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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. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
SCANSOURCE, 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):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) 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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] 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.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
SCANSOURCE, INC.
6 Logue Court
Greenville, South Carolina 29615
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held December 7, 2000
The Annual Meeting of Shareholders of ScanSource, Inc. will be held at the
GSP Airport Marriott, 1 Parkway East, Greenville, South Carolina on Thursday,
December 7, 2000, at 10:00 a.m., for the following purposes:
(1) To elect four members to the Board of Directors;
(2) To ratify the appointment of the Company's independent auditors; and
(3) To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Only shareholders whose names appeared of record on the books of the
Company at the close of business on October 18, 2000 will be entitled to notice
of and to vote at the Annual Meeting or at any adjournments thereof.
You are cordially invited and urged to attend the Annual Meeting in person,
but if you are unable to do so, please date, sign and promptly return the
enclosed proxy card in the enclosed postage paid envelope. If you attend the
Annual Meeting and desire to revoke your proxy and vote in person, you may do
so. In any event, you remain entitled to revoke your proxy at any time before
it is exercised.
Steven H. Owings
Chairman of the Board
October 24, 2000
<PAGE>
SCANSOURCE, INC.
6 Logue Court
Greenville, South Carolina 29615
PROXY STATEMENT
General
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of ScanSource, Inc. (the "Company") to be used
in voting at the Annual Meeting of Shareholders of the Company to be held at the
GSP Airport Marriott, 1 Parkway East, Greenville, South Carolina on Thursday,
December 7, 2000, at 10:00 a.m., and at any adjournments thereof. This Proxy
Statement and the accompanying form of proxy are being mailed to shareholders
commencing on or about October 26, 2000.
Any shareholder who executes the form of proxy referred to in this Proxy
Statement may revoke it at any time before it is exercised. The proxy may be
revoked by either giving written notice to the Secretary of the Company of such
revocation, or by executing and delivering to the Secretary of the Company a
proxy bearing a later date. The voting of such proxy will be suspended if the
shareholder executing the proxy attends the Annual Meeting and elects to vote in
person. Whether or not you plan to attend, you are urged to sign and return the
enclosed proxy.
The cost of preparing, assembling and mailing this Proxy Statement and the
form of proxy will be borne by the Company. Directors, officers and employees
of the Company may also solicit proxies personally or by mail, telephone or
telegram. No compensation will be paid for such solicitations. In addition,
the Company will bear the reasonable expenses of brokerage houses and other
custodians, nominees and fiduciaries who, at the request of the Company, may
send proxies and proxy solicitation material to their clients and principals.
Voting Securities Outstanding
The Board of Directors has fixed the close of business on October 18, 2000
as the record date and time for the determination of shareholders entitled to
notice of, and to vote at, the Annual Meeting and at any adjournments thereof.
As of such date, 5,697,024 shares of the Company's no par value common stock
(the "Common Stock") were outstanding. All of such shares are eligible to be
voted on each matter currently scheduled to come before the Annual Meeting, and
no other outstanding shares of capital stock of the Company are eligible to be
voted at the Annual Meeting. Cumulative voting for the election of directors is
not available under the Company's Articles of Incorporation. Consequently, each
eligible share of Common Stock is entitled to one vote on each matter to be
voted upon at the Annual Meeting. Except for the election of directors, for
each matter specified in this Proxy Statement to be submitted for shareholder
approval at the Annual Meeting, the affirmative vote of a majority of the shares
of Common Stock present at the Annual Meeting in person or by proxy and entitled
to vote on such matter is required for approval. Abstentions will be considered
shares present in person or by proxy and entitled to vote and therefore will
have the effect of a vote against any matter requiring the affirmative vote of a
majority of the shares present and entitled to vote at the Annual Meeting.
Broker non-votes will be considered shares present but not entitled to vote and
therefore will have no effect on the outcome of the vote. A broker non-vote
occurs when a broker or other nominee holding shares of Common Stock for a
beneficial owner does not vote on a particular proposal because the broker or
other nominee does not have discretionary voting power with respect to that item
and has not received voting instructions from the beneficial owner.
