UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment No. 1 )
Filed by
the Registrant x
Filed by
a Party other than the Registrant o
Check the
appropriate box:
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o
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Preliminary
Proxy Statement
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o
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Confidential, for Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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o
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Definitive
Additional Materials
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o
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Soliciting
Material Pursuant to Rule 14a-12
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EPLUS
INC.
(Name of
Registrant as Specified in Its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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x
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No
fee required.
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o
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was
determined):
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(4)
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Proposed
maximum aggregate value of
transaction:
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(5)
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Total
fee paid:
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o
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Fee
paid previously with preliminary
materials.
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o
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement
No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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EPLUS
INC.
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To be
held on Monday, September 14, 2009
To the
Stockholders of ePlus
inc.:
The
Annual Meeting of Stockholders of ePlus inc., a Delaware
corporation, will be held on September 14, 2009, at the Hyatt Regency, 1800
Presidents Street, Reston, Virginia, 20190 at 8:00 a.m. local time for the
purposes stated below:
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1.
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To
elect directors named in the attached proxy statement, each to serve a
term as described in the proxy statement, and until their successors have
been duly elected and qualified;
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2.
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To
ratify the appointment of Deloitte & Touche LLP as our independent
auditors for our fiscal year ending March 31, 2010;
and
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3.
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To
transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement
thereof.
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Under the
provisions of our Bylaws, and in accordance with Delaware law, the Board of
Directors has fixed the close of business on July 20, 2009 as the Record Date
for stockholders entitled to notice of and to vote at the Annual
Meeting.
Whether
or not you expect to be present at the Annual Meeting, please date and sign the
enclosed Proxy Card and mail it promptly in the enclosed envelope to Proxy
Tabulator, P.O. Box 535300, Pittsburgh, PA, 15253-9837. If you submit your proxy
and then decide to attend the Annual Meeting to vote your shares in person, you
may still do so. Your proxy is revocable in accordance with the procedures set
forth in the Proxy Statement.
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By
Order of the Board of Directors
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/s/
Erica S. Stoecker
Erica
S. Stoecker
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August
4, 2009
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Corporate
Secretary
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TABLE OF CONTENTS
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ePlus
inc.
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www.eplus.com
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PROXY STATEMENT
FOR THE
2009 ANNUAL MEETING OF STOCKHOLDERS
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting to
be Held on September 14, 2009: The Proxy Statement and Annual Report are
available at www.eplus.com/proxy09.
QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
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Why am I
receiving these materials?
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We sent
you this proxy statement and the enclosed proxy card because the Board of
Directors of ePlus inc.
(sometimes referred to as “we”, “us”, “our”, “the Company” and “ePlus”), a Delaware
corporation, is soliciting your proxy to vote at the 2009 Annual Meeting of
Stockholders and at any adjournment or postponement thereof. The
annual meeting will be held on September 14, 2009 at 8:00 a.m. at the Hyatt
Regency, 1800 Presidents Street, Reston, Virginia, 20190. You are
invited to attend the annual meeting and we request that you vote on the
proposals described in this proxy statement. However, you do not need
to attend the annual meeting to vote your shares. Instead, you may
complete, sign and return the enclosed proxy card.
The
Company intends to mail this proxy statement and accompanying proxy card on or
about August 4, 2009 to all stockholders of record entitled to vote at the
annual meeting.
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Who is entitled
to vote?
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Only
stockholders of record at the close of business on July 20, 2009, or “record
date,” will be entitled to vote at the annual meeting. On this record
date, there were 8,253,997 shares of common stock outstanding and entitled
to vote. Each share of common stock is entitled to one vote on each
matter properly brought before the annual meeting.
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What is the
difference between holding shares as a registered stockholder and as a
beneficial holder?
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If on the
record date your shares were registered directly in your name with our transfer
agent, National City Bank, now a part of PNC, then you are a stockholder of
record and the proxy materials were sent directly to you by the
Company. As a stockholder of record, you may vote in person at the
annual meeting or vote by proxy using the enclosed proxy
card. Whether or not you plan to attend the annual meeting, we urge
you to complete, sign and return the proxy card to ensure your vote is
counted.
If on the
record date your shares were held in an account at a brokerage firm, bank,
dealer, or other similar organization, then you are the beneficial owner of
shares held in “street name” and these proxy materials were forwarded to you by
that organization. The organization holding your account is
considered the stockholder of record for purposes of voting at the annual
meeting. As a beneficial owner you have the right to direct your
broker or other agent on how to vote the shares in your account by following the
voting instructions included in their mailing. You are also invited
to attend the annual meeting. However, since you are not the
stockholder of record you may not vote your shares in person at the annual
meeting unless you request and obtain a valid proxy from your broker or other
agent.
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On what am I
voting?
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There are
two matters scheduled for a vote:
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Election
of eight directors named in this proxy statement to serve for an annual
term.
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Ratification
of the appointment of Deloitte & Touche LLP as our independent
auditors for our fiscal year ending March 31,
2010.
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Can I change my
vote after submitting my
proxy?
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Yes. You
can revoke your proxy at any time before the final vote at the annual meeting.
If you are a stockholder of record, you may revoke your proxy in any one of
three ways:
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You
may submit another properly completed proxy card with a later
date.
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You
may send a written notice that you are revoking your proxy to the
Corporate Secretary, ePlus inc., 13595
Dulles Technology Drive, Herndon, Virginia,
20171.
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You
may attend the annual meeting and vote in person. Attending the annual
meeting will not, by itself, revoke your
proxy.
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1
Please
note that to be effective, your new proxy card or written notice of revocation
must be received by the Corporate Secretary prior to the annual
meeting.
If you
are a beneficial owner of shares, you may submit new voting instructions by
contacting your broker or other agent. You may also vote in person at
the annual meeting if you obtain a legally valid proxy from your broker or other
agent as described above.
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How are votes
counted?
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Votes
will be counted by the inspector of election appointed for the annual meeting,
who will separately count “For” and “Against” votes, abstentions and broker
non-votes. A “broker non-vote” occurs when a nominee holding shares
for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that proposal
and has not received instructions with respect to that proposal from the
beneficial owner despite voting on at least one other proposal for which it does
have discretionary authority or for which it has received
instructions. Discretionary authority is allowed for both Proposal 1
and Proposal 2. Broker non-votes will have no effect and will not be
counted towards the vote for either Proposal 1 or 2. For Proposal 1,
abstentions will have no effect. For Proposal 2, abstentions will be
counted toward the vote total and will have the same effect as “Against”
votes.
If you
give us a proxy without giving specific voting instructions, your shares will be
voted as recommended by the Board of Directors by the persons named as proxies.
We are not aware of any other matters to be presented at the annual meeting
except for those described in this proxy statement. However, if any other
matters not described in this proxy statement are properly presented at the
meeting, the persons named as proxies will use their own judgment to determine
how to vote your shares. If the meeting is adjourned, your shares may be voted
by the persons named as proxies on the new meeting date as well, unless you have
revoked your proxy instructions prior to that time.
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What are the
voting requirements for each
proposal?
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For
Proposal 1, election of directors, nominees who receive a plurality of the
votes cast will be elected director. Abstentions and broker non-votes will
have no effect.
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To
be approved, Proposal 2, ratification of appointment of independent
auditors, must receive a “For” vote from the majority of shares present
and entitled to vote either in person or by proxy. If you
“Abstain” from voting, it will have the same effect as an “Against” vote.
Broker non-votes will have no
effect.
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What is a
quorum?
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A quorum
of stockholders is necessary to hold a valid annual meeting. A quorum
will be present if at least a majority of the outstanding shares entitled to
vote at the annual meeting are represented by proxy or by stockholders present
in person at the annual meeting. On the record date, there
were 8,253,997 shares outstanding and entitled to vote. Thus, at
least 4,126,999 shares must be represented by proxy or by stockholders
present and entitled to vote at the annual meeting to have a
quorum.
Your
shares will be counted towards the quorum only if you submit a valid proxy (or
one is submitted on your behalf by your broker or bank) or if you vote in person
at the annual meeting. We will count abstentions and broker non-votes
for purposes of determining a quorum. If there is no quorum, the
chairman of the annual meeting or holders of a majority of the votes present at
the annual meeting may adjourn the annual meeting to another time or
date.
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Who pays for the
cost of this proxy
solicitation?
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We will
pay for the entire cost of soliciting proxies. In addition to these
proxy materials, our directors and employees may also solicit proxies in person,
by telephone, or by other means of communication. Directors and
employees will not be paid any additional compensation for soliciting
proxies. We may also reimburse brokerage firms, banks and other
agents for the cost of forwarding proxy materials to beneficial
owners.
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How do I submit
a proposal for the Annual Meeting of Stockholders in
2010?
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To be
considered for inclusion in the Company’s proxy statement and form of proxy for
next year’s annual meeting, your stockholder proposal must be submitted in
writing by April 6, 2010 to the Corporate Secretary, ePlus inc., 13595 Dulles
Technology Drive, Herndon, Virginia 20171. Proposals must
be received by that date and satisfy the requirements under applicable SEC Rules
(including SEC Rule 14a-8) to be included in the proxy statement and on the
proxy card that will be used for solicitation of proxies by the Board for the
2010 Annual Meeting.
In
accordance with our Bylaws, if you wish to submit a proposal for consideration
at next year’s annual meeting that is not to be included in next year’s proxy
materials, or wish to nominate a candidate for election to the Board of
Directors at next year’s annual meeting, your proposal or nomination must be
submitted in writing and received by the Corporate Secretary not less than 60
days before the date of the first anniversary of this 2009 annual meeting if the
2010 annual meeting is held within 30 days of the anniversary of this 2009
annual meeting, otherwise, within seven days after the first public announcement
of the date of the 2010 annual meeting.
A
submission by an ePlus
stockholder must contain the specific information required in ePlus’ Bylaws. If
you would like a copy of ePlus’ current Bylaws, please
write to the Corporate Secretary, ePlus inc., 13595 Dulles
Technology Drive, Herndon, Virginia 20171. ePlus’ current Bylaws may
also be found on the Company’s website at www.eplus.com/bylaws.htm.
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Can I find
additional information on the Company’s
website?
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Yes. Although
the information contained on, or accessible through, our website is not part of
this proxy statement, you will find information about ePlus and our corporate
governance practices at www.eplus.com/about_us.htm. Our
website contains information about our Board, Board Committees and their
charters, a copy of our Bylaws, and Standard of Conduct and
Ethics. Stockholders may obtain, without charge, hard copies of the
above documents by writing to: Corporate Secretary, ePlus inc., 13595 Dulles Technology Drive,
Herndon, Virginia 20171.
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Where are the
Company’s principal executive offices located and what is the Company’s
main telephone number?
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The
Company’s principal executive offices are located at 13595 Dulles Technology
Drive, Herndon, Virginia 20171. The Company’s main telephone number is (703)
984-8400.
Our Board
plays an active role in overseeing management and representing the interests of
stockholders. Directors are expected to attend Board meetings and the meetings
of committees on which they serve. Directors are also frequently in
communication with management between formal meetings. During the fiscal year
ended March 31, 2009, the Board met a total of six times. All directors attended
at least 75% of the total Board and committee meetings to which they were
assigned in the fiscal year ended March 31, 2009. Six members of the Board
attended the last meeting of our stockholders.
Standard of Conduct and Ethics
We are
committed to ethical behavior in all that we do. Our Standard of Conduct and
Ethics applies to all of our directors, officers and employees. It sets forth
our policies and expectations on a number of topics, including our commitment to
promoting a fair workplace, avoiding conflicts of interest, compliance with laws
(including insider trading laws), appropriate relations with government
officials and employees, and compliance with accounting principles.
We also
maintain a toll-free hotline through which employees may raise concerns
regarding accounting or financial reporting matters. The hotline is available to
all employees, 7 days a week, 24 hours a day, in English and in Spanish.
Employees using the hotline may choose to remain anonymous. All hotline
inquiries are forwarded to a member of our Audit Committee.
Our
Standard of Conduct and Ethics is posted on our website at
www.eplus.com/ethics.htm. Printed copies of the Standard of Conduct and Ethics
may be obtained by stockholders, without charge, by contacting Corporate
Secretary, ePlus inc., 13595 Dulles
Technology Drive, Herndon, Virginia 20171. We intend to make any required
disclosures regarding any amendments of our Standard of Conduct and Ethics or
waivers granted to any of our directors or executive officers on our website at
www.eplus.com.
Identifying and Evaluating Nominees for Directors
Each
year, the Nominating and Corporate Governance Committee recommends to the Board
the slate of directors to serve as management’s nominees for election by the
stockholders at the annual meeting. The process for identifying and evaluating
candidates to be nominated to the Board starts with an evaluation of a candidate
by the Chairman of the Committee, followed by the Committee in its entirety.
Director candidates may also be identified by stockholders. In evaluating such
nominations, the Nominating and Corporate Governance Committee seeks to achieve
a balance of knowledge, experience, and capability on the Board of Directors.
Furthermore, any member of the Board of Directors shall have unquestioned
personal ethics and integrity; shall possess specific skills and experience
aligned with ePlus’ strategic direction
and operating challenges and that complement the overall composition of the
Board; core business competencies of high achievement and a record of success,
financial literacy and history of making good business decisions and exposure to
best practices; interpersonal skills that maximize group dynamics; should be
enthusiastic about ePlus and have
sufficient time to become fully engaged.
Stockholder Nominees
Stockholder
proposals for nominations to the Board should be submitted to the Secretary of
the Company as specified in the Company’s Bylaws. The information
requirements for any stockholder proposal or nomination can be found in Section
2.8 of our Bylaws, available at www.eplus.com/bylaws.htm. Proposed
stockholder nominees are communicated to the Nominating and Corporate Governance
Committee and are considered in the selection process for nominees to be
included among the director candidates to be recommended to the
Board.
Communications with the Board of Directors
Persons
interested in communicating with the directors regarding concerns or issues may
address correspondence to a particular director, to the Board or to the
independent directors generally, in care of ePlus inc. at 13595 Dulles
Technology Drive, Herndon, Virginia 20171. If no particular director
is named, letters will be forwarded, as appropriate and depending on the subject
matter, by the General Counsel to the Chair of the Audit Committee, the Chair of
the Compensation Committee, or the Chair of the Nominating and Corporate
Governance Committee. The General Counsel reviews such communications
for spam (such as junk mail or solicitations) or misdirected
communications.
Director Independence
Our Board
has reviewed the relationships concerning independence of each director on the
basis of the definition of “independent” contained in the Nasdaq Marketplace
Rules and our Corporate Governance Guidelines and Policies, a copy of which is
available on our website at www.eplus.com/corporate-governance-guidelines.htm. Guideline
No. 11 of our Corporate Governance Guidelines and Policies provides that the
Board of Directors has determined that the following relationships will not be
considered material relationships that would impair a director's
independence:
Business
Relationships
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The
Company does business with a director’s business affiliate or the business
affiliate of an immediate family member of a director for goods or
services, or other contractual arrangements, in the ordinary course of
business and on substantially the same terms as those prevailing at the
time for comparable transactions with non-affiliated persons and the
annual revenues or purchases from such business affiliate are less than
the greater of $500,000 and 1% of such person’s consolidated gross
revenues;
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A
company (of which a director or an immediate family member is an officer)
does business with the Company and the annual sales to, or purchases from,
the Company during such other company’s preceding fiscal year are less
than the greater of $500,000 and 1% of the gross annual revenues of such
other company;
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A
law firm of which a director or an immediate family member is a partner or
of counsel performs legal services for the Company, the director or the
immediate family member does not personally perform any legal services for
the Company, and the annual payments to such law firm are less than the
greater of $500,000 and 1% of such law firm’s consolidated gross
revenues;
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An
investment bank or consulting firm of which a director or an immediate
family member is a partner or of counsel performs investment banking or
consulting services for the Company, the director or the immediate family
member does not personally perform any investment banking or consulting
services for the Company and the annual payments to such investment bank
or consulting firm are less than the greater of $500,000 and 1% of such
investment bank’s or consulting firm’s consolidated gross revenues;
and
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The
director serves on a regularly constituted advisory board of the Company,
for which such director receives standard fees of no more than $50,000 per
annum.
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Relationships
with Not-for-Profit Entities
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A
foundation, university or other not-for-profit organization of which a
director or immediate family member is an officer, director or trustee
receives from the Company contributions in an amount which does not exceed
the greater of $100,000 and 1% of the not-for-profit organization’s
aggregate annual charitable receipts during the entity’s preceding fiscal
year. (The Company’s automatic matching of employee charitable
contributions, if any, are not included in the Company’s contributions for
this purpose.)
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In
accordance with that review, our Board has made a subjective determination as to
each independent director that no relationships exist that, in our Board’s
opinion, would interfere with his exercise of independent judgment in carrying
out the responsibilities of a director. In making these determinations, the
Board reviewed and discussed information provided by the directors and by
management with regard to each director’s business and personal activities as
they may relate to our business and our management.
