Employee Benefit Plans

The Company provides substantially all U.S. employees and employees at certain foreign subsidiaries with retirement benefits including defined benefit pension plans and defined contribution plans. The Company provides eligible U.S. employees who retire under qualifying conditions with access to postretirement health care, at full cost to the retiree (certain employees are “grandfathered” into subsidized coverage while others are provided with Health Care Reimbursement Accounts as described below).

The Company maintains 401(k) plans covering substantially all U.S. employees. The Company contributes cash to the plans to match qualifying employee contributions, and also provides a non-matching employer contribution of 1% of pay to eligible participants. Under an employee stock ownership component of the 401(k) plans, employees may choose to invest in ADM stock as part of their own investment elections. The employer contributions are expensed when paid. Assets of the Company’s 401(k) plans consist primarily of listed common stocks and pooled funds. The Company’s 401(k) plans held 12 million shares of Company common stock at December 31, 2015, with a market value of $426 million. Cash dividends received on shares of Company common stock by these plans during the year ended December 31, 2015 were $13 million.



	Pension Benefits									Postretirement Benefits
(In millions)	Year Ended December 31									Year Ended December 31
	2015			2014			2013			2015			2014			2013
Retirement plan expense
Defined benefit plans:
Service cost (benefits earned during the period)	$	92		$	71		$	84		$	5		$	4		$	5
Interest cost	112			126			114			8			8			7
Expected return on plan assets	(129		)	(155		)	(144		)	—			—			—
Settlement charges	60			95			—			—			—			—
Amortization of actuarial loss	69			36			74			7			2			5
Amortization of prior service cost (credit)	2			3			3			(17		)	(18		)	(18		)
Net periodic defined benefit plan expense	206			176			131			3			(4		)	(1		)
Defined contribution plans	52			50			44			—			—			—
Total retirement plan expense	$	258		$	226		$	175		$	3		$	(4	)	$	(1	)

The following tables set forth changes in the defined benefit obligation and the fair value of defined benefit plan assets for the years ended December 31, 2015 and 2014:



	Pension Benefits						Postretirement Benefits
	December 31 2015			December 31 2014			December 31 2015			December 31 2014
	(In millions)						(In millions)
Benefit obligation, beginning	$	3,305		$	2,814		$	231		$	174
Service cost	92			71			5			4
Interest cost	112			126			8			8
Actuarial loss (gain)	(117		)	688			(32		)	54
Employee contributions	2			2			—			—
Curtailments	(2		)	(5		)	—			—
Settlements	(323		)	(304		)	—			—
Business combinations	—			136			—			—
Divestitures	(1		)	—			(1		)	—
Benefits paid	(91		)	(109		)	(11		)	(12		)
Plan amendments	(1		)	(4		)	—			3
Actual expenses	(2		)	(2		)	—			—
Foreign currency effects	(94		)	(108		)	(1		)	—
Benefit obligation, ending	$	2,880		$	3,305		$	199		$	231

Fair value of plan assets, beginning	$	2,194		$	2,341		$	—		$	—
Actual return on plan assets	(7		)	292			—			—
Employer contributions	222			42			11			12
Employee contributions	2			2			—			—
Settlements	(328		)	(304		)	—			—
Business combinations	—			10			—			—
Divestitures	(1		)	—			—			—
Benefits paid	(91		)	(109		)	(11		)	(12		)
Actual expenses	(2		)	(2		)	—			—
Foreign currency effects	(67		)	(78		)	—			—
Fair value of plan assets, ending	$	1,922		$	2,194		$	—		$	—

Funded status	$	(958	)	$	(1,111	)	$	(199	)	$	(231	)

Prepaid benefit cost	$	32		$	27		$	—		$	—
Accrued benefit liability – current	(16		)	(17		)	(13		)	(12		)
Accrued benefit liability – long-term	(974		)	(1,121		)	(186		)	(219		)
Net amount recognized in the balance sheet	$	(958	)	$	(1,111	)	$	(199	)	$	(231	)

Included in accumulated other comprehensive income for pension benefits at December 31, 2015, are the following amounts that have not yet been recognized in net periodic pension cost: unrecognized prior service cost of $4 million and unrecognized actuarial loss of $851 million. The prior service cost and actuarial loss included in accumulated other comprehensive income expected to be recognized in net periodic pension cost during 2016 is $2 million and $56 million, respectively.

Included in accumulated other comprehensive income for postretirement benefits at December 31, 2015, are the following amounts that have not yet been recognized in net periodic postretirement benefit cost: unrecognized prior service credit of $68 million and unrecognized actuarial loss of $41 million. Prior service credit of $17 million and actuarial loss of $3 million included in accumulated other comprehensive income are expected to be recognized in net periodic benefit cost during 2016.

The following table sets forth the principal assumptions used in developing net periodic pension cost:



	Pension Benefits		Postretirement Benefits
	December 31 2015	December 31 2014	December 31 2015	December 31 2014
Discount rate	3.5%	4.6%	3.8%	4.4%
Expected return on plan assets	6.3%	7.0%	N/A	N/A
Rate of compensation increase	3.8%	3.9%	N/A	N/A

The following table sets forth the principal assumptions used in developing the year-end actuarial present value of the projected benefit obligations:



	Pension Benefits				Postretirement Benefits
	December 31 2015		December 31 2014		December 31 2015	December 31 2014
Discount rate	4.0	%	3.5	%	4.0%	3.8%
Rate of compensation increase	4.7	%	3.8	%	N/A	N/A

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with projected benefit obligations in excess of plan assets were $2.5 billion, $2.2 billion, and $1.5 billion, respectively as of December 31, 2015, and $2.9 billion, $2.6 billion, and $1.7 billion, respectively, as of December 31, 2014. The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets were $2.5 billion, $2.2 billion, and $1.5 billion, respectively, as of December 31, 2015 and $2.8 billion, $2.5 billion, and $1.7 billion, respectively, as of December 31, 2014. The accumulated benefit obligation for all pension plans as of December 31, 2015 and 2014, was $2.6 billion and $3.0 billion, respectively.

For postretirement benefit measurement purposes, a 7.25% annual rate of increase in the per capita cost of covered health care benefits was assumed for the year ended December 31, 2015. The rate was assumed to decrease gradually to 4.5% by 2025 and remain at that level thereafter. The credits used to fund certain retirees with Health Reimbursement Accounts are indexed up to a maximum of 2% per year.

A 1% change in assumed health care cost trend rates would have the following effects:



	1% Increase		1% Decrease
	(In millions)
Effect on combined service and interest cost components	$	1	$	(1	)
Effect on accumulated postretirement benefit obligations	$	6	$	(5	)

Plan Assets

The Company’s employee benefit plan assets are principally comprised of the following types of investments:

Common stock:

Equity securities are valued based on quoted exchange prices and are classified within Level 1 of the valuation hierarchy.

Mutual funds:

Mutual funds are valued at the closing price reported on the active market on which they are traded and are classified within Level 1 of the valuation hierarchy.

Common collective trust (CCT) funds:

The fair values of the CCTs are based on the cumulative net asset value (NAV) of their underlying investments. The investments in CCTs are comprised of international equity funds, a small cap U.S. equity fund, large cap U.S. equity funds, fixed income funds, and other funds. The fund units are valued at NAV based on the closing market value of the units bought or sold as of the valuation date and are classified in Level 2 of the fair value hierarchy. The CCTs seek primarily to provide investment results approximating the aggregate price, dividend performance, total return, and income stream of underlying investments of the funds. Issuances and redemptions of certain of the CCT investments may be restricted by date and/or amount.

Corporate debt instruments:

Corporate debt instruments are valued using third-party pricing services and are classified within Level 2 of the valuation hierarchy.

U.S. Treasury instruments:

U.S. Treasury instruments are valued at the closing price reported on the active market on which they are traded and are classified within Level 1 of the valuation hierarchy.

U.S. government agency, state, and local government bonds:

U.S. government agency obligations and state and municipal debt securities are valued using third-party pricing services and are classified within Level 2 of the valuation hierarchy.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants’ methods, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following tables set forth, by level within the fair value hierarchy, the fair value of plan assets as of December 31, 2015 and 2014.



	Fair Value Measurements at December 31, 2015
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In millions)
Common stock
U.S. companies	$	196	$	—	$	—	$	196
International companies	8		—		—		8
Equity mutual funds
Emerging markets	58		—		—		58
International	105		—		—		105
Large cap U.S.	409		—		—		409
Common collective trust funds
International equity	—		278		—		278
Large cap U.S. equity	—		45		—		45
Fixed income	—		193		—		193
Other	—		47		—		47
Debt instruments
Corporate bonds	—		457		—		457
U.S. Treasury instruments	99		—		—		99
U.S. government agency, state and local government bonds	—		24		—		24
Other	—		3		—		3
Total assets at fair value	$	875	$	1,047	$	—	$	1,922



	Fair Value Measurements at December 31, 2014
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In millions)
Common stock
U.S. companies	$	180	$	—	$	—	$	180
International companies	6		—		—		6
Equity mutual funds
Emerging markets	62		—		—		62
International	91		—		—		91
Large cap U.S.	362		—		—		362
Common collective trust funds
International equity	—		370		—		370
Large cap U.S. equity	—		33		—		33
Fixed income	—		500		—		500
Other	—		35		—		35
Debt instruments
Corporate bonds	—		422		—		422
U.S. Treasury instruments	95		—		—		95
U.S. government agency, state and local government bonds	—		37		—		37
Other	—		1		—		1
Total assets at fair value	$	796	$	1,398	$	—	$	2,194

Level 3 Gains and Losses:

There are no Plan assets classified as Level 3 in the fair value hierarchy; therefore there are no gains or losses associated with Level 3 assets.

The following table sets forth the actual asset allocation for the Company’s global pension plan assets as of the measurement date:



	December 31 2015⁽¹⁾⁽²⁾	December 31 2014⁽²⁾
Equity securities	58%	51%
Debt securities	40%	48%
Other	2%	1%
Total	100%	100%

⁽¹⁾

The Company’s U.S. pension plans contain approximately 77% of the Company’s global pension plan assets. The actual asset allocation for the Company’s U.S. pension plans as of the measurement date consists of 60% equity securities and 40% debt securities. The target asset allocation for the Company’s U.S. pension plans is approximately the same as the actual asset allocation. The actual asset allocation for the Company’s foreign pension plans as of the measurement date consists of 52% equity securities, 42% debt securities, and 6% in other investments. The target asset allocation for the Company’s foreign pension plans is approximately the same as the actual asset allocation.


⁽²⁾	The Company’s pension plans did not hold any shares of Company common stock as of the December 31, 2015 and 2014 measurement dates.

Investment objectives for the Company’s plan assets are to:


•	Optimize the long-term return on plan assets at an acceptable level of risk.


•	Maintain a broad diversification across asset classes and among investment managers.


•	Maintain careful control of the risk level within each asset class.

Asset allocation targets promote optimal expected return and volatility characteristics given the long-term time horizon for fulfilling the obligations of the pension plans. Selection of the targeted asset allocation for plan assets was based upon a review of the expected return and risk characteristics of each asset class, as well as the correlation of returns among asset classes. The U.S. pension plans target asset allocation is also based on an asset and liability study that is updated periodically.

Investment guidelines are established with each investment manager. These guidelines provide the parameters within which the investment managers agree to operate, including criteria that determine eligible and ineligible securities, diversification requirements, and credit quality standards, where applicable. In some countries, derivatives may be used to gain market exposure in an efficient and timely manner; however, derivatives may not be used to leverage the portfolio beyond the market value of underlying investments.

The Company uses external consultants to assist in monitoring the investment strategy and asset mix for the Company’s plan assets. To develop the Company’s expected long-term rate of return assumption on plan assets, the Company generally uses long-term historical return information for the targeted asset mix identified in asset and liability studies. Adjustments are made to the expected long-term rate of return assumption when deemed necessary based upon revised expectations of future investment performance of the overall investment markets.

Contributions and Expected Future Benefit Payments

Based on actuarial calculations, the Company expects to contribute $31 million to the pension plans and $13 million to the postretirement benefit plan during 2016. The Company may elect to make additional discretionary contributions during this period.

The following benefit payments, which reflect expected future service, are expected to be paid by the benefit plans:



	Pension Benefits		Postretirement Benefits
	(In millions)
2016	$	93	$	13
2017	96		12
2018	103		13
2019	110		13
2020	116		13
2021 – 2025	691		68