Annual report pursuant to Section 13 and 15(d)

PENSION AND OTHER RETIREMENTS BENEFITS

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PENSION AND OTHER RETIREMENTS BENEFITS
 12 Months Ended
Dec. 31, 2023
Retirement Benefits [Abstract]  
PENSION AND OTHER RETIREMENTS BENEFITS
NOTE 12: PENSION AND OTHER RETIREMENT BENEFITS
Certain current and former employees of the Company are covered under a funded qualified defined benefit retirement plan at Flavors & Ingredients which was frozen on December 31, 2019. Plan provisions covering certain of the Company’s salaried employees generally provide pension benefits based on years of service and compensation. Plan provisions covering certain of the Company’s union members generally provide stated benefits for each year of credited service. In addition, the Company has unfunded non-qualified plans also at Flavors & Ingredients covering certain salaried employees with additional retirement benefits in excess of qualified plan limits imposed by federal tax law, which were frozen by the Company on December 31, 2022. The Company uses December 31 as a measurement date for the plans. The Company’s funding policy was to contribute annually the statutory required amount as actuarially determined.
In February 2021, the Compensation Committee approved the termination of the Company’s qualified defined benefit retirement plan. During the fourth quarter of 2021, the Company offered the option of receiving a lump sum payment to certain participants with vested benefits in lieu of receiving monthly annuity payments. Approximately 125 participants elected to receive the settlement, and lump sum payments of approximately $16.8 million were paid from plan assets to these participants in December 2021. The benefit obligation settled approximated payments to plan participants and a pre-tax settlement gain of $0.5 million was recorded in the fourth quarter of 2021. During 2022, the Company purchased non-participating annuity contracts to settle the remaining liabilities of the plan for approximately $9.3 million which was fully funded by plan assets. The annuity contracts purchased along with the plan termination activities resulted in a settlement gain of $1.2 million for the year ended December 31, 2022. During the first quarter of 2023, the Company transferred the remaining surplus of the plan of approximately $2.5 million to a suspense account held within a trust for the Flavors & Ingredients defined contribution plan. The surplus consists of an investment fund measured at fair value which is being used, as prescribed in the applicable regulations, to fund current and future contributions to the defined contribution plan. See Note 9 for additional information.
The following table reconciles the funded status of the Company’s defined benefit pension plans (in thousands):
Year Ended
December 31, 2023 December 31, 2022
Accumulated benefit obligations $ 7,941  $ 7,706 
Changes in projected benefit obligations:
Projected benefit obligations at beginning of year $ 7,706  $ 20,314 
Service cost —  41 
Interest cost 377  326 
Actuarial loss (gain)
 208  (3,084)
Benefits paid (350) (9,891)
Projected benefit obligations at end of year 7,941  7,706 
Change in plans’ assets:
Fair value of plans’ assets at beginning of year 2,522  12,902 
Actual returns on plans’ assets 10  (349)
Employer contributions
 350  360 
Benefits paid (419) (9,891)
Transfers related to plan termination (2,463) (500)
Fair value of plans’ assets at end of year —  2,522 
Net pension liability $ (7,941) $ (5,184)
The projected benefit obligation at December 31, 2023 and December 31, 2022 included $7.9 million and $7.7 million, respectively, related to the Company’s unfunded non-qualified plans.
Amounts recognized in the Company’s consolidated balance sheets consisted of (in thousands):
Year Ended
December 31, 2023 December 31, 2022
Other assets $ —  $ 2,522 
Accrued expenses and other current liabilities (355) (355)
Other liabilities (7,586) (7,351)
Net amount recognized $ (7,941) $ (5,184)

