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, 2016 and 2015 for performance shares granted under the WTM Incentive Plan:



	Three Months Ended March 31,
	2016					2015
Millions, except share amounts	Target Performance Shares Outstanding		Accrued Expense			Target Performance Shares Outstanding		Accrued Expense
Beginning of period	96,211		$	58.2		113,198		$	44.4
Shares paid or expired⁽¹⁾	—		—			(34,001	)	(24.9		)
New grants	16,215		—			29,078		—
Assumed forfeitures and cancellations⁽²⁾	(1,186	)	(.6		)	123		.5
Expense recognized	—		14.2			—		5.7
End of period⁽³⁾	111,240		$	71.8		108,398		$	25.7

⁽¹⁾WTM performance share payments in 2016 for the 2013-2015 performance cycle, which were paid in April 2016, ranged from 140% to 142% of target. WTM performance share payments in 2015 for the 2012-2014 performance cycle ranged from 88% to 131.5% of target.

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

⁽³⁾Outstanding performance share awards as of March 31, 2016 and 2015 both exclude 7,998 performance share awards, net of assumed forfeitures, granted to employees of Sirius Group, which is accounted for as discontinued operations.

For the 2012-2014 performance cycle, all performance shares earned were settled in cash. If the outstanding WTM performance shares had vested on March 31, 2016, the total additional compensation cost to be recognized would have been $35.2 million, based on accrual factors at March 31, 2016 (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, 2016 for each performance cycle:



Millions, except share amounts	Target Performance Shares Outstanding		Accrued Expense
Performance cycle:
2016 – 2018	16,215		$	1.0
2015 – 2017	29,428		12.8
2014 – 2016	32,157		18.7
2013 – 2015	36,293		41.1
Sub-total	114,093		73.6
Assumed forfeitures	(2,853	)	(1.8		)
Total at March 31, 2016	111,240		$	71.8

Restricted Shares

The following table summarizes the unrecognized compensation cost associated with the outstanding restricted share awards for the three months ended March 31, 2016 and 2015:



	Three Months Ended March 31,
	2016					2015
Millions, except share amounts	Restricted Shares		Unamortized Issue Date Fair Value			Restricted Shares		Unamortized Issue Date Fair Value
Non-vested,
Beginning of period	70,675		$	15.7		83,314		$	14.3
Issued	21,215		16.3			22,890		15.2
Vested	(24,620	)	—			(35,079	)	—
Forfeited	(800	)	.2			—		—
Expense recognized	—		(3.0		)	—		(3.0		)
End of period ⁽¹⁾	66,470		$	29.2		71,125		$	26.5

⁽¹⁾ Outstanding restricted share awards as of March 31, 2016 and 2015 include 2,512 and 3,572 restricted shares issued to employees of Sirius Group, which is accounted for as discontinued operations.

During the first three months of 2016, White Mountains issued 21,215 restricted shares that vest on January 1, 2019. During the first three months of 2015, White Mountains issued 22,890 restricted shares that vest on January 1, 2018. The unrecognized compensation cost at March 31, 2016 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, 2016 and 2015 for OneBeacon performance shares granted under the OneBeacon Incentive Plan:



	Three Months Ended March 31,
	2016					2015
Millions, except share amounts	Target Performance Shares Outstanding		Accrued Expense			Target Performance Shares Outstanding		Accrued Expense
Beginning of period	449,435		$	1.4		517,470		$	3.4
Shares paid or expired⁽¹⁾	(167,300	)	(.7		)	(181,290	)	(1.5		)
New grants	163,150		—			154,887		—
Assumed forfeitures and cancellations⁽²⁾	(4,079	)	—			(28,920	)	—
Expense recognized	—		.4			—		.2
End of period	441,206		$	1.1		462,147		$	2.1

⁽¹⁾ OneBeacon performance share payments in 2016 for the 2013-2015 performance cycle were at 24.3% of target. OneBeacon performance share payments in 2015 for the 2012-2014 performance cycle were at 45.7% 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, 2016, the total additional compensation cost to be recognized would have been $3.1 million, based on accrual factors at March 31, 2016 (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, 2016 for each performance cycle:



Millions, except share amounts	Target Performance Shares Outstanding		Accrued Expense
Performance cycle:
2016 – 2018	163,150		$	.1
2015 – 2017	146,659		.8
2014 – 2016	142,710		.2
Sub-total	452,519		1.1
Assumed forfeitures	(11,313	)	—
Total at March 31, 2016	441,206		$	1.1

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, 2016 and 2015:



	Three Months Ended March 31,
	2016					2015
Millions, except share amounts	Restricted Shares		Unamortized Issue Date Fair Value			Restricted Shares		Unamortized Issue Date Fair Value
Non-vested,
Beginning of period	382,722		$	2.5		612,500		$	3.5
Issued	170,650		2.3			75,950		1.1
Vested	(157,500	)	—			(296,000	)	—
Forfeited	—		—			(1,500	)	—
Expense recognized	—		(.5		)	—		(.6		)
End of period	395,872		$	4.3		390,950		$	4.0

On February 24, 2016, OneBeacon issued 170,650 restricted shares, of which 92,500 restricted shares vest on February 24, 2018 and 78,150 vest on January 1, 2019. On February 24, 2015, OneBeacon issued 75,950 restricted shares that vest on January 1, 2018.

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, 2016 is expected to be recognized ratably over the remaining vesting periods.

OneBeacon Restricted Stock Units

During the first quarter of 2016, the OneBeacon Compensation Committee awarded to certain employees 222,449 restricted stock units (“RSUs”) that are scheduled to vest on January 1, 2019 and will be paid out in cash or shares at the discretion of the OneBeacon Compensation Committee. During the first quarter of 2015, the OneBeacon Compensation Committee awarded to certain employees 207,848 RSU that are scheduled to vest on January 1, 2018, of which, net of forfeiture assumptions, 198,928 were outstanding as of March 31, 2016. For the three months ended March 31, 2016 and 2015, the expense associated with the RSUs was $0.4 million and $0.1 million.