Benefit Obligations

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Benefit Obligations

Benefit Obligations

Pension Obligations

The Company sponsors defined benefit pension plans in North America, Europe and Asia. Independent trusts or insurance companies administer the majority of these plans. Pension obligations are established for benefits payable in the form of retirement, disability and surviving dependent pensions. The commitments result from participation in defined contribution and defined benefit plans, primarily in the U.S. Benefits are dependent on years of service and the employee's compensation. Supplemental retirement benefits provided to certain employees are nonqualified for U.S. tax purposes. Separate nonqualified trusts have been established for certain U.S. nonqualified plan obligations. Pension costs under the Company's retirement plans are actuarially determined.

Other Postretirement Obligations

Certain retired employees receive postretirement health care and life insurance benefits under plans sponsored by the Company, which has the right to modify or terminate these plans at any time. The cost for coverage is shared between the Company and the retiree. The cost of providing retiree health care and life insurance benefits is actuarially determined and accrued over the service period of the active employee group. The Company's policy is to fund benefits as claims and premiums are paid. The U.S. postretirement health care plan was closed to new participants effective January 1, 2006.

Defined Contribution Plans

The Company sponsors various defined contribution plans in North America, Europe and Asia covering certain employees. Employees may contribute to these plans and the Company will match these contributions in varying amounts. The Company's matching contribution to the defined contribution plans are based on specified percentages of employee contributions.

The amount of costs recognized for the Company's defined contribution plans are as follows:

	Year Ended December 31,
	2022	2021	2020
	(In $ millions)
Defined contribution plans	62	47	39

Summarized information on the Company's pension and postretirement benefit plans is as follows:

	Pension Benefits As of December 31,				Postretirement Benefits As of December 31,
	2022		2021		2022	2021
	(In $ millions)
Change in Projected Benefit Obligation
Projected benefit obligation as of beginning of period	3,488		3,847		51	61
Service cost	12		13		1	1
Interest cost	67		54		1	1
Net actuarial (gain) loss(1)	(662)		(119)		(10)	(7)
Acquisitions	198	(2)	7	(3)	—	—
Settlements	—		(38)		—	—
Benefits paid	(220)		(226)		(3)	(4)
Exchange rate changes	(25)		(50)		(2)	(1)
Projected benefit obligation as of end of period	2,858		3,488		38	51
Change in Plan Assets
Fair value of plan assets as of beginning of period	3,183		3,388		—	—
Actual return on plan assets	(588)		36		—	—
Employer contributions	45		47		3	4
Acquisitions	211	(2)	—		—	—
Settlements	—		(38)		—	—
Benefits paid(4)	(220)		(226)		(3)	(4)
Exchange rate changes	(6)		(24)		—	—
Fair value of plan assets as of end of period	2,625		3,183		—	—
Funded status as of end of period	(233)		(305)		(38)	(51)
Amounts Recognized in the Consolidated Balance Sheets Consist of:
Noncurrent Other assets	160		221		—	—
Current Other liabilities	(21)		(22)		(3)	(4)
Benefit obligations	(372)		(504)		(35)	(47)
Net amount recognized	(233)		(305)		(38)	(51)
Amounts Recognized in Accumulated Other Comprehensive Income Consist of:
Net actuarial (gain) loss(5)	13		20		—	—
Prior service (benefit) cost	—		—		(1)	(1)
Net amount recognized	13		20		(1)	(1)

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(1)Primarily relates to changes in discount rates.

(2)Represents plan obligations and assets related to the M&M acquisition.

(3)Represents plan obligations related to the Santoprene acquisition.

(4)Includes benefit payments to nonqualified pension plans of $20 million and $21 million as of December 31, 2022 and 2021, respectively.

(5)Relates to the pension plans of the Company's equity method investments.

The percentage of U.S. and international projected benefit obligation at the end of the period is as follows:

	Pension Benefits As of December 31,		Postretirement Benefits As of December 31,
	2022	2021	2022	2021
	(In percentages)
U.S. plans	73	78	50	50
International plans	27	22	50	50
Total	100	100	100	100

The percentage of U.S. and international fair value of plan assets at the end of the period is as follows:

	Pension Benefits As of December 31,
	2022	2021
	(In percentages)
U.S. plans	77	85
International plans	23	15
Total	100	100

Pension plans with projected benefit obligations in excess of plan assets are as follows:

	As of December 31,
	2022	2021
	(In $ millions)
Projected benefit obligation	669	803
Fair value of plan assets	277	277

Pension plans with accumulated benefit obligations in excess of plan assets are as follows:

	As of December 31,
	2022	2021
	(In $ millions)
Accumulated benefit obligation	649	781
Fair value of plan assets	270	277

