Share-Based Compensation Plans

12 Months Ended

Dec. 31, 2024

Share-Based Payment Arrangement [Abstract]

18.

Share-Based Compensation Plans

The fair value method of accounting recognizes share-based compensation to employees and non-employee directors in the consolidated statements of operations using the grant-date fair value of the stock options and other equity-based compensation expensed over the requisite service and vesting period.

For the purpose of determining the fair value of stock option awards, the Company uses the Black-Scholes option-pricing model. The Company elected a policy to accrue for compensation cost based on the number of awards that are expected to vest. An estimation of forfeitures is required when recognizing compensation expense which is then adjusted over the requisite service period should actual forfeitures differ from such estimates. Changes in estimated forfeitures are recognized through a cumulative adjustment to compensation in the period of change.

Excess tax benefits and tax deficiencies associated with share-based payment awards are required to be recognized as an income tax benefit or expense in net income (loss) with the corresponding cash flows recognized as an operating activity in the Consolidated Statement of Cash Flow.

Share Incentive Plan

On June 14, 2023, the Company’s Shareholders approved the Global Indemnity Group, LLC 2023 Share Incentive Plan (“the 2023 Plan”). The primary purpose of the 2023 Plan is to provide Global Indemnity a competitive advantage in attracting, retaining, and motivating officers, employees, consultants and non-employee directors, and to position Global Indemnity to offer incentives linked to the financial results of the Company’s business and increases in shareholder value. Under the 2023 Plan, the Company may issue up to 2.5 million class A common shares pursuant to awards granted under the Plan. The 2023 Plan replaced the Global Indemnity Group, LLC 2018 Share Incentive Plan, as amended and restated on August 28, 2020, which expired pursuant to its terms on March 4, 2023.

Options

Award activity for stock options granted under the Plan and the weighted average exercise price per share are summarized as follows:


	Time-Based Options			Performance- Based Options			Total Options			Weighted Average Exercise Price Per Share
Options outstanding at January 1, 2022		600,000			93,333			693,333			33.23
Options issued		200,000			—			200,000			20.77
Options forfeited		—			(46,666	)		(46,666	)		28.70
Options exercised		—			—			—			—
Options expired		—			—			—			—
Options purchased by the Company		—			—			—			—
Options outstanding at December 31, 2022		800,000			46,667			846,667			30.54
Options issued		—			—			—			—
Options forfeited		(600,000	)		(46,667	)		(646,667	)		33.56
Options exercised		—			—			—			—
Options expired		—			—			—			—
Options purchased by the Company		—			—			—			—
Options outstanding at December 31, 2023		200,000			—			200,000			20.77
Options issued		550,000			—			550,000			30.73
Options forfeited		—			—			—			—
Options exercised		—			—			—			—
Options expired		—			—			—			—
Options purchased by the Company		—			—			—			—
Options outstanding at December 31, 2024 (1)		750,000			—			750,000		$	28.07
Options exercisable at December 31, 2024		400,000			—			400,000		$	26.39

(1)

Of the options outstanding, 350,000 time-based stock options were granted with a weighted average exercise price per share of $30.00. These options will vest one-third on each of March 6, 2025, March 6, 2026, and March 6, 2027. The remaining 400,000 time-based options represent stock options granted to the Company's Chief Executive Officer. See note below under Chief Executive Officer for additional information.

The Company recorded $1.6 million, $0.2 million, and $0.3 million of compensation expense for stock options under the Plan during the years ended December 31, 2024, 2023, and 2022, respectively.

The Company did not receive any proceeds from the exercise of options during 2024, 2023, or 2022 under the Plan.

Compensation expense related to options outstanding under the Plan as of December 31, 2024 is anticipated to be $0.7 million, $0.7 million, and $0.1 million in 2025, 2026, and 2027, respectively.

Option intrinsic values, which are the differences between the fair value of $36.00 at December 31, 2024 and the weighted average strike price of the option, are as follows:


	Number of Shares		Weighted Average Strike Price		Intrinsic Value
Outstanding		750,000		28.07	$5.9 Million
Exercisable		400,000		26.39	$3.8 Million
Exercised (1)		—		—		—

(1)

The intrinsic value of the exercised options is the difference between the fair market value at time of exercise and the strike price of the option.

The weighted average fair value of options granted under the Plan was $5.72 in 2024 and $2.98 in 2022 using a Black-Scholes option-pricing model and the following weighted average assumptions.


