As of March 31, 2026, there were 1,139,325 and 1,207,899 shares available for grant under The Hanover Insurance Group 2022 Long-Term Incentive Plan and 2023 Employee Stock Purchase plan, respectively.

Compensation cost for the Company’s stock-based awards and the related tax benefits were as follows:


	Three Months Ended March 31,
(in millions)	2026			2025
Stock-based compensation expense	$	6.6		$	6.6
Tax benefit		(1.4	)		(1.4	)
Stock-based compensation expense, net of taxes	$	5.2		$	5.2

Information on the Company’s stock option activity for the three months ended March 31, 2026 and 2025 is summarized below.


	Three Months Ended March 31,
	2026					2025
(in whole shares and dollars)	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding, beginning of period		1,094,462		$	126.02		1,111,871		$	117.43
Granted		148,066			173.56		140,393			161.82
Exercised		(44,271	)		101.19		(92,520	)		89.99
Outstanding, end of period		1,198,257			132.81		1,159,744			124.99

The Company has issued time-based, market-based and performance-based restricted stock units to eligible employees, all of which generally vest after three years of continued employment.

The following table summarizes activity information about employee restricted stock units:


	Three Months Ended March 31,
	2026					2025
(in whole shares and dollars)	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Time-based restricted stock units:
Outstanding, beginning of period		381,944		$	144.61		386,712		$	137.44
Granted		129,017			171.17		136,535			160.40
Vested		(127,413	)		139.95		(118,406	)		139.49
Forfeited		(2,493	)		148.75		(2,108	)		140.39
Outstanding, end of period		381,055			155.13		402,733			144.60
Performance-based and market-based restricted stock units:
Outstanding, beginning of period		133,150		$	153.78		126,211		$	140.47
Granted		59,663			167.54		52,360			178.39
Vested		(55,764	)		141.91		(31,052	)		141.58
Forfeited		—			—		(14,369	)		152.88
Outstanding, end of period		137,049			164.60		133,150			153.78

During the first three months of 2026, the Company granted performance-based restricted stock units totaling 58,111 to certain members of senior management, which are reflected in the table above as performance and market-based restricted stock activity. Vesting of these stock units is based on a performance-based metric (adjusted return on equity), with a market-based modifier determined by relative total shareholder return (“TSR”) for the three-year period, as compared to a pre-determined group of Property and Casualty peer companies. The modifier may increase or decrease the payout by up to 20%. The fair value of the 2026 awards was estimated at the date of grant using a valuation model. These units have the potential to range from 0% to 240% of the shares disclosed for grant year 2026.

In the first three months of 2025, the Company granted performance-based restricted stock units totaling 28,868, to certain members of senior management, which are included in the table above as performance and market-based restricted stock activity. The vesting of these stock units is determined using a performance-based metric (adjusted return on equity). The Company also separately granted market-based awards totaling 23,492 in 2025, which are also included in the table above as performance and market-based restricted stock activity. The vesting of these stock units is generally based on the relative TSR of the Company for a three-year period, as compared to a group of pre-determined Property and Casualty peer companies. The fair value of market-based awards was estimated at the date of grant using a valuation model. Units granted in 2025 have the potential to range from 0% to 200% of the shares disclosed.

Shares earned in excess of the 100% target level are reflected as granted in the period following achievement of performance conditions, and shares below the 100% target level are reflected as forfeited. Amounts granted in 2026 and 2025 include 11,296 shares and 5,246 shares, respectively, related to performance-based awards that achieved a payout in excess of 100%, and vested in the first quarter of 2026 and 2025, respectively. No shares were granted or forfeited during the first quarter of 2026 in connection with the vesting of the 2023 market-based awards. Amounts reported as forfeited in the table above in 2025 include 14,369 shares related to 2022 market-based awards that achieved a payout below 100%, and were forfeited in the first quarter of 2025.