<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]Preliminary Proxy Statement [_]CONFIDENTIAL, FOR USE OF THE
[X]Definitive Proxy Statement COMMISSION ONLY (AS PERMITTED BY
[_]Definitive Additional RULE 14A-6(E)(2))
Materials
[_]Soliciting Material Pursuant
to Section 240.14a-11(c) or
Section 240.14a-12
BB&T 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4)Proposed maximum aggregate value of transaction:
(5)Total fee paid:
[_]Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1)Amount Previously Paid:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
BB&T CORPORATION
March 17, 2000
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
BB&T Corporation scheduled for 11:00 A.M. on Tuesday, April 25, 2000 at the
Grand Hyatt Atlanta at 3300 Peachtree Road, Atlanta, Georgia. The matters
scheduled for consideration at the meeting are described in detail in the
Notice of Annual Meeting of Shareholders and Proxy Statement. In order to be
sure your shares are voted at the meeting if you cannot attend, please
complete, sign and return the enclosed proxy card as soon as possible.
In compliance with applicable regulations, the Corporation's financial
statements and other required disclosures are presented in its 1999 Annual
Report on Form 10-K, a copy of which follows the Proxy Statement, and which
reflects the Corporation's financial condition on December 31, 1999.
Also included in the package is a Summary 1999 Annual Report to Shareholders
which contains additional information about the Corporation, including a
financial summary, our letter to shareholders and selected financial data. We
believe that this Summary 1999 Annual Report provides our shareholders, the
investment community, and the public with financial and other corporate
information in an understandable and useful manner.
We trust that this presentation will satisfy your informational needs, and,
at the same time, provide you with a better understanding of both the
financial history and strategic direction of BB&T Corporation.
Sincerely,
/s/ John A. Allison IV
John A. Allison IV
Chairman and Chief Executive Officer
<PAGE>
BB&T CORPORATION
200 West Second Street
Winston-Salem, North Carolina 27101
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 2000
TO THE SHAREHOLDERS OF
BB&T CORPORATION:
Notice is hereby given that the Annual Meeting of Shareholders of BB&T
Corporation (the "Corporation" or "BB&T") will be held on Tuesday, April 25,
2000 at 11:00 A.M. local time, at the Grand Hyatt Atlanta at 3300 Peachtree
Road, Atlanta, Georgia, for the following purposes:
(1) To elect seven Directors for three-year terms expiring in 2003.
(2) To approve amendments to the Corporation's 1995 Omnibus Stock Incentive
Plan.
(3) To ratify the reappointment of Arthur Andersen LLP as the Corporation's
independent auditors for 2000.
(4) To transact such other business as may properly come before the
meeting.
Pursuant to the provisions of the North Carolina Business Corporation Act,
March 1, 2000 has been fixed as the record date for the determination of
holders of Common Stock entitled to notice of and to vote at the Annual
Meeting of Shareholders or any adjournment thereof. Accordingly, only
shareholders of record at the close of business on the record date will be
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. It is important that your shares of the Corporation's Common Stock be
represented at this meeting in order that the presence of a quorum may be
assured.
A copy of the Annual Report on Form 10-K, containing the financial
statements of the Corporation for the year ended December 31, 1999, is
enclosed herewith.
By Order of the Board of Directors
/s/ Jerone C. Herring
Jerone C. Herring
Secretary
March 17, 2000
Even if you plan to attend the meeting in person, please date and sign the
enclosed proxy and mail it promptly. If you attend the meeting, you may revoke
your proxy and vote your shares in person. A postage-paid, return-addressed
envelope is enclosed.
<PAGE>
BB&T CORPORATION
200 West Second Street
Winston-Salem, North Carolina 27101
PROXY STATEMENT
The enclosed proxy, for use at the Annual Meeting of Shareholders to be held
April 25, 2000, at 11:00 A.M. local time, and any adjournment thereof, is
solicited on behalf of the Board of Directors of BB&T Corporation
("Corporation" or "BB&T"). The approximate date this proxy material is first
being sent to shareholders is March 17, 2000. Such solicitation is being made
by mail and may be made in person or by fax, internet or telephone by officers
or employees of the Corporation or its subsidiaries. All expenses incurred in
such solicitation will be paid by the Corporation or its subsidiaries. Banks,
brokerage houses and other institutions, nominees and fiduciaries will be
requested to forward the soliciting material to beneficial owners and to
obtain authorization for the execution of proxies. The Corporation will, upon
request, reimburse such parties for their reasonable expenses in forwarding
proxy materials to beneficial owners.
The accompanying proxy is for use at the meeting if a shareholder either
will be unable to attend in person or will attend but wishes to vote by proxy.
The proxy may be revoked by the shareholder at any time before it is exercised
by filing with the Secretary of the Corporation an instrument revoking it,
filing a duly executed proxy bearing a later date or by attending the meeting
and electing to vote in person. All shares of the Corporation's Common Stock
("Common Stock" or "BB&T Common Stock") represented by valid proxies received
pursuant to this solicitation, and not revoked before they are exercised, will
be voted in the manner specified therein. If no specification is made, the
proxies will be voted in favor of: (1) electing seven Directors for three-year
terms expiring in 2003, (2) approving amendments to the Corporation's 1995
Omnibus Stock Incentive Plan and (3) ratifying the reappointment of Arthur
Andersen LLP as the Corporation's independent auditors for 2000. The
Corporation has engaged Morrow & Co. to assist in proxy solicitation for an
estimated fee of $7,500, plus out-of-pocket expenses.
Voting Securities Outstanding
Pursuant to the provisions of the North Carolina Business Corporation Act,
March 1, 2000 has been fixed as the record date for the determination of
holders of Common Stock entitled to notice of and to vote at the Annual
Meeting of Shareholders. Each share of the Corporation's Common Stock issued
and outstanding on March 1, 2000 is entitled to one vote on all proposals at
the meeting, except that shares held in a fiduciary capacity by Branch Banking
and Trust Company ("BB&T-NC"), Branch Banking and Trust Company of South
Carolina ("BB&T-SC") and Branch Banking and Trust Company of Virginia ("BB&T-
VA") may only be voted in accordance with the instruments creating the
fiduciary capacity. BB&T-NC, BB&T-SC and BB&T-VA are collectively referred to
herein as the "BB&T Bank Subsidiaries". Holders of shares of Common Stock vote
together as a voting group on all such proposals. As of the close of business
on March 1, 2000, there were 348,394,093 shares of Common Stock of the
Corporation outstanding and entitled to vote.
The presence in person or by proxy of a majority of the shares of Common
Stock outstanding on the record date constitutes a quorum for purposes of
conducting business at the Annual Meeting. Once a share is represented for any
purpose at a meeting, it is deemed present for quorum purposes for the
remainder of the meeting and for any adjourned meeting. Abstentions and shares
which are withheld as to voting with respect to one or more of the nominees
for Director will be counted in determining the existence of a quorum.
1
<PAGE>
SECURITY OWNERSHIP
The table below sets forth the beneficial ownership of BB&T Common Stock by
all Directors and nominees, all named Executive Officers of BB&T (See "Summary
Compensation Table") and all Directors and Executive Officers of BB&T as a
group as of March 1, 2000. Unless otherwise indicated, all persons listed
below have sole voting and investment power over all shares beneficially
owned. No shareholder is known to BB&T to be the beneficial owner of more than
5% of the outstanding BB&T Common Stock as of March 1, 2000.
<TABLE>
<CAPTION>
Common Shares
Subject to a Percent of
Name of Beneficial Owner/ Common Shares Right to Common
Number of Persons in Group Beneficially Owned(1) Acquire(2) Stock
- -------------------------------- --------------------- ------------- ----------
<S> <C> <C> <C>
John A. Allison IV.............. 235,688 538,602 *
Paul B. Barringer............... 93,072 33,357 *
Alfred E. Cleveland(3).......... 57,854 6,906 *
W.R. Cuthbertson, Jr............ 151,000 0 *
Ronald E. Deal.................. 43,837 50,827 *
A.J. Dooley, Sr................. 97,700 17,694 *
Tom D. Efird(4)................. 72,326 33,737 *
Paul S. Goldsmith............... 235,867 5,414 *
L. Vincent Hackley.............. 2,574 39,559 *
Jane P. Helm.................... 400 10,377 *
Richard Janeway, M.D............ 38,959 51,167 *
J. Ernest Lathem, M.D........... 375,558 4,147 *
James H. Maynard................ 370,867 33,483 *
Joseph A. McAleer, Jr........... 9,820 32,717 *
Albert O. McCauley.............. 34,579 34,381 *
Richard L. Player, Jr........... 30,664 27,210 *
C. Edward Pleasants, Jr......... 70,027 1,966 *
Nido R. Qubein.................. 147,702 49,589 *
E. Rhone Sasser................. 311,193 2,288 *
Jack E. Shaw.................... 806,260 10,177 *
Harold B. Wells................. 234,161 10,009 *
W. Kendall Chalk................ 86,725 167,137 *
Robert E. Greene................ 32,825 84,773 *
Kelly S. King................... 108,734 182,885 *
Henry G. Williamson, Jr......... 130,689 305,833 *
Directors and Executive Officers
as a group (28 persons)........ 3,923,249 2,045,568 1.71%
</TABLE>
- --------
*Less than 1%.
(1) As reported to BB&T by the Directors, nominees and Executive Officers,
including shares held by spouses, minor children, affiliated companies,
partnerships and trusts over which the named person has beneficial
ownership. Also includes shares allocated to individual accounts by the
BB&T Corporation 401(k) Savings Plan and the BB&T Corporation Non-
Qualified Defined Contribution Plan, voting of which is directed by those
named persons and group members who participate in those plans.
(2) Includes options to acquire common shares which are or become exercisable
within 60 days of March 1, 2000.
(3) Mr. Cleveland disclaims beneficial ownership of 3,414 shares owned by his
wife.
(4) Mr. Efird disclaims beneficial ownership of 1,960 shares owned by United
Oil Company of the Carolinas, Inc.
