Norwegian Cruise Line Holdings Ltd. Annual report pursuant to Section 13 and 15(d)

Employee Benefits and Share-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2016

	Number of Share Option Awards								Weighted-Average Exercise Price						Weighted- Average Contractual Term		Aggregate Intrinsic Value
	Time- Based Awards			Performance- Based Awards			Market- Based Awards		Time- Based Awards		Performance- Based Awards		Market- Based Awards		(years)		(in thousands)
Outstanding as of January 1, 2016		7,702,071			432,752			208,333	$	47.35	$	19.00	$	59.43		8.59	$	104,864
Granted		1,095,000			52,083			—		49.88		59.43		—		—		—
Exercised		(235,555	)		(51,857	)		—		28.19		19.00		—		—		—
Forfeited and cancelled		(786,458	)		—			—		49.82		—		—		—		—
Outstanding as of December 31, 2016		7,775,058			432,978			208,333	$	48.04	$	23.86	$	59.43		7.81	$	35,429
Vested and expected to vest as of December 31, 2016		7,558,521			432,978			208,333	$	48.01	$	23.86	$	59.43		7.60	$	34,926
Exercisable as of December 31, 2016		2,539,348			432,978			—	$	43.30	$	23.86	$	—		6.67	$	24,272

	Number of Time-Based Awards			Weighted- Average Grant Date Fair Value
Non-vested as of January 1, 2016		43,653		$	5.87
Vested		(26,429	)		4.79
Forfeited or expired		(352	)		2.50

Non-vested and expected to vest as of December 31, 2016		16,872		$	7.63

	Number of Time-Based Awards			Weighted- Average Grant Date Fair Value		Number of Performance- Based Awards			Weighted- Average Grant Date Fair Value		Number of Market-Based Awards		Weighted- Average Grant Date Fair Value
Non-vested as of January 1, 2016		150,000		$	59.43		—		$	—		50,000	$	59.43
Granted		1,328,490		$	49.62		12,500		$	50.00		—		—
Vested		(50,000	)	$	57.15		(12,500	)	$	50.00		—		—
Forfeited or expired		(123,155	)	$	50.44		—					—		—
Non-vested as of December 31, 2016		1,305,335		$	50.38		—		$	—		50,000	$	59.43
Non-vested and expected to vest as of December 31, 2016		1,267,692		$	50.43		—			—		50,000	$	59.43

	Share-Based Compensation Expense
Classification of expense	2016		2015		2014
(In thousands)
Payroll and related (1)	$	7,793	$	—	$	—
Marketing, general and administrative (2)		58,621		42,209		20,627	(3)
Total share-based compensation expense	$	66,414	$	42,209	$	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.

	As of or for the Year Ended December 31,
	2016			2015			2014
Pension expense:
Service cost	$	1,863		$	1,793		$	1,393
Interest cost		874			738			728
Amortization of prior service cost		378			378			378
Amortization of actuarial loss		54			99			—
Total pension expense	$	3,169		$	3,008		$	2,499
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	21,078		$	19,730		$	15,570
Service cost		1,863			1,793			1,393
Interest cost		874			738			728
Actuarial gain (loss)		(65	)		(625	)		2,689
Direct benefit payments		(1,145	)		(558	)		(650	)
Projected benefit obligation at end of year	$	22,605		$	21,078		$	19,730
Amounts recognized in the consolidated balance sheets:
Projected benefit obligation	$	22,605		$	21,078		$	19,730

	As of or for the Year Ended December 31,
	2016			2015			2014
Amounts recognized in accumulated other comprehensive income (loss):
Prior service cost	$	(4,915	)	$	(5,293	)	$	(5,671	)
Accumulated actuarial loss		(3,008	)		(3,126	)		(3,849	)
Accumulated other comprehensive income (loss)	$	(7,923	)	$	(8,419	)	$	(9,520	)

	2016	2015	2014
Dividend yield	—%	—%	—%
Expected share price volatility	30.36%-33.01%	32.32%-45.33%	48.30%-49.90%
Risk-free interest rate	1.20%-1.48%	1.34%-1.92%	1.80%-2.02%
Expected term	6.00 years	6.00-6.50 years	6.25 years

	2016	2015
Dividend yield	—%	—%
Expected share price volatility	25.97%-30.21%	29.31%-29.86%
Risk-free interest rate	1.01%-1.93%	1.76%
Expected term	4.38-5.13 years	4.88-5.38 years

		2015
Dividend yield		—%
Expected share price volatility		30.00%
Risk-free interest rate		1.34%
Expected term		Mid-point from vesting to assumed options expiration

	2015
Dividend yield	0%
Expected share price volatility	30.00%
Risk-free interest rate	1.34%
Expected term		Mid-point from vesting to assumed awards expiration