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Section 1: DEF 14A (DEF 14A)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.   )

Filed by the Registrant ☒

Filed by a Party other than the Registrant o

Check the appropriate box:

o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material under §240.14a-12
NABORS INDUSTRIES LTD.
(Name of Registrant as Specified in its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

No fee required.
 
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
(1)
Title of each class of securities to which transaction applies:
 
 
 
 
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(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
 
 
 
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
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Amount Previously Paid:
 
 
 
 
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Form, Schedule or Registration Statement No.:
 
 
 
 
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Date Filed:
 
 
 

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NOTICE OF 2018 ANNUAL GENERAL MEETING OF SHAREHOLDERS
Tuesday, June 5, 2018, 10 a.m. CT
Nabors Corporate Services, Inc., 515 W. Greens Rd., Houston, Texas 77067

April 26, 2018

Dear Fellow Shareholder:

On behalf of the Board of Directors (the “Board”) of Nabors Industries Ltd. (the “Company”), we cordially invite you to attend the Company’s 2018 annual general meeting of shareholders to be held on June 5, 2018 at 10 a.m. CT (the “meeting”). You are entitled to vote at the meeting if you were a shareholder of record at the close of business on April 6, 2018. This year, shareholders will consider:

1. the election of seven directors for a one year term (Item 1);
2. the approval and appointment of PricewaterhouseCoopers LLP as the Company’s independent auditor for the year ending December 31, 2018, and authorization for the Audit Committee of the Board to set the independent auditor’s remuneration (Item 2);
3. a non-binding, advisory “Say on Pay” vote to approve the compensation paid by the Company to its named executive officers as disclosed in the Proxy Statement (Item 3);
4. the approval of Amendment No. 1 to the Company’s 2016 Stock Plan (Item 4); and
5. such other business as may properly come before the meeting.

The Company’s annual audited financial statements for the year ended December 31, 2017 will also be presented at the meeting.

Further information regarding the meeting and the above proposals is set forth in the Proxy Statement. We are mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) on or about April 26, 2018. Shareholders who have requested a paper copy of the Proxy Statement and the Company’s 2017 Annual Report will receive those documents. The Notice contains instructions on how to access the proxy materials, vote online and obtain a paper copy of the proxy materials.

YOUR VOTE IS VERY IMPORTANT. PLEASE SUBMIT YOUR PROXY OR VOTING INSTRUCTIONS AS SOON AS POSSIBLE. We hope you will read the Proxy Statement and 2017 Annual Report and submit your proxy, or use telephone or Internet voting, prior to the meeting. Even if you plan to attend the meeting, please submit a proxy as soon as possible to ensure that your shares are voted at the meeting in accordance with your instructions.

On behalf of the Board and our management team, I extend our appreciation for your continued support.

Sincerely yours,


ANTHONY G. PETRELLO
Chairman, President and Chief Executive Officer

   

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL GENERAL MEETING TO BE HELD ON JUNE 5, 2018:
 
Our Proxy Statement and our 2017 Annual Report are available at:
 
www.proxyvote.com

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April 26, 2018

Dear Fellow Shareholder:

For the Board of Directors of Nabors Industries Ltd. and for the senior management, 2017 was both a busy and a productive year. While continuing to focus on maximizing long-term shareholder value through the delivery of key strategic business objectives tied to our 2020 Vision, the multiple achievements in 2017 were noteworthy:

launched SANAD, our joint venture with a subsidiary of Saudi Arabian Oil Company, solidifying our long-standing position as a market leader in what is considered to be the most important oil and gas region in the world
acquired Tesco Corporation, which combines our two companies’ exceptional talent and technologies to strengthen our ability to accelerate the growth of Nabors Drilling Solutions and provide a more integrated offering
acquired Robotic Drilling Systems AS, with its advanced robotic systems and expertise, accelerating our automation initiatives
expanded our real-time drilling analytics, providing for further improvements in drilling efficiency
introduced our PACE®-M1000 rigs as well as modernized our L48 rig fleet, solidifying our position as an industry leader
expanded our Nabors Drilling Solutions offering, including performance drilling tools, wellbore placement technologies and other value-add services

We returned almost $69 million to our shareholders in the form of dividends. Our Board continued to fulfill its critical mission of providing active oversight of the Company’s strategy, leadership and risk management.

Following the results of last year’s annual general meeting, we discussed with and sought input from our large shareholders on key corporate governance issues. We gained valuable insight from these interactions and also evaluated our strategic objectives, corporate governance and executive compensation programs based on the feedback received. As a result of these discussions, a number of actions were taken:

Board Diversity, Proxy Access, and Committee Refreshment

added Ms. Tanya S. Beder as a director, bringing a fresh perspective and greater diversity to the Board, as well as a wealth of relevant experience and expertise
amended our existing proxy access policy in response to a shareholder proposal
continued the education program for directors to further enhance the Board’s knowledge and skills, including cyber-security
refreshed Board committee assignments

Shareholder Engagement

supported the exchange of views year-round through our outreach program, as described on page 10, and we continually look for new ways to connect with shareholders

Corporate Responsibility

published our third corporate sustainability report for the year ended December 31, 2016, further demonstrating our commitment to and the importance of enhanced disclosure on environmental, social and governance practices in our corporate culture
hosted our third annual safety week

Our people remain committed to our core values of safety, excellence, teamwork, accountability and innovation. The Board and senior management believe these values serve as a foundation for our continued success. I encourage you to read more about our Board, our governance structures and practices, and our strategy in this Proxy Statement and in the accompanying Annual Report. As your representatives, my fellow independent directors and I are committed to hearing from you. We encourage you to vote your shares in line with the Board’s recommendation. Thank you for your investment in Nabors.

Sincerest regards,


JOHN YEARWOOD
Lead Director

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2018 Proxy Statement

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2018 Proxy Statement

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PROXY SUMMARY

This summary provides highlights of information contained in this Proxy Statement. It does not contain all of the information that you should consider before voting. We encourage you to read the entire Proxy Statement. For more complete information regarding the Company’s 2017 performance, please read our 2017 Annual Report. The annual meeting will take place:

Date:
June 5, 2018
Place:
Nabors Corporate Services, Inc.
Time:
10 a.m. CT
 
515 W. Greens Rd.
Houston, Texas 77067

Please vote your shares promptly, as this will save the expense of additional proxy solicitation.
You may submit your vote by Internet, telephone, mail or in person.


Visit the website listed on your proxy card/voting instruction form to vote via the Internet.

Call the telephone number on your proxy card/voting instruction form to vote by telephone.

Sign, date and return your proxy card/voting instruction form to vote by mail.

Vote in person at the annual meeting. Owners with shares held through a bank or broker may vote in person at the meeting if they have a legal proxy from the bank or broker and bring it to the meeting.

ITEMS TO BE CONSIDERED & BOARD RECOMMENDATIONS

ITEM
VOTES REQUIRED
FOR APPROVAL
BOARD’S VOTING
RECOMMENDATION
PAGE
REFERENCE
 
 
 
 
 
Item 1
Elect directors
Plurality of votes cast
FOR
 
 
 
 
 
Item 2
Approve and appoint PricewaterhouseCoopers LLP as our independent auditor for the year ending December 31, 2018 and authorize the Board’s Audit Committee to set the independent auditor’s remuneration
Majority of votes present
FOR
Item 3
Advisory vote to approve the compensation paid to the company’s named executive officers
Majority of votes present
   
The vote on this item is nonbinding, but the Board will consider the results of the vote in making future decisions.
FOR
Item 4
Approve Amendment No. 1 to Company’s 2016 Stock Plan
Majority of votes present
FOR
This Proxy Statement and our 2017 Annual Report are available electronically on our hosted website at www.proxyvote.com and accessible via the QR code at the right. The Notice and proxy materials are first being made available to our shareholders on or about April 26, 2018.

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DIRECTOR NOMINEES

Upon the recommendation of the Governance & Nominating Committee, our Board of Directors has nominated the following seven director nominees (all of whom are current directors) to be elected at the annual general meeting of shareholders. All of the nominees for director are independent under the rules of the NYSE, other than Mr. Petrello, who is our Chief Executive Officer. Detailed information about each director nominee, including their background, skills and experience, can be found under “Corporate Governance—Director Nominees”.

NAME
AGE
DIRECTOR
SINCE
INDEPENDENT
PRIMARY OCCUPATION
Tanya S. Beder
62
2017*
Chairman and CEO of SBCC Group Inc.
James R. Crane
64
2012
Chairman and CEO of Crane Capital Group Inc.
John P. Kotts
67
2013
Private investor and entrepreneur
Michael C. Linn
66
2012
President and CEO of MCL Ventures, LLC
Anthony G. Petrello
63
1991
 
Chairman of the Board, President and CEO
Dag Skattum
57
2014
Vice Chairman, Europe, the Middle East and Africa of JP Morgan
John Yearwood
58
2010
Retired President, CEO and COO of Smith International, Inc.
* Elected to our board following the resignation of former director Howard Wolf following the 2017 annual general meeting.

DIRECTOR DASHBOARD


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CORPORATE GOVERNANCE HIGHLIGHTS

The following actions are reflective of our ongoing, constructive dialogue with shareholders and commitment to transparency and good corporate governance:

Direct outreach on corporate governance matters to shareholders representing over 25 percent of shares;
Direct investor relations outreach to active institutional investors representing over 50 percent of shares;
Amended the Company’s existing proxy access policy in proactive response to the results of last year’s annual general meeting and ongoing dialogue with certain shareholders to allow for a group of up to 20 shareholders owning 3% or more of our outstanding common stock for at least 3 years to nominate and include in our proxy materials nominees representing up to 20% of the Board as detailed in the policy; and
Board committee assignments refreshed.

We believe these actions enhance our corporate governance program, which already includes:

Advisory vote on executive compensation by shareholders annually;
Publishing our third corporate sustainability report for the year ended December 31, 2016 (the “2016 Corporate Sustainability Report”), demonstrating our commitment to enhanced disclosure on environmental, social and governance practices;
Executive sessions of independent directors;
No shareholder rights plan; and
Independent committee chairs and members.

EXECUTIVE SHARE OWNERSHIP

Executive share ownership remains an important mechanism in our executive compensation structure for aligning the interests of our executives with those of our other shareholders. Accordingly, we require our CEO and CFO to maintain equity ownership in the Company based on acquisition-date value. As of the record date, the equity ownership of our CEO exceeds the required equity value of 5x his base salary, and the equity ownership of our CFO exceeds the required ownership of 3x his base salary.


* Excludes common shares for which the executive disclaims beneficial ownership. See “Corporate Governance—Beneficial Ownership of Company Common Shares.”
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FOCUS ON SHAREHOLDER VALUE

We are committed to generating shareholder value and delivering results. In 2017, we maintained our quarterly dividend to shareholders of $0.06 per common share in the face of challenging industry conditions, returning $68.6 million to shareholders compared to $68.0 million in 2016.


* Represents dividends declared in corresponding year.

We will continue to identify and consider opportunities to increase returns to our shareholders in the future.

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PROXY STATEMENT

GENERAL

This Proxy Statement and the proxy card are being furnished to all shareholders on or about April 26, 2018, in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Nabors Industries Ltd. for the 2018 annual general meeting of shareholders (the “meeting”).

In this Proxy Statement, “Nabors”, the “Company”, “we”, “us” and “our” refer to Nabors Industries Ltd. Where the context requires, these references also include our consolidated subsidiaries and predecessors. Our principal executive offices are located at Crown House, 4 Par-la-Ville Road, Second Floor, Hamilton, HM 08 Bermuda.

MEETING INFORMATION

We will hold the meeting at the offices of Nabors Corporate Services, Inc., 515 W. Greens Rd., Houston, Texas, 77067, at 10:00 a.m. Central Time on Tuesday, June 5, 2018, unless adjourned or postponed. Directions to the meeting can be found under the Investor Relations tab of our website at www.nabors.com or by calling our Investor Relations department at 281-775-8038.

WHO CAN VOTE & RECORD DATE

All shareholders of record at the close of business on April 6, 2018 (the “record date”), are entitled to vote, in person or by proxy, on each matter submitted to a vote of shareholders at the meeting. On the record date, 370,300,188 of the Company’s common shares were outstanding, the holders of which are entitled to one vote per common share on all matters. The number of common shares outstanding includes shares held by our subsidiaries, which will be voted consistent with the Board’s recommendation. We have no other class of securities entitled to vote at the meeting.

MEETING ATTENDANCE

Only record or beneficial owners of the Company’s common shares may attend the meeting in person. If you are a shareholder of record, you may be asked to present proof of identification, such as a driver’s license or passport. Beneficial owners who hold their shares through a broker, dealer, or other nominee must also present evidence of share ownership, such as a recent brokerage account or bank statement. All attendees must comply with our standing rules, which are available on our website and will be distributed upon entrance to the meeting.

IMPORTANT NOTICE REGARDING INTERNET AVAILABILITY OF MATERIALS

Pursuant to the Securities and Exchange Commission (the “SEC”) “notice and access” rules, we may furnish proxy materials, including this Proxy Statement and our 2017 Annual Report for the year ended December 31, 2017, to our shareholders by providing access to such documents on the Internet instead of mailing printed copies. Most shareholders will not receive printed copies of the proxy materials unless they request them prior to distribution of the Proxy Statement. Instead, a Notice of Internet Availability of Proxy Materials (the “Notice”) was mailed, which explains how you may access and review the proxy materials and how you may submit your proxy on the Internet. We believe that this makes the proxy distribution process more efficient, less costly, and helps to conserve natural resources. If you would like to receive a paper or electronic copy of our proxy materials, please follow the instructions included in the Notice. Shareholders who requested paper copies of the proxy materials or previously elected to receive proxy materials electronically did not receive the Notice and are receiving the proxy materials in the format requested. Proxy materials will also be provided for distribution through brokers, custodians and other nominees and fiduciaries. We will reimburse these parties for their reasonable out-of-pocket expenses for forwarding the proxy materials.

