Employee Benefit Plans

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Employee Benefit Plans

14. Employee Benefit Plans

Defined Contribution Plans

The Company has defined contribution employee retirement savings plans in the U.S., the U.K. and Japan. The Company matches the contributions of participating employees on the basis of percentages specified in each plan. The Company’s matching contributions to the plans were $6.8 million, $5.9 million and $4.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Defined Benefit Plan

The Company maintains a frozen defined benefit pension plan in the U.K. (the “U.K. Plan”). The U.K. Plan was closed to new membership in 1997 and stopped accruing additional pension benefits for existing members in 2003. Benefits under the U.K. Plan were based on the participants’ years of service and compensation as of the date the plan was frozen in 2003, adjusted for inflation. The Company continues to fund the plan in accordance with the pension regulations in the U.K.

The net periodic pension cost is included in other income (expense) in the consolidated statements of operations and consisted of the following components (in thousands):

	Year Ended December 31,
	2023			2022			2021
Components of the net periodic pension cost:
Interest cost	$	1,185		$	669		$	554
Expected return on plan assets		(1,440	)		(1,286	)		(1,120	)
Amortization of actuarial losses		990			380			928
Amortization of prior service cost		30			32			31
Net periodic pension cost	$	765		$	(205	)	$	393

The actuarial assumptions used to compute the net periodic pension cost for the years ended December 31, 2023, 2022 and 2021, respectively, were as follows:

	Year Ended December 31,
	2023	2022	2021
Weighted-average discount rate	4.8%	1.8%	1.2%
Weighted-average long-term rate of return on plan assets	5.3%	3.2%	2.5%

The actuarial assumptions used to compute the benefit obligations as of December 31, 2023 and 2022, respectively, were as follows:

	December 31,
	2023	2022
Weighted-average discount rate	4.5%	4.8%
Rate of inflation	2.8%	2.7%

The discount rates used are derived from (AA) corporate bonds that have maturities approximating the terms of the pension obligations under the U.K. Plan. In estimating the expected return on plan assets, the Company considered the historical performance of the major asset classes held by the U.K. Plan and current forecasts of future rates of return for these asset classes.

The following table provides a reconciliation of benefit obligations and plan assets of the U.K. Plan (in thousands):

	December 31,
	2023			2022
Change in benefit obligation:
Projected benefit obligation at beginning of year	$	24,597		$	41,398
Interest cost		1,185			669
Actuarial (gains) losses (1)		445			(12,135	)
Benefits paid		(1,257	)		(1,191	)
Prior service cost		—			—
Foreign currency exchange rate changes		1,289			(4,144	)
Projected benefit obligation at end of year	$	26,259		$	24,597
Accumulated benefit obligation at end of year	$	26,259		$	24,597
Change in plan assets:
Fair value of plan assets at beginning of year	$	26,609		$	44,187
Actual return on plan assets		1,575			(12,927	)
Employer contributions		1,007			971
Benefits paid		(1,257	)		(1,191	)
Foreign currency exchange rate changes		1,417			(4,431	)
Fair value of plan assets at end of year	$	29,351		$	26,609
Funded status at end of year	$	3,092		$	2,012
Amounts included in accumulated other comprehensive loss not yet recognized in net periodic pension cost:
Net actuarial losses at beginning of year	$	(8,076	)	$	(7,206	)
Net actuarial gains (losses) during the year		(310	)		(2,078	)
Prior service cost arising during the year		-			-
Amounts reclassified from accumulated other comprehensive loss to income before income taxes		1,020			412
Foreign currency exchange rate changes		(406	)		796
Net actuarial losses	$	(7,772	)	$	(8,076	)

(1)Actuarial (gains)/losses in the U.K. Plan for the years ended December 31, 2023 and 2022, respectively, primarily resulted from changes in the discount rate assumptions.

The funded status of the U.K. Plan was included in other long term assets on the accompanying consolidated balance sheet as of December 31, 2023 and December 31, 2022, respectively.

The following table reflects the total expected benefit payments to plan participants for each of the next five years and the following five years in aggregate and have been estimated based on the same assumptions used to measure the Company’s benefit obligations as of December 31, 2023 (in thousands):

	Amount
2024	$	1,363
2025		1,365
2026		1,568
2027		1,661
2028		1,723
2029-2033		9,436
Total	$	17,116

In the U.K., defined benefit pension plan funding valuations are conducted every three years to determine the future level of contributions. Based on the results of the most recent valuation as of January 1, 2021, the Company is scheduled to make a required

funding contribution of approximately $0.3 million in 2024. Future annual funding contributions will be determined in the next statutory funding valuation to be completed in 2024.

Fair Value of Plan Assets

The trustee of the U.K. Plan has the fiduciary responsibilities to manage the plan assets in consultation with the Company. The overall objective is to invest plan assets in a portfolio of diversified assets, primarily through the use of institutional collective funds. The current approach is a balanced growth strategy that combines investments in growth assets (such as equities and credit) with investments in debt instruments that match a portion of the expected future benefit payments. This approach will gradually shift to a strategy that is progressively more focused on matching the benefit payments based on a series of de-risking triggers that are based on the funding level. As these triggers are hit, the assets will shift from growth assets into fixed income investments leading to an increasingly low risk approach.

The following table summarizes the fair values of Plan assets by asset category as of December 31, 2023 (in thousands):

Asset Category	Fair Value		Quoted Prices in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs  (Level 2)		Significant Other Unobservable Inputs  (Level 3)		Not Subject to Leveling
Mutual Funds:
Balanced (1)	$	18,978	$	—	$	—	$	—	$	18,978
Fixed income (2)		10,129		—		—		—		10,129
Cash		244		244		—		—		—
Total	$	29,351	$	244	$	—	$	—	$	29,107

(1)This class comprises a diversified portfolio of global investments which seeks growth from equities and credit assets. It is allocated on a weighted average basis as follows: equities (11%), bonds (64%) and other assets (25%).

(2)This class comprises a diversified portfolio of global investments which seeks fixed income growth and is allocated on a weighted average basis as follows: bonds (95%) and other assets (5%).

The following table summarizes the fair values of Plan assets by asset category as of December 31, 2022 (in thousands):

Asset Category	Fair Value		Quoted Prices in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs  (Level 2)		Significant Other Unobservable Inputs  (Level 3)		Not Subject to Leveling
Mutual Funds:
Balanced (1)	$	17,025	$	—	$	—	$	—	$	17,025
Fixed income (2)		9,355		—		—		—		9,355
Cash		229		229		—		—		—
Total	$	26,609	$	229	$	—	$	—	$	26,380

(1)This class comprises a diversified portfolio of global investments which is allocated on a weighted average basis as follows: equities (12%), bonds (67%), other assets (20%) and cash (1%).

(2)This class comprises a diversified portfolio of global investments which seeks fixed income growth and is allocated on a weighted average basis as follows: bonds (78%), other assets (13%) and cash (9%).