<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SOUTHTRUST CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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> 2
[SOUTHTRUST CORPORATION LOGO]
420 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 17, 1996
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders (the "Annual Meeting") of SouthTrust
Corporation (the "Company") will be held in the auditorium on the eighth floor
of the SouthTrust Tower, 420 North 20th Street, Birmingham, Alabama, on
Wednesday, April 17, 1996, at 9:00 A.M., Central Time, for the following
purposes:
(1) To elect three (3) persons to the Board of Directors of the
Company, each person to serve a three-year term and until such person's
successor is duly elected and qualified;
(2) To amend the Restated Certificate of Incorporation of the Company
to increase the number of shares of Common Stock authorized for issuance
from 200,000,000 to 300,000,000 shares;
(3) To adopt the Long-Term Incentive Plan of the Company; and
(4) To transact such other business as may properly come before the
Annual Meeting.
Holders of Common Stock of the Company of record at the close of business
on February 23, 1996 are entitled to notice of and to vote at the Annual
Meeting.
You are cordially invited to attend the Annual Meeting, and we hope you
will be present at the Annual Meeting. WHETHER YOU PLAN TO ATTEND OR NOT, PLEASE
SIGN AND RETURN THE ENCLOSED PROXY SO THAT THE COMPANY MAY BE ASSURED OF THE
PRESENCE OF A QUORUM AT THE ANNUAL MEETING. A postage-paid envelope addressed to
the Company is enclosed for your convenience in returning your proxy to the
Company.
By Order Of The Board Of Directors
/s/ Audrey D. Barnard
----------------------
AUDREY D. BARNARD
Secretary
Birmingham, Alabama
March 8, 1996
<PAGE> 3
[SOUTHTRUST CORPORATION LOGO]
---------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 17, 1996
The accompanying proxy is solicited on behalf of the Board of Directors of
SouthTrust Corporation, a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders (the "Annual Meeting") of the Company to be held
in the auditorium on the eighth floor of the SouthTrust Tower, 420 North 20th
Street, Birmingham, Alabama, on Wednesday, April 17, 1996 at 9:00 A.M., Central
Time. It is anticipated that this proxy material will be mailed to stockholders
on or about March 8, 1996.
The matters to be considered at the Annual Meeting are (i) the election of
three directors to serve for the term of office described below, (ii) the
amendment of the Restated Certificate of Incorporation of the Company to
increase the number of shares of Common Stock authorized for issuance from
200,000,000 to 300,000,000 shares and (iii) the adoption of a Long-Term
Incentive Plan of the Company. All shares of Common Stock represented by an
executed and completed proxy received by the Company in time for voting at the
Annual Meeting will be voted in accordance with the instructions specified
thereon, and if no instructions are specified thereon, will be voted for (i) the
election of the three nominees named herein as directors, (ii) the amendment to
the Restated Certificate of Incorporation of the Company and (iii) the adoption
of the Long-Term Incentive Plan of the Company. A proxy may be revoked at any
time prior to its exercise by filing with the Secretary of the Company either an
instrument revoking the proxy or a duly executed proxy bearing a later date or
by attending the Annual Meeting and voting in person. Attendance at the Annual
Meeting by itself will not revoke a proxy.
All expenses of solicitation of proxies will be paid by the Company. The
Company will reimburse banks, brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy soliciting
material to the beneficial owners of shares of Common Stock of the Company. In
addition, the Company has retained Morrow & Co., Inc. to assist in the
solicitation of proxies and anticipates that it will incur fees of $7,500,
excluding out-of-pocket costs, for this service. In addition to the use of the
mail, proxies may be solicited by telephone or by telecopy or personally by the
directors, officers and employees of the Company, who will receive no extra
compensation for their services.
As of February 23, 1996, the record date for the Annual Meeting, there were
issued and outstanding 88,018,394 shares of Common Stock of the Company. The
holders of each outstanding share of Common Stock of the Company as of such date
are entitled to one vote per share with respect to each matter to be considered
at the Annual Meeting.
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock of the Company is necessary to constitute a quorum at the
Annual Meeting. Shares of Common Stock represented by a properly executed and
returned proxy will be treated as present at the Annual Meeting for purposes of
determining a quorum without regard to whether the proxy is marked as casting a
vote for or against or abstaining with respect to a particular matter. In
addition, shares of Common Stock represented by "broker non-votes" (i.e., shares
of Common Stock held in record name by brokers or nominees as to which a proxy
is received and (i) instructions have not been received from the beneficial
owners or persons entitled to vote, (ii) the broker or nominee does not have
discretionary voting power and (iii) the record holder has indicated that it
does not have authority to vote such shares on that matter) will be treated as
present for purposes of determining a quorum. Since the election of directors is
determined by a majority of the votes cast at the Annual Meeting, abstentions
and broker non-votes will not affect such election. However, since the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock of the Company is required for the adoption of the proposed
amendment to the Restated Certificate of Incorporation of the Company, and since
the affirmative vote of the holders of a majority of the shares of Common Stock
present in person or by
<PAGE> 4
proxy at the Annual Meeting is required for the adoption of the Long-Term
Incentive Plan, abstentions and broker non-votes will have the effect of
negative votes with respect to these matters.
ELECTION OF DIRECTORS
The Bylaws of the Company provide for a Board of Directors of not fewer
than three nor more than sixteen members. The Restated Certificate of
Incorporation and the Bylaws of the Company provide that the members of the
Board of Directors shall be divided into three classes, one class to be elected
at each annual meeting of stockholders and to serve for a term of three years.
As of the date of the Proxy Statement, the Board of Directors consists of ten
persons.
CURRENT NOMINEES
The Board of Directors proposes to nominate the three persons named below
for election as directors, such persons to serve until the 1999 Annual Meeting
of Stockholders and until their successors have been elected and shall have
qualified.
The names, ages and principal occupations during the past five years of the
nominees, the year each first became a director of the Company, and the number
and percentage of shares of the Company's Common Stock owned beneficially by
each of them as of December 31, 1995 are as follows:
<TABLE>
<CAPTION>
NUMBER AND PERCENT
OF SHARES OF COMMON
STOCK OF THE COMPANY
NAME, AGE AND BENEFICIALLY OWNED
PRINCIPAL OCCUPATION DIRECTOR AS
OF NOMINEES SINCE OF DECEMBER 31, 1995
- - -------------------------------------------------- ----------------- --------------------
<S> <C> <C>
H. Allen Franklin (51) April 20, 1994 3,535
Chairman and Chief Executive Officer, 0.00%
Georgia Power Company (electric utility)(1)
Herbert Stockham (67) October 17, 1973 111,882(2)
Chairman, Stockham Valves & Fittings, Inc. 0.13%
(manufacturing business)
Charles G. Taylor (67) January 15, 1992 222,925(3)
President and Chief Executive Officer, 0.25%
The Taylor Group, Inc.
(contract service business)
</TABLE>
- - ---------------
(1) Prior to January 1, 1994, Mr. Franklin was principally employed as President
and Chief Executive Officer of Southern Company Services, Inc.
(2) Includes 6,036 shares held by Mr. Stockham's wife and 2,551 shares held in a
trust with respect to which Mr. Stockham possesses voting power.
(3) Includes 1,468 shares owned by Mr. Taylor's wife.
Each of the nominees was elected as a director at the Annual Meeting of
Stockholders held on April 21, 1993, except that Mr. Franklin was elected on
April 20, 1994 by the Board of Directors of the Company.
Unless directed to the contrary, the persons acting under the proxy
solicited hereby will vote for the nominees named above. Should any such nominee
become unable to accept election, which is not anticipated, it is intended that
the persons acting under the proxy will vote for the election in his stead of
such other person as the Board of Directors may recommend. Proxies may not be
voted for more than three persons.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE NOMINEES
FOR DIRECTORS NAMED ABOVE.
CONTINUING DIRECTORS
The following tabulation sets forth with respect to those persons who were
elected as directors of the Company at previous Annual Meetings of Stockholders
or otherwise (and will continue to serve as directors
2
<PAGE> 5
following the Annual Meeting) the names, ages and principal occupations of each
such person during the past five years, the year of expiration of such person's
current term as a director, the year such person first became a director of the
Company, and the number and percentage of shares of the Company's Common Stock
owned beneficially by such person as of December 31, 1995:
<TABLE>
<CAPTION>
NUMBER AND PERCENT OF
SHARES OF COMMON STOCK OF
CURRENT THE COMPANY BENEFICIALLY
NAME, AGE AND TERM DIRECTOR OWNED AS OF DECEMBER 31,
PRINCIPAL OCCUPATION EXPIRES SINCE 1995
- - ----------------------------------------- -------- ----------------- --------------------------
<S> <C> <C> <C>
F. Crowder Falls (62) 1997 July 19, 1995 941(2)
Business Consultant(1) 0.00%
Allen J. Keesler, Jr. (57) 1997 January 15, 1992 7,464(3)
President and Chief Executive Officer, 0.01%
Florida Power Corporation
(electric utility business)
T.W. Mitchell (67) 1997 January 17, 1973 487,774(4)
Chairman and Chief Executive Officer, 0.55%
Stuart Construction Co., Inc.
(construction business)
William K. Upchurch, Jr. (63) 1997 April 23, 1987 45,100(5)
Chairman and Chief Executive Officer, 0.05%
W.K. Upchurch
Construction Company, Inc.
(construction business)
John M. Bradford (57) 1998 April 23, 1987 25,228(6)
Chairman and President, 0.03%
Mrs. Stratton's Salads, Inc.
(processor of prepared salads)
William C. Hulsey (57) 1998 April 16, 1986 946,415(7)
Chairman and Chief Executive Officer, 1.06%
Arlington Properties, Inc.
(real estate development)
Wallace D. Malone, Jr. (59) 1998 August 2, 1972 1,526,736(8)
Chairman and Chief Executive Officer 1.72%
of the Company
</TABLE>
- - ---------------
(1) Prior to July 1, 1991, Mr. Falls was principally employed as a Partner with
the accounting firm of KPMG Peat Marwick LLP.
(2) Includes 500 shares held by a trust of which Mr. Falls is a co-trustee.
(3) Includes 1,129 shares held by Mr. Keesler's wife.
(4) Includes 256,555 shares held by corporations of which Mr. Mitchell is a
principal stockholder and 183,859 shares held in trust for Mr. Mitchell's
wife.
(5) Includes 2,430 shares held in a trust of which Mr. Upchurch is trustee,
2,310 shares held by trusts of which Mr. Upchurch is custodian and 3,085
shares held by Mr. Upchurch's wife.
(6) Includes 9,740 shares held by Mr. Bradford's wife.
(7) Includes 18,678 shares held by Mr. Hulsey's wife (6,678 of which are held in
a custodial capacity) and 815,385 shares held by various trusts of which
Mr. Hulsey is a co-trustee.
(8) Includes 29,250 shares held by Mr. Malone's wife, 243,799 shares subject to
employee stock options exercisable within 60 days after December 31, 1995
and 282,263 shares held in Mr. Malone's account by the trustee of
SouthTrust Corporation's Employee Profit Sharing Plan as to which the
trustee possesses sole voting power but as to which Mr. Malone, by virtue
of allocating elections to various funds, possesses dispositive power.
3
<PAGE> 6
Of the directors named above, Messrs. Keesler, Mitchell and Upchurch were
elected at the 1994 Annual Meeting of Stockholders (and Mr. Falls was appointed
by the Board of Directors on July 19, 1995 to fill a vacancy on the Board of
Directors), and Messrs. Bradford, Hulsey and Malone were elected at the 1995
Annual Meeting of Stockholders, to serve for the terms indicated.
Messrs. Stockham and Franklin are directors of The Southern Company, which
has securities registered under the Securities Exchange Act of 1934. Mr. Keesler
is a director of Florida Progress Corporation, which also has securities
registered under the Securities Exchange Act of 1934.
The Company has an Audit Committee of the Board of Directors, consisting of
Messrs. Stockham, Falls and Keesler, which recommends to the Board of Directors
the independent accountants to be selected as the Company's auditors and reviews
the audit plan, financial statements and audit results. The Audit Committee also
reviews the internal audit reports of the Company and its affiliates and reviews
comments from the affiliates as to exceptions noted in the reports. The Audit
Committee held five meetings during 1995. Mr. Stockham serves as Chairman of the
Audit Committee.
