The Company's Employee Equity Plan (EEP), which was approved by the Company's shareholders, 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). From 2013, the Company will also grant PSUs to employees of the Company.

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, RSUs or PSUs 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 and PSU awards granted under the EEP generally cliff vest after three years of continuous service. Share options and SSARs vest ratably over three 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 and PSUs that are unvested. At December 31, 2012, 4.8 million shares, of which a total of 1.8 million shares can be issued as either RS, RSUs or PSUs and 3.0 million shares can be issued as share options or SSARs, remained available for issuance under this plan.

In addition, the Committee is authorized to grant performance awards to eligible senior executives. These performance awards 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 certain performance measures are achieved. The individual maximum number of shares underlying any such share-denominated award granted in any calendar year will be 0.5 million shares, and the individual maximum amount of any such cash-denominated award in any calendar year shall not exceed $5.0 million.

The Company's Non-Employee Directors Share Plan (Directors Share Plan), which was approved by the Company's shareholders, permits the grant of up to 1.2 million shares, of which a total of 0.8 million shares can be issued as either RS or RSUs and 0.4 million shares can be issued as share options or SSARs. Under the Directors Share Plan, 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 Directors Share Plan as the closing price reported on the grant date.

Options and RSUs are awarded on an annual basis under the Directors Share Plan. Prior to May 2012, options generally vested at the time of grant, were expensed immediately and had a ten year contractual term. From May 2012, options generally vest and are expensed ratably over three years and have a ten year contractual term. Prior to May 2010, RSUs generally vested at the time of grant with a delivery date restriction of one year and were expensed immediately. From May 2010, RSUs have a five year cliff vest with no delivery restrictions and are expensed over the vesting period. Prior to the RSU grant, directors have the ability to 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, 2012, 0.4 million shares, of which a total of 0.1 million shares can be issued as either RS or RSUs and 0.3 million shares can be issued as share options or SSARs, 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, 2012, 0.3 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, 2012, 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 and SSARs or the conversion of RSUs into shares.

For the years ended December 31, 2012, 2011 and 2010, the Company's share-based compensation expense was $26.8 million, $24.2 million and $33.5 million, respectively, with a tax benefit of $3.6 million, $2.4 million and $3.4 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 $1.6 million, $3.1 million and $5.9 million for the years ended December 31, 2012, 2011 and 2010, respectively.

The following table summarizes the activity related to options granted and exercised for the years ended December 31, 2012, 2011 and 2010.

		2012		2011		2010

Options granted		120,210		123,162		91,817
Weighted average grant date fair value of options granted	$	7.90	$	7.43	$	10.29

Options exercised		518,548		194,201		860,154
Total intrinsic value of options exercised (in millions of U.S. dollars)	$	8.8	$	4.6	$	21.0
Proceeds from option exercises (in millions of U.S. dollars)	$	29.3	$	10.6	$	37.2

	The activity related to the Company’s share options for the year ended December 31, 2012 was as follows:

			Weighted Average
		Options	Exercise Price

Outstanding at January 1, 2012		1,863,156	62.89
Granted		120,210	70.82
Exercised		(518,548)	56.92
Forfeited or expired		(6,965)	66.86

Outstanding at December 31, 2012		1,457,853	65.66
Options exercisable at December 31, 2012		1,334,481	65.16
Options vested and expected to vest at December 31, 2012		1,450,769	65.63

The weighted average remaining contractual term and the aggregate intrinsic value of share options outstanding, exercisable, vested and expected to vest at December 31, 2012, was 3.7 years and $22.1 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, 2012, 2011 and 2010:

	2012	2011	2010

Expected life	6 years	6 years	6 years
Expected volatility	17.7%	14.9%	15.8%
Risk-free interest rate	1.0%	2.0%	2.8%
Dividend yield	2.7%	2.7%	2.7%

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, 2012, 2011 and 2010, the Company issued 294,184 RSUs, 314,182 RSUs and 374,366 RSUs with a weighted average grant date fair value of $65.33, $81.20 and $79.18, respectively. The Company values RSUs issued under all plans at the fair value of its common shares at the date of grant, as defined by the plan document.

The activity related to the Company's RSUs for the year ended December 31, 2012 was as follows:

		RSUs

Outstanding at January 1, 2012		695,744
Granted		294,184
Released		(83,650)
Forfeited		(36,783)

Outstanding at December 31, 2012		869,495

The RSUs that vested during the years ended December 31, 2012, 2011 and 2010 had a fair value of $5.5 million, $18.3 million and $30.9 million, respectively.

Of the 869,495 RSUs outstanding at December 31, 2012, 15,388 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 $23.4 million at December 31, 2012, which is expected to be recognized over a weighted-average period of 1.8 years.

During the years ended December 31, 2012, 2011 and 2010, the Company issued 356,900 SSARs, 210,582 SSARs, and 450,568 SSARs with a weighted average grant date fair value of $7.34, $10.32 and $10.45, respectively.

The activity related to the Company's SSARs for the year ended December 31, 2012 was as follows:

			SSARs

Outstanding at January 1, 2012			1,515,207
Granted			356,900
Exercised			(17,313)
Forfeited or expired			(34,200)

Outstanding at December 31, 2012			1,820,594
Exercisable at December 31, 2012			1,208,495

Total unrecognized share-based compensation expense related to unvested SSARs was approximately $2.9 million at December 31, 2012, which is expected to be recognized over a weighted-average period of 1.8 years.

The Company values SSARs issued with a Black-Scholes valuation model and used the following assumptions for the years ended December 31, 2012, 2011 and 2010:

	2012	2011	2010

Expected life	6 years	6 years	6 years
Expected volatility	17.6%	15.6%	15.8%
Risk-free interest rate	1.1%	2.7%	2.8%
Dividend yield	2.8%	2.8%	2.7%

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, 2012, 11,243 warrants are outstanding and fully vested with a weighted average remaining contractual life of 2.1 years and a weighted average exercise price of $33.26. During the year ended December 31, 2012, 4,027 warrants were exercised with a weighted average exercise price of $33.59.