UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.)

Filed by the Registrantx                            Filed by a Party other than the Registrant¨

Check the appropriate box:

PC CONNECTION, INC.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

PC CONNECTION, INC.

730 Milford Road

Merrimack, New Hampshire 03054

(603) 683-2000

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held June 9, 2005May 21, 2008

The 20052008 Annual Meeting of Stockholders of PC Connection, Inc., a Delaware corporation (the “Company”), will be held at the Crowne Plaza Hotel, 2 Somerset Parkway (Exit 8 off the Everett Turnpike), Nashua, New Hampshire on Thursday, June 9, 2005Wednesday, May 21, 2008 at 10:00 a.m., Eastern time, to consider and act upon the following matters:

Stockholders of record at the close of business on April 22, 20052, 2008 are entitled to notice of and to vote at the meeting or any adjournments thereof. TheOur stock transfer books of the Company will remain open. All stockholders are cordially invited to attend the meeting.

By Order of the Board of Directors,

Steven Markiewicz,Secretary

Merrimack, New Hampshire

May 2, 2005

April 10, 2008

WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO ENSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE NEED BE AFFIXED IF THE PROXY IS MAILED IN THE UNITED STATES.

PC CONNECTION, INC.

730 Milford Road

Merrimack, New Hampshire 03054

PROXY STATEMENT FOR THE 20052008 ANNUAL MEETING OF STOCKHOLDERS

To Be Held On June 9, 2005May 21, 2008

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of PC Connection, Inc., a Delaware corporation (the “Company”“Company,” “we,” “us,” or “our”), by our Board of Directors, for the 2005our 2008 Annual Meeting of Stockholders, ofor the Company (the “Annual Meeting”)Annual Meeting, to be held on Thursday, June 9, 2005Wednesday, May 21, 2008 at 10:00 a.m., Eastern time, at the Crowne Plaza Hotel, 2 Somerset Parkway (Exit 8 off the Everett Turnpike), Nashua, New Hampshire or any adjournment or adjournments of the Annual Meeting. All proxies will be voted in accordance with the stockholders’ instructions. If no choice is specified, the proxies will be voted in favor of the matters set forth in the accompanying Notice of Meeting. Any proxy may be revoked by a stockholder at any time before its exercise by delivery of a written revocation or a subsequently dated proxy to the Secretary of the Companyour secretary or by voting in person at the Annual Meeting.

The Notice of Meeting, this Proxy Statement, the enclosed proxy, the Company’sand our Annual Report on Form 10-K for the year ended December 31, 2004,2007 as filed with the Securities and Exchange Commission, (the “SEC”),or the SEC, and the Company’sour Annual Report to Stockholders for the year ended December 31, 20042007 are being mailed to stockholders on or about May 11, 2005.April 28, 2008.

Voting Securities and Votes Required

On April 22, 2005,2, 2008, the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting, there were outstanding and entitled to vote an aggregate of 25,135,72126,835,837 shares of Common Stock of the Company,our common stock, $.01 par value per share, (the “Common Stock”).or the Common Stock. Stockholders are entitled to one vote per share. Theshare of Common Stock. Our stock record books of the Company will remain open for inspection by stockholders of record for ten days prior to the Annual Meeting at theour offices of the Company at the above address and at the time and place of the Annual Meeting.

The presence, in person or by proxy, of the holders of a majority of the outstanding shares of Common Stock entitled to vote at the Annual Meeting shall be necessary to constitute a quorum for the transaction of business. Abstentions and broker non-votes will be considered as present for purposes of determining whether a quorum is present.

The affirmative vote of the holders of a plurality of the votes cast by the stockholders entitled to vote at the Annual Meeting is required for the election of directors. The affirmative vote of the holders of a majority of the shares of Common Stock present or represented by proxy and voting at the Annual Meeting is required for the approval of Proposals 2 and 3.

Shares that abstain from voting in a particular matter, and shares held in “street name” by brokers of nominees who indicate on their proxies that they do not have discretionary authority to vote such shares as to a particular matter, will not be counted as votes in favor of such matter and will also not be counted as votes cast or shares voting on such matter. Abstentions and “broker non-votes” will have no effect on the voting on matters, such as the ones presented for stockholder approval at this Annual Meeting, that require the affirmative vote of a certain percentage of the shares voting on the matter.

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Security Ownership of Certain Beneficial Owners and ManagementSECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of January 31, 2005,2008, the beneficial ownership of the Company’sour Common Stock by: (i) persons known by the Companyus to own more than 5% of theour outstanding shares of Common Stock;shares; (ii) each of the current and nominated directors of the Company;our directors; (iii) each of the current or formerour named executive officers of the Company named in the Summary Compensation Table under the heading “Executive Compensation” below; and (iv) all our current directors and executive officers of the Company as a group.

Except as otherwise set forth below, the street address of each beneficial owner is c/o PC Connection, Inc., 730 Milford Road, Merrimack, New Hampshire 03054.

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PROPOSAL ONE

ELECTION OF DIRECTORS

Directors are to be elected at the Annual Meeting. TheOur Board of Directors is currently fixed at six members. The Company’sOur Bylaws provide that theour directors of the Company will be elected at each annual meeting of the Company’sour stockholders to serve until the next annual meeting of stockholders or until their successors are duly elected and qualified. Mr. Baxter will not stand for re-election at the Annual Meeting. Mr. Weatherson is nominated for election at the Annual Meeting.

The persons named in the enclosed proxy (Patricia Gallup and David Hall) will vote to elect the six nominees named below as our directors of the Company unless authority to vote for the election of any or all of the nominees is withheld by marking the proxy to that effect. Each nominee other than Mr. Weatherson, is presently serving as a director, and each nominee has consented to being named in this Proxy Statement and to serve, if elected. If for any reason any nominee should be unable to serve, the person acting under the proxy may vote the proxy for the election of a substitute nominee designated by theour Board of Directors. It is not presently expected that any of the nominees will be unavailable to serve, if elected.

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TheOur Board of Directors recommends a vote “FOR” the election of the nominees described below.

Set forth below are the name, age, and length of service as a director for each nominee of theour Board of Directors and the positions and offices held by him or her, his or her principal occupation and business experience for at least the past five years, and the names of other publicly-held companies of which he or she serves as a director. Information with respect to the number of shares of Common Stock beneficially owned by each director or nominee, directly or indirectly, as of January 31, 2005,2008, appears under “Security Ownership of Certain Beneficial Owners and Management.”

Nominees for Election to theour Board of Directors

Patricia Gallup, age 51,54, is our Chairman, President, and CEO of the Company.Chief Executive Officer. She has served on the Company’sour Board of Directors since its inception, and has been Chairman since 1998. Ms. Gallup is a co-founderone of the Companyour co-founders and has served as an executive officer since 1982. She was Chief Executive Officer from 1990 to 2001, and from September 2002 to the present. She has held the title ofserved as our President of the Company since March 2003.

