Ingram Micro 2002 Annual Report Download - page 12

Martha R. Ingram is the mother of John R. Ingram and Orrin H. Ingram II. There are no other family relationships among our
directors or executive officers.
What are the requirements for Board membership?
We have entered into a board representation agreement with Martha, John and Orrin Ingram, certain trusts created for their benefit
(including trusts where SunTrust Bank acts as trustee), and a charitable trust and foundation created by the Ingram family (the “Ingram
Family Stockholders”). 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 our outstanding common stock, proposed directors are required to possess the
following qualifications: (1) three individuals designated by the Ingram Family Stockholders, (2) one individual designated by the Chief
Executive Officer of Ingram Micro, and (3) four or five individuals who are not members of the Ingram family or executive officers or
employees of Ingram Micro. Directors designated by the Ingram Family Stockholders may, but are not required to, include Mrs. Ingram,
any of her legal descendants, or any of their respective spouses. Mrs. Ingram and John and Orrin Ingram are considered directors
designated by the Ingram Family Stockholders. Mr. Foster is considered our Chief Executive Officer designee. Messrs. Laurance,
Schulmeyer, Smith and Wyatt are considered independent directors. The parties to the board representation agreement (other than
Ingram Micro) have agreed to vote their shares of common stock in favor of the proposed nominees who fit within the qualifications set
out in the agreement.
What are the other rights of the Ingram Family Stockholders under the board representation agreement?
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 Ingram Micro; the issuance of
additional equity, warrants, or options; acquisitions involving aggregate consideration in excess of 10% of our stockholders’ equity; any
guarantee of indebtedness of an entity other than a subsidiary of Ingram Micro exceeding 5% of our stockholders’ equity; and the
incurrence of indebtedness in a transaction which could reasonably be expected to reduce our investment rating (1) lower than one grade
below the rating in effect immediately following our initial public offering in November 1996, or (2) 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 the Ingram Family Stockholders and their permitted transferees.
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 our common stock (as such number may be equitably
adjusted to reflect stock splits, stock dividends, recapitalizations, and other transactions in our capital stock). The trustees, who in some
cases are members of the Ingram family, are authorized to make all decisions for the trusts or foundations which are parties to the
agreement.
How are directors compensated?
Compensation package. Beginning in 2001 for non-executive directors first elected to the Board and 2002 for all other incumbent
non-executive directors, each non-executive director is entitled to receive an annual award of cash, stock options and restricted stock
with an estimated value of $150,000 ($155,000 for Committee chairmen). The mix of cash, stock options and restricted stock must be
selected by each eligible Board member prior to January 1 of each year or promptly upon initial election to the Board, as the case may
be. The award will be pro rated for partial year service. The mix of cash, stock options and restricted stock is subject to the following
assumptions and restrictions:
• Cash. If cash is selected as a component of compensation, the maximum amount that may be selected is $35,000 ($40,000 for
Committee chairmen).
• Stock Options. Stock options must be selected as a component of compensation. The grant value of the options must be at least
$50,000 and may be more. Options will be granted as non-qualified stock options
7