Four times last year, Nabors Industries' corporate board descended on the luxurious Fairmont Hamilton Princess Hotel in Bermuda for three days of round-the-clock meetings.

Nabors, a global oil and drilling company, paid its six non-executive directors well for their trouble.

They received an average of $420,000 for all of last year, according to a proxy filing with the U.S. Securities and Exchange Commission, which works out to more than $100,000 for the three-day stay in Bermuda.

That's more than what nearly any other Standard & Poor's 500 Company pays its board members.

In the debate over executive compensation that has taken center stage following the financial crisis, little has been said about corporate boards.

But a Reuters analysis of the 2009 Spencer Stuart Board Index, an annual report on boards by the executive search firm, shows that at some companies, being a corporate director is pretty good work if you can get it. (Click here to see a list of the 10 most highly compensated outside U.S. directors: http://link.reuters.com/cep96g)

Nabors doesn't even take first prize. According to the Spencer Stuart report, the best-paid directors are at Intuitive Surgical Ltd , a robotic health care equipment maker.

It paid its seven non-employee directors an average of $697,000 last year. That's about $139,000 per director for each of the Sunnyvale, California-based company's five meetings in 2008.

Not far behind Intuitive Surgical is Apple Inc , whose non-employee directors received $633,000, or $127,000 per meeting last year. The computer giant's board met five times in 2008.

Shares of both Intuitive Surgical and Apple have more than doubled in 2009. Both companies pay directors largely with stock options, which have become especially valuable in light of their recent performance.

We are certainly comfortable with that, and shareholders are typically happy if returns are high, said Ben Gong, a spokesman for Intuitive Surgical.

A spokeswoman for Apple declined to comment.

PAY FOR PERFORMANCE

What sets Nabors apart is that it had a bad year. Based in Hamilton, Bermuda, the company owns and operates more than 500 land drilling rigs worldwide. The precipitous drop in oil prices last year battered the firm, whose share price has plummeted 60 percent since June 2008, to $20.94 from $49.77.

Let's face facts, said Michelle Leder, the editor of Footnoted.org, a corporate watchdog web site. If you had a part-time job that was paying you $300,000, $400,000, $500,000 a year, and you didn't have a lot of work to do, would you rock that boat? That's just human nature.

Leder, who spends her days examining regulatory filings, called Nabors one of the biggest offenders when it comes to executive compensation.

They are perpetually bad, she said.

(Watch Reuters Insider's interview with Leder at http://link.reuters.com/xat27g)

Nabors doesn't see a problem. Dennis Smith, a spokesman for the firm, defends the pay as well as the board's decision to meet at the Fairmont, a resort that bills itself as an elegant tribute to Bermuda's old world splendor.

It's not some leisurely boondoggle, that's for damn sure, he said.

BOARDROOM ETIQUETTE

Up until probably a couple years ago director pay was probably not on the radar, said Paul Hodgson, a compensation expert at independent research firm The Corporate Library.

The thought was, 'I'd rather have a well-compensated engaged director than... than one who didn't want to put in the time for the company.

Indeed, in 2008, many companies found their directors working overtime as the financial crisis unfolded.

Take Goldman Sachs Group Inc , which has faced withering criticism for setting aside more than $16 billion in 2009 for year-end bonuses.

Its board has not been assailed over its pay. Goldman directors received $298,000, on average, in 2008, but they participated in 16 meetings during an unusually busy year, for an average of $18,000 per meeting.

Morgan Stanley's board met even more -- 28 times, with directors paid an average of $312,000 for the year, or just $11,000 a meeting.

The average number of board meetings continues to increase, from 7.3 in 1999, to eight in 2004, and nine last year, according to the Spencer Stuart index. The report also found a small increase in board retainer fees, bumping the average to $76,000. At the same time, fewer boards are paying fees for each meeting.

The most highly paid directors tend to be in the energy and healthcare industries. Energy directors made on average $301,000 in 2008, while healthcare directors were paid $306,000. Overall, the average director of an S&P 500 company across all industries was $213,000.

Directors in the west and southwest of the United States were the highest paid, making 31 percent more than their counterparts in the southeast, the lowest compensated, according to the index. Keywords: BOARDPAY/

PRICING DIRECTORS

Determining how much money a director makes is tough.

The Spencer Stuart index used proxy filings that public companies are required to submit to report the pay of top executives and board members. The reported figures can be distorted by accounting charges and can include compensation granted in earlier years.

Pay can also vary based on the value of stock options, depending on when the report was filed. A company that has a volatile stock will seemingly have higher pay for directors, said Charlie Tharp, the executive vice president for policy with the Washington-based Center on Executive Compensation, an advocacy organization.

Tharp also said board members typically do not take their positions for the money.

They have sitting CEOs on their boards, Tharp said. These people, when you look at their day jobs, are making $10 million. They are kind of lending or renting their reputations to the board. They are actually putting in time to go to the meetings. They are spending a lot of time understanding executive compensation and business strategy.

'FAIRLY COMPENSATED'

James Payne, 72, is the chairman of Nabors' governance committee. He is the chief executive of privately held Shona Energy and a director of two other public company boards.

In 2008, he made $1.46 million for his three board appointments, including $505,328 for his work with Nabors, a board he joined in 1999.

Payne acknowledged in a telephone interview that Nabors is on the high end of the pay scale in terms of its directors. But he said the board has scaled back its pay in recent years to bring it more into line with similar companies.

In 2006 and 2007, it hired Towers Perrin to conduct an assessment of its nonemployee director compensation program, he said. The reviews led the board to reduce the equity portion of the compensation from 20,000 restricted shares down to 12,000.

Nabors board members get an annual retainer of $50,000 each. The chairs of each committee get an extra $50,000, or $100,000 in the case of the audit committee chairman.

Three years ago we were probably over-compensated, Payne said. I would say we are fairly compensated now.

NOT SO EXOTIC

The average energy company non-employee director gets $301,175, or $34,000 a meeting, based on the Spencer Stuart Index -- or about 25 percent less than what Nabors' non-executive directors made on average last year.

Nabors' board is packed with elder statesmen in the banking, energy and legal industries, men with decades of experience. Several members have been on the board for more than a decade. The board includes the following:

- William Comfort, 71, is chairman of Citigroup Venture Capital.

- Hans Schmidt, 79, was an executive with German diversified energy company C. Deilmann A.G. from 1958 until his retirement in 1992.

- Myron Sheinfeld, 79, is counsel with the law firm of King & Spalding LLP.

- Marty Whitman, 84, the lead director, is chairman of Third Avenue Trust, a money manager.

(All ages were current as of the company's most recent proxy filing.)

Nabors says the board's compensation is justified because of the wealth of experience the directors bring to the table.

They are all extremely seasoned, all highly capable people, Nabors' Smith said. We don't have any directors for the sake of other social agendas.

In 2008, the average age of Nabors' board members was 75. The board's retirement age was 72. The average age of S&P 500 boards was 61.7 in 2008 and inching toward older, according to the Spencer Stuart index.

When Nabors' board instituted a mandatory retirement age a few years ago, it decided that it would apply only to future directors.

Despite their age, each member attended at least three of Nabors' four meetings in 2008, according to the proxy.

In addition, directors, the company said, are often called upon for meetings aside from the four major ones. And getting to those major meetings -- in Bermuda -- requires extensive travel, Payne said.

It is a long plane trip and it is three days by the time you come and go, Payne said.

And meeting in Bermuda isn't quite as exotic as it sounds, Payne says, adding the meetings include day-long board sessions, working dinners and nighttime committee meetings.

That's a lot of togetherness, said Payne.

UNDER FIRE

Nabors has been in the spotlight before because of its compensation practices. Its chief executive, Eugene Isenberg was paid $79.3 million in 2008, according to a report by The Corporate Library, making him the ninth highest-paid CEO in the United States.

In 2006, Nabors launched a review of its stock options granting practices after The Wall Street Journal questioned the timing of grants to Isenberg. The newspaper report showed that Isenberg was paid more than $450 million over the previous 19 years, much of that in the form of stock options.

Nabors' compensation committee seems to be responding to the criticism. In April, it reduced Isenberg's severance from $264 million to just $100 million. (Reporting by Steve Eder; editing by Jim Impoco and Robert MacMillan)

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