DEF 14A of Eplus Inc
Filed Jul 23, 2024 · FY20240001022408-24-000059
PROXY STATEMENT TABLE OF CONTENTS
| DIRECTOR COMPENSATION | 17 | | 2024 Director Compensation Table | 18 | | Stock Ownership Guidelines | 19 | | STOCK OWNERSHIP | 19 | | Ownership of our Common Stock | 19 | | Directors and Executive Officers | 20 | | Principal Shareholders | 21 | | EXECUTIVE COMPENSATION | 22 | | PROPOSAL 2 – Advisory Vote to Approve Named Executive Officer Compensation | 22 | | COMPENSATION COMMITTEE REPORT | 23 | | COMPENSATION DISCUSSION AND ANALYSIS | 24 | | OVERVIEW | 24 | | Financial Highlights | 24 | | Our Executive Compensation Program | 25 | | Our Executive Compensation Practices | 26 | | 2023 Say-On-Pay Vote | 27 | | Long-Term Performance-Based Equity Compensation | 27 | | WHAT WE PAY AND WHY | 27 | | Fiscal Year 2024 Executive Compensation Decisions | 27 | | Base Salary | 27 | | Annual Cash Incentive Awards | 28 | | Long-Term Incentive Program | 30 | | Other Elements of Our Fiscal Year 2024 Executive Compensation Program | 33 | | HOW WE MAKE EXECUTIVE COMPENSATION DECISIONS | 35 | | Role of the Board and Compensation Committee, and our Chief Executive Officer | 35 | | Guidance from the Compensation Committee’s Independent Compensation Consultant | 35 | | Comparison Peer Groups | 35 | | Alignment of Senior Management Team to Drive Performance | 36 | | 2024 EXECUTIVE COMPENSATION | 36 | | 2024 Summary Compensation Table | 36 | | Outstanding Equity Awards at 2024 Fiscal Year End | 39 | | Fiscal Year 2024 Options Exercised and Stock Vested | 39 | | Employment Agreements, Severance, and Change in Control Provisions | 40 | | 2024 Pay Ratio Disclosure | 44 | | Pay Versus Performance | 45 |
Our Board of Directors
Our Board of Directors
PROPOSAL 1 – ELECTION OF DIRECTORS
PROPOSAL 1 – ELECTION OF DIRECTORS ePlus’ Board of Directors (the “Board of Directors” or “Board”) is currently composed of seven directors who are “independent,” and one director, our Chief Executive Officer, Mark P. Marron, who is not “independent,” within the meaning of The Nasdaq Stock Market LLC’s (“Nasdaq”). listing standards. One of our directors, C. Thomas Faulders, III, will reach the retirement age set forth in our Corporate Governance Guidelines before our Annual Meeting, and will not be standing for re-election. The Board’s Nominating and Corporate Governance Committee has recommended to the Board, and the Board has nominated for election at our 2024 Annual Meeting, each of our sitting directors except for Mr. Faulders, having found they each possess the requisite knowledge, skills, and abilities to oversee the Company’s long-term business objectives. C. Thomas Faulders, III served as our Board Chair during the fiscal year ending March 31, 2024. Our Board has appointed Ms. Morrison as Board Chair, effective upon Mr. Faulders’ retirement at our Annual Meeting.
PROPOSAL 1 – ELECTION OF DIRECTORS
| ePlus Director Nominees for the 2024 Annual Meeting | | | | | | | | | | Board Committees | | | | | | Name | Age | Audit | Compensation | Nominating& Corporate Governance | Number of Other Public Company Boards | Independent Director | | Reneé Bergeron | 61 | | ✔ | ✔ | 0 | ✔ | | Bruce M. Bowen | 72 | | | | 0 | ✔ | | John E. Callies | 70 | ✔ | Chair | | 0 | ✔ | | Ira A. Hunt, III | 68 | | ✔ | ✔ | 0 | ✔ | | Mark P. Marron, CEO and President | 63 | | | | 0 | | | Maureen F. Morrison | 69 | Chair | | ✔ | 1 | ✔ | | Ben Xiang | 39 | ✔ | | Chair | 0 | ✔ |
PROPOSAL 1 – ELECTION OF DIRECTORS
More information about our Board, including their biographies, is available in Proposal 1 – Election of Directors.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE DIRECTOR NOMINEES
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE DIRECTOR NOMINEES
PROPOSAL 1 – Election of Directors
PROPOSAL 1 – Election of Directors Adopting the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated seven of its current directors—Mses. Bergeron and Morrison, and Messrs. Bowen, Callies, Hunt, Marron and Xiang—to be elected to serve until the 2025 Annual Meeting of Shareholders, or until their successors are duly elected and qualified. Biographical information as of July 18, 2024, for each nominee is provided herein. C. Thomas Faulders, III, who is currently a member of the Board, is not a nominee, as a result of his reaching mandatory retirement age. Each of the nominees has agreed to be named in this proxy statement and serve as a director if elected, and we know of no reason why any of the nominees would be unable to serve. If, however, any nominee is unable or declines to serve as a director, or if a vacancy occurs before the election (such events are not anticipated), the proxy holders will vote for the election of such other person or persons as the Board nominates. There are no arrangements or understandings between any of the nominees and any other person pursuant to which such director nominees were selected. Each of the seven nominees for director will be elected by a plurality of the shares present in person or by proxy at the 2024 Annual Meeting and entitled to vote on the election of directors, subject to the Company’s director resignation policy should any director not receive a majority of the votes cast. Withheld votes and broker non-votes will have no effect on the vote for this proposal.
