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EMPLOYEE BENEFIT PLANS | 12 Months Ended
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Dec. 31, 2016
EMPLOYEE BENEFIT PLANS |
EMPLOYEE BENEFIT PLANS | NOTE I – EMPLOYEE BENEFIT PLANS Nonunion Defined Benefit Pension, Supplemental Benefit, and Postretirement Health Benefit Plans The Company has a noncontributory defined benefit pension plan covering substantially all noncontractual employees hired before January 1, 2006. Benefits under the defined benefit pension plan are generally based on years of service and employee compensation. In June 2013, the Company amended the nonunion defined benefit pension plan to freeze the participants’ final average compensation and years of credited service as of July 1, 2013. The amendment resulted in a plan curtailment and eliminated the service cost of the plan. The plan amendment did not impact the vested benefits of retirees or former employees whose benefits have not yet been paid from the plan. Effective July 1, 2013, participants of the nonunion defined benefit pension plan who were active employees of the Company became eligible for the discretionary defined contribution feature of the Company’s nonunion 401(k) and defined contribution plan in which all eligible noncontractual employees hired subsequent to December 31, 2005 also participate (see Defined Contribution Plans section within this Note). In consideration of the freeze of the accrual of benefits, the investment strategy has become more focused on reducing investment, interest rate, and longevity risks in the plan. As part of this strategy, in January 2014, the plan purchased a nonparticipating annuity contract from an insurance company to settle the pension obligation related to the vested benefits of 375 plan participants and beneficiaries receiving monthly benefit payments at the time of the contract purchase. Upon payment by the plan of the $25.4 million premium for the annuity contract, pension benefit obligations totaling $23.3 million were irrevocably transferred to the insurance company. The Company recognized pension settlement expense as a component of net periodic benefit cost related to the nonparticipating annuity contract purchase amount of $25.4 million plus total lump-sum benefit distributions of $32.1 million in 2014 with corresponding reductions in the unrecognized net actuarial loss of the nonunion defined benefit pension plan. The Company also recognized pension settlement expense in 2016, 2015, and 2014 related to lump-sum benefit distributions from the plan. The pension settlement expense amounts are presented in the tables within this Note. The remaining pre‑tax unrecognized net actuarial loss of $23.3 million will continue to be amortized over the average remaining future years of service of the plan participants, which is approximately eight years. The Company will continue to incur additional quarterly pension settlement expense related to lump‑sum distributions from the nonunion defined benefit pension plan. The Company also has an unfunded supplemental benefit plan (“SBP”) for the purpose of supplementing benefits under the Company’s nonunion defined benefit pension plan for executive officers designated as participants in the SBP by the Company’s Board of Directors. The Compensation Committee of the Company’s Board of Directors (“Compensation Committee”) elected to close the SBP to new entrants and to place a cap on the maximum payment per participant to existing participants in the SBP effective January 1, 2006. In place of the SBP, eligible officers of the Company appointed after 2005 participate in a long‑term cash incentive plan (see Cash Long‑Term Incentive Compensation Plan section within this Note). Effective December 31, 2009, the Compensation Committee elected to freeze the accrual of benefits for remaining participants under the SBP. With the exception of early retirement penalties that may apply in certain cases, the valuation inputs for calculating the frozen SBP benefits to be paid to participants, including final average salary and the interest rate, were frozen at December 31, 2009. As presented in the tables within this Note, pension settlement expense and a corresponding reduction in the net actuarial loss was recorded in 2016 and 2014 related to lump-sum SBP benefit distributions. The SBP did not incur pension settlement expense related to lump‑sum distributions in 2015. The Company sponsors an insured postretirement health benefit plan that provides supplemental medical benefits and dental and vision benefits primarily to certain officers of the Company and certain subsidiaries. Effective January 1, 2011, retirees began paying a portion of the premiums under the plan according to age and coverage levels. The amendment to the plan to implement retiree premiums resulted in an unrecognized prior service credit which was recorded in accumulated other comprehensive loss and is being amortized over approximately nine years. The following table discloses the changes in benefit obligations and plan assets of the Company’s nonunion defined benefit plans for years ended December 31, the measurement date of the plans:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |  | 2016 |  | 2015 |
|  | (in thousands) |
Change in benefit obligations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligations at beginning of year |  | $ | 159,607 |  | $ | 174,410 |  | $ | 4,917 |  | $ | 6,782 |  | $ | 24,616 |  | $ | 22,116 |
Service cost |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 429 |  |  | 406 |
Interest cost |  |  | 4,572 |  |  | 5,200 |  |  | 130 |  |  | 123 |  |  | 1,017 |  |  | 913 |
Actuarial (gain) loss(1) |  |  | 4,202 |  |  | 494 |  |  | (7) |  |  | (47) |  |  | 133 |  |  | 1,806 |
Benefits paid |  |  | (16,896) |  |  | (20,892) |  |  | (246) |  |  | (1,941) |  |  | (663) |  |  | (625) |
Settlement loss |  |  | 521 |  |  | 395 |  |  | — |  |  | — |  |  | — |  |  | — |
Benefit obligations at end of year |  |  | 152,006 |  |  | 159,607 |  |  | 4,794 |  |  | 4,917 |  |  | 25,532 |  |  | 24,616 |
Change in plan assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  |  | 136,917 |  |  | 158,265 |  |  | — |  |  | — |  |  | — |  |  | — |
Actual return (loss) on plan assets |  |  | 11,384 |  |  | (506) |  |  | — |  |  | — |  |  | — |  |  | — |
Employer contributions |  |  | 13,400 |  |  | 50 |  |  | 246 |  |  | 1,941 |  |  | 663 |  |  | 625 |
Benefits paid |  |  | (16,896) |  |  | (20,892) |  |  | (246) |  |  | (1,941) |  |  | (663) |  |  | (625) |
Fair value of plan assets at end of year |  |  | 144,805 |  |  | 136,917 |  |  | — |  |  | — |  |  | — |  |  | — |
Funded status at end of year |  | $ | (7,201) |  | $ | (22,690) |  | $ | (4,794) |  | $ | (4,917) |  | $ | (25,532) |  | $ | (24,616) |
Accumulated benefit obligation |  | $ | 152,006 |  | $ | 159,607 |  | $ | 4,794 |  | $ | 4,917 |  | $ | 25,532 |  | $ | 24,616 |
| (1) |  | The actuarial loss on the nonunion defined benefit pension plan was higher for 2016, primarily due to a decrease in the discount rate used to remeasure the plan obligation at December 31, 2016 versus December 31, 2015.
Amounts recognized in the consolidated balance sheets at December 31 consisted of the following:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |  | 2016 |  | 2015 |
|  | (in thousands) |
Current liabilities (included in accrued expenses) |  | $ | — |  | $ | — |  | $ | (989) |  | $ | (246) |  | $ | (690) |  | $ | (736) |
Noncurrent liabilities (included in pension and postretirement liabilities) |  |  | (7,201) |  |  | (22,690) |  |  | (3,805) |  |  | (4,671) |  |  | (24,842) |  |  | (23,880) |
Liabilities recognized |  | $ | (7,201) |  | $ | (22,690) |  | $ | (4,794) |  | $ | (4,917) |  | $ | (25,532) |  | $ | (24,616) |
The following is a summary of the components of net periodic benefit cost for the Company’s nonunion benefit plans for the years ended December 31:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |
|  | (in thousands) |  |  |  |
Service cost |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 429 |  | $ | 406 |  | $ | 280 |
Interest cost |  |  | 4,572 |  |  | 5,200 |  |  | 6,039 |  |  | 130 |  |  | 123 |  |  | 184 |  |  | 1,017 |  |  | 913 |  |  | 788 |
Expected return on plan assets |  |  | (8,607) |  |  | (9,180) |  |  | (10,419) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Amortization of prior service credit |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (190) |  |  | (190) |  |  | (190) |
Pension settlement expense |  |  | 3,023 |  |  | 3,202 |  |  | 5,880 |  |  | 206 |  |  | — |  |  | 715 |  |  | — |  |  | — |  |  | — |
Amortization of net actuarial loss(1) |  |  | 4,087 |  |  | 3,218 |  |  | 2,398 |  |  | 152 |  |  | 159 |  |  | 214 |  |  | 705 |  |  | 853 |  |  | 93 |
Net periodic benefit cost |  | $ | 3,075 |  | $ | 2,440 |  | $ | 3,898 |  | $ | 488 |  | $ | 282 |  | $ | 1,113 |  | $ | 1,961 |  | $ | 1,982 |  | $ | 971 |
| (1) |  | The Company amortizes actuarial losses over the average remaining active service period of the plan participants and does not use a corridor approach.
The following is a summary of the pension settlement distributions and pension settlement expense for the years ended December 31:
|  | Nonunion Defined |  | Supplemental |
|  | Benefit Pension Plan |  | Benefit Plan |
|  | 2016(1) |  | 2015(1) |  | 2014(2) |  | 2016 |  | 2015(3) |  | 2014 |
|  | (in thousands, except per share data) |
Pension settlement distributions |  | $ | 16,515 |  | $ | 20,622 |  | $ | 57,518 |  | $ | 246 |  | $ | 1,941 |  | $ | 853 |
Pension settlement expense, pre-tax |  | $ | 3,023 |  | $ | 3,202 |  | $ | 5,880 |  | $ | 206 |  | $ | — |  | $ | 715 |
Pension settlement expense per diluted share, net of taxes |  | $ | 0.07 |  | $ | 0.07 |  | $ | 0.14 |  | $ | 0.01 |  | $ | — |  | $ | 0.02 |
| (1) |  | Pension settlement distributions represent lump‑sum benefit distributions paid.
| (2) |  | Pension settlement distributions represent $32.1 million of lump‑sum benefit distributions and a $25.4 million nonparticipating annuity contract purchase.
| (3) |  | The 2015 SBP distribution represents the portion of a benefit related to an officer retirement that occurred in 2014 which was delayed for six months after retirement in accordance with IRC Section 409A. The pension settlement expense related to this distribution was recognized in 2014.