The Company has a Human Resources Committee of the Board of Directors,
consisting, as of the date of the Proxy Statement, of Messrs. Taylor and Hulsey,
which sets compensation for the executive officers of the Company and
administers the 1990 Discounted Stock Plan, the Amended and Restated 1984 Stock
Option Plan, the 1993 Stock Option Plan, the Amended and Restated Senior Officer
Performance Incentive Plan (and similar plans) of the Company and, if the
stockholders approve the adoption of the Long-Term Incentive Plan, the Human
Resources Committee will administer the Long-Term Incentive Plan of the Company.
The Human Resources Committee held five meetings during 1995. Mr. Taylor serves
as Chairman of the Human Resources Committee.
The Company does not have any Nominating Committee of the Board of
Directors. The functions of a Nominating Committee are filled by the Board of
Directors.
COMPENSATION OF DIRECTORS
During the year ended December 31, 1995, the Board of Directors held five
regular and special meetings. Directors of the Company are paid $3,500 per
calendar quarter and $2,500 per meeting. Directors who are also employees of the
Company are not compensated for their service as directors or for attendance at
meetings of the Board of Directors. All directors attended more than 75% of the
meetings of the Board of Directors (including any meetings of any committees
thereof of which they are members).
STOCK OWNERSHIP OF CERTAIN EXECUTIVE OFFICERS
The following tabulation sets forth with respect to those executive
officers of the Company and its subsidiaries (who are not also directors of the
Company) the name and age of each officer, the position of such officer with the
Company or its subsidiaries, the length of time such person has held such
office, the number and percentage of shares of the Company's Common Stock owned
beneficially by such person as of December 31, 1995 and, with respect to all
executive officers and directors of the Company, the number and
4
<PAGE> 7
percentage of shares of Common Stock of the Company owned beneficially by such
persons as of December 31, 1995:
<TABLE>
<CAPTION>
NUMBER AND PERCENT OF
SHARES OF COMMON
POSITION STOCK OF THE COMPANY
HELD BENEFICIALLY OWNED
NAME AND AGE(1) OFFICE(2) SINCE AS OF DECEMBER 31, 1995
------------------------------- --------------------------- -------- -----------------------
<S> <C> <C> <C>
Julian W. Banton (55) Chief Executive Officer of 1/16/90 165,585(3)
SouthTrust Bank of 0.19%
Alabama, National
Association
Thomas H. Coley (53) Chief Executive Officer of 7/1/89 38,691(4)
SouthTrust Bank of 0.04%
Georgia, National
Association
Frederick W. Murray, Jr. (57) Executive Vice President of 1/1/80 165,979(5)
the Company 0.19%
James W. Rainer, Jr. (52) Executive Vice President of 12/15/82 123,100(6)
the Company 0.14%
All Executive Officers and N/A N/A 4,065,682
Directors as a Group (16 4.57%
persons)
</TABLE>
- - ---------------
(1) Information with respect to Wallace D. Malone, Jr., Chairman and Chief
Executive Officer of the Company, is set forth in the director nominee
table above.
(2) All officers of the Company and its subsidiaries are elected annually by the
Board of Directors of the Company or such subsidiary, as the case may be.
(3) Includes 450 shares held by Mr. Banton's child, 125,368 shares subject to
stock options exercisable within 60 days after December 31, 1995 and 1,117
shares held in Mr. Banton's account by the trustee of the Company's Profit
Sharing Plan as to which the trustee possesses sole voting power but as to
which Mr. Banton, by virtue of allocating elections to various funds,
possesses dispositive power.
(4) Includes 38,624 shares subject to stock options exercisable within 60 days
after December 31, 1995.
(5) Includes 23,000 shares held by Mr. Murray's wife, 792 shares held in a
custodial capacity, 74,225 shares subject to stock options exercisable
within 60 days after December 31, 1995 and 47,018 shares held in Mr.
Murray's account by the trustee of the Company's Profit Sharing Plan as to
which the trustee possesses sole voting power but as to which Mr. Murray,
by virtue of allocating elections to various funds, possesses dispositive
power.
(6) Includes 204 shares held by Mr. Rainer's wife, 61,135 shares subject to
stock options exercisable within 60 days after December 31, 1995 and 16,207
shares held in Mr. Rainer's account by the trustee of the Company's Profit
Sharing Plan as to which the trustee possesses sole voting power but as to
which Mr. Rainer, by virtue of allocating elections to various funds,
possesses dispositive power.
AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors of the Company has adopted a resolution recommending
that the first paragraph of Article FOURTH of the Restated Certificate of
Incorporation of the Company be amended to increase the authorized number of
shares of Common Stock from 200,000,000 to 300,000,000 shares. Under the
Restated Certificate of Incorporation of the Company, the holders of the Common
Stock are not entitled to preemptive rights.
As of the record date of the Annual Meeting, the Company had outstanding or
reserved for issuance with respect to future grants under the 1993 Stock Option
Plan, the Discounted Stock Plan and certain other plans or agreements an
aggregate of 91,394,892 shares of Common Stock, and if the Long-Term Incentive
Plan is
5
<PAGE> 8
approved by the stockholders of the Company, the Company will have outstanding
and reserved for issuance for such purposes an aggregate of 92,868,105 shares of
Common Stock. As of the date of the Proxy Statement, the Company does not
currently plan to issue any shares of Common Stock, except that (i) if approved
by the stockholders, the Company expects to issue shares of Common Stock
pursuant to the Long-Term Incentive Plan, (ii) the Company in the past has
issued shares of Common Stock to fund other employee benefit plans of the
Company, and expects to continue to do so, and (iii) the Company has engaged in
the acquisition of financial institutions and, at any particular time, including
the date of the Proxy Statement, the Company is a party to various agreements
and/or letters of intent providing for the acquisition of such entities in
exchange for shares of Common Stock of the Company and expects this acquisition
program to continue in the future. The shares of Common Stock authorized for
issuance by the Company prior to the approval of the proposed amendment to the
Restated Certificate of Incorporation are sufficient to fund the activities
described above.
In addition to the activity described above, the Company may issue
additional authorized shares of Common Stock in connection with stock dividends
or stock splits or the generation of additional capital for the Company,
although as of the date of the Proxy Statement the Company does not currently
plan to do so. If the proposed amendment is adopted, the additional authorized
shares may be issued by the Board of Directors without approval by the
stockholders of the Company, unless applicable law were to require otherwise,
and if the Company were to issue a significant number of the newly authorized
shares of Common Stock, it is possible that the ownership and interests of the
current stockholders of the Company could be diluted and, depending upon the
circumstances of such issuance, it is possible that the earnings per share and
book value per share of the currently outstanding shares of Common Stock could
be diluted. The authorization of additional shares of Common Stock, under
certain circumstances, could have anti-takeover effects, and may have the effect
of discouraging unilateral attempts by third parties to obtain control of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED COMMON STOCK.
CONSIDERATION OF SOUTHTRUST CORPORATION LONG-TERM INCENTIVE PLAN
The Board of Directors of the Company has adopted, subject to stockholder
approval, the SouthTrust Corporation Long-Term Incentive Plan (the "Incentive
Plan"). The Incentive Plan reserves that number of shares of Common Stock set
forth below for issuance to certain key employees of the Company in the form of
stock options, stock appreciation rights ("SARs"), restricted stock and
performance units/shares. The Incentive Plan is annexed to the Proxy Statement
as Exhibit I.
BACKGROUND AND PURPOSE
As described in the Human Resources Committee Report on Executive
Compensation, one of the fundamental components of compensation for the key
employees of the Company is long-term incentive compensation. For a number of
years, such long-term incentive compensation has been provided through the
Amended and Restated 1984 Stock Option Plan (the "1984 Stock Option Plan") and
the 1993 Stock Option Plan (collectively, the "Stock Option Plans") of the
Company.
The Company intends that its long-term incentive plans will (i) attract and
retain key executive and managerial employees, (ii) motivate such employees by
means of growth-related incentives, (iii) provide incentive compensation
opportunities that are competitive with those of other major corporations and
(iv) further align the interests of such employees with the stockholders of the
Company. The Board of Directors believes that the Incentive Plan should be
adopted because it would provide a better means for achieving these goals. The
Incentive Plan will provide the Company with greater flexibility in designing
long-term incentive compensation awards, including providing the Company with a
flexible means of making awards that are conditioned on satisfying certain
performance criteria. This would allow the Company to make long-term incentive
compensation a more significant aspect of a key employee's overall compensation
package. The Incentive Plan is designed to provide for several types of awards,
including (i) stock options with a fair market value exercise price at the date
of grant and (ii) restricted stock or performance units/shares
6
<PAGE> 9
that are conditioned on the satisfaction of certain performance criteria, all of
which are generally intended to constitute "qualified performance-based
compensation" under Section 162(m) of the Internal Revenue Code of 1986 (the
"Code") that would be exempt from certain deductibility limits.
If the Incentive Plan is adopted by the stockholders of the Company, it
would replace the Stock Option Plans (to the extent of shares reserved to fund
the grant of additional options thereunder). No further awards would be made
under the Stock Option Plans, and as described below, the shares reserved for
issuance under the Stock Option Plans that have not been made the subject of a
grant will be available for issuance of awards under the Incentive Plan. The
following is a summary of the material terms of the Incentive Plan as proposed.
NUMBER OF SHARES
The number of shares available for issuance under the Incentive Plan,
including the shares available for grant under the Stock Option Plans (which,
upon approval of the Incentive Plan, will be available for grant under the
Incentive Plan) and the shares subject to outstanding awards under the Stock
Option Plans, is 4,200,000 shares of Common Stock. As of the record date of the
Annual Meeting, there were 2,526,787 shares available for grant under the Stock
Option Plans and 1,585,145 shares subject to outstanding options under the Stock
Option Plans. All shares available for granting awards in any year that are not
used, as well as shares allocated to awards under both the Stock Option Plans
and the Incentive Plan that (if approved by the stockholders) are canceled or
forfeited, will be available for use in subsequent years.
ADMINISTRATION
The Incentive Plan will be administered by the Human Resources Committee of
the Board of Directors. It is intended that the Human Resources Committee will
at all times be made up of "disinterested persons" within the meaning of Rule
16b-3 promulgated under Section 16(b) of the Exchange Act, as applicable to the
Company from time to time, and that all of its members will be "outside
directors" within the meaning of Section 162(m) of the Code. Under the Incentive
Plan, the Human Resources Committee will (i) select the key employees to receive
awards from time to time, (ii) make awards in such amounts as it determines,
(iii) impose such limitations, restrictions and conditions upon awards as it
deems appropriate, (iv) establish performance targets and allocation formulas
for awards of restricted stock or performance shares intended to be "qualified
performance-based compensation" under Section 162(m) of the Code, (v) certify
the attainment of performance goals, if applicable, as required by Section
162(m) of the Code, (vi) interpret the Incentive Plan and adopt, amend and
rescind administrative guidelines and other rules and regulations relating to
the Incentive Plan, (vii) correct any defect or omission or reconcile any
inconsistency in the Incentive Plan or any award granted thereunder and (viii)
make all other determinations and take all other actions necessary or advisable
for the implementation and administration of the Incentive Plan. Under certain
circumstances, the vesting and/or restrictions of any outstanding award may be
accelerated or waived. No awards will be made under the Incentive Plan after 10
years from the date of the approval of the Incentive Plan by the stockholders.
In no event may an individual receive awards under the Incentive Plan for a
given calendar year covering in excess of 300,000 shares, and the cash portion
of any award under the Incentive Plan to any individual is limited to $1,000,000
for a given calendar year.
ELIGIBILITY
Only "key employees" of the Company may participate in the Incentive Plan.
"Key employees" are those employees of the Company who occupy managerial or
other important positions and who have made significant contributions to the
business of the Company, as determined by the Human Resources Committee.
Approximately three to five percent of all employees of the Company, as such
employees exist from time to time, are expected to be eligible to participate.
As of the date of the initial mailing of this proxy material, three percent of
the employees of the Company represents approximately 250 persons. The Human
Resources Committee, in its discretion, will select the award recipients.
7
<PAGE> 10
AWARDS OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The Incentive Plan provides for the grant of options to purchase shares of
Common Stock at option prices which are not less than the fair market value of
shares of Common Stock at the close of business on the date of grant. (The fair
market value of the Common Stock as of March 4, 1996 was $26.375). The Incentive
Plan also provides for the grant of SARs (either in tandem with stock options or
freestanding), which entitle holders upon exercise to receive either cash or
shares of Common Stock or a combination thereof, as the Committee in its
discretion shall determine, with a value equal to the difference between (i) the
fair market value on the exercise date of the shares with respect to which an
SAR is exercised and (ii) fair market value of such shares on the date of grant
(or, if different, the exercise price of the related option in the case of a
tandem SAR).
Awards of options under the Incentive Plan, which may be either incentive
stock options (which qualify for special tax treatment) or non-qualified stock
options, are determined by the Human Resources Committee. The terms and
conditions of each option and of any SAR are to be determined by the Human
Resources Committee at the time of grant.
Exercise of an option (or an SAR) will result in the cancellation of any
related SAR (or option) to the extent of the number of shares in respect of
which such option or SAR has been exercised. Options and SARs granted under the
Incentive Plan will expire not more than 10 years from the date of grant, and
the option agreements entered into with the optionees will specify the extent to
which options and SARs may be exercised during their respective terms, including
in the event of the optionee's death, disability or termination of employment.
Payment for shares issuable pursuant to the exercise of an option may be made
either in cash or by tendering shares of Common Stock with a fair market value
at the date of the exercise equal to the portion of the exercise price which is
not paid in cash.
AWARDS OF RESTRICTED STOCK AND PERFORMANCE SHARES
The Incentive Plan provides for the issuance of shares of restricted stock
to such key employees and on such terms and conditions as determined from time
to time by the Human Resources Committee. The restricted stock award agreement
with a participant will set forth the terms of the award, including the
applicable restrictions. Such restrictions may include the continued service of
the participant with the Company, the attainment of specified performance goals
or any other condition deemed appropriate by the Human Resources Committee.
The stock certificates evidencing the restricted stock will bear an
appropriate legend and will be held in the custody of the Company until the
applicable restrictions have been satisfied. Subject to certain limited
exceptions, the participant cannot sell, transfer, pledge, assign or otherwise
alienate or hypothecate shares of restricted stock until the applicable
restrictions have been satisfied. Once the restrictions are satisfied, the
shares will be delivered to the participant. During the period of restriction,
the participant may exercise full voting rights with respect to the restricted
stock. The participant will also be credited with dividends with respect to the
restricted stock. Such dividends may be payable currently or may be subject to
additional restrictions (including restrictions as to the time of payment) as
determined by the Human Resources Committee and set forth in the award
agreement.
In addition to restricted stock, the Human Resources Committee may award
performance units/shares to selected key employees. The value of a performance
unit/share will equal the fair market value of a share of Common Stock. The
Incentive Plan provides that the number of performance units/shares granted
and/or the vesting of performance units/shares can be contingent on the
attainment of certain performance goals or other conditions over a period of
time (the "Performance Period"), all as determined by the Human Resources
Committee and evidenced by an award agreement. During the Performance Period,
the Human Resources Committee will determine what number (if any) of performance
units/shares have been earned. Earned performance units/shares may be paid in
cash, shares of Common Stock or a combination thereof having an aggregate fair
market value equal to the value of the earned performance units/shares as of the
payment date. Common Stock used to pay earned performance units/shares may have
additional restrictions as determined
8
<PAGE> 11
by the Human Resources Committee. Earned but unpaid performance units/shares may
be entitled to dividends as determined by the Human Resources Committee and
evidenced in the award agreement.
SECTION 162(M) OF THE CODE
Because stock options and SARs granted under the Incentive Plan must have
an exercise price equal at least to fair market value at the date of grant,
compensation from the exercise of stock options and SARs should be treated as
"qualified performance-based compensation" for Section 162(m) purposes. In
addition, the Incentive Plan authorizes the Human Resources Committee to make
awards of restricted stock or performance shares that are conditioned on the
satisfaction of certain performance criteria. For such awards intended to result
in "qualified performance-based compensation," the Human Resources Committee
will establish prior to or within 90 days after the start of the applicable
performance period the applicable performance conditions. The Human Resources
Committee may select from the following performance measures for such purpose:
(i) return on average common shareholders' equity of the Company, (ii) return on
average assets of the Company, (iii) net income of the Company, (iv) earnings
per common share of the Company, and (v) total shareholder return of the
Company. The performance conditions will be stated in the form of an objective,
nondiscretionary formula, and the Human Resources Committee will certify in
writing the attainment of such performance conditions prior to any payout with
respect to such awards. The Human Resources Committee in its discretion may
adjust downward any such award, even if the performance objective is achieved.
WITHHOLDING FOR PAYMENT OF TAXES
The Incentive Plan provides for the withholding and payment by a
participant of any payroll or withholding taxes required by applicable law. The
Incentive Plan permits a participant to satisfy such requirement, with the
approval of the Human Resources Committee and subject to the terms of the
Incentive Plan, by having the Company withhold from the participant a number of
shares of Common Stock otherwise issuable under the award having a fair market
value equal to the amount of the applicable payroll and withholding taxes.
CHANGES IN CAPITALIZATION AND SIMILAR CHANGES
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend, stock split or similar recapitalization, the
aggregate number of shares of Common Stock with respect to which awards may be
made under the Incentive Plan, and the terms, types of shares and number of
shares of any outstanding awards under the Incentive Plan will be equitably
adjusted.
CHANGE IN CONTROL
The Incentive Plan provides that in the event of a change in control of the
Company, all options and SARs will be fully exercisable as of the date of the
change in control and shall remain exercisable through their full term.
Outstanding awards of restricted stock and performance units/shares will become
immediately vested, and any applicable performance conditions shall be deemed
satisfied (at the target or other performance levels, if applicable) as of the
date of the change in control.
AMENDMENT AND TERMINATION OF THE INCENTIVE PLAN
The Board of Directors will have the power to amend, modify or terminate
the Incentive Plan on a prospective basis. Stockholder approval will be obtained
for any change to the material terms of the Incentive Plan to the extent
required by Section 16(b) under the Exchange Act. Amendment that adversely
affects a participant after a change of control of the Company has occurred may
not be effected.
9
<PAGE> 12
FEDERAL INCOME TAX TREATMENT
Incentive Stock Options.
Incentive stock options ("ISOs") granted under the Incentive Plan will be
subject to the applicable provisions of the Code, including Section 422 of the
Code. If shares of Common Stock are issued to an optionee upon the exercise of
an ISO, and if no "disqualifying disposition" of such shares is made by such
optionee within one year after the exercise of the ISO or within two years after
the date the ISO was granted, then (i) no income will be recognized by the
optionee at the time of the grant of the ISO, (ii) no income, for federal income
tax purposes, will be realized by the optionee at the date of exercise, (iii)
upon sale of the shares acquired by exercise of the ISO, any amount realized in
excess of the option price will be taxable to the optionee, for federal income
tax purposes, as a long-term capital gain and any loss sustained will be a long-
term capital loss, and (iv) no deduction will be allowed to the Company for
federal income tax purposes. If a "disqualifying disposition" of such shares is
made, the optionee will realize taxable ordinary income in an amount equal to
the excess of the fair market value of the shares purchased at the time of
exercise over the option price (the "bargain purchase element") and the Company
will be entitled to a federal income tax deduction equal to such amount. The
amount of any gain in excess of the bargain purchase element realized upon a
"disqualifying disposition" will be taxable as capital gain to the holder (for
which the Company will not be entitled a federal income tax deduction). Upon
exercise of an ISO, the optionee may be subject to alternative minimum tax.
Nonqualified Stock Options.
With respect to nonqualified stock options ("NQSOs") granted to optionees
under the Incentive Plan, (i) no income is realized by the optionee at the time
the NQSO is granted, (ii) at exercise, ordinary income is realized by the
optionee in an amount equal to the difference between the option price and the
fair market value of the shares on the date of exercise, and the Company
receives a tax deduction for the same amount, and (iii) on disposition,
appreciation or depreciation after the date of exercise is treated as either
short-term or long-term capital gain or loss depending on whether the shares
have been held for more than one year.
Restricted Stock.
Upon becoming entitled to receive shares at the end of the applicable
restriction period without a forfeiture, the recipient will recognize ordinary
income in an amount equal to the fair market value of the shares at that time.
However, a recipient who elects under Section 83(b) of the Code, within 30 days
of the date of the transfer of such shares, will have ordinary taxable income on
the date of the grant equal to the fair market value of the shares of restricted
stock as if the shares were unrestricted and could be sold immediately. If the
shares subject to such election are forfeited, the recipient will not be
entitled to any deduction, refund or loss for tax purposes. Upon sale of the
shares after the forfeiture period has expired, the holding period to determine
whether the recipient has long-term or short-term capital gain or loss begins
when the restriction period expires, and the tax basis will be equal to the fair
market value of the shares when the restriction period expires. However, if the
recipient timely elects to be taxed as of the date of transfer of such shares,
the holding period commences on the date of the grant and the tax basis will be
equal to the fair market value of the shares on the date of the grant as if the
shares were then unrestricted and could be sold immediately. The Company
generally will be entitled to a deduction equal to the amount that is taxable as
ordinary compensation income to the recipient.
Performance Units/Shares.
A participant who is awarded performance units/shares will not recognize
income and the Company will not be allowed a deduction at the time the award is
made. When a participant receives payment for performance units/shares in cash
or shares of Common Stock, the amount of the cash and the fair market value of
the shares received will be ordinary income to the participant and will be
allowed as a deduction for federal income tax purposes to the Company. However,
if there is a substantial risk that any shares used to pay out earned
performance units/shares will be forfeited (for example, because the Human
Resources
10
<PAGE> 13
Committee conditions such shares on the performance of future services), the
taxable event is deferred until the risk of forfeiture lapses. In this case, the
participant can elect to make a Section 83(b) election under the Code as
previously described. The Company is entitled to take the deduction attributable
to such shares at the time the income is recognized by the participant.
The Human Resources Committee cannot determine as of the date of this Proxy
Statement the amount of awards or the recipients thereof under the Incentive
Plan. The Incentive Plan permits awards thereunder to be granted, subject to
stockholder approval of the Incentive Plan, prior to the Annual Meeting. As of
the date of the Proxy Statement, no awards have been granted under the Incentive
Plan, although the Human Resources Committee reserves the right to do so prior
to the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
LONG-TERM INCENTIVE PLAN.
11
<PAGE> 14
EXECUTIVE COMPENSATION
The following tables, graphs and other information provide certain details
concerning the cash and equity-based compensation payable to certain executives
of the Company and certain additional information, all of which are presented in
accordance with regulations of the Securities and Exchange Commission.
FIVE YEAR TOTAL STOCKHOLDER RETURN
The following indexed graph compares the Company's annual percentage change
in cumulative total stockholders' return for the past five years with the
cumulative total return of the Standard and Poor's 500 Stock Index and the
Standard and Poor's Regional Bank Index during the same period. This
presentation assumes that $100 was invested in shares of the relevant issuers on
December 31, 1990, and that dividends received were immediately reinvested in
additional shares. The graph plots the value of the initial $100 investment at
one-year intervals. For purposes of constructing this data, the returns of each
component issuer have been weighted according to that issuer's market
capitalization.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
SOUTHTRUST CORPORATION
(PERFORMANCE THROUGH DECEMBER 31, 1995)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P MAJOR
(FISCAL YEAR COVERED) SOUTHTRUST S&P 500 REG. BANKS
<S> <C> <C> <C>
1990 100 100 100
1991 245 130 179
1992 255 140 228
1993 297 154 241
1994 291 156 228
1995 429 215 359
</TABLE>
REPORT OF THE HUMAN RESOURCES COMMITTEE ON EXECUTIVE COMPENSATION
The Human Resources Committee of the Board of Directors of the Company
annually establishes the compensation of the executive officers of the Company
and certain of its subsidiaries. In doing so, the Human Resources Committee's
primary objective is to ensure that the compensation programs for executives are
designed and administered to motivate executives to produce superior performance
for the Company and to provide superior returns to stockholders of the Company.
An executive's base salary is established after a careful review of
competitive practices to ensure that the total compensation opportunity compares
favorably to similarly situated executives. A significant portion of an
12
<PAGE> 15
executive's total compensation is variable and is based on short-term and
long-term performance of the Company. Short-term performance of the Company is
rewarded, in the case of the senior executive officers of the Company, by annual
cash bonuses under the Senior Officer Performance Incentive Plan of the Company
and, in the case of certain other executives of the Company, by annual cash
bonuses under a similar incentive plan, the amount and criterion of which are
established in advance by the Human Resources Committee. The 1984 Stock Option
Plan, the 1993 Stock Option Plan and the Long-Term Incentive Plan (if approved
by the stockholders) are the principal mechanisms for rewarding executives for
the long-term performance of the Company.
