<PAGE>
TRUSTMARK CORPORATION
Post Office Box 291 Jackson, Mississippi 39205-0291
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 14, 1998
TO THE SHAREHOLDERS:
The annual meeting of the shareholders of Trustmark Corporation, a
Mississippi corporation (the "Corporation"), will be held in the Windsor III
room of the Crowne Plaza Hotel, located at 200 East Amite Street, Jackson,
Mississippi 39201, on Tuesday, April 14, 1998, at 10:00 A.M., local time, for
the following purposes:
1. To elect a board of twenty-five directors to hold office for the ensuing
year and until their successors are elected and have qualified.
2. To vote on a proposal to amend the Articles of Incorporation to increase
the number of authorized common shares from 100 million to 250 million.
3. To transact such other business as may properly come before the meeting.
The close of business on February 20, 1998, has been fixed as the record
date for the determination of the shareholders entitled to notice of and to vote
at the annual meeting or any adjournment thereof. The stock transfer books will
not close.
You are urged to sign and return the enclosed proxy as promptly as
possible, whether or not you plan to attend the meeting in person. If you do
attend the meeting, you may then revoke your proxy prior to the voting thereof.
The proxy also may be revoked at any time prior to its exercise by written
notice to the Secretary of the Corporation or by execution of a subsequently
dated proxy.
BY ORDER OF THE BOARD OF DIRECTORS.
/s/ Frank R. Day
----------------
Chairman
Enclosures: 1. Proxy
2. Business Reply Envelope
3. Annual Report
<PAGE>
TRUSTMARK CORPORATION
Post Office Box 291 Jackson, Mississippi 39205-0291
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
April 14, 1998
I. GENERAL
This proxy statement is being sent on or about March 13, 1998, in
connection with the solicitation by the Board of Directors of the Corporation of
proxies for the annual meeting of shareholders to be held in the Windsor III
room of the Crowne Plaza Hotel, located at 200 East Amite Street, Jackson,
Mississippi 39201, on Tuesday, April 14, 1998, at 10:00 A.M., local time, and
for any adjournment or adjournments thereof, for the purposes set forth in the
foregoing notice of annual meeting of shareholders.
Any shareholder giving a proxy has the right to revoke it at any time prior
to its exercise on the specific matter to be voted upon by written notice to the
Secretary, by revocation at the meeting, or by execution of a subsequently dated
proxy. All valid proxies received by the Corporation will be voted in accordance
with the instructions indicated in such proxies. If no instructions are
indicated in an otherwise properly executed proxy, it will be voted for the
slate of directors proposed by the Board of Directors and for the proposed
amendment to the Corporation's Articles of Incorporation.
Shareholders of record at the close of business on February 20, 1998 are
entitled to notice of and to vote at the meeting in person or by proxy. A
majority of the shares outstanding constitute a quorum. On the record date the
Corporation had outstanding 36,370,354 shares of common stock. On February 11,
1998, the Corporation declared a two-for-one stock split for shareholders of
record as of March 20, 1998. The information appearing in this proxy statement
does not reflect the effect of the stock split. Except in the election of
directors each share is entitled to one vote, and action on a matter is approved
if the votes cast in favor of the action exceed the votes cast opposing the
action. Abstentions are counted for purposes of determining a quorum, but are
otherwise not counted.
Solicitation of proxies will be primarily by mail. Employees of the
Corporation and its subsidiaries may be used to solicit proxies by means of
telephone, telegraph, or personal contact, but at no additional compensation.
Banks, brokers, trustees, and nominees will be reimbursed for reasonable
expenses incurred in sending proxy materials to the beneficial owners of such
shares. The total cost of the solicitation will be borne by the Corporation.
The Board of Directors is not aware of any matters other than as set forth
herein which are likely to be brought before the meeting. If other matters do
come before the meeting, the persons named in the accompanying proxy or their
<PAGE>
substitutes will vote the shares represented by such proxies in accordance with
the recommendations of the Board of Directors of the Corporation.
II. ELECTION OF DIRECTORS
The following slate of twenty-five nominees has been proposed by the Board
of Directors for election at the meeting. The shares represented by the proxies
will, unless authority to vote is withheld, be voted in favor of these persons.
Shareholders may make nominations at the meeting. In the election of directors
each shareholder may vote his shares cumulatively by multiplying the number of
shares he is entitled to vote by the number of directors to be elected. This
product shall be the number of votes the shareholder may cast for one nominee or
by distributing this number of votes among any number of nominees. The proxies
reserve the right, in their discretion, to vote cumulatively. If a shareholder
withholds authority for one or more nominees and does not direct otherwise, the
total number of votes the shareholder is entitled to cast will be distributed
among the remaining nominees. Should any of these nominees be unable to accept
the nomination, the votes which otherwise would have been cast for that nominee
will be voted for such other persons as the Board of Directors shall nominate.
Each director is elected to hold office until the next annual meeting of
shareholders and until his successor is elected and qualified. The persons who
will be elected to the Board of Directors will be the twenty-five nominees
receiving the largest number of votes.