2024 Nominees for Election to the Board of Directors
2024 Nominees for Election to the Board of Directors Our Board has a variety of qualifications and expertise relevant to our business, resulting in a collective diverse set of backgrounds and experiences. See above, Director Qualifications¸ for more information. The following biographies describe the director nominees’ business experience, including their specific experiences and qualifications that, collectively, strengthen the Board’s qualifications, skills, and experience. The Board expects that each of the nominees will be available for election as a director and, if elected, will serve for a term expiring at the 2025 Annual Meeting of Shareholders, and until their successors have been duly elected and qualified.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE FOLLOWING NOMINEES FOR ELECTION AS DIRECTORS:
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
| Renée Bergeron Independent Director Age 61 | Director of ePlus since 2022 Committees: Compensation Nominating and Corporate Governance Other Public Company Directorships: None |
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
Ms. Bergeron is Chief Operating Officer of AppDirect, where she provides leadership and strategic vision, and oversees customer operations, technical support, and customer success on a global basis. She joined AppDirect, one of the leading B2B commerce platforms for selling, buying, and managing recurring technology services, in March 2020. From 2010 until 2020, Ms. Bergeron held roles at Ingram Micro, a global leader in technology and supply chain services, most recently as Senior Vice President Global Cloud. Since March 2020 she has also been a board member of FLO EV Charging, a premier manufacturer and network operator of electric vehicle charging solutions. Ms. Bergeron has a Master of Business Administration from McGill University, and a Bachelor’s degree in Information Technology from Université de Sherbrooke. The Board believes that, as a proven industry leader with significant experience across many of ePlus’ strategic focus areas, such as security, cloud and services, Ms. Bergeron brings a strong knowledge base that will help ePlus be a customer-centric, service-driven partner of choice.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
| Bruce M. Bowen Independent Director Age 72 | Director of ePlus since 1990 Committees: None Other Public Company Directorships: None |
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
Mr. Bowen founded our company in 1990 and served as our President until September 1996. Beginning in September 1996 until March 2014, Mr. Bowen served as our Executive Vice President and from September 1996 to June 1997 also served as our Chief Financial Officer. In March 2014, Mr. Bowen stepped down as Executive Vice President, and retired as an employee of the company in May 2018 though he continues to serve on the Board. Prior to founding the Company, he served as Senior Vice President of PacifiCorp Capital, Inc., which was an equipment leasing company. In the past, he has also served as Chair of the Association for Government Leasing and Finance as well as various committees of the Equipment Leasing and Finance Association, which gave him a broad understanding of issues affecting our industry. During his leasing career, Mr. Bowen participated in equipment lease financing transactions in excess of an aggregate of $3 billion, involving many major vendors as well as government contractors. Mr. Bowen has a degree in finance from the University of Maryland as well as a Master of Business Administration in Finance from the University of Maryland. Mr. Bowen’s experience in the leasing industry brings to the Board depth and breadth of knowledge relating to finance and funding. He also has a thorough knowledge of sales and operations activities and in a multitude of industry-specific areas.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
| John E. Callies Independent Director Age 70 | Director of ePlus since 2010 Committees: Audit Compensation (Chair) Other Public Company Directorships: None |
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
Mr. Callies has been a Senior Advisor to McKinsey and Company since 2011. Previously, he was employed by IBM in various capacities for 34 years. Mr. Callies served as General Manager of IBM Global Financing from 2004 until his retirement in June 2010. With operations in 55 countries supporting 125,000 clients, Mr. Callies led the world’s largest information technology financing and asset management organization and was responsible for business direction and management of a portfolio of nearly $35 billion in total assets. Mr. Callies has a degree in economics from Lehigh University. The Board believes that Mr. Callies’ knowledge of our business, including the leasing sector, along with his sales, operational and strategic experience bring value to the Board. He additionally has international experience and qualifies as an audit committee financial expert within the meaning of SEC regulations.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
| Ira A. Hunt, III Independent Director Age 68 | Director of ePlus since 2014 Committees: Compensation Nominating and Corporate Governance Other Public Company Directorships: None |
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
Mr. Hunt is President and CEO of Hunt Technology, LLC. Hunt Technology, LLC focuses on strategic IT planning, cyber and data-security, AI and big data analytics, and cloud computing. He retired from the Central Intelligence Agency in 2013 as their Chief Technology Officer after a 28-year career in intelligence. From July 2016 through October 2020, he served as Managing Director and Cyber Lead for Accenture Federal Services in Arlington, Virginia, and he has also served as Chief Architect for Bridgewater Associates, the world’s largest hedge fund. Mr. Hunt currently serves on the Board of Directors for Mission Link, a non-profit organization, and for VAST Data Federal, a next-gen solid state storage company. He also serves on Intel’s Public Sector Advisory Board and as an advisor to Enlightenment Capital. He holds a Bachelor and Masters of Engineering in Civil/Structural Engineering from Vanderbilt University in Nashville, Tennessee. The Board believes that Mr. Hunt’s extensive knowledge of the technology industry, including strategic IT planning, cyber and data-centric security, big data analytics, cloud computing, and IT architecture and environment, bring valuable industry expertise to the Board.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
| Mark P. Marron Director, CEO and President Age 63 | Director of ePlus since 2018 Committees: None Other Public Company Directorships: None |
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
Mr. Marron became the CEO and President of ePlus inc. on August 1, 2016, and was appointed to the Board on November 14, 2018. He oversees all corporate strategy for global operations, leading with an emphasis on our greatest asset: our people. He began his career at ePlus in 2005 as Senior Vice President of Sales and became COO in 2010. A 30+ year industry veteran, he was formerly with NetIQ where he held the position of Senior Vice President of Worldwide Sales and Services. Prior to joining NetIQ, Mr. Marron served as General Manager of Worldwide Channel Sales for Computer Associates International Inc., a provider of software and services that enables organizations to manage their IT environments. Through his time with both NetIQ and Computer Associates International Inc., Mr. Marron gained extensive international experience, throughout North America, Europe, the Middle East, and Africa and holds a Bachelor of Science degree in Computer Science from Montclair State University. The Board has determined that Mr. Marron’s role as CEO provides the Board with access to an experienced executive with a thorough understanding of our business and extensive experience in leading sales teams, international sales, and mergers and acquisitions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
| Maureen F. Morrison Independent Director Age 69 | Director of ePlus since 2018 Committees: Audit (Chair) Nominating and Corporate Governance Other Public Company Directorships: Asbury Automotive Group Inc. (NYSE: ABG) |
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
