Employee Benefit Plans

12 Months Ended

Dec. 31, 2021

Retirement Benefits [Abstract]

Employee Benefit Plans

Employee Benefit Plans

Pension Benefits

The Company has defined benefit pension plans covering a certain number of employees. The defined benefits for salaried employees generally are based on years of service and the employee's level of compensation during specified periods of employment. Defined benefit pension plans covering hourly employees generally provide benefits of stated amounts for each year of service. MEPPs in which the Company participates provide benefits to certain unionized employees. The Company's funding policy for qualified plans is consistent with statutory regulations and customarily equals the amount deducted for income tax purposes. Periodic voluntary contributions are made, as recommended, by the Company's Pension Committee.

For most U.S. defined benefit pension plans and a majority of international defined benefit pension plans, accrued service is no longer granted. In place of these plans, the Company has established defined contribution plans providing for the Company to contribute a specified matching amount for participating employees' contributions to the plan. For U.S. employees, this match is made on employee contributions up to 4% of eligible compensation. Additionally, the Company may provide a discretionary contribution for eligible employees. There have been no discretionary contributions provided for the years 2021, 2020 and 2019. For non-U.S. employees, this match is up to 6% of eligible compensation with an additional 2% going towards insurance and administrative costs.

NPPC from continuing operations for U.S. and international plans for 2021, 2020 and 2019 is as follows:

	U.S. Plans						International Plans
(In thousands)	2021		2020		2019		2021		2020		2019
Net Periodic Pension Cost (Income):
Defined benefit pension plans:
Service cost	$	—	$	—	$	39	$	1,805	$	1,642	$	1,308
Interest cost	4,813		7,381		10,551		12,652		17,599		22,148
Expected return on plan assets	(12,199)		(11,368)		(10,297)		(45,018)		(41,013)		(37,218)
Recognized prior service costs	—		—		—		582		512		326
Recognized losses	5,538		5,100		5,585		18,119		14,723		14,345
Settlement/curtailment loss (gain)	—		—		129		(6)		18		19
Defined benefit pension plan cost (income)	(1,848)		1,113		6,007		(11,866)		(6,519)		928
Multiemployer pension plans	640		620		727		1,035		969		1,167
Defined contribution plans	5,660		4,769		2,523		4,196		3,994		5,349
Net periodic pension cost (income)	$	4,452	$	6,502	$	9,257	$	(6,635)	$	(1,556)	$	7,444

The change in the financial status of the defined benefit pension plans and amounts recognized on the Consolidated Balance Sheets at December 31, 2021 and 2020 are as follows:

	U.S. Plans				International Plans
(In thousands)	2021		2020		2021		2020
Change in benefit obligation:
Benefit obligation at beginning of year	$	296,660	$	294,693	$	1,119,552	$	984,665
Service cost	—		—		1,805		1,642
Interest cost	4,813		7,381		12,652		17,599
Plan participants' contributions	—		—		15		18
Amendments	—		—		—		1,088
Actuarial (gain) loss	(8,063)		25,212		(58,567)		129,410
Settlements/curtailments	—		—		(269)		(256)
Benefits paid	(16,403)		(17,675)		(39,831)		(43,952)
Effect of foreign currency	—		—		(13,159)		29,379
Acquisitions/divestitures	—		(12,951)		—		(41)
Benefit obligation at end of year	$	277,007	$	296,660	$	1,022,198	$	1,119,552
Change in plan assets:
Fair value of plan assets at beginning of year	$	226,125	$	226,268	$	957,177	$	860,321
Actual return on plan assets	19,005		24,975		40,382		95,132
Employer contributions	4,219		3,528		25,077		21,955
Plan participants' contributions	—		—		15		18
Settlements/curtailments	—		—		(269)		(256)
Benefits paid	(16,402)		(17,675)		(39,220)		(43,527)
Effect of foreign currency	—		—		(9,910)		23,534
Acquisitions/divestitures	—		(10,971)		—		—
Fair value of plan assets at end of year	$	232,947	$	226,125	$	973,252	$	957,177
Funded status at end of year	$	(44,060)	$	(70,535)	$	(48,946)	$	(162,375)

Significant items impacting actuarial gains and losses for 2021 for U.S. plans included: improvement in the funded position due to the actual return on the fair value of plan assets since the prior measurement date being greater than assumed, and an increase in the discount rate used to measure the benefit obligation compared with the prior year; partially offset by a decrease in the funded position due to updates in the mortality improvement projection assumption.

