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 of White Mountains. As of September 30, 2017, White Mountains’s share-based compensation incentive awards consist of performance shares and restricted shares.

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 approved for payment. The following table summarizes performance share activity for the three and nine months ended September 30, 2017 and 2016 for performance shares granted under the WTM Incentive Plan:



	Three Months Ended September 30,										Nine Months Ended September 30,
	2017					2016					2017					2016
Millions, except share amounts	Target Performance Shares Outstanding		Accrued Expense			Target Performance Shares Outstanding		Accrued Expense			Target Performance Shares Outstanding		Accrued Expense			Target Performance Shares Outstanding		Accrued Expense
Beginning of period	50,575		$	31.2		73,297		$	32.5		80,353		$	42.4		93,654		$	57.7
Shares paid ⁽¹⁾	—		—			—		—			(30,838	)	(21.6		)	(36,294	)	(41.0		)
New grants	—		—			6,400		—			17,510		—			22,615		—
Forfeitures and cancellations⁽²⁾	(256	)	(.4		)	(160	)	(.1		)	(16,706	)	(9.4		)	(438	)	.2
Expense recognized	—		7.0			—		5.0			—		26.4			—		20.5
End of period⁽³⁾	50,319		$	37.8		79,537		$	37.4		50,319		$	37.8		79,537		$	37.4

⁽¹⁾WTM performance share payments in 2017 for the 2014-2016 performance cycle, which were paid in March 2017, ranged from 34% to 76% of target. 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.

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

⁽³⁾Outstanding performance share awards as of September 30, 2017 and 2016 exclude 2,195 and 7,315 performance share awards granted to employees of Sirius Group.

For performance shares earned in the 2014-2016 performance cycle, all performance shares earned were settled in cash. For the performance shares earned in the 2013-2015 performance cycle, the Company issued 5,000 common shares and settled the remainder in cash. If all the outstanding WTM performance shares had vested on September 30, 2017, the total additional compensation cost to be recognized would have been $28.7 million, based on accrual factors (common share price and payout assumptions) at September 30, 2017.

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 September 30, 2017 for each performance cycle:



Millions, except share amounts	Target Performance Shares Outstanding		Accrued Expense
Performance cycle:
2015 – 2017	18,370		$	20.6
2016 – 2018	16,235		12.1
2017 – 2019	16,480		5.7
Sub-total	51,085		38.4
Assumed forfeitures	(766	)	(.6		)
September 30, 2017	50,319		$	37.8

Restricted Shares Granted Under the WTM Incentive Plan

The following table summarizes the unrecognized compensation cost associated with the outstanding restricted share awards for the three and nine months ended September 30, 2017 and 2016:



	Three Months Ended September 30,									Nine Months Ended September 30,
	2017					2016				2017					2016
Millions, except share amounts	Restricted Shares		Unamortized Issue Date Fair Value			Restricted Shares	Unamortized Issue Date Fair Value			Restricted Shares		Unamortized Issue Date Fair Value			Restricted Shares		Unamortized Issue Date Fair Value
Non-vested,
Beginning of period	53,815		$	23.5		66,470	$	24.2		70,620		$	19.7		70,675		$	15.7
Issued	—		—			4,150	3.4			17,785		16.7			25,365		19.7
Vested	(260	)	—			—	—			(28,846	)	—			(24,620	)	—
Forfeited	—		—			—	—			(6,004	)	(3.5		)	(800	)	.2
Expense recognized	—		(3.8		)	—	(3.8		)	—		(13.2		)	—		(11.8		)
End of period⁽¹⁾	53,555		$	19.7		70,620	$	23.8		53,555		$	19.7		70,620		$	23.8

⁽¹⁾Restricted share awards outstanding as of September 30, 2017 and 2016 include 2,195 and 5,235 restricted shares issued to employees of Sirius Group, which was accounted for as discontinued operations.

During the second quarter of 2017, White Mountains issued 550 restricted shares that vest on January 1, 2020, 250 restricted shares that vest on January 1, 2019 and 250 restricted shares that vest on January 1, 2018. During the first quarter of 2017, White Mountains issued 16,735 restricted shares that vest on January 1, 2020. During the first nine months of 2016, White Mountains issued 24,615 restricted shares that vest on January 1, 2019 and 750 restricted shares that vest on January 1, 2018. The unamortized issue date fair value at September 30, 2017 is expected to be recognized ratably over the remaining vesting periods.

Stock Options

Non-Qualified Options

As January 20, 2017, the 125,000 Non-Qualified options issued to the Company’s former Chairman and CEO had been exercised. During the first quarter of 2017, 40,000 Non-Qualified Options, with an intrinsic value of $4.4 million, were exercised in exchange for 5,142 common shares with an equal total market value. During 2016, 5,000 Non-Qualified Options, with an intrinsic value of $0.4 million, were exercised at $742 per common share and 80,000 Non-Qualified Options, with an intrinsic value of $8.4 million, were exercised in exchange for 9,930 common shares with an equal total market value. Intrinsic value represents the difference between the market price of the Company’s common shares at the date of exercise and the fixed strike price of $742 per common share. The Non-Qualified Options were fully amortized as of 2011.