The Board
has determined that Messrs. O’Donnell, Cooper, Beimler, Herman, Faulders and
Hovde are independent under the Nasdaq Marketplace Rules and in accordance with
the Corporate Governance Guidelines and Policies. The Board has also determined
that the members of each committee of the Board are independent under the
listing standards of the Nasdaq Marketplace Rules. In determining the
independence of the directors, the Board considered the relationships described
under “Related Party Transactions,” which it determined were immaterial to the
individual’s independence.
In
accordance with our Corporate Governance Guidelines and Policies, the
independent directors have chosen a lead director to preside at regularly
scheduled executive sessions of our Board held without management
present. Mr. Irving R. Beimler currently serves as lead
director.
COMMITTEES OF THE BOARD OF DIRECTORS
Committees
In
accordance with our bylaws, the Board of Directors has three standing
committees: Audit, Compensation, and Nominating and Corporate
Governance. On June 17, 2009, the Board of Directors approved and
adopted amended charters for each of our three committees. The charter for each
of our committees can be found at www.eplus.com/committeecharters.htm.
The
following table provides a summary of the membership of each of the committees
of the Board of Directors as of March 31, 2009.
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Name
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Audit
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Compensation
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Nominating and
Corporate Governance
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Mr.
Beimler
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Member
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Member
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Mr.
Cooper
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Chair
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Member
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Mr.
Faulders
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Member
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Member
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Mr.
Herman
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Member
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Member
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Chair
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Mr.
Hovde
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Member
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Member
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Mr.
O’Donnell
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Chair
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Member
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The Audit Committee
The Audit
Committee of the Board of Directors assists the Board in its oversight of the
Company’s corporate accounting and financial reporting process; the Company’s
compliance with legal and regulatory requirements; the independent auditor’s
qualifications and independence; and the performance of the Company’s internal
audit function and independent auditor. The Audit Committee is governed by a
Board-approved charter stating its responsibilities. The Committee’s
responsibilities include:
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appointment,
compensation, retention and oversight of the work of any registered public
accounting firm engaged for the purpose of preparing or issuing an audit
report and performing other audit, review or attest services for the
Company.
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to
discuss the annual audited financial statements with management and the
registered public accounting firm, including the Company’s disclosures
under “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” and recommend to the Board of Directors whether
the audited financial statements should be included in the Company’s
Annual Report on Form 10-K.
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to
discuss the Company’s unaudited financial statements and related footnotes
and the “Management Discussion and Analysis” portion of the Company’s Form
10-Q for each interim quarter with management and the registered public
accounting firm, as appropriate.
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to
provide oversight of the Company’s internal audit
function.
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to
discuss the earnings press releases, as well as financial information and
earnings guidance provided to analysts and ratings agencies with
management and the registered public accounting firm, as
appropriate.
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For
additional information regarding the Audit Committee’s duties and
responsibilities, please refer to the Audit Committee’s charter, which is
available on the Company’s web site.
Each of
the members of the Audit Committee is independent within the meaning of the
listing standards of Nasdaq Marketplace Rules and applicable SEC regulations.
The Board has determined that Mr. Faulders is an audit committee financial
expert within the meaning of SEC regulations. The Audit Committee met five times
during the fiscal year ended March 31, 2009.
As
required under the Sarbanes-Oxley Act of 2002, the Audit Committee has in place
procedures to receive, retain and treat complaints received regarding
accounting, internal accounting controls or auditing matters, including
procedures for the confidential and anonymous submission by employees of
concerns regarding questionable accounting or auditing matters.
The Compensation Committee
The
Compensation Committee of the Board of Directors oversees and advises the Board
on the adoption of policies that govern the Company’s compensation and benefit
programs. Each of the members of the Compensation Committee is an independent
director within the meaning of the Nasdaq Marketplace Rules, a “non-employee
director” within the meaning of Rule 16b-3 of the Securities Exchange Act of
1934, as amended, or the Exchange Act, and an “outside director” for purposes of
Section 162(m) of the Internal Revenue Code of 1986, as amended. During the
fiscal year ended March 31, 2009, the Compensation Committee met eight
times.
The
Compensation Committee reviews the effectiveness of the Company’s executive
compensation programs, including reviewing and approving goals and objectives
for the Company’s executives. The Compensation Committee is responsible for
evaluating and setting the compensation for our Chief Executive Officer, Phillip
G. Norton. Mr. Norton is responsible for evaluating and recommending to the
Compensation Committee the amount of compensation of our other executive
officers. The Compensation Committee reviews such recommendations from Mr.
Norton and has the authority to approve or revise such recommendations. The
functions of the Committee are further described in its charter, which can be
found on our website.
The Nominating and Corporate Governance Committee
The
Nominating and Corporate Governance Committee is responsible for developing and
implementing policies and practices relating to corporate governance. The
Nominating and Corporate Governance Committee is governed by a Board-approved
charter stating its responsibilities, as well as Corporate Governance Guidelines
and Policies that were adopted by the Board of Directors. The Committee assists
the Board by selecting and recommending Board nominees and making
recommendations concerning the composition of Board committees. The Committee
also reviews and recommends to the Board the compensation of non-employee
directors. The Nominating and Corporate Governance Committee met five times
during the fiscal year ended March 31, 2009. Each of the members of the
Committee is an independent director within the meaning of the Nasdaq
Marketplace Rules. The functions of the Committee are further described in its
charter, which can be found on our website.
DIRECTORS’ COMPENSATION
The
following table sets forth the compensation for the members of the Board of
Directors of ePlus for
the fiscal year ended March 31, 2009. Mr. Norton, the Company’s Chairman of the
Board, President and Chief Executive Officer, and Mr. Bowen, the Company’s
Executive Vice President, do not receive any additional compensation for their
service as a director. Mr. Norton’s and Mr. Bowen’s compensation is reported in
“Executive Compensation” and accordingly is not included in the following
table.
The
general policy of the Board is that compensation for non-employee directors
should be a mix of cash and equity-based compensation. Each non-employee
director receives an annual cash retainer of $35,000, which is paid in quarterly
installments. Alternatively, directors may elect to receive their
cash compensation in restricted stock. In addition, each non-employee director
will receive on September 25th of
each year an annual grant of restricted stock having a fair market value on the
date of grant (determined without regard to the restrictions applicable thereto)
equal to the aggregate dollar amount of cash compensation earned by a
non-employee director during the Company’s fiscal year ended immediately prior
to the annual grant date. In accordance with the 2008 Non-Employee
Director Long-Term Incentive Plan, on September 25, 2008, each director received
an additional one-time grant of 3,211 shares of restricted stock. All
awards of restricted stock will vest ratably over two years. Upon
joining the Board, a new non-employee director will receive a pro-rata share of
restricted stock awarded to the other non-employee directors, based on the
number of days the new non-employee director will serve before the next
regularly scheduled annual grant date (i.e., September 25th).
These awards will also vest ratably over two years.
All
directors are also reimbursed for their out-of-pocket expenses incurred to
attend Board or Committee meetings.
|
Fees
Earned or Paid in
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive Plan Compensation
|
Nonqualified
Deferred Compensation
|
All
Other Compensation
|
|||||||||
|
Name
|
Cash
($)(1)
|
($)(2)(3)
|
($)(3)
|
($)
|
Earnings
|
($)
|
Total
($)
|
|||||||
|
C.
Thomas Faulders, III
|
35,000
|
18,083
|
-
|
-
|
-
|
-
|
53,083
|
|||||||
|
Terrence
O'Donnell
|
35,000
|
18,083
|
-
|
-
|
-
|
-
|
53,083
|
|||||||
|
Milton
E. Cooper, Jr.
|
35,000
|
18,083
|
-
|
-
|
-
|
-
|
53,083
|
|||||||
|
Lawrence
S. Herman
|
35,000
|
18,083
|
-
|
-
|
-
|
-
|
53,083
|
|||||||
|
Eric
D. Hovde
|
35,000
|
18,083
|
-
|
-
|
-
|
-
|
53,083
|
|||||||
|
Irving
R. Beimler
|
35,000
|
18,083
|
-
|
-
|
-
|
-
|
53,083
|
|
(1)
|
Three
of our directors, Messrs. Cooper, Hovde and O’Donnell, made a stock fee
election for calendar year 2009 to receive shares of restricted stock in
lieu of cash pursuant to the 2008 Non-Employee Long-Term Incentive
Plan. Thus, for the first three quarters of fiscal year ended
March 31, 2009, they each received cash compensation of $8,750 per
quarter. For the last quarter of the fiscal year ended March
31, 2009, they each received 748 shares of restricted stock in lieu of
cash compensation of $8,750.
