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Note 9 - Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Retirement Benefits [Text Block] | Note 9: Employee Benefit Plans Pensions and Other Post-retirement Plans We sponsor defined benefit pension plans covering substantially all U.S. employees. The following tables provide a reconciliation of the changes in the plans’ benefit obligations and fair value of assets over the two-year period ended December 31, 2020, and the funded status as of December 31, 2020 and December 31, 2019 (in thousands):
|  | Pension Benefits |
|  | 2020 |  |  | 2019 |
Change in benefit obligation: |  |  |  |  |  |  |  |
Benefit obligation at beginning of year |  | $ | 172,909 |  |  | $ | 144,638 |
Service cost |  |  | 5,334 |  |  |  | 4,401 |
Interest cost |  |  | 5,618 |  |  |  | 6,482 |
Change due to mortality change |  |  | (1,521 | ) |  |  | (2,130 | )
Change due to discount rate change |  |  | 17,040 |  |  |  | 25,806 |
Actuarial return (loss) |  |  | 121 |  |  |  | (395 | )
Benefits paid |  |  | (6,547 | ) |  |  | (5,893 | )
Benefit obligation at end of year |  |  | 192,954 |  |  |  | 172,909 |
Change in fair value of plan assets: |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  |  | 116,067 |  |  |  | 96,329 |
Actual return on plan assets |  |  | 14,801 |  |  |  | 21,536 |
Employer contributions |  |  | 23,731 |  |  |  | 4,095 |
Benefits paid |  |  | (6,547 | ) |  |  | (5,893 | )
Fair value of plan assets at end of year |  |  | 148,052 |  |  |  | 116,067 |
Underfunded status at end of year |  | $ | (44,902 | ) |  | $ | (56,842 | )
The following table provides the amounts recognized in the consolidated balance sheets as of December 31, 2020 and December 31, 2019 (in thousands):
|  | Pension Benefits |
|  | 2020 |  |  | 2019 |
Current liabilities: |  |  |  |  |  |  |  |
Accrued benefit liability |  | $ | (758 | ) |  | $ | (622 | )
Non- current pension liability: |  |  |  |  |  |  |  |
Accrued benefit liability |  |  | (44,144 | ) |  |  | (56,219 | )
Accumulated other comprehensive loss |  |  | 53,085 |  |  |  | 49,525 |
Net amount recognized |  | $ | 8,183 |  |  | $ | (7,316 | )
The benefit obligation and prepaid benefit costs were calculated by applying the following weighted average assumptions:
|  | Pension Benefits |
|  | 2020 |  |  | 2019 |
Discount rate: net periodic pension cost |  |  | 3.32 | % |  |  | 4.59 | %
Discount rate: projected benefit obligation |  |  | 2.64 | % |  |  | 3.32 | %
Expected rate of return on plan assets |  |  | 6.45 | % |  |  | 6.37 | %
Rate of compensation increase: net periodic pension cost |  |  | 2.00 | % |  |  | 2.00 | %
Rate of compensation increase: projected benefit obligation |  |  | 2.00 | % |  |  | 2.00 | %
The above assumptions were calculated based on information as of December 31, 2020 and December 31, 2019, the measurement dates for the plans. The discount rate is based on the yield curve for investment-grade corporate bonds as published by the U.S. Treasury Department. The expected rate of return on plan assets is based upon consideration of the plan’s current asset mix, historical long-term return rates and the plan’s historical performance. Our current assumption for the rate on plan assets is 6.4%. The vested benefit obligation is determined based on the actuarial present value of benefits to which employees are currently entitled, based on employees' expected date of separation or retirement. Net periodic pension cost for the plans consisted of the following in 2020, 2019, and 2018 (in thousands):
|  | Pension Benefits |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Service cost |  | $ | 5,334 |  |  | $ | 4,401 |  |  | $ | 5,009 |
Interest cost |  |  | 5,618 |  |  |  | 6,482 |  |  |  | 5,508 |
Expected return on plan assets |  |  | (7,489 | ) |  |  | (5,982 | ) |  |  | (6,536 | )
Amortization of prior service benefit |  |  | 117 |  |  |  | 61 |  |  |  | 61 |
Amortization of net gain from earlier periods |  |  | 4,652 |  |  |  | 4,389 |  |  |  | 3,726 |
Net periodic pension cost |  | $ | 8,232 |  |  | $ | 9,351 |  |  | $ | 7,768 |
The service cost component of net periodic pension cost is included in the same line items of our consolidated financial statements as other employee compensation costs. The net expense of $2.9 million, $5.0 million and $2.8 million for 2020, 2019, and 2018, respectively, related to all other components of net periodic pension cost is included in other (expense) income on our consolidated statements of operations and comprehensive (loss) income. The allocations of investments at December 31, 2020 and December 31, 2019, the measurement dates of the plan, by asset category in the Hecla Mining Company Retirement Plan and the Lucky Friday Pension Plan are as follows:
|  | Hecla |  |  | Lucky Friday |
|  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Cash |  |  | — | % |  |  | 6 | % |  |  | — | % |  |  | 6 | %
Large cap U.S. equities |  |  | 17 | % |  |  | 14 | % |  |  | 16 | % |  |  | 14 | %
Small cap U.S. equities |  |  | 8 | % |  |  | 7 | % |  |  | 9 | % |  |  | 7 | %
Non-U.S. equities |  |  | 26 | % |  |  | 22 | % |  |  | 26 | % |  |  | 22 | %
Fixed income |  |  | 21 | % |  |  | 19 | % |  |  | 21 | % |  |  | 19 | %
Real estate |  |  | 11 | % |  |  | 14 | % |  |  | 12 | % |  |  | 15 | %
