<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
Proxy Statement Pursuant to Section 14(a) of Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant X
---
Filed by a Party other than the Registrant
---
Check the appropriate box:
Preliminary Proxy Statement
- ---
Confidential, for use of the Commission Only (as permitted
- --- by Rule 14a-6(c)(2))
X Definitive Proxy Statement
- ---
Definitive Additional Materials
- ---
Soliciting Material Pursuant to Rule 14a-11(c) or rule 14a-12
- ---
Morgan Keegan, Inc.
- -----------------------------------------------------------------------
(Name of Registrant as Specified In The Charter)
- -----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement,if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required
- ---
Fee computed on table below per Exchange Act Rules 14a-6(i)(l)
- --- 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:
--------------------------------------
Fee paid previously with preliminary materials:
- ---
---------------------------------------------------------------
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:
---------------------------
<PAGE>
MORGAN KEEGAN, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 24, 1998
NOTICE IS HEREBY GIVEN that the 1998 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 24, 1998, 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 2, 1998, 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
JOSEPH C. WELLER
Secretary
October 15, 1998
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 24, 1998,
(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 15, 1998.
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, 1998 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 2, 1998 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 2, 1998, the Company had outstanding 32,697,954
shares of common stock $.625 par value per share (the "Common Shares").
Of the total number of outstanding Common Shares on October 2, 1998, the
Directors and Executive Officers of the Company, consisting of eight persons,
owned 8,315,229 shares comprising 25.4% 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.
OWNERSHIP OF THE COMPANY'S COMMON SHARES
Security Ownership of Certain Beneficial Owners
The following table sets forth information as of October 2, 1998, regarding
each person known to the Company to be the beneficial owner of more than
five percent of its Common Shares:
<TABLE>
NAME AND ADDRESS AMOUNT AND NATURE
OF BENEFICIAL OF BENEFICIAL PERCENT OF CLASS(1)
OWNER OWNERSHIP
<S> <C> <C>
Allen B. Morgan, Jr. 3,563,814(2) 10.9%
Morgan Keegan Tower
Fifty Front Street
Memphis, Tennessee 38103
<FN>
(1) Based on 32,697,954 Common Shares outstanding at October 2, 1998.
(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 95,872 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.
</TABLE>
<PAGE>
Security Ownership of Management
The following table sets forth the beneficial ownership of the
Company's Common Shares as of October 2, 1998 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>
NAME OF AMOUNT AND NATURE
BENEFICIAL OWNER OF BENEFICIAL PERCENT OF CLASS(1)
OWNERSHIP
<S> <C> <C>
Kenneth F. Clark, Jr. 99,000(2) *
William W. Deupree, Jr. 1,156,870(9) 3.5%
Douglas Edwards 451,747(6) 1.4%
James H. Ganier 240,851(7) *
James E. Harwood 85,683(8) *
Allen B. Morgan, Jr. 3,563,814(3) 10.9%
Harry J. Phillips 21,000(10) *
Donald Ratajczak, Ph.D. 92,427(2) *
John W. Stokes, Jr. 1,010,109(4) 3.1%
Joseph C. Weller 1,593,728(5) 4.9%
All Director, Nominees and
Executive Officers as a Group
(10 Persons) 25.4%
<FN>
(1) Based on 32,697,954 Common Shares outstanding at October 2,
1998. Beneficial ownership is determined in accordance with
rules of the Securities and Exchange Commission and include
voting or investment power with respect to securities. Shares
of Common Stock issuable upon the exercise of stock options or
other rights to acquire Common Stock, currently exercisable
or convertible, or exercisable or convertible within 60 days
of October 2, 1998 are deemed outstanding and to be beneficially
owned by the person holding such option or other right for
purposes for computing such person's percentage ownership, but
are not deemed outstanding for the purpose of computing the
percentage ownership of any other person. Except for shares held
jointly with a person's spouse and subject to applicable
community property laws, or indicated in the footnotes to this
table, each shareholder identified in the table possesses sole
voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by such shareholder.
<PAGE>
(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
95,872 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.
(9) Includes 40,000 shares owned or record by a family foundation.
(10) Includes options to purchase 13,500 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.
</FN>
</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 1998, and each director attended at least
three of the four meetings.
