Employee Benefit Plans

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Employee Benefit Plans

Employee Benefit Plans

Defined Benefit Plans

We have a defined benefit pension plan which is frozen, that covers certain U.S. hourly and salary employees (the “Chart Plan”). The defined benefit plan provides benefits based primarily on the participants’ years of service and compensation. The Retirement Plan for Union Employees of Smithco Engineering Inc. (the “Hudson Plan”) merged into the Chart Plan as of February 28, 2021 (the “Hudson Plan merger”).

Following the Howden Acquisition, we assumed responsibility for approximately ten additional defined benefit plans outside of the United States, which are predominantly in Germany (the “Howden Plans”). Upon acquisition, we recognized a net liability on our consolidated balance sheet.

The components of net periodic pension income are as follows:

	U.S. Plans						International Plans
	Year Ended December 31,						Year Ended December 31,
	2023		2022		2021		2023
Interest cost	$	2.4	$	1.7	$	1.7	$	1.2
Service cost	$	—	$	—	$	—	$	0.7
Expected return on plan assets	(3.3)		(4.3)		(3.8)		(1.3)
Amortization of net loss	0.9		0.5		1.0		—
Total net periodic pension income	$	—	$	(2.1)	$	(1.1)	$	0.6

Each component of net periodic pension income is included in selling, general and administrative expenses in the consolidated statements of income. The other changes in plan assets and projected benefit obligations recognized in other comprehensive (loss) income are as follows:

	U.S. Plans				International Plans
	Year Ended December 31,				Year Ended December 31,
	2023		2022		2023
Net actuarial (gain) loss	$	(5.9)	$	1.7	$	0.1
Net amortization	(0.9)		(0.5)		—
Effect of foreign exchange rates	—		—		4.7
Total recognized in other comprehensive (loss) income	$	(6.8)	$	1.2	$	4.8

The changes in the projected benefit obligation and plan assets, the funded status of the plans and the amounts recognized in the consolidated balance sheets are as follows:

 

	U.S. Plans				International Plans
	December 31,				December 31,
	2023		2022		2023
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	50.0	$	63.5	$	—
Acquisition of Howden (1)	—		—		41.1
Interest cost	2.4		1.7		1.2
Service cost	—		—		0.7
Benefits paid	(3.1)		(3.0)		(2.0)
Actuarial (gains) losses	(1.2)		(12.2)		0.4
Foreign exchange rate impact	—		—		1.6
Projected benefit obligation at year end	48.1		50.0		43.0
Accumulated benefit obligation at year end	48.1		50.0		41.2
Change in plan assets:
Fair value of plan assets at beginning of year	49.1		61.9		—
Acquisition of Howden (1)	—		—		38.7
Actual return	8.0		(9.8)		1.6
Employer contributions	—		—		1.9
Benefits paid	(3.1)		(3.0)		(2.0)
Foreign exchange rate impact	—		—		1.6
Fair value of plan assets at year end	54.0		49.1		41.8
Funded status (Accrued pension asset (liability))	$	5.9	$	(0.9)	$	(1.2)
Amounts recognized on the consolidated balance sheet at December 31:
Non-current assets	$	5.9	$	—	$	5.8
Current liabilities	—		—		(0.3)
Non-current liabilities	—		(0.9)		(6.7)
Recognized accrued pension asset (liability)	$	5.9	$	(0.9)	$	(1.2)
Unrecognized actuarial loss recognized in accumulated other comprehensive loss	$	3.5	$	10.3	$	0.1

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(1)The 2023 changes in the projected benefit obligation and plan assets reflect the effect of the Howden Acquisition.

Non-current assets and current liabilities related to defined benefit plans are classified within other assets and accrued salaries, wages and benefits, respectively, in our consolidated balance sheets.

The estimated net periodic pension income for the Chart Plan that will be amortized from accumulated other comprehensive loss over the next fiscal year is $0.8. The estimated net periodic pension income for the Howden Plans that will be amortized from accumulated other comprehensive loss over the next fiscal year is not material.

Howden Plans with accumulated benefit obligations in excess of plan assets consist of the following:

	International Plans
	December 31,
	2023
Projected benefit obligation	$	6.7
Accumulated benefit obligation	5.7
Fair value of plan assets	0.3

Howden Plans with projected benefit obligations in excess of plan assets consist of the following:

	International Plans
	December 31,
	2023
Projected benefit obligation	$	10.2
Accumulated benefit obligation	8.4
Fair value of plan assets	3.4

The actuarial assumptions used in determining pension plan information are as follows: 

	U.S. Plans						International Plans
	Year Ended December 31,						Year Ended December 31,
	2023		2022		2021		2023
Assumptions used to determine the projected obligation at year end:
Discount rate	5.0	%	4.9	%	2.7	%	3.4	%
Rate of increase in compensation levels for active pension plans	—	%	—	%	—	%	4.1	%
Assumptions used to determine net periodic benefit cost:
Discount rate	4.9	%	2.7	%	2.4	%	3.4	%
Expected long-term weighted-average rate of return on plan assets	7.0	%	7.0	%	7.0	%	4.5	%
Rate of increase in compensation levels for active pension plans	—	%	—	%	—	%	4.1	%

U.S. Plans

The discount rate of the Chart Plan reflects the current rate at which the pension liabilities could be effectively settled at year end. In estimating this rate, we look to rates of return on high quality, fixed-income investments that receive one of the two highest ratings given by a recognized rating agency and the expected timing of benefit payments under the plan.

The expected return assumptions were developed using an averaging formula based upon the plans’ investment guidelines, mix of asset classes, historical returns of equities and bonds, and expected future returns. We employ a total return investment approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of short and long-term plan liabilities, plan funded status and corporate financial condition. The investment portfolio contains a diversified blend of equity

and fixed-income investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks, as well as growth, value, and small and large capitalizations. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements, and periodic asset/liability studies.

International Plans

In determining discount rates for the Howden Plans, we utilize the single discount rate equivalent to discounting the expected future cash flows from each plan using the yields at each duration from a published yield curve as of the measurement date. The expected long-term rate of return on plan assets was based on our investment policy target allocation of the asset portfolio between various asset classes and the expected real returns of each asset class over various periods of time that are consistent with the long-term nature of the underlying obligations of these plans.

Our primary investment objective for the defined benefit pension plan assets is to provide a source of retirement income for the plans’ participants and beneficiaries. The Chart Plan’s target allocations by asset category and fair values of the plan assets by asset class at December 31 are as follows:

		U.S. Plans
	Target Allocations by Asset Category	Fair Value
		Total				Level 2				Level 3
Plan Assets:		2023		2022		2023		2022		2023		2022
Equity funds	30%	$	16.5	$	35.0	$	16.5	$	35.0	$	—	$	—
Fixed income funds	62%	34.0		13.0		34.0		13.0		—		—
Other investments	8%	3.5		1.1		—		—		3.5		1.1
Total		$	54.0	$	49.1	$	50.5	$	48.0	$	3.5	$	1.1

The plan assets are primarily invested in pooled separate funds. The fair values of equity securities and fixed income securities held in pooled separate funds are based on net asset value of the units of the funds as determined by the fund manager. These funds are similar in nature to retail mutual funds, but are typically more efficient for institutional investors. The fair value of pooled funds is determined by the value of the underlying assets held by the fund and the units outstanding. The value of the pooled funds is not directly observable, but is based on observable inputs. As such, these plan assets are valued using Level 2 inputs. Certain plan assets in the other investments asset category are invested in a general investment account where the fair value is derived from the liquidation value based on an actuarial formula as defined under terms of the investment contract. These plan assets were valued using unobservable inputs and, accordingly, the valuation was performed using Level 3 inputs.

