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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation In 2013, Essent Group's Board of Directors adopted, and Essent Group's shareholders approved, the Essent Group Ltd. 2013 Long-Term Incentive Plan (the "2013 Plan"), which was effective upon completion of the initial public offering. The types of awards available under the 2013 Plan include nonvested shares, nonvested share units, non-qualified share options, incentive stock options, share appreciation rights, and other share-based or cash-based awards. Nonvested shares and nonvested share units granted under the 2013 Plan have rights to dividends, which entitle the holders to the same dividend value per share as holders of common shares in the form of dividend equivalent units ("DEUs"). DEUs are subject to the same vesting and other terms and conditions as the corresponding nonvested shares and nonvested share units. DEUs vest when the underlying shares or share units vest and are forfeited if the underlying share or share units forfeit prior to vesting. The maximum number of shares and share units available for issuance is 7.5 million under the 2013 Plan. As of December 31, 2023, there were 3.8 million common shares available for future grant under the 2013 Plan. In February of each year, 2018 through 2020, certain members of senior management were granted nonvested common shares under the 2013 Plan that were subject to time-based and performance-based vesting. The time-based share awards vest in three equal yearly installments commencing on March 1 of the year following the grant year. The performance-based share awards vest based upon our compounded annual book value per share growth percentage during a three-year performance period that commences on January 1 of the grant year and vest on March 1 following the end of the performance period. The portion of the nonvested performance-based share awards that will be earned based upon the achievement of compounded annual book value per share growth is as follows:
|  | 2020 Performance-Based Grants |  | 2019 Performance-Based Grants |  | 2018 Performance-Based Grants
Performance level |  | Compounded Annual Book Value Per Share Growth |  | Nonvested Common Shares Earned |  | Compounded Annual Book Value Per Share Growth |  | Nonvested Common Shares Earned |  | Compounded Annual Book Value Per Share Growth |  | Nonvested Common Shares Earned
|  | <13 | % |  | 0 | % |  | <14 | % |  | 0 | % |  | <15 | % |  | 0 | %
Threshold |  | 13 | % |  | 10 | % |  | 14 | % |  | 10 | % |  | 15 | % |  | 25 | %
|  | 14 | % |  | 35 | % |  | 15 | % |  | 35 | % |  | 16 | % |  | 50 | %
|  | 15 | % |  | 60 | % |  | 16 | % |  | 60 | % |  | 17 | % |  | 75 | %
|  | 16 | % |  | 85 | % |  | 17 | % |  | 85 | % |  |  |  |
Maximum |  | ≥17 | % |  | 100 | % |  | ≥18 | % |  | 100 | % |  | ≥18 | % |  | 100 | %
In the event that the compounded annual book value per share growth falls between the performance levels shown above, the nonvested common shares earned will be determined on a straight-line basis between the respective levels shown. The compounded annual book value per share growth for each of the 2018, 2019 and 2020 performance-based grants exceeded the maximum performance level and have vested at 100%. In February 2021, February and May 2022, and February 2023, certain members of senior management were granted nonvested common shares under the 2013 Plan that were subject to time-based and performance-based vesting. The time-based share awards granted vest in three equal installments commencing on March 1 of the year following the grant year. The performance-based share awards granted vest based upon our compounded annual book value per share growth percentage and relative total shareholder return during a three-year performance period that commenced on January 1, 2021, 2022 and 2023, respectively and vest on March 1, 2024, 2025 and 2026, respectively. Shares were issued at the maximum 200% of target. The portion of these nonvested performance-based share awards that will be earned is as follows:
|  |  |  | Relative Total Shareholder Return vs. S&P 1500 Financial Services Index
