Mr. O’Donnell, Chairman of the Audit Committee and member of the Nominating and Corporate Governance Committee, has a son-in-law serving as Senior Account Executive at
e
Plus
Group, inc. who earned $459 thousand in the fiscal year ended March 31, 2019. Less than 20% of his compensation was salary, and the remainder was commission earned in accordance with our commission plan.
Our Nominating and Corporate Governance Committee regularly reviews our written policy regarding the approval and/or ratification of related party transactions, which applies to any transaction or series of
transactions in which the Company is a participant, the amount involved exceeds or is expected to exceed $120,000 in any year, and any related party has a direct or indirect interest, with certain exceptions enumerated in the policy. Generally,
such exceptions include transactions that would not require disclosure under SEC Regulation S-K Item 404(a). For purposes of the policy, “related parties” consist of the Company’s directors, director nominees, executive officers, any
shareholder beneficially owning more than 5% of the Company’s common stock, and immediate family members of a director, director nominee, or executive officer.
The Nominating and Corporate Governance Committee only approves related party transactions that, under all of the circumstances, are fair to the Company, and may impose such conditions as it deems appropriate
regarding the transaction.
We also require that each executive officer and director complete an annual questionnaire and report all transactions with us in which they or their immediate family members had or will have a direct or indirect
material interest, which are then reviewed by our General Counsel and experienced SEC counsel. We are not aware of any related party transactions requiring disclosure under Regulation S-K Item 404(a) since the beginning of fiscal year 2019 that
have not been pre-approved or ratified pursuant to this policy.
No Stockholder Rights Plan
|
The Company does not maintain a stockholder rights plan (commonly referred to as a “poison pill”).
PROPOSAL 1
– Election of Directors
Adopting the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated eight of its current directors—Ms. Morrison, and Messrs., Bowen, Callies, Faulders, Hovde, Hunt, Marron and
Xiang—to be elected to serve until the 2020 Annual Meeting of Shareholders, and until their successors are duly elected and qualified. Biographical information as of July 23, 2019, for each nominee is provided herein. The remaining three
directors, Mr. Norton, Mr. O’Donnell and Mr. Herman, will not be standing for re-election as they have reached the retirement age set forth in our Corporate Governance Guidelines.
Unless otherwise instructed or authority to vote is withheld, all signed proxies will be voted to elect the Board’s nominees. Each of the nominees has agreed to be named in this proxy statement and serve if elected,
and we know of no reason why any of the nominees would be unable to serve. If, however, any nominee is unable or declines to serve as a director, or if a vacancy occurs before the election (such events are not anticipated), the proxy holders
will vote for the election of such other person or persons as the Board nominates.
Director Nomination Process
|
The Board of Directors is responsible for determining the appropriate number of Board members, nominating individuals for election to the Board, and filling vacancies on the Board that may occur between annual
meetings of shareholders. The Nominating and Governance Committee is responsible for identifying and screening potential candidates, and recommending qualified candidates to the Board for nomination. Third-party search firms may be retained to
identify individuals that meet the Nominating and Governance Committee’s criteria, however, during the fiscal year ended March 31, 2019, no third-party search firms were used. The Nominating and Governance Committee will consider director
candidates recommended by shareholders in the same manner in which it evaluates candidates it identifies, if such recommendations are properly submitted to the Company. Shareholders wishing to recommend nominees for election to the Board should
submit their recommendations in writing by mail to our Corporate Secretary,
e
Plus, 13595 Dulles Technology Drive, Herndon, Virginia 20171.
In selecting director candidates, the Nominating and Governance Committee and the Board of Directors consider the individual candidates’ qualifications and skills, as well as the Board’s composition as a whole. Under
our Guidelines, the Nominating and Governance Committee and the Board consider the following attributes for each candidate, among other qualifications deemed appropriate, when considering the suitability of candidates for nomination as
director:
|
•
|
Unquestioned personal ethics and integrity;
|
|
•
|
Specific skills and experience that aligns with
e
Plus’ strategic direction and operational initiatives, and complements the Board’s overall composition;
|
|
•
|
Multiple dimensions of diversity;
|
|
•
|
Core business competencies of high achievement and a record of success;
|
|
•
|
Financial literacy, exposure to best practices, and track-record of making good business decisions;
|
|
•
|
Interpersonal skills that maximize group dynamics; and
|
|
•
|
Enthusiasm about
e
Plus and sufficient time to become fully engaged.
|
2019 Nominees for Election to the Board of Directors
|
The following biographies describe the director nominees’ business experience, including their specific experiences and qualifications that, collectively, strengthen the Board’s qualifications, skills, and experience.
The Board expects that each of the nominees will be available for election as a director and, if elected, will serve for a term expiring at the Annual Meeting of Shareholders in 2020, and until their successors have
been duly elected and qualified.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
THE FOLLOWING NOMINEES
FOR ELECTION AS DIRECTORS:
|
Bruce M. Bowen
Director
Age 67
|
|
|
Director of ePlus since: 1990
Committees: None
Other Public Company Directorships: None
|
Mr. Bowen founded our company in 1990 and served as our President until September 1996. Beginning in September 1996, Mr. Bowen has served as our Executive Vice President and from September 1996
to June 1997 also served as our Chief Financial Officer. In March 2014, Mr. Bowen stepped down as Executive Vice President, however, he continues to serve on the Board as he has since our founding.
Prior to founding the Company he served as Senior Vice President of PacifiCorp Capital, Inc. In the past, he has served as Chairman of the Association for Government Leasing and Finance as well
as various committees of the Equipment Leasing and Finance Association, which gave him a broad understanding of issues affecting our industry. During his leasing career, Mr. Bowen has participated in equipment lease financing in excess of $3
billion, involving many major vendors as well as government contractors. Mr. Bowen is a 1973 graduate of the University of Maryland with a Bachelor of Science in Finance and in 1978 received a Masters of Business Administration in Finance from
the University of Maryland. Throughout his leasing career, he has been responsible for finance and funding, and sales and operations activities, providing the Board with a vast array of knowledge in a multitude of industry-specific areas.
|
C. Thomas Faulders, III
Independent Director
Age 69
|
|
|
Director of ePlus since: 1998
Committees: Audit and Compensation
Other Public Company Directorships: None
|
Mr. Faulders was the President and Chief Executive Officer of the University of Virginia Alumni Association from 2006 to 2017. Prior to that, Mr. Faulders served as the Chairman and Chief
Executive Officer of LCC International, Inc. from 1999 to 2005 and as Chairman of Telesciences, Inc., an information services company, from 1998 to 1999. From 1995 to 1998, Mr. Faulders was Executive Vice President, Treasurer, and Chief
Financial Officer of BDM International, Inc., a prominent systems integration company. Mr. Faulders also served as the Vice President and Chief Financial Officer of COMSAT Corporation, an international satellite communication company, from
1992 to 1995. Prior to this, Mr. Faulders served in a variety of executive roles at MCI, including Treasurer and Senior Vice President of Marketing. He has served on numerous boards in the past and has held roles as chairs of compensation,
audit and governance committees. He is a 1971 graduate of the University of Virginia and in 1981 received a Masters of Business Administration from the Wharton School of the University of Pennsylvania. The Board believes Mr. Faulders’
extensive executive and financial experience in the telecommunications and high tech sectors, along with his experience as Chief Financial Officer of a public company, enables him to provide considerable financial expertise, business management
and operational knowledge, insight and guidance to the Board. He qualifies as an audit committee financial expert within the meaning of SEC regulations.
|
Eric D. Hovde
Independent Director
Age 55
|
|
|
Director of ePlus since: 2006
Committees: Compensation and Nominating and Corporate Governance
Other Public Company Directorships: Old Line Bancshares, Inc.
|
Eric D. Hovde
. Mr. Hovde is an active entrepreneur who has started and manages numerous business enterprises. Mr. Hovde is the Chairman and CEO of H Bancorp LLC, a private
bank holding company with banking operations on both the east and the west coasts. Additionally, he serves as CEO and co-owner of Hovde Properties, LLC, a real estate development and management company where he oversees management of the
company and all large development projects. Mr. Hovde also founded and previously managed Hovde Financial, an investment banking company, and Hovde Capital, an asset management company. Throughout his career he has served as a director on
numerous bank boards and currently serves as the CEO of Sunwest Bank headquartered in Orange County, California. Mr. Hovde, along with his brother, Steve, created and funds the Hovde Foundation, an organization that actively supports two
central missions – clinical research to find a cure for Multiple Sclerosis and charitable relief for children in desperate need. The Foundation has established Hovde Houses throughout many countries around the world. He earned his degrees in
Economics and International Relations at the University of Wisconsin. The Board believes that Mr. Hovde’s expertise in the financial services industry, investment management areas, and business operations, and his experience on publicly-held
and private boards, bring valuable insight to the Board.
|
John E. Callies
Independent Director
Age 65
|
|
|
Director of ePlus since: 2010
Committees: Audit and Compensation
Other Public Company Directorships: None
|
Mr. Callies is a Senior Advisor to McKinsey and Company, and also serves on the Advisory Board of the Leeds School of Business at the University of Colorado.
Previously, he
was employed by IBM in various capacities for thirty-four years.
Mr. Callies served as general manager of IBM Global Financing from 2004 until his retirement in June 2010. With operations in 55 countries
supporting 125,000 clients, Mr. Callies led the world’s largest information technology financing and asset management organization and was responsible for business direction and management of a portfolio of nearly $35 billion in total
assets. As vice president, marketing, On Demand Business for IBM, Mr. Callies had company-wide responsibility for all marketing efforts in support of On Demand Business, along with leading the marketing management discipline for IBM. In
2003, Mr. Callies was appointed vice president, marketing and strategy, of IBM Systems Group. Prior to that, beginning in 1996 when he was named general manager, small and medium business, IBM Asia Pacific Corporation, based in Tokyo, Japan,
Mr. Callies has filled roles in marketing and marketing management. In 1991 he was named general manager of IBM Credit Corporation’s end-user financing division, now called IBM Global Financing. Mr. Callies is a former Chair of the Board of
Governors of Fairfield Preparatory School in Fairfield, Connecticut and former member of the Advisory Board of Lehigh University. Mr. Callies is a 1976 graduate of Lehigh University. The Board believes that Mr. Callies’ knowledge of our
business, including the leasing sector, along with his sales, operational, strategic, international and board experience bring value to the Board.
|
Ira A. Hunt, III
Independent Director
Age 63
|
|
|
Director of ePlus since: 2014
Committees: Compensation and Nominating and Corporate Governance
Other Public Company Directorships: None
|
Mr. Hunt is Managing Director and Cyber Lead for Accenture Federal Services in Arlington Virginia. Previously he was Chief Architect for Bridgewater Associates, a hedge fund located in Westport, Connecticut and
President and Chief Executive Officer of Hunt Technology, LLC, a private consulting practice focused on strategic IT planning, cyber and data-centric security, big data analytics, and cloud computing. In October 2013, after a 28-year career,
Mr. Hunt retired from the Central Intelligence Agency (the “CIA”) as their Chief Technology Officer (“CTO”). Prior to that, Mr. Hunt served as Director, Application Services, of one of the largest business units in the CIA. Mr. Hunt began his
CIA career in 1985 as an analyst in the CIA’s Directorate of Intelligence and subsequently served in positions of increasing responsibility across the organization to include: the Directorate of Intelligence, DCI’s Non-Proliferation Center,
Crime Narcotics Center, and Open Source Program Office, and CIO. Mr. Hunt began his career in 1979 working as an aerospace engineer for Rockwell International and General Research Corporation. Mr. Hunt currently serves on the Board of
Directors for Mission Link, a non-profit organization. He holds a Bachelor of Engineering and Masters of Engineering in Civil/Structural Engineering from Vanderbilt University in Nashville, Tennessee.
The Board
believes that Mr. Hunt’s extensive knowledge of the technology industry, including
strategic IT planning, cyber and data-centric security, big data analytics, cloud computing, and IT architecture and environment, bring industry
expertise to our Board.
|
Mark P. Marron
Director, President and CEO
Age 58
|
|
|
Director of ePlus since: 2018
Committees: None
Other Public Company Directorships: None
|
Mr. Marron became the CEO and President of
e
Plus inc. on August 1, 2016, and was appointed to the Board on November 14, 2018. He began his career at
e
Plus in
2005 as Senior Vice President of Sales and became COO in 2010. A 30-year industry veteran, he was formerly with NetIQ where he held the position of Senior Vice President of Worldwide Sales and Services. Prior to joining NetIQ, Mr. Marron served
as General Manager of Worldwide Channel Sales for Computer Associates International Inc., a provider of software and services that enables organizations to manage their IT environments. Mr. Marron has extensive experience throughout North
America, Europe, the Middle East, and Africa and holds a Bachelor of Science degree in Computer Science from Montclair State University. Mr. Marron’s role as Chief Executive Officer provides the Board with access to an experienced executive with
a thorough understanding of our business and the industry.
|
Maureen F. Morrison
Independent Director
Age 65
|
|
|
Director of ePlus since: 2018
Committees: Audit and Nominating and Corporate Governance
Other Public Company Directorships:
Safeguard Scientifics, Inc, and Asbury Automotive Group Inc.
|
Maureen F. Morrison joined the ePlus Board of Directors in June 2018. She is a highly-accomplished senior executive leader who retired in 2015 from a career as an audit partner at PricewaterhouseCoopers, LLP. At
PwC, Ms. Morrison worked with prominent, private equity backed entities and multibillion-dollar global technology corporations. She has diversified experience in software, IT-enabled solutions and consulting, hardware, and manufacturing. As a
highly-respected financial and accounting professional, Ms. Morrison has extensive experience in corporate boardrooms, advising Audit Committees of midcap public companies, private equity-backed entities, and Fortune 500 companies.