|
|
(2)
|
These
amounts reflect the dollar amount recognized in accordance with SFAS
No. 123R for financial statement reporting purposes for the year
ended March 31, 2009. These amounts include awards pursuant to the
2008 Non-Employee Director Long-Term Incentive Plan. Assumptions used in
the calculations of these amounts are included in the footnotes to the
Company’s audited consolidated financial statements for the fiscal year
ended March 31, 2009, which are included in Item 8 of the
Company’s annual report on Form 10-K filed with the SEC. An estimate of
forfeitures is not included in these amounts nor were any actual
forfeitures included in these amounts. On September 25, 2008, each
non-employee director was granted 3,211 shares of restricted stock in
connection with their annual award. The grant date fair value of each of
these awards was $35,000 (calculated by multiplying the number of shares
by $10.90 per share, the closing price reported by The Nasdaq Global
Market). In addition, on September 25, 2008, each non-employee
director was granted 3,211 shares of restricted stock in connection with a
one-time award. The grant date fair value of each of these awards was
$35,000 (calculated by multiplying the number of shares by $10.90 per
share, the closing price reported by The Nasdaq Global
Market).
|
|
(3)
|
As
of March 31, 2009, the aggregate number of restricted stock awards
and option awards outstanding for each director was as
follows:
|
|
Name
|
Restricted
Stock
|
Options
|
||
|
C.
Thomas Faulders, III
|
6,422
|
70,000
|
||
|
Terrence
O’Donnell
|
6,422
|
70,000
|
||
|
Milton
E. Cooper, Jr.
|
6,422
|
30,000
|
||
|
Lawrence
S. Herman
|
6,422
|
47,500
|
||
|
Eric
D. Hovde
|
6,422
|
-
|
||
|
Irving
R. Beimler
|
6,422
|
-
|
SECURITY OWNERSHIP BY MANAGEMENT
The
following table shows the shares of ePlus common stock
beneficially owned by each named executive officer, director and nominee, and
all directors and executive officers as a group as of June 30,
2009.
|
Name
of Beneficial Owner (1)
|
Number
of Shares Beneficially Owned (2)
|
Percentage
of Shares Outstanding
|
||||||
|
Phillip
G. Norton (3)
|
2,216,000 | 26.33 | % | |||||
|
Bruce
M. Bowen (4)
|
581,400 | 7.05 | ||||||
|
Steven
J. Mencarini (5)
|
15,000 | * | ||||||
|
C.
Thomas Faulders (6)
|
76,422 | * | ||||||
|
Terrence
O’Donnell (7)
|
77,170 | * | ||||||
|
Milton
E. Cooper (8)
|
37,170 | * | ||||||
|
Lawrence
S. Herman (9)
|
53,922 | * | ||||||
|
Eric
D. Hovde (10)
|
1,283,071 | 15.57 | ||||||
|
Irving
R. Beimler (11)
|
6,422 | * | ||||||
|
All
directors and executive officers as a group (11
persons)
|
4,397,269 | 50.62 | ||||||
|
*
|
Less
than 1%
|
|
(1)
|
The
business address of Messrs. Norton, Bowen, Mencarini, Faulders, O’Donnell,
Cooper, Herman, Hovde and Beimler is 13595 Dulles Technology Drive,
Herndon, Virginia, 20171-3413.
|
|
(2)
|
A
person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days of June 30, 2009 upon exercise of
options or warrants. Each beneficial owner’s percentage
ownership is determined by assuming that options or warrants that are held
by such person (but not by any other person) and that are exercisable
within 60 days of June 30, 2009 have been
exercised.
|
|
(3)
|
Includes
2,040,000 shares held by J.A.P. Investment Group, L.P., a Virginia limited
partnership, of which J.A.P., Inc., a Virginia corporation, is the sole
general partner. The limited partners are: Patricia A. Norton,
the spouse of Mr. Norton, trustee for the benefit of Phillip G. Norton,
Jr. u/a dated as of July 20, 1983; Patricia A. Norton, trustee for the
benefit of Jeremiah O. Norton, u/a dated as of July 20, 1983; and Patricia
A. Norton. Patricia A. Norton is the sole stockholder of
J.A.P., Inc. Also includes 175,000 shares of common stock that
Mr. Norton has the right to acquire by exercise of stock
options. Mr. Norton holds 1,000 shares of ePlus
individually.
|
|
(4)
|
Includes
421,400 shares held by Mr. Bowen and his spouse, as tenants by the
entirety, and 160,000 shares held by Bowen Holdings LLC, a Virginia
limited liability company, which is owned by Mr. Bowen and his three
children, for which shares Mr. Bowen serves as
manager.
|
|
(5)
|
Includes
15,000 shares of common stock that Mr. Mencarini has the right to acquire
by exercise of stock options.
|
|
(6)
|
Includes
70,000 shares of common stock that Mr. Faulders has the right to acquire
by exercise of stock options. Also includes 6,422 shares of
restricted stock that have not vested as of June 30, 2009, however, Mr.
Faulders has the right to vote such shares of restricted stock prior to
vesting.
|
|
(7)
|
Includes
70,000 shares of common stock that Mr. O’Donnell has the right to acquire
by exercise of stock options. Also includes 7,170 shares of
restricted stock that have not vested as of June 30, 2009, however, Mr.
O’Donnell has the right to vote such shares of restricted stock prior to
vesting.
|
|
(8)
|
Includes
30,000 shares of common stock that Mr. Cooper has the right to acquire by
exercise of stock options. Also includes 7,170 shares of
restricted stock that have not vested as of June 30, 2009, however, Mr.
Cooper has the right to vote such shares of restricted stock prior to
vesting.
|
|
(9)
|
Includes
47,500 shares of common stock that Mr. Herman has the right to acquire by
exercise of stock options. Also includes 6,422 shares of
restricted stock that have not vested as of June 30, 2009, however, Mr.
Herman has the right to vote such shares of restricted stock prior to
vesting.
|
|
(10)
|
Of
the 1,283,071 shares beneficially owned by Eric D. Hovde, 35,729 shares
are owned directly, which includes 7,170 shares of restricted stock that
have not vested as of June 30, 2009, however, Mr. Hovde has the right to
vote such shares of restricted stock prior to vesting. Eric D.
Hovde is the managing member (“MM”) of Hovde Capital, L.L.C., the general
partner to Financial Institution Partners II, L.P., which owns 328,719
shares; Eric D. Hovde is the MM of Hovde Capital Limited IV LLC, the
general partner to Financial Institution Partners IV, L.P., which owns
27,231 shares; Eric D. Hovde is the MM of Hovde Capital, Ltd., the general
partner to Financial Institution Partners III, L.P., which owns 126,811
shares; Eric D. Hovde is the MM of Hovde Capital I, LLC, the general
partner to Financial Institution Partners, L.P., which owns 293,991
shares; Eric D. Hovde is the MM to Hovde Capital Offshore LLC, the
management company to Financial Institution Partners, Ltd., which owns
374,395 shares; Eric D. Hovde is the MM of Hovde Capital Advisors LLC, the
investment manager to certain discretionary or non-discretionary managed
accounts which own 25,930 shares; Eric D. Hovde is the MM of Hovde
Acquisition II, L.L.C, which owns 30,000 shares; Eric D. Hovde is the
trustee to The Eric D. and Steven D. Hovde Foundation, which owns 21,265
shares; and Eric D. Hovde is the trustee to The Hovde Financial, Inc.
Profit Sharing Plan and Trust, which owns 19,000
shares.
|
|
(11)
|
Includes
6,422 shares of restricted stock that have not vested as of June 30, 2009,
however, Mr. Beimler has the right to vote such shares of restricted stock
prior to vesting.
|
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE, RELATED
PERSON TRANSACTIONS AND INDEMNIFICATION
Section 16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires the Company’s directors and executive
officers, and persons who own more than ten percent of a registered class of the
Company’s equity securities, to file with the SEC initial reports of ownership
and reports of changes in ownership of common stock and other equity securities
of the Company. Officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based
solely on a review of the copies of such reports furnished to the Company and
written representations that no other reports were required, the Company
believes that all Section 16(a) filing requirements applicable to its’ executive
officers, directors and greater than ten percent beneficial owners were complied
with during the fiscal year ended March 31, 2009.
Related Party Transactions
During
the fiscal year ended March 31, 2009, we leased approximately 55,880 square feet
for use as our principal headquarters from Norton Building 1, LLC for an average
monthly payment of approximately $88,000 which includes rent and operating
expenses. Norton Building 1, LLC is a limited liability company owned
in part by Mr. Norton’s spouse and in part in trust for his children.
As of May 31, 2007, Mr. Norton, our President and CEO, has no managerial or
executive role in Norton Building 1, LLC. On June 18, 2009, we entered
into Amendment No. 2 to the office lease agreement with Norton Building 1,
LLC pursuant to which we will continue to lease 55,880 square feet for use
as our principal headquarters. The term of the amended lease will begin
January 1, 2010, and will continue for five years from such date. In
addition, we have the right to terminate the lease on December 31, 2012 in the
event that the facility no longer meets our needs, by giving six months’ prior
written notice, with no penalty fee. The annual base rent, which
includes an expenses factor, is $21.50 per square foot for the first year, with
an annual rent escalation for operating cost increases plus 2.75% of the annual
base rent, net of the expenses factor, for each year thereafter. The
amended lease was approved by the Nominating and Corporate Governance Committee
in accordance with our Related Person Transaction Policy, and was subsequently
approved by a majority of the Board of Directors, with Mr. Norton abstaining.
During the years ended March 31, 2009 and 2008, we paid rent, which
includes operating expenses, in the amount of $1,126,000 and $1,052,000,
respectively.
Two of
Mr. Norton’s sons are employed at subsidiaries of the Company. The first, a
Director of Finance at ePlus Government, inc.,
earned $200,000 in each of the fiscal years ended March 31, 2008 and 2009. His
compensation is comprised of a base salary and a bonus. The second, a Senior
Account Executive at ePlus Government, inc.,
earned $331,000 and $281,000 in the fiscal years ended March 31, 2008 and 2009,
respectively, in base salary and commissions. Mr. Norton’s two brothers are
Senior Account Executives at ePlus Group,
inc. The first earned less than $120,000 for the fiscal year ended
March 31, 2008 and his compensation in the fiscal year ended March 31, 2009 was
$139,000. The second earned $193,000 in the fiscal year ended March
31, 2008 in base salary and commissions, and $281,000 in the fiscal year ended
March 31, 2009, primarily in commissions. The Senior Account
Executives’ compensation, like that of their peers’, is based primarily on the
calculation of commissions for sales completed, in accordance with our
commission plan.
Mr.
Terrence O’Donnell, Chairman of the Audit Committee and member of
the Nominating and Corporate Governance Committee, has a son-in-law
serving as Senior Account Executive at ePlus Group, inc. who earned
$845,000 and $819,000 in base salary and commissions in the fiscal years ended
March 31, 2008 and 2009, respectively. His compensation, like that of
his peers’, is based primarily on the calculation of commissions for sales
completed, in accordance with our commission plan.
The
Company has a written Related Party Transaction Policy, which establishes
processes, procedures and standards regarding the review, approval and
ratification of transactions between the Company and its directors, director
nominees, executive officers, greater than five percent beneficial owners and
their respective immediate family members, where the amount involved in the
transaction exceeds the lesser of $120,000 or one percent of the average of the
Company’s total assets at year end for the last two completed fiscal
years. All related person transactions are prohibited unless approved
or ratified by the Nominating and Corporate Governance Committee, or, in certain
circumstances, the Chair of the Nominating and Corporate Governance
Committee.
Indemnification
We have
entered into indemnification agreements with each of our directors and executive
officers, and we expect to enter into similar indemnification agreements with
persons who become directors or executive officers in the future. The
indemnification agreements provide that ePlus will indemnify the
director or officer against any expenses or liabilities incurred in connection
with any proceeding in which the director or officer may be involved as a party
or otherwise, by reason of the fact that the director or officer
is or was a director or officer of ePlus or by any reason of any
action taken by or omitted to be taken by the director or officer while acting
as an officer or director of ePlus.
However,
ePlus is only obligated to provide
indemnification under the indemnification agreements if:
|
|
●
|
the
director or officer was acting in good faith in a manner the director or
officer reasonably believed to be in the best interests of ePlus, and, with
respect to any criminal action, the director or officer had no reasonable
cause to believe the director’s or officer’s conduct was
unlawful;
|
|
|
●
|
the
claim was not made to recover profits by the director or officer in
violation of Section 16(b) of the Exchange Act or any successor
statute;
|
|
|
●
|
the
claim was not initiated by the director or
officer;
|
|
|
●
|
the
claim was not covered by applicable insurance;
or
|
|
|
●
|
the
claim was not for an act or omission of a director of ePlus from which a
director may not be relieved of liability under Section 102(b)(7) of the
Delaware General Corporation Law. Each director and officer has
undertaken to repay ePlus for any costs or
expenses paid by ePlus if it is
ultimately determined that the director or officer is not entitled to
indemnification under the indemnification
agreements.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The
following table shows information regarding each person known to be a
“beneficial owner” of more than 5% of our outstanding shares of common stock as
of June 30, 2009. For purposes of this table, beneficial ownership of
securities generally means the power to vote or dispose of securities,
regardless of any economic interest in the securities. All
information shown is based on information reported on Schedule 13G/A filed with
the SEC on the dates indicated in the footnotes to this table.
|
Name
of Beneficial Owner
|
Number
of Shares Beneficially Owned
|
Percentage
of Shares Outstanding
|
||||||
|
Patrick
J. Retzer (1)
1140
Auburn Drive
Brookfield,
WI 53045
|
597,817
|
7.3%
|
||||||
|
Dimensional
Fund Advisors LP (2)
Palisades
West, Building One
6300
Bee Cave Road
Austin,
TX 78746
|
547,596
|
6.7
|
||||||
|
(1)
|
The
information regarding Patrick J. Retzer is derived from a Schedule 13G/A
filed with the SEC on February 12,
2009.
|
|
(2)
|
The
information as to Dimensional Fund Advisors LP (“Dimensional”) is derived
from a Schedule 13G/A filed with the SEC on February 9,
2009. Dimensional, an investment adviser registered under
Section 203 of the Investment Advisers Act of 1940, furnishes investment
advice to four investment companies registered under the Investment
Company Act of 1940, and serves as investment manager to certain other
commingled group trusts and separate accounts. These investment
companies, trusts, and accounts are referred to as the “Funds.” In its
role as investment adviser or manager, Dimensional possesses investment
and/or voting power over our securities that are owned by the Funds, and
may be deemed to be the beneficial owner of our securities held by the
Funds. However, Dimensional disclaims beneficial ownership of
all securities reported in its Schedule
13G/A.
|
EXECUTIVE OFFICERS
The
following table sets forth the name, age and position, as of June 30, 2009, of
each person who was an executive officer of ePlus on June 30,
2009. There are no family relationships between any director or
executive officer and any other director or executive officer of ePlus. Information
pertaining to Messrs. Norton and Bowen, who are both directors and executive
officers of the Company, may be found in the section entitled “Proposal 1 –
Election of Directors.”
|
Name
|
Age
|
Position
|
|
Elaine
D. Marion
|
41
|
Chief
Financial Officer
|
|
Steven
J. Mencarini
|
53
|
Senior
Vice President of Business Operations
|
|
Kleyton
L. Parkhurst
|
46
|
Senior
Vice President and Assistant
Secretary
|
The
business experience during the past five years of each executive officer of
ePlus is described
below.
Elaine D. Marion joined us in
1998. Ms. Marion became our Chief Financial Officer on September 1,
2008. Since 2004, Ms. Marion served as our Vice President of
Accounting. Prior to that, she was the Controller of ePlus Technology, inc., a
subsidiary of ePlus,
from 1998 to 2004. Ms. Marion is a 1995 graduate of George Mason University,
where she earned a Bachelor’s of Science degree with a concentration in
Accounting.
Steven J. Mencarini joined us
in June 1997. On September 1, 2008 he became our Senior Vice
President of Business Operations. Prior to that, he served as our
Chief Financial Officer. Prior to joining us, Mr. Mencarini was
Controller of the Technology Management Group of Computer Sciences Corporation
(“CSC”). Mr. Mencarini joined CSC in 1991 as Director of Finance and
was promoted to Controller in 1996. Mr. Mencarini is a 1976 graduate of the
University of Maryland and received a Masters of Taxation from American
University in 1985.
Kleyton L. Parkhurst joined
us in May 1991 as Director of Finance. Mr. Parkhurst has also served as
Secretary or Assistant Secretary and Treasurer. Mr. Parkhurst is currently also
a Senior Vice President, and is responsible for all of our mergers and
acquisitions, investor relations, and marketing. Mr. Parkhurst is a 1985
graduate of Middlebury College.
Each of
our executive officers is chosen by the Board and holds his or her office until
his or her successor shall have been duly chosen and qualified or until his or
her death or until he or she shall resign or be removed as provided by the
Bylaws.
EXECUTIVE COMPENSATION
The
following table includes compensation information concerning compensation paid
to or earned by the Chief Executive Officer and the two other most highly
compensated executive officers of our Company as of March 31, 2009 (the "named
executive officers").
2009 Summary Compensation Table
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards ($)
|
Option
Awards ($)(1)
|
Non-Equity
Incentive Plan Compensation ($)
|
Non-Qualified
Deferred Compensation Earnings
($)
|
All
Other Compensation ($)
|
Total
($)
|
|
Phillip
G. Norton –
|
2009
|
400,000
|
-
|
-
|
-
|
168,660
|
-
|
1,500(2)
|
570,160
|
|
Chairman
of the Board, President, and Chief Executive Officer
|
2008
|
395,561
|
-
|
-
|
999,941
|
200,000
|
-
|
1,500
|
1,597,002
|
|
Bruce
M. Bowen –
|
2009
|
310,692
|
-
|
-
|
-
|
150,000
|
-
|
203,126(3)
|
663,818
|
|
Executive
Vice President
|
2008
|
300,000
|
-
|
-
|
164,370
|
150,000
|
-
|
190,952
|
805,322
|
|
Steven
J. Mencarini –
|
2009
|
286,458
|
-
|
-
|
-
|
131,082
|
-
|
79,160(4)
|
496,700
|
|
Senior
Vice President of Business Operations
|
2008
|
286,827
|
-
|
-
|
164,370
|
150,000
|
-
|
74,292
|
675,489
|
|
(1)
|
The
amounts in this column reflect the dollar amount recognized in accordance
with SFAS 123R for financial statement reporting purposes for the years
ended March 31, 2008 and 2009 (we estimated the forfeitures to be zero).
There were no stock awards made to the named executive officers in fiscal
year 2008 or 2009. The amounts shown in this column for fiscal
year 2008 relate to options which were canceled on May 11,
2007. The assumptions used to calculate the accounting expense
recognized in fiscal 2008 for these stock option awards
are:
|
|
Expected
life of option
|
5
years
|
|
Expected
stock price volatility
|
71.77%
|
|
Expected
dividend yield
|
0%
|
|
Risk-free
interest rate
|
3.46%
|
|
(2)
|
Includes
$1,500 of our employer 401(k) matching
contributions.
|
|
(3)
|
Includes
$5,600 of country club dues, $1,500 of our employer 401(k) matching
contributions, and $196,026, which represents for fiscal year 2009 the
increase of the cash benefit under the Supplemental Benefit
Plan.
|
|
(4)
|
Includes
$1,500 of our employer 401(k) matching contributions, and $77,660 which
represents for fiscal year 2009 the increase in the cash benefit under the
Supplemental Benefit Plan.
|
Description of Executive Compensation
Supplemental
Benefit Plans
On
February 28, 2005, our Board approved the adoption of separate ePlus inc. Supplemental
Benefit Plans for each of Messrs. Bowen and Mencarini. The plans were developed
and designed to provide each of the participating named executive officers with
a long-term incentive plan outside of the Company’s normal incentive
plans.
The plans
are unfunded and nonqualified and are designed to provide the participants with
a cash benefit that is payable only upon the earlier to occur of:
|
|
●
|
death
|
|
|
●
|
termination
of employment; or
|
|
|
●
|
the
expiration of the plans.
|
Each plan
terminates on August 11, 2014. Under the terms of the plans, the participants or
their beneficiaries have only the right to receive a single lump-sum cash
distribution upon the occurrence of one of the triggering events described
above. Under the terms of the plans, the participants do not have a right to
accelerate payments of the benefits payable under the plans. If a participant is
terminated for cause (as defined in each plan) prior to the expiration of the
respective plan, we will have no further obligation under the respective plan
and the affected participant will not be entitled to any payments under such
plan. In connection with the adoption of the plans, we have established a
grantor trust to which we have transferred assets intended to be used for the
benefit of the participants. Through the date of distribution of plan benefits,
the assets of such trusts will remain subject to the claims of our creditors and
the beneficiaries of the trusts shall have standing with respect to the trusts’
assets not greater than that of our general unsecured creditors. For the year
ended March 31, 2009, there were no payments to the participants under the plan.
The Compensation Committee takes the amounts accruing under these plans into
consideration when setting other long-term compensation awards.
Incentive
Plan Awards Paid to Named Executive Officers
On July
31, 2008, the Board of Directors of the Company adopted the ePlus inc. Fiscal Year 2009
Executive Incentive Plan ("the Cash Incentive Plan"), effective August 6,
2008. Certain performance-based cash incentive compensation was
earned by eligible executive employees under the Cash Incentive
Plan.
The Cash
Incentive Plan is administered by the Compensation Committee of the Board, which
has full authority to determine the participants in the Cash Incentive Plan, the
terms and amounts of each participant’s minimum, target and maximum awards, and
the period during which the performance is to be measured.
At the
conclusion of the fiscal year ended March 31, 2009, the Compensation Committee
determined the various corporate, unit and individual performance objectives
described under the Cash Incentive Plan which were achieved. A cash
payment to each respective executive was based on the level of attainment of the
applicable performance objectives.
The award
amount paid is a percentage of base salary based on the level of attainment of
the applicable performance goals as set forth in each participant’s award
agreement. The 2009 performance criteria and their relative weights
for each participant were as follows: Company financial performance, 66.6%; and
individual performance, 33.3%. The Company’s financial performance was based on
the Company’s net earnings before taxes for the 2009 fiscal year as stated in
the Company’s Form 10-K for such year. Such earnings were adjusted to exclude
the incentive compensation accrued by the Company under the Cash Incentive
Plan. The Cash Incentive Plan also permits the exclusion of all items
of income, gain or loss determined by the Board to be extraordinary or unusual
in nature and not incurred or realized in the ordinary course of business, and
any income, gain or loss attributable to the business operations of any entity
acquired by the Company during the 2009 fiscal year. For the 2009
fiscal year, the Compensation Committee excluded the goodwill impairment charge
in its determination of the Company’s financial performance. After
taking into account this adjustment, the Company’s financial performance set
forth in each executive’s plan was exceeded. The cash incentive
compensation was capped at 50% of each executive’s salary, therefore, although
the Company’s financial performance was exceeded, no executive received more
than the maximum cash incentive payment of 50% of his salary. There
were no waivers or modifications to any specified performance targets, goals or
conditions with respect to the Cash Incentive Plan.
Employment
Agreements
Phillip
G. Norton’s employment agreement was not renewed at the end of the most recent
renewal period, November 20, 2008, as a result of the board of directors’ notice
of non-renewal. The notice of non-renewal did not otherwise modify the
terms of Mr. Norton’s employment. Currently, Mr. Norton receives an annual
salary in the amount of $400,000, and is a participant in our Cash Incentive
Plan for the fiscal years ending March 31, 2009 and March 31,
2010. Mr. Norton is also entitled to certain other benefits on the
same terms as our employees, including medical insurance, death and long-term
disability benefits, the reimbursement of employment-related expenses and our
401(k) program. He may also be entitled to additional benefits upon
the termination of his employment.
We
entered into employment agreements with Bruce M. Bowen, effective December 10,
2008 and Steven Mencarini, effective September 1, 2008. Each provide
for an initial term of one year. At the end of the year, if the
parties have not extended the agreement or entered into a new agreement, then
the executive shall continue as an at-will employee. Under the
agreement, Mr. Bowen and Mr. Mencarini are each eligible for an annual bonus of
up to 50% of his base salary then in effect under the terms and conditions of
the Cash Incentive Plan and certain other benefits such as reimbursement of
business expenses.
If Mr.
Bowen or Mr. Mencarini’s employment is terminated due to death or Incapacity (as
defined in the Employment Agreement), the Company will pay any bonus determined
by the Compensation Committee in accordance with the Cash Incentive Plan, and,
in the case of Incapacity, an additional amount equal to the greater of (a) an
amount equal to one year of his base salary or (b) the balance of his salary
through the end of the Employment Term.
Under the
terms of the Employment Agreements, the Company may terminate Mr. Bowen or Mr.
Mencarini’s employment at any time with or without Good Cause (as defined in the
Employment Agreement). If the Company terminates the executive’s employment
without Good Cause or the executive terminates his employment for Good Reason
(as defined in the Employment Agreement), then he shall be entitled to (a)
payment in an amount equal to one year of his base salary, and (b) continued
medical and dental insurance for himself and his dependents through COBRA for a
period not longer than one year after termination. If the Company and the
executive have not entered into a new employment agreement or extended the
Employment Term, and within ten (10) days following the end of the Employment
Term, either the Company or the executive gives notice of an at-will
termination, then he shall be entitled to (a) an amount equal to one year of his
base salary and (b) continued medical and dental insurance for himself and his
dependents through COBRA for a period not longer than one year after
termination.
