Employee Share-Based Incentive Compensation Plans

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Employee Share-Based Incentive Compensation Plans

White Mountains’s Long-Term Incentive Plan (the “WTM Incentive Plan”) provides for grants of various types of share-based and non-share-based incentive awards to key employees of White Mountains. As of September 30, 2021, White Mountains’s share-based compensation incentive awards consist of performance shares and restricted shares.

Performance Shares

Performance shares are designed to reward employees for meeting company-wide performance targets. Performance shares are conditional grants of a specified maximum number of common shares or an equivalent amount of cash. Awards generally vest at the end of a three-year service period, are subject to the attainment of pre-specified performance goals, and are valued based on the market value of common shares at the time awards are paid. Performance shares earned under the WTM Incentive Plan are typically paid in cash but may be paid in common shares. Compensation expense is recognized for the vested portion of the awards over the related service periods. The level of payout ranges from zero to two times the number of shares initially granted, depending on White Mountains’s financial performance. Performance shares become payable at the conclusion of a performance cycle (typically 3 years) if pre-defined financial targets are met. The performance measures used for determining performance share payouts are growth in White Mountains’s adjusted book value per share and intrinsic value per share. Intrinsic value per share is generally calculated by adjusting adjusted book value per share for differences between the adjusted book value of certain assets and liabilities and White Mountains’s estimate of their underlying intrinsic values.

The following table presents the performance share activity for the three and nine months ended September 30, 2021 and 2020 for performance shares granted under the WTM Incentive Plan:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Millions, except share amounts	Target Performance Shares Outstanding	Accrued Expense		Target Performance Shares Outstanding	Accrued Expense		Target Performance Shares Outstanding	Accrued Expense		Target Performance Shares Outstanding	Accrued Expense
Beginning of period	41,252	$	45.7	42,458	$	15.8	42,458	$	56.3	42,473	$	43.7
Shares paid (1)	(219)	(.6)		—	—		(14,336)	(35.2)		(14,070)	(27.7)
New grants	—	—		—	—		13,475	—		14,055	—
Forfeitures and cancellations (2)	(205)	.2		—	(.3)		(769)	.4		—	.1
Expense recognized	—	(6.5)		—	13.6		—	17.3		—	13.0
End of period	40,828	$	38.8	42,458	$	29.1	40,828	$	38.8	42,458	$	29.1

(1) WTM performance share payments in 2021 for the 2018-2020 performance cycle, which were paid in cash in March 2021 at 200% of target. WTM performance share payments in 2020 for the 2017-2019 performance cycle, which were paid in cash in March 2020, ranged from 174% to 180% of target.

(2) Amounts include changes in assumed forfeitures, as required under GAAP.

During the nine months ended September 30, 2021, White Mountains granted 13,475 performance shares for the 2021-2023 performance cycle. During the nine months ended September 30, 2020, White Mountains granted 14,055 performance shares for the 2020-2022 performance cycle.

All performance shares earned were settled in cash. If all the outstanding WTM performance shares had vested on September 30, 2021, the total additional compensation cost to be recognized would have been $17.2 million, based on accrual factors (common share price and payout assumptions) as of September 30, 2021.

The following table presents performance shares outstanding and accrued expense for performance shares awarded under the WTM Incentive Plan as of September 30, 2021 for each performance cycle:


	Nine Months Ended September 30, 2021
Millions, except share amounts	Target Performance Shares Outstanding	Accrued Expense
Performance cycle:
2019 – 2021	14,625	$	24.4
2020 – 2022	13,350	13.4
2021 – 2023	13,475	1.6

Sub-total	41,450	39.4
Assumed forfeitures	(622)	(.6)
September 30, 2021	40,828	$	38.8

Restricted Shares

Restricted shares are grants of a specified number of common shares that generally vest at the end of a 34-month service period. The following table presents the unrecognized compensation cost associated with the outstanding restricted share awards for the three and nine months ended September 30, 2021 and 2020:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Millions, except share amounts	Restricted Shares	Unamortized Issue Date Fair Value		Restricted Shares	Unamortized Issue Date Fair Value		Restricted Shares	Unamortized Issue Date Fair Value		Restricted Shares	Unamortized Issue Date Fair Value
Non-vested,
Beginning of period	38,280	$	23.2	43,105	$	23.0	43,105	$	15.2	43,395	$	16.7
Issued	—	—		—	—		13,475	16.1		14,055	15.1
Vested	(219)	—		—	—		(17,936)	—		(14,345)	—
Forfeited	(211)	(.2)		—	—		(794)	(.8)		—	—
Expense recognized	—	(3.6)		—	(3.6)		—	(11.1)		—	(12.4)
End of period	37,850	$	19.4	43,105	$	19.4	37,850	$	19.4	43,105	$	19.4

During the nine months ended September 30, 2021, White Mountains issued 13,475 restricted shares that vest on January 1, 2024. During the nine months ended September 30, 2020, White Mountains issued 14,055 restricted shares that vest on January 1, 2023. The unamortized issue date fair value as of September 30, 2021 is expected to be recognized ratably over the remaining vesting periods.