Included in accumulated other comprehensive loss at December 31 were the following pre‑tax amounts that have not yet been recognized in net periodic benefit cost:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |  | 2016 |  | 2015 |
|  | (in thousands) |
Unrecognized net actuarial loss |  | $ | 23,294 |  | $ | 28,457 |  | $ | 635 |  | $ | 1,001 |  | $ | 5,708 |  | $ | 6,280 |
Unrecognized prior service credit |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (317) |  |  | (507) |
Total |  | $ | 23,294 |  | $ | 28,457 |  | $ | 635 |  | $ | 1,001 |  | $ | 5,391 |  | $ | 5,773 |
The following amounts, which are reported within accumulated other comprehensive loss at December 31, 2016 are expected to be recognized as components of net periodic benefit cost in 2017 on a pre‑tax basis. (Amounts exclude the effect of pension settlements, which the Company will incur for the nonunion defined benefit pension plan.)
|  | Nonunion |  | Supplemental |  | Postretirement |
|  | Defined Benefit |  | Benefit |  | Health |
|  | Pension Plan |  | Plan |  | Benefit Plan |
|  | (in thousands) |
Unrecognized net actuarial loss |  | $ | 2,960 |  | $ | 109 |  | $ | 620 |
Unrecognized prior service credit |  |  | — |  |  | — |  |  | (190) |
Total |  | $ | 2,960 |  | $ | 109 |  | $ | 430 |
The discount rate is determined by matching projected cash distributions with appropriate high‑quality corporate bond yields in a yield curve analysis. Weighted‑average assumptions used to determine nonunion benefit obligations at December 31 were as follows:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |  | 2016 |  | 2015 |
Discount rate |  | 3.4 | % | 3.5 | % | 2.7 | % | 2.6 | % | 4.0 | % | 4.2 | %
Weighted‑average assumptions used to determine net periodic benefit cost for the Company’s nonunion benefit plans for the years ended December 31 were as follows:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2016(1) |  | 2015(2) |  | 2014(3) |  | 2016 |  | 2015 |  | 2014(4) |  | 2016 |  | 2015 |  | 2014 |
Discount rate |  | 3.5 | % | 3.2 | % | 3.8 | % | 2.6 | % | 2.5 | % | 2.8 | % | 4.2 | % | 3.9 | % | 4.7 | %
Expected return on plan assets |  | 6.5 | % | 6.5 | % | 6.5 | % | N/A |  | N/A |  | N/A |  | N/A |  | N/A |  | N/A |
| (1) |  | The discount rate presented was used to determine the first quarter 2016 expense, and the interim discount rate established upon each quarterly settlement in 2016 of 3.0%, 2.7%, and 2.7% was used to calculate the expense/credit for the second, third, and fourth quarter of 2016, respectively.
| (2) |  | The discount rate presented was used to determine the first quarter 2015 credit, and the interim discount rate established upon each quarterly settlement in 2015 of 3.0%, 3.5%, and 3.4% was used to calculate the expense/credit for the second, third, and fourth quarter of 2015, respectively.
| (3) |  | The discount rate presented was used to determine the first quarter 2014 credit, and the interim discount rate established upon each quarterly settlement in 2014 of 3.5%, 3.3%, and 3.4% was used to calculate the credit for the second, third, and fourth quarter of 2014, respectively.
| (4) |  | The discount rate presented was used to determine expense for the first ten months of 2014 and the discount rate of 2.5% established upon the October 31, 2014 settlement was used to calculate expense for the last two months of 2014.
