CEO of Ingram Puts His Money Where His Job Is
Ingram Micro Inc., the No. 1 personal-computer distributor, said Chairman and Chief Executive Jerre Stead bought 1 million shares of company stock, which he plans to keep for the “foreseeable future.”
Stead bought the stock by using options, a first for the CEO of the Santa Ana-based company. Drawing from his own money, Stead bought the shares at $18 on Dec. 24. He now owns 1.2 million shares of the company’s common stock, Ingram officials said Monday.
The news of Stead’s purchase comes less than a week after the company said that fourth-quarter earnings would fall short of forecasts because of slowing sales. The company released the earnings estimates after the market’s close Dec. 22, but its stock still fell 20%, or $9.25 a share, in New York Stock Exchange trading. The following day, Ingram shares fell another 8.3%, closing at $33.94. The stock traded as high as $54.63 three months ago.
On Monday, Ingram’s shares rose 13 cents to $34.50.
“Stead has advised the company that he intends to hold the shares with no plans to sell in the foreseeable future,” Ingram said in a statement.
Stead became chairman and CEO of Ingram in August 1996. At the time, the company agreed to grant him options to buy 3.695 million Ingram shares at the initial public offering price of $18.
After this month’s sale, Stead will retain options for nearly 2.7 million Ingram shares; the options expire between 2004 and 2006, company officials said.
Analysts say Stead’s move on Monday is an effort to boost confidence in the company’s stock and in its future.
Under his employment agreement with Ingram, Stead gets no salary or bonus during the vesting period of his company stock options. But he and his wife do have lifetime health care coverage.
In last week’s warning, Ingram said it expected a profit of $73 million to $75 million, or 48 cents to 50 cents a share, in the quarter ending Saturday. Ingram had been expected to earn 56 cents, according to analysts surveyed by First Call Corp.
The company is scheduled to release fourth-quarter results Feb. 18. Ingram Micro earned $69 million, or 47 cents a share, in the year-earlier quarter.
The company cited slower sales of personal computers to large corporate resellers, which rely on Ingram Micro as a backup provider of the PCs. The resellers typically get machines from the computer maker directly and resell them to corporate users, with Ingram handling any extra tailoring to fit their needs.
Despite the slowdown, many analysts predict the lowered expectations for the current quarter will be just a temporary setback for the distributor giant.
