Share-Based Payments

Share-based compensation costs are primarily classified as underwriting, policy acquisition and operating expenses.

During 2015, 2014 and 2013, ProAssurance provided share-based compensation to employees utilizing three types of awards: restricted share units, performance share units, and purchase match units. The awards were made under either the ProAssurance Corporation Amended and Restated 2014 Equity Incentive Plan or the ProAssurance Corporation 2008 Equity Incentive Plan. The Compensation Committee of the Board is responsible for the administration of both plans.

The following table provides a summary of compensation expense and the total related tax benefit recognized during each period as well as compensation cost that will be charged to expense in future periods, by award type.



	Share-Based Compensation Expense						Unrecognized Compensation Cost
	Year Ended December 31						December 31, 2015
	2015		2014		2013		Amount		Remaining Recognition Period
	(In millions)						(In millions)		(Weighted average years)
Restricted Share Units	$	2.5	$	1.7	$	1.6	$	3.2	1.8
Performance Share Units	5.9		7.6		7.1		6.0		1.6
Purchase Match Units	0.8		0.8		0.5		1.8		2.2
Total share-based compensation expense	$	9.2	$	10.1	$	9.2	$	11.0
Tax benefit recognized	$	3.2	$	3.5	$	3.2

Each award type is charged to expense as an increase to equity over the service period (generally the vesting period) associated with the award. Restricted share and performance share units vest in their entirety at the end of a three-year period following the grant date based on a continuous service requirement and, for performance share units, achievement of a performance objective; partial vesting is permitted for retirees. Purchase match units vest over a three-year period based on a service requirement with partial vesting permitted for all participants. For the restricted share and purchase match units, a single share is issued per vested unit. For performance share units, the number of shares issued per vested unit varies based on performance goals achieved. For all types of awards, units sufficient to satisfy required tax withholdings are paid in cash rather than in shares.

Restricted Share Units

Activity for restricted share units during 2015, 2014 and 2013 is summarized below. Grant date fair values are based on the market value of a ProAssurance common share on the date of grant less the estimated present value of dividends during the vesting period.



	2015				2014				2013
	Units		Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value
Beginning non-vested balance	136,802		$	45.02	138,770		$	38.92	157,212		$	31.94
Granted	91,943		42.73		49,750		46.34		39,400		46.97
Forfeited	(1,342	)	42.79		(2,044	)	44.88		(603	)	35.91
Vested and released	(48,935	)	42.24		(49,674	)	29.22		(57,239	)	25.25
Ending non-vested balance	178,468		44.64		136,802		45.02		138,770		38.92

The aggregate grant date fair value of restricted share units vested and released in 2015, 2014 and 2013 totaled $2.1 million, $1.5 million and $1.4 million, respectively. The aggregate intrinsic value of restricted share units vested and released in 2015, 2014 and 2013 (including units paid in cash to cover tax withholdings) totaled $2.3 million, $2.3 million and $2.7 million, respectively.

Performance Share Units

Performance share units vest only if minimum performance objectives are met, and the number of units earned varies from 75% to 125% of a base award depending upon the degree to which stated performance objectives are achieved. Performance share unit activity for 2015, 2014 and 2013 is summarized below. The table reflects the base number of units; actual awards that vest depend upon the extent to which performance objectives are achieved. Grant date fair values are based on the market value of a ProAssurance common share on the date of grant less the estimated present value of dividends during the vesting period.



	2015				2014				2013
	Base Units		Weighted Average Grant Date Fair Value		Base Units		Weighted Average Grant Date Fair Value		Base Units		Weighted Average Grant Date Fair Value
Beginning non-vested balance	466,860		$	44.97	486,680		$	39.86	552,417		$	33.21
Granted	106,490		42.73		160,900		46.34		145,580		46.97
Forfeited	(2,322	)	46.42		(14,221	)	45.30		(17,043	)	38.90
Vested and released	(180,678	)	42.44		(166,499	)	31.33		(194,274	)	26.39
Ending non-vested balance	390,350		45.56		466,860		44.97		486,680		39.86

The aggregate grant date fair value of performance share units (base level) vested and released in 2015, 2014 and 2013 totaled $7.7 million, $5.2 million and $5.1 million, respectively. The aggregate intrinsic value of performance share units (base level) vested and released in 2015, 2014 and 2013 (including units paid in cash to cover tax withholdings) totaled $8.4 million, $7.7 million and $9.1 million, respectively. The weighted average level at which the vested units were issued was 115% during 2015 and 125% during both 2014 and 2013, based on performance levels achieved.

Purchase Match Units

The ProAssurance Corporation 2011 Employee Stock Ownership Plan provides a purchase match unit for each share purchased with contributions by eligible plan participants, with participant contributions subject to a $5,000 annual limit per participant. Purchase match unit activity during 2015, 2014 and 2013 is summarized below. Grant date fair values are based on the market value of a ProAssurance common share on the date of grant less the estimated present value of dividends during the vesting period.



	2015				2014				2013
	Units		Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value
Beginning non-vested balance	72,101		$	43.69	63,125		$	41.34	40,985		$	39.85
Granted	26,593		46.03		29,069		44.55		25,151		43.57
Forfeited	(3,087	)	44.16		(2,968	)	43.14		(2,456	)	40.71
Vested and released	(21,124	)	42.65		(17,125	)	36.61		(555	)	36.33
Ending non-vested balance	74,483		44.80		72,101		43.69		63,125		41.34

The aggregate grant date fair value of purchase match units vested and released in 2015 and 2014 totaled $0.9 million and $0.6 million, respectively, and the aggregate intrinsic value of purchase match share units vested and released in 2015 and 2014 (including units paid in cash to cover tax withholdings) totaled $1.0 million and $0.8 million, respectively.

Stock Options

ProAssurance also had certain fully-vested employee stock options outstanding during 2015, 2014 and 2013, as summarized below.



	2015				2014				2013
	Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price
Outstanding, vested and exercisable, beginning of year	4,456		$	24.64	18,082		$	23.00	20,302		$	23.15
Exercised	(2,342	)	24.13		(13,626	)	22.47		(2,220	)	24.28
Outstanding, vested and exercisable, end of year	2,114		25.02		4,456		24.64		18,082		23.00

The aggregate intrinsic value of options exercised during 2015, 2014 and 2013 was $0.1 million, $0.3 million and $0.1 million, respectively. ProAssurance outstanding options had an aggregate intrinsic value of $0.1 million and a weighted average remaining contractual term of 2.21 years at December 31, 2015. All ProAssurance option agreements permit cashless exercise whereby the exercise price and any required tax withholdings are allowed to be satisfied by the retention of shares that would otherwise be deliverable to the option holder. ProAssurance issues new shares for options exercised. There were no cash proceeds from options exercised during the years ended December 31, 2015, 2014 or 2013.