Absolute return hedge funds |  |  | 5 | % |  |  | 5 | % |  |  | 4 | % |  |  | 5 | %
Company stock |  |  | 12 | % |  |  | 13 | % |  |  | 12 | % |  |  | 12 | %
Total |  |  | 100 | % |  |  | 100 | % |  |  | 100 | % |  |  | 100 | %
"Company stock" asset category in the table above includes our common stock in the amounts of $17.2 million and $14.7 million at December 31, 2020 and December 31, 2019, respectively, in total for both plans. Each plan's statement of investment policy delineates the responsibilities of the board, the retirement/pension committee, the investment manager(s), and investment adviser/consultant, and provides guidelines on investment management. Investment objectives are established for each of the asset categories included in the pension plans with comparisons of performance against appropriate benchmarks. Each plan's policy calls for investments to be supervised by qualified investment managers. The investment managers are monitored on an ongoing basis by our outside consultant, with formal reporting to us and the consultant performed each quarter. The policy sets forth the following allocation of assets:
|  | Target |  |  | Maximum |
Large cap U.S. equities |  |  | 17 | % |  |  | 20 | %
Small cap U.S. equities |  |  | 8 | % |  |  | 10 | %
Non-U.S. equities |  |  | 25 | % |  |  | 30 | %
Fixed income |  |  | 23 | % |  |  | 28 | %
Real estate |  |  | 15 | % |  |  | 18 | %
Absolute return |  |  | 5 | % |  |  | 7 | %
Company stock/Real return |  |  | 7 | % |  |  | 13 | %
Each plan's statement of investment policy and objectives aspires to achieve the assumed long term rate of return on plan assets established by the plan’s actuary plus one percent. Accounting guidance has established a hierarchy of assets measured at fair value on a recurring basis. The three levels included in the hierarchy are: Level 1: quoted prices in active markets for identical assets or liabilities Level 2: significant other observable inputs Level 3: significant unobservable inputs The fair values by asset category in each plan, along with their hierarchy levels, are as follows as of December 31, 2020 (in thousands):
|  | Hecla |  |  | Lucky Friday |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Investments measured at fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing cash |  | $ | 367 |  |  | $ | — |  |  | $ | — |  |  | $ | 367 |  |  | $ | 111 |  |  | $ | — |  |  | $ | — |  |  | $ | 111 |
Common stock |  |  | 13,947 |  |  |  | — |  |  |  | — |  |  |  | 13,947 |  |  |  | 3,203 |  |  |  | — |  |  |  | — |  |  |  | 3,203 |
Mutual funds |  |  | 69,994 |  |  |  | — |  |  |  | — |  |  |  | 69,994 |  |  |  | 15,786 |  |  |  | — |  |  |  | — |  |  |  | 15,786 |
Total investments in the fair value hierarchy |  |  | 84,308 |  |  |  | — |  |  |  | — |  |  |  | 84,308 |  |  |  | 19,100 |  |  |  | — |  |  |  | — |  |  |  | 19,100 |
Investments measured at net asset value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate funds |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 12,708 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3,428 |
Hedge funds |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 5,823 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,215 |
Common collective funds |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 17,545 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3,925 |
Total investments measured at net asset value |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 36,076 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 8,568 |
Total fair value |  | $ | 84,308 |  |  | $ | — |  |  | $ | — |  |  | $ | 120,384 |  |  | $ | 19,100 |  |  | $ | — |  |  | $ | — |  |  | $ | 27,668 |
The fair values by asset category in each plan, along with their hierarchy levels, were as follows as of December 31, 2019 (in thousands):
|  | Hecla |  |  | Lucky Friday |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Investments measured at fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing cash |  | $ | 5,709 |  |  | $ | — |  |  | $ | — |  |  | $ | 5,709 |  |  | $ | 1,441 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,441 |
Common stock |  |  | 11,835 |  |  |  | — |  |  |  | — |  |  |  | 11,835 |  |  |  | 2,827 |  |  |  | — |  |  |  | — |  |  |  | 2,827 |
Mutual funds |  |  | 46,317 |  |  |  | — |  |  |  | — |  |  |  | 46,317 |  |  |  | 10,999 |  |  |  | — |  |  |  | — |  |  |  | 10,999 |
Total investments in the fair value hierarchy |  |  | 63,861 |  |  |  | — |  |  |  | — |  |  |  | 63,861 |  |  |  | 15,267 |  |  |  | — |  |  |  | — |  |  |  | 15,267 |
Investments measured at net asset value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate funds |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 12,659 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3,445 |
Hedge funds |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 4,336 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,161 |
Common collective funds |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 12,255 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3,083 |
Total investments measured at net asset value |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 29,250 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,689 |
