Kellogg (K) 11-KAnnual report of employee stock purchases

The financial statements of the Kellanova Savings and Investment Plan (the Plan) have been prepared in conformity with accounting principles generally accepted in the United States (GAAP). The accounts of the Plan are maintained on the accrual basis.

The Plan’s investments are stated at estimated fair value, except for the Plan's interest in guaranteed investment contracts which are stated at contract value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the market participants at the measurement date. See Note 6 for discussion.

The Plan’s interest in income/(loss) of the Kellanova Master Trust (Master Trust), formerly the Kellogg Company Master Trust, which consists primarily of the realized gains or losses on the fair value of the Master Trust investments, dividend and interest income, and the unrealized appreciation/(depreciation) on those investments, is included in the Statements of Changes in Net Assets Available for Benefits.

The Master Trust invests in synthetic guaranteed investment contracts and a separate account insurance contract, for which GSAM Stable Value, LLC is the investment manager. The Master Trust enters into a contract with an issuer to receive a rate of return based on underlying investments. For the synthetic contracts, the Master Trust acquires, retains title to and holds the underlying investments in a separately identified custody account. The underlying investments typically include portfolios of fixed income securities or units of fixed income collective trusts. The rate of return is based on a formula described within the terms of the contract (the crediting rate). The incremental value (if any) of the contract itself is based on i) issuer ratings as determined by credit ratings, which are published by rating agencies and ii) the present value of the change in each contract’s replacement cost. At December 31, 2023 and 2022, the present value of contract replacement cost approximates current contract cost.

Contract value is the relevant measurement attribute for that portion of the net assets available for benefits attributable to the fully benefit responsive guaranteed investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. Contract value, as reported to the Plan by GSAM Stable Value, LLC, represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value.

There are no reserves against contract value for credit risk of the contract issuers or otherwise. The crediting interest rate is based on a formula agreed upon with the issuers, but it may not be less than zero percent. Such interest rates are reviewed on a quarterly basis for resetting.

Certain events limit the ability of the Plan to transact at contract value with the issuer. Such events include the following: (1) amendments to the Plan documents (including complete or partial Plan termination or merger with another plan), (2) bankruptcy of the Plan Sponsor or other Plan Sponsor events (for example, divestitures or spin-offs of a subsidiary) that cause a significant withdrawal from the Plan, or (3) the failure of the Master Trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under the Employee Retirement Income Security Act of 1974 (ERISA). The Plan administrator does not believe that the occurrence of any such event, which would limit the Plan’s ability to transact at contract value with participants, is probable.

Except for the above, the guaranteed investment contracts do not permit the contract issuers to terminate the agreement prior to the scheduled maturity date at an amount different from contract value.

Net investment income/(loss) is allocated to participant accounts daily, in proportion to their respective account balances on that day.

Benefit payments to participants are recorded when paid.

Notes receivable from participants are recorded at net realizable value. Interest income is recorded on the accrual basis. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for credit losses has been recorded as of December 31, 2023 or 2022. Loans determined to be uncollectible are deemed distributed and recorded as participant withdrawals.

The Plan was established effective as of December 29, 1943. The Plan’s allocated share of the Master Trust net assets and investment activities is based upon the total of each individual participant’s share of the Master Trust. The Plan’s net interest in the Master Trust is equal to the net investment in the Master Trust held at The Northern Trust Company.

The following description of the Plan, formerly the Kellogg Company Savings & Investment Plan, is provided for general information purposes only. Participants should refer to the Plan document for a more comprehensive description of the Plan’s provisions. The Plan operates as a qualified defined contribution plan with a 401(k) feature and was established under Section 401(a) of the Internal Revenue Code.

The Plan is administered by the ERISA Finance Committee and the ERISA Administrative Committee appointed by Kellanova.

The ERISA Administrative Committee has appointed Fidelity Workspace Services, LLC to provide recordkeeping and financial advisory services to the Plan and participants.

Generally, all salaried employees and non-union hourly employees of the Company and its U.S. subsidiaries, and certain union hourly employees covered by a collective bargaining agreement, are eligible to participate in the Plan on the date of hire. Certain locations are subject to auto enrollment and annual re-enrollment into the Plan. Annual re-enrollment will occur if the participant contributes less than 5% of their eligible wages. Participants may opt-out of the annual re-enrollment before January 31, of any given year.

Subject to limitations prescribed by the Internal Revenue Service, participants may elect to contribute from 1% to 50% of their annual wages.  Participants were eligible to defer up to $22,500 in 2023 and $20,500 in 2022.  Participants who have attained age 50 before the end of the year are eligible to make catch-up contributions. 

