UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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 þ
Filed by a Party other than the Registrant o

Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to Rule 14a-12

Ingram Micro Inc.

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):
þ No fee required.
o 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:

o		Fee paid previously with preliminary materials
o		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:

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 6, 2007

 

To our shareholders:

 

We will hold our annual meeting of shareholders at our Santa Ana campus, 1600 E. Saint Andrew Place, Santa Ana, California 92705, on Wednesday, June 6, 2007, at 10:00 a.m. local time. We are holding this meeting:

 

(1) To elect four directors for a three-year term and one director for a one-year term; and

 

(2) To transact any other business that properly comes before the meeting.

 

The shareholders of record at the close of business on April 11, 2007 will be entitled to vote at the meeting or any postponements or adjournments of 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 or vote via telephone or the Internet in accordance with the instructions on the enclosed proxy card. If you attend the meeting, you may vote your shares in person, which will revoke any prior vote.

 

By order of the Board of Directors,

 

 

Larry C. Boyd
Senior Vice President, Secretary and
General Counsel

 

April 26, 2007

Santa Ana, California

 

TABLE OF CONTENTS

 

1600 East Saint Andrew Place

Santa Ana, California 92705

 

 

PROXY STATEMENT

 

 

This proxy statement contains information related to the annual meeting of our shareholders to be held on Wednesday, June 6, 2007, beginning at 10:00 a.m., local time, at our Santa Ana campus, 1600 E. Saint Andrew Place, Santa Ana, California 92705, and at any postponements or adjournments thereof. The enclosed form of proxy is solicited by our Board of Directors. The date of this proxy statement is April 26, 2007. It is first being mailed to our shareholders on April 26, 2007.

 

The purpose of the Annual Meeting is to elect directors and to conduct the business described in the Notice of Annual Meeting.

 

A quorum is the minimum number of shares required to hold a meeting. The presence in person or by proxy of the holders of a majority of the outstanding shares of common stock will constitute a quorum for the transaction of business at the meeting. Votes cast by proxy or in person at the meeting will be counted by the persons appointed by our company to act as election inspectors for the meeting. The election inspectors will treat shares represented by proxies that reflect abstentions as shares that are present and entitled to vote for purposes of determining the presence of a quorum and for purposes of determining the outcome of any matter submitted to the shareholders for a vote. Abstentions, however, do not constitute a vote “for” or “against” any matter and thus will be disregarded in the calculation of a plurality or of “votes cast.”

 

The election inspectors will treat shares referred to as “broker non-votes” (i.e., shares held by brokers or nominees over which the broker or nominee lacks discretionary power to vote and for which the broker or nominee has not received specific voting instructions from the beneficial owner) as shares that are present and entitled to vote for purposes of determining the presence of a quorum.

 

Holders of record of our Class A common stock at the close of business on April 11, 2007 may vote at the annual meeting. Each share of Ingram Micro common stock that you own entitles you to one vote.

 

You may vote in person at the meeting or by proxy. We recommend that you vote by proxy even if you plan to attend the meeting. You can always change your vote at the meeting.

If you are a registered shareholder (meaning your name is included on the shareholder file maintained by our transfer agent, Computershare Trust Company, N.A.), you can vote by proxy in any of the following ways:

 

 

If your shares are held in the name of a bank, broker or other holder of record, you will receive instructions from the holder of record that you must follow in order for your shares to be voted.

 

If you participate in our 401(k) Investment Savings Plan, you may vote an amount of shares of common stock equivalent to the interest in common stock credited to your account as of the record date. You may vote by instructing Fidelity Investments, the trustee of the plan, pursuant to the instruction card being mailed with this proxy statement to plan participants. The trustee will vote your shares in accordance with your duly executed instructions if they are received by May 28, 2007. If you do not provide the trustee with your voting instructions, the trustee will not vote on your behalf.

 

 

Our Board of Directors is asking for your proxy. Giving us your proxy means you authorize us to vote your shares at the meeting in the manner you direct. You may vote for all, some or none of our director candidates. You may also abstain from voting.

 

 

If you properly fill in your proxy card and send it to us in time to vote, or vote by the Internet or telephone, one of the individuals named on your proxy card will vote your shares as your proxy and as you have directed. If you sign the proxy card but do not make specific choices, your proxy will follow the Board’s recommendations and vote your shares:

 

 

If any other matter is presented at the meeting, your proxy will vote in accordance with his best judgment. At the time this proxy statement went to press, we knew of no other matters to be acted on at the meeting.

 

 

Directors are elected by a plurality, and the five nominees who receive the most votes will be elected. Abstentions and broker non-votes will not be taken into account in determining the outcome of the election. Under current New York Stock Exchange rules, if your broker holds your shares in its name, your broker is permitted to vote your shares on Proposal 1 even if it does not receive voting instructions from you.

 

 

You may revoke your proxy by: (1) sending in another signed proxy card with a later date; (2) providing subsequent Internet or telephone voting instructions; (3) notifying our Secretary in writing before the meeting that you have revoked your proxy; or (4) voting in person at the meeting.

 

 

Our company will bear the costs of soliciting proxies.

 

The Board of Directors recommends that you vote “FOR” the election of each of the nominees for election as directors described below, which is designated as proposal No. 1 on the enclosed proxy card.

 

Our Board of Directors oversees the management of our company on your behalf. Our Certificate of Incorporation and Bylaws currently provide for a classified Board of Directors. Each person elected as a Class III director at the annual meeting will serve a three-year term expiring at the 2010 annual meeting of shareholders. Our Governance Committee has recommended to the Board of Directors, and the Board of Directors has nominated for re-election the five persons currently serving as directors, whose terms are expiring at this annual meeting of shareholders. We did not receive any nominations from any shareholders.

 

Business background information on each of our director nominees is given below.

 

 

Ms. Heisz, age 46, is an experienced investment banking and finance executive, and currently is a managing director of the Los Angeles office of Lazard Freres & Co., where she provides strategic advisory services for clients in a variety of industries. Before joining Lazard in 2003, Ms. Heisz was managing director of the Los Angeles office of Dresdner Kleinwort Wasserstein (and its predecessor Wasserstein Perella & Co.) for six years, specializing in mergers and acquisitions and leading the Gaming and Leisure Group. She was also a vice president at Salomon Brothers, where she developed the firm’s industry-leading gaming practice, and a senior consultant specializing in strategic information systems at Price Waterhouse. Ms. Heisz currently is a board member for International Game Technology, a publicly-traded manufacturer and operator of electronic gaming devices, and for Eldorado Resorts LLC, a privately-held owner and operator of casino hotels.

 

 

Mr. Ingram, age 46, is President and Chief Executive Officer of Ingram Industries Inc. Mr. Ingram held numerous positions with Ingram Materials Company and Ingram Barge Company before being named Co-President of Ingram Industries in January 1996. He was named to his present position as President and Chief Executive Officer of Ingram Industries in June 1999. He remains Chairman of Ingram Barge Company.

 

 

Mr. Smith, age 63, is the former Chairman of the Board and Chief Executive Officer of Hughes Electronics Corporation, a world leading provider of digital television entertainment, broadband services, satellite-based private business networks, and global video and data broadcasting, serving from October 1997 to May 2001. Prior to assuming such positions in October 1997, Mr. Smith was Vice Chairman of Hughes Electronics and Chairman of Hughes Aircraft Company, responsible for the aerospace, defense electronics and information systems businesses of Hughes Electronics. He joined Hughes Electronics in 1985, the year the Company was formed, as Senior Vice President and Chief Financial Officer after spending nearly 20 years with General Motors Corporation in a variety of financial management positions. Mr. Smith is a member of the Board of Directors of Alliant Techsystems, Inc., Teledyne Technologies and Flir Inc.

