Michael Baur
About Michael Baur
Michael L. “Mike” Baur, 68, is Chair, President and Chief Executive Officer of ScanSource, Inc. (SCSC). He has served as either CEO or President since the Company’s inception in December 1992, as a director since December 1995, and as Chair since February 2019, bringing 40+ years of technology distribution experience and deep institutional knowledge . Under his leadership in FY2025, ScanSource delivered gross profit growth to $408.6M (+2.4% YoY), Adjusted EBITDA of $144.7M (+2.8% YoY), EBITDA margin expansion, 117% free cash flow conversion, non-GAAP EPS of $3.57 (+15.9% YoY), and Adjusted ROIC of 13.6%, aided by $106.5M in share repurchases and accretive acquisitions (Resourcive and Advantix) . For pay-versus-performance, a $100 investment translated to $174 by FY2025 (down from $184 in FY2024), while net income was $71.5M and Adjusted EBITDA $144.7M .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| ScanSource, Inc. | Chair | Feb 2019–present | Unified leadership and strategic oversight during expansion of recurring revenue and margin improvement . |
| ScanSource, Inc. | CEO/President | Dec 1992–present | Founder-executive guiding strategy, M&A, and capital allocation for 30+ years . |
| Various technology/distribution companies (pre-SCSC) | Senior leadership roles | Prior to 1992 | Built industry expertise in IT distribution prior to founding ScanSource . |
Fixed Compensation
| Metric (USD) | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Base Salary | $875,000 | $901,000 | $950,000 |
| Annual Cash Incentive (Non-Equity Incentive Plan) | $1,246,875 | $540,600 | $1,724,250 |
| Other Bonus (Supplemental/Cyber Insurance Program) | — | $270,300 | $320,938 |
Notes:
- FY2025 target bonus opportunity: 150% of base salary ($1,425,000 target); actual payout ~121% of target ($1,724,250) reflecting metric attainment and 100% individual factor .
- FY2025 base salaries set July 1, 2024; CEO base: $950,000 .
Performance Compensation
Annual Incentive Plan (FY2025 design and results)
| Component | Weight | Threshold | Target | Max | Actual | Payout vs Target |
|---|---|---|---|---|---|---|
| Performance Award Adjusted EBITDA (in “thousands”) | 45% | 118.9 | 158.5 | 182.3 | 147.7 | 80% (contributes ~36% of total target) |
| Free Cash Flow Conversion | 30% | 60% | 65% | 90% | 117% | 200% (contributes ~60% of total target) |
| Individual Performance Factor | 25% | — | 100% | — | 100% | 100% (contributes 25% of total target) |
- Aggregate result ≈ 121% of target cash incentive for FY2025 .
- Definitions: Adjusted EBITDA and FCF Conversion are non-GAAP measures specified in Appendix A ; FCF Conversion = Free Cash Flow / Non-GAAP Net Income, 117% in FY2025 .
Long-Term Incentives (FY2025 grants; total equity mix 50% TBRSUs / 50% PSUs)
| Grant (Aug 30, 2024) | Shares | Vesting | Performance Metrics |
|---|---|---|---|
| Time-Based RSUs | 49,077 | 25% annually over 4 years (service-based) | N/A |
| Performance-Based RSUs | 49,078 | Cliff vest at 3 years, subject to performance | 50% Normalized EPS (2-yr targets, with 3-yr rTSR modifier) and 50% Adjusted ROIC (3-yr annual targets) |
PSU Performance detail:
- Normalized EPS PSU annual targets (examples): FY2025 threshold/target/max $2.69/$3.58/$4.30; FY2026 target tied to FY2025 actuals; rTSR modifier ±25% vs S&P 600 Tech Hardware & Equipment peer set; capped at 200% .
- Adjusted ROIC PSU annual thresholds/target/max: 11.25% / 13.5% / 16.3% (linear interpolation; 3-year period) .
- No stock options granted since 2021 as part of long-term incentive plan (reduces risk profile) .
Realized Equity Activity (FY2025)
| Item | FY2025 Quantity | FY2025 Value |
|---|---|---|
| Options Exercised | 264,093 shares | $2,728,024 value realized on exercise |
| RSUs/PSUs Vested | 88,451 shares | $4,270,303 value realized on vesting |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 416,613 shares (1.9% of 22,067,128 outstanding as of Oct 3, 2025) |
| Includes Options Exercisable | 283,338 options included in beneficial ownership footnote |
| Unvested RSUs (6/30/25) | 7,802 (2021), 28,350 (2022), 44,615 (2023), 49,077 (2024); market values $326,202; $1,185,314; $1,865,353; $2,051,909 respectively |
| Unvested PSUs (target basis, 6/30/25) | 25,515 (2022), 59,487 (2023), 49,078 (2024); market values $1,066,782; $2,487,151; $2,051,951 respectively |
| Outstanding Options (examples) | Legacy grants: 125,000 @ $38.19 exp. 12/4/2025; 77,339 @ $37.00 exp. 12/2/2026; 53,079 @ $34.35 exp. 12/8/2027; 33,899 @ $24.68 exp. 11/19/2030; 119,021 @ $27.14 exp. 11/24/2030 |
| Ownership Guidelines | CEO must hold 3x base salary; retain 50% net shares until compliant; CEO in compliance as of 6/30/25 |
| Anti-Pledging / Anti-Hedging | Pledging and hedging prohibited; all executives/directors in compliance |
Trading pressure considerations:
- Significant FY2025 option exercises (264,093 shares) and annual RSU/PSU vesting create potential liquidity events; anti-pledging reduces leverage risk .
- Near-term option expirations (e.g., Dec 2025, Dec 2026, Dec 2027) can drive additional exercises around expirations .
Employment Terms
| Term | Key Economics / Provisions |
|---|---|
| Employment Agreement | Three-year agreement effective July 1, 2017 with auto 1-year renewals unless 180 days’ non-renewal notice |
| Base Salary / Target Bonus | $950,000 base; target annual bonus 150% of base (max 200%) |
| Annual Equity Opportunity | Consideration for annual grants; indicative level $5,000,000 (committee discretion; plan terms apply) |
| Deferred Compensation | May defer up to 50% salary and 100% bonus; Company match 50% up to $200,000/year |
| Post-Employment Medical Support | Company contributions to cover access-only continuation (Medicare coordination) until age 80 per agreement |
| Severance (no CIC) | 2.5x Average Compensation Amount (avg base+variable over last 3 yrs) plus pro-rata bonus; benefits continuation; equity acceleration provisions as described |
| Severance (CIC, Double Trigger) | 3.0x Average Compensation Amount plus pro-rata bonus; benefits continuation; equity acceleration |
| Restrictive Covenants | Non-compete and non-solicit for 2 years; confidentiality for 5 years post-termination |
| Clawback Policy | Dodd-Frank compliant recovery of erroneously awarded incentive comp upon restatement; applies regardless of fault; effective for comp “received” on/after Oct 2, 2023 |
| Hedging/Pledging | Prohibited; insider trading policy and 10b5-1 enhancements adopted |
Illustrative payout table (CEO; as of 6/30/25, USD):
| Scenario | Severance | Pro-Rata Bonus | Time-Based Equity Acceleration | PSU Acceleration | Medical Coverage | Total (select) |
|---|---|---|---|---|---|---|
| Involuntary (no CIC) | $5,624,479 | $1,425,000 | — | — | $395,557 | $7,445,036 |
| Involuntary (in connection with CIC) | $6,749,375 | $1,425,000 | $5,428,778 | $6,208,467 | $395,557 | $20,207,177 |
| Retirement | — | $1,425,000 | $5,428,778 | $6,208,467 | $395,557 | $13,647,802 |
Board Governance
- Role/tenure: Director since Dec 1995; Chair since Feb 2019; not independent; no committee memberships .
- Dual-role implications: Combined CEO/Chair structure mitigated by a strong Lead Independent Director (Peter C. Browning) with defined authority (presides in executive sessions, agenda review, shareholder outreach) .
- Board independence: All directors other than Baur are independent per SEC/Nasdaq standards .
- Board/committee activity: Board met 6 times in FY2025; committees collectively 13; each director attended ≥75% of meetings .
- Committee leadership snapshot: Audit (Chair: Charles A. Mathis), Compensation (Chair: Elizabeth O. Temple), Nominating & Corporate Governance (Chair: Peter C. Browning) .
- Director compensation: Employee-director Baur receives no additional board fees .