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR OF
BUSINESS EXPERIENCE CORPORATION DIRECTORSHIPS HELD
NAME AGE DURING THE LAST FIVE YEARS SINCE IN OTHER COMPANIES(1)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
J. Kelly Allgood 57 President, Mississippi 1991
BellSouth
Reuben V. Anderson 55 Partner, Phelps Dunbar, 1980 The Kroger Company
L.L.P. (Attorneys) BellSouth Corporation
John L. Black, Jr. 58 Chairman and Chief Executive 1990
Officer, The Waverley Group, Inc.
(Owns and Manages Nursing Home
Facilities)
Robert P. Cooke III 63 Manages Personal and Family 1991
Investments
Frank R. Day 66 Chairman of the Board, 1976
Trustmark Corporation;
Chairman of the Board,
Trustmark National Bank
William C. Deviney, Jr. 52 Chief Executive Officer, 1995
Deviney Construction Company,
Inc. (Telecommunications
Construction)
D. G. Fountain, Jr. 61 President, Fountain Construction 1980
Company, Inc. (Mechanical and
Electrical Contractors)
C. Gerald Garnett 53 Chief Executive Officer, 1993
Southern Farm Bureau
Casualty Insurance Company and
Southern Farm Bureau Property
Insurance Company
Richard G. Hickson 53 President and Chief Executive 1997
Officer, Trustmark Corporation and
Vice Chairman and Chief Executive
Officer, Trustmark National Bank
since May 1997; President and Chief
Operating Officer, SouthTrust Bank
of Georgia, N.A. from 1995 to May
1997; President, Texas Commerce Bank,
Dallas from 1993 to 1995.
<PAGE>
<S> <C> <C> <C>
Matthew L. Holleman III 46 President and Chief Executive 1994
Officer, Mississippi Valley Gas
Company (Natural Gas Distribution)
since October 1993; Executive
Vice President and Treasurer
from 1991 to 1993
Fred A. Jones 62 President, Columbus Manufacturers, 1994
Inc. (Mail Order Distributor);
President, Columbus Marble Works,
Inc. (Manufacturer of Marble and
Granite Monuments and License
Plates)
T. H. Kendall III 61 President and General Manager, 1971
The Gaddis Farms, Inc. (Farming,
Banking, Oil Production)
Larry L. Lambiotte 50 Co-Owner, Falco Lime, Inc. 1995
(Lime Sales)
Robert V. Massengill 58 President, Consulting Solutions, 1989
Inc. (Small Business Consulting)
since January 1996, Chairman of
the Advisory Board, Brookhaven
Branch, Trustmark National Bank
Donald E. Meiners 62 President, Entergy Mississippi 1994 Entergy Mississippi, Inc.
William Neville III 57 President, The Rogue and Good 1980
Company (Men's Retailer)
Richard H. Puckett 43 Chief Executive Officer and 1995
President, Puckett Machinery
Company,(Distributor of Heavy
Earth Moving Equipment)
William K. Ray 61 President and Chief Executive
Officer, Wesley Health System,
L.L.C. (Hospital and Health Care
Holding Company)
<PAGE>
<S> <C> <C> <C>
Charles W. Renfrow 51 President, Renfrow Supply, Inc. 1995
(Supplier of Commercial and Resi-
dential Construction Material);
President, Renfrow Insulation, Inc.
(Commercial and Residential Insulation)
Harry M. Walker 47 Secretary, Trustmark Corporation 1992
since January 1995; President and
Chief Operating Officer, Trustmark
National Bank
LeRoy G. Walker, Jr. 48 President, LTM, Inc. 1995
(McDonald's Restaurant Franchises)
Paul H. Watson, Jr. 59 President, Farmers Tractor 1989
Company, Inc.
John C. Wheeless, Jr. 57 Senior Partner, Wheeless, Shappley 1995
Bailess & Rector (Attorneys)
Kenneth W. Williams 56 Secretary-Treasurer, Coca-Cola/
Dr Pepper Operations of Corinth/
Tupelo; President, Refreshments,
Inc.
Allen Wood, Jr. 54 President and Chief Executive 1993
Officer, Scientific Tele-
communications, Inc. (Tele-
communications Equipment Sales
and Service)
</TABLE>
(1) Indicates other directorships in companies with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934 or
1934 or subject to the requirements of Section 15(d) of that Act or any
company registered as an investment company under the Investment Company
Act of 1940.
<PAGE>
III. AMENDING THE ARTICLES OF INCORPORATION
The Board of Directors has proposed an amendment to the Corporation's
Articles of Incorporation increasing the number of authorized common shares from
100 million to 250 million. This increase will allow the Corporation to issue
additional shares to consummate acquisitions, implement stock splits or
dividends and for other corporate purposes. None of the newly authorized shares
are currently proposed to be issued. Approval of the proposed amendment will
require approval of a majority of the shares voting at the annual meeting.