 

 

Mr. Spierkel, age 50, has been our Chief Executive Officer since June 2005. He previously served as President from March 2004 to June 2005, as Executive Vice President and President of Ingram Micro Europe from June

1999 to March 2004, and as Senior Vice President and President of Ingram Micro Asia-Pacific from July 1997 to June 1999. Prior to working for Ingram Micro, Mr. Spierkel was Vice President of Global Sales and Marketing at Mitel Inc., a manufacturer of telecommunications and semiconductor products, from March 1996 to June 1997 and was President of North America at Mitel from April 1992 to March 1996.

 

 

Mr. Wyatt, age 71, has been Chancellor Emeritus of Vanderbilt University in Nashville, Tennessee, since his retirement as Chancellor of Vanderbilt University, a position that he held from 1982 to 2000. Mr. Wyatt has also been a principal of The Washington Advisory Group since August 2000. Mr. Wyatt was previously a Director of Ingram Industries from April 1990 through October 1996. Mr. Wyatt is a Director of El Paso Corporation and Hercules Incorporated. He also serves as Chairman of the Universities Research Association.

 

 

Mr. Ingram, age 45, is Vice Chairman of Ingram Industries Inc., Chairman of Ingram Book Group, Lightning Source Inc., a print-on-demand and digital distribution company, and Ingram Digital Group. He was Co-President of Ingram Industries from January 1996 to June 1999. Mr. Ingram was also President of Ingram Book Company from January 1995 to October 1996. Mr. Ingram served as our Acting Chief Executive Officer from May 1996 to August 1996 and held a variety of positions at our company from 1991 through 1994, including Vice President of Purchasing and Vice President of Management Services at Ingram Micro Europe, and Director of Purchasing.

 

 

Dr. Laurance, age 61, is the owner of Laurance Enterprises LLC, a private advisory services company. He is also the owner of Nightingale Properties, LLC, a Hawaiian real estate development company. He retired from Occidental Petroleum Corporation on December 31, 2004 where he had served as President since 1996 and Director since 1990. From 1983 to 1996 he served in various management and executive positions with Occidental Petroleum Corporation. Dr. Laurance is also a member of the Board of Directors of Jacobs Engineering Group Inc. and serves on the Advisory Board of Hancock Park Associates. Dr. Laurance is a director of the Saint John’s Health Center and serves on the Board of Trustees of the Polytechnic School. He also serves on the Board of Trustees of the Children’s Bureau and the Advisory Board of the Golden West Humanitarian Foundation. On March 27, 2007, the Board of Directors selected Dr. Laurance as its Chairman-designate to succeed Mr. Foster, who is retiring from the Board of Directors at the conclusion of our company’s 2007 Annual Meeting of Shareholders on June 6, 2007.

 

 

Mr. Murai, age 43, has been our President and Chief Operating Officer since June 2005. He previously served as our President from March 2004 to June 2005, as Executive Vice President and President of Ingram Micro North America from January 2002 to March 2004, as Executive Vice President and President of Ingram Micro U.S. from January 2000 to December 2001, as Senior Vice President and President of Ingram Micro Canada from December 1997 to January 2000, and Vice President of Operations for Ingram Micro Canada from January 1993 to December 1997.

 

 

Mr. Schulmeyer, age 68, is Managing Partner of Gerhard LLC. From January 2002 to July 2006, Mr. Schulmeyer was Professor of Practice at the MIT Sloan School of Management. Mr. Schulmeyer served as President and Chief Executive Officer of Siemens Corporation, the holding company for U.S. businesses of Siemens AG (Munich, Germany), a world leader in electrical engineering and electronics in the information and communications, automation and control, power, transportation, medical and lighting fields, from January 1999 to

December 2003. Prior to assuming such positions, he served as President and Chief Executive Officer of Siemens Nixdorf, Munich/Paderborn, a position he held since 1994. Mr. Schulmeyer serves on the Board of Directors of Alcan Inc., Zurich Financial Services, and Korn/Ferry International.

 

 

Mr. Foster, age 63, was elected Chairman of the Board in May 2000 and upon re-election to the Board at the 2005 annual meeting of shareholders, became non-executive Chairman of the Board, effective June 1, 2005, when Mr. Foster retired as Chief Executive Officer. Mr. Foster had joined Ingram Micro as Chief Executive Officer and President and as a member of the Board of Directors in March 2000, after a 29-year career at GTE Corporation, a leading telecommunications company with one of the industry’s broadest arrays of products and services. From 1995 through 1999, Mr. Foster served as President of GTE Corporation and was a member of GTE’s Board of Directors from 1992 to 1999, serving as Vice Chairman of the Board from 1993 to 1999. In addition, he currently serves on the Board of Directors of Campbell Soup Company, Inc., J.C. Penney Company, Inc., and New York Life Insurance Company. Mr. Foster is retiring from the Board of Directors at the conclusion of our company’s 2007 Annual Meeting of Shareowners on June 6, 2007 after seven years as Chairman of the Board.

 

 

Mr. Atkins, age 56, is Senior Executive Vice President and Chief Financial Officer of Wells Fargo & Company in San Francisco, California. Prior to joining Wells Fargo in 2001, Mr. Atkins was Executive Vice President and Chief Financial Officer of New York Life Insurance Company in New York, New York from 1996 to 2001. Mr. Atkins also served as Executive Vice President and Chief Financial Officer of New Jersey-based Midatlantic Corporation from 1991 to 1996. Mr. Atkins joined the former Chase Manhattan Bank in 1974 and was, successively, in asset/liability management, U.S. capital markets/derivatives, head of Capital Markets for Europe, the Middle East and Africa, and head of the Bank’s worldwide derivatives trading business. He was Chase Manhattan Bank’s Treasurer from 1988 until 1991 when he became Chief Financial Officer of Midlantic Corporation.

 

 

Mrs. Ingram, age 71, is the Chairman of the Board of Ingram Industries Inc. and served as Chief Executive Officer of Ingram Industries from May 1996 to June 1999. Ingram Industries is a Nashville, Tennessee company with various operating divisions: Ingram Book Group, a leading wholesaler of trade books, textbooks and specialty magazines; Lightning Source Inc., a print-on-demand and digital content company; Ingram Marine Group, which includes Ingram Barge Company and Ingram Materials Company. Mrs. Ingram previously served as our Chairman of the Board from May 1996 to August 1996 and as Director of Public Affairs of Ingram Industries from 1979 to June 1995. Mrs. Ingram serves as Chairman of the Board of Trust of Vanderbilt University. She also serves on the Board of Directors of Weyerhaeuser Company and Regions Financial Corporation.

 

 

Ms. Levinson, age 65, is an advisor to professionally funded, privately held ventures. Ms. Levinson is presently Executive Chair of X1 Technologies, Inc., a privately held software company, and Chair of the Board of VendareNetBlue, a privately held internet media company. From February through July 2006, Ms. Levinson was also Interim CEO of that company. From 1997 until May 2004, Ms. Levinson was a Partner of GRP Partners, a venture capital firm investing in early stage technology companies in the financial services, internet media and online retail sectors. From 1982 until 1998, Ms. Levinson was President of Fayne Levinson Associates, an independent consulting firm advising major corporations. Prior to that, Ms. Levinson was an executive at Creative Artists Agency, Inc.; a Partner of Wings Partner, a Los Angeles-based merchant bank; a Senior Vice President of American Express Travel Related Services Co., Inc.; and a Partner of McKinsey & Company, where she became the first woman partner in 1979. Ms. Levinson also serves as a member of the Board of Directors of NCR Corporation, Jacobs Engineering Group Inc. and The Western Union Company.

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.

