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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2018
Text Block [Abstract] |
Employee Benefit Plans | E MPLOYEE B ENEFIT P LANS We measure the assets and obligations of the defined benefit pension plans and other postretirement benefits plans to determine the plans’ funded status as of the end of the year. We record as a component of other comprehensive income/loss or a regulatory asset the changes in funded status that occurred during the year that are not recognized as part of net periodic benefit costs. Defined Benefit Pension Plans We sponsor three defined benefit pension plans: the Chesapeake Pension Plan, the FPU Pension Plan and the Chesapeake unfunded supplemental executive retirement pension plan ("SERP"). The Chesapeake Pension Plan, a qualified plan, was closed to new participants, effective January 1, 1999, and was frozen with respect to additional years of service and additional compensation, effective January 1, 2005. Benefits under the Chesapeake Pension Plan were based on each participant’s years of service and highest average compensation, prior to the freezing of the plan. Active participants on the date the Chesapeake Pension Plan was frozen were credited with two additional years of service. The FPU Pension Plan, a qualified plan, covers eligible FPU non-union employees hired before January 1, 2005 and union employees hired before the respective union contract expiration dates in 2005 and 2006. Prior to the FPU merger, the FPU Pension Plan was frozen with respect to additional years of service and additional compensation, effective December 31, 2009. The Chesapeake SERP, a nonqualified plan, is comprised of two sub-plans. The first sub-plan was frozen with respect to additional years of service and additional compensation as of December 31, 2004. Benefits under the Chesapeake SERP were based on each participant’s years of service and highest average compensation, prior to the freezing of the plan. Active participants on the date the Chesapeake SERP was frozen were credited with two additional years of service. The second sub-plan provides fixed payments for several executives who joined the Company as a result of an acquisition and whose agreements with the Company provided for this benefit. The unfunded liability for all three plans at both December 31, 2018 and 2017, is included in the other pension and benefit costs liability in our consolidated balance sheets. The following schedule sets forth the funded status at December 31, 2018 and 2017 and the net periodic cost for the years ended December 31, 2018, 2017 and 2016 for the Chesapeake and FPU Pension Plans as well as the Chesapeake SERP:
| Chesapeake Pension Plan |  | FPU Pension Plan |  | Chesapeake SERP
At December 31, | 2018 |  | 2017 |  | 2018 |  | 2017 |  | 2018 |  | 2017
(in thousands) |  |  |  |  |  |  |  |  |  |  |
Change in benefit obligation: |  |  |  |  |  |  |  |  |  |  |
Benefit obligation — beginning of year | $ | 11,443 |  |  | $ | 11,355 |  |  | $ | 64,664 |  |  | $ | 63,832 |  |  | $ | 2,428 |  |  | $ | 2,428 |
Interest cost | 384 |  |  | 402 |  |  | 2,339 |  |  | 2,482 |  |  | 83 |  |  | 89 |
Actuarial loss (gain) | (610 | ) |  | 454 |  |  | (4,739 | ) |  | 1,199 |  |  | (74 | ) |  | 63 |
Benefits paid | (505 | ) |  | (768 | ) |  | (2,887 | ) |  | (2,849 | ) |  | (152 | ) |  | (152 | )
Benefit obligation — end of year | 10,712 |  |  | 11,443 |  |  | 59,377 |  |  | 64,664 |  |  | 2,285 |  |  | 2,428 |
Change in plan assets: |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets — beginning of year | 9,350 |  |  | 8,668 |  |  | 48,396 |  |  | 43,272 |  |  | — |  |  | — |
Actual return on plan assets | (647 | ) |  | 1,144 |  |  | (3,113 | ) |  | 6,025 |  |  | — |  |  | — |
