Of the DSUs outstanding as at December 31, 2023, 143,000 (2022 166,000) entitle the holder to receive
common shares, 913,000 (2022 977,000) entitle the holder to receive payment in cash and 907,000 (2022 1,230,000) entitle the holder to receive payment in cash or common shares, at the option of the holder.
Compensation expense related to DSUs was $9 for the year ended December 31, 2023 (2022 $7).
The carrying and fair value of the DSUs liability as at December 31, 2023 was $62 (2022 $53) and was included in other liabilities.
(c) Restricted share units and performance share units
For the year ended December 31, 2023, 8.5 million RSUs (2022 8.6 million) and 1.6 million PSUs (2022 1.7 million) were granted to certain eligible
employees under MFCs Restricted Share Unit Plan. The fair value of the RSUs and PSUs granted during the year was $29.28 per unit as at December 31, 2023 (2022 $24.15 per unit). Each RSU and PSU entitles the holder to receive
payment equal to the market value of one common share, plus credited dividends, at the time of vesting, subject to any performance conditions.
RSUs and PSUs granted
in March 2023 will vest after 36 months from their grant date and the related compensation expense is recognized over this period, unless the employee is eligible to retire at the time of grant or will be eligible to retire during the vesting
period, in which case the cost is recognized at the grant date or over the period between the grant date and the date on which the employee is eligible to retire, respectively. Compensation expense related to RSUs and PSUs was $207 and $45,
respectively, for the year ended December 31, 2023 (2022 $158 and $23, respectively).
The carrying and fair value of the RSUs and PSUs liability as at
December 31, 2023 was $514 (2022 $388) and was included in other liabilities.
(d) Global share ownership plan
The Companys Global Share Ownership Plan allows qualifying employees to apply up to five per cent of their annual base earnings toward the purchase of common
shares. The Company matches a percentage of the employees eligible contributions up to a maximum amount. The Companys contributions vest immediately. All contributions are used to purchase common shares in the open market on behalf of
participating employees.
Note 16 Employee Future Benefits
The Company maintains defined contribution and defined benefit pension plans and other post-employment plans for employees and agents including registered (tax-qualified)
pension plans that are typically funded, as well as supplemental non-registered (non-qualified) pension plans for executives, retiree welfare plans and disability welfare plans that are typically not funded.
(a) Plan characteristics
The Companys final
average pay defined benefit pension plans and retiree welfare plans are closed to new members. All employees may participate in capital accumulation plans including defined benefit cash balance plans, 401(k) plans and/or defined contribution plans,
depending on the country of employment.
All pension arrangements are governed by local pension committees or management, but significant plan changes require
approval from the Companys Board of Directors.
The Companys funding policy for defined benefit pension plans is to make the minimum annual contributions
required by regulations in the countries in which the plans are offered. Assumptions and methods prescribed for regulatory funding purposes typically differ from those used for accounting purposes.
The Companys remaining defined benefit pension and/or retiree welfare plans are in the U.S., Canada, Japan and Taiwan (China). There are also disability welfare
plans in the U.S. and Canada.
The largest defined benefit pension and retiree welfare plans are the primary plans for employees in the U.S. and Canada. These are the
material plans that are discussed in the balance of this note. The Company measures its defined benefit obligations and fair value of plan assets for accounting purposes as at December 31 each year.
U.S. defined benefit pension and retiree welfare plans
The Company operates a
qualified cash balance plan that is open to new members, a closed non-qualified cash balance plan, and a closed retiree welfare plan.
Actuarial valuations to
determine the Companys minimum funding contributions for the qualified cash balance plan are required annually. Deficits revealed in the funding valuations must generally be funded over a period of up to seven years. It is expected that there
will be no required funding for this plan in 2024. No assets are held in the non-qualified cash balance plan.
The retiree welfare plan subsidizes the cost of life
insurance and medical benefits. The majority of those who retired after 1991 receive a fixed-dollar subsidy from the Company based on service. The plan was closed to all employees hired after 2004. While assets have been set aside in a qualified
trust to pay future retiree welfare benefits, this funding is optional. Retiree welfare benefits offered under the plan coordinate with the U.S. Medicare program to make optimal use of available federal financial support.
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