12. Pension and Retirement Plans

Prior to December 31, 2003, all employees of the Company’s Kolberg-Pioneer, Inc. subsidiary were covered by a defined benefit pension plan. After December 31, 2003, all benefit accruals under the plan ceased and no new employees could become participants in the plan. Benefits paid under this plan are based on years of service multiplied by a monthly amount. The Company’s funding policy for the plan is to make at least the minimum annual contributions required by applicable regulations.

The Company’s investment strategy for the plan is to earn a rate of return sufficient to match or exceed the long- term growth of pension liabilities. The investment policy states that the Plan Committee in its sole discretion shall determine the allocation of plan assets among the following four asset classes: cash equivalents, fixed-income securities, domestic equities and international equities. The Plan Committee attempts to ensure adequate diversification of the invested assets through investment in an exchange traded mutual fund that invests in a diversified portfolio of stocks, bonds and money market securities.

The following provides information regarding benefit obligations, plan assets and the funded status of the plan:

	Pension Benefits
	2015			2014
Change in benefit obligation
Benefit obligation, beginning of year	$	15,986		$	13,815
Interest cost		596			620
Actuarial (gain)/loss		(417	)		2,118
Benefits paid		(600	)		(567	)
Benefit obligation, end of year		15,565			15,986
Accumulated benefit obligation	$	15,565		$	15,986
Change in plan assets
Fair value of plan assets, beginning of year	$	13,283		$	12,693
Actual gain/(loss) on plan assets		(279	)		819
Employer contribution		284			338
Benefits paid		(600	)		(567	)
Fair value of plan assets, end of year		12,688			13,283
Funded status, end of year	$	(2,877	)	$	(2,703	)
Amounts recognized in the consolidated balance sheets
Noncurrent liabilities	$	(2,877	)	$	(2,703	)
Net amount recognized	$	(2,877	)	$	(2,703	)
Amounts recognized in accumulated other comprehensive income consist of
Net loss	$	6,098		$	5,896
Net amount recognized	$	6,098		$	5,896
Weighted average assumptions used to determine benefit obligations as of December 31
Discount rate		4.28	%		3.81	%
Expected return on plan assets		7.00	%		7.00	%
Rate of compensation increase		N/A			N/A

The measurement date used for the plan was December 31.In determining the expected return on plan assets, the historical experience of the plan assets, the current and expected allocation of the plan assets and the expected long-term rates of return were considered.

All assets in the plan are invested in an exchange traded mutual fund (level 1 in the fair value hierarchy). The allocation of assets within the mutual fund as of December 31 and the target asset allocation ranges by asset category are as follows:

	Actual Allocation				2015 & 2014 Target
Asset Category	2015		2014		Allocation Ranges
Equity securities		66.0%		65.6%		53 - 73%
Debt securities		30.7%		30.1%		21 - 41%
Money market funds		3.3%		4.3%		0 - 15%
Total		100.0%		100.0%

Net periodic benefit cost for 2015, 2014 and 2013 included the following components:

	Pension Benefits
	2015			2014			2013
Components of net periodic benefit cost
Interest cost	$	596		$	620		$	561
Expected return on plan assets		(840	)		(816	)		(693	)
Amortization of actuarial loss		500			295			536
Net periodic benefit cost	$	256		$	99		$	404
Other changes in plan assets and benefit obligations recognized in other comprehensive income
Net actuarial (gain)/loss for the year	$	702		$	2,115		$	(2,109	)
Amortization of net loss		(500	)		(295	)		(536	)
Total recognized in other comprehensive income		202			1,820			(2,645	)
Total recognized in net periodic benefit cost and other comprehensive income	$	458		$	1,919		$	(2,241	)
Weighted average assumptions used to determine net periodic benefit cost for years ended December 31
Discount rate		3.81	%		4.60	%		3.82	%
Expected return on plan assets		7.00	%		7.00	%		7.00	%

No contributions are expected to be funded by the Company during 2016.

Amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit cost in 2016 for the amortization of a net loss is $480.

The following estimated future benefit payments are expected in the years indicated:

	Pension Benefits
2016	$	730
2017		730
2018		790
2019		840
2020		870
2021 - 2025		4,670

The Company sponsors a 401(k) defined contribution plan to provide eligible employees with additional income upon retirement. The Company’s contributions to the plan are based on employee contributions. The Company’s contributions totaled $5,292, $5,134 and $4,941 in 2015, 2014 and 2013, respectively.

The Company maintains a SERP for certain of its executive officers. The plan is a non-qualified deferred compensation plan administered by the Board of Directors of the Company, pursuant to which the Company makes quarterly cash contributions of a certain percentage of executive officers’ compensation. Investments are self-directed by participants and can include Company stock. Upon retirement, participants receive their apportioned share of the plan assets in the form of cash.

Assets of the SERP consist of the following:

	December 31, 2015					December 31, 2014
		Cost	Market			Cost			Market
Company stock	$	1,778		$	2,560		$	2,929		$	4,401
Equity securities		3,402			3,309			3,368			3,727
Total	$	5,180		$	5,869		$	6,297		$	8,128

The Company periodically adjusts the deferred compensation liability such that the balance of the liability equals the total fair market value of all assets held by the trust established under the SERP. Such liabilities are included in other long-term liabilities on the consolidated balance sheets. The equity securities are included in investments in the consolidated balance sheets and classified as trading equity securities. See Note 4, Investments, for additional information. The cost of the Company stock held by the plan is included as a reduction in shareholders’ equity in the consolidated balance sheets.

The change in the fair market value of Company stock held in the SERP results in a charge or credit to selling, general and administrative expenses in the consolidated statements of income because the acquisition cost of the Company stock in the SERP is recorded as a reduction of shareholders’ equity and is not adjusted to fair market value; however, the related liability is adjusted to the fair market value of the stock as of each period end. The Company recognized expense of $241, $74 and $601 in 2015, 2014 and 2013, respectively, related to the change in the fair value of the Company stock held in the SERP.