6. Deferred Compensation and Retirement Plans

The Company has several deferred compensation and retirement plans for eligible consultants and vice presidents that provide defined benefits to participants based on the deferral of current compensation or contributions made by the Company subject to vesting and retirement or termination provisions.

The total benefit obligations for these plans were as follows:


	Year Ended April 30,
	2016			2015
	(in thousands)
Deferred compensation plans	$	82,546		$	83,876
Pension plan		5,219			5,262
International retirement plans		15,678			2,847
Executive Capital Accumulation Plan		105,676			99,461
Legacy Hay Group defined benefit obligation plans		24,940			—

Total benefit obligations		234,059			191,446
Less: current portion of benefit obligation		(17,946	)		(18,014	)

Non-current benefit obligation	$	216,113		$	173,432

Deferred Compensation Plans

The Enhanced Wealth Accumulation Plan (“EWAP”) was established in fiscal 1994, which replaced the Wealth Accumulation Plan (“WAP”). Certain vice presidents elected to participate in a “deferral unit” that required the participant to contribute a portion of their compensation for an eight year period, or in some cases, make an after tax contribution, in return for defined benefit payments from the Company over a fifteen year period at retirement age of 65 or later. Participants were able to acquire additional “deferral units” every five years. Vice presidents who did not choose to roll over their WAP units into the EWAP continue to be covered under the earlier version in which participants generally vest and commence receipt of benefit payments at retirement age of 65. In June 2003, the Company amended the EWAP and WAP, so as not to allow new participants or the purchase of additional deferral units by existing participants.

The Company also maintains a Senior Executive Incentive Plan (“SEIP”) for participants approved by the Board. Generally, to be eligible, the vice president must be participating in the EWAP. Participation in the SEIP required the participant to contribute a portion of their compensation during a four-year period, or in some cases make an after tax contribution, in return for a defined benefit paid by the Company generally over a fifteen year period after ten years of participation in the plan or such later date as elected by the participant. In June 2003, the Company amended the SEIP, so as not to allow new participants or the purchase of additional deferral units by existing participants.

Pension Plan

The Company has a defined benefit pension plan, referred to as the Worldwide Executive Benefit (“WEB”), covering certain executives in the U.S. and foreign countries. The WEB is designed to integrate with government sponsored and local benefits and provide a monthly benefit to vice presidents upon retirement from the Company. Each year a plan participant accrued and was fully vested in one-twentieth of the targeted benefits expressed as a percentage set by the Company for that year. Upon retirement, a participant receives a monthly benefit payment equal to the sum of the percentages accrued over such participant’s term of employment, up to a maximum of 20 years, multiplied by the participant’s highest average monthly salary during the 36 consecutive months in the final 72 months of active full-time employment through June 2003. In June 2003, the Company froze the WEB, so as to not allow new participants, future accruals and future salary increases.

Deferred Compensation Plans

The following tables reconcile the benefit obligation for the deferred compensation plans:


	Year Ended April 30,
	2016			2015			2014
	(in thousands)
Change in benefit obligation:
Benefit obligation, beginning of year	$	83,876		$	82,153		$	85,562
Interest cost		2,644			2,835			2,566
Actuarial loss (gain)		1,720			4,863			(294	)
Benefits paid		(5,694	)		(5,975	)		(5,681	)

Benefit obligation, end of year		82,546			83,876			82,153
Less: current portion of benefit obligation		(5,446	)		(5,554	)		(5,593	)

Non-current benefit obligation	$	77,100		$	78,322		$	76,560

The components of net periodic benefits costs are as follows:


	Year Ended April 30,
	2016		2015		2014
	(in thousands)
Interest cost	$	2,644	$	2,835	$	2,566
Amortization of actuarial loss		2,796		3,029		3,111

Net periodic benefit cost	$	5,440	$	5,864	$	5,677

The weighted-average assumptions used in calculating the benefit obligations were as follows:


	Year Ended April 30,
	2016			2015			2014
Discount rate, beginning of year		3.28	%		3.60	%		3.12	%
Discount rate, end of year		3.05	%		3.28	%		3.60	%
Rate of compensation increase		0.00	%		0.00	%		0.00	%

