(2) | TheWe calculated market value was computed by multiplying the closing price of our common stock ($49.04) on the last business day of our fiscal year, March 31, 2017 ($135.05), divided by 2 to adjust for the stock split that occurred the same day, multiplied2023, by the number of shares in the first column, which similarly have been adjusted for the stock split.column. |
Fiscal Year 2023 Options Exercised and Stock Vested
Fiscal 2017 Option Exercises and Stock Vested |
The following table sets forth information with respect to the shares of Company common stock acquired by our NEOs through vesting of restricted stock during our 2023 fiscal year 2017.year. There were no stock options outstanding during fiscal year 2017. The number of shares acquired has been retroactively adjusted to reflect the 2-for-1 stock split on March 31, 2017.2023.
| Stock Awards | |
Name | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($)(1) | |
Phillip G. Norton | | | 32,637 | | | | 1,446,063 | |
Mark P. Marron | | | 37,317 | | | | 1,637,644 | |
Elaine D. Marion | | | 29,717 | | | | 1,308,526 | |
| | 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, with both figures retroactively adjusted to reflect the March 31, 2017, 2-for-1 stock split.acquired. Additionally, the restricted stock shares were net-share settled such that the Company withheld shares with value equivalent to the named executive officers’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 named executive officers.NEOs. The net number of shares acquired by Mr. Norton,were as follows: Mr. Marron, and28,579; Ms. Marion, was 20,339, 22,81917,825; and 18,845, respectively.Mr. Raiguel, 17,825. |
Employment Agreements, Severance and Change in Control Provisions |
Employment Agreements, Severance, and Change in Control Provisions
Our incentive plans for and our employment agreements with our executive officersNEOs reflect our compensation philosophy. New employment agreements with our executive officers were entered into effective July 25, 2016 for Mr. Norton, and August 1, 2016 for Mr. Marron and Ms. Marion.
All of our employment agreements with our named executive officersNEOs contain “clawback” provisions in connection theas required by Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and the Sarbanes-Oxley Act of 2002.Sarbanes-Oxley.
In all cases, our named executive officers’NEOs’ receipt of severance payments is contingent upon his or hertheir executing a release, and certifying that he or she has compliedthey will comply with certain confidentiality, non-competition, and non-solicitation provisions of the employment agreement.
The Company’s employment agreements with its named executive officersNEOs are intended to comply with IRC Section 409A of the Internal Revenue Code.409A. The material terms of the employment agreements are described below. Also, pursuant to our 2021 Employee LTIP and standard award agreement, upon a change of control, as defined in the plan, unvested stock issued to any employee will vest.
Phillip G. Norton
Executive Chairman
| · | Effective July 25, 2016. |
| · | Mr. Norton’s agreement provides that his employment shall terminate effective July 31, 2018, unless either the employment terminates earlier in accordance with his agreement, or he and the Board of directors agree in writing to extend the term. The expiration of Mr. Norton’s employment agreement will not impact his service on our Board of Directors. |
| · | A severance payment upon termination of employment “without cause,” or by Mr. Norton for “good reason,” as those terms are defined in the agreement, result in severance as set forth in a schedule attached to the agreement. As of March 31, 2017, the severance due would be $1,150,000, and reduces to $0 in July 2018. Mr. Norton would also be entitled to, at the Company’s election, either the acceleration of unvested restricted stock, or cash in an amount equal to the value of the stock on the date of termination. Mr. Norton is additionally entitled to a pro-rated Cash Incentive Award, to the extent that Performance Goals are met, with the payment to be made at the time the payment would have been made had there been no termination of employment. |
| · | In the event of Mr. Norton’s death, or termination due to Disability, then he shall be entitled to cash severance as set forth in a schedule attached to the agreement, a pro-rated Cash Incentive Award, to the extent that Performance Goals are met, with the payment to be made at the time the payment would have been made had there been no termination of employment, and an acceleration of any unvested restricted stock, as set forth in the 2012 Employee LTIP and Mr. Norton’s award agreements. |
vest upon a “Change in Control,” as defined in the 2021 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 that the Performance Goals have been met, with the payment to be made after the end of the fiscal year at the time the payment would have been made had there been no termination. Additionally, the Company would also pay Mr. Marron an amount in cash equal to the cost of premiums the Company paid prior to the date of termination for Mr. Marron and his dependents’ qualified coverage under the Company’s medical, prescription, dental, and other health benefits, for eighteen months.
| · | In exchange for Mr. Norton’s ongoing assistance with, among other things, the leadership transition as Mr. Marron moves into the Chief Executive Officer role, Mr. Norton’s agreements provides for three retention payments, on the following schedule: $250,000 on January 31, 2017, $250,000 on July 31, 2017, and $500,000 on January 31, 2018. |
In the event of termination without cause, or by Mr. Marron 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 stock on the date of termination.
| · | In the event Mr. Norton’s employment is terminated due to disability, by the Company without good Cause or by Mr. Norton for good Reason (as defined in the agreement), the Company also would be responsible for COBRA to maintain health and dental insurance for Mr. Norton and his spouse through the earlier of 18 months after the termination date, or the date that he or his spouse become ineligible for COBRA. |
| · | Mr. Norton’s agreement also sets his fiscal year 2018 Cash Incentive Plan target award at $150,000. |
The table below summarizes the potential payments and benefits to Mr. NortonMarron upon the occurrence of certain triggering events. The table assumes a hypothetical effective date of termination of March 31, 2017, and a payment of the Target Cash Incentive.2023. The table does not include earned but unpaidaccrued, unused vacation time, which is paid to all employees upon termination of employment.employment, pursuant to ePlus’ policies.
