PENSION AND POST-RETIREMENT PLANS

12 Months Ended

Dec. 31, 2023

PENSION AND POST-RETIREMENT PLANS

PENSION AND POST-RETIREMENT PLANS

11. PENSION AND POST-RETIREMENT PLANS

Qualified Pension and Post-retirement Benefits Plans: The Company provides a funded qualified single-employer defined benefit pension plan that covers most non-bargaining employees and certain clerical bargaining unit employees. The Company also provides a post-retirement benefit plan that provides health and life insurance benefits, and covers substantially all salaried, non-bargaining employees hired before 2008, and certain bargaining unit employees. Employees are generally eligible for such benefits upon retirement and completion of a specified number of years of service. The Company does not pre-fund the post-retirement benefit plan and has the right to modify or terminate the plan in the future, with the exception of the benefits pertaining to the bargaining unit employees. Most non-bargaining retirees pay a portion of these post-retirement benefit costs.

Plan Administration, Investments and Asset Allocations: The Company has a Benefits Investment Committee that meets regularly with investment advisors to establish investment policies, direct investments and select investment options for the qualified plan. The Benefits Investment Committee is also responsible for appointing investment managers and monitoring their performance. The Company’s investment policy permits investments in marketable equity securities, such as domestic and foreign stocks, domestic and foreign bonds, venture capital, real estate investments, and cash equivalents. The Company’s investment policy does not permit direct investment in certain types of assets, such as options or commodities, or the use of certain strategies, such as short selling or the purchase of securities on margin.

The Company’s investment strategy for its qualified pension plan assets is to achieve a diversified mix of investments that provides for long-term growth at an acceptable level of risk, and to provide sufficient liquidity to fund ongoing benefit payments. The Company has engaged a number of investment managers to implement various investment strategies to achieve the desired asset class mix, liquidity and risk diversification objectives.

The Company’s target and actual asset allocations at December 31, 2023 and 2022 were as follows:

Asset Categories	Target		2023		2022
Domestic equity securities	53	%	57	%	53	%
International equity securities	15	%	16	%	16	%
Debt securities	22	%	19	%	20	%
Real estate	5	%	5	%	7	%
Other and cash	5	%	3	%	4	%
Total	100	%	100	%	100	%

The Company’s investments in equity securities primarily include domestic large-cap and mid-cap companies, but also includes an allocation to small-cap and international equity securities. Equity investments do not include any direct holdings of the Company’s stock but may include such holdings to the extent that the stock is included as part of certain mutual fund holdings. Debt securities include investment-grade and high-yield corporate bonds from diversified industries, mortgage-backed securities, and U.S. Treasuries. Other types of investments include funds that invest in commercial real estate assets. All assets within specific funds are allocated to the target asset allocation of the fund.

The expected return on plan assets is principally based on the Company’s historical returns combined with the Company’s long-term future expectations regarding asset class returns, the mix of plan assets, and inflation assumptions. Actual return on plan assets for the periods presented are as follows:

Actual Return on Plan Assets	Returns
One-year return	12.8	%
Three-year return	4.6	%
Five-year return	9.5	%
Long-term average return (since plan inception in 1989)	8.2	%

The Company’s pension plan assets are held in a trust and are stated at estimated fair values of the underlying investments. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on an accrual basis. Dividends are recorded on the ex-dividend date.

Equity Securities: Domestic and international common stocks are valued by obtaining quoted prices on recognized and highly liquid exchanges.

Fixed Income Securities: Corporate bonds and U.S. government treasury and agency securities are valued based on the closing price reported in the market in which the security is traded. U.S. government agency and corporate asset-backed securities may utilize models, such as a matrix pricing model, that incorporate other observable inputs when broker/dealer quotes are not available, such as cash flow, security structure, or market information.

Real Estate and Certain International Equity Funds: The fair value of real estate and certain developed and emerging market equity funds is determined by the issuer based on their net asset value (“NAV”). NAV is determined by dividing the fund’s net assets, as recorded in the fund’s audited financial statements, by the number of units outstanding at the valuation date. Fair value for the underlying investments in real estate is determined through independent property appraisals.