David Hall, age 56,58, is a co-founderone of the Companyour co-founders and has served on the Company’sour Board of Directors since its inception. Mr. Hall served as Vice Chairman of theour Board of Directors from March 1998 to December 2004. Mr. Hall was an executive officer of the Company from 1982 to 1997, and since then has served as a project manager and advisor to theour Company.

Bruce Barone, age 56,58, has served on the Company’sour Board of Directors since June 2002. Since December 1998, he has worked as an independent consultant. Prior to December 1998, Mr. Barone was the President and CEO of Overseas Partners Ltd, a global reinsurance and real estate company, and served in a variety of senior financial positions at United Parcel Service (UPS).Service.

Joseph Baute, age 77,80, has served on the Company’sour Board of Directors since June 2001. From 1979 to 1993, Mr. Baute served as Chairman and Chief Executive Officer of Markem Corporation, an industrial marking and coding solutions provider. Since 1993, Mr. Baute has worked as an independent consultant. Mr. Baute serveshas served on the board of directors of several privately-heldpublic companies.

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David Beffa-Negrini,age 51,54, has served on the Company’sour Board of Directors since September 19941994. Mr. Beffa-Negrini has served as our Senior Vice President, Corporate Marketing and Creative Services since February 2007. Mr. Beffa-Negrini served as Co-President of our Merrimack Services subsidiary from September 2005 to February 2007 and as our Vice President of Corporate Communications sincefrom June 2000. Prior2000 to this role,February 2007. Mr. Beffa-Negrini has served the Company in a variety of senior management capacities in the areas of merchandising, marketing, and communications. He has been employed by the Companyan employee since 1983.

Donald Weatherson,age 67, is being nominated for election.70, has served on our Board of Directors since June 2005. Mr. Weatherson has served on the board of directors of the Company’sour GovConnection subsidiary sincefrom May 2003. From November 2003 to May 2004,June 2005. Since August 2002, Mr. Weatherson has pursued personal and community interests and served on an interim basis as Chief Executive Officer of GovConnection.GovConnection from November 2003 to May 2004. From June 2000April 1994 to July 2002, Mr. Weatherson served as Vice Presidentin a variety of North American Operations and Strategy forsenior executive positions at Compaq Computer Corporation. From April 1994 to June 2000, Mr. Weatherson served as Vice President of Compaq’s Government and Education business. From 1990 to 1993, Mr. Weatherson was Chief Executive Officer of the Navy Exchange System, a retail services company operated by the U.S. Navy. He retired from the Navy as a rear admiralRear Admiral in 1993. Mr. Weatherson also serves as Chairman of the Board of Enliven Marketing Technologies Corporation, an internet service marketing company.

No family relationship exists between any of our executive officers directors, or director nominees.directors.

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INFORMATION CONCERNING DIRECTORS, NOMINEES, AND EXECUTIVE OFFICERS

Board Meetings and Attendance

TheOur Board of Directors met tenfour times during 2004,the year ended December 31, 2007, either in person or by teleconference. During 2004,2007, each director attended at least 75% of the aggregate of the number of Board meetings and the number of meetings held by all committees on which he or she then served. TheOur Board of Directors does not currently have a policy with regard to the attendance of board members at itsour annual meeting of stockholders. All of the directorsTwo board members, Ms. Gallup and Mr. Baute, attended the Company’s 2004our 2007 Annual Meeting of Stockholders.

Board Committees

TheOur Board of Directors has established two standing committees–committees – Audit and Compensation. The Audit Committee operatesand Compensation Committees each operate under a charterwritten charters that hashave been approved by our Board of Directors. You can request a copy of these documents by writing to Investor Relations, PC Connection, Inc., 730 Milford Road, Merrimack, New Hampshire 03054. We included the Board.charters of the Committees as appendixes to our 2007 Proxy Statement which can be obtained by accessing the website maintained by the SEC at www.sec.gov, by accessing our website at http://ir.pcconnection.com, or by contacting our investor relations department at PC Connection, Inc., Rt. 101A, 730 Milford Road, Merrimack, New Hampshire 03054.

Our Board of Directors has determined that all of the members of each of the two standing committees of our Board of Directors are independent as defined under the rules of the Nasdaq Stock Market including, in the case of all members of the Audit Committee, the independence requirements contemplated by Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Audit Committee

The Audit Committee’s responsibilities include:

The members of our Audit Committee currently consists ofare Messrs. Barone, Baute, and Baxter. TheWeatherson. Our Board of Directors has determined that each current member of theour Audit Committee members would qualify as an “audit committee financial expert” as defined in Item 401(h) of Regulation S K.by applicable SEC rules. The Audit Committee met fifteensix times during 2004.2007.

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Immediately followingCompensation Committee and Subcommittee

The Compensation Committee’s responsibilities include:

The processes and procedures followed by our Compensation Committee shall consistin considering and determining executive and director compensation are described below under the heading “Executive and Director Compensation Processes.”

The Compensation Committee met twice in 2007. The members of the Compensation Committee are Messrs. Barone, Baute, Barone, and Weatherson. Each of Messrs. BauteThe Compensation Committee has established a subcommittee and Barone is an “independent director”delegated to that subcommittee authority to issue equity awards and to determine other qualified performance-based compensation in accordance with NASDAQ National Market standards. the requirements of Section 162(m) of the Internal Revenue Code. The Subcommittee, comprised of Messrs. Barone and Baute, who are “outside directors” under IRS regulations, met once during 2007 and approved the executive officer bonus payments for fiscal year 2006.

Director Independence

Under applicable NASDAQ rules, among other requirements a director of the Company will only qualify as an “independent director” if, in the opinion of the Company’sour Board of Directors, that person does not have a relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Company’sOur Board of Directors has determined that none of Messrs. Baute, Barone, andor Weatherson, who will comprise our Audit and Compensation Committees, has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Each of Messrs. Barone, Baute, and BauteWeatherson is an “independent director” as defined under NASDAQNasdaq Stock Market Inc. Marketplace Rule 4200(a)(15). Mr. Weatherson does not qualify

Executive and Director Compensation Processes

The Compensation Committee retained the services of Pearl Meyer & Partners, a national consulting firm, to conduct a competitive assessment in 2005 of our executive compensation for fiscal year 2006. Pearl Meyer & Partners provided to the Compensation Committee three studies as an independent director under Rule 4200(a)(15)described further in our Compensation Discussion and Analysis. These studies compiled individual compensation ranges for each executive position and compared this information to each executive’s actual salary level. These studies and the related ranges were updated in 2007 by our management to reflect current market conditions. The Compensation Committee targeted the median base salary of the survey data and adjusted the executive’s salary based on evaluation of the executive’s level of responsibility and experience as a result of his interim servicewell as company-wide performance. The Compensation Committee may, in its discretion, invite the Chief Executive Officer (“CEO”)to be present during the approval of, or deliberations with respect to, other executive officer compensation.

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We adopted an Executive Bonus Plan for our executive officers and other senior management employees in 2007. Annual cash bonuses are based on the achievement of company-wide net income and expense leverage goals. Cash bonuses are set as a percentage of the Company’s GovConnection subsidiary from November 2003executive officer’s base salary. Please see our Compensation Discussion and Analysis for a further discussion of our Executive Bonus Plan.