Other postretirement plans with accumulated postretirement benefit obligations in excess of plan assets are as follows:

	As of December 31,
	2022	2021
	(In $ millions)
Accumulated postretirement benefit obligation	38	52

The accumulated benefit obligation for all defined benefit pension plans is as follows:

	As of December 31,
	2022	2021
	(In $ millions)
Accumulated benefit obligation	2,837	3,461

The components of net periodic benefit cost are as follows:

	Pension Benefits Year Ended December 31,			Postretirement Benefits Year Ended December 31,
	2022	2021	2020	2022	2021	2020
	(In $ millions)
Service cost	12	13	12	1	1	1
Interest cost	67	54	85	1	1	1
Expected return on plan assets	(166)	(205)	(199)	—	—	—
Recognized actuarial (gain) loss	91	47	97	(10)	(6)	(1)
Curtailment (gain) loss	—	—	—	—	—	(1)
Settlement (gain) loss	—	3	—	—	—	—
Special termination benefit	—	—	1	—	—	—
Total	4	(88)	(4)	(8)	(4)	—

The Company maintains nonqualified pension plans funded with nonqualified trusts for certain U.S. employees as follows:

	As of December 31,
	2022	2021
	(In $ millions)
Nonqualified Trust Assets
Marketable securities	5	10
Noncurrent Other assets, consisting of insurance contracts	22	28
Nonqualified Pension Obligations
Current Other liabilities	18	19
Benefit obligations	152	204

(Income) expense relating to the nonqualified pension plans included in net periodic benefit cost, excluding returns on the assets held by the nonqualified trusts, is as follows:

	Year Ended December 31,
	2022	2021	2020
	(In $ millions)
Total	(34)	3	23

Valuation

The principal weighted average assumptions used to determine benefit obligation are as follows:

	Pension Benefits As of December 31,		Postretirement Benefits As of December 31,
	2022	2021	2022	2021
	(In percentages)
Discount Rate Obligations
U.S. plans	5.5	2.8	5.4	2.7
International plans	3.4	1.4	4.7	2.4
Combined	4.9	2.5	5.1	2.5
Rate of Compensation Increase
U.S. plans	N/A	N/A
International plans	2.7	2.5
Combined	2.7	2.5

The principal weighted average assumptions used to determine net periodic benefit cost are as follows:

	Pension Benefits Year Ended December 31,			Postretirement Benefits Year Ended December 31,
	2022	2021	2020	2022	2021	2020
	(In percentages)
Discount Rate Obligations
U.S. plans	2.8	2.4	3.2	2.7	2.2	3.1
International plans	1.4	1.0	1.4	2.4	1.9	2.7
Combined	2.5	2.1	2.8	2.5	2.1	2.9
Discount Rate Service Cost
U.S. plans	N/A	N/A	1.9	3.5	N/A	3.8
International plans	1.5	1.1	1.8	2.1	1.9	2.7
Combined	1.5	1.1	1.8	2.1	1.9	2.7
Discount Rate Interest Cost
U.S. plans	2.2	1.7	2.8	2.0	1.5	2.6
International plans	1.2	0.7	1.1	2.1	1.5	2.5
Combined	2.0	1.4	2.4	2.1	1.5	2.6
Expected Return on Plan Assets
U.S. plans	5.5	6.5	6.7
International plans	4.9	4.8	5.1
Combined	5.4	6.3	6.5
Rate of Compensation Increase
U.S. plans	N/A	N/A	N/A
International plans	2.5	2.5	2.6
Combined	2.5	2.5	2.6
Interest Crediting Rate
U.S. plans	1.9	1.4	2.1
International plans	1.0	1.0	N/A
Combined	1.9	1.4	2.1

The Company's health care cost trend assumptions for U.S. postretirement medical plan's net periodic benefit cost are as follows:

	As of December 31,
	2022	2021	2020
	(In percentages, except year)
Health care cost trend rate assumed for next year	7.5	7.3	7.5
Health care cost trend ultimate rate	5.0	5.0	5.0
Health care cost trend ultimate rate year	2032	2031	2031

Plan Assets

The weighted average target asset allocations for the Company's pension plans in 2022 are as follows:

	U.S. Plans	International Plans
	(In percentages)
Bonds - domestic to plans	85	30
Equities - domestic to plans	8	24
Equities - international to plans	7	10
Other	—	36
Total	100	100

On average, the actual return on the U.S. qualified defined pension plans' assets over the long-term (20 years) has exceeded the expected long-term rate of asset return assumption. The U.S. qualified defined benefit plans' actual return on assets for the year ended December 31, 2022 was (19.5)% versus an expected long-term rate of asset return assumption of 5.5%. The expected long-term rate of asset return assumption used to determine 2023 net periodic benefit cost is 5.5% for the U.S. qualified defined benefit plans.