2021 Awards |  | ≤25th percentile |  | 50th percentile "Target" |  | ≥75th percentile
Three-Year Book Value Per Share CAGR |  | 14% "Target" |  | 100% |  | 150% |  | 200%
| 12% |  | 75% |  | 125% |  | 175%
| 10% |  | 50% |  | 100% |  | 150%
| 8% |  | 25% |  | 75% |  | 125%
| 6% |  | 0% |  | 50% |  | 100%
|  |  |  | Relative Total Shareholder Return vs. S&P 1500 Financial Services Index
2022 Awards |  | ≤25th percentile |  | 50th percentile "Target" |  | ≥75th percentile
Three-Year Book Value Per Share CAGR |  | 13% "Target" |  | 100% |  | 150% |  | 200%
| 11% |  | 75% |  | 125% |  | 175%
| 9% |  | 50% |  | 100% |  | 150%
| 7% |  | 25% |  | 75% |  | 125%
| 5% |  | 0% |  | 50% |  | 100%
|  |  |  | Relative Total Shareholder Return vs. S&P 1500 Financial Services Index
2023 Awards |  | ≤25th percentile |  | 50th percentile "Target" |  | ≥75th percentile
Three-Year Book Value Per Share CAGR |  | 10% "Target" |  | 100% |  | 150% |  | 200%
| 9% |  | 75% |  | 125% |  | 175%
| 8% |  | 50% |  | 100% |  | 150%
| 6% |  | 25% |  | 75% |  | 125%
| 5% |  | 0% |  | 50% |  | 100%
In the event that the compounded annual book value per share growth or the relative total shareholder return falls between the performance levels shown above for the 2023, 2022 or 2021 performance-based share awards, the nonvested common shares earned will be determined on a straight-line basis between the respective levels shown. Quoted market prices are used for the valuation of common shares granted that do not contain a market condition under ASC 718. The performance-based share awards granted in 2023, 2022 and 2021 contain a market condition and were valued based on analysis provided by a third-party valuation firm using a risk neutral simulation taking into effect the vesting conditions of the grant. In February 2021, the performance-based share awards granted in 2019 and 2020 to certain members of senior management were amended to provide that such awards will no longer be subject to the achievement of the compounded annual book value per share growth metrics and will be subject to only service-based vesting. As a result, the unvested shares subject to the amended 2019 and 2020 awards vested on March 1, 2022 and March 1, 2023, respectively, subject to the continued service requirements and other terms and conditions set forth in the applicable award agreements, without taking into consideration any performance metrics. Total incremental compensation expense related to amending these awards was $4.0 million. In January 2020, time-based share units were issued to all vice president and staff level employees that vested in three equal installments in January 2021, 2022 and 2023. In January 2023, time-based share units were issued to all vice president and staff level employees that vested in three equal installments in January 2024, 2025 and 2026. In connection with our incentive program covering bonus awards for performance years 2018 through 2022, in February following each performance year, time-based share units were issued to certain employees that vest in three equal yearly installments commencing on March 1 of the year following the grant year. In May of each year, 2020 through 2023, time-based share units were granted to non-employee directors that vest one year from the date of grant. The following tables summarize nonvested common share, nonvested common share unit and DEU activity for the year ended December 31:
|  | 2023
|  | Time and Performance- Based Share Awards |  | Time-Based Share Awards |  | Share Units |  | DEUs
(Shares in thousands) |  | Number of Shares |  | Weighted Average Grant Date Fair Value |  | Number of Shares |  | Weighted Average Grant Date Fair Value |  | Number of Share Units |  | Weighted Average Grant Date Fair Value |  | Dividend Equivalent Units |  | Weighted Average Grant Date Fair Value
Outstanding at beginning of year |  | 647 |  |  | $ | 20.99 |  |  | 138 |  |  | $ | 45.94 |  |  | 350 |  |  | $ | 45.51 |  |  | 37 |  |  | $ | 40.86 |
Granted |  | 300 |  |  | 12.66 |  |  | 75 |  |  | 43.51 |  |  | 567 |  |  | 40.81 |  |  | 37 |  |  | 40.55 |
Vested |  | (103) |  |  | 51.52 |  |  | (64) |  |  | 46.65 |  |  | (177) |  |  | 47.43 |  |  | (16) |  |  | 40.38 |
