Deferred Compensation and Other Benefits

6 Months Ended

Jul. 02, 2021

Compensation And Retirement Disclosure [Abstract]

Deferred Compensation and Other Benefits

9. Deferred Compensation and Other Benefits

The Company maintains a non-qualified defined benefit Executive Supplemental Benefit Plan (ESBP) that provides certain former key executives with deferred compensation benefits, based on years of service and base compensation, payable during retirement. The plan was amended as of November 30, 1994, to freeze benefits for the participants in the plan at that time.

The Company retained certain potential obligations related to a contributory defined-benefit plan for its previous employees located in the Netherlands (NDBP) when the Company disposed of its subsidiary, CTG Nederland, B.V. Benefits paid are a function of a percentage of career average pay. This plan was curtailed for additional contributions in January 2003.

The Company also maintains a fully funded pension plan related to Belgium employees (BDBP). This is a plan with active employees and the Company expects to make future contributions.

The Company maintains an unfunded pension plan related to certain France employees (FDBP). The Company does not anticipate contributing to the plan. No benefit payments were made in 2020 and none are expected to be paid in 2021.

On March 3, 2020, the Company acquired StarDust and now maintains an unfunded pension plan related to the current StarDust employees (SDBP). The Company does not anticipate contributing to this plan and no benefit payments are expected to be paid in 2021.

Net periodic pension cost for the quarter and two quarters ended July 2, 2021 and June 26, 2020 for the plans is as follows:

	For the Quarter Ended						For the Two Quarters Ended
(amounts in thousands)	July 2, 2021			June 26, 2020			July 2, 2021			June 26, 2020
Service cost	$	127		$	102		$	254		$	205
Interest cost		49			87			100			174
Expected return on assets		(178	)		(158	)		(357	)		(317	)
Amortization of actuarial loss		125			74			250			148
Net periodic pension cost	$	123		$	105		$	247		$	210

The ESBP is deemed to be unfunded as the Company has not specifically identified assets to be used to discharge the deferred compensation benefit liabilities. The Company has purchased insurance on the lives of certain plan participants in amounts deemed to be sufficient to reimburse the Company for the costs associated with the plan for those participants (see Note 2 for “Life Insurance Policies”). The Company does not anticipate contributing to the plan other than for benefit payments as required in 2021 and future years. In the 2021 second quarter and year-to-date period, the Company made benefit payments totaling approximately $0.1 million and $0.2 million, respectively, and expects to make payments in 2021 totaling approximately $0.5 million. The Company made benefit payments totaling approximately $0.2 million and $0.3 million in the 2020 second quarter and year-to-date period, respectively.

As the NDBP was curtailed for additional contributions in January 2003, no contributions were made in 2020 and none are expected to be made in 2021. The assets for the NDBP are held by Aegon, a financial services firm located in the Netherlands. The Company maintains a contract with Aegon to insure future benefit payments of the NDBP; however, due to certain terms of the agreement and potential obligations to the Company, the NDBP has not been settled. The benefit payments to be made in 2021 are expected to be paid by Aegon from plan assets. The assets for the plan are included in a general portfolio of government bonds, a portion of which is allocated to the NDBP based upon the estimated pension liability associated with the plan. The fair market value of the plan’s assets equals the contractual value of the NDBP at any point in time. The fair value of the assets is determined using a Level 3 methodology (see Note 2 for “Fair Value”). In 2021, the plan investments have a targeted minimum return to the Company of 4.0%, which is consistent with historical returns and the 4.0% return guaranteed to the participants of the plan. The Company, in conjunction with Aegon, intends to maintain the current investment strategy of investing plan assets solely in government bonds throughout 2021.

The BDBP is considered fully funded. The Company made contributions of $0.1 million and $0.3 million in the 2021 second quarter and year-to-date period, respectively, and $0.2 million and $0.3 million in the 2020 second quarter and

year-to-date period, respectively. The Company made benefit payments totaling less than $0.1 million in both the 2021 and 2020 second quarters and expects to make payments in 2021 totaling $0.1 million.

The assets for the BDBP are held by Allianz, a financial services firm located in Belgium. The Company maintains a contract with Allianz to insure future benefit payments of the BDBP. Contributions made by the Company to Allianz are based on employees’ current salaries. The benefit payments to be made in 2021 are expected to be paid by Allianz from plan assets. The assets for the plan are included in the overall portfolio of assets held by Allianz. The fair market value of the plan’s assets equals the contractual value of the BDBP in any given year (which is the mathematical reserve held by Allianz). The fair value of the assets is determined using a Level 3 methodology (see Note 2 “Fair Value”). Allianz does not guarantee a minimum return on the plan investments, whereas Belgian law sets a minimum return to be guaranteed to the participants of the plan.

The change in the fair value of plan assets for the plans for the two quarters ended July 2, 2021 and June 26, 2020 was as follows:

	For the Quarter Ended
(amounts in thousands)	July 2, 2021			June 26, 2020
Fair value of plan assets at beginning of period	$	20,654		$	18,078
Return on plan assets		357			317
Contributions		596			568
Benefits paid		(451	)		(408	)
Effect of exchange rate changes		(713	)		16
Fair value of plan assets at end of quarter	$	20,443		$	18,571

The Company maintains the Key Employee Non-Qualified Deferred Compensation Plan for certain key executives. Company contributions to this plan, if any, are based on annually defined financial performance objectives. The Company made no cash contributions in either the 2021 or 2020 second quarter or year-to-date periods for amounts earned in the previous year. Participants in the plan have the ability to purchase stock units from the Company at current market prices using their available investment balances within the plan. In exchange for the cash received, the Company releases shares out of treasury stock equivalent to the number of share units purchased by the participants. These shares of common stock are not entitled to any voting rights, but will receive dividends in the event any are paid. The shares are being held by the Company, and will be released to the participants as prescribed by their payment elections under the plan. There were no stock units purchased in the 2021 or 2020 second quarter or year-to-date periods.

The Company maintains the Non-Employee Director Deferred Compensation Plan for its non-employee directors. There were no cash contributions in either the 2021 or 2020 second quarter or year-to-date periods. Contributions deposited in the director’s accounts in the 2021 and 2020 second quarters consisted of equity grants from the 2020 Equity Award Plan, and the 2010 Equity Award Plan, respectively. These shares of common stock are not entitled to any voting rights, but will receive dividends in the event any are paid. The shares are being held by the Company, and will be released to the participants as prescribed by their payment elections under the plan.