Employer contributions | 451 |  |  | 306 |  |  | 1,205 |  |  | 1,948 |  |  | 152 |  |  | 152 |
Benefits paid | (505 | ) |  | (768 | ) |  | (2,887 | ) |  | (2,849 | ) |  | (152 | ) |  | (152 | )
Fair value of plan assets — end of year | 8,649 |  |  | 9,350 |  |  | 43,601 |  |  | 48,396 |  |  | — |  |  | — |
Reconciliation: |  |  |  |  |  |  |  |  |  |  |
Funded status | (2,063 | ) |  | (2,093 | ) |  | (15,776 | ) |  | (16,268 | ) |  | (2,285 | ) |  | (2,428 | )
Accrued pension cost | $ | (2,063 | ) |  | $ | (2,093 | ) |  | $ | (15,776 | ) |  | $ | (16,268 | ) |  | $ | (2,285 | ) |  | $ | (2,428 | )
Assumptions: |  |  |  |  |  |  |  |  |  |  |
Discount rate | 4.00 | % |  | 3.50 | % |  | 4.25 | % |  | 3.75 | % |  | 4.00 | % |  | 3.50 | %
Expected return on plan assets | 6.00 | % |  | 6.00 | % |  | 6.50 | % |  | 6.50 | % |  | — | % |  | — | %
| Chesapeake Pension Plan |  | FPU Pension Plan |  | Chesapeake SERP
For the Years Ended December 31, | 2018 |  | 2017 |  | 2016 |  | 2018 |  | 2017 |  | 2016 |  | 2018 |  | 2017 |  | 2016
(in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Components of net periodic pension cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest cost | $ | 384 |  |  | $ | 402 |  |  | $ | 421 |  |  | $ | 2,339 |  |  | $ | 2,482 |  |  | $ | 2,525 |  |  | $ | 83 |  |  | $ | 89 |  |  | $ | 91 |
Expected return on assets | (542 | ) |  | (495 | ) |  | (501 | ) |  | (3,091 | ) |  | (2,779 | ) |  | (2,702 | ) |  | — |  |  | — |  |  |
Amortization of actuarial loss | 343 |  |  | 399 |  |  | 459 |  |  | 404 |  |  | 513 |  |  | 519 |  |  | 101 |  |  | 87 |  |  | 87 |
Settlement expense | — |  |  | — |  |  | 161 |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  |
Net periodic pension cost(1) | 185 |  |  | 306 |  |  | 540 |  |  | (348 | ) |  | 216 |  |  | 342 |  |  | 184 |  |  | 176 |  |  | 178 |
Amortization of pre-merger regulatory asset | — |  |  | — |  |  | — |  |  | 761 |  |  | 761 |  |  | 761 |  |  | — |  |  | — |  |  | — |
Total periodic cost | $ | 185 |  |  | $ | 306 |  |  | $ | 540 |  |  | $ | 413 |  |  | $ | 977 |  |  | $ | 1,103 |  |  | $ | 184 |  |  | $ | 176 |  |  | $ | 178 |
Assumptions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Discount rate | 3.50 | % |  | 3.75 | % |  | 3.75 | % |  | 3.75 | % |  | 4.00 | % |  | 4.00 | % |  | 3.50 | % |  | 3.75 | % |  | 3.75 | %
Expected return on plan assets | 6.00 | % |  | 6.00 | % |  | 6.00 | % |  | 6.50 | % |  | 6.50 | % |  | 6.50 | % |  | — | % |  | — | % |  | — | %
(1) As a result of our adoption of ASU 2017-07 on January 1, 2018, the "other than service" cost components of the net periodic costs have been recorded or reclassified to other income (expense), net in the consolidated statements of income. Included in the net periodic costs for the FPU Pension Plan is continued amortization of the FPU pension regulatory asset, which represents the portion attributable to FPU's regulated operations for the changes in funded status that occurred, but were not recognized as part of net periodic cost, prior to the merger with Chesapeake Utilities in October 2009. This was previously deferred as a regulatory asset to be recovered through rates pursuant to an order by the Florida PSC. The unamortized balance of this regulatory asset was $543,000 and $1.3 million at December 31, 2018 and 2017, respectively. Our funding policy provides that payments to the trustee of each qualified plan shall be equal to at least the minimum funding requirements of the Employee Retirement Income Security Act of 1974. The following schedule summarizes the assets of the Chesapeake Pension Plan and the FPU Pension Plan, by investment type, at December 31, 2018, 2017 and 2016:
| Chesapeake Pension Plan |  | FPU Pension Plan
