2016 Annual Report for Norwegian Cruiseline Holdings - F-26

The compensation expense recognized for share-based compensation for the years ended December 31, 2016, 2015 and 2014 was as follows:
Classification of expense

2016

(In thousands)
Payroll and related (1)
Marketing, general and administrative (2)
Total share-based compensation expense

$
$

Share-Based Compensation Expense
2015
2014

7,793 $
58,621
66,414 $

- $
42,209
42,209 $

-
20,627(3)
20,627

(1) Amounts relate to equity granted to certain of our shipboard officers.
(2) Amounts relate to equity granted to certain of our corporate employees.
(3) Amount above includes $6.0 million of non-recurring charges associated with the Management Exchange Agreement.
Employee Benefit Plans
We maintain annual incentive bonus plans for our executive officers and other key employees. Bonuses under these plans become earned and
payable based on the Company's performance during the applicable performance period and the individual's continued employment. Company
performance criteria include the attainment of certain financial targets and other strategic objectives.
Certain employees are employed pursuant to agreements that provide for severance payments. Severance is generally only payable upon an
involuntary termination of the employment by us without cause or a termination by the employee for good reason. Severance generally includes a
series of cash payments based on the employee's base salary (and in some cases, bonus), and our payment of the employee's continued medical
benefits for the applicable severance period.
We maintain a 401(k) Plan for our shoreside employees, including our executive officers. Participants may contribute up to 100% of eligible
compensation each pay period, subject to certain limitations. We make matching contributions equal to 100% of the first 3% and 50% of amounts
greater than 3% to and including 10% of each participant's contributions subject to certain limitations. In addition, we may make discretionary
supplemental contributions to the Plan, which shall be allocated to each eligible participant on a pro-rata basis based on the compensation of the
participant to the total compensation of all participants. Our matching contributions are vested according to a five-year schedule. The 401(k) Plan
is subject to the provisions of ERISA and is intended to be qualified under section 401(a) of the U.S. Internal Revenue Code (the "Code").
Our contributions are reduced by contributions forfeited by those employees who leave the 401(k) Plan prior to vesting fully in the contributions.
Forfeited contributions of $0.1 million, $0.4 million and $0.1 million were utilized in the years ended December 31, 2016, 2015 and 2014,
respectively.
We maintained a Supplemental Executive Retirement Plan ("SERP"), which is a legacy unfunded defined contribution plan for certain executives
who were employed by the Company in an executive capacity prior to 2008. The SERP was frozen to future participation following that date. The
SERP provided for Company contributions on behalf of the participants to compensate them for the benefits that are limited under the 401(k)
Plan. We credited participants under the SERP for amounts that would have been contributed by us to the Company's previous Defined
Contribution Retirement Plan and the former 401(k) Plan without regard to any limitations imposed by the Code. Participants did not make any
elective contributions under this plan. As of December 31, 2016 and 2015, the aggregate balance of participants' deferred compensation accounts
under the SERP Plan was $0.5 million and $0.5 million, respectively. We have discontinued this plan following the 2015 contributions and will
pay the deferred contributions to participants in early 2017 following the expiration of the required twelve month period.
We recorded expenses related to the above 401(k) Plan and SERP of $6.4 million, $5.3 million and $3.7 million for the years ended
December 31, 2016, 2015 and 2014, respectively.
We maintained a Senior Management Retirement Savings Plan ("SMRSP"), which was a legacy unfunded defined contribution plan for certain
employees who were employed by the Company prior to 2001. The SMRSP provided for Company contributions on behalf of the participants to
compensate them for the difference between the qualified plan benefits that were previously available under the Company's cash balance pension
plan and the redesigned 401(k) Plan. We credited participants under the SMRSP Plan for the difference in the amount that would have been
contributed by us to the Company's previous Norwegian Cruise Line Pension Plan and the qualified plan maximums of the new 401(k) Plan. We
have discontinued this plan following the 2015 contributions and will pay the deferred contributions to participants in early 2017 following the
expiration of the required twelve month period.
Effective January 2009, we implemented the Shipboard Retirement Plan which computes benefits based on years of service, subject to eligibility
requirements of the Shipboard Retirement Plan. The Shipboard Retirement Plan is unfunded with no plan assets. The current portion of the
projected benefit obligation of $1.2 million and $1.1 million was included in accrued expenses and other liabilities as of December 31, 2016 and
2015, respectively and $21.4 million and $20.0 million was included in other long-term liabilities in our consolidated balance sheets as of
December 31, 2016 and 2015, respectively. The amounts related to the Shipboard Retirement Plan were as follows (in thousands):
F-26

Table of Contents for the Digital Edition of 2016 Annual Report for Norwegian Cruiseline Holdings