In 1996, the Company adopted and the shareholders approved a performance stock plan, under which until the suspension of the plan in 2010, up to 28,800,000 Performance Stock Plan (“PSP”) shares could be granted to key employees contingent on the employees’ future years of service with the Company and other performance-based criteria established by the Compensation Committee of the Company’s board of directors. Before participants may take full title to Performance Stock, two vesting conditions must be met. Of the grants currently outstanding, specified portions satisfied the first condition for vesting based upon 20% incremental increases in the 20-trading-day average stock price of Brown & Brown’s common stock from the price on the last business day before date of grant. Performance Stock that has satisfied the first vesting condition is considered “awarded shares.” Awarded shares are included as issued and outstanding common stock shares and are included in the calculation of basic and diluted net income per share. Dividends are paid on awarded shares and participants may exercise voting privileges on such shares. Awarded shares satisfy the second condition for vesting on the earlier of a participant’s: (i) 15 years of continuous employment with Brown & Brown from the date shares are granted to the participants (or, in the case of the July 2009 grant to Powell Brown, 20 years), (ii) attainment of age 64 (on a prorated basis corresponding to the number of years since the date of grant), or (iii) death or disability. On April 28, 2010, the PSP was suspended and any remaining authorized, but unissued shares, as well as any shares forfeited in the future, were reserved for issuance under the 2010 Stock Incentive Plan (the “2010 SIP”).

At December 31, 2023, 10,155,094 shares had been granted, net of forfeitures, under the PSP. As of December 31, 2023, 167,772 shares had met the first condition of vesting and had been awarded, and 9,987,322 shares had satisfied both conditions of vesting and had been distributed to participants. Of the shares that have not vested as of December 31, 2023, the initial stock prices ranged from $8.89 to $10.31.

The Company uses a path-dependent lattice model to estimate the fair value of PSP grants on the grant date.

A summary of PSP activity for the years ended December 31, 2023, 2022 and 2021 is as follows:


	Weighted- average grant date fair value		Granted shares			Awarded shares			Shares not yet awarded
Outstanding at January 1, 2021	$	4.86		909,828			909,828			—
Granted	$	—		—			—			—
Awarded	$	—		—			—			—
Vested	$	4.73		(45,736	)		(45,736	)		—
Forfeited	$	5.50		(24,250	)		(24,250	)		—
Outstanding at December 31, 2021	$	4.87		839,842			839,842			—
Granted	$	—		—			—			—
Awarded	$	—		—			—			—
Vested	$	4.81		(101,900	)		(101,900	)		—
Forfeited	$	4.80		(29,562	)		(29,562	)		—
Outstanding at December 31, 2022	$	4.88		708,380			708,380			—
Granted	$	—		—			—			—
Awarded	$	—		—			—			—
Vested	$	4.69		(532,282	)		(532,282	)		—
Forfeited	$	5.25		(8,326	)		(8,326	)		—
Outstanding at December 31, 2023	$	5.47		167,772			167,772			—

The total fair value of PSP grants that vested during each of the years ended December 31, 2023, 2022 and 2021 was $30.6 million, $6.3 million and $2.3 million, respectively.

On April 28, 2010, the shareholders of the Company approved the 2010 Stock Incentive Plan (“2010 SIP”), which was suspended May 1, 2019. On May 1, 2019, the shareholders of the Company approved the 2019 Stock Incentive Plan (“2019 SIP”) that provides for the granting of restricted stock, restricted stock units, stock options, stock appreciation rights and other stock-based awards to employees and directors contingent on performance-based and/or time-based criteria established by the Compensation Committee of the Company’s board of directors. In addition, the 2019 SIP provides for a limited delegation of authority of the Company’s chief executive officer to grant awards to individuals who are not subject to Section 16 of the Securities Exchange Act of 1934. The principal purpose of the 2019 SIP is to attract, incentivize and

retain key employees by offering those persons an opportunity to acquire or increase a direct proprietary interest in the Company’s operations and future success. The number of shares of stock reserved for issuance under the 2019 SIP is 2,283,475 shares, plus any shares that are authorized for issuance under the 2010 SIP (described below), and not already subject to grants under the 2010 SIP, and that were outstanding as of May 1, 2019, the date of suspension of the 2010 SIP, together with PSP shares, 2010 SIP shares and 2019 SIP shares forfeited after that date. As of May 1, 2019, 6,957,897 shares were available for issuance under the 2010 SIP, which were then transferred to the 2019 SIP.

The Company has granted restricted share awards (including both restricted stock and restricted stock units) to our employees in the form of time-based grants and performance-based grants under the 2010 SIP and 2019 SIP. To date, a substantial majority of restricted share grants to employees under these plans vest in 5 years. The performance-based grants are subject to the achievement of certain performance criteria by grantees, which may include growth in a defined book of business, Organic Revenue growth of the Company and consolidated diluted net income per share growth at certain levels of the Company. The performance measurement period ranges from 3 to 5 years. Beginning in 2016, certain performance-based grants have a payout range between 0% to 200% depending on the achievement against the stated performance target. Prior to 2016, the majority of the grants had a binary performance measurement criteria that only allowed for 0% or 100% payout.

Non-employee members of the board of directors received shares annually issued pursuant to the 2019 SIP as part of their annual compensation. A total of 16,857 shares were issued in May 2021, 15,003 shares were issued in May 2022 and 16,632 shares were issued in May 2023.

The Company uses the closing stock price on the day before the grant date to determine the fair value of grants under the 2010 SIP and 2019 SIP and then applies an estimated forfeiture factor to estimate the annual expense. Additionally, the Company uses the path-dependent lattice model to estimate the fair value of grants with PSP-type vesting conditions as of the grant date. SIP shares that satisfied the first vesting condition for PSP-type grants or the established performance criteria are considered awarded shares. Awarded shares under restricted stock awards are included as issued and outstanding common stock shares and are included in the calculation of basic and diluted net income per share.

A summary of 2010 SIP and 2019 SIP activity for the years ended December 31, 2023, 2022 and 2021 is as follows:


	Weighted- average grant date fair value		Granted shares			Awarded shares			Shares not yet awarded
Outstanding at January 1, 2021	$	19.89		9,694,337			6,919,847			2,774,490
Granted	$	46.05		1,143,094			204,826			938,268		(1)
Awarded	$	25.80		310,147			1,272,554			(962,407	)
Vested	$	15.73		(3,223,964	)		(3,223,964	)		—
Forfeited	$	30.54		(315,168	)		(147,702	)		(167,466	)
Outstanding at December 31, 2021	$	21.59		7,608,446			5,025,561			2,582,885
Granted	$	65.22		1,478,613			693,802			784,811		(2)
Awarded	$	28.73		470,793			1,383,216			(912,423	)
Vested	$	20.09		(2,179,476	)		(2,179,476	)		—
Forfeited	$	37.78		(313,428	)		(168,454	)		(144,974	)
Outstanding at December 31, 2022	$	25.01		7,064,948			4,754,649			2,310,299
Granted	$	56.39		1,558,826			235,738			1,323,088		(3)
Awarded	$	47.60		330,310			977,447			(647,137	)
Vested	$	25.46		(1,561,615	)		(1,561,615	)		—
Forfeited	$	49.37		(271,154	)		(129,889	)		(141,265	)
Outstanding at December 31, 2023	$	27.50		7,121,315			4,276,330			2,844,985

(1)

Of the 938,268 performance-based shares granted in 2021, the payout for 486,679 shares may be increased up to 200% of the target or decreased to zero, 21,651 shares may be increased up to 120% of the target or decreased to zero and 3,886 shares may be increased up to 150% or decreased to 50% of target subject to the level of performance attained. The amount reflected in the table includes all time-based share grants at a target payout of 100%.

