4
| Amendment to the ePlus inc. Charter| | · | To be approved, Proposal 4, approval“FOR” votes of our Amended and Restated Certificatethe holders of Incorporation, must receive a “For” vote from the majority of the outstanding shares entitled to vote. Abstentions and broker non-votes will have the same effect as an “Against” vote.vote |
| | ·Vote AGAINST | To be approved, Proposal 5, ratification of appointment of independent auditors, must receive a “For” vote from the majority of shares present and entitled to vote either in person or by proxy. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect. | Vote AGAINST |
A quorum of stockholders is necessary to hold a valid annual meeting. A quorum will be present if at least a majority of the outstanding shares are represented by proxy or by stockholders present and entitled to vote at the annual meeting. On the record date, there were [NUMBER OF SHARES] shares outstanding and entitled to vote. Thus, at least [ NUMBER OF SHARES ] shares must be represented by proxy or by stockholders present and entitled to vote at the annual meeting to have a quorum.
Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker or bank) or if you vote in person at the annual meeting. We will count abstentions and broker non-votes for purposes of determining a quorum. If there is no quorum, the chairman of the annual meeting or holders of a majority of the votes present at the annual meeting may adjourn the annual meeting to another time or date.
Ø | Who pays for the cost of this proxy solicitation? |
We will pay for the entire cost of soliciting proxies. In addition to these mailed proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may retain the services of Georgeson Inc. in connection with soliciting proxies for the Annual Meeting of Stockholders for an estimated fee of $1,200 to $1,600, plus appropriate out-of-pocket expenses. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
Ø | How do I submit a proposal for the Annual Meeting of Stockholders in 2009? |
To be considered for inclusion in the Company’s proxy statement and form of proxy for next year’s annual meeting, your stockholder proposal must be submitted in writing by [April 17], 2009 to the Corporate Secretary, ePlus inc., 13595 Dulles Technology Drive, Herndon, Virginia 20171. Proposals must be received by that date and satisfy the requirements under applicable SEC Rules (including SEC Rule 14a-8) 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 20092023 Annual Meeting.
(2) If a broker or other nominee does not exercise this discretion, such broker non-votes will have no effect on the results of this vote.
On June 25, 2008,
Our Board of Directors has adopted Corporate Governance Guidelines and Policies (the “Guidelines”) that provide a framework for effective corporate governance. The Guidelines outline our Board of Directors approvedDirectors’ operating principles, and the Amendedcomposition and Restated Bylaws, which amended, among other things, the procedures for stockholders to submit proposals or nominate directors. In accordance with our current 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 Boardworking processes of Directors at next year’s annual meeting, your proposal or nomination must be submitted in writing and received by the Corporate Secretary not less than 60 days before the date of the first anniversary of this 2008 annual meeting if the 2009 annual meeting is held within 30 days of the anniversary of this 2008 annual meeting, otherwise, within seven days after the first public announcement of the date of the 2009 annual meeting.
A submission by an ePlus stockholder must contain the specific information required in ePlus’ Bylaws. If you would like a copy of ePlus’ current Bylaws, please write to the Corporate Secretary, ePlus inc., 13595 Dulles Technology Drive, Herndon, Virginia 20171. ePlus’ current Bylaws may also be found on the Company’s website at http://www.eplus.com/bylaws.htm.
Ø | Can I find additional information on the Company’s website? |
Yes. Although the information contained on our website is not part of this proxy statement, you will find information about ePlus and our corporate governance practices at http://www.eplus.com/about_us.htm. Our website contains information about our Board Board Committees and their charters, a copy of our Bylaws, and Standard of Conduct and Ethics. Stockholders may obtain, without charge, hard copies of the above documents by writing to: Corporate Secretary, ePlus inc., 13595 Dulles Technology Drive, Herndon, Virginia 20171.
Role of the Board of Directors
its committees. Our Board plays an active role in overseeing management and representing the interests of stockholders. Directors are expected to attend Board meetings and the meetings of committees on which they serve. Directors are also frequently in communication with management between formal meetings. During the fiscal year ended March 31, 2008, the Board met a total of seven times. All directors attended at least 75% of the total Board and committee meetings to which they were assigned in the fiscal year ended March 31, 2008. All members of the Board, who were members of the Board on such date, attended the last meeting of our stockholders.
Standard of Conduct and Ethics
We are committed to ethical behavior in all that we do. Our Standard of Conduct and Ethics applies to all of our directors, officers and employees. It sets forth our policies and expectations on a number of topics, including our commitment to promoting a fair workplace, avoiding conflicts of interest, compliance with laws (including insider trading laws), appropriate relations with government officials and employees, and compliance with accounting principles.
We also maintain a toll-free hotline through which employees may raise concerns regarding accounting or financial reporting matters. The hotline is available to all employees, 7 days a week, 24 hours a day, in English and in Spanish. Employees using the hotline may choose to remain anonymous. All hotline inquiries are forwarded to a member of our Audit Committee.
Our Standard of Conduct and Ethics is posted on our website at www.eplus.com/ethics.htm. Printed copies of the Standard of Conduct and Ethics may be obtained by stockholders, without charge, by contacting Corporate Secretary, ePlus inc., 13595 Dulles Technology Drive, Herndon, Virginia 20171. We intend to make any required disclosures regarding any amendments of our Standard of Conduct and Ethics or waivers granted to any of our directors or executive officers on our website at www.eplus.com.
Identifying and Evaluating Nominees for Directors
Each year, the Nominating and Corporate Governance Committee periodically reviews our Guidelines and developments in corporate governance, and, if appropriate, recommends toproposed changes for Board approval.
Our Guidelines and other corporate governance documents, including the Board the slateCharter, bylaws, committee charters, and our Code of directors to serve as management’s nominees for election by the stockholdersConduct and Business Partner Code of Conduct, are all available on our website at the annual meeting. The process for identifying and evaluating candidates to be nominated to the Board starts with an evaluationhttps://www.eplus.com/investors/corporate-governance-legal. Independence of a candidate by the Chairman of the Committee, followed by the Committee in its entirety. Director candidates may also be identified by stockholders. In evaluating such nominations, the Nominating and Corporate Governance Committee seeks to achieve a balance of knowledge, experience, and capability on theOur Board of Directors. Furthermore, any memberDirectors
Under our Guidelines and Nasdaq’s listing standards, a majority of theour Board members must be “independent.” The Board of Directors must haveannually determines whether each of our directors is independent. In determining independence, the highest personal ethicsBoard follows the independence criteria set forth in Nasdaq’s listing standards, and valuesconsiders all relevant facts and have experience at the policy-making level of business, and should be committed to enhancing stockholder value. circumstances.
Stockholder proposals for nominationsPursuant to Nasdaq’s independence criteria, a director is not “independent” if she or he has one or more of the relationships specifically enumerated in Nasdaq’s listing standards. In addition, the Board should be submitted to the Secretary of the Corporation as specifiedmust affirmatively determine that a director does not have a relationship that, in the Corporation’s Bylaws. The information requirements for any stockholder proposal or nomination can be found in Section 2.8 of our Bylaws, available at http://www.eplus.com/bylaws.htm. Proposed stockholder nominees are presented to the Chairman of the Nominating and Corporate Governance Committee, who decides if further consideration should be given to the nomination by the Committee.
Communications with the Board of Directors
Persons interested in communicating with the directors regarding concerns or issues may address correspondence to a particular director, to the Board or to the independent directors generally, in care of ePlus inc. at 13595 Dulles Technology Drive, Herndon, Virginia 20171. If no particular director is named letters will be forwarded, as appropriate and depending on the subject matter, by the General Counsel to the Chair of the Audit Committee, the Chair of the Compensation Committee, or the Chair of the Nominating and Corporate Governance Committee. The General Counsel reviews such communications for spam (such as junk mail or solicitations) or misdirected communications.
Effective at the opening of business on July 20, 2007, our common stock was delisted from The Nasdaq Global Market due to non-compliance with financial statement reporting requirements. Our common stock currently trades in the Over-the-Counter market and, therefore, we are not subject to the Nasdaq Marketplace Rules. However, our Board has reviewed the relationships concerning independence of each director on the basis of the definition of “independent” contained in the Nasdaq Marketplace Rules. In accordance with that review, our Board has made a subjective determination as to each independent director that no relationships exist that, in our Board’s opinion, would interfere with histhat director’s exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations,The Board has affirmatively determined that Messrs. Bowen, Callies, Faulders, Hovde, Hunt, and Xiang, and Mses. Bergeron and Morrison, are “independent” under the applicable Nasdaq listing standards.
Leadership Structure of Our Board reviewedof Directors
The Board regularly reviews the effectiveness of the Company’s structure, and discussed information provided byon at least an annual basis, examines what form of structure is in the directors and by management with regard to each director’s business and personal activities as they may relate tobest interest of our business and our management.
shareholders. The Board has determined that Messrs. O’Donnell, Cooper, Beimler, Herman,a structure with a separation of the Chairman and CEO roles will enable the Board to best carry out its roles and responsibilities on behalf of ePlus’ shareholders, and currently, C. Thomas Faulders serves as our Chairman. Additionally, the Board believes that this structure further supports the CEO focusing on operating and Hovde are independent undermanaging ePlus, while leveraging the Nasdaq Marketplace Rules. Chairman’s experience and perspective. The Board has also determined that the members of eachregularly reviews its committee structure. Each of the Board are independent under the listing standards of the Nasdaq Marketplace Rules. In determining the independence of the directors, the Board considered the relationships described under “Related Party Transactions,” which it determined were immaterial to the individual’s independence.
The Board of Directors has threeBoard’s standing committees: committees—Audit, Compensation, and Nominating and Corporate Governance. TheGovernance—are comprised entirely of independent directors, which further complements the Board’s oversight role.
Our Board has three standing committees: (1) Audit, Committee(2) Compensation, and Compensation Committee were prescribed by our bylaws throughout the year, and on June 25, 2008 the bylaws were amended to include, among other things, that the(3) Nominating and Corporate Governance Committee shall also be a standing committee. TheGovernance. Each committee’s charter foris available on our website at https://www.eplus.com/investors/corporate-governance-legal/committee-charters. Additional information about each of our committees can be found at http://www.eplus.com/committee_charters.htm.committee is below.
The following table provides a summary of the membership of each of the committees of the Board of Directors as of March 31, 2008.
Name | | Compensation | Nominating and Corporate GovernanceCommittee | Mr. Beimler | Member | | Member (6) | Mr. Cooper | (1) | | Member | Mr. Faulders | Member | Member (2) | (7) | Mr. Herman | Member | Member (3) | Chair | Mr. Hovde | | Member (4) | Member (8) | Mr. O’Donnell | Chair | (5) | Member (9) |
:
(1) | Mr. Cooper was aMaureen F. MorrisonOther Committee Members: John E. Callies, C. Thomas Faulders, Ben Xiang Meetings Held in Fiscal Year 2023: 7
Independence: Each Audit Committee member meets the audit committee independence requirements of Nasdaq and the rules of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) .
Qualifications: Each member of the Audit Committee until June 13, 2007. |
is financially literate, knowledgeable, and qualified to review financial statements.(2)
In addition, the Board has determined that C. Thomas Faulders and Maureen F. Morrison meet the definition of an “audit committee financial expert” under the Exchange Act rules. | Mr. Faulders was the Chairman of the CompensationPrimary Responsibilities: Our Audit Committee until June 13, 2007. |
(3) | Mr. Herman joined the Compensation Committee effective March 1, 2008. |
(4) | Mr. Hovde joined the Compensation Committee effective June 13, 2007. |
(5) | Mr. O’Donnell was a member of the Compensation Committee until March 1, 2008. |
(6) | Mr. Beimler joined the Nominatingis responsible for, among other things: (1) appointing, compensating, retaining, and Corporate Governance Committee effective June 13, 2007. |
(7) | Mr. Faulders was a member of the Nominating and Corporate Governance Committee until June 13, 2007. |
(8) | Mr. Hovde joined the Nominating and Corporate Governance Committee effective June 13, 2007. |
(9) | Mr. O’Donnell joined the Nominating and Corporate Governance Committee effective March 1, 2008. |
The Audit Committee of the Board of Directors assists the Board in its oversight of the Company’s corporate accounting and financial reporting process. The Audit Committee is governed by a Board-approved charter stating its responsibilities. The Committee’s responsibilities include:
| · | appointment, compensation and oversight ofoverseeing the work of any registered public accounting firmthe independent auditor engaged for the purpose of preparingto prepare or issuing anissue audit reportreports and performingperform other audit, review, or attest services for the Company; |
| · | to discuss (2) discussing the annual audited financial statements with management and the registered public accounting firm,Company’s independent auditor, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,Operations” (“MD&A”), and recommendrecommending to the Board of Directors whether the audited financial statements should be included in the Company’s Annual Report on Form 10-K; |
| · | to discuss (3) discussing the Company’s unaudited financial statements and related footnotes and the “Management Discussion and Analysis”MD&A portion of the Company’s Form 10-Q for each interim quarter with management and the registered public accounting firm;independent auditor; (4) overseeing the Company’s internal audit function; and |
| · | to discuss (5) discussing the earnings press releases as well asand financial information and earnings guidance, if any, provided to analysts and ratingsrating agencies with management and/or the independent auditor, as appropriate. |
| Other Committee Members: Renée Bergeron, C. Thomas Faulders, Eric D. Hovde, Ira A. Hunt Renée Bergeron’s service on the Compensation Committee began on November 8, 2022. Ben Xiang also served on the Compensation Committee during the fiscal year ended March 31, 2023, until June 13, 2023.
Meetings Held in Fiscal Year 2023: 7
Independence: Each member of the Compensation Committee meets the compensation committee independence requirements of Nasdaq and the registered public accounting firm,Exchange Act rules, as appropriate.well as the non-employee director requirements of Exchange Act Rule 16b-3, and the outside director requirements under the Internal Revenue Code (“IRC”) Section 162(m). | Primary Responsibilities: Our Compensation Committee is responsible for, among other things: (1) reviewing and approving, and recommending for Board ratification (as relates to the CEO), the corporate goals and objectives applicable to the compensation of the Company’s CEO and other executive officers; (2) reviewing and approving and, if required by law, recommending for Board approval incentive compensation and equity-based plans, and, where appropriate or required, recommending such plans for shareholder approval; (3) reviewing the Company’s incentive compensation arrangements relating to executive officer compensation to determine whether they encourage excessive risk-taking, reviewing and discussing the relationship between risk management policies and practices related to executive compensation, and evaluating policies and practices that could mitigate any such risk; (4) reviewing and discussing with management the Compensation Discussion and Analysis (“CD&A”) and related executive compensation information, and recommending the same for inclusion in the Company’s proxy statement or Annual Report; (5) reviewing and recommending for Board approval the frequency with which the Company conducts Say on Pay votes, and approving proposals regarding the Say on Pay Vote; (6) directly responsible for the appointing, compensating, and overseeing of any work of any compensation consultant, legal counsel, or other advisor the Committee retains; (7) overseeing management’s development and succession planning and reviewing and discussing the same with the Board; and (8) reviewing and approving, and recommending for Board ratification, employment agreements and severance/change in control agreements for the Company’s executive officers. |
For additional information regarding the Audit Committee’s duties and responsibilities, please refer to the Audit Committee’s charter, which is available on the Company’s web site at http://www.eplus.com/committee_charters.htm.7
Nominating and Corporate Governance Committee | Chair: Ben Xiang (effective June 13, 2023) Other Committee Members: Renée Bergeron, Eric D. Hovde (chair until June 13, 2023), Ira A. Hunt, Maureen F. Morrison Renée Bergeron’s service on the Nominating and Corporate Governance Committee began on November 8, 2022.
Ben Xiang’s service on the Nominating and Corporate Governance Committee began on June 13, 2023. Meetings Held in Fiscal Year 2023: 4
Independence: Each member of the Nominating and Corporate Governance Committee meets Nasdaq’s independence requirements. | Primary Responsibilities: Our Nominating and Corporate Governance Committee is responsible for, among other things: (1) selecting and recommending nominees for director to the Board; (2) recommending committee composition to the Board; (3) overseeing the annual performance self-assessment of the Board and each of its committees; (4) reviewing and recommending compensation of non-employee directors to the Board; (5) reviewing our related person transaction policy, and any related person transactions; and (6) reviewing and assessing the adequacy of our corporate governance framework, including our Charter, Bylaws, and Corporate Governance Guidelines, and making recommendations to the Board as appropriate. |
Board and Committee Meetings
Our directors are expected to attend meetings of the members of the Audit Committee is independent within the meaning of the listing standards of Nasdaq Marketplace RulesBoard and applicable SEC regulations. The Board has determined that Mr. Faulders is an audit committee financial expert within the meaning of SEC regulations. The Audit Committee met six times during thecommittees. During our fiscal year ended March 31, 2008.2023, the Board held eight meetings. Each of our directors attended at least 95 percent of the meetings of the Board and the committees on which she or he served. Although we do not have a formal policy requiring directors to attend our Annual Meetings, we encourage their attendance. Seven of our then eight directors attended our September 2022 Annual Meeting of Shareholders (the “2022 Annual Meeting”).
As required underBoard of Directors’ Role in Risk Oversight
The Board oversees the Sarbanes-Oxley ActCompany’s enterprise risk management process. Management reviews the process with the Board on a periodic basis, including identifying key risks and steps taken to monitor or mitigate those risks. In addition, the Board’s standing committees—Audit, Compensation, and Nominating and Corporate Governance—assist the Board in discharging its oversight duties as described below. Accordingly, while each of 2002, the committees contributes to the risk management oversight function by assisting the Board in the manner outlined below, the Board itself remains responsible for overseeing the Company’s risk management program. The Audit Committee has discusses with management and/or the independent auditor and/or internal audit function, as appropriate, risks related to the Committee’s roles and responsibilities as described in place proceduresits charter. The Compensation Committee reviews risks related to receive, retainthe subject matters for which it is responsible, primarily our executive compensation program and treat complaints received regardingincentive plans. The Nominating and Corporate Governance Committee considers risks related to the subject matters for which it is responsible, primarily corporate governance matters and related person transactions. We are committed to behaving ethically. Our Code of Conduct, which applies to all our directors and employees, including our principal executive officer and principal financial and accounting internal accounting controlsofficer, is available on our website at https://www.eplus.com/investors/corporate-governance-legal/code-of-conduct. If we make any substantive amendments to the Code of Conduct, or auditing matters,grant any waiver from a provision to our executive officers, it is our intention to disclose the nature of such amendment or waiver on our website if such disclosure is required by Exchange Act or Nasdaq rules. Our employees are annually required to acknowledge our Code of Conduct. We also have a Business Partner Code of Conduct, which clarifies our expectations in the areas of business integrity, labor practices, health and safety, and environmental management. The Business Partner Code of Conduct complements our Code of Conduct, and is available on our website at https://www.eplus.com/investors/corporate-governance-legal/business-partner-code-of-conduct. We expect our suppliers, vendors, contractors and subcontractors, agents, and other providers of goods and services for ePlus-affiliated entities worldwide to follow our Business Partner Code of Conduct. Hedging, Short Sales, and Pledging Policies
Our Insider Trading Policy applies to our directors and employees, as well as family trusts or similar entities controlled by or benefiting individuals subject to the Insider Trading Policy. The policy prohibits directors, officers, and employees who are Insiders (as defined in the policy) from hedging transactions involving Company securities, and it also prohibits transactions that establish downside price protection, including proceduresshort sales, and buying or selling put options, call options, or other derivatives of Company securities. The policy prohibits Insiders from holding securities in a margin account or pledging securities as collateral, except in certain circumstances with pre-approval from our Insider Trading Compliance Officer. Communications with the Board of Directors
Shareholders who desire to communicate with the Board or its committees may do so by writing to them at the Company’s headquarters at ePlus inc., 13595 Dulles Technology Drive, Herndon, Virginia 20171. Correspondence may be addressed to the collective Board, or to any of its individual members or committees. Any such communication is promptly distributed to the director(s) named therein unless such communication is considered, either presumptively or in the reasoned judgment of the Company’s Corporate Secretary, to be improper for submission to the confidentialintended recipient(s). Examples of communications that would presumptively be deemed improper for submission include, without limitation, solicitations, communications that do not relate to the Company, and anonymous submission by employees of concerns regarding questionable accountingunsolicited advertising, spam, or auditing matters.junk mail.
The Compensation Committee Interlocks and Insider Participation
The Compensation Committee is comprised of the Board of Directors reviews and approves the overall compensation strategy and policies for the Company’s executives. Each of the membersfive independent directors. No member of the Compensation Committee is an independent director within the meaninga current or former officer or employee of the Nasdaq Marketplace Rules, a “non-employee director” within the meaningCompany, or any of Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and an “outside director” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended.its subsidiaries. During the fiscal year ended March 31, 2008,2023, no member of the Compensation Committee met eight times.had a relationship that required disclosure under the SEC rules as a related person transaction. Also, during the fiscal year, none of our executive officers served on the board of directors or compensation committee of any entity that had one or more of its executive officers serving on our Board, or the Company’s Compensation Committee.
Review, Approval, or Ratification of Transactions with Related Persons
The Compensation Committee reviewsBoard has adopted a written policy for approval of transactions between ePlus and its directors, director nominees, executive officers, greater than 5% beneficial owners of ePlus’ common stock, and each of their respective immediate family members, where the effectiveness ofamount involved in the Company’s executive officer compensation, including reviewingtransaction exceeds or is expected to exceed $120,000 in a single fiscal year, and approving goalsthe related person has or will have a direct or indirect material interest in the transaction. Under the policy, the company’s General Counsel gathers material facts and objectives forother information necessary to assess whether a proposed transaction would constitute a related person transaction. If the Company’s executives. The Compensation Committee is responsible for evaluating and settingGeneral Counsel determines that the compensation for our Chief Executive Officer, Phillip G. Norton. Mr. Norton is responsible for evaluating and recommendingproposed transaction will be a related person transaction, she or he submits an assessment to the Compensation Committee the amount of compensation of our other executive officers. The Compensation Committee reviews such recommendations from Mr. Norton and has the authority to approve or revise such recommendations. The functions of the Committee can be found in its charter on our website at http://www.eplus.com/committee_charters.htm.
Committee. The policy directs that ePlus’ Nominating and Corporate Governance Committee reviews transactions subject to the policy and determines whether or not to approve or ratify those transactions, considering all relevant facts and circumstances reasonably available to it, which include:
the related person’s interest in the transaction; the purpose of, and the potential benefits to the Company of, the proposed transaction; the impact on a director’s independence in the event the related person is responsible for developinga director, an immediate family member of a director, or an entity in which a director is a partner, shareholder, or executive officer; the approximate dollar value of the amount involved in the transaction; the approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss; the terms and implementing policiesconditions of the transaction; whether the proposed transaction will be undertaken in the ordinary course of business of the Company and practices relatingis on terms that are comparable to corporate governance. The Nominatingthe terms available to an unrelated third party or to employees generally; and Corporate Governance Committee is governed by a Board-approved charter stating its responsibilities. any other information regarding the related person transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction. The Committee assistsapproves only those related person transactions that, under all of the Board by selecting and recommending Board nominees and making recommendations concerning the composition of Board committees. The Committee also reviews and recommendscircumstances, are fair to the BoardCompany, as the compensationCommittee determines in good faith, and may, in its sole discretion, impose such conditions as it deems appropriate on the Company or the related person in connection with approval of non-employee directors. The Nominating and Corporate Governance Committee met five times duringthe related person transaction. Transactions with Related Persons
Except for the transaction set forth below, there were no transactions since the beginning of the fiscal year ended March 31, 2008. Eachbeginning April 1, 2022, in which the Company was a party, the amount involved in the transaction exceeds $120,000, and in which any director, director nominee, executive officer, holder of more than 5% beneficial owners of ePlus’ common stock, or immediate family member of any of the membersforegoing individuals had or will have a direct or indirect material interest. Mr. Marron’s daughter is a non-executive employee of a subsidiary of the Committee is an independent director within the meaning of the Nasdaq Marketplace Rules. The functions of the Committee are further described on our website at http://www.eplus.com/committee_charters.htm.
The following table sets forth the compensation for the members of the Board of Directors of ePlus for the fiscal year ended March 31, 2008. Mr. Norton, the Company’s Chairman of the Board, President and Chief Executive Officer, and Mr. Bowen, the Company’s Executive Vice President, do not receive any additional compensation for their service as a director. Mr. Norton’s and Mr. Bowen’sCompany who began her employment in June 2023. Her annual compensation is reported in “Executive Compensation” and accordingly is not included in the following table.
The general policy of the Board is that compensation for non-employee directors should be a mix of cash and equity-based compensation. Each non-employee director receives an annual retainer of $35,000 cash, which is paid in quarterly installments. All directors are also reimbursed for their out-of-pocket expenses incurredexpected to attend Board or Committee meetings. In addition, we are submitting to stockholders for their approval, the 2008 Non-Employee Director Long-Term Incentive Plan which we intend to utilize for the equity-based component of our non-employee director compensation. The 2008 Non-Employee Director Long-Term Incentive Plan is described in more detail below under “Proposal 2.”
| | | Fees Earned or Paid in | | | Stock Awards | | | Option Awards | | | Non-Equity Incentive Plan Compen-sation | | | Change in Pension Value and Nonqualified Deferred Compensation | | | All Other Compen-sation | | | | | | Name | | Cash ($) | | | ($) | | | ($) (1) | | | ($) | | | Earnings | | | ($) | | | Total ($) | | | C. Thomas Faulders, III | | 35,000 | | | - | | | - | | | - | | | - | | | - | | | 35,000 | | | Terrence O'Donnell | | 35,000 | | | - | | | - | | | - | | | - | | | - | | | 35,000 | | | Milton E. Cooper, Jr. | | 35,000 | | | - | | | - | | | - | | | - | | | - | | | 35,000 | | | Lawrence S. Herman | | 35,000 | | | - | | | - | | | - | | | - | | | - | | | 35,000 | | | Eric D. Hovde | | 35,000 | | | - | | | - | | | - | | | - | | | - | | | 35,000 | | | Irving R. Beimler | | 35,000 | | | - | | | - | | | - | | | - | | | - | | | 35,000 | |
(1) | The outstanding number of stock options awarded to each director as of March 31, 2008 was Mr. Faulders 83,507; Mr. O’Donnell 80,000; Mr. Cooper 30,000; Mr. Herman 47,500; Mr. Hovde 0; and Mr. Beimler 0. |
The following table shows the ePlus common stock beneficially owned by each named executive officer, director, and all directors and named executive officers as a group as of June 30, 2008. All amounts are rounded to the nearest one-tenth.
| Name of Beneficial Owner(1) | | Number of Shares Beneficially Owned (2) | | | Percentage of Shares Outstanding | | | Phillip G. Norton (3) | | | 2,216,000 | | | | 26.4 | % | | Bruce M. Bowen (4) | | | 696,400 | | | | 8.3 | | | Steven J. Mencarini (5) | | | 60,000 | | | | * | | | C. Thomas Faulders, III (6) | | | 83,507 | | | | 1.0 | | | Terrence O’Donnell (7) | | | 80,000 | | | | 1.0 | | | Milton E. Cooper, Jr. (10) | | | 30,000 | | | | * | | | Lawrence S. Herman (8) | | | 47,500 | | | | * | | | Eric D. Hovde (9) | | | 1,265,129 | | | | 15.4 | | | Irving R. Beimler | | | -- | | | | * | | | All directors and executive officers as a group (9 Individuals) | | | 4,651,536 | | | | 50.8 | |
(1) | The business address of Messrs. Norton, Bowen, Mencarini, Faulders, O’Donnell, Cooper, Herman, Hovde and Beimler is 13595 Dulles Technology Drive, Herndon, Virginia, 20171-3413. |
(2) | A person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days of June 30, 2008 upon exercise of options or warrants. Each beneficial owner’s percentage ownership is determined by assuming that options or warrants that are held by such person (but not by any other person) and that are exercisable within 60 days of June 30, 2008 have been exercised. |
(3) | Includes 2,040,000 shares held by J.A.P. Investment Group, L.P., a Virginia limited partnership, of which J.A.P., Inc., a Virginia corporation, is the sole general partner. The limited partners are: Patricia A. Norton, the spouse of Mr. Norton, trustee for the benefit of Phillip G. Norton, Jr., u/a dated as of July 20, 1983; Patricia A. Norton, the spouse of Mr. Norton, trustee for the benefit of Andrew L. Norton, u/a dated as of July 20, 1983; Patricia A. Norton, trustee for the benefit of Jeremiah O. Norton, u/a dated as of July 20, 1983; and Patricia A. Norton. Patricia A. Norton is the sole stockholder of J.A.P., Inc. Also includes 175,000 shares of common stock issuable to Mr. Norton under options that are exercisable within 60 days of June 30, 2008. Mr. Norton holds 1,000 shares of ePlus individually. |
(4) | Includes 421,400 shares held by Mr. Bowen and his spouse, as tenants by the entirety, and 160,000 shares held by Bowen Holdings LLC, a Virginia limited liability company composed of Mr. Bowen and his three children, for which shares Mr. Bowen serves as manager. Also includes 115,000shares of common stock issuable to Mr. Bowen under options that are exercisable within 60 days of June 30, 2008.
|
(5) | Includes 60,000 shares of common stock issuable to Mr. Mencarini under options that are exercisable within 60 days of June 30, 2008. |
(6) | Includes 83,507 shares of common stock issuable to Mr. Faulders under options that are exercisable within 60 days of June 30, 2008. |
(7) | Includes 80,000 shares of common stock issuable to Mr. O’Donnell under options that are exercisable within 60 days of June 30, 2008. |
(8) | Includes 47,500 shares of common stock issuable to Mr. Herman under options that are exercisable within 60 days of June 30, 2008. |
(9) | Of the 1,265,129 shares beneficially owned by Eric D. Hovde, 28,559 shares are owned directly; Eric D. Hovde is the managing member (“MM”) of Hovde Capital, L.L.C., the general partner to Financial Institution Partners II, L.P., which owns 328,719 shares; Eric D. Hovde is the MM of Hovde Capital Limited IV LLC, the general partner to Financial Institution Partners IV, L.P., which owns 51,970 shares; Eric D. Hovde is the MM of Hovde Capital, Ltd., the general partner to Financial Institution Partners III, L.P., which owns 234,876 shares; Eric D. Hovde is the MM of Hovde Capital IV, LLC, the general partner to Financial Institution Partners, L.P., which owns 432,720 shares; Eric D. Hovde is the MM to Hovde Capital Offshore LLC, the management company to Financial Institution Partners, Ltd., which owns 118,020 shares; Eric D. Hovde is the MM of Hovde Acquisition II, L.L.C., which owns 30,000 shares; Eric D. Hovde is the trustee to The Hovde Financial, Inc. Profit Sharing Plan and Trust, which owns 19,000 shares; Eric D. Hovde is the trustee to The Eric D. and Steven D. Hovde Foundation, which owns 21,265 shares. |
(10) | Includes 30,000 shares of common stock issuable to Mr.��Cooper under options that are exercisable within 60 days of June 30, 2008. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than ten percent of registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.
