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Stock Compensation Plans
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Stock Compensation Plans
20. STOCK COMPENSATION PLANS
The Company's stock-based compensation plans are described below. Shares issued in satisfaction of stock-based compensation may be made available from authorized but unissued shares, shares held by the Company in treasury or from shares purchased in the open market. In 2023, 2022 and 2021, the Company issued shares from treasury in satisfaction of stock-based compensation.
The Hartford measures stock compensation at the grant date based on the estimated fair value of the award and recognizes expense on a straight-line basis, net of estimated forfeitures, over the requisite service period. Stock-based compensation expense, included in insurance operating costs and other expenses in the consolidated statement of operations, was as follows:
Stock-Based Compensation Expense
For the years ended December 31,
202320222021
Stock-based compensation plans expense$125 $131 $128 
Income tax benefit(22)(22)(22)
Excess tax benefit on awards vested, exercised and expired(12)(12)(6)
Total stock-based compensation plans expense, net of tax$91 $97 $100 
The Company did not capitalize any cost of stock-based compensation. As of December 31, 2023, the total compensation cost related to non-vested awards not yet recognized was $64, which is expected to be recognized over a weighted average period of 2 years.
Stock Plan
Future stock-based awards may be granted under The Hartford's 2020 Stock Incentive Plan (the "Stock Incentive Plan") other than the Subsidiary Stock Plan and the Employee
Stock Purchase Plan described below. The Stock Incentive Plan provides for awards to be granted in the form of non-qualified or incentive stock options qualifying under Section 422 of the Internal Revenue Code, stock appreciation rights, performance shares, restricted stock or restricted stock units, or any other form of stock-based award. The maximum number of shares, subject to adjustments set forth in the 2020 Stock Plan, that may be issued to Company employees and third-party service providers during the 10-year duration of the Stock Incentive Plan is the sum of 11,250,000 shares, any shares forfeited subsequent to February 29, 2020, plus any shares used for tax withholding purposes. If any award under an earlier incentive stock plan is forfeited, terminated, surrendered, exchanged, expires unexercised, or is settled in cash in lieu of stock (including to effect tax withholding) or for the net issuance of a lesser number of shares than the number subject to the award, the shares of stock subject to such award (or the relevant portion thereof) shall be available for awards under the Stock Incentive Plan and such shares shall be added to the maximum limit. As of December 31, 2023, there were 6,884,152 shares available for future issuance.
The fair values of awards granted under the Stock Incentive Plan are measured as of the grant date and expensed ratably over the awards’ vesting periods, generally three years. For stock awards to retirement-eligible employees, the Company recognizes the expense over a period shorter than the stated vesting period because the employees receive accelerated vesting upon retirement and, therefore, the vesting period is considered non-substantive.
Stock Option Awards
Under the Stock Incentive Plan, options granted have an exercise price at least equal to the closing stock price on the New York Stock Exchange for the Company’s common stock on the date of grant, and an option’s maximum term is not to exceed 10 years. Options generally become exercisable over a
period of three years commencing one year from the date of grant.
The Company uses a hybrid lattice/Monte-Carlo based option valuation model (the “Plan Valuation Model”) that incorporates the possibility of early exercise of options into the valuation. The Plan Valuation Model also incorporates the Company’s historical termination and exercise experience to determine the option value.
The Plan Valuation Model incorporates ranges of assumptions for inputs, and those ranges are disclosed below. The term structure of volatility is generally constructed utilizing implied volatilities from exchange-traded options, historical volatility of
the Company’s stock and other factors. The Company uses historical data to estimate option exercise and employee termination within the Plan Valuation Model, and accommodates variations in employee preference and risk-tolerance by segregating the grantee pool into a series of behavioral cohorts and conducting a fair valuation for each cohort individually. The expected term of options granted is derived from the output of the option Plan Valuation Model and represents, in a mathematical sense, the period of time that options are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Constant Maturity Treasury yield curve in effect at the time of grant.
Stock Options Valuation Assumptions
 For the years ended December 31,
 202320222021
Expected dividend yield2.0%2.3%2.8%
Expected annualized spot volatility24.5 %-26.0%28.3 %-29.6%34.1 %-43.0%
Weighted average annualized volatility25.4%28.8%39.4%
Risk-free spot rate3.8 %-5.1%(0.04)%-2.0%0.03 %-1.4%
Expected term6.7 years6.4 years6.4 years
Non-qualified Stock Option Activity Under the Stock Incentive Plan
Number of Options
(in thousands)
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic Value
For the year ended December 31, 2023
Outstanding at beginning of year6,596 $51.58 
Granted593 $78.28 
Exercised(1,118)$42.20 
Forfeited— $— 
Expired— $— 
Outstanding at end of year6,071 $55.92 5.7$148 
Outstanding, fully vested and expected to vest6,033 $55.83 5.7$148 
Exercisable at end of year4,790 $52.00 4.9$136 
Aggregate intrinsic value represents the value of the Company's closing stock price on the last trading day of the period in excess of the exercise price multiplied by the number of options outstanding or exercisable. The aggregate intrinsic value excludes the effect of stock options that have a zero or negative intrinsic value. The weighted average grant-date fair value per share of options granted during the years ended December 31, 2023, 2022, and 2021 was $21.09, $16.56 and $14.88, respectively. For the years ended December 31, 2023, 2022, and 2021, The Hartford received $47, $26, and $45, respectively, in cash from exercised stock options. The Hartford recognized tax benefits of $3, $3, and $4 on stock options exercised for the years ended December 31, 2023, 2022, and 2021, respectively. The total intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 was $35, $24, and $28, respectively.