 

The Board of Directors held 7 meetings during fiscal 2006. All directors, with the exception of Ms. Heisz who was elected as a director effective March 1, 2007, attended more than 75% of the total number of meetings of the Board and the committees on which he or she served in 2006. The Board and its committees regularly hold executive sessions of non-management directors without management present. Directors are encouraged and expected to attend the annual meeting of shareholders. All directors, with the exception of Ms. Heisz, attended Ingram Micro’s 2006 annual meeting of shareholders.

 

Ingram Micro pays directors who are not employed by our company (“non-management directors”), (1) an annual retainer award of cash, stock options and restricted stock/restricted stock units with an estimated value of $167,000 ($182,000 for committee chairs), and (2) meeting fees for attending meetings of the Board. Beginning January 1, 2007 the estimated value of the annual retainer award for the directors increased to $180,000 ($195,000 for Committee Chairs and $200,000 for the Audit Committee Chair).

 

Annual Retainer Award. The mix of cash, stock options and restricted stock/restricted stock units for the annual retainer award must be selected by each non-management director prior to December 31 of each year or promptly upon initial election to the Board, as the case may be. The award is pro rated for partial year service. The mix of cash, stock options and restricted stock for the annual retainer award is subject to the following assumptions and restrictions:

 

 

 

Meeting Fees. Non-management directors also receive a cash fee of $1,000 for each Board and committee meeting they attend, whether in person or by conference telephone call. The amount of the cash fee increased to $1,500 beginning January 1, 2007.

 

Other. Each director is required to achieve and maintain ownership of at least 15,000 shares of our common stock (with vested but unexercised stock options counted as owned shares) beginning five years from the date of his or her election to the Board. All current directors, with the exception of Ms. Heisz, who was elected as director effective March 1, 2007, meet this stock ownership requirement. Each director is also reimbursed for expenses incurred in attending meetings of the Board and Board committees. Beginning 2004, each director was also able to elect to defer his or her cash compensation through a non-qualified deferral plan. Directors who defer cash compensation may elect to have earnings, or losses, credited to their deferrals as if their deferrals were invested in the various investment options available under our company’s Supplemental Investment Savings Plan, a non-qualified deferred compensation plan. Directors are not credited with “above-market” or “preferential” interest.

 

Additional Compensation for Non-Executive Chairman of the Board. In 2005, we entered into an agreement with Mr. Foster to compensate him separately in his capacity as non-executive Chairman of the Board (the “2005 Agreement”). Mr. Foster will receive a $6 million cash retention bonus at the end of the two year term of the agreement (June 1, 2007) if he remains as the non-executive Chairman of the Board throughout the term. Mr. Foster also receives an annual non-executive Chairman’s fee equal to $650,000 payable in cash and equity-based compensation, plus the standard Board of Director’s annual retainer compensation package comprised of an annual award of cash and equity-based compensation, with an estimated value of approximately $167,000. This combined with his annual non-executive Chairman fee totals $817,000. If Mr. Foster were to select cash as part of the mix of his compensation, such election may not be greater than 40% of his total aggregate annual compensation. See “Compensation Discussion and Analysis — Employment Contracts, Termination of Employment Arrangements and Charge-in-Control Arrangements — Agreements with Kent B. Foster” for additional compensation information relating to Mr. Foster’s agreement. Mr. Foster is retiring from the Board after seven years as Chairman of the Board immediately after the 2007 Annual Meeting. In connection with Mr. Foster’s retirement, the Board has approved that Mr. Foster’s 61,180 and 49,360 unvested options with vesting dates of July 1, 2007 and February 1, 2008, respectively, will vest immediately on June 6, 2007, the date of Mr. Foster’s retirement.

 

Dr. Laurance, who will succeed Mr. Foster as Chairman of the Board, will continue to receive compensation as a non-executive Board member pursuant to the Compensation Plan for Non-Executive Members of the Board of Directors. Dr. Laurance will receive additional compensation in his new role as non-executive Chairman of the Board effective June 6, 2007 pursuant to the Compensation Plan of Non-Executive Chairman of the Board of Directors adopted by the Board on March 27, 2007 (“Non-Executive Chairman Plan”). Under the Non-Executive Chairman Plan, Dr. Laurance will receive additional annual compensation in an amount equal to $250,000 payable in cash and equity (stock options, restricted stock or restricted stock units) awarded under our company’s 2003 Equity Incentive Plan.

2006 Compensation of Non-Management Directors  The following table lists the 2006 non-management director compensation which is comprised of: (1) an annual retainer award paid, based on each of their elections, in cash, stock options, restricted stock, restricted stock units or a combination thereof, (2) meeting fees paid to non-management directors for attending meetings of the Board and Board committees, and (3) the additional compensation for the non-executive Chairman of the Board as discussed above.

 

 

 

 

 

 

Our Board of Directors has standing Audit, Executive and Finance, Governance and Human Resources Committees. Messrs. Spierkel and Murai attend all Board Committee meetings, although they are not designated members of any Board Committees. The following table lists members of the Committees as of the date of the Proxy Statement.

 

 

 

 

In addition, the Board of Directors has made, subject to the election of the director nominees by the stockholders at the Annual Meeting, the following committee assignments to be effective immediately after the Annual Meeting:

 

 

 

Audit Committee — 12 meetings in 2006.  The Audit Committee assists our Board of Directors’ oversight of (1) the integrity of our financial reporting processes and systems of internal controls regarding finance, accounting, legal and ethical compliance, (2) our compliance with legal and regulatory requirements, and (3) the independence and performance of our independent registered public accounting firm and internal audit department. In addition, the Committee is charged with providing an avenue of open communication among our independent registered public accounting firm, management, our internal audit department, and our Board of Directors. The Committee also appoints our independent registered accounting firm, discusses and reviews in advance the scope of and the fees to be paid in connection with the annual audit and reviews the results of the audit with our independent registered public accounting firm, monitors the independence and performance of our independent registered accounting firm, reviews our compliance with applicable major accounting and financial reporting policies, reviews the adequacy of our financial organization, reviews management’s procedures and policies relating to the adequacy of our internal accounting controls and compliance with applicable laws relating to accounting practices and reviews our draft annual report on Form 10-K, quarterly reports on Form 10-Q, and annual financial statements and other key accounting and/or reporting matters, and the activities and recommendations of our internal audit department. The Audit Committee discusses our company’s earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies. A detailed list of the Committee’s functions is included in its charter, a copy of which is attached under Exhibit A and can also be accessed by following the links to “Corporate Governance” under “Investor Relations” on our company’s website at www.ingrammicro.com.

 

Executive and Finance Committee — 5 meetings in 2006.  The Executive and Finance Committee oversees the financial affairs and policies of our company and make decisions requiring the attention of the Board between regularly scheduled meetings of the Board, subject to the limitations set forth in our Bylaws. Under our Bylaws, during the period of time between each regularly scheduled meeting of the Board, management decisions requiring the immediate attention of the Board of Directors may be made with the approval of a majority of the members of the Committee; provided, however, that the Committee shall not have the authority to approve certain delineated items which require the approval of the Board. A detailed list of the Committee’s functions is included in its charter, a copy of which is attached under Exhibit B and can also be accessed by following the links to “Corporate Governance” under “Investor Relations” on our company’s website at www.ingrammicro.com.

 

Governance Committee — 5 meetings in 2006.  The Governance Committee is responsible for developing and recommending to the Board a set of corporate governance principles applicable to our company, and thereafter recommending such changes as it deems appropriate to maintain effective corporate governance. In addition, the Committee is responsible for identifying candidates for election to the Board of Directors, developing and reviewing background information for candidates, making recommendations to the Board regarding such candidates, reviewing and making recommendations to the Board with respect to candidates for directors proposed by shareholders, and recommending for nomination by the Board, members of Board committees, as well as Board committee chair positions. The Committee also reviews and recommends for consideration and approval by the Board, the form and amounts of compensation for non-management directors and oversees the annual self-evaluations of the Board and its committees, as well as director performance and board dynamics.