Total fair value |  | $ | 63,861 |  |  | $ | — |  |  | $ | — |  |  | $ | 93,111 |  |  | $ | 15,267 |  |  | $ | — |  |  | $ | — |  |  | $ | 22,956 |
Generally, investments are valued based on information provided by fund managers to each plan's trustee as reviewed by management and its investment advisers. Mutual funds and equities are valued based on available exchange data. Commingled equity funds consist of publicly-traded investments. Fair value for real estate funds, hedge funds and common collective equity funds is measured using the net asset value per share (or its equivalent) practical expedient ("NAV"), and has not been categorized in the fair value hierarchy. There are no unfunded commitments related to these investments. There are no restrictions on redemptions of these funds as of December 31, 2020, except as limited by the redemption terms discussed below. The following summarizes information on the asset classes measured using NAV:
|  | Investment strategy |  | Redemption terms
Real estate funds |  | Invest in real estate properties among the four major property types (office, industrial, retail and multi-family) |  | Allowed quarterly with notice of between 45 and 60 days
Hedge funds |  | Invest in a variety of asset classes which aim to diversify sources of returns |  | Allowed quarterly with notice of 90 days
Common collective funds |  | Invest in U.S. large cap or small/medium cap public equities in actively traded managed equity portfolios |  | Allowed daily or with notice of 30 days
The following are estimates of future benefit payments, which reflect expected future service as appropriate, related to our pension plans (in thousands):
Year Ending December 31, |  | Pension Plans |
2021 |  | $ | 8,314 |
2022 |  |  | 8,199 |
2023 |  |  | 8,420 |
2024 |  |  | 8,661 |
2025 |  |  | 9,419 |
Years 2026-2030 |  |  | 47,269 |
During 2020, we contributed $16.0 million in shares of our common stock, and contributed $6.0 million in cash, to our defined benefit plans. In January 2021, we contributed $16.8 million in shares of our common stock to our supplemental executive retirement plan. We do not expect to be required to contribute to our defined benefit plans in 2021, but we may choose to do so. We expect to contribute an additional approximately $0.8 million to our supplemental executive retirement plan during 2021. The following table indicates whether our pension plans had accumulated benefit obligations ("ABO") in excess of plan assets, or plan assets exceeded ABO (amounts are in thousands).
|  | December 31, 2020 |  |  | December 31, 2019 |
|  | ABO Exceeds Plan Assets |  |  | Plan Assets Exceed ABO |  |  | ABO Exceeds Plan Assets |  |  | Plan Assets Exceed ABO |
Projected benefit obligation |  | $ | 192,954 |  |  | $ | — |  |  | $ | 172,908 |  |  | $ | — |
Accumulated benefit obligation |  |  | 189,931 |  |  |  | — |  |  |  | 168,239 |  |  |  | — |
Fair value of plan assets |  |  | 148,051 |  |  |  | — |  |  |  | 116,067 |  |  |  | — |
For the pension plans, the following amounts are included in "Accumulated other comprehensive loss, net" on our balance sheet as of December 31, 2020, that have not yet been recognized as components of net periodic benefit cost (in thousands):
|  | Pension Benefits |
Unamortized net (gain)/loss |  | $ | 51,660 |
Unamortized prior service cost |  |  | 1,425 |
Non-U.S. employees are not eligible to participate in the defined benefit pension plans that we maintain for U.S. employees. Canadian employees participate in Canada's public retirement income system, which includes the following components: (i) the Canada (or Quebec) Pension Plan, which is an employee and employer contributory, earnings-related social insurance program, and (ii) the Old Age Security program. Mexican employees participate in Mexico's public retirement income system, which is based on contributions the employee, employer and the government submit to the retirement savings system. The system is administered through savings accounts managed by private fund managers selected by the participant. Capital Accumulation Plans Our Capital Accumulation Plan ("Hecla 401(k) Plan") is available to all U.S. salaried and certain hourly employees and applies immediately upon employment. Employees may contribute from 1% to 50% of their annual compensation to the plan (subject to statutory limits). We make a matching contribution in the form of cash or stock of 100% of an employee’s contribution up to 6% of the employee’s earnings. Our matching contributions were approximately $4.6 million in 2020, $3.9 million in 2019, and $3.7 million in 2018. Payment of matching contributions to the Hecla 401(k) Plan is allowed to be made in Hecla common stock on a quarterly basis, which was done for 2020, 2019, and 2018. We also maintain a 401(k) plan that is available to all hourly employees at the Lucky Friday unit after completion of six months of service. Employees may contribute from 2% to 50% of their compensation to the plan (subject to statutory limits). The matching contribution is 55% of an employee’s contribution up to, but not exceeding, 5% of the employee’s earnings. Our contributions were approximately $10,000 in 2020, $10,000 in 2019, and $4,000 in 2018.

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