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EMPLOYEE BENEFIT PLANS | 12 Months Ended
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Dec. 31, 2022
EMPLOYEE BENEFIT PLANS |
EMPLOYEE BENEFIT PLANS | NOTE 12: EMPLOYEE BENEFIT PLANS Supplemental Executive Retirement Plan (“SERP”) - The Company permits selected highly compensated employees to defer a portion of their compensation into the SERP. The SERP assets are invested primarily in company-owned life insurance (“COLI”) policies as a funding source to satisfy the obligation of the SERP. The assets are subject to claims by creditors, and the Company can designate them to another purpose at any time. Investments in COLI policies consist of variable life insurance policies of $7.1 million as of December 31, 2022 and $9.7 million as of December 31, 2021. In the COLI policies, the Company is able to allocate assets across a set of choices provided by the insurance underwriter, including fixed income securities and equity funds. The COLI policies are recorded at their net cash surrender values, which approximates fair value, as provided by the issuing insurance company, whose Standard & Poor’s credit rating was A+. The Company classifies the SERP assets as trading securities as described in Note 1. The fair value of these assets totaled $9,881,000 as of December 31, 2022 and $12,264,000 as of December 31, 2021. The SERP assets are reported in other non-current assets on the consolidated balance sheets and changes to the fair value of the assets are reported in selling, general and administrative expenses in the consolidated statements of operations. Trading (losses) gains related to the SERP assets totaled $(2,383,000) in 2022, $1,643,000 in 2021 and $906,000 in 2020. The SERP liabilities include participant deferrals net of distributions and are stated at a fair value of $14,440,000 as of December 31, 2022 and $15,564,000 as of December 31, 2021. The SERP liabilities are reported on the consolidated balance sheets in long-term pension liabilities and any change in the fair value is recorded as compensation cost within selling, general and administrative expenses in the consolidated statements of operations. Changes in the fair value of the SERP liabilities represented unrealized (losses) gains of $(2,315,000) in 2022, and $1,647,000 in 2021 and $1,395,000 in 2020. Retirement Income Plan (“Plan”) — Marine Products participates in the tax-qualified, defined benefit, noncontributory, trusteed retirement income plan sponsored by RPC that covers substantially all employees with at least one year of service prior to 2002. During 2021, the Company initiated actions to terminate the defined benefit pension plan and as such, the year-end pension obligation has been valued on a termination basis. As part of the termination process, the Company offered a lump-sum window in the fourth quarter of 2022 and used the following assumptions to calculate the projected benefit obligation as of December 31, 2022 - (i) updated census data and removed participants who elected to receive a lump-sum during the lump-sum window; (ii) annuities to be purchased for all remaining participants effective March 1, 2023 and (iii) using appropriate discount rates and mortality tables for participants depending on their pay status. We do not currently expect the Company to make any contributions to the Plan in 2023. A $1.2 million settlement loss representing the accelerated recognition of actuarial losses was recognized in the fourth quarter of 2022 and is recorded as part of selling, general and administrative expenses. During the first quarter of 2023, the Company expects to recognize a pre-tax, non-cash settlement charge representing the unamortized net loss in the Plan which was approximately $2.6 million as of December 31, 2022. The final amount is subject to change based on the actual return on plan assets and the periodic actuarial updates of the net losses in the Plan. For the year ending December 31, 2022, the Company has utilized an expected return on plan assets of zero percent based on the current short-term rates and investment horizon as a result of the expected Plan termination. Subsequent to December 31, 2022, the Company completed an annuity purchase to transfer risk from the Plan to a commercial annuity provider for all of the remaining Plan participants through the liquidation of its investments in the Plan. The Company’s fair value of the plan assets exceeded the projected benefit obligation for its Plan by $356,000 and thus the Plan was over-funded as of December 31, 2022. The following table sets forth the funded status of the Plan and the amounts recognized in Marine Products’ consolidated balance sheets: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
