MORGAN KEEGAN, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 25, 1997
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting
of the Shareholders of Morgan Keegan, Inc.
(the "Annual Meeting") will be held at the offices
of Morgan Keegan, Inc. (the "Company"),Twenty-First
Floor, Morgan Keegan Tower,50 North Front Street,
Memphis, Tennessee 38103 on Tuesday, November 25, 1997,
at 10:00 a.m., local time, for the following purpose:
1. To elect directors to serve for the ensuing
year or until their successors have been duly
elected and qualified;
Only shareholders of the Company of record as of
the close of business on October 3, 1997, will be
entitled to notice of, and to vote at, the Annual
Meeting and any adjournment thereof.
There is enclosed, as a part of this Notice,
a Proxy Statement which contains further
information regarding the meeting and the above
proposal.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Joseph C. Weller
JOSEPH C. WELLER
Secretary
October 17, 1997
IMPORTANT
Shareholders who do not expect to attend the meeting
are requested to complete, date, sign and return the
accompanying proxy in the enclosed envelope. Share-
holders who attend the meeting may vote in person
even if they have already sent in a proxy.
<PAGE>
MORGAN KEEGAN, INC.
PROXY STATEMENT
GENERAL INFORMATION
THIS PROXY STATEMENT is provided in connection
with the solicitation of proxies by the Board of
Directors of Morgan Keegan, Inc. (the "Company")
for use at the annual meeting of shareholders
to be held at the offices of Morgan Keegan, Inc.,
21st floor Morgan Keegan Tower, 50 North Front
Street, Memphis, Tennessee 38103 at 10:00 a.m,
local time, on November 25, 1997, (the "Annual
Meeting") and any adjournment thereof. The
mailing address of the principal executive
offices of the Company is Morgan Keegan Tower,
50 North Front Street, Memphis, Tennessee 38103.
This Proxy Statement and the Proxy Form, Notice
of Meeting and the Company's Annual Report,
all enclosed herewith, are first being
mailed to the shareholders of the Company
on or about October 17, 1997.
The Proxy
The solicitation of proxies is being made
primarily by the use of the mails. The cost of
preparing and mailing this Proxy Statement and
accompanying material, and the cost of any
supplementary solicitations, which may be made
by mail, telephone, telegraph, telecopier or
personally by officers and employees of the Company,
will be borne by the Company. The annual report
of the Company for the year ended July 31, 1997
is being mailed with the Proxy Statement to
Shareholders entitled to vote at the meeting.
The shareholder giving the proxy has the power
to revoke it by delivering written notice of such
revocation to the Secretary of the Company
prior to the Annual Meeting or by attending
the meeting and voting in person. The proxy
will be voted as specified by the shareholder
in the spaces provided on the Proxy Form,
or, if no specification is made,
it will be voted in accordance with the
terms thereof.
Common Shares represented by properly
executed proxies, unless previously revoked,
will be voted in accordance with the
instructions on such proxies. If no instruction
is indicated on the proxy, the named holders
of the proxies will vote such common shares
FOR all director nominees named in this Proxy
Statement. The named holders of proxies also
will use their discretion in voting the
Common Shares in connection with any other
business that properly may come before the
Annual Meeting.
Voting Rights
Each outstanding share is entitled to
one vote. Only shareholders of record at
the close of business on October 3, 1997 will
be entitled to notice of, and to vote at, the
Annual Meeting and any adjournment thereof.
As of the close of business on October 3, 1997,
the Company had outstanding 32,273,616 shares of
common stock $.625 par value per share (the
"Common Shares"). Of the total number of
outstanding Common Shares on October 3, 1997,
the Directors and Executive Officers of
the Company, consisting of eight persons,
owned 8,381,933 shares comprising 26% of the total.
<PAGE>
REQUIRED VOTE
Approval of each matter submitted to the
Shareholders of the Company for a vote at the
Annual Meeting will require the affirmative
vote of a plurality of the Common Shares voting
at the Annual Meeting in person or by proxy.