Triggering Event | | Cash Severance | | | Target Cash Incentive (1) | | | Equity-Based Compensation Awards(2)(3) | | | Benefits | | | Total | |
Termination Without Cause, or for Good Reason, as defined in the agreement | | $ | 1,150,000 | | | $ | 250,000 | | | $ | 2,207,122 | | | $ | 70,555 | | | $ | 3,677,677 | |
Change in Control - without termination | | $ | - | | | $ | 250,000 | | | $ | 2,207,122 | | | $ | - | | | $ | 2,457,122 | |
Change in Control - with termination | | $ | 1,150,000 | | | $ | 250,000 | | | $ | 2,207,122 | | | $ | 70,555 | | | $ | 3,677,677 | |
Death or Disability | | $ | 750,000 | | | $ | 250,000 | | | $ | 2,207,122 | | | $ | 70,555 | | | $ | 3,277,677 | |
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) | Pursuant to“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 agreement,change in control. In the event of death,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, terminationTermination without causeCause or terminationby Mr. Marron for good reason,Good Reason, all as defined in theMr. Marron’s employment agreement, Mr. NortonMarron is entitled to a pro-rated amount of the Cash Incentive Award,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 assumesreflects the target goalamount 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 reached but not exceeded.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. |
(2)(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 based oncalculated using the closing price of the Company’sour common stock ($49.04) on the last business day of our fiscal year, March 31, 2017, of $67.53.2023. |
(3) | Pursuant to the 2012 Employee LTIP, and our standard award agreements, upon death or a change in control, as defined by the 2012 Employee LTIP, all unvested stock for all employees will vest. |
| · | Effective August 1, 2016, and entered into in connection with Mr. Marron’s promotion to Chief Executive Officer. |
| · | Mr. Marron’s agreement expires January 31, 2018, with automatic two-year successive renewal periods unless either party terminates the agreement 60 days prior to the end of the then-current term. |
| · | In the event of disability, termination without cause or termination for good reason (as defined in the agreement), Mr. Marron is entitled to eighteen months of his base salary, in addition to a pro-rated amount of the Cash Incentive Award, 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. |
| · | In the event of termination without cause, or by Mr. Marron for good reason, he is also entitled to, at the Company’s election, either the acceleration of unvested restricted stock, or cash in an amount equal to the value of the stock on the date of termination. |
| · | In the event of termination without cause by the Company or for good reason by Mr. Marron in the event of a termination in connection with a change in control, the Company also would be responsible for COBRA to maintain health and dental insurance for Mr. Marron and his dependents for 18 months. |
| · | Effective June 8, 2017, Mr. Marron’s employment agreement was amended to reflect his increase in base annual salary to $750,000. |
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 good reason (all as defined in the agreement), Ms. Marion is entitled to twelve months of her base salary, in addition to a pro-rated amount of the payment under our 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 health benefits, for eighteen months.
In the event of termination without cause or by Ms. Marion for good reason, she 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 stock on the date of termination.
The table below summarizes the potential payments and benefits to Mr. MarronMs. Marion upon the occurrence of certain triggering events. The table assumes a hypothetical effective date of termination of March 31, 2017, and a payment of the Target Cash Incentive.2023. The table does not include earned but unpaidaccrued, unused vacation time, which is paid to all employees upon termination of employment.employment, pursuant to ePlus’ policies.
Triggering Event | | Cash Severance | | | Target Cash Incentive (2) | | | Equity-Based Compensation Awards(3) | | | Benefits | | | Total | |
Termination Without Cause, or for Good Reason, as defined in the agreement | | $ | 1,050,000 | | | $ | 400,000 | | | $ | 8,473,442 | | | $ | 36,453 | | | $ | 9,959,895 | |
Change in Control - without termination | | $ | - | | | $ | 400,000 | | | $ | 8,473,442 | | | $ | - | | | $ | 8,873,442 | |
Change in Control - with termination | | $ | 1,050,000 | | | $ | 400,000 | | | $ | 8,473,442 | | | $ | 36,453 | | | $ | 9,959,895 | |
Death or Disability (1) | | $ | 1,050,000 | | | $ | 400,000 | | | $ | 8,473,442 | | | $ | 36,453 | | | $ | 9,959,895 | |
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) | Assumes disability. No cash severance is due“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 death.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. |
(2)(3) | In the event of disability, termination without cause or by Mr. MarronMs. Marion for good reason, or terminationall as defined in connection with a change in control, Mr. MarronMs. Marion’s employment agreement, Ms. Marion is entitled to a pro-rated amount of the Cash Incentive Award,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 assumesreflects the target goalamount 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 reached but not exceeded.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. |
(3)(6) | Pursuant to the 20122021 Employee LTIP, and our standard restricted stock award agreements, upon death or a change in control, as defined by the 20122021 Employee LTIP, all unvested stock for all employees will vest. |
Elaine D. Marion
Chief Financial Officer
| · | Effective as of August 1, 2016, with an initial expiration of one-year, however, the employment agreement contains automatic successive renewal periods unless either party terminates the agreement 60 days prior to the end of the then-current term. As no notice to terminate was delivered, Ms. Marion’s agreement is in effect through July 31, 2018. |
| · | In the event of disability, termination without cause or termination for good reason (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 Cash Incentive Award. |
| · | In the event of termination without cause, or by Ms. Marion for good reason, she is also entitled to, at the Company’s election, either the acceleration of unvested restricted stock, or cash in an amount equal to the 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 datelast business day of termination.our fiscal year, March 31, 2023. |
| · | In the event of termination without cause by the Company or for good reason by Ms. Marion in the event of a termination in connection with a change in control, the Company also would be responsible for COBRA to maintain health and dental insurance for Ms. Marion and her dependents for 18 months. |
| · | Effective June 8, 2017, Ms. Marion’s employment agreement was amended to reflect the increase in her base annual salary to $450,000. |
Mr. Raiguel’s employment agreement was effective as of May 7, 2018. Pursuant to such agreement (and the Compensation 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 initial termination date of July 31, 2019; however, the agreement contains automatic one-year successive renewal periods unless either party terminates the agreement 60 days prior to the end of the then-current term. As no notice of termination was provided, the expiration date of his agreement is now July 31, 2024.
