Note 8 - Employee Benefit Plans

12 Months Ended

Dec. 31, 2015

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

Note 8: Employee Benefit Plans

Pensions and Other Post-retirement Plans

We sponsor defined benefit pension plans covering substantially all U.S. employees. The following tables provide a reconciliation of the changes in the plans’ benefit obligations and fair value of assets over the two-year period ended December 31, 2015, and the funded status as of December 31, 2015 and December 31, 2014 (in thousands):

	Pension Benefits
	2015			2014
Change in benefit obligation:
Benefit obligation at beginning of year	$	118,284		$	101,155
Service cost		4,216			4,312
Interest cost		4,823			4,859
Actuarial (gain) loss		(2,617	)		12,575
Benefits paid		(4,469	)		(4,617	)
Benefit obligation at end of year		120,237			118,284
Change in fair value of plan assets:
Fair value of plan assets at beginning of year		74,551			69,051
Actual (loss) return on plan assets		(2,221	)		3,402
Employer contributions		5,460			6,715
Benefits paid		(4,469	)		(4,617	)
Fair value of plan assets at end of year		73,321			74,551
Underfunded status at end of year	$	(46,916	)	$	(43,733	)

The following table provides the amounts recognized in the consolidated balance sheets as of December 31, 2015 and December 31, 2014 (in thousands):

	Pension Benefits
	2015			2014
Current liabilities:
Accrued benefit liability	$	(402	)	$	(385	)
Non- current pension liability:
Accrued benefit liability		(46,513	)		(43,348	)
Accumulated other comprehensive loss		42,103			41,041
Net amount recognized	$	(4,812	)	$	(2,692	)

The benefit obligation and prepaid benefit costs were calculated by applying the following weighted average assumptions:

	Pension Benefits
	2015			2014
Discount rate: net periodic pension cost		4.17	%		4.81	%
Discount rate: projected benefit obligation		4.45	%		4.17	%
Expected rate of return on plan assets		7.20	%		7.20	%
Rate of compensation increase: net periodic pension cost		2.00	%		4.00	%
Rate of compensation increase: projected benefit obligation	0.00%/2.00		%(1)		2.00	%

⁽¹⁾ 0% is assumed for years 2016 through 2018 and 2% is assumed thereafter.

The above assumptions were calculated based on information as of December 31, 2015 and December 31, 2014, the measurement dates for the plans. The discount rate is based on the yield curve for investment-grade corporate bonds as published by the U.S. Treasury Department. The expected rate of return on plan assets is based upon consideration of the plan’s current asset mix, historical long-term return rates and the plan’s historical performance. Our current expected rate on plan assets of 7.2% is based on historical returns over the past five years.

Net periodic pension cost for the plans consisted of the following in 2015, 2014, and 2013 (in thousands):

	Pension Benefits
	2015			2014			2013
Service cost	$	4,216		$	4,312		$	4,025
Interest cost		4,823			4,859			3,889
Expected return on plan assets		(5,382	)		(4,996	)		(4,741	)
Amortization of prior service cost (benefit)		(337	)		(337	)		66
Amortization of net gain from earlier periods		4,260			3,275			3,152
Net periodic pension cost	$	7,580		$	7,113		$	6,391

The allocations of investments at December 31, 2015 and December 31, 2014, the measurement dates of the plan, by asset category in the Hecla Mining Company Retirement Plan and the Lucky Friday Pension Plan are as follows:

	Hecla						Lucky Friday
	2015			2014			2015			2014
Cash		2	%		3	%		4	%		1	%
Large cap U.S. equities		10	%		11	%		10	%		11	%
Small cap U.S. equities		5	%		6	%		5	%		6	%
Non-U.S. equities		9	%		8	%		9	%		10	%
Fixed income		34	%		34	%		33	%		34	%
Real estate		18	%		15	%		18	%		16	%
Absolute return hedge funds		15	%		14	%		14	%		15	%
Real return		7	%		9	%		7	%		7	%
Total		100	%		100	%		100	%		100	%

The "Small cap U.S. equities" asset category in the table above includes our common stock in the amounts of $4.3 million and $1.4 million at December 31, 2015 and December 31, 2014. These investments represent approximately 6% and 2% of the total combined assets of the plans at December 31, 2015 and December 31, 2014, respectively.

