<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SouthTrust Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[SOUTHTRUST CORPORATION LOGO]
420 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 21, 1999
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders (the "Annual Meeting") of SouthTrust
Corporation ("SouthTrust") will be held in the auditorium on the eighth floor of
the SouthTrust Tower, 420 North 20th Street, Birmingham, Alabama, on Wednesday,
April 21, 1999, at 9:00 a.m., Central Time, for the following purposes:
(1) To elect five (5) persons to the Board of Directors of SouthTrust,
each person to serve the term set forth herein and until such person's
successor is duly elected and qualified;
(2) To amend the Long-Term Incentive Plan of the Company;
(3) To approve and ratify the Amended and Restated Senior Officer
Performance Incentive Plan; and
(4) To transact such other business as may properly come before the
Annual Meeting.
Holders of Common Stock of SouthTrust of record at the close of business on
February 26, 1999 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 SOUTHTRUST MAY BE ASSURED OF THE
PRESENCE OF A QUORUM AT THE ANNUAL MEETING. A postage-paid envelope addressed to
SouthTrust is enclosed for your convenience in returning your proxy to
SouthTrust.
By Order of the Board of Directors
/s/ Alton E. Yother
ALTON E. YOTHER
Secretary
Birmingham, Alabama
March 15, 1999
<PAGE> 3
[SOUTHTRUST CORPORATION LOGO]
---------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 21, 1999
The accompanying proxy is solicited on behalf of the Board of Directors of
SouthTrust Corporation, a Delaware corporation ("SouthTrust"), for use at the
Annual Meeting of Stockholders (the "Annual Meeting") of SouthTrust to be held
in the auditorium on the eighth floor of the SouthTrust Tower, 420 North 20th
Street, Birmingham, Alabama, on Wednesday, April 21, 1999 at 9:00 a.m., Central
Time. It is anticipated that this proxy material will be mailed to stockholders
on or about March 15, 1999.
The matters to be considered at the Annual Meeting are (i) the election of
five directors to serve for the term of office described below; (ii) the
amendment of the Long-Term Incentive Plan of SouthTrust; and (iii) the approval
and ratification of the Amended and Restated Senior Officer Performance
Incentive Plan. All shares of Common Stock represented by an executed and
completed proxy received by SouthTrust 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
five nominees named herein as directors; (ii) the approval of the amendment to
the Long-Term Incentive Plan; and (iii) the approval and ratification of the
Amended and Restated Senior Officer Performance Incentive Plan. A proxy may be
revoked at any time prior to its exercise by filing with the Secretary of
SouthTrust 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 SouthTrust.
SouthTrust 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
SouthTrust. In addition, SouthTrust has retained Morrow & Co., Inc. to assist in
the solicitation of proxies and anticipates that it will incur fees of $7,500,
excluding out-of-pocket costs, for this service. In addition to the use of the
mail, proxies may be solicited by telephone or by telecopy or personally by the
directors, officers and employees of SouthTrust, who will receive no extra
compensation for their services.
As of February 26, 1999, the record date for the Annual Meeting, there were
issued and outstanding 167,263,368 shares of Common Stock of SouthTrust. The
holders of each such issued and outstanding share of Common Stock of SouthTrust
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 the holders of a majority of the
issued and outstanding shares of Common Stock of SouthTrust is necessary to
constitute a quorum at the Annual Meeting. Shares of Common Stock represented by
a properly executed and returned proxy will be treated as present at the Annual
Meeting for purposes of determining a quorum without regard to whether the proxy
is marked as casting a vote for or against or abstaining with respect to a
particular matter. In addition, shares of Common Stock represented by "broker
non-votes" (i.e., shares of Common Stock held in record name by brokers or
nominees as to which a proxy is received and (i) any required 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 or (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 each of the matters to be voted on at the Annual Meeting is determined by
a majority of the votes cast at the Annual Meeting, abstentions and broker
non-votes will not affect either the election of directors, the approval of the
amendments to the Long-Term Incentive Plan or the approval and ratification of
the Amended and Restated Senior Officer Performance Incentive Plan.
<PAGE> 4
ELECTION OF DIRECTORS
The Restated Bylaws of SouthTrust provide for a Board of Directors of not
fewer than three nor more than sixteen members. The Restated Certificate of
Incorporation and the Restated Bylaws of SouthTrust 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
twelve persons.
CURRENT NOMINEES
The Board of Directors proposes to nominate the five persons named below
for election as directors, such persons to serve until the 2002 Annual Meeting
of Stockholders (with the exception of Mr. Bailey, who will be elected to serve
until the 2001 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 nominee first became a director of SouthTrust, and the
number and percentage of shares of SouthTrust's Common Stock owned beneficially
by each nominee as of December 31, 1998 are as follows:
<TABLE>
<CAPTION>
NUMBER AND PERCENT OF
SHARES OF COMMON
STOCK OF SOUTHTRUST
NAME, AGE AND PRINCIPAL DIRECTOR BENEFICIALLY OWNED AS
OCCUPATION OF NOMINEES SINCE OF DECEMBER 31, 1998
----------------------- ----------------- ---------------------
<S> <C> <C>
Carl F. Bailey (68)............................ October 16, 1996 31,303
President, BDI 0.02%
(beverage distributor)
Formerly Chairman and
Chief Executive Officer,
South Central Bell Telephone Co.
(telephone and communications)
H. Allen Franklin (54)......................... April 20, 1994 11,870
Chairman and Chief Executive 0.01%
Officer, Georgia Power Company
(electric utility)
Rex J. Lysinger (61)........................... December 18, 1996 5,312
Management Consultant 0.00%
Formerly Chairman and Chief
Executive Officer, Energen
Corporation (diversified energy
company) and Alabama Gas
Corporation (gas utility)
Julian W. Banton (58).......................... July 16, 1997 302,791(1)
President and Chief Executive 0.18%
Officer, SouthTrust Bank,
National Association (commercial
bank; subsidiary of SouthTrust)
Donald M. James (50)........................... December 16, 1998 0
Chairman and Chief Executive 0.00%
Officer, Vulcan Materials
Company (construction materials
and chemicals)
</TABLE>
- ---------------
(1) Includes 26,673 shares that are owned by Mr. Banton's wife, and 223,539
shares that are subject to stock options exercisable within 60 days of
December 31, 1998.
2
<PAGE> 5
Mr. Franklin was elected at the 1996 Annual Meeting of Stockholders and
Messrs. Bailey, Lysinger, Banton and James were elected by the Board of
Directors on October 16, 1996, December 18, 1996, July 16, 1997 and December 16,
1998, respectively, to fill vacancies on the Board of Directors.
Mr. Bailey is a trustee of Colonial Properties Trust, Mr. Franklin is a
director of The Southern Company and Georgia Power Company, Mr. Lysinger and Mr.
Banton are both directors of Energen Corporation and Mr. James is a director of
Vulcan Materials Company and Protective Life Corporation. Each of these
corporations has securities registered under the Securities Exchange Act of
1934.
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 five persons.
THE BOARD OF DIRECTORS OF SOUTHTRUST RECOMMENDS A VOTE FOR THE NOMINEES FOR
DIRECTORS NAMED ABOVE.
CONTINUING DIRECTORS
The following tabulation sets forth certain information with respect to
those persons who were elected as directors of SouthTrust at previous Annual
Meetings of Stockholders or otherwise (and who will continue to serve as
directors following the Annual Meeting):
<TABLE>
<CAPTION>
NUMBER AND PERCENT OF
SHARES OF COMMON
CURRENT STOCK OF SOUTHTRUST
NAME, AGE AND TERM DIRECTOR BENEFICIALLY OWNED AS
PRINCIPAL OCCUPATION EXPIRES SINCE OF DECEMBER 31, 1998
- -------------------- ------- ----------------- ---------------------
<S> <C> <C> <C>
F. Crowder Falls (65)................... 2000 July 19, 1995 6,111(1)
Business Consultant 0.00%
Formerly Carolinas Managing
Partner, KPMG Peat Marwick
LLP (accountants)
Allen J. Keesler, Jr. (60).............. 2000 January 15, 1992 18,291(2)
Management Consultant 0.01%
Formerly President and
Chief Executive Officer,
Florida Power Corporation
(electric utility)
Van L. Richey (49)...................... 2000 December 18, 1996 7,721
President and Chief Executive 0.00%
Officer, American Cast Iron Pipe Co.