The fair values of the Company’s pension plan assets at December 31, 2023 and 2022 by asset category were as follows:

	Fair Value Measurements at December 31, 2023
			Quoted Prices in		Significant		Significant
			Active Markets		Observable		Unobservable
Asset Category (in millions)	Total		(Level 1)		Inputs (Level 2)		Inputs (Level 3)
Cash	$	6.1	$	6.1	$	—	$	—
Equity securities:
U.S. large-cap		82.8		82.8		—		—
U.S. mid- and small-cap		46.0		46.0		—		—
International large-cap		7.1		7.1		—		—
Fixed income securities:
U.S. Treasuries		19.2		—		19.2		—
Municipal bonds		0.2		—		0.2		—
Investment grade U.S. corporate bonds		24.7		—		24.7		—
Convertible bonds		0.1		—		0.1		—
International fixed income securities		0.1		—		0.1		—
Total		186.3	$	142.0	$	44.3	$	—
Investment measured at NAV (1)		41.6
Total plan assets	$	227.9

	Fair Value Measurements at December 31, 2022
			Quoted Prices in		Significant		Significant
			Active Markets		Observable		Unobservable
Asset Category (in millions)	Total		(Level 1)		Inputs (Level 2)		Inputs (Level 3)
Cash	$	8.8	$	8.8	$	—	$	—
Equity securities:
U.S. large-cap		69.1		69.1		—		—
U.S. mid- and small-cap		41.5		41.5		—		—
International large-cap		6.2		6.2		—		—
Fixed income securities:
U.S. Treasuries		17.4		—		17.4		—
Municipal bonds		0.2		—		0.2		—
Investment grade U.S. corporate bonds		22.8		—		22.8		—
Convertible bonds		0.3		—		0.3
International fixed income securities		0.1		—		0.1		—
Total		166.4	$	125.6	$	40.8	$	—
Investment measured at NAV (1)		40.0
Total plan assets	$	206.4

(1) Certain funds for which fair value is measured using the NAV per share as a practical expedient are not leveled within the fair value hierarchy and are included as a reconciling item to total plan assets. These investments include real estate and certain developed and emerging market equity funds.

Contributions to the qualified single-employer defined benefit pension plan are determined annually by the Company, taking into consideration recommendations from the actuary based upon the actuarially determined minimum required contributions under the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, the Pension Protection Act of 2006, and the maximum deductible contribution allowed for tax purposes. The Company’s funding policy is to contribute cash so that it meets at least the minimum required contributions, with an allowance for discretionary contributions. In 2023, 2022 and 2021, the Company contributed $9.0 million, $9.0 million and $9.0 million, respectively, in pension contributions to this plan, which were in excess of the minimum required contributions.

The benefit formulas for employees who are members of collective bargaining units are determined according to the collective bargaining agreements, either using final average pay as the base, a flat dollar amount per year of service, or a cash balance formula.

Effective December 31, 2011, the Company froze benefit accruals under the final average pay formula for salaried, non-bargaining unit employees hired before January 1, 2008 and transitioned them to the same cash balance formula for

employees hired on or after January 1, 2008. Retirement benefits under the cash balance formula are based on a fixed percentage of employee eligible compensation, plus interest. The plan interest credit rate will vary from year to year based on the ten-year U.S. Treasury rate.

Effective December 31, 2022, the Matson Pension Plan for Clerical Bargaining Unit Employees was merged into the Retirement Plan for Employees of Matson.

Benefit Plan Assets and Obligations: The measurement date for the Company’s benefit plan disclosures is December 31 of each year. The status of the funded qualified defined benefit pension plan and the unfunded post-retirement benefit plan at December 31, 2023 and 2022 are shown below:

					Post-retirement
	Pension Benefits				Benefits
	December 31,				December 31,
(In millions)	2023		2022		2023		2022
Change in Benefit Obligation:
Benefit obligation at beginning of year	$	187.4	$	249.5	$	15.3	$	29.3
Service cost		3.1		4.8		0.2		0.7
Interest cost		10.0		7.0		0.8		0.8
Participant contributions		—		—		0.7		0.7
Actuarial loss (gain)		5.5		(59.0)		4.5		(14.2)
Benefits paid, net of subsidies received		(12.9)		(14.1)		(2.0)		(2.0)
Expenses paid		—		(0.8)		—		—
Benefit obligation at end of year		193.1		187.4		19.5		15.3
Change in Plan Assets:
Fair value of plan assets at beginning of year		206.3		238.9		—		—
Actual return on plan assets		25.5		(26.7)		—		—
Participant contributions		—		—		0.7		0.7
Employer contributions		9.0		9.0		1.3		1.3
Benefits paid, net of subsidies received		(12.9)		(14.1)		(2.0)		(2.0)
Expenses paid		—		(0.8)		—		—
Fair value of plan assets at end of year		227.9		206.3		—		—
Funded Status and Recognized Plan Assets and Benefit Obligations	$	34.8	$	18.9	$	(19.5)	$	(15.3)