Director/Shareholder Alignment and Say‑on‑Pay
- Stock ownership/retention: Directors must hold 5x cash retainer; 50% net shares retention until compliance; all in compliance .
- Executive ownership: CEO guideline 3x salary; in compliance as of 6/30/25 .
- Say-on-Pay: ~98% approval at Dec 2024 annual meeting; Compensation Committee interpreted as strong support for program design .
- Shareholder engagement: Outreach to holders of >60% shares outstanding; direct engagement with ~28% .
Compensation Structure Analysis
- Mix and risk: Heavy at-risk pay with performance linkage; FY2025 CEO comp ~87% variable (cash + equity), 62% LTI, aligning with long-term value creation .
- Metric evolution: FY2025 AIP added Free Cash Flow Conversion and individual goals while retaining Adjusted EBITDA; LTI PSUs tied to Normalized EPS (with rTSR) and Adjusted ROIC, reinforcing profitability and capital efficiency .
- Shift away from options: No stock options as LTI since 2021; reduces risk of option-related windfalls and aligns with RSU/PSU frameworks .
- Governance protections: Double-trigger CIC; no excise tax gross‑ups; clawback; anti-hedging/pledging; ownership/retention policies .
- One-time adjustments: Cyberattack supplemental bonus mechanism pays only upon insurance recoveries; $511,171 aggregate to NEOs (ex‑Conde) in FY2025 tied to $6.24M insurance proceeds—designed to restore 2023 MIP impact, not inflate ongoing pay .
Related Party Transactions and Red Flags
- Related party transactions: None requiring disclosure; annual oversight by Audit Committee .
- Legal/regulatory: No Section 16(a) delinquencies in FY2025; no disclosed investigations .
- Hedging/pledging: Prohibited; compliance affirmed .
- Low say-on-pay risk: Very high support (~98%) reduces risk of adverse shareholder votes .
- Dual role CEO/Chair: Governance mitigants in place via Lead Independent Director responsibilities and fully independent key committees .
Compensation Peer Group (Benchmarking context)
Peer set used for FY2025 benchmarking includes distributors/tech hardware/services such as Applied Industrial Technologies, Insight Enterprises, ePlus, PC Connection, Sanmina, Plexus, Brady, Zebra, TTM Technologies, among others (full list in proxy) .
Equity Plan and Overhang Snapshot (context)
- Equity plans outstanding (as of 6/30/25): 1,367,656 securities underlying outstanding rights; 2,241,354 shares available for future issuance under the 2024 Omnibus Plan; weighted average option exercise price on legacy plans $32.71 .
- Director equity grants: Directors (non-employee) received 3,141 RSUs on Aug 30, 2024 (vested Aug 2025); Baur receives no director equity as employee .
Investment Implications
- Alignment and performance levers: The pay design emphasizes cash generation (FCF Conversion 117%) and capital efficiency (Adjusted ROIC framework), while PSUs tie to EPS quality and relative TSR—supporting shareholder-aligned execution (margin expansion, recurring gross profit mix up to 32.8%) .
- Potential selling pressure windows: FY2025 realized sizable option exercises/vesting; plus legacy options approaching expiry (2025–2027) can trigger further exercises—monitor 10b5‑1 plans and Form 4s around window openings and expirations .
- Retention and transition: Robust severance/CIC protections (2.5x/3.0x for CEO; non-compete 2 years) and succession planning activities reduce near-term retention risk; however, CEO age (68) and long tenure necessitate continued succession oversight .
- Governance: Combined CEO/Chair structure is balanced by a strong Lead Independent Director and fully independent committees; say-on-pay support and engagement practices suggest low governance discount from investors .
- Strategy execution: Capital allocation discipline (accretive M&A, net leverage 1–2x adjusted EBITDA target, share repurchases) and progress toward recurring revenue mix provide catalysts; watch PSU performance periods and ROIC delivery for sustained payout alignment .
Overall, Baur’s incentives are tightly coupled to FCF, EBITDA, EPS quality, and ROIC with protective governance features (double-trigger CIC, clawback, no hedging/pledging), supporting alignment. Near-term technicals include option expirations and periodic vesting, which may affect insider transaction cadence; fundamental focus should remain on sustaining margin expansion, recurring gross profit growth, and ROIC performance to drive PSU realizations and shareholder returns .