	2024	2022
Dividend yield	2.9%	2.0%
Expected volatility	28.88%	22.56%
Risk-free interest rate	4.32%	4.49%
Expected option life	3.0 years	2.0 years

There were no options granted under the Plan in 2023.

The following tables summarize the range of exercise prices of options outstanding at December 31, 2024, 2023, and 2022:


Ranges of Exercise Prices	Outstanding at December 31, 2024		Weighted Average Per Share Exercise Price		Weighted Average Remaining Life
$20.00 - $24.99		200,000	$	20.77	4.8 years
$30.00 - $34.99		550,000	$	30.73	4.8 years
Total		750,000


Ranges of Exercise Prices	Outstanding at December 31, 2023		Weighted Average Per Share Exercise Price		Weighted Average Remaining Life
$20.00 - $24.99		200,000	$	20.77	5.8 years
Total		200,000


Ranges of Exercise Prices	Outstanding at December 31, 2022		Weighted Average Per Share Exercise Price		Weighted Average Remaining Life
$15.00 - $19.99		300,000	$	17.87	0.0 years
$20.00 - $24.99		200,000	$	20.77	6.8 years
$25.00 - $39.99		46,667	$	28.70	8.1 years
$50.00 - $59.99		300,000	$	50.00	5.0 years
Total		846,667

Restricted Shares / Restricted Stock Units

The Plan also provides for the granting of restricted shares and restricted stock units to employees and non-employee Directors. The Company recognized compensation expense for restricted shares of $3.0 million, $2.7 million, and $2.0 million for 2024, 2023, and 2022, respectively. There is no unrecognized compensation expense for the non-vested restricted shares at December 31, 2024. The Company recognized compensation expense for restricted stock units of $0.2 million, $0.5 million, and $1.5 million for 2024, 2023 and 2022, respectively. There is no unrecognized compensation expense for the non-vested restricted stock units at December 31, 2024.

The following table summarizes the restricted stock grants since the 2003 inception of the original share incentive plan:


	Restricted Stock Awards
Year	Employees		Directors		Total
Inception through 2021		1,171,576		830,800		2,002,376
2022		—		97,260		97,260
2023		—		91,088		91,088
2024		—		94,503		94,503
		1,171,576		1,113,651		2,285,227

The following table summarizes the non-vested restricted shares activity for the years ended December 31, 2024, 2023, and 2022:


	Number of Shares			Weighted Average Price Per Share
Non-vested Restricted Shares at January 1, 2022		14,639			36.23
Shares issued		97,260			25.08
Shares vested		(100,975	)		25.49
Shares forfeited		(10,924	)		36.23
Non-vested Restricted Shares at December 31, 2022		—			—
Shares issued		91,088			29.83
Shares vested		(91,088	)		29.83
Shares forfeited		—			—
Non-vested Restricted Shares at December 31, 2023		—			—
Shares issued		94,503			31.64
Shares vested		(94,503	)		31.64
Shares forfeited		—			—
Non-vested Restricted Shares at December 31, 2024		—		$	—

The following table summarizes the restricted stock unit grants since the 2003 inception of the original share incentive plan through 2020:



	Restricted Stock Unit Awards
Employees		336,736
Directors		41,667
		378,403

No additional restricted stock units have been granted since 2020.

The following table summarizes the non-vested restricted stock units activity for the years ended December 31, 2024, 2023, and 2022:


	Number of Restricted Stock Units			Weighted Average Price Per Restricted Stock Unit
Non-vested Restricted Stock Units at January 1, 2022		227,356		$	30.33
Restricted Stock Units issued		—			—
Restricted Stock Units vested		(47,633	)		30.35
Restricted Stock Units forfeited		(51,885	)		29.82
Non-vested Restricted Stock Units at December 31, 2022		127,838		$	30.53
Restricted Stock Units issued		—			—
Restricted Stock Units vested		(61,652	)		30.43
Restricted Stock Units forfeited		(14,893	)		30.18
Non-vested Restricted Stock Units at December 31, 2023		51,293		$	30.75
Restricted Stock Units issued		—			—
Restricted Stock Units vested		(51,293	)		30.75
Restricted Stock Units forfeited		—			—
Non-vested Restricted Stock Units at December 31, 2024		—		$	—

Upon vesting, the restricted stock units are converted to restricted class A common shares. Based on the terms of the restricted share and restricted stock unit grants, all forfeited shares revert back to the Company.

