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EMPLOYEE BENEFIT PLANS | 12 Months Ended
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Sep. 30, 2021
Retirement Benefits [Abstract] |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS Griffon offers defined contribution plans to most of its U.S. employees. In addition to employee contributions to the plans, Griffon makes contributions based upon various percentages of compensation and/or employee contributions, which were $8,576 in 2021, $6,855 in 2020 and $7,097 in 2019. The Company also provides healthcare and life insurance benefits for certain groups of retirees through several plans. For certain employees, the benefits are at fixed amounts per retiree and are partially contributory by the retiree. The post-retirement benefit obligation was $1,678 and $1,833 as of September 30, 2021 and 2020. The accumulated other comprehensive income (loss) for these plans was $(118) and ($196) as of September 30, 2021 and 2020, respectively, and the 2021 and 2020 benefit expense was $35 and $46, respectively. It is the Company’s practice to fund these benefits as incurred. Griffon also has qualified and non-qualified defined benefit plans covering certain employees with benefits based on years of service and employee compensation. Over time, these amounts will be recognized as part of net periodic pension costs in the Consolidated Statements of Operations and Comprehensive Income (Loss). Griffon is responsible for overseeing the management of the investments of the qualified defined benefit plan and uses the services of an investment manager to manage these assets based on agreed upon risk profiles. The primary objective of the qualified defined benefit plan is to secure participant retirement benefits. As such, the key objective in this plan’s financial management is to promote stability and, to the extent appropriate, growth in the funded status. Financial objectives are established in conjunction with a review of current and projected plan financial requirements. The fair values of a majority of the plan assets were determined by the plans’ trustee using quoted market prices for identical instruments (level 1 inputs) as of September 30, 2021 and 2020. The fair value of various other investments was determined by the plan’s trustee using direct observable market corroborated inputs, including quoted market prices for similar assets (level 2 inputs). A small amount of plan assets are invested in private equity which consist primarily of investments in private companies which are valued using the net asset values provided by the underlying private investment companies as a practical expedient (level 3 inputs). The Clopay AMES Pension Plan and the AMES supplemental executive retirement plan are frozen to new entrants and participants in the plans no longer accrue benefits. The Company’s non-service cost components of net periodic benefit plan cost was a benefit of $907, $1,559 and $3,148 during 2021, 2020, and 2019 respectively. Griffon uses judgment to establish the assumptions used in determining the future liability of the plan, as well as the investment returns on the plan assets. The expected return on assets assumption used for pension expense was developed through analysis of historical market returns, current market conditions and past experience of plan investments. The long-term rate of return assumption represents the expected average rate of earnings on the funds invested, or to be invested, to provide for the benefits included in the benefit obligations. The assumption is based on several factors including historical market index returns, the anticipated long-term asset allocation of plan assets and the historical return. The discount rate assumption is determined by developing a yield curve based on high quality bonds with maturities matching the plans’ expected benefit payment stream. The plans’ expected cash flows are then discounted by the resulting year-by-year spot rates. A 10% change in the discount rate or return on assets would not have a material effect on the financial statements of Griffon. Net periodic costs (benefits) were as follows:
