Share-Based Payments

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

During 2016, 2015 and 2014, 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, 2016
	2016		2015		2014		Amount		Remaining Recognition Period
	(In millions)						(In millions)		(Weighted average years)
Restricted Share Units	$	3.7	$	2.5	$	1.7	$	4.4	1.7
Performance Share Units	7.6		5.9		7.6		5.7		1.6
Purchase Match Units	1.2		0.8		0.8		2.0		2.2
Total share-based compensation expense	$	12.5	$	9.2	$	10.1	$	12.1
Tax benefit recognized	$	4.4	$	3.2	$	3.5

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 2016, 2015 and 2014 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 net present value of dividends during the vesting period.



	2016				2015				2014
	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	178,468		$	43.13	136,802		$	42.03	138,770		$	37.12
Granted	109,181		$	45.59	91,943		$	42.79	49,750		$	42.95
Forfeited	(5,954	)	$	43.99	(1,342	)	$	42.81	(2,044	)	$	42.03
Vested and released	(41,546	)	$	44.04	(48,935	)	$	39.45	(49,674	)	$	29.22
Ending non-vested balance	240,149		$	44.07	178,468		$	43.13	136,802		$	42.03

The aggregate grant date fair value of restricted share units vested and released in 2016, 2015 and 2014 totaled $1.8 million, $1.9 million and $1.5 million, respectively. The aggregate intrinsic value of restricted share units vested and released (including units paid in cash to cover tax withholdings) totaled $2.1 million in 2016 and $2.3 million in both 2015 and 2014.

Performance Share Units

Performance share units vest only if minimum performance objectives are met, and the number of units earned varies from 50% to 200% of a base award depending upon the degree to which stated performance objectives are achieved. Performance share unit activity for 2016, 2015 and 2014 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 net present value of dividends during the vesting period.



	2016				2015				2014
	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	390,350		$	44.65	466,860		$	41.96	486,680		$	37.94
Granted	60,000		$	45.59	106,490		$	42.79	160,900		$	42.95
Forfeited	(5,162	)	$	43.02	(2,322	)	$	46.05	(14,221	)	$	42.40
Vested and released	(139,948	)	$	44.05	(180,678	)	$	39.58	(166,499	)	$	31.12
Ending non-vested balance	305,240		$	43.41	390,350		$	44.65	466,860		$	41.96

The aggregate grant date fair value of performance share units (base level) vested and released in 2016, 2015 and 2014 totaled $6.2 million, $7.2 million and $5.2 million, respectively. The aggregate intrinsic value of performance share units (base level) vested and released in 2016, 2015 and 2014 (including units paid in cash to cover tax withholdings) totaled $6.9 million, $8.4 million and $7.7 million, respectively. The weighted average level at which the vested units were issued was 98%, 115% and 125% during 2016, 2015 and 2014, respectively, 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 2016, 2015 and 2014 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 net present value of dividends during the vesting period.



	2016				2015				2014
	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	74,483		$	42.80	72,101		$	40.62	63,125		$	38.51
Granted	23,903		$	50.18	26,593		$	46.09	29,069		$	41.16
Forfeited	(2,875	)	$	43.77	(3,087	)	$	41.03	(2,968	)	$	40.21
Vested and released	(22,896	)	$	40.88	(21,124	)	$	39.79	(17,125	)	$	33.81
Ending non-vested balance	72,615		$	45.77	74,483		$	42.80	72,101		$	40.62

The aggregate grant date fair value of purchase match units vested and released in 2016, 2015 and 2014 totaled $0.9 million, $0.8 million and $0.6 million, respectively. The aggregate intrinsic value of purchase match share units vested and released in 2016, 2015 and 2014 (including units paid in cash to cover tax withholdings) totaled $1.2 million, $1.0 million and $0.8 million, respectively.

Stock Options

ProAssurance also had certain fully-vested employee stock options outstanding during 2016, 2015 and 2014, as summarized below.



	2016				2015				2014
	Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price
Outstanding, vested and exercisable, beginning of year	2,114		$	25.02	4,456		$	24.64	18,082		$	23.00
Exercised	(2,114	)	$	25.02	(2,342	)	$	24.13	(13,626	)	$	22.47
Outstanding, vested and exercisable, end of year	—		$	—	2,114		$	25.02	4,456		$	24.64

The aggregate intrinsic value of options exercised during 2016, 2015 and 2014 totaled $0.1 million, $0.1 million and $0.3 million, respectively. ProAssurance had no outstanding options at December 31, 2016.There were no cash proceeds from options exercised during the years ended December 31, 2016, 2015 or 2014.