Business Ethics and Code of Conduct
Business Ethics and Code of Conduct
The successful business operation and reputation of ScanSource, Inc. and all of its subsidiaries (the “Company”) is built upon the principles of fair dealing and ethical conduct of our employees. Our reputation for integrity and excellence requires careful observance of the spirit and letter of all applicable laws and regulations, as well as a scrupulous regard for the highest standards of conduct and personal integrity.
Our continued success is dependent upon our customers’ and vendors’ trust, and we are dedicated to preserving that trust. Employees owe a duty to the Company, our customers, our vendors, and shareholders to act in ways that will merit the continued trust and confidence of the public.
As an organization, the Company strives to ensure compliance with all applicable laws and regulations. We expect our directors, officers, and employees to conduct business in accordance with the letter, spirit, and intent of all relevant laws and to refrain from any illegal, dishonest, or unethical conduct.
Code of Conduct
In general, you should find that using good judgment, based on high ethical principles, will guide you to act appropriately. Further, it is the responsibility of every ScanSource employee, officer and director and select third parties with whom we do business with to comply with our Code of Conduct. Our Code of Conduct includes the following 9 policies provided in this same section of the Company Handbook:
Code of Conduct:
Business Ethics and Code of Conduct
Intellectual Property & Confidentiality
Conflicts of Interest
Financial and Accounting Matters
Insider Trading in Securities
Securities Laws and Disclosures
Anti-Corruption and International Business
Open Door, Anti-Retaliation and Review Policies
Equal Employment Opportunity
Fair and Honest Dealing
You must deal fairly and honestly with the Company’s employees, shareholders, customers, suppliers, and competitors. You must behave in an ethical manner and not take unfair advantage of anyone through manipulation, concealment, abuse of confidential or privileged information, misrepresentation of material facts, or any other unfair dealing practice.
You must respect the integrity of persons and firms with whom the Company deals. You must limit the fees and commissions paid to agents and other representatives to amounts that are consistent with proper business conduct. You cannot make a payment, directly or indirectly, to any employee, agent or representative of a third party with or through whom the Company does business without full, documented disclosure to all parties.
Other Conflicts of Interest policies which are an integral part of this Code are provided in Policy #113.
The Company and its employees deal with government officials in the course of the Company’s business, either out of necessity or in legitimate efforts to develop or maintain good working relationships. It is important that the responsible employees be thoroughly familiar with and comply with laws and regulations applicable to dealing with government officials. Employees should be aware that business practices which are acceptable in a commercial environment (e.g., meals, transportation or entertainment) may not be acceptable when dealing with government officials. Employees should follow Company guidelines in their relationships with government officials, and should direct questions about particular situations to the General Counsel. Personal contributions to any political cause, party, candidate or charity should not be represented as coming from the Company or in any way tied to obtaining or maintaining business from a governmental entity or official. Other policies governing interaction with government officials, and integral to this Code, can be found in Policy #117.
Any investigation or review of the Company or its business practices by any government official is important to the Company. The Company’s General Counsel must be notified of any request for information directed to the Company from any government official or agency before any information is furnished and before there is any agreement or understanding to furnish such information. While it is the Company’s policy to cooperate with all appropriate inquiries, in order to make certain this is done properly, the General Counsel must be advised at the outset. Under no circumstance should any employee lie to or mislead a government official. Nor may an employee destroy any documents which have been, or which he or she believes will be, requested for inspection by a government official. Nothing in the Code of Conduct prohibits any person from reporting potential violations of law to relevant government authorities.
Compliance with Antitrust Laws
You must comply with applicable antitrust and similar laws that regulate competition in the countries in which we operate. If a question arises as to how the antitrust laws apply to a particular business situation or whether our existing business practices comply with the law, every employee has both the right and the responsibility to review the question by calling the General Counsel. These laws prohibit, among other things:
- Agreements that unreasonably restrain competition including agreements (whether reflected through tacit understandings, side agreements, oral commitments or written contracts) regarding price fixing, bid rigging, market allocation and collusion (including price sharing) with anyone, including competitors, customers and suppliers;
- Monopolization, boycotts, certain exclusive dealing arrangements and price discrimination agreements; and
- Unfair trade practices, including bribery, misappropriation of trade secrets, deception, intimidation and similar unfair practices.
Compliance with Other Laws, Rules and Regulations
The Company strives to ensure all activity on its behalf is in compliance with applicable laws, rules and regulations. You must comply with all applicable laws, rules and regulations, whether or not specifically addressed in this Code of Conduct. Securities Laws and Insider Trading policies are included as part of this Code as policies #115 and #116. Please contact the Company’s General Counsel for additional guidance or if you have questions on any law, rule or regulation.
Proceeds of Illegal Activity
It is a crime under federal and some state money laundering statutes for any person to engage in commercial transactions with the proceeds of criminal activity knowing that the property involved is the proceeds of criminal activity, if the intent in so doing is to promote the criminal activity, conceal or disguise the source or ownership of the proceeds, avoid transaction reporting requirements or evade taxes. If a financial institution, such as a bank or loan company, or a travel agency is involved, and the transaction exceeds $10,000, it is not even necessary that the person have the intent to promote the criminal activity, conceal or disguise it, evade taxes or avoid a reporting requirement. These statutes are not limited to cash transactions. Transactions such as payments for hotel bills, airline tickets and retail purchases that involve personal checks, company checks or wire transfers may be covered.
While it is often thought that such statutes are limited to drug money laundering, these statutes reach almost every crime that generates large amounts of money. Violations of these statutes are extremely serious and can subject a person to 20 years in prison and a fine of the greater of $500,000 or twice the amount of money involved in each transaction.
The Company does not want to be misused by those engaged in criminal activity. Each employee is expected to be on the alert for activities indicative of drug trafficking, money laundering or other crimes. If an employee has reason to believe that a transaction involves criminal proceeds, or if the transaction otherwise appears suspicious, the employee must immediately notify his or her supervisor, report the transaction to the General Counsel, or communicate his or her concerns under the Company’s Open Door Policy.
As we expand our operations abroad, we encounter new challenges as a result of cultural differences and unfamiliar business practices. While we are bound by U.S. laws and regulations as well as Company policy, we must recognize that in many cases we are introducing our culture and methods of conducting business into different environments. When conducting business in other countries, it is imperative that we be especially sensitive to foreign legal requirements and cultural differences and make every effort to integrate our culture as smoothly as possible. For example, it may be customary in some countries to give gifts or gratuities to customers or business partners, including those working for foreign governments, but such practices may violate U.S. law or laws in countries we do business.
The Company must be careful not to knowingly enter into relationships that, directly or indirectly, expose employees to undue health and safety risks, or that use child, prison or forced labor, or other similarly exploitative practices. The Company and employees will not act illegally to secure or conduct business. The Company will adhere to all applicable legal requirements, both foreign and those in the United States, such as the Foreign Corrupt Practices Act, anti-boycott laws, export laws, and embargo/sanctions regulations.
Delegation of Authority
Only employees who are specifically authorized may commit the Company to others. A “commitment” by the Company includes execution of any written agreement, the making of any oral agreement, or any other undertaking that obligates or binds the Company in any respect, whether or not it involves the payment of money. Employees must never execute a document or otherwise commit the Company unless they have clear authority to do so. You should check with your VP or the General Counsel to determine what authority limits have been delegated to you. Failure to follow this policy may subject you to prompt disciplinary action up to and including termination of employment.
You must promptly report any possible violation of Company policies or violations of applicable laws, including any allegation of questionable accounting or auditing activity. Disregarding or failing to comply with this obligation could lead to prompt disciplinary action, up to and including termination of employment. The Company forbids any retaliation against any employee who makes such a report or who assists in the processing of any claim regarding a possible violation of Company policy or applicable law. We are committed to this principle. Multiple independent channels of communications are available to employees; these are fully described in the Company’s Open Door Policy (Policy #121).
Investigations and Enforcement
Reports of possible violations of Company policy or applicable law will be collected, reviewed and processed by the General Counsel. The Company may refer reports that are submitted, as it determines to be appropriate to the Board of Directors, an appropriate committee of the Board or to legal authorities. Any reports submitted that involve the Company’s accounting, auditing and internal auditing controls and disclosure practices will be presented directly to the Audit committee of the Board of Directors on a periodic basis, unless immediate attention by the Audit Committee is warranted.