(cast iron pipe manufacturer)
William K. Upchurch, Jr. (66)........... 2000 April 23, 1987 77,058(3)
Chairman, 0.05%
W. K. Upchurch
Construction Company, Inc.
(construction business)
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
NUMBER AND PERCENT OF
SHARES OF COMMON
CURRENT STOCK OF SOUTHTRUST
NAME, AGE AND TERM DIRECTOR BENEFICIALLY OWNED AS
PRINCIPAL OCCUPATION EXPIRES SINCE OF DECEMBER 31, 1998
- -------------------- ------- ----------------- ---------------------
<S> <C> <C> <C>
John M. Bradford (60)................... 2001 April 23, 1987 39,958(4)
Chairman, President and 0.02%
Chief Executive Officer,
Mrs. Stratton's Salads, Inc.
(processor of prepared salads)
William C. Hulsey (60).................. 2001 April 16, 1986 1,282,802(5)
Chairman and Chief Executive 0.76%
Officer, Arlington Properties, Inc.
(real estate development)
Wallace D. Malone, Jr. (62)............. 2001 August 2, 1972 2,583,793(6)
Chairman, President and 1.53%
Chief Executive Officer,
SouthTrust
</TABLE>
- ---------------
(1) Includes 2,565 shares held by Mr. Falls' wife and 1,050 shares held by a
trust of which Mr. Falls is a co-trustee.
(2) Includes 3,750 shares held by Mr. Keesler's wife.
(3) Includes 3,711 shares held by trusts of which Mr. Upchurch is custodian and
12,257 shares held by Mr. Upchurch's wife.
(4) Includes 12,600 shares held by Mr. Bradford's wife.
(5) Includes 18,000 shares held by Mr. Hulsey's wife, 9,969 shares held in a
custodial capacity by Mr. Hulsey's wife and 1,122,329 shares held by various
trusts of which Mr. Hulsey is a co-trustee.
(6) Includes 44,537 shares held by Mr. Malone's wife, 448,738 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, and 484,350 shares that are subject to options
exercisable within 60 days of December 31, 1998.
Of the directors named above, Messrs. Falls, Keesler, Richey and Upchurch
were elected at the 1997 Annual Meeting of Stockholders, and Messrs. Bradford,
Hulsey and Malone were elected at the 1998 Annual Meeting of Stockholders. All
of such persons are to serve for the terms indicated.
Mr. Keesler is a director of Cameron Ashley Building Products, Inc., Mr.
Richey is a director of Citation Corporation and Mr. Malone is a director of
Alabama Power Company. Each of these corporations has securities registered
under the Securities Exchange Act of 1934.
SouthTrust has an Audit Committee of the Board of Directors, consisting of
Messrs. Keesler and Richey, which recommends to the Board of Directors the
independent accountants to be selected as SouthTrust's auditors and reviews the
audit plan, financial statements and audit results. The Audit Committee also
reviews the internal audit reports of SouthTrust and its affiliates and reviews
comments from the affiliates as to exceptions noted in the reports. The Audit
Committee held four meetings during 1998. Mr. Keesler serves as Chairman of the
Audit Committee.
SouthTrust has a Human Resources Committee of the Board of Directors,
consisting of Messrs. Bailey, Franklin and Hulsey (with Mr. Bailey serving as
Chairman), which sets compensation for the executive officers of SouthTrust and
administers the employee benefit plans of SouthTrust, including the 1990
Discounted Stock Plan, the Amended and Restated Senior Officer Performance
Incentive Plan and the Long-Term Incentive Plan (including the predecessor stock
option plans). The Human Resources Committee held five meetings during 1998.
4
<PAGE> 7
SouthTrust does not have a Nominating Committee of the Board of Directors.
The functions of a Nominating Committee are filled by the Board of Directors.
COMPENSATION OF DIRECTORS
During the year ended December 31, 1998, the Board of Directors held five
regular and special meetings. Directors of SouthTrust were paid $3,500 per
calendar quarter and, in addition, $2,500 per regular and special meeting
attended and $500 per committee meeting attended. Directors who are also
employees of SouthTrust are not compensated for their service as directors or
for attendance at meetings of the Board of Directors. Directors may receive
these fees in cash, or they may participate in two plans maintained by
SouthTrust with respect to director's fees. The Deferred Compensation Plan
allows directors to defer director's fees paid during the year until the earlier
of death or attainment of age 70. The Director's Stock Purchase Plan allows
directors to elect that all or any portion of their director's fees be used to
purchase SouthTrust Common Stock on the director's behalf through the SouthTrust
Corporation Dividend Reinvestment and Common Stock Purchase Plan. An amount
equal to 25% of the election amount is added to the election amount and used to
purchase SouthTrust Common Stock at the then market rate. All of the eligible
directors participate in the Director's Stock Purchase Plan. In addition, all
directors attended more than 75% of the meetings of the Board of Directors
(including any meetings of any committee thereof of which they are members).
STOCK OWNERSHIP OF CERTAIN EXECUTIVE OFFICERS
The following tabulation sets forth certain information as of the date
indicated with respect to those executive officers of SouthTrust and its
subsidiaries (who are not also directors of SouthTrust), including the number
and percentage of shares of SouthTrust's Common Stock owned beneficially by each
such person, and with respect to all executive officers and directors of
SouthTrust as a group:
<TABLE>
<CAPTION>
NUMBER AND PERCENT OF
SHARES OF COMMON
POSITION STOCK OF SOUTHTRUST
NAME AND AGE HELD BENEFICIALLY OWNED AS
OF EXECUTIVE OFFICER(1) OFFICE(2) SINCE OF DECEMBER 31, 1998
- ----------------------- ------------------------ ------------------- ---------------------
<S> <C> <C> <C>
Thomas H. Coley (56).... Executive Vice President July 1, 1989 109,894(3)
of SouthTrust Bank, 0.07%
National Association
James W. Rainer, Jr. Executive Vice President December 15, 1982 233,488(4)
(55).................. of SouthTrust 0.14%
E. Frank Schmidt (57)... Executive Vice President January 1, 1995 216,853(6)
of SouthTrust Bank, 0.13%
National Association(5)
Frederick W. Murray,
Jr. (60).............. Executive Vice President January 1, 1980 234,470(8)
(Retired) of SouthTrust(7) 0.14%
All Executive Officers 4,847,105
and
Directors as a N/A N/A 2.87%
Group...................
(15 persons)
</TABLE>
- ---------------
(1) Information with respect to Wallace D. Malone, Jr., Chairman, President and
Chief Executive Officer of SouthTrust, and with respect to Julian W. Banton,
President and Chief Executive Officer of SouthTrust Bank, National
Association, is set forth in the preceding tables.
(2) All officers of SouthTrust and its subsidiaries are elected annually by the
Board of Directors of SouthTrust or the respective subsidiary.
(3) Includes 89,439 shares subject to stock options exercisable within 60 days
after December 31, 1998.
(4) Includes 9,810 shares held by Mr. Rainer's wife, 25,765 shares held in Mr.
Rainer's account by the trustee of SouthTrust Corporation's Employee Profit
Sharing Plan as to which the trustee possesses sole
5
<PAGE> 8
voting power but as to which Mr. Rainer, by virtue of allocating elections
to various funds, possesses dispositive power, and 88,078 shares subject to
stock options exercisable within 60 days after December 31, 1998.
(5) Prior to being elected Executive Vice President, Mr. Schmidt was the
Chairman and Chief Executive Officer of SouthTrust Bank of Alabama, National
Association -- Mobile, Alabama market.
(6) Includes 879 shares held in a custodial capacity, 15,985 shares held in Mr.
Schmidt'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. Schmidt, by virtue of allocating elections to various funds,
possesses dispositive power, and 91,948 shares subject to stock options
exercisable within 60 days after December 31, 1998.
(7) Mr. Murray retired as Executive Vice President effective February 28, 1998,
but continues to provide certain consulting and other services to SouthTrust
on a part-time basis.