December 31, |  | 2022 |  | 2021
(in thousands) |  | ​ |  |  | ​ |
Accumulated benefit obligation at end of year | ​ | $ | 3,146 | ​ | $ | 5,832
​ | ​ | ​ | ​ | ​ | ​ | ​
Change in projected benefit obligation: | ​ |  | ​ | ​ |  |
Benefit obligation at beginning of year | ​ | $ | 5,832 | ​ | $ | 5,576
Service cost | ​ |  | — | ​ |  | —
Interest cost | ​ |  | 133 | ​ |  | 147
Actuarial loss | ​ |  | (1,045) | ​ |  | 347
Benefits paid | ​ |  | (322) | ​ |  | (238)
Settlement | ​ | ​ | (1,452) | ​ | ​ | —
Projected benefit obligation at end of year | ​ | $ | 3,146 | ​ | $ | 5,832
Change in plan assets: | ​ |  | ​ | ​ |  |
Fair value of plan assets at beginning of year | ​ | $ | 6,870 | ​ | $ | 7,351
Actual return on plan assets | ​ |  | (1,594) | ​ |  | (243)
Benefits paid | ​ |  | (322) | ​ |  | (238)
Settlements | ​ | ​ | (1,452) | ​ | ​ | —
Fair value of plan assets at end of year | ​ | $ | 3,502 | ​ | $ | 6,870
Funded status at end of year | ​ | $ | 356 | ​ | $ | 1,038
​
​ | ​ | ​ | ​ | ​ | ​ | ​
December 31, |  | 2022 |  | 2021
(in thousands) | ​ | ​ | ​ | ​ | ​ | ​
Amounts recognized in the consolidated balance sheets consist of: | ​ | ​ | ​ | ​ | ​ | ​
Pension plan assets | ​ | $ | 356 | ​ | $ | —
Noncurrent other assets | ​ |  | — | ​ |  | 1,038
​ | ​ | $ | 356 | ​ | $ | 1,038
​ The funded status of the Plan was recorded in the consolidated balance sheets in pension plan assets as of both December 31, 2022 and other noncurrents assets as of December 31, 2021. ​
​ | ​ | ​ | ​ | ​ | ​ | ​
December 31, |  | 2022 |  | 2021
(in thousands) |  | ​ |  |  | ​ |
Amounts (pre-tax) recognized in accumulated other comprehensive loss consist of: |  | ​ |  |  | ​ |
Net loss | ​ | $ | 2,558 | ​ | $ | 3,303
Prior service cost (credit) | ​ |  | — | ​ |  | —
​ | ​ | $ | 2,558 | ​ | $ | 3,303
​ The accumulated benefit obligation for the Plan as of December 31, 2022 and 2021 has been disclosed above. The Company uses a December 31 measurement date for this qualified plan. As part of the plan termination, the Company expects to recognize a non-cash settlement charge for the remaining balance in the accumulated other comprehensive loss at that time. Amounts recorded in the consolidated balance sheet as pension liabilities consist of: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
December 31, |  | 2022 |  | 2021
(in thousands) |  | ​ |  |  | ​ |
SERP liability | ​ | $ | (14,440) | ​ | $ | (15,564)
​ Marine Products’ funding policy is to contribute to the Plan the amount required, if any, under the Employee Retirement Income Security Act of 1974. The Company did not contribute to the plan in 2022 and 2021. The components of net periodic benefit cost of the Plan are summarized as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(in thousands) | ​ | 2022 | ​ | 2021 | ​ | 2020
Service cost for benefits earned during the period | ​ | $ | — | ​ | $ | — | ​ | $ | —
Interest cost | ​ |  | 133 | ​ |  | 147 | ​ |  | 230
Expected return on plan assets | ​ |  | — | ​ |  | (289) | ​ |  | (292)
Amortization of net losses | ​ |  | 113 | ​ |  | 73 | ​ |  | 98
Settlement loss | ​ | ​ | 1,180 | ​ | ​ | — | ​ | ​ | 647
Net periodic cost (benefit) | ​ | $ | 1,426 | ​ | $ | (69) | ​ | $ | 683
​ The Company recognized pre-tax decreases to the funded status in accumulated other comprehensive income (loss) of $(744,000) in 2022, $806,000 in 2021 and $(899,000) in 2020. There were no previously unrecognized prior service costs during 2022, 2021 and 2020. Non-cash settlement charges shown above represent the accelerated recognition of actuarial losses previously reflected in accumulated other comprehensive loss related to the lump-sum window offered in each of the years. The pre-tax amounts recognized in other comprehensive income for the years ended December 31, 2022, 2021 and 2020 are summarized as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(in thousands) |  | 2022 |  | 2021 |  | 2020
Net loss (gain) | ​ | $ | 549 | ​ | $ | 879 | ​ | $ | (154)
Amortization of net loss | ​ |  | (113) | ​ |  | (73) | ​ |  | (98)
