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Pensions and Other Postretirement Benefits
 12 Months Ended
Dec. 31, 2013
Compensation and Retirement Disclosure [Abstract]  
Pensions and Other Postretirement Benefits
Pensions and Other Postretirement Benefits
 
Defined Benefit Plans
PPG has defined benefit pension plans that cover certain employees worldwide. The principal defined benefit pension plans are those in the U.S., Canada, the Netherlands and the U.K. which, in the aggregate represent approximately 91% of the projected benefit obligation at December 31, 2013, of which the U.S. defined benefit pension plans represent the majority. PPG also sponsors welfare benefit plans that provide postretirement medical and life insurance benefits for certain U.S. and Canadian employees and their dependents. These programs require retiree contributions based on retiree-selected coverage levels for certain retirees and their dependents and provide for sharing of future benefit cost increases between PPG and participants based on management discretion. The Company has the right to modify or terminate certain of these benefit plans in the future. Salaried and certain hourly employees in the U.S. hired on or after October 1, 2004, or rehired on or after October 1, 2012 are not eligible for postretirement medical benefits. Salaried employees in the U.S. hired, rehired or transferred to salaried status on or after January 1, 2006, and certain U.S. hourly employees hired in 2006 or thereafter are eligible to participate in a defined contribution retirement plan. These employees are not eligible for defined benefit pension plan benefits.
 
Plan Design Changes
 In January 2011, the Company approved an amendment to one of its U.S. defined benefit pension plans that represented about 77% of the total U.S. projected benefit obligation at December 31, 2011. Depending upon the affected employee's combined age and years of service to PPG, this change resulted in certain employees no longer accruing benefits under this plan as of December 31, 2011, while the remaining employees will no longer accrue benefits under this plan as of December 31, 2020. The affected employees will participate in the Company’s defined contribution retirement plan from the date their benefit under the defined benefit plan is frozen. The Company remeasured the projected benefit obligation of this amended plan, which lowered 2011 pension expense by approximately $12 million. The Company made similar changes to certain other U.S. defined benefit pension plans in 2011. The Company recognized a curtailment loss and special termination benefits associated with these plan amendments of $5 million in 2011. The Company plans to continue reviewing and potentially changing other PPG defined benefit plans in the future.
Separation and Merger of Commodity Chemicals Business
On January 28, 2013, PPG completed the separation of its commodity chemicals business and the merger of the subsidiary holding the PPG commodity chemicals business with a subsidiary of Georgia Gulf, as discussed in Note 22, “Separation and Merger Transaction.” PPG transferred the defined benefit pension plan and other postretirement benefit liabilities for the affected employees in the U.S., Canada, and Taiwan in the separation resulting in a net partial settlement loss of $33 million that was recorded in the first quarter of 2013. This transaction lowered the projected benefit obligation of PPG's defined benefit pension plans by approximately $550 million and the accumulated benefit obligation of the other postretirement benefit plans by $165 million. PPG has transferred to Axiall pension assets of $421 million and expects to transfer an additional $75 million upon the completion of the calculation of the total amount required to be transferred under ERISA. These amounts are recorded in "Income from discontinued operations, net of tax" in each of these years and have been excluded from the expense disclosures in the remainder of this footnote.
Plan Reorganization
As a part of recently completed separation activities related to the separation and merger transaction of the former commodity chemicals business, the Company reorganized two of its U.S. defined benefit pension plans representing 92% of the total U.S. projected benefit obligation as of January 28, 2013, the date of the separation of the former commodity chemicals business and remeasurement of these pension plans, into multiple plans. The decision to reorganize these plans was finalized in August 2013. As a result of this reorganization, certain of these newly formed plans have no active participants and as such the amortization periods of the unrecognized net actuarial losses of these plans were changed to the average remaining life expectancy of the plan participants from the average remaining service period of plan participants in accordance with the accounting guidance for retirement benefits. This change reduced the Company's 2013 annual pension expense by approximately $18 million.
Postretirement medical
Beginning in 2004, PPG's other postretirement benefit plan provided a retiree prescription drug benefit which was at least actuarially equivalent to Medicare Part D. Therefore, PPG received the federal subsidy provided for under the Medicare Act of 2003. The federal subsidy is not subject to U.S. federal income tax and is recorded as a reduction in annual net periodic benefit cost of other postretirement benefits. During the period from January 1, 2010 to December 31, 2012 the Company provided a self-insured plan for certain retirees and their dependents that was at least actuarially equivalent to Medicare Part D and received the subsidy under the Medicare Act of 2003 for those retirees and their dependents. 
In October 2012, the Company decided, effective January 1, 2013, to move to an Employee Group Waiver Plan ("EGWP") for certain Medicare-eligible retirees and their dependents. The EGWP includes a fully-insured Medicare Part D prescription drug plan. As such, beginning in 2013 PPG was no longer eligible to receive the federal subsidy provided under the Medicare Act of 2003 for these retirees and their dependents.
The following table sets forth the changes in projected benefit obligations (“PBO”) (as calculated as of December 31), plan assets, the funded status and the amounts recognized in the accompanying consolidated balance sheet for the Company’s defined benefit pension and other postretirement benefit plans:
 