Outstanding Equity Awards At Fiscal Year-End 2009
The
following table sets forth outstanding option awards held by our named executive
officers as of March 31, 2009.
|
Option
Awards
|
||||||||||
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options (#)
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
|||||
|
Phillip
G. Norton
|
175,000
|
-
|
-
|
7.75
|
8/11/2009
|
|||||
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Bruce
M. Bowen
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29,641
|
-
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-
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7.75
|
8/11/2009
|
|||||
|
Steven
J. Mencarini
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5,000
|
-
|
-
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7.75
|
12/27/2010
|
|||||
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10,000
|
-
|
-
|
17.38
|
9/13/2010
|
||||||
Equity Compensation Plan Information
The
following table provides information as of March 31, 2009 about our common stock
that may be issued upon the exercise of options, warrants, and rights under our
prior equity compensation plans. It also provides information regarding the
number of securities available for future issuance under our current equity
compensation plans, under which there are no outstanding options, warrants or
rights.
|
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding options, warrants,
and rights
|
Weighted-average
exercise price of outstanding options, warrants, and
rights
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in first
column)
|
|||||||||
|
Equity
compensation plans approved by security holders
|
908,290 | $ | 10.29 | 1,211,468(1) | ||||||||
|
Equity
compensation plans not approved by security holders
|
- | - | - | |||||||||
|
Total
|
908,290 | $ | 10.29 |
1,211,468
|
||||||||
|
(1)
|
This
number includes 211,468 shares reserved for issuance under the 2008
Non-Employee Director Long-Term Incentive Plan and available for future
restricted stock awards.
|
PROPOSALS
Proposal 1 - Election of Directors
(Proposal
# 1 on Proxy Card)
The Board
of Directors presently has eight members. The Board of Directors has
nominated directors Norton, Bowen, O’Donnell, Cooper, Faulders, Herman, Hovde
and Beimler to be elected to serve until the next annual meeting of shareholders
and until their successors are duly elected and qualified. Each of the nominees
for election is currently a director of the company and was selected by the
Board of Directors as a nominee in accordance with the recommendation of the
Nominating and Corporate Governance Committee. Biographical information as of
June 30, 2009 for each nominee is provided below.
Unless
otherwise instructed or unless authority to vote is withheld, all signed proxies
will be voted for the election of the Board’s nominees. Each of the nominees has
agreed to be named in this proxy statement and to serve if elected, and we know
of no reason why any of the nominees would not be able to serve. However, if any
nominee is unable or declines to serve as a director, or if a vacancy occurs
before the election (which events are not anticipated), the proxy holders will
vote for the election of such other person or persons as are nominated by the
Board.
Vote
Required
The eight
nominees receiving the highest number of affirmative votes of the outstanding
shares of the Company’s common stock present or represented by proxy and voting
at the meeting, will be elected as directors to serve until the next annual
meeting of shareholders and until their successors are duly elected and
qualified.
Recommendation
of the Board
The Board of Directors unanimously
recommends that you vote in favor of the election of Messrs. Norton, Bowen, O’Donnell,
Cooper, Faulders, Herman, Hovde and Beimler.
Phillip G. Norton, age
65, joined us in
March 1993 and has served since then as our Chairman of the Board and CEO. Since
September 1996, Mr. Norton has also served as our President. Mr. Norton is a
1966 graduate of the U.S. Naval Academy.
Bruce M. Bowen, age 57,
founded our company in 1990 and served as our President until September 1996.
Since September 1996, Mr. Bowen has served as our Executive Vice President, and
from September 1996 to June 1997 also served as our CFO. Mr. Bowen has served on
our Board since our founding. He is a 1973 graduate of the University of
Maryland and in 1978 received a Masters of Business Administration from the
University of Maryland.
Terrence O’Donnell, age 65,
joined our Board in November 1996 upon the completion of our IPO. For the past
nine years, Mr. O’Donnell has been the Executive Vice President and General
Counsel of Textron, Inc. and a partner with the law firm of Williams &
Connolly LLP in Washington, D.C. Mr. O’Donnell has practiced law since 1977, and
from 1989 to 1992 served as General Counsel to the U.S. Department of Defense.
Mr. O’Donnell presently also serves on the Board of Directors and the
Compensation, Nominating and Audit Committees of IGI Laboratories, Inc., an
NYSE-Amex Equities company. Mr. O’Donnell is a 1966 graduate of the U.S. Air
Force Academy and received a Juris Doctor from Georgetown University Law Center
in 1971.
Milton E. Cooper, Jr., age 70,
joined our Board in November 2003. Mr. Cooper served with Computer Sciences
Corporation (“CSC”) from September 1984 until his retirement in May 2001, first
as Vice President, Business Development and then (from January 1992) as
President, Federal Sector. Before joining CSC, Mr. Cooper served in marketing
and general management positions with IBM Corporation, Telex Corporation, and
Raytheon Company. He also serves on the Board of Directors and on the
Compensation Committee of both L-1 Identity Solutions, Inc. and Applied Signal
Technology, Inc. Mr. Cooper is a 1960 graduate of the United States Military
Academy. He served as an artillery officer with the 82nd Airborne Division
before leaving active duty in 1963.
C. Thomas Faulders, III, age
59, joined our
Board in July 1998. Mr. Faulders has been the President and Chief Executive
Officer of the University of Virginia Alumni Association since 2006. Prior to
that, Mr. Faulders served as the Chairman and Chief Executive Officer of LCC
International, Inc. from 1999 to 2005 and as Chairman of Telesciences, Inc., an
information services company, from 1998 to 1999. From 1995 to 1998, Mr. Faulders
was Executive Vice President, Treasurer, and Chief Financial Officer of BDM
International, Inc., a prominent systems integration company. Mr. Faulders is a
member of the Board of Trustees of Randolph College. He is a 1971 graduate of
the University of Virginia and in 1981 received a Masters of Business
Administration from the Wharton School of the University of
Pennsylvania.
Lawrence S. Herman, age
65, joined our
Board of Directors in March 2001. Until his retirement in July 2007, Mr. Herman
was one of BearingPoint’s most senior Managing Directors with senior
responsibility for managing the strategy and emerging markets in the company’s
state and local government practice. During his 40 year career with BearingPoint
and KPMG, Mr. Herman specialized in developing, evaluating, and implementing
financial and management systems and strategies for state and local governments
around the nation. He has directed systems integration projects for state and
local governments, and several statewide performance and budget reviews for
California, North Carolina, South Carolina, Louisiana, Oklahoma, and others,
resulting in strategic fiscal and technology plans. He is considered to be one
of the nation’s foremost state budget and fiscal planning experts. Mr. Herman
received his B.S. degree in Mathematics and Economics from Tufts University in
1965 and his Masters of Business Administration in 1967 from Harvard Business
School.
Eric D. Hovde, age 45, joined
our Board in November 2006. Mr. Hovde is a founder and the Chief Executive
Officer, Managing Member and Chairman of Hovde Capital Advisors LLC and Hovde
Private Equity Advisors LLC, which are asset management and private equity firms
focused exclusively on the financial services industry. Mr. Hovde is also a
founder and the former Chairman of Hovde Financial, Inc., an investment banking
firm focused on financial advisory services. Mr. Hovde has also served as a
director on numerous bank and thrift boards and currently serves on the Board of
Directors and the Compensation Committee of Sunwest Bank in Orange County,
California. Mr. Hovde is the co-founder and a trustee of the Eric D. and Steven
D. Hovde Foundation, an organization that actively supports clinical research in
search of a cure for Multiple Sclerosis and charitable relief in devastated
areas around the world. Mr. Hovde received his degrees in Economics and
International Relations from the University of Wisconsin. He is licensed with
FINRA as a registered representative and general securities
principal.
Irving R. Beimler, age 62,
joined our Board in November 2006. Mr. Beimler has been with the Hovde Group
since November 1997. Currently, he is serving as Portfolio Manager of Hovde
Private Equity Advisors LLC. He has served as a senior officer, Interim
President and Chief Executive Officer and a Board Member of numerous banks and
thrifts during his career. He is a graduate of the State University of New York
at Geneseo.
Proposal 2 – Ratification of the appointment of Deloitte &
Touche LLP as our independent auditors for our fiscal year ending March 31, 2010
(Proposal
# 2 on Proxy Card)
The Audit
Committee of the Board of Directors has selected Deloitte & Touche LLP
(“Deloitte”) as the Company’s independent auditor for the fiscal year ending
March 31, 2010. Deloitte has served as the Company’s independent auditors since
1990, and is an independent registered public accounting firm.