Pension Plan

The following tables reconcile the benefit obligation for the pension plan:


	Year Ended April 30,
	2016			2015			2014
	(in thousands)
Change in benefit obligation:
Benefit obligation, beginning of year	$	5,262		$	4,424		$	4,536
Interest cost		167			154			137
Actuarial loss		122			1,001			92
Benefits paid		(332	)		(317	)		(341	)

Benefit obligation, end of year		5,219			5,262			4,424
Less: current portion of benefit obligation		(289	)		(278	)		(274	)

Non-current benefit obligation	$	4,930		$	4,984		$	4,150

The components of net periodic benefits costs are as follows:


	Year Ended April 30,
	2016		2015		2014
	(in thousands)
Interest cost	$	167	$	154	$	137
Amortization of actuarial loss		128		21		8

Net periodic benefit cost	$	295	$	175	$	145

The weighted-average assumptions used in calculating the benefit obligations were as follows:


	Year Ended April 30,
	2016			2015			2014
Discount rate, beginning of year		3.28	%		3.60	%		3.12	%
Discount rate, end of year		3.05	%		3.28	%		3.60	%
Rate of compensation increase		0.00	%		0.00	%		0.00	%

Benefit payments, which reflect expected future service, as appropriate, are expected to be paid over the next ten years as follows:


Year Ending April 30,	Deferred Compensation Plans		Pension Benefits
	(in thousands)
2017	$	6,483	$	325
2018		6,275		330
2019		6,199		328
2020		6,451		331
2021		6,598		324
2022-2026		29,667		1,480

During fiscal 2017, the Company expects to recognize $3.1 million in net periodic benefit expense from deferred compensation and pension plans that will be transferred from accumulated other comprehensive income through the amortization of actuarial losses in the consolidated statements of income.

International Retirement Plans

The Company also maintains various retirement plans and other miscellaneous deferred compensation arrangements in 22 foreign jurisdictions. The aggregate of the long-term benefit obligation accrued at April 30, 2016 and 2015 is $15.7 million for 1,450 participants and $2.8 million for 393 participants, respectively. The Company’s contribution to these plans was $5.1 million and $0.5 million in fiscal 2016 and 2015, respectively. The increase is due to the acquisition of Legacy Hay Group which maintains various retirement plans and other miscellaneous deferred compensation arrangements in 18 of the total foreign jurisdictions. Legacy Hay Group added to the long-term benefit obligation, $12.4 million for 741 participants and contributed $1.5 million to these plans in fiscal 2016.

Executive Capital Accumulation Plan

The Company’s ECAP is intended to provide certain employees an opportunity to defer salary and/or bonus on a pre-tax basis or make an after-tax contribution. In addition, the Company, as part of its compensation philosophy, makes discretionary contributions into the ECAP and such contributions may be granted to key employees annually based on the employee’s performance. Certain key management may also receive Company ECAP contributions upon commencement of employment. The Company amortizes these contributions on a straight-line basis over the service period, generally a four year period. Participants have the ability to allocate their deferrals among a number of investment options and may receive their benefits at termination, retirement or “in service” either in a lump sum or in quarterly installments over one to 15 years. The ECAP amounts that are expected to be paid to employees over the next 12 months are classified as a current liability included in compensation and benefits payable on the accompanying balance sheet.

The Company made contributions to the ECAP during fiscal 2016, 2015 and 2014, of $23.2 million, $19.1 million and $17.2 million, respectively.

The ECAP is accounted for whereby the changes in the fair value of the vested amounts owed to the participants are adjusted with a corresponding charge (or credit) to compensation and benefits costs. During fiscal 2016, the deferred compensation liability decreased; therefore, the Company recognized a credit to compensation expense of $1.7 million. Offsetting the decrease in compensation and benefits liability was a decrease in the fair value of marketable securities classified as trading (held in trust to satisfy obligations of the ECAP liabilities) of $3.3 million in fiscal 2016, recorded in other (loss) income, net on the consolidated statements of income. During fiscal 2015 and 2014, the deferred compensation liability increased; therefore, the Company recognized compensation expense of $5.9 million and $8.9 million, respectively. Offsetting these increases in compensation and benefits expense was an increase in the fair value of marketable securities classified as trading (held in trust to satisfy obligations of the ECAP liabilities) of $8.8 million and $9.5 million in fiscal 2015 and 2014, respectively, recorded in other (loss) income, net on the consolidated statements of income.

