Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Assessment of Disclosure Controls and Procedures
We assessed the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2022, the end of the period covered by this Annual Report on Form 10-K. This assessment was done under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Disclosure controls and procedures means controls and other procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed such that information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Based on this assessment, our CEO and CFO have concluded that as of December 31, 2022, our disclosure controls and procedures were effective.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:
• pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.
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Table of Con t ents
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.
Under the supervision and with the participation of management, including our principal executive and financial officers, we assessed our internal control over financial reporting as of December 31, 2022, based on criteria for effective internal control over financial reporting established in the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this assessment, management concluded that we maintained effective internal control over financial reporting as of December 31, 2022 based on the specified criteria.
Pursuant to the SEC’s general guidance that the assessment of a recently acquired business' internal control over financial reporting may be omitted in the year of acquisition, as of December 31, 2022, our scope of the assessment of our internal control over financial reporting excluded GCommerce and InterTrade, which were acquired in July 2022 and in October 2022, respectively. Our assessment of the effectiveness of internal control over financial reporting as of December 31, 2023 will include GCommerce and InterTrade.
As of December 31, 2022, excluding net intangible assets and goodwill, GCommerce and InterTrade combined represented 3.7% of our consolidated assets. For the twelve months ended December 31, 2022, GCommerce and InterTrade combined represented 1.4% of our consolidated revenues.
The effectiveness of our internal control over financial reporting as of December 31, 2022 has been audited by KPMG LLP, our independent registered public accounting firm, as stated in their report, which is included under Item 8 of this Annual Report on Form 10-K.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
The information included in this Item 9B is provided in lieu of filing such information on a Current Report on Form 8-K under Item 5.03 Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal Year.
On February 17, 2023, the Board of Directors of the Company amended and restated the Company’s Amended and Restated Bylaws (as so amended and restated, the “Bylaws”), primarily to implement certain procedural mechanisms related to stockholder nominations of directors under Rule 14a-19 (“Rule 14a-19”) under the Securities Exchange Act of 1934, as amended. These amendments took immediate effect. The amendments implement the following changes to the Bylaws, among other things:
• require a stockholder soliciting proxies in support of nominations of persons, other than the Company’s nominees, for election to the Company’s Board of Directors to certify their compliance with Rule 14a-19 and, upon request of the Company, to deliver reasonable evidence of such compliance to the Company no later than five business days prior to the date of the applicable meeting of stockholders;
• provide that, unless otherwise required by law, if a stockholder provides notice under Rule 14a-19 and subsequently: (i) notifies the Company that such stockholder no longer intends to solicit proxies in support of director nominees other than the Company’s director nominees in accordance with Rule 14a-19; (ii) fails to comply with the requirements of Rule 14a-19; or (iii) fails to provide reasonable evidence sufficient to satisfy the Company that the requirements of Rule 14a-19 have been met, then the stockholder’s nominations shall be deemed null and void and the Company shall disregard any proxies or votes solicited for any nominee proposed by such stockholder;
• establish additional rules governing the conduct of meetings of stockholders;
• update references to meetings using remote communication;
• reserve white proxy cards for use by the Company’s Board of Directors only; and
• incorporate other technical, clarifying and conforming changes.
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Form 10-K for the Annual Period ended December 31, 2022
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The foregoing description of the amendments to the Bylaws is qualified in its entirety by reference to the text of the Bylaws. The Bylaws, along with a copy marked to show changes from the prior version, are included as Exhibits 3.2 and 3.3, respectively, to this Annual Report on Form 10-K and are incorporated herein by reference.
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 required by this item will be included in the 2023 Proxy Statement under the captions “Election of Directors,” “Executive Compensation,” and “Information Regarding the Board of Directors and Corporate Governance” and is incorporated herein by reference.
Item 11. Executive Compensation
The information required by this item will be included in the 2023 Proxy Statement under the captions “Executive Compensation,” and "Security Ownership" and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item will be included in the 2023 Proxy Statement under the caption “Security Ownership” and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item will be included in the 2023 Proxy Statement under the captions “Certain Relationships and Related Transactions,” “Information Regarding the Board of Directors and Corporate Governance,” and "Election of Directors" and is incorporated herein by the reference.
Item 14. Principal Accounting Fees and Services
The information required by this item will be included in the 2023 Proxy Statement under the caption “Audit Committee Report and Payment of Fees to Our Independent Auditor” and is incorporated herein by reference.
PART IV
Item 15. Exhibits, Financial Statement Schedules
The following documents are filed as a part of this Annual Report on Form 10-K:
(a) Financial Statements: The financial statements filed as a part of this report are listed in Part II, Item 8.
