Employee Benefits

12 Months Ended

Dec. 31, 2023

Employee Benefits

Employee Benefits

Note 9 − Employee Benefits

Seaboard has qualified defined benefit pension plans for its domestic salaried and clerical employees that were hired before January 1, 2014. Benefits are generally based upon the number of years of service and a percentage of final average pay. Seaboard did not make any contributions to these plans in 2023, 2022 and 2021 and does not intend to make material contributions in 2024.

Seaboard also sponsors non-qualified, unfunded supplemental executive plans. Management has no plans to provide funding for these supplemental executive plans in advance of when the benefits are paid.

Pursuant to Seaboard’s investment policies for qualified pension plans, assets are invested to achieve a diversified target allocation of approximately 80% in equities and 20% in fixed-income securities. The investment strategy is periodically reviewed by management for adherence to policy and performance.

The following tables show the qualified plans’ assets measured at estimated fair value as of December 31, 2023 and 2022, respectively, and the level within the fair value hierarchy used to measure each category of assets:

	December 31,
(Millions of dollars)	2023		Level 1		Level 2		Level 3
Assets:
Domestic equity securities	$	81	$	81	$	—	$	—
Foreign equity securities		51		51		—		—
Domestic fixed income mutual funds		26		26		—		—
Foreign fixed income mutual funds		11		11		—		—
Money market funds		2		2		—		—
Total assets	$	171	$	171	$	—	$	—

	December 31,
(Millions of dollars)	2022		Level 1		Level 2		Level 3
Assets:
Domestic equity securities	$	84	$	84	$	—	$	—
Foreign equity securities		60		60		—		—
Domestic fixed income mutual funds		26		26		—		—
Foreign fixed income mutual funds		11		11		—		—
Money market funds		1		1		—		—
Total assets	$	182	$	182	$	—	$	—

Assumptions used in determining pension information for the qualified and nonqualified plans were:

	Years ended December 31,
	2023		2022		2021
Weighted-average assumptions:
Discount rate used to determine obligations	5.26	%	5.38	%	2.78	%
Discount rate used to determine net periodic benefit cost	5.38	%	2.78	%	2.39	%
Expected return on plan assets	6.50	%	6.25	%	6.25	%
Long-term rate of increase in compensation levels	3.80	%	4.00	%	4.00	%

Management selected the discount rates based on a model-based result where the timing and amount of cash flows approximates the estimated payouts. The expected return on the qualified plans’ assets assumption is based on the weighted-average of asset class expected returns that are consistent with the qualified plans’ asset allocation and related long-term projected returns.

The aggregate changes in the benefit obligation and fair value of assets for the qualified and nonqualified plans and the funded status were as follows:

						December 31,
						2023		2022
(Millions of dollars)		Assets exceed accumulated benefits		Accumulated benefits exceed assets		Total		Accumulated benefits exceed assets
Reconciliation of benefit obligation:
Benefit obligation at beginning of year	$	129	$	147	$	276	$	362
Service cost		3		3		6		9
Interest cost		7		6		13		10
Actuarial losses (gains)		(1)		2		1		(97)
Plan settlements		(21)		(25)		(46)		—
Benefits paid		(4)		(4)		(8)		(8)
Benefit obligation at end of year	$	113	$	129	$	242	$	276
Reconciliation of fair value of plan assets:
Fair value of plan assets at beginning of year	$	126	$	56	$	182	$	227
Actual return on plan assets		21		9		30		(38)
Employer contributions		—		13		13		1
Plan settlements		(21)		(25)		(46)		—
Benefits paid		(4)		(4)		(8)		(8)
Fair value of plan assets at end of year	$	122	$	49	$	171	$	182
Funded status	$	9	$	(80)	$	(71)	$	(94)

In addition to other settlements that occurred during 2023, Seaboard entered into an agreement with an insurance company to purchase a group annuity contract for a select group of retirees in Seaboard’s qualified pension plans and as a result, the benefit obligation and related assets decreased $34 million. The accumulated benefit obligation for Seaboard’s defined benefit pension plans was $216 million and $247 million as of December 31, 2023 and 2022, respectively. The accumulated benefit obligation for Seaboard’s defined benefit pension plans in excess of plan assets was $118 million and $130 million as of December 31, 2023 and 2022, respectively. Expected future benefit payments for the qualified and nonqualified plans during each of the next five years and the next five years thereafter were as follows: $29 million, $10 million, $15 million, $12 million, $15 million and $72 million, respectively.

The net periodic benefit cost of these plans was as follows:

	Years ended December 31,
(Millions of dollars)	2023		2022		2021
Components of net periodic benefit cost:
Service cost	$	6	$	9	$	10
Interest cost		13		10		9
Expected return on plan assets		(11)		(14)		(12)
Amortization		—		6		9
Settlement loss recognized		1		—		6
Net periodic benefit cost	$	9	$	11	$	22

The amounts not reflected in net periodic benefit cost and included in accumulated other comprehensive loss before taxes as of December 31, 2023 and 2022 were $2 million and $21 million, respectively. Such amounts primarily represent the cumulative unrecognized net actuarial gains and losses that are generally amortized over the average remaining working lifetime of the active participants for all of these plans.

Seaboard has defined contribution retirement programs for various groups of employees. Contribution expense for these programs was $9 million, $9 million and $4 million for the years ended December 31, 2023, 2022 and 2021, respectively. The increased cost in 2023 and 2022 was primarily due to match changes for a production plan and an increase in the rate of matching contributions for another plan.

Seaboard has deferred compensation plans that allow certain employees to reduce their compensation in exchange for values in various investments. One plan requires certain individuals to defer compensation over a specific threshold and another plan, which no longer allows contributions, has options that are exercisable. In conjunction with these plans,

Seaboard purchases investments that are classified as trading securities and included in other current assets, and recognizes the amount payable to employees in other current liabilities on the consolidated balance sheets. Investments for Seaboard’s deferred compensation plans were $22 million and $26 million as of December 31, 2023 and 2022, respectively. The amount payable to employees was $19 million and $23 million as of December 31, 2023 and 2022, respectively. Deferred compensation plan costs recognized in selling, general and administrative expenses are offset by the effect of the marked-to-market adjustments on investments recorded in other investment income (loss).