

NOTE 9:	EMPLOYEE BENEFIT PLANS

401(k) Plans. The Company has established 401(k) plans covering all employees after certain eligibility requirements are met. Amounts charged to operations for employer contributions related to the plans totaled $1,299, $1,097, and $1,032 for 2017, 2016, and 2015, respectively.

Pension Benefits. The Company and its subsidiaries provided defined retirement benefits to certain employees covered under collective bargaining agreements. The benefits under these pension plans were based upon years of qualified credited service; however, benefit accruals under the defined benefit plans were frozen in 2009. In April 2015, the Company received approval from the Pension Benefit Guaranty Corporation to terminate the pension plans for employees covered under collective bargaining agreements. The funding by the Company to terminate the plans was $741 and was recognized when the pension plan settlement was fully executed during the quarter ended June 30, 2015.

Post-Employment Benefits. The Company sponsors life insurance coverage as well as medical benefits, including prescription drug coverage, to certain retired employees and their spouses. In 2014, the Company made a change to the plan to terminate post-employment health care and life insurance benefits for all union employees except for a specified grandfathered group. At December 31, 2017 the plan covered 177 participants, both active and retired. The post-employment health care benefit is contributory for spouses under certain circumstances. Otherwise, participant contribution premiums are not required. The health care plan contains fixed deductibles, co-pays, coinsurance, and out-of-pocket limitations. The life insurance segment of the plan is noncontributory and is available to retirees only.

The Company funds the post-employment benefit on a pay-as-you-go basis, and there are no assets that have been segregated and restricted to provide for post-employment benefits. Benefit eligibility for the current remaining grandfathered active group (25 employees) is age 62 and five years of service. The Company pays claims and premiums as they are submitted. The Company provides varied levels of benefits to participants depending upon the date of retirement and the location in which the employee worked. An older group of grandfathered retirees receives lifetime health care coverage. All other retirees receive coverage to age 65 through continuation of the Company group medical plan and a lump sum advance premium to the MediGap carrier of the retiree’s choice. Life insurance is available over the lifetime of the retiree in all cases.

The Company bases its post-employment plan valuation on The Society of Actuaries RPH-2014 Adjusted to 2006 Total Dataset Headcount-weighted Mortality with Scale MP-2017 Full Generational Improvement ("MP-2017 scale"). Based on the 2017 update, the MP-2017 scale reflects a lower level of improvement resulting in shorter assumed life spans. The impact of this change in assumed mortality on post-employment benefits liability was included in the Company's post-employment plan valuation for 2017, and using previous year scales, for 2016, and 2015.

The Company’s measurement date is December 31. The Company expects to contribute approximately $486, net of $15 of Medicare Part D subsidy receipts, to the plan in 2018.

The status of the Company’s plans at December 31, 2017, 2016, and 2015:



	Pension Benefit Plans^(a)			Post-Employment Benefit Plan
	December 31,			December 31,
	2015			2017			2016			2015
Change in benefit obligation:
Beginning of year	$	2,016		$	4,106		$	4,681		$	4,926
Service cost	—			25			36			51
Interest cost	36			122			142			141
Actuarial loss (gain)	(9		)	(261		)	(297		)	45
Benefits paid	(2,043		)	(388		)	(456		)	(482		)
Benefit obligation at end of year	$	—		$	3,604		$	4,106		$	4,681

^(a) The Company's pension benefit plans were terminated and paid as of June 2015.

Assumptions used to determine accumulated benefit obligations as of year end:



	Post-Employment Benefit Plan
	Year Ended December 31,
	2017	2016
Discount rate	2.96%	3.15%
Measurement date	December 31, 2017	December 31, 2016

Assumptions used to determine net benefit cost (benefit) for 2017, 2016, and 2015:



	Post-Employment Benefit Plan
	Year Ended December 31,
	2017		2016		2015
Expected return on Assets	—		—		—
Discount rate	3.15	%	3.20	%	2.99	%
Average compensation increase	N/A		N/A		N/A

The discount rate refers to the interest rate used to discount the estimated future benefit payments to their present value, referred to as the benefit obligation. The Company determines the discount rate using a yield curve of high quality fixed income investments whose cash flows match the timing and amount of the Company’s expected benefit payments.

