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Equity Based Compensation | 12 Months Ended
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Dec. 31, 2020
Share-based Payment Arrangement [Abstract] |
Equity Based Compensation | Equity Based Compensation The Company adopted the RGA Flexible Stock Plan (the “Plan”) in February 1993, as amended, and the Flexible Stock Plan for Directors (the “Directors Plan”) in January 1997, as amended, (collectively, the “Stock Plans”). The Stock Plans provide for the award of benefits (collectively “Benefits”) of various types, including stock options, stock appreciation rights (“SARs”), restricted stock, performance shares, cash awards, and other stock-based awards, to key employees, officers, directors and others performing significant services for the benefit of the Company or its subsidiaries. As of December 31, 2020, shares authorized for the granting of Benefits under the Plan and the Directors Plan totaled 14,960,077 and 412,500 respectively. The Company uses treasury shares or shares made available from authorized but unissued shares to support the future exercise of options or settlement of awards granted under its stock plans. Equity-based compensation expense of $(12) million, $39 million, and $30 million related to grants or awards under the Stock Plans was recognized in 2020, 2019 and 2018, respectively. The decrease in equity compensation expense for the year ended December 31, 2020, is attributable to the reduction in the estimated financial performance measures results associated with performance-based stock awards, primarily due to the adverse impact of COVID-19 on the Company’s financial results. Equity-based compensation expense is principally related to the issuance of performance contingent restricted units, stock appreciation rights and restricted stock. In general, stock awards granted under the Plan become exercisable over vesting periods ranging from one to five years. SARs are generally granted with a conversion price equal to the stock’s fair value at the date of grant and expire 10 years after the date of grant. There are no options outstanding under the Directors Plan during the periods presented. Information with respect to grants under the Stock Plans are as follows. Stock Options and Stock Appreciation Rights The following table presents a summary of stock option and SAR activity:
|  | Number of Options and SARs |  | Weighted-Average Exercise/Conversion Price |  | Aggregate Intrinsic Value (in millions)
Outstanding at December 31, 2019 |  | 2,031,797 |  |  | $ | 92.63 |  |  |
Granted |  | 455,455 |  |  | $ | 117.96 |  |  |
Exercised |  | (312,345) |  |  | $ | 61.70 |  |  |
Forfeited |  | (6,512) |  |  | $ | 126.50 |  |  |
Outstanding at December 31, 2020 |  | 2,168,395 |  |  | $ | 102.30 |  |  | $ | 43.5 |
Awards exercisable |  | 1,695,704 |  |  | $ | 95.68 |  |  | $ | 43.5 |
The intrinsic value of awards exercised was $15 million, $31 million, and $26 million for 2020, 2019 and 2018, respectively.
|  | Awards Outstanding |  | Awards Exercisable
Range of Exercise Prices |  | Number Outstanding as of 12/31/2020 |  | Weighted-Average Remaining Contractual Life (years) |  | Weighted- Average Exercise Price |  | Number Exercisable as of 12/31/2020 |  | Weighted-Average Exercise Price
$50.00 - $89.99 |  | 503,239 |  |  | 2.0 |  | $ | 62.41 |  |  | 503,239 |  |  | $ | 62.41 |
$90.00 - $99.99 |  | 711,645 |  |  | 4.8 |  | $ | 92.55 |  |  | 711,645 |  |  | $ | 92.55 |
$100.00 - $139.99 |  | 608,599 |  |  | 8.4 |  | $ | 120.90 |  |  | 269,284 |  |  | $ | 124.74 |
$140.00 + |  | 344,912 |  |  | 7.7 |  | $ | 147.80 |  |  | 211,536 |  |  | $ | 148.37 |
Totals |  | 2,168,395 |  |  | 5.6 |  | $ | 102.30 |  |  | 1,695,704 |  |  | $ | 95.68 |
The following table presents the weighted average assumptions used to determine the fair value of SARs issued:
For the years ended December 31, |  | 2020 |  | 2019 |  | 2018
Dividend yield |  | 2.37 | % |  | 1.65 | % |  | 1.33 | %
Risk-free rate of return |  | 0.69 | % |  | 2.67 | % |  | 2.79 | %
Expected volatility |  | 18.8 | % |  | 18.2 | % |  | 21.4 | %
Expected life (years) |  | 7.0 |  | 6.0 |  | 7.0
Weighted average exercise price of stock options granted |  | $ | 117.85 |  |  | $ | 145.25 |  |  | $ | 150.87 |
Weighted average fair value of stock options granted |  | $ | 15.14 |  |  | $ | 26.59 |  |  | $ | 36.31 |
The Black-Scholes model was used to determine the fair value recognized in the financial statements of SARs that have been granted. The Company used daily historical volatility when calculating a SAR’s value. The benchmark rate is based on observed interest rates for instruments with maturities similar to the expected term of the stock options. Dividend yield is determined based on historical dividend distributions compared to the price of the underlying common stock as of the valuation date and held constant over the life of the stock options. The Company estimated expected life using the historical average years to exercise or cancellation. Performance Contingent Units Performance contingent units (“PCUs”), are units that, if they vest, are multiplied by a performance factor to produce a number of final PCUs that are paid in the Company’s common stock. Each PCU represents the right to receive up to two shares of Company common stock, depending on the results of certain performance measures over a three-year period. The compensation expense related to the PCUs is recognized ratably over the requisite performance period. Performance shares are accounted for as equity awards, but are not credited with dividend-equivalents for actual dividends paid on the Company’s common stock during the performance period. Restricted Stock Units In general, restricted stock units (“RSUs”) become payable at the end of a three- or ten-year vesting period. Each RSU, if they vest, represents the right to receive one share of Company common stock. RSUs awarded under the plan generally have no strike price and are included in the Company’s shares outstanding. The following table presents a summary of Performance Share and Restricted Stock Unit activity:
| Performance Contingent Units |  | Restricted Stock Units |  |
Outstanding at December 31, 2019 | 325,851 |  |  | 62,194 |  |  |
Granted | 175,047 |  |  | 37,135 |  |  |
Change in units based on performance factor | (67,847) |  |  | — |  |  |
Paid | (138,785) |  |  | (20,232) |  |  |
Forfeited | (3,137) |  |  | (2,707) |  |  |
Outstanding at December 31, 2020 (1) | 291,129 |  |  | 76,390 |  |  |
(1)Amount outstanding at December 31, 2020, includes the amount of shares to be issued under RSUs expected to vest and number of shares to be issued under PCUs at target performance. The PCU amount of shares do not reflect potential increases or decreases that may result from the performance factor, except for the 2018 – 2020 PCU grants, which vested as of December 31, 2020. During 2020, the Company issued 175,047 PCUs to key employees at a weighted average fair value per unit of $117.85. In May 2020 and May 2019, RGA’s board of directors approved a 132% and 135% share payout for each PCU granted in 2017 and 2016, resulting in the issuance of 138,785 and 248,789 shares of common stock from treasury, respectively. As of December 31, 2020, the total compensation cost of non-vested awards not yet recognized in the financial statements was $6.2 million. It is estimated that these costs will vest over a weighted average period of 1.2 years. The majority of the awards granted each year under the board-approved incentive compensation package and Directors Plan are made in the first quarter of each year.

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