Settlement loss | ​ | ​ | (1,180) | ​ | ​ | — | ​ | ​ | (647)
Amount recognized in accumulated other comprehensive income (loss) | ​ | $ | (744) | ​ | $ | 806 | ​ | $ | (899)
​ The weighted average assumptions as of December 31 used to determine the projected benefit obligation and net benefit cost were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
December 31, |  | 2022 |  | 2021 |  | 2020 |
Projected benefit obligation: |  |  |  |  |  |  | ​
Discount rate |  | Note (1) | ​ | Note (1) | ​ | 2.70 | %
Rate of compensation increase |  | N/A |  | N/A |  | N/A |
Net benefit cost: |  |  |  |  |  |  |
Discount rate |  | Note (1) | ​ | 2.70 | % | 3.70 | %
Expected return on plan assets |  | — | % | 4.00 | % | 4.00 | %
Rate of compensation increase |  | N/A |  | N/A |  | N/A |
(1) Projected benefit obligation as of December 31, 2022 reflects proposed termination of the Plan and is calculated based on various assumptions in accordance with the Plan agreement. ​ The plan’s weighted average asset allocation at December 31, 2022 and 2021 by asset category along with the target allocation for 2023 are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Percentage of | ​ | Percentage of |
​ | ​ | ​ | ​ | ​ | ​ | ​ | Plan Assets as of | ​ | Plan Assets as of |
​ | ​ | Target Allocation | ​ | December 31, | ​ | December 31, |
Asset Category |  | for 2023 |  | 2022 |  | 2021 |
Cash and Cash Equivalents |  | 0 | % | - | 5.0 | % | 3.7 | % | 1.4 | %
Fixed Income Securities |  | 15.0 | % | - | 100.0 | % | 96.3 |  | 98.6 | ​
Total |  | ​ | ​ | ​ | ​ | ​ | 100.0 | % | 100.0 | %
​ The Company’s Plan investments consist primarily of fixed-income securities that include corporate bonds, mortgage-backed securities, sovereign bonds, and U.S. Treasuries. For each of the asset categories in the Plan, the investment strategy is intended to minimize the level of risk as compared to the Plan’s liability and to minimize the cost of providing pension benefits. The investment policy establishes a target allocation for each asset class which is rebalanced as required. While not limited in approach, the Plan utilizes fixed income funds in which the underlying securities are marketable, to achieve this target allocation. The Company’s investments consist primarily of fixed-income securities that include corporate bonds, mortgage-backed securities, sovereign bonds, and U.S. Treasuries. For each of the asset categories in the pension plan, the investment strategy is identical – maximize the long-term rate of return on plan assets while minimizing the level of risk to minimize the cost of providing pension benefits. The investment policy establishes a target allocation for each asset class which is rebalanced as required. The plan utilizes a number of investment approaches, including but not limited to fixed income funds in which the underlying securities are marketable, to achieve this target allocation. The following tables present our plan assets using the fair value hierarchy as of December 31, 2022 and 2021. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. See Note 10: Fair Value Measurements for a brief description of the three levels under the fair value hierarchy. Fair Value Hierarchy as of December 31, 2022: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Investments (in thousands) |  | ​ | ​ |  | Total |  | Level 1 |  | Level 2
Cash and Cash Equivalents |  | ​ | (1) | ​ | $ | 129 | ​ | $ | 129 | ​ | $ | —
Fixed Income Securities |  | ​ | (2) | ​ |  | 3,373 | ​ |  | — | ​ |  | 3,373
Total Assets in the Fair Value Hierarchy | ​ | ​ | ​ | ​ | $ | 3,502 | ​ | $ | 129 | ​ | $ | 3,373
​ Fair Value Hierarchy as of December 31, 2021:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Investments (in thousands) |  | ​ | ​ |  | Total |  | Level 1 |  | Level 2
Cash and Cash Equivalents |  | ​ | (1) | ​ | $ | 87 | ​ | $ | 87 | ​ | $ | —
Fixed Income Securities |  | ​ | (2) | ​ |  | 6,783 | ​ |  | — | ​ |  | 6,783
Total Assets in the Fair Value Hierarchy | ​ | ​ | ​ | ​ | $ | 6,870 | ​ | $ | 87 | ​ | $ | 6,783
​
(1) | Cash and cash equivalents, which are used to pay benefits and plan administrative expenses, are held in Rule 2a-7 money market funds.
(2) | Fixed income securities are primarily valued using a market approach with inputs that include broker quotes, benchmark yields, base spreads and reported trades. Subsequent to December, 31, 2022, these securities were liquidated to fund the annuity purchase.