HOUSEHOLDING

The SEC permits a single set of annual reports and proxy statements or a notice of Internet availability of proxy materials, as applicable, to be sent to any household at which two or more shareholders reside if they appear to be members of the same family. Each shareholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information shareholders receive and reduces mailing and

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printing expenses. A number of brokerage firms have instituted householding. As a result, if a shareholder holds shares through a broker and resides at an address at which two or more shareholders reside, that residence may receive only one annual report and proxy statement or notice, as applicable, unless any shareholder at that address has given the broker contrary instructions. However, if any such shareholder residing at such an address wishes to receive a separate annual report and proxy statement or notice in the future, or if any such shareholder that elected to continue to receive such materials wishes to receive a single set of materials in the future, that shareholder should contact their broker, call our Corporate Secretary at (441) 292-1510, or send a request to our Corporate Secretary at Crown House Second Floor, 4 Par-la-Ville Road, Hamilton, HM08 Bermuda. The Company will deliver, promptly upon written or oral request to the Corporate Secretary, a separate copy of the annual report and proxy statement or notice, as applicable, to a shareholder at a shared address to which a single copy of the documents was delivered.

PROXY SOLICITATION

We have retained Georgeson LLC, 1290 Avenue of the Americas, 9th Floor, New York, NY 10104, for a fee of approximately $15,000, plus reimbursement of out-of-pocket costs and expenses, to solicit proxies on behalf of the Board by mail, in person and by telephone. We will pay all expenses associated with this solicitation and the preparation of proxy materials. In addition, certain of our directors, officers, and employees may solicit proxies by telephone, personal contact, or other means of communication. They will not receive any additional compensation for these activities.

VOTING INFORMATION

Quorum. A majority of the common shares outstanding on the record date, represented in person or by proxy, will constitute a quorum to transact business at the meeting. Abstentions, withheld votes, and broker nonvotes will be counted for purposes of establishing a quorum.

Submitting voting instructions for shares held in your name. As an alternative to voting in person at the meeting, you may direct your vote for the meeting by telephone or via the Internet, which saves the Company money, or, for those shareholders who receive a paper proxy card in the mail, by mailing a completed and signed proxy card. A properly submitted proxy will be voted in accordance with your instructions, unless you subsequently revoke your instruction. If you submit a signed proxy without indicating your vote, the person voting the proxy will vote your shares according to the Board’s recommendation unless they lack the discretionary authority to do so.

Submitting voting instructions for shares held in street name. If you hold your shares through your broker, follow the instructions you receive from your broker. If you want to vote in person, you must obtain a legal proxy from your broker and bring it to the meeting. If you do not submit voting instructions to your broker, your broker may still be permitted to vote your shares. New York Stock Exchange (“NYSE”) member brokers may vote your shares on the approval and appointment of the Company’s independent auditor and authorization for the Audit Committee to set the independent auditor’s remuneration, which is a “discretionary” item. All other items to be voted on at the meeting are “nondiscretionary” items. Absent specific voting instructions from the beneficial owners, NYSE member brokers may not vote on these proposals. If your broker does not have discretion to vote your shares on a matter, your shares will not be voted on that matter, resulting in a “broker nonvote”. Broker nonvotes will be counted for purposes of establishing a quorum, but will not be counted in determining the outcome of “non-discretionary” items. In other words, broker nonvotes will have no effect on the proposal.

Withholding your vote or voting to “abstain”. You may withhold your vote for any nominee for election as a director. Withheld votes will be excluded from the vote. Because directors are elected by a plurality of votes and there are only seven nominees for the seven director positions, withheld votes will have no effect on the election of directors. On the other proposals, you may vote to “abstain”. If you vote to “abstain”, your shares will be counted as present at the meeting, and your abstention will have the effect of a vote against the proposal.

Revoking your proxy. You may revoke your proxy at any time before it is actually voted by (1) delivering a written revocation notice prior to the meeting to the Corporate Secretary in person or by courier at the address on the notice of meeting appearing at the front of this Proxy Statement or by mail to P.O. Box HM3349, Hamilton, HMPX Bermuda; (2) submitting a later-dated proxy that we receive no later than the conclusion of voting at the meeting; or (3) actually voting in person at the meeting. Please note that merely attending the meeting will not, by itself, constitute a revocation of a proxy.

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Votes Required / Abstentions and Broker Nonvotes. The following chart provides information on the votes required to elect a director nominee or approve a proposal and the treatment of abstentions and broker nonvotes:

VOTING ITEM
VOTE REQUIRED TO ELECT OR APPROVE
TREATMENT OF ABSTENTIONS AND
BROKER NONVOTES
Election of
Directors
Each director must receive a plurality of the votes cast; however, a nominee who does not receive the affirmative vote of a majority of the shares voted in connection with his/her election must promptly tender his resignation from the Board, which the Board will accept unless it determines that it would not be in the Company’s best interests to do so.
No effect
Independent
Auditor
Requires the affirmative vote of the holders of a majority of shares present in person or represented by proxy.
Abstentions have the same effect as a vote against the proposal; brokers may vote undirected shares
Say-on-Pay
Requires the affirmative vote of the holders of a majority of shares present in person or represented by proxy. The vote on this item is nonbinding, but the Board will consider the results of the vote in making future decisions.
Abstentions have the same effect as a vote against the proposal; broker nonvotes will have no effect
Amendment No. 1 to Company’s 2016 Stock Plan
Requires the affirmative vote of the holders of a majority of shares present in person or represented by proxy
Abstentions have the same effect as a vote against the proposal; broker nonvotes will have no effect


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CORPORATE GOVERNANCE

ROLE OF THE BOARD OF DIRECTORS

The Board directs the management of the Company’s business and affairs. The shareholders elect the Board to act on their behalf and to oversee their interests. Unless reserved to the shareholders under applicable law or the Company’s bye-laws, all corporate authority resides in the Board as the representative of the shareholders.

The Board selects and appoints executive officers to manage the day-to-day operations of the Company, while retaining ultimate oversight responsibilities. Together, the Board and management share an ongoing commitment to the highest standards of corporate governance and ethics. The Board reviews all aspects of our governance policies and practices, including the “Board Guidelines on Significant Corporate Governance Issues” (the “Governance Guidelines”) and the Company’s “Code of Business Conduct”, at least annually and makes changes as necessary. The Governance Guidelines and the Code of Business Conduct along with all committee charters are available on the Company’s website at www.nabors.com.

OVERVIEW OF KEY GOVERNANCE TOPICS

Director Independence

The Governance and Nominating Committee conducts a review at least annually of the independence of each member of the Board and its committees and reports its findings to the full Board. As permitted by the rules of the NYSE, the Board has adopted categorical standards to assist it in making determinations of director independence. These standards incorporate and are consistent with the independence requirements of the NYSE and are set forth in our Governance Guidelines available on our website at www.nabors.com. In addition to these standards, the Board also reviews each of the transactions, relationships and arrangements described under “Certain Relationships and Related-Party Transactions” below, as well as social and other relationships, in determining whether a director is independent.

Upon the recommendation of the Governance and Nominating Committee, the Board has determined that each director of the Board during 2017, other than Mr. Petrello, is independent. The Board has also determined that each member of our Audit, Compensation and Governance and Nominating Committees meets the independence standards established for these committees by the NYSE and the rules and regulations of the SEC.

Director Nominations

The Governance and Nominating Committee, in consultation with the CEO, recommends director candidates to the full Board. The Governance and Nominating Committee considers the entirety of each candidate’s credentials including, especially, the ability of each candidate to assist the Board in fulfilling its fiduciary duties to the Company and its shareholders. See “Item 1: Election of Directors” below for a more complete discussion of the criteria used to select director nominees.

Shareholder Nominations and Proxy Access Policy

The Governance and Nominating Committee accepts shareholder recommendations of director candidates and evaluates such candidates in the same manner as other candidates. Shareholders who wish to submit a candidate for consideration by the Governance and Nominating Committee for election at our 2019 annual general meeting of shareholders may do so by submitting in writing the candidate’s name, together with the information described in the Board’s “Policy Regarding Direct Candidates Recommended by Shareholders” available at www.nabors.com. In addition, in July 2017, our Board amended the Company’s proxy access policy to permit up to 20 shareholders owning three percent or more of our outstanding common stock for at least three years to nominate and include in our proxy materials nominees representing up to 20% of the Board, as detailed in the policy, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in the policy. Submissions to the Board should be delivered in person or by courier to the address on the notice of meeting appearing at the beginning of this Proxy Statement or by mail to P.O. Box HM3349, Hamilton, HMPX Bermuda, no later than the date required for shareholder submissions pursuant to SEC Rule 14a-8, as set forth on page 67 of this proxy statement.

Shareholder Communications with the Board

Shareholders and other interested parties may contact any of the Board’s directors, as a group or individually, committees, or independent directors as a group, by writing to them at Nabors Industries Ltd., c/o Corporate Secretary. Communications should be delivered in person or by courier to the address on the notice of meeting appearing at the beginning of this Proxy Statement or by mail to P.O. Box HM3349, Hamilton, HMPX Bermuda. Shareholder communications received in this manner will be handled in accordance with the Board’s “Policy Regarding Shareholder Communications with the Board of Directors” which is available at www.nabors.com. In addition, any concern about the Company's conduct, or a complaint about the Company's accounting, internal control

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or auditing matters, may be communicated directly to the Lead Director, to the outside directors as a group, or to the Audit Committee. Such communications may be confidential or anonymous, and may be submitted in writing in care of the Corporate Secretary, or reported by phone to the Nabors Hotline, established specifically for reporting policy concerns, at 1-877-NABORS7.

Annual Meeting Attendance Policy

The Company encourages all directors to attend the annual general meeting of the shareholders. All six incumbent directors then comprising the full Board attended the 2017 annual general meeting of shareholders.

Executive Sessions of Non-Employee Directors

Our non-employee directors, each of whom the Board has determined is independent, meet in executive session at each regular meeting of the Board, and any executive sessions convened by the Lead Director during the year, without the CEO or any other member of management present. The Lead Director presides over these executive sessions.

Board Leadership Structure

Our Governance Guidelines were modified in 2014 to provide for an independent chairman of the Board following the tenure of our current Chairman and CEO, Mr. Petrello, whose employment agreement provides that he will serve in both roles. Until such time, the Board believes that the current coupling of the chairmanship with an experienced, independent Lead Director creates an effective Board leadership structure for the Company. The Board believes that, as the individual with primary responsibility for managing the Company’s day-to-day operations and with extensive knowledge and understanding of the Company, Mr. Petrello is best positioned to chair regular Board meetings as the directors discuss key business and strategic issues and to focus the Board’s attention on the issues of greatest importance to the Company and its shareholders. Furthermore, combining the roles of Chairman and CEO in Mr. Petrello creates a clear line of authority that promotes decisive and effective leadership, both within and outside the Company. The Board’s current view is that a combined Chairman and CEO position, coupled with a predominantly independent board and a proactive, independent Lead Director, promotes a candid discourse and responsible corporate governance.

Mr. Yearwood will continue to serve as our Lead Director, a position he has held since 2011. The Lead Director’s primary responsibility is to preside over executive sessions of non-employee directors and to call meetings of the non-employee directors as desirable. Such executive sessions provide non-employee directors an opportunity to independently evaluate management and the Company’s operations. In addition, the Lead Director:

chairs certain portions of Board meetings;
serves as liaison between the Chairman and the non-employee directors;
develops and approves, together with the Chairman, the agenda for Board meetings, adding agenda items where he deems appropriate;
leads the Board’s annual self-evaluation; and
performs other duties delegated by the Board from time to time.

The Board believes that the Company’s corporate governance and leadership structures, including the composition of the Board, its committees and the presence of a strong Lead Director, creates the most effective leadership structure for the Company at this time and provides effective independent oversight of the Board itself and management. Both the Chairman and Lead Director serve on the Board’s Executive Committee, and any director may raise a matter for consideration by the Board. This past year, our Lead Director:

partnered with our Chairman, the Chair of the Compensation Committee, and others in extensive communications with significant shareholders regarding governance matters;
traveled to the Company’s Dubai office for its October Board meeting and toured the SANAD facility and operations in the Kingdom of Saudi Arabia with our partner, Saudi Aramco;
provided input and guidance on strategy and growth directly to management in operations; and
supported the Continuing Education program for directors and arranged for an in-depth training session on cyber-security.

The Board believes that Mr. Yearwood’s extensive management experience in the industry and effective performance in the role of Lead Director qualify him to continue to serve in that capacity.

Board’s Role in Risk Oversight

Our full Board is responsible for risk oversight and has designated the Risk Oversight Committee to provide assistance in fulfilling its oversight responsibilities with respect to the Company’s processes and policies regarding risk assessment and risk management, including the Company’s enterprise risk management, compliance and

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operational control activities. The Risk Oversight Committee currently meets, at a minimum, on a quarterly basis to evaluate the Company’s risk exposure and tolerance. Ms. Beder, our newest director, bolsters the Board’s risk management process through her extensive experience in risk management.

At each meeting, the Risk Oversight Committee receives information from management regarding a variety of matters, including operations, legal, regulatory, finance, internal audit, cyber-security, information technology, and strategy, as well as any material risks associated with each matter. It also receives an update from the Company’s Enterprise Risk Management Committee (“ERMC”) comprised of almost a dozen top executives of the Company from various functions, each of whom supervises day-to-day risk management throughout the Company. This ERMC is not a committee of the Board. The ERMC is tasked with identifying all potential material risks facing the Company and implements mitigation measures. The ERMC members meet formally throughout the year to define and improve the risk mapping process and implementation. In addition, the Risk Oversight Committee receives an update from the chairman of each of the Company’s committees and in turn provides a comprehensive quarterly risk report to the Board. The Board also has adopted a procedure for employees and shareholders to report concerns about the Company’s conduct, accounting, internal controls and other matters directly to certain members of the Board. In addition, the Board oversees management as management fulfills its responsibilities for the assessment and mitigation of risks and for taking appropriate risks.

