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Item 9A. Controls and Procedures

2025-05-30 compared with 2024-05-29 · 93 added, 48 removed, 157 unchanged (47% of the section changed)

Controls and Procedures

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed by the Company under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

The Company’s Chief Executive Officer and Chief Financial Officer evaluated, with the participation of the Company’s management, the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)), as of the end of the period covered by this Annual Report.

Based on this evaluation, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

Based on this evaluation, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, concluded that, as a result of the material weakness in the Company’s internal control over financial reporting described below, the Company’s disclosure controls and procedures were not effective as of March 31, 2025.

Management’s Report on Internal Control Over Financial Reporting

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The evaluation was based on the criteria set forth in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Based on this assessment, the Company’s management concluded that the Company’s internal control over financial reporting was effective at the reasonable assurance level as of March 31, 2024.

The Company’s independent registered public accounting firm, Ernst & Young LLP, has audited the Company’s internal control over financial reporting as of March 31, 2024.

Their report on this audit appears on page 90 of this Annual Report.

Based on this assessment, the Company’s management concluded that the Company’s internal control over financial reporting was not effective at the reasonable assurance level as of March 31, 2025, due to the material weakness described under “New Material Weakness” below.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company's annual or interim financial statements will not be prevented or detected on a timely basis.

Remediation of Previously Disclosed Material Weakness

As previously disclosed under “Item 9A – Controls and Procedures” in Amendment No.

1 to the Company’s Annual Report on Form 10-K/A for the fiscal year ended March 31, 2024, in August 2024, shortly before filing the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, the Company’s management was made aware of embezzlement by a former senior finance employee at the Company’s Mozambique subsidiary, Mozambique Leaf Tobacco Ltda.

The Company promptly commenced an internal investigation regarding these allegations and related matters.

With the assistance of outside advisors, the Company’s internal investigation identified approximately $7 million in the aggregate of unauthorized payments during fiscal years 2022 through 2025.

The Company has identified approximately $16.7 million in the aggregate of unauthorized payments during fiscal years 2016 through 2025.

As result of the discovery of the embezzlement, the Company’s management reassessed the design and effectiveness of its internal control over financial reporting.

This reassessment identified certain control activities at MLT that were deficient in that they had failed to prevent or detect the embezzlement in a timely manner.

Additionally, the Company’s management concluded that it was unable to rely on controls performed at MLT due to the lack of competence and integrity of certain individuals at MLT executing those controls.

The Company’s management concluded that these control deficiencies collectively constituted a material weakness in the Company’s internal control over financial reporting as of March 31, 2024.

Notwithstanding the material weakness, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s previously filed consolidated financial statements were fairly stated in all material respects in accordance with GAAP for each of the periods presented.

Therefore, no restatement of any prior period financial statements was required.

During the fiscal year ended March 31, 2025, the Company, with the oversight of the Audit Committee of the Board of Directors, designed and implemented measures pursuant to management’s overall internal control over financial reporting

remediation plan and also completed testing of the design and operating effectiveness of all remediated controls.

The remediation efforts included the following:

Discontinued employment of the employee who perpetrated the embezzlement in Mozambique and the employee’s supervisor and replaced those individuals.

Required recurring remedial internal control training to all internal control performers and owners, including journal entry review and reconciliation procedures.

Designed and implemented additional internal controls of banking systems access.

Based on management’s evaluation of the effectiveness of the Company’s internal controls as of March 31, 2025, including newly remediated controls, management concluded that the previously identified material weakness had been successfully remediated as of March 31, 2025.

New Material Weakness

As noted above, the Company’s management concluded that the Company’s internal control over financial reporting was not effective as of March 31, 2025 as a result of certain control deficiencies that were determined to constitute a material weakness in its internal control over financial reporting.

Specifically, the Company’s management determined that the internal controls at one of the Company’s tobacco subsidiaries were not effectively documented and executed to ensure that the existence of all dark air-cured tobacco inventories subject to physical inventory counts were appropriately counted, and that the controls related to the compilation and reconciliation of the related inventory to ensure complete and accurate reporting of inventory in the consolidated financial statements were not effective.