We have generally set our compensation paid to May 2004. At the timenon-officer members of his election as CEO of GovConnection, Mr. Weatherson was serving as Chairman of the Board of GovConnection. Until May 8, 2007, Mr. Weatherson will not qualify as an “independent director” under NASDAQ rules. Theour Board of Directors of the Company,to be consistent with NASDAQ Stock Market Rule 4350(d)(2)(B), has determined that such prior service as interim CEOcompensation paid to directors of GovConnection does not interfere with Mr. Weatherson’s abilitysimilar-sized companies. In 2007 we paid an annual retainer of $36,000 to exercise independent judgment as a director or membereach of the Audit Committee. As such theMessrs. Barone, Baute, Hall, and Weatherson. Messrs. Barone, Baute, Hall, and Weatherson also each received $1,500 for each Board of Directors has determined that Mr. Weatherson is not precluded from membership on the Audit Committeemeeting attended, and that his membership is in the best interests of stockholders given his experience and background, as well as the circumstances surrounding his appointment as interim CEO of GovConnection.

Compensation Committee

The Company also has a standing Compensation Committee of the Board of Directors that administers the Company’s stock incentive plan and determines the salary and incentive compensation of the Chief Executive Officer. The Compensation Committee’s responsibilities include:

During 2004, the Compensation Committee held one meeting. The members of the Compensation Committee for the year ended December 2004 and until the Annual Meeting are Messrs. Barone, Baute and Baxter. Immediately followingWeatherson each received $1,500 for each Board Committee meeting attended. As one of our executive officers, Mr. Beffa-Negrini did not receive any additional compensation in 2007 for his service on our Board of Directors. Ms. Gallup has never received compensation for her service on our Board of Directors.

The Compensation Committee has the Annual Meeting,authority to retain compensation consultants and other outside advisors to assist in the evaluation of executive officer compensation as evidenced by its retention of Pearl Meyer & Partners. During 2007 the Compensation Committee shall consist of Messrs. Barone, Baute, and Weatherson. A copy ofdid not employ a compensation consultant because the Compensation Committee Charter, asbelieved the August 2005 Pearl Meyer & Partners study, together with the updated salary information obtained in effect on the date of this proxy statement, is attached asAppendix A. See “Report of the Compensation Committee.”

2007, was sufficient to provide guidance in setting 2007 compensation levels.

Controlled Company Status

The Company isWe are a “Controlled Company” as defined in NASDAQNasdaq Stock Market Rule 4350(c). TheOur Board of Directors has based this determination on the fact that approximately 68%64% of theour voting stock of the Company is beneficially owned or controlled by Ms. Gallup and Mr. Hall.

The Company doesWe do not have a standing nominating committee, and the functions of evaluating and selecting directors have been performed by theour Board of Directors as a whole. TheWe believe that it is not necessary to have a nominating committee because our directors have generally served for extended terms. Our Board of Directors will from time to time evaluate biographical information and background material relating to potential candidates and interview selected candidates. TheOur Board of Directors does not currently have a charter or written policy with regard to the nomination process. We do not have a written policy due to the extended terms served by our directors.

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Director Candidates

All of the Company’s current members of theour Board of Directors have served as directors since 1997,2002, except Mr. Barone,Weatherson, who became a director in June 2002, and Mr. Baute, who became a director in June 2001. Mr. Baxter will not stand for re-election at the Annual Meeting, and Mr. Weatherson is nominated for election at the Annual Meeting.2005. Where called for, qualifications for consideration as a boarddirector nominee may vary according to the particular areas of expertise being sought as a complement to the existing board composition. Minimum qualifications include high-level leadership experience in business activities, breadth of knowledge about issues affecting the Company,us, experience on other boards of directors, preferably public company boards, and time available for meetings and consultation on Company matters. TheOur Board of Directors desires a diverse group of candidates who possess the background, skills, and expertise to make a significant contribution to theour Board theof Directors, our Company, and its stockholders. In the event of a need for a new or additional director, theour Board of Directors would evaluate potential nominees by reviewing their qualifications, results of personal and reference interviews, and such other information as theythe Board may deem relevant.

The Company doesWe do not currently employ an executive search firm, or pay a fee to any other third party, to locate qualified candidates for director positions.

TheOur Board of Directors has generally nominated the current directors for re-election at each annual meeting of stockholders. TheOur Board of Directors has therefore not established special procedures for security holders to

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submit director recommendations. If the Companywe were to receive recommendations of candidates from the Company’sour security holders, the Board of Directors would consider such recommendations in the same manner as all other candidates.

Communicating with the Independent Directors

The Board of Directors hasWe have not implemented a process for our stockholders of the Company to send communications to the Board.

our Board of Directors, other than as set out elsewhere in this proxy. We have not done so primarily due to our status as a controlled company, as discussed earlier.

Code of Business Conduct and Ethics Policy

The Company hasWe have adopted a written Code of Business Conduct and Ethics Policy (the “Policy”) that applies to the Company’sour directors, officers, and employees, including itsour principal executive officer, principal financial officer, principaland accounting officer, or controller, orand persons performing similar functions. The CodeWe have posted our Policy on our website (http://ir.pcconnection.com). In addition, we intend to post on our website all disclosures that are required by law or Nasdaq Stock Market listing standards concerning any amendments to, or waivers from, any provision of Ethics wasthe Policy.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers, and holders of more than 10% of our Common Stock to file with the SEC initial reports of ownership and reports of changes in beneficial ownership of our Common Stock. Based solely on our review of copies of reports filed as an exhibitby individuals required to make filings, or Reporting Persons, pursuant to Section 16(a) of the Company’s Form 10-KExchange Act or written representations from certain Reporting Persons, we believe that all such reports required to be filed under Section 16(a) of the Exchange Act for its fiscal year ended December 31, 2003.

2007 were timely filed.

Directors’Director Compensation

Messrs. Beffa-Negrini, Baxter, Baute, Barone, and HallOur non-officer directors each received a $22,000receive standard annual retainer and fees of $36,000 for their service on the Board as well as $1,500 for each Board and committee meeting attended, unless the committee meeting was attended on a day of theindividual Board meeting in which caseand Board Committee meeting they received $1,000attend. Our directors who are also officers do not receive any additional compensation for each committee meeting attended. In addition, thetheir role as directors. Board members also receive reimbursement for all reasonable expenses incurred in attending Board and committee meetings. Mr. Weatherson is nominated for election

As more fully described below, the following table describes compensation paid to each director not listed as a Named Executive Officer for the year ended December 31, 2007.

Director Compensation for Fiscal Year Ended December 31, 2007

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EXECUTIVE COMPENSATION

Compensation Discussion And Analysis

The Compensation Committee of our Board of Directors oversees the design and therefore didimplementation of our executive compensation program. In this role, the Compensation Committee, which is comprised of three independent directors, evaluates the performance of, and reviews and approves annually all compensation decisions relating to our Chief Executive Officer. Our Chief Executive Officer annually reviews the performance of our other Named Executive Officers and makes recommendations regarding their compensation. Our Compensation Committee may adopt or revise such recommendations in making compensation decisions for our other Named Executive Officers. The Compensation Committee has established a subcommittee, comprised of two outside directors, and delegated to that subcommittee authority to issue equity awards and to determine other qualified performance-based compensation in accordance with the requirements of Section 162(m) of the Internal Revenue Code.

