Stock Options Aren’t Pay for CEO

* Your article titled “O.C. Execs’ Pay Jumps, but Stock Brings More” (May 24) regarding executive pay missed several important items regarding the compensation of Jerre Stead, chairman and chief executive of Ingram Micro Inc.

The article cited $15.9 million “paid” in total compensation for 1998 based on the exercise of stock options.

Ingram Micro did not pay Mr. Stead $15.9 million. It granted him options to purchase stock in the company valued at $15.9 million above his exercise costs.

The current and future value of that stock position is at risk based on the performance of the company’s stock.

In addition, when Mr. Stead exercised 1 million of his options in 1998 to purchase Ingram Micro stock, he paid for those options with $25 million of his own money: $18 million to purchase the stock, and about $7 million in taxes.

Mr. Stead continues to hold these shares in Ingram and views this stake as part of his long-term investment in the company.

Mr. Stead believes that his compensation should be tied completely to the performance of Ingram Micro, just as the gains realized by Ingram Micro’s investors are tied completely to the performance of the company.

Consistent with this philosophy, he draws no traditional salary or bonus from the company, but instead has chosen to be compensated based solely on the value he brings to investors.

KATHLEEN A. JANSON

Vice president,

Corporate communications

Ingram Micro Inc.