Employee Share-Based Incentive Compensation Plans

White Mountains’s Long-Term Incentive Plan (the “WTM Incentive Plan”) provides for grants of various types of share-based and non share-based incentive awards to key employees and service providers of White Mountains. White Mountains’s share-based compensation incentive awards consist of performance shares, restricted shares and stock options.

Share-Based Compensation Based on White Mountains Common Shares

WTM Performance Shares

Performance shares are conditional grants of a specified maximum number of common shares or an equivalent amount of cash. Awards generally vest at the end of a three-year period, are subject to the attainment of pre-specified performance goals, and are valued based on the market value of common shares at the time awards are paid. The following table summarizes performance share activity for the three months ended March 31, 2015 and 2014 for performance shares granted under the WTM Incentive Plan:



	Three Months Ended March 31,
	2015					2014
Millions, except share amounts	Target Performance Shares Outstanding		Accrued Expense			Target Performance Shares Outstanding		Accrued Expense
Beginning of period	123,549		$	48.1		119,220		$	60.2
Shares paid or expired⁽¹⁾	(37,977	)	(27.3		)	(37,130	)	(26.7		)
New grants	30,640		—			45,660		—
Assumed forfeitures and cancellations⁽²⁾	184		.6			(213	)	.4
Expense recognized	—		6.2			—		8.4
Ending of period	116,396		$	27.6		127,537		$	42.3

⁽¹⁾WTM performance share payments in 2015 for the 2012-2014 performance cycle ranged from 91% to 145.5% of target. WTM performance share payments in 2014 for the 2011-2013 performance cycle ranged from 88% to 131.5% of target.

⁽²⁾Amounts include changes in assumed forfeitures, as required under GAAP.

For the 2012-2014 performance cycle, all performance shares earned were settled in cash. For the 2011-2013 performance cycle, the Company issued common shares for 3,570 performance shares earned and all other performance shares earned were settled in cash

If the outstanding WTM performance shares had vested on March 31, 2015, the total additional compensation cost to be recognized would have been $33.1 million, based on accrual factors at March 31, 2015 (common share price and payout assumptions).

Performance Shares granted under the WTM Incentive Plan

The following table summarizes performance shares outstanding and accrued expense for performance shares awarded under the WTM Incentive Plan at March 31, 2015 for each performance cycle:



Millions, except share amounts	Target Performance Shares Outstanding		Accrued Expense
Performance cycle:
2015 – 2017	30,640		$	1.8
2014 – 2016	41,937		5.6
2013 – 2015	46,803		20.9
Sub-total	119,380		28.3
Assumed forfeitures	(2,984	)	(.7		)
Total at March 31, 2015	116,396		$	27.6

Restricted Shares

The following table summarizes the unrecognized compensation cost associated with the outstanding restricted share awards for the three months ended March 31, 2015 and 2014:



	Three Months Ended March 31,
	2015					2014
Millions, except share amounts	Restricted Shares		Unamortized Issue Date Fair Value			Restricted Shares		Unamortized Issue Date Fair Value
Non-vested,
Beginning of period	83,314		$	14.3		94,130		$	17.0
Issued	22,890		15.2			20,400		11.8
Vested	(35,079	)	—			(33,205	)	—
Forfeited	—		—			—		—
Expense recognized	—		(3.0		)	—		(4.0		)
Non-vested at March 31,	71,125		$	26.5		81,325		$	24.8

During the first three months of 2015, White Mountains issued 22,890 restricted shares that vest on January 1, 2018. During the first three months of 2014, White Mountains issued 20,400 restricted shares that vest on January 1, 2017. The unrecognized compensation cost at March 31, 2015 is expected to be recognized ratably over the remaining vesting periods.

Share-Based Compensation Based on OneBeacon Ltd. Common Shares

The OneBeacon Long-Term Incentive Plan (the “OneBeacon Incentive Plan”) provides for grants to key employees of OneBeacon various types of share-based and non share-based incentive awards. OneBeacon’s share-based incentive awards include OneBeacon performance shares and restricted shares.