2
<PAGE>
PROPOSAL 1--ELECTION OF DIRECTORS
The BB&T Board of Directors currently consists of 21 persons. The Board is
divided into three classes, each class to be as nearly equal in number as
possible. There are seven nominees for election as Director to serve for
three-year terms expiring in 2003. Each of the nominees currently serves as a
Director. It is intended that the persons named in the accompanying proxy will
vote to elect the seven nominees listed below as Directors, unless authority
so to vote is withheld. Although management expects that each of the nominees
will be available for election, in the event a vacancy in the slate of
nominees occurs, it is intended that shares of the Corporation's Common Stock
represented by proxies will be voted for the election of a substitute nominee
selected by the persons named in the accompanying proxy or to reduce the
number of persons to be elected by the number of persons unable to serve
(subject to the requirement that each class be as nearly equal in number as
possible). The election of each nominee requires the affirmative vote of a
plurality of the shares of BB&T Common Stock cast in the election of
Directors. Votes that are withheld and shares held by a broker, as nominee,
that are not voted in the election of Directors will not be included in
determining the number of votes cast. Holders of BB&T's Common Stock do not
have cumulative voting rights in the election of Directors.
The names of the nominees for election and the other continuing members of
the Board of Directors, their principal occupations and certain other
information with respect to such persons are as follows.
NOMINEES FOR ELECTION AS DIRECTORS FOR THREE-YEAR TERMS EXPIRING IN 2003
Director of
BB&T or
Name; Age; Principal Occupation During BB&T
the Past Five Years; Residence and Financial
Committee Memberships Since(1)
--------------------------------------- --------------
[PHOTO] ALFRED E. CLEVELAND (64). Member/Manager of 1997
McCoy, Weaver, Wiggins, Cleveland & Raper,
PLLC (attorneys); prior to March 1996,
Partner in the law firm of McCoy, Weaver,
Wiggins, Cleveland & Raper; Fayetteville,
N.C. (3)
[PHOTO] A.J. DOOLEY, SR. (68). Retired; prior to 1994
July 1995, Partner of Dooley, Dooley,
Spence, Parker and Hipp, P.A. (attorneys);
Lexington, S.C. (3)
[PHOTO] PAUL S. GOLDSMITH (66). Chairman and 1994
President of William Goldsmith Company,
Inc. (real estate); Greenville, S.C. (2)
3
<PAGE>
Director of
BB&T or
Name; Age; Principal Occupation During BB&T
the Past Five Years; Residence and Financial
Committee Memberships Since(1)
____________________________________________ ____________
[PHOTO] L. VINCENT HACKLEY (59). Chairman of 1992
Character Counts! Coalition (consultant for
public service and ethics development); prior
to June 1997, President of North Carolina
System of Community Colleges; Fayetteville,
N.C. (3)
[PHOTO] JANE P. HELM (57). Vice Chancellor of 1997
Business Affairs, Appalachian State
University; Boone, N.C. (3)
[PHOTO] JOSEPH A. MCALEER, JR. (50). Manager/Member 1993
of MACKK, LLC (Krispy Kreme Doughnut
franchisee); prior to February 1998, Chairman
and Chief Executive Officer of Krispy Kreme
Doughnut Corporation; Winston-Salem, N.C. (2)
[PHOTO] E. RHONE SASSER (63). Retired; prior to 1997
July 1997, Chairman of the Board, Chief
Executive Officer, and Chairman of the
Executive Committee of United Carolina
Bancshares Corporation ("UCB"); Whiteville,
N.C. (2)
4
<PAGE>
Director of
BB&T or
Name; Age; Principal Occupation During BB&T
the Past Five Years; Residence and Financial
Committee Memberships Since(1)
____________________________________________ ____________
CONTINUING DIRECTORS FOR TERMS EXPIRING IN 2001
[PHOTO] JOHN A. ALLISON, IV (51). Chairman and 1986
Chief Executive Officer of BB&T; Winston-
Salem, N.C. (2)
[PHOTO] W.R. CUTHBERTSON, JR. (69). Retired; prior 1983
to June 1995, Senior Vice President of
BB&T-NC, a subsidiary of BB&T; Charlotte,
N.C. (4)
[PHOTO] RONALD E. DEAL (56). Chairman of Wesley 1986
Hall (furniture manufacturer); Hickory,
N.C. (2)
[PHOTO] TOM D. EFIRD (60). President of Standard 1982
Distributors, Inc. (beverage wholesaler);
Gastonia, N.C. (4)
5
<PAGE>
Director of
BB&T or
Name; Age; Principal Occupation During BB&T
the Past Five Years; Residence and Financial
Committee Memberships Since(1)
____________________________________________ ____________
[PHOTO] RICHARD JANEWAY, M.D. (67). Executive Vice 1989
President for Health Affairs Emeritus and
University Professor of Medicine and
Management, Wake Forest University School
of Medicine; prior to August 1997,
Executive Vice President for Health
Affairs; Professor of Neurology and
Research Associate in Radiology, Bowman
Gray School of Medicine, Wake Forest
University; Winston-Salem, N.C. (3)
[PHOTO] JAMES H. MAYNARD (60). Chairman and Chief 1985
Executive Officer of Investors Management
Corporation (restaurants); Raleigh, N.C.
(4)
[PHOTO] ALBERT O. MCCAULEY (59). President and 1993
Chief Executive Officer of McCauley Moving
and Storage of Fayetteville, Inc.;
Fayetteville, N.C. (4)
CONTINUING DIRECTORS FOR TERMS EXPIRING IN 2002
[PHOTO] PAUL B. BARRINGER (69). Chairman and Chief 1975
Executive Officer of Coastal Lumber Company
(manufacturer of diverse wood products);
Weldon, N.C. (2)
6
<PAGE>
Director of
BB&T or
Name; Age; Principal Occupation During BB&T
the Past Five Years; Residence and Financial
Committee Memberships Since(1)
____________________________________________ ____________
[PHOTO] J. ERNEST LATHEM, M.D. (66). Personal 1987
Investments; Greenville, S.C. (2)
[PHOTO] RICHARD L. PLAYER, JR. (64). Chairman of 1990
Player, Inc. (commercial and industrial
general contractor); prior to June 1999,
President of Player, Inc.; Fayetteville,
N.C. (2)
[PHOTO] C. EDWARD PLEASANTS, JR. (59). Chairman 1993
Emeritus of PHC Holdings (architectural
door and hardware distributor); prior to
January 1999, President and Chief Executive
Officer of Pleasants Hardware Company, a
subsidiary of PHC Holdings; Winston-Salem,
N.C. (4)
[PHOTO] NIDO R. QUBEIN (51). Chief Executive 1990
Officer of Creative Services, Inc.
(international management consulting); High
Point, N.C. (3)
7
<PAGE>
Director of
BB&T or
Name; Age; Principal Occupation During BB&T
the Past Five Years; Residence and Financial
Committee Memberships Since(1)
____________________________________________ ___________
[PHOTO] JACK E. SHAW (65). Chief Executive Officer 1997
of Shaw Resources, Inc. (real estate
investment and development); Greenville,
S.C. (4)
[PHOTO] HAROLD B. WELLS (68). President of Wells 1997
Chevrolet, Buick, Pontiac, Oldsmobile, GMC,
Inc. (automobile dealership); Whiteville,
N.C. (4)
- --------
(1) On February 28, 1995, the merger of BB&T Financial Corporation ("BB&T
Financial") into Southern National Corporation ("SNC") (the "BB&T Merger")
was consummated and certain directors of BB&T Financial became directors
of SNC, which is now named BB&T Corporation.
(2) Member of the Executive Committee.
(3) Member of the Audit Committee.
(4) Member of the Compensation Committee.
Certain of the above Directors and nominees are also directors of other
publicly-held companies. Paul B. Barringer has been a director of Sea Pines,
Inc. since 1997. L. Vincent Hackley has been a director of Tyson's Foods, Inc.
since 1994. J. Ernest Lathem, M.D., has been a director of Span-America
Medical Systems, Inc. since 1996. James H. Maynard has been a director of
Investors Management Corporation since 1972 and a director of Golden Corral
Realty Corporation since 1984. Jack E. Shaw has been a director of Unitronix
Corp. since 1990. Each of these companies has securities registered under the
Securities Exchange Act of 1934 ("Exchange Act").
8
<PAGE>
The BB&T Board has established the Executive Committee, the Audit Committee
and the Compensation Committee and has assigned certain responsibilities to
each of these committees. The members of these committees are identified under
"Proposal 1--Election of Directors", above.
The Executive Committee is generally authorized to have and to exercise all
of the powers of the Board between Board meetings. The Executive Committee
also serves as the Nominating Committee for the Board (the "Nominating
Committee") and recommends to the BB&T Board nominees for election as
Directors and considers the performance of incumbent Directors in determining
whether or not to nominate them for re-election. The Nominating Committee
considers written nominations of candidates for election to the Board
submitted by shareholders to the Secretary of BB&T that are accompanied by
biographical material, qualifications and consent of nominees and are
otherwise in accordance with BB&T's bylaws. Nominations of such candidates
must have been received not later than 60 days prior to one year after the
date of the immediately preceding annual meeting of shareholders, along with
such information as is disclosed in the proxy materials concerning all
nominees for Director and the shareholder's name, address and number of shares
owned, in order to be considered for the slate of nominees for election as
Directors at the next annual meeting. See "Proposals for 2001 Annual Meeting",
below.
The Audit Committee recommends engaging and discharging the independent
auditors; reviews with the independent auditors the plan for and result of the
auditing engagement; reviews the scope and result of BB&T's procedures for
internal auditing and loan review; approves each professional service above
certain limits provided by the independent auditors; considers the range of
audit and non-audit fees; directs and supervises special investigations; and
reviews the adequacy of BB&T's system of internal accounting controls. The
Audit Committee reappointed Arthur Andersen LLP as BB&T's independent auditors
for 2000. See "Proposal 3--Ratification of Arthur Andersen LLP as Independent
Auditors for 2000", below.
The Compensation Committee recommends to the Board remuneration arrangements
for senior management and Directors and oversees adoption and administration
of compensation plans in which officers and Directors are eligible to
participate. See "Compensation Committee Report on Executive Compensation",
below.
All Directors attended at least 75% of the Board meetings and assigned
committee meetings during 1999, except Mr. McAleer. The Board held eight
meetings during the year; the Executive Committee held two meetings; the Audit
Committee held two meetings; and the Compensation Committee held two meetings.
