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Stock Incentive Compensation and Employee Benefit Plans
12 Months Ended
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Stock Incentive Compensation and Employee Benefit Plans STOCK INCENTIVE COMPENSATION AND EMPLOYEE BENEFIT PLANS
Stock Incentive Compensation Plans and Awards
The Company is authorized to issue restricted stock awards, restricted stock units, performance share awards, stock options and other share-based awards to its employees and directors pursuant to various stock incentive compensation plans.
On May 16, 2022, the Company’s shareholders approved the Company’s First Amended and Restated 2016 Long-Term Incentive Plan, which amended and restated the plan initially approved by the shareholders in May 2016 (as amended from time to time, the “2016 Long-Term Incentive Plan”). The Company is authorized to issue up to 3,060,092 common shares pursuant to the 2016 Long-Term Incentive Plan. The 2016 Long-Term Incentive Plan permits the grant of restricted stock awards, restricted stock units, performance share awards (including cash-based performance awards), stock options and other share-based awards to employees, officers, non-employee directors and consultants or advisors of the Company and its affiliates.
The Company’s 2001 Stock Incentive Plan, which permitted the grant of stock options, restricted stock awards and other share-based awards to employees of RenaissanceRe and its subsidiaries, expired in accordance with its terms on February 6, 2016. The terms and conditions of awards made under this plan were not impacted by the expiration, but no additional awards may be made under this plan. All awards made under the 2001 Stock Incentive Plan vested no later than March 1, 2020.
In 2010, the Company instituted a cash settled restricted stock unit (“CSRSU”) plan, the 2010 Restricted Stock Unit Plan, which allowed for the issuance of equity awards in the form of CSRSUs. In November 2016, the 2010 Restricted Stock Unit Plan was terminated and replaced with a new CSRSU plan, the 2016 Restricted Stock Unit Plan. The terms and conditions of CSRSU awards outstanding under the 2010 Restricted Stock Unit Plan at the time of termination were not affected, but no additional awards will be made under the 2010 Restricted Stock Unit Plan. All outstanding awards made under the 2010 Restricted
Stock Unit Plan vested no later than March 1, 2020. Further, all outstanding awards made under the 2016 Restricted Stock Unit Plan vested no later than March 1, 2021.
Restricted Stock Awards
Restricted stock awards granted to employees under the 2016 Long-Term Incentive Plan generally vest ratably over a four-year period. Restricted stock awards granted to non-employee directors generally vest ratably over a three-year period.
Performance Share Awards
Performance share awards granted to certain of the Company’s executive officers pursuant to the 2016 Long-Term Incentive Plan are subject to vesting conditions based on both continued service and the attainment of pre-established performance goals. If performance goals are achieved, the performance share awards will vest up to a maximum of 200% of target. Performance share awards generally cliff vest at the end of a three-year vesting period based on the attainment of performance goals over the three-year performance period.
Performance Share Awards Granted in March 2019
Performance share awards granted in March 2019 have a performance condition, which is the percentage change in the Company’s tangible book value per common share plus change in accumulated dividends, or, in the event of a change in control, a market condition, which is the Company’s total shareholder return relative to its peer group.
Performance Share Awards Granted Beginning in March 2020
Beginning with awards granted in March 2020, performance share awards have performance conditions, which are the average percentage change in the Company’s book value per common share plus change in accumulated dividends over three years and the three-year average underwriting expense ratio rank compared to peers, or, in the event of a change in control, a market condition, which is the Company’s total shareholder return relative to its peer group. The performance conditions are calculated in accordance with the terms of the applicable award agreement.
Cash Settled Restricted Stock Units
CSRSUs are liability awards with fair value measurement based on the fair market value of the Company’s common shares at the end of each reporting period. CSRSUs granted periodically pursuant to the 2016 Restricted Stock Unit Plan generally vest ratably over 4 years.
Valuation Assumptions
Performance Share Awards Granted in March 2019
For performance share awards granted in March 2019, the performance metric relates to the percentage change in tangible book value per share plus change in accumulated dividends which is classified as a performance condition under FASB ASC Topic Compensation - Stock Compensation. As a result, the fair value of the performance share awards is determined based on the fair market value of RenaissanceRe’s common shares on the grant date. The estimated fair value of performance share awards is amortized as an expense over the requisite service period.
Performance Share Awards Granted Beginning in March 2020
For performance share awards granted beginning in March 2020, the performance metrics relate to (i) the percentage change in book value per share plus change in accumulated dividends and (ii) average underwriting expense ratio rank compared to peers, both of which are classified as performance conditions under FASB ASC Topic Compensation - Stock Compensation. As a result, the fair value of the performance share awards is determined based on the fair market value of RenaissanceRe’s common shares on the
grant date. The estimated fair value of performance share awards is amortized as an expense over the requisite service period.