At December 31, | 2018 |  | 2017 |  | 2016 |  | 2018 |  | 2017 |  | 2016
Asset Category |  |  |  |  |  |  |  |  |  |  |
Equity securities | 49.02 | % |  | 52.70 | % |  | 52.93 | % |  | 50.04 | % |  | 55.17 | % |  | 53.18 | %
Debt securities | 40.98 | % |  | 37.79 | % |  | 37.64 | % |  | 41.06 | % |  | 36.56 | % |  | 37.74 | %
Other | 10.00 | % |  | 9.51 | % |  | 9.43 | % |  | 8.90 | % |  | 8.27 | % |  | 9.08 | %
Total | 100.00 | % |  | 100.00 | % |  | 100.00 | % |  | 100.00 | % |  | 100.00 | % |  | 100.00 | %
The investment policy of both the Chesapeake Utilities and FPU Pension Plans is designed to provide the capital assets necessary to meet the financial obligations of the plans. The investment goals and objectives are to achieve investment returns that, together with contributions, will provide funds adequate to pay promised benefits to present and future beneficiaries of the plans, earn a long-term investment return in excess of the growth of the plans’ retirement liabilities, minimize pension expense and cumulative contributions resulting from liability measurement and asset performance, and maintain a diversified portfolio to reduce the risk of large losses. The following allocation range of asset classes is intended to produce a rate of return sufficient to meet the plans’ goals and objectives:
Asset Allocation Strategy
Asset Class | Minimum Allocation Percentage |  | Maximum Allocation Percentage
Domestic Equities (Large Cap, Mid Cap and Small Cap) | 14 | % |  | 32 | %
Foreign Equities (Developed and Emerging Markets) | 13 | % |  | 25 | %
Fixed Income (Inflation Bond and Taxable Fixed) | 26 | % |  | 40 | %
Alternative Strategies (Long/Short Equity and Hedge Fund of Funds) | 6 | % |  | 14 | %
Diversifying Assets (High Yield Fixed Income, Commodities, and Real Estate) | 7 | % |  | 19 | %
Cash | 0 | % |  | 5 | %
Due to periodic contributions and different asset classes producing varying returns, the actual asset values may temporarily move outside of the intended ranges. The investments are monitored on a quarterly basis, at a minimum, for asset allocation and performance. At December 31, 2018 and 2017, the assets of the Chesapeake Pension Plan and the FPU Pension Plan were comprised of the following investments:
| Fair Value Measurement Hierarchy
| At December 31, 2018 |  | At December 31, 2017
Asset Category | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
(in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mutual Funds - Equity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Large Cap (1) | $ | 3,399 |  |  | $ | — |  |  | $ | — |  |  | $ | 3,399 |  |  | $ | 4,245 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,245 |
U.S. Mid Cap (1) | 1,478 |  |  | — |  |  | — |  |  | 1,478 |  |  | 1,775 |  |  | — |  |  | — |  |  | 1,775 |
U.S. Small Cap (1) | 670 |  |  | — |  |  | — |  |  | 670 |  |  | 918 |  |  | — |  |  | — |  |  | 918 |
International (2) | 9,226 |  |  | — |  |  | — |  |  | 9,226 |  |  | 11,916 |  |  | — |  |  | — |  |  | 11,916 |
Alternative Strategies (3) | 5,726 |  |  | — |  |  | — |  |  | 5,726 |  |  | 5,528 |  |  | — |  |  | — |  |  | 5,528 |
| 20,499 |  |  | — |  |  | — |  |  | 20,499 |  |  | 24,382 |  |  | — |  |  | — |  |  | 24,382 |
Mutual Funds - Debt securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed income (4) | 18,630 |  |  | — |  |  | — |  |  | 18,630 |  |  | 18,454 |  |  | — |  |  | — |  |  | 18,454 |
High Yield (4) | 2,818 |  |  | — |  |  | — |  |  | 2,818 |  |  | 2,772 |  |  | — |  |  | — |  |  | 2,772 |
| 21,448 |  |  | — |  |  | — |  |  | 21,448 |  |  | 21,226 |  |  | — |  |  | — |  |  | 21,226 |
Mutual Funds - Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodities (5) | 1,902 |  |  | — |  |  | — |  |  | 1,902 |  |  | 2,154 |  |  | — |  |  | — |  |  | 2,154 |
