Ingram Micro 2002 Annual Report Download - page 24

Cash Compensation. We determined the total cash compensation (base salary and annual bonus target) for our executive officers, as
well as adjustments to such salaries, after considering recommendations from our Chief Executive Officer and taking into account such
factors as competitive industry salaries, the contribution and experience of the officer, and the length of the officer’s service. Our Chief
Executive Officer’s recommendations took into consideration our general philosophy of targeting total cash compensation (base salary
plus annual bonus target) for our executives at the median level of cash compensation of the selected companies in the 2000 Hewitt
compensation survey when target levels of corporate and business unit performance are achieved.
Annual bonus. Ingram Micro’s 2001 Executive Incentive Award Plan provided for performance-based bonuses for executives as well
as other management level associates. Specifically, the 2001 annual bonus program was based 100% on our company’s performance
relative to preset financial performance targets, assuming minimum financial targets are met, in order to provide maximum focus on
company profitability and shareowner return. We approved a one-time adjustment to the 2001 incentive award plan to allow payment of
a semi-annual bonus based on achievement of revised preset financial performance targets for the second half of 2001 to better reflect
our current marketplace and to continue to provide incentives to all of our associates. At his request, our Chief Executive Officer was not
eligible to earn any payment based on the revised targets.
Equity-based awards. During fiscal year 2001, our equity-based award guidelines provided generally for the grant of stock options to
executive officers upon initial employment or promotion and semi-annual grants in each successive February and July. Such options
generally have a three-year vesting schedule and a ten-year term.
In carrying out our guidelines, our Chief Executive Officer recommends to us for review and approval the number of options to be
granted based on an executive officer’s salary grade level. Our Chief Executive Officer may also make recommendations that deviate
from our guidelines where he deems it appropriate.
In 2001, stock option grants were made to our management team on February 1, 2001 and on July 2, 2001 in accordance with award
guidelines we had previously approved.
How is our Chief Executive Officer compensated?
Kent B. Foster became our Chief Executive Officer on March 6, 2000 and was elected as Chairman of the Board on May 17, 2000.
Salary and annual bonus. We entered into an employment agreement with Mr. Foster covering his services as Chief Executive
Officer in March 2000. The agreement provides for an annualized base salary of $1,000,000 and the opportunity for an annual
performance-based compensation award. We may also approve discretionary increases to Mr. Foster’s salary. Under the terms of his
agreement, Mr. Foster is eligible for a target annual bonus opportunity of 100% of his annual base salary, with a maximum bonus
opportunity of 200% of his annual base salary.
2001 Compensation. We reviewed the annual base salary of our executive officers, including the base salary of our Chief Executive
Officer, in December 2000. Based on the information presented in the 2000 Hewitt total compensation measurement study, and in
recognition of Mr. Foster’s appointment to the position of Chairman and Chief Executive Officer in May 2000, we approved an increase
in Mr. Foster’s annual base salary to $1,100,000 effective January 1, 2001. Mr. Foster earned a bonus of 3% of his annual base salary for
the 2001 fiscal year. At his request, none of this was attributable to the revised financial performance targets we set for the second half of
2001.
Options. Mr. Foster received options to purchase 250,830 shares of Class A common stock, at an exercise price of $16.42 in
accordance with our semi-annual stock option grant guidelines for the management team on February 1, 2001. These options vest in
three equal installments commencing February 1, 2002. Mr. Foster was also granted options to purchase 277,110 shares of Class A
common stock in accordance with our semi-annual stock
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