In the event of disability, termination without cause, or termination for good reason (all as defined in the agreement), Mr. Raiguel is entitled to twelve months of his base salary, in addition to a pro-rated amount of the payment under our 2018 CIP. Additionally, the Company would pay to Mr. Raiguel an amount in cash equal to the cost of premiums the Company paid prior to the date of termination for Mr. Raiguel and his dependents’ qualified coverage under the Company’s medical, prescription, dental, and other health benefits, for 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 stock on the date of termination.
The table below summarizes the potential payments and benefits to Ms. MarionMr. Raiguel upon the occurrence of certain triggering events. The table assumes a hypothetical effective date of termination of March 31, 2017, and a payment of the Target Cash Incentive.2023. The table does not include earned but unpaidaccrued, unused vacation time, which is paid to all employees upon termination of employment.employment, pursuant to ePlus’ policies.
Triggering Event | | Cash Severance | | | Target Cash Incentive (2) | | | Equity-Based Compensation Awards(3) | | | Benefits | | | Total | |
Termination Without Cause, or for Good Reason, as defined in the agreement | | $ | 415,000 | | | $ | 207,500 | | | $ | 5,070,182 | | | $ | - | | | $ | 5,692,682 | |
Change in Control - without termination | | $ | - | | | $ | 207,500 | | | $ | 5,070,182 | | | $ | - | | | $ | 5,277,682 | |
Change in Control - with termination | | $ | 415,000 | | | $ | 207,500 | | | $ | 5,070,182 | | | $ | - | | | $ | 5,692,682 | |
Death or Disability (1) | | $ | 415,000 | | | $ | 207,500 | | | $ | 5,070,182 | | | $ | - | | | $ | 5,692,682 | |
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) | Assumes disability. No cash severance is due“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 death.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. |
(2)(3) | In the event of disability, termination by the Company without cause or by Ms. MarionMr. Raiguel for good reason, or terminationall as defined in connection with a change in control, Mr. MarronRaiguel’s employment agreement, Mr. Raiguel is entitled to a pro-rated amount of the Cash Incentive Award.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 assumesreflects the target goalamount 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 reached but not exceeded.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. |
(3)(6) | Pursuant to the Company’s 20122021 Employee LTIP, and our standard restricted stock award agreements, upon death or a change in control, as defined by the 20122021 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 Company is required to provide annual disclosure of the ratio of the median 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 equitable result. The below table shows our median employee annual compensation and the total compensation of Mr. Marron as reflected in the Summary Compensation Table, as well as the ratio of the two pay levels. This pay ratio is a reasonable estimate, calculated in a 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 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.
Fiscal
| | Summary Compensation Table Total to | | | Compensation Actually Paid to | | | Average Summary Compensation Table Total for | | | Average Compensation Actually Paid to | | | Value of Initial Fixed $100 Investment Based On: | | | Net Income
| | | Operating Income | |
Year | | PEO | | | PEO | | | Non-PEO NEOs | | | Non-PEO NEOs | | | Company TSR | | | Peer Group TSR | | | ($ thousands) | | | ($ 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
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 most important performance measures used to link executive compensation actually paid for the most recently completed fiscal year, as described above, to the Company’s performance:
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of March 31, 2017, about our common stock that may be issued upon the exercise of options, warrants, and rights under our prior equity compensation plans. It also provides information2023, regarding the number of securities available for future issuance under our current equity compensation plans, under whichplans. Currently, there are no outstanding options, warrants, or rights.rights under our prior or current equity compensation plans pursuant to which common stock may be issued.
Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants, and rights | | | Weighted average exercise price of outstanding options, warrants, and rights | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column) | |
Equity compensation plans approved by security holders | | | - | | | | n/a | | | | 1,075,642 | (1) |
Equity compensation plans not approved by security holders | | | - | | | | n/a | | | | - | |
Total | | | - | | | | | | | | 1,075,642 | |
| 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 253,352198,720 shares reserved for issuance under the 20082017 Non-Employee Director Long-Term Incentive Plan and available for future restricted stockequity awards, and 822,2902,861,952 shares reserved for issuance under the 20122021 Employee LTIP and available for future awards.Long Term Incentive Plan. |
PROPOSAL
43 –Ratification of the Selection of Deloitte & Touche LLP as our Independent Registered Public Accounting Firm for our Fiscal Year Ending March 31,
20182024
The Board of Directors and the Audit Committee recommend that the stockholdersshareholders ratify the selection of Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public accounting firm for the year ending March 31, 2018. The Audit Committee approved the selection of Deloitte as the Company’s independent registered public accounting firm for the fiscal year 2018.ending March 31, 2024. Deloitte is currently the Company’s 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 Charter, Bylaws noror other governing documents ornor the law require shareholder ratification of the selection of Deloitte as the Company’s independent registered accounting firm. However,As a matter of good corporate practice, however, the Company is submitting the selection of Deloitte to the shareholders for ratification as a matter of good corporate practice.ratification. If the shareholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain that firm.Deloitte. Even if the selection is ratified, the Audit Committee in itsretains discretion may direct the selection ofto select a different independent registered 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 shareholders.