Ms. Morrison joined the ePlus Board of Directors in June 2018. She is a highly accomplished senior executive leader who retired in 2015 from a career as an audit partner at PricewaterhouseCoopers, LLP (“PwC”). At PwC, Ms. Morrison worked with prominent private equity backed entities and multibillion-dollar global technology corporations. She has diversified experience in software, IT-enabled solutions and consulting, hardware, and manufacturing. As a highly respected financial and accounting professional, Ms. Morrison has extensive experience in corporate boardrooms advising Audit Committees of midcap public companies, private equity-backed entities, and Fortune 500 companies. Ms. Morrison currently is a member of one other publicly traded board of directors: Asbury Automotive Group, where she is the Chair of the Audit Committee and a member of the Compensation and Human Resources Committee and the Capital Allocation & Risk Management Committee. She holds a Bachelor of Arts in Business Administration with a concentration in Accounting from Rutgers University. The Board has determined that as a result of her broad experience with complex accounting, financial and risk related issues, as well as her experience on public company boards, Ms. Morrison is well-qualified to assist in the auditor oversight function as an Audit Committee member and brings value as a member of the Board. She also qualifies as an audit committee financial expert within the meaning of SEC regulations.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
| Ben Xiang Independent Director Age 39 | Director of ePlus since 2019 Committees: Audit Nominating and Corporate Governance (Chair) Other Public Company Directorships: None |
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
Mr. Xiang currently serves as Senior Vice President, Technology, Corporate Development, and Strategy at Veritone, an Enterprise AI company. Mr. Xiang joined Veritone in February 2021. Along with leading Veritone’s corporate development and strategy, Mr. Xiang leads global product and engineering across Veritone's AI platform and AI application teams. Prior to that, Mr. Xiang served as interim Chief Information Officer of Sunwest Bank from August 2019 to December 2019. Beginning in 2015 and through the present, he has served in a consulting role through Crescent Group, where his contributions included advising start-ups and established companies in digital transformation and growth. From 2012 through 2019, Mr. Xiang held multiple roles with Ingram Micro, the world’s largest IT distributor, as Ingram’s global executive for the Internet of Things, Artificial Intelligence, and Mixed-Reality business as well as roles in strategy and corporate development. He has extensive experience in cross-border M&A, post-merger integrations, and business operations. Prior to joining Ingram, Mr. Xiang was Managing Director of Fortress Consulting, a management consulting firm supporting Fortune 500 companies in the US, Europe, and China. In 2009, he joined the CITIC Group as Director focusing on investments in technology and media. Prior to that, Mr. Xiang worked for Sony BMG in the areas of digital strategy and transformation. Mr. Xiang has extensive experience throughout Asia Pacific and North America and holds a degree in Finance and Management from the Wharton School at the University of Pennsylvania. Since April 2015, Mr. Xiang has also been on the board of directors of Sunwest Bank. The Board believes that Mr. Xiang’s expertise of go-to-market within the IT channel, knowledge of the technology industry, emerging technology vendors and international M&A experience bring value to the Board.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION The below table sets forth the compensation for the members of the Board for the fiscal year ended March 31, 2024. Mr. Marron did not receive any additional compensation for his service as a director during our fiscal year ended March 31, 2024. Mr. Marron’s compensation is reported under “Executive Compensation” herein. The Board’s general policy is that compensation for the non-employee directors should be a mix of cash and equity-based compensation. Directors also have the ability to elect to receive their compensation entirely in equity. During our fiscal year ended March 31, 2024, each non-employee director received an annual cash retainer of $86,250, reflecting four quarterly payments of $21,562.50, or, alternatively, at the director’s election, the same amount in stock in lieu of cash, rounded down to avoid a fractional share. Stock that directors receive in lieu of cash is not subject to forfeiture or a vesting period. In September 2023, each non-employee director also received $86,240.22 in restricted stock, reflecting 1,353 shares at $63.74, which was the closing price of our stock on the grant date of September 25, 2023. The annual restricted stock grant is equal to the amount of cash compensation earned by directors during the prior fiscal year, as more fully set forth in our 2017 Non-Employee Director Long-Term Incentive Plan (“2017 Director LTIP”). This number of shares of restricted stock granted is rounded down to avoid a fractional share award, and vests in equal installments on the first- and second-year anniversaries of the grant. For fiscal year 2024 service, our Board’s Chair, Mr. Faulders, also received additional annual cash compensation of $50,000, which is paid in equal quarterly installments. Effective April 1, 2024, each of our Board’s committee chairs will receive additional cash compensation for fiscal year 2025 service, as follows:
DIRECTOR COMPENSATION
| Committee | Annual Chair Compensation (1) | | Audit | $15,000 | | Compensation | $12,500 | | Nominating and Corporate Governance | $10,000 |
DIRECTOR COMPENSATION
| (1) Paid in equal quarterly installments. |
DIRECTOR COMPENSATION
Directors are also reimbursed for out-of-pocket expenses incurred to attend Board and committee meetings and the Annual Meeting.
2024 Director Compensation Table
2024 Director Compensation Table The tables below show compensation for all directors except for Mr. Marron, whose compensation is in the Summary Compensation Table.
2024 Director Compensation Table
| Name | Fees Earned or Paid in Cash (1) | Stock Awards (2)(3) | Option Awards | All Other Compensation | Total | | Renée Bergeron | $86,250 | $86,240 | $- | $- | $172,490 | | Bruce M. Bowen | $86,250 | $86,240 | $- | $- | $172,490 | | John E. Callies | $86,250 | $86,240 | $- | $- | $172,490 | | C. Thomas Faulders, III | $136,250 | $86,240 | $- | $- | $222,490 | | Eric D. Hovde | $86,250 | $86,240 | $- | $- | $172,490 | | Ira A. Hunt, III | $86,250 | $86,240 | $- | $- | $172,490 | | Maureen F. Morrison | $86,250 | $86,240 | $- | $- | $172,490 | | Ben Xiang | $86,250 | $86,240 | $- | $- | $172,490 |
2024 Director Compensation Table
| (1) The above table reflects fees earned during the fiscal year 2024. Pursuant to our 2017 Director LTIP, directors may make a stock fee election, through which they receive shares of stock in lieu of cash compensation. The stock fee elections are made on a calendar year basis, and the stock grant is made on the first business day after the end of each quarter of Board service. The number of shares received is determined by dividing the cash compensation earned quarterly by directors ($21,562.50 for our fiscal year ended March 31, 2024) by the Fair Market Value of a share of common stock, as defined in the 2017 Director LTIP, and rounding down to avoid the issuance of a fractional share. |
2024 Director Compensation Table
Messrs. Bowen and Hovde each received stock instead of cash throughout the fiscal year. This stock is not subject to forfeiture or a vesting period. The amount of stock granted for each quarter to Messrs. Bowen and Hovde is shown below. Mr. Hovde’s grant for the fourth quarter of our fiscal year ended March 31, 2024, was pro-rated to reflect his service from January 1, 2024, until his resignation from our Board on February 20, 2024.
2024 Director Compensation Table
| Bruce M. Bowen Board Service Time | Number of Shares Granted | Eric D. Hovde Board Service Time | Number of Shares Granted | | April 1, 2023 - June 30, 2023 | 384 | April 1, 2023 - June 30, 2023 | 384 | | July 1, 2023 - September 30, 2023 | 333 | July 1, 2023 - September 30, 2023 | 333 | | October 1, 2023 - December 31, 2023 | 268 | October 1, 2023 - December 31, 2023 | 268 | | January 1, 2024 - March 31, 2024 | 280 | January 1, 2024 - February 20, 2024 | 157 |
2024 Director Compensation Table
| (2) The values in this column represent the aggregate grant date fair market values of the fiscal year 2024 restricted stock awards, computed in accordance with Codification Topic Compensation—Stock Compensation. |
2024 Director Compensation Table
| (3) The table below reflects the aggregate number of unvested restricted stock shares outstanding as of March 31, 2024, for each director except Mr. Marron, whose compensation is provided in the Summary Compensation Table. |
2024 Director Compensation Table
| Name | Unvested Restricted Shares | | Renée Bergeron | 2,290 | | Bruce M. Bowen | 2,379 | | John E. Callies | 2,379 | | C. Thomas Faulders, III | 2,379 | | Ira A. Hunt, III | 2,379 | | Maureen F. Morrison | 2,379 | | Ben Xiang | 2,379 |
Directors and Executive Officers
Directors and Executive Officers Share ownership is shown as of our Record Date of July 18, 2024.
Directors and Executive Officers
| Name (1) | Aggregate Number of Beneficial Shares | Percent of Outstanding Shares | Additional Information (2) | | Renée Bergeron | 3,227 | * | Includes 2,290 shares of restricted stock that have not vested as of July 18, 2024. | | Bruce M. Bowen | 25,761 | * | Includes 10,700 shares of common stock held by Bowen Holdings LLC, a Virginia limited liability company, which is owned by Mr. Bowen and his three adult children, of which Mr. Bowen serves as manager. Also includes (a) 2,084 shares held by the Elizabeth Dederich Bowen Trust in which Mr. Bowen's spouse serves as trustee, (b) 9,758 shares held by the Bruce Montague Bowen Trust in which Mr. Bowen serves as trustee, and (c) 2,379 shares of restricted stock that have not vested as of July 18, 2024. | | John E. Callies | 20,493 | * | Includes 2,379 shares of restricted stock that have not vested as of July 18, 2024. | | C. Thomas Faulders, III | 46,341 | * | Includes 2,379 shares of restricted stock that have not vested as of July 18, 2024. | | Ira A. Hunt, III | 25,261 | * | Includes 2,379 shares of restricted stock that have not vested as of July 18, 2024. | | Maureen F. Morrison | 11,293 | * | Includes 2,379 shares of restricted stock that have not vested as of July 18, 2024. | | Ben Xiang | 9,621 | * | Includes 2,379 shares of restricted stock that have not vested as of July 18, 2024. | | Mark P. Marron | 197,118 | * | Includes (a) 69,030 shares of restricted stock that have not vested as of July 18, 2024, and (b) 128,088 shares held in a revocable trust in which Mr. Marron serves as trustee. | | Elaine D. Marion | 112,226 | * | Includes (a) 69,442 shares held in a revocable trust in which Ms. Marion serves as trustee, (b) 42,360 shares of restricted stock that have not vested as of July 18, 2024, and (c) 424 shares held in an IRA. | | Darren S. Raiguel | 91,243 | * | Includes (a) 48,569 shares held in a revocable trust in which Mr. Raiguel serves as trustee and (b) 42,360 shares of restricted stock that have not vested as of July 18, 2024. | | All directors and executive officers as a group (10 persons) | 542,584 | 2.02% | |
Directors and Executive Officers
| * Less than 1% |
Directors and Executive Officers
| (1) The business address of Mses. Bergeron, Marion and Morrison, and Messrs. Bowen, Callies, Faulders, Hunt, Marron, Raiguel, and Xiang is ePlus inc., 13595 Dulles Technology Drive, Herndon, Virginia 20171. |
Directors and Executive Officers
| (2) Nonvested restricted shares included herein are considered beneficially owned since the owner thereof has the right to vote such shares. Other than the ownership described below, the balance of the shares beneficially owned represent shares directly held by the holder. |
COMPENSATION DISCUSSION AND ANALYSIS
| Overview | • Fiscal Year 2024 Financial Highlights • Our Executive Compensation Program • Our Executive Compensation Practices • 2023 Say-On-Pay and Say-On-Frequency Votes • Long-Term Cash Incentive Compensation | | What We Pay and Why | • Fiscal Year 2024 Executive Compensation Decisions • Base Salary • Annual Cash Incentive Awards • Long-Term Incentive Program (Cash, Restricted Stock Awards and Performance Stock Units) • Other Elements of Our Fiscal Year 2024 Executive Compensation Program | | How We Make Executive Compensation Decisions | • Role of the Board and Compensation Committee, and our Executive Officers • Guidance from the Compensation Committee’s Independent Compensation Consultant • Comparison Peer Groups • Alignment of Senior Management Team to Drive Performance |
Our Executive Compensation Program
Our Executive Compensation Program The Company’s goal for its executive compensation, as well as its non-executive compensation, program is to attract, motivate, and retain a talented, ethical, and creative executive team who will provide leadership for the Company’s success in dynamic and competitive markets, while remaining attuned to the risks facing the Company. The Company seeks to accomplish this goal in a way that rewards performance, is aligned with its business strategy, and maximizes shareholders’ long-term interests. The Company’s executive compensation program is also intended to promote and maintain stability within the executive team by issuing restricted stock with multi-year vesting terms, as well as cash awards and Performance Stock Unit awards with multi-year performance periods. The table below summarizes the components of our fiscal year 2024 executive compensation.
Our Executive Compensation Program
| | Pay Element | | | | | | | Salary | Annual Cash Incentive | Long-Term Cash Incentive | Performance Stock Units | Restricted Stock | | Who Receives | All NEOs | All NEOs | All NEOs | All NEOs | All NEOs | | When Granted | Annually | Annually | Annually | Annually | Annually | | Form of Delivery | Cash | Cash | Cash | Equity | Equity | | Performance Type | Short-Term Fixed | Short-Term Variable | Long-Term Variable | Long-Term Variable | Long-Term Fixed | | Performance Period | 1 Year | 1 Year | 3 Years | 3 Years | 3-year Ratable Annual Vesting | | How Payout Determined | Amount Set by Compensation Committee | Formula Determined by Compensation Committee | Formula Determined by Compensation Committee | Formula Determined by Compensation Committee | Amount Determined by Compensation Committee |
Our Executive Compensation Program
| Performance Measures | Individual | Consolidated Net Sales; Financing Segment Operating Income; Earnings Before Taxes; Services Gross Profit | Target Increase in Net Sales and Operating Income | Target Increase in Net Sales and Operating Income; Relative Total Shareholder Return (“TSR”) | Time-Based |
Our Executive Compensation Practices
| | What We Do | | What We Don’t Do | | ✔ | Annual review of our executive compensation programs | | No excessive executive perquisites | | ✔ | Annual advisory vote to approve executive compensation programs (say-on-pay) | | No excessive severance benefits | | ✔ | Periodic market comparison of executive compensation against relevant peer group information | | No supplemental executive retirement plans | | ✔ | Periodic use of an independent compensation consultant reporting directly to the Compensation Committee and providing no other services to the Company | | No acceleration of unvested stock upon retirement | | ✔ | Significant percentage of compensation delivered in the form of variable compensation, which is “at-risk” and tied to quantifiable performance measures | | No hedging or short sales of our securities | | ✔ | Long-term vesting of restricted stock, to align executive and shareholder interests (minimum of three-year vesting) | | No pledging of our securities, except in limited circumstances with pre-approval by the Insider Trading Compliance Officer | | ✔ | Long-term performance-based cash and performance stock unit grants | | No tax gross-ups on benefits (other than as also provided to non-executive officer employees) | | ✔ | Robust executive officer stock ownership guidelines require NEOs to hold ePlus stock | | | | ✔ | Clawback policy to recoup erroneously paid incentive compensation | | |
Long-Term Performance-Based Equity Compensation
Long-Term Performance-Based Equity Compensation Beginning with the 2024 fiscal year, the Compensation Committee updated the executive compensation program by adding a long-term performance-based equity component in the form of performance stock unit awards to further encourage executives to focus on delivering long-term value to shareholders. The long-term performance stock unit awards are made pursuant to the Employee Long-Term Incentive Plan in effect at the date of the award and are based on three financial metrics that are measured over a three-year period. For more information on the long-term performance-based equity compensation, see “Long-Term Incentive Program” below.
Annual Cash Incentive Awards
Annual Cash Incentive Awards During the 2024 fiscal year, we provided our NEOs with short-term cash incentive compensation through our annual Cash Incentive Plan. This short-term, variable cash compensation represents a significant portion of each NEO’s target total cash compensation opportunity in a given year.
Cash Incentive Plan Pay for Performance Alignment
Cash Incentive Plan Pay for Performance Alignment Our Compensation Committee annually reviews, and then sets, performance goals under a Cash Incentive Plan, which was adopted by the Compensation Committee in 2018 (“2018 CIP”). During the 2024 fiscal year, short-term performance goals and cash awards were made under our 2018 CIP. The combination of performance goals the Compensation Committee chose for fiscal year 2024 emphasizes factors that the Compensation Committee believes are important to Company strategy, future growth and enhancing shareholder value. The Compensation Committee administers the 2018 CIP and has full authority to determine which of the Company’s executive officers will participate in the 2018 CIP; the terms and amounts of each participant’s minimum, target, and maximum awards; and the period during which the performance is to be measured.
Cash Incentive Awards for Fiscal Year 2024
Cash Incentive Awards for Fiscal Year 2024 For the fiscal year ended March 31, 2024, our NEOs’ cash bonuses were earned pursuant to the 2018 CIP, based on the following financial performance goals: consolidated net sales (20%), financing segment operating income (20%), earnings before tax (30%), and services gross profit (30%). The award opportunity in fiscal year 2024 was based on a target amount, which was adjusted based on the level of attainment of financial performance as set forth in each participant’s award agreement, and payouts may range between 0% to 200% of target award amounts. The Compensation Committee set the target award for each of ePlus’ executive officers. All three of the participating executive officers had the same financial performance goals and the same performance weights. The fiscal year 2024 financial performance weights and target amounts for each participant were as follows:
Cash Incentive Awards for Fiscal Year 2024
| | Consolidated Net Sales | | Financing Segment Operating Income | | Earnings Before Taxes | | Services Gross Profit | | | | Named Executive Officer | Percentage of Total Bonus | Target Bonus Amount | Percentage of Total Bonus | Target Bonus Amount | Percentage of Total Bonus | Target Bonus Amount | Percentage of Total Bonus | Target Bonus Amount | Total Target Bonus Amount | | Mark P. Marron | 20.0% | $215,000 | 20.0% | $215,000 | 30.0% | $322,500 | 30.0% | $322,500 | $1,075,000 | | Elaine D. Marion | 20.0% | $125,000 | 20.0% | $125,000 | 30.0% | $187,500 | 30.0% | $187,500 | $625,000 | | Darren S. Raiguel | 20.0% | $125,000 | 20.0% | $125,000 | 30.0% | $187,500 | 30.0% | $187,500 | $625,000 |
Cash Incentive Awards for Fiscal Year 2024
The Cash Incentive Award Agreements permit the exclusion of all items of income, gain or loss determined by the Board to be extraordinary or unusual in nature and not incurred or realized in the ordinary course of business, the incentive compensation expensed by ePlus for payments under the 2018 CIP, and any revenue, gain, or loss attributable to the business operations of any entity acquired by us during the fiscal year. The 2018 CIP further provides that cash payments under the 2018 CIP are subject to recovery by the Company to the extent required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd Frank”) and the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and any regulations promulgated thereunder. As more fully discussed below, the Company has adopted a Policy for Recoupment of Incentive Compensation. Possible payouts under the 2018 CIP ranged between 0% and 200% of the target amount, depending on the level of achievement of the performance goals for the fiscal year 2024. The financial performance goals for 2024 were as follows:
Cash Incentive Awards for Fiscal Year 2024
| | Performance Goals | | | | | Performance Level (Dollars in thousands) | Consolidated Net Sales (20%) | Financing Segment Operating Income (20%) | Earnings Before Taxes (30%) | Services Gross Profit (30%) | | Maximum | n/a (1) | n/a (1) | n/a (1) | n/a (1) | | Target | $2,182,348 | $24,138 | $175,479 | $104,151 | | Threshold (75% of Performance Goal) | $1,636,761 | $18,104 | $131,609 | $78,113 | | Below Threshold | < $1,636,761 | < $18,104 | < $131,609 | < $78,113 |
Cash Incentive Awards for Fiscal Year 2024
| (1) The maximum payout of 200% of the target award can be achieved based on the results of one or more of the performance goals. The threshold and escalators for each performance goal are as follows: |
Cash Incentive Awards for Fiscal Year 2024
| Amount of Goal Achieved | Award Amount | | Less than 75% of Goal Target | No award relating to that target | | Between 75% - 100% of Goal Target | Award shall be 50% of target, plus an additional 2.0% for each percentage point over 75% of Goal Target achieved | | 100% of Goal Target | 100% of target for that Goal | | More than 100% of Goal Target | 100% of target for that Goal, plus an additional 5.0% for each percentage point over 100% of Goal Target achieved | | Total Maximum Award for all goals combined | 200% of Target |
Cash Incentive Awards for Fiscal Year 2024
At the conclusion of the fiscal year ended March 31, 2024, the Compensation Committee determined which of the financial objectives described under the 2018 CIP and in the award agreements were achieved. There were no waivers or modifications to any specified performance targets, goals, or conditions with respect to the 2018 CIP or award agreements. The achievement of the financial performance goals is set forth below.