Employer contributions held in Kellanova common stock fund can be transferred by a participant at any time to any other investment fund available under the Plan, except for transfers prohibited under the Company's Insider Trading Policy.

In addition to the Company contributions described above, employees hired, rehired or who became eligible for the Plan on or after January 1, 2010 , who are not covered by a collective bargaining agreement and who are not eligible to participate in the Kellanova Pension Plan (KPP) will receive a service-based, nonelective Company contribution (Retirement Contribution). In addition, those employees impacted by the freezing of the KPP as of December 31, 2018, will also receive the Retirement Contribution. The Retirement Contribution is made each pay period, and is based on the employee’s years of service with the Company, as follows:

The Retirement Contribution begins on the eligible employee’s date of hire.

Participant account balances are fully vested with regards to participant contributions and the Company matching contributions. The Retirement Contribution will become fully vested upon completion of three years of service. At December 31, 2023 and 2022 forfeited nonvested balances totaled $776,206 and $1,063,447, respectively. Consistent with the Plan document, amounts forfeited in 2023 and 2022 were used to pay administrative expenses of the Plan and reduce future Retirement Contributions. In 2023 and 2022, Retirement Contributions were reduced by $0 and $1,000,000 from forfeited nonvested accounts, respectively.

Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their account balance. Participants may have only one loan outstanding at any time. Loan transactions are treated as transfers between the Loan Fund and the other funds. Loan terms range from 12 to 60 months, except for principal residence loans, which must be repaid within 15 years. Interest is paid at a constant rate equal to one percent over the prime rate in the month the loan begins. Interest rates on loans held during year-ended December 31, 2023 and 2022 were 4.25%-9.5%, and 4.25%-8.0%, respectively. Principal and interest are paid ratably through payroll deductions. Loans determined to be uncollectible are deemed distributed and recorded as participant withdrawals.

Participants may request an in-service withdrawal of all or a portion of certain types of contributions under standard in-service withdrawal rules. The withdrawal of any participant contributions which were not previously subject to income tax is restricted by Internal Revenue Service regulations.

Participants who terminate employment may remain in the Plan or receive payment of their account balances. If the account balance is $5,000 or less, the terminated participant will receive the account balance in a lump sum. Otherwise, a participant's account balances may be received in a lump sum or installment payments. For any investment in Kellanova common stock, the participant can elect to receive that portion of their distribution in shares.

While the Company has expressed no intentions to do so, the Plan may be terminated at any time. In the event of Plan termination, participants will become fully vested in their accounts. After payment of all expenses, at the discretion of the employer, each participant and each beneficiary of a deceased participant will either (a) receive their entire accrued benefit as soon as reasonably possible, provided that the employer does not maintain or establish another defined contribution plan as of the date of termination, or (b) have an annuity

purchased through an insurance carrier on his behalf funded by the amount of his entire accrued benefit.

Certain investments held in the Master Trust are shares of Kellanova common stock and short term investment funds managed by The Northern Trust Company. The Northern Trust Company is the trustee as defined by the Plan and, therefore, these transactions, as well as participant loans, qualify as exempt party-in-interest transactions.

At December 31, 2023 and 2022, the Plan respectively held $47,157,826 invested in Kellanova common stock and $64,849,466 invested in Kellogg Company common stock through a unitized stock fund managed by the Trustee. Net purchases/(sales)/transitions of Kellanova Common stock was $17,691,640. The Plan held 843,460 units of Kellanova employer stock as of December 31, 2023, and received $2,558,534 of dividends. As of December 31, 2022, the plan held 911,577 units of employer stock and received $2,078,158 of dividends.

The Northern Trust Company charges an asset based fee and a flat account based fee which are paid to the trustee as compensation for services performed under the Master Trust agreement.

Fees paid during 2023 and 2022 for management and other services rendered by parties-in-interest were based on comparable rates for such services. The majority of such fees were paid by the Plan. An immaterial portion was returned to the Plan based on revenue sharing arrangements. The revenue sharing amounts received are used to pay the Plan’s administrative expenses.

The Plan’s assets are categorized using a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 2     Inputs to the valuation methodology include:

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Following is a description of the valuation methodologies used for assets measured at fair value.

The Plan has an interest in the net assets held in the Master Trust in which interests are determined on the basis of cumulative funds specifically contributed on behalf of the Plan adjusted for an allocation of income. Such income allocation is based on the Plan’s funds available for investment during the year.

Investments held by the Kellanova Master Trust and Plan at December 31, 2023 and 2022 are as follows: