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Employee Benefit Plans
 12 Months Ended
Dec. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Employee Benefit Plans
Employee Benefit Plans

Stock-Based Compensation Plans
The Company maintains stock-based compensation plans primarily for its key employees and directors, although the plans permit awards to others expected to make significant contributions to the future of the Company. The plans authorize the compensation committee of the Company's board of directors (the board committee) to award a variety of stock and stock-based incentives, such as restricted stock, RSUs, nonqualified and incentive stock options, stock bonus shares, or performance-based shares. The award recipients and the terms of awards, including price, granted under these plans are determined by the board committee. Upon a change of control, as defined in the plans, all options or other awards become fully vested and all restrictions lapse. The Company had 561,162 shares available for grant under stock-based compensation plans at year-end 2016. The Company generally issues its common stock out of treasury stock, to the extent available, for share issuances related to its stock-based compensation plans.
The Company recognizes compensation cost for all stock-based awards granted to employees and directors based on the grant date estimate of fair value for those awards. The fair value of RSUs is based on the grant date trading price of the Company's common stock, reduced by the present value of estimated dividends foregone during the requisite service period. The fair value of stock options is based on the Black-Scholes option-pricing model. Total stock-based compensation expense was $5,069,000, $5,741,000, and $5,813,000 in 2016, 2015, and 2014, respectively, and is included in SG&A expenses in the accompanying consolidated statement of income.

The components of pre-tax stock-based compensation expense are as follows:
(In thousands)
 
2016
 
2015
 
2014
Restricted Stock Unit Awards
 
$
4,848

 
$
5,185

 
$
4,904

Stock Option Awards
 
51

 
420

 
782

Employee Stock Purchase Plan Awards
 
170

 
136

 
127

Total
 
$
5,069

 
$
5,741

 
$
5,813



The Company has elected to recognize excess income tax benefits from stock option exercises and the vesting of RSUs in capital in excess of par value using the tax return ordering approach. The Company measures the tax benefit associated with excess tax deductions related to stock-based compensation expense by multiplying the excess tax deductions by the statutory tax rates. As a result of the adoption of ASU No. 2016-09, the Company did not recognize any income tax benefits in capital in excess of par value in 2016. The Company recognized income tax benefits in capital in excess of par value of $881,000 and $771,000 in 2015 and 2014, respectively, associated with stock-based compensation.
The Company grants RSUs to non-employee directors and certain employees. Holders of RSUs have no voting rights and are not entitled to receive cash dividends.

Non-Employee Director Restricted Stock Units
For the past three fiscal years, the Company has granted 5,000 RSUs to each of its non-employee directors in the first quarter of each fiscal year. The shares vest ratably on the last day of each fiscal quarter within the year. In addition, on March 9, 2015, the Company also granted 10,000 cash-settled RSUs to each of its non-employee directors, which totaled 50,000 in the aggregate and had a grant date fair value of $2,279,000. These RSUs would have only vested and compensation expense would only have been recognized if a change in control as defined in the Company's 2006 equity incentive plan had occurred before the last day of the first quarter of 2020. If a change in control had occurred, the directors would have received cash compensation equal to the value of the RSUs at the trading price of the Company's common stock on the change in control date. During 2015, 10,000 RSUs were forfeited, and the remaining 40,000 RSUs were outstanding at year-end 2016. These cash-settled RSUs were canceled without value on March 8, 2017.

Performance-Based Restricted Stock Units
The Company grants performance-based RSUs to executive officers of the Company. Each performance-based RSU represents the right to receive one share of the Company's common stock upon vesting. The RSUs are subject to adjustment based on the achievement of a performance measure selected for the fiscal year, which is a specified target for adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) generated from continuing operations. Following adjustment, the RSUs are subject to additional time-based vesting, and vest in three equal annual installments, provided that the executive officer is employed by the Company on the applicable vesting dates.
The Company recognizes compensation expense associated with performance-based RSUs ratably over the requisite service period for each separately-vesting portion of the award based on the grant date fair value. Compensation expense recognized is net of forfeitures and remeasured each reporting period until the total number of RSUs to be issued is known. Unrecognized compensation expense related to the unvested performance-based RSUs totaled approximately $1,467,000 at year-end 2016, and will be recognized over a weighted average period of 1.3 years.
The performance-based RSU agreements provide for forfeiture in certain events, such as voluntary or involuntary termination of employment, and for acceleration of vesting in certain events, such as death, disability or a change in control of the Company. If death, disability, or a change in control occurs prior to the end of the performance period, the officer will receive the target RSU amount; otherwise, the officer will receive the number of deliverable RSUs based on the achievement of the performance goal, as stated in the RSU agreements.

