DEF 14A

DEF 14A 1 d243427ddef14a.htm DEF 14A DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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Securities Exchange Act of 1934

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ScanSource, Inc.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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LOGO

Letter from our Chairman and CEO

Fellow Shareholders:

Thank you for your continued investment in ScanSource. On behalf of ScanSource’s Board of Directors, it is my pleasure to invite you to participate in the upcoming 2022 Annual Meeting of Shareholders and encourage you to review the attached Notice of Annual Meeting of Shareholders and Proxy Statement and vote using the attached proxy card.

I want to take this opportunity to remind you of some of the important changes and updates at ScanSource this past year:

Our Performance in Fiscal 2021: Our talented employees have made excellent progress on our strategic plan to lead as a “hybrid distributor” connecting devices to the cloud and accelerating growth for our customers and suppliers across hardware, software, connectivity and cloud. We enable partners to deliver solutions for their customers to address changing end-user buying and consumption patterns. For fiscal year 2021, despite the impact of a worldwide pandemic, net sales increased 3.4% to $3.2 billion, or a 5.5% year-over-year increase on an organic basis. Fiscal year 2021 GAAP operating income increased to $61.5 million, and non-GAAP operating income increased to $93.1 million, up 18.0% year-over-year. On a GAAP basis, net income for fiscal year 2021 totaled $45.4 million, or $1.78 per diluted share. Non-GAAP net income totaled $69.9 million, or $2.74 per diluted share. As we reflect on fiscal 2021, we are confident that these results signify a positive outlook for the long-term success of ScanSource.

COVID-19 and Return to Office: The ongoing COVID-19 global pandemic continues to present unique challenges, and we have prioritized the health and safety of our employees and business partners. Although all of our offices in the United States are now open, the vast majority of our employees continue to work from home regularly. We have encouraged our teams to plan team collaboration days in the office to facilitate innovation and shared experiences. As we plan to grow our workforce in FY 2022, we will create engagement opportunities in person at our offices to educate our new hires on our company values and culture. We are monitoring the evolving pandemic situation and have implemented risk mitigation actions in accordance with applicable government and health laws and regulations. As an example, in Brazil, the laws are different and our office based employees are still working remote. However, worldwide, our distribution facilities and employees have been working in the warehouses every day and achieving excellent customer satisfaction scores. Despite the ongoing challenges resulting from the pandemic, our employees are committed to providing the highest level of customer service our partners have grown to expect from ScanSource.

Shareholder Engagement Efforts: Engagement with our shareholders is a key focus for ScanSource management and an important part of our Board’s governance commitment. Our recent engagement efforts focused on establishing relationships, expanding dialogue to cover strategy and governance topics and collecting shareholder feedback. This dialogue helped us to better understand shareholders’ views on a variety of relevant issues, including company strategy, industry trends and growth opportunities, board diversity and refreshment, executive compensation and environmental, social and governance (ESG) practices. This dialogue led in part to several of the governance-related proposals included in the attached proxy statement.

Diversity & Inclusion: In fiscal 2021, we continued to expand our D&I efforts and focused on four main areas: (i) fostering continued awareness of D&I issues and providing education opportunities for our workforce; (ii) launching a Partner Diversity Program intended to help diverse customers, many of whom have struggled during the pandemic, become more successful; (iii) conducting a review of our workforce recruitment strategies and interviewing tactics to ensure a more open/inclusive talent selection approach; and (iv) introducing employee resource groups to assist with networking, mentorship and development.

Board of Directors Refresh: We strive to achieve an appropriate mix of tenure and expertise on our Board that provides a balance of fresh perspectives and institutional knowledge. Our Board continued to grow during 2021, and this growth has brought with it additional, valuable experience and perspectives to ScanSource. In October 2020, we increased the size of the Board to nine members and appointed Frank E. Emory as a new Board member. Frank has over three decades of legal and executive leadership experience. His perspectives as a legal expert and executive in the Health Care industry – as well as his many years of public service and deep community involvement – bring valuable insight to the Board and our organization. In August 2021, the Board was increased to 10 members as we welcomed Charles A.

(“Charlie”) Mathis to the Board. Charlie brings decades of experience in finance, strategic M&A, and capital markets to the Board, including 13 years as Chief Financial Officer for multiple publicly traded companies. Charlie previously served as ScanSource’s Chief Financial Officer from 2012-2016 and his deep knowledge of our business and markets, especially our recurring revenue opportunities, his financial acumen, and experience creating shareholder value will serve ScanSource extremely well.

John P. (“Jack”) Reilly, who has served as a director of ScanSource since 2001, is retiring from the Board when his current term of office expires effective at the 2022 Annual Meeting. Jack’s contributions to our Board greatly influenced ScanSource’s growth and achievement. The Board would like to thank Jack for his 20 years of insightful guidance and exceptional service to the Board.

Ongoing Commitment to Corporate Social Responsibility and Sustainability: ScanSource continues to be committed to being a good corporate citizen and being an agent of positive change in our local communities. In 2021, our ESG Task Force was integral in the identification of our most important ESG topics, gathering data necessary to understand our environmental impact, moving forward our D&I agenda, and developing our ESG roadmap for the future, which contains items like understanding the impact of climate change on our strategy and integrating our ESG program into our supply chain activities. Last year our Board approved new ESG-related policies including a Business Partner Code of Conduct, a Human Rights Policy, and an Environmental Stewardship Policy. These policies are consistent with, and are an extension of, our existing Business Ethics and Code of Conduct and reflect the Company’s commitment to sustainability, diversity and accountability.

The Board remains deeply committed to a sound governance structure that promotes the best interests of our shareholders. To that end, the Board examines emerging corporate governance trends and best practices. We have corporate governance guidelines to help ensure that the Board is independent from management and appropriately performs its function as the overseer of management, and that the interests of the Board and management align with the interests of our shareholders. We believe our current leadership structure and corporate governance guidelines ensure effective independent Board leadership and oversight of management. During fiscal 2021, our directors met six times, including five times in executive sessions without the Chief Executive Officer or other members of management present. The Board also usually meets with the senior management team at each in-person meeting held at the Company’s headquarters. We have strong independent director leadership with Peter Browning serving as our Lead Independent Director and with all of the Board Committees being comprised solely of, and chaired by, independent directors.

Best regards,

LOGO

Michael L. Baur

Chairman of the Board, Chief Executive Officer and President

LOGO

Notice of Annual Meeting of Shareholders

January 27, 2022

9:00 a.m., Eastern Standard Time

The Annual Meeting of Shareholders of ScanSource, Inc. will be held at our principal executive offices, located at 6 Logue Court, Greenville, South Carolina 29615 on Thursday, January 27, 2022, at 9:00 a.m., Eastern Standard Time, for the following purposes:

1)	To elect nine members to the Board of Directors;

2)	To approve a proposal to amend the Company’s Amended and Restated Articles of Incorporation (the “Articles”) and Amended and Restated Bylaws (the “Bylaws”) to require that directors be elected by a majority of votes cast in uncontested elections;

3)	To approve a proposal to amend the Articles to eliminate the supermajority voting provisions applicable to the Company by default under the South Carolina Business Corporation Act;

4)	To approve the ScanSource, Inc. 2021 Omnibus Incentive Compensation Plan;

5)	To hold an advisory vote to approve the compensation of our Named Executive Officers (as defined in the Proxy Statement);

6)	To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending June 30, 2022; and

7)	To transact such other business as may properly come before the Annual Meeting or any adjournments thereof.

Only shareholders whose names appear of record on our books at the close of business on November 29, 2021 will be entitled to notice of and to vote at the Annual Meeting or at any adjournments thereof.

You are cordially invited to attend the Annual Meeting in person, but if you are unable to do so, please vote by signing and returning your proxy card or by voting via telephone or online. You are entitled to revoke your proxy at any time before it is exercised, and if you attend the Annual Meeting you may also revoke your proxy by voting in person. Voting online, by telephone, by written proxy or voting instruction card will ensure your representation at the Annual Meeting regardless of whether you attend in person.

We continue to monitor developments regarding the coronavirus (COVID-19) pandemic. In the interest of the health and well-being of our shareholders, to the extent permitted by South Carolina law, we are planning for the possibility that the 2022 Annual Meeting may be held solely by means of remote communication, which includes the possibility of a virtual meeting. If we make this change, we will announce the decision to do so in advance, and details on how to participate, including details on how to inspect a list of shar

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SEC Form DEF 14A filed by ScanSource, Inc.