The Company's defined benefit plan assets are measured at fair value on a recurring basis (Note 2) as follows:

Cash and Cash Equivalents: Foreign and domestic currencies as well as short-term securities are valued at cost plus accrued interest, which approximates fair value.

Equity securities, treasuries and corporate debt: Valued at the closing price reported on the active market in which the individual securities are traded. Automated quotes are provided by multiple pricing services and validated by the plan custodian. These securities are traded on exchanges as well as in the over the counter market.

Registered Investment Companies: Composed of various mutual funds and other investment companies whose diversified portfolio is comprised of foreign and domestic equities, fixed income securities, and short-term investments. Investments are valued at the net asset value of units held by the plan at year-end.

Pooled-type investments: Composed of various funds whose diversified portfolio is comprised of foreign and domestic equities, fixed income securities, and short-term investments. Investments are valued at the net asset value of units held by the plan at year-end.

Derivatives: Derivative financial instruments are valued in the market using discounted cash flow techniques. These techniques incorporate Level 1 and Level 2 fair value measurement inputs such as interest rates and foreign currency exchange rates. These market inputs are utilized in the discounted cash flow calculation considering the instrument's term, notional amount, discount rate and credit risk. Significant inputs to the derivative valuation for interest rate swaps, foreign currency forwards and swaps, and options are observable in the active markets and are classified as Level 2 in the fair value measurement hierarchy.

Mortgage backed securities: Fair value is estimated based on valuations obtained from third-party pricing services for identical or comparable assets. Mortgage Backed Securities are traded in the over the counter broker/dealer market.

Insurance contracts: Valued at contributions made, plus earnings, less participant withdrawals and administrative expenses, which approximates fair value.

Short-term investment funds: Composed of various funds whose portfolio is comprised of foreign and domestic currencies as well as short-term securities. Investments are valued at the net asset value of units held by the plan at year-end.

Other: Composed of real estate investment trust common stock valued at closing price as reported on the active market in which the individual securities are traded.

	Fair Value Measurement
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total
	As of December 31,
	2022	2021	2022	2021	2022	2021
	(In $ millions)
Assets
Cash and cash equivalents	7	5	—	—	7	5
Derivatives
Swaps	—	—	4	6	4	6
Equity securities
U.S. companies	26	—	—	—	26	—
International companies	135	95	—	—	135	95
Fixed income
Corporate debt	—	—	662	895	662	895
Treasuries, other debt	162	118	968	1,338	1,130	1,456
Mortgage backed securities	—	—	12	16	12	16
Insurance contracts	—	—	98	57	98	57
Other	4	4	21	6	25	10
Total investments, at fair value(1)	334	222	1,765	2,318	2,099	2,540
Liabilities
Derivatives
Swaps	—	—	4	6	4	6
Total liabilities	—	—	4	6	4	6
Total net assets(2)	334	222	1,761	2,312	2,095	2,534

______________________________

(1)Certain investments that are measured at fair value using the NAV per share practical expedient have not been classified in the fair value hierarchy. Total investments, at fair value, for the year ended December 31, 2022 excludes investments in pooled-type investments, registered investment companies and short-term investment funds with fair values of $441 million, $41 million and $41 million, respectively. Total investments, at fair value, for the year ended December 31, 2021 excludes investments in pooled-type investments, registered investment companies and short-term investment funds with fair values of $538 million, $69 million and $37 million, respectively.

(2)Total net assets excludes non-financial plan receivables and payables of $17 million and $10 million, respectively, as of December 31, 2022 and $13 million and $8 million, respectively, as of December 31, 2021. Non-financial items include due to/from broker, interest receivables and accrued expenses.

Benefit obligation funding is as follows:

	Total Expected 2023
	(In $ millions)
Cash contributions to defined benefit pension plans	27
Benefit payments to nonqualified pension plans	18
Benefit payments to other postretirement benefit plans	4

The Company's estimates of its U.S. defined benefit pension plan contributions reflect the provisions of the Pension Protection Act of 2006.

Pension and postretirement benefits expected to be paid are as follows:

	Pension Benefit Payments(1)	Company Portion of Postretirement Benefit Cost(2)
	(In $ millions)
2023	233	4
2024	221	3
2025	218	3
2026	215	3
2027	209	3
2028-2032	975	13

______________________________

(1)Payments are expected to be made primarily from plan assets.

(2)Payments are expected to be made primarily from Company assets.