OWERSHIP OF THE COMPANY'S COMMON SHARES
Security Ownership of Certain Beneficial Owners
The following table sets forth information
as of October 3, 1997, regarding each person
known to the Company to be the beneficial owner
of more than five percent of its Common Shares:
<TABLE>
<CAPTION>
NAME AND AMOUNT AND
ADDRESS OF NATURE OF
BENEFICIAL BENEFICIAL PERCENT
OWNER OWNERSHIP OF CLASS (1)
<S> <C> <C>
Allen B. Morgan, Jr. 3,590,845(2) 11.1%
Morgan Keegan Tower
Fifty Front Street
Memphis, Tennessee 38103
Joseph C. Weller 1,600,129(3) 5.0%
Morgan Keegan Tower
Fifty Front Street
Memphis, Tennessee 38103
____________________________
<FN>
(1) Based on 32,273,616 Common Shares outstanding at
October 3, 1997.
(2) Excludes 84,145 shares owned by Mr. Morgan's
spouse over which shares Mr. Morgan has no voting
power or investment power and in which Mr. Morgan
disclaims any beneficial ownership. Includes 95,873
shares held by Mr. Morgan as custodian or Trustee
for his minor children over which shares Mr. Morgan
has sole voting power and investment power.
(3) Includes 67,500 shares owned by Mr. Weller's spouse.
</TABLE>
<PAGE>
Security Ownership of Management
The following table sets forth the beneficial ownership of the
Company's Common Shares as of October 3, 1997 by (i) each
director, (ii) each director nominee, (iii) each executive officer
named in the Summary Compensation Table, and (iv) all directors,
nominees and Executive Officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND
NAME OF NATURE OF
BENEFICIAL BENEFICIAL PERCENT
OWNER OWNERSHIP OF CLASS (1)
<S> <C> <C>
Kenneth F. Clark, Jr. 86,250(2) *
William W. Deupree, Jr. 1,159,953 3.6%
Douglas Edwards 442,953(6) 1.4%
James H. Ganier 233,511(7) *
James E. Harwood 75,183(8) *
Allen B. Morgan, Jr. 3,590,845(3) 11.1%
Harry Phillips 7,500 *
Donald Ratajczak, Ph.D. 88,826(2) *
John W. Stokes, Jr. 1,096,783(4) 3.5%
Joseph C. Weller 1,600,129(5) 5.0%
All Director, Nominees and
Executive Officers as a Group
(10 Persons) 8,381,933 26.0%
_______________
<FN>
(1) Based on 32,273,616 Common Shares outstanding at
October 3, 1997, plus, with respect to each
listed person (or all listed persons as a group),
the number of Common Shares issuable by the
Company to such person or group in respect of
currently exercisable options. The total
number of shares used in calculating this
percentage assumes that none of the currently
exercisable options held by other persons are
exercised.
(2) Includes option to purchase 54,000 shares
pursuant to the Company's 1991 Directors
Stock Option Plan which have not been exercised.
(3) Excludes 84,145 shares owned by Mr. Morgan's
spouse over which shares Mr. Morgan has no
voting power or investment power and in which
Mr. Morgan disclaims any beneficial ownership.
Includes 95,873 shares held by Mr. Morgan as
custodian or Trustee for his minor children
over which shares Mr. Morgan has sole voting
power and investment power.
(4) Includes 29,940 shares owned of record
by Mr. Stokes' spouse.
(5) Includes 67,500 shares owned of record
by Mr. Weller's spouse.
(6) Includes 6,988 shares owned of record
by Mr. Edward's spouse.
(7) Includes 60,000 shares owned of record
by Mr. Ganier's spouse.
(8) Includes option to purchase 40,500
shares pursuant to the Company's 1991
Directors Stock Option Plan which have not
been exercised.
* Represents less than one 1% of total
outstanding Common Shares.
</TABLE>
<PAGE>
(Proposal No.1)
Election of Directors
Committees and Meetings of the Board of Directors
The business of the Company is under the general
management of its Board of Directors as provided
by the Company's by-laws and the laws of Tennessee,
the Company's state of incorporation. The Board of
Directors meets quarterly during the Company's fiscal
year. There are presently eight directors. The
Board of Directors held four meetings during fiscal
1997, and each director attended at least three of
the four meetings.
The Company does not have a standing Nominating
Committee or a Compensation Committee of its
Board of Directors. The Compensation
Committee ("Compensation Committee") of Morgan
Keegan and Co., Inc., (the "Brokerage Company")
determines the compensation for all of the
employees, including officers of the Company (see
"Report of the Brokerage Company Compensation
Committee"). The entire Board of Directors
serves in the capacity of a Nominating Committee.
The Board of Directors will accept recommendations
for director nominations from shareholders, and
shareholders wishing to propose such
nominees for consideration should write to Joseph
C. Weller, Secretary, at the principal executive
office of the Company.
The Company has a standing Audit Committee of
its Board of Directors composed entirely of directors
who are not officers or employees of the Company
or the Brokerage Company ("Independent Directors").
During fiscal 1997, the Audit Committee consisted of
Kenneth F. Clark, Jr., Donald Ratajczak, and
James E. Harwood, III. The Audit Committee's function
is to determine that the Company's assets are
properly accounted for and safeguarded and that
adequate operating, accounting and financial
controls, consistent with Company policy,
regulatory requirements and accepted accounting
practice are in existence and adequately functioning.
The Audit Committee also may make recommendations
to the Board of Directors concerning the
engagement of independent accountants to audit
the books, records and accounts of the Company
and its subsidiaries. The Audit Committee met
four times during the past fiscal year and
each Audit Committee member attended at least
three of the four meetings.
Compensation of Directors
Directors who are employees of the Company
or one of its subsidiaries do not receive
additional remuneration as directors. Independent
Directors receive an annual retainer of $6,000,
fees of $1,500 for each board meeting, and $500
for each committee meeting attended, and are annually
granted options to acquire up to 13,500 Common
Shares pursuant to the Company's 1991 Directors Stock
Option Plan.
<PAGE>
Nominees for Directors
The Company's bylaws provide for the election
all directors on an annual basis. The Board of
Directors proposes to nominate the following
eight individuals, each of whom is currently a
director of the Company, for election to serve
as directors of the Company for the ensuing fiscal
year.
ALLEN B. MORGAN, JR., 55, is the Chairman of the
Board and Chief Executive Officer of the Company,
positions he has held since 1983. He has also been
Chairman of the Board, Chief Executive Officer,
employee and Director of the Brokerage Company since
1969 and was named Chief Operating Officer in 1996.
Mr. Morgan is President and a Director of Morgan
Keegan Southern Capital Fund and a Director of
Catherine's Stores, Inc. (member of Compensation
Committee). He has been a Director of the
Company since 1983.
Committees: None
WILLIAM W. DEUPREE, JR., 56, is an employee and
Director of the Brokerage Company, positions he
has held since 1974. From 1985 through July,
1996, Mr. Deupree was President of the Company and
President and Chief Executive Officer of the
Brokerage Company. Mr. Deupree is a director
of NSA International, Inc. (member of Compensation
Committee) and Equity Inns, Inc. He has been a
Director of the Company since 1983.
Committees: None
JOHN W. STOKES, JR., 60, is the Vice President of
the Company and Vice Chairman of the Brokerage
Company, positions he has held since 1983. He has
been an employee and Director of the Brokerage Company
since 1970. Mr. Stokes is a director of O'Charley's,
Inc. (member of Compensation Committee) and RFS
Hotel Investors, Inc. He has been a Director of the
Company since 1983.
Committees: None
JOSEPH C. WELLER, 58, is the Secretary, Treasurer
and Chief Financial Officer of the Company, positions
he has held since 1983. He has also been an
Executive Vice President and the Treasurer
and Chief Financial Officer, employee and
Director of the Brokerage Company since 1969.