(8) Includes 34,500 shares held by Mr. Murray's wife, 1,188 shares held in a
custodial capacity, 74,749 shares held in Mr. Murray'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. Murray, by
virtue of allocating elections to various funds, possesses dispositive power
and 2,130 shares subject to stock options exercisable within 60 days after
December 31, 1998.
AMENDMENT TO THE SOUTHTRUST CORPORATION
LONG-TERM INCENTIVE PLAN
The Board of Directors of SouthTrust has amended Section 4.1(b) of the
SouthTrust Corporation Long-Term Incentive Plan to increase the maximum
aggregate cash payout with respect to any award granted in any one fiscal year
to any single participant from $1,000,000 to $3,000,000. This amendment is
subject to the approval of the stockholders by a majority of the votes cast at
the Annual Meeting and will be effective retroactive to January 1, 1999.
The amendment to the Long-Term Incentive Plan will provide SouthTrust with
greater flexibility in compensating officers of SouthTrust in furtherance of the
goals of the Long-Term Incentive Plan. The goals are to (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 SouthTrust.
The Long-Term 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 unit/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, as amended (the
"Code"), that would be exempt from certain deductibility limits. The performance
criteria are chosen by the Human Resources Committee from among the following
measures: return on average shareholder's equity; return on average assets; net
income; earnings per common share; total shareholder return; and such other
criteria as may be established by the Human Resources Committee in writing.
The Long-Term Incentive Plan is administered by the Human Resources
Committee of the Board of Directors. It is intended that the Human Resources
Committee will at all times be made up of "disinterested persons" within the
meaning of Rule 16b-3 promulgated under Section 16(b) of the Exchange Act, as
applicable to SouthTrust 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
Long-Term Incentive Plan, the Human Resources Committee (i) selects the key
employees to receive awards from time to time, (ii) makes awards in such amounts
as it determines, (iii) imposes such limitations, restrictions and conditions
upon awards as it deems appropriate, (iv) establishes 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) certifies the attainment of performance goals, if applicable,
as required by Section 162(m) of the Code, (vi) interprets the Long-Term
Incentive Plan and adopts, amends and rescinds administrative
6
<PAGE> 9
guidelines and other rules and regulations relating to the Long-Term Incentive
Plan, (vii) corrects any defect or omission or reconciles any inconsistency in
the Long-Term Incentive Plan or any award granted thereunder and (viii) makes
all other determinations and takes all other actions necessary or advisable for
the implementation and administration of the Long-Term Incentive Plan. Under
certain circumstances, the vesting and/or restrictions of any outstanding award
may be accelerated or waived. No awards will be made under the Long-Term
Incentive Plan after 10 years from the date of the approval of the Long-Term
Incentive Plan by the stockholders, which was approved on April 17, 1996 at the
Annual Meeting of Stockholders. In no event may an individual receive awards
under the Long-Term Incentive Plan for a given calendar year covering in excess
of 1,125,000 shares, and the cash portion of any award under the Long-Term
Incentive Plan to any individual, provided the proposed amendment to the
Long-Term Incentive Plan is approved by the stockholders, will be limited to
$3,000,000 for a given calendar year.
Only "key employees" of SouthTrust may participate in the Long-Term
Incentive Plan. "Key employees" are those employees of SouthTrust who occupy
managerial or other important positions and who have made significant
contributions to the business of SouthTrust, as determined by the Human
Resources Committee. Approximately three to five percent of all employees of
SouthTrust, as such employees exist from time to time, are expected to
participate. As of the date of the initial mailing of this proxy material, three
percent of the employees of SouthTrust represents approximately 400 persons. The
Human Resources Committee, in its discretion, will select the award recipients.
The Long-Term 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 Long-Term 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 Human Resources 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) the fair market
value of such shares on the date of grant (or, if different, the exercise price
of the related option in the case of a tandem SAR).
Awards of options under the Long-Term 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
Long-Term 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.
The Long-Term Incentive Plan provides for the issuance of shares or
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 SouthTrust, the attainment of
specified performance goals or any other condition deemed appropriate by the
Human Resources Committee.
The stock certificates evidencing the restricted stock will bear an
appropriate legend and will be held in the custody of SouthTrust 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
7
<PAGE> 10
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
Long-Term Incentive Plan provides that the number of performance units/shares
granted and/or the vesting of performance units/shares can be contingent on the
attainment of certain performance goals or other conditions over a period of
time (the "Performance Period"), all as determined by the Human Resources
Committee and evidenced by an award agreement. During the Performance Period,
the Human Resources Committee will determine what number (if any) of performance
units/shares have been earned. Earned performance units/shares may be paid in
cash, shares of Common Stock or a combination thereof having an aggregate fair
market value equal to the value of the earned performance units/shares as of the
payment date. Common Stock used to pay earned performance units/shares may have
additional restrictions as determined by the Human Resources Committee. Earned
but unpaid performance units/shares may be entitled to dividends as determined
by the Human Resources Committee and evidenced in the award agreement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
AMENDMENT TO THE LONG-TERM INCENTIVE PLAN.
APPROVAL AND RATIFICATION OF THE AMENDED AND RESTATED
SENIOR OFFICER PERFORMANCE INCENTIVE PLAN
OF SOUTHTRUST CORPORATION
The Board of Directors of SouthTrust has adopted and amended from time to
time the Amended and Restated Senior Officer Performance Incentive Plan
(hereinafter the "Senior Officer Plan"), a copy of which is annexed to the Proxy
Statement as Exhibit I. At the Annual Meeting of Stockholders of SouthTrust held
on April 20, 1994, the stockholders approved and ratified the adoption of the
Senior Officer Plan by the Board of Directors, including the terms and
conditions of the performance goals under which compensation thereunder is to be
paid to certain executives of SouthTrust and its subsidiaries. Under Section
162(m) of the Code, the stockholders are required to reapprove the material
terms of the performance goals set forth in the Senior Officer Plan within 5
years after the initial approval. The Board of Directors recommends that the
stockholders approve and ratify the Senior Officer Plan, which contains
substantially the same terms and conditions as the Senior Officer Plan approved
by the stockholders in 1994, except that Section 3.2 of the Senior Officer Plan
has been amended, subject to stockholder approval, to increase the maximum
amount that could be awarded to a participant with respect to any one fiscal
year from $1,000,000 to $4,000,000. By approving the Senior Officer Plan, as
amended, the stockholders are approving the performance criterion utilized under
the plan.
The goal of the Senior Officer Plan is to compensate executives of
SouthTrust and its subsidiaries for performance that contributes significantly
to the success and profitability of SouthTrust and enhances the return to the
stockholders of SouthTrust. The Senior Officer Plan is administered by the Human
Resources Committee. Under the Senior Officer Plan, the Chairman of the Board of
Directors, the President, the Executive Vice Presidents and the
Secretary-Treasurer of SouthTrust and the Chief Executive Officer of any
subsidiary of SouthTrust are eligible for selection by the Human Resources
Committee to participate in the Senior Officer Plan. Pursuant to the Senior
Officer Plan, the Human Resources Committee, after consultation with the
Chairman of the Board of Directors, selects the executives who will participate
in the Senior Officer Plan for the ensuing fiscal year, and then determines the
award opportunities as well as the performance criteria that must be met for
such executives to obtain such awards; the Human Resources Committee, acting in
executive session and without participation of the Chairman, determines the
award opportunities and performance criteria for the Chairman. Award
opportunities are expressed as a percentage, or range of percentages, of each
participant's annual base salary as of the first day of the ensuing fiscal year,
and may vary for each participant and from year to year, but in no event may the
Human Resources Committee grant an
8
<PAGE> 11
award to any participant under the Senior Officer Plan that would result in any
participant receiving under the Senior Officer Plan more than $4,000,000 for any
fiscal year. The performance criterion that must be met for each participant is
expressed as a dollar amount of net income, after taxes, of SouthTrust or, if
appropriate, one of its subsidiaries. Criterion for each participant constitutes
confidential commercial or business information, the disclosure of which would
affect SouthTrust adversely. For fiscal 1999, the Human Resources Committee has
determined that cash bonuses to be awarded participants under the Senior Officer
Plan will range from 33.33% to 200% of a participant's annual base salary. Given
the range of base salaries of participants under the Senior Officer Plan for
1999, the maximum award that may be earned for 1999 by any participant under the
Senior Officer Plan is $1,950,000. The Senior Officer Plan provides that
following the close of each fiscal year of SouthTrust, the Human Resources
Committee shall determine the relative performance of each participant by
comparing the actual results of operations of SouthTrust or, if appropriate, one
of SouthTrust's subsidiaries, for the year to the performance criterion that
were assigned to each participant by the Human Resources Committee. For 1999,
the Human Resources Committee has determined that an award shall be deemed to be
earned by a participant only if 95% of a participant's performance criterion is
achieved, the maximum award shall be deemed to be earned if 105% of a
participant's performance criterion is achieved, and incremental portions of the
award shall be deemed to be earned if more than 95% but less than 105% of a
participant's performance criterion is achieved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL AND RATIFICATION OF
THE AMENDED AND RESTATED SENIOR OFFICER PERFORMANCE INCENTIVE PLAN.