Compensation Objectives

Our Compensation Committee’s primary objectives with respect to executive compensation are to attract, retain, and motivate our executives and to create long-term stockholder value. Additionally, the Committee seeks to ensure that executive compensation is aligned with our corporate strategies and business objectives, and that it promotes the achievement of key strategic and financial performance measures by linking short- and long-term cash and equity incentives to the achievement of measurable company performance goals.

To achieve these objectives, the Compensation Committee evaluates our executive compensation program with the goal of setting compensation at levels the Committee believes are competitive with those of other companies in our industry and our region that compete with us for executive talent. In addition, our executive compensation program ties a substantial portion of each executive’s overall compensation to managing their respective areas of responsibility and meeting key strategic, financial, and operational goals. These goals include success in (a) demonstrated leadership ability, (b) management development, (c) compliance with our policies, and (d) anticipation of, and response to, changing market and economic conditions that enhance our ability to operate profitably. From time to time, we also provide a portion of our executive compensation in the form of stock options and restricted stock grants that vest over time, which we believe helps to attract new management talent, as well as retain our existing executives. We believe such grants align our executives’ interests with those of our stockholders by allowing them to participate in the longer-term success of our company as reflected in stock price appreciation.

We compete with many other companies for executive personnel. Accordingly, the Compensation Committee generally targets overall base salary and bonus compensation for executives at or near the midpoint of compensation paid to similarly situated executives of companies analyzed in our survey data, described more fully below. The Committee is currently reviewing the various components of long-term incentives, including equity awards and deferred compensation, to determine how best to attract and retain key executives. We may vary this general target in certain situations when necessary, due to the experience level of the individual or other market factors.

Components of our Executive Compensation Program

The primary elements of our executive compensation program are:

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Allocations between long-term and short-term compensation, cash and non-cash compensation, or the different forms of non-cash compensation vary, depending on our current initiatives and stated goals. Our goals for 2007 were focused on continuing the growth trend in consolidated net sales and net income that we established in 2006 and, additionally, achieving a better leveraging of our expense structure by reducing our selling, general and administrative, or SG&A, expenses as a percentage of net sales below that of 2006. Accordingly, our 2007 executive bonus plan was designed to help achieve these two objectives. A total of 60% of the bonus was allocated to the achievement of a net income target of $20.5 million, and 40% was allocated to achievement of an SG&A expense target of 10% of net sales. Each component was then applied to a multiplier based on the degree to which the respective target was met or exceeded, ranging from 0.5 to 1.0 for the expense target and from 0.5 to 1.7 for the net income target. No bonuses were to be paid for performance below $18.5 million of net income or SG&A expenses in excess of 10.6% of net sales.

Our 2007 net income was $23.0 million, and 60% of the 2007 executive cash bonus was subject to a multiplier of 1.2. Our SG&A expenses were 10.2% of net sales, and 40% of the 2007 executive cash bonus was subject to a multiplier of .82. Non-cash compensation was not receive anya significant factor in 2007.

Our executive officers work together as a team and all executives are assigned the same company-wide net income and expense leverage goals. Individual goals are not assigned.

In 2005 our Compensation Committee retained Pearl Meyer & Partners, a national consulting firm, as its independent compensation consultant to conduct a competitive assessment of our executive compensation and general compensation programs. Pearl Meyer & Partners provided comparative market data on compensation practices and programs based on an analysis of twelve peer companies deemed comparable in terms of product and service offerings and revenue levels. Pearl Meyer & Partners also provided two additional surveys with similar compensation data – the 2005 Clark Consulting SC/CHIPS Executive and Senior Management Survey and the 2005 Mercer Benchmark Database. From these three studies, two market composites were calculated, one reflecting the average of the Peer Group and Technology Industry and one reflecting the average of the Peer Group and the general industry survey data for similar size companies. We compiled individual compensation ranges for each executive position based on this information and compared the compensation ranges to actual salary levels. We updated our compensation ranges in 2007 by 2.6% after applying a combination of competitor trend information and consumer price indexes.

The peer group was used to benchmark executive compensation levels against companies that have executive positions with responsibilities similar in breadth and scope to ours and that compete with us for executive talent. The following companies were included in the peer group:

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An analysis based on currently available financial data shows that amongst the peer group we ranked seventh in revenue and eighth in market capitalization as of the date of the Pearl Meyer & Partners study.

The Compensation Committee used the updated survey data to assist it in the review and comparison of each element of base salary and bonus compensation for our executives. With this information, the Compensation Committee analyzed compensation for each executive. The Compensation Committee targeted different compensation levels for each element of compensation as a directordescribed below.

Base Salary

The median base salary level of the Company, whethersurvey data was targeted by the Compensation Committee as the base salaries of our executives. Adjustments to the median base salary level were made based on comparisons to the survey data and evaluation of the executive’s level of responsibility and experience as well as company-wide performance. The Compensation Committee also considered the executive’s success in achieving business results and demonstrating leadership.

While each executive is expected to manage his/her area of responsibility successfully, our success is believed to be dependent on the ability of our management group to integrate and work together to meet common goals. Accordingly, executives are not assigned specific individual goals but instead are collectively responsible for meeting company-wide goals.

The compensation levels of our executives are established to recognize the relative level of responsibility of each executive. Our Chief Executive Officer’s compensation is higher than the levels of our other executives reflecting the generally broader and more significant level of responsibility of our Chief Executive Officer. We have found that compensation survey results generally reflect this pattern for most companies.

Benchmarking and aligning base salaries is especially critical to a competitive compensation program. Other elements of compensation are affected by changes in base salary. Annual incentives are targeted and paid out as a percentage of base salary, and the target levels of long-term incentives are also set as a percentage of base salary.

Base salaries are reviewed at least annually by the Compensation Committee, and in the case of Named Executive Officers other than our Chief Executive Officer, are based on recommendations of the Chief Executive Officer. These salaries are adjusted from time to time to realign salaries with market levels after taking into account individual responsibilities, performance, experience, and the peer group data. The base salaries of the Chief Financial Officer and the Executive Vice President of our Enterprise Group were each increased in 2007 by the Compensation Committee to a level slightly above the median levels reported for the peer group in recognition of each respective officer’s increased level of responsibility and experience over comparable officers included in the peer group. Our Chief Executive Officer was offered but declined a similar base compensation adjustment.

Executive Bonus Plan

In 2007, we had an executive bonus plan for our executives and other senior management employees. The annual cash or otherwise, in 2004.bonuses are intended to compensate for the achievement of a company-wide net income goal and an operating expense leverage goal.