Each plan's statement of investment policy delineates the responsibilities of the board, the retirement/pension committee, the investment manager(s), and investment adviser/consultant, and provides guidelines on investment management. Investment objectives are established for each of the asset categories included in the pension plans with comparisons of performance against appropriate benchmarks. Each plan's policy calls for investments to be supervised by qualified investment managers. The investment managers are monitored on an ongoing basis by our outside consultant, with formal reporting to us and the consultant performed each quarter. The policy sets forth the following allocation of assets:

	Target			Minimum			Maximum
Large cap U.S. equities		10	%		7	%		13	%
Small cap U.S. equities		5	%		4	%		6	%
Non-U.S. equities		15	%		11	%		19	%
Fixed income		30	%		25	%		35	%
Real estate		15	%		12	%		18	%
Absolute return hedge funds		15	%		12	%		18	%
Real return		10	%		8	%		12	%

Each plan's statement of investment policy and objectives aspires to achieve the assumed long term rate of return on plan assets established by the plan’s actuary plus one percent.

Accounting guidance has established a hierarchy of assets measured at fair value on a recurring basis. The three levels included in the hierarchy are:

Level 1: quoted prices in active markets for identical assets or liabilities

Level 2: significant other observable inputs

Level 3: significant unobservable inputs

The fair values by asset category in each plan, along with their hierarchy levels, are as follows as of December 31, 2015 (in thousands):

	Hecla								Lucky Friday
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Interest-bearing cash	$	936	$	—	$	—	$	936	$	76	$	—	$	—	$	76
Common stock		3,284		—		—		3,284		989		—		—		989
Real estate		—		—		10,326		10,326		—		—		2,856		2,856
Common collective funds		—		9,862		4,462		14,324		—		2,573		1,309		3,882
Mutual funds		28,803		—		—		28,803		7,845		—		—		7,845
Total fair value	$	33,023	$	9,862	$	14,788	$	57,673	$	8,910	$	2,573	$	4,165	$	15,648

The following is a roll-forward of assets in Level 3 of the fair value hierarchy (in thousands):

	Hecla					Lucky Friday
	Real estate		Common collective funds			Real estate		Common collective funds
Beginning balance at January 1, 2015	$	8,889	$	8,454		$	2,458	$	2,306
Net unrealized gains on assets held at the reporting date		1,094		8			303		3
Purchases		343		—			95		—
Sales		—		(4,000	)		—		(1,000	)
Ending balance at December 31, 2015	$	10,326	$	4,462		$	2,856	$	1,309

Of the $19.0 million in plan assets classified as level 3, $13.2 million was invested in real estate, and the remaining $5.8 million was invested in collective investment funds.

The fair values by asset category in each plan, along with their hierarchy levels, were as follows as of December 31, 2014 (in thousands):

	Hecla								Lucky Friday
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Interest-bearing cash	$	1,798	$	—	$	—	$	1,798	$	136	$	—	$	—	$	136
Common stock		1,105		—		—		1,105		281		—		—		281
Real estate		—		—		8,889		8,889		—		—		2,458		2,458
Common collective funds		—		12,280		8,454		20,734		—		3,040		2,306		5,346
Mutual funds		26,392		—		—		26,392		7,412		—		—		7,412
Total fair value	$	29,295	$	12,280	$	17,343	$	58,918	$	7,829	$	3,040	$	4,764	$	15,633

The following is a roll-forward of assets in Level 3 of the fair value hierarchy (in thousands):

	Hecla					Lucky Friday
	Real estate			Common collective funds		Real estate			Common collective funds
Beginning balance at January 1, 2014	$	10,797		$	7,970	$	2,865		$	2,174
Net unrealized gains on assets held at the reporting date		973			484		243			132
Purchases		424			—		121			—
Sales		(3,305	)		—		(771	)		—
Ending balance at December 31, 2014	$	8,889		$	8,454	$	2,458		$	2,306

Of the $22.1 million in plan assets classified as level 3, $11.3 million was invested in real estate, and the remaining $10.8 million was invested in collective investment funds.

Generally, investments are valued based on information provided by fund managers to each plan's trustee as reviewed by management and its investment advisers. Mutual funds and equities are valued based on available exchange data. Commingled equity funds consist of publicly-traded investments. Fair value for real estate and private equity partnerships is primarily based on valuation methodologies that include third-party appraisals, comparable transactions, and discounted cash flow valuation models.

Future benefit payments, which reflect expected future service as appropriate, are estimates of what will be paid in the following years (in thousands):

Year Ending December 31,	Pension Plans
2016	$	5,430
2017		5,624
2018		5,984
2019		6,217
2020		6,630
Years 2021-2025		36,233

In January 2015, we contributed approximately $4.9 million in shares of our common stock to our defined benefit plans, with no additional contributions in 2015. We expect to contribute a total of $5.3 million in shares of our common stock and cash to our defined benefit plans in 2016. We expect to contribute approximately $0.4 million to our unfunded supplemental executive retirement plan during 2016.

The following table describes plans for which accumulated benefit obligations ("ABO") were in excess of plan assets, and for which plan assets exceeded ABO (in thousands).

	December 31, 2015				December 31, 2014
	ABO Exceeds Plan Assets		Plan Assets Exceed ABO		ABO Exceeds Plan Assets		Plan Assets Exceed ABO
Projected benefit obligation	$	120,237	$	—	$	118,284	$	—
Accumulated benefit obligation		116,289		—		112,727		—
Fair value of plan assets		73,321		—		74,551		—

For the pension plans and other benefit plans, the following amounts are included in "Accumulated other comprehensive loss, net" on our balance sheet as of December 31, 2015, that have not yet been recognized as components of net periodic benefit cost (in thousands):

	Pension Benefits
Unamortized net (gain)/loss	$	43,684
Unamortized prior service benefit		(1,581	)

The amounts in "Accumulated other comprehensive loss, net" expected to be recognized as components of net periodic benefit cost during 2016 are (in thousands):

	Pension Benefits
Amortization of net loss	$	4,372
Amortization of prior service benefit		(337	)

We do not expect to have any of the plans’ assets returned during 2016.

Effective July 1, 2013, we amended the Hecla Mining Company Retirement Plan (the "Hecla plan") to change the pension benefit formula and other plan provisions. The amendment resulted in the following changes to the Hecla plan:

• The definition of pensionable compensation was changed to exclude one-half of any performance-based or annual incentive bonus, fringe benefits, reimbursements or other expense allowances, moving expenses, health and welfare benefits, stock awards, income realized from stock options or restricted stock, income from certain property arrangements, long term incentive awards, premium pay rates for overtime, contributions to or distributions from a non-qualified deferred compensation plan, and shift or location differentials. Under the terms of the amended Hecla plan, pensionable compensation includes an employee's base salary and other payments of compensation for services performed during the course of employment, elective deferrals not includable in the gross income of the employee under the Internal Revenue Service Code Sections 125, 132(f)(4), 402(e)(3), 402(h), 403(b) and 457, one-half of any performance-based or annual incentive bonus, one-half of any cash safety incentive award, paid time off other than for disability leave, and compensation for overtime at the employee's regular hourly rate of pay for each hour worked.

• For new employees hired after June 30, 2013, pension benefits will be calculated based on the highest average of any five consecutive years (60 months) of pensionable compensation during the final ten years of service instead of three consecutive years during the final ten years of service for employees hired before July 1, 2013.

• Prior to July 1, 2013, we credited each participant's account annually with an amount equal to 6.0% of pensionable compensation, plus an additional 5.7% of the participant's pensionable compensation in excess of the Social Security taxable wage base ("the cash balance pay credit"). Beginning July 1, 2013, the cash balance pay credit will consist of the 6.0% of pensionable compensation without the 5.7% additional credit.

• Access to cash balance accounts following a termination of employment prior to early or normal retirement age has been limited. Prior to the amendment, a cash balance participant could elect to receive a distribution of the vested portion of his or her account at any age following a termination of employment. This change applies only to amounts credited to a cash balance account after June 30, 2013.

• For new employees hired after June 30, 2013, the cash balance pay credit will be earned based on years of plan participation: 3% for 1 through 5 years; 4.5% for 6 through 10 years; 6% after 10 years.

Non-U.S. employees are not eligible to participate in the defined benefit pension plans that we maintain for U.S. employees. Canadian employees participate in Canada's public retirement income system, which includes the following components: (i) the Canada (or Quebec) Pension Plan, which is a contributory, earnings-related social insurance program, and (ii) the Old Age Security program. In addition, the Registered Retirement Savings Plan is a tax-deferred individual savings plan available to Canadian employees. Mexican employees participate in Mexico's public retirement income system, which is based on contributions the employee, employer and the government submit to the retirement savings system. The system is administered through savings accounts managed by private fund managers selected by the participant.

Capital Accumulation Plans

Our Capital Accumulation Plan ("Hecla 401(k) Plan") is available to all U.S. salaried and certain hourly employees and applies immediately upon employment. Employees may contribute from 1% to 50% of their annual compensation to the plan (subject to statutory limits). We make a matching contribution in the form of cash or stock of 100% of an employee’s contribution up to 6% of the employee’s earnings. Our matching contributions were approximately $3.4 million in 2015, $3.2 million in 2014, and $3.0 million in 2013.

Effective January 1, 2014, the Hecla 401(k) Plan was restated to allow for payment of matching contributions to be made in Hecla common stock on a quarterly basis. Prior to 2014, contributions were made in cash on a payroll-to-payroll basis.

We also maintain a 401(k) plan that is available to all hourly employees at the Lucky Friday unit after completion of six months of service. Employees may contribute from 2% to 50% of their compensation to the plan (subject to statutory limits). The matching contribution is 55% of an employee’s contribution up to, but not exceeding, 5% of the employee’s earnings.  Our contributions were approximately $391,000 in 2015, $292,000 in 2014, and $293,000 in 2013.