9
<PAGE> 12
NEW PLAN BENEFITS
As indicated above, the Long-Term Incentive Plan and the Senior Officer
Plan were both in effect during the last fiscal year. The following tabulation
reflects certain information respecting the amounts of the awards that were
received by the following persons under the Long-Term Incentive Plan and the
Senior Officer Plan. The proposed amendments would not have changed the amounts
that were awarded to participants last year under the respective plans.
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLAN SENIOR OFFICER PLAN
------------------------- -----------------------
DOLLAR VALUE NUMBER DOLLAR VALUE NUMBER
NAME AND POSITION OF AWARD(1) OF UNITS OF AWARD(2) OF UNITS
- ----------------- ------------ -------- ------------ --------
<S> <C> <C> <C> <C>
Wallace D. Malone, Jr......................... $ 586,104 15,867 $ 900,000 N/A
Chief Executive Officer
and President of SouthTrust
Julian W. Banton.............................. 403,420 10,921 464,000 N/A
President and Chief Executive
Officer of SouthTrust Bank,
National Association
Thomas H. Coley............................... 298,635 8,084 0(3) N/A
Executive Vice President of
SouthTrust Bank,
National Association
James W. Rainer............................... 254,102 6,879 160,500 N/A
Executive Vice President of
SouthTrust
E. Frank Schmidt.............................. 275,058 7,446 0(3) N/A
Executive Vice President of
SouthTrust Bank,
National Association
Executive Officer Group....................... 1,817,319 49,197 1,524,500 N/A
Non-Executive Director Group.................. 0 0 0(3) N/A
Employee Group................................ 1,197,159 32,404 0(3) N/A
</TABLE>
- ---------------
(1) Represents payments made pursuant to Article 9 of the Long-Term Incentive
Plan to the persons described above with respect to fiscal 1998. The amounts
may differ with respect to fiscal 1999.
(2) Represents payments made pursuant to the Senior Officer Plan to the persons
described above with respect to fiscal 1998. For fiscal 1999, the Human
Resources Committee has established award opportunities under the Senior
Officer Plan ranging from 33.33% to 200% of a participant's annual base
salary for 1999, which represents an increase from the maximum award
opportunities established for fiscal 1998. In addition, the base salaries of
these persons were increased for fiscal 1999. Therefore it is possible that
payments made under the Senior Officer Plan to such persons for fiscal 1999
may increase, assuming the maximum award opportunities are earned.
(3) Non-executive officer directors of SouthTrust and employees of SouthTrust
and its subsidiaries who are not executive officers of SouthTrust or the
chief executive officer of certain subsidiaries of SouthTrust are not
eligible to receive awards pursuant to the Senior Officer Plan.
10
<PAGE> 13
EXECUTIVE COMPENSATION
The following information provides certain details concerning the cash and
equity-based compensation payable to certain executives of SouthTrust as well as
certain other information.
FIVE YEAR TOTAL STOCKHOLDER RETURN
The following indexed graph compares SouthTrust'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, 1993, and that dividends received were immediately reinvested in
additional shares. The graph depicts 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, 1998)
<TABLE>
<CAPTION>
S&P MARKET
MEASUREMENT PERIOD REGIONAL
(FISCAL YEAR COVERED) SOUTHTRUST S&P 500 BANKS
<S> <C> <C> <C>
12/93 100 100 100
12/94 98 101 94
12/95 145 139 144
12/96 203 171 194
12/97 377 228 313
12/98 335 293 338
</TABLE>
REPORT OF THE HUMAN RESOURCES COMMITTEE ON EXECUTIVE COMPENSATION
The Human Resources Committee of the Board of Directors of SouthTrust
annually establishes the compensation of the executive officers of SouthTrust
and certain of its subsidiaries. In doing so, the Human Resources Committee's
primary objective is to ensure that the compensation programs for executives
motivate
11
<PAGE> 14
executives to produce superior performance for SouthTrust and to provide
superior returns to stockholders of SouthTrust.
An executive's compensation is established after a careful review of
competitive practices to ensure that the total compensation opportunity afforded
such executive compares favorably to similarly situated executives at peer
financial institutions. A significant portion of an executive's total
compensation is variable and is based on short-term and long-term performance of
SouthTrust. Short-term performance of SouthTrust is rewarded, in the case of the
senior executive officers of SouthTrust, by annual cash bonuses under the Senior
Officer Plan and, in the case of certain other executives of SouthTrust, by
annual cash bonuses under a similar incentive plan, the amount and criterion of
which are established in advance by the Human Resources Committee. The Long-Term
Incentive Plan (and prior to its adoption, predecessor stock option plans of
SouthTrust) is the principal mechanism for rewarding executives for the
long-term performance of SouthTrust.
The following is a description of the compensation programs of SouthTrust
and the manner in which such plans relate to the objectives outlined above:
Base Salary
The base salaries of the five highest paid executives of SouthTrust 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 SouthTrust and executives of peer institutions. In doing so, the
Human Resources Committee seeks to ensure that the base salary of each executive
is competitive and rewards the executive for the executive's performance and
total contribution to the success of SouthTrust.
As part of this process, the Human Resources Committee reviews a number of
salary surveys produced by compensation consulting firms. These surveys
indicated that the 1998 base salaries of the executives of SouthTrust listed in
the Summary Compensation Table in general approximated the average base salary
for comparable executives of the peer institutions described below.
The Human Resources Committee considers SouthTrust's peer institutions to
be southeastern banks and bank holding companies with total assets ranging from
$15 to $70 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 SouthTrust's operating region and are of an asset size that is
significant but not greatly in excess of SouthTrust's asset size. In
establishing the 1998 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 SouthTrust 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 executives of SouthTrust listed in the Summary Compensation
Table were at approximately the 50th percentile of the array of base salaries
reported by such peer institutions.
Annual Incentive Compensation
The Senior Officer Plan is designed to reward senior executives annually
for achieving the after-tax net income goals of SouthTrust for the preceding
year. Upon completion of the business plan for the forthcoming year, the Chief
Executive Officer of SouthTrust presents to the Human Resources Committee the
net income goal of SouthTrust on a consolidated basis and the net income goals
of the various subsidiaries of SouthTrust for such year.
With respect to the executive officers named in the Summary Compensation
Table, the potential incentive award for each executive under the Senior Officer
Plan 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 1998,
the range of potential awards for such
12
<PAGE> 15
executives under the Senior Officer Plan was between 21.66% and 100% 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 of SouthTrust 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 SouthTrust's five highest paid executives in 1998 under
the Senior Officer Plan are set forth in the Annual Compensation-Bonus column of
the Summary Compensation Table. Comparing SouthTrust to the peer institutions
described above, the amounts paid to eligible executives under the Senior
Officer Plan is slightly below average; however, with the addition of
discretionary incentive bonuses also paid in 1998, the annual incentive
compensation is slightly above average.
Long-Term Incentive Compensation
The Long-Term Incentive Plan of SouthTrust makes available to the Human
Resources Committee various methods of compensating and rewarding executives of
SouthTrust, including the grant or award of stock options, stock appreciation
rights, restricted stock and performance units/shares. The various grants or
awards under the Long-Term Incentive Plan are used by the Human Resources
Committee to reward management decisions that result in the long-term success of
SouthTrust. The Long-Term Incentive Plan was adopted in 1996 and amended in 1998
by SouthTrust, and except for outstanding grants of stock options, replaced the
predecessor stock option plans of SouthTrust.