Ms. Morrison currently is a member of two other for-profit boards: Asbury Automotive Group, where she is on the Audit Committee and the Capital Allocation & Risk Management Committee, and Safeguard
Scientifics, Inc., where she serves as Chair of the Audit Committee and a member of the Compensation and the Nominating & Corporate Governance Committees. She also presently serves on the Education Committee for The Alliance Theater in
Atlanta, Georgia, and previously served on their Finance Committee. She holds a Bachelor of Arts in Business Administration with a concentration in Accounting from Rutgers University.
|
Ben Xiang
Independent Director
Age 34
|
|
|
Director of ePlus since: 2019
Committees: None
Other Public Company Directorships: None
|
Mr. Xiang is the global executive for the Internet of Things, Artificial Intelligence, and Mixed-Reality business at Ingram Micro, the world’s largest IT distributor. In this role, he is responsible for creating a new global business unit
while overseeing solution development, engineering, and go-to-market. Previously at Ingram Micro, Mr. Xiang served in various roles including in corporate development and as special advisor to the CEO. He has extensive experience in cross-border
M&A, post-merger integrations, and business operations. Mr. Xiang has executed M&A transactions globally in the areas of cloud computing, e-commerce, and mobility services. Prior to joining Ingram, Mr. Xiang was Managing Director of
Fortress Consulting, a management consulting firm supporting Fortune 500 companies in the US, Europe, and China. In 2009, he joined the CITIC Group as Director focusing on investments in technology and media. Prior to that, Mr. Xiang worked for
Sony BMG in the areas of digital strategy and transformation. Mr. Xiang has extensive experience throughout Asia Pacific and North America and holds a degree in Finance and Management from the Wharton School at the University of Pennsylvania. The
Board believes that Mr. Xiang’s expertise of go-to-market within the IT channel, knowledge of the technology industry and emerging technology vendors, and international M&A experience bring value to the Board.
The below table sets forth the compensation for the members of the Board for the fiscal year ended March 31, 2019.
Mr. Norton’s compensation is not reported in the below table, and is reported under “Executive Compensation” herein, as he was an employee and our Executive Chairman until his retirement on July 31, 2018. Mr. Norton
began receiving compensation as a non-employee director on August 1, 2018.
Mr. Bowen’s compensation is reported in the below table, and not under “Executive Compensation,” as he was an employee, but not an executive officer, until his retirement on April 30, 2018. Mr. Bowen began receiving
compensation as a non-employee director on May 1, 2018.
Mr. Marron did not receive any additional compensation for his service as a director during our fiscal year ended March 31, 2019. Mr. Marron’s compensation is not reported in the below table, and is reported under
“Executive Compensation” herein, as he is a named executive officer.
Compensation for Ms. Morrision, who joined our Board during the fiscal year, was adjusted on a pro-rata basis.
No compensation is reported in the below table for Mr. Xiang, as he joined our Board after March 31, 2019.
The Board’s general policy is that compensation for the non-employee directors should be a mix of cash and equity-based compensation. For the fiscal year ended March 31, 2019, each non-employee director received an
annual cash retainer of $76,875, reflecting three quarterly payments of $18,750 and one of $20,625, or, alternatively, at the director’s election, the same amount in non-forfeitable restricted stock in lieu of cash. In addition, each director
received $75,000 in restricted stock, which vests in equal installments on the first- and second-year anniversaries of the grant. The restricted stock is rounded down to avoid a fractional share award.
Directors are also reimbursed for out-of-pocket expenses incurred to attend Board and committee meetings and the 2019 Annual Meeting.
2019 Director Compensation Table
|
The tables below show compensation for all directors except for Messrs. Marron and. Norton, whose compensation is in the Summary Compensation Table, and Mr. Xiang, who joined the Board on July 22, 2019.
Name
|
|
Fees Earned or
Paid in Cash
($)(1)
|
|
|
Stock
Awards
($)(2)(3)
|
|
|
Option
Awards
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
John E. Callies
|
|
|
76,875
|
|
|
|
74,918
|
|
|
|
-
|
|
|
|
-
|
|
|
|
151,793
|
|
Ira A. Hunt, III
|
|
|
76,875
|
|
|
|
74,918
|
|
|
|
-
|
|
|
|
-
|
|
|
|
151,793
|
|
C. Thomas Faulders, III
|
|
|
76,875
|
|
|
|
74,918
|
|
|
|
-
|
|
|
|
-
|
|
|
|
151,793
|
|
Lawrence S. Herman
|
|
|
76,875
|
|
|
|
74,918
|
|
|
|
-
|
|
|
|
-
|
|
|
|
151,793
|
|
Eric D. Hovde
|
|
|
76,875
|
|
|
|
74,918
|
|
|
|
-
|
|
|
|
-
|
|
|
|
151,793
|
|
Maureen F. Morrison (4)
|
|
|
62,040
|
|
|
|
96,423
|
|
|
|
-
|
|
|
|
-
|
|
|
|
158,463
|
|
Terrence O’Donnell
|
|
|
76,875
|
|
|
|
74,918
|
|
|
|
-
|
|
|
|
-
|
|
|
|
151,793
|
|
Bruce Bowen (5)
|
|
|
50,069
|
|
|
|
105,073
|
|
|
|
-
|
|
|
|
45,612
|
|
|
|
200,754
|
|
(1)
|
The above table reflects fees earned during the fiscal year 2019. Pursuant to our 2017 Non-Employee Director Long-Term Incentive Plan (“2017 Director LTIP”), directors may make a stock fee election, through
which they receive shares of restricted stock in lieu of cash compensation. The stock fee elections are made on a calendar year basis, and the stock grant is made on the first business day after the end of each quarter of board
services. The number of shares received is determined by dividing $18,750 (the cash compensation earned quarterly by directors) by the Fair Market Value of a share of common stock, as defined in the 2017 Director LTIP, and rounding
down to avoid a fractional share.
|
One director, Terrence O’Donnell, received restricted stock instead of cash throughout the fiscal year. Another director, Bruce Bowen, elected to receive stock beginning with the quarter ended March
31, 2019. The amounts of stock granted for each quarter is shown below:
Board Service Time
|
|
Number of
Shares Granted
|
|
April 1, 2018 - June 30, 2018
|
|
194
|
|
July 1, 2018 - September 30, 2018
|
|
209
|
|
October 1, 2018 - December 31, 2018
|
|
267
|
|
January 1, 2019 - March 31, 2019
|
|
227
|
|
(2)
|
The values in this column represent the aggregate grant date fair market values of the fiscal year 2019 restricted stock awards, computed in accordance with Codification Topic
Compensation—Stock Compensation
.
|
(3)
|
The table below reflects the aggregate number of unvested restricted stock shares outstanding as of March 31, 2019, for each director except Messrs. Norton and Marron, whose compensation is in the Summary
Compensation Table, and Mr. Xiang, who joined the Board after March 31, 2019.
|
Name
|
|
Unvested Restricted
Stock Shares
|
|
John E. Callies
|
|
|
1,223
|
|
Ira A. Hunt, III
|
|
|
1,223
|
|
C. Thomas Faulders, III
|
|
|
1,223
|
|
Lawrence S. Herman
|
|
|
1,223
|
|
Eric D. Hovde
|
|
|
1,223
|
|
Maureen F. Morrison
|
|
|
1,027
|
|
Terrence O’Donnell
|
|
|
2,364
|
|
Bruce Bowen
|
|
|
1,167
|
|
(4)
|
Ms. Morrison’s compensation includes an initial stock grant when she joined the Board on June 12, 2018, pro-rated in accordance with Section 7(a) of our 2017 Non-Employee Director Long
Term Incentive Plan.
|
(5)
|
Mr. Bowen served as our Senior Vice President of Business Development until his retirement as an employee on April 30, 2018. The “All Other Compensation” column reflects compensation paid to him as an
employee, and includes $28,845 vacation payout and a $100 “medical waiver” payment in accordance with the Company’s policy applicable to all eligible employees who decline the Company’s health insurance.
|
Stock Ownership Guidelines
|
The Board believes that, to more closely align the interests of our non-employee directors with the interests of the Company’s other shareholders, each non-employee director should maintain a minimum level of ownership in the Company’s common
stock. Our Nominating and Corporate Governance Committee regularly reviews the stock ownership guidelines, and compliance therewith. Pursuant to the stock ownership guidelines, which are part of our Corporate Governance Guidelines, non-employee
directors are expected to reach a multiple of three times their annual cash board retainer fee within four years of joining the Board. During the fiscal year ended March 31, 2019, all directors met this requirement or are within the four-year
phase-in period for meeting the ownership guidelines.
Ownership of our Common Stock
|
The following tables show information regarding the beneficial ownership of our common stock by:
|
•
|
each member of our Board of Directors, each director nominee and each of our named executive officers (“NEO”);
|
|
•
|
all members of our Board and our executive officers as a group; and
|
|
•
|
each person or group who is known by us to own beneficially more than 5% of our common stock.
|
Beneficial ownership of shares is determined under the SEC’s rules and generally includes any shares over which a person exercises sole or shared voting or investment power. Shares of restricted stock that have not
vested as of our Record Date are deemed outstanding and beneficially owned by the person and any group of which that person is a member because such holder has voting rights with respect to those shares. Except as footnoted below, and subject
to community property laws where applicable, we believe based on the information provided to us that the persons and entities named in the following table have sole voting and investment power with respect to all shares of our common stock
shown as beneficially owned by them.
The percentage of beneficial ownership is 13,506,047 shares of common stock outstanding which includes 195,933 unvested restricted shares, which have voting rights, as of our Record Date.
Directors and Executive Officers
|
Share ownership is shown as of our Record Date of July 23, 2019.
Name (1)
|
Aggregate
Number of
Beneficial
Shares
|
Percent of
Outstanding
Shares
|
Additional Information (2)
|
Phillip G. Norton
|
29,599
|
*
|
Includes 911 shares of restricted stock that has not vested as of July 23, 2019.
|
Bruce M. Bowen
|
17,247
|
*
|
Includes 10,000 shares of common stock held by Bowen Holdings LLC, a Virginia limited liability company, which is owned by Mr. Bowen and his three adult children, for which shares Mr. Bowen serves as manager.
Also includes 2,782 shares each held by the Elizabeth Dederich Bowen Trust and the Bruce Montague Bowen Trust, and 1,498 shares of restricted stock that has not vested as of July 23, 2019.
|
John E. Callies
|
9,481
|
*
|
Includes 1,223 shares of restricted stock that has not vested as of July 23, 2019.
|
C. Thomas Faulders, III
|
18,958
|
*
|
Includes 1,223 shares of restricted stock that has not vested as of July 23, 2019.
|
Lawrence S. Herman
|
10,149
|
*
|
Includes 1,223 shares of restricted stock that has not vested as of July 23, 2019.
|
Eric D. Hovde
|
43,291
|
*
|
Includes 1,223 shares of restricted stock that has not vested as of July 23, 2019. Mr. Hovde is the managing member of Hovde Capital, Ltd., the general partner to Financial Institution Partners III LP, which
owns 10,198 shares. Mr. Hovde is a trustee of The Eric D. and Steven D. Hovde Foundation, which owns 8,277 shares.
|
Ira A. Hunt, III
|
8,011
|
*
|
Includes 1,223 shares of restricted stock that has not vested as of July 23, 2019.
|
Terrence O’Donnell
|
12,741
|
*
|
Includes 2,656 shares of restricted stock that has not vested as of July 23, 2019.
|
Maureen F. Morrison
|
1,027
|
*
|
Includes 912 shares of restricted stock that has not vested as of July 23, 2019.
|
Ben Xiang
|
191
|
|
Includes 191 shares of restricted stock that has not vested as of July 23, 2019.
|
Mark P. Marron
|
93,518
|
*
|
Includes 62,226 shares of restricted stock that has not vested as of July 23, 2019, and 3,250 shares held in Trust.
|
Elaine D. Marion
|
62,356
|
*
|
Includes 36,479 shares of restricted stock that has not vested as of July 23, 2019 and 212 shares held in an IRA.
|
Darren S. Raiguel
|
42,897
|
*
|
Includes 23,146 shares of restricted stock that has not vested as of July 23, 2019.
|
All directors and executive
officers as a group (13 persons)
|
349,466
|
2.59%
|
|
(1)
|
The business address of Mses. Morrison and Marion, and Messrs. Norton, Bowen, Marron, Raiguel, Faulders, O’Donnell, Hunt, Herman, Hovde, Callies and Xiang is ePlus, 13595 Dulles Technology Drive, Herndon,
Virginia 20171.
|
(2)
|
Nonvested restricted shares included herein are considered beneficially owned since the owner thereof has the right to vote such shares.
|
The share ownership is shown as of the date disclosed in the Additional Other Information column, and percentages are calculated assuming continued beneficial ownership at our Record Date of July 23, 2019.
Name of Beneficial Owner
|
Aggregate Number
of Beneficial Shares
|
Percent of
Outstanding
Shares
|
Additional Information
|
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
|
1,953,108
|
14.46%
|
This information is based on a Schedule 13G/A filed with the SEC on January 28, 2019. BlackRock indicates in its Schedule 13G/A that one entity, iShares Core S&P Small-Cap ETF, has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, or has an interst in the common stock of, more than five percent of ePlus’ total outstanding common stock.
|
|
|
|
|
Dimensional Fund Advisors LP
Building One
6300 Bee Cave Rod
Austin, TX 78746
|
916,016
|
6.78%
|
This information is based on a Schedule 13G/A filed with the SEC on February 8, 2019. Dimensional Fund Advisors LP, an investment adviser registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment
advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies,
trusts and accounts, collectively referred to as the “Funds”). In certain cases, subsidiaries of Dimensional Fund Advisors LP may act as an adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-adviser and/or
manager, Dimensional Fund Advisors LP or its subsidiaries (collectively, “Dimensional”) may possess voting and/or investment power over the securities that are owned by the Funds, and may be deemed to be the beneficial owner of the shares
held by the Funds. However, all securities reported in the Schedule 13 G/A are owned by the Funds. Dimensional disclaims beneficial ownership of such securities.
|
|
|
|
|
Fiduciary Management Inc.
