Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on such evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that, as of December 31, 2022, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
158
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria established in “Internal Control - Integrated Framework” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on that assessment, our management has concluded that our internal control over financial reporting was effective as of December 31, 2022. The effectiveness of our 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 appears herein.
ITEM 9B. OTHER INFORMATION
On February 22, 2023, Amrita Ahuja, the Chief Financial Officer was appointed as Chief Operating Officer of the Company. Ms. Ahuja will continue to serve as the Company’s Chief Financial Officer. Ms. Ahuja’s biographical information is included in the Company’s proxy statement filed April 28, 2022.
In connection with her appointment, Ms. Ahuja is expected to receive an incremental stock grant (in addition to her compensation as the Company’s Chief Financial Officer) of approximately $5 million in a mix of RSUs and stock options vesting over four years consistent with Ms. Ahuja’s existing stock grants, subject to the approval of the compensation committee of the board of directors of the Company.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
159
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item will be included in our Proxy Statement for the 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2022 ("Proxy Statement") and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item will be included in the Proxy Statement 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 Proxy Statement 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 Proxy Statement and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this item will be included in the Proxy Statement and is incorporated herein by reference.
160
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as a part of this Annual Report on Form 10-K:
(1) Consolidated Financial Statements:
Our Consolidated Financial Statements are listed in the “Index to Consolidated Financial Statements” under Part II, Item 8 of this Annual Report on Form 10-K.
(2) Financial Statement Schedules:
Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes herein.
(3) Exhibits
The documents listed in the following Exhibit Index of this Annual Report on Form 10-K are incorporated by reference or are filed with this Annual Report on Form 10-K, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K):
EXHIBIT INDEX
Incorporated by Reference
Exhibit Number Description Form File No. Exhibit Filing Date
2 .1
Scheme Implementation Deed, dated as of August 2, 2021, by and among Square, Inc., Lanai (AU) 2 Pty Ltd, and Afterpay Limited.
8-K 001-37622 2.1 August 2, 2021
2.2
Amending Deed, dated as of December 7, 2021, by and among Block, Inc., Lanai (AU) 2 Pty Ltd and Afterpay Limited.
8-K 001-37622 2.1 December 7, 2021
3.1
Amended and Restated Certificate of Incorporation of the Registrant, as amended .
10-K 001-37622 3.1 February 24, 2022
3.2
Amended and Restated Bylaws of the Registrant.
8-K 001-37622 3.1 October 21, 2022
4.1
Form of Class A common stock certificate of the Registrant.
S-1/A 333-207411 4.1 November 6, 2015
4.2
Indenture, dated May 25, 2018, by and between the Registrant and The Bank of New York Mellon Trust Company, N.A.
8-K 001-37622 4.1 May 25, 2018
4.3
Form of 0.50% Convertible Senior Note due 2023 (included in Exhibit 4. 3 ).
8-K 001-37622 4.2 May 25, 2018
4.4
Indenture, dated March 5, 2020, between the Registrant and The Bank of New York Mellon Trust Company, N.A.
8-K 001-37622 4.1 March 5, 2020
4.5
Form of 0.125% Convertible Senior Note due 2025 (included in Exhibit 4. 5 ) .
8-K 001-37622 4.2 March 5, 2020
4.6
Indenture, dated November 13, 2020, between the Registrant and The Bank of New York Mellon Trust Company, N.A. (2026 Convertible Notes).
8-K 001-37622 4.1 November 13, 2020
4.7
Form of 0% Convertible Senior Note due 2026 (included in Exhibit 4. 7 ).
8-K 001-37622 4.2 November 13, 2020
4.8
Indenture, dated November 13, 2020, between the Registrant and The Bank of New York Mellon Trust Company, N.A. (2027 Convertible Notes).
8-K 001-37622 4.3 November 13, 2020
4.9
Form of 0.25% Convertible Senior Note due 2027 (included in Exhibit 4. 9 ).
8-K 001-37622 4.4 November 13, 2020
4.10
Indenture, dated as of May 20, 2021, by and between Square, Inc. and Bank of New York Mellon Trust Company, N.A., as Trustee (2.75% Senior Notes due 2026).
8-K 001-37622 4.1 May 20, 2021
4.11
Form of 2.75% Senior Note due 2026 (included in Exhibit 4.1 1 ).
