EMPLOYEE BENEFIT PLANS

Defined Contribution Plans

The Bristow Group Inc. Employee Savings and Retirement Plan (the “Bristow Plan”) covers Bristow Group Inc., Bristow U.S. LLC, Bristow Panama Inc. and Bristow Alaska Inc. employees. Under the Bristow Plan, we match each participant’s contributions up to 3% of the employee’s compensation. In addition, under the Bristow Plan, we contribute an additional 3% of the employee’s compensation at the end of each calendar year.

Bristow Helicopters and Bristow International Aviation (Guernsey) Limited (“BIAGL”) have a defined contribution plan. This defined contribution plan replaced the defined benefit pension plans described below for future accrual.

On March 1, 2016, the defined benefit pension plan in Norway discussed below was closed and replaced with a defined contribution plan.

Our contributions to our defined contribution plans were $12.3 million, $14.4 million and $15.2 million for fiscal years 2017, 2016 and 2015, respectively.

Defined Benefit Plans

The defined benefit pension plans of Bristow Helicopters and BIAGL replaced by the defined contribution plans described above covered all full-time employees of Bristow Aviation and BIAGL employed on or before December 31, 1997. Both plans were closed to future accrual as of February 1, 2004. The defined benefits for employee members were based on the employee’s annualized average last three years’ pensionable salaries up to February 1, 2004, increasing thereafter in line with retail price inflation (prior to 2011) and consumer price inflation (from 2011 onwards), and subject to maximum increases of 5% per year over the period to retirement. Any valuation deficits are funded by contributions by Bristow Helicopters and BIAGL. Plan assets are held in separate funds administered by the plans’ trustee (the “Trustee”), which are primarily invested in equities and debt securities. For members of the two closed defined benefit pension plans, since January 2005, Bristow Helicopters contributes a maximum of 7% of a participant’s non-variable salary, and since April 2006, the maximum employer contribution into the plan has been 7.35% for pilots. Each member is required to contribute a minimum of 5% of non-variable salary for Bristow Helicopters to match the contribution. In addition, there are three defined contribution plans for staff who were not members of the original defined benefit plans, two of which are closed to new members.

Bristow Norway had a final salary defined benefit pension plan, which was closed on March 1, 2016 as discussed above. Under this plan, pilots could have retired from age 58 and other employees from age 62 (after meeting certain criteria). Bristow Norway also participates in the standard Norwegian Avtalefestet pension (contractual pension or “AFP”), which is accounted for as a defined contribution plan. The pension benefit was a percentage of final salary in excess of a deductible. The maximum pension was available to those with 30 or more years of service as of the date of retirement. Additionally, there were associated death and disability benefits. Plan assets were held in an insurance policy with an insurance company and contributions followed Norwegian rules, which were based on an individual actuarial calculation for each plan member.

The closure of the Bristow Norway final salary plan on March 1, 2016 led to a curtailment and settlement of the projected benefit obligations. All active members of the plan were transferred to the new defined contribution for future service and the accrued individual insurance reserves for the beneficiaries was transferred to individual insurance policies.

The following tables provide a rollforward of the projected benefit obligation and the fair value of plan assets, set forth the defined benefit retirement plans’ funded status and provide detail of the components of net periodic pension cost calculated for the U.K. and Norway pension plans. The measurement date adopted is March 31. For the purposes of amortizing gains and losses, the 10% corridor approach has been adopted and assets are taken at fair market value. Any such gains or losses are amortized over the average remaining life expectancy of the plan members.



