Edgar Filing: NABORS INDUSTRIES LTD

OMB APPROVAL
--------------------------
OMB Number: 3235-0059
Expires: February 28, 2006
Estimated average burden
hours per response...12.75

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 [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[X] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 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):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

--------------------------------------------------------------------------------

2) Aggregate number of securities to which transaction applies:

--------------------------------------------------------------------------------

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):

--------------------------------------------------------------------------------

4) Proposed maximum aggregate value of transaction:

--------------------------------------------------------------------------------

5) Total fee paid:

--------------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

[ ] 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.

1) Amount Previously Paid:

--------------------------------------------------------------------------------

2) Form, Schedule or Registration Statement No.:

--------------------------------------------------------------------------------

3) Filing Party:

--------------------------------------------------------------------------------

4) Date Filed:

--------------------------------------------------------------------------------
PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.

SEC 1913 (02-02)

[NABORS INDUSTRIES LTD. LOGO]

2ND FLOOR INTERNATIONAL TRADING CENTRE
WARRENS, P.O. BOX 905E
ST. MICHAEL, BARBADOS

Notice of 2005 Annual General Meeting of Shareholders
Nabors Industries Ltd.
Tuesday, June 7, 2005, 11:00 a.m., CDT
Wyndham Greenspoint Hotel
12400 Greenspoint Drive
Houston, Texas

May __, 2005

Fellow shareholder:

We cordially invite you to attend Nabors Industries Ltd.'s 2005 annual general
meeting of shareholders to:

1. Elect three Class II directors for three-year terms;

2. Approve and appoint PricewaterhouseCoopers LLP as independent
auditors and authorize the Audit Committee of the Board of Directors
to set the auditors' remuneration;

3. Approve an amendment to the Amended and Restated Bye-Laws to require
shareholder approval of certain dispositions of the Company's
assets;

4. Approve an amendment to the Company's 2003 Employee Stock Plan to
make nonemployee directors eligible participants under such plan;

5. Consider a shareholder proposal, if presented by the shareholder
proponent; and

6. Transact such other business as may properly come before the annual
general meeting.

Our Board of Directors recommends you vote "FOR" the election of directors, the
approval and appointment of auditors, the amendment to the Bye-Laws, and the
amendment to the 2003 Employee Stock Plan. Our Board of Directors recommends you
vote "AGAINST" the shareholder proposal, if presented.

The financial statements for the Company will also be presented at the annual
general meeting.

We hope you will read the proxy statement and submit your proxy. On behalf of
the Board of Directors and the management of Nabors, I extend our appreciation
for your continued support.

Sincerely yours,

/s/ Eugene M. Isenberg

EUGENE M. ISENBERG
Chairman of the Board & Chief Executive Officer

NABORS INDUSTRIES LTD.
2ND FLOOR INTERNATIONAL TRADING CENTRE
WARRENS, P.O. BOX 905E
ST. MICHAELS, BARBADOS

PROXY STATEMENT

2005 ANNUAL GENERAL MEETING OF SHAREHOLDERS

JUNE 7, 2005

We are sending you this proxy statement in connection with the
solicitation of proxies by the Board of Directors of Nabors Industries Ltd. for
the 2005 annual general meeting of shareholders. We are mailing this proxy
statement and the accompanying form of proxy to shareholders on or about May __,
2005. In this proxy statement, "Nabors", the "Company", "we", "us" and "our"
refer to Nabors Industries Ltd. or, for information pertaining to periods prior
to June 24, 2002, to Nabors Industries, Inc. Where the context requires, such
references also include our subsidiaries.

ANNUAL GENERAL MEETING INFORMATION

DATE AND LOCATION OF THE ANNUAL GENERAL MEETING. We will hold the annual
general meeting at the Wyndham Greenspoint Hotel, 12400 Greenspoint Drive,
Houston, Texas at 11:00 a.m., Central Daylight Time, on Tuesday, June 7, 2005
unless adjourned or postponed.

ADMISSION TO THE ANNUAL GENERAL MEETING. Only record or beneficial owners
of Nabors common shares may attend the annual general meeting in person. When
you arrive at the annual general meeting, please present photo identification,
such as a driver's license. Beneficial owners must also present evidence of
share ownership, such as a recent brokerage account or bank statement.

VOTING INFORMATION

RECORD DATE AND QUORUM. The record date for the annual general meeting is
April 8, 2005. You may vote all common shares of Nabors that you owned as of the
close of business on that date. Each common share entitles you to one vote on
each matter to be voted on at the annual general meeting. On the record date,
158,016,454 common shares of Nabors were outstanding. In addition, the holder of
record of one Special Voting Preferred Share of Nabors is entitled to a number
of votes equal to the number of exchangeable shares of Nabors Exchangeco
(Canada), Inc., a corporation incorporated under the laws of Canada, in
accordance with the instructions received from the holders of such shares. There
were 207,061 exchangeable shares of Nabors Exchangeco (Canada) Inc. outstanding
on the record date. A majority of the common shares outstanding on the record
date present, in person or by proxy, constitutes a quorum to transact business
at the annual general meeting. Abstentions and withheld votes will be counted
for purposes of establishing a quorum.

SUBMITTING VOTING INSTRUCTIONS FOR SHARES HELD IN YOUR NAME. You may vote
at the annual general meeting by completing, signing and returning the enclosed
proxy card. A properly completed and submitted proxy will be voted in accordance
with your instructions, unless you subsequently revoke your instructions. 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.

SUBMITTING VOTING INSTRUCTIONS FOR SHARES HELD IN STREET NAME. If you hold
your shares through a broker, follow the voting 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 annual general meeting. If you do not submit
voting

instructions to your broker, your broker may still be permitted to vote your
shares. American Stock Exchange member brokers may vote your shares under the
following circumstances:

- DISCRETIONARY ITEMS. The election of directors and approval and
appointment of Nabors' independent auditors are "discretionary" items
under the rules of the American Stock Exchange. Member brokers that do not
receive instructions from beneficial owners may vote on these proposals in
their discretion.

- NON-DISCRETIONARY ITEMS. The proposals to amend the Company's Bye-Laws and
2003 Employee Stock Plan and the shareholder proposal are
"non-discretionary" items under the rules of the American Stock Exchange
and may not be voted on by member brokers, absent specific voting
instructions from beneficial owners.

If you do not submit voting instructions and your broker does not have
discretion to vote your shares on a matter ("broker non-votes"), your shares
will not be voted on that matter at the annual general meeting. Accordingly,
broker non-votes will not be counted in determining the outcome of vote on any
matter at the annual general meeting, except that broker non-votes will count as
votes against the vote required for the amendment of the Amended and Restated
Bye-Laws. Broker non-votes will, however, be counted for purposes of
establishing a quorum.

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 annual
general meeting to Daniel McLachlin, Secretary, Nabors Industries Ltd., 2nd
Floor International Trading Centre, Warrens, St. Michael, Barbados; (2)
submitting a later proxy; or (3) voting in person at the annual general meeting
(although attendance at the annual general meeting will not, by itself,
constitute a revocation of a proxy).

VOTES REQUIRED TO ELECT DIRECTORS AND TO ADOPT OTHER PROPOSALS. Directors
are elected by a plurality of the votes cast. The approval and appointment of
PricewaterhouseCoopers LLP and authorization for the Audit Committee to set the
auditor's remuneration, the adoption of the amendment to our 2003 Employee Stock
Plan and the approval of the shareholder proposal each requires the affirmative
vote of the holders of a majority of shares present in person or represented by
proxy and entitled to vote thereon. The approval of the amendment to the Amended
and Restated Bye-Laws requires the affirmative vote of the holders of a majority
of the outstanding shares of the Company.

WITHHOLDING YOUR VOTE OR VOTING TO "ABSTAIN". You can withhold your vote
for any nominee for election for director. Withheld votes will be excluded from
the vote and will have no effect on the outcome. On the other proposals, you can
vote to "abstain". If you vote to "abstain", your shares will be counted as
present at the annual general meeting for purposes of that proposal and your
vote will have the effect of a vote against the proposal.

ITEM 1
ELECTION OF DIRECTORS

Our Board proposes, based on the recommendation of the Governance and
Nominating Committee, the election of Anthony G. Petrello, Myron M. Sheinfeld
and Martin J. Whitman as Class II directors for terms ending at the 2008 annual
general meeting. Messrs. Petrello, Sheinfeld and Whitman are current directors
of Nabors. Each nominee has indicated that he will serve if elected. We do not
anticipate that any nominee will be unable or unwilling to stand for election,
but if that happens, your proxy will be voted for another person nominated by
the Board or the Board may opt to reduce the number of directors.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF MESSRS.
PETRELLO, SHEINFELD AND WHITMAN AS CLASS II DIRECTORS FOR TERMS ENDING AT THE
2008 ANNUAL GENERAL MEETING.

CLASS II
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM ENDING IN 2008

DIRECTOR
POSITION WITH NABORS OF NABORS
NAME AGE AND PRIOR BUSINESS EXPERIENCE SINCE
---- --- ----------------------------- ---------

Anthony G. Petrello.... 50 President and Chief Operating Officer of Nabors since 1992, Deputy 1991
chairman since 2003, a member of the executive committee of the
board since 1991 and a member of the technical and safety
committee of the board since 2003. from 1979 to 1991,
mr. petrello was with the law firm baker & mckenzie, where he
had been managing partner of its new york office from 1986 until
his resignation in 1991. mr. petrello holds a j.d. degree from
harvard law school and b.s. and m.s. degrees in mathematics from
yale university.

Myron M. Sheinfeld..... 75 Chairman of the Audit Committee of the Board since 1988, a member 1988
of the Compensation Committee of the Board since 1993 and a
member of the Governance and Nominating Committee of the Board
since 2002. He is Senior Counsel to the law firm Akin, Gump,
Strauss, Hauer & Feld, L.L.P. From 1970 until April 2001 he
held various positions in the law firm Sheinfeld, Maley & Kay
P.C. Mr. Sheinfeld was an adjunct professor of law at the
University of Texas, School of Law from 1975 to 1991, and is a
contributing author to numerous legal and business publications,
and a contributor, co-editor and co-author of Collier On
Bankruptcy, and a co-author of Collier On Bankruptcy Tax for
Lexis-Nexis and Matthew Bender & Co., Inc. He is President, a
Director and a member of The Houston Chapter of National
Association of Corporate Directors and a member of The National
Association of Corporate Directors.

Martin J. Whitman...... 80 Mr. Whitman is the Lead Director for the Company's Board of 1991
Directors. Member of the Audit Committee of the Board since
1993; a member of the Governance and Nominating Committee of the
Board since 2002, and a member of the Executive Committee since
2005. Chief Executive Officer until June 2002 and a Director of
Danielson Holding Corporation (a holding company for barge
transportation, energy, and insurance businesses) until October
2004 (Chairman of the Board until July 1999); Chairman and
Trustee of Third Avenue Trust since 1990 and Chief Executive
Officer of Third Avenue Trust from 1990 to 2003; Co-Chief
Investment Officer of Third Avenue Management LLC and its
predecessor (the adviser to Third Avenue Trust) since 2003 and
Chief Investment Officer of Third Avenue Management LLC and its
predecessor from 1991 to 2003; Director of Tejon Ranch Co. (an
agricultural and land management company) from 1997 to 2001;
and, Director of Stewart Information Services Corp. (a title

insurance and real estate company) from 2000 until 2001. Mr.
Whitman was an Adjunct Lecturer, Adjunct Professor and
Distinguished Fellow in Finance, Yale University School of
Management from 1972 to 1984 and 1992 to 1999 and is currently
an Adjunct Lecturer in Finance at Yale University and an Adjunct
Professor in Finance at Syracuse University. He was an Adjunct
Professor at the Columbia University Graduate School of Business
in 2001. Mr. Whitman is co-author of The Aggressive
Conservative Investor and author of Value Investing: A Balanced
Approach.

CLASS I
DIRECTORS CONTINUING IN OFFICE - TERMS EXPIRING IN 2007

DIRECTOR
POSITION WITH NABORS OF NABORS
NAME AGE AND PRIOR BUSINESS EXPERIENCE SINCE
---- --- ----------------------------- ---------

James L. Payne......... 68 Chairman of the Governance and Nominating Committee of the Board 1999
since 2002 and a member of the Technical and Safety Committee of
the Board since 1999. Mr. Payne is currently Chairman and Chief
Executive Office of Shona Energy Company, LLC. Mr. Payne was
Chairman, Chief Executive Officer and President of Nuevo Energy
Company (a company engaged in the acquisition, production and
exploration of oil and natural gas properties) until May 2004.
He also serves as a Director of BJ Services and Global
Industries. He was a Director of Pool Energy Services Co. from
1993 until its acquisition by Nabors in November 1999. He
retired as Vice Chairman of Devon Corp. in February 2001. Prior
to the merger between Devon Corp. and Santa Fe Snyder Company in
2000, he had served as Chairman and Chief Executive Officer of
Santa Fe Snyder Company. He was Chairman and Chief Executive
Officer of Santa Fe Energy Company from 1990 to 1999 when it
merged with Snyder Oil Company. Mr. Payne is a graduate of the
Colorado School of Mines where he was named a Distinguished
Achievement Medalist in 1993. He holds an MBA degree from
Golden Gate University and has completed the Stanford Executive
Program.

Hans W. Schmidt........ 75 Chairman of the Technical and Safety Committee of the Board since 1993
1998, a member of the Governance and Nominating Committee of the
Board since 2002 and a member of the Compensation Committee
since 2005. From 1958 to his retirement in 1992, Mr. Schmidt
held a number of positions with C. Deilmann A.G., a diversified
energy company located in Bad Bentheim, Germany, including
serving as a Director from 1982 to 1992. From 1965 to 1992 he
served as Director of a subsidiary of C. Deilmann A.G.,
Deutag Drilling, a company with worldwide drilling

operations. From 1988 to 1991, Mr. Schmidt
served as President of Transocean Drilling
Company, a company of which he was also a
Director from 1981 until 1991.

Alexander M. Knaster...
46 Member of the Governance and Nominating Committee of the Board of 2004
Nabors since 2004. Mr. Knaster currently serves as Chairman and
CEO of Pamplona Capital Management, an investment management
firm with private equity and fund of funds operations. Mr.
Knaster also serves as director of TNK-BP and several
subsidiaries of Alfa Group Holding Company which is one of
Russia's largest conglomerates with interests in telecoms,
banking, insurance and the Russian oil and gas producing entity
TNK-BP. From 1998 until 2004 Mr. Knaster was Chief Executive
Officer of Alfa Bank. During 2002 and 2003 he also served as
General Director of Sidanco, Russia's seventh largest oil
company. From 1995 to 1998 he served as President and CEO of
Credit Suisse First Boston (Moscow), responsible for the firm's
operations in Russia and the CIS. Mr. Knaster has 20 years
experience in the banking industry including several other major
investment banks. Mr. Knaster started his career as engineer
with Schlumberger, Ltd. working on offshore oil and gas rigs in
the U.S. Gulf of Mexico. Mr. Knaster holds a PhD in economics
from the Russian Academy of Science, an MBA from Harvard
Business School and a BS in Electrical Engineering and
Mathematics from Carnegie-Mellon University. Mr. Knaster is
also a Chartered Financial Analyst and a member of International
Society of Financial Analysts and National Association of
Petroleum Industry Analysts.