Time-Based Restricted Stock Units
The Company grants time-based RSUs to certain executive officers and other employees of the Company. Each time-based RSU represents the right to receive one share of the Company's common stock upon vesting. The Company recognizes compensation expense associated with these time-based RSUs ratably over the requisite service period for the entire award based on the grant date fair value and net of forfeitures. The time-based RSU agreement provides for forfeiture in certain events, such as voluntary or involuntary termination of employment, and for acceleration of vesting in certain events, such as death, disability, or a change in control of the Company. Unrecognized compensation expense related to the time-based RSUs totaled approximately $2,614,000 at year-end 2016, and will be recognized over a weighted average period of 1.8 years.

A summary of the activity of the Company's unvested RSUs for 2016 is as follows:
Unvested Restricted Stock Units
 
Units
(In thousands)
 
Weighted
Average Grant-
Date Fair Value
Unvested RSUs at January 2, 2016
 
216

 
$
37.01

Granted
 
132

 
$
40.41

Vested
 
(143
)
 
$
35.46

Forfeited / Expired
 
(2
)
 
$
40.87

Unvested RSUs at December 31, 2016
 
203

 
$
40.23



The weighted-average grant date fair value of RSUs granted was $40.41, $44.75, and $38.52 in 2016, 2015, and 2014, respectively. The total fair value of shares vested was $6,233,000, $7,502,000, and $6,895,000 in 2016, 2015, and 2014, respectively.

Stock Options
The Company did not grant stock options during the last three fiscal years. Prior to 2014, the Company granted nonqualified stock options to its executive officers that vested over three years and were not exercisable until vested. To date, all options have been granted at an exercise price equal to the fair market value of the Company's common stock on the date of grant. Stock options vested in three equal annual installments beginning on the first anniversary of the grant date, provided that the recipient remained employed by the Company on the applicable vesting dates and expire on the tenth anniversary of the grant date. All outstanding stock options are fully vested. The Company recognized compensation expense associated with these stock options ratably over the requisite service period for the entire award based on the grant date fair value and net of forfeitures. There was no unrecognized compensation expense related to these stock options at year-end 2016.
The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option-pricing models require the input of highly subjective assumptions, including expected stock price volatility. Expected stock price volatility was calculated based on a review of the Company's actual historic stock prices commensurate with the expected life of the award. The expected option life was derived based on a review of the Company's historic option holding periods, including consideration of the holding period inherent in currently vested but unexercised options. The expected annual dividend rate was calculated by dividing the Company's annual dividend by the closing stock price on the grant date. The risk-free interest rate is based on the yield on zero-coupon U.S. Treasury securities for a period that is commensurate with the expected term of the option. The compensation expense recognized for all equity-based awards is net of estimated forfeitures. Forfeitures are estimated based on an analysis of actual option forfeitures.

A summary of the Company's stock option activity for 2016 is as follows:
(In thousands, except per share amounts)
 
Number
of
Shares
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
 
Aggregate
Intrinsic
Value (a)
Options Outstanding at January 2, 2016
 
358

 
$
21.12

 
 
 
 

Exercised
 
(51
)
 
$
23.57

 
 
 
 

Options Outstanding at December 31, 2016
 
307

 
$
20.72

 
4.5 years
 
$
12,443

Vested and Exercisable at December 31, 2016
 
307

 
$
20.72

 
4.5 years
 
$
12,443

 
(a)
The closing price per share on the last trading day prior to December 31, 2016 was $61.20.

A summary of the Company's stock option exercises in 2016, 2015, and 2014 is as follows.
(In thousands)
 
2016
 
2015
 
2014
Total Intrinsic Value of Options Exercised
 
$
1,341

 
$
442

 
$
438

Cash Received From Options Exercised
 
$
1,189

 
$
284

 
$
336



Modified Awards
On September 15, 2014, the Company entered into an executive transition agreement with its former chief financial officer in connection with his retirement on June 30, 2015. This agreement included provisions for post-employment compensation and modifications to outstanding equity awards. The Company recognized $360,000 of post-employment compensation ratably through the retirement date. Pursuant to this agreement, any unvested stock options immediately vested on the retirement date and any unvested RSUs at the retirement date vested on June 30, 2015 and were distributed on March 10, 2016. As of September 15, 2014, 5,201 stock options were remeasured at a grant date fair value of $17.96 per option based on the Black-Scholes option-pricing model and 12,313 RSUs were remeasured at a fair value of $39.94 per unit. The remaining compensation expense associated with the modified stock options and RSUs totaled $428,000 as of September 15, 2014, which was recognized ratably through the retirement date.