To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the fiscal year ended March 31, 2008, all Section 16(a) filing requirements applicable to ePlus’ executive officers, directors and greater than ten percent beneficial owners were complied with.
From April 1, 2007 to June 30, 2007, we leased approximately 50,232 square feet for use as our principal headquarter from Norton Building 1, LLC for a monthly rent payment of approximately $76,000. Effective July 1, 2007, we entered into an amendment which increased the leased square footage to 55,880 and the monthly rent payment to approximately $86,000. Norton Building 1, LLC is a limited liability company owned in part by Mr. Norton’s spouse and in part in trust for his children. As of May 31, 2007, Mr. Norton, our President and CEO, has no managerial or executive role in Norton Building 1, LLC. The lease was approved by the Board of Directors prior to its commencement, and viewed by the Board as being at or below comparable market rents, and ePlus has the right to terminate up to 40% of the leased premises for no penalty, with six months’ notice. During the years ended March 31, 2008 and March 31, 2007, we paid rent in the amount of $1,052,000 and $964,000, respectively.
Two of Mr. Norton’s sons are employed at the Company. The first, a Director of Finance at ePlus Government, inc., earned $200,000 in each of the fiscal years ended March 31, 2007 and 2008. His compensation is comprised ofinclude a base salary and a bonus. The second, a Senior Account Executive at ePlus Government, inc., earned $233,000 and $331,000bonus combined in excess of $120,000, as well as standard employee benefits consistent with the fiscal years ended March 31, 2007 and 2008, respectively, in base salary and commissions. Mr. Norton’s brother is a Senior Account Executive at ePlus Group, inc., who earned $194,000 intotal compensation provided to other employees of the fiscal year ended March 31, 2007 and $193,000 in the fiscal year ended March 31, 2008 in base salary and commission. The Senior Account Executives’ compensation, like that of their peers’, is based primarily on the calculation of commissions for sales completed, in accordancesame level with our commission plan.similar responsibilities.
Mr. Terrence O’Donnell, Board of Director member, Chairman of Audit Committee and Nominating and Corporate Governance Committee member, has a son-in-law serving as Senior Account Executive at ePlus Group, inc. who earned $741,000 and $845,000 in base salary and commission in the fiscal years ended March 31, 2007 and 2008, respectively. His compensation, like that of his peers’, is based primarily on the calculation of commissions for sales completed, in accordance with our commission plan.
On June 25, 2008 the Board adopted a written Related Party Transactions Policy in order to establish more detailed processes, procedures and standards regarding the review, approval and ratification of related person transactions and to provide greater specificity regarding what types of transactions constitute related person transactions. AllAs described above, all related person transactions are prohibited unless approved or ratified by the AuditNominating and Corporate Governance Committee, or, in certain circumstances, the Chair of the AuditNominating and Corporate Governance Committee. To the extent required by our Related Person Transactions Policy, the above matter was approved by the Nominating and Corporate Governance Committee in accordance with such Policy.
IndemnificationNo Shareholder Rights Plan
The Company does not maintain a shareholder 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 each of its current directors—Mses. Bergeron and Morrison, and Messrs. Bowen, Callies, Faulders, Hovde, Hunt, Marron and Xiang—to be elected to serve until the 2024 Annual Meeting of Shareholders, or until their successors are duly elected and qualified. Biographical information as of July 21, 2023, for each nominee is provided herein. 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. Each of the nine nominees for director will be elected by a plurality of the shares present in person or by proxy at the 2023 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. Withheld votes and broker non-votes will have no effect on the vote for this proposal. 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 Corporate 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 Corporate Governance Committee’s criteria; however, during the fiscal year ended March 31, 2023, no third-party search firms were used. The Nominating and Corporate 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, at ePlus inc., 13595 Dulles Technology Drive, Herndon, Virginia 20171. In selecting director candidates, the Nominating and Corporate 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 Corporate 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 align with ePlus’ strategic direction and operational initiatives, and complements the Board’s overall composition; |
Multiple dimensions of diversity, including with respect to race, ethnicity and gender, to strengthen and increase the diversity, breadth of skills and qualifications of the Board; 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 ePlus and sufficient time to become fully engaged. |
In considering multiple dimensions of diversity, ePlus’ Nominating and Corporate Governance Committee’s practice is to include diverse candidates for consideration. Our board includes two women and one director of racial diversity, resulting in membership diversity of 33% serving on our Board. Because we use a holistic approach to evaluate all aspects of candidates’ qualifications, we do not set arbitrary numerical goals or timelines. We have entered into indemnification agreements with eachare committed, however, to ensuring our candidate slates reflect our desire to further diversify our Board in service of our shareholders. Key skills held by our directors include finance, risk oversight, cybersecurity, sales and marketing, leasing/financing, mergers and acquisitions, technology, and international business experience, as further highlighted in our directors’ biographies below. 2023 Nominees for Election to the Board of Directors
The below graphics provide information regarding members of our Board, including certain types of attributes, qualifications and expertise possessed by one or more of our directors that our Board believes are relevant to our business. The graphics do not encompass all of the knowledge, skills, experiences or attributes of our directors, and executive officers, and we expect to enter into similar indemnification agreements with persons who become directors or executive officers in the future. The indemnification agreements provide that ePlus will indemnify the director or officer against any expenses or liabilities incurred in connection with any proceeding in which the director or officer may be involved as a party or otherwise, by reason of the fact that a particular knowledge, skill, experience or attribute is not listed does not mean that our Board does not possess it. In addition, the absence of a particular knowledge, skill, experience or attribute with respect to any of our directors does not mean the director in question has no relevant experience or officer is or was a director or officerunable to contribute to the decision-making process in that area. The type and degree of ePlus or by any reason of any action taken by or omitted to be taken byknowledge, skill, experience, and attribute listed may vary among the director or officer while acting as an officer or director of ePlus. However, ePlus is only obligated to provide indemnification under the indemnification agreements if:
| · | the director or officer was acting in good faith and in a manner the director or officer reasonably believed to be in the best interests of ePlus, and, with respect to any criminal action, the director or officer had no reasonable cause to believe the director’s or officer’s conduct was unlawful; |
| · | the claim was not made to recover profits by the director or officer in violation of Section 16(b) of the Exchange Act or any successor statute; |
| · | the claim was not initiated by the director or officer; |
| · | the claim was not covered by applicable insurance; or |
| · | the claim was not for an act or omission of a director of ePlus from which a director may not be relieved of liability under Section 102(b)(7) of the DGCL. Each Director and officer has undertaken to repay ePlus for any costs or expenses paid by ePlus if it is ultimately determined that the Director or officer is not entitled to indemnification under the indemnification agreements. |
The following table shows information regarding each person known to be a “beneficial owner” of more than 5% of our common stock as of June 30, 2008. For purposes of this table, beneficial ownership of securities generally means the power to vote or dispose of securities, regardless of any economic interest in the securities. All information shown is based on information reported on Schedule 13G filed with the SEC on the dates indicated in the footnotes to this table.
| Name of Beneficial Owner | | Number of Shares Beneficially Owned (2) | | | Percentage of Shares Outstanding | | | John H. Lewis (1) | | | 416,373 | | | | 5.1 | % | | | | | | | | | | | | Patrick J. Retzer (2) | | | 474,023 | | | | 5.8 | | | | | | | | | | | | Dimensional Fund Advisors LP (3) 1299 Ocean Avenue, 11th Floor Santa Monica, CA 90401 | | | 557,552 | | | | 6.8 | |
(1) | The information as to John H. Lewis is derived from a Schedule 13G filed with the SEC on April 9, 2008. John H. Lewis reports that he is the controlling member of Osmium Partners, LLC, a Delaware limited liability company ("Osmium Partners"), which serves as the general partner of Osmium Capital, LP, a Delaware limited partnership (the "Fund"), Osmium Capital II, LP, a Delaware limited partnership ("Fund II"), and Osmium Spartan, LP, a Delaware limited partnership ("Fund III"). Mr. Lewis and Osmium Partners may be deemed to share with the Fund, Fund II, Fund III voting and dispositive power with respect to such shares. Each filer disclaims beneficial ownership with respect to any shares other than the shares owned directly by such filer. |
(2) | The information as to Patrick J. Retzer is derived from a Schedule 13G filed with the SEC on April 23, 2008. |
(3) | The information as to Dimensional Fund Advisors is derived from a Schedule 13G/A filed with the SEC on February 6, 2008. Dimensional Fund Advisors reports that it is an investment advisor 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 to certain other commingled group trusts and separate accounts (the “Funds”). In its role as investment advisor or manager, Dimensional possesses investment and/or voting power over our securities that are owned by the Funds, and may be deemed to be the beneficial owner of our shares held by the Funds. However, Dimensional disclaims beneficial ownership of all securities reported in its Schedule 13G/A. |
The following table sets forth the name, age and position, as of June 30, 2008, of each person who was an executive officer with ePlus on such date. To the Company’s knowledge, there are no family relationships between any director or executive officer and any other director or executive officer of the Company. Additionally, Mr. Norton serves as the Chairman of the Board of Directors and Mr. Bowen serves on the Board.
NAME | AGE | POSITION | | | | Phillip G. Norton | 64 | Director, Chairman of the Board, President and Chief Executive Officer | | | | Bruce M. Bowen | 56 | Director and Executive Vice President | | | | Steven J. Mencarini | 52 | Senior Vice President and Chief Financial Officer | | | | Kleyton L. Parkhurst | 45 | Senior Vice President and Treasurer |
The business experience during the past five years of each executive officer of ePlus is described below.
Phillip G. Norton, Chairman of the Board, President and Chief Executive Officer
Mr. Norton joined us in March 1993 and has served since then as our Chairmanmembers of the Board, and the knowledge, skills, experiences, and attributes listed below are not in any order of priority or preference.
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 2024 Annual Meeting of Shareholders, and until their successors have been duly elected and qualified. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE FOLLOWING NOMINEES FOR ELECTION AS DIRECTORS:
Renée Bergeron
Independent Director Age 60 | | Director of ePlus since 2022
Committees: Compensation Nominating and Corporate Governance
Other Public Company Directorships: None |
Ms. Bergeron is Chief Executive Officer. He was elected PresidentOperating Officer of ePlus inc.AppDirect, where she provides leadership and strategic vision, and oversees customer operations, technical support, and customer success on a global basis. She joined AppDirect, one of the leading B2B commerce platforms for selling, buying, and managing recurring technology services, in September 1996. Mr. Norton graduated from the U.S. Naval AcademyMarch 2020. From 2010 until 2020, Ms. Bergeron held roles at Ingram Micro, a global leader in 1966.
Bruce M. Bowen, Directortechnology and Executivesupply chain services, most recently as Senior Vice President Global Cloud. Since March 2020 she has also been a board member of FLO EV Charging, a premier manufacturer and network operator of electric vehicle charging solutions. Ms. Bergeron has a Master of Business Administration from McGill University, and a Bachelor’s degree in Information Technology from Université de Sherbrooke.
The Board believes that, as a proven industry leader with significant experience across many of ePlus’ strategic focus areas, such as security, cloud and services, Ms. Bergeron brings a strong knowledge base that will help ePlus be the most customer-centric, service-driven partner of choice. Bruce M. Bowen Independent Director Age 71 | | Director of ePlus since 1990 Committees: None Other Public Company Directorships: None |
Mr. Bowen founded our Companycompany in 1990 and served as our President until September 1996. SinceBeginning in September 1996 until March 2014, 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, and retired as an employee of the company in May 2018 though he continues to serve on the Board. Prior to founding the Company, he served as Senior Vice President of PacifiCorp Capital, Inc., which was an equipment leasing company. In the past, he has also 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 participated in equipment lease financing transactions in excess of an aggregate of $3 billion, involving many major vendors as well as government contractors. Mr. Bowen has served on our Board since our founding. He is a 1973 graduate ofdegree in finance from the University of Maryland and in 1978 receivedas well as a MastersMaster of Business Administration in Finance from the University of Maryland.
Mr. Bowen’s experience in the leasing industry brings to the Board depth and breadth of knowledge relating to finance and funding. He also has a thorough knowledge of sales and operations activities and in a multitude of industry-specific areas. John E. Callies
Independent Director Age 69 | | Director of ePlus since 2010
Committees: Audit Compensation (Chair)
Other Public Company Directorships: None |
Steven J. Mencarini, Senior Vice President and Chief Financial Officer
Mr. Mencarini joined usCallies has been a Senior Advisor to McKinsey and Company since 2011. Previously, he was employed by IBM in various capacities for 34 years. Mr. Callies served as General Manager of IBM Global Financing from 2004 until his retirement in June 1997 as Senior Vice President2010. With operations in 55 countries supporting 125,000 clients, Mr. Callies led the world’s largest information technology financing and Chief Financial Officer. Prior to joining us, Mr. Mencarini was Controller of the Technology Management Group of Computer Sciences Corporation (“CSC”). Mr. Mencarini joined CSC in 1991 as Director of Financeasset management organization and was promoted to Controller in 1996. Mr. Mencarini is a 1976 graduate of the University of Maryland and received a Masters of Taxation from American University in 1985.
Kleyton L. Parkhurst, Senior Vice President and Treasurer
Kleyton L. Parkhurst joined us in May 1991 as Director of Finance. Mr. Parkhurst has served as Secretary or Assistant Secretary and Treasurer since September 1996. In July 1998, Mr. Parkhurst was made Senior Vice President for Corporate Development. Mr. Parkhurst is currently responsible for allbusiness direction and management of our mergers and acquisitions, investor relations, and marketing.a portfolio of nearly $35 billion in total assets. Mr. Parkhurst isCallies has a 1985 graduate of Middlebury College.
The following table includes certain compensation information concerning compensation paid to or earned by the Chief Executive Officer and the two other most highly compensated executive officers of our Company as of March 31, 2008 (the "named executive officers").
2008 Summary Compensation Table
| Name and Principal | | | | Salary | | Bonus | | Stock Awards | | Option Awards | | Non-Equity Incentive Plan Compen- sation | | Non-Qualified Deferred Compen- sation Earnings | | All Other Compen- sation | | | Total | | | Position | | Year | | ($) | | ($) | | ($) | | ($)(1) | | ($) | | ($) | | ($) | | | ($) | | | | | | | | | | | | | | | | | | | | | | | | | Phillip G. Norton - Chairman of the Board, President, and Chief Executive Officer | | 2008 | | | 395,561 | | - | | - | | | 999,941 | | | 200,000 | | - | | | 1,500 | (2) | | | 1,597,002 | | | | 2007 | | | 375,000 | | | 150,000 | | - | | | 487,288 | | | - | | - | | | 1,500 | | | | 1,013,788 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Bruce M. Bowen - Executive Vice President | | 2008 | | | 300,000 | | | - | | - | | | 164,370 | | | 150,000 | | - | | | 190,952 | (3) | | | 805,322 | | | | 2007 | | | 300,000 | | | 75,000 | | - | | | 80,100 | | | - | | - | | | 166,712 | | | | 621,812 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Steven J. Mencarini - Chief Financial Officer and Senior Vice President | | 2008 | | | 286,827 | | | - | | - | | | 164,370 | | | 150,000 | | - | | | 74,292 | (4) | | | 675,489 | | | | 2007 | | | 225,000 | | | 100,000 | | - | | | 80,100 | | | - | | - | | | 65,615 | | | | 470,715 | |
(1) | The amounts in this column show the amount we have expensed during the fiscal year 2007 and 2008 under FAS 123R. There were no stock awards made to the named executive officers in fiscal year 2007 or 2008. The amounts shown in this column for fiscal year 2008 relate to options which were canceled on May 11, 2007. The assumptions used to calculate the accounting expense recognized in fiscal 2008 for these stock option awards are set forth in Note 11, “Stock-Based Compensation” to the Consolidated Financial Statements included in ePlus’ Annual Report on Form 10-K for fiscal 2008. |
(2) | Includes $1,500 of our employer 401(k) matching contributions. |
(3) | Includes $5,790 of country club dues, $1,500 of our employer 401(k) matching contributions, and $183,662, which represents for fiscal year 2008 the increase the cash benefit under the Supplemental Benefit Plan. |
(4) | Includes $1,500 of our employer 401(k) matching contributions, and $72,792 which represents for fiscal year 2008 the increase in the cash benefit under the Supplemental Benefit Plan. |
Supplemental Benefit Plans
On February 28, 2005, our Board approved the adoption of separate ePlus inc. Supplemental Benefit Plans for each of Messrs. Bowen and Mencarini. The plans were developed and designed to provide each of the participating named executive officers with a long-term incentive plan outside of the Company’s normal incentive plans.degree in economics from Lehigh University.
The plans are unfundedBoard believes that Mr. Callies’ knowledge of our business, including the leasing sector, along with his sales, operational and nonqualifiedstrategic experience bring value to the Board. He additionally has international experience and are designed to providequalifies as an audit committee financial expert within the participants with a cash benefit that is payable only upon the earlier to occurmeaning of SEC regulations.
C. Thomas Faulders, III
Independent Director and Chairman Age 73 | · | deathDirector of ePlus since 1998
Committees: Audit Compensation
Other Public Company Directorships: None |
| · | termination of employment; or |
| · | the expiration of the plans. |
Each plan terminates on August 11, 2014. Under the terms of the plans, the participants or their beneficiaries have only the right to receive a single lump-sum cash distribution upon the occurrence of one of the triggering events described above. Under the terms of the plans, the participants do not have a right to accelerate payments of the benefits payable under the plans. If a participant is terminated for cause (as defined in each plan) prior to the expiration of the respective plan, we will have no further obligation under the respective plan and the affected participant will not be entitled to any payments under such plan. In connection with the adoption of the plans, we have established a grantor trust to which we have transferred assets intended to be used for the benefit of the participants. Through the date of distribution of plan benefits, the assets of such trusts will remain subject to the claims of our creditors and the beneficiaries of the trusts shall have standing with respect to the trusts’ assets not greater than that of our general unsecured creditors. For the year ended March 31, 2008, there were no payments to the participants under the plan. The Compensation Committee takes the amounts accruing under these plans into consideration when setting other long-term compensation awards.
Incentive Plan Awards Paid to Named Executive Officers
On February 29, 2008, the Board of Directors of the Company adopted the ePlus inc. Fiscal Year 2008 Executive Incentive Plan ("the Cash Incentive Plan"), effective March 6, 2008. Certain performance-based cash incentive compensation was earned by eligible executive employees under the Cash Incentive Plan.
The Cash Incentive Plan is administered by the Compensation Committee of the Board, which has full authority to determine the participants in the Cash Incentive Plan, the terms and amounts of each participant’s minimum, target and maximum awards, and the period during which the performance is to be measured.
At the conclusion of the fiscal year ended March 31, 2008, the Compensation Committee determined the various corporate, unit and individual performance objectives described under the Cash Incentive Plan which were achieved. A cash payment to each respective executive was based on the level of attainment of the applicable performance objectives.
The award amount paid is a percentage of base salary based on the level of attainment of the applicable performance goals as set forth in each participant’s award agreement. The 2008 performance criteria and their relative weights for each participant were as follows: Company financial performance, 66.6%; and individual performance, 33.3%. The Company financial performance was based on the Company’s net earnings before taxes for the 2008 fiscal year as stated in the Company’s Form 10-K for such year. Such earnings were adjusted to exclude the incentive compensation accrued by the Company under the Cash Incentive Plan, and also would have excluded, if they had been applicable, 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 any income, gain or loss attributable to the business operations of any entity acquired by the Company during the 2008 fiscal year. The Company financial performance set forth in each executive’s plan was exceeded. The cash incentive compensation was capped at 50% of each executive’s salary, therefore, although the Company financial performance was exceeded, each executive received the maximum cash incentive payment of 50% of his salary. There were no waivers or modifications to any specified performance targets, goals or conditions with respect to the Cash Incentive Plan.
Employment Agreements
We have entered into employment agreements with Phillip G. Norton and Bruce M. Bowen, each effective as of September 1, 1996, and with Steven J. Mencarini, effective as of October 31, 2003.
Each of Messrs. Norton’s and Bowen’s employment agreements provide for an initial term of three years, and is subject to an automatic one-year renewal at the expiration thereof unless we or the employee provides notice of an intention not to renew at least thirty (30) days prior to expiration.
The employment agreements of Messrs. Norton and Bowen also contain a covenant not to compete on the part of each, whereby, in the event of a voluntary termination of employment, upon expiration of the term of the agreement, or upon the termination of employment by us for cause, each is subject to restrictions on acquiring, consulting with, or otherwise engaging in or assisting in providing capital needs for competing business activities or entities within the United States for a period of one year after the date of such termination or expiration of the term of the employment agreement. Messrs. Norton and Bowen’s employment agreements do not provide for payment in the event of a change of control.
Mr. Mencarini’s employment agreement provides for an initial term of two years, and is subject to an automatic one-year renewal at the expiration thereof unless we provide at least six months’ prior notice of termination or the employee resigns for any reason. On April 28, 2008, we timely provided six months’ notice to Mr. Mencarini of non-renewal of his agreement. The notice did not otherwise affect Mr. Mencarini’s employment with us. The employment agreement requires us to pay severance to Mr. Mencarini if we terminate his employment during the term of the agreement other than for cause or disability, or if he resigns for good reason (as defined in the agreement). Mr. Mencarini’s employment agreement further provides that, should his employment be terminated for any reason within 90 days of a change of control, as defined in the agreement, and provided that he provides 180 days notice to the Company, he shall receive one year of salary and benefits.
Under the employment agreements, each receives certain other benefits, including medical, insurance, death and long-term disability benefits and reimbursement of employment-related expenses. Under Mr. Bowen’s employment agreement, country-club dues are paid by us. If Mr. Bowen’s employment is terminated other than for cause, he is able to retain the country club membership provided he pays the country club dues. Under Mr. Norton’s employment agreement, we maintain key-man term life insurance in the amount of $11 million. Upon termination of employment for any reason, Mr. Norton has the right to have this policy transferred to him. However, we would not have further obligations to pay the premiums due on the policy. In addition, upon termination of employment, other than for cause, Mr. Norton has the right to receive season basketball tickets held by us, provided that the cost of the tickets are paid by Mr. Norton.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2008
The following table sets forth outstanding option awards held by our named executive officers as of March 31, 2008.
| | | Option awards | | Name | | Number of Securities Underlying Unexercised Options (#) Exercisable (1) | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | | Option Exercise Price ($) | | Option Expiration Date | | Phillip G. Norton | | | 175,000 | | | | - | | | | - | | | | 7.75 | | 8/11/2009 | | | | | | | | | | | | | | | | | | | | | Bruce M. Bowen | | | 115,000 | | | | - | | | | - | | | | 7.75 | | 8/11/2009 | | | | | | | | | | | | | | | | | | | | Steven J. Mencarini | | | 25,000 | | | | - | | | | - | | | | 8.00 | | 10/1/2008 | | | | | 20,000 | | | | - | | | | - | | | | 7.75 | | 8/11/2009 | | | | | 10,000 | | | | - | | | | - | | | | 17.38 | | 9/13/2010 | | | | | 5,000 | | | | - | | | | - | | | | 7.75 | | 12/27/2010 |
(1) On May 11, 2007, Messrs. Norton, Bowen, Parkhurst and Mencarini entered into separate stock option cancellation agreements pursuant to which options to purchase 300,000 shares, 50,000 shares, 50,000 shares, and 50,000 shares, respectively, were cancelled. These cancelled awards are not included in this column. In accordance with SFAS No. 123R, “Share-Based Payment,” we recognized $1.5 million of share-based compensation expense relating to the cancellation of these options.
The following table provides information about our common stock that may be issued upon the exercise of options, warrants, and rights under all of our existing equity compensation plans as of March 31, 2008, including the ePlus inc. Amended and Restated 1998 Long-Term Incentive Plan, Amended and Restated Incentive Stock Option Plan, Amended and Restated Outside Director Stock Option Plan, and Amended and Restated Nonqualified Stock Option Plan.
| 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 | | 1,240,813 | | | $ | 9.78 | | | 776,406 | | Equity compensation plans not approved by security holders | | - | | | | - | | | - | | | | 1,240,813 | | | $ | 9.78 | | | 776,406 | | | | | | | | | | | | | |
(Proposal # 1 on Proxy Card)
In accordance with the terms of our certificate of incorporation, our Board of Directors is presently divided into three classes. Each class consists, as nearly as possible, of one-third of the total number of directors, and each class has a three-year term. Vacancies on the Board of Directors may be filled by persons elected by a majority of the remaining directors. A director elected by the Board of Directors to fill a vacancy in a class shall serve for the remainder of the full term of that class, and until such director’s successor is elected and qualified or until such director’s death, resignation or removal. This includes vacancies created by an increase in the number of directors.
The Board of Directors presently has eight members. There are three Class I Directors, three Class II Directors, and two Class III Directors. The last election of any director was held at our annual meeting of stockholders in September 2005. Because each class serves for three years or until their successors are appointed, each class is presently up for election at this annual meeting. Each of the nominees for election is currently a director of the company and was selected by the Board of Directors as a nominee in accordance with the recommendation of the Nominating and Corporate Governance Committee.
At the 2008 annual meeting, stockholders will also vote on a proposal to amend the Company’s Certificate of Incorporation to de-classify the Board of Directors (Proposal No. 4). If the proposal is approved, each nominee for director in Classes II and III has agreed to resign effective at the 2009 annual meeting. Hence, beginning with the 2009 annual meeting, each of our directors would then stand for election for a one-year term and until each director’s successor is duly elected and qualified.
Biographical information for each nominee is provided below. A plurality of votes cast is required for the election of Directors. Your Board unanimously recommends a vote FOR each of the director-nominees.
C. Thomas Faulders, III joined our Board in July 1998. Mr. Faulders has beenwas the President and Chief Executive Officer of the University of Virginia Alumni Association since 2005.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 is a memberalso served as the Vice President and Chief Financial Officer of COMSAT Corporation, an international satellite communication company, from 1992 to 1995. He led mergers and acquisitions efforts in several roles, including at MCI, Inc., Comsat, BDM International Inc., and LCC International, Inc., all of which were publicly traded companies during his tenure. He has served on numerous boards in the Boardpast and has held roles as chairs of Advisors of Morgan Franklincompensation, audit, and the Board of Trustees of Randolph College.governance committees. He is a 1971 graduate of the University of Virginia and in 1981 received a MastersMaster of Business Administration from the Wharton School of the University of Pennsylvania.
Lawrence S. Herman joined ourThe Board in March 2001.believes Mr. Herman has been with BearingPoint, Inc. since June 1967Faulders’ extensive executive and was one of BearingPoint’s most senior managing directors, responsible for managing the strategy and emerging marketsfinancial experience in the company’s statetelecommunications and local government practice. In July 2007, Mr. Herman transitioned to a new rolehightech sectors, together with BearingPointhis experience as a managing director emeritus on a part time basis. During his career, Mr. Herman has specialized in developing, evaluating, and implementing financial and management systems and strategies for state and local governments around the nation. He has directed systems integration projects for state and local governments, and several statewide performance and budget reviews for California, North Carolina, South Carolina, Louisiana, Oklahoma, and others, resulting in strategic fiscal and technology plans. He is considered to be one of the nation’s foremost state budget and fiscal planning experts. Mr. Herman received his B.S. degree in Mathematics and Economics from Tufts University in 1965 and his Masters of Business Administration in 1967 from Harvard Business School.