Representatives of Deloitte are expected to attend the 2023 Annual Meeting and will have the opportunity to make a statement if they desire and to respond to appropriate questions.
THE BOARD UNANIMOUSLY RECOMMENDS VOTING FOR RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY’S INDEPENDENT AUDITORREGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING MARCH 31, 2018.2024
The following is theAudit Committee’s report of the Audit Committee with respect toregarding the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2017.2023, is below. The information contained in this report isshall not be deemed to be (i) soliciting material, is not deemed(ii) filed with the SEC, and is(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.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 ePlus inc.’sthe Board, of Directors (the “Board”), which is available on the Investors section of the Company’s website at http:https://www.eplus.com/investors/corporate-governance-legal/committee-charterscommittee-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 theits 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 of the NASDAQ Stock Market,and in accordance with SEC rules and regulations, as currently in effect, and in accordance with the rules and regulations promulgated by the SEC, 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 and for thestatements; establishment and effectiveness of internal controlcontrols over financial reporting,reporting; and for maintainingmaintenance of appropriate accounting and financial reporting principles, and policies, and internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm, 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”PCAOB”), expressing an opinion as to the conformity of such financial statements with generally accepted accounting principles, and auditing the effectiveness of internal controlcontrols over financial reporting.
In performing its oversight role, the Audit Committee has consideredreviewed 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 Auditing Standard No. 16, Communications with Audit Committees, as adopted by the PCAOB.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 freeunfettered access to the Audit Committee to discuss any matters the firmDeloitte deems appropriate.
Members of the Audit Committee rely without independent verification on the information provided to them and on the representations made byof management and the independent registered public accounting firm.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, of America, that Deloitte is in fact “independent”,“independent,” or the effectiveness of the Company’s internal controls.
Based on the reportsreview 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, 2017.2023. 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 | |
| |
| Terrence O’Donnell, Chairman |
| John E. Callies |
| C. Thomas Faulders, III |
| Lawrence S. Herman |
Submitted by the Audit Committee
Maureen F. Morrison, Chair John E. Callies C. Thomas Faulders, III Independent Registered Public Accounting Firm Fees and Independence
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, 2018.2024.
The following table presents the aggregate fees paid to or accrued by ePlus relating to fees due to Deloitte for the audit of the Company’s annual consolidated financial statements, and all other professional services rendered by Deloitte, for the fiscal years ended March 31, 2017,2023, and March 31, 2016:2022:
| | Fiscal 2017 | | | Fiscal 2016 | |
Audit Fees | | $ | 1,654,062 | | | $ | 1,662,531 | |
Audit Related Fees | | | - | | | | - | |
Tax Fees | | | - | | | | - | |
All Other Fees | | | 1,895 | | | | 5,000 | |
TOTAL FEES | | $ | 1,655,957 | | | $ | 1,667,531 | |
| | 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 | |
Audit Fees and Audit-Related Fees
Deloitte billed expenses for the fiscal year ended March 31, 2023. The Audit Committee pre-approves all auditing services (which may entail providing comfort letters in connection with securities underwriting), and all audit-related services Deloitte provided to us, subject to a de minimis exception as set forth in the SEC’s rules.There wereTax Fees
Deloitte provided no audit-relatedtax services, and thus billed no tax fees billed by Deloitte for the fiscal years ended March 31, 2016 or 2015.2023, and 2022.
There were no fees billed by Deloitte for tax-related services rendered for the fiscal years ended March 31, 2016 or 2015.
There wereDeloitte provided other fees billed by Deloitte for an annual licenseservices related to online resources in the amount of $1,895 and $5,000other regulatory filings for the fiscal yearsyear ended March 31, 20172023. Deloitte provided no other services, and 2016 respectively.
There werethus billed no audit related services provided by Deloitte during the last two fiscal years. The Audit Committee pre-approves all auditing services (which may entail providing comfort letters in connection with securities underwriting), and all audit-related services provided to us by Deloitte, subject to a de minimis exception as set forth by the SEC.
PROPOSAL 5 –Approval of the 2017 Non-Employee Director Long-Term Incentive PlanThe Company currently maintains the 2008 Non-Employee Director Long-Term Incentive Plan, as amended (the “2008 Director LTIP” or the “Current Plan”). The Board believes that the Current Plan has been effective in attracting and retaining highly-qualified non-employee directors, and that the awards granted under the Current Plan have provided an incentive that aligns the economic interests of directors with those of our shareholders. As of July 21, 2017, the Current Plan has 252,817 shares of common stock remaining available for new awards. However, under the terms of the Current Plan, no grants may be made to non-employee directors after September 15, 2018. This limitation will permit only the 2017 annual grant to non-employee directors. The Current Plan will expire before the September 25th annual grant date for 2018. The Company believes that the additional shares would create a share pool that will be sufficient for annual grants to eligible non-employee directorsother fees, for the life of the 10-year New Plan.