​ The Company estimates that the future benefits payable for the Plan are as follows: ​
​ | ​ | ​ | ​
(in thousands) |  |  | ​
2023 | ​ | $ | 3,171
​ 401(k) Plan — Marine Products participates in a defined contribution 401(k) plan sponsored by RPC that is available to substantially all full-time employees with more than 90 days of service. Effective January 1, 2019, the Company began matching 100 percent of employee’s contributions for each dollar of a participant’s contribution to the 401(k) Plan for the first three percent of his or her annual compensation, and fifty percent for each dollar of a participant’s contribution to the 401(k) Plan for the next three percent of his or her annual compensation. Employees vest in the Company’s contributions after two years of service. The charges to expense for Marine Products’ contributions to the 401(k) plan were $1,170,000 in 2022, $976,000 in 2021 and $603,000 in 2020. Stock Incentive Plan — The Company reserved 3,000,000 shares of common stock under the 2014 Stock Incentive Plan with a term of ten years expiring in April 2024. All future equity compensation awards by the Company will be issued under the 2014 plan. This plan provides for the issuance of various forms of stock incentives, including among others, incentive and non-qualified stock options and restricted shares. As of December 31, 2022, there were 1,095,547 shares available for grant. The Company recognizes compensation expense for the unvested portion of awards outstanding over the remainder of the service period. The compensation cost recorded for these awards will be based on their fair value at grant date less the cost of estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods to reflect actual forfeitures. Pre-tax stock-based employee compensation expense was approximately $2,707,000 ($2,111,000 after tax) for 2022, $2,289,000 ($1,785,000 after tax) for 2021, and $3,102,000 (2,420,000 after tax) for 2020. We have not issued any stock options since 2003 and have no immediate plans to issue additional stock options. Restricted Stock — Marine Products grants selected employees and directors time lapse restricted stock that vest after a certain stipulated number of years from the grant date, depending on the terms of the issue. The time lapse restricted shares granted by the Company in 2023 will vest ratably over a period of four years and the shares granted in 2022 will vest ratably over a period of five years. Prior to 2022, the time lapse restricted shares vested one-fifth per year beginning on the second anniversary of the grant date. During these years, grantees receive all dividends declared and retain voting rights for the shares. The agreements under which the restricted stock is issued provide that shares awarded may not be sold or otherwise transferred until restrictions established under the stock plans have lapsed. Upon termination of employment from the Company, with the exception of death (fully vests), disability or retirement (partially vests based on duration of service), shares with restrictions are forfeited in accordance with the plan. The following is a summary of the changes in non-vested restricted shares for the year ended December 31, 2022: ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Weighted Average
​ | ​ | ​ | ​ | Grant-Date Fair
​ |  | Shares |  | Value
Non-vested shares at January 1, 2022 |  | 671,370 | ​ | $ | 14.70
Granted |  | 311,703 | ​ | ​ | 11.61
Vested |  | (193,403) | ​ | ​ | 11.96
Forfeited |  | (25,500) | ​ | ​ | 14.11
Non-vested shares at December 31, 2022 |  | 764,170 | ​ | $ | 14.15
​ The following is a summary of the changes in non-vested restricted shares for the year ended December 31, 2021: ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Weighted Average
​ | ​ | ​ | ​ | Grant-Date Fair
​ |  | Shares |  | Value
Non-vested shares at January 1, 2021 |  | 678,220 | ​ | $ | 12.89
Granted |  | 189,750 | ​ | ​ | 16.55
Vested |  | (194,800) | ​ | ​ | 10.25
Forfeited |  | (1,800) | ​ | ​ | 11.76
Non-vested shares at December 31, 2021 |  | 671,370 | ​ | $ | 14.70
​ The fair value of restricted stock awards is based on the market price of the Company’s stock on the date of grant and is amortized to compensation expense on a straight-line basis over the requisite service period. The weighted average grant date fair value of these restricted stock awards was $11.61 in 2022, $16.55 in 2021 and $15.00 in 2020. The total fair value of shares vested was approximately $2,241,000 in 2022, $3,174,000 in 2021 and $4,431,000 during 2020. For the year ending December 31, 2022 approximately $68,000 of excess tax benefits for stock-based compensation awards were recorded as a discrete tax adjustment and classified within operating activities in the consolidated statements of cash flows compared to approximately $341,000 for the year ending December 31, 2021. Other Information — As of December 31, 2022 total unrecognized compensation cost related to non-vested restricted shares was approximately $7,157,000 which is expected to be recognized over a weighted-average period of 3.3 years.

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