Eric D. Hovde joined our Board in November 2006. In 1987, Mr. Hovde founded Hovde Financial, Inc., and is the Chief Executive Officer Managing Member and ChairmanChief Financial Officer of Hovde Capital Advisors LLC, Hovde Private Equity Advisors LLC,a public company and Hovde Financial, Inc., respectively (the “Hovde Group”). The Hovde Group is focused exclusively on thehis leasing and M&A experience, enables him to provide considerable financial services industry and provides its clients with investment banking, assetexpertise, business management and merchant banking services. operational knowledge, insight and guidance to the Board. He additionally has international experience and qualifies as an audit committee financial expert within the meaning of SEC regulations.
Eric D. Hovde Independent Director Age 59 | | Director of ePlus since 2006 Committees: Compensation Nominating and Corporate Governance Other Public Company Directorships: None |
Mr. Hovde is an entrepreneur who has alsoestablished and managed numerous business enterprises. Mr. Hovde is currently the Chairman and Chief Executive Officer of H Bancorp LLC, a private bank holding company, and has served in such role since 2014. He has served as a director on numerous bank boards throughout his career and thrifthas served on the board of H Bancorp’s largest holding, Sunwest Bank, since 1998, where he is also the Chief Executive Officer and has served in such role since 2015. Additionally, Mr. Hovde serves as the Chief Executive Officer and co-owner of Hovde Properties, LLC, a real estate development company, located in Madison, Wisconsin. Mr. Hovde oversees the management of the company and all large development properties. Formerly, Mr. Hovde founded and managed Hovde Financial, an investment banking company focused on the financial services industry, and Hovde Capital, an asset management company that managed capital for institutional clients, family offices, and high net worth individuals. Throughout his career, he has also purchased numerous banks and savings banks throughout the United States and has served on the board of over a dozen banking companies. Charity is a primary principle in the Hovde family and related businesses. Mr. Hovde and his brother, Steven, created and funded The Hovde Foundation in 1998. The foundation focuses on several charitable organizations throughout the United States and worldwide. Principally, The Hovde Foundation’s focus is on assisting disadvantaged children. In this regard, Mr. Hovde founded Hovde Homes, which provides shelter, care, education, and love to vulnerable children that were abandoned on the street or trafficked. Mr. Hovde earned his degrees in Economics and International Relations at the University of Wisconsin – Madison. The Board believes that Mr. Hovde’s expertise in the financial services industry, investment management areas and business operations, as well as his experience on other company boards and with mergers and acquisitions, bring valuable insight to the Board. His deep understanding of the merger and acquisition landscape and his ability to assess synergies and growth opportunities have been instrumental in enhancing shareholder value. He has played a pivotal role in identifying potential targets, conducting due diligence, negotiating transactions, and overseeing integration efforts.
Ira A. Hunt, III Independent Director Age 67 | | Director of ePlus since 2014 Committees: Compensation Nominating and Corporate Governance Other Public Company Directorships: None |
Mr. Hunt retired from the Central Intelligence Agency in 2013 as its Chief Technology Officer after a 28-year career in intelligence. Since his retirement, he has returned to private consulting practice as President and CEO of Hunt Technology, LLC, which he founded. Hunt Technology, LLC focuses on strategic IT planning, cyber and data-centric security, big data analytics, and cloud computing. From July 2016 through October 2020, he served as Managing Director and Cyber Lead for Accenture Federal Services in Arlington, Virginia, and he has also served as Chief Architect for Bridgewater Associates, the world’s largest hedge fund. He currently serves on the Board of Directors for Mission Link, a non-profit organization, and the Compensation Committee of Sunwest Bank in Orange County, California. Mr. Hovde also serves on the Board of Advisors for Vaga Ventures and LookingGlass. He holds a Bachelor degree in Engineering and Master of Engineering in Civil/Structural Engineering from Vanderbilt University. 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 valuable industry expertise to the Board. Mark P. Marron Director, CEO and President Age 62 | | Director of ePlus since 2018 Committees: None Other Public Company Directorships: None |
Mr. Marron became the CEO and President of ePlus inc. on August 1, 2016, and was appointed to the Board on November 14, 2018. He oversees all corporate strategy for global operations, leading with an emphasis on our greatest asset: our people. He began his career at ePlus 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. Through his time with both NetIQ and Computer Associates International Inc., Mr. Marron gained extensive international experience, throughout North America, Europe, the Middle East, and Africa and holds a Bachelor of Science degree in Computer Science from Montclair State University. The Board has determined that Mr. Marron’s role as CEO provides the Board with access to an experienced executive with a thorough understanding of our business and extensive experience in leading sales teams, international sales, and mergers and acquisitions. Maureen F. Morrison Independent Director Age 69 | | Director of ePlus since 2018 Committees: Audit (Chair) Nominating and Corporate Governance Other Public Company Directorships: Asbury Automotive Group Inc. (NYSE: ABG) |
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 (“PwC”). 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 one other publicly traded board of directors: Asbury Automotive Group, where she is the Chair of the Audit Committee of Great Wolf Resorts, Inc. Mr. Hovde is the co-founder and a trusteemember of the Eric D.Compensation and Steven D. Hovde Foundation,Human Resources Committee and Capital Allocation & Risk Management Committee. She holds a Bachelor of Arts in Business Administration with a concentration in Accounting from Rutgers University. The Board has determined that as a result of her broad experience with complex accounting, financial and risk related issues, as well as her experience on public company boards, Ms. Morrison is well-qualified to assist in the auditor oversight function as an organizationAudit Committee member and brings value as a member of the Board. She also qualifies as an audit committee financial expert within the meaning of SEC regulations. Ben Xiang
Independent Director Age 38 | | Director of ePlus since 2019
Committees: Audit Nominating and Corporate Governance (Chair)
Other Public Company Directorships: None |
Mr. Xiang currently serves as Senior Vice President, Corporate Development and Strategy at Veritone, an Enterprise AI company. Mr. Xiang joined Veritone in February 2021. Along with leading Veritone’s corporate development and venture activities, Mr. Xiang drives strategy and growth. Prior to that, actively supports clinical researchMr. Xiang served as interim Chief Information Officer of Sunwest Bank from August 2019 to December 2019. Beginning in search2015 and through the present, he serves in a consulting role through Crescent Group, where his contributions include advising start-ups and established companies in digital transformation and growth. From 2012 through 2019, Mr. Xiang held multiple roles with Ingram Micro, the world’s largest IT distributor, as Ingram’s global executive for the Internet of Things, Artificial Intelligence, and Mixed-Reality business as well as roles in strategy and corporate development. He has extensive experience in cross-border M&A, post-merger integrations, and business operations. Prior to joining Ingram, Mr. Xiang was Managing Director of Fortress Consulting, a curemanagement 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 Multiple SclerosisSony BMG in the areas of digital strategy and charitable relieftransformation. Mr. Xiang has extensive experience throughout Asia Pacific and North America and holds a degree in devastated areas aroundFinance and Management from the world. Mr. Hovde received his degrees in Economics and International Relations fromWharton School at the University of Wisconsin. HePennsylvania. Since April 2015, Mr. Xiang has also served on the board of directors of Sunwest Bank. The Board believes that Mr. Xiang’s expertise of go-to-market within the IT channel, knowledge of the technology industry, 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, 2023. Mr. Marron did not receive any additional compensation for his service as a director during our fiscal year ended March 31, 2023. Mr. Marron’s compensation is licensedreported under “Executive Compensation” herein. The Board’s general policy is that compensation for the non-employee directors should be a mix of cash and equity-based compensation. Directors also have the ability to elect to receive their compensation entirely in equity. During our fiscal year ended March 31, 2023, each non-employee director received an annual cash retainer of $86,250 (on a pro rata basis for Ms. Bergeron based on her nomination during fiscal year 2022), reflecting four quarterly payments of $21,562.50, or, alternatively, at the director’s election, the same amount in stock in lieu of cash, rounded down to avoid a fractional share. Stock that directors receive in lieu of cash is not subject to forfeiture or a vesting period. In September 2022, each non-employee director also received $83,413.80 in restricted stock (except for Ms. Bergeron, who received $81,182 in restricted stock upon her appointment to the board on October 13, 2022, representing a pro rata amount), which is equal to the amount of cash compensation earned by directors during the prior fiscal year, as more fully set forth in our 2017 Non-Employee Director Long-Term Incentive Plan (“2017 Director LTIP”). This number of shares of restricted stock granted is rounded down to avoid a fractional share award, and vests in equal installments on the first- and second-year anniversaries of the grant. Our Board’s Chairman, Mr. Faulders, also receives an additional annual cash compensation of $50,000, which is paid quarterly in equal amounts of $12,500. Directors are also reimbursed for out-of-pocket expenses incurred to attend Board and committee meetings and the Annual Meeting. 2023 Director Compensation Table
The tables below show compensation for all directors except for Mr. Marron, whose compensation is in the Summary Compensation Table. | Name | | Fees Earned
or Paid in Cash
(1) | | | Stock Awards (2)(3) | | | Option Awards | | | All Other Compensation | | | Total | | | Renée Bergeron | | $ | 40,313 | | | $ | 81,182 | | | $ | - | | | $ | - | | | $ | 121,495 | | | Bruce M. Bowen | | $ | 86,250 | | | $ | 83,414 | | | $ | - | | | $ | - | | | $ | 169,664 | | | John E. Callies | | $ | 86,250 | | | $ | 83,414 | | | $ | - | | | $ | - | | | $ | 169,664 | | | C. Thomas Faulders, III | | $ | 136,250 | | | $ | 83,414 | | | $ | - | | | $ | - | | | $ | 219,664 | | | Eric D. Hovde | | $ | 86,250 | | | $ | 83,414 | | | $ | - | | | $ | - | | | $ | 169,664 | | | Ira A. Hunt, III | | $ | 86,250 | | | $ | 83,414 | | | $ | - | | | $ | - | | | $ | 169,664 | | | Maureen F. Morrison | | $ | 86,250 | | | $ | 83,414 | | | $ | - | | | $ | - | | | $ | 169,664 | | | Ben Xiang | | $ | 86,250 | | | $ | 83,414 | | | $ | - | | | $ | - | | | $ | 169,664 | |
| (1) | The above table reflects fees earned during the fiscal year 2023. Pursuant to our 2017 Director LTIP, directors may make a stock fee election, through which they receive shares of 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 service. The number of shares received is determined by dividing the cash compensation earned quarterly by directors ($21,562.50 during our fiscal year ended March 31, 2023) by the Fair Market Value of a share of common stock, as defined in the 2017 Director LTIP, and rounding down to avoid the issuance of a fractional share. |
Messrs. Bowen and Hovde each received stock instead of cash throughout the fiscal year. This stock is not subject to forfeiture or a vesting period. The amount of stock granted for each quarter to Messrs. Bowen and Hovde is shown below:
Board Service Time | Number of
Shares Granted | | April 1, 2022 - June 30, 2022 | 408 | | July 1, 2022 - September 30, 2022 | 507 | | October 1, 2022 - December 31, 2022 | 481 | | January 1, 2023 - March 31, 2023 | 431 |
| (2) | The values in this column represent the aggregate grant date fair market values of the fiscal year 2023 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, 2023, for each director except Mr. Marron, whose compensation is in the Summary Compensation Table. |
| Name | Unvested
Restricted Shares | | Renée Bergeron | 1,874 | | Bruce M. Bowen | 2,840 | | John E. Callies | 2,840 | | C. Thomas Faulders, III | 2,840 | | Eric D. Hovde | 2,840 | | Ira A. Hunt, III | 2,840 | | Maureen F. Morrison | 2,840 | | Ben Xiang | 2,840 |
Stock Ownership Guidelines
The Board believes that to align the interests of our non-employee directors more closely with the NASDinterests 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, 2023, all directors met this requirement or were 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 registered representativegroup; and general securities principal. 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 percentages of beneficial ownership were calculated on the basis of [26,944,377] shares of common stock outstanding which includes [314,519] 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 21, 2023.
| Name (1) | Aggregate
Number of
Beneficial Shares | Percent of
Outstanding
Shares | Additional Information (2) | | Renée Bergeron | 1,874 | * | Includes 1,874 shares of restricted stock that have not vested as of July 21, 2023. | | Bruce M. Bowen | 36,235 | * | Includes 13,200 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, of which Mr. Bowen serves as manager. Also includes (a) 2,084 shares held by the Elizabeth Dederich Bowen Trust in which Mr. Bowen's spouse serves as trustee, (b) 17,727 shares held by the Bruce Montague Bowen Trust in which Mr. Bowen serves as trustee, and (c) 2,840 shares of restricted stock that have not vested as of July 21, 2023. | | John E. Callies | 20,448 | * | Includes 2,840 shares of restricted stock that have not vested as of July 21, 2023. | | C. Thomas Faulders, III | 44,988 | * | Includes 2,840 shares of restricted stock that have not vested as of July 21, 2023. | | Eric D. Hovde | 86,599 | * | Includes 2,840 shares of restricted stock that have not vested as of July 21, 2023. Mr. Hovde is the managing member of Hovde Capital, Ltd., the general partner to Financial Institution Partners III LP, which owns 20,396 shares. Mr. Hovde is a trustee of The Eric D. and Steven D. Hovde Foundation, which owns 10,000 shares. | | Ira A. Hunt, III | 23,908 | * | Includes 2,840 shares of restricted stock that have not vested as of July 21, 2023. | | Maureen F. Morrison | 9,940 | * | Includes 2,840 shares of restricted stock that have not vested as of July 21, 2023. | | Ben Xiang | 8,268 | * | Includes 2,840 shares of restricted stock that have not vested as of July 21, 2023. | | Mark P. Marron | 195,330 | * | Includes (a) 78,874 shares of restricted stock that have not vested as of July 21, 2023, (b) 112,227 shares held in a revocable trust in which Mr. Marron serves as trustee, and (c) 4,229 shares held in trust for Mr. Marron's dependent child. | | Elaine D. Marion | 117,781 | * | Includes (a) 69,155 shares held in a revocable trust in which Ms. Marion serves as trustee, (b) 48,202 shares of restricted stock that have not vested as of July 21, 2023, and (c) 424 shares held in an IRA. | | Darren S. Raiguel | 108,767 | * | Includes (a) 60,434 shares held in a revocable trust in which Mr. Raiguel serves as trustee, and (b) 48,202 shares of restricted stock that have not vested as of July 21, 2023. | All directors and executive
officers as a group (11 persons) | 654,138 | [2.43%] | |
| (1) | The business address of Mses. Bergeron, Marion and Morrison, and Messrs. Bowen, Callies, Faulders, Hovde, Hunt, Marron, Raiguel, and Xiang is ePlus inc., 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 Information column, and percentages are calculated assuming continued beneficial ownership at our Record Date of July 21, 2023.
| 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 | 4,732,927 | [17.57%] | BlackRock, Inc. reported that as of December 31, 2022 it had sole voting power over 4,632,230 shares and sole dispositive power over 4,732,927 shares. This information is based on a Schedule 13G/A filed with the SEC on January 26, 2023. | | | | 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 interest in the common stock of, more than five percent of ePlus' total outstanding common stock. | The Vanguard Group
100 Vanguard Boulevard
Malvern, PA 19355 | 2,111,123 | [7.84%] | The Vanguard Group reported that as of December 30, 2022 it had shared voting power over 38,325 shares and sole and shared dispositive power over 2,049,488 and 61,635 shares, respectively. The information is based on a Schedule 13G/A filed with the SEC on February 9, 2023. | River Road Asset Management, LLC
462 S. 4th Street, Suite 2000
Louisville, KY 40202 | 1,900,459 | [7.05%] | River Road Asset Management, LLC reported that as of December 31, 2022 it had sole voting power over 1,860,523 shares and sole dispositive power over 1,900,459 shares. This information is based on a Schedule 13G filed with the SEC on February 8, 2023. | Geneva Capital Management LLC
411 E Wisconsin Avenue, Suite 2320
Milwaukee, WI 53202 | 1,544,898 | [5.73%] | Geneva Capital Management LLC reported that as of December 31, 2022 it had shared voting power over 1,521,323 shares and shared dispositive power over 1,544,898 shares. This information is based on a Schedule 13G filed with the SEC on February 10, 2023. | Dimensional Fund Advisors LP Building One
6300 Bee Cave Road
Austin, TX 78746 | 1,485,138 | [5.51%] | Dimensional Fund Advisors LP ("DFA") reported that as of December 30, 2022 it had sole voting power over 1,462,983 shares and sole dispositive power over 1,485,138 shares. This information is based on a Schedule 13G/A filed with the SEC on February 10, 2023. DFA is an investment adviser registered under Section 203 of 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 companies, trusts and accounts, collectively referred to as the "Funds"). In certain cases subsidiaries of DFA may act as an adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-adviser and/or manager, DFA or its subsidiaires (collectively, "Dimensional") may possess voting and/or investment power over the securities of the Company that are owned by the Funds, and may be deemed to be the beneficial owner of the shares of the Company held by the Funds. However, all securities reported in the Schedule 13G/A are owned by the Funds, and Dimensional disclaims beneficial ownership of such securities. |
EXECUTIVE OFFICERS The following biographies describe the business experience of each of the Company’s executive officers as of March 31, 2023, except for Mark P. Marron, who is discussed under the heading “2023 Nominees – Term Expiringfor Election to the Board of Directors.”
Elaine D. Marion, Age 55 Chief Financial Officer | | Officer of ePlus since 2008 |
Ms. Marion joined us in 2010
Irving R. Beimler joined1998 and became our Board in November 2006. Mr. Beimler has been withCFO on September 1, 2008. From 2004 to 2008, Ms. Marion served as our Vice President of Accounting. Prior to that, she was the Hovde Group since November 1997. Currently, he is serving as PortfolioController of ePlus Technology, inc., a subsidiary of ePlus, from 1998 to 2004. Before joining ePlus, Ms. Marion was General Manager of Hovde Private Equity Advisors LLC. He has served asBristow Development Corporation. Ms. Marion is a senior officer, Interim Presidentboard member of the Executive Advisory Board of the College of Business at the University of Mary Washington, and Chief Executive Officer and a Board Memberchair of numerous banks and thrifts during his career. Hethe George Mason University School of Business Dean’s Advisory Council. Ms. Marion is a graduate of the StateGeorge Mason University, where she earned a Bachelor of New York at Geneseo.Science degree in Business Administration with a concentration in Accounting.
Darren S. Raiguel, Age 52 Chief Operating Officer | | Officer of ePlus since 2018 |
Milton E. Cooper, Jr. Darren Raiguel joined our Boardus in November 2003. Mr. Cooper1997 and served with Computer Sciences Corporation (“CSC”) from September 1984in various sales and management roles until his retirementpromotion in May 2001, first asApril 2011 to Senior Vice President Business Developmentof SLED (state, local and then (from January 1992) as President, Federal Sector. Before joining CSC,education) and northeast commercial sales. From November 2014 to May 2018, Mr. Cooper served in marketing and general management positions with IBM Corporation, Telex Corporation, and Raytheon Company. He also serves on the Board of Directors and on the Compensation Committee of both L-1 Identity Solutions, Inc. and Applied Signal Technology, Inc. Mr. Cooper is a 1960 graduate of the United States Military Academy. HeRaiguel served as an artillery officer with the 82nd Airborne Division before leaving active duty in 1963.
Terrence O’Donnell joined our Board in November 1996 upon the completion of our IPO. For the past eight years, Mr. O’Donnell has been the Executive Vice President of Technology Sales of ePlus Technology, inc., a subsidiary of ePlus, and General Counselhe became Chief Operating Officer of Textron, Inc.the Company 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 to 1997. Mr. Raiguel is a partnergraduate 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 law firmBoard 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 Williams & Connolly LLP in Washington, D.C. Mr. O’Donnell has practiced law since 1977,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 1989our shareholders on compensation and other important matters, and we expect to 1992 served as General Counsel tohold this vote on an annual basis for the U.S. Department of Defense. Mr. O’Donnell presently also serves on theforeseeable future. The Board of Directors and the Compensation Nominating and Audit Committees of IGI, Inc., an American Stock Exchange company. Mr. O’Donnell is a 1966 graduateCommittee will consider the voting results when making future compensation decisions. At our 2022 Annual Meeting, approximately 98% of the U.S. Air Force Academy and received a Juris Doctor from Georgetown University Law Centervotes cast by our shareholders approved the compensation in 1971.the 2022 proxy statement for our NEOs.
Class III Director Nominees – Term Expiring in 2011
Phillip G. Norton joined us in March 1993 and has served since then as our Chairman of the Board and CEO. Since September 1996, Mr. Norton has also served as our President. Mr. Norton is a 1966 graduate of the U.S. Naval Academy.
Bruce M. Bowen founded our company in 1990 and served as our President until September 1996. Since September 1996, Mr. Bowen has served as our Executive Vice President, and from September 1996 to June 1997 also served as our CFO. Mr. Bowen has served on our Board since our founding. He is a 1973 graduate of the University of Maryland and in 1978 received a Masters of Business Administration from the University of Maryland.
In deciding how to vote on this proposal, we encourage you to review the CD&A and 2023 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 NEOs’ compensation as described in this proxy statement by voting “FOR” the following resolution at our 2023 Annual Meeting: “RESOLVED, that the shareholders of ePlus approve, on an advisory basis, the 2008 Non-Employee Director Long-Term Incentive Plan
(Proposal # 2 on Proxy Card)
On June 25, 2008,compensation paid to the Board of Directors adopted the 2008 Non-Employee Director Long-Term Incentive Plan, subject to stockholder approval (the “Non-Employee Director Plan”). The Company’s current Long-Term Incentive Plan (the “1998 Amended Plan”) was adopted by shareholdersnamed executive officers, as disclosed in 2003. The 1998 Amended Plan provided that Directors would annually receive 10,000 options the day after the Company’s annual meeting, but that no options shall be awardedproxy statement for the 2023 Annual Meeting pursuant to that provision after September 1, 2006. The most recent option grants awarded to non-employee directors under the 1998 Amended Plan were awarded in September 2005. No equity awards were granted to the non-employee directors during the 2006 or 2007 calendar years.
Eligible participants in the Non-Employee Director Plan are directors who, on the date such person is to receive a grantcompensation disclosure rules of restricted shares hereunder is not a current employee of the Company or any of the Company’s subsidiaries (“Outside Director”). Six of our directors proposed for election at the annual meeting will be eligible to participate in the Non-Employee Director Plan. Messrs. Norton and Bowen are not eligible to participate in the Non-Employee Director Plan.
Under the proposed Non-Employee Director Plan, each Non-Employee Director will receive a one-time grant on the date which is two business days after the date that a Form S-8 registration statement in respect of the shares subject to the Non-Employee Director Plan is filed with, and declared effective by, the Securities and Exchange Commission, of a number of restricted shares having a Fair Market Value (as defined inincluding the Plan) onCD&A, the date of grant (determined without regard toSummary Compensation Table, and the restrictions applicable thereto) of $35,000. Thereafter, every September 25th beginning September 25, 2008, or, if September 25th is not a business day, then on the first business day thereafter, each director will receive an annual grant of restricted stock having a Fair Market Value on the date of grant (determined without regard to the restrictions applicable thereto) equal to the aggregate dollar amount of cashother related compensation earned by an Outside Director during the Company’s fiscal year ended immediately prior to the respective Annual Grant Date. Alternatively, directors may elect to receive their cash compensation in restricted stock.tables and narrative disclosure.”
The restricted shares granted to directors under the Plan will be subject to restrictions prohibiting such restricted shares from being sold, transferred, assigned, pledged or otherwise encumbered or disposed of. The restrictions with respect to each award of restricted shares shall lapse as to one-half of such restricted shares on each of the one-year and second-year anniversary date of the grant of such award; provided, however, that the restrictions with respect to such restricted shares shall lapse immediately in the event that (i) the director is nominated for a new term as an Outside Director but is not elected by stockholders of the Company, or (ii) the director ceases to be a member of the Board due to death, disability or mandatory retirement (if any). The restrictions with respect to all of a director's restricted shares shall lapse immediately prior to a Change in Control (as defined in the Non-Employee Director Plan) provided that the director is a member of the Board immediately prior to such Change in Control.
During the restriction period, a director will have the right to vote his or her restricted shares and have the right to receive any cash dividends with respect to such restricted shares. All distributions, if any, received by a director with respect to restricted shares as a result of any stock split, stock distribution, combination of shares, or other similar transaction will be subject to the same restrictions as are applicable to the restricted shares to which such distributions relate.
The purpose of the Non-Employee Director Plan is to align the economic interests of the directors with the interests of stockholders by including equity as a component of pay and to attract, motivate and retain experienced and knowledgeable directors.
Under the Non-Employee Director Plan, the total number of shares authorized for grant to non-employee directors is two hundred fifty thousand (250,000). The 1998 Amended Plan did not specify the total number of shares authorized for grants solely to non-employee directors. If the Non-Employee Director Plan is approved by stockholders, we will register under the Securities Act of 1933, as amended, 250,000 shares of our common stock for issuance pursuant to awards granted under the Non-Employee Director Plan.
The Non-Employee Director Plan may be amended by the Board, in its sole discretion, without stockholder approval, unless approval of a change is required by applicable law. The equity payable under the Non-Employee Director Plan is intended to constitute a designated percentage (initially 50%) of the compensation paid to a director each year and if the directors approve an increase in the total annual retainer, the value of the annual awards under the Non-Employee Director Plan will increase. It is not anticipated that stockholder approval of an increase in the total annual retainer would be sought. Any amendments made without stockholder approval could increase the costs of the Non-Employee Director Plan. A director’s consent would be required to revoke or alter an outstanding award in a manner unfavorable to such director.
Stockholders are requested in this Proposal 2 to approve the Non-Employee Director Plan. 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 and entitled to vote at the annual meeting, will beis required to approve the Non-Employee Director Plan. If you “Abstain” from voting, itProposal 2. Abstentions will have the same effect as an “Against” vote. Brokervoting “AGAINST” this proposal, and broker non-votes will have no effect.effect on the vote for this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY 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 STATEMENT
COMPENSATION COMMITTEE REPORT The information contained in this report shall not be deemed to be (i) soliciting material, (ii) filed with the SEC, (iii) subject to Regulations 14A or 14C of the Exchange Act, or (iv) subject to the liabilities of Section 18 of the Exchange Act. Further, this report shall not be deemed 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, except to the extent the Company specifically incorporates this report by reference into such filing. The description aboveCompensation Committee has reviewed the CD&A contained in this proxy statement and discussed the CD&A with management. Based on its review and discussions with management, the Compensation 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 2023 Annual Report. Submitted by the Compensation Committee John E. Callies, Chair Renée Bergeron 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 2023, and our executive compensation philosophies and objectives. This CD&A reviews compensation for our three NEOs: our CEO, CFO, and COO. Our NEOs for the fiscal year ended March 31, 2023, were: | | | Mark P. Marron | Chief Executive Officer and President | | Elaine D. Marion | Chief Financial Officer | | Darren S. Raiguel | Chief Operating Officer |
This CD&A is divided into three sections: | Overview | • Fiscal Year 2023 Financial Highlights • Our Executive Compensation Program • Our Executive Compensation Practices • 2022 Say-On-Pay and Say-On-Frequency Votes • Long-Term Cash Incentive Compensation | | What We Pay and Why | • Fiscal Year 2023 Executive Compensation Decisions • Base Salary • Annual Cash Incentive Awards • Long-Term Incentive Program • Other Elements of Our Fiscal Year 2023 Executive Compensation Program | | 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 2023 Highlights
Net sales increased 13.5% from the prior year to $2,067.7 million Services revenue increased 9.9% to $264.4 million Consolidated gross profit increased 12.3% to $517.5 million Consolidated operating income increased 12.8% to $166.2 million Net earnings increased 13.0% to $119.4 million Diluted earnings per share increased 14.0% to $4.48
Past Five Years Highlights Over the past five years from fiscal year 2019 to fiscal year 2023, our financial performance has been strong.
| • | Net sales grew at a compound annual growth rate ("CAGR") of 11%. |
Services revenue grew at a CAGR of 15%. Gross profit grew at a CAGR of 12%. Consolidated operating income increased at a CAGR of 20%.