Neither
the Company’s Bylaws nor other governing documents or law require stockholder
ratification of the appointment of Deloitte as the Company’s independent
auditors. However, the Company is submitting the appointment of Deloitte to the
stockholders for ratification as a matter of good corporate practice. If the
stockholders fail to ratify the appointment, the Audit Committee will reconsider
whether or not to retain that firm. Even if the appointment is ratified, the
Audit Committee in its discretion may direct the appointment of different
independent auditors at any time if they determine that such a change would be
in the best interest of the Company and its stockholders.
Representatives
of Deloitte are expected to attend the annual meeting and will have the
opportunity to make a statement if they desire and to respond to appropriate
questions.
Auditor’s
Fees
With
respect to the fiscal years ended March 31, 2008 and March 31, 2009, the
aggregate fees billed by Deloitte were as follows:
|
Fiscal
2009
|
Fiscal
2008
|
|||||||
|
Audit
Fees
|
$ | 966,160 | $ | 2,229,000 | ||||
|
Audit
Related Fees
|
-
|
-
|
||||||
|
Tax
Fees
|
-
|
-
|
||||||
|
All
Other Fees
|
-
|
-
|
||||||
|
TOTAL
FEES
|
$ | 966,160 | $ | 2,229,000 | ||||
Audit-Related
Fees. There were no audit-related fees billed by Deloitte for the fiscal years
ended March 31, 2009 or 2008.
Tax Fees.
There were no fees billed by Deloitte for tax-related services rendered for the
fiscal years ended March 31, 2009 or 2008.
All Other
Fees. There were no other fees billed by Deloitte for professional services for
the fiscal years ended March 31, 2009 or 2008.
There
were no non-audit related services provided by Deloitte during the last two
fiscal years. The Audit Committee pre-approves all auditing services (which may
entail providing comfort letters in connection with securities underwriting),
and all non-audit services provided to us by Deloitte, subject to a de minimis
exception as set forth by the SEC.
Vote
Required
To be
approved, Proposal 2, ratification of appointment of independent auditors, must
receive a “For” vote from the majority of shares present and entitled to vote
either in person or by proxy. If you “Abstain” from voting, it will have the
same effect as an “Against” vote. Broker non-votes will have no
effect.
Your
board unanimously recommends voting FOR ratification of Deloitte & Touche
LLP as the Company’s independent auditor for the fiscal year ending March 31,
2010.
Report
of the Audit Committee
The
primary role of the Audit Committee, as more fully described in its charter, is
to assist the Board of Directors in its oversight of our corporate accounting
and financial reporting process and to interact directly with and evaluate the
performance of our independent auditors. Management is responsible
for the preparation, presentation and integrity of our consolidated financial
statements, accounting and financial reporting principles, internal controls and
procedures designed to assure compliance with accounting standards, applicable
laws and regulations. Our independent registered public accounting firm,
Deloitte & Touche LLP, is responsible for performing an independent audit of
the consolidated financial statements in accordance with the standards of the
Public Company Accounting Oversight Board, or PCAOB.
In the
performance of its oversight function, the Audit Committee has reviewed the
audited financial statements for the fiscal year ended March 31, 2009 and has
met with both management and Deloitte & Touche LLP to discuss those
financial statements. The Audit Committee has discussed with Deloitte &
Touche LLP those matters related to the conduct of the audit that are required
to be communicated by the independent auditors to the Audit Committee,
including, as set forth in Statements of Auditing Standards No. 61, as
amended (as adopted by the PCAOB in Rule 3200T), Deloitte & Touche
LLP’s judgments as to the quality, not just the acceptability, of our accounting
principles.
The Audit
Committee met separately with the independent auditors, without management
present, to discuss the results of their audits, their evaluations of our
internal controls and the overall quality of our financial
reporting.
The Audit
Committee has received from Deloitte & Touche LLP the written disclosures
and letter required by applicable requirements of the PCAOB regarding the
independent accountant’s communications with the audit committee concerning
independence, and has discussed with Deloitte & Touche LLP its independence.
The Audit Committee has also reviewed and considered whether the provision of
other non-audit services by Deloitte & Touche LLP is compatible with
maintaining the auditors’ independence.
Based on
these reviews and discussions, the Audit Committee recommended to the Board of
Directors, and the Board of Directors approved, that the audited financial
statements of ePlus for
the fiscal year ended March 31, 2009 be included in the Annual Report on
Form 10-K, which was filed with the Securities and Exchange Commission on
June 16, 2009.
The Audit
Committee
Terrence
O’Donnell, Chairman
Irving R.
Beimler
C. Thomas
Faulders III
Lawrence
S. Herman
The
foregoing Report is not soliciting material, is not deemed filed with the SEC
and is not to be incorporated by reference in any filing of the Company under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
[FORM OF PROXY
CARD]
 |
c/o
National City Bank
Shareholder
Services Operations
Locator
5352
P
O. Box 94509
Cleveland,
OH 44101-4509
|
YOUR
VOTE IS IMPORTANT
|
Please
sign and date this proxy card and return it promptly in the enclosed
postage-paid envelope, or otherwise to National City Bank, P.O. Box
535300, Pittsburgh, PA 15253, so that your shares may be represented at
the Annual Meeting.
|
|
Proxy
card must be signed and dated below.
ò Please
fold and detach card at perforation before mailing. ò
|
ePlus inc.
|
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS TO
BE HELD ON SEPTEMBER 14, 2009.
|
The
undersigned hereby appoints Erica S. Stoecker and Kleyton L. Parkhurst, and each
or either of them, proxies, with power of substitution, to vote all shares of
the undersigned at the Annual Meeting of Stockholders of ePlus inc., a Delaware corporation, to be held
on September 14, 2009 at 8:00 a.m. at the Hyatt Regency located at 1800
Presidents Street, Reston, Virginia 20190, or at any adjournment thereof, upon
the matters set forth in the Proxy Statement for such Meeting, and in their
discretion, upon such other business as may properly come before the
Meeting. Prior to voting, you should carefully read the accompanying
proxy statement.
|
Dated:
|
,
2009.
|
|
Signature
|
|
|
Signature
if held jointly
|
|
|
NOTE: When
shares are held by joint tenants, both should sign. Persons
signing as Executor, Administrator, Trustee, etc. should so
indicate. Please sign exactly as the name appears on the
proxy.
|
PLEASE
DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
The
meeting will be held at 1800 Presidents Street, Reston, Virginia
20190
at
8:00 a.m. Eastern Time
 |
 |
|
Proxy
card must be signed and dated below.
ò Please
fold and detach card at perforation before mailing. ò
|
|
ePlus
inc.
|
PROXY
|
THE
SHARES REPRESENTED BY ALL PROXIES RECEIVED WILL BE VOTED IN ACCORDANCE WITH THE
CHOICES SPECIFIED ON SUCH PROXIES. THE SHARES REPRESENTED BY A PROXY
WILL BE VOTED IN FAVOR OF A PROPOSAL IF NO CONTRARY SPECIFICATION IS
MADE. ALL VALID PROXIES OBTAINED WILL BE VOTED AT THE DISCRETION OF
THE APPOINTED PROXIES WITH RESPECT TO ANY OTHER BUSINESS THAT MAY COME BEFORE
THE ANNUAL MEETING.
The
Board of Directors recommends a vote “FOR” all nominees in proposal 1 and “FOR”
proposal 2.
|
1.
|
To
elect as Directors, each to serve a term of one year and until their
successors have been duly elected and qualified.
|
||
|
(1)
Phillip G. Norton
|
(2)
Bruce M. Bowen
|
(3)
Terrence O’Donnell
|
|
|
(4)
Milton E. Cooper, Jr.
|
(5)
C. Thomas Faulders, III
|
(6)
Lawrence S. Herman
|
|
|
(7)
Eric D. Hovde
|
(8)
Irving R. Beimler
|
||
|
q
|
FOR all nominees listed
above
|
q
|
WITHHOLD
AUTHORITY
|
|
|
(except
as marked to the contrary below)
|
to vote for all
nominees listed above
|
(Instructions: To
withhold authority to vote for any individual nominee, write that nominee’s name
in the space provided below.)
|
2.
|
To
ratify the appointment of Deloitte & Touche LLP as ePlus’ independent
auditors for ePlus’ fiscal year
ending March 31, 2010.
|
|
q
|
FOR
|
q
|
AGAINST
|
q
|
ABSTAIN
|
PLEASE
DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.