The Company will investigate reports of possible violations of Company policy or applicable law and, if a violation is substantiated, disciplinary action will be taken, where necessary, including appropriate sanctions for the individual(s) involved, up to and including termination of employment. Any executive officer or director suspected of having been a potential participant in a possible violation shall not be permitted to participate in any investigation or recommendation for disciplinary action or sanctions. The existence of any such investigation and the conclusions of any investigation are confidential and must not be disclosed without appropriate Company approval or as may be required by law.
Violations of Company policy or applicable law shall be addressed, which may include making a report to civil or criminal authorities for further action. In addition, the Company may, under certain circumstances, be required to disclose violations of the Code to the stockholders of the Company.
The Company may also from time to time conduct reviews to assess compliance with Company policy or applicable law. The policies concerning the reporting and review of potential violation of Company Policy or law is found in Policy #121.
Senior Financial Officers
Additional guidelines and standards for the Company’s principal executive officer, principal financial officers, principal accounting officer or controller, or persons performing similar functions (the “Senior Financial Officers”) can be found under “Supplemental Standards for Senior Financial Officers” within the Financial and Accounting Matters policy #114.
Amendments and Waivers
Only ScanSource, Inc.’s Board of Directors may amend this Code of Conduct. Only the Board of Directors or an authorized committee of the Board may waive a part of the Code. ScanSource will disclose publicly all material amendments and any waivers to the extent required by law.
Policy No. 111 Issued: 11/1/2004 Applicable: 11/1/2004 Revised: 3/15/2016
Intellectual Property and Confidentiality
This policy #112 is an integral part of the Company’s Code of Conduct, which is introduced under policy #111.
Every employee must carefully maintain and manage ScanSource’s intellectual property rights, including patents, trademarks, copyrights, licenses and trade secrets, to preserve and protect their value. In addition, employees must respect the intellectual property rights of others. If any employee violates other’s intellectual property rights, that individual and ScanSource could face substantial liability, including criminal penalties.
An invention, concept, discovery or improvement (all referred to as “Intellectual Property”) whether patentable or not, which is conceived or made by an employee, alone or with others, and with the use of the Company’s time, materials or facilities, at any time during the term of an employee’s employment is the property of the Company. This provision does not apply to Intellectual Property for which no equipment, supplies, facility, or trade secret information of the Company was used and which was developed entirely on the employee’s own time, unless (a) the invention related (i) to the business of the Company, or (ii) to the Company’s actual or demonstrably anticipated research or development, or (b) the invention resulted from any work performed by the employee for the Company.
An employee must promptly make full disclosure of all Intellectual Property to his/her immediate supervisor. At the Company’s request and expense and without further compensation, the employee will sign patent applications, assignments and other documents and will perform any other services considered necessary by the Company to vest title to the Company to such Intellectual Property and to perfect, defend and maintain the Company’s rights therein. An employee must disclose to the Company prior to the commencement of his/her employment with the Company a list of all inventions that he/she has, alone or jointly with others, conceived, developed, and/or reduced to practice that he/she considers to be his or her property.
Confidential information includes all non-public information that might be of use to competitors or harmful to the Company or its customers, if disclosed. The Company owns all information, in any form (including electronic information) that is created or used in support of its activities. This information is a valuable asset and the Company expects employees to protect it from unauthorized disclosure. This information includes Company customer, supplier, business partner, and employee data. Federal and state law may restrict the use of this information and may penalize the employee if the person uses or discloses it. Each employee should protect information pertaining to the Company’s competitive position, business strategies and information relating to negotiations with employees or third parties and share it only with employees who need to know it in order to perform their jobs.
Employees must maintain the confidentiality of information entrusted to them by the Company, its customers, vendors or consultants, except when disclosure is authorized or legally required. Employees must take all reasonable efforts to safeguard confidential information that is in their possession against inadvertent disclosure and must comply with any non-disclosure obligations imposed on ScanSource.
Confidential information includes, but is not limited to, the following examples:
- Labor relations strategies
- Computer Programs and codes
- Pending projects and proposals
Because the Company considers security breaches very serious, improper use or disclosure of trade secrets or confidential business information will result in prompt disciplinary action, up to and including termination of employment and legal action, even if the offending employee does not actually benefit from the disclosed information. Nothing in this Policy prohibits any person from reporting potential violations of law to relevant government authorities.
This policy does not supersede or limit any separate confidentiality agreements that ScanSource may enter into with individual employees.
Policy No. 112 Issued: 11/1/2004 Applicable: 11/1/2004 Revised: 3/15/2016
Conflicts of Interest
This policy #113 is an integral part of the Company’s Code of Conduct, which is introduced under policy #111.
Conflicts of Interest
The Company requires that employees avoid any relationship, activity, or ownership that might create a conflict between the employee’s personal interest and the Company’s interest. A “conflict of interest” occurs when the employee’s private interest interferes in any way, or even appears to interfere, with the interests of the Company. A conflict of interest can arise when employees take actions or have interests that may interfere with their ability to perform their jobs objectively and effectively. Conflicts of interest also arise when an employee, or a member of the employee’s family, receives improper personal benefits as a result of their position with the Company.
Employees owe a duty of undivided and unqualified loyalty to the Company. Employees may not use their positions improperly to profit personally or to assist others in profiting at the Company’s expense. The Company expects each employee to avoid situations that might influence their actions or prejudice their judgment in handling the Company business. Employees must not become obligated in any way to representatives of firms with which they deal and must not show any preference to third parties based on self or family interest. In addition, employees must communicate to the General Counsel any transaction or relationship that could create a conflict of interest or report such a transaction or relationship using any of the other avenues of communication set forth in the Company’s Open Door Policy, including anonymous reporting.
Activities that May Cause Conflicts
While not all inclusive, the following will serve as a guide to the types of activities that might cause conflicts of interest:
Outside Financial Interests
One potential conflict of interest is owning a financial interest in any company that is a competitor of the Company or which does or seeks to do business with the Company. Generally, owning securities of a publicly owned corporation regularly traded on a national securities exchange or NASDAQ would not create a conflict of interest. Relationships, pre-existing at the time of the adoption of this Code, which have been disclosed to the Board are exempt from this Policy.
Additional Restrictions for Certain Company Employees
In addition, the Company’s employees (and their immediate family members) (1) holding the office of Vice President or higher, (2) who are members of the executive team and (3) all Merchandising Department employees with the title of director or higher, are also prohibited from engaging in the following activities:
- Trading in Certain Securities
Affected employees shall not, directly or indirectly, trade in or own shares of stock of any publicly traded vendor companies that sell product to the Company; except that these employees are permitted to participate in trusts or managed accounts where someone other than the employee makes investment decisions that might include stocks of these companies, and employees can purchase mutual funds which might hold shares in these vendor companies.
- Restrictions on Certain Business Activities
Affected employees are further prohibited from:
- Conducting business, not on the Company’s behalf, with any of the Company’s vendors, suppliers, contractors, agencies, or any of their employees, officers or directors.
- Representing the Company in any transaction in which an employee or a family member, has a personal interest or in any transaction with an entity in which an employee or a family member have a substantial personal interest.
- Disclosing or using confidential, special or inside information about the Company or the Company’s customers, suppliers, business partners for the profit or advantage of an employee or an employee’s family members.
- Competing with the Company in the purchase, sale or ownership of property or services or business investment opportunities.
- Engaging in outside business activities or employment incompatible with the Company’s right to the employee’s full-time employment and efficient service.
Other than common courtesies usually associated with accepted business practices such as (and primarily) meals for business purposes, employees should not accept any of the following, but not limited to: gifts, payments, fees, services, special privileges, vacations, pleasure trips, use of recreational facilities or vacation homes, loans (other than conventional loans from lending institutions), or other favors from any person or business organization that does or seeks to do business with, or is a competitor of, the Company. With respect to tangible gifts, no company employee may accept gifts either individually or cumulatively, having a fair market value of more than $250 per year, and in no event may any gifts in the form of cash or marketable securities be accepted. The Company recognizes that it is not easy to turn down gifts which may in fact be made out of genuine generosity, so the Company is providing an alternative with respect to a gift that does not comply with this policy: (1) return it with a letter saying why you did so, or (2) give it to the Company, so that the Company may either donate it to a charity or find some other use for it, or (3) submit a one-time exception request to the Human Resources Department for logging and consideration.
