Note 11 - Retirement Plans

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Retirement Benefits [Text Block]

11. Retirement Plans

We sponsor and contribute to defined benefit and defined contribution retirement plans. The Gray Television, Inc. Retirement Plan (“Gray Pension Plan”) is a defined benefit pension plan. Benefits under the Gray Pension Plan are frozen and can no longer increase, and no new participants can be added to the Gray Pension Plan.

The Gray Pension Plan’s funding policy is consistent with the funding requirements of existing federal laws and regulations under the Employee Retirement Income Security Act of 1974. The measurement dates used to determine the benefit information for the Gray Pension Plan were December 31, 2022 and 2021, respectively. The following summarizes the Gray Pension Plan’s funded status and amounts recognized on our consolidated balance sheets at December 31, 2022 and 2021, respectively (in millions):

	December 31,
	2022			2021
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	140		$	151
Interest cost		4			4
Actuarial (gain) loss		(38	)		(11	)
Benefits paid		(4	)		(4	)
Projected benefit obligation at end of year	$	102		$	140
Change in plan assets:
Fair value of pension plan assets at beginning of year	$	119		$	108
Actual return on plan assets		(14	)		12
Company contributions		4			4
Benefits paid		(5	)		(5	)
Fair value of pension plan assets at end of year		104			119
Funded status of pension plan	$	2		$	(21	)
Amounts recognized on our balance sheets consist of:
Accrued benefit cost	$	21		$	15
Accumulated other comprehensive loss		(19	)		(36	)
Net asset (liability) recognized	$	2		$	(21	)

Because the Gray Pension Plan is a frozen plan, the projected benefit obligation and the accumulated benefit obligation are the same. The accumulated benefit obligation was $102 million and $140 million at December 31, 2022 and 2021, respectively. The long-term rate of return on assets assumption was chosen from a best estimate range based upon the anticipated long-term returns for asset categories in which the Gray Pension Plan is invested. An estimate of the rate of increase in compensation levels used to calculate the net periodic benefit cost is not required because of the Plan’s frozen status:

	Year Ended December 31,
	2022			2021
Weighted-average assumptions used to determine net periodic benefit cost for the Gray Pension Plan:
Discount rate		2.73	%		2.38	%
Expected long-term rate of return on pension plan assets		6.25	%		6.25	%
Estimated rate of increase in compensation levels		N/A			N/A

	As of December 31,
	2022			2021
Weighted-average assumptions used to determine benefit obligations:
Discount rate		4.99	%		2.73	%

Pension expense is computed using the projected unit credit actuarial cost method. The net periodic pension cost for the Gray Pension Plan includes the following components (in millions):

	Year Ended December 31,
	2022			2021			2020
Components of net periodic pension cost:
Interest cost	$	4		$	4		$	4
Expected return on plan assets		(8	)		(7	)		(6	)
Recognized net actuarial loss		1			1			1
Net periodic pension benefit	$	(3	)	$	(2	)	$	(1	)

For the Gray Pension Plan, the estimated future benefit payments are as follows (in millions):

Years			Amount
2023			$	5
2024				5
2025				5
2026				6
2027				6
2028	-	2032		32

The Gray Pension Plan’s weighted-average asset allocations by asset category were as follows:

	As of December 31,
	2022			2021
Asset category:
Insurance general account		14	%		13	%
Cash management accounts		4	%		2	%
Equity accounts		51	%		50	%
Fixed income accounts		28	%		33	%
Real estate accounts		3	%		2	%
Total		100	%		100	%

The investment objective is to achieve a consistent total rate of return (income, appreciation, and reinvested funds) that will equal or exceed the actuarial assumption with aversion to significant volatility. The following is the target asset allocation:

	Target Range
Asset class:	Strategic Allocation			Lower Limit			Upper Limit
Equities:
Large Cap Blend		27.0	%		0.0	%		50.0	%
Mid Cap Blend		10.0	%		0.0	%		40.0	%
Small Cap Blend		6.0	%		0.0	%		25.0	%
Foreign Large Blend		11.0	%		0.0	%		40.0	%
Emerging Markets		3.0	%		0.0	%		25.0	%
Real Estate		3.0	%		0.0	%		20.0	%
Fixed Income:
U.S. Treasury Inflation Protected		3.5	%		0.0	%		25.0	%
Intermediate Core Plus Bond		25.0	%		0.0	%		50.0	%
Short-Term Bond		3.0	%		0.0	%		25.0	%
Bank Loan		0.0	%		0.0	%		25.0	%
High Yield Bond		4.0	%		0.0	%		25.0	%
Emerging Markets Bond		3.0	%		0.0	%		20.0	%
Money Market Taxable		1.5	%		0.0	%		100.0	%

Our equity portfolio contains securities of companies necessary to build a diversified portfolio, and that we believe are financially sound. Our fixed income portfolio contains obligations generally rated A or better with no maturity restrictions and an actively managed duration. The cash equivalents strategy uses securities of the highest credit quality.

Fair Value of Gray Pension Plan Assets. We calculate the fair value of the Gray Pension Plan’s assets based upon the observable and unobservable net asset value of its underlying investments. We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized by the fair value hierarchy proscribed by ASU Topic 820, described in Note 5 “Fair Value Measurement.”

The following table presents the fair value of the Gray Pension Plan’s assets and classifies them by level within the fair value hierarchy as of December 31, 2022 and 2021 (in millions):

	As of December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Insurance general account	$	-	$	15	$	-	$	15
Cash management accounts		4		-		-		4
Equity accounts		53		-		-		53
Fixed income accounts		29		-		-		29
Real estate accounts		3		-		-		3
Total	$	89	$	15	$	-	$	104

	As of December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Insurance general account	$	-	$	15	$	-	$	15
Cash management accounts		3		-		-		3
Equity accounts		59		-		-		59
Fixed income account		39		-		-		39
Real estate accounts		3		-		-		3
Total	$	104	$	15	$	-	$	119

Expected Pension Contributions. We expect to contribute a combined total of approximately $4 million to our frozen defined benefit pension plan during the year ending December 31, 2023.

Capital Accumulation Plan. The Gray Television, Inc. Capital Accumulation Plan (the “Capital Accumulation Plan”) is a defined contribution plan intended to meet the requirements of Section 401(k) of the Internal Revenue Code. In 2022, employer contributions under the Capital Accumulation Plan include matching cash contributions at a rate of 100% of the first 1% of each employee’s salary deferral, and 50% of the next 5% of each employee’s salary deferral. For the years ended December 31, 2022, 2021 and 2020, our matching contributions to our Capital Accumulation Plan were approximately $17 million, $15 million and $13 million, respectively. We estimate that our matching cash contributions to the Capital Accumulation Plan for 2023 will be approximately $25 million.

In addition, the Company, at its discretion, may make an additional profit-sharing contribution, based on annual Company performance, to those employees who meet certain criteria. For the years ended December 31, 2022, 2021 and 2020, we accrued contributions of approximately $9 million, $7 million and $6 million, respectively, as discretionary profit sharing contributions. Each of these discretionary profit-sharing contributions was subsequently made in the form of shares of our common stock. We may also make matching and discretionary contributions of our common stock under the Capital Accumulation Plan. As of December 31, 2022, we had 2.8 million shares of common stock reserved for issuance under this plan.

Meredith Plan. In connection with the Meredith Transaction, On December 1, 2021, we assumed a defined benefit pension plan covering certain legacy Meredith bargaining class employees. At December 31, 2022, this plan has combined plan assets of $14 million and combined projected benefit obligations of $11 million. The net asset for this plan is recorded as an asset in our financial statements as of December 31, 2022.