Components of net benefit cost (benefit):



	Pension Benefit Plans^(a)			Post-Employment Benefit Plan
	Year Ended December 31,			Year Ended December 31,
	2015			2017			2016			2015
Service cost	$	—		$	25		$	36		$	51
Interest cost	36			122			142			141
Expected return on assets	(45		)	—			—			—
Amortization of prior service cost	—			(339		)	(338		)	(338		)
Recognized net actuarial loss	25			184			269			278
Settlement losses	414			—			—			—
Net benefit cost (benefit)	$	430		$	(8	)	$	109		$	132

^(a) The Company's pension benefit plans were terminated and paid as of June 2015.

Changes in plan assets and benefit obligations recognized in other comprehensive income:



	Pension Benefit Plans^(a)			Post-Employment Benefit Plan
	Year Ended December 31,			Year Ended December 31,
	2015			2017			2016			2015
Net actuarial (loss) gain	$	(35	)	$	261		$	293		$	(35	)
Settlement losses	414			—			—			—
Recognized net actuarial loss	25			184			269			278
Amortization of prior service cost	—			(339		)	(338		)	(338		)
Total other comprehensive income (loss), pre-tax	404			106			224			(95		)
Income tax expense (benefit)	160			40			90			(41		)
Total other comprehensive income (loss), net of tax	$	244		$	66		$	134		$	(54	)

^(a) The Company's pension benefit plans were terminated and paid as of June 2015.

Benefit obligation recognized in the Consolidated Balance Sheets:



	Post-Employment Benefit Plan
	As of December 31,
Benefit obligation	2017			2016
Current	$	(471	)	$	(502	)
Non-Current	(3,133		)	(3,604		)
Net amount recognized	$	(3,604	)	$	(4,106	)

The estimated amount that will be recognized from accumulated other comprehensive income (loss) into net periodic benefit cost during 2018:



	Post-Employment Benefit Plan
Actuarial net loss	$	(92	)
Net prior service credits	37
Net amount recognized	$	(55	)

The assumed average annual rate of increase in the per capita cost of covered benefits (health care cost trend rate):



	Post-Employment Benefit Plan
	Year Ended December 31,
	2017						2016
	Group Plan		Lifetime Prescription Cost		Medicare Supplement		Group Plan		Lifetime Prescription Cost		Medicare Supplement
Health care cost trend rate	7.00	%	9.00	%	4.50	%	7.50	%	9.00	%	5.00	%
Ultimate trend rate	5.00	%	5.00	%	4.50	%	5.00	%	5.00	%	5.00	%
Year rate reaches ultimate trend rate	2025		2027		2018		2023		2024		2017

A one percentage point increase (decrease) in the assumed health care cost trend rate would have increased (decreased) the accumulated benefit obligation by $98 ($93) at December 31, 2017 and the service and interest cost would have increased (decreased) by $5 ($4) for the year ended December 31, 2017.

As of December 31, 2017, the following expected benefit payments (net of Medicare Part D subsidiary for Post-Employment Benefit Plan Payments) and the related expected subsidy receipts that reflect expected future service, as appropriate, are expected to be paid to plan participants:



	Post-Employment Benefit Plan
	Expected Benefit Payments		Expected Subsidy Receipts
2018	$	486	$	15
2019	491		13
2020	469		11
2021	443		11
2022	418		9
2023-2027	1,221		30
Total	$	3,528	$	89

Share-Based Compensation Plans. As of December 31, 2017, the Company was authorized to issue 40,000,000 shares of Common Stock and had a treasury share balance of 1,318,545 at December 31, 2017.

The Company currently has two active share-based compensation plans: the Employee Equity Incentive Plan of 2014 (the "2014 Plan") and the Non-Employee Director Equity Incentive Plan (the "Directors' Plan"). The plans were approved by shareholders at the Company's annual meeting in May 2014. The 2014 Plan replaced the 2004 Plan. Detail of activities in both plans follows below.