Employee Stock Purchase Plan
The Company's eligible U.S. employees may elect to participate in its employee stock purchase plan. Under the plan, shares of the Company's common stock may be purchased at a 15% discount from the fair market value at the beginning or end of the purchase period, whichever is lower. Shares purchased under the plan are subject to a one-year resale restriction and are purchased through payroll deductions of up to 10% of each participating employee's gross wages. For the 2016, 2015, and 2014 plan years, the Company issued 17,874, 13,573, and 12,017 shares, respectively, of its common stock under this plan.

401(k) Savings and Other Defined Contribution Plans
The Company's U.S. subsidiaries participate in the Kadant Inc. 401(k) Retirement Savings Plan sponsored by the Company. Contributions to the plan are made by both the employee and the Company and are immediately vested. Company contributions are based upon the level of employee contributions.
Certain of the Company's subsidiaries offer other retirement plans, the majority of which are defined contribution plans. Company contributions to these plans are based on formulas determined by the Company.
For these plans, the Company contributed and charged to expense approximately $3,005,000, $2,749,000, and $2,655,000 in 2016, 2015, and 2014, respectively.

Pension and Other Post-Retirement Benefits Plans
The Company sponsors a noncontributory defined benefit pension plan for eligible employees at one of its U.S. divisions and its corporate office. Effective December 31, 2005, this plan was closed to new participants. Three of the Company’s non-U.S. subsidiaries also sponsor defined benefit pension plans covering certain employees at those subsidiaries. Funds for the U.S. pension plan and one of the non-U.S. pension plans are contributed to a trustee as necessary to provide for current service and for any unfunded projected benefit obligation over a reasonable period. The remaining two non-U.S. pension plans are unfunded as permitted under their plans and applicable laws. Benefits under the Company’s pension plans are based on years of service and employee compensation.
The Company also provides other post-retirement benefits under two plans in the United States, which are both closed to new retirees, and at one of its non-U.S. subsidiaries. In addition, the Company provides for a restoration plan for certain executive officers which fully supplements benefits lost under the noncontributory defined benefit retirement plan as a consequence of applicable Internal Revenue Service limits.
In accordance with ASC 715, "Compensation-Retirement Benefits," (ASC 715), an employer is required to recognize the funded status of defined benefit pension and other post-retirement benefit plans as an asset or liability and changes in that funded status through comprehensive income. These amounts will be subsequently recognized as net periodic pension cost pursuant to the Company's historical accounting policy for amortizing such amounts. Further, actuarial gains and losses that arise in subsequent periods and are not recognized as net periodic pension cost in the same periods will be recognized as a component of AOCI. The actuarial loss and prior service loss included in AOCI and expected to be recognized in net periodic benefit cost in 2017 are $541,000 and $144,000, respectively.
The following table summarizes the change in benefit obligation; the change in plan assets; the unfunded status; and the amounts recognized in the accompanying consolidated balance sheet for the Company's U.S. and non-U.S. pension benefit plans and other post-retirement benefit plans. In accordance with the adoption of ASU No. 2015-04 in 2015, the Company has elected to measure its plan assets and benefit obligations as of December 31, which coincides with its fiscal year-end in 2016 and is the closest month-end to its fiscal year-end in 2015.
 