The Human Resources Committee believes that stock ownership encourages and
rewards management decisions that result in the long-term success of SouthTrust.
In the past, stock options have been one of SouthTrust's principal long-term
incentive mechanisms, and the Human Resources Committee anticipates that the
various stock ownership mechanisms offered by the Long-Term Incentive Plan will
be used to further such stock ownership by executives.
Stock Options and Purchase Rights. The value of stock options is dependent
upon an appreciation in the value of the underlying shares of Common Stock. 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 SouthTrust determines the aggregate number of
shares of Common Stock to be allocated annually for use in connection with the
grant of stock options, and the Human Resources Committee then grants stock
options to particular executives. The number of shares of Common Stock subject
to options granted by the Human Resources Committee to a particular executive is
determined in light of the executive's level of responsibility, seniority and
previous grants of stock options to such executive.
Information respecting the peer institutions described above indicates that
the shares of Common Stock subject to stock options granted to SouthTrust's five
most highly compensated executives during 1998 in general approximated the
average grants reported with respect to comparable executives of peer
institutions of comparable size to SouthTrust. In addition, the total number of
shares of Common Stock subject to outstanding stock options as of September 30,
1998, as a percentage of SouthTrust's then total outstanding Common Stock, is
below the median reported by peer institutions of comparable size to SouthTrust.
The information set forth in this paragraph does not take into account a special
grant of a Non-Qualified Stock Option covering 750,000 shares of Common Stock
that was granted to Mr. Malone in 1998 and is discussed in further detail under
the section heading "Chief Executive Officer Compensation."
SouthTrust also maintains the 1990 Discounted Stock Plan, which is
available to all employees including executives who have at least five years of
service with SouthTrust. 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 as a vehicle for executive
compensation.
Other Stock-Based Incentive Compensation. Under the Long-Term Incentive
Plan, one of the mechanisms available to the Human Resources Committee is the
award of performance units/shares. The number of performance units/shares
granted to a particular executive, as well as the vesting of such performance
units/
13
<PAGE> 16
shares, is contingent upon certain performance goals and/or conditions being met
over a period of time. The Human Resources Committee determines whether and to
what extent the grants have been earned; such grants are payable in cash, shares
of Common Stock of SouthTrust or a combination thereof, as specified in the
grant, with the fair market value of performance units/shares (based on the then
trading value of SouthTrust's Common Stock) being determined as of the payment
date.
The percentage of the shares of Common Stock of SouthTrust subject to
outstanding grants of performance units/shares as of December 31, 1998
approximates the median percentage reported by peer institutions of comparable
size to SouthTrust.
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 proposed
regulations provide an exception from this limitation for certain
performance-based compensation, assuming that various requirements are met. The
Senior Officer Plan and the Long-Term Incentive Plan are designed to satisfy
this exception for awards issued thereunder. The stockholders of SouthTrust
previously have approved the material terms and conditions of the performance
goals under which compensation is to be paid pursuant to the Senior Officer Plan
and the Long-Term Incentive Plan and are reapproving the Senior Officer Plan.
Accordingly, if the Senior Officer Plan and the amendments to the Long-Term
Incentive Plan are approved by the stockholders of SouthTrust, SouthTrust
anticipates being entitled to deduct an amount equal to the taxable income
reportable by each participant in the Senior Officer Plan and the Long-Term
Incentive Plan as a result of any award made under the respective plan up to a
maximum limit of $4,000,000 with respect to the Senior Officer Plan and, with
respect to the Long-Term Incentive Plan, up to $3,000,000, plus any amounts that
may be deductible with respect to grants of stock, stock options or restricted
stock, up to 1,125,000 shares in any given year. To the extent feasible, the
Human Resources Committee of SouthTrust 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 SouthTrust reserve the right, in light of the overall goals and
objectives of SouthTrust, to exceed such limitation if it is determined to be in
the best interest of SouthTrust and its stockholders. In 1998, the Human
Resources Committee awarded additional discretionary amounts to Mr. Malone
outside of the Senior Officer Plan and the Long-Term Incentive Plan, portions of
which did not qualify for deductibility under OBRA.
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 1998 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 giving substantially the same weight to SouthTrust'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 1998. The Chief Executive Officer's base
salary for 1998 was at approximately the 80th percentile of the array of
salaries for chief executive officers of all peer institutions as reported by
such institutions.
For 1998, the Chief Executive Officer was entitled to receive under the
Senior Officer Plan an incentive award equal to 66.66% of base salary if the
target award for SouthTrust's net income was achieved. Since SouthTrust's 1998
net income exceeded the maximum target goal established by the Human Resources
Committee, the incentive award paid the Chief Executive Officer under the Senior
Officer Plan was equal to 100% of base salary. In addition, due to SouthTrust's
performance in 1998, a supplemental bonus was awarded to the Chief Executive
Officer by the Human Resources Committee.
During 1998, the Chief Executive Officer was granted (i) annual stock
options to purchase 150,001 shares of Common Stock, (ii) 15,000 performance
units/shares and (iii) a special Non-Qualified Stock Option covering 750,000
shares of Common Stock of SouthTrust, in each case after giving effect to the 3
for 2
14
<PAGE> 17
split of the Common Stock of SouthTrust effective February 26, 1998. The 1998
annual stock option award was increased (over that granted in 1997) after a
review of the stock option awards of comparable executives of peer institutions
of comparable size to SouthTrust. The Chief Executive Officer's 1998 annual
stock 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
SouthTrust. The 1998 grant of the performance units/shares to the Chief
Executive Officer is for a 36 month performance period beginning on January 1,
1998, and ending December 31, 2000. The amount of the payment will vary
depending upon the performance attained. The amount of the payment made or
accrued in 1998 to the Chief Executive Officer in 1998 in respect of performance
units/shares, when compared to other peer institutions and weighted in terms of
a percentage of base salary, is slightly below average to that reported by peer
institutions of comparable size to SouthTrust. The Non-Qualified Stock Option
was designed to encourage Mr. Malone to remain in his current capacity with
SouthTrust for at least five years. Mr. Malone's rights under this option vest
incrementally (20% each year) for a period of five years. If the pro rata
portion of this award were combined with his other annual grants for 1998, then
the awards granted to Mr. Malone, when compared to the awards as granted to
chief executive officers reported by peer institutions of comparable size to
SouthTrust, would be above average.
In addition, in 1998, the Human Resources Committee and the Board of
Directors approved a deferred compensation plan and agreement for the benefit of
Mr. Malone. Pursuant to this arrangement, Mr. Malone is entitled to receive the
equivalent of 300,000 shares of Common Stock of SouthTrust, as adjusted from the
date of initial deferral to credit any earnings and dividends on such Common
Stock, as well as for any stock split, stock dividend or recapitalization, which
right shall become vested as of January 31, 2003, or upon the death or
disability of Mr. Malone before such date, or upon any change in control of
SouthTrust, as such term is defined in the deferred compensation plan. This
benefit is to be paid to Mr. Malone as soon as administratively possible
following the end of the calendar year in which his employment with SouthTrust
is terminated after January 31, 2003, or upon his death, disability, or a change
in control of SouthTrust, if these occur prior to such date. If Mr. Malone's
employment is terminated for any reason other than death or disability prior to
the earlier of a change in control or January 31, 2003, the benefits under this
arrangement will be forfeited.
During 1998, the members of the Human Resources Committee were as follows:
Carl F. Bailey, Chairman
William C. Hulsey
H. Allen Franklin
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
None of the members of the Human Resources Committee have served as
officers of SouthTrust. In addition, none of the Human Resources Committee
members have any other relationship to SouthTrust.
