DEF 14A of PC Connection Inc
Filed Mar 27, 2026 · FY20250001104659-26-036089
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Directors are to be elected at the Annual Meeting. The size of our Board of Directors is currently fixed at six members. Our Bylaws provide that our directors will be elected at each annual meeting of our stockholders to serve until the next annual meeting of stockholders or until their successors are duly elected and qualified. The person named in the enclosed proxy (Patricia Gallup) will vote to elect the six nominees named below as our directors 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 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 any substitute nominee designated by our Board of Directors. It is not presently expected that any of the nominees will be unavailable to serve. Our Board of Directors recommends a vote “FOR” the election of the nominees described below. Set forth below is certain biographical information about each nominee to our Board of Directors, including the positions and offices they hold, their principal occupations and their business experience. Information with respect to the number of shares of Common Stock directly and indirectly beneficially owned by each nominee as of March 16, 2026, appears under “Security Ownership of Certain Beneficial Owners and Management”.
Nominees for Election to our Board of Directors
Nominees for Election to our Board of Directors Patricia Gallup, age 72, has been the Chair of our Board of Directors since September 1994 and Chief Administrative Officer since August 2011. She served as Chief Executive Officer from September 2002 until August 2012 and from 1990 to 2001. Ms. Gallup is a co-founder of our Company, has been on our Board of Directors since its inception and has served as an executive officer since 1982. David Beffa-Negrini, age 72, has served on our Board of Directors since September 1994, and serves as a member of the Audit Committee. He had held a variety of senior management roles with the Company and was the Co-President of our former subsidiary, Merrimack Services, from September 2005 to February 2007. He served as our Vice President of Corporate Communications from June 2000 to February 2007. Mr. Beffa-Negrini retired from the Company in 2008. Jay Bothwick, age 69, has served on our Board of Directors since March 2022 and as Vice Chair and Secretary since August 2022. Mr. Bothwick also serves as the Chair of the Corporate Development Committee, or the CDC. Mr. Bothwick has been a Managing Director of CrossHarbor Capital Partners LLC, an investment and asset management firm focused on commercial real estate, since August 2021. Prior to joining CrossHarbor Capital Partners LLC, Mr. Bothwick spent almost 40 years practicing in the corporate group at WilmerHale, a national law firm. Barbara Duckett, age 81, has served on our Board of Directors since June 2009, and serves as the Chair of the Compensation Committee and as a member of the Audit and Corporate Development Committees. From 2000 to 2013, Ms. Duckett was the President, Chief Executive Officer, and a member of the board of directors of Home Healthcare, Hospice and Community Services. Since 2021, Ms. Duckett has served as a member of the board of directors and as Chair of the Professional Affairs Committee of Cheshire Medical Center. Prior to joining the board of directors at Cheshire Medical Center, Ms. Duckett served as a member of the board of directors of Monadnock Community Hospital, as well as other non-profit and privately held healthcare organizations, at the local, state, and national level. Jack Ferguson, age 87, has been on our Board of Directors since May 2016, and serves as the Chair of the Audit Committee and as a member of the Compensation and Corporate Development Committees. Mr. Ferguson served as our Executive Vice President from May 2007 to March 2012, Chief Financial Officer from December 2005 to March 2012, and Treasurer from November 1997 to March 2012. From December 1992 to May 2007, he served in various executive financial roles at the Company. Prior to joining the Company, Mr. Ferguson was with Deloitte & Touche, an international accounting firm, where he served as a partner for over 15 years on both domestic and international client assignments. He retired from the Company in March 2012. Gary Kinyon, age 71, has been on our Board of Directors since May 2021. Mr. Kinyon had been a partner at Bradley & Faulkner, P.C. from 1983 until his retirement at the end of 2025. He has served as a Corporator and Director of the Savings Bank of Walpole since 2010, and as a Corporator and Trustee of New Hampshire Mutual Bancorp since 2018. We believe that each of our nominees is qualified to serve as a director of the Company as a result of his or her level of business experience described in the individual biographies above. The nominees have served in a broad range of senior management roles, and have served on boards of directors or in leadership roles for a variety of nonprofit and community organizations. The Board has concluded that the depth of experience and the combination of the different backgrounds of each of our nominees facilitate the Company’s goal of having a diversity of viewpoints and backgrounds on the Board, and gives the Company a broad range of experience on which to draw. Accordingly, the Board has concluded that each of these individuals should serve as a director of the Company, in light of its business and structure, at the time of filing this proxy. In particular:
Nominees for Election to our Board of Directors
| ● | Ms. Gallup is a co-founder of the Company and has served as an executive, director, or corporate officer of the Company for over 40 years and, as a result, has in-depth knowledge of the information technology (IT) industry and our business. She also has experience serving as a board member of both public and private companies in the banking and manufacturing industries, respectively. |
Nominees for Election to our Board of Directors
| ● | Mr. Beffa-Negrini served the Company in a variety of leadership roles and senior management positions, and has more than 35 years of experience in the IT industry. Following his retirement from the Company in 2008, Mr. Beffa-Negrini pursued other business and investment opportunities outside and within the IT industry. His experience and qualifications provide the Board with insights into the organizational development of the Company, along with a broad knowledge base of the industry. |
Nominees for Election to our Board of Directors