 
U.S. Pension Benefits
 
Non-U.S.
Pension Benefits
 
Other Post-Retirement Benefits
(In thousands)
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
Change in Benefit Obligation:
 
 
 
 
 
 
 
 
 
 
 
 
Benefit obligation at beginning of year
 
$
31,310

 
$
32,213

 
$
3,041

 
$
3,531

 
$
3,539

 
$
3,823

Acquisition
 
—

 
—

 
380

 
—

 
—

 
—

Service cost
 
723

 
842

 
102

 
105

 
130

 
117

Interest cost
 
1,273

 
1,229

 
107

 
102

 
156

 
147

Actuarial loss (gain)
 
575

 
(1,448
)
 
58

 
(102
)
 
686

 
(299
)
Benefits paid
 
(1,946
)
 
(1,526
)
 
(63
)
 
(189
)
 
(180
)
 
(219
)
Settlement payment
 
—

 
—

 
—

 
—

 
(415
)
 
—

Currency translation
 
—

 
—

 
(284
)
 
(406
)
 
(22
)
 
(30
)
Benefit obligation at end of year
 
$
31,935

 
$
31,310

 
$
3,341

 
$
3,041

 
$
3,894

 
$
3,539

Change in Plan Assets:
 
 

 
 

 
 

 
 

 
 

 
 

Fair value of plan assets at beginning of year
 
$
27,776

 
$
28,986

 
$
396

 
$
632

 
$
26

 
$
34

Actual return on plan assets
 
2,075

 
(764
)
 
6

 
(142
)
 
1

 
(3
)
Employer contributions
 
1,080

 
1,080

 
159

 
189

 
601

 
219

Benefits paid
 
(1,946
)
 
(1,526
)
 
(63
)
 
(189
)
 
(180
)
 
(219
)
Settlement payment
 
—

 
—

 
—

 
—

 
(415
)
 
—

Currency translation
 
—

 
—

 
(72
)
 
(94
)
 
(5
)
 
(5
)
Fair value of plan assets at end of year
 
$
28,985

 
$
27,776

 
$
426

 
$
396

 
$
28

 
$
26

Unfunded Status
 
$
(2,950
)
 
$
(3,534
)
 
$
(2,915
)
 
$
(2,645
)
 
$
(3,866
)
 
$
(3,513
)
Accumulated Benefit Obligation at End of Year
 
$
27,573

 
$
26,844

 
$
2,549

 
$
2,169

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Amounts Recognized in the Balance Sheet:
 
 

 
 

 
 

 
 

Current liability
 
$
—

 
$
—

 
$
(194
)
 
$
(133
)
 
$
(183
)
 
$
(187
)
Non-current liability
 
$
(2,950
)
 
$
(3,534
)
 
$
(2,721
)
 
$
(2,512
)
 
$
(3,683
)
 
$
(2,911
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Amounts Recognized in Accumulated Other Comprehensive Items Before Tax:
 
 

 
 

Unrecognized net actuarial loss
 
$
(7,383
)
 
$
(8,094
)
 
$
(784
)
 
$
(832
)
 
$
(872
)
 
$
(325
)
Unrecognized prior service cost
 
(53
)
 
(108
)
 
(42
)
 
(47
)
 
(525
)
 
(610
)
Total
 
$
(7,436
)
 
$
(8,202
)
 
$
(826
)
 
$
(879
)
 
$
(1,397
)
 
$
(935
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Changes in Amounts Recognized in Accumulated Other Comprehensive Items Before Tax:
 
 

 
 

Current year unrecognized net actuarial gain (loss)
 
$
213

 
$
(737
)
 
$
(75
)
 
$
(75
)
 
$
(685
)
 
$
237

Amortization of unrecognized prior service cost
 
55

 
55

 
4

 
4

 
88

 
88

Amortization of unrecognized net actuarial loss
 
498

 
508

 
39

 
38

 
50

 
30

Settlement loss
 
—

 
—

 
—

 
—

 
114

 
—

Currency translation
 
—

 
—

 
85

 
109

 
(29
)
 
35

Total
 
$
766

 
$
(174
)
 
$
53

 
$
76

 
$
(462
)
 
$
390



The weighted-average assumptions used to determine the benefit obligation as of year-end are as follows:
 
 
U.S. Pension Benefits
 
Non-U.S.
Pension Benefits
 
Other Post-Retirement Benefits
 
 
 
 
 
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
Discount rate
 
4.03
%
 
4.22
%
 
3.26
%
 
3.55
%
 
4.20
%
 
4.32
%
Rate of compensation increase
 
3.00
%
 
3.00
%
 
3.33
%
 
3.47
%
 
3.12
%
 
3.18
%

    
The discount rates for pension and other post-retirement plans are based on market yields on high-quality corporate bonds currently available and expected to be available during the period to maturity of the benefits. For pension and post-retirement plans, which have been closed to new participants thereby shortening the duration, the discount rate is determined based on discounting the projected benefit streams against the Citigroup Pension discount curve.