The assumed health care cost trend rates for the Company’s postretirement health benefit plan at December 31 were as follows:
|  | 2016 |  | 2015
Health care cost trend rate assumed for next year |  | 8.0 | % |  | 6.7 | %
Rate to which the cost trend rate is assumed to decline |  | 4.5 | % |  | 4.5 | %
Year that the rate reaches the cost trend assumed rate |  | 2031 |  |  | 2030 |
The health care cost trend rates have a significant effect on the obligations reported for health care plans. A one‑percentage‑point change in assumed health care cost trend rates would have the following effects on the Company’s postretirement health benefit plan for the year ended December 31, 2016:
|  | One Percentage Point |
|  | Increase |  | Decrease |
|  | (in thousands) |
Effect on total of service and interest cost components |  | $ | 322 |  | $ | (252) |
Effect on postretirement benefit obligation |  | $ | 5,059 |  | $ | (4,036) |
Estimated future benefit payments from the Company’s nonunion defined benefit pension (paid from trust assets), SBP, and postretirement health benefit plans, which reflect expected future service as appropriate, as of December 31, 2016 are as follows:
|  | Nonunion |  | Supplemental |  | Postretirement |
|  | Defined Benefit |  | Benefit |  | Health |
|  | Pension Plan |  | Plan |  | Benefit Plan |
|  | (in thousands) |
2017 |  | $ | 26,608 |  | $ | 989 |  | $ | 690 |
2018 |  | $ | 12,386 |  | $ | — |  | $ | 777 |
2019 |  | $ | 12,372 |  | $ | 3,107 |  | $ | 854 |
2020 |  | $ | 12,543 |  | $ | — |  | $ | 928 |
2021 |  | $ | 12,031 |  | $ | — |  | $ | 1,003 |
2022-2026 |  | $ | 51,341 |  | $ | — |  | $ | 6,202 |
The Company’s contributions to the defined benefit pension plan are based upon the minimum funding levels required under provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Pension Protection Act of 2006 (the “PPA”), with the maximum contributions not to exceed deductible limits under the IRC. Based upon currently available actuarial information, which is subject to change upon completion of the 2017 actuarial valuation of the plan, the Company does not expect to have cash outlays for required minimum contributions to its nonunion defined benefit pension plan in 2017. The plan’s actuary certified the adjusted funding target attainment percentage (“AFTAP”) to be 107.8% as of the January 1, 2016 valuation date. The AFTAP is determined by measurements prescribed by the IRC, which differ from the funding measurements for financial statement reporting purposes. Nonunion Defined Benefit Pension Plan Assets The Company establishes the expected long‑term rate of return on nonunion defined benefit pension plan assets, which are held in trust, by considering the historical returns for the current mix of investments. In addition, consideration is given to the range of expected returns for the current pension plan investment mix provided by the plan’s investment advisor. This approach is intended to establish a long‑term, nonvolatile rate. The Company’s long‑term expected rate of return utilized in determining its 2017 nonunion defined benefit pension plan expense is 6.5%. The overall objectives of the investment strategy for the Company’s nonunion defined benefit plan are to achieve a rate of return that over the long term will fund liabilities and provide for required benefits under the plan in a manner that satisfies the fiduciary requirements of ERISA. The investment strategy aims to maximize the long‑term return on plan assets subject to an acceptable level of investment risk, liquidity risk, and funding risk utilizing target asset allocations for investments. The plan’s long‑term asset allocation policy is intended to protect or improve the purchasing power of plan assets and provide adequate diversification to limit the possibility of experiencing a substantial loss over a one‑year period. The weighted‑average target, acceptable ranges, and actual asset allocations of the Company’s nonunion defined benefit pension plan at December 31 are summarized in the following table:
|  | 2016 |  |  |
|  | Target |  |  | Acceptable |  |  | Weighted-Average Allocation |
|  | Allocation |  |  | Range |  |  | 2016 |  | 2015 |
Equity Securities |  |  |  |  |  |  |  |  |  |  |  |  |  |
Large Cap U.S. Equity |  | 13.0 | % |  | 8.0 | % | - | 20.0 | % |  | 14.0 | % | 17.2 | %
Mid Cap U.S. Equity |  | 9.0 |  |  | 7.0 | % | - | 11.0 | % |  | 9.4 |  | 10.4 |
Small Cap U.S. Equity |  | 9.0 |  |  | 7.0 | % | - | 11.0 | % |  | 10.0 |  | 10.3 |
International Equity |  | 14.0 |  |  | 10.0 | % | - | 18.0 | % |  | 14.4 |  | 17.1 |
Income Securities |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt Instruments |  | 25.0 |  |  | 20.0 | % | - | 30.0 | % |  | 25.0 |  | 19.5 |
Floating Rate Loan Fund |  | 10.0 |  |  | 3.0 | % | - | 15.0 | % |  | 10.8 |  | 11.6 |
Cash Equivalents |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and Cash Equivalents |  | 20.0 |  |  | 0.0 | % | - | 25.0 | % |  | 16.4 |  | 13.9 |
|  | 100.0 | % |  |  |  |  |  |  |  | 100.0 | % | 100.0 | %
