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Item 9A. Controls and Procedures

2023-02-16 compared with 2022-02-15 · 29 added, 40 removed, 322 unchanged (18% of the section changed)

11 unchanged sentences

Based on this assessment under COSO’s “Internal Control-Integrated Framework,” management believes that, as of December 31, 2022, Timken’s internal control over financial reporting is effective.

On May 31, 2022, the Company completed the acquisition of Spinea, and on November 4, 2022, the Company completed the acquisition of GGB.

The results of these acquisitions are included in the Company's consolidated financial statements for 2022.

The total and net assets of Spinea and GGB represent 3% and 7% of the Company's total assets, and 6% and 14% of the Company's net assets, respectively, as of December 31, 2022.

For 2022, the net sales of Spinea and GGB each represented less than 1% of the Company's consolidated net sales and approximately 2% of the Company's consolidated net income.

The scope of the Company's assessment of the effectiveness of internal control over financial reporting does not include these acquisitions.

This exclusion is in accordance with the SEC's general guidance that an assessment of a recently acquired business may be omitted from the Company's scope in the year of acquisition.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is presented in this Annual Report on Form 10-K.

4 unchanged sentences

In our opinion, The Timken Company and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

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, 2021 and 2020, and the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and the financial statement schedule listed in the Index at Item 15(a)(2) of the Company and our report dated February 15, 2022 expressed an unqualified opinion thereon.

As indicated in the accompanying Report of Management 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 Spinea or GGB, which is included in the 2022 consolidated financial statements of the Company.

The total and net assets of Spinea and GGB represent 3% and 7% of the Company's total assets and 6% and 14% of the Company's net assets, respectively, as of December 31, 2022.

For 2022, the net sales of Spinea and GGB each represented less than 1% of the Company’s consolidated net sales and approximately 2% of the Company's consolidated net income.

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 Spinea or GGB.

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 income, comprehensive income, shareholders' equity and cash flows for each of the three 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)(2) of the Company and our report dated February 16, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

28 unchanged sentences

The Company has adopted a code of ethics that applies to all of its employees, including its principal executive officer, principal financial officer and principal accounting officer, as well as its directors.

The Company’s code of ethics, The Timken Company Standards of Business Ethics Policy, is available on its website at www.timken.com/about/governance-documents.

The Company’s code of ethics, The Timken Company Standards of Business Ethics Policy, is available on its website at https://investors.timken.com/corporate-governance/documents/default.aspx.

The Company intends to disclose any amendment to, or waiver from, its code of ethics by posting such amendment or waiver, as applicable, on its website.

Executive Compensation

Required information is set forth under the captions “Compensation Discussion and Analysis,” “2021 Summary Compensation Table,” “2021 Grants of Plan-Based Awards,” “Outstanding Equity Awards at 2021 Year-End,” “2021 Option Exercises and Stock Vested,” “2021 Pension Benefits Table,” “2021 Nonqualified Deferred Compensation,” “Potential Payments Upon Termination or Change in Control,” “Director Compensation,” “Compensation Committee,” and “Compensation Committee Report” in the Proxy Statement, and is incorporated herein by reference.

Required information is set forth under the captions “Compensation Discussion and Analysis,” “2022 Summary Compensation Table,” “2022 Grants of Plan-Based Awards,” “Outstanding Equity Awards at 2022 Year-End,” “2022 Option Exercises and Stock Vested,” “2022 Pension Benefits Table,” “2022 Nonqualified Deferred Compensation,” “Potential Payments Upon Termination or Change in Control,” “Director Compensation,” "CEO Pay Ratio," “Compensation Committee,” and “Compensation Committee Report” in the Proxy Statement, and is incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

14 unchanged sentences

1-1169) and are incorporated herein by reference.

Fourth Amended and Restated Credit Agreement, dated as of June 25, 2019, among The Timken Company, Bank of America, N.A.

and KeyBank National Association, as Co-Administrative Agent, and the Lenders party thereto, was filed on June 25, 2019 with Form 8-K (Commission File No.