An employee may not lend to or borrow from any customer, supplier, contractor or any person connected with the same. An employee may however, obtain a personal loan from the Company’s lenders that are on terms no more favorable than those available to the general public.
Services for Competitors/Vendors
An employee may not perform work or render services for any competitor of the Company or for any organization which does business or seeks to do business with the Company, outside of the normal course of your employment with the Company, without the approval of the General Counsel (or the Board of Directors, if the employee is an executive officer, senior financial officer or director). An employee cannot serve as a director, officer, or consultant of that organization, or permit the employee’s name to be used in a way that would suggest a business connection with that organization, without the General Counsel’s approval.
Participation on Boards of Directors
Employees and officers may not serve as a director of any other for-profit company, other than on behalf of the Company, without the approval of the Chief Executive Officer. Executive officers, senior financial officers, or financial directors may not serve in such capacity without prior approval of the Company’s Board of Directors.
Use of Undisclosed Information
Employees may have important information not generally known to the public about the Company or other corporations with which the Company is doing business (such as a publicly traded vendor, a service provider, software company, customer, or otherwise). The personal use of any such information for the personal profit or advantage of an employee or anyone else is strictly prohibited by the Company. Furthermore, individuals could be found to be in violation of federal securities laws if they take advantage of such information by (a) trading in the Company’s or another corporation’s stock, or (b) furnishing information to others in connection with the trading of such stock. Important information includes, but is not limited to, sales and earnings figures, major contracts, plans for stock splits, acquisitions or mergers, real estate transactions, and new projects contemplated by the Company. Employees should not, without proper authority, give or release data or information of a confidential nature concerning the Company or other corporations that the Company does business with to anyone not employed by the Company, or to another employee who has no need for such data or information. Nothing in this Policy prohibits any person from reporting potential violations of law to relevant government authorities.
For further information, see Insider Trading in Securities policy #115 and the Open Door, Anti-Retaliation and Review policy #121.
Improper or Unethical Payments
No employee of the Company shall give, or promise to give, any consideration to another person or entity in connection with the Company’s business, if the giving of such consideration is, or appears to be, an improper or unethical compensation or inducement. For the purpose hereof, the term “consideration” means anything of value or advantage, tangible or intangible, including such things as services rendered, or influence exercised, or promised to be exercised, for another’s benefit.
It is presumed that the giving of such consideration is improper or unethical compensation or inducement if:
- The consideration is so excessive as to suggest improper purposes.(For instance, an excessively high fee paid to individual arranging contracts with government officials may be, or may appear to be, improper because part of such consideration could be channeled to the government officials involved).
- The service or act rendered to the Company in return for such consideration is contrary to the interests of those whom the recipient of the consideration represents (i.e., the consideration induces, or appears to induce, a breach of duty by the recipient to his/her employer or principal).
- The service or act rendered to the Company is required by law or custom to be performed without charge.
- The actual purpose or use of the consideration is different from its stated purpose or use.
It is in the best interests of the Company to avoid even the appearance of impropriety and further to avoid practices, which might give rise to potential abuse. The Company’s concern is not simply whether a particular payment is technically legal, but also whether the making of such payment or any similar payments (even though not illegal or clearly unethical in and of themselves) could eventually create a climate conducive to the development of questionable business practices. In addition, the Company is concerned as to whether the public might view any such payments as improper, unethical, or subject to question if they were disclosed.
Real Estate Speculation, Corporate Opportunities, and Corporate Assets
Employees shall not acquire real estate, which they know the Company is interested in acquiring, nor purchase any nearby property or other property, the value of which may be affected by actions taken by the Company or its subsidiaries.
In general, the use by an employee of the Company or any member of his/her family or any of his/her friends or acquaintances of any business opportunity of which the employee becomes aware through his/her Company relationship, without first obtaining the express written consent of the General Counsel, is strictly prohibited.
Employees should use the Company’s property for legitimate business purposes and conduct the Company’s business in a way that furthers the Company’s interests rather than their personal interest. Employees may not use or take the Company’s equipment, supplies, materials or services, except in the normal course of employment, without approval of the supervisor.
Policy No. 113 Issued: 11/1/2004 Applicable: 5/24/2006 Revised: 3/15/2016
Financial and Accounting Matters
This policy #114 is an integral part of the Company’s Code of Conduct, which is introduced under policy #111.
Integrity of Records and Compliance with Accounting Principles
The Company and the law require the preparation and maintenance of accurate and reliable business records. Employees must prepare all reports, books and records of the Company with care and honesty. Internal reports and Company books and records must accurately reflect the economic substance of the transactions they record. The Company maintains a system of internal controls to ensure that transactions are carried out in accordance with management’s authorization, properly recorded and assure the generation of accurate financial statements and reports. This system includes policies and procedures and may include examination by a professional staff of internal auditors; the Company expects you to adhere to these policies and procedures and not circumvent any applicable internal control.
The Company requires employees to report any potential questionable accounting or auditing activity, as well as any allegations of such activities. The Company will not retaliate against any employee who makes such report or who assists in the processing of any claim regarding such alleged corporate fraud. We are committed to this principle. If any employee believes that the Company has engaged in any type of questionable accounting or auditing activity, the employee is required to discuss the matter with his or her supervisor, the Chief Financial Officer or one of the avenues of communication set forth in the Company’s Open Door Policy, which includes anonymous reporting options. Confidentiality and anonymity will be maintained in accordance with the applicable laws and the matter will be fully investigated.
Cash-Related Reporting Requirements
The Internal Revenue Code and some state statutes require businesses that receive more than $10,000 in cash or certain monetary instruments in a single transaction or related transactions to file reports with the IRS and the state. These reports must be filed by the Company (a) whenever it receives more than $10,000 in cash or (b) upon receipt of a cashier’s check, bank draft, traveler’s check or money order with a face value of less than $10,000, if when combined with another monetary instrument and/or cash the value of the transaction totals over $10,000. Severe criminal and civil penalties can be imposed against the Company and its employees for failure to file these reports or for structuring transactions to evade the requirements.
It is the policy of the Company to comply fully with all cash and monetary instrument reporting requirements and to file timely and accurate reports for all reportable transactions. Employees are prohibited from providing any advice or help to customers on how to structure transactions to evade the reporting requirements. Any employee who has reason to believe that a transaction may be reportable or is being conducted to evade the requirements must notify his or her supervisor immediately and, if required, file a report. Alternatively, the employee must report the transaction to the General Counsel at 864-286-4682. Any employee who fails to do so may be subject to appropriate disciplinary action, including, depending on the circumstance, dismissal.
Standards for Senior Financial Officers and Managers
The Board of Directors of ScanSource has established additional standards for its principal executive officer and Senior Financial Officers and designated managers. These officers/managers include the Chief Executive Officer, the Chief Financial Officer and other designated senior financial managers. All Senior Financial Officers and other designated senior financial managers of ScanSource must comply with these standards which follow, in addition to all of the other standards contained in this Code of Conduct:
Integrity and Accuracy of Public Disclosures
The Company’s Senior Financial Officers and other designated managers must take all reasonable steps to ensure that the disclosures in the reports and documents that the Company files with or submits to the Securities and Exchange Commission and in other public communications are full, fair, accurate, timely and understandable. In the event that a Senior Financial Officer or such manager learns that any such report, document or communication does not meet this standard and the deviation is material, then such officer/manager will review and investigate the deviation, advise the Board of Directors or the appropriate Board committee and, where necessary, revise the relevant report, document or communication.
Although a particular accounting treatment for one or more of the Company’s operations may be permitted under applicable accounting standards, the Senior Financial Officers and other designated senior financial managers will not authorize or permit the use of such an accounting treatment if the effect is to distort or conceal the Company’s true financial condition.
Policy No. 114 Issued: 11/1/2004 Applicable: 11/1/2004 Revised: 3/15/2016
Insider Trading in Securities
This policy #115 is an integral part of the Company’s Code of Conduct, which is introduced under policy #111.