CLASS III
DIRECTORS CONTINUING IN OFFICE - TERMS EXPIRING IN 2006

DIRECTOR
POSITION WITH NABORS OF NABORS
NAME AGE AND PRIOR BUSINESS EXPERIENCE SINCE
---- --- ----------------------------- ---------

Eugene M. Isenberg..... 75 Chairman of the Board, Chairman of the Executive Committee of the 1987
Board and Chief Executive Officer of Nabors since 1987. Mr.
Isenberg served as a Director of Danielson Holding Company (a
financial services holding company) until October 2004. He has
been a Governor of the National Association of Securities
Dealers (NASD) since 1998 and the American Stock Exchange (AMEX)
until 2005. He has served as a member of the National Petroleum
Council since 2000. From 1969 to 1982, Mr. Isenberg was
Chairman of the Board and principal shareholder of Genimar, Inc.
(a steel trading and building products manufacturing company),
which was sold in 1982. From 1955 to 1968, Mr. Isenberg was
employed in various management capacities with Exxon Corporation.

James C. Flores........ 45 Chairman of the Compensation Committee of the Board of Nabors, a 2005
member of the Governance and Nominating Committee and a member
of the Audit Committee since 2005. Mr. Flores is currently
Chairman, President and Chief Executive Officer of Plains
Exploration & Production Company, an independent oil and gas
company with operations both onshore and offshore principally in
Texas, Louisiana and California. Previously, Mr. Flores was
Chairman of Plains Resources, Inc. and Co-founder, Chairman and
CEO at various times of Ocean Energy, Inc.

COMMITTEES AND MEETINGS OF THE BOARD

The Board of Directors met four times during 2004. Each of our incumbent
directors attended at least 75% of the aggregate of the meetings of the Board
and the committees on which he served during 2004, except Mr. Hans Schmidt, who
attended 70% of the aggregate of the meetings of the Board and the committees on
which he served during 2004, and Mr. Jack Wexler who attended 27% of the
aggregate of the meetings of the Board and the committees on which he served
during 2004. Mr. Wexler retired from the Board in February 2005 and currently is
Director Emeritus. The Board has five committees - the Audit Committee, the
Compensation Committee, the Governance and Nominating Committee, the Technical
and Safety Committee and the Executive Committee. The independent directors of
the Board meet in executive sessions following each Board meeting. Appointments
and chairmanships of the committees are recommended by the Governance and
Nominating Committee and are selected by the Board. All committees report their
activities to the Board. The charters of each of our Audit Committee,
Compensation Committee, and Governance and Nominating Committee are available on
our web site at www.nabors.com.

The Board has affirmatively determined that each of the current directors,
with the exception of Messrs. Isenberg and Petrello who are officers of the
Company, has no material relationship with Nabors that would interfere with the
exercise of independent judgment and, therefore, is independent under the
listing standards of the American Stock Exchange ("AMEX").

AUDIT COMMITTEE

The primary purpose of our Audit Committee is to assist the Board in
monitoring (a) the quality and integrity of the financial statements of the
Company; (b) the independent auditors' qualifications and independence; (c) the
performance of the Company's independent auditors; and (d) compliance by the
Company with legal and regulatory requirements. The Audit Committee met four
times during 2004. The members of the Audit Committee for fiscal 2004 were Myron
M. Sheinfeld (Chairman), Jack Wexler and Martin J. Whitman. As of the date of
this proxy statement, the members of the Audit Committee are Myron M. Sheinfeld
(Chairman), James C. Flores and Martin J. Whitman. The Board has determined that
the Audit Committee's current composition satisfies the rules of the AMEX that
govern audit committee composition, including the requirement that each member
of the Audit Committee be "independent" as that term is defined under the
listing standards of the AMEX and specified in Rule 10A-3 under the Securities
Exchange Act of 1934. In addition, the Board has determined that Mr. Whitman is
an "audit committee financial expert" as defined under the current rules of the
SEC.

COMPENSATION COMMITTEE

The primary purpose of our Compensation Committee is to: (a) discharge the
Board's responsibilities relating to the compensation of our executives,
including overseeing the administration of our compensation programs and setting
the compensation of our key executives; (b) assist the Board in its oversight of
the development, implementation, and effectiveness of our policies and
strategies relating to our human capital function; and (c) prepare any report on
executive compensation required by the rules and regulations of the SEC. The

Compensation Committee met three times during 2004. The members of the
Compensation Committee for 2004 were Jack Wexler (Chairman), Myron M. Sheinfeld,
Martin J. Whitman, and Hans Schmidt (from August 2004) each of whom is, as
determined by the Board, an independent director as defined under AMEX listing
standards. The members of the Compensation Committee as of the date of this
proxy statement are James C. Flores (Chairman), Myron M. Sheinfeld and Hans
Schmidt each of whom is, as determined by the Board, an independent director as
defined under AMEX listing standards.

GOVERNANCE AND NOMINATING COMMITTEE

The primary purpose of the Governance and Nominating Committee is to
recommend individuals to the Board of Directors for nomination, election or
appointment as members of the Board and its committees and to take a leadership
role in shaping our corporate governance, including developing, recommending to
the Board and reviewing on an ongoing basis our corporate governance principles
and practices. The Governance and Nominating Committee met four times during
2004. The members of the Governance and Nominating Committee for 2004 were James
L. Payne (Chairman), Hans W. Schmidt, Myron M. Sheinfeld, Jack Wexler and Martin
J. Whitman, and Alexander M. Knaster (from October 2004), each of whom is, as
determined by the Board, an independent director as defined under AMEX listing
standards. As of the date of this proxy statement, the members of the Governance
and Nominating Committee are James L. Payne (Chairman), James C. Flores,
Alexander M. Knaster, Hans W. Schmidt, Myron M. Sheinfeld, and Martin J.
Whitman, each of whom is, as determined by the Board, an independent director as
defined under AMEX listing standards.

SHAREHOLDER RECOMMENDATIONS FOR DIRECTORS. The Governance and Nominating
Committee will consider director candidates recommended by shareholders. The
Governance and Nominating Committee does not set specific, minimum
qualifications that nominees must meet in order for the Committee to recommend
them to the Board of Directors, but rather believes that each nominee should be
evaluated based upon his or her individual merits, taking into account the needs
of the Company and the composition of the Board of Directors. Of course,
directors should possess the highest personal and professional ethics, integrity
and values, be committed to the long-term interests of the shareholders, and be
willing to devote sufficient time to carry out their duties and responsibilities
effectively. Members of the Governance and Nominating Committee discuss and
evaluate possible candidates in detail, and suggest individuals to explore in
more depth. The Committee has the authority to engage consultants and may or may
not choose to do so. Once a candidate is identified whom the Committee wishes to
consider seriously and move toward nomination, the Chair of the Committee and
the Chief Executive Officer enter into discussions with that candidate. The
policy adopted by the Committee provides that candidates recommended by
shareholders are given appropriate consideration in the same manner as other
candidates. Shareholders who wish to submit candidates for director for
consideration by the Governance and Nominating Committee for election at our
2006 Annual Meeting of Shareholders may do so by submitting in writing such
candidates names, together with the information described on our web site at
www.nabors.com, to Board of Directors, Nabors Industries Ltd., 2nd Floor,
International Trading Centre, Warrens, P.O. Box 905E, St. Michael, Barbados
prior to January __, 2006:

TECHNICAL AND SAFETY COMMITTEE

The Technical and Safety Committee provides leadership in developing
policies, implementing programs and monitoring performance in the technical and
safety aspects of Nabors' operations. The Technical and Safety Committee met two
times during 2004. The members of the Technical and Safety Committee are Hans W.
Schmidt (Chairman), James L. Payne and Anthony G. Petrello.

EXECUTIVE COMMITTEE

The Executive Committee has the authority to exercise all powers, rights
and authority of the Board as might be necessary from time to time between
regularly scheduled Board meetings, except with respect to certain actions as
provided in Nabors' Bye-Laws or applicable law. The members of the Executive
Committee for 2004 were Eugene M. Isenberg (Chairman), Anthony G. Petrello and
Jack Wexler (who retired in February 2005 and currently as Director Emeritus).
As of the date of this proxy statement, the members of the Executive Committee
are Eugene M. Isenberg (Chairman), Anthony G. Petrello and Martin J. Whitman.
The Executive

Committee did not meet during 2004.

CODE OF ETHICS

We have adopted a Code of Business Conduct that satisfies the SEC's
definition of a "Code of Ethics" and applies to all employees, including our
principal executive officer, principal financial officer, and principal
accounting officer. The Code of Business Conduct is posted on our website at
www.nabors.com. We intend to disclose on our website any amendments to the Code
of Conduct and any waivers of the Code of Conduct that apply to our principal
executive officer, principal financial officer, and principal accounting
officer.

DIRECTOR COMPENSATION

Nabors compensates its directors through a combination of an annual
retainer and stock options. During 2004 directors received an annual retainer of
$50,000 for service on the Board. Beginning in 2005 each director will receive
an annual retainer of $50,000; the Chairman of each committee shall receive an
additional retainer of $10,000 (except the Chairman of the Audit Committee, who
shall receive $25,000), and the Lead Director will receive an annual retainer of
$10,000 for service in this capacity. No additional amounts are paid for
attendance at Board or committee meetings. Until February 2005 nonemployee
directors who served on the Executive Committee received an additional annual
retainer of $125,000. In the event of retirement, permanent and total disability
or death of a non-employee director who served on the Executive Committee, the
$125,000 annual retainer, together with the amount of the annual retainer for
serving as a Board member continued for an additional five years following the
end of the quarter in which retirement, permanent and total disability, or death
occurs. The practices of paying the annual retainer for service on the Executive
Committee, together with the additional payments for five years following
retirement, were eliminated in February 2005. Upon Mr. Wexler's retirement in
February 2005 the Company paid Mr. Wexler a lump sum in the amount of $803,110
in full satisfaction of its obligations to Mr. Wexler under this now
discontinued policy.

Nabors also issues equity incentives to its nonemployee directors to align
their interests with Nabors' shareholders. Awards are made pursuant to option
plans adopted from time to time for nonemployee directors. On February 20, 2004,
each nonemployee director was awarded options to purchase at least 30,000 shares
and certain nonemployee directors received additional awards in recognition of
their service as a committee member or committee chairman. The awards were as
follows: Mr. Payne, 40,000 options; Mr. Schmidt, 40,000 options; Mr. Sheinfeld,
45,000 options; Mr. Wexler, 45,000 options; and Mr. Whitman, 45,000 options. All
of the options were granted at a per share price of $45.91, the closing price of
the Company's shares on the date of grant. In connection with their appointments
to the Board of Directors, on November 9, 2004, Alexander M. Knaster was awarded
options to purchase 30,000 shares, and on January 25, 2005, James C. Flores was
awarded options to purchase 30,000 shares. Mr. Knaster's options were granted at
a per share price of $47.03, and Mr. Flores' options were granted at a per share
price of $49.67, in each case, the closing price of the Company's shares on the
respective dates of grant. The options generally vest in three equal annual
installments beginning on the first anniversary of the date of the grant and are
exercisable for ten years from the date of grant. If the amendment to the 2003
Employee Stock Plan is approved by the shareholders at this year's annual
general meeting of shareholders, the Company intends to replace the option
awards historically made to nonemployee directors with awards of restricted
stock. For 2005 the Company intends to award each nonemployee director 10,000
shares of restricted stock, which shall vest pro-rata over 3 years.

SHARE OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS

The following table sets forth, as of April 8, 2005, certain information
with respect to the beneficial ownership of Nabors' outstanding common shares by
(a) each current director, (b) each executive officer named in the Summary
Compensation Table appearing elsewhere herein (the "Named Executive Officers"),
(c) all directors and executive officers as a group, and (d) any other person or
entity known by Nabors to be the beneficial owner of more than 5% of Nabors'
common shares:

COMMON SHARES BENEFICIALLY OWNED
--------------------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER (1) SHARES TOTAL(2)
-------------------- ---------- ----------

DIRECTORS
James C. Flores(2) .............................................. 48,000 *
Eugene M. Isenberg (2) (3)....................................... 8,423,104 5.11%
Alexander M. Knaster(2) ......................................... 0 *
James L. Payne (2)............................................... 51,550 *
Anthony G. Petrello (2).......................................... 4,191,336 2.60%
Hans W. Schmidt (2).............................................. 155,916 *
Myron M. Sheinfeld (2) (4)....................................... 151,300 *
Martin J. Whitman (2) (5)........................................ 300,364 *

OTHER EXECUTIVE OFFICERS
Bruce P. Koch (2)................................................ 37,500 *
Daniel McLachlin (2) ............................................ 2,216 *

All Directors/Executive Officers as a group (10 persons) (2)-(5) 13,361,286 7.80%

OTHER
AXA Financial Inc.(6) 22,828,932 14.45%

FMR Corp. (7) 11,174,978 7.07%

---------------
* Less than 1%

(1) The address of each of the directors and officers listed is in care of
Nabors Industries Ltd., 2nd Floor International Trading Centre, Warrens,
P.O. Box 905E, St. Michael, Barbados.

(2) As of April 8, 2005, Nabors had 158,016,454 shares outstanding and
entitled to vote. For purposes of this table, "beneficial ownership" is
determined in accordance with Rule 13d-3 under the U.S. Securities
Exchange Act of 1934, 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. We have included in the
table common shares underlying fully vested stock options (without giving
effect to accelerated vesting that might occur in certain circumstances).
For purposes of computing the percentage of outstanding common shares held
by each person or group of persons named above, any shares which such
person or persons has the right to acquire within 60 days (as well as
common shares underlying fully vested stock options) are deemed to be
outstanding, but are not deemed to be outstanding for purposes of
computing the percentage ownership of any other person.

The number of common shares underlying fully vested stock options included
in the table are as follows: Mr. Isenberg - 6,748,836; Mr. Payne - 47,500;
Mr. Petrello - 4,090,324; Mr. Schmidt - 153,166; Mr. Sheinfeld - 134,165;
Mr. Whitman - 137,498; Mr. Koch - 37,500; Mr. McLachlin - 2,125, and all
directors and Named Executive Officers as a group - 11,351,114.

(3) The shares listed for Mr. Isenberg are held directly or indirectly through
certain trusts, defined benefit plans and individual retirement accounts
of which Mr. Isenberg is a grantor, trustee or beneficiary. Not included
in the table are 386 shares owned directly or held in trust by Mr.
Isenberg's spouse.

(4) The shares listed for Mr. Sheinfeld include 292 shares owned directly by
Mr. Sheinfeld's spouse. Mr. Sheinfeld disclaims beneficial ownership of
these shares.

(5) The shares listed for Mr. Whitman include 132,819 common shares owned by
M.J. Whitman & Co., Inc. Because Mr. Whitman is a majority stockholder in
M.J. Whitman & Co., Inc., he may be deemed to have beneficial ownership of
the Nabors shares owned by that company.

(6) Based solely on the information contained in Schedule 13G of AXA
Financial, Inc. and certain of its affiliates filed with the Securities
and Exchange Commission on February 14, 2005, the shares listed include
(i) 22,562,040 shares beneficially owned by Alliance Capital Management
L.P., (ii) 238,818 shares beneficially owned by AXA Equitable Life
Insurance Company, (iii) 1,000 shares beneficially owned by AXA Rosenberg
Investment Management LLC. AXA Financial, Inc. has sole voting power with
respect to 15,111,257 shares and sole dispositive power with respect to
22,801,858 shares. The address of AXA Financial, Inc.'s principal business
office is 1290 Avenue of the Americas, New York, NY 10104.

