Employee Benefit Plans

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

Defined Benefit Plans and Postretirement Plans:

Defined Benefit Plans. The Company sponsors four defined benefit pension plans (two qualified and two non-qualified) covering virtually all individuals who were employed by Liggett on a full-time basis prior to 1994. Future accruals of benefits under these four defined benefit plans were frozen between 1993 and 1995. These benefit plans provide pension benefits for eligible employees based primarily on their compensation and length of service. Contributions are made to the two qualified pension plans in amounts necessary to meet the minimum funding requirements of the Employee Retirement Income Security Act of 1974. The plans’ assets and benefit obligations were measured on December 31, 2023 and 2022, respectively.

The Company also sponsors a Supplemental Retirement Plan (“SERP”) where the Company will pay supplemental retirement benefits to certain key employees, including certain executive officers of the Company. The plan meets the applicable requirements of Section 409A of the Internal Revenue Code and is intended to be unfunded for tax purposes. Payments under the SERP are made from the general assets of the Company. The SERP is a defined benefit plan. Under the SERP, the benefit payable to a participant at his normal retirement date is a lump sum amount which is the actuarial equivalent of a predetermined annual retirement benefit set by the Company’s Board of Directors. Normal retirement date is defined as the January 1 following the attainment by the participant of the latter of age 60 or the completion of eight years of employment following January 1, 2002 with the Company or a subsidiary.

The SERP provides the Company’s President and Chief Executive Officer with an additional benefit paid as a lump sum under the SERP that is actuarially equivalent to a $1,788 lifetime annuity. In addition, in the event of a termination of his employment under the circumstances where he is entitled to severance payments under his employment agreement, he will be credited with an additional 36 months of service towards vesting under the SERP.

As of December 31, 2023, the aggregate lump sum equivalents of the annual retirement benefits payable under the Amended SERP at normal retirement dates occurring during the following years is as follows: 2028 – $68,316 and 2029 to 2033 – $6,866. In the case of a participant who becomes disabled prior to his normal retirement date or whose service is terminated without cause, the participant’s benefit consists of a pro-rata portion of the full projected retirement benefit to which he would have been entitled had he remained employed through his normal retirement date, as actuarially discounted back to the date of payment. A participant who dies while working for the Company or a subsidiary (and before becoming disabled or attaining his normal retirement date) will be paid an actuarially discounted equivalent of his projected retirement benefit; conversely, a participant who retires beyond his normal retirement date will receive an actuarially increased equivalent of his projected retirement benefit.

Postretirement Medical and Life Plans. The Company provides certain postretirement medical and life insurance benefits to certain employees and retirees. Substantially all Liggett manufacturing employees as of December 31, 2023 are eligible for postretirement medical benefits if they reach retirement age while working for Liggett or certain affiliates. Retirees are required to fund 100% of participant medical premiums and, pursuant to union contracts, Liggett reimburses 43 hourly retirees, who retired prior to 1991, for Medicare Part B premiums. In addition, the Company provides life insurance benefits to 66 active employees and 326 retirees who reach retirement age and are eligible to receive benefits under two of the Company’s defined benefit pension plans. The Company’s postretirement liabilities are comprised of Medicare Part B and life insurance premiums.

The following table provides a reconciliation of benefit obligations, plan assets and the funded status of the pension plans and other postretirement benefits:

	Pension Benefits				Other Postretirement Benefits
	2023		2022		2023		2022
Change in benefit obligation:
Benefit obligation at January 1	$	(103,576)	$	(121,166)	$	(6,283)	$	(8,480)
Service cost	(397)		(414)		—		—
Interest cost	(5,090)		(2,628)		(323)		(233)
Benefits paid	5,634		5,993		960		975
Expenses paid	247		264		—		—
Actuarial gain	(807)		14,375		(429)		1,455
Benefit obligation at December 31	$	(103,989)	$	(103,576)	$	(6,075)	$	(6,283)
Change in plan assets:
Fair value of plan assets at January 1	$	84,058	$	104,545	$	—	$	—
Actual return on plan assets	9,279		(14,331)		—		—
Expenses paid	(247)		(264)		—		—
Contributions	100		101		960		975
Benefits paid	(5,634)		(5,993)		(960)		(975)
Fair value of plan assets at December 31	$	87,556	$	84,058	$	—	$	—
Unfunded status at December 31	$	(16,433)	$	(19,518)	$	(6,075)	$	(6,283)
Amounts recognized in the consolidated balance sheets:
Prepaid pension costs	$	45,292	$	38,100	$	—	$	—
Other accrued liabilities	(88)		(89)		(601)		(596)
Non-current employee benefit liabilities	(61,637)		(57,529)		(5,474)		(5,687)
Net amounts recognized	$	(16,433)	$	(19,518)	$	(6,075)	$	(6,283)