Pensions
 
Other
Postretirement
Benefits
(Millions)
2013
 
2012
 
2013
 
2012
Projected benefit
obligation, January 1
$
5,784

 
$
5,333

 
$
1,362

 
$
1,394

Service cost
57

 
54

 
20

 
19

Interest cost
218

 
217

 
49

 
50

Plan amendments
(25
)
 
(2
)
 
(8
)
 
(19
)
Actuarial losses / (gains) - net
(267
)
 
443

 
(160
)
 
(33
)
Benefits paid
(304
)
 
(347
)
 
(60
)
 
(62
)
Plan transfers
327

 
—

 
40

 
—

Foreign currency translation adjustments
12

 
59

 
(8
)
 
3

Curtailment and special termination benefits
(18
)
 
(6
)
 
—

 
—

Impact of commodity chemicals transaction (a)
(548
)
 
29

 
(165
)
 
10

Other
4

 
4

 
—

 
—

Projected benefit
obligation, December 31
$
5,240

 
$
5,784

 
$
1,070

 
$
1,362

Market value of plan
assets, January 1
$
4,750

 
$
4,382

 
 
 
 
Actual return on plan assets
267

 
571

 
 
 
 
Company contributions
174

 
80

 
 
 
 
Participant contributions
2

 
2

 
 
 
 
Benefits paid
(283
)
 
(335
)
 
 
 
 
Plan transfers
352

 
—

 
 
 
 
Plan settlements
(51
)
 
—

 
 
 
 
Plan expenses and other-net
(2
)
 
(1
)
 
 
 
 
Foreign currency translation adjustments
(11
)
 
50

 
 
 
 
Impact of commodity chemicals transaction
(496
)
 
1

 
 
 
 
Other
(1
)
 
—

 
 
 
 
Market value of plan
assets, December 31
$
4,701

 
$
4,750

 
 
 
 
Funded Status
$
(539
)
 
$
(1,034
)
 
$
(1,070
)
 
$
(1,362
)
Amounts recognized in the Consolidated Balance Sheet:
 
 
 
 
Other assets (long-term)
224

 
27

 
—

 
—

Accounts payable and accrued liabilities
(19
)
 
(20
)
 
(63
)
 
(75
)
Accrued pensions
(744
)
 
(1,041
)
 
—

 
—

Other postretirement benefits
—

 
—

 
(1,007
)
 
(1,287
)
Net liability recognized
$
(539
)
 
$
(1,034
)
 
$
(1,070
)
 
$
(1,362
)

