SHARE-BASED COMPENSATION PLANS

12 Months Ended

Dec. 31, 2024

Share-Based Payment Arrangement, Noncash Expense [Abstract]

The Company has a 2020 Stock Incentive Plan (“2020 Employee Plan”), a 2009 Non-Employee Director Stock Option and Restricted Stock Plan (“2009 Director Plan”) and a 2003 Non-Employee Director Equity Compensation Plan (“2003 Director Plan”).

The 2020 Employee Plan was established in June 2020. Under the 2020 Employee Plan, 1,400,000 common shares have been authorized to be granted as non-qualified share options, share appreciation rights, restricted share awards or performance share unit (“PSU”) awards to officers and key employees of the Company. At December 31, 2024, there were 554,882 remaining shares available to be granted under the 2020 Employee Plan. Through December 31, 2024, only non-qualified share options, restricted share awards and PSU awards had been granted under the employee plans. Under the 2009 Director Plan, 37,439 common shares have been authorized to be granted as share options or restricted share awards to non-employee directors of the Company. At December 31, 2024, there were 34,617 remaining shares available to be granted under the 2009 Director Plan. Under the 2003 Director Plan, 500,000 common shares have been authorized to be granted as share options or share awards to non-employee directors of the Company. At December 31, 2024, there were 264,704 remaining shares available to be granted under the 2003 Director Plan.

Options and restricted shares granted under the 2020 Employee Plan prior to January 1, 2024 vest at the earliest of 20% per year over five years or in accordance with any applicable employment agreement. Restricted shares granted under the 2020 Employee Plan after January 1, 2024 vest at the earliest of 33.3% per year over three years or in accordance with any applicable employment agreement. Options and restricted shares granted under the 2003 Director Plan generally vest at 33% per year over three years, unless an alternate vesting period is authorized by the Board. Options and restricted shares granted under the 2009 Director Plan will vest as provided in the award agreement. All options are exercisable at fair market value of the stock at the date of grant and expire ten years after the date of grant.

PSU awards granted under the 2020 Employee Plan will vest 100% after three years. The PSU awards represent the right to receive between 0 and 1.75 shares of stock for each unit awarded depending upon performance in relation to certain metrics. The PSU valuation will be based partly on growth in book value per share over the three year vesting period, compared to designated peer companies. The remaining portion of the PSU valuation will be based upon operating return on equity for each of the separate operating years within the vesting period.

For share options, restricted shares and PSU awards granted under the 2020 Employee Plan, the 2009 Director Plan and the 2003 Director Plan, share-based compensation expense recognized in the consolidated statements of operations and comprehensive income (loss) was $63 million, $49 million and $45 million for the years ended December 31, 2024, 2023

and 2022, respectively. The corresponding income tax benefit recorded in the consolidated statements of operations and comprehensive income (loss) for share-based compensation was $8 million, $7 million and $4 million for the years ended December 31, 2024, 2023 and 2022, respectively.

For the year ended December 31, 2024, a total of 222,196 shares of restricted stock were granted on February 28, 2024, February 29, 2024, May 15, 2024, September 12, 2024 and November 7, 2024, with a fair value of $369.52, $367.04, $377.80, $376.58 and $365.61 per share, respectively. Additionally, 18,713 PSU awards were granted on February 28, 2024, with a fair value of $369.52 per unit. No share options were granted during the year ended December 31, 2024. For share options granted during previous years, the fair value per option was calculated on the date of the grant using the Black-Scholes option valuation model.

The Company recognizes, as an increase to additional paid-in capital, a realized income tax benefit from dividends, charged to retained earnings and paid to employees on equity classified non-vested equity shares. In addition, the amount recognized in additional paid-in capital for the realized income tax benefit from dividends on those awards is included in the pool of excess tax benefits available to absorb tax deficiencies on share-based payment awards. For the years ended December 31, 2024, 2023 and 2022, the Company recognized $0.6 million, $0.5 million and $0.6 million, respectively, of additional paid-in capital due to tax benefits from dividends on restricted shares.

There have been no stock options granted since 2012. As of December 31, 2024, there were no stock options outstanding. Any remaining stock options were exercised in 2022. The aggregate intrinsic value (market price less exercise price) of options exercised during 2022 was $10 million. The cash received from the exercised share options during 2022 was $4 million. The tax benefit realized from the options exercised during 2022 was $2 million.

The following table summarizes the status of the Company’s restricted non-vested shares and changes for the periods indicated:


	Years Ended December 31,
	2024			2023			2022
Restricted (non-vested) Shares	Shares	Weighted- Average Grant Date Fair Value		Shares	Weighted- Average Grant Date Fair Value		Shares	Weighted- Average Grant Date Fair Value
Outstanding at January 1,	461,537	$	313.05	479,630	$	268.82	496,094	$	247.76
Granted	222,196	369.62		181,646	382.01		203,598	300.38
Vested	147,655	292.15		155,110	261.60		162,579	246.41
Forfeited	68,893	333.54		44,629	297.23		57,483	262.28
Outstanding at December 31,	467,185	343.53		461,537	313.05		479,630	268.82

As of December 31, 2024, there was $113 million of total unrecognized compensation cost related to non-vested share-based compensation expense. That cost is expected to be recognized over a weighted-average period of 2.4 years. The total fair value of shares vested during the years ended December 31, 2024, 2023 and 2022, was $43 million, $41 million and $40 million, respectively. The tax benefit realized from the shares vested for the years ended December 31, 2024, 2023 and 2022 were $9 million, $11 million and $9 million, respectively.

In addition to the 2020 Employee Plan, the 2009 Director Plan and the 2003 Director Plan, Group issued 324 common shares in 2024, 447 common shares in 2023 and 774 common shares in 2022 to the Company’s non-employee directors as compensation for their service as directors. These issuances had aggregate values of $0.1 million, $0.2 million and $0.2 million in 2024, 2023 and 2022.

The Company acquired 54,537, 56,832 and 69,833 common shares at a cost of $20 million, $22 million and $21 million in 2024, 2023 and 2022, respectively, from employees who chose to pay required withholding taxes and/or the exercise cost on option exercises or restricted share vestings by withholding shares.

The following table summarizes the status of the Company’s non-vested PSU awards and changes for the period indicated:


	Years Ended December 31,
	2024			2023			2022
Performance Share Unit Awards	Shares	Weighted- Average Grant Date Fair Value		Shares	Weighted- Average Grant Date Fair Value		Shares	Weighted- Average Grant Date Fair Value
Outstanding at January 1,	51,000	$	—	54,861	$	—	50,495	$	—
Granted	18,713	369.52		14,975	382.39		18,340	301.54
Increase/(Decrease) on vesting units due to performance	8,354	—		(4,063)	—		3,028	—
Vested	24,053	386.81		14,023	340.44		15,919	274.37
Forfeited	1,332	—		750	—		1,083	—
Outstanding at December 31,	52,682	—		51,000	—		54,861	—

The Company acquired 11,336, 6,117 and 6,175 common shares at a cost of $4 million, $2 million and $2 million in 2024, 2023 and 2022, respectively, from employees who chose to pay required withholding taxes on PSU settlements by withholding shares.