Non-Qualified Retirement, Savings and Investment Plans

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Non-Qualified Retirement, Savings and Investment Plans

Non-Qualified Retirement, Savings, and Investment Plans

The Company sponsors two non-qualified retirement savings and investment plans for certain employees and senior executives. Employee and Company contributions are maintained in separate irrevocable trusts. Legally, the assets of the trusts remain those of the Company; however, access to the trusts’ assets is severely restricted. The trusts cannot be revoked by the Company or an acquirer, but the assets are subject to the claims of the Company’s general creditors. The participants do not have the right to assign or transfer contractual rights in the trusts.

In 2002, the Company adopted the Choice Hotels International, Inc. Executive Deferred Compensation Plan ("EDCP") which became effective January 1, 2003. Under the EDCP, certain executive officers may defer a portion of their salary into an irrevocable trust and invest these amounts in a selection of available diversified investment options. In 1997, the Company adopted the Choice Hotels International, Inc. Non-Qualified Retirement Savings and Investment Plan ("Non-Qualified Plan"). The Non-Qualified Plan allows certain employees who do not participate in the EDCP to defer a portion of their salary and invest these amounts in a selection of available diversified investment options. Under the EDCP and Non-Qualified Plan, (together, the "Deferred Compensation Plan"), the Company recognized current and long-term deferred compensation and retirement plan liabilities of $47.5 million and $37.4 million as of December 31, 2023 and 2022, respectively, related to these deferrals and credited investment returns under these two deferred compensation plans. Compensation expense is recognized in selling, general and administrative expenses in the consolidated statements of income based on the change in the deferred compensation obligations related to the earnings credited to the participants as well as the changes in the fair value of the diversified investments. For the years ended December 31, 2023 and 2021, the increase in compensation expense recognized in selling, general and administrative expenses was $7.0 million and $6.1 million, respectively. For the year ended December 31, 2022, the decrease in compensation expense recognized in selling, general and administrative expenses was $5.3 million.

Under the Deferred Compensation Plan, the Company has invested the employee salary deferrals in diversified long-term investments which are intended to provide investment returns that offset the earnings credited to the participants. As of December 31, 2023 and 2022, the employee benefit plans investments held in the trusts totaled $41.6 million and $32.4 million, respectively, and are recognized at fair value, which is based on quoted market prices. As of December 31, 2023, the Company expects $1.8 million of the assets held in the trusts to be distributed during the year ended December 30, 2024 to plan participants. These investments are considered trading securities and therefore, the changes in the fair value of the diversified assets is included in other (gain) loss in the consolidated statements of income. During the years ended December 31, 2023 and 2021, the Company recognized investment gains of $6.6 million and $5.6 million, respectively. During the year ended December 31, 2022, the Company recognized investment losses of $6.0 million. The Deferred Compensation Plan held no shares of the Company's common stock as of December 31, 2023 and 2022.