15
<PAGE> 18
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth certain information
concerning compensation for services rendered to SouthTrust by SouthTrust's
Chief Executive Officer and the four other most highly compensated executive
officers of SouthTrust for each of the last three fiscal years, along with such
information for an executive officer who, but for his retirement during 1998,
would have been included in the Summary Compensation Table:
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
AWARDS(1) PAYOUTS
----------------------- ----------
OTHER RESTRICTED
ANNUAL COMPENSATION(2) ANNUAL STOCK OPTIONS LTIP ALL OTHER
------------------------------ COMPENSATION AWARDS (NUMBER PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(3) A($)(4) ($) OF SHARES) ($) ($)
- --------------------------- ---- --------- ----------- ------------ ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wallace D. Malone, Jr.,.... 1998 $900,000 $1,797,672 $54,453 N/A 900,001(5) $ 586,104 $75,180(8)
Chief Executive Officer 1997 800,016 895,000 11,044 N/A 135,000 1,408,267(6) 70,082(8)
of SouthTrust 1996 770,016 870,000 20,191 N/A 112,500 908,445(7) 69,569(8)
Julian W. Banton,.......... 1998 414,000 464,000 0 N/A 49,501 403,420 37,105(9)
Chairman, President and 1997 344,350 197,193 0 N/A 37,500 592,550(6) 30,316(9)
Chief Executive Officer 1996 323,520 172,193 5,152 N/A 22,500 382,242(7) 28,130(9)
of SouthTrust Bank,
National Association
Thomas H. Coley,........... 1998 255,000 153,255 0 N/A 15,001 298,635 22,850(9)
Executive Vice President 1997 240,000 118,440 0 N/A 12,750 438,642(6) 21,164(9)
of SouthTrust Bank, 1996 240,000 118,440 0 N/A 12,750 282,958(7) 21,075(9)
National Association
James W. Rainer, Jr.,...... 1998 214,200 160,500 0 N/A 15,001 254,102 19,264(9)
Executive Vice President 1997 204,000 132,600 0 N/A 12,300 373,230(6) 18,080(9)
of SouthTrust 1996 204,000 132,600 4,099 N/A 15,000 240,762(7) 17,238(9)
E. Frank Schmidt,.......... 1998 240,000 165,600 0 N/A 15,001 275,058 21,573(9)
Executive Vice President 1997 220,000 93,478 0 N/A 11,250 404,413 19,495(9)
of SouthTrust Bank, 1996 220,000 97,746 0 N/A 9,001 260,619(7) 19,811(9)
National Association
Frederick W. Murray, Jr.... 1998 65,513 0 0 N/A 2,130 44,533 5,194(9)
Executive Vice President 1997 214,000 139,100 0 N/A 12,750 392,469(6) 18,955(9)
of SouthTrust 1996 214,000 139,100 14,841 N/A 15,000 253,172(7) 17,511(9)
(Retired)(10)
</TABLE>
- ---------------
(1) Share amounts reflect adjustment for a 3 for 2 split of the Common Stock of
SouthTrust effective February 26, 1998.
(2) 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.
(3) Represents amounts paid to each executive officer under the Senior Officer
Plan as well as other bonuses paid for 1998.
(4) Represents life insurance premiums and additional taxes owed on the
additional compensation paid by SouthTrust on behalf of each executive
officer.
(5) Includes a special grant of a Non-Qualified Stock Option covering 750,000
shares of Common Stock.
(6) The LTIP Payout amount for 1997 has been revised from the amount set forth
in the 1998 Proxy Statement to set forth the actual amount earned for the
Performance Period ended December 31, 1997 consistent with prior years
methodology and presentation.
(7) Represents amount of award of performance units/shares under the Long-Term
Incentive Plan of SouthTrust that was accrued by SouthTrust during 1996.
(8) Includes (i) $30,000 for Mr. Malone, which amount was withheld by
SouthTrust from deferred compensation due Mr. Malone in each of 1998, 1997
and 1996 in order to defray the costs of SouthTrust agreeing to pay Mr.
Malone an annual sum, commencing at the age of 60 and continuing for the
greater of his lifetime or 15 years, (ii) payments by SouthTrust to defined
contribution plans maintained by SouthTrust (including qualified and
nonqualified compensation plans) and (iii) the value of certain insurance
coverage.
16
<PAGE> 19
(9) Represents payments by SouthTrust to defined contribution plans maintained
by SouthTrust (including qualified and nonqualified compensation plans) on
behalf of the executive officers.
(10) Mr. Murray retired effective February 28, 1998. If not for such retirement,
Mr. Murray would have been among the four most highly compensated executive
officers of SouthTrust other than the Chief Executive Officer.
STOCK OPTIONS AND DISCOUNTED STOCK PLAN
Pursuant to the Long-Term Incentive Plan (and the predecessor stock option
plans of SouthTrust), SouthTrust grants to key employees of SouthTrust either
incentive stock options ("ISO's") or nonqualified stock options ("NQSO's"), and
pursuant to the 1990 Discounted Stock Plan (the "Discounted Plan"), awards to
purchase shares of Common Stock of SouthTrust at a discount are made to eligible
employees, including executive officers of SouthTrust.
The grant of stock options has been, 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.
The Discounted Plan was established in order to give all employees an
opportunity to acquire equity interest in SouthTrust 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 SouthTrust and its
subsidiaries. A total of 1,687,500 shares of Common Stock of SouthTrust 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, SouthTrust may repurchase such shares.
The following table sets forth information concerning grants of stock
options and rights during fiscal year 1998 to each executive officer listed
below:
OPTION AND RIGHT GRANTS IN FISCAL YEAR 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------------------
POTENTIAL
% OF TOTAL REALIZABLE VALUE
OPTIONS OPTIONS EXERCISE ASSUMING RATES OF STOCK
GRANTED GRANTED OR BASE PRICE APPRECIATION OF
(NUMBER OF EMPLOYEES PRICE EXPIRATION -------------------------
NAME SHARES)(1)(2) IN 1998 ($/SH) DATE 5%(3) 10%(3)
- ---- ------------- ---------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Wallace D.
Malone, Jr......... 150,001(4) 10.1% 36.1667 1-27-2008 $ 3,411,733 $ 8,646,118
750,000(5) 50.1 44.0000 4-15-2008 20,753,550 52,593,525
Julian W. Banton..... 49,501(4) 3.4 36.1667 1-27-2008 1,125,900 2,853,257
Thomas H. Coley...... 15,001(4) 1.0 36.1667 1-27-2008 341,198 864,664
James W. Rainer,
Jr................. 15,001(4) 1.0 36.1667 1-27-2008 341,198 864,664
E. Frank Schmidt..... 15,001(4) 1.0 36.1667 1-27-2008 341,198 864,664
Frederick W. Murray,
Jr................. 2,130(4) 0.1 36.1667 1-27-2008 48,447 122,774
</TABLE>
- ---------------
(1) Share amounts reflect adjustment for a 3 for 2 split of the Common Stock of
SouthTrust effective on February 26, 1998.
(2) Does not include awards during 1998 under the Discounted Plan to Mr. Malone
to purchase 1,989 shares, Mr. Banton to purchase 915 shares, Mr. Coley to
purchase 563 shares, Mr. Rainer to purchase 473 shares, Mr. Schmidt to
purchase 530 shares and Mr. Murray to purchase 491 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 under the
Discounted Plan during 1998.
17
<PAGE> 20
(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.
(4) Each of the options granted to the named executives in 1998 became
exercisable on January 27, 1999 (with the exception of 2,764 options granted
to each of Mr. Malone and Mr. Banton, which become exercisable on January
27, 2000), 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 SouthTrust, 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 SouthTrust equal to the number of shares so
tendered.
(5) This option was granted to Mr. Malone as of April 15, 1998, and vests
incrementally (20% each year) for a period of five years. In the event Mr.
Malone retires or leaves SouthTrust voluntarily, or is terminated for cause,
any right to any unvested portion of the option will terminate in accordance
with the provisions of the Long-Term Incentive Plan. Mr. Malone's rights as
to the option shall become 100% vested upon a change in control of
SouthTrust (as defined in the Long-Term Incentive Plan) or upon his death or
disability.