	Fiscal Year Ended March 31,
	2017			2016

	(In thousands)
Change in benefit obligation:
Projected benefit obligation (PBO) at beginning of period	$	525,053		$	639,299
Service cost	627			8,243
Interest cost	15,330			20,108
Actuarial loss (gain)	73,622			(17,096		)
Benefit payments and expenses	(26,456		)	(29,836		)
Curtailments	—			(12,960		)
Settlements	—			(65,799		)
Effect of exchange rate changes	(70,990		)	(16,906		)
Projected benefit obligation (PBO) at end of period	$	517,186		$	525,053
Change in plan assets:
Market value of assets at beginning of period	$	454,946		$	539,723
Actual return on assets	71,873			(6,271		)
Employer contributions	16,530			32,128
Benefit payments and expenses	(26,456		)	(29,836		)
Settlements	—			(65,799		)
Effect of exchange rate changes	(61,354		)	(14,999		)
Market value of assets at end of period	$	455,539		$	454,946
Reconciliation of funded status:
Accumulated benefit obligation (ABO)	$	517,186		$	524,540
Projected benefit obligation (PBO)	$	517,186		$	525,053
Fair value of assets	(455,539		)	(454,946		)
Net recognized pension liability	$	61,647		$	70,107
Amounts recognized in accumulated other comprehensive loss	$	220,396		$	235,720



	Fiscal Year Ended March 31,
	2017			2016			2015

	(In thousands)
Components of net periodic pension cost:
Service cost for benefits earned during the period	$	627		$	8,243		$	7,878
Interest cost on PBO	15,330			20,108			26,000
Expected return on assets	(21,697		)	(27,208		)	(31,020		)
Amortization of unrecognized losses	7,266			8,246			6,653
Net periodic pension cost	$	1,526		$	9,389		$	9,511

The amount in accumulated other comprehensive loss as of March 31, 2017 expected to be recognized as a component of net periodic pension cost in fiscal year 2018 is $6.5 million, net of tax, and represents amortization of the net actuarial losses.

Actuarial assumptions used to develop the components of the U.K. plans were as follows:



	Fiscal Year Ended March 31,
	2017		2016		2015
Discount rate	3.30	%	3.30	%	4.40	%
Expected long-term rate of return on assets	5.30	%	5.40	%	6.29	%
Pension increase rate	2.80	%	2.80	%	3.10	%

Actuarial assumptions used to develop the components of the Norway plan were as follows:



	Fiscal Year Ended March 31,
	2016		2015
Discount rate	2.50	%	4.25	%
Rate of compensation increase	3.50	%	4.00	%
Social Security increase amount	3.25	%	3.75	%
Expected return on plan assets	1.50	%	2.75	%
Pension increase rate	—	%	1.75	%

We utilize a British pound sterling denominated AA corporate bond index as a basis for determining the discount rate for our U.K. plans and NOK-denominated corporate bonds that are credit-rated AA or AAA as a basis for determining the discount rate for our Norway plan. The expected rate of return assumptions have been determined following consultation with our actuarial advisors. In the case of bond investments, the rates assumed have been directly based on market redemption yields at the measurement date, and those on other asset classes represent forward-looking rates that have typically been based on other independent research by investment specialists.

Under U.K. and Guernsey legislation, it is the Trustee who is responsible for the investment strategy of the plans, although day-to-day management of the assets is delegated to a team of regulated investment fund managers. The Trustee of the Bristow Staff Pension Scheme (the “Scheme”) has the following three stated primary objectives when determining investment strategy:


(i)	“funding objective” - to ensure that the Scheme is fully funded using assumptions that contain a modest margin for prudence. Where an actuarial valuation reveals a deficit, a recovery plan will be put in place which will take into account the financial covenant to the employer;


(ii)	“stability objective” - to have due regard to the likely level and volatility of required contributions when setting the Scheme’s investment strategy; and


(iii)	“security objective” - to ensure that the solvency position of the Scheme (as assessed on a gilt basis) is expected to improve. The Trustee will take into account the strength of the employer’s covenant when determining the expected improvement in the solvency position of the Scheme.

The types of investments are held, and the relative allocation of assets to investments is selected, in light of the liability profile of the Scheme, its cash flow requirements, the funding level and the Trustee’s stated objectives. In addition, in order to avoid an undue concentration of risk, assets are diversified within and across asset classes.

In determining the overall investment strategy for the plans, the Trustee undertakes regular asset and liability modeling (“ALM”) with the assistance of their U.K. actuary. The ALM looks at a number of different investment scenarios and projects both a range and a best estimate of likely return from each one. Based on these analyses, and following consultation with us, the Trustee determines the benchmark allocation for the plans’ assets.

The market value of the plan's assets as of March 31, 2017 and 2016 was allocated between asset classes as follows. Details of target allocation percentages under the Trustee’s investment strategies as of the same dates are also included.



	Target Allocation as of March 31,				Actual Allocation as of March 31,
Asset Category	2017		2016		2017		2016
Equity securities	64.8	%	58.3	%	51.1	%	60.7	%
Debt securities	34.8	%	31.1	%	33.4	%	35.9	%
Property	—	%	—	%	—	%	0.1	%
Other assets	0.4	%	10.6	%	15.5	%	3.3	%
Total	100.0	%	100.0	%	100.0	%	100.0	%

The following table summarizes, by level within the fair value hierarchy, the plan assets we had as of March 31, 2017, which are valued at fair value (in thousands):



	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of March 31, 2017
Cash and cash equivalents	$	70,650	$	—	$	—	$	70,650
Equity investments - U.K.	—		47,392		—		47,392
Equity investments - Non-U.K.	—		185,567		—		185,567
Government debt securities	—		80,654		—		80,654
Corporate debt securities	—		71,276		—		71,276
Total investments	$	70,650	$	384,889	$	—	$	455,539

The following table summarizes, by level within the fair value hierarchy, the plan assets we had as of March 31, 2016, which are valued at fair value (in thousands):



	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of March 31, 2016
Cash and cash equivalents	$	14,229	$	—	$	—	$	14,229
Equity investments - U.K.	—		61,085		—		61,085
Equity investments - Non-U.K.	—		117,140		—		117,140
Diversified growth (absolute return) funds	—		98,024		—		98,024
Government debt securities	—		72,728		—		72,728
Corporate debt securities	—		89,256		—		89,256
Insurance policies	—		—		2,484		2,484
Total investments	$	14,229	$	438,233	$	2,484	$	454,946

The investments’ fair value measurement level within the fair value hierarchy is classified in its entirety based on the lowest level of input that is significant to the measurement. The fair value of assets using Level 2 inputs is determined based on the fair value of the underlying investment using quoted prices in active markets or other significant inputs that are deemed observable. Our Norway pension plan is vested in an insurance policy which is designated as Level 3 within the valuation hierarchy and the fair value is based on the estimated value provided by the insurer.

Estimated future benefit payments over each of the next five fiscal years from March 31, 2017 and in aggregate for the following five fiscal years after fiscal year 2022, including life assurance premiums, are as follows (in thousands):



Projected Benefit Payments by the Plans for Fiscal Years Ending March 31,	Payments
2018	$	19,882
2019	20,382
2020	20,883
2021	21,508
2022	22,008
Aggregate 2023 - 2027	117,417

We expect to fund these payments with our cash contributions to the plans, plan assets and earnings on plan assets. The current estimates of our cash contributions for our pension plans required for fiscal year 2018 are expected to be $15.8 million.

Incentive Compensation

Incentive and Stock Option Plans — Stock–based awards are currently made under the Bristow Group Inc. 2007 Long-Term Incentive Plan (the “2007 Plan”). As of March 31, 2017, a maximum of 10,646,729 shares of Common Stock are reserved, including 4,360,908 shares available for incentive awards under the 2007 Plan. Awards granted under the 2007 Plan may be in the form of stock options, stock appreciation rights, shares of restricted stock, other stock-based awards (payable in cash or our Common Stock) or performance awards, or any combination thereof, and may be made to outside directors, employees or consultants.

In addition, we have the following incentive and stock plans which have awards outstanding as of March 31, 2017, but under which we no longer make grants:


•	The 2004 Stock Incentive Plan (the “2004 Plan”), which provided for awards to officers and key employees in the form of stock options, stock appreciation rights, restricted stock, other stock-based awards or any combination thereof. Options become exercisable at such time or times as determined at the date of grant and expire no more than 10 years after the date of grant.

•

The 2003 Non-qualified Stock Option Plan for Non-employee Directors (the “2003 Director Plan”), which provided for a maximum of 250,000 shares of our Common Stock to be issued pursuant to such plan. As of the date of each annual meeting, each non-employee director who met certain attendance criteria was automatically granted an option to purchase 5,000 shares of our Common Stock. The exercise price of the options granted was equal to the fair market value of our Common Stock on the date of grant, and the options were exercisable not earlier than six months after the date of grant and expire no more than ten years after the date of grant.

In June 2016, June 2015 and June 2014, the Compensation Committee of our board of directors authorized the grant of stock options, time vested restricted stock and long-term performance cash awards to participating employees. Each of the stock options has a ten-year term and has an exercise price equal to the fair market value (as defined in the 2007 Plan) of our Common Stock on the grant date. The options will vest in annual installments of one-third each, beginning on the first anniversary of the grant date. Restricted stock grants vest at the end of three years. Performance cash awards allow the recipient to receive from 0 to 200% of the target amount at the end of three years depending on how our total shareholder return ranks among a peer group over the performance period. The value of the performance cash awards is calculated on a quarterly basis by comparing the performance of our Common Stock, including any dividends paid since the award date, against the peer group and has a maximum potential payout of $11.4 million, $10.7 million and $11.3 million for the June 2016, June 2015 and June 2014 awards, respectively. The total value of the awards is recognized as compensation expense over a three-year vesting period with the recognition amount being adjusted quarterly. Compensation expense related to the performance cash awards during fiscal years 2017, 2016 and 2015 was $7.0 million, $1.4 million and $14.1 million, respectively. Performance cash compensation expense has been allocated to our various regions.

Total share-based compensation expense, which includes stock options, restricted stock and restricted stock units, was $12.4 million, $21.2 million and $16.4 million for fiscal years 2017, 2016 and 2015, respectively. Stock-based compensation expense is included in general and administrative expense in the consolidated statements of operations and has been allocated to our various regions. As of March 31, 2017 and 2016, there were no non-vested restricted stock units.

On May 23, 2016, our board of directors approved an amendment and restatement of the 2007 Plan, which was approved by our stockholders on August 3, 2016, that effected each of the following changes: (i) reserved an additional 5,250,000 “shares” (or 2,625,000 full value shares) that, when combined with “shares” remaining available for issuance under the 2007 plan resulted in a total of approximately 6,400,000 “shares” (or approximately 3,200,000 full value shares) available for issuance under the amended and restated 2007 plan, with each option and stock appreciation right granted under the amended and restated 2007 plan counting as one “shares” against such total and with each incentive award that may be settled in common stock counting as two “shares” (or one full value share) against such total; (ii) increased the maximum share-based employee award under the amended and restated 2007 plan from 500,000 full value shares to 1,000,000 full value shares; (iii) set the maximum aggregate compensation and incentive awards that may be provided by the Company in any calendar year to any non-employee member of the board of directors at $1,125,000; and (iv) made other administrative and updating changes.

A summary of our stock option activity for fiscal year 2017 is presented below:



	Weighted Average Exercise Prices		Number of Shares		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
						(in thousands)
Outstanding at March 31, 2016	$	57.74	2,041,442
Granted	16.21		1,024,168
Expired or forfeited	57.79		(222,002	)
Outstanding at March 31, 2017	42.78		2,843,608		6.66	$	—
Exercisable at March 31, 2017	55.95		1,431,992		4.40	$	—

Stock options granted to employees under the 2004 and 2007 Plans vest ratably over three years on each anniversary from the date of grant and expire 10 years from the date of grant. Stock options granted to non-employee directors under the 2003 Director Plans vest after six months.