(a) Amount reported in Income from discontinued operations.
The PBO is the actuarial present value of benefits attributable to employee service rendered to date, including the effects of estimated future pay increases. The accumulated benefit obligation (“ABO”) is the actuarial present value of benefits attributable to employee service rendered to date, but does not include the effects of estimated future pay increases. The ABO for all defined benefit pension plans as of December 31, 2013 and 2012 was $5,064 million and $5,517 million, respectively.
The aggregate PBO and fair value of plan assets (in millions) for the pension plans with PBO in excess of plan assets were $2,377 and $1,619, respectively, as of December 31, 2013, and $5,588 and $4,534, respectively, as of December 31, 2012. The aggregate ABO and fair value of plan assets (in millions) for the pension plans with ABO in excess of plan assets were $2,242 and $1,617, respectively, as of December 31, 2013, and $5,186 and $4,352, respectively, as of December 31, 2012.
Amounts (pretax) not yet reflected in net periodic benefit cost and included in accumulated other comprehensive loss include the following:
(Millions)
Pensions
 
Other
Postretirement
Benefits
 
2013
 
2012
 
2013
 
2012
Accumulated net actuarial losses
$
1,542

 
$
2,097

 
$
254

 
$
505

Accumulated prior service credit
(26
)
 
(3
)
 
(45
)
 
(45
)
Total
$
1,516

 
$
2,094

 
$
209

 
$
460



The accumulated net actuarial losses for pensions relate primarily to the actual return on plan assets in prior years being less than the expected return on plan assets and due to declines in the discount rate. The accumulated net actuarial losses for other postretirement benefits relate primarily to actual healthcare costs increasing at a higher rate than assumed in prior years and due to declines in the discount rate. The accumulated net actuarial losses exceed 10% of the higher of the market value of plan assets or the PBO at the beginning of the year, therefore, amortization of such excess has been included in net periodic benefit costs for pension and other postretirement benefits in each of the last three years. The amortization period is the average remaining service period of active employees expected to receive benefits unless a plan is mostly inactive in which case the amortization period is the average remaining life expectancy of the plan participants. Accumulated prior service cost (credit) is amortized over the future service periods of those employees who are active at the dates of the plan amendments and who are expected to receive benefits.
The decrease in accumulated other comprehensive loss (pretax) in 2013 relating to defined benefit pension and other postretirement benefits consists of:
(Millions)
Pensions
 
Other
Postretirement
Benefits
Net actuarial gain arising during the year
$
(250
)
 
$
(160
)
New prior service credit
(25
)
 
(9
)
Impact of curtailments
(36
)
 
(61
)
Plan spinoff
(159
)
 
—

Amortization of actuarial loss
(103
)
 
(28
)
Amortization of prior service cost
2

 
10

Foreign currency translation adjustments and other
(7
)
 
(3
)
Net change
$
(578
)
 
$
(251
)

 
The net actuarial gain arising during 2013 related to the Company’s pension plans was primarily due to an increase in the discount rate. The net actuarial gain arising during 2013 related to the Company’s other postretirement benefit plans was primarily due to an increase in the discount rate, demographic changes and updated claim costs.
The estimated amounts of accumulated net actuarial loss and prior service (credit) for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2014 are $80 million and $(3) million, respectively. The estimated amounts of accumulated net actuarial loss and prior service (credit) for the other postretirement benefit plans that will be amortized from accumulated other comprehensive (loss) income into net periodic benefit cost in 2014 are $15 million and $(10) million, respectively.
Net periodic benefit cost for the three years ended December 31, 2013, included the following:
 
Pensions
 
Other
Postretirement
Benefits
(Millions)
2013
 
2012
 
2011
 
2013
 
2012
 
2011
Service cost
$
57

 
$
54

 
$
57

 
$
20

 
$
19

 
$
16

Interest cost
218

 
217

 
231

 
49

 
50

 
55

Expected return on plan assets
(286
)
 
(261
)
 
(280
)
 
—

 
—

 
—

Amortization of prior service cost (credit)
(2
)
 
—

 
1

 
(9
)
 
(10
)
 
(10
)
Amortization of actuarial losses
102

 
133

 
106

 
28

 
31

 
26

Curtailments and special termination benefits
18

 
—

 
5

 
—

 
—

 
—

Net periodic benefit cost
$
107

 
$
143

 
$
120

 
$
88

 
$
90

 
$
87



Net periodic benefit cost is included in Cost of sales, exclusive of depreciation and amortization, Selling, general and administrative and Research and development in the accompanying consolidated statement of income.
 