Share Awards
Share awards granted under the Stock Incentive Plan and outstanding include restricted stock units and performance shares. Performance shares become payable within a range of 0% to 200% of the number of shares initially granted based upon the attainment of specific performance goals achieved at the end of a performance period of three years and, for the 2021 grant year, is subject to a modifier that will either increase or decrease final performance by 10% based upon results against predetermined year-end 2023 representation goals for women and people of color in executive level roles.
Performance share awards that are not dependent on market conditions are valued equal to the closing stock price on the New York Stock Exchange for the Company’s common stock on the date of grant. Stock compensation expense for these performance share awards without market conditions is based on a current estimate of the number of awards expected to vest based on the performance level achieved and, therefore, may change during the performance period as new estimates of performance are available.
Other performance share awards or portions thereof have a market condition based upon the Company's total stockholder
return relative to a pre-determined group of peer companies as of December 31 at the end of the three year performance period. Stock compensation expense for these performance share awards is based on the number of awards expected to vest as estimated at the grant date and, therefore, does not change for changes in estimated performance. The Company uses a risk neutral Monte-Carlo Plan Valuation Model that incorporates time to maturity, implied volatilities of the Company and the peer companies, and correlations between the Company and the peer companies and interest rates.
Assumptions for Total Stockholder Return Performance Shares
 For the years ended December 31,
 202320222021
Volatility of common stock33.0%35.9%37.3%
Average volatility of peer companies26.0 %-41.0%27.0 %-46.0%27.0 %-49.0%
Average correlation coefficient of peer companies52.0%68.0%67.0%
Risk-free spot rate4.4%1.8%0.2%
Term3.0 years3.0 years3.0 years
Total Share Awards
Non-vested Share Award Activity Under the Stock Incentive Plan
Restricted Stock Units
Performance Shares
Number of Shares
(in thousands)
Weighted-Average
Grant-Date
Fair Value
Number of Shares
(in thousands)
Weighted-Average
Grant date
Fair Value
Non-vested shares
For the year ended December 31, 2023
Non-vested at beginning of year3,517 $58.28 711 $63.04 
Granted1,019 $77.72 268 $85.69 
Performance based adjustment, net389 $56.09 
Vested(1,177)$54.58 (777)$56.09 
Forfeited(100)$66.72 (8)$72.05 
Non-vested at end of year3,259 $65.44 583 $77.97 
In addition to the non-vested shares presented in the above table, there are related non-vested dividend equivalent shares. The number of non-vested dividend equivalent shares related to restricted stock units was 155 thousand and 182 thousand as of December 31, 2023 and 2022, respectively, and the number of non-vested dividend equivalent shares related to performance shares was 18 thousand and 25 thousand as of December 31, 2023 and 2022, respectively. The dividend equivalent shares are subject to the same vesting terms as the restricted stock units and performance shares.
The weighted average grant-date fair value per share of restricted stock units granted during the years ended December 31, 2023, 2022, and 2021 was $77.72, $69.32 and $52.13, respectively. The weighted average grant-date fair value per share of performance shares granted during the years ended December 31, 2023, 2022, and 2021 was $85.69, $71.54 and $56.09, respectively.
The total fair value of shares vested during the years ended December 31, 2023, 2022 and 2021 was $154, $134 and $105, respectively, based on actual or estimated performance factors. The Company did not make cash payments in settlement of stock compensation during the years ended December 31, 2023, 2022 and 2021.
Subsidiary Stock Plan
The Hartford has a subsidiary stock-based compensation plan similar to the Stock Incentive Plan, except that it awards non-public subsidiary stock as compensation. The Company recognized stock-based compensation plan expense of $12, $13 and $11 in the years ended December 31, 2023, 2022 and 2021, respectively, for the subsidiary stock plan. Upon employee vesting of subsidiary stock, the Company recognizes a noncontrolling equity interest. Employees are restricted from selling vested subsidiary stock to anyone other than the Company and the Company has discretion on the amount of stock to repurchase. Therefore, the subsidiary stock is classified
as equity because it is not mandatorily redeemable. For the years ended December 31, 2023, 2022 and 2021, the Company repurchased $11, $10 and $16, respectively, in subsidiary stock.
Employee Stock Purchase Plan
The Company sponsors The Hartford Employee Stock Purchase Plan ("ESPP"). Under this plan, eligible employees of The Hartford purchase common stock of the Company at a discount rate of 5% of the market price per share on the last trading day of the offering period. Accordingly, the plan is a non-compensatory plan. Employees purchase a variable number of
shares of stock through payroll deductions elected as of the beginning of the offering period. The Company may sell up to 15,400,000 shares of stock to eligible employees under the ESPP. As of December 31, 2023, there were 3,155,609 shares available for future issuance. During the years ended December 31, 2023, 2022 and 2021, 194,561 shares, 194,504 shares, and 199,173 shares were sold, respectively. For the years ended December 31, 2023, 2022 and 2021, The Hartford received $13, $13 and $13, respectively, in cash from sales under this plan.