Net earnings grew at a CAGR of 17%. Diluted earnings per share increased at a CAGR of 18%. Over the past five fiscal years, we have returned over $60 million to shareholders in the form of stock repurchases. 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 executive team who will provide leadership for the Company’s success in dynamic and competitive markets, while remaining attuned to the risks facing the Company. 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 2023 executive compensation. | Pay Element |
| Salary | Annual Cash Incentive | Long-Term Cash Incentive | Restricted Stock | | Who Receives | All NEOs | All NEOs | All NEOs | All NEOs | | When Granted | Annually | Annually | Annually | Annually | | Form of Delivery | Cash | Cash | Cash | Equity | | Performance Type | Short-Term Fixed | Short-Term Variable | Long-Term Variable | Long-Term Fixed | | Performance Period | 1 Year | 1 Year | 3 Years | Vesting Annually over 3 years | | How Payout Determined | Amount Set by Compensation Committee | Formula Determined by Compensation Committee | Formula Determined by Compensation Committee | Amount Determined by Compensation Committee | | Performance Measures | Individual | Consolidated Net Sales; Financing Segment Operating Income; Earnings Before Taxes; Services Gross Profit | Target Increase in Operating Income and Net Sales | Time-Based |
Our Executive Compensation Practices
Our Compensation Committee annually 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 are outlined below, each of which the Compensation Committee believes reinforces our executive compensation objectives: | Our Executive Compensation Practices |
| What We Do | | What We Don’t Do | | ✔ | Annual review of our executive compensation programs |  | No excessive executive perquisites | | ✔ | Annual advisory vote to approve executive compensation programs (say-on-pay) | | No excessive severance benefits | | ✔ | Periodic market comparison of executive compensation against relevant peer group information | | No supplemental executive retirement plans | | ✔ | Periodic use of an independent compensation consultant reporting directly to the Compensation Committee and providing no other services to the Company | | No acceleration of unvested stock upon retirement | | ✔ | Significant percentage of cash compensation delivered in the form of variable compensation, which is “at-risk” and tied to quantifiable performance measures | | No hedging or short sales of our securities | | ✔ | Long-term vesting of restricted stock, to align executive and shareholder interests (minimum of three-year vesting) | | No pledging of our securities, except in limited circumstances with pre-approval by the Insider Trading Compliance Officer | | ✔ | Robust executive officer stock ownership guidelines require NEOs to hold ePlus stock | | No tax gross-ups on benefits (other than as also provided to non-executive officer employees) | | ✔ | Clawback provisions to mitigate undue risk regarding executive compensation practices |
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As part of its review of the Non-Employee Director Plan is qualified in its entiretyCompany’s executive compensation program, the Compensation Committee considers the results of the annual, non-binding advisory vote by referencethe shareholders to approve named executive officer compensation (the “Say-On-Pay Vote”). Approximately 98% of the votes cast for the Company’s Say-On-Pay Vote at our 2022 Annual Meeting 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 full textCompany’s executive compensation program in response to the 2022 Say-On-Pay vote. Additionally, at our 2022 Annual Meeting, the Company’s shareholders voted on a non-binding advisory vote regarding the frequency of future Say-On-Pay Votes (the “Say-On-Frequency Vote”). The highest number of votes cast by the Company’s shareholders at the 2022 Annual Meeting (approximately 93% of the Non-Employee Director Plan, a copyvotes cast) for the Company’s Say-On-Frequency Vote was in favor of holding such advisory vote every year, as recommended by the Board. Based on the outcome of the Say-On-Frequency Vote, the Board has determined that the Company will continue to hold the Say-On-Pay Vote every year until the next required Say-On-Frequency Vote, which is attached as Annex Arequired to these proxy materials.occur no later than the Company’s 2028 Annual Meeting of Shareholders.
Your Board unanimously recommendsLong-Term Cash Incentive Compensation
Beginning with the 2020 fiscal year, the Compensation Committee revised the executive compensation program by adding a vote FOR approval oflong-term cash component to further encourage executives to focus on the Non-Employee Director Plan.
Proposal 3 – Approval oflong-term value to shareholders. The long-term cash awards are made pursuant to the 2008 Employee Long-Term Incentive Plan in effect at the date of the award and are based on one or more three-year financial metrics. For more information on the long-term cash incentive compensation, see “Long-Term Incentive Program” below.
(Proposal # 3 on Proxy Card)
27
On June 25, 2008,
Fiscal Year 2023 Executive Compensation Decisions
Consistent with our pay philosophy and executive compensation program objectives described below, in determining the fiscal year 2023 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 scope of responsibility, prior performance and experience, and Company performance, as more fully described below under “How We Make Executive Compensation Decisions.” Base salary represents annual fixed cash 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 Directors adopted the 2008 Long-Termcompanies 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, 2023, and 2022 is set forth below:
| | Base Salary as of March 31, | | | Named Executive Officer | | 2023 | | | 2022 | | | Mark P. Marron | | $ | 925,000 | | | $ | 875,000 | | | Elaine D. Marion | | $ | 500,000 | | | $ | 475,000 | | | Darren S. Raiguel | | $ | 500,000 | | | $ | 475,000 | |
Effective April 1, 2023, Mr. Raiguel’s annual base salary was increased to $525,000.
Annual Cash Incentive Awards
During the 2023 fiscal year, we provided our NEOs with short-term cash incentive compensation through our annual Cash Incentive Plan. This short-term, variable cash compensation represents a significant portion of each NEO’s target total cash compensation opportunity in a given year. Cash Incentive Plan (the “Employee Plan”Pay for Performance Alignment Our Compensation Committee annually reviews, and then sets, performance goals under a Cash Incentive Plan, which was adopted by the Compensation Committee in 2018 (“2018 CIP”), subject. During the 2023 fiscal year, short-term performance goals and cash awards were made under our 2018 CIP. The combination of performance goals the Compensation Committee chose for fiscal year 2023 emphasizes factors that the Compensation Committee believes are important to stockholder approval. No awards have been issued underCompany strategy, future growth and enhancing shareholder value. The Compensation Committee administers the 1998 Amended Plan since September 2006. Options granted under2018 CIP and has full authority to determine which of the 1998 Amended Plan, and any earlier plan,Company’s executive officers will continue to be subject toparticipate in the 2018 CIP; the terms and conditionsamounts of each participant’s minimum, target, and maximum awards; and the period during which the performance is to be measured. Cash Incentive Awards for Fiscal Year 2023 For the fiscal year ended March 31, 2023, our NEOs’ cash bonuses were earned pursuant to the 2018 CIP, based on the following financial performance goals: consolidated net sales (20%), financing segment operating income (20%), earnings before tax (30%), and services gross profit (30%). The award opportunity in fiscal year 2023 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. For fiscal year 2023, the agreements evidencing such options, as well as the termstarget award amount for each of the plan under which they were granted.
Stockholders are requested in this Proposal 3 to approve the Employee Plan. The affirmative voteNEOs was 100% of their base salary amount. All three of the holdersparticipating executive officers had the same financial performance goals and the same performance weights. The fiscal year 2023 financial performance weights and target amounts for each participant were as follows:
| | | Consolidated Net Sales | | | Financing Segment Operating Income | | | Earnings Before Taxes | | | Services Gross Profit | | | | | Named
Executive Officer | | Percentage of Total Bonus | | | Target Bonus
Amount | | | Percentage of Total Bonus | | | Target Bonus Amount | | | Percentage of Total Bonus | | | Target Bonus Amount | | | Percentage of Total Bonus | | | Target Bonus Amount | | | Total Target
Bonus Amount | | | Mark P. Marron | | | 20.0 | % | | $ | 185,000 | | | | 20.0 | % | | $ | 185,000 | | | | 30.0 | % | | $ | 277,500 | | | | 30.0 | % | | $ | 277,500 | | | $ | 925,000 | | | Elaine D. Marion | | | 20.0 | % | | $ | 100,000 | | | | 20.0 | % | | $ | 100,000 | | | | 30.0 | % | | $ | 150,000 | | | | 30.0 | % | | $ | 150,000 | | | $ | 500,000 | | | Darren S. Raiguel | | | 20.0 | % | | $ | 100,000 | | | | 20.0 | % | | $ | 100,000 | | | | 30.0 | % | | $ | 150,000 | | | | 30.0 | % | | $ | 150,000 | | | $ | 500,000 | |
The 2018 CIP also permits the exclusion of a majorityall 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, the incentive compensation expensed by ePlus for payments under the 2018 CIP, and any revenue, gain, or loss attributable to the business operations of any entity acquired by us during the fiscal year. Possible bonus payouts ranged between 0% and 200% of the shares present in person or represented by proxy and entitled to vote attarget amount, depending on the annual meeting will be required to approve the Employee Plan. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect.
The description belowlevel of achievement of the Employee Plan is qualifiedperformance goals for the fiscal year 2023. The financial performance goals were as follows:
| | | Performance Goals | | Performance Level
(Dollars in thousands) | | Consolidated Net
Sales (20%) | | | Financing Segment
Operating Income (20%) | | | Earnings Before
Taxes (30%) | | | Services Gross
Profit (30%) | | | Maximum | | | n/a(1) |
| | | n/a(1) |
| | | n/a(1) |
| | | n/a(1) |
| | Target | | $ | 1,926,732 | | | $ | 33,969 | | | $ | 149,793 | | | $ | 104,460 | | | Threshold (75% of Performance Goal) | | $ | 1,445,049 | | | $ | 25,477 | | | $ | 112,345 | | | $ | 78,345 | | | Below Threshold | | < $1,445,049 | | | < $25,477 | | | < $112,345 | | | < $78,345 | |
| (1) | The maximum payout of 200% of the target award can be achieved based on the results of one or more of the performance goals. 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, 2023, the Compensation Committee determined which of the financial objectives described under the 2018 CIP and in its entirety by referencethe award agreements were achieved. There were no waivers or modifications to any specified performance targets, goals, or conditions with respect to the full text2018 CIP or award agreements. The achievement of the Employee Plan, a copyfinancial performance goals is set forth below. Performance Criteria
(Dollars in thousands) | | Goal | | | Achievement (1) | | | Amount of
Goal Achieved | | | Consolidated Net Sales | | $ | 1,926,732 | | | $ | 2,057,882 | | | | 106.8 | % | | Financing Segment Operating Income | | $ | 33,969 | | | $ | 26,455 | | | | 77.9 | % | | Earnings Before Taxes | | $ | 149,793 | | | $ | 164,449 | | | | 109.8 | % | | Services Gross Profit | | $ | 104,460 | | | $ | 93,497 | | | | 89.5 | % |
| (1) | Performance Criteria achievement were adjusted to exclude the incentive compensation accrued by the Company, and income and expenses related to acquisitions, if any, and the Performance Criteria goals were adjusted to exclude incentive compensation targets. |
The following table details the payments earned in the fiscal year ended March 31, 2023, and 2022, respectively (but paid in the subsequent fiscal year) for each NEO: Your Board unanimously recommends a vote FOR approval of the 2008
| Named Executive Officer | | FY 2023 Annual Incentive
Cash Payment Earned | | | FY 2022 Annual Incentive
Cash Payment Earned | | | % Change | | | Mark P. Marron | | $ | 983,627 | | | $ | 1,750,000 | | | | (44 | %) | | Elaine D. Marion | | $ | 531,690 | | | $ | 950,000 | | | | (44 | %) | | Darren S. Raiguel | | $ | 531,690 | | | $ | 950,000 | | | | (44 | %) |
Long-Term Incentive Program
Under our 2021 Employee Long-Term Incentive Plan.
Summary of thePlan (“2021 Employee Plan
General
The Employee Plan allows for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, and other stock-based awards to ePlus employees. Under the Employee Plan, the total number of shares authorized for grant is 1,000,000. This reflects a decrease of 2,000,000 from the 1998 Amended Plan. Awards granted under the 1998 Amended Plan or any prior plan will not be counted toward the 1,000,000 authorized for grant under the Employee Plan. The approval of the Employee Plan will allowLTIP”), the Compensation Committee has the authority to continue to grantaward various forms of long-term incentive compensation grants, such as cash awards, stock options, restricted stock awards, and a broad arrayrestricted stock units. The Compensation Committee’s objectives for the fiscal year 2023 long-term equity-based and cash incentive awards to our NEOs were to focus executives on long-term profitable growth and shareholder value creation and the Company’s long-term strategic plan, and retain the services of otherour executives through multi-year vesting requirements.
Mr. Marron makes recommendations to the Compensation Committee for equity incentives at levels it determines appropriate, subjectgrants to certain limitations set forthNEOs, including to himself; however, the Compensation Committee deliberates and reaches its own decision regarding grants to all NEOs, including Mr. Marron, who does not participate in any deliberations or votes regarding his own compensation. When determining the Employee Plan. The purposeslevel of the Employee Plan are to encourage employees ofgrant, the Company to acquire a proprietary interest in the growthCompensation Committee considers each NEO’s functional and performance of the Company, to generate an increased incentive to contributeenterprise management responsibilities, potential contributions to the Company’s future successprofitability and prosperity, thus enhancinggrowth, the value of prior long-term incentive grants and other non-cash and cash compensation, regular analysis of how the Company performed on multiple financial metrics as compared to certain peers, information from our independent compensation consultant (if any), 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 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. All outstanding restricted shares vesting for, or granted to, executive officers and other employees during the fiscal year ended March 31, 2023, vest over a three-year period. For fiscal year 2023, the Compensation Committee used a combination of long-term incentive vehicles, including time-based restricted stock and cash performance awards. These vehicles focus NEOs on driving long-term profitable growth and shareholder value creation. | Element of LTI | Weight (by value) | Overview of Design | | Time-Based Restricted Stock | CEO: 89% Other NEOs: 90% | • Vests in three equal increments on the first three one-year anniversaries of the grant | | Cash Performance Award | CEO: 11% Other NEOs: 10% | • Grant is tied to achievement of operating income growth • Three-year performance period • Vesting and payout occurs on third year anniversary of grant • Actual payout can range between 0% and 150% |
The table below shows the long-term incentive award values granted in fiscal year 2023 for each of the NEOs: Named Executive Officer | | Time-Based
Restricted Stock (1) | | | Cash Performance Award (2) | | | Total Value | | | Mark P. Marron | | $ | 2,199,967 | | | $ | 275,000 | | | $ | 2,474,967 | | | Elaine D. Marion | | $ | 1,349,994 | | | $ | 150,000 | | | $ | 1,499,994 | | | Darren S. Raiguel | | $ | 1,349,994 | | | $ | 150,000 | | | $ | 1,499,994 | |
| (1) | Award amounts for Time-Based Restricted Stock were determined based on the closing price of our common stock on the date of grant on June 8, 2022. |
| (2) | Amounts shown are the target amounts. 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 | 150% of Target |
Our Compensation Committee granted long-term cash performance awards in fiscal year 2021 that pay out based on a specific pre-established performance goal. Performance was measured over the three-fiscal-year performance period ending March 31, 2023. At the conclusion of the fiscal year ended March 31, 2023, the Compensation Committee determined which of the financial objectives described under the long-term cash performance award agreements for the benefitperformance period of its stockholders, andApril 1, 2020, through March 31, 2023, were achieved. There were no waivers or modifications to enhance the ability of the Company and its affiliates to attract and retain exceptionally qualified individuals upon whom, in large measure, the sustained progress, growth and profitability of the Company depend. Shares under the Employee Plan will not be used to compensate our outside directors, who may be compensated under a separate Non-Employee Director Plan, described above under Proposal 2, if approved by stockholders.
The Employee Plan includes certain provisions intended to ensure compliance with Section 409A of the Internal Revenue Code regarding certain deferred compensation arrangements. These provisions are designed to exempt the awards from Section 409A, to preserve the intended tax treatments of the benefits providedany specified performance targets, goals, or conditions with respect to the award agreements. The achievement of the financial performance goals is set forth below.
Performance Criteria
(Dollars in thousands) | | Goal | | | Achievement (1) | | | Amount of
Goal Achieved | | Increase in operating income from
April 1, 2020, to March 31, 2023 | | $ | 101,711 | | | $ | 159,414 | | | | 156.7 | % |
| (1) | Performance Criteria were adjusted to exclude income and expenses related to our July 2022 acquisition of assets of Future Com, Ltd. and our December 2020 acquisition of assets of Systems Management Planning, Inc. |
The following table details the payments earned during the three-fiscal-year period ended March 31, 2023, (but paid in the subsequent fiscal year) for each NEO: | Named Executive Officer | | Long-Term Cash Payment Earned
Performance Period
April 1, 2020 to March 31, 2023 | | | Mark P. Marron | | $ | 300,000 | | | Elaine D. Marion | | $ | 150,000 | | | Darren S. Raiguel | | $ | 150,000 | |
More information about the long-term incentive awards granted to each NEO in fiscal year 2023 are set forth in “Grants of Plan-Based Awards.” The Compensation Committee determines compensation for our CEO using generally the same criteria it uses for other executive officers. Other Elements of Our Fiscal Year 2023 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 Section 409A,the section entitled “Employment Agreements, Severance and Change in Control Provisions.” Our executive compensation arrangements with our NEOs, including our 2018 CIP, employment agreements, and long-term cash performance awards, provide that bonuses or other compensation are subject to otherwise ensurerecovery by the Company to the extent required by the 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. 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. 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 lower the amount of such payment so that it reflects the amount that would have been paid based on the correct financial results and 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 and Sarbanes-Oxley, and any regulations promulgated thereunder. The SEC has recently finalized rules promulgating Dodd-Frank’s clawback provisions and NASDAQ has finalized its listing standards requiring the development and implementation of the clawback policy mandated by Dodd-Frank, which we are in the process of preparing ahead of the compliance deadline later this year. 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 requirementsinterests 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 non-CEO 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. All 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 ownership level. 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 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 other insiders require pre-approval from our Insider Trading Compliance Officer and must be made in accordance with the Insider Trading Policy. Tax and Accounting Considerations Deductibility of Executive Compensation When designing compensation plans, the Compensation Committee takes into consideration any changes to IRC Section 409A.162(m), as applicable. 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 the Compensation Committee has authorized 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.
AdministrationOur 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 shareholder 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 its terms,their employment agreements, they also are entitled to reimbursement for annual participation in an executive health assessment program. During our fiscal year ended March 31, 2023, our CFO and COO have each completed an executive coaching program designed to further enhance their leadership skills and potential. 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. The Company pays the same costs for the executives as for all attendees at the meeting. The costs incurred with regard to the family members of our named executive officers are included in our Summary Compensation Table in the compensaton for the year ended March 31, 2023; however, no such meetings were held during the years ended March 31, 2021, and March 31, 2022, due to the COVID-19 pandemic. Additionally, from time to time, some of our employees attend sales meetings or other events held by our vendor partners, to which guests are invited. To the extent our executive officers’ guests attend such an event, the benefit obtained by the guest would be included as and if required in our Summary Compensation Table. HOW WE MAKE EXECUTIVE COMPENSATION DECISIONS Role of the Board and Compensation Committee, and our Chief Executive Officer
Role of the Board and Compensation Committee The Compensation Committee, which is composed entirely of independent directors, generally establishes the components of our executive officer 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, CFO, and COO. The Compensation Committee reviews the executive compensation program on an annual basis, with awards 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 independent 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, is 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 year 2023, metrics for the long-term cash awards made pursuant to our 2021 Employee PlanLTIP, 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, the CEO is administerednot present during any deliberations or voting regarding his own compensation. Guidance from the Compensation Committee’s Independent Compensation Consultant
An independent compensation consultant, Pay Governance LLC (the “Compensation Consultant”), was retained by the Compensation Committee of the Board of Directors.in February 2023. The Compensation Committee reviewed the independence of the Compensation Consultant under Nasdaq and SEC rules, and concluded that the work of the Compensation Consultant has not raised any conflict of interest. The Compensation Consultant is engaged directly by the powerCompensation Committee. The Compensation Consultant assisted the Compensation Committee with developing a publicly traded peer group for benchmarking executive pay levels and design, reviewing incentive plan design practices and recommending changes to doincentive plans, and analyzing target compensation levels for executive officers relative to peer group companies and relevant published survey sources. Prior to retaining Pay Governance LLC in February 2023, the following, among other powers: designate participants, determine the number, terms and conditionsCompany had not retained a Compensation Consultant since its retention of any award, interpret and administer the Employee Plan, accelerate the vesting, exercise or payment of an award, correct any defect, supply any omission, or reconcile any inconsistencyPearl Meyer + Partners, LLC in the spring of 2021, which relied on its 2019 market analysis. The Compensation Committee approves the compensation for the NEOs based on its own evaluation, input from our CEO, internal pay equity considerations, the tenure, role, and performance of each NEO, as well as input from the compensation consultant and market data. The CEO is not present during any deliberations or voting regarding his own compensation. 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. In March 2023, the Compensation Committee, with the assistance of the Compensation Consultant, determined a new peer group (as the prior peer group dated back to 2019). In selecting the peer group, the Compensation Committee considered potential peers’ primary industry, total review, market capitalization, gross margin, operating income margin, number of employees, and cumulative Total Shareholder Return (“TSR”) on a 1-year, 3-year and 5-year basis. The Compensation Committee also considered the pay practices of two additional companies from a design standpoint only. | Peer Group | | CACI International Inc. | EPAM Systems, Inc. | ASGN Incorporated | | Amdocs Limited** | ScanSource, Inc. | PC Connection, Inc. | | Pure Storage, Inc. | Unisys Corporation* | Itron, Inc. | | ICF International, Inc.* | Thoughtworks Holding, Inc. | CSG Systems Internationals, Inc.* | | Perficient, Inc.* | StarTek, Inc.* | Climb Global Solutions, Inc. |
| * | Only these five companies provided compensation information for the COO role. |
| ** | Amdocs Limited did not publicly disclose its executive compensation program, and therefore was not included in the analysis. |
The Compensation Consultant also provided a secondary market reference, Mercer’s 2022 U.S. Executive Benchmark Database, which was size-adjusted using regression data to approximate ePlus’ then-current revenue of $1.8 billion. The Compensation Committee considered this broad range of data to ascertain where the compensation for our executive officers is positioned with respect to the median to properly reflect various factors, such as our Company’s performance, the unique characteristics of each executive’s position, and applicable retention considerations. The Compensation Committee does not set compensation components to meet specific benchmarks, such as targeting salaries “above the median” or equity compensation at a particular percentile. 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. 2023 EXECUTIVE COMPENSATION
The following table includes information concerning compensation earned by our NEOs during fiscal years 2023, 2022, and 2021. 2023 Summary Compensation Table
| Name and Principal Position | Fiscal Year | | Salary | | | Stock Awards
(1) | | | Non-Equity Incentive Plan Compensation
(2) | | | All Other Compensation
(3) | | | Total | | Mark P. Marron – President and Chief Executive Officer
| 2023 | | $ | 916,500 | | | $ | 2,199,967 | | | $ | 1,283,627 | | | $ | 22,131 | | | $ | 4,422,225 | | | 2022 | | $ | 846,154 | | | $ | 1,999,964 | | | $ | 2,050,000 | | | $ | 4,000 | | | $ | 4,900,118 | | | 2021 | | $ | 800,000 | | | $ | 1,799,979 | | | $ | 1,236,267 | | | $ | 3,700 | | | $ | 3,839,946 | |
| | | | | | | | | | | | | | | | | | | | | | | Elaine D. Marion – Chief Financial Officer | 2023 | | $ | 495,750 | | | $ | 1,349,994 | | | $ | 681,690 | | | $ | 51,452 | | | $ | 2,578,886 | | | 2022 | | $ | 465,385 | | | $ | 1,199,923 | | | $ | 1,100,000 | | | $ | 4,000 | | | $ | 2,769,308 | | | 2021 | | $ | 450,000 | | | $ | 1,049,958 | | | $ | 618,133 | | | $ | 3,700 | | | $ | 2,121,791 | |
| | | | | | | | | | | | | | | | | | | | | | | Darren S. Raiguel – Chief Operating Officer | 2023 | | $ | 495,750 | | | $ | 1,349,994 | | | $ | 681,690 | | | $ | 58,096 | | | $ | 2,585,530 | | | 2022 | | $ | 465,385 | | | $ | 1,199,923 | | | $ | 1,100,000 | | | $ | 4,000 | | | $ | 2,769,308 | | | 2021 | | $ | 450,000 | | | $ | 1,049,958 | | | $ | 618,133 | | | $ | 3,700 | | | $ | 2,121,791 | |
| (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 13 of our financial statements in our 2023 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, as disclosed in Annual Cash Incentive Awards above in the last table under the “FY 2023 Annual Incentive Cash Payment Earned” column, for the fiscal years ended March 31, 2023, and 2022. For the fiscal years ended March 31, 2023 and 2022, the amount also includes cash payments earned under our 2012 Employee LTIP, which were earned over a three-year performance period, as disclosed in Long-Term Incentive Program above in the last table under the “Long-Term Cash Payment Earned Performance Period April 1, 2020, to March 31, 2023” column. Both the annual cash award and the long-term cash award payments were received after the conclusion of the fiscal year in which they were earned. A detailed description of the fiscal year 2023 payments can be found in the CD&A. |
| (3) | The “All Other Compensation” includes imputed income relating to group life insurance, and a company match to our 401(k) plan, both of which are available to all employees on the same terms, as well as a gross-up of costs relating to their and their families’ attendance at the Company’s sales meeting for high-perfomers, which was available for all attendees at the meeting. In addition, “All Other Compensation” includes professional coaching services provided to Mr. Raiguel (with a value of $34,635) and to Ms. Marion (with a value of $34,000). All of our NEOs are entitled to an annual executive physical. For health privacy reasons, each NEO has been attributed a cost of $3,750, regardless of whether such benefit was used. |
From time to time, Mr. Raiguel attends events hosted by our vendor business partners. On one such trip, the vendor partner paid the expenses for Mr. Raiguel’s spouse to accompany him, with no related expense to the Company, and therefore no related amount is included in “All Other Compensation.” | 2022 Grants of Plan-Based Awards Table | |
The following table provides information regarding the grants of plan-based awards during fiscal year 2023 under the 2018 CIP and the Company’s 2021 Employee LTIP. | | | | | Estimated
Possible Payouts
Under Non-Equity
Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of | | | All Other Option Awards: Number of Securities | | | Exercise or Base Price of | | | Grant Date Fair Value of Stock | | | Name | | Grant Date | | Threshold | | | Target | | | Maximum | | | Stock or Units
(#)(3) | | | Underlying Options
(#) | | | Option Awards
($/Sh) | | | and Option Awards
(4) | | | Mark P. Marron | | 6/8/2022 | | | | | | | | | | | | 37,587 | | | | - | | | | - | | | $ | 2,199,967 | | | | (1 | ) | 6/6/2022 | | $ | 92,500 | | | $ | 925,000 | | | $ | 1,850,000 | | | | | | | | | | | | | | | | | | | | (2 | ) | 6/6/2022 | | $ | 68,750 | | | $ | 275,000 | | | $ | 412,500 | | | | | | | | | | | | | | | | | | | Elaine D. Marion | | 6/8/2022 | | | | | | | | | | | | | | | 23,065 | | | | - | | | | - | | | $ | 1,349,994 | | | | (1 | ) | 6/6/2022 | | $ | 50,000 | | | $ | 500,000 | | | $ | 1,000,000 | | | | | | | | | | | | | | | | | | | | (2 | ) | 6/6/2022 | | $ | 37,500 | | | $ | 150,000 | | | $ | 225,000 | | | | | | | | | | | | | | | | | | | Darren S. Raiguel | | 6/8/2022 | | | | | | | | | | | | | | | 23,065 | | | | - | | | | - | | | $ | 1,349,994 | | | | (1 | ) | 6/6/2022 | | $ | 50,000 | | | $ | 500,000 | | | $ | 1,000,000 | | | | | | | | | | | | | | | | | | | | (2 | ) | 6/6/2022 | | $ | 37,500 | | | $ | 150,000 | | | $ | 225,000 | | | | | | | | | | | | | | | | | |
| (1) | These amounts reflect award opportunities under the 2018 CIP and are described more fully in the CD&A under the heading “Annual Cash Incentive Awards” and subheading “Cash Incentive Awards for Fiscal Year 2023.” 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 year 2022 (and paid in fiscal year 2023) are disclosed in the Non-Equity Incentive Plan Compensation column of the 2023 Summary Compensation Table. |
| (2) | These amounts reflect non-equity award opportunities under our 2021 Employee LTIP and are more fully described in this CD&A under the heading “Long-Term Incentive Program.” Threshold amounts represent minimal level of achievement of the lowest weighted financial performance metric, and maximum amounts represent 150% of target values. These awards are earned on the third anniversary of the grant date to the extent the Company achieves a performance goal relating to growth in operating income. |
| (3) | These amounts represent the number of shares of restricted stock granted to the NEOs under our 2021 Employee LTIP. Equity awards granted to the executive officers and reflected in the 2023 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 2021 Employee LTIP, award agreements, and/or employment agreements. |
| (4) | These amounts reflect the grant date fair value of the restricted stock granted in fiscal year 2023. This represents the aggregate amount that we expect 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 13 of our 2023 Annual Report. |
Outstanding Equity Awards at 2023 Fiscal Year End
The following table provides information concerning the outstanding equity-based awards for our NEOs as of March 31, 2023. | | | Stock Awards | | | | | Number of Shares or Units of Stock That Have | | | Market Value of Shares or Units of Stock That Have | | | Name | | Not Vested (1) | | | Not Vested (2) | | | Mark P. Marron | | | 83,211 | | | $ | 4,080,667 | | | Elaine D. Marion | | | 50,159 | | | $ | 2,459,797 | | | Darren S. Raiguel | | | 50,159 | | | $ | 2,459,797 | |
| (1) | The following table shows the dates on which the outstanding stock awards as of March 31, 2023, will vest, subject to continued employment through the vest date, or acceleration in limited circumstances as set forth in the 2021 Employee LTIP, award agreements, and/or employment agreements. |
| Vest Date | Mark P. Marron | Elaine D. Marion | Darren S. Raiguel | | 6/8/23 | 12,529 | 7,688 | 7,688 | | 6/15/23 | 14,468 | 8,680 | 8,680 | | 6/16/23 | 16,688 | 9,734 | 9,734 | | 6/8/24 | 12,529 | 7,688 | 7,688 | | 6/15/24 | 14,468 | 8,680 | 8,680 | | 6/8/25 | 12,529 | 7,689 | 7,689 |
| (2) | We calculated market value by multiplying the closing price of our common stock ($49.04) on the last business day of our fiscal year, March 31, 2023, by the number of shares in the first column. |
Fiscal Year 2023 Options Exercised and Stock Vested
The following table sets forth information with respect to the shares of Company common stock acquired by our NEOs through vesting of restricted stock during our 2023 fiscal year. There were no stock options outstanding during fiscal year 2023.
| | Stock Awards | | | Name | | Number of Shares
Acquired on Vesting (#) | | | Value
Realized on Vesting (1) | | | Mark P. Marron | | | 47,268 | | | $ | 2,672,095 | | | Elaine D. Marion | | | 27,622 | | | $ | 1,561,113 | | | Darren S. Raiguel | | | 27,622 | | | $ | 1,561,113 | |
| (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, the restricted shares were net-share settled such that the Company withheld shares with value equivalent to the NEOs’ 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 as follows: Mr. Marron, 28,579; Ms. Marion, 17,825; and Mr. Raiguel, 17,825. |
Employment Agreements, Severance, and Change in Control Provisions
Our incentive plans for and employment agreements with our NEOs reflect our compensation philosophy. All of our employment agreements with our NEOs contain “clawback” provisions as required by Dodd-Frank and Sarbanes-Oxley. In all cases, our NEOs’ 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 2021 Employee LTIP and standard award agreement, unvested stock issued to any awardemployee will vest upon a “Change in Control,” as defined in the matter2021 Employee LTIP.
| • | Mr. Marron’s currently effective agreement was amended and restated on December 12, 2017, and thereafter amended. Pursuant to such agreement (and the Compensation Committee’s and Board’s discretion to raise base salary), Mr. Marron’s current base salary is $925,000. |
Mr. Marron’s agreement had an initial 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, 2024. 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 2018 CIP, to the extent it shall deem desirable to carry the Employee Plan into effect, and make any other determination and take any other action that the Committee deems necessary or desirable forPerformance Goals have been met, with the administrationpayment to be made after the end of the Employee Plan.