(7) Based solely on the information contained in Schedule 13G of FMR Corp.
filed with the Securities and Exchange Commission on February 14, 2005,
the shares listed include (i) 10,102,712 shares beneficially owned by
Fidelity Management & Research Company, (ii) 823,808 shares beneficially
owned by Fidelity Management Trust Company, (iii) 247,200 shares
beneficially owned by Fidelity International Limited, and (iv) 1,258
shares beneficially owned by Strategic Advisers Inc.. FMR Corp. has sole
voting power with respect to 984,566 shares and sole dispositive power
with respect to 11,174,978 shares. The address of FMR Corp.'s principal
business office is 82 Devonshire Street, Boston, Massachusetts 02109.

OTHER EXECUTIVE OFFICERS

POSITION WITH NABORS
NAME AGE AND PRIOR BUSINESS EXPERIENCE
---- --- -----------------------------

Bruce P. Koch........... 45 Vice President and Chief Financial Officer since February 2003, Vice
President-Finance from January 1996 to February 2003, and Corporate
Controller of Nabors from March 1990 to 1995. He was employed with the
accounting firm of Coopers & Lybrand from 1983 to 1990 in a number of
capacities, including Audit Manager from 1987 until 1990.

Daniel McLachlin........ 67 Vice President-Administration and Secretary of Nabors since 1986. He was
Manager, Administration of Nabors from 1984 to 1986. From 1979 to 1984 he
was the Vice President, Human Resources of Nabors Drilling Limited, a
subsidiary of Nabors.

MANAGEMENT COMPENSATION

SUMMARY COMPENSATION TABLE

The table below sets forth all reportable compensation awarded to, earned
by or paid to the Named Executive Officers for services rendered in all
capacities to Nabors and its subsidiaries and whose compensation for the year
exceed $100,000 for each of the last three fiscal years.

ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------------------- -------------------------------------
AWARDS
------------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL COMPENSATION AWARD(S) OPTIONS/ COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($) ($) (1) SARS (2) ($)
------------------ ---- --------- -------- ------------ ---------- ---------- -----------

Eugene M. Isenberg 2004 825,000(3) 2,200,000(4) 208,267(5) 0 950,000 170,432(6)
Chairman of the
Board, Director and 2003 325,000 1,400,000 231,569 0 950,000 248,419
Chief Executive Officer
2002 325,000 1,400,000 273,270 0 1,900,000 134,012

Anthony G. Petrello 2004 700,000(7) 1,100,000(8) 100,437(9) 0 475,000 214,125(10)
Director, Deputy
Chairman, President and 2003 275,000 700,000 85,566 0 475,000 80,684
Chief Operating Officer
2002 275,000 700,000 112,267 0 950,000 88,031

Bruce P. Koch 2004 200,000 50,000 0 30,000 8,000(11)
Vice President and
Chief Financial Officer 2003 185,000 45,000 - 0 20,000 7,400

2002 185,000 40,000 - 0 25,000 8,325

Daniel McLachlin 2004 100,000 12,500 57,867(12) 0 4,500 3,248(13)
Vice
President-Administration 2003 99,333 10,000 46,089 0 8,500 3,284
and Secretary
2002 92,000 10,000 18,636 0 5,000 4,140

(1) Each of the Named Executive Officers received the number of restricted
stock indicated below, effective February 24, 2005 for performance during
2004. On February 24, 2005, the fair market value of a share of Common
Stock of Nabors' was $57.65. The restricted stock awards vest in three
equal annual installments beginning on the first anniversary of the date
of the grant for Mr. Isenberg and Mr. Petrello and three equal annual
installments beginning on the second anniversary of the date of the grant
for Mr. Koch and Mr. McLachlin: Mr. Isenberg - 100,000, Mr. Petrello -
50,000, Mr. Koch - 1,626 and Mr. McLachlin - 325.

(2) Each of the Named Executive Officers received the number of options
indicated below, effective February 24, 2005 for performance during 2004.
The exercise price of the options awarded is $57.65, the closing price per
common share on the AMEX on the grant date. The options become fully
vested on June 1, 2005: Mr. Isenberg - 350,000, Mr. Petrello - 175,000,
Mr. Koch - 5,000 and Mr. McLachlin - 1,000.

(3) Includes $44,500 paid as director's fees.

(4) Mr. Isenberg is entitled to receive an annual bonus as provided in his
employment agreement. For each of fiscal years 2004, 2003, and 2002, Mr.
Isenberg agreed to accept a bonus that was less than the bonus he was
entitled to receive under his employment agreement.

(5) Includes various club dues; auto allowance; imputed life insurance; tax
preparation fees ($56,250); and gross-up amount for auto allowance and tax
preparation fees.

(6) Includes (a) Nabors' matching contributions to a retirement savings plan
and a non-qualified deferred compensation plan of $8,200; and (b) $162,232
that is the net benefit to Mr. Isenberg of the premiums paid by Nabors, as
projected on an actuarial basis, for a split dollar life insurance
arrangement (Nabors has suspended additional premium payments under these
policies as a result of the adoption of the Sarbanes - Oxley Act of 2002).

(7) Includes $44,500 paid as director's fees.

(8) Mr. Petrello is entitled to receive an annual bonus as provided in his
employment agreement. For each of fiscal years 2004 and 2003, Mr. Petrello
agreed to accept a bonus that was less than the bonus he was entitled to
receive under his employment agreement.

(9) Includes club dues; auto allowance; imputed life insurance; and gross-up
amounts for auto allowance and imputed interest ($100,437).

(10) Includes (a) Nabors' matching contributions to a retirement savings plan
and a non-qualified deferred compensation plan of $8,200; (b) $148,542
that is the net benefit to Mr. Petrello of the premiums paid by Nabors, as
projected on an actuarial basis, for a split dollar life insurance
arrangement (Nabors has suspended additional premium payments under these
policies as a result of the adoption of the Sarbanes - Oxley Act of 2002);
and (c) imputed interest of $57,383 on a loan from Nabors in the maximum
amount of $2,881,915 pursuant to his employment agreement in connection
with his relocation to Houston, the balance of which was $2,881,915 as of
March 31, 2005, and on which no interest has been paid or charged thereon.

(11) Includes Nabors' matching contributions to a retirement savings plan and a
non-qualified deferred compensation plan of $8,000.

(12) Includes club dues; imputed life insurance; foreign service premium; goods
& services differential ($25,380); Company reimbursement of moving
expenses in connection with a relocation from Houston to Barbados; and a
hardship allowance.

(13) Includes Nabors' matching contributions to a retirement savings plan and a
nonqualified deferred compensation plan of $3,248.

STOCK OPTION/SAR GRANT TABLE

The following table provides information with respect to stock options
granted during the fiscal year ended December 31, 2004 to the Named Executive
Officers. Nabors did not grant any stock appreciation rights to the Named
Executive Officers during the fiscal year ended December 31, 2004.

INDIVIDUAL GRANTS
-----------------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS EXERCISE
SECURITIES GRANTED TO OR
UNDERLYING EMPLOYEES BASE GRANT DATE
OPTIONS IN PRICE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR ($/SH) DATE VALUE ($)(1)
------------------- ---------- ----------- -------- ---------- ----------

Eugene M. Isenberg 950,000(2) 29.76% 45.91 2/20/2014 12,287,965

Anthony G. Petrello 475,000(2) 14.88% 45.91 2/20/2014 6,143,983

Bruce P. Koch 30,000(3) .94% 45.91 2/20/2014 388,041

Daniel McLachlin 4,500(3) .14% 45.91 2/20/2014 58,206

(1) All options are granted at an exercise price equal to the closing price of
Nabors' common shares on the date of grant. Therefore, if there is no
appreciation in the market value, no value will be realizable. In
accordance with Securities and Exchange Commission rules, the
Black-Scholes option pricing model was chosen to estimate the grant date
present value of the options set forth in this table. Nabors' use of this
model should not be construed as an endorsement of its accuracy at valuing
options. All stock option valuation models, including the Black-Scholes
model, require a prediction about the future movement of the stock price.
The following assumptions were made for purposes of calculating the
February 20, 2004 grant date present value: (a) the expected term is
assumed to be four years, (b) volatility of 31%, (c) dividend of $0 per
share and (d) risk-free rate of return of 2.462%. The figures given are
not intended to forecast future price appreciation of the shares. The real
value of the options in this table depends solely upon the actual
performance of the Nabors' shares during the applicable period.

(2) The options were granted on February 20, 2004 and vest in three equal
annual installments beginning on February 20, 2005.

(3) The options were granted on February 20, 2004 and vest in four annual
installments beginning on the date of grant.

OPTION EXERCISES DURING 2004 AND YEAR-END OPTION VALUES

The following table provides information with respect to stock options
exercised during 2004 and the value as of December 31, 2004 of unexercised
in-the-money options held by the Named Executive Officers. The value realized on
the exercise of options is calculated using the difference between the per share
option exercise price and the market value of a share on the date of the
exercise. The value of unexercised in-the-money options at fiscal year end is
calculated using the difference between the per share option exercise price and
the market value of $51.29 per share at December 31, 2004.

NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED VALUE OPTIONS OPTIONS AT
ON REALIZED AT FISCAL YEAR-END FISCAL YEAR-END ($)
NAME EXERCISE ($) EXERCISABLE / UNEXERCISABLE EXERCISABLE / UNEXERCISABLE
-------------------- -------- -------- --------------------------- -----------------------------

Eugene M. Isenberg 0 0 10,611,745/ 1,583,334 238,542,830/ 13,053,008

Anthony G. Petrello 0 0 5,478,581/ 791,667 127,362,866/ 6,526,504

Bruce P. Koch 0 0 96,600/ 57,500 2,651,189/ 652,500

Daniel McLachlin 2,750 66,159 4,000/ 14,500 29,760/ 174,810

EMPLOYMENT CONTRACTS

Mr. Isenberg and Mr. Petrello's employment contracts were amended and
restated effective October 1, 1996 and both contracts currently are set to
expire on September 30, 2009. The expiration date automatically extends for an
additional one-year term on each anniversary date, unless Nabors provides notice
to the contrary ten days prior to such anniversary. Mr. Isenberg's salary is
subject to annual review for increase at the discretion of the Board and the
Compensation Committee. The formula for the calculation of his cash bonus
remained as it had been under the prior version, a shareholder approved
contract, which provided that Mr. Isenberg is entitled to receive an annual cash
bonus equal to 6% of Nabors' net cash flow (as defined in the employment
contract) in excess of 15% of the average stockholders' equity for such fiscal
year. Mr. Petrello's salary is subject to annual review for increase at the
discretion of the Board and the Compensation Committee. His annual bonus
remained as it had been at the greater of $700,000 or 2% of the net cash flow
(as defined in the employment contract) in excess of 15% of the average
stockholders' equity in such year. Mr. Isenberg and Mr. Petrello are eligible
for stock options and grants; may participate in annual long-term incentive
programs, and pension and welfare plans, on the same basis as other executives;
and may receive special bonuses from time to time as determined by the Board.
Effective June 24, 2002, Mr. Isenberg's and Mr. Petrello's employment contracts
were amended to reflect a reduction in salary equivalent to the amount of
director's fees to be paid by Nabors as of that date. Pursuant to an Executive
Cost Allocation Agreement, a percentage of Mr. Isenberg's and Mr. Petrello's
salary, bonus, stock options or other compensation payable pursuant to their
employment agreements is paid by Nabors Corporate Services, Inc. for services
performed for that company.

In addition to salary and bonus, each of Mr. Isenberg and Mr. Petrello
receive group life insurance at an amount at least equal to three times their
respective base salaries; various split-dollar life insurance policies,
reimbursement of expenses, various perquisites and a personal umbrella policy in
the amount of $5 million. Further, if Mr. Isenberg or Mr. Petrello is subject to
the tax imposed by Section 4999 of the Internal Revenue Code, Nabors has agreed
to reimburse them for such tax on an after-tax basis. Premiums payable under the
split dollar life insurance policies have been suspended as a result of the
adoption of the Sarbanes - Oxley Act of 2002.

In the event that either Mr. Isenberg's or Mr. Petrello's employment
contract is terminated by Nabors by reason of death, disability, or any reason
other than for cause, or is terminated by either individual for Constructive
Termination Without Cause (as defined in the respective agreements) or is
terminated as a result of or following a Change in Control (as defined in the
respective agreements), the terminated individual will be entitled to receive:
(a) all base salary which would have been payable through the expiration date of
the contract or three times his then current base salary, whichever is greater;
(b) all annual cash bonuses which would have been payable through the expiration
date, or three times the highest bonus, (including the imputed value of grants
of stock awards and stock options), paid or payable during the last three fiscal
years prior to termination, whichever is greater; (c) any restricted stock
outstanding, which shall immediately and fully vest; (d) any outstanding stock
options, which shall immediately and fully vest; (e) any amounts earned, accrued
or owing to the executive but not yet paid (including executive benefits, life
insurance, disability benefits and reimbursement of expenses and perquisites)
shall be continued through the later of the expiration date or three

years after the termination date; (f) continued participation in medical, dental
and life insurance coverage until the executive receives equivalent benefits or
coverage through a subsequent employer or until the death of the executive or
his spouse, whichever is later; and (g) any other or additional benefits in
accordance with applicable plans and programs of Nabors. In the event that
either Mr. Isenberg's or Mr. Petrello's termination is related to a Change in
Control, the terminated individual, at his election, would be entitled to
receive a cash amount equal to one dollar less than the amount that would
constitute an "excess parachute payment" as defined in Section 280G of the
Internal Revenue Code, in place of the salary and bonus referred to in (a) and
(b) above. In addition, the terminated individual would be entitled, at his
election, to terminate his employment because of such Change in Control, and to
receive instead such number of outstanding options, as selected by the
individual, an amount of cash in exchange therefor equal to (x) the excess of
the Change in Control Price (as defined in the respective agreements) over the
exercise price of the options per common share multiplied by (y) the number of
options selected by the individual. In addition, the terminated individual would
be entitled to a grant of additional vested options exercisable for five years,
at a price equal to the average closing price per share during the 20 days prior
to the Change in Control in an amount equal to the highest number of options
granted during any fiscal year during the period comprising the then current
fiscal year and the three fiscal years preceding the Change in Control. In the
event that either Mr. Isenberg's or Mr. Petrello's employment contract is
terminated for cause or as a result of resignation (other than as described
above), the terminated individual will be entitled to receive: (1) base salary
through the date of termination; (2) all annual cash bonuses which would have
been payable through the date of termination; (3) all restricted stock that has
vested on or prior to the date of termination; (4) any outstanding stock options
vested on or prior to the date of termination; (5) any amounts earned, accrued
or owing to the executive but not yet paid (including executive benefits, life
insurance, disability benefits and reimbursement of expenses and perquisites if
to be performed following termination); and (6) other or additional benefits in
accordance with applicable plans and programs of Nabors. If Mr. Petrello's
employment is terminated for any reason, he also is entitled to certain
relocation benefits as set forth in his employment agreement.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

This section discusses certain direct and indirect relationships and
transactions involving Nabors and any director or Named Executive Officer.