| Defined Benefits for the Years Ended September 30, |  | Supplemental Benefits for the Years Ended September 30,
| 2021 |  | 2020 |  | 2019 |  | 2021 |  | 2020 |  | 2019
Net periodic (benefits) costs: |  |  |  |  |  |  |  |  |  |  |
Interest cost | $ | 2,816 |  |  | $ | 4,267 |  |  | $ | 5,778 |  |  | $ | 162 |  |  | $ | 335 |  |  | $ | 503 |
Expected return on plan assets | (10,177) |  |  | (10,343) |  |  | (10,331) |  |  | — |  |  | — |  |  | — |
Amortization of: |  |  |  |  |  |  |  |  |  |  |
Prior service costs | — |  |  | — |  |  | — |  |  | — |  |  | 14 |  |  | 14 |
Actuarial loss | 5,776 |  |  | 3,769 |  |  | 630 |  |  | 516 |  |  | 399 |  |  | 258 |
Total net periodic (benefits) costs | $ | (1,585) |  |  | $ | (2,307) |  |  | $ | (3,923) |  |  | $ | 678 |  |  | $ | 748 |  |  | $ | 775 |
The tax benefits in 2021, 2020 and 2019 for the amortization of pension costs in Other comprehensive income (loss) were $270, $878 and $221, respectively. The weighted-average assumptions used in determining the net periodic (benefits) costs were as follows:
| Defined Benefits for the Years Ended September 30, |  | Supplemental Benefits for the Years Ended September 30,
| 2021 |  | 2020 |  | 2019 |  | 2021 |  | 2020 |  | 2019
Discount rate | 2.30 | % |  | 2.92 | % |  | 4.10 | % |  | 1.69 | % |  | 2.64 | % |  | 3.99 | %
Expected return on assets | 6.75 | % |  | 7.00 | % |  | 7.00 | % |  | — | % |  | — | % |  | — | %
Plan assets and benefit obligation of the defined and supplemental benefit plans were as follows:
| Defined Benefits at September 30, |  | Supplemental Benefits at September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Change in benefit obligation: |  |  |  |  |  |  |
Benefit obligation at beginning of fiscal year | $ | 183,003 |  |  | $ | 177,797 |  |  | $ | 16,070 |  |  | $ | 16,180 |
Interest cost | 2,816 |  |  | 4,267 |  |  | 162 |  |  | 335 |
Benefits paid | (10,743) |  |  | (10,747) |  |  | (1,936) |  |  | (1,939) |
Actuarial (gain) loss | (4,571) |  |  | 11,686 |  |  | 479 |  |  | 1,494 |
Benefit obligation at end of fiscal year | 170,505 |  |  | 183,003 |  |  | 14,775 |  |  | 16,070 |
Change in plan assets: |  |  |  |  |  |  |
Fair value of plan assets at beginning of fiscal year | 147,145 |  |  | 145,610 |  |  | — |  |  | — |
Actual return on plan assets | 23,199 |  |  | 4,261 |  |  | — |  |  | — |
Company contributions | 922 |  |  | 8,021 |  |  | 1,936 |  |  | 1,939 |
Benefits paid | (10,743) |  |  | (10,747) |  |  | (1,936) |  |  | (1,939) |
Fair value of plan assets at end of fiscal year | 160,523 |  |  | 147,145 |  |  | — |  |  | — |
Projected benefit obligation in excess of plan assets | $ | (9,982) |  |  | $ | (35,858) |  |  | $ | (14,775) |  |  | $ | (16,070) |
Amounts recognized in the statement of financial position consist of: |  |  |  |  |  |  |
Accrued liabilities | $ | — |  |  | $ | — |  |  | $ | (1,884) |  |  | $ | (1,891) |
Other liabilities (long-term) | (9,982) |  |  | (35,858) |  |  | (12,890) |  |  | (14,179) |
Total Liabilities | (9,982) |  |  | (35,858) |  |  | (14,774) |  |  | (16,070) |
Net actuarial losses | 38,296 |  |  | 61,666 |  |  | 7,662 |  |  | 7,700 |
Prior service cost | — |  |  | — |  |  | — |  |  | — |
Deferred taxes | (8,042) |  |  | (12,950) |  |  | (1,609) |  |  | (1,617) |
Total Accumulated other comprehensive loss, net of tax | 30,254 |  |  | 48,716 |  |  | 6,053 |  |  | 6,083 |
Net amount recognized at September 30, | $ | 20,272 |  |  | $ | 12,858 |  |  | $ | (8,721) |  |  | $ | (9,987) |
Accumulated benefit obligations | $ | 170,505 |  |  | $ | 183,003 |  |  | $ | 14,775 |  |  | $ | 16,070 |
Information for plans with accumulated benefit obligations in excess of plan assets: |  |  |  |  |  |  |
ABO | $ | 170,505 |  |  | $ | 183,003 |  |  | $ | 14,775 |  |  | $ | 16,070 |
PBO | 170,505 |  |  | 183,003 |  |  | 14,775 |  |  | 16,070 |
Fair value of plan assets | 160,523 |  |  | 147,145 |  |  | — |  |  | — |