Mr. Weller has been a Director of the Company
since 1983.
Committees: None
<PAGE>
KENNETH F. CLARK, JR., 70, is a Counsel to the
Memphis office of the Louisville, Kentucky law
firm of Wyatt, Tarrant & Combs, a position held
since October 1, 1995. From September 1, 1994
to October 1, 1995, Mr. Clark was a Member in the
Memphis law firm of McDonnell Dyer, P.L.C. From
July 1990 to September 1, 1994, Mr. Clark was a
partner in the Memphis law firm of McDonnell Boyd.
He was a Partner in the law firm of Boone, Wellford,
Clark, Langschmidt & Apperson for more than 10
years prior thereto. Mr. Clark has been a
Director of the Company since 1984.
Committees: Audit
DONALD RATAJCZAK, Ph. D., 55, is the Director of
the Economic Forecasting Project at Georgia State
University in Atlanta, is a Director of Morrison
Restaurants Inc., Ruby Tuesday, Inc. and a
Trustee of AIM High Yield Fund, positions he
has held for several years. He has been
a consulting economist to the Company and
other businesses for more than five years.
Dr. Ratajczak has been a Director of the
Company since 1984.
Committees: Audit
JAMES E. HARWOOD, 61, is President of
Sterling Equities, Inc., a business planning,
capital and management services firm founded
by him in 1991. He was corporate vice-president
of Schering Plough Corporation, a pharmaceutical
and health care products concern, from 1988 until
1990, and was the president of Scholl, Inc.,
a subsidiary of Schering Plough Corporation
from 1983 until 1987, and an employee thereof
from 1980 until 1987. He held various executive
positions with Conwood Corporation from 1960 until
1980. Mr. Harwood is a director of Leader
Financial Corporation and American Maize Products,
Inc. He has been a director of the Company since 1991.
Committees: Audit
_____________________________________________
HARRY PHILLIPS, 67, is Chairman of the Executive
Committee and a Director of Browning-Ferris
Industries, Inc. and is a member of the board of
directors of National Commerce Bancorporation,
RFS Hotel Investors, Bockman Laboratories, Inc.
and Buckeye Cellulose Corporation. He served
as Chief Executive Officer of Browning-Ferris from
1970 until 1988, when he assumed his current position.
Committees: Audit
<PAGE>
Unless a shareholder specifies otherwise, it is
intended that such shareholder's shares will be
voted FOR the election of the foregoing nominees
to serve as directors until the next annual meeting
and until their successors are elected and qualified.
If any nominee shall become unavailable or unwilling to
serve the Company as a director for any reason, the
persons named in the Proxy Form are expected to consult
with the management of the Company in voting the
shares represented by them. The Board of Directors
has no reason to doubt the availability of any
of the nominees, and each has indicated his
willingness to serve as a director of the Company
if elected.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" ADOPTION OF
PROPOSAL NO. 1
Business Relationships Between Company and Nominees
Mr. Clark is of counsel to the law firm of Wyatt,
Tarrant & Combs. The Company and the Brokerage
Company have retained McDonnell Dyer, P.L.C.
(which was dissolved effective October 1, 1995,
with several members (including Mr. Clark)
joining Wyatt, Tarrant & Combs on that date)
during the past fiscal year and propose to
retain Wyatt, Tarrant & Combs during the present
fiscal year as special counsel on select matters.
The Brokerage Company has retained Dr. Ratajczak
as a consulting economist to provide consulting
services to it and its customers. Dr. Ratajczak
was so retained during the past fiscal year,
and the Brokerage Company proposes to retain Dr.
Ratajczak in such capacity during the current fiscal
year.