Real Estate (6) | 2,216 |  |  | — |  |  | — |  |  | 2,216 |  |  | 2,300 |  |  | — |  |  | — |  |  | 2,300 |
Guaranteed deposit (7) | — |  |  | — |  |  | 627 |  |  | 627 |  |  | — |  |  | — |  |  | 436 |  |  | 436 |
| 4,118 |  |  | — |  |  | 627 |  |  | 4,745 |  |  | 4,454 |  |  | — |  |  | 436 |  |  | 4,890 |
Total Pension Plan Assets in fair value hierarchy | $ | 46,065 |  |  | $ | — |  |  | $ | 627 |  |  | 46,692 |  |  | $ | 50,062 |  |  | $ | — |  |  | $ | 436 |  |  | 50,498 |
Investments measured at net asset value (8) |  |  |  |  |  |  | 5,558 |  |  |  |  |  |  |  |  | 7,248 |
Total Pension Plan Assets |  |  |  |  |  |  | $ | 52,250 |  |  |  |  |  |  |  |  | $ | 57,746 |
(1) Includes funds that invest primarily in United States common stocks. (2) Includes funds that invest primarily in foreign equities and emerging markets equities. (3) Includes funds that actively invest in both equity and debt securities, funds that sell short securities and funds that provide long-term capital appreciation. The funds may invest in debt securities below investment grade. (4) Includes funds that invest in investment grade and fixed income securities. (5) Includes funds that invest primarily in commodity-linked derivative instruments and fixed income securities. (6) Includes funds that invest primarily in real estate. (7) Includes investment in a group annuity product issued by an insurance company. (8) Certain investments that were measured at net asset value per share have not been classified in the fair value hierarchy. These amounts are presented to reconcile to total pension plan assets. At December 31, 2018 and 2017, all of the investments were classified under the same fair value measurement hierarchy (Level 1 through Level 3) described under Note 9, Fair Value of Financial Instruments. The Level 3 investments were recorded at fair value based on the contract value of annuity products underlying guaranteed deposit accounts, which was calculated using discounted cash flow models. The contract value of these products represented deposits made to the contract, plus earnings at guaranteed crediting rates, less withdrawals and fees. The following table sets forth the summary of the changes in the fair value of Level 3 investments for the years ended December 31, 2018 and 2017:
| For the Year Ended December 31,
| 2018 |  | 2017
(in thousands) |  |  |
Balance, beginning of year | $ | 436 |  |  | $ | 498 |
Purchases | 1,674 |  |  | 2,271 |
Transfers in | 2,375 |  |  | 1,743 |
Disbursements | (3,872 | ) |  | (4,101 | )
Investment income | 14 |  |  | 25 |
Balance, end of year | $ | 627 |  |  | $ | 436 |
Other Postretirement Benefits Plans We sponsor two defined benefit postretirement health plans: the Chesapeake Postretirement Plan and the FPU Medical Plan. The following table sets forth the funded status at December 31, 2018 and 2017 and the net periodic cost for the years ended December 31, 2018, 2017, and 2016:
| Chesapeake Postretirement Plan |  | FPU Medical Plan
At December 31, | 2018 |  | 2017 |  | 2018 |  | 2017
(in thousands) |  |  |  |  |  |  |
Change in benefit obligation: |  |  |  |  |  |  |
Benefit obligation — beginning of year | $ | 1,128 |  |  | $ | 1,132 |  |  | $ | 1,287 |  |  | $ | 1,349 |
Interest cost | 38 |  |  | 41 |  |  | 47 |  |  | 50 |
Plan participants contributions | 136 |  |  | 118 |  |  | 41 |  |  | 48 |
Actuarial loss (gain) | (131 | ) |  | 72 |  |  | (89 | ) |  | (48 | )
Benefits paid | (169 | ) |  | (235 | ) |  | (99 | ) |  | (112 | )
Benefit obligation — end of year | 1,002 |  |  | 1,128 |  |  | 1,187 |  |  | 1,287 |
Change in plan assets: |  |  |  |  |  |  |
Fair value of plan assets — beginning of year | — |  |  | — |  |  | — |  |  | — |
