PENSION AND POSTRETIREMENT BENEFITS

12 Months Ended

May 26, 2024

PENSION AND POSTRETIREMENT BENEFITS

PENSION AND POSTRETIREMENT BENEFITS

18. PENSION AND POSTRETIREMENT BENEFITS

We have defined benefit retirement plans (“pension plans”) for eligible salaried and hourly employees. Benefits are based on years of credited service and average compensation or stated amounts for each year of service. We also sponsor postretirement plans which provide certain medical and dental benefits to qualifying U.S. employees. Effective August 1, 2013, our defined benefit pension plan for eligible salaried employees was closed to new hire salaried employees. New hire salaried employees will generally be eligible to participate in our defined contribution plan.

During the second quarter of fiscal 2024, the Company provided a voluntary lump-sum settlement offer to certain vested participants in the salaried and hourly pension plans in order to reduce a portion of the pension obligation. During the third quarter of fiscal 2024, approximately $135 million was distributed from the pension plan assets in connection with this offer. The lump-sum settlement exceeded our service and interest cost for our hourly pension plans, requiring a remeasurement in the third quarter of fiscal 2024. In connection with the remeasurement, we updated the effective discount rate assumption for the impacted pension plan obligations from 5.52% to 5.20%, as of December 31, 2023. The settlement and related remeasurement resulted in the recognition of an immaterial settlement loss, reflected in pension and postretirement non-service expense (income), as well as a loss in other comprehensive income (loss) totaling $6.8 million in the third quarter of fiscal 2024.

We recognize the funded status of our pension and postretirement plans in the Consolidated Balance Sheets. For our pension plans, we also recognize as a component of accumulated other comprehensive income (loss), the net of tax results of the actuarial gains or losses within the corridor and prior service costs or credits that arise during the period but are not recognized in net periodic benefit cost. For our postretirement plans, we also recognize as a component of accumulated other comprehensive income (loss), the net of tax results of the gains or losses and prior service costs or credits that arise during the period but are not recognized in net periodic benefit cost. These amounts will be adjusted out of accumulated other comprehensive income (loss) as they are subsequently recognized as components of net periodic benefit cost. For our pension plans, we have elected to immediately recognize actuarial gains and losses in our operating results in the year in which they occur, to the extent they exceed the corridor, eliminating amortization. Amounts are included in the components of pension and postretirement plan costs, below, as recognized net actuarial loss.

The changes in benefit obligations and plan assets at May 26, 2024 and May 28, 2023 are presented in the following table.

	Pension Plans				Postretirement Plans
	2024		2023		2024		2023
Change in Benefit Obligation
Benefit obligation at beginning of year	$	2,800.2	$	3,132.6	$	53.2	$	64.8
Service cost		5.8		6.5		0.1		0.1
Interest cost		144.7		124.0		2.5		2.3
Amendments		0.3		3.0		—		—
Actuarial gain		(31.2)		(265.5)		(0.8)		(6.3)
Plan settlements		(70.8)		—		—		—
Benefits paid		(274.3)		(199.3)		(6.9)		(7.3)
Currency		—		(1.1)		—		(0.4)
Benefit obligation at end of year	$	2,574.7	$	2,800.2	$	48.1	$	53.2
Change in Plan Assets
Fair value of plan assets at beginning of year	$	2,948.5	$	3,294.7	$	3.5	$	3.4
Actual return on plan assets		118.4		(158.1)		0.2		0.1
Employer contributions		12.2		12.5		6.9		7.3
Plan settlements		(65.9)		—		—		—
Benefits paid		(274.3)		(199.3)		(6.9)		(7.3)
Currency		—		(1.3)		—		—
Fair value of plan assets at end of year	$	2,738.9	$	2,948.5	$	3.7	$	3.5

The $31.2 million actuarial gain reducing our projected benefit obligation at the end of fiscal 2024 is principally related to the increase in the discount rate from 5.50% to 5.58%. 