The Company has an Audit Committee and a Compensation Committee. The
Company does not have a standing Nominating 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 Morgan Keegan & Company, Inc. (the "Brokerage Company")
("Independent Directors"). During fiscal 1998, the Audit Committee
consisted of Kenneth F. Clark, Jr., Dr. Donald Ratajczak, Harry J.
Phillips and James E. Harwood. 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.
The Compensation Committee of the Board of Directors is composed of
Messrs. Clark, Ratajczak, Phillips and Harwood, all of whom are
non-employee directors of the Company. The Compensation Committee met
one time during the past fiscal year and each Compensation Committee
member attended the meeting. The Compensation Committee determines
the compensation for all the Executive Officers.
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 of 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., 56, 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., 57, 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., 61, 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, 59, 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., 71, is Counsel to the 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 of
the law firm of McDonnell Dyer, P.L.C. From July 1990 to
September 1, 1994, Mr. Clark was a partner in the 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, Compensation
DONALD RATAJCZAK, Ph. D., 55, is the Director of the Economic
Forecasting Center at Georgia State University in Atlanta, is a
Director of Ruby Tuesday, Inc. and a Trustee of CIM 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, Compensation
JAMES E. HARWOOD, 62, is President of Sterling Equities, Inc., a
business planning, capital and management services firm founded
in 1991. He was an executive with Schering Plough, Inc., a
pharmaceutical and healthcare products company, from 1980 until
1991, and was president of Scholl, Inc., a division of Schering
Plough from 1983 until 1987. He was a director and held various
executive positions with Conwood Corporation from 1960 until 1980.
Mr. Harwood is a director of Union Planters Corporation, SCB
Computer Technologies, Inc. and Washington Life Insurance Co.
He has been a director of the Company since 1991.
Committees: Audit, Compensation
HARRY J. PHILLIPS, 68, 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, Buckman Laboratories, Inc. and Buckeye
Technologies, Inc. He served as Chief Executive Officer of
Browning-Ferris from 1970 until 1988, when he assumed his
current position.
Committees: Audit, Compensation
<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.
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
Wyatt, Tarrant & Combs during the past fiscal year and propose
to retain them 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, 1997 through July 31, 1998,
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>
<TABLE>
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 $100,000:
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
ALL
NAME AND RESTRICTED OTHER
PRINCIPAL YEAR SALARY BONUS(1) OTHER STOCK OPTIONS LTIP COMPEN-
POSITION ($) ($) ($) AWARDS(2) /SARs PAYOUTS SATION(8)
($) (#) (#) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Allen B. 1998 $130,000 $1,247,866 0 $223,726 0 0 $1,600
Morgan,
Jr., 1997 130,000 1,070,000 0 $ 84,654(3) 0 0 1,574
CEO 1996 130,000 1,258,666 0 $ 48,998 0 0 1,574
John W.
Stokes 1998 $110,000 $ 924,408 0 $220,595 0 0 $1,600
Jr., Vice 1997 110,000 1,067,414 0 $ 63,317(4) 0 0 1,574
President 1996 110,000 1,326,164 0 $ 45,046 0 0 1,574
Joseph C. 1998 $110,000 $ 950,000 0 $176,333 0 0 $1,600
Weller 1997 110,000 869,160 0 $ 53,128(5) 0 0 1,574
Secretary 1996 110,000 975,000 0 $ 35,350 0 0 1,574
James H. 1998 $ 85,000 $ 915,000 0 $143,849 0 0 $1,600
Ganier,(9) 1997 85,000 715,000 0 $ 42,912(6) 0 0 1,574
Managing 1996 85,000 665,000 0 $ 3,408 0 0 1,574
Director of
Brokerage
Company
Douglas 1998 $ 0 $1,000,000 0 $199,503 0 0 $1,600
Edwards,
(10) 1997 0 800,000 0 79,237(7) 0 0 1,574
Managing 1996 0 585,625 0 4,331 0 0 1,574
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 30,289 shares of restricted stock as of
July 31, 1998 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 $249,524. Dividends will
be paid on the restricted stock granted during the 1998
fiscal year.
<PAGE>
(4) Mr. Stokes held 29,885 shares of restricted stock as of
July 31,1998. 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 $277,972. Dividends will
be paid on the restricted stock granted during the 1998
fiscal year.
(5) Mr. Weller held 22,070 shares of restricted stock as of
July 31, 1998. 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 $186,314. Dividends will
be paid on the restricted stock granted during the 1998
fiscal year.
(6) Mr. Ganier held 16,944 shares of restricted stock as of
July 31,1998. 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 $165,146. Dividends will
be paid on the restricted stock granted during the 1998
fiscal year.
(7) Mr. Edwards held 15,409 shares of restricted stock as of
July 31,1998. 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 $145,208. Dividends will
be paid on the restricted stock granted during the 1998
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 vice-chairman 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 COMPENSATION COMMITTEE
Compensation of Officers and Employees, Generally
The Compensation Committee determines the compensation for all
officers and employees of the Company and its subsidiaries,
including the Executive Officers.
The 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 688 employees having
received bonuses totaling approximately $42.7 million for
the 1998 fiscal year. Of such bonuses for the 1998 fiscal
year, approximately $6.7 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, 1998
amounted to approximately $1,000,000 or 16% of the approximately
$6,704 million total incentive compensation paid to those five
Executive Officers.
<PAGE>
Restricted Stock Awards. Pursuant to the Company's 1994 Restricted
Stock and Incentive Stock Option Plan, 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 1998 fiscal year. Each Executive Officer received an award of
restricted stock in 1998, in the aggregate amount of 8,365 shares,
which constituted approximately 4% 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 six 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 1998 consisted of
$1,247,866 of incentive compensation based on the overall performance
of the Company and his role in achieving such performance, of which
approximately 30% was attributable to Mr. Morgan's share of
commissions on brokerage business conducted by him. In addition
to the foregoing, Mr. Morgan was granted 1,770 shares of the
Company's restricted stock during 1998, which shares had a value
at the time of grant of approximately $44,802.
Mr. Morgan presided over a third 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, 1993 until
August 1998, shares of Morgan Keegan common stock have appreciated
in value 473%, which was substantially more than 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 Compensation Committee believes that the compensation levels
of the Company's executive officers are competitive and reasonably
comparable with the compensation and benefits paid to executive
officers of companies that generate similar financial results.
Kenneth F. Clark, Jr.
Donald Ratajczak
James E. Harwood
Harry J. Phillips
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There were no compensation committee interlocks in 1998, and no
insider participated in decisions related to his compensation in 1998.
<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, 1993 to July 31, 1998) 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, 1993, and the reinvestment of all
dividends). The FSA Regional is comprised of 15 publicly held
regional securities firms.
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Morgan Keegan $100 $105 $160 $159 $289 $473
S&P 500 Stock
Index $100 $105 $133 $154 $235 $280
FSA Regional $100 $ 92 $136 $144 $313 $440
</TABLE>
<PAGE>
SHAREHOLDER PROPOSALS FOR 1998
Pursuant to the Securities Exchange Act of 1934, shareholder
proposals intended to be presented at the 1999 annual meeting of
shareholders of the Company must be received by the Company at
its executive offices on or before June 17, 1999.
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, 1998, 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 1998 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 15, 1998
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
This schedule contains summary financial information extracted from
the Morgan Keegan, Inc. 1998 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-31-1998
<PERIOD-END> JUL-31-1998
<CASH> 22,172
<RECEIVABLES> 456,404
<SECURITIES-RESALE> 521,483
<SECURITIES-BORROWED> 29,920
<INSTRUMENTS-OWNED> 353,708
<PP&E> 24,332
<TOTAL-ASSETS> 1,463,821
<SHORT-TERM> 68,400
<PAYABLES> 726,117
<REPOS-SOLD> 162,734
<SECURITIES-LOANED> 4,981
<INSTRUMENTS-SOLD> 116,727
<LONG-TERM> 0
0
0
<COMMON> 20,510
<OTHER-SE> 236,848
<TOTAL-LIABILITY-AND-EQUITY> 1,463,821
<TRADING-REVENUE> 121,790
<INTEREST-DIVIDENDS> 78,865
<COMMISSIONS> 110,082
<INVESTMENT-BANKING-REVENUES> 67,763
<FEE-REVENUE> 28,594
<INTEREST-EXPENSE> 51,165
<COMPENSATION> 204,829
<INCOME-PRETAX> 77,186
<INCOME-PRE-EXTRAORDINARY> 77,186
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48,186
<EPS-PRIMARY> 1.47
<EPS-DILUTED> 1.47
</TABLE>