The full Board has the opportunity to have extensive interaction with the management team, field and office employees, and customers. The Board uses the opportunities to meet frequently throughout the year. Additionally, the Board held its October Board meeting in the Company’s Dubai office and traveled to the Kingdom of Saudi Arabia to tour the Company’s facilities, have meetings with local area management and employees, and visit a rig working for Saudi Aramco. The Board also held informative meetings with key members of the SANAD board of managers and key Saudi Aramco executives.

SUSTAINABILITY

Sustainability is an essential part of our corporate culture and an integral part of our strategic plans. Through technological innovation, environmental impact planning, corporate safety initiatives and community relations activities, the Company understands that how we conduct business is of equal importance to our results. Our annual sustainability report can be found on our website, www.nabors.com.

CODE OF BUSINESS CONDUCT

The Company has adopted a Code of Business Conduct in accordance with NYSE requirements. All of our employees, including our executive officers, senior management and non-employee directors are required to abide by our Code of Business Conduct, as well as related policies and procedures, to ensure that our business is conducted in a consistently legal and ethical manner. The Code of Business Conduct is posted on our website at www.nabors.com. We intend to disclose on our website any material amendments to the Code of Business Conduct, or waivers from any provision of the Code of Business Conduct that apply to our CEO and CFO.

SHAREHOLDER ENGAGEMENT

In making decisions regarding corporate governance issues, the Board considers shareholder opinions and input, which it obtains in several ways. One way is through advisory votes on executive officer compensation, as well as shareholder and other proposals at our annual general meetings. In addition, our Chairman and Lead Director both maintain contact with a number of significant shareholders on key governance issues. As part of our shareholder outreach effort, we contacted six of our largest shareholders, representing more than 25 percent of our outstanding common stock, to obtain their views on the Company’s corporate governance program. Our Lead Director and Chair of the Compensation Committee and our Vice President of Investor Relations met with four large shareholders, representing more than 17 percent of our shares. Our other directors and certain members of management also participate in those discussions on occasion. Among other benefits, that continuous dialogue affords our directors deeper insight into shareholder concerns than is provided by a vote on individual topics, which we believe enables a more effective response to issues of most importance to shareholders.

During 2017, we engaged in dialogue with approximately 62 shareholders collectively holding approximately 50 percent of our outstanding shares. The Board considered input from these and other shareholders, as well as the

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level of support for each proposal, as part of its overall decision-making process on each issue raised and took actions consistent with many of the proposals. The table below summarizes the Board’s response to the shareholder proposal presented at the 2017 annual general meeting of shareholders.

PROPOSAL
2017
VOTE
COMPANY RESPONSE
Shareholder proposal to allow proxy access to shareholders who have held 3% of Company’s shares continuously for 3 years
66.4%
The Company reviewed shareholder feedback and amended our proxy access policy, in response, to provide for a group of up to 20 shareholders owning 3% or more of our outstanding common stock for at least 3 years to nominate and include proxy access materials for up to 20% of the Board, as detailed in the policy.

MEETINGS OF THE BOARD AND COMMITTEES

The Board met five times during 2017.

The Board has six committees, which report their activities to the Board: (1) the Audit Committee, (2) the Compensation Committee, (3) the Executive Committee, (4) the Governance and Nominating Committee, (5) the Risk Oversight Committee and (6) the Technology and Safety Committee. Appointments to and chairmanships of the committees are recommended by the Governance and Nominating Committee and approved by the Board. Directors are expected to attend all meetings of the Board and committees on which they serve.

Each of our incumbent directors attended over 75 percent of all meetings of the Board and committees on which he or she served during 2017.

The following chart shows the membership and chairmanship of each Board committee and the number of meetings held by each committee, during 2017. The Board will determine committee assignments for the remainder of 2018 shortly after the meeting.

 
AUDIT
COMPENSATION
EXECUTIVE
GOVERNANCE
AND
NOMINATING
RISK
OVERSIGHT(1)
TECHNOLOGY
AND
SAFETY
Tanya S. Beder
(2)
 
 
 
(3)
James R. Crane
 
 
(4)
Chair
John P. Kotts
Chair
 
 
 
Michael C. Linn
 
Chair
 
(4)
 
Anthony G. Petrello
 
 
Chair
 
 
 
Dag Skattum
(2)
 
 
Chair
 
Howard Wolf(5)
 
 
 
 
(4)
(4)
John Yearwood
 
Chair
(4)
Number of Meetings
4
4
0
5
4
4
(1) The Board decided to re-focus the Risk Oversight Committee given the importance of risk management to the strategy and future of the Company. Accordingly, committee members were selected based on their direct experience, as well as other determining factors.
(2) Mr. Skattum tendered his resignation from the Audit Committee on July 27, 2017. He was formally replaced on the committee by Ms. Beder on October 27, 2017.
(3) As of June 6, 2017.
(4) Until June 6, 2017.
(5) Mr. Wolf retired from the Board and all committees effective as of our 2017 annual general meeting of shareholders.

In addition, in 2017, the Audit Committee held one telephonic informational session; the Compensation Committee took action on one occasion by written consent; and the Executive Committee did not meet during 2017, but took action on two occasions by written consent.

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Board Practices and Commitment

The Board typically meets four times a year at a location outside the United States. A typical Board meeting requires at least one, and most times two, overnight stays. The Board targets at least one meeting each year to be held at a key Nabors market location outside the United States. Last year, this meeting took place in Saudi Arabia. This practice allows the Board members to have direct contact with both field level and local management, and facilitates their greater understanding of the challenges and opportunities in various markets. The Board also uses these occasions to meet with customers and receive direct feedback on the Company’s performance and opportunities.

Board meetings, including committee meetings, typically consume collectively about 15 hours of actual meeting time for each trip. Travel times range from 8 hours to as many as 34 hours depending on location. This time commitment is very extensive.

As a policy, Board member participation is virtually always in person and not telephonically. Key management personnel are invited on a rotational basis to make presentations to the Board at almost every meeting. This practice ensures informed contact by the Board members with one another as well as with management.

Given that Board meetings are held outside the U.S., our standard practice is for each director to attend all committee meetings, whether or not a member of that committee. This practice promotes extraordinary depth of knowledge with respect to all Company matters and ensures the Company is taking advantage of the directors’ considerable knowledge, skill and experience.

Board members hold meetings with shareholders, either in person or by telephone, throughout the year. This allows the Board to have direct communication and to discuss all issues that are of importance to the shareholders.

The Company believes these Board practices are among the best in class for corporate governance.

Key Committee Responsibilities

The following table shows the key responsibilities of each Board Committee.

   

AUDIT COMMITTEE
   
 
Oversees the integrity of our consolidated financial statements, system of internal controls, internal audit, financial risk management and compliance with legal and regulatory requirements.
Selects, determines the compensation of, evaluates and, when appropriate, replaces the independent auditor, and preapproves audit and permitted nonaudit services.
Determines the qualifications and independence of our independent auditor and evaluates the performance of our internal auditors and independent auditor.
After review, recommends to the Board the acceptance and inclusion of the annual audited consolidated financial statements in our annual report on Form 10-K.
Conducts information sessions in connection with the Company’s quarterly earnings releases and other matters.
   
 
All members of the Audit Committee were determined to meet the independence, financial literacy and experience requirements of the NYSE and SEC rules and regulations. The Board has also determined that Messrs. Kotts and Yearwood and Ms. Beder are “audit committee financial experts” as defined under SEC rules.
   
 
The Audit Committee operates under a written charter adopted by the Board, and which is available on the Corporate Governance page of Nabors’ website at www.nabors.com.
   

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COMPENSATION COMMITTEE
   
 
Reviews and approves the compensation of our executive officers and other senior leaders.
Oversees the administration of our equity-based compensation plans for officers and employees.
   
 
All members of the Compensation Committee were determined to meet the independence standards of the NYSE.
   
 
The Compensation Committee operates under a written charter adopted by the Board, and which is available on the Corporate Governance page of Nabors’ website at www.nabors.com.
   

   

EXECUTIVE COMMITTEE
   
 
As necessary between meetings of the Board, exercises all power and authority of the Board overseeing the management of the business and affairs of the Company.
   

   

GOVERNANCE AND NOMINATING COMMITTEE
   
 
Identifies and recommends candidates for election to the Board.
Establishes procedures for the committee’s oversight of the evaluation of the Board.
Recommends director compensation.
Reviews corporate governance policies annually.
Reviews and approves any related-party transactions involving directors and executive officers.
   
 
All members of the Governance and Nominating Committee were determined to meet the independence standards of the NYSE.
   
 
The Governance and Nominating Committee operates under a written charter adopted by the Board, and which is available on the Corporate Governance page of Nabors’ website at www.nabors.com.
   

   

RISK OVERSIGHT COMMITTEE
   
 
Monitors management’s identification and evaluation of major strategic, operational, regulatory, information and external risks inherent in the Company’s business.
Reviews the integrity of the Company’s systems of operational controls, regarding legal and regulatory compliance.
Reviews the Company’s processes for managing and mitigating operational and enterprise risk.
   
 
The Risk Oversight Committee operates under a written charter adopted by the Board, and which is available on the Corporate Governance page of Nabors’ website at www.nabors.com.
   

   

TECHNOLOGY AND SAFETY COMMITTEE
   
 
Reviews the Company’s strategic technology positions, including intellectual property, patents, and trademarks.
Monitors the Company’s compliance with health, safety and environmental standards.
Reviews the Company’s safety performance and strategic technology position.
   
 
The Technology & Safety Committee Charter Committee operates under a written charter adopted by the Board, and which is available on the Corporate Governance page of Nabors’ website at www.nabors.com.
   
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ITEM 1: ELECTION OF DIRECTORS

Each of the nominees for director who is elected at the meeting will serve a one-year term, expiring at the next annual general meeting of shareholders or until such later time as such director’s successor is duly elected and qualified. At the meeting, proxies cannot be voted for a greater number of individuals than seven. The directors standing for election have been nominated by the Board, upon the recommendation of the Governance and Nominating Committee, to serve until the 2019 annual general meeting of shareholders, or until such later time as their successors are duly elected and qualified. Each of the nominees has agreed to serve as a director if elected, and we do not anticipate that any will be unable or unwilling to stand for election. If that were to occur, your proxy will be voted for another person nominated by the Board.

CRITERIA

Ensuring effective, ethical, oversight of the Company and its operations, and in the implementation of its strategic goals, is the Board’s top priority. To accomplish this the Board, through the Governance and Nominating Committee, seeks director nominees that have demonstrated exceptional skills, qualifications, attributes, and experience. In identifying and recommending director nominees, the Governance and Nominating Committee places primary emphasis on the following criteria:

Reputation, integrity and independence (for non-employee directors);
Judgment and diversity of viewpoints, backgrounds and experience, including gender, race and age;
Business or other relevant experience;
The extent to which the interplay of the nominee’s expertise, skills, knowledge and experience with that of the other members of the Board will result in an effective Board that is responsive to the Company’s needs; and
For director nominees who are current directors, history of attendance at Board and committee meetings, as well as preparation for, participation in and contributions to the effectiveness of those meetings.

These criteria include those set forth in our Board Guidelines on Significant Corporate Governance Issues, which are available on our website at www.nabors.com and to any shareholder who requests them in writing. Requests should be addressed to the Corporate Secretary and delivered in person or by courier to the address on notice of meeting appearing at the beginning of this Proxy Statement, or by mail to P.O. Box HM3349, Hamilton, HMPX Bermuda.

The Governance and Nominating Committee believes that each nominee should be evaluated on his or her individual merits, taking into account the needs of the Company at any given time as well as the overall composition of the Board. There are certain criteria that are expected of all director nominees. For example, all nominees are expected to have high integrity and a reputation of success in his or her field. In addition, all nominees are expected to have the time and ability to fulfill his or her responsibilities to the Company and its shareholders, if elected. Other than these basic criteria, however, the Board does not set universal minimum qualifications that all nominees must meet in order to be recommended. Rather, using the broad criteria set out above, the Board identifies specific skills and qualifications that may be beneficial at any given time – including those that are determined to be necessary for committees of the Board to fulfill their respective individual mandates – which the Governance and Nominating Committee in turn utilizes to determine whether a given director nominee is qualified to serve on our Board. Members of the Governance and Nominating Committee then discuss and evaluate possible candidates in detail and suggest individuals to explore in greater depth. Accordingly, while we believe that each director meets the broad criteria for inclusion as a director nominee, he or she undoubtedly does so in a way specific to that director. The Board, together with the Governance and Nominating Committee, believes this approach helps to ensure a diversity of viewpoints and experience that enables the Board, and the Company, to maintain the highest levels of corporate governance and oversight. The Governance and Nominating Committee has discretion to engage outside consultants to help identify candidates and also considers suggestions from shareholders, as described in our Governance Guidelines.

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DIRECTOR NOMINEE SNAPSHOT


 
Beder
Crane
Kotts
Linn
Petrello
Skattum
Yearwood
Skills & Experience
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Board of Directors Experience
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oilfield Services Industry Experience
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Drilling
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oil and Gas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CEO / Business Head
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Finance / Capital Allocation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial literacy / Accounting
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment Banking
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Manufacturing
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate Governance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Technology / Systems
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Logistics
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Academia/Education
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Board Tenure
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Years
 
1
 
 
6
 
 
5
 
 
6
 
 
27
 
 
4
 
 
8
 

Over the past several years, the Governance and Nominating Committee has nominated qualified new independent directors to provide fresh perspectives to the Board. The average tenure of the independent director nominees is a mere five years. The Committee believes that Board tenure and directors with many years of service provide the Board with a deep knowledge of the Company, while newer directors lend fresh perspectives.

Last year, the Board reiterated its dedication to attaining a diverse composition of members. The Governance and Nominating Committee believes that the Board should include appropriate expertise and reflect gender, cultural and geographical diversity, as appropriate, in light of the entire Board’s current composition and range of diversity. To that end, Ms. Tanya S. Beder was nominated and voted onto the Board. More important than her gender, however, is the considerable experience, expertise and insight she brings to the Board, as identified in her professional biography set forth under “—Director Nominees” below. The members of the Governance and Nominating Committee recommended the re-nomination of all continuing director nominees. The full Board has agreed with the recommendations of the Governance and Nominating Committee and nominated each of Ms. Beder and Messrs. Crane, Kotts, Linn, Petrello, Skattum and Yearwood for re-election.