Forfeited |  | — |  |  | — |  |  | — |  |  | — |  |  | (16) |  |  | 39.12 |  |  | (1) |  |  | 42.13 |
Outstanding at end of year |  | 844 |  |  | $ | 14.29 |  |  | 149 |  |  | $ | 44.40 |  |  | 724 |  |  | $ | 41.49 |  |  | 57 |  |  | $ | 44.00 |
|  | 2022
|  | Time and Performance- Based Share Awards |  | Time-Based Share Awards |  | Share Units |  | DEUs
(Shares in thousands) |  | Number of Shares |  | Weighted Average Grant Date Fair Value |  | Number of Shares |  | Weighted Average Grant Date Fair Value |  | Number of Share Units |  | Weighted Average Grant Date Fair Value |  | Dividend Equivalent Units |  | Weighted Average Grant Date Fair Value
Outstanding at beginning of year |  | 500 |  |  | $ | 31.29 |  |  | 140 |  |  | $ | 45.31 |  |  | 461 |  |  | $ | 47.94 |  |  | 28 |  |  | $ | 41.75 |
Granted |  | 308 |  |  | 14.83 |  |  | 87 |  |  | 46.15 |  |  | 161 |  |  | 42.56 |  |  | 25 |  |  | 40.28 |
Vested |  | (139) |  |  | 45.32 |  |  | (86) |  |  | 45.07 |  |  | (192) |  |  | 47.53 |  |  | (14) |  |  | 41.29 |
Forfeited |  | (22) |  |  | 15.45 |  | (3) |  |  | 46.91 |  |  | (80) |  |  | 48.73 |  |  | (2) |  |  | 42.70 |
Outstanding at end of year |  | 647 |  |  | $ | 20.99 |  |  | 138 |  |  | $ | 45.94 |  |  | 350 |  |  | $ | 45.51 |  |  | 37 |  |  | $ | 40.86 |
|  | 2021
|  | Time and Performance- Based Share Awards |  | Time-Based Share Awards |  | Share Units |  | DEUs
(Shares in thousands) |  | Number of Shares |  | Weighted Average Grant Date Fair Value |  | Number of Shares |  | Weighted Average Grant Date Fair Value |  | Number of Share Units |  | Weighted Average Grant Date Fair Value |  | Dividend Equivalent Units |  | Weighted Average Grant Date Fair Value
Outstanding at beginning of year |  | 363 |  |  | $ | 47.09 |  |  | 153 |  |  | $ | 46.34 |  |  | 492 |  |  | $ | 46.59 |  |  | 21 |  |  | $ | 37.66 |
Granted |  | 281 |  |  | 15.64 |  |  | 93 |  |  | 43.67 |  |  | 212 |  |  | 46.96 |  |  | 17 |  |  | $ | 44.86 |
Vested |  | (113) |  |  | 45.02 |  |  | (98) |  |  | 45.40 |  |  | (214) |  |  | 43.74 |  |  | (9) |  |  | 38.53 |
Forfeited |  | (31) |  |  | 24.33 |  | (8) |  |  | 44.94 |  |  | (29) |  |  | 48.85 |  |  | (1) |  |  | 40.53 |
Outstanding at end of year |  | 500 |  |  | $ | 31.29 |  |  | 140 |  |  | $ | 45.31 |  |  | 461 |  |  | $ | 47.94 |  |  | 28 |  |  | $ | 41.75 |
The total fair value of nonvested shares, share units or DEUs that vested was $15.3 million, $18.4 million and $19.5 million for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, there was $26.9 million of total unrecognized compensation expense related to nonvested shares or share units outstanding at December 31, 2023 and we expect to recognize the expense over a weighted average period of 2.5. In February 2024, 46,252 nonvested common share units were issued to certain vice president and staff level employees and are subject to time-based vesting. In connection with our incentive program covering bonus awards for performance year 2023, in February 2024, 61,788 nonvested common share units were issued to certain employees and are subject to time-based vesting. In February 2024, 296,670 nonvested common shares and 66,547 nonvested common share units were granted to certain members of senior management and are subject to time-based and performance-based vesting. Employees have the option to tender shares to Essent Group to pay the minimum employee statutory withholding taxes associated with shares upon vesting. Common shares tendered by employees to pay employee withholding taxes totaled 119,334, 133,011 and 135,616 in 2023, 2022 and 2021, respectively. The tendered shares were recorded at cost and included in treasury stock. All treasury stock has been cancelled as of December 31, 2023 and 2022. Compensation expense, net of forfeitures, and related tax effects recognized in connection with nonvested shares and share units were as follows for the years ended December 31:
(In thousands) |  | 2023 |  | 2022 |  | 2021
Compensation expense |  | $ | 18,446 |  |  | $ | 18,381 |  |  | $ | 20,844 |
Income tax benefit |  | 3,660 |  |  | 3,636 |  |  | 4,088 |

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