Eligibility
In general, any employee of ePlus and its consolidated subsidiaries is eligible to be designated as a participant. As of June 30, 2008, wefiscal year at the time the payment would have been made had approximately 687 employees.
Stock Subjectthere been no termination. Additionally, the Company would also pay Mr. Marron an amount in cash equal to the Plan
A maximumcost of 1,000,000 shares of common stock are available for issuance underpremiums the Employee Plan, subjectCompany paid prior to adjustment as provided under the terms of the Employee Plan. Shares issuable under the Employee Plan may consist of authorized but unissued shares or shares held in our treasury. If any shares covered by an award granted under the Employee Plan are forfeited, or if an award otherwise terminates without the delivery of shares or of other consideration, then the shares covered by such award, or the number of shares otherwise counted against the aggregate number of shares available under the Employee Plan with respect to such award, to the extent of any such forfeiture or termination, shall again be available for granting awards under the Employee Plan. No more than 300,000 shares shall be available as incentive stock options, and no more than 500,000 may be available for awards granted in any form other than options or stock appreciation rights. In addition, the Employee Plan includes an annual per-person limitation of 50,000 options and stock appreciation rights, and also a 50,000 annual limit on restricted stock, restricted stock units, performance awards and other stock-based awards.
Section 409A
Except to the extent specifically provided otherwise by the Committee, awards are intended to satisfy the requirements of Section 409A of the Internal Revenue Code, so as to avoid the imposition of any additional taxes or penalties. Notwithstanding any provision in the Employee Plan to the contrary, with respect to any award that is subject to Section 409A, distributions on account of a separation from service may not be made to a “specified employee,” as defined by Section 409A, before six months after the date of separation from service, or, if earlier, the date of death of the employee.
Amendments to and Termination of the Plan
The Board of Directors may amend, alter, suspend, discontinue or terminate the Employee Plan, in whole or in part, provided that no material amendment may be made without stockholder approval if said approval is required by applicable law, rule or regulation. No amendment, alteration, suspension or discontinuation may be made without approval of stockholders if the action would increase the total number of shares available under the Employee Plan or would result in a repricing, as described below. No amendment of the Employee Plan may materially adversely affect any right of any participant with respect to any outstanding award without the participant’s written consent. If not earlier terminated by the Board of Directors, the Employee Plan will automatically terminate on [September 15, 2018]. No awards may be granted under the Employee Plan after it is terminated, but any previously granted awards will remain in effect until they expire.
Prohibition of Repricing
Except in the event of a stock dividend, recapitalization, stock split, merger, or other similar events defined in the Employee Plan, the Board may not, without stockholder approval, take any action that would: permit options, SARs, or other stock-based awards encompassing rights to purchase shares to be repriced, replaced, or regranted through cancellation, or by lowering the exercise price of a previously granted option or the grant price of a previously granted SAR, or the purchase price of a previously granted other stock-based award.
Terms of Options
The Committee may grant non-qualified stock options, incentive stock options, or a combination of the two. Each award will be evidenced by an agreement, which may have additional conditions or restrictions so long as such provisions are not inconsistent with the Employee Plan.
Exercise Price. The exercise price shall no be less than 100% of the fair market value (as defined in the Employee Plan) of the Company’s common stock on the date of the grant.
Option Term. The term of each Option shall not exceed ten years from the date of the grant.
Vesting. Unless the award agreement provides otherwise, and subject to the Committee’s authority to accelerate vesting, waive or amend terms, or otherwise modify an award, options shall become vested as follows: 20% of the shares shall first become exercisable on the one-year anniversary of the date of grant, 30% of the shares shall first become exercisable on the two-year anniversary of the date of grant, and the remainder shall first become exercisable on the three-year anniversary of the date of grant. All options shall become immediately exercisable upon a change in control.
Payment of Exercise Price. The exercise price shall be paid in full when an option is exercised, or, at the Committee’s discretion, may be paid pursuant to a broker-assisted cashless exercise, delivery of other shares of common stock of ePlus that have been held for at least six months, or a combination of the above methods.
Termination of Employment. Options become immediately exercisable upon the death or disability of a participant, and must be exercised, if at all, within one year after said death or disability, but in no event after the date the options would otherwise lapse. Upon retirement, all options that are not exercisable shall be forfeited, and if exercisable, the options must be exercised, if at all, within one year of retirement but in no event after the date the options would otherwise lapse. Options that are not exercisable shall lapse upon a termination of employment for cause. Upon termination of employment for any reason other than death, disability, retirement or cause, all options that are not exercisable as of the date of termination shall be forfeited,for Mr. Marron and if exercisable, must be exercised, if at all, within 90 days of termination of employment.his dependents’ qualified coverage under the Company’s medical, prescription, dental, and other health benefits, for eighteen months.
Restrictions on Transfer. No option shall be assignable, alienable, saleable or transferable by a participant other than by will or the laws of descent and distribution. However, the Committee may permit a participant to designate a beneficiary to exercise the rights of the participant upon the participant’s death.
Incentive Stock Options
Terms. The terms of incentive stock options (“ISOs”) shall be designed to comply with Section 422 of the Internal Revenue Code. In the event any provisions of termination without cause, or by Mr. Marron for good reason, he is also entitled to either, at the Employee Plan would contraveneCompany’s election, the Code, such Employee Plan provision shall not apply to ISOs. In additionacceleration of unvested restricted stock, or cash in an amount equal to the above conditions regarding stock options, the following also apply to ISOs:
Amount of Award. The aggregate fair market value of stock (determined as of the time of grant) with respect to which such ISOs are exercisable for the first time by the participant during any calendar year may not exceed $100,000. To the extent an option initially designated as an ISO exceeds this value limit or otherwise fails to satisfy the requirements applicable to ISOs, it shall be deemed a non-qualified stock option.
Timing of Exercise. If the Committee exercises its discretion to permit an ISO to be exercised more than 90 days after the participant’s termination of employment, and the exercise occurs more than 90 days after the participant ceases being an employee (or more than 12 months in the event of the participant’s death or disability), such ISO shall be treated for all purposes as a non-qualified stock option.
Ten Percent Owners. Any ISO granted to any individual who, at the date of grant, owns stock possessing more than ten percent of the total combined voting power of all classes of the Company’s stock shall have an exercise price per share of at least 110% of the fair market value of the stock at the date of grant, and the ISO shall expire no later than five years after the date of grant.
Stock Appreciation Rights
The Committee may grant Stock Appreciation Rights (“SARs”). The grant price shall not be less than 100% of the fair market value of the stock on the date of grant, except that iftermination.
The table below summarizes the potential payments and benefits to Mr. Marron upon the occurrence of certain triggering events. The table assumes a SAR is granted in tandem with an option, the grant price of the SAR shall not be less than the exercise price of the option. As determined by the Committee, the payment upon exercise may be paid in cash, shares to be valued at their fair market value on thehypothetical effective date of exercise, by any other modetermination of payment deemed appropriate by the Committee or by any combination thereof.March 31, 2023. The term of each SAR shalltable does not exceed ten years from the date of grant.
Restricted Stock and Restricted Stock Units
Restricted stock and restricted stock units (“RSUs”) may be awarded under the Employee Planinclude accrued, unused vacation time, which is paid to any employee selected by the Compensation Committee. Generally, the Compensation Committee has the discretion to fix the amount, terms, conditions and restrictions applicable to restricted stock awards. Any restricted stock or RSUs granted may be evidenced as the Committee deems appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of shares of restricted stock granted under the Employee Plan, such certificate shall be registered in the name of the participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such restricted stock. Unless otherwise determined by the Committee, all shares of restricted stock and RSUs still subject to restriction shall be forfeited and reacquired by the Companyemployees upon termination of employment, pursuant to ePlus’ policies.
| Triggering Event | | Cash Severance
(4) | | | Cash Incentive | | | Cash Long-Term Incentive Award
(5) | | | Equity-Based Compensation Awards (6) | | | Total | | Termination Without Cause, or
for Good Reason (1) | | $ | 1,432,509 | | | $ | 983,627 | | | $ | 712,500 | | | $ | 4,080,667 | | | $ | 7,209,303 | | | Change in Control (2) | | $ | - | | | $ | - | | | $ | - | | | $ | 4,080,667 | | | $ | 4,080,667 | | | Disability (3) | | $ | 1,432,509 | | | $ | 983,627 | | | $ | 712,500 | | | $ | 4,080,667 | | | $ | 7,209,303 | | | Death | | $ | - | | | $ | - | | | $ | 712,500 | | | $ | 4,080,667 | | | $ | 4,793,167 | |
| (1) | “Termination Without Cause” and termination “for Good Reason” are defined terms in Mr. Marron’s employment agreement. |
| (2) | This row assumes no termination accompanies the change in control. In the event of a termination in connection with the change in control, without Cause or for Good Reason (as defined in Mr. Marron’s employment agreement), see “Termination Without Cause, or for Good Reason” above. |
| (3) | In the event of disability, Termination without Cause or by Mr. Marron for Good Reason, all as defined in Mr. Marron’s employment agreement, Mr. Marron is entitled to a pro-rated amount of the payment under our 2018 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 reflects the amount earned during the fiscal year ended March 31, 2023, and paid in the following fiscal year. |
| (4) | As provided in Mr. Marron’s employment agreement, this column includes an amount equal to the cost of premiums 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 eighteen months, which amount would be paid in cash as opposed to providing continued coverage. |
| (5) | Mr. Marron has Cash Long-Term Incentive Awards with a three-year performance period, consistent with our fiscal year. The above table reflects the amount actually earned for the Incentive Award for which the performance period ended on March 31, 2023. The award agreements for the performance period ending March 31, 2024 and March 31, 2025 provide that, in the event Mr. Marron’s employment is terminated due to death or disability as defined in the applicable Employee Long-Term Incentive Plan, or termination without cause or for good reason as defined in any applicable employment agreement, the Company shall pay to Mr. Marron a pro-rated amount based on achievement of targets modified in the agreements. |
| (6) | Pursuant to the 2021 Employee LTIP, and our standard restricted stock award agreements, upon death or a change in control, as defined by the 2021 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 ($49.04) on the last business day of our fiscal year, March 31, 2023. |
Ms. Marion’s employment agreement was amended and restated on December 12, 2017. Pursuant to such agreement (and the Compensation Committee’s and Board’s discretion to raise base salary), Ms. Marion’s current base salary is $500,000. Ms. Marion’s agreement had an initial 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, 2024. In the event of disability, termination without cause, or termination for anygood 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 2018 CIP. Additionally, the Company would 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 than deathhealth benefits, for eighteen months. In the event of termination without cause or disability. Any conditions or restrictions onby Ms. Marion for good reason, she is also entitled to either, at the Company’s election, the acceleration of unvested restricted stock, shall lapse upon a change in control.
Performance Awards
The Employee Plan authorizes the Committee to grant Performance Awards, which include arrangements under which the grant, issuance, retention, vesting and/or transferability of any award is subject to performance criteria and additional terms or conditions as designated by the Committee. A performance award may be payable in cash shares of common stock (including restricted stock), other securities or other awards.
Dividend Equivalents
The Employee Plan authorizes the Committee to grant participants awards under which the holders thereof are entitled to receive payments equivalent to dividends or interest, with respect to a number of shares determined by the Committee, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional shares or otherwise reinvested.
Other Stock-Based Awards
The Employee Plan authorizes the Committee to grant participants other awards that are denominated or payable in shares, as the Committee deems consistent with the Employee Plan and as comply with applicable law. The awards shall be granted for no cash consideration, or for such minimal cash consideration as may be required by applicable law. Payment of the award may be made in cash, shares, rights in or to shares issuable under the award, other securities, or other forms as determined by the Committee, or in any combination thereof. The Committee may establish rules and procedures relating to the awards. Except as provided by the Committee, the award shall not be assignable, alienable, saleable, or transferable other than by will or the laws of descent and distribution, although the Committee may permit a participant to designate a beneficiary to exercise the rights of the participant upon the death of the participant.
Summary of Federal Income Tax Consequences of Options and Stock Appreciation Rights
The following is a brief summary of the principal United States Federal income tax consequences of stock options and stock appreciation rights under the Employee Plan, under current United States Federal income tax laws. This summary is not intended to constitute tax advice and is not intended to be exhaustive and, among other things, does not describe state, local or foreign tax consequences.
Nonqualified Stock Options. A participant will not recognize any income at the time a nonqualified stock option or stock appreciation right is granted, nor will we be entitled to a deduction at that time. When a nonqualified stock option or stock appreciation right is exercised, the participant will recognize ordinary income in an amount equal to the excess of the fair market value of the shares to which the option exercise pertainsstock on the date of exercise over the exercise price (or, for a stock appreciation right, the cash or value of shares received on exercise). Payroll taxes are required to be withheld from the participant on the amount of ordinary income recognized by the participant. We generally will be entitled to a tax deduction with respect to a nonqualified stock option or stock appreciation right at the same time and in the same amount as the participant recognizes income. The participant’s tax basis in any shares acquired by exercise of a nonqualified stock option (or received on exercise of a stock appreciation right) will be equal to the exercise price paid plus the amount of ordinary income recognized.termination.
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, 2023. The table does not include accrued, unused vacation time, which is paid to all employees upon termination of employment, pursuant to ePlus’ policies.
| Triggering Event | | Cash Severance
(4) | | | Cash Incentive | | | Cash Long-Term Incentive Award (5) | | | Equity-Based Compensation Awards (6) | | | Total | | Termination Without Cause, or
for Good Reason (1) | | $ | 542,636 | | | $ | 531,690 | | | $ | 375,000 | | | $ | 2,459,797 | | | $ | 3,909,123 | | | Change in Control (2) | | $ | - | | | $ | - | | | $ | - | | | $ | 2,459,797 | | | $ | 2,459,797 | | | Disability (3) | | $ | 542,636 | | | $ | 531,690 | | | $ | 375,000 | | | $ | 2,459,797 | | | $ | 3,909,123 | | | Death | | $ | - | | | $ | - | | | $ | 375,000 | | | $ | 2,459,797 | | | $ | 2,834,797 | |
| (1) | “Termination Without Cause” and termination “for Good Reason” are defined terms in Ms. Marion’s employment agreement. |
| (2) | This row assumes no termination accompanies the change in control. In the event of a termination in connection with the change in control, without Cause or for Good Reason (as defined in Ms. Marion’s employment agreement), see “Termination Without Cause, or for Good Reason”, above. |
| (3) | In the event of disability, termination without cause or by Ms. Marion for good reason, all as defined in Ms. Marion’s employment agreement, Ms. Marion is entitled to a pro-rated amount of the payment under our 2018 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 reflects the amount earned during the fiscal year ended March 31, 2023, and paid in the following fiscal year. |
| (4) | As provided in Ms. Marion’s employment agreement, this column includes an amount equal to the cost of premiums 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 eighteen months, which amount would be paid in cash as opposed to providing continued coverage. |
| (5) | Ms. Marion has Cash Long-Term Incentive Awards with a three-year performance period, consistent with our fiscal year. The above table reflects the amount actually earned for the Incentive Award for which the performance period ended on March 31, 2023. The award agreements for the performance period ending March 31, 2024, and March 31, 2025 provide that, in the event Ms. Marion’s employment is terminated due to death or disability as defined in the applicable Employee Long-Term Incentive Plan, or termination without cause or for good reason as defined in any applicable employment agreement, the Company shall pay to Ms. Marion a pro-rated amount based on achievement of targets modified in the agreements. |
| (6) | Pursuant to the 2021 Employee LTIP, and our standard restricted stock award agreements, upon death or a change in control, as defined by the 2021 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 ($49.04) on the last business day of our fiscal year, March 31, 2023. |
Incentive Stock Options. A participant will not recognize any income atChief Operating Officer
Mr. Raiguel’s employment agreement was effective as of May 7, 2018. Pursuant to such agreement (and the timeCompensation Committee’s and Board’s discretion to raise base salary), Mr. Raiguel’s current base salary is $525,000 (raised from $500,000 effective April 1, 2023). Mr. Raiguel’s agreement had an ISO is granted. Nor will a participant recognize any income at the time an ISO is exercised. However, the excess of the fair market value of the shares on theinitial termination date of exercise overJuly 31, 2019; however, the exercise price paid will be a preference item that could create an alternate minimum tax liability. If a participant disposes ofagreement contains automatic one-year successive renewal periods unless either party terminates the shares acquired on exercise of an ISO after the later of two years after the date of grant of the ISO or one year after the date of exercise of the ISO (the “holding period”), the gain (i.e., the excess of the proceeds received on sale over the exercise price paid), if any, will be long-term capital gain eligible for favorable tax rates. If the participant disposes of the sharesagreement 60 days prior to the end of the holding period,then-current term. As no notice of termination was provided, the dispositionexpiration date of his agreement is a “disqualifying disposition”, andnow July 31, 2024. In the participant will recognize ordinary incomeevent of disability, termination without cause, or termination for good reason (all as defined in the yearagreement), Mr. Raiguel is entitled to twelve months of his base salary, in addition to a pro-rated amount of the disqualifying dispositionpayment under our 2018 CIP. Additionally, the Company would pay to Mr. Raiguel an amount in cash equal to the excesscost of premiums the lesserCompany paid prior to the date of (i)termination for Mr. Raiguel and his dependents’ qualified coverage under the fair marketCompany’s medical, prescription, dental, and other health benefits, for eighteen months. In the event of termination without cause or by Mr. Raiguel for good reason, he is also entitled to either, at the Company’s election, the acceleration of unvested restricted stock, or cash in an amount equal to the value of the sharesstock on the date of exercise or (ii)termination. The table below summarizes the amount received forpotential payments and benefits to Mr. Raiguel upon the shares, overoccurrence of certain triggering events. The table assumes a hypothetical effective date of termination of March 31, 2023. The table does not include accrued, unused vacation time, which is paid to all employees upon termination of employment, pursuant to ePlus’ policies. | Triggering Event | | Cash Severance
(4) | | | Cash Incentive | | | Cash Long-Term Incentive Award (5) | | | Equity-Based Compensation Awards (6) | | | Total | | Termination Without Cause, or
for Good Reason (1) | | $ | 545,676 | | | $ | 531,690 | | | $ | 375,000 | | | $ | 2,459,797 | | | $ | 3,912,163 | | | Change in Control (2) | | $ | - | | | $ | - | | | $ | - | | | $ | 2,459,797 | | | $ | 2,459,797 | | | Disability (3) | | $ | 545,676 | | | $ | 531,690 | | | $ | 375,000 | | | $ | 2,459,797 | | | $ | 3,912,163 | | | Death | | $ | - | | | $ | - | | | $ | 375,000 | | | $ | 2,459,797 | | | $ | 2,834,797 | |
| (1) | “Termination Without Cause” and termination “for Good Reason” are defined terms in Mr. Raiguel’s employment agreement. |
| (2) | This row assumes no termination accompanies the change in control. In the event of a termination in connection with the change in control, without Cause or for Good Reason (as defined in Mr. Raiguel’s employment agreement), see “Termination Without Cause, or for Good Reason,” above. |
| (3) | In the event of disability, termination without cause or by Mr. Raiguel for good reason, all as defined in Mr. Raiguel’s employment agreement, Mr. Raiguel is entitled to a pro-rated amount of the payment under our 2018 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 reflects the amount earned during the fiscal year ended March 31, 2023, and paid in the following fiscal year. |
| (4) | As provided in Mr. Raiguel’s employment agreement, this column includes an amount equal to the cost of premiums 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 eighteen months, which amount would be paid in cash as opposed to providing continued coverage. |
| (5) | Mr. Raiguel has Cash Long-Term Incentive Awards with a three-year performance period, consistent with our fiscal year. The above table reflects the amount actually earned for the Incentive Award whose performance period ended on March 31, 2023. The award agreements for the performance period ending March 31, 2024, and March 31, 2025 provide that, in the event Mr. Raiguel’s employment is terminated due to death or disability as defined in the applicable Employee Long-Term Incentive Plan, or termination without cause or for good reason as defined in any applicable employment agreement, the Company shall pay to Mr. Raiguel a pro-rated amount based on achievement of targets modified in the agreements. |
| (6) | Pursuant to the 2021 Employee LTIP, and our standard restricted stock award agreements, upon death or a change in control, as defined by the 2021 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 ($49.04) on the last business day of our fiscal year, March 31, 2023. |
2023 Pay Ratio Disclosure
Pursuant to Item 402(u) of Regulation S-K, the exercise price paid. The balanceCompany is required to provide annual disclosure of the gain or loss, if any, will be long-term or short-term capital gain or loss depending on how long the shares were held by the participant prior to disposition.
We generally are not entitled to a deduction as a resultratio of the grant or exercisemedian of the total annual compensation of all employees of the Company (other than Mr. Marron, the Company’s CEO) to the total annual compensation of the principal executive officer, which for ePlus is our CEO, Mr. Marron. The purpose of the required disclosure is to provide a measure of the equitability of pay within the Company. ePlus believes its compensation philosophy and process yield an ISO. If a participant recognizes ordinary incomeequitable result. The below table shows our median employee annual compensation and the total compensation of Mr. Marron as a result of a disqualifying disposition, we will be entitled to a deduction at the same time andreflected in the same amount as the participant recognizes ordinary income.
Code Section 162(m). With certain exceptions, Section 162(m) of the Code limits deduction for compensation in excess of $1,000,000 paid to certain “covered employees” whose compensation is reported in the compensation table included in the Company’s annual proxy statements. However, compensation paid to such employees will not be subject to such deduction limitation if it is considered “qualified performance-based compensation” (within the meaning of Section 162(m) of the Code, which, among other requirements, requires stockholder approval of the performance measures available under a plan). As previously noted, notwithstanding the adoption of the Employee Plan by stockholders, we reserve the right to pay our employees, including recipients of awards under the Employee Plan, amounts which may or may not be deductible under Section 162(m) or other provisions of the Code.
Your Board unanimously recommends a vote FOR approval of the 2008 Employee Long-Term Incentive Plan.
Proposal 4 - Approval of Amended and Restated Certificate of Incorporation
(Proposal # 4 on Proxy Card)
The Board of Directors proposes to amend and restate our Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”) to provide for the annual election of directors. Currently, the Board is divided into three classes, with directors elected to staggered three-year terms. Approximately one-third of our directors stand for election each year. If the proposed amendment to the Certificate of Incorporation is approved, directors will be elected to one-year terms of office starting at the 2009 Annual Meeting of Shareholders. The Amended and Restated Certificate of Incorporation also makes less substantive revisions, such as updating the name and address of our registered agent .
This proposal results from an ongoing review of corporate governance matters by the Nominating and Corporate Governance Committee and the Board. In its review, the Committee and the Board considered the advantages of maintaining the classified Board structure in light of our current circumstances, including that a classified Board structure promotes Board continuity and stability, encourages a long-term perspective by company management, and reduces vulnerability to coercive takeover tactics. While the Committee and the Board continue to believe that these are important considerations, the Committee and the Board also considered potential advantages of declassification in light of our current circumstances, including the ability of stockholders to evaluate directors annually,Summary Compensation Table, as well as the maintenanceratio of best practicesthe two pay levels. This pay ratio is a reasonable estimate, calculated in corporate governancea manner consistent with the applicable SEC requirements.
Median Employee
Total Annual Compensation | Mr. Marron’s
Total Annual Compensation | Pay Ratio | | $120,758 | $4,422,225 | 36.6 to 1 |
In determining our median employee, we considered the full annual compensation of all individuals who were employed throughout the entire 2022 calendar year, and annualized compensation for employees who joined ePlus during 2022, with the following adjustments. Our employee population on December 31, 2022, after taking into consideration the adjustments permitted by SEC rules and described below, consisted of approximately 1,746 individuals. We did not include our 54 non-U.S.-based employees in the calculation, which was less than 5% of our total workforce, and consists of 23 employees in the United Kingdom, 29 employees in India, and two employees in Singapore. We selected our median employee from the list of the remaining employees. To identify our median employee, we calculated compensation as the sum of (i) base salary, (ii) commissions, if any, and (iii) equity that vested during the year, if any. Mr. Marron’s compensation was calculated using the same methodology that the Company used to calculate the CEO’s annual total compensation for the 2023 Summary Compensation Table described above. Once we identified our median employee, we calculated his or her fiscal year 2023 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.
As required by Section 953(a) of Dodd-Frank, and Item 402(v) of Regulation S-K, we are providing the following information reflecting the relationship between executive compensation actually paid by the Company.Company and the Company’s financial performance for each of the last three completed calendar years. In determining the compensation “actually paid” to our NEOs, we are required to make various adjustments to amounts that have been previously reported in the Summary Compensation Table in previous years, as the SEC’s valuation methods for this section differ from those required in the Summary Compensation Table. For further information concerning the Company’s pay for performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to the “Compensation Discussion and Analysis” provided elsewhere in this proxy statement. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the fiscal years shown.