Cash Incentive Awards for Fiscal Year 2024
| Performance Criteria (Dollars in thousands) | Goal | Achievement (1) | Amount of Goal Achieved | | Consolidated Net Sales | $2,182,348 | $2,116,071 | 97.0% | | Financing Segment Operating Income | $24,138 | $26,182 | 108.5% | | Earnings Before Taxes | $175,479 | $159,924 | 91.1% | | Services Gross Profit | $104,151 | $108,190 | 103.9% |
Cash Incentive Awards for Fiscal Year 2024
| (1) Performance Criteria achievement were adjusted to exclude the incentive compensation accrued by the Company, and income and expenses related to acquisitions, if any, and the Performance Criteria goals were adjusted to exclude incentive compensation targets. The Percentage of the Total Target Award earned is: |
Cash Incentive Awards for Fiscal Year 2024
| Named Executive Officer | Total Target Award | Annual Incentive Cash Payment Earned Fiscal Year 2024 | Payout Percentage | | Mark P. Marron | $1,075,000 | $1,158,321 | 108% | | Elaine D. Marion | $625,000 | $673,443 | 108% | | Darren S. Raiguel | $625,000 | $673,443 | 108% |
Cash Incentive Awards for Fiscal Year 2024
The following table details the payments earned in the fiscal year ended March 31, 2024, and 2023, respectively (but paid in the subsequent fiscal year) for each NEO:
Cash Incentive Awards for Fiscal Year 2024
| | Annual Incentive Cash Payment Earned Fiscal Year Ended | | | | Named Executive Officer | March 31, 2024 | March 31, 2023 | % Change | | Mark P. Marron | $1,158,321 | $983,627 | 18% | | Elaine D. Marion | $673,443 | $531,690 | 27% | | Darren S. Raiguel | $673,443 | $531,690 | 27% |
Cash Incentive Awards for Fiscal Year 2024
| Long-Term Incentive Program |
Cash Incentive Awards for Fiscal Year 2024
Under our 2021 Employee Long-Term Incentive Plan (“2021 Employee LTIP”), the Compensation Committee has the authority to award various forms of long-term incentive compensation grants, such as cash awards, stock options, restricted stock awards, restricted stock units, and performance stock units. The Compensation Committee’s objectives for the fiscal year 2024 long-term equity-based and cash incentive awards to our NEOs were to focus executives on long-term profitable growth and shareholder value creation linked to the Company’s long-term strategic plan, and to retain the services of our executives through multi-year vesting requirements. Mr. Marron makes recommendations to the Compensation Committee for cash and equity grants with regard to Ms. Marion and Mr. Raiguel; however, the Compensation Committee deliberates and reaches its own decision regarding grants to all NEOs, including Mr. Marron, who does not participate in any deliberations or votes regarding his own compensation. When determining the level of the grant, the Compensation Committee considers each NEO’s functional and enterprise management responsibilities, potential contributions to the Company’s profitability and growth, the value of prior long-term incentive grants and other non-cash and cash compensation, regular analysis of how the Company performed on multiple financial metrics as compared to certain peers, information from our independent compensation consultant (if any), and each executive’s total compensation, including cash compensation. However, the Compensation Committee does not use a formula or assign a particular weight to any given factor in determining equity award grant levels. Rather, the Compensation Committee’s determination of grant levels is subjective, and the Compensation Committee grants awards that are intended to deliver compensation to the executive at the target performance level (subject to actual performance and irrespective of accounting and tax implications) and in its judgment are reasonably competitive. The Compensation Committee believes that restricted stock and performance stock unit awards help to create incentives for performance and further align the interests of executives with those of shareholders because the stock’s value increases or decreases in conjunction with the Company’s stock price. The Compensation Committee believes that long-term cash performance awards align the interests of executives with those of shareholders because the award’s value is tied to operating metrics that drive long-term shareholder value. In addition, the Compensation Committee believes that granting awards with multi-year vesting periods creates a substantial retention incentive and encourages the NEOs to focus on the Company’s long-term business objectives and stock performance. All outstanding restricted shares vesting for, or granted to, executive officers and other employees during the fiscal year ended March 31, 2024, vest over a three-year period. For fiscal year 2024, the Compensation Committee used a combination of long-term incentive vehicles, including time-based restricted stock, performance-based stock units, and cash performance awards. These vehicles focus NEOs on driving long-term profitable growth and shareholder value creation.
Cash Incentive Awards for Fiscal Year 2024
| Element of LTI | | Overview of Design | | Time-Based Restricted Stock | • | Vests in three equal increments on the first three one-year anniversaries of the grant | | Performance Stock Units | • | Award tied to Relative TSR (10% of award), based on the Russell 2000 Index, growth in operating income (45% of award), and growth in net sales (45% of award). | | | • | Three-year performance period | | | • | Vesting and payout can range between 0% and 200% of target award | | Cash Performance Award | | | | | • | Award is tied to achievement of growth in operating income (50% of award) and growth in net sales (50% of award) | | | • | Three-year performance period | | | • | Payout occurs at end of three-year performance period | | | • | Payout can range between 0% and 150% of target award |
Cash Incentive Awards for Fiscal Year 2024
The table below shows the long-term incentive award values granted in fiscal year 2024 for each of the NEOs:
Cash Incentive Awards for Fiscal Year 2024
| Named Executive Officer | Time-Based Restricted Stock (1) | Performance Stock Units (2) | Cash Performance Award (3) | Total Value | | Mark P. Marron | $2,199,947 | $499,942 | $275,000 | $2,974,889 | | Elaine D. Marion | $1,349,947 | $199,965 | $150,000 | $1,699,912 | | Darren S. Raiguel | $1,349,947 | $224,983 | $150,000 | $1,724,930 |
Cash Incentive Awards for Fiscal Year 2024
| (1) Award amounts for Time-Based Restricted Stock is based on $55.91, which was the closing price of our common stock on June 14, 2023, the date of the award. |
Cash Incentive Awards for Fiscal Year 2024
| (2) Award amounts for Performance Stock Units is based on $61.17, which was the closing price of our common stock on November 17, 2023, the date of the award. The three categories of performance goals to be achieved during the performance period, which will be weighted at the end of the performance period, are as follows: (a) 45% of the Performance Stock Units will be earned if the Company’s actual operating income meets a certain growth percentage over the performance period; (b) 45% of the Performance Stock Units will be earned if the Company’s actual net sales meets a certain growth percentage over the performance period; and (c) 10% of the Performance Stock Units will be earned if the Company achieves a threshold relative total shareholder return based on the Russell 2000 Index (the “Relative TSR Metric”). The performance period is April 1, 2023 to March 31, 2026. Amounts shown are the target amounts and represent the amount of compensation intended by the Compensation Committee to be delivered to the NEO (subject to actual performance and irrespective of accounting and tax implications). The threshold and escalator for the Performance Stock Units are as follows: |
Cash Incentive Awards for Fiscal Year 2024
| Amount of Goal Achieved | Award Amount | | Less than 50% of Performance Target achieved | No Performance Award relating to that Performance Target goal | | Between 50% - 100% of Performance Target achieved | Performance Award shall be 50%, plus an additional 1.0% for each percentage point over 50% of Performance Target achieved | | More than 100% of Performance Target achieved | Performance Award shall be 100%, plus an additional 5.0% for each percentabe point over 100% of Performance Target achieved, subjet to the Total Maximum Awarded PSUs | | Total Maximum Vested Awarded PSUs (for all goals combined) | 200% of the Awarded PSUs |
Cash Incentive Awards for Fiscal Year 2024
| (3) The two categories of performance goals to be achieved during the performance period, which will be weighted at the end of the performance period, are as follows: (1) 50% of the Cash Performance Awards will be earned if the Company’s actual operating income meets a certain growth percentage over the performance period and (2) 50% of the Cash Performance Awards will be earned if the Company’s actual net sales meets a certain growth percentage over the performance period. The performance period for the Cash Performance Awards is April 1, 2024 – March 31, 2027. Amounts shown are the target amounts. The threshold and escalators for the Cash Performance Awards are as follows: |
Cash Incentive Awards for Fiscal Year 2024
| Amount of Goal Achieved | Award Amount | | Less than 75% of Goal Target | No award relating to that target | | Between 75% - 100% of Goal Target | Award shall be 50% of target, plus an additional 2.0% for each percentage point over 75% of Goal Target achieved | | 100% of Goal Target | 100% of target for that Goal | | More than 100% of Goal Target | 100% of target for that Goal, plus an additional 5.0% for each percentage point over 100% of Goal Target achieved | | Total Maximum Award for all goals combined | 150% of Target |
Vested Long-Term Cash Performance Awards Completed
Vested Long-Term Cash Performance Awards Completed
(Performance Period April 1, 2021 – March 31, 2024)
| (1) Performance Criteria were adjusted to exclude income and expenses related to acquisitions. The Payout earned and Payout Percentage relative to the Total Target Award is set forth in the table below: |
(Performance Period April 1, 2021 – March 31, 2024)
| Named Executive Officer | Total Target Award | Long-Term Cash Payment Earned Performance Period April 1, 2021 to March 31, 2024 | Payout Percentage | | Mark P. Marron | $275,000 | $412,500 | 150% | | Elaine D. Marion | $150,000 | $225,000 | 150% | | Darren S. Raiguel | $150,000 | $225,000 | 150% |
(Performance Period April 1, 2021 – March 31, 2024)
| | Long-Term Cash Payment Earned Performance Period | | | | Named Executive Officer | April 1, 2021 to March 31, 2024 | April 1, 2020 to March 31, 2023 | % Change | | Mark P. Marron | $412,500 | $300,000 | 38% | | Elaine D. Marion | $225,000 | $150,000 | 50% | | Darren S. Raiguel | $225,000 | $150,000 | 50% |
More information about the long-term incentive awards granted to each NEO in fiscal year 2024 are set forth in “2024 Grants of Plan-Based Awards.”
More information about the long-term incentive awards granted to each NEO in fiscal year 2024 are set forth in “2024 Grants of Plan-Based Awards.”
Severance and Change in Control Provisions
Severance and Change in Control Provisions Severance and change in control provisions are designed to facilitate our ability to attract and retain executives as we compete for talented employees in a marketplace where such protections are frequently offered. Severance benefits are designed to provide benefits to ease an executive’s transition following an employment termination by the Company due to changes in our employment needs. Additionally, severance agreements increase the enforceability of non-competition provisions to which all of our executives are contractually bound. Change in control benefits are intended to encourage executives to remain focused on the Company’s business in the event of rumored or actual fundamental corporate changes. Both severance and change in control benefits are often an important part of an executive’s compensation package. See further details under the section entitled “Employment Agreements, Severance, and Change in Control Provisions.”
Clawback Policy
Clawback Policy Our executive compensation arrangements with our NEOs, including our 2018 CIP, our 2021 Employee Long-Term Incentive Plan, employment agreements, long-term cash performance awards, and Performance Stock Unit awards provide that bonuses or other compensation are subject to recovery by the Company to the extent required by Dodd-Frank and the Sarbanes-Oxley, and any regulations promulgated thereunder. This provision does not apply to base salary, or to time-vested restricted stock which is not awarded, granted, or vested based on financial measures required to be reported under the securities laws. The 2018 CIP includes a provision for an adjusted award if it is determined that an award was paid based on incorrect financial results, and permits the Compensation Committee to lower the amount of such payment so that it reflects the amount that would have been paid based on the correct financial results and require, to the extent permitted by law, the participant to reimburse to the Company any amount received with respect to such an award. The 2018 CIP also provides that cash payments under the plan are subject to recovery by the Company to the extent required by Dodd-Frank and Sarbanes-Oxley, and any regulations promulgated thereunder. Our 2021 Employee LTIP provides that awards shall be subject to Company policies and applicable statutes, rules or regulations regarding recoupment or clawback as may be in effect from time to time, and that if for any reason our financial statements must be restated for any part of a performance period, as result of material noncompliance with accounting requirements, and the vesting or amount of an award for a participant would be materially affected by information changed in such financial statements, then such Award will be forfeited, and be repaid to us, in such amount or to such extent as the Compensation Committee shall determine. During our fiscal year ended March 31, 2024, NASDAQ listing standards became effective which required the development and implementation of the clawback policy mandated by Dodd-Frank. On November 17, 2023, our Board adopted a stand-alone Policy for Recoupment of Incentive Compensation (the “Recoupment Policy”), which complements the recoupment provisions in our 2018 CIP and 2021 Employee LTIP. Performance-based award agreements entered into after the effective date of the listing standards include specific recoupment language consistent with our Recoupment Policy and the new listing standards.
Deductibility of Executive Compensation
Deductibility of Executive Compensation When designing compensation plans, the Compensation Committee takes into consideration any changes to Internal Revenue Code (“IRC”) Section 162(m), as applicable. The Company believes that tax deductibility of compensation is an important factor, but not the sole factor, to be considered in setting executive compensation policy, and the Compensation Committee has authorized payments that are not deductible for federal income tax purposes when it believes that such payments are appropriate to attract, retain, and incentivize executive talent. Our executive employment agreements provide that, if a severance payment is subject to the excise tax provided in IRC Section 280G, the executive will receive a lesser payment if he or she would receive a greater after-tax benefit, which will better enable the Company to obtain a tax deduction. Our long-term Performance Cash Award agreements include a similar provision.
Role of the Chief Executive Officer
Role of the Chief Executive Officer Our CEO, Mr. Marron, is responsible for the implementation and administration of our executive compensation program during the fiscal year. Mr. Marron recommended the overall structure for our executive compensation program, including base salary, metrics for the 2018 CIP award agreements for fiscal year 2024, metrics for the long-term cash awards made pursuant to our 2021 Employee LTIP, metrics for our Performance Stock Unit awards granted during fiscal year 2024, and the amount and vesting schedule of equity awards to be granted. The final decisions regarding executive compensation were, however, made by the Compensation Committee. Additionally, the CEO is not present during any deliberations or voting regarding his own compensation.
Role of the Chief Executive Officer
| Guidance from the Compensation Committee’s Independent Compensation Consultant |
Role of the Chief Executive Officer
An independent compensation consultant, Pay Governance LLC (the “Compensation Consultant”), was retained by the Compensation Committee in February 2023. The Compensation Committee reviewed the independence of the Compensation Consultant under Nasdaq and SEC rules, and concluded that the work of the Compensation Consultant has not raised any conflict of interest. The Compensation Consultant is engaged directly by the Compensation Committee. The Compensation Consultant assisted the Compensation Committee with developing a publicly traded peer group for benchmarking executive pay levels and design, reviewing incentive plan design practices and recommending changes to incentive plans, and analyzing target compensation levels for executive officers relative to peer group companies and relevant published survey sources. The Compensation Committee approves the compensation for the NEOs based on its own evaluation, input from our CEO, internal pay equity considerations, the tenure, role, and performance of each NEO, as well as input from the compensation consultant and market data. The CEO is not present during any deliberations or voting regarding his own compensation.
Role of the Chief Executive Officer
| Comparison Peer Groups |
Role of the Chief Executive Officer
The Compensation Committee periodically reviews the compensation practices of peer companies as part of its decision-making process so it can set total compensation levels that it believes are reasonably competitive. In March 2023, the Compensation Committee, with the assistance of the Compensation Consultant, determined a new peer group. In selecting the peer group, the Compensation Committee considered potential peers’ primary industry, total review, market capitalization, gross margin, operating income margin, number of employees, and cumulative Total Shareholder Return (“TSR”) on a 1-year, 3-year and 5-year basis. The Compensation Committee also considered the pay practices of two additional companies from a design standpoint only.