Mr. Petrello has a loan from Nabors in the maximum amount of $2,881,915
pursuant to his employment agreement in connection with his relocation to
Houston, the balance of which was $2,881,915 as of December 31, 2004. The
repayment of the loan was automatically extended for an additional year on each
anniversary of his employment agreement. In September 2002 Mr. Petrello signed a
waiver discontinuing the automatic extensions of the loan repayment. The loan is
scheduled to be paid on or before September 30, 2006 and shall not be further
extended.

The adult son of one of our directors for fiscal 2004, Jack Wexler, is an
employee of Nabors Corporate Services, Inc., a subsidiary of Nabors, and has
been employed by Nabors since February 1, 1992. Mr. Wexler retired from the
Board in February 2005. The employee is paid an annual salary above $60,000 and
is eligible to receive cash bonuses and stock options.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee for fiscal 2004 was comprised of three
independent directors: Mr. Wexler (Chairman) and Mr. Sheinfeld and Mr. Whitman.
Mr. Wexler retired in February 2005 and Mr. Flores was appointed to the
Compensation Committee in February 2005. None of these directors has ever served
as an officer or employee of Nabors or any of its subsidiaries, nor has any
participated in any transaction during the last fiscal year required to be
disclosed pursuant to the federal proxy rules. No executive officer of Nabors
serves on any compensation committee of the board of directors of any entity
that has one or more of its executive officers serving as a member of our
Compensation Committee. In addition, none of our executive officers serves as a
member of the compensation committee of the board of directors of any entity
that has one or more of its executive officers serving as a member of our Board
of Directors.

REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

COMPENSATION AND ROLE OF THE COMPENSATION COMMITTEE

The Compensation Committee is responsible for overseeing the
administration of our compensation programs and setting the compensation of our
key executives. The Compensation Committee's charter is available on our website
at www.nabors.com. We discuss below our policies for compensating our executives
and aligning the interests of management with the long-term interests of
shareholders.

COMPENSATION POLICIES

The Compensation Committee's goal is to incentivize and reward superior
executive performance that will create long-term investor value and to attract
and retain executives who deliver that level of performance. The Compensation
Committee is mindful that the oil field services industry, particularly the
contract drilling segment, has been volatile, undergoing severe contractions in
activity forcing many companies to withdraw or be eliminated from the market
place followed by periods of rapid expansion when market conditions improve. The
ability of the Company to compete in this market place depends in part on its
ability to attract and retain executives with the necessary industry knowledge
and management and financial skills to preserve and enhance Nabors' position,
notwithstanding the industry's characteristics. For this reason, the
Compensation Committee also is of the view that attracting executive talent from
both inside and outside the industry is important to the continued enhancement
of Nabors. The Compensation Committee reviews and approves all of the policies
under which compensation is paid to our senior executive officers. The
Compensation Committee will regularly oversee and evaluate the effectiveness of
the executive compensation programs in hiring, motivating and retaining key
employees.

Nabors' executive compensation program includes base salary and incentive
bonuses as follows:

BASE SALARY. The Compensation Committee reviews the performance of each
senior executive officer individually with the Chief Executive Officer and
determines an appropriate salary level for each senior executive officer based
primarily on individual performance and competitive factors. These competitive
factors include as a reference the base salary of other top executives of
drilling contractors and the oil service sector generally, and also the
compensation levels needed to attract and retain highly talented executives from
outside the industry. The Compensation Committee noted that, prior to 2004, the
salaries of the Chief Executive Officer and the other Named Executive Officers
were, in most cases, below the mean of the salaries for the same categories of
Nabors' competitors, as reported in proxy statements of the five companies other
than Nabors that comprise the Dow Jones Oil Equipment and Services Index. Prior
to 2004, the salaries of the Chief Executive Officer and the President had
remained the same since 1987 and 1991, respectively. For fiscal 2004, the
Compensation Committee, subject to additional information received in connection
with a compensation study performed by Mercer Consulting and final approval by
the Board of Directors, approved increases in the base salaries for the Chief
Executive Officer and the President to $825,000 and $700,000, respectively.

INCENTIVE BONUS PROGRAM. The Compensation Committee administers annual
review programs to determine rewards to senior executive officers and key
employees based upon Nabors' performance in relation to performance goals.
Financial performance goals for the Chief Executive Officer and President are
set forth in the contractual bonus formulae described above under "MANAGEMENT
COMPENSATION-Employment Contracts". With respect to other senior executive
officers, the performance goals include both financial and nonfinancial
objectives, including achieving certain financial targets in relation to
internal budgets, developing internal infrastructure and enhancing positions in
certain markets. The financial criteria include, among other things, increasing
revenues, controlling direct and overhead expenses and increasing cash flow from
operations. The nonfinancial criteria include: obtainment of safety goals,
maintaining Nabors' share in its principal geographic markets, enhancing Nabors'
technical capabilities and developing operations in identified strategic
markets. Based on these reviews, the Compensation Committee recommends annual
incentive rewards. Annual incentive awards include cash, options or shares, or a
combination thereof. Share awards or stock option grants typically have been
issued on a four-year vesting schedule, but the Compensation Committee reserves
the right to modify the vesting schedule in its discretion. Annual incentive
bonus awards are not guaranteed except for those provided under contractual
arrangements. The Compensation Committee believes that equity awards are
critical in motivating and rewarding the creation of long-term shareholder
value, and the Compensation Committee has established a policy of including
equity awards in the employee's overall compensation package from time to time
based on the continuing progress of Nabors and on individual performance.

Mr. Isenberg's and Mr. Petrello's cash bonuses are determined under a
contractual formula based upon financial results (see "MANAGEMENT COMPENSATION -
Employment Contracts"). However, for 2004, Mr. Isenberg voluntarily recommended
and the Compensation Committee concurred to reduce the amount of cash bonus
which he was entitled to receive under his contractual arrangements and awarded
Mr. Isenberg $2,200,000. Similarly, Mr. Petrello agreed to reduce the amount of
cash bonus which he was entitled to receive under his contractual arrangements
and the Compensation committee awarded Mr. Petrello $1,100,000. On February 24,
2005, the Committee granted to Mr. Isenberg and Mr. Petrello 350,000 and 175,000
stock options, respectively, with a per share exercise price of $57.65, the
closing price of an underlying share on the date of grant. On February 24, 2005,
the Committee also granted to Mr. Isenberg and Mr. Petrello 100,000 and 50,000
restricted shares, respectively.

Section 162(m) of the Internal Revenue Code of 1986, as amended, limits to
$1,000,000 the amount of compensation that may be deducted by Nabors in any year
with respect to certain of Nabors' highest paid executives. Certain
performance-based compensation that has been approved by shareholders is not
subject to the $1,000,000 limit, nor is compensation paid pursuant to employment
contracts in existence prior to the adoption of Section 162(m) in 1993. Section
162(m) applied to Nabors for the first time in fiscal 1995. Although the
contractual bonus arrangements remained the same from their previous contracts,
certain bonus compensation, as well as the share options granted to Mr. Isenberg
and Mr. Petrello pursuant to the new and amended employment contracts entered
into in 1996 may not be exempt from Section 162(m). Consequently, Nabors may not
be able to deduct that portion of such compensation that exceeds $1,000,000 (see
"MANAGEMENT COMPENSATION-Option/Exercises During 2004 and Year-End Options
Values" and "- Employment Contracts"). While Nabors intends to take reasonable
steps to obtain deductibility of compensation, it reserves the right not to do
so in its judgment, particularly with respect to retaining the service of its
principal executive officers.

CHIEF EXECUTIVE OFFICER AND PRESIDENT

Nabors' arrangements with its Chief Executive Officer and President have
been designed from the outset to align their compensation with enhancing
shareholder value. Mr. Isenberg's compensation is made pursuant to a contractual
formula that was negotiated with the creditors committee in 1987 in connection
with the bankruptcy proceedings of Nabors' predecessor corporation. These
arrangements were subsequently approved by the

various constituencies in such bankruptcy proceedings, including equity and debt
holders, and confirmed by the United States Bankruptcy Court. Mr. Isenberg's
base salary remained constant from 1987 through the end of 2003 and Mr.
Petrello's base salary remained constant since his employment began in 1991
through the end of 2003. The major portion of Mr. Isenberg's and Mr. Petrello's
cash compensation is the performance-based bonus compensation. Under their
agreements, Mr. Isenberg and Mr. Petrello are entitled to receive a cash bonus
according to a formula based on a percentage during 2004 (Isenberg-6%,
Petrello-2%) of cash flow in excess of a 15% return on shareholders' average
book equity. Mr. Petrello is entitled to a minimum annual cash bonus of
$700,000. The Compensation Committee believes that tying the cash bonus to
Nabors' cash flow in excess of a return on shareholders' average equity aligns
Mr. Isenberg's and Mr. Petrello's bonuses to the objective of achieving superior
financial results that should enhance shareholder value. In order to ensure that
Mr. Isenberg and Mr. Petrello would continue to be available to Nabors, the
Compensation Committee amended and restated their employment contracts effective
October 1, 1996 for additional five-year terms that renew annually absent notice
to the contrary (see "MANAGEMENT COMPENSATION - Employment Contracts"). Mr.
Isenberg's contractual bonus (as well as Mr. Petrello's) provides for the
mandatory application of their respective bonus formulae. However, as indicated
above, for 2004 the Compensation Committee, upon the recommendation of Messrs.
Isenberg and Petrello reduced the cash bonus award to which Mr. Isenberg and Mr.
Petrello were entitled under the formula arrangement.

In reviewing Mr. Isenberg's and Mr. Petrello's compensation, the
Compensation Committee noted that Nabors' financial results in 2004 were the
second best in the Company's history at $1.92 per diluted share. Results
increased throughout the year as supply and demand for rigs tightened and our
management team's foresight in prior and current investments at attractive costs
have positioned the Company extraordinarily well to achieve new records over the
next few years. There were noteworthy achievements in virtually every operating
and business category/activity that further our ability to fully exploit the
market recovery. New, state-of-the-art rigs were deployed in Canada and the U.S.
Lower 48 Drilling and Well Servicing businesses, the U.S. Gulf of Mexico
deepwater, and Saudi Arabia all of which were accomplished at favorable cost,
thus generating superior returns by utilizing the Company's available equipment.
Furthermore, financial strength was maintained, the Company generated free cash
flow after an aggressive investment year, and the Company is recognized as a
dynamic, excellently managed organization, well positioned to maintain its
leadership and growth. Forbes Magazine named Nabors Industries to its Platinum
400 list of America's best companies and went further by selecting Nabors as one
of the 26 best managed companies among this elite group.

The senior executive management team in place for many years has
demonstrated its versatility and leadership in forging a stable and effective
organization. The Compensation Committee also noted The Wall Street Journal's
special supplement published on February 28, 2005 which again listed Nabors
among the top U.S. companies in long-term shareholder returns, with a ten-year
return of 22.9%, surpassing the vast majority of its list of 1,000 largest
companies in 76 industry groups.

The Compensation Committee believes that the consistent high ranking of
Nabors in such studies throughout the industry's cyclical ups and downs
validates its assertion that the current management team has delivered
consistently superior returns to its shareholders over the long term. In fact,
according to Bloomberg, Nabors' ten-year average is 23.14% which is nearly
double that of the S&P 500 (the ten-year average return for companies in the S&P
500 Index is 11.88% for the ten-year period ending December 31, 2004) and is
well in excess of a significant majority of its peers in both the energy
industry and general US business. The Compensation Committee also believes that
retention and financial motivation of the current management team is vital to
sustaining this level of performance.

FINANCIAL HIGHLIGHTS - NABORS INDUSTRIES LTD. AND SUBSIDIARIES
(In millions, except per share amounts)

2004 VERSUS 2003 2004 VERSUS 1999
------------------- ----------------------
FISCAL YEAR (1) INCREASE/(DECREASE) INCREASE/(DECREASE)
------------------------------------------------------------------------------------
FINANCIAL DATA 2004 2003 1999 $ % $ %
--------- --------- --------- --------- -- ------- ---

Revenues and earnings from
unconsolidated affiliates..... $ 2,398 $ 1,890 $ 670 508 27 1,728 258

Net income....................... 302.5 192.2 27.7 110.3 57 274.8 992

Net income per diluted
Share......................... 1.92 1.25 .23 .67 54 1.69 734

Stockholders' equity............. 2,929.4 2,490.3 1,470 439.1 18 1,459.4 99

Year end market value of
shares outstanding............ $ 7,686.4 $ 6,086.2 $ 4,233.2 $ 1,600.2 26 3,453.2 82

(1) The fiscal years ended 2004, 2003 and 1999 are for the period January 1
through December 31.

THE COMPENSATION COMMITTEE
Jack Wexler, Chairman (through February 2005)
James C. Flores (from February 2005)
Myron M. Sheinfeld
Martin J. Whitman

REPORT OF THE AUDIT COMMITTEE

The Audit Committee is comprised of three independent directors and
operates pursuant to a written Charter that is available on our website at
www.nabors.com. In 2004 the Committee met four times. The primary purposes of
the Audit Committee are to assist the Board in monitoring (a) the quality and
integrity of the financial statements of Nabors; (b) the independent auditors'
qualifications and independence; (c) the performance of Nabors' independent
auditors; and (d) compliance by Nabors with legal and regulatory requirements.
The Board has determined that the Audit Committee's current composition
satisfies the rules of the AMEX that govern audit committee composition,
including the requirement that each member of the Audit Committee be
"independent" as that term is defined under the listing standards of the AMEX
and specified in Rule 10A-3 under the Securities Exchange Act of 1934. In
addition, the Board has determined that Mr. Whitman is an "audit committee
financial expert" as defined under the current rules of the SEC.

Management is responsible for the preparation, presentation and integrity
of Nabors' financial statements, accounting and financial reporting principles
and internal controls and procedures designed to assure compliance with
accounting standards and applicable laws and regulations. The independent
auditors are responsible for performing an independent audit of the financial
statements in accordance with generally accepted auditing standards. The
independent auditors have free access to the Audit Committee to discuss any
matters they deem appropriate.

In performing its oversight role, the Audit Committee has reviewed and
discussed the audited financial statements with management and the independent
auditors. The Audit Committee has also discussed with the independent auditors
the matters required to be discussed by Statement on Auditing Standards No. 61,

Communication with Audit Committees, as updated by Statement on Auditing
Standards No. 89, Audit Adjustments, and Statement on Auditing Standards No. 90,
Audit Committee Communications. The Committee has received the written
disclosures and the letter from the independent auditors required by
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees, as currently in effect and has discussed with the independent
auditors their independence. The Audit Committee has also considered whether the
provision of certain non-audit services by the independent auditors is
compatible with maintaining the auditors' independence and has enhanced its
pre-approval policies and procedures for services provided by our independent
auditors. The Committee also reviews reports received from the internal auditors
and corrective actions taken by management where warranted.

During fiscal 2004 the Audit Committee performed all of its duties and
responsibilities under the then-applicable Audit Committee Charter. In addition,
based on the review and discussions described in this Report of the Audit
Committee, the Audit Committee recommended to the Board of Directors and the
Board approved that the audited financial statements of Nabors for fiscal 2004
be included in its Annual Report on Form 10-K for such fiscal year.