The funded status and amounts recognized in our Consolidated Balance Sheets at May 26, 2024 and May 28, 2023 were as follows:

	Pension Plans				Postretirement Plans
	2024		2023		2024		2023
Funded Status	$	164.2	$	148.3	$	(44.4)	$	(49.7)
Amounts Recognized in Consolidated Balance Sheets
Other assets	$	260.1	$	249.9	$	3.5	$	3.3
Other accrued liabilities		(9.3)		(9.7)		(6.5)		(7.2)
Other noncurrent liabilities		(86.6)		(91.9)		(41.4)		(45.8)
Net Amount Recognized	$	164.2	$	148.3	$	(44.4)	$	(49.7)
Amounts Recognized in Accumulated Other Comprehensive (Income) Loss (Pre-tax)
Actuarial net loss (gain)	$	8.3	$	8.1	$	(42.7)	$	(46.5)
Net prior service cost (benefit)		6.2		9.6		(7.5)		(9.2)
Total	$	14.5	$	17.7	$	(50.2)	$	(55.7)
Weighted-Average Actuarial Assumptions Used to Determine Benefit Obligations at May 26, 2024 and May 28, 2023
Discount rate		5.58%		5.50%		5.41%		5.37%
Long-term rate of compensation increase		N/A		N/A		N/A		N/A

The accumulated benefit obligation for all defined benefit pension plans was $2.57 billion and $2.80 billion at May 26, 2024 and May 28, 2023, respectively.

The projected benefit obligation and accumulated benefit obligation for pension plans with accumulated benefit obligations in excess of plan assets at May 26, 2024 and May 28, 2023 were as follows:

	2024		2023
Projected benefit obligation	$	95.9	$	101.6
Accumulated benefit obligation		95.9		101.6

Components of pension and postretirement plan costs included:

	Pension Plans						Postretirement Plans
	2024		2023		2022		2024		2023		2022
Service cost	$	5.8	$	6.5	$	8.7	$	0.1	$	0.1	$	0.2
Interest cost		144.7		124.0		83.3		2.5		2.3		1.3
Expected return on plan assets		(141.3)		(145.9)		(145.4)		—		—		—
Amortization of prior service cost (benefit)		1.6		1.4		1.9		(1.7)		(1.7)		(2.0)
Recognized net actuarial loss (gain)		(12.5)		0.1		(2.9)		(4.7)		(4.4)		(3.5)
Settlement loss		1.1		—		—		—		—		—
Pension and postretirement cost (benefit) — Company plans		(0.6)		(13.9)		(54.4)		(3.8)		(3.7)		(4.0)
Pension cost (benefit) — multi-employer plans		9.0		9.2		8.1		—		—		—
Total pension and postretirement cost (benefit)	$	8.4	$	(4.7)	$	(46.3)	$	(3.8)	$	(3.7)	$	(4.0)

In fiscal 2024, 2023, and 2022, the Company recorded a gain of $12.5 million, charges of $0.1 million, and a gain of $2.9 million, respectively, reflecting the year-end write-off of actuarial gains and losses in excess of 10% of our pension liability.

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) were as follows:

	Pension Plans				Postretirement Plans
	2024		2023		2024		2023
Net actuarial gain (loss)	$	13.3	$	(38.4)	$	0.9	$	6.3
Amendments		(0.3)		(3.0)		—		—
Amortization of prior service cost (benefit)		1.6		1.4		(1.7)		(1.7)
Settlement loss		1.1		—		—		—
Recognized net actuarial gain		(12.5)		—		(4.7)		(4.4)
Currency		—		0.1		—		—
Net amount recognized	$	3.2	$	(39.9)	$	(5.5)	$	0.2

Weighted-Average Actuarial Assumptions Used to Determine Net Expense

	Pension Plans						Postretirement Plans
	2024		2023		2022		2024		2023		2022
Discount rate - interest cost		5.41%		4.09%		2.29%		5.36%		3.83%		1.69%
Discount rate - service cost		5.60%		4.74%		3.50%		5.31%		4.60%		3.55%
Long-term rate of return on plan assets		5.00%		4.56%		3.87%		N/A		N/A		N/A
Long-term rate of compensation increase		N/A		N/A		N/A		N/A		N/A		N/A

The Company uses a split discount rate (spot-rate approach) for the U.S. plans and certain foreign plans. The spot-rate approach applies separate discount rates for each projected benefit payment in the calculation of pension service and interest cost.

