10. Employee Benefit Plans

Defined Benefit Pension Plan

The Company has a defined benefit pension plan that covers certain of its executive, professional, administrative and clerical employees, subject to certain specified service requirements. The plan is noncontributory and benefits are based on an employee’s years of service and “final average earnings,” as defined by the plan. The plan provides reduced benefits for early retirement and takes into account offsets for social security benefits. The Company also has an unfunded supplemental retirement plan (“Benefit Equalization Plan”) for certain employees whose benefits under the defined benefit pension plan were reduced because of compensation limitations under federal tax laws. Effective June 1, 2004, all benefit accruals under the Company’s pension plan and Benefit Equalization Plan were frozen; however, the current vested benefit was preserved. Pension disclosure as presented below includes aggregated amounts for both of the Company’s plans, except where otherwise indicated.

The Company historically has used the date of its fiscal year-end as its measurement date to determine the funded status of the plan.

The long-term investment goals of our plan are to manage the assets in accordance with the legal requirements of all applicable laws; produce investment returns which maximize return within reasonable and prudent levels of risks; and achieve a fully funded status with regard to current pension liabilities. Some risk must be assumed in order to achieve the investment goals. Investments with the ability to withstand short and intermediate term variability are considered and some interim fluctuations in market value and rates of return are tolerated in order to achieve the plan’s longer-term objectives.

The plan’s assets are managed by a third-party investment manager. The investment manager is limited to pursuing the investment strategies regarding asset mix and purchases and sales of securities within the parameters defined in the Investment Objectives & Policy Statement and investment management agreement. Investment performance and risk is measured and monitored on an ongoing basis through quarterly investment meetings.

A summary of net periodic benefit cost is as follows:



	Year Ended December 31,
(in thousands)	2015			2014			2013
Interest cost	$	4,055		$	4,144		$	3,710
Expected return on plan assets		(5,021)			(4,797)			(4,509)
Recognized net actuarial losses		1,869			4,385			6,330
Net periodic benefit cost	$	903		$	3,732		$	5,531
Actuarial assumptions used to determine net cost:
Discount rate		3.75	%		4.47	%		3.58	%
Expected return on assets		6.50	%		6.75	%		6.75	%
Rate of increase in compensation		n.a.			n.a.			n.a.

The target asset allocation for the Company’s pension plan by asset category for 2016 and the actual asset allocation as of December 31, 2015 and 2014 by asset category are as follows:



	Percentage of Plan Assets as of December 31,
	Target
	Allocation		Actual Allocation
Asset Category	2016		2015		2014
Cash	5	%	4	%	6	%
Equity securities:
Domestic	65		61		63
International	25		30		26
Fixed income securities	5		5		5
Total	100	%	100	%	100	%

As of December 31, 2015 and 2014, plan assets included approximately $44.1 million and $45.5 million, respectively, of investments in hedge funds which do not have readily determinable fair values. The underlying holdings of the funds are comprised of a combination of assets for which the estimate of fair value is determined using information provided by fund managers.

The Company expects to contribute approximately $1.8 million to its defined benefit pension plan in 2016. Future benefit payments under the plans are estimated as follows:



Year ended December 31,	(in thousands)
2016	$	6,399
2017		6,439
2018		6,601
2019		6,687
2020		6,720
Thereafter		33,510
	$	66,356

The following tables provide a reconciliation of the changes in the fair value of plan assets and plan benefit obligations during 2015 and 2014, and a summary of the funded status as of December 31, 2015 and 2014



	Year Ended December 31,
(in thousands)	2015		2014
Change in Fair Value of Plan Assets
Balance at beginning of year	$	75,956	$	72,617
Actual return on plan assets		(984)		3,711
Company contribution		2,900		5,213
Benefit payments		(5,576)		(5,585)
Balance at end of year	$	72,296	$	75,956



	Year Ended December 31,
(in thousands)	2015		2014
Change in Benefit Obligations
Balance at beginning of year	$	110,923	$	95,178
Interest cost		4,055		4,144
Assumption change (gain) loss		(3,838)		17,054
Actuarial loss		378		132
Benefit payments		(5,576)		(5,585)
Balance at end of year	$	105,942	$	110,923



	As of December 31,
(in thousands)	2015		2014
Funded status	$	(33,646)	$	(34,967)
Amounts recognized in Consolidated Balance Sheets consist of:
Current liabilities	$	(218)	$	(218)
Long-term liabilities		(33,428)		(34,749)
Net amount recognized in Consolidated Balance Sheets	$	(33,646)	$	(34,967)



	Year Ended December 31,
(in thousands)	2015		2014
Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive loss:
Net actuarial loss	$	(56,824)	$	(56,147)
Accumulated other comprehensive loss		(56,824)		(56,147)
Cumulative Company contributions in excess of net periodic benefit cost		23,178		21,180
Net amount recognized in Consolidated Balance Sheets	$	(33,646)	$	(34,967)

The net actuarial gain arising during the period, netted against the amortization of the previously existing actuarial loss resulted in a net other comprehensive loss of $0.7 million in 2015 and $13.9 million in 2014, and a net comprehensive gain of $18.7 million in 2013.