We use a Black-Scholes option pricing model to estimate the fair value of share-based awards. The Black-Scholes option pricing model incorporates various assumptions, including the risk-free interest rate, volatility, dividend yield and the expected term of the options.

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for a period equal to the expected term of the option. Expected volatilities are based on the historical volatility of shares of our Common Stock, which has not been adjusted for any expectation of future volatility given uncertainty related to the future performance of our Common Stock at this time. We also use historical data to estimate the expected term of the options within the option pricing model and groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of the options represents the period of time that the options granted are expected to be outstanding. Additionally, we estimate pre-vesting option forfeitures at the time of grant and periodically revise those estimates in subsequent periods if actual pre-vesting forfeitures differ from those estimates. We record stock-based compensation expense only for those awards expected to vest using an estimated forfeiture rate based on our historical forfeiture data.

The following table shows the assumptions we used to compute the stock-based compensation expense for stock option grants issued during fiscal years 2017, 2016 and 2015.



	Fiscal Year Ended March 31,
	2017			2016			2015
Risk free interest rate	1.07		%	1.62		%	1.67		%
Expected life (years)	5			5			5
Volatility	46.8		%	28.1		%	30.1		%
Dividend yield	2.74		%	3.14		%	2.06		%
Weighted average grant-date fair value of options granted	$	2.16		$	10.71		$	17.17

Unrecognized stock-based compensation expense related to nonvested stock options was approximately $3.8 million as of March 31, 2017, relating to a total of 1,411,616 unvested stock options. We recognize compensation expense on a straight-line basis over the requisite service period for the entire award. We expect to recognize this stock-based compensation expense over a weighted average period of approximately 1.5 years. The total fair value of options vested during fiscal years 2017, 2016 and 2015 was approximately $7.8 million, $7.4 million and $8.9 million, respectively.

The total intrinsic value, determined as of the date of exercise, of options exercised during fiscal years 2017, 2016 and 2015 was zero, zero and $2.4 million, respectively. The total amount of cash we received from option exercises during fiscal years 2017, 2016 and 2015 was zero, zero and $5.2 million, respectively. The total tax benefit attributable to options exercised during fiscal years 2017, 2016 and 2015 was zero, zero and $0.6 million, respectively.

The excess tax benefits from stock-based compensation for fiscal years 2017, 2016 and 2015 of zero, zero and $1.6 million, respectively, are reported on our consolidated statements of cash flows in financing activities. This represents the reduction in the provision for income taxes otherwise payable during the period attributable to the actual gross tax benefits in excess of the expected tax benefits for options exercised in current and prior periods.

We have restricted stock awards that cliff vest on the third anniversary from the date of grant provided the grantee is still employed by the Company, subject to our retirement policy.

We record compensation expense for restricted stock awards based on an estimate of the service period related to the awards, which is tied to the future performance of our stock over certain time periods under the terms of the award agreements. The estimated service period is reassessed quarterly. Changes in this estimate may cause the timing of expense recognized in future periods to accelerate. Compensation expense related to awards of restricted stock and restricted stock units for fiscal years 2017, 2016 and 2015 was $8.0 million, $12.9 million and $10.1 million, respectively.

The following is a summary of non-vested restricted stock as of March 31, 2017 and 2016 and changes during fiscal year 2017:



	Units		Weighted Average Grant Date Fair Value per Unit
Non-vested as of March 31, 2016	440,856		$	65.24
Granted	642,753		10.21
Forfeited	(45,535	)	59.78
Vested	(298,581	)	42.39
Non-vested as of March 31, 2017	739,493		26.97

Unrecognized stock-based compensation expense related to non-vested restricted stock was approximately $7.1 million as of March 31, 2017, relating to a total of 739,493 unvested restricted stock. We expect to recognize this stock-based compensation expense over a weighted average period of approximately 1.6 years.

The Annual Incentive Compensation Plan provides for an annual award of cash bonuses to key employees based primarily on pre-established objective measures of performance. The bonuses related to this plan were $5.0 million and $19.9 million for fiscal years 2017 and 2015, respectively. There were no bonuses awarded related to this plan during fiscal year 2016.

Additionally, we have a non-qualified deferred compensation plan for our senior executives. Under the terms of the plan, participants can elect to defer a portion of their compensation for distribution at a later date. In addition, we have the discretion to make annual tax deferred contributions to the plan on the participants’ behalf. We contributed $0.6 million, $1.3 million and $1.5 million to this plan in each of fiscal years 2017, 2016 and 2015, respectively. The assets of the plan are held in a rabbi trust and are subject to our general creditors. As of March 31, 2017, the amount held in trust was $3.1 million.

Retirement of President and Chief Executive Officer — On February 3, 2014, we announced that William E. Chiles would resign as President and Chief Executive Officer of the Company effective upon the conclusion of the 2014 annual meeting of the stockholders of the Company that was held on July 31, 2014. On June 9, 2014, Jonathan E. Baliff began serving as President and on July 31, 2014 he assumed the additional role of Chief Executive Officer of the Company. Mr. Baliff also became a member of the Board of Directors of the Company effective July 31, 2014.

Mr. Chiles and the Company entered into a Retirement and Consulting Agreement, dated January 30, 2014 (the “Agreement”) to specify the terms of his continued employment with the Company. We recorded additional compensation expense, included in general and administrative expense, of $5.5 million during fiscal year 2015 related to the Agreement.

Separation Agreements — In March 2015 and May 2016, we offered voluntary separation programs (“VSPs”) to certain employees as part of our ongoing efforts to improve efficiencies and reduce costs. Additionally, beginning in March 2015, we initiated involuntary separation programs (“ISPs”) in certain regions. The expense related to the VSPs and ISPs for the fiscal years 2017, 2016 and 2015 is as follows (in thousands):



	Fiscal Year Ended March 31,
	2017		2016		2015

VSP:
Direct cost	$	1,663	$	7,664	$	—
General and administrative	23		886		—
Total	$	1,686	$	8,550	$	—

ISP:
Direct cost	$	5,938	$	5,162	$	233
General and administrative	9,238		8,788		692
Total	$	15,176	$	13,950	$	925

On April 18, 2016, Mr. Jeremy Akel departed the Company as Senior Vice President and Chief Operating Officer. Mr. Akel and the Company have entered into a Separation Agreement and Release in Full, dated June 7, 2016 to specify the terms of his departure from the Company, pursuant to which he will receive benefits generally consistent with the termination without cause terms set forth in the Bristow Group Inc. Management Severance Benefits Plan for U.S. Employees effective June 4, 2014 and the Amended and Restated Severance Benefits Agreement between Mr. Akel and the Company dated April 20, 2012. Additionally, on July 1, 2016, Ms. Hilary Ware departed the Company as Senior Vice President and Chief Administration Officer. Ms. Ware and the Company have entered into a Separation Agreement and Release in Full, dated July 14, 2016 to specify the terms of her departure from the Company, pursuant to which she will receive benefits generally consistent with the termination without cause terms set forth in the Bristow Group Inc. Management Severance Benefits Plan for U.S. Employees effective June 4, 2014 and the Amended and Restated Severance Benefits Agreement between Ms. Ware and the Company dated November 4, 2010. We recognized compensation expense related to the departure of Mr. Akel and Ms. Ware during fiscal year 2017 included in the table above.

During fiscal year 2015, we recognized $0.9 million in severance expense included in direct costs and general and administrative expense in our Americas region, primarily as a result of our planned closure of our Alaska operations. Also, during fiscal year 2015, we recognized approximately $5.5 million in compensation expense (including expenses recorded for the acceleration of unvested stock options and restricted stock), included in general and administrative expense, related to the separation between us and officers. These expenses are not included in the table above.