Business Ethics and Code of Conduct
The successful business operation and reputation of ScanSource, Inc. (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.
HOTLINE: If you want to report illegal or unethical activity, please speak up and report your concern to our anonymous 3rd party hotline provider at the following numbers or web location
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 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 and Confidentiality
|Conflicts of Interest
|Financial and Accounting Matters
|Insider Trading in Securities
|Securities Laws and Disclosures
|Anti-Corruption and International Business
|Open Door Policy
|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 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 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.
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 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.
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:
• Agreements that unreasonably restrain competition including agreements (whether reflected through tacit understandings, 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
• 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 laws, rules and regulations.
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, or alternatively, report the transaction to the General Counsel.
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.
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 of 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 these policies of business ethics and Code of Conduct, including any allegation of questionable accounting or auditing activity. Disregarding or failing to comply with this standard of business ethics and conduct could lead to prompt disciplinary action, up to and including termination of employment. The Company will not retaliate against any employee who makes such a report or who assists in the processing of any claim regarding such alleged corporate fraud. We are committed to this principle. Multiple independent channels of communications are available to employees; these are fully described in the nine policies which comprise our Code of Conduct.
Investigations and Enforcement
Reports of possible violations of the Code of Conduct will be collected, reviewed and processed by the General Counsel. The General Counsel may refer reports that are submitted, as he or she determines to be appropriate or as required under the directives of the Board of Directors or an appropriate committee of the Board. 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.
Reports of possible violations of the Code of Conduct will be investigated by the Company and, if a violation of the Code 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 believed to have participated in a possible violation shall not be permitted to participate in any investigation or recommendation for disciplinary action or sanctions.
Violations of the Code of Conduct that may also constitute illegal conduct 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 the Code of Conduct.
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 for a Senior Financial Officer, executive officer or director. ScanSource will disclose publicly all material amendments and any waivers for Senior Financial Officers, executive officers or directors, to the extent required by law.
Policy No. 111 Issued: 11/1/2004 Applicable: 11/1/2004 Revised: 12/2/2008
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 the intellectual property rights of ScanSource, 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. Intellectual property that is created during the course of employment belongs to ScanSource. An employee must disclose any innovations or inventions created with the immediate supervisor so that ScanSource can take steps to protect these valuable assets.
Confidential information includes all non-public information that might be of use to competitors or harmful to ScanSource 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 ScanSource 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 ScanSource'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 ScanSource, 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:
• Compensation data • Labor relations strategies
• Computer Processes • Marketing strategies
• Computer Programs and codes • New materials research
• Customer lists • Pending projects and proposals
• Customer preferences • Technological data
• Financial information • Technological prototypes
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.
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: 12/2/08
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
ScanSource, Inc. (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 materially interferes in any way, or even appears to materially interfere, with the interests of the Company. A conflict of interest can arise when employees take actions or have interests that may materially 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 material 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 materially 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 material transaction or relationship that could create a conflict of interest.
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
Owning a substantial 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. An employee has a "substantial financial interest" if he or she invests 5% or more of personal assets in a company. Relationships, pre-existing at the time of the adoption of this Code, which have been disclosed to the Board will not be considered "substantial financial interests."
In addition to the provisions above, the Company’s employees (and their immediate family members)
(1) Holding the office of Vice President or higher, or who are members of the executive team and
(2) All Merchandising Department employees with the title of director or higher
are not to, directly or indirectly, trade in or own shares of stock of any publicly traded vendor companies (including, but not limited to, the list below) 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.
• 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 substantial 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 of or about the Company for an employee or a family member's profit or advantage.
• 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. Specifically, with respect to tangible gifts, no more than one gift per year having a fair market value of not more than $100 may be accepted from any such person or organization, 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, other than personal loans 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.
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 to anyone not employed by the Company, or to another employee who has no need for such data or information. For further information, see Insider Trading in Securities policy # 115.
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: 12/2/2008
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
ScanSource, Inc. (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. The Company maintains a system of internal controls to ensure that transactions are carried out in accordance with management's authorization and properly recorded. 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.
The Company specifically encourages employees to report any allegation of questionable accounting or auditing activity. 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 encouraged to discuss the matter with his or her supervisor and/or with the Chief Financial Officer. However, if the employee is not comfortable doing so or chooses not to report the matter in this manner, such employee should report the allegation to the Company's Audit Committee by confidentially calling 1-800-891-4178, a toll free number established for this purpose. 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.
