Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures . The Company’s Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the year covered by this annual report. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that are filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and the information is accumulated and communicated to the Company’s Chief Executive Officer and Principal Financial Officer to allow timely decisions regarding required disclosure. Based on this evaluation, the Company’s Chief Executive Officer and Principal Financial Officer have concluded that these controls are effective as of the end of the year covered by this annual report.
Change in Internal Controls over Financial Reporting. During the fourth quarter ended December 31, 2023, there have been no changes in the Company’s internal control over financial reporting, identified in connection with our evaluation thereof, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
Design and Evaluation of Internal Control over Financial Reporting. Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we included a report of our management’s assessment of the design and effectiveness of our internal controls as part of this Annual Report on Form 10-K for the year ended December 31, 2023. Our independent registered public accounting firm also attested to, and reported on, our management’s assessment of the effectiveness of internal control over financial reporting. Our management’s report and our independent registered public accounting firm’s attestation report are set forth in Item 8 of this Annual Report on Form 10-K under the captions entitled “Management’s Responsibility for Financial Reporting” and “Report of Independent Registered Public Accounting Firm.”
87
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Crane Company
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Crane Company and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 26, 2024, expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Responsibility for Financial Reporting” appearing in Item 8. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Stamford, Connecticut
February 26, 2024
88
Item 9B. Other Information
None
Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
Not Applicable.
Part III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by Item 10 is incorporated by reference to the definitive proxy statement with respect to the 2024 Annual Meeting of Shareholders which the Company expects to file with the Commission pursuant to Regulation l4A on or about March 7, 2024 except that such information with respect to Executive Officers of the Registrant is included, pursuant to Instruction 3, paragraph (b) of Item 401 of Regulation S-K, under Part I. The Company’s Corporate Governance Guidelines, the charters of its Management Organization and Compensation Committee, its Nominating and Governance Committee and its Audit Committee and its Code of Ethics are available at www.craneco.com/governance. The information on our website is not part of this report.
Item 11. Executive Compensation
The information required by Item 11 is incorporated by reference to the definitive proxy statement with respect to the 2024 Annual Meeting of Shareholders which the Company expects to file with the Commission pursuant to Regulation 14A on or about March 7, 2024.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Except the information required by Section 201(d) of Regulation S-K which is set forth below, the information required by Item 12 is incorporated by reference to the definitive proxy statement with respect to the 2024 Annual Meeting of Shareholders which the Company expects to file with the Commission pursuant to Regulation 14A on or about March 7, 2024.
As of December 31, 2023: Number of securities to be issued upon exercise of outstanding options,
warrants and rights Weighted average
exercise price of
outstanding
options Number of securities
remaining available
for future issuance
under equity
compensation plans
(a) (b) (c)
Equity compensation plans approved by security holders:
Crane Company 2023 Stock Plan
2,188,718 a
$ 55.97 7,336,181
Equity compensation plans not approved by security holders — $ — —
Total 2,188,718 $ 55.97 7,336,181
a Includes 325,702 restricted share units (“RSUs”), 135,886 deferred stock units (“DSUs”) and 352,068 performance-based restricted share units (“PRSUs”), assuming the maximum potential payout percentage. Actual numbers of shares may vary, depending on actual performance. If the PRSUs included in this total vest at the target performance level as opposed to the maximum level, the aggregate awards outstanding would be 2,012,684. Column (b) does not take RSUs, PRSUs or DSUs into account because they do not have an exercise price.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by Item 13 is incorporated by reference to the definitive proxy statement with respect to the 2024 Annual Meeting of Shareholders which the Company expects to file with the Commission pursuant to Regulation 14A on or about March 7, 2024.
Item 14. Principal Accountant Fees and Services
The information required by Item 14 is incorporated by reference to the definitive proxy statement with respect to the 2024 Annual Meeting of Shareholders which the Company expects to file with the Commission pursuant to Regulation 14A on or about March 7, 2024.
89
Item 15. Exhibits and Financial Statement Schedules
(a) Consolidated Financial Statements:
Page
Number
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 )
Page 41
Consolidated Statements of Operations Page 43
Consolidated Statements of Comprehensive Income Page 44
Consolidated Balance Sheets Page 45
Consolidated Statements of Cash Flows Page 46
Consolidated Statements of Changes in Equity Page 48
Notes to Consolidated Financial Statements Page 49
(b) Exhibits
Exhibit No. Description
Exhibit 21 Subsidiaries of the Registrant .
Exhibit 23.1 Consent of Independent Registered Public Accounting Firm.
Exhibit 31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a).
Exhibit 31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a).
Exhibit 32.1 Certification of Chief Executive Officer pursuant to Rule13a-14(b) or 15d-14(b).
Exhibit 32.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or 15d-14(b).
Exhibit 97 Crane Company Incentive Compensation Clawback Policy (as adopted July 24, 2023).
Exhibit 101.INS Inline XBRL Instance Document
Exhibit 101.SCH Inline XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL Inline XBRL Taxonomy Calculation Linkbase Document
Exhibit 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
Exhibit 101.LAB Inline XBRL Taxonomy Label Linkbase Document
Exhibit 101.PRE Inline XBRL Taxonomy Presentation Linkbase Document
Exhibit 104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
90
Exhibits to Form 10-K — Documents incorporated by reference:
91
(2) Plan of Acquisition, Reorganization, Liquidation, or Succession
2.1
Separation and Distribution Agreement, dated as of April 3, 2023, by and between Crane Holdings, Co. and Crane Company (incorporated by reference to Exhibit 2.1 to Crane Company’s Current Report on Form 8-K filed on April 3, 2023).
2.2
Stock Purchase Agreement, dated as of August 12, 2022, by and among Crane Holdings, Co., Crane Company, Redco Corporation and Spruce Lake Liability Management Holdco LLC (incorporated by reference to Exhibit 2.1 to Crane Holdings, Co.'s Current Report on Form 8-K filed on August 15, 2022).
(3) Certificate of Incorporation and Bylaws:
3.1
Amended and Restated Certificate of Incorporation of Crane Company, dated as of March 28, 2023 (incorporated by reference to Exhibit 3.1 to Crane Company’s Current Report on Form 8-K filed on April 3, 2023).
3.2
Amended and Restated By-laws of Crane Company, dated as of March 28, 2023 (incorporated by reference to Exhibit 3.2 to Crane Company’s Current Report on Form 8-K filed on April 3, 2023).
(4) Instruments Defining the Rights of Security Holders:
4.1
Description of Crane Company’s capital stock registered under Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.1 to Crane Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2022).
(10) Material Contracts
10.1
Credit Agreement, dated as of March 17, 2023, by and among Crane Company, as borrower, CR Holdings, C.V., as a subsidiary borrower, the lenders and issuing banks party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents and arrangers party thereto (incorporated by reference to Exhibit 10.1 to Crane Company’s Current Report on Form 8-K filed on March 20, 2023).
10. 2
Incremental Facility and Amendment Agreement, dated as of October 3, 2023, among Crane Company, as borrower, the lenders and issuing banks party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and the other agents and arrangers party thereto (incorporated by reference to Exhibit 10.1 to Crane Company’s Current Report on Form 8-K filed on October 10, 2023).
10.3
Transition Services Agreement, dated as of April 3, 2023, by and between Crane Holdings, Co. and Crane Company (incorporated by reference to Exhibit 10.1 to Crane Company’s Current Report on Form 8-K filed on April 3, 2023).
10.4
Tax Matters Agreement, dated as of April 3, 2023, by and between Crane Holdings, Co. and Crane Company (incorporated by reference to Exhibit 10.2 to Crane Company’s Current Report on Form 8-K filed on April 3, 2023).
10.5
Employee Matters Agreement, dated as of April 3, 2023, by and between Crane Holdings, Co. and Crane Company (incorporated by reference to Exhibit 10.3 to Crane Company’s Current Report on Form 8-K filed on April 3, 2023).
10.6
Intellectual Property Matters Agreement, dated as of April 3, 2023, by and between Crane Holdings, Co. and Crane Company (incorporated by reference to Exhibit 10.4 to Crane Company’s Current Report on Form 8-K filed on April 3, 2023).
10.7
Form of Employment/Severance Agreement between Crane Company and its executive officers, which provides for the continuation of certain employee benefits upon a change in control (incorporated by reference to Exhibit 10.5 to Crane Company’s Registration Statement on Form 10 filed on December 15, 2022).
10.8
Form of Indemnification Agreement between Crane Company and each of its director and executive officers (incorporated by reference to Exhibit 10.6 to Crane Company’s Registration Statement on Form 10 filed on December 15, 2022).
10.9
Time-sharing Agreement dated January 31, 2014 between Crane Company and Max H. Mitchell (incorporated by reference to Exhibit 10.10 to Crane Company’s Registration Statement on Form 10 filed on December 15, 2022).
10.10
Amendment, dated August 31, 2017, to Time Sharing Agreement with M. Mitchell (incorporated by reference to Exhibit 10.11 to Crane Company’s Registration Statement on Form 10 filed on December 15, 2022).
10.11
Time-sharing Agreement, dated April 27, 2020 between Crane Company and James L.L. Tullis (incorporated by reference to Exhibit 10.12 to Amendment No. 1 to Crane Company’s Registration Statement on Form 10 filed on Januar y 24, 2023).
10.12
Offer Letter between Crane Company and Marijane Papanikolaou (incorporated by reference to Exhibit 10.3 to Crane Company’s Quarterly Report on Form 10-Q for its fiscal quarter ended March 31, 2023).
(iii) Management Contracts or Compensatory Plans, Contracts or Arrangements
(a)
Crane Company Annual Incentive Plan (incorporated by reference to Exhibit 10.1 to Crane Company’s Quarterly Report on Form 10-Q for its fiscal quarter ended March 31, 2023).
(b)
Crane Company 2023 Stock Incentive Plan (incorporated by reference to Exhibit 99.1 to Crane Company’s Current Report on Form 8-K filed on February 27, 2023).
(c)
Crane Company 2023 Stock Incentive Plan (incorporated by reference to Exhibit 4.3 to Crane Company’s Registration Statement on Form S-8, filed on April 3, 2023).
(d)
The Crane Co. Benefit Equalization Plan, effective February 25, 2008 (incorporated by reference to Exhibit 10.8 to Crane Company’s Registration Statement on Form 10 filed on December 15, 2022).
(e)
The Crane Co. Benefit Equalization Plan as amended effective January 1, 2013 (incorporated by reference to Exhibit 10.9 to Crane Company’s Registration Statement on Form 10 filed on December 15, 2022).
92
Item 16. Form 10-K Summary
Not applicable.
93
Part IV
Signatures
Pursuant to the requirements of Section l3 or l5 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CRANE COMPANY
(Registrant)
By /s/ MAX H. MITCHELL
Max H. Mitchell
President and Chief Executive Officer
Date 2/26/2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Officers
/s/ MAX H. MITCHELL /s/ RICHARD A. MAUE /s/ MARIJANE PAPANIKOLAOU
Max H. Mitchell President, Chief Executive Officer and Director Richard A. Maue Executive Vice President
Chief Financial Officer
(Principal Financial Officer)
Marijane Papanikolaou
Vice President, Controller
Chief Accounting Officer
(Principal Accounting Officer)
Date 2/26/2024 Date 2/26/2024 Date 2/26/2024
Directors
/s/ JAMES L.L. TULLIS /s/ MARTIN R. BENANTE /s/ SANJAY KAPOOR
James L.L. Tullis Martin R. Benante Sanjay Kapoor
Date 2/26/2024 Date 2/26/2024 Date 2/26/2024
/s/ RONALD C. LINDSAY /s/ ELLEN MCCLAIN /s/ CHARLES G. MCCLURE, JR.
Ronald C. Lindsay Ellen McClain Charles G. McClure, Jr.
Date 2/26/2024 Date 2/26/2024 Date 2/26/2024
/s/ JENNIFER M. POLLINO /s/ JOHN S. STROUP
Jennifer M. Pollino John S. Stroup
Date 2/26/2024 Date 2/26/2024
94