1-1169) and is incorporated herein by reference.

First Amendment to Credit Agreement, dated as of May 27, 2020, among the Timken Company, Bank of America, N.A.

and KeyBank National Association, as Co-Administrative Agents, KeyBank National Association as Paying Agent, L/C Issuer and Swing Line Lender, and the other lenders party thereto was filed on May 27, 2020 with Form 8-K (Commission File No.

1-1169) and is incorporated herein by reference.*

Credit Agreement, dated as of September 11, 2018, among The Timken Company, KeyBank National Association, as Administrative Agent, and the Lenders party thereto, was filed on September 14, 2018 with Form 8-K (Commission File No.

1-1169) and is incorporated herein by reference.

First Amendment to Credit Agreement, dated as of July 12, 2019, among The Timken Company, KeyBank National Association, as Administrative Agent, and the Lenders party thereto was filed on July 12, 2019 with Form 8-K (Commission File No.

1-1169) and is incorporated herein by reference.

Second Amendment to Credit Agreement, dated as of May 27, 2020, among The Timken Company KeyBank National Association, as Administrative Agent, and the other lenders party thereto was filed on May 27, 2020 with Form 8-K (Commission File No.

1-1169) and is incorporated herein by reference.*

First Supplemental Indenture, dated as of July 24, 1996, by and between The Timken Company and Mellon Bank, N.A.

was filed on November 13, 1996 with Form 10-Q (Commission File No.

Fifth Amended and Restated Credit Agreement, dated as of December 5, 2022, among The Timken Company, Bank of America, N.A.

and KeyBank National Association, as Co-Administrative Agents, and the Lenders party thereto, was filed on December 6, 2022 with Form 8-K (Commission File no.

1-1169) and is incorporated herein by reference.*

5 unchanged sentences

1-1169) and is incorporated herein by reference.

Indenture, dated as of March 28, 2022, by and between the Company and U.S.

Bank Trust Company, National Association, as Trustee, was filed on March 28, 2022 with Form 8-K (Commission File no.

1-1169) and is incorporated herein by reference.

First Supplemental Indenture, dated as of March 28, 2022, by and between the Company and U.S.

Bank Trust Company, National Association, as Trustee (including Form of Note), was filed on March 28, 2022 with Form 8-K (Commission File no.

1-1169) and is incorporated herein by reference.

Description of The Timken Company Common Shares was filed on February 14, 2020 with Form 10-K (Commission File No.

3 unchanged sentences

Management Contracts and Compensation Plans

The Timken Company 1996 Deferred Compensation Plan for officers and other key employees, amended and restated effective as of January 1, 2019 was filed on May 1, 2019 with Form 10-Q (Commission File No.

1-1169) and is incorporated herein by reference.

The Timken Company 1996 Deferred Compensation Plan for officers and other key employees, amended and restated effective as of January 1, 2023, as attached hereto as Exhibit 10.1.

The Timken Company Director Deferred Compensation Plan, amended and restated effective December 31, 2008, was filed on February 25, 2010 with Form 10-K (Commission File No.

17 unchanged sentences

1-1169) and is incorporated herein by reference.

The Timken Company Senior Executive Management Performance Plan, as amended and restated as of February 13, 2015 and approved by shareholders on May 7, 2015, was filed on March 27, 2015 with Definitive Proxy Statement on Schedule 14A (Commission File No.

The Timken Company Short-Term Incentive Plan Global Plan Document for officers and other key employees, amended and restated effective as of January 1, 2021 and pursuant to The Timken Company 2019 Equity and Incentive Compensation Plan, was filed on February 15, 2022 with Form 10-K (Commission File No.

1-1169) and is incorporated herein by reference.

Form of Severance Agreement (for Executive Officers appointed on or after November 12, 2015), as adopted on November 12, 2015, was filed on February 24, 2016 with Form 10-K (Commission File No.