Amounts payable under the executive bonus plan are calculated as a percentage of the applicable executive’s base salary with higher-ranked executives typically being compensated at a higher percentage of base salary. However, our success is believed to be dependent on the ability of the management group to integrate and work together to meet common company-wide goals. Accordingly, executives are not assigned specific individual goals but instead are collectively responsible for meeting company-wide goals. A consolidated net income goal of $20.5 million was established for 2007, reflecting our growth target for the year. Additionally, an

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expense leverage goal was established to reduce 2007 consolidated SG&A expenses as a percentage of net sales to 10%, or 70 basis points below our 2006 expense ratio (which excluded special charges relating to events prior to 2006).

Our Compensation Committee works with our Chief Executive Officer to develop corporate goals that they believe can be reasonably achieved over the next year. Our Board of Directors approved the 2007 Executive Bonus Plan, and an aggregate of $1,555,100 was accrued for distribution to the Named Executive Officers under that plan for the year ended December 31, 2007, based on achievement of company-wide net income and expense-leverage targets.For our Chief Executive Officer and Executive Vice Presidents, the target bonus percentage is 100% of base salary. For the other named executive officers it is 50% of base salary. Our compensation program also provides incentives for our executives to reach beyond our target corporate goals. Those who perform above expectations are entitled to receive additional bonus amounts that can result in a total annual bonus of up to 142% of base salary for our Chief Executive Officer and Executive Vice Presidents, and up to 71% of base salary for our other named executive officers. Proportionally lower bonuses are provided for achievement levels between 90% and 100% of respective company-wide targets, and no bonuses are earned by any executive where less than 90% of the directorsrespective company-wide target is achieved.

The table below describes the bonus payments and the percentage of base salary for 2007 for the Named Executive Officers:

Equity Awards

Our equity award program is a vehicle for offering long-term incentives to our executives. We believe that equity grants help attract management talent and provide a strong link to our long-term performance and help to align the interests of our executives and our stockholders. In addition, the vesting feature of our equity grants furthers our goal of executive retention by providing an incentive to our executives to remain in our employ during the vesting period. In determining the size of equity grants to our executives, the Compensation Committee and the Chief Executive Officer consider comparative share ownership of executives in our compensation peer group, our company-wide performance, the applicable executive’s performance, the amount of equity previously awarded to the executive, the vesting of such awards, and the recommendation of management.

Our equity awards have typically taken the form of stock options and restricted stock awards. The Compensation Committee and our Chief Executive Officer review all components of the executive’s compensation when determining equity awards to ensure that an executive’s total compensation conforms to our overall philosophy and objectives.

Typically, the equity awards we grant vest in equal annual installments over four years, although shorter vesting periods may be applied in certain circumstances. Vesting and exercise rights cease shortly after termination of employment except in the case of death or disability. We do not have any equity ownership guidelines for our executives.

In 2007 we granted options to purchase 50,000 shares to Mr. Ferguson and options to purchase 140,000 shares to Mr. McGrath. Mr. Ferguson’s options vest in two installments of 25,000 shares on December 31, 2007 and 2008, respectively. Mr. McGrath’s options vest as follows: 20,000 shares on December 31, 2007; 30,000

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shares on December 31, 2008, 40,000 shares on December 31, 2009; and 50,000 shares on December 31, 2010. Additionally, we granted 25,000 shares of restricted stock to Mr. Ferguson, which vest in full on December 31, 2008. Although we have provided equity based incentive compensation to our executive officers, we do not regularly grant equity based incentive compensation. We granted the options awards to Messrs. Ferguson and McGrath in 2007 to award them for their increased levels of responsibility. We believe that cash compensation using base salaries and annual incentive plan payments is a fair method of compensating our executive officers without equity dilution to our stockholders, although we are continuing to review long-term incentives as a means to attract and retain key executives.

Benefits and Other Compensation

We maintain broad-based benefits that are provided to all employees, including health and dental insurance, life and disability insurance, and a 401(k) plan. Executives are eligible to participate in all of our employee benefit plans, in each case on the Company’s 1997 Stock Incentive Plan.same basis as other employees. We provide a matching contribution equal to 25% of the employee’s deferral contributions that do not exceed 6% of their qualified compensation.

No executive officer received perquisites aggregating $10,000 or more in 2007.

Severance Benefits

Pursuant to employment agreements we have entered into with Timothy McGrath, Executive Vice President, Enterprise Group and Bradley Mousseau, Senior Vice President, Human Resources, each executive is entitled to specified benefits in the event of termination of their employment under specified circumstances, including termination following a change of control of our company. We have provided more detailed information about these benefits, along with estimates of their value under various circumstances, under the caption “Potential Payments Upon Termination or Change in Control” below.

We believe providing these benefits helps us compete for executive talent. After reviewing the practices of companies represented in the compensation peer group, we believe that our severance and change of control benefits are generally in line with severance packages offered to executives by the companies in the peer group.

Tax and Accounting Considerations

Section 162(m) of the Internal Revenue Code of 1986, as amended, generally disallows a tax deduction for compensation in excess of $1.0 million paid to our Chief Executive Officer and our other officers whose compensation is required to be disclosed to our stockholders under the Exchange Act by reason of being among our four most highly compensated officers. Qualifying performance-based compensation is not subject to the deduction limitation if specified requirements are met. We periodically review the potential consequences of Section 162(m) and we intend to structure the performance-based portion of our executive compensation, where feasible, to comply with exemptions in Section 162(m) so that the compensation remains tax deductible to us. However, the Compensation Committee may, in its judgment, authorize compensation payments that do not comply with the exemptions in Section 162(m) when it believes that such payments are appropriate to attract and retain executive talent.

We account for equity compensation awarded to our employees per the methods prescribed by SFAS 123(R), which require us to recognize compensation expense in our financial statements for all share-based payments based upon an estimate of their fair value over the service period of the award. We record cash compensation as an expense at the time the obligation is accrued. Given our adoption of SFAS 123(R), we believe that the accounting impact of the different forms of equity compensation awards generally reflects their economic impact. Accordingly, the underlying accounting treatment is not a material consideration in determining the specific nature or size of equity awards granted. The tax impact of the awards on the recipient, together with the effectiveness of the award in retaining executives are more relevant considerations.

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Summary Compensation Table

The following table describessets forth information for our Chief Executive Officer, Chief Financial Officer, and our three other most highly compensated executive officers who were serving as executive officers as of December 31, 2007, collectively, the cash paymentsNamed Executive Officers for the fiscal years indicated.

Summary Compensation Table for Fiscal Years Ended December 31, 2007 and 2006

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Grants of Plan Based Awards

The following table sets forth certain information regarding grants of plan-based awards made to our directorsNamed Executive Officers during 2004.2007.

Grants of Plan Based Awards for Fiscal Year Ended December 31, 2007

716

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth certain information regarding outstanding equity awards held by our Named Executive Officers as of December 31, 2007.

Outstanding Equity Awards at Fiscal Year Ended December 31, 2007

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Option Exercises and Stock Vested

The following table sets forth certain information regarding stock options exercised by our Named Executive Officers in the year ended December 31, 2007.

Option Exercises and Stock Vested for Fiscal Year Ended December 31, 2007

Potential Payments Upon Termination or Change in Control

We are a party to an employment agreement with Ms. Gallup. The agreement contains provisions for establishing her annual base salary and bonus and may be terminated by Ms. Gallup doesor us. We have entered into letter agreements with Messrs. McGrath and Mousseau, providing for severance payments for six months of their then respective annual base salary if we terminate their employment for any reason other than for cause or for a change in control (as defined therein). Under such circumstances, Mr. Mousseau’s and Mr. McGrath’s severance payments would have an aggregate value of $120,000 and $220,000, respectively. In the event of termination resulting from a change in control of our Company, Mr. Mousseau’s severance payments would extend for a total of twelve months and have an aggregate value of $240,000. Mr. McGrath’s severance payments would extend for a total of six months and have an aggregate value of $220,000. Each of Messrs. McGrath’s and Mousseau’s letter agreement includes certain non-compete obligations that extend for eighteen months after termination of employment. We assume, for the purpose of calculating values for all termination events, that the effective date of termination is December 31, 2007.

In event that we undergo a change in control (referred to as an “Acquisition Event” in the Amended and Restated 1997 Stock Incentive Plan and a “Reorganization Event” in the 2007 Stock Incentive Plan) and as a result our Board of Directors accelerates the vesting of all outstanding unvested equity awards, Mr. McGrath and Mr. Ferguson would realize $307,500 and $283,750, respectively, based on the closing price of our Common Stock on December 31, 2007 of $11.35 per share, assuming the exercise and sale by each of their in-the-money options.

Compensation Committee Report

Our Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with our management. Based on this review and discussion, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

By the Compensation Committee of the Board of Directors of PC Connection:

Donald Weatherson, Chairman

Bruce Barone

Joseph Baute

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Compensation Committee Interlocks and Insider Participation

The members of the Compensation Committee are Messrs. Barone, Baute, and Weatherson. Messrs. Barone and Baute were not receive compensation for her servicesat any time during 2007, or formerly, an officer or employee of the Company or any of our subsidiaries. None of our executive officers has served as a director or member of the Compensation Committee (or other committee serving an equivalent function) of any other entity, one of whose executive officers served as our director or a member of the Company’s Board of Directors.

our Compensation Committee.

Certain TransactionsCERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The CompanyWe currently hashave leases for a facilityfacilities in Marlow and Merrimack, New Hampshire and two facilities in Keene, New Hampshire with Gallup & Hall, (“or G&H”),&H, a partnership owned solely by Patricia Gallup and David Hall, the Company’sour principal stockholders. The lease for one of the Keene, New Hampshire facilities expires in July 2008 and requires annual rental payments of $141,276 (subject to adjustment every three years for changes in the consumer price index). The lease for the Marlow, New Hampshiresecond facility expires in May 2007 and requires annualKeene is leased on a month-to-month basis requiring monthly rental payments of $6,000.$1,344. The second facility in Keene,Marlow, New Hampshire is leased on a month-to-month basis requiring monthly rental payments of $1,344.$500. We also lease on a month-to-month basis a facility in Merrimack, adjacent to our corporate headquarters requiring monthly rental payments of $18,141. These leases also obligate the Companyus to pay certain real estate taxes and insurance premiums on the premises. Rent expense under all such leases aggregated $163,404$381,102 for the year ended December 31, 2004.

2007.

In November 1997 the Companywe entered into a fifteen-year lease for a 114,000 square foot corporate headquarters in Merrimack, New Hampshire with G&H Post, L.L.C., an entity owned solely by Patricia Gallup and David Hall. The CompanyWe began occupying the new facility upon completion of construction in late November 1998, and lease payments began in December 1998. Annual lease payments under the terms of the lease are $911,400 for the first five years of the lease, increasing to $1,025,350 for years six through ten and to $1,139,400 for years 11 through 15. The lease is in its seventhtenth year. The lease requires the Companyus to pay itsour proportionate share of real estate taxes and common area maintenance charges as additional rent and also to pay insurance premiums for the leased property. The Company hasWe have the option to renew the lease for two additional terms of five years.

During 2004 the Company2007 we provided various facilities management, maintenance, financial, tax, and legal services to certain affiliates in connection with the operation of facilities leased by the Companyus from those affiliates. The Company wasG&H reimbursed $73,820 by G&Hus $34,601 during 20042007 for those services.

The 1998 PC Connection Voting Trust

In connection with the Company’sour initial public offering in March 1998, Patricia Gallup and David Hall placed substantially all of the shares of Common Stock that they beneficially owned immediately prior to the public offering into a Voting Trust (the “Voting Trust”) of which they serve as co-trustees. The Voting Trust is the record holder of 16,338,188 shares of Common Stock as of the record date, April 22, 2005.2, 2008. The terms of the Voting Trust require that both Ms. Gallup and Mr. Hall, as co-trustees, must agree as to the manner of voting the shares of our Common Stock of the Company held by the Voting Trust in order for the shares to be voted. In the event the co-trustees are deadlocked with respect to the election of directors at a meeting of stockholders, theour Board of Directors may require the co-trustees to execute and deliver to theour Secretary of the Company a proxy representing all shares issued and outstanding in the name of the Voting Trust and entitled to vote in the election of directors. Such proxy shall confer upon the proxyholder authority to attend the meeting for purposes of establishing a quorum and to vote for the directors nominated by theour Board of Directors, provided that such nominees are incumbent directors elected with the consent of the co-trustees. Each of Ms. Gallup and Mr. Hall may transfer shares of Common Stock for value to unaffiliated third parties. Any shares so transferred will no longer be subject to the Voting Trust and an equal number of the non-transferring co-trustee’s shares will be released from the Voting Trust. Transfers by either of Ms. Gallup or Mr. Hall in excess of 75,000 shares in any 90-day period, or that would decrease the shares held by the Voting Trust to less than a majority of the outstanding shares, will be

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subject to a right of first refusal to the other. The Voting Trust will terminate when it holds less than 10% of the outstanding shares of our Common Stock of the Company or at the death of both co-trustees. In addition, in the event of the death or incapacity of either co-trustee, or when either of Ms. Gallup or Mr. Hall holds less than 25% of the beneficial interest held by the other in the Voting Trust, the other will become the sole trustee of the Voting Trust with the right to vote all the shares held by the Voting Trust.

POLICIES AND PROCEDURES FOR RELATED PERSON TRANSACTIONS

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Executive CompensationA related person transaction reviewed under the policy will be considered approved or ratified if it is authorized by the Audit Committee after full disclosure of the related person’s interest in the transaction. As appropriate for the circumstances, the Audit Committee will review and consider:

The Audit Committee may approve or ratify the transaction only if the Audit Committee determines that, under all of the circumstances, the transaction is not inconsistent with our best interests. The Audit Committee may impose any conditions on the related person transaction that it deems appropriate.