The Company’s share-based compensation plans provide for the awarding of stock options, stock appreciation rights, and shares of restricted stock and RSUs for senior executives and salaried employees, as well as for outside directors. Compensation expense related to restricted stock awards is based on the market price of the stock on the date the Board of Directors communicates the approved award and is amortized over the vesting period of the restricted stock award. The Consolidated Statements of Income for 2017, 2016, and 2015 reflect total share-based compensation costs and director fees for awarded grants of $2,245, $2,402, $1,414, respectively, related to these plans.

The Company elected to early adopt the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting in the quarter ended September 30, 2016. The provision of this ASU related to share-based compensation award forfeitures had no impact on the Company’s beginning of year retained earnings for 2016 and no impact for the year of adoption since it elected to continue to estimate forfeitures rather than account for them as they occur.

For long-term incentive awards to be granted in the form of RSUs in 2018 based on 2017 results, the Human Resources and Compensation Committee ("HRCC") determined that the grants would have performance conditions that would be based on the same performance metrics as the Short-Term Incentive Plan (the "STI Plan"). The performance metrics are operating income, earnings before interest, taxes, depreciation, and amortization ("EBITDA"), and EPS. Because management determined at the beginning of 2017 that the performance metrics would most likely be met, amortization of the estimated dollar pool of RSUs to be awarded based on 2017 results was started in the first quarter over an estimated 48 month period, including 12 months to the grant date and an additional 36 months to the vesting date. The Consolidated Statements of Income for 2017, 2016, and 2015 reflects share-based compensation costs for grants to be awarded of $491, $317, and $482, respectively.

At the Company's annual meeting in May 2014, shareholders approved a new Employee Stock Purchase Plan (the "ESPP Plan") with 300,000 shares registered for employee purchase. The ESPP Plan is not active at this time. The Company's former employee stock purchase plan continued in use until its termination during 2017.

2014 Plan

The 2014 Plan, with 1,500,000 shares registered for future grants, provides that vesting occurs pursuant to the time period specified in the particular award agreement approved for that issuance of RSUs, which is to be not less than three years unless vesting is accelerated due to the occurrence of certain events. As of December 31, 2017, 280,075 RSUs had been granted of the 1,500,000 shares approved for under the 2014 Plan.

Directors' Plan

The Director's Plan, with 300,000 shares registered for future grants, provides that vesting occurs pursuant to the time period specified in the particular award agreement approved for that issuance of equity. As of December 31, 2017, 64,035 shares were granted of the 300,000 shares approved for grants under the Directors' Plan and all 64,035 shares were vested.

2004 Plan

Under the 2004 Plan, as amended, the Company granted incentives (including stock options and restricted stock awards) for up to 2,680,000 shares of the Company’s Common Stock to salaried, full time employees, including executive officers. The term of each award generally was determined by the committee of the Board of Directors charged with administering the 2004 Plan. Under the terms of the 2004 Plan, any options granted were non-qualified stock options, exercisable within ten years and had an exercise price of not less than the fair value of the Company’s Common Stock on the date of the grant. As of December 31, 2017, no stock options and no unvested restricted stock shares (net of forfeitures) remained outstanding under the 2004 Plan. No future grants can be made under the 2004 Plan.

In connection with the Reorganization, the 2004 Plan was amended to provide for grants in the form of RSUs. The awards entitle participants to receive shares of stock following the end of a five year vesting period. Full or pro-rata accelerated vesting generally might occur upon a "change in the ownership" of the Company or the subsidiary for which a participant performed services, a "change in effective control" of the Company or a "change in the ownership of a substantial portion of the assets" of the Company (in each case, generally as defined in the Treasury regulations under Section 409A of the Internal Revenue Code), or if employment of a participant is terminated as a result of death, disability, retirement or termination without cause. Participants have no voting of dividend rights under the awards that were granted; however, the awards provide for payment of dividend equivalents when dividends are paid to stockholders. As of December 31, 2017, 145,000 unvested RSUs remained under the 2004 Plan. As of December 31, 2017, no RSU awards were available for future grants under the 2004 Plan.