Section 16(a) Beneficial Ownership Reporting Compliance
Under the securities laws of the United States, BB&T's Directors and
officers are required to report their beneficial ownership of BB&T Common
Stock and any changes in that ownership to the Securities and Exchange
Commission ("Commission"). Specific dates for such reporting have been
established by the Commission and BB&T is required to report in this Proxy
Statement any failure to file by the established dates during 1999. In 1999,
all of these filing requirements were satisfied by BB&T's Directors and
Executive Officers, except for Mr. McCauley, who failed to file three reports
on a timely basis relating to four transactions, and Mr. Pleasants, who failed
to file one report on a timely basis relating to one transaction. In making
this statement, BB&T has relied on the written representations of its
incumbent Directors and officers and copies of the reports that have been
filed with the Commission.
9
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table presents information relating to total compensation paid
during the last three calendar years to the Chief Executive Officer and the
four next most highly compensated executive officers of BB&T (the "BB&T Named
Executives").
BB&T Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------------------------------ -----------------------
Awards Payouts
----------- -----------
Securities All Other
Name and Principal Other Annual Underlying LTIP Compensation
Position Year Salary ($) Bonus ($) Compensation ($) Options (#) Payouts ($) ($)(1)
------------------ ---- ---------- --------- ---------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
John A. Allison IV...... 1999 679,800 685,238 -- 162,247 499,325 103,565
Chairman & Chief 1998 639,000 587,867 -- 184,516 453,780 68,902
Executive Officer 1997 553,669 509,364 -- 66,230 -- 68,261
Henry G. Williamson,
Jr..................... 1999 463,500 428,274 -- 61,693 262,700 65,188
Chief Operating 1998 442,500 373,167 -- 67,448 246,500 45,295
Officer 1997 407,500 312,410 -- 44,058 -- 46,650
Kelly S. King........... 1999 343,750 288,750 -- 36,874 185,250 45,236
President 1998 312,500 239,578 -- 41,934 168,500 31,170
1997 270,000 206,995 -- 30,364 -- 29,970
Robert E. Greene........ 1999 237,625 199,605 -- 15,255 136,300 34,082
Senior Executive 1998 227,500 174,413 -- 16,938 131,200 25,095
Vice President 1997 216,375 165,884 -- 25,006 -- 26,952
W. Kendall Chalk........ 1999 237,500 199,500 -- 15,222 136,000 27,409
Senior Executive 1998 227,000 174,030 -- 16,900 130,600 23,533
Vice President 1997 215,500 165,213 -- 24,768 -- 25,410
</TABLE>
- --------
(1) The compensation shown as "All Other Compensation" for 1999 consisted of
the following: (i) BB&T's matching contribution under the BB&T 401(k)
Savings Plan in the amount of $9,600 for each of the named officers; (ii)
BB&T's contribution to the BB&T Non-Qualified Defined Contribution Plan in
the amount of $93,965 for Mr. Allison, $55,588 for Mr. Williamson, $35,636
for Mr. King, $22,994 for Mr. Greene and $17,809 for Mr. Chalk; and (iii)
the actuarial equivalent of benefits to employees from payment of annual
premiums by BB&T under the split-dollar life insurance program in the
amount of $1,488 for Mr. Greene.
10
<PAGE>
The following table provides information concerning options for BB&T Common
Stock exercised by each of the BB&T Named Executives in 1999, and the value of
options held by each at December 31, 1999.
BB&T Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values (1)
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Value Options at FY-End (#) FY-End ($)(3)
Acquired on Realized ------------------------- -------------------------
Name Exercise (#) ($)(2) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John A. Allison IV...... 12,102 416,919 451,004 307,779 6,435,773 161,862
Henry G. Williamson,
Jr..................... 28,974 846,096 247,806 121,639 3,523,818 107,668
Kelly S. King........... 30,578 916,115 155,160 75,156 2,116,434 74,203
Robert E. Greene........ 0 0 65,538 35,051 788,827 61,122
W. Kendall Chalk........ 0 0 148,008 34,912 2,263,655 60,533
</TABLE>
- --------
(1) No SARs have been granted to the BB&T Named Executives.
(2) Value represents the difference between the option price and the market
value of the Common Stock on the date of exercise, rounded to the nearest
dollar.
(3) Value represents the difference between the option price and the market
value of the Common Stock on December 31, 1999, rounded to the nearest
dollar.
The following table provides information concerning options for BB&T Common
Stock granted to the BB&T Named Executives in 1999.
BB&T Option Grants in Last Fiscal Year (1)
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Rates of Stock
Price
Appreciation
Individual Grants for Option Term
----------------------------------------- -------------------
% of
Number of Total
Securities Options
Underlying Granted to Exercise
Options Employees or Base
Granted in Fiscal Price Expiration
Name (#) Year ($/Sh) Date 5% ($) 10% ($)
- ---- ---------- ---------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
John A. Allison IV...... 162,247 9.16% 36.3125 2/23/09 3,705,192 9,389,684
Henry G. Williamson,
Jr..................... 61,693 3.48% 36.3125 2/23/09 1,408,867 3,570,345
Kelly S. King........... 36,874 2.08% 36.3125 2/23/09 842,082 2,134,001
Robert E. Greene........ 15,255 0.86% 36.3125 2/23/09 348,374 882,849
W. Kendall Chalk........ 15,222 0.86% 36.3125 2/23/09 347,621 880,939
</TABLE>
- --------
(1) All options (i) are granted as incentive stock options, but will largely
become nonqualified stock options under current tax law, (ii) have an
exercise price equal to the market value on the date of grant, and (iii)
are exercisable over three years in equal installments. Nonqualified
options may be transferred by gift to certain immediate family members and
related entities upon approval by the Compensation Committee. No SARs have
been granted to the BB&T Named Executives.
11
<PAGE>
The following table provides information concerning LTIP awards made during
1999 to the BB&T Named Executives.
Long-Term Incentive Plans--Awards in Last Fiscal Year(1)
<TABLE>
<CAPTION>
Number
of Performance
Shares, or Other Estimated Future Payouts
Units Period under
or Until Non-Stock Price-Based Plans
Other Maturation ---------------------------
Rights or Threshold Target Maximum
Name (#) Payout ($ or #) ($ or #) ($ or #)
- ---- ------- ----------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
John A. Allison, IV............ 11,842 1999-2001 $75,129 $300,515 $601,030
Henry G. Williamson, Jr........ 6,384 1999-2001 40,505 162,018 324,036
Kelly S. King.................. 4,469 1999-2001 28,356 113,425 226,850
Robert E. Greene............... 3,227 1999-2001 20,476 81,902 163,804
W. Kendall Chalk............... 3,227 1999-2001 20,473 81,890 163,780
</TABLE>
- --------
(1) For a description of the 1999-2001 LTIP Performance Unit Plan, see
"Compensation Committee Report on Executive Compensation--Compensation
Plans--Three-Year Long-Term Incentive Plan", below. The performance
criteria applied in determining amounts payable under the plan is return
on equity with a target of 16.76% and a maximum of 19.76%, and the target
payment is 40% of average base salary for the Chief Executive Officer and
30% of average base salary for the other BB&T Named Executives. The award
is payable in cash or shares of BB&T Common Stock at the option of the
Compensation Committee.
Retirement Plans
BB&T Retirement Plan. BB&T maintains a tax-qualified defined benefit
retirement plan, the BB&T Corporation Pension Plan (the "Retirement Plan"),
for eligible employees. All employees of BB&T and certain subsidiaries who
have attained age 21 are eligible to participate under the Retirement Plan
after completing one year of service. Contributions to the Retirement Plan are
computed on an actuarial basis. A participant's normal annual retirement
benefit under the Retirement Plan at age 65 is an amount equal to 1.0% of the
participant's average compensation, plus .5% of the participant's average
compensation in excess of Social Security covered compensation times the
number of years of service completed with BB&T and certain subsidiaries up to
a maximum of 35 years. A participant's average compensation is his average
annual compensation, including salary, wages, overtime, bonuses and incentive
compensation, for the five consecutive years in the last ten years that
produce the highest average. For the BB&T Named Executives, such annual
compensation generally approximates amounts set forth under the "Salary,"
"Bonus" and "LTIP Payouts" columns of the Summary Compensation Table above.
The table on page 13 shows the estimated annual benefits payable under the
Retirement Plan upon retirement at age 65 to persons in specified average
compensation and years of service classifications. The amounts shown are based
on a life annuity and are not subject to offsets based upon Social Security
amounts or other amounts.
12
<PAGE>
BB&T Corporation
Estimated Annual Retirement Benefits
Based on Years of Credited Service
<TABLE>
<CAPTION>
Remuneration 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years
- ------------ -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$500,000................ $73,347 110,020 146,693 183,367 220,040 256,713
600,000................. 88,347 132,520 176,693 220,867 265,040 309,213
700,000................. 103,347 155,020 206,693 258,367 310,040 361,713
800,000................. 118,347 177,520 236,693 295,867 355,040 414,213
900,000................. 133,347 200,020 266,693 333,367 400,040 466,713
1,000,000............... 148,347 222,520 296,693 370,867 445,040 519,213
1,100,000............... 163,347 245,020 326,693 408,367 490,040 571,713
1,200,000............... 178,347 267,520 356,693 445,867 535,040 624,213
1,300,000............... 193,347 290,020 386,693 483,367 580,040 676,713
1,400,000............... 208,347 312,520 416,693 520,867 625,040 729,213
1,500,000............... 223,347 335,020 446,693 558,367 670,040 781,713
1,600,000............... 238,347 357,520 476,693 595,867 715,040 834,213
1,700,000............... 253,347 380,020 506,693 633,367 760,040 886,713
1,800,000............... 268,347 402,520 536,693 670,867 805,040 939,213
1,900,000............... 283,347 425,020 566,693 708,367 850,040 991,713
2,000,000............... 298,347 447,520 596,693 745,867 895,040 1,044,213
2,100,000............... 313,347 470,020 626,693 783,367 940,040 1,096,713
2,200,000............... 328,245 492,368 656,490 820,613 984,735 1,148,858
2,300,000............... 343,245 514,868 686,490 858,113 1,029,735 1,201,358
</TABLE>
- --------
(1) Remuneration means average compensation for five consecutive years of
highest compensation within final 10 years of employment.