The members of the Governance and Nominating Committee, as well as the full Board, believe that the combination of the various qualifications, attributes, skills, and experience of the director nominees will contribute to an effective and well-functioning Board and that, individually and as a whole, the director nominees possess the necessary qualifications and expertise to provide effective oversight of the Company and its business.

In the business descriptions that follow, except as otherwise noted, the companies for which directors have worked are not a parent, subsidiary or otherwise affiliated with the Company.

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DIRECTOR NOMINEES


TANYA S. BEDER
   
Director since: June 7, 2017
Age: 62
   
Committees: Audit, Risk Oversight, and Technology and Safety
   
Other Public Company Boards: 1
Ms. Beder has served as a member of the CYS Investments, Inc. Board of Directors since May 2012, where she chairs the Nominating and Governance Committee and is also a member of the Audit and Compliance Committee. She currently serves as the Chairman and CEO of SBCC Group, Inc. (“SBCC”), which she founded in January 1987. SBCC is an independent advisory firm whose projects include assisting corporate management, institutional investors, large financial firms and other clients in solving complex financial problems under crisis and providing strategic advice to seize opportunities. Ms. Beder has served since 2011 on the board of the American Century mutual fund complex in Mountain View, California, where she chairs the Risk Committee and is a member of the Portfolio Committee. Previously, Ms. Beder was the Chief Executive Officer of Tribeca Global Management LLC, a $2.6 billion dollar fund with operations in Singapore, London, and New York; Managing Director of Caxton Associates LLC, a $10 billion asset management firm; and President of Capital Market Risk Advisors, Inc., which she co-founded. Ms. Beder also spent time in various positions with The First Boston Corporation (now Credit Suisse) where she was a part of the first team of derivatives traders and structurers for currency and interest rate swaps, caps, collars, floors, futures, and options, and was on the mergers and acquisitions team in New York and London. In January 2013, she was appointed to the President’s Circle of the National Academies, after serving six years at the National Academy of Sciences on the Board of Mathematics and their Applications. Ms. Beder also serves on the Advisory Board of the Columbia University Financial Engineering Program, the Mathematical Finance Advisory Board of New York University and The Institute for Pure and Applied Mathematics at UCLA and is a Board Member Emeritus of the International Association of Quantitative Finance, where she previously served as Chairman. She is an appointed Fellow of the International Center for Finance at Yale University and teaches a course on finance and fintech at Stanford University. Ms. Beder holds a B.A. in mathematics and philosophy from Yale University, and an MBA from Harvard Business School.
   
Ms. Beder brings to the Board extensive asset management experience, vast knowledge of operational and risk management, and experience serving on public and private boards of directors. The Board also benefits greatly from Ms. Beder’s audit committee experience and financial expertise.

JAMES R. CRANE
   
Director since: 2012
Age: 64
   
Committees: Executive, Technology and Safety, and Compensation
   
Other Public Company Boards: 1
Chairman and CEO of Crane Capital Group Inc., an investment management company, since 2006.
   
Mr. Crane was Founder, Chairman and Chief Executive Officer of Eagle Global Logistics, Inc., a NASDAQ-listed global transportation, supply chain management and information services company, from 1984 until its sale in August 2007. Crane Capital Group has invested in transportation, power distribution, real estate and asset management. Its holdings include Crane Worldwide Logistics, a premier global provider of customized transportation and logistics services with 105 offices in 30 countries and Crane Freight & Cartage. Mr. Crane also led an investor group that in November 2011 purchased the Houston Astros. He holds a B.S. in Industrial Safety from Central Missouri State University and serves on the board of directors of Western Gas Holdings, LLC, a subsidiary of Anadarko Petroleum Corporation, as well as Cargojet Inc.
   
Mr. Crane’s experience in marketing, logistics, global operations and creating shareholder value provide a valuable resource to the Board. The Board also benefits from Mr. Crane’s proven leadership abilities and experience.
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JOHN P. KOTTS
   
Director since 2013
Age: 67
   
Committees: Audit, Compensation and Risk Oversight
   
Other Public Company Boards: None
Mr. Kotts is a private investor and entrepreneur. Through his management company, J.P. Kotts & Co., Inc., Mr. Kotts also operates a private investment fund focused on the trading of U.S. and international securities and other financial instruments. He also invests in real estate and private equities. Mr. Kotts is currently the owner and CEO of Vesco/Cardinal, an oil tool rental and service company, as well as several manufacturing companies. Mr. Kotts previously held various financial, banking and investment banking positions in companies specializing in leveraged buyouts, venture capital and turnaround transactions. From 1990 to 1998, he owned and operated Cardinal Services, Inc., a leading supplier of liftboat rentals and other production-related services, including mechanical wireline services and plug and abandonment services, to oil companies operating in the Gulf of Mexico. Mr. Kotts previously served on the board of directors for C&J Energy Services Ltd. from March 2015 to September 2015. He holds a B.A. in Philosophy and an MBA in Finance from Hofstra University and completed additional post-graduate work at McGill University in Montréal, New York University and Harvard Business School.
   
Mr. Kotts’ industry background and knowledge, business acumen and financial expertise were the primary factors considered by the Board in deciding to appoint him as a director and nominate him for election to the Board. Mr. Kotts brings to the Board entrepreneurial drive and management skills.

MICHAEL C. LINN
   
Director since 2012
Age: 66
   
Committees: Governance and Nominating, and Compensation
   
Other Public Company Boards: 3
President and CEO of MCL Ventures, LLC, an oil, gas and real estate investment firm, since 2012.
   
Mr. Linn is the former Chairman, CEO, President and Director of LINN Energy, LLC, which he founded. Since 2015 he has served as a director for the general partner of Black Stone Minerals, L.P. He has served as a Senior Advisor for Quantum Energy Partners, LLC since 2012, and previously served as a director for Western Refining Logistics GP. Mr. Linn is on the Board of Managers of Cavallo Mineral Partners, LLC, and has served as a director of Jagged Peak Energy Inc. since January 2017. He serves as a member of the National Petroleum Council’s Board of Directors and as Chairman of the Education Committee of the IPAA. He previously served on the board of directors of C&J Energy Services Ltd., as Non-Executive Director and Chairman of the Safety, Health, Environment, Security and Ethics Committee for Centrica plc, as Chairman and director of the Natural Gas Council, as Chairman of the Independent Petroleum Association of America, as director of the Natural Gas Supply Association, as Chairman and President of each of the Independent Oil and Gas Associations of New York, Pennsylvania and West Virginia, and as Texas Representative for the Legal and Regulatory Affairs Committee of the Interstate Oil and Gas Compact Commission Mr. Linn holds a B.A. in Political Science from Villanova University and a J.D. from the University of Baltimore School of Law.
   
Mr. Linn’s broad understanding of the energy landscape and insight into the needs of our customers, together with his extensive industry knowledge and relationships, provide valuable resources to the Board. The Board also benefits from Mr. Linn’s proven leadership from his experience as a chief executive officer.
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ANTHONY G.
PETRELLO
   
Director since 1991
Age: 63
   
Committees: Executive
   
Other Public Company Boards: None
Chairman of the Board of Nabors and its subsidiary, Nabors Industries, Inc., since 2012 and director of each since 1991; Deputy Chairman of Nabors 2003-2012; President and CEO of Nabors and Nabors Industries, Inc. since 2011; President and Chief Operating Officer of Nabors and Nabors Industries, Inc. from 1991-2011. Mr. Petrello holds a J.D. degree from Harvard Law School and B.S. and M.S. degrees in Mathematics from Yale University. Mr. Petrello also serves as a director of Hilcorp Energy Company.
   
Mr. Petrello brings to the Board a unique operational perspective and thorough knowledge of the Company’s operational activities worldwide. In addition to his operations functions, Mr. Petrello provides strategic planning initiative and direction enabling the Company to adapt and prosper in our dynamic competitive environment.

DAG SKATTUM
   
Director since 2014
Age: 57
   
Committees: Governance and Nominating, and Risk Oversight
   
Other Public Company Boards: 1
Mr. Skattum serves as Vice Chairman, Europe, the Middle East and Africa of JP Morgan since January 2015.
   
Previously, he served as Partner of TPG, a leading global private investment firm, based in London from 2007 until 2013. Prior to that, Mr. Skattum worked for JP Morgan for 21 years in a variety of roles in New York and London until his departure as Managing Director and Co-head of Global Mergers and Acquisitions in 2007. He currently serves on the board of Sonae SGPS S.A. in Portugal, the advisory board of the UAMS Myeloma Institute for Research and Therapy, Little Rock, Arkansas; and the International Board of Directors of Right To Play, a global organization leveraging sports and play to support children in troubled parts of the world. He received a B.A. in History from Allegheny College and an MBA from the Simon Graduate School of Business at the University of Rochester.
   
Mr. Skattum was nominated to the Board in June 2014 upon the recommendation to the Governance and Nominating Committee of our largest shareholders at the time. Mr. Skattum has derived valuable experience throughout his investment banking career working with a variety of different industries throughout the world and advising other boards.

JOHN YEARWOOD
   
Director since 2010
Age: 58
   
Committees: Audit, Governance and Nominating, Executive, and Technology and Safety
   
Other Public Company Boards: None
Mr. Yearwood currently serves on the board of directors of Sheridan Production Partners, Barra Energia, Foro Energy LLC, Dixie Electric LLC and Coil Tubing Partners LLC. He previously served on the boards of Sabine Oil & Gas, LLC, until August 2016, and Premium Oilfield Services, LLC, until April 2017. Until August 2010, he served as the Chief Executive Officer, President and Chief Operating Officer of Smith International, Inc. (“Smith”). He was first elected to Smith’s board of directors in 2006 and remained on the board until he successfully negotiated and completed the sale of Smith to Schlumberger Limited in August 2010. Before joining Smith, Mr. Yearwood spent 27 years with Schlumberger Limited in numerous operations management and staff positions throughout Latin America, Europe, North Africa and North America, including as President and in financial director positions. He also previously served as Financial Director of WesternGeco, a 70:30 joint venture between Schlumberger and Baker Hughes from 2000 to 2004. Mr. Yearwood received a Bachelor of Science Honors Degree in Geology and the Environment from Oxford Brookes University in England.
   
Mr. Yearwood brings significant executive management experience in the oilfield services industry to the Board. His extensive industry knowledge, combined with his keen insight into strategic development initiatives, operations and our competitive environment, have provided the basis for the extraordinary leadership and critical independent oversight Mr. Yearwood demonstrates as Lead Director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THESE NOMINEES FOR
DIRECTOR WITH A TERM ENDING AT THE 2019 ANNUAL GENERAL MEETING.
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OTHER EXECUTIVE OFFICERS


WILLIAM J. RESTREPO
   
Age: 58
CFO of Nabors since March 2014. In this role, Mr. Restrepo has global oversight for finance and accounting, including the treasury, tax, risk management, internal audit and supply chain groups. He also works closely on Nabors’ corporate development and investor relations initiatives.
   
Mr. Restrepo formerly served as Chief Financial Officer at Pacific Drilling S.A. from February 2011 to February 2014. He also previously served as Chief Financial Officer at Seitel from 2005 to 2009 and Smith from 2009 to 2010 until its merger with Schlumberger Limited. Prior to that, from 1985 to 2005, Mr. Restrepo served in various senior financial and operational positions for Schlumberger Limited, including operational responsibility for all product lines in the Continental Europe and Arabian Gulf markets, as well as senior financial executive roles in Corporate Treasury and worldwide controller positions with international posts in Europe, South America and Asia. Mr. Restrepo served on the boards of directors of C&J Energy Services Ltd. from 2015 to 2017, Probe Technology Services from 2008 to 2016, and Platinum Energy Solutions, Inc. from 2012 to 2013. Mr. Restrepo holds a B.A. in Economics and an MBA, both from Cornell University, as well as a B.S. in Civil Engineering from the University of Miami.

MARK D. ANDREWS
   
Age: 45
Corporate Secretary of Nabors since September 2007. Prior to joining Nabors, Mr. Andrews served in various treasury and financial management positions with General Electric Company, a diversified technology and financial services company, beginning in December 2000. Mr. Andrews was employed by the public accounting firm of PricewaterhouseCoopers LLP from September 1996 to November 2000 in a number of capacities, including Tax Manager, within the firm’s Mining and Resource Practice. Mr. Andrews holds a Bachelor of Business Administration degree from Wilfrid Laurier University and is also a Chartered Professional Accountant, Chartered Secretary and a CFA charterholder.

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NON-EMPLOYEE DIRECTOR COMPENSATION

We believe it is essential to attract outstanding non-employee directors and align their economic interest in the Company with other shareholders. We accomplish this through a combination of annual cash retainers and equity incentive awards. Director compensation and benefits are set by the full Board, upon the recommendation of the Governance and Nominating Committee in consultation with the Compensation Committee. Both the Governance and Nominating Committee and the Compensation Committee consist entirely of independent directors, and have the authority to delegate authority to one or more subcommittees. The Company believes that director compensation should be reasonable in light of what is customary for companies of similar size, scope and complexity and should reflect the time, effort and expertise required of directors to adequately perform their responsibilities. The amount of compensation paid or awarded to non-employee directors takes into account the fact that, given the nature of the business and the location of our operations, our directors are required to travel a substantial distance to attend meetings outside of the U.S. These travel obligations often result in the directors having to dedicate a number of days to attending meetings. Directors do not receive additional amounts for attendance at these Board and committee meetings.

Our annual cash retainer is set at $100,000 for each non-employee director; an additional $50,000 for the chairman of each committee (except the chairman of the Audit Committee, whose additional retainer is $100,000); and an additional $50,000 for the Lead Director. In recognition of the significant additional time commitment requested of committee members, the non-Chairman committee members of the Audit Committee and of all other committees (other than the Executive Committee) receive additional retainers of $20,000 and $10,000, respectively.