Certain Indebtedness of Management
During the period from August 1, 1996 through
July 31, 1997, except for indebtedness as margin
account customers of the Brokerage Company, no
director or executive officer was indebted to the
Company in excess of $60,000. The indebtedness of
directors and executive officers as margin account
customers was as a result of debit balances in
margin accounts. Such indebtedness was
incurred in transactions which were in the ordinary
course of business, on substantially the same
terms, including interest rates and collateral,
as those prevailing at the time for comparable
transactions with unaffiliated customers, and did
not involve more than the normal risk of collectibility
or present other unfavorable features.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation
for services rendered for each of the Company's
last three fiscal years, of the Chief Executive
Officer and its other four most highly compensated
executive officers whose total annual salary
and bonus exceeded $100,000:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
ALL
NAME AND RESTRICTED OTHER
PRINCIPAL YEAR SALARY BONUS(1) OTHER STOCK OPTIONS LTIP COMPEN-
POSITION ($) ($) ($) AWARDS(2) /SARs PAYOUTS SATION(8)
($) (#) (#) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Allen B. 1997 $130,000 $1,070,000 0 $84,654(3) 0 0 $1,574
Morgan,
Jr., 1996 130,000 1,258,666 0 $48,998 0 0 1,574
CEO 1995 130,000 790,259 0 $45,152 0 0 1,574
John W. 1997 $110,000 $1,067,414 0 $63,317(4) 0 0 $1,574
Stokes 1996 110,000 1,326,164 0 $45,046 0 0 1,574
Jr., 1995 110,000 857,475 0 $46,307 0 0 1,574
Vice
President
Joseph C. 1997 $110,000 $ 869,160 0 $53,128(5) 0 0 $1,574
Weller, 1996 110,000 975,000 0 $35,350 0 0 1,574
Secretary 1995 110,000 690,000 0 $29,560 0 0 1,574
James H. 1997 $ 85,000 $ 715,000 0 $42,912(6) 0 0 $1,574
Ganier,(9) 1996 85,000 665,000 0 3,408 0 0 1,574
Managing 1995 85,000 440,500 0 38,837 0 0 1,574
Director
of
Brokerage
Company
Douglas 1997 $ 0 $ 800,000 0 $79,237(7) 0 0 $1,574
Edwards, 1996 0 585,625 0 4,331 0 0 1,574
(10) 1995 0 535,781 0 53,586 0 0 1,574
Managing
Director
of
Brokerage
Company
<FN>
(1) Includes commissions earned on brokerage business as
registered sales representatives of the Brokerage
Company. See "Report of Brokerage Company Compensation
Committee."
(2) Excludes dividends paid in respect of restricted stock
at the same rate as paid in respect of all outstanding
Common Shares.
(3) Mr. Morgan held 37,127 shares of restricted stock as of
July 31, 1997. The total value of those shares,
determined based on the closing market price of the
Common Shares as of the date of each grant, is $253,695.
Dividends will be paid on the restricted stock
granted during the 1997 fiscal year.
<PAGE>
(4) Mr. Stokes held 36,372 shares of restricted stock as of
July 31, 1997. The total value of those shares,
determined based on the closing market price of the
Common Shares as of the date of each grant, is $245,156.
Dividends will be paid on the restricted stock
granted during the 1997 fiscal year.
(5) Mr. Weller held 27,267 shares of restricted stock as of
July 31, 1997. The total value of those shares,
determined based on the closing market price of the
Common Shares as of the date of each grant, is $184,350.
Dividends will be paid on the restricted stock
granted during the 1997 fiscal year.
(6) Mr. Ganier held 20,919 shares of restricted stock as of
July 31, 1997. The total value of those shares,
determined based on the closing market price of the
Common Shares as of the date of each grant, is $141,289.
Dividends will be paid on the restricted stock
granted during the 1997 fiscal year.
(7) Mr. Edwards held 21,752 shares of restricted stock as of
July 31, 1997. The total value of those shares,
determined based on the closing market price of the
Common Shares as of the date of each grant, is $136,497.
Dividends will be paid on the restricted stock
granted during the 1997 fiscal year.
