DEF 14A of Scansource, Inc., Dec 12, 2023

DEF 14A of Scansource, Inc.

Filed Dec 12, 2023 · FY20230001193125-23-293482

Open on EDGAR

  1. COMPOSITION OF BOARD

    COMPOSITION OF BOARD The size of the Board may be increased or decreased by resolution of the Board. Michael J. Grainger, who served on the Board since 2004, retired from the Board when his current term of office expired at the 2023 Annual Meeting. In connection with Mr. Grainger’s retirement, the Board decreased in size to eight members. In August 2023, the Board decided to expand the size of the Board to nine members. The Board appointed Vernon J. Nagel to serve as a new member of the Board. The Board currently consists of nine members. Charles R. Whitchurch, who has served on the Board since 2009, notified the Board that he plans to retire from the Board when his current term of office expires at the 2024 Annual Meeting. The Board expects that the Board will be decreased in size to eight members at that time. The Guidelines provide that a majority of the Board will at all times be independent. Through the Nominating and Corporate Governance Committee, the Board will identify potential candidates for Board membership with the objective being that all new, non-management candidates will be independent. The Nominating and Corporate Governance Committee will confirm the independence of the non-management directors on an annual basis. The Board has determined that Directors Browning, Emory, Mathis, Nagel, Ramoneda, Rodek, Temple and Whitchurch meet the requirements for being “independent” as defined in the NASDAQ listing standards. Mr. Baur is the only management member of the Board.

  2. PROPOSAL NUMBER 1 – Election of Directors

    PROPOSAL NUMBER 1 – Election of Directors The Company intends to nominate each of the individuals named below to serve as directors on our Board until their successor is duly elected and qualified at the 2025 Annual Meeting of Shareholders or, if earlier, his or her death, resignation or removal. Each of the nominees is currently a director of the Company. Mr. Whitchurch is not standing for reelection, and his term will end following the conclusion of the 2024 Annual Meeting. The Board thanks Mr. Whitchurch for his many years of valuable leadership and service to both the Company and his fellow directors. Each of the proposed nominees has consented to stand for election as a member of our Board. We believe that each of our director nominees has served our shareholders’ interests well during his or her tenure as a director and will continue to do so. We believe that the Company and our shareholders benefit from the wide variety of industry and professional experience that characterizes the members of our Board. The following sets forth certain information regarding the proposed nominees, including each director’s specific experience, qualifications, attributes and skills that led our Board to conclude that each nominee is well-qualified to serve as a member of the Board.

  3. PROPOSAL NUMBER 1 – Election of Directors

    | Michael L. Baur AGE 66 DIRECTOR SINCE December 1995 COMMITTEES None | Experience Michael L. Baur is our Chair and Chief Executive Officer. Mr. Baur has served as either our President or CEO since our inception, as a director since December 1995, and as Chair of the Board since February 2019. Mr. Baur has been employed with the Company since its founding in December 1992. Qualifications Mr. Baur has served the Company since its inception and has developed a deep institutional knowledge and perspective regarding the Company’s strengths, challenges and opportunities. Mr. Baur has more than 40 years of experience in the IT industry, having served in various leadership and senior management roles in the technology and distribution industries before joining ScanSource. Mr. Baur brings strong leadership, entrepreneurial, business building and development skills and experience to the Board. |

  4. PROPOSAL NUMBER 1 – Election of Directors

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  5. PROPOSAL NUMBER 1 – Election of Directors

    | Peter C. Browning AGE 82 DIRECTOR SINCE June 2014 COMMITTEES Lead Independent Director and Chair of Nominating and Corporate Governance Committee and serves on all committees | Experience Peter C. Browning has served as a director of the Company since June 2014 and as Lead Independent Director since February 2019. He has extensive experience in business, serving as an executive officer of numerous public companies, including Continental Can Company, National Gypsum Company and Sonoco Products Company. He also has served on more than 14 public-company boards, including Acuity Brands from 2001 to 2021, Wachovia from 2002 to 2008, Nucor Corporation from 1999 to 2015, Lowe’s Companies from 1997 to 2014, EnPro Industries, Inc. from 2001 to 2015, and The Phoenix Companies from 1988 to 1999 and from 2000 to 2009, and in a variety of board leadership roles, including serving as non-executive Chair, lead director and Chair of audit, compensation and governance/nominating committees. Mr. Browning currently serves on the board of GMS, Inc. Qualifications Mr. Browning is a well-known authority on board governance and his knowledge and experience in that area are invaluable to our Board. He was the Dean of the McColl Graduate School of Business at Queens University of Charlotte from 2002 to 2005 and has served as the Managing Partner of Peter Browning Partners, a board advisory consulting firm, since 2009. Mr. Browning was selected for the “2011 and 2012 NACD Director 100 List” (a list of the most influential people in corporate governance in the boardroom). He co-authored a book on governance guidance, titled The Directors Manual: A Framework for Board Governance, which offers practical advice on leading an organization’s board. | | Frank E. Emory, Jr. AGE 66 DIRECTOR SINCE October 2020 COMMITTEES Serves on all committees | Experience Frank E. Emory, Jr. has served as a director of the Company since October 2020. Mr. Emory joined Novant Health in December 2018 and currently serves as Executive Vice President, Chief Legal Officer. From June 2001 to December 2018, he served as a partner with Hunton Andrews Kurth LLP, an international law firm. Qualifications As a former partner of Hunton Andrews Kurth LLP, a former Chair of EDPNC, Inc., and executive of Novant Health (including serving as its Chief Administrative Officer), as well as service on numerous non-profit boards, Mr. Emory brings considerable experience overseeing legal, government relations, risk management, corporate audit, compliance, human resources and diversity, inclusion and health equity teams to the Board. |

  6. PROPOSAL NUMBER 1 – Election of Directors

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  7. PROPOSAL NUMBER 1 – Election of Directors

    | Charles A. Mathis AGE 63 DIRECTOR SINCE August 2021 COMMITTEES Chair of Audit Committee and serves on all committees | Experience Charles A. Mathis has served as a director of the Company since August 2021. Mr. Mathis served as Executive Vice President and Chief Financial Officer of Amentum, a government and commercial services provider, from December 2021 until June 2023. Previously, Mr. Mathis served as Executive Vice President and Chief Financial Officer for Science Applications International Corporation (“SAIC”), a U.S. government IT services provider, from 2016 to 2021. Prior to joining SAIC, Mr. Mathis served as Chief Financial Officer at the Company, from 2012 to 2016. Prior to joining the Company, Mr. Mathis was Chief Financial Officer from 2008 to 2012 for Force Protection Inc., a global defense company. He also served as the Chief Financial Officer for Fort Worth-based EFW, Inc., the U.S.-based subsidiary of the Israeli defense contractor, Elbit Systems, from 2006 to 2008. Qualifications As a former executive at SAIC, a Fortune 500 company (including serving as its Chief Financial Officer), Mr. Mathis has extensive experience in mergers and acquisitions, finance and accounting, financial controls, and U.S. government contracting and compliance. Mr. Mathis also brings an understanding of our Company and business, previously serving as Chief Financial Officer. | | Vernon J. Nagel AGE 65 DIRECTOR SINCE August 2023 COMMITTEES Serves on all committees | Experience Vernon J. Nagel has served as a director of the Company since August 2023. Mr. Nagel served as Executive Chair of the Board of Directors of Acuity Brands, Inc., an industrial technology company, from February 2020 until his retirement in December 2020. Mr. Nagel Served as Chair and Chief Executive Officer of Acuity Brands from September 2004 through January 2020 and as President of Acuity Brands from August 2005 to August 2019. Mr. Nagel previously served as Vice Chair and Chief Financial Officer of Acuity Brands from January 2004 through August 2004 and as Executive Vice President and Chief Financial Officer of Acuity Brands from December 2001 to January 2004. Mr. Nagel currently serves as a member of the Board of Directors of The AZEK Company, a provider of sustainable outdoor residential products, and Southwire, a leading provider of wire and cable and other electrical solutions. Qualifications Mr. Nagel has extensive management and leadership experience having previously served as the Chief Executive Officer and Executive Chair of the Board of Directors of a multi-national public company. Over the course of his career, Mr. Nagel has enhanced shareholder value by introducing new technologies, expanding markets served through organic growth and acquisitions and driving company-wide productivity. Mr. Nagel’s background provides the Board with invaluable executive leadership, financial and accounting expertise. |

  8. PROPOSAL NUMBER 1 – Election of Directors

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  9. PROPOSAL NUMBER 1 – Election of Directors

    | Dorothy F. Ramoneda AGE 64 DIRECTOR SINCE November 2019 COMMITTEES Serves on all committees | Experience Dorothy F. Ramoneda has served as a director of the Company since November 2019. Ms. Ramoneda has been in the role of Executive Vice President and Chief Information Officer of First-Citizens Bank since January 2014. She also has served as Chief Information Officer and Vice President of Information Technology and Telecommunications at Progress Energy. Qualifications Ms. Ramoneda has extensive leadership experience serving as the Chief Information Officer of a Fortune 500 company and in multiple industries. Ms. Ramoneda started her career at Arthur Andersen doing system integration, business process outsourcing and practice management. Over Ms. Ramoneda’s career, she has provided leadership for the continued development of innovative, robust, and secure information technology environments, giving her an understanding of the challenges and issues in our industry and the industries of many of our vendors and customers. | | Jeffrey R. Rodek AGE 70 DIRECTOR SINCE May 2020 COMMITTEES Serves on all committees | Experience Jeffrey Rodek has served as a director of the Company since May 2020. Mr. Rodek has served as an Executive Network Advisor and Limited Partner of Tensility Venture Partners, a venture capital firm investing in early-stage AI startups, since October 2017, as well as Executive Advisor and member of the Leadership Council for Pathr.ai Inc. since September 2021. From July 2007 to May 2018, Mr. Rodek served as a Senior Lecturer at the Fisher College of Business at The Ohio State University. Prior to that, Mr. Rodek served as Senior Advisor and Executive Partner at Accretive, LLC from July 2007 to December 2009; as Executive Chair, Chair and Chief Executive Officer of Hyperion Solutions Corporation from October 1999 to April 2007; and as President and Chief Operating Officer of Ingram Micro Corporation from 1995 to 1999. Qualifications Mr. Rodek has over 40 years of business and leadership experience spanning across multiple industries. Over Mr. Rodek’s career, he has driven performance growth and improved corporate governance strategies in the logistics, enterprise software and technology solutions industries, giving him a keen understanding of the challenges and issues present in our industry. |