Assumptions
The following weighted average assumptions were used to determine the benefit obligation for the Company’s defined benefit pension and other postretirement plans as of December 31, 2013 and 2012:
 
2013
 
2012
Discount rate
4.6
%
 
4.1
%
Rate of compensation increase
3.5
%
 
4.0
%

 
The following weighted average assumptions were used to determine the net periodic benefit cost for the Company’s defined benefit pension and other postretirement benefit plans for the three years in the period ended December 31, 2013:
 
2013
 
2012
 
2011
Discount rate
4.1
%
 
4.6
%
 
5.3
%
Expected return on assets
6.5
%
 
7.0
%
 
7.6
%
Rate of compensation increase
4.0
%
 
3.9
%
 
3.8
%

 
These assumptions for each plan are reviewed on an annual basis. In determining the expected return on plan asset assumption, the Company evaluates the mix of investments that comprise each plan’s assets and external forecasts of future long-term investment returns. The Company compares the expected return on plan assets assumption to actual historic returns to ensure reasonability. The expected return on plan assets assumption to be used in determining 2014 net periodic pension expense will be 6.5% (7.3% for the U.S. plans).
In 2013, the Company updated the mortality table used to calculate its U.S. defined benefit pension and other postretirement benefit liabilities. Previously, the Company had used the mortality table known as RP 2000, projected to 2006 and now uses the RP 2000 table projected to 2020. This updated table reflects improvements in mortality rates.

The weighted-average healthcare cost trend rate (inflation) used for 2013 was 6.4% declining to 4.5% in the year 2024. For 2014, the assumed weighted-average healthcare cost trend rate used will be 6.3% declining to 4.5% in the year 2024. These assumptions are reviewed on an annual basis. In selecting rates for current and long-term health care cost assumptions, the Company takes into consideration a number of factors including the Company’s actual health care cost increases, the design of the Company’s benefit programs, the demographics of the Company’s active and retiree populations and external expectations of future medical cost inflation rates. If these 2014 health care cost trend rates were increased or decreased by one percentage point per year, such increase or decrease would have the following effects:
 
One-Percentage Point
(Millions)
Increase
 
Decrease
Increase (decrease) in the aggregate of service and interest cost components of annual expense
$
10

 
$
(7
)
Increase (decrease) in the benefit obligation
$
111

 
$
(86
)


Contributions
On August 17, 2006, the Pension Protection Act of 2006 (“PPA”) was signed into law, changing the funding requirements for the Company’s U.S. defined benefit pension plans beginning in 2008. In July 2012, the Moving Ahead for Progress in the 21st Century Act (“MAP-21”) was signed into law. MAP-21 included discount-rate stabilization rules that reduce the funding targets required on an ERISA basis for the U.S. defined benefit pension plans. As a result, PPG did not have to make a mandatory contribution to these plans in 2013 and does not expect to have to make a mandatory contribution in 2014. PPG made voluntary contributions to these plans of $50 million in 2013 and 2011, of which $7 million in 2011 relates to the former commodity chemicals business. PPG did not make any contributions to these plans in 2012. PPG made contributions to its non-U.S. defined benefit pension plans of $124 million in 2013, $80 million in 2012, and $70 million in 2011. PPG expects to make mandatory contributions to its non-U.S. plans in the range of $10 million to $25 million in 2014.
Benefit Payments
The estimated pension benefits to be paid under the Company’s defined benefit pension plans during the next five years are (in millions) $361 in 2014, $296 in 2015, $304 in 2016, $282 in 2017 and $289 in 2018 and are expected to aggregate $1,059 million for the five years thereafter. The estimated other postretirement benefits to be paid annually during the 2014 - 2018 period are $68 million and are expected to aggregate $339 million for the five years thereafter.
Beginning in 2012, the Company initiated a lump sum payout program that gave certain terminated vested participants in certain U.S. defined benefit pension plans the option to take a one-time lump sum cash payment in lieu of receiving a future monthly annuity.  PPG paid approximately $22 million and $70 million in 2013 and 2012, respectively, in lump sum benefits to terminated vested participants who elected to participate in the program. 
Plan Assets
Each PPG sponsored defined benefit pension plan is managed in accordance with the requirements of local laws and regulations governing defined benefit pension plans for the exclusive purpose of providing pension benefits to participants and their beneficiaries. Investment committees comprised of PPG managers have fiduciary responsibility to oversee the management of pension plan assets by third party asset managers. Pension plan assets are held in trust by financial institutions and managed on a day-to-day basis by the asset managers. The asset managers receive a mandate from each investment committee that is aligned with the asset allocation targets established by each investment committee to achieve the plan’s investment strategies. The performance of the asset managers is monitored and evaluated by the investment committees throughout the year. 
Pension plan assets are invested to generate investment earnings over an extended time horizon to help fund the cost of benefits promised under the plans while mitigating investment risk. The asset allocation targets established for each pension plan are intended to diversify the investments among a variety of asset categories and among a variety of individual securities within each asset category to mitigate investment risk and provide each plan with sufficient liquidity to fund the payment of pension benefits to retirees.
The following summarizes the weighted average target pension plan asset allocation as of December 31, 2013 and 2012 for all PPG defined benefit plans:
Asset Category
Dec. 31, 2013
 
Dec. 31, 2012
Equity securities
30-65%
 
35-70%
Debt securities
30-65%
 
30-65%
Real estate
0-10%
 
0-10%
Other
0-10%
 
0-10%

 
The fair values of the Company’s pension plan assets at December 31, 2013, by asset category, are as follows:
(Millions)
Level 1(1)
 
Level 2(1)
 
Level 3(1)
 
Total
Asset Category
 
 
 
 
 
 
 
Equity securities:
 
 
 
 
 
 
 
 
U.S.
 
 
 
 
 
 
 
 
 
Large cap
$
6

 
$
378

 
$
—

 
$
384

 
 
Small cap
—

 
172

 
—

 
172

 
 
PPG common stock
85

 
—

 
—

 
85

 
Non-U.S.
 
 
 
 
 
 
 
 
 
Developed and emerging markets(2)
17

 
795

 
—

 
812

Debt securities:
 
 
 
 
 
 
 
 
Cash and cash equivalents
—

 
115

 
—

 
115

 
Corporate(3)
 
 
 
 
 
 
 
 
 
U.S.(4)
—

 
750

 
131

 
881

 
 
Developed and emerging markets(2)
—

 
200

 
—

 
200

 
Diversified(5)
—

 
698

 
—

 
698

 
Government
 
 
 
 
 
 
 
 
 
U.S.(4)
201

 
36

 
—

 
237

 
 
Developed markets
—

 
331

 
—

 
331

 
Other(6)
—

 
161

 
27

 
188

Real estate, hedge funds, and other
—

 
124

 
474

 
598

 
Total
$
309

 
$
3,760

 
$
632

 
$
4,701

(1)
These levels refer to the accounting guidance on fair value measurement described in Note 9, “Fair Value Measurement.”
(2)
These amounts represent holdings in investment grade debt or equity securities of issuers in both developed markets and emerging economies.
(3)
This category represents investment grade debt securities from a diverse set of industry issuers.
(4)
These investments are primarily long duration fixed income securities.
(5)
This category represents commingled funds invested in diverse portfolios of debt securities.
(6)
This category includes mortgage-backed and asset backed debt securities, municipal bonds and other debt securities including derivatives.
 