| ● | Mr. Bothwick has over 40 years of experience advising senior management and boards of directors of public and private entities on a wide range of legal matters including governance, structuring, mergers and acquisitions, and SEC disclosure compliance. Mr. Bothwick served as outside legal counsel for the Company for over 20 years. Accordingly, Mr. Bothwick brings to the Board strong knowledge of our business, corporate development, as well as disclosure and reporting obligations applicable to the Company as a publicly traded entity. |
Nominees for Election to our Board of Directors
| ● | Ms. Duckett has significant executive management and board-level experience with numerous organizations in the healthcare industry. Accordingly, Ms. Duckett brings to the Board strong business knowledge as well as insight into the growing healthcare industry, which is a sector the Company serves. |
Nominees for Election to our Board of Directors
| ● | Mr. Ferguson served the Company in a variety of executive financial positions for almost 20 years and, as a result, has in-depth knowledge of the Company’s business as well as the IT industry. Accordingly, Mr. Ferguson’s experience and strong financial background provides the Board with insights into the Company’s business development and financials. |
Nominees for Election to our Board of Directors
| ● | Mr. Kinyon had been a partner in a general practice law firm specializing in business formation, reorganization, banking, business transactions, commercial/residential financing, contracts and real estate from 1983 until his retirement at the end of 2025, thereby possessing the knowledge to assist with the business of the Company and its customers, employees and other stakeholders. |
Nominees for Election to our Board of Directors
No family relationship exists between any of our executive officers, directors, or director nominees.
INFORMATION CONCERNING DIRECTORS, NOMINEES, AND EXECUTIVE OFFICERS
INFORMATION CONCERNING DIRECTORS, NOMINEES, AND EXECUTIVE OFFICERS
Compensation Committee
| ● | reviewing and making recommendations to our Board of Directors with respect to director compensation; |
Board Leadership Structure
Board Leadership Structure Ms. Gallup is the Chair of our Board of Directors and Chief Administrative Officer of our Company. While the roles of Chief Executive Officer and Chair are separate, our leadership structure does not include a lead independent director. In light of our controlled company status discussed above, we believe that the creation of a lead independent director position is not necessary at this time. Our Board of Directors has determined that having Ms. Gallup act as Chair and as Chief Administrative Officer of our Company is in the best interests of the Company and our stockholders and is consistent with good corporate governance for the following reasons:
Board Leadership Structure
| ● | our Chair and Chief Administrative Officer is more familiar with our business and strategy than an independent, non-employee Chair would be, and is thus better positioned to focus our Board’s agenda on the key issues facing our Company; |
Board Leadership Structure
| ● | our structure provides strong and consistent leadership for our Company, without risking overlap or conflict of roles; and |
Board Leadership Structure
| ● | oversight of our Company is the responsibility of our Board as a whole, and this responsibility can be properly discharged without an independent Chair. |
Board Leadership Structure
Our Board decided to separate the roles of Chair and Chief Executive Officer because it believes that this leadership structure offers the following benefits:
Board Leadership Structure
| ● | enhancing our Board’s objective evaluation of our Chief Executive Officer; |
Board Leadership Structure
| ● | freeing the Chief Executive Officer to focus on company operations instead of Board administration; and |
Board Leadership Structure
| ● | providing the Chief Executive Officer with an experienced sounding board. |
Board Leadership Structure
Mr. Bothwick has served as Vice Chair of the Board of Directors since 2022.
Executive and Director Compensation Processes
Executive and Director Compensation Processes Our Compensation Committee generally reviews employee performance and compensation on an annual basis. Our Compensation Committee also compares the salaries of our executive officers to salaries of individuals who hold comparable positions in our immediate peer group as appropriate. The Compensation Committee makes salary recommendations based on a number of factors, including the level and breadth of each executive officer’s responsibilities and experience. Salary recommendations are also made with a view to retaining our executive talent. The Compensation Committee may, in its discretion, invite the Chief Executive Officer to be present during the approval of, or deliberations with respect to, other executive officer compensation, and our Chief Executive Officer may make recommendations relating to the salaries of our other executive officers. However, our Compensation Committee does not permit our Chief Executive Officer to be present during deliberations regarding his compensation or any votes related thereto. After the foregoing evaluation the Compensation Committee will then recommend the compensation payable to such executive officers for approval by the full Board of Directors. Our Board of Directors, after an evaluation of the recommendation of the Compensation Committee, will then approve the compensation packages for each of our executive officers. In 2025, our Compensation Committee recommended, and our Board approved, cash performance awards issued pursuant to the 2020 Stock Incentive Plan, or the 2025 Cash Performance Awards. The amounts payable under the 2025 Cash Performance Awards were subject to the achievement of certain company-wide financial performance goals with target payments determined based on a percentage of the executive officer's base salary. Our Compensation Committee administers the 2020 Stock Incentive Plan and the Amended and Restated 1997 Employee Stock Purchase Plan. To the extent permitted by applicable law, our Board of Directors or the Compensation Committee may delegate its authority to grant options and other awards that constitute rights under Delaware law to employees and non-executive officers under the 2020 Stock Incentive Plan to either a committee of our Board or to our Chief Executive Officer, provided that it will fix the terms of such awards to be granted (including the exercise price of such awards, which may include a formula by which the exercise price will be determined) and the maximum number of shares subject to awards that may be granted. The Compensation Committee has the authority to retain compensation consultants and other outside advisors to assist in the evaluation of executive officer compensation.
Director Compensation
Director Compensation Each director is entitled to receive an annual retainer of $75,000, payable quarterly, for service on the Board. Each independent director also receives an annual retainer of $20,000, payable quarterly. In addition, Board members who act in a Chair capacity receive annual fees as follows: Board Chair, $35,000; Board Vice-Chair, $45,000; Audit Committee Chair, $10,000; Compensation Committee Chair, $5,000; and sub-committee Chair, $5,000. The Chair and members of the CDC receive fees of $50,000 and $10,000, respectively, for each quarter in which the committee is actively engaged in the process of developing and evaluating strategic alternatives, including the holding of multiple meetings in the quarter. As more fully described below, the following table describes compensation paid to each director for the year ended December 31, 2025, except for compensation paid to Ms. Gallup, which is reflected below in the Summary Compensation Table for Fiscal Years Ended December 31, 2025, 2024, and 2023.
Director Compensation for Fiscal Year Ended December 31, 2025
Director Compensation for Fiscal Year Ended December 31, 2025
Director Compensation for Fiscal Year Ended December 31, 2025
| | Fees Earned or | | | | Name(1) | Paid in Cash(2) | Stock Awards(3) | Total | | Jay Bothwick | $140,000 | $314,850 | $454,850 | | Jack Ferguson | $105,000 | $314,850 | $419,850 | | Barbara Duckett | $100,000 | $276,738 | $376,738 | | David Beffa-Negrini | $95,000 | $238,625 | $333,625 | | Gary Kinyon | $95,000 | $238,625 | $333,625 |
Director Compensation for Fiscal Year Ended December 31, 2025
| (1) As of December 31, 2025, the aggregate number of outstanding stock awards held by each non-employee director were as follows: |
Director Compensation for Fiscal Year Ended December 31, 2025
| | Aggregate Number of | | Name | Outstanding Stock Awards | | Jay Bothwick | 8,125 | | Jack Ferguson | 7,875 | | Barbara Duckett | 7,250 | | David Beffa-Negrini | 6,625 | | Gary Kinyon | 5,625 |
Director Compensation for Fiscal Year Ended December 31, 2025
| (2) The fees listed include an annual retainer, an independent director retainer, and varying fees based on participation in Board committees. Board members also are entitled to receive reimbursement for all reasonable expenses incurred in attending Board and committee meetings. |
Director Compensation for Fiscal Year Ended December 31, 2025
| (3) Valuation represents the aggregate grant date fair value of the stock awards granted computed in accordance with ASC 718. Please see Note 10, “Stockholders’ Equity and Share-Based Compensation” of our Notes to Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2025, for further information regarding share-based compensation. For their service on the Board of Directors, each member was awarded RSUs in 2025 as follows: |
Director Compensation for Fiscal Year Ended December 31, 2025
| | | Number of | Grant Date | | Name | Grant Date | RSUs Awarded | Fair Value | | Jay Bothwick | 2/10/2025 | 2,500 | $162,400 | | | 12/16/2025 | 2,500 | $152,450 | | Jack Ferguson | 2/10/2025 | 2,500 | $162,400 | | | 12/16/2025 | 2,500 | $152,450 | | Barbara Duckett | 2/10/2025 | 2,500 | $162,400 | | | 12/16/2025 | 1,875 | $114,338 | | David Beffa-Negrini | 2/10/2025 | 2,500 | $162,400 | | | 12/16/2025 | 1,250 | $76,225 | | Gary Kinyon | 2/10/2025 | 2,500 | $162,400 | | | 12/16/2025 | 1,250 | $76,225 |
Director Compensation for Fiscal Year Ended December 31, 2025
The RSUs vest ratably over four years in equal annual installments, with the first vesting event occurring on February 10, 2026 for the RSUs granted in February and December 16, 2026 for the RSUs granted in December. Each RSU represents the right to receive one share of Common Stock upon vesting.
Compensation Objectives
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 Compensation 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, RSUs, and other stock-based awards 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 cash performance award 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. We may adjust 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
| ● | equity awards; |
Components of our Executive Compensation Program
| ● | severance benefits. |
Peer Group
Peer Group In 2023, our Compensation Committee engaged Pearl Meyer & Partners to serve as its independent compensation consultant and to conduct an updated competitive assessment of our executive compensation program. The results of this updated assessment were delivered to our Compensation Committee in November 2023 and included market data on the compensation practices and programs of companies deemed comparable in terms of product and service offerings and/or revenue levels. The companies included in the assessment were as follows:
Peer Group
| ● | Alteryx, Inc. |
Peer Group
| ● | Applied Industrial Technologies, Inc. |
Peer Group
| ● | Benchmark Electronics, Inc. |
Peer Group
| ● | CACI International Inc. |
Peer Group
| ● | CDW Corporation |
Peer Group
| ● | CommScope Holding Company, Inc. |
Peer Group
| ● | Diebold Nixdorf, Incorporated |
Peer Group
| ● | Envestnet, Inc. |
Peer Group
| ● | ePlus, Inc. |
Peer Group
| ● | Global Industrial Company |
Peer Group
| ● | Insight Enterprises, Inc. |
Peer Group
| ● | RingCentral, Inc. |
Peer Group
| ● | ScanSource, Inc. |
Peer Group
| ● | Thoughtworks Holding, Inc. |
Peer Group
| ● | Xerox Holdings Corporation |
Peer Group
Our Compensation Committee has assessed the independence of Pearl Meyer & Partners consistent with SEC rules and Nasdaq listing standards and has concluded that the engagement of Pearl Meyer & Partners did not raise any conflicts of interest that would prevent these consultants from independently advising our Compensation Committee. In 2025, the Compensation Committee used the survey data provided by Pearl Meyer & Partners to assist it in the review and comparison of each element of executive compensation, including base salary, cash performance award compensation, and other long-term incentive vehicles 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 described below.
Base Salary
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 current market levels after taking into account individual responsibilities, performance, experience, and the peer group data. The Compensation Committee reviews the base salaries of our executives initially by reference to the median base salary level of the Pearl Meyer & Partners survey data. The Compensation Committee then makes adjustments to these reference levels for each executive’s base salary 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 considers the executive’s success in achieving business results and demonstrating leadership in determining actual base salary levels. In 2025, there were no changes in the base salaries of our three executive officers. 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 in order to reflect the generally broader and more significant level of responsibility of our Chief Executive Officer. We found that the 2023 compensation survey results generally reflected this pattern for most companies. The Compensation Committee believes that periodically benchmarking and aligning base salaries based on the results of these benchmarks is 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 determined as a percentage of base salary.
Executive Cash Performance Awards
| | 2025 Cash Performance | | | Name of Executive | Award Payouts | Percentage of Base Salary | | Timothy McGrath | $1,189,100 | 94% | | Thomas Baker | $426,525 | 94% | | Patricia Gallup | $230,535 | 71% |
Equity Awards
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 as our employees 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 RSUs. 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. Stock options, when granted, have a ten-year life, and 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.
Severance Benefits
Severance Benefits Pursuant to the incentive and retention agreements we have entered into with Mr. McGrath and Mr. Baker, each is entitled to severance payments for twenty-four months if the Company terminates the executive’s employment other than for cause (as defined in the incentive and retention agreements), subject to a dollar-for-dollar reduction for cash compensation he may receive pursuant to any employment or consulting arrangement in such twenty-four month period. In addition, each is entitled to receive an amount in respect of his annual target payout under the 2020 Stock Incentive Plan (assuming achievement of 100% of target payout) prorated for the number of days he is employed for the year in which termination of employment occurs, such amount payable in a lump sum on the date the first installment of severance is paid. In the event of a change in control (as defined in the incentive and retention agreements), each is entitled to additional severance payments and certain other specified benefits, including the payment of COBRA continuation coverage costs otherwise payable by Mr. McGrath and Mr. Baker for a period of twenty-four months, in the event of termination of their employment under specified circumstances. 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 our peer group, we believe that our severance and change of control benefits are generally in line with severance packages offered to executives at such companies.
Summary Compensation Table for Fiscal Years Ended December 31, 2025, 2024 and 2023
Summary Compensation Table for Fiscal Years Ended December 31, 2025, 2024 and 2023
Summary Compensation Table for Fiscal Years Ended December 31, 2025, 2024 and 2023
| | | | | | Non-Equity | | | | | | | | | Incentive | | | | | | | | Stock | Plan | All Other | | | | | Salary | Bonus | Awards(1) | Compensation(2) | Compensation(3) | Total | | Name and Principal Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | | Timothy McGrath | 2025 | 1,265,000 | — | 5,037,600 | 1,189,100 | 10,350(4) | 7,502,050 | | President and Chief Executive | 2024 | 1,265,000 | 7,590 | 2,569,200 | 1,214,400 | 19,463 | 5,075,653 | | Officer | 2023 | 1,265,000 | — | — | 632,500 | 18,364 | 1,915,864 | | Thomas Baker | 2025 | 453,750 | — | 2,518,800 | 426,525 | 10,500(4) | 3,409,575 | | Senior Vice President, Chief | 2024 | 445,500(5) | 2,723 | 1,284,600 | 435,600 | 19,365 | 2,187,788 | | Financial Officer and Treasurer | 2023 | 412,500 | — | — | 206,250 | 18,364 | 637,114 | | Patricia Gallup | 2025 | 327,000 | — | 2,671,250 | 230,535 | 120,500(4) | 3,349,285 | | Chief Administrative Officer and | 2024 | 327,000 | 1,472 | 1,284,600 | 235,440 | 120,350 | 1,968,862 | | Chair of the Board | 2023 | 327,000 | — | — | 122,625 | 119,900 | 569,525 |
Summary Compensation Table for Fiscal Years Ended December 31, 2025, 2024 and 2023
| (1) Valuation represents the aggregate grant date fair value of the stock awards granted each year computed in accordance with ASC 718. Please see Note 10, “Stockholders’ Equity and Share-Based Compensation” of our Notes to Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2025, for further information regarding share-based compensation. |
Summary Compensation Table for Fiscal Years Ended December 31, 2025, 2024 and 2023
Each RSU represents the right to receive one share of Common Stock upon vesting.
Summary Compensation Table for Fiscal Years Ended December 31, 2025, 2024 and 2023
| (2) Non-equity incentive compensation for our executive officers was awarded pursuant to the 2020 Stock Incentive Plan, upon the achievement of company-wide net income and expense leverage goals. |
Summary Compensation Table for Fiscal Years Ended December 31, 2025, 2024 and 2023
| (3) We have omitted perquisites and other personal benefits in those instances where the aggregate amount of such perquisites and other personal benefits for a named executive officer totaled less than $10,000. |
Summary Compensation Table for Fiscal Years Ended December 31, 2025, 2024 and 2023
| (4) Consists of: (a) our contributions for Messrs. McGrath and Baker and Ms. Gallup under our 401(k) Plan in the amounts of $10,350, $10,500, and $10,500, respectively; and (b) $110,000 in Director fees for Ms. Gallup. |
Summary Compensation Table for Fiscal Years Ended December 31, 2025, 2024 and 2023
| (5) Effective March 14, 2024, Mr. Baker’s annual salary was increased from $412,500 to $453,750, and the salary presented above includes the pro-rated increase. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth certain information regarding grants of plan-based awards made to our named executive officers during 2025.
Grants of Plan-Based Awards for Fiscal Year Ended December 31, 2025
Grants of Plan-Based Awards for Fiscal Year Ended December 31, 2025
Grants of Plan-Based Awards for Fiscal Year Ended December 31, 2025
| | | Estimated Future Payouts Under | | | All Other Stock Awards: | Grant Date | | | Grant | Non‑Equity Incentive Plan Awards(1) | | | Number of Shares | Fair Value of | | Name | Date | Threshold | Target | Maximum | of Stock or Units(2) | Stock Awards(3) | | Timothy McGrath | 2/5/2025 | $1,138,500 | $1,265,000 | $2,150,500 | | | | | 2/10/2025 | | | | 40,000 | $2,598,400 | | | 12/16/2025 | | | | 40,000 | $2,439,200 | | Thomas Baker | 2/5/2025 | $408,375 | $453,750 | $771,375 | | | | | 2/10/2025 | | | | 20,000 | $1,299,200 | | | 12/16/2025 | | | | 20,000 | $1,219,600 | | Patricia Gallup | 2/5/2025 | $220,725 | $245,250 | $416,925 | | | | | 2/10/2025 | | | | 20,000 | $1,299,200 | | | 12/16/2025 | | | | 22,500 | $1,372,050 |
Grants of Plan-Based Awards for Fiscal Year Ended December 31, 2025
| (1) Threshold, target, and maximum amounts are based on the achievement of certain financial milestones, which are described above. All non-equity incentive plan awards listed were made under the 2020 Stock Incentive Plan. |
Grants of Plan-Based Awards for Fiscal Year Ended December 31, 2025
| (2) Consists of RSUs granted under the 2020 Stock Incentive Plan. Please refer to the Summary Compensation Table above for the vesting schedules of the RSUs. |
Grants of Plan-Based Awards for Fiscal Year Ended December 31, 2025
| (3) Valuation represents the aggregate grant date fair value of the stock awards computed in accordance with ASC 718. There can be no assurance that the value on settlement will equal the ASC 718 value. |
Outstanding Equity Awards at Fiscal Year-End
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, 2025.
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
| | Stock Awards | | | | | Market | | | Number of | Value of | | | Shares or | Shares or | | | Units of | Units of | | | Stock That | Stock That | | | Have Not | Have Not | | Name | Vested | Vested(1) | | Timothy McGrath | 15,000(2) | $866,400 | | | 20,000(3) | $1,155,200 | | | 5,000(4) | $288,800 | | | 10,000(5) | $577,600 | | | 30,000(6) | $1,732,800 | | | 40,000(7) | $2,310,400 | | | 40,000(8) | $2,310,400 | | Thomas Baker | 5,000(9) | $288,800 | | | 15,000(10) | $866,400 | | | 20,000(11) | $1,155,200 | | | 20,000(12) | $1,155,200 | | Patricia Gallup | 1,000(13) | $57,760 | | | 15,000(14) | $866,400 | | | 20,000(15) | $1,155,200 | | | 22,500(16) | $1,299,600 |
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
| (1) The fair value of RSUs was based on the closing price of our Common Stock on December 31, 2025 of $57.76 per share. |
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
| (2) The RSUs granted to Mr. McGrath in March 2016 vest according to the following schedule: 10,000 units will vest on September 1, 2026; and 5,000 units will vest on September 1, 2027. |
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
| (3) The RSUs granted to Mr. McGrath in February 2018 vest over six years in equal annual installments of 10,000 units, the first installment of which vested on April 1, 2022. |
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
| (4) The RSUs granted to Mr. McGrath in October 2019 vest over seven years in equal annual installments of 5,000 units, the first installment of which vested on October 29, 2020. |
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
| (5) The RSUs granted to Mr. McGrath in November 2022 vest over four years in equal annual installments of 10,000 units, the first installment of which vested on November 21, 2023. |
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
| (6) The RSUs granted to Mr. McGrath in March 2024 vest over four years in equal annual installments of 10,000 units, the first installment of which vested on March 14, 2025. |
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
| (7) The RSUs granted to Mr. McGrath in February 2025 vest over four years in equal annual installments of 10,000 units, the first installment of which vested on February 10, 2026. |
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
| (8) The RSUs granted to Mr. McGrath in December 2025 vest over four years in equal annual installments of 10,000 units, the first installment of which will vest on December 16, 2026. |
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
| (9) The RSUs granted to Mr. Baker in November 2022 vest over four years in equal annual installments of 5,000 units, the first installment of which vested on November 21, 2023. |
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
| (10) The RSUs granted to Mr. Baker in March 2024 vest over four years in equal annual installments of 5,000 units, the first installment of which vested on March 14, 2025. |
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
| (11) The RSUs granted to Mr. Baker in February 2025 vest over four years in equal annual installments of 5,000 units, the first installment of which vested on February 10, 2026. |
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
| (12) The RSUs granted to Mr. Baker in December 2025 vest over four years in equal annual installments of 5,000 units, the first installment of which will vest on December 16, 2026. |
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
| (13) The RSUs granted to Ms. Gallup in February 2018 for her service on the Board of Directors vest annually in six equal installments of 500 units, the first installment of which vested on September 1, 2022. |
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
| (14) The RSUs granted to Ms. Gallup in March 2024 for her service on the Board of Directors vest over four years in equal annual installments of 5,000 units, the first installment of which vested on March 14, 2025. |
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
| (15) The RSUs granted to Ms. Gallup in February 2025 for her service on the Board of Directors vest over four years in equal annual installments of 5,000 units, the first installment of which vested on February 10, 2026. |
Outstanding Equity Awards at Fiscal Year Ended December 31, 2025
| (16) The RSUs granted to Ms. Gallup in December 2025 for her service on the Board of Directors vest over four years in equal annual installments of 5,625 units, the first installment of which will vest on December 16, 2026. |
Options Exercised and Stock Vested
Options Exercised and Stock Vested No options were exercised during 2025. The following table sets forth certain information regarding RSUs held by our named executive officers that vested during 2025.
Options Exercised and Stock Vested
| | Stock Awards | | | | Number of Shares | Value Realized | | Name | Acquired on Vesting | on Vesting(1) | | Timothy McGrath | 55,000 | $3,383,900 | | Thomas Baker | 20,000 | $1,220,150 | | Patricia Gallup(2) | 6,750 | $410,818 |
Options Exercised and Stock Vested
| (1) The value realized on vesting equals the number of shares acquired multiplied by the closing price of our Common Stock on the applicable vesting date. |
Options Exercised and Stock Vested
| (2) The RSUs were awarded to Ms. Gallup for her service on the Board of Directors. |
CEO Pay Ratio Disclosure
CEO Pay Ratio Disclosure Following is a reasonable estimate, prepared under applicable SEC rules, of the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of our other employees. We determined our 2025 median employee for this Proxy Statement based on base pay/cash compensation/W-2 wages actually paid during 2025 (annualized in the case of full- and part-time employees who joined the Company during 2025) to each of our 2,524 employees (excluding the Chief Executive Officer) as of December 31, 2025. The annual total compensation of our 2025 median employee (other than the Chief Executive Officer) for 2025 was $77,723. As disclosed in the Summary Compensation Table appearing on page 19, our Chief Executive Officer’s annual total compensation for 2025 was $7,502,050. Based on the foregoing, our estimate of the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all other employees was approximately 97 to 1 for 2025. Given the different methodologies that various public companies will use to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies.
Pay Versus Performance
Pay Versus Performance
Pay Versus Performance Table
Pay Versus Performance Table The following tables and related disclosures provide information about (i) the total compensation of our principal executive officer, or PEO, and our other named executive officers, or NEOs, as presented in the Summary Compensation Table on page 19, or the SCT Amounts, (ii) the compensation actually paid to our PEO and NEOs, as calculated pursuant to the SEC’s pay-versus-performance rules, or the CAP Amounts, (iii) certain financial performance measures, and (iv) the relationship of the CAP Amounts to those financial performance measures. This disclosure has been prepared in accordance with Item 402(v) of Regulation S-K under the Exchange Act and does not necessarily reflect value actually realized by the executives or how our Compensation Committee evaluates compensation decisions in light of company or individual performance. For discussion of how our Compensation Committee seeks to align pay with performance when making compensation decisions, please review the Compensation Discussion and Analysis beginning on page 14.