  10. PROPOSAL NUMBER 1 – Election of Directors

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  11. PROPOSAL NUMBER 1 – Election of Directors

    | Elizabeth O. Temple AGE 58 DIRECTOR SINCE September 2017 COMMITTEES Chair of Compensation Committee and serves on all committees | Experience Elizabeth O. Temple has served as a director of the Company since September 2017. Ms. Temple has served as the Chair and Chief Executive Officer of Womble Bond Dickinson (US) LLP since January 1, 2016. She has been a practicing corporate and securities attorney at the firm since 1989. Prior to serving as Chair and Chief Executive Officer, Ms. Temple served in a number of leadership roles at the firm over the past decade and has been a partner at the firm since 1997. Ms. Temple has also served on the Board of Directors of Messer Construction Co., a construction management and general contractor, since March 2023. Qualifications Ms. Temple has extensive leadership experience serving as the Chief Executive Officer of a global law firm. Over Ms. Temple’s legal career, she has counseled public and private companies on their highest strategic priorities, giving her an understanding of the challenges and issues in the Company’s industry and the industries of many of its vendors and customers. Her background as a legal advisor to public companies and boards provides the Board with additional expertise in the areas of risk management, corporate governance, acquisitions and securities regulation. |

  12. INFORMATION REGARDING NON-CONTINUING DIRECTORS

    INFORMATION REGARDING NON-CONTINUING DIRECTORS

  13. INFORMATION REGARDING NON-CONTINUING DIRECTORS

    | Charles R. Whitchurch AGE 77 DIRECTOR SINCE February 2009 COMMITTEES Serves on all committees | Experience Charles R. Whitchurch has served as a director of the Company since February 2009. Mr. Whitchurch served as the Chief Financial Officer of Zebra Technologies Corporation from September 1991 to June 2008. Mr. Whitchurch previously served on the boards of directors of SPSS, Inc., a publicly-held provider of predictive analytic software, from October 2003 to October 2009, Landmark Aviation, a privately-held operator of fixed-base aviation operations throughout the United States and Europe, from October 2008 to October 2012, Tricor Braun Holdings, a privately-held distributor of rigid packaging materials, from July 2010 to November 2016, and Ashworth College, a provider of nationally accredited on-line education, from June 2010 to December 2019. On all boards of other companies, he served as Chair of the Audit Committee. Qualifications Mr. Whitchurch’s executive career brings in-depth knowledge of business operations and strategy and broad experience related to financial and corporate governance matters through his tenure serving on the boards of directors of public companies, including serving as the Chair of audit committees. With over three decades of service as a Chief Financial Officer, more than half of which was with a public company, Mr. Whitchurch has a deep understanding of the complex accounting issues often faced by public companies. |

  14. INFORMATION REGARDING NON-CONTINUING DIRECTORS

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  15. INFORMATION REGARDING NON-CONTINUING DIRECTORS

    The following table provides information regarding the compensation paid to each of our non-employee directors for the fiscal year ended June 30, 2023.

  16. INFORMATION REGARDING NON-CONTINUING DIRECTORS

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(4) | Total ($) | | Peter C. Browning | 165,000 | 151,898 | 316,898 | | Frank E. Emory, Jr. | 85,000 | 151,898 | 236,898 | | Michael J. Grainger(2) | 49,583 | 151,898 | 201,481 | | Charles A. Mathis | 101,667 | 151,898 | 253,565 | | Vernon J. Nagel(3) | — | — | — | | Dorothy F. Ramoneda | 85,000 | 151,898 | 236,898 | | Jeffrey R. Rodek | 85,000 | 151,898 | 236,898 | | Elizabeth O. Temple | 100,000 | 151,898 | 251,898 | | Charles R. Whitchurch | 93,333 | 151,898 | 245,231 |

  17. INFORMATION REGARDING NON-CONTINUING DIRECTORS

    | (1) Amounts shown are the aggregate grant date fair value of restricted stock awards computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. For a discussion of the assumptions made in such valuation, see Note 12 to our audited financial statements for the fiscal year ended June 30, 2023, included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023. Each then-serving non-employee director received a restricted stock award on August 26, 2022 for 5,300 shares that vested in August 2023. |

  18. INFORMATION REGARDING NON-CONTINUING DIRECTORS

    | (2) Mr. Grainger’s service as a director of the Company ended on January 26, 2023. |

  19. INFORMATION REGARDING NON-CONTINUING DIRECTORS

    | (3) Mr. Nagel was appointed as a director of the Company effective August 16, 2023. |

  20. INFORMATION REGARDING NON-CONTINUING DIRECTORS

    | (4) Each non-employee director had 5,300 shares of restricted stock awards outstanding as of June 30, 2023. |

  21. EXECUTIVE COMPENSATION

    | ◾ | Variable cash incentives are payable to NEOs to encourage the achievement of various pre-determined performance metrics, business growth opportunities, management goals and profitability of business units, all of which focus our NEOs on performance goals intended to enhance shareholder value. |

  22. EXECUTIVE COMPENSATION

    | ◾ | Awards of long-term equity incentives, in the form of performance-based and service-based restricted stock unit awards, directly align the interests of our NEOs and shareholders. |

  23. EXECUTIVE COMPENSATION

    | ◾ | Linking the personal financial interests of our NEOs to the Company’s long-term performance discourages excessive risk-taking and encourages behavior that supports sustainable shareholder value creation. |

  24. Fiscal 2023 Pay Mix

    Fiscal 2023 Pay Mix The Compensation Committee strives to provide our NEOs with a compensation package that balances short-term and long-term compensation. We believe that our current executive compensation program, consisting primarily of a mix of base salary, annual performance-based cash incentive awards and both performance-based and service-based grants of equity, (i) provides a predictable and transparent structure for executive compensation, (ii) provides a significant percentage of a NEO’s compensation through variable performance-based vehicles and (iii) attracts, retains and motivates our NEOs. Our executive compensation program emphasizes performance-based pay. The elements of compensation and the general mix of compensation among the various elements remained largely unchanged from the previous year. Our financial performance during fiscal 2023 is reflected in the compensation of each of our NEOs for fiscal 2023, particularly with respect to payouts pursuant to our annual cash incentive program. Our cash incentive opportunity is designed so that, if our financial results, as measured by certain consolidated adjusted EBITDA and revenue numbers, reflect an increase in the financial performance of the Company, then our executives should realize a greater cash incentive. Awards are also capped at 200% of each executive’s target bonus regardless of our financial performance. For fiscal year 2023, the cash incentives paid to our CEO decreased from fiscal 2022 and fiscal 2021 based on (i) our financial performance and (ii) the Compensation Committee’s pre-established Management Incentive Plan (“MIP”) operating targets for the cash incentive opportunity. The value of the equity awarded to our CEO increased in fiscal 2023, with half of such awards being subject to performance targets. We believe this result is appropriately aligned with the Company’s fiscal 2023 financial performance and the Company’s long-term compensation program.

  25. Best Practice Compensation Policies and Practices

    | ScanSource Does | | | | | Require significant stock ownership. | We have adopted minimum ownership guidelines for our CEO. He is required to retain 50% of the net shares resulting from vesting or exercises of equity awards until he owns Company common stock in an amount equal to three times his base salary. | | | Mandate a compensation recovery policy tied to a compensation program. | We maintain a “compensation recovery policy,” which would allow us to recover certain incentive compensation based on financial results in the event those results were restated due at least partially to the recipient’s misconduct. | | | Seek our shareholders’ input on executive compensation. | We value our shareholders’ input on our executive compensation, and we seek an annual non-binding vote on our executive compensation policies. | | | Prohibit pledging of our securities by our Named Executive Officers or Board of Directors. | We have a policy that prohibits officers and directors from pledging Company securities in margin accounts or as collateral for a loan. | | | Prohibit hedging of our securities by our Named Executive Officers or Board of Directors. | We have a policy that prohibits employees (including the NEOs) and directors from trading in options, warrants, puts, calls or similar instruments in connection with our securities, or selling our securities “short.” | | | Require a “double trigger” for cash severance benefits upon a change in control. | Our employment arrangements with our NEOs provide cash severance only upon a “double trigger.” | | | Not provide golden parachute tax gross ups or excessive perquisites. | We do not provide excise tax gross-ups for severance benefits received by our NEOs under their employment arrangements. We only provide limited perquisites to our NEOs. |

  26. Material Elements of Our Compensation Programs

    | | | Compensation Objectives | | | | Compensation Element | Description | Reward Performance | Attract and Retain | Align with Shareholders | | Base Salary | Fixed level of compensation | | | | | Annual Variable Cash Incentive Awards | Performance-based cash incentives reward Company and individual performance | | | | | Time-Vesting Restricted Stock or Restricted Stock Units | Long-term equity award, with four-year vesting | | | | | Performance- and Time-Vesting Restricted Stock or Restricted Stock Units | Rewards Company performance; three-year vesting, in addition to performance criteria | | | |

  27. Role of the Compensation Committee

    | ◾ | negotiating the employment agreement of the CEO; |

  28. Role of the Compensation Committee

    | ◾ | reviewing and approving any employment letters or contracts and severance plans of all other NEOs; |

  29. Role of the Compensation Committee

    | ◾ | reviewing and approving annual incentive awards to NEOs; and |

  30. Role of the Compensation Committee

    | ◾ | reviewing and approving equity-based compensation plans and grants of equity awards under such plans and the Board-approved policies or guidelines applicable to them. |

  31. Role of Management

    Role of Management The Compensation Committee regularly meets with the CEO to receive reports and recommendations regarding the compensation of our NEOs other than the CEO. In particular, the CEO recommends to the Compensation Committee annual base salaries, annual incentive awards and long-term or performance equity grants for the NEOs other than himself. The Compensation Committee then evaluates each NEO, including the CEO, sets performance criteria for annual cash incentive awards, and makes long-term equity grants, if any. At the beginning of each fiscal year and as necessary throughout the year, MIP targets for certain financial measures are established following consultation with management with consideration for adjustments for one-time expenses or longer-term investments that are planned. As part of its evaluation process, the Compensation Committee considers our performance and consistency, the NEO’s individual performance over the prior year, changes in responsibilities and future potential as well as data available from compensation surveys and compensation consultants. Although the Compensation Committee considers the CEO’s recommendations, the final decisions regarding base salary, annual incentive awards and equity awards of the NEOs are made by the Compensation Committee.