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
1998, along with the number and dollar value of any options remaining
unexercised at year end (share amounts reflect adjustment for a 3 for 2 split of
the Common Stock of SouthTrust effective on February 26, 1998):
AGGREGATE STOCK OPTION EXERCISES IN 1998
AND DECEMBER 31, 1998 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 1998 1998
ACQUIRED EXERCISABLE(1)/ EXERCISABLE(1)/
NAME ON EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- ----------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Wallace D. Malone, Jr. ............ 0 $ 0 484,351 $8,526,426
752,764 2,130
Julian W. Banton................... 13,000 444,137 223,540 4,134,290
2,764 2,130
Thomas H. Coley.................... 4,500 128,896 89,439 1,756,564
0 0
James W. Rainer, Jr. .............. 25,478 862,638 88,078 1,686,120
0 0
E. Frank Schmidt................... 9,324 357,593 91,948 1,887,976
0 0
Frederick W. Murray, Jr. .......... 118,769 3,550,904 2,130 1,642
0 0
</TABLE>
- ---------------
(1) Includes options exercisable within 60 days of December 31, 1998, but
excludes options disposed of by gift as of such date.
18
<PAGE> 21
The following tabulation sets forth certain information regarding the
number of performance units/shares or other rights granted under the Long-Term
Incentive Plan of SouthTrust during 1998 (share amounts reflect adjustment for a
3 for 2 split of the Common Stock of SouthTrust effective on February 26, 1998):
LONG-TERM INCENTIVE PLAN -- GRANTS IN 1998
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE UNDER NON-STOCK
NUMBER OF OR OTHER PRICE-BASED PLANS
SHARES, UNITS PERIOD UNTIL ----------------------------
OR OTHER MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS (#) OR PAYOUT (#) (#) (#)
- ---- ------------- ------------ --------- ------ -------
<S> <C> <C> <C> <C> <C>
Wallace D. Malone, Jr. ............. 7,500 36 months 7,500 15,000 45,000
Julian W. Banton.................... 3,375 36 months 3,375 6,750 20,250
Thomas H. Coley..................... 1,725 36 months 1,725 3,450 10,350
James W. Rainer, Jr. ............... 1,425 36 months 1,425 2,850 8,550
E. Frank Schmidt.................... 1,725 36 months 1,725 3,450 10,350
Frederick W. Murray, Jr. ........... 0 36 months 0 0 0
</TABLE>
EXECUTIVE EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS
SouthTrust 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
an initial term commencing as of October 19, 1984 and ending on December 31,
1992, unless the executive (if eligible) elects early retirement, and subject to
being automatically renewed 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 SouthTrust, 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 SouthTrust, the executive elects to terminate the employment
agreement without any reason, the executive is entitled to receive annual
compensation, based upon the executive's annual base salary as in effect
immediately prior to such termination and the executive's highest aggregate
bonuses for a specified period prior to such termination, for a period of five
years.
SouthTrust or certain of its subsidiaries are parties to certain agreements
with Messrs. Banton, Coley, Rainer and Schmidt, as well as certain other
executive officers of SouthTrust and its subsidiaries, that become effective
only upon a change of control of SouthTrust, 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 compensation, based upon the
executive's annual base salary as in effect immediately prior to such
termination and the executive's highest annual bonus for a specified period
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 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.
SouthTrust 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 SouthTrust 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. SouthTrust also maintains an Additional
Retirement Plan for certain executives, and since 1987, all of the contributions
of SouthTrust with respect to Mr. Malone were made under the
19
<PAGE> 22
Additional Retirement Plan. SouthTrust 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.
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*
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,
SouthTrust maintains an Additional Retirement Plan and certain deferred
compensation and similar agreements which supplement the benefits payable to
certain executive officers.
Base salary figures of the Chief Executive Officer and the other executive
officers of SouthTrust for the most recent fiscal year are set forth in the
Summary Compensation Table. As of December 31, 1998, credited years of service
for each such executive officer are as follows: Mr. Malone -- 40 years; Mr.
Banton -- 16 years; Mr. Coley -- 11 years; Mr. Rainer -- 34 years; and Mr.
Schmidt -- 35 years.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
SouthTrust'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 SouthTrust.
Based solely on a review of copies of such reports furnished to SouthTrust
through the date hereof, or written representations of such officers, directors
or stockholders that no reports were required, SouthTrust believes that during
1998 all filing requirements applicable to its officers, directors and
stockholders were complied with in a timely manner, with the exception of a Form
3 that was filed late by Donald M. James and a Form 4 and Form 5 that were each
filed late by Wallace D. Malone, Jr.
20
<PAGE> 23
TRANSACTIONS WITH MANAGEMENT
Directors and executive officers of SouthTrust and their associates were
customers of and/or had transactions with the banks which are subsidiaries of
SouthTrust in the ordinary course of business during the year ended December 31,
1998, 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 features unfavorable to
SouthTrust.
AUDITORS
Arthur Andersen LLP, independent accountants, have been engaged as
SouthTrust's auditors since 1989 and will continue to serve as SouthTrust's
auditors during 1999. 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 SouthTrust no later than December
15, 1999, to be included in the 2000 proxy materials. A stockholder must notify
SouthTrust before January 21, 2000 of a proposal for the 2000 Annual Meeting
which the stockholder intends to present other than by inclusion in SouthTrust's
proxy material. If SouthTrust does not receive such notice prior to January 21,
2000, proxies solicited by the management of SouthTrust will confer
discretionary authority upon the management of SouthTrust to vote upon any such
matter.
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
/s/ Alton E. Yother
ALTON E. YOTHER
Secretary
Birmingham, Alabama
March 15, 1999
21
<PAGE> 24
EXHIBIT I
AMENDED AND RESTATED SENIOR OFFICER
PERFORMANCE INCENTIVE PLAN
OF
SOUTHTRUST CORPORATION
This Senior Officer Performance Incentive Plan, as amended and restated as
of the 1st day of January, 1999, of SOUTHTRUST CORPORATION, a Delaware
corporation with its principal place of business in Birmingham, Alabama.
WITNESSETH:
WHEREAS, the Board of Directors of SouthTrust Corporation has established
and maintained for several years the Senior Officer Performance Incentive Plan
of SouthTrust Corporation; and
WHEREAS, the Senior Officer Performance Incentive Plan is intended to
compensate and reward executive officers of SouthTrust Corporation and certain
of its subsidiaries for excellent job performance which contributes to the
success, profitability, and return to the stockholders of SouthTrust
Corporation; and
WHEREAS, the Board of Directors of SouthTrust Corporation previously has
made amendments to the Senior Officer Performance Incentive Plan and hereby
desires to amend and restate the Senior Officer Performance Incentive Plan.
NOW, THEREFORE, the Board of Directors of SouthTrust Corporation hereby
amends and restates the Senior Officer Performance Incentive Plan as follows:
1. DEFINITIONS.
1.1 "Board" means the Board of Directors of SouthTrust.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Compensation" means the base salary paid to Senior Officers.
1.4 "Committee" means the Human Resources Committee of the Board.
1.5 "Fiscal Year" means the calendar year.
1.6 "Participant" means a Senior Officer who has been designated for
participation in the Plan by the Committee in accordance with Section 3 of the
Plan and who has commenced participation in the Plan.
1.7 "Participating Employer" means any corporation or other entity (other
than SouthTrust), which is a member of an "affiliated group," as such term is
defined in Section 1504 of the Code, in which SouthTrust also is a member.
1.8 "Performance Agreement" means the written notice described in Section
3.2 of the Plan, executed by an executive officer of SouthTrust and transmitted
on behalf of the Committee by SouthTrust to each Participant, setting forth the
terms and conditions of each Participant's participation in the Plan.
1.9 "Plan" means the Amended and Restated Senior Officer Performance
Incentive Plan of SouthTrust Corporation established by this document, as
amended from time to time, and any related Performance Agreements.
1.10 "Senior Officer" means, unless otherwise indicated by the context, (i)
those persons who are full-time employees of SouthTrust and who are serving as
the Chairman, President, Executive Vice Presidents or Secretary-Treasurer of
SouthTrust and (ii) that person who is a full-time employee of each
Participating Employer and who is serving as the Chief Executive Officer of each
such Participating Employer.
I-1
<PAGE> 25
1.11 "SouthTrust" means SouthTrust Corporation, a corporation organized and
existing under the laws of the State of Delaware, with its principal place of
business in Birmingham, Alabama, and any assign or successor there to, whether
by merger, consolidation, sale of assets, liquidation or otherwise.
2. PURPOSE.
The Plan is intended to motivate Participants to render superior service to
SouthTrust and its subsidiaries and for achieving certain performance goals and
criteria established by the Committee.