100 East Wisconsin Avenue
Suite 2200
Milwaukee, WI 53202
|
815,967
|
6.04%
|
This information is based on a Schedule 13G filed with the SEC on February 14, 2019. Fiduciary Management, Inc. is an Investment Adviser registered under the Investment Advisers Act of 1940. The shares to which this statement relates
are owned directly by various accounts managed by Fiduciary Management, Inc. Such accounts have the right to receive dividends from, and the proceeds from the sale of, the shares.
|
|
|
|
|
FMR LLC
245 Summer Street
Boston, MA 02210
|
901,457
|
6.67%
|
This information is based on a Schedule 13G/A filed with the SEC on February 13, 2019. Reflects the securities beneficially owned, or that may be deemed to be beneficially owned, by FMR LLC, certain of its subsidiaries and
affiliates, and other companies.
|
|
|
|
|
The Vanguard Group
100 Vanguard Boulevard
Malvern, PA 19355
|
1,144,208
|
8.47%
|
This information is based on a Schedule 13G/A filed with the SEC on February 11, 2019.
|
|
|
|
|
Wellington Management Company LLP
280 Congress Street
Boston, MA 02210
|
721,448
|
5.34%
|
This information is based on a Schedule 13G filed with the SEC on February 12, 2019. The securities are owned of record by clients of one or more investment advisers directly or indirectly owned by Wellington Management Group LLP. No
such client is known to have such right or power with respect to more than five percent of ePlus’ common stock.
|
Delinquent Section 16(a) Reports
|
Our directors, executive officers, and owners of more than 10% of our common stock must file reports with the SEC under Section 16(a) of the Exchange Act regarding their ownership of and transactions in our common
stock and securities related to our common stock. Except as set forth below, based upon a review of these reports and inquiries we have made, we believe that, with two exceptions all reports required to be filed by our directors, executive
officers and holders of more than 10% of our common stock pursuant to Section 16(a) of the Exchange Act were filed on a timely basis during the fiscal year 2019. Pursuant to the Non-Employee Director Long-Term Incentive Plan, Mr. Bowen was
granted 370 shares of restricted stock on May 1, 2018, the day he retired as an employee and became an Outside Director. Due to an administrative oversight his Form 4 was filed on May 31, 2018. Additionally, on August 2, 2018, a Form 4 filed
for Mr. Norton included a charitable donation that had been made on May 11, 2017.
The following biographies describe the business experience of each of the Company’s executive officers as of March 31, 2019, except for Phillip G. Norton and Mark P. Marron, who are discussed under the heading “2019
Nominees for Election to the Board of Directors.”
|
|
|
|
|
Elaine D. Marion
, Age 51
Chief Financial Officer
|
|
Officer of
e
Plus since:
2008
|
|
|
|
|
Ms. Marion joined us in 1998 and became our CFO on September 1, 2008. From 2004 to 2008, Ms. Marion served as our Vice President of Accounting. Prior to that, she was the Controller of
e
Plus Technology, inc., a subsidiary of
e
Plus, from 1998 to 2004. Before joining
e
Plus, Ms. Marion was General Manager of Bristow Development
Corporation. She serves on the Executive Advisory Board of the College of Business at the University of Mary Washington, and is a member of the George Mason University School of Business Dean’s Advisory Council. Ms. Marion is a graduate of
George Mason University, where she earned a Bachelor of Science degree in Business Administration with a concentration in Accounting.
|
|
|
|
|
Darren S. Raiguel
, Age 48
Chief Operating Officer
|
|
Officer of
e
Plus since:
2018
|
|
|
|
|
Darren Raiguel joined us in 1997, and served in various sales and management roles through his promotion in April 2011 to Senior Vice President of SLED and northeast commercial sales. From November 2014 to May 2018,
Mr. Raiguel served as our Executive Vice President of Technology Sales of
e
Plus Technology, inc., a subsidiary of
e
Plus and he became our Chief Operating
Officer and President of ePlus Technology, inc. on May 7, 2018. Before joining ePlus, Mr. Raiguel worked for Computerware, later acquired by Elcom International from 1992-1997. Mr. Raiguel is a graduate of Temple University, where he earned a
Bachelor of Business Administration degree, with dual majors in Marketing and Finance. Mr. Raiguel has participated in numerous industry organizations, councils, and advisory boards throughout his career.
Each of our executive officers is chosen by the Board and holds his or her office until his or her successor shall have been duly chosen and qualified, or until his or her death, resignation, or removal by the Board.
PROPOSAL 2
– Advisory Vote to Approve Named Executive Officer Compensation
Shareholders may cast an advisory vote to approve NEO compensation as disclosed in this proxy statement pursuant to Section 14A of the Exchange Act (commonly referred to as a “say-on-pay” vote). This vote is not
intended to address any specific item of compensation, but rather our overall compensation policies and practices relating to our NEOs. Although the vote is non-binding, we value feedback from our shareholders on compensation and other
important matters, and we expect to hold this vote on an annual basis for the foreseeable future. The Board of Directors and the Compensation Committee will consider the voting results when making future compensation decisions. At our 2018
Annual Meeting of Shareholders, approximately 92% of the votes cast by our shareholders approved the compensation in the 2018 proxy statement for our NEOs.
In deciding how to vote on this proposal, we encourage you to review the CD&A and 2019 Executive Compensation sections of this proxy statement for a detailed description of our executive compensation program. As
described in the CD&A, the Compensation Committee has designed our compensation program with the objective of rewarding achievement of specific goals that align the interests of management with the interests of our shareholders.
We are asking our shareholders to indicate their support for our NEO’s compensation as described in this proxy statement by voting “FOR” the following resolution at our 2019 Annual Meeting:
“RESOLVED, that the shareholders of
e
Plus approve, on an advisory basis, the compensation paid to the named executive officers, as disclosed in the Company’s Proxy Statement
for the 2019 Annual Meeting pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the CD&A, the Summary Compensation Table, and the other related compensation tables and narrative disclosure.”
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
APPROVAL
ON AN ADVISORY BASIS OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
AS DISCLOSED IN THE CD&A, THE SUMMARY COMPENSATION TABLE,
AND OTHER RELATED DISCLOSURE AND TABLES IN THIS PROXY.
COMPENSATION COMMITTEE REPORT
The information contained in this report is not soliciting material, is not deemed filed with the SEC, and is not to be incorporated by reference in any filing of the Company under the Securities
Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective any general incorporation of this proxy statement by reference.
The Compensation Committee has reviewed the CD&A and discussed that Analysis with management. Based on its review and discussions with management, the committee recommended to our Board of Directors that the
CD&A, as it appears below, be included in this proxy statement and incorporated by reference into the Company’s 2019 Annual Report.
Submitted by the Compensation Committee
John E. Callies (Chairman)
C. Thomas Faulders, III
Eric D. Hovde
Ira A. Hunt, III
COMPENSATION DISCUSSION AND ANALYSIS
This CD&A provides an overview of our executive compensation program for our fiscal year 2019, and our executive compensation philosophies and objectives. This CD&A reviews compensation for our three NEOs—our
Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer, as well as one former executive officer—our Executive Chairman—who retired from being an employee during the fiscal year 2019.
Our NEOs for the fiscal year ended March 31, 2019, were:
|
|
Phillip G. Norton
|
Executive Chairman (retired as an employee effective July 31, 2018)
|
Mark P. Marron
|
President and Chief Executive Officer
|
Elaine D. Marion
|
Chief Financial Officer
|
Darren S. Raiguel
|
Chief Operating Officer (promoted to COO effective May 7, 2018)
|
This CD&A is divided into three sections:
|
Overview
|
|
•
Fiscal Year 2019 Financial Highlights
•
Our Executive Compensation Program
•
Our Executive Compensation Practices
•
2018 Say-On-Pay Vote
|
|
What We Pay and Why
|
|
•
Fiscal Year 2019 Executive Compensation Decisions
•
Base Salary
•
Annual Cash Incentive Awards
•
Long-Term Cash and Equity Based Incentive Program
•
Other Elements of Our Fiscal Year 2019 Executive Compensation Program
•
2019 Pay Ratio Disclosure
|
|
How We Make Executive
Compensation Decisions
|
|
•
Role of the Board and Compensation Committee, and our Executive Officers
•
Guidance from the Compensation Committee’s Independent Compensation Consultant
•
Comparison Peer Groups
•
Alignment of Senior Management Team to Drive Performance
|
Fiscal Year 2019 Financial Highlights
|
|
•
|
Net sales decreased 3.3% from the prior year to $1,372.7 million
|
|
•
|
Services revenues increased 15.4% to $149.5 million
|
|
•
|
Consolidated gross profit increased 2.1% from the prior year to $330.4 million
|
|
•
|
Net earnings increased 14.6% over the prior year, to $63.2 million
|
|
•
|
Diluted earnings per share increased 17.7% to $4.65
|
Our Executive Compensation Program
|
The Company’s goal for its executive compensation (as well as its non-executive compensation) program is to attract, motivate, and retain a talented, entrepreneurial, ethical, and creative team of executives who will
provide leadership for the Company’s success in dynamic and competitive markets. The Company seeks to accomplish this goal in a way that rewards performance, is aligned with its business strategy, and maximizes shareholders’ long-term
interests. The Company’s executive compensation program is also intended to promote and maintain stability within the executive team by issuing restricted stock with multi-year vesting terms. The table below summarizes the components of our
fiscal year 2019 executive compensation.
|
Pay Element
|
|
|
|
Salary
|
Annual Cash Incentive
|
Restricted Stock
|
|
|
Who Receives -- All NEOs
|
|
|
|
When Granted
|
Annually
|
|
|
Form of Delivery
|
Cash
|
Equity
|
|
|
Type of Performance
|
Short-term fixed
|
Short-term variable
|
Long-term fixed
|
|
|
Performance Period
|
1 year
|
1 year
|
Vesting annually over 2 to 5 years
|
|
|
How Payout Determined
|
Compensation Committee determination
|
Based upon formula established by Compensation Committee
|
Compensation Committee determination
|
|
|
Performance Measures
|
Individual
|
Financing origination volume, earnings before tax, consolidated net sales, Management Business Objectives
|
|
|
Our Executive
Compensation Practices
|
Our Compensation Committee regularly reviews the Company’s executive compensation program to evaluate whether it is aligned with shareholder interests and supports the Company’s executive compensation philosophies and
objectives. Our executive compensation practices include the following, each of which the Compensation Committee believes reinforces our executive compensation objectives:
Our Executive Compensation Practices
|
|
What We Do
|
|
What We Don’t Do
|
|
✔
Significant percentage of cash compensation delivered in the form of variable compensation, which is “at-risk” and tied to quantifiable
performance measures
✔
Long-term vesting of restricted stock, to align executive and shareholder interests (minimum of two year vesting)
✔
Compensation Committee consists of independent directors only
✔
Annual review of our executive compensation programs
✔
Annual advisory vote to approve executive compensation programs (say-on-pay)
✔
Market comparison of executive compensation against relevant peer group information
✔
Periodic use of an independent compensation consultant reporting directly to the Compensation Committee and providing no services to the
Company
✔
Robust executive officer stock ownership guidelines require NEOs to hold
e
Plus stock
✔
Clawback policy mitigates undue risk regarding executive compensation practices
✔
Double-trigger equity acceleration for change-in-control
|
|
û
No excessive executive perquisites
û
No excessive severance benefits
û
No supplemental executive retirement plans
û
No acceleration of unvested stock upon retirement
û
No hedging or short sales of our securities
û
No pledging of our securities, except in limited circumstances with pre-approval
û
No tax gross-ups on benefits
û
No resetting of financial targets once established for a performance period
|
As part of its review of the Company’s executive compensation program, the Compensation Committee considers the results of the annual, non-binding advisory vote by the shareholders to approve named executive
compensation. Approximately 92% of the votes cast for the Company’s say-on-pay proposal at our 2018 Annual Meeting of Shareholders were to approve the Committee’s decisions regarding executive compensation. The Compensation Committee believes
the results of the say-on-pay vote demonstrate shareholder support for the Company’s executive compensation program. Accordingly, the Compensation Committee believes that the Company’s executive compensation philosophies and objectives continue
to be appropriate, and therefore made no material changes to the Company’s executive compensation program in response to the 2018 say-on-pay vote.
Additionally, for the current 2020 fiscal year, the Compensation Committee decided to add a long-term cash component to the executive compensation program, to further encourage executives to focus on the long-term
value to shareholders. The long-term cash awards are made pursuant to our 2012 Employee Long-Term Incentive Plan, and are be based on a 3-year financial metric.
Fiscal Year 2019 Executive Compensation Decisions
|
Consistent with our pay philosophy and executive compensation program objectives described below, in determining the fiscal year 2019 adjustments to executive compensation levels and the mix of compensation elements
for each NEO, the Compensation Committee and our CEO (in making recommendations regarding the CFO’s, and COO’s compensation) considered each NEO’s span of responsibility, prior performance and experience, Company performance, the competitive
market data to provide a perspective on external practices, and input from the Compensation Committee’s independent compensation consultant, Towers Watson (the “Consultant”), as more fully described below under “Guidance from the Compensation
Committee’s Independent Compensation Consultant.”
Base salary represents annual fixed compensation and is a standard element of compensation necessary to attract and retain talent. It is the minimum payment for a satisfactory level of individual performance as long
as the executive remains employed with the Company. Base salary is set by the Compensation Committee, and ratified by the Board, after taking into account the competitive landscape—the compensation practices of the companies in our selected
peer group and survey data from a broader index of comparable companies—as well as our business strategy and short- and long-term performance goals, and individual factors, such as position, individual performance and contribution, length of
service with the Company, experience in the position, and placement within the general base salary range offered to our NEOs.
The base salary for each of our NEOs as of March 31, 2019 and 2018 is set forth below:
|
|
Base salary as of March 31,
|
|
Named Executive Officer
|
|
2019
|
|
|
2018
|
|
Phillip G. Norton (1)
|
|
|
N/A
|
|
|
$
|
300,000
|
|
Mark P. Marron
|
|
$
|
800,000
|
|
|
$
|
750,000
|
|
Elaine D. Marion
|
|
$
|
450,000
|
|
|
$
|
450,000
|
|
Darren S. Raiguel (2)
|
|
$
|
450,000
|
|
|
|
N/A
|
|
(1)
|
Mr. Norton retired as an employee effective July 31, 2018.
|
(2)
|
Mr. Raiguel became an executive officer effective May 7, 2018.
|
Annual Cash Incentive Awards
|
During the 2019 fiscal year, we provided our NEOs with short-term cash incentive compensation through our annual Cash Incentive Plan (“CIP”). This short-term, variable cash compensation represents a significant
portion of each NEO’s target total cash compensation opportunity in a given year. Mr. Norton was not a participant in the CIP in fiscal year 2019.
Cash Incentive Plan Pay for Performance Alignment
Our Compensation Committee annually reviews, and then sets, performance goals under a Cash Incentive Plan. The combination of performance goals the Compensation Committee chose for fiscal year 2019 emphasizes factors
that the Compensation Committee believes are important to Company strategy and enhancing shareholder value.
On July 16, 2018, and in light of the tax changes discussed in “Deductibility of Executive Compensation and the Tax Cuts and Jobs Act of 2017” in “Tax and Accounting Considerations” below, the Compensation Committee
adopted the 2018 Cash Incentive Plan (“2018 Cash Incentive Plan” or “2018 CIP”). During the 2019 fiscal year, performance goals and awards were made under our 2018 CIP.
The 2018 CIP includes a provision for an adjusted award if it is determined that an award was paid based on incorrect financial results, and permits the Compensation Committee to require, to the extent permitted by
law, the participant to reimburse to the Company any amount received with respect to such an award. The 2018 CIP also provides that cash payments under the plan are subject to recovery by the Company to the extent required by Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) and the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), and any regulations promulgated thereunder. The Compensation Committee administers the 2018 CIP, and has full authority to
determine which of the Company’s executive officers will participate in the 2018 CIP; the terms and amounts of each participant’s minimum, target and maximum awards; and the period during which the performance is to be measured.
Prior to the 2019 fiscal year, performance goals and awards were made under our 2014 Cash Incentive Plan (“2014 Cash Incentive Plan” or “2014 CIP”).
Cash Incentive Awards for Fiscal Year 2019
For the fiscal year ended March 31, 2019, our NEOs' cash bonuses were earned pursuant to the 2018 CIP, based on the financial performance and management business objectives (“MBOs”).
|
•
|
The Financial Performance component constitutes 90% of the total award goals, and is based on earnings before tax (45%), consolidated net sales (30%), and financing origination volume (15%).
|
|
•
|
The MBOs component constitutes 10% of the total award goals, and is based on individual performance goals.
|
The award opportunity in fiscal 2019 was based on a target amount, which was adjusted based on the level of attainment of financial performance as set forth in each participant’s award agreement, and payouts may range
between 0% to 200% of target award amounts. All three of the participating executive officers had the same financial performance goals. The fiscal year 2019 financial performance weights and target amounts for each participant were as
follows:
|
|
Earnings Before Taxes
|
|
|
Consolidated Net Sales
|
|
|
Financing Origination Volume
|
|
Named Executive Officer
|
|
Percentage of
Total Bonus
|
|
|
Target Bonus
Amount ($)
|
|
|
Percentage of
Total Bonus
|
|
|
Target Bonus
Amount ($)
|
|
|
Percentage of
Total Bonus
|
|
|
Target Bonus
Amount ($)
|
|
Phillip G. Norton (1)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Mark P. Marron
|
|
|
45.0
|
%
|
|
|
337,500
|
|
|
|
30.0
|
%
|
|
|
225,000
|
|
|
|
15.0
|
%
|
|
|
112,500
|
|
Elaine D. Marion
|
|
|
45.0
|
%
|
|
|
135,000
|
|
|
|
30.0
|
%
|
|
|
90,000
|
|
|
|
15.0
|
%
|
|
|
45,000
|
|
Darren S. Raiguel
|
|
|
45.0
|
%
|
|
|
135,000
|
|
|
|
30.0
|
%
|
|
|
90,000
|
|
|
|
15.0
|
%
|
|
|
45,000
|
|
(1)
|
Mr. Norton retired as an employee effective July 31, 2018.
|
The MBOs, which represent 10% of the total target award amount for each executive officer, are based on the following criteria: for Mr. Marron, develop training programs for key executives to expand capabilities and
round out our succession plans, and develop a roadmap to support and scale our business; for Ms. Marion, develop a roadmap to support and scale our business, and implement various new accounting pronouncements; for Mr. Raiguel, develop key
performance metrics and expectations around key focus areas, and develop training programs for key executives to expand capabilities. In keeping with ePlus’ commitment to recruiting and maintaining the best talent available, all three
executive officers MBOs also task them with creating a workforce that attracts individuals whose talents, backgrounds, experiences and skills will enhance ePlus’ diverse and inclusive culture.
Results were adjusted to exclude any gain or loss attributable to the business operations of any entity acquired by the Company during the 2019 fiscal
year
. The 2018 CIP also permits the exclusion of all
items of income, gain or loss determined by the Board to be
extraordinary
or unusual in nature and not incurred or realized in the ordinary course of business, and the
incentive compensation expensed by
e
Plus for payments under the 2018 CIP.
Bonus payouts possible ranged between 0% and 200% of the target amount, depending on the level of achievement of the performance goals for the fiscal year 2019. The financial performance goals were as follows:
|
|
Performance Goals
|
|
Performance Level
|
|
Earnings
Before Taxes
|
|
|
Consolidated Net
Sales
|
|
|
Financing
Origination
Volume
|
|
Maximum
|
|
|
n/a
|
(1)
|
|
|
n/a
|
(1)
|
|
|
n/a
|
(1)
|
Target
|
|
$
|
85,643,000
|
|
|
$
|
1,504,132,000
|
|
|
$
|
457,908,000
|
|
Threshold (75% of Performance Goal)
|
|
$
|
64,232,250
|
|
|
$
|
1,128,099,000
|
|
|
$
|
343,431,000
|
|
Below Threshold
|
|
< $64,232,250
|
|
|
< $1,128,099,000
|
|
|
< $343,431,000
|
|
|
(1)
|
The threshold and escalators for each performance goal are as follows:
|
|
Amount of Goal Achieved
|
Award Amount
|
|
|
Less than 75% of Goal Target
|
No award relating to that target
|
|
|
|
|
|
|
Between 75% - 100% of Goal Target
|
Award shall be 50% of target, plus an additional 2.0% for each percentage point over 75% of Goal Target achieved
|
|
|
|
|
|
|
100% of Goal Target
|
100% of target for that Goal
|
|
|
|
|
|
|
More than 100% of Goal Target
|
100% of target for that Goal, plus an additional 5.0% for each percentage point over 100% of Goal Target achieved
|
|
|
|
|
|
|
Total Maximum Award for all goals combined
|
200% of Target
|
|
At the conclusion of the fiscal year ended March 31, 2019, the Compensation Committee determined which of the financial objectives described under the 2018 CIP and in the award agreements were achieved. There were no
waivers or modifications to any specified performance targets, goals, or conditions with respect to the 2018 CIP. The achievement of the financial performance goals is set forth below.
Performance Criteria
|
|
Goal
|
|
|
Achievement
|
|
Percentage Payout
|
|
Earnings before taxes
|
|
$
|
85,643,000
|
|
|
$
|
86,053,742(1
|
)
|
|
|
102.0
|
%
|
Consolidated net sales
|
|
$
|
1,504,132,000
|
|
|
$
|
1,359,225,276
|
|
|
|
80.7
|
%
|
Financing origination volume
|
|
$
|
457,908,000
|
|
|
$
|
359,813,000
|
|
|
|
57.2
|
%
|
(1)
|
Actual earnings before taxes were adjusted to exclude the incentive compensation accrued by the Company, and results for entities acquired during fiscal year 2019.
|
At the conclusion of the fiscal year ended March 31, 2019, the Compensation Committee determined which of the financial objectives described under the 2018 CIP and in the award agreements were achieved. There were no
waivers or modifications to any specified performance targets, goals, or conditions with respect to the 2018 CIP. The following table details the payments earned in the fiscal year ended March 31, 2019 and 2018, respectively (but paid in the
subsequent fiscal year) for each NEO:
Named Executive Officer
|
|
FY 2019 Annual Incentive
Cash Payment Earned ($)
|
|
|
FY 2018 Annual Incentive
Cash Payment Earned ($)
|
|
|
% Change
|
|
Phillip G. Norton (1)
|
|
|
N/A
|
|
|
|
135,682
|
|
|
|
N/A
|
|
Mark P. Marron
|
|
|
666,540
|
|
|
|
542,726
|
|
|
|
23
|
%
|
Elaine D. Marion
|
|
|
266,616
|
|
|
|
226,136
|
|
|
|
18
|
%
|
Darren S. Raiguel (2)
|
|
|
266,616
|
|
|
|
N/A
|
|
|
|
N/A
|
|
(1)
|
Mr. Norton retired as an employee effective July 31, 2018.
|
(2)
|
Mr. Raiguel became an executive officer upon his promotion to Chief Operating Officer in May 2018.
|
Long-Term Incentive Program
|
Under our 2012 Employee Long-Term Incentive Plan (the “2012 Employee LTIP”), the Compensation Committee has the authority to award various forms of long-term incentive compensation grants, such as cash awards, stock
options, restricted stock awards, and restricted stock units. The Compensation Committee’s objectives for the fiscal year 2019 long-term equity-based incentive awards to our NEOs were to focus executives on long-term shareholder value creation
and the Company’s long-term strategic plan, and retain the services of our executives through multi-year vesting requirements.
Mr. Marron makes recommendations to the Committee for equity grants to NEOs. When determining the level of the grant, the Compensation Committee considers each NEO’s functional and enterprise management
responsibilities, potential contributions to the Company’s profitability and growth, the value of prior long-term incentive grants and other non-cash and cash compensation, an analysis of how the Company performed on multiple financial metrics
as compared to certain peers, data from the Consultant’s report referenced above, and each executive’s total compensation, including cash compensation. However, the Compensation Committee does not use a formula or assign a particular weight to
any given factor in determining equity award grant levels. Rather, the Compensation Committee’s determination of grant levels is subjective, and the Compensation Committee grants awards that it believes in its judgment are reasonably
competitive.
The Compensation Committee believes that restricted stock helps to create incentives for performance and further align the interests of executives with those of shareholders because the stock’s value increases or
decreases in conjunction with the Company’s stock price. In addition, the Compensation Committee believes that granting awards with multi-year vesting periods creates a substantial retention incentive and encourages the NEOs to focus on the
Company’s long-term business objectives and stock performance. Most restricted shares granted to executive officers and other employees vest over a three-year period. Grants made in June 2015 to Mr. Marron and Ms. Marion vest over a five-year
period to further align their long-term interests with shareholders.
While generally the Compensation Committee determines compensation for our CEO using the same criteria it uses for other executives, the CEO’s compensation is based relatively less on base salary, and instead provides
greater opportunities for short-term performance-based cash and long-term equity grants. Effective April 1, 2018, Mr. Marron’s annual base salary was increased from $750,000 to $800,000. In making the increase the Compensation Committee
considered the 2016 report by the Company’s Compensation Consultant, as more fully discussed below, and the Company’s performance during the fiscal year ended March 31, 2018.
Other Elements of Our Fiscal Year 2019 Executive Compensation Program
|
Severance and Change in Control Provisions
Severance and change in control provisions are designed to facilitate our ability to attract and retain executives as we compete for talented employees in a marketplace where such protections are frequently offered.
Severance benefits are designed to provide benefits to ease an executive’s transition following an employment termination by the Company due to changes in our employment needs. Additionally, severance agreements increase the enforceability of
non-competition provisions to which all of our executives are contractually bound. Change in control benefits are intended to encourage executives to remain focused on the Company’s business in the event of rumored or actual fundamental
corporate changes. Both severance and change in control benefits are often an important part of an executive’s compensation package. See further details under the section entitled “Employment Agreements, Severance and Change in Control
Provisions.”
Our executive compensation arrangements with our NEOs, including our CIP and employment agreements, provide that bonuses or other compensation are subject to recovery by the Company to the extent required by
Dodd-Frank and Sarbanes-Oxley, and any regulations promulgated thereunder. This provision does not apply to base salary, or to time-vested restricted stock which is not awarded, granted, or vested based on financial measures required to be
reported under the securities laws.