Role of the Chief Executive Officer
| Peer Group | | | | CACI International Inc. | EPAM Systems, Inc. | ASGN Incorporated | | Amdocs Limited** | ScanSource, Inc. | PC Connection, Inc. | | Pure Storage, Inc. | Unisys Corporation* | Itron, Inc. | | ICF International, Inc.* | Thoughtworks Holding, Inc. | CSG Systems Internationals, Inc.* | | Perficient, Inc.* | StarTek, Inc.* | Climb Global Solutions, Inc. |
Role of the Chief Executive Officer
The above peer group was used for compensation-related decisions for the fiscal year ended March 31, 2024. The Compensation Consultant also provided a secondary market reference, Mercer’s 2022 U.S. Executive Benchmark Database, which was size-adjusted using regression data to approximate ePlus’ then-current revenue of $1.8 billion. The Compensation Committee considered this broad range of data to ascertain where the compensation for our executive officers is positioned with respect to the median to properly reflect various factors, such as our Company’s performance, the unique characteristics of each executive’s position, and applicable retention considerations. The Compensation Committee does not set compensation components to meet specific benchmarks, such as targeting salaries “above the median” or equity compensation at a particular percentile.
2024 EXECUTIVE COMPENSATION
| 2024 Summary Compensation Table |
2024 EXECUTIVE COMPENSATION
| Name and Principal Position | Fiscal Year | Salary | Stock Awards (1) | Non-Equity Incentive Plan Compensation (2) | All Other Compensation (3) | Total | | Mark P. Marron – President and Chief Executive Officer | 2024 | $925,000 | $3,199,832 | $1,570,821 | $26,443 | $5,722,096 | | | 2023 | $916,500 | $2,199,967 | $1,283,627 | $22,131 | $4,422,225 | | | 2022 | $846,154 | $1,999,964 | $2,050,000 | $4,000 | $4,900,118 | | Elaine D. Marion – Chief Financial Officer | 2024 | $500,000 | $1,749,876 | $898,443 | $15,945 | $3,164,265 | | | 2023 | $495,750 | $1,349,994 | $681,690 | $51,452 | $2,578,886 | | | 2022 | $465,385 | $1,199,923 | $1,100,000 | $4,000 | $2,769,308 | | Darren S. Raiguel – Chief Operating Officer | 2024 | $525,000 | $1,799,914 | $898,443 | $15,609 | $3,238,966 | | | 2023 | $495,750 | $1,349,994 | $681,690 | $58,096 | $2,585,530 | | | 2022 | $465,385 | $1,199,923 | $1,100,000 | $4,000 | $2,769,308 |
2024 EXECUTIVE COMPENSATION
| 2024 Grants of Plan-Based Awards Table |
2024 EXECUTIVE COMPENSATION
| Outstanding Equity Awards at 2024 Fiscal Year End |
2024 EXECUTIVE COMPENSATION
| Fiscal Year 2024 Options Exercised and Stock Vested |
2024 Pay Ratio Disclosure
2024 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.
2024 Pay Ratio Disclosure
| Median Employee Total Annual Compensation | Mr. Marron’s Total Annual Compensation | Pay Ratio | | $119,703 | $5,722,096 | 47.8 to 1 |
2024 Pay Ratio Disclosure
Our median employee referenced above is the same median employee identified in our 2023 Proxy Statement since there were no changes to our employee population or employee compensation arrangements that we believe would significantly impact our pay ratio. 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 1,745 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 2024 Summary Compensation Table described above. To ascertain the median employee’s compensation this year, we calculated his or her fiscal year 2024 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.
Pay Versus Performance
Pay Versus Performance 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 2024 Summary Compensation Table, as well as the adjusted values required in this section for the 2021, 2022, 2023 and 2024 fiscal years.
Pay Versus Performance
| Fiscal Year | Summary Compensation Table Total to PEO | Compensation Actually Paid to PEO | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs | Value of Initial Fixed $100 Investment Based On: | | Net Income ($ thousands) | Operating Income ($ thousands) | | | | | | | Company TSR | Peer Group TSR | | | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | | 2024 | $5,722,096 | $8,069,037 | $3,201,615 | $4,631,113 | $250.85 | $196.39 | $115,776 | $158,257 | | 2023 | $4,422,225 | $3,767,495 | $2,582,208 | $2,185,745 | $156.63 | $185.73 | $119,356 | $166,162 | | 2022 | $4,900,118 | $5,466,517 | $2,769,308 | $3,119,485 | $179.05 | $196.33 | $105,600 | $147,316 | | 2021 | $3,839,946 | $5,480,397 | $2,121,791 | $3,072,398 | $159.12 | $192.05 | $74,397 | $106,335 |
Pay Versus Performance
| (a) Reflects compensation amounts reported in the “2024 Summary Compensation Table” for our President and Chief Executive Officer, Mr. Marron. In the table above in accordance with SEC rules, our President and Chief Executive Officer is referred to as the “PEO” or principal executive officer. |
Pay Versus Performance
| (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 “2024 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. |
Pay Versus Performance
| | | Fiscal 2024 | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 | | Summary Compensation Table Total | | $5,722,096 | $4,422,225 | $4,900,118 | $3,839,946 | | - | Grant Date Fair Value of Stock Awards Granted in Fiscal Year | $(2,199,947) | $(2,199,967) | $(1,999,964) | $(1,799,979) | | + | Fair Value at Fiscal Year-End of Outstanding Unvested Stock Awards Granted in Fiscal Year | $3,090,392 | $1,843,266 | $2,433,116 | $2,494,089 | | ± | Change in Fair Value of Outstanding Unvested Stock Awards Granted in Prior Fiscal Years | $1,166,017 | $(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 | $290,479 | $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 | | $8,069,037 | $3,767,495 | $5,466,517 | $5,480,397 |
Pay Versus Performance
| (c) Reflects the average compensation amounts reported in the “2024 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. |
Pay Versus Performance
| (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 “2024 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. |
Pay Versus Performance
| | | Fiscal 2024 | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 | | Summary Compensation Table Total | | $3,201,615 | $2,582,208 | $2,769,308 | $2,121,791 | | - | Grant Date Fair Value of Stock Awards Granted in Fiscal Year | $(1,349,947) | $(1,349,994) | $(1,199,923) | $(1,049,958) | | + | Fair Value at Fiscal Year-End of Outstanding Unvested Stock Awards Granted in Fiscal Year | $1,896,348 | $1,131,108 | $1,459,802 | $1,454,844 | | ± | Change in Fair Value of Outstanding Unvested Stock Awards Granted in Prior Fiscal Years | $709,682 | $(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 | $173,415 | $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 | | $4,631,113 | $2,185,745 | $3,119,485 | $3,072,398 |
Pay Versus Performance
| (e) Reflects the 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, 2021. Historical stock performance is not necessarily indicative of future stock performance. |
Pay Versus 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. |
Pay Versus 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. |
Pay Versus Performance
| (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
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, 2022, 2023 and 2024. 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.