Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted 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.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2022. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2022.
Management’s Report on Internal Controls Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles.
Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework established in “Internal Control-Integrated Framework (2013)”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2022.
This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm on our internal control over financial reporting following an exemption established by the JOBS Act for “emerging growth companies.”
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of a control system must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements related to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.
108
Table of Contents
Item 9B. Other Information
Form of Management Incentive Bonus Plan
On March 1, 2023, the compensation committee (the “compensation committee”) of our board of directors approved a new form of our annual, performance-based Management Incentive Bonus Plan (“MIB”) that is applicable to our executive officers and certain other key employees, which is attached hereto as Exhibit 10.17 and is incorporated herein by reference. The new form of MIB initially is applicable for the annual performance period ending as of December 31, 2023.
Form of Equity Award Agreements
On March 1, 2023, the compensation committee approved an updated Form of Restricted Stock Unit Award Agreement and a new Form of Stock Appreciation Right Award Agreement for grants of RSUs and stock appreciation rights (“SARs”) under the Latham Group, Inc. 2021 Omnibus Incentive Plan, which are attached hereto as Exhibits 10.14 and 10.15, respectively, and are incorporated herein by reference. The new forms of equity award agreements were used for the annual equity awards to executive officers on March 1, 2023.
Non-Employee Director Compensation Policy
On February 21, 2023, the compensation committee ratified the Non-Employee Director Compensation Policy without change, which is attached hereto as Exhibit 10.16 and is incorporated herein by reference.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None
109
Table of Contents
Part III
Item 10. Directors, Executive Officers, and Corporate Governance
The information required by this item will be included in our definitive Proxy Statement pertaining to our 2023 Annual Meeting of Stockholders, which will be filed with the SEC pursuant to Regulation 14A not later than 120 days after the end of the 2022 fiscal year, and is herein incorporated by reference.
Code of Conduct and Business Ethics
We have adopted a Code of Conduct and Ethics, which is applicable to all directors, officers, and employees, including our Chief Executive Officer and Chief Financial Officer. Our Code of Conduct and Business Ethics is posted on our Investor Relations website at https://ir.lathampool.com/ on the Governance page of the website. To the extent required by SEC rules, we intend to disclose any amendments to our code of conduct and ethics, and any waiver of a provision of the code with respect to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our web site referred to above within four business days following any such amendment or waiver, or within any other period that may be required under SEC rules from time to time.
Item 11. Executive Compensation
The information required by this item will be included in our definitive Proxy Statement pertaining to our 2023 Annual Meeting of Stockholders, which will be filed with the SEC pursuant to Regulation 14A not later than 120 days after the end of the 2022 fiscal year, and is herein incorporated 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 our definitive Proxy Statement pertaining to our 2023 Annual Meeting of Stockholders, which will be filed with the SEC pursuant to Regulation 14A not later than 120 days after the end of the 2022 fiscal year, and is herein incorporated by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item will be included in our definitive Proxy Statement pertaining to our 2023 Annual Meeting of Stockholders, which will be filed with the SEC pursuant to Regulation 14A not later than 120 days after the end of the 2022 fiscal year, and is herein incorporated by reference.
Item 14. Principal Accounting Fees and Services
The information required by this item will be included in our definitive Proxy Statement pertaining to our 2023 Annual Meeting of Stockholders, which will be filed with the SEC pursuant to Regulation 14A not later than 120 days after the end of the 2022 fiscal year, and is herein incorporated by reference.
110
Table of Contents
Part IV
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as a part of this report:
1) Financial Statements. The Company’s financial statements are included in Part II, Item 8, Financial Statements and Supplementary Data.
2) Financial Statements Schedules. All schedules are omitted since they are not applicable, not required, or the information required to be set forth therein is included under Part II, Item 8, Financial Statements and Supplementary Data.
3) Exhibits. The exhibits listed in the Exhibit Index immediately below are filed as part of this Annual Report on Form 10-K.
EXHIBIT INDEX
Exhibit
Number
Exhibit Description
2.1#
Merger Agreement by and between Latham Group, Inc. and Latham Investment Holdings, L.P. (incorporated by reference to Exhibit 2.1 to Latham Group, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on June 3, 2021 (File No. 001-40358))
3.1
Amended and Restated Certificate of Incorporation of Latham Group, Inc. (incorporated by reference to Exhibit 3.1 to Latham Group, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on June 3, 2021 (File No. 001-40358))
3.2
Amended and Restated Bylaws of Latham Group, Inc. (incorporated by reference to Exhibit 3.2 to Latham Group, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on June 3, 2021 (File No. 001-40358))
4.1
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.1 to Latham Group, Inc’s Annual Report on Form 10-K filed with the SEC on March 10, 2022 (File No. 001-40358)).
10.1#
Credit and Guaranty Agreement, dated as of February 23, 2022, among Latham Pool Products, Inc., Latham International Manufacturing Corp., the other guarantors party thereto, the lenders and letter of credit issuers party thereto and Barclays Bank PLC, as administrative agent (incorporated by reference to Exhibit 10.1 to Latham Group, Inc.’s Current Report on Form 8-K filed with the SEC on February 23, 2022 (File No. 001-40358)).