Qualified pension and post-retirement benefit plan assets and liabilities recognized in the Consolidated Balance Sheets and expenses recognized in accumulated other comprehensive income (loss) at December 31, 2023 and 2022 were as follows:

					Post-retirement
	Pension Benefits				Benefits
	December 31,				December 31,
(In millions)	2023		2022		2023		2022
Non-current assets	$	34.8	$	18.9	$	—	$	—
Current liabilities		—		—		(1.1)		(0.9)
Non-current liabilities		—		—		(18.4)		(14.4)
Total	$	34.8	$	18.9	$	(19.5)	$	(15.3)
Net (loss) gain, net of taxes	$	(20.3)	$	(25.8)	$	2.7	$	7.6
Prior service credit, net of taxes		—		—		8.3		11.1
Total	$	(20.3)	$	(25.8)	$	11.0	$	18.7

Unrecognized gains and losses of the post-retirement benefit plans are amortized over five years. Although current health care costs are expected to increase, the Company attempts to mitigate these increases by maintaining caps on certain of its benefit plans, using lower cost health care plan options where possible, requiring that certain groups of employees pay a portion of their benefit costs, self-insuring for certain insurance plans, encouraging wellness programs for employees, and implementing measures to mitigate future benefit cost increases.

Components of the net periodic benefit cost and other amounts recognized in other comprehensive income (loss) for the qualified pension plan and the post-retirement benefit plan during 2023, 2022 and 2021 were as follows:

	Pension Benefits						Post-retirement Benefits
	December 31,						December 31,
(In millions)	2023		2022		2021		2023		2022		2021
Components of Net Periodic Benefit Cost (Credit):
Service cost	$	3.1	$	4.8	$	4.8	$	0.2	$	0.7	$	0.7
Interest cost		10.0		7.0		6.4		0.8		0.8		0.7
Expected return on plan assets		(13.9)		(16.0)		(14.7)		—		—		—
Amortization of net loss (gain)		1.3		2.4		5.2		(2.0)		0.8		1.0
Amortization of prior service credit		—		(1.0)		(2.3)		(3.7)		(3.6)		(3.7)
Net periodic benefit cost (credit)		0.5		(2.8)		(0.6)		(4.7)		(1.3)		(1.3)
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income, net of tax:
Net (gain) loss		(4.5)		(12.3)		(20.4)		3.4		(10.7)		—
Amortization of net (loss) gain		(1.0)		(1.8)		(3.9)		1.5		(0.6)		(0.7)
Amortization of prior service credit		—		0.8		1.7		2.8		2.7		2.8
Total recognized in other comprehensive (income) loss		(5.5)		(13.3)		(22.6)		7.7		(8.6)		2.1
Total recognized in net periodic benefit cost and other comprehensive (income) loss	$	(5.0)	$	(16.1)	$	(23.2)	$	3.0	$	(9.9)	$	0.8

The weighted average assumptions used to determine benefit information during 2023, 2022 and 2021 were as follows:

	Pension Benefits						Post-retirement Benefits
	December 31,						December 31,
	2023		2022		2021		2023		2022		2021
Discount rate (1)	5.30	%	5.60	%	2.90	%	5.40	%	5.50	%	3.00	%
Expected return on plan assets	6.85	%	6.75	%	7.00	%
Rate of compensation increase	3.50	%	4.00 % - 3.50	%	3.00	%	3.50	%	4.00 % - 3.50	%	3.00	%
Cash balance interest credit rate	4.50 % - 3.25	%	3.50 % - 3.25	%	1.50 % - 3.25	%
Immediate health care cost trend rate:
Pre-65 group							6.80	%	6.60	%	5.70	%
Post-65 group							7.10	%	6.10	%	5.80	%
Ultimate health care cost trend rate							3.90	%	4.00	%	4.00	%
Year ultimate health care cost trend rate is reached							2048		2046		2045

(1) The Company derives a single equivalent rate utilizing a yield curve constructed from a portfolio of high-quality corporate bonds with various maturities.