 

Pursuant to our Corporate Governance Guidelines, Dr. Laurance, due to his position as Chairman of the Governance Committee, was automatically the Lead Director of the Board, and as such, presided at executive sessions of the Company’s non-management directors during fiscal year 2006. Effective March 27, 2007, our Board of Directors amended our Corporate Governance Guidelines to provide that non-management directors shall choose a Lead Director when the Chairman of the Board is not independent of management and that the Chairman of the Board shall perform the duties of the Lead Director when the Chairman is independent of management. Dr. Laurance continues to be our Lead Director and will act in such role when he becomes Chairman of the Board after Mr. Foster retires on June 6, 2007.

 

A detailed list of the Committee’s functions is included in its charter, a copy of which is attached as Exhibit C and can also be accessed by following the links to “Corporate Governance” under “Investor Relations” on our company’s website at www.ingrammicro.com.

 

Human Resources Committee — 5 meetings in 2006.  The Human Resources Committee assists the Board in overseeing and establishing the compensation of all executive officers and administering all stock-related and

long-term executive incentive plans. The Committee reviews and reports to the Board on our key strategic and operational human resource issues, ensuring that investments in human assets provide maximum return to all partners — associates, customers, shareholders and vendors. The Committee’s oversight areas include executive compensation strategy, succession planning processes and key leader succession planning, and work environment assessment and improvement. A detailed list of the Committee’s functions is included in its charter, a copy of which is attached as Exhibit D and can also be accessed by following the links to “Corporate Governance” under Investor Relations” on our company’s website at www.ingrammicro.com. Additional information on the Committee’s processes and procedures for consideration of executive compensation are addressed in the Compensation Discussion and Analysis below.

 

Code of Conduct.  Our code of conduct applies to all members of the Board of Directors, officers appointed by the Board of Directors and other Ingram Micro associates and codifies our commitment to the highest standards of corporate governance. If we make any amendment to the code of conduct or grant any waiver, including any implicit waiver, from a provision of the code of conduct to our Chief Executive Officer, Chief Financial Officer or Controller, we will disclose the nature of the amendment or waiver at www.ingrammicro.com or on a current report on Form 8-K.

 

Corporate Governance Guidelines.  In March 2007, the Board of Directors amended our Corporate Governance Guidelines to, among other things, remove the mandatory retirement age for directors, and provide that non-management directors shall choose a Lead Director when the Chairman of the Board is not independent of management and that the Chairman of the Board shall perform the duties of the Lead Director when the Chairman is independent of management. Effective corporate governance that ensures management follows the highest ethical standards is not a new concept to our company. It is an important principle that is embraced at all levels of our company, beginning with how our Board operates. Members of our Board of Directors are kept informed about our business through discussions with the Chief Executive Officer, President and Chief Operating Officer, Chief Financial Officer and other key members of management, by reviewing materials provided to them, and by participating in meetings of the Board of Directors and its committees. Our Board members provide feedback to management on a regular basis and meet in executive session, without any members of management, at each regular meeting.

 

Our Corporate Governance Guidelines address important corporate governance policies and procedures, including those relating to (1) composition of the Board and membership criteria; (2) director qualifications (such as independence, simultaneous service on other Boards and conflicts of interests); (3) Board member responsibilities (including attendance at annual shareowner meetings); (4) establishment of Board agenda; (5) establishment of a lead director position; (6) regularly scheduled meetings of non-management Board members; (7) Board size; (8) Board committees; (9) Board member access to management and independent advisors; (10) director compensation; (11) director orientation and continuing education; (12) management evaluation and management succession; and (13) annual performance evaluation of the Board, its committees, and the individual Board members.

 

Our Board expects to consider further amendments to these corporate governance guidelines from time to time as rules and standards are revised and/or finalized by various regulatory agencies, including the SEC and the NYSE, and to address any changes in our operations, organization or environment.

 

The Board of Directors adopted director independence standards as part of our Corporate Governance Guidelines. Pursuant to the Guidelines, the Board undertook its annual review of director independence in March 2007. During this review, the Board considered any transactions and relationships between each director or any member of his or her immediate family and our company and its subsidiaries and affiliates, including holdings of stock of our company by Martha, John and Orrin Ingram and certain arms-length commercial relationships between Ingram Micro and Wells Fargo (where Mr. Atkins serves as Chief Financial Officer) which are immaterial in amount and nature to both Wells Fargo and Ingram Micro and did not create conflicts of interests under Ingram Micro’s Code of Conduct (including a sublease between Ingram Micro Canada and a Wells Fargo subsidiary in Canada and ordinary course lease financing

provided by a Wells Fargo finance subsidiary to certain of Ingram Micro’s end-user customers pursuant to which Ingram Micro US receives immaterial customary referral fees).

 

The purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that the director is independent.

 

As a result of this review, the Board determined that all of the directors nominated for election at the annual meeting, as well as all other directors serving on the Board are independent of our company and its management under the standards set forth in the Corporate Governance Guidelines, as well as under Audit Committee independence requirements of the SEC and the NYSE, with the exception of Kent Foster, Gregory Spierkel and Kevin Murai. Messrs. Foster, Spierkel and Murai are considered inside directors because of either their former employment or current employment (in the case of Messrs. Spierkel and Murai) as a senior executive of our company. All of the members of the Human Resources, Audit and Governance Committees are independent.

 

Our Board of Directors has determined that each member of the Audit Committee: (1) meets the independence criteria prescribed by applicable law and rules of the SEC for Audit Committee membership and (2) is an “independent director” within the meaning of NYSE listing standards and the standards established by our company. Each member of the Audit Committee also meets the NYSE’s financial literacy requirements. No member of our Audit Committee serves on more than three audit committees of public corporations.

 

In addition, the Board of Directors has designated Michael Smith as an “audit committee financial expert” as such term is defined in Item 401(h) of Regulation S-K promulgated by the SEC, and has determined that he also meets the NYSE’s professional experience requirements through experience gained in his previous positions as former Chairman of the Board and Chief Executive Officer of Hughes Electronics Corporation, Vice Chairman of Hughes Electronics and Chairman of Hughes Aircraft Company, as Senior Vice President and Chief Financial Officer of Hughes Electronics, and in nearly 20 years with General Motors Corporation in a variety of financial management positions.

 

General Criteria and Process  In identifying and evaluating director candidates, the Governance Committee does not set specific criteria for directors. As expressed in the Governance Committee charter, in nominating candidates, the Governance Committee shall comply with the requirements of our company’s Bylaws and take into consideration such other factors as it deems appropriate. These factors may include judgment, skill, diversity, experience with businesses and other organizations of comparable size, the interplay of the candidate’s experience with the experience of other Board members, and the extent to which the candidate would be a desirable addition to the Board and any committees of the Board. The Governance Committee may use and pay for assistance from consultants, including obtaining background checks, and advice from outside counsel, to assist its review and evaluation.

 

Shareholder Nominations  Shareholders who wish to recommend nominees for consideration by the Governance Committee may submit their nominations in writing to our Corporate Secretary at the address set forth below under “Annual Report.” The Governance Committee may consider such shareholder recommendations when it evaluates and recommends nominees to the Board of Directors for submission to the shareholders at each annual meeting. In addition, shareholders may nominate directors for election by complying with the eligibility, advance notice and other provisions of the policy. Under the policy, the shareholder must provide timely notice of the nomination to us to be considered by the Governance Committee in connection with our company’s next annual meeting of shareholders. To be timely, the Corporate Secretary must receive the shareholder’s proposal and the information required in the policy on or before December 30th of the year immediately preceding such annual meeting. A copy of the policy is available on the Investor Relations section of our company’s website, www.ingrammicro.com.