Amounts recognized in accumulated other comprehensive income (loss), net of tax, which have not yet been recognized as a component of net periodic pension expense for the Company’s defined benefit pension plans, are as follows (in thousands):
Year Ended
December 31, 2023 December 31, 2022 December 31, 2021
Net actuarial gain
 $ (1,323) $ (1,523) $ (207)
$ (1,323) $ (1,523) $ (207)
The components of the changes in unrecognized amounts included in pension obligation, net in other comprehensive income (loss) for the Company’s defined benefit pension plans were as follows (in thousands):
Year Ended
December 31, 2023 December 31, 2022 December 31, 2021
Net actuarial loss (gain)
 $ 152  $ (1,316) $ 527 
Amortization of actuarial gain (loss)
 48  —  (36)
Total loss (gain) recognized in other comprehensive income (loss)
 $ 200  $ (1,316) $ 491 
The components of net periodic benefit cost (credit) for the Company’s defined benefit pension plans were as follows (in thousands):
Year Ended
December 31, 2023 December 31, 2022 December 31, 2021
Service cost $ —  $ 41  $ 63 
Interest cost 377  326  1,047 
Expected return on plan assets —  144  (1,310)
Amortization of net actuarial (gain) loss
 (63) —  36 
Settlement loss (income)
 59  (1,178) (644)
Net periodic benefit cost (credit)
 $ 373  $ (667) $ (808)
Net periodic benefit cost (credit) is reflected in the Company’s consolidated financial statements as follows (in thousands):
Year Ended
December 31, 2023 December 31, 2022 December 31, 2021
Selling, general and administrative expense $ —  $ 41  $ 63 
Other expense (income), net
 373  (708) (871)
Net periodic benefit cost (credit)
 $ 373  $ (667) $ (808)
Assumptions—The following assumptions were used to determine the net periodic benefit cost during 2022 for the Company’s funded defined benefit pension plan:
Year Ended December 31, 2022
Weighted-average assumptions used to determine net periodic benefit cost:
Discount rate 2.38  %
Expected long-term rate of return on plan assets 1.70  %
The following assumptions were used to determine the benefit obligation at year end and net periodic benefit cost during the year for the Company’s unfunded supplemental defined benefit pension plan:
Year Ended
December 31, 2023 December 31, 2022
Weighted-average assumptions used to determine benefit obligation at year end:
Discount rate 4.81  % 5.01  %
Weighted-average assumptions used to determine net periodic benefit cost:
Discount rate 5.01  % 2.78  %
Rate of compensation increase —  % 3.50  %
The Company bases the discount rate assumption on current investment yields of high quality fixed income investments during the retirement benefits maturity period. The rate of increase in future compensation assumptions reflects the Company’s long-term actual experience and future and near-term outlook.
The Company considered a number of factors to determine its expected rates of return on the assets in its plan, including, without limitation, historical performance of the plan assets, investment style, asset allocations and other third-party studies and surveys. The Company considered the plan portfolio’s asset allocation over a variety of time periods and compared them with third-party studies and reviewed performance of the capital markets in recent years and other factors and advice from various third parties, such as the pension plan’s advisors, investment managers and actuaries. While the Company considered recent performance and the historical performance of its plan assets, the Company’s assumptions are based primarily on its estimates of long-term, prospective rates of return. Differences between actual and expected asset returns are recognized in the net periodic benefit cost over the remaining service period of the active participating employees.
Plan Assets—The investment committee for the Company’s plan adopted investment policies with the objective of meeting and exceeding over time, the expected long-term rate of return on plan assets assumptions, weighted against a reasonable risk level and considering the appropriate liquidity levels. In connection with this objective, the plan’s assets were mainly invested in mutual funds, common and collective funds, corporate bonds, government bonds, private equity funds, as well as a real estate fund, in order to achieve the Company’s goals to enhance the expected returns of its investments together with their liquidity and protect the plan’s funded status. As a result of the planned termination of the qualified pension plan, certain of the plan’s assets were liquidated during the fourth quarter of 2021 and used to satisfy lump sum benefit payments as further described above, and any remaining plan assets were liquidated during 2022. Therefore, at December 31, 2022 the remaining plan assets were invested in cash and cash equivalents. As discussed above, during the first quarter of 2023, the Company transferred the remaining surplus of the plan to a suspense account held within a trust for the Flavors & Ingredients defined contribution plan.
The following tables set forth, by category, the Company’s pension plan assets as of December 31, 2022, using the fair value hierarchy established under ASC Topic 820 and as described in Note 9 (in thousands):
Pension Plan Assets as of December 31, 2022
Level 1 Level 2 Level 3 Total
Pension plan assets measured at fair value:
Cash and cash equivalents $ 2,522  $ —  $ —  $ 2,522 
Total pension plan assets measured at fair value $ 2,522  $ —  $ —  $ 2,522 
Cash and cash equivalents are stated at cost, which approximates fair market value. There were no transfers between levels within the three-tier fair value hierarchy in 2022.
Contributions—The Company does not expect to make further contributions to its funded defined benefit pension plan due to its termination.
Expected Future Benefit Payments—The projected benefit payments for the unfunded non-qualified defined benefit pension plans are as follows (in thousands):
2024 $ 355 
2025 425 
2026 592 
2027 588 
2028 583 
2029-2033 3,177 
The Company also participates in certain state-sponsored defined benefit plans covering certain non-U.S. employees with total net liabilities of $2.6 million and $1.9 million as of December 31, 2023 and December 31, 2022, respectively. The primary state-sponsored plan relates to Merisant employees in Switzerland and France, which had pension benefit obligations of $5.3 million and plan assets of $2.7 million as of December 31, 2023 and a pension benefit obligation of $5.5 million and plan assets of $3.6 million as of December 31, 2022. Net periodic pension cost for 2023, 2022, and 2021 was $0.1 million, $0.4 million, and $0.4 million, respectively.
Defined Contribution Pension Plans—The Company has defined contribution 401(k) plans covering certain eligible domestic employees, as defined by the plans. The plans provide for certain employer matching contributions. The Company recorded compensation expense related to its defined contribution plans of $1.2 million for both 2023 and 2022, and $1.0 million for 2021.