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Employee Share-Based Incentive Compensation Plans | 12 Months Ended
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Dec. 31, 2022
Share-Based Payment Arrangement [Abstract] |
Employee Share-Based Incentive Compensation Plans | Employee Share-Based Incentive Compensation Plans White Mountains’s share-based incentive compensation plans are designed to incentivize key employees to maximize shareholder value over long periods of time. White Mountains believes that this is best pursued by utilizing a pay-for-performance program that closely aligns the financial interests of management with those of its shareholders. White Mountains accomplishes this by emphasizing highly variable long-term compensation that is contingent on performance over a number of years rather than entitlements. White Mountains expenses all its share-based compensation. As a result, White Mountains’s calculation of its owners’ returns includes the expense of all outstanding share-based compensation awards. Incentive Compensation Plans The WTM Incentive Plan provides for grants of various types of share-based and non-share-based incentive awards to key employees and directors of White Mountains. The WTM Incentive Plan was adopted by the Board, was approved by the Company’s sole shareholder in 1985 and was subsequently amended by its shareholders in 1995, 2001, 2003, 2005, 2010, 2013 and 2019. Share-based incentive awards that may be granted under the plan include performance shares, restricted shares, incentive stock options and non-qualified stock options. 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 three 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 performance share activity for the years ended December 31, 2022, 2021 and 2020 for performance shares granted under the WTM Incentive Plan:
|  | Year Ended December 31,
|  | 2022 |  | 2021 |  | 2020
$ in Millions |  | Target Performance Shares Outstanding |  | Accrued Expense |  | Target Performance Shares Outstanding |  | Accrued Expense |  | Target Performance Shares Outstanding |  | Accrued Expense
Beginning of period |  | 40,828 |  |  | $ | 42.2 |  |  | 42,458 |  |  | $ | 56.3 |  |  | 42,473 |  |  | $ | 43.7 |
Shares paid or expired (1) |  | (14,625) |  |  | (26.4) |  |  | (14,336) |  |  | (35.2) |  |  | (14,070) |  |  | (27.7) |
New grants |  | 13,225 |  |  | — |  |  | 13,475 |  |  | — |  |  | 14,055 |  |  | — |
Forfeitures and cancellations (2) |  | 21 |  |  | (.4) |  |  | (769) |  |  | .4 |  |  | — |  |  | (.4) |
Expense recognized |  | — |  |  | 52.1 |  |  | — |  |  | 20.7 |  |  | — |  |  | 40.7 |
End of period |  | 39,449 |  |  | $ | 67.5 |  |  | 40,828 |  |  | $ | 42.2 |  |  | 42,458 |  |  | $ | 56.3 |
(1)WTM performance share payments in 2022 for the 2019-2021 performance cycle, which were paid in March 2022 at 172% of target. WTM performance share payments in 2021 for the 2018-2020 performance cycle, which were paid in March 2021 at 200% of target. WTM performance share payments in 2020 for the 2017-2019 performance cycle, which were paid in March 2020, ranged from 174% to 180% of target. (2)Amounts include changes in assumed forfeitures, as required under GAAP. During 2022, White Mountains granted 13,225 performance shares for the 2023-2025 performance cycle. During 2021, White Mountains granted 13,475 performance shares for the 2022-2024 performance cycle. During 2020, White Mountains granted 14,055 performance shares for the 2020-2022 performance cycle. For the 2019-2021 performance cycle, the Company issued common shares for 750 performance shares earned and all other performance shares earned were settled in cash. For the 2018-2020 and 2017-2019 performance cycles, all performance shares earned were settled in cash. If the outstanding performance shares had vested on December 31, 2022, the total additional compensation cost to be recognized would have been $36.7 million, based on accrual factors as of December 31, 2022 (common share price and payout assumptions). The following table presents performance shares outstanding and accrued expense for performance shares awarded under the WTM Incentive Plan as of December 31, 2022 for each performance cycle:
|  | December 31, 2022
$ in Millions |  | Target Performance Shares Outstanding |  | Accrued Expense
Performance cycle: |  |  |  |
2022 – 2024 |  | 13,225 |  |  | $ | 11.0 |
2021 – 2023 |  | 13,475 |  |  | 19.7 |
2020 – 2022 |  | 13,350 |  |  | 37.8 |
Sub-total |  | 40,050 |  |  | 68.5 |
Assumed forfeitures |  | (601) |  |  | (1.0) |
Total |  | 39,449 |  |  | $ | 67.5 |
For the 2022-2024 performance cycle, the targeted performance goal for full payment of outstanding performance shares granted under the WTM Incentive Plan is 9% average annual growth in adjusted book value per share and intrinsic value per share. Average annual growth of 4% or less would result in no payout and average annual growth of 14% or more would result in a payout of 200%. For the 2021-2023 performance cycle, the targeted performance goal for full payment of outstanding performance shares granted under the WTM Incentive Plan is 8% average annual growth in adjusted book value per share and intrinsic value per share. Average annual growth of 3% or less would result in no payout and average annual growth of 13% or more would result in a payout of 200%. For the 2020-2022 performance cycle, the targeted performance goal for full payment of outstanding performance shares granted under the WTM Incentive Plan is 7% average annual growth in adjusted book value per share and intrinsic value per share. Average annual growth of 2% or less would result in no payout and average annual growth of 12% or more would result in a payout of 200%. 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 under the WTM Incentive Plan for the years ended December 31, 2022, 2021 and 2020:
|  | Year Ended December 31,
|  | 2022 |  | 2021 |  | 2020
$ in Millions |  | 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 |  | 37,850 |  |  | $ | 15.9 |  |  | 43,105 |  |  | $ | 15.2 |  |  | 43,395 |  |  | $ | 16.7 |
Issued |  | 13,225 |  |  | 13.8 |  |  | 13,475 |  |  | 16.1 |  |  | 14,055 |  |  | 15.1 |
Vested |  | (12,725) |  |  | — |  |  | (17,936) |  |  | — |  |  | (14,345) |  |  | — |
Forfeited |  | — |  |  | — |  |  | (794) |  |  | (.8) |  |  | — |  |  | — |
Expense recognized |  | — |  |  | (14.2) |  |  | — |  |  | (14.6) |  |  | — |  |  | (16.6) |
End of period |  | 38,350 |  |  | $ | 15.5 |  |  | 37,850 |  |  | $ | 15.9 |  |  | 43,105 |  |  | $ | 15.2 |
During 2022, White Mountains issued 13,225 restricted shares that vest on January 1, 2025. During 2021, White Mountains issued 13,475 restricted shares that vest on January 1, 2024. During 2020, White Mountains issued 14,055 restricted shares that vest on January 1, 2023. The unamortized issue date fair value as of December 31, 2022 is expected to be recognized ratably over the remaining vesting periods.

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