Pay Versus Performance Table
| | | | Average | | | | | | | | | | | Summary | Average | Value of Initial Fixed $100 | | | | | | | | | Compensation | Compensation | Investment Based on: | | | | | | | Summary | | Table Total for | Actually Paid to | Total | Peer Group | | | SG&A | | | Compensation | Compensation | Non-PEO Named | Non-PEO Named | Shareholder | Total | | Adjusted | Percentage | | | Table Total | Actually Paid | Executive | Executive | Return | Shareholder | Net | Net | of | | Year | for PEO(1) ($) | to PEO(2) ($) | Officers(1) ($) | Officers(2) ($) | (TSR) ($) | Return(3) ($) | Income ($) | Income(4) ($) | Billings(5) | | 2025 | 7,502,050 | 5,738,500 | 3,379,430 | 2,848,822 | 129.07 | 187.14 | 83,722,000 | 88,149,000 | | | 2024 | 5,075,653 | 5,661,803 | 2,078,325 | 2,238,376 | 153.36 | 154.48 | 87,095,000 | | 10.54% | | 2023 | 1,915,864 | 5,357,164 | 603,320 | 1,096,862 | 147.95 | 119.22 | 83,271,000 | | 11.03% | | 2022 | 4,787,929 | 5,547,279 | 1,338,317 | 1,416,376 | 102.57 | 82.43 | 89,219,000 | | 10.46% | | 2021 | 3,209,550 | 2,339,350 | 1,802,672 | 1,649,422 | 93.75 | 122.18 | 69,906,000 | | 10.34% |
Pay Versus Performance Table
| (1) Our PEO was Timothy McGrath for all years presented in the table. Our NEOs other than our PEO were Thomas Baker and Patricia Gallup for all years presented in the table. |
Pay Versus Performance Table
| (2) The following table describes the adjustments, each of which is prescribed by SEC rule, to calculate the CAP Amounts from the SCT Amounts. The SCT Amounts and the CAP Amounts do not reflect the actual amount of compensation earned by or paid to our executives during the applicable years, but rather are amounts determined in accordance with Item 402 of Regulation S-K under the Exchange Act. |
Pay Versus Performance Table
| | PEO | | | | | | | 2025 | 2024 | 2023 | 2022 | 2021 | | Total Compensation from SCT | $7,502,050 | $5,075,653 | $1,915,864 | $4,787,929 | $3,209,550 | | Decrease for aggregate value for stock awards and option awards included in SCT for the covered fiscal year | (5,037,600) | (2,569,200) | — | (2,165,200) | (887,200) | | Increase for fair value at year end of awards granted during the covered fiscal year that were outstanding and unvested at the covered fiscal year end | 4,620,800 | 2,770,800 | — | 1,876,000 | 862,600 | | Increase (decrease) in year-over-year change in fair value at covered fiscal year end of awards granted in any prior fiscal year that were outstanding and unvested at the covered fiscal year end | (920,800) | 195,700 | 2,944,950 | 603,200 | (790,400) | | Increase for vesting date fair value of awards granted and vested during the covered fiscal year | — | — | — | — | — | | Increase (decrease) in change as of the vesting date (from the end of the prior fiscal year) in fair value of awards granted in any prior fiscal year for which vesting conditions were satisfied during the covered fiscal year | (425,950) | 188,850 | 496,350 | 445,350 | (55,200) | | Decrease for fair value at end of prior fiscal year of awards granted in any prior fiscal year that failed to meet the applicable vesting conditions during the covered fiscal year | — | — | — | — | — | | Increase for dividends or other earnings paid on stock or option awards in the covered fiscal year prior to vesting if not otherwise included in the total compensation for the covered fiscal year | — | — | — | — | — | | Compensation Actually Paid | $5,738,500 | $5,661,803 | $5,357,164 | $5,547,279 | $2,339,350 |
Pay Versus Performance Table
| | Average of NEO's | | | | | | | 2025 | 2024 | 2023 | 2022 | 2021 | | Total Compensation from SCT | $3,379,430 | $2,078,325 | $603,320 | $1,338,317 | $1,802,672 | | Decrease for aggregate value for stock awards and option awards included in SCT for the covered fiscal year | (2,595,025) | (1,284,600) | — | (541,300) | (1,074,200) | | Increase for fair value at year end of awards granted during the covered fiscal year that were outstanding and unvested at the covered fiscal year end | 2,382,600 | 1,385,400 | — | 469,000 | 970,425 | | Increase (decrease) in year-over-year change in fair value at covered fiscal year end of awards granted in any prior fiscal year that were outstanding and unvested at the covered fiscal year end | (207,180) | 23,433 | 401,123 | 84,825 | (42,640) | | Increase for vesting date fair value of awards granted and vested during the covered fiscal year | — | — | — | — | — | | Increase (decrease) in change as of the vesting date (from the end of the prior fiscal year) in fair value of awards granted in any prior fiscal year for which vesting conditions were satisfied during the covered fiscal year | (111,003) | 35,818 | 92,419 | 65,534 | (6,835) | | Decrease for fair value at end of prior fiscal year of awards granted in any prior fiscal year that failed to meet the applicable vesting conditions during the covered fiscal year | — | — | — | — | — | | Increase for dividends or other earnings paid on stock or option awards in the covered fiscal year prior to vesting if not otherwise included in the total compensation for the covered fiscal year | — | — | — | — | — | | Compensation Actually Paid | $2,848,822 | $2,238,376 | $1,096,862 | $1,416,376 | $1,649,422 |
Pay Versus Performance Table
| (3) Our peer group for the calculation of Total Shareholder Return, or TSR, is the NASDAQ Composite-Total Return. |
Pay Versus Performance Table
| (4) Adjusted net income, a non-GAAP financial measure, is calculated as net income plus the after-tax amount of severance expenses in 2025. |
Pay Versus Performance Table
| (5) SG&A percentage of billings, a non-GAAP financial measure, is calculated as total SG&A expenses (less any exclusions approved by the subcommittee that administered our cash performance awards, or the Subcommittee) divided by total billings of products and services delivered to customers. For 2024, we defined total billings delivered to customers as net sales plus the amounts we are required to net for sales of software and extended service plans under ASC 606. For 2023, 2022, and 2021, we defined total billings delivered to customers as net sales plus the amounts we are required to net for sales of software under ASC |
Pay Versus Performance Table
| 606. In 2021, the Subcommittee approved $5 million of uncontrolled medical expenses to be excluded from total SG&A expenses. |
Pay Versus Performance Table
The following lists the financial performance measures that, in our assessment, represent the most important performance measures we use to link the CAP Amounts for our named executive officers for 2025 (our most recently completed fiscal year), to company performance:
Compensation Actually Paid vs TSR
Compensation Actually Paid vs TSR
Compensation Actually Paid vs Net Income
Compensation Actually Paid vs Net Income
Compensation Actually Paid vs Adjusted Net Income
Compensation Actually Paid vs Adjusted Net Income
Compensation Actually Paid vs SG&A Percentage of Billings
Compensation Actually Paid vs SG&A Percentage of Billings
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control We have entered into incentive and retention agreements with Mr. McGrath and Mr. Baker providing for severance payments for twenty-four months in the event the Company terminates the executive’s employment other than for cause, as described under the caption “Severance Benefits” above. In addition, if employment is terminated by the Company for any reason other than for cause or by Mr. McGrath or Mr. Baker for good reason (as defined in the incentive and retention agreements) within 12 months of a change in control, the payment in respect of his annual target payout under any cash performance award programs then in effect (assuming achievement of 100% of target payout) shall be for the full year and not prorated for the number of days he is employed for the year in which termination of employment occurs. In addition, upon a change in control 75% of the number of shares of Common Stock subject to the unvested portion of each outstanding stock option and other equity award held by Messrs. McGrath and Baker shall become fully vested, exercisable and otherwise free from forfeiture, with the remaining unvested portion of such equity awards continuing to vest and becoming fully exercisable and free from forfeiture on the earlier of (x) the one-year anniversary of the closing of the change in control (assuming continued employment through such date) or (y) the termination of employment by the Company for any reason other than for cause or by Mr. McGrath or Mr. Baker for good reason. The amount paid upon such one-year anniversary of closing or qualified termination with respect to RSUs shall be the greater of the per share price paid to stockholders upon the closing of the change in control or the value on such one year anniversary of any equity into which the Common Stock converted upon the closing of the change in control. Under such circumstances, severance payments for Messrs. McGrath and Baker would have an aggregate value of $10,743,000 and $3,977,250, respectively, which includes twenty-four months of base salary payments of $2,530,000 and $907,500 in the aggregate, respectively, accelerated vesting RSU value of $6,931,200 and $2,599,200, respectively, based on the closing price of our Common Stock on December 31, 2025 of $57.76 per share, $1,265,000 and $453,750, respectively, in respect of annual target payouts under any cash performance award programs then in effect, and $16,800 each in aggregate COBRA continuation coverage costs otherwise payable by Mr. McGrath and Mr. Baker for a period of twenty-four months. Such payments are conditioned upon our receipt of a general release of claims from Messrs. McGrath and Baker. The employment agreements with Messrs. McGrath and Baker include certain non-compete and non-solicit obligations that extend for twenty-four months after termination of employment. We assume, for the purpose of calculating the values above, that the effective date of termination is December 31, 2025. In the event that we undergo an “Acquisition Event” as defined in the Amended and Restated 1997 Stock Incentive Plan and a “Reorganization Event” as defined in the Amended and Restated 2007 Stock Incentive Plan, as amended, which we refer to as the 2007 Stock Incentive Plan, and the 2020 Stock Incentive Plan and as a result our Board of Directors accelerates the vesting of all outstanding unvested equity awards, the outstanding stock option and other equity awards held by Ms. Gallup shall become fully vested. As a result, Ms. Gallup would realize $3,378,960, based on the closing price of our Common Stock on December 31, 2025 of $57.76 per share, assuming the vesting and sale by her of the unvested equity awards presented above. Ms. Gallup is not otherwise entitled to any specific compensation in the event of a change of control transaction.