The fair values of the Company’s pension plan assets at December 31, 2012, by asset category, are as follows:
(Millions)
Level 1(1)
 
Level 2(1)
 
Level 3(1)
 
Total
Asset Category
 
 
 
 
 
 
 
Equity securities:
 
 
 
 
 
 
 
 
U.S.
 
 
 
 
 
 
 
 
 
Large cap
$
1

 
$
172

 
$
—

 
$
173

 
 
Small cap
—

 
146

 
—

 
146

 
 
PPG common stock
244

 
—

 
—

 
244

 
Non-U.S.
 
 
 
 
 
 
 
 
 
Developed and emerging markets(2)
—

 
578

 
—

 
578

Debt securities:
 
 
 
 
 
 
 
 
Cash and cash equivalents
—

 
499

 
—

 
499

 
Corporate(3)
 
 
 
 
 
 
 
 
 
U.S.(4)
—

 
922

 
76

 
998

 
 
Developed and emerging markets(2)
—

 
185

 
—

 
185

 
Diversified(5)
—

 
635

 
4

 
639

 
Government
 
 
 
 
 
 
 
 
 
U.S.(4)
196

 
69

 
—

 
265

 
 
Developed markets
—

 
301

 
—

 
301

 
Other(6)
—

 
155

 
27

 
182

Real estate, hedge funds, and other
—

 
128

 
412

 
540

 
Total
$
441

 
$
3,790

 
$
519

 
$
4,750

(1)
These levels refer to the accounting guidance on fair value measurement described in Note 9, “Fair Value Measurement.”
(2)
These amounts represent holdings in investment grade debt or equity securities of issuers in both developed markets and emerging economies.
(3)
This category represents investment grade debt securities from a diverse set of industry issuers.
(4)
These investments are primarily long duration fixed income securities.
(5)
This category represents commingled funds invested in diverse portfolios of debt securities.
(6)
This category includes mortgage-backed and asset backed debt securities, municipal bonds and other debt securities including derivatives.

    

The change in the fair value of the Company’s Level 3 pension assets for the years ended December 31, 2013 and 2012 was as follows:
(Millions)
Real
Estate
 
Other Debt
Securities
 
Hedge Funds
&
Other assets
 
Total
Balance, January 1, 2012
$
156

 
$
28

 
$
157

 
$
341

Realized gain
8

 
—

 
13

 
21

Unrealized gain/(loss) for positions still held
8

 
—

 
(1
)
 
7

Transfers in/(out)
4

 
(1
)
 
148

 
151

Foreign currency loss
—

 
—

 
(1
)
 
(1
)
Balance, December 31, 2012
$
176

 
$
27

 
$
316

 
$
519

Realized gain/(loss)
7

 
1

 
55

 
63

Unrealized gain/(loss) for positions still held
18

 
—

 
14

 
32

Transfers in/(out)
21

 
(1
)
 
(5
)
 