On August 8, 2013, the Board of Directors approved modification of certain provisions related to vesting for all restricted stock and restricted unit awards that were awarded under the 2004 Plan. The modifications provided that a pro-rata portion of each restricted stock and RSU award granted under the 2004 Plan would, in addition to vesting in accordance with the terms previously provided therein, vest with respect to a pro-rata portion of such grant, upon the occurrence of the Employment Agreement Change in Control. The modification applies to all employee restricted stock awards and RSU holders, not just executive officers. The modification also provided that all restricted stock awards and RSUs previously awarded to employees shall vest, to the maximum extent provided under the terms of the prior restricted stock award and RSU award guidelines, upon the termination of employment by the Company without cause (as determined in the modification).

Restricted Stock. Summary of unvested restricted stock under the Company’s share-based compensation plans for 2016 and 2015. There was no unvested restricted stock under the Company's share-based compensation plans in 2017.



	Year Ended December 31,
	2016				2015
	Shares		Weighted Average Grant-Date Fair Value		Shares		Weighted Average Grant-Date Fair Value
Unvested balance at beginning of year	128,500		$	5.85	278,900		$	6.28
Granted	—		—		13,585		17.02
Forfeited	—		—		(30,800	)	6.27
Vested	(128,500	)	5.85		(133,185	)	7.80
Unvested balance at end of year	—		$	—	128,500		$	5.85

During 2016 and 2015, the total fair value of restricted stock awards vested was $752, and $1,038, respectively. As of December 31, 2016, there was no unrecognized compensation costs related to restricted stock awards.

RSUs. Summary of unvested RSUs under the Company’s share-based compensation plans for 2017, 2016, and 2015:



	Year Ended December 31,
	2017				2016				2015
	Units		Weighted Average Grant-Date Fair Value		Units		Weighted Average Grant-Date Fair Value		Units		Weighted Average Grant-Date Fair Value
Unvested balance at beginning of year	527,486		$	10.17	437,946		$	7.09	413,288		$	5.09
Granted	47,514		42.93		100,892		23.15		89,702		16.63
Forfeited	(3,508	)	25.74		(11,352	)	11.55		(54,506	)	6.15
Vested	(203,000	)	4.82		—		—		(10,538	)	14.88
Unvested balance at end of year	368,492		$	17.20	527,486		$	10.17	437,946		$	7.09

During 2017, 2016, and 2015, the total fair value of RSU awards vested was $979, $0, and $157, respectively. As of December 31, 2017 there was $3,036 of total estimated unrecognized compensation costs (net of estimated forfeitures) related to granted RSU awards. These costs are expected to be recognized over a weighted average period of approximately 1.5 years.

Upon their vesting, we purchased restricted stock and RSUs from employees to cover associated withholding taxes. Total treasury stock purchases added 74,132 shares or $4,663 in 2017; 40,870 shares or $1,518 in 2016; and 60,135 shares or $920 in 2015.

Annual Cash Incentive Plan. Effective January 1, 2014, the Company adopted a new STI Plan to replace its 2012 Cash Incentive Program. The STI Plan is designed to motivate and retain the Company's officers and employees and tie short-term incentive compensation to achievement of certain profitability goals by the Company. Pursuant to the STI Plan, short-term incentive compensation is dependent on the achievement of certain performance metrics by the Company, established by the Board of Directors. Each performance metric is calculated in accordance with the rules approved by the HRCC, which may adjust the results to eliminate unusual items. For 2017, the performance metrics were operating income, EBITDA, and EPS. For 2016, the performance metrics were operating income, EBITDA, and EPS. For 2015, the performance metrics were operating income, barreled distillate put away, and ICP equity income. Operating income for the performance metric was defined as reported GAAP operating income adjusted for certain discretionary items as determined by the Company's management ("adjusted operating income"). The HRCC determines the officers and employees eligible to participate under the STI Plan for the plan year as well as the target annual incentive compensation for each participant for each plan year.

Amounts expensed under the STI Plan totaled $5,150, $3,394, and $4,964 for 2017, 2016, and 2015, respectively.