While the material weakness did not result in a material misstatement of the Company’s consolidated financial statements for the fiscal year ended March 31, 2025, there is a reasonable possibility that these deficiencies could have resulted in a material misstatement of the Company’s annual or interim consolidated financial statements that would not be prevented or detected on a timely basis.

The Company’s independent registered public accounting firm, Ernst & Young LLP, audited the Company’s internal control over financial reporting as of March 31, 2025.

The material weakness identified by the Company’s management resulted in Ernst & Young LLP issuing an adverse opinion on the effectiveness of the Company’s internal control over financial reporting as of March 31, 2025.

See “Report of Ernst & Young LLP, Independent Registered Public Accounting Firm” in Item 8.

Notwithstanding the material weakness, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s consolidated financial statements included in this Annual Report are fairly stated in all material respects in accordance with GAAP for each of the periods presented.

Therefore, no restatement of any prior period financial statements is required.

Remediation Plan for New Material Weakness

To remediate the new material weakness described above, the Company will implement the following remediation steps at the tobacco subsidiary:

Require enhanced documentation associated with management review controls and validation of the completeness and accuracy of key reports used across the inventory process, including physical inventory counts.

Design and implement additional reports to be utilized in inventory reconciliation controls at the subsidiary.

The Company believes these measures, once they have operated effectively for a sufficient period of time, will remediate the control deficiencies identified and strengthen its internal control over financial reporting.

However, there may not be sufficient time for the Company to remediate the material weakness or, if remediated, to test the operating effectiveness of the remediated controls as of the Company’s next fiscal year end.

As the Company continues to evaluate, and works to improve, its internal control over financial reporting, management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary.

The Company cannot assure you, however, when it will remediate such weakness, nor can it be certain whether additional actions will be required or the costs of any such actions.

Moreover, the Company cannot assure you that additional material weaknesses will not arise in the future.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Attestation Report of Registered Accounting Firm

The attestation report required under this Item 9A is contained in Item 8 of this Form 10-K under the caption “Report of Ernst & Young LLP, Independent Registered Public Accounting Firm.”

Except as noted above with respect to the completion of the steps in the remediation plan for the previously disclosed material weakness and the identification of the new material weakness, there were no changes in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Other Information

During the three months ended March 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).

(a) On May 30, 2025, the Compensation and Human Resources Committee of the Company’s Board of Directors granted Airton L.

Hentschke, the Company’s Senior Vice President and Chief Operating Officer, a special award of 22,050

restricted stock units (“RSUs”) under the Company’s shareholder-approved 2023 Stock Incentive Plan (equal to approximately $1.2 million based on the volume-weighted average price of the Company’s shares from March 1, 2025 to April 30, 2025).

40% of the RSUs will vest on the first anniversary of the grant date, and the remaining 60% of the RSUs will vest on the second anniversary of the grant date.

Consistent with the restricted stock units granted in connection with the fiscal year 2025 long-term equity incentive awards, the RSUs earn dividend equivalent units during the vesting periods and only vest when the underlying RSU awards vest.

Other than the annual vesting as described above, vesting of the RSUs (and the earned dividend equivalent units) is consistent with the terms of Mr.

Hentschke’s annual long-term incentive equity awards, except that the RSUs are forfeitable if Mr.

Hentschke terminates his employment with the Company prior to the vesting date(s).

The foregoing description of the RSUs does not purport to be complete and is qualified in its entirety by reference to the Restricted Stock Units Award Agreement, dated as of May 30, 2025, between the Company and Airton L.

Hentschke, a copy of which is filed as Exhibit 10.30 to this Annual Report and is incorporated by reference herein.

(b) During the three months ended March 31, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers, and Corporate Governance

Except as to the matters set forth below, information required by this Item is incorporated herein by reference to the Company’s 2024 Proxy Statement.

The following are executive officers of the Company as of May 29, 2024:

Except as to the matters set forth below, information required by this Item is incorporated herein by reference to the Company’s definitive Proxy Statement for its 2025 Annual Meeting of Shareholders, which is expected to be held on August 5, 2025 (“2025 the Proxy Statement”).

Information About Our Executive Officers as of May 30, 2025:

Name and Age Position Business Experience During Past The Five Years

Freeman, III (61) Chairman, President, and Chief Executive Officer Mr.

Freeman was elected Chairman of the Board in August 2008, Chief Executive Officer effective April 2008, President in December 2006, and Vice President in November 2005.

Freeman served as General Counsel and Secretary from February 2001 until November 2005 and has been employed with the Company since 1997.

Wigner (56) Chairman, President, and Chief Executive Officer Mr.

Wigner was elected Chairman, President, and Chief Executive Officer effective October 1, 2024.

He served as Senior Vice President since April 2024, Vice President since August 2007, and General Counsel and Secretary since November 2005.

He also served as Chief Compliance Officer from November 2007 until September 2012.

Wigner served as Senior Counsel of Universal Leaf from November 2004 until November 2005.

He has been employed with the Company since 2003.

Hentschke (55) Senior Vice President and Chief Operating Officer Mr.

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He has been employed with the Company since July 1993.

Wigner (55) Senior Vice President Mr.

Wigner was elected Senior Vice President effective April 2024.

He served as Vice President since August 2007, and General Counsel and Secretary since November 2005.

He also served as Chief Compliance Officer from November 2007 until September 2012.

Wigner served as Senior Counsel of Universal Leaf from November 2004 until November 2005.

He has been employed with the Company since 2003.

Claiborne (64) Vice President, General Counsel and Secretary Mrs.

Claiborne was elected as General Counsel and Secretary effective April 2024.

She has served as Vice President and Assistant Secretary since February 2018.

She also has served as Vice President since February 2018 having previously served as Vice President and Assistant Secretary from February 2018 to April 2024.

From October 2004 to February 2018, Mrs.

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Bleicher joined the Company in August 2014 and served as Assistant Controller through May 2019.

Starke (48) Senior Vice President Mr.

Starke was elected Senior Vice President and Sales Director effective July 2023.

Starke (49) Senior Vice President and Sales Director Mr.

Starke was elected Senior Vice President and Sales Director of Universal Leaf Tobacco Company, Incorporated effective July 2023.

He has served as Senior Vice President since 2017, as Vice President from January 2012 until February 2017, and Assistant Vice President from October 2007 until January 2012.

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If the Company amends a provision of the Code of Conduct, or grants a waiver from any such provision to a director or executive officer, the Company will disclose such amendments and the details of such waivers on the Company’s website www.universalcorp.com to the extent required by the SEC or the NYSE.

Other than the matters set forth above, the information required by Item 401 of Regulation S-K is contained under the caption “Proposal One - Election of Directors” of the Company’s 2024 Proxy Statement and such information is incorporated by reference herein.

The information required by Item 405 of Regulation S-K is contained under the caption “Stock Ownership—Delinquent Section 16(a) Reports” of the Company’s 2024 Proxy Statement and such information is incorporated herein.

The information required by Item 406, Items 407(c)(3), (d)(4) and (d)(5), and Item 408(b) of Regulation S-K is contained under the captions “Corporate Governance and Committees—Committees of the Board—Nominating and Corporate Governance Committee,” “Corporate Governance and Committees—Committees of the Board—Audit Committee” of the Company’s 2024 Proxy Statement and such information is incorporated by reference herein.

The information required by Item 408(b) of Regulation S-K is contained under the caption “Corporate Governance and Committees—Insider Trading Policy” of the Company’s 2024 Proxy Statement and such information is incorporated by reference herein.

Other than the matters set forth above, the information required by Item 401 of Regulation S-K is contained under the caption “Proposal One - Election of Directors” of the 2025 Proxy Statement and such information is incorporated by reference herein.

The information required by Item 405 of Regulation S-K is contained under the caption “Stock Ownership—Delinquent Section 16(a) Reports” of the 2025 Proxy Statement and such information is incorporated herein.

The information required by Item 406, Items 407(c)(3), (d)(4) and (d)(5), and Item 408(b) of Regulation S-K is contained under the captions “Corporate Governance and Committees—Committees of the Board—Nominating, Governance and Risk Committee” and “Corporate Governance and Committees—Committees of the Board—Audit Committee” of the 2025 Proxy Statement and such information is incorporated by reference herein.

The information required by Item 408(b) of Regulation S-K is contained under the caption “Corporate Governance and Committees—Insider Trading Policy” of the 2025 Proxy Statement and such information is incorporated by reference herein.

Executive Compensation

Refer to the captions “Compensation Discussion and Analysis,” “Executive Compensation,” “Report of the Compensation Committee,” “Compensation Committee Interlocks and Inside Participation” and “Directors’ Compensation” in the Company’s 2024 Proxy Statement, which information is incorporated herein by reference.

Refer to the captions “Compensation Discussion and Analysis,” “Executive Compensation,” “Report of the Compensation and Human Resources Committee,” “Compensation and Human Resources Committee Interlocks and Inside Participation” and “Directors’ Compensation” in the 2025 Proxy Statement, which information is incorporated herein by reference.

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

Refer to the caption “Stock Ownership” and "Equity Compensation Information" in the Company’s 2024 Proxy Statement, which information is incorporated herein by reference.

Refer to the caption “Stock Ownership” and “Equity Compensation Information” in the 2025 Proxy Statement, which information is incorporated herein by reference.

Certain Relationships and Related Transactions, and Director Independence

Refer to the caption “Certain Transactions” in the Company’s 2025 Proxy Statement, which information is incorporated herein by reference.

The information required by Item 407(a) of Regulation S-K is contained under the caption “Corporate Governance and Committees—Director Independence” of the Company’s 2024 Proxy Statement and such information is incorporated by reference herein.

Principal Accounting Fees and Services

Refer to the captions “Audit Information – Fees of Independent Registered Public Accounting Firm” and “Audit Information – Pre-Approval Policies and Procedures” in the Company’s 2024 Proxy Statement, which information is incorporated herein by reference.

Exhibits, Financial Statement Schedules

The information required by Item 407(a) of Regulation S-K is contained under the caption “Corporate Governance and Committees—Director Independence” of the 2025 Proxy Statement and such information is incorporated by reference herein.

Principal Accountant Fees and Services

Refer to the captions “Audit Information – Fees of Independent Registered Public Accounting Firm” and “Audit Information – Pre-Approval Policies and Procedures” in the 2025 Proxy Statement, which information is incorporated herein by reference.

Exhibits and Financial Statement Schedules

(a) The following are filed as part of this Annual Report:

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EXHIBIT INDEX

3.1 Amended and Restated Articles of Incorporation, effective August 9, 2011 (incorporated herein by reference to the Registrant’s Current Report on Form 8-K Registration Statement filed August 9, 2011, File No.

3.2 Amended and Restated Bylaws, effective November 1,2023 (incorporated herein by reference to the Registrant’s Current Report on Form 8-K dated November 2, 2023, File No.

3.2 Amended and Restated Bylaws, effective as of April 17, 2025 (incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarter ended December 31, 2024.

4.1 Description of Registrant’s Securities Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021, File No.

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10.1† Form of Universal Leaf Tobacco Company, Incorporated Executive Life Insurance Agreement (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 1994, File No.

10.2† Universal Leaf Tobacco Company, Incorporated Deferred Income Plan (incorporated herein by reference to the Registrant’s Report on Form 8-K, dated February 8, 1991, File No.

10.3† Universal Leaf Tobacco Company, Incorporated Benefit Replacement Plan (incorporated herein by reference to the Registrant’s Report on Form 8-K, dated February 8, 1991, File No.

10.2† Universal Leaf Tobacco Company, Incorporated Deferred Income Plan (incorporated herein by reference to the Registrant’s Current Report on Form 8-K, dated February 8, 1991, File No.