The Bylaws of the Company provide that the presence in person or by proxy
of the holders of a majority of the outstanding shares of Common Stock entitled
to vote at the Annual Meeting is necessary to constitute a quorum at the Annual
Meeting and at any adjournments thereof. Directions to withhold authority to
vote for directors, abstentions and broker non-votes will be counted for
purposes of determining if a quorum is present at the Annual Meeting. If a
quorum is not present or represented at the Annual Meeting, the chairman of the
meeting or the shareholders holding a majority of the shares of Common Stock
entitled to vote, present in person or represented by proxy, have the power to
adjourn the meeting from time to time without notice, other than an announcement
at the meeting, until a quorum is present or
1
<PAGE>
represented. Directors, officers and employees of the Company may solicit
proxies for the reconvened meeting in person or by mail, telephone or telegram.
At any such reconvened meeting at which a quorum is present or represented, any
business may be transacted that might have been transacted at the meeting as
originally scheduled.
PROPOSAL ONE
ELECTION OF DIRECTORS
Four directors are to be elected at the Annual Meeting. Pursuant to the
authority granted to it by the Company's Bylaws, the Board of Directors has set
the size of the Board of Directors at five members. A vacancy currently exists
on the Board of Directors, which the Board of Directors has indicated it does
not expect to have filled at the Annual Meeting. Consequently, immediately
following the Annual Meeting, the Board of Directors will continue to consist of
four members. Pursuant to the Company's Bylaws and applicable South Carolina
corporate law, the four directors who will serve following the Annual Meeting
may elect a director to fill the vacancy that will exist on the Board of
Directors.
The Board of Directors has recommended each of the four existing members of
the Board of Directors as the four nominees for election as directors at the
Annual Meeting to serve until the next annual meeting of shareholders or until
their respective successors shall have been elected and shall have qualified.
The following are the Company's nominees for election as directors at the Annual
Meeting: Michael L. Baur, Steven R. Fischer, James G. Foody and Steven H.
Owings.
In accordance with the Bylaws of the Company, those nominees receiving the
greatest number of votes cast (although not necessarily a majority of the votes
cast) will be elected to the Board of Directors. Abstentions and shares held in
street name that are not voted in the election of directors will not be included
in determining the number of votes cast in the election of directors. The
proxies solicited for the Annual Meeting cannot be voted for a greater number of
persons than four, the number of nominees named. Cumulative voting in the
election of directors is not permitted by the Company's Articles of
Incorporation. If any nominee shall become unavailable for any reason, the
persons named in the form of proxy shall vote for a substitute nominee or vote
to reduce the number of directors to be elected as directed by the Board of
Directors. The Board of Directors has no reason to believe that any of the four
nominees listed above will not be available for election as a director.
THE PERSONS NAMED IN THE FORM OF PROXY WILL VOTE THE PROXY AS SPECIFIED. IF
NO SPECIFICATION IS MADE, THE PROXY WILL BE VOTED "FOR" THE ELECTION OF THE
NOMINEES SET FORTH ABOVE.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
appointed the firm of Deloitte & Touche LLP, certified public accountants, as
independent auditors to make an examination of the accounts of the Company for
the fiscal year ending June 30, 2001. If the shareholders do not ratify this
appointment, other certified public accountants will be considered by the Board
of Directors upon recommendation of the Audit Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE
APPOINTMENT OF DELOITTE & TOUCHE LLP. THE PERSONS NAMED IN THE FORM OF PROXY
WILL VOTE THE PROXY AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE PROXY WILL
BE VOTED "FOR" THE APPROVAL OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP.
A representative of Deloitte & Touche LLP is expected to be in attendance
at the Annual Meeting and will have the opportunity to make a statement and be
available to respond to appropriate questions. A representative of KPMG
2
<PAGE>
LLP is expected to be in attendance at the Annual Meeting and will have the
opportunity to make a statement and be available to respond to appropriate
questions.
CHANGES IN CERTIFYING ACCOUNTANT
On October 19, 2000, the Company notified KPMG LLP that it would not be
retained by the Company to perform the audit of the financial statements of the
Company for the fiscal year ending June 30, 2001. KPMG LLP had served as the
Company's principal independent accountants for the fiscal years ended June 30,
2000 and 1999. The decision not to retain KPMG LLP was approved by the Audit
Committee of the Board of Directors of the Company and, upon recommendation by
that committee, was approved by the full Board of Directors on October 19, 2000.
In connection with the audits of the financial statements of the Company
for the fiscal years ended June 30, 2000 and 1999, the Company had no
disagreement with KPMG LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of KPMG LLP, would have caused
them to make reference to such disagreement in their report for such periods.
