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Retirement Plans
 12 Months Ended
May 31, 2020
Retirement Benefits [Abstract]  
Retirement Plans RETIREMENT PLANS
Defined Benefit Plans and Postretirement Benefit Plan
As of December 2014, our non-contributory defined benefit pension plans were frozen and no additional benefits accrued for participants (except for continuing interest credits for eligible participants in the Cash Balance formula). In April 2018, our Benefit Plans Committee approved the termination of our primary non-contributory defined benefit pension plan (the Retirement Income Plan for Darden Restaurants, Inc.).  Plan participants who had not yet begun receiving their benefit payments were provided the opportunity to receive their full accrued benefits from plan assets by either (i) electing immediate lump sum distributions or annuities or (ii) deferring commencement of their benefits to a later date. During fiscal 2020, we made a funding contribution of approximately $12.7 million to fully fund the benefit obligation. As of May 31, 2020, all of the plan assets were either (i) distributed to settle the benefits for participants who selected the lump sum option or (ii) transferred to a third-party annuity provider for all other eligible participants. The settlement of the benefit obligation to plan participants in fiscal 2020 resulted in a pre-tax pension settlement charge of $145.5 million recorded in other (income) expense, net in our consolidated statement of earnings.
We also sponsor a non-contributory postretirement benefit plan that provides health care benefits to certain eligible salaried retirees as a subsidy credit to a health care reimbursement account. This benefit is not impacted by future changes in health care cost trend rates.

Fundings related to the defined benefit pension plans and postretirement benefit plan, which are funded on a pay-as-you-go basis, were as follows:
 
Fiscal Year Ended
(in millions)
May 31, 2020


May 26, 2019


May 27, 2018

Defined benefit pension plans funding (1)
$
13.2

 
$
0.4

 
$
60.8

Postretirement benefit plan funding
1.3

 
1.3

 
1.2


(1)
Fundings for fiscal 2018 include voluntary funding contributions of $60.4 million.

We expect to contribute approximately $0.4 million to our remaining defined benefit pension plan and approximately $1.3 million to our postretirement benefit plan during fiscal 2021.
We are required to recognize the over- or under-funded status of the plans as an asset or liability as measured by the difference between the fair value of the plan assets and the benefit obligation and any unrecognized prior service costs and actuarial gains and losses as a component of accumulated other comprehensive income (loss), net of tax.
The following provides a reconciliation of the changes in the plan benefit obligation, fair value of plan assets and the funded status of the plans as of May 31, 2020 and May 26, 2019:
 
Defined Benefit Plans
 
Postretirement Benefit Plan
(in millions)
May 31, 2020

 
May 26, 2019

 
May 31, 2020

 
May 26, 2019

Change in Benefit Obligation:
 
 
 
 
 
 
 
Benefit obligation at beginning of period
$
252.0

 
$
237.2

 
$
19.8

 
$
19.9

Service cost
—

 
—

 
0.1

 
0.1

Interest cost
3.3

 
9.3

 
0.7

 
0.8

Benefits paid (1)
(272.2
)
 
(17.8
)
 
(1.3
)
 
(1.3
)
Actuarial (gain) loss
21.9

 
23.3

 
1.6

 
0.3

Benefit obligation at end of period (2)
$
5.0

 
$
252.0

 
$
20.9

 
$
19.8


Change in Plan Assets:
 
 
 
 
 
 
 
Fair value at beginning of period
$
248.5

 
$
253.8

 
$
—

 
$
—

Actual return on plan assets
10.5

 
12.1

 
—

 
—

Employer contributions
13.2

 
0.4

 
1.3

 
1.3

Benefits paid (1)
(272.2
)
 
(17.8
)
 
(1.3
)
 
(1.3
)
Fair value at end of period
$
—

 
$
248.5

 
$
—

 
$
—


Funded (unfunded) status at end of period
$
(5.0
)
 
$
(3.5
)
 
$
(20.9
)
 
$
(19.8
)