Actuarial gains as of September 30, 2021 were primarily the result of the actual return on assets versus the expected return on assets. Actuarial gains also resulted from the increase in the discount rate and the change in the mortality assumption for valuing the Projected Benefit Obligation. Actuarial losses as of September 30, 2020 were primarily the result of the decrease in the discount rate. The weighted-average assumptions used in determining the benefit obligations were as follows:
| Defined Benefits at September 30, |  | Supplemental Benefits at September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Weighted average discount rate | 2.58 | % |  | 2.30 | % |  | 1.94 | % |  | 1.69 | %
Estimated future benefit payments to retirees, which reflect expected future service, are as follows:
For the years ending September 30, | Defined Benefits |  | Supplemental Benefits
2022 | $ | 10,909 |  |  | $ | 1,884 |
2023 | 10,902 |  |  | 1,765 |
2024 | 10,876 |  |  | 1,641 |
2025 | 10,803 |  |  | 1,513 |
2026 | 10,789 |  |  | 1,383 |
2027 through 2031 | 51,669 |  |  | 4,965 |
During 2022, Griffon expects to contribute $1,884 in payments related to Supplemental Benefits that will be funded from the general assets of Griffon. Griffon expects to contribute $953 to the Defined Benefit plan in 2022. The Clopay AMES Plan is covered by the Pension Protection Act of 2006. The Adjusted Funding Target Attainment Percent for the plan as of January 1, 2021 was 98.7%. Since the plan was in excess of the 80% funding threshold there were no plan restrictions. The expected level of 2022 catch up contributions is $198. The actual and weighted-average asset allocation for qualified benefit plans were as follows:
| At September 30, |  |
| 2021 |  | 2020 |  | Target
Cash and equivalents | 1.2 | % |  | 0.4 | % |  | — | %
Equity securities | 52.5 | % |  | 48.5 | % |  | 63.0 | %
Fixed income | 26.9 | % |  | 31.9 | % |  | 37.0 | %
Other | 19.4 | % |  | 19.2 | % |  | — | %
Total | 100.0 | % |  | 100.0 | % |  | 100.0 | %
The following is a description of the valuation methodologies used for plan assets measured at fair value: Government and agency securities – When quoted market prices are available in an active market, the investments are classified as Level 1. When quoted market prices are not available in an active market, the investments are classified as Level 2. Equity securities – The fair values reflect the closing price reported on a major market where the individual mutual fund securities are traded in equity securities. These investments are classified within Level 1 of the valuation hierarchy. Debt securities – The fair values are based on a compilation of primarily observable market information or a broker quote in a non-active market where the individual mutual fund securities are invested in debt securities. These investments are classified within Level 1 and Level 2 of the valuation hierarchy. Commingled funds – The fair values are determined using NAV provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the trust/entity, minus its liabilities, and then divided by the number of shares outstanding. These investments are generally classified within Level 2 or 3, as appropriate, of the valuation hierarchy and can be liquidated on demand. Interest in limited partnerships and hedge funds - One limited partnership investment is a private equity fund and the fair value is determined by the fund managers based on the net asset values provided by the underlying private investment companies as a practical expedient. These investments are classified within Level 2 of the valuation hierarchy. The following table presents the fair values of Griffon’s pension and post-retirement plan assets by asset category:
At September 30, 2021 | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total
Cash and equivalents | $ | 1,867 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,867 |
Government agency securities | 32,217 |  |  | 4,608 |  |  | — |  |  | 36,825 |
Debt instruments | 1,063 |  |  | 2,706 |  |  | — |  |  | 3,769 |
Equity securities | 84,129 |  |  | — |  |  | — |  |  | 84,129 |
