Employee Benefits

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Employee Benefits

EMPLOYEE BENEFITS

The Company has pension and/or other retirement benefit plans covering approximately 20% of active employees. In 2007, the Company amended its U.S. qualified and non-qualified pension plans under which accrual of future benefits was suspended for all participants that did not meet the rule of 70 (age plus years of service equal to at least 70 as of December 31, 2007). Pension benefits are generally based on years of service and compensation during the final years of employment. Plan assets consist primarily of equity securities and corporate and government fixed income securities. Substantially all pension benefit costs are funded as accrued; such funding is limited, where applicable, to amounts deductible for income tax purposes. Certain other retirement benefits are provided by general corporate assets.

As of the Closing Date of the Merger with N&B, the Company assumed responsibility for approximately 20 additional defined benefit plans and recognized liabilities in the aggregate amount of $221 million.

The Company sponsors a qualified defined contribution plan covering substantially all U.S. employees. Under this plan, effective January 1, 2023, the Company matches 100% of the first 6% of participants’ contributions. Prior to this, the Company matched 100% of participants’ contributions up to 4% of compensation and 75% of participants’ contributions from over 4% to 8%. Employees that are still eligible to accrue benefits under the pension plans are limited to a 50% match of up to 6% of the participants’ compensation.

In addition to pension benefits, certain health care and life insurance benefits are provided to qualifying U.S. employees upon retirement from IFF. Such coverage is provided through insurance plans with premiums based on benefits paid. The Company does not generally provide health care or life insurance coverage for retired employees of foreign subsidiaries; such benefits are provided in most foreign countries by government-sponsored plans, and the cost of these programs is not material.

The Company offers a non-qualified Deferred Compensation Plan (“DCP”) for certain key employees and non-employee directors. Eligible employees and non-employee directors may elect to defer receipt of salary, incentive payments and Board of Directors’ fees into participant-directed investments which are generally invested by the Company in individual variable life insurance contracts it owns that are designed to informally fund savings plans of this nature. The cash surrender value of life insurance is based on the net asset values of the underlying funds available to plan participants. At December 31, 2023 and December 31, 2022, the Consolidated Balance Sheets reflect liabilities of approximately $52 million and $53 million, respectively, related to the DCP in Other liabilities and approximately $17 million and $25 million, respectively, included in Capital in excess of par value related to the portion of the DCP that will be paid out in IFF shares.

The total cash surrender value of life insurance contracts the Company owns in relation to the DCP and post-retirement life insurance benefits amounted to $49 million and $45 million at December 31, 2023 and 2022, respectively, and are recorded in Other assets in the Consolidated Balance Sheets.

The plan assets and benefit obligations of the defined benefit pension plans are measured at December 31 of each year.

	U.S. Plans						Non-U.S. Plans
(DOLLARS IN MILLIONS)	2023		2022		2021		2023		2022		2021
Components of net periodic benefit cost
Service cost for benefits earned(1)	$	—	$	1	$	1	$	21	$	34	$	41
Interest cost on projected benefit obligation(2)	25		15		71		36		17		10
Expected return on plan assets(2)	(31)		(21)		(106)		(47)		(42)		(55)
Net amortization of deferrals(2)	2		8		29		(1)		11		19
Settlements and curtailments(2)	—		—		—		(8)		—		(10)
Net periodic benefit (income) cost	(4)		3		(5)		1		20		5
Defined contribution and other retirement plans	30		33		36		51		29		33
Total expense	$	26	$	36	$	31	$	52	$	49	$	38
Changes in plan assets and benefit obligations recognized in OCI
Net actuarial loss (gain)	$	27	$	—			$	70	$	(143)
Recognized actuarial (loss) gain	(1)		(8)				9		(12)
Recognized prior service credit	—		—				1		1
Currency translation adjustment	—		—				9		(27)
Total loss (gain) recognized in OCI (before tax effects)	$	26	$	(8)			$	89	$	(181)

 _______________________ 

(1)Included as a component of Operating (loss) profit.

(2)Included as a component of Other expense (income), net.

