On August 8, 2008 the Company established The Executive Nonqualified Defined Benefit Plan of Gentherm Incorporated (the “Plan”), an unfunded executive pension plan, with an effective date of April 1, 2008. The Company’s former Chief Executive Officer, Daniel R. Coker, is the only participant in the Plan.

On May 10, 2017 the Company amended (the “Plan Amendment”) the Plan. Prior to the Plan Amendment, the Plan provided for 15 annual retirement benefit payments of $300,000 each beginning January 1, 2018. Mr. Coker became fully vested in the benefits under the Benefit Plan on April 1, 2017. The Plan Amendment provided that if Mr. Coker continued to provide employment service to the Company through and including January 1, 2018, the fifteen annual retirement benefit payments would be increased to $342,000, otherwise the 15 annual retirement benefits would remain at $300,000.

On June 28, 2017, the same day a leader transition plan leading up to Mr. Coker’s retirement was announced, the Company entered into a Retirement Agreement with Mr. Coker (the “Retirement Agreement”). The Retirement Agreement provided that if Mr. Coker’s retirement date was prior to January 1, 2018, the Company would amend the terms of the Plan, as amended, to accelerate the in-service vesting date to ensure an increase in the annual accrued benefit from $300,000 to $342,000. Mr. Coker became fully vested in the incremental benefit, as described in the Plan Amendment, on December 4, 2017.

The Company records a projected benefit obligation representing the present value of future plan benefits when earned by the participant. The following table sets forth the benefit obligation, amounts recognized in the Company’s financial statements and the principal assumptions used:

	2018			2017
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	4,218		$	3,419
Service cost		—			101
Interest cost		114			111
Actuarial (gain) loss		(158	)		78
Prior service cost		(342	)		509
Benefit obligation at end of year	$	3,832		$	4,218

The portion of the benefit obligation from the Plan expected to be paid in 2019 is classified as a current liability within accrued liabilities in the Company’s consolidated balance sheet. The remaining portion is classified as a non-current liability within pension benefit obligations. Service and interest cost is included in selling, general and administrative expenses in the Company’s consolidated statements of income and actuarial gains and losses are included the Company’s consolidated balance sheet as part of accumulated other comprehensive income within shareholders’ equity. Actuarial gains or losses are amortized to selling, general and administrative expense in the Company’s consolidated statements of income based on the average future service life of the Plan using the corridor method. A discount rate assumption of 3.65%, 2.95% and 3.25% was used to determine the benefit obligation for the years ended December 31, 2018, 2017 and 2016, respectively. A discount rate assumption of 2.95%, 3.25% and 3.40% was used to determine the net periodic service cost for years ended December 31, 2018, 2017 and 2016, respectively. Prior service costs reflect an increase to the projected benefit obligation as a result of the Plan Amendment, which retroactively increased benefits. Prior service cost is included in selling, general and administrative expenses in the Company’s consolidated statements of income. We do not expect contributions to be paid to the Plan during the next fiscal year.

Although the Plan is not funded, the Company has established a separate trust having the sole purpose of paying benefits under the Plan. The only asset of the trust is a corporate-owned life insurance policy (“COLI”). The COLI is valued at fair value using quoted prices listed in active markets (Level 1 input based on the U.S. GAAP fair value hierarchy). The policy value of the COLI was $2,148 and $2,353 as of December 31, 2018 and 2017, respectively, and was included in other non-current assets.

Components of the Plan’s net periodic pension benefit cost for the years ended December 31, 2018, 2017 and 2016 are as follows:

	2018		2017		2016
Service cost	$	—	$	101	$	387
Interest cost		114		111		98
Amortization of prior service cost		—		509		—
Net periodic benefit cost	$	114	$	721	$	485

Pretax amounts recognized in other comprehensive income for the years ended December 31, 2018, 2017 and 2016 are as follows


	2018			2017			2016
Actuarial Losses/(gains)	$	(158	)	$	78		$	36
Amortization of actuarial losses		—			—			—
Establish prior service cost		—			509			—
Amortization prior service cost		—			(509	)		—
	$	(158	)	$	78		$	36

Tax expense of $73 was recognized in other comprehensive income related to the Plan for the year ended December 31, 2018, which included $40 due to the adoption of ASU 2018-02. See Note 13 for additional information about ASU 2018-02 and its impact in to Gentherm’s financial statements. Tax benefit of $26 was recognized in other comprehensive income related to the Plan for the year ended December 31, 2017. Tax expense of $14 was recognized in other comprehensive income related to the Plan for the year ended December 31, 2016.

Pretax unrecognized actuarial losses recorded in accumulated other comprehensive loss not yet recognized in net periodic benefit cost were $222 and $380 as of December 31, 2018 and 2017, respectively. No amount of pretax unrecognized actuarial loss recorded in accumulated other comprehensive income as of December 31, 2018 are expected to be recognized as components of net periodic benefit cost in the year ending December 31, 2019.

