DEF 14A: ePlus Inc. Sets 2025 Annual Meeting, Details Executive Pay

ePlus Inc. announces its 2025 Annual Meeting, detailing director elections, executive compensation, and auditor ratification, alongside a strategic divestiture of its U.S. financing business.

Summary

• The 2025 Annual Meeting of Shareholders for ePlus Inc. is scheduled for September 16, 2025, at 8:30 a.m. ET in Herndon, Virginia.
• Shareholders will vote on the election of seven director nominees, an advisory resolution on named executive officer (NEO) compensation, and the ratification of Deloitte & Touche LLP as the independent registered accounting firm.
• ePlus completed the divestiture of its U.S. financing business (Marlin Leasing Corporation dba PEAC Solutions) on June 30, 2025, to become a pure-play technology solutions provider.
• For fiscal year 2025, net sales decreased 7.0% to $2,068.8 million, while services revenue increased 37.1% to $400.4 million.
• Consolidated gross profit increased 3.3% to $569.1 million, but consolidated operating income decreased 10.6% to $141.4 million.
• Net earnings for FY25 decreased 6.7% to $108.0 million, and diluted earnings per share decreased 6.5% to $4.05.
• Over the past five fiscal years (FY21-FY25), ePlus achieved a compound annual growth rate (CAGR) of 7% for net sales, 19% for services revenue, 10% for gross profit, 7% for consolidated operating income, 10% for net earnings, and 10% for diluted earnings per share.
• The company returned over $84 million to shareholders through stock repurchases over the last five fiscal years.
• NEOs received base salary increases for FY25, with Mark P. Marron's salary increasing to $975,000, Elaine D. Marion's to $525,000 (effective April 1, 2025, to $540,000), and Darren S. Raiguel's to $550,000 (effective April 1, 2025, to $565,000).
• Annual cash incentive awards for FY25 were paid out at 118% of target for all NEOs, including $1,356,048 for Mark P. Marron, and $795,941 each for Elaine D. Marion and Darren S. Raiguel.
• Long-term cash performance awards for the April 1, 2022, to March 31, 2025, period paid out at 77% of target, resulting in $212,891 for Mark P. Marron and $116,122 each for Elaine D. Marion and Darren S. Raiguel.
• The Board of Directors is composed of seven members, with six being independent; Melissa J. Ballenger was appointed in January 2025, and Ben Xiang resigned in July 2025.

Sentiment

Score: 5

Explanation: While the company demonstrates strong long-term growth trends and a clear strategic pivot towards high-growth technology sectors, the significant year-over-year declines in key fiscal year 2025 financial metrics (net sales, operating income, net earnings, EPS) and underperformance in long-term incentive payouts introduce near-term concerns. The strategic divestiture is positive, but its full impact on future performance remains to be seen. The mixed financial results warrant a neutral to cautious sentiment.

Positives

• Strategic divestiture of the U.S. financing business positions the company as a pure-play technology solutions provider, enabling increased investment in high-growth areas like AI, cloud, cybersecurity, and managed services.
• Strong five-year financial performance with positive compound annual growth rates (CAGR) across key metrics: net sales (+7%), services revenue (+19%), gross profit (+10%), operating income (+7%), net earnings (+10%), and diluted EPS (+10%).
• Shareholders approved the company's say-on-pay proposal at the 2024 Annual Meeting with approximately 93.2% of votes cast in favor, indicating strong shareholder support for the executive compensation program.
• Over $84 million has been returned to shareholders through stock repurchases over the past five fiscal years.
• Annual cash incentive awards for fiscal year 2025 paid out at 118% of target, reflecting strong short-term performance against set financial goals.
• The Board of Directors maintains a majority of independent directors (6 out of 7), enhancing corporate governance and oversight.
• All directors and executive officers meet or are within the phase-in period for their respective stock ownership guidelines, aligning their interests with shareholders.

Negatives

• Fiscal year 2025 saw a 7.0% decrease in net sales to $2,068.8 million compared to the prior year.
• Consolidated operating income for FY25 decreased 10.6% to $141.4 million.
• Net earnings for FY25 declined 6.7% to $108.0 million, and diluted earnings per share decreased 6.5% to $4.05.
• Long-term cash performance awards for the April 1, 2022, to March 31, 2025, period paid out at 77% of target, indicating underperformance against long-term growth goals, and representing a 48% decrease compared to the prior period's payout.
• Section 16(a) reports for Mark P. Marron, Elaine D. Marion, and Darren S. Raiguel were filed one day late due to an administrative error.

Risks

• The company's enterprise risk management process oversees risks associated with business strategy, operations, accounting and controls, cybersecurity, environmental, social and governance (ESG), human capital, and capital investments.
• The Compensation Committee reviews risks related to the executive compensation program and incentive plans to ensure they do not encourage excessive risk-taking that could cause a material adverse effect.
• Forward-looking statements involve substantial risks and uncertainties that may cause actual results to differ materially from those set forth in the statements.
• General business risks are mentioned under the heading 'Risk Factors' in the company's Annual Report on Form 10-K and periodic reports on Form 10-Q.

Future Outlook

The divestiture of the U.S. financing business is expected to position ePlus as a pure-play technology solutions provider, strengthening its ability to invest in high-growth areas such as AI, cloud, cybersecurity, data center modernization, high performance networking, and related consulting and managed services. This strategic shift is anticipated to provide flexibility to accelerate plans for expanding the company's footprint and customer base. The executive compensation program is designed to attract, motivate, and retain a talented, ethical, and creative executive team, aligning their performance with the company's business strategy and long-term shareholder interests through performance-based pay opportunities tied to key financial, operational, and strategic metrics.

Management Comments

• Our executive compensation philosophy is to reward performance in alignment with our shareholders long-term interests, and to promote and maintain stability within the executive team by granting cash incentives, performance stock units and restricted stock awards, each with multi-year vesting terms.
• The Compensation Committee believes that our compensation programs do not encourage excessive risks that are reasonably likely to cause a material adverse effect to our Company.
• The Company believes that tax deductibility of compensation is an important factor, but not the sole factor, to be considered in setting executive compensation policy, and the Compensation Committee has authorized payments that are not deductible for federal income tax purposes when it believes that such payments are appropriate to attract, retain, and incentivize executive talent.
• ePlus believes its compensation philosophy and process yield an equitable result.

Industry Context

ePlus is strategically repositioning itself as a pure-play technology solutions provider by divesting its financing business, aligning with the broader industry trend of specialization and focus on high-growth technology segments. The company's emphasis on AI, cloud, cybersecurity, data center modernization, high performance networking, and related consulting and managed services reflects the critical and evolving demands within the IT sector. Operating in a dynamic and competitive market, ePlus aims to attract and retain top executive talent, a common challenge across the technology industry. The company's peer group selection for compensation benchmarking, which includes various IT services, software, and technology distribution firms, underscores its competitive landscape within the technology solutions space.

Comparison to Industry Standards

• The company benchmarks its executive compensation practices against a publicly traded peer group, including CACI International Inc., EPAM Systems, Inc., ASGN Incorporated, ScanSource, Inc., PC Connection, Inc., Pure Storage, Inc., Unisys Corporation, Itron, Inc., ICF International, Inc., Thoughtworks Holding, Inc., CSG Systems Internationals, Inc., Perficient, Inc., StarTek, Inc., and Climb Global Solutions, Inc., to ensure competitiveness.
• A secondary market reference, Mercers 2022 U.S. Executive Benchmark Database (size-adjusted to $1.8 billion revenue), is also used to ascertain compensation positioning.
• The 93.2% shareholder approval of the 2024 say-on-pay proposal indicates strong alignment with industry best practices for executive compensation transparency and effectiveness.
• The Relative Total Shareholder Return (TSR) Metric for Performance Stock Units is benchmarked against the Russell 2000 Index, providing a comparison to the performance of small-cap companies in the broader market.

Management Changes

Corporate Governance

Related Party Transactions

• One of CEO Mark P. Marron's daughters is a non-executive employee of a company subsidiary, serving as a Customer Success Manager.
• She received approximately $131,000 in compensation during the fiscal year ended March 31, 2025, comprising about 90% base salary, with the remainder being benefits and certain bonus payments.
• This transaction was approved and ratified in accordance with the company's written policy for related person transactions.

Stakeholder Impact

• **Shareholders**: Directly impacted by financial performance (FY25 declines, but strong 5-year CAGRs), share repurchases, and corporate governance decisions (director elections, executive compensation, auditor ratification). The strategic divestiture aims to enhance long-term shareholder value.
• **Employees**: The executive compensation program is designed to attract, motivate, and retain talented employees. The company's acquisition of Bailiwick Services, LLC in August 2024, increased employee headcount. The median employee compensation is disclosed.
• **Customers**: The company's core mission is to leverage technology to create 'inspired and transformative business outcomes' and cultivate 'positive customer experiences.' The strategic shift to a pure-play technology solutions provider is intended to strengthen offerings and customer focus.
• **Suppliers/Vendors**: The Business Partner Code of Conduct sets clear expectations for suppliers, vendors, contractors, and other service providers, promoting ethical and responsible business practices across the supply chain.

Next Steps

• Hold the 2025 Annual Meeting of Shareholders on September 16, 2025, to vote on director elections, NEO compensation, and auditor ratification.
• Continue to invest in high-growth areas such as AI, cloud, cybersecurity, data center modernization, high performance networking, and related consulting and managed services.
• Accelerate plans for expanding the company's footprint and customer base following the divestiture.
• The Compensation Committee will conduct an annual review of executive compensation programs.
• The Board and its committees will perform an annual performance self-assessment.
• File a Current Report on Form 8-K with the SEC within four business days following the 2025 Annual Meeting to report final voting results.
• Shareholders may submit proposals for the 2026 Annual Meeting of Shareholders by April 1, 2026, for inclusion in the proxy statement, or provide notice between May 19, 2026, and June 18, 2026, for other proposals or nominations.

Key Dates

Recommendation

The company exhibits a strong long-term growth trajectory and a clear strategic pivot towards high-growth technology areas through its recent divestiture. This strategic focus, coupled with a robust corporate governance framework and a commitment to shareholder returns via repurchases, provides a solid foundation. However, the significant year-over-year declines in net sales, operating income, net earnings, and diluted EPS for fiscal year 2025, along with the underperformance in long-term cash incentive payouts, introduce near-term uncertainty. While the long-term outlook appears promising, the recent financial performance suggests a period of adjustment or potential headwinds that warrant a cautious approach. Investors should monitor the execution of the new pure-play strategy and the reversal of the recent financial declines before considering a stronger position.

Keywords

Technology solutions, IT services, cybersecurity, cloud computing, data center, networking, artificial intelligence, managed services, corporate governance, executive compensation, SEC filing, proxy statement, ePlus, DEF 14A