(2)

Of the 784,811 performance-based shares granted in 2022, the payout for 378,836 shares may be increased up to 200% of the target or decreased to zero and 15,114 shares may be increased up to 120% of the target or decreased to zero. The amount reflected in the table includes all time-based share grants at a target payout of 100%.

(3)

Of the 1,323,088 performance-based shares grant in 2023, the payout for 615,575 shares may be increased up to 200% of the target or decreased to zero and 17,338 shares may be increased up to 120% of the target or decreased to zero. The amount reflected in the table includes all time-based share grants at a target payout of 100%.

The following table sets forth information as of December 31, 2023, 2022 and 2021, with respect to the number of time-based restricted shares granted and awarded, the number of performance-based restricted shares granted, and the number of performance-based restricted shares awarded under our Performance Stock Plan and 2010 and 2019 Stock Incentive Plans:


Year	Time-based restricted stock granted and awarded		Performance-based restricted stock granted			Performance-based restricted stock awarded
2023		235,738		1,323,088	(1)		977,447
2022		693,802		784,811	(2)		1,383,216
2021		204,826		938,268	(3)		1,272,554

(1)

Of the 1,323,088 performance-based shares granted in 2023, the payout for 615,575 shares may be increased up to 200% of the target or decreased to zero and 17,338 shares may be increased up to 120% of the target or decreased to zero. The amount reflected in the table includes all time-based share grants at a target payout of 100%.

(2)

(3)

At December 31, 2023, 4,238,212 shares were available for future grants under the 2019 SIP. This amount is calculated assuming the maximum payout for all grants.

The Company has a shareholder-approved Employee Stock Purchase Plan (“ESPP”) with a total of 34,000,000 authorized shares of which 2,991,813 were available for future subscriptions as of December 31, 2023. Employees of the Company who regularly work 20 hours or more per week are generally eligible to participate in the ESPP. Participants, through payroll deductions, may allot up to 10% of their compensation towards the purchase of a maximum of $25,000 worth of Company stock between August 1st of each year and the following July 31st (the “Subscription Period”) at a cost of 85% of the lower of the stock price as of the beginning or end of the Subscription Period.

The Company estimates the fair value of an ESPP share option as of the beginning of the Subscription Period as the sum of: (i) 15% of the quoted market price of the Company’s stock on the day prior to the beginning of the Subscription Period, and (ii) 85% of the value of a one-year stock option on the Company stock using the Black-Scholes option-pricing model. The estimated fair value of an ESPP share option as of the Subscription Period beginning in August 2023 was $18.13. The fair values of an ESPP share option as of the Subscription Periods beginning in August 2022 and 2021, were $15.81 and $11.60, respectively.

For the ESPP plan years ended July 31, 2023, 2022 and 2021, the Company issued 743,856, 791,842 and 850,956 shares of common stock, respectively. These shares were issued at an aggregate purchase price of $39.9 million, or $53.70 per share, in 2023, $36.5 million, or $46.10 per share, in 2022 and $32.9 million, or $38.70 per share, in 2021.

For the five months ended December 31, 2023, 2022 and 2021 (portions of the 2023-2024, 2022-2023 and 2021-2022 plan years), 330,599, 338,498 and 354,911 shares of common stock (from authorized but unissued shares), respectively, were subscribed to by ESPP participants for proceeds of approximately $19.7 million, $18.2 million and $16.4 million, respectively.

The non-cash stock-based compensation expense for the years ended December 31 is as follows:


(in millions)	2023		2022		2021
Stock incentive plan	$	75.3	$	55.4	$	50.7
Employee stock purchase plan		12.5		10.4		9.9
Performance stock plan		1.0		0.3		0.4
Sharesave plan		0.6
Total	$	89.4	$	66.1	$	61.0

As of December 31, 2023, the Company estimates there to be $205.1 million of unamortized compensation expense related to all non-vested stock-based compensation arrangements granted under the Company’s stock-based compensation plans, based upon current projections of grant measurement against performance criteria. That expense is expected to be recognized over a weighted average period of 3.53 years.