The significant item impacting actuarial gains and losses for 2021 for international plans, principally the U.K. plan, was improvement in the funded position due to an increase in the discount rate used to measure the benefit obligation compared with the prior year.

Amounts recognized on the Consolidated Balance Sheets for defined benefit pension plans consist of the following at December 31, 2021 and 2020:

	U.S. Plans				International Plans
	December 31				December 31
(In thousands)	2021		2020		2021		2020
Noncurrent assets	$	—	$	—	$	2,046	$	—
Current liabilities	1,999		1,970		967		907
Noncurrent liabilities	42,061		68,565		50,025		161,468
AOCI	114,874		135,281		410,114		487,682

Amounts recognized in AOCI for defined benefit pension plans consist of the following at December 31, 2021 and 2020:

	U.S. Plans				International Plans
(In thousands)	2021		2020		2021		2020
Net actuarial loss	$	114,874	$	135,281	$	400,497	$	477,238
Prior service cost	—		—		9,617		10,444
Total	$	114,874	$	135,281	$	410,114	$	487,682

The Company's estimate of expected contributions to be paid in 2022 for the U.S. and international defined benefit plans total $2.0 million and $24.7 million, respectively.

Future Benefit Payments

Expected benefit payments for defined benefit pension plans over the next ten years are as follows:

(In millions)	2022		2023		2024		2025		2026		2026-2030
U.S. Plans	$	27.2	$	16.7	$	16.6	$	16.5	$	16.4	$	78.7
International Plans	40.9		41.9		43.1		44.5		45.9		245.3

Net Periodic Pension Cost and Defined Benefit Pension Obligation Assumptions

The weighted-average actuarial assumptions used to determine the defined benefit pension plan NPPC for 2021, 2020 and 2019 were as follows:

	U.S. Plans December 31						International Plans December 31						Global Weighted-Average December 31
	2021		2020		2019		2021		2020		2019		2021		2020		2019
Discount rates	2.4	%	3.2	%	4.2	%	1.4	%	2.1	%	2.9	%	1.6	%	2.4	%	3.2	%
Expected long-term rates of return on plan assets	6.8	%	7.0	%	7.3	%	4.7	%	5.2	%	5.5	%	5.1	%	5.6	%	5.9	%

The expected long-term rates of return on defined benefit pension plan assets for the 2022 NPPC are 6.3% for the U.S. plans and 4.4% for the international plans. The expected global long-term rate of return on assets for 2022 is 4.7%.

The weighted-average actuarial assumptions used to determine the defined benefit pension plan obligations at

December 31, 2021 and 2020 were as follows:

	U.S. Plans				International Plans				Global Weighted-Average
	December 31				December 31				December 31
	2021		2020		2021		2020		2021		2020
Discount rates	2.7	%	2.4	%	1.9	%	1.4	%	2.1	%	1.6	%

Since accrued service is no longer granted to the U.S. defined benefit plans and the majority of the international defined benefit pension plans, the rate of compensation increase did not have a significant impact on the defined benefit pension obligation at December 31, 2021 and 2020 or the defined benefit pension plan NPPC for the years ended 2021, 2020 and 2019.

The U.S. discount rate was determined using a yield curve that was produced from a universe containing approximately 1,100 U.S. dollar-denominated, AA-graded corporate bonds, all of which were noncallable (or callable with make-whole provisions) and excluding the 10% of the bonds with the highest deviation from the expected yield and the 10% with the lowest deviation from the expected yield within each duration group. The discount rate was then developed as the level-equivalent rate that would produce the same present value as that using spot rates to discount the projected benefit payments. For international

plans, the discount rate is aligned to corporate bond yields in the local markets, normally AA-rated corporations. The process and selection seek to approximate the cash inflows with the timing and amounts of the expected benefit payments.