Employer contributions(1) | 33 |  |  | 117 |  |  | 58 |  |  | 64 |
Plan participants contributions | 136 |  |  | 118 |  |  | 41 |  |  | 48 |
Benefits paid | (169 | ) |  | (235 | ) |  | (99 | ) |  | (112 | )
Fair value of plan assets — end of year | — |  |  | — |  |  | — |  |  | — |
Reconciliation: |  |  |  |  |  |  |
Funded status | (1,002 | ) |  | (1,128 | ) |  | (1,187 | ) |  | (1,287 | )
Accrued postretirement cost | $ | (1,002 | ) |  | $ | (1,128 | ) |  | $ | (1,187 | ) |  | $ | (1,287 | )
Assumptions: |  |  |  |  |  |  |
Discount rate | 4.00 | % |  | 3.50 | % |  | 4.25 | % |  | 3.75 | %
(1) The Chesapeake Postretirement Plan does not receive a Medicare Part-D subsidy. The FPU Medical Plan did not receive a significant subsidy for the post-merger period. Net periodic postretirement benefit costs for 2018, 2017, and 2016 include the following components:
| Chesapeake Postretirement Plan |  | FPU Medical Plan
For the Years Ended December 31, | 2018 |  | 2017 |  | 2016 |  | 2018 |  | 2017 |  | 2016
(in thousands) |  |  |  |  |  |  |  |  |  |  |
Components of net periodic postretirement cost: |  |  |  |  |  |  |  |  |  |  |
Interest cost | $ | 38 |  |  | $ | 41 |  |  | $ | 43 |  |  | $ | 47 |  |  | $ | 50 |  |  | $ | 55 |
Amortization of actuarial loss | 58 |  |  | 53 |  |  | 64 |  |  | — |  |  | — |  |  | — |
Amortization of prior service cost (credit) | (77 | ) |  | (77 | ) |  | (77 | ) |  | — |  |  | — |  |  | — |
Net periodic cost | 19 |  |  | 17 |  |  | 30 |  |  | 47 |  |  | 50 |  |  | 55 |
Amortization of pre-merger regulatory asset | — |  |  | — |  |  | — |  |  | 8 |  |  | 8 |  |  | 8 |
Total periodic cost(1) | $ | 19 |  |  | $ | 17 |  |  | $ | 30 |  |  | $ | 55 |  |  | $ | 58 |  |  | $ | 63 |
Assumptions |  |  |  |  |  |  |  |  |  |  |
Discount rate | 3.50 | % |  | 3.75 | % |  | 3.75 | % |  | 3.75 | % |  | 4.00 | % |  | 4.00 | %
(1) As a result of our adoption of ASU 2017-07 on January 1, 2018, the "other than service" cost components of the net periodic costs have been recorded or reclassified to other income (expense), net in the condensed consolidated statements of income. Similar to the FPU Pension Plan, continued amortization of the FPU Medical Plan regulatory asset related to the unrecognized cost prior to the merger with Chesapeake Utilities was included in the net periodic cost. The unamortized balance of this regulatory asset was $14,000 and $22,000 at December 31, 2018 and 2017, respectively. The following table presents the amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive loss or as a regulatory asset as of December 31, 2018:
(in thousands) | Chesapeake Pension Plan |  | FPU Pension Plan |  | Chesapeake SERP |  | Chesapeake Postretirement Plan |  | FPU Medical Plan |  | Total
Prior service cost (credit) | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (524 | ) |  | $ | — |  |  | $ | (524 | )
Net loss (gain) | 3,865 |  |  | 18,544 |  |  | 559 |  |  | 578 |  |  | (79 | ) |  | 23,467 |
Total | $ | 3,865 |  |  | $ | 18,544 |  |  | $ | 559 |  |  | $ | 54 |  |  | $ | (79 | ) |  | $ | 22,943 |
Accumulated other comprehensive loss (gain) pre-tax(1) | $ | 3,865 |  |  | $ | 3,523 |  |  | $ | 559 |  |  | $ | 54 |  |  | $ | (15 | ) |  | $ | 7,986 |
Post-merger regulatory asset | — |  |  | 15,021 |  |  | — |  |  | — |  |  | (64 | ) |  | 14,957 |
Subtotal | 3,865 |  |  | 18,544 |  |  | 559 |  |  | 54 |  |  | (79 | ) |  | 22,943 |
Pre-merger regulatory asset | — |  |  | 543 |  |  | — |  |  | — |  |  | 14 |  |  | 557 |
Total unrecognized cost | $ | 3,865 |  |  | $ | 19,087 |  |  | $ | 559 |  |  | $ | 54 |  |  | $ | (65 | ) |  | $ | 23,500 |
