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Stock-based Compensation | 9 Months Ended
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Sep. 30, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-based Compensation | 9. Stock-based Compensation As of September 30, 2024, there were 2,356,776 and 1,229,903 shares available for grant under The Hanover Insurance Group 2022 Long-Term Incentive Plan and 2023 Employee Stock Purchase plan, respectively. Compensation cost for the Company’s stock-based awards and the related tax benefits were as follows:
|  | Three Months Ended September 30, |  |  |  | Nine Months Ended September 30, |
(in millions) |  | 2024 |  |  |  | 2023 |  |  |  | 2024 |  |  |  | 2023 |
Stock-based compensation expense |  | $ | 8.7 |  |  |  | $ | 8.6 |  |  |  | $ | 23.5 |  |  |  | $ | 23.9 |
Tax benefit |  |  | (1.8 | ) |  |  |  | (1.8 | ) |  |  |  | (4.9 | ) |  |  |  | (5.0 | )
Stock-based compensation expense, net of taxes |  | $ | 6.9 |  |  |  | $ | 6.8 |  |  |  | $ | 18.6 |  |  |  | $ | 18.9 |
Stock Options Information on the Company’s stock option activity for the nine months ended September 30, 2024 and 2023 is summarized below.
|  | Nine Months Ended September 30, |
|  | 2024 |  |  | 2023 |
(in whole shares and dollars) |  | Shares |  |  | Weighted Average Exercise Price |  |  | Shares |  |  | Weighted Average Exercise Price |
Outstanding, beginning of period |  |  | 1,137,042 |  |  | $ | 111.57 |  |  |  | 1,080,852 |  |  | $ | 107.07 |
Granted |  |  | 150,731 |  |  |  | 134.26 |  |  |  | 135,019 |  |  |  | 140.01 |
Exercised |  |  | (131,891 | ) |  |  | 88.87 |  |  |  | (40,544 | ) |  |  | 92.39 |
Forfeited or cancelled |  |  | (2,642 | ) |  |  | 134.99 |  |  |  | (22,184 | ) |  |  | 125.15 |
Outstanding, end of period |  |  | 1,153,240 |  |  |  | 117.08 |  |  |  | 1,153,143 |  |  |  | 111.09 |
Restricted Stock Units The Company currently issues time-based, market-based and performance-based restricted stock units to eligible employees, all of which generally vest after three years of continued employment. The following table summarizes activity information about employee restricted stock units:
|  | Nine Months Ended September 30, |
|  | 2024 |  |  | 2023 |
(in whole shares and dollars) |  | Shares |  |  | Weighted Average Grant Date Fair Value |  |  | Shares |  |  | Weighted Average Grant Date Fair Value |
Time-based restricted stock units: |  |  |  |  |  |  |  |  |  |  |  |
Outstanding, beginning of period |  |  | 376,626 |  |  | $ | 132.04 |  |  |  | 378,256 |  |  | $ | 124.88 |
Granted |  |  | 158,460 |  |  |  | 133.30 |  |  |  | 149,509 |  |  |  | 138.35 |
Vested |  |  | (123,973 | ) |  |  | 116.25 |  |  |  | (132,086 | ) |  |  | 118.21 |
Forfeited |  |  | (21,705 | ) |  |  | 135.85 |  |  |  | (19,132 | ) |  |  | 131.14 |
Outstanding, end of period |  |  | 389,408 |  |  |  | 137.36 |  |  |  | 376,547 |  |  |  | 132.25 |
Performance-based and market-based restricted stock units: |  |  |  |  |  |  |  |  |  |  |
Outstanding, beginning of period |  |  | 120,504 |  |  | $ | 132.76 |  |  |  | 119,163 |  |  | $ | 122.81 |
Granted |  |  | 53,336 |  |  |  | 132.27 |  |  |  | 50,115 |  |  |  | 137.90 |
Vested |  |  | (41,290 | ) |  |  | 112.36 |  |  |  | (44,781 | ) |  |  | 114.14 |
Forfeited |  |  | (6,339 | ) |  |  | 108.06 |  |  |  | (3,993 | ) |  |  | 109.19 |
Outstanding, end of period |  |  | 126,211 |  |  |  | 140.47 |  |  |  | 120,504 |  |  |  | 132.76 |
In the first nine months of 2024 and 2023, the Company granted market-based awards totaling 25,414 shares and 21,789 shares, respectively, to certain members of senior management, which are included in the table above as performance and market-based restricted stock activity. The vesting of these stock units is based on the relative total shareholder return (“TSR”) of the Company. This metric is generally based on relative TSR for a three-year period as compared to a pre-selected group of property and casualty companies. The fair value of market-based awards was estimated at the date of grant using a valuation model. These units have the potential to range from 0% to 150% of the shares disclosed. Included in the amount forfeited above in 2024 and 2023 are 6,339 shares and 2,836 shares, respectively, related to market-based awards that achieved a payout below 100%. These awards were forfeited in the first quarter of 2024 and 2023, respectively. The Company also granted performance-based restricted stock units in 2024 and 2023, totaling 27,922 shares and 28,326 shares, respectively, which are based upon the Company’s achievement of return on equity objectives. These units have the potential to range from 0% to 150% of the shares disclosed. Increases above the 100% target level are reflected as granted in the period after which performance-based stock unit goals are achieved. Decreases below the 100% target level are reflected as forfeited. Included in the amounts granted above in 2024 and 2023 are 2,615 shares and 5,961 shares, respectively, related to performance-based awards that achieved a payout in excess of 100%. These awards vested in the first quarter of 2024 and 2023, respectively.

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