 

Any interested person who desires to communicate with our company’s non-management directors may so do as follows:

 

 

Our code of conduct, corporate governance guidelines, and shareholder nominations policy and committee charters are accessible by following the links to “Corporate Governance” on our company’s website at www.ingrammicro.com. Furthermore, upon request to our Corporate Secretary at the address set forth below under “Annual Report,” we will provide copies of our code of conduct, corporate governance guidelines, shareholder nominations policy and committee charters without charge.

 

 

The following table shows the amount of common stock beneficially owned (unless otherwise indicated) by our directors, the executive officers named in the Summary Compensation Table found on page 27 of this proxy statement, our directors and executive officers as a group, and beneficial owners of more than 5% of our common stock. Except as otherwise indicated, all information is as of January 19, 2007. At January 19, 2007, there were 169,698,921 shares of common stock outstanding.

 

 

 

 

 

 

 

Based upon a review of filings with the SEC and/or written representations that no other reports were required, we believe that all of our directors and executive officers complied during fiscal year 2006 with the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, except for one report for each of our directors (other than Ms. Heisz who joined the Board on March 1, 2007) and executive officers covering one equity-based award on January 3, 2006 (reported on January 12, 2006) for each that due to our administrative error was untimely filed on behalf of each of them.

 

We were split-off from our former parent, Ingram Industries, in November 1996. We agreed to register at various times shares of common stock issuable upon the exercise of certain Ingram Industries options and stock appreciation rights held by current or former employees or directors of Ingram Industries, its former subsidiary Ingram Entertainment or their subsidiaries, which options and stock appreciation rights were converted into options to purchase shares of our common stock in 1996. We have completed several registrations with respect to shares of common stock issuable upon exercise of these rollover stock options. The registration statement that we have agreed to keep current is described below.

 

Registration statements being kept current.  We filed a registration statement on Form S-3 covering 10,949,298 shares of common stock that was declared effective on November 20, 1997. It relates to our offer and sale of up to 2,485,944 shares of common stock upon the exercise of options under the Ingram Micro Rollover Option Plan (which options have all expired pursuant to the terms of such option awards) and up to 250,000 shares under the Ingram Micro Amended and Restated 1996 Equity Incentive Plan. It also relates to the offer and sale by our 401(k) plan, the Ingram Thrift Plan, and the Ingram Entertainment Thrift Plan of a total of 8,213,354 shares of our common stock (resulting from the conversion of shares of Class B common stock held by these plans). We have agreed to keep the registration statement current.

 

The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Ingram Micro filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent we specifically incorporate this Report by reference therein.

 

The Audit Committee of the Board of Directors has furnished the following report.

 

The charter of the Audit Committee of the Board of Directors of Ingram Micro Inc. (“Ingram Micro”) specifies that the purpose of the Audit Committee is to discharge its responsibilities as set forth in Ingram Micro’s Amended and Restated Bylaws and to assist the Board’s oversight of:

 

 

 

In addition, the Audit Committee is charged with providing an avenue of open communication among Ingram Micro’s independent registered public accounting firm, management, internal audit department, and Board of Directors.

 

The Audit Committee expects to consider further amendments to its Charter from time to time as rules and standards are revised and/or finalized by various regulatory agencies, including the SEC and the NYSE, and to address any changes in Ingram Micro’s operations, organization or environment.

 

 

 

Members of the Audit Committee
of the Board of Directors of Ingram Micro Inc.

 

Joe B. Wyatt (Chair)
Leslie S. Heisz*
John R. Ingram
Dale R. Laurance
Michael T. Smith
* Member of the Audit Committee since March 1, 2007

 

The following Report of the Human Resources Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Ingram Micro filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent we specifically incorporate this Report by reference therein.

 

The Human Resources Committee of the Board of Directors has furnished the following report.

 

The Human Resources Committee has reviewed and discussed the “Compensation Discussion and Analysis” section of the proxy statement with management of Ingram Micro, and based on this review and discussion, recommended to the Board of Directors of Ingram Micro that such “Compensation Discussion and Analysis” be included in Ingram Micro’s proxy statement for the 2007 annual meeting of shareholders for filing with the SEC.

 

Members of the Human Resources Committee
of the Board of Directors of Ingram Micro Inc.

 

Michael T. Smith (Chair)
Howard I. Atkins
Orrin H. Ingram
Linda Fayne Levinson
Gerhard Schulmeyer

 

Committee Composition.  The Human Resources Committee (the “Committee”) is comprised entirely of independent directors. Its primary responsibilities are to set all executive officer compensation levels. In doing so, it establishes Ingram Micro’s executive compensation strategy, approves program designs, establishes incentive goals, specifically reviews and approves all cash and equity compensation for executive officers, and monitors the use of equity for compensation program purposes at all organization levels. The Committee also reviews a range of broad human resource programs implemented by Ingram Micro (such as the management development and succession planning programs), which comprise approximately 20% of its work.

 

Outside Advisors.  The Committee engages outside advisors to assist it. The primary executive compensation advisor is Fredric W. Cook & Co. (“Cook”), an independent consulting firm, which reports solely to the Committee. Cook has also reviewed Board compensation matters at the request of the Governance Committee of Ingram Micro. In addition, management engaged Hewitt Associates LLC (“Hewitt”), an independent human resources consulting firm, to provide market survey data on various executive compensation components, programs, and trends.

 

Management Input to the Committee.  The Committee frequently requests the help of management in accomplishing its work, including requests of specific analyses to assist with decision making. The Ingram Micro Human Resources, Finance and Legal departments work with the Committee Chair to help set meeting agendas and to coordinate the distribution of materials to the Committee in advance of its meetings. Generally, our Chief Executive Officer; President and Chief Operating Officer; Executive Vice President and Chief Financial Officer; Senior Vice President, Secretary and General Counsel; and Senior Vice President for Human Resources attend committee meetings. In addition, the Committee frequently meets in executive session, when no members of management are present. Also, our Chief Executive Officer will make specific recommendations on the pay levels of subordinate executive officers and can make suggestions for the establishment of new or modification of existing executive compensation program designs. However, the Committee makes all final decisions regarding executive compensation programs.

 

Executive Compensation Objectives.  Ingram Micro operates in an extremely competitive and rapidly changing high technology distribution and service industry. The Committee believes that the compensation programs for the executive officers are designed to attract, motivate and retain talented executives responsible for Ingram Micro’s long-term success. The programs are designed within a framework based on the achievement of designated financial targets and to align the financial interests of executive officers with those of shareowners by providing appropriate long-term equity-based incentives. The broad objectives of the executive compensation program established by the Committee are:

 

 

The Committee has approved a compensation program for executive officers using the following primary elements:

 

 

The Committee believes that this multi-component approach best serves the interest of Ingram Micro and its shareholders. It enables Ingram Micro to meet the requirements of the highly competitive business environment for executive talent, while aligning executive officer compensation with shareholders’ short and long-term interests. In general, we seek to encourage and reward both profitable growth and operational efficiency. Our incentive plans have goals that support these objectives.

 

A high proportion of our executive officers’ current compensation is “at risk.” The only guaranteed forms of officer compensation are base salaries and benefit plans generally available to all associates. The remainder of compensation must be earned through performance.

 

Competitive pay objectives for each major element of pay (base, annual bonus, and long-term stock-based awards) and total compensation is targeted at market median levels. Targeting pay at market allows Ingram Micro to hire and retain the right level of executive talent.

