Total share-based compensation expense, which includes stock options and restricted shares, was $24.6 million, $24.7 million and $26.4 million for 2020, 2019 and 2018, respectively. Compensation expense related to awards of restricted shares totaled $23.6 million, $24.5 million and $26.0 million for 2020, 2019 and 2018, respectively, which 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 reportable segments. See Note 19—Segment Information.

In addition to the time-based restricted stock share-based awards, historically we have provided two types of performance share awards: the first, based on our performance measured against pre-determined performance metrics (“Performance Shares”) and the second, based on market conditions measured against a predetermined peer group (“TSR Shares”). The performance period for the awards granted in 2020 commenced on January 1, 2019 and ended December 31, 2019.

In 2020, under the Amended and Restated 2016 Stock Plan, the company introduced new Performance-Based Restricted Stock Units (“PSUs”) awards to move away from Performance Shares. PSUs are granted at the beginning of the one-year performance period and they are earned at the end of the same period, depending on performance.

At a special meeting of shareholders held April 20, 2020, the Board set the Reverse Stock Split ratio at 1-for-50. All share and per share information included in this annual report has been retrospectively adjusted to reflect this Reverse Stock Split.

As of December 31, 2020, 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 cannot be exercised more than ten years from the date of grant. Options to purchase 0.4 million and 0.2 million Nabors common shares remained available for grant as of December 31, 2020 and 2019, respectively. Of the common shares available for grant as of December 31, 2020, approximately 0.4 million of these shares are also available for issuance in the form of restricted shares.

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:

During 2019 and 2018, respectively, we awarded options vesting over periods up to four years to purchase 2,759 and 3,422 of our common shares to certain of our directors. No options were awarded during 2020 nor were there any unvested options during 2020.

The fair value of stock options granted during 2019 and 2018 was calculated using the Black-Scholes option pricing model and the following weighted-average assumptions:

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

There were no options exercised during 2020, 2019 or 2018. The total fair value of options that vested during the years ended December 31, 2019 and 2018 was $0.2 million and $0.4 million, respectively.

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 shares values are based on stock value at grant date. Restricted shares vest in varying periodic installments ranging up to five years.

A summary of our restricted shares as of December 31, 2020, 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, 2019	98	$	270.27
Granted	4		35.27
Vested	(45)		298.17
Forfeited	(8)		262.06
Unvested as of December 31, 2020	49	$	226.06

During 2020, 2019 and 2018, we awarded 4,156, 65,299 and 47,850 restricted shares, respectively, to our employees and directors. These awards had an aggregate value at their date of grant of $0.1 million, $10.6 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 2020, 2019 and 2018 was $2.6 million, $4.1 million and $8.7 million, respectively.

As of December 31, 2020, there was $6.8 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 approximately two years.

Restricted Shares Based on Performance Conditions

During the years ended December 31, 2020, 2019 and 2018, we awarded 59,490, 48,253 and 20,199 restricted shares, respectively, vesting over a period of three years to some of our executives. The Performance Share awards granted were based upon achievement of specific financial or operational objectives. The number of shares granted was determined by the percentage of performance goals achieved during fiscal years 2019, 2018 and 2017, respectively. These awards had an aggregate fair value at their date of grant of $8.8 million, $7.5 million and $7.0 million, respectively.

The following table sets forth information regarding outstanding restricted shares based on performance conditions as of December 31, 2020:


		Weighted-Average
		Grant-Date Fair
Performance based restricted shares	Outstanding	Value

	(In thousands, except fair value)
Outstanding as of December 31, 2019	65	$	223.39
Granted	59		148.00
Vested	(26)		276.85
Outstanding as of December 31, 2020	98	$	163.74

Until shares are granted, our Performance Share awards are liability-classified awards. Our accrued liabilities included $2.4 million for such awards at December 31, 2020 for the performance period beginning January 1, 2020 through December 31, 2020 and $2.4 million for such awards at December 31, 2019 for the performance period beginning January 1, 2019 through December 31, 2019. The fair value of these awards that vested during the years ended December 31, 2020, 2019 and 2018 was $3.0 million, $2.5 million and $4.8 million, respectively. The fair value of these liability-classified awards are estimated at each reporting period, based on internal metrics and marked to market.

During 2020, we granted PSU awards to certain of our executive officers covering a total of 31,204 shares of our common stock. The number of earned shares that ultimately vest over three years, following conclusion of the

performance period, will be determined based upon on achievement of specific financial or operational goals. The number of earned shares vesting can range from 30% of the PSU awards if minimum thresholds are achieved to a maximum of 200%.

The following table sets forth information regarding outstanding PSUs based on performance conditions as of December 31, 2020:


		Weighted-Average
		Grant-Date Fair
Restricted Stock Units	Outstanding	Value

	(In thousands, except fair value)
Outstanding as of December 31, 2019	—	$	—
Granted	31		148.00
Outstanding as of December 31, 2020	31	$	148.00

Restricted Shares Based on Market Conditions

During 2020, 2019 and 2018, we granted awards for 22,931, 52,191 and 21,163 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 $3.4 million, $3.7 million and $5.1 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,
	2020		2019		2018

Risk free interest rate		1.57%		2.48%		2.02%
Expected volatility		74.00%		70.00%		57.00%
Closing stock price at grant date	$	148.00	$	109.50	$	343.50
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, 2020:


		Weighted-Average
		Grant-Date Fair
Market based restricted shares	Outstanding	Value

	(In thousands, except fair value)
Outstanding as of December 31, 2019	64	$	142.00
Granted	23		111.00
Vested	(3)		558.12
Forfeited	(5)		558.12
Outstanding as of December 31, 2020	79	$	91.34

As of December 31, 2020, there was $2.9 million of total future compensation cost related to unvested TSR Share awards. The TSR Shares will amortize over a weighted average remaining period of 1.58 years.