THE AUDIT COMMITTEE
Myron M. Sheinfeld, Chairman
Jack Wexler (through February 2005)
Martin J. Whitman

PREAPPROVAL OF INDEPENDENT AUDITOR SERVICES. The Audit Committee
preapproves all audit and permitted non-audit services (including the fees and
terms thereof) to be performed for the Company by PricewaterhouseCoopers LLP
("PricewaterhouseCoopers"), the Company's independent auditors. The Chairman of
the Audit Committee may preapprove additional permissible proposed non-audit
services that arise between Committee meetings, provided that the decision to
pre-approve the service is presented for ratification at the next regularly
scheduled Committee meeting.

INDEPENDENT AUDITOR FEES

The following table summarizes the aggregate fees for professional
services rendered by PricewaterhouseCoopers. The Audit Committee pre-approved
fiscal 2004 services and approved fiscal 2003 services.

2004 2003
---------------- ----------------

Audit Fees $ 4,787,460 $ 2,012,778
Audit-Related Fees 314,799 297,058
Tax Fees 1,015,845 1,349,954
All Other Fees -
-
---------------- ----------------
Total $ 6,118,104 $ 3,659,790
================ ================

The Audit fees for the years ended December 31, 2004 and 2003,
respectively, include fees for professional services rendered for the audits of
the consolidated financial statements of the Company, statutory and subsidiary
audits, issuance of comfort letters, consents, and accounting consultation
attendant to the audit. Additionally, audit fees for 2004 include the audit of
management's report on the effectiveness of the Company's internal control over
financial reporting and PricewaterhouseCooper's own audit of the Company's
internal control over financial reporting, in each case as required by Section
404 of the Sarbanes-Oxley Act of 2002 and applicable SEC rules.

The Audit-Related fees as of the years ended December 31, 2004 and 2003
include audits of employee benefit plans, agreed upon procedures engagements and
consultations concerning financial accounting and reporting standards.
Additionally, audit related fees for the year 2003 include work performed in
anticipation of the requirements of Section 404 of the Sarbanes-Oxley Act of
2002, limited to data entry of the Company's policies and procedures into the
project management database of Section 404 compliance.

Tax fees as of the years ended December 31, 2004 and 2003, respectively,
include services related to tax compliance, including the preparation of tax
returns and claims for refund; and tax planning and tax advice.

There were no other professional services rendered during 2004 or 2003.

-------------------
* The aggregate fees included in Audit Fees are fees billed for the fiscal years
for the audit of the registrant's annual financial statements and review of
financial statements and statutory and regulatory filings or engagements. The
aggregate fees included in each of the other categories are fees billed in the
fiscal years.

ITEM 2
APPROVAL AND APPOINTMENT OF INDEPENDENT AUDITORS AND AUTHORIZATION OF
THE AUDIT COMMITTEE TO SET THE AUDITORS REMUNERATION

Under Bermuda law, our shareholders have the responsibility to appoint the
independent auditors of the Company to hold office until the close of the next
annual general meeting and to authorize the Audit Committee of the Board of
Directors to set the auditors' remuneration. At the annual general meeting, the
shareholders will be asked to approve the appointment of PricewaterhouseCoopers
LLP as our independent auditors and to authorize the Audit Committee of the
Board of Directors to set the independent auditors' remuneration.
PricewaterhouseCoopers LLP, or a predecessor, has been our independent auditors
since May 1987.

A representative from PricewaterhouseCoopers LLP is expected to be present
at the annual general meeting, will have the opportunity to make a statement if
he or she desires to do so, and will be available to respond to appropriate
questions.

DIRECTORS' RECOMMENDATION

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS OF THE COMPANY AND TO
AUTHORIZE THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS TO SET THE AUDITORS'
REMUNERATION.

ITEM 3
AMENDMENT TO AMENDED AND RESTATED BYE-LAWS TO REQUIRE SHAREHOLDER
APPROVAL OF CERTAIN DISPOSITIONS OF COMPANY ASSETS

The Company's Board of Directors has unanimously approved an amendment to
the Company's Amended and Restated Bye-Laws (the "Bye-Law Amendment") and has
voted to recommend that the shareholders approve the Bye-Law Amendment. The
proposed Bye-Law Amendment would require the affirmative vote of holders of a
majority of the outstanding shares of the Company entitled to vote on the
relevant record date for the approval of the disposition (whether by sale, lease
or exchange) of all or substantially all of the Company's property and/or assets
(an "Asset Sale"). The proposed Bye-Law Amendment, if adopted, would amend the
Bye-Laws of the Company by adding the following new bye-law:

"87 Sale, Lease or Exchange of Assets. The Board of
Directors is hereby expressly authorized to sell,
lease or exchange all or substantially all of the
Company's property and assets, including the
company's goodwill and its corporate franchises, upon
such terms and conditions and for such consideration,
which may coexist in whole or in part of money or
other property, including shares of stock in, and/or
other securities of, any other corporation or
corporations, as the Board of Directors deems
expedient and for the best interests of the Company,
subject to the authorization by a Resolution adopted
by the affirmative vote of the holders of record of a
majority of the outstanding shares of capital stock
of the Company entitled to vote on the relevant
record date with respect thereto. Notwithstanding
authorization or consent to a

proposed sale, lease or exchange of the Company's
property and assets by the shareholders, the Board of
Directors may abandon such proposed sale, lease or
exchange without further action by the shareholders,
subject to the rights, if any, of third parties under
any contract relating thereto."

Existing bye-law number 87, "Alteration of Bye-Laws," will be renumbered as
bye-law number 88. No other provisions of the Bye-Laws will be affected by the
Bye-Law Amendment, save consequential amendments to the Bye-Laws necessitated by
the Bye-Law Amendment.

The Board of Directors of the Company is asking shareholders to consider
and adopt the proposed Bye-Law Amendment in order to grant the shareholders the
right to vote upon any proposed Asset Sale. The Bye-Law amendment, if adopted,
will prevent the Board of Directors from causing the consummation of an Asset
Sale without the prior approval of the holders of a majority of the shares of
the Company. The Board of Directors has approved the Bye-Law Amendment in
adherence with its commitment to maintain good corporate governance and in this
case to conform the Company's Bye Laws with respect to the approval of Asset
Sales with the Delaware corporate law provisions regarding such dispositions.

The proposed Bye-Law Amendment is permitted under Bermuda law and is
consistent with the rules of AMEX. The Bye-Law Amendment is not the result of
any specific efforts to consummate an Asset Sale of which the Company is aware.
Pursuant to the Amended and Restated Bye-Laws of the Company, the proposed
Bye-Law Amendment, if adopted, may only be amended or repealed by the
affirmative vote of the holders of a majority of the Company's outstanding
shares.

REQUIRED VOTE

The affirmative vote of the holders of a majority of the Company's
outstanding shares is required for the approval of the Bye-Law Amendment. The
Bye-Law Amendment will become effective upon such approval.

DIRECTORS' RECOMMENDATION

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT
TO THE AMENDED AND RESTATED BYE-LAWS TO REQUIRE SHAREHOLDER APPROVAL OF CERTAIN
DISPOSITIONS OF COMPANY ASSETS.

ITEM 4
AMENDMENT TO 2003 EMPLOYEE STOCK PLAN TO MAKE NONEMPLOYEE DIRECTORS
ELIGIBLE PARTICIPANTS

PROPOSED AMENDMENT

The Board of Directors believes that equity compensation awards are vital
to attract, retain and motivate highly qualified directors, officers and other
key employees, to enable them to acquire a larger personal financial interest in
the Company through the acquisition and ownership of common stock, and to
encourage them to identify with shareholders through stock ownership. To this
end, the Board of Directors established, and the shareholders previously
approved, our 2003 Employee Stock Plan. The Board of Directors is now seeking
approval to amend the 2003 Employee Stock Plan to make nonemployee directors of
the Company eligible to receive awards of restricted stock under such plan. We
are not proposing to increase the number of shares available under the Plan. The
Board of Directors has voted to amend the 2003 Employee Stock Plan (as amended,
the "Plan"), subject to shareholder approval at the annual general meeting, to
make nonemployee directors eligible to receive awards of restricted stock under
the Plan. The plan pursuant to which the nonemployee directors of the Company
historically have received stock options (the 1999 Stock Option Plan for
Non-Employee Directors) does not contemplate awards of restricted stock and
recent accounting

pronouncements requiring the expensing of stock options may make awards of
restricted stock preferable to awards of stock options. The full text of the
proposed amendment to the Plan is as follows:

Section 2(l). "'Eligible Recipient' means an employee
or officer of the Company or of any Subsidiary or
Affiliate, and in the case of awards of Restricted
Stock, shall include nonemployee directors of the
Company."

PLAN DESCRIPTION

The following is a brief description of the relevant features of the Plan.
It does not purport to be complete and is qualified in its entirety by the full
text of the Plan, which is attached hereto as Exhibit A.

GENERAL. We have reserved for issuance under the Plan a maximum of
3,500,000 common shares. If an award granted under the Plan expires or is
terminated, the common shares underlying the award will again be available under
the Plan. In addition, to the extent common shares are used to exercise any
award (as described below) or to satisfy tax withholding obligations under the
Plan, an equal number of shares will remain available for issuance under the
Plan. No individual may be granted awards under the Plan in any calendar year
covering more than 1,500,000 shares.

In the event of any change in the Company's capitalization or in the event
of a corporate transaction such as a merger, amalgamation, consolidation,
separation or similar event, the Plan provides for appropriate adjustments in
the number and class of common shares available for issuance or grant and in the
number and/or price of shares subject to awards.

TYPES OF AWARDS. The following awards may be granted under the Plan:

[X] stock options, including incentive stock options and
non-qualified stock options,

[X] restricted stock,

[X] restricted stock units,

[X] stock appreciation rights, and

[X] stock bonuses.

The amendment to the Plan would permit nonemployee directors to receive
restricted stock awards under the Plan, but no other forms of awards could be
made to nonemployee directors.

ADMINISTRATION. The terms and conditions of each award granted under the
Plan will be set forth in a written award agreement relating to the award. The
Governance and Nominating Committee of the Board of Directors recommends
compensation (including the amount and form of equity awards) for the
nonemployee directors to the full Board of Directors, which sets the
compensation for the nonemployee directors. Accordingly, specific grants under
the Plan will be made in the discretion of the Board of Directors.

RESTRICTED STOCK. The Plan provides for awards of common shares that are
subject to restrictions on transferability and other restrictions that may be
determined by the Committee in its discretion. Such restrictions will lapse on
terms established by the Committee. Except as may be otherwise provided under
the award agreement relating to the restricted stock, a participant granted
restricted stock will have all the rights of a shareholder (for instance, the
right to receive dividends on the shares of restricted stock, if any, and the
right to vote the shares). The restricted period shall not be less than three
years, but the restricted period can be shortened to one or more years if
vesting of the restricted stock is conditioned upon the attainment of certain
performance goals established by the Committee at the time of grant.

CHANGE IN CONTROL. The Committee in its discretion may provide that, in
the event of a change in control (as defined in an applicable award agreement),
whether alone or in combination with other events, the vesting and
exercisability restrictions on any outstanding award that is not yet fully
vested and exercisable will lapse in part or in full.

AMENDMENT AND TERMINATION. The Board of Directors may modify or terminate
the Plan or any portion of the Plan at any time, except that an amendment that
requires shareholder approval in order for the Plan to continue to comply with
any law, regulation or stock exchange requirement will not be effective unless
approved by the requisite vote of our shareholders. In addition, any amendment
shall be subject to approval of our shareholders if it materially increases the
benefits accruing to participants under the Plan, materially increases the
number of shares that may be issued under the Plan, or materially modifies the
requirements for participation in the Plan. Any amendment to the Plan or an
award agreement that accelerates the date on which an award is exercisable or
payable or that reduces the exercise price of any outstanding option will also
be subject to the approval of our shareholders. No awards may be granted under
the Plan after the day prior to the tenth anniversary of the date of its
approval by the Company's shareholders, but awards granted prior to that time
can continue after such time in accordance with their terms.

REQUIRED VOTE

The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy at the annual general meeting and entitled to
vote on this proposal is required for the approval of the amendment to the Plan.
The amendment to the Plan will become effective upon such approval.

DIRECTORS' RECOMMENDATION

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT
TO THE 2003 EMPLOYEE STOCK PLAN.

ITEM 5
SHAREHOLDER PROPOSAL TO REQUIRE THE COMPANY TO ADOPT A POLICY THAT A
SIGNIFICANT AMOUNT OF FUTURE STOCK GRANTS TO SENIOR EXECUTIVES BE
PERFORMANCED-BASED

ProxyVote Plus, LLC, 2 Northfield Plaza, Northfield, IL 60093, owner of
12,032 common shares of the Company, notified the Company that it intends to
present the following proposal and related supporting statement at the annual
general meeting of shareholders:

RESOLVED, that the shareholders of Nabors request that the Compensation
Committee of the Board of Directors adopt a policy that a significant portion of
future stock option grants to senior executives shall be performance-based.
Performance-based options are defined as follows: (1) indexed options, in which
the exercise price is linked to an industry or well-defined peer group index;
(2) premium-priced stock options, in which the exercise price is set above the
market price on the grant date; or (3) performance-vesting options, which vest
when a performance target is met.

SUPPORTING STATEMENT

As long-term shareholders of the Company, we support executive
compensation policies and practices that provide challenging performance
objectives and serve to motivate executives to enhance long-term corporate
value. We believe that standard fixed-price stock option grants can and often do
provide levels of compensation well beyond those merited, by reflecting stock
market value increases, not performance superior to the company's peer group.

Our shareholder proposal advocates performance-based stock options in the
form of indexed, premium-priced or performance-vesting stock options. With
indexed options, the option exercise price moves with an appropriate peer group
index so as to provide compensation value only to the extent that the company's
stock price performance is superior to the companies in the peer group utilized.
Premium-priced options entail the setting of an option exercise price above the
exercise price used for standard fixed-priced options so as to provide value for
sock price performance that exceeds the premium option price.
Performance-vesting options encourage strong corporate performance by

conditioning the vesting of granted options on the achievement of demanding
stock and/or operational performance measures.

Our shareholder proposal requests that the Company's Compensation
Committee utilize one or more varieties of performance-based stock options in
constructing the long-term equity portion of the senior executives' compensation
plan. The use of performance-based options, to the extent they represent a
significant portion of the total options granted to senior executives, will help
place a strong emphasis on rewarding superior corporate performance and the
achievement of demanding performance goals.

Leading investors and market observers, such as Warren Buffet and Alan
Greenspan, have criticized the use of fixed-price options on the grounds that
they all to often reward mediocre or poor performance. The Conference Board's
Commission on Public Trust and Private Enterprise in 2002 looked at the issue of
executive compensation and endorsed the use of performance-based options to help
restore public confidence in the markets and U.S. corporations.

At present, the Company does not employ performance-based stock options as
defined in this proposal, so shareholders cannot be assured that only superior
performance is being rewarded. Performance-based options can be an important
component of a compensation plan designed to focus senior management on
accomplishing long-term corporate strategic goals and superior long-term
corporate performance. We urge your support for this important executive
compensation reform.

REQUIRED VOTE

DIRECTORS' RECOMMENDATION

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THE
SHAREHOLDER PROPOSAL.