We amortize prior service cost for our pension and postretirement plans, as well as amortizable gains and losses for our postretirement plans, in equal annual amounts over the average expected future period of vested service. For plans with no active participants, average life expectancy is used instead of average expected useful service.

Plan Assets

The fair value of plan assets, summarized by level within the fair value hierarchy described in Note 19, as of May 26, 2024, was as follows:

	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	2.2	$	75.3	$	—	$	77.5
Equity securities:
U.S. equity securities		71.0		24.0		—		95.0
International equity securities		34.8		—		—		34.8
Fixed income securities:
Government bonds		—		508.1		—		508.1
Corporate bonds		—		1,797.6		—		1,797.6
Mortgage-backed bonds		—		53.3		—		53.3
Net receivables for unsettled transactions		(20.6)		—		—		(20.6)
Fair value measurement of pension plan assets in the fair value hierarchy	$	87.4	$	2,458.3	$	—	$	2,545.7
Investments measured at net asset value								193.2
Total pension plan assets							$	2,738.9

The fair value of plan assets, summarized by level within the fair value hierarchy described in Note 19, as of May 28, 2023, was as follows:

	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	5.7	$	152.6	$	—	$	158.3
Equity securities:
U.S. equity securities		59.0		19.5		—		78.5
International equity securities		34.4		—		—		34.4
Fixed income securities:
Government bonds		—		562.2		—		562.2
Corporate bonds		—		1,878.1		—		1,878.1
Mortgage-backed bonds		—		22.0		—		22.0
Net payables for unsettled transactions		2.6		—		—		2.6
Fair value measurement of pension plan assets in the fair value hierarchy	$	101.7	$	2,634.4	$	—	$	2,736.1
Investments measured at net asset value								212.4
Total pension plan assets							$	2,948.5

Level 1 assets are valued based on quoted prices in active markets for identical securities. The majority of the Level 1 assets listed above include the common stock of both U.S. and international companies, mutual funds, and master limited partnership units, all of which are actively traded and priced in the market.

Level 2 assets are valued based on other significant observable inputs including quoted prices for similar securities, yield curves, indices, etc. Level 2 assets consist primarily of individual fixed income securities where values are based on quoted prices of similar securities and observable market data.

Level 3 assets consist of investments where active market pricing is not readily available and, as such, fair value is estimated using significant unobservable inputs.

Certain assets that are measured at fair value using the NAV (net asset value) per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. Such investments are generally considered long-term in nature with varying redemption availability. For certain of these investments, with a fair value of approximately $22.1 million as of May 26, 2024, the asset

managers have the ability to impose customary redemption gates which may further restrict or limit the redemption of invested funds therein. As of May 26, 2024, no such gates were imposed.

As of May 26, 2024, we have unfunded commitments for additional investments of $33.1 million in private equity funds and $10.1 million in natural resources funds. We expect unfunded commitments to be funded from plan assets rather than the general assets of the Company.

To develop the expected long-term rate of return on plan assets assumption for the pension plans, we consider the current asset allocation strategy, the historical investment performance, and the expectations for future returns of each asset class.

Our pension plan weighted-average asset allocations by asset category were as follows:

	May 26, 2024		May 28, 2023
Equity securities		5%	4%
Debt securities		86%	84%
Real estate funds		1%	1%
Private equity		4%	4%
Other		4%	7%
Total		100%	100%

The Company’s pension asset strategy is designed to align our pension plan assets with our projected benefit obligation to reduce volatility by targeting an investment strategy of approximately 90% in fixed-income securities and approximately 10% in return seeking assets, primarily equity securities, real estate, and private assets.

Assumed health care cost trend rates have a significant effect on the benefit obligation of the postretirement plans.

Assumed Health Care Cost Trend Rates at:	May 26, 2024	May 28, 2023
Initial health care cost trend rate	6.67%	6.92%
Ultimate health care cost trend rate	4.42%	4.43%
Year that the rate reaches the ultimate trend rate	2033	2034

We currently anticipate making contributions of approximately $11.7 million to our pension plans in fiscal 2025. We anticipate making contributions of $6.6 million to our other postretirement plans in fiscal 2025. These estimates are based on ERISA guidelines, current tax laws, plan asset performance, and liability assumptions, which are subject to change.

The following table presents estimated future gross benefit payments for our plans:

	Pension		Postretirement
	Plans		Plans
2025	$	199.2	$	6.6
2026		198.9		6.1
2027		199.4		5.6
2028		199.2		5.1
2029		198.6		4.7
Succeeding 5 years		965.6		18.1

Multiemployer Pension Plans

The Company contributes to several multiemployer defined benefit pension plans under collective bargaining agreements that cover certain units of its union-represented employees. The risks of participating in such plans are different from the risks of single-employer plans, in the following respects:

a. Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

b. If a participating employer ceases to contribute to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

c. If the Company ceases to have an obligation to contribute to a multiemployer plan in which it had been a contributing employer, it may be required to pay to the plan an amount based on the underfunded status of the plan and on the history of the Company’s participation in the plan prior to the cessation of its obligation to contribute. The amount that an employer that has ceased to have an obligation to contribute to a multiemployer plan is required to pay to the plan is referred to as a withdrawal liability.

The Company’s participation in multiemployer plans for the fiscal year ended May 26, 2024 is outlined in the table below. For each plan that is individually significant to the Company the following information is provided:

● The “EIN / PN” column provides the Employer Identification Number and the three-digit plan number assigned to a plan by the IRS.

● The most recent Pension Protection Act Zone Status available for 2023 and 2022 is for plan years that ended in calendar years 2023 and 2022, respectively. The zone status is based on information provided to the Company by each plan. A plan in the “red” zone has been determined to be in “critical status”, based on criteria established under the Internal Revenue Code (“Code”), and is generally less than 65% funded. A plan in the “yellow” zone has been determined to be in “endangered status”, based on criteria established under the Code, and is generally less than 80% funded. A plan in the “green” zone has been determined to be neither in “critical status” nor in “endangered status”, and is generally at least 80% funded.

● The “FIP/RP Status Pending/Implemented” column indicates whether a Funding Improvement Plan, as required under the Code to be adopted by plans in the “yellow” zone, or a Rehabilitation Plan, as required under the Code to be adopted by plans in the “red” zone, is pending or has been implemented by the plan as of the end of the plan year that ended in calendar year 2023.

● Contributions by the Company are the amounts contributed in the Company’s fiscal periods ending in the specified year.

● The “Surcharge Imposed” column indicates whether the Company contribution rate for its fiscal year that ended on May 26, 2024 included an amount in addition to the contribution rate specified in the applicable collective bargaining agreement, as imposed by a plan in “critical status”, in accordance with the requirements of the Code.

● The last column lists the expiration dates of the collective bargaining agreements pursuant to which the Company contributes to the plans.

For plans that are not individually significant to Conagra Brands the total amount of contributions is presented in the aggregate.

Expiration

Pension Protection

FIP /

Contributions by the

Dates of

Act Zone Status

RP Status

Company (millions)

Collective

Pending /

Surcharge

Bargaining

Pension Fund

EIN / PN

2023

2022

Implemented

FY24

FY23

FY22

Imposed

Agreements

Central States, Southeast and Southwest Areas Pension Fund

36-6044243/ 001

Red, Critical and Declining

Red, Critical and Declining

RP Implemented

2.4

2.6

2.5

No

5/31/2025

Western Conference of Teamsters Pension Plan

91-6145047/ 001

Green

Green

N/A

4.3

4.4

3.8

No

4/30/2025

Other Plans

2.3

2.2

1.8

Total Contributions

$

9.0

$

9.2

$

8.1

The Company was not listed in the Forms 5500 filed by any of the other plans or for any of the other years as providing more than 5% of the plan’s total contributions. At the date our financial statements were issued, Forms 5500 were not available for plan years ending in calendar year 2023.

Certain employees are covered under defined contribution plans. The expense related to these plans was $62.3 million, $59.4 million, and $57.9 million in fiscal 2024, 2023, and 2022, respectively.