Commingled funds | — |  |  | — |  |  | 11,286 |  |  | 11,286 |
Limited partnerships and hedge fund investments | — |  |  | 19,823 |  |  | — |  |  | 19,823 |
Other Securities | 2,379 |  |  | 160 |  |  | — |  |  | 2,539 |
Subtotal | $ | 121,655 |  |  | $ | 27,297 |  |  | $ | 11,286 |  |  | $ | 160,238 |
Accrued income and plan receivables |  |  |  |  |  |  | 285 |
Total |  |  |  |  |  |  | $ | 160,523 |
At September 30, 2020 | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total
Cash and equivalents | $ | 600 |  |  | $ | — |  |  | $ | — |  |  | $ | 600 |
Government and agency securities | 33,675 |  |  | 6,136 |  |  | — |  |  | 39,811 |
Debt instruments | 179 |  |  | 2,722 |  |  | — |  |  | 2,901 |
Equity securities | 68,987 |  |  | — |  |  | — |  |  | 68,987 |
Commingled funds | — |  |  | — |  |  | 9,362 |  |  | 9,362 |
Limited partnerships and hedge fund investments | — |  |  | 17,867 |  |  | — |  |  | 17,867 |
Other Securities | 2,488 |  |  | 163 |  |  | — |  |  | 2,651 |
Subtotal | $ | 105,929 |  |  | $ | 26,888 |  |  | $ | 9,362 |  |  | $ | 142,179 |
Accrued income and plan receivables |  |  |  |  |  |  | 4,966 |
Total |  |  |  |  |  |  | $ | 147,145 |
The following table represents level 3 significant unobservable inputs for the years ended September 30, 2021 and 2020:
| Significant Unobservable Inputs (Level 3)
As of October 1, 2020 | $ | 8,776 |
Purchases, issuances and settlements | — |
Gains and losses | 586 |
As of September 30, 2020 | 9,362 |
Purchases, issuances and settlements | — |
Gains and losses | 1,924 |
As of September 30, 2021 | $ | 11,286 |
Griffon has an ESOP that covers substantially all domestic employees. All U.S. employees of Griffon, who are not members of a collective bargaining unit, automatically become eligible to participate in the plan on the October 1 st following completion of one qualifying year of service (as defined in the plan). Securities are allocated to participants’ individual accounts based on the proportion of each participant’s aggregate compensation (not to exceed $290 for the plan year ended September 30, 2021), to the total of all participants’ compensation. Shares of the ESOP which have been allocated to employee accounts are charged to expense based on the fair value of the shares transferred and are treated as outstanding in determining earnings per share. Dividends paid on shares held by the ESOP are used to offset debt service on ESOP Loans. Dividends paid on shares held in participant accounts are utilized to allocate shares from the aggregate number of shares to be released, equal in value to those dividends, based on the closing price of Griffon common stock on the dividend payment date. Compensation expense under the ESOP was $3,678 in 2021, $2,878 in 2020 and $2,629 in 2019. The cost of the shares held by the ESOP and not yet allocated to employees is reported as a reduction of Shareholders’ Equity. The fair value of the unallocated ESOP shares as of September 30, 2021 and 2020 based on the closing stock price of Griffon’s stock was $45,571 and $40,217, respectively. The ESOP shares were as follows:
| At September 30,
| 2021 |  | 2020
Allocated shares | 3,322,355 |  |  | 3,301,448 |
Unallocated shares | 1,852,492 |  |  | 2,058,187 |
Total | 5,174,847 |  |  | 5,359,635 |

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- Definition The entire disclosure for an entity's employee compensation and benefit plans, including, but not limited to, postemployment and postretirement benefit plans, defined benefit pension plans, defined contribution plans, non-qualified and supplemental benefit plans, deferred compensation, share-based compensation, life insurance, severance, health care, unemployment and other benefit plans. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 712 -URI http://asc.fasb.org/topic&trid=2197446 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 710 -URI http://asc.fasb.org/topic&trid=2127225 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI http://asc.fasb.org/topic&trid=2235017 + Details
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