<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>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / 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):
/ / $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
PRELIMINARY COPY - CONFIDENTIAL: FOR USE OF THE COMMISSION ONLY.
SOUTHTRUST CORPORATION
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
AUBREY D. BARNARD
Secretary
Birmingham, Alabama
March ___, 1996
<PAGE> 3
SOUTHTRUST CORPORATION
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 ___, 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 approval
of the amendment to the Restated Certificate of Incorporation of the Company
and (iii) the approval 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 $7500, 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 _________ 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
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<PAGE> 4
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
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:
2
<PAGE> 5
<TABLE>
<CAPTION>
NUMBER AND PERCENT
OF SHARES OF COMMON
NAME, AGE AND STOCK OF THE COMPANY
PRINCIPAL OCCUPATION DIRECTOR BENEFICIALLY OWNED AS
OF NOMINEES SINCE OF DECEMBER 31, 1995
----------- ----- --------------------
<S> <C> <C>
H. Allen Franklin (51) April 20, 1994 3,535
Chairman and Chief Executive 0.00%
Officer, Georgia Power Company
(electric utility) (1)
Herbert Stockham (67) October 17, 1973 111,882 (2)
Chairman, Stockham Valves & 0.13%
Fittings, Inc. (manufacturing
business)
Charles G. Taylor (67) January 15, 1992 222,925 (3)
President and Chief Executive 0.25%
Officer, 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
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
3
<PAGE> 6
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 THE COMPANY
NAME, AGE CURRENT BENEFICIALLY OWNED AS
AND PRINCIPAL TERM DIRECTOR OF DECEMBER 31,
OCCUPATION EXPIRES SINCE 1995
----------- ------- ----- ----
<S> <C> <C> <C>
F. Crowder Falls (63) 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 0.01%
Officer, Florida Power Corporation
(electric utility business)
T. W. Mitchell (67) 1997 January 17, 1973 487,774 (4)
Chairman and Chief Executive 0.55%
Officer, Stuart Construction Co., Inc.
(construction business)
William K. Upchurch, Jr. (63) 1997 April 23, 1987 45,100 (5)
Chairman and Chief Executive 0.05%
Officer, 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.
(process of prepared salads)
William C. Hulsey (57) 1998 April 16, 1986 946,415 (7)
Chairman and Chief Executive 1.06%
Officer, Arlington Properties, Inc.
(real estate development)
Wallace D. Malone, Jr. (59) 1998 August 2, 1972 1,526,736 (8)
Chairman and Chief Executive 1.72%
Officer of the Company
</TABLE>
4
<PAGE> 7
(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's wife 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.
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 this 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 "1984 Stock Option Plan"), the 1993 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.
5
<PAGE> 8
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 percentage of shares of Common Stock of the Company owned
beneficially by such persons as of December 31, 1995.
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<PAGE> 9
<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 1/16/90 165,585 (3)
of SouthTrust Bank of 0.19%
Alabama, National
Association
Thomas H. Coley (53) Chief Executive Officer 7/1/89 38,691 (4)
of SouthTrust Bank of 0.04%
Georgia, National
Association
Frederick W. Murray, Jr. (57) Executive Vice President 1/1/80 165,979 (5)
of the Company 0.19%
James W. Rainer, Jr. (52) Executive Vice President 12/15/82 123,100 (6)
of 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.
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<PAGE> 10
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.
If the proposed amendment is adopted, the additional
authorized shares may be issued by the Board of Directors without any further
action or approval by the stockholders of the Company. The Company may issue
the additional authorized shares of Common Stock in connection with stock
dividends or splits, employee benefit plans, the acquisition of financial
institutions and other entities or the generation of additional capital for the
Company. If the Company were to issue a significant number of the newly
authorized shares of Common Stock, it is possible that the ownership interest
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. As of the date of the Proxy Statement, the Company has no
plans 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 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 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 this Proxy Statement as Exhibit
I.
8
<PAGE> 11
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 1984 Stock Option Plan and the 1993 Stock Option Plan (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 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, after giving effect to the termination of the Stock Option
Plans and making available for issuance under the Incentive Plan the shares
that have not been made the subject of grants thereunder, is 4,000,000 shares
of Common Stock. 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 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
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<PAGE> 12
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. The Human Resources Committee will also have the authority to
accelerate the vesting and/or waive any restrictions of any outstanding awards.
