PLOYEE BENEFIT PLANS

Retirement Investment Plans

We have several employee retirement investment plans that, taken together, cover most of our full-time employees. The Oceaneering Retirement Investment Plan is a 401(k) plan in which U.S. employees may participate by deferring a portion of their gross monthly salary and directing us to contribute the deferred amount to the plan. We match a portion of the employees' deferred compensation. Our contributions to the 401(k) plan were $18 million, $17 million and $20 million for the plan years ended December 31, 2018, 2017 and 2016, respectively.

We also make matching contributions to foreign employee savings plans similar in nature to a 401(k) plan. In 2018, 2017 and 2016, these contributions, principally related to plans associated with U.K. and Norwegian subsidiaries, were $11 million, $9.1 million and $12 million, respectively.

The Oceaneering International, Inc. Supplemental Executive Retirement Plan covers selected key management employees and executives, as approved by the Compensation Committee of our Board of Directors (the "Compensation Committee"). Under this plan, we accrue an amount determined as a percentage of the participant's gross monthly salary and the amounts accrued are treated as if they are invested in one or more investment vehicles pursuant to this plan. Expenses related to this plan during 2018, 2017 and 2016 were $2.8 million, $3.2 million and $3.3 million, respectively.

We had a defined benefit plan covering some of our employees in the U.K. The assets of the U.K. plan were invested in individual pensioners' annuities in anticipation of the plan settlement, which occurred in the fourth quarter of 2018. There were no plan assets or obligations for the U.K plan at December 31, 2018. The projected benefit obligations for the U.K. plan were $21 million at December 31, 2017 and the fair values of the plan assets (using Level 2 inputs) for the U.K. plan were $22 million at December 31, 2017.

Incentive Plan

Under our Second Amended and Restated 2010 Incentive Plan (the "Incentive Plan"), shares of our common stock are made available for awards to employees and nonemployee members of our Board of Directors.

The Incentive Plan is administered primarily by the Compensation Committee; however, the full Board of Directors makes determinations regarding awards to nonemployee directors under the Incentive Plan. The Compensation Committee or our Board of Directors, as applicable, determines the type(s) of award(s) to be made to each participant and sets forth in the related award agreement the terms, conditions and limitations applicable to each award. Stock options, stock appreciation rights and stock and cash awards may be made under the Incentive Plan. There has been no stock option activity after December 31, 2010 and there are no options outstanding under the Incentive Plan. We have not granted any stock options since 2005 and the Compensation Committee has expressed its intention to refrain from using stock options as a component of employee compensation for our executive officers and other employees for the foreseeable future. Additionally, the Board of Directors has expressed its intention to refrain from using stock options as a component of nonemployee director compensation for the foreseeable future.

In 2018, 2017 and 2016, the Compensation Committee granted awards of performance units to certain of our key executives and employees. The performance units awarded are scheduled to vest in full on the third anniversary of the award date, or pro rata over three years if the participant meets certain age and years of service requirements. The Compensation Committee and the Board of Directors approved specific financial goals and measures (as defined), for each of the three-year periods ending December 31, 2020, 2019 and 2018 to be used as the basis for the final value of the performance units. The final value of the performance unit granted may range from $0 to $200 in each of 2018 and 2017 and from $0 to $150 in 2016. Upon vesting and determination of value, the value of the performance units will be payable in cash. Compensation expense (benefit) related to the performance units was $3.9 million, $4.2 million and $(4.2) million in 2018, 2017 and 2016, respectively. As of December 31, 2018, there were 332,756 performance units outstanding.

During 2018, 2017 and 2016, the Compensation Committee granted restricted units of our common stock to certain of our key executives and employees. During 2018, 2017 and 2016, our Board of Directors granted restricted common stock to our nonemployee directors. Over 85%, 80%, and 65% of the grants made to our employees in 2018, 2017 and 2016, respectively, vest in full on the third anniversary of the award date, conditional upon continued employment. The remainder of the grants made to employees vest pro rata over three years, as these participants meet certain age and years-of-service requirements. For the grants of restricted stock units to each of the participant employees, the participant will be issued a share of our common stock for the participant's vested restricted stock units at the earlier of three years or, if the participant vested earlier after meeting the age and service requirements, following termination of employment or service. The grants of restricted stock to our nonemployee directors were scheduled to vest in full on the first anniversary of the award date conditional upon continued service as a director, with one exception. In February 2017, we granted shares of restricted common stock to a director who had given written notice of his intention to retire from our board of directors. Those shares were to vest if the director's service continued until the election of directors at our subsequent annual meeting of shareholders in May 2017. The director fulfilled that requirement by resigning concurrent with that election and the shares of restricted stock became vested.