After careful consideration, and for the reasons set forth below, the
Board believes that the proposal to require the Compensation Committee to adopt
a policy that a significant portion of future stock option grants to senior
executives be indexed options, premium-priced options, or performance vesting
options is not in the best interests of the Company or its stockholders for the
following reasons:

1. We believe strongly in, and have a long history of, linking employee
compensation to company performance. Historically, our compensation programs
have included a higher proportion of compensation delivered through
pay-for-performance incentives and long-term equity compensation, equating to
more compensation risk for our executives than for the employees of competitor
companies. Our programs historically have provided for lower-than-market base
salaries and higher-than-market equity incentives. This philosophy has
contributed to the Company's relatively better financial performance in times of
weaker financial performance. Conversely, in times of excellent performance, it
yields higher total compensation, rewarding employees for sustained excellent
performance.

2. Fixed-price stock options already are performance-based because the
exercise price equals the market value of Company's common stock on the date of
award. Accordingly, no economic benefit is conferred on the optionee unless the
Company's stock increases in value subsequent to the award date. Stock options
generally vest over a period of years. These vesting periods require long-term
focus on company performance in order for the employee to realize any value from
the exercise of stock options. We believe it appropriate for there to be
elements of equity-based compensation in which employees are able to realize the
full benefits of positive market performance and experience the effects of
negative market performance, as do shareholders. We believe that fixed-price
stock options provide an objective performance metric that is directly aligned
with the interests of stockholders and is an appropriate performance measure for
the Company.

3. We believe that the shareholder proposal is unnecessary because the
Company's compensation programs already have significant performance and
time-based components and that implementing such proposal would adversely affect
the Company's ability to attract and retain the most qualified senior
executives. Because few companies have adopted indexed or premium-priced
options, adoption of the proponent's proposal could place the Company in a
competitively disadvantageous position in attracting and retaining executive
talent, as our peers would not similarly be restricted in the types of incentive
awards available for award. We considered and rejected the concept of
implementing premium-priced options because, in order to place the Company's
executives on a "level playing field" with companies which have not adopted
indexed or premium-priced options, the size of the awards made upon achieving
the arbitrarily determined threshold would need to be increased incrementally,
which we did not and do not believe to be in the best interests of the Company's
shareholders.

4. We believe it is appropriate for the Compensation Committee to retain
the flexibility to structure compensation programs taking into account
circumstances as they exist from time to time. Changing economic and industry
conditions, accounting requirements and tax laws, together with evolving
governance trends, all mitigate in favor of preserving the flexibility of the
Compensation Committee to structure equity incentives as they deem appropriate
from time to time to balance the corporate objectives they wish to promote with
appropriate compensation metrics.. The shareholder proposal would needlessly
limit that flexibility.

The Board believes that the Company's current equity compensation programs
work well and have been a strong contributing factor to the Company's success
over the years, providing real value to its stockholders. The Board believes
that it is in the best interests of stockholders to give the Compensation
Committee the flexibility and discretion to use compensation and equity
incentive tools as appropriate based on the circumstances and information
available at the time. For this reason and the reasons stated above, the Board
believes that the adoption of the stockholder proposal is unnecessary and
detrimental to the long-term interests of the Company's stockholders and
therefore unanimously recommends a vote "AGAINST" the proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THE
SHAREHOLDER PROPOSAL TO REQUIRE THE COMPANY TO ADOPT A POLICY THAT A SIGNIFICANT
AMOUNT OF FUTURE STOCK GRANTS TO SENIOR EXECUTIVES BE PERFORMANCED-BASED.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires Nabors
directors and executive officers, and persons who own more than 10% of a
registered class of Nabors' equity securities, to file with the Securities and
Exchange Commission and the American Stock Exchange initial reports of ownership
and reports of changes in ownership of common shares and other equity securities
of Nabors. Officers, directors and greater than 10% shareholders are required by
Commission regulation to furnish Nabors with copies of all Section 16(a) forms
which they file.

To our knowledge, based solely on review of the copies of Forms 3 and 4
and amendments thereto furnished to us during 2004 and Form 5 and amendments
thereto furnished to us with respect to the year 2004, and written
representations that no other reports were required, all Section 16(a) filings
required to be made by Nabors' officers, directors and greater than 10%
beneficial owners with respect to the fiscal year 2004 were timely filed, except
Mr. Alexander Knaster filed a late Form 3 with respect to his initial holdings.

SHAREHOLDER MATTERS

Bermuda has exchange controls which apply to residents in respect of the
Bermudian dollar. As an exempt company, Nabors is considered to be nonresident
for such controls; consequently, there are no Bermuda governmental restrictions
on the Company's ability to make transfers and carry out transactions in all
other currencies, including currency of the United States.

There is no reciprocal tax treaty between Bermuda and the United States
regarding withholding taxes. Under existing Bermuda law, there is no Bermuda
income or withholding tax on dividends, if any, paid by Nabors to its
shareholders. Furthermore, no Bermuda tax or other levy is payable on the sale
or other transfer (including by gift or on the death of the shareholder) of
Nabors common shares (other than by shareholders resident in Bermuda).

STOCK PERFORMANCE GRAPH

The following graph illustrates comparisons of five-year cumulative total
returns among Nabors Industries Ltd., the S&P 500 Index and the Dow Jones Oil
Equipment and Services Index. Total return assumes $100 invested on December 31,
1999 in shares of Nabors Industries Ltd., the S&P 500 Index, and the Dow Jones
Oil Equipment and Services Index. It also assumes reinvestment of dividends and
is calculated at the end of each calendar year, December 31, 2000 to December
31, 2004.

[LINE GRAPH]

2000 2001 2002 2003 2004
---- ---- ---- ---- ----

NABORS INDUSTRIES LTD. 191 110 114 134 166

S&P 500 Index 91 80 62 80 89

Dow Jones Oil Equipment and Services Index 148 102 94 108 146

SHAREHOLDER PROPOSALS

Shareholders who, in accordance with the SEC's Rule 14a-8, wish to present
proposals for inclusion in the proxy materials to be distributed by us in
connection with our 2006 annual general meeting of shareholders must submit
their proposals and their proposals must be received at our principal executive
offices no later than January __, 2006. As the rules of the SEC make clear,
simply submitting a proposal does not guarantee its inclusion.

In accordance with our Bye-Laws, in order to be properly brought before
the 2006 annual general meeting, a shareholder notice of the matter the
shareholder wishes to present must be delivered to the Secretary of Nabors at
Nabors Industries Ltd., 2nd Floor, International Trading Centre, Warrens, P.O.
Box 905E, St. Michael, Barbados, not less than sixty (60) nor more than ninety
(90) days prior to the first anniversary of this year's annual general meeting
(provided, however, that if the 2006 annual general meeting is called for a date
that is not within thirty (30) days before or after such anniversary date,
notice must be received not later than the close of business on the tenth (10th)
day following the day on which notice of the date of the annual general meeting
is mailed or public disclosure of the date of the annual general meeting is
made, whichever first occurs). As a result, any notice given by or on behalf of
a shareholder pursuant to these provisions of our Bye-Laws (and not pursuant to
the SEC's Rule 14a-8) generally must be received no earlier than March 9, 2006
and no later than April 8, 2006.

OTHER MATTERS

The Board knows of no other business to come before the annual general
meeting. However, if any other matters are properly brought before the annual
general meeting, the persons named in the accompanying form of proxy, or their
substitutes, will vote in their discretion on such matters.

COSTS OF SOLICITATION. We will pay the expenses of the preparation of the
proxy materials and the solicitation by the Board of your proxy. We have
retained Georgeson Shareholder Communications Inc., 17 State Street, New York,
New York 10004 to solicit proxies on behalf of the Board of Directors at an
estimated cost of $15,000 plus reasonable out-of-pocket expenses. Proxies may be
solicited on behalf of the Board of Directors by mail, in person and by
telephone. Proxy materials will also be provided for distribution through
brokers, custodians, and other nominees and fiduciaries. We will reimburse such
parties for their reasonable out-of-pocket expenses for forwarding the proxy
materials.

FINANCIAL STATEMENTS. The financial statements for the Company's 2004
fiscal year will be presented at the annual general meeting.

SHAREHOLDER COMMUNICATIONS WITH DIRECTORS. Shareholders may contact any of
the Company's directors, a committee of the Board of Directors, the Board's
independent directors as a group or the Board generally, by writing to them at
Nabors Industries Ltd., 2nd Floor, International Trading Centre, Warrens, P.O.
Box 905E, St. Michael, Barbados. Shareholder communications received in this
manner will be handled in accordance with procedures approved by the Board's
independent directors. The Board's Policy Regarding Shareholder Communications
with the Board of Directors is available at www.nabors.com. In addition, the
Company encourages directors to attend the annual general meeting of
shareholders. Four directors attended the 2004 annual general meeting of
shareholders.

NABORS INDUSTRIES LTD.

/s/ Daniel McLachlin

DANIEL MCLACHLIN

Dated: May __, 2005 Secretary

NABORS INDUSTRIES LTD.

2003 EMPLOYEE STOCK PLAN

SECTION 1. PURPOSE OF PLAN.

The name of this plan is the Nabors Industries Ltd. 2003
Employee Stock Plan (the "Plan"). The purpose of the Plan is to provide
additional incentive to those officers and employees of the Company and its
Subsidiaries and Affiliates whose contributions are essential to the growth and
success of the Company's business, in order to strengthen the commitment of such
persons to the Company and its Subsidiaries and Affiliates, motivate such
persons to faithfully and diligently perform their responsibilities and attract
and retain competent and dedicated persons whose efforts will result in the
long-term growth and profitability of the Company and its Subsidiaries and
Affiliates. To accomplish such purposes, the Plan provides that the Company may
grant Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units, and Stock Bonuses. The Plan is
intended to permit awards that satisfy the requirements of section 162(m) of the
Code and shall be interpreted in a manner consistent with the requirements
thereof.

SECTION 2. DEFINITIONS.

For purposes of the Plan, in addition to terms defined
elsewhere in the Plan, the following terms shall be defined as set forth below:

(a) "Administrator" means the Board, or if and to the extent
the Board does not administer the Plan, the Committee, in accordance with
Section 3 hereof.

(b) "Affiliate" means any corporation or other entity, more
than 50% of the voting power of the outstanding voting securities of which is
owned by the Company, its Subsidiaries, or any other Affiliate.

(c) "Award" means an award of Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units, or Stock Bonus under the Plan.

(d) "Award Agreement" means, with respect to any Award, the
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.

(e) "Board" means the Board of Directors of the Company.

(f) "Change in Capitalization" means any increase, reduction,
or change or exchange of Shares for a different number or kind of shares or
other securities or property by reason of a reclassification, recapitalization,
merger, amalgamation, consolidation, reorganization, issuance of warrants or
rights, stock dividend, stock split or reverse stock split, combination or
exchange of shares, repurchase of shares, change in corporate structure or
otherwise; or any other corporate action, such as declaration of a special
dividend, that affects the capitalization of the Company.

(g) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor thereto.

(h) "Committee" means any committee or subcommittee the Board
may appoint to administer the Plan. If at any time or to any extent the Board
shall not administer the Plan, then the functions of the Administrator specified
in the Plan shall be exercised by the Committee. Unless otherwise determined by
the Board, the composition of the Committee shall at all times consist solely of
persons who are (i) "Nonemployee Directors" as defined in Rule 16b-3 issued
under the Exchange Act, and (ii) "outside directors" as defined in section
162(m) of the Code.

(i) "Common Shares" means the common shares, par value $0.001
per share, of the Company.

(j) "Company" means Nabors Industries Ltd., a Bermuda exempt
company (or any successor corporation).

(k) "Disability" means (1) any physical or mental condition
that would qualify a Participant for a disability benefit under any long-term
disability plan maintained by the Company (or by the Subsidiary or Affiliate by
which he is employed); (2) when used in connection with the exercise of an
Incentive Stock Option following termination of employment, disability within
the meaning of section 22(e)(3) of the Code; or (3) such other condition as may
be determined in the sole discretion of the Administrator to constitute
Disability.

(l) "Eligible Recipient" means an employee or officer of the
Company or of any Subsidiary or Affiliate.

(m) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.

(n) "Exercise Price" means the per share price at which a
holder of an Option may purchase the Shares issuable upon exercise of the
Option.

(o) "Fair Market Value" of a Common Share as of a particular
date shall mean (1) the closing sale price reported for such share on the
national securities exchange or national market system on which such share is
principally traded on such date (or, if there were no trades on such date, on
the most recently preceding day on which there was a sale), or (2) if the Common
Shares are not then listed on a national securities exchange or national market
system, or the value of such shares is not otherwise determinable, such value as
determined by the Administrator in good faith in its sole discretion.

(p) "Freestanding SAR" means an SAR that is granted
independently of any Options, as described Section 11 hereof.

(q) "Immediate Family" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationships of the Participant; trusts for the benefit of such immediate
family members; or partnerships in which such immediate family members are the
only partners.

(r) "Incentive Stock Option" shall mean an Option that is an
"incentive stock option" within the meaning of section 422 of the Code, or any
successor provision, and that is designated by the Administrator as an Incentive
Stock Option.

(s) "Nonqualified Stock Option" means any Option that is not
an Incentive Stock Option, including any Option that provides (as of the time
such Option is granted) that it will not be treated as an Incentive Stock
Option.

(t) "Option" means an Incentive Stock Option, a Nonqualified
Stock Option, or either or both of them, as the context requires.

(u) "Participant" means any Eligible Recipient selected by the
Administrator, pursuant to the Administrator's authority in Section 3 hereof, to
receive grants of Options or Stock Appreciation Rights or awards of Restricted
Stock, Restricted Stock Units, or Stock Bonus. A Participant who receives the
grant of an Option is sometimes referred to herein as "Optionee."

(v) "Performance Goal" shall mean one or more of the following
business criteria applied to a Participant and/or a business unit or the Company
and/or a Subsidiary: (i) income before federal taxes and net interest expense;
(ii) achievement of specific and measurable operational objectives in the areas
of rig operating costs, accident records, and employee turnover; (iii) working
capital, generally defined to include receivables, inventories

and controllable current liabilities, measured either in absolute dollars or
relative to sales; (iv) earnings growth, revenues, expenses, share price, market
share, return on assets, return on capital, equity or investment, regulatory
compliance, satisfactory internal or external audits, improvement of financial
ratings, or achievement of balance sheet, income statement or cash flow
objectives; (v) adjusted cash flows or adjusted income derived from operating
activities; and/or (vi) a percentage of cash flow in excess of a percentage of
shareholders' average book equity.

(w) "Restricted Stock Unit" means the right to receive a Share
or the Fair Market Value of a Share in cash granted pursuant to Section 9
hereof.

(x) "Restricted Stock" means Shares subject to certain
restrictions granted pursuant to Section 8 hereof.

(y) "Shares" means Common Shares and the common equity of any
successor security.

(z) "Stock Appreciation Right" or "SAR" means an Award,
granted alone or in connection with a related Option, designated as an SAR,
pursuant to Section 11 hereof.

(aa) "Stock Bonus" means the right to receive a Share granted
pursuant to Section 10 hereof.

(bb) "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, if
each of the corporations (other than the last corporation) in the unbroken chain
owns stock possessing more than 50% of the total combined voting power of all
classes of stock in one of the other corporations in the chain.

(cc) "Tandem SAR" means an SAR that is granted in connection
with a related Option pursuant to Section 11 hereof, the exercise of which shall
require forfeiture of the right to purchase a Share under the related Option
(and when a Share is purchased under the Option, the Tandem SAR shall similarly
be canceled).