This Insider Trading Policy (the “Policy”) provides guidelines with respect to transactions in the securities of ScanSource, Inc. and the handling of confidential information about the Company and the companies with which the Company does business. The Company’s Board of Directors has adopted this Policy to promote compliance with federal, state and foreign securities laws that prohibit certain persons who are aware of material nonpublic information about a company from: (i) trading in securities of that company; or (ii) providing material nonpublic information to other persons who may trade on the basis of that information.
- Company-Wide Policy Provision
- Persons Subject to the Policy
This Policy applies to all officers of the Company, all members of the Company’s Board of Directors and all employees of the Company. The Company may also determine that other persons should be subject to this Policy, such as contractors or consultants who have access to material nonpublic information. This Policy also applies to family members, other members of a person’s household and entities controlled by a person covered by this Policy, as described below.
Portions of this Policy only apply to executive officers and directors of the Company and certain other employees designated by the Compliance Officer as subject to certain restrictions (See, Sections III and V, infra).
- Transactions Subject to the Policy
This Policy applies to transactions in the Company’s securities, including the Company’s common stock, options to purchase common stock, or any other type of securities that the Company may issue, including (but not limited to) preferred stock, convertible debentures and warrants, as well as derivative securities that are not issued by the Company, such as exchange-traded put or call options or swaps relating to the ScanSource securities (collectively referred to in this Policy as “Company Securities”).
Transactions under this Policy include any acquisition or disposition of an interest in or concerning Company Securities, including any purchase, sale, or pledge of Company Securities.
- Administration of the Policy
The Company’s General Counsel shall serve as the Compliance Officer for the purposes of this Policy, and the Compliance Officer shall be responsible for administration of this Policy. All determinations and interpretations by the Compliance Officer shall be final and not subject to further review.
- Individual Responsibility
Persons subject to this Policy have ethical and legal obligations to maintain the confidentiality of information about the Company and to not engage in transactions in Company Securities while in possession of material nonpublic information. Each individual is responsible for making sure that he or she complies with this Policy, and that any family member, household member or entity whose transactions are subject to this Policy, as discussed below, also comply with this Policy. In all cases, the responsibility for determining whether an individual is in possession of material nonpublic information rests with that individual, and any action on the part of the Company, the Compliance Officer or any other employee or director pursuant to this Policy (or otherwise) does not in any way constitute legal advice or insulate an individual from liability under applicable securities laws. You could be subject to severe legal penalties and disciplinary action by the Company for any conduct prohibited by this Policy or applicable securities laws, as described below in more detail under the heading “Consequences of Violations.”
- Statement of Policy
It is the policy of the Company that no director, officer or other employee of the Company (or any other person designated by this Policy or by the Compliance Officer as subject to this Policy) who is aware of material nonpublic information relating to the Company may, directly, or indirectly through family members or other persons or entities:
- Engage in transactions in Company Securities, except as otherwise specified in this Policy under the headings “Transactions Under Company Plans,” “Transactions Not Involving a Purchase or Sale” and “Rule 10b5‑1 Plans;”
- Recommend the purchase or sale of any Company Securities;
- Disclose material nonpublic information to persons within the Company whose jobs do not require them to have that information, or outside of the Company to other persons, including, but not limited to, family, friends, business associates, investors and expert consulting firms, unless any such disclosure is made in accordance with the Company’s policies regarding the protection or authorized external disclosure of information regarding the Company; or
- Assist anyone engaged in the above activities.
In addition, it is the policy of the Company that no director, officer or other employee of the Company (or any other person designated as subject to this Policy) who, in the course of working for the Company, learns of material nonpublic information about a company with which the Company does business, including a customer or vendor of the Company, may trade in that company’s securities until the information becomes public or is no longer material.
There are no exceptions to this Policy, except as specifically noted herein. Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure), or small transactions, are not excepted from this Policy. The securities laws do not recognize any mitigating circumstances, and, in any event, even the appearance of an improper transaction must be avoided to preserve the Company’s reputation for adhering to the highest standards of conduct. Nothing in this Policy prohibits any person from reporting potential violations of law to relevant government authorities.
- Definition of Material Nonpublic Information
Material Information. Information is considered “material” if a reasonable investor would consider that information important in making a decision to buy, hold or sell securities. Any information that could be expected to affect the Company’s stock price, whether it is positive or negative, should be considered material. There is no bright-line standard for assessing materiality; rather, materiality is based on an assessment of all of the facts and circumstances, and is often evaluated by enforcement authorities with the benefit of hindsight. While it is not possible to define all categories of material information, some examples of information that ordinarily would be regarded as material are:
- Additional Procedures for Executive Officers, Directors and Members of the Restricted Group
The Company has established additional procedures to assist the administration of this Policy, to facilitate compliance with laws prohibiting insider trading while in possession of material nonpublic information, and to avoid the appearance of any impropriety. These additional procedures above, are applicable only to the Company’s Executive Officers, Directors and employees the Compliance Officer designates as having to comply with these additional procedures (“Restricted Group”). The Compliance Officer may designate any employee as a member of the Restricted Group at any time if the Compliance Officer makes a determination that such employee is reasonably likely to be in contact with material non-public information of the Company. The Compliance Officer shall keep a list of any employee that is a part of the Restricted Group.
- Quarterly Trading Restrictions
Executive Officers, Directors and the Restricted Group, as well as their Family Members or Controlled Entities, may not conduct any transactions involving the Company’s Securities (other than as specified by this Policy), during a “Blackout Period,” which (i) begins before the start of trading for the first full calendar week before the end of each fiscal quarter and (ii) ends at the close of trading on the second trading day following the date of the public release of the Company’s earnings results for that quarter.
Under certain very limited circumstances, a person subject to this restriction may be permitted to trade during a Blackout Period, but only if the Compliance Officer concludes that the person does not in fact possess material nonpublic information. A person subject to this restriction wishing to trade during a Blackout Period must contact the Compliance Officer for approval at least two business days in advance of any proposed transaction involving Company Securities.
- Event-Specific Trading Restriction Periods
From time to time, an event may occur that is material to the Company and is known by only a few directors, officers and/or employees. So long as the event remains material and nonpublic, the persons designated by the Compliance Officer may not trade Company Securities. In addition, the Company’s financial results may be sufficiently material in a particular fiscal quarter that, in the judgment of the Compliance Officer, designated persons should refrain from trading in Company Securities even sooner than the typical Blackout Period described above. In that situation, the Compliance Officer may notify these persons that they should not trade in the Company’s Securities, without disclosing the reason for the restriction. The existence of an event-specific trading restriction period or extension of a Blackout Period will not be announced to the Company as a whole, and should not be communicated to any other person. Even if the Compliance Officer has not designated you as a person who should not trade due to an event-specific restriction, you should not trade while aware of material nonpublic information. Exceptions will not be granted during an event-specific trading restriction period.
The quarterly trading restrictions and event-driven trading restrictions do not apply to those transactions to which this Policy does not apply, as described above under the headings “Transactions Under Company Plans” and “Transactions Not Involving a Purchase or Sale.” Further, the requirement for pre-clearance, the quarterly trading restrictions and event-driven trading restrictions do not apply to transactions conducted pursuant to approved Rule 10b5‑1 plans, described under the heading “Rule 10b5‑1 Plans.
- Additional Procedures for Officers and Directors
The Company has established additional procedures to assist the Company in the administration of this Policy, to facilitate compliance with laws prohibiting insider trading, and to avoid the appearance of any impropriety. These additional procedures, as well as the restrictions listed in I. and II. above, are applicable only to Officers and Directors of the Company.
Holding Company Securities in a margin account or pledging Company Securities as collateral for a loan is prohibited. This prohibition does not apply to any broker-assisted “cashless” exercise or settlement of awards granted under any ScanSource equity incentive plan.
- Pre-Clearance Procedures
Executive Officers, Directors of the Company, and members of the Restricted Group, as well as the Family Members and Controlled Entities of such persons, may not engage in any transaction in Company Securities without first obtaining pre-clearance of the transaction from the Compliance Officer. A request for pre-clearance should be submitted to the Compliance Officer at least two business days in advance of the proposed transaction. The Compliance Officer is under no obligation to approve a transaction submitted for pre-clearance, and may determine not to permit the transaction. If a person seeks pre-clearance and permission to engage in the transaction is denied, then he or she should refrain from initiating any transaction in Company Securities, and should not inform any other person of the restriction.
When a request for pre-clearance is made, the requestor should carefully consider whether he or she may be aware of any material nonpublic information about the Company, and should describe fully those circumstances to the Compliance Officer. The requestor should also indicate whether he or she has effected any non-exempt “opposite-way” transactions within the past six months, and should be prepared to report the proposed transaction on an appropriate Form 4 or Form 5. The requestor should also be prepared to comply with SEC Rule 144 and file Form 144, if necessary, at the time of any sale.
- Company Assistance
- Projections of future earnings or losses, or other earnings guidance;
- Changes to previously announced earnings guidance, or the decision to suspend earnings guidance;
- A pending or proposed material merger, acquisition or tender offer;
- A pending or proposed acquisition or disposition of a significant asset;
- A pending or proposed joint venture;
- A Company restructuring;
- Significant related party transactions;
- A change in dividend policy, the declaration of a stock split, or an offering of additional securities;
- Bank borrowings or other financing transactions out of the ordinary course;
- The establishment of a repurchase program for Company Securities;
- A change in the Company’s pricing or cost structure;
- Major marketing changes;
- A change in executive management;
- A change in auditors or notification that the auditor’s reports may no longer be relied upon;
- Development of a significant new product, process, or service;
- Pending or threatened significant litigation, or the resolution of such litigation;
- Impending bankruptcy or the existence of severe liquidity problems;
- The gain or loss of a significant vendor; and
- The imposition of a ban on trading in Company Securities or the securities of another company.
When Information is Considered Public. Information that has not been disclosed to the public is generally considered to be nonpublic information. To establish that the information has been disclosed to the public, the information must have been widely disseminated. Information generally would be considered widely disseminated if it has been disclosed through the Dow Jones “broad tape,” newswire services (such as AP, UPI, Reuters or Bloomberg), a broadcast on widely available radio or television programs, publication in a widely available newspaper, magazine or news website, public disclosure documents filed with the SEC that are available on the SEC’s website, or disclosed on the Company’s website. By contrast, information would likely not be considered widely disseminated if it is available only to the Company’s employees, or if it is only available to a select group of analysts, brokers and institutional investors.
Once information is widely disseminated, it is still necessary to afford the investing public with sufficient time to absorb the information. As a general rule, information should not be considered fully absorbed by the marketplace until after 24 hours after its public release. Depending on the particular circumstances, the Company may determine that a longer or shorter period should apply to the release of specific material nonpublic information.
- Transactions by Family Members and Others
This Policy applies to family members who reside with you (including a spouse, a child, a child away at college, stepchildren, grandchildren, parents, stepparents, grandparents, siblings and in-laws), anyone else who lives in your household, and any family members who do not live in your household but whose transactions in Company Securities are directed by you or are subject to your influence or control, such as parents or children who consult with you before they trade in Company Securities (collectively referred to as “Family Members”). You are responsible for the transactions of Family Members. Therefore you should make Family Members aware of the need to confer with you before they trade in Company Securities. You should treat all such transactions for the purposes of this Policy and applicable securities laws as if the transactions were for your own account. This Policy does not, however, apply to personal securities transactions of Family Members where the purchase or sale decision is made by a third party not controlled by, influenced by or related to you or your Family Members.
- Transactions by Entities that You Influence or Control
This Policy applies to any entities that you influence or control, including any corporations, partnerships or trusts (collectively referred to as “Controlled Entities”), and transactions by these Controlled Entities should be treated for the purposes of this Policy and applicable securities laws as if they were for your own account.
- Transactions Under Company Plans
This Policy does not apply in the case of the following transactions, except as specifically noted:
Stock Option Exercises. This Policy does not apply to the exercise of an employee stock option acquired pursuant to the Company’s plans where an employee holds ScanSource stock after the exercise. This Policy does not apply to the exercise of a tax withholding right pursuant to which a person has elected in advance to have the Company withhold shares subject to an option to satisfy tax withholding requirements. However, this Policy does apply, however, to any sale of stock as part of a broker-assisted cashless exercise of an option, or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option.
Restricted Stock. This Policy does not apply to the vesting of restricted stock, or the exercise of a tax withholding right pursuant to which you elect in advance to have the Company withhold shares of stock to satisfy tax withholding requirements upon the vesting of any restricted stock. The Policy does apply, however, to any market sale of restricted stock.
401(k) Plan. This Policy does not apply to purchases of Company Securities in the Company’s 401(k) plan resulting from your periodic contribution of money to the plan pursuant to your payroll deduction election. This Policy does apply, however, to certain elections you may make under the 401 (k) plan, including: (a) an election to increase or decrease the percentage of your periodic contributions that will be allocated to the Company stock fund; (b) an election to make an intra-plan transfer of an existing account balance into or out of the Company stock fund; (c) an election to borrow money against your 401(k) plan account if the loan will result in a liquidation of some or all of your Company stock fund balance; and (d) an election to pre-pay a plan loan if the pre-payment will result in allocation of loan proceeds to the Company stock fund.
Employee Stock Purchase Plan. This Policy does not apply to purchases of Company Securities in the employee stock purchase plan resulting from your periodic contribution of money to the plan pursuant to the election you made at the time of your enrollment in the plan. This Policy also does not apply to purchases of Company Securities resulting from lump sum contributions to the plan, provided that you elected to participate by lump sum payment at the beginning of the applicable enrollment period. This Policy does apply, however, to your election to participate in the plan for any enrollment period, and to your sales of Company Securities purchased pursuant to the plan.
- Transactions Not Involving a Purchase or Sale
Bona fide gifts of securities are not transactions subject to this Policy. Further, transactions in mutual funds that are invested in Company Securities are not transactions subject to this Policy.
- Special and Prohibited Transactions
The Company has determined that there is a heightened legal risk and/or the appearance of improper or inappropriate conduct if the persons subject to this Policy engage in certain types of transactions. Therefore, it is the Company’s policy that any persons covered by this Policy may not engage in any of the following transactions, or should otherwise consider the Company’s preferences as described below:
Short Sales (prohibited). Short sales of Company Securities (i.e., the sale of a security that the seller does not own) may evidence an expectation on the part of the seller that the securities will decline in value, and therefore have the potential to signal to the market that the seller lacks confidence in the Company’s prospects. In addition, short sales may reduce a seller’s incentive to seek to improve the Company’s performance. For these reasons, short sales of Company Securities are prohibited. In addition, Section 16(c) of the Exchange Act prohibits officers and directors from engaging in short sales.
Publicly-Traded Options (prohibited). Given the relatively short term of publicly-traded options, transactions in options may create the appearance that a director, officer or employee is trading based on material nonpublic information and focus a director’s, officer’s or other employee’s attention on short-term performance at the expense of the Company’s long-term objectives. Accordingly, transactions in put options, call options or other derivative securities, on an exchange or in any other organized market, are prohibited by this Policy.
Standing and Limit Orders (discouraged). Standing and limit orders (except standing and limit orders under approved Rule 10b5‑1 Plans, as described below) create heightened risks for insider trading violations similar to the use of margin accounts. There is no control over the timing of purchases or sales that result from standing instructions to a broker, and as a result the broker could execute a transaction when a director, officer or other employee is in possession of material nonpublic information. The Company therefore discourages placing standing or limit orders on Company Securities. If a person subject to this Policy determines that they must use a standing order or limit order, the order should be limited to short duration and should otherwise comply with the restrictions and procedures outlined below under the heading “Additional Procedures.”
Anti-Hedging Policy (discouraged). A hedging transaction is any transaction in Company securities that is designed to reduce your potential downside or pre-sell your upside. These transactions can be accomplished through a number of possible mechanisms, including through the use of financial instruments such as zero-cost collars and forward sale contracts, among others. Such hedging transactions may permit a director, officer or employee to continue to own Company Securities obtained through employee benefit plans or otherwise, but without the full risks and rewards of ownership. When that occurs, the director, officer or employee may no longer have the same objectives as the Company’s other shareholders. Therefore, the Company strongly discourages you from engaging in such transactions. Any person wishing to enter into such an arrangement must first submit the proposed transaction for approval by the Company’s General Counsel. Any request for pre-clearance of a hedging or similar arrangement must be submitted to the Company’s General Counsel at least two weeks prior to the proposed execution of documents evidencing the proposed transaction and must set forth a justification for the proposed transaction.
- Rule 10b5‑1 Plans
Rule 10b5‑1 under the Exchange Act provides a defense from insider trading liability under Rule 10b‑5. In order to be eligible to rely on this defense, a person subject to this Policy must enter into a Rule 10b5‑1 plan for transactions in Company Securities that meets certain conditions specified in the Rule (a “Rule 10b5‑1 Plan”). If the plan meets the requirements of Rule 10b5‑1, Company Securities may be purchased or sold without regard to certain insider trading restrictions. To comply with the Policy, a Rule 10b5‑1 Plan must be approved by the Compliance Officer and meet the requirements of Rule 10b5‑1 and the Company’s “Guidelines for Rule 10b5‑1 Plans,” which may be obtained from the Compliance Officer. In general, a Rule 10b5‑1 Plan must be entered into at a time when the person entering into the plan is not aware of material nonpublic information. Once the plan is adopted, the person must not exercise any influence over the amount of securities to be traded, the price at which they are to be traded or the date of the trade. The plan must either specify the amount, pricing and timing of transactions in advance or delegate discretion on these matters to an independent third party.
Any Rule 10b5‑1 Plan must contain an initial thirty (30) day cool down period prior to any trades commencing and the Plan must also include “No Sale” periods surrounding the Company’s earnings releases. Additionally, the Rule 10b5‑1 Plan may not be implemented during a blackout period. No further pre-approval of transactions conducted pursuant to the Rule 10b5‑1 Plan will be required.
- Post-Termination Transactions
This Policy continues to apply to transactions in Company Securities even after termination of service to the Company. If an individual is in possession of material nonpublic information when his or her service terminates, that individual may not trade in Company Securities until that information has become public or the individual has otherwise received authorization to trade from the Company.
- Consequences of Violations
The purchase or sale of securities while aware of material nonpublic information, or the disclosure of material nonpublic information to others who then trade in the Company’s Securities, is prohibited by the federal and state laws. Insider trading violations are pursued vigorously by the SEC, U.S. Attorneys and state enforcement authorities as well as the laws of foreign jurisdictions. Punishment for insider trading violations is severe, and could include significant fines and imprisonment. While the regulatory authorities concentrate their efforts on the individuals who trade, or who tip inside information to others who trade, the federal securities laws also impose potential liability on companies and other “controlling persons” if they fail to take reasonable steps to prevent insider trading by company personnel.
In addition, an individual’s failure to comply with this Policy may subject the individual to Company imposed sanctions, including dismissal for cause, whether or not the employee’s failure to comply results in a violation of law. Needless to say, a violation of law, or even an SEC investigation that does not result in prosecution, can tarnish a person’s reputation and irreparably damage a career.
Any person who has a question about this Policy or its application to any proposed transaction may obtain additional guidance from the Compliance Officer, John Ellsworth, who can be reached by telephone at (864) 286-4682 or by e-mail at firstname.lastname@example.org.
Policy No. 115 Issued: 11/4/2004 Applicable: 2/29/2008 Last Revised: 3/15/2016
Securities Laws and Disclosures
This policy #116 is an integral part of the Company’s Code of Conduct, which is introduced under policy #111.
Guidelines for Disclosures
These guidelines for disclosures of information to investors, securities market professionals and the media set forth the standards of conduct for Company employees and members of the Company’s Board of Directors with regard to the disclosure of information to: 1) securities market professionals such as analysts, broker-dealers, institutional investment managers, investment companies and hedge funds, (2) investors, (3) media personnel and (4) other individuals or entities outside the Company. These guidelines have specifically been revised to comply with Regulation FD promulgated by the Securities and Exchange Commission (“SEC”). Regulation FD became effective October 23, 2000.
- As a “public company,” the Company is committed to timely, consistent, fair and credible dissemination of information to the public, in keeping with legal and regulatory requirements, to enable orderly behavior in the capital markets.The Company regularly prepares comprehensive reports for filing with the SEC and dissemination to the public.Our management is often asked, nevertheless, to provide additional business and financial information.It is the policy of this Company never to release material, non-public information to any third party except (1) pursuant to signed confidentiality agreements or (2) communications made to a person who owes the Company a duty of trust or confidence such as an attorney, investment or commercial banker or accountant.Should the Company release material, non-public information to an investor or securities market professional other than under the special circumstances referred to above, then it is the Company’s policy, pursuant to Regulation FD, to immediately make public disclosure of such information.
- For various reasons, including ensuring the accuracy and proper disclosure of information, it is the Company’s policy to limit the individuals responding to requests for information to authorized spokespersons.Employees who are not authorized spokespersons shall continue to refer all calls from shareholders, securities market professionals, banks and media to persons authorized to speak on behalf of the Company.Any request for such business or financial information should be directed to the following Authorized Spokespersons for the Company:
- Chairman of the Board of Directors
- Chief Executive Officer
- Chief Financial Officer
Principles and Procedures for Disclosures
The principles and procedures set forth below are designed to permit the fullest possible disclosure of corporate news to securities market professionals, reporters, and other responsible people, while avoiding prohibited selective disclosure and potential trading abuses. All Company employees and members of the Company’s management and Board of Directors are expected to follow these principles and, where applicable, the disclosure procedures set forth below. Any questions about compliance with these principles and procedures should be addressed to the General Counsel.
- Sensitive information should be disseminated within the Company only to those individuals who need to know it.
- Voluntary public disclosure of financial projections prepared for internal use would be very troublesome for the Company, given the inherent unreliability of such information and the possible need to update it.Statements about other future events, uncertain to occur, would raise similar problems.Accordingly, briefings of securities market professionals, reporters or other “outsiders” should be limited to historical, previously disclosed, financial data and completed business transactions.“Forecasts,” financial or otherwise, in these types of circumstances should not be made; nor should they be confirmed or denied.
- Unless the Company is the source of a “market rumor,” there is generally no duty to respond to the rumor.When asked to respond to a “market rumor,” members of management should respond with a firm “it is the Company’s policy not to respond to market rumors,” and they should do so consistently, without regard to whether the particular rumor may be good or bad, true or false.Such inquiries should be reported immediately to the Chief Financial Officer.
- Special rules apply to disclosures proposed to be made if the Company were to take substantial steps to commence a “tender offer.” In that context, no one in the Company may respond to any inquiry for sensitive information without the prior approval of the Chief Financial Officer.
- While it is indeed the Company’s policy to provide helpful information to the extent possible, it is not our policy to edit or revise written work produced by others.The Company cannot assume responsibility for the contents of reports of securities analysts or other third parties concerning the Company.Accordingly, none of our employees, management or members of the Company’s Board of Directors should review “drafts” of reports produced by others concerning the Company, except, that any of the persons designated as authorized spokespersons in the third paragraph of this document may review a draft report for misstatements of history or fact only.
From time to time, inquiries are made by investors or individuals who represent investment banks, the press, commercial banks, and other financial institutions with an interest in determining facts relevant to the value of the Company’s securities. Subject to the disclosure principles stated above, it is appropriate to respond to such inquiries with reliable information, but only in accordance with the following additional procedures:
- Determine whether or not you are the appropriate Authorized Spokesperson to talk to the individual who is making the inquiry.If another Authorized Spokesperson would be in a better position to respond, refer the inquirer to that person.
- The Authorized Spokesperson, where practicable, should make and keep legible notes of his or her conversations with the individual seeking Company information, especially as it relates to any information that may be conveyed.
- The Authorized Spokesperson should satisfy himself or herself that he or she would not be providing the inquirer with any information that he or she could not or would not provide under these guidelines to any other qualified inquirer.
- Never release material, non-public information to any third party unless such release is approved by the Chief Financial Officer and General Counsel, and either (i) the communication is made pursuant to a signed confidentiality agreement or (ii) the communication is made to a person who owes the Company a duty of trust or confidence such as the Company’s attorney, investment or commercial banker or accountant.
- For purposes of these guidelines, information is material if there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision.Common examples of information that will frequently be regarded as material include information concerning:(1) earnings, (2) mergers, acquisitions, tender offers, joint ventures, or significant changes in assets, (3) new products or discoveries, or developments regarding customers or suppliers (e.g., the acquisition or loss of a contract), (4) changes in control or in management, (5) changes in auditors or auditor notification that the Company may no longer rely on the auditor’s audit report, (6) events regarding the Company’s securities (e.g., defaults on senior securities, calls of securities for redemption, repurchase plans, stock splits, changes in rights of security holders, or public or private sales of additional securities) and (7) bankruptcies or receiverships.Information is non-public if it has not been disseminated in a manner making it available to investors generally.
- Should an Authorized Spokesperson or senior official of the Company (i.e., a Company executive officer or a member of the Company’s Board of Directors) disclose material, non public information during any communication with any third party (e.g., an investor, the press or securities market professional), then the Company’s Chief Financial Officer and General Counsel, should be immediately notified and immediate public disclosure should be made.
- These procedures should be repeated at the time of each inquiry, even if the particular caller has made prior inquires.
Meetings and Planned Disclosures of Material Information
From time to time, meetings may be scheduled by the Company’s senior financial executives with outside financial analysts, security holders and/or other securities market professionals and responsible interested persons to provide a forum for distribution of information to the investing public of previously non-public information relating to recent corporate developments or the Company’s performance since the last quarterly earnings release. If such non-public information is deemed to be material in nature, then the Company will disclose such information to the public, at least concurrently, in a press release or through filing a Form 8‑K with the SEC. Additionally, when the Company makes planned disclosures of material information, such as a scheduled earnings release, the following model should be used:
- First, issue a press release, distributed through regular channels such as filing a Form 8‑K with the SEC, containing the information.
- Second, provide adequate notice, by a press release and/or website posting, of a scheduled conference call to discuss the announced results, giving investors both the time and date of the conference call, and instructions on how to access the call.
- Third, hold the conference call in an open manner, permitting investors to listen in, either by telephonic means or through internet webcasting.
- Fourth, such conference calls will be taped and will generally be available for replay for one week after the call by means indicated in the announcing press release and/or website posting.
It should be expected that any statement made to the press, whether written or oral, will be disseminated promptly and simultaneously to all elements of the investing public. Liability may be incurred with statements emanating from the Company concerning “future events” such as financial results for periods not yet ended. Therefore, when dealing with the press, take care to observe the disclosure principles stated herein, particularly the limitation on disclosure of forward-looking information. In addition:
- Inquiries made on behalf of a “wire service” (such as Dow Jones, AP or Reuters) or other national or international institution should be directed at once to the Chief Financial Officer.
- All requests for financial data should be answered by or under the direction of the Chief Financial Officer. Nothing in this Policy prohibits any person from reporting potential violations of law to relevant government authorities.
Policy No. 116 Issued: 11/1/2004 Applicable: 11/1/2004 Revised: 3/15/2016
Anti-Corruption and International Business
This policy #117 is an integral part of the Company’s Code of Conduct, which is introduced under policy #111.
- Anti-Corruption Policy
It is the policy of the Company to prohibit the offering or giving, either directly or indirectly, of money or anything else of value to a private party or to a government official in order to influence a business/commercial action, or to obtain an improper business advantage. It is also the policy of the Company to keep books and records that accurately reflect all transactions.
This policy applies globally to all of the Company’s directors, officers, employees, agents, consultants and other third parties working with the Company (each a “Company Person”). Neither the Company nor any Company Person may avoid the requirements of this policy through the use of such agents, consultants or other third parties.
Nearly all countries have adopted laws prohibiting the bribery of government officials. Most countries have similar laws prohibiting bribery of private parties. Not all bribery takes the form of cash payments or commissions. For example, providing gifts, travel or entertainment may be unlawful depending on the circumstances.
- Violations of these anti-bribery laws can lead to costly enforcement actions against the Company and the individual(s) involved, damage to the reputation of the Company and its employees, and criminal penalties against both the Company and the individual(s) involved.Persons found guilty of bribery face possible imprisonment, as well as substantial fines.
- Each Company Person must use their own reasonable judgment in identifying activity that may violate the Company’s anti-corruption policy or be subject to scrutiny by law enforcement officials.It is the responsibility of each Company Person to immediately consult the Company’s General Counsel if he or she has any question that his or her action could potentially violate the Company’s Code of Conduct and/or anti-bribery laws.
- The Company may issue from time-to-time additional anti-corruption guidance consistent with this general policy to address, among other things, the specific requirements of local law.The Company will also institute training and testing as well as internal auditing to ensure compliance with this policy.
- Questions.Any questions concerning this policy or the applicability of the anti-bribery laws to specific situations or practices should be directed to the Company’s General Counsel.
- Acknowledgment.Each Company Person, if requested, will annually acknowledge in writing, in the form requested, that he or she understands the Company’s policies with respect to anti-corruption and is in compliance with it and will adhere to its provisions.
- General Practice.No Company Person may offer, give, promise or authorize the giving of anything of value to a private party (see section 4.7 below) or to a government official (as defined below), directly or through an agent or other third party, to influence a business decision or government action or obtain an improper business advantage.This prohibition bars the giving, offering, promising, or authorizing the transfer of not only cash but anything else of value including, for example:
If you suspect that any Company Person, or any other person acting for the Company, may have engaged in conduct inconsistent with the Company’s policies with respect to anti-corruption, you must immediately contact the Company’s General Counsel or use any other of the avenues of communication set forth in the Company’s Open Door Policy, including anonymous reporting options. No Company Person will be penalized or retaliated against in any way for reporting misconduct.
- International Business
- Anti-Boycott Regulations
Certain countries are engaged in a boycott of Israel, and may attempt to enforce this boycott in their contracts with companies from the U.S. The U.S. maintains anti-boycott regulations prohibiting U.S. persons from participating in the boycott of Israel and any other secondary boycott of a country friendly to the U.S. No Company employee shall agree to a contract, document or oral request containing language that could be interpreted as requesting or requiring compliance with such a boycott. In addition, no employee shall comply with a customer request for information about the Company’s business activities relating to Israel or any other country that is the target of such a boycott. U.S. law requires that any such requests be immediately reported to the U.S. government, even when a response is not provided. Therefore, any such request must be immediately reported to the General Counsel. U.S. law imposes fines and other penalties for violations of the anti-boycott regulations, including on U.S. parent companies in cases where their non-U.S. subsidiaries violate the anti-boycott regulations.
- Export Controls
It is Company’s policy that strict compliance with all export control laws and regulations. The U.S., as well as many other countries, maintain controls on the export of products, software, and technology “Technology” includes information concerning the development, production or use of a product or software and may take the form of technical data (e.g., blueprints, plans, diagrams, models, formulae, tables, engineering designs and specifications, manuals and instructions) or technical assistance (e.g., instruction, skills training, working knowledge, and consulting services). The idea of an “export” is broad. For example, it includes:
- Gifts or gratuities of any kind (see Section 4.3 below);
- Travel, meals or entertainment (see Section 4.4 below);
- Contributions to a charity (even a legitimate one) specified by a private party or government official; or
- Offers of employment to family members of the private party or a government official
in order to influence a business/commercial action or a government action, or to obtain an improper business advantage in any such action.
- sending or taking products, software, or technology out of the U.S. in any manner (includingelectronic transfers);
- releasing software or technology in a foreign country;
- transferring certain encryption software in the United States to an embassy or affiliate of a foreign country; and
- releasing technology or software to a foreign national, whether located in the U.S. or abroad (including oral or visual disclosure). For purposes of export controls, a “foreign national” does not include any person holding valid U.S. citizenship, lawfully admitted for permanent residence in the United States, or who is a protected individual under the Immigration and Naturalization Act.
U.S. export laws and regulations also apply to the re-export to third countries of U.S.-origin items, foreign products with U.S. content, and the direct product of U.S. technology. In addition, they also prohibit transactions involving certain proliferation-related end-uses, including nuclear activities, chemical or biological weapons, missiles, and unmanned aerial vehicles. Every Company employee shall comply with these export control requirements. Before engaging in a transaction involving proliferation-related end-uses, or exporting or re-exporting any controlled commodities or technology, by whatever method of transmission, Company employees must determine whether the proposed transaction requires U.S. government approval, and comply with any pre-requisite filing requirements, licensing requirements or post-export reporting requirements. If a license is required, employees must ensure that it is in place prior to the export event. Licenses may be required for the Company to engage in transactions requiring U.S. government authorization for the ultimate destination, even if the Company is only dealing with an intermediary.