3. PARTICIPATION.
3.1 Selection to Participate. Upon recommendation from the Chairman and
the President of SouthTrust, the Committee, prior to the close of each Fiscal
Year, may designate in writing one or more Senior Officers as persons eligible
to participate in the Plan during the next succeeding Fiscal Year, except that
in the case of the Fiscal Year ending December 31, 1994, the Committee may make
such designation prior to April 1, 1994.
3.2 Designation of Award and Performance Criteria. Within ninety (90)
days after the commencement of each Fiscal Year, the Committee shall approve and
establish, and shall request that SouthTrust, on its behalf, communicate in
writing to each Senior Officer who is a Participant in the Plan for such Fiscal
Year, the terms and conditions of each such Participant's participation in the
Plan for such Fiscal Year, including the award that each such Participant will
be eligible to earn during such Fiscal Year (which shall be expressed as a
percentage of each such Participant's annual compensation as of the first day of
such Fiscal Year and shall specify a minimum, maximum and target award for each
such Participant) and the performance criterion that must be achieved in order
for each such Participant to earn such award (which, if the Participant is a
Senior Officer of SouthTrust, shall be expressed as a dollar amount of net
income, after taxes, of SouthTrust on a consolidated basis for such Fiscal Year
or, if the Participant is a Senior Officer of any Participating Employer, a
dollar amount of net income, after taxes, of such Participating Employer on a
consolidated basis for such Fiscal Year, determined, in each case, in accordance
with generally accepted accounting principles, applied on a basis consistent
with prior periods, and which shall state the circumstances under which each
such Participant shall be deemed to earn the minimum, maximum, target or any
other amount of any such award); provided, however, that in no event shall the
Committee grant any Participant under the Plan an award that could result in
such Participant earning an amount under the Plan greater than $4,000,000 with
respect to any Fiscal Year. In establishing the award and performance criteria
of Participants in the Plan, the Committee shall consider the Participant's
level of responsibility with SouthTrust or any Participating Employer and the
Participant's potential contribution to the net income goals of SouthTrust or
such Participating Employer; in establishing the award and performance criterion
of any Participant other than the Chairman and the President of SouthTrust, the
Committee shall solicit the recommendation of the Chairman and the President of
SouthTrust.
4. PAYMENT OF AWARDS.
4.1 Calculation of Award Payments. Within sixty (60) days following the
close of each Fiscal Year in which a Participant is participating in the Plan,
the Committee shall compare the terms and conditions of the award of each
Participant and the performance criterion assigned to each such Participant to,
if the Participant is a Senior Officer of SouthTrust, the net income, after
taxes, of SouthTrust on a consolidated basis for such Fiscal Year or, if the
Participant is a Senior Officer of any Participating Employer, the net income,
after taxes, of such Participating Employer on a consolidated basis for such
Fiscal Year, determined, in each case, in accordance with generally accepted
accounting principles, applied on a basis consistent with prior periods.
Following such determination, and prior to the payment of awards pursuant to
Section 4.2 below, the Committee shall certify in writing to each Participant
and to the Board of Directors of SouthTrust (and, if appropriate, the Board of
Directors of any Participating Employer) whether each Participant has met the
terms and conditions of the award for the Fiscal Year in question.
I-2
<PAGE> 26
4.2 Payment of Award Amounts. All awards determined to have been earned
pursuant to Section 4.2 of the Plan, adjusted as contemplated by Section 4.3
below, shall be payable in cash, as soon as administratively possible following
the certification described in Section 4.1 above, but in no event later than
seventy-five (75) days following the close of the Fiscal Year to which such
award related.
4.3 Effect of Discretionary Bonuses. As may be consistent with the
business objectives of SouthTrust, the Committee, in its discretion, and,
subject to approval of the Board, may elect to pay a discretionary bonus to any
Participant in the Plan prior to the end of any Fiscal Year, which discretionary
bonus, at the discretion of and as specified by the Committee, may or may not
reduce any award that may be earned by any such Participant under the Plan for
such Fiscal Year. In the event that any such bonus is paid prior to the end of
any Fiscal Year, and in the event that the Committee determines that such bonus
is to reduce any award that may be earned by any Participant under the Plan,
such bonus, or any award payable under the Plan following the end of such Fiscal
Year, shall be reduced appropriately to reflect the time value of money, any
award payable under the Plan following the end of such Fiscal Year shall be
reduced by the amount of such discretionary bonus, and in the event that any
award payable to any Participant under the Plan for such Fiscal Year is less
than the amount of such discretionary bonus, such Participant shall be obligated
to repay the amount of such discretionary bonus to SouthTrust or any
Participating Employer, as may be the case, plus interest accrued thereon from
the date of payment of such discretionary bonus at a rate equal to the prime
rate of interest that existed at SouthTrust Bank of Alabama, N.A. as of the date
of payment of such discretionary bonus.
4.4 Effect of Termination of Employment on Payment of Award. In the event
the employment of a Participant terminates at any time prior to the close of the
Fiscal Year for which an award has been made for any reason, including, without
limitation, death, disability or normal or early retirement, participation in
this Plan shall end and no amount shall be payable under the terms of this Plan.
5. ADMINISTRATION.
5.1 Powers and Duties. The Plan shall be administered by the Committee and
the Committee shall have the power and duty to:
(a) construe and interpret the provisions of the Plan;
(b) adopt, amend, or revoke rules and regulations for the
administration of the Plan, provided they are not inconsistent with the
provisions of the Plan;
(c) appoint and retain such persons as may be necessary to carry out
the functions of the Administrator; and
(d) take such other action as may reasonably be required to administer
the Plan in accordance with its terms or as may be provided for or required
by law.
6. MISCELLANEOUS.
6.1 Amendment or Termination. The Plan may be amended or terminated at any
time with respect to any or all Participants by the Committee, which amendment
or termination shall be reflected in a written instrument approved by the
Committee and executed by a duly authorized executive officer of SouthTrust.
6.2 Governing Law. Except as provided under federal law, the provisions of
the Plan shall be governed by and construed in accordance with the laws of the
State of Alabama.
6.3 Right to Employment. This Agreement shall not be construed as giving
the Participant any right to continued employment with SouthTrust.
6.4 Entire Agreement. This Plan, as completed and executed by SouthTrust,
the Participation Agreements, and all amendments thereto, will constitute the
entire agreement between SouthTrust and Participants regarding the Plan.
6.5 Captions. The captions or headings in this Agreement are made for
convenience and general reference only and shall not be construed to describe,
define, or limit the scope or intent of the provisions of this Agreement.
I-3
<PAGE> 27
(SOUTHTRUST CORPORATION LOGO)
P.O. BOX 2554
BIRMINGHAM, ALABAMA 35290
(RECYCLED PAPER LOGO)
<PAGE> 28
SOUTHTRUST CORPORATION
BIRMINGHAM, ALABAMA
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
APRIL 21, 1999
(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 21, 1999, at 9:00
A.M., Central Time, or any adjournment thereof.
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, FOR THE AMENDMENT TO THE
LONG-TERM INCENTIVE PLAN AND FOR THE APPROVAL AND RATIFICATION OF THE AMENDED
AND RESTATED SENIOR OFFICER PERFORMANCE INCENTIVE PLAN.
(continued and to be signed on other side)
<TABLE>
<S> <C> <C> <C> <C>
1. ELECTION OF Carl F. Bailey, H. Allen Franklin, Please mark your vote as indicated in
DIRECTORS: Rex J. Lysinger, Julian W Banton and this example. X
Donald M. James
FOR WITHHOLD 2. AMENDMENT TO LONG-TERM INCENTIVE PLAN:
all nominees AUTHORITY
(except as to vote for all (INSTRUCTION: To withhold authority FOR AGAINST ABSTAIN
indicated to the nominees to vote for an individual nominee,
contrary) write that nominee's name in the space
provided below.)
---------------------------------------
</TABLE>
<TABLE>
<S> <C>
3. APPROVAL AND RATIFICATION OF AMENDED AND RESTATED SENIOR OFFICER 4. OTHER MATTERS:
PERFORMANCE INCENTIVE PLAN: In their discretion, upon
such other matters as may properly
FOR AGAINST ABSTAIN come before the Annual Meeting of
Stockholders.
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.)
FOLD AND DETACH HERE
</TABLE>