The following table represents changes in the fair value of plan assets categorized as Level 3 from the preceding table:

	U.S. Plans
Balance at December 31, 2021	$	2.0
Purchases, sales and settlements, net	(3.4)
Transfers, net	2.5
Balance at December 31, 2022	1.1
Purchases, sales and settlements, net	(2.9)
Transfers, net	5.3
Balance at December 31, 2023	$	3.5

The Howden Plans’ target allocations by asset category and fair values of the plan assets by asset class at December 31 are as follows:

		International Plans
	Target Allocations by Asset Category	Fair Value
		Total		Level 1		Level 2
Plan Assets:		2023		2023		2023
Cash and cash equivalents	0%	$	0.2	$	0.2	$	—
Insurance contracts	7%	2.9		—		2.9
Investments funds	93%	38.7		—		38.7
Total		$	41.8	$	0.2	$	41.6

The assets are invested with the goal of preserving principal while providing a reasonable real rate of return over the long term. Diversification of assets is achieved through strategic allocations to various asset classes in line with the investment guidelines of the plans. Actual allocations to each asset class vary due to periodic investment strategy changes, market value fluctuations, the length of time it takes to fully implement investment allocation positions, and the timing of benefit payments and contributions. The asset allocation is monitored and rebalanced as required, as frequently as on a quarterly basis in some instances. The plan assets are primarily invested in pooled separate funds. The fair values of equity securities and fixed income securities held in pooled separate funds are based on net asset value of the units of the funds as determined by the fund manager. These funds are similar in nature to retail mutual funds, but are typically more efficient for institutional investors. The fair value of pooled funds is determined by the value of the underlying assets held by the fund and the units outstanding. The value of the pooled funds is not directly observable, but is based on observable inputs. As such, these plan assets are valued using Level 2 inputs.

Our funding policy is to contribute at least the minimum funding amounts required by law. Based upon current actuarial estimates, we do not expect to contribute to our Chart Plan in the next five years. Expected contributions to our Howden Plans for the year ended December 31, 2024, related to plans as of December 31, 2023, are $2.5. The following benefit payments are expected to be paid by the plan in each of the next five years and in the aggregate for the subsequent five years:

	U.S. Plans		International Plans
2024	$	3.5	$	2.5
2025	3.6		2.2
2026	3.6		2.7
2027	3.6		2.2
2028	3.6		2.6
In aggregate during five years thereafter	17.5		12.6

Multi-Employer Plan

We contribute to a multi-employer plan for certain collective bargaining U.S. employees. The risks of participating in this multi-employer plan are different from a single employer plan in the following aspects:

(a)    Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers.

(b)    If a participating employer ceases contributing to the plan, the unfunded obligations of the plan may be inherited by the remaining participating employers.

(c)    If we choose to stop participating in the multi-employer plan, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

We have assessed and determined that the multi-employer plan to which we contribute is not significant to our financial statements. We do not expect to incur a withdrawal liability or expect to significantly increase our contribution over the remainder of the current contract period, which ends in February 2026. We made contributions to the bargaining unit supported multi-employer pension plan resulting in expense of $0.7, $0.6, and $0.5 for the years ended December 31, 2023, 2022, and 2021, respectively.

Defined Contribution Plans

The Company also sponsors defined contribution plans at various locations globally. Company contributions to the plans are based on employee contributions and include a Company match and discretionary contributions. Expenses under the plan totaled $18.2, $6.8, and $5.7 for the years ended December 31, 2023, 2022, and 2021, respectively.

Voluntary Deferred Income Plan

We provide additional retirement plan benefits to certain members of management under the Amended and Restated Chart Industries, Inc. Voluntary Deferred Income Plan. This is an unfunded plan. We recorded $0.6, $0.3, and $0.1 of expense associated with this plan for the years ended December 31, 2023, 2022, and 2021, respectively.