The estimated amount of the net accumulated loss that will be amortized from accumulated other comprehensive loss into net period benefit cost in 2016 is $1.7 million.



	Year Ended December 31,
	2015		2014
Actuarial assumptions used to determine benefit obligation:
Discount rate	4.10	%	3.75	%
Rate of increase in compensation	n.a.		n.a.
Measurement date	December 31		December 31

The expected long-term rate of return on assets assumption was 6.5% for 2015 and 6.75% for 2014. The expected long-term rate of return on assets assumption was developed considering forward looking capital market assumptions and historical return expectations for each asset class assuming the Company’s target asset allocation and full availability of invested assets.

Plan assets are measured at fair value. The following provides a description of the valuation techniques employed for each major asset class: Corporate equities are valued at the closing price reported on the active market on which the individual securities are purchased.

Registered investment companies are public investment vehicles valued using the Net Asset Value (NAV) of shares held by the plan at year-end. The NAV is a quoted price in an active market and classified within Level 1 of the valuation hierarchy. Closely held funds held by the plan, which are only available through private offerings, do not have readily determinable fair values. Estimates of fair value of these funds are determined using the information provided by the fund managers and it is generally based on the net asset value per share or its equivalent. Corporate bonds are valued based on market values quoted by dealers who are market makers in these securities, and by independent pricing services which use multiple valuation techniques that incorporate available market information and proprietary valuation models using market characteristics, such as benchmark yield curve, coupon rates, credit spreads, estimated default rates and other features.

The following table sets forth the plan assets at fair value in accordance with the fair value hierarchy described in Note 3:



	As of December 31, 2015								As of December 31, 2014
	Fair Value Hierarchy								Fair Value Hierarchy
(in thousands)	Level 1		Level 2		Level 3		Total Value		Level 1		Level 2		Level 3		Total Value

Cash and cash equivalents	$	2,654	$	—	$	—	$	2,654	$	4,693	$	—	$	—	$	4,693
Fixed Income		4,029		—		—		4,029		3,824		—		—		3,824
Equities		6,566		—		—		6,566		7,676		—		—		7,676
Mutual Funds		6,994		—		—		6,994		6,550		—		—		6,550
Equity Partnerships		—		7,920		—		7,920		—		7,723		—		7,723
Hedge Fund Investments:
Cash		324		—		—		324		1,010		—		—		1,010
Long-Short Equity Fund		—		12,640		16,370		29,010		—		15,878		12,755		28,633
Event-Driven Fund		—		3,618		6,984		10,602		—		3,471		9,562		13,033
Distressed Credit		—		—		935		935		—		—		1,320		1,320
Multi-Strategy Fund		—		—		1,262		1,262		—		—		1,494		1,494
Private Credit		—		—		2,000		2,000		—		—		—		—
Total	$	20,567	$	24,178	$	27,551	$	72,296	$	23,753	$	27,072	$	25,131	$	75,956

Fund strategies seek to capitalize on inefficiencies identified across different asset classes or markets. Hedge fund strategy types include long-short, event-driven, multi-strategy and distressed credit. Generally, the redemption of the Company’s hedge fund investments is subject to certain notice-period requirements and, as such, the Company has classified these assets as Level 3 assets.

The table below sets forth a summary of changes in the fair value of the Level 3 assets:



	Changes in Fair Value of Level 3 Assets
	Long-Short		Event-Driven		Distressed		Multi-Strategy
(in thousands)	Equity Fund		Fund		Credit		Fund		Private Credit		Total
Balance, December 31, 2013	$	10,863	$	8,863	$	2,199	$	1,799	$	—	$	23,724
Realized gains		—		—		13		3		—		16
Unrealized gains		843		505		57		59		—		1,464
Purchases		1,049		16		5		6		—		1,076
Sales		—		(2,512)		(954)		(373)		—		(3,839)
Reclassified to Level 3 (a)		—		2,690		—		—		—		2,690
Balance, December 31, 2014	$	12,755	$	9,562	$	1,320	$	1,494	$	—	$	25,131
Realized gains		(50)		(16)		(7)		(9)		—		(82)
Unrealized gains		581		(585)		(28)		(38)		—		(70)
Purchases		5,631		—		—		225		2,642		8,498
Sales		(2,547)		(1,977)		(350)		(410)		(642)		(5,926)
Balance, December 31, 2015	$	16,370	$	6,984	$	935	$	1,262	$	2,000	$	27,551

(a)

The transfer of $2.7 million from Level 2 to Level 3 was comprised of certain hedge funds that were moved due to liquidity.

The Company’s plans have benefit obligations in excess of the fair value of the plans’ assets. The following table provides information relating to each of the plans’ benefit obligations compared to the fair value of its assets:



	As of December 31, 2015						As of December 31, 2014
			Benefit						Benefit
	Pension		Equalization				Pension		Equalization
(in thousands)	Plan		Plan		Total		Plan		Plan		Total
Projected benefit obligation	$	102,495	$	3,447	$	105,942	$	107,570	$	3,353	$	110,923
Accumulated benefit obligation		102,495		3,447		105,942		107,570		3,353		110,923
Fair value of plan assets		72,296		—		72,296		75,956		—		75,956
Projected benefit obligation greater than fair value of plan assets	$	30,199	$	3,447	$	33,646	$	31,614	$	3,353	$	34,967
Accumulated benefit obligation greater than fair value of plan assets	$	30,199	$	3,447	$	33,646	$	31,614	$	3,353	$	34,967

Section 401(k) Plans

The Company has several contributory Section 401(k) plans which cover its executive, professional, administrative and clerical employees, subject to certain specified service requirements. The 401(k) expense provision was $4.0 million in 2015, $3.6 million in 2014 and $3.8 million in 2013. The Company’s contribution is based on a non-discretionary match of employees’ contributions, as defined by each plan.

Cash-Based Compensation Plans

The Company has multiple cash-based compensation plans and a share-based incentive compensation plan for key employees, which are generally based on the Company’s achievement of a certain level of profit. For information on the Company’s share-based incentive compensation plan, see Note 8.

Multiemployer Plans

In addition to the Company’s defined benefit pension and contribution plans discussed above, the Company participates in multiemployer pension plans for its union construction employees. Contributions are based on the hours worked by employees covered under various collective bargaining agreements. Under the Employee Retirement Income Security Act, a contributor to a multiemployer plan is only liable for its proportionate share of a plan’s unfunded vested liability upon termination, or withdrawal from, a plan. The Company currently has no intention of withdrawing from any of the multiemployer pension plans in which it participates and, therefore, has not recognized a liability for its proportionate share of any unfunded vested liabilities associated with these plans.

The following tables summarize key information for the plans that the Company had significant involvement with during the years ended December 31, 2015, 2014 and 2013.

Expiration

FIP/RP

Date of

Pension Protections Act

Status

Company Contributions

Collective

EIN/Pension

Zone Status

Pending Or

(amounts in millions)

Surcharge

Bargaining

Pension Fund

Plan Number

2015

2014

Implemented

2015

2014

2013

Imposed

Agreement

Pension, Hospitalization and Benefit Plan of the Electrical Industry - Pension Trust Account

13-6123601/001

Green

13.6

(a)

11.8

(a)

13.4

(a)

5/31/2016

Steamfitters Industry Pension Fund

13-6149680/001

Green

Yellow

6.2

(a)

5.1

(a)

4.3

(a)

6/30/2017

Excavators Union Local 731 Pension Fund

13-1809825/002

Green

7.1

5.3

3.2

6/30/2016

Local 147 Construction Workers Retirement Fund

13-6528181

Green

5.6

(a)

1.3

0.2

6/30/2018

Iron Workers Locals 40,361 & 417 Pension Fund

51-6102576/001

Yellow

Implemented

5.2

(a)

0.7

0.5

6/30/2020

New York City District Council of Carpenters Pension Plan

51-0174276/001

Green (b)

Green

3.1

2.6

1.6

6/30/2016

(a)

These amounts exceeded 5% of the respective total plan contributions.

(b)

Pension Protection Act zone status is as of July 1, 2015 and 2014, respectively.

In addition to the individually significant plans described above, the Company also contributed approximately $40.6 million in 2015, $32.7 million in 2014 and $31.4 million in 2013 to other multiemployer pension plans.