Failure to comply with export control laws and regulations may result in fines, loss or restriction of export privileges, or adverse publicity for the Company. Failure to comply may also result in termination of employment. Intentional violation of these requirements may be a criminal offense and can result in imprisonment. Each supervisor and manager is responsible for ensuring employee understanding and compliance with export regulatory requirements associated with the activities in which the employee is engaged. Business situations having the appearance of not complying with the regulations or the terms of export licenses should be reported promptly to the supervisor and the General Counsel. Any employee may bring export control issues to the attention of higher management for review.
- Embargoes and Sanctions
The United States imposes various comprehensive embargoes and sanctions on trade and other transactions (e.g., travel-related service transactions; contracting; imports; loans; and, in some cases, investments) with a number of countries, currently including North Korea, Cuba, Iran, Sudan, Syria, and the Crimea Region of Ukraine.
Some U.S. agencies also prohibit certain transactions involving designated persons, entities or vessels (collectively “Restricted Parties”). For example, the Department of Commerce maintains the Denied Persons List, Entity List, and Unverified List and the Office of Foreign Assets Control maintains the Specially Designated Nationals List, among others. Restricted Parties can be located in any country of the world (including the United States) and may be designated for any number of reasons (including support for terrorism, narcotics-trafficking activities, acting counter to the foreign policy interests of the United States, and prior violations of export laws). In some cases, entities owned 50% or more by a Restricted Party (or in aggregate by multiple Restricted Parties) are also deemed to be Restricted Parties, even if not separately listed.
These restrictions are applicable to U.S. companies as well as U.S. persons. Some even apply to foreign subsidiaries and foreign branches of U.S. companies. To avoid violations of the sanctions regulations, immediately notify the General Counsel before engaging in any discussions or transactions with representatives of persons or entities in or from any of the aforementioned countries or regions, or with persons or entities identified by the U.S. government as Restricted Parties.
Policy No. 117 Issued: 12/2/2008 Applicable: 12/2/2008 Revised: 3/15/2016
Open Door, Anti-Retaliation and Review Policies
An integral part of our Code of Conduct is real-time input on workplace issues from all members of the ScanSource family, including all members of management and employees (“ScanSource employees”). In order to foster this goal, ScanSource has adopted the following Open Door Policy, Anti-Retaliation and Review Policies.
Open Door Policy
ScanSource encourages ScanSource employees to discuss their problems, suggestions and concerns with management. Moreover, all ScanSource employees are obligated to promptly report any concern about a possible violation of ScanSource’s Code of Conduct or violation of any applicable law.
To facilitate ScanSource employees to raise their problems, suggestions, concerns or report potential violations of ScanSource policies or applicable law, ScanSource employees have several options that they are free to choose from. ScanSource employees may discuss any issues with: (i) their direct manager; (ii) any member of management within their reporting chain; (iii) any member of executive management, including their business unit president or the CEO Michael Bauer; (iv) Human Resources; (v) any member of ScanSource’s legal department; or (vi) ScanSource’s audit committee via an email addressed to BoardofDirectors@scansource.com. Any recipient of such communication, must notify ScanSource’s legal department promptly if the reported concern involves any possible violation of ScanSource’s Code of Conduct or violation of any applicable law.
In the event that a ScanSource employee is not comfortable with directly raising any issues or concerns they may do so anonymously be either calling one of the toll free hotline numbers in the language of their choosing or via the internet portal. The complete list of toll free hotline numbers can be found on the Company’s intranet page. Likewise, a link to the confidential web portal may be found on the Company’s intranet page. A ScanSource employee is free to use any of these communication options. ScanSource employees are encouraged to try any of the alternative communication channels if they feel that their concerns have not been adequately addressed under the initial avenue. All such communications will be treated as confidential and only shared on a “need to know basis” or as otherwise required by law.
In the event that a ScanSource employee elects to raise any issues anonymously via the hotline or web portal, the ScanSource employee will be given an access code. This access code will allow the ScanSource employee to check on the status of their communication, as well as provide a method by which ScanSource may seek additional information regarding the communicated issue.
ScanSource seeks to maintain a spirit of openness concerning its compliance with applicable law and policies. As a result, ScanSource forbids any retaliation against any ScanSource employee that communicates any concern or reports any potential violation of ScanSource policy or applicable law. No employee or member or management shall take any action designed to retaliate against any ScanSource employee for reporting a concern or potential violation of ScanSource policy or applicable law. Any ScanSource employee that engages in retaliation – directly or indirectly – will be subject to discipline, including termination from the company.
It shall also be a violation of this policy for any ScanSource employee to investigate the origin of any communication under the Open Door Policy that was submitted anonymously.
ScanSource values any communication under the Open Door Policy. ScanSource has adopted a formal review process for any communication under the Open Door Policy that relates to any potential violation of the Code of Conduct or any applicable law. Upon notification of any such communication under ScanSource’s Open Door Policy, ScanSource’s legal department will review the communication and assign it to the appropriate avenue of review within five business days of receiving the reported communication. Any communication relating to an employment or benefits concern, will be referred to ScanSource’s Human Resources Department for review. Any communication relating to a potential violation of the Code of Conduct or applicable law will be reviewed by the legal department.
In conducting their review, the Legal or Human Resource Department may use ScanSource internal resources or use outside resources, such as counsel, consultants or forensic accountants, to assist ScanSource’s review of the conduct underlying the communication. Moreover, every ScanSource employee is required to cooperate with ScanSource’s review and to maintain the confidentiality of the existence of the review and his or her interactions with anyone conducting or participating in the review. For those ScanSource employees that submitted anonymous communications via the hot line and web portals, ScanSource encourages those employees to use their access codes to monitor the status of the review and provide any requested follow-up information that may be required to complete the review. Failure to cooperate in with a ScanSource review is grounds for discipline, including termination of employment.
ScanSource’s Legal or HR Department will use their best efforts to complete the review of the communication under the Open Door Policy between 90 and 120 days from the receipt of the communication concerning potential violations of the Code of Conduct or applicable law. The results of the review will be communicated to ScanSource’s Audit Committee. ScanSource reserves the right to share the results of its review, as well as any evidence gathered during that process, with the appropriate governmental body where there is a suspected violation of the law or to make any disclosures required by law.
If ScanSource determines that there has been a violation of its policy or applicable law, ScanSource, in its sole discretion, will take appropriate disciplinary action, including reprimand, suspension (with or without pay) and termination of employment. In imposing disciplinary action, ScanSource may consider, among other factors, the nature of the violation, whether the conduct was intentional, whether the ScanSource employee self-reported the violation, and the degree to which the violation exposes ScanSource to adverse legal consequences or harms its reputation in the community or industry.
Policy No.121 Issued: 11/1/2004 Applicable: 8/7/2006 Revised: 3/15/2016
Equal Employment Opportunity
This policy #201 is an integral part of the Company's Code of Conduct, which is introduced under policy #111.
In order to provide equal employment and advancement opportunities to all individuals, employment decisions at ScanSource will be based on merit, qualifications, and abilities. ScanSource does not discriminate in employment opportunities or practices on the basis of race, religion, color, sex, national origin, age, veteran status, uniformed services status, disability as provided in the Americans with Disabilities Act and any Amendments thereof, sexual orientation, ancestry, marital status, political affiliation, genetic information, or any other characteristic protected by federal, state, or local law. This statement does not constitute an employment contract. Employment is at-will.
ScanSource will endeavor to make a reasonable accommodation to the known physical or mental limitations of qualified employees with disabilities covered by Americans with Disabilities Act or similar state law unless the accommodation would impose an undue hardship on ScanSource. If an employee believes he or she may require an accommodation to perform his/her job duties because of a physical or mental condition, please contact the Vice President of Human Resources or the Senior Human Resources Manager.
Employees with questions or concerns about any type of discrimination in the workplace are encouraged to contact their immediate supervisor, the business unit president, the Vice President of Human Resources, or the Senior Human Resources Manager. At ScanSource be assured that you can raise concerns and make reports without fear of reprisal. Anyone found to be engaging in any type of unlawful discrimination will be subject to prompt disciplinary action, up to and including termination of employment.
Policy No. 201 Issued: 11/1/2004 Applicable: 11/1/2004 Revised: 3/17/2009