(b) Financial Statement Schedules: The schedules are either not applicable or the required information is presented in the consolidated financial statements or notes thereto.
(c) Exhibits: The exhibits incorporated by reference or filed as a part of this Annual Report on Form 10-K are listed in the Exhibit Index prior to the signatures to this report.
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Form 10-K for the Annual Period ended December 31, 2022
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EXHIBIT INDEX
Incorporated By Reference
Exhibit
Number
Exhibit Description Form Date of
First
Filing
Exhibit
Number
Filed
Herewith
3.1 Ninth Amended and Restated Certificate of Incorporation
8-K 05/21/2020 3.2
3.2 Amended and Restated Bylaws, effective as of February 17, 2023
X
3.3 Amended and Restated Bylaws, marked to show amendments effective as of February 17, 2023
X
4.1 Description of Capital Stock
10-K 2/23/2021 4.1
10.1 2010 Equity Incentive Plan, as amended effective October 29, 2014**
10-K 02/20/2015 10.6
10.2 Form of Incentive Stock Option Agreement under 2010 Equity Incentive Plan**
8-K 02/17/2012 10.2
10.3 Form of Non-Statutory Stock Option Agreement (Employee) under 2010 Equity Incentive Plan**
X
10.4 Form of Non-Statutory Stock Option Agreement (Director) under 2010 Equity Incentive Plan**
8-K 02/17/2012 10.4
10.5 Form of Restricted Stock Unit Award Agreement under 2010 Equity Incentive Plan**
X
10.6 Form of Restricted Stock Award Agreement under 2010 Equity Incentive Plan**
10-Q 05/08/2012 10.6
10.7 Form of Performance Stock Unit Agreement under 2010 Equity Incentive Plan**
X
10.8 Form of Deferred Stock Unit Agreement under 2010 Equity Incentive Plan
10-Q 04/26/2019 10.2
10.9 Form of Indemnification Agreement for Independent Directors * *
S-1/A 01/11/2010 10.18
10.10 Form of Indemnification Agreement for Archie C. Black**
S-1/A 01/11/2010 10.19
10.11 Management Incentive Plan**
8-K 02/03/2016 10.2
10.12 Amended and Restated Executive Severance and Change in Control Agreement between the Company and Archie C. Black**
8-K 02/18/2020 10.1
10.13 Form of Amended and Restated Executive Severance and Change in Control Agreement**
8-K 02/18/2020 10.2
10.14 Non-Employee Director Compensation Summary **
X
21.1 Subsidiaries of the registrant
X
23.1 Consent of KPMG LLP
X
24.1 Power of Attorney (included on signature page) X
31.1 Certification of Principal Executive Officer pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934, as amended
X
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Incorporated By Reference
Exhibit
Number
Exhibit Description Form Date of
First
Filing
Exhibit
Number
Filed
Herewith
31.2 Certification of Principal Financial Officer pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934, as amended
X
32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X
101 Interactive Data Files Pursuant to Rule 405 of Regulation S-T X
104 The cover page from the Annual Report on Form 10-K for the year ended December 31, 2022, formatted in Inline XBRL
X
** Indicates management contract or compensatory plan or arrangement.
Item 16. Form 10-K Summary
None.
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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.
Dated: February 21, 2023
SPS COMMERCE, INC.
By: /s/ ARCHIE BLACK
Archie Black
Chief Executive Officer
Each of the undersigned hereby appoints Archie Black and Kimberly Nelson, and each of them (with full power to act alone), as attorneys and agents for the undersigned, with full power of substitution, for and in the name, place and stead of the undersigned, to sign and file with the Securities and Exchange Commission under the Securities Exchange Act of 1934, any and all amendments and exhibits to this annual report on Form 10-K and any and all applications, instruments, and other documents to be filed with the Securities and Exchange Commission pertaining to this annual report on Form 10-K or any amendments thereto, with full power and authority to do and perform any and all acts and things whatsoever requisite and necessary or desirable. 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 indicated on February 21, 2023.
Name and Signature Title
/s/ ARCHIE BLACK Chief Executive Officer and Director
Archie Black (principal executive officer)
/s/ KIMBERLY NELSON Executive Vice President and Chief Financial Officer
Kimberly Nelson (principal financial and accounting officer)
/s/ JAMES RAMSEY Director
James Ramsey
/s/ MARTY RÉAUME Director
Marty Réaume
/s/ TAMI RELLER Director
Tami Reller
/s/ PHILIP SORAN Director
Philip Soran
/s/ ANNE SEMPOWSKI WARD Director
Anne Sempowski Ward
/s/ SVEN WEHRWEIN Director
Sven Wehrwein
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Form 10-K for the Annual Period ended December 31, 2022