Abstentions and broker nonvotes will not be counted.
IV. VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
On February 20, 1998, the Corporation had outstanding 36,370,354 shares of
common stock, no par value, owned by approximately 5,200 shareholders. The
following is certain information about shareholders beneficially owning more
than five percent of the outstanding common stock of the Corporation.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
- ------------------- -------------------- --------
Capitol Street 2,114,719 5.81%
Corporation (1)
711 West Capitol Street
Jackson, MS 39207
Robert M. Hearin 3,884,624 10.68%
Foundation; Robert M.
Hearin Support
Foundation (2)
711 West Capitol Street
Jackson, MS 39207
Trustmark National 3,101,587 8.53%
Bank (3)
248 East Capitol Street
Jackson, MS 39201
(1) Includes 12,254 shares owned by a second tier subsidiary.
(2) Includes 191,964 shares owned by the Robert M. Hearin Foundation, 1,441,441
shares owned by the Robert M. Hearin Support Foundation, 2,102,465 shares
owned by Capitol Street Corporation, 136,500 shares owned by Bay Street
Corporation and 12,254 shares owned by American Federated Insurance
Company, Inc., which is a second tier subsidiary controlled by Capitol
Street Corporation. Capitol Street Corporation is a 100 percent owned
subsidiary of Galaxie Corporation, which may be deemed to be controlled by
the Robert M. Hearin Support Foundation. Does not include 254,427 shares
held in the Mississippi Valley Gas Company pension plan, since Trustmark
National Bank ("the Bank") has voting and investment power over these
shares. Voting and investment decisions concerning shares beneficially
owned by the Robert M. Hearin Foundation and the Robert M. Hearin Support
Foundation are made by the Foundations' trustees: Robert M. Hearin, Jr.,
Matthew L. Holleman III, Daisy S. Blackwell, E.E. Laird Jr., Laurie H.
McRee and Alan W. Perry.
<PAGE>
(3) Includes 124,138 shares owned by the Bank's 401(k) Plan, 81,873 shares held
in the Bank's Pension Plan, 1,660,940 shares held in the Bank's Employee
Stock Ownership Plan ("ESOP") and 1,440,647 shares held by the Bank's Trust
Department in various capacities in which the Bank has investment or voting
discretion. Although the Bank's Trust Department has voting and investment
discretion with respect to the 1,440,647 shares held in trust, it has
declined to exercise this authority as a matter of policy.
<PAGE>
V. OWNERSHIP OF EQUITY SECURITIES BY MANAGEMENT
The following table sets forth the beneficial ownership of the
Corporation's common shares as of February 20, 1998, by persons who are
currently serving as directors, persons nominated for election at the annual
meeting and each of the executive officers named in Section VI hereof. Also
shown is ownership by all directors and executive officers of the Corporation as
a group. The persons listed have sole voting and investment power as to all
shares except as indicated. Percent of outstanding shares of common stock owned
is not shown where less than one percent.
Amount and Percent of
Nature of Outstanding
Beneficial Shares of
Ownership of Common Stock
Name Common Stock Owned
- ---------------- --------------------- ------------
J. Kelly Allgood 13,829
Reuben V. Anderson 9,595 (1)
John L. Black, Jr. 261,300 (1)(2)
Harry H. Bush 28,244 (1)
Robert P. Cooke III 70,030 (3)
Frank R. Day 1,678,294 (4)(17)(18) 4.61%
William C. Deviney, Jr. 3,000
D. G. Fountain, Jr. 114,400 (5)
C. Gerald Garnett 717,051 (6) 1.97%
Richard G. Hickson 9,000 (7)
Matthew L. Holleman III 3,905,277 (8)(17) 10.74%
Gerard R. Host 150,837 (1)(9)(18)
Fred A. Jones 223,359 (1)(10)
T. H. Kendall III 173,591 (1)(11)
Larry L. Lambiotte 56,200 (12)
Robert V. Massengill 40,097
Donald E. Meiners 500
William Neville III 224,736 (13)(18)
Richard H. Puckett 122,174 (1)(14)(17)
William O. Rainey 11,694
William K. Ray 1,250
Charles W. Renfrow 160,400 (1)(15)
William Thomas Shows 66,035 (1)
Harry M. Walker 28,603 (9)(17)
LeRoy G. Walker, Jr. 502
Paul H. Watson, Jr. 3,196 (1)(16)
John C. Wheeless, Jr. 562
Kenneth W. Williams 4,533
Allen Wood, Jr. 13,021 (1)
Above named persons and
executive officers of
Corporation as a group 7,820,038 21.50%
(1) Includes shares owned by spouse and/or minor children.
(2) Includes 14,300 shares held in a private foundation for which nominee has
voting and investment authority.
(3) Includes 39,030 shares held as trustee for which nominee has voting and
investment authority.
<PAGE>
(4) Includes 28,000 shares which the nominee has the right to acquire through
the exercise of options granted under the Corporation's 1997 Long Term
Incentive Plan.