In addition to the transactions that are excluded by the instructions to the SEC’s related person transaction disclosure rule, our Board of Directors has determined that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related person transactions for purposes of this policy:

Summary Compensation Table

920

The Company is a party to employment agreements with Ms. Gallup and Messrs. Wilkins and Mousseau. Each employment agreement contains provisions for establishing the annual base salary and bonus for each such executive officer. The Named Executive Officers, except Mr. Gavin and Mr. Ferguson, are eligible to receive an annual bonus based upon the achievement of individual and Company goals. The employment agreements may be terminated by either Ms. Gallup, Mr. Wilkins, Mr. Mousseau, or the Company. Mr. Wilkins’ employment agreementpolicy provides that if the Company terminates his employment without cause (as defined therein), the Company is required to pay Mr. Wilkins’ severance payments at his then current base salary for a periodtransactions involving compensation of twelve months. Mr. Wilkins’ employment agreement includes certain non-compete obligations which extend for two years following termination of his employment. The Company has entered into a letter agreement with Mr. Mousseau, providing for severance payments for six months of his then annual base salary if the Company terminates his employment for any reason other than for cause or for a change in control (as defined therein). In the event of termination resulting from a change in control of the Company, such severance payments would extend for a total of twelve months. Mr. Mousseau’s letter agreement includes certain non-compete obligations which extend for eighteen months following his termination of employment.

The Company entered into a separation agreement with Mark A. Gavin on October 21, 2004. This agreement superseded his employment agreement dated February 5, 1998. In consideration for entering into the separation agreement, Mr. Gavin is entitled to receive his base salaryexecutive officers shall be reviewed and benefits for six months commencing on November 20, 2004. Mr. Gavin is entitled to an additional six months of salary continuance in consideration for his entering into a Non-Compete, Non-Solicitation Agreement with the Company. These non-compete, non-solicitation obligations extend for twelve months following his termination of employment in October 2004.

Option Grants

The Company did not grant any stock options or stock appreciation rights to its Named Executive Officers during the year ended December 31, 2004, and no stock options were exercisedapproved by the executive officers in 2004.

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Option Exercises and Year-End Values.The following table sets forth certain information regarding the aggregate shares of Common Stock acquired upon stock option exercises by the Named Executive Officers and the value realized upon such exercises during the year ended December 31, 2004, as well as the number and value of unexercised stock options held by the Named Executive Officers as of December 31, 2004:

Aggregate Option Exercises in Last Fiscal Year and

Year-End Option Values

Report of the CompensationAudit Committee

This report is submitted by the Compensation Committee and addresses the Company’s compensation policies for 2004 as they affected Ms. Gallup and the Company’s other executive officers. In 2004 and until the Annual Meeting, the Committee consists of Messrs. Baxter, Barone, and Baute, each of whom is an independent, non-employee director. Immediately following the Annual Meeting, the Compensation Committee shall consist of Messrs. Barone, Baute, and Weatherson.

The Compensation Committee annually sets the compensation of the Chief Executive Officer. The Compensation Committee also reviews and approves or recommends for approval to the Board of Directors the recommendations of the Chief Executive Officer regarding the compensation of the Company’s other executive officers. In addition, the Committee administers the Company’s stock incentive plans as recommended by the Chief Executive Officer.

Each of the Named Executive Officers regularly makes presentations to the Board of Directors. As a result, the members of the Compensation Committee are personally familiar with the performance of each Named Executive Officer.

The Compensation Committee seeks to achieve three broad goals in connection with the Company’s compensation philosophy and decisions regarding compensation. First, the Company is committed to providing executive compensation designed to attract, retain, and motivate executives who contribute to the long-term success of the Company and are capable of leading the Company in achieving its business objectives in the competitive and rapidly changing industrymanner specified in which the Company operates. Second, the Company wants to reward executives for the achievement of business objectives of the Company and/or the individual executive’s particular area of responsibility. By tying compensation in part to achievement, the Company believes that a performance-oriented environment is created for the Company’s executives. Finally, compensation is intended to provide executives with an equity interest in the Company so as to link a meaningful portion of the compensation of the Company’s executives with the performance of the Company’s Common Stock.

Each executive’s total compensation depends upon the executive’s performance against specific objectives. These objectives include both quantitative factors related to the Company’s short-term financial objectives and qualitative factors such as (a) demonstrated leadership ability, (b) management development, (c) compliance with

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Company policies, and (d) anticipation of and response to changing market and economic conditions, to enhance the Company’s ability to operate profitably. Compensation for the Company’s executives generally consists of three elements:

salary—levels are generally set by reviewing compensation for competitive positions in the market and considering the executive’s level of responsibility, qualifications, and experience, as well as the Company’s financial performance and the individual’s performance;

bonus—amounts are generally based on achievement of the Company’s performance goals in any given year; and

stock option grants—options provide long-term incentives to promote and identify long-term interests between the Company’s employees and its stockholders and to assist in the retention of executives.charter.

In addition, executives are also eligible to receive various benefits, including medical, disability, and life insurance plans, and may participate in the Company’s stock purchase plan and 401(k) qualified savings plan. All of these benefits are generally available to all employees of the Company.

In making decisions regarding the compensation of the Chief Executive Officer, the Compensation Committee considered the input of the Company’s other directors and other publicly available information relating to comparable direct marketing firms of information technology products. In order to attract, retain, and motivate the talented personnel it needs, the Company has structured its executive compensation program to provide its employees with cash compensation competitive with total compensation paid by comparable companies. Bonuses are primarily based on corporate performance, with actual awards varying greatly according to the Company’s overall performance and the individual’s impact on that performance.

Base Salaries for 2004

Ms. Gallup’s salary was set for 2004 at $430,000. The Compensation Committee also reviewed the annual salary levels for all other Named Executive Officers. These salary levels were designed to remain competitive within the market.

Bonus Compensation for 2004

Messrs. Mousseau and Ferguson received bonuses for 2004 based upon their achievement of certain performance goals. The other Named Executive Officers did not receive a bonus for 2004.

Stock Option Awards in 2004

The Compensation Committee reviews and approves all grants of stock options to the Company’s Named Executive Officers and reviews all grants of stock options to other employees. The Company did not grant any stock options to its Named Executive Officers in 2004, although it did make periodic grants to various managerial employees. All grants of stock options were reviewed by the full Board of Directors.

Compensation of Chief Executive Officer

The Company’s compensation plans are designed to provide incentive and reward for individual achievement and for meeting company goals. As with other executive officers, the Chief Executive Officer’s compensation reflects this philosophy. The factors of determining compensation for the CEO are generally the same as for other Company executives. Ms. Gallup did not participate in any decisions regarding her own compensation.

The Compensation Committee has determined that, based upon a review of the Company’s operations and salaries of Chief Executive Officers of comparable companies, Ms. Gallup’s salary for 2005 will be $445,000. In

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light of her substantial current stock ownership, the Compensation Committee determined not to recommend to the Board of Directors any award of equity-based compensation. The Compensation Committee believes that Ms. Gallup’s compensation has been set at a level competitive with other companies in the industry.

Compliance with Internal Revenue Code Section 162(m)

Section 162(m) of the Internal Revenue Code of 1986, as amended, generally disallows a tax deduction to a public company for certain compensation in excess of $1 million paid to the Company’s Chief Executive Officer and the four other most highly compensated executive officers. Certain compensation, including qualified performance-based compensation, will not be subject to the deduction limit if certain requirements are met. The Compensation Committee reviews the potential effect of Section 162(m) periodically and uses its judgment to authorize compensation payments that may be subject to the limit when the Compensation Committee believes such payments are appropriate and in the best interests of the Company and its stockholders, after taking into consideration changing business conditions and the performance of its employees.

