Brown & Brown Insurance 2016 Annual Report

Management’s Discussion and Analysis
of Financial Condition and Results of Operations
of up to ten years from the January 2011 grant date in order for the awarded shares to become fully vested and nonforfeitable.
As a result of the awarding of these shares, the grantees became eligible to receive payments of dividends and exercise
voting privileges after the awarding date.
During the first quarter of 2017, the performance conditions for approximately 169,000 shares of the Company’s
common stock granted under the Company’s Stock Incentive Plan were determined by the Compensation Committee to have
been satisfied relative to performance-based grants issued in 2012. These grants had a performance measurement period
that concluded on December 31, 2016. The vesting condition for these grants requires continuous employment for a period
of up to ten years from the January 2012 grant date in order for the awarded shares to become fully vested and nonforfeitable.
As a result of the awarding of these shares, the grantees will be eligible to receive payments of dividends and exercise
voting privileges after the awarding date, and the awarded shares will be included as issued and outstanding common stock
shares and included in the calculation of basic and diluted EPS.
Litigation and Claims
We are subject to numerous litigation claims that arise in the ordinary course of business. If it is probable that a liability
has been incurred at the date of the financial statements and the amount of the loss is estimable, an accrual for the costs to
resolve these claims is recorded in accrued expenses in the accompanying Consolidated Balance Sheets. Professional fees
related to these claims are included in other operating expenses in the accompanying Consolidated Statement of Income as
incurred. Management, with the assistance of in-house and outside counsel, determines whether it is probable that a liability
has been incurred and estimates the amount of loss based upon analysis of individual issues. New developments or changes
in settlement strategy in dealing with these matters may significantly affect the required reserves and affect our net income.
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Brown & Brown, Inc.