Share-Based Compensation

9 Months Ended

Sep. 30, 2011

Share-Based Compensation [Abstract]

Share-Based Compensation

Note 5   Share-Based Compensation

We have several share-based employee compensation plans, which are more fully described in Note 6 Share-Based Compensation to the audited financial statements included in our 2010 Annual Report.

Total share-based compensation expense, which includes both stock options and restricted stock, totaled $9.0 million and $3.6 million for the three months ended September 30, 2011 and 2010, respectively, and $17.2 million and $10.6 million for the nine months ended September 30, 2011 and 2010, respectively. Total share-based compensation is included in direct costs and general and administrative expenses in our consolidated statements of income (loss). Share-based compensation expense has been allocated to our various operating segments. See Note 12 Segment Information.

During the nine months ended September 30, 2011 and 2010, we awarded 1,049,540 and 475,667 shares of restricted stock, respectively, vesting over periods up to four years, to our employees and directors. These awards had an aggregate value at their grant date of $29.3 million and $10.6 million, respectively. The fair value of restricted stock that vested during the nine months ended September 30, 2011 and 2010 was $18.6 million and $23.0 million, respectively.

During the nine months ended September 30, 2011 and 2010, we awarded options, vesting over periods up to four years, to purchase 755,166 and 27,907, respectively, of our common shares to our employees and directors. The fair value of stock options granted during the nine months ended September 30, 2011 and 2010, respectively, was calculated using the Black-Scholes option pricing model and the following weighted-average assumptions:

	Nine Months Ended
	September 30,
	2011		2010
Weighted-average fair value of options granted	$	6.53	$	6.27
Weighted-average risk free interest rate		.66%		1.49%
Dividend yield		0%		0%
Volatility(1)		51.0%		40.62%
Expected life		4.0 years		4.0 years

(1) Expected volatilities were based on implied volatilities from publicly traded options to purchase Nabors’ common shares, historical volatility of Nabors’ common shares and other factors

The total intrinsic value of stock options exercised during the nine months ended September 30, 2011 and 2010 was $15.8 million and $4.0 million, respectively. The total fair value of stock options that vested during the nine months ended September 30, 2011 and 2010 was $5.2 million and $5.6 million, respectively.