Stock Ownership Guidelines
Our Board has adopted stock ownership guidelines for our executive officers to further align the interests of our executive officers with the interests of our shareholders. The guidelines are expressed as a multiple
of the executives’ base salary as of each January 1st,
or as of the date they are first identified as executive officers. Our executive officers are expected to retain stock ownership valued at a multiple of two times their annual
base salary within five years of first being identified as an executive officer. Our CEO is expected to retain stock ownership valued at a multiple of five times his annual base salary within the same time frame. Executive officers are expected
to retain one-half of all equity grants until such time as the target stock ownership is reached. The guidelines may be waived at the discretion of our Compensation Committee in the event of an extraordinary expense (such as, for example,
housing or higher education needs), or if compliance would create a severe hardship or prevent an executive from complying with a court order, as in the case of a divorce or other property settlement. However, the Company expects such instances
to be rare, and has not granted any waivers. At this time, all of our executive officers meet their respective guideline requirement.
Hedging and Short Sales Policies
Our Insider Trading Policy applies to all of our employees and directors. Under the policy, our directors, officers, and employees who are “Insiders” (as defined in the Policy) are absolutely prohibited from hedging,
including using prepaid variable forward contracts, equity swaps, collars and exchange funds, and similar transactions that establish downside price protection, including short sales, and buying or selling put options, call options, or other
derivatives of Company securities.
All trades of Company stock by directors, executive officers, and Insiders require pre-approval from our General Counsel, and must be made in accordance with the Insider Trading Policy.
Tax and Accounting Considerations
Deductibility of Executive Compensation and the Tax Cuts and Jobs Act of 2017
IRC Section 162(m), as amended, generally denies a publicly traded company a federal income tax deduction for compensation in excess of $1 million paid to certain of its named executive officers (“Covered NEOs”)
unless, for tax years prior to January 1, 2018, such compensation met certain criteria, including being based solely upon the attainment of objective performance criteria. On December 22, 2017, the performance-based exception under Section
162(m) was repealed for fiscal years commencing on or after January 1, 2018, subject to certain transition relief. As a result, the deduction will not be available for any executive officer beginning with our fiscal year ending March 31, 2019.
For our fiscal year beginning April 1, 2018, and future years, the Compensation Committee will review and consider the deductibility of executive compensation, taking into account the changes to IRC Section 162(m).
The Company believes that tax deductibility of compensation is an important factor, but not the sole factor, to be considered in setting executive compensation policy, and in light of the changes to IRC Section 162(m), it is expected that the
Compensation Committee will authorize payments that are not deductible for federal income tax purposes when it believes that such payments are appropriate to attract, retain, and incentivize executive talent.
Our executive employment agreements also provide that, if a severance payment is subject to the excise tax provided in IRC Section 280G, the executive will receive a lesser payment if he or she would receive a greater
after-tax benefit, which will better enable the Company to obtain a tax deduction.
Accounting Considerations
Accounting
considerations also play a role in the design of our executive compensation programs and policies.
Codification Topic
Compensation—Stock Compensation
requires us to expense the cost of stock-based compensation awards. We consider the relative impact of the expense, in addition to other factors such as stockholder dilution, retentive
impact, motivational impact, and the overall competitiveness of compensation packages when selecting long-term equity incentive instruments.
Our NEOs participate in benefit plans generally available to all of our employees, including medical, health, life insurance, and disability plans. They also are eligible to participate in our 401(k) plan, and receive
Company matching contributions, to the extent made by the Company, on the same terms as generally available to our employees. Pursuant to his employment agreement, our CEO, Mr. Marron, is entitled to reimbursement for his annual participation
in an executive health assessment program.
Our executive officers are provided with relatively limited perquisites, which we believe is in the best interests of the Company. In some years, certain of our executive officers have received certain company-paid
travel, meals, and entertainment costs for their families to attend the company's sales meeting. All attendees at the sales meeting are likewise eligible to have their families attend the meeting with the Company’s paying the same costs.
2019 Pay Ratio Disclosure
|
Pursuant to a mandate of Dodd-Frank, the SEC adopted in August 2015 a rule requiring annual disclosure of the ratio of the median employee’s total annual compensation to the total annual compensation of the principal
executive officer (‟PEO”), which for
e
Plus is our CEO, Mr. Marron. The purpose of the required disclosure is to provide a measure of the equitability of pay within the Company.
e
Plus believes its compensation philosophy and process yield an equitable result and presents such information as follows:
Median employee total annual compensation was $114,052
Mr. Marron’s total annual compensation was $3,057,380.
Based on this information, for our 2019 fiscal year, the ratio of the annual total compensation of Mr. Marron to the annual total compensation of our median employee was estimated to be 26.8 to 1. This pay ratio is a
reasonable estimate, calculated in a manner consistent with the applicable SEC requirements.
Our median employee referenced above is different than our median employee identified in our 2018 Proxy Statement (“2018 Median Employee”).
Although there were no changes to
our employee population or employee compensation arrangements that would significantly impact our pay ratio disclosure, our 2018 Median Employee terminated employment during fiscal year 2019 and, accordingly, there was a significant change to
the employee’s compensation. As allowed by SEC rules, our median employee identified above is one whose compensation is substantially similar to 2018 Median Employee based on the compensation measure used to select the 2018 Median Employee.
As described in our 2018 Proxy Statement, in determining our 2018 Median Employee, a list was prepared of all employees’ compensation as of December 31, 2017. The list included the full annual compensation of all
individuals who were employed throughout the entire 2017 calendar year, and annualized compensation for employees who joined
e
Plus during 2017. Our median employee was then selected from the list. To
identify our 2018 Median employee, we calculated compensation as the sum of (i) base salary, (ii) commissions, and (iii) equity that vested during the year. For simplicity, the value of the Company’s 401(k) plan and medical benefits provided
was excluded as all eligible employees, including Mr. Marron, are offered the exact same benefits and the Company uses the IRC safe harbor provision for 401(k) discrimination testing.
Once we identified our 2019 median employee, we calculated his or her 2019 annual total compensation under the Summary Compensation Table rules in a manner that is consistent with the calculation of our CEO’s
compensation, without any adjustments or estimates. The SEC requirements for identifying our median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies,
apply certain exclusions, and make reasonable estimates and assumptions that reflect their compensation practices. Accordingly, the pay ratio we report may not be comparable to the pay ratio other companies report.
HOW WE MAKE EXECUTIVE COMPENSATION DECISIONS
Role of the Board and Compensation Committee, and our Executive Officers
|
Role of the Board and Compensation Committee
The Compensation Committee, which is composed entirely of independent directors, generally establishes the components of our compensation program and may evaluate the components from time to time. The Compensation
Committee is responsible for evaluating and setting the compensation for our CEO, Executive Chairman (prior to his retirement as an employee), CFO, and COO. The Compensation Committee reviews the executive compensation program on an annual
basis, with awards and adjustments generally being made in June. Compensation decisions may be made at other times of the year in the case of promotions, new hires, or changes in responsibilities. In making these determinations, the
Compensation Committee may consider such factors as the Company’s performance, the individual performance of an executive officer, information from our compensation consultant (if any), and recommendations from management. In some cases, our
Board of Directors ratifies the Compensation Committee’s decisions. The Compensation Committee also considers any recommendations from the Board relating to the CEO’s performance.
Role of the Chief Executive Officer
Our CEO, Mr. Marron, was responsible for the implementation and administration of our executive compensation program during the fiscal year. Mr. Marron recommended the overall structure for our executive compensation
program, including base salary, metrics for the 2018 CIP award agreements for fiscal 2019, and the amount and vesting schedule of equity awards to be granted. The final decisions regarding executive compensation were, however, made by the
Compensation Committee. Additionally, neither the CEO nor the Executive Chairman are present during any deliberations or voting with regard to their own compensation.
Guidance from the Compensation Committee’s Independent Compensation Consultant
|
An independent compensation Consultant periodically provides executive compensation consulting services to the Compensation Committee. The Compensation Committee reviewed the independence of the Consultant under
NASDAQ and SEC rules, and concluded that the work of the Consultant has not raised any conflict of interest. The Consultant is engaged directly by the Compensation Committee.
In June 2016, the Consultant provided services relating to a review of our CEO’s and CFO’s compensation arrangements, including base salary, annual incentives, total cash compensation, long-term incentives, and total
direct compensation. The Compensation Committee referred to this report in July 2018 when setting the compensation for Mr. Marron and Ms. Marion.
While the Consultant provided general observations on the Company’s compensation programs, it did not determine or recommend the amount or form of compensation for the NEOs.
In late fiscal 2019, the Compensation Committee engaged a new independent compensation consultant, Pearl Meyer to provide consulting services for the Company’s executive compensation program. This engagement did not
impact any fiscal year 2019 compensation decisions. The Compensation Committee reviewed the independence of the Consultant under NASDAQ and SEC rules, and concluded that the work of the Consultant has not raised any conflict of interest. The
Consultant was engaged directly by the Compensation Committee. The Compensation Committee did not rely on Pearl Meyer’s work for its compensation decisions during fiscal year 2019.
The Compensation Committee periodically reviews the compensation practices of peer companies as part of its decision-making process so it can set total compensation levels that it believes are reasonably competitive.
The Compensation Committee, however, does not set compensation components to meet specific benchmarks, such as targeting salaries “above the median” or equity compensation at a particular percentile. Furthermore, the Compensation Committee
believes that over-reliance on benchmarking can result in compensation that is unrelated to the value delivered by the NEOs.
In June 2016 the Compensation Committee reviewed the composition of our peer group with regard to CEO and CFO positions. This review included the advice of the Consultant. Presidio was added to our peer group after
they became publicly traded in March 2017, and Datalink Corporation was removed after it was acquired by Insight Enterprises in January 2017. In addition to peer groups, the Compensation Committee also considered survey data provided by the
Consultant. In 2018, the Committee did not make any changes to the peer group.
|
Peer Group
|
|
|
Ciber, Inc.
|
Black Box Corp.
|
CDW Corporation
|
|
|
PCM, Inc. (f/k/a PC Mall)
|
Presidio, Inc.
|
ScanSource, Inc.
|
|
|
PC Connection Inc.
|
Insight Enterprises, Inc.
|
ManTech International Corp.
|
|
In determining our peer group, we considered our revenue; net earnings; earnings before interest, taxes, depreciation and amortization (“EBITDA”); market capitalization; number of employees; ISS-selected peers;
Industry GICS Code; and companies with whom we compete for customers. While we also view a number of other companies as potential peers, because they are privately held and no compensation data was available for those entities, they were not
included in our peer group.
Alignment of Senior Management Team to Drive Performance
|
Our performance goals are designed to drive shareholder value creation by aligning members of senior management with our strategy and common performance goals. To match performance to our goals, the Company engages in
extensive communications on what members of senior management, together with their teams, should strive toward to impact achievement of the Company’s goals. We believe this understanding of the link between individual, team, and Company
performance helps the Company to focus on actions that have the greatest potential to drive the Company toward more profitable growth and shareholder value.
2019 EXECUTIVE COMPENSATION
The following table includes information concerning compensation earned by our NEOs during fiscal years 2019, 2018, and 2017.
2019 Summary Compensation Table
|
Name and Principal Position
|
Year
|
|
Salary
($)
|
|
|
Stock
Awards
($)(1)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)(2)
|
|
|
All Other
Compensation
($)(3)
|
|
|
Total
($)
|
|
Phillip G. Norton - Executive Chairman of the Board (4)
|
2019
|
|
|
129,999
|
|
|
|
86,124
|
|
|
|
-
|
|
|
|
149,796
|
|
|
|
365,919
|
|
2018
|
|
|
298,846
|
|
|
|
-
|
|
|
|
135,682
|
|
|
|
753,500
|
|
|
|
1,188,028
|
|
2017
|
|
|
465,000
|
|
|
|
778,558
|
|
|
|
378,253
|
|
|
|
262,220
|
|
|
|
1,884,031
|
|
Mark P. Marron – President and Chief Executive Officer
|
2019
|
|
|
800,000
|
|
|
|
1,704,119
|
|
|
|
666,540
|
|
|
|
10,535
|
|
|
|
3,181,194
|
|
2018
|
|
|
740,720
|
|
|
|
1,594,000
|
|
|
|
542,726
|
|
|
|
13,542
|
|
|
|
2,890,988
|
|
2017
|
|
|
641,666
|
|
|
|
1,615,558
|
|
|
|
605,204
|
|
|
|
11,765
|
|
|
|
2,874,193
|
|
Elaine D. Marion – Chief Financial Officer
|
2019
|
|
|
450,000
|
|
|
|
960,500
|
|
|
|
266,616
|
|
|
|
10,019
|
|
|
|
1,687,135
|
|
2018
|
|
|
443,504
|
|
|
|
956,400
|
|
|
|
226,136
|
|
|
|
14,211
|
|
|
|
1,640,251
|
|
2017
|
|
|
415,000
|
|
|
|
778,558
|
|
|
|
313,950
|
|
|
|
11,211
|
|
|
|
1,518,719
|
|
Darren S. Raiguel – Chief Operating Officer
|
2019
|
|
|
436,381
|
|
|
|
1,089,625
|
|
|
|
266,616
|
|
|
|
7,669
|
|
|
|
1,800,291
|
|
2018
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
(1)
|
The values in this column represent the aggregate grant date fair values of restricted stock awards granted in the respective fiscal year, computed in accordance with Codification Topic
Compensation—Stock Compensation
. Assumptions used in calculating these values may be found in Note 12 of our financial statements in our 2019 Form 10-K. Each of these amounts reflect our expected
aggregate accounting expense for these awards as of the grant date and do not necessarily correspond to the actual values that will be expensed by us or realized by the NEOs.
|
(2)
|
These amounts reflect cash payments under our 2018 CIP, which were earned during the fiscal year identified. A detailed description of the fiscal 2019 payments can be found in the CD&A.
|
(3)
|
Each of our executive officers received other compensation during fiscal years 2019, 2018, and 2017, in the form of an employer 401(k) match (which is available on the same terms to all employees), and
Messrs. Marron and Raiguel and Ms. Marion received travel, meals, and entertainment costs for their family to attend the Company’s sales meeting. In addition, subsequent to his retirement as an employee, Mr. Norton received
compensation for his service on the Company’s Board. The amounts received by each NEO in fiscal year 2019 are enumerated below:
|
Other Compensation
|
|
|
|
Employer 401K
Match
|
|
|
Sales
Meeting (a)
|
|
|
Medical
Insurance
Waiver
|
|
|
Director Cash Compensation
|
|
|
Total Other
|
|
Phillip G. Norton
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
149,796
|
|
|
$
|
149,796
|
|
Mark P. Marron
|
|
$
|
3,500
|
|
|
$
|
7,035
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
10,535
|
|
Elaine D. Marion
|
|
$
|
3,500
|
|
|
$
|
5,469
|
|
|
$
|
1,050
|
|
|
|
|
|
|
$
|
10,019
|
|
Darren S. Raiguel
|
|
$
|
3,500
|
|
|
$
|
4,169
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
7,669
|
|
|
(a)
|
The amounts shown reflect the costs incurred by the Company relating to the executives’ family’s attendance at the sales meeting, grossed up to cover the taxes incurred by the executive. This payment was
received similarly by all attendees at the sales meeting.
|
(4) Mr. Norton retired as an employee effective July 31, 2018. The stock awards reported on this table reflect stock granted under our 2017 Director Long-Term Incentive Plan, for Mr. Norton’s service on our Board of
Directors.