(2) The amounts shown exceed statutory benefit and compensation limitations
under the Retirement Plan in some instances. To the extent an amount cannot
be earned under the Retirement Plan, it will be earned under BB&T's Non-
Qualified Defined Benefit Plan or BB&T's Target Pension Plan, both of which
are discussed below.
As of December 31, 1999, for purposes of computing benefits under the
Retirement Plan, age and years of service of the BB&T Named Executives are as
follows:
<TABLE>
<CAPTION>
Years of
Name Age Service
---- --- --------
<S> <C> <C>
John A. Allison, IV............................................. 51 29
Henry G. Williamson, Jr......................................... 52 28
Kelly S. King................................................... 51 28
Robert E. Greene................................................ 50 27
W. Kendall Chalk................................................ 54 25
</TABLE>
Non-Qualified Defined Benefit Plan. BB&T also maintains the BB&T Corporation
Non-Qualified Defined Benefit Plan. This plan is designed to provide special
supplemental retirement benefits to supplement the benefits payable to
participants under the tax-qualified Retirement Plan. This plan is an unfunded,
excess benefit plan maintained for the purpose of providing deferred
compensation to certain highly-compensated employees, including the BB&T Named
Executives (other than Mr. Greene). The primary purpose of this plan is to
supplement the benefits payable to participants under the Retirement Plan to
the extent that such benefits are curtailed by application of certain
limitations contained in the Internal Revenue Code of 1986, as amended
("Code"). Benefits payable under the plan are included in the table above.
Supplemental Executive Retirement Plan. BB&T also maintains the BB&T
Corporation Target Pension Plan, a supplemental executive retirement plan (the
"SERP"), which became effective January 1, 1989. The SERP covers certain
management employees of BB&T and participating subsidiaries as designated by
its administrative committee. Under the SERP, participants who retire either at
or after age 55 with 15 years of service under the Retirement Plan, or at or
after age 65, receive monthly retirement benefits equal to the greater
13
<PAGE>
of: (a) the difference between 55% of "final average monthly earnings," less
the participant's projected monthly benefits under the Retirement Plan and 50%
of the participant's projected monthly "Social Security benefit," as defined in
the SERP; or (b) the difference between the monthly benefit the participant
would have received under the Retirement Plan, but for certain limitations
imposed by the Code and the participant's actual monthly benefit under the
Retirement Plan. Benefits are payable in the form of a joint and 75% survivor
annuity for married participants and a 10-year certain and life annuity for
unmarried participants, and are reduced in the event payment commences prior to
age 65. If the participant dies either while employed by BB&T or a
participating subsidiary, or under a "disability," as defined in the SERP, and
before attaining age 65, his surviving spouse, or if there is none, his
designated beneficiary, receives a monthly benefit for 180 months equal to 20%
of the participant's "final average earnings." If the participant dies while
employed by BB&T or a participating subsidiary and after attaining age 65, his
surviving spouse, if any, receives the SERP retirement benefits which would
have been paid had the participant retired the day before he died. "Final
average earnings" are the participant's average monthly earnings, including
amounts deferred under the BB&T Corporation 401(k) Savings Plan and the BB&T
Corporation Non-Qualified Defined Contribution Plan, for the five highest years
out of the participant's last ten years of employment by BB&T or a
participating subsidiary, as the case may be.
Upon a "change in control" of BB&T as defined in the SERP, participants' SERP
benefits become fully accrued and cannot be reduced by amendment or
termination. Such a change of control occurred in February 1995 upon the
consummation of the BB&T Merger. Under the SERP, participants have no interest
in any particular assets of BB&T or its subsidiaries and their right to
benefits is no greater than that of a general unsecured creditor. Mr. Greene is
the only BB&T Named Executive who participates in the SERP. His estimated
annual benefit payable upon retirement at normal retirement age is $248,031.
Other Employee Benefit Plans. The BB&T Corporation 401(k) Savings Plan is
maintained to provide a means for substantially all employees of BB&T and its
subsidiaries to defer up to 16% of their cash compensation on a pre-tax basis.
The plan provides for BB&T to match the employee's contribution with up to six
percent of the employee's compensation. BB&T also maintains the BB&T
Corporation Non-Qualified Defined Contribution Plan. This plan is an unfunded,
excess benefit plan which provides deferred compensation to certain highly-
compensated employees, including the BB&T Named Executives. The purpose of this
plan is to supplement the benefits under the tax-qualified BB&T 401(k) Savings
Plan to the extent that such benefits are curtailed by the application of
certain limits imposed by the Code. This plan is also intended to provide
participants in BB&T's executive incentive compensation plans with an effective
means of electing to defer on a pre-tax basis a portion of the payments they
are entitled to receive under such plans. BB&T's contributions to each of the
BB&T Named Executives during 1999 under the Non-Qualified Defined Contribution
Plan and the 401(k) Savings Plan are included in the "BB&T Summary Compensation
Table", above.
Employment Agreements
In 1994, BB&T Financial and SNC entered into Employment Agreements with 27 of
their executive and other senior officers, including the BB&T Named Executives
and Sherry A. Kellett, Morris D. Marley and Scott E. Reed (collectively,
"Executive Management"), who served as Executive Officers of BB&T in 1999. In
1998, the Employment Agreements for Executive Management were reviewed and
amended in order to provide benefits more comparable to industry standards for
this group of Executive Officers. Set forth below is a description of the
Employment Agreements, as amended, for Executive Management, including the
persons named in the Summary Compensation Table.
The Employment Agreements provide for five-year terms that are extended
automatically each month (absent contrary notice by either party to the
Employment Agreement). As a result, five years remain on the term of each
Employment Agreement at any time unless either party elects not to extend the
term. However, the term of any Employment Agreement may not be extended beyond
the month in which the Executive Officer reaches age 65. The Employment
Agreements provide that the Executive Officers are guaranteed minimum annual
salaries equal to their current annual base salaries, and continued
participation in specified incentive
14
<PAGE>
compensation plans. During the term of the Employment Agreements, each
Executive Officer will be entitled to receive, on the same basis as other
Executive Officers, employee pension and welfare benefits and group employee
benefits such as sick leave, vacation, group disability and health, life and
accident insurance and similar non-cash compensation that BB&T may from time to
time extend to its Executive Officers.
In the event the Executive Officer's employment is terminated by BB&T other
than for "Just Cause" (which is generally defined as dishonesty, commission of
a felony or willful disobedience), the Executive Officer will be entitled to
receive cash compensation (including salary, bonuses and deferred compensation)
on a monthly basis at the highest rate in effect over the past five years
("Termination Compensation"), as well as employee pension and welfare benefits,
including health insurance, for the remainder of the term of the Employment
Agreement, subject to compliance with the non-competition provisions of the
Employment Agreement. In addition, if an Executive Officer is terminated by
BB&T other than for "Just Cause", BB&T will use its best efforts to accelerate
vesting of any unvested benefits to which the Executive Officer may be entitled
under any stock-based or other benefit plan or arrangement to the extent
permitted by the terms of such plan(s).
The Executive Officers have the right to terminate their employment
voluntarily at any time for "Good Reason", which is generally defined in the
Employment Agreements to include a reduction in the Executive Officer's status,
responsibilities and duties or salary. If the Executive Officer voluntarily
terminates his employment for "Good Reason", he will be entitled to receive
Termination Compensation for the full five-year term (or until age 65 if that
is a shorter period), employee welfare benefits, including health insurance,
outplacement services, and accelerated vesting of unvested benefits under
employee stock and benefit plans to the extent permitted by such plans.
The Employment Agreements also provide that if the Executive Officer is
terminated for any reason (other than for "Just Cause") within 12 months after
a "Change of Control" (as hereinafter defined) of BB&T or certain of its
affiliates, the Executive Officer will be entitled to receive Termination
Compensation and the other benefits described above. To the extent that
payments under the Employment Agreements, subsequent to a "Change of Control",
cause an Executive Officer to have excise taxes imposed pursuant to Section
280G of the Internal Revenue Code, BB&T will compensate the Executive Officer
for such excise taxes. A "Change of Control" is deemed to have occurred under
the Employment Agreements if: (a) any person or group acquires 20% or more of
the voting securities of BB&T or specified affiliates; (b) during any two-year
period persons who were directors of BB&T at the beginning of the two-year
period cease to constitute at least two-thirds of the BB&T Board; (c) the
shareholders of BB&T approve any merger or consolidation of BB&T with another
company that would result in less than 60% of the voting securities outstanding
after the merger or consolidation being held by persons who were shareholders
of BB&T immediately prior to the merger or consolidation; (d) the shareholders
of BB&T approve a plan of complete liquidation or an agreement for the sale of
substantially all of BB&T's assets; or (e) any other event occurs that the BB&T
Board determines should constitute a Change of Control. In addition, the BB&T
Board can determine, in its discretion, that a transaction constitutes a
"Merger of Equals", even though one or more of the above definitions of a
"Change of Control" is met, and upon such determination, the Executive Officers
will not be entitled to terminate their Employment Agreement voluntarily and
receive continued salary and benefits unless "Good Reason" exists.
BB&T also has the right under the Employment Agreements to terminate the
Executive Officer's employment at any time for "Just Cause." If BB&T terminates
an Executive Officer's employment for "Just Cause", such Executive Officer will
have no right to receive any compensation or other benefits under the
Employment Agreement for any period after such termination.
The Employment Agreements also provide that under certain circumstances upon
leaving the employment of BB&T, the Executive Officer may not engage directly
or indirectly in the banking, financial services or any other business in which
BB&T is engaged in the states of North Carolina and South Carolina and in any
counties contiguous to any counties located in such states, nor may the
Executive Officer solicit or assist in the solicitation of any depositors or
customers of BB&T or any of BB&T's affiliates or induce any employees to
terminate their employment with BB&T or its affiliates. This non-competition
provision generally will be effective if the Executive Officer is terminated by
BB&T other than for "Just Cause", until the earlier of the first anniversary of
15
<PAGE>
the Executive Officer's termination or the date as of which the Executive
Officer elects to forego receiving the Termination Compensation. This non-
competition provision is not effective if the Executive Officer voluntarily
terminates employment after a "Change of Control".
The Employment Agreement of Mr. Allison provides that he will be Chairman of
the BB&T Board and Chief Executive Officer of BB&T for the term of his
Employment Agreement.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During 1999, the Compensation Committee administered the various incentive
plans of BB&T and fixed the compensation for the Chief Executive Officer.