All cash retainers are paid on a pro rata basis at the end of each quarter. Any director may elect to receive immediately vested stock options, in lieu of any cash compensation, valued at the amount of the payment using the Black-Scholes valuation model. During 2017, Mr. Kotts elected to receive immediately vested options at the end of each quarter, Mr. Skattum elected to receive immediately vested options at the end of the first, second and fourth quarters, and Ms. Beder elected to receive immediately vested options at the end of the second quarter.

In addition to the cash compensation described above, non-employee directors also receive an annual equity incentive award. Beginning in 2015, we rescheduled the annual grant of restricted share awards to non-employee directors, which historically had occurred in the first quarter of each fiscal year, to be made shortly after the annual general meeting of shareholders. This ensures that the awards are granted only to shareholder-elected members for the current year and not to directors who are retiring or otherwise not continuing as directors. In addition, directors who retire from the Board may maintain previously issued equity awards outstanding upon approval by the Governance and Nominating Committee.

Previously, directors were awarded a predetermined number of shares, rather than a nonfluctuating dollar value. Consequently, the value of director compensation varied from year to year and overall director compensation relative to our peer group (as defined under “Compensation Discussion & Analysis—Determination of Peer Group”) would also fluctuate to the extent other directors in that peer group received equity of a predetermined value. During 2016, the Board reviewed this practice for non-employee director compensation in light of market, industry and peer group practices in consultation with Pearl Meyer & Partners, LLC (“Pearl Meyer”), its independent compensation consultant. Following this review, the Board modified its practice. First, the Board eliminated its historical practice of issuing restricted shares to non-employee directors upon initial appointment or election to the Board, as noted above. Second, the Board changed its practice to award directors a predetermined value of shares instead of a predetermined number of shares. Beginning in 2016, each non-employee director has been annually awarded restricted shares under our equity incentive plans having an aggregate “Fair Market Value” of $300,000. Each director award is scheduled to vest ratably over three years, although, beginning with the grant on June 7, 2016, the second and third installments are subject to accelerated vesting under certain conditions. For example, the second installment of the director grant made on June 6, 2017, would accelerate in the event that the per share Fair Market Value (calculated as set forth below) on any date of measurement between the first and second anniversaries of the date of grant equals or exceeds $11.56, which would represent the equivalent of a ten percent (10%) annual compound return from the grant date Fair Market Value for the two (2) year period up to and including the second anniversary of the grant date. The third installment would accelerate in the event that the Fair Market Value on any date of measurement between the first and third anniversaries of the date of grant equals or exceeds $12.71, which would represent the equivalent of a ten percent (10%) annual compound return from the grant date Fair Market Value for the three (3) year period up to an including the third anniversary of the date of grant. For purposes of the awards, Fair Market Value means, as of any date of measurement, the average daily closing price in the NYSE for the twenty (20) trading days prior to the date of measurement. To date, no director awards under either the 2016 or the

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2017 grants have been accelerated pursuant to the aforementioned criteria. Following the annual general meeting of shareholders, assuming shareholder approval of Item 4 we expect to issue restricted shares to our non employee board members with a vesting period of less than three years from the grant date (but at least one year). In addition, we will calculate the number of shares using a “fair market value” equal to our share price on the date of grant (as opposed to a twenty day trading average).

On April 20, 2018, the Board approved, based on the recommendation of the Nominating and Governance Committee, a new director compensation policy that would limit each non-employee director’s individual compensation to a maximum $550,000 per calendar year (the “Non-Employee Director Compensation Limitation”). Under the Non-Employee Director Compensation Limitation, the Board has the authority to make decisions with respect to director compensation within the $550,000 limit; in other words, such compensation may consist of cash, equity or other amounts, but cannot in any event exceed $550,000 per non-employee director per calendar year. In the event the Board wishes to approve or provide compensation that exceeds the limitation, the Board would be required to seek shareholder approval. Although the Board approved the Non-Employee Director Compensation Limitation, it did not increase the amount of compensation currently payable to the Company’s non-employee directors; rather, the $550,000 serves as an outside limitation on the amount of compensation that can be paid to each non-employee director on an annual basis.

The Board also approved and adopted new Director Share Ownership Guidelines. Under the guidelines, each director is required to own Company shares with a value of at least five times the director’s annual cash retainer (exclusive of any portion of the retainer received as a member or chair of any Board committee). Share value for purposes of the guidelines is determined as of the date of grant for vested or unvested restricted share awards or, in the case of open market purchases, the date of acquisition. Each director has three years from the date of his or her first election to the Board by the shareholders to meet the ownership requirements of the guidelines. Each director is currently in compliance with the guidelines or is on schedule to be within the requisite three-year period.

The following table sets forth information concerning total director compensation in 2017 for each non-employee director.

2017 DIRECTOR COMPENSATION TABLE

NAME(1)
FEES
EARNED
OR
PAID IN
CASH ($)
STOCK
AWARDS
($)(2)(3)
OPTION
AWARDS
($)(4)
NON-EQUITY
INCENTIVE PLAN
COMPENSATION
($)
CHANGE IN
PENSION
VALUE AND
NONQUALIFIED
DEFERRED
COMPENSATION
EARNINGS ($)
ALL OTHER
COMPENSATION
($)
TOTAL ($)(5)
Tanya S. Beder
 
63,587
 
 
277,700
 
 
8,241
 
 
0
 
 
0
 
 
0
 
 
349,528
 
James R. Crane
 
164,341
 
 
277,700
 
 
0
 
 
0
 
 
0
 
 
0
 
 
442,041
 
John P. Kotts
 
0
 
 
277,700
 
 
220,000
 
 
0
 
 
0
 
 
0
 
 
497,700
 
Michael C. Linn
 
164,341
 
 
277,700
 
 
0
 
 
0
 
 
0
 
 
0
 
 
442,041
 
Dag Skattum(6)
 
0
 
 
277,700
 
 
127,100
 
 
0
 
 
0
 
 
0
 
 
404,800
 
Howard Wolf(7)
 
56,429
 
 
0
 
 
0
 
 
0
 
 
0
 
 
0
 
 
56,429
 
John Yearwood
 
234,341
 
 
277,700
 
 
0
 
 
0
 
 
0
 
 
0
 
 
512,041
 
(1) Mr. Petrello, who was an employee of the Company throughout 2017, is not included in this table. His compensation is reflected in the Summary Compensation Table under “Executive Compensation Tables” below.
(2) The amounts shown in the “Stock Awards” column reflect the grant-date fair value of restricted share awards, in accordance with FASB ASC Topic 718. Dividends on stock awards are not shown in the table because those amounts are factored into the grant date fair value. On June 6, 2017, upon re-election (or in the case of Ms. Beder, upon her initial election), each non-employee director then on the Board received an award of 31,414 restricted shares as part of his or her annual compensation. The number of restricted shares was determined by dividing the approved award dollar amount of $300,000 by the “Fair Market Value” as that term is defined in the director awards. For purposes of the awards, Fair Market Value means, as of any date of measurement, the average daily closing price in the NYSE for the twenty (20) trading days prior to the date of measurement. The Fair Market Value for the 2017 director awards, measured as set forth above, was $9.55. Because the Fair Market Value is measured over a period of time, rather than on the date of grant, it may be higher or lower than the fair value of the grant as calculated in accordance with FASB ASC Topic 718, which is the value used in this table. The per share grant date value of the 2017 director awards as calculated in accordance with FASB ASC Topic 718 was $8.84, which is the amount reflected in the table above.
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(3) As of December 31, 2017, the aggregate numbers of outstanding unvested restricted share awards held by non-employee directors were: Ms. Beder—31,414; Mr. Crane—59,697 shares; Mr. Kotts—59,697 shares; Mr. Linn—59,697 shares; Mr. Skattum—59,697 shares; and Mr. Yearwood—59,697 shares.
(4) The amounts shown in the “Option Awards” column reflect the grant-date fair value of stock option awards, as calculated in accordance with FASB ASC Topic 718. The only stock option awards granted to non-employee directors during 2017 were to Messrs. Kotts and Skattum and Ms. Beder, each of whom received options in lieu of certain of their quarterly cash retainers. As of December 31, 2017, the aggregate numbers of stock options outstanding were: Ms. Beder—2,982; Mr. Crane—58,463; Mr. Kotts—213,404; and Mr. Skattum—135,647, all of which are fully vested.
(5) The Company believes the total compensation paid to directors is reasonable given the size of the Board and the time commitment required by the individual directors.
(6) Mr. Skattum relinquished his director fees for the 3rd quarter in favor of the Nabors Charitable Foundation Hurricane Harvey relief efforts.
(7) Mr. Wolf retired from the Board on June 6, 2017. Accordingly, fees earned by Mr. Wolf consist of a pro-rata amount of annual retainer fee and committee membership fees in 2017 prior to his retirement.

SHARE OWNERSHIP

Share Ownership of Directors and Executive Officers

We encourage our directors and executive officers to own our common shares in order to align their interests with those of other shareholders. Ownership of the Company’s common shares ties a portion of their net worth to the Company’s share price and provides a continuing incentive for them to work toward superior long-term stock performance. Our policy is for directors to own common shares valued at three times the annual cash retainer paid to non-employee directors, in line with our peers.

As of April 6, 2018, Nabors had 370,300,188 common shares outstanding and entitled to vote. For purposes of the following table, “beneficial ownership” is determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) pursuant to which a person or group of persons is deemed to have “beneficial ownership” of any common shares that such person has the right to acquire within 60 days. The following table sets forth the beneficial ownership of common shares, as of April 6, 2018, by each of our current directors and executive officers, both individually and as a group. Except as otherwise indicated below, each person has sole voting and investment power for the common shares shown below.

 
COMMON SHARES BENEFICIALLY OWNED
BENEFICIAL OWNER(1)
NUMBER OF SHARES
   
PERCENT OF TOTAL
OUTSTANDING(2)
Tanya Beder
 
34,396
 
 
*
 
James R. Crane(3)
 
193,801
 
 
*
 
John P. Kotts(3)
 
478,821
 
 
*
 
Michael C. Linn
 
135,338
 
 
*
 
Anthony G. Petrello(3)(4)
 
12,938,619
 
 
3.47
%
Dag Skattum(3)
 
260,042
 
 
*
 
John Yearwood
 
159,338
 
 
*
 
Mark D. Andrews(3)
 
49,582
 
 
*
 
William J. Restrepo
 
1,243,723
 
 
*
 
All directors and executive officers as a group(3)
 
15,493,660
 
 
4.15
%

* Less than 1%

(1) The address of each of the directors and named executive officers listed above is in care of the Company at the address shown on the notice of meeting at the beginning of this Proxy Statement.
(2) Based on the Company’s total common shares outstanding as of April 6, 2018, the record date for this year’s meeting.
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(3) We have included in the table common shares underlying stock options that are vested or scheduled to vest within 60 days of April 6, 2018. For purposes of computing the percentage of shares held by the persons named above, such option shares are not deemed to be outstanding for purposes of computing the ownership of any person other than the relevant option holder. The number of common shares underlying fully vested stock options, or those vesting within 60 days of April 6, 2018, included in the table are as follows: Mr. Andrews—6,143; Mr. Crane—58,463; Mr. Kotts235,483; Mr. Petrello—2,450,153; Mr. Skattum—151,704; and all directors/executive officers as a group—2,904,928. Restricted share awards are considered outstanding shares and therefore are included in the table above regardless of vesting schedule.
(4) The shares listed for Mr. Petrello include 635,236 shares owned by a charitable foundation over which Mr. Petrello has shared voting and dispositive power. Mr. Petrello disclaims beneficial ownership of those shares.

Share Ownership of Certain Beneficial Owners

The following table contains information regarding each person known to us to beneficially own more than 5% of our outstanding common shares as of April 6 2018, based on Schedule 13G filings made by such persons with the SEC.

BENEFICIAL OWNER
NAME AND ADDRESS
NUMBER OF SHARES
PERCENT OF TOTAL
OUTSTANDING SHARES(1)
BlackRock, Inc.(2)
55 East 52nd Street
New York, NY 10055
 
27,830,232
 
 
7.52
%
Dimensional Fund Advisors LP(3)
Building One
6300 Bee Cave Road
Austin, TX 78746
 
24,769,339
 
 
6.69
%
FMR LLC(4)
245 Summer Street
Boston, MA 02210
 
26,007,647
 
 
7.02
%
Hushang Ansary(5)
c/o Parman Enterprises LLC
1000 Louisiana, Suite 5900
Houston, TX 77002
 
19,000,000
 
 
5.13
%
Morgan Stanley(6)
1585 Broadway
New York, NY 10036
 
20,672,993
 
 
5.58
%
The Vanguard Group(7)
100 Vanguard Blvd.
Malvern, PA 19355
 
25,039,824
 
 
6.76
%
(1) Based upon the Company’s total common shares outstanding as of April 6, 2018.
(2) Based on a Schedule 13G/A filed on January 30, 2018, BlackRock, Inc. and certain of its affiliates have sole voting power with respect to 26,551,052 shares and sole dispositive power with respect to 27,830,232 shares as of December 31, 2017.
(3) Based on a Schedule 13G/A filed on February 9, 2018, Dimensional Fund Advisors LP and certain of its affiliates have sole voting power with respect to 24,253,451 shares and sole dispositive power with respect to 24,769,339 shares as of December 31, 2017. Dimensional Fund Advisors LP serves as investment adviser, sub-adviser and/or manager to certain investment companies, comingled funds, group trusts and separate accounts that own all of the reported shares. According to its Schedule 13G/A, Dimensional Fund Advisors LP disclaims beneficial ownership of such shares.
(4) Based on a Schedule 13G filed on February 13, 2018, FMR LLC and certain of its affiliates have sole voting power with respect to 179,790 shares and sole dispositive power with respect to 26,007,647 shares as of December 31, 2017.
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(5) Based on a Schedule 13G filed on November 6, 2017, Hushang Ansaray, along with certain entities he controls, has sole voting and dispositive power with respect to 11,000,000 shares, and shared voting and dispositive power with respect to 8,000,000 shares as of November 6, 2017. With respect to those same shares, (i) Parman International B.V. and Ennia Caribe Holding N.V. claim shared voting and dispositive power with respect to 8,000,000 shares; (ii) EC Investments B.V. claims shared voting and dispositive power with respect to 6,000,000 shares; and (iii) Banco di Caribe B.V. and BDV Investments B.V. claim shared voting and dispositive power with respect to 2,000,000 shares.
(6) Based on a Schedule 13G/A filed on February 13, 2018, Morgan Stanley and certain of its affiliates have shared voting power with respect to 3,551,527shares and shared dispositive power with respect to 20,402,907 shares. With respect to 18,408,915 of those same shares and based on the same Schedule 13G/A, Morgan Stanley Smith Barney LLC has shared voting power with respect to 1,287,449 shares and shared dispositive power with respect to 18,138,829 shares as of December 31, 2017.
(7) Based on a Schedule 13G/A filed on February 8, 2018, The Vanguard Group and certain of its affiliates have sole voting power with respect to 168,870 shares, shared voting power with respect to 37,305 shares, sole dispositive power with respect to 24,862,208 shares and shared dispositive power with respect to 177,616 shares as of December 31, 2017.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

All of our directors and executive officers are required to file reports of share ownership and reports of changes in ownership with the SEC pursuant to Section 16(a) of the Exchange Act. To our knowledge, and based solely on our review of the copies of Forms 3, 4 and 5 and amendments thereto furnished to us during 2017, and written representations from our directors and executive officers, we believe that all Section 16(a) filing requirements were met for such director and executive officers in 2017 in a timely manner.

CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS

The Board has adopted a written policy regarding the review, approval and ratification of “related-party transactions”. A “related person” is defined under applicable SEC rules and includes our directors, executive officers, beneficial owners of 5% or more of our common shares and each of their immediate family members. Under the written policy, our Governance and Nominating Committee, which is comprised entirely of independent directors, is responsible for reviewing and approving in advance all transactions involving any related party of the Company. In making its determination, the Committee must consider the fairness of the transaction to the Company and the potential impact of the transaction on the director’s independence.

Mr. Crane, an independent director of our Board, is the Chairman and CEO of Crane Capital Group Inc. (“CCG”), an investment management company that indirectly owns a majority interest in several operating companies, some of which have provided services to the Company in the ordinary course of business, including transportation and international logistics. In 2017, the Company’s payments to the CCG companies totaled $14.6 million excluding contract carrier charges, a significant decrease from $22.4 million in 2016 and $33.7 million in 2015, which the Governance and Nominating Committee determined were immaterial to both CCG and the Company. In its determination, the Governance and Nominating Committee considered that:

(1) The Company’s aggregate payment for services to the CCG companies, excluding disbursements passed through at cost of $257,192, constituted less than 2.0% of the consolidated revenue of the CCG companies;
(2) Mr. Crane was not and is not involved in the commercial decisions of either the Company or CCG related to the provision of transportation and logistics to the Company; and
(3) All commercial transactions between the Company and CCG were and are conducted at arm’s length and in the ordinary course of business and involve charges determined by competitive bids.

The Governance and Nominating Committee and the Board considered the totality of the information and concluded that Mr. Crane met both the objective and subjective standards of director independence established by the NYSE, as well as the Board’s Governance Guidelines. The Governance and Nominating Committee and the Board also approved ongoing ordinary-course business transactions between the Company and the CCG companies.

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AUDIT COMMITTEE

The Audit Committee operates under a written charter adopted by the Board. The charter is available on the Company’s website at www.nabors.com. The Audit Committee is responsible for (i) oversight of the quality and integrity of the Company’s consolidated financial statements, the Company’s system of internal controls over financial reporting, and financial risk management, (ii) the qualifications and independence of the Company’s independent registered public accounting firm (independent auditor), (iii) the performance of the Company’s internal auditors and independent auditor and (iv) the Company’s compliance with legal and regulatory requirements with respect to the foregoing. Subject to approval by the shareholders, the Audit Committee has the sole authority and responsibility to select, determine the compensation of, oversee, evaluate and, when appropriate, replace the Company’s independent auditor.

The Audit Committee serves in an oversight capacity and is not part of the Company’s managerial or operational decision-making process. Management is responsible for the financial reporting process, including the Company’s system of internal controls, for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States, and for the assessment of and the report on the Company’s internal control over financial reporting included in the Annual Report. The Company’s independent auditor is responsible for auditing those financial statements and expressing an opinion as to (i) their conformity with such accounting principles and (ii) the effectiveness of the Company’s internal controls over financial reporting. PricewaterhouseCoopers LLP was the Company’s independent auditor in 2017. The Audit Committee’s responsibility is to oversee the financial reporting process and to review and discuss management’s report on the Company’s internal controls over financial reporting. The Audit Committee relies, without independent verification, on the information provided to it and on the representations made by management, the internal auditors and the independent auditor.

During 2017, the Audit Committee, among other things:

Reviewed and discussed the Company’s quarterly earnings releases, quarterly reports on Form 10-Q, and the annual report on Form 10-K, including the consolidated financial statements and the report on internal controls;
Reviewed and discussed the Company’s policies and procedures for financial risk assessment and financial risk management and the major financial risk exposures of the company and its business units, as appropriate;
Reviewed and discussed the annual plan and the scope of work of the internal auditors for 2017 and summaries of the significant reports to management by the internal auditors;
Provided input to the Compensation Committee regarding performance of key finance, internal control and risk management personnel;
Reviewed and discussed with management their reports on the Company’s policies regarding applicable legal and regulatory requirements;
Reviewed, updated and approved the Audit Committee’s charter; and
Met with the independent auditor and the internal auditors in executive sessions and was involved in the selection of the independent auditor’s lead engagement partner.

The Audit Committee reviewed and discussed with management, the internal auditors and the independent auditor the audited consolidated financial statements for the year end December 31, 2017, the critical accounting policies that are set forth in the Company’s annual report on Form 10-K for the year then ended, management’s annual report on the Company’s internal controls over financial reporting, and PricewaterhouseCoopers LLP’s opinion on the effectiveness of the internal controls over financial reporting.

The Audit Committee discussed with the independent auditor matters that independent registered public accounting firms must discuss with Audit Committees under generally accepted auditing standards and standards of the Public Company Accounting Oversight Board (“PCAOB”), including, among other things, matters related to the conduct of the audit of the Company’s consolidated financial statements and the matters required to be discussed by PCAOB Accounting Standards No. 1301 (Communications with Audit Committees). This review included a discussion with management and the independent auditor of the quality (not merely the acceptability) of the Company’s accounting principles, the reasonableness of significant estimates and judgments, and the disclosures in the Company’s consolidated financial statements, including the disclosures related to critical accounting policies.

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The independent auditor also provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB and represented that it is independent from the Company. The Audit Committee discussed with the independent auditor its independence from the Company, and considered whether services it provided to the Company beyond those rendered in connection with its audit of the Company’s annual consolidated financial statements included in its annual report on Form 10-K, reviews of the Company’s interim condensed consolidated financial statements included in its quarterly reports on form 10-Q, and its opinion on the effectiveness of the Company’s internal controls over financial reporting were compatible with maintaining its independence.

The Audit Committee also reviewed and preapproved, among other things, the audit, audit-related, tax and other services performed by, and related fees of, the independent auditor. The Audit Committee received regular updates on the amount of fees and scope of audit, audit-related, tax and other services provided.

Based on the Audit Committee review and these meetings, discussions and reports discussed above, and subject to the limitations on its role and responsibilities referred to above and in the Audit Committee charter, the Audit Committee recommended to the Board that the Company’s audited consolidated financial statements for the year ended December 31, 2017, be included in the Company’s annual report on Form 10-K. The Audit Committee also selected PricewaterhouseCoopers LLP as the Company’s independent auditor for the year ending December 31, 2018, which it believes is in the best interest of the Company and/or shareholders, and is presenting that selection to shareholders for approval at the meeting.

Respectfully submitted,

THE AUDIT COMMITTEE
John P. Kotts, Chairman
Tanya S. Beder
John Yearwood

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ITEM 2: APPROVAL AND APPOINTMENT OF INDEPENDENT AUDITOR AND AUTHORIZATION FOR THE AUDIT COMMITTEE TO SET THE INDEPENDENT AUDITOR’S REMUNERATION

PricewaterhouseCoopers LLP served as independent auditors for the Company for the year ended December 31, 2017. PricewaterhouseCoopers LLP or its predecessor has been our independent auditor since May 1987.

Under Bermuda law, our shareholders have the responsibility to appoint the independent auditor of the Company to hold office until the close of the next annual general meeting and to authorize the Audit Committee of the Board to set the independent auditor’s remuneration. At the meeting, the shareholders will be asked to approve the appointment of PricewaterhouseCoopers LLP as our independent auditor for the year ending December 31, 2018, and to authorize the Audit Committee to set the independent auditor’s remuneration. The selection of PricewaterhouseCoopers LLP as our independent auditor for the year ending 2018 was approved by the Audit Committee in February 2018.

Representatives of PricewaterhouseCoopers LLP will be present at the meeting with the opportunity to make a statement if they desire to do so and to respond to appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 2, THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITOR OF THE COMPANY AND AUTHORIZATION OF THE AUDIT COMMITTEE TO SET THE INDEPENDENT AUDITOR’S
REMUNERATION

AUDIT COMMITTEE PREAPPROVAL POLICY

The Audit Committee has established a pre-approval policy for all audit and permitted nonaudit services (including the fees and terms thereof) to be performed for the Company by the independent auditor. The Chairman of the Audit Committee may preapprove permissible proposed nonaudit services that arise between committee meetings, provided that the decision to preapprove the service is reported to the full Audit Committee at the next regularly scheduled meeting. During 2017, all audit and nonaudit services performed by the independent auditor were subject to the pre-approval policy.

INDEPENDENT AUDITOR FEES

The following table summarizes the aggregate fees for professional services rendered by PricewaterhouseCoopers LLP. The Audit Committee preapproved all fees for 2017 and 2016 services.

 
2017
2016
Audit Fees
$
5,223,860
 
$
4,897,263
 
Audit-Related Fees
 
128,300
 
 
1,800
 
Tax Fees
 
1,159,249
 
 
1,053,844
 
All Other Fees
 
0
 
 
0
 
Total
$
6,511,409
 
$
5,952,907
 

Audit Fees for the years ended December 31, 2017 and 2016, respectively, include fees for professional services rendered for the audits of the consolidated financial statements of the Company and the audits of the Company’s internal control over financial, in each case as required by Section 404 of the Sarbanes-Oxley Act of 2002 and applicable SEC rules, statutory audits, consents and accounting consultation attendant to the audit.

Audit-Related Fees for the years ended December 31, 2017 and 2016, respectively, include consultations concerning financial accounting and reporting standards.

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Tax Fees for the years ended December 31, 2017 and 2016, respectively, include services related to tax compliance, including the preparation of tax returns and claims for refund, and tax planning and tax advice. The increase in tax fees year-over-year was primarily related to transfer pricing services.

All Other Fees for the years ended December 31, 2017 and 2016 respectively, include nonrecurring advisory services with respect to corporate process improvements, as well as market data research.

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COMPENSATION DISCUSSION AND ANALYSIS

This compensation discussion and analysis (“CD&A”) is intended to help you understand our executive compensation practices and decisions we made in 2017 relating to the named executive officers listed below (the “executive officers”). This CD&A supplements and should be read in conjunction with the tables and related narratives of this Proxy Statement.

NAMED EXECUTIVE OFFICERS

Anthony G. Petrello,Chairman of the Board, President and Chief Executive Officer
William J. Restrepo,Chief Financial Officer
Mark D. Andrews,Corporate Secretary

EXECUTIVE SUMMARY

2017 PERFORMANCE HIGHLIGHTS

During 2017, the Compensation Committee continued to implement its compensation philosophy and goals by seeking to closely align the overall compensation of our executive officers to the Company’s short- and long-term business objectives which, for 2017, were specifically designed to strengthen our market presence and penetration and augment shareholder value. As a result, despite challenging industry conditions, our executives capitalized on value-add opportunities and delivered on a number of strategic initiatives in 2017, including:

Launching SANAD, our joint venture with a subsidiary of Saudi Arabian Oil Company, solidifying our long-standing position as a market leader in what is considered to be the most important oil and gas region in the world;
Acquiring Tesco Corporation, which combines our two companies’ exceptional talent and technologies to strengthen our ability to accelerate the growth of Nabors Drilling Solutions and provide a more integrated offering;
Acquiring Robotic Drilling Systems AS, with its advanced robotic systems and expertise, accelerating our automation initiatives;
Expanding our real-time drilling analytics, providing for further improvements in drilling efficiency;
Introducing our PACE®-M1000 rigs as well as modernizing our L48 rig fleet, solidifying our position as an industry leader; and
Expanding our Nabors Drilling Solutions offering, including performance drilling tools, wellbore placement technologies and other value-add services.

CEO “REPORTED” VS. “REALIZED” SHARE-BASED COMPENSATION

As part of our on-going shareholder outreach program as further described below, some of our shareholders requested a clearer and more concise explanation regarding the structure, design and long-term impact of our CEO’s equity-based compensation granted over the last 3 years. In particular, certain of our shareholders expressed a desire to better understand how our CEO’s equity-based compensation as reported in our proxy statement compares to the value actually paid to him in subsequent years.

The difference between these two concepts is often referred to as “reported” versus “realized” pay. Reported pay refers to the value reported in the compensation tables required under Item 402 of Regulation S-K, which we calculate based on applicable SEC rules and guidance. Realized pay refers to the value of compensation received by the executive as of the applicable vesting date.

In reviewing the compensation information provided in this proxy statement, it is important for shareholders to note, that all annual cash bonus and equity compensation is performance based. Equity awards to our CEO are in two categories, TSR Shares and Performance Shares, the realization of which are both conditioned upon the CEO’s performance. In addition, the target grant date value shown for the TSR Shares and Performance Shares granted to

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our CEO each year is not necessarily the actual compensation received by Mr. Petrello in respect of those awards. It is also important to note that, only after the satisfaction of the applicable performance goals, Performance Shares granted will vest ratably over three years following the grant date, subject to Mr. Petrello’s continued employment with us (subject to certain exceptions in connection with involuntary employment terminations).