Gentherm GmbH has an established defined benefit plan for retired and current members of its executive management team.

Gentherm GmbH records a projected benefit obligation representing the present value of future plan benefits when earned by the participant. The following table sets forth the benefit obligation and amounts recognized in the Company’s financial statements:

	2018			2017
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	7,927		$	7,326
Interest cost		147			130
Paid pension distributions		(292	)		(272	)
Actuarial (gains)/losses		114			(257	)
Exchange rate impact		(367	)		1,000
Benefit obligation at end of year	$	7,529		$	7,927

The following table sets forth the fair value of the plan assets for the periods ending December 31, 2018 and 2017:

	2018			2017
Change in plan assets:
Plan assets at beginning of year	$	3,891		$	3,326
Actual return on plan assets		130			121
Contributions		292			272
Paid pension distributions		(292	)		(272	)
Actuarial losses		(30	)		(28	)
Exchange rate impact		(183	)		472
Plan assets at end of year	$	3,808		$	3,891

The $3,720 and $4,036 net liability from the Gentherm GmbH plan as of December 31, 2018 and 2017, respectively, is classified as a noncurrent liability in pension benefit obligation.

Pretax amounts recognized in other comprehensive (loss) income for the years ended December 31, 2018, 2017 and 2016 are as follows:


	2018			2017			2016
Actuarial (gains)/losses	$	143		$	(229	)	$	718
Amortization of actuarial losses		(73	)		(78	)		(48	)
Amortization of prior service cost		—			—			—
	$	70		$	(307	)	$	670

Tax expense of $19 was recognized in other comprehensive income related to the Gentherm GmbH defined benefit plan for the year ended December 31, 2018. Tax expense of $86 and tax benefit of $171 were recognized in other comprehensive income for the years ended December 31, 2017 and 2016, respectively.

Pretax unrecognized actuarial losses recorded in accumulated other comprehensive loss not yet recognized in net periodic benefit cost were $2,372 and $2,416 as of December 31, 2018 and 2017, respectively. We expect $74 of pretax unrecognized actuarial loss recorded in accumulated other comprehensive income as of December 31, 2018 to be recognized as components of net periodic benefit cost in the year ending December 31, 2019.

Components of the Plan’s net periodic pension benefit cost for the years ended December 31, 2018, 2017 and 2016 are as follows:

	2018			2017			2016
Interest cost	$	147		$	130		$	154
Return on plan assets		(130	)		(121	)		(125	)
Amortization of prior service cost		—			—			—
Amortization of actuarial loss (gains)		73			78			48
Net periodic benefit cost	$	90		$	87		$	77

The Gentherm GmbH defined benefit plan is underfunded by $3,720 and $4,036 as of December 31, 2018 and 2017, respectively. The net periodic benefit cost is included in selling, general and administrative expenses in the Company’s consolidated statements of income and actuarial gains and losses are included the Company’s consolidated balance sheet as part of accumulated other comprehensive income within shareholders’ equity. Actuarial gains or losses are amortized to selling, general and administrative expense in the Company’s consolidated statements of income using the corridor method. The following table describes the actuarial assumptions used to determine the benefit obligation and the net periodic service cost:

	2018			2017			2016
Discount rate		2.04	%		1.93	%		1.69	%
Expected long term rate of return on plan assets		3.40	%		3.40	%		3.40	%

Plan assets are comprised of Gentherm GmbH’s pension insurance policies and are pledged to the beneficiaries of the plan. A market valuation technique, based on observable underlying insurance charges, is used to determine the fair value of the pension plan assets (Level 2). The expected return on plan assets assumption used to calculate Gentherm GmbH’s pension benefit obligation was determined using actual returns realized on plan assets in the prior year. We do not expect contributions to be paid to the Gentherm GmbH defined benefit plan during the next fiscal year.

The schedule of expected pension payments made to Gentherm GmbH defined benefit plan participants over the next 10 years is as follows:

Year
2019	$	287
2020		285
2021		283
2022		279
2023		290
2024 - 2028		1,344
Total	$	2,768

Gentherm has adopted a 401(k) plan to provide all eligible employees a means to accumulate retirement savings on a tax-advantaged basis, and eligible executive officers can participate in this plan on the same basis as other participants. Participants may defer specified portions of their compensation. On a discretionary basis, the Company matches a portion of the employee contributions. The Plan also allows for additional discretionary contributions. Gentherm made $1,471, $1,396 and $1,289 in matching contributions to the 401(k) plan in 2018, 2017 and 2016, respectively.

On December 31, 2018, Gentherm adopted the Gentherm Incorporated Deferred Compensation Plan (the “Management Plan”), effective January 1, 2019. The Management Plan’s purpose is to attract and retain a select group of management or highly compensated employees who will contribute significantly to the future business success of the Company by providing supplemental retirement income benefits. No contributions were made to the Management Plan as of December 31, 2018.