The projected benefit obligations and fair values of plan assets for the Company's pension plans with projected benefit obligations in excess of plan assets are as follows:
 
 
U.S. Pension Benefits
 
Non-U.S.
Pension Benefits
 
 
 
(In thousands)
 
2016
 
2015
 
2016
 
2015
Pension Plans with Projected Benefit Obligations in Excess of Plan Assets:
Projected benefit obligation
 
$
31,935

 
$
31,310

 
$
3,341

 
$
3,041

Fair value of plan assets
 
$
28,985

 
$
27,776

 
$
426

 
$
396



The accumulated benefit obligations and fair values of plan assets for the Company's pension plans with accumulated benefit obligations in excess of plan assets are as follows:
 
 
U.S. Pension Benefits
 
Non-U.S.
Pension Benefits
 
 
 
(In thousands)
 
2016
 
2015
 
2016
 
2015
Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets:
Accumulated benefit obligation
 
$
—

 
$
—

 
$
2,549

 
$
2,169

Fair value of plan assets
 
$
—

 
$
—

 
$
426

 
$
396



The components of net periodic benefit cost are as follows:
 
 
 U.S.
Pension Benefits
 
Non-U.S.
Pension Benefits
 
Other
Post-Retirement Benefits
 
 
 
 
(In thousands)
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
Components of Net Periodic Benefit Cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
 
$
723

 
$
842

 
$
850

 
$
102

 
$
105

 
$
193

 
$
130

 
$
117

 
$
103

Interest cost
 
1,273

 
1,229

 
1,286

 
107

 
102

 
138

 
156

 
147

 
163

Expected return on plan assets
 
(1,288
)
 
(1,421
)
 
(1,480
)
 
(25
)
 
(40
)
 
(44
)
 
(2
)
 
(2
)
 
(2
)
Recognized net actuarial loss
 
498

 
508

 
315

 
39

 
38

 
18

 
50

 
30

 
22

Amortization of prior service cost
 
55

 
55

 
55

 
4

 
4

 
6

 
88

 
88

 
88

Settlement loss
 
—

 
—

 
—

 
—

 
—

 
—

 
114

 
—

 
—

Net Periodic Benefit Cost
 
$
1,261

 
$
1,213

 
$
1,026

 
$
227

 
$
209

 
$
311

 
$
536

 
$
380

 
$
374



The weighted-average assumptions used to determine net periodic benefit cost are as follows:
 
 
 U.S.
Pension Benefits
 
Non-U.S.
Pension Benefits
 
Other
Post-Retirement Benefits
 
 
 
 
 
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
Discount Rate
 
4.22
%
 
3.87
%
 
4.79
%
 
3.87
%
 
3.33
%
 
3.68
%
 
5.38
%
 
4.01
%
 
4.91
%
Expected Long-Term Return on Plan Assets
 
5.00
%
 
5.25
%
 
5.75
%
 
7.72
%
 
6.90
%
 
6.75
%
 
7.72
%
 
6.90
%
 
6.75
%
Rate of Compensation Increase
 
3.00
%
 
3.00
%
 
3.50
%
 
3.67
%
 
3.42
%
 
2.70
%
 
3.94
%
 
3.15
%
 
3.52
%


In developing the overall expected long-term return on plan assets assumption, a building block approach was used in which rates of return in excess of inflation were considered separately for equity securities, debt securities, and other assets. The excess returns were weighted by the representative target allocation and added along with an appropriate rate of inflation to develop the overall expected long-term return on plan assets assumption. The Company believes this determination is consistent with ASC 715.

Assumed weighted-average healthcare cost trend rates as of year-end were as follows:
 
 
Other Post-Retirement Benefits
 
 
2016
 
2015
Healthcare Cost Trend Rate Assumed for Next Year
 
8.00%
 
8.00%
Ultimate Healthcare Cost Trend Rate
 
8.00%
 
8.00%
Year Assumed Rate Reaches Ultimate Rate
 
2016
 
2015


Plan Assets

The fair values of the Company's noncontributory defined benefit retirement plan assets at year-end 2016 and 2015 by asset category are as follows:
 
 
2016 Fair Value Measurement
(In thousands)
 
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
 
Significant
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Total
U.S. Pension Plan Assets:
 
 
 
 
 
 
 
 
Mutual Funds
 
$
20,318

 
$
—

 
$
—

 
$
20,318

 
 
