PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS

3 Months Ended

Mar. 31, 2023

Retirement Benefits [Abstract]

PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS

PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS

Prior to January 1, 2021, substantially all of the Company’s employees were covered by the defined benefit pension plan, a cash balance plan that provided benefits based upon a fixed percentage of an employee’s annual compensation (the “Plan”). As part of an ongoing effort to reduce costs, the Company elected to freeze the Plan effective January 1, 2021. Employees that were participants in the Plan prior to January 1, 2021 continued to receive the interest component of the Plan but no longer received the service component. On September 13, 2021, the Compensation Committee of the Board approved terminating the Plan, effective December 31, 2021. This decision, among other benefits, will provide Plan participants quicker access to, and greater flexibility in, the management of participants’ respective benefits due under the Plan.

The Company commenced the Plan termination process, and, on April 6, 2022, the Internal Revenue Service issued a favorable determination letter, concurring that the Plan met all of the qualification requirements under the Internal Revenue Code. In December 2022, the Company distributed approximately 40% of the Plan’s assets to participants in the form of lump sum payments in connection with a limited distribution window provided to all active and former employee participants as part of the Plan termination process.

In March 2023, the Company entered into a group annuity contract with a qualified insurance company relating to the Plan. Under the group annuity contract, the Company purchased an irrevocable nonparticipating single premium group annuity contract from the insurer and transferred to the insurer the future benefit obligations and annuity administration for remaining retirees and beneficiaries under the Plan.

Upon issuance of the group annuity contract, the pension benefit obligations and annuity administration for the remaining participants was irrevocably transferred from the Plan to the insurer. By transferring these obligations through the payment to the insurer in March 2023, the Company has no remaining obligations under the Plan or any other U.S. tax-qualified defined benefit pension plan. The purchase of the group annuity contract was funded directly by the assets of the Plan. The Company recognized a pre-tax non-cash pension settlement charge of approximately $2 million during the three months ended March 31, 2023 as a result of the settlement of the Plan.

As of March 31, 2023, the Company had residual Plan assets of $13 million. The Company has not transferred the residual Plan assets to a qualified replacement plan as of March 31, 2023 as the reconciliation process with the insurance company is ongoing.

The postretirement benefit plan provides contributory health care and life insurance benefits. Employees become eligible for these benefits if they meet age and service requirements. Generally, the benefits paid are a stated percentage of medical expenses reduced by deductibles and other coverages.

Substantially all of the Company’s employees continue to be covered by the postretirement benefit plans. The Company accounts for its defined benefit pension and other postretirement plans by recognizing the funded status of each defined pension benefit plan and other postretirement benefit plan on the Company’s balance sheet. In the event a plan is overfunded, the Company recognizes an asset. Conversely, if a plan is underfunded, the Company recognizes a liability.

Net periodic pension costs include the following components for the three months ended March 31, 2023 and 2022:

	Consolidated Statements of Operations Classification of Net Periodic Benefit Cost	For the three months ended March 31,
(in millions)		2023		2022
Service cost	General and administrative expenses	$	—	$	—
Interest cost	Other Income (Loss), Net	—		1
Expected return on plan assets	Other Income (Loss), Net	(1)		—
Amortization of prior service cost	Other Income (Loss), Net	—		—
Settlement loss	Other Income (Loss), Net	2		—
Net periodic benefit cost		$	1	$	1

The Company’s other postretirement benefit plan had a net periodic benefit cost of less than $1 million for both the three months ended March 31, 2023 and 2022.

The Company did not make any contributions to the Plan during 2023 and does not expect to do so throughout the completion of the Plan termination process. The Company recognized residual pension assets of $13 million and net pension assets of $15 million related to its pension benefits as of March 31, 2023 and December 31, 2022, respectively. The Company recognized liabilities of $10 million and $9 million related to its other postretirement benefits as of March 31, 2023 and December 31, 2022, respectively.

The Company maintains a non-qualified deferred compensation supplemental retirement savings plan (“Non-Qualified Plan”) for certain key employees who may elect to defer and contribute a portion of their compensation, as permitted by the Non-Qualified Plan. Shares of the Company’s common stock purchased under the terms of the Non-Qualified Plan are included in treasury stock and totaled 1,455 shares at March 31, 2023 and 1,743 shares at December 31, 2022.