Compensation Philosophy. BB&T's compensation philosophy and guiding
principles consist of the following:
1. Compensation and reward systems should be a management tool to achieve
business results;
2. Competitive total compensation opportunities should be provided based
on external competitive performance;
3. Total compensation should be aligned with relative internal
performance; and
4. A commitment should be made to an annual review by the Compensation
Committee of the guiding principles of BB&T's total compensation program.
Under BB&T's compensation policy, compensation for Executive Management is
structured to emphasize variable pay based on performance, with base salary
below median and cash incentives above median to result in a total cash
compensation at market median. To achieve this goal, compensation
opportunities are compared to a peer group of publicly-traded bank holding
companies with assets between approximately $20 billion and $65 billion, which
is one of the peer groups ("New Peer Group") in the Performance Graph set
forth below. In addition, stock options and three-year performance-based
awards comprise the core for long-term performance incentives and a large
portion of total compensation is "at risk".
BB&T has established incentive compensation programs for Executive
Management, which consist of an annual cash incentive, stock options, three-
year performance-based incentives, and normal employee benefits. These
programs emphasize variable compensation for Executive Management which is
tied to the financial results of BB&T. The Compensation Committee approves, on
an annual basis, target award opportunities for Executive Management,
performance criteria to be utilized in the annual incentive plan and the long-
term incentive plan and stock option awards.
BB&T's compensation policy is based in large part on a study conducted by
KPMG Peat Marwick ("Peat Marwick") in 1995 and updated in 1997 and 1999. As
part of the initial study, Peat Marwick made recommendations to the
Compensation Committee relating to overall compensation philosophy,
appropriate base salaries, short-term and long-term compensation plans,
appropriate goals and targets for such plans and employment contracts of
BB&T's senior officers. Peat Marwick's initial recommendations were
implemented by appropriate Compensation Committee, Board of Directors or
shareholder action, and the recommendations have continued to serve as a
principal basis of BB&T's compensation program. In October 1999, the study was
updated by William M. Mercer, Incorporated ("Mercer"), the successor to Peat
Marwick's compensation consulting practice. Mercer reaffirmed this philosophy
and guiding principles and recommended to the Compensation Committee
appropriate base salaries and goals for the short-term and long-term plans for
2000.
BB&T's compensation philosophy and policies are intended to comply with
Section 162(m) of the Code and related regulations, which establish certain
requirements in order for performance-based compensation in excess of
$1,000,000 that is paid to certain executive officers to be deductible by the
Corporation. In establishing and administering BB&T's compensation programs,
the Compensation Committee has intended to comply with
16
<PAGE>
the requirements of Section 162(m), although the Corporation retains the
flexibility to pay compensation that is not eligible for such treatment under
Section 162(m) if it is in the best interest of the Corporation to do so.
Compensation Plans and Arrangements
Annual Executive Incentive Plan. In 1995, BB&T established the BB&T
Corporation Short-Term Incentive Plan ("Bonus Plan"), which covers Executive
Management and other senior officers selected by the Compensation Committee.
In order to protect BB&T's ability to deduct compensation paid to the BB&T
Named Executives under Section 162(m) of the Code, the Bonus Plan was
submitted to shareholders for approval at the 1996 Annual Shareholders Meeting
and was approved. The Compensation Committee determined that it was
appropriate to establish a plan for the year 1999, which would be a
continuation of the plan established in 1996.
The Bonus Plan provides cash awards to participants based on the achievement
of performance goals established by the Compensation Committee. Awards are
based on corporate performance, business unit/function performance, individual
performance or any combination of such types of performance. Corporate
performance is determined primarily based on the attainment of earnings per
share goals and return on asset goals. Business unit/function performance is
determined primarily on the attainment of financial or non-financial goals,
growth and market share. Individual performance is determined primarily on the
attainment of selected business criteria such as process improvement, sales,
loan growth, deposit growth and expense management. The Compensation Committee
may, from time to time, select other performance measures. The size of the
cash awards is determined by establishing target incentive awards expressed as
a percentage of base salary, up to a maximum amount established by the
Compensation Committee. For 1999, the Compensation Committee provided that the
target incentive award would be established for the Chief Executive Officer at
60% of base salary, for the Chief Operating Officer at 55% of base salary, and
for other members of Executive Management at 50% of base salary. Actual awards
are subject to increase or decrease on the basis of the participant's
achievement of the performance goals and can range from 25% to 200% of the
participant's targeted incentive awards. For the Chief Executive Officer and
Executive Management, the Compensation Committee established corporate
performance goals based on cash flow earnings per share (weighted at 67%) and
return on assets (weighted at 33%), with specific goals established by
budgeted earnings, industry standards and other similar factors. In 1999, BB&T
achieved the performance levels specified by the Compensation Committee,
entitling the Chief Executive Officer and Executive Management to receive an
award of 168% of their respective target incentive awards under the terms of
the plan. These amounts are shown in the "Bonus" column of the Summary
Compensation Table for the BB&T Named Executives.
Stock Incentive Plan. BB&T's primary stock incentive plan is the 1995
Omnibus Stock Incentive Plan, as amended and restated ("Stock Plan"), which is
administered by the Compensation Committee. The Stock Plan is intended to
benefit BB&T by assisting in recruiting and retaining employees with ability
and initiative, providing greater incentive for employees of BB&T and
associating the interest of employees with those of BB&T. The Compensation
Committee selects individuals who will participate in the Stock Plan and, from
time to time, may grant stock options, stock appreciation rights ("SARs"),
restricted stock awards, performance units and performance shares to selected
participants. Stock options granted under the Stock Plan may be incentive
stock options or non-qualified stock options. A stock option entitles a
participant to purchase shares of Common Stock of BB&T at the option price,
which is fixed by the Compensation Committee at the time the option is
granted, but cannot be less than 100% of the per share fair market value on
the date of grant in the case of incentive stock options and not less than 85%
of the per share fair market value on the date of grant in the case of non-
qualified stock options.
Peat Marwick recommended that option grants be based on competitive market
factors and that the Black-Scholes methodology for computing the value of
options be utilized, within parameters approved by the Committee. Peat Marwick
also recommended that the number of shares subject to a grant generally be
equal to a percentage of the employee's salary projected over the life of the
grant. The Committee has followed these recommendations. The Compensation
Committee considers the grant of stock options on a periodic basis, and in
February 1999, made grants for 1,771,076 shares to 904 officers. The awards to
the BB&T Named Executives are shown in the Summary Compensation Table. SARs,
performance shares and restricted stock awards were not
17
<PAGE>
granted in 1999. The grant of performance units under the Stock Plan is
discussed below under "Three-Year Long-Term Incentive Plan". The Stock Plan is
proposed to be amended to increase the number of shares available for issuance
under the plan and to increase certain other award limitations. See "Proposal
2--Approval of Amendments to the BB&T Corporation 1995 Omnibus Stock Incentive
Plan", below.
Three-Year Long-Term Incentive Plan. In 1996, BB&T established a long-term
performance unit incentive plan ("LTIP"), which operates as a component of the
Stock Plan. Performance units are performance-based awards payable, in the
Compensation Committee's discretion, in shares of BB&T's Common Stock, cash or
a combination of both. At the date of grant, the Compensation Committee
establishes for each performance unit (i) a performance target and (ii) an
applicable percentage (which cannot be less than zero, but which can exceed
100% of the value of the performance unit to be paid to the participant based
upon the degree to which the performance target is met). A performance target
is a profitability target which serves as the basis for valuing a performance
unit. A performance target is based on certain performance criteria determined
by the Compensation Committee and is earned based on the performance unit
value during each valuation period (generally, the calendar year following the
date of the award). The Compensation Committee establishes the number of
valuation periods applicable to a performance unit, which number may not be
less than three. The value of a performance unit equals the applicable
percentage, as set by the Compensation Committee, times the fair market value
of Common Stock on the date of grant, plus such other nominal value as may be
set by the Compensation Committee. In 1997, the 1997-1999 performance unit
LTIP was established by the Compensation Committee and provided that the
performance criteria would be return on equity for the three-year period, with
a target goal of 15.20% and a superior goal of 18%. For this three-year
period, the Corporation attained a return on equity of 20.02%, which entitled
the participants to receive an award of 200% of their target payout. The
amounts of such awards are shown in the LTIP Payout column of the Summary
Compensation Table for the BB&T Named Executives. In 1999, the Compensation
Committee established the 1999-2001 performance unit LTIP and provided that
the performance criteria be return on equity. The Compensation Committee
approved a target payout for the Chief Executive Officer of 40% of average
base salary, and for the remainder of Executive Management, 30% of average
base salary. The Compensation Committee established a return on equity goal of
16.76% for the three-year period of the LTIP, with a maximum goal of 19.76%.
Annual Base Salary. For 1999, the Compensation Committee reviewed the salary
range system previously adopted by the Committee for all employees' base
salaries. The Committee reviewed pay grades and salary ranges previously
recommended by Peat Marwick and concluded that the grades and ranges were
appropriate. Based on this review, together with a review of the Corporation's
performance as compared to its New Peer Group (see "Performance Graph",
below), the Committee established the base salary of the CEO and delegated
authority to the Chief Executive Officer to set the base salaries of the rest
of Executive Management within the policies and procedures of the Corporation.
The salaries of each of the BB&T Named Executives are shown in the Summary
Compensation Table.
Employee Benefit Plans. For 1999, the Compensation Committee reviewed the
various tax-qualified employee benefit plans maintained by the Corporation
which constitute a portion of the total compensation package available to
Executive Management and all eligible employees of BB&T. These plans consist
of a 401(k) Savings Plan (which permits employees to contribute up to 16% of
their compensation with the Corporation matching up to six percent of their
contribution); a retirement plan covering substantially all employees of the
Corporation, including Executive Management; and a health care plan which
provides medical and dental coverage for all employees. The Compensation
Committee concluded that these plans, which are maintained based upon
recommendations of Peat Marwick, are consistent with plans provided by peer
bank holding companies and industry standards and that no material
modification of such plans was necessary in 1999.
Chief Executive Officer's 1999 Compensation. The Chief Executive Officer's
compensation is based upon the same factors as described above for other
members of Executive Management. In establishing the base salary, annual
incentive, long-term incentive and stock awards of the Chief Executive Officer
for 1999, the Committee considered BB&T's overall performance, record of long-
term increase in shareholder value, success in meeting strategic objectives
and the general accomplishments of the incumbent Chief Executive Officer.
These factors were considered in relation to BB&T's financial results for 1999
and in comparison with the performance of
18
<PAGE>
peer organizations. The Chief Executive Officer's base salary was based upon
the pay grades and salary ranges previously recommended by Peat Marwick. Based
on this review and the position in his salary range, the Chief Executive
Officer's base salary for 1999 was established at the amount shown in the
Summary Compensation Table. The Chief Executive Officer's 1999 annual incentive
compensation, long-term incentive compensation and stock awards were based on
the same considerations, as discussed above, as for other members of Executive
Management.
Conclusion
The Compensation Committee believes that the components of its total
compensation program, both for Executive Management and all employees, are
consistent with market standards and with comparable programs of peer bank
holding companies. The executive compensation programs are based on financial
performance of the Corporation compared to both market medians and peer group
averages and appropriately link executive performance to the annual financial
and operational results of the Corporation and the long-term financial
interests of the shareholders. The Committee believes that the foregoing
compensation philosophy has served and will continue to serve as a basis for
administering the total compensation program of the Corporation, both for
Executive Management and all employees, for the foreseeable future. The
Directors who constitute the Compensation Committee are:
<TABLE>
<S> <C>
James H. Maynard, Chairman C. Edward Pleasants, Jr.
W.R. Cuthbertson, Jr. Jack E. Shaw
Tom D. Efird Harold B. Wells
Albert O. McCauley
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Harold B. Wells, a Director of BB&T and member of the Compensation Committee
in 1999, is the owner of Wells Chevrolet, Buick, Pontiac, Oldsmobile, GMC, Inc.
During 1999, BB&T-N.C. purchased in the ordinary course of business $4,956,487
in retail consumer credit contracts from that corporation. In addition, BB&T-NC
purchased in the ordinary course of business $958,617 in such contracts from
Toby Wells Pontiac-Buick-GMC, LLC, another affiliate of Mr. Wells. Management
believes that the terms of these transactions were as favorable to BB&T as
could have been obtained from a non-affiliated entity. Mr. Wells abstains from
voting on matters relating to stock options and other stock-based incentive
plans.
COMPENSATION OF DIRECTORS
General
Non-employee Directors of BB&T received an annual retainer of $22,500 for
their services as a Director in 1999. In addition, such Directors received
$1,500 for each regular BB&T Board meeting and each committee meeting attended,
and $1,000 for each meeting held by conference telephone in which the Director
participated. A Director who is an employee of BB&T does not receive fees for
serving as a Director.
Non-Employee Directors' Deferred Compensation and Stock Option Plan
Effective January 1, 1997, the BB&T Board approved the adoption of the Non-
Employee Directors Deferred Compensation and Stock Option Plan ("Directors
Plan"). The Directors Plan combined into a single plan two previously
established plans, the Stock Option Plan and the Directors Deferred
Compensation Plan. A total of 1,800,000 shares of Common Stock are authorized
for issuance under the Directors Plan.
The Directors Deferred Compensation component of the Directors Plan permits
non-employee Directors to elect to defer 0%, 50% or 100% of retainer fees,
meeting fees or both into a deferred compensation account.
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<PAGE>
Deferrals are credited with interest based on either a fixed rate or an index
fund, as elected by the participant. Deferrals are fully vested at all times
and are payable in cash upon the termination of the participant's service
(except for hardship withdrawals in limited circumstances). During 1999, one
non-employee Director of BB&T participated in the Directors Deferred
Compensation component of the Directors Plan.
The stock option component of the Directors Plan permits non-employee
Directors to elect to defer, prior to the start of the year in which fees are
earned, 0%, 50% or 100% of the Director's retainer fees, meeting fees, or both
for the calendar year and apply that percentage toward the grant of options to
purchase shares of Common Stock. Options are granted on July 1 of each year
with respect to deferred retainer fees for the calendar year and deferred
meeting fees earned in the first six months of the year. Options are granted on
December 31 of each year for deferred meeting fees earned in the second half of
the year. The option price for options granted is equal to 75% of the average
market value of Common Stock on the date of grant. "Average Market Value" is
defined as the average of the closing price of Common Stock as reported by the
NYSE for the period of 30 consecutive trading days prior to the date of grant.
Options granted under the Directors Plan may be exercised during the period
beginning on a date six months after the date of grant and ending on the date
ten years from the date of grant. In addition, all outstanding options become
fully exercisable in the event of a change of control of BB&T. Options are non-
transferable except in the case of transfers by gift to immediate family
members or related entities with approval of the Compensation Committee.
During 1999, the 18 non-employee Directors of BB&T who participated in the
stock option portion of the Directors Plan were granted options to purchase a
total of 74,298 shares of BB&T Common Stock at an exercise price of $26.76 per
share on July 1, 1999, and were granted options to purchase a total of 20,448
shares of BB&T Common Stock at an exercise price of $23.24 per share on
December 31, 1999. The value of all such options at December 31, 1999 was
$27.38 per share.
Consulting Agreement
Messrs. Deal and Qubein and Dr. Janeway have executed Consulting Agreements
with BB&T to provide business development consulting services for a period of
ten years following their retirement. They will receive a sum equal to the
annual retainer paid to BB&T's Directors in effect at the time they begin such
service. The consultants have agreed not to serve as directors of, or advisers
to, businesses which compete with BB&T and its subsidiaries during the time
they serve as consultants to BB&T.
TRANSACTIONS WITH EXECUTIVE OFFICERS AND DIRECTORS
General
A number of BB&T's Directors and members of Executive Management and their
associates are customers of BB&T's Bank Subsidiaries. Any extensions of credit
made to them are in the ordinary course of business, are substantially on the
same terms, including interest rates and collateral, as those prevailing at the
same time for comparable transactions with others, and do not involve more than
normal risk of collectibility or present other unfavorable features. None of
such credits are classified as non-accrual, past due, restructured or potential
problem. All outstanding loans to such Executive Officers and Directors and
their associates are current as to principal and interest. As of December 31,
1999, loans to Directors, Executive Officers and their related interests
totaled approximately $79.5 million, or approximately 2.5% of BB&T's
consolidated shareholders' equity at such date.
Agreement with Mr. Sasser
In connection with the merger of UCB into BB&T, a Settlement and Non-
Competition Agreement between E. Rhone Sasser and BB&T (the "Sasser Settlement
Agreement") was entered into effective July 1, 1997. The Sasser Settlement
Agreement settled BB&T's obligations to Mr. Sasser under his then existing
employment
20
<PAGE>
agreement with UCB and provides that Mr. Sasser will be prohibited, for a
period of ten years, from engaging, directly or indirectly, in the banking or
financial services business anywhere in the states of North Carolina, South
Carolina or Virginia, or in any county contiguous to these states, and
soliciting any depositors or customers of BB&T or its subsidiaries or inducing
any employees of BB&T or its subsidiaries to terminate their employment with
BB&T. The Sasser Settlement Agreement further provides that BB&T will pay
annually to Mr. Sasser the sum of $769,392 (to be adjusted annually in
accordance with the Consumer Price Index) until Mr. Sasser attains the age of
65, at which time Mr. Sasser will receive annually an amount equal to 70% of
the amount paid Mr. Sasser during the final year under the Sasser Settlement
Agreement (estimated to be approximately $623,000), reduced by amounts payable
to Mr. Sasser under the UCB Pension Plan and UCB Benefit Equivalency Plan. The
payments provided for under the Sasser Settlement Agreement will be made to
Mr. Sasser for his life and, after his death, to his current wife for her
life, if she survives him, in the annual amount equal to 35% of the amount
paid Mr. Sasser during the final year under the Sasser Settlement Agreement
(estimated to be approximately $312,000), reduced by amounts payable to Mr.
Sasser's wife under the UCB Pension Plan and the UCB Benefit Equivalency Plan.
If Mr. Sasser dies prior to age 65, the payments that would otherwise have
been made to him will continue until the date he would have reached age 65, at
which time the payments to his current wife would begin (if she survives to
that date). In addition, Mr. Sasser is entitled to certain miscellaneous
benefits, including the continuation of certain life, health and welfare
benefits. If any of the amounts payable under the Sasser Settlement Agreement
are subject to, or cause any other payments to be subject to, excess tax under
Section 4999 of the Code as excess parachute payments under Section 280G of
the Code, BB&T will indemnify Mr. Sasser on an after-tax basis for any excise
tax, plus any penalties or interest, plus any excess taxes and income taxes on
the indemnity amounts. The Sasser Settlement Agreement also provides that BB&T
will use its best efforts, subject to the fiduciary duties of the Board of
Directors, to re-elect Mr. Sasser to the BB&T Board of Directors until his
70th birthday.
Transactions with Affiliates
BB&T-NC has entered into a consulting services contract with Creative
Services, Inc., an international management consulting firm owned by Nido R.
Qubein, a Director of BB&T, under which Creative Services, Inc. is advising
management by providing organizational development expertise, including the
conceptualization and creation of integrated corporate employee training
materials and programs. Creative Services, Inc. was paid $439,699 under this
contract in 1999. Management believes this contract is on terms as favorable
as could have been obtained from other non-affiliated parties. Management
intends to utilize these services in 2000 and anticipates that the amount to
be paid in 2000 will be substantially comparable to the amount paid in 1999.
Alfred E. Cleveland, a Director of BB&T, is a member of the law firm of
McCoy, Weaver, Wiggins, Cleveland and Raper. The firm was retained to provide
legal services to BB&T and its subsidiaries during 1999 and management intends
to retain the firm in 2000.
See "Compensation Committee Interlocks and Insider Participation."
PERFORMANCE GRAPH
Set forth below is a graph comparing the total returns (assuming
reinvestment of dividends) of BB&T Common Stock, the S&P 500 Index, and two
Industry Peer Group Indices. The graph assumes $100 invested on December 31,
1994 in BB&T Common Stock and in each of the indices. In 1999 the bank holding
companies in the Industry Peer Group Index ("New Peer Group") were AmSouth
Bancorporation, Comerica Corporation, Fifth-Third BanCorp, First American
Corporation, First Security Corporation, Firstar Corporation, Huntington
Bancshares, Inc., M&T Bank Corporation, Marshall & Ilsely Financial
Corporation, Mercantile Bancorporation, Regions Financial Corporation,
SouthTrust Corporation, Summit Bancorp, Union Planters Bancorporation and
Wachovia Corporation. The 1998 Industry Peer Group Index ("Old Peer Group")
consisted of the following bank holding companies: AmSouth Bancorporation,
Comerica Corporation, Crestar Financial Corporation, Fifth-Third BanCorp,
Firstar Corporation, Huntington Bancshares, Inc., Marshall & Ilsley Financial
Corporation, Mercantile
21
<PAGE>
Bancorporation, Regions Financial Corporation, SouthTrust Corporation, Summit
Bancorp and Union Planters Bancorporation. The graph depicts both peer groups.
The New Peer Group, which consists of bank holding companies with assets
between approximately $20 billion and $65 billion, more closely approximates
BB&T's asset size than does the Old Peer Group. The Compensation Committee
utilized the New Peer Group for comparison to BB&T to determine appropriate
levels of compensation for the BB&T Named Executives in 1999.
[Performance Graph Appears Here]
<TABLE>
<CAPTION>
Cumulative Total Return
-----------------------------------------
12/94 12/95 12/96 12/97 12/98 12/99
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
BB&T CORPORATION 100.00 142.64 203.92 370.12 475.50 329.75
NEW PEER GROUP 100.00 155.13 204.29 356.24 381.85 320.31
OLD PEER GROUP 100.00 155.94 206.64 373.07 401.95 335.65
S&P 500 100.00 137.58 169.17 225.61 290.09 351.13
</TABLE>
PROPOSAL 2--APPROVAL OF AMENDMENTS TO THE
BB&T CORPORATION 1995 OMNIBUS STOCK INCENTIVE PLAN
The Board of Directors proposes that the shareholders approve certain
amendments to the BB&T Corporation 1995 Omnibus Stock Incentive Plan, as
amended and restated (the "Stock Plan"). The Stock Plan was originally adopted
by the shareholders at the 1995 Annual Meeting. The amended and restated
version of the Stock Plan was approved by the shareholders on April 23, 1996,
and the Board of Directors now proposes that the shareholders approve
additional amendments. The proposal to amend the Stock Plan will be approved
if the votes cast in favor of the proposal exceed the votes cast opposing it.
Abstentions and shares held in street name voted as to any matter at the
meeting will not be included in determining the number of votes cast on this
proposal.
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<PAGE>
The discussion which follows summarizes the proposed amendments to the Stock
Plan and describes the material terms of the current Stock Plan. The summary
is subject, in all respects, to the terms of the Stock Plan. The Corporation
will provide promptly, upon request and without charge, a copy of the full
text of the Stock Plan to each person to whom a copy of this Proxy Statement
is delivered. Requests should be directed to: Mr. Jerone C. Herring,
Secretary, BB&T Corporation, 200 West Second Street, Winston-Salem, North
Carolina 27101.
Summary of the Stock Plan
The Board of Directors believes that the Stock Plan benefits the Corporation
by (i) assisting it in recruiting and retaining employees with ability and
initiative, (ii) providing greater incentive for employees of the Corporation
or its related entities and (iii) associating the interests of employees with
those of the Corporation, its related entities, and its shareholders through
opportunities for increased stock ownership. Currently, a maximum of
12,000,000 shares of Common Stock may be issued under the Stock Plan, subject
to (i) an annual increase (or "replenishment") equal to 3% of the amount, if
any, by which the total number of shares of Common Stock outstanding on the
last day of each calendar year exceeds the total number of shares outstanding
on the first day of the calendar year, and (ii) adjustment in the event of a
stock split, stock dividend, recapitalization or similar event. Of the
aggregate amount authorized for issuance under the Stock Plan, a total of
12,000,000 shares may be issued pursuant to the exercise of Incentive Stock
Options ("ISOs"). Under the current terms of the Stock Plan, certain annual
participant award limitations also apply: (i) no participant may be granted
options and SARs for more than 60,000 shares in any calendar year; (ii) no
participant may receive shares of Common Stock pursuant to the grant of any
awards for more than 200,000 shares during any calendar year; and (iii) no
participant may receive awards payable in cash in excess of $300,000 during
any calendar year. These award limitations are proposed to be increased. See
"Summary of Proposed Amendments to the Stock Plan", below.
The Compensation Committee of the Board of Directors administers the Stock
Plan. The Compensation Committee may delegate its authority to administer the
Stock Plan to one or more officers of the Corporation. The Compensation
Committee, however, may not delegate its authority with respect to
participants who are subject to Section 16 of the Securities Exchange Act of
1934 ("Section 16"). As used in this summary, the terms "Administrator" or
"Committee" mean the Compensation Committee and any delegate, as appropriate.
Each employee of the Corporation or a related entity is eligible to be
selected to participate in the Stock Plan. Certain non-employees are eligible
to participate in the Stock Plan in conjunction with merger and acquisition
transactions. The Administrator will select the individuals who will
participate in the Stock Plan ("Participants") but no person may participate
in the Stock Plan while he is a member of the Compensation Committee. The
Administrator may, from time to time, grant stock options, stock appreciation
rights ("SARs"), restricted stock awards, performance shares and performance
units to participants.
Options granted under the Stock Plan may be ISOs or nonqualified stock
options. A stock option entitles the Participant to purchase shares of Common
Stock from the Corporation at the option price. The option price will be fixed
by the Administrator at the time the option is granted, but the price cannot
be less than 100% of the fair market value per share on the date of grant in
the case of ISOs, and not less than 85% of the fair market value per share on
the date of grant in the case of nonqualified stock options. To date, no
nonqualified stock options have been granted for less than 100% of the fair
market value per share on the date of grant. The option price may be paid in
cash, with shares of Common Stock, or with a combination of cash and Common
Stock.
SARs generally entitle the Participant to receive the lesser of (i) the
excess of the fair market value of a share of Common Stock on the date of
exercise over the initial value of the SAR or (ii) the initial value. The
initial value of the SAR is determined by the Administrator at the time of the
grant. The amount payable upon the exercise of an SAR may be paid in cash,
Common Stock, or a combination of the two. SARs may be granted in relation to
option grants ("corresponding SARs") or independently of option grants. The
difference between these two types of SARs is that to exercise a corresponding
SAR, the Participant must surrender unexercised that portion of the stock
option to which the corresponding SAR relates.
23
<PAGE>
Participants also may be awarded shares of Common Stock pursuant to a
restricted stock award. The Administrator, in its discretion, may prescribe
that a Participant's rights in a restricted stock award will be nontransferable
or forfeitable, or both, unless certain conditions are satisfied. These
conditions may include, for example, a requirement that the Participant
continue employment with the Corporation or a related entity for a specified
period or that the Corporation, a related entity, and/or the Participant
achieves stated performance objectives. Currently, the vesting period of a
restricted stock award is no less than three years, or no less than one year in
the case of performance-based restricted stock awards.
The Stock Plan also provides for the award of performance shares. A
performance share award entitles the Participant to receive a payment equal to
the fair market value of a targeted number of shares of Common Stock if certain
performance standards are met. The Administrator will prescribe the
requirements that must be satisfied before a performance share award is earned.
The performance share requirements may include, for example, a requirement that
the Participant continue employment with the Corporation or a related entity
for a specified period or that Corporation, a related entity, and/or the
Participant achieve stated performance objectives. A performance share award
generally will be earned based on the performance share value during each of
the five valuation periods (each, a calendar year) following the date of the
award. To the extent that performance shares are earned, the obligation may be
settled in cash, in Common Stock or by a combination of the two, as selected by
the Administrator.
Performance units are performance-based awards payable, in the
Administrator's discretion, in shares of Common Stock, cash or a combination of
Common Stock and cash. At the date of grant, the Committee will establish for
each performance unit a (i) performance target and (ii) an applicable
percentage (which cannot be less than zero, but which can exceed 100%) of the
value of the performance unit to be paid to the Participant based upon the
degree to which the performance target is met. A performance target is a
profitability target which serves as the basis for valuing a performance unit.
A performance target is based on certain performance factors and criteria
selected by the Committee, including but not limited to earnings per share,
return on equity and return on assets. A performance unit award is earned based
on the performance unit value during each valuation period (generally, a
calendar year) following the date of the award. The Committee will establish
the number of valuation periods applicable to a performance unit, which number
may not be less than three. The value of a performance unit equals the
applicable percentage, as set by the Committee, times the fair market value of
the Common Stock on the date of grant, plus such other nominal value as may be
set by the Committee.
Generally, a Participant's right to earn shares of Common Stock or cash under
a performance unit award will terminate if the Participant's employment with
the Corporation or a subsidiary ends for reasons other than death, legal
disability or retirement. However, a Participant will be entitled to receive
payment for awards earned in a valuation period that ended before termination.
In addition, Participants may be entitled to receive payment on a pro rated
basis based upon service during a portion of a valuation period in the event of
termination due to retirement, death or legal disability.
No awards may be made under the Stock Plan after April 9, 2005. The Board of
Directors may terminate the Stock Plan sooner without further action by
shareholders. The Board of Directors also may amend the Stock Plan except that
no amendment that increases the number of shares of Common Stock that may be
issued under the Stock Plan or changes the class of individuals who may be
selected to participate in the Stock Plan will become effective until it is
approved by shareholders. Shareholder approval is also required for certain
other types of amendments to the Stock Plan pursuant to Section 162(m) of the
Code, as discussed below.
Awards granted under the Stock Plan generally are not transferable except by
will or the laws of descent and distribution. However, nonqualified options may
be transferred by gift to family members and related entities, upon approval by
the Compensation Committee.
24
<PAGE>
Federal Income Tax Consequences
The Corporation has been advised by counsel regarding the federal income tax
consequences of the Stock Plan. The following summary briefly describes the
principal federal income tax consequences of awards under the Stock Plan. The
summary is not intended to cover all tax consequences that may apply to a
particular participant or to BB&T. No income is recognized by a Participant at
the time an option is granted. If the option is an ISO, no income will be
recognized upon the Participant's exercise of the option if certain holding
periods are met. Income is recognized by a Participant when he disposes of
shares acquired under an ISO. The exercise of a nonqualified stock option
generally is a taxable event that requires the Participant to recognize, as
ordinary income, the difference between the shares' fair market value and the
option price.