SECTION 3. ADMINISTRATION.

(a) The Plan shall be administered by the Board or, at the
Board's sole discretion, by the Committee, which shall serve at the pleasure of
the Board. Pursuant to the terms of the Plan, the Administrator shall have the
power and authority, without limitation:

(i) to select those Eligible Recipients who shall be
Participants;

(ii) to determine in an Award Agreement whether and
to what extent Options or Stock Appreciation Rights or awards of
Restricted Stock, Restricted Stock Units, or Stock Bonus are to be
granted hereunder to Participants;

(iii) to determine in an Award Agreement the number
of Shares to be covered by each Award granted hereunder;

(iv) to determine in an Award Agreement the terms and
conditions, not inconsistent with the terms of the Plan, of each Award
granted hereunder;

(v) to determine the terms and conditions, not
inconsistent with the terms of the Plan, which shall govern all written
instruments evidencing Options or Stock Appreciation Rights or awards
of Restricted Stock, Restricted Stock Units, or Stock Bonus granted
hereunder;

(vi) to adopt, alter and repeal such administrative
rules, guidelines and practices governing the Plan as it shall from
time to time deem advisable; and

(vii) to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any Award Agreement
relating thereto), and to otherwise supervise the administration of the
Plan.

(b) All decisions made by the Administrator pursuant to the
provisions of the Plan shall be final, conclusive and binding on all persons,
including the Company and the Participants. No member of the Board or the
Committee, nor any officer or employee of the Company acting on behalf of the
Board or the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the
Plan, and all members of the Board or the Committee and each and any officer or
employee of the Company acting on their behalf shall, to the extent permitted by
law, be fully indemnified and protected by the Company in respect of any such
action, determination or interpretation.

(c) The Administrator in its discretion may condition
entitlement to an Award in whole or in part on the attainment of one or more
Performance Goals. The Administrator shall establish any such Performance Goal
not later than 90 days after the commencement of the period of service to which
the Award relates if the period equals or exceeds one year (or if the period is
shorter, 25% of such period of service), and once granted, the Administrator
shall not have discretion to increase the amount payable under such Award,
provided, however, that whether or not an Award is intended to constitute
qualified performance based compensation within the meaning of section 162(m) of
the Code, the Administrator shall have the authority to make appropriate
adjustments in Performance Goals under an Award to reflect the impact of
extraordinary items not reflected in such Performance Goals. For purposes of the
Plan, extraordinary items shall be defined as (1) any profit or loss
attributable to acquisitions or dispositions of stock or assets, (2) any changes
in accounting standards that may be required or permitted by the Financial
Accounting Standards Board or adopted by the Company after the goal is
established, (3) all items of gain, loss or expense for the year related to
restructuring charges for the Company, (4) all items of gain, loss or expense
for the year determined to be extraordinary or unusual in nature or infrequent
in occurrence or related to the disposal of a segment of a business, (5) all
items of gain, loss or expense for the year related to discontinued operations
as defined in APB Opinion No. 30 or FAS No. 144, and (6) such other items as may
be prescribed by section 162(m) of the Code and the Treasury Regulations
thereunder as may be in effect from time to time, and any amendments, revisions
or successor provisions and any changes thereto.

(d) Subject to section 162(m) of the Code and except as
required by Rule 16b-3 under the Exchange Act with respect to grants of Awards
to individuals who are subject to section 16 of the Exchange Act, or as
otherwise required for compliance with Rule 16b-3 under the Exchange Act or
other applicable law, the Administrator may delegate all or any part of its
authority under the Plan to an employee, employees or committee of employees of
the Company or any Subsidiary.

(e) If at any time (whether before or after termination of
employment) a majority of either the Board or the Committee determines that a
Participant has engaged in fraud, embezzlement, theft, commission of a felony,
dishonesty, or any other conduct inimical to the Company, either the Board or
the Committee (as the case may be) may provide for the immediate forfeiture of
any Award held by the Participant, whether or not then vested. Any determination
by the Board or Committee (as the case may be) under this subsection (e) shall
be final, conclusive and binding on all persons.

SECTION 4. SHARES RESERVED FOR ISSUANCE UNDER THE PLAN.

(a) There shall be reserved and available for issuance under
the Plan 3,500,000 Common Shares. The grant of any Restricted Stock Units or
SARs that may be settled only in cash shall not reduce the number of Common
Shares with respect to which Awards may be granted pursuant to the Plan.

(b) To the extent that (i) an Option expires or is otherwise
cancelled or terminated without being exercised as to the underlying Shares,
(ii) any Shares subject to any award of Stock Appreciation Rights, Restricted
Stock, Restricted Stock Unit, or Stock Bonus are forfeited, (iii) payment for an
Option upon exercise is made with

Shares owned by the Optionee for at least six months on the date of surrender or
(iv) Shares are withheld from payment of an Award in satisfaction of any
federal, state or local tax withholding requirements, such Shares shall again be
available for issuance in connection with future Awards granted under the Plan.

(c) The aggregate number of Shares with respect to which
Awards (including Awards payable in cash but denominated in Common Shares, i.e.,
cash-settled Restricted Stock Units or SARs) may be granted to any individual
Participant during any calendar year shall not exceed 1,500,000.

SECTION 5. EQUITABLE ADJUSTMENTS.

In the event of any Change in Capitalization, an equitable
substitution or proportionate adjustment shall be made in (i) the aggregate
number and/or kind of common shares or other property reserved for issuance
under the Plan, (ii) the kind, number and/or option price of shares or other
property subject to outstanding Options and Stock Appreciation Rights granted
under the Plan, and (iii) the kind, number and/or purchase price of shares or
other property subject to outstanding awards of Restricted Stock, and Restricted
Stock Units granted under the Plan, in each case as may be determined by the
Administrator, in its sole discretion. Such other equitable substitutions or
adjustments shall be made as may be determined by the Administrator, in its sole
discretion. Without limiting the generality of the foregoing, in connection with
a Change in Capitalization, the Administrator may provide, in its sole
discretion, for the cancellation of any outstanding Awards in exchange for
payment in cash or other property of the Fair Market Value of the Shares covered
by such Awards reduced, in the case of Options, by the Exercise Price thereof,
and in the case of Stock Appreciation Rights, by the grant price thereof, or by
any other applicable purchase price.

SECTION 6. ELIGIBILITY.

The Participants under the Plan shall be selected from time to
time by the Administrator, in its sole discretion, from among Eligible
Recipients. The Administrator shall have the authority to grant to any Eligible
Recipient Incentive Stock Options, Nonqualified Stock Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, or a Stock Bonus.

SECTION 7. OPTIONS.

(a) General. Options may be granted alone or in addition to
other Awards granted under the Plan. Any Option granted under the Plan shall be
evidenced by an Award Agreement in such form as the Administrator may from time
to time approve. The provisions of each Option need not be the same with respect
to each Participant. Participants who are granted Options shall enter into an
Award Agreement with the Company, in such form as the Administrator shall
determine, which Award Agreement shall set forth, among other things, the
Exercise Price of the Option, the term of the Option and provisions regarding
exercisability of the Option granted thereunder. The Options granted under the
Plan may be of two types: (i) Incentive Stock Options and (ii) Nonqualified
Stock Options. To the extent that any Option does not qualify as an Incentive
Stock Option, it shall constitute a separate Nonqualified Stock Option. More
than one Option may be granted to the same Participant and be outstanding
concurrently hereunder. Options granted under the Plan shall be subject to the
terms and conditions set forth in paragraphs (b)-(i) of this Section 7 and shall
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Administrator shall deem desirable.

(b) Exercise Price. The per share Exercise Price of Shares
purchasable under an Option shall be determined by the Administrator in its sole
discretion at the time of grant but shall not be less than 100% of the Fair
Market Value per Share on such date (or, in the case of Incentive Stock Options,
110% of the Fair Market Value per Share on such date if, on such date, the
Eligible Recipient owns (or is deemed to own under the Code) stock possessing
more than 10% (a "Ten Percent Owner") of the total combined voting power of all
classes of shares of the Company or its Subsidiaries).

(c) Option Term. The term of each Option shall be fixed by the
Administrator, but no Option shall be exercisable more than ten years after the
date such Option is granted. If the Eligible Participant is a Ten Percent Owner,
an Incentive Stock Option may not be exercisable after the expiration of five
years from the date such Incentive Stock Option is granted.

(d) Exercisability. Options shall be exercisable at such time
or times and subject to such terms and conditions, including the attainment of
preestablished Performance Goals or other corporate or individual performance
goals, as shall be determined by the Administrator in its sole discretion. The
Administrator may also provide that any Option shall be exercisable only in
installments.

(e) Method of Exercise. Options may be exercised in whole or
in part by giving written notice of exercise to the Company specifying the
number of Shares to be purchased, accompanied by payment in full of the
aggregate Exercise Price of the Shares so purchased in cash or its equivalent,
as determined by the Administrator. As determined by the Administrator, in its
sole discretion, payment in whole or in part may also be made (i) by means of
any properly executed broker-assisted exercise procedure, subject to approval by
the Administrator, (ii) in the form of unrestricted Shares already owned by the
Optionee for at least six months on the date of surrender to the extent the
Shares have a Fair Market Value on the date of surrender equal to the aggregate
option price of the Shares as to which such Option shall be exercised, provided
that, in the case of an Incentive Stock Option, the right to make payment in the
form of already owned Shares may be authorized only at the time of grant, or
(iii) any combination of the foregoing.

(f) Rights as Shareholder. An Optionee shall have no rights to
dividends or any other rights of a shareholder with respect to the Shares
subject to the Option until the Optionee has given written notice of exercise,
has paid in full for such Shares, and has satisfied the requirements of Section
15 hereof.

(g) Nontransferability of Options. The Optionee shall not be
permitted to sell, transfer, pledge or assign any Option other than by will and
the laws of descent and distribution and all Options shall be exercisable during
the Participant's lifetime only by the Participant, in each case, except as set
forth in the following two sentences. During an Optionee's lifetime, the
Administrator may, in its discretion, permit the transfer, assignment or other
encumbrance of an outstanding Option if such Option is a Nonqualified Stock
Option or an Incentive Stock Option that the Administrator and the Participant
intend to change to a Nonqualified Stock Option. Subject to the approval of the
Administrator and to any conditions that the Administrator may prescribe, an
Optionee may, upon providing written notice to the Company, elect to transfer
any or all Options described in the preceding sentence (i) to members of his or
her Immediate Family, provided that no such transfer by any Participant may be
made in exchange for consideration, or (ii) by instrument to an inter vivos or
testamentary trust in which the Options are to be passed to beneficiaries upon
the death of the Participant.

(h) Termination of Employment or Service. Except as otherwise
provided in an Award Agreement, if a Participant's employment with the Company
or any Subsidiary or Affiliate terminates for any reason, all outstanding
Options granted to such Participant shall expire on the date of such termination
(whether or not then vested or exercisable). Notwithstanding the foregoing, no
Option shall be exercisable after the expiration of its term.

(i) Limitation on Incentive Stock Options. To the extent that
the aggregate Fair Market Value of Shares with respect to which Incentive Stock
Options are exercisable for the first time by an Optionee during any calendar
year under the Plan and any other stock option plan of the Company or any
Subsidiary or Affiliate shall exceed $100,000, such Options shall be treated as
Nonqualified Stock Options. Such Fair Market Value shall be determined as of the
date on which each such Incentive Stock Option is granted.

SECTION 8. RESTRICTED STOCK.

(a) General. Awards of Restricted Stock may be issued either
alone or in addition to other Awards granted under the Plan and shall be
evidenced by an Award Agreement. The Administrator shall determine the

Eligible Recipients to whom, and the time or times at which, Awards of
Restricted Stock shall be made; the number of Shares to be awarded; the price,
if any, to be paid by the Participant for the acquisition of Restricted Stock;
and the Restricted Period (as defined in Section 8(d)) applicable to awards of
Restricted Stock. The provisions of the awards of Restricted Stock need not be
the same with respect to each Participant.

(b) Purchase Price. The price per Share, if any, that a
Recipient must pay for Shares purchasable under an award of Restricted Stock
shall be determined by the Administrator in its sole discretion at the time of
grant.

(c) Awards and Certificates. The prospective recipient of an
Award of Restricted Stock shall not have any rights with respect to any such
Award, unless and until such recipient has executed an Award Agreement
evidencing the Award and delivered a fully executed copy thereof to the Company,
within such period as the Administrator may specify after the award date. Each
Participant who is granted an award of Restricted Stock shall be issued a share
certificate in respect of such shares of Restricted Stock, which certificate
shall be registered in the name of the Participant and shall bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to any
such Award, provided that the Company may require that the share certificates
evidencing Restricted Stock granted hereunder be held in the custody of the
Company until the restrictions thereon shall have lapsed, and that, as a
condition of any award of Restricted Stock, the Participant shall have delivered
a stock power, endorsed in blank, relating to the Shares covered by such Award.

(d) Nontransferability. Any Award of Restricted Stock granted
pursuant to this Section 8 shall be subject to the restrictions on
transferability set forth in this paragraph (d). During such period as may be
set by the Administrator in the Award Agreement (the "Restricted Period"), the
Participant shall not be permitted to sell, transfer, pledge, hypothecate or
assign Shares of Restricted Stock awarded under the Plan except by will or the
laws of descent and distribution. The Administrator may also impose such other
restrictions and conditions, including the attainment of preestablished
Performance Goals or other corporate or individual performance goals, on
Restricted Stock as it determines in its sole discretion. The Restricted Period
shall be not less than three years, provided that the Restricted Period may be
shorter (but not less than one year) if vesting of the Restricted Stock is
conditioned upon the attainment of preestablished Performance Goals or other
corporate or individual performance goals. However, in no event shall the
Restricted Period end with respect to a Restricted Stock Award prior to the
satisfaction by the Participant of any liability arising under Section 15
hereof. Any attempt to dispose of any Restricted Stock in contravention of any
such restrictions shall be null and void and without effect.

(e) Rights as a Shareholder. Except as provided in Section
8(c) and (d), the Participant shall possess all incidents of ownership with
respect to Shares of Restricted Stock during the Restricted Period, including
the right to receive or reinvest dividends with respect to such Shares (except
that the Administrator may provide in its discretion that any dividends paid in
property other than cash shall be subject to the same restrictions as those that
apply to the underlying Restricted Stock) and to vote such Shares. Certificates
for unrestricted Shares shall be delivered to the Participant promptly after,
and only after, the Restricted Period shall expire without forfeiture in respect
of such awards of Restricted Stock except as the Administrator, in its sole
discretion, shall otherwise determine.

(f) Termination of Employment. The rights of Participants
granted an Award of Restricted Stock upon termination of employment with the
Company or any Subsidiary or Affiliate for any reason during the Restricted
Period shall be set forth in the Award Agreement governing such Award.

SECTION 9. RESTRICTED STOCK UNITS

(a) Vesting. At the time of the grant of Restricted Stock
Units, the Administrator may impose such restrictions or conditions to the
vesting of such Restricted Stock Units as it, in its sole discretion, deems
appropriate, to be contained in the Award Agreement, including the attainment of
preestablished Performance Goals or other corporate or individual performance
goals. The Administrator may divide such Restricted Stock Units into classes and
assign different vesting conditions for each class. Provided that all conditions
to the vesting of a Restricted Stock Unit are satisfied, and except as provided
in Section 9(c), upon the satisfaction of all vesting conditions with respect

to a Restricted Stock Unit, such Restricted Stock Unit shall vest. The
provisions of the awards of Restricted Stock Units need not be the same with
respect to each Participant.

