<PAGE> 1
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
FIled by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
INGRAM MICRO INC.
(Name of Registrant as Specified in its Charter)
INGRAM MICRO INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[IM LOGO]
INGRAM MICRO INC.
1600 East St. Andrew Place
Santa Ana, California 92705
--------------------
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
To Be Held May 6, 1998
--------------------
The 1998 Annual Meeting of the Shareowners of Ingram Micro Inc. will be
held at the Company's Buffalo campus, 1740 Wehrle Drive, Williamsville, New York
14221 on Wednesday, May 6, 1998 at 11:00 a.m. for the following purposes:
1. To elect eight Directors of the Company to serve until the Annual Meeting
of the Shareowners in 1999.
2. To approve and adopt the Ingram Micro Inc. 1998 Equity Incentive Plan.
3. To approve and adopt the Ingram Micro Inc. 1998 Employee Stock Purchase
Plan.
4. To transact such other business as may properly come before the meeting
and any and all adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 20, 1998 as
the record date for the determination of the shareowners entitled to notice of
and to vote at the meeting and at any adjournment or postponement thereof.
Shareowners are invited to attend the meeting. Whether or not you expect to
attend, we urge you to sign, date and promptly return the enclosed proxy card in
the enclosed postage prepaid envelope. If you attend the meeting, you may vote
your shares in person, which will revoke any previously executed proxy.
If your shares are held of record by a broker, bank or other nominee and
you wish to attend the meeting, you must obtain a letter from the broker, bank
or other nominee confirming your beneficial ownership of the shares and bring it
to the meeting. In order to vote your shares at the meeting, you must obtain
from the record holder a proxy issued in your name.
By Order of the Board of Directors,
/s/ JAMES E. ANDERSON, JR.
James E. Anderson, Jr.
Senior Vice President, Secretary and
General Counsel
April 6, 1998
<PAGE> 3
[IM LOGO]
INGRAM MICRO INC.
1600 East St. Andrew Place
Santa Ana, California 92705
--------------------
PROXY STATEMENT
For Annual Meeting of Shareowners to be held May 6, 1998
--------------------
INTRODUCTION
This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Ingram Micro Inc., a Delaware
corporation (the "Company") for the 1998 Annual Meeting of the Shareowners of
the Company (the "1998 Annual Meeting") to be held at the Company's Buffalo
campus, 1740 Wehrle Drive, Williamsville, New York 14221 on Wednesday, May 6,
1998 at 11:00 a.m. The Notice of Annual Meeting, this proxy statement and the
accompanying proxy are first being mailed on or about April 6, 1998 to
shareowners of record as of the close of business on March 20, 1998. You can
ensure that your shares are voted at the meeting by signing, dating and promptly
returning the enclosed proxy in the envelope provided. Sending in a signed proxy
will not affect your right to attend the meeting and vote in person. You may
revoke your proxy at any time before it is voted by notifying the Company's
Transfer Agent, First Chicago Trust Company of New York, P.O. Box 2500, Jersey
City, New Jersey 07303-2500, in writing, or by executing a subsequent proxy,
which revokes your previously executed proxy. Additionally, if you attend the
meeting, you may vote your shares in person, which will revoke any previously
executed proxy.
VOTING OF PROXIES
Proxies will be voted as specified by the shareowners. Where specific
choices are not indicated, proxies will be voted FOR the election of all
nominees for Director (Proposal 1), FOR the approval and adoption of the Ingram
Micro Inc. 1998 Equity Incentive Plan (the "1998 Plan") (Proposal 2), and FOR
the approval and adoption of the Ingram Micro Inc. 1998 Employee Stock Purchase
Plan (the "1998 ESPP") (Proposal 3).
Under the Delaware General Corporation Law (the "DGCL"), the Company's
Certificate of Incorporation (the "Charter") and the Company's Bylaws (the
"Bylaws"), shares represented by proxies that reflect abstentions or "broker
non-votes" will be counted as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. The election of Directors
(Proposal 1) requires the affirmative vote of a plurality of the shares of
Common Stock present, in person or by proxy, and entitled to vote at the 1998
Annual Meeting. Accordingly, abstentions and broker non-votes have no effect on
the plurality of votes for election of Directors. The approval and adoption of
the 1998 Plan (Proposal 2) requires the affirmative vote of a majority of the
shares of Common Stock present, in person or by proxy, and entitled to vote at
the 1998 Annual Meeting. The approval and adoption of the 1998 ESPP (Proposal 3)
requires the affirmative vote of a majority of the shares of Common Stock
present, in person or by proxy, and entitled to vote at the 1998 Annual Meeting.
Abstentions and broker non-votes will be counted as present and not voting for
Proposal 2 and Proposal 3.
The Company has two classes of Common Stock outstanding, the Class A Common
Stock, par value $0.01 per share (the "Class A Common Stock"), and the Class B
Common Stock, par value $0.01 per share (the "Class B Common Stock" and,
together with the Class A Common Stock, the "Common Stock"). The shares of Class
A Common Stock and Class B Common Stock are identical in all respects, except
for voting rights and certain conversion rights. Each share of Class A Common
Stock entitles the holder to one vote on each matter submitted to a vote of the
Company's shareowners, including the proposals being submitted to the
shareowners herewith, and each share of Class B Common Stock entitles the holder
to ten votes on each such matter. The Class B Common Stock is convertible into
Class A Common Stock, in whole or in part, at any time and from time to time at
the option of the holder, on the basis of one share of Class A Common Stock for
each share of Class B Common Stock
1
<PAGE> 4
converted. Each share of Class B Common Stock will also automatically convert
into one share of Class A Common Stock upon the earliest to occur of (i)
November 6, 2001 (the fifth anniversary of the closing of the split-off (the
"Split-Off") of the Company from its former parent, Ingram Industries Inc.
("Ingram Industries")); (ii) the sale or transfer of such share of Class B
Common Stock (a) by a holder that is a party to the Board Representation
Agreement (as defined below) to any person that is not an affiliate, spouse or
descendant of such holder, their estates or trusts for their benefit or any
other party to the Exchange Agreement (as defined below) or (b) by any other
holder, to a holder that is not the spouse or descendant of such holder or their
estates or trusts for the benefit thereof; and (iii) the date on which the
number of shares of Class B Common Stock then outstanding is less than 25% of
the aggregate number of shares of Common Stock then outstanding. Except as
required by applicable law, holders of the Class A Common Stock and Class B
Common Stock vote together as a single class on all matters submitted to a vote
of the shareowners of the Company. The shares of Common Stock do not have
cumulative voting rights.
As of February 17, 1998, there were outstanding 37,701,374 shares of Class
A Common Stock and 99,714,672 shares of Class B Common Stock.
In connection with the Split-Off, the Company entered into certain
agreements relating to the provision of certain services. The Company also
entered into certain agreements with certain shareowners of the Company relating
to board representation and registration rights. See "Item 1. Election of
Directors" and "Certain Relationships and Related Transactions." In the
Split-Off, certain existing shareowners exchanged a specified number of their
shares of Ingram Industries common stock for shares of Class B Common Stock of
the Company of equivalent value to the shares of Ingram Industries common stock
so exchanged. As of February 17, 1998, Martha R. Ingram, her children, certain
trusts created for their benefit, and two charitable trusts and a foundation
created by the Ingram family (collectively, the "Ingram Family Stockholders")
held 137,961 shares of Class A Common Stock (including 115,939 shares issuable
for stock options exercisable within 60 days of February 17, 1998) in the
aggregate and 89,930,326 shares of Class B Common Stock in the aggregate
(amounting to 86.9% of the aggregate voting power of the Common Stock).
Ingram Industries (which is controlled by the Ingram Family Stockholders)
held 231,000 shares of Class A Common Stock as of February 17, 1998. In
addition, Ingram Entertainment Inc. ("Ingram Entertainment") (which is
controlled by David B. Ingram) held 2,901 shares of Class A Common Stock as of
February 17, 1998.
Shareowners will not be entitled to appraisal rights in connection with
any matter to be voted on at the 1998 Annual Meeting.
2
<PAGE> 5
ITEM 1.
ELECTION OF DIRECTORS
At the 1998 Annual Meeting, eight Directors (constituting the entire Board
of Directors) are to be elected to serve for a term to expire at the 1999 Annual
Meeting of the Shareowners. The nominees for re-election are Don H. Davis, Jr.,
David B. Ingram, John R. Ingram, Martha R. Ingram, Philip M. Pfeffer, J. Phillip
Samper, Jerre L. Stead, and Joe B. Wyatt. Information regarding the Board's
nominees for Directors is set forth below.
The accompanying proxy will be voted for election of the Board's nominees
unless contrary instructions are given. If any of the Board's nominees is unable
to serve, which is not anticipated, the persons named as proxies intend to vote,
unless the number of nominees is reduced by the Board of Directors, for such
other person or persons as the Board of Directors may designate.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF MESSRS. DAVIS,
DAVID B. INGRAM, JOHN R. INGRAM, PFEFFER, SAMPER, STEAD, AND WYATT AND MRS.
INGRAM AS DIRECTORS, WHICH IS DESIGNATED AS PROPOSAL NO. 1 ON THE ENCLOSED PROXY
CARD.
NOMINEES FOR RE-ELECTION TO THE BOARD OF DIRECTORS FOR A ONE-YEAR TERM TO
EXPIRE AT THE 1999 ANNUAL MEETING OF SHAREOWNERS
DON H. DAVIS, JR., age 58, became a Director of the Company in October
1996. Since February 1998, he has served as Chairman of the Board and Chief
Executive Officer of Rockwell International Corporation, a global electronic
controls and communications company. Mr. Davis, who has served Rockwell
International Corporation or its predecessors for 35 years, previously was
President and Chief Executive Officer from October 1997 to February 1998;
President and Chief Operating Officer from July 1995 through September 1997;
Executive Vice President and Chief Operating Officer from January 1994 to July
1995; President, Automation Group of Rockwell International Corporation from
June 1993 to January 1994; and President of Rockwell International Corporation's
wholly-owned subsidiary, Allen-Bradley Company, from July 1989 to January 1994.
He also is a member of the Board of Directors of Sybron International
Corporation, a member of The Business Roundtable, Chairman of the Board for the
L.A. Manufacturing Learning Center and a director, trustee or member of a number
of other business, educational and civic organizations.
DAVID B. INGRAM, age 35, has been a Director of the Company since April
1996. He is currently Chairman and President of Ingram Entertainment, a position
he has held since March 1996. Mr. Ingram had previously served as President and
Chief Operating Officer of Ingram Entertainment from August 1994, Vice
President, Major Accounts of Ingram Entertainment from November 1993 to August
1994, Assistant Vice President of Sales from June 1992 to November 1993, and
Director of Sales from July 1991 to June 1992. He is a member of the Video
Software Dealers Association national board.
JOHN R. INGRAM, age 36, has served as a Director of the Company since April
1996 and served as a Director of the Company's predecessors beginning in
December 1994. He has been Co-President of Ingram Industries since January 1996
and was President of Ingram Book Company, a division of Ingram Industries, from
January 1995 to October 1996. Mr. Ingram served as Acting Chief Executive
Officer of the Company from May 1996 to August 1996 and held a variety of
positions at the Company from 1991 through 1994, including Vice President of
Purchasing and Vice President of Management Services at Ingram Micro Europe, and
Director of Purchasing. He is a member of the Board of Directors of SunTrust
Bank, Nashville, and the Nashville Area Chamber of Commerce.
MARTHA R. INGRAM, age 62, became a Director of the Company in May 1996,
serving as Chairman of the Board until August 1996. She has been the Chairman of
the Board of Directors of Ingram Industries since June 1995 and Chief Executive
Officer since April 1996. She previously served as Director of Public Affairs of
Ingram Industries from 1979 to June 1995. Mrs. Ingram serves on the Board of
Trust of Vanderbilt University and Vassar College and on the Board of Directors
of Weyerhaeuser Company, First American Corporation, and Baxter International
Inc.
3
<PAGE> 6
PHILIP M. PFEFFER, age 53, has served as a Director of the Company since
April 1996 and was a Director of the Company's predecessors beginning in
December 1985. He has been a Director and President and Chief Operating Officer
of Random House, Inc., a publishing company, since May 1996. Previously, Mr.
Pfeffer was Executive Vice President and a Director of Ingram Industries from
December 1981 to March 1996, and Chairman and Chief Executive Officer of Ingram
Distribution Group Inc. from December 1981 to December 1995.
J. PHILLIP SAMPER, age 63, has been a Director of the Company since October
1996. He currently serves as Chief Executive Officer and President of AVISTAR
Systems Corp., a video collaboration company. Mr. Samper was previously
Chairman, Chief Executive Officer and President of Quadlux, Inc., a commercial
and residential cooking appliances company from 1996 to 1997, Chairman and Chief
Executive Officer of Cray Research, Inc., a computer products company, from May
1995 to March 1996, President and Chief Executive of Sun Microsystems Computer
Corporation from January 1994 to March 1995, and Managing Partner of FRN Group,
a private investment consulting firm, from February 1991 until January 1994. He
also serves as a Director of Armstrong World Industries, Inc., The Interpublic
Group of Companies, and Sylvan Learning Systems, Inc.
JERRE L. STEAD, age 55, became Chairman of the Board and Chief Executive
Officer of the Company in August 1996. Mr. Stead served as Chief Executive
Officer and Chairman of the Board at LEGENT Corporation, a software development
company, from January 1995 to August 1995. Prior to that, Mr. Stead was
Executive Vice President, Chairman and Chief Executive Officer of AT&T Corp.
Global Information Solutions (NCR Corporation) from May 1993 to December 1994
and President and Chief Executive Officer of AT&T Corp. Global Business
Communication Systems from September 1991 to April 1993. He was Chairman,
President and Chief Executive Officer of Square D Co., an electronics
manufacturer, from September 1988 to August 1991. He is on the Board of
Directors of Armstrong World Industries, Inc., American Precision Industries,
Inc. and TJ International, Inc. Mr. Stead is Chairman of the Board of the Center
of Ethics and Values at Garrett Seminary on the Northwestern University campus.
JOE B. WYATT, age 62, has been a Director of the Company since October
1996. Mr. Wyatt was previously a Director of Ingram Industries from April 1990
through October 1996. He currently serves as Chancellor of Vanderbilt University
in Nashville, Tennessee, a position he has held since 1982. Mr. Wyatt is a
Director of Sonat, Inc. and Reynolds Metals Company.
Martha R. Ingram is the mother of David B. Ingram and John R. Ingram. There
are no other family relationships among the Directors or executive officers of
the Company.
REQUIREMENTS OF BOARD MEMBERS
The Company and the Ingram Family Stockholders have entered into a Board
Representation Agreement (the "Board Representation Agreement"). So long as the
Ingram Family Stockholders and their permitted transferees (as defined in the
Board Representation Agreement) own in excess of 25,000,000 shares of the
outstanding Common Stock, the Board Representation Agreement provides for the
designation of certain Directors (the "Designated Nominees"): (i) not more than
three Directors designated by the Ingram Family Stockholders, (ii) one Director
designated by the Chief Executive Officer of the Company, and (iii) four or five
additional Directors ("Independent Directors") who are not members of the Ingram
family or executive officers or employees of the Company. Directors designated
by the Ingram Family Stockholders may, but are not required to, include Martha
R. Ingram, any of her legal descendants, or any of their respective spouses.
Messrs. David B. Ingram and John R. Ingram and Mrs. Ingram are the Directors
designated by the Ingram Family Stockholders; Mr. Stead is the Director
designated by the Chief Executive Officer of the Company; and Messrs. Davis,
Pfeffer, Samper, and Wyatt are Independent Directors. Each of the parties to the
Board Representation Agreement (other than the Company) has agreed to vote its
shares of Common Stock in favor of the Designated Nominees. The Ingram Family
Stockholders' holdings of Common Stock are sufficient to guarantee the election
of the Designated Nominees.
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COMMITTEES OF THE BOARD - BOARD MEETINGS
In 1997, there were nine meetings of the Board of Directors of the Company.
In addition, management conferred frequently with Directors. During 1997, all
Directors attended 75% or more of the aggregate of the total number of meetings
of the Board of Directors and meetings of all committees of the Board on which
they served, except Mr. Davis, who attended 73% (11 out of 15) of all such
meetings.
COMMITTEES. The Board Representation Agreement provides for the formation
of certain committees of the Board of Directors. As provided in the Bylaws and
the Board Representation Agreement, the Company has four committees: an
Executive Committee, a Nominating Committee, an Audit Committee, and a Human
Resources Committee.
The Executive Committee consists of three Directors, one of whom is a
Director designated by the Ingram Family Stockholders, one of whom is the
Director designated by the Chief Executive Officer of the Company, and one of
whom is an Independent Director. The Executive Committee currently consists of
Messrs. Stead (Chairman), John R. Ingram, and Samper. The Executive Committee
held one meeting in 1997, and acted by written consent on several occasions. The
Executive Committee may approve management decisions requiring the immediate
attention of the Board of Directors during the period of time between each
regularly scheduled meeting of the Board. The Executive Committee does not have
authority to approve any of the following items, all of which require the
approval of the Board: (i) any action that would require the approval of the
holders of a majority of the stock held by certain of the Ingram Family
Stockholders or that would require approval of the holders of a majority of the
Common Equity under applicable law or under the Certificate of Incorporation or
Bylaws of the Company; (ii) any acquisition with a total aggregate consideration
in excess of 2% of the Company's stockholders' equity; (iii) any action outside
the ordinary course of business of the Company; or (iv) any other action
involving a material shift in policy or business strategy for the Board.
The Nominating Committee consists of three Directors, two of whom are
Directors designated by the Ingram Family Stockholders, and one of whom is the
Director designated by the Chief Executive Officer of the Company. The
Nominating Committee currently consists of Messrs. David B. Ingram and Stead and
Mrs. Ingram (Chairman). The Nominating Committee held one meeting in 1997. The
function of the Nominating Committee is to designate nominees for election as
Directors of the Company and to elect members of other committees of the Board
of Directors. The Nominating Committee will consider individuals recommended by
shareowners. Any such recommendation must be submitted in writing prior to
January 1 of each year, accompanied by a description of the proposed nominee's
qualifications and other relevant biographical information, and should be
addressed to the Nominating Committee, in care of the Secretary of the Company.
The Audit Committee consists of at least three Directors, a majority of
whom must be Independent Directors. The Audit Committee currently consists of
Messrs. David B. Ingram, Pfeffer, and Wyatt (Chairman). The Audit Committee held
two meetings in 1997. The functions of the Audit Committee are to recommend
annually to the Board of Directors the appointment of the independent auditors
of the Company, discuss and review in advance the scope and the fees of the
annual audit and review the results thereof with the independent auditors,
review and approve non-audit services of the independent auditors, review
compliance with existing major accounting and financial reporting policies of
the Company, review the adequacy of the financial organization of the Company,
and review management's procedures and policies relating to the adequacy of the
Company's internal accounting controls and compliance with applicable laws
relating to accounting practices.
The Human Resources Committee consists of three Directors, one of whom is a
Director designated by the Ingram Family Stockholders and two of whom are
Independent Directors. The Human Resources Committee currently consists of
Messrs. Davis and Samper (Chairman) and Mrs. Ingram. The Human Resources
Committee held six meetings in 1997 and acted by written consent on several
occasions. The functions of the Human Resources Committee are to review and
approve annual salaries, bonuses, and grants of stock awards for all executive
officers and key members of the Company's management staff and to review and
approve the terms and conditions of all compensation plans in which such
individuals participate, and any changes thereto.
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HUMAN RESOURCES (COMPENSATION) COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION. Messrs. Davis and Samper and Mrs. Ingram served on the Human
Resources Committee during 1997. No Human Resources Committee interlocks or
insider participation existed in 1997.
COMPENSATION OF DIRECTORS
Directors who are not Independent Directors do not receive any additional
compensation for serving on the Board of Directors, but are reimbursed for
expenses incurred in attending meetings of the Board of Directors and Committees
thereof. In addition to such reimbursement, each current Independent Director
has been granted on the date his service began (but not prior to October 31,
1996), and each new Independent Director will be granted on the date his or her
service begins, options to purchase 45,000 shares of Class A Common Stock. These
options have an exercise price per share equal to the market price of the Common
Stock on the date of grant and will vest in equal installments on the first,
second, and third anniversaries of the date of grant. Independent Directors do
not receive any other compensation for their service.
CERTAIN RIGHTS OF THE INGRAM FAMILY STOCKHOLDERS WITH RESPECT TO THE BOARD OF
DIRECTORS
In addition to provisions relating to the designation of Directors
described above, the Board Representation Agreement provides as follows:
Certain types of corporate transactions, including transactions involving
the potential sale or merger of the Company; the issuance of additional equity,
warrants, or options; acquisitions involving aggregate consideration in excess
of 10% of the Company's stockholders' equity; any guarantee of indebtedness of
an entity other than a subsidiary of the Company exceeding 5% of the Company's
stockholders' equity; and the incurrence of indebtedness in a transaction which
could reasonably be expected to reduce the Company's investment rating (i) lower
than one grade below the rating in effect immediately following the Company's
initial public offering in November 1996 ("IPO") or (ii) below investment grade,
may not be entered into without the written approval of at least a majority of
the voting power deemed to be held (for purposes of the Board Representation
Agreement) by certain of the Ingram Family Stockholders, acting in their sole
discretion.
The Board Representation Agreement will terminate on the date on which the
Ingram Family Stockholders and their permitted transferees collectively cease to
beneficially own at least 25,000,000 shares of the Common Stock of the Company
(as such number may be equitably adjusted to reflect stock splits, stock
dividends, recapitalizations, and other transactions in the capital stock of the
Company). All decisions for the Ingram Family Stockholders that are trusts or
foundations will be made by the trustees thereof, who in some cases are members
of the Ingram family.
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SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of February 17,
1998, with respect to the beneficial ownership of each class of the Common Stock
by (a) each Director of the Company; (b) the Company's Chief Executive Officer,
and the other four most highly compensated executive officers of the Company in
the most recently completed fiscal year (collectively, the "Named Executive
Officers"); (c) all executive officers and Directors of the Company as a group;
and (d) each person known by the Company to own beneficially more than five
percent of the outstanding shares of either class of Common Stock. As of
February 17, 1998, the Ingram Family Stockholders held 137,961 shares of Class A
Common Stock (including 115,939 shares issuable for stock options exercisable
within 60 days of February 17, 1998) in the aggregate (representing less than
one percent of the total outstanding shares of Class A Common Stock) and
89,930,326 shares of Class B Common Stock in the aggregate (representing 90.2%
of the total outstanding shares of Class B Common Stock, and collectively with
the Class A Common Stock held by the Ingram Family Stockholders, amounting to
86.9% of the aggregate voting power of the Common Stock). A significant number
of shares attributable to the individual Ingram Family Stockholders are
reflected more than once in the table below as a result of Ingram Family
Stockholders being co-trustees to various trusts.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK (1) CLASS B COMMON STOCK COMMON STOCK
----------------------------- --------------------------------- ----------------------
PERCENTAGE PERCENTAGE
SHARES SHARES OF TOTAL OF TOTAL
BENEFICIALLY PERCENTAGE BENEFICIALLY PERCENTAGE OUTSTANDING VOTING
NAME OWNED OF CLASS OWNED OF CLASS SHARES POWER
------------ ---------- ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Don H. Davis, Jr ................. 15,000(4) * -- -- * *
David B. Ingram(2)(3) ............ 54,184(4)(5) * 74,769,003(7)(8) 75.0% 54.4% 72.3%
John R. Ingram(3)(9) ............. 11,416(4)(6) * 73,149,728(7)(8) 73.4% 53.2% 70.7%
Martha R. Ingram(3)(9) ........... --(6) -- 80,286,638(7)(8) 80.5% 58.4% 77.6%
Philip M. Pfeffer ................ 318,866(10) * 1,972,478(8) 2.0% 1.7% 1.9%
J. Phillip Samper ................ 15,000(4) * -- -- * *
Jerre L. Stead ................... 780,000(11) 2.0% -- -- * *
Joe B. Wyatt ..................... 126,565(12) * -- -- * *
David R. Dukes ................... 196,385(13) * 73,750(14) * * *
Sanat K. Dutta ................... 127,998(15) * 95,000(14) * * *
Michael J.Grainger ............... 103,197(16) * 45,000 * * *
Jeffrey R. Rodek ................. 111,546(4) * 322,500(14) * * *
All Executive
Officers and
Directors as a
group (18 persons)(3)......... 2,124,447(6)(17) 5.4% 90,382,455(7)(8)(14) 90.6% 66.7% 87.4%
AMVESCAP PLC (18) ................ 4,430,400 11.8% -- -- 3.2% *
Orrin H. Ingram(3)(9) ............ 72,361(6)(19) * 73,157,670(7)(8) 73.4% 53.3% 70.7%
Robin Ingram Patton(3)(9) ........ --(6) -- 71,435,525(7)(8) 71.6% 52.0% 69.0%
E. Bronson Ingram QTIP
Marital Trust(3)(9) ........... -- -- 69,099,259 69.3% 50.3% 66.8%
Ingram Thrift Plan(9) ............ -- -- 5,243,043 5.3% 3.8% 5.1%
SunTrust Bank(20) ................ 43,329 * 8,137,088 8.2% 5.9% 7.9%
Tiger Management
L.L.C./Tiger Performance
L.L.C./Julian H
Robertson(21) .................... 6,228,300 16.5% -- -- 4.5% *
</TABLE>
(footnotes on the following page)
7
<PAGE> 10
- --------------
* Less than one percent.
(1) Excludes each shareowner's beneficial ownership of Class B Common Stock,
which may be converted into Class A Common Stock at any time, at the
option of the holder.
(2) The address for David B. Ingram is c/o Ingram Entertainment Inc., Two
Ingram Boulevard, Lavergne, Tennessee 37089.
(3) David B. Ingram, Robin Ingram Patton, Orrin H. Ingram, John R. Ingram, and
Martha R. Ingram are trustees of the E. Bronson Ingram QTIP Marital Trust
(the "QTIP Trust"), and accordingly could each be deemed to be the
beneficial owner of the shares held by the QTIP Trust.
(4) Represents stock options exercisable for shares of Class A Common Stock
within 60 days of the date of the table.
(5) Excludes 2,901 shares owned by Ingram Entertainment. As principal
shareowner of Ingram Entertainment, the indicated shareowner may be deemed
to be beneficial owner of the shares held by Ingram Entertainment.
(6) Excludes 231,000 shares of Common Stock owned by Ingram Industries. As
principal shareowners of Ingram Industries, the indicated shareowners may
be deemed to be beneficial owners of the shares held by Ingram Industries.
(7) Includes 71,286,290; 71,055,197; 71,286,290; 71,286,290; 78,248,636; and
80,413,227 shares, for David B. Ingram, Robin Ingram Patton, Orrin H.
Ingram, John R. Ingram, Martha R. Ingram, and all executive officers and
Directors as a group, respectively, which shares are held by various
trusts or foundations of which these individuals are trustees. Such
individuals could each be deemed to be the beneficial owner of the shares
held by such trusts of which he or she is a trustee.
(8) Excludes for David B. Ingram 2,740,287 shares held by one or more trusts
of which he and/or his children are beneficiaries; for Robin Ingram Patton
2,932,919 shares held by one or more trusts of which she is a beneficiary;
for Orrin H. Ingram 1,441,858 shares held by one or more trusts of which
he and/or his children are beneficiaries; for John R. Ingram 1,459,064
shares held by one or more trusts of which he and/or his children are
beneficiaries; and for Mr. Pfeffer 234,348 shares held by his children or
one or more trusts of which his children are beneficiaries. Each such
individual disclaims beneficial ownership as to such shares.
(9) The address for each of the indicated parties is c/o Ingram Industries
Inc., One Belle Meade Place, 4400 Harding Road, Nashville, Tennessee
37205.
(10) Includes 116,762 stock options exercisable for shares of Class A Common
Stock within 60 days of the date of the table.
(11) Includes options to purchase 580,000 shares of Class A Common Stock.
(12) Includes options to purchase 15,000 shares of Class A Common Stock.
(13) Includes options to purchase 135,404 shares of Class A Common Stock.
(14) Includes options to purchase 8,750; 10,000; 37,500; and 71,250 shares of
Class B Common Stock, for Messrs. Dukes, Dutta and Rodek and all executive
officers as a group, respectively.
(15) Includes options to purchase 49,425 shares of Class A Common Stock.
(16) Includes options to purchase 80,889 shares of Class A Common Stock.
(17) Includes options to purchase 1,336,340 shares of Class A Common Stock.
(18) Based on information provided in a Schedule 13G filed on February 12, 1998
by AMVESCAP PLC and certain related entities. AMVESCAP PLC shares voting
and dispositive power with respect to all 4,430,400 shares of Class A
Common Stock with each of the following entities: AVZ, Inc., A I M
Management Group Inc., AMVESCAP Group Services, Inc., INVESCO, Inc.,
INVESCO North American Holdings, Inc., INVESCO Capital Management, Inc.,
INVESCO Funds Group, Inc., INVESCO Management & Research, Inc. and INVESCO
Realty Advisers, Inc. The address for each such entity is 11 Devonshire
Square, London EC2M 4YR, England.
8
<PAGE> 11
(19) Includes options to purchase 50,339 shares of Class A Common Stock.
(20) The address for SunTrust Bank, Atlanta ("SunTrust") is 25 Park Place, NE,
Atlanta, Georgia 30303. All shares of Class B Common Stock are held by
SunTrust as trustee for certain individuals. All shares of Class A Common
Stock are held in accounts for customers of SunTrust Banks and its
affiliates. SunTrust and its affiliates have sole voting and dispositive
power with respect to 20,320 of these shares of Class A Common Stock, and
shared voting and dispositive power with respect to 4,100 of such shares.
SunTrust and its affiliates hold the other 18,909 shares of Class A Common
Stock in non-discretionary accounts. SunTrust Banks and each of its
affiliates disclaim any beneficial interest in all shares of Common Stock
it holds.
(21) Based on information provided in a Schedule 13G filed on February 13, 1998
by Tiger Management L.L.C. ("Tiger Management"), Tiger Performance L.L.C.
("Tiger Performance"), and Julian H. Robertson, Jr. Tiger Management has
shared voting and dispositive power with respect to 3,801,200 shares of
Class A Common Stock and Tiger Performance has shared voting and
dispositive power with respect to 2,427,100 shares of Class A Common
Stock. Mr. Robertson has shared voting and dispositive power with respect
to 6,228,300 shares held by Tiger Management and Tiger Performance. The
address for each of Tiger Management, Tiger Performance and Mr. Robertson
is 101 Park Avenue, New York, New York 10178.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Historically, Ingram Industries provided certain administrative services to
the Company. In connection with the Split-Off, the Company entered into certain
agreements (the "Transitional Service Agreements") with Ingram Industries
relating to the continued provision of certain administrative services. The
Company believes that the terms of the Transitional Service Agreements were on a
basis as favorable as those that would have been obtained from third parties on
an arm's length basis. The Transitional Service Agreements generally terminated
on December 31, 1996, although payroll services under the Transitional Service
Agreements were provided through December 31, 1997.
The Company leases certain office space near Buffalo, New York from a
partnership owned by certain members of the Ingram family. The lease agreement
expires January 31, 2013 and requires annual rental payments of approximately
$1.6 million.
The Company extended two loans in 1997 to two executive officers, David
Carlson and Ed Pensel, to assist them with the purchase of their homes. The
largest aggregate amount outstanding at any time during 1997 and as of February
17, 1998 on Mr. Carlson's and Mr. Pensel's loans were $200,000 and $350,000,
respectively. These loans bear an interest rate of Prime Rate plus 1%. In
addition, the Company extended a no interest bridge loan in 1997 to another
executive officer, James E. Anderson, Jr., to assist him with the purchase of
his home. The largest aggregate amount outstanding at any time during 1997 on
Mr. Anderson's loan was $250,000. Mr. Anderson repaid the full amount of the
loan in 1997 within six weeks of the loan origination date.
In connection with the Split-Off, agreements relating to board
representation and registration rights with respect to Common Stock held by the
Ingram Family Stockholders (including shares of Class A Common Stock issued upon
conversion of Class B Common Stock) were entered into by the Company and the
Ingram Family Stockholders.
In connection with the exchange of shares of Ingram Industries common stock
for shares of Class B Common Stock of the Company (as described above), the
exchange values were determined by the board of directors of Ingram Industries,
which relied in part on an opinion of a financial advisor to the effect that the
Split-Off was fair to all involved parties. In an exchange agreement (the
"Exchange Agreement"), the Company covenanted that, during the two-year period
following the Split-Off, it will not (i) liquidate, merge, or consolidate with
any other person, or sell, exchange, distribute, or dispose of any material
asset other than in the ordinary course of business, (ii) with certain limited
exceptions, redeem or reacquire any of its capital stock transferred in the
Split-Off, (iii) cease to conduct the principal active trade or business
conducted by it during the five years immediately preceding the Split-Off, or
(iv) otherwise take any actions inconsistent with the facts and representations
set forth in the private letter ruling from the U.S. Internal Revenue Service
(the "IRS") regarding certain federal income tax consequences of the Split-Off,
in each case unless it first obtains an opinion from recognized tax counsel or a
ruling from the IRS that such action will not affect the qualification of the
transactions contemplated by the Exchange Agreement for tax-free treatment. All
such covenants were necessary to obtain the private letter ruling from the IRS.
9
<PAGE> 12
In connection with the Split-Off, certain outstanding Ingram Industries
options and stock appreciation rights ("SARs") held by current or former
employees or directors of Ingram Industries, Ingram Entertainment or their
respective subsidiaries were converted to, and certain Ingram Industries
incentive stock units ("ISUs") were exchanged for, options exercisable for
shares of Class A Common Stock of the Company ("Rollover Stock Options"). The
exchange values for these options, SARs, and ISUs were based primarily on the
exchange value for the underlying common stock, and were determined by the board
of directors of Ingram Industries in accordance with the respective plans under
which they were issued. A total of approximately 10,989,000 Rollover Stock
Options were issued in connection with the Split-Off. In connection with such
conversion and exchange, the Company agreed to register at various times
following the IPO, shares of Class A Common Stock issuable upon the exercise of
Rollover Stock Options. As described below, the Company has effected several
registrations with respect to shares of Class A Common Stock issuable upon
exercise of Rollover Stock Options.
The Ingram Family Stockholders and the other shareowners of Ingram
Industries who received shares of Class B Common Stock in the Split-Off entered
into a registration rights agreement (the "Registration Rights Agreement") which
grants the QTIP Trust demand registration rights following the closing of the
IPO. Such demand registration rights may be exercised with respect to all or any
portion (subject to certain minimum thresholds) of the shares of Class B Common
Stock owned by the QTIP Trust, one or more of the other Ingram Family
Stockholders and certain of their permitted transferees on up to three occasions
during the 84-month period following the closing of the IPO; provided that the
Company shall not be obligated to effect (i) any registration requested by the
QTIP Trust unless the QTIP Trust has furnished the Company with an opinion of
counsel to the effect that such registration and any subsequent sale will not
affect the tax-free nature of the Split-Off or (ii) more than one demand
registration during any 12-month period.
The Registration Rights Agreement also grants one demand registration right
(subject to certain minimum thresholds) to members of the Ingram family (which
may only be exercised during the 84-month period following the closing of the
IPO) and one demand registration right to certain minority shareowners of the
Company if a change of control of the Company occurs following the closing of
the IPO but prior to the second anniversary of the Split-Off. The minority
shareowners will not be entitled to this registration right if they were offered
the opportunity to participate in the change of control transaction.
The Registration Rights Agreement restricts the exercise by any party
thereto of a demand registration right, and provides that the Company will not
grant any registration rights to any other person that are more favorable than
those granted pursuant to the Registration Rights Agreement or that provide for
the exercise of demand registration rights sooner than three months following a
public offering in which such person was entitled to include its shares, unless
the number of shares requested to be included in such public offering exceeded
125% of the number of shares actually included.
In addition, the Registration Rights Agreement provides that the parties
thereto shall be entitled to unlimited "piggyback" registration rights in
connection with any proposed registration of equity securities by the Company
(with certain specified exceptions) during the 84-month period following the
completion of the IPO. Employees who received shares of Class B Common Stock in
the Company's July 1996 employee offering are bound by the provisions of the
Registration Rights Agreement as if such employees were parties thereto, and are
entitled to the "piggyback" registration rights provided therein, with respect
to the portion of their shares of Class B Common Stock that is no longer subject
to restrictions on transfer.
The Registration Rights Agreement contains provisions regarding reduction
of the size of an offering that has been determined by the underwriters to have
exceeded its maximum potential size and contains certain customary provisions,
including those relating to holdback arrangements, registration procedures,
indemnification, contribution and payment of fees and expenses.
As provided in an agreement (the "Thrift Plan Liquidity Agreement") with
the Ingram Thrift Plan, which received 10,007,000 shares of Class B Common Stock
in the Split-Off, the Company filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1, pursuant to which the
Ingram Thrift Plan sold 770,000 of such shares of Class B Common Stock in
December 1996. All of such shares were automatically converted into shares of
Class A Common Stock in connection with the sale thereof. In January 1997,
pursuant to an employee benefits transfer and assumption agreement (the
"Employee Benefits Agreement"), the
10
<PAGE> 13
Ingram Thrift Plan transferred an aggregate of 2,548,292 shares of Class B
Common Stock to the Ingram Micro Thrift Plan and the Ingram Entertainment Thrift
Plan.
A registration statement on Form S-1 (the "Thrift Plan S-1") filed by the
Company with the Commission covering 3,383,369 shares of Class A Common Stock
was declared effective on June 27, 1997. The Thrift Plan S-1 related to the
offer and sale of up to 1,378,369 shares of Class A Common Stock by the Company
upon exercise of Rollover Stock Options. The Thrift Plan S-1 also related to the
offer and sale by the Ingram Thrift Plan, the Ingram Micro Thrift Plan and the
Ingram Entertainment Thrift Plan (collectively, the "Thrift Plans"), of a total
of 2,005,000 shares of Class A Common Stock (resulting from the conversion of
shares of Class B Common Stock held by the Thrift Plans) in order to meet their
liquidity needs. The Company kept the prospectus filed in connection with the
Thrift Plan S-1 available until July 30, 1997.
A registration statement on Form S-3 (the "Thrift Plan S-3") filed by the
Company with the Commission covering 10,949,298 shares of Class A Common Stock
was declared effective on November 20, 1997. The Thrift Plan S-3 relates to the
offer and sale of up to 2,735,944 shares of Class A Common Stock by the Company
upon the exercise of Rollover Stock Options. The Thrift Plan S-3 also relates to
the offer and sale by the Thrift Plans, of a total of 8,213,894 shares of Class
A Common Stock of the Company (resulting from the conversion of shares of Class
B Common Stock of the Company held by the Thrift Plans). The Thrift Plan S-3 is
being kept current by the Company.
Pursuant to a reorganization agreement (the "Reorganization Agreement"),
each of the Company, Ingram Industries and Ingram Entertainment agreed to retain
or assume, at the time of the Split-Off, certain liabilities and obligations,
including the following: (i) liabilities and obligations incurred by such Ingram
Company (other than certain general corporate level liabilities of Ingram
Industries) with respect to periods ending on or prior to the closing of the
Split-Off, other than liabilities or obligations arising as a result of any
intentional act which is tortious or as a result of any illegal act (each, a
"Designated Action") committed by (x) a corporate officer of Ingram Industries
(except for actions that are believed by such person to be in furtherance of his
duties as an officer or employee of the Company, Ingram Entertainment, or their
respective subsidiaries, or the other subsidiaries or business operating units
of Ingram Industries), (y) any other employee of Ingram Industries whose
responsibilities are not primarily associated with the Company, Ingram
Entertainment, or their respective subsidiaries, or the other subsidiaries or
business operating units of Ingram Industries or (z) an employee (other than
general corporate level employees of Ingram Industries) of any other Ingram
Company; (ii) liabilities and obligations (other than general corporate level
liabilities of Ingram Industries) incurred by any other Ingram Company with
respect to periods ending on or prior to the closing of the Split-Off as a
result of any Designated Action committed by an employee of any such Ingram
Company or certain subsidiaries or business operating units of such Ingram
Company; (iii) in the case of Ingram Industries, certain general corporate level
liabilities and obligations up to an aggregate of $100,000 incurred by Ingram
Industries with respect to certain periods ending on or prior to the closing of
the Split-Off and recorded under Ingram Industries' internal accounting system
as "home office" liabilities, to the extent that such liabilities and
obligations are extraordinary in nature and arise out of the ordinary course of
business and were not accrued on Ingram Industries' year end 1995 balance sheet;
(iv) specified liabilities and obligations related to certain asset dispositions
and the settlement of certain claims; and (v) liabilities and obligations
incurred by such Ingram Company with respect to periods beginning after the
closing of the Split-Off.
The Reorganization Agreement also provides that certain contingent assets
or liabilities, as well as fees and costs incurred in connection with the
Split-Off, will be shared 23.01% by Ingram Industries, 72.84% by the Company,
and 4.15% by Ingram Entertainment. These contingent liabilities include (i)
liabilities and obligations arising as a result of any Designated Action
committed by a corporate officer of Ingram Industries (except for actions that
are believed by such person to be in furtherance of his duties as an officer or
employee of the Company, Ingram Entertainment, or their respective subsidiaries
or other designated affiliates, or the other subsidiaries or designated
affiliates of Ingram Industries), or any other employee of Ingram Industries
whose responsibilities are not primarily associated with the Company, Ingram
Entertainment, or their respective subsidiaries, or the other subsidiaries or
business operating units of Ingram Industries; (ii) certain general corporate
level liabilities and obligations, if the aggregate of such liabilities and
obligations incurred by Ingram Industries exceeds $100,000, incurred by Ingram
Industries with respect to periods ending on or prior to the closing of the
Split-Off and recorded under Ingram Industries' internal accounting system as
"home office" liabilities, to the extent that such liabilities and obligations
are extraordinary and non-recurring in nature and arise out of the ordinary
course of business and were not accrued
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<PAGE> 14
on Ingram Industries' 1995 balance sheet; (iii) certain liabilities and
obligations incurred by Ingram Industries in respect of specified individuals
pursuant to certain deferred compensation plans of Ingram Industries; and (iv)
assets, liabilities, and obligations arising in connection with certain
specified asset dispositions. The Company will not be responsible for any
liabilities except to the extent that the Company's share of such liabilities,
fees or costs and certain other amounts (net of any contingent assets) exceeds,
in the aggregate, $20,778,000. The Company currently believes that any such
liabilities, fees, or costs will be largely offset by other amounts due from
Ingram Industries. However, there can be no assurance that further payments,
which could be material, will not be required in the future.
In addition, the Reorganization Agreement required the Company, at or prior
to the closing of the Split-Off, to enter into bank repurchase agreements with
respect to securities of the Company received in connection with the Exchange
Agreement in exchange for shares of Ingram Industries common stock previously
held as collateral for certain loans made to shareowners of Ingram Industries.
Pursuant to the Reorganization Agreement, each Ingram Company has agreed to
indemnify each other Ingram Company from any and all damage, loss, liability,
and expense incurred as a result of any breach by such party of any covenant or
agreement pursuant to the Reorganization Agreement or the failure by such party
to perform its obligations with respect to any liability retained or assumed by
such party pursuant to the Reorganization Agreement.
In addition, until 1999, the Company will provide data processing services
to Ingram Industries and Ingram Entertainment for a fee based on the allocated
costs of such services. The Company received fees of $1,835,232 in 1997, and is
expected to receive approximately $1,902,224 in 1998.
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<PAGE> 15
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides information relating to compensation for the
three most recently completed fiscal years for the Named Executive Officers.
Excluding Mr. Stead, prior to the Split-Off, a portion of this compensation was
paid by Ingram Industries and was included as a factor in the determination of
intercompany charges paid by the Company to Ingram Industries.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------- ----------------------------------------------
RESTRICTED SECURITIES ALL OTHER
STOCK AWARDS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(2) ($) OPTIONS/SARS(#) ($)(3)
---- ------------ ----------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Jerre L. Stead, Chairman of the Board 1997 -- -- -- 400,000 --
and Chief Executive Officer(4) 1996 -- -- -- 3,400,000 --
Jeffrey R. Rodek, President and 1997 $ 500,000 $ 468,198 -- -- $ 14,262
Worldwide Chief Operating Officer 1996 434,458 375,239 $ 245,000(5) 350,000(6) 12,493
1995 392,820 267,089 -- 240,259(7) 163,649
David R. Dukes Vice Chairman and 1997 325,000 286,650 -- -- 12,912
Chief Executive Officer of Ingram Alliance 1996 317,084 266,272 -- 185,000(6) 16,499
1995 260,130 205,611 -- -- 10,607
Sanat K. Dutta, Executive Vice President 1997 318,000 275,095 -- -- 12,635
and President, Ingram Micro U.S. 1996 268,435 241,475 -- 165,000(6) 12,850
1995 263,500 213,593 -- -- 12,365
Michael J. Grainger, Executive Vice President 1997 310,000 313,420(8) -- -- 16,256
and Worldwide Chief Financial Officer 1996 222,537 113,066 -- 300,000(6) 8,735
1995 145,496 39,463 -- 34,323(9) 3,636
</TABLE>
(1) The 1997 salary information is as of the last payroll period ending prior
to January 3, 1998. Includes amounts deferred under qualified and
nonqualified defined contribution compensation plans and pretax insurance
premium amounts.
(2) In respect of each of 1995, 1996 and 1997, the bonuses generally were paid
in February or March of the following years.
(3) Includes the following amounts for 1997: Mr. Rodek (group term life
insurance, $816; accidental death & dismemberment insurance, $238;
employer thrift plan contributions, $13,208); Mr. Dukes (group term life
insurance, $568; accidental death & dismemberment insurance, $156;
employer thrift plan contributions, $12,188); Mr. Dutta (group term life
insurance, $557; accidental death & dismemberment insurance, $153;
employer thrift plan contributions, $11,925); and Mr. Grainger (group term
life insurance, $576; accidental death & dismemberment insurance, $158;
employer thrift plan contributions, $11,625; relocation, $3,897).
(4) Mr. Stead became the Company's Chairman of the Board and Chief Executive
Officer on August 27, 1996.
(5) Granted in June 1996 with a fair market value of $7.00 per share. These
shares vest 25% per year commencing April 1, 1998. As of January 3, 1998,
Mr. Rodek held 35,000 shares of restricted stock with a market value of
$1,015,000 (based on the $29.00 market value per share of Class A Common
Stock on such date).
(6) Does not include the exchange or conversion of outstanding Ingram
Industries securities held by Messrs. Rodek, Dukes, Dutta, and Grainger
into Rollover Stock Options in connection with the Split-Off, as follows:
274,582, 273,896, 258,107, and 140,724 shares, respectively.
(7) Represents options granted in 1995 exercisable for 175,000 shares of
Ingram Industries common stock, which were converted into options
exercisable for 240,259 shares of Common Stock in connection with the
Split-Off.
(8) Includes $40,000 paid in December 1997.
(9) Represents options granted in 1995 exercisable for 25,000 shares of Ingram
Industries common stock, which were converted into options exercisable for
34,323 shares of Common Stock in connection with the Split-Off.
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<PAGE> 16
STOCK OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information relating to stock options granted
to the Named Executive Officers for the year ended January 3, 1998.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------------
NAME NUMBER OF SECURITIES % OF TOTAL EXERCISE OR EXPIRATION DATE ALTERNATIVE
UNDERLYING OPTIONS/SARS BASE PRICE TO GRANT
OPTIONS/SARS GRANTED TO ($/SH) DATE PRESENT
GRANTED EMPLOYEES OF THE VALUE($)(2)
COMPANY IN
FISCAL YEAR
-------------------- ---------------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Jerre L. Stead ......................... 400,000(1) 21.2% $23.375 5/26/05 $4,174,457
Jeffrey R. Rodek ....................... -- -- -- -- --
David R. Dukes ......................... -- -- -- -- --
Sanat K. Dutta ......................... -- -- -- -- --
Michael J. Grainger .................... -- -- -- -- --
</TABLE>
(1) Of these options, 40,000 options were immediately exercisable on the date
of grant, 180,000 options will vest in four equal annual installments,
beginning April 1, 1998, and 180,000 options will become exercisable over
a fixed term, but will vest earlier if the Company achieves certain
performance criteria.
(2) The grant date present values shown in the table were determined pursuant
to the Black-Scholes option valuation model, using the following
assumptions: stock price volatility of 47.0%, expected option life of 4.0
years, dividend yield of 0%, and risk free interest rate of 6.5%.
STOCK OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR
VALUES
The following table provides information relating to any stock options and
incentive stock units ("ISUs") exercised by the Named Executive Officers during
the year ended January 3, 1998, as well as the number and value of securities
underlying unexercised stock options held by the Named Executive Officers as of
January 3, 1998.
<TABLE>
<CAPTION>
NAME SHARES ACQUIRED NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
ON EXERCISE VALUE REALIZED UNDERLYING UNEXERCISED MONEY OPTIONS/SARS AT
DURING 1997 ($) OPTIONS/SARS AT YEAR END YEAR END ($)
----------- ----------- ------------------------- -------------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------------------- -------------------------
<S> <C> <C> <C> <C>
Jerre L. Stead ...... -- -- 240,000/3,455,000 $2,425,000/$36,070,000
Jeffrey R. Rodek .... -- -- 111,546/513,036 2,916,928/9,763,391
David R. Dukes ...... 62,981 $1,253,447 102,453/293,462 2,820,957/5,415,897
Sanat K. Dutta ...... 112,573 3,052,186(1) 6,864/303,670 179,494/6,015,825
Michael J. Grainger . 22,308 515,383 30,889/387,527 838,877/5,622,984
</TABLE>
(1) Includes $258,714 paid to Mr. Dutta in connection with the settlement of
ISUs.
EMPLOYMENT AGREEMENTS
In August 1996, the Company entered into an agreement with Mr. Stead
pursuant to which he agreed to serve as Chief Executive Officer and Chairman of
the Board of the Company. The agreement provides for the grant to Mr. Stead of
options at the initial public offering price exercisable for 3,600,000 shares of
Common Stock. Such options will vest over an extended period, as described
below. In lieu of receipt of 200,000 of such options, Mr. Stead purchased
200,000 shares of Common Stock directly from the Company at the initial public
offering price. Mr. Stead will not receive any salary, bonus, or other cash
compensation during the vesting period of such options; however, the Company's
agreement with Mr. Stead provides for the Company to compensate Mr. Stead in a
mutually agreeable manner in the event (which occurred) that the initial public
offering price exceeded $14.00. On May 27, 1997, the Company agreed to
compensate Mr. Stead by granting him options to purchase 400,000 shares of the
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<PAGE> 17
Company's Class A Common Stock at the closing price of the Class A Common Stock
as reported on the New York Stock Exchange on such date, $23 3/8 per share. Of
the options awarded to Mr. Stead in May 1997, 40,000 options vested immediately,
180,000 options will vest in four equal annual installments beginning April 1,
1998, and 180,000 options will become exercisable over a fixed term, but will
vest earlier if the Company achieves certain performance criteria. The Company
has also agreed to provide Mr. Stead and his spouse with lifetime healthcare
coverage, with a lifetime cap of $2.0 million, as well as certain other
perquisites.
In April 1988, the Company entered into an agreement with Mr. Dutta
pursuant to which he agreed to serve as Senior Vice President, Operations. The
agreement provides for a base salary, participation in the Company's Executive
Incentive Bonus Plan, and participation in the Company's health and benefit
programs. Mr. Dutta will receive a severance benefit of nine months' base salary
if he is terminated without cause or 12 months' base salary if he is
involuntarily terminated or has a substantial change in title or reduction of
salary within 12 months of a change in control (as defined in the agreement).
Mr. Dutta currently serves as Executive Vice President and President, Ingram
Micro U.S.
In October 1996, the Company entered into an agreement with Mr. Grainger
pursuant to which he agreed to serve as Executive Vice President and Worldwide
Chief Financial Officer. The agreement provides for a base salary, the grant in
1996 of the stock options disclosed in the Summary Compensation Table,
participation in the Company's Executive Incentive Bonus Plan, and participation
in the Company's health and benefit programs. Mr. Grainger's unvested Rollover
Options will be 100% vested if, at anytime, the Company terminates Mr.
Grainger's employment without cause (as defined in the Ingram Micro Inc.
Rollover Stock Option Plan). In addition, upon such termination, all
restrictions applicable to shares purchased by Mr. Grainger under the Ingram
Micro Inc. Key Employee Stock Purchase Plan will lapse.
HUMAN RESOURCES COMMITTEE'S
REPORT ON EXCUTIVE COMPENSATION
The Human Resources Committee of the Board of Directors (the "Committee") is
responsible for establishing the Company's overall philosophy and policies
governing the compensation programs for management personnel and for
administering the executive compensation plans and programs of the Company. In
1997, the Committee worked with management to design a program that would
motivate each associate to build wealth for the Company's shareowners through
specific objectives, measures and rewards intended to provide a tight link
between pay and measured performance. This program of objectives, measures and
rewards was instituted at the end of 1997 for measuring and rewarding
performance in fiscal 1998.
The Committee assessed the competitiveness of the total value of the
Company's 1997 compensation program elements (base salary, annual incentive and
long-term incentives) by comparing the total value of the program elements to
those of a selected group of 17 world class high technology and distribution
companies that the Company believes are its competitors in recruiting the best
employees and who provide outstanding performance in the area of shareowner
return (the "Selected Companies").
EXECUTIVE COMPENSATION PRINCIPLES AND PHILOSOPHY
The Company's executive compensation program is based on the principles
that: (1) the level and mixture of compensation opportunity should be sufficient
to attract and retain the caliber of executive talent necessary to sustain the
Company's continued success, and (2) incentive compensation should be at risk
and conditional on the attainment of performance goals that reward both short
and long term performance directly related to increasing the long term value of
the Company and achieving superior levels of total shareowner return. The
Company used the philosophy embodied in these principles to determine the base
salary, annual incentive and long term incentive components of the executive
compensation program for fiscal 1997.
15
<PAGE> 18
ANNUAL COMPENSATION
Base salaries for executive officers are determined based on the Committee's
assessment of each individual's experience level, the scope and complexity of
the position held and the Company's knowledge of salaries being paid for similar
positions in the marketplace. Annual salary adjustments are determined by the
Company's performance and the individual's contribution to that performance. For
those executive officers responsible for particular business units, the
financial and non-financial results (e.g., recognition within respective
industries) of their business units are also considered.
ANNUAL INCENTIVE PLAN
The annual bonus paid in 1998 for executive officers named in the Summary
Compensation Table shown on page 13, other than the Chairman and Chief Executive
Officer, under the Executive Incentive Bonus Plan relates to 1997 performance.
The Executive Incentive Bonus Plan has been structured so that the level of
total cash compensation (base salary plus annual bonus) will exceed the median
level of cash compensation for the Selected Companies when high levels of
corporate, business unit and individual performance are achieved. Conversely,
when the Company and business units fall short of established targets, the level
of cash compensation will fall below the median level of cash compensation for
the Selected Companies. Specifically, the annual bonus was based 60% on the
Company's performance relative to preset financial performance targets and 40%
on individual performance against preset goals. No annual bonus is payable
unless the Company achieves certain minimum financial targets.
LONG TERM INCENTIVE COMPENSATION
The Company's Amended and Restated 1996 Equity Incentive Plan (the "Amended
1996 Plan") provides for the grant of stock based awards, including stock
options. The Committee reviews and authorizes, where appropriate, long-term
incentive grants under the Amended 1996 Plan for purposes of special recognition
and employment retention. In 1997, stock options were granted at the fair market
value of the stock on the date of the grant. In determining the number of stock
options granted to management, the Committee took into account position levels,
the targeted amounts of the long-term incentive award for selected participants,
and other factors determined to be relevant, such as individual performance,
employment retention, and the number of shares available for issuance under the
Amended 1996 Plan. If the Company's stock price increases significantly,
participants can realize commensurate rewards and the opportunity to increase
their stock ownership positions by exercising their options.
TAX DEDUCTIBILITY UNDER SECTION 162(M)
It is the opinion of the Company that annual incentive payments under the
Executive Incentive Bonus Plan and all outstanding stock option grants will
qualify as performance-based compensation under Internal Revenue Code Section
162(m).
CEO COMPENSATION
Jerre Stead, the Company's Chairman and Chief Executive Officer, receives no
salary or annual bonus. At the time of the Company's initial public offering in
November 1996, Mr. Stead received a one-time grant of options to purchase
3,400,000 shares of the Company's Class A Common Stock at the initial public
offering price, $18.00 per share. The number of options was determined at the
time of Mr. Stead's employment with the Company, based on a comparison with
other firms with which the Company believed it was competing for top executive
talent.
Of the options awarded to Mr. Stead, 200,000 were vested immediately and
1,600,000 will vest in four equal installments on April 1 of each of the years
1998 through 2001. The remaining 1,600,000 will vest 100% on November 1, 2005 or
sooner should shareowner value reach the preset performance objectives described
below. One-half of these options may vest any time after April 1, 1998 upon
satisfaction of either of the following conditions:
16
<PAGE> 19
- the completion of any 90 calendar day period in which the beginning,
ending and average reported closing price of the Company's Class A
Common Stock on the New York Stock Exchange exceeds $35.00 per
share.
- (i) the earnings per share as publicly reported by the Company meets
or exceeds $2.10 for any consecutive six quarter period, beginning
with the six quarter period ending in March 1998, and (ii) the most
recent two quarters' earnings per share total at least $0.75;
provided that, for any consecutive six quarter period ending in
fiscal 1999, or thereafter, the Committee may establish, from time
to time, different minimum cumulative earnings per share amounts
using substantially the same criteria as used in establishing the
initial cumulative amounts (either condition, the "First
Condition").
The remaining one-half of the options will vest and become exercisable upon
satisfaction of either of the following conditions:
- the completion of any 90 calendar day period in which the beginning,
ending and average reported closing price of the Company's Class A
Common Stock on the New York Stock Exchange exceeds $45.00 per
share.
- (i) the earnings per share as publicly reported by the Company meets
or exceeds $2.75 for any consecutive six quarter period, beginning
with the six quarter period ending in March 1998, and (ii) the most
recent two quarters' earnings per share total at least $1.00;
provided that, for any consecutive six quarter period ending in
fiscal 2000, or thereafter, the Committee may establish, from time
to time, different minimum cumulative earnings per share amounts
using substantially the same criteria as used in establishing the
initial cumulative amounts (either condition, the "Second
Condition").
The first day of measuring the consecutive 90-day periods was January 1,
1998.
In addition, the Company agreed to compensate Mr. Stead in a mutually
agreeable manner in the event that the initial public offering price exceeded
$14.00. On May 27, 1997, the Committee agreed to compensate Mr. Stead by
authorizing the grant to Mr. Stead of options to purchase 400,000 shares of the
Company's Class A Common Stock, at the closing price per share of Class A Common
Stock as reported on the New York Stock Exchange on such date, $23 3/8 per
share. Of the options awarded to Mr. Stead in May 1997, 40,000 options vested
immediately, 180,000 options will vest in four equal annual installments,
beginning April 1, 1998, 90,000 options will vest upon meeting the First
Condition listed above, and 90,000 options will vest upon meeting the Second
Condition listed above.
The Committee may, at its discretion, revise the terms and conditions of
these stock options to the extent permitted by the Amended 1996 Plan.
J. Phillip Samper, Chairman
Don H. Davis, Jr.
Martha R. Ingram
17
<PAGE> 20
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph below, which assumes a $100 investment on
November 1, 1996 and reinvestment of any dividends, compares cumulative total
shareowner return (assuming reinvestment of dividends) of the Company, the New
York Stock Exchange, Inc. ("NYSE") Composite Index and the Standard Industrial
Classification ("SIC") Code Index (SIC Code 5045 -- Computer and Computer
Peripheral Equipment and Software) for the period beginning November 1, 1996,
the date on which trading of the Company's Class A Common Stock commenced,
through January 3, 1998. While the Company's Class A Common Stock was sold at
$18.00 per share in the IPO, the Class A Common Stock closed at $23.00 per share
on November 1, 1996. The closing price of the Company's Class A Common Stock was
$29.00 on January 3, 1998 and $37.125 on March 31, 1998. The price performance
of the Company's Class A Common Stock depicted in the graph below represents
past performance only and is not indicative of future performance.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
11/01/96 12/28/96 3/29/97 6/28/97 9/27/97 01/03/98 2/27/98
-------- -------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Ingram Micro Inc. ...... $ 100.00 $ 114.63 $ 101.22 $ 117.38 $ 132.01 $ 141.46 $ 188.41
SIC Code Index ......... 100.00 98.57 81.75 91.88 109.30 103.58 124.20
NYSE Composite Index ... 100.00 105.25 107.12 124.46 134.41 138.48 147.65
</TABLE>
18
<PAGE> 21
ITEM 2.
PROPOSAL TO APPROVE ADOPTION OF THE
INGRAM MICRO INC. 1998 EQUITY INCENTIVE PLAN
Effective as of February 1, 1998, the Company's Board of Directors adopted,
subject to the approval of the Company's shareowners, the 1998 Plan. The
following summary of the material terms of the 1998 Plan, a copy of which is
attached hereto as Exhibit A, does not purport to be complete and is qualified
in its entirety by reference to the terms of the 1998 Plan.
PURPOSE
The purpose of the 1998 Plan is to promote the interests of the Company and
its shareowners by (i) attracting and retaining exceptional directors, executive
personnel and other key employees of the Company and its affiliates; (ii)
motivating such employees and directors by means of performance-related
incentives to achieve longer-range performance goals; and (iii) enabling such
employees and directors to participate in the long-term growth and financial
success of the Company.
ADMINISTRATION
The 1998 Plan is administered by a committee appointed by the Company's
Board of Directors (the "Committee"), each of whom is a non-employee director
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 (the
"1934 Act"). The Committee has broad discretion, subject to contractual
restrictions affecting the Company, as to the specific terms and conditions of
each award and any rules applicable to awards, including but not limited to the
effect on an award of the death, retirement, or other termination of employment
of the participant.
The exercise price of an Option is determined by the Committee at the time
of grant. The Committee may determine at the time of grant and any time
thereafter the terms under which Options and SARs shall vest and become
exercisable.
NUMBER OF AUTHORIZED SHARES
Under the 1998 Plan, 15,000,000 shares of the Company's Class A Common
Stock, $.01 par value, or such other securities as may be designated by the
Committee from time to time ("Shares") will be available for awards. If any
Shares covered by an award granted under the 1998 Plan are forfeited, an award
is settled for cash or otherwise terminates or is canceled without the delivery
of Shares, then the Shares covered by such award will, unless any dividends have
been paid on such Shares, again become Shares with respect to which awards may
be granted in the calendar year in which such settlement, forfeiture,
termination or cancellation occurs.
ELIGIBILITY AND PARTICIPATION
Eligibility to participate in the 1998 Plan is limited to employees of the
Company and its subsidiaries who are selected by the Committee and any member of
the Company's Board of Directors. Currently, approximately 12,000 employees of
the Company and its subsidiaries are eligible to participate in the 1998 Plan.
The Company anticipates that less than 5% of those eligible will participate in
the 1998 Plan. Participation in the 1998 Plan is at the discretion of the
Committee. No employee may be granted awards covering more than 500,000 Shares
in any calendar year.
TYPES OF AWARDS
The 1998 Plan permits the granting of (i) stock options that qualify as
"Incentive Stock Options" under the Internal Revenue Code of 1986, as amended
(the "Code"), (ii) options other than Incentive Stock Options ("Nonqualified
Stock Options"), (iii) stock appreciation rights ("SARs") granted either alone
or in tandem with other awards under the 1998 Plan, (iv) restricted share awards
and restricted share units ("Restricted Share Awards and Restricted Share
Units"), (v) performance awards ("Performance Awards"), and (vi) other
stock-based awards.
19
<PAGE> 22
AMENDMENT AND TERMINATION
The Board of Directors may amend, alter, or terminate the 1998 Plan at any
time, provided that shareowner approval generally must be obtained for any
change that would require shareowner approval under any regulatory or tax
requirement that the Board deems desirable to comply with or obtain relief under
and subject to the requirement that no rights under an outstanding award may be
impaired by such action without the consent of the holder thereof. The Committee
may amend or modify the terms of any outstanding award but only with the consent
of the participant if such amendment would impair his rights. In the event of
certain corporate transactions or events affecting the shares or the structure
of the Company, the Committee may make certain adjustments as set forth in the
1998 Plan.
TERM OF 1998 PLAN
Unless earlier terminated by the Company's Board of Directors, the 1998 Plan
will terminate on January 31, 2008.
AWARDS GRANTED UNDER THE 1998 PLAN
On January 30, 1998, February 18, 1998 and March 31, 1998, the Company
granted options to purchase or stock-based awards relating to an aggregate of
1,777,805 Shares under the 1998 Plan, subject to approval of the 1998 Plan by
the Company's shareowners. Set forth below is a summary of the awards made to
date under the 1998 Plan, subject to shareowner approval, to the Named
Executives, all executive officers as a group and all employees, excluding
executive officers, but including all current officers who are not executive
officers, as a group. As of March 31, 1998, the fair market value of a share of
Class A Common Stock was $37.125.
<TABLE>
<CAPTION>
NAME AND TITLE NUMBER OF
UNITS
---------
<S> <C>
Jeffrey R. Rodek, President and
Worldwide Chief Operating Officer ............ 80,000
Sanat K. Dutta, Executive Vice President
and President, Ingram Micro U.S. ............. 60,000
Michael J. Grainger, Executive Vice
President and Worldwide Chief Financial Officer 60,000
All executive officers as a group ............. 391,000
All employees, excluding executive officers,
but including all current officers who are not
executive officers, as a group ................ 1,386,805
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES
The 1998 Plan is not subject to any provision of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and is not qualified under
Section 401(a) of the Code.
OPTIONS. There will be no federal income tax consequences to a participant
or the Company upon the grant of either an Incentive Stock Option or a
Nonqualified Stock Option under the 1998 Plan. Upon exercise of a Nonqualified
Stock Option, a participant generally will recognize ordinary income in an
amount equal to (i) the fair market value, on the date of exercise, of the
acquired Shares less (ii) the exercise price of the Nonqualified Stock Option.
Subject to Section 162(m) of the Code and a participant including such
compensation in income or the Company satisfying applicable reporting
requirements, the Company will be entitled to a tax deduction in the same
amount.
Upon the exercise of an Incentive Stock Option, a participant recognizes no
immediate taxable income. Income recognition is deferred until a participant
sells the Shares so acquired If the Incentive Stock Option is exercised no later
than three months after the termination of a participant's employment, and a
participant does not dispose of the Shares so acquired within two years from the
date the Incentive Stock Option was granted and within one year after its
exercise, the gain on the sale will be treated as long-term capital gain.
Certain of these holding periods and employment requirements are liberalized in
the event of a participant's death or disability while employed by the Company.
The Company is generally not entitled to any tax deduction with respect to the
grant or exercise of Incentive Stock Options. However, if the Shares are not
held for the full term of the holding period described above,
20
<PAGE> 23
the gain on the sale of such Shares, being the lesser of: (i) the fair market
value of the Shares on the date of exercise minus the option price or (ii) the
amount realized on disposition minus the exercise price, will be taxed to a
participant as ordinary income, and subject to Section 162(m) of the Code and a
participant including such compensation in income and the Company satisfying
applicable reporting requirements, the Company will be entitled to a deduction
in the same amount. The excess of the fair market value of the Shares acquired
upon exercise of an Incentive Stock Option over the exercise price therefor
constitutes a tax preference item for purposes of computing the "alternative
minimum tax" under the Code.
Special rules, summarized below, may apply to participants who are subject
to Section 16 of the 1934 Act.
STOCK APPRECIATION RIGHTS. There will be no federal income tax consequences
to either a participant or the Company upon the grant of an SAR. However, a
participant generally will recognize ordinary income upon the exercise of an SAR
in an amount equal to the aggregate amount of cash and the fair market value of
Shares acquired upon exercise. Subject to Section 162(m) of the Code and a
participant including such compensation in income and the Company satisfying
applicable reporting requirements, the Company will be entitled to a deduction
equal to the amount includable in a participant's income.
Special rules, summarized below, may apply to participants who are subject
to Section 16 of the 1934 Act.
RESTRICTED SHARE AWARDS AND RESTRICTED SHARE UNITS. There will be no federal
income tax consequences to either a participant or the Company upon the grant of
Restricted Share Awards or Restricted Share Units until expiration of the
restricted period and the satisfaction of any other conditions applicable to the
Restricted Share Awards or Restricted Share Units. At that time, a participant
generally will recognize taxable income equal to the aggregate amount of cash
received and the then fair market value of the Shares and, subject to Section
162(m) of the Code and a participant including such compensation in income and
the Company satisfying applicable reporting requirements, the Company will be
entitled to a corresponding deduction. However, a participant may elect, within
thirty days after the date of the grant, to recognize ordinary income as of the
date of grant and the Company will be entitled to a corresponding deduction at
that time.
Special rules, summarized below, may apply to participants who are subject
to Section 16 of the 1934 Act.
PERFORMANCE AWARDS. There will be no federal income tax consequences to a
participant or the Company upon the grant of Performance Awards. Participants
generally will recognize taxable income at the time when payment for the
Performance Awards is received in an amount equal to the aggregate amount of
cash and the fair market value of Shares acquired. Subject to Section 162(m) of
the Code, and a participant including such compensation in income and the
Company satisfying applicable reporting requirements, the Company will be
entitled to a deduction equal to the amount includable in a participant's
income.
Special rules, summarized below, may apply to participants who are subject
to Section 16 of the 1934 Act.
SECTION 16 OF THE 1934 ACT. Participants who are subject to Section 16 of
the 1934 Act and receive Shares under the 1998 Plan will not recognize ordinary
income at that time unless (i) an election is made by such participant under
Section 83(b) of the Code or (ii) the sale of such Shares by such participant at
a profit is no longer subject to Section 16(b) of the 1934 Act (generally, six
months after the receipt of shares). Such participant will instead recognize
ordinary income equal to the fair market value of such Shares received (less the
price paid for the Shares, if any) on the first day that such a sale is no
longer subject to Section 16(b) of the 1934 Act and, subject to Section 162(m)
of the Code, the Company or an affiliate generally will be entitled to a
deduction of an equal amount for federal income tax purposes at that time
provided that applicable tax withholding requirements are satisfied. A
participant subject to Section 16 of the 1934 Act may elect under Section 83(b)
of the Code, within 30 days of the transfer of such Shares, to recognize income
at the time of transfer equal to the difference between the price paid for such
Shares, if any, and the fair market value of such Shares. Such amount will be
taxed as ordinary income to a participant and, subject to Section 162(m) of the
Code and satisfaction of applicable withholding requirements, generally will be
allowed as a deduction for federal income tax purposes to the Company.
21
<PAGE> 24
REQUIRED VOTE
Approval of the 1998 Plan requires the affirmative vote of a majority of the
total voting power represented by outstanding shares of Common Stock present or
represented at the Annual Meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1998 PLAN, WHICH IS
DESIGNATED AS PROPOSAL NO. 2 ON THE ENCLOSED PROXY CARD.
ITEM 3.
PROPOSAL TO APPROVE ADOPTION OF THE
INGRAM MICRO INC. 1998 EMPLOYEE STOCK PURCHASE PLAN
Effective as of March 18, 1998, the Company's Board of Directors adopted,
subject to the approval of the Company's shareowners, the 1998 ESPP. The 1998
ESPP is intended to qualify as an employee stock purchase plan under Section 423
of the Code. The following summary of the material terms of the 1998 ESPP, a
copy of which is attached hereto as Exhibit B, does not purport to be complete
and is qualified in its entirety by reference to the terms of the 1998 ESPP.
PURPOSE
The purpose of the ESPP Plan is to provide employment incentive and to
encourage stock ownership by officers and employees of the Company and
designated subsidiaries in order to increase their proprietary interest in the
Company's success.
PURCHASE RIGHTS; NUMBER OF AUTHORIZED SHARES
Under the 1998 ESPP, each participant electing to participate in the Plan
will have the right ("Purchase Right") to purchase Shares on a date ("Purchase
Date") designated by the Human Resources Committee of the Company's Board of
Directors (the "ESPP Committee"). Purchases will be made through after-tax
payroll deductions accumulated over one or more periods (each, a "Purchase
Period") determined by the Committee. No Purchase Period will exceed 27 months.
An employee who has entered into an Agreement may at any time on or before the
Purchase Date terminate the Agreement (and related Purchase Right) in its
entirety by written notice of such termination. Any funds then on deposit with
the Company pursuant to the Agreement will be returned to the employee.
Under the 1998 ESPP, 3,000,000 Shares will be available for purchase
pursuant to the exercise of Purchase Rights, subject to adjustments in the event
of certain corporate transactions, including stock dividends and splits, to
preserve, or to prevent the enlargement of, the benefits made available under
the 1998 ESPP. In the event a Purchase Right expires or is terminated and the
underlying Shares are not purchased, such unpurchased Shares may be the subject
of future Purchase Rights.
ELIGIBILITY AND PARTICIPATION
Each person who is a regular full-time or part-time employee of the Company
or a designated subsidiary on the date on which Purchase Rights are granted is
eligible to participate in the 1998 ESPP other than any employee who is, or who
will be, after giving effect to purchases under the 1998 ESPP, the direct or
indirect owner of 5% or more of the total value or combined voting power of all
classes of stock of the Company or any subsidiary. The Company estimates that
approximately 7,500 associates of the Company and designated subsidiaries are
currently eligible to participate in the 1998 ESPP.
NUMBER OF SHARES PARTICIPANTS MAY PURCHASE
Eligible employees may elect to purchase under terms and conditions
determined by the ESPP Committee a number of Shares determined by the ESPP
Committee but in no event greater than the number of Shares with a fair
22
<PAGE> 25
market value in excess of 22.5% of the employee's aggregate compensation (as
determined under the 1998 ESPP) for the fiscal year preceding the grant of the
Purchase Right.
No employee may receive a Purchase Right which permits such employee's
rights to purchase Shares under the 1998 ESPP and any other qualified employee
stock purchase plan (within the meaning of Section 423 of the Code) of the
Company or its subsidiaries to accrue at a rate which exceeds $25,000 of fair
market value of Shares for each calendar year in which a Purchase Right is
outstanding at any time.
PURCHASE PRICE
The per share purchase price of Shares under the 1998 ESPP will be set by
the ESPP Committee but in no event will such price be less than the lesser of:
(i) 85 percent of the fair market value of a Share on the date a
Purchase Right is granted ("Grant Date");
(ii) 85 percent of the fair market value of a Share on the Purchase
Date.
ADMINISTRATION
The 1998 Plan is administered by the ESPP Committee, which has broad
discretion in construing and interpreting, and in adopting rules and regulations
for carrying out, the 1998 ESPP, including but not limited to the determination
of Purchase Periods, the terms and conditions of Purchase Rights and related
agreements (each, an "Agreement") and the effect on an Agreement (and related
Purchase Right) of a change in control of, or other corporate event affecting,
the Company or the death, retirement, or other termination of employment of the
participant.
AMENDMENT AND TERMINATION OF 1998 ESPP
The Company's Board of Directors may amend, alter, or terminate the 1998
ESPP at any time, provided that shareowner approval generally must be obtained
for any change that would require shareowner approval under any regulatory or
tax requirement that the Board of Directors deems desirable to comply with or
obtain relief under and subject to the requirement that no rights under an
outstanding Agreement may be impaired by such action without the consent of the
holder thereof.
TERM OF 1998 ESPP
Unless earlier terminated by the Company's Board of Directors, the 1998 ESPP
will terminate on December 31, 2003.
Since participation in the plan is voluntary, it is not possible to predict
acquisitions under the 1998 ESPP by any participant or group of participants.
FEDERAL INCOME TAX CONSEQUENCES
The 1998 ESPP is not subject to any provision of ERISA, and is not qualified
under Section 401(a) of the Code.
A participant will not realize taxable income upon the grant of a Purchase
Right relating to Shares or upon the purchase of Shares under the 1998 ESPP.
If a participant disposes of Shares acquired under the 1998 ESPP, the amount
of ordinary income, capital gains or capital loss realized will depend on the
holding period of the Shares. Under current federal law, the applicable capital
gain rate is determined by the amount of time the Shares were held by the
participant.
If the participant disposes of shares acquired under the 1998 ESPP more than
one year after the Shares have been transferred and more than two years after
the date of grant, any gain from the sale generally will be long-term capital
gain, although a longer holding period may be required to qualify for the most
favorable capital gain rate.
23
<PAGE> 26
If the Shares acquired are disposed of within either of the holding periods
described above (a "Disqualifying Disposition"), the participant will realize
ordinary income equal to the excess of the fair market value of the Shares on
the date of purchase pursuant to the 1998 ESPP over the purchase price. This
excess is taxed as ordinary income even if the Shares are sold at a loss. In
addition, the participant will have capital gain or loss measured by the
difference between (i) the sale price and (ii) the purchase price plus the
amount of ordinary income recognized.
The Company generally is not entitled to an income tax deduction when any
participant exercises an option to purchase a Share under the 1998 ESPP or upon
the subsequent disposition of any such Share. If the disposition is a
Disqualifying Disposition, the Company will be entitled to an income tax
deduction in the year of such disposition in an amount equal to the amount of
ordinary income recognized by the participant as a result of such disposition.
REQUIRED VOTE
Approval of the 1998 ESPP requires the affirmative vote of a majority of the
total voting power represented by outstanding shares of Common Stock present or
represented at the Annual Meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1998 ESPP, WHICH IS
DESIGNATED AS PROPOSAL NO. 3 ON THE ENCLOSED PROXY CARD.
INDEPENDENT ACCOUNTANTS
The firm of Price Waterhouse LLP served as the Company's independent
accountants for fiscal 1997. This firm has advised the Company that it has no
direct or indirect financial interest in the Company. Representatives of this
firm are expected to be present at the 1998 Annual Meeting, with the opportunity
to make a statement should they desire to do so, and will be available to
respond to appropriate questions from shareowners. It is anticipated that the
Audit Committee will recommend that Price Waterhouse LLP be selected to serve as
the Company's independent accountants for 1998.
OUTSTANDING VOTING SECURITIES
On March 20, 1998, the record date for the 1998 Annual Meeting, there were
outstanding and entitled to vote 38,109,723 shares of Class A Common Stock of
the Company, entitled to one vote per share, and 99,714,602 shares of Class B
Common Stock, entitled to ten votes per share.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires the Company's executive officers and
Directors, and beneficial owners of more than 10% of the Class A Common Stock of
the Company, to file initial reports of ownership and reports of changes in
ownership with the Commission and the New York Stock Exchange. Executive
officers and Directors are required by Commission regulations to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on a
review of the copies of such forms furnished to the Company and written
representations from the Company's executive officers and Directors, the Company
noted that no individual who, at any time during 1997, was a Director, officer
or beneficial owner of more than 10% of the Class A Common Stock of the Company
failed to file the reports required by Section 16(a) of the 1934 Act on a timely
basis, except that Roy E. Claverie inadvertently failed to report two
transactions involving agreements to sell shares of Class B Common Stock.
Promptly after discovery of these errors, the transactions were reported on Form
5.
SOLICITATION OF PROXIES
The cost of soliciting proxies for the 1998 Annual Meeting will be borne by
the Company. In addition to solicitation by mail, solicitations may also be made
by personal interview, telegram, fax and telephone. Although the
24
<PAGE> 27
Company does not currently intend to do so, the Company may engage one or more
agents to assist in soliciting proxies. Arrangements will be made with brokerage
houses and other custodians, nominees and fiduciaries to send proxies and proxy
material to their principals, and the Company will reimburse them for expenses
in so doing. Consistent with the Company's confidential voting procedure,
Directors, officers and other regular employees of the Company, as yet
undesignated, may also request the return of proxies by telephone or telegram,
or in person.
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended January 3, 1998,
including financial statements audited by Price Waterhouse LLP, independent
auditors, and their report thereon dated February 17, 1998, is being mailed to
all shareowners with this proxy statement. IN ADDITION, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 3, 1998 (WITHOUT
EXHIBITS), AS FILED WITH THE COMMISSION, WILL BE SENT TO ANY SHAREOWNER WITHOUT
CHARGE UPON WRITTEN REQUEST TO INGRAM MICRO INC., 1600 EAST ST. ANDREW PLACE,
SANTA ANA, CALIFORNIA 92705, ATTENTION: SENIOR DIRECTOR, INVESTOR RELATIONS.
SHAREOWNER PROPOSALS
Shareowner proposals intended to be considered for inclusion in the proxy
statement for presentation at the 1999 Annual Meeting must be received by the
Company at its principal executive offices by December 7, 1998, unless the date
of the 1999 Annual Meeting is more than 30 days prior or subsequent to May 6,
1999, in which case proposals must be received a reasonable time before the
mailing of the proxy statement relating to the 1999 Annual Meeting.
OTHER MATTERS
The Board of Directors does not know of any matter other than those
described in this proxy statement that will be presented for action at the
meeting. If other matters properly come before the meeting, the persons named as
proxies intend to vote the shares they represent in accordance with their
judgment.
By Order of the Board of Directors,
/s/ JAMES E. ANDERSON, JR.
James E. Anderson, Jr.
Senior Vice President, Secretary and
General Counsel
April 6, 1998
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EXHIBIT A
INGRAM MICRO INC.
1998 EQUITY INCENTIVE PLAN
SECTION 1. Purpose. The purposes of the Ingram Micro Inc. 1998 Equity
Incentive Plan are to promote the interests of Ingram Micro Inc. and its
shareowners by (i) attracting and retaining exceptional directors, executive
personnel and other key employees of Micro and its Affiliates, as defined below;
(ii) motivating such employees and directors by means of performance-related
incentives to achieve longer-range performance goals; and (iii) enabling such
employees and directors to participate in the long-term growth and financial
success of Micro.
SECTION 2. Definitions. As used in the Plan, the following terms shall
have the meanings set forth below:
"AFFILIATE" means (i) any entity that is, directly or indirectly,
controlled by Micro and (ii) any other entity in which Micro has a significant
equity interest or which has a significant equity interest in Micro, in either
case as determined by the Committee.
"AWARD" means any Option, Stock Appreciation Right, Restricted Stock
Award, Performance Award or Other Stock-Based Award.
"AWARD AGREEMENT" means any written agreement, contract, or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.
"BOARD" means the Board of Directors of Micro.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMITTEE" means a committee of the Board designated by the Board to
administer the Plan and composed of not less than the minimum number of persons
from time to time required by Rule 16b-3, each of whom, to the extent necessary
to comply with Rule 16b-3 only, is a "NON-EMPLOYEE DIRECTOR" within the meaning
of Rule 16b-3. Until otherwise determined by the Board, the Human Resources
Committee or any successor or replacement thereof designated by the Board shall
be the Committee under the Plan.
"EMPLOYEE" means an employee of Micro or any Affiliate and any member of
the Board.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXECUTIVE OFFICER" means, at any time, an individual who is an
executive officer of Micro within the meaning of Exchange Act Rule 3b-7 or who
is an officer of Micro within the meaning of Exchange Act Rule 16a-1(f).
"FAIR MARKET VALUE" means with respect to the Shares, as of any given
date or dates, the reported closing price of a share of such class of common
stock on such exchange or market as is the principal trading market for such
class of common stock. If such class of common stock is not traded on an
exchange or principal trading market on such date, the fair market value of a
Share shall be determined by the Committee in good faith taking into account as
appropriate recent sales of the Shares, recent valuations of the Shares, the
lack of liquidity of the Shares, the fact that the Shares may represent a
minority interest and such other factors as the Committee shall in its
discretion deem relevant or appropriate.
"INCENTIVE STOCK OPTION" means a right to purchase Shares from Micro
that is granted under Section 6 of the Plan and that is intended to meet the
requirements of Section 422 of the Code or any successor provision thereto.
"MICRO" means Ingram Micro Inc., a Delaware corporation, together with
any successor thereto.
"NON-QUALIFIED STOCK OPTION" means a right to purchase Shares from Micro
that is granted under Section
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6 of the Plan and that is not intended to be an Incentive Stock Option.
"OPTION" means an Incentive Stock Option or a Non-Qualified Stock
Option.
"OTHER STOCK-BASED AWARD" means any right granted under Section 10 of
the Plan.
"PARTICIPANT" means any Employee selected by the Committee to receive an
Award under the Plan (and to the extent applicable, any heirs or legal
representatives thereof).
"PERFORMANCE AWARD" means any right granted under Section 9 of the Plan.
"PERSON" means any individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, government or political subdivision thereof or other entity.
"PLAN" means this Ingram Micro Inc. 1998 Equity Incentive Plan.
"RESTRICTED STOCK" means any Shares granted under Section 8 of the Plan.
"RESTRICTED STOCK UNIT" means any unit granted under Section 8 of the
Plan.
"RULE 16B-3"' means Rule 16b-3 as promulgated and interpreted by the SEC
under the Exchange Act, or any successor rule or regulation thereto as in effect
from time to time.
"SEC" means the Securities and Exchange Commission or any successor
thereto.
"SHARES" means shares of Class A common stock, $.01 par value, of Micro
or such other securities as may be designated by the Committee from time to
time.
"STOCK APPRECIATION RIGHT" means any right granted under Section 7 of
the Plan.
"SUB-PLAN" means any sub-plan or sub-plans adopted by the Committee
under Section 14(q) hereof.
"SUBSTITUTE AWARDS" means Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by a company acquired by
Micro or with which Micro combines.
SECTION 3. Administration.
(a) Authority of Committee. The Plan shall be administered by the
Committee. Subject to the terms of the Plan, applicable law and contractual
restrictions affecting Micro, and in addition to other express powers and
authorizations conferred on the Committee by the Plan, the Committee shall have
full power and authority to: (i) designate Participants; (ii) determine the type
or types of Awards to be granted to an eligible Employee; (iii) determine the
number of Shares to be covered by, or with respect to which payments, rights, or
other matters are to be calculated in connection with, Awards; (iv) determine
the terms and conditions of any Award and Award Agreement; (v) determine
whether, to what extent, and under what circumstances Awards may be settled or
exercised in cash, Shares, other securities, other Awards or other property, or
canceled, forfeited, or suspended and the method or methods by which Awards may
be settled, exercised, canceled, forfeited, or suspended; (vi) determine
whether, to what extent, and under what circumstances cash, Shares, other
securities, other Awards, other property, and other amounts payable with respect
to an Award shall be deferred either automatically or at the election of the
holder thereof or of the Committee; (vii) interpret and administer the Plan and
any instrument or agreement relating to, or Award made under, the Plan; (viii)
establish, amend, suspend, or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
(ix) make any other determination and take any other action that the Committee
deems necessary or desirable for the administration of the Plan; and (x) adopt
and administer one or more Sub-Plans. Without limiting the foregoing, the
Committee may impose such conditions with respect to the exercise and/or
settlement of any Awards, including without limitation, any relating to the
application of Federal or state securities laws or the laws, rules or
regulations of any jurisdiction outside the United States, as it may deem
necessary or advisable.
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(b) Committee Discretion Binding. Unless otherwise expressly provided in
the Plan, all designations, determinations, interpretations, and other decisions
under or with respect to the Plan or any Award shall be within the sole
discretion of the Committee, may be made at any time and shall be final,
conclusive and binding upon all Persons, including Micro, any Affiliate, any
Participant, any holder or beneficiary of any Award, any shareholder and any
Employee.
SECTION 4. Shares Available for Awards.
(a) Shares Available. Subject to adjustment as provided in Section 4(b)
and 4(c), the number of Shares with respect to which Awards may be granted under
the Plan and all Sub-Plans shall be 15,000,000. If, after the effective date of
the Plan, any Shares covered by an Award granted under the Plan or to which such
an Award relates, are forfeited, or if such an Award is settled for cash or
otherwise terminates or is canceled without the delivery of Shares, then the
Shares covered by such Award, or to which such Award relates, or the number of
Shares otherwise counted against the aggregate number of Shares with respect to
which Awards may be granted, to the extent of any such settlement, forfeiture,
termination or cancellation, shall, in the calendar year in which such
settlement, forfeiture, termination or cancellation occurs, again become Shares
with respect to which Awards may be granted unless any dividends have been paid
thereon prior to such settlement, forfeiture, termination or cancellation.
Notwithstanding the foregoing and subject to adjustment as provided in Section
4(b), no Employee of Micro may receive Awards under the Plan in any calendar
year that relate to more than 500,000 Shares.
(b) Adjustments. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, reclassification, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of Shares or other securities of
Micro, issuance of warrants or other rights to purchase Shares or other
securities of Micro, or other similar corporate transaction or event affects the
Shares such that an adjustment is determined by the Committee to be appropriate
in order to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan, then the Committee shall,
in such manner as it may deem equitable, adjust any or all of (i) the number of
Shares of Micro (or number and kind of other securities or property) with
respect to which Awards may thereafter be granted, (ii) the number of Shares or
other securities of Micro (or number and kind of other securities or property)
subject to outstanding Awards, and (iii) the grant or exercise price with
respect to any Award, or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award; provided, in each case, that
except to the extent deemed desirable by the Committee (A) with respect to
Awards of Incentive Stock Options no such adjustment shall be authorized to the
extent that such authority would cause the Plan to violate Section 422(b)(1) of
the Code, as from time to time amended, and (B) with respect to any Award no
such adjustment shall be authorized to the extent that such authority would be
inconsistent with the Plan's meeting the requirements of Section 162(m) of the
Code, as from time to time amended.
(c) Substitute Awards. Any Shares underlying Substitute Awards shall not,
except in the case of Shares with respect to which Substitute Awards are granted
to Employees who are officers or directors of Micro for purposes of Section 16
of the Exchange Act or any successor section thereto, be counted against the
Shares available for Awards under the Plan.
(d) Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.
SECTION 5. Eligibility. Any Employee, including any officer or
employee-director of Micro or any Affiliate, and any member of the Board, shall
be eligible to be designated a Participant.
SECTION 6. Stock Options.
(a) Grant. Subject to the provisions of the Plan and contractual
restrictions affecting Micro, the Committee shall have sole and complete
authority to determine the Employees to whom Options shall be granted, the
number of Shares to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the Option. The
Committee shall have the authority to grant Incentive Stock Options, or to grant
Non-Qualified Stock Options, or to grant both types of options. In the case of
Incentive Stock Options, the
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terms and conditions of such grants shall be subject to and comply with such
rules as may be prescribed by Section 422 of the Code, as from time to time
amended, and any regulations implementing such statute.
(b) Exercise Price. The Committee in its sole discretion shall establish
the exercise price at the time each Option is granted.
(c) Exercise. Each Option shall be exercisable at such times and subject
to such terms and conditions as the Committee may, in its sole discretion,
specify in the applicable Award Agreement or thereafter.
(d) Payment. No Shares shall be delivered pursuant to any exercise of an
Option until payment in full of the option price therefor is received by Micro.
Such payment may be made: (i) in cash; (ii) in Shares already owned by the
Participant (the value of such Shares shall be their Fair Market Value on the
date of exercise); (iii) by a combination of cash and Shares; (iv) if approved
by the Committee, in accordance with a cashless exercise program under which
either (A) if so instructed by the Participant, Shares may be issued directly to
the Participant's broker or dealer upon receipt of the purchase price in cash
from the broker or dealer, or (B) Shares may be issued by Micro to a
Participant's broker or dealer in consideration of such broker's or dealer's
irrevocable commitment to pay to Micro that portion of the proceeds from the
sale of such Shares that is equal to the exercise price of the Option(s)
relating to such Shares, or (v) in such other manner as permitted by the
Committee at the time of grant or thereafter.
SECTION 7. Stock Appreciation Rights.
(a) Grant. Subject to the provisions of the Plan and contractual
restrictions affecting Micro, the Committee shall have sole and complete
authority to determine the Employees to whom Stock Appreciation Rights shall be
granted, the number of Shares to be covered by each Stock Appreciation Right
Award, the grant price thereof and the conditions and limitations applicable to
the exercise thereof. Stock Appreciation Rights may be granted in tandem with
another Award, in addition to another Award, or freestanding and unrelated to
another Award. Stock Appreciation Rights granted in tandem with or in addition
to an Award may be granted either at the same time as the Award or at a later
time. Stock Appreciation Rights shall not be exercisable earlier than six months
after grant and shall have a grant price as determined by the Committee on the
date of grant. (b) Exercise and Payment. A Stock Appreciation Right shall
entitle the Participant to receive an amount equal to the excess of the Fair
Market Value of a Share on the date of exercise of the Stock Appreciation Right
over the grant price thereof. The Committee shall determine whether a Stock
Appreciation Right shall be settled in cash, Shares or a combination of cash and
Shares.
(c) Other Terms and Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine, at or after the grant
of a Stock Appreciation Right, the term, methods of exercise, methods and form
of settlement, and any other terms and conditions of any Stock Appreciation
Right. Any such determination by the Committee may be changed by the Committee
from time to time and may govern the exercise of Stock Appreciation Rights
granted or exercised prior to such determination as well as Stock Appreciation
Rights granted or exercised thereafter. The Committee may impose such conditions
or restrictions on the exercise of any Stock Appreciation Right as it shall deem
appropriate.
SECTION 8. Restricted Stock and Restricted Stock Units.
(a) Grant. Subject to the provisions of the Plan and contractual
provisions affecting Micro, the Committee shall have sole and complete authority
to determine the Employees to whom Shares of Restricted Stock and Restricted
Stock Units shall be granted, the number of Shares of Restricted Stock and/or
the number of Restricted Stock Units to be granted to each Participant, the
duration of the period during which, and the conditions under which, the
Restricted Stock and Restricted Stock Units may be forfeited to Micro, and the
other terms and conditions of such Awards.
(b) Payment. Each Restricted Stock Unit shall have a value equal to the
Fair Market Value of a Share. Restricted Stock Units shall be paid in cash,
Shares, other securities, or other property, as determined in the sole
discretion of the Committee, upon the lapse of the restrictions applicable
thereto, or otherwise in accordance with the applicable Award Agreement.
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(c) Dividends and Distributions. Dividends and other distributions paid
on or in respect of any Shares of Restricted Stock may be paid directly to the
Participant, or may be reinvested in additional Shares of Restricted Stock or in
additional Restricted Stock Units, as determined by the Committee in its sole
discretion.
SECTION 9. Performance Awards.
(a) Grant. Subject to the provisions of the Plan and contractual
provisions affecting Micro, the Committee shall have sole and complete authority
to determine the Employees who shall receive a "PERFORMANCE AWARD", which shall
consist of a right which is (i) denominated in cash or Shares, (ii) valued, as
determined by the Committee, in accordance with the achievement of such
performance goals during such performance periods as the Committee shall
establish, and (iii) payable at such time and in such form as the Committee
shall determine.
(b) Terms and Conditions. Subject to the terms of the Plan, any
contractual provisions affecting Micro and any applicable Award Agreement, the
Committee shall determine the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
Performance Award and the amount and kind of any payment or transfer to be made
pursuant to any Performance Award.
(c) Payment of Performance Awards. Performance Awards may be paid in a
lump sum or in installments following the close of the performance period or in
accordance with procedures established by the Committee, on a deferred basis.
SECTION 10. Other Stock-based Awards. The Committee shall have authority
to grant to eligible Employees an "OTHER STOCK-BASED AWARD", which shall consist
of any right which is (i) not an Award described in Sections 6 through 9 above
and (ii) an Award of Shares or an Award denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible into Shares), as deemed
by the Committee to be consistent with the purposes of the Plan; provided that
any such rights must comply with applicable law, and to the extent deemed
desirable by the Committee, with Rule 16b-3. Subject to the terms of the Plan,
any contractual provisions affecting Micro and any applicable Award Agreement,
the Committee shall determine the terms and conditions of any such Other
Stock-Based Award.
SECTION 11. Termination or Suspension of Employment or Service.
The following provisions shall apply in the event of the Participant's
termination of employment or service unless the Committee shall have provided
otherwise, either at the time of the grant of the Award or thereafter.
(a) Non-Qualified Stock Options and Stock Appreciation Rights.
(i) Termination of Employment or Service. (A) Except as the
Committee may at any time otherwise provide or as required to comply
with applicable law, if the Participant's employment or service with
Micro or its Affiliates is terminated for any reason other than death,
disability, or retirement, the Participant's right to exercise any
Non-Qualified Stock Option or Stock Appreciation Right shall terminate,
and such Option or Stock Appreciation Right shall expire, on the earlier
of (x) the sixtieth day following such termination of employment or
service or (y) the date such Option or Stock Appreciation Right would
have expired had it not been for the termination of employment or
services. The Participant shall have the right to exercise such Option
or Stock Appreciation Right prior to such expiration to the extent it
was exercisable at the date of such termination of employment or service
and shall not have been exercised.
(B) Notwithstanding any of the provisions of Section 11(a)(i)(A),
in respect of a Participant employed outside the United States, such
Participant's right to exercise any Non-Qualified Stock Option and Stock
Appreciation Rights shall terminate and such Option or Stock
Appreciation Right shall expire and lapse, on the earlier of (x) the
sixtieth day following the first to occur of the time (1) such
Participant's employer gives notice to the Participant of termination of
Participant's employment, or (2) such Participant gives notice to such
Participant's employer to terminate Participant's employment, or (3) if
no such notice is given, on the date Participant's employment is
terminated (whichever the first to occur of (1), (2) or (3)
collectively, "NOTICE/TERMINATION") or (y) the date such Option or Stock
Appreciation Right would have expired had it not been for the
Notice/Termination. The Participant shall have the right to exercise
such Option or Stock Appreciation Right prior to such expiration to the
extent it was exercisable at the date of
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Notice/Termination and shall not have been exercised. Any such
Participant shall not be entitled, and by applying for or accepting
the grant of any Non-Qualified Stock Option or Stock Appreciation
Right, shall be deemed irrevocably to have waived any entitlement, by
way of compensation for loss of office or damages for breach of
contract or otherwise howsoever to any sum or other benefit to
compensate for the loss of any rights under the Plan.
(ii) Death. Except as the Committee may at any time otherwise
provide or as required to comply with applicable law, if the
Participant's employment or service with Micro or its Affiliates is
terminated by reason of death all then non-exercisable Non-Qualified
Stock Options and Stock Appreciation Rights held by such Participant
shall be immediately exercisable and the Participant or his successor
shall have the right to exercise any Non-Qualified Stock Option or Stock
Appreciation Right during the one year period following such termination
of employment or service, but in no event shall such Option or Stock
Appreciation Right be exercisable later than the date the Option or
Stock Appreciation Right would have expired had it not been for the
termination of such employment or service.
(iii) Disability. Except as the Committee may at any time
otherwise provide or as required to comply with applicable law, if the
Participant's employment or service with Micro or its Affiliates is
terminated by reason of disability, all then non-exercisable
Non-Qualified Stock Options and Stock Appreciation Rights held by such
Participant shall continue to vest pursuant to the vesting schedule in
effect on the date of disability and the Participant shall have the
right to exercise such Non-Qualified Stock Option or Stock Appreciation
Right through the one year period following the last vesting date, but
in no event shall such Option or Stock Appreciation Right be exercisable
later than the date the Option or Stock Appreciation Right would have
expired had it not been for the termination of such employment or
service. The meaning of the term "DISABILITY" shall be determined by the
Committee.
(iv) Retirement. Except as the Committee may at any time
otherwise provide or as required to comply with applicable law, if the
Participant's employment or service with Micro or its Affiliates is
terminated by reason of retirement, the Participant shall have the right
to exercise any Non-Qualified Stock Option or Stock Appreciation Right
exercisable on the retirement date during the one year period following
such termination of employment or service, but in no event shall such
option be exercisable later than the date the Option or Stock
Appreciation Right would have expired had it not been for the
termination of such employment or service. The meaning of the term
"RETIREMENT" shall be determined by the Committee.
(v) Acceleration or Extension of Exercisability. Notwithstanding
the foregoing, the Committee may, in its discretion, provide at any time
(A) that an Option or Stock Appreciation Right granted to a Participant
may terminate at a date earlier than that set forth above, (B) that an
Option or Stock Appreciation Right granted to a Participant may
terminate at a date later than that set forth above, provided such date
shall not be beyond the date the Option or Stock Appreciation Right
would have expired had it not been for the termination of the
Participant's employment or service and (C) that an Option or Stock
Appreciation Right may become immediately exercisable when it finds that
such acceleration would be in the best interests of Micro.
(b) Incentive Stock Options and Related Stock Appreciation Rights.
(i) Termination of Employment or Service. (A) Except as the
Committee may at any time otherwise provide or as required to comply
with applicable law, if the Participant's employment or service with
Micro or its Affiliates is terminated for any reason other than death,
disability, or retirement, the Participant's right to exercise any
Incentive Stock Option or related Stock Appreciation Right shall
terminate, and such Option or related Stock Appreciation Right shall
expire, on the earlier of (x) the ninetieth day following such
termination of employment or service or (y) the date such Option or
related Stock Appreciation Right would have expired had it not been for
the termination of employment or services. The Participant shall have
the right to exercise such Option or related Stock Appreciation Right
prior to such expiration to the extent it was exercisable at the date of
such termination of employment or service and shall not have been
exercised.
(B) Notwithstanding any of the provisions of Section 11(b)(i)(A), in
respect of a Participant employed
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outside the United States, such Participant's right to exercise any
Incentive Stock Option and related Stock Appreciation Rights shall
terminate and such Option and related Stock Appreciation Right shall
expire and lapse, on the earlier of (x) the ninetieth day following
Notice/Termination or (y) the date such Option and related Stock
Appreciation Right would have expired had it not been for the
Notice/Termination. The Participant shall have the right to exercise
such Option and related Stock Appreciation Right prior to such
expiration to the extent it was exercisable at the date of
Notice/Termination and shall not have been exercised. Any such
Participant shall not be entitled, and by applying for or accepting the
grant of any Incentive Stock Option, whether or not in conjunction with
a Stock Appreciation Right, shall be deemed irrevocably to have waived
any entitlement, by way of compensation for loss of office or damages
for breach of contract or otherwise howsoever to any sum or other
benefit to compensate for the loss of any rights under the Plan.
(ii) Death, Disability or Retirement. Except as the Committee may
at any time otherwise provide or as required to comply with applicable
law, if the Participant's employment or service with Micro or its
Affiliates is terminated by reason of death, disability or retirement,
the Participant or his successor (if employment or service is terminated
by death) shall have the right to exercise any exercisable Incentive
Stock Option or related Stock Appreciation Right during the 90 day
period following such termination of employment or service, but in no
event shall such option be exercisable later than the date the Incentive
Stock Option would have expired had it not been for the termination of
such employment or services. To the extent such Incentive Stock Option
or related Stock Appreciation Right is not exercised prior to the
termination of such 90 day period, the unexercised balance of such
Option automatically will be deemed a Non-Qualified Stock Option, and
such Option and related Stock Appreciation Right will vest and be
exercisable as provided in Section 11(a)(ii), (iii) or (iv), hereof, as
the case may be, but in no event shall such Option or related Stock
Appreciation Right be exercisable later than the date the Option or
related Stock Appreciation Right would have expired had it not been for
the termination of such employment or service, provided that in the
event that the Participant dies in such 90-day period the Option will
continue to be an Incentive Stock Option to the extent provided by
Section 421 or Section 422 of the Code, or any successor provision, and
any regulations promulgated thereunder.
(iii) Acceleration or Extension of Exercisability.
Notwithstanding the foregoing, the Committee may, in its discretion,
provide at any time (A) that an Option and related Stock Appreciation
Right granted to a Participant may terminate at a date earlier than that
set forth above, (B) that an Option and related Stock Appreciation Right
granted to a Participant may terminate at a date later than that set
forth above, provided such date shall not be beyond the date the Option
and related Stock Appreciation Right would have expired had it not been
for the termination of the Participant's employment or service and (C)
that an Option and related Stock Appreciation Right may become
immediately exercisable when it finds that such acceleration would be in
the best interests of Micro.
(c) Restricted Stock.
(i) Except as otherwise determined by the Committee at the time
of grant or as required to comply with applicable law, upon termination
of employment or service for any reason during the restriction period,
all shares of Restricted Stock still subject to restriction shall be
forfeited by the Participant and reacquired by Micro at the price (if
any) paid by the Participant for such Restricted Stock; provided that,
except as the Committee may at any time otherwise provide, in the event
of Participant's retirement, disability, or death such Restricted Stock
shall be subject to forfeiture and/or vesting as provided in Section
11(a)(ii), (iii) and (iv) hereof, as the case may be. In cases of
special circumstances, the Committee may, in its sole discretion, when
it finds that a waiver would be in the best interests of Micro, waive in
whole or in part any or all remaining restrictions with respect to such
Participant's shares of Restricted Stock. Any time spent by a
Participant in the status of "LEAVE WITHOUT PAY" shall extend the period
otherwise required for purposes of determining the extent to which any
Award or portion thereof has vested or otherwise become exercisable or
nonforfeitable.
(ii) In the case of a Participant employed outside the United
States, except to the extent (if any) provided in the Plan in the case
of termination of such Participant's employment by reason of death,
disability or retirement, any rights of such Participant relating to
Restricted Stock and Restricted Stock
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Units or Performance Awards or Other Stock Based-Awards shall lapse and
no longer be capable of exercise at the time when such Participant's
employer gives notice to the Participant or, at the time when the
Participant gives notice to such Participant's employer to terminate his
employment or, if no such notice is given, at the time when his
employment is terminated. Any such Participant shall not be entitled,
and by applying for or accepting any such Award or accepting the same he
shall be deemed irrevocably to have waived any entitlement, by way of
compensation for loss of office or damages for breach of contract or
otherwise howsoever to any sum or other benefit to compensate for the
loss of any rights under the Plan.
(d) Except as the Committee may otherwise determine, for purposes hereof
any termination of a Participant's employment or service for any reason shall
occur on the date Participant ceases to perform services for Micro or any
Affiliate without regard to whether Participant continues thereafter to receive
any compensatory payments therefrom or is paid salary thereby in lieu of notice
of termination or, with respect to a member of the Board who is not also an
employee of Micro or any Affiliate, the date such Participant is no longer a
member of the Board.
SECTION 12. Merger. In the event of a merger of Micro with or into
another corporation, each outstanding Award may be assumed or an equivalent
award may be substituted by such successor corporation or a parent or subsidiary
of such successor corporation. If, in such event, an Award is not assumed or
substituted, the Award shall terminate as of the date of the closing of the
merger. For the purposes of this paragraph, the Award shall be considered
assumed if, following the merger, the Award confers the right to purchase or
receive, for each Share subject to the Award immediately prior to the merger,
the consideration (whether stock, cash, or other securities or property)
received in the merger by holders of Common Stock for each Share held on the
effective date of the transaction (and if the holders are offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares). If such consideration received in the merger is not
solely common stock of the successor corporation or its parent, the Committee
may, with the consent of the successor corporation, provide for the
consideration to be received upon the exercise of the Award, for each Share
subject to the Award, to be solely common stock of the successor corporation or
its parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger.
SECTION 13. Amendment and Termination.
(a) Amendments to the Plan. The Board may terminate or discontinue the
Plan at any time and the Board or the Committee may amend or alter the Plan or
any portion thereof at any time; provided that no such amendment, alteration,
discontinuation or termination shall be made without shareholder approval if
such approval is necessary to comply with any tax or regulatory requirement,
including for these purposes any approval requirement which is a prerequisite
for exemptive relief from Section 16(b) of the Exchange Act, for which or with
which the Board or the Committee deems it necessary or desirable to qualify or
comply.
(b) Amendments to Awards. Subject to the terms of the Plan and
applicable law, the Committee may waive any conditions or rights under, amend
any terms of, or alter, suspend, discontinue, cancel or terminate, any Award
theretofore granted, prospectively or retroactively; provided that any such
waiver, amendment, alteration, suspension, discontinuance, cancellation or
termination that would adversely affect the rights of any Participant or any
holder or beneficiary of any Award theretofore granted shall not to that extent
be effective without the consent of the affected Participant, holder or
beneficiary.
(c) Cancellation. Any provision of this Plan or any Award Agreement to
the contrary notwithstanding, the Committee may cause any Award granted
hereunder to be canceled in consideration of a cash payment or alternative Award
made to the holder of such canceled Award equal in value to the Fair Market
Value of such canceled Award.
SECTION 14. General Provisions.
(a) Dividend Equivalents. In the sole and complete discretion of the
Committee, an Award, whether made as an Other Stock-Based Award under Section 10
or as an Award granted pursuant to Sections 6 through 9 hereof, may provide the
Participant with dividends or dividend equivalents, payable in cash, Shares,
other securities or other property on a current or deferred basis.
A-8
<PAGE> 36
(b) Nontransferability. (i) Except as provided in subsection (ii) below,
no Award shall be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by a Participant, except by will or the laws of
descent and distribution.
(ii) Notwithstanding subsection (i) above, the Committee may determine
that an Award may be transferred by a Participant to one or more members of the
Participant's immediate family, to a partnership of which the only partners are
members of the Participant's immediate family, or to a trust established by the
Participant for the benefit of one or more members of the Participant's
immediate family. For this purpose, immediate family means the Participant's
spouse, parents, children, grandchildren and the spouses of such parents,
children and grandchildren. A transferee described in this subsection (ii) may
not further transfer an Award. An Award transferred pursuant to this subsection
shall remain subject to the provisions of the Plan, including, but not limited
to, the provisions of Section 11 relating to the effect on the Award of the
death, retirement or termination of employment of the Participant, and shall be
subject to such other rules as the Committee shall determine.
(c) No Rights to Awards. No Employee, Participant or other Person shall
have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Employees, Participants, or holders or beneficiaries
of Awards. The terms and conditions of Awards need not be the same with respect
to each recipient.
(d) Share Certificates. All certificates for Shares or other securities
of Micro or any Affiliate delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations and other requirements of the SEC or any stock exchange upon which
such Shares or other securities are then listed and any applicable Federal,
state or foreign laws or rules or regulations, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(e) Withholding. A Participant may be required to pay to Micro or any
Affiliate, and Micro or any Affiliate shall have the right and is hereby
authorized to withhold from any Award, from any payment due or transfer made
under any Award or under the Plan or from any compensation or other amount owing
to a Participant the amount (in cash, Shares, other securities, other Awards or
other property) of any applicable withholding taxes in respect of an Award, its
exercise, or any payment or transfer under an Award or under the Plan and to
take such other action as may be necessary in the opinion of Micro to satisfy
all obligations for the payment of such taxes. The Committee may provide for
additional cash payments to holders of Awards to defray or offset any tax
arising from any such grant, lapse, vesting, or exercise of any Award.
(f) Award Agreements. Each Award hereunder shall be evidenced by an
Award Agreement which shall be delivered to the Participant and shall specify
the terms and conditions of the Award and any rules applicable thereto.
(g) No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent Micro or any Affiliate from adopting or continuing in
effect other compensation arrangements, which may, but need not, provide for the
grant of options, restricted stock, Shares and other types of Awards provided
for hereunder (subject to shareholder approval if such approval is required),
and such arrangements may be either generally applicable or applicable only in
specific cases.
(h) No Right to Employment. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ or service of
Micro or any Affiliate. Further, Micro or an Affiliate may at any time dismiss a
Participant from employment or service, free from any liability or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any Award
Agreement.
(i) Rights as a Stockholder. Subject to the provisions of the applicable
Award, no Participant or holder or beneficiary of any Award shall have any
rights as a stockholder with respect to any Shares to be issued under the Plan
until he or she has become the holder of such Shares. Notwithstanding the
foregoing, in connection with each grant of Restricted Stock hereunder, the
applicable Award shall specify if and to what extent the Participant shall not
be entitled to the rights of a stockholder in respect of such Restricted Stock.
A-9
<PAGE> 37
(j) Governing Law. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan and any Award Agreement shall
be determined in accordance with the laws of the State of Delaware.
(k) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to the applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction, Person or Award and the remainder of the Plan
and any such Award shall remain in full force and effect.
(l) Other Laws. The Committee may refuse to issue or transfer any Shares
or other consideration under an Award if, acting in its sole discretion, it
determines that the issuance or transfer of such Shares or such other
consideration might violate any applicable law or regulation, whether domestic
or foreign, or entitle Micro to recover the same under Section 16(b) of the
Exchange Act, and any payment tendered to Micro by a Participant in connection
therewith shall be promptly refunded to the relevant Participant, holder or
beneficiary. Without limiting the generality of the foregoing, no Award granted
hereunder shall be construed as an offer to sell securities of Micro, and no
such offer shall be outstanding, unless and until the Committee in its sole
discretion has determined that any such offer, if made, would be in compliance
with all applicable requirements of the Federal securities laws and any other
laws, whether domestic or foreign, to which such offer, if made, would be
subject.
(m) No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between Micro or any Affiliate and a Participant or any
other Person. To the extent that any Person acquires a right to receive payments
from Micro or any Affiliate pursuant to an Award, such right shall be no greater
than the right of any unsecured general creditor of Micro or any Affiliate.
(n) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash or other securities or other property shall be paid or transferred
in lieu of any fractional Shares or whether such fractional Shares or any rights
thereto shall be canceled, terminated, or otherwise eliminated.
(o) Transfer Restrictions. Shares acquired hereunder may not be sold,
assigned, transferred, pledged or otherwise disposed of, except as provided in
the Plan or the applicable Award Agreement.
(p) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
(q) Sub-Plans. Subject to the terms hereof, the Committee may from time
to time adopt one or more Sub-Plans and grant Awards thereunder as it shall deem
necessary or appropriate in its sole discretion in order that Awards may comply
with the laws, rules or regulations of any jurisdiction; provided, however, that
neither the terms of any Sub-Plan nor Awards thereunder shall be inconsistent
with the Plan.
SECTION 15. Term of the Plan.
(a) Effective Date. The Plan shall be effective as of February 1, 1998,
subject to approval by the shareowners of Micro. Awards may be granted hereunder
prior to such shareowner approval subject in all cases, however, to such
approval.
(b) Expiration Date. No Award shall be granted under the Plan after
January 31, 2008. Unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted hereunder may, and the authority
of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such Award or to waive any conditions or rights under any such
Award shall, continue after the authority for grant of new Awards hereunder has
been exhausted.
A-10
<PAGE> 38
EXHIBIT B
INGRAM MICRO INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE OF THE PLAN.
The purpose of the Ingram Micro Inc. 1998 Employee Stock Purchase Plan
(the "Plan") is to provide employment incentive and to encourage stock ownership
by certain officers and employees of Ingram Micro Inc. (the "Company") and
certain officers and employees of certain of its designated subsidiaries
("Participating Subsidiaries") in order to increase their proprietary interest
in the Company's success. The Plan is intended to be a qualified employee stock
purchase plan within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations and rulings thereunder. The
provisions of the Plan shall be construed accordingly.
2. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Human Resources Committee (the
"Committee") of the Company's Board of Directors as from time to time appointed
pursuant to the By-Laws of the Company. The Committee shall have full power and
authority to construe and interpret the Plan and may from time to time adopt
such rules and regulations for carrying out the Plan as it may deem best,
including, but not limited to, the determination of purchase periods hereunder.
Decisions of the Committee shall be final, conclusive and binding upon all
parties, including the Company, its stockholders and its employees.
The Committee may in its sole discretion determine from time to time
that the Company shall offer to enter into Agreements hereunder ("Agreements")
with all of the then eligible employees, provided, however, that it shall be
under no obligation to do so.
3. PARTICIPATION IN THE PLAN.
The individuals who shall be eligible to receive grants of purchase
rights under the Plan shall be all the employees (including directors who are
employees) of the Company or of any Subsidiary (as defined in Section 424(f) of
the Code) of the Company, which Subsidiary has been designated by the Committee
as a Participating Subsidiary in the Plan, on the date as of which such purchase
rights are granted under the Plan (the "Grant Date"), other than those employees
who have customary employment with the Company or Participating Subsidiary of
not more than 20 hours a week or not more than 5 months in any calendar year,
within the meaning of Code Sections 423(b)(4) and (c), respectively; provided,
however, that an Agreement will be entered into with an employee of a
Participating Subsidiary only if such Agreement will, under the applicable
provisions of the Code as then in effect, qualify for the same tax treatment as
would be accorded if such employee was then an employee of the Company; and
further provided, that no individual shall be eligible to enter into an
Agreement under the Plan if immediately thereafter and after giving effect
thereto, the aggregate value or voting power of all shares of stock of the
Company and any Subsidiary then owned by such individual either directly or
indirectly, within the meaning of the applicable sections of the Code and
including all shares of stock with respect to which such individual holds
options, would equal or exceed in the aggregate 5 % of the total value or
combined voting power of all classes of stock of the Company or any Subsidiary.
The term "Compensation" as used in this Plan means with respect to each eligible
employee, the total amount of base salary including commissions, shift
differentials, and sick leave pay paid to such employee on account of his
employment by his or her employer, excluding (a) over-time pay and bonuses, (b)
benefits under any other pension, profit sharing, stock bonus, phantom stock,
nonstatutory stock option, hospitalization, life insurance, long-term
disability, or other employee benefit plan (including without limiting the
foregoing, the Ingram Micro Inc. Supplemental Executive Deferred Compensation
Plan and the Ingram Micro Inc. Supplemental Executive Retirement Plan), (c)
travel, entertainment, and other business expense allowances from which an
accounting is made to the employees, (d) living allowances, (e) imputed income
attributable to employer-provided group term life insurance and such other
imputed non-cash income recognized as such by the Code and the employee's
Employer for purposes of this Plan, (f) any home sale costs, reimbursed moving
costs, employer reimbursed or employer-subsidized meals, employer payments for
the use of his or her personal car for business purposes, location adjustments
or any other similar supplemental type of pay, and (g) severance pay.
Compensation
B-1
<PAGE> 39
shall include elective deferrals under any tax-qualified defined contribution
plan maintained by the Company or any subsidiary and any amount which is
contributed to such plan by the employee's employer pursuant to a salary
reduction agreement which is not includible in the gross income of the eligible
employee. under Section 125, 402(e)(3), 402(h) or 403(b) of the Code.
4. STOCK.
The stock subject to the Agreements shall be, in the discretion of the
Board of Directors of the Company, either authorized but unissued shares of any
class of the Company's Common Stock ("Common Stock") or shares of Common Stock
held in the treasury of the Company or any Subsidiary of the Company, including
shares purchased in the open market or otherwise. Subject to adjustment in
accordance with the provisions of paragraph 6(i) hereof, the total number of
shares of Common Stock which may be the subject of such Agreements shall not
exceed in the aggregate 3,000,000 shares.
In the event that any Agreement for any reason expires or is terminated
and the shares of Common Stock which are the subject thereof are not purchased,
such unpurchased shares of Common Stock may again be subject to Agreements.
5. NUMBER OF SHARES WHICH AN EMPLOYEE MAY PURCHASE.
Each Agreement shall provide that an eligible employee may elect to
purchase pursuant to the terms of the Agreement a number of shares of Common
Stock determined by the Committee but in no event greater than the number of
shares of Common Stock with a fair market value (as determined by the Committee
on the Grant Date) not in excess of 2-1/4 times 10% of the employee's aggregate
Compensation for the fiscal year next preceding the Grant, as determined from
the payroll records of the Company and the Participating Subsidiaries.
Notwithstanding anything else contained herein, no employee may receive
a Grant which permits such employee's rights to purchase Common Stock under this
Plan and any other qualified employee stock purchase plan (within the meaning of
Section 423 of the Code) of the Company or its Subsidiaries to accrue at a rate
which exceeds $25,000 of fair market value of Common Stock for each calendar
year in which a Grant is outstanding at any time. For purposes of this section,
fair market value shall be determined as of the Grant-Date by the Committee.
6. TERMS AND CONDITIONS OF AGREEMENTS.
(a) General.
The Agreements shall be in such form as the Committee shall from time to
time approve, and shall contain such terms and conditions as the Committee shall
prescribe not inconsistent with the Plan.
(b) Purchase Price.
The price of a share of Common Stock pursuant to a grant shall be set by
the Committee but in no event shall be less than the lesser of:
(i) 85 percent of the fair market value of a share of Common
Stock on the Grant Date; or
(ii) 85 percent of the fair market value of a share of Common
Stock on the Purchase Date (as defined below).
(c) Payment of Purchase Price.
Each Agreement shall prescribe the method or methods pursuant to which
the purchase price of shares shall be paid by the employee.
B-2
<PAGE> 40
(d) Term of Agreements.
Each Agreement shall be dated as of the date purchase rights are granted
under the Plan and shall have a stated term of not more than 27 months from such
date.
(e) Date on which Shares Must be Purchased.
Each Agreement shall provide that, subject to earlier termination
pursuant to Paragraph 6(g) hereof, any shares to be purchased thereunder must be
purchased on the last day (hereinafter called the "Purchase Date") of the stated
term of the Agreement.
(f) Employee's Purchase Directions.
Each Agreement shall provide that the employee on the Purchase Date
shall purchase all of the whole shares covered by such Agreement unless the
employee shall, in the manner provided for in the Agreement, notify the
Secretary of the Company, or such other persons specified in the Agreement, on
or before the Purchase Date that the employee does not desire to purchase any of
such shares or desires to purchase fewer than all of such shares.
(g) Termination by Employee of his Agreement.
An employee who has entered into an Agreement may at any time on or
before the Purchase Date terminate the employee's Agreement in its entirety by
written notice of such termination delivered in the manner set forth in the
Agreement to the Secretary of the Company, or to such other person or persons as
may be specified in the employee's Agreement. If there are any funds then on
deposit pursuant to the Agreement such funds shall be paid to the employee or to
the Company for payment to the employee.
(h) Termination of Employment and Change in Control.
Each Agreement shall specify the applicable rules in respect of the
effect of the death, retirement, disability or other termination of employment
of the employee and the effect, if any, of a change in control of the Company.
(i) Adjustments.
In the event that the Committee shall determine that any stock dividend,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares, or other
similar corporate event affects the Common Stock such that an adjustment is
required in order to preserve the benefits or potential benefits intended to be
made available under this Plan, then the Committee shall, in its sole
discretion, and in such manner as the Committee may deem equitable, adjust any
or all of (1) the number and kind of shares which thereafter may be made the
subject of Agreements under the Plan, (2) the number and kind of shares subject
to outstanding Agreements and (3) the purchase price with respect to any of the
foregoing and/or, if deemed appropriate, make provision for a cash payment to a
person who has an outstanding Agreement; provided, however, that the number of
shares subject to any Agreement shall always be a whole number.
(j) Assignability.
No rights hereunder shall be assignable or transferable except by will
or by the laws of descent and distribution. During the lifetime of an employee
who is a party to an Agreement the shares which are covered by such Agreement
may be purchased only by the employee.
(k) Employee's Agreement.
If, at the time of the purchase of shares which are covered by an
Agreement in writing, in the opinion of counsel for the Company, it is necessary
or desirable, in order to comply with any applicable laws or regulations
relating to the sale of securities, that the employee purchasing such shares
shall agree that such employee will purchase such shares for investment and not
with any present intention to resell the same, the employee will, upon the
request of the Company, execute and deliver to the Company an agreement to such
effect. The Company may
B-3
<PAGE> 41
also require that a legend setting forth such investment intention be stamped or
otherwise written on the certificates for shares purchased pursuant to the Plan.
(1) Rights as a Shareholder.
An employee who is a party to an Agreement shall have no rights as a
shareholder with respect to shares covered by such Agreement until the date of
the issuance of the shares to the employee. No adjustment will be made for
dividends or other rights for which the record date is prior to the date of such
issuance.
7. TERM OF PLAN.
No Agreement shall be entered into after December 31, 2003.
8. AMENDMENTS.
The Board of Directors may from time to time alter, amend, suspend, or
discontinue the Plan or alter or amend any and all Agreements: provided,
however, that no such action of the Board of Directors may, without the approval
of the shareholders, make any amendment for which stockholder approval is
necessary to comply with any tax or regulatory requirement, including for this
purpose any approval requirement which is a prerequisite for exemptive relief
under Section 16(b) of the Securities Exchange Act of 1934.
9. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Common Stock
pursuant to an Agreement will be used for general corporate purposes.
10. NO OBLIGATION TO PURCHASE SHARES.
Entering into an Agreement shall impose no obligation upon an employee
to purchase any shares covered by such Agreement.
11. GOVERNING LAW.
This Plan and all Agreements shall be construed in accordance with and
governed by the laws of the State of Delaware.
12. SHAREHOLDER APPROVAL.
This Plan shall not be effective until approved by the shareholders of
the Company as provided in Section 423(b) of the Code and the regulations
thereunder.
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<PAGE> 42
THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF PROXY
INGRAM MICRO INC.
INGRAM MICRO INC.
The undersigned, a shareowner of Ingram Micro Inc. (the
"Company"), hereby appoints James E. Anderson, Jr. and
Michael J. Grainger, and each of them individually, as
Proxies to represent and vote all of the Company's Class A ANNUAL
Common Stock and Class B Common Stock held of record by MEETING OF
the undersigned, each with full power of substitution, at SHAREOWNERS
the Annual Meeting of the Shareowners of the Company, to be
held at the Company's Buffalo Campus, 1740 Wehrle Drive, MAY 6, 1998
Williamsville, New York 14221, on Wednesday, May 6, 1998 at
11:00 a.m., local time, and at any adjournment or
postponement thereof. [INGRAM
MICRO LOGO]
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NOT OTHERWISE
DIRECTED, WILL BE VOTED FOR PROPOSALS 1 THROUGH 3. YOUR SHARES
CANNOT BE VOTED UNLESS YOU SIGN AND RETURN THIS CARD OR ATTEND
THE MEETING AND VOTE IN PERSON.
[SEE REVERSE
SIDE]
- --------------------------------------------------------------------------------
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE-PAID ENVELOPE PROVIDED
<PAGE> 43
[X] Please mark your
votes as in this
example.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NOT OTHERWISE DIRECTED, WILL BE
VOTED FOR PROPOSALS 1 THROUGH 3.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 THROUGH 3.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR WITHHELD (Nominee)
<S> <C> <C> <C>
1. Election of [ ] [ ] Don H. Davis, Jr., David B. Ingram,
Directors John R. Ingram, Martha A. Ingram,
Philip M. Pfeffer, J. Phillip Samper,
Jerre L. Stead, Joe B. Wyatt
For, except vote withheld from the following nominee(s):
</TABLE>
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. Approving the adoption of the Ingram Micro [ ] [ ] [ ]
Inc. 1998 Equity Incentive Plan.
3. Approving the adoption of the Ingram Micro [ ] [ ] [ ]
Inc. 1998 Employee Stock Purchase Plan.
4. In their discretion, the Proxies are authorized to vote upon such other business as may
properly come before the meeting or any adjournment or postponement thereof.
</TABLE>
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- ------------------------------------------
- ------------------------------------------
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