In April 2009, the Compensation Committee adopted a policy that Oceaneering will not provide U.S. federal income tax gross-up payments to any of its directors or executive officers in connection with future awards of restricted stock or stock units. This policy had no effect on the existing service agreement with our Chairman, which provides for tax gross-up payments that could become applicable to such future awards in limited circumstances, such as following a change in control of Oceaneering. Since August 2010, there have been no outstanding awards that provide for tax gross-up payments.

The additional tax charge realized from tax deductions less than the financial statement expense of our restricted stock grants was $2.1 million, $3.1 million and $3.0 million in 2018, 2017 and 2016, respectively. The 2018 and 2017 charges were recognized in our Consolidated Statements of Operations and the 2016 charge was recognized in our Consolidated Statements of Equity.

The following is a summary of our restricted stock and restricted stock unit activity for 2018, 2017 and 2016:



	Number		Weighted Average Fair Value	Aggregate Intrinsic Value
Balance at December 31, 2015	831,291		60.49
Granted	587,953		27.90
Issued	(278,572	)	61.48	$	7,866,000
Forfeited	(88,665	)	43.03
Balance at December 31, 2016	1,052,007		43.48
Granted	489,514		26.70
Issued	(277,968	)	61.90	$	7,038,000
Forfeited	(81,748	)	34.15
Balance at December 31, 2017	1,181,805		32.84
Granted	653,286		18.05
Issued	(320,147	)	47.62	$	5,993,000
Forfeited	(71,047	)	24.87
Balance at December 31, 2018	1,443,897		23.27

The restricted stock units granted in 2018, 2017 and 2016 carry no voting rights and no dividend rights. Each grantee of shares of restricted common stock is deemed to be the record owner of those shares during the restriction period, with the right to vote and receive any dividends on those shares.

Grants of restricted stock units are valued at their estimated fair values as of their respective grant dates. The grants in 2018, 2017 and 2016 were subject only to vesting conditioned on continued employment or service as a nonemployee director; therefore, these grants were valued at the grant date fair market value using the closing price of our stock on the New York Stock Exchange.

Compensation expense under the restricted stock plans was $10 million, $11 million and $14 million for 2018, 2017 and 2016, respectively. As of December 31, 2018, we had $10.0 million of future expense to be recognized related to our restricted stock unit plans over a weighted average remaining life of 1.6 years.

Post-Employment Benefit

In 2001, we entered into an agreement with our Chairman who was also then our Chief Executive Officer. That agreement was amended in 2006 and in 2008. Pursuant to the amended agreement, the Chairman relinquished his position as Chief Executive Officer in May 2006 and began his post-employment service period on December 31, 2006, which continued through August 15, 2011, during which service period the Chairman, acting as an independent contractor, agreed to serve as nonexecutive Chairman of our Board of Directors. The agreement provides the Chairman with post-employment benefits for ten years following August 15, 2011. The agreement also provides for medical coverage on an after-tax basis to the Chairman, his spouse and children for their lives. We recognized the net present value of the post-employment benefits over the expected service period. Our total accrued liabilities, current and long-term, under this post-employment benefit were $3.2 million and $3.9 million at December 31, 2018 and 2017, respectively.

As part of the arrangements relating to the Chairman's post-employment benefits, we established an irrevocable grantor trust, commonly known as a "rabbi trust," to provide the Chairman greater assurance that we will set aside an adequate source of funds to fund payment of the post-retirement benefits under this agreement, including the medical coverage benefits payable to the Chairman, his spouse and their children for their lives. In connection with establishment of the rabbi trust, we contributed to the trust a life insurance policy on the life of the Chairman, which we had previously obtained, and we agreed to continue to pay the premiums due on that policy. When the life insurance policy matures, the proceeds of the policy will become assets of the trust. If the value of the trust exceeds $4 million, as adjusted by the consumer price index, at any time after January 1, 2012, the excess may be paid to us. However, because the trust is irrevocable, the assets of the trust are generally not available to fund our future operations until the trust terminates, which is not expected to be during the lives of the Chairman, his spouse or their children. Furthermore, no tax deduction will be available for our contributions to the trust; however, we may benefit from future tax deductions for benefits actually paid from the trust (although benefit payments from the trust are not expected to occur in the near term, because we expect to make direct payments of those benefits for the foreseeable future).