The table below compares the grant date values as reported in previous years’ proxy statements to the fair market value of the shares on the applicable vesting date. To calculate this value, we multiplied the number of shares vesting by the closing price of our common stock on the applicable vesting date.

TSR SHARES
Key Features:
   
 
We grant the maximum number of shares eligible to vest at the beginning of the performance period, and the value shown in our proxy tables is based on the probable outcome of the percentage of vesting of such shares using the Monte Carlo probability model; however, TSR Shares will only vest to the extent our relative TSR performance meets certain threshold levels, and any shares that do not vest will be forfeited
   
 
Vesting based on the Company’s TSR performance relative to the peer group measured over a 3-year period
   
 
Minimum performance criteria must be met in order for any TSR Shares to vest
   
 
Cap on the maximum number of TSR shares eligible to vest in respect of a performance period
   
YEAR
REPORTED
REPORTED GRANT DATE
VALUE
VALUE OF SHARES THAT VESTED AT THE END OF THE PERFORMANCE PERIOD*
% CHANGE FROM
REPORTED
VALUE
2014
$3,356,826
$2,895,473
13.7% decrease
in value
2015
$3,787,224
$1,203,745
68.2% decrease
in value
2016
$3,353,662
Performance Period ends 12/31/2018
N/A

   

PERFORMANCE SHARES
Key Features:
   
 
Number of restricted shares granted based upon the achievement of certain pre-determined financial or operational performance goals measured over the one-year performance period prior to the year such shares are granted (i.e., 2017 Performance Share grant was based on achievement of performance goals during 2016)
   
 
Once granted, the vesting of Performance Shares remains subject to a 3-year vesting period following the grant date
   
 
Minimum performance threshold applies before any Performance Shares can be granted
   
 
Subject to a maximum award amount
   
YEAR REPORTED
REPORTED GRANT DATE
VALUE
AGGREGATE VALUE REALIZED
ON VESTING*
% CHANGE FROM
REPORTED
VALUE
2014
$6,460,000
$4,312,717
33% decrease
in value
2015
$5,201,428
$3,694,593
29% decrease
in value
2016**
$7,455,107
$7,400,926
~1% change
* Values shown do not take into account shares tendered back to the Company to cover applicable tax withholdings.
** Aggregate Value Realized on Vesting for 2016 Performance Shares assumes that the Performance Shares vested in full on December 29,2017 based on our closing stock price on that date.
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OUR 2017 SAY-ON-PAY AND SHAREHOLDER OUTREACH

At our 2017 Annual Meeting, only 43.73% of votes cast voted in favor of our 2017 executive compensation program. We were disappointed in this result and continue to be concerned with the relatively low level of support that our executive compensation program has received from our shareholders in the past. Although the Board has a practice of engaging in shareholder outreach efforts each year to address a variety of corporate governance topics (including compensation), given this low level of support, the Board was eager to hear investors’ specific views on our executive compensation programs. As part of our shareholder outreach effort, we contacted six of our largest shareholders, representing more than 25 percent of our outstanding common stock, to obtain their views on the Company’s corporate governance program. Our Lead Director and Chair of the Compensation Committee (both of whom are independent) and our Vice President of Investor Relations met with four large shareholders, representing more than 17 percent of our outstanding common stock. Other independent directors and certain members of management also participated in certain of those discussions. During these meetings, our representatives encouraged investors to share specific concerns and feedback relating to our executive compensation programs. This feedback included:

Provide more clear and concise disclosure of compensation designs and outcomes (including a more linear discussion of the objectives vs. related payouts);
When making compensation decisions, take into account any potential loss in shareholder value measured over the year in question, even where other financial metrics may have been strong; and
Consider capping the vesting of TSR Shares in situations where the Company’s total shareholder return, or TSR, was negative.

The Compensation Committee gives serious consideration to the views and opinions of our shareholders, and in the past has taken steps to address shareholder concerns that are specific to compensation issues. The Board hopes that shareholders will take into account the following Company considerations and responses in connection with this feedback:

SHAREHOLDER CONCERN
COMPANY CONSIDERATIONS AND RESPONSES
Vesting of TSR Shares Should be Capped When Nabors’ TSR is Negative
The terms of our TSR Share program were heavily negotiated in connection with entering into employment agreements with our CEO and CFO.
   
 
TSR Shares are only earned to the extent that our TSR, when compared to that of our peer group, exceeds certain levels, and therefore the vesting of these awards is based on measurable performance criteria.
   
 
The actual value realized from TSR shares is dependent not only upon the number of shares earned based on relative performance, but also upon the stock price at the time of vesting. As a result, realized value is already negatively impacted by any decline in TSR from grant date through vesting date.
   
 
The Compensation Committee is considering ways to enhance the design features of our TSR Shares for the future in order to better align TSR Share vesting with our stock performance.
Give Greater Consideration to Shareholder Losses When Making Compensation Decisions for Given Year
Although our executives capitalized on value-add opportunities and delivered on a number of strategic initiatives in 2017, in light of our stock performance during the year, the Compensation Committee did not approve any special or discretionary bonuses during 2017.
Lack of Clear and Concise Disclosure Regarding Compensation Programs
Provided more streamlined disclosure of design features of the various elements of our compensation programs, together with greater visibility into targets and thresholds, including emphasizing the performance-based nature of our TSR and Performance Shares.

The Compensation Committee hopes that shareholders will consider these highlights, as well as the other positive attributes of our compensation program, when casting their say-on-pay votes at the 2018 annual general meeting of shareholders.

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PAY MIX BREAKDOWN

Our goal is to align our executives with our shareholders by providing by providing appropriate incentives to achieve our business objectives and to drive growth in shareholder value. We achieve this alignment by providing a mix of performance-based cash and equity awards designed to reward superior performance and achievement of specific short- and long-term business objectives.

In 2017, approximately 86% of our CEO’s annual target compensation, approximately 80% of our CFO’s target compensation, and approximately 43% of our other executive officer’s target compensation was performance-based. The target allocation of 2017 compensation for our CEO, CFO and other executive officer is shown in the charts below.


For purposes of the above illustration, “target compensation” is comprised of base salary, annual performance bonus, and long-term performance-based equity incentives.

COMPENSATION PRINCIPLES AND PRACTICES

The Compensation Committee strongly believes that executive compensation should be set at levels appropriate to attract, motivate, reward and retain talented leaders and should be closely aligned to Company performance.

In 2017, we continued to adhere to compensation practices that we believe strengthen the link between the compensation of our executive officers and the performance of our business:

WHAT WE DO
 
 
WHAT WE DON’T DO

Independent Compensation Committee – We have oversight by a Compensation Committee comprised of only independent directors
 
 

No excessive perquisites without a compelling business rationale

Independent Compensation Consultant – Our compensation committee engages an independent compensation consultant
 
 

No repricing of underwater stock options without shareholder approval

Pay for performance – Tie a majority of executive compensation to performance with specific, measurable financial and operational objectives
 
 

No excise tax gross-ups in connection with a change-of-control, and it is our policy not to include any such tax gross-ups in any future executive officer agreements

Share ownership policy – Require our CEO and CFO to hold shares equal in value to five times and three times base salary, respectively
 
 

No discretionary bonuses except in the case of extraordinary specific developments that materially enhance the value of the company
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Capped severance – Adopted a policy limiting severance payments in our executive agreements to 2.99x the sum of average base salary and bonus for 3 years prior to termination
 
 
 
 

Annual say-on-pay vote – Conduct annual say-on-pay non-binding advisory votes
 
 
 
 

KEY COMPONENTS OF EXECUTIVE COMPENSATION

Our executive compensation structure is designed to attract and retain exceptional talent and incentivize achievement of our strategic business goals, including maximizing long-term shareholder value.

CORE OBJECTIVES

We have designed a compensation program for our executives that embodies these core objectives:

Aligning management’s interests with the long-term interests of shareholders by tying a significant portion of compensation to growth in shareholder value;
Attract, motivate and retain experienced leaders who are critical to the success of our business;
Provide compensation that rewards performance and drives achievement of key financial and strategic business objectives;
Maintain an appropriate balance between short- and long-term business goals; and
Limit perquisites and other non-performance based elements of compensation.

Our executive compensation program consists of three main components that reflect our compensation philosophy:

1. Annual base salary;
2. A capped performance-based cash award under our shareholder-approved Incentive Plan (as defined below) (“annual performance bonus”); and
3. Capped long-term performance-based equity incentive awards, consisting of performance shares that are subject to annual performance goals (“Performance Shares”) and long-term performance shares subject to achievement of Total Shareholder Return relative to our peers over a three year period (“TSR Shares”).

An appropriate mix of these key components, which are discussed in more detail below, enables us to remain competitive within our industry while ensuring that our executive officers are appropriately incentivized to deliver shareholder value. Although restricted shares granted to our CEO are all performance based and are only earned if the underlying performance goal is achieved, in order to address shareholder requests for a better understanding of the differences between our annual performance shares and our long term TSR performance shares, we have separately described these awards in the following discussion.

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COMPENSATION
ELEMENT
LINK TO COMPENSATION
PHILOSOPHY
KEY DESIGN FEATURES
Base Salary
•   Base level of compensation critical
     to attracting and retaining top talent
   
•   Rewards the skill and expertise that
     our executive officers contribute to
     the Company on a day-to-day basis
•   CEO base salary aligned with
     median market levels based on
     Peer Group (as defined later in this
     CD&A)
   
•   Determined based on a variety of
     considerations, including
     performance, experience level,
     additional responsibilities, internal
     equity, and retention risk
Annual Cash Incentive
(the “Incentive Plan”)
•   Annual cash incentive designed to
     focus executive officers on
     achieving specific performance
     measures and to reward successful
     outcomes
   
•   Competitive opportunity aids with
     attraction and retention of top talent
   
•   Aligns executives with shareholders
     by placing a significant portion of
     annual compensation at risk
     for achievement of key near-term
     strategic and financial performance
     goals that are critical
     to long-term growth
Mr. Petrello & Mr. Restrepo
   
•   For 2017, based 100% on
     adjusted EBITDA
   
     •     Threshold:   $455 Million
   
     •     Target:      $650 Million
   
     •     Maximum:   $780 Million
   
•   No award will be earned unless
     threshold level performance is
     achieved.
   
Mr. Andrews’ annual cash incentive bonus is determined based on quantitative goals established by the Committee at the beginning of each annual performance period.
Performance Shares
•   Aligns executives with shareholders
     by tying a significant portion of
     compensation to achievement of
     strategic objectives critical
     to long-term growth
   
•   Reinforces alignment by awarding
     compensation in the form of equity
   
•   Reinforces retention by vesting
     earned awards over a three year
     period
•   Shares earned based on
     achievement of applicable
     performance goals during the
     prior year
   
•   Only granted to the extent the
     applicable performance criteria
     established for the
     1-year performance period have
     been achieved
   
•   Once earned & granted, awards
     vest over an additional
     three year term
TSR Shares
•   Aligns executives with shareholders
     by tying a significant portion of
     compensation to achievement of
     strong relative total shareholder
     return performance over a
     multi-year period
   
•   Reinforces alignment by awarding
     compensation in the form of equity
•   Shares earned based upon TSR
     performance relative to our peers
     over the three years following
     the grant date
   
•   No shares are earned if relative
     performance is below the
     peer group 25th percentile
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COMPENSATION
ELEMENT
LINK TO COMPENSATION
PHILOSOPHY
KEY DESIGN FEATURES
Time-based Restricted Shares (Mr. Andrews only)
•   Time-based vesting elements
     strengthen retention of top talent
   
•   Reinforces alignment with
     shareholders by awarding
     compensation in the form of equity
•   Annual equity grant determined by
     multiplying annual cash incentive
     bonus award by a multiple
     determined for Mr. Andrews based
     upon his position and attainment of
     performance metrics determined at
     the beginning of the annual
     performance period
   
•   Awards vest ratably over 4 years

HOW WE DETERMINE ANNUAL BASE SALARY

Base salary is the fixed portion of an executive’s annual cash compensation. The other compensation components fluctuate and are not guaranteed. The Compensation Committee determines an appropriate level of base salary for our CEO and CFO by taking into account a series of competitive and other factors and conducting a compensation comparison against a pre-selected peer group (the “Peer Group”), which is discussed later in this CD&A. The Compensation Committee makes this initial determination of base salary upon the executive’s initial appointment and periodically reviews its determination, as it deems appropriate, taking into account various factors, including the Company’s performance, market data, industry conditions and shareholder feedback.

The Compensation Committee may also take into account certain competitive factors, which sometimes include:

Compensation levels of similarly-situated executives of other drilling contractors and in the oilfield services sector at companies in our Peer Group;
Necessary levels of compensation to attract and retain highly talented executives from outside the industry; and
A newly hired executive’s salary at his or her most recent place of employment.

The Compensation Committee engaged Pearl Meyer to review our CEO’s target total direct compensation in comparison to the average Peer Group CEO. Upon careful review, the Compensation Committee recommended to the independent members of the Board that no action be taken to amend or terminate our CEO’s employment agreement at the end of its initial term in 2017. As a result, the employment agreement extended automatically for another year. The Compensation Committee determined not to approve an increase in his base salary, other than reversing the 10% decrease that occurred in 2015 through 2016, because his base salary is already postured competitively to the Peer Group comparators.

►   2017 ANNUAL BASE SALARY

Our CEO’s and CFO’s initial annual base salaries are reflected in each of their respective employment agreements as $1.70 million and $650,000, respectively. In 2014, Mr. Petrello received a 3% increase in his annual base salary to $1.75 million. There have been no recent increases or other adjustments in annual base salary for either our CEO or CFO, except for a 10% agreed reduction applicable in 2015 and 2016, which reduction was reversed in 2017. Mr. Andrews does not have an employment agreement. Mr. Andrews’ annual base salary for 2017 was $220,000, reflecting a 4.76% increase after the lifting of the 10% reduction that was in place applicable during 2015 and 2016.

HOW WE DETERMINE ANNUAL PERFORMANCE BONUS

At the beginning of each year, the Compensation Committee sets objective performance measures for the Company as a whole and establishes corresponding performance goals for each participant under the Incentive Plan, including our named executive officers. In structuring the performance measures and goals, the Compensation Committee sets targets for achieving those goals:

Minimum threshold before any annual performance bonus can be earned;
Target award dollar amount to incentivize a specific desired performance level; and
Maximum goal which sets an appropriate limit on the potential annual performance bonus that can be earned.
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At its first meeting following the end of the fiscal year, the Compensation Committee determines whether the performance goals have been attained and approves any cash payment amount based upon the level of achievement of the pre-established annual performance goals.

Pursuant to their respective employment agreements, each of our CFO and CEO are assigned one or more financial or nonfinancial metrics by which their performance is measured for purposes of calculating their annual performance bonus for a given year. Following the end of that year, the Compensation Committee evaluates each executive’s performance against the applicable metric or metrics and determines their cash performance bonus based on the established threshold, target and maximum level(s) for that year. Any results between levels are prorated in calculating the performance bonus.

►   2017 ANNUAL CASH PERFORMANCE BONUS

Pursuant to their respective employment agreements, Mr. Petrello’s annual cash performance bonus is targeted at 100 percent of his base salary ($1.75 million for 2017) and capped at twice his base salary ($3.5 million). Mr. Restrepo’s annual performance bonus is targeted at 100 percent of his base salary ($650,000 for 2017) and capped at twice his base salary ($1.3 million ). In each case, the target opportunity is determined by the Compensation Committee at the beginning of the applicable performance year.

For 2017, Mr. Petrello’s and Mr. Restrepo’s annual cash performance bonus was based on the Company’s targets for adjusted EBITDA1. This performance measure was selected by the Compensation Committee to ensure focus on efficient and profitable operations, preservation of shareholder value through a challenging industry environment, improvement in our competitive position, and to help ensure that we remain properly positioned to capitalize on opportunities for growth. Adjusted EBITDA is a significant consideration used by analysts in evaluating the Company and is therefore, we believe, a key driver of the Company’s share price.

The Compensation Committee established the following targets for Mr. Petrello’s and Mr. Restrepo’s annual performance bonus for 2017:

OBJECTIVE
WEIGHT
TARGET RANGES
PERFORMANCE
ACHIEVED
CASH BONUS EARNED
Adjusted EBITDA
100%
Threshold: $455 Million
   
Target: $650 Million
   
Maximum: $780 Million
Achieved at 83.7% of Target
   
The Company’s adjusted EBITDA for 2017 was $544 million
Because the actual performance falls between payout levels, the bonus is prorated to $1.46 million for Mr. Petrello and $0.54 million for Mr. Restrepo

In the event actual performance falls between payout levels, the annual performance bonus is prorated. In addition, adjustments to targets are permitted as deemed appropriate by the Board to account for significant events that warrant an adjustment. Actual performance for 2017 fell between the threshold and target and the actual payout was calculated using straight line interpolation between these two points. No adjustments to the CEO’s targets were made for 2017.

Mr. Andrews’ annual cash performance bonus is based on the achievement of quantitative performance goals established at the beginning of the annual performance period. For 2017, Mr. Andrews’ performance goals included implementing changes to the Company’s internal equity compensation reporting portals and providing training and structure advice related to the Company’s internal equity compensation reporting and administration procedures.

1 Throughout this Proxy Statement, the term “adjusted EBITDA” is computed by subtracting the sum of direct costs, general and administrative expenses and research and engineering expenses from operating revenues. Adjusted EBITDA is a non-GAAP measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. However, management evaluates the performance of our operating segments and the consolidated company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because we believe that these financial measures accurately reflect our ongoing profitability and performance. Please refer to Annex A to this Proxy Statement for a reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is a GAAP measure.
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LONG-TERM EQUITY INCENTIVES

Pursuant to their employment agreements, our CEO and CFO are eligible only to earn equity awards that are performance based – TSR Shares and Performance Shares. The Performance Shares are earned based on achievement of annual performance goals, and the TSR Shares are earned based on our relative TSR achievement over three years. It is important to note that, in reading the Summary Compensation Table appearing elsewhere herein, compensation amounts represented by Performance Shares appearing in the table represent amounts awarded for performance achieved in the prior year, whereas compensation amounts represented by TSR Shares appearing in the table represent only amounts that may be earned in the future. Mr. Andrews receives only time-based restricted shares.

►   HOW WE DETERMINE OUR PERFORMANCE-BASED TSR SHARES

The Compensation Committee determines the number of TSR Shares that will be granted at the beginning of the applicable three-year performance period. For the 2017 award, Mr. Petrello’s maximum number of shares that may vest is 318,761, calculated by multiplying Mr. Petrello’s base salary on the first day of the performance period of $1.75 million by three, then dividing by the 20 day average closing price of $16.47 on December 31, 2016. For Mr. Restrepo, the maximum number of shares that may vest is 78,931, calculated by multiplying Mr. Restrepo’s base salary on the first day of the performance period of $650,000 by two, then dividing by the 20 day average closing price of $16.47 on December 31, 2016. Pursuant to their respective employment agreements, the target number of TSR Shares is valued at (i) 150% of base salary on the first day of the performance period for Mr. Petrello, and (ii) 100% of base salary on the first day of the performance period for Mr. Restrepo.

TSR Shares will not vest until the end of the applicable three-year performance period, with the level of vesting based on the Company’s TSR ranking compared to the TSR ranking of the companies in the Peer Group measured over this three year period. TSR for the common stock of Nabors and each Peer means the difference between (x) the average closing price for the 30 consecutive trading days prior to the start of the performance period, and (y) the average closing price for the last 30 consecutive trading days during such performance period, as adjusted for dividends paid during such performance cycle.

For TSR Shares granted in 2017, the target number of TSR Shares will vest if the Company ranks at the median of the Peer Group for TSR during the period 2017 through 2019. If the Company ranks in the first quintile, TSR Shares will vest at the maximum level, and the Company must rank at least in the fourth quintile for any TSR Shares to vest (at 25% of maximum). Other rankings yield proportionate results. Any TSR Shares that have not vested at the end of the performance period are immediately forfeited.

The percentage of maximum shares earned based on three-year TSR rank is shown in the table below:

TSR RANK
PERCENTAGE OF MAXIMUM
SHARES EARNED
1, 2 or 3
 
100
%
4 or 5
 
75
%
6 or 7
 
60
%
8 or 9
 
50
%
10 or 11
 
40
%
12 or 13
 
25
%
14,15 or 16
 
0
%

For purposes of our TSR Share awards, the Compensation Committee, in consultation with Pearl Meyer, determined the Peer Group for 2017-2019 by:

Reviewing the Peer Group to determine whether any companies should be eliminated to the extent there are companies whose operations, although requiring similar management skills, were nevertheless not comparable to the Company’s business lines and therefore did not provide a meaningful basis for measuring relative share performance; and
Determining whether to add other significant competitors in each of the Company’s business lines to provide a comprehensive means for evaluating TSR.
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The Compensation Committee has discretion to adjust the composition of the Peer Group and to set the threshold, target and maximum performance criteria to reflect current circumstances. Our 2017 Peer Group (which is substantially the same as the Peer Group established on January 1, 2016) is discussed in more detail on page 42.

VESTING OF TSR SHARES GRANTED IN 2015 (FOR PERFORMANCE PERIOD OF 2015-2017)

Based on the Company’s share performance for the 2015-2017 performance period, the Company’s ranking for TSR Shares granted in 2015 was 10, which (as shown in the chart above) falls below the median of the Peer Group. Accordingly, the number of TSR Shares vested for our CEO and CFO were:

►   Mr. Petrello: 174,709, or 40% of his maximum shares; and

►   Mr. Restrepo: 43,261, or 40% of his maximum shares.

►   HOW WE DETERMINE OUR PERFORMANCE SHARES

The Compensation Committee pre-determines at the beginning of each one-year performance cycle the specific financial and operational performance metrics for Performance Shares applicable to each executive officer in order to tailor long-term incentives to the specific goals and needs of the Company at such time. The restricted shares earned based on performance over the prior year are granted after the end of the one-year performance cycle. For example, the Compensation Committee determined the applicable performance metrics for the 2016 performance cycle at the beginning of 2016. The number of Performance Shares earned by our executive officers for their performance in the 2016 performance cycle was not determined until February 17, 2017. Accordingly, these awards are disclosed as compensation for 2017, as set forth under “Executive Compensation Tables—2017 Summary Compensation Table”.

By design, the strategic or operational targets upon which the vesting of the Performance Shares is based contain both objective and subjective components. The Compensation Committee specifically designs the goals to strategically position the Company for long-term success. Performance metrics that are more subjective and qualitative serve as an appropriate performance metric when the relative success of such metrics are incapable of objective measurement during the performance period. For example, development of an industry-changing technology may be a goal capable of achievement during the performance cycle, but may not generate significant revenue or returns until some future period. The Compensation Committee retains flexibility to determine the specific performance metric(s) for Performance Shares so that it may tailor these long-term incentives to the specific strategies of the Company as they evolve in our dynamic industry. This flexibility includes the prerogative of amending metrics during a performance cycle, for example, as a result of changes from a significant acquisition or technological developments.

Pursuant to their respective employment agreements:

Mr. Petrello has the opportunity to receive an award of Performance Shares in respect of each fiscal year targeted at 200% of base salary ($3,500,000), with a maximum award of twice that amount ($7,000,000).
Mr. Restrepo has the opportunity to receive an award of Performance Shares for each fiscal year targeted at 100% of base salary ($650,000), with a maximum award of twice that amount ($1,300,000).

Performance Shares are earned on a pro-rated basis based on the number of goals (or overall percentage of all goals) achieved, and each goal is given equal weighting. For the 2017 performance cycle:

►   Threshold performance required the achievement of two goals (or 40% of all goals);

►   Target performance required the achievement of three goals (or 60% of all goals); and

►   Maximum performance required achievement of all five goals (or 100% of all goals).

No Performance Shares would have been earned in the event that less than 40% of the executive’s goals had been achieved. Once earned and granted, Performance Shares are subject to an additional vesting period of three years following the grant date.

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►   2016 PERFORMANCE SHARES (Granted in February 2017 based on 2016 Performance)

A portion of the compensation appearing below in the stock awards column of the 2017 Summary Compensation Table for Mr. Petrello and Mr. Restrepo consists of Performance Shares earned by each of them during the 2016 performance cycle and granted in February 2017. For the 2016 performance cycle, Mr. Petrello had the following five performance goals related to his Performance Shares:

GOAL #
PERFORMANCE GOAL
DEGREE OF ACHIEVEMENT DETERMINED
BY COMPENSATION COMMITTEE
1
Secure a joint venture with Saudi Aramco
100%
2
Implement a program to measure customer satisfaction and drive growth
100%
3
Develop a plan to maximize the Company’s investment in C&J Energy Services Ltd.
100%
4
Grow non-rig drilling services revenue on a per-rig basis
50.0%
5
Commercialize the iRacker® technology
90.0%

As a result of the 88% achievement level of the applicable performance goals, the Compensation Committee approved a Performance Share award for Mr. Petrello valued at 88% of his maximum award value, or $6.16 million. As a result, the Compensation Committee granted Mr. Petrello a Performance Share award of 381,424 shares, determined on February 17, 2017, based upon the average daily closing price of our shares on each of the preceding 20 business days. As discussed above, these Performance Shares, which appear as compensation in 2017 Summary Compensation Table below, are subject to an additional three-year vesting period following the grant date.

For the 2016 performance cycle, Mr. Restrepo had the following five performance goals:

GOAL #
PERFORMANCE GOAL
DEGREE OF ACHIEVEMENT DETERMINED
BY COMPENSATION COMMITTEE
1
Secure a joint venture with Saudi Aramco
100%
2
Develop a plan to maximize the Company’s investment in C&J Energy Services Ltd.
100%
3
Achieve certain tax initiatives
100%
4
Deliver a trackable reduction in operating expenses
100%
5
Upgrade certain financial reporting measures and eliminating certain recurring audit exceptions
100%

As a result of the 100% achievement level of the applicable performance goals, the Compensation Committee approved a Performance Share award for Mr. Restrepo valued at 100% of his maximum award value, or $1.3 million. As a result, the Compensation Committee granted Mr. Restrepo a Performance Share award of 80,495 shares, determined on February 17, 2017, based upon the average daily closing price of our shares on each of the preceding 20 business days. As discussed above, these Performance Shares, which are appear as compensation in the 2017 Summary Compensation Table below, are subject to an additional three-year vesting period following the grant date.

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►   2017 PERFORMANCE SHARES (Granted in February 2018 based on 2017 Performance)

For the 2017 performance cycle, Mr. Petrello had the following five performance goals (the first three of which were shared with Mr. Restrepo):

GOAL #
PERFORMANCE GOAL
DEGREE OF ACHIEVEMENT DETERMINED
BY COMPENSATION COMMITTEE
1
Ensure successful implementation and integration of the joint venture with Saudi Aramco
100%
2
Balance sheet improvement
66.7%
3
Grow non-rig drilling services adjusted EBITDA so that the fourth quarter adjusted EBITDA annualized would be at least $50 million
100%
4
Development of automatic pipe handler system
75%
5
Define and implement a strategy on the use of big data
100%

As a result of the 88.34% achievement level of the applicable performance goals, the Compensation Committee approved a Performance Share award for Mr. Petrello valued at 88.34% of his maximum award value, or $6.18 million. As a result, the Compensation Committee granted Mr. Petrello a Performance Share award of 851,763 shares, determined on February 23, 2018, based upon the average daily closing price of our shares on each of the preceding 20 business days. As discussed above, these Performance Shares are subject to an additional three-year vesting period following the grant date.

For the 2017 performance cycle, Mr. Restrepo had the following five performance goals:

GOAL #
PERFORMANCE GOAL
DEGREE OF ACHIEVEMENT DETERMINED
BY COMPENSATION COMMITTEE
1
Ensure successful implementation and integration of the joint venture with Saudi Aramco