Employee Benefit Plans

12 Months Ended

Jun. 01, 2019

Retirement Benefits [Abstract]

Employee Benefit Plans

Employee Benefit Plans

The Company maintains a medical plan that is qualified under Section 401(a) of the Internal Revenue Code and is not subject to tax under present income tax laws.  The plan is funded by contributions from the Company and its employees.  Under its plan, the Company self-insures its portion of medical claims for substantially all full-time employees.  The Company uses stop-loss insurance to limit its portion of medical claims to $225,000 per occurrence.  The Company's expenses including accruals for incurred but not reported claims were approximately $18.1 million, $16.1 million, and $14.0 million in fiscal years 2019,  2018 and 2017, respectively.  The liability recorded for incurred but not reported claims was $1.1 million as of June 1, 2019 and June 2, 2018.

The Company has a KSOP plan that covers substantially all employees (“the Plan”).  The Company makes contributions to the Plan at a rate of 3% of participants' eligible compensation, plus an additional amount determined at the discretion of the Board of Directors.  Contributions can be made in cash or the Company's common stock, and vest immediately.   The Company's cash contributions to the Plan were $3.7 million, $3.3 million, and $3.2 million in fiscal years 2019,  2018 and 2017, respectively. The Company did not make direct contributions of the Company’s common stock in fiscal years 2019,  2018, or 2017. Dividends on the Company’s common stock are paid to the Plan in cash.  The Plan acquires the Company’s common stock, which is listed on the NASDAQ, by using the dividends and the Company’s cash contribution to purchase shares in the public markets.  The Plan sold common stock on the NASDAQ to pay benefits to Plan participants.  Participants may make contributions to the Plan up to the maximum allowed by the Internal Revenue Service regulations.  The Company does not match participant contributions.

The Company has deferred compensation agreements with certain officers for payments to be made over specified periods beginning when the officers reach age 65 or over as specified in the agreements.  Amounts accrued for the agreements are based upon deferred compensation earned over the estimated remaining service period of each

officer.  Payments made under the plan were $129,000,  $110,000, and $110,000 in fiscal years 2019,  2018, and 2017, respectively.  The liability recorded related to these agreements was $1.5 million at June 1, 2019 and June 2, 2018. 

In December 2006, the Company adopted an additional deferred compensation plan to provide deferred compensation to named officers of the Company.  The awards issued under this plan were $267,000, $298,000, and $290,000 in fiscal 2019,  2018 and 2017, respectively.  Payments made under the plan were $84,000 and $42,000 in fiscal 2019 and 2018, respectively.  The liability recorded related to this plan was $3.4 million and $3.1 million at June 1, 2019 and June 2, 2018, respectively.

Deferred compensation expense for both plans totaled $377,000, $693,000 and $616,000 in fiscal 2019,  2018 and 2017, respectively.

Postretirement Medical Plan

The Company maintains an unfunded postretirement medical plan to provide limited health benefits to certain qualified retired employees and officers.  Retired non-officers and spouses are eligible for coverage until attainment of Medicare eligibility, at which time coverage ceases.  Retired officers and spouses are eligible for lifetime benefits under the plan.  Officers and their spouses, who retired prior to May 1, 2012, must participate in Medicare Plans A and B.  Officers, and their spouses, who retire on or after May 1, 2012 must participate in Medicare Plans A, B, and D. 

The plan is accounted for in accordance with ASC 715, “Compensation – Retirement Benefits”, whereby an employer recognizes the funded status of a defined benefit postretirement plan as an asset or liability, and recognizes changes in the funded status in the year the change occurs through comprehensive income.  Additionally, this expense is recognized on an accrual basis over the employees’ approximate period of employment. The liability associated with the plan was $2.9 million at June 1, 2019 and $2.3 million June 2, 2018.  The remaining disclosures associated with ASC 715 are immaterial to the Company’s financial statements.