(8) The amounts listed in this column are the amounts of
matching contributions made by the Company to the
Revised Profit Sharing and Retirement Savings Plan
on behalf of the Executive Officers.
(9) Mr. Ganier is president of Private Client Group,
a division of Morgan Keegan & Company, Inc.
(10) Mr. Edwards is president of Fixed Income Capital
Markets, a division of Morgan Keegan & Company, Inc.
</FN>
</TABLE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Company has adopted a Supplemental Executive
Retirement Plan ("SERP") for the benefit of executive
officers and key employees of the Company and its
subsidiaries. The SERP is an unfunded, non-qualified
deferred compensation plan which provides for the
payment of supplemental retirement benefits to
participants upon normal retirement, disability
retirement or death after reaching age 55 and completing
at least 20 years of employment with the Company
or its subsidiaries.
Benefits under the SERP will not be paid to or will
cease with respect to (if applicable) any participant
whose employment terminates prior to the participant's
attaining age 55 or 20 years of service, if such
termination is for cause, for acts of willful
malfeasance or gross negligence or for violation
of the non-competition provisions of the SERP.
Benefits are payable out of the general assets of
the Company.
<PAGE>
Participation in the SERP is determined by
the Board of Directors of the Company, and
the SERP is administered by an ad hoc committee
consisting exclusively of Independent Directors.
Current participants are Messrs. Morgan, Stokes and
Weller. The benefit payable from the SERP is a
monthly benefit, payable for 120 months
based on the participant's age at the date of
termination of his employment, as follows:
<TABLE>
<CAPTION>
ATTAINED AGE
UPON MONTHLY
TERMINATION BENEFITS
<C> <C>
62 or older $8,333
61 $7,917
60 $7,500
59 $7,083
58 $6,667
57 $6,250
56 $5,833
55 or younger $5,417
</TABLE>
The estimated annual benefit to any participant
who retires at the normal retirement age of 65
is $100,000.
<PAGE>
REPORT OF THE BROKERAGE COMPANY
COMPENSATION COMMITTEE
Compensation of Officers and Employees, Generally
The Compensation Committee of the Brokerage
Company determines the compensation for all
officers and employees of the Company and its
subsidiaries, including the Executive Officers.
The Company does not have a compensation
committee. The following report is given by
the Brokerage Company's Compensation Committee.
The Brokerage Company strives to offer to
officers and key employees compensation packages
that are not only competitive with packages
offered by other regional brokerage firms but that
also encourage a high level of individual productivity,
with a view toward retaining the highest
quality personnel available. The Compensation
Committee's policy is to base a substantial
portion of each Executive Officer's annual
compensation upon his individual productivity,
the performance of the Company and its subsidiaries
and such officer's contribution to the overall
success of the Company during the fiscal year.
Compensation of Executive Officers consists of
the following elements:
Base Salary. The base salaries of the Company's
Executive Officers have remained the same for the more
than five fiscal years. The Compensation
Committee has researched the base salaries of executive
officers in other firms in the securities brokerage
industry and believes the Company's salary levels
to be very comparable to other regional brokerage firms.
Incentive Compensation. Incentive bonuses are
routinely paid to those persons making significant
contributions to the profitability of the Company
and its subsidiaries. The Brokerage Company maintains
several bonus pools which are distributed among
officers and employees by the Compensation Committee,
based upon such factors as gross commission
production, contribution to the net income of the
Company, new client development, contribution
to Company management and long-range planning,
management of individual profit centers and
demonstrated firm leadership. Bonuses are distributed
to a broad cross-section of employees of the
Company and its subsidiaries, with 587 employees
having received bonuses totaling approximately
$31.5 million for the 1997 fiscal year. Of such
bonuses for the 1997 fiscal year, approximately
$4.5 million was paid to the Executive Officers.
