Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, these disclosure controls and procedures were effective in providing reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act). Our 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.
Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management conducted an assessment of the effectiveness of internal control over financial reporting as of December 31, 2023 based on the criteria established in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on this assessment, our management has concluded that our internal control over financial reporting was effective as of December 31, 2023.
The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by Ernst & Young LLP an independent registered public accounting firm, as stated in their report included in this Annual Report on Form 10-K. See “Report of Independent Registered Public Accounting Firm.”
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting that have occurred d uring the most recent completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
(c) Trading Plans
On November 15, 2023 , Mr. Christopher M. Hix , a member of the Company’s Board of Director s, adopted a trading plan intended to satisfy Rule 10b5-1(c) to sell up to 7,465 shares of Company common stock on March 1, 2024, subject to certain conditions, in order to satisfy certain tax obligations associated with the vesting of restricted stock units awarded to Mr. Hix in connection with his service as Chief Financial Officer of Enovis Corporation.
On December 7, 2023 , Ms. Michelle Campion , the Company’s Chief Human Resources Officer , adopted a trading plan intended to satisfy Rule 10b5-1(c) to sell up to 3,660 shares of Company common stock beginning on May 15, 2024, subject to certain conditions. On December 15, 2023 , Ms. Campion terminated the trading plan.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
102
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Information relating to our Executive Officers is set forth in Part I of this Form 10-K u nder the caption “Information About Our Executive Officers”. Additional information r egarding our Directors, Audit Committee and compliance with Section 16(a) of the Exchange Act, if necessary, is incorporated by reference to such information included in our 2024 Proxy Statement to be filed with the SEC within 120 days after the end of the fiscal year covered by this Form 10-K under the captions “Election of Directors,” “Board of Directors and its Committees - Audit Committee” and “Delinquent Section 16(a) Reports.”
As part of our system of corporate governance, our Board of Directors has adopted a code of ethics that applies to all employees, including our principal executive officer, our principal financial officer, principal accounting officer or other persons performing similar functions. A copy of the code of ethics is available on the Corporate Governance page of the Investor Relations section of our website at www.esabcorporation.com . We intend to satisfy any disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, a provision of our code of ethics by posting such information on our website at the address above.
Item 11. Executive Compensation
Information responsive to this item is incorporated by reference to such information included in our 2024 Proxy Statement under the captions “Executive Compensation,” “Director Compensation,” “Compensation Discussion and Analysis,” “Compensation Committee Report,” “Compensation Committee Interlocks and Insider Participation,” “CEO Pay Ratio Disclosure” and “Pay Versus Performance.”
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information responsive to this item is incorporated by reference to such information included in our 2024 Proxy Statement under the captions “Beneficial Ownership of Our Common Stock” and “Equity Compensation Plan Information.”
Item 13. Certain Relationships and Related Transactions and Director Independence
Information responsive to this item is incorporated by reference to such information included in our 2024 Proxy Statement under the captions “Certain Relationships and Related Person Transactions” and “Director Independence.”
Item 14. Principal Accountant Fees and Services
Information responsive to this item is incorporated by reference to such information included in our 2024 Proxy Statement under the captions “Independent Registered Public Accounting Firm Fees and Services” and “Audit Committee’s Pre-Approval Policies and Procedures.”
103
PART IV
Item 15. Exhibits and Financial Statement Schedules
(A) The following documents are filed as part of this report.
(1) Financial Statements. The financial statements are set forth under Part II, Item 8. “Financial Statements and Supplementary Data” of this report on Form 10-K.
(2) Schedules. An index of Exhibits and Schedules begins on page 104 of this report. Schedules other than those listed below have been omitted from this Annual Report because they are not required, are not applicable or the required information is included in the financial statements or the notes thereto.
(3) Exhibits. See exhibits listed under Part (B) below.
(B) Exhibits.
INDEX TO FINANCIAL STATEMENTS, SUPPLEMENTARY DATA AND FINANCIAL STATEMENT SCHEDULE
Schedule: Page Number in Form 10-K
Valuation and Qualifying Accounts 110
EXHIBIT INDEX
Exhibit
No.
Description
Location
2.1
Separation and Distribution Agreement, dated April 4, 2022, between Enovis Corporation and ESAB Corporation Incorporated by reference to Exhibit 2.1 to ESAB Corporation’s Form 8-K (File No. 001-41297) as filed with the SEC on April 8, 2022
3.1
Amended and Restated Certificate of Incorporation of ESAB Corporation Incorporated by reference to Exhibit 3.1 to ESAB Corporation’s Form 8-K (File No. 001-41297) as filed with the SEC on April 8, 2022
3.2
Amended and Restated Bylaws of ESAB Corporation Incorporated by reference to Exhibit 3.2 to ESAB Corporation’s Form 8-K (File No. 001-41297) as filed with the SEC on April 8, 2022
4.1
Description of Securities registered under Section 12 of the Exchange Act Incorporated by reference to Exhibit 4.1 to ESAB Corporation’s Annual Report on Form 10-K (File No. 001-41297) as filed with the SEC on March 7, 2023
10.1
Transition Services Agreement, dated April 4, 2022, between Enovis Corporation and ESAB Corporation Incorporated by reference to Exhibit 10.1 to ESAB Corporation’s Form 8-K (File No. 001-41297) as filed with the SEC on April 8, 2022
10.2
Tax Matters Agreement, dated April 4, 2022, between Enovis Corporation and ESAB Corporation Incorporated by reference to Exhibit 10.2 to ESAB Corporation’s Form 8-K (File No. 001-41297) as filed with the SEC on April 8, 2022
10.3
Employee Matters Agreement, dated April 4, 2022, between Enovis Corporation and ESAB Corporation Incorporated by reference to Exhibit 10.3 to ESAB Corporation’s Form 8-K (File No. 001-41297) as filed with the SEC on April 8, 2022
10.4
Intellectual Property Matters Agreement, dated April 4, 2022, between Enovis Corporation and ESAB Corporation Incorporated by reference to Exhibit 10.4 to ESAB Corporation’s Form 8-K (File No. 001-41297) as filed with the SEC on April 8, 2022
10.5
EBS License Agreement, dated April 4, 2022, between Enovis Corporation and ESAB Corporation Incorporated by reference to Exhibit 10.5 to ESAB Corporation’s Form 8-K (File No. 001-41297) as filed with the SEC on April 8, 2022
10.6
Stockholder’s and Registration Rights Agreement, dated April 4, 2022, between Enovis Corporation and ESAB Corporation Incorporated by reference to Exhibit 10.6 to ESAB Corporation’s Form 8-K (File No. 001-41297) as filed with the SEC on April 8, 2022
104
10.7
Registration Rights Agreement, dated March 17, 2022, among ESAB Corporation, Mitchell P. Rales and Steven M. Rales Incorporated by reference to Exhibit 10.7 to ESAB Corporation’s registration statement on Form S-1 (File No. 333-268325) as filed with the SEC on November 14, 2022
10.8
Credit Agreement, dated April 4, 2022, by and among ESAB Corporation, as the lead borrower, the other loan parties from time to time party thereto, including any designated subsidiary borrower party thereto pursuant to the terms thereof and certain subsidiaries of the Company identified therein, as guarantors, each of the lenders from time to time party thereto, Bank of America, N.A., as administrative agent, and the co-syndication agents, joint bookrunners and joint lead arrangers named therein Incorporated by reference to Exhibit 10.7 to ESAB Corporation’s Form 8-K (File No. 001-41297) as filed with the SEC on April 8, 2022
10.9
Amendment No. 2 to Credit Agreement, dated June 28, 2022 Incorporated by reference to Exhibit 10.1 to ESAB Corporation’s Form 8-K (File No. 001-41297) as filed with the SEC on June 28, 2022
10.10#
ESAB Corporation 2022 Omnibus Incentive Plan Incorporated by reference to Exhibit 10.8 to ESAB Corporation’s Form 8-K (File No. 001-41297) as filed with the SEC on April 8, 2022
10.11#
ESAB Corporation Annual Incentive Plan Incorporated by reference to Exhibit 10.9 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.12#
The ESAB Group, Inc. Excess Benefits Plan Incorporated by reference to Exhibit 10.10 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.13#
The ESAB Group, Inc. Nonqualified Deferred Compensation Plan Incorporated by reference to Exhibit 10.11 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.14#
ESAB Corporation Executive Officer Severance Plan Incorporated by reference to Exhibit 10.12 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.15#
Letter Agreement, effective as of May 15, 2016, between Colfax Corporation and Shyam Kambeyanda Incorporated by reference to Exhibit 10.13 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.16#
Letter Agreement, dated April 26, 2019, between Colfax Corporation and Kevin Johnson Incorporated by reference to Exhibit 10.14 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.17#
Letter Agreement, dated April 4, 2017, between Colfax Corporation and Olivier Biebuyck Incorporated by reference to Exhibit 10.15 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.18#
Letter Agreement, dated December 17, 2021, between ESAB Corporation and Kevin Johnson Incorporated by reference to Exhibit 10.17 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.19#
Letter Agreement, dated December 12, 2021, between ESAB Corporation and Olivier Biebuyck Incorporated by reference to Exhibit 10.18 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.20#
Letter Agreement, dated December 10, 2021, between ESAB Corporation and Curtis Jewell Incorporated by reference to Exhibit 10.20 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
105
10.21#
Letter Agreement, dated December 10, 2021, between ESAB Corporation and Michele Campion Incorporated by reference to Exhibit 10.21 to ESAB Corporation’s Annual Report on Form 10-K (File No. 001-41297) as filed with the SEC on March 7, 2023
10.22#
Employment Agreement, dated February 21, 2022, between ESAB Corporation and Shyam Kambeyanda Incorporated by reference to Exhibit 10.21 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.23#
Letter Agreement, dated December 12, 2022, between ESAB Corporation and Eleanor Lukens Filed herewith
10.24#
Letter Agreement, dated January 9, 2023, between ESAB Corporation and Olivier Biebuyck Filed herewith
10.2 5 #
Form of Change in Control Agreement, effective October 27, 2020 (Colfax) Incorporated by reference to Exhibit 10.22 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.2 6 #
Change in Control Agreement, dated October 30, 2020, between Colfax Corporation and Shyam Kambeyanda Incorporated by reference to Exhibit 10.23 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.2 7 #
Form of Change in Control Agreement, effective March 5, 2021 (ESAB) Incorporated by reference to Exhibit 10.24 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.2 8 #
Change in Control Agreement, dated March 5, 2021, between Colfax Corporation and Shyam Kambeyanda Incorporated by reference to Exhibit 10.25 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.2 9 #
Change in Control Agreement, dated March 5, 2021, between Colfax Corporation and Olivier Biebuyck Incorporated by reference to Exhibit 10.27 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10. 3 0 #
Change in Control Agreement, dated March 5, 2021, between Colfax Corporation and Curtis Jewell Incorporated by reference to Exhibit 10.28 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10 .31 #
Retention Agreement, dated March 5, 2021, between Colfax Corporation and Shyam Kambeyanda Incorporated by reference to Exhibit 10.29 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.3 2 #
Form of Retention Agreement, dated March 5, 2021 Incorporated by reference to Exhibit 10.30 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.3 3 #
Form of Change in Control Agreement, effective February 17, 2022 (ESAB) Incorporated by reference to Exhibit 10.31 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.3 4 #
Amended and Restated Retention Agreement, dated November 30, 2021, by and between Colfax Corporation and Kevin Johnson Incorporated by reference to Exhibit 10.32 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.3 5 #
Amended and Restated Retention Agreement, dated November 30, 2021, by and between Colfax Corporation and Olivier Biebuyck Incorporated by reference to Exhibit 10.33 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.3 6 #
Amended and Restated Retention Agreement, dated November 30, 2021, by and between Colfax Corporation and Curtis Jewell Incorporated by reference to Exhibit 10.36 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
106
10.3 7 #
Amended and Restated Retention Agreement, dated November 30, 2021, by and between Colfax Corporation and Michele Campion Incorporated by reference to Exhibit 10.35 to ESAB Corporation’s Annual Report on Form 10-K (File No. 001-41297) as filed with the SEC on March 7, 2023
10.3 8 #
Form of ESAB Corporation Officer Non-Qualified Stock Option Agreement Incorporated by reference to Exhibit 10.38 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.3 9 #
Form of ESAB Corporation Officer Performance Stock Unit Agreement Incorporated by reference to Exhibit 10.39 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10. 40 #
Form of ESAB Corporation Officer Restricted Stock Unit Agreement Incorporated by reference to Exhibit 10.40 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10. 41 #
Form of ESAB Corporation Outside Director Non-Qualified Stock Option Agreement Incorporated by reference to Exhibit 10.41 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
10.4 2 #
Form of ESAB Corporation Outside Director Restricted Stock Unit Agreement Incorporated by reference to Exhibit 10.42 to ESAB Corporation’s registration statement on Form 10-12B/A (File No. 001-41297) as filed with the SEC on March 11, 2022
Exhibit
No. Description Location
21.1
Subsidiaries of the Registrant Filed herewith
23.1
Consent of Ernst & Young LLP. Filed herewith
31.1
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 Filed herewith
31.2
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith
32.1
Certification of Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Filed herewith
32.2
Certification of Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Filed herewith
97.1
ESAB Corporation Clawback Policy Filed herewith
101.INS Inline XBRL Instance Document Filed herewith
101.SCH Inline XBRL Taxonomy Extension Schema Document Filed herewith
Exhibit
No. Description Location
101.CAL Inline XBRL Extension Calculation Linkbase Document Filed herewith
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Filed herewith
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Filed herewith
107
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith
104 Cover Page Interactive Data File - The cover page from this Annual Report on Form 10-K for the fiscal year ended December 31, 2022 is formatted in Inline XBRL (included as Exhibit 101) Filed herewith
# Indicates management contract or compensatory plan, contract or arrangement.
Item 16. Form 10-K Summary
None.
108
SIGNATURES
Pursuant to the requirements of Section 13 or 15(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 on February 29, 2024.
ESAB CORPORATION
By: /s/ SHYAM P. KAMBEYANDA
Shyam P. Kambeyanda
President and Chief Executive Officer
Pursuant to the requirements of Section 13 or 15(d) 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 date indicated.
Date: February 29, 2024
/s/ SHYAM P. KAMBEYANDA
Shyam P. Kambeyanda
President, Chief Executive Officer and Director
(Principal Executive Officer)
/s/ KEVIN JOHNSON
Kevin Johnson
Chief Financial Officer
(Principal Financial Officer)
/s/ RENATO NEGRO
Renato Negro
Chief Accounting Officer
(Principal Accounting Officer)
/s/ MITCHELL P. RALES
Mitchell P. Rales
Chairman of the Board
/s/ PATRICK W. ALLENDER
Patrick W. Allender
Director
/s/ MELISSA CUMMINGS
Melissa Cummings
Director
/s/ CHRISTOPHER M. HIX
Christopher M. Hix
Director
/s/ RHONDA L. JORDAN
Rhonda L. Jordan
Director
/s/ ROBERT S. LUTZ
Robert S. Lutz
Director
/s/ STEPHANIE M. PHILLIPPS
Stephanie M. Phillipps
Director
/s/ DIDIER TEIRLINCK
Didier Teirlinck
Director
/s/ RAJIV VINNAKOTA
Rajiv Vinnakota
Director
109
Schedule II - Valuation and Qualifying Accounts
Balance at
Beginning
of Period Charged to Cost and
Expense (1)
Write-Offs Write-Downs
Deductions and Other (2)
Foreign
Currency
Translation Balance at
End of
Period
(Dollars in thousands)
Year Ended December 31, 2023:
Allowance for credit losses $ 23,471 $ 3,902 $ ( 2,289 ) $ 393 $ 25,477
Valuation allowance for deferred tax assets 88,202 ( 12,283 ) — 3,436 79,355
Year Ended December 31, 2022:
Allowance for credit losses $ 23,912 $ 4,526 $ ( 4,978 ) $ 11 $ 23,471
Valuation allowance for deferred tax assets (2)
15,465 4,503 68,876 ( 642 ) 88,202
Year Ended December 31, 2021:
Allowance for credit losses $ 32,311 $ ( 494 ) $ ( 6,931 ) $ ( 974 ) $ 23,912
Valuation allowance for deferred tax assets 12,647 3,738 — ( 920 ) 15,465
(1) Amounts charged to expense are net of recoveries for the respective period.
(2) As of December 31, 2022, valuation allowance for deferred tax assets “Other” of $ 68.9 million is primarily due to valuation allowance transferred from Former Parent.
110