Annual report pursuant to Section 13 and 15(d)

Employee Retirement Plans

Employee Retirement Plans
12 Months Ended
Dec. 31, 2022
Retirement Benefits [Abstract]  
Employee Retirement Plans Employee Retirement Plans
Defined Contribution Plan
The Company has a 401(k) defined contribution retirement plan (the 401(k) Plan) covering all eligible employees. Participants may voluntarily contribute on a pre-tax basis an amount not to exceed a maximum contribution amount pursuant to Section 401(k) of the Internal Revenue Code. The Company is not required to contribute, nor has it contributed, to the 401(k) Plan for any of the periods presented.
Pension and Other Defined Benefit Retirement Obligations
The Company maintains certain defined benefit retirement plans, including a pension plan, in foreign jurisdictions. As of December 31, 2022 and December 31, 2021, the defined benefit obligation was $1.7 million and $4.5 million, respectively. The benefit is based on a formula applied to eligible employee earnings. Net periodic benefit costs were $0.3 million, $0.5 million, and $0.2 million respectively for the years ended December 31, 2022, 2021, and 2020 respectively, and were recorded to research and development expenses in the consolidated statements of operations.
Benefit Obligation and Plan Assets for Pension Benefit Plans
The vested benefit obligation for a defined-benefit pension or other retirement plan is the actuarial present value of the vested benefits to which the employee is currently entitled based on the employee’s expected date of separation or retirement.
December 31, 2022 December 31, 2021
(in thousands)
Changes in projected benefit obligation:
Projected benefit obligation, beginning of period $ 9,733  $ 12,022 
Service cost 289  442 
Interest cost 79  66 
Actuarial (gain) loss (2,817) (1,794)
Benefits paid (124) (157)
Currency exchange rate changes (587) (845)
Projected benefit obligation, end of period 6,573  9,733 
Changes in fair value of plan assets:
Fair value of plan assets, beginning of period 5,198  5,634 
Actual return on plan assets (24)
Currency exchange rate changes (279) (439)
Fair value of plan assets, end of period 4,895  5,198 
Net unfunded status $ 1,678  $ 4,536 
Amounts recognized in the Consolidated Balance Sheets
Other long-term liabilities $ 1,678  $ 4,536 
Accumulated other comprehensive (income) loss, before tax $ (2,837) $ (1,724)
Changes in actuarial gains and losses in the projected benefit obligation are primarily driven by discount rate movement. The Company uses the corridor approach to amortize actuarial gains and losses. Under this approach, net actuarial gains or losses in excess of 10% of the larger of the projected benefit obligation or the fair value of plan assets are amortized on a straight-line basis.
As of December 31, 2022 and December 31, 2021, all plans had accumulated benefit obligations and projected benefit obligations in excess of plan assets. As of December 31, 2022 and December 31, 2021, the accumulated benefit obligations were $6.3 million and $9.2 million for the pension plans.
December 31, 2022 December 31, 2021
(in thousands)
Plans with accumulated benefit obligation in excess of plan assets
Accumulated benefit obligation $ 6,258  $ 9,211 
Plan assets $ 4,895  $ 5,198 
Plans with projected benefit obligation in excess of plan assets
Projected benefit obligation $ 6,573  $ 9,733 
Plan assets $ 4,895  $ 5,198 
Assumptions for Pension Benefit Plans
December 31, 2022 December 31, 2021
(in thousands)
Weighted average actuarial assumptions used to determine benefit obligations
Discount rate
3.5% - 3.9%
0.8% - 0.9%
Rate of compensation increase
3.0% - 3.8%
2.6% - 3.8%
Weighted average actuarial assumptions used to determine costs
Discount rate
3.5% - 3.9%
0.8%- 0.9%
Expected long-term rate of return on plan assets —  % —  %
Rate of compensation increase
3.0% - 3.8%
2.6% - 3.8%
The Company establishes the discount rate for each pension plan by analyzing current market long-term bond rates and matching the bond maturity with the average duration of the pension liabilities. The Company establishes the long-term expected rate of return by developing a forward-looking, long-term return assumption for each pension fund asset class, taking into account factors such as the expected real return for the specific asset class and inflation. A single, long-term rate of return is then calculated as the weighted average of the target asset allocation percentages and the long-term return assumption for each asset class.
Pension Plan Assets
The plan assets are currently all in liquid cash and cash equivalents and an investment strategy is being developed to ensure that sufficient assets are available to pay pension benefits as they come due.
Estimated Future Benefit Payments for Pension Benefit Plans
At December 31, 2022, the estimated benefit payments over the next five years and beyond are as follows:
Estimated Future Benefit Payments
(in thousands)
2023 $ 123 
2024 143 
2025 180 
2026 185 
2027 185 
Thereafter 346