Annual report pursuant to Section 13 and 15(d)

Savings Plans And Multiemployer Pension Plans

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Savings Plans And Multiemployer Pension Plans
12 Months Ended
Dec. 31, 2017
Deferred Compensation Arrangements [Abstract]  
Savings Plans And Multiemployer Pension Plans
13.
SAVINGS, MULTI-EMPLOYER AND DEFINED BENEFIT PENSION PLANS
SEACOR Savings Plan. The Company provides a defined contribution plan (the “Savings Plan”) for its eligible U.S.-based employees. The Company’s contribution to the Savings Plan is limited to 3.5% of an employee’s wages depending upon the employee’s level of voluntary wage deferral into the Savings Plan and is subject to annual review by the Board of Directors of SEACOR. The Company’s Savings Plan costs were $1.8 million, $1.8 million and $3.8 million for the years ended December 31, 2017, 2016 and 2015, respectively.
SEACOR Deferred Compensation Plan. In 2005, the Company established a non-qualified deferred compensation plan, as amended (the “Deferred Compensation Plan”) to provide certain highly compensated executives and non-employee directors the ability to defer receipt of up to 75% of their cash base salary and up to 100% of their cash bonus. Prior to a 2012 amendment, participants were eligible to defer up to 100% of their vested restricted stock (deferred in the form of Restricted Stock Units, as defined in the plan) for each fiscal year. Each participant’s compensation deferrals are credited to a bookkeeping account and, subject to certain restrictions, each participant may elect to have their cash deferrals in such account indexed against one or more investment options, solely for purposes of determining amounts payable under the Deferred Compensation Plan (the Company is not obligated to actually invest any deferred amounts in the selected investment options).
Participants may receive a distribution of deferred amounts, plus any earnings thereon (or less any losses), on a date specified by the participant or, if earlier, upon a separation from service or upon a change of control (as defined). All distributions to participants following a separation from service shall be in the form of a lump sum, except if such separation qualifies as “retirement” under the terms of the plan, in which case it may be paid in installments if previously elected by the participant. Distributions to “Key Employees” upon a separation from service (other than due to death) will not commence until at least six months after the separation from service. Participants are always 100% vested in the amounts they contribute to their Deferred Compensation Plan accounts. The Company, at its option, may contribute amounts to participants’ accounts, which may be subject to vesting requirements.
The obligations of the Company to pay deferred compensation under the Deferred Compensation Plan are general unsecured obligations of the Company and rank equally with other unsecured indebtedness of the Company that is outstanding from time to time. As of December 31, 2017 and 2016, the Company had obligations of $0.5 million and $0.4 million, respectively, related to the Deferred Compensation Plan that are included in the accompanying consolidated balance sheets as deferred gains and other liabilities. The total amount of the Company’s obligation under the Deferred Compensation Plan will vary depending upon the level of participation by participants and the amount of compensation that participants elect to defer under the plan. The duration of the Deferred Compensation Plan is indefinite (subject to the Board of Directors’ discretion to amend or terminate the plan).
AMOPP and SPP. Certain subsidiaries of the Company are participating employers in two industry-wide, multi-employer defined benefit pension plans, the American Maritime Officers Pension Plan (the “AMOPP” - EIN: 13-1936709) and the Seafarers Pension Plan (the “SPP’” - EIN: 13-6100329). The Company’s participation in these plans relates to certain employees of the Company’s Ocean Services business segment. During the years ended December 31, 2017, 2016 and 2015, the Company made contributions of $2.4 million, $1.8 million and $1.5 million, respectively in the aggregate to the AMOPP and SPP.
Under federal pension law, the AMOPP was deemed in critical status for the 2009 and 2010 plan years. The AMOPP was frozen in January 2010 and a ten year rehabilitation plan was adopted by the AMOPP trustees in February 2010 whereby benefit changes and increased contributions by participating employers were expected to improve the funded status of the AMOPP. On December 28, 2012, the AMOPP was elevated to endangered status primarily as a result of favorable investment performance and the rehabilitation plan adopted by the AMOPP trustees. Based on an actuarial valuation performed as of September 30, 2016, the latest period for which an actuarial valuation is available, if the Company chose to fully withdraw from the AMOPP at that time, its withdrawal liability would have been $28.6 million. That liability may change in future years based on various factors, primarily employee census. As of December 31, 2017, the Company had no intention to withdraw from the AMOPP and no deficit amounts have been invoiced. Depending upon the results of the future actuarial valuations and the ten year rehabilitation plan, it is possible that the AMOPP will experience further funding deficits, requiring the Company to recognize additional payroll related operating expenses in the periods invoices are received or contribution levels are increased.
The SPP was neither in endangered or critical status for the 2016 plan year, the latest period for which a report is available, as the SPP was fully funded.
Multi-Employer Defined Contribution Plans. In accordance with collective bargaining agreements between the Company and the American Maritime Officers Union, the latest of which expires on February 28, 2019, and the Seafarers International Union, the latest of which expires on July 31, 2022, the Masters Mates and Pilots Union, which expires July 2, 2022 and the Marine Engineer Benefit Association, which expires July 2, 2022, the Company makes periodic contributions to various defined contribution and 401(k) plans for the benefit of the participants. The contributions to these plans are expensed as incurred and are included in operating expenses in the accompanying consolidated statements of income (loss). During the years ended December 31, 2017, 2016 and 2015, the Company made contributions of $1.0 million, $0.3 million and $0.2 million, respectively, in the aggregate to these plans. During the years ended December 31, 2017, 2016 and 2015, none of the Company’s contributions to any of these plans exceeded 5% of total contributions to each plan and the Company did not pay any material surcharges. As of December 31, 2017, there is no required minimum future contributions to these plans. The Company’s obligations for future contributions are based upon the number of employees subject to the collective bargaining agreements, their rates of pay and the number of days worked. Future negotiations of collective bargaining agreements between the Company and the participating unions, including the contribution levels for these plans or any additional plans that may come into existence, may result in increases to the Company’s wage and benefit costs and those increases may be material.
ISH Retirement Plan. ISH sponsored a defined benefit pension plan (the “ISH Plan”) covering non-union employees prior to its acquisition by the Company on July 3, 2017 (see Note 2). The ISH Plan generally provided participants with benefits based on years of service and compensation levels for participants hired prior to September 1, 2006. From that date forward, the benefit was calculated prospectively under a cash balance formula with pay credits based on age plus service years and interest credits based on an as defined U.S. treasury rate. Effective July 3, 2017, in conjunction with the Plan, an amendment was made to the ISH Plan that fully vested all active participants as of January 1, 2017 and froze the retirement benefits effective August 31, 2017. As of August 31, 2017, all retirement benefits earned were fully preserved and will be paid in accordance with the ISH Plan and legal requirements.
The following table sets forth the projected benefit obligation, plan assets and funded status associated with the ISH Plan as of December 31, 2017 (in thousands):
Fair Value of Assets
$
38,492

Projected Benefit Obligation
(36,940
)
Funded Status as of December 31, 2017(1)
$
1,552

 
 
Net Pension Income July 3, 2017 through December 31, 2017
$
1,315

_____________________
(1)
Included in other assets in the accompanying consolidated balance sheets.
The significant assumptions used in determining the projected benefit obligation and net pension income were as follows:
Discount rate
3.50
%
Rate of increase in compensations levels(1)
4.50
%
CPI
2.00
%
Cash balance interest credits (compounded annually)
4.10
%
Expected long-term rate of return on plan assets
6.75
%
_____________________
(1)
For the period July 3, 2017 through August 31, 2017, the date retirement benefits were frozen.
The future benefit payments expected to be paid in each of the next five fiscal years are as follows (in thousands):
2018
2,030

2019
1,950

2020
2,030

2021
2,030

2022
2,060

The following table sets forth the projected benefit obligation, plan assets and funded status associated with the ISH Plan as of December 31, 2017 (in thousands):
Fair Value of Assets
$
38,492

Projected Benefit Obligation
(36,940
)
Funded Status as of December 31, 2017(1)
$
1,552

 
 
Net Pension Income July 3, 2017 through December 31, 2017
$
1,315

_____________________
(1)
Included in other assets in the accompanying consolidated balance sheets.
The significant assumptions used in determining the projected benefit obligation and net pension income were as follows:
Discount rate
3.50
%
Rate of increase in compensations levels(1)
4.50
%
CPI
2.00
%
Cash balance interest credits (compounded annually)
4.10
%
Expected long-term rate of return on plan assets
6.75
%
_____________________
(1)
For the period July 3, 2017 through August 31, 2017, the date retirement benefits were frozen.
The future benefit payments expected to be paid in each of the next five fiscal years are as follows (in thousands):
2018
2,030

2019
1,950

2020
2,030

2021
2,030

2022
2,060