OneBeacon Performance Shares

OneBeacon performance shares are conditional grants of a specified maximum number of common shares or an equivalent amount of cash. OneBeacon performance share awards generally vest at the end of a three-year period, are subject to the attainment of pre-specified performance goals, and are valued based on the market value of OneBeacon Ltd. common shares at the time awards are paid. The following table summarizes performance share activity for the three months ended March 31, 2015 and 2014 for OneBeacon performance shares granted under the OneBeacon Incentive Plan:



	Three Months Ended March 31,
	2015					2014
Millions, except share amounts	Target Performance Shares Outstanding		Accrued Expense			Target Performance Shares Outstanding		Accrued Expense
Beginning of period	517,470		$	3.4		493,421		$	4.0
Shares paid or expired⁽¹⁾	(181,290	)	(1.5		)	(142,138	)	(1.0		)
New grants	154,887		—			165,800		—
Assumed forfeitures and cancellations⁽²⁾	(28,920	)	—			(4,145	)	—
Expense recognized	—		.2			—		.6
Ending of period	462,147		$	2.1		512,938		$	3.6

⁽¹⁾ OneBeacon performance share payments in 2015 for the 2012-2014 performance cycle were at 45.7% of target. OneBeacon performance share payments in 2014 for the 2011-2013 performance cycle were at 37.1% of target.

⁽²⁾ Amounts include changes in assumed forfeitures, as required under GAAP.

If the outstanding OneBeacon performance shares had been vested on March 31, 2015, the total additional compensation cost to be recognized would have been $3.3 million, based on accrual factors at March 31, 2015 (common share price, accumulated dividends and payout assumptions).

The following table summarizes OneBeacon performance shares outstanding awarded under the OneBeacon Incentive Plan at March 31, 2015 for each performance cycle:



Millions, except share amounts	Target Performance Shares Outstanding		Accrued Expense
Performance cycle:
2015 – 2017	154,887		$	.2
2014 – 2016	151,810		.5
2013 – 2015	167,300		1.4
Sub-total	473,997		2.1
Assumed forfeitures	(11,850	)	—
Total at March 31, 2015	462,147		$	2.1

OneBeacon Restricted Shares

The following table summarizes the unrecognized compensation cost associated with the outstanding OneBeacon restricted stock awards for the three months ended March 31, 2015 and 2014:



	Three Months Ended March 31,
	2015					2014
Millions, except share amounts	Restricted Shares		Unamortized Issue Date Fair Value			Restricted Shares		Unamortized Issue Date Fair Value
Non-vested,
Beginning of period	612,500		$	3.5		915,000		$	6.5
Issued	75,950		1.1			—		—
Vested	(296,000	)	—			(300,000	)	—
Forfeited	(1,500	)	—			(2,500	)	—
Expense recognized	—		(.6		)	—		(.8		)
Non-vested at March 31,	390,950		$	4.0		612,500		$	5.7

On February 24, 2015, OneBeacon issued 75,950 restricted shares that fully vest on January 1, 2018.

On March 1, 2012, OneBeacon issued 300,000 restricted shares that vest in two equal annual installments. The first installment vested on February 28, 2014.

On May 25, 2011, OneBeacon issued 630,000 restricted shares to its CEO that vest in four equal annual installments. The first installment vested on February 22, 2014. Concurrently with the grant of the restricted shares, 35,000 OneBeacon performance shares issued to OneBeacon’s CEO for the 2011-2013 performance share cycle were forfeited and performance share awards to OneBeacon’s CEO for the subsequent five years have been or will also be reduced by 35,000 shares.

The unrecognized compensation cost at March 31, 2015 is expected to be recognized ratably over the remaining vesting periods.

OneBeacon Restricted Stock Units

On February 24, 2015, the OneBeacon Compensation Committee awarded to certain employees 207,848 restricted stock units (“RSUs”), of which 205,319 remained outstanding as of March 31, 2015. The RSUs are scheduled to vest on January 1, 2018 and will be paid out in cash or shares at the discretion of the OneBeacon Compensation Committee. For the three months ended March 31, 2015, the expense associated with the RSUs was $0.1 million.