| Item 5.02 | Departure of Director or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
At the annual meeting of the shareholders of ScanSource, Inc. (the “Company”) held on January 27, 2022, (the “Annual Meeting”), the shareholders of the Company approved the ScanSource, Inc. 2021 Omnibus Incentive Compensation Plan (the “2021 Plan”). The 2021 Plan had previously been approved by the Company’s Board of Directors (the “Board”) and the Compensation Committee of the Board.
The 2021 Plan replaces the Company’s current long-term equity incentive plan, the ScanSource, Inc. 2013 Long-Term Incentive Plan (the “2013 Plan”), and no further awards will be granted under the 2013 Plan. Awards previously granted under the 2013 Plan will continue in accordance with their terms.
The 2021 Plan permits the grant of any or all of the following types of awards to grantees: stock options, including non-qualified options and ISOs; SARs; restricted stock; deferred stock and restricted stock units; performance units and performance shares; dividend equivalents; and other stock-based awards. Eligible grantees include employees, officers, non-employee consultants and non-employee directors of the Company and its affiliates.
Under the terms of the 2021 Plan, the maximum number of shares of the Company’s common stock available for issuance upon settlement of awards shall be an aggregate of 1,600,000 shares of the Company’s common stock, (i) plus that number of shares of the Company’s common stock subject to awards granted under the 2013 Plan which hereafter become available for future awards in accordance with the provisions of the 2021 Plan and (ii) reduced on a one-for-one basis by that number of shares of the Company’s common stock subject to awards granted under the 2013 Plan between October 31, 2021 and January 27, 2022. However, the total number of shares of common stock that may be delivered pursuant to the exercise of ISOs granted under the 2021 Plan may not exceed 1,600,000 shares. The 2021 Plan imposes limitations on the amount of participant awards that can be granted in any single calendar year; requires most awards granted under the 2021 Plan to have a minimum vesting schedule of one year; prohibits the grant of discounted stock options or SARs or the repricing of options and SARs without shareholder approval; prohibits the payment of dividend equivalents unless and until the underlying award vests; and provides express requirements on what happens upon a change in control of the Company.
The Compensation Committee of the Board will administer the 2021 Plan and approve the grant and terms of awards (consistent with the terms of the 2021 Plan). All awards granted under the 2021 Plan are subject to the Company’s standard share retention guidelines and recoupment policies in effect from time to time. The Board reserves the right to amend the 2021 Plan, subject to shareholder approval where required by applicable law.
The foregoing summary description of the 2021 Plan is qualified in its entirety by reference to the actual terms of the 2021 Plan, which are incorporated herein by reference as Exhibit 10.1. For additional information regarding the 2021 Plan, please refer to “Proposal Number 4 – Approval of ScanSource, Inc. 2021 Omnibus Incentive Compensation Plan” on pages 28-37 of the Company’s definitive proxy statement, as filed with the Securities and Exchange Commission on December 7, 2021.
| Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year |
On January 27, 2022, following approval by the Board and the Company’s shareholders at the Annual Meeting, the Company amended its Amended and Restated Bylaws (as amended, the “Bylaws”) and filed Second Amended and Restated Articles of Incorporation (as amended, the “Articles”). The Articles will become effective upon the filing with the Secretary of State of the State of South Carolina. The Bylaws and the Articles include the following amendments:
| | • | | Section 2.07 of the Bylaws and Section 4(c) of the Articles have been amended to implement a majority voting standard in uncontested director elections. This amendment implements a majority voting standard in any meeting of shareholders to vote for uncontested directors and departs from the existing plurality standard imposed by default under the South Carolina Business Corporation Act (“SCBCA”). Under a majority voting standard, in order to be elected, a majority of the votes cast on the proposal for a nominee’s election must be in favor of the nominee’s election. Contested director elections will continue to be decided by a plurality standard. |