10.2
Stockholders Agreement by and among Latham Group, Inc. and the stockholders party thereto, dated as of April 27, 2021 (incorporated by reference to Exhibit 10.1 to Latham Group, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2021 (File No. 001-40358))
10.3
Registration Rights Agreement by and among Latham Group, Inc. and the stockholders party thereto, dated as of April 27, 2021 (incorporated by reference to Exhibit 10.2 to Latham Group, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2021 (File No. 001-40358)))
10.4
Form of Indemnification Agreement by and among the Latham Group, Inc. and each of its directors and executive officers (incorporated by reference to Exhibit 10.3 to Latham Group, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2021 (File No. 001-40358))
10.5†
Employment Agreement by and between Scott Rajeski and Latham Pool Products, Inc., dated December 17, 2018 (incorporated by reference to Exhibit 10.8 to Latham Group, Inc.’s Registration Statement on Form S-1 filed with the SEC on April 15, 2021 (File No. 333-254930))
111
Table of Contents
Exhibit
Number
Exhibit Description
10.6†
Offer Letter by and between Joel R. Culp and Latham Pool Products, Inc., dated January 18, 2019 (incorporated by reference to Exhibit 10.11 to Latham Group, Inc.’s Registration Statement on Form S-1 filed with the SEC on April 15, 2021 (File No. 333-254930))
10.7†
Employment Agreement by and between Joel R. Culp and Latham Pool Products, Inc., dated February 11, 2019 (incorporated by reference to Exhibit 10.12 to Latham Group, Inc.’s Registration Statement on Form S-1 filed with the SEC on April 15, 2021 (File No. 333-254930))
10.8†
Employment Agreement by and between Robert L. Masson II and Latham Pool Products, Inc., dated June 9, 2022 (incorporated by reference to Exhibit 10.1 to Latham Group, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on August 11, 2022 (File No. 001-40358))
10.9†
Retirement Agreement by and between J. Mark Borseth and Latham Pool Products, Inc., dated June 12, 2022 (incorporated by reference to Exhibit 10.2 to Latham Group, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on August 11, 2022 (File No. 001-40358))
10.10†
Latham Group, Inc. 2021 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to Latham Group, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2021 (File No. 001-40358))
10.11†
Form of Nonqualified Option Award Agreement under the 2021 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.6 to Latham Group, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2021 (File No. 001-40358))
10.12†
Form of Restricted Stock Award Agreement under the 2021 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.7 to Latham Group, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2021 (File No. 001-40358))
10.13†
Form of Restricted Stock Unit Award Agreement under the 2021 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.8 to Latham Group, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2021 (File No. 001-40358))
10.14†*
Form of Restricted Stock Unit Award Agreement under the 2021 Omnibus Equity Incentive Plan dated March 2023
10.15†*
Form of Stock Appreciation Right Award Agreement under the 2021 Omnibus Equity Incentive Plan dated March 2023
10.16†*
Latham Group, Inc. Non-Employee Director Compensation Plan
10.17†*
Form of Latham Group, Inc. Management Incentive Bonus Plan
21.1*
Subsidiaries of the registrant
23.1*
Consent of Deloitte & Touche LLP, independent registered public accounting firm
31.1*
Certification of CEO, pursuant to SEC Rule 13a-14(a) and 15d-14(a) (filed herewith)
31.2*
Certification of CFO, pursuant to SEC Rule 13a-14(a) and 15d-14(a) (filed herewith)
32.1**
Certification by the CEO, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
32.2**
Certification by the CFO, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101.INS*
iXBRL Instance Document
101.SCH*
iXBRL Taxonomy Extension Schema Document
101.CAL*
iXBRL Taxonomy Extension Calculation Linkbase Document
112
Table of Contents
Exhibit
Number
Exhibit Description
101.DEF*
iXBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
iXBRL Taxonomy Extension Label Linkbase Document
101.PRE*
iXBRL Taxonomy Extension Presentation Linkbase
104*
Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)
† Indicates management contract or compensatory plan.
* Filed herewith.
# Portions of this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K.
** A signed original of the written statement required by Section 906 has been provided to the Company and will be retained by the Company and forwarded to the SEC or its staff upon request.
Item 16. Form 10-K Summary
None
113
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.
Date March 7, 2023
LATHAM GROUP, INC.
/s/ Scott Rajeski
Scott Rajeski
Chief Executive Officer and President
(Principal Executive Officer)
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 and on the dates indicated.
Signature
Title
Date
/s/ Scott M. Rajeski
Chief Executive Officer and President; Director
March 7, 2023
Scott M. Rajeski
(Principal Executive Officer)
/s/ Robert L. Masson II
Chief Financial Officer
March 7, 2023
Robert L. Masson II
(Principal Financial Officer)
/s/ Suraj Kunchala
Vice President and Controller
March 7, 2023
Suraj Kunchala
(Principal Accounting Officer)
/s/ William M. Pruellage
Director
March 7, 2023
William M. Pruellage
/s/ Dane Derbyshire
Director
March 7, 2023
Dane Derbyshire
/s/ Mark P. Laven
Director
March 7, 2023
Mark P. Laven
/s/ James E. Cline
Director
March 7, 2023
James E. Cline
/s/ Robert D. Evans
Director
March 7, 2023
Robert D. Evans
/s/ Alexander L. Hawkinson
Director
March 7, 2023
Alexander L. Hawkinson
/s/ Suzan Morno-Wade
Director
March 7, 2023
Suzan Morno-Wade
114