Investment balances and results are reviewed quarterly. Investment performance is generally compared to the three‑to‑five year performance of recognized market indices as well as analyzed for periods shorter than three years for each investment fund and over five years for the total fund. Although investment allocations which fall outside the acceptable range at the end of any quarter are usually rebalanced based on the target allocation, the Company has the discretion to maintain cash or other short‑term investments during periods of market volatility. Certain types of investments and transactions are prohibited or restricted by the Company’s written pension investment policy, including, but not limited to, borrowing of money; purchase of securities on margin; short sales; pledging, mortgaging, or hypothecating securities except loans of securities that are fully‑collateralized; purchase or sale of futures, options, or derivatives for speculation or leverage; purchase or sale of commodities; or illiquid interests in real estate or mortgages. In addition to index fund investments in equity and income securities, the plan also holds investments in actively managed portfolios which include investments in an actively managed portfolio of mid-cap U.S. equity securities and separate actively managed portfolios of short-term debt instruments. The short-term debt instrument portfolios include 1-3 year and 1-5 year fixed income portfolios, which aim to approximate or exceed the returns of their respective benchmarks while preserving capital, and a total return fixed income portfolio with high quality investment grade corporate bond and high yield bond holdings, which seeks to provide less volatility than longer duration fixed income strategies while generating income. In addition to the requirements of the pension investment policy, certain investment restrictions apply to the actively managed portfolios, including: guidelines for permitted investments; minimum acceptable credit quality of securities; maximum maturity of investments; limitations on the concentration of certain types of investments; and/or acceptable effective duration period ranges. The fair value of the Company’s nonunion defined benefit pension plan assets at December 31, 2016, by major asset category and fair value hierarchy level (see Fair Value Measurements accounting policy in Note B), were as follows:
|  |  |  |  | Fair Value Measurements Using |
|  |  |  |  | Quoted Prices |  | Significant |  | Significant |
|  |  |  |  | In Active |  | Observable |  | Unobservable |
|  |  |  |  | Markets |  | Inputs |  | Inputs |
|  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  | (in thousands) |
Cash and Cash Equivalents(1) |  | $ | 23,696 |  | $ | 23,696 |  | $ | — |  | $ | — |
Debt Instruments(2) |  |  | 36,245 |  |  | — |  |  | 36,245 |  |  | — |
Floating Rate Loans(3) |  |  | 15,687 |  |  | 15,687 |  |  | — |  |  | — |
Large Cap U.S. Equity |  |  | 20,208 |  |  | 20,208 |  |  | — |  |  | — |
Mid Cap U.S. Equity |  |  | 13,597 |  |  | 13,597 |  |  | — |  |  | — |
Small Cap U.S. Equity |  |  | 14,561 |  |  | 14,561 |  |  | — |  |  | — |
International Equity |  |  | 20,811 |  |  | 20,811 |  |  | — |  |  | — |
|  | $ | 144,805 |  | $ | 108,560 |  | $ | 36,245 |  | $ | — |
| (1) |  | Consists primarily of money market mutual funds.
| (2) |  | Includes corporate debt instruments (81%), mortgage-backed instruments (10%), treasury instruments (7%), municipal debt instruments (1%), and agency debt instruments (1%) which are priced using daily bid prices. The fair value measurements are provided by a pricing service which uses the market approach with inputs derived from observable market data.
| (3) |  | Consists of a floating rate loan mutual fund.
The fair value of the Company’s nonunion defined benefit pension plan assets at December 31, 2015, by major asset category and fair value hierarchy level (see Fair Value Measurements accounting policy in Note B), were as follows:
|  |  |  |  | Fair Value Measurements Using |
|  |  |  |  | Quoted Prices |  | Significant |  | Significant |
|  |  |  |  | In Active |  | Observable |  | Unobservable |
|  |  |  |  | Markets |  | Inputs |  | Inputs |
|  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  | (in thousands) |
Cash and Cash Equivalents(1) |  | $ | 19,079 |  | $ | 19,079 |  | $ | — |  | $ | — |
Debt Instruments(2) |  |  | 26,662 |  |  | — |  |  | 26,662 |  |  | — |
Floating Rate Loans(3) |  |  | 15,868 |  |  | 15,868 |  |  | — |  |  | — |
Large Cap U.S. Equity |  |  | 23,459 |  |  | 23,459 |  |  | — |  |  | — |
Mid Cap U.S. Equity |  |  | 14,276 |  |  | 14,276 |  |  | — |  |  | — |
Small Cap U.S. Equity |  |  | 14,135 |  |  | 14,135 |  |  | — |  |  | — |
International Equity |  |  | 23,438 |  |  | 23,438 |  |  | — |  |  | — |
|  | $ | 136,917 |  | $ | 110,255 |  | $ | 26,662 |  | $ | — |
| (1) |  | Consists primarily of money market mutual funds.
| (2) |  | Includes corporate debt instruments (74%), mortgage‑backed instruments (17%), treasury instruments (6%), municipal debt instruments (2%), and agency debt instruments (1%) which are priced using daily bid prices. The fair value measurements are provided by a pricing service which uses the market approach with inputs derived from observable market data.
| (3) |  | Consists of a floating rate loan mutual fund.
