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Pension and Savings Plans | 12 Months Ended
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Dec. 31, 2022
Pension and Savings Plans [Abstract] |
Pension and Savings Plans | Pension and Savings Plans One of the Company’s subsidiaries, Peabody Investments Corp. (PIC), sponsors a defined benefit pension plan covering certain U.S. salaried employees and eligible hourly employees at certain PIC subsidiaries (the Peabody Plan). A subsidiary of PIC also has a defined benefit pension plan covering eligible employees who are represented by the UMWA under the Western Surface Agreement (the Western Plan and together with the Peabody Plan, the Pension Plans). Effective May 31, 2008, the Peabody Plan was frozen in its entirety for both participation and benefit accrual purposes. In 2020, the Company announced a program to offer a voluntary lump-sum pension payout to eligible active salaried employees and former salaried employees in the Peabody Plan which would settle the Company’s obligation to them. The program provided participants with a limited time opportunity to elect to receive a lump-sum settlement of their pension benefit or begin to receive their benefit in the form of a monthly annuity in December 2020. As part of this voluntary lump-sum program, the Company settled $51.6 million of its pension obligations for active salaried employees and former salaried employees in the Peabody Plan with an equal amount paid from plan assets. As a result, the Company recorded a settlement gain of $2.7 million during the year ended December 31, 2020, which was reflected in “Net periodic benefit credit, excluding service cost” on the consolidated statement of operations. In March 2022, PIC entered into a commitment agreement relating to the Peabody Plan with The Prudential Insurance Company of America (Prudential) and Fiduciary Counselors Inc., as independent fiduciary to the Peabody Plan. Under the commitment agreement, the Peabody Plan purchased a buy-in group annuity contract (GAC) from Prudential for approximately $500 million and Prudential will reimburse the Peabody Plan for benefit payments to be made to the Peabody Plan’s participants. The benefit obligation was not transferred to Prudential and the Peabody Plan continues to administer and pay the retirement benefits of Peabody Plan participants and is reimbursed by Prudential for the payment of all benefits covered by the GAC. The purchase of the GAC was funded directly by the Peabody Plan’s assets. There was no impact on the monthly retirement benefits paid to Peabody Plan participants and no material impact on contributions for the Peabody Plan in 2022 as a result of this transaction. As of December 31, 2022 the benefit obligation attributed to the Peabody Plan’s participants covered by the GAC is equal to the GAC value. In May 2022, the Board of Directors of PIC approved the termination of the Peabody Plan effective July 31, 2022. In June 2022, the Peabody Plan’s participants were notified of the Peabody Plan termination and the Peabody Plan filed an application with the Internal Revenue Service to request a determination as to the qualified status under §401(a) of the Internal Revenue Code of 1986 with respect to the amendment and termination of the Peabody Plan. As part of the plan termination process, benefits will be distributed to participants or transferred to an insurance company. Anticipated asset distribution, via voluntary lump sum payouts for active and deferred participants, is expected in the first half of 2023, following which participants not electing a lump sum and all participants in payment status will be transferred to a highly qualified insurance company. Net periodic pension cost (credit) included the following components:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
| (Dollars in millions)
Service cost for benefits earned | $ | 0.1 |  |  | $ | 0.2 |  |  | $ | 0.3 |
Interest cost on projected benefit obligation | 21.4 |  |  | 20.4 |  |  | 28.0 |
Expected return on plan assets | (23.8) |  |  | (22.9) |  |  | (29.7) |
Settlement | — |  |  | — |  |  | (2.7) |
Net actuarial loss (gain) | 20.6 |  |  | 12.7 |  |  | (25.6) |
Net periodic pension cost (credit) | $ | 18.3 |  |  | $ | 10.4 |  |  | $ | (29.7) |
The actuarial loss for all pension plans in 2022 was primarily due to actual returns on plan assets lower than expected returns for the year and the premium paid to Prudential to purchase the GAC, offset by the increase in the discount rate used to measure the benefit obligation. The actuarial loss for all pension plans in 2021 was primarily due to actual returns on plan assets lower than expected returns for the year, offset by the increase in the discount rate used to measure the benefit obligation. The actuarial gain for all pension plans in 2020 was primarily due to actual returns on plan assets exceeding the expected returns for the year and the favorable impact of updating the mortality base tables and improvement scales to those published by the Society of Actuaries, offset by the decline in the discount rate used to measure the benefit obligation. The following summarizes the change in benefit obligation, change in plan assets and funded status of the Pension Plans:
| December 31,
| 2022 |  | 2021
| (Dollars in millions)
Change in benefit obligation: |  |  |
Projected benefit obligation at beginning of period | $ | 751.7 |  |  | $ | 816.4 |
Service cost | 0.1 |  |  | 0.2 |
Interest cost | 21.4 |  |  | 20.4 |
Benefits paid | (55.1) |  |  | (55.9) |