	Postretirement Benefits
(DOLLARS IN MILLIONS)	2023		2022		2021
Components of net periodic benefit cost
Service cost for benefits earned	$	—	$	1	$	1
Interest cost on projected benefit obligation	3		1		7
Net amortization and deferrals	(6)		(5)		(20)
Total credit	$	(3)	$	(3)	$	(12)
Changes in plan assets and benefit obligations recognized in OCI
Net actuarial loss (gain)	$	3	$	(16)
Recognized actuarial loss	—		(1)
Recognized prior service credit	5		6
Total recognized in OCI (before tax effects)	$	8	$	(11)

The weighted-average actuarial assumptions used to determine expense at December 31 of each year are:

	U.S. Plans						Non-U.S. Plans
	2023		2022		2021		2023		2022		2021
Discount rate	5.42	%	2.86	%	2.51	%	3.98	%	1.43	%	0.85	%
Expected return on plan assets	6.00	%	3.80	%	3.80	%	4.92	%	3.52	%	4.21	%
Rate of compensation increase	3.75	%	3.25	%	3.25	%	3.01	%	2.72	%	2.56	%

Changes in the postretirement benefit obligation and plan assets, as applicable, are detailed in the following table:

	U.S. Plans				Non-U.S. Plans				Postretirement Benefits
(DOLLARS IN MILLIONS)	2023		2022		2023		2022		2023		2022
Benefit obligation at beginning of year	$	500	$	662	$	930	$	1,501	$	50	$	66
Service cost for benefits earned	—		1		21		34		—		1
Interest cost on projected benefit obligation	25		15		36		17		3		2
Actuarial (gain) loss	38		(139)		77		(468)		3		(16)
Adjustments for expense/tax contained in service cost	—		—		(2)		(2)		—		—
Plan participants’ contributions	—		—		4		4		—		—
Benefits paid	(39)		(38)		(33)		(32)		(3)		(2)
Curtailments/settlements	(1)		—		(21)		(21)		—		—
Translation adjustments	—		—		45		(104)		—		—
Other	1		(1)		(1)		1		(1)		(1)
Benefit obligation at end of year	$	524	$	500	$	1,056	$	930	$	52	$	50
Fair value of plan assets at beginning of year	$	498	$	649	$	920	$	1,320
Actual return on plan assets	41		(118)		50		(286)
Employer contributions	5		5		31		31
Participants’ contributions	—		—		4		4
Benefits paid	(39)		(38)		(33)		(32)
Settlements	—		—		(21)		(21)
Translation adjustments	—		—		44		(96)
Other	—		—		5		—
Fair value of plan assets at end of year	$	505	$	498	$	1,000	$	920
Funded status at end of year	$	(19)	$	(2)	$	(56)	$	(10)

The amounts recognized in the balance sheet are detailed in the following table:

	U.S. Plans				Non-U.S. Plans
(DOLLARS IN MILLIONS)	2023		2022		2023		2022
Other assets	$	30	$	51	$	109	$	129
Other current liabilities	(5)		(6)		(4)		(1)
Retirement liabilities	(44)		(47)		(161)		(138)
Net amount recognized	$	(19)	$	(2)	$	(56)	$	(10)

The amounts recognized in AOCI are detailed in the following table:

	U.S. Plans				Non-U.S. Plans				Postretirement Benefits
(DOLLARS IN MILLIONS)	2023		2022		2023		2022		2023		2022
Net actuarial (gain) loss	$	155	$	129	$	198	$	110	$	—	$	(3)
Prior service cost (credit)	—		—		(2)		(3)		(4)		(9)
Total AOCI (before tax effects)	$	155	$	129	$	196	$	107	$	(4)	$	(12)

	U.S. Plans						Non-U.S. Plans
(DOLLARS IN MILLIONS)	2023			2022			2023			2022
Accumulated Benefit Obligation — end of year	$	520		$	495		$	988		$	870
Information for Pension Plans with an Accumulated Benefit Obligation (“ABO”) in excess of Plan Assets:
Accumulated benefit obligation	$	47		$	49		$	165		$	150
Fair value of plan assets	—			—			36			41
Information for Pension Plans with a Projected Benefit Obligation (“PBO”) in excess of Plan Assets:
Projected benefit obligation	$	47		$	49		$	185		$	169
Fair value of plan assets	—			—			41			45
Weighted-average assumptions used to determine obligations at December 31
Discount rate	4.47		%	5.42		%	3.59		%	4.02		%
Rate of compensation increase	3.75		%	3.75		%	2.83		%	3.00		%

