Employee Share-Based Incentive Compensation Plans

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

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 June 30, 2022 and 2021, White Mountains’s share-based compensation incentive awards consist of performance shares and restricted shares.

Performance Shares

Performance shares are designed to reward employees for meeting company-wide performance targets. 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 service 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. Performance shares earned under the WTM Incentive Plan are typically paid in cash but may be paid in common shares. Compensation expense is recognized for the vested portion of the awards over the related service periods. The level of payout ranges from zero to two times the number of shares initially granted, depending on White Mountains’s financial performance. Performance shares become payable at the conclusion of a performance cycle (typically 3 years) if pre-defined financial targets are met. The performance measures used for determining performance share payouts are growth in White Mountains’s adjusted book value per share and intrinsic value per share. Intrinsic value per share is generally calculated by adjusting adjusted book value per share for differences between the adjusted book value of certain assets and liabilities and White Mountains’s estimate of their underlying intrinsic values.

The following table presents the performance share activity for the three and six months ended June 30, 2022 and 2021 for performance shares granted under the WTM Incentive Plan:


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
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	39,302	$	21.9	40,784	$	38.2	40,828	$	42.2	42,458	$	56.3
Shares paid (1)	—	—		—	—		(14,625)	(26.4)		(14,117)	(34.6)
New grants	150	—		475	—		13,225	—		13,475	—
Forfeitures and cancellations (2)	(3)	(.4)		(7)	(.2)		21	(.1)		(564)	.2
Expense recognized	—	19.7		—	7.7		—	25.5		—	23.8
End of period	39,449	$	41.2	41,252	$	45.7	39,449	$	41.2	41,252	$	45.7

(1) WTM performance share payments in 2022 for the 2019-2021 performance cycle, which were paid in cash in March 2022 at 172% of target. WTM performance share payments in 2021 for the 2018-2020 performance cycle, which were paid in cash in March 2021 at 200% of target.

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

During the three and six months ended June 30, 2022, White Mountains granted 150 and 13,225 performance shares for the 2022-2024 performance cycle. During the three and six months ended June 30, 2021, White Mountains granted 475 and 13,475 performance shares for the 2021-2023 performance cycle.

For the 2019-2021 performance cycle, the Company issued common shares for 750 performance shares earned and all other performance shares earned were settled in cash. For the 2018-2020 performance cycle, all performance shares earned were settled in cash. If all the outstanding WTM performance shares had vested on June 30, 2022, the total additional compensation cost to be recognized would have been $44.0 million, based on accrual factors (common share price and payout assumptions) as of June 30, 2022.

The following table presents performance shares outstanding and accrued expense for performance shares awarded under the WTM Incentive Plan as of June 30, 2022 for each performance cycle:


	Six Months Ended June 30, 2022
Millions, except share amounts	Target Performance Shares Outstanding	Accrued Expense
Performance cycle:
2020 – 2022	13,350	$	27.4
2021 – 2023	13,475	11.0
2022 – 2024	13,225	3.5

Sub-total	40,050	41.9
Assumed forfeitures	(601)	(.7)
June 30, 2022	39,449	$	41.2

Restricted Shares

Restricted shares are grants of a specified number of common shares that generally vest at the end of a 34-month service period. The following table presents the unrecognized compensation cost associated with the outstanding restricted share awards for the three and six months ended June 30, 2022 and 2021:


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
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	38,200	$	26.5	37,805	$	26.2	37,850	$	15.9	43,105	$	15.2
Issued	150	.2		475	.5		13,225	13.8		13,475	16.1
Vested	—	—		—	—		(12,725)	—		(17,717)	—
Forfeited	—	—		—	—		—	—		(583)	(.6)
Expense recognized	—	(3.7)		—	(3.5)		—	(6.7)		—	(7.5)
End of period	38,350	$	23.0	38,280	$	23.2	38,350	$	23.0	38,280	$	23.2

During the three and six months ended June 30, 2022, White Mountains issued 150 and 13,225 restricted shares that vest on January 1, 2025. During the three and six months ended June 30, 2021, White Mountains issued 475 and 13,475 restricted shares that vest on January 1, 2024. The unamortized issue date fair value as of June 30, 2022 is expected to be recognized ratably over the remaining vesting periods.