10.3† Universal Leaf Tobacco Company, Incorporated Benefit Replacement Plan (incorporated herein by reference to the Registrant’s Current Report on Form 8-K, dated February 8, 1991, File No.

10.4† Universal Leaf Tobacco Company, Incorporated 1994 Benefit Replacement Plan (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 1994, File No.

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10.11† Universal Corporation 2002 Executive Stock Plan, as amended on August 7, 2003 (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2003, File No.

10.12† Form of Restricted Stock Units Award Agreement (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed November 10, 2008, File No.

10.12† Form of Restricted Stock Units Award Agreement (incorporated herein by reference to the Registrant’s Current Report on Form 8-K, dated November 10, 2008, File No.

10.13† Universal Corporation 2007 Amended and Restated Stock Incentive Plan effective August 7, 2012 (incorporated herein by reference to Exhibit A to the Registrant’s definitive proxy statement filed June 28, 2012, File No.

10.14† Amended and Restated Universal Corporation Executive Officer Annual Incentive Plan (incorporated herein by reference to the Registrant's definitive proxy statement filed July 24, 2019, File No.

10.15† Universal Corporation 2017 Stock Incentive Plan (incorporated herein by reference to the Registrant's definitive proxy statement filed June 26, 2017 (File No.

10.14† Amended and Restated Universal Corporation Executive Officer Annual Incentive Plan (incorporated herein by reference to Exhibit A to the Registrant's definitive proxy statement filed July 24, 2019, File No.

10.15† Universal Corporation 2017 Stock Incentive Plan (incorporated herein by reference to Exhibit A to the Registrant's definitive proxy statement filed June 26, 2017 (File No.

10.16† Universal Corporation 2023 Stock Incentive Plan (incorporated herein by reference to the Registrant's definitive proxy statement filed June 23, 2023 (File No.

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10.24† Form of Universal Corporation 2021 Restricted Stock Units Award Agreement (incorporated herein by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, File No.

10.25 Purchase Agreement dated as of September 6, 2021, by and among Shank's Extracts, Inc., the stockholder named therein, Rolling Rock Transit Company and Universal Corporation (incorporated herein by reference to the Registrant's Current Report on form 8-k filed September 7, 2021.

10.25 Credit Agreement dated December 15, 2022 among the Company, JPMorgan Chase Bank, N.A., as Administrative Agent, Truist Bank and AgFirst Farm Credit Bank, as Co-Syndication Agents and First Horizon, KeyBank National Association and Citibank, N.A., as Co-Documentation Agents (incorporated herein by reference to the Registrant’s Current Report on Form 8-K dated December 16, 2022, File No.

19.1 Universal Corporation Insider Trading Policy and Procedures*

10.26 Consulting Agreement with George C.

Freeman, III (incorporated herein by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, File No.

10.27† Form of Universal Corporation Non-employee Director Restricted Stock Units Award Agreement.*

10.28† Form of Universal Corporation Performance Stock Units Award Agreement.*

10.29† Form of Restricted Stock Units Award Agreement.*

10.30† Restricted Stock Units Award Agreement, dated May 30, 2025, between Universal Corporation and Airton L.

19.1 Universal Corporation Insider Trading Policy and Procedures (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the year ended March 31, 2024, File No.

21 Subsidiaries of the Registrant.*

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Section 1350.*

97.1 Universal Corporation Dodd-Frank Clawback Policy*

97.1 Universal Corporation Dodd-Frank Clawback Policy (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the year ended March 31, 2024, File No.

101 Interactive Data Files (submitted electronically herewith)*

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UNIVERSAL CORPORATION

/s/ GEORGE C.

/s/ PRESTON D.

Chairman, President, and Chief Executive Officer

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Signature Title Date

/s/ GEORGE C.

FREEMAN, III Chairman, President, Chief Executive Officer, and Director May 29, 2024

Freeman, III (Principal Executive Officer)

/s/ PRESTON D.

WIGNER Chairman, President, Chief Executive Officer, and Director May 30, 2025

Wigner (Principal Executive Officer)

KRONER Senior Vice President and Chief Financial Officer May 30, 2025

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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