Share-Based Compensation

12 Months Ended

Dec. 31, 2025

Share-Based Compensation

Share-Based Compensation

Note 6 Share-Based Compensation

Total share-based compensation expense, which includes stock options and restricted shares, was $23.4 million, $16.5 million and $15.8 million for 2025, 2024 and 2023, respectively. Compensation expense related to awards of restricted shares totaled $23.4 million, $16.5 million and $15.8 million 2025, 2024 and 2023, respectively, which is included in general and administrative and research and engineering expenses in our consolidated statements of income (loss). Share-based compensation expense has been allocated to our various reportable segments. See Note 17—Segment Information.

In addition to the time-based restricted stock share-based awards, we provide performance share awards based on market conditions measured against a predetermined peer group (“TSR Shares”). We also provide Performance-Based Restricted Stock Units (“PSUs”) which are granted at the beginning of the one-year performance period and are earned at the end of the same period, depending on performance.

Stock Option Plans

As of December 31, 2025, we had several stock plans under which options to purchase our common shares could be granted to key officers, directors and managerial employees of Nabors and its subsidiaries. Options granted under the plans have fair market value on the date of the grant. Options granted under the plans generally are exercisable in varying cumulative periodic installments after one year. In the case of certain key executives and directors, options granted may vest immediately on the grant date. Options granted under the plans expire ten years from the date of grant. There are approximately 0.6 million common shares available for issuance in the form of either restricted shares or stock options, under these plans as of December 31, 2025.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model, which uses assumptions for the risk-free interest rate, volatility, dividend yield and the expected term of the options. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for a period equal to the expected term of the option. Expected volatilities are based on implied volatilities from traded options on Nabors’ common shares, historical volatility of Nabors’ common shares, and other factors. We use historical data to estimate the expected term of the options and employee terminations within the option-pricing model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of the options represents the period of time that the options granted are expected to be outstanding.

Stock option transactions under our various stock-based employee compensation plans are presented below:

				Weighted-
		Weighted-		Average
		Average		Remaining		Aggregate
		Exercise		Contractual		Intrinsic
Options	Shares	Price		Term		Value
	(In thousands, except exercise price and term)
Options outstanding as of December 31, 2024	15	$	317.82
Expired	(2)		537.45
Options outstanding as of December 31, 2025	13	$	286.54	2.90	years	$	—
Options exercisable as of December 31, 2025	13	$	286.54	2.90	years	$	—

No stock options were awarded or exercised during 2023, 2024 or 2025. There were no unvested options outstanding at the end of 2023, 2024 or 2025.

Restricted Shares

Our stock plans allow grants of restricted shares. Restricted shares are issued on the grant date but cannot be sold or transferred. Restricted share values are based on stock value at grant date. Restricted shares vest in varying periodic installments ranging up to four years.

A summary of our restricted shares as of December 31, 2025, and the changes during the year then ended, is presented below:

		Weighted-Average
		Grant-Date Fair
Restricted shares	Outstanding	Value
	(In thousands, except fair value)
Unvested as of December 31, 2024	200	$	117.20
Granted	235		42.87
Vested	(82)		114.82
Forfeited	(33)		82.52
Unvested as of December 31, 2025	320	$	66.76

During 2025, 2024 and 2023, we awarded 234,832, 96,368 and 103,465 restricted shares, respectively, to our employees and directors. These awards had an aggregate value at their date of grant of $10.1 million, $8.0 million and $16.6 million, respectively, and were scheduled to vest over a period of up to four years. The fair value of restricted shares that vested during 2025, 2024 and 2023 was $9.4 million, $8.9 million and $8.4 million, respectively.

As of December 31, 2025, there was $13.0 million of total future compensation cost related to unvested restricted share awards that are expected to vest. That cost is expected to be recognized over a weighted-average period of 2.24 years.

Restricted Shares Based on Performance Conditions

During 2025, 2024 and 2023, we granted awards to certain of our executive officers covering a total of 143,213, 92,761 and 60,633 PSUs, respectively. The number of earned PSUs that ultimately vest over three years, following conclusion of the performance period, is determined based upon on achievement of specific financial or operational goals. The number of PSUs that can be earned, range from a minimum of 30% of the PSU awards to a maximum of

200%, of the PSUs granted. In addition to these PSUs, we also granted 5,356 performance share awards in 2024. The vesting of these awards is based upon achievement of financial milestones over specified time periods.

The following table sets forth information regarding outstanding PSUs based on performance conditions as of December 31, 2025:

		Weighted-Average
		Grant-Date Fair
Restricted Stock Units	Outstanding	Value
	(In thousands, except fair value)
Outstanding as of December 31, 2024	148	$	73.36
Granted	143		71.94
Vested	(55)		91.00
Forfeited	(14)		134.78
Outstanding as of December 31, 2025	222	$	87.24

Restricted Shares Based on Market Conditions

During 2025, 2024 and 2023, we granted awards for 74,457, 52,930 and 29,621 TSR Shares, respectively, which are equity classified awards and will vest on our performance compared to our peer group over a three-year period. These awards had an aggregate fair value at their date of grant of $4.2 million, $4.3 million and $2.5 million, respectively, after consideration of all assumptions.

The grant date fair value of these awards was based on a Monte Carlo model, using the following assumptions:

		Year Ended December 31,
	2025		2024		2023
Risk free interest rate		4.23%		4.01%		4.13%
Expected volatility		65.00%		65.00%		94.00%
Closing stock price at grant date	$	57.17	$	81.63	$	154.87
Expected term (in years)		3.0		3.0		3.0

The following table sets forth information regarding outstanding restricted shares based on market conditions as of December 31, 2025:

		Weighted-Average
		Grant-Date Fair
Market based restricted shares	Outstanding	Value
	(In thousands, except fair value)
Outstanding as of December 31, 2024	82	$	65.52
Granted	74		32.32
Vested	(52)		57.89
Forfeited	(19)		79.66
Outstanding as of December 31, 2025	85	$	37.90

As of December 31, 2025, there was $1.6 million of total future compensation cost related to unvested TSR Share awards. The TSR Shares will amortize over a weighted average remaining period of 1.65 years.