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.
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 ___,
1996 was $_____.) 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).
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<PAGE> 13
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 conditions 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 shares
as of the payment date. Common Stock used to pay earned performance shares may
have
11
<PAGE> 14
additional restrictions as determined by the Human Resources Committee. Earned
but unpaid performance 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.
12
<PAGE> 15
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 performance condition, 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. Shareholder 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.
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 regular 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 taxes to the
optionee, for regular 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
13
<PAGE> 16
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 shares will be forfeited (for example, because
the Human Resources 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.
14
<PAGE> 17
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>
S&P Major
Regional
Date SouthTrust S&P 500 Banks
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
December 1990 $100 $100 $100
December 1991 $245 $130 $179
December 1992 $255 $140 $228
December 1993 $297 $154 $241
December 1994 $291 $156 $228
December 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 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
15
<PAGE> 18
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 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,
16
<PAGE> 19
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.
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 Stock Option Plans of the Company, 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.
In addition, 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
17
<PAGE> 20
the 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 this 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 this Proxy Statement.
18
<PAGE> 21
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.
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.
19
<PAGE> 22
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
----------------------
Annual Compensation(1) Awards Payouts
------------------- ------ -------
Other
Name Annual Restricted Options
and Compensa- Stock (Number LTIP All Other
Principal(1) Salary Bonus tion Award(s) of Payouts Compensation
Position Year ($) ($)(2) ($)(3) ($) Shares) ($) ($)
------------ ---- ------ ------ --------- ---------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wallace D.
Malone, Jr.,
Chief
Executive 1995 $695,000 $459,772 -0- N/A 70,065 N/A $67,104(4)
Officer of the 1994 630,000 358,344 $20,191 N/A 66,000 N/A 60,335(4)
Company 1993 605,016 363,000 20,121 N/A 32,266(5) N/A 59,770(4)
Julian W.
Banton,
President and
Chief Executive
Officer of
SouthTrust Bank
of Alabama, 1995 323,500 177,925 -0- N/A 15,000 N/A 31,168(6)
National 1994 303,500 166,925 5,152 N/A 15,000 N/A 18,137(6)
Association 1993 292,000 160,600 5,152 N/A 11,679(5) N/A 28,836(6)
Thomas H. Coley
Chief Executive
Officer and
Chairman of the
Board of
SouthTrust 1995 240,000 120,000 -0- N/A 7,000 N/A 22,930(6)
Bank of 1994 225,000 50,000 -0- N/A 4,000 N/A 21,531(6)
Georgia, N.A. 1993 200,000 50,000 -0- N/A 7,999(5) N/A 19,733(6)
Frederick W.
Murray, Jr.,
Executive Vice
President of 1995 198,167 87,627 -0- N/A 5,000 N/A 20,156(6)
the Company 1994 188,500 80,414 5,954 N/A 4,750 N/A 18,137(6)
1993 183,000 82,350 5,954 N/A 7,319(5) N/A 18,158(6)
James W. Rainer,
Jr., Executive 1995 188,167 83,207 -0- N/A 5,000 N/A 18,893(6)
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
20
<PAGE> 23
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 effective date of the grant; and (iii) such other
conditions as the Human Resources Committee, which administers the Stock Option
Plans, may determine. A total of 2,526,787 shares of Common Stock of the
Company is available for issuance under the Stock Option Plans, but if the
Incentive Plan is approved by stockholders, these shares will become part of
4,000,000 shares of stock authorized for issuance thereunder.
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:
21
<PAGE> 24
OPTION AND RIGHT GRANTS IN FISCAL YEAR 1995
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
% of Total Potential
Options Options Exercise Realizable Value
Granted Granted or Base Assuming Rates of Stock
(Number of Employees Price Expiration Price Appreciation of
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; none of such persons purchased
any shares of Common Stock owned then under the Discounted Plan during
1995, except for Mr. Banton (who 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.
22
<PAGE> 25
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>
Exercise
Options or 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."
23
<PAGE> 26
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 Value of
Shares Unexercised
Underlying In-the-Money
Options at Options at
Number of December 31, December 31,
Shares 1995 1995
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 the capacity in which the executive was serving as of October
1984 for a term commencing as of October 19, 1984 and ending on December 31,
1993, unless the executive (if eligible) elects early retirement and subject to
being automatically renewed (after) for an additional period of one year, so
that the term of employment under the employment agreement always will be 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
24
<PAGE> 27
executive is entitled to receive annual payments at the rate in effect
immediately prior to such termination of employment for a period of five years.
The Company 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 executive for a period of three years and provide that, if
the executive is terminated for any reason other than his death or disability
or for cause, such executives are entitled to receive annual payments at the
rate in effect immediately prior to such termination 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 or will 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 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.
25
<PAGE> 28
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
----------------
Remuneration 15 Years 20 Years 25 Years 30 Years 35 Years
-------------- -------- -------- -------- -------- --------
<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 - 36 years; Mr. Banton
- - 12 years; Mr. Coley - 7 years; Mr. Murray - 30 years; and Mr. Rainer - 30
years.
26
<PAGE> 29
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.
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 1995. 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 ___, 1996, to be included in the 1997 proxy materials.
27
<PAGE> 30
GENERAL INFORMATION
As of the date of this 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
Birmingham, Alabama AUBREY D. BARNARD
March ___, 1996 Secretary
28
<PAGE> 31
EXHIBIT I
LONG-TERM INCENTIVE PLAN
SOUTHTRUST CORPORATION
JANUARY 1996
<PAGE> 32
<TABLE>
<CAPTION>
CONTENTS
- -----------------------------------------------------------------
<S> <C> <C>
Article 1. Establishment, Objectives, and Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Article 2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Article 3. Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Article 4. Shares Subject to the Plan and Maximum Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Article 5. Eligibility and Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Article 6. Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Article 7. Stock Appreciation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Article 8. Restricted Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Article 9. Performance Units and Performance Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Article 10. Performance Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Article 11. Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Article 12. Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Article 13. Rights of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Article 14. Change In Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Article 15. Amendment, Modification, and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Article 16. Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Article 17. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Article 18. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Article 19. Legal Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
<PAGE> 33
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 ___, 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 ___,
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 each Participant setting forth the terms and provisions applicable
to Awards granted under this Plan.
1
<PAGE> 34
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 Securities Exchange Act of 1934 (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 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 shareholders 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
2
<PAGE> 35
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 shareholders 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.
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 with any and all Subsidiaries, and any successor thereto
as provided in Article 18 herein.
3
<PAGE> 36
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
of Directors of the Company.
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 of Directors of the Company 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 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.
4
<PAGE> 37
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.
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, at its discretion),
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 an Award granted to a Participant
pursuant to Article 8 herein.
2.30 "RETIREMENT" shall have the meaning ascribed to such term in
the Company's tax-qualified defined benefit retirement plan.
2.31 "SHARES" means the shares of Common Stock of the Company.
2.32 "STOCK APPRECIATION RIGHT" OR "SAR" means 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
5
<PAGE> 38
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 the Plan applies to Employees.
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.
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 4,000,000 Shares, which
includes the Shares authorized for issuance under the 1993 Stock Option Plan of
the Company that, as of the Effective Date, were not subject to outstanding
awards thereunder.
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.
6
<PAGE> 39
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; 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 eligible 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 whose grant 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.
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.
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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 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, 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 nonstatutory stock options granted pursuant to the Plan shall
terminate upon the expiration date of each such nonstatutory stock option or
three years after such date of termination of
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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. 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 stock
option 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 6.8 to be
exempt pursuant to Rule 16b-3 of the Securities Exchange Act
of 1934; 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.
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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 RULE 16B-3 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).
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
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<PAGE> 43
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 Securities Exchange Act
of 1934; 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 a Restricted Stock 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 any Restricted Stock 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 Securities Exchange Act of 1934; 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, business unit,
and/or individual),
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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 Shares 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.
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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.
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, 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). In addition, Participants may, at the discretion of the
Committee, be entitled to exercise their voting rights with respect to such
Shares.
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
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<PAGE> 46
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 Securities and Exchange Act of 1934;
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 transfer 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.
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
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(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.
13.2 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.
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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 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
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<PAGE> 49
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 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. ln 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 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.
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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.
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.
18
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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.
19
<PAGE> 52
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.
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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> 53
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 AND FOR THE AMENDMENT
OF THE STOCK OPTION PLANS.
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.)