The audit reports of KPMG LLP on the financial statements of the Company
for the fiscal years ended June 30, 2000 and 1999 contained no adverse opinion
or disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope, or accounting principles. KPMG LLP was provided with a copy of the
above disclosures and was requested to furnish us with a letter addressed to the
Commission stating whether it agrees with the above statements and, if not,
stating the respects in which it does not agree. KPMG LLP's letter was filed as
an exhibit to our report on Form 8-K dated October 19, 2000.
On October 19, 2000, the Audit Committee of the Board of Directors of the
Company approved, and, upon recommendation by that committee, the Board of
Directors of the Company approved, the engagement of the accounting firm of
Deloitte & Touche LLP as independent accountants to audit the Company's
financial statements for the fiscal year ending June 30, 2001. As of October
19, 2000, the Company has not on any prior occasions consulted with Deloitte &
Touche LLP regarding any of the matters set forth in Item 304(a)(2) of
Regulation S-K.
OTHER BUSINESS
The Board of Directors of the Company knows of no other matter to come
before the Annual Meeting. However, if any matter requiring a vote of the
shareholders should be duly presented for a vote, then the persons named in the
enclosed form of proxy intend to vote such proxy in accordance with their best
judgment.
PROPOSALS FOR 2001 ANNUAL MEETING
Shareholder proposals intended to be presented at the 2001 Annual Meeting
of Shareholders must be received by the Company by June 26, 2001 for possible
inclusion in the proxy material relating to such meeting.
MANAGEMENT
Executive Officers and Directors
The following sets forth certain information regarding the Company's
executive officers and directors:
Steven H. Owings, 47, has served as Chairman of the Board of Directors of
the Company since its inception in December 1992, and was Chief Executive
Officer of the Company from December 1992 until January 2000. From 1991 to 1992
Mr. Owings served as Chairman of the Board, Chief Executive Officer and the sole
shareholder of Argent Technologies, Inc. ("Argent"), a personal computer
manufacturer. From 1983 to 1991 Mr. Owings held various positions with Gates/FA
Distributing, Inc. and its predecessors ("Gates"), including serving as
President from December 1987 until December 1990, Chief Executive Officer from
December 1987 to December 1991, and Chairman of the Board of Directors from
December 1990 to December 1991. From December 1987 to September 1994 Mr. Owings
served as a
3
<PAGE>
director of Gates. From July 1996 to April 1997, he served as a director of
Globelle Corporation, an international distributor of personal computer
products.
Michael L. Baur, 43, has served as Chief Executive Officer of the Company
since January 2000, President of the Company since its inception in December
1992, and as a director since December 1995. Prior to joining the Company, from
April 1991 to November 1992, Mr. Baur served in various positions at Argent,
including President and General Manager. In September 1989, Mr. Baur joined
Gates as Product Manager and served as Merchandising Director from February 1990
to March 1991.
Jeffery A. Bryson, 40, has served as Chief Financial Officer and Treasurer
of the Company since December 1993. Prior to joining the Company, from 1990 to
1993, Mr. Bryson served as a senior manager with the accounting firm of KPMG
LLP, where he was employed for more than seven years. Mr. Bryson is a certified
public accountant.
Robert S. McLain, Jr., 40, has served as the Company's Vice President of
Marketing since September 1997. Prior to joining the Company, from July 1995 to
September 1997, Mr. McLain served as President of Transition Marketing, Inc., a
majority-owned subsidiary of the Company. From July 1993 to June 1995, Mr.
McLain was Director of Marketing with Gates, and from July 1991 to June 1993 he
was a senior account executive with a broadcasting firm in Greenville, South
Carolina.
Steven R. Fischer, 55, has served as a director of the Company since
December 1995. Mr. Fischer has served Transamerica Business Credit Corporation
as President since September 2000, as Executive Vice President and Division
Manager since October 1997 and as Senior Vice President and Regional Manager
since March 1992. From February 1981 to March 1992, Mr. Fischer served as Vice
President and Regional Manager of Citibank, N.A.
James G. Foody, 70, has served as a director of the Company since December
1995. Mr. Foody has served as a business consultant in Greenville, South
Carolina since October 1990. Prior to that time, he served as a partner in the
accounting firm of Ernst & Young LLP.
Board Meetings and Committees
The Board of Directors of the Company met or acted by written consent a
total of eleven times during the Company's fiscal year ended June 30, 2000. No
director attended fewer than 75% of the total of such meetings and the meetings
of the committees upon which he served.
