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Item 9A. Controls and Procedures

2024-03-06 compared with 2023-03-10 · 69 added, 46 removed, 167 unchanged (41% of the section changed)

9 unchanged sentences

Accordingly, even effective controls can provide only reasonable assurance with respect to financial statement preparation and presentation.

There were no significant changes in internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred

during the fourth quarter of 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Foster Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022.

In making this assessment, management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework (2013 Framework).

There were no significant changes in internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the fourth quarter of 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Foster Company’s management assessed the effectiveness of the Company’s internal control over financial reporting, including the 2022 acquisitions of VanHooseCo and Skratch, as of December 31, 2023.

In making this assessment, management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control -

Integrated Framework (2013 Framework).

Based on this assessment, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2023.

The SEC’s general guidance permits the exclusion of an assessment of the effectiveness of a registrant’s internal control over financial reporting for an acquired business during the first year following such acquisition, if among other circumstances and factors, there is not adequate time between the acquisition date and the date of the assessment.

As previously discussed in Part II, Item 8, Financial Statements and Supplementary Data, Note 3 to the Consolidated Financial Statements, the Company completed the acquisition of Skratch Enterprises Ltd.

(“Skratch”) on June 21, 2022 and VanHooseCo Precast LLC (“VanHooseCo”) on August 12, 2022.

These acquired businesses constituted approximately 17.9% of the Company’s consolidated assets as of December 31, 2022 and 4.2% of the Company’s consolidated net sales for the year ended December 31, 2022.

Management’s assessment and conclusion on the effectiveness of the Company’s disclosure controls and procedures and internal control over financial reporting at December 31, 2022 excluded an assessment of the internal control over financial reporting of the assets and businesses acquired in the Skratch and VanHooseCo acquisitions.

Ernst & Young LLP, the independent registered public accounting firm that also audited the Company’s consolidated financial statements, has issued an attestation report on the Company’s internal control over financial reporting.

8 unchanged sentences

Foster Company and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

As indicated in the accompanying Managements’ Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of VanHooseCo Precast LLC and Skratch Enterprises Ltd., which are included in the 2022 consolidated financial statements of the Company and constituted 17.9% of total assets as of December 31, 2022 and 4.2% of total net sales for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of VanHooseCo Precast LLC and Skratch Enterprises Ltd.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2022, and the related notes and the financial statement schedule listed in the Index at Item 15(a) and our report dated March 10, 2023 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated March 6, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

26 unchanged sentences

EXECUTIVE COMPENSATION

The information required by this Item regarding executive compensation is incorporated herein by reference to the information included in the Proxy Statement under the captions “Director Compensation - 2022,” “Executive Compensation,” “Summary Compensation Table (2022, 2021, and 2020),” “Grants of Plan-Based Awards in 2022,” “Outstanding Equity Awards At 2022 Fiscal Year-End,” “2022 Options Exercises and Stock Vested Table,” “2022 Nonqualified Deferred Compensation,” “Change-In-Control,” “Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report.”

The information required by this Item regarding executive compensation is incorporated herein by reference to the information included in the Proxy Statement under the captions “Director Compensation - 2023,” “Executive Compensation,” “Summary Compensation Table (2023, 2022, and 2021),” “Grants of Plan-Based Awards in 2023,” “Outstanding Equity Awards At 2023 Fiscal Year-End,” “2023 Options Exercises and Stock Vested,” “2023 Non-Qualified Deferred Compensation,” “Change-In-Control,” “Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report.”

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item regarding the Company’s equity compensation plans is set forth in Part II, Item 5 of this Annual Report on Form 10-K under the caption “Securities Authorized for Issuance Under Equity Compensation Plans” and is incorporated herein by reference.

Equity Compensation Plans

Under the 2006 Omnibus Incentive Plan, as amended and restated in May 2018 (“Omnibus Plan”), and continuing under the 2022 Equity and Incentive Compensation Plan (“Equity and Incentive Plan”) approved by shareholders on June 2, 2022, since May 2018, at each annual meeting of shareholders, where non-employee directors were elected or reelected, as part of their compensation, the non-employee members of the Board of Directors (“Board”) have received annual awards of forfeitable restricted shares subject to a one-year vesting requirement from the date of the grant.

Prior to that date, such directors received fully-vested shares.

During 2023, pursuant to the Equity and Incentive Compensation Plan, the Company issued approximately 39,000 shares of the Company’s common stock for the annual non-employee director equity award, which shares vest on the one-year anniversary of the date of grant.

Commencing in 2020 and ending in December 2021, in addition to the annual restricted stock award, those non-employee directors serving on the Board Strategy Committee were awarded restricted shares on an annual basis subject to a one-year vesting requirement from the date of grant until that committee was disbanded in 2021.

During 2023, there were no non-employee directors who elected the option to receive fully-vested shares of the Company’s common stock in lieu of director cash compensation.

Through December 31, 2023, there were approximately 352,000 fully vested shares issued under the Omnibus Plan to all non-employee directors who were serving at the time of grant or on the date of vesting of the underlying award.

During the quarter ended June 30, 2017, the Nomination and Governance Committee and Board of Directors jointly approved the Deferred Compensation Plan for Non-Employee Directors under the Omnibus Plan, as amended and restated effective December 1, 2022 pursuant to the 2022 Equity and Incentive Compensation Plan, which permits non-employee directors of the Company to defer receipt of earned cash and/or stock compensation for service on the Board.

As of December 31, 2023, approximately 12,000 deferred share units were allotted to the accounts of non-employee directors pursuant to the Deferred Compensation Plan for Non-Employee Directors.

The Company grants eligible employees restricted stock and performance unit awards under the Omnibus Plan and Equity and Incentive Plans.

The forfeitable restricted stock awards generally time-vest ratably over a three-year period, unless indicated otherwise in the underlying restricted stock award agreement.

Performance unit awards are offered annually under separate three-year long-term incentive programs.

Performance units are subject to forfeiture and will be converted into common stock of the Company based upon the Company’s performance relative to performance measures and conversion multiples as defined in the underlying program.

Commencing in 2022, performance units may be earned annually and converted into performance restricted stock units which settle in common stock at the end of the three year program.

Since 2017, the Company has withheld shares of restricted stock for satisfaction of tax withholding obligations.

During 2023 and 2022, the Company withheld 24,886 and 27,636 shares, respectively, for this purpose.

The values of the shares withheld were $315 and $410 in 2023 and 2022, respectively.

The information required by this Item regarding the beneficial ownership of the Company is incorporated herein by reference to the information included in the Proxy Statement under the caption “Stock Ownership.”

12 unchanged sentences

Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022.

Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 2022 and 2021.

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2023 and 2022.

Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022.

30 unchanged sentences

Fields & Company, Inc.

dated September 24, 2021, is incorporated herein by reference to Exhibit 2.1 to the Quarterly Report of Form 10-Q for the quarter ended September 30, 2021, File no.

dated September 24, 2021, is incorporated herein by reference to Exhibit 2.1 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, File no.

0-10436, filed on November 3, 2021.

2.2 Asset Purchase Agreement between VanHooseCo Precast, LLC and CXT Incorporated.

dated August 12, 2022, is incorporated herein by reference to Exhibit 2.1 to the Quarterly Report of Form 10-Q for the quarter ended September 30, 2022, File no.

dated August 12, 2022, is incorporated herein by reference to Exhibit 2.1 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, File no.

0-10436, filed on November 8, 2022.

1 unchanged sentence

0-10436, filed on May 13, 2003.

3.2 Bylaws of the Company, incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, File No.

0-10436, filed on November 8, 2012.

3.2 Amended and Restated Bylaws of the Company, incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, File No.

0-10436, filed on August 8, 2023.

*4.1 Description of Capital Stock of L.B.

14 unchanged sentences

0-10436, filed on March 16, 2011.

10.8 ** Executive Annual Incentive Compensation Plan (as Amended and Restated), incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report of Form 10-Q for the quarter ended March 31, 2018, File no.

10.8 ** Executive Annual Incentive Compensation Plan (as Amended and Restated), incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, File no.

0-10436, filed on May 2, 2018.

10.9 ** Amended and Restated 2006 Omnibus Incentive Plan, effective as of May 24, 2018, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report of Form 10-Q for the quarter ended June 30, 2018, File no.

10.9 ** Amended and Restated 2006 Omnibus Incentive Plan, effective as of May 24, 2018, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report o n Form 10-Q for the quarter ended June 30, 2018, File no.

0-10436, filed on July 31, 2018.

10.11 ** 2020 Executive Annual Incentive Compensation Plan, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report of Form 10-Q for the quarter ended March 31, 2020, File no.

0-10436, filed on May 6, 2020.

10.12 ** Form of Restricted Stock Award Agreement (2020), incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report of Form 10-Q for the quarter ended March 31, 2020, File no.

0-10436, filed on May 6, 2020.

10.13 ** Long Term Incentive Performance Share Unit Program (2020-2022), incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report of Form 10-Q for the quarter ended March 31, 2020, File no.

0-10436, filed on May 6, 2020.

10.14 ** Form of Performance Share Unit Award Agreement (2020-2022), incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report of Form 10-Q for the quarter ended March 31, 2020, File no.

0-10436, filed on May 6, 2020.

10.15 ** 2021 Executive Annual Incentive Compensation Plan, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report of Form 10-Q for the quarter ended March 31, 2021, File no.

10.11 ** 2021 Executive Annual Incentive Compensation Plan, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report o n Form 10-Q for the quarter ended March 31, 2021, File no.