2 unchanged sentences

1-1169) and is incorporated herein by reference.

Severance Agreement with Andreas Roellgen, dated as of July 18, 2016, was filed on July 31, 2019 with Form 10-Q (Commission File No.

1-1169) and is incorporated herein by reference.

Amended and Restated Severance Agreement with Andreas Roellgen, dated as of December 9, 2022, as attached hereto as Exhibit 10.2.

Form of Indemnification Agreement for Directors was filed on February 14, 2020 with Form 10-K (Commission File No.

35 unchanged sentences

1-1169) and is incorporated herein by reference.

Form of Nonqualified Stock Option Agreement for transferable options for Officers, as adopted on December 8, 2011, was filed on February 17, 2012 with Form 10-K (Commission File No.

1-1169) and is incorporated herein by reference.

Form of Nonqualified Stock Option Agreement for non-transferable options for Non-Officer Employees, as adopted on December 8, 2011, was filed on February 17, 2012 with Form 10-K (Commission File No.

26 unchanged sentences

1-1169) and is incorporated herein by reference.

Form of Deferred Shares Agreement (three year cliff vesting), as adopted on February 8, 2018, was filed on May 1, 2018 with Form 10-Q (Commission File No.

1-1169) and is incorporated herein by reference.

Form of Deferred Shares Agreement (five year cliff vesting), as adopted on February 8, 2018, was filed on May 1, 2018 with Form 10-Q (Commission File No.

36 unchanged sentences

1-1169) and is incorporated herein by reference.

Deferred Shares Agreement with Ronald J.

Myers, effective as of February 6, 2020 and granted pursuant to the Timken Company 2019 Equity and Incentive Compensation Plan was filed on May 1, 2020 with Form 10-Q (Commission File No.

1-1169) and is incorporated herein by reference.

Form of Performance-Based Restricted Stock Unit Agreement, as adopted on February 8, 2018, was filed on May 1, 2018 with Form 10-Q (Commission File No.

1-1169) and is incorporated herein by reference.

Form of Performance-Based Restricted Stock Unit Agreement, as adopted February 7, 2019 and pursuant to the Timken Company 2011 Long-Term Incentive Plan, was filed on May 1, 2019 with Form 10-Q (Commission File No.

6 unchanged sentences

1-1169) and is incorporated herein by reference.

Form of Time-Based Restricted Stock Unit Agreement entered into with key employees was filed on May 2, 2012 with Form 10-Q (Commission File No.

1-1169) and is incorporated herein by reference.

Form of Time-Based Restricted Stock Unit Agreement, as adopted on February 8, 2018, was filed on May 1, 2018 with Form 10-Q (Commission File No.

2 unchanged sentences

1-1169) and is incorporated herein by reference.

Form of Time-Based Restricted Stock Unit Agreement for Nonemployee Directors (new member grant), as adopted February 8, 2018, was filed on May 1, 2018 with Form 10-Q (Commission File No.

1-1169) and is incorporated herein by reference.

Form of Time-Based Restricted Stock Unit Agreement, as adopted February 7, 2019 and pursuant to the Timken Company 2011 Long-Term Incentive Plan, was filed on May 1, 2019 with Form 10-Q (Commission File No.

14 unchanged sentences

Listing of Exhibits (continued)

The Timken Company 1996 Deferred Compensation Plan for officers and other key employees, amended and restated effective as of January 1, 2023.

Amended and Restated Severance Agreement with Andreas Roellgen, dated as of December 9, 2022.

A list of subsidiaries of the Registrant.

26 unchanged sentences

Harrell * By:

Harrell Frank C.

Harrell, Director Frank C.

Sullivan, Director

6 unchanged sentences

February 16, 2023

Sarah C Lauber Ward J.

Lauber, Director Ward J.

Timken, Jr., Director

4 unchanged sentences

Woods, Director

February 16, 2023 Date:

February 16, 2023

/s/ Christopher L.

Mapes * * By:

/s/ Philip D.

44 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures