Letter from our Chair and CEO
Dear Shareholders:
Thank you for your investment in ScanSource. On behalf of ScanSource’s Board of Directors, it is my pleasure to invite you to participate in the upcoming 2024 Annual Meeting of Shareholders and encourage you to review the attached Notice of Annual Meeting of Shareholders and Proxy Statement and vote using the attached proxy card.
I want to take this opportunity to share our Board’s priorities for creating long-term shareholder value and to highlight some important developments at ScanSource this year:
Our Performance in Fiscal 2023: Our fiscal year 2023 financial results demonstrated the value creation of the ScanSource business model. Our Specialty distribution team delivered outstanding revenue growth amid the supply chain challenges that persisted throughout our fiscal year. Our Modern Communications team delivered strong profit growth, especially from our Intelisys recurring revenue business. Our customers and our suppliers prefer the valuable relationships they have with our highly skilled and talented team of sales and support professionals. The ScanSource teams from Brazil, UK, Canada and the United States achieved these remarkable results by providing a superior level of execution and value to our customers.
For fiscal year 2023, ScanSource delivered 7% annual net sales growth, which exceeded our full year 2023 outlook. Our team produced record adjusted EBITDA of $180 million and a 4.75% adjusted EBITDA margin. These results validate our hybrid distribution strategy of connecting devices to cloud services and signify a positive outlook for the long-term success of ScanSource.
In order to better communicate our progress with our long-term strategic plan, we introduced a set of midterm (three to four year) goals. These goals are focused on growth in net sales, target adjusted EBITDA margin, target ROIC, and growth in our recurring revenue, and we will continue to update you on our progress on these goals.
As we enter fiscal year 2024, strong free cash flow and focus on Intelisys are keys for our success. Now that the supply chain challenges are behind us, we are executing a multi-quarter working capital improvement plan, with the support of key suppliers and customers, to meet our margin expectations and market demand. We have confidence in our business, and our business fundamentals remain strong in a softer revenue environment.
Ongoing Board Refreshment: Our Board is committed to ensuring we have the diversity of skills, expertise and backgrounds to drive value for our shareholders. Our Board recently appointed a new independent director, Vernon Nagel, who adds extensive executive leadership experience and financial and accounting expertise. Having served as Chairman, CEO and CFO at Acuity Brands, he brings a wealth of knowledge working with a multi-national company whose customers span several industries and was also instrumental in leading Acuity Brand’s digital transformation.
With the addition of Vern to the Board, we have added four new independent directors since 2020. Three of eight of our director nominees are either gender or racially/ethnically diverse. As part of our ongoing refreshment process, the Board is actively searching for qualified independent director candidates, including gender and ethnically diverse candidates.
The Board also announced the retirement of Randy Whitchurch who has served as a director since 2009. We thank Randy for his service to ScanSource and wish him the best in his retirement.
Ongoing Commitment to Corporate Social Responsibility and Sustainability: ScanSource is committed to being an agent of positive change in our local communities. Our Board and management team are prioritizing our ESG strategy to ensure it touches every aspect of our business and our stakeholders. Our cross-functional ESG Steering Committee provides guidance, evaluates important ESG initiatives for the Company, and drives progress toward our goals. Our latest ESG report expands disclosures developed using foundational parts of the Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB) frameworks. It outlines how our ESG efforts align with our overall strategic plan and touches every aspect of our business and the stakeholders we serve, both internally and externally.
Information Concerning Solicitation and Voting
This Proxy Statement is first being mailed on or about December 12, 2023 to shareholders of ScanSource, Inc. in connection with the solicitation by our Board of Directors (the “Board”) of proxies to be voted at the 2024 Annual Meeting of Shareholders to be held on Thursday, January 25, 2024, at 9:00 a.m., Eastern Standard Time, at our principal executive offices, located at 6 Logue Court, Greenville, South Carolina 29615, and any adjournments thereof. The Proxy Statement contains information relating to the proposals to be voted upon at the meeting, the voting process, our Board, the compensation of our “Named Executive Officers” (“NEOs”), and certain other information.
The solicitation of proxies is being made by our directors and employees, and the cost of soliciting proxies will be borne by the Company. Copies of solicitation materials may be furnished to brokers, custodians, nominees and other fiduciaries for forwarding to beneficial owners of shares of our common stock, and the Company will reimburse the normal handling charges for such forwarding services. Solicitation of proxies may be made by mail, in person, by telephone or by other electronic means, and by our directors, executive officers, and other employees, who will receive no additional compensation for their services.
As used in this Proxy Statement, the terms “ScanSource,” the “Company,” “we,” “us,” and “our” refer to ScanSource, Inc. and its consolidated subsidiaries as a combined entity, except where it is clear that the terms mean only ScanSource, Inc. The term “common stock” means shares of our common stock, no par value per share.
PROPOSALS TO BE CONSIDERED AND VOTE REQUIRED
The following proposals are expected to be voted upon at the 2024 Annual Meeting:
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The election of the eight individuals named in this Proxy Statement to serve as members of our Board for a one-year term, each to serve until the 2025 Annual Meeting of Shareholders and until their successor is duly elected and qualified; |
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An advisory vote to approve the compensation of our NEOs; and |
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The ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending June 30, 2024. |
Only shareholders of record on November 27, 2023 (the “record date”) will be entitled to vote at the 2024 Annual Meeting, and each share of common stock will be entitled to one vote. At the close of business on the record date, there were 25,124,513 shares of our common stock outstanding and entitled to vote at the 2024 Annual Meeting.
All shares of our common stock represented by valid proxies received pursuant to this solicitation, and not revoked before they are exercised, will be voted in the manner specified. If no specification is made, properly executed and returned proxies will be voted (i) “FOR” the director nominees named in this Proxy Statement; (ii) “FOR” approval, on an advisory basis, of the compensation of our NEOs; and (iii) “FOR” ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending June 30, 2024. Management is not aware of any matters, other than those specified herein, that will be presented for consideration at the 2024 Annual Meeting. If other matters are properly presented for consideration at the 2024 Annual Meeting, the proxies named on the proxy card will have the discretion to vote on those matters for you.
Our Bylaws provide that the presence in person or by proxy of the holders of a majority of the outstanding shares of common stock entitled to vote at the 2024 Annual Meeting is necessary to constitute a quorum at the 2024 Annual Meeting and at any adjournments thereof. Signed proxies that withhold authority to vote for directors or reflect abstentions or broker non-votes (as described below) will be counted for purposes of determining if a quorum is present at the 2024 Annual Meeting. If a quorum is not present, the shareholders holding a majority of the shares at the meeting, in person or by proxy, have the power to adjourn the meeting; however, if the reconvened meeting is more than 120 days from the date of the original meeting, then we must establish a new record date. At any reconvened meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally scheduled.
Brokers that are members of certain securities exchanges and that hold shares of our common stock in “street name” on behalf of beneficial owners have authority to vote on certain “discretionary” items when they have not received instructions from beneficial owners. Under applicable securities exchange rules, our proposal to ratify the appointment of the independent registered public accounting firm is considered a discretionary item. However, proposal numbers
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Corporate Governance
BOARD OF DIRECTORS
Director Independence
In accordance with the listing standards of The NASDAQ Stock Market (“NASDAQ”) and our Corporate Governance Guidelines (the “Guidelines”), our Board consists of a majority of independent directors. The Board has determined that all members of the Board, other than Mr. Baur, meet the requirements for being “independent” as defined in the SEC rules and regulations and NASDAQ listing standards.
The Board maintains an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. Each committee of the Board is comprised only of independent directors.
In addition, under our Guidelines, executive officers are prohibited from serving as a director of another company that concurrently employs a director of the Company.
Board Leadership Structure
The Board does not have a set policy on whether or not the Chief Executive Officer (“CEO”) and the Chair of the Board should be separate. Mr. Baur, who is also the CEO of the Company, serves as Chair of the Board, and Mr. Browning serves as Lead Independent Director of the Board. Mr. Baur was appointed as Chair upon the retirement of our former Chair, Mr. Fischer. Mr. Browning was appointed as the Lead Independent Director at that same time.
The Board reviews the Company’s board leadership structure annually. As part of this process, the Board considered the structures used by peer companies, alternative structures and the effectiveness of the Company’s current structure. The Board believes that the change to having Mr. Baur serve as Chair is important because it reflects the Board’s belief that the CEO can use his experience and performance at the Company to function as the Company’s overall leader, while the Lead Independent Director provides independent leadership to the directors and serves as an intermediary between the independent directors and the Chair. The resulting structure sends a message to our employees, customers and shareholders that we believe in having strong, unifying leadership at the highest levels of management. At the same time, having a Lead Independent Director with a well-defined role provides an appropriate level of independent oversight and an effective channel for communications when needed.
Our Guidelines set forth the role of the Lead Independent Director, who must satisfy our independence standards. The Lead Independent Director has the following duties, among others:
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presiding at meetings of Board in the absence of, or upon the request of, the Chair; |
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presiding over all executive meetings of non-employee and independent directors; |
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serving as a liaison and supplemental channel of communication between the Chair and the independent directors; |
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reviewing Board agendas and recommending matters in collaboration with the Chair; and |
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if requested by major shareholders, being available for consultation and direct communication. |
Board and Committee Meetings in Fiscal 2023
The Board met a total of twelve times during the 2023 fiscal year. Committees of the Board met a total of twelve times during the 2023 fiscal year. All of our directors attended at least 75% of Board and committee meetings that occurred during their tenure as a director during the 2023 fiscal year. We expect all Board members to attend annual meetings. All of our directors serving at the time attended the 2023 Annual Meeting, except for Mr. Emory.
Board’s Role in Risk Oversight
The Board as a whole actively oversees the risk management of the Company. Risks — the specific financial, operational, business and strategic risks that we face, whether internal or external — are identified by the Board and management together, and then each risk is assigned to either the full Board or a Board committee for oversight in accordance with its charter. Certain strategic and business risks, such as those relating to our products, markets and capital investments, are overseen by the entire Board. The full Board oversees the Company’s risk identification, risk assessment and management practices for strategic enterprise risks facing the company. In addition, each of the other committees oversees risks relevant to its scope of review. The Audit Committee oversees management of market and operational risks that could have a financial impact, or impact financial reporting, such as those relating to internal controls or liquidity. The Nominating and Corporate Governance Committee manages the risks associated with governance issues, such as the independence of the Board. The Compensation Committee is responsible for managing the risks relating to our executive compensation plans and policies and, in conjunction with the Board, key executive succession.
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Board of Directors
Management regularly reports to the Board or relevant committee on actions that we are taking to manage these risks. In addition, our Board committees annually evaluate compliance with their respective charters, ensuring that the committees are exercising proper oversight.
Information Security and Cybersecurity
Information security and cybersecurity are critical components of our risk management program and are vital to maintaining our proprietary information and the trust of our customers and employees. Our information security program includes policies and procedures, prevention and detection mechanisms, incident response, business continuity planning and employee compliance and security awareness training. We also engage with third-party information security experts to assess our defense mechanisms and have a cyber risk insurance policy in place that provides coverage for security incident response expenses, certain losses due to network security failures, investigation expenses, privacy liability and certain third-party liability. On May 14, 2023, we discovered that we were subject to a cybersecurity attack perpetrated by unauthorized third parties that affected our IT systems. Upon detection, we took immediate steps to address the incident, engaged third-party experts, and notified law enforcement. We have cyber insurance and are working with our insurance carriers on claims to recover costs incurred. On May 26, 2023, we substantially recovered our operations and completed the restoration of our pertinent IT systems. We have taken actions to strengthen our existing IT security infrastructure and will continue to implement additional measures to prevent unauthorized access to, or manipulation of, our systems and data.
Given the importance of information security and privacy to our stakeholders, the Board receives regular reports from senior management assessing our program for managing information security risks, including data privacy and data protection risks.
Director Education
The Company and each Board member are members of the National Association of Corporate Directors (“NACD”). As members of NACD and through other external director education service providers, the Company and each Board member have access to various programs, materials, reports, and research teams.
Corporate Governance Guidelines
The Board has established Guidelines that address various governance matters, including the role, function, size and composition of the Board, Board tenure, service on other public-company boards, conflict of interest issues, executive sessions of non-management directors, shareholder engagement, review of committee charters and the Board self-evaluation process. Copies of the Guidelines and certain other policies adopted by the Board are available on the “Investors” page of our website, www.scansource.com, under the “Governance” tab.
GENERAL BOARD FUNCTIONS
The Guidelines set forth general functions of the Board, including holding regular scheduled meetings and special meetings where appropriate, periodically reviewing management’s performance and our organizational structure, regularly reviewing management talent development and succession planning for our NEOs, reviewing and approving corporate strategy, determining compensation for our NEOs through the Compensation Committee and approving awards of equity-based compensation, overseeing our accounting and financial-reporting process and audits of our financial statements through the Audit Committee, identifying potential candidates for Board membership and reviewing Board succession planning, overseeing our risk management activities, and retaining independent advisors on behalf of the Board when appropriate.
DIRECTOR RESIGNATION POLICY
Section 4(c) of our Articles provides that directors are elected by a majority of votes cast in uncontested elections and a plurality of votes cast in contested elections. The Articles and Guidelines provide that a director will tender his or her resignation if, in an uncontested election, the director fails to receive a majority of the votes cast. The Board, on recommendation from the Nominating and Corporate Governance Committee, will then determine whether to accept the director’s resignation.
RETENTION OF INDEPENDENT ADVISORS
The Guidelines provide that the Board may retain independent advisors when appropriate.
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Board of Directors
SUCCESSION PLANNING
Our Board engages in an active succession planning process. On an annual basis, with the assistance of our CEO, it reviews the potential in-house candidates for each of the critical senior management positions and identifies areas of growth for those candidates that will best enable them to fill any need that we might have. Where there is not a satisfactory in-house candidate for a position, the Board considers whether outside candidates are likely to be available in a timely manner and whether other alternatives need to be considered. The Nominating and Corporate Governance Committee also regularly reviews Board succession planning and identifies potential candidates for Board membership, with the objective that all new, non-CEO candidates will be independent.
BOARD TENURE
The Board is elected annually and is not classified. The Board does not have a mandatory retirement age or term limits for directors. We believe our shareholders benefit from continuity of directors. To ensure the Board continues to generate new ideas and operate effectively, the Nominating and Corporate Governance Committee evaluates individual Board member performance and takes steps as necessary regarding continuing director tenure. The Nominating and Corporate Governance Committee considers each director’s age and length of tenure when considering Board composition and seeks to maintain a balance of experience and continuity, along with fresh perspectives.
COMPOSITION OF BOARD
The size of the Board may be increased or decreased by resolution of the Board. Michael J. Grainger, who served on the Board since 2004, retired from the Board when his current term of office expired at the 2023 Annual Meeting. In connection with Mr. Grainger’s retirement, the Board decreased in size to eight members. In August 2023, the Board decided to expand the size of the Board to nine members. The Board appointed Vernon J. Nagel to serve as a new member of the Board. The Board currently consists of nine members. Charles R. Whitchurch, who has served on the Board since 2009, notified the Board that he plans to retire from the Board when his current term of office expires at the 2024 Annual Meeting. The Board expects that the Board will be decreased in size to eight members at that time.
The Guidelines provide that a majority of the Board will at all times be independent. Through the Nominating and Corporate Governance Committee, the Board will identify potential candidates for Board membership with the objective being that all new, non-management candidates will be independent. The Nominating and Corporate Governance Committee will confirm the independence of the non-management directors on an annual basis. The Board has determined that Directors Browning, Emory, Mathis, Nagel, Ramoneda, Rodek, Temple and Whitchurch meet the requirements for being “independent” as defined in the NASDAQ listing standards. Mr. Baur is the only management member of the Board.
BOARD DIVERSITY
The Nominating and Corporate Governance Committee regularly reviews the diversity of skills, expertise, background and other characteristics of existing and potential director candidates in deciding on nominations for election to the Board by our shareholders or for appointment to the Board. The Nominating and Corporate Governance Committee recognizes the benefits associated with a diverse board and takes diversity considerations into account when identifying candidates. The Nominating and Corporate Governance Committee seeks director nominees that would complement and enhance the effectiveness of the existing Board with respect to skills, knowledge, perspectives, experience, background and other characteristics. Furthermore, we are committed to the value of inclusion, and the Board believes it is important to consider diversity of race, ethnicity, gender, age, education, cultural background, and professional experiences. As part of the Board’s refreshment process and succession planning, the Board is actively searching for qualified independent director candidates, including gender and ethnically diverse candidates.
SERVICE ON OTHER PUBLIC COMPANY BOARDS
A director may serve on only four public boards of directors (including the Company’s Board) and no more than three public company audit committees. The CEO may serve on only two public boards of directors (including the Company’s Board). All members of the Board, including the CEO, are compliant with the Guidelines regarding service on boards and audit committees of other public companies.
EXECUTIVE SESSIONS OF NON-MANAGEMENT DIRECTORS
Pursuant to the Guidelines, the non-management directors must meet regularly as a Board and in committees in executive session, without the participation of the CEO or other members of the Company’s management. Our non-management directors met regularly in executive session during fiscal 2023 Board and committee meetings.
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Committees of the Board
Audit Committee
The Board has a standing Audit Committee. The Audit Committee currently is composed of Chair Mathis and Directors Browning, Emory, Nagel, Ramoneda, Rodek, Temple and Whitchurch. The functions of the Audit Committee include selecting the independent auditor, reviewing the scope of the annual audit undertaken by our independent auditor and the progress and results of its work, overseeing the quality, adequacy and effectiveness of our data security, privacy, technology and information security policies, procedures and internal controls, reviewing our financial statements and our internal accounting and auditing procedures and overseeing our internal audit function. The Audit Committee met four times during the 2023 fiscal year. Each member of the Audit Committee meets the definition of independence for audit committee members as set forth in the NASDAQ listing standards and Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Board has determined that Chair Mathis and Directors Browning, Nagel, Rodek, Temple and Whitchurch each meets the requirements of an “audit committee financial expert” as defined in SEC rules and regulations.
Compensation Committee
The Compensation Committee is currently composed of Chair Temple and Directors Browning, Emory, Mathis, Nagel, Ramoneda, Rodek and Whitchurch. The functions of the Compensation Committee include reviewing and approving executive compensation policies and practices, reviewing salaries and bonuses for our NEOs, overseeing our equity-based plans, overseeing compensation risk assessment and considering such other matters as may from time to time be referred to the Compensation Committee by the Board. The Compensation Committee met four times during the 2023 fiscal year. Each member of the Compensation Committee meets the independence requirements for compensation committee members as set forth in the NASDAQ listing standards, and the Exchange Act. See “Executive Compensation — Compensation Discussion and Analysis” for a further discussion of the Compensation Committee’s processes and procedures for the consideration and determination of executive compensation.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is currently composed of Chair Browning and Directors Emory, Mathis, Nagel, Ramoneda, Rodek, Temple and Whitchurch. The functions of the Nominating and Corporate Governance Committee include oversight and responsibility for (i) identifying individuals qualified to serve on our Board and recommending that the Board select a slate of director nominees for election at each annual meeting of our shareholders; (ii) assisting our Board in fulfilling its oversight responsibilities under the NASDAQ listing standards, our Articles and Bylaws and South Carolina law; and (iii) implementing our programs for complying with the rules and regulations of the SEC and NASDAQ (in conjunction with the Audit Committee, where necessary or appropriate) as well as other NASDAQ rulemaking initiatives pertaining to corporate governance considerations. Each member of the Nominating and Corporate Governance Committee meets the independence requirements as set forth in the NASDAQ listing standards. The Nominating and Corporate Governance Committee held four committee meetings in the 2023 fiscal year.
CANDIDATES FOR THE BOARD
The Nominating and Corporate Governance Committee will identify and screen potential nominees for directors, including nominees recommended by shareholders or third-party search firms, and recommend nominees to the Board. See “Shareholder Proposals” for a discussion of the Company’s policies for shareholder nominees. The Nominating and Corporate Governance Committee has not adopted specific objective requirements for service on the Board. Instead, the Nominating and Corporate Governance Committee will consider various factors in determining whether to recommend to the Board potential new Board members, or the continued service of existing members, including the nominee’s experience and skills and whether such skills or experience are particularly relevant to us; whether the nominee would be an independent director under NASDAQ listing standards and applicable law; and in the case of existing members, the nominee’s contributions as a member of the Board during his or her prior service. In addition, in determining whether to recommend a director nominee, the committee members will consider and discuss diversity, among other factors, with a view toward the needs of the Board as a whole. Generally, the Board considers such factors as race, age, gender, national origin and other factors as part of the consideration with regard to diversity. The Nominating and Corporate Governance Committee strives to nominate directors with a variety of complementary skills so that the Board, as a whole, will possess the appropriate talent, skills and expertise to oversee our business. The Nominating and Corporate Governance Committee believes that the inclusion of diversity as one of many factors considered in selecting director nominees is consistent with the committee’s goal of creating a Board that best serves the needs of the Company and the interests of our shareholders. The Nominating and Corporate Governance Committee
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Environmental, Social, and Corporate Governance
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Workforce Representation |
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Review workforce metrics, determine areas of opportunity and establish goals |
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Continue efforts with Historically Black Colleges and Universities (“HBCU”) and 2-year colleges |
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In CY2022, we held our first HBCU Recruitment Summit, inviting recruitment directors from select HBCUs to better connect with their institutions and students. |
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Make intentional efforts to improve diverse representation at all levels |
An example of our recent DEI efforts is the introduction of unconscious bias training for all managers in our organization. The training discusses what biases are, how to recognize them, and steps managers can take to become conscious of this in their thinking. We introduced unconscious bias training as a requirement for all people leaders to complete in calendar year 2022 and mandatory unconscious bias training for all employees is taking place in calendar year 2023. This topic is important and impactful to all levels of our organization.
Supply Chain Resilience
We are committed to building a supply chain that is focused on shared values and sustainability. ScanSource’s continued success is built on being a values-driven company, which is understood by all members of the ScanSource team. As a hybrid distributor of technology solutions and not a manufacturer, ScanSource is not an emissions-intensive business and has lower exposure to risks such as product redesign costs and responsible mineral sourcing.
Our opportunities in clean technology and supporting sustainable life-cycle products are attributed to our distribution portfolio, and we are supportive of our suppliers’ efforts to bring to market more products of this type. Additionally, our Business Partner Code of Conduct requires that our suppliers and partners throughout the supply chain are dedicated to the values of corporate social responsibility, fairness, and ethics. Supplier diversity is a key topic for our business, and we continue to examine existing policies and procedures to better understand our risk areas and opportunities to choose suppliers with a more positive environmental impact whenever possible.
Corporate Governance Updates
In November 2023, the Board adopted a new compensation clawback policy (the “Compensation Recovery Policy”) consistent with the requirements of Rule 10D-1 under the Exchange Act and the applicable NASDAQ listing standards. The Compensation Recovery Policy provides for the recovery of erroneously awarded incentive-based compensation “received” by current and former executive officers in connection with a financial restatement, regardless of fault or misconduct, on or after October 2, 2023. In addition, the Company implemented other governance improvements in the form of an updated code of conduct (including an updated insider trading policy) and equity award grant policy, board refreshment activities and board committee restructuring.
Charitable Activities
Shortly after our founding in 1992, we formed the ScanSource Charitable Foundation to support our commitment to giving back to our communities where we have operations through investments of time, talent, and resources. Our philanthropic efforts support the following areas of focus for giving back: community, education, environment, welfare of children, and workforce development. In calendar year 2022, we donated approximately $0.7 million to a variety of non-profit organizations in communities in which our offices are located. Since our founding in 1992, ScanSource has invested more than $20 million in our communities focused on community enrichment, education, environment, leadership development, recruiting, welfare of children, and workforce development. Our employees and executives also generously devote their time to serve as volunteers in the community and local schools, colleges and universities. These efforts positively impact our business, as we increase community support, provide our employees with greater opportunities for leadership development and training, and improve the job satisfaction of our employees.
We will continue to evolve our ESG program in a manner that is beneficial to the Company and our stakeholders.
ScanSource publishes an ESG report that is periodically updated and, while it can be found at www.scansource.com/about/responsibility, the ESG report is not being incorporated by reference into this proxy statement.
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2023 Director Compensation Table
Stock Ownership and Retention Policy
Under the equity ownership policy, directors are expected to hold five times their annual Board cash retainer in Company securities. The policy also incorporates a retention requirement by requiring such persons to retain 50% of the net shares resulting from the vesting of certain awards until the required ownership under the policy is met. As of the end of the 2023 fiscal year, all directors were in compliance with this policy.
CODE OF CONDUCT
Our Code of Conduct applies to all of our executive officers, including our CEO and our Chief Financial Officer (“CFO”), directors and employees. In November 2023, the Board approved updates to our Code of Conduct to reflect new amendments to Rule 10b5-1 under the Exchange Act, including (i) mandatory “cooling-off” periods prior to trading under a new or amended Rule 10b5-1 plan, (ii) prohibitions on multiple overlapping Rule 10b5-1 plans, (iii) limitations on single-trade arrangements, and (iv) new disclosure requirements with respect to insider trading policies and procedures. We have posted the Code of Conduct on the “Investors” page of our website, www.scansource.com, under the “Governance” tab. We will provide a copy of the Code of Conduct upon request to any person without charge. Such requests may be transmitted by regular mail in the care of the Corporate Secretary.
We will post on our website, www.scansource.com, under the “Governance” tab, or will disclose on a Form 8-K filed with the SEC, any amendments to, or waivers from, any provision of the Code of Conduct that applies to our CEO and our CFO, or persons performing similar functions, and that relate to (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, (ii) full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in other public communications made by us, (iii) compliance with applicable governmental laws, rules and regulations, (iv) the prompt internal reporting of violations of the Code of Conduct to an appropriate person or persons identified in the Code of Conduct, or (v) accountability for adherence to the Code of Conduct. Any waiver granted to an executive officer or a director may only be granted by the Board and will be disclosed, along with the reasons therefor, on a Form 8-K filed with the SEC. No waivers were sought or granted in fiscal 2023.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended June 30, 2023, directors Browning, Emory, Mathis, Ramoneda, Rodek, Temple and Whitchurch served on the Compensation Committee. No member of the Compensation Committee was an officer or employee of the Company or any of its subsidiaries during fiscal 2023, or at any time prior thereto. During fiscal 2023, no member of the Compensation Committee had any relationship with the Company requiring disclosure under Item 404 of Regulation S-K under the Exchange Act, and no executive officers served on the compensation committee (or equivalent) or the board of directors of another entity whose executive officer(s) served on our Board or Compensation Committee.
CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
The Audit Committee reviews all related party transactions (as defined by Item 404 of Regulation S-K) in accordance with NASDAQ listing standards. In addition, the charter of the Audit Committee requires the Audit Committee to review a summary of any director’s or officer’s related-party transactions and potential conflicts of interest on a yearly basis. The charter also requires the Audit Committee to review our conflict of interest policy (which is part of our Code of Conduct) and compliance with that policy on an annual basis.
We are not aware of any related-party transaction since the beginning of fiscal 2023 required to be reported under our policy or applicable SEC rules for which our policies and procedures did not require review or for which such policies and procedures were not followed.
There are no family relationships among the executive officers and directors, and there are no arrangements or understandings between any independent director or any other person pursuant to which that independent director was selected as a director.
RECOMMENDATION OF BOARD OF DIRECTORS
The Board of Directors unanimously recommends that shareholders vote “FOR” each of the nominees previously listed in this Proxy Statement.
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Compensation Discussion and Analysis
Supplemental MIP Bonus Program
In August 2023, against the backdrop of losses incurred by the Company in connection with the cybersecurity attack in the fourth quarter of fiscal 2023 (the “Cyberattack”), the Compensation Committee established a supplemental plan under the MIP to provide for the award to the NEOs of an additional cash bonus payment (the “Cyber Insurance Program”). Under the Cyber Insurance Program, each NEO will be eligible to receive an additional cash bonus payment in the event the Company accrues any insurance proceeds to reimburse the Company for the losses incurred in connection with the Cyberattack. Any cash bonus payments that become payable under the Cyber Insurance Program will be paid no later than 30 days after accrual of the reimbursements. The Cyber Insurance Program enables the NEOs to earn the portion of the cash bonus they would have received under the MIP for fiscal 2023 if the insurance proceeds for losses incurred in connection with the Cyberattack were accrued during fiscal 2023.
Long-Term Equity Incentives
GENERAL OVERVIEW
Equity awards are a significant component of our NEO compensation. The Compensation Committee annually grants equity awards, typically in the form of restricted stock awards and/or restricted stock units and performance-based restricted stock units or awards. We believe this element of our compensation program provides our NEOs with the opportunity to develop a significant ownership stake in the Company and directly aligns their interests with the long-term interests of our shareholders. In addition, equity awards serve as a retention vehicle for the NEOs because, if the applicable criteria are met, they typically vest over a set number of years and generally are forfeited if not vested upon termination of employment. We maintain a formal Equity Award Grant Policy, whereby equity awards to employees are made by, or with the oversight of, the Compensation Committee or the Board. Under the policy, the Compensation Committee must approve any equity awards to the NEOs, and our Principal Accounting Officer and human resources management oversee the documentation of, and accounting for, equity award grants.
The number of shares subject to equity awards granted by the Compensation Committee to NEOs in a given year is based on, among other things, overall Company performance, the number of shares available for awards under the ScanSource, Inc. 2021 Omnibus Incentive Compensation Plan (the “2021 Plan”) or successor plan, the value of the proposed award, the amount and realizable value of equity awards awarded in prior years, total compensation and consideration of the competitive market practice for the respective position level and experience, with the ultimate objective of motivating, rewarding and retaining NEOs while maintaining efficient use of equity and preserving shareholder value. The Compensation Committee determines the number of shares of a value-based restricted stock unit award by using the closing price of our stock on the grant date.
The grant date for annual equity awards provides that the grant date will be the third trading date following the meeting at which the awards are approved, provided that the Company is in an open trading window, and otherwise on the first trading day of the next open window. In addition, vesting of such awards accelerates on a change in control followed by termination in certain instances or upon death, disability or termination due to retirement. In certain circumstances, the vesting term may be reduced due to termination of employment, death or disability of a participant.
The Compensation Committee may also make special grants of equity awards during the year in the case of the hiring or promotion of certain eligible persons, or in other situations not involving annual grants. The grant date for non-annual grants approved by the Compensation Committee on or before the 15th day of the second month of the quarter will be the first day of the third month of such quarter. For non-annual grants approved after the 15th day of the second month of the quarter, the grant date will be the first day of the third month of the following quarter. In any event, all equity awards must be made during an open trading window. In fiscal 2023, the only grant of equity awards to a NEO made outside of the annual equity grant timing was Ms. Smith’s new hire grant, which was intended to serve as her annual grant for fiscal 2023.
FISCAL 2023 ANNUAL LONG-TERM INCENTIVE AWARDS
The annual grant of long-term equity incentives was awarded to our NEOs in August 2022, except for Ms. Smith’s new hire grant as discussed above. In fiscal 2023, 50% of the long-term equity incentives awarded to our NEOs were in the form of time-based restricted stock units and the remaining 50% were in the form of performance-based restricted stock units. The time-based restricted stock units generally vest and become exercisable in one-fourth increments on the anniversary of the grant date over four years, subject to the continued employment of the NEO on the applicable
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Compensation Discussion and Analysis
Other Important Compensation Policies Affecting the Named Executive Officers
Compensation Recovery Policy
The Compensation Recovery Policy provides for the recovery of erroneously awarded incentive-based compensation “received” by current and former NEOs in the event the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, regardless of fault or misconduct. If an NEO receives an award under our equity or cash incentive plans based on financial statements that subsequently are restated in a way that would decrease the amount of the award to which such NEO was entitled, then the NEO will be required to refund the Company the difference between what they received and what they should have received. In addition, this policy requires the recoupment of any compensation to the extent mandated by all applicable laws, rules, and regulations. The Compensation Recovery Policy applies to compensation received on or after October 2, 2023. The Compensation Committee monitors laws, rules and regulations on compensation recovery policies and will amend this policy as required to comply with any new compensation recovery rules or regulations.
Stock Ownership Requirements
The Compensation Committee has adopted minimum ownership requirements for Company stock for the CEO. The ownership target for the CEO has been established as three times his annual base compensation. Our CEO is expected to utilize grants under equity compensation plans to maintain the levels of ownership required by the policy. The policy also incorporates an equity retention requirement by requiring him to retain 50% of the net shares resulting from the vesting or exercise of certain awards to obtain the required ownership under the policy.
As of June 30, 2023, our CEO was in compliance with our stock ownership guidelines.
Anti-Hedging and Anti-Pledging Policy
Our NEOs and directors are prohibited from holding Company securities in margin accounts or pledging Company securities as collateral for a loan. All NEOs and directors are in compliance with this policy. Our NEOs and directors are also prohibited from hedging transactions.
Perquisites
We provide only limited perquisites to our NEOs, including relocation cost reimbursements and the availability of a voluntary comprehensive physical examination once every fiscal year. The physical examinations help ensure our NEOs’ continued health and ability to render services to the Company. The physicals are provided to encourage senior leaders of the Company to set an example for living positively and active healthy living. We do not provide any other material perquisites to our NEOs.
Health and Insurance Plans
Our NEOs are entitled to participate in our health, vision, dental, paid time off, life, disability and employee stock purchase plans to the same degree that our other employees are entitled to participate. In addition, our NEOs participate in a supplemental long-term disability plan and each receives term life insurance in the amount of $1,000,000 (subject to underwriting) and $500,000 (subject to limited underwriting).
Deferred Compensation Plan
We maintain a deferred compensation plan pursuant to which NEOs may defer a portion of their annual compensation. These deferrals are matched to the extent specified in each NEO’s employment agreement or letter, and such contributions vest over a five-year period. Participants invest their deferrals and Company matching contributions among various funds designated by the plan administrator (and currently may not be invested in our common stock). Participants become fully vested in any employer contributions as long as they are continuously employed until their death, total disability, they reach the date in which the sum of age and years of service equals or exceeds 65, or the occurrence of a change in control. We maintain the deferred compensation plan to provide a competitive benefit and to facilitate adequate savings for retirement on a tax efficient basis for our NEOs.
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Compensation Discussion and Analysis
Retirement Benefits
The NEOs are eligible to participate in our 401(k) Plan, which is a Company-wide, tax-qualified retirement plan. The intent of this plan is to provide all employees with a tax-advantaged savings opportunity for retirement. We sponsor this plan to help employees at all levels save and accumulate assets for use during their retirement. Eligible pay under this plan is capped at Internal Revenue Code annual limits. We provide a 50% matching contribution on the first 6% that an employee contributes. These Company contributions vest over a five-year period.
Employee Stock Purchase Plan
Eligible employees may participate in our Employee Stock Purchase Plan (“ESPP”), which is a Company-wide employee stock purchase plan. The intent of the ESPP is to assist our employees in acquiring a stock ownership interest in the Company.
Employment Agreements and Employment Letters
We have determined that our Company’s and our shareholders’ interests are best served by entering into (i) an employment agreement with our CEO and (ii) employment letters with an accompanying severance plan with our other NEOs. Such agreements, letters and plans are the result of arms’ length negotiations between the Compensation Committee, the Company, the CEO and other NEOs, and all are approved by the Compensation Committee. We believe that these employment arrangements benefit us and our shareholders by permitting us to attract and retain NEOs with demonstrated leadership abilities and to secure their services over an extended period of time. In addition, the employment arrangements align executive interests with the long-term interests of the Company and serve our recruitment and retention goals by providing executive officers with security based on the knowledge of how they will be compensated over the course of their employment, while at the same time providing the Company with significant protections regarding non-competition, non-solicitation of business and employees, and confidential business information.
On June 15, 2017, we entered into a three-year employment agreement, effective July 1, 2017, with Mr. Baur. Mr. Baur’s employment agreement provides for:
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a base salary of $875,000 per year; |
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an annual target variable compensation opportunity of 150% of his base salary (with a maximum opportunity of 200% of target) based upon performance and the attainment of performance goals set by the Compensation Committee; |
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consideration for inclusion in our annual equity grant program at a grant level opportunity of $2,250,000; |
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the opportunity to participate in our Nonqualified Deferred Compensation Plan by deferring up to 50% of base salary and/or up to 100% of annual variable compensation, with a match of 50% of deferred amounts to be made by the Company, up to a maximum of $200,000 per year; and |
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automatic one-year renewals unless 180 days’ prior notice of non-renewal is given to the other party following the initial term. |
In addition, we will make additional payments to Mr. Baur’s deferred compensation account to cover the cost of future premiums for “access only” continuation coverage under our medical and dental plan following termination of employment assuming Mr. Baur is enrolled in Medicare Parts A, B and D, obtains a Medicare supplemental policy until age 80, and pays the full cost for such coverage.
Under Mr. Baur’s employment agreement, variable cash incentive opportunities will continue to be based upon the performance and attainment of performance goals to be established annually by the Compensation Committee, subject to maximum amounts that may be earned. Mr. Baur’s annual equity award opportunity is subject to the Compensation Committee’s discretion and the terms of our equity plan and related equity award agreements.
Mr. Baur’s employment agreement also provides for severance payments to Mr. Baur upon certain events, as further described in the “Severance Plan” section below.
On November 16, 2020, we entered into an employment letter with Mr. Jones in connection with his appointment as our Senior Executive Vice President and Chief Financial Officer, effective December 14, 2020. Under the employment letter, Mr. Jones will be paid an annual base salary and be eligible to participate in the variable cash compensation incentive
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Compensation Discussion and Analysis
program. He also will receive other benefits, including relocation benefits, change-in-control payments as a participant in the Severance Plan described below, and is eligible for participation in our other long-term incentive programs and our Nonqualified Deferred Compensation Plan.
On February 9, 2023, we entered into an employment letter with Ms. Smith in connection with her appointment as our Senior Executive Vice President and Chief Legal Officer, effective February 21, 2023. Under the employment letter, Ms. Smith will be paid an annual base salary and be eligible to participate in the variable cash compensation incentive program. She also will receive other benefits, including relocation benefits, change-in-control payments as a participant in a Severance Plan described below, and is eligible for participation in our other long-term incentive programs and our Nonqualified Deferred Compensation Plan.
On May 6, 2021, we entered into an employment letter with Ms. Hayden in connection with her appointment as our Senior Executive Vice President and Chief Information Officer, effective June 7, 2021. Under the employment letter, Ms. Hayden will be paid an annual base salary and be eligible to participate in the variable cash compensation incentive program. She also will receive other benefits, including relocation benefits, change-in-control payments as a participant in a Severance Plan described below, and is eligible for participation in our other long-term incentive programs and our Nonqualified Deferred Compensation Plan.
On September 27, 2019, we entered into an employment letter with Mr. Eldh in connection with his appointment as our Senior Executive Vice President and Chief Revenue Officer, effective October 1, 2019. Under the employment letter, Mr. Eldh was paid an annual base salary and eligible to participate in the variable cash compensation incentive program. He also received other benefits, including relocation benefits, change-in-control payments as a participant in a Severance Plan described below, and was eligible for participation in our other long-term incentive programs and our Nonqualified Deferred Compensation Plan. We entered into a Separation Agreement and General Release with Mr. Eldh in September 2023 which superseded his rights under his employment letter and the Severance Plan.
See the “Employment Arrangements and Potential Payments upon Certain Events” section for more information on Mr. Baur’s, Mr. Jones’, Ms. Smith’s, Ms. Hayden’s, and Mr. Eldh’s employment arrangements that were in effect during fiscal 2023.
Severance Plan
We have established a severance plan to provide severance and other benefits to certain executives selected by the Compensation Committee to participate in the severance plan. The Company’s severance plan is uniform for the current executives selected by the Compensation Committee to participate at their respective levels, except for Mr. Eldh, who had several provisions that were individually tailored, as described below. We refer to the Company severance plan and Mr. Eldh’s severance plan collectively as the “Severance Plan.”
The employment arrangements with our NEOs and the Severance Plan provide that, if the employment of any participant in the Severance Plan is terminated by the Company without cause, or if the Executive resigns for good reason, we will be required to pay or provide the executive’s 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 executive’s execution of a release, 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 completed 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. Jones, Ms. Smith, Ms. Hayden, and Mr. Eldh 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. Jones, Ms. Smith, Ms. Hayden, and Mr. Eldh, 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 or her Average Compensation Amount multiplied by his or her change in control multiple,
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Compensation Discussion and Analysis
as set forth in a Participation Agreement. In addition, in the event that the executive’s 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 otherwise would be payable to the executive based on actual performance. For a period of up to twenty-four months (or in the case of Mr. Eldh, for up to eighteen 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 executive’s employment is terminated for cause or if the executive voluntarily terminates his or her 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 executive’s annual base salary or any other amounts not previously paid, but earned, by the executive through 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 executive’s 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. Baur’s 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 employment agreement, employment letter, and/or Severance Plan, as applicable, requires the executive not to, during the term of his or her employment and for a period of two years (or in the case of Mr. Eldh, for a period of 18 months) following the termination of such executive’s 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 or her 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.
Post-Termination Restrictions and Compensation
The Compensation Committee believes that our NEOs should be provided with reasonable severance benefits in the event a NEO is terminated under certain circumstances. Severance benefits for NEOs reflect the fact that the NEO may not be able to find reasonably comparable employment within a reasonable period of time following termination. In addition, the Compensation Committee believes that certain post-termination benefits such as change in control payments will allow the NEOs to focus their time on potential transactions that may be beneficial to the Company, rather than have concern for their own employment prospects following a change in control. Severance benefits are provided under our employment agreements, employment letters and/or the Severance Plan, as applicable.
NON-COMPETE AND NON-SOLICITATION AGREEMENTS
Our NEOs are obligated pursuant to their employment agreements, employment letters, and/or the Severance Plan, as applicable, not to compete with the Company for a period of two years (or in the case of Mr. Eldh, for a period of 18 months) following their termination of employment with the Company. These agreements also restrict the NEOs’ disclosure and use of confidential information to which they were exposed during their employment. In addition, the agreements provide for restrictions on the solicitation of suppliers, customers and employees of the Company for a period of twenty-four months (or in the case of Mr. Eldh, for a period of eighteen months) following termination of employment.
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Audit Committee Report
The Audit Committee oversees our financial reporting process on behalf of the Board. The Audit Committee operates under a written charter, a copy of which is available on the “Investors” page of our website, www.scansource.com, under the “Governance” tab. This report reviews the actions taken by the Audit Committee with regard to our financial reporting process during fiscal 2023 and particularly with regard to the audited consolidated financial statements as of June 30, 2023 and June 30, 2022 and for the three years ended June 30, 2023.
The Audit Committee is comprised solely of independent directors. None of the committee members is or has been an officer or employee of the Company or any of our subsidiaries at any time during the past three years or has any current business or any family relationship with the Company or any of our subsidiaries or affiliates.
Our management has the primary responsibility for the financial statements and reporting process, including the systems of internal controls. The independent auditors are responsible for performing an independent audit of our consolidated financial statements in accordance with auditing standards generally accepted in the United States and issuing a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes and to select annually the accountants to serve as our independent auditors for the coming year.
The Audit Committee has implemented procedures to ensure that during the course of each fiscal year it devotes the attention that it deems necessary or appropriate to fulfill its oversight responsibilities under the Audit Committee’s charter. To carry out its responsibilities, the Audit Committee met four times during fiscal 2023.
In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the audited consolidated financial statements in our Annual Report on Form 10-K for fiscal 2023, including a discussion of the quality, rather than just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements.
The Audit Committee also discussed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited consolidated financial statements with accounting principles generally accepted in the United States, their judgments as to the quality, rather than just the acceptability, of our accounting principles and such other matters as are required to be discussed with the Audit Committee under the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. The Audit Committee also reviewed and discussed with the independent auditors the critical audit matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the Audit Committee and that (1) relate to accounts or disclosures that are material to the consolidated financial statements, and (2) involved the auditor’s especially challenging, subjective or complex judgments. In addition, the Audit Committee discussed with the auditors their independence from management and the Company, including the matters in the written disclosures and the letter required by the PCAOB regarding the independent auditors’ communications with the Audit Committee regarding independence. The Audit Committee also considered whether the provision of services during the fiscal year ended June 30, 2023 by the auditors that were unrelated to their audit of the consolidated financial statements referred to above and to their reviews of our interim consolidated financial statements during the fiscal year is compatible with maintaining their independence.
Additionally, the Audit Committee discussed with the independent auditors the overall scope and plan for their audit. The Audit Committee met with the independent auditors, with and without management present, to discuss the results of their examination, their evaluation of our internal controls and the overall quality of our financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 for filing with the SEC.
Submitted by the Audit Committee:
Charles A. Mathis, Chair
Peter C. Browning
Frank E. Emory
Dorothy F. Ramoneda
Jeffrey R. Rodek
Elizabeth O. Temple
Charles R. Whitchurch
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Shareholder Proposals
We must receive shareholder proposals intended to be presented at the 2025 Annual Meeting of Shareholders by August 14, 2024 for possible inclusion in the proxy materials relating to such meeting, in accordance with the SEC’s Rule 14a-8. However, if the date of the 2025 Annual Meeting is changed by more than 30 days from the first anniversary of the date of the 2024 Annual Meeting, the deadline will instead be a reasonable time before we begin to print and mail the proxy statement for the 2025 Annual Meeting.
Shareholders intending to present a proposal or to nominate a candidate for director for election at the 2025 Annual Meeting of Shareholders, but not to have the proposal or nomination considered for inclusion in the proxy materials for that meeting, must be eligible and give us advance written notice in accordance with our Bylaws and Rule 14a-19 of the Exchange Act.
Our Bylaws provide that such notice shall set forth in writing: (i) whether the shareholder is providing the notice at the request of a beneficial holder of shares, whether the shareholder, any such beneficial holder or any nominee has any agreement, arrangement or understanding with, or has received any financial assistance, funding or other consideration from, any other person with respect to the investment by the shareholder or such beneficial holder in the Company or the matter the notice relates to, and the details thereof, including the name of such other person (the shareholder, any beneficial holder on whose behalf the notice is being delivered, any nominees listed in the notice and any persons with whom such agreement, arrangement or understanding exists or from whom such assistance has been obtained are hereinafter collectively referred to as “Interested Persons”), (ii) the name and address of all Interested Persons, (iii) a complete listing of the record and beneficial ownership positions (including number or amount) of all equity securities and debt instruments, whether held in the form of loans or capital market instruments, of the Company or any of its subsidiaries held by all Interested Persons, (iv) whether and the extent to which any hedging, derivative or other transaction is in place or has been entered into within the prior six months preceding the date of delivery of the notice by or for the benefit of any Interested Person with respect to the Company or its subsidiaries or any of their respective securities, debt instruments or credit ratings, the effect or intent of which transaction is to give rise to gain or loss as a result of changes in the trading price of such securities or debt instruments or changes in the credit ratings for the Company, its subsidiaries or any of their respective securities or debt instruments (or, more generally, changes in the perceived creditworthiness of the Company or its subsidiaries), or to increase or decrease the voting power of such Interested Person, and if so, a summary of the material terms thereof, and (v) a representation that the shareholder is a holder of record of stock of the Company that would be entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to propose the matter set forth in the notice. As used herein, “beneficially owned” has the meaning provided in Rules 13d-3 and 13d-5 under the Exchange Act. The notice shall be updated not later than 10 days after the record date for the determination of shareholders entitled to vote at the meeting to provide any material changes in the foregoing information as of the record date.
The deadline for shareholders to provide written notice of intent to make nominations for the election of directors at the 2025 Annual Meeting of Shareholders (but not for inclusion in the proxy materials relating to such meeting) will be no more than 120 days and no less than 90 days prior to the first anniversary date of the annual meeting for the preceding year; provided, however, that if (and only if) the annual meeting is not scheduled to be held within a period that commences 30 days before such anniversary date and ends within 60 days after such anniversary date (an annual meeting date outside such period being referred to herein as an “Other Meeting Date”), the notice shall be given in the manner provided herein by the later of the close of business on (i) the date 90 days prior to such Other Meeting Date or (ii) the tenth day following the date such Other Meeting Date is first publicly announced or disclosed. Assuming that the date of the 2025 Annual Meeting is not advanced or delayed in the manner described above, the required notice for the 2025 Annual Meeting would need to be provided to us not earlier than September 27, 2024 and not later than October 27, 2024.
In addition to satisfying the requirements under our Bylaws, shareholders who intend to solicit proxies in support of director nominees other than Company nominees for the 2025 Annual Meeting must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act and complies with all other requirements under Rule 14a-19, including the minimum solicitation requirements. Because the advance notice provisions of our Bylaws require earlier notice than what is required by Rule 14a-19, the deadline for shareholders to provide notice must be submitted in accordance with the deadlines set forth in the preceding paragraph. Our Bylaws require that any notice relating to the nomination of directors must contain (i) the information regarding each nominee required by paragraphs (a), (e) and (f) of Item 401 of Regulation S-K adopted by the SEC (or the corresponding provisions of any successor regulation), (ii) each nominee’s signed consent to serve as a director of the Company if elected, and (iii) whether each nominee is
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Pay vs Performance Disclosure - USD ($)
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12 Months Ended |
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Pay vs Performance Disclosure |
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Pay vs Performance Disclosure, Table |
This section provides disclosure about the relationship between executive “compensation actually paid” (“CAP”) to our CEO and non-CEO NEOs and certain financial performance measures of the Company for the fiscal years listed below. This disclosure has been prepared in accordance with Item 402(v) of Regulation S-K under the Securities and Exchange Act of 1934 (the “Pay Versus Performance Rules”). For further information concerning the Company’s variable philosophy and how the Company aligns executive compensation with the Company’s performance, refer to “Executive Compensation — Compensation Discussion and Analysis.”
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Value of Initial Fixed $100 Investment Based On: |
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Summary Compensation Table Total for Baur |
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Compensation Actually Paid to CEO |
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Average Summary Compensation Table Total for Non-CEO NEOs |
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Average Compensation Actually Paid to Non-CEO NEOs |
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ScanSource, Inc. Total Shareholder Return |
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Peer Group Total Shareholder Return |
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2023 |
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5,657,484 |
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5,155,039 |
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1,839,235 |
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1,709,711 |
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123 |
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159 |
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89.8 |
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182.6 |
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2022 |
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5,647,684 |
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7,297,747 |
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2,050,989 |
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2,464,805 |
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129 |
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130 |
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88.8 |
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166.7 |
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2021 |
|
|
|
6,637,813 |
|
|
|
|
7,618,769 |
|
|
|
|
1,433,835 |
|
|
|
|
1,572,107 |
|
|
|
|
117 |
|
|
|
|
168 |
|
|
|
|
10.8 |
|
|
|
|
117.9 |
|
(1) |
Deductions from, and additions to, total compensation in the Summary Compensation Table by year to calculate Compensation Actually Paid consist of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Compensation from Summary Compensation Table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for Summary Compensation Table Pension |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Amount added for current year service cost |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Amount added for prior service cost impacting current year |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Total Adjustments for Pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments for Equity Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for grant date values in the Summary Compensation Table |
|
($ |
3,229,036 |
) |
|
($ |
947,223 |
) |
|
|
|
|
|
($ |
2,331,320 |
) |
|
($ |
824,430 |
) |
|
|
|
|
|
($ |
3,690,662 |
) |
|
($ |
633,904 |
) |
|
|
|
|
|
|
|
|
|
Year-end fair value of unvested awards granted in the current year |
|
$ |
3,093,126 |
|
|
$ |
914,109 |
|
|
|
|
|
|
$ |
2,751,537 |
|
|
$ |
986,537 |
|
|
|
|
|
|
$ |
4,490,976 |
|
|
$ |
741,513 |
|
|
|
|
|
|
|
|
|
|
Year-over-year difference of year-end fair values for unvested awards granted in prior years |
|
($ |
386,870 |
) |
|
($ |
92,141 |
) |
|
|
|
|
|
$ |
614,269 |
|
|
$ |
113,848 |
|
|
|
|
|
|
$ |
123,216 |
|
|
$ |
30,003 |
|
|
|
|
|
|
|
|
|
|
Fair values at vest date for awards granted and vested in current year |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
19,557 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years |
|
$ |
20,335 |
|
|
($ |
4,269 |
) |
|
|
|
|
|
$ |
615,578 |
|
|
$ |
118,304 |
|
|
|
|
|
|
$ |
57,426 |
|
|
$ |
660 |
|
|
|
|
|
|
|
|
|
|
Forfeitures during current year equal to prior year-end fair value |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Dividends or dividend equivalents not otherwise included in the total compensation |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Adjustments for Equity Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation Actually Paid (as calculated) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
Equity valuations assumptions for calculating Compensation Actually Paid are not materially different from grant date valuation assumptions. |
(3) |
Non-CEO NEOs reflect the average Summary Compensation Table total compensation and average Compensation Actually Paid for the following executives by year: | 2023: Stephen T. Jones, John C. Eldh (Former), Shana C. Smith, Rachel A. Hayden 2022: Stephen T. Jones, John C. Eldh, Rachel A. Hayden, Matthew S. Dean (Former) 2021: Stephen T. Jones, John C. Eldh, Rachel A. Hayden, Matthew S. Dean, Gerald Lyons (Former)
(4) |
The selected peer group is the S&P 600 Technology Hardware & Equipment (Industry Group) Index. |
(5) |
We have determined that Adjusted EBITDA is the financial performance measure that, in the Company’s assessment, represents the most important financial performance measure used to link CAP to our NEOs to Company performance for fiscal 2023. Adjusted EBITDA is a non-GAAP financial measure that includes the following: non-GAAP operating income; non-GAAP net income; non-GAAP EPS; adjusted earnings before interest expense, income taxes, depreciation, and amortization. Please refer to page 27 in our annual report for a reconciliation of net income to Adjusted EBITDA. |
|
|
|
Company Selected Measure Name |
Adjusted EBITDA
|
|
|
Named Executive Officers, Footnote |
(3) |
Non-CEO NEOs reflect the average Summary Compensation Table total compensation and average Compensation Actually Paid for the following executives by year: | 2023: Stephen T. Jones, John C. Eldh (Former), Shana C. Smith, Rachel A. Hayden 2022: Stephen T. Jones, John C. Eldh, Rachel A. Hayden, Matthew S. Dean (Former) 2021: Stephen T. Jones, John C. Eldh, Rachel A. Hayden, Matthew S. Dean, Gerald Lyons (Former)
|
|
|
Peer Group Issuers, Footnote |
The selected peer group is the S&P 600 Technology Hardware & Equipment (Industry Group) Index.
|
|
|
PEO Total Compensation Amount |
$ 5,657,484
|
$ 5,647,684
|
$ 6,637,813
|
PEO Actually Paid Compensation Amount |
$ 5,155,039
|
7,297,747
|
7,618,769
|
Adjustment To PEO Compensation, Footnote |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Compensation from Summary Compensation Table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for Summary Compensation Table Pension |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Amount added for current year service cost |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Amount added for prior service cost impacting current year |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Total Adjustments for Pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments for Equity Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for grant date values in the Summary Compensation Table |
|
($ |
3,229,036 |
) |
|
($ |
947,223 |
) |
|
|
|
|
|
($ |
2,331,320 |
) |
|
($ |
824,430 |
) |
|
|
|
|
|
($ |
3,690,662 |
) |
|
($ |
633,904 |
) |
|
|
|
|
|
|
|
|
|
Year-end fair value of unvested awards granted in the current year |
|
$ |
3,093,126 |
|
|
$ |
914,109 |
|
|
|
|
|
|
$ |
2,751,537 |
|
|
$ |
986,537 |
|
|
|
|
|
|
$ |
4,490,976 |
|
|
$ |
741,513 |
|
|
|
|
|
|
|
|
|
|
Year-over-year difference of year-end fair values for unvested awards granted in prior years |
|
($ |
386,870 |
) |
|
($ |
92,141 |
) |
|
|
|
|
|
$ |
614,269 |
|
|
$ |
113,848 |
|
|
|
|
|
|
$ |
123,216 |
|
|
$ |
30,003 |
|
|
|
|
|
|
|
|
|
|
Fair values at vest date for awards granted and vested in current year |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
19,557 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years |
|
$ |
20,335 |
|
|
($ |
4,269 |
) |
|
|
|
|
|
$ |
615,578 |
|
|
$ |
118,304 |
|
|
|
|
|
|
$ |
57,426 |
|
|
$ |
660 |
|
|
|
|
|
|
|
|
|
|
Forfeitures during current year equal to prior year-end fair value |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Dividends or dividend equivalents not otherwise included in the total compensation |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Adjustments for Equity Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation Actually Paid (as calculated) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-PEO NEO Average Total Compensation Amount |
$ 1,839,235
|
2,050,989
|
1,433,835
|
Non-PEO NEO Average Compensation Actually Paid Amount |
$ 1,709,711
|
2,464,805
|
1,572,107
|
Adjustment to Non-PEO NEO Compensation Footnote |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Compensation from Summary Compensation Table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for Summary Compensation Table Pension |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Amount added for current year service cost |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Amount added for prior service cost impacting current year |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Total Adjustments for Pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments for Equity Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for grant date values in the Summary Compensation Table |
|
($ |
3,229,036 |
) |
|
($ |
947,223 |
) |
|
|
|
|
|
($ |
2,331,320 |
) |
|
($ |
824,430 |
) |
|
|
|
|
|
($ |
3,690,662 |
) |
|
($ |
633,904 |
) |
|
|
|
|
|
|
|
|
|
Year-end fair value of unvested awards granted in the current year |
|
$ |
3,093,126 |
|
|
$ |
914,109 |
|
|
|
|
|
|
$ |
2,751,537 |
|
|
$ |
986,537 |
|
|
|
|
|
|
$ |
4,490,976 |
|
|
$ |
741,513 |
|
|
|
|
|
|
|
|
|
|
Year-over-year difference of year-end fair values for unvested awards granted in prior years |
|
($ |
386,870 |
) |
|
($ |
92,141 |
) |
|
|
|
|
|
$ |
614,269 |
|
|
$ |
113,848 |
|
|
|
|
|
|
$ |
123,216 |
|
|
$ |
30,003 |
|
|
|
|
|
|
|
|
|
|
Fair values at vest date for awards granted and vested in current year |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
19,557 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years |
|
$ |
20,335 |
|
|
($ |
4,269 |
) |
|
|
|
|
|
$ |
615,578 |
|
|
$ |
118,304 |
|
|
|
|
|
|
$ |
57,426 |
|
|
$ |
660 |
|
|
|
|
|
|
|
|
|
|
Forfeitures during current year equal to prior year-end fair value |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
Dividends or dividend equivalents not otherwise included in the total compensation |
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Adjustments for Equity Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation Actually Paid (as calculated) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation Actually Paid vs. Total Shareholder Return |
|
|
|
Compensation Actually Paid vs. Net Income |
|
|
|
Compensation Actually Paid vs. Company Selected Measure |
|
|
|
Total Shareholder Return Vs Peer Group |
|
|
|
Tabular List, Table |
Most Important Financial Performance Measures In accordance with the Pay Versus Performance Rules, the following table lists the financial performance measures that, in the Company’s assessment, represent the most important financial performance measures used to link CAP to our NEOs for fiscal 2023 to Company performance:
|
Most Important Financial Performance Measures |
|
Adjusted EBITDA |
|
Revenue |
|
ROIC |
|
EPS |
|
|
|
Total Shareholder Return Amount |
$ 123
|
129
|
117
|
Peer Group Total Shareholder Return Amount |
159
|
130
|
168
|
Net Income (Loss) |
$ 89,800,000
|
$ 88,800,000
|
$ 10,800,000
|
Company Selected Measure Amount |
182.6
|
166.7
|
117.9
|
PEO Name |
Baur
|
|
|
Measure:: 1 |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Name |
Adjusted EBITDA
|
|
|
Non-GAAP Measure Description |
We have determined that Adjusted EBITDA is the financial performance measure that, in the Company’s assessment, represents the most important financial performance measure used to link CAP to our NEOs to Company performance for fiscal 2023. Adjusted EBITDA is a non-GAAP financial measure that includes the following: non-GAAP operating income; non-GAAP net income; non-GAAP EPS; adjusted earnings before interest expense, income taxes, depreciation, and amortization. Please refer to page 27 in our annual report for a reconciliation of net income to Adjusted EBITDA.
|
|
|
Measure:: 2 |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Name |
Revenue
|
|
|
Measure:: 3 |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Name |
ROIC
|
|
|
Measure:: 4 |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Name |
EPS
|
|
|
PEO | Adjustment for Summary Compensation Table Pension [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
$ 0
|
$ 0
|
$ 0
|
PEO | Amount added for current year service cost [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
0
|
0
|
0
|
PEO | Amount added for prior service cost impacting current year [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
0
|
0
|
0
|
PEO | Total Adjustments for Pension [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
0
|
0
|
0
|
PEO | Adjustment for grant date values in the Summary Compensation [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
(3,229,036)
|
(2,331,320)
|
(3,690,662)
|
PEO | Yearend fair value of unvested awards granted in the current year [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
3,093,126
|
2,751,537
|
4,490,976
|
PEO | Yearoveryear difference of yearend fair values for unvested awards granted in prior years [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
(386,870)
|
614,269
|
123,216
|
PEO | Fair values at vest date for awards granted and vested in current year [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
0
|
0
|
0
|
PEO | Difference in fair values between prior yearend fair values and vest date fair values for awards granted in prior years [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
20,335
|
615,578
|
57,426
|
PEO | Forfeitures during current year equal to prior yearend fair value [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
0
|
0
|
0
|
PEO | Dividends or dividend equivalents not otherwise included in the total compensation [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
0
|
0
|
0
|
PEO | Total Adjustments for Equity Awards [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
(502,445)
|
1,650,063
|
980,956
|
Non-PEO NEO | Adjustment for Summary Compensation Table Pension [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
0
|
0
|
0
|
Non-PEO NEO | Amount added for current year service cost [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
0
|
0
|
0
|
Non-PEO NEO | Amount added for prior service cost impacting current year [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
0
|
0
|
0
|
Non-PEO NEO | Total Adjustments for Pension [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
0
|
0
|
0
|
Non-PEO NEO | Adjustment for grant date values in the Summary Compensation [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
(947,223)
|
(824,430)
|
(633,904)
|
Non-PEO NEO | Yearend fair value of unvested awards granted in the current year [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
914,109
|
986,537
|
741,513
|
Non-PEO NEO | Yearoveryear difference of yearend fair values for unvested awards granted in prior years [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
(92,141)
|
113,848
|
30,003
|
Non-PEO NEO | Fair values at vest date for awards granted and vested in current year [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
0
|
19,557
|
0
|
Non-PEO NEO | Difference in fair values between prior yearend fair values and vest date fair values for awards granted in prior years [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
(4,269)
|
118,304
|
660
|
Non-PEO NEO | Forfeitures during current year equal to prior yearend fair value [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
0
|
0
|
0
|
Non-PEO NEO | Dividends or dividend equivalents not otherwise included in the total compensation [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
0
|
0
|
0
|
Non-PEO NEO | Total Adjustments for Equity Awards [Member] |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
$ (129,524)
|
$ 413,816
|
$ 138,272
|