Share-based compensation

12 Months Ended

Dec. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

On July 15, 2013, the Third Point Re 2013 Omnibus Incentive Plan (“Omnibus Plan”) was approved by the Board of Directors and subsequently on August 2, 2013 by the Shareholders of the Company. An aggregate of 21,627,906 common shares were made available under the Omnibus Plan. This number of shares includes the shares available under the Third Point Re Share Incentive Plan (“Share Incentive Plan”). Awards under the Omnibus Plan may be made in the form of performance awards, restricted shares, restricted share units, share options, share appreciation rights and other share-based awards.

As of December 31, 2019, 9,006,995 (December 31, 2018 - 9,017,930) of the Company’s common shares were available for future issuance under the equity incentive compensation plans.

The following table provides the total share-based compensation expense included in general and administrative expenses during the years ended December 31, 2019, 2018 and 2017:



	2019		2018		2017
Management and director options	$	—	$	275	$	648
Restricted shares with service condition⁽¹⁾	1,927		611		(331		)
Restricted shares with service and performance condition	5,134		4,070		3,282
	$	7,061	$	4,956	$	3,599


(1)	Net of forfeitures of $nil in the year ended December 31, 2019 (December 31, 2018 - $nil and December 31, 2017 - $0.9 million)

As of December 31, 2019, the Company had $7.1 million (December 31, 2018 - $7.4 million) of unamortized share compensation expense, which is expected to be amortized over a weighted average period of 1.5 years (December 31, 2018 - 1.4 years).

Management and director options

The management options issued under the Share Incentive Plan were subject to a service and performance condition. The service condition will be met with respect to 20% of the management options on each of the first five anniversary dates following the grant date of the management options. The performance condition with respect to the management options was met as a result of the Company’s IPO.

The management and director options activity for the years ended December 31, 2019, 2018 and 2017 were as follows:



	Number of options		Weighted average exercise price
Balance as of January 1, 2017	9,596,993		$	13.64
Forfeited	(558,138	)	18.00
Exercised	(150,802	)	10.00
Balance as of January 1, 2018	8,888,053		13.43
Forfeited	—		—
Exercised	—		—
Balance as of January 1, 2019	8,888,053		13.43
Forfeited	(393,717	)	14.73
Exercised	(187,678	)	10.00
Balance as of December 31, 2019	8,306,658		$	13.45

The fair value of share options issued were estimated on the grant date using the Black-Scholes option-pricing model. There were no share options granted in the years ended December 31, 2019 and 2018. As of December 31, 2019, the weighted average remaining contractual term for options outstanding and exercisable was 2.2 years and 2.2 years, respectively (2018 - 3.2 years and 3.2 years, respectively).

The following table summarizes information about the Company’s management and director share options outstanding as of December 31, 2019:



	Options outstanding				Options exercisable
Range of exercise prices	Number of options	Weighted average exercise price		Remaining contractual life	Number of options	Weighted average exercise price
$10.00 - $10.89	4,774,694	$	10.04	2.1 years	4,774,694	$	10.04
$15.05 - $16.89	1,800,866	$	15.92	2.3 years	1,800,866	$	15.92
$20.00 - $25.05	1,731,098	$	20.28	2.2 years	1,731,098	$	20.28
	8,306,658	$	13.45	2.2 years	8,306,658	$	13.45

As of December 31, 2019, the aggregate intrinsic value of options outstanding and options exercisable was $2.4 million and $2.4 million, respectively. As the Company’s closing share price on December 31, 2018 was below $10.00, there was no aggregate intrinsic value of options outstanding and options exercisable. For the year ended December 31, 2019, the Company received proceeds of $1.9 million (2018 - $nil) from the exercise of options.

Restricted shares with service condition

Restricted shares vest either ratably or at the end of the required service period and contain certain restrictions during the vesting period, relating to, among other things, forfeiture in the event of termination of employment or service and transferability.

Restricted share award activity for the restricted shares with only a service condition for the years ended December 31, 2019, 2018 and 2017 was as follows:



	Number of non- vested restricted shares		Weighted average grant date fair value
Balance as of January 1, 2017	301,043		$	11.12
Granted	36,418		12.15
Forfeited	(71,429	)	14.00
Vested	(247,823	)	10.36
Balance as of January 1, 2018	18,209		12.15
Granted	50,644		13.45
Vested	(44,788	)	12.97
Balance as of January 1, 2019	24,065		13.35
Granted	403,360		11.10
Forfeited	(36,907	)	11.31
Vested	(49,751	)	12.40
Balance as of December 31, 2019	340,767		$	11.83

For the year ended December 31, 2019, the Company issued 67,291 (2018 - 50,644 and 2017 - 36,418) restricted shares to directors and 336,069 (2018 - nil and 2017 - nil) restricted shares to employees. The restricted shares issued to employees in 2019 vest in equal annual installments over three years based on continued employment. The restricted shares issued to employees in 2015 had an original vesting period of three years from the date of issuance, however, as a result of the grantee’s departure from the Company, these shares were forfeited in the year ended December 31, 2017. The restricted shares issued to directors in 2017, 2018 and 2019 vest quarterly on July 31, October 31, January 31 and April 30, of each year.

Restricted shares with service and performance condition

Beginning in December 2014, the Company granted on an annual basis performance-based restricted shares to certain employees pursuant to the Omnibus Plan. Performance-based restricted shares vest based on continued service and the achievement of certain financial performance measures over a three-year measurement period. The number of performance-based restricted shares that will be retained upon vesting will vary based on the level of achievement of the performance goals. The formula for determining the amount of shares that will vest is based on underwriting performance of the property and casualty reinsurance segment including underwriting income and the amount of float generated, as defined in the relevant award agreements.

Restricted share award activity for the restricted shares with a service and performance condition for the years ended December 31, 2019, 2018 and 2017 was as follows:



	Number of non- vested restricted shares		Number of non- vested restricted shares probable of vesting		Weighted average grant date fair value
Balance as of January 1, 2017	1,381,740		577,486		$	12.91
Granted	935,825		623,882		12.66
Forfeited	(325,568	)	(45,617	)	12.57
Vested	(136,618	)	(136,618	)	14.60
Change in estimated restricted shares considered probable of vesting	n/a		(131,930	)	12.17
Balance as of January 1, 2018	1,855,379		887,203		12.60
Granted	556,403		370,931		14.01
Forfeited	(294,977	)	(4,102	)	13.98
Vested	(115,757	)	(115,757	)	14.00
Change in estimated restricted shares considered probable of vesting	n/a		46,945		13.35
Balance as of January 1, 2019	2,001,048		1,185,220		12.80
Granted	862,176		574,784		10.95
Forfeited	(823,977	)	(290,552	)	11.70
Vested	(148,718	)	(148,718	)	11.40
Change in estimated restricted shares considered probable of vesting	n/a		(6,698	)	12.92
Balance as of December 31, 2019	1,890,529		1,314,036		$	12.43

Defined contribution retirement plans

The Company's employees are eligible for retirement benefits through defined contribution retirement plans. The Company and employees contribute an amount equal to a specified percentage of each employee's salary. Expenses related to the defined contribution plans were $0.9 million for the year ended December 31, 2019 (2018 - $0.9 million and 2017 - $0.8 million)