Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the fiscal year covered by this Annual Report, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended. This evaluation was done under the supervision and with the participation of the Company’s President and Chief Executive Officer, the Chief Financial Officer and Treasurer, and the Executive Vice President, Corporate Controller and Information Systems. Based upon that evaluation, they concluded that the Company’s disclosure controls and procedures are effective.
Management’s Annual Report on Internal Control Over Financial Reporting
The information under the heading “Management’s Report on Internal Control Over Financial Reporting” in Part II, Item 8, of this 2021 Annual Report on Form 10-K is incorporated herein by reference.
Reports of Independent Registered Public Accounting Firm
The information under the headings “Reports of Independent Registered Public Accounting Firm” and “Opinion on Internal Control Over Financial Reporting” in Part II, Item 8, of this 2021 Annual Report on Form 10-K is incorporated herein by reference.
Changes in Internal Control Over Financial Reporting
During the fourth quarter, there was no change in the Company’s internal control over financial reporting that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.
Item 9B. Other Information
Not applicable.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information under the heading “Information About Our Executive Officers” in Part I of this 2021 Annual Report on Form 10-K and the information under the heading “Board of Directors” in our Company’s Proxy Statement for its 2022 Annual Meeting of Shareholders to be held on April 29, 2022 (the “Proxy Statement”), is incorporated herein by reference.
Audit Committee Members and Audit Committee Financial Expert
The information under the heading “Committees of the Board of Directors” in our Company’s Proxy Statement is incorporated herein by reference.
Corporate Governance Guidelines, Committee Charters and Code of Ethics
Our Company has adopted Corporate Governance Guidelines and Charters for each of the Audit, Governance, and Management Organization and Compensation Committees of the Board of Directors. We have also issued a Code of Ethics and Business Conduct (“Code of Ethics”) that applies to our principal executive officer, principal financial officer, principal accounting officer, all officers, directors, and employees of Graco Inc. and all of its subsidiaries, representative offices and branches worldwide. The Corporate Governance Guidelines, Committee Charters, and Code of Ethics, with any amendments or waivers thereto, may be accessed free of charge by visiting the Graco website at www.graco.com.
Our Company intends to post on the Graco website any amendment to, or waiver from, a provision of the Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer, controller and other persons performing similar functions within four business days following the date of such amendment or waiver.
Delinquent Section 16(a) Reports
The information under the heading “Delinquent Section 16(a) Reports” in our Company’s Proxy Statement is incorporated herein by reference.
Item 11. Executive Compensation
The information contained under the headings “Director Compensation,” “Executive Compensation,” “Compensation Committee Interlocks and Insider Participation” and “Report of the Management Organization and Compensation Committee” in the Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information contained under the headings “Equity Compensation Plan Information” and “Beneficial Ownership of Shares” in the Proxy Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information under the headings “Related Person Transaction Approval Policy” and “Director Independence” in the Proxy Statement is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
The information under the headings “Independent Registered Public Accounting Firm Fees and Services” and “Pre-Approval Policies” in the Proxy Statement is incorporated herein by reference.
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PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this report:
Page
(1) Financial Statements
35
(2) Financial Statement Schedule
Schedule II – Valuation and Qualifying Accounts
All financial statement schedules are omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes.
(3) Management Contract, Compensatory Plan or Arrangement. (See Exhibit Index)
63
Those entries marked by an asterisk are Management Contracts, Compensatory Plans or Arrangements.
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Exhibit Index
Exhibit
Number
Description
3.1 Restated Articles of Incorporation as amended December 8, 2017. (Incorporated by reference to Exhibit 3.1 to the Company’s Report on Form 8-K filed December 8, 2017.)
3.2 Restated Bylaws as amended February 14, 2014. (Incorporated by reference to Exhibit 3.2 to the Company’s 2013 Annual Report on Form 10-K.)
4.1 Description of Our Securities. (Incorporated by reference to Exhibit 4.1 to the Company’s 2019 Annual Report on Form 10-K.)
*10.1 Graco Inc. Incentive Bonus Plan. (Incorporated by reference to Exhibit 10.1 to the Company's Report on Form 8-K filed September 19, 2019.)
*10.2 Graco Inc. 2010 Stock Incentive Plan. (Incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed March 11, 2010.)
*10.3 Graco Inc. 2015 Stock Incentive Plan. ( Incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed March 11, 2015. )
*10.4 Graco Inc. 2019 Stock Incentive Plan. (Incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed March 13, 2019.)
*10.5 Deferred Compensation Plan (2005 Statement) as amended and restated on April 4, 2005. (Incorporated by reference to Exhibit 10.1 of the Company’s Report on Form 10-Q for the thirteen weeks ended July 1, 2005.) Second Amendment dated November 1, 2005. ( Incorporated by reference to Exhibit 10.8 to the Company’s 2005 Annual Report on Form 10-K. ) Third Amendment adopted on December 29, 2008. ( Incorporated by reference to Exhibit 10.8 to the Company’s 2008 Annual Report on Form 10-K .) Second Amendment dated October 25, 2012. ( Incorporated by reference to Exhibit 10.9 to the Company’s 2012 Annual Report on Form 10-K.)
*10.6 Graco Restoration Plan (2005 Statement). ( Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 10-Q for the thirteen weeks ended September 29, 2006.) First Amendment adopted December 8, 2006. ( Incorporated by reference to Exhibit 10.12 to the Company’s 2006 Annual Report on Form 10-K .) Second Amendment adopted August 15, 2007. ( Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 10-Q for the thirteen weeks ended September 28, 2007. ) Third Amendment adopted March 27, 2008. ( Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 10-Q for the thirteen weeks ended March 28, 2008 .) Fourth Amendment adopted December 29, 2008. (Incorporated by reference to Exhibit 10.11 to the Company’s 2008 Annual Report on Form 10-K. ) Fifth Amendment adopted September 16, 2010. ( Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 10-Q for the thirteen weeks ended September 24, 2010. ) Sixth Amendment adopted February 15, 2018 ( Incorporated by reference to Exhibit 10.7 to the Company’s 2017 Annual Report on Form 10-K. ) Seventh Amendment adopted December 6, 2018. ( Incorporated by reference to Exhibit 10.6 to the Company’s 2018 Annual Report on Form 10-K. )
*10.7 Graco Inc. Retirement Plan for Non-Employee Directors. ( Incorporated by reference to Exhibit 10.7 to the Company’s 2018 Annual Report on Form 10-K. ) (Initially filed by the Company in paper form as Attachment C to Item 5 to the Company’s Report on Form 10-Q for the thirteen weeks ended March 29, 1991.) First Amendment adopted on December 29, 2008. ( Incorporated by reference to Exhibit 10.10 to the Company’s 2008 Annual Report on Form 10-K.)
*10.8 Form of Amendment to Executive Officer and Non-Employee Director Stock Options to Permit Net Exercises, as adopted by the Board of Directors February 17, 2012. ( Incorporated by reference to Exhibit 10.1 of the Company’s Report on Form 10-Q for the thirteen weeks ended March 30, 2012 .)
*10.9 Stock Option Agreement. Form of agreement used for award of non-incentive stock options to nonemployee directors under the Graco Inc. 2010 Stock Incentive Plan in 2011. ( Incorporated by reference to Exhibit 10.16 to the Company’s 2010 Annual Report on Form 10-K .) Amended form of agreement for awards made to nonemployee directors commencing in 2012 (and subsequently used for awards made to nonemployee directors under the Graco Inc. 2015 Stock Incentive Plan in 2015). ( Incorporated by reference to Exhibit 10.4 of the Company’s Report on Form 10-Q for the thirteen weeks ended March 30, 2012 .)
*10.10 Stock Option Agreement. Form of agreement used for award of non-incentive stock options to executive officers under the Graco Inc. 2010 Stock Incentive Plan in 2011. (Incorporated by reference to Exhibit 10.4 to the Company’s Report on Form 10-Q for the thirteen weeks ended April 1, 2011 .) Amended form of agreement for awards made to executive officers commencing in 2012. ( Incorporated by reference to Exhibit 10.3 of the Company’s Report on Form 10-Q for the thirteen weeks ended March 30, 2012 .)
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*10.11 Stock Option Agreement. Form of agreement used for award of non-incentive stock options to Chief Executive Officer under the Graco Inc. 2010 Stock Incentive Plan in 2011. ( Incorporated by reference to Exhibit 10.3 to the Company’s Report on Form 10-Q for the thirteen weeks ended April 1, 2011 .) Amended form of agreement for awards made to Chief Executive Officer commencing in 2012. ( Incorporated by reference to Exhibit 10.2 of the Company’s Report on Form 10-Q for the thirteen weeks ended March 30, 2012 .)
*10.12 Stock Option Agreement. Form of agreement used for award of non-incentive stock options to nonemployee directors under the Graco Inc. 2015 Stock Incentive Plan commencing in 2016. ( Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 10-Q for the thirteen weeks ended June 24, 2016. )
*10.13 Stock Option Agreement. Form of agreement used for award of non-incentive stock options to executive officers under the Graco Inc. 2015 Stock Incentive Plan commencing in 2016. ( Incorporated by reference to Exhibit 10.2 to the Company’s Report on Form 10-Q for the thirteen weeks ended March 25, 2016. )
*10.14 Stock Option Agreement. Form of agreement used for award of non-incentive stock options to Chief Executive Officer under the Graco Inc. 2015 Stock Incentive Plan commencing in 2016. ( Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 10-Q for the thirteen weeks ended March 25, 2016. )
*10.15 Stock Option Agreement. Form of agreement used for award of non-incentive stock options to nonemployee directors under the Graco Inc. 2019 Stock Incentive Plan commencing in 2019. ( Incorporated by reference to Exhibit 10.2 to the Company’s Report on Form 10-Q for the thirteen weeks ended June 28, 2019. )
*10.16 Stock Option Agreement. Form of agreement used for award of non-incentive stock options to executive officers under the Graco Inc. 2019 Stock Incentive Plan commencing in 2020. ( Incorporated by reference to Exhibit 10.22 to the Company’s 2019 Annual Report on Form 10-K. )
*10.17 Stock Option Agreement. Form of agreement used for award of non-incentive stock options to Chief Executive Officer under the Graco Inc. 2019 Stock Incentive Plan commencing in 2020. ( Incorporated by reference to Exhibit 10.21 to the Company’s 2019 Annual Report on Form 10-K. )
*10.18 Executive Officer Restricted Stock Unit Agreement. Form of agreement used to award restricted stock units to Dale D. Johnson under the Graco Inc. 2019 Stock Incentive Plan. ( Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K filed February 26, 2021. )
*10.19 Nonemployee Director Stock and Deferred Stock Program (2019 Restatement). (I ncorporated by reference to Exhibit 10.3 to the Company’s Report on Form 10-Q for the thirteen weeks ended June 28, 2019. )
*10.20 Key Employee Agreement. Form of agreement used with Chief Executive Officer and other executive officers. ( Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K filed April 27, 2021. )
*10.21 Executive Group Long-Term Disability Policy as revised in 1995. ( Incorporated by reference to Exhibit 10.23 to the Company’s 2004 Annual Report on Form 10-K .) Enhanced by Supplemental Income Protection Plan in 2004. ( Incorporated by reference to Exhibit 10.28 to the Company’s 2007 Annual Report on Form 10-K. )
10.22 Omnibus Amendment, dated June 26, 2014, amending and restating the Credit Agreement among Graco Inc., the borrowing subsidiaries from time to time party thereto, the banks from time to time party thereto and U.S. Bank National Association, as administrative agent. ( Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K filed July 1, 2014. ) Third Amendment to Credit Agreement, dated December 15, 2016, amending the Credit Agreement among Graco Inc., the borrowing subsidiaries from time to time party thereto, the banks from time to time party thereto and U.S. Bank National Association, as administrative agent. ( Incorporated by reference to Exhibit 10.1 to the Company’s Report 8-K filed December 20, 2016. ) Fourth amendment to Credit Agreement, dated May 23, 2017, amending the Credit Agreement among Graco Inc., the borrowing subsidiaries from time to time party thereto, the banks from time to time party thereto and U.S. Bank National Association, as administrative agent. ( Incorporated by reference to Exhibit 10.2 to the Company ’ s 10-Q for the thirteen weeks ended June 30, 2017. ) Fifth amendment to Credit Agreement, dated April 17, 2020, amending the Credit Agreement among Graco Inc., the borrowing subsidiaries from time to time party thereto, the banks from time to time party thereto and U.S. Bank National Association, as administrative agent. ( Incorporated by reference to Exhibit 10.5 to the Company ’ s 10-Q for the thirteen weeks ended March 27, 2020 .)
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10.23 Amended and Restated Credit Agreement, dated March 25, 2021, among Graco Inc., the borrowing subsidiaries from time to time party thereto, the banks from time to time party thereto and U.S. Bank National Association, as administrative agent. ( Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K filed March 26, 2021. )
10.24 Note Agreement, dated March 11, 2011, between Graco Inc. and the Purchasers listed on the Purchaser Schedule attached thereto, which includes as exhibits the form of Senior Notes. ( Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K filed March 16, 2011. ) Amendment No. 1 dated May 23, 2011. ( Incorporated by reference to Exhibit 10.2 to the Company’s Report on Form 10-Q for the thirteen weeks ended July 1, 2011. ) Amendment and Restatement No. 1 to Note Agreement dated as of March 27, 2012. ( Incorporated by reference to Exhibit 10.2 to the Company’s Report on Form 8-K filed April 2, 2012. ) Amendment No. 2 dated as of June 26, 2014 to Note Agreement dated as of March 11, 2011. ( Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 10-Q for the thirteen weeks ended June 27, 2014. ) Amendment No. 3 dated as of December 15, 2016 to Note Agreement dated as of March 11, 2011. ( Incorporated by reference to Exhibit 10.28 to the Company ’ s 2016 Annual Report on Form 10-K. ) Amendment No. 4 dated May 23, 2017 to Note Agreement dated as of March 11, 2011. ( Incorporated by reference to Exhibit 10.1 to the Company ’ s 10-Q for the thirteen weeks ended June 30, 2017. ) Amendment No. 5 dated April 17, 2020 to Note Agreement dated as of March 11, 2011. ( Incorporated by reference to Exhibit 10.4 to the Company ’ s 10-Q for the thirteen weeks ended March 27, 2020 .)
10.25 Master Note Agreement, dated January 29, 2020, between Graco Inc. and NYL Investors LLC. ( Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K filed February 3, 2020. )
11 Statement of Computation of Earnings per share included in Note I on page 53
21 Subsidiaries of the Company
23 Independent Registered Public Accounting Firm’s Consent
24 Power of Attorney
31.1 Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a)
31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
32 Certification of President and Chief Executive Officer and Chief Financial Officer pursuant to Section 1350 of Title 18, U.S.C.
101 Interactive data files pursuant to Rule 405 of Regulation S-T formatted in iXBRL (Inline eXtensible Business Reporting Language).
104 Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101).
* Management Contracts, Compensatory Plans or Arrangements.
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of certain instruments defining the rights of holders of certain long-term debt of the Company and its subsidiaries are not filed as exhibits because the amount of debt authorized under any such instrument does not exceed 10 percent of the total assets of the Company and its subsidiaries. The Company agrees to furnish copies thereof to the Securities and Exchange Commission upon request.
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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.
Graco Inc.
/s/ Mark W. Sheahan February 22, 2022
Mark W. Sheahan
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
/s/ Mark W. Sheahan February 22, 2022
Mark W. Sheahan
President and Chief Executive Officer
(Principal Executive Officer)
/s/ David M. Lowe February 22, 2022
David M. Lowe
Chief Financial Officer and Treasurer
(Principal Financial Officer)
/s/ K ATHRYN L. S CHOENROCK
February 22, 2022
Kathryn L. Schoenrock
Executive Vice President, Corporate Controller and Information Systems
(Principal Accounting Officer)
Lee R. Mitau Director, Chairman of the Board
Brett C. Carter Director
Eric P. Etchart Director
Jody H. Feragen Director
J. Kevin Gilligan Director
Martha A. Morfitt Director
Mark W. Sheahan Director
R. William Van Sant Director
Kevin J. Wheeler Director
Emily C. White Director
Mark W. Sheahan, by signing his name hereto, does hereby sign this document on behalf of himself and each of the above named directors of the Registrant pursuant to powers of attorney duly executed by such persons.
/s/ Mark W. Sheahan February 22, 2022
Mark W. Sheahan
(For himself and as attorney-in-fact)
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