In May 2005, the shareholders approved the PartnerRe Ltd. Employee Equity Plan (EEP). The EEP permits the grant of share options, RS, RSUs, SSARs or other share-based awards to employees of the Company. The EEP is administered by the Compensation and Management Development Committee of the Board (the Committee).

The EEP permits the grant of up to 8.3 million shares, of which a total of 3.4 million shares can be issued as either RS or RSUs and 4.9 million shares can be issued as share options or SSARs. If an award under the EEP is cancelled or forfeited without the delivery of the full number of shares underlying such award, only the net number of shares actually delivered to the participant will be counted against the EEP's authorized shares. Under the EEP, the exercise price of the award will not be less than the fair value of the award at the time of grant. The fair value is defined in the EEP as the closing price reported on the grant date. RSU awards granted under the EEP generally cliff vest after 3 years of continuous service. Share options and SSARs vest ratably over 3 years of continuous service and have a ten year contractual term. Participants in the EEP are eligible to receive dividend equivalents, which the Company records as an expense, on RSUs that are unvested. At December 31, 2011, 5.4 million shares remained available for issuance under this plan.

Certain awards to certain senior executives will, if the Committee intends such award to qualify as “qualified performance based compensation” under Section 162(m) of the Internal Revenue Code (IRC), become earned and payable only if pre-established targets relating to one or more of the following performance measures are achieved: (i) earnings per share, (ii) financial year return on common equity, (iii) underwriting year return on equity, (iv) return on net assets, (v) organizational objectives, and (vi) premium growth. The individual maximum number of shares underlying any such share-denominated award granted in any year will be 0.8 million shares, and the individual maximum amount earned with respect to any such non-share denominated award granted in any year will be $5.0 million.

In September 2009, in connection with the acquisition of Paris Re, the shareholders approved an amendment to the EEP to increase the number of shares available for issuance by 0.4 million shares, of which 0.3 million may be awarded as RS or RSUs. As part of the acquisition of Paris Re, the Company issued replacement share options, RSUs, and warrants to holders of Paris Re share options, RSUs and warrants. These replacement awards were issued under the terms and conditions of the Paris Re 2006 Equity Purchase Plan, Paris Re 2006 Equity Incentive Plan, Paris Re 2006 Executive Equity Incentive Plan and Paris Re 2007 Equity Incentive Plan and were not considered to be grants under the Company's EEP.

The PartnerRe Ltd. Non-Employee Directors Stock Plan (Directors' Stock Plan), which was approved by the Company's shareholders, permits the grant of up to 0.8 million share options, RS, RSUs, alternative awards and other share-based awards. Under the Directors' Stock Plan, the exercise price of the share options will be equivalent to the fair value of the share options at the time of grant. The fair value is defined in the Directors' Stock Plan as the closing price reported on the grant date. Options are awarded on an annual basis and are issued under the Directors' Stock Plan. They generally vest at the time of grant and are expensed immediately and have a ten year contractual term. Prior to May 2010, RSU awards granted under the Directors' Stock Plan generally vested at the time of grant with a delivery date restriction of one year and were expensed immediately. With effect from May 2010, RSUs are awarded on an annual basis and have a five year cliff vest with no delivery restrictions and are expensed over the vesting period. Before the grant date, directors must elect to receive their awards in the form of either 100% RSUs, or split, with 60% of the award being RSUs and 40% of the award being cash upon delivery. At December 31, 2011, 0.1 million shares remained available for issuance under this plan.

The PartnerRe Ltd. Employee Share Purchase Plan (ESPP), which was approved by the Company's shareholders, has a twelve month offering period with two purchase periods of six months each. All employees are eligible to participate in the ESPP and can contribute between 1% and 10% of their base salary toward the purchase of the Company's shares up to the limit set by the IRC. Employees who enroll in the ESPP may purchase the Company's shares at a 15% discount of the lower fair value on either the enrolment date or purchase date. Participants in the ESPP are eligible to receive dividends on their shares as of the purchase date. A total of 0.6 million common shares may be issued under the ESPP. At December 31, 2011, 0.4 million shares remained available for issuance under this plan.

The Swiss Share Purchase Plan (SSPP) has two offering periods per year with two purchase periods of six months each. Swiss employees, who work at least 20 hours per week, are eligible to participate in the SSPP and can contribute between 1% and 8% of their base salary toward the purchase of the Company's shares up to a maximum of 5,000 Swiss francs per annum. Employees who enroll in the SSPP may purchase the Company's shares at a 40% discount of the fair value on the purchase date. There is a restriction on transfer or sale of these shares for a period of two years following purchase. Participants in the SSPP are eligible to receive dividends on their shares as of the purchase date. A total of 0.4 million common shares may be issued under the SSPP. At December 31, 2011, 0.2 million shares remained available for issuance under this plan.

Under each of the Company's equity plans, the Company issues new shares upon the exercise of share options or the conversion of RSUs and SSARs into shares.

