<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:
<PAGE>
--------------------------------------
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 23, 1999
NOTICE IS HEREBY GIVEN that the 1999 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 23, 1999, 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 1, 1999, 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 15, 1999
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 23, 1999,
(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, 1999.
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, 1999 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 1, 1999 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 1, 1999, the Company
had outstanding 29,669,553 shares of common stock $.625 par value per
share (the "Common Shares"). Of the total number of outstanding Common
Shares on October 1, 1999, the Directors and Executive Officers of the
Company, consisting of eleven persons, owned 7,160,559 shares comprising
24.1% of the total.
1
<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 1, 1999,
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 ADDRESS AMOUNT AND NATURE
OF BENEFICIAL OF BENEFICIAL PERCENT OF CLASS(1)
OWNER OWNERSHIP
<S> <C> <C>
Allen B. Morgan, Jr. 3,495,788(2) 11.8%
Morgan Keegan Tower
Fifty Front Street
Memphis, Tennessee 38103
Joseph C. Weller 1,587,928 5.3%
Morgan Keegan Tower
Fifty Front Street
Memphis, Tennessee 38103
____________________________
<FN>
(1) Based on 29,669,553 Common Shares outstanding at October 1, 1999.
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 1, 1999 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.
(2) Excludes 84,145 shares owned by Mr. Morgan's spouse and
70,000 owned by Mr. Morgan's children's trust 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.
</FN>
</TABLE>
2
<PAGE>
Security Ownership of Management
The following table sets forth the beneficial ownership of the
Company's Common Shares as of October 1, 1999 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. 108,000(2) *
Douglas Edwards 467,573(6) 1.6%
James H. Ganier 244,143(7) *
James E. Harwood 92,183(8) *
Allen B. Morgan, Jr. 3,495,788(3) 11.8%
Harry J. Phillips, Sr. 34,500(9) *
Donald Ratajczak, Ph.D. 106,248(2) *
Robert M. Solmson 5,000 *
John W. Stokes, Jr. 1,013,196(4) 3.4%
Joseph C. Weller 1,587,928(5) 5.3%
Spence L. Wilson 6,000 *
All Director, Nominees and
Executive Officers as a Group
(11 Persons) 24.1%
_______________
<FN>
(1) Based on 29,699,553 Common Shares outstanding at October 1,
1999. 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 1, 1999 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.
3
<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 and 70,000
in his children's trust 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 30,000 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 options to purchase 27,000 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>
4
<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
1999, 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 ("Independent Directors") who are not
officers or employees of the Company or Morgan Keegan & Company, Inc.
(the "Brokerage Company"). During fiscal 1999, the Audit Committee
consisted of Robert M. Solmson, Dr. Donald Ratajczak, 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 and Phillips, 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.
5
<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 ten 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.
- ---------------------------------------------------------------------
KENNETH F. CLARK, JR., 72, 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: Compensation
- ---------------------------------------------------------------------
G. DOUGLAS EDWARDS, 47, is President of the Fixed Income Capital
Markets division of Morgan Keegan and Company, Inc., a position he
has held since 1996. Mr. Edwards serves as a Director of the Brokerage
Company and is on the Board of Advisors to the SSM Venture Partners
II Fund.
Committees: None
- ---------------------------------------------------------------------
JAMES E. HARWOOD, 63, 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
- ---------------------------------------------------------------------
ALLEN B. MORGAN, JR., 57, 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
6
<PAGE>
- ---------------------------------------------------------------------
HARRY J. PHILLIPS, SR., 69, is the former Chairman and Chief Executive
Officer of Browning-Ferris Industries, Inc. and is a member of the
board of directors of National Commerce Bancorporation, RFS Hotel
Investors, Inc. and Buckeye Technologies, Inc.
Committees: Compensation (Chairman)
- ---------------------------------------------------------------------
DONALD RATAJCZAK, Ph. D., 56, 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 (Chairman)
- ---------------------------------------------------------------------
ROBERT M. SOLMSON, 52, is Chairman of the Board and Chief Executive
Officer of RFS Hotel Investors, Inc., a post he has held since 1993.
He was named a Director of the Company in February 1999.
Committees: Audit
- ---------------------------------------------------------------------
JOHN W. STOKES, JR., 62, 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, 60, 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
- -------------------------------------------------------------------------------
SPENCE L. WILSON, 57, is President of Kemmons Wilson, Inc. and is a
partner in Wilson Hotel Management. He also serves as a Director of
Union Planters Corporation. He was named a Director of the Company in
February 1999.
Committees: Compensation
7
<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, 1998 through July 31, 1999, 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.
8
<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. 1999 $130,000 $1,223,401 0 $165,370 0 0 $1,650
Morgan, Jr., 1998 130,000 1,247,866 0 223,726 0 0 1,600
CEO 1997 130,000 1,070,000 0 84,654(3) 0 0 1,574
John W. Stokes 1999 $110,000 $ 903,235 0 $ 80,579 0 0 $1,650
Jr., Vice 1998 110,000 924,408 0 220,595 0 0 1,600
President 1997 110,000 1,067,414 0 63,317(4) 0 0 1,574
Joseph C. 1999 $110,000 $ 950,000 0 $131,128 0 0 $1,650
Weller 1998 110,000 950,000 0 176,333 0 0 1,600
Secretary 1997 110,000 869,160 0 53,128(5) 0 0 1,574
James H. 1999 $ 85,000 $ 865,000 0 $ 99,358 25,000 0 $1,650
Ganier,(9) 1998 85,000 915,000 0 143,849 0 0 1,600
Managing 1997 85,000 715,000 0 42,912(6) 0 0 1,574
Director of
Brokerage
Company
Douglas 1999 $ 85,000 $1,044,852 0 $ 96,981 25,000 0 $1,650
Edwards,(10) 1998 85,000 $ 915,000 0 199,503 0 0 1,600
Managing 1997 85,000 715,000 0 79,237(7) 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, 1999 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 1999
fiscal year.
9
<PAGE>
(4) Mr. Stokes held 29,885 shares of restricted stock as of
July 31,1999. 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 1999
fiscal year.
(5) Mr. Weller held 22,070 shares of restricted stock as of
July 31, 1999. 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 1999
fiscal year.
(6) Mr. Ganier held 16,944 shares of restricted stock as of
July 31,1999. 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 1999
fiscal year.
(7) Mr. Edwards held 15,409 shares of restricted stock as of
July 31,1999. 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 $145,208. Dividends will
be paid on the restricted stock granted during the 1999
fiscal year.
(8) The amounts listed in this column are the amounts of matching
contributions made by the Company to the Revised Profit Sharing
and Retirement Savings Plan on behalf of the Executive Officers.
(9) Mr. Ganier is vice-chairman of Morgan Keegan & Company, Inc.
(10) Mr. Edwards is president of Fixed Income Capital Markets, a
division of Morgan Keegan & Company, Inc.
</FN>
</TABLE>
10
<PAGE>
The following tables contain information concerning options
granted to, and exercised by, the executive officers included in
the Summary Compensation Table during the fiscal year.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
-------------------------------------------------
Potential Realizable
% of Total Value at Assumed
Options Annual Rates of
Options Granted Exercise Stock Appreciation
Granted in Fiscal Price Expiration for Option Term (2)
Name (#) (1) Year ($/share) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Doug Edwards 25,000 1999 23.9375 8/19/03 165,337 365,355
James Ganier 25,000 1999 23.9375 8/19/03 165,337 365,355
<FN>
1) All of these options were granted on 8/19/98. The options vest 1/3
after 2 years, 1/3 after 3 years, and 1/3 after 4 years.
2) Potential realized values represent the future value, net of exercise
price, of the options if the Company's stock price were to appreciate
by 5% and 10% during each year of the awards.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Aggregated Option Exercises during
Last Fiscal Year and Year-end Value
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Shares July 31, 1999 Sept. 25, 1998
Acquired Value (Exercisable/ (Exercisable/
Name On Exercise Realized Unexercisable) Unexercisable)
<S> <C> <C> <C> <C>
Doug Edwards None None 25,000 0/0
James Ganier None None 25,000 0/0
</TABLE>
11
<PAGE>
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.
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.
12
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
Compensation of Officers and Employees, Generally
The Compensation Committee determines the compensation for Messrs.
Morgan, Stokes and Weller and reviews and advises senior management
with respect to the incentive compensation of all other 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 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 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 738 employees having received bonuses totaling approximately
$43.9 million for the 1999 fiscal year. Of such bonuses for the
1999 fiscal year, approximately $4.9 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 compensation is brokerage
commissions from their selling efforts, which for the fiscal year ended
July 31, 1999 amounted to approximately 17% of the approximately
$4,986,000 total incentive compensation paid to those five Executive
Officers.
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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 set by senior management. 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 executive committee of the Brokerage
Company, 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 23%
of such employees having received awards during the 1999 fiscal year.
Each Executive Officer received an award of restricted stock in
1999, in the aggregate amount of 13,149 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 seven 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 1999 consisted of
$1,223,401 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 2,974 shares of the Company's restricted stock
during 1999, which shares had a value at the time of grant of
approximately $55,763.
Mr. Morgan presided over a third consecutive record year in terms of
revenue for the Company. Morgan Keegan has consistently ranked 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 August,
1994 until July 1999, shares of Morgan Keegan common stock have
appreciated in value 206%, 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.
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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.
Harry J. Phillips, Sr.
Spence L. Wilson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There were no compensation committee interlocks in 1999, and
no insider participated in decisions related to his compensation in 1999.
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PERFORMANCE GRAPH
The following graph compares the Company's cumulative total shareholder
return on its Common Shares for a five year period (August 1, 1994 to
July 31, 1999) 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, 1994,
and the reinvestment of all dividends). The FSA Regional is comprised
of 15 publicly held regional securities firms.
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
Morgan Keegan $100 $152 $151 $274 $449 $335
S&P 500 Stock
Index $100 $126 $147 $223 $267 $512
FSA Regional $100 $152 $160 $335 $480 $456
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SHAREHOLDER PROPOSALS FOR 2000
Pursuant to the Securities Exchange Act of 1934, shareholder
Proposals intended to be presented at the 2000 annual meeting of
shareholders of the Company must be received by the Company at its
executive offices on or before June 16, 2000.
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, 1999, 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 1999 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/ Joesph C. Weller
----------------------------
JOSEPH C. WELLER
Secretary
October 15, 1999
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</TABLE>