 

The Committee benchmarks benefits and perquisites and other employment termination provisions periodically; it seeks to keep them modest and below market levels.

 

Factors in Designing and Determining Levels of Executive Compensation.  The primary focus in setting pay levels is the competitive market defined as the market median; the primary basis for making payouts is achievement of results aligned with shareholder interests. The Committee has established a program designed to keep it abreast of emerging trends, and asks its consultant to report on these trends on a regular basis. This includes the use of equity compensation — including the prevalence of specific incentive vehicles; the goals used in incentive programs; and the relative importance of each component of pay. In some cases, officer incentive opportunities have been adjusted from market for internal consistency, but market practice is pre-eminent in setting overall compensation levels. Performance versus goals is the most important factor in making actual awards.

 

Benchmarking.  The Committee benchmarks executive officer compensation annually. Ingram Micro management engages an executive compensation consulting firm to conduct a total compensation study of executive officers. In 2006, Hewitt collected and reported the survey data which was then reviewed by Cook. Cook provided the Committee with its own analysis of conclusions to be drawn from the data, and advised the Committee on setting appropriate compensation levels for Ingram Micro’s executive officers for 2007. The benchmark effort examined the competitiveness of Ingram Micro’s executive compensation programs in total and by element (base pay, annual incentives, long-term incentives, benefits, and perquisites). In doing so, the value of each of Ingram Micro’s executive pay elements was compared to information available from survey databases for a selected group of companies drawn from the FORTUNE 500.

 

The Committee believes this benchmark group, which is broader than Ingram Micro’s direct business competitors, represents the relevant labor market in recruiting for executive talent. The FORTUNE 500 group contained 130 non-financial companies in Hewitt’s database with the following characteristics:

 

 

On average, Ingram Micro’s executive compensation is targeted to competitive levels; actual pay versus market varies by individual based on performance and other compensable factors.

 

The Committee believes the design of the compensation program and the amounts paid are appropriate and reflect the objectives set forth earlier: alignment with shareholder interests; market competitive pay; modest use of benefits and perquisites; prudent use of equity compensation; and effective tax and accounting designs.

 

The elements of executive officer compensation are annual base salary, annual bonus, long-term equity-based incentives, benefits and perquisites.

 

Base Salary.  The process for the review of executive officer base salaries include:

 

 

For 2006, management recommended a salary increase budget of 3.8% for named executive officers base salary increases. Actual salary increases were greater than budget for our Chief Executive Officer, Chief Operating Officer, and Chief Financial Officer because the incumbents were newly promoted to these positions in 2005 and their salaries were substantially below market median. For these three executives, the average increase was 6.6%. The average 2006 base salary increase for the named executive officers, as a group, was 5.4%.

 

Annual Incentives.

 

Intent of the Annual Incentive Program.  Ingram Micro’s 2006 annual executive incentive award program provided for performance-based bonuses for executives as well as for management-level associates. The 2006 bonus program was based on Ingram Micro’s performance relative to financial goals designed to encourage both profitability and the efficient use of capital, thus improving shareholder value. The annual program is intended to qualify for tax deductibility under Section 162(m) of the Internal Revenue Code, as a performance-based plan.

 

Award Size Determination.  Each executive officer position has an incentive target that is established as a percentage of base salary. The percentage reflects median market practice. For executive officers in 2006, this percentage ranged from 45% up to 90% (for our Chief Executive Officer). For executive officers in 2007, this percentage range was changed to 45% up to 100% (for our Chief Executive Officer). If a threshold level of profit performance is not met, the incentive award is zero. The maximum award for significant overachievement of performance against goals for the executive officers is two times their respective target awards.

 

Performance Metrics, and Weightings.  For executive officers, the two performance metrics of the 2006 annual incentive plan were pretax earnings and working capital days. The use of those two metrics encourages executives to focus on performance based on profitable growth and capital use. In 2006, the earnings component was weighted more heavily than the working capital component because the Committee believed there were more opportunities to improve performance on earnings than working capital. For 2007, the financial metrics of pretax earnings and working capital days will be retained for participants in most countries and regions. However, for 2007 in the European region countries, our company will use a single financial metric (economic profit) in lieu of pretax profit and working capital days. Management will be evaluating whether economic profit will better take into account the opportunity cost of invested capital, while still driving behavior that optimizes earnings.

The Impact of Individual, Business Unit, and Corporate Performance and Weightings.  Corporate officers are rewarded on overall corporate performance (consolidated earnings and working capital days plus a component for individual country level performance). Regional presidents are rewarded on the overall performance of their respective region (consolidated regional earnings and working capital days plus a component for individual country level performance).

 

Committee Exercise of Discretion.  The Committee has the ability to make discretionary adjustments to awards under the annual incentive plan, but generally exercises this discretion only in exceptional circumstances when performance was impacted because of events outside the control of management, such as changes in accounting standards, or to recognize and reward exceptional performance. In 2006, the Committee exercised its discretion to exclude certain project-related expenses in the calculation of the 2006 awards for the regional executives.

 

Actual Performance Relative to Goals and Actual Earned Annual Incentives.  For fiscal year 2006, Ingram Micro exceeded performance relative to goals and the named executive officers who are our corporate officers received an annual bonus equal to 108.1% of their respective target bonus awards. The North American, European, Latin American and Asia Pacific Regions achieved performance relative to goals and each of our regional presidents received annual bonus awards of 129.3%, 70.6%, 158.1%, and 136.0% of their target awards, respectively.

 

The primary purpose of providing annual incentives is to focus the executive team on the actions necessary to achieve Ingram Micro’s annual business operating plan.

 

Long-Term Incentives.  Long-term incentives are granted under the Ingram Micro Inc. 2003 Equity Incentive Plan (the “2003 Plan”), which was approved by shareholders that year; and the Ingram Micro Inc. Executive Incentive Plan (“EIP”) which was approved by shareholders in 2002. The EIP in conjunction with the 2003 Plan permit the granting of stock options, SARs, restricted stock, performance shares, and cash awards.

 

Ingram Micro granted two types of long-term equity-based incentives to the executive officers in 2006: stock options with a three-year vesting schedule and a ten-year term, and performance shares with a three-year performance measurement period. The Committee approved all the equity-based awards to executive officers at Committee meetings prior to their 2006 grant dates.

 

Prior to 2006, our company used a combination of three-year performance-based cash long-term incentive awards (“Cash LTIP”) and stock options. Beginning in 2006, performance shares were introduced in lieu of cash awards to continue Ingram Micro’s focus on growing shareowner value, conserving cash and promoting executive stock ownership.

 

 

Award Size Determination.  The Committee establishes the eligibility criteria for executive officers and other key management personnel for these plans. For each executive officer, there is a dollar value guideline for each salary grade that reflects competitive long-term incentive grant levels targeting the market median. For the 2006 grants, the dollar value guidelines for executive officers ranged from 120% to 290% of their respective salary grade midpoints. For 2007, this percentage range was changed to 120% up to 350% of their respective salary grade midpoints to reflect changes in the relative weight of grant types as well as market data. The dollar values are

converted to options using a modified Black Scholes methodology, and into performance shares based on stock price. Generally, executive officers receive an annual competitive long-term incentive grant based on the competitive market level for their positions.