During 2024, 2023, and 2022, the Company granted 94,503, 91,088, and 97,260 class A common shares, respectively, at a weighted average grant date value of $31.64, $29.83, and $25.08 per share, respectively, to non-employee directors of the Company under the Plan. The Company previously granted 157,139 shares to a non-employee director with deferred vesting. These shares vested on January 13, 2023. All other shares granted to non-employee directors of the Company are fully vested but subject to certain restrictions.

There were no restricted class A common shares or restricted stock units granted to key employees during the years ended December 31, 2024, 2023, or 2022.

Book Value Appreciation Rights (“BVAR”)

In 2021, the Company granted 2.9 million Penn-Patriot BVARs which entitled the holder to a payment based on the value of the pre-BVAR appreciation in Penn-Patriot Insurance Company’s book value. These BVARs were forfeited in 2022. Compensation expense in 2022 was reduced by $2.3 million due to these forfeitures.

Book Value Rights ("BVR")

Book Value Rights are awards issued to employees and are indexed to Belmont Holdings GX, Inc.'s equity. The BVRs are paid in cash. The Company does have the ability to issue Global Indemnity Group, LLC's class A common shares in lieu of cash. Vesting of the BVRs are subject to the employee's continuous service with the Company and remaining in good standing through the vesting date.

In 2024, the Company granted 114,146 Book Value Rights. Of these BVR, 14,063 BVR were forfeited. 10,834 BVR will vest on January 23, 2027, 58,854 BVR will vest 50% on March 6, 2026 and 50% on March 6, 2027 and the remaining 30,395 BVR will vest 50% on June 10, 2026 and 50% on June 10, 2027.

In 2023, the Company granted 177,045 Book Value Rights. Of these BVR, 39,545 BVR were forfeited. The remaining 137,500 BVR will vest 50% on March 3, 2025 and 50% on March 3, 2026.

In 2022, the Company granted 179,096 Book Value Rights. Of these BVR, 5,163 and 7,335 of the BVR vested in 2024 and 2023, respectively, and 81,876 BVR were forfeited. The remaining 84,722 BVR will vest as follows:

•

74,294 of the book value rights will vest in 2025.

•

Subject to Board approval, 10,428 of the book value rights will vest 100%, no later than March 15, 2026, following a re-measurement of 2022 results as of December 31, 2025.

There are no unvested BVR related to years prior to 2022.

The Company recorded $1.9 million, $0.6 million, and $0.8 million in compensation expense during the years ended December 31, 2024, 2023, and 2022, respectively, and had $2.6 million and $1.3 million accrued as of December 31, 2024, and 2023, respectively, related to the book value rights.

Chief Executive Officer

Effective October 21, 2022, Global Indemnity Group, LLC's Board of Directors appointed Joseph W. Brown as its Chief Executive Officer ("CEO"). The CEO Agreement provided for a grant of 200,000 stock options to acquire the Company's class A common shares with an exercise price equal to the closing price of the Company’s class A common shares on the date of the grant. The options vested in four equal tranches as follows: 25% on each of November 1, 2022, February 1, 2023, May 1, 2023 and August 1, 2023 and are exercisable within 7 years of the grant. The stock options are subject to the terms and conditions for stock options as reflected in the Company’s 2018 Share Incentive Plan and written option agreement.

The Company entered into a new Chief Executive Officer Agreement ("2024 CEO Agreement") with Joseph W. Brown on January 18, 2024. The 2024 CEO agreement provides for a grant of 200,000 stock options to acquire the Company's class A common shares with an exercise price equal to the closing price of the Company's class A common shares on the date of the grant. The options vested in four equal tranches as follows: 25% on each of the first business day of each quarter in 2024 and are exercisable within 7 years of the grant. The stock options are subject to the terms and conditions for stock options as reflected in the Company’s 2023 Share Incentive Plan and written option agreement.

The 2024 CEO Agreement further provides that on the first business day of each year, beginning in 2025 through 2028, if Mr. Brown is employed by the Company, he shall be granted 50,000 stock options to acquire the Company's class A common shares with an exercise price equal to the closing price of the Company's class A common shares on the date of the grant. The options, if granted, will vest on December 31, 2028 (subject to Mr. Brown remaining employed with the Company or serving on the Company's Board of Directors through the vesting date), and to the extent vested, are exercisable within 7 years of the grant notwithstanding any earlier termination of employment. The stock options are subject to the terms and conditions for stock options as reflected in the Company’s 2023 Share Incentive Plan and written option agreement.