(b) Benefit Upon Vesting. Upon the vesting of a Restricted
Stock Unit, the Participant shall be entitled to receive, within 30 days of the
date on which such Restricted Stock Unit vests, an amount in cash or, in the
Company's sole discretion, in Common Shares with a Fair Market Value equal to
the sum of (1) the Fair Market Value of a Common Share on the date on which such
Restricted Stock Unit vests and (2) the aggregate amount of cash dividends paid
with respect to a Common Share during the period commencing on the date on which
the Restricted Stock Unit was granted and terminating on the date on which such
Share vests. Notwithstanding the foregoing provisions of this Section 9, if a
Restricted Stock Unit is to be settled in Common Shares, the Restricted Stock
Unit shall vest not earlier than three years from the date of grant, provided
that the Restricted Stock Unit may vest earlier (but not less than one year from
the date of grant) if vesting of the Restricted Stock Unit is conditioned upon
the attainment of preestablished Performance Goals or other corporate or
individual performance goals.

(c) Termination of Employment. The rights of Participants
granted a Restricted Stock Unit upon termination of employment with the Company
or any Subsidiary or Affiliate for any reason before the Restricted Stock Unit
vests shall be set forth in the Award Agreement governing such Award.

SECTION 10. STOCK BONUS AWARDS

In the event that the Administrator grants a Stock Bonus, a
certificate for the Common Shares constituting such Stock Bonus shall be issued
in the name of the Participant to whom such grant was made and delivered to such
Participant as soon as practicable after the date on which such Stock Bonus is
payable. The Fair Market Value of the Shares subject to a Stock Bonus shall not
exceed the salary or cash bonus otherwise payable to the Participant on the date
of grant, and the Stock Bonus shall be in lieu of an amount of the Participant's
salary or cash bonus equal to such Fair Market Value.

SECTION 11. STOCK APPRECIATION RIGHTS.

(a) Grant of SARs. Subject to the terms and conditions of the
Plan, SARs may be granted to Participants at any time and from time to time as
shall be determined by the Administrator in its sole discretion. The
Administrator may grant Freestanding SARs, Tandem SARs, or any combination of
these forms of SAR. The Administrator in its sole discretion shall determine the
number of SARs granted to each Participant (subject to Section 4 hereof) and,
consistent with the provisions of the Plan, the terms and conditions pertaining
to such SARs, including any conditions relating to the attainment of
preestablished Performance Goals or other corporate or individual performance
goals as may be determined by the Administrator in its sole discretion. The
provisions of the awards of SARs need not be the same with respect to each
Participant.

(b) Grant Price. The grant price of a Freestanding SAR shall
be not less than the Fair Market Value of a Share on the date of grant of the
SAR. The grant price of Tandem SARs shall equal the Exercise Price of the
related Option.

(c) Exercise of Tandem SARs. Tandem SARs may be exercised for
all or part of the Shares subject to the related Option upon the surrender of
the right to exercise the equivalent portion of the related Option. A Tandem SAR
may be exercised only with respect to the Shares for which its related Option is
then exercisable. Notwithstanding any other provision of this Plan to the
contrary, with respect to a Tandem SAR granted in connection with an Incentive
Stock Option: (i) the Tandem SAR shall expire no later than the expiration of
the underlying Incentive Stock Option; (ii) the value of the payout with respect
to the Tandem SAR may be for no more than one hundred percent (100%) of the
difference between the Exercise Price of the underlying Incentive Stock Option
and the Fair Market Value of the Shares subject to the underlying Incentive
Stock Option at the time the Tandem SAR is exercised; and (iii) the Tandem SAR
may be exercised only when the Fair Market Value of the Shares subject to the
Incentive Stock Option exceeds the Exercise Price of the Incentive Stock Option.

(d) Exercise of Freestanding SARs. Freestanding SARs may be
exercised upon whatever terms and conditions the Administrator, in its sole
discretion, imposes upon them.

(e) SAR Agreement. Each SAR grant shall be evidenced by an
Award Agreement that shall specify the grant price, the term of the SAR, and
such other provisions as the Administrator shall determine.

(f) Term of SARs. The term of an SAR granted under the Plan
shall be determined by the Administrator, in its sole discretion; provided,
however, that such term shall not exceed ten (10) years.

(g) Payment of SAR Amount. Upon exercise of an SAR, a
Participant shall be entitled to receive payment from the Company in an amount
determined by multiplying:

(i) the difference between the Fair Market Value of a
Share on the date of exercise over the grant price; by

(ii) the number of Shares with respect to which the
SAR is exercised.

At the discretion of the Administrator, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof. The
Administrator's determination regarding the form of SAR payout shall be set
forth in the Award Agreement pertaining to the grant of the SAR.

SECTION 12. EFFECT OF CHANGE IN CONTROL.

The Administrator in its discretion may provide that, upon the
occurrence of a change in control (as such term may be defined in an Award
Agreement) or upon termination of employment under specified circumstances
during a specified period following such a change in control, all as specified
in the applicable Award Agreement, all outstanding Shares of Restricted Stock,
and Restricted Stock Units granted to a Participant which have not theretofore
vested shall immediately vest and all restrictions on such Shares and Units
shall immediately lapse, and each Option and Stock Appreciation Right granted to
a Participant and outstanding at such time shall become fully and immediately
exercisable.

SECTION 13. AMENDMENT AND TERMINATION.

(a) The Board may amend, alter or discontinue the Plan, but
(i) no amendment, alteration, or discontinuation shall be made that would impair
the rights of a Participant under any Award theretofore granted without such
Participant's consent, and (ii) any amendment shall be subject to approval of
shareholders if it (A) materially increases the benefits accruing to
Participants under the Plan, (B) materially increases the number of Shares that
may be issued under the Plan, or (C) materially modifies the requirements for
participation in the Plan. Unless the Board determines otherwise, the Board
shall obtain approval of shareholders of the Company for any amendment that
would require such approval in order to satisfy the requirements of section
162(m) of the Code, section 422 of the Code, stock exchange rules or other
applicable law.

(b) The Administrator may amend the terms of any Award
theretofore granted, prospectively or retroactively, but (i) unless approved by
the shareholders of the Company, no such amendment shall (A) accelerate the date
on which any Option or SAR granted under the Plan becomes exercisable or (B)
accelerate the lapse of restrictions, or waive any condition imposed hereunder,
with respect to any Restricted Stock, Restricted Stock Units, or Stock Bonus,
and (ii) subject to Section 4 of Plan, no such amendment shall impair the rights
of any Participant without his or her consent.

(c) Notwithstanding the foregoing provisions of this Section
13, any decrease in the Exercise Price of any outstanding Option (whether
effected by amendment to the Plan or an Award Agreement) shall be subject to the
approval of the shareholders of the Company.

SECTION 14. UNFUNDED STATUS OF PLAN.

The Plan is intended to constitute an "unfunded" plan for
incentive compensation. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.

SECTION 15. WITHHOLDING TAXES.

(a) Whenever cash is to be paid pursuant to an Award, the
Company (or Subsidiary or Affiliate, as the case may be) shall have the right to
deduct therefrom an amount sufficient to satisfy any federal, state and local
tax withholding requirements related thereto. Whenever Shares are to be
delivered pursuant to an Award, the Company (or Subsidiary or Affiliate, as the
case may be) shall have the right to require the Participant to remit to the
Company (or Subsidiary or Affiliate, as the case may be) in cash an amount
sufficient to satisfy any federal, state and local tax withholding requirements
related thereto. With the approval of the Administrator, a Participant may
satisfy the foregoing requirement by electing to have the Company withhold from
delivery Shares or by delivering Shares already owned by the Participant for at
least six months, in each case, having a value equal to the minimum amount of
tax required to be withheld. Such shares shall be valued at their Fair Market
Value on the date of which the amount of tax to be withheld is determined.
Fractional share amounts shall be settled in cash. Such an election may be made
with respect to all or any portion of the shares to be delivered pursuant to an
Award.

(b) If the Participant makes a disposition, within the meaning
of section 424(c) of the Code and regulations promulgated thereunder, of any
Share or Shares issued to such Participant pursuant to such Participant's
exercise of an Incentive Stock Option, and such disposition occurs within the
two-year period commencing on the day after the date of grant or within the
one-year period commencing on the day after the date of exercise, such
Participant shall, within ten (10) days of such disposition, notify the Company
(or Subsidiary or Affiliate, as the case may be) thereof and thereafter
immediately deliver to the Company (or Subsidiary or Affiliate, as the case may
be) any amount of federal, state or local income taxes and other amounts which
the Company (or Subsidiary or Affiliate, as the case may be) informs the
Participant the Company (or Subsidiary or Affiliate, as the case may be) is
required to withhold.

SECTION 16. GENERAL PROVISIONS.

(a) Shares shall not be issued pursuant to the exercise of any
Award granted hereunder unless the exercise of such Award and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act and the requirements of any stock exchange upon which
the Common Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance. The Company
shall be under no obligation to effect the registration pursuant to the
Securities Act of 1933, as amended, of any interests in the Plan or any Common
Shares to be issued hereunder or to effect similar compliance under any state
laws.

(b) All certificates for Shares delivered under the Plan shall
be subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Shares may then be listed, and any applicable federal or state
securities law, and the Administrator may cause a legend or legends to be placed
on any such certificates to make appropriate reference to such restrictions. The
Administrator may require, as a condition of the issuance and delivery of
certificates evidencing Shares pursuant to the terms hereof, that the recipient
of such Shares make such agreements and representations as the Administrator, in
its sole discretion, deems necessary or desirable.

(c) Nothing contained in the Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to shareholder
approval, if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of the
Plan shall not confer

upon any Eligible Recipient any right to continued employment or service with
the Company or any Subsidiary or Affiliate, as the case may be, nor shall it
interfere in any way with the right of the Company or any Subsidiary or
Affiliate to terminate the employment or service of an Eligible Recipient at any
time.

(d) No fractional Common Shares shall be issued or delivered
pursuant to the Plan. The Administrator shall determine whether cash, other
Awards, or other property shall be issued or paid in lieu of such fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.

(e) If any provision of the Plan is held to be invalid or
unenforceable, the other provisions of the Plan shall not be affected but shall
be applied as if the invalid or unenforceable provision had not been included in
the Plan.

(f) The Plan and all Awards shall be governed by the laws of
the State of Delaware without regard to its principles of conflict of laws.

(g) Awards may be granted under the Plan from time to time in
substitution for awards held by employees, directors or service providers of
other corporations who are about to become employees of the Company or a
Subsidiary or Affiliate as the result of a merger or consolidation of the
employing corporation with the Company or Subsidiary or Affiliate, or the
acquisition by the Company or a Subsidiary or Affiliate of the assets of the
employing corporation, or the acquisition by the Company or a Subsidiary or
Affiliate of the shares of the employing corporation, as the result of which it
becomes a Subsidiary or Affiliate under the Plan. The terms and conditions of
the Awards so granted may vary from the terms and conditions set forth in this
Plan at the time of such grant as the Administrator may deem appropriate to
conform, in whole or in part, to the provisions of the awards in substitution
for which they are made.

SECTION 17. SHAREHOLDER APPROVAL; EFFECTIVE DATE OF PLAN.

The Plan shall be effective as of the date of its approval by
the Company's shareholders.

SECTION 18. TERM OF PLAN.

No Award shall be granted pursuant to the Plan on or after the
tenth anniversary of the date the Plan is approved by the Company's
shareholders, but Awards theretofore granted may extend beyond that date.

PROXY

NABORS INDUSTRIES LTD.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The person signing on the reverse by this proxy appoints Eugene M. Isenberg and
Anthony G. Petrello, and each of them (with full power to designate
substitutes), proxies to represent, vote and act with respect to all common
shares of Nabors Industries Ltd. held of record by the undersigned at the close
of business on April 8, 2005 at Nabors' annual general meeting of shareholders
to be held on June 7, 2005 and at any adjournments or postponements thereof. The
proxies may vote and act upon the matters designated below and upon such other
matters as may properly come before the meeting (including a motion to adjourn
the meeting), according to the number of votes the undersigned might cast and
with all powers the undersigned would possess if personally present.

1. ELECTION OF DIRECTORS: Election of three Class II directors of Nabors
to serve until the 2008 annual general meeting of shareholders or until
their respective successors are elected and qualified.

Nominees: Anthony G. Petrello, Myron M. Sheinfeld
and Martin J. Whitman

2. APPOINTMENT OF AUDITORS AND AUTHORIZATION OF AUDIT COMMITTEE TO SET
AUDITORS REMUNERATION: Appointment of PricewaterhouseCoopers LLP as
independent auditors and to authorize the Audit Committee of the Board
of Directors to set auditors' remuneration.

3. MANAGEMENT PROPOSAL: Approval of an amendment to the Amended and
Restated Bye-Laws to require shareholder approval of certain
dispositions of the Company's assets.

4. MANAGEMENT PROPOSAL: Approval of an amendment to the Company's 2003
Employee Stock Plan to make nonemployee directors eligible
participants under such plan.

5. SHAREHOLDER PROPOSAL: Shareholder Proposal to require the Company to
adopt a policy that a significant amount of future stock grants to
senior executives be performance-based.

YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOX ON THE
REVERSE SIDE. IF YOU DO NOT MARK ANY BOX, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF THE ABOVE-NAMED DIRECTORS, FOR THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS AUDITORS, FOR THE AMENDMENT TO THE BYE-LAWS, FOR
THE AMENDMENT TO THE 2003 EMPLOYEE STOCK PLAN AND AGAINST THE SHAREHOLDER
PROPOSAL IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.

SEE REVERSE
SIDE

[X] Please mark your votes as in this example.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1, 2, 3, AND 4.
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________

1. Election of Directors FOR WITHHELD 2. Appointment of FOR AGAINST ABSTAIN
PricewaterhouseCoopers
Anthony G. Petrello [ ] [ ] LLP as independent [ ] [ ] [ ]
Myron M. Sheinfeld auditors and to
Martin J. Whitman authorize the Audit
Committee of the
For, except vote withheld from Board of Directors
the following nominee (s): to set auditors's
____________________________ remuneration.

3. Amendment to FOR AGAINST ABSTAIN 4. Amendment to FOR AGAINST ABSTAIN
Amended and 2003 Employee
Restated Bye-Laws [ ] [ ] [ ] Stock Plan to [ ] [ ] [ ]
to require make nonemployee
shareholder directors
approval of certain eligible
dispositions of participants
Company's assets.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 5.
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________

5. Shareholder FOR AGAINST ABSTAIN
Proposal to require
the Company to [ ] [ ] [ ]
adopt a policy that
a significant amount
of future stock
grants to senior
executives be
performance based.

In their discretion the proxies are authorized to vote upon such other business
as may properly come before the meeting (including a motion to adjourn the
meeting) and at any adjournment of the meeting.

NOTE: Please mark the proxy, sign exactly as your name appears below, and return
it promptly in the enclosed addressed envelope. When shares are held by joint
tenants, both parties should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized person. If a partnership, please sign in full partnership name by an
authorized person.

----------------------------------------------
Signature Date