(5) Includes 96,600 shares held in a charitable foundation for which nominee
has shared voting and investment authority.
(6) Includes 677,551 shares owned by Southern Farm Bureau Casualty Insurance
Company and 36,000 shares owned by Southern Farm Bureau Casualty Insurance
Company Employee Retirement Plan and Trust for which nominee has shared
voting and investment authority.
(7) Includes 7,000 shares which the nominee has the right to acquire through
the exercise of options granted under the Corporation's 1997 Long Term
Incentive Plan.
(8) Includes 20,653 shares owned by nominee and immediate family members and
3,884,624 shares as to which nominee has shared investment and voting
authority as a result of serving as one of six trustees of the Robert M.
Hearin Foundation and the Robert M. Hearin Support Foundation, president
and director of Galaxie Corporation, president and director of Capitol
Street Corporation and president and director of Bay Street Corporation.
These shares are reported as beneficially owned by the Robert M. Hearin
Foundation and the Robert M. Hearin Support Foundation under Section IV.
(9) Includes 3,750 shares which employee has the right to acquire through the
exercise of options granted under the Corporation's 1997 Long Term
Incentive Plan.
(10) Includes 17,361 shares owned by Columbus Manufacturers, Inc. and 4,668
shares owned by Quality Products, Inc., for which nominee has investment
and voting authority. Also includes 74,568 shares owned in trusts for
family members for which nominee's wife has voting and investment
authority.
(11) Includes 43,568 shares held as trustee for which nominee has shared voting
and/or investment authority. Also includes 56,028 shares owned by The
Gaddis Farms, Inc. and 38,821 shares owned by Gaddis & McLaurin, Inc. for
which nominee has voting authority.
(12) Includes 6,000 shares owned by Falco Lime, Inc. for which nominee has
voting and/or investment authority.
(13) Includes 8,500 shares held by a corporation controlled by the nominee.
(14) Includes 45,000 shares owned by Puckett Machinery Company and 30,180 shares
held by Puckett Machinery Company Profit Sharing Plan for which nominee has
either sole or shared voting and investment authority.
(15) Includes 9,500 shares held by Renfrow Supply Company Profit Sharing Plan
for which nominee has either sole or shared voting and investment
authority.
(16) Includes 1,000 shares held in an estate for which nominee has voting and/or
investment authority.
(17) Does not include shares to be issued in connection with the anticipated
Smith County Bank acquisition.
(18) Includes 135,636 shares owned by a charitable foundation as to which named
individual has one of five votes on investment and voting decisions.
<PAGE>
VI. COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Executive Compensation
The following table shows the aggregate compensation for the last three
fiscal years paid by the Corporation and its subsidiary, Trustmark National
Bank, to the Corporation's Chief Executive Officer and to the Bank's four
highest compensated executive officers where compensation in the form of
salaries and bonuses exceeded $100,000 in 1997. Deferred compensation is
included as salary in the year earned.
(2)
Name and (1) All Other
Principal Position Year Salary Bonus Compensation
------------------- ---- -------- -------- ------------
Frank R. Day 1997 $500,000 $225,000 $6,159
Chairman of the Board, 1996 450,000 450,000 6,304
Trustmark Corporation; 1995 450,000 300,000 5,581
Chairman of the Board,
Trustmark National Bank
Richard G. Hickson 1997 $256,154 $275,000 $213,000
President and Chief 1996 N/A N/A N/A
Executive Officer, 1995 N/A N/A N/A
Trustmark Corporation;
Vice Chairman of the
Board and Chief
Executive Officer,
Trustmark National Bank
Harry M. Walker 1997 $197,000 $110,000 $6,159
Secretary, Trustmark 1996 190,000 100,000 6,271
Corporation; President and 1995 170,000 70,000 5,552
Chief Operating Officer,
Trustmark National Bank
Gerard R. Host 1997 $182,000 $105,000 $6,159
Treasurer, Trustmark 1996 175,000 90,000 6,222
Corporation; Executive 1995 135,000 60,500 5,508
Vice President and
Chief Financial Officer,
Trustmark National Bank
William O. Rainey 1997 $142,660 $ 42,500 $6,159
Executive Vice 1996 138,500 40,000 5,516
President and Chief 1995 135,500 33,875 5,650
Banking Officer,
Trustmark National Bank
<PAGE>
(1) Includes Business Development Incentive which was awarded in recognition of
special new business development achievements. Amounts paid did not exceed
$500 for any named individual in any year.
(2) All other compensation represents contributions to the Bank's ESOP except
for $213,000 paid to Richard G. Hickson in 1997 for forfeited benefits of
prior employment.
Option Grants During 1997 and Potential Realizable Values
The following table sets forth as to each of the named executive officers
information with respect to option grants during 1997 and the potential
realizable value of such option grants. The potential realizable values assume
5% and 10% compounded annual rates of appreciation in the value of the
Corporation's shares over the term of the options. The 5% and 10% assumed rates
of growth are for illustrative purposes only. They are not intended to predict
future stock prices, which will depend on market conditions and other factors
such as the Corporation's performance. Options granted to Frank R. Day were
fully vested as of the date of grant. Other options granted vest in four annual
installments.
<TABLE>
<CAPTION>
Individual Option Grants in the Last Fiscal Year
- ---------------------------------------------------------------------------
Potential
Number of % of Realizable Value
Shares Total at Assumed Annual
Underlying Options (1) Appreciation
Options Granted to Exercise For Option Term
Granted Employees Price Per Expiration --------------------
Name in 1997 in 1997 Share ($) Date 5.0% 10.0%
- ---------------- ---------- ---------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Frank R. Day 28,000 32.56% 24.8750 4/27/07 $438,025 $1,110,041
Richard G. Hickson 28,000 32.56% 27.0625 5/12/07 476,545 1,207,658
Harry M. Walker 15,000 17.44% 27.0625 5/12/07 255,292 646,960
Gerard R. Host 15,000 17.44% 27.0625 5/12/07 255,292 646,960
</TABLE>
(1) On the date of the grant, the exercise price of all stock options was equal
to the closing price on the NASDAQ market.
Pension Plan
Trustmark maintains a noncontributory pension plan (the "Plan") for
employees who are 21 years or older and who have completed one year of service
with a prescribed number of hours of credited service. The following table
specifies the estimated benefits
<PAGE>
payable upon retirement under the Plan to persons in the following remuneration
and years of service classifications:
10 Year Average YEARS OF CREDITED SERVICE
Annual Earnings 15 20 25 30 35 40
--------------- ------- ------- ------- ------- ------- -------
$ 50,000 $11,250 $15,000 $18,750 $22,500 $26,250 $30,000
75,000 17,811 23,748 29,685 35,622 41,559 47,184
100,000 25,874 34,498 43,123 51,747 60,372 67,872
125,000 33,936 45,248 56,560 67,872 79,184 88,559
150,000 41,999 55,998 69,998 83,997 97,997 109,247
200,000 45,224 60,298 75,373 90,447 105,522 117,522
Years of credited service for the highest paid executives are: Frank R. Day
- - 40 years, Richard G. Hickson - 0 years, Harry M. Walker - 26 years, Gerard R.
Host - 14 years, William O. Rainey - 16 years.
Benefits payable under the Plan are based on a formula that takes into
account the individual's average compensation over the highest consecutive
ten-year period and the number of years of credited service. The table reflects
the benefit ($125,000) and compensation ($160,000) limits under federal law in
effect for 1997 and assumes that the entire service period was completed under
the new benefit formula that is effective for service on or after January 1,
1989.
Deferred Compensation Plan
The Bank provides executive officers with the right to participate in a
defined benefit deferred compensation plan pursuant to which the Bank is
obligated to provide participants certain retirement and death benefits.
Participants are required to defer 2% of salary. Benefits following normal
retirement equal 50% of final salary payable for life, but not less than 10
years. The beneficiary of a participant who dies prior to normal retirement age
receives a death benefit equal to specified percentages of final salary for a
period of up to 10 years. Life insurance contracts have been purchased which may
be used to fund payments under the plan.
Employment and Termination of Employment Agreements
The Corporation and Mr. Hickson entered into an employment agreement
effective May 13, 1997 (the "Commencement Date"), which provides for his
employment as President and Chief Executive Officer of the Corporation.
Mr. Hickson's base salary is $400,000 per year subject to periodic
increases at the discretion of the Board of Directors. Mr. Hickson agreed to an
annual bonus for 1997 of not less than 50% of the base salary paid in 1997 and
is eligible to receive a discretionary bonus of up to 75% of base salary for
future years. Mr. Hickson was also reimbursed for his relocation expenses and
received a one-time payment of $213,000 to compensate him for benefits forfeited
upon leaving his prior employment. Pursuant to the agreement, Mr. Hickson was
granted options to acquire 28,000 shares of the Corporation's common stock
pursuant to the Corporation's 1997 Long Term Incentive Plan. The options were
<PAGE>
granted at an exercise price equal to the fair market value of the Corporation's
common stock on the date of grant and vest over a four-year period.
In the event of disability or death, the agreement provides that Mr.
Hickson or his designated beneficiaries will receive any unpaid salary and bonus
for any concluded year and a prorata portion of his "Target Bonus" (which equals
50% of base salary) for the year of death or disability.
Pursuant to the agreement, the Corporation is obligated to make certain
payments to Mr. Hickson in the event his contract is terminated or in the event
he resigns for certain specified reasons, within three years after a change in
control of the Corporation. The amount payable is the sum of his base salary
immediately prior to the change and the highest annual bonus earned in any of
the three years preceding the change, multiplied by 4.5 if the termination
occurs within 12 months of the Commencement Date, 3.5 if within 24 months of the
Commencement Date, and 3.0 if termination occurs during any successive twelve
month period during the term thereafter. In addition, the Corporation is
required to provide certain employee benefits for a period of years equal to the
severance multiple shown above, reduced by any employee benefits received from
later employment. Previously granted stock options which have not vested, shall
vest immediately.
If, without a change in control, the Corporation terminates Mr. Hickson for
a reason other than for cause, death, disability or retirement, or if Mr.
Hickson resigns for any reason during the period February 13, 1998, through May
12, 1998 and does not accept comparable employment within 6 months from the date
of termination, the Corporation is obligated to pay Mr. Hickson an amount equal
to the product of 1.5 times the sum of his annual base salary and Target Bonus
for the year in which the termination occurs. Mr. Hickson will also be entitled
to certain employee benefits for a period of 18 months following the
termination, reduced by any employee benefits received from later employment.
In December 1997 the Corporation entered into agreements with Harry M.
Walker and Gerard R. Host which provide certain benefits in the event of a
change in control of the Corporation. Pursuant to these agreements, the
Corporation is obligated to make certain payments to these individuals in the
event their employment is terminated or if they resign for specified reasons
within two years after a change in control of the Corporation. The amount
payable is the sum of the product of the individual's base salary immediately
prior to the change in control and the highest annual bonus earned in the two
years preceding the change in control, multiplied by 2.0. The Corporation is
required to continue certain employee benefits for the two year period following
termination, reduced by any employee benefits received from a later employment.
Any previously granted unvested stock options vest as of the date of
termination.
Compensation Committee Report on Executive Compensation
The Corporation's Executive Compensation Committee determines the
compensation of the Corporation's executive officers. In establishing Mr. Day's
salary for 1997, the Executive Committee, which served as the Compensation
Committee until February 1997, principally considered the salaries of chief
executive officers in comparable financial institutions. The Committee also
considered Mr. Day's past performance and contributions to the Corporation. In
establishing Mr. Day's salary within the range indicated by comparable
<PAGE>
institutions, no prescribed quantitative measures of Mr. Day's or the
Corporation's performance were used.
In September 1996, the Board appointed a Search Committee to select a chief
executive officer of the Corporation to succeed Mr. Day. The Search Committee,
in consultation with the Compensation Committee, engaged a nationally recognized
compensation consultant to advise it concerning the range of compensation to be
offered to the new chief executive officer. With this information, the Search
Committee formulated a compensation package which was presented to Mr. Hickson
and refined through arm's length negotiations. In establishing Mr. Hickson's
compensation and benefits for 1997, the Executive Compensation Committee and the
Board were principally guided by the ranges of compensation of chief executive
officers of comparable financial institutions. Additionally, consideration was
given to Mr. Hickson's existing compensation and the benefits he was required to
forfeit by leaving his previous position.
In December 1997, the Board of Directors approved a discretionary bonus
pool of approximately $2.7 million for all Bank personnel. This amount was based
upon the Corporation's earnings for 1997 compared to prior years. After
establishing a maximum bonus for various categories of employees, including the
chief executive officer, the Executive Compensation Committee awarded Mr. Day
and Mr. Hickson a combined bonus of $500,000, of which $225,000 was allocated to
Mr. Day and $275,000 was allocated to Mr. Hickson. In awarding Mr. Day's and Mr.
Hickson's bonuses, the Executive Compensation Committee considered each person's
performance based on various factors including traditional financial results and
indicators such as revenues, expenses, earnings and qualitative ratios. In
addition, regulatory compliance, competitive position and similar factors in the
context of the Corporation's historical performance and the performance of
comparable institutions were considered. These factors were not assigned
specific weights and no specific quantitative measures of performance were
employed by the Executive Compensation Committee. In the case of Mr. Hickson,
the Board also considered his ability to achieve a successful management
transition. Although the Corporation's common stock price increased 81% during
1997, this was not a significant factor considered by the Executive Compensation
Committee in evaluating Mr. Day's or Mr. Hickson's performance for 1997 and
establishing their bonuses for the year.
On April 28, 1997, Mr. Day was granted immediately exercisable options to
purchase 28,000 shares of the Corporation's common stock at $24.875 per share,
which was the market price of such shares on that date. The number of options
granted was designed to provide Mr. Day with additional compensation in the
range of 60% of his base salary assuming continued appreciation in the
Corporation's shares at historic levels.
The Executive Compensation Committee established the 1997 salaries of the
other executive officers principally based upon Mr. Day's recommendations. The
Executive Compensation Committee and Mr. Day also reviewed compensation reported
for similar positions at comparable financial institutions. Executive officers'
salaries were designed to be at levels necessary to attract and retain qualified
personnel.
Bonuses paid to executive officers for 1997 were allocated by the Executive
Compensation Committee based upon the recommendations of Mr. Hickson and the
results of the formal performance appraisal process which is used in
establishing salaries and allocating bonuses for all bank personnel. Factors
considered included personal development, level of job responsibility,
achievement of work goals and management skills.
<PAGE>
On May 13, 1997, Messrs. Walker and Host were each granted options to
purchase a total of 15,000 shares of the Corporation's common stock at $27.0625
per share. As with the options granted to Mr. Day, these options were designed
to provide these executives with additional, incentive-oriented, compensation in
the range of 60% of their base salaries.
Executive Compensation Committee
--------------------------------
C. Gerald Garnett, Chairman
D.G. Fountain, Jr.
William F. Goodman, Jr.
T.H. Kendall III
William Neville III
Ben Puckett
Compensation Committee Interlocks and Insider Participation in
Compensation Decisions
The Executive Committee of the Board of Directors served as the
Compensation Committee until February 1997. Thereafter, the Executive
Compensation Committee was composed of the persons identified above. Mr. Goodman
is a partner in a law firm which was retained by the Corporation and the Bank
during 1997 and which is anticipated to be retained during 1998. During 1997, no
executive officer of the Corporation or any of its subsidiaries served as a
member of the compensation committee (or other board or committee performing
similar functions) or the board of directors of another entity, one of whose
executive officers served on the Executive Committee or the Board of Directors
of the Corporation.
Compensation of Directors
Directors' meetings of the Corporation are held in conjunction with
meetings of the Board of Directors of the Bank. During 1997, each director and
each committee chairman received $750 and $1,000, respectively, for each board
meeting attended. Members of the Executive Committee were paid $1,875 per month.
The Corporation provides nonemployee directors the opportunity to participate in
a deferred fee plan pursuant to which participants may elect to defer up to 100%
of fees to be earned. The plan provides specified death and retirement benefits
in accordance with the plan agreement. Members of the Board who are salaried
officers of the Corporation or the Bank are not paid directors' fees.
Performance Graph
The following graph compares the Corporation's annual percentage change in
cumulative total return on common shares over the past five years with the
cumulative total return of companies comprising the NASDAQ market value index
and the KBW 50 Total Return Index. The KBW 50 is an industry index prepared by
Keefe, Bruyette and Woods, Inc. and consists of 50 bank holding companies,
including all money-center and most major regional bank holding companies.
This presentation assumes that $100 was invested in shares of the relevant
issuers on December 31, 1992, and that dividends received were immediately
invested in additional shares. The graph plots the value of the initial $100
investment at one-year intervals.
FIVE YEAR CUMULATIVE TOTAL RETURN
------------------------FISCAL YEAR ENDING-------------------------
COMPANY 1992 1993 1994 1995 1996 1997
-------------------------------------------------------------------
Trustmark Corp. 100 113.17 139.81 186.43 213.60 395.31
KBW 50 100 105.54 100.16 160.41 228.92 331.73
NASDAQ Market 100 119.95 125.94 163.35 202.99 248.30
VII. TRANSACTIONS WITH MANAGEMENT
No executive officer, director, nominee, their related entities or their
immediate family members have been indebted to the Corporation, or any
subsidiaries, other than the Bank, at any time since January 1, 1997. In the
ordinary course of business, the Bank and its subsidiary have had, and expects
to have in the future, banking and securities brokerage transactions (including
loans, repurchase transactions, reverse repurchase transactions and other
routine transactions) in excess of $60,000 with executive officers, directors,
nominees, related entities and immediate family members. Such transactions are
made on substantially the same terms, including, in the case of loans, interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons. None of the loans involved more than the normal
risks of collectibility and presented no other unfavorable features.
<PAGE>
For the year 1997, Scientific Telecommunications, Inc., a company
controlled by director Allen Wood, Jr., was paid $382,981 for telecommunications
equipment and services. Reuben V. Anderson is a partner in the law firm of
Phelps Dunbar. John C. Wheeless, Jr. is a partner in the law firm of Wheeless,
Shappley, Bailess and Rector. Each of these firms was retained by the
Corporation or the Bank on various legal matters during 1997 and it is
anticipated that these firms will be retained during 1998.
During 1997, the Bank engaged in business relationships with various
entities in which members of Management have direct and indirect interests. None
of these relationships were considered material to the Bank or such entity.
VIII. OTHER INFORMATION CONCERNING DIRECTORS
During 1997, the Corporation had an Audit Committee composed of J. Kelly
Allgood, Chairman, Harry H. Bush, Fred A. Jones, Richard H. Puckett, Paul H.
Watson, Jr., Allen Wood, Jr. and Advisory Directors Adolphus B. Baker and
William K. Ray. This Committee, which conducts the usual and necessary
activities in connection with the audit functions of the Corporation, held seven
meetings during 1997.
The Corporation's Executive Compensation Committee, which, effective
February 1997 was composed of C. Gerald Garnett, Chairman, D.G. Fountain, Jr.,
William F. Goodman, Jr., T.H. Kendall III, William Neville III and Ben Puckett,
held six meetings during 1997.
There were eleven meetings of the Board of Directors held during 1997. Of
those directors serving during 1997, none attended fewer than 75% of the Board
meetings and meetings of those committees of which they were members, except for
Larry L. Lambiotte, Clyda S. Rent and John C. Wheeless, Jr.
<PAGE>
IX. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Directors, certain officers of the Corporation and its subsidiaries and
holders of more than 10% of the Corporation's outstanding shares are required to
file reports under Section 16 of the Securities Exchange Act of 1934. Federal
regulations require disclosure of any failures to file these reports on a timely
basis. The Corporation believes that during 1997 its officers, directors and
greater than 10% beneficial owners complied with all filing requirements except
Director Paul H. Watson, Jr., who filed one late report covering one
transaction.
X. INDEPENDENT PUBLIC ACCOUNTANTS
It is the intention of the Board of Directors to employ the services of
Arthur Andersen LLP, independent accountants for the Corporation during the most
recently completed fiscal year, as independent accountants for the Corporation
for the year 1998. Representatives of Arthur Andersen LLP are expected to be
present at the shareholders' meeting with the opportunity to make a statement,
if they desire to do so, and to be available to respond to appropriate and
proper questions during the period generally allotted for questions at the
meeting.
XI. PROPOSALS OF SHAREHOLDERS
In order for a shareholder proposal to be included in a proxy statement and
form of proxy prepared by the Board of Directors, it must meet the requirements
of Rule 14a-8 of the Securities Exchange Act of 1934 and be received at the
principal executive offices of the Corporation not less than 120 days in advance
of the date the previous year's proxy statement and form of proxy were mailed to
shareholders. Thus, a shareholder proposal must be received before November 13,
1998, in order to be included in the proxy statement and form of proxy for the
1999 annual meeting.
BY ORDER OF THE BOARD OF DIRECTORS.
/s/ Frank R. Day
-----------------
Chairman
<PAGE>
APPENDIX I
PROXY CARD
TRUSTMARK CORPORATION
POST OFFICE BOX 291 JACKSON, MISSISSIPPI 39205-0291
This Proxy is Solicited on Behalf of the Board of Directors for the Annual
Meeting of Shareholders on April 14, 1998.
The undersigned, having received Notice of Meeting and Proxy Statement dated
March 13, 1998, appoint D. G. Fountain, Jr., T. H. Kendall III and William
Neville III and each or any of them as proxies, with full power of substitution
and revocation, to represent the undersigned and to vote all shares of the
Common Stock of Trustmark Corporation which the undersigned is entitled to vote
at the Annual Meeting of the Shareholders of the Corporation to be held on April
14, 1998, in the Windsor III room of the Crowne Plaza Hotel, located on Amite
Street, in Jackson, Mississippi, at 10:00 A.M., local time, and any adjournment
thereof, as follows:
1. Election of Directors
J. Kelly Allgood, Reuben V. Anderson, John L. Black, Jr., Robert P.
Cooke III, Frank R. Day, William C. Deviney, Jr., D.G. Fountain, Jr.,
C. Gerald Garnett, Richard G. Hickson, Matthew L. Holleman III, Fred
A. Jones, T. H. Kendall III, Larry L. Lambiotte, Robert V. Massengill,
Donald E. Meiners, William Neville III, Richard H. Puckett, William
K. Ray, Charles W. Renfrow, Harry M. Walker, LeRoy G. Walker, Jr.,
Paul H. Watson, Jr., John C. Wheeless, Jr., Kenneth W. Williams, and
Allen Wood, Jr.
2. Amend Articles of Incorporation
An amendment to the Corporation's Articles of Incorporation to increase the
authorized common shares from 100 million to 250 million.
Management knows of no other matters that may properly be, or which are likely
to be, brought before the meeting. In their discretion, the Proxies are
authorized to vote upon such other business as may properly come before the
meeting in accordance with the decision of the Board of Directors.
SEE REVERSE SIDE
<PAGE>
(X) Please mark your vote as in this example
When properly executed, this proxy will be voted in the manner directed by the
undersigned shareholder. If no direction is made, or if any other matter
properly comes before the meeting for which no choice has been specified, the
shares will be voted in accordance with the recommendation of the Board of
Directors. Unless authority is withheld as to a particular nominee, the proxy
will be voted for each nominee listed. The undersigned hereby authorizes the
proxies, in their discretion, to vote the undersigned's shares cumulatively.
1. Election of Directors (see reverse)
( ) FOR all nominees
( ) WITHHOLD all nominees
( ) FOR, EXCEPT vote withheld from the following nominee(s):
--------------------------------------------------------
2. Amend Articles of Incorporation (see reverse)
( ) FOR
( ) AGAINST
( ) ABSTAIN
Please sign exactly as name appears. When shares are held as joint tenants, both
are requested to sign. Trustees, attorneys, executors, administrators,
guardians, and others signing in a representative capacity should indicate the
capacity in which they sign. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Signature Date
-------------------------------------- ------------------
Signature Date
-------------------------------------- ------------------
Please mark, sign, date and return proxy card promptly using the enclosed
envelope.