Actuarial gain | (137.2) |  |  | (29.4) |
Projected benefit obligation at end of period | 580.9 |  |  | 751.7 |
Change in plan assets: |  |  |
Fair value of plan assets at beginning of period | 772.4 |  |  | 847.5 |
Actual return on plan assets | (134.0) |  |  | (19.2) |
Benefits paid | (55.1) |  |  | (55.9) |
Fair value of plan assets at end of period | 583.3 |  |  | 772.4 |
Funded status at end of period | $ | 2.4 |  |  | $ | 20.7 |
Amounts recognized in the consolidated balance sheets: |  |  |
Noncurrent asset (included in “Investments and other assets”) | $ | 9.9 |  |  | $ | 28.5 |
Noncurrent obligation (included in “Other noncurrent liabilities”) | (7.5) |  |  | (7.8) |
Net amount recognized | $ | 2.4 |  |  | $ | 20.7 |
The weighted-average assumptions used to determine the benefit obligations as of the end of each year were as follows:
| December 31,
| 2022 |  | 2021
Discount rate | 5.44 | % |  | 2.95 | %
Measurement date | December 31, 2022 |  | December 31, 2021
The weighted-average assumptions used to determine net periodic pension cost (credit) during each period were as follows:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Discount rate | 2.95 | % |  | 2.60 | % |  | 3.40 | %
Expected long-term return on plan assets | 3.20 | % |  | 2.80 | % |  | 3.60 | %
Measurement date | December 31, 2021 |  | December 31, 2020 |  | December 31, 2019
The expected rate of return on plan assets is determined by taking into consideration expected long-term returns associated with each major asset class based on long-term historical ranges, inflation assumptions and the expected net value from active management of the assets based on actual results. Effective January 1, 2023, the Company raised its expected rate of return on plan assets from 3.20% to 4.90% and 4.65% for the Peabody Plan and Western Plan; respectively, reflecting the impact of the Plans’ asset allocations and capital market expectations. As of December 31, 2022 and 2021, the accumulated benefit obligation for all plans was $580.9 million and $751.7 million, respectively, which was equal to the projected benefit obligation for those periods. As of December 31, 2022 and 2021, the plan assets for the Peabody Plan of $464.7 million and $611.6 million, respectively, exceeded the projected benefit obligation and accumulated benefit obligation for those periods of $454.8 million and $583.1 million, respectively. The projected benefit obligation and accumulated benefit obligation for the Western Plan as of December 31, 2022 and 2021, was $126.1 million and $168.6 million, respectively, which exceeded the plan assets of $118.6 million and $160.8 million, respectively, for those periods. Assets of the Pension Plans Assets of the PIC Master Trust (the Master Trust) are invested in accordance with investment guidelines established by the Peabody Plan Retirement Committee and the Peabody Western Plan Retirement Committee (collectively, the Retirement Committees) after consultation with outside investment advisors and actuaries. The asset allocation targets have been set with the expectation that the assets of the Master Trust will be managed with an appropriate level of risk to fund each Pension Plan’s expected liabilities. To determine the appropriate target asset allocations, the Retirement Committees consider the demographics of each Pension Plan’s participants, the funded status of each Pension Plan, the business and financial profile of the Company and other associated risk preferences. These allocation targets are reviewed by the Retirement Committees on a regular basis and revised as necessary. As a result of discretionary contributions made in recent years, the Pension Plans have become nearly fully funded and therefore, as of December 31, 2022 and 2021, the Master Trust investment portfolio reflected the Company’s target asset mix of 100% fixed income investments. Master Trust assets also include investments in various real estate holdings through limited partnerships representing approximately less than 1% of total Master Trust assets as of both December 31, 2022 and 2021. The Retirement Committees’ intention is to liquidate these real estate holdings when allowable per the terms of the limited partnership agreements. Generally, dissolution and liquidation of the limited partnerships is required before the Master Trust’s real estate holdings can be liquidated. Assets of the Master Trust are under management by third-party investment managers, which are selected and monitored by the Retirement Committees. Specific investment guidelines have been established by the Retirement Committees for each major asset class including performance benchmarks, allowable and prohibited investment types and concentration limits. In general, investment guidelines do not permit leveraging the assets held in the Master Trust. However, investment managers may employ various strategies and derivative instruments in establishing overall portfolio characteristics consistent with the guidelines and investment objectives established by the Retirement Committees for their portfolios. Fixed income investment guidelines only allow for exchange-traded derivatives if the investment manager deems the derivative vehicle to be more attractive than a similar direct investment in an underlying cash market or to manage the duration of the fixed income portfolio. A financial instrument’s level within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Following is a description of the valuation techniques and inputs used for investments measured at fair value, including the general classification of such investments pursuant to the valuation hierarchy. Corporate bonds. The Master Trust invests in corporate bonds for diversification and to provide a hedge to interest rate movements affecting liabilities. Investment types are predominantly investment-grade corporate bonds. Fair value for these securities is provided by a third-party pricing service that utilizes various inputs such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads and benchmark securities as well as other relevant economic measures. Corporate bonds are classified within the Level 2 valuation hierarchy since fair value inputs are derived prices in active markets and the bonds are not traded on a national securities exchange. U.S. government securities. The Master Trust invests in U.S. government securities for diversification and to provide a hedge to interest rate movements affecting liabilities. Investment types are predominantly U.S. government bonds, agency securities and municipal bonds. Fair value for these securities is provided by a third-party pricing service that utilizes various inputs such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads and benchmark securities as well as other relevant economic measures. If fair value is based on quoted prices in active markets and traded on a national securities exchange, U.S. government securities are classified within the Level 1 valuation hierarchy; otherwise, U.S. government securities are classified within the Level 2 valuation hierarchy. International government securities. The Master Trust invests in international government securities for diversification and to provide a hedge to interest rate movements affecting liabilities. Investment types are predominantly non-U.S. government bonds. Fair value for these securities is provided by a third-party pricing service that utilizes various inputs such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads and benchmark securities as well as other relevant economic measures. International government securities are classified within the Level 2 valuation hierarchy since fair value inputs are derived prices in active markets and the bonds are not traded on a national securities exchange. Asset-backed securities. The Master Trust invests in asset-backed securities for diversification and to provide a hedge to interest rate movements affecting liabilities. Investment types are predominately mortgage-backed securities. Asset-backed securities are classified within the Level 2 valuation hierarchy since fair value inputs are derived prices in active markets and the investments are not traded on a national securities exchange. Cash funds. The Master Trust invests in cash funds to manage liquidity resulting from payment of participant benefits and certain administrative fees. Investment vehicles primarily include a non-interest bearing cash fund with an earnings credit allowance feature, various exchange-traded derivative instruments consisting of futures and interest rate swap agreements used to manage the duration of certain liability-hedging investments. The non-interest bearing cash fund is classified within the Level 1 valuation hierarchy. Exchange traded derivatives, such as options and futures, for which market quotations are readily available, are valued at the last reported sale price or official closing price on the primary market or exchange on which they are traded and are classified within the Level 1 valuation hierarchy. Group annuity contract. The Master Trust invests in a buy-in GAC to provide a hedge to interest rate movements affecting liabilities. The GAC consists of a nonparticipating single premium group annuity contract. The initial value of the GAC was equal to the premium paid to secure the contract and is adjusted each reporting period to reflect the estimated fair value of the premium that would be paid for such a contract at that time. Since there are no observable inputs associated with the valuation, the GAC is classified within the Level 3 valuation hierarchy. Real estate interests. The Master Trust invests in real estate interests for diversification. Investments in real estate represent interests in several limited partnerships, which invest in various real estate properties. Interests in real estate are valued using various methodologies, including independent third party appraisals; fair value measurements are not developed by the Company. For some investments, little market activity may exist and determination of fair value is then based on the best information available in the circumstances. This involves a significant degree of judgment by taking into consideration a combination of internal and external factors. Accordingly, interests in real estate are classified within the Level 3 valuation hierarchy. Some limited partnerships issue dividends to their investors in the form of cash distributions that the Pension Plans invest elsewhere within the Master Trust. Private mutual funds. The Master Trust invests in mutual funds for growth and diversification. Investment vehicles include an institutional fund that holds a diversified portfolio of long-duration corporate fixed income investments (Corporate Bond Fund). The Corporate Bond Fund is not traded on a national securities exchange and is valued at NAV, the practical expedient to estimate fair value. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The inputs or methodologies used for valuing investments are not necessarily an indication of the risk associated with investing in those investments. The following tables present the fair value of assets in the Master Trust by asset category and by fair value hierarchy:
| December 31, 2022
| Level 1 |  | Level 2 |  | Level 3 |  | Total
| (Dollars in millions)
Corporate bonds | $ | — |  |  | $ | 67.2 |  |  | $ | — |  |  | $ | 67.2 |
U.S. government securities | 23.3 |  |  | 2.8 |  |  | — |  |  | 26.1 |
International government securities | — |  |  | 2.0 |  |  | — |  |  | 2.0 |
Asset-backed securities | — |  |  | 0.7 |  |  | — |  |  | 0.7 |
Cash funds | 9.8 |  |  | — |  |  | — |  |  | 9.8 |
Group annuity contract | — |  |  | — |  |  | 430.1 |  |  | 430.1 |
Real estate interests | — |  |  | — |  |  | 0.3 |  |  | 0.3 |
Total assets at fair value | $ | 33.1 |  |  | $ | 72.7 |  |  | $ | 430.4 |  |  | 536.2 |
Assets measured at net asset value practical expedient (1) |  |  |  |  |  |  |
Private mutual funds |  |  |  |  |  |  | 47.1 |
Total plan assets |  |  |  |  |  |  | $ | 583.3 |
| December 31, 2021
| Level 1 |  | Level 2 |  | Level 3 |  | Total
| (Dollars in millions)
Corporate bonds | $ | — |  |  | $ | 537.5 |  |  | $ | — |  |  | $ | 537.5 |
U.S. government securities | 125.2 |  |  | 22.5 |  |  | — |  |  | 147.7 |
International government securities | — |  |  | 15.5 |  |  | — |  |  | 15.5 |
Asset-backed securities | — |  |  | 3.3 |  |  | — |  |  | 3.3 |
Cash funds | 30.7 |  |  | — |  |  | — |  |  | 30.7 |
Real estate interests | — |  |  | — |  |  | 0.3 |  |  | 0.3 |
Total assets at fair value | $ | 155.9 |  |  | $ | 578.8 |  |  | $ | 0.3 |  |  | 735.0 |
Assets measured at net asset value practical expedient (1) |  |  |  |  |  |  |
Private mutual funds |  |  |  |  |  |  | 37.4 |
Total plan assets |  |  |  |  |  |  | $ | 772.4 |
(1) In accordance with Accounting Standards Update 2015-07, investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the tables are intended to permit reconciliation of the fair value hierarchy to the total value of assets of the plans. The table below sets forth a summary of changes in the fair value of the Master Trust’s Level 3 investments:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
| (Dollars in millions)
Balance, beginning of period | $ | 0.3 |  |  | $ | 1.2 |  |  | $ | 4.1 |
Realized gains | 0.1 |  |  | 0.9 |  |  | 1.6 |
Unrealized losses relating to investments still held at the reporting date | (68.8) |  |  | (0.6) |  |  | (2.1) |
Purchases, sales and settlements, net | 498.8 |  |  | (1.2) |  |  | (2.4) |
Balance, end of period | $ | 430.4 |  |  | $ | 0.3 |  |  | $ | 1.2 |
Contributions Annual contributions to the qualified plans are made in accordance with minimum funding standards and the Company’s agreement with the Pension Benefit Guaranty Corporation. Funding decisions also consider certain funded status thresholds defined by the Pension Protection Act of 2006 (generally 80%). As of December 31, 2022, the Company’s qualified plans are expected to be at or above the Pension Protection Act thresholds. The Company was not required to make any payments to its qualified pension plans in 2022 based on minimum funding requirements and did not make any discretionary contributions in 2022. Estimated Future Benefit Payments The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid in connection with the Company’s benefit obligation:
| Pension Benefits
| (Dollars in millions)
2023 | $ | 76.1 |
2024* | 11.1 |
2025* | 11.0 |
2026* | 10.8 |
2027* | 10.6 |
Years 2028-2032* | 49.6 |
*Estimated future benefit payments reflect Western Plan only as a result of Peabody Plan termination. Defined Contribution Plans The Company sponsors employee retirement accounts under three 401(k) plans for eligible U.S. employees. The Company matches voluntary contributions to each plan up to specified levels. In May 2020 the Company amended one of its plans to eliminate the formula for calculating matching contributions and provide the Company sole discretion in making any matching contributions. During the period May 2020 to December 2020 the Company suspended matching contributions due to challenging business conditions of COVID-19. In January 2021 the Company reinstated matching contributions. The expense for these plans was $20.1 million, $9.7 million and $9.6 million for the years ended December 31, 2022, 2021 and 2020, respectively. Discretionary contribution features in the plans allow for additional contributions from the Company. The Company granted discretionary contributions of $9.2 million during the year ended December 31, 2022. There were no discretionary contributions granted during the years ended December 31, 2021 and 2020. Discretionary contributions paid during the year ended December 31, 2022 were $4.0 million. There were no discretionary contributions paid during the years ended December 31, 2021 and 2020. Superannuation The Company makes superannuation contributions for eligible Australia employees in accordance with the employer contribution rate set by the Government of Australia. The expense related to these contributions was $18.8 million, $17.4 million and $20.5 million for the years ended December 31, 2022, 2021 and 2020, respectively. A performance contribution feature allows for additional discretionary contributions from the Company. The Company granted discretionary performance contributions of $1.6 million during the year ended December 31, 2022. There were no discretionary performance contribution granted for the years ended December 31, 2021 and 2020. There were no discretionary performance contributions paid during the years ended December 31, 2022, 2021 and 2020.

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