Messrs. Morgan, Edwards and Stokes, in addition
to performing responsibilities as Executive
Officers and senior management of the Company,
maintain day-to-day client relationships and,
consequently, conduct significant levels of
brokerage business on behalf of clients of the
Brokerage Company. An element of their incentive
compensation is their respective share of
brokerage commissions from their selling efforts,
which for the fiscal year ended July 31,
1997 amounted to approximately $1,700,000 or
37.6% of the approximately $4,521,000 million
total incentive compensation paid to those
five Executive Officers.
<PAGE>
Restricted Stock Awards. Pursuant to the
Company's 1985 and 1994 Restricted Stock and
Incentive Stock Option Plans, the Company
periodically awards shares of restricted stock
to officers and key employees of the Company
and its subsidiaries. Restricted stock must be
returned to the Company if the recipient forfeits
such shares by reason of termination of employment
within a fixed period established by the Compensation
Committee. After the expiration of any restriction
period, the recipient owns such shares free of
restrictions. The number of shares awarded
to a particular recipient is subjectively
determined by the Compensation Committee,
which considers gross revenue production,
contribution to the net income of the
Company, new client development, management
contribution and demonstrated leadership,
among other things, in determining the
number of shares to be granted to a particular
person.
The Company believes that restricted stock
awards are a key element in the overall compensation
packages of officers and key employees because
such awards recognize productivity and profitability
while at the same time giving recipients a
vested long-term interest in the success of the
Company through stock ownership. Consequently,
the Company routinely grants restricted stock to a
broad cross-section of employees of the Company's
subsidiaries, with approximately 22% of such employees
having received awards during the 1997 fiscal
year. Each Executive Officer received an award of
restricted stock in 1997, in the aggregate amount
of 20,890 shares, which constituted approximately
7.0% of all shares of restricted stock granted.
Compensation of Chief Executive Officer
Mr. Morgan's base salary has remained at $130,000
per year for the last five years, consistent
with the Compensation Committee's and Board of
Directors' view that the Company should continue to
place greater emphasis on incentive and
production-based compensation for Executive Officers
tied to the financial and strategic performance of
the Company.
Other cash compensation paid to Mr. Morgan in 1997
consisted of $1,070,000 of incentive compensation
based on the overall performance of the Company and
his role in achieving such performance, of which
approximately 33% was attributable to Mr. Morgan's
share of commissions on brokerage business conducted
by him. In addition to the foregoing, Mr. Morgan
was granted 6,081 shares of the Company's restricted
stock during 1997, which shares had a value at the
time of grant of approximately $69,445.
Mr. Morgan presided over a second consecutive record
year for the Company. Lipper Analytical ranks Morgan
Keegan as one of the top 10 securities firms in pre-tax
operating margin, return on average equity and pre-tax
return on average assets. From July, 1992 until
August 1997, shares of Morgan Keegan common
stock have appreciated in value 412%, more than
double the S&P index. The Compensation Committee
determined Mr. Morgan's incentive bonus based primarily
upon the foregoing factors and his continued high
level of personal productivity and commitment to the
success of the Company. The Compensation Committee
believes Mr. Morgan's compensation to be commensurate
with the compensation paid to the chief executive
officers of corporations within the Company's peer group.
<PAGE>
The report of the brokerage Company Compensation
Committee was adopted in whole by the Board of
Directors of the Company.
1. Allen B. Morgan, Jr.
2. William W. Deupree, Jr.
3. John W. Stokes, Jr.
4. Joseph C. Weller
5. Kenneth F. Clark, Jr.
6. Donald Ratajczak
7. James E. Harwood
8. Harry Phillips
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Company does not have a compensation committee,
and the Compensation Committee of the Brokerage Company
makes all decisions regarding executive compensation.
The members of the compensation committee of the
Brokerage Company are Messrs. Morgan, Stokes and Weller,
all of whom are Executive Officers and each of whom
during the 1997 fiscal year participated in
deliberations regarding Executive Officers' compensation.
<PAGE>
PERFORMANCE GRAPH
The following graph compares the Company's cumulative
total shareholder return on its Common Shares for a
five year period (August 1, 1992 to July 31, 1997)
with the cumulative total return of the Standard &
Poor's 500 Stock Index and the Regional Sub-Index
of the Financial Service Analytics Stock Price
Index ("FSA Regional") over the same period
(assuming the investment of $100 in each on August
1, 1992, and the reinvestment of all dividends).
The FSA Regional is comprised of 15 publicly
held regional securities firms.
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Morgan
Keegan $100 $143 $150 $228 $226 $412
S&P 500
Stock
Index $100 $109 $114 $144 $168 $225
FSA
Regional $100 $133 $129 $195 $202 $464
</TABLE>
<PAGE>
SHAREHOLDER PROPOSALS FOR 1998
Pursuant to the Securities Exchange Act of 1934,
shareholder proposals intended to be presented at the
1998 annual meeting of shareholders of the Company
must be received by the Company at its executive
offices on or before July 16, 1998.
RELATIONSHIPS WITH INDEPENDENT
PUBLIC ACCOUNTANTS
Ernst & Young, LLP has served as auditors for the
Company and its subsidiaries for many years and will
continue to so serve until and unless changed by
action of the Board of Directors. It has not been
the practice of the Company, and it is not
required by its Charter or By-Laws, to submit
the Company's selection of auditors to the
shareholders for ratification.
A partner of Ernst & Young, LLP is expected to be
present at the annual meeting with the opportunity
to make a statement if he desires to do so and is
expected to be available to respond to appropriate
questions.
BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
The federal securities laws require the Company's
directors and officers, and persons who own more
than 10% of a registered class of the
Company's equity securities, to file with the
Securities and Exchange Commission initial reports
of ownership and reports of changes in
ownership of any securities of the Company.
To the Company's knowledge, based solely on review
of the copies of such reports furnished to the
Company and representations that no other reports
were required, during the year ended July 31, 1997,
all of the Company's officers and directors made
all required filings.
OTHER MATTERS
The Board of Directors knows of no other business
to be brought before the meeting. If any other
matters properly come before the meeting, the
proxies will be voted on such matters in accordance
with the judgment of the persons named as proxies
therein, or their substitutes, present and acting at
the meeting.
INCORPORATION BY REFERENCE
The consolidated financial statements of the Company,
included in the Company's 1997 Annual Report which
accompanies this Proxy Statement, are hereby
incorporated by reference into this Proxy Statement
as if stated verbatim herein.
BY ORDER OF THE BOARD OF DIRECTORS
/S/ Joseph C. Weller
JOSEPH C. WELLER
Secretary
October 17, 1997
??
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
This schedule contains summary financial information extracted from
the Morgan Keegan, Inc. 1997 Annual Report and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JUL-31-1997
<CASH> 22,423
<RECEIVABLES> 379,158
<SECURITIES-RESALE> 426,981
<SECURITIES-BORROWED> 25,745
<INSTRUMENTS-OWNED> 275,611
<PP&E> 43,418
<TOTAL-ASSETS> 1,208,257
<SHORT-TERM> 570
<PAYABLES> 606,842
<REPOS-SOLD> 97,417
<SECURITIES-LOANED> 7,160
<INSTRUMENTS-SOLD> 94,298
<LONG-TERM> 19,714
0
0
<COMMON> 19,782
<OTHER-SE> 183,938
<TOTAL-LIABILITY-AND-EQUITY> 1,208,257
<TRADING-REVENUE> 109,964
<INTEREST-DIVIDENDS> 64,262
<COMMISSIONS> 79,859
<INVESTMENT-BANKING-REVENUES> 51,179
<FEE-REVENUE> 23,270
<INTEREST-EXPENSE> 44,652
<COMPENSATION> 164,364
<INCOME-PRETAX> 55,278
<INCOME-PRE-EXTRAORDINARY> 55,278
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,378
<EPS-PRIMARY> 1.10
<EPS-DILUTED> 1.10
</TABLE>
