Compensation Discussion and Analysis
Severance Plan
On June 15, 2017, we approved
the ScanSource, Inc. Executive Severance Plan (the Severance Plan), which became effective July 1, 2017. The Severance Plan was established to provide severance and other benefits to certain executives selected by the Compensation
Committee to participate in the Severance Plan.
Mr. Baurs employment agreement and the Severance Plan also provide that if the employment of
Mr. Baur or any executive selected by the Committee to participate in the Severance Plan, respectively, is terminated by the Company without cause, or if the Executive resigns for good reason, we will be required to pay or provide the
executives base salary earned through the date of termination. In addition, we will also be required to pay to the executive in such instances any other amounts or benefits the executive is eligible to receive under any Company plan, program,
policy, practice, contract or agreement in accordance with their terms. In such instances, we will also be required to provide severance benefits to the executive, subject to the executives execution of a release in a form provided in the
employment agreement, the employment letter, and/or the Severance Plan, as applicable, consisting of compensation equal to the average annual base salary and variable compensation earned by the executive, including any amounts earned but deferred,
in the last three fiscal years prior to the termination (the Average Compensation Amount), multiplied by a severance multiple, less withholdings. In the case of Mr. Baur, the severance multiple is equal to 2.5, in the case of
Mr. Lyons and Mr. Dean, the severance multiple is 1.5, and in the case of any other executive participating in the Severance Plan, the severance multiple will be set forth in a participation agreement between the Company and such executive
(a Participation Agreement), but such multiple may not exceed 2.5. In the event the termination occurs within 12 months after or prior to and in contemplation of certain change in control events, Mr. Baur will receive three times
his Average Compensation Amount, Mr. Lyons and Mr. Dean will receive two times their respective Average Compensation Amount and, in the case of any other executive participating in the Severance Plan, such executive will receive his
Average Compensation Amount multiplied by his change in control multiple, as set forth in a Participation Agreement, but such multiple may not exceed 2.5. In addition, in the event that the executives employment is terminated by us without
cause, or if the executive resigns for good reason, the executive will be entitled to receive a bonus equal to the pro-rata portion of the then current fiscal year annual variable compensation that would
otherwise be payable to the executive based on actual performance. For a period of up to twenty-four months following the date of such a termination (or in the case of Mr. Baur, until he attains 65 years of age), the executives shall be
entitled to participate in our medical and dental plans, with the executive paying the full premium charged for such coverage subject to the terms of the employment agreement, the employment letter, and/or the Severance Plan, as applicable.
If the executives employment is terminated for cause or if the executive voluntarily terminates his employment during the term of the agreement, other than for
good reason, we will only be obligated to provide any accrued amounts payable on the executives annual base salary or any other amounts not previously paid, but earned, by the executive as of the date of termination, and benefits under other
plans in accordance with their terms. If the executive dies, becomes disabled, or retires during the term of the employment agreement, the employment letter, and/or the Severance Plan, as applicable, we will only be obligated to provide any accrued
amounts payable on the executives annual base salary or any other amounts not previously paid, but earned, by the executive as of the date of termination, a bonus equal to the pro-rata portion of the
then current fiscal year annual variable compensation that would otherwise be payable to the executive based on actual performance, and benefits under other plans in accordance with their terms.
If we do not renew the employment agreement, or enter into a new employment agreement with the same or similar terms after the end of the employment period, and
Mr. Baur remains an employee of the Company in any capacity, Mr. Baurs employment will be on an at-will basis, and Mr. Baur generally will be eligible to receive the same severance
benefits set forth in the employment agreement.
In addition, each of the employment agreement, the employment letter, and/or the Severance Plan, as applicable,
requires the executive not to, during the term of his employment and for a period of two years following the termination of such executives employment: (a) compete with the Company; (b) solicit certain customers or suppliers and
certain prospective customers or suppliers of the Company; or (c) solicit employees to leave the Company. Each of the employment agreement, the employment letter, and/or the Severance Plan, as applicable, also requires the executive not to use
or disclose our confidential information or trade secrets during the term of his employment and for a period of five years thereafter or for so long as the trade secrets remain protected. In addition, the Company and each executive agree not to
disparage each other during the term of employment or for a period of five years thereafter. If an executive breaches or threatens to breach such restrictions on conduct, we may immediately cease any severance benefits or refuse such payment and
shall be entitled to recover from any such executive any amounts previously paid as a severance benefit.
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2020 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT
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