	Pension Benefits						Other Postretirement Benefits
	2023		2022		2021		2023		2022		2021
Service cost — benefits earned during the period	$	397	$	414	$	415	$	—	$	—	$	—
Interest cost on projected benefit obligation	5,090		2,628		2,284		323		233		224
Expected return on assets	(5,038)		(3,530)		(3,458)		—		—		—
Prior service cost	—		—		—		8		8		4
Amortization of net loss (gain)	1,055		1,636		1,835		(85)		(31)		86
Net expense	$	1,504	$	1,148	$	1,076	$	246	$	210	$	314

As of December 31, 2023, accumulated other comprehensive (loss) income, before income taxes, consisted of the following:

	Defined Benefit Pension Plans		Post- Retirement Plans		Total
Accumulated other comprehensive (loss) gain as of January 1, 2023	$	(22,667)	$	788	$	(21,879)
Amortization of prior service costs	—		8		8
Amortization of loss (gain)	1,055		(85)		970
Net (loss) gain arising during the year	3,434		(429)		3,005
Accumulated other comprehensive (loss) income as of December 31, 2023	$	(18,178)	$	282	$	(17,896)

As of December 31, 2022, accumulated other comprehensive (loss) income, before income taxes, consisted of the following:

	Defined Benefit Pension Plans		Post- Retirement Plans		Total
Accumulated other comprehensive loss as of January 1, 2022	$	(20,817)	$	(644)	$	(21,461)
Amortization of prior service costs	—		8		8
Amortization of loss (gain)	1,636		(31)		1,605
Net (loss) gain arising during the year	(3,486)		1,455		(2,031)
Accumulated other comprehensive (loss) income as of December 31, 2022	$	(22,667)	$	788	$	(21,879)

As of December 31, 2023, our total accumulated benefit obligations, as well as our projected benefit obligations more than the fair value of the related plan assets, for defined benefit pension plans were as follows:

	December 31,
	2023		2022
Accumulated benefit obligation	$	61,724	$	57,618
Fair value of plan assets	$	—	$	—

	December 31,
	2023		2022
Projected benefit obligation	$	61,724	$	57,618
Fair value of plan assets	$	—	$	—

The information for other postretirement benefit plans with an accumulated postretirement benefit obligation more than plan assets has been disclosed in the Obligations table above because all the other postretirement benefit plans are unfunded or underfunded.

The assumptions used for the pension benefits and other postretirement benefits were:

	Pension Benefits			Other Postretirement Benefits
	2023	2022	2021	2023	2022	2021
Weighted average assumptions:
Discount rates — benefit obligation	4.95% - 5.35%	4.90% - 5.30%	1.80% - 2.70%	5.40%	5.40%	2.85%
Discount rates — service cost	4.90% - 5.30%	1.80% - 2.70%	1.40% - 2.30%	5.40%	2.85%	2.55%
Assumed rates of return on invested assets	6.25%	3.50%	3.50%	N/A	N/A	N/A
Salary increase assumptions	N/A	N/A	N/A	3.00%	3.00%	3.00%

Discount rates were determined by a quantitative analysis examining the prevailing prices of high-quality bonds to determine an appropriate discount rate for measuring obligations. The aforementioned analyses analyze the cash flow from each of the Company’s four benefit plans as well as a separate analysis of the cash flows from the postretirement medical and life insurance plans sponsored by Liggett. The aforementioned analyses then construct a hypothetical bond portfolio whose cash flow from coupons and maturities match the year-by-year, projected benefit cash flow from the respective pension or retiree health plans. The Company uses the lower discount rate derived from the two independent analyses in the computation of the benefit obligation and service cost for each respective retirement liability.

The Company considers input from its external advisors and historical returns in developing its expected rate of return on plan assets. The expected long-term rate of return is the weighted average of the target asset allocation of each individual asset class. The Company’s actual 10-year annual rate of return on its pension plan assets was 4.42%, 4.83% and 7.74% for the years ended December 31, 2023, 2022 and 2021, respectively, and the Company’s actual five-year annual rate of return on its pension plan assets was 3.00%, 2.42% and 7.86% for the years ended December 31, 2023, 2022 and 2021, respectively.

