Shareholders' Equity

a)The Company had 50,000,000 shares of no par value common stock authorized of which 13,887,711 shares and 13,903,526 shares were issued and outstanding at December 31, 2018 and 2017, respectively. The Company also has 10,000,000 shares of no par value preferred stock authorized, none of which was issued or outstanding at December 31, 2018 or 2017.

In May 2018, the Company's Board of Directors approved a new share repurchase program (the 2018 Program) to replace the previous share repurchase program that was approved by the Board of Directors in November 2013 (the 2013 Program). The 2018 Program provides for the repurchase of up to $300 million of common stock and has no expiration date but may be terminated by the Board of Directors at any time.

During the year ended December 31, 2018, the Company repurchased an aggregate of 35,174 shares of common stock at a cost of $39.0 million, including 15,509 shares repurchased under the 2013 Program at a cost of $17.6 million, and 19,665 shares repurchased under the 2018 Program at a cost of $21.4 million. In total, the Company repurchased 199,244 shares of common stock under the 2013 Program at a cost of $175.6 million.

b)Net income per share was determined by dividing adjusted net income to shareholders by the applicable weighted average shares outstanding. Basic shares outstanding include restricted stock units that are no longer subject to any contingencies for issuance, but for which the corresponding shares have not been issued. Diluted net income per share is computed by dividing adjusted net income to shareholders by the weighted average number of common shares and dilutive potential common shares outstanding during the year. Average closing common stock market prices are used to calculate the dilutive effect attributable to restricted stock.



	Years Ended December 31,
(in thousands, except per share amounts)	2018			2017			2016
Net income (loss) to shareholders ⁽¹⁾	$	(128,180	)	$	395,269		$	455,689
Adjustment of redeemable noncontrolling interests	(4,828		)	(33,738		)	(15,472		)
Adjusted net income (loss) to shareholders	$	(133,008	)	$	361,531		$	440,217

Basic common shares outstanding	13,923			13,964			14,013
Dilutive potential common shares from options	—			1			4
Dilutive potential common shares from restricted stock units and restricted stock	—			41			61
Diluted shares outstanding	13,923			14,006			14,078
Basic net income (loss) per share	$	(9.55	)	$	25.89		$	31.41
Diluted net income (loss) per share ⁽²⁾	$	(9.55	)	$	25.81		$	31.27


⁽¹⁾	Effective January 1, 2018, the Company adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income, rather, changes in the fair value of equity securities are now recognized in net income. Prior periods have not been restated to conform to the current presentation. See note 1.


⁽²⁾	The impact of restricted stock units and restricted stock of 25 thousand shares was excluded from the computation of diluted earnings per share for the year ended December 31, 2018 because the effect would have been anti-dilutive.

c)The Company's Employee Stock Purchase and Bonus Plan provides a method for employees and directors to purchase shares of the Company's common stock on the open market. The plan encourages share ownership by providing for the award of bonus shares to participants equal to 10% of the net increase in the number of shares owned under the plan in a given year, excluding shares acquired through the plan's loan program component. Under the loan program, the Company offers subsidized unsecured loans so participants may purchase shares and awards bonus shares equal to 5% of the shares purchased with a loan. In May 2016, the Company adopted the Markel Corporation 2016 Employee Stock Purchase and Bonus Plan which replaced the Company's prior employee stock purchase and bonus plan. No shares have been issued under the prior employee stock purchase and bonus plan since the effective date of the 2016 Employee Stock Purchase and Bonus Plan. The Company authorized 125,000 shares for purchase under the 2016 Employee Stock Purchase and Bonus Plan, of which 105,283 and 113,690 shares were available for purchase as of December 31, 2018 and 2017, respectively. At December 31, 2018 and 2017, loans outstanding under the plans, which are included in receivables on the consolidated balance sheets, totaled $19.2 million and $18.5 million, respectively.

d)In May 2016, the Company adopted the 2016 Equity Incentive Compensation Plan (2016 Compensation Plan), which replaced the 2012 Equity Incentive Compensation Plan (2012 Compensation Plan). The 2016 Compensation Plan provides for grants and awards of restricted stock, restricted stock units, performance grants, and other stock based awards to employees and non-employee directors and is administered by the Compensation Committee of the Company's Board of Directors (Compensation Committee). No share-based awards have been issued under the 2012 Compensation Plan after the effective date of the 2016 Compensation Plan. At December 31, 2018, there were 220,831 shares available for future awards under the 2016 Compensation Plan.

Restricted stock units are awarded to certain associates and executive officers based upon meeting performance conditions determined by the Compensation Committee. These awards generally vest at the end of the third year following the year for which the Compensation Committee determines performance conditions have been met. At the end of the vesting period, recipients are entitled to receive one share of the Company's common stock for each vested restricted stock unit. During 2018, the Company awarded 11,214 restricted stock units to associates and executive officers based on performance conditions being met.

Restricted stock units also are awarded to associates to assist the Company in securing or retaining the services of key employees. During 2018, the Company awarded 2,102 restricted stock units to associates as a hiring or retention incentive. These awards generally vest over a three-year period and entitle the recipient to receive one share of the Company's common stock for each vested restricted stock unit.

During 2018, the Company awarded 990 shares of restricted stock to its non-employee directors. The shares awarded to non-employee directors will vest in 2019.

The following table summarizes nonvested share-based awards.



	Number of Awards		Weighted Average Grant-Date Fair Value
Nonvested awards at January 1, 2018	31,518		$	808.63
Granted	14,306		1,121.68
Vested	(24,535	)	779.65
Forfeited	(416	)	914.94
Nonvested awards at December 31, 2018	20,873		$	1,042.83

The fair value of the Company's share-based awards granted under the 2012 Compensation Plan and 2016 Compensation Plan was determined based on the closing price of the Company's common shares on the grant date. The fair value of the Company's share-based awards issued under the Markel Corporation Omnibus Incentive Plan, which preceded the 2012 Compensation Plan, was determined based on the average price of the Company's common shares on the grant date. The weighted average grant-date fair value of the Company's share-based awards granted in 2018, 2017 and 2016 was $1,121.68, $979.23 and $878.03, respectively. As of December 31, 2018, unrecognized compensation cost related to nonvested share-based awards was $8.8 million, which is expected to be recognized over a weighted average period of 1.8 years. The fair value of the Company's share-based awards that vested during 2018, 2017 and 2016 was $19.1 million, $28.8 million and $29.8 million, respectively.