Non-qualified Pension Plans: The Company has non-qualified supplemental pension plans covering certain employees and retirees, which provide for incremental pension payments from the Company’s general funds so that total pension benefits would be substantially equal to amounts that would have been payable from the Company’s qualified pension plans if it were not for limitations imposed by income tax law. A few employees and retirees receive additional supplemental pension benefits. Non-qualified pension plan liabilities recognized in the Consolidated Balance Sheets and expenses recognized in accumulated other comprehensive income (loss) at December 31, 2023 and 2022 are as follows:

	Non-qualified
	Pension Benefits
	December 31,
(In millions)	2023		2022
Current liabilities	$	(1.2)	$	(0.7)
Non-current liabilities		(3.4)		(3.4)
Total	$	(4.6)	$	(4.1)
Net (loss), net of taxes	$	(0.2)	$	0.1
Total	$	(0.2)	$	0.1

Discount rates of 5.2 percent and 5.5 percent were used in determining the 2023 and 2022 non-qualified pension plan obligations, respectively.

Estimated Benefit Payments: The estimated future benefit payments for the next ten years consist of the following as of December 31, 2023:

			Non-qualified
	Pension		Pension		Post-retirement
Year (in millions)	Benefits		Benefits		Benefits (1)
2024	$	14.7	$	1.2	$	1.1
2025		15.0		0.4		1.1
2026		15.2		0.5		1.2
2027		15.4		0.5		1.2
2028		15.6		0.4		1.2
2029-2033		77.0		2.6		6.1
Total	$	152.9	$	5.6	$	11.9

(1) Net of participant contributions and Medicare Part D subsidies.

Defined Contribution Plans: The Company sponsors defined contribution plans that qualify under Sections 401(a) and 401(k) of the Internal Revenue Code. The Company may make discretionary matching contributions equal to a specified percentage of each participant’s 401(k) contributions and makes other non-discretionary contributions. For the year ended December 31, 2023, the Company provided discretionary matching contributions of up to 4 percent of eligible employee compensation. The Company’s matching contributions and other contributions expensed in 2023, 2022 and 2021 were $4.2 million, $3.6 million and $3.2 million, respectively.

The Company may also provide a discretionary profit sharing contribution under the qualified defined contribution plans to non-bargaining unit employees, if both a minimum threshold of Company performance is achieved and the Board has approved the profit sharing contribution. For certain eligible employees, supplemental profit sharing contributions are credited under a non-qualified plan to be paid after separation from service from the Company’s general funds so that total profit sharing contributions would be substantially equal to amounts that would have been contributed to the Company’s qualified defined contribution plans if it were not for limitations imposed by income tax law. Discretionary profit sharing contributions expensed in 2023, 2022 and 2021 were $3.1 million, $2.8 million and $2.5 million, respectively.

Multi-employer Bargaining Plans:

The Company contributes to multi-employer defined benefit pension plans under the terms of collective-bargaining agreements that cover its bargaining unit employees. Contributions are generally based on amounts paid for union labor or cargo volume. The risks of participating in multi-employer plans are different from single-employer plans because assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers. Additionally, if one employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

The multi-employer pension plans are subject to the plan termination insurance provisions of ERISA and are paying premiums to the Pension Benefit Guaranty Corporation (“PBGC”). The statutes provide that an employer who withdraws from, or significantly reduces its contribution obligation to, a multi-employer plan generally will be required to continue funding its proportional share of the plan’s unfunded vested benefits. As of December 31, 2023, the Company’s estimated benefit plan withdrawal obligations were $182.1 million. Except as described in Note 12, no withdrawal obligations have been recorded by the Company in the Consolidated Balance Sheets at December 31, 2023 and 2022, as the Company has no present intention of withdrawing from and does not anticipate termination of any of these plans.