(DOLLARS IN MILLIONS)	U.S. Plans		Non-U.S. Plans		Postretirement Benefits
Estimated Future Benefit Payments
2024	$	99	$	39	$	4
2025	38		36		4
2026	38		41		4
2027	37		40		4
2028	36		45		4
2029 - 2033	166		239		18
Contributions
Required Company Contributions in the Following Year (2024)	$	5	$	20	$	—

The Company considers a number of factors in determining and selecting assumptions for the overall expected long-term rate of return on plan assets. The Company considers the historical long-term return experience of its assets, the current and expected allocation of its plan assets and expected long-term rates of return. The Company derives these expected long-term rates of return with the assistance of its investment advisors. The Company bases its expected allocation of plan assets on a diversified portfolio consisting of domestic and international equity securities, fixed income, property and alternative asset classes. The asset allocation is monitored on an ongoing basis.

The Company considers a variety of factors in determining and selecting its assumptions for the discount rate at December 31. For the U.S. plans, the discount rate was based on the internal rate of return for a portfolio of high quality bonds rated Aa or higher by either Moody’s or Standard & Poor’s with maturities that are consistent with the projected future benefit payment obligations of the plan. For the Non-U.S. Plans, the discount rates were determined by region and are based on high quality long-term corporate bonds. Consideration has been given to the duration of the liabilities in each plan when selecting the bonds to be used in determining the discount rate. The rate of compensation increase for all plans and the medical cost trend rate for the applicable U.S. plans are based on plan experience.

The percentage of assets in the Company’s pension plans, by type, is as follows:

	U.S. Plans				Non-U.S. Plans
	2023		2022		2023		2022
Cash and cash equivalents	1	%	2	%	3	%	3	%
Equities	13	%	47	%	16	%	18	%
Fixed income	86	%	51	%	42	%	37	%
Property	—	%	—	%	8	%	9	%
Alternative and other investments	—	%	—	%	31	%	33	%

With respect to the U.S. plans, the expected return on plan assets was determined based on an asset allocation model using the current target allocation, real rates of return by asset class and an anticipated inflation rate. The target investment allocation is 10% equity securities and 90% fixed income securities.

The expected annual rate of return for the non-U.S. plans employs a similar set of criteria adapted for local investments, inflation rates and in certain cases specific government requirements. Each plan has its own target asset allocation, which is reviewed periodically and rebalanced when necessary.

The following tables present the Company’s plan assets for the U.S. and non-U.S. plans using the fair value hierarchy as of December 31, 2023 and 2022. The plans’ assets were accounted for at fair value and are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and their placement within the fair value hierarchy levels. For more information on a description of the fair value hierarchy, see Note 16.

	U.S. Plans for the Year Ended
	December 31, 2023
(DOLLARS IN MILLIONS)	Level 1		Level 2		Level 3		Total
Cash Equivalents	$	—	$	6	$	—	$	6
Fixed Income Securities
Government & Government Agency Bonds	—		5		—		5
Corporate Bonds	—		82		—		82
Municipal Bonds	—		5		—		5
Assets measured at net asset value(1)							406
Total	$	—	$	98	$	—	$	504
Receivables							$	1
Total							$	505

	U.S. Plans for the Year Ended
	December 31, 2022
(DOLLARS IN MILLIONS)	Level 1		Level 2		Level 3		Total
Cash Equivalents	$	—	$	9	$	—	$	9
Fixed Income Securities
Government & Government Agency Bonds	—		6		—		6
Corporate Bonds	—		73		—		73
Municipal Bonds	—		5		—		5
Assets measured at net asset value(1)							404
Total	$	—	$	93	$	—	$	497
Receivables							$	1
Total							$	498

_______________________ 

(1)Investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the table above are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Balance Sheets. The total amount measured at net asset value includes approximately $65 million and $234 million in pooled equity funds and $341 million and $170 million in fixed income mutual funds for the years ended December 31, 2023 and 2022, respectively.