$
20,318

 
$
—

 
$
—

 
$
20,318

Investments measured at NAV
 
 
 
 
 
 
 
8,667

Total assets at fair value
 
 
 
 
 
 
 
$
28,985

 
 
 
 
 
 
 
 
 
Non-U.S. Pension Plan Assets:
 
 
 
 
 
 
 
 
Mutual Funds
 
$
426

 
$
—

 
$
—

 
$
426

Total assets at fair value
 
$
426

 
$
—

 
$
—

 
$
426

 
 
2015 Fair Value Measurement
(In thousands)
 
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
 
Significant
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Total
U.S. Pension Plan Assets:
 
 
 
 
 
 
 
 
Mutual Funds
 
$
19,485

 
$
—

 
$
—

 
$
19,485

 
 
$
19,485

 
$
—

 
$
—

 
$
19,485

Investments measured at NAV
 
 
 
 
 
 
 
8,291

Total assets at fair value
 
 
 
 
 
 
 
$
27,776

 
 
 
 
 
 
 
 
 
Non-U.S. Pension Plan Assets:
 
 
 
 
 
 
 
 
Mutual Funds
 
$
396

 
$
—

 
$
—

 
$
396

Total assets at fair value
 
$
396

 
$
—

 
$
—

 
$
396



Description of Fair Value Measurements
Level 1 – Quoted, active market prices for identical assets.
Level 2 – Observable inputs other than Level 1 prices, based on model-derived valuations in which all significant inputs are observable in active markets.
Level 3 – Unobservable inputs based on the Company's own assumptions.

The following is a description of the valuation methodologies used for assets measured at fair value. There were no changes in valuation techniques during 2016 or 2015.

Mutual funds - Investments in common stock index and fixed income funds. Share prices of the funds, referred to as a fund's Net Asset Value (NAV), are calculated daily based on the closing market prices and accruals of securities in the fund's total portfolio (total value of the fund) divided by the number of fund shares currently issued and outstanding. There are no redemption restrictions.

Investments measured at NAV - Investments in common collective trusts that invest in a diversified blend of investment and non-investment grade fixed income securities and are valued at NAV provided by the fund administrator. The NAV is used as the practical expedient to estimate fair value. The NAVs of the funds are calculated monthly based on the closing market prices and accruals of securities in the fund's total portfolio (total value of the fund) divided by the number of fund shares currently issued and outstanding. Redemptions of the investments occur by contract at the respective fund's redemption date NAV.

The Company has developed an investment policy for its U.S. noncontributory defined benefit retirement plan. The investment strategy is to emphasize total return, that is, the aggregate return from capital appreciation and dividend and interest income. The primary objective of the investment management for the plan's assets is the emphasis on consistent growth; specifically, growth in a manner that protects the plan's assets from excessive volatility in market value from year to year. The investment policy takes into consideration the benefit obligations, including timing of distributions.

The following target asset allocation has been established for the plan:
Asset Category
 
Minimum
 
Neutral
 
Maximum
Equity Securities
 
5
%
 
15
%
 
20
%
Debt Securities
 
80
%
 
85
%
 
95
%
Total
 
 

 
100
%
 
 



All equity securities must be drawn from recognized securities exchanges. Debt securities must be weighted to reflect a portfolio average maturity of not more than ten years, with average benchmark duration of five years. The credit quality must equal or exceed high investment grade quality ("Baa" or better).
Cash Flows
Contributions
The Company expects to make cash contributions of $1,080,000 to its U.S. noncontributory defined benefit pension plan in 2017. For the remaining pension and post-retirement benefit plans, no cash contributions other than to fund current benefit payments are expected in 2017.
Estimated Future Benefit Payments
Expected benefit payments are based on the same assumptions used to measure the Company's benefit obligation at year-end 2016. Estimated future benefit payments during the next five years and in aggregate for the five years thereafter are as follows:
 
 
 
 
 
 
Other
Post-retirement
Benefits
(In thousands)
 
U.S.
Pension
Benefits
 
Non-U.S.
Pension
Benefits
 
2017
 
$
1,485

 
$
227

 
$
187

2018
 
1,479

 
30

 
177

2019
 
1,485

 
105

 
169

2020
 
4,131

 
87

 
308

2021
 
1,894

 
237

 
162

2022-2026
 
11,488

 
2,029

 
2,753