(1) The total amount of accumulated other comprehensive loss recorded on our consolidated balance sheet as of December 31, 2018 is net of income tax benefits of $2.1 million. Pursuant to a Florida PSC order, FPU continues to record as a regulatory asset a portion of the unrecognized pension and postretirement benefit costs after the merger with Chesapeake Utilities related to its regulated operations, which is included in the above table as a post-merger regulatory asset. FPU also continues to maintain and amortize a portion of the unrecognized pension and postretirement benefit costs prior to the merger with Chesapeake Utilities related to its regulated operations, which is shown as a pre-merger regulatory asset. Assumptions The assumptions used for the discount rate to calculate the benefit obligations were based on the interest rates of high-quality bonds in 2018, considering the expected lives of each of the plans. In determining the average expected return on plan assets for each applicable plan, various factors, such as historical long-term return experience, investment policy and current and expected allocation, were considered. Since Chesapeake Utilities' plans and FPU’s plans have different expected plan lives, particularly in light of the lump-sum-payment option provided in the Chesapeake Pension Plan, different assumptions regarding discount rate and expected return on plan assets were selected for Chesapeake Utilities' and FPU’s plans. Since both pension plans are frozen with respect to additional years of service and compensation, the rate of assumed compensation increases is not applicable. The health care inflation rate for 2018 used to calculate the benefit obligation is 5.0 percent for medical and 6.0 percent for prescription drugs for the Chesapeake Postretirement Plan; and 5.0 percent for both medical and prescription drugs for the FPU Medical Plan. Estimated Future Benefit Payments In 2019, we expect to contribute $163,000 and $1.2 million to the Chesapeake Pension Plan and FPU Pension Plan, respectively, and $383,000 to the Chesapeake SERP. We also expect to contribute $96,000 and $94,000 to the Chesapeake Postretirement Plan and FPU Medical Plan, respectively, in 2019. The schedule below shows the estimated future benefit payments for each of the plans previously described:
| Chesapeake Pension Plan(1) |  | FPU Pension Plan(1) |  | Chesapeake SERP(2) |  | Chesapeake Postretirement Plan(2) |  | FPU Medical Plan(2)
(in thousands) |  |  |  |  |  |  |  |  |
2019 | $ | 528 |  |  | $ | 3,091 |  |  | $ | 383 |  |  | $ | 96 |  |  | $ | 94 |
2020 | $ | 529 |  |  | $ | 3,221 |  |  | $ | 150 |  |  | $ | 85 |  |  | $ | 87 |
2021 | $ | 736 |  |  | $ | 3,299 |  |  | $ | 148 |  |  | $ | 82 |  |  | $ | 91 |
2022 | $ | 595 |  |  | $ | 3,485 |  |  | $ | 147 |  |  | $ | 81 |  |  | $ | 93 |
2023 | $ | 1,244 |  |  | $ | 3,558 |  |  | $ | 145 |  |  | $ | 64 |  |  | $ | 80 |
Years 2024 through 2028 | $ | 3,866 |  |  | $ | 18,570 |  |  | $ | 744 |  |  | $ | 275 |  |  | $ | 402 |
(1) The pension plan is funded; therefore, benefit payments are expected to be paid out of the plan assets. (2) Benefit payments are expected to be paid out of our general funds. Retirement Savings Plan For the years ended December 31, 2018, 2017 and 2016, we sponsored a 401(k) Retirement Savings Plan. This plan is offered to all eligible employees who have completed three months of service. We match 100 percent of eligible participants’ pre-tax contributions to the Retirement Savings Plan up to a maximum of six percent of eligible compensation. The employer matching contribution is made in cash and is invested based on a participant’s investment directions. In addition, we may make a discretionary supplemental contribution to participants in the plan, without regard to whether or not they make pre-tax contributions. Any supplemental employer contribution is generally made in our common stock. With respect to the employer match and supplemental employer contribution, employees are 100 percent vested after two years of service or upon reaching 55 years of age while still employed by us. New employees who do not make an election to contribute and do not opt out of the Retirement Savings Plan will be automatically enrolled at a deferral rate of three percent, and the automatic deferral rate will increase by one percent per year up to a maximum of ten percent. All contributions and matched funds can be invested among the mutual funds available for investment. Employer contributions to our Retirement Savings Plan totaled $5.5 million, $5.0 million, and $4.5 million for the years ended December 31, 2018, 2017 and 2016, respectively. As of December 31, 2018, there were 831,183 shares of our common stock reserved to fund future contributions to the Retirement Savings Plan. Non-Qualified Deferred Compensation Plan Members of our Board of Directors, and officers designated by the Compensation Committee, are eligible to participate in the Non-Qualified Deferred Compensation Plan. Directors can elect to defer any portion of their cash or stock compensation and officers can defer up to 80 percent of their base compensation, cash bonuses or any amount of their stock bonuses (net of required withholdings). Officers may receive a matching contribution on their cash compensation deferrals up to six percent of their compensation, provided it does not duplicate a match they receive in the Retirement Savings Plan. Stock bonuses are not eligible for matching contributions. Participants are able to elect the payment of deferred compensation to begin on a specified future date or upon separation from service. Additionally, participants can elect to receive payments upon the earlier or later of a fixed date or separation from service. The payments can be made in one lump sum or annual installments for up to 15 years. All obligations arising under the Non-Qualified Deferred Compensation Plan are payable from our general assets, although we have established a Rabbi Trust to informally fund the plan. Deferrals of cash compensation may be invested by the participants in various mutual funds (the same options that are available in the Retirement Savings Plan). The participants are credited with gains or losses on those investments. Deferred stock compensation may not be diversified. The participants are credited with dividends on our common stock in the same amount that is received by all other stockholders. Such dividends are reinvested into our common stock. Assets held in the Rabbi Trust, recorded as Investments on the consolidated balance sheet, had a fair value of $6.7 million at both December 31, 2018 and 2017. (See Note 10, Investments, for further details). The assets of the Rabbi Trust are at all times subject to the claims of our general creditors. Deferrals of officer base compensation and cash bonuses and directors’ cash retainers are paid in cash. All deferrals of executive performance shares, which represent deferred stock units, and directors’ stock retainers are paid in shares of our common stock, except that cash is paid in lieu of fractional shares. The value of our stock held in the Rabbi Trust is classified within the stockholders’ equity section of the consolidated balance sheets and has been accounted for in a manner similar to treasury stock. The amounts recorded under the Non-Qualified Deferred Compensation Plan totaled $3.9 million and $3.4 million at December 31, 2018 and 2017, respectively, which are also shown as a deduction against stockholders' equity in the consolidated balance sheet.

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