CDW CORPORATION

DEF 14A 1 lcdw2021_def14a.htm CDW CORPORATION - DEF 14A CDW CORPORATION - DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

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CDW CORPORATION

(Name of Registrant as Specified in its Charter)

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		*“Our mission at CDW has always been to help our customers navigate and be successful in a changing world.„*

Dear Fellow Stockholder ,

2020 was an extraordinary year. CDW coworkers found inspiration in our shared mission and worked unwaveringly to provide our customers with technologies that helped dramatically change how and where they worked, learned, connected and served their own end users and communities. I am proud of the work we did to support these businesses and institutions, all of which epitomized great courage and resilience in the face of the COVID-19 pandemic. Amidst the turmoil of last year, the experience of our people, the depth of our capabilities, and the breadth of our scale enabled us to meet the moment – helping our customers address their critical technology and operational needs. The engagement, commitment and productivity of our coworkers fueled another year of record results and market outperformance for CDW.

While the challenges of 2020 tested all of us, I believe they ultimately strengthened CDW's position as an industry leader and value creator for our stakeholders. As we look to the future, there is no doubt that technology will be more essential than ever. We will continue to do what we do best – help our customers navigate an ever-changing world and maximize their technology investments to succeed in their missions. As a trusted strategic advisor, CDW plays a dual role as a technology advisor and solutions provider to enable technology driven transformations. We are confident that we have the right strategy and remain committed to investing in our business to serve our customers for the long term.

Annual Meeting Invitation

On behalf of our Board of Directors, I would like to invite you to CDW’s 2021 Annual Meeting of Stockholders. The meeting will be held virtually on Thursday, May 20, 2021, at 7:30 a.m. CDT at www.virtualshareholdermeeting.com/CDW2021. The attached Notice of Annual Meeting of Stockholders and Proxy Statement will serve as your guide to the business conducted at the meeting. Your vote is very important. Whether or not you plan to attend the Annual Meeting, we urge you to vote either via the Internet, by telephone, or by signing and returning a proxy card. Please vote as soon as possible so that your shares will be represented. For more information on CDW and to take advantage of our many stockholder resources and tools, we encourage you to visit our Investor Relations website at investor.cdw.com. Thank you for your continued trust in CDW and investment in our business.

Christine A. Leahy

President and Chief Executive Officer

April 8 , 2021

2021 Proxy Statement

When:

THURSDAY, MAY 20, 2021

7:30 a.m. CDT

Where:

Live webcast online at

www.virtualshareholdermeeting.com/CDW2021

REVIEW YOUR PROXY STATEMENT AND VOTE IN ADVANCE OF THE ANNUAL MEETING IN ONE OF FOUR WAYS:

BY INTERNET USING YOUR COMPUTER Visit 24/7 www.proxyvote.com

BY TELEPHONE Dial toll-free 24/7 1-800-690-6903 (registered holders) 1-800-454-8683 (beneficial holders)

BY MAILING YOUR PROXY CARD Cast your ballot, sign your proxy card and return by mail in the postage prepaid envelope

BY INTERNET USING YOUR TABLET OR SMARTPHONE Scan this QR code 24/7 to vote with your mobile device (may require free software)

Please refer to the enclosed proxy materials or the information forwarded by your bank, broker or other holder of record to see which voting methods are available to you.

NOTICE

of Annual Meeting
of Stockholders

	WE ARE PLEASED TO INVITE YOU TO THE CDW CORPORATION ANNUAL MEETING OF STOCKHOLDERS.

	Items of business:

	1.	To elect the ten director nominees named in this proxy statement for a term expiring at the 2022 Annual Meeting of Stockholders;
	2.	To approve, on an advisory basis, named executive officer compensation;
	3.	To ratify the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2021;
	4.	To approve the amendment to the Company’s certificate of incorporation to eliminate the supermajority voting requirement in Article Eleven and to make certain non-substantive changes;
	5.	To approve the amendment to the Company’s certificate of incorporation to eliminate the obsolete competition and corporate opportunity provision;
	6.	To approve the CDW Corporation 2021 Long-Term Incentive Plan;
	7.	To approve the amendment to the CDW Corporation Coworker Stock Purchase Plan; and
	8.	To consider any other matters that may properly come before the meeting or any adjournments or postponements of the meeting.

RECORD DATE

Holders of our common stock at the close of business on March 24, 2021 are entitled to notice of, and to vote at, the Annual Meeting.

HOW TO VOTE

Your vote is important to us. Please see “Voting Information” on pages 5-6 for instructions on how to vote your shares.

These proxy materials are first being distributed on or about April 8 , 2021.

2021 Proxy Statement

ATTENDING THE VIRTUAL ANNUAL MEETING

Due to the continuing public health impact of the coronavirus (COVID-19) pandemic, related governmental actions and the importance of safeguarding the health of our stockholders, coworkers and representatives, the Board of Directors has determined that it is prudent to hold this year’s Annual Meeting in a virtual-only format via live audio webcast. To participate in the Annual Meeting online, please visit www.virtualshareholdermeeting.com/CDW2021 and enter the 16-digit control number included on your Notice of Internet Availability of Proxy Materials, proxy card or the instructions that accompanied your proxy materials. You will be able to vote your shares electronically during the Annual Meeting by following the instructions available on the meeting website. For beneficial holders who do not have a control number, please contact your broker, bank, or other nominee as soon as possible and no later than May 13, 2021, so that you can be provided with a control number and gain access to the meeting. If you do not have access to a 16-digit control number, you may access the meeting as a guest by going to www.virtualshareholdermeeting.com/CDW2021, but you will not be able to vote during the meeting or ask questions.

By Order of the Board of Directors,

Frederick J. Kulevich

Senior Vice President, General Counsel

and Corporate Secretary

April 8 , 2021

Important Notice Regarding Availability of Proxy Materials for the Annual Meeting to be Held on May 20, 2021:

The proxy materials relating to our 2021 Annual Meeting (notice, proxy statement and annual report) are available at www.proxyvote.com.

2021 Proxy Statement

TABLE OF CONTENTS

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS	2

VOTING INFORMATION	5

PROXY SUMMARY	7

CORPORATE GOVERNANCE	14

Corporate Governance Highlights	14
Environmental, Social and Governance (ESG) at CDW	15
Independence of Our Board of Directors	16
Board of Directors Leadership Structure	16
Board and Committee Meetings	16
Board Committees	16
Oversight of Strategy	18
Oversight of Risk	18
Oversight of Human Capital Management	19
Code of Business Conduct and Ethics	19
Hedging, Short Sales and Pledging Policies	19
Executive Compensation Policies and Practices	19

PROPOSAL 1—Election of Directors	21

DIRECTOR COMPENSATION	26

STOCK OWNERSHIP	28

PROPOSAL 2—Advisory Vote to Approve Named Executive Officer Compensation	31

COMPENSATION DISCUSSION AND ANALYSIS	32

Our Named Executive Officers	32
Overview	33
What We Pay And Why	36
How We Make Executive Compensation Decisions	43

COMPENSATION COMMITTEE REPORT	45

2020 EXECUTIVE COMPENSATION	46

EQUITY COMPENSATION PLAN INFORMATION	53

PROPOSAL 3—Ratification of Selection of Independent Registered Public Accounting Firm	54

AUDIT COMMITTEE REPORT	56

PROPOSAL 4—Approval of the Amendment to the Company’s Certificate of Incorporation to Eliminate the Supermajority Voting Requirement in Article Eleven and to Make Certain Non-Substantive Changes	57

PROPOSAL 5—Approval of the Amendment to the Company’s Certificate of Incorporation to Eliminate the Obsolete Competition and Corporate Opportunity Provision	59

PROPOSAL 6—Approval of the CDW Corporation 2021 Long-Term Incentive Plan	60

PROPOSAL 7—Approval of the Amendment to the CDW Corporation Coworker Stock Purchase Plan	67

FREQUENTLY ASKED QUESTIONS CONCERNING THE ANNUAL MEETING	71

OTHER BUSINESS	76

APPENDIX A—CDW Corporation and Subsidiaries Non-GAAP Financial Measure Reconciliations	77

APPENDIX B—Forward-Looking Statements	79

APPENDIX C—Proposed Amendment to the Company’s Certificate of Incorporation	80

APPENDIX D—Proposed Amendment to the Company’s Certificate of Incorporation	84

APPENDIX E—CDW Corporation 2021 Long-Term Incentive Plan	86

APPENDIX F—Amended and Restated CDW Corporation Coworker Stock Purchase Plan	98

2021 Proxy Statement

Proposal	Topic	More Information	Board Recommendation
Proposal 1	Election of Directors	Page 21	FOR each Director Nominee
Proposal 2	Advisory Vote to Approve Named Executive Officer Compensation	Page 31	FOR
Proposal 3	Ratification of Selection of Independent Registered Public Accounting Firm	Page 54	FOR
Proposal 4	Approval of the Amendment to the Company’s Certificate of Incorporation to Eliminate the Supermajority Voting Requirement in Article Eleven and to Make Certain Non-Substantive Changes	Page 57	FOR
Proposal 5	Approval of the Amendment to the Company’s Certificate of Incorporation to Eliminate the Obsolete Competition and Corporate Opportunity Provision	Page 59	FOR
Proposal 6	Approval of the CDW Corporation 2021 Long-Term Incentive Plan	Page 60	FOR
Proposal 7	Approval of the Amendment to the CDW Corporation Coworker Stock Purchase Plan	Page 67	FOR

•	First, our balanced portfolio of customer end-markets, including five US channels – Corporate, Small Business, Government, Education and Healthcare – and our UK and Canadian operations. The diversity of our customer end markets serves us well when macro or other external challenges impact various industries and customers differently. In 2020, our net sales performance varied by segment, channel and customer end-market due to the uneven impact of COVID-19. All customers experienced change or disruption to their technology and to their operations due to the pandemic. Our teams helped businesses – small, medium and large – to work in completely new ways. The crisis posed greater challenges for our commercial customers due to the macroeconomic slowdown, which led to net sales declines of 8.7 percent and 7.5 percent, respectively, for our Corporate and Small Business segments. Public segment net sales increased by 18.5 percent, primarily driven by strong demand from our Education and Government channels, partially offset by a decline in Healthcare. In the Education channel, our teams helped education institutions shift to remote learning solutions for students and teachers driving 43.4 percent growth. In the Government channel, we enabled work from home for government agencies, supported the expansion of first responder capacity, and delivered a complex Device-as-a-Service mobile data collection solution for the US Census Bureau leading to 18.2 percent growth. In the Healthcare channel, our teams enabled healthcare providers to establish mobile virus screening centers, to expand telehealth capabilities, and to provide services in incredibly challenging point of care environments, but, due to Healthcare customer budget constraints, net sales declined 12.0 percent. In addition, net sales for our Other segment, which is comprised of our UK and Canadian operations, decreased 3.3 percent in US dollars with a low double digit decline in Canada and low single digit growth in the UK in local currency as the pandemic similarly impacted customers in those countries.

•	*Second, the breadth of our product and solutions portfolio* of more than 100,000 products from over 1,000 leading and emerging brands. This breadth ensures we are well-positioned to meet our customers’ needs and pivot quickly to trends in customer demand. This was especially important in 2020 as technology needs shifted and became crucial for our customers to maintain ongoing operations and develop new capabilities for their customers and employees. In 2020, customers were focused on remote enablement, optimization, cost reduction, security, and digital transformation, with an increasing focus on cloud. We helped our customers smartly deploy their IT resources, navigate through interconnected and complex solutions, and adopt modern software and infrastructure patterns and practices whether on-premise, hybrid or in the cloud. Our performance reflected the success of past investments, especially in cloud and security, and our ability to help our customers across the full IT solutions stack and lifecycle.

•	*Third, we continued to make excellent progress against our three-part strategy for growth:* (1) to acquire new customers and capture share, (2) to enhance our solutions capabilities, and (3) to expand our services capabilities. The combination of these three interconnected pillars, with our scope and scale, creates powerful differentiation in the market. We benefited from our strong competitive advantages and value proposition in 2020. Customers turned to CDW as a trusted advisor to

	help with some of their toughest challenges, to leverage our extensive logistical and distribution capabilities, and as a source of supply in a constrained market. We continued to invest in high-growth solutions and services capabilities, including three acquisitions – IGNW, a leading provider of cloud-native services expertise and software development capabilities, and Aeritae and Southern Dakota Solutions, which expanded our ServiceNow team. As we do every three years, we completed a rigorous, detailed strategic planning process in 2020 and remain confident that we have the right strategy to best serve our customers, optimize our productivity, and enhance our competitive position. We believe that technology will be more essential to all sectors of the economy and will play an increasingly important role in the years ahead, making our role as a trusted, strategic partner to our customers more important than ever.

•	*Finally, our ability to adapt and respond to the COVID-19 crisis.* At the beginning of the pandemic, we identified three key principles, which have guided us. First, safeguard the health and well-being of our coworkers, second, serve the mission-driven needs of our customers, and third, support our communities. At our distribution centers, we quickly implemented and have maintained precautionary measures advised by public health authorities. Our office coworkers transitioned to work from home in March and have demonstrated strong engagement, productivity and collaboration – testaments to the strength and resiliency of our culture. CDW also contributed meaningfully to support the COVID-19 response efforts locally, in the US, UK and Canada, and around the world. Our team has done an outstanding job of maintaining the high level of customer service we are known for, while safeguarding our coworkers and supporting our communities.

PRIORITIES	OBJECTIVES	ACTIONS

Increase Dividends Annually	Target ~25% payout of Non-GAAP net income; grow in line with earnings	5.3% increase to $1.60/share annually

Maintain Net Leverage Ratio⁽¹⁾	~2.5 to 3.0 times Net leverage ratio	Ended 2020 at 1.7 times

Supplement Organic Growth with M&A	Expand CDW’s strategic capabilities	Completed 3 acquisitions in 2020

Return Excess Free Cash Flow after Dividends & M&A Through Share Repurchases	Offset to incentive plan dilution and to supplement earnings per share growth	$341 million in share repurchases in 2020

	Independent Chairman

	Annual election of all Directors

	All of our Directors, other than our President and Chief Executive Officer, are independent and the independent Directors regularly meet in Executive Session

	100% independent Audit, Compensation and Nominating and Corporate Governance Committees

	Four of our continuing Audit Committee members qualify as “audit committee financial experts” under SEC rules

	12 year Board term limit to promote Board refreshment

	Proxy access right

	Majority vote to elect Directors with resignation policy

	Restrictions on other board service by Directors

	Annual Board and Audit, Compensation and Nominating and Corporate Governance Committee evaluations

	Proposed elimination of supermajority vote requirements

Key Director Skills
Technology/Digital Solutions	Operations	International
Vertical Markets (e.g., Healthcare, Public Sector)	Distribution	Economic/Business Trends
Strategic Planning/Leadership of Complex Organizations	Finance	Capital Market Transactions
Board Practices of Major Corporations	Sales and Marketing	Legal

Name	Age	Director Since⁽¹⁾	Primary Occupation	Independent	Committee Memberships	Other Public Company Boards
Virginia C. Addicott	57	2016	Retired President & Chief Executive Officer, FedEx Custom Critical		• Audit (Chair) • Nominating & Corporate Governance	1
James A. Bell	72	2015	Retired Executive Vice President, Corporate President and Chief Financial Officer, The Boeing Company		• Audit • Nominating & Corporate Governance	2
Lynda M. Clarizio	60	2015	Former Executive Vice President, Strategic Initiatives, The Nielsen Company (US), LLC		• Compensation • Nominating & Corporate Governance	2
Paul J. Finnegan	68	2011	Co-Chief Executive Officer, Madison Dearborn Partners, LLC		• Compensation • Nominating & Corporate Governance	—
Anthony R. Foxx	49	2021	Chief Policy Officer & Senior Advisor to the President & Chief Executive Officer of Lyft, Inc.		• Audit • Nominating & Corporate Governance	1
Christine A. Leahy	56	2019	President & Chief Executive Officer, CDW Corporation	__	__	1
Sanjay Mehrotra	62	2021	President & Chief Executive Officer, Micron Technology, Inc.		• Compensation • Nominating & Corporate Governance	1
David W. Nelms (Independent Chairman)	60	2014	Retired Chairman & Chief Executive Officer, Discover Financial Services		• Audit • Nominating & Corporate Governance (Chair)	—
Joseph R. Swedish	69	2015	Retired Chairman, President and Chief Executive Officer, Anthem, Inc.		• Compensation (Chair) • Nominating & Corporate Governance	2
Donna F. Zarcone	63	2011	Retired President and Chief Executive Officer, The Economic Club of Chicago		• Audit • Nominating & Corporate Governance	1

Our Executive Compensation Practices
	Significant percentage of target annual compensation delivered in the form of variable compensation tied to performance
	Long-term objectives aligned with the creation of stockholder value
	Target total compensation at the competitive market median
	Market comparison of executive compensation against a relevant peer group
	Use of an independent compensation consultant reporting directly to the Compensation Committee and providing no other services to the Company
	Double-trigger vesting for equity awards in the event of a change in control under our long-term incentive plan
	Robust stock ownership guidelines
	Clawback policy
	Annual say-on-pay vote
	Limited perquisites

	We do not have tax gross-ups*
	We do not have an enhanced severance multiple upon a change in control
	We do not have excessive severance benefits
	We do not pay dividends or dividend equivalents on unearned performance-based awards under our long-term incentive plan
	We do not allow repricing of underwater stock options under our long-term incentive plan without stockholder approval
	We do not allow hedging or short sales of our securities, and we do not allow pledging of our securities except in limited circumstances with pre-approval
	*Excludes tax reimbursements with respect to customary relocation benefits and tax reimbursements made to Mr. Kebo in connection with an expatriate assignment prior to his appointment as an executive officer, consistent with the Company’s practices for expatriate assignments.

	Independent Chairman. David W. Nelms serves as our independent Chairman of the Board.
	All Directors Elected Annually. All Directors are elected annually. Our Board of Directors and our stockholders approved the phased declassification of our Board in 2018, which will be complete as of the Annual Meeting.
	Independent Board. Our Board of Directors is comprised entirely of independent directors, other than our President and Chief Executive Officer. The independent members of our Board of Directors regularly meet in executive session.
	Independent Board Committees. All members of our Audit, Compensation, and Nominating and Corporate Governance Committees are independent directors.
	Audit Committee Financial Experts. Four of our continuing members of our Audit Committee qualify as “audit committee financial experts” as defined under SEC rules.
	Board Term Limit. Our Corporate Governance Guidelines provide that a director will not be renominated at the next annual meeting of stockholders after 12 years of service on our Board of Directors, absent special circumstances. Messrs. Alesio, Allen and Chereskin are retiring from our Board immediately prior to the Annual Meeting under this term limit policy.
	Proxy Access. Our Amended and Restated Bylaws (“Bylaws”) permit a stockholder, or a group of up to 20 stockholders, owning at least 3% of our outstanding common stock continuously for at least 3 years to nominate and include in our proxy materials director nominees constituting up to 2 individuals or 20% of the Board, whichever is greater, as further detailed in our Bylaws.
	Majority Vote. Directors are elected by majority vote of our stockholders in uncontested elections. We have a resignation policy that applies if a director fails to receive a majority of the votes cast.
	Restrictions on Other Board Service. Our Corporate Governance Guidelines restrict the number of public company boards on which our directors may serve. A director who is currently an executive officer of a public company may serve on a total of 2 public company boards (including our Board) and a director who is not currently an executive officer of a public company may serve on a total of 4 public company boards (including our Board).
	Annual Board and Committee Evaluations. Our Chairman leads the annual Board evaluation process by conducting a one-on-one interview with each director to obtain feedback on and discuss Board performance and effectiveness. The results are then discussed by the Nominating and Corporate Governance Committee, which consists of all of our independent directors. Each of the Audit, Compensation and Nominating and Corporate Governance Committees also conducts an annual self-evaluation to discuss Committee performance and effectiveness.
	Proposed Elimination of Supermajority Vote Provisions. Our Board of Directors has approved the amendment of our certificate of incorporation to eliminate supermajority vote provisions (Proposal 4 in this proxy statement).

Nominating and Corporate Governance Committee
Chairperson: David W. Nelms
Other Members of the Committee:	Virginia C. Addicott, Steven W. Alesio, Barry K. Allen, James A. Bell, Benjamin D. Chereskin*, Lynda M. Clarizio, Paul J. Finnegan, Anthony R. Foxx, Sanjay Mehrotra, Joseph R. Swedish, Donna F. Zarcone
Meetings Held in 2020: 4 Primary Responsibilities: Our Nominating and Corporate Governance Committee is responsible for, among other things: (1) identifying individuals qualified to become members of our Board of Directors, consistent with criteria approved by our Board; (2) evaluating potential nominees for our Board of Directors recommended by our stockholders and maintaining procedures for the submission of stockholder nominees; (3) overseeing the organization of our Board to discharge the Board’s duties and responsibilities properly and efficiently; (4) identifying best practices and recommending corporate governance principles; (5) developing and recommending to our Board a set of corporate governance guidelines and principles applicable to us; (6) reviewing compliance with The CDW Way Code, our code of business conduct and ethics; (7) reviewing and approving the compensation of our directors; (8) setting performance goals for and reviewing the performance of our chief executive officer; (9) overseeing our environmental, social and governance program; and (10) executive succession planning. Independence: Each member of the Nominating and Corporate Governance Committee meets the nominating and corporate governance committee independence requirements of Nasdaq.

SEC Form DEF 14A filed by CDW Corporation