Peter Baxter, Chairman

Bruce Barone

Joseph Baute

Compensation Committee and Interlocks and Insider Participation

The members of the Compensation Committee for 2004 and until the Annual Meeting are Messrs. Barone, Baute, and Baxter. No member of the Compensation Committee was at any time during 2004, or formerly, an officer or employee of the Company or any subsidiary of the Company. No executive officer of the Company has served as a director or member of the Compensation Committee (or other committee serving an equivalent function) of any other entity, one of whose executive officers served as a director of or member of the Compensation Committee of the Company. Immediately following the Annual Meeting, the Compensation Committee shall consist of Messrs. Barone, Baute, and Weatherson.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires the Company’s directors, executive officers, and holders of more than 10% of the Company’s Common Stock to file with the SEC initial reports of ownership and reports of changes in beneficial ownership of Common Stock of the Company. Based solely on its review of copies of reports filed by individuals required to make filings (“Reporting Persons”) pursuant to Section 16(a) of the Exchange Act or written representations from certain Reporting Persons, the Company believes that all such reports required to be filed under Section 16(a) of the Exchange Act for 2004 were timely filed, except that Mr. Beffa-Negrini, a member of the Board, failed to timely file a Form 4 in December 2003 to report the receipt of a stock option grant of 50,000 shares, and Mr. Mousseau, an executive officer, failed to timely file a Form 4 in December 2003 to report the receipt of a stock option grant of 50,000 shares. Both reporting persons filed late the required Form 4s with the SEC on January 27, 2004.

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Stock Performance Graph

The following stock performance graph compares cumulative total stockholder return on the Company’s Common Stock for the period from December 31, 1999 through December 31, 2004 with the cumulative total return for (i) the Russell 2000 Index and (ii) the Company’s Peer Group. This graph assumes the investment of $100 on December 31, 1999 in the Company’s Common Stock, the Russell 2000 Index, and the Company’s Peer Group and assumes dividends are reinvested. The Company’s Peer Group consists of CDW Computer Centers, Inc., PC Mall, Inc., Insight Enterprises, Inc., Zones, Inc., and Systemax, Inc.

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Equity Compensation Plan Information

The following table provides information about the Company’sour Common Stock that may be issued upon exercise of options, warrants, and rights under all of the Company’sour equity compensation plans as of December 31, 2004,2007, including the 1993 IncentiveAmended and Non-Statutory Stock Option Plan (the “1993 Plan”), as amended, theRestated 1997 Stock Incentive Plan as amended, and the Company’s2007 Stock Incentive Plan, or the 2007 Plan, and our Employee Stock Purchase Plan, (the “ESPP”). The Company’sor the ESPP. Our stockholders have approved all of these plans.

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PROPOSAL TWO

APPROVAL OF AMENDMENT TO 1997 EMPLOYEE STOCK PURCHASEEXECUTIVE BONUS PLAN AS AMENDED

On April 9, 2008, our Board of Directors adopted, subject to stockholder approval, the Executive Bonus Plan, or the Bonus Plan.

TheOur Board of Directors believes that the continued growth and profitability of the Companyour future success depends, in large part, upon theour ability of the Company to maintain a competitive position in attracting, retaining, and retainingmotivating key personnel.Accordingly, in 1997, the Company adopted the ESPP which permits eligible employees to purchase shares of the Company’s Common Stock at a discounted price. In May 2002 and April 2003, the Board of Directors adopted increases in the number of shares issuable under the ESPP, and in June 2002 and 2003, the Company’s public stockholders also approved such respective increases. On April 22, 2005, the Board of Directors adopted resolutions, subject to stockholder approval, to approve an amendment to the ESPP, to increase the number of shares of Common Stock authorized for issuance thereunder from 637,500 to 837,500.

As of April 22, 2005, 56,268 shares were available for issuance under the ESPP.

Theour Board of Directors believes that the approvaladoption of the amendment to the ESPPBonus Plan is in the best interests of theour stockholders and our Company and its stockholders and recommends a vote “FOR” this proposal and the reservation of 200,000 shares of Common Stock for issuance thereunder.

Summaryapproval of the ESPPBonus Plan.

Description of the Bonus Plan

The following is a brief summary of the ESPP. The following summary is qualified in its entirety by reference to the ESPP,Executive Bonus Plan, a copy of which is attached asAppendix BA to this Proxy Statement.

Administration and Eligibility

The ESPP is administered by theCompensation Committee of our Board of Directors orwill, through a Subcommittee consisting solely of outside directors within the Compensation Committee, which hasmeaning of Section 162(m) of the authority to makeInternal Revenue Code, administer the Plan.

Eligibility

Each of our named executive officers, within the meaning of the rules and regulations for the administration of the ESPP. Each employee of the CompanySecurities and

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its eligible subsidiaries, including any officer or director who is also an employee, Exchange Commission, is eligible to participate in the ESPP, provided he or she

Plan.

The following table sets forth (a)Determination of Bonus Awards

We refer to each fiscal year that the market valuePlan is in effect as a “Plan Year.” Within 90 days after the beginning of each Plan Year, the Compensation Committee will establish specific performance measures for the payment of bonus awards for that Plan Year. For each Plan Year, the performance measures will include the attainment of a certain minimum level of consolidated net income and may also be based on one or more of the sharesfollowing additional quantifiable performance measures selected by the Committee: consolidated SG&A expenses; earnings per share; operating income; gross revenue; profit margins; stock price targets or stock price maintenance; working capital; free cash flow, cash flow; return on equity; return on capital or return on invested capital; earnings before interest, taxes, depreciation, and amortization, or EBITDA, and strategic business criteria, consisting of one or more objectives based on meeting specified revenue, market penetration, geographic business expansion goals, cost targets, or objective goals relating to acquisitions or divestitures. The precise annual amounts and bonus allocation percentages with respect to each performance measure will also be established by the Committee. Performance measures are generally based on our operating forecasts. However, the Committee may determine, in its sole discretion, that significant unusual or extraordinary items should or should not be included in determining whether the performance measures have been met.

Bonuses are calculated as a percentage of the Company’s Common Stock issued underparticipating executive’s annual base salary. Base level bonuses are 100% of base salary for our Chief Executive Officer, 100% of base salary for our Executive Vice Presidents, and 50% of base salary for our Senior Vice Presidents. Actual bonus payouts may be higher or lower than the ESPP during the fiscal year ended December 31, 2004 basedbase level amounts, depending on the closing price of $9.52 ondegree to which each performance measure is met or exceeded. Each performance measure is subject to a multiplier table which determines the extent to which that date minus the purchase price of such shares and (b) the number of shares purchased under the ESPP by designated individuals and groups (including all associatesportion of the directors and executive officers included in the table) during the fiscal year ended December 31, 2004: