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Benefit Plans
 6 Months Ended
Jun. 30, 2021
Compensation And Retirement Disclosure [Abstract]  
Benefit Plans

13. BENEFIT PLANS

The following table summarizes key information related to the Company’s pension plans and retirement agreements (in thousands):

 

 

 

Six Months Ended

June 30,

2021

 

 

Year Ended

December 31,

2020

 

Change in Projected Benefit Obligation

 

 

 

 

 

 

 

 

Projected benefit obligation, beginning of period

 

$

33,530

 

 

$

37,551

 

Service cost

 

 

702

 

 

 

1,254

 

Interest cost

 

 

637

 

 

 

1,306

 

Actuarial gain

 

 

—

 

 

 

3,180

 

Other reclassification [1]

 

 

—

 

 

 

(8,925

)

Benefits paid

 

 

(434

)

 

 

(836

)

Projected benefit obligation, end of period

 

$

34,435

 

 

$

33,530

 

Change in Plan Assets

 

 

 

 

 

 

 

 

Plan assets at fair value, beginning of period

 

$

—

 

 

$

—

 

Company contributions

 

 

434

 

 

 

836

 

Benefits paid

 

 

(434

)

 

 

(836

)

Plan assets at fair value, end of period

 

$

—

 

 

$

—

 

Unfunded Status of the Plan

 

$

34,435

 

 

$

33,530

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

2021

 

 

June 30,

2020

 

 

June 30,

2021

 

 

June 30,

2020

 

Components of Net Periodic Benefit Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

351

 

 

$

313

 

 

$

702

 

 

$

627

 

Interest cost

 

 

319

 

 

 

326

 

 

 

637

 

 

 

653

 

Net loss

 

 

197

 

 

 

135

 

 

 

394

 

 

 

270

 

Net periodic pension cost

 

$

867

 

 

$

774

 

 

$

1,733

 

 

$

1,550

 

 

 

[1] The Company has a non-qualified deferred compensation agreement with its CEO. The agreement provided for a lump sum cash payment upon retirement, no sooner than age 55. As of June 30, 2021, the CEO had reached age 55 and was eligible to receive the payment upon retirement.

 

On February 26, 2020, the Company and its CEO entered into an amended and restated executive retirement agreement that amends the CEO’s executive retirement agreement.

 

The amended and restated executive retirement agreement provides that upon the CEO’s retirement from the Company, the Company will pay a lump sum amount initially equal to $8,925,065 (determined as of February 26, 2020) which will be paid in the form of a fixed number of shares of the Company’s common stock. The Grandfathered Payment will be delayed for six months and a day following the effective date of the CEO’s termination of employment in compliance with Section 409A of the Code.

 

On the Effective Date, an amount equal to the Grandfathered Payment was invested in the Company’s common stock. The number of the Company’s shares of common stock as of the Effective Date was equal to the Grandfathered Payment divided by the closing price of the Company’s common stock on the Effective Date (rounded up to the nearest whole number of shares), which equals 553,665 shares of the Company’s common stock. Additional shares of the Company’s common stock are credited with a value equal to any dividends declared and paid on the Company’s shares of common stock, calculated by reference to the closing price of the Company’s common stock on the payment date for such dividends (rounded up to the nearest whole number of shares).

 

 

 

The Company has established several trusts for the purpose of paying the retirement benefit pursuant to the amended and restated executive retirement agreement. The trusts are revocable “rabbi trusts” and the assets of the trusts are subject to the claims of the Company’s creditors in the event of the Company’s insolvency.

 

The Company repurchased shares of its outstanding common stock under its stock buyback program and contributed such shares to the trusts in order to fund the retirement benefit under the amended and restated executive retirement agreement. In accordance with Accounting Standards Codification (“ASC”) 710 – Compensation-General, the shares of common stock held in the rabbi trusts are classified as treasury stock.  In addition, the amended and restated executive retirement agreement qualifies for equity accounting under ASC 710 and therefore, the fair value of the Grandfathered Payment has been reclassified to stockholders’ equity.

 

The Company and its CEO entered into on May 27, 2021, and effective as of July 1, 2021, an Amended and Restated Executive Retirement Agreement which replaces the February 26, 2020 agreement. Refer to Note 15 – Subsequent Events for further information.

 

The long-term portion of the pension liability as of June 30, 2021 and December 31, 2020 was $34.1 million and $33.2 million, respectively, and is included in Other Non-Current Liabilities in the accompanying consolidated balance sheets.