 

Awards Timing and Determination.  Based on the guidelines determined for each executive officer position, the Chief Executive Officer recommends the number of options and performance shares to be granted individually to the executive officers and the Committee determines the grant for the CEO. Historically and through 2005, stock option grants were made to executive officers and key management employees upon initial employment or promotion, with semi-annual grants in each successive February and July. In 2006, the semi-annual grant dates for stock options were set at the first trading day in January and July. Performance shares (similar to the Cash LTIP in the past) are granted on the first trading day of January for a three year term. Performance shares will be earned if Ingram Micro achieves pre-established financial performance goals over the three-year measurement period. Similar to the annual executive incentive plan, there is a threshold performance level for each metric; if these thresholds are not met, there will be no award earned. The maximum award opportunity is three times the target award. Effective with the 2007 performance share grants, the maximum award opportunity was reduced to two times the target award to better reflect competitive market practice. Commencing in 2007, a single annual grant date for all stock options was set as the first trading day in January, replacing the former two semi-annual grant dates in January and July, and is expected to remain on this date each year going forward.

 

Payments of awards under past Cash LTIP programs will be based on Ingram Micro’s performance against financial metrics during each measurement cycle and made following the conclusion of each cycle. Although the performance cycle for the 2004-2006 Cash LTIP program has ended, this 2004-2006 program’s financial metrics are based upon Ingram Micro performance relative to an identified peer group. The information necessary to finalize these calculations has been delayed due to late reporting by one of the peer companies and will not be available until after the publication of this proxy. The performance for the June 2005-2006 program has been calculated and approved by the Committee for payment to eligible participants at an achievement of 82.6%. This payout represents the minimum amount that would be paid under either the 2004-2006 Cash LTIP program or the June 2005-2006 program. In accordance with the June 2005-2006 program, any participant who is also a participant in the 2004-2006 Cash LTIP program is eligible to receive either the greater of the award payment earned under the 2004-2006 Cash LTIP or the June 2005-2006 program. Rather than delay payment, management, with the Committee’s approval, has agreed to make the minimum payment to participants who are eligible under both programs under the terms of the June 2005-2006 program. Management does not have access to financial results of the comparator company at this time and it cannot assess the likelihood of a payment under the 2004-2006 Cash LTIP program being met. However, in the event that a payment is required and such payment would be higher than under the June 2005-2006 program, the Committee will review and approve such additional or incremental payments as required under the programs.

 

The Committee has the ability to make discretionary adjustments to awards under the Cash LTIP program and for performance shares, but expects to exercise this discretion only in exceptional circumstances, outside of the control of management.

 

Our company has stock ownership guidelines. These guidelines currently require that executive officers hold between three and six times their base salary in Ingram Micro stock, based on salary grade level after five years. The structure and level of the guidelines is being reviewed in 2007.

 

We do not seek to use benefit programs or perquisites as a primary compensatory element, or as an enhancement to executive officer compensation. Benefits for named executive officers are generally proportionate to those of other management employees, including retirement and deferred compensation.

 

For U.S. executives, Ingram Micro provides a 401(k) Investment Savings Plan with company matching contributions as the only qualified retirement plan. In addition, Ingram Micro offers all US Highly Compensated Employees (“HCEs”), as defined annually by the Internal Revenue Service (“IRS”), an opportunity to participate on

a voluntary basis in the Supplemental Investment Savings Plan (“Supplemental Plan”), a non-qualified deferred compensation plan. In general, the Supplemental Plan operates to restore 401(k) plan benefits, including company matching contributions that were reduced or limited by IRS regulations.

 

Mr. Murai is a Canadian citizen and does not participate in the Ingram Micro-sponsored 401(k) plan or the Supplemental Plan. As a result, Ingram Micro has entered into a deferred compensation arrangement with Mr. Murai that provides him the same opportunity to defer compensation and receive company matching contributions as other management employees.

 

In general, our executive officers participate in Ingram Micro’s broad-based health and welfare, life insurance, disability and retirement programs for management employees. Perquisites we provide to our named executives are reported in further detail in footnote 6 to the “All Other Compensation” column in the Summary Compensation Table on page 27.

 

Change-in-Control Agreements.  Ingram Micro does not have any written or unwritten arrangements with any executives that provide for payments at, following, or in connection with a change in control of Ingram Micro. Upon a change in control, the Committee at its sole discretion may waive, shorten or terminate any restriction period imposed on stock options, performance shares or awards under the 2005-2007 Cash LTIP.

 

Agreements with Kent B. Foster.  Mr. Foster retired as our Chairman and Chief Executive Officer and, upon his re-election to the Board at the 2005 annual meeting of shareholders, became our non-executive Chairman of the Board, effective June 1, 2005.

 

2000 Agreement.  During the time that Mr. Foster served as our Chairman and Chief Executive Officer, through June 1, 2005, the employment agreement that we entered into with Mr. Foster in March 2000 (the “2000 Agreement”) remained effective. The initial term of this agreement ran through the end of 2002, but was automatically extended for successive additional periods of one year.

 

2005 Agreement.  The Board approved that effective June 1, 2005, Ingram Micro and Mr. Foster mutually terminate the 2000 Agreement, with no further compensation or rights accruing or due to Mr. Foster under the 2000 Agreement. We entered into a new agreement with Mr. Foster effective June 1, 2005 for his new role as non-executive Chairman of the Board (the “2005 Agreement”).

 

The 2005 Agreement provides that all stock options previously awarded to Mr. Foster will continue to vest according to their original terms and be exercisable until the earlier of (i) the expiration date of such option grant or (ii) the fifth anniversary of the date Mr. Foster ceases to perform services for our company or its Board of Directors. Mr. Foster’s 2005 annual incentive bonus was paid on a pro-rata basis through June 1, 2005, at the time all other annual incentive bonuses for 2005 were paid to eligible executives.

 

The 2005 Agreement further provides Mr. Foster’s interest in all existing long-term executive cash incentive programs (the 2003-2005 Cash LTIP, the 2004-2006 Cash LTIP, the June 2005-2006 Cash LTIP, and the 2005-2007 Cash LTIP under the Ingram Micro Inc. Executive Incentive Plan) will continue to accrue in full irrespective of whether Mr. Foster completes his term as non-executive Chairman of the Board of our company and will be paid to Mr. Foster at the same time as payments are made (if any) to other participants.

 

Payments under these programs will be based on our company’s achievement against pre-established objective performance measures over a three-year period. Minimum performance standards have been established below which no payments will be made. Our company made no payments under the 2003-2005 Cash LTIP to any of the participants. As discussed above, performance under the 2004-2006 Cash LTIP cannot be determined until one of the comparator companies publishes its financial results. Payment, if any, under the 2004-2006 Cash LTIP will be paid as soon as practical after such determination is made. Payment under the June 2005-2006 Cash LTIP in the amount of $683,267 was approved by the Committee. Payment under the 2005-2007 Cash LTIP (if any), will be made following the close of fiscal year 2007.

 

Under the terms of the 2005 Agreement, Mr. Foster is entitled to receive a $6 million cash retention bonus if he remains as the non-executive Chairman of the Board through June 1, 2007. Mr. Foster also receives an annual non-

executive Chairman’s compensation package comprised of an annual award of cash and equity-based compensation with an estimated value of approximately $650,000, plus the standard Board of Director’s compensation package comprised of an annual award of cash and equity-based compensation, with an estimated value of approximately $167,000.

 

Under the 2005 Agreement, if our company chooses to terminate the 2005 Agreement prior to June 1, 2007 other than for cause, Mr. Foster will be entitled to receive in cash: (i) the full amount of the retention bonus, (ii) all accrued and unpaid chairman’s and director’s compensation to which he is entitled, and (iii) all remaining amounts of such annual chairman’s compensation to which he would have been entitled if he had served through the term of the Agreement. If Ingram Micro terminates the 2005 Agreement for cause, Mr. Foster will be entitled to receive in cash all accrued and unpaid chairman’s and director’s compensation.

 

Under the 2005 Agreement, if Mr. Foster voluntarily retires before June 1, 2007 and ceases to be the non-executive chairman, he will receive: (i) all accrued and unpaid chairman’s and director’s compensation and (ii) a pro-rated portion of the retention bonus. If Mr. Foster dies or becomes disabled before the end of the term, his estate will receive: (i) all accrued and unpaid chairman’s and director’s compensation and (ii) the full amount of the retention bonus.

 

Since Mr. Foster will have completed his required two-year term of service under the 2005 Agreement upon his retirement as non-executive Chairman of the Board effective June 6, 2007, Mr. Foster will receive the $6 million cash retention bonus pursuant to the terms of the 2005 Agreement.

 

Executive Officer Severance Policy.  In October 2003, the Committee adopted the Executive Officer Severance Policy (the “Severance Policy”). The Severance Policy applies to our Chief Executive Officer, and our executive officers elected by the Board of Directors who report to either the Chief Executive Officer or Chief Operating Officer (which include all the named executive officers), and to any other executive officers designated by our Board of Directors.

 

Subject to execution of a release and covenant agreement satisfactory to us, eligible executive officers will be entitled to the severance benefits described below in the event their employment is terminated by us without “cause” as determined under the Severance Policy.

 

The executive officer will receive an aggregate severance benefit equal to the greater of (x) the sum of the executive officer’s annual base salary and target annual bonus, each as in effect on the effective date of termination; and (y) the product of one-twelfth times the sum of the executive officer’s annual base salary and target annual bonus, each as in effect on the effective date, multiplied by the number of the executive officer’s full years of employment with our company (the “employment years”). The severance benefit will be payable in equal installments from the effective date of termination over the greater of (x) 12 months or (y) that number of months equal to the number of employment years (such greater period, the “Continuation Period”).

 

The executive officer will also be entitled to an amount in cash equal to executive officer’s actual annual bonus determined for the year in which the Continuation Period begins, prorated to reflect the executive officer’s period of employment in such year. Such payment will be otherwise calculated and paid on the same basis, and at the same time, as the annual bonus payments are made to actively employed Ingram Micro executive officers.

 

The executive officer and his or her dependents may continue to participate, at the executive officer’s expense, in company-sponsored health and welfare programs through the Continuation Period. The executive officer will also be entitled to participate in an outplacement program, paid for by us, with a maximum cost not to exceed $20,000.

 

Any unvested stock options, restricted stock awards, or other stock-based incentive compensation awards held by the executive officer will be cancelled on the effective date of termination. Any such vested awards will be governed by the terms of the plan and award agreements for each award. The executive officer’s participation in our Cash LTIP programs shall cease on termination of employment; however, payments of earned awards through the date of termination will be made in accordance with the terms of the programs and if they are made, at the same time as to other participants.

 

Relocation Assistance Arrangements.  We have an International Expatriate Assignment Policy applicable to all associates working for Ingram Micro who are transferred from their country of permanent residence and placed on an international assignment for a specified period of time and whom management has approved to be covered by this policy. We generally provide assistance relating to such relocation, including travel costs, home leave for the

associate and the associate’s family, reimbursements for necessary work and residency permits, disposition of home country automobile, transportation and storage of household goods and personal effects, relocation and housing assistance, reimbursements for customary and reasonable transaction expenses, dependent education costs, and tax preparation services.

 

In addition, Ingram Micro’s International Assignment Tax Equalization Policy is intended to eliminate tax inequities or benefits that normally result from accepting an expatriate foreign assignment. Ingram Micro associates covered under this policy will be provided tax equalization benefits. Accordingly, such associate will not recognize any income tax-related financial losses or gains as a result of an international assignment. In order to ensure that the associate pays no more or no less tax as a result of an international assignment, the associate will be responsible for a “stay-at-home” tax liability, an estimate of the home country tax the associate would have paid had he or she remained in the home country. To assist the associate in meeting the stay-at-home tax liability, an estimated amount of tax is withheld from the associate’s pay each pay period (hypothetical tax). In general, if upon final determination of the associate’s actual stay-at-home tax for a given tax year, the total actual stay-at-home tax exceeds the hypothetical tax that was withheld from the associate’s pay for that tax year, the associate will reimburse Ingram Micro for the difference. If the actual stay-at-home tax is less than the associate’s hypothetical tax withheld, Ingram Micro will reimburse the associate for the difference.

 

We have provided relocation assistance to each of our named executives other than Mr. Humes under one or both of these policies. In addition to these general benefits, we also provided to Mr. Spierkel a $400,000 relocation “sign-on” bonus, including tax gross-up in 2004, which would have been forfeited in full to Ingram Micro if Mr. Spierkel voluntarily terminated his employment with Ingram Micro or be terminated for cause within three years from the bonus payment date.

 

2001 Executive Retention Agreements with Named Executive Officers.  We entered into executive retention agreements in 2001 with each of Messrs. Spierkel, Murai and Koppen and amended Mr. Koppen’s agreement in 2003 (the “Retention Agreements”). These agreements as amended provided that if the executive remained employed by us through March 1, 2006, the executive would be entitled to a lump sum cash retention payment of $2.5 million. The executive is not entitled to receive any payment if his employment is (1) terminated by the executive’s resignation for any reason other than his disability prior to March 1, 2006, or (2) terminated by us for cause or for not accepting a transfer of his principal office location to our then corporate headquarters or any of our then regional headquarters, prior to March 1, 2006.

 

Since these contingencies for non-payment did not occur and Messrs. Spierkel, Murai and Koppen remained employed in good standing with Ingram Micro through March 1, 2006, they were entitled to receive such lump sum cash retention payments. However, pursuant to Ingram Micro’s agreement with Mr. Koppen, the Committee at its discretion, deferred payment of the award to Mr. Koppen until the year Mr. Koppen’s employment with Ingram Micro terminates, or solely at the Committee’s election, to an earlier date. Mr. Koppen’s award will be credited with earnings at 10% per year, compounded daily, until paid. This above market interest rate was deemed appropriate by the Committee in recognition of the fact that Mr. Koppen was entitled to receive payment in March 2006 under the terms of the Retention Agreements and that the Committee at its sole discretion took action to delay said payment.

 

Ingram Micro has no other special, one-time, nonrecurring, or other compensation payments or arrangements with any named executive officer.

 

It is Ingram Micro’s practice to attempt to ensure the deductibility of compensation to the degree possible under Internal Revenue Code Section 162(m). Executive officer incentive awards (annual bonus and long-term incentives) are generally performance-based in accordance with the requirements of Section 162(m), but the Committee may decide to forgo 162(m) deductibility where there is a compelling business rationale and the cost impact is deemed not to be material.

Base salary is set at median market levels and may in the future exceed the Section 162(m) limit for deductibility. Ingram Micro reserves the right to provide non-deductible compensation in the future as deemed necessary or appropriate to meet Ingram Micro’s needs. The payments made to Messrs. Spierkel and Murai in March 2006 under the terms of the 2001 Executive Retention Agreements are not deductible above the 162(m) limits. In addition, payments made to named executive officers under the June 2005-2006 Cash LTIP likely are not deductible above the 162(m) limits. The Committee took this into consideration in determining the compensation for the named executive officers.

 

None of the members of the Committee had any “interlock” relationship to report during our fiscal year ended December 30, 2006.

 

 

The following table sets forth information concerning total compensation earned or paid to our Chief Executive Officer, Chief Financial Officer and our three other most highly compensated executive officers who served in such capacities as of December 30, 2006 (the “named executive officers”) for services rendered to us during the fiscal year ended December 30, 2006.

 

 

 

 

 

The following table provides information relating to plan-based awards granted to the named executive officers during the fiscal year ended December 30, 2006.

 

 

 

 

 

The following table provides information relating to outstanding equity awards held by the named executive officers at fiscal year end, December 30, 2006.