2019 Grants of Plan-Based Awards Table
|
The following table provides information regarding the possible payouts to our NEOs in fiscal year 2019 under the 2018 CIP and the Company’s 2012 Employee Long-Term Incentive Plan.
|
|
|
Estimated
Possible Payouts
Under Non-Equity
Incentive Plan Awards(1)
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(2)
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)
|
|
|
Grant Date
Fair Value of
Stock
and Option
Awards
($)(3)
|
|
Name
|
Grant Date
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
|
|
|
|
|
|
|
Phillip G. Norton
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Mark P. Marron
|
6/14/2018
|
|
|
|
|
|
|
|
|
|
|
17,742
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,704,119
|
|
|
|
|
|
750,000
|
|
|
|
1,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elaine D. Marion
|
6/14/2018
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
960,500
|
|
|
|
|
|
300,000
|
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Darren S. Raiguel
|
5/7/2018
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
849,500
|
|
6/14/2018
|
|
|
|
|
|
|
|
|
|
|
2,500
|
|
|
|
|
|
|
|
|
|
|
|
240,125
|
|
|
|
|
|
300,000
|
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
These amounts reflect award opportunities under the 2018 CIP and are described more fully in the CD&A under the heading “Components of Compensation and 2019 Compensation Determinations” and subheading
“Cash Compensation.” Threshold amounts represent minimal level of achievement of the lowest weighted financial performance metric, and maximum amounts represent 200% of target values. Actual payments with respect to the awards for
fiscal 2018 (and paid in fiscal 2019) are disclosed in the Non-Equity Incentive Plan Compensation column of the 2019 Summary Compensation Table.
|
(2)
|
These amounts represent the number of shares of restricted stock granted to the NEOs under our 2012 Employee LTIP. Equity awards granted to the executive officers and reflected in the 2019 Grants of
Plan-Based Awards Table vest equally over a three-year period, and may be accelerated in limited circumstances as set forth in the Employee LTIP, award agreements, and/or employment agreements.
|
(3)
|
These amounts reflect the grant date fair value of the restricted stock granted in fiscal year 2019. This represents the aggregate amount that we expected to expense for such grants in accordance with
Codification Topic
Compensation—Stock Compensation
over the grants’ respective service period. These amounts do not necessarily correspond to the actual values that will be expensed by us or
realized by the NEOs. Assumptions used in calculating these values with respect to restricted stock awards may be found in Note 12 of our 2019 Annual Report.
|
Outstanding Equity Awards at 2019 Fiscal Year End
|
The following table provides information concerning the outstanding equity-based awards as of March 31, 2019.
|
|
Stock Awards
|
|
Name
|
|
Number of Shares or
Units of Stock That
Have Not Vested (1)
|
|
|
Market Value of Shares or
Units of Stock That Have Not
Vested ($)(2)
|
|
Phillip G. Norton (3)
|
|
|
911
|
|
|
|
80,660
|
|
Mark P. Marron
|
|
|
82,949
|
|
|
|
7,344,304
|
|
Elaine D. Marion
|
|
|
48,006
|
|
|
|
4,250,451
|
|
Darren S. Raiguel
|
|
|
16,236
|
|
|
|
1,437,535
|
|
(1)
|
The following table shows the dates on which the outstanding stock awards as of March 31, 2019, will vest, subject to continued employment through the vest date, or acceleration in limited circumstances as
set forth in the 2012 Employee LTIP, award agreements, and/or employment agreements.
|
|
|
Number of Shares
|
|
Vest Date
|
|
Phillip G. Norton
|
|
|
Mark P. Marron
|
|
|
Elaine D. Marion
|
|
|
Darren S. Raiguel
|
|
5/7/19
|
|
|
-
|
|
|
|
|
|
|
|
|
|
3,333
|
|
6/8/19
|
|
|
-
|
|
|
|
6,667
|
|
|
|
4,000
|
|
|
|
1,000
|
|
6/14/19
|
|
|
-
|
|
|
|
5,914
|
|
|
|
3,333
|
|
|
|
833
|
|
6/16/19
|
|
|
-
|
|
|
|
6,006
|
|
|
|
6,006
|
|
|
|
1,736
|
|
6/17/19
|
|
|
-
|
|
|
|
19,600
|
|
|
|
12,000
|
|
|
|
-
|
|
7/21/19
|
|
|
-
|
|
|
|
6,667
|
|
|
|
-
|
|
|
|
-
|
|
8/1/19
|
|
|
57
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
9/25/19
|
|
|
398
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
5/7/20
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,333
|
|
6/8/20
|
|
|
-
|
|
|
|
6,667
|
|
|
|
4,000
|
|
|
|
1,000
|
|
6/14/20
|
|
|
-
|
|
|
|
5,914
|
|
|
|
3,333
|
|
|
|
833
|
|
6/17/20
|
|
|
-
|
|
|
|
19,600
|
|
|
|
12,000
|
|
|
|
-
|
|
8/1/20
|
|
|
57
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
9/25/20
|
|
|
399
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
5/7/21
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,334
|
|
6/14/21
|
|
|
-
|
|
|
|
5,914
|
|
|
|
3,334
|
|
|
|
834
|
|
(2)
|
We calculated market value by multiplying the closing price of our common stock ($88.54) on the last business day of our fiscal year, March 29, 2019, by the number of shares in the first column.
|
(3)
|
All outstanding stock awards for Mr. Norton represent stock awards granted to him in his capacity as a director.
|
Fiscal Year 2019 Options Exercised and Stock Vested
|
The following table sets forth information with respect to the shares of Company common stock acquired through vesting of restricted stock during our fiscal year 2019. There were no stock options outstanding during
fiscal year 2019.
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on Vesting (#)
|
|
|
Value Realized on Vesting
($) (1)
|
|
Phillip G. Norton
|
|
|
16,343
|
|
|
|
1,575,465
|
|
Mark P. Marron
|
|
|
38,939
|
|
|
|
3,766,390
|
|
Elaine D. Marion
|
|
|
22,006
|
|
|
|
2,108,578
|
|
Darren S. Raiguel
|
|
|
4,038
|
|
|
|
386,063
|
|
(1)
|
Market value was computed by multiplying the closing price of our common stock on the day of vesting by the number of shares acquired. Additionally, for Mr. Marron, Ms. Marrion and Mr. Raiguel, the
restricted stock shares were net-share settled such that the Company withheld shares with value equivalent to the NEO’s minimum statutory tax obligation for the applicable income and other employment taxes, and remitted cash to the
appropriate taxing authorities. The amounts in the table represent the gross number of shares and value realized on vesting for each of the NEOs. The net number of shares acquired were: Mr. Marron, 22,969; Ms. Marion 13,660, and Mr.
Raiguel, 2,824. Mr. Norton’s shares represented compensation for his service on our Board, which is reported via a Form 1099 and thus employment taxes were not withheld.
|
Employment Agreements, Severance, and Change in Control Provisions
|
Our incentive plans for and employment agreements with our NEOs reflect our compensation philosophy. In addition to our employment agreements with Mr. Marron and Ms. Marion, which became effective December 12, 2017,
we entered into an employment agreement with Mr. Raiguel in conjunction with his promotion to Chief Operating Officer, which became effective May 7, 2018.
All of our employment agreements with our NEOs contain “clawback” provisions as required by Dodd-Frank and Sarbanes-Oxley.
In all cases, our NEO’s receipt of severance payments is contingent upon their executing a release, and certifying that they will comply with certain confidentiality, non-competition, and non-solicitation provisions
of the employment agreement.
The Company’s employment agreements with its NEOs are intended to comply with IRC Section 409A. The material terms of the employment agreements are described below. Also, pursuant to our 2012 Employee LTIP and
standard award agreement, unvested stock issued to any employee will vest upon a “Change in Control,” as defined in the 2012 Employee LTIP.
|
•
|
Effective as of December 12, 2017.
|
|
•
|
Mr. Marron’s agreement has a termination date of January 31, 2018, however, the agreement contains automatic two-year successive renewal periods unless either party terminates the agreement 60 days prior
to the end of the then-current term. As no notice of termination was provided, the expiration date of his agreement is now January 31, 2020.
|
|
•
|
In the event of disability, termination without cause, or termination for good reason (all as defined in the agreement), Mr. Marron is entitled to eighteen months of his base salary, in addition to a
pro-rated payment under our CIP, to the extent that the Performance Goals have been met, with the payment to be made after the end of the fiscal year at the time the payment would have been made had there been no termination.
Additionally, the Company also would be responsible to pay Mr. Marron an amount in cash equal to the cost of premiums the Company paid prior to the date of termination for Mr. Marron and his dependents’ qualified coverage under the
Company’s medical, prescription, dental, and other health benefits, for 18 months.
|
|
•
|
In the event of termination without cause, or by Mr. Marron for good reason, he is also entitled to, at the Company’s election, either the acceleration of unvested restricted stock, or cash in an amount
equal to the value of the stock on the date of termination.
|
|
•
|
Mr. Marron’s employment agreement was amended on July 16, 2018, to increase his base salary to $800,000, effective April 1, 2018. The table below summarizes the potential payments and benefits to Mr.
Marron upon the occurrence of certain triggering events. The table assumes a hypothetical effective date of termination of March 31, 2019, and a payment of the target award under the 2018 CIP. The table does not include accrued,
unused vacation time, which is paid to all employees upon termination of employment, pursuant to
e
Plus’ policies.
|
Triggering Event
|
|
Cash Severance
|
|
|
Target Cash
Incentive (2)
|
|
|
Equity-Based
Compensation
Awards (3)
|
|
|
Total
|
|
Termination Without Cause, or for Good Reason, as defined in the agreement
|
|
$
|
1,153,875
|
|
|
$
|
750,000
|
|
|
$
|
7,344,304
|
|
|
$
|
9,248,179
|
|
Change in Control
|
|
$
|
-
|
|
|
|
|
|
|
$
|
7,344,304
|
|
|
$
|
7,344,304
|
|
Death or Disability (1)
|
|
$
|
1,153,875
|
|
|
$
|
750,000
|
|
|
$
|
7,344,304
|
|
|
$
|
9,248,179
|
|
(1)
|
The Cash Severance column assumes disability. No cash severance is due in the event of death.
|
(2)
|
In the event of disability, termination without cause or by Mr. Marron for good reason, all as defined in the agreement, Mr. Marron is entitled to a pro-rated amount of the payment under our CIP, to the
extent that the Performance Goals have been met, with the payment to be made after the end of the fiscal year at the time the payment would have been made had there been no termination. The above table assumes the target goal is
reached but not exceeded.
|
(3)
|
Pursuant to the 2012 Employee LTIP, and our standard award agreements, upon death or a change in control, as defined by the 2012 Employee LTIP, all unvested stock for all employees will vest. The value of
the equity-based compensation awards for all termination tables herein is calculated using the closing price of our common stock ($88.54) on the last business day of our fiscal year, March 29, 2019.
|
|
•
|
Effective as of December 12, 2017.
|
|
•
|
Ms. Marion’s agreement has a termination date of July 31, 2018, however, the agreement contains automatic one-year successive renewal periods unless either party terminates the agreement 60 days prior to
the end of the then-current term. As no notice of termination was provided, the expiration date of her agreement is now July 31, 2020.
|
|
•
|
In the event of disability, termination without cause, or termination for good reason (all as defined in the agreement), Ms. Marion is entitled to twelve months of her base salary, in addition to a
pro-rated amount of the payment under our CIP. Additionally, the Company would be required to pay to Ms. Marion an amount in cash equal to the cost of premiums the Company paid prior to the date of termination for Ms. Marion and her
dependents’ qualified coverage under the Company’s medical, prescription, dental, and other health benefits, for 18 months.
|
|
•
|
In the event of termination without cause or by Ms. Marion for good reason, she is also entitled to, at the Company’s election, either the acceleration of unvested restricted stock, or cash in an amount
equal to the value of the stock on the date of termination.
|
|
•
|
In the event of termination without cause by the Company or for good reason by Ms. Marion, an amount in cash equal to the cost of premiums the Company paid prior to the date of termination for Ms. Marion and
her dependents’ qualified coverage under the Company’s medical, prescription, dental, and other health benefits, for 18 months.
|
|
•
|
Ms. Marion’s employment agreement was amended on June 8, 2017, to increase her base salary to $450,000.
|
The table below summarizes the potential payments and benefits to Ms. Marion upon the occurrence of certain triggering events. The table assumes a hypothetical effective date of termination of March 31, 2019, and a
payment of the target award under the 2018 CIP. The table does not include accrued, unused vacation time, which is paid to all employees upon termination of employment, pursuant to
e
Plus’ policies.