The Compensation Committee (the “Committee”) has reviewed the Current Plan to determine whether it remains a flexible and effective source of compensation in terms of the number of shares of stock available for awards and in terms of its design, as well as whether it generally conforms with best practices in today’s business environment.
Based on its review, upon the recommendation of the Committee, the Board recommends that the Company adopt a new plan that replaces the Current Plan to:
| · | increase the number of shares of the Company’s stock available for new awards to 150,000 shares; |
| · | add an individual limit on restricted stock awards that a non-employee director may receive in any one calendar year; and |
| · | update and streamline certain administrative practices and liability provisions. |
Accordingly, the Board approved, and recommends that the Company’s shareholders approve, the 2017 Non-Employee Director Long-Term Incentive Plan (the “New Plan”). Upon approval of the New Plan by the Company’s shareholders, the New Plan will replace the Current Plan and no new awards will be made under the terms of the Current Plan. However, any outstanding awards previously granted under the Current Plan will continue in effect after approval of the New Plan and will not be deemed amended or modified by the adoption and approval of the New Plan. If the New Plan is not approved by the Company’s shareholders, the Current Plan will remain in effect according to its terms and the Company may continue to grant awards under that plan.
The material features of the New Plan are summarized below. The summary is qualified in its entirety by reference to the specific provisions of the New Plan, the full text of which is set forth as Annex A to this Proxy Statement.
The New Plan will be administered by the Committee. Subject to the express provisions of the New Plan, the Committee has the authority, in its discretion, to interpret the New Plan, establish rules and regulations for its operation, and determine the form and amount and other terms and conditions of such awards.
Eligibility and Limitation on Awards |
Eligible participants in the New Plan are directors 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 (“Outside Director”). Six of our directors proposed for election at the annual meeting will be eligible to participate in the New Plan. Messrs. Norton and Bowen are not eligible to participate in the New Plan. The maximum awards that can be granted under the New Plan to a single participant in any calendar year are awards having a grant date fair value totaling $150,000.
Summary of Award Terms and Conditions |
Awards under the New Plan may only include restricted shares of common stock.
Under the proposed New Plan, each Outside Director, every September 25th beginning September 25, 2017, or, if September 25th is not a business day, then on the first business day thereafter, will receive an annual grant of restricted stock having a Fair Market Value (as defined in the Plan) 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 immediately prior to the respective Annual Grant Date. Also, directors may elect to receive their cash compensation in restricted stock.
The restricted shares granted to directors under the New 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 shareholders 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 New 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. At the end of the restriction period, the director will receive any cash dividends with respect to such restricted shares that were paid during the restriction period. 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.March 31, 2022.
Shares Subject to the New Plan |
The number of shares of the Company’s common stock reserved for issuance, subject to stockholder approval, with respect to awards under the New Plan is one hundred fifty thousand (150,000). Restricted shares that are forfeited will be available for future grants of restricted shares under the New Plan.
Anti-Dilution Protections |
In the event of any change in corporate capitalization such as a stock split or stock dividend, or a corporate transaction such as any reorganization, merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company, such adjustment shall be made in the number and class of shares which are reserved and may be delivered under the New Plan, in the number and class of shares subject to outstanding awards, and in any award limits as may be determined to be appropriate and equitable by the Committee.
Amendment and Termination |
The New Plan may be amended, altered, suspended or terminated by the Board, in its sole discretion, without shareholder approval, unless approval of a change is required by applicable law. The equity payable under the New Plan is intended to constitute a designated percentage (initially 50%) of the compensation paid to an Outside Director each year and if the Board approves an increase in the total annual retainer, the value of the annual awards under the New Plan will increase subject to the individual limitation described above. It is not anticipated that shareholder approval will be sought, in the event of an increase in the total annual retainer. Any amendments made without shareholder approval could increase the costs of the New Plan. A director’s consent would be required to revoke or alter an outstanding award in a manner unfavorable to such director.
Federal Income Tax Consequences |
The federal income tax consequences of the issuance of awards under the New Plan are as described below. The following information is only a summary of the tax consequences of the awards, and participants should consult with their own tax advisors with respect to the tax consequences inherent in the ownership of the awards, and the ownership and disposition of any underlying securities.
A participant will not be taxed at the date of an award of restricted shares, but will be taxed at ordinary income rates on the fair market value of any restricted shares as of the date that the restrictions lapse, unless the participant, within 30 days after transfer of such restricted shares to the participant, elects under Section 83(b) of the Code to include in income the fair market value of the restricted shares as of the date of such transfer. The Company will be entitled to a corresponding deduction, subject to certain limits on the deductibility of compensation under the Code. Any disposition of shares after the restrictions lapse will be subject to the regular rules governing long-term and short-term capital gains and losses, with the basis for this purpose equal to the fair market value of the shares at the end of the restricted period (or on the date of the transfer of the restricted shares, if the participant elects to be taxed on the fair market value upon such transfer).
At the end of the restriction period, the participant shall have the right to receive any cash dividends, with respect to such restricted shares, that were paid during the restriction period (the “Accrued Dividends”). The Accrued Dividends will be taxable to the participant at ordinary income tax rates and will be deductible by the Company (unless the participant has elected to be taxed on the fair market value of the restricted shares upon transfer pursuant to Section 83(b), in which case the Accrued Dividends will be taxable to the participant as dividends and will not be deductible by the Company. Dividends declared and paid to the participant following the restriction period will be taxable to the participant as dividends and will not be deductible by the Company.
The New Plan will be effective as of September 12, 2017, if approved by the shareholders of the Company. If not approved by the shareholders, no awards will be made under the New Plan and the Current Plan will continue in effect, subject to its existing terms and conditions.
Shareholders are requested in this Proposal 5 to approve the New Plan. The affirmative vote of the holders of a majority of the shares entitled to vote on Proposal 3, present in person 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 Restated Certificate of Incorporation (our “Charter”), subject to shareholder approval, to provide for the elimination or limitation of monetary liability of specified executive officers of the Company for breach of the duty of care. Article Seventh of our 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 limiting 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 Certificate of Amendment to our Charter in the form attached hereto as Annex A (the “Charter Amendment”) to incorporate the provisions of Section 102(b)(7). In accordance with the DGCL, however, our Board may elect to abandon the Charter Amendment without further action by the shareholders at any time prior to the effectiveness of the filing of the Charter Amendment 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 will beAnnual Meeting is required to approve the New Plan. If you “Abstain” from voting, itProposal 4. Abstentions and broker non-votes will have the same effect as an “Against” vote. Broker non-votes will have no effect.voting “AGAINST” this proposal.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE
FOR APPROVAL OF
THE 2017 NON-EMPLOYEE DIRECTOR LONG-TERM INCENTIVE PLAN.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 or about July 31, 2017,2023, to shareholders of the CompanyCompany’s shareholders in connection with theour Board’s solicitation by our Board of Directors of proxies to be voted at the 2023 Annual Meeting of Shareholders on September 12, 2017,14, 2023, at 8:00 am30 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 athe Company’s shareholder, of the Company, are entitled to vote. It also includes information that we are required to provide to you under SEC rules and that is designed to assist you in voting your shares.
What is the purpose of the 2023 Annual Meeting?
At our 2023 Annual Meeting, of Shareholders, shareholders will be asked to vote to (1) to elect the eightnine director nominees named in this proxy statement for a term expiring at the 20182024 Annual Meeting of Shareholders,Shareholders; (2) to approve, on an advisory basis, the compensation of our Named Executive OfficersNEOs; (3) to approve, on an advisory basis, the frequency of future advisory votes to approve Named Executive Officer compensation, (4) to ratify the appointment of the Company’s independent registered public accounting firm,firm; and (5)(4) approve an amendment to approve our 2017 Non-Employee Director Long-Term Incentive Plan.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 – Advisory Vote on the frequency of Future Advisory Votes to Approve Named Executive Officer Compensation,” “Proposal 4 – Ratification of Independent Registered Public Accounting Firm,”Firm” and (4) “Proposal 5 – 2017 Non-Employee Director Long-Term Incentive Plan.4 –Amendment to the ePlus inc. Amended and Restated Certificate of Incorporation.”
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 (the “Notice”).Shareholders.
Who canmay attend the 2023 Annual Meeting?
Only holders of our common stock as of the close of business on our Record Date, which was July 21, 2017,2023, or their duly appointed proxies, may attend the 2023 Annual Meeting. If you hold your shares through a broker, bank, or other nominee, you will be required to show the notice or voting instructions form you received from your broker, bank, or other nominee, or a copy of the statement (such as a brokerage statement) from your broker, bank, or other nominee reflecting your stock ownership as of July 21, 2017 in orderour Record Date to be admitted to the 2023 Annual Meeting.
Who is entitled tomay 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, 2017,2023, there were 14,167,18826,940,564 shares of our common stock outstanding, andwhich 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?
Shareholders of record canEligible shareholders may vote in one of four ways:
| ·• | By telephone – You may usetelephone. Use the toll-free telephone number shown on your Notice or proxy card; |
| ·• | Via the Internet – You may visitInternet. Visit the Internet website shown on your Notice or proxy card and follow the on-screen instructions; |
| ·• | By mail – You may date,mail. Date, sign, and promptly return your proxy card by mail in a postage prepaid envelope; or |
| ·• | In person – You may deliverperson. Deliver a completed proxy card at the meeting or vote in person. |
Voting instructions for eligible shareholders of record (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, to allow shareholders to give voting instructions, and to confirm that the shareholders’ instructions have been recorded properly. A control number, located on the Notice and the proxy card, will identify shareholders and allow them to submit their proxies and confirm that their voting instructions have been properly recorded. Costs associated with telephone and electronic access, such as usage charges from telephone companies and Internet access providers, must be borne by the shareholder. If you submit your proxy by telephone or via the Internet, it will not be necessary to return your proxy card. The deadline for voting by telephone or via the Internet is 11:59 pm8:30 a.m. ET on Monday, September 11, 2017.14, 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 aan eligible shareholder of record does not return a signed proxy card or submit a proxy by telephone or via the Internet, and does not attend the meeting and vote in person, his or her shares will not be voted. Shares of our common stock represented by properly executed proxies received by us or proxies submitted by telephone or via the Internet, and which are not revoked, will be voted at the meeting in accordance with the instructions contained therein.