For the years ended December 31, 2011, 2010 and 2009, the Company's share-based compensation expense was $24.2 million, $33.5 million and $21.7 million, respectively, with a tax benefit of $2.4 million, $3.4 million and $2.7 million, respectively. Included within these tax benefits are amounts related to the exercise of share options and the conversion of RSUs and SSARs into shares by employees of the Company's U.S. subsidiaries of $3.1 million, $5.9 million and $1.6 million for the years ended December 31, 2011, 2010 and 2009, respectively.

The following table summarizes the activity related to options granted and exercised for the years ended December 31, 2011, 2010 and 2009.

		2011		2010		2009

Options granted		123,162		91,817		598,698
Weighted average grant date fair value of options granted	$	7.43	$	10.29	$	7.95

Options exercised		194,201		860,154		250,400
Total intrinsic value of options exercised (in millions of U.S. dollars)	$	4.6	$	21.0	$	5.0
Proceeds from option exercises (in millions of U.S. dollars)	$	10.6	$	37.2	$	12.7

	The activity related to the Company’s share options for the year ended December 31, 2011 was as follows:

				Weighted Average
		Options		Exercise Price

Outstanding at January 1, 2011		1,936,095	$	61.86
Granted		123,162		68.59
Exercised		(194,201)		56.19
Forfeited or expired		(1,900)		65.05

Outstanding at December 31, 2011		1,863,156		62.89
Options exercisable at December 31, 2011		1,856,435		62.84
Options vested and expected to vest at December 31, 2011		1,862,867		62.89

The weighted average remaining contractual term and the aggregate intrinsic value of share options outstanding, exercisable, vested and expected to vest at December 31, 2011, was 3.6 years and $7.4 million, respectively.

The Company values share options issued with a Black-Scholes valuation model and used the following assumptions for the years ended December 31, 2011, 2010 and 2009:

	2011	2010	2009

Expected life	6 years	6 years	3 years
Expected volatility	14.9%	15.8%	15.8%
Risk-free interest rate	2.0%	2.8%	2.8%
Dividend yield	2.7%	2.7%	2.7%

The expected life of the replacement share options issued as part of the acquisition of Paris Re in 2009 was assumed to be 3 years. The expected life of all other share options issued during the years ended December 31, 2011, 2010 and 2009 was assumed to be 6 years. Expected volatility is based on the historical volatility of the Company's common shares over a period equivalent to the expected life of the Company's share options. The risk-free interest rate is based on the market yield of U.S. treasury securities with maturities equivalent to the expected life of the Company's share options. The dividend yield is based on the average dividend yield of the Company's shares over the expected life of the Company's share options.

During the years ended December 31, 2011, 2010 and 2009, the Company issued 314,182 RSUs, 374,366 RSUs and 607,173 RSUs with a weighted average grant date fair value of $81.20, $79.18 and $75.09, respectively. The Company values RSUs issued under all plans at the fair value of its common shares at the time of grant, as defined by the plan document.

The activity related to the Company's RSUs for the year ended December 31, 2011 was as follows:

		RSUs

Outstanding at January 1, 2011		868,002
Granted		314,182
Released		(462,912)
Forfeited		(23,528)

Outstanding at December 31, 2011		695,744

The RSUs that vested during the years ended December 31, 2011, 2010 and 2009 had a fair value of $18.3 million, $30.9 million and $9.6 million, respectively.

Of the 695,744 RSUs outstanding at December 31, 2011, 34,866 are subject to a five year delivery date restriction from the grant date and were not released for conversion into shares.

Total unrecognized share-based compensation expense related to unvested RSUs was approximately $26.4 million at December 31, 2011, which is expected to be recognized over a weighted-average period of 1.8 years.

During the years ended December 31, 2011, 2010 and 2009, the Company issued 210,582 SSARs, 450,568 SSARs, and 105,344 SSARs with a weighted average grant date fair value of $10.32, $10.45 and $8.42, respectively.

The activity related to the Company's SSARs for the year ended December 31, 2011 was as follows:

			SSARs

Outstanding at January 1, 2011			1,337,350
Granted			210,582
Exercised			(21,462)
Forfeited or expired			(11,263)

Outstanding at December 31, 2011			1,515,207
Exercisable at December 31, 2011			1,031,110

Total unrecognized share-based compensation expense related to unvested SSARs was approximately $3.1 million at December 31, 2011, which is expected to be recognized over a weighted-average period of 1.7 years.

The Company values SSARs issued with a Black-Scholes valuation model and used the following assumptions for the years ended December 31, 2011, 2010 and 2009:

	2011	2010	2009

Expected life	6 years	6 years	6 years
Expected volatility	15.6%	15.8%	15.4%
Risk-free interest rate	2.7%	2.8%	2.7%
Dividend yield	2.8%	2.7%	2.6%

In determining the weighted average assumptions used, the Company used the same methodology as described in share options above.

In 2009, the Company issued 27,655 replacement warrants as part of the acquisition of Paris Re. At December 31, 2011, 15,270 warrants are outstanding and fully vested with a weighted average remaining contractual life of 4 years and a weighted average exercise price of $34.42. During the year ended December 31, 2011, 7,993 warrants were exercised with a weighted average exercise price of $35.33.