	Non-U.S. Plans for the Year Ended
	December 31, 2023
(DOLLARS IN MILLIONS)	Level 1		Level 2		Level 3		Total
Cash	$	27	$	—	$	—	$	27
Equity Securities
U.S. Large Cap	90		—		—		90
U.S. Mid Cap	8		—		—		8
U.S. Small Cap	1		—		—		1
Non-U.S. Large Cap	50		—		—		50
Non-U.S. Mid Cap	5		—		—		5
Non-U.S. Small Cap	1		—		—		1
Emerging Markets	8		—		—		8
Fixed Income Securities
U.S. Corporate Bonds	29		—		—		29
Non-U.S. Treasuries/Government Bonds	194		—		—		194
Non-U.S. Corporate Bonds	50		88		—		138
Non-U.S. Asset-Backed Securities	—		56		—		56
Non-U.S. Other Fixed Income	2		—		—		2
Alternative Types of Investments
Insurance Contracts	—		247		—		247
Derivative Financial Instruments	—		28		—		28
Absolute Return Funds	3		2		—		5
Private Equity Funds	—		27		—		27
Property
Non-U.S. Property	7		—		77		84
Total	$	475	$	448	$	77	$	1,000

	Non-U.S. Plans for the Year Ended
	December 31, 2022
(DOLLARS IN MILLIONS)	Level 1		Level 2		Level 3		Total
Cash	$	14	$	9	$	—	$	23
Equity Securities
U.S. Large Cap	73		—		—		73
U.S. Mid Cap	6		—		—		6
Non-U.S. Large Cap	79		—		—		79
Non-U.S. Mid Cap	4		—		—		4
Non-U.S. Small Cap	1		—		—		1
Emerging Markets	7		—		—		7
Fixed Income Securities
U.S. Corporate Bonds	35		—		—		35
Non-U.S. Treasuries/Government Bonds	144		—		—		144
Non-U.S. Corporate Bonds	34		75		—		109
Non-U.S. Asset-Backed Securities	—		46		—		46
Non-U.S. Other Fixed Income	2		—		—		2
Alternative Types of Investments
Insurance Contracts	—		177		—		177
Derivative Financial Instruments	—		56		—		56
Absolute Return Funds	4		2		—		6
Other	—		64		3		67
Property
Non-U.S. Property	4		—		81		85
Total	$	407	$	429	$	84	$	920

Cash and cash equivalents are primarily held in registered money market funds which are valued using a market approach based on the quoted market prices of identical instruments. Other cash and cash equivalents are valued daily by the fund using a market approach with inputs that include quoted market prices for similar instruments.

Equity securities are primarily valued using a market approach based on the quoted market prices of identical instruments. Pooled funds are typically common or collective trusts valued at their net asset values (NAVs).

Fixed income securities are primarily valued using a market approach with inputs that include broker quotes and benchmark yields.

Derivative instruments are valued by the custodian using closing market swap curves and market derived inputs.

Property values are primarily based on valuation of the underlying investments, which include inputs such as cost, discounted future cash flows, independent appraisals and market comparable data.

Hedge funds are valued based on valuation of the underlying securities and instruments within the funds. Quoted market prices are used when available and NAVs are used for unquoted securities within the funds.

Absolute return funds are actively managed funds mainly invested in debt and equity securities and are valued at their NAVs.

The following table presents a reconciliation of Level 3 non-U.S. plan assets held during the year ended December 31, 2023:

	Non-U.S. Plans
(DOLLARS IN MILLIONS)	Property		Hedge Funds		Total
Ending balance as of December 31, 2022	$	81	$	3	$	84
Actual return on plan assets	(4)		—		(4)
Purchases, sales and settlements	—		(3)		(3)
Ending balance as of December 31, 2023	$	77	$	—	$	77

The following weighted average assumptions were used to determine the postretirement benefit expense and obligation for the years ended December 31:

	Expense				Liability
	2023		2022		2023		2022
Discount rate	5.40	%	2.90	%	5.10	%	5.40	%
Current medical cost trend rate	6.50	%	6.75	%	7.25	%	6.50	%
Ultimate medical cost trend rate	4.75	%	4.75	%	4.75	%	4.75	%
Medical cost trend rate decreases to ultimate rate in year	2030		2030		2034		2030

The Company contributed $31 million to its non-U.S. pension plans in 2023. No contributions were made to the Company’s qualified U.S. pension plans in 2023. The Company contributed $5 million with respect to its non-qualified U.S. pension plan. In addition, $3 million of payments were made with respect to the Company’s other postretirement plans.