Key Takeaways
- • Eastman Kodak closed its in-house pension investment office and engaged investment consultant NEPC LLC to act as outsourced Chief Investment Officer and investment fiduciary for its U.S. pension plan, according to a company press release.
- • The Kodak Retirement Income Plan had $6.5 billion of global retirement assets as of June 30, 2023, with a funded status of 145%, per information provided to CIO last year.
- • The plan was overfunded by $1.2 billion as of December 31, 2022, a figure roughly three times Kodak's current market capitalization, according to the release.
- • Kodak shares surged 50% on Thursday after Bloomberg reported NEPC would take over management of the plan.
- • Excess pension assets returned to the employer would be subject to a 50% excise tax plus applicable federal and state income taxes, according to Milliman.
Summary
Kodak said, in conjunction with the committee, that it "has been exploring how it can best preserve and maximize the value of the pension over-funding" for the benefit of current and former employees and shareholders. Bloomberg reported on Wednesday that the closure of the investment office was driven by the plan's overfunded status. Kodak shares surged 50% on Thursday following Bloomberg's report that NEPC would take over the committee's responsibilities.
According to information provided to CIO last year, the plan held $6.5 billion of global retirement assets as of June 30, 2023, with a funded status of 145%. The release put the overfunding at $1.2 billion as of December 31, 2022, when U.S. plan assets were valued at $3.7 billion against benefit obligations of $2.5 billion. The plan returned an annualized 3.0%, 9.0% and 9.2% over the past one, five and 10 years, respectively, as of June 30, 2023. The investment office had been led since 2013 by CIO Thomas Mucha, who won the 2023 CIO Industry Innovation Award for corporate DB plans with less than $20 billion in assets. When Mucha joined, the plan's funded status was 91%.
According to Milliman, excess pension assets returned to the employer would generally be subject to a 50% excise tax, in addition to applicable federal and state income taxes. Kodak did not respond to requests for additional comment.
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