Deferred Compensation Plans The Company has deferred salary agreements with certain executives for which liabilities of $3.4 million and $3.9 million were recorded as of December 31, 2016 and 2015, respectively. The deferred salary agreements include a provision that immediately vests all benefits and provides for a lump‑sum payment upon a change in control of the Company that is followed by a termination of the executive. The Compensation Committee elected to close the deferred salary agreement program to new entrants effective January 1, 2006. In place of the deferred salary agreement program, officers appointed after 2005 participate in the Cash Long‑Term Incentive Plan (see Cash Long‑Term Incentive Compensation Plan section within this Note). The Company maintains a Voluntary Savings Plan (“VSP”), a nonqualified deferred compensation program for the benefit of certain executives of the Company and certain subsidiaries. Eligible employees may defer receipt of a portion of their salary and incentive compensation into the VSP by making an election prior to the beginning of the year in which the salary compensation is payable and, for incentive compensation, by making an election at least six months prior to the end of the performance period to which the incentive relates. The Company credits participants’ accounts with applicable rates of return based on a portfolio selected by the participants from the investments available in the plan. The Company match related to the VSP was suspended beginning January 1, 2010. All deferrals, Company match, and investment earnings are considered part of the general assets of the Company until paid. Accordingly, the consolidated balance sheets reflect the fair value of the aggregate participant balances, based on quoted prices of the mutual fund investments, as both an asset and a liability of the Company. As of December 31, 2016 and 2015, VSP balances of $2.2 million and $2.1 million, respectively, were included in other long‑term assets with a corresponding amount recorded in other long‑term liabilities. Defined Contribution Plans The Company and its subsidiaries have various defined contribution 401(k) plans that cover substantially all employees. The plans permit participants to defer a portion of their salary up to a maximum of 69% as determined under Section 401(k) of the IRC. For certain participating subsidiaries, the Company matches 50% of nonunion participant contributions up to the first 6% of annual compensation. The plans also allow for discretionary Company contributions determined annually. The Company’s matching expense for the 401(k) plans totaled $5.7 million, $5.5 million, and $4.9 million for 2016, 2015, and 2014, respectively. Effective July 1, 2013, participants in the nonunion defined benefit pension plan who were active employees of the Company became eligible for the discretionary defined contribution feature of Company’s nonunion 401(k) and defined contribution plan in which all eligible noncontractual employees hired subsequent to December 31, 2005 also participate. Participants are fully vested in their benefits under the defined contribution plan after three years of service. The Company may make discretionary contributions to the defined contribution plan. In 2016, 2015, and 2014, the Company recognized expense of $5.0 million, $9.5 million and $9.0 million, respectively, related to its contributions to the defined contribution plan. Cash Long‑Term Incentive Compensation Plan The Company maintains a performance-based Cash Long-Term Incentive Compensation Plan (“LTIP”) for officers of the Company or its subsidiaries who are not active participants in the deferred salary agreement program. The LTIP incentive, which is generally earned over three years, is based, in part, upon a proportionate weighting of return on capital employed and shareholder returns compared to a peer group, as specifically defined in the plan document. As of December 31, 2016, 2015, and 2014, $3.9 million, $6.7 million, $7.6 million, respectively, were accrued for future payments under the plans. Other Plans Other long‑term assets include $47.4 million and $45.1 million at December 31, 2016 and 2015, respectively, in the cash surrender value of life insurance policies. These policies are intended to provide funding for long‑term nonunion benefit arrangements such as the Company’s SBP and deferred compensation plans. A portion of the Company’s cash surrender value of variable life insurance policies have investments, through separate accounts, in equity and fixed income securities and, therefore, are subject to market volatility. The Company recognized gains associated with changes in the cash surrender value and proceeds from life insurance policies of $2.9 million, $0.3 million, and $3.8 million during 2016, 2015, and 2014, respectively. Multiemployer Plans ABF Freight System, Inc. and certain other subsidiaries reported in the Company’s Asset-Based operating segment (“ABF Freight”) contribute to multiemployer pension and health and welfare plans, which have been established pursuant to the Taft-Hartley Act, to provide benefits for its contractual employees. ABF Freight’s contributions generally are based on the time worked by its contractual employees, in accordance with the ABF NMFA and other related supplemental agreements. As of December 2016, approximately 77% of ABF Freight employees were covered under the ABF NMFA. ABF Freight recognizes as expense the contractually required contributions for each period and recognizes as a liability any contributions due and unpaid. The ABF NMFA and the related supplemental agreements provide for continued contributions to various multiemployer health, welfare, and pension plans maintained for the benefit of ABF Freight employees who are members of the IBT. Upon implementation of the ABF NMFA on November 3, 2013, contribution rate increases for the benefits under the collective bargaining agreement were applied retroactively to August 1, 2013. The combined contribution rates for health, welfare, and pension benefits under the ABF NMFA may increase up to $1.00 per hour each August 1 providing that the plans provide evidence that an increase is actuarially necessary. The multiemployer plans to which ABF Freight segment contributes are jointly‑trusteed (half of the trustees of each plan are selected by the participating employers, the other half by the IBT) and cover collectively-bargained employees of multiple unrelated employers. Due to the inherent nature of multiemployer plans, there are risks associated with participation in these plans that differ from single‑employer plans. Assets received by the plans are not segregated by employer, and contributions made by one employer can be and are used to provide benefits to current and former employees of other employers. If a participating employer in a multiemployer plan no longer contributes to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. If a participating employer in a multiemployer pension plan completely withdraws from the plan, it owes to the plan its proportionate share of the plan’s unfunded vested benefits, referred to as a withdrawal liability. A complete withdrawal generally occurs when the employer permanently ceases to have an obligation to contribute to the plan. Withdrawal liability is also owed in the event the employer withdraws from a plan in connection with a mass withdrawal, which generally occurs when all or substantially all employers withdraw from the plan pursuant to an agreement in a relatively short period of time. Were ABF Freight to completely withdraw from certain multiemployer pension plans, whether in connection with a mass withdrawal or otherwise, under current law, ABF Freight would have material liabilities for its share of the unfunded vested liabilities of each such plan. Pension Plans The 25 multiemployer pension plans to which ABF Freight contributes vary greatly in size and in funded status. Contribution obligations to these plans are specified in the ABF NMFA, which will remain in effect through March 31, 2018. The funding obligations to the pension plans are intended to satisfy the requirements imposed by the PPA, which was permanently extended by the Multiemployer Pension Reform Act (the “Reform Act”) included in the Consolidated and Further Continuing Appropriations Act of 2015. Among other things, the PPA requires that “endangered” (generally less than 80% funded and commonly called “yellow zone”) plans adopt “funding improvement plans” and that “critical” (generally less than 65% funded and commonly called “red zone”) plans adopt “rehabilitation plans” that are intended to improve the plan’s funded status over time. Through the term of its current collective bargaining agreement, ABF Freight’s contribution obligations generally will be satisfied by making the specified contributions when due. However, the Company cannot determine with any certainty the contributions that will be required under future collective bargaining agreements for ABF Freight’s contractual employees. The Reform Act includes provisions to address the funding of multiemployer pension plans in “critical and declining” status, including certain of those in which ABF Freight participates. Critical and declining status is applicable to critical status plans that are projected to become insolvent anytime in the current plan year or during the next 14 plan years, or if the plan is projected to become insolvent within the next 19 plan years and either the plan’s ratio of inactive participants to active participants exceeds two to one or the plan’s funded percentage is less than 80%. Provisions of the Reform Act include, among others, providing qualifying plans the ability to self‑correct funding issues, subject to various requirements and restrictions, including applying to the U.S. Department of Treasury (the “Treasury Department”) for the reduction of certain accrued benefits. Based on the most recent annual funding notices the Company has received, most of which are for plan years ended December 31, 2015, approximately 60% of the Asset-Based contributions to multiemployer pension plans were made to plans that are in “critical and declining” status, including the Central States, Southeast and Southwest Areas Pension Plan (the “Central States Pension Plan”) discussed below, approximately 4% were made to plans that are in “critical status” but not “critical and declining” status, and approximately 3% were made to plans that are in “endangered status,” each as defined by the PPA. The Asset-Based segment’s participation in multiemployer pension plans is summarized in the table below. The multiemployer pension plans listed separately in the table represent plans that are individually significant to the Asset-Based segment based on the amount of plan contributions. The severity of a plan’s underfunded status was also considered in the analysis of individually significant funds to be separately disclosed. Significant multiemployer pension funds and key participation information were as follows:
|  |  |  | Pension |  | FIP/RP |  |  |  |  |  |  |  |  |  |  |
|  |  |  | Protection Act |  | Status |  | Contributions (d) |  |
|  | EIN/Pension |  | Zone Status (b) |  | Pending/ |  | (in thousands) |  | Surcharge
Legal Name of Plan |  | Plan Number (a) |  | 2016 |  | 2015 |  | Implemented (c) |  | 2016 |  | 2015 |  | 2014 |  | Imposed (e)
Central States, Southeast and Southwest Areas Pension Plan(1)(2) |  | 36-6044243 |  | Critical and Declining |  | Critical and Declining |  | Implemented(3) |  | $ | 77,891 |  | $ | 77,491 |  | $ | 74,001 |  | No
Western Conference of Teamsters Pension Plan(2) |  | 91-6145047 |  | Green |  | Green |  | No |  |  | 25,075 |  |  | 24,474 |  |  | 23,030 |  | No
Central Pennsylvania Teamsters Defined Benefit Plan(1)(2) |  | 23-6262789 |  | Green |  | Green |  | No |  |  | 13,381 |  |  | 13,147 |  |  | 12,810 |  | No
I. B. of T. Union Local No. 710 Pension Fund(5)(6) |  | 36-2377656 |  | Green(4) |  | Green(4) |  | No |  |  | 9,670 |  |  | 10,020 |  |  | 9,186 |  | No
All other plans in the aggregate |  |  |  |  |  |  |  |  |  |  | 28,122 |  |  | 26,766 |  |  | 25,150 |  |
Total multiemployer pension contributions paid(7) |  |  |  |  |  |  |  |  |  | $ | 154,139 |  | $ | 151,898 |  | $ | 144,177 |  |
Table Heading Definitions
| (a) |  | The “EIN/Pension Plan Number” column provides the Federal Employer Identification Number (EIN) and the three‑digit plan number, if applicable.
| (b) |  | Unless otherwise noted, the most recent PPA zone status available in 2016 and 2015 is for the plan’s year‑end status at December 31, 2015 and 2014, respectively. The zone status is based on information received from the plan and was certified by the plan’s actuary. Green zone funds are those that are in neither endangered, critical, or critical and declining status and generally have a funded percentage of at least 80%.
| (c) |  | The “FIP/RP Status Pending/Implemented” column indicates if a funding improvement plan (FIP) or a rehabilitation plan (RP), if applicable, is pending or has been implemented.
| (d) |  | Amounts reflect contributions made in the respective year and differ from amounts expensed during the year.
| (e) |  | The surcharge column indicates if a surcharge was paid by ABF Freight to the plan.
| (1) |  | ABF Freight System, Inc. was listed by the plan as providing more than 5% of the total contributions to the plan for the plan years ended December 31, 2015 and 2014.
| (2) |  | Information for this fund was obtained from the annual funding notice, other notices received from the plan, and the Form 5500 filed for the plan years ended December 31, 2015 and 2014.
| (3) |  | Adopted a rehabilitation plan effective March 25, 2008 as updated. Utilized amortization extension granted by the IRS effective December 31, 2003.
| (4) |  | PPA zone status relates to plan years February 1, 2015 – January 31, 2016 and February 1, 2014 – January 31, 2015.
| (5) |  | The Company was listed by the plan as providing more than 5% of the total contributions to the plan for the plan years ended January 31, 2016 and 2015.
| (6) |  | Information for this fund was obtained from the annual funding notice, other notices received from the plan, and the Form 5500 filed for the plan years ended January 31, 2016 and January 31, 2015.
| (7) |  | Contribution levels can be impacted by several factors such as changes in business levels and the related time worked by contractual employees, contractual rate increases for pension benefits, and the specific funding structure, which differs among funds. The pension contribution rate for contractual employees increased an average of approximately 2.8%, 1.3%, and 0.8% effective primarily on August 1, 2016, 2015, and 2014, respectively. The Supplemental Negotiating Committee for the Central States Pension Plan approved no pension contribution increase effective August 1, 2016, 2015, and 2014. The Supplemental Negotiating Committee for the Western Conference of Teamsters Pension Plan approved no pension increase effective August 1, 2016, 2015, and 2014. The year‑over‑year changes in multiemployer pension plan contributions presented above were also influenced by changes in Asset-Based business levels.
For 2016, 2015, and 2014, 50% to 60% of Asset-Based multiemployer pension contributions were made to the Central States Pension Plan. The funded percentage of the Central States Pension Plan, as set forth in information provided by the Central States Pension Plan, was 42.1%, 47.9%, and 48.4% as of January 1, 2016, 2015, and 2014, respectively. In September 2015, the Central States Pension Plan filed an application with the Treasury Department seeking approval under the Reform Act for a pension rescue plan, which included benefit reductions for participants in the Central States Pension Plan in an attempt to avoid the insolvency of the plan that otherwise is projected by the plan to occur. In May 2016, the Treasury Department denied the Central States Pension Plan’s proposed rescue plan. The trustees of the Central States Pension Plan subsequently announced that a new rescue plan would not be submitted and stated that it is not possible to develop and implement a new rescue plan that complies with the final Reform Act regulations issued by the Treasury Department on April 26, 2016. Although the future of the Central States Pension Plan is impacted by a number of factors, without legislative action, the plan is currently projected to become insolvent within 10 years or less. ABF Freight’s current collective bargaining agreement with the IBT provides for contributions to the Central States Pension Plan through March 31, 2018, and it is ABF Freight’s understanding that its contribution rate is not expected to increase during this period. ABF Freight’s contribution rates are made in accordance with its collective bargaining agreements with the IBT and other related supplemental agreements. In consideration of high multiemployer contribution rates, several of the plans in addition to the Central States Pension Plan have frozen contribution rates at current levels under ABF Freight’s current collective bargaining agreement. Future contribution rates will be determined through the negotiation process for contract periods following the term of the current collective bargaining agreement (though there can be no guarantees). ABF Freight pays some of the highest benefit contribution rates in the industry and continues to address the effect of the wage and benefit cost structure on its operating results in discussions with the IBT. ABF Freight received a Notice of Insolvency from the Road Carriers Local 707 Pension Fund (the “707 Pension Fund”) for the plan year beginning February 1, 2016. During the second quarter of 2016, the 707 Pension Fund received notice that the Treasury Department denied its proposal to suspend participant benefits in an effort to remain solvent. Approximately 1% of ABF Freight’s total multiemployer pension contributions for the year ended December 31, 2016 were made to the 707 Pension Fund. Based on currently available information, it is the Company’s understanding that if the 707 Pension Fund becomes insolvent, ABF Freight’s benefit contribution rates under the ABF NMFA will be frozen and ABF Freight will be required to continue making contributions at the frozen rate throughout and after the current ABF NMFA contract period, which extends to March 31, 2018; however, there can be no assurance in this regard. ABF Freight has not received any other notification of plan reorganization or plan insolvency with respect to any multiemployer pension plan to which it contributes. Health and Welfare Plans ABF Freight contributes to 42 multiemployer health and welfare plans which provide health care benefits for active employees and retirees covered under labor agreements. Contributions to multiemployer health and welfare plans totaled $153.3 million, $144.7 million, and $130.5 million, for the year ended December 31, 2016, 2015, and 2014, respectively. The benefit contribution rate for health and welfare benefits increased by an average of approximately 4.0%, 5.6%, and 5.3% primarily on August 1, 2016, 2015, and 2014, respectively, under the ABF NMFA. Other than changes to benefit contribution rates and variances in rates and time worked, there have been no other significant items that affect the comparability of the Company’s 2016, 2015, and 2014 multiemployer health and welfare plan contributions.

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