8-K 001-37622 4.2 May 20, 2021
161
Incorporated by Reference
Exhibit Number Description Form File No. Exhibit Filing Date
4.12
Indenture, dated as of May 20, 2021 by and between Square, Inc. and Bank of New York Mellon Trust Company, N.A., as Trustee (3.50% Senior Notes due 2031).
8-K 001-37622 4.3 May 20, 2021
4.13
Form of 3.50% Senior Note due 2031 (included in Exhibit 4.1 3 ).
8-K 001-37622 4.4 May 20, 2021
4.14
Trust Deed, dated as of March 12, 2021, by and between Afterpay and the Hongkong and Shanghai Banking Corporation Limited as trustee.
8-K 001-37622 4.1 January 31, 2022
4.15
Description of Class A Common Stock .
10-K 001-37622 4.7 February 26, 2020
10.1+
Form of Indemnification Agreement between the Registrant and each of its directors and executive officers.
S-1/A 333-207411 10.1 November 6, 2015
10.2.1+
Block, Inc. 2015 Equity Incentive Plan, as amended and restated
10-K 001-37622 10.2.1 February 24, 2022
10.2.2+ *
Form of Restricted Stock Unit Award and Restricted Stock Unit Agreement.
10.2.3+
Form of Restricted Stock Award and Restricted Stock Agreement.
10-K 001-37622 10.2.3 February 24, 2022
10.2.4+ *
Form of Stock Option Grant and Stock Option Agreement.
10.3+
Block, Inc. 2015 Employee Stock Purchase Plan, as amended and restated.
10-Q 001-37622 10.1 November 3, 2022
10.4+
Square, Inc. 2009 Stock Plan and related form agreements.
S-1 333-207411 10.4 October 14, 2015
10.5+
Square, Inc. Executive Incentive Compensation Plan.
S-1 333-207411 10.5 October 14, 2015
10.6+
Block, Inc. Outside Director Compensation Policy, as amended and restated.
10-K 001-37622 10.6 February 24, 2022
10.7+
Form of Change of Control and Severance Agreement between the Registrant and certain of its executive officers.
S-1 333-207411 10.7 October 14, 2015
10.8+
Form of Change of Control and Severance Agreement between the Registrant and certain of its executive officers entered into on and after January 27, 2020.
10-K 001-37622 10.8 February 24, 2022
10.9+
Offer Letter between the Registrant and Jack Dorsey, dated as of March 7, 2016.
10-K 001-37622 10.8 March 10, 2016
10.10+
Offer Letter between the Registrant and Alyssa Henry, dated as of October 1, 2015.
S-1/A 333-207411 10.12 November 6, 2015
10.11+
Offer Letter between the Registrant and Amrita Ahuja, dated as of December 16, 2018 .
8-K 001-37622 10.1 January 4, 2019
10.12
Revolving Credit Agreement dated as of May 1, 2020 among the Registrant, the Lenders Party Thereto, and Goldman Sachs Bank USA, as Administrative Agent.
8-K 001-37622 10.1 May 6, 2020
10.13
First Amendment to Credit Agreement, dated as of May 28, 2020, among the Registrant, the Lenders Party Thereto, and Goldman Sachs Bank USA, as Administrative Agent.
8-K 001-37622 10.1 June 3, 2020
10.14
Second Amendment to Credit Agreement, dated as of November 9, 2020, among the Registrant, the Lenders Party Thereto, and Goldman Sachs Bank USA, as Administrative Agent.
8-K 001-37622 10.6 November 10, 2020
10.15
Third Amendment to Credit Agreement, dated as of January 28, 2021, by and among the Registrant, the Lenders party thereto, and Goldman Sachs Bank USA, as administrative agent.
8-K 001-37622 10.1 February 3, 2021
10.16
Fourth Amendment to Credit Agreement, dated as of May 25, 2021, by and among Square, Inc., the lenders party thereto, and Goldman Sachs Bank USA, as administrative agent.
8-K 001-37622 10.1 May 26, 2021
10.17
Fifth Amendment to Credit Agreement, dated as of January 28, 2022, by and among Block, Inc., the lenders party thereto, and Goldman Sachs Bank USA, as administrative agent .
8-K 001-37622 10.1 January 31, 2022
10.18
Sixth Amendment to Credit Agreement, dated as of February 23, 2022, by and among Block, Inc., the lenders party thereto, and Goldman Sachs Bank USA, as administrative agent.