Pursuant to the Bylaws of the Company, the Board of Directors has
established an Audit Committee and a Compensation Committee. The Board of
Directors has not established a committee performing the functions traditionally
performed by a Nominating Committee. Such functions are currently performed by
the Board of Directors acting as a whole.
The Audit Committee is composed of Messrs. Fischer and Foody. The
functions of the Audit Committee include recommending to the Board of Directors
the retention of independent auditors, reviewing the scope of the annual audit
undertaken by the Company's independent auditors and the progress and results of
their work, and reviewing the financial statements of the Company and its
internal accounting and auditing procedures. No directors of the Company who
are also executive officers may serve on the Audit Committee. This committee
met or acted by written consent four times during the fiscal year ended June 30,
2000.
The Compensation Committee is composed of Messrs. Fischer and Foody. The
functions of the Compensation Committee include reviewing and approving
executive compensation policies and practices, reviewing salaries and bonuses
for certain officers of the Company, administering the Company's stock option
plans, and considering such other matters as may from time to time be referred
to the Compensation Committee by the Board of Directors. No directors of the
Company who are also executive officers of the Company participate in
deliberations of such committee concerning the compensation of such executive
officers. This committee met or acted by written consent four times during the
fiscal year ended June 30, 2000.
4
<PAGE>
Executive Compensation
The following table sets forth the cash compensation earned by the
Company's Chairman of the Board, Chief Executive Officer and President, Chief
Financial Officer and Treasurer, and Vice President-Marketing (the "Named
Executive Officers") for the fiscal years ended June 30 in each of 2000, 1999
and 1998.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
-------------------------------- ----------------------
Awards
----------------------
Fiscal Securities Underlying
Name and Principal Position Year Salary Bonus Options
-------------------------------- ------ -------- -------- ----------------------
<S> <C> <C> <C> <C>
Steven H. Owings....................... 2000 $200,000 $250,198 17,500
Chairman of the Board 1999 96,000 103,733 30,000
1998 96,000 58,419 20,000
Michael L. Baur........................ 2000 125,000 455,586 25,000
Chief Executive Officer and President 1999 87,000 272,129 55,000
1998 87,000 166,497 25,000*
Jeffery A. Bryson...................... 2000 90,000 182,827 15,000
Chief Financial Officer and Treasurer 1999 80,000 115,383 35,000
1998 63,158 77,669 15,000*
Robert S. McLain, Jr................... 2000 100,000 47,251 5,000
Vice President - Marketing 1999 100,000 33,276 4,500
1998 96,174 27,837 -0-
</TABLE>
* These stock options were cancelled by the Company on September 1, 1998.
Option Grants
The following table sets forth information with respect to the stock
options granted to the Named Executive Officers during the fiscal year ended
June 30, 2000.
Option Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants Potential Realizable Value at
------------------------------------------------------------------- Assumed Annual Rates of
Number of Stock
Securities Percent of Total Price Appreciation for
Underlying Options Granted to Option Term
Options Employees in Exercise Expiration -----------------------------
Name Granted Fiscal Year Price Date 5% 10%
---- ---------- ------------------ -------- ---------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Steven H. Owings....... 17,500 11.5% $33.625 12/09 $370,050 $ 937,800
Michael L. Baur........ 25,000 16.4 33.625 12/09 528,650 1,339,750
Jeffery A. Bryson...... 15,000 9.8 33.625 12/09 317,200 803,850
Robert S. McLain, Jr... 5,000 3.3 33.625 12/09 105,750 267,950
</TABLE>
5
<PAGE>
Option Exercises and Fiscal Year-End Option Values
The following table sets forth certain information with respect to stock
options exercised by the Named Executive Officers during the fiscal year ended
June 30, 2000, and the number and value of unexercised stock options held by
each of the Named Executive Officers at June 30, 2000.
Aggregated Option Exercises in Fiscal 2000 and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Fiscal Year-End Fiscal Year-End(1)
------------------------------- --------------------------------
Shares
Acquired Value
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Steven H. Owings........ -0- $ -0- 130,832 44,168 $2,969,244 $667,319
Michael L. Baur......... 10,000 430,000 (2) 94,333 61,667 2,476,034 974,591
Jeffery A. Bryson....... 2,500 74,213 (3) 31,766 38,334 778,506 614,181
Robert S. McLain, Jr.... -0- -0- 21,499 8,001 599,269 94,856
</TABLE>
________________
(1) Based on a per share price of $38.875, the closing price of the Common
Stock as reported on The Nasdaq National Market on June 30, 2000, the last
trading day of the fiscal year.
(2) The amount realized is based on a per share price of $47.75, the price of
the Common Stock as reported on The Nasdaq National Market on the day of
exercise.
(3) The amount realized is based on a per share price of $35.375 with respect
to the exercise of 1,500 shares, and a per share price of $43.25 with
respect to the exercise of 1,000 shares, which prices were the prices of
the Common Stock as reported on The Nasdaq National Market on the
respective dates of exercise.
Employment Agreements
Effective July 1, 1999, and for a term extending through June 30, 2002, the
Company entered into employment agreements with each of Steven H. Owings,
Michael L. Baur and Jeffery A. Bryson. These agreements provide for annual
salaries of $200,000, $125,000 and $90,000 for Messrs. Owings, Baur and Bryson,
respectively, plus incentive bonuses based upon a percentage of the Company's
operating income. The agreements also include non-competition provisions for two
years following the expiration of the agreements or the earlier termination of
employment.
Compensation of Directors
All directors are reimbursed for their expenses incurred in connection
with the performance of their services as directors. In addition, directors who
are not otherwise compensated as officers of the Company receive a fee of $1,000
per calendar quarter for their service on the Board of Directors. Subject to
approval of the Company's Non-Employee Director Stock Option Plan (the "Director
Plan") at the Annual Meeting, directors will also be eligible to be granted on
an annual basis ten-year options to purchase 5,000 shares of Common Stock under
the terms of the Director Plan. Grants of options under the Director Plan are
automatic and are made each year to each non-employee director. The exercise
price of all options so granted is the fair market value of the Common Stock on
the date of grant. Options granted under the Director Plan are exercisable
beginning six months after the option is granted. Options may be exercised only
during the period in which the option holder remains a director of the Company
and for one year thereafter, unless the director's membership on the Board of
Directors is terminated for cause, in which case all options granted to such
director expire upon such termination.
On December 3, 1999, the day following the 1999 Annual Meeting of
Shareholders, automatic grants of options for the purchase of 5,000 shares of
Common Stock pursuant to the Company's Non-Employee Director Stock Option
6
<PAGE>
Plan were made to each of Messrs. Fischer and Foody, the two non-employee
directors. No other compensation was paid or awarded during the fiscal year
ended June 30, 2000 to any director for service on the Board of Directors.
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended June 30, 2000, matters of executive
compensation were decided by the Compensation Committee of the Board of
Directors. The Compensation Committee is currently composed of Messrs. Fischer
and Foody.
Compensation Committee Report on Executive Compensation
The compensation of the Company's executive officers is generally
determined by the Compensation Committee of the Board of Directors. The
following report with respect to certain compensation paid or awarded to the
Company's executive officers during the fiscal year ended June 30, 2000 is
furnished by the directors who comprise the Compensation Committee.
General Policies. The Company's compensation program is intended to
enable the Company to attract, motivate, reward and retain the management talent
to achieve corporate objectives, and thereby increase shareholder value. It is
the Company's policy to provide incentives to senior management to achieve both
short-term and long-term objectives. To attain these objectives, the Company's
executive compensation program is composed of a base salary and bonus, which is
generally established for the Named Executive Officers in an employment
agreement.
Base Salary. Base salaries for each of the Named Executive Officers
as established in his employment agreement are determined by a subjective
assessment of the executive officer's performance, in light of the officer's
responsibilities and position with the Company and the Company's performance
during prior periods. In evaluating overall Company performance, the primary
focus is upon financial performance for the relevant annual period measured by
operating income. Base salaries are reviewed periodically and from time to time
by the Compensation Committee and adjusted appropriately.
Incentive Compensation. Incentive compensation for each of the Named
Executive Officers is established in his employment agreement as a percentage of
the Company's operating income. Incentive compensation is reviewed
periodically and from time to time by the Compensation Committee and adjusted
accordingly.
Stock Options. Executive compensation includes the grant of stock
options in order to more closely align the interests of the executive with the
long-term interests of the shareholders.
Chief Executive Officer Compensation. Michael L. Baur is an original
founder of the ScanSource concept and has devoted his career to this concept
since the inception of the Company in December 1992. The Compensation Committee
believes that Mr. Baur's entrepreneurial drive, dedication, commitment and
knowledge have been vitally important to the successful and ongoing growth of
the Company. Mr. Baur's overall compensation for the fiscal year ended June 30,
2000 consisted of base salary, bonus and stock options. In determining Mr.
Baur's compensation, the Compensation Committee evaluated Mr. Baur's personal
performance, the performance of the Company and Mr. Baur's long-term commitment
to the success of and ownership position in the Company.
Report of Compensation Committee Steven R. Fischer
James G. Foody
Certain Transactions
At the fiscal year ended June 30, 2000, Michael L. Baur, Chief Executive
Officer and President of the Company, was indebted to the Company under the
terms of a loan to him from the Company with a principal balance of $214,477 at
an annual interest rate of 6.5%. The principal and accrued interest are due in
May 2001.
7
<PAGE>
Performance Graph
The following graph compares cumulative total shareholder return of the
Common Stock over a five-year period with The Nasdaq Stock Market (US) Index and
with a Peer Group of companies for the same period. Total shareholder return
represents stock price changes and assumes the reinvestment of dividends. The
graph assumes the investment of $100 on June 30, 1995.
[GRAPH]
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
6/30/95 6/30/96 6/30/97 6/30/98 6/30/99 6/30/00
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SCANSOURCE, INC. $ 100.00 $ 147.37 $ 151.32 $ 202.63 $ 227.63 $ 409.21
----------------------------------------------------------------------------------------
NASDAQ MARKET INDEX (US) 100.00 126.93 160.28 266.26 228.90 316.34
----------------------------------------------------------------------------------------
PEER GROUP* 100.00 125.88 151.64 201.01 281.68 423.84
----------------------------------------------------------------------------------------
</TABLE>
* The members of the Peer Group are Daisytek International Corporation, Ingram
Micro, Inc., Symbol Technologies, Inc., Tech Data Corp. and Zebra Technologies
Corporation. The returns of each company in the Peer Group have been weighted
according to their respective stock market capitalization for purposes of
arriving at a Peer Group average.
8
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock at September 30, 2000 of: (i) each
person known by the Company to beneficially own five percent or more of the
Common Stock; (ii) each director of the Company who beneficially owns Common
Stock; (iii) each executive officer who beneficially owns Common Stock; and (iv)
all directors and executive officers of the Company, as a group.
<TABLE>
<CAPTION>
Shares Beneficially
Owned (1)
-----------------------
Name Number Percentage
---- ------ ----------
<S> <C> <C>
John Hancock Mutual Life Insurance Company (2)..................... 369,600 6.5%
FMR Corp. (3)...................................................... 339,580 6.0
Steven H. Owings (4).............................................. 320,689 5.5
AMVESCAP PLC (5).................................................. 296,000 5.2
Michael L. Baur (6)............................................... 112,666 2.0
Jeffery A. Bryson (7)............................................. 45,933 *
James G. Foody (8)................................................ 30,000 *
Steven R. Fischer (9)............................................. 31,000 *
Robert S. McLain, Jr. (10)........................................ 23,534 *
All directors and executive officers as a group (6 persons)........ 563,822 9.3
</TABLE>
* Amount represents less than 1.0%.
(1) Applicable percentage of ownership is based upon 5,686,926 shares of Common
Stock outstanding. Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange Commission and includes voting and
investment power with respect to shares shown as beneficially owned. Shares
of Common Stock subject to options currently exercisable or exercisable
within 60 days are deemed outstanding for computing the shares and
percentage ownership of the person holding such options, but are not deemed
outstanding for computing the percentage ownership of any other person or
entity. Except as otherwise indicated, the persons or entities listed in
the table have sole voting and investment power with respect to all shares
shown as beneficially owned by them.
(2) A Schedule 13G filed with the Securities and Exchange Commission reflects
that John Hancock Mutual Life Insurance Company is the ultimate parent
company of John Hancock Advisors, Inc. which held sole voting and
investment power with respect to the indicated shares as of December 31,
1999. The business address of the named shareholder is John Hancock Place,
Post Office Box 111, Boston, Massachusetts 02117.
(3) A Schedule 13G filed with the Securities and Exchange Commission reflects
that FMR Corp. is the ultimate parent company of a variety of companies
engaged in the securities business and was the beneficial owner of the
indicated shares as of December 31, 1999, including 211,400 shares as to
which sole voting power was held and 339,580 shares as to which sole
investment power was held. The business address of the named shareholder
is 82 Devonshire Street, Boston, Massachusetts 02109.
(4) Includes 140,832 shares issuable pursuant to currently exercisable stock
options granted by the Company. Does not include 34,168 shares issuable
pursuant to options granted by the Company which are not currently
9
<PAGE>
exercisable. Includes 6,097 shares owned in a trust of which Mr. Owings is
the trustee. The business address for the named shareholder is 6 Logue
Court, Greenville, South Carolina 29615.
(5) A Schedule 13G filed with the Securities and Exchange Commission reflects
that AMVESCAP PLC is the ultimate parent company of a variety of companies
engaged in the securities business and was the beneficial owner of the
indicated shares as of December 31, 1999. The named shareholder had shared
voting and investment power with respect to all of the indicated shares.
The business address of the named shareholder is 1315 Peachtree Street,
N.E., Atlanta, Georgia 30309.
(6) Includes 105,047 shares issuable pursuant to currently exercisable options
granted by the Company. Does not include 43,334 shares issuable pursuant
to options granted by the Company which are not currently exercisable.
(7) Includes 43,433 shares issuable pursuant to currently exercisable options
granted by the Company. Does not include 26,667 shares issuable pursuant
to options granted by the Company which are not currently exercisable.
(8) Includes 20,000 shares issuable pursuant to currently exercisable options
granted by the Company.
(9) Includes 20,000 shares issuable pursuant to currently exercisable options
granted by the Company.
(10) Includes 22,999 shares issuable pursuant to currently exercisable options
granted by the Company. Does not include 6,501 shares issuable pursuant to
options granted by the Company which are not currently exercisable.
Section 16(a) Beneficial Ownership Reporting Requirements
The Company believes that each of its officers and directors complied with all
requirements applicable to them during the fiscal year ended June 30, 2000
pursuant to Section 16(a) of the Securities Exchange Act of 1934.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 2000, which is required to be filed with the Securities and
Exchange Commission, will be made available to shareholders to whom this proxy
statement is mailed, without charge, upon written request to Mr. Jeffery A.
Bryson, Chief Financial Officer, ScanSource, Inc., 6 Logue Court, Greenville,
South Carolina 29615.
By order of the Board of Directors,
Steven H. Owings
Chairman of the Board
October 24, 2000
10
<PAGE>
SCANSOURCE, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE 2000 ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON THURSDAY, DECEMBER 7, 2000, AT THE GSP AIRPORT
MARRIOTT, 1 PARKWAY EAST, GREENVILLE, SOUTH CAROLINA AT 10:00 A.M. LOCAL TIME.
The undersigned hereby appoints Michael L. Baur and Jeffery A. Bryson, or
any of them acting in the absence of the other, as attorneys and proxies of the
undersigned, with full power of substitution, to vote all of the shares of the
common stock of ScanSource, Inc., a South Carolina corporation, held or owned by
the undersigned or standing in the name of the undersigned at the 2000 Annual
Meeting of Shareholders of the Company and at any adjournment thereof, and the
undersigned hereby instructs said attorneys to vote as follows:
1. Election of Directors:
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote as to all nominees
contrary below)
[_] [_]
(This is considered a vote for
all nominees)
NOTE: To withhold authority to vote for any individual nominee, strike a line
through the nominee's name in the list below:
One-year term:
--------------
1. Michael L. Baur
2. Steven R. Fischer
3. James G. Foody
4. Steven H. Owings
2. Ratification of the appointment of Deloitte & Touche LLP as independent
auditors for the Company for the fiscal year ending June 30, 2001.
FOR [_] AGAINST [_] ABSTAIN [_]
3. In their discretion, upon any other business which may properly come
before the meeting or any adjournment thereof.
DATE
-------------------- -----------------------------------------
-----------------------------------------
(Please sign exactly as shown on envelope
addressed to you. If securities are
jointly owned, each should sign. If
voting less than all shares held, please
so indicate.)
THIS PROXY WILL BE VOTED AS INSTRUCTED. IN THE ABSENCE OF SUCH INSTRUCTIONS,
THIS PROXY WILL BE VOTED "FOR" EACH OF THE MATTERS SET FORTH ABOVE, AND THE
PROXIES HEREIN NAMED WILL VOTE ON OTHER MATTERS THAT MAY PROPERLY COME BEFORE
THE MEETING OR ANY ADJOURNMENT THEREOF IN ACCORDANCE WITH THEIR BEST JUDGMENT.
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