(1)
Fiscal 2020 includes $271.8 million of benefits paid in accordance with the termination of our primary non-contributory defined benefit pension plan.
(2)
Remaining defined benefit plan obligation as of May 31, 2020, relates to a supplemental defined benefit pension plan, which is an unfunded nonqualified plan separate from our primary pension plan which was settled in fiscal 2020. The supplemental plan is frozen and therefore no longer accruing benefits for participants.
The following is a detail of the balance sheet components of each of our plans and a reconciliation of the amounts included in accumulated other comprehensive income (loss):
 
Defined Benefit Plans
 
Postretirement Benefit Plan
(in millions)
May 31, 2020


May 26, 2019

 
May 31, 2020


May 26, 2019

Components of the Consolidated Balance Sheets:
 
 
 
 
 
 
 
Current liabilities
$
—

 
$
—

 
$
1.3

 
$
1.4

Noncurrent (assets) liabilities
5.0

 
3.5

 
19.6

 
18.4

Net amounts recognized
$
5.0

 
$
3.5

 
$
20.9

 
$
19.8

Amounts Recognized in Accumulated Other Comprehensive Income (Loss), net of tax:
 
 
 
 
 
 
 
Prior service credit
$
—

 
$
—

 
$
0.2

 
$
3.8

Net actuarial gain (loss)
(1.6
)
 
(100.4
)
 
(8.8
)
 
(8.7
)
Net amounts recognized
$
(1.6
)
 
$
(100.4
)
 
$
(8.6
)
 
$
(4.9
)


The following is a summary of our accumulated and projected benefit obligations for our defined benefit plans:
(in millions)
May 31, 2020

 
May 26, 2019

Accumulated benefit obligation for all defined benefit plans
$
5.0

 
$
252.0

Pension plans with accumulated benefit obligations in excess of plan assets:
 
 
 
Accumulated benefit obligation
5.0

 
252.0

Fair value of plan assets
—

 
248.5

Projected benefit obligations for all plans with projected benefit obligations in excess of plan assets
5.0

 
252.0



The following table presents the weighted-average assumptions used to determine benefit obligations and net expense:
  
Defined Benefit Plans
 
Postretirement Benefit Plan
 
May 31, 2020

 
May 26, 2019

 
May 31, 2020

 
May 26, 2019

Weighted-average assumptions used to determine benefit obligations at May 31 and May 26 (1)
 
 
 
 
 
 
 
Discount rate
2.58
%
 
2.66
%
 
2.98
%
 
3.95
%
Rate of future compensation increases
N/A

 
N/A

 
N/A

 
N/A

Weighted-average assumptions used to determine net expense for fiscal years ended May 31 and May 26 (2)
 
 
 
 
 
 
 
Discount rate
3.70
%
 
4.32
%
 
3.95
%
 
4.28
%
Expected long-term rate of return on plan assets
—
%
 
4.25
%
 
N/A

 
N/A

Rate of future compensation increases
N/A

 
N/A

 
N/A

 
N/A

(1)
Determined as of the end of fiscal year.
(2)
Determined as of the beginning of fiscal year.
We set the discount rate assumption annually for each of the plans at their valuation dates to reflect the yield of high-quality fixed-income debt instruments, with lives that approximate the maturity of the plan benefits. Additionally, for our mortality assumption as of fiscal year end, we selected the most recent Pri-2012 mortality tables and MP-2019 mortality improvement scale to measure the benefit obligations.
The expected long-term rate of return on plan assets is based upon several factors, including our historical assumptions compared with actual results, an analysis of current market conditions, asset fund allocations and the views of leading financial advisers and economists. Our expected long-term rate of return on plan assets for our defined benefit plans was 4.25 percent in fiscal 2019 and 0.00 percent for fiscal 2020.
Components of net periodic benefit cost included in earnings are as follows:
 
Defined Benefit Plans
 
Postretirement Benefit Plan
 
Fiscal Year Ended
 
Fiscal Year Ended
(in millions)
May 31, 2020
 
May 26, 2019
 
May 27, 2018
 
May 31, 2020
 
May 26, 2019
 
May 27, 2018
Service cost
$
—

 
$
—

 
$
—

 
$
0.1

 
$
0.1

 
$
0.1

Interest cost
3.3

 
9.3

 
8.6

 
0.7

 
0.8

 
0.7

Expected return on plan assets
(4.0
)
 
(11.2
)
 
(12.0
)
 
—

 
—

 
—

Amortization of unrecognized prior service cost
—

 
—

 
—

 
(4.8
)
 
(4.8
)
 
(4.8
)
Recognized net actuarial loss
1.8

 
2.5

 
2.8

 
1.5

 
1.5

 
1.7

Settlement loss recognized
145.5

 
—

 
—

 
—

 
—

 
—

Net pension and postretirement cost (benefit)
$
146.6

 
$
0.6

 
$
(0.6
)
 
$
(2.5
)
 
$
(2.4
)
 
$
(2.3
)


The amortization of the net actuarial gain (loss) component of our fiscal 2021 net periodic benefit cost for the remaining defined benefit plan and postretirement benefit plan is expected to be approximately $0.1 million and $1.3 million, respectively.  

The fair values of the defined benefit pension plans assets at their measurement date of May 26, 2019, are as follows:
 
 
 
Items Measured at Fair Value at May 26, 2019
(in millions)
 
 
Fair Value
of Assets
(Liabilities)
  
Quoted Prices
in Active
Market for
Identical Assets
(Liabilities)
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Fixed-Income:
 
 
 
 
 
 
 
 
 
Global Fixed-Income Commingled Funds
(1)
 
$
163.8

 
$
—

 
$
163.8

 
$
—

Cash and Accruals
 
 
84.7

 
84.7

 
—

 
—

Total
 
 
$
248.5

 
$
84.7

 
$
163.8

 
$
—

(1)
Global fixed-income commingled funds are comprised of investments in U.S. and non-U.S. government fixed-income securities. Investments are valued using a unit price or net asset value (NAV) based on the fair value of the underlying investments of the fund. There are no redemption restrictions associated with this fund.

The following benefit payments are expected to be paid between fiscal 2021 and fiscal 2030:
(in millions)
 
Defined Benefit Plan
 
Postretirement Benefit Plan
2021
 
$
0.4

 
$
1.3

2022
 
0.4

 
1.3

2023
 
0.4

 
1.3

2024
 
0.4

 
1.3

2025
 
0.4

 
1.3

2026-2030
 
1.7

 
6.2



Defined Contribution Plan
We have a defined contribution (401(k)) plan (Darden Savings Plan) covering most employees age 21 and older. We match contributions for participants with at least one year of service up to 6 percent of compensation, based on our performance. The match ranges from a minimum of $0.25 to $1.20 for each dollar contributed by the participant. The Darden Savings Plan also provides for a profit sharing contribution for eligible participants equal to 1.5 percent of the participant’s compensation. The Darden Savings Plan had net assets of $870.2 million at May 31, 2020, and $947.9 million at May 26, 2019. Expense recognized in fiscal 2020, 2019 and 2018 was $19.9 million, $26.1 million and $19.6 million, respectively. Employees classified as “highly compensated” under the IRC are not eligible to participate in the Darden Savings Plan. Instead, highly compensated employees are eligible to participate in a separate non-qualified deferred compensation (FlexComp) plan. The FlexComp plan allows eligible
employees to defer the payment of part of their annual salary and all or part of their annual bonus and provides for awards that approximate the matching contributions that participants would have received had they been eligible to participate in the Darden Savings Plan, as well as an additional retirement contribution amount. Amounts payable to highly compensated employees under the FlexComp plan totaled $242.5 million and $237.9 million at May 31, 2020 and May 26, 2019, respectively. These amounts are included in other current liabilities on our accompanying consolidated balance sheets.
The Darden Savings Plan includes a leveraged Employee Stock Ownership Plan (ESOP). The ESOP borrowed $16.9 million from us at a variable rate of interest in July 1996 and was fully repaid during fiscal 2020. Compensation expense is recognized as contributions are accrued. Fluctuations in our stock price impact the amount of expense to be recognized. Contributions to the Darden Savings Plan, plus the dividends accumulated on unallocated shares held by the ESOP, were used to pay principal, interest and expenses of the Darden Savings Plan. As loan payment were made, common stock was allocated to ESOP participants. In each of the fiscal years 2020, 2019 and 2018, the ESOP used dividends received of $0.2 million, $0.2 million and $0.5 million, respectively, and contributions received from us of $0.5 million, $1.0 million and $0.1 million, respectively, to pay principal and interest on our debt.