10-K 001-37622 10.21 February 24, 2022
10. 19 #
Master Development and Supply Agreement by and between the Registrant and TDK Corporation, dated as of October 1, 2013.
S-1 333-207411 10.15 October 14, 2015
162
Incorporated by Reference
Exhibit Number Description Form File No. Exhibit Filing Date
10.2 0 #
Master Manufacturing Agreement by and between the Registrant and Cheng Uei Precision Industry Co., Ltd., dated as of June 27, 2012.
S-1 333-207411 10.16 October 14, 2015
10.2 1 #
ASIC Development and Supply Agreement by and between the Registrant, Semiconductor Components Industries, LLC (d/b/a ON Semiconductor) and ON Semiconductor Trading, Ltd., dated as of March 25, 2013.
S-1 333-207411 10.17 October 14, 2015
10.2 2
Amendment 1 to ASIC Development and Supply Agreement, dated as of January 15, 2019.
10-K 001-37622 10.23 February 27, 2019
10.2 3
Paycheck Protection Program Liquidity Facility Letter Agreement, dated as of June 2, 2020.
8-K 001-37622 10.2 June 3, 2020
10.2 4
Paycheck Protection Program Liquidity Facility Letter of Agreement, dated as of January 29, 2021.
8-K 001-37622 10.2 February 3, 2021
10.25
Form of Convertible Note Hedge Confirmation.
8-K 001-37622 10.2 May 25, 2018
10.26
Form of Warrant Confirmation.
8-K 001-37622 10.3 May 25, 2018
10.27
Form of Convertible Note Hedge Confirmation.
8-K 001-37622 10.2 March 5, 2020
10.28
Form of Warrant Confirmation.
8-K 001-37622 10.3 March 5, 2020
10.29
Form of Convertible Note Hedge Confirmation (2026 Convertible Notes).
8-K 001-37622 10.2 November 10, 2020
10. 3 0
Form of 2026 Warrant Confirmation.
8-K 001-37622 10.4 November 10, 2020
10.31
Form of Convertible Note Hedge Confirmation (2027 Convertible Notes).
8-K 001-37622 10.3 November 10, 2020
10.32
Form of 2027 Warrant Confirmation.
8-K 001-37622 10.5 November 10, 2020
21.1*
List of subsidiaries of the Registrant.
23.1*
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
31.1*
Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1†*
Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document..
101.SCH Inline XBRL Taxonomy Extension Schema Document.
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
____________________
* Filed herewith.
+ Indicates management contract or compensatory plan.
# The Registrant has omitted portions of the relevant exhibit and filed such exhibit separately with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 406 of the Securities Act of 1933, as amended.
† The certifications attached as Exhibit 32.1 that accompany this Annual Report on Form 10-K are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.
163
ITEM 16. FORM 10-K SUMMARY
None.
164
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 23, 2023
BLOCK, INC.
By: /s/ Jack Dorsey
Jack Dorsey
Block Head and Chairperson
(Principal Executive Officer)
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints Jack Dorsey, Amrita Ahuja, and Chrysty Esperanza, and each of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their, his or her substitutes, may lawfully do or cause to be done by virtue hereof.
165
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ Jack Dorsey Block Head and Chairperson
(Principal Executive Officer) February 23, 2023
Jack Dorsey
/s/ Amrita Ahuja Chief Financial Officer (Principal Financial Officer)
February 23, 2023
Amrita Ahuja
/s/ Ajmere Dale Chief Accounting Officer (Principal Accounting Officer)
February 23, 2023
Ajmere Dale
/s/ Roelof Botha Director February 23, 2023
Roelof Botha
/s/ Amy Brooks Director February 23, 2023
Amy Brooks
/s/ Shawn Carter Director February 23, 2023
Shawn Carter
/s/ Paul Deighton Director February 23, 2023
Paul Deighton
/s/ Randy Garutti Director February 23, 2023
Randy Garutti
/s/ Jim McKelvey Director February 23, 2023
Jim McKelvey
/s/ Mary Meeker Director February 23, 2023
Mary Meeker
/s/ Sharon Rothstein Director February 23, 2023
Sharon Rothstein
/s/ Lawrence Summers Director February 23, 2023
Lawrence Summers
/s/ Darren Walker Director February 23, 2023
Darren Walker
166