Information regarding the Company’s participation in multi-employer pension plans is outlined in the table below. The “EIN/Pension Plan Number” column provides the Employer Identification Number (“EIN”) and the three-digit plan number, if applicable. Unless otherwise noted, the most recent Pension Protection Act zone status available in 2023 and 2022 is for the plan’s year-end at December 31, 2023 and 2022, respectively. The zone status is based on information that the Company received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally less than 65 percent funded; plans in the orange zone are both a) less than 80 percent funded and

b) have an accumulated/expected funding deficiency in any of the next six plan years, net of any amortization extensions; plans in the yellow zone meet either one of the criteria mentioned in the orange zone; and plans in the green zone are at least 80 percent funded. The funding improvement plan (“FIP”) or rehabilitation plan (“RP”) column indicates the status which is either pending or has been implemented. The last column lists the expiration dates of the collective-bargaining agreements to which the plans are subject.

Pension

Protection Act

Zone as of

FIP/RP Status

5%

Contributions of Matson

EIN/Pension

December 31,

Pending/

Contributor

(in millions)

Surcharge

Expiration

Pension Funds

Plan Number

Notes

2023

2022

Implemented

in 2023

2023

2022

2021

Imposed

Date (1)

American Radio Association Pension Fund

13-6161999-001

Green

Green

Implemented

Yes

$

1.0

$

1.1

$

1.1

No

6/15/2028

Hawaii Longshore Pension Plan

99-0314293-001

Green

Green

No

Yes

12.1

11.9

11.1

No

6/30/2028

Master, Mates and Pilots Pension Plan

13-6372630-001

Green

Green

No

Yes

3.6

3.8

3.5

No

6/15/2027,

6/15/2028

Masters, Mates and Pilots Adjustable Pension Plan

37-1719247-001

Green

Green

No

Yes

2.0

2.1

2.0

No

6/15/2027,

6/15/2028

MEBA Pension Trust - Defined Benefit Plan

51-6029896-001

Green

Green

No

Yes

4.2

4.5

4.3

No

6/15/2028

OCU Pension Trust Plan

26-1574440-001

Green

Green

No

No

0.4

0.5

0.3

No

6/30/2030

MFOW Supplementary Pension Plan

94-6201677-001

Yellow

Yellow

No

Yes

0.1

0.1

0.1

No

6/30/2026

SIU Pacific District Pension Plan

94-6061923-001

Green

Green

No

Yes

1.3

1.5

1.4

No

6/30/2026

Alaska Teamster - Employer Pension Plan

92-6003463-024

Red

Red

Implemented

Yes

3.9

4.0

3.6

No

6/30/2024,

6/30/2025,

6/30/2026,

6/30/2027

All Alaska Longshore Pension Plan

91-6085352-001

Green

Green

No

Yes

1.8

2.0

1.6

No

6/30/2028

Western Conference of Teamsters Pension Plan

91-6145047-001

Green

Green

No

No

2.1

2.1

1.9

No

3/31/2028

Western Conference of Teamsters Supplemental Benefit Trust

95-3746907-001

Green

Green

No

No

0.1

0.1

—

No

3/31/2028

OPEIU Local 153 Pension Plan

13-2864289-001

Red

Red

Implemented

No

0.1

0.1

0.1

No

11/9/2028

Seafarers Pension Plan

13-6100329-001

(2)

Green

Green

No

No

—

—

—

No

6/30/2027

Total

$

32.7

$

33.8

$

31.0

(1) Represents the expiration date of the collective bargaining agreement.

(2) The Company does not make contributions directly to the Seafarers Pension Plan. Instead, contributions are made to the Seafarers Health and Benefits Plan, and are subsequently re-allocated to the Seafarers Pension Plan at the discretion of the plan Trustees.

The Company also contributes to multi-employer plans that provide post-retirement health and other benefits other than pensions under the terms of collective-bargaining agreements. Benefits provided to active and retired employees and their eligible dependents under these plans include medical, dental, vision and prescription drugs. These plans are not subject to the PBGC plan termination and withdrawal liability provisions of ERISA applicable to multi-employer defined benefit pension plans. Contributions made to these plans were $37.7 million, $37.7 million and $34.7 million in 2023, 2022 and 2021, respectively.

Multi-employer Defined Contribution Plans: The Company contributes to six multi-employer defined contribution pension plans. These plans are not subject to the withdrawal liability provisions of ERISA or the PBGC applicable to multi-employer defined benefit pension plans. Contributions made to these plans by the Company were $5.7 million, $6.0 million and $5.6 million in 2023, 2022 and 2021, respectively.