The following is a description of the compensation programs of the Company
and how each relates to the objectives outlined above.
Base Salary
The base salaries of the five highest paid executives of the Company are
listed in the Summary Compensation Table. The base salary of each executive is
reviewed annually by the Human Resources Committee. Each executive's base pay is
determined by considering the performance of the individual as well as the
executive's experience and total responsibility in comparison to other
executives of the Company and to executives with peer institutions of comparable
size. In doing so, the Human Resources Committee seeks to ensure that the base
pay of each executive is competitive and rewards the executive for the
executive's performance and total contribution to the success of the Company.
As part of this process, the Human Resources Committee reviews a number of
salary surveys produced by compensation consulting firms. In terms of base
salaries, the surveys indicated that the base salaries of the executives of the
Company listed in the Summary Compensation Table, when compared to the peer
institutions described below, approximated the average base salary for
executives of such institutions.
The Human Resources Committee considers the Company's peer institutions to
be southeastern banks and bank holding companies with total assets ranging from
$10 to $40 billion, some of which are included in the Standard and Poor's
Regional Bank Index. These peer institutions were selected because they are
located within the Company's operating region and generally are comparable in
size to the Company. In establishing the 1995 base salaries for the executives
listed in the Summary Compensation Table, the Human Resources Committee
considered the base salary of each such executive, the performance and
experience of each such executive and the base salaries for comparable
executives reported by the peer institutions. Comparing the Company only to peer
institutions of its approximate size and without any regard for any other
variable, the surveys indicated that the base salaries of the Company's
executives were at approximately the 50th percentile of the array of base
salaries reported by such peer institutions.
Incentive Plans
The Senior Officer Performance Incentive Plan is designed to reward senior
executives annually for achieving the after-tax net income goals of the Company
for the preceding year. Upon completion of the business plan for the forthcoming
year, the Chief Executive Officer of the Company presents to the Human Resources
Committee the net income goal of the Company on a consolidated basis and the net
income goals of the various subsidiaries of the Company for such year.
With respect to the executive officers named in the Summary Compensation
Table, the potential incentive award for each executive is dependent upon each
executive's level of responsibility and the judgement of the Human Resources
Committee of the executive's potential contribution to the achievement of the
particular net income goals. For 1995, the range of potential awards for such
executives was between 15% and 60% of such executive's annual base salary, with
each individual executive being assigned minimum, target and maximum awards. An
executive whose award is based upon a net income goal earns no award if less
than 95% of the target goal is achieved, earns incremental percentages of the
award if more than 95% but less than 105% of the target goal is achieved and
earns the maximum award if 105% of the target goal is achieved.
13
<PAGE> 16
The amounts awarded the Company's five highest paid executives in 1995
under the Senior Officer Performance Incentive Plan are set forth in the Annual
Compensation Bonus column of the Summary Compensation Table.
Under the Omnibus Budget Reconciliation Act of 1993 ("OBRA"), Congress has
limited to $1 million per year the tax deduction available to public companies
for certain compensation paid to designated executive officers. The regulations
provide an exception from this limitation for certain performance-based
compensation, assuming that various requirements are met, and provide for
certain transition rules. To the extent feasible, the Human Resources Committee
of the Company intends that awards of compensation under its various incentive
plans to its executive officers qualify for deductibility under OBRA, but the
Human Resources Committee and the Board of Directors of the Company reserve the
right, in light of the overall goals and objectives of the Company, to exceed
such limitation if it is determined to be in the best interest of the Company
and its stockholders.
Stock Options
Stock options are one of the Company's principal long-term incentive plans.
The Human Resources Committee believes that stock options encourage and reward
management decisions that result in the long-term success of the Company.
The value of stock options is dependent upon an appreciation in the value
of the underlying shares of Common Stock. The Human Resources Committee believes
stock options motivate and reward executives by including them within the
ownership base of the Company. In addition, to encourage a long-term
perspective, options have a ten-year exercise period, and options cannot be
exercised before a one-year period has elapsed from grant date.
The Board of Directors of the Company determines the aggregate number of
shares of Common Stock to be allocated annually for use in connection with the
grant of stock options, and the Human Resources Committee then awards stock
options to particular executives. The number of shares of Common Stock subject
to options awarded by the Human Resources Committee to a particular executive is
determined in light of the executive's level of responsibility, seniority and
previous grants of stock options to such executive.
Information respecting the peer institutions described above, indicates
that the stock option awards for the Company's five most highly compensated
executives during 1995 were below average when compared to the award
opportunities that have been reported by peer institutions of comparable size to
the Company. In addition, the total number of shares of Common Stock subject to
options for 1995, as a percentage of the Company's total outstanding Common
Stock, is below the median reported by peer institutions of comparable size to
the Company.
The Company also maintains the 1990 Discounted Stock Plan, which is
available to all employees including executives who have at least five years of
service with the Company. For information respecting the 1990 Discounted Stock
Plan, see the information set forth under the heading "Stock Options and Other
Stock Purchase Rights" in the Proxy Statement. Awards under the 1990 Discounted
Stock Plan have not been used extensively by the Human Resources Committee as a
vehicle for executive compensation.
Other Possible Awards
If the stockholders approve the Incentive Plan, the Company will have
available to it the additional awards contemplated thereby. These include, in
addition to stock options, restricted stock, SARs and performance share/units.
If the Incentive Plan is approved, the Human Resources Committee intends to
utilize these awards to motivate the Company's executives in a manner consistent
with the long-term compensation philosophy of the Company, as described above.
The amount of awards and the recipients thereof under the Incentive Plan, if
approved by stockholders, is not determinable as of the date of the Proxy
Statement.
14
<PAGE> 17
Chief Executive Officer Compensation
The Human Resources Committee meets in executive sessions to review the
Chief Executive Officer's salary and periodically engages independent
consultants to advise the Human Resources Committee on the compensation
practices of similarly situated institutions.
The 1995 base salary increase for the Chief Executive Officer was
established after a review of the base salaries of comparable executives of the
peer institutions referred to above. This analysis contained information on all
components of the Chief Executive Officer's compensation. After reviewing the
data and equally weighing the Company's substantial asset growth and sustained
performance, including increased net income and increased earnings per share,
the Human Resources Committee established the Chief Executive Officer's base
salary for 1995. The Chief Executive Officer's base salary for 1995 was at
approximately the 50th percentile of the array of salaries for chief executive
officers of all peer institutions as reported by such institutions.
The Chief Executive Officer's target award for achieving the net income
goal of the Company for 1995 was 40% and the maximum award was 60%. In 1995, the
Company's net income exceeded the target goal established by the Human Resources
Committee, resulting in a bonus of 59% of base salary being paid to the Chief
Executive Officer. In addition, the Human Resources Committee determined to
award the Chief Executive Officer a supplemental bonus during 1995.
During 1995, the Chief Executive Officer also was granted options to
purchase 70,065 shares of Common Stock. The 1995 stock option award increase was
granted after a review of the stock option awards of comparable executives of
peer institutions of comparable size to the Company. The Chief Executive
Officer's 1995 option award, as a percentage of base salary, is below average
when compared to the awards reported by the peer institutions of comparable size
to the Company.
The members of the Human Resources Committee are as follows:
Charles G. Taylor, Chairman
William C. Hulsey
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
None of the members of the Human Resources Committee have served as
officers of the Company. In addition, none of the Human Resources Committee
members have any other relationship to the Company.
15
<PAGE> 18
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth certain information
concerning compensation for services rendered to the Company by the Company's
Chief Executive Officer and the four other most highly compensated executive
officers of the Company for each of the last three fiscal years:
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
AWARDS
----------------------- PAYOUTS
ANNUAL COMPENSATION(1) RESTRICTED -------
--------------------------- OTHER ANNUAL STOCK OPTIONS LTIP ALL OTHER
NAME AND PRINCIPAL BONUS COMPENSATION AWARD(S) (NUMBER OF PAYOUTS COMPENSATION
POSITION(1) YEAR SALARY($) ($)(2) ($)(3) ($) SHARES) ($) ($)
- - --------------------------- ---- --------- -------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wallace D. Malone, Jr., 1995 $695,000 $459,772 -0- N/A 70,065 N/A $ 67,104(4)
Chief Executive Officer 1994 630,000 358,344 $ 20,191 N/A 66,000 N/A 60,335(4)
of the Company 1993 605,016 363,000 20,121 N/A 32,266(5) N/A 59,770(4)
Julian W. Banton, 1995 323,500 177,925 -0- N/A 15,000 N/A 31,168(6)
President and Chief 1994 303,500 166,925 5,152 N/A 15,000 N/A 18,137(6)
Executive Officer of 1993 292,000 160,600 5,152 N/A 11,679(5) N/A 28,836(6)
SouthTrust Bank of
Alabama, National
Association
Thomas H. Coley 1995 240,000 120,000 -0- N/A 7,000 N/A 22,930(6)
Chief Executive Officer 1994 225,000 50,000 -0- N/A 4,000 N/A 21,531(6)
and Chairman of the Board 1993 200,000 50,000 -0- N/A 7,999(5) N/A 19,733(6)
of SouthTrust Bank of
Georgia, N.A.
Frederick W. Murray, Jr., 1995 198,167 87,627 -0- N/A 5,000 N/A 20,156(6)
Executive Vice President 1994 188,500 80,414 5,954 N/A 4,750 N/A 18,137(6)
of the Company 1993 183,000 82,350 5,954 N/A 7,319(5) N/A 18,158(6)
James W. Rainer, Jr., 1995 188,167 83,207 -0- N/A 5,000 N/A 18,893(6)
Executive Vice President 1994 177,000 75,508 4,099 N/A 4,750 N/A 17,123(6)
of the Company 1993 171,000 76,950 4,099 N/A 6,839(5) N/A 16,971(6)
</TABLE>
- - ---------------
(1) Although each person received perquisites or other personal benefits in the
years shown, the value of these benefits did not exceed in the aggregate
the lesser of $50,000 or 10% of such person's salary and bonus in any year.
(2) Represents amounts paid to each executive officer under the Senior Officer
Performance Incentive Plan or otherwise and applicable for 1995.
(3) Represents life insurance premiums and additional taxes owed on the
additional compensation paid by the Company on behalf of each executive
officer.
(4) Includes $30,000 for Mr. Malone, which amount was withheld by the Company
from deferred compensation due Mr. Malone in 1995, 1994 and 1993,
respectively, in order to defray the costs of the Company agreeing to pay
Mr. Malone an annual sum certain, commencing at the age of 60 and
continuing for the greater of his lifetime or 15 years, and includes
payments by the Company to defined contribution plans maintained by the
Company (including qualified and nonqualified compensation plans).
(5) Adjusted for 3 for 2 stock split that occurred on May 19, 1993.
(6) Represents payments by the Company to defined contribution plans maintained
by the Company (including qualified and nonqualified compensation plans) on
behalf of the executive officers.
STOCK OPTIONS AND OTHER STOCK RIGHTS
Pursuant to the Stock Option Plans, the Company grants to key employees of
the Company either ISO's or NQSO's, and pursuant to the 1990 Discounted Stock
Plan (the "Discounted Plan"), awards to purchase shares of Common Stock of the
Company at a discount are made to eligible employees, including executive
officers of the Company.
The grant of stock options pursuant to the Stock Option Plans is, and will
be, made subject to the following limitations: (i) the option price will be not
less than 100% of the fair market value of the Common Stock on the date a grant
is determined to be made; (ii) no option may be exercised after ten years from
the
16
<PAGE> 19
effective date of the grant; and (iii) such other conditions as the Human
Resources Committee, which administers the Stock Option Plans, may determine. As
indicated elsewhere in the Proxy Statement, the Stock Option Plans (except for
outstanding awards thereunder) will be terminated if the stockholders approve
the Incentive Plan.
The Discounted Plan was established in order to give all employees an
opportunity to acquire equity interest in the Company at a discount (17.5%) to
market, and awards are made to all employees (including executive officers) who
have completed five years of full time service to the Company and its
subsidiaries. A total of 1,125,000 shares of Common Stock of the Company is
reserved for issuance under the Discounted Plan, and the aggregate purchase
price of shares of Common Stock awarded to each employee may not exceed 10% of
the annual salary of each employee. Certain restrictions are imposed on the
shares of Common Stock awarded under the Discounted Plan and, under certain
circumstances, the Company may repurchase such shares.
For information respecting the Incentive Plan, which is to be considered by
the stockholders at the Annual Meeting, see "CONSIDERATION OF SOUTHTRUST
CORPORATION LONG-TERM INCENTIVE PLAN."
The following table sets forth information concerning grants of stock
options and rights during fiscal year 1995 to each executive officer listed
below:
OPTION AND RIGHT GRANTS IN FISCAL YEAR 1995
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
% OF TOTAL ASSUMING RATE OF
OPTIONS OPTIONS EXERCISE STOCK
GRANTED GRANTED OR BASE PRICE APPRECIATION OF
(NUMBER OF EMPLOYEES PRICE EXPIRATION ---------------------
NAME SHARES)(1)(2) IN 1995 ($/SH) DATE 5%(3) 10%(3)
- - ------------------------------- ------------ ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Wallace D. Malone, Jr.......... 70,065 22.9% $ 19.125 1/17/2005 $842,714 $2,135,604
Julian W. Banton............... 15,000 4.9% 19.125 1/17/2005 180,414 457,205
Thomas H. Coley................ 7,000 2.3% 19.125 1/17/2005 84,193 213,362
James W. Rainer, Jr............ 5,000 1.6% 19.125 1/17/2005 60,138 152,402
Frederick W. Murray............ 5,000 1.6% 19.125 1/17/2005 60,138 152,402
</TABLE>
- - ---------------
(1) Does not include awards during 1995 under the Discounted Plan to Messrs.
Malone, Banton, Coley, Murray and Rainer to purchase 4,624, 2,074, 1,541,
1,245 and 1,181 shares of Common Stock, respectively, at a 17.5% discount
to the then market price of such shares; of those grants, Mr. Banton
purchased 2,074 of the shares awarded.
(2) Each of the options granted to the named executives in 1995 become
exercisable on January 18, 1996 (except for options respecting 10,456
shares of Common Stock which are exercisable in January 1997), and the
exercisability of such options is not subject to any future
performance-based condition. Nonqualified options granted to the named
executives pursuant to the 1993 Stock Option Plan have a reload option
which provides that if any optionee elects to exercise a nonqualified
option issued under the 1993 Stock Option Plan by tendering stock (rather
than cash) to the Company, the Human Resources Committee is authorized, but
not required, to grant additional nonqualified options with respect to a
number of shares of Common Stock of the Company equal to the number of
shares so tendered.
(3) These numbers are calculated by comparing the exercise price of such options
and the market value of the shares of Common Stock subject to such options,
assuming that the market price of such shares increase by 5% and 10%,
respectively, during each year that the options are exercisable.
17
<PAGE> 20
The following table sets forth certain information concerning grants of
stock options, rights and other awards under the Stock Option Plans during the
first quarter of 1996 to certain executive officers and other persons:
OPTION RIGHT AND AWARD GRANTS DURING FISCAL 1996
<TABLE>
<CAPTION>
OPTIONS OR EXERCISE OR
AWARDS GRANTED BASE PRICE
NAME OR GROUP (NUMBER OF SHARES) $/SH
- - -------------------------------------------------------------- ------------------ -----------
<S> <C> <C>
Wallace D. Malone, Jr......................................... 75,000 $ 25.25
Julian W. Banton.............................................. 15,000 25.25
Thomas H. Coley............................................... 8,500 25.25
Frederick W. Murray, Jr....................................... 10,000 25.25
James W. Rainer, Jr........................................... 10,000 25.25
Executive Group............................................... 130,500 25.25
Employee Group................................................ 386,200 25.25
</TABLE>
Stock options are granted at fair market value (or the last sales price of
the Common Stock, as reported by NASDAQ-National Market System) as of the date
that a decision is made to grant the stock option, although the Board of
Directors may not approve the grant until a later date.
For information regarding possible awards under the Incentive Plan in 1996,
see "CONSIDERATION OF SOUTHTRUST CORPORATION LONG-TERM INCENTIVE PLAN."
The following table sets forth the number of stock options exercised and
the dollar value realized thereon by each of the executives listed below during
1995, along with the number and dollar value of any options remaining
unexercised at year end:
AGGREGATED STOCK OPTION EXERCISES IN 1995
AND DECEMBER 31, 1995 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING
OPTIONS AT VALUE OF UNEXERCISED
DECEMBER 31, IN-THE-MONEY OPTIONS
NUMBER OF 1995 AT DECEMBER 31, 1995
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE VALUE REALIZED UNEXERCISABLE(1) UNEXERCISABLE(1)
- - ------------------------------- --------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Wallace D. Malone, Jr.......... -0- -0- 231,879/5228 $ 2,073,177/$35,289
Julian W. Banton............... 3,300 64,029 109,762/5228 1,501,425/35,289
Thomas H. Coley................ -0- -0- 38,624/0 449,856/0
Frederick W. Murray, Jr........ -0- -0- 74,222/0 1,135,357/0
James W. Rainer, Jr............ 5,094 96,338 61,134/0 895,621/0
</TABLE>
- - ---------------
(1) Includes options exercisable within 60 days of December 31, 1995. As of such
date, all options held by the persons named in the above table were
exercisable, except for an aggregate of 10,456 shares which are exercisable
in 1997.
EXECUTIVE EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS
The Company is a party to an employment agreement with Mr. Wallace D.
Malone, Jr. providing for the employment of Mr. Malone in a capacity at least
equal to Mr. Malone's present capacity, subject to early retirement and after
adjustments for automatic annual renewal, for a term of at least five years. The
employment agreement provides further that if the executive is terminated for
any reason other than his death or disability or for cause, which is defined in
the employment agreement as certain acts of dishonesty and certain acts
competitive with the Company, or if the executive elects to terminate the
employment agreement for good reason, which is defined to include a change of
duties or certain relocations, or if, during a limited period following a change
of control of the Company, the executive elects to terminate the employment
agreement without any reason, the executive is entitled to receive annual
compensation, based upon the
18
<PAGE> 21
executive's annual base salary as of the date of such termination and the
executive's highest annual bonus for a specified period, for a period of five
years.
The Company and/or certain of its subsidiaries are parties to certain
agreements with Messrs. Banton, Coley, Murray and Rainer, as well as certain
other executive officers of the Company and its subsidiaries, that become
effective only upon a change of control of the Company, provide for employment
of such executives for a period of three years and provide that, if the
executives are terminated for any reason other than his death or disability or
for cause, such executives are entitled to receive annual compensation, based
upon the executive's annual base salary as of the date of such termination and
the executive's highest annual bonus for a specified period, for a period of
three years.
The employment agreement with Mr. Malone, as well as the change of control
employment agreements with the other executives described above, provide that
additional payments will be made to such persons to reimburse them for any
excise taxes that may be owed in the event that payments under such agreements
exceed the limitations of Section 280G of the Code.
The Company maintains a Retirement Income Plan (the "Retirement Plan")
which is a noncontributory, defined benefit plan and covers all employees who
have been in the employ of the Company or one of its subsidiaries for more than
one year.
The Retirement Plan provides generally for an annual benefit commencing at
age 65 equal to 1.55% of the employee's average base compensation during the
highest five consecutive years of the fifteen years preceding retirement, less
1.25% of primary Social Security benefits in effect at the time of retirement,
for each year of credited service. The Company also maintains an Additional
Retirement Plan for certain executives, and since 1987, all of the contributions
of the Company with respect to Mr. Malone were made under the Additional
Retirement Plan. The Company also maintains certain deferred compensation and
similar agreements which pay Mr. Malone and others certain amounts upon
retirement.
The following table shows the annual pension benefits under the Retirement
Plan and the Additional Retirement Plan (and the deferred compensation and
similar agreements) for retirement at age 65 based upon various salaries and
years of service. The effects of integration with Social Security benefits have
been
19
<PAGE> 22
excluded from the table, because the amount of reduction in benefits due to
integration varies depending on the employee's age at the time of retirement and
changes in the Social Security laws.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------------------
REMUNERATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- - ------------ ---------- -------- -------- -------- --------
<C> <S> <C> <C> <C> <C> <C>
$ 125,000 ................. $ 29,063 $ 38,750 $ 48,438 $ 58,125 $ 67,813
150,000 ................. 34,875 46,500 58,125 69,750 81,375
175,000 ................. 40,688 54,250 68,813 81,375 94,938
200,000 ................. 46,500 62,000 77,500 93,000 108,500*
225,000 ................. 52,313 69,750 87,188 104,625* 122,063*
250,000 ................. 58,125 77,500 96,875 116,250* 135,625*
300,000 ................. 69,750 93,000 116,250* 139,500* 162,750*
400,000 ................. 93,000 124,000* 155,000* 186,000* 217,000*
450,000 ................. 104,625* 139,500* 174,375* 209,250* 244,125*
500,000 ................. 116,250* 155,000* 193,750* 232,500* 271,250*
600,000 ................. 139,500* 186,000* 232,500* 279,000* 325,500**
700,000 ................. 162,750* 217,000* 271,250* 325,500* 379,750**
800,000 ................. 186,000* 248,000* 310,000* 372,000* 434,000*
900,000 ................. 209,250* 279,000* 348,750* 418,500* 488,250*
1,000,000 ................. 232,500* 217,000* 387,500* 465,000* 524,500*
</TABLE>
- - ---------------
* Under the Employee Retirement Income Security Act of 1974, the maximum pension
benefit under the Retirement Plan is subject to certain limitations, which,
while varying in some cases, generally is $102,582. As indicated above, the
Company maintains an Additional Retirement Plan and certain deferred
compensation and similar agreements which supplement the benefits payable to
certain executive officers.
Current base salary figures of the Chief Executive Officer and the other
executive officers of the Company are set forth in the Summary Compensation
Table. As of December 31, 1995, credited years of service for each such
executive officer are as follows: Mr. Malone -- 37 years; Mr. Banton - 13 years;
Mr. Coley -- 7 years; Mr. Murray -- 31 years; and Mr. Rainer -- 31 years.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
The Company's executive officers, directors and 10% stockholders are
required under the Securities Exchange Act of 1934 to file reports of ownership
and changes in ownership with the Commission. Copies of these reports must also
be furnished to the Company.
Based solely on a review of copies of such reports furnished to the Company
through the date hereof, or written representations of such officers, directors
or stockholders that no reports were required, the Company believes that during
1995 all filing requirements applicable to its officers, directors and
stockholders were complied with in a timely manner.
TRANSACTIONS WITH MANAGEMENT
Directors and executive officers of the Company and their associates were
customers of and/or had transactions with the banks which are subsidiaries of
the Company in the ordinary course of business during the year ended December
31, 1995, and may continue to do so in the future. All outstanding loans and
commitments included in such transactions were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons, and did not involve more than
normal risks of collectability or present other unfavorable features.
20
<PAGE> 23
AUDITORS
Arthur Andersen LLP, independent accountants, have been engaged as the
Company's auditors since 1989 and will continue to serve as the Company's
auditors during 1996. Representatives of Arthur Andersen LLP will be in
attendance at the Annual Meeting and will be available to respond to questions
from stockholders.
STOCKHOLDER PROPOSALS
Stockholder proposals submitted for consideration at the next Annual
Meeting of Stockholders must be received by the Company no later than December
15, 1996, to be included in the 1997 proxy materials.
GENERAL INFORMATION
As of the date of the Proxy Statement, the Board of Directors does not know
of any other business to be presented for consideration or action at the Annual
Meeting, other than that stated in the notice of the Annual Meeting. If other
matters properly come before the Annual Meeting, the persons named in the
accompanying form of proxy will vote thereon in their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
SOUTHTRUST CORPORATION
/S/ Aubrey D. Barnard
---------------------
AUBREY D. BARNARD
Secretary
Birmingham, Alabama
March 8, 1996
21
<PAGE> 24
EXHIBIT I
SOUTHTRUST CORPORATION
LONG-TERM INCENTIVE PLAN
JANUARY 31, 1996
1
<PAGE> 25
CONTENTS
<TABLE>
<S> <C> <C>
Article 1. Establishment, Objectives, and Duration...................................... 3
Article 2. Definitions.................................................................. 3
Article 3. Administration............................................................... 6
Article 4. Shares Subject to the Plan and Maximum Awards................................ 7
Article 5. Eligibility and Participation................................................ 7
Article 6. Stock Options................................................................ 7
Article 7. Stock Appreciation Rights.................................................... 9
Article 8. Restricted Stock............................................................. 10
Article 9. Performance Units and Performance Shares..................................... 11
Article 10. Performance Measures......................................................... 13
Article 11. Beneficiary Designation...................................................... 13
Article 12. Deferrals.................................................................... 13
Article 13. Rights of Employees.......................................................... 13
Article 14. Change In Control............................................................ 14
Article 15. Amendment, Modification, and Termination..................................... 14
Article 16. Withholding.................................................................. 15
Article 17. Indemnification.............................................................. 15
Article 18. Successors................................................................... 15
Article 19. Legal Construction........................................................... 16
</TABLE>
2
<PAGE> 26
SOUTHTRUST CORPORATION
LONG-TERM INCENTIVE PLAN
ARTICLE 1. ESTABLISHMENT, OBJECTIVES, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. SouthTrust Corporation, a Delaware
corporation (hereinafter referred to as the "Company"), hereby establishes an
incentive compensation plan to be known as the "SouthTrust Corporation Long-Term
Incentive Plan" (hereinafter referred to as the "Plan"), as set forth in this
document. The Plan permits the grant of Nonqualified Stock Options, Incentive
Stock Options, Stock Appreciation Rights, Restricted Stock, Performance Shares
and Performance Units.
Subject to approval by the Company's stockholders, the Plan shall become
effective as of January 31, 1996 (the "Effective Date") and shall remain in
effect as provided in Section 1.3 hereof.
1.2 OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize the
profitability and growth of the Company through incentives which are consistent
with the Company's objectives and which link the interests of Participants to
those of the Company's stockholders; to provide Participants with an incentive
for excellence in individual performance; and to promote teamwork among
Participants.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants who make
significant contributions to the Company's success and to allow Participants to
share in the success of the Company.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date,
as described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 15 hereof, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions. However, in no event
may an Award be granted under the Plan on or after January 31, 2006.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized:
2.1 "Award" means, individually or collectively, a grant under this
Plan of Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Stock, Performance Shares and Performance
Units.
2.2 "Award Agreement" means an agreement entered into by the Company
and a Participant setting forth the terms and provisions applicable to
Awards granted under this Plan.
2.3 "Beneficial Owner" or "Beneficial Ownership" shall have the
meaning ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act.
2.4 "Board" or "Board of Directors" means the Board of Directors of
the Company.
2.5 "Change in Control" of the Company shall be deemed to have
occurred if:
(a) Any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act as in effect as of the date of this Agreement),
other than the Company or any "person" who as of the Effective Date is a
director or officer of the Company or whose shares of Common Stock of
the Company are treated as "beneficially owned" (as such term is defined
in Rule 13d-3 of the Exchange Act as in effect as of the Effective Date)
by any such director or officer, is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding
securities;
(b) Individuals who, as of the Effective Date, constitute the Board
of Directors (the "Board") of the Company (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board, provided,
however, that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election, was approved by a
vote of at least a majority of the
3
<PAGE> 27
directors comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding for
this purpose any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest
(as such terms are used in Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a person other than the Board;
(c) The stockholders of the Company approve a reorganization,
merger or consolidation of the Company, unless, following such
reorganization, merger or consolidation, (i) more than 60% of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation
and the combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election of the
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the outstanding Common Stock of the
Company and outstanding voting securities of the Company immediately
prior to such reorganization, merger or consolidation in substantially
these same proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the outstanding Common Stock
of the Company and the outstanding voting securities of the Company, as
the case may be, (ii) no person (excluding the Company, any employee
benefit plan (or related trust) of the Company or such corporation
resulting from such reorganization, merger or consolidation and any
person beneficially owning, immediately prior to any reorganization,
merger or consolidation, directly or indirectly, 20% or more of the
outstanding Common Stock of the Company or outstanding voting securities
of the Company, as the case may be), beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from such reorganization,
merger or consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors, and (iii) at least a majority of
the members of the board of directors of the corporation resulting from
such reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial agreement
providing for such reorganization, merger or consolidation; or
(d) The stockholders of the Company approve (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or substantially all of the assets of the Company,
other than to a corporation, with respect to which following such sale
or other disposition, (A) more than 60% of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the outstanding Common Stock of the Company and the
outstanding voting securities of the Company immediately prior to such
sale or other disposition in substantially the same proportions as their
ownership, immediately prior to such sale or other disposition, of the
outstanding Common Stock of the Company and outstanding voting
securities of the Company, as the case may be, (B) no person (excluding
the Company, any employee benefit plan (or related trust) of the Company
or such corporation resulting from such reorganization, merger or
consolidation, and any person beneficially owning, immediately prior to
such sale or other disposition, directly or indirectly, 20% or more of
the outstanding Common Stock of the Company or the outstanding voting
securities of the Company, as the case may be), beneficially owns,
directly or indirectly, 20% or more, respectively, of the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors, and
(C) at least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or consolidation
were members of the Incumbent Board at the time of the execution of the
initial agreement providing for such sale or other disposition of assets
of the Company.
2.6 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
4
<PAGE> 28
2.7 "Committee" means the Human Resources Committee of the Board, as
specified in Article 3 herein, or such other Committee appointed by the
Board to administer the Plan with respect to grants of Awards.
2.8 "Company" means SouthTrust Corporation, a Delaware corporation,
together (unless the context indicates otherwise) with any and all
Subsidiaries, and any successor thereto as provided in Article 18 herein.
2.9 "Covered Employee" means a Participant who, as of the date of
vesting and/or payout of an Award, as applicable, is one of the group of
"covered employees," as defined in the regulations promulgated under Code
Section 162(m), or any successor statute.
2.10 "Director" means any individual who is a member of the Board.
2.11 "Disability" shall have the meaning ascribed to such term in the
Participant's governing long-term disability plan.
2.12 "Effective Date" shall have the meaning ascribed to such term in
Section 1.1 hereof.
2.13 "Employee" means any full-time, active employee of the Company.
Directors who are not employed by the Company shall not be considered
Employees under this Plan.
2.14 "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.
2.15 "Fair Market Value" shall be determined on the basis of the
closing or last sales price on the principal securities exchange on which
the Shares are traded or, if there is no such sale on the relevant date,
then on the last previous day on which a sale was reported.
2.16 "Freestanding SAR" means an SAR that is granted independently of
any Options, as described in Article 7 herein.
2.17 "Incentive Stock Option" or "ISO" means an option to purchase
Shares granted under Article 6 herein and which is designated as an
Incentive Stock Option and which is intended to meet the requirements of
Code Section 422.
2.18 "Insider" shall mean an individual who is, on the relevant date,
an officer, director or ten percent (10%) beneficial owner of any class of
the Company's equity securities that is registered pursuant to Section 12
of the Exchange Act, all as defined under Section 16 of the Exchange Act.
2.19 "Nonemployee Director" means an individual who is a member of the
Board but who is not an Employee of the Company.
2.20 "Nonqualified Stock Option" or "NQSO" means an option to purchase
Shares granted under Article 6 herein and which is designated as a
Nonqualified Stock Option and is not intended to meet the requirements of
Code Section 422.
2.21 "Option" means an Incentive Stock Option or a Nonqualified Stock
Option, as described in Article 6 herein.
2.22 "Option Price" means the price at which a Share may be purchased
by a Participant pursuant to an Option.
2.23 "Participant" means an Employee who has outstanding an Award
granted under the Plan. The term "Participant" shall not include
Nonemployee Directors.
2.24 "Performance-Based Exception" means the performance-based
exception from the tax deductibility limitations of Code Section 162(m).
2.25 "Performance Share" means an Award granted to a Participant, as
described in Article 9 herein.
5
<PAGE> 29
2.26 "Performance Unit" means an Award granted to a Participant, as
described in Article 9 herein.
2.27 "Period of Restriction" means the period during which the
transfer of Shares of Restricted Stock is limited in some way (based on the
passage of time, the achievement of performance objectives, or upon the
occurrence of other events as determined by the Committee), and the Shares
are subject to a substantial risk of forfeiture, as provided in Article 8
herein.
2.28 "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.
2.29 "Restricted Stock" means the shares granted pursuant to an Award
made to a Participant pursuant to Article 8 herein.
2.30 "Retirement" shall have the meaning ascribed to such term in the
SouthTrust Corporation Revised Retirement Income Plan, as amended from time
to time.
2.31 "Shares" means the shares of common stock of the Company.
2.32 "Stock Appreciation Right" or "SAR" means a right granted
pursuant to an Award, granted alone or in connection with a related Option,
designated as an SAR, pursuant to the terms of Article 7 herein.
2.33 "Subsidiary" means any corporation, partnership, joint venture or
other entity in which the Company has a majority voting interest.
2.34 "Tandem SAR" means an SAR that is granted in connection with a
related Option pursuant to Article 7 herein, the exercise of which shall
require forfeiture of the right to purchase a Share under the related
Option (and when a Share is purchased under the Option, the Tandem SAR
shall similarly be canceled).
ARTICLE 3. ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Human Resources
Committee of the Board, or by any other Committee appointed by the Board, which
Committee shall satisfy the "disinterested administration" rules of Rule 16b-3
under the Exchange Act, as in effect and applicable to the Company as of the
Effective Date or as in effect and applicable to the Company as of any date
subsequent to the Effective Date, and which Committee shall satisfy the "outside
director" rules of Code Section 162(m). The members of the Committee shall be
appointed from time to time by, and shall serve at the discretion of, the Board
of Directors.
3.2 AUTHORITY OF THE COMMITTEE. Except as limited by law or by the
Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select Employees who
shall participate in the Plan; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner consistent with the
Plan; construe and interpret the Plan and any agreement or instrument entered
into under the Plan as they apply to Employees; establish, amend, or waive rules
and regulations for the Plan's administration as they apply to Employees; and
(subject to the provisions of Article 15 herein) amend the terms and conditions
of any outstanding Award to the extent such terms and conditions are within the
discretion of the Committee as provided in the Plan. Further, the Committee
shall make all other determinations which may be necessary or advisable for the
administration of the Plan. As permitted by law, the Committee may delegate its
authority as identified herein.
3.3 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all persons,
including the Company, its stockholders, Employees, Participants, and their
estates and beneficiaries.
6
<PAGE> 30
ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1 NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to adjustment as
provided in Section 4.3 herein, the number of Shares hereby reserved for
issuance to Participants under the Plan shall be 4,200,000 Shares, after taking
into account the Shares subject to outstanding awards as of the Effective Date
(as further adjusted for exercises occurring after the Effective Date) under the
Amended and Restated 1984 Stock Option Plan and the 1993 Stock Option Plan.
The following rules shall apply to grants of Awards under the Plan:
(a) The maximum aggregate number of Shares that may be granted, paid
out, or that may vest, as applicable, pursuant to any Award granted in any
one fiscal year to any single Participant shall be 300,000 Shares.
(b) The maximum aggregate cash payout with respect to Awards granted
in any fiscal year which may be made to any Participant shall be
$1,000,000.
4.2 LAPSED AWARDS. If any Award granted under this Plan is canceled,
terminates, expires, or lapses for any reason (with the exception of the
termination of a Tandem SAR upon exercise of the related Option, or the
termination of a related Option upon exercise of the corresponding Tandem SAR),
any Shares subject to such Award again shall be available for the grant of an
Award under the Plan.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in the
number of outstanding Shares through the declaration and payment of a stock
dividend or stock split or through any recapitalization resulting in the
combination or exchange of Shares in which the Company does not receive any
consideration, such adjustment shall be made in the number and class of Shares
which may be delivered under Section 4.1, in the number and class of and/or
price of Shares subject to outstanding Awards granted under the Plan, and in the
Award limits set forth in subsections 4.1(a) and 4.1(b), as may be determined to
be appropriate and equitable by the Committee, in its sole discretion, to
prevent dilution or enlargement of rights hereunder; provided, however, that the
number of Shares subject to any Award shall always be a whole number.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Persons eligible to participate in this Plan include all
Employees of the Company, including Employees who are members of the Board.
5.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select, from all Employees, those to whom
Awards shall be granted and shall determine the nature and amount of each Award.
ARTICLE 6. STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Participants in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Committee.
6.2 AWARD AGREEMENT. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Award Agreement also shall specify whether the
Option is intended to be an ISO within the meaning of Code Section 422, or an
NQSO the grant of which is intended not to fall under the provisions of Code
Section 422.
6.3 OPTION PRICE. The Option Price for each grant of an Option under this
Plan shall be at least equal to one hundred percent (100%) of the Fair Market
Value of a Share on the date the Option is granted.
6.4 DURATION OF OPTIONS. Each Option granted to an Employee shall expire
at such time as the Committee shall determine at the time of grant; provided,
however, that no Option shall be exercisable later than the tenth (10th)
anniversary date of its grant.