The table below summarizes compensation values both reported in our 2023 Summary Compensation Table, as well as the adjusted values required in this section for the 2021, 2022 and 2023 fiscal years.
| | | | | | | | | | |
| | | Value of Initial Fixed $100 Investment Based On: | | |
| | |
| | Fiscal
Year | | Summary Compensation Table Total to PEO | | | Compensation Actually Paid to PEO | | | Average Summary Compensation Table Total for Non-PEO NEOs | | | Average Compensation Actually Paid to Non-PEO NEOs | | | Company TSR | | | Peer Group TSR | | | Net Income
($ thousands) | | | Operating Income ($ thousands) | | | | | (a) | | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | 2023 | | $ | 4,422,225 | | | $ | 3,767,495 | | | $ | 2,582,208 | | | $ | 2,185,745 | | | $ | 156.63 | | | $ | 187.37 | | | $ | 119,356 | | | $ | 166,162 | | | 2022 | | $ | 4,900,118 | | | $ | 5,466,517 | | | $ | 2,769,308 | | | $ | 3,119,485 | | | $ | 179.05 | | | $ | 197.49 | | | $ | 105,600 | | | $ | 147,316 | | | 2021 | | $ | 3,839,946 | | | $ | 5,480,397 | | | $ | 2,121,791 | | | $ | 3,072,398 | | | $ | 159.12 | | | $ | 192.68 | | | $ | 74,397 | | | $ | 106,335 | |
| (a) | Reflects compensation amounts reported in the “2023 Summary Compensation Table” for our President and Chief Executive Officer, Mr. Marron. |
| (b) | Compensation actually paid to our President and Chief Executive Officer for each period presented, as computed in accordance with SEC rules, does not reflect the actual amount of compensation earned or received during the applicable fiscal year. In accordance with SEC rules, these amounts differ from the total compensation reported in the “2023 Summary Compensation Table” for each fiscal year as shown below. The fair value of equity awards was determined using methodologies and assumption developed in a manner substantively consistent with those used to determine the grant date fair value of such awards in accordance with Codification Topic Compensation – Stock Compensation. |
| | | | | Fiscal 2023 | | | Fiscal 2022 | | | Fiscal 2021 | | | Summary Compensation Table Total | | $ | 4,422,225 | | | $ | 4,900,118 | | | $ | 3,839,946 | | | | - | | Grant Date Fair Value of Stock Awards Granted in Fiscal Year | | $ | (2,199,967 | ) | | $ | (1,999,964 | ) | | $ | (1,799,979 | ) | | | + | | Fair Value at Fiscal Year-End of Outstanding Unvested Stock Awards Granted in Fiscal Year | | $ | 1,843,266 | | | $ | 2,433,116 | | | $ | 2,494,089 | | | ± | | Change in Fair Value of Outstanding Unvested Stock Awards Granted in Prior Fiscal Years | | $ | (320,280 | ) | | $ | 308,818 | | | $ | 815,477 | | | ± | | Fair Value at Vesting of Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | | $ | - | | | $ | - | | | $ | - | | | ± | | Change in Fair Value as of Vesting Date of Stock Awards Granted in Prior Fiscal Years for Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | | $ | 22,251 | | | $ | (175,571 | ) | | $ | 130,865 | | | | - | | Fair Value as of Prior Fiscal Year-End of Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | | $ | - | | | $ | - | | | $ | - | | | | + | | Dividends Accrued During Fiscal Year | | $ | - | | | $ | - | | | $ | - | | | Compensation Actually Paid | | $ | 3,767,495 | | | $ | 5,466,517 | | | $ | 5,480,397 | |
| (c) | Reflects the average compensation amounts reported in the “2023 Summary Compensation Table” for our NEOs (excluding the President and Chief Executive Officer), which included the Chief Financial Officer, Ms. Marion, and the Chief Operating Officer, Mr. Raiguel, in each year presented. |
| (d) | Average compensation actually paid to our NEOs (excluding the President and Chief Executive Officer) for each period presented, as computed in accordance with SEC rules, does not reflect the actual amount of compensation earned or received during the applicable fiscal year. In accordance with SEC rules, these amounts differ from the average total compensation reported in the “2023 Summary Compensation Table” for each fiscal year as shown below. The fair value of equity awards was determined using methodologies and assumptions developed in a manner substantively consistent with those used to determine the grant date fair value of such awards in accordance with Codification Topic Compensation – Stock Compensation. |
| | | | | Fiscal 2023 | | | Fiscal 2022 | | | Fiscal 2021 | | | Summary Compensation Table Total | | $ | 2,582,208 | | | $ | 2,769,308 | | | $ | 2,121,791 | | | | - | | Grant Date Fair Value of Stock Awards Granted in Fiscal Year | | $ | (1,349,994 | ) | | $ | (1,199,923 | ) | | $ | (1,049,958 | ) | | | + | | Fair Value at Fiscal Year-End of Outstanding Unvested Stock Awards Granted in Fiscal Year | | $ | 1,131,108 | | | $ | 1,459,802 | | | $ | 1,454,844 | | | ± | | Change in Fair Value of Outstanding Unvested Stock Awards Granted in Prior Fiscal Years | | $ | (190,200 | ) | | $ | 178,938 | | | $ | 479,714 | | | ± | | Fair Value at Vesting of Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | | $ | - | | | $ | - | | | $ | - | | | ± | | Change in Fair Value as of Vesting Date of Stock Awards Granted in Prior Fiscal Years for Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | | $ | 12,624 | | | $ | (88,640 | ) | | $ | 66,007 | | | | - | | Fair Value as of Prior Fiscal Year-End of Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | | $ | - | | | $ | - | | | $ | - | | | | + | | Dividends Accrued During Fiscal Year | | $ | - | | | $ | - | | | $ | - | | | Compensation Actually Paid | | $ | 2,185,745 | | | $ | 3,119,485 | | | $ | 3,072,398 | |
| (e) | Reflects the total shareholder return (“TSR”) of a $100 investment in ePlus’ common stock. Cumulative TSR is calculated by dividing (a) the sum of (i) the cumulative amount of any dividends for the measurement period, assuming dividend reinvestment, and (ii) the difference between the Company’s stock price at the end and the beginning of the measurement period by (b) the Company’s stock price at the beginning of the measurement period. The beginning of the measurement period for each year in the table is April 1, 2020. Historical stock performance is not necessarily indicative of future stock performance. |
| (f) | Reflects the TSR of a $100 investment in the S&P 600 Small Cap Information Technology Group, which is used in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the applicable fiscal year. Historical stock performance is not necessarily indicative of future stock performance. |
| (g) | The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable fiscal year. |
| (h) | The “Company-Selected Measure” (as defined in Item 402(v) of Regulation S-K) is our operating income reflected in the Company’s audited financial statements for the applicable fiscal year. |
Pay Versus Performance Relationship Descriptions This general description
The charts below illustrate the relationship between the PEO and average Non-PEO Compensation Actually Paid (“CAP”) amounts and the S&P 600 Small Cap Information Technology Group (our “TSR Peer Group”)’s TSR during the periods ended March 31, 2021, 2022 and 2023. The chart below demonstrates the relationship between CAP amounts for our PEO and non-PEO executive officers and our net income. The chart below demonstrates the relationship between CAP amounts for our PEO and non-PEO executive officers and our operating income. Financial Performance Measures Below is an unranked list of the Amended and Restated Certificate of Incorporation is qualified in its entirety by referencemost important performance measures used to link executive compensation actually paid for the most recently completed fiscal year, as described above, to the full textCompany’s performance: EQUITY COMPENSATION PLAN INFORMATION The following table provides information as of March 31, 2023, regarding the Amended and Restated Certificatenumber of Incorporation, a copysecurities available for future issuance under our current equity compensation plans. Currently, there are no outstanding options, warrants, or rights under our prior or current equity compensation plans pursuant to which common stock may be issued. | | 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 | 3,060,672 | (1) | | Equity compensation plans not approved by security holders | - | n/a | - | | | Total | - | | 3,060,672 | |
| (1) | This number includes 198,720 shares reserved for issuance under the 2017 Non-Employee Director Long-Term Incentive Plan and available for future equity awards, and 2,861,952 shares reserved for issuance under the 2021 Employee Long Term Incentive Plan. |
This proposal will be approved, and the proposed Amended and Restated Certificate of Incorporation adopted, upon the affirmative vote of the holders of the majority of the outstanding shares entitled to vote. Abstentions and broker non-votes will have the same effect as an “Against” vote.
Your Board unanimously recommends a vote FOR approval of the Amended and Restated Certificate of Incorporation.
Proposal 5PROPOSAL 3 – Ratification of the appointmentSelection of Deloitte & Touche LLP as our independent auditorsIndependent Registered Public Accounting Firm for our fiscal year endingFiscal Year Ending March 31, 20092024
(Proposal # 5 on Proxy Card)
The Board and the Audit Committee recommend that the shareholders ratify the selection of the Board of Directors has selected Deloitte & Touche LLP (“Deloitte”) as the Company’s independent auditorregistered public accounting firm for the fiscal year ending March 31, 2009.2024. Deloitte has served asis currently the Company’s independent auditors since 1990, and is an independent registered public accounting firm.firm, and the Audit Committee approved the selection and retention of Deloitte for fiscal year 2024.
Neither the Company’s bylaws norCharter, Bylaws or other governing documents ornor the law require stockholdershareholder ratification of the appointmentselection of Deloitte as the Company’s independent auditors. However,registered accounting firm. As a matter of good corporate practice, however, the Company is submitting the appointmentselection of Deloitte to the stockholdersshareholders for ratification as a matter of good corporate practice.ratification. If the stockholdersshareholders fail to ratify the appointment,selection, the Audit Committee will reconsider whether or not to retain that firm.Deloitte. Even if the appointmentselection is ratified, the Audit Committee in itsretains discretion may direct the appointment ofto select a different independent auditorsregistered accounting firm at any time if they determinethe Audit Committee determines that such a change would be in the best interest of the Company and its stockholders.shareholders.
Representatives of Deloitte & Touche are expected to attend the annual meeting2023 Annual Meeting and will have the opportunity to make a statement if they desire and to respond to appropriate questions.
Auditor’s FeesTHE BOARD UNANIMOUSLY 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, 2024
The Audit Committee’s report regarding the Company’s audited consolidated financial statements for the fiscal yearsyear ended March 31, 20072023, is below. The information contained in this report shall not be deemed to be (i) soliciting material, (ii) filed with the SEC, (iii) subject to Regulations 14A or 14C of the Exchange Act, or (iv) subject to the liabilities of Section 18 of the Exchange Act. Further, this report shall not to be deemed 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, except to the extent the Company specifically incorporates this report by reference into such filing. 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 https://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 and in accordance with SEC rules and regulations, as currently in effect, 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 reviewed 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 and the SEC. 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 unfettered 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 review and discussions noted above, 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, 2008,2023. This report is provided by the following independent directors, who served on the Audit Committee during the 2023 fiscal year. Submitted by the Audit Committee Maureen F. Morrison, Chair John E. Callies C. Thomas Faulders, III 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, 2024. The following table presents the aggregate fees billedpaid to or accrued by ePlus relating to fees due to Deloitte were as follows:
| | | Fiscal 2008 | | | Fiscal 2007 | | | Audit Fees | | $ | 2,029,800 | | | $ | 2,160,000 | | | Audit Related Fees | | __ | | | __ | | | Tax Fees | | | | | | | | | | All Other Fees | | $ | 2,029,800 | | | $ | 2,160,000 | |
Audit-Related Fees. There were no audit-related fees billedfor the audit of the Company’s annual consolidated financial statements, and all other professional services rendered by Deloitte, & Touche LLP for the fiscal years ended March 31, 2008 or 2007.2023, and 2022:
| | | Fiscal 2023 | | | Fiscal 2022 | | | Audit Fees | | $ | 1,895,790 | | | $ | 1,707,448 | | | Audit‐Related Fees | | | 11,500 | | | | - | | | Tax Fees | | | - | | | | - | | | All Other Fees | | | 41,305 | | | | - | | | TOTAL FEES | | $ | 1,948,595 | | | $ | 1,707,448 | |
Tax Fees. There were no fees48
Audit Fees and Audit-Related Fees Deloitte billed by Deloitte & Touche LLP for tax-related services renderedexpenses for the fiscal yearsyear ended March 31, 2008 or 2007.
All Other Fees. There were no other fees billed by Deloitte & Touche LLP for professional services for the fiscal years ended March 31, 2008 or 2007.
There were no non-audit related services provided by Deloitte & Touche LLP during the last two fiscal years.2023. The Audit Committee pre-approves all auditing services (which may entail providing comfort letters in connection with securities underwriting), and all non-auditaudit-related services Deloitte provided to us, by Deloitte & Touche LLP, subject to a de minimis exception as set forth byin the SEC.SEC’s rules.
To be approved, Proposal 5, ratification of appointment of independent auditors, must receive a “For” vote from the majority of shares presentTax Fees
Deloitte provided no tax services, and entitled to vote either in person or by proxy. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will havethus billed no effect.
Your board unanimously recommends voting FOR ratification of Deloitte and Touche LLP as the Company’s independent auditortax fees for the fiscal year endingyears ended March 31, 2009.2023, and 2022.
Report of the Audit Committee
All Other Fees
The primary role of the Audit Committee, as more fully described in its Charter, isDeloitte provided other services related to assist the Board of Directors in its oversight of the Company’s corporate accounting and financial reporting process and to interact directly with and evaluate the performance of the Company’s independent auditors.
In the performance of its oversight function, the Audit Committee has reviewed the Company’s audited financial statementsother regulatory filings for the fiscal year ended March 31, 20082023. Deloitte provided no other services, and has met with both management and the Company’s independent auditors, Deloitte & Touche LLP, to discuss those financial statements. The Audit Committee has discussed with Deloitte & Touche LLP those matters related to the conduct of the audit that are required to be communicated by the independent auditors to the Audit Committee, including, as set forth in Statements of Auditing Standards No. 61, as amended (as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T), Deloitte & Touche LLP’s judgments as to the quality, not just the acceptability, of the Company’s accounting principles.
The Audit Committee met separately with the independent auditors, without management present, to discuss the results of their audits, their evaluations of the Company’s internal controls and the overall quality of the Company’s financial reporting.
The Audit Committee has received from Deloitte & Touche LLP the required written disclosures and letter regarding its independence from ePlus, as set forth by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees)(as adopted by the PCAOB in Rule 3600T), and has discussed with Deloitte & Touche LLP its independence. The Audit Committee has also reviewed and considered whether the provision ofthus billed no other non-audit services by Deloitte & Touche LLP is compatible with maintaining the auditors’ independence.
Based on these reviews and discussions, the Audit Committee recommended to the Board of Directors, and the Board of Directors approved, that the audited financial statements of ePlusfees, for the fiscal year ended March 31, 2008 be included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on July 3, 2008.
2022.
Terrence O’Donnell, Chairman
The foregoing Report is not soliciting material, is not deemed filed with the SEC and is not to be incorporated by reference in any filingaffirmative vote of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
ANNEX A – 2008 NON-EMPLOYEE DIRECTOR LONG-TERM INCENTIVE PLAN
Section 1. Establishment and Purposes of the Plan.
(a) Purpose. The purposes of this ePlus inc. 2008 Non-Employee Director Long-Term Incentive Plan (the “Plan”) are to attract, retain and compensate for service as members of the Board of Directors of ePlus inc. (the “Company”) highly qualified individuals who are not current employees of the Company and to enable them to increase their ownership in the Company’s Common Stock. The Plan will be beneficial to the Company and its stockholders since it will allow these Directors to have a greater personal financial stake in the Company through the ownership of Common Stock, in addition to underscoring their common interest with stockholders in increasing the long-term value of the Common Stock.
(b) Effective Date; Shareholder Approval. The Plan is effective [September 15], 2008, subject to the approval by the Company’s shareholders.
Section 2. Definitions.
As used herein, the following definitions shall apply:
“Affiliate” shall mean (i) any entity that, directly or through one or more intermediaries, is controlled by the Company and (ii) any entity in which the Company has a significant equity interest, as determined by the Committee.
“Applicable Laws” means the requirements relating to the administration of equity plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Restricted Shares are, or will be, granted under the Plan.
“Board” means the Board of Directors of the Company.
“Change in Control” means the occurrence of any of the following events with respect to the Company:
(i) the consummation of any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of Common Stock immediately prior to the merger own more than fifty percent (50%) of the outstanding common stock of the surviving corporation immediately after the merger; or
(ii) the consummation of any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, other than to a subsidiary or affiliate; or
(iii) any action pursuant to which any person (as such term is defined in Section 13(d) of the Exchange Act), corporation or other entity shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of shares of capital stock entitled to vote generally for the election of directors of the Company (“Voting Securities”) representing more than fifty (50%) percent of the combined voting power of the Company’s then outstanding Voting Securities (calculated as provided in Rule 13d-3(d) in the case of rights to acquire any such securities); or
(iv) the individuals (x) who, as of the Effective Date, constitute the Board (the “Original Directors”) and (y) who thereafter are elected to the Board and whose election, or nomination for election, to the Board was approved by a vote of a majority of the Original Directors then stillshares entitled to vote on Proposal 3, present in office (such Directors being called “Additional Original Directors”) and (z) who thereafter are electedperson or represented by proxy at the meeting, is required to ratify Proposal 3. Abstentions will have the same effect as voting “AGAINST” this proposal. If you do not instruct your broker, bank or other nominee how to vote on this proposal, your broker may vote your shares on Proposal 3, so there will be no broker non-votes.
PROPOSAL 4 – Amendment to the ePlus inc. Amended and Restated Certificate of Incorporation The Board has unanimously adopted a resolution to amend our Amended and whose electionRestated Certificate of Incorporation (our “Charter”), subject to shareholder approval, to provide for the elimination or nomination for election to the Board was approved by a votelimitation of a majoritymonetary liability of specified executive officers of the Original Directors and Additional Original Directors then still in office, ceaseCompany for any reason to constitute a majoritybreach of the membersduty of the Board; or
(v) the dissolution or liquidation of the Company.
“Code” means the Internal Revenue Code of 1986, as amended.
“Committee” means a committee designated by the Board and composed of not less than two “Non-Employee Directors” as defined in Rule 16b-3 under the Exchange Act, or any successor rule or definition adopted by the Securities and Exchange Commission.
“Common Stock” means the common stock, par value $0.01 per share, of the Company.
“Director” means a member of the Board.
“Disability” means any illness or other physical or mental condition of a Participant which renders the Participant incapable of performing his or her customary and usual dutiesour Charter currently provides for the Company to limit the monetary liability of directors in certain circumstances pursuant to, and consistent with, Section 102(b)(7) of the Delaware General Corporation Law (“DGCL”). Effective August 1, 2022, Section 102(b)(7) was amended to permit a Delaware corporation’s certificate of incorporation to include a provision eliminating or any medically determinable illness or other physical or mental condition resulting fromlimiting monetary liability for certain senior corporate officers for breach of fiduciary duty, subject to certain limitations.
If our shareholders approve this proposal at the 2023 Annual Meeting, the Company intends to file a bodily injury, disease, or mental disorder thatCertificate of Amendment to our Charter in the judgment of the Committee is permanent and continuous in nature. The Committee may require such medical or other evidenceform attached hereto as it deems necessaryAnnex A (the “Charter Amendment”) to judge the nature and permanency of the Participant’s condition.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Fair Market Value” means, as of any date, the value of Common Stock determined as follows:
(i) if the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq Global Market or The Nasdaq Capital Market of The Nasdaq Stock Market, the fair market value of a share of Common Stock shall be the closing sales price of a share of Common Stock as quoted on such exchange or system for such date (or the most recent trading day preceding such date if there were no trades on such date), as reported in The Wall Street Journal or such other source as the Committee deems reliable;
(ii) if the Common Stock is regularly quoted by a recognized securities dealer but is not listed in the manner contemplated by clause (i) above, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; or
(iii) if neither clause (i) above nor clause (ii) above applies, the fair market value of a share of Common Stock shall be determined in good faith by the Committee based on the reasonable application of a reasonable valuation method.
“Outside Director” means any Director who, on the date such person is to receive a grant of Restricted Shares hereunder is not a current employee of the Company or any of the Company’s subsidiaries.
“Participant” shall mean any Outside Director who holds a Restricted Stock Award granted or issued pursuant to the Plan.
“Plan” means this ePlus inc. 2008 Non-Employee Director Long-Term Incentive Plan.
“Restricted Shares” means Shares subject to a Restricted Stock Award.
“Restricted Stock Agreement” means any written agreement, contract, or other instrument or document, including an electronic communication, evidencing the terms and conditions of a Restricted Stock Award.
“Restricted Stock Award” means a grant of Restricted Shares pursuant to Section 7 of the Plan.
“Share” means a share of Common Stock, as adjusted in accordance with Section 9 of the Plan.
Section 3. Stock Subject to the Plan.
Subject toincorporate the provisions of Section 9 of102(b)(7). In accordance with the Plan,DGCL, however, our Board may elect to abandon the maximum aggregate number of Shares that may be issued as Restricted Shares under the Plan is two hundred fifty thousand (250,000) Shares. The Shares may be authorized, but unissued, or treasury Shares. Restricted Shares that have been transferred back to the Company shall be available for future grants of Restricted Shares under the Plan.
Section 4. Administration of the Plan.
(a) Administration. The Plan shall be administeredCharter Amendment without further action by the Committee. The Committee shall have the authority, in its discretion:
(i) to determine the Fair Market Value of Common Stock;
(ii) to approve forms of agreement for use under the Plan;
(iii) to determine the number of Shares that may be issued as Restricted Shares and the terms and conditions of such Restricted Shares;
(iv) to construe and interpret the terms of the Plan;
(v) to prescribe, amend and rescind rules and regulations relating to the Plan;
(vi) to allow Participants to satisfy withholding tax obligations by having the Company withhold from the shares of Common Stock to be issued upon vesting of Restricted Shares that number of Shares having a Fair Market Value equal to the amount required to be withheld, provided that withholding is calculatedshareholders at the minimum statutory withholding level. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All determinations to have Shares withheld for this purpose shall be made by the Committee in its discretion;
(vii) to instruct a corporate officer to execute on behalf of the Company any instrument required to effect the grant of a Restricted Stock Award granted by the Committee; and
(viii) to make all other determinations deemed necessary or advisable for administering the Plan.
(b) Effect of Committee’s Decision. The Committee’s decisions, determinations and interpretations shall be final and binding on all Participants and anyone else who may claim an interest in Restricted Shares.
Section 5. Eligibility.
The only persons who shall be eligible to receive Restricted Stock Awards under the Plan shall be persons who, on the date such Awards are granted, are Outside Directors.
Section 6. Term of the Plan.
No Restricted Stock Award may be granted under the Plan after [September 15], 2018.
Section 7. Grants of Restricted Stock Awards.
(a) Initial Grant. Each individual who first becomes an Outside Director on or after the date of the approval of this Plan by the stockholders of the Company shall, upon first qualifying as an Outside Director, automatically be granted a number of Restricted Shares, on the terms and conditions set forth in Section 8 below, having a Fair Market Value on the date of grant (determined without regard to the restrictions applicable thereto) equal to the product of the amount of cash compensation earned by an individual Outside Director during the twelve months immediately prior to his becoming an Outside Director multiplied by the quotient of the number of days until the next Annual Grant Date (as defined below) divided by 365; provided, however, that grants of Restricted Shares under this Plan shall not be made until a Form S-8 registration statement in respect of the Shares is filed with, and declared effective by, the Securities and Exchange Commission.
(b) Annual Grant. On September 25th of each year (the “Annual Grant Date”), beginning with September 25, 2008, or the next following business day if September 25th is not a business day, each Outside Director shall automatically be granted a number of Restricted Shares, on the terms and conditions set forth in Section 8 below, having a Fair Market Value on the date of grant (determined without regard to the restrictions applicable thereto) equal to the aggregate dollar amount of cash compensation earned by an individual Outside Director who served on the board during the Company’s entire fiscal year ended immediatelytime prior to the respective Annual Grant Date; provided, however, that grants of Restricted Shares under this Plan shall not be made until a Form S-8 registration statement in respecteffectiveness of the Shares is filed with, and declared effective by, the Securities and Exchange Commission.
(c) Special Grant. On the date which is two business days after the date that a Form S-8 registration statement in respectfiling of the Shares is filed with, and declared effective by, the Securities and Exchange Commission, each Outside Director who was serving as an Outside Director on the day prior to the date of the approval of this Plan by the stockholders of the Company shall automatically be granted a number of Restricted Shares, on the terms and conditions set forth in Section 8 below, having a Fair Market Value on the date of grant (determined without regard to the restrictions applicable thereto) equal to thirty-five thousand dollars ($35,000).
(d) Stock Fee Election. An Outside Director may make an election (a "Stock Fee Election") to receive Restricted Shares in lieu of all or any part of the cash compensation payable to him or her for service on the Board for a calendar year. Any Stock Fee Election and any change or revocation thereof shall be made by delivering written notice thereof to the Committee prior to the end of the calendar year preceding the calendar year of service for which it is to be effective. Such Stock Fee Election shall remain in effect for each subsequent calendar year of service unless changed. An Outside Director may not elect to change his or her Stock Fee Election for a calendar year after the last day of the calendar year preceding the calendar year of service for which the election is made. Any Restricted Stock that relates to a Stock Fee Election shall be treated as a Restricted Stock Award for purposes of this Plan. The number of shares shall be determined by dividing the cash compensation deferred for a calendar quarter of service by the Fair Market Value as of the first business day of the following calendar quarter, and each such first business day shall be considered the grant date of the Restricted Stock Award.
Section 8. Terms of Restricted Stock Awards.
Except as provided herein, Restricted Shares shall be subject to restrictions (“Restrictions”) prohibiting such Restricted Shares from being sold, transferred, assigned, pledged or otherwise encumbered or disposed of. The Restrictions with respect to each award of Restricted Shares shall lapse as to one-half of such Restricted Shares on each of the one-year and second-year anniversary date of the grant of such award; provided, however, that the Restrictions with respect to such Restricted Shares shall lapse immediately in the event that (i) the Participant is nominated for a new term as an Outside Director but is not elected by stockholders of the Company, or (ii) the Participant ceases to be a member of the Board due to death, disability or mandatory retirement (if any). Notwithstanding the foregoing, the Restrictions with respect to all of a Participant's Restricted Shares shall lapse immediately prior to a Change in Control provided that the Participant is a member of the Board immediately prior to such Change in Control.
The Company shall issue, in the name of each Participant to whom Restricted Shares have been granted, stock certificates (in tangible or electronic form) representing the total number of Restricted Shares granted to such Participant as soon as reasonably practicable after the grant. However, the Company or its transfer agent shall hold such certificates, properly endorsed for transfer, for the Participant’s benefit until such time as the Restriction Period applicable to such Restricted Shares lapses. Upon the expiration or termination of the Restricted Period, the restrictions applicable to the Restricted Shares shall lapse and a stock certificate for the number of Restricted Shares with respect to which the restrictions have lapsed shall be delivered, free of all such restrictions, to the Participant or his or her beneficiary or estate, as the case may be. Except as described in the above paragraph, in the event that a Participant ceases to be a member of the Board before the applicable Restriction Period has expired or under circumstances in which the Restriction Period does not otherwise lapse, the Restricted Shares granted to such Participant shall thereupon be forfeited and transferred back to the Company.
During the Restriction Period, a Participant shall have the right to vote his or her Restricted Shares and shall have the right to receive any cash dividends with respect to such Restricted Shares. All distributions, if any, received by a Participant with respect to Restricted Shares as a result of any stock split, stock distribution, combination of shares, or other similar transaction shall be subject to the same restrictions as are applicable to the Restricted Shares to which such distributions relate.
Section 9. Adjustments Upon Changes in Capitalization.
Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by each outstanding Restricted Stock Award, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Restricted Stock Awards have yet been granted or which have been returned to the Plan upon cancellation or expiration of a Restricted Stock Award, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to a Restricted Stock Award.
Section 10. Grant Agreement.
Each grant of a Restricted Stock Award under the Plan will be evidenced by a Restricted Stock Agreement. Such document will contain such provisions as the Committee may in its discretion deem advisable, provided that such provisions are not inconsistent with any of the provisions of the Plan.
Section 11. Charter Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder approval of any Plan amendment to the extent necessary to comply with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Committee, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan shall not affect the Committee’s ability to exercise the powers granted to it hereunder with respect to Restricted Shares granted under the Plan prior to the date of such termination.
Section 12. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to a Restricted Stock Award unless the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the issuance of Restricted Shares, the Company may require the Participant to represent and warrant at the time of any such issuance that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. Not in limitation of any of the foregoing, in any such case referred to in the preceding sentence the Committee may also require the Participant to execute and deliver documents containing such representations (including the investment representations described in this Section 12(b) of the Plan), warranties and agreements as the Committee or counsel to the Company shall deem necessary or advisable to comply with any exemption from registration under the Securities Act of 1933, as amended, any applicable State securities laws, and any other applicable law, regulation or rule.
(c) Additional Conditions. The Committee shall have the authority to condition the grant of any Restricted Shares in such other manner that the Committee determines to be appropriate, provided that such condition is not inconsistent with the terms of the Plan.
Section 13. Inability to Obtain Authority.
The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
Section 14. Reservation of Shares.
The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.
Section 15. Stockholder Approval.
The Plan shall be subject to approval by the stockholders of the Company. Such stockholder approval shall be obtained in the manner and to the degree required under Applicable Laws.
Section 16. Withholding; Notice of Sale.
Each Participant shall, no later than the date as of which the value of a Restricted Stock Award or of any Shares or other amounts received thereunder first becomes includable in the gross income of the Participant for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld with respect to such income. The Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. The Company’s obligation to deliver stock certificates to any Participant is subject to and conditioned on any such tax obligations being satisfied by the Participant. Subject to approval by the Committee, a Participant may elect to have the minimum required tax withholding obligation satisfied, in whole or in part, by (i) authorizing the Company to withhold from Shares to be issued pursuant to any Restricted Stock Award a number of Shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due, or (ii) transferring to the Company Shares owned by the Participant with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the minimum withholding amount due.