Supplemental Standards for Senior Financial Officers and Managers
The Board of Directors of ScanSource has established certain 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
ScanSource, Inc'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: 12/2/2008
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.
II. Company-Wide Policy Provision
A. 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).
B. 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.
C. 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.
D. 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.”
E. 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 expected 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.
F. 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:
- 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.
G. 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.
H. 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.
I. 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.
J. 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.
K. 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.
L. 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.
M. 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.
N. 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.
III. 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.
A. 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.
B. 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.
IV. 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.
B. 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.
V. Company Assistance
Any person who has a question about this Policy or its application to any proposed transaction may obtain additional guidance from a member of the Legal Department.
Policy No. 115 Issued: 11/4/2004 Applicable: 2/29/2008 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," ScanSource, Inc. 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 :
o Chairman of the Board of Directors
o Chief Executive Officer
o 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 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, 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 or 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 are 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 an investor or securities market professional, then the Company's Chief Financial Officer or 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. 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, 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. As a result, you need not fear that any such statement could assist an "insider trading" violation. Liability may be incurred, nevertheless, 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.
Policy No. 116 Issued: 11/1/2004 Applicable: 11/1/2004 Revised: 12/2/2008
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.
I. 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.
3.1 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.
3.2 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.
3.3 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.
4.1 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:
- 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.
- To “influence a business or government action” means to attempt to induce a private party or a government official to act or refrain from acting in any way.
- An “improper advantage” is any advantage gained by the Company not on the merits of its products or services but because the private party or a government official violated their employer’s trust for the Company’s benefit. Such an improper advantage could include new business, retaining existing business, a reduction of a tax or import duty, a regulatory approval or any other action that is unwarranted.
- A “government official” includes anyone working at a government entity (as defined below), as well as any candidate for political office or political party.
- A “government entity” is defined broadly to include national, state or local governments or government departments, bodies, agencies or other government entities, as well as “public international organizations” and political parties. “Public international organizations” include any organization with two or more governments as members. “Government entity” also includes “government-owned enterprises,” meaning any entity, whether organized under public or private law, in which one or more governmental entities has a sufficient interest to give it control. A majority of the voting shares would clearly qualify, as would a single share if it conferred control.
Thus, for example, a government official could include any of the following:
- Employee of a state-owned hospital, utility or other enterprise;
- Local police officer;
- Military personnel;
- Customs official;
- Officer of the World Health Organization, Council of Europe, World Bank or United Nations;
- Mayoral candidate; or
- Member of Parliament; or Judge, Prosecutor or Court Clerk.
Should you have any doubts as to whether a person is a government official, contact the Company’s General Counsel.
4.2 Facilitation Payments. Minor payments made to officials or others to speed up a routine governmental process are prohibited, as are similar payments in the private sector to the extent they are not made as part of an established, open process or are not properly documented. A facilitation payment made to ensure the safety and/or security of an employee must be reported immediately to the Company’s General Counsel, recorded and steps must be taken to avoid a recurrence.
4.3 Gifts and Contributions. A gift or promise of a gift to a private person or to a government official is never permissible if it is provided to influence a business decision or a government action or to obtain an improper business advantage. Contributions to political parties, candidates and campaigns for public office made by the Company or a Company Person on behalf of the Company are generally not permitted and any exception must be approved by the Company’s General Counsel.
4.4 Travel, Meals and Entertainment. Providing travel, meals or entertainment to a private party or to a government official in order to influence a business decision or a government action or to obtain an improper business advantage is never permitted. However, meals and entertainment that are (1) reasonable in value, (2) permitted under local laws and customs, and (3) offered infrequently, may be acceptable. In addition, reasonable and good faith expenditures on travel, lodging and similar items may be permitted with the prior approval of your manager, but only if they are directly related to the marketing, demonstration or explanation of products or services or the signing of a contract. Providing travel, meals or entertainment to a guest (including spouse) of the private party or of a government official is not permitted. Consult your manager or the Company’s General Counsel for any additional guidance you may need on this issue.
4.5 Agents, Consultants and Other Third Parties. A Company Person may not give money or anything of value to any person if the circumstances indicate that it is probable that all or part of the money or other thing of value will be passed on to a private party or to a government official to influence a business decision or a government action or to obtain an improper business advantage. To protect the Company against the risk of bribes given indirectly, it is imperative that the Company and each Company Person ensure that its agents, consultants and other third parties who represent the Company understand and abide by the Company’s anti-bribery policies. It is also imperative that the Company investigate the qualifications and reputation of such third parties prior to establishing a relationship.
4.6 Books and Records. The Company’s books, records and accounts must be kept with reasonable detail and accuracy such that they fairly reflect the true economic substance of all transactions and dispositions of assets. Company Persons must follow all internal controls, practices and procedures, as well as applicable standards and practices for accounting and financial reporting. False or artificial entries are not to be made in the books and records of the Company for any reason. Such artificial entries could include the mischaracterization of an improper payment as a commission payment, customer development charge, processing fee or rebate.
4.7 Private Parties; Bribery in the Private Sector. Private parties are covered in the same manner as are government officials. That is, no person may solicit or receive a bribe, and no person may give, offer, promise or authorize the giving of anything of value to a private party employed by a private sector (non-governmental) entity, directly or through an agent or other third party, to influence any action, to obtain an improper business advantage or to cause the other person to breach any of his/her duties to the private entity. This prohibition bars the giving, offering, promising, authorizing the transfer of, or receiving of not only cash, but of anything of value, as it does in the general provisions of Section 4 above.
4.8 U.S. Officials. The laws applicable to dealings with U.S. officials or employees are complex and easily violated. Typical business practices, such as business meals or entertainment expenditures, may violate federal law. As a result, special care must be taken when interacting with U.S. officials.
a. U.S. federal, state and local officials and employees are prohibited from accepting entertainment, meals, gifts, gratuities or other things of value. Offering a benefit to a U.S. federal, state or local government official or employee or their family members may violate the law. Where offering a benefit violates the law, it may constitute bribery, and that can subject you to fines or jail time.
b. Company Persons who interact with government employees and government agencies are expected to know and abide by all applicable guidelines preventing unauthorized or illegal gifts and payments. Unless a proposed gift is clearly permitted under applicable laws and rules, or have approval from the General Counsel, you should assume the gift is prohibited.
c. Keep in mind that these rules may apply even where the business courtesy is based purely on a personal or social relationship, rather than on the position of the government official or employee. This determination is often fact-specific and requires legal analysis. If you have any questions about providing any type of gift to a government official or employee, contact the General Counsel.
4.9 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.
4.10 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.
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.
II. International Business
1. 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.
2. 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:
- sending or taking products, software, or technology out of the U.S. in any manner (including electronic 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.
3. 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 Policy
This policy #121 is an integral part of the Company's Code of Conduct, which is introduced under policy #111.
ScanSource encourages employees to discuss their problems and suggestions with management. Employees are encouraged to discuss any issues with their supervisors. If an employee is not satisfied with the results of that discussion or are uncomfortable approaching the supervisor, he or she should feel free to discuss the issue with other levels of departmental management and/or with management in the Human Resources department. If the employee is still not satisfied, there is also the option to contact anyone in executive management, including the president of a business unit or the CEO of the Company.
Complaints will be investigated as deemed appropriate and information will be maintained as confidential as possible and appropriate under the circumstances, but certain information may need to be disclosed strictly on a "need-to-know" basis.
The Company specifically encourages employees to report any allegation of questionable accounting or auditing activity. 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. ScanSource is 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 encouraged to discuss the matter with his or her supervisor and/or with the Chief Financial Officer. However, if the employee is not comfortable doing so or chooses not to report the matter in this manner, such employee should report the allegation to the Company's Audit Committee through a confidential toll-free number 1-800-891-4178 established for this purpose. Confidentiality and anonymity will be maintained in accordance with the applicable laws and the matter will be fully investigated.
Policy No. 121 Issued: 11/1/2004 Applicable: 8/7/2006 Revised: 12/2/2008
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, color, religion, sex, national origin, age, protected disability, genetic information, veteran or uniformed service status, pregnancy, childbirth, or related medical conditions, including, but not limited to, lactation or any other protected characteristic in accordance with applicable federal, state, or local laws. 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 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 a 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.
ScanSource prohibits harassment of any employee based on race, color, religion, sex, national origin, age, protected disability, genetic information, veteran or uniformed service status, pregnancy, childbirth, or related medical conditions, including, but not limited to, lactation or any other protected characteristic in accordance with applicable federal, state, or local laws.
Policy No. 201 Issued: 11/1/2004 Applicable: 11/1/2004 Revised: 7/11/2018