If you submit a properly completed proxy but do not indicate how your shares should be voted on a proposal, the shares represented by your proxy will be voted as the Board of Directors 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 with respect tofor 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 Named Executive OfficerNEO compensation (Proposal 2), the advisory vote on the frequency of future advisory votes to approve Named Executive Officer compensation (Proposal 3), and the 2017 Non-Employee Director Long-Term Incentive Planamendment to our Charter (Proposal 5)4) may not be voted on by your broker if it has not received voting instructions. |
| ·• | Discretionary Items.The ratification of Deloitte & Touche LLP as the Company’s independent registered public accounting firm (Proposal 4)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 stockholdershareholder 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,ePlus inc., 13595 Dulles Technology Drive, Herndon, Virginia, 20171; |
| · | Delivering a later-dated proxy (either in writing, by telephone or via the Internet); or
|
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.
No. As a matter of policy, shareholder proxies, ballots, and tabulations that identify individual stockholdersshareholders 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.
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.
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.
The Board knows of no other matters that will be presented for consideration at the 2023 Annual Meeting of Shareholders.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.
44Annual Report on Form 10-K
Annual Report on Form 10-K |
A copy of our Annual Report, which includes our 2023 Form 10-K, for the year ended March 31, 2017, as filed with the SEC, will be sent to any shareholder without charge upon written request addressed to:
to Investor Relations,
ePlus at ePlus inc.
, 13595 Dulles Technology Drive, Herndon, Virginia 20171.
Herndon, VA 20171
(703) 984-8400
You may also obtain our Form 10-K over the Internet atvia the SEC’s Internet site, www.sec.gov, or our Annual Report, which includes our 2023 Form 10-K, over the Internet onvia our website, www.eplus.com/Investors/Pages/Annual-Reports.aspx.
Additional copies of the Annual Report, on Form 10-K, the Notice, this Proxy Statementproxy 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 stockholdershareholder 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 2018 Annual Meeting |
Shareholder Proposals for the 2024 Annual Meeting of Shareholders
Shareholders have the opportunity to submit proposals for next year’sthe 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, 2018, 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 ePlusat 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 Securities Exchange Act of 1934, or 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 20182024 Annual Meeting.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 not to be included in next year’s proxy materials, or wish to nominate a candidate for election to the Board at next year’s Annual Meeting of Shareholders, your proposal or nomination must be submitted in writing and received by the Corporate Secretary not lessmore than 60120 days before the datenor later than 90 days in advance of the first anniversary of this 20172023 Annual Meeting if the 20182024 Annual Meeting of Shareholders is held within 30 days of the anniversary of this 20172023 Annual Meeting or, otherwise, within seven days after the first public announcement of the date of the 20182024 Annual Meeting.Meeting of Shareholders. Assuming that our 20182024 Annual Meeting of Shareholders is held on schedule, to be “timely” within the meaning of Rule 14a-4(c) under the Exchange Act, we must receive written notice of your intention to introduce a nomination or other item of business at that Meeting before July 14, 2018.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 Meetingmeeting will use their discretion in voting the proxies if any such matters are raised at the Meeting.meeting.
A submission by an ePlusePlus shareholder must contain the specific information required in ePlus’ePlus’ Bylaws. If you would like a copy of ePlus’ePlus’ current Bylaws, please write to the Corporate Secretary ePlusat ePlus inc., 13595 Dulles Technology Drive, Herndon Virginia 20171. ePlus’ePlus’ current Bylaws may also be found on the Company’s website at http:https://www.eplus.com/investors/corporate-governance-legal/amended-and-restated-bylaws.
Results of the Annual Meeting |
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 Securities and Exchange CommissionSEC within four business days following the 2023 Annual Meeting.
Additional Information About the Company |
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 ePlusePlus and our corporate governance practices at http://www.eplus.com/investors. Our website contains information about our Board, Boardits Committees, and their charters,charters; our Bylaws,Bylaws; and our Code of Conduct, Certificate of IncorporationCharter, and corporate governance guidelines.Corporate Governance Guidelines. Shareholders may obtain, without charge, hardprinted copies of the above documents by writing to:to the Corporate Secretary, ePlusat ePlus inc., 13595 Dulles Technology Drive, Herndon, Virginia 20171.
The Company’s principal executive offices are located atePlus 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 Compensation Discussion and AnalysisCD&A section of this proxy statement regarding the benefits and anticipated results of our compensation programs and the Compensation Committee’s plans and intentions relating thereto. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as may be required by law. Forward-looking statements should be evaluated together with the many uncertainties that affect our business, particularly those mentioned under the heading “Risk Factors” in our Annual Report, (accompanying this proxy statement), and in the periodic reports that we file with the SEC on Form 10-Q.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON SEPTEMBER 12, 201714, 2023
The proxy materials for the Company’s annual meeting of shareholders,2023 Annual Meeting, including our Annual Report on Form 10-K for the year ended March 31, 2017,2023, and this proxy statement, are available over the Internet by accessingonline via the Company’s website at http: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, 20172023 | By Order of the Board of Directors |
| |
| Erica S. Stoecker |
| |
| Corporate Secretary, & General Counsel, & Chief Compliance Officer |
2017 NON-EMPLOYEE DIRECTOR LONG-TERM INCENTIVE PLANCERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
EPLUS INC.
Pursuant to Section 1 Establishment and Purposes242 of the Plan.
