Employee Benefits

12 Months Ended

Dec. 31, 2023

Employee Benefits

Employee Benefits

Note 13. Employee Benefits

Defined Contribution Plans

Effective in 1998, the Reliance Steel & Aluminum Co. Master 401(k) Plan (the “Master 401(k) Plan”) was established, which combined several of the various 401(k) and profit-sharing plans of the Company and its subsidiaries into one plan. Salaried and certain hourly employees of the Company and its participating subsidiaries are covered under the Master 401(k) Plan. Eligibility occurs after 30 days of service and the Company contribution vests at 25% per year. We have other defined contribution plans that include the Precision Strip Retirement and Savings Plan and plans at certain domestic and foreign subsidiaries that have not merged their plans into the Master 401(k) Plan as of December 31, 2023 (collectively, the “Other Defined Contribution Plans”).

We also sponsor the Reliance Steel & Aluminum Co. Employee Stock Ownership Plan, a tax-qualified noncontributory employee stock ownership plan, for certain salaried and hourly employees of the Company. The plan is closed to new enrollees and the Company is not currently making annual contributions to the plan.

Supplemental Executive Retirement Plans

Effective January 1996, we adopted the Supplemental Executive Retirement Plan (“Reliance SERP”), which is a nonqualified pension plan that provides postretirement pension benefits to certain key officers of the Company. The

Reliance SERP is administered by the Compensation Committee of the Board. Benefits are based upon the employees’ earnings. We recognized settlement losses of $2.3 million in the year ended December 31, 2022 related to the payment of benefits under the Reliance SERP.

Life insurance policies were purchased for most individuals covered by the Reliance SERP and held within a grantor trust. See Note 8—“Cash Surrender Value of Life Insurance Policies, Net” for further discussion of our life insurance policies. Separate supplemental executive retirement plans exist for certain wholly owned subsidiaries of the Company (together with the Reliance SERP, the “SERPs”), each of which provides postretirement pension benefits to certain former key employees. All SERPs have been frozen to new participants since 2009.

Deferred Compensation Plan

In December 2008, the Reliance Deferred Compensation Plan (the “DCP”) was established for certain officers and key employees of the Company. Account balances from various compensation plans of subsidiaries were contributed and consolidated into this new deferred compensation plan. Plan participants may contribute a portion of their eligible compensation to the plan and Reliance currently makes contributions to the plan for certain participants.

During 2021, we established a grantor trust to fund our obligations under the DCP. The grantor trust is an irrevocable grantor trust to which we may contribute assets for the purpose of funding the DCP. Although we may not use the assets of the grantor trust for any purpose other than meeting our obligations under the DCP, the assets of the grantor trust remain subject to the claims of our creditors. The aggregate fair value of the marketable securities held by the grantor trust as of December 31, 2023 and 2022 were $51.0 million and $41.2 million, respectively, and the amount of our obligations to the participants under the DCP on those dates were also $51.0 million and $41.2 million, respectively. The grantor trust assets and our liability under the DCP are included in the Other long-term assets and Other long-term liabilities captions of our consolidated balance sheets. The Company expects to contribute $2.4 million to the plan during 2024.

Multiemployer Plans

Certain of our union employees participate in plans collectively bargained and maintained by multiple employers and a labor union. We do not recognize on our balance sheet any amounts relating to these plans. For 2023, 2022 and 2021 our contributions to these plans were $5.4 million, $5.4 million and $4.8 million, respectively. Some of the plans we participate in are in endangered, critical or critical and declining status and have adopted rehabilitation plans. If we were to withdraw our participation from these plans, we would be required to recognize a liability on our balance sheet and the amount could be significant.

Defined Benefit Plan

Our wholly owned subsidiary, EMJ, maintains a qualified defined benefit pension plan (the “Defined Benefit Plan”) for certain union employees. The plan generally provides benefits of stated amounts for each year of service or provides benefits based on the participant’s hourly wage rate and years of service. The plan permits the sponsor, at any time, to amend or terminate the plan.

We use a December 31 measurement date for our plans. The following is a summary of the status of the funding of the SERPs and Defined Benefit Plan:

	SERPs				Defined Benefit Plan
	2023		2022		2023		2022
	(in millions)				(in millions)
Change in benefit obligation:
Benefit obligation at beginning of year	$	18.8	$	36.4	$	55.0	$	74.5
Service cost		0.3		0.4		1.3		2.0
Interest cost		0.9		0.7		2.7		2.0
Actuarial loss (gain)(1)		1.0		(5.6)		1.0		(21.0)
Benefits paid		(0.8)		(0.8)		(2.5)		(2.5)
Plan amendment		—		—		2.5		—
Plan settlement		—		(12.3)		—		—
Benefit obligation at end of year	$	20.2	$	18.8	$	60.0	$	55.0
Change in plan assets:
Fair value of plan assets at beginning of year		N/A		N/A	$	56.7	$	70.9
Actual return on plan assets		N/A		N/A		9.6		(11.7)
Benefits paid		N/A		N/A		(2.5)		(2.5)
Fair value of plan assets at end of year		N/A		N/A	$	63.8	$	56.7
Funded status:
Funded status of the plans	$	(20.2)	$	(18.8)	$	3.8	$	1.7
Items not yet recognized as component of net periodic pension expense:
Unrecognized net actuarial losses (gains)	$	2.9	$	1.9	$	(4.7)	$	0.5
Unamortized prior service cost		—		—		4.8		2.8
	$	2.9	$	1.9	$	0.1	$	3.3

(1) Actuarial gains in 2022 were primarily due to increases in the discount rate used to measure the obligations.

As of December 31, 2023 and 2022, the following amounts were recognized on the balance sheet:

	SERPs				Defined Benefit Plan
	2023		2022		2023		2022
	(in millions)				(in millions)
Amounts recognized in the statement of financial position:
Noncurrent assets	$	—	$	—	$	3.8	$	1.7
Current liabilities		(0.8)		(0.8)		—		—
Noncurrent liabilities		(19.4)		(18.0)		—		—
Accumulated other comprehensive loss		2.9		1.9		0.1		3.3
Net amount recognized	$	(17.3)	$	(16.9)	$	3.9	$	5.0

The accumulated benefit obligation for the SERPs was $18.2 million and $17.1 million as of December 31, 2023 and 2022, respectively.

Details of net periodic benefit cost related to the SERPs and Defined Benefit Plan are presented below:

	SERPs						Defined Benefit Plan
	Year Ended December 31,						Year Ended December 31,
	2023		2022		2021		2023		2022		2021
	(in millions)						(in millions)
Service cost	$	0.3	$	0.4	$	1.0	$	1.3	$	2.0	$	2.2
Interest cost		0.9		0.7		0.6		2.7		2.0		1.8
Expected return on plan assets		—		—		—		(3.3)		(4.2)		(3.9)
Settlement loss		—		2.3		—		—		—		—
Prior service cost		—		—		—		0.5		0.5		0.6
Amortization of net loss		—		0.6		1.8		—		—		0.8
	$	1.2	$	4.0	$	3.4	$	1.2	$	0.3	$	1.5

Net periodic benefit cost related to the SERPs and the Defined Benefit Plan is presented in our consolidated statements of income, as summarized below:

	SERPs						Defined Benefit Plan
	Year Ended December 31,						Year Ended December 31,
	2023		2022		2021		2023		2022		2021
	(in millions)						(in millions)
Amounts recognized in the statement of income:
Warehouse, delivery, selling, general and administrative expense	$	0.3	$	0.4	$	1.0	$	1.3	$	2.0	$	2.2
Other expense (income), net		0.9		3.6		2.4		(0.1)		(1.7)		(0.7)
	$	1.2	$	4.0	$	3.4	$	1.2	$	0.3	$	1.5

Assumptions used to determine net periodic benefit cost are detailed below:

	SERPs						Defined Benefit Plan
	Year Ended December 31,						Year Ended December 31,
	2023		2022		2021		2023		2022		2021
Weighted average assumptions to determine net cost:
Discount rate	4.58	%	2.17	%	1.64	%	5.00	%	2.70	%	2.40	%
Expected long-term rate of return on plan assets	N/A		N/A		N/A		6.00	%	6.00	%	6.25	%
Rate of compensation increase	6.00	%	6.00	%	6.00	%	N/A		N/A		N/A

Assumptions used to determine the benefit obligation are detailed below:

	SERPs				Defined Benefit Plan
	December 31,				December 31,
	2023		2022		2023		2022
Weighted average assumptions to determine benefit obligations:
Discount rate	4.35	%	4.51	%	4.80	%	5.00	%
Expected long-term rate of return on plan assets	N/A		N/A		6.00	%	6.00	%
Rate of compensation increase	6.00	%	6.00	%	N/A		N/A

Employer contributions of $0.8 million are expected during 2024 to the SERPs and none for the Defined Benefit Plan.

Plan Assets and Investment Policy

The weighted-average asset allocations of our Defined Benefit Plan by asset category were as follows:

	December 31,
	2023		2022
Plan assets:
Equity securities	62	%	58	%
Debt securities	37		38
Cash and cash equivalents	1		4
Total	100	%	100	%

Plan assets are invested in various asset classes that are expected to produce a sufficient level of diversification and investment return over the long term. The investment goal is a return on assets that is at least equal to the assumed actuarial rate of return over the long-term within reasonable and prudent levels of risk. We establish our estimated long-term return on plan assets assumption considering various factors including the targeted asset allocation percentages, historic returns and expected future returns.

The fair value measurements of the investments held by our Defined Benefit Plan fall within the following levels of the fair value hierarchy as of December 31, 2023 and 2022:

	Level 1		Level 2		Level 3		Total
	(in millions)
December 31, 2023
Common stock(1)	$	37.8	$	—	$	—	$	37.8
U.S. government, state and agency		—		8.3		—		8.3
Corporate debt securities(2)		—		3.8		—		3.8
Mutual funds(3)		13.4		—		—		13.4
Interest bearing cash		0.5		—		—		0.5
Total investments at fair value	$	51.7	$	12.1	$	—	$	63.8
December 31, 2022
Common stock(1)	$	31.4	$	—	$	—	$	31.4
U.S. government, state and agency		—		6.0		—		6.0
Corporate debt securities(2)		—		4.6		—		4.6
Mutual funds(3)		12.6		—		—		12.6
Interest bearing cash		2.1		—		—		2.1
Total investments at fair value	$	46.1	$	10.6	$	—	$	56.7

(1) Comprised primarily of securities of large domestic and foreign companies. Valued at the closing price reported on the active market on which the individual securities are traded on national exchanges.

(2) Valued using pricing models maximizing the use of observable inputs for similar securities. This includes basing values on a combination of inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data.

(3) Mutual funds held are registered with the United States Securities and Exchange Commission. These funds are required to publish their daily net asset value (NAV) and to transact at that price. The mutual funds held are deemed to be actively traded.

Summary Disclosures—SERPs and Defined Benefit Plan

The following is a summary of benefit payments under the SERPs and the Defined Benefit Plan, which reflect expected future employee service, as appropriate, expected to be paid in the periods indicated:

			Defined
	SERPs		Benefit Plan
	(in millions)
2024	$	0.8	$	2.7
2025		0.8		3.0
2026		0.8		3.2
2027		1.2		3.4
2028		0.6		3.6
2029-2033		22.1		19.7

Contributions to Reliance Sponsored Retirement Plans

Our expense for Reliance-sponsored retirement plans was as follows:

	Year Ended December 31,
	2023		2022		2021
	(in millions)
Master 401(k) Plan	$	29.3	$	28.1	$	25.6
Precision Strip Retirement and Savings Plan		10.9		9.2		8.0
Deferred Compensation Plan		2.4		2.0		2.5
Other Defined Contribution Plans		2.0		2.0		2.0
Defined Benefit Plan		1.2		0.3		1.5
Supplemental Executive Retirement Plans		1.2		4.0		3.4
	$	47.0	$	45.6	$	43.0