Triggering Event
|
|
Cash Severance
|
|
|
Target Cash
Incentive (2)
|
|
|
Equity-Based Compensation
Awards (3)
|
|
|
Total
|
|
Termination Without Cause, or for Good Reason, as defined in the agreement
|
|
$
|
490,731
|
|
|
$
|
300,000
|
|
|
$
|
4,250,451
|
|
|
$
|
5,041,182
|
|
Change in Control
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,250,451
|
|
|
$
|
4,250,451
|
|
Death or Disability (1)
|
|
$
|
490,731
|
|
|
$
|
300,000
|
|
|
$
|
4,250,451
|
|
|
$
|
5,041,182
|
|
(1)
|
The Cash Severance column assumes disability. No cash severance is due in the event of death.
|
(2)
|
In the event of disability, termination by the Company without cause, or by Ms. Marion for good reason, all as defined in the agreement, Ms. Marion is entitled to a pro-rated amount of the payment under
our CIP. The above table assumes the target goal is reached but not exceeded.
|
(3)
|
The value of the equity-based compensation awards for all termination tables is calculated using closing price of our common stock ($88.54) on the last business day of our fiscal year, March 29, 2019.
|
|
•
|
Effective as of May 7, 2018.
|
|
•
|
Mr. Raiguel’s agreement has a termination date of July 31, 2019, however, the agreement contains automatic one-year successive renewal periods unless either party terminates the agreement 60 days prior to
the end of the then-current term. As no notice of termination was provided, the expiration date of his agreement is now July 31, 2020.
|
|
•
|
In the event of disability, termination without cause, or termination for good reason (all as defined in the agreement), Mr. Raiguel is entitled to twelve months of his base salary, in addition to a
pro-rated amount of the payment under our CIP. Additionally, the Company would be required to pay to Mr. Raiguel an amount in cash equal to the cost of premiums the Company paid prior to the date of termination for Mr. Raiguel and
his dependents’ qualified coverage under the Company’s medical, prescription, dental, and other health benefits, for 18 months.
|
|
•
|
In the event of termination without cause or by Mr. Raiguel for good reason, he is also entitled to, at the Company’s election, either the acceleration of unvested restricted stock, or cash in an amount
equal to the value of the stock on the date of termination.
|
The table below summarizes the potential payments and benefits to Mr. Raiguel upon the occurrence of certain triggering events. The table assumes a hypothetical effective date of termination of
March 31, 2019, and a payment of the target award under the 2018 CIP. The table does not include accrued, unused vacation time, which is paid to all employees upon termination of employment, pursuant to
e
Plus’
policies.
Triggering Event
|
|
Cash Severance
|
|
|
Target Cash
Incentive (2)
|
|
|
Equity-Based Compensation
Awards (3)
|
|
|
Total
|
|
Termination Without Cause, or for Good Reason, as defined in the agreement
|
|
$
|
490,731
|
|
|
$
|
300,000
|
|
|
$
|
1,437,535
|
|
|
$
|
2,228,266
|
|
Change in Control
|
|
|
|
|
|
|
|
|
|
$
|
1,437,535
|
|
|
$
|
1,437,535
|
|
Death or Disability (1)
|
|
$
|
490,731
|
|
|
$
|
300,000
|
|
|
$
|
1,437,535
|
|
|
$
|
2,228,266
|
|
(1)
|
The Cash Severance column assumes disability. No cash severance is due in the event of death.
|
(2)
|
In the event of disability, termination by the Company without cause, or by Mr. Raiguel for good reason, all as defined in the agreement, Mr. Raiguel is entitled to a pro-rated amount of the payment under
our CIP. The above table assumes the target goal is reached but not exceeded.
|
(3)
|
The value of the equity-based compensation awards for all termination tables is calculated using closing price of our common stock ($88.54) on the last business day of our fiscal year, March 29, 2019.
|
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of March 31, 2019, about our common stock that may be issued upon the exercise of options, warrants, and rights under our prior equity compensation plans. It also provides
information regarding the number of securities available for future issuance under our current equity compensation plans, under which there are no outstanding options, warrants, or rights.
Plan Category
|
|
Number of securities
to be issued upon
exercise of
outstanding options,
warrants, and rights
|
|
|
Weighted
average exercise
price of
outstanding
options,
warrants, and
rights
|
|
|
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in first column)
|
|
Equity compensation plans approved by security holders
|
|
|
-
|
|
|
|
n/a
|
|
|
|
830,231(1
|
)
|
Equity compensation plans not approved by security holders
|
|
|
-
|
|
|
|
n/a
|
|
|
|
-
|
|
Total
|
|
|
-
|
|
|
|
|
|
|
|
830,231
|
|
(1)
|
This number includes 135,644 shares reserved for issuance under the 2017 Non-Employee Director Long-Term Incentive Plan and available for future restricted stock awards, and 694,587 shares reserved for
issuance under the 2012 Employee LTIP and available for future awards.
|
PROPOSAL 3
– Ratification of the Selection of Deloitte & Touche LLP as our Independent Registered Public Accounting Firm for our Fiscal Year Ending March 31,
2020
The Board and the Audit Committee recommend that the stockholders ratify the selection of Deloitte as the Company’s independent registered public accounting firm for the fiscal year ending March 31, 2020. Deloitte is
currently the Company’s independent registered public accounting firm, and the Audit Committee approved the selection and retention of Deloitte for fiscal year 2020.
Neither the Company’s Bylaws or other governing documents nor the law require shareholder ratification of the selection of Deloitte as the Company’s independent registered accounting firm. As a matter of good
corporate practice, however, the Company is submitting the selection of Deloitte to the shareholders for ratification. If the shareholders fail to ratify the selection, the Audit Committee will reconsider whether to retain Deloitte. Even if the
selection is ratified, the Audit Committee retains discretion to direct the selection of a different independent registered accounting firm at any time if the Audit Committee determines that such a change would be in the best interest of the
Company and its shareholders.
Representatives of Deloitte are expected to attend the 2019 Annual Meeting and will have the opportunity to make a statement and respond to appropriate questions.
THE BOARD RECOMMENDS VOTING
FOR
RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL
YEAR ENDING MARCH 31, 2020.
The Audit Committee’s report regarding the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2019 is below. The information contained in this report is not
soliciting material, is not deemed filed with the SEC, and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and
irrespective of any general incorporation of this proxy statement by reference.
The Audit Committee has certain duties and powers as described in its written charter adopted by the Board, which is available on the Investors section of the Company’s website at
http://www.eplus.com/investors/corporate-governance-legal/committee-charters
. The Audit Committee is responsible primarily for assisting the Board in its oversight of the Company’s
accounting and financial reporting processes, including audits of the Company’s financial statements and the integrity of its financial statements, determining the independent registered public accounting firm’s qualifications and
independence, and evaluating the performance of the Company’s internal audit function and that of the independent registered public accounting firm. The Audit Committee does not itself prepare financial statements or perform audits. All
members of the Audit Committee are “independent,” as required by applicable NASDAQ Listing Rules, as currently in effect, and in accordance with SEC rules and regulations, and each such member has the ability to read and understand
fundamental financial statements.
Management is responsible for the preparation, presentation, and integrity of the Company’s financial statements; establishment and effectiveness of internal controls over financial reporting; and maintenance of
appropriate accounting and financial reporting principles, policies, and internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations. Deloitte is responsible for planning and
carrying out a proper audit of the Company’s annual financial statements in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), expressing an opinion as to the conformity of such
financial statements with generally accepted accounting principles, and auditing the effectiveness of internal controls over financial reporting.
In performing its oversight role, the Audit Committee has considered and discussed the audited consolidated financial statements with management and Deloitte. The Audit Committee has discussed with Deloitte the
matters required to be discussed by the applicable requirements of the PCAOB. The Audit Committee has received the written disclosures and the letter from Deloitte required by the applicable requirements of the PCAOB regarding the independent
auditors’ communications with the Audit Committee concerning independence, and has discussed with Deloitte its independence. Deloitte has free access to the Audit Committee to discuss any matters Deloitte deems appropriate.
Members of the Audit Committee rely without independent verification on the information provided to them and on the representations of management and Deloitte. Accordingly, the Audit Committee’s oversight does not
provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee’s considerations and discussions referred to above do not assure that the audit of the Company’s consolidated financial statements has been carried out in accordance with the
auditing standards of the PCAOB, that the consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States, that Deloitte is in fact “independent”, or the effectiveness of the
Company’s internal controls.
Based on the reports and discussions, and subject to the limitations on the role and responsibilities of the Audit Committee described above, the Audit Committee recommended to the Board of Directors that the audited
consolidated financial statements be included in the Annual Report on Form 10-K for the fiscal year ended March 31, 2019. This report is provided by the following independent directors, who served on the Audit Committee during the 2019 fiscal
year.
Submitted by the Audit Committee
|
|
|
|
|
Terrence O’Donnell, Chairman
|
|
John E. Callies
|
|
C. Thomas Faulders, III
|
|
Lawrence S. Herman
Maureen F. Morrison
|
Independent Registered Public Accounting Firm Fees and Independence
|
Deloitte has served as the Company’s independent registered public accounting firm since 1990. The Audit Committee of the Board has selected Deloitte as the Company’s independent registered accounting firm for the
fiscal year ending March 31, 2020.
The following table presents the aggregate fees paid to or accrued by Deloitte for the audit of the Company’s annual consolidated financial statements, and all other professional services rendered by Deloitte, for the
fiscal years ended March 31, 2019, and March 31, 2018:
|
|
Fiscal 2019 ($)
|
|
|
Fiscal 2018 ($)
|
|
Audit Fees
|
|
$
|
1,773,266
|
|
|
$
|
1,755,448
|
|
Audit Related Fees
|
|
|
-
|
|
|
|
-
|
|
Tax Related Fees
|
|
|
113,888
|
|
|
|
202,799
|
|
All Other Fees
|
|
|
1,895
|
|
|
|
1,895
|
|
TOTAL FEES
|
|
$
|
1,889,049
|
|
|
$
|
1,960,142
|
|
Audit-Related Fees
Deloitte billed no audit-related fees for the fiscal years ended March 31, 2019 and 2018. Deloitte did not provide audit-related services during the last two fiscal years. The Audit Committee pre-approves all auditing
services (which may entail providing comfort letters in connection with securities underwriting), and all audit-related services Deloitte provided to us, subject to a de minimis exception as set forth by the SEC.
Tax Related Fees
Deloitte’s fees for tax-related services were $113,888 and $202,799 for the fiscal years ended March 31, 2019 and 2018, respectively.
All Other Fees
Deloitte’s fees for an annual license to online resources were $1,895 for each of the fiscal years ended March 31, 2019 and 2018.
FREQUENTLY ASKED QUESTIONS CONCERNING THE 2019 ANNUAL MEETING OF SHAREHOLDERS
Why did I receive these proxy materials?
These proxy materials are first being distributed on or about August 5, 2019, to the Company’s shareholders in connection with our Board’s solicitation of proxies to be voted at the 2019 Annual Meeting on September 18,
2019, at 8:00 am ET, at The Westin Washington Dulles Airport, 2520 Wasser Terrace, Herndon, Virginia, 20171, and any postponement or adjournment thereof. This proxy statement describes the matters on which you, as the Company’s shareholder, are
entitled to vote. It also includes information that we are required to provide to you under SEC rules and is designed to assist you in voting your shares.
What is the purpose of the 2019 Annual Meeting?
At our 2019 Annual Meeting, shareholders will be asked to vote to (1) elect the eight director nominees named in this proxy statement for a term expiring at the 2020 Annual Meeting of Shareholders; (2) approve, on an
advisory basis, the compensation of our NEOs; and (3) ratify the appointment of the Company’s independent registered public accounting firm. See the sections entitled “Proposal 1 – Election of Directors,” “Proposal 2 – Advisory Vote to Approve
Named Executive Officer Compensation,” and “Proposal 3 – Ratification of Independent Registered Public Accounting Firm.” The Board does not know of any matters to be brought before the meeting other than as set forth in the Notice of 2019 Annual
Meeting of Shareholders.
Who may attend the 2019 Annual Meeting?
Only holders of our common stock as of the close of business on our Record Date, which was July 23, 2019, or their duly appointed proxies, may attend the 2019 Annual Meeting. If you hold your shares through a broker,
bank, or other nominee, you will be required to show the notice or voting instructions form you received from your broker, bank, or other nominee, or a copy of the statement (such as a brokerage statement) from your broker, bank, or other nominee
reflecting your stock ownership as of our Record Date to be admitted to the 2019 Annual Meeting.
Who may vote at the 2019 Annual Meeting?
Holders of our common stock as of the close of business on the Record Date are entitled to notice of, and to vote at, the 2019 Annual Meeting. As of July 23, 2019, there were 13,506,047 shares of our common stock
outstanding and which includes 195,933 unvested restricted shares entitled to vote at the 2019 Annual Meeting, with each share entitled to one vote.
How do I vote at the 2019 Annual Meeting?
Eligible shareholders may vote in one of four ways:
|
•
|
By telephone
– Use the toll-free telephone number shown on your Notice or proxy card;
|
|
•
|
Via the Internet
– Visit the Internet website shown on your Notice or proxy card and follow the on-screen instructions;
|
|
•
|
By mail
– Date, sign, and promptly return your proxy card by mail in a postage prepaid envelope; or
|
|
•
|
In person
– Deliver a completed proxy card at the meeting or vote in person.
|
Voting instructions for eligible shareholders (including instructions for both telephonic and Internet voting) are provided under the heading “Voting Information” of this proxy statement and on the proxy card. The
telephone and Internet voting procedures are designed to authenticate shareholder identities, allow shareholders to give voting instructions, and confirm that the shareholders’ instructions have been recorded properly. A control number, located
on the Notice and the proxy card, will identify shareholders and allow them to submit their proxies and confirm that their voting instructions have been properly recorded. Costs associated with telephone and electronic access, such as usage
charges from telephone companies and Internet access providers, must be borne by the shareholder. If you submit your proxy by telephone or via the Internet, it will not be necessary to return your proxy card. The deadline for voting by telephone
or via the Internet is 11:59 p.m. ET on September 17, 2019.
What if I do not vote or do not indicate how my shares should be voted on my proxy card?
If an eligible shareholder does not return a signed proxy card or submit a proxy by telephone or via the Internet, and does not attend the meeting and vote in person, his or her shares will not be voted. Shares of our
common stock represented by properly executed proxies received by us or proxies submitted by telephone or via the Internet, and which are not revoked, will be voted at the meeting in accordance with the instructions contained therein.
If you submit a properly completed proxy but do not indicate how your shares should be voted on a proposal, the shares represented by your proxy will be voted as the Board recommends on such proposal.
What if my shares of the Company’s common stock are held for me by a broker?
If you are the beneficial owner of shares held for you by a broker, your broker must vote those shares in accordance with your instructions. A “broker non-vote” occurs when a broker or other nominee holding shares for a
beneficial owner does not vote on a particular proposal because the broker or other nominee does not have discretionary voting power for that item and has not received instructions from the beneficial owner.
|
•
|
Non-Discretionary Items.
The election of directors (Proposal 1) and the advisory vote to approve Named Executive Officer compensation (Proposal 2) may not be voted
on by your broker if it has not received voting instructions.
|
|
•
|
Discretionary Items.
The ratification of Deloitte as the Company’s independent registered public accounting firm (Proposal 3) is a discretionary item. Generally,
brokers that do not receive voting instructions from beneficial owners may vote on this proposal in their discretion.
|
How can I change my votes or revoke my proxy after I have voted?
Any proxy signed and returned by a stockholder or submitted by telephone or via the Internet may be revoked or changed at any time before it is exercised at the 2019 Annual Meeting, or any adjournments or postponements
thereof, by:
|
•
|
Mailing written notice of revocation or change to our Corporate Secretary at
e
Plus, 13595 Dulles Technology Drive, Herndon, Virginia, 20171;
|
|
•
|
Delivering a later-dated proxy (either in writing, by telephone, or via the Internet); or
|
|
•
|
Voting in person at the meeting.
|
Attendance at the meeting will not, in and of itself, constitute revocation of a proxy.
Will my votes be publicly disclosed?
No. As a matter of policy, shareholder proxies, ballots, and tabulations that identify individual stockholders are not publicly disclosed and are available only to the inspector of election and certain employees, who
are obligated to keep such information confidential.
Who will count the votes?
A representative of the Company’s Transfer Agent, Computershare, will serve as the inspector of election for the 2019 Annual Meeting, and will count the votes.
What if other matters come up during the 2019 Annual Meeting?
If any other matters properly come before the meeting, including a question of adjourning or postponing the meeting, the persons named in the proxies or their substitutes acting thereunder will have discretion to vote
on such matters in accordance with their best judgment.
What constitutes a quorum at the 2019 Annual Meeting?
To constitute a quorum, there must be in attendance or represented by proxy a majority of the voting power of the outstanding capital stock entitled to vote at the 2019 Annual Meeting of Stockholders. A quorum is
required to transact business at the 2019 Annual Meeting. Abstentions and broker non-votes count toward the establishment of a quorum.
How many votes are required to approve each matter to be considered at the 2019 Annual Meeting?
Proposal 1: Election of director nominees named in this proxy statement.
Each of the eight nominees for director will be elected by a plurality of the shares present in person or
by proxy at the 2019 Annual Meeting and entitled to vote on the election of directors, subject to the Company’s director resignation policy should any director not receive a majority of the votes cast. A plurality means that the nominees with the
greatest number of votes are elected as directors up to the maximum number of directors to be chosen at the 2019 Annual Meeting. In the election of directors, Proposal 1, you may vote “for” each of the nominees or your vote may be “withheld” with
respect to one or more of the nominees. Please note, however, that the Company’s Corporate Governance Guidelines provide that, in an uncontested election (that is, an election where the number of director nominees does not exceed the number of
directors to be elected), if any nominee for director does not receive a majority of the votes cast, he or she is expected to tender his or her resignation in writing to the Chairman of the Nominating and Corporate Governance Committee. The
Nominating and Corporate Governance Committee shall evaluate the resignation tendered and shall make a recommendation to the Board whether to accept or reject the resignation, or whether other actions should be taken. The Board shall act on each
such resignation, taking into account the recommendation of the Nominating and Corporate Governance Committee, within 90 days following the certification of the election results. If a director’s resignation is not accepted by the Board, then the
director who tendered that resignation will continue to serve on the Board until the 2020 Annual Meeting of Shareholders and until his or her successor is elected and qualified, or until his or her earlier death, unconditional resignation, or
removal. In the event of a contested election, director nominees who receive the most votes for the number of seats up for election will be elected. Broker non-votes and abstentions will not be counted as present and entitled to vote on the
proposal and will therefore have no effect on the outcome of the proposal.
Proposal 2: Advisory vote to approve Named Executive Officer compensation.
The affirmative vote of the holders of a majority of the shares entitled to vote on the proposal,
present in person or represented by proxy at the meeting, is required to approve on an advisory, non-binding basis the compensation paid to our NEOs. Abstentions will be counted as present and entitled to vote on the proposal and will therefore
have the effect of a negative vote. Broker non-votes will not be counted as present and entitled to vote on the proposal and will therefore have no effect on the outcome of the proposal.
Proposal 3: Ratification of Deloitte & Touche LLP as the Company’s independent registered public accounting firm.
The affirmative vote of the holders of a majority of the
shares entitled to vote on the proposal, present in person or represented by proxy at the meeting, is required to ratify Deloitte as the Company’s independent registered public accounting firm for the year ending March 31, 2020. Abstentions will
be counted as present and entitled to vote on the proposal and will therefore have the effect of a negative vote. Broker non-votes will not be counted as present and entitled to vote on the proposal and will therefore have no effect on the
outcome of the proposal.
Who pays to prepare, mail, and solicit the proxies?
The Company will bear the costs of solicitation of proxies for the 2019 Annual Meeting of Shareholders, including preparation, assembly, printing, and mailing of the Notice, this proxy statement, the Annual Report, the
proxy card, and any additional information furnished to shareholders. We may reimburse persons representing beneficial owners of common stock for their costs of forwarding any solicitation materials to such beneficial owners. Proxies may be
solicited in person or by mail, telephone, or electronic transmission on our behalf by our directors, officers, or employees. However, we do not reimburse or pay additional compensation to our own directors, officers, or other employees for
soliciting proxies.
The Board knows of no other matters that will be presented for consideration at the 2019 Annual Meeting. If any other matters are properly brought before the meeting, the persons named in the accompanying proxy will
have the discretionary authority to vote such proxy on such matters in accordance with their best judgment.
Annual Report on Form 10-K
|
A copy of our Annual Report, which includes our Form 10-K for the year ended March 31, 2019, as filed with the SEC, will be sent to any shareholder without charge upon written request addressed to:
Investor Relations
e
Plus
13595 Dulles Technology Drive
Herndon, Virginia 20171
(703) 984-8400
You may also obtain our Form 10-K via the SEC’s Internet site, www.sec.gov, or our Annual Report, which includes our Form 10-K, via our website,
www.eplus.com/Investors/Pages/Annual-Reports.aspx
.
Additional copies of the Annual Report, the Notice, this proxy statement, and the accompanying proxy may be obtained from our Investor Relations department at the address above.
Company shareholders who share an address may receive only one copy of the Notice or this proxy statement and the Annual Report from their bank, broker, or other nominee, unless contrary instructions are received. We
will deliver promptly a separate copy of the Notice or this proxy statement and Annual Report to any stockholder who resides at a shared address and to which a single copy of the documents was delivered, if the shareholder makes a request by
contacting our Corporate Secretary,
e
Plus, 13595 Dulles Technology Drive, Herndon, Virginia, 20171, or by telephone at (703) 984-8400. If you wish to receive separate copies of the Notice or this proxy
statement and the Annual Report in the future, or if you are receiving multiple copies and would like to receive a single copy for your household, you should contact your broker, bank, or other nominee.
Shareholder Proposals for the 2020 Annual Meeting of Shareholders
|
Shareholders have the opportunity to submit proposals for the 2020 Annual Meeting of Shareholders. To be considered for inclusion in the Company’s proxy statement and form of proxy for next year’s Annual Meeting of
Shareholders, your shareholder proposal must be submitted in writing by April 7, 2020, to the Corporate Secretary,
e
Plus, 13595 Dulles Technology Drive, Herndon, Virginia 20171. Proposals must be received
by that date and satisfy the requirements of Rule 14a-8 under the Exchange Act to be included in the proxy statement and on the proxy card that will be used for solicitation of proxies by the Board for the 2020 Annual Meeting of Shareholders.
In accordance with our Bylaws, if you wish to submit a proposal for consideration at next year’s Annual Meeting that is not to be included in next year’s proxy materials, or wish to nominate a candidate for election to
the Board at next year’s Annual Meeting, your proposal or nomination must be submitted in writing and received by the Corporate Secretary at least 60 days before the date of the first anniversary of this 2019 Annual Meeting if the 2020 Annual
Meeting of Shareholders is held within 30 days of the anniversary of this 2019 Annual Meeting or, otherwise, within seven days after the first public announcement of the date of the 2020 Annual Meeting of Shareholders. Assuming that our 2020
Annual Meeting of Shareholders is held on schedule, to be “timely” within the meaning of Rule 14a-4(c) under the Exchange Act, we must receive written notice of your intention to introduce a nomination or other item of business at that Meeting
before July 20, 2020. If we do not receive written notice during that time period, or if we meet certain other requirements of the SEC rules, the persons named as proxies in the proxy materials relating to that Meeting will use their discretion
in voting the proxies if any such matters are raised at the meeting.
A submission by an
e
Plus shareholder must contain the specific information required in
e
Plus’ Bylaws. If you would like a copy of
e
Plus’ current Bylaws,
please write to the Corporate Secretary,
e
Plus, 13595 Dulles Technology Drive, Herndon, Virginia 20171.
e
Plus’ current Bylaws may also be found on the Company’s website at
http://www.eplus.com/investors/corporate-governance-legal/amended-and-restated-
bylaws
.
Results of the 2019 Annual Meeting
|
The preliminary voting results will be announced at the 2019 Annual Meeting. The final voting results will be tallied by the inspector of elections and published in a Current Report on Form 8-K, which we are required to
file with the SEC within four business days following the 2019 Annual Meeting.
Additional Information about the Company
|
Although the information contained on, or accessible through, our website is not part of this proxy statement, you will find information about
e
Plus and our corporate governance practices at
http://www.eplus.com/investors
. Our website contains information about our Board, its Committees, and their charters; our Bylaws; and our Code of Conduct,
Certificate of Incorporation, and Corporate Governance Guidelines. Shareholders may obtain, without charge, printed copies of the above documents by writing to the Corporate Secretary,
e
Plus, 13595 Dulles Technology Drive, Herndon, Virginia 20171.
The Company’s principal executive offices are located at 13595 Dulles Technology Drive, Herndon, Virginia 20171. The Company’s main telephone number is (703) 984-8400.
FORWARD-LOOKING STATEMENTS
This proxy statement contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and involve
substantial risks and uncertainties, which may cause results to differ materially from those set forth in the statements. The forward-looking statements may include, but are not limited to, statements made in the CD&A section of this proxy
statement regarding the benefits and anticipated results of our compensation programs and the Compensation Committee’s plans and intentions relating thereto. The Company undertakes no obligation to publicly update any forward-looking statement,
whether as a result of new information, future events, or otherwise, except as may be required by law. Forward-looking statements should be evaluated together with the many uncertainties that affect our business, particularly those mentioned
under the heading “Risk Factors” in our Annual Report (accompanying this proxy statement), and in the periodic reports that we file with the SEC on Form 10-Q.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON SEPTEMBER 18, 2019
The proxy materials for the Company’s the 2019 Annual Meeting, including our Annual Report on Form 10-K for the year ended March 31, 2019, and this proxy statement, are available online via the Company’s website
at
http://www.eplus.com/investors/investor-information/annual-meeting-proxy
. Other information on the Company’s website does not constitute part of the
Company’s proxy materials.
It is important that your proxy be returned promptly, whether by mail, by telephone or via the Internet. The proxy may be revoked at any time by you before it is exercised as described in this proxy
statement. If you attend the meeting in person, you may withdraw any proxy (including a telephonic or Internet proxy) and vote your own shares as described in this proxy statement.
August 5, 2019
|
By Order of the Board of Directors
|
|
|
|
Erica S. Stoecker
|
|
Corporate Secretary, General Counsel, & Chief Compliance Officer
|