Section 17. Code Section 83(b) Elections
Neither the Company, any Affiliate, nor the Committee shall have any responsibility in connection with a Participant’s election, or attempt to elect, under Code section 83(b) to include the value of a Restricted Stock Award in the Participant’s gross income for the year of payment. Any Participant who makes a Code section 83(b) election with respect to any such Restricted Stock Award shall promptly notify the Committee of such election and provide the Committee with a copy thereof.
Section 18. No Right to Continue as a Director
Neither this Plan, nor the granting of a Restricted Stock Award under this Plan, nor any other action taken pursuant to this Plan shall constitute or be evidence of any agreement or understanding, express or implied, that the Company will retain a director for any period of time, or at any particular rate of compensation.
Section 19. Governing Law.
This Plan shall be governed by the laws of the State of Delaware.
ANNEX B– 2008 EMPLOYEE LONG-TERM INCENTIVE PLAN
Section 1. Establishment and Purpose
(a) Purpose. The purposes of this ePlus inc. 2008 Long-Term Incentive Plan (the “Employee Plan”) are to encourage Employees of ePlus inc. (together with any successor thereto, the “Company”) and its Affiliates (as defined below) to acquire a proprietary interest in the growth and performance of the Company, to generate an increased incentive to contribute to the Company’s future success and prosperity, thus enhancing the value of the Company for the benefit of its stockholders, and to enhance the ability of the Company and its Affiliates to attract and retain exceptionally qualified individuals upon whom, in large measure, the sustained progress, growth and profitability of the Company depend.
(b) Effective Date; Shareholder Approval. The Plan is effective [September 15], 2008, subject to approval by the Company’s shareholders.
Section 2. Definitions
As used in the Employee Plan, the following terms shall have the meanings set forth below:
(a) “Affiliate” shall mean (i) any entity that, directly or through one or more intermediaries, is controlled by the Company and (ii) any entity in which the Company has no less than a 50% equity interest, as determined by the Committee. With respect to Incentive Stock Options, “Affiliate” means any entity, domestic or foreign, whether or not such entity now exists or is hereafter organized or acquired by the Company or by an Affiliate that is a “subsidiary corporation” within the meaning of Code Section 424(d) and the rules thereunder.
(b) “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent, or Other Stock-Based Award granted under the Employee Plan.
(c) “Award Agreement” shall mean any written agreement, contract, or other instrument or document, including an electronic communication, evidencing any Award granted under the Employee Plan.
(d) “Board” shall mean the Board of Directors of the Company.
(e) “Cause” means (except as otherwise provided in an Award Agreement) if the Committee, in its reasonable and good faith discretion, determines that the employee (i) fails to substantially perform his or her duties (other than as a result of Disability), after the Board or the executive to which the Participant reports delivers to the Participant a written demand for substantial performance that specifically identifies the manner in which the Participant has not substantially performed his or her duties; (ii) engages in willful misconduct or gross negligence that is materially injurious to the Company or a subsidiary; (iii) breaches his or her duty of loyalty to the Company or a subsidiary; (iv) removed without proper authorization from the premises of the Company or a subsidiary of a document (of any media or form) relating to the Company or a subsidiary or the customers of the Company or a subsidiary; (v) breaches any confidentiality and/or non-compete agreement between him or her and the Company; or (vi) has committed a felony or a serious crime involving moral turpitude.
(f) “Change in Control” means an event that is “a change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation" within the meaning of Section 409A and that also falls within one of the following events with respect to the Company:
(i) the consummation of any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of Common Stock immediately prior to the merger own more than fifty percent (50%) of the outstanding common stock of the surviving corporation immediately after the merger; or
(ii) the consummation of any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, other than to a subsidiary or affiliate; or
(iii) any action pursuant to which any person (which term may include two or more persons consistent with Section 13(d)(3) of the Exchange Act), corporation or other entity shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of shares of capital stock entitled to vote generally for the election of directors of the Company (“Voting Securities”) representing more than fifty (50%) percent of the combined voting power of the Company’s then outstanding Voting Securities (calculated as provided in Rule 13d-3(d) in the case of rights to acquire any such securities); or
(iv) the individuals (x) who, as of the Effective Date, constitute the Board (the “Original Directors”) and (y) who thereafter are elected to the Board and whose election, or nomination for election, to the Board was approved by a vote of a majority of the Original Directors then still in office (such Directors being called “Additional Original Directors”) and (z) who thereafter are elected to the Board and whose election or nomination for election to the Board was approved by a vote of a majority of the Original Directors and Additional Original Directors then still in office, cease for any reason to constitute a majority of the members of the Board; or
(v) the dissolution or liquidation of the Company.
(g) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
(h) “Committee” shall mean the Compensation Committee of the Board of Directors of the Company, or such other committee as may be designated by the Board. However, if a member of the Compensation Committee is not an “outside director” within the meaning of Section 162(m) of the Code or is not a “non-employee director” as defined in Rule 16b-3 under the Exchange Act, the Compensation Committee may from time to time delegate some or all of its functions under the Employee Plan to a committee or subcommittee composed of members that meet the relevant requirements. The term “Committee” includes any such committee or subcommittee, to the extent of the Compensation Committee’s delegation.
(i) “Common Stock” shall mean shares of the Company’s common stock, par value $0.01 per share.
(j) “Disability” shall mean any illness or other physical or mental condition of a Participant which renders the Participant incapable of performing his or her customary and usual duties for the Company, or any medically determinable illness or other physical or mental condition resulting from a bodily injury, disease, or mental disorder that in the judgment of the Committee is permanent and continuous in nature. The Committee may require such medical or other evidence as it deems necessary to judge the nature and permanency of the Participant’s condition.
(k) “Dividend Equivalent” shall mean any right granted under Section 6(e) of the Employee Plan.
(l) “Employee” means any person who is in the employ of the Company or any Affiliate, subject to the control and direction of the Company or any Affiliate as to both the work to be performed and the manner and method of performance.
(m) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
(n) “Fair Market Value” shall mean, as of any date, the value of Common Stock determined as follows:
(i) if the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq Global Market or The Nasdaq Capital Market of The Nasdaq Stock Market, the Fair Market Value of a share of Common Stock shall be the closing sales price of a share of Common Stock as quoted on such exchange or system for such date (or the most recent trading day preceding such date if there were no trades on such date), as reported in The Wall Street Journal or such other source as the Committee deems reliable;
(ii) if the Common Stock is regularly quoted by a recognized securities dealer but is not listed in the manner contemplated by clause (i) above, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; or
(iii) if neither clause (i) above nor clause (ii) above applies, the Fair Market Value of a share of a share of Common Stock shall be determined in good faith by the Committee based on the reasonable application of a reasonable valuation method.
(o) “Incentive Stock Option” shall mean an option granted under Section 6(a) of the Employee Plan that is intended to meet the requirements of Sections 422 of the Code, or any successor provision thereto.
(p) “Key Employee” shall mean an Employee who is a “covered employee” within the meaning of Section 162(m)(3) of the Code.
(q) “Non-Qualified Stock Option” shall mean an option granted under Section 6(a) of the Employee Plan that is not an Incentive Stock Option.
(r) “Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.
(s) “Other Stock-Based Award” shall mean any right granted under Section 6(f) of the Employee Plan.
(t) “Participant” shall mean an Employee of the Company or of any Affiliate designated to be granted an Award under the Employee Plan.
(u) “Performance Award” shall mean any right granted under Section 6(d) of the Employee Plan.
(v) “Performance Criteria” shall mean any quantitative and/or qualitative measures, as determined by the Committee, which may be used to measure the level of performance of the Company or any individual Participant during a Performance Period, including any Qualifying Performance Criteria. With respect to any Award intended to satisfy the requirements of Code Section 162(m), performance criteria shall mean the Qualifying Performance Criteria.
(w) “Performance Period” shall mean any period as determined by the Committee in its sole discretion.
(x) “Person” shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, or government or political subdivision thereof.
(y) “Qualifying Performance Criteria” shall mean one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the company as a whole or to a business unit or Affiliate, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to a previous year’s results or to a designated comparison group, in each case as specified by the Committee in the Award: revenue, sales, net income, net earnings, earnings per share, return on total capital, return on equity, cash flow, operating profit and margin rate, subject to adjustment by the Committee to remove the effect of charges for restructurings, discontinued operations, extraordinary items and all items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence, related to the disposal of a segment or a business, or related to a change in accounting principle or otherwise.
(z) “Restricted Securities” shall mean Awards of Restricted Stock or other Awards under which issued and outstanding Shares are held subject to certain restrictions.
(aa) “Restricted Stock” shall mean any award of Shares granted under Section 6(c) of the Employee Plan.
(bb) “Restricted Stock Unit” shall mean any right granted under Section 6(c) of the Employee Plan that is denominated in Shares.
(cc) “Retirement” means retirement (i) at or after age 55 with ten years of service or (ii) at or after age 65.
(dd) “Section 409A” means Section 409A of Code, and the Treasury regulations and other authoritative guidance issued thereunder.
(ee) “Shares” shall mean the Shares of Common Stock, and such other securities as may become the subject of Awards, or become subject to Awards, pursuant to an adjustment made under Section 4(d) of the Employee Plan.
(ff) “Stock Appreciation Right” shall mean any right granted under Section 6(b) of the Employee Plan.
Section 3. Administration
Except as otherwise provided herein, the Employee Plan shall be administered by the Committee, which shall have the power to interpret the Employee Plan and to adopt such rules and guidelines for implementing the terms of the Employee Plan as it may deem appropriate. The Committee shall have the ability to modify the Employee Plan provisions, to the extent necessary, to accommodate any changes in laws and regulations in jurisdictions in which Participants will receive Awards.
(a) Subject to the terms of the Employee Plan and applicable law, the Committee shall have full power and authority to:
| (i) | designate Participants; |
| (ii) | determine the type or types of Awards to be granted to each Participant under the Employee Plan; |
| (iii) | determine the number of Shares to be covered by (or with respect to which payments, rights, or other matters are to be calculated in connection with) Awards; |
| (iv) | determine the terms and conditions of any Award; |
| (v) | determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, or other Awards, or canceled, forfeited, or suspended, and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; |
| (vi) | determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, and other amounts payable with respect to an Award under the Employee Plan shall be deferred either automatically or at the election of the holder thereof or of the Committee; |
| (vii) | interpret and administer the Employee Plan and any instrument or agreement relating to, or Award made under, the Employee Plan; |
| (viii) | establish, amend, suspend, or waive such rules and guidelines; |
| (ix) | accelerate the vesting, exercise or payment of an Award; |
| (x) | make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Employee Plan; and |
| (xi) | correct any defect, supply any omission, or reconcile any inconsistency in the Employee Plan or any Award in the manner and to the extent it shall deem desirable to carry the Employee Plan into effect. |
(b) Unless otherwise expressly provided in the Employee Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Employee Plan or any Award shall be within the sole discretion of the Committee, may be made at any time, and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, any stockholder, and any employee of the Company or of any Affiliate. In addition, actions of the Committee may be taken by the Committee but with one or more members abstaining or recusing himself or herself from acting on the matter, so long as two or more members remain to act on the matter. Such action, authorized by the Committee upon the abstention or recusal of such members, shall be the action of the Committee for purposes of the Employee Plan. The Committee may designate the Secretary of the Company or other employees of the Company to assist the Committee in the administration and operation of the Employee Plan and may direct such persons to execute documents on behalf of the Committee.
Section 4. Shares Available for Awards
(a) Shares Available. Subject to adjustment as provided in Section 4(d),
The total number of shares of Common Stock reserved and available for delivery pursuant to Awards granted under the Employee Plan shall be one million (1,000,000); of which no more than five hundred thousand (500,000) may be available for Awards granted in any form provided for under the Employee Plan other than Options or Stock Appreciation Rights. If any Shares covered by an Award granted under the Employee Plan, or to which such an Award relates, are forfeited, or if an Award otherwise terminates without the delivery of Shares or of other consideration, then the Shares covered by such Award, or to which such Award relates, or the number of Shares otherwise counted against the aggregate number of Shares available under the Employee Plan with respect to such Award, to the extent of any such forfeiture or termination, shall again be available for granting Awards under the Employee Plan. Notwithstanding the foregoing but subject to adjustment as provided in Section 4(d), no more than three hundred thousand (300,000) Shares shall be available for delivery pursuant to the exercise of Incentive Stock Options.
Any Award made under a previous ePlus incentive plan shall continue to be subject to the terms and conditions of the plan under which it was awarded and the applicable Award Agreement.
(b) | Accounting for Awards. For purposes of this Section 4,
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| (i) | if an Award (other than a Dividend Equivalent) is denominated in Shares, the number of Shares covered by such Award, or to which such Award relates, shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Employee Plan; and |
| (ii) | Dividend Equivalents denominated in Shares and Awards not denominated in Shares but potentially payable in Shares shall be counted against the aggregate number of Shares available for granting Awards under the Employee Plan in such amount and at such time as the Dividend Equivalents and such Awards are settled in Shares, provided, however, that Awards that operate in tandem with (whether granted simultaneously with or at a different time from), or that are substituted for, other Awards may only be counted once against the aggregate number of Shares available, and the Committee shall adopt procedures, as it deems appropriate, in order to avoid double counting. Any Shares that are delivered by the Company, and any Awards that are granted by, or become obligations of, the Company through the assumption by the Company or an Affiliate of, or in substitution for, outstanding awards previously granted by an acquired company, shall not be counted against the Shares available for granting Awards under this Plan.
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| (iii) | Notwithstanding anything herein to the contrary, any Shares related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, are settled in cash in lieu of Shares, or are exchanged with the Committee’s permission, prior to the issuance of Shares, for Awards not involving Shares, shall be available again for grant under this Plan. Shares subject to an Award under the Employee Plan may not again be made available for issuance under the Employee Plan if such Shares are: (x) Shares that were subject to an Option or a stock-settled Stock Appreciation Right and were not issued upon the net settlement or net exercise of such Option or Stock Appreciation Right, (y) Shares delivered to or withheld by the Company to pay the exercise price or the withholding taxes under Options or Stock Appreciation Rights, or (z) Shares repurchased on the open market with the proceeds of an Option exercise. |
(c) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized but unissued Shares or of treasury Shares.
(d) Adjustments.
| (i) | In the event that the Committee shall determine that any stock dividend, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event constitutes an equity restructuring transaction, as that term is defined in Statement of Financial Accounting Standards No. 123 (revised) or otherwise affects the Shares, then the Committee shall adjust the following in a manner that is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Employee Plan: |
(A) the number and type of Shares or other securities which thereafter may be made the subject of Awards including the limit specified in Section 4(a) regarding the number of shares that may be granted in the form of Restricted Stock, Restricted Stock Units, Performance Awards, or Other Stock-Based Awards;
(B) the number and type of Shares or other securities subject to outstanding Awards;
(C) the number and type of Shares or other securities specified as the annual per-participant limitation under Section 6(g)(v) and (vi);
(D) the grant, purchase, or exercise price with respect to any Award, or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award; and
(E) other value determinations applicable to outstanding awards.
Provided, however, in each case, that with respect to Awards of Incentive Stock Options no such adjustment shall be authorized to the extent that such authority would cause the Employee Plan to violate Sections 422(b)(1) of the Code or any successor provision thereto; and provided further, however, that the number of Shares subject to any Award denominated in Shares shall always be a whole number. Notwithstanding the foregoing, no adjustments shall be made with respect to Performance Awards granted to a Key Employee to the extent such adjustment would cause the Award to fail to qualify as performance-based compensation under Section 162(m) of the Code and no adjustment shall be required if the Committee determines that such action could cause an Award to fail to satisfy the conditions of an applicable exception from the requirements of Section 409A of the Code or otherwise could subject a Participant to the additional tax imposed under Section 409A in respect of an outstanding Award.
| (ii) | Consolidation, Merger or Sale of Assets. Upon the occurrence of (i) a merger, consolidation, acquisition of property or stock, reorganization or otherwise involving the Company in which the Company is not to be the surviving corporation, (ii) a merger, consolidation, acquisition of property or stock, reorganization or otherwise involving the Company in which the Company is the surviving corporation but holders of Shares receive securities of another corporation, or (iii) a sale of all or substantially all of the Company’s assets (as an entirety) or capital stock to another person, any Award granted hereunder shall be deemed to apply to the securities, cash or other property (subject to adjustment by cash payment in lieu of fractional interests) to which a holder of the number of Shares equal to the number of Shares the Participant would have been entitled, and proper provisions shall be made to ensure that this clause is a condition to any such transaction; provided, however, that for an Award that is not subject to Section 409A the Committee (or, if applicable, the board of directors of the entity assuming the Company’s obligations under the Employee Plan) shall, in its discretion, have the power to either:
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(a) provide, upon written notice to Participants, that all Awards that are currently exercisable must be exercised within the time period specified in the notice and that all Awards not exercised as of the expiration of such period shall be terminated without consideration; provided, however, that the Committee (or successor board of directors) may provide, in its discretion, that, for purposes of this subsection, all outstanding Awards are currently exercisable, whether or not vested; or
(b) cancel any or all Awards and, in consideration of such cancellation, pay to each Participant an amount in cash with respect to each Share issuable under an Award equal to the difference between the Fair Market Value of such Share on such date (or, if greater, the value per Share of the consideration received by holders of Shares as a result of such merger, consolidation, reorganization or sale) and the Exercise Price.
Section 5.�� Eligibility
Any Employee of the Company or of any Affiliate shall be eligible to be designated a Participant.
Section 6. Awards
(a) Options. Options granted under the Employee Plan may, at the discretion of the Committee, be in the form of either Non-Qualified Stock Options, Incentive Stock Options or a combination of the two. Where both a Non-Qualified Stock Option and an Incentive Stock Option are granted to a Participant at the same time, such Awards shall be deemed to have been granted in separate grants, shall be clearly identified, and in no event will the exercise of one such Award affect the right to exercise the other Award. Unless otherwise specified, an Option shall be a Non-Qualified Stock Option. Subject to Section 3, the Committee is hereby authorized to grant Options to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Employee Plan, as the Committee shall determine:
| (i) | Amount of Shares. The Committee may grant Options to a Participant in such amounts as the Committee may determine, subject to the limitations se forth in Section 6(g)(v) of the Employee Plan. The number of Shares subject to an Option shall be set forth in the applicable Award Agreement.
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| (ii) | Exercise Price. The exercise price per Share under an Option shall be determined by the Committee; provided, however, and except as provided in Section 4(d), that such exercise price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option. The exercise price of an Option, as determined by the Committee pursuant to this Section 6(a)(ii), shall be set forth in the applicable Award Agreement.
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| (iii) | Option Term. Except as set forth in Section 6(a)(vii) below, the term of each Option shall not exceed ten (10) years from the date of grant.
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| (iv) | Timing of Exercise. Except as may otherwise be provided in the Award Agreement or as the Committee may otherwise determine, and subject to the Committee’s authority under Section 3(a) to accelerate the vesting of an Award and to waive or amend any terms, conditions, limitations or restrictions of an Award, each Option granted under the Employee Plan shall be exercisable in whole or in part, subject to the following conditions, limitations and restrictions:
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| (A) | 20% of the Shares subject to an Option shall first become exercisable on the one-year anniversary of the date of grant, 30% shall first become exercisable on the two-year anniversary of the date of grant and the remainder shall first become exercisable on the three-year anniversary of the date of grant; |
| (B) | All Options subject to the Award shall become immediately exercisable upon a Change in Control; |
| (C) | All Options granted to a Participant shall become immediately exercisable upon the death or Disability of the Participant and must be exercised, if at all, within one year after such Participant’s death or Disability, but in no event after the date such Options would otherwise lapse. Options of a deceased Participant may be exercised only by the estate of the Participant or by the person given authority to exercise such Options by the Participant’s will or by operation of law. In the event an Option is exercised by the executor or administrator of a deceased Participant, or by the person or persons to whom the Option has been transferred by the Participant’s will or the applicable laws of descent and distribution, the Company shall be under no obligation to deliver Shares thereunder unless and until the Company is satisfied that the person or persons exercising the Option is or are the duly appointed executor(s) or administrator(s) of the deceased Participant or the person to whom the Option has been transferred by the Participant’s will or by the applicable laws of descent and distribution; |
| (D) | Upon an Employee’s Retirement, all Options that have not become exercisable as of the date of Retirement shall be forfeited and to the extent that Options have become exercisable as of such date, such Options must be exercised, if at all, within one year after Retirement, but in no event after the date such Options would otherwise lapse; and |
| (E) | The Option shall lapse upon termination of employment for Cause. Except as otherwise provided in Section 6(a)(vii) or Section 6(g)(xii), upon an Employee’s termination of employment, for any reason other than death, Disability, Retirement or Cause, all Options that have not become exercisable as of the date of termination shall be forfeited and to the extent that Options have become exercisable as of such date, such Options must be exercised, if at all, within 90 days after such termination of employment. |
| (v) | Payment of Exercise Price. The exercise price shall be paid in full when the Option is exercised and stock certificates shall be registered and delivered only upon receipt of such payment. Unless otherwise provided by the Committee, payment of the exercise price may be made in cash or by certified check, bank draft, wire transfer, or postal or express money order or any other form of consideration approved by the Committee. In addition, at the discretion of the Committee, payment of all or a portion of the exercise price may be made by
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| (A) | Delivering a properly executed exercise notice to the Company, or its agent, together with irrevocable instructions to a broker to deliver promptly to the Company the amount of sale proceeds with respect to the portion of the Shares to be acquired upon exercise having a Fair Market Value on the date of exercise equal to the sum of the applicable portion of the exercise price being so paid and appropriate tax withholding; |
| (B) | Tendering (actually or by attestation) to the Company previously acquired Shares that have been held by the Participant for at least six months having a Fair Market Value on the day prior to the date of exercise equal to the applicable portion of the exercise price being so paid; or |
| (C) | any combination of the foregoing. |
| (vi) | Incentive Stock Options. The terms of any Incentive Stock Option granted under the Employee Plan shall be designed to comply in all respects with the provisions of Section 422 of the Code, or any successor provision thereto, and any regulations promulgated thereunder which are hereby incorporated by reference. In the event that any provision of the Employee Plan would contravene the Code rules that apply to Incentive Stock Options, such Plan provision shall not apply to Incentive Stock Options. Incentive Stock Options granted under the Employee Plan shall be subject to the following additional conditions, limitations and restrictions:
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| (A) | Timing of Grant. No Incentive Stock Option shall be granted under the Employee Plan after the 10-year anniversary of the date the Employee Plan is adopted by the Board.
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| (B) | Amount of Award. The aggregate Fair Market Value of Shares (determined as of the time of grant) with respect to which such Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any subsidiary) may not exceed $100,000, taking Incentive Stock Option into account in the order in which they were granted. To the extent an Option initially designated as an Incentive Stock Option exceeds the value limit of this Section or otherwise fails to satisfy the requirements applicable to Incentive Stock Options, it shall be deemed a Non-Qualified Stock Option and shall otherwise remain in full force and effect.
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| (C) | Timing of Exercise. In the event that the Committee exercises its discretion to permit an Incentive Stock Option to be exercised by a Participant more than 90 days after the Participant’s termination of employment and such exercise occurs more than 90 days after such Participant has ceased being an Employee (or more than 12 months after the Participant is Disabled or dies), such Incentive Stock Option shall thereafter be treated as a Non-Qualified Stock Option for all purposes.
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| (D) | Transfer Restrictions. In no event shall the Committee permit an Incentive Stock Option to be transferred by a Participant other than by will or the laws of descent and distribution, and any Incentive Stock Option granted hereunder shall be exercisable, during his or her lifetime, only by the Participant.
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| (E) | Ten Percent Owners. No Incentive Stock Option shall be granted to any individual who, at the date of grant, owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any Affiliate unless the exercise price per share of such Option is at least 110% of the Fair Market Value per Share at the date of grant and the Option expires no later than five years after the date of grant.
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| (vii) | Extension of Option Term for Blackouts. At its discretion, the Committee may extend the term of any Option beyond its earlier termination pursuant to Section 6(a)(iii),(iv)(C), (iv)(D) or (iv)(E) if the Company had prohibited the participant from exercising the Option prior to termination or expiration in order to comply with applicable Federal, state, local or foreign law, provided that such extension may not exceed the earlier of 30 days from the date such prohibition is lifted or ten years after the Option grant date.
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(b) Stock Appreciation Rights. The Committee is hereby authorized to grant Stock Appreciation Rights to Participants. Subject to the terms of the Employee Plan and any applicable Award Agreement, a Stock Appreciation Right Award granted under the Employee Plan shall confer on the holder thereof a right to receive, upon exercise thereof, the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the Stock Appreciation Right as specified by the Committee, multiplied by the number of Stock Appreciation Rights granted. As determined by the Committee, the payment upon exercise may be paid in cash, Shares to be valued at their Fair Market Value on the date of exercise, any other mode of payment deemed appropriate by the Committee or any combination thereof. The Committee may establish a maximum appreciation value payable for stock appreciation rights.
| (i) | Grant Price. Shall be determined by the Committee, provided, however, and except as provided in Section 4(d), that such price shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right, except that if a Stock Appreciation Right is at any time granted in tandem with an Option, the grant price of the Stock Appreciation Right shall not be less than the exercise price of such Option.
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| (ii) | Term. The term of each Stock Appreciation Right shall not exceed ten (10) years from the date of grant.
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| (iii) | Time and Method of Exercise. The Committee shall establish in the applicable Award Agreement the time or times at which a Stock Appreciation Right may be exercised in whole or in part.
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(c) Restricted Stock and Restricted Stock Units. The Committee is hereby authorized to grant Awards of Restricted Stock and Restricted Stock Units to Participants.
| (i) | Restrictions. Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may establish in the applicable Award Agreement (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate. Unrestricted Shares, evidenced in such manner as the Committee shall deem appropriate, shall be delivered to the holder of Restricted Stock promptly after such restrictions have lapsed.
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| (ii) | Registration. Any Restricted Stock or Restricted Stock Units granted under the Employee Plan may be evidenced in such manner as the Committee may deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of Shares of Restricted Stock granted under the Employee Plan, such certificate shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock.
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| (iii) | Forfeiture. Upon termination of employment during the applicable restriction period for any reason other than death or Disability, except as determined otherwise by the Committee, all Shares of Restricted Stock and all Restricted Stock Units still, in either case, subject to restriction shall be forfeited and reacquired by the Company.
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(d) Performance Awards. The Committee is hereby authorized to grant Performance Awards to Participants. Performance Awards include arrangements under which the grant, issuance, retention, vesting and/or transferability of any Award is subject to such Performance Criteria and such additional conditions or terms as the Committee may designate. The Committee may establish a maximum Performance Award. Subject to the terms of the Employee Plan and any applicable Award Agreement, a Performance Award granted under the Employee Plan:
| (i) | may be denominated or payable in cash, Shares (including, without limitation, Restricted Stock), other securities, or other Awards; and |
| (ii) | shall confer on the holder thereof rights valued as determined by the Committee and payable to, or exercisable by, the holder of the Performance Award, in whole or in part, upon the achievement of such performance goals during such Performance Periods as the Committee shall establish. |
(e) Dividend Equivalents. The Committee is hereby authorized to grant to Participants Awards under which the holders thereof shall be entitled to receive payments equivalent to dividends or interest with respect to a number of Shares determined by the Committee, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested. Subject to the terms of the Employee Plan and any applicable Award Agreement, such Awards may have such terms and conditions as the Committee shall determine.
(f) Other Stock-Based Awards. The Committee is hereby authorized to grant to Participants such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as are deemed by the Committee to be consistent with the purposes of the Employee Plan, provided, however, that such grants must comply with applicable law. Subject to the terms of the Employee Plan and any applicable Award Agreement, the Committee shall determine the terms and conditions of such Awards. Shares or other securities delivered pursuant to a purchase right granted under this Section 6(f) shall be purchased for such consideration, which may be paid by such method or methods and in such form or forms, including, without limitation, cash, Shares, other securities, or other Awards, or any combination thereof, as the Committee shall determine, the value of which consideration, as established by the Committee, and except as provided in Section 4(d), shall not be less than the Fair Market Value of such Shares or other securities as of the date such purchase right is.
(g) General.
| (i) | No Cash Consideration for Awards. Awards shall be granted for no cash consideration or for such minimal cash consideration as may be required by applicable law.
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| (ii) | Awards may be Granted Separately or Together. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards, or in addition to or in tandem with awards granted under any other plan of the Company or any Affiliate, may be granted either at the same time as or at a different time from the grant of such other Awards.
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| (iii) | Forms of Payment under Awards. Subject to the terms of the Employee Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise, or payment of an Award may be made in such form or forms as the Committee shall determine, including, without limitation, cash, Shares, rights in or to Shares issuable under the Award or other Awards, other securities, or other Awards, or any combination thereof, and may be made in a single payment or transfer, in installments, or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents in respect of installment or deferred payments.