Restricted Stock Awards
The fair value of restricted stock awards is determined based on the fair market value of RenaissanceRe’s common shares on the grant date. The estimated fair value of restricted stock awards is amortized as an expense over the requisite service period. The Company has elected to recognize forfeitures as they occurred rather than estimating service-based forfeitures over the requisite service period.
Cash Settled Restricted Stock Units
CSRSUs are revalued at the end of each quarterly reporting period based on the then fair market value of RenaissanceRe’s common shares. The total cost is adjusted each quarter for unvested CSRSUs to reflect the current share price, and this total cost is amortized as an expense over the requisite service period. The Company has elected to recognize forfeitures as they occurred rather than estimating service-based forfeitures over the requisite service period.
Summary of Stock Compensation Activity
Cash Settled Restricted Stock Units
Number of
Shares
Nonvested at December 31, 201963,744 
Awards granted— 
Awards vested(44,734)
Awards forfeited(529)
Nonvested at December 31, 202018,481 
Awards granted— 
Awards vested(18,481)
Awards forfeited— 
Nonvested at December 31, 2021— 
Performance Share Awards
Number of
Shares (1)
Weighted
Average 
Grant Date Fair Value
Nonvested at December 31, 2019144,847 $94.70 
Awards granted65,840 170.40 
Awards vested(48,997)61.48 
Awards forfeited(9,976)— 
Nonvested at December 31, 2020151,714 $140.96 
Awards granted55,876 162.61 
Awards vested(49,792)130.73 
Awards forfeited(16,730)— 
Nonvested at December 31, 2021141,068 $163.98 
Awards granted69,548 145.49 
Awards vested— — 
Awards forfeited(19,352)— 
Nonvested at December 31, 2022191,264 $159.07 
(1)     For performance share awards, the number of shares is stated at the maximum number that can be attained if the performance conditions are fully met. Forfeitures represent shares forfeited due to vesting below the maximum attainable as a result of the Company not fully meeting the performance conditions.
Restricted Stock Awards
Employee
Restricted Stock Awards
Non-Employee Director
Restricted Stock Awards
Total
Restricted Stock Awards
Number of
Shares
Weighted
Average Grant Date Fair 
Value
Number of
Shares
Weighted
Average Grant Date Fair 
Value
Number of
Shares
Weighted
Average Grant Date Fair 
Value
Nonvested at December 31, 2019510,860 $139.91 21,006 $140.79 531,866 $139.94 
Awards granted309,892 145.03 9,970 170.40 319,862 145.82 
Awards vested(213,488)138.35 (10,316)141.12 (223,804)138.47 
Awards forfeited(14,517)140.11 — — (14,517)140.11 
Nonvested at December 31, 2020592,747 $143.14 20,660 $155.03 613,407 $143.54 
Awards granted252,625 167.92 10,452 162.61 263,077 167.71 
Awards vested(207,264)142.52 (10,511)147.72 (217,775)142.77 
Awards forfeited(14,776)158.97 — — (14,776)158.97 
Nonvested at December 31, 2021623,332 $153.02 20,601 $162.60 643,933 $153.32 
Awards granted354,887 143.86 12,721 145.77 367,608 143.92 
Awards vested(242,628)148.30 (12,307)159.20 (254,935)148.83 
Awards forfeited(22,795)149.01 — — (22,795)149.01 
Nonvested at December 31, 2022712,796 $150.19 21,015 $154.40 733,811 $150.31 
There were 1.4 million shares available for issuance under the 2016 Long-Term Incentive Plan at December 31, 2022.
The aggregate fair value of restricted stock awards, performance share awards and CSRSUs vested during 2022 was $38.8 million (2021 – $46.3 million, 2020 – $54.7 million). In connection with share vestings, there
was a $0.1 million excess windfall tax benefit realized by the Company in 2022 (2021 – $0.2 million, 2020 – $0.3 million).
The total stock compensation expense recognized in the Company’s consolidated statements of operations during 2022 was $45.2 million (2021 – $40.0 million, 2020 – $43.7 million). As of December 31, 2022, there was $75.2 million of total unrecognized compensation cost related to restricted stock awards and $4.9 million related to performance share awards, which will be recognized on a weighted average basis during the next 1.7 and 1.7 years, respectively.
All of the Company’s employees are eligible for defined contribution pension plans. Contributions are primarily based upon a percentage of eligible compensation. The Company contributed $6.7 million to its defined contribution pension plans in 2022 (2021 – $7.5 million, 2020 – $6.7 million).