(a)Purpose. The purposes of this ePlus inc. 2017 Non-Employee Director Long-Term Incentive Plan (the “Plan”) are to attract, retain and compensate for service as membersGeneral Corporation Law of the BoardState of Directors of Delaware
ePlus inc. (the “Company”) highly qualified individuals who are not current employees, a corporation organized and existing under the laws 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 ownershipstate of Common Stock, in addition to underscoring their common interest with stockholders in increasing the long-term value of the Common Stock.Delaware (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: |
(b)Effective Date; Shareholder Approval. The Plan is effective September 12, 2017, 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; orSEVENTH
(iii) any action pursuant to which any person (as such term is defined in Section 13(d)No director or officer of the Exchange Act), corporation or other entityCorporation 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 electedbe personally liable to the Board and whose election,Corporation or nominationits stockholders for election, to the Board was approved by a votemonetary damages for breach 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.
“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 that renders the Participant incapable of performing his or her customary and usual duties for the Company (with or without a reasonable accommodation as required by law) and that in the judgment of the Committee is permanent and continuous in nature. The Committee may establish any process or procedure it deems appropriate for determining whether a Participant has a “Disability”.
“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 Select Market, 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 that complies with Code Section 409A and Code Section 422 if and to the extent required.
“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. 2017 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 Share Limits.
(a)Aggregate Share Limit. Subject to the provisions of Section 9 of the Plan, the maximum aggregate number of Shares that may be issued as Restricted Shares under the Plan is One Hundred Fifty Thousand (150,000) 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.
(b)Individual Share Limit. In no event shall any one Outside Director receive Restricted Stock Awards under Sections 7(a) or 7(b) of this Plan totaling in excess of One Hundred Fifty Thousand Dollars ($150,000) in any one calendar year.
Section 4 Administration of the Plan.
(a)Administration. The Plan shall be administered 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 that it deems necessary for the proper operation and administration of the Plan;
(vi) to waive or amend any terms, conditions, restrictions or limitations on an Award, to the extent permissible under applicable law.
(vii) 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 calculated at the minimum statutory withholding level. The Fair Market Value of the Shares to be withheld shalt 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;
(viii) 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
(ix) 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.
(c)No Liability. No member of the Committee shall be liable for any losses resulting from any action, interpretation or construction made in good faith with respect to the Plan, any Restricted Stock Agreement, or any Award granted under the Plan. The Company shall indemnify, to the fullest extent permitted by law, each person made or threatened to be made a party to any civil or criminal action or proceeding by reason of the fact that the person, or the executor or administrator of the person’s estate, is or was a member of the Committee or a delegate of the Committee.
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 12, 2027.
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, 2017, 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 immediately 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 respect of the Shares is filed with, and declared effective by, the Securities and Exchange Commission.
(c)Stock Fee Election. An Outside Director may make an election (a “Stock Fee Election”) to receive 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 Shares that relate to a Stock Fee Election shall be treatedfiduciary duty as a Restricted Stock Award for purposes of this Plan, provided that such Shares shall not be subject to any Restrictions provided under Section 8 of the 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 on the date of grant (determined without regard to the restrictions applicable thereto) and the first trading day of the following calendar quarter shall be considered the grant date of the Restricted Stock Award.
Section 8 Terms of Restricted Stock Awards.
Exceptdirector or officer, as provided herein, Restricted Shares granted pursuant to Sections 7(a) and 7(b) of the Plan 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;applicable; provided, however, that the Restrictions with respect to such Restricted Sharesforegoing shall lapse immediately innot eliminate or limit the event thatliability of a director or officer (i) the Participant is nominated for a new term as an Outside Director but is not elected by stockholdersany breach of the Company,director’s or (ii)officer’s duty of loyalty to 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 CompanyCorporation or its transfer agent shall hold such certificates, properly endorsedstockholders, (ii) for transfer,acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) 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 toany transaction from which the restrictions have lapsed shall be delivered, free of all such restrictions,director or officer derived an improper personal benefit, or (iv) as applicable solely 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. At the end of the Restriction Period, the Participant shall have the right to receive any cash dividends, with respect to such Restricted Shares, that were paid during the Restriction Period. 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 authorizeddirectors, 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 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. After the termination of the Plan, any previously granted Awards shall remain in effect and shall continue to be governed by the terms of the Plan and the applicable Restricted Stock Agreement. 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 delivera dividend or approval of a stock certificates to any Participantrepurchase that 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 (asillegal under Section 174 of the dateDelaware General Corporation Law. No amendment (including any amendment effected by operation of law, by merger, consolidation or otherwise) to or repeal of this paragraph shall apply to or have any effect on the withholding is effected) that would satisfy the withholding amount due,liability or (ii) transferring to the Company Shares owned by the Participant with an aggregate Fair Market Value (asalleged liability of any director or officer 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,Corporation for 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 Committeeacts or omissions of such election and provide the Committee with a copy thereof.
Section 18 No Rightdirector or officer occurring prior 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 constitutesuch amendment 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 Successors.
All obligations of the Company under the Plan with respect to Restricted Stock Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business, stock and/or assets of the Company.repeal.
3. | 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. |
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4. | This Certificate of Amendment shall become effective at [_]:[_] [a/p].m., Eastern Time, on [Month] [day], 2023. |
Section 20 Governing Law.IN WITNESS WHEREOF, said corporation has caused this certificate to be signed this ________________ day of ________________, 2023.
| By: | | |
| Authorized Officer Title: | | Corporate Secretary |
| Name | | Erica S. Stoecker |
This Plan shall be governed by the laws of the State of Delaware.
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