StepStone Group Inc. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission 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. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives. Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective to provide reasonable assurance that information that we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission 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. As of September 20, 2021, we consolidated Greenspring (as discussed in Note 15 to the accompanying audited consolidated financial statements). The internal controls over financial reporting of Greenspring were excluded from the evaluation of the effectiveness of our disclosure controls and procedures as of March 31, 2022. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with U.S. GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, 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. 172 Table of Contents The Company’s internal control over financial reporting includes 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 receipts and expenditures are being made only in accordance with authorizations of management and the 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 the consolidated financial statements. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of March 31, 2022, based on the criteria described in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the results of its evaluation, management concluded that our internal control over financial reporting was effective as of March 31, 2022. As of September 20, 2021, we consolidated Greenspring (as discussed in Note 15 to the accompanying audited consolidated financial statements). We are in the process of evaluating the internal controls of the consolidated entity. However, as permitted by related SEC Staff interpretive guidance for newly consolidated entities, we excluded the internal control over financial reporting of the consolidated entity from management’s annual assessment of the effectiveness of our internal control over financial reporting as of March 31, 2022. In the aggregate, this entity represented approximately 32% of our total consolidated assets and approximately 11% of our total consolidated net income as of and for the fiscal year ended March 31, 2022. Changes in Internal Control Over Financial Reporting There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent quarter ended March 31, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Attestation Report of the Independent Registered Public Accounting Firm Ernst & Young LLP, our independent registered public accounting firm, has audited the Company’s consolidated financial statements included in this annual report and issued its report on the effectiveness of our internal control over financial reporting as of March 31, 2022, which is included in Item 8 of this annual report. Item 9B. Other Information. None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 173 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance. We have adopted a Code of Conduct and Ethics that applies to all directors, officers and employees, which is available on our website at www.stepstonegroup.com. If we make any amendments to our Code of Conduct and Ethics that require disclosure under the rules of the Securities and Exchange Commission or the rules of the Nasdaq Global Select Market or grant any waivers to our directors or executive officers, we will disclose any such amendment and/or waiver on our website listed above. The remaining information required by this item is incorporated by reference to the definitive Proxy Statement for our 2022 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission no later than 120 days after March 31, 2022. Item 11. Executive Compensation. The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2022 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission no later than 120 days after March 31, 2022. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information regarding the beneficial ownership of our common stock required by this item is incorporated by reference to the definitive Proxy Statement for our 2022 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission no later than 120 days after March 31, 2022. Securities Authorized for Issuance under Equity Compensation Plans The table set forth below provides information concerning the awards that may be issued under the LTIP as of March 31, 2022: Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) (1) Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (2) Equity compensation plans approved by security holders 2,087,324 N/A 12,422,413 Equity compensation plans not approved by security holders — — — Total 2,087,324 N/A 12,422,413 _______________________________ (1) Reflects the outstanding RSUs granted under the LTIP as of March 31, 2022. (2) The aggregate number of our shares available for future issuance under the LTIP will automatically increase on January 1st of each year beginning in 2021 and ending with a final increase on January 1, 2030, in an amount equal to 5% of the total number of shares of stock outstanding on December 31st of the preceding calendar year. The Board may provide that there will be no January 1st increase in the shares available for future issuance for any such year or that the increase in the shares available for future issuance for any such year will be a smaller number of shares than would otherwise occur under the automatic increase. 174 Table of Contents Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2022 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission no later than 120 days after March 31, 2022. Item 14. Principal Accounting Fees and Services. The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2022 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission no later than 120 days after March 31, 2022. 175 Table of Contents PART IV Item 15. Exhibit and Financial Statement Schedules. (a) The following documents are filed as part of this Form 10-K: (1) Financial statements Index to Consolidated Financial Statements Page Report s of Independent Registered Public Accounting Firm (PCAOB ID: 42) 120 Consolidated Balance Sheets as of March 31, 202 2 and 202 1 125 Consolidated Statements of Income for the Years Ended March 31, 202 2 , 202 1 and 20 20 127 Consolidated Statements of Comprehensive Income for the Years Ended March 31, 202 2 , 202 1 and 20 20 128 Consolidated Statements of Stockholders’ Equity for the Years Ended March 31, 202 2 , 202 1 and 20 20 129 Consolidated Statements of Cash Flows for the Years Ended March 31, 202 2 , 202 1 and 20 20 131 Notes to Consolidated Financial Statements 133 (2) Financial statement schedules All financial statement schedules have been omitted because they are not applicable, not required or the information has been otherwise included in the consolidated financial statements or accompanying notes to the consolidated financial statements. (3) Exhibits: Incorporated By Reference Filed Herewith Exhibit No. Description of Exhibit Form Exhibit Filing Date File No. 3.1 Amended and Restated Certificate of Incorporation of StepStone Group Inc. 8-K 3.1 9/18/2020 001-39510 3.2 Amended and Restated Bylaws of StepStone Group Inc. 8-K 3.2 9/18/2020 001-39510 4.1 Description of Securities 10-K 4.1 6/23/2021 001-39510 10.1 Ninth Amended and Restated Limited Partnership Agreement of StepStone Group LP, dated as of September 20 , 202 1 , by and among StepStone Group Holdings LLC, as General Partner, and each of the other persons and entities parties thereto 8-K 10.3 9/20/2021 001-39510 10.2 Tax Receivable Agreement (Exchanges), dated as of September 18, 2020, by and among StepStone Group Inc., StepStone Group LP, and each of the other persons and entities parties thereto 8-K 10.2 9/18/2020 001-39510 10.3 Tax Receivable Agreement (Reorganization), dated as of September 18, 2020, by and among StepStone Group Inc., StepStone Group LP, and each of the other persons and entities parties thereto 8-K 10.3 9/18/2020 001-39510 10.4 Exchange Agreement, dated as of September 18, 2020, by and among the Company, the Partnership, and each of the other persons and entities party thereto 8-K 10.4 9/18/2020 001-39510 176 Table of Contents 10.5 Amended and Restated Registration Rights Agreement, dated as of September 20 , 202 1 , by and among the Company and the other persons and entities party thereto 8-K 10.4 9/20/2021 001-39510 10.6 Amended and Restated Stockholders Agreement, dated as of September 20 , 202 1 , by and among the Company, the Partnership and the other persons and entities party thereto 8-K 10.2 9/20/2021 001-39510 10.7 † StepStone Group Inc. 2020 Long-Term Incentive Plan 8-K 10.7 9/18/2020 001-39510 10.8 † Form of Restricted Stock Unit Award Agreement under the 2020 Long-Term Incentive Plan S-1 10.8 8/24/2020 333-248313 10.9 † Form of Indemnification Agreement for directors and officers S-1 10.9 8/24/2020 333-248313 10.10 Class C Exchange Agreement, dated as of September 20, 2021, by and among the Company, the Partnership and the other persons and entities party thereto 8-K 10.5 9/20/2021 001-39510 10.11 Credit Agreement, dated as of September 20, 2021, by and among StepStone Group Inc., StepStone Group LP, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and certain other lenders party thereto 8-K 10.1 9/20/2021 001-39510 21.1 List of Subsidiaries X 23.1 Consent of Ernst & Young LLP X 31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended X 31. 2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended X 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X 32. 2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X 101 The following financial information in Part II, Item 8, “Financial Statements and Supplementary Data” from our Annual Report on Form 10-K for the year ended March 31, 2022 formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Income; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Stockholders’ Equity; (v) the Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements. X 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) X † Indicates a management contract or compensatory plan or arrangement. Item 16. Form 10-K Summary. None. 177 Table of Contents 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 May 31, 2022 . STEPSTONE GROUP INC. By: /s/ Johnny D. Randel Johnny D. Randel Chief Financial Officer (Principal Financial Officer and Authorized Signatory) 178 Table of Contents 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 May 31, 2022. Signature Title /s/ Scott W. Hart Chief Executive Officer and Director (Principal Executive Officer) Scott W. Hart /s/ Johnny D. Randel Chief Financial Officer (Principal Financial Officer) Johnny D. Randel /s/ David Y. Park Chief Accounting Officer (Principal Accounting Officer) David Y. Park /s/ Monte Brem Chairman of the Board of Directors Monte Brem /s/ Valerie Gay Brown Director Valerie Gay Brown /s/ Jose A. Fernandez Director Jose A. Fernandez /s/ David F. Hoffmeister Director David F. Hoffmeister /s/ Thomas Keck Director Thomas Keck /s/ Michael I. McCabe Director Michael I. McCabe /s/ Steven R. Mitchell Director Steven R. Mitchell /s/ Anne L. Raymond Director Anne L. Raymond 179