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| (iv) | Limits on Transfer of Awards. Except as provided by the Committee, no Award and no right under any such Award, shall be assignable, alienable, saleable, or transferable by a Participant otherwise than by will or by the laws of descent and distribution provided, however, that, if so determined by the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of the Participant with respect to any Award upon the death of the Participant. Each Award, and each right under any Award, shall be exercisable, during the Participant’s lifetime, only by the Participant or, if permissible under applicable law, by the Participant’s guardian or legal representative. No Award and no right under any such Award, may be pledged, alienated, attached, or otherwise encumbered, and any purported pledge, alienation, attachment, or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate.
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| (v) | Per-Person Limitation on Options and SARs. The number of Shares with respect to which Options and Stock Appreciation Rights may be granted under the Employee Plan during any calendar year to an individual Participant shall not exceed fifty thousand (50,000) Shares, subject to adjustment as provided in Section 4(d).
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| (vi) | Per-Person Limitation on Certain Awards. Other than Options and Stock Appreciation Rights, the aggregate number of Shares with respect to which Restricted Stock, Restricted Stock Units, Performance Awards and Other Stock-Based Awards may be granted under the Employee Plan during any calendar year to an individual Participant shall not exceed fifty thousand (50,000) Shares, subject to adjustment as provided in Section 4(d).
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| (vii) | Conditions and Restrictions upon Securities Subject to Awards. The Committee may provide that the Shares issued upon exercise of an Option or Stock Appreciation Right or otherwise subject to or issued under an Award shall be subject to such further agreements, restrictions, conditions or limitations as the Committee in its discretion may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting or settlement of such Award, including without limitation, conditions on vesting or transferability and forfeiture or repurchase provisions or provisions on payment of taxes arising in connection with an Award. Without limiting the foregoing, such restrictions may address the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any Shares issued under an Award, including without limitation: (A) restrictions under an insider trading policy or pursuant to applicable law, (B) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant and holders of other Company equity compensation arrangements, (C) restrictions as to the use of a specified brokerage firm for such resales or other transfers and (D) provisions requiring Shares to be sold on the open market or to the Company in order to satisfy tax withholding or other obligations.
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| (viii) | Share Certificates. All Shares or other securities delivered under the Employee Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Employee Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange or automated quotation system upon which such Shares or other securities are then listed, quoted, or traded, and any applicable Federal, state, or local securities laws, and the Committee may cause a legend or legends to be put on any such certificates or issue instructions to the transfer agent to make appropriate reference to such restrictions.
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| (ix) | Suspension of Exercise. The Company reserves the right from time to time to suspend the exercise of any stock option or stock appreciation right where such suspension is deemed by the Company as necessary or appropriate for corporate purposes.
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| (x) | Change in Control. Notwithstanding anything to the contrary in the Employee Plan, any conditions or restrictions on Restricted Stock shall lapse upon a Change in Control.
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| (xi) | Award Agreement. Each grant of an Award under the Employee Plan will be evidenced by an Award Agreement. Such document will contain such provisions as the Committee may in its discretion deem advisable, provided that such provisions are not inconsistent with any of the provisions of the Employee Plan.
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| (xii) | Special Forfeiture Provision. If the Committee, in its discretion, determines and the applicable Award Agreement so provides, a Participant who, without prior written approval of the Company, enters into any employment or consultation arrangement (including service as an agent, partner, stockholder, consultant, officer or director) to any entity or person engaged in any business in which the Company or its affiliates is engaged which, in the sole judgment of the Company, is competitive with the Company or any Affiliate, (i) shall forfeit all rights under any outstanding Option or Stock Appreciation Right and shall return to the Company the amount of any profit realized upon the exercise, within such period as the Committee may determine, of any Option or Stock Appreciation Right, and (ii) shall forfeit and return to the Company all Shares of Restricted Stock and other Awards which are not then vested or which vested but remain subject to the restrictions imposed by this Section 6(g)(xii), as provided in the Award Agreement.
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| (xiii) | No Repricing. Repricing of Options or Stock Appreciation Rights shall not be permitted without stockholder approval. For this purpose, a “repricing” means any of the following (or any other action that has the same effect as any of the following): (A) changing the terms of an Option or Stock Appreciation Right to lower its exercise price (other than pursuant to Section 4(d)); (B) any other action that is treated as a “repricing” under generally accepted accounting principles; and (C) repurchasing for cash or canceling an Option or Stock Appreciation Right at a time when its exercise price is greater than the Fair Market Value of the underlying stock in exchange for another Award, unless the cancellation and exchange occurs in connection with an event set forth in Section 4(d). Such cancellation and exchange would be considered a “repricing” regardless of whether it is treated as a “repricing” under generally accepted accounting principles and regardless of whether it is voluntary on the part of the Participant.
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Section 7. Amendment and Termination
Except to the extent prohibited by applicable law and unless otherwise expressly provided in an Award Agreement or in the Employee Plan:
(a) Amendments to the Employee Plan. The Board of Directors of the Company may amend, alter, suspend, discontinue, or terminate the Employee Plan, in whole or in part; provided, however, that without the prior approval of the Company’s stockholders, no material amendment shall be made if stockholder approval is required by applicable law, rule or regulation, and; provided, further, that, notwithstanding any other provision of the Employee Plan or any Award Agreement, no such amendment, alteration, suspension, discontinuation, or termination shall be made without the approval of the stockholders of the Company that would:
| (i) | increase the total number of Shares available for Awards under the Employee Plan, except as provided in Section 4 hereof; or |
| (ii) | except as provided in Section 4(d), permit Options, Stock Appreciation Rights, or other Stock-Based Awards encompassing rights to purchase Shares to be repriced, replaced, or regranted through cancellation, or by lowering the exercise price of a previously granted Option or the grant price of a previously granted Stock Appreciation Right, or the purchase price of a previously granted Other Stock-Based Award. |
(b) Amendments to Awards. The Committee may waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue, or terminate, any Awards theretofore granted, prospectively or retroactively. No such amendment or alteration shall be made which would impair the rights of any Participant, without such Participant’s consent, under any Award theretofore granted, provided that no such consent shall be required with respect to any amendment or alteration if the Committee determines in its sole discretion that such amendment or alteration either (i) is required or advisable in order for the Company, the Employee Plan or the Award to satisfy or conform to any law or regulation or to meet the requirements of any accounting standard, or (ii) is not reasonably likely to significantly diminish the benefits provided under such Award.
Section 8. General Provisions
(a) No Rights to Awards. No Employee, Participant or other Person shall have any claim to be granted any Award under the Employee Plan, or, having been selected to receive an Award under this Plan, to be selected to receive a future Award, and further there is no obligation for uniformity of treatment of Employees, Participants, or holders or beneficiaries of Awards under the Employee Plan. The terms and conditions of Awards need not be the same with respect to each recipient.
(b) Withholding. The Company or any Affiliate shall be authorized to withhold from any Award granted or any payment due or transfer made under any Award or under the Employee Plan the amount (in cash, Shares, other securities, or other Awards) of withholding taxes due in respect of an Award, its exercise, or any payment or transfer under such Award or under the Employee Plan and to take such other action as may be necessary in the opinion of the Company or Affiliate to satisfy statutory withholding obligations for the payment of such taxes.
(c) No Limit on Other Compensation Arrangements. Nothing contained in the Employee Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases.
(d) No Right to Employment. The grant of an Award shall not constitute an employment contract nor be construed as giving a Participant the right to be retained in the employ of the Company or any Affiliate. Further, the Company or an Affiliate may at any time dismiss a Participant from employment, free from any liability, or any claim under the Employee Plan, unless otherwise expressly provided in the Employee Plan or in any Award Agreement.
(e) Governing Law. The validity, construction, and effect of the Employee Plan and any rules and regulations relating to the Employee Plan shall be determined in accordance with the laws of the State of Delaware and applicable Federal law without regard to conflict of law.
(f) Severability. If any provision of the Employee Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Employee Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Employee Plan or the Award, such provision shall be stricken as to such jurisdiction, Person, or Award, and the remainder of the Employee Plan and any such Award shall remain in full force and effect.
(g) No Trust or Fund Created. Neither the Employee Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Employee Plan or any Award, and the Committee shall determine whether cash or other securities shall be paid or transferred in lieu of any fractional Shares, or whether such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of the Employee Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Employee Plan or any provision thereof, and, in the event of any conflict, the text of the Employee Plan, rather than such headings, shall control.
(j) Indemnification. Subject to requirements of Delaware State law, each individual who is or shall have been a member of the Board, or a Committee appointed by the Board or a delegate of the Committee so acting, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his/her own behalf, unless such loss, cost, liability, or expense is a result of his/her own willful misconduct or except as expressly provided by statute. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
(k) Compliance with Section 409A. Except to the extent specifically provided otherwise by the Committee, Awards under the Employee Plan are intended to satisfy the requirements of Section 409A so as to avoid the imposition of any additional taxes or penalties under Section 409A. If the Committee determines that an Award, Award Agreement, payment, distribution, deferral election, transaction or any other action or arrangement contemplated by the provisions of the Employee Plan would, if undertaken, cause a Participant to become subject to any additional taxes or other penalties under Section 409A, then unless the Committee specifically provides otherwise, such Award, Award Agreement, payment, distribution, deferral election, transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Employee Plan and/or Award Agreement will be deemed modified, or, if necessary, suspended in order to comply with the requirements of Section 409A to the extent determined appropriate by the Committee, in each case without the consent of or notice to the Participant. Notwithstanding any provision in the Employee Plan to the contrary, with respect to any Award that is subject to Section 409A, distributions on account of a separation from service may not be made to a “specified employee” (as defined by Section 409A) before the date which is six (6) months after the date of separation from service (or, if earlier, the date of death of the employee).
(l) No Representations or Covenants with Respect to Tax Qualification. Although the Company may endeavor to (i) qualify an Award for favorable U.S. tax provisions (e.g., incentive stock options under Section 422 of the Code) or (ii) avoid adverse tax treatment (e.g., under Section 409A of the Code), the Company makes no representation to that effect and expressly disavows any covenant to maintain favorable or avoid unfavorable tax treatment. The Company shall be unconstrained in its corporate activities without regard to the potential negative tax impact on holders of Awards under the Employee Plan.
(m) Compliance with Laws. The granting of Awards and the issuance of Shares under the Employee Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or stock exchanges or automated quotation systems on which the Company is listed, quoted or traded as may be required. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under the Employee Plan prior to:
| (i) | obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and |
| (ii) | completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable or at a time when any such registration or qualification is not current, has been suspended or otherwise has ceased to be effective. |
The inability or impracticability of the Company to obtain or maintain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
(n) Code Section 83(b) Elections. Neither the Company, any Affiliate, nor the Committee shall have any responsibility in connection with a Participant’s election, or attempt to elect, under Code section 83(b) to include the value of a Restricted Stock Award in the Participant’s gross income for the year of payment. Any Participant who makes a Code section 83(b) election with respect to any such Award shall promptly notify the Committee of such election and provide the Committee with a copy thereof.
Section 9. Term of the Employee Plan
The Plan shall remain in full force and effect through [September 15], 2018, unless sooner terminated by the Board. After the Employee Plan is terminated, no future Awards may be granted, but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and the Employee Plan’s terms and conditions.
ANNEX C – AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF EPLUS INC.
The present name of the corporation is ePlus inc. (the “Corporation”). The Corporation was incorporated under the name “MLC Holdings, Inc.” by filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware, notwithstanding shareholder approval of the Charter Amendment.
Purpose and Possible Effects of the Proposed Amendment The Board desires to amend our Charter to maintain provisions consistent with the governing statutes contained in the DGCL. Previously, Delaware law has permitted Delaware corporations to eliminate or limit directors from personal liability for monetary damages associated with breaches of the duty of care, but that protection did not extend to a Delaware corporation’s officers. Consequently, shareholder plaintiffs have employed a tactic, which would otherwise be exculpated if brought against directors, of bringing certain claims against individual officers to avoid dismissal of such claims. Section 102(b)(7) was adopted to address this inconsistent treatment between officers and directors and the rising litigation and insurance costs for shareholders. As is currently the case with our directors, this provision would not exculpate officers from liability for breach of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit. Nor would this provision exculpate such officers from liability for claims brought by or in the right of the corporation, such as derivative claims. The Board believes it is necessary to provide protection to officers to the fullest extent permitted by law to attract and retain top talent. This protection has long been afforded to directors, and accordingly, the Board believes that this proposal, which would extend exculpation to officers, as specifically permitted by the Section 102(b)(7), is fair and in the best interests of the Company and its shareholders. The Charter Amendment is not being proposed in response to any specific resignation, threat of resignation or refusal to serve by any officer nor is it being proposed in response to any litigation or threat of litigation. The affirmative vote of the holders of a majority of shares outstanding and entitled to vote at the Annual Meeting is required to approve Proposal 4. Abstentions and broker non-votes will have the same effect as voting “AGAINST” this proposal. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE CHARTER AMENDMENT
FREQUENTLY ASKED QUESTIONS CONCERNING THE 2023 ANNUAL MEETING OF SHAREHOLDERS Why did I receive these proxy materials? These proxy materials are first being distributed on August 27, 1996.or about July 31, 2023, to the Company’s shareholders in connection with our Board’s solicitation of proxies to be voted at the 2023 Annual Meeting on September 14, 2023, at 8:30 a.m. 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 2023 Annual Meeting? At our 2023 Annual Meeting, shareholders will be asked to vote to (1) elect the nine director nominees named in this proxy statement for a term expiring at the 2024 Annual Meeting of Shareholders; (2) approve, on an advisory basis, the compensation of our NEOs; (3) ratify the appointment of the Company’s independent registered public accounting firm; and (4) approve an amendment to our Charter to limit the personal liability of certain officers of ePlus as permitted by recent amendments to the DGCL. See the sections entitled “Proposal 1 – Election of Directors,” “Proposal 2 – Advisory Vote to Approve Named Executive Officer Compensation,” “Proposal 3 – Ratification of Independent Registered Public Accounting Firm” and (4) “Proposal 4 –Amendment to the ePlus inc. Amended and Restated Certificate of IncorporationIncorporation.” The Board does not know of any matters to be brought before the meeting other than as set forth in the Notice of 2023 Annual Meeting of Shareholders. Who may attend the 2023 Annual Meeting? Only holders of our common stock as of the Corporation,close of business on our Record Date, which restates and integrates and also further amendswas July 21, 2023, or their duly appointed proxies, may attend the provisions2023 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 Corporation’s Certificatestatement (such as a brokerage statement) from your broker, bank, or other nominee reflecting your stock ownership as of Incorporation, was duly adoptedour Record Date to be admitted to the 2023 Annual Meeting. Who may vote at the 2023 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 2023 Annual Meeting. As of July 21, 2023, there were [26,944,377] shares of our common stock outstanding, which includes [314,519] unvested restricted shares entitled to vote at the 2023 Annual Meeting, with each share entitled to one vote. How do I vote at the 2023 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 8:30 a.m. ET on September 14, 2023. Further, a proxy that is signed and dated, but which does not contain voting instructions, will be voted as recommended by our Board on each proposal. 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 provisions of Sections 242 and 245instructions 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), the advisory vote to approve NEO compensation (Proposal 2) and the amendment to our Charter (Proposal 4) 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 shareholder or submitted by telephone or via the Internet may be revoked or changed at any time before it is exercised at the 2023 Annual Meeting, or any adjournments or postponements thereof, by:
| • | Mailing written notice of revocation or change to our Corporate Secretary, at ePlus inc., 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 shareholders are not publicly disclosed and are available only to the inspector of election and certain employees of the Company 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 2023 Annual Meeting, and will count the votes. What if other matters come up during the 2023 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 2023 Annual Meeting? A quorum is required to transact business at the 2023 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 2023 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 2023 Annual Meeting?
Proposal 1: Election of directors. Each of the nine nominees for director will be elected by a plurality of the shares present in person or by proxy at the 2023 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 2023 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 would continue to serve on the Board until the 2024 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. Withheld votes and broker non-votes will have no effect on the vote for this proposal. Proposal 2: Advisory vote to approve NEO 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 have the same effect as voting “AGAINST” this proposal, and broker non-votes will have no effect on the vote for this 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 fiscal year ending March 31, 2024. Abstentions will have the same effect as voting “AGAINST” this proposal. If you do not instruct your broker, bank or other nominee how to vote on this proposal, your broker may vote your shares on the proposal, so no broker non-votes are expected. Proposal 4: Amendment to our Charter. The affirmative vote of the holders of a majority of shares outstanding and entitled to vote at the Annual Meeting is required to amend our Charter. Abstentions and broker non-votes will have the same effect as voting “AGAINST” this proposal. Who pays to prepare, mail, and solicit the proxies? The Company will bear the costs of solicitation of proxies for the 2023 Annual Meeting, 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 2023 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 2023 Form 10-K, as filed with the SEC, will be sent to any shareholder without charge upon written request addressed to Investor Relations, at ePlus inc., 13595 Dulles Technology Drive, Herndon, Virginia 20171. You may also obtain our Form 10-K via the SEC’s Internet site, www.sec.gov, or our Annual Report, which includes our 2023 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 shareholder 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, at ePlus inc., 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 2024 Annual Meeting of Shareholders
Shareholders have the opportunity to submit proposals for the 2024 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 2, 2024 (assuming the 2024 Annual Meeting of Shareholders is held within 30 days of the anniversary of this 2023 Annual Meeting),to the Corporate Secretary at ePlus inc., 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 2024 Annual Meeting of Shareholders. In addition, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act postmarked or transmitted electronically no later than July 16, 2024 (assuming the 2024 Annual Meeting of Shareholders is held within 30 days of the anniversary of this 2023 Annual Meeting). In accordance with our Bylaws, if you wish to submit a proposal for consideration at next year’s Annual Meeting of Shareholders that is 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 of Shareholders, your proposal or nomination must be submitted in writing and received by the Corporate Secretary not more than 120 days nor later than 90 days in advance of the first anniversary of this 2023 Annual Meeting if the 2024 Annual Meeting of Shareholders is held within 30 days of the anniversary of this 2023 Annual Meeting or, otherwise, within seven days after the first public announcement of the date of the 2024 Annual Meeting of Shareholders. Assuming that our 2024 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 not earlier than May 17, 2024, and not later than June 16, 2024. 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 ePlus shareholder must contain the specific information required in ePlus’ Bylaws. If you would like a copy of ePlus’ current Bylaws, please write to the Corporate Secretary at ePlus inc., 13595 Dulles Technology Drive, Herndon Virginia 20171. ePlus’ current Bylaws may also be found on the Company’s website at https://www.eplus.com/investors/corporate-governance-legal/amended-and-restated-bylaws. Results of the 2023 Annual Meeting
The preliminary voting results will be announced at the 2023 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 2023 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 ePlus 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, Charter, and Corporate Governance Guidelines. Shareholders may obtain, without charge, printed copies of the above documents by writing to the Corporate Secretary, at ePlus inc., 13595 Dulles Technology Drive, Herndon, Virginia 20171. The Company’s principal executive offices are located at ePlus inc., 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, 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 14, 2023 The proxy materials for the Company’s 2023 Annual Meeting, including our Annual Report on Form 10-K for the year ended March 31, 2023, and this proxy statement, are available online via the Company’s website at https://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. | July 31, 2023 | By Order of the Board of Directors | | | | Erica S. Stoecker | | | | Corporate Secretary, General Counsel, & Chief Compliance Officer |
TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF EPLUS INC.
Pursuant to Section 242 of the General Corporation LawsLaw of the State of Delaware (particularly Chapter 1, Title 8
ePlus inc., a corporation organized and existing under the laws of the Delaware Code, as amended, and referred to as the “Delaware General Corporation Law”). The Certificate of Incorporation of the Corporation is hereby amended, integrated and restated to read in its entirety as follows:
FIRST
The name of the Corporation is ePlus inc.
SECOND
The address of the registered office of the Corporation in the Statestate of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle, 19801, and the name of the Corporation’s registered agent in the State of Delaware is The Corporation Trust Company.(the “Corporation”), does hereby certify that:
| Article Seventh of the Amended and Restated Certificate of Incorporation of the Corporation (the “Charter”), shall be deleted in its entirety. | | | | A new Article Seventh, the text of which is set forth below, shall be added to the Charter immediately after the existing Article Sixth of the Charter: |
THIRD
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law.
FOURTH
The total number of shares of all classes of stock which the Corporation shall have authority to issue is 27 million (27,000,000) shares consisting of 25 million (25,000,000) shares of common stock having a par value of $.01 per share (the “Common Stock”) and two million (2,000,000) shares of preferred stock having a par value of $.01 per share (the “Preferred Stock”).
The Board of Directors of the Corporation is authorized, subject to limitations prescribed by law, to provide by resolution or resolutions for the issuance of shares of the Preferred Stock as a class or in series, and, by filing a certificate of designations, pursuant to the Delaware General Corporation Law, setting forth a copy of such resolution or resolutions to establish from time to time the number of shares to be included in each such series and to fix the designation, powers, preferences and rights of the shares of the class or of each such series and the qualifications, limitations, and restrictions thereof. The authority of the Board of Directors with respect to the class or each series shall include, but not be limited to, determination of the following:
a) the number of shares constituting any series and the distinctive designation of that series;
b) the dividend rate of the shares of the class or of any series, whether dividends shall be cumulative, and if so, from which date or dates, and the relative rights of priority, if any of payment of dividends on shares of the class or of that series;
c) whether the class or any series shall have voting rights, in addition to the voting rights provided by law, and if so, the terms of such voting rights;
d) whether the class or any series shall have conversion privileges and, if so, the terms and conditions of conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors shall determine;
e) whether or not the shares of the class or of any series shall be redeemable, and, if so, the terms and conditions of such redemption, including the date or date upon or after which they shall be redeemable and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption rates;
f) whether the class or any series shall have a sinking fund for the redemption or purchase of shares of the class or of that series, and if so, the terms and amount of such sinking fund;
g) the rights of the shares of the class or of any series in the event of voluntary or involuntary dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of shares of the class or of that series; and
h) any other powers, preferences, rights, qualifications, limitations and restrictions of the class or of that series.
All rights accruing to the outstanding shares of the Corporation not expressly provided for to the contrary herein or in any certificate of designation shall be vested exclusively in the Common Stock.
FIFTH
The Corporation is to have perpetual existence.
SIXTH
In furtherance and not in limitation of the powers conferred by statute, the Board of Directors of the Corporation is expressly authorized to make, alter, or repeal the Bylaws of the Corporation.
SEVENTH
No persondirector or officer of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director; director or officer, as applicable; provided,, however,, that the foregoing shall not eliminate or limit the liability of a director or officer (i) for any breach of the director’s or officer’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for any transaction from which the director or officer derived an improper personal benefit, or (iv) as applicable solely to directors, for any payment of a dividend or approval of a stock repurchase that is illegal under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.
EIGHTH
The Corporation shall indemnify, in the manner and to the fullest extent permitted by the Delaware General Corporation Law (and in the case ofLaw. No amendment (including any amendment thereto, to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), any person (or the estateeffected by operation of any person) who islaw, by merger, consolidation or was a partyotherwise) to or is threatenedrepeal of this paragraph shall apply to be made a party to,or have any threatened, pendingeffect on the liability or completed action, suit or proceeding, whether or not by or in the rightalleged liability of the Corporation, and whether civil, criminal, administrative, investigative or otherwise, by reason of the fact that such person is or was aany director or officer of the Corporation for or iswith respect to any acts or was serving at the requestomissions of the Corporation as asuch director or officer of another corporation, partnership, joint venture, trustoccurring prior to such amendment or other enterprise, including service with respect to an employee benefit plan. The corporation may, to the fullest extent permitted by the Delaware General Corporation Law, purchase and maintain insurance on behalf of any such person against any liability which may be asserted against such person.�� To the fullest extent permitted by the Delaware General Corporation Law, the indemnification provided herein may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement and any such expenses may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the person seeking indemnification to repay such amounts if it is ultimately determined that he or she is not entitled to be indemnified. The indemnification provided herein shall not be deemed to limit the right of the Corporation to indemnify any other person for any such expenses to the fullest extent permitted by the Delaware General Corporation Law, nor shall it be deemed exclusive of any other rights to which any person seeking indemnification from the Corporation may be entitled under any agreement, the Corporation’s Bylaws, vote of stockholders or disinterested directors, or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. The Corporation may, but only to the extent that the Board of Directors may (but shall not be obligated to) authorize from time to time, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation to the fullest extent of the provisions of this Article Eighth as they apply to the indemnification and advancement of expenses of directors and officers of the Corporation.repeal.
NINTH
From time to time any of the provisions of this Certificate of Incorporation may be amended, altered, or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the stockholders of the Corporation by this Certificate of Incorporation are granted subject to the provisions of this Article Ninth.
IN WITNESS WHEREOF, ePlus inc. has caused this Amended and Restated Certificate of Incorporation to be executed by its duly authorized officer on this ______ day of ___________, 2008.
| 3. | EPLUS INC.This Certificate of Amendment has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. | | | | | 4. | This Certificate of Amendment shall become effective at [_]:[_] [a/p].m., Eastern Time, on [Month] [day], 2023. |
IN WITNESS WHEREOF, said corporation has caused this certificate to be signed this ________________ day of ________________, 2023.
| Signature: __________________________By: | | | |
| Name: _____________________________Authorized Officer Title: | | Corporate Secretary |
| Name | | | Title: ______________________________Erica S. Stoecker |
Annual Meeting of Stockholders Of
ePlus inc.
[September 15, 2008]
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Erica S. Stoecker and Kleyton L. Parkhurst, and each or either of them, proxies, with power of substitution, to vote all shares of the undersigned at the Annual Meeting of Stockholders of ePlus inc., a Delaware corporation, to be held on [September 15, 2008] at 8:00 a.m. at the Hyatt Regency located at 1800 Presidents Street, Reston, Virginia 20170, or at any adjournment thereof, upon the matters set forth in the Proxy Statement for such Meeting, and in their discretion, upon such other business as may properly come before the Meeting.
1. | To elect as Directors, each to serve a term as described below |
| · | To elect three Class I Directors, each to serve a term of one year and until their successors have been duly elected and qualified. |
TO VOTE FOR ALL THE NOMINEES LISTED BELOW
£ FOR ALL THE NOMINEES LISTED BELOW £ WITHHOLD AUTHORITY
C. Thomas Faulders, III
Lawrence S. Herman
Eric D. Hovde
OR TO VOTE FOR EACH NOMINEE SEPARATELY
C. Thomas Faulders, III | £ FOR £ WITHHOLD AUTHORITY | Lawrence S. Herman | £ FOR£ WITHHOLD AUTHORITY | Eric D. Hovde | £ FOR £ WITHHOLD AUTHORITY |
| · | To elect three Class II Directors, each to serve a term of two years and until their successors have been duly elected and qualified. |
TO VOTE FOR ALL THE NOMINEES LISTED BELOW
£ FOR ALL THE NOMINEES LISTED BELOW £ WITHHOLD AUTHORITY
Irving R. Beimler
Milton E. Cooper, Jr.
Terrence O’Donnell
OR TO VOTE FOR EACH NOMINEE SEPARATELY
Irving R. Beimler | £ FOR £ WITHHOLD AUTHORITY
| Milton E. Cooper, Jr. | £ FOR £ WITHHOLD AUTHORITY | Terrence O’Donnell | £ FOR £ WITHHOLD AUTHORITY |
| · | To elect two Class III Directors, each to serve a term of three years and until their successors have been duly elected and qualified. |
TO VOTE FOR BOTH THE NOMINEES LISTED BELOW
£ FOR BOTH THE NOMINEES LISTED BELOW £ WITHHOLD AUTHORITY
Phillip G. Norton Bruce M. Bowen
OR TO VOTE FOR EACH NOMINEE SEPARATELY
Phillip G. Norton | £ FOR £ WITHHOLD AUTHORITY
| Bruce M. Bowen | £ FOR £ WITHHOLD AUTHORITY
|
2. To approve the 2008 Non-Employee Director Long-Term Incentive Plan
3. To approve the 2008 Employee Long-Term Incentive Plan
4.To approve our Amended and Restated Certificate of Incorporation
5. To ratify the appointment of Deloitte & Touche LLP as ePlus’ independent auditors for ePlus’ fiscal year ending March 31, 2009.
Dated:________________, 2008
Signature if held jointly: | |
NOTE: When shares are held by joint tenants, both should sign. Persons signing as Executor, Administrator, Trustee, etc. should so indicate. Please sign exactly as the name appears on the proxy.
THE SHARES REPRESENTED BY ALL PROXIES RECEIVED WILL BE VOTED IN ACCORDANCE WITH THE CHOICES SPECIFIED ON SUCH PROXIES. THE SHARES REPRESENTED BY A PROXY WILL BE VOTED IN FAVOR OF A PROPOSAL IF NO CONTRARY SPECIFICATION IS MADE. ALL VALID PROXIES OBTAINED WILL BE VOTED AT THE DISCRETION OF THE BOARD OF DIRECTORS WITH RESPECT TO ANY OTHER BUSINESS THAT MAY COME BEFORE THE ANNUAL MEETING.
PLEASE MARK, SIGN, AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
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