Pension and Other Post Retirement Benefit Plans

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Pension and Other Post Retirement Benefit Plans

Note 10 — Pension and Other Post Retirement Benefit Plans

The Company maintains a U.S. defined benefit pension plan covering its former Chief Executive Officer (“U.S. Plan”) and a German defined benefit pension plan covering certain retired executive employees of the Company’s wholly owned subsidiary, Gentherm GmbH (“German Plan”).

The components of net periodic benefit cost for the Company’s defined benefit plans for the years ended December 31, 2022, 2021 and 2020 were as follows:

	U.S. Plan									German Plan
	Year Ended December 31,									Year Ended December 31,
	2022			2021			2020			2022			2021			2020
Net periodic benefit cost:
Service cost	$	—		$	—		$	—		$	—		$	—		$	—
Interest cost		56			42			85			92			91			88
Expected return on plan assets		—			—			—			(109	)		(120	)		(121	)
Amortization of prior service cost and actuarial loss		22			26			7			114			133			124
Net periodic benefit cost	$	78		$	68		$	92		$	97		$	104		$	91
Assumptions:
Discount rate		1.80	%		1.20	%		2.40	%		1.25	%		1.08	%		1.06	%
Long-term return on assets	N/A			N/A			N/A				2.90	%		2.90	%		3.10	%

A reconciliation of the change in benefit obligation and the change in plan assets for the years ended December 31, 2022 and 2021 is as follows:

	U.S. Plan						German Plan
	As of December 31,						As of December 31,
	2022			2021			2022			2021
Change in projected benefit obligation:
Balance at beginning of year	$	3,446		$	3,847		$	8,102		$	8,934
Interest cost		56			42			92			91
Paid pension distributions		(342	)		(342	)		(281	)		(310	)
Actuarial (gain) loss		(349	)		(101	)		(2,001	)		9
Exchange rate impact		—			—			(514	)		(622	)
Balance at end of year	$	2,811		$	3,446		$	5,398		$	8,102
Change in plan assets:
Balance at beginning of year		—			—			4,069			4,276
Actual return on plan assets		—			—			89			98
Contributions		—			—			—			310
Paid pension distributions		—			—			—			(310	)
Exchange rate impact		—			—			(240	)		(305	)
Balance at end of year	$	—		$	—		$	3,918		$	4,069
Underfunded Status	$	(2,811	)	$	(3,446	)	$	(1,480	)	$	(4,033	)
Balance sheet classification:
Other current liabilities	$	(342	)	$	(342	)	$	(314	)	$	(306	)
Pension benefit obligation		(2,469	)		(3,104	)		(1,166	)		(3,727	)
Accumulated other comprehensive loss (pre-tax):
Actuarial losses		205			575			965			3,288
Assumptions:
Discount rate		4.65	%		1.80	%		4.10	%		1.25	%

Pre-tax amounts included in AOCI that are expected to be recognized in net periodic benefit cost during the year ended December 31, 2023 are as follows:

	U.S Plan		German Plan
Actuarial losses	$	-	$	22

The accumulated benefit obligations were as follows:

	U.S. Plan				German Plan
	As of December 31,				As of December 31,
	2022		2021		2022		2021
Accumulated benefit obligation	$	2,811	$	3,446	$	5,398	$	8,102

Interest costs are recognized in Selling, general and administrative expenses in the consolidated statements of income and actuarial gains and losses are included the consolidated balance sheet as part of Accumulated other comprehensive loss within shareholders’ equity. Actuarial gains or losses are amortized to Selling, general and administrative expense in the consolidated statements of income based on the average future life of the Plan using the corridor method. Prior service cost is included in Selling, general and administrative expenses in the consolidated statements of income.

Plan assets – German Plan

Plan assets are comprised of Gentherm GmbH’s pension insurance policies and are pledged to the beneficiaries of the German Plan. A market valuation technique, based on observable underlying insurance charges, is used to determine the fair value of the pension plan assets (Level 2).

The expected return on plan assets assumption used to calculate Gentherm GmbH’s pension benefit obligation was determined using actual returns realized on plan assets in the prior year.

Contributions

We do not expect contributions to be paid to the U.S. Plan or the German Plan during the next fiscal year.

The schedule of future expected pension payments is as follows:

	Projected Pension Benefit Payments
Year	U.S Plan		German Plan
2023	$	342	$	311
2024		342		303
2025		342		294
2026		342		285
2027		342		274
2028-2031		1,710		2,732
Total	$	3,420	$	4,199

Defined contribution plans

The Company also sponsors defined contribution plans for eligible employees. On a discretionary basis, the Company matches a portion of the employee contributions and or makes additional discretionary contributions. Gentherm recognized costs of $1,984, $1,724 and $1,275 related to contributions to its defined contribution plans during the years ended December 31, 2022, 2021 and 2020, respectively.