Gains and losses resulted from changes in actuarial assumptions and from differences between assumed and actual experience, including, among other items, changes in discount rates and changes in actual returns on plan assets as compared to

assumed returns. These gains and losses are amortized to the extent that they exceed 10% of the greater of Projected Benefit Obligation and the fair value of assets. For the year ended December 31, 2023, Liggett used a 12.64-year period for its Hourly Plan and an 11.01-year period for its Salaried Plan to amortize pension fund gains and losses on a straight-line basis. Such amounts are reflected in the pension expense calculation beginning the year after the gains or losses occur. The amortization of deferred losses negatively impacts pension expense in the future periods.

Plan assets are invested employing multiple investment management firms. Managers within each asset class cover a range of investment styles and focus primarily on issue selection to add value. Risk is controlled through a diversification among asset classes, managers, styles and securities. Risk is further controlled both at the manager and asset class level by assigning excess return and tracking error targets. Investment managers are monitored to evaluate performance against these benchmark indices and targets.

Allowable investment types include equity, investment grade fixed income and short-term investments. The equity fund is comprised of a Large Cap Index fund and a Mid Cap Index fund, both of which are U.S. based. The investment grade fixed income fund includes two managed funds investing in fixed income securities issued or guaranteed by the U.S. government, or by its respective agencies, mortgage-backed securities, including collateralized mortgage obligations, and corporate debt obligations. The Company generally utilizes its short-term investments, including interest-bearing cash, to pay benefits and to deploy in special situations.

The Liggett Employee Benefits Committee has established the following target assets allocation to equal 35% equity investments and 65% investment grade fixed income, with a rebalancing range of approximately plus or minus 5% around the target asset allocations.

Vector’s defined benefit retirement plan allocations by asset category, were as follows:

	Plan Assets at December 31,
	2023		2022
Asset category:
Equity securities	35	%	34	%
Investment grade fixed income securities	65	%	66	%
Total	100	%	100	%

The defined benefit plans’ recurring financial assets subject to fair value measurements and the necessary disclosures were as follows:

	Fair Value Measurements as of December 31, 2023
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Insurance contracts	$	1,535	$	—	$	1,535	$	—
Amounts in individually managed investment accounts:
Cash, mutual funds and common stock	118		118		—		—
Common collective trusts at NAV (1)	85,903		—		—		—
Total	$	87,556	$	118	$	1,535	$	—
(1) In accordance with Subtopic 820-10, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.

	Fair Value Measurements as of December 31, 2022
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Insurance contracts	$	1,679	$	—	$	1,679	$	—
Amounts in individually managed investment accounts:
Cash, mutual funds and common stock	85		85		—		—
Common collective trusts at NAV (1)	82,294		—		—		—
Total	$	84,058	$	85	$	1,679	$	—
(1) In accordance with Subtopic 820-10, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.

The fair value of investment included in Level 1 is based on quoted market prices from various stock exchanges. The Level 2 investments are based on quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets in markets that are not active.

For 2023 measurement purposes, annual increases in Medicare Part B trends were assumed to equal rates between 5.54% and 7.23% between 2024 and 2031 and 4.5% thereafter. For 2022 measurement purposes, annual increases in Medicare Part B trends were assumed to equal rates between 3.06% and 8.01% between 2023 and 2030 and 4.5% thereafter.

To comply with ERISA’s minimum funding requirements, the Company currently anticipates that it will be required to make $88 of contributions to the pension plan year beginning on January 1, 2024 and ending on December 31, 2024. Any additional funding obligation that the Company may have for subsequent years is contingent on several factors and is not reasonably estimable at this time.

Estimated future pension and postretirement medical benefits payments were as follows:

	Pension		Postretirement Medical
2024	$	5,524	$	601
2025	5,177		590
2026	4,860		579
2027	4,539		551
2028	72,548		533
2029 - 2033	23,577		2,313

Profit Sharing and 401(k) Plans:

The Company maintains 401(k) plans for substantially all U.S. employees which allow eligible employees to invest a percentage of their pre-tax compensation. The Company contributed to the 401(k) plans and expensed $1,756, $1,590 and $1,473 for the years ended December 31, 2023, 2022 and 2021, respectively.