Accumulated Benefit Obligation

The accumulated benefit obligation for all defined benefit pension plans at December 31, 2021 and 2020 was as follows:

	U.S. Plans				International Plans
	December 31				December 31
(In millions)	2021		2020		2021		2020
Accumulated benefit obligation	$	277.0	$	296.7	$	1,016.1	$	1,113.4

Defined Benefit Pension Plans with Accumulated Benefit Obligation in Excess of Plan Assets

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for defined benefit pension plans with accumulated benefit obligations in excess of plan assets at December 31, 2021 and 2020 were as follows:

	U.S. Plans				International Plans
	December 31				December 31
(In millions)	2021		2020		2021		2020
Projected benefit obligation	$	277.0	$	296.7	$	988.6	$	1,115.7
Accumulated benefit obligation	277.0		296.7		984.7		1,109.8
Fair value of plan assets	232.9		226.1		939.3		953.5

The asset allocations attributable to the Company's U.S. defined benefit pension plans at December 31, 2021 and 2020, and the long-term target allocation of plan assets, by asset category, are as follows:

	Target  Long-Term Allocation	Percentage of Plan Assets December 31
U.S. Plans Asset Category		2021		2020
Domestic equity securities	18%-28%	22.8	%	30.8	%
International equity securities	17%-27%	22.5	%	26.5	%
Fixed income securities	41%-51%	45.9	%	33.4	%
Cash and cash equivalents	Less than 5%	—	%	0.7	%
Other (a)	4%-14%	8.8	%	8.6	%

(a)    Investments within this caption include diversified global asset allocation funds and credit collection funds.

Defined benefit pension plan assets are allocated among various categories of equities, fixed income securities and cash and cash equivalents with professional investment managers whose performance is actively monitored. The primary investment objective is long-term growth of assets in order to meet present and future benefit obligations. The Company periodically conducts an asset/liability modeling study and accordingly adjusts investments among and within asset categories to ensure the long-term investment strategy is aligned with the profile of benefit obligations.

The Company reviews the long-term expected return on asset assumption on a periodic basis considering a variety of factors including historical investment returns achieved over a long-term period, the targeted allocation of plan assets and future expectations based on a model of asset returns for an actively managed portfolio. The model simulates 1,000 different capital market results over 20 years. The expected return-on-asset assumption for U.S. defined benefit pension plans for 2022 and 2021 are 6.3% and 6.8%, respectively.

The U.S. defined benefit pension plans' assets include 310,000 shares at December 31, 2021 and 330,000 shares at December 31, 2020 of the Company's common stock, valued at $5.2 million and $5.9 million, respectively. These shares represented 2.2% and 2.6% of total U.S. plan assets at December 31, 2021 and 2020, respectively.

The asset allocations attributable to the Company's international defined benefit pension plans at December 31, 2021 and 2020 and the long-term target allocation of plan assets, by asset category, are as follows:

International Plans Asset Category	Target Long-Term Allocation		Percentage of Plan Assets December 31
			2021		2020
Equity securities	26.5	%	27.9	%	32.0	%
Fixed income securities	65.5	%	63.6	%	49.5	%
Cash and cash equivalents	—		0.7	%	0.2	%
Other (b)	8.0	%	7.8	%	18.3	%

(b)     Investments within this caption include diversified growth funds and real estate funds.

International defined benefit pension plan assets at December 31, 2021 in the U.K. defined benefit pension plan totaled approximately 96% of the international defined benefit pension plan assets. The U.K. plan assets are allocated among various categories of equities, fixed income securities and cash and cash equivalents with professional investment managers whose performance is actively monitored. The primary investment objective is long-term growth of assets in order to meet present and future benefit obligations. The Company periodically conducts asset/liability modeling studies and accordingly adjusts investment amounts within asset categories to ensure the long-term investment strategy is aligned with the profile of benefit obligations.

For the international long-term rate of return assumption, the Company considered the current level of expected returns in risk-free investments (primarily government bonds), the historical level of the risk premium associated with other asset classes in which the portfolio is invested, and the expectations for future returns of each asset class and plan expenses. The expected return for each asset class is then weighted based on the target asset allocation to develop the expected long-term rate of return on assets. The expected return on asset assumption for the U.K. defined benefit pension plan for 2022 and 2021 are 4.3% and 4.7%, respectively. The remaining international defined benefit pension plans, with plan assets representing approximately 4% of the international defined benefit pension plan assets, are under the guidance of professional investment managers and have similar investment objectives.

The fair values of the Company's U.S. defined benefit pension plans' assets at December 31, 2021 by asset class are as follows:

(In thousands)	Total		Level 1		Investments Valued at Net Asset Value (c)
Domestic equities:
Common stocks	$	5,180	$	5,180	$	—
Mutual funds—equities	48,411		48,411		—
International equities:
Mutual funds—equities	50,783		50,783		—
Fixed income investments:
Mutual funds—bonds	105,114		105,114		—
Other—mutual funds	9,371		9,371		—
Cash and money market accounts	1,624		1,624		—
Other—partnerships/joint ventures	12,464		—		12,464
Total	$	232,947	$	220,483	$	12,464

(c)     Certain investments that are measured at fair value using Net Asset Value per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy.

The fair values of the Company's U.S. defined benefit pension plans' assets at December 31, 2020 by asset class are as follows:

(In thousands)	Total		Level 1		Investments Valued at Net Asset Value
Domestic equities:
Common stocks	$	5,934	$	5,934	$	—
Mutual funds—equities	63,651		63,651		—
International equities:
Mutual funds—equities	59,933		59,933		—
Fixed income investments:
Mutual funds—bonds	75,441		75,441		—
Other—mutual funds	8,944		8,944		—
Cash and money market accounts	1,691		1,691		—
Other - partnerships/joint ventures	10,531		—		10,531
Total	$	226,125	$	215,594	$	10,531

The fair values of the Company's international defined benefit pension plans' assets at December 31, 2021 by asset class are as follows:

(In thousands)	Total		Level 1		Level 2
Equity securities:
Mutual funds—equities	$	271,811	$	—	$	271,811
Fixed income investments:
Mutual funds—bonds	613,243		—		613,243
Insurance contracts	5,684		—		5,684
Other:
Other mutual funds	75,651		—		75,651
Cash and money market accounts	6,863		6,863		—
Total	$	973,252	$	6,863	$	966,389

The fair values of the Company's international defined benefit pension plans' assets at December 31, 2020 by asset class are as follows:

(In thousands)	Total		Level 1		Level 2
Equity securities:
Mutual funds—equities	$	306,959	$	—	$	306,959
Fixed income investments:
Mutual funds—bonds	467,285		—		467,285
Insurance contracts	6,282		—		6,282
Other:
Other mutual funds	174,921		—		174,921
Cash and money market accounts	1,730		1,730		—
Total	$	957,177	$	1,730	$	955,447

Following is a description of the valuation methodologies used for the defined benefit pension plans' investments measured at fair value:

•Level 1 Fair Value Measurements—Investments in interest-bearing cash are stated at cost, which approximates fair value. The fair values of money market accounts and certain mutual funds are based on quoted net asset values of the shares held by the plan at year-end. The fair values of domestic and international stocks and corporate bonds, notes and convertible debentures are valued at the closing price reported in the active market on which the individual securities are traded.

•Level 2 Fair Value Measurements—The fair values of investments in mutual funds for which quoted net asset values in an active market are not available are valued by the investment advisor based on the current market values of the underlying assets of the mutual fund based on information reported by the investment consistent with audited financial statements of the mutual fund. Further information concerning these mutual funds may be obtained from their separate audited financial statements. Investments in U.S. Treasury notes and collateralized securities are valued based on yields currently available on comparable securities of issuers with similar credit ratings.

Multiemployer Pension Plans

The Company, through the Harsco Environmental Segment, contributes to several MEPPs under the terms of collective-bargaining agreements that cover union-represented employees, many of whom are temporary in nature. The Company's total contributions to MEPPs were $1.7 million, $1.6 million and $1.9 million for the years ended December 31, 2021, 2020 and 2019, respectively.