7
<PAGE> 31
6.5 DIVIDEND EQUIVALENTS. The Committee may grant dividend equivalents in
connection with Options granted under this Plan. Such dividend equivalents may
be payable in cash or in Shares, upon such terms as the Committee, in its sole
discretion, deems appropriate.
6.6 EXERCISE OF OPTIONS. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant.
6.7 PAYMENT. Options granted under this Article 6 shall be exercised by
the delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares. The Committees may promulgate such
rules and procedures as it may determine appropriate to regulate the giving and
receipt of such notice.
The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent, or (b) if permitted in
the governing Award Agreement, by tendering previously acquired Shares having an
aggregate Fair Market Value at the time of exercise equal to the total Option
Price (provided that the Shares which are tendered must have been held by the
Participant for at least six (6) months prior to their tender to satisfy the
Option Price), or (c) if permitted in the governing Award Agreement, by a
combination of (a) and (b).
The Committee also may allow cashless exercise as permitted under Federal
Reserve Board's Regulation T, subject to applicable securities law restrictions,
or by any other means which the Committee determines to be consistent with the
Plan's purpose and applicable law. In addition, the Committee may authorize
Company loans to Participants in connection with Option exercises, upon such
terms and subject to such limits that the Committee, in its sole discretion,
deems appropriate.
As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant, registered in
the Participant's name, Share certificates in an appropriate amount based upon
the number of Shares purchased under the Option(s).
6.8 RESTRICTIONS ON SHARE TRANSFERABILITY. In addition to the foregoing,
the Committee may impose such restrictions on any Shares acquired pursuant to
the exercise of an Option granted under this Article 6 as it may deem advisable,
including, without limitation, restrictions under applicable Federal securities
laws, under the requirements of any stock exchange or market upon which such
Shares are then listed and/or traded, and under any blue sky or state securities
laws applicable to such Shares.
6.9 TERMINATION OF EMPLOYMENT. In the event that the employment of a
Participant is terminated by reason of death, Disability or Retirement, or in
the event the employment of a Participant is terminated for any reason other
than death, Disability or Retirement, the rights under then outstanding Options
granted pursuant to the Plan shall terminate upon the expiration date of each
such Option or three months after such date of termination of employment,
whichever first occurs; provided that in the event that the employment of a
Participant is terminated by reason of death, Disability or Retirement
(provided, in the case of Retirement, that such Participant has not attained the
age of 60 years), the rights under then outstanding NQSO's granted pursuant to
the Plan shall terminate upon the expiration date of each such NQSO or twelve
months after such date of termination of employment, whichever first occurs; and
provided, further, that in the event that the employment of a Participant is
terminated by reason of Retirement (provided that such Participant has attained
the age of 60 years), the rights under then outstanding NQSO's granted pursuant
to the Plan shall terminate upon the expiration date of each such NQSO or three
years after such date of termination of employment, whichever first occurs. In
addition to the foregoing, the Committee may include such provisions in the
Award Agreement entered into with each Participant as it deems advisable, which
provision need not be uniform among all Options issued pursuant to this Article
6, and may reflect distinctions based on the reasons for termination of
employment.
6.10 NONTRANSFERABILITY OF OPTIONS.
(a) INCENTIVE STOCK OPTIONS. No ISO granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution.
8
<PAGE> 32
Further, all ISOs granted to a Participant under the Plan shall be exercisable
during his or her lifetime only by such Participant.
(b) NONQUALIFIED STOCK OPTIONS. No NQSO granted under the Plan may be
sold, transferred, pledged, or assigned, or otherwise alienated or hypothecated
by a Participant, other than by will or by the laws of descent and distribution,
and except that the Committee, in its discretion, may provide that any Award
Agreement relating to any NQSO (i) may be transferred by a Participant to
members of such Participant's immediate family, trusts for the benefit of such
family members and/or partnerships whose partners are such family members, but
such transferees may not transfer such NQSO's to third parties, (ii) shall be
subject to all other conditions and restrictions applicable to Options granted
under the Plan prior to such transfer and (iii) shall set forth the restrictions
on transfer described in (i) and (ii) above, as well as any other restriction
necessary to render the Options not subject to being transferred in accordance
with this Section 6.10(b) to be exempt pursuant to Rule 16b-3 of the Exchange
Act; provided, however, that if Rule 16b-3, or any comparable rule, as then in
effect and applicable to the Company, were to provide that transfers of the type
described in (i), (ii) and (iii) above shall result in the NQSO's or the Plan
being disqualified from the exception afforded by Rule 16b-3, then such
transfers shall be prohibited under the Plan.
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1 GRANT OF SARS. Subject to the terms and conditions of the Plan, SARs
may be granted to Participants at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs, or any combination of these forms of SAR.
The Committee shall have complete discretion in determining the number of
SARs granted to each Participant (subject to Article 4 herein) and, consistent
with the provisions of the Plan, in determining the terms and conditions
pertaining to such SARs.
The grant price of a Freestanding SAR shall equal the Fair Market Value of
a Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Option Price of the related Option.
7.2 EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
7.3 EXERCISE OF FREESTANDING SARS. Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes
upon them.
7.4 SAR AGREEMENT. Each SAR grant shall be evidenced by an Award Agreement
that shall specify the grant price, the term of the SAR, and such other
provisions as the Committee shall determine.
7.5 TERM OF SARS. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided, however, that
such term shall not exceed ten (10) years.
7.6 PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:
(a) The difference between the Fair Market Value of a Share on the
date of exercise over the grant price; by
(b) The number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, or in some combination thereof.
7.7 SECTION 16 REQUIREMENTS. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on exercise of an SAR (including,
without limitation, the right of the Committee to limit the time of exercise to
specified periods) as may be required to satisfy the requirements of Section 16
of the Exchange Act (or any successor rule).
9
<PAGE> 33
7.8 TERMINATION OF EMPLOYMENT. Each SAR Award Agreement shall set forth
the extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant's employment with the Company. Such
provisions shall be determined in the sole discretion of the Committee, shall be
included in the Award Agreement entered into with Participants, need not be
uniform among all SARs issued pursuant to the Plan, and may reflect distinctions
based on the reasons for termination of employment.
7.9 NONTRANSFERABILITY OF SARS. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution, except that the
Committee, in its discretion, may provide that any Award Agreement evidencing
any SAR (i) may be transferred by a Participant to members of such Participant's
immediate family, trusts for the benefit of such family members and/or
partnerships whose partners are such family members, but such transferees may
not transfer such SARs to third parties, (ii) shall be subject to all other
conditions and restrictions applicable to SARs granted under the Plan prior to
such transfer and (iii) shall set forth the restrictions on transfer described
in (i) and (ii) above, as well as any other restriction necessary to render the
SARs not being transferred pursuant to this Section 7.9 to be exempt pursuant to
Rule 16b-3 of the Exchange Act; provided, however, that if Rule 16b-3 or any
comparable rule, as then in effect and applicable to the Company, were to
provide that transfers of the type described in (i), (ii) and (iii) above shall
result in the SARs or the Plan being disqualified from the exception afforded by
Rule 16b-3, then such transfers shall be prohibited under the Plan. Further,
except as otherwise provided in a Participant's Award Agreement, all SARs
granted to a Participant under the Plan shall be exercisable during his or her
lifetime only by such Participant.
ARTICLE 8. RESTRICTED STOCK
8.1 GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to Participants in such amounts as the Committee shall
determine.
8.2 RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by an Award Agreement that shall specify the Period(s) of Restriction,
the number of Shares of Restricted Stock granted, and such other provisions as
the Committee shall determine.
8.3 TRANSFERABILITY. Except as provided in this Article 8, the Shares of
Restricted Stock granted herein may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated until the end of the applicable Period of
Restriction established by the Committee and specified in the Restricted Stock
Award Agreement, or upon earlier satisfaction of any other conditions, as
specified by the Committee in its sole discretion and set forth in the
Restricted Stock Award Agreement, except that the Committee, in its discretion,
may provide that any Award Agreement relating to any Restricted Stock (i) may be
transferred by a Participant to members of such Participant's immediate family,
trusts for the benefit of such family members and/or partnerships whose partners
are such family members, but such transferees may not transfer such Restricted
Stock to third parties, (ii) shall be subject to all the conditions and
restrictions applicable to Restricted Stock granted under the Plan prior to such
transfer and (iii) shall set forth the restrictions on transfers described in
(i) and (ii) above, as well as any other restriction necessary to render the
Restricted Stock not being transferred in accordance with this Section 8.3 to be
exempt pursuant to Rule 16b-3 of the Exchange Act; provided, however, that if
Rule 16b-3 or any comparable rule, as then in effect and applicable to the
Company, were to provide that transfers of the type described in (i), (ii) and
(iii) above shall result in the Restricted Stock or the Plan being disqualified
from the exception afforded by Rule 16b-3, then such transfers shall be
prohibited under the Plan. All rights with respect to the Restricted Stock
granted to a Participant under the Plan shall be available during his or her
lifetime only to such Participant.
8.4 OTHER RESTRICTIONS. Subject to Article 11 herein, the Committee shall
impose such other conditions and/or restrictions on any Shares of Restricted
Stock granted pursuant to the Plan as it may deem advisable including, without
limitation, a requirement that Participants pay a stipulated purchase price for
each Share of Restricted Stock, restrictions based upon the achievement of
specific performance objectives (Company-wide,
10
<PAGE> 34
business unit, and/or individual), time-based restrictions on vesting following
the attainment of the performance objectives, and/or restrictions under
applicable Federal or state securities laws.
The Company shall retain the certificates representing Shares of Restricted
Stock in the Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied.
Except as otherwise provided in this Article 8, Shares of Restricted Stock
covered by each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the applicable Period of
Restriction.
8.5 VOTING RIGHTS. During the Period of Restriction, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares.
8.6 DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may be
credited with regular cash dividends paid with respect to the underlying Shares
while they are so held. Such dividends may be paid currently, accrued as
contingent cash obligations, or converted into additional shares of Restricted
Stock, upon such terms as the Compensation Committee establishes.
The Committee may apply any restrictions to the dividends that the
Committee deems appropriate. Without limiting the generality of the preceding
sentence, if the grant or vesting of Restricted Shares granted to a Covered
Employee is designed to comply with the requirements of the Performance-Based
Exception, the Committee may apply any restrictions it deems appropriate to the
payment of dividends declared with respect to such Restricted Shares, such that
the dividends and/or the Restricted Shares maintain eligibility for the
Performance-Based Exception.
In the event that any dividend constitutes a "derivative security" or an
"equity security" pursuant to Rule 16(a) under the Exchange Act, such dividend
shall be subject to a vesting period equal to the remaining vesting period of
the Shares of Restricted Stock with respect to which the dividend is paid.
8.7 TERMINATION OF EMPLOYMENT. Each Restricted Stock Award Agreement shall
set forth the extent to which the Participant shall have the right to retain
unvested Restricted Stock following termination of the Participant's employment
with the Company. Such provisions shall be determined in the sole discretion of
the Committee, shall be included in the Award Agreement entered into with each
Participant, need not be uniform among all Shares of Restricted Stock issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
termination of employment; provided, however that, except in the cases of
terminations connected with a Change in Control and terminations by reason of
death or Disability, the vesting of Shares of Restricted Stock which qualify for
the Performance-Based Exception and which are held by Covered Employees shall
not be accelerated.
ARTICLE 9. PERFORMANCE UNITS AND PERFORMANCE SHARES
9.1 GRANT OF PERFORMANCE UNITS/SHARES. Subject to the terms of the Plan,
Performance Units and/or Performance Shares may be granted to Participants in
such amounts and upon such terms, and at any time and from time to time, as
shall be determined by the Committee.
9.2 VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall have an
initial value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. The Committee shall set performance objectives in
its discretion which, depending on the extent to which they are met, will
determine the number and/or value of Performance Units/Shares that will be paid
out to the Participant. For purposes of this Article 9, the time period during
which the performance objectives must be met shall be called a "Performance
Period."
9.3 EARNING OF PERFORMANCE UNITS/SHARES. Subject to the terms of this
Plan, after the applicable Performance Period has ended, the holder of
Performance Units/Shares shall be entitled to receive payout on the number and
value of Performance Units/Shares earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the corresponding
performance objectives have been achieved.
11
<PAGE> 35
9.4 FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. Payment of
earned Performance Units/Shares shall be made within seventy-five (75) calendar
days following the close of the applicable Performance Period in a manner
designated by the Committee, in its sole discretion. Subject to the terms of
this Plan, and after considering, in connection with a Change in Control, the
impact of a payout on the desired accounting treatment of such Change in
Control, the Committee, in its sole discretion, may pay earned Performance
Units/Shares in the form of cash or in Shares (or in a combination thereof)
which have an aggregate Fair Market Value equal to the value of the earned
Performance Units/Shares at the close of the applicable Performance Period. Such
Shares may be granted subject to any restrictions deemed appropriate by the
Committee.
At the discretion of the Committee, Participants may be entitled to receive
any dividends declared with respect to Shares which have been earned in
connection with grants of Performance Units and/or Performance Shares which have
been earned, but not yet distributed to Participants (such dividends shall be
subject to the same accrual, forfeiture, and payout restrictions as apply to
dividends earned with respect to Shares of Restricted Stock, as set forth in
Section 8.6 herein).
9.5 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR
RETIREMENT. Unless determined otherwise by the Committee and set forth in the
Participant's Award Agreement, in the event the employment of a Participant is
terminated by reason of death, Disability or Retirement during a Performance
Period, the Participant shall receive a payout of the Performance Units/Shares
which is prorated, as specified by the Committee in its discretion.
Payment of earned Performance Units/Shares shall be made at a time
specified by the Committee in its sole discretion and set forth in the
Participant's Award Agreement. Notwithstanding the foregoing, with respect to
Covered Employees who retire during a Performance Period, payments shall be made
at the same time as payments are made to Participants who did not terminate
employment during the applicable Performance Period.
9.6 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event that a
Participant's employment terminates for any reason other than those reasons set
forth in Section 9.5 herein, all Performance Units/ Shares shall be forfeited by
the Participant to the Company unless determined otherwise by the Committee, as
set forth in the Participant's Award Agreement.
9.7 NONTRANSFERABILITY. Except as otherwise provided in a Participant's
Award Agreement, Performance Units/Shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution, except that the Committee, in its discretion,
may provide that any Award Agreement relating to any Performance Units/Shares
(i) may be transferred by a Participant to members of such Participant's
immediate family, trusts for the benefit of such family members and/or
partnerships whose partners are such family members, but such transferees may
not transfer such Performance Shares/Units to third parties, (ii) shall be
subject to all other conditions and restrictions applicable to Performance
Shares/Units granted under the Plan prior to such transfer and (iii) shall set
forth the restrictions on transfers described in (i) and (ii) above, as well as
any other restriction necessary to render the Performance Shares/Units not being
transferred in accordance with this Section 9.7 to be exempt pursuant to Rule
16b-3 of the Exchange Act; provided, however, that if Rule 16b-3 or any
comparable rule, as then in effect and applicable to the Company, were to
provide that transfers of the type described in (i), (ii) and (iii) above shall
result in the Performance Units/Shares or the Plan being disqualified from the
exception afforded by Rule 16b-3, then such transfers shall be prohibited under
this Plan. Further, except as otherwise provided in a Participant's Award
Agreement, a Participant's rights under the Plan shall be exercisable during the
Participant's lifetime only by the Participant or the Participant's legal
representative.
12
<PAGE> 36
ARTICLE 10. PERFORMANCE MEASURES
Unless and until the Committee proposes for shareholder vote and
shareholders approve a change in the general performance measures set forth in
this Article 10, the attainment of which may determine the degree of payout
and/or vesting with respect to Awards to Covered Employees which are designed to
qualify for the Performance-Based Exception, the performance measure(s) to be
used for purposes of such grants shall be chosen from among the following
alternatives:
(a) Return on average, and shareholder's equity of the Company;
(b) Return on average assets of the Company;
(c) Net income of the Company;
(d) Earnings per common share of the Company;
(e) Total shareholder return of the Company; and
(f) Such other criteria as may be established by the Committee in
writing and which meets the requirements of the Performance-Based
Exception.
The Committee shall have the discretion to adjust the determinations of the
degree of attainment of the preestablished performance objectives; provided,
however, that Awards which are designed to qualify for the Performance-Based
Exception, and which are held by Covered Employees, may not be adjusted upward
(the Committee shall retain the discretion to adjust such Awards downward).
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder-approval. In
addition, in the event that the Committee determines that it is advisable to
grant Awards which shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Code
Section 162(m).
ARTICLE 11. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant's lifetime. In
the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.
ARTICLE 12. DEFERRALS
The Committee may permit or require a Participant to defer such
Participant's receipt of the payment of cash or the delivery of Shares that
would otherwise be due to such Participant by virtue of the exercise of an
Option or SAR, the lapse or waiver of restrictions with respect to Restricted
Stock, or the satisfaction of any requirements or objectives with respect to
Performance Units/Shares. If any such deferral election is required or
permitted, the Committee shall, in its sole discretion, establish rules and
procedures for such payment deferrals.
ARTICLE 13. RIGHTS OF EMPLOYEES
13.1 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of the
Company.
13
<PAGE> 37
13.2 PARTICIPATION. No Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
ARTICLE 14. CHANGE IN CONTROL
14.1 TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a Change in
Control, unless otherwise specifically prohibited under applicable laws, or by
the rules and regulations of any governing governmental agencies or national
securities exchanges:
(a) Any and all Options and SARs granted hereunder shall become
immediately exercisable, and shall remain exercisable throughout their
entire term;
(b) Any restriction periods and restrictions imposed on Restricted
Shares shall lapse; provided, however, that the degree of vesting
associated with Restricted Stock which has been conditioned upon the
achievement of performance conditions pursuant to Section 8.4 herein shall
be determined in the manner set forth in Section 14.1(c) herein;
(c) The vesting of all Performance Units and Performance Shares shall
be accelerated as of the effective date of the Change in Control, and there
shall be paid out in cash or Shares, in the discretion of the Committee and
after taking into account the impact of the payout upon the desired
accounting treatment of the proposed Change in Control, to Participants
within thirty (30) days following the effective date of the Change in
Control a pro rata amount based upon an assumed achievement of all relevant
performance objectives at target levels, and upon the length of time within
the Performance Period which has elapsed prior to the Change in Control;
provided, however, that in the event the Committee determines that actual
performance to the date of the Change in Control exceeds targeted levels,
the prorated payouts shall be made at levels commensurate with such actual
performance (determined by extrapolating such actual performance to the end
of the Performance Period), based upon the length of time within the
Performance Period which has elapsed prior to the Change in Control; and
provided further, that there shall not be an accelerated payout with
respect to Awards of Performance Units or Performance Shares which qualify
as "derivative securities" under Section 16 of the Exchange Act which were
granted less than six (6) months prior to the effective date of the Change
in Control.
14.2 TERMINATION, AMENDMENT, AND MODIFICATIONS OF CHANGE-IN-CONTROL
PROVISIONS. Notwithstanding any other provision of this Plan or any Award
Agreement provision, the provisions of this Article 14 may not be terminated,
amended, or modified on or after the date of a Change in Control to affect
adversely any Award theretofore granted under the Plan without the prior written
consent of the Participant with respect to said Participant's outstanding
Awards.
ARTICLE 15. AMENDMENT, MODIFICATION, AND TERMINATION
15.1 AMENDMENT, MODIFICATION, AND TERMINATION. Subject to Section 14.2
herein, the Board may at any time and from time to time, alter, amend, suspend
or terminate the Plan in whole or in part; provided, however, that no amendment
which requires shareholder approval in order for the Plan to continue to comply
with Rule 16b-3 under the Exchange Act, including any successor to such Rule,
shall be effective unless such amendment shall be approved by the requisite vote
of shareholders of the Company entitled to vote thereon.
The Committee shall not have the authority to cancel outstanding Awards and
issue substitute Awards in replacement thereof.
15.2 ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. Subject to the restriction set forth in Article 10 herein
on the exercise of upward discretion with respect to Awards which have been
designed to comply with the Performance-Based Exception, the Committee may make
adjustments in the terms and conditions of, and the criteria included in, Awards
in recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4.3 hereof) affecting the Company or the
financial statements of the Company or of changes in applicable laws,
regulations, or accounting principles, whenever the Committee determines that
such adjustments are
14
<PAGE> 38
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.
15.3 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification
of the Plan shall adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the Participant holding
such Award.
15.4 COMPLIANCE WITH CODE SECTION 162(M). At all times when Code Section
162(m) is applicable, all Awards granted under this Plan shall comply with the
requirements of Code Section 162(m); provided, however, that in the event the
Committee determines that such compliance is not desired with respect to any
Award or Awards available for grant under the Plan, then compliance with Code
Section 162(m) will not be required. In addition, in the event that changes are
made to Code Section 162(m) to permit greater flexibility with respect to any
Award or Awards available under the Plan, the Committee may, subject to this
Article 15, make any adjustments it deems appropriate.
ARTICLE 16. WITHHOLDING
16.1 TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant or beneficiary to remit to the
Company, an amount sufficient to satisfy Federal, state, and local taxes,
domestic or foreign, required by law or regulation to be withheld with respect
to any taxable event arising as a result of this Plan.
16.2 SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
or upon any other taxable event arising as a result of Awards granted hereunder,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which could be withheld on the transaction.
All such elections shall be irrevocable, made in writing, signed by the
Participant, and shall be subject to any restrictions or limitations that the
Committee, in its sole discretion, deems appropriate.
ARTICLE 17. INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgement in any such action, suit, or proceeding against him or her, provided
he or she shall give the Company an opportunity at its own expense, to handle
and defend the same before he or she undertakes to handle and defend it on his
or her own behalf. The foregoing right of indemnification shall not be exclusive
of any other rights of indemnification to which such persons may be entitled
under the Company's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
ARTICLE 18. SUCCESSORS
All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase, of
all or substantially all of the business and/or assets of the Company, or a
merger, consolidation, or otherwise.
15
<PAGE> 39
ARTICLE 19. LEGAL CONSTRUCTION
19.1 GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
19.2 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
19.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
19.4 SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. To the extent any provision of
the plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.
19.5 GOVERNING LAW. To the extent not preempted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the state of Delaware.
16
<PAGE> 40
[SOUTHTRUST CORPORATION LOGO]
P.O. BOX 2554
BIRMINGHAM, ALABAMA 35290
<PAGE> 41
APPENDIX A
SOUTHTRUST CORPORATION
BIRMINGHAM, ALABAMA
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
APRIL 17, 1996
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY)
The undersigned hereby appoints J. Reese Murray and William O.
Vann, and each of them, with full power of substitution, proxies to vote the
shares of Common Stock of SouthTrust Corporation (the "Company") which the
undersigned could vote if personally present at the Annual Meeting of
Stockholders of the Company to be held in the auditorium on the eighth floor of
the SouthTrust Tower, 420 North 20th Street, Birmingham, Alabama, on April 17,
1996, at 9:00 A.M., Central Time, or any adjournment thereof:
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees below [ ] WITHHOLD AUTHORITY to
(except as indicated to vote for all nominees below
the contrary below)
H. Allen Franklin, Herbert Stockham and Charles G. Taylor
INSTRUCTION: To withhold authority to vote for an individual nominee,
write that nominee's name in the space provided below.
-----------------------------------------------------------------------
2. AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION:
[ ] FOR [ ] AGAINST [ ] ABSTAIN respecting a proposal to
amend the Restated Certificate of Incorporation of the Company, as
described in the accompanying Proxy Statement of the Company.
3. ADOPTION OF THE LONG-TERM INCENTIVE PLAN:
[ ] FOR [ ] AGAINST [ ] ABSTAIN respecting a proposal to
adopt the Long-Term Incentive Plan, as described in the accompanying Proxy
Statement of the Company.
4. OTHER MATTERS:
In their discretion, upon such other matters as may properly come before
the Annual Meeting of Stockholders.
<PAGE> 42
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS, AND IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
PERSONS NOMINATED BY THE BOARD OF DIRECTORS AS DIRECTORS, THE AMENDMENT OF THE
RESTATED CERTIFICATE OF INCORPORATION AND THE APPROVAL OF THE LONG-TERM
INCENTIVE PLAN.
Dated:
(Signature(s) of Stockholder(s))
(Please date and sign as name appears on
proxy. If shares are held jointly, each
stockholder should sign. Executors,
administrators, trustees, etc. should use
full title and, if more than one, all
should sign. If the stockholder is a
corporation, please sign full corporate
name by an authorized officer.)
