Employee Benefit Plans

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Employee Benefit Plans

Employee Benefit Plans

Our defined benefit pension plans cover employees in the U.S., Canada, and Europe who meet eligibility requirements. The plan covering U.S. employees is noncontributory, and we implemented a hard freeze for the U.S. qualified defined benefit plan as of December 31, 2013. No further benefits were provided after this date for additional credited service or earnings, and all participants became fully vested as of December 31, 2013. The Canadian plan is contributory, and benefits are based on career average compensation. Our funding policy is to contribute an amount equal to the minimum required contribution under applicable pension legislation. For the plans in the U.S. and Canada, we may increase our contribution above the minimum, if appropriate to our tax and cash position and the plans’ funded position. The European plans are funded in accordance with local regulations.

We also sponsor supplemental retirement plans covering employees in the U.S. and Canada. We use a measurement date of December 31 for our pension and supplemental retirement plans.

Several assumptions are used to determine the benefit obligations, plan assets, and net periodic income. The discount rate for the U.S. pension plan is calculated using a bond matching approach to select specific bonds that would satisfy the projected benefit payments. The bond matching approach reflects the process that would be used to settle the pension obligations. The discount rate for non U.S. plans are set by using Willis Towers Watson's RATE:Link model. For each plan, this approach reflects yields available on high quality corporate bonds that would generate the cash flow necessary to pay the plan's benefits when due. The expected return on plan assets is based on a calculated market-related value of plan assets, where gains and losses on plan assets are amortized over a five year period and accumulate in other comprehensive income. Other non-investment unrecognized gains and losses are amortized in future net income based on a “corridor” approach, where the corridor is equal to 10% of the greater of the benefit obligation or the market-related value of plan assets at the beginning of the year. The unrecognized gains and losses in excess of the corridor criteria are amortized over the average future lifetime or service of plan participants, depending on the plan. These assumptions are updated at each annual measurement date.

Changes in benefit obligations for the years ended December 31, 2022 and 2021 were:

	2022		2021
Changes in benefit obligation
Benefit obligation at beginning of year	$	2,532,973	$	2,678,966
Service cost	10,204		12,218
Interest cost	75,248		71,693
Plan participants’ contributions	1,892		1,908
Actuarial gain	(546,266)		(87,966)
Foreign currency exchange rate changes	(15,744)		(1,184)
Gross benefits paid	(135,907)		(142,327)
Curtailments	—		(80)
Settlements	(276)		(255)
Acquired plans	1,039		—
Benefit obligation at end of year	$	1,923,163	$	2,532,973

The benefit obligations for our U.S. pension plans included in the above were $1.7 billion and $2.2 billion at December 31, 2022 and 2021, respectively. The total accumulated benefit obligation for our defined benefit pension plans in the U.S., Canada, and Europe was approximately $1.9 billion and $2.5 billion at December 31, 2022 and 2021, respectively.

For the U.S. pension plan, there was a net actuarial liability gain of $442 million and an asset loss of $581 million. The liability gain was comprised primarily of a $466 million gain due to discount rate changes. For the U.S. supplemental retirement plan, there was a net actuarial liability gain of $61 million comprised primarily of a $63 million gain due to discount rate changes.

The assumptions used to measure the pension benefit obligations for the plans at December 31, 2022 and 2021, were:

	2022		2021
Weighted average discount rate	5.61	%	3.04	%
Rate of increase in future compensation levels	3.16	%	3.13	%

Changes in plan assets for the years ended December 31, 2022 and 2021 were:

	2022		2021
Changes in plan assets
Fair value of plan assets at beginning of year	$	2,756,803	$	2,545,359
Actual return on plan assets	(493,359)		330,402
Foreign currency exchange rate changes	(15,599)		80
Employer contributions	15,504		21,635
Plan participants’ contributions	1,892		1,908
Benefits paid	(135,907)		(142,327)
Settlements	(276)		(254)
Fair value of plan assets at end of year	$	2,129,058	$	2,756,803

The fair values of plan assets for our U.S. pension plans included in the above were $1.9 billion and $2.5 billion at December 31, 2022 and 2021, respectively.

For the years ended December 31, 2022 and 2021, the aggregate projected benefit obligation and aggregate fair value of plan assets for plans with projected benefit obligations in excess of plan assets were as follows:

	2022		2021
Aggregate projected benefit obligation	$	208,939	$	323,593
Aggregate fair value of plan assets	$	—	$	47,445

For the years ended December 31, 2022 and 2021, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with accumulated benefit obligations in excess of plan assets were as follows:

	2022		2021
Aggregate accumulated benefit obligation	$	192,421	$	247,277
Aggregate fair value of plan assets	$	—	$	—

The asset allocations for our funded pension plans at December 31, 2022 and 2021, and the target allocation for 2023, by asset category were:

	Target Allocation		Percentage of Plan Assets at December 31
	2023		2022		2021
Asset Category
Equity securities	58	%	59	%	57	%
Debt securities	41	%	41	%	43	%
Other	1	%	—	%	—	%
	100	%	100	%	100	%

Our benefit plan committees in the U.S. and Canada establish investment policies and strategies and regularly monitor the performance of the funds. The plans in Europe are unfunded and, therefore, there are no plan assets. The pension plan strategy implemented by our management is to achieve long-term objectives and invest the pension assets in accordance with the applicable pension legislation in the U.S. and Canada as well as fiduciary standards. The long-term primary investment objectives for the pension plans are to provide for a reasonable amount of long-term growth of capital, without undue exposure to risk, protect the assets from erosion of purchasing power, and provide investment results that meet or exceed the pension plans’ actuarially assumed long-term rates of return. Our investment strategy with respect to pension plan assets is to generate a return in excess of the passive portfolio benchmark (38% US Large-cap stocks, 9% US Mid-cap stocks, 10% International stocks, 3% Emerging Market stocks and 40% Barclays U.S. Gov/Credit Index).

The fair values of the plan assets as of December 31, 2022 and 2021, by asset category, are shown in the tables below. Various inputs are considered when determining the value of our pension plan assets. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. Level 1 represents observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets. Level 2 represents other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.). Level 3 represents significant unobservable inputs (including our own assumptions in determining the fair value of investments). Certain investments are measured at fair value using the net asset value ("NAV") per share as a practical expedient and have not been classified in the fair value hierarchy. 

The valuation methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Equity securities are valued at the closing price reported on the active market on which the individual securities are traded on the last day of the calendar plan year. Debt securities including corporate bonds, U.S. Government securities, and asset-backed securities are valued using price evaluations reflecting the bid and/or ask sides of the market for an investment as of the last day of the calendar plan year.

	2022
	Total		Assets Measured at NAV		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs  (Level 2)		Significant Unobservable Inputs (Level 3)
Equity Securities
Common stocks — mutual funds — equity	$	285,103	$	48,521	$	236,582	$	—	$	—
Genuine Parts Company common stock	261,869		—		261,869		—		—
Other stocks	711,830		—		711,830		—		—
Debt Securities
Short-term investments	41,076		—		41,076		—		—
Cash and equivalents	8,632		—		8,632		—		—
Government bonds	344,787		—		411		344,376		—
Corporate bonds	412,896		—		—		412,896		—
Asset-backed and mortgage-backed securities	9,925		—		—		9,925		—
Convertible Securities	1,159		—		—		1,159		—
Other-international	37,304		—		37,304		—		—
Municipal bonds	14,442		—		—		14,442		—
Other
Options and Futures	35		—		35		—		—
Total	$	2,129,058	$	48,521	$	1,297,739	$	782,798	$	—

	2021
	Total		Assets Measured at NAV		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Equity Securities
Common stocks — mutual funds — equity	$	388,591	$	64,669	$	323,922	$	—	$	—
Genuine Parts Company common stock	210,510		—		210,510		—		—
Other stocks	971,020		—		971,020		—		—
Debt Securities
Short-term investments	46,815		—		46,815		—		—
Cash and equivalents	22,084		—		22,084		—		—
Government bonds	425,877		—		4,513		421,364		—
Corporate bonds	598,216		—		—		598,216		—
Asset-backed and mortgage-backed securities	12,894		—		—		12,894		—
Other-international	61,008		—		46,133		14,875		—
Municipal bonds	19,621		—		—		19,621		—
Other
Cash surrender value of life insurance policies	167		—		167		—		—
Total	$	2,756,803	$	64,669	$	1,625,164	$	1,066,970	$	—

Equity securities include Genuine Parts Company common stock in the amounts of $262 million (12% of total plan assets) and $211 million (8% of total plan assets) at December 31, 2022 and 2021, respectively. Dividend payments received by the plan on company stock totaled approximately $5 million and $5 million in 2022 and 2021, respectively. Fees paid during the year for services rendered by parties in interest were based on customary and reasonable rates for such services.

Based on the investment policy for the pension plans, as well as an asset study that was performed based on our asset allocations and future expectations, our expected rate of return on plan assets for measuring 2023 pension income is 7.09% for the plans. The asset study forecasted expected rates of return for the approximate duration of our benefit obligations, using capital market data and historical relationships.

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets at December 31:

	2022		2021
Other long-term asset	$	414,834	$	499,978
Other current liability	(12,537)		(12,546)
Pension and other post-retirement liabilities	(196,402)		(263,602)
	$	205,895	$	223,830

Amounts recognized in accumulated other comprehensive (loss) income consist of:

	2022		2021
Net actuarial loss	$	682,884	$	625,339
Prior service cost	7,273		7,958
	$	690,157	$	633,297

The following table reflects the total benefits expected to be paid from the pension plans’ or our assets. Of the pension benefits expected to be paid in 2023, approximately $13 million is expected to be paid from employer assets. Expected employer contributions below reflect amounts expected to be contributed to funded plans. Information about the expected cash flows for the pension plans follows:

Employer contribution
2023 (expected)	$	4,449
Expected benefit payments:
2023	$	138,411
2024	$	140,826
2025	$	143,591
2026	$	145,953
2027	$	147,677
2027 through 2030	$	736,560

Net periodic benefit income included the following components:

	2022		2021		2020
Service cost	$	10,204	$	12,218	$	12,105
Interest cost	75,248		71,693		83,732
Expected return on plan assets	(150,318)		(153,822)		(154,111)
Amortization of prior service cost	691		690		692
Amortization of actuarial loss	37,065		49,897		39,613
Net periodic benefit income	$	(27,110)	$	(19,324)	$	(17,969)

Service cost is recorded in selling, administrative and other expenses in the consolidated statements of income while all other components are recorded within other non-operating expenses (income). Pension benefits also include amounts related to supplemental retirement plans.

Other changes in plan assets and benefit obligations recognized in other comprehensive income are as follows:

	2022		2021		2020
Current year actuarial loss (gain)	$	97,412	$	(264,547)	$	24,613
Recognition of actuarial loss	(37,065)		(49,897)		(39,613)
Recognition of prior service cost	(691)		(690)		(692)
Recognition of curtailment (loss) gain	—		(5)		435
Other	68		(29)		—
Total recognized in other comprehensive (loss) income	$	59,724	$	(315,168)	$	(15,257)
Total recognized in net periodic benefit income and other comprehensive (loss) income	$	32,614	$	(334,492)	$	(33,226)

The assumptions used in measuring the net periodic benefit income for the plans follow:

	2022		2021		2020
Weighted average discount rate	3.04	%	2.72	%	3.43	%
Rate of increase in future compensation levels	3.13	%	3.11	%	3.13	%
Expected long-term rate of return on plan assets	6.34	%	6.88	%	7.11	%

We have one defined contribution plan in the U.S. that covers substantially all of our domestic employees. Employees receive a matching contribution of 100% of the first 5% of the employees’ salary. Total plan expense was approximately $69 million in 2022, $60 million in 2021, and $55 million in 2020.