Audit Committee Charter
AUDIT COMMITTEE CHARTER
(as Amended by the Board of Directors on December 12, 2017)
The purpose of the Audit Committee (the “Committee”) shall be to represent and assist the Board of Directors (the “Board”) in its oversight of (a) the Corporation’s accounting and financial reporting processes, including audits of the Corporation’s financial statements and the integrity of the financial statements; (b) risk management; (c) the Corporation’s compliance with legal and regulatory requirements; (d) the independent auditor’s qualifications and independence; and (e) the performance of the Corporation’s internal audit function and independent auditor.
The Committee shall consist of no fewer than three members, each of whom shall meet the independence requirements of the Securities Exchange Act of 1934, as amended and the NASDAQ Stock Market applicable to directors and audit committee members, as determined by the Board. It is the goal of the Committee that at least one member of the Committee shall be an “audit committee financial expert” as defined by the rules and regulations of the Securities and Exchange Commission (the “SEC”) and as determined by the Board. In addition, all members of the Committee shall have sufficient financial experience and the ability to enable them to read and understand financial statements and at least one member of the Committee shall meet the financial sophistication standards established by the requirements of the NASDAQ Stock Market. No Committee member may have participated in the preparation of the financial statements of the Corporation or any of the Corporation’s current subsidiaries at any time during the past three years. In addition, no Committee member shall simultaneously serve on the audit committees of more than two other public companies, unless the Board determines that such service would not impair the member’s ability to effectively serve on the Committee. The members and chair of the Committee shall be appointed by the Board upon the recommendation of the Nominating and Corporate Governance Committee. The Board may remove any member from the Committee at any time with or without cause.
The Committee shall meet at least four times per year. Additional meetings may occur as the Committee or its chair deems advisable. The Committee will cause to be kept adequate minutes of its proceedings, and shall report regularly to the Board with respect to its activities.
The Committee shall meet periodically in executive session without management present. In addition, the Committee shall meet separately, periodically, with management, the internal auditors and the independent auditor, provided that the sessions with internal audit and the independent auditor shall occur at least quarterly. The Committee shall have the authority to investigate any matter brought to its attention that it determines to be within the scope of its authority with full access to all books records, facilities and personnel of the Company.
Outside Advisors and Subcommittees
The Committee shall have the resources and authority necessary to discharge its duties and responsibilities. The Committee shall have sole authority to retain and terminate such outside counsel, experts or other advisors as it deems appropriate to assist it in carrying out its duties and responsibilities. The Committee shall have sole authority to approve related fees and retention terms. The Committee shall receive appropriate funding from the Corporation, as determined by the Committee, for payment of compensation to the independent auditor and any advisors retained by the Committee, and for ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties. The Committee may form and delegate authority to subcommittees and may delegate authority to one or more designated members of the Committee to perform certain of its duties on its behalf.
The Committee’s duties and responsibilities shall include the following:
Relationship with Independent Auditor
1. Being directly responsible for the appointment, compensation, retention and oversight of the work of the independent auditor engaged for the purpose of preparing or issuing an audit report and performing other audit, review or attest services for the Corporation, including the authority to retain or to terminate the independent auditor, which shall report directly to the Committee. The Committee will, at least annually, review the engagement letter provided by the independent auditor that describes the terms of the audit engagement.
2. Establishing policies and procedures for pre-approving all auditing services and all permissible non-audit services provided to the Corporation by the Corporation’s independent auditor. The Committee has delegated to the Chair of the Committee the authority to approve any services which do not exceed $50,000, provided that the services are ratified by the Committee at its next scheduled meeting. The Committee may also, in its sole discretion, delegate to one or more of its members additional authority to pre-approve any audit or non-audit services to be performed by the independent auditor, provided that any such approvals are ratified by the Committee at its next scheduled meeting.
3. At least annually, obtaining and reviewing a report by the independent auditor describing: the audit firm’s internal quality-control procedures; any material issues raised by the most recent peer review, Public Company Accounting Oversight Board (the “PCAOB”) inspection of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues.
4. Considering at least annually the independence of the independent auditor, and, consistent with the rules of the PCAOB, obtain and review a report by the independent auditor describing any relationships between the independent auditor, and the Company or individuals in financial reporting oversight roles at the Company, that may reasonably be thought to bear on the independent auditor’s independence and discuss with the independent auditor the potential effects of any such relationships on independence.
5. Overseeing the rotation of the members of the audit engagement team as required by law or as otherwise desirable and the independent auditor’s process for the orderly transition of audit engagement team members.
6. Discussing the annual audited financial statements and related footnotes with management and the independent auditor, including the Corporation’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and recommending to the Board whether the audited financial statements should be included in the Corporation’s Annual Report on Form 10-K.
7. Discussing the Corporation’s unaudited financial statements and related footnotes and the “Management Discussion and Analysis” portion of the Corporation’s Form 10-Q for each interim quarter with management and the independent auditor before the Corporation files its quarterly report on Form 10-Q with the SEC.
8. Reviewing with the independent auditor the scope of the audit, audit strategy, the results of the annual audit examination and any audit problems or difficulties and management’s response, including any restrictions on the scope of the independent auditor’s activities or on access to requested information.
9. Receiving reports from and discussing such matters with the independent auditor as are required by applicable SEC rules and professional standards.
10. Reviewing with the independent auditor the matters required to be discussed by applicable SEC rules and professional standards relating to the conduct of the audit, including any problems or difficulties encountered in the course of the audit work, any restrictions on the scope of the independent auditor’s activities or on access to requested information, any significant disagreements with management and, in each case, management’s response to such matter.
11. Discussing earnings press releases, as well as financial information and, if applicable, earnings guidance provided to analysts and ratings agencies with management and the independent auditor, as appropriate, prior to their release. Such discussions may be done generally, consisting of discussing the types of information to be disclosed and the types of presentations to be made. The Chair of the Committee, or his or her designee from the Committee, may represent the entire Audit Committee for purposes of reviewing earnings press releases.
12. Discussing with the independent auditor (i) all critical accounting policies, practices and estimates identified by management or the independent auditor, (ii) all alternative treatments of financial information within GAAP for policies and practices related to material items that the independent auditor has discussed with management, the ramifications of such alternative disclosures and treatments, and the accounting treatment “preferred” by the independent auditor, and (iii) any other material written communications with management, such as a management letter or schedule of unadjusted differences.
Internal Controls and Disclosure Controls
13. Discussing, as appropriate, the adequacy and effectiveness of the Company’s disclosure controls and internal controls with the internal audit department, the independent auditor and management, including reports regarding (i) significant limitations on the effectiveness of disclosure controls and procedures, (ii) significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting and (iii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting; and to review and discuss, as appropriate, the steps implemented by management to address significant control deficiencies.
Risk Assessment, Compliance and Other Matters
15. Assisting the Board with its oversight of the Company’s risk management program, the Committee will discuss with management and the independent auditor, as appropriate: (i) risks related to the Committee’s duties and responsibilities as described in this Charter; (ii) management’s policies and processes for risk assessment and risk management; and, (iii) in the period between the Board’s risk oversight reviews, management's evaluation of the Company’s major risks and the steps management has taken or proposes to take to monitor and mitigate such risks.
16. Setting clear hiring policies for employees or former employees of the independent auditors.
17. Overseeing and reviewing the Company’s legal, ethical and regulatory compliance program, including the Company’s Code of Conduct for employees, officers and directors of ePlus, and to at least annually meet to review the implementation and effectiveness of the Company’s legal, ethical and regulatory compliance program with the General Counsel and Chief Financial Officer, each of whom shall have the authority to communicate directly to the Audit Committee, promptly, about actual and alleged violations of the Code of Conduct for employees, officers and directors of ePlus, including any matters involving criminal or potential criminal conduct.
18. Establishing and overseeing procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters, and periodically receive reports regarding the status and treatment of complaints submitted through the procedures.
Oversight of the Corporation’s Internal Audit Function
19. Reviewing and concurring in the appointment, replacement, reassignment or dismissal of the senior internal auditing executive, and the compensation package for such person.
20. Reviewing, as appropriate, the results of internal audits and discuss such matters with the internal audit department and with management, including significant reports to management prepared by the internal audit department and management’s responses.
22. Discussing with the independent auditor the internal audit department’s responsibilities, budget and staffing and any recommended changes in the planned scope of the internal audit.
23. Overseeing preparation of the report of the Committee that SEC rules require to be included in the Corporation’s annual proxy statement.
24. Conducting an annual performance evaluation of the Committee, reviewing and reassessing the adequacy of this Charter at least annually, and recommending changes as appropriate to the Board.
25. Discussing with the General Counsel legal matters that may have a material impact on the financial statements or the Company’s compliance policies.26. Meeting separately and periodically with each of management, the internal auditors, the independent auditors and the General Counsel.
Nominating and Governance Committee Charter
Compensation Committee Charter
COMPENSATION COMMITTEE CHARTER
(as Amended by the Board of Directors on February 15, 2018)
This Charter is intended as a component of the flexible framework within which the Board of Directors, assisted by its committees, directs the affairs of ePlus inc. While it should be interpreted in the context of all applicable laws, regulations and listing requirements, as well as in the context of the ePlus inc. Certificate of Incorporation and Amended and Restated Bylaws, it is not intended to establish by its own force any legally binding obligations.
The Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of ePlus inc. (the Company”) will discharge the responsibilities delegated by the Board relating to the review and determination of compensation of the Company’s executive officers. For purposes of this Charter, the term “executive officer” has the same meaning specified for the term “officer” in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The Committee shall consist of three or more directors. Each member of the Committee shall be an independent director as defined under Rule 5605(a) and the applicable listing standards of the Nasdaq Stock Market, and satisfy any other independence guidelines adopted by the Company or required under federal securities laws.
Each member of the Committee must qualify as a "non-employee director" as defined under Rule 16b-3 of the Exchange Act. The members and chair of the Committee shall be appointed by the Board, based on recommendations from the Nominating and Corporate Governance Committee of the Board. The Board, by majority vote, may remove any member from the Committee at any time with or without cause.
Committee Meetings and Procedures
The Committee meets quarterly or more frequently as needed. The Committee may invite to its meetings any director, officer of the Company or such other person as it deems appropriate in order to assist it in performing its responsibilities. The Committee reports its actions and recommendations to the Board. The Committee may form and delegate authority to subcommittees, other directors on the Board or executive officers, when appropriate and permitted by applicable law, rule or regulation.
Committee Authority and Responsibilities
The Committee shall have the following powers and responsibilities and may take action according the foregoing as the Committee deems it appropriate:
1. CEO Compensation. To review and approve, and recommend to the board annually to ratify, the corporate goals and objectives applicable to the compensation of the chief executive officer (“CEO”), evaluate at least annually the CEO's performance in light of those goals and objectives, and approve and recommend to the board to ratify, the CEO's compensation level based on this evaluation. The CEO cannot be present during any voting or deliberations by the Committee or the Board on his or her compensation.
2. Executive Officer Compensation. To review and approve, based on the recommendation of the Company’s CEO, and recommend to the Board to ratify, the corporate goals and objectives applicable to the compensation of the Company’s non-CEO executive officers, evaluate at least annually the executive officers’ performance in light of those goals and objectives, and approve and recommend to the Board to ratify, the executive officers’ compensation level based on this evaluation.
3. Incentive and Equity-Based Plans. To review and approve and, if required by law, recommend to the Board approval of, incentive compensation plans and equity-based plans, and where appropriate or required, recommend such plans for approval by the stockholders of the Company, which includes the ability to adopt, amend and terminate such plans. The Committee shall also have the authority to administer the Company's incentive compensation plans and equity-based plans as provided for in the relevant plan, including designation of the employees to whom the awards are to be granted, the amount of the award or equity to be granted and the terms and conditions applicable to each award or grant, subject to the provisions of each plan.
4. CEO and Executive Officer Employment and Severance Agreements. Review and approve, and recommend to the Board for ratification, all employment agreements, severance agreements, retention agreements and change in control agreements, and any other special or supplemental benefits with respect to the CEO and the executive officers.
5. Executive Perquisites. Establish, review and monitor compliance with policies and procedures related to executive perquisites, and review and approve all executive perquisite plans or programs and all material modifications thereto.
6. Risk Oversight. To review the Company's incentive compensation arrangements to determine whether they encourage excessive risk-taking, to review and discuss at least annually the relationship between risk management policies and practices and compensation, and to evaluate compensation policies and practices that could mitigate any such risk.
7. Compensation Discussion and Analysis. To review and discuss with management the Compensation Discussion and Analysis (“CD&A”) and the related executive compensation information, recommend that the CD&A and related executive compensation information be included in the Company's annual report on Form 10-K and proxy statement, and produce the compensation committee report on executive officer compensation required to be included in the Company's proxy statement or annual report on Form 10-K.
8. Say on Pay. To review and recommend to the Board for approval the frequency with which the Company will conduct Say on Pay Votes, taking into account the results of the most recent stockholder advisory vote on frequency of Say on Pay Votes required by Section 14A of the Exchange Act, and review and approve the proposals regarding the Say on Pay Vote and the frequency of the Say on Pay Vote to be included in the Company's proxy statement.
9. Outside Consultants, Legal Counsel and Other Advisers. The Committee shall have the authority, in its sole discretion, to select, retain and obtain the advice of a compensation consultant, legal counsel or other adviser as necessary to assist with the execution of its duties and responsibilities as set forth in this Charter. The Committee shall be directly responsible for the appointment of, setting the compensation for, and overseeing the work of, such compensation consultant, legal counsel or other adviser. The Committee shall receive appropriate funding from the Company, as determined by the Committee, for the payment of reasonable compensation to its compensation consultants, legal counsel and any other advisers. However, the Committee shall not be required to implement or act consistently with the advice or recommendations of its compensation consultant, legal counsel or other adviser, and the authority granted in this Charter shall not affect the ability or obligation of the Committee to exercise its own judgment in fulfillment of its duties under this Charter.
The Committee may select, or receive advice from, a compensation consultant, legal counsel or other adviser to the Committee only after taking into consideration the factors set forth in Nasdaq Listing Rule 5605(d), except as otherwise provided therein. However, nothing in this Charter or Nasdaq Listing Rule 5605(d) should be read to require that the Committee select, or receive advice from, a compensation consultant, legal counsel or other compensation adviser that is independent under the factors set forth in such Rule, but rather only that the Committee consider such compensation consultant’s, legal counsel’s, or other adviser’s independence before selecting, or receiving advice from, such person.
10. Charter Review. Review and reassess the adequacy of this Charter at least annually and recommend any proposed changes to the Board for approval.
11. Performance Evaluation. The Committee shall conduct an annual evaluation of the performance of its duties under this Charter and shall present the results of the evaluation to the Board. The Committee shall conduct this evaluation in such manner as it deems appropriate.
12. General Authority. The Committee undertakes additional activities within the scope of its primary functions as the Board may from time to time determine.