Changes in the ECAP liability were as follows:


	Year Ended April 30,
	2016			2015
	(in thousands)
Balance, beginning of year	$	99,461		$	89,308
Employee contributions		7,015			3,048
Amortization of employer contributions		16,439			12,378
(Gain) loss on investment		(1,654	)		5,871
Employee distributions		(15,201	)		(10,295	)
Exchange rate fluctuations		(384	)		(849	)

Balance, end of year		105,676			99,461
Less: current portion		(11,092	)		(12,182	)

Non-current portion	$	94,584		$	87,279

As of April 30, 2016 and 2015, the unamortized portion of the Company contributions to the ECAP was $33.2 million and $29.7 million, respectively.

Defined Contribution Plan

The Company has a defined contribution plan (“401(k) plan”) for eligible employees. Participants may contribute up to 50% of their base compensation as defined in the plan agreement. In addition, the Company has the option to make matching contributions. The Company intends to make matching contributions related to fiscal 2016 in fiscal 2017. The Company made a $1.7 million matching contribution in fiscal 2016 related to contributions made by employees in fiscal 2015 and a $1.6 million matching contribution in fiscal 2015 related to contributions made by employees in fiscal 2014.

Company Owned Life Insurance

The Company purchased COLI contracts insuring the lives of certain employees eligible to participate in the deferred compensation and pension plans as a means of funding benefits under such plans. The gross CSV of these contracts of $175.7 million and $172.3 million is offset by outstanding policy loans of $68.4 million and $69.6 million in the accompanying consolidated balance sheets as of April 30, 2016 and 2015, respectively. Total death benefits payable, net of loans under COLI contracts, were $216.7 million and $216.5 million at April 30, 2016 and 2015, respectively. Management intends to use the future death benefits from these insurance contracts to fund the deferred compensation and pension arrangements; however, there may not be a direct correlation between the timing of the future cash receipts and disbursements under these arrangements. The CSV value of the underlying COLI investments increased by $4.0 million, $10.5 million and $8.2 million during fiscal 2016, 2015 and 2014, respectively, recorded as a decrease in compensation and benefits expense. In addition, certain policies are held in trusts to provide additional benefit security for the deferred compensation and pension plans, excluding the WEB. As of April 30, 2016, COLI contracts with a net CSV of $72.7 million and death benefits, net of loans, of $122.5 million were held in trust for these purposes.

Legacy Hay Group Defined Benefit Plans

In conjunction with the acquisition of Legacy Hay Group on December 1, 2015, the Company acquired multiple pension and savings plans covering certain of its employees worldwide. Among these plans is a defined benefit pension plan for certain employees in the United States. The assets of this plan are held separately from the assets of the sponsors in self-administered funds. The plan is funded consistent with local statutory requirements. The Company also has benefit plans which offer medical and life insurance coverage to eligible employees and continue to provide coverage after retirement. Medical and life insurance benefit plans are unfunded. Additionally, the Company operates a benefit plan which provides supplemental pension benefits. Supplemental defined benefit obligations are unfunded. As of April 30, 2016, the Company has accrued $37.4 million in connection with all of their plans of which $36.3 million is included in the non-current portion of deferred compensation and other retirement plans in the accompanying consolidated balance sheets, and $1.1 million is included in compensation and benefits payable.

The following table reconciles the benefit obligation for the Legacy Hay Group defined benefit plans and fair value of plan assets for the Legacy Hay Group defined benefit plans:


	Year Ended April 30, 2016
	Defined Benefit Pension Plan			Supplemental Pension Benefits			Medical and Life Insurance
	(in thousands)
Change in benefit obligation:
Benefit obligation at acquisition date	$	32,795		$	6,284		$	12,322
Service cost		—			—			62
Interest cost		554			58			208
Actuarial loss		2,438			113			816
Settlements		—			(4,799	)		—
Benefits paid		(595	)		(47	)		(402	)

Benefit obligation, end of year		35,192			1,609			13,006

Change in fair value of plan assets:
Fair value of plan assets at acquisition date		25,540			—			—
Actual return on plan assets		(78	)		—			—
Benefits paid		(595	)		—			—

Fair value of plan assets, end of year		24,867			—			—

Funded status and balance, end of year	$	(10,325	)	$	(1,609	)	$	(13,006	)

Current liability	$	—		$	110		$	673
Non-current liability		10,325			1,499			12,333

Total liability	$	10,325		$	1,609		$	13,006

Plan Assets — weighted-average asset allocation:
Equity securities		63.9	%		—			—
Debt securities		30.8	%		—			—
Other		5.3	%		—			—

Total		100.0	%		—			—

The fair value measurements of the defined benefit plan assets fall within the following levels of the fair value hierarchy as of April 30, 2016:


	Level 1		Level 2		Level 3		Total
	(in thousands)
Mutual funds	$	7,990	$	—	$	—	$	7,990
Common stock		7,910		—		—		7,910
Corporate and municipal bonds		—		5,597		—		5,597
U.S. Treasury and agency securities		—		2,055		—		2,055
Money market funds		1,315		—		—		1,315

Total	$	17,215	$	7,652	$	—	$	24,867

Plan assets are invested in various asset classes that are expected to produce a sufficient level of diversification and investment return over the long term. The investment goal is a return on assets that is at least equal to the assumed actuarial rate of return over the long term within reasonable and prudent levels of risk. Investment policies reflect the unique circumstances of the respective plans and include requirements designed to mitigate risk including quality and diversification standards. Asset allocation targets are reviewed periodically with investment advisors to determine the appropriate investment strategies for acceptable risk levels. Our target allocation ranges are as follows: equity securities 50% to 70%, debt securities 30% to 50% and other assets of 0% to 10%. We establish our estimated long-term return on plan assets considering various factors including the targeted asset allocation percentages, historic returns and expected future returns.

The components of net periodic benefits costs are as follows:


	Year Ended April 30, 2016
	Defined Benefit Pension Plans			Supplemental Pension Benefits		Medical and Life Insurance
	(in thousands)
Service cost	$	—		$	—	$	62
Interest cost		554			58		208
Expected return on plan assets		(682	)		—		—

Net periodic benefit cost	$	(128	)	$	58	$	270

The weighted-average assumptions used in calculating the benefit obligation were as follows:


	Year Ended April 30, 2016
	Defined Benefit Pension Plan			Supplemental Pension Benefits			Medical and Life Insurance
Discount rate at acquisition date		4.10	%		4.10	%		4.10	%
Discount rate, end of year		3.49	%		3.23	%		3.36	%
Rate of compensation increase		0.00	%		0.00	%		0.00	%
Expected long-term rates of return on plan assets		6.50	%		0.00	%		0.00	%

Benefit payments, which reflect expected future service, as appropriate, are expected to be paid over the next ten years as follows:


Year Ended April 30,	Defined Benefit Pension Plans		Supplemental Pension Benefits		Medical and Life Insurance
	(in thousands)
2017	$	1,785	$	112	$	684
2018		1,801		111		708
2019		1,844		110		735
2020		1,867		108		771
2021		1,933		107		795
2022-2026		9,942		508		4,037

For the medical and life insurance plan, the current health care cost trend rate assumption is 7.0%. We anticipate that the health care cost trend rate assumption will be 5.0% by fiscal 2022. Increasing the assumed health care cost trend rate by one-percentage point would increase the accumulated postretirement benefit obligation for the medical and life insurance plan by less than $0.1 million. Decreasing the assumed health care cost trend rate by one-percentage point would decrease the accumulated postretirement benefit obligation for the medical and life insurance plan by less than $0.1 million.