  32. Role of Compensation Consultant

    Role of Compensation Consultant The Compensation Committee has the authority to retain independent compensation consultants to provide counsel and advice. For fiscal 2023, the Compensation Committee retained Pearl Meyer. The Compensation Committee reviewed all factors relevant to the independence of Pearl Meyer, including:

  33. Role of Compensation Consultant

    | ◾ | The provision of services to the Company by the consultant other than those requested by the Compensation Committee; |

  34. Role of Compensation Consultant

    | ◾ | The amount of fees received by the consultant as a percentage of its total revenue; |

  35. Role of Compensation Consultant

    | ◾ | The policies and procedures adopted by the consultant that are designed to prevent conflicts of interest; |

  36. Role of Compensation Consultant

    | ◾ | Any business or personal relationship between a consultant and a member of the Compensation Committee; |

  37. Role of Compensation Consultant

    | ◾ | Any stock of the Company owned by a consultant; and |

  38. Role of Compensation Consultant

    | ◾ | Any business or personal relationship between a consultant and an executive officer of the Company. |

  39. Role of Compensation Consultant

    As a result of such evaluation, and a certification from Pearl Meyer regarding its consultant’s independence, the Compensation Committee determined that Pearl Meyer is independent.

  40. Role of Peer Companies and Benchmarking

    Role of Peer Companies and Benchmarking The Compensation Committee regularly reviews benchmarking and market surveys to ensure that our compensation is competitive with that of our peers. The Compensation Committee also considers analysis and benchmarking by third parties, such as ISS and Equilar, and the different peer groups each firm uses for comparative purposes in order to gain a better understanding of compensation practices and trends in the market. Our compensation consultants provide the Compensation Committee with general market surveys and other information related to the general market for executive compensation, including best practices and emerging trends. In addition, in fiscal 2023 Pearl Meyer provided information derived from proxy statements from peer companies and from surveys that include publicly traded and privately held technology distributors and other technology industry companies with similar revenues. The peer companies referred to for evaluation of fiscal 2023 compensation included the following:

  41. Role of Peer Companies and Benchmarking

    | Applied Industrial Technologies, Inc. | Benchmark Electronics, Inc. | Diebold Nixdorf, Inc. | | ePlus, Inc. | Insight Enterprises, Inc. | Itron, Inc. | | PC Connection, Inc. | Plexus Corp. | TTM Technologies, Inc. | | WESCO International, Inc. | | |

  42. Role of Peer Companies and Benchmarking

    The Compensation Committee reviewed compensation information from this peer group by comparable executive position and level to better understand the market for other participants in the market for all aspects of compensation. In a review of the applicable data, the Compensation Committee sought to ensure that the overall compensation to our NEOs was competitive and within norms for the industry and other companies of similar characteristics based on the executive’s position, level and job performance. The Compensation Committee took this evaluation into account in determining all elements of NEO compensation for fiscal 2023, including the fiscal 2023 MIP design and equity awards.

  43. Role of Peer Companies and Benchmarking

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  44. Named Executive Officer Compensation in Fiscal 2023

    Named Executive Officer Compensation in Fiscal 2023 In deciding whether to increase a NEO’s compensation, the Compensation Committee considers company performance, market trends, the consistency of the NEO’s individual performance over the prior year, changes in the NEO’s responsibilities and the NEO’s future potential. The Compensation Committee also considers data available from benchmarking studies obtained from a range of industry and general market sources, as well as information that may be provided by its compensation consultants, including comparisons of peer companies comprised of other participants in the industry and other similar companies based on size and other objective factors. In evaluating the Company’s performance in fiscal 2023, the primary consideration was our financial performance for the relevant annual period, with a focus on consolidated adjusted EBITDA and Intelisys revenue.

  45. Annual Performance-Based Cash Incentives

    Annual Performance-Based Cash Incentives Annual variable performance-based cash incentive awards are granted under the Company’s Management Incentive Plan (“MIP”) and are designed to encourage the achievement of various pre-determined Company financial and operating performance goals. Annual performance-based cash incentive opportunities were set based on an analysis of market data and assessing the experience of the respective individual and his or her respective role. The design provides that each NEO’s cash incentive opportunity will be expressed as a percentage of his or her base salary and earned based on non-GAAP operating results as compared to pre-established threshold and stretch goals. The cash incentive opportunities for our NEOs that were employed in fiscal 2022 remained at the same level as fiscal 2022. Each NEO has a variable factor by role or position applied as a percentage against his or her respective base salary, as set forth in the table below.

  46. Annual Performance-Based Cash Incentives

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  47. Annual Performance-Based Cash Incentives

    | Named Executive Officer | Base Salary ($) | Target Cash Incentive Opportunity (%) | Target Cash Incentive Opportunity ($) | | Mr. Baur | $875,000 | 150% | $1,312,500 | | Mr. Jones | $480,000 | 100% | $480,000 | | Ms. Smith | $400,000 | 75% | $300,000 | | Ms. Hayden | $361,000 | 60% | $217,000 | | Mr. Eldh | $625,000 | 150% | $937,500 |

  48. Annual Performance-Based Cash Incentives

    For fiscal year 2023, the Compensation Committee set MIP targets for consolidated adjusted EBITDA (“Adjusted EBITDA”) and Intelisys revenue (“Agency Revenue”) based on the Compensation Committee’s belief that these measurements have a strong correlation with shareholder value. Management emphasizes these measures in evaluating and monitoring the Company’s financial condition and operating performance. These metrics assist management in comparing the Company’s performance over various reporting periods on a consistent basis because they remove the impact of items that do not reflect our core operating performance from the Company’s operating results. The performance metrics were established by the Compensation Committee in August 2022. Each performance metric is adopted with certain adjustments to align management’s performance on focused strategic objectives. The maximum incentive award for any NEO is 200% of his or her target bonus. For fiscal 2023, the Compensation Committee established MIP performance targets as set forth below. The payouts of the awards depend on our results in comparison to these targets, weighted as follows: Adjusted EBITDA, 60% and Agency Revenue, 40%. If performance of any measure does not meet the applicable threshold for that measure, no award will be earned for that measure. If the performance of a measure reaches the applicable threshold, the award earned for that measure will be 50% of the target. The award earned for results between the threshold and the maximum of 200% of the target is calculated using straight-line interpolation.

  49. Annual Performance-Based Cash Incentives

    | Fiscal 2023 MIP Performance Targets | | | | | | | Performance Measure | Weights | Performance Range | | | Actual Results | | | | Threshold (50% payout) | Target (100% payout) | Maximum (200% payout) | | | Adjusted EBITDA | 60% | $166.7 | $174.0 | $189.0 | $182.6 | | Agency Revenue | 40% | $80.5 | $81.2 | $84.5 | $79.5 |

  50. Annual Performance-Based Cash Incentives

    The Compensation Committee has the discretion to adjust these measurements for extraordinary one-time events, or other items beyond management’s control, and to award cash incentives based on other criteria. For fiscal 2023, the Compensation Committee determined to adjust the MIP attainment calculation for Adjusted EBITDA to reflect a non-GAAP tax recovery benefit of approximately $2.7 million given the operational nature of the recovery and the prior period impacts on the Adjusted EBITDA measure. Apart from the foregoing, the Compensation Committee elected not to make any discretionary modifications to the awards payable under the MIP. As a result of the Adjusted EBITDA and Agency Revenue results for fiscal 2023, the cash incentive award earned by the NEOs under the MIP in fiscal 2023 was 95% of the target, as compared to 161.8% in fiscal 2022 and 154.9% in fiscal 2021. The specific calculations, targets and cash awards for each NEO under the MIP for fiscal 2023 are detailed below.

  51. Annual Performance-Based Cash Incentives

    | Named Executive Officer | Base Salary | Target Bonus as % of Base Salary | Bonus Target | % of Bonus Target | Amount of Cash Incentive | | Mr. Baur | $875,000 | 150% | $1,312,500 | 95% | $1,246,875 | | Mr. Jones | $480,000 | 100% | $480,000 | 95% | $456,000 | | Ms. Smith | $400,000 | 75% | $300,000 | 95% | $100,726(1) | | Ms. Hayden | $361,000 | 60% | $217,000 | 95% | $206,150 | | Mr. Eldh | $625,000 | 150% | $937,000 | 95% | $890,150 |

  52. Annual Performance-Based Cash Incentives

    | (1) Ms. Smith’s cash incentive award was prorated for her length of employment during fiscal 2023. |

  53. Annual Performance-Based Cash Incentives

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  54. Supplemental MIP Bonus Program

    Supplemental MIP Bonus Program In August 2023, against the backdrop of losses incurred by the Company in connection with the cybersecurity attack in the fourth quarter of fiscal 2023 (the “Cyberattack”), the Compensation Committee established a supplemental plan under the MIP to provide for the award to the NEOs of an additional cash bonus payment (the “Cyber Insurance Program”). Under the Cyber Insurance Program, each NEO will be eligible to receive an additional cash bonus payment in the event the Company accrues any insurance proceeds to reimburse the Company for the losses incurred in connection with the Cyberattack. Any cash bonus payments that become payable under the Cyber Insurance Program will be paid no later than 30 days after accrual of the reimbursements. The Cyber Insurance Program enables the NEOs to earn the portion of the cash bonus they would have received under the MIP for fiscal 2023 if the insurance proceeds for losses incurred in connection with the Cyberattack were accrued during fiscal 2023.

  55. Long-Term Equity Incentives

    Long-Term Equity Incentives

  56. GENERAL OVERVIEW

    GENERAL OVERVIEW Equity awards are a significant component of our NEO compensation. The Compensation Committee annually grants equity awards, typically in the form of restricted stock awards and/or restricted stock units and performance-based restricted stock units or awards. We believe this element of our compensation program provides our NEOs with the opportunity to develop a significant ownership stake in the Company and directly aligns their interests with the long-term interests of our shareholders. In addition, equity awards serve as a retention vehicle for the NEOs because, if the applicable criteria are met, they typically vest over a set number of years and generally are forfeited if not vested upon termination of employment. We maintain a formal Equity Award Grant Policy, whereby equity awards to employees are made by, or with the oversight of, the Compensation Committee or the Board. Under the policy, the Compensation Committee must approve any equity awards to the NEOs, and our Principal Accounting Officer and human resources management oversee the documentation of, and accounting for, equity award grants. The number of shares subject to equity awards granted by the Compensation Committee to NEOs in a given year is based on, among other things, overall Company performance, the number of shares available for awards under the ScanSource, Inc. 2021 Omnibus Incentive Compensation Plan (the “2021 Plan”) or successor plan, the value of the proposed award, the amount and realizable value of equity awards awarded in prior years, total compensation and consideration of the competitive market practice for the respective position level and experience, with the ultimate objective of motivating, rewarding and retaining NEOs while maintaining efficient use of equity and preserving shareholder value. The Compensation Committee determines the number of shares of a value-based restricted stock unit award by using the closing price of our stock on the grant date. The grant date for annual equity awards provides that the grant date will be the third trading date following the meeting at which the awards are approved, provided that the Company is in an open trading window, and otherwise on the first trading day of the next open window. In addition, vesting of such awards accelerates on a change in control followed by termination in certain instances or upon death, disability or termination due to retirement. In certain circumstances, the vesting term may be reduced due to termination of employment, death or disability of a participant. The Compensation Committee may also make special grants of equity awards during the year in the case of the hiring or promotion of certain eligible persons, or in other situations not involving annual grants. The grant date for non-annual grants approved by the Compensation Committee on or before the 15th day of the second month of the quarter will be the first day of the third month of such quarter. For non-annual grants approved after the 15th day of the second month of the quarter, the grant date will be the first day of the third month of the following quarter. In any event, all equity awards must be made during an open trading window. In fiscal 2023, the only grant of equity awards to a NEO made outside of the annual equity grant timing was Ms. Smith’s new hire grant, which was intended to serve as her annual grant for fiscal 2023.

  57. FISCAL 2023 ANNUAL LONG-TERM INCENTIVE AWARDS

    FISCAL 2023 ANNUAL LONG-TERM INCENTIVE AWARDS The annual grant of long-term equity incentives was awarded to our NEOs in August 2022, except for Ms. Smith’s new hire grant as discussed above. In fiscal 2023, 50% of the long-term equity incentives awarded to our NEOs were in the form of time-based restricted stock units and the remaining 50% were in the form of performance-based restricted stock units. The time-based restricted stock units generally vest and become exercisable in one-fourth increments on the anniversary of the grant date over four years, subject to the continued employment of the NEO on the applicable

  58. FISCAL 2023 ANNUAL LONG-TERM INCENTIVE AWARDS

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  59. FISCAL 2023 ANNUAL LONG-TERM INCENTIVE AWARDS

    vesting date. The performance-based restricted stock units generally vest upon the third anniversary of the grant date, subject to the continued employment of the NEO on the applicable vesting date and achievement of the performance targets set by the Compensation Committee over the applicable performance period. The long-term equity incentives awarded to our NEOs in fiscal 2023 are set forth below:

  60. FISCAL 2023 ANNUAL LONG-TERM INCENTIVE AWARDS

    | Named Executive Officer | Form of Equity Incentive Award | Amount of Shares Subject to Award | | Mr. Baur | Time-Based Restricted Stock Units Performance-Based Restricted Stock Units | 56,699 56,700 | | Mr. Jones | Time-Based Restricted Stock Units Performance-Based Restricted Stock Units | 20,935 20,936 | | Ms. Smith | Time-Based Restricted Stock Units Performance-Based Restricted Stock Units | 13,067 — | | Ms. Hayden | Time-Based Restricted Stock Units Performance-Based Restricted Stock Units | 6,298 6,298 | | Mr. Eldh | Time-Based Restricted Stock Units Performance-Based Restricted Stock Units | 32,711 32,712 |

  61. FISCAL 2023 PERFORMANCE-BASED EQUITY AWARDS PERFORMANCE METRICS

    FISCAL 2023 PERFORMANCE-BASED EQUITY AWARDS PERFORMANCE METRICS As discussed above, the Compensation Committee grants certain employees, including our NEOs, performance-based restricted stock units that contain both performance and service vesting conditions over a multi-year period. Performance-based awards are conditioned on achievement of pre-established performance targets. New performance periods begin each fiscal year, and performance targets and the target awards for our NEOs are established shortly after the beginning of the applicable performance period. For fiscal 2023, the performance-based restricted stock units granted will vest, if at all, based on two equally weighted performance metrics: (i) an earnings per share (“EPS”) performance metric based on the achievement of annual target levels of normalized non-GAAP EPS over a two-year performance period (the “Normalized EPS”) and (ii) a return on invested capital (“ROIC”) performance metric based on annual target levels of ROIC over a three-year performance period (the “Adjusted ROIC”), subject to adjustments for certain nonrecurring items as approved by the Compensation Committee. The Compensation Committee considers Normalized EPS and Adjusted ROIC to be key drivers of shareholder value and fundamental to long-term value creation. The Compensation Committee also believes that measuring our performance against multiple metrics provides a more complete picture of our performance. In August 2023, the Compensation Committee determined to adjust the calculation of the Normalized EPS performance metric for the fiscal 2023 performance-based restricted stock awards to account for the accrual of any insurance proceeds to reimburse the Company for the losses incurred in connection with the Cyberattack. The fiscal 2023 performance-based restricted stock units cliff vest, if at all, on the third anniversary of the grant date, subject to the NEO’s continued employment through the vesting date and achievement of the performance metrics. Achievement of the Normalized EPS and Adjusted ROIC performance targets is determined at the end of the three-year vesting period. The actual number of restricted stock units earned will equal the sum (rounded down to the nearest whole share) of (i) the aggregate target number of restricted stock units for fiscal year 2023 – 2024 multiplied by 50% of the Normalized EPS (subject to the relative total shareholder return modifier) achieved for the applicable two-year performance period and (ii) the aggregate target number of restricted stock units for fiscal 2023 – 2025 multiplied by 50% of the Adjusted ROIC achieved for the three-year performance period. The total sum of restricted stock units earned is capped at 200% of the aggregate target number of restricted stock units for the fiscal 2023 – 2025 vesting period.

  62. FISCAL 2023 PERFORMANCE-BASED EQUITY AWARDS PERFORMANCE METRICS

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  63. FISCAL 2023 PERFORMANCE-BASED EQUITY AWARDS PERFORMANCE METRICS

    The following table summarizes the performance calculations for the fiscal 2023 performance-based equity awards. If the performance targets are achieved at a level between the stated performance levels, vesting will be determined by linear interpolation.

  64. FISCAL 2023 PERFORMANCE-BASED EQUITY AWARDS PERFORMANCE METRICS

    | Fiscal Year 2023 Performance Metrics | | | | | | | Weight | Threshold (50%) | Target (100%) | Max (200%) | | Normalized EPS | 50% | 95% of EPS Target | 100% of EPS Target | 115% of EPS Target | | Adjusted ROIC | 50% | Adj. ROIC > 4.5% + WACC(1) | Adj. ROIC > 6.0% + WACC | Adj. ROIC > 8.0% + WACC |

  65. FISCAL 2023 PERFORMANCE-BASED EQUITY AWARDS PERFORMANCE METRICS

    (1) Reflects the Company’s weighted average cost of capital for the applicable performance period. The awards earned upon achievement of the Normalized EPS performance targets are subject to a relative total shareholder return modifier (“rTSR Modifier”) whereby, at the end of the three-year vesting period, the Normalized EPS payout is adjusted upwards or downwards by up to 25% based on the Company’s rTSR to the TSR of a peer group of companies with high correlation to the Company’s industry (the “TSR Peer Group”), subject to the absolute TSR governor and capped at a maximum of 200% of target. The rTSR Modifier will be the percentage multiplier assigned to the Company’s TSR rank compared to the TSR Peer Group for the applicable two-year performance period. To determine rank, the TSRs of the Company and each company in the TSR Peer Group will be ranked for the performance period to determine the quartile which contains the Company. There will be no interpolation applied to determine the rTSR Modifier. Depending on the Company’s rTSR to the TSRs of the TSR Peer Group, the payout percentage of restricted stock units that will be subject to vesting will be modified as follows:

  66. FISCAL 2023 PERFORMANCE-BASED EQUITY AWARDS PERFORMANCE METRICS

    | | | | rTSR Modifier | | | | | | | Bottom Quartile | Median (2nd and 3rd Quartile) | Top Quartile | | | | Preliminary Unadjusted Payout | Multiplier | | | | | | | 75% | 100% | 125% | | Normalized EPS | Below Threshold | 0% | 0% (0% x 75%) | 0% (0% x 100%) | 0% (0% x 125%) | | | Threshold | 50% | 37.5% (50% x 75%) | 50% (50% x 100%) | 62.5% (50% x 125%) | | | Target | 100% | 75% (100% x 75%) | 100% (100% x 100%) | 125% (100% x 125%) | | | Maximum | 200% | 150.0% (200% x 75%) | 200% (200% x 100%) | Capped at 200% (200% x 125%) |

  67. FISCAL 2023 PERFORMANCE-BASED EQUITY AWARDS PERFORMANCE METRICS

    For fiscal 2023 performance-based equity awards, the Compensation Committee approved a rTSR comparator group comprised of 31 public companies that serve as a representative index. The comparator group for the rTSR modifier includes constituents of the S&P 600 Technology Hardware & Equipment (Industry Group) Index.

  68. Fiscal 2022 Performance-Based Equity Awards

    Fiscal 2022 Performance-Based Equity Awards Certain of our NEOs were granted performance-based restricted stock units in fiscal 2022 which vest on the third anniversary of the date of grant, subject to the NEO’s continued employment through the vesting date. Similar to the fiscal 2023 performance-based equity awards, vesting of the fiscal 2022 awards is subject to attainment of certain performance targets over the applicable performance periods and other terms and conditions established by the Compensation Committee. The fiscal 2022 awards were subject to two equally weighted performance metrics: (i) Normalized EPS (subject to an rTSR Modifier) and (ii) Adjusted ROIC. Achievement of the performance targets for the fiscal 2022 awards will be determined following the applicable performance and vesting periods.

  69. Fiscal 2022 Performance-Based Equity Awards

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  70. Employment Agreements and Employment Letters

    Employment Agreements and Employment Letters We have determined that our Company’s and our shareholders’ interests are best served by entering into (i) an employment agreement with our CEO and (ii) employment letters with an accompanying severance plan with our other NEOs. Such agreements, letters and plans are the result of arms’ length negotiations between the Compensation Committee, the Company, the CEO and other NEOs, and all are approved by the Compensation Committee. We believe that these employment arrangements benefit us and our shareholders by permitting us to attract and retain NEOs with demonstrated leadership abilities and to secure their services over an extended period of time. In addition, the employment arrangements align executive interests with the long-term interests of the Company and serve our recruitment and retention goals by providing executive officers with security based on the knowledge of how they will be compensated over the course of their employment, while at the same time providing the Company with significant protections regarding non-competition, non-solicitation of business and employees, and confidential business information. On June 15, 2017, we entered into a three-year employment agreement, effective July 1, 2017, with Mr. Baur. Mr. Baur’s employment agreement provides for:

  71. Employment Agreements and Employment Letters

    | ◾ | a base salary of $875,000 per year; |

  72. Employment Agreements and Employment Letters

    | ◾ | an annual target variable compensation opportunity of 150% of his base salary (with a maximum opportunity of 200% of target) based upon performance and the attainment of performance goals set by the Compensation Committee; |

  73. Employment Agreements and Employment Letters

    | ◾ | consideration for inclusion in our annual equity grant program at a grant level opportunity of $2,250,000; |

  74. Employment Agreements and Employment Letters

    | ◾ | the opportunity to participate in our Nonqualified Deferred Compensation Plan by deferring up to 50% of base salary and/or up to 100% of annual variable compensation, with a match of 50% of deferred amounts to be made by the Company, up to a maximum of $200,000 per year; and |

  75. Employment Agreements and Employment Letters

    | ◾ | automatic one-year renewals unless 180 days’ prior notice of non-renewal is given to the other party following the initial term. |

  76. Employment Agreements and Employment Letters

    In addition, we will make additional payments to Mr. Baur’s deferred compensation account to cover the cost of future premiums for “access only” continuation coverage under our medical and dental plan following termination of employment assuming Mr. Baur is enrolled in Medicare Parts A, B and D, obtains a Medicare supplemental policy until age 80, and pays the full cost for such coverage. Under Mr. Baur’s employment agreement, variable cash incentive opportunities will continue to be based upon the performance and attainment of performance goals to be established annually by the Compensation Committee, subject to maximum amounts that may be earned. Mr. Baur’s annual equity award opportunity is subject to the Compensation Committee’s discretion and the terms of our equity plan and related equity award agreements. Mr. Baur’s employment agreement also provides for severance payments to Mr. Baur upon certain events, as further described in the “Severance Plan” section below. On November 16, 2020, we entered into an employment letter with Mr. Jones in connection with his appointment as our Senior Executive Vice President and Chief Financial Officer, effective December 14, 2020. Under the employment letter, Mr. Jones will be paid an annual base salary and be eligible to participate in the variable cash compensation incentive

  77. Employment Agreements and Employment Letters

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  78. Employment Agreements and Employment Letters

    program. He also will receive other benefits, including relocation benefits, change-in-control payments as a participant in the Severance Plan described below, and is eligible for participation in our other long-term incentive programs and our Nonqualified Deferred Compensation Plan. On February 9, 2023, we entered into an employment letter with Ms. Smith in connection with her appointment as our Senior Executive Vice President and Chief Legal Officer, effective February 21, 2023. Under the employment letter, Ms. Smith will be paid an annual base salary and be eligible to participate in the variable cash compensation incentive program. She also will receive other benefits, including relocation benefits, change-in-control payments as a participant in a Severance Plan described below, and is eligible for participation in our other long-term incentive programs and our Nonqualified Deferred Compensation Plan. On May 6, 2021, we entered into an employment letter with Ms. Hayden in connection with her appointment as our Senior Executive Vice President and Chief Information Officer, effective June 7, 2021. Under the employment letter, Ms. Hayden will be paid an annual base salary and be eligible to participate in the variable cash compensation incentive program. She also will receive other benefits, including relocation benefits, change-in-control payments as a participant in a Severance Plan described below, and is eligible for participation in our other long-term incentive programs and our Nonqualified Deferred Compensation Plan. On September 27, 2019, we entered into an employment letter with Mr. Eldh in connection with his appointment as our Senior Executive Vice President and Chief Revenue Officer, effective October 1, 2019. Under the employment letter, Mr. Eldh was paid an annual base salary and eligible to participate in the variable cash compensation incentive program. He also received other benefits, including relocation benefits, change-in-control payments as a participant in a Severance Plan described below, and was eligible for participation in our other long-term incentive programs and our Nonqualified Deferred Compensation Plan. We entered into a Separation Agreement and General Release with Mr. Eldh in September 2023 which superseded his rights under his employment letter and the Severance Plan. See the “Employment Arrangements and Potential Payments upon Certain Events” section for more information on Mr. Baur’s, Mr. Jones’, Ms. Smith’s, Ms. Hayden’s, and Mr. Eldh’s employment arrangements that were in effect during fiscal 2023.

  79. Severance Plan

    Severance Plan We have established a severance plan to provide severance and other benefits to certain executives selected by the Compensation Committee to participate in the severance plan. The Company’s severance plan is uniform for the current executives selected by the Compensation Committee to participate at their respective levels, except for Mr. Eldh, who had several provisions that were individually tailored, as described below. We refer to the Company severance plan and Mr. Eldh’s severance plan collectively as the “Severance Plan.” The employment arrangements with our NEOs and the Severance Plan provide that, if the employment of any participant in the Severance Plan is terminated by the Company without cause, or if the Executive resigns for good reason, we will be required to pay or provide the executive’s base salary earned through the date of termination. In addition, we will also be required to pay to the executive in such instances any other amounts or benefits the executive is eligible to receive under any Company plan, program, policy, practice, contract or agreement in accordance with their terms. In such instances, we will also be required to provide severance benefits to the executive, subject to the executive’s execution of a release, consisting of compensation equal to the average annual base salary and variable compensation earned by the executive, including any amounts earned but deferred, in the last three fiscal years completed prior to the termination (the “Average Compensation Amount”), multiplied by a severance multiple, less withholdings. In the case of Mr. Baur, the severance multiple is equal to 2.5, in the case of Mr. Jones, Ms. Smith, Ms. Hayden, and Mr. Eldh the severance multiple is 1.5, and in the case of any other executive participating in the Severance Plan, the severance multiple will be set forth in a participation agreement between the Company and such executive (a “Participation Agreement”), but such multiple may not exceed 2.5. In the event the termination occurs within 12 months after or prior to and in contemplation of certain change in control events, Mr. Baur will receive three times his Average Compensation Amount, Mr. Jones, Ms. Smith, Ms. Hayden, and Mr. Eldh, will receive two times their respective Average Compensation Amount and, in the case of any other executive participating in the Severance Plan, such executive will receive his or her Average Compensation Amount multiplied by his or her change in control multiple,

  80. Severance Plan

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  81. Severance Plan

    as set forth in a Participation Agreement. In addition, in the event that the executive’s employment is terminated by us without cause, or if the executive resigns for good reason, the executive will be entitled to receive a bonus equal to the pro-rata portion of the then current fiscal year annual variable compensation that otherwise would be payable to the executive based on actual performance. For a period of up to twenty-four months (or in the case of Mr. Eldh, for up to eighteen months) following the date of such a termination (or in the case of Mr. Baur, until he attains 65 years of age), the executives shall be entitled to participate in our medical and dental plans, with the executive paying the full premium charged for such coverage subject to the terms of the employment agreement, the employment letter, and/or the Severance Plan, as applicable. If the executive’s employment is terminated for cause or if the executive voluntarily terminates his or her employment during the term of the agreement, other than for good reason, we will only be obligated to provide any accrued amounts payable on the executive’s annual base salary or any other amounts not previously paid, but earned, by the executive through the date of termination, and benefits under other plans in accordance with their terms. If the executive dies, becomes disabled, or retires during the term of the employment agreement, the employment letter, and/or the Severance Plan, as applicable, we will only be obligated to provide any accrued amounts payable on the executive’s annual base salary or any other amounts not previously paid, but earned, by the executive as of the date of termination, a bonus equal to the pro-rata portion of the then current fiscal year annual variable compensation that would otherwise be payable to the executive based on actual performance, and benefits under other plans in accordance with their terms. If we do not renew the employment agreement, or enter into a new employment agreement with the same or similar terms after the end of the employment period, and Mr. Baur remains an employee of the Company in any capacity, Mr. Baur’s employment will be on an at-will basis, and Mr. Baur generally will be eligible to receive the same severance benefits set forth in the employment agreement. In addition, each employment agreement, employment letter, and/or Severance Plan, as applicable, requires the executive not to, during the term of his or her employment and for a period of two years (or in the case of Mr. Eldh, for a period of 18 months) following the termination of such executive’s employment: (a) compete with the Company; (b) solicit certain customers or suppliers and certain prospective customers or suppliers of the Company; or (c) solicit employees to leave the Company. Each of the employment agreement, the employment letter, and/or the Severance Plan, as applicable, also requires the executive not to use or disclose our confidential information or trade secrets during the term of his or her employment and for a period of five years thereafter or for so long as the trade secrets remain protected. In addition, the Company and each executive agree not to disparage each other during the term of employment or for a period of five years thereafter. If an executive breaches or threatens to breach such restrictions on conduct, we may immediately cease any severance benefits or refuse such payment and shall be entitled to recover from any such executive any amounts previously paid as a severance benefit.

  82. Post-Termination Restrictions and Compensation

    Post-Termination Restrictions and Compensation The Compensation Committee believes that our NEOs should be provided with reasonable severance benefits in the event a NEO is terminated under certain circumstances. Severance benefits for NEOs reflect the fact that the NEO may not be able to find reasonably comparable employment within a reasonable period of time following termination. In addition, the Compensation Committee believes that certain post-termination benefits such as change in control payments will allow the NEOs to focus their time on potential transactions that may be beneficial to the Company, rather than have concern for their own employment prospects following a change in control. Severance benefits are provided under our employment agreements, employment letters and/or the Severance Plan, as applicable.

  83. SEVERANCE AND CHANGE IN CONTROL BENEFITS

    SEVERANCE AND CHANGE IN CONTROL BENEFITS In the event of a termination of employment by the Company other than for cause, death, disability, retirement, the expiration of the employment agreement (in the case of Mr. Baur), or by a NEO for good reason, the NEO will be entitled to a severance payment, provided that the NEO is in, and remains in, compliance with the non-competition, confidentiality, non-solicitation and related covenants provided in his or her employment agreement or the Severance Plan. The amount of a severance payment varies based upon the NEO’s historic compensation amounts, up to two and a half times the Chief Executive Officer’s and one and one-half times the other NEO’s average annual base salary and variable compensation over the last three fiscal years prior to a termination. These potential payments are discussed in more detail under the caption “Employment Arrangements and Potential Payments Upon Certain Events” below. Our NEOs’ employment agreements, employment letters, and/or the Severance Plan, as applicable, provide for severance in the event of certain termination in connection with a change of control. Such severance payments will be made only if a “double trigger” is met. That is, both a change in control and a termination of employment are required. This is discussed in more detail under the caption “Employment Arrangements and Potential Payments Upon Certain Events” below. The Compensation Committee believes this benefit is required to offer competitive benefits to attract and retain highly qualified executives.

  84. Risk Assessment of Compensation Policies and Practices

    | ◾ | Our compensation program design provides a balanced mix of cash and equity and annual and long-term incentives that are designed to encourage strategies and actions that are in the Company’s and our shareholders’ long-term best interests. Equity awards such as service and performance-based restricted stock awards and restricted stock units reinforce our long-term performance perspective. |

  85. Risk Assessment of Compensation Policies and Practices

    | ◾ | Our performance goals and objectives generally reflect a mix of corporate and other performance measures designed to promote progress towards both our annual and longer-term goals. |

  86. Risk Assessment of Compensation Policies and Practices

    | ◾ | A significant component of each of our NEOs’ total direct compensation consists of long-term, equity-based incentive awards that are designed to encourage these NEOs to focus on sustained stock price appreciation. |

  87. Risk Assessment of Compensation Policies and Practices

    | ◾ | Equity awards typically have vesting schedules of three or four years and, in some cases, have performance-based vesting components as well; thus, NEOs typically will always have unvested awards that could decrease significantly in value if our business is not well-managed for the long term. |

  88. Risk Assessment of Compensation Policies and Practices

    | ◾ | Equity incentive awards are granted periodically, typically annually, during open window periods and under an established equity grant program. |

  89. Risk Assessment of Compensation Policies and Practices

    | ◾ | Equity awards are subject to annual limitations on the number of shares that may be awarded during any year. The typical Company compensation structure has a threshold and maximum for cash bonuses. |

  90. Risk Assessment of Compensation Policies and Practices

    | ◾ | The target levels under our annual cash bonus program are designed to be set at a level where achieving the target incentive compensation levels is not guaranteed and the achievement of such levels is rewarding to both the NEO and the shareholders. |

  91. Risk Assessment of Compensation Policies and Practices

    | ◾ | Our internal reporting system ensures a consistent and ongoing assessment of financial results used to determine payouts. |

  92. Risk Assessment of Compensation Policies and Practices

    | ◾ | Our stock ownership policy sets out a minimum level of Company share ownership for our CEO so that he has personal wealth tied to the long-term success of Company and is therefore aligned with shareholders and imposes an equity retention requirement to facilitate attaining such levels of ownership. |

  93. 2023 Summary Compensation Table

    2023 Summary Compensation Table The following table summarizes compensation paid to or accrued on behalf of the NEOs for the fiscal year ended June 30, 2022:

  94. 2023 Summary Compensation Table

    | Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | | Michael L. Baur | 2023 | 875,000 | — | 3,229,036 | — | 1,246,875 | 306,573 | 5,657,484 | | Chair and Chief | 2022 | 875,000 | — | 2,331,320 | — | 2,123,625 | 317,739 | 5,647,684 | | Executive Officer | 2021 | 765,625 | — | 1,262,036 | 2,428,626 | 2,033,063 | 148,463 | 6,637,813 | | Stephen T. Jones | 2023 | 480,000 | — | 1,192,277 | — | 456,000 | 82,285 | 2,210,561 | | Senior Executive Vice President, | 2022 | 400,000 | — | 828,927 | — | 647,200 | 59,890 | 1,936,017 | | Chief Financial Officer | 2021 | 218,462 | — | 800,001 | — | 360,500 | 87,300 | 1,466,263 | | Shana C. Smith | 2023 | 136,923 | — | 375,023 | — | 100,726 | 103,621 | 716,293 | | Senior Executive Vice President, | | | | | | | | | | Chief Legal Officer(4) | | | | | | | | | | Rachel A. Hayden | 2023 | 361,000 | — | 358,671 | — | 206,150 | 48,830 | 974,651 | | Senior Executive Vice President, | 2022 | 350,000 | 200,000 | 474,197 | — | 339,780 | 22,050 | 1,386,027 | | Chief Information Officer | 2021 | 20,192 | — | — | — | 27,107 | 100,000 | 147,299 | | John C. Eldh | 2023 | 625,000 | — | 1,862,920 | — | 890,150 | 77,366 | 3,455,436 | | Former President | 2022 | 548,077 | — | 1,554,205 | — | 1,339,569 | 70,197 | 3,512,048 | | | 2021 | 475,000 | — | 841,366 | 817,676 | 1,161,750 | 91,105 | 3,386,897 |

  95. 2023 Summary Compensation Table

    | (1) Amounts shown are the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. For a discussion of the assumptions made in such valuation, see Note 11 to our audited financial statements for the fiscal year ended June 30, 2023, included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023. |

  96. 2023 Summary Compensation Table

    | (2) Reflects the value of cash incentives earned pursuant to our annual incentive plan. For fiscal 2023, the cash incentives were awarded in August 2023. For fiscal 2022, the cash incentives under that program were awarded in August 2022. For fiscal 2021, the cash incentives under that program were awarded in August 2021. See the discussion in “Compensation Discussion and Analysis” herein. |

  97. 2023 Summary Compensation Table

    | (3) See the “All Other Compensation” table below for additional information. |

  98. 2023 Summary Compensation Table

    | (4) Ms. Smith joined the Company as Senior Executive Vice President and Chief Legal Officer in February 2023 and was designated an executive officer at that time. |

  99. 2023 Summary Compensation Table

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  100. 2023 Summary Compensation Table

    2023 All Other Compensation Table

  101. 2023 All Other Compensation Table

    | Name | Fiscal Year | Perquisites ($)(1) | Company Contributions to Nonqualified Deferred Compensation Plan ($)(2) | Company Paid Disability Benefit ($)(3) | Company Contributions to Deferred Contribution Plans (401(k)) ($) | Other ($)(4) | Total ($) | | Michael L. Baur | 2023 | 7,197 | 200,000 | 66,406 | 9,900 | 23,070 | 306,573 | | | 2022 | 6,573 | 200,000 | 77,600 | 9,950 | 23,616 | 317,739 | | | 2021 | 4,085 | 42,361 | 77,601 | 800 | 23,616 | 148,463 | | Stephen T. Jones | 2023 | 2,500 | 50,724 | 11,632 | 7,733 | 9,696 | 82,285 | | | 2022 | — | 34,223 | 11,632 | 5,900 | 8,136 | 59,890 | | | 2021 | 1,500 | 9,000 | — | 800 | 76,000 | 87,300 | | Shana C. Smith | 2023 | — | — | — | 3,231 | 100,390 | 103,621 | | Rachel A. Hayden | 2023 | — | 29,911 | 5,719 | 6,492 | 6,708 | 48,830 | | | 2022 | — | 7,875 | 5,719 | 4,576 | 3,880 | 22,050 | | | 2021 | — | — | — | — | 100,000 | 100,000 | | John C. Eldh | 2023 | 1,500 | 22,500 | 30,367 | 9,583 | 13,416 | 77,366 | | | 2022 | 2,500 | 22,500 | 29,943 | 9,742 | 5,512 | 70,197 | | | 2021 | — | 22,500 | — | 800 | 67,805 | 91,105 |

  102. 2023 Grants of Plan Based Awards Table

    2023 Grants of Plan Based Awards Table The following table summarizes awards granted to each of the NEOs during the fiscal year ended June 30, 2023 under the 2021 Plan:

  103. 2023 Grants of Plan Based Awards Table

    | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($)(1)(2) | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Michael L. Baur | 8/17/2022 | 656,250 | 1,312,500 | 2,625,000 | | | | | | | | 8/26/2022 | | | | | | | 56,699 | 1,624,993 | | | 8/26/2022 | | | | 14,175 | 28,350 | 56,700 | 28,350 | 791,532 | | | 8/26/2022 | | | | 14,175 | 28,350 | 56,700 | 28,350 | 812,511 | | Stephen T. Jones | 8/17/2022 | 240,000 | 480,000 | 800,000 | | | | | | | | 8/26/2022 | | | | | | | 20,935 | 599,997 | | | 8/26/2022 | | | | 5,234 | 10,468 | 20,936 | 10,468 | 292,267 | | | 8/26/2022 | | | | 5,234 | 10,468 | 20,936 | 10,468 | 300,013 | | Shana C. Smith | 2/9/2023 | 150,000 | 300,000 | 600,000 | | | | | | | | 6/1/2023 | | | | | | | 13,067 | 375,023 | | Rachel A. Hayden | 8/17/2022 | 108,500 | 217,000 | 420,000 | | | | | | | | 8/26/2022 | | | | | | | 6,298 | 180,501 | | | 8/26/2022 | | | | 1,575 | 3,149 | 6,298 | 3,149 | 87,920 | | | 8/26/2022 | | | | 1,575 | 3,149 | 6,298 | 3,149 | 90,250 | | John C. Eldh | 8/17/2022 | 468,500 | 937,000 | 1,655,834 | | | | | | | | 8/26/2022 | | | | | | | 32,711 | 937,497 | | | 8/26/2022 | | | | 8,178 | 16,356 | 32,712 | 16,356 | 456,660 | | | 8/26/2022 | | | | 8,178 | 16,356 | 32,712 | 16,356 | 468,763 |

  104. 2023 Grants of Plan Based Awards Table

    | (1) See “Compensation Discussion and Analysis — Material Elements of our Compensation Programs — Annual Performance-Based and Service-Based Equity Awards,” above. |

  105. 2023 Grants of Plan Based Awards Table

    | (2) The grant date fair values of the stock awards and units are based on the closing prices of our common stock on NASDAQ on August 26, 2022. These equity awards were part of an equity grant granted on August 26, 2022 and the performance metrics for the performance-based portion of these awards were set at that time. These performance-and service-based equity awards were computed in accordance with FASB ASC Topic 718. See “Compensation Discussion and Analysis — Material Elements of our Compensation Program — Annual Performance-Based and Service-Based Equity Awards,” above. |

  106. 2023 Grants of Plan Based Awards Table

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  107. 2023 Grants of Plan Based Awards Table

    2023 Outstanding Equity Awards at Fiscal Year End Table

  108. 2023 Outstanding Equity Awards at Fiscal Year End Table

    2023 Outstanding Equity Awards at Fiscal Year End Table The following table summarizes outstanding equity awards held by each of the NEOs as of June 30, 2023:

  109. 2023 Outstanding Equity Awards at Fiscal Year End Table

    | Name | | Option Awards | | | | Stock Awards | | | | | | | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#)(1) | Option Exercise Price ($) | Option Expiration Date | Grant Date | Number of Shares or Units of Stock that Have Not Vested (#)(2) | Market Value of Shares or Units of Stock that Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) | | Michael L. Baur | 12/6/2013 | 115,356 | — | 42.82 | 12/6/2023 | | | | | | | | 12/5/2014 | 164,093 | — | 41.13 | 12/5/2024 | | | | | | | | 12/4/2015 | 125,000 | — | 38.19 | 12/4/2025 | | | | | | | | 12/2/2016 | 77,339 | — | 37.00 | 12/2/2026 | | | | | | | | 12/8/2017 | 53,079 | — | 34.35 | 12/8/2027 | | | | | | | | 11/19/2020 | 89,712 | 44,187 | 24.68 | 11/19/2030 | | | | | | | | | | | | | 11/19/2020 | 16,875 | 498,825 | — | — | | | 11/24/2020 | 79,744 | 39,277 | 27.14 | 11/24/2030 | | | | | | | | | | | | | 8/27/2021 | 23,406 | 691,881 | — | — | | | | | | | | 8/27/2021 | — | — | 53,147 | 1,571,019 | | | | | | | | 8/26/2022 | 56,699 | 1,676,022 | — | — | | | | | | | | 8/26/2022 | — | — | 56,700 | 1,676,052 | | Stephen T. Jones | | | | | | 3/1/2021 | 9,070 | 268,109 | — | — | | | | | | | | 8/27/2021 | 8,322 | 245,998 | — | — | | | | | | | | 8/27/2021 | — | — | 18,897 | 558,601 | | | | | | | | 8/26/2022 | 20,935 | 618,839 | — | — | | | | | | | | 8/26/2022 | — | — | 20,936 | 618,868 | | Shana C. Smith | | | | | | 6/1/2023 | 13,067 | 386,261 | — | — | | Rachel A. Hayden | | | | | | 8/27/2021 | 3,641 | 107,628 | — | — | | | | | | | | 8/27/2021 | — | — | 8,269 | 244,438 | | | | | | | | 9/1/2021 | 3,974 | 117,471 | — | — | | | | | | | | 8/26/2022 | 6,298 | 186,169 | — | — | | | | | | | | 8/26/2022 | — | — | 6,298 | 186,169 | | John C. Eldh | 11/19/2020 | 59,808 | 29,458 | 24.68 | 11/19/2030 | | | | | | | | | | | | | 11/19/2020 | 11,251 | 332,580 | — | — | | | | | | | | 8/27/2021 | 15,603 | 461,225 | — | — | | | | | | | | 8/27/2021 | — | — | 35,432 | 1,047,358 | | | | | | | | 8/26/2022 | 32,711 | 966,937 | — | — | | | | | | | | 8/26/2022 | — | — | 32,712 | 966,967 |

  110. 2023 Outstanding Equity Awards at Fiscal Year End Table

    | (1) Stock options and restricted stock units granted prior to July 1, 2021 vest ratably over three years beginning on the grant date. Restricted stock units granted on or after July 1, 2021 vest ratably over four years beginning on the grant date. |

  111. 2023 Outstanding Equity Awards at Fiscal Year End Table

    | (2) The market value is based on achieving performance goals at the threshold performance level for the fiscal 2022 awards and maximum performance level for the fiscal 2023 awards. |

  112. 2023 Outstanding Equity Awards at Fiscal Year End Table

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  113. 2023 Outstanding Equity Awards at Fiscal Year End Table

    2023 Option Exercises and Stock Vested Table

  114. 2023 Option Exercises and Stock Vested Table

    2023 Option Exercises and Stock Vested Table The following table summarizes the exercise of options and the vesting of stock awards by each of our NEOs during the fiscal year ended June 30, 2023:

  115. 2023 Option Exercises and Stock Vested Table

    | Name | Option Awards | | Restricted Awards | | | | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Michael L. Baur | — | — | 35,208 | 1,101,971 | | Stephen T. Jones | — | — | 11,843 | 366,718 | | Shana C. Smith | — | — | — | — | | Rachel A. Hayden | — | — | 3,200 | 96,143 | | John C. Eldh | — | — | 30,508 | 933,670 |

  116. 2023 Nonqualified Deferred Compensation Table

    2023 Nonqualified Deferred Compensation Table The following table contains information concerning benefits earned by each of the NEOs under nonqualified deferred compensation plans during the fiscal year ended June 30, 2023:

  117. 2023 Nonqualified Deferred Compensation Table

    | Name | Executive Contributions in Last Fiscal Year ($)(1)(2) | Registrant Contributions in Last Fiscal Year ($)(3) | Aggregate Earnings (Loss) in Last Fiscal Year ($)(4) | Aggregate Withdrawals/ Distributions ($)(4) | Aggregate Balance at Last Fiscal Year-End ($) | | Michael L. Baur | 400,000 | 200,000 | 1,224,523 | — | 13,052,583 | | Stephen T. Jones | 654,480 | 50,724 | 56,041 | — | 919,629 | | Shana C. Smith | — | — | — | — | — | | Rachel A. Hayden | 99,702 | 29,911 | 20,342 | — | 180,387 | | John C. Eldh | 75,000 | 22,500 | 33,381 | — | 296,541 |

  118. 2023 Nonqualified Deferred Compensation Table

    | (1) Amounts represent voluntary deferrals of salary, bonus or a combination of both salary and bonus under our Nonqualified Deferred Compensation Plan. Contributions of deferred salary are reported as fiscal year 2023 income in the “Salary” column of the 2023 Summary Compensation Table. |

  119. 2023 Nonqualified Deferred Compensation Table

    | (2) Amounts reflect voluntary deferrals under our Nonqualified Deferred Compensation Plan associated with plan awards for fiscal year 2023 but paid in fiscal year 2024. |

  120. 2023 Nonqualified Deferred Compensation Table

    | (3) Amounts represent our matching contributions under our Nonqualified Deferred Compensation Plan. These amounts are reported as fiscal year 2023 income in the “All Other Compensation” column of the 2023 Summary Compensation Table. |

  121. 2023 Nonqualified Deferred Compensation Table

    | (4) Reflects cash flows for the fiscal year ended June 30, 2023. |

  122. 2023 Nonqualified Deferred Compensation Table

    Our Nonqualified Deferred Compensation Plan permits our NEOs to elect to defer a portion of their base salary and incentive bonus, and to receive matching contributions from the Company on a portion of the deferred amounts. Mr. Baur may defer up to 50% of his base compensation and 100% of his bonus, and we will provide a matching contribution of 50% of the amount deferred up to a calendar year limit of $200,000 in matching contributions. Each of Mr. Jones, Ms. Smith, Ms. Hayden, and Mr. Eldh may defer up to 50% of his or her base salary and 100% of his or her bonus, and we will provide a matching contribution of 30% on the first 15% of compensation deferred. Deferred amounts are credited to each participant’s account, which are invested in one or more investment alternatives chosen by each participant from a range of mutual fund offerings and other investments available under the plan. Each participant’s account is adjusted to reflect the investment performance of the selected investments. Benefits under the plan are payable in cash and generally will be paid in either a lump sum or in annual installments over a certain term upon retirement, death or other termination of employment, or upon a change in control of the Company, as elected in advance by the participant. A participant may also elect to receive some or all of the deferred amounts and related earnings pursuant to an in-service distribution, subject to a minimum five-year deferral.

  123. 2023 Nonqualified Deferred Compensation Table

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  124. 2023 Nonqualified Deferred Compensation Table

    We have entered into an employment agreement with Mr. Baur that was effective July 1, 2017 and employment letters with Mr. Jones, Ms. Smith and Ms. Hayden effective December 14, 2020, February 21, 2023 and June 7, 2021, respectively. Mr. Baur, Mr. Jones, Ms. Smith, and Ms. Hayden also participate in the Severance Plan. Notwithstanding these employment arrangements, each of Mr. Baur, Mr. Jones, Ms. Smith, and Ms. Hayden has the right to voluntarily terminate his or her employment at any time. The employment arrangements set forth the general terms and conditions of Mr. Baur’s, Mr. Jones’, Ms. Smith’s, and Ms. Hayden’s employment and provide for certain severance benefits upon the occurrence of certain events, which are stated as column headings in the tables below. We had an employment letter with Mr. Eldh effective October 1, 2019, and Mr. Eldh participated in the Severance Plan prior to his departure from the Company in November 2023. As a result of his departure and in lieu of any benefits to which Mr. Eldh would have otherwise been entitled to under the Severance Plan, Mr. Eldh will receive the benefits set forth in his Separation Agreement, subject to the terms and conditions therein. The material elements of compensation of each NEO as contained in their employment arrangements are described in the “Compensation Discussion and Analysis” section herein. The following sets forth in tabular format the incremental compensation that would be payable to such NEO in the event of his termination of employment under various scenarios, which we refer to as termination events. In accordance with SEC rules, the following discussion assumes:

  125. 2023 Nonqualified Deferred Compensation Table

    | ◾ | That the termination event in question occurred on June 30, 2023, the last day of fiscal 2023; and |

  126. 2023 Nonqualified Deferred Compensation Table

    | ◾ | With respect to calculations based on our stock price, the reported closing price of our common stock on June 30, 2023, $29.56, was used. |

  127. 2023 Nonqualified Deferred Compensation Table

    The tables contained in this section do not include payments made to a NEO with respect to contracts, agreements, plans or arrangements to the extent they do not discriminate in scope, terms or operation, in favor of our executive officers and that are available generally to all salaried employees, such as our 401(k) plan. The actual amounts that would be paid upon a termination event can only be determined at the time of such executive officer’s termination. Due to the number of factors that affect the nature and amount of any compensation or benefits provided upon the termination events, any actual amounts paid or distributed may be higher or lower than reported below. Factors that could affect these amounts include the timing during the year of any such event and our stock price at such time.

  128. 2023 Nonqualified Deferred Compensation Table

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  129. BENEFITS UPON THE OCCURRENCE OF CERTAIN TERMINATION EVENTS

    | (6) These amounts do not include the payout of Mr. Baur’s vested balance under our Nonqualified Deferred Compensation Plan, which is reflected and described in the Nonqualified Deferred Compensation Table herein. |

  130. BENEFITS UPON THE OCCURRENCE OF CERTAIN TERMINATION EVENTS

    | (5) These amounts do not include the payout of the executive officer’s vested balance under our Nonqualified Deferred Compensation Plan, which is reflected and described in the Nonqualified Deferred Compensation Table herein. |

  131. BENEFITS UPON THE OCCURRENCE OF CERTAIN TERMINATION EVENTS

    | (5) These amounts do not include the payout of the executive officer’s vested balance under our Nonqualified Deferred Compensation Plan, which is reflected and described in the Nonqualified Deferred Compensation Table herein. |

  132. BENEFITS UPON THE OCCURRENCE OF CERTAIN TERMINATION EVENTS

    | (5) These amounts do not include the payout of the executive officer’s vested balance under our Nonqualified Deferred Compensation Plan, which is reflected and described in the Nonqualified Deferred Compensation Table herein. |

  133. Pay Ratio Disclosure

    Pay Ratio Disclosure Pursuant to Item 402(u) of Regulation S-K promulgated under the Exchange Act, we are required to disclose the median annual total compensation of all the Company’s employees, the total compensation of our CEO and the ratio of those two amounts. The pay ratio set forth below is a reasonable estimate and has been calculated in a manner consistent with SEC rules and based on the methodology described below. The SEC rules for identifying median employees allow companies to use a variety of methodologies. As a result, the pay ratio reported by others may not be comparable to our reported pay ratio. For the year ended June 30, 2023:

  134. Pay Ratio Disclosure

    | ◾ | the total compensation for our median employee was $65,793; |

  135. Pay Ratio Disclosure

    | ◾ | the annual total compensation of Mr. Baur was $5,657,484; and |

  136. Pay Ratio Disclosure

    | ◾ | based on the information above, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees is 86 to 1. |

  137. Pay Ratio Disclosure

    During the year ended June 30, 2023, there were no changes in our employee population or employee compensation arrangements that we reasonably believe would result in a significant change to our pay ratio disclosure. Therefore, to calculate the pay ratio for the year ended June 30, 2023, we used the same median employee identified as of June 30, 2021. The methodology that we used and the material assumptions, adjustments and estimates that we used to identify the median and determine annual total compensation were as follows: Employee population. As of June 30, 2021, the date we selected to identify our median employee, our employee population consisted of approximately 2,184 individuals, with 765 employees representing 35% of our total employee population located outside the United States and 1,419 employees representing 65% of our total employee population located in the United States. Identification of Median. To identify the median of the annual total compensation of all our employees, we reviewed the total cash earnings of all employees for the twelve-month period ending on June 30, 2021 (the “reported compensation”). In making this calculation, we annualized the reported compensation of all our employees who were hired during the period. While we did not make any cost-of-living adjustments to the reported compensation in identifying the median employee, we did convert the reported compensation of our non-United States employees to United States dollars using the applicable conversion rate as of June 30, 2021. Using this methodology, we determined that our median employee was a full-time, salaried employee located in the United States.

  138. Pay Ratio Disclosure

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  139. Pay Ratio Disclosure

    This section provides disclosure about the relationship between executive “compensation actually paid” (“CAP”) to our CEO and non-CEO NEOs and certain financial performance measures of the Company for the fiscal years listed below. This disclosure has been prepared in accordance with Item 402(v) of Regulation S-K under the Securities and Exchange Act of 1934 (the “Pay Versus Performance Rules”). For further information concerning the Company’s variable pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to “Executive Compensation — Compensation Discussion and Analysis.”

  140. Pay Ratio Disclosure

    | | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year | Summary Compensation Table Total for Baur ($) | Compensation Actually Paid to CEO ($) (1)(2) | Average Summary Compensation Table Total for Non-CEO NEOs ($) (3) | Average Compensation Actually Paid to Non-CEO NEOs ($) (1)(2)(3) | ScanSource, Inc. Total Shareholder Return ($) | Peer Group Total Shareholder Return ($) (4) | Net Income (in millions) ($) | Adjusted EBITDA ($) (5) | | 2023 | 5,657,484 | 5,155,039 | 1,839,235 | 1,709,711 | 123 | 159 | 89.8 | 182.6 | | 2022 | 5,647,684 | 7,297,747 | 2,050,989 | 2,464,805 | 129 | 130 | 88.8 | 166.7 | | 2021 | 6,637,813 | 7,618,769 | 1,433,835 | 1,572,107 | 117 | 168 | 10.8 | 117.9 |

  141. Pay Ratio Disclosure

    | (1) Deductions from, and additions to, total compensation in the Summary Compensation Table by year to calculate Compensation Actually Paid consist of: |

  142. Pay Ratio Disclosure

    | | 2023 | | | | 2022 | | | | 2021 | | | | | | CEO | | Average Non-CEO NEOs | | CEO | | Average Non-CEO NEOs | | CEO | | Average Non-CEO NEOs | | | Total Compensation from Summary Compensation Table | | 5,657,484 | | 1,839,235 | | 5,647,684 | | 2,050,989 | | 6,637,813 | | 1,433,835 | | Adjustments for Pension | | | | | | | | | | | | | | Adjustment for Summary Compensation Table Pension | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | Amount added for current year service cost | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | Amount added for prior service cost impacting current year | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | Total Adjustments for Pension | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | Adjustments for Equity Awards | | | | | | | | | | | | | | Adjustment for grant date values in the Summary Compensation Table | ($ | 3,229,036) | ($ | 947,223) | ($ | 2,331,320) | ($ | 824,430) | ($ | 3,690,662) | ($ | 633,904) | | Year-end fair value of unvested awards granted in the current year | | 3,093,126 | | 914,109 | | 2,751,537 | | 986,537 | | 4,490,976 | | 741,513 | | Year-over-year difference of year-end fair values for unvested awards granted in prior years | ($ | 386,870) | ($ | 92,141) | | 614,269 | | 113,848 | | 123,216 | | 30,003 | | Fair values at vest date for awards granted and vested in current year | | 0 | | 0 | | 0 | | 19,557 | | 0 | | 0 | | Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years | | 20,335 | ($ | 4,269) | | 615,578 | | 118,304 | | 57,426 | | 660 | | Forfeitures during current year equal to prior year-end fair value | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | Dividends or dividend equivalents not otherwise included in the total compensation | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | Total Adjustments for Equity Awards | ($ | 502,445) | ($ | 129,524) | | 1,650,063 | | 413,816 | | 980,956 | | 138,272 | | Compensation Actually Paid (as calculated) | | 5,155,039 | | 1,709,711 | | 7,297,747 | | 2,464,805 | | 7,618,769 | | 1,572,107 |

  143. Pay Ratio Disclosure

    | (2) Equity valuations assumptions for calculating Compensation Actually Paid are not materially different from grant date valuation assumptions. |

  144. Pay Ratio Disclosure

    | (3) Non-CEO NEOs reflect the average Summary Compensation Table total compensation and average Compensation Actually Paid for the following executives by year: |

  145. Pay Ratio Disclosure

    2023: Stephen T. Jones, John C. Eldh (Former), Shana C. Smith, Rachel A. Hayden 2022: Stephen T. Jones, John C. Eldh, Rachel A. Hayden, Matthew S. Dean (Former)

  146. Pay Ratio Disclosure

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  147. Pay Ratio Disclosure

    2021: Stephen T. Jones, John C. Eldh, Rachel A. Hayden, Matthew S. Dean, Gerald Lyons (Former)

  148. Pay Ratio Disclosure

    | (4) The selected peer group is the S&P 600 Technology Hardware & Equipment (Industry Group) Index. |

  149. Pay Ratio Disclosure

    | (5) We have determined that Adjusted EBITDA is the financial performance measure that, in the Company’s assessment, represents the most important financial performance measure used to link CAP to our NEOs to Company performance for fiscal 2023. Adjusted EBITDA is a non-GAAP financial measure that includes the following: non-GAAP operating income; non-GAAP net income; non-GAAP EPS; adjusted earnings before interest expense, income taxes, depreciation, and amortization. Please refer to page 27 in our annual report for a reconciliation of net income to Adjusted EBITDA. |

  150. Relationship Between “Compensation Actually Paid” and Performance Measures

    Relationship Between “Compensation Actually Paid” and Performance Measures In accordance with the Pay Versus Performance Rules, the graphs below illustrate how CAP to our NEOs aligns with the Company’s financial performance as measured by our cumulative TSR, our TSR Peer Group’s cumulative TSR, our net income, and Adjusted EBITDA.

  151. Relationship Between “Compensation Actually Paid” and Performance Measures

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  152. Relationship Between “Compensation Actually Paid” and Performance Measures

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  153. Relationship Between “Compensation Actually Paid” and Performance Measures

    Compensation Committee Report