15

Foreign currency gain/(loss)
—

 
—

 
3

 
3

Balance, December 31, 2013
$
222

 
$
27

 
$
383

 
$
632



Real Estate properties are externally appraised at least annually by reputable, independent appraisal firms. Property valuations are also reviewed on a regular basis and are adjusted if there has been a significant change in circumstances related to the property since the last valuation.
Other debt securities consist of insurance contracts, which are externally valued by insurance companies based on the present value of the expected future cash flows. Hedge funds consist of a wide range of investments which target a relatively stable investment return. The underlying funds are valued at different frequencies, some monthly and some quarterly, based on the value of the underlying investments. Other assets consist primarily of small investments in private equity funds and senior secured debt obligations of non-investment grade borrowers.
Retained Liabilities and Legacy Settlement Charges
PPG has retained certain liabilities for pension and post-employment benefits earned for service up to the date of sale of its former automotive glass and service business, totaling approximately $914 million and $1,047 million at December 31, 2013 and 2012, respectively, for employees who were active as of the divestiture date and for individuals who were retirees of the business as of the divestiture date. PPG recognized expense of approximately $30 million, $35 million and $35 million related to these obligations in 2013, 2012, and 2011, respectively. The acquirer of the business closed two facilities in Canada, resulting in five partial windups of Canadian defined benefit pension plans covering former employees of these plants. As such, PPG recorded a settlement charge in the first quarter of 2013 of $2 million. The proposed effective dates of the remaining partial windups are in 2009 and 2010. Cash contributions are currently being made to the plans based on estimated cash requirements and must be completed by the end of the five year period following the proposed effective dates of the partial windups. The settlement charges will be recorded following the approval of the partial windups by the Canadian pension authorities and when the related cash contributions are completed. The remaining partial windups will result in additional settlement charges against PPG's income from continuing operations, which are expected to be incurred in 2014-2015, of approximately $40 million to $50 million and require cash contributions to the plans totaling approximately $5 million to $10 million.
As part of a 2008 PPG restructuring plan, a glass manufacturing facility in Canada was closed. This plant closure resulted in a full windup of the pension plan for the former hourly employees of this plant. The full windup of this plan was approved by the Canadian pension authorities and the Company made the final contributions to this plan in the first quarter of 2013. As a result, the Company recorded a settlement charge in the amount of $16 million. There will be additional windup charges of $15 million to $20 million related to this plant closure as well as another Canadian location closed by PPG in 2009, which are expected to be incurred in 2015 and 2016. The expected cash contributions related to these windups total $5 million to $10 million from 2013 to 2016.
Other Plans
The Company recognized expense for defined contribution pension plans in 2013, 2012 and 2011 of $49 million, $41 million and $37 million, respectively. As of December 31, 2013 and 2012, the Company’s liability for contributions to be made to the defined contribution pension plans was $17 million and $13 million, respectively.
The Company has a deferred compensation plan for certain key managers which allows them to defer a portion of their compensation in a phantom PPG stock account or other phantom investment accounts. The amount deferred earns a return based on the investment options selected by the participant. The amount owed to participants is an unfunded and unsecured general obligation of the Company. Upon retirement, death, disability, termination of employment, scheduled payment or unforeseen emergency, the compensation deferred and related accumulated earnings are distributed in accordance with the participant’s election in cash or in PPG stock, based on the accounts selected by the participant.
The plan provides participants with investment alternatives and the ability to transfer amounts between the phantom non-PPG stock investment accounts. To mitigate the impact on compensation expense of changes in the market value of the liability, the Company has purchased a portfolio of marketable securities that mirror the phantom non-PPG stock investment accounts selected by the participants, except the money market accounts. These investments are carried by PPG at fair market value, and the changes in market value of these securities are also included in income from continuing operations. Trading occurs in this portfolio to align the securities held with the participant’s phantom non-PPG stock investment accounts, except the money market accounts.
The cost of the deferred compensation plan, comprised of dividend equivalents accrued on the phantom PPG stock account, investment income and the change in market value of the liability, was expense in 2013, 2012 and 2011 of $18 million, $10 million and $2 million, respectively. These amounts are included in “Selling, general and administrative” in the accompanying consolidated statement of income. The change in market value of the investment portfolio was income of $17 million, $8 million, and $1 million in 2013, 2012 and 2011, respectively, of which $3.4 million, $0.9 million and $0.8 million was realized gains, and is also included in “Selling, general and administrative.”
The Company’s obligations under this plan, which are included in “Accounts payable and accrued liabilities” and “Other liabilities” in the accompanying consolidated balance sheet, totaled $114 million and $102 million as of December 31, 2013 and 2012, respectively, and the investments in marketable securities, which are included in “Investments” and “Other current assets” in the accompanying consolidated balance sheet, were $75 million and $64 million as of December 31, 2013 and 2012, respectively.