

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 $1,488, $1,299, and $1,097 for 2018, 2017, and 2016, respectively.

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, 2018 the plan covered 181 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-2018 Full Generational Improvement ("MP-2018 scale"). Based on the 2018 update, the MP-2018 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 2018, and using previous year scales, for 2017, and 2016.

The Company’s measurement date is December 31. The Company expects to contribute approximately $484, net $17 for Medicare Part D subsidy receipts, resulting in a net contribution of $467 to the plan in 2019.

The status of the Company’s plan at December 31, 2018, 2017, and 2016:



	Post-Employment Benefit Plan
	December 31,
	2018			2017			2016
Change in benefit obligation:
Beginning of year	$	3,604		$	4,106		$	4,681
Service cost	22			25			36
Interest cost	100			122			142
Actuarial gain	(196		)	(261		)	(297		)
Benefits paid	(421		)	(388		)	(456		)
Other	(47		)	—			—
Benefit obligation at end of year	$	3,062		$	3,604		$	4,106

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



	Post-Employment Benefit Plan
	Year Ended December 31,
	2018	2017
Discount rate	3.67%	2.96%
Measurement date	December 31, 2018	December 31, 2017

Assumptions used to determine net benefit cost (credit) for 2018, 2017, and 2016:



	Post-Employment Benefit Plan
	Year Ended December 31,
	2018		2017		2016
Discount rate	2.96	%	3.15	%	3.20	%
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 (credit):



	Post-Employment Benefit Plan
	Year Ended December 31,
	2018			2017			2016
Service cost	$	22		$	25		$	36
Interest cost	100			122			142
Amortization of unrecognized prior service cost	(37		)	(339		)	(338		)
Amortization of unrecognized net actuarial loss	92			184			269
Net benefit cost (credit)	$	177		$	(8	)	$	109

Changes in plan assets and benefit obligations recognized in accumulated other comprehensive loss in the Consolidated Balance Sheets:



	Post-Employment Benefit Plan
	Year Ended December 31,
	2018			2017			2016
Net actuarial gain	$	196		$	261		$	293
Amortization of unrecognized net actuarial loss	92			184			269
Amortization of unrecognized prior service cost	(37		)	(339		)	(338		)
Stranded tax effects from the Tax Act and Other	(78		)	—			—
Other	47			—			—
Total other comprehensive income, pre-tax	220			106			224
Income tax expense	73			40			90
Total other comprehensive income, net of tax	$	147		$	66		$	134

Benefit obligation recognized in the Consolidated Balance Sheets:



	Post-Employment Benefit Plan
	As of December 31,
Benefit obligation	2018			2017
Current	$	(467	)	$	(471	)
Non-Current	(2,595		)	(3,133		)
Net amount recognized	$	(3,062	)	$	(3,604	)

The estimated amount that will be recognized from accumulated other comprehensive income (loss) into net periodic benefit cost during 2019:



	Post-Employment Benefit Plan
Actuarial net loss	$	(23	)
Net prior service credits	15
Net amount recognized	$	(8	)

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,
	2018						2017
	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	%	7.00	%	9.00	%	4.50	%
Ultimate trend rate	5.00	%	5.00	%	4.50	%	5.00	%	5.00	%	4.50	%
Year rate reaches ultimate trend rate	2025		2027		2019		2025		2027		2018

A one percentage point increase (decrease) in the assumed health care cost trend rate would have increased (decreased) the accumulated benefit obligation by $69 ($104) at December 31, 2018 and the service and interest cost would have increased (decreased) by $4 ($3) for the year ended December 31, 2018.

As of December 31, 2018, 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
2019	$	484	$	17
2020	468		15
2021	438		14
2022	426		13
2023	376		11
2024-2028	961		34
Total	$	3,153	$	104

Share-Based Compensation Plans. As of December 31, 2018, the Company was authorized to issue 40,000,000 shares of Common Stock and had a treasury share balance of 1,259,551 at December 31, 2018.

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 2018, 2017, and 2016 reflect total share-based compensation costs and director fees for awarded grants of $2,612, $2,245, $2,402, respectively, related to these plans.

For long-term incentive awards to be granted in the form of RSUs in 2019 based on 2018 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 2018 that the performance metrics would most likely be met, amortization of the estimated dollar pool of RSUs to be awarded based on 2018 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 2018, 2017, and 2016 reflects share-based compensation costs for grants to be awarded of $821, $491, and $317, 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, 2018, 321,131 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, 2018, 69,900 shares were granted of the 300,000 shares approved for grants under the Directors' Plan and all 69,900 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, 2018, 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. 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, 2018, 145,000 unvested RSUs remained under the 2004 Plan that will vest in January 2019. As of December 31, 2018, no RSU awards were available for future grants under the 2004 Plan.

RSUs. Summary of unvested RSUs under the Company’s share-based compensation plans for 2018, 2017, and 2016:



	Year Ended December 31,
	2018				2017				2016
	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	368,492		$	17.20	527,486		$	10.17	437,946		$	7.09
Granted	42,136		78.37		47,514		42.93		100,892		23.15
Forfeited	(1,080	)	28.30		(3,508	)	25.74		(11,352	)	11.55
Vested	(80,343	)	15.42		(203,000	)	4.82		—		—
Unvested balance at end of year	329,205		$	25.42	368,492		$	17.20	527,486		$	10.17

During 2018, 2017, and 2016, the total grant date fair value of RSU awards vested was $1,239, $979, and $0, respectively. As of December 31, 2018 there was $2,779 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 1.8 years.

Upon their vesting, the Company purchased restricted stock and RSUs from employees to cover associated withholding taxes. Total treasury stock purchases added 27,214 shares for $2,324 in 2018; 74,132 shares for $4,663 in 2017; and 40,870 shares for $1,518 in 2016.

Annual Cash Incentive Plan. The STI Plan, effective January 1, 2014, 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 2018, 2017, and 2016, the performance metrics were operating income, EBITDA, and EPS. 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, if applicable ("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 $5,581, $5,150, and $3,394 for 2018, 2017, and 2016, respectively.

Deferred Compensation Plan. The Company established an unfunded Executive Deferred Compensation Plan effective as of June 30, 2018, with a purpose to attract and retain highly-compensated key employees by providing participants with an opportunity to defer receipt of a portion of their salary, bonus, and other specified compensation. The Company's obligations under this plan will change in conjunction with the performance of the participants' investments, along with contributions to and withdrawals from the plan. For 2018, participants were only able to direct the deferral of the receipt of a portion of their 2018 STI Plan amounts that are to be paid in early 2019 (see detail above). At the time of payment in 2019, the amounts elected for deferral will be deposited into the plan by the Company and allocated by participants among Company-determined investment options.

The current portion of deferred compensation plan deferrals is comprised of estimated amounts to be paid within one year depending on timing of planned disbursements. At December 31, 2018, all $1,176 of participant 2018 STI Plan deferrals were expensed currently in the year earned. Based on expected planned disbursements, all were considered non-current and were included in Other noncurrent liabilities on the Company's 2018 Consolidated Balance Sheet.