No income is recognized upon the grant of an SAR, but upon exercise the
Participant generally must recognize income equal to any cash that is paid and
the fair market value of Common Stock that is received in settlement of the
SAR.
The Participant will recognize income on account of a stock award on the
first day that the shares are either transferable or not subject to a
substantial risk of forfeiture. The amount of income recognized by the
Participant is equal to the fair market value of the Common Stock received on
that date.
The Participant will recognize income on account of the settlement of a
performance share or performance unit award. The Participant will recognize
income equal to any cash that is paid and the fair market value of shares of
Common Stock that are received in settlement of the award (on the date that the
shares are first transferable or not subject to a substantial risk of
forfeiture).
The employer (either the Corporation or a related entity) will be entitled to
claim a federal income tax deduction on account of the exercise of a
nonqualified option or SAR, the vesting of a restricted stock award, and the
settlement of a performance share or performance unit award. The amount of the
deduction generally is equal to the ordinary income recognized by the
Participant. The employer will not be entitled to a federal income tax
deduction on account of the grant or the exercise of an ISO. The employer may
claim a federal income tax deduction on account of certain dispositions of
Common Stock acquired upon the exercise of an ISO.
Summary of Proposed Amendments to the Stock Plan
The Board of Directors adopted certain amendments to the Stock Plan to be
effective January 1, 2000, subject to shareholders approving the amendments
described below. Certain of these amendments require shareholder approval. In
particular, under Section 162(m) of the Code and related regulations,
performance-based compensation paid to certain covered employees in excess of
$1,000,000 is not eligible for deduction by the Corporation unless the
compensation is based upon material performance goals approved by the
shareholders (and certain other conditions are met). In addition, federal tax
law regarding ISOs requires shareholder approval if the number of shares
authorized for issuance under the Stock Plan is proposed to be increased.
Amendments to Increase the Maximum Number of Shares Issuable Under the Plan.
As presently approved by the shareholders, the Stock Plan authorizes the
issuance of up to 12,000,000 shares of the Corporation's common stock, which
has been adjusted to 16,600,592 as a result of the Stock Plan's replenishment
and anti-dilution provisions, discussed above. As of March 1, 2000, awards have
been made for 16,419,410 shares of the Corporation's Common Stock. In order for
the Stock Plan to continue to provide an incentive for highly-qualified
employees (including employees of acquired companies) to serve or continue
service with the Corporation, to more closely align the interest of such
officers and employees with the shareholders and to provide stock-based
compensation comparable to that offered by other financial institutions, the
Board of Directors believes that the number of shares of the Corporation's
common stock authorized for issuance should be increased by an additional
17,000,000 shares to a total of 29,000,000 shares (subject to the replacement
and anti-dilution provisions discussed above). The Stock Plan is also proposed
to be amended to provide that the maximum number of shares which may be issued
upon the exercise of ISOs shall not exceed 29,000,000, subject to the
25
<PAGE>
overall share limit discussed above and to adjustments in the event of stock
splits, stock dividends, or other similar events, as discussed above. The
Board of Directors believes that these increases will permit awards to be made
under the Stock Plan for the remaining five years of the life of the Stock
Plan.
Amendment to Revise Participant Award Limitation. As noted above, the Stock
Plan currently provides that (i) no participant may be granted options and
SARs that are not related to an option in any calendar year for more than
60,000 shares of Common Stock, (ii) no participant may receive shares of BB&T
Common Stock pursuant to the grant of any award for more than a total of
200,000 shares of BB&T Common Stock, and (iii) no participant may receive
awards under the Stock Plan payable in cash having an aggregate dollar value
in excess of $300,000. These provisions are intended to comply with Section
162(m) of the Code and related regulations, which require that the maximum
number of shares with respect to which awards may be granted during a
specified period approved by the shareholders in order for such compensation
to be considered performance-based and thus eligible for employer
deductibility.
The Stock Plan is proposed to be amended to provide that in any calendar
year, (i) no participant may be granted options and SARs that are not related
to an option for more than 500,000 shares of BB&T Common Stock, (ii) no
participant may receive shares of BB&T Common Stock pursuant to the grant of
any awards made under the Plan for more than a total of 500,000 shares of BB&T
Common Stock, and (iii) no participant may receive awards under the Plan
payable in cash, having an aggregate dollar value in excess of $2,000,000.
These limitations are subject to the Stock Plan anti-dilution provisions
described above. These amendments are intended to continue to comply with the
requirements of Code Section 162(m) and related regulations that shareholders
approve the material performance goal terms which describe the maximum amount
of compensation that could be paid to a participant during a specified period
(or the formula used to calculate the maximum amount). The performance factors
(earnings per share, return on equity, return on assets and/or other criteria
selected by the Committee) which apply to performance units are not proposed
to be changed.
The Committee has made no decisions regarding whether any Participant will
receive the maximum Common Stock or cash awards in any given year. However,
the Committee believes that the proposed amendments to increase the annual
cash and Common Stock limitations would further the purposes of the Stock Plan
and are in the best interests of the Corporation. To the extent that Code
Section 162(m) applies to compensation paid to certain executives, it is in
the best interests of the Corporation for such compensation to be eligible for
deductibility. In addition, the participant award limitations and the proposed
increase in the number of shares authorized to be issued under the Stock Plan
are intended to enable the Corporation to obtain outstanding levels of
performance from Participants who receive awards under the Stock Plan by
serving as an incentive for excellent performance and by enabling BB&T to
continue to attract and retain qualified employees in an increasingly
competitive market.
The amount of compensation that will be paid pursuant to the grant of awards
under the Stock Plan, as it is proposed to be amended, in the current year to
the following persons is not yet determinable due to vesting, performance and
other requirements. However, the following table sets forth the number of
awards that were granted in 1999 under BB&T's stock-based plans to each of the
following:
BB&T Corporation 1995 Omnibus Stock Incentive Plan
<TABLE>
<CAPTION>
Stock Options Performance Units
---------------------- -------------------
Number
Number of of
Name Dollar Value Options Dollar Value Units
- ---- ------------ --------- ------------ ------
<S> <C> <C> <C> <C>
John A. Allison, IV................ $ 5,891,594 162,247 $ 453,780 12,496
Henry G. Williamson, Jr. .......... 2,240,227 61,693 246,500 6,788
Kelly S. King...................... 1,338,987 36,874 168,500 4,640
Robert E. Greene .................. 553,947 15,255 131,200 3,613
W. Kendall Chalk................... 552,748 15,222 130,600 3,596
Executive Group.................... 1,468,368 40,437 249,650 6,875
Non-Executive Officer Employee
Group............................. 52,294,756 1,440,131 0 0
----------- --------- ---------- ------
Total.............................. $64,340,627 1,771,859 $1,380,230 38,008
=========== ========= ========== ======
</TABLE>
26
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENTS TO
THE STOCK PLAN.
PROPOSAL 3--RATIFICATION OF ARTHUR ANDERSEN LLP AS
INDEPENDENT AUDITORS FOR 2000
The Audit Committee of the Board of Directors has reappointed the firm of
Arthur Andersen LLP as independent auditors to examine the books of BB&T and
subsidiaries for the year 2000, and to report on the consolidated balance
sheets, statements of income and other related statements of BB&T and
subsidiaries. Arthur Andersen LLP has served as independent auditors for BB&T
continuously since 1966. Representatives of Arthur Andersen LLP are expected
to be present at the Annual Meeting, will have an opportunity to make a
statement if they desire to do so and will be available to respond to
questions posed by the shareholders. Ratification of the reappointment of
Arthur Andersen LLP as BB&T's independent auditors requires the affirmative
vote of a majority of the shares of BB&T Common Stock voting on such matter.
Abstentions and shares held by a broker, as nominee, that are not voted on
this matter will not be included in determining the number of votes cast.
THE BB&T BOARD RECOMMENDS A VOTE "FOR"APPROVAL OF THE PROPOSAL TO RATIFY
ARTHUR ANDERSEN LLP AS BB&T'S INDEPENDENT AUDITORS FOR 2000.
OTHER MATTERS
Proposals for 2001 Annual Meeting
Under regulations of the Commission, any shareholder desiring to make a
proposal to be acted upon at the 2001 annual meeting of shareholders must
present such proposal to BB&T at its principal office in Winston-Salem, North
Carolina by November 19, 2000 for the proposal to be considered for inclusion
in BB&T's proxy statement.
In addition to any other applicable requirements, for business to be
properly brought before the annual meeting by a shareholder even if the
proposal is not to be included in BB&T's proxy statement, the BB&T bylaws
provide that the shareholder must give timely notice in writing to the
Secretary of BB&T at least 60 days prior to the date one year from the date of
the immediately preceding annual meeting. As to each matter, the notice must
contain (i) a brief description of the business desired to be brought before
the annual meeting, (ii) the name of, record address of, and class and number
of shares beneficially owned by, the shareholder proposing such business and
(iii) any material interest of the shareholder in such business. A proxy may
confer discretionary authority to vote on any matter at an annual meeting if
BB&T does not receive proper notice of the matter within the time frame
described above.
Other Business
The BB&T Board knows of no other matter to come before the Annual Meeting.
However, if any other matter requiring a vote of the shareholders arises, it
is the intention of the persons named in the accompanying proxy to vote such
proxy in accordance with their best judgment.
By Order of the Board of Directors
/s/ John A. Allison IV
John A. Allison IV
Chairman and Chief Executive Officer
Dated: March 17, 2000
27
<PAGE>
- --------------------------------------------------------------------------------
PROXY PROXY
BB&T CORPORATION
ANNUAL MEETING APRIL 25, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
BB&T CORPORATION
The undersigned shareholder of BB&T Corporation, a North Carolina
corporation ("BB&T"), appoints John A. Allison IV and Jerone C. Herring, or
either of them, with full power to act alone, the true and lawful attorneys-
in-fact of the undersigned, with full power of substitution and revocation, to
vote all shares of stock of BB&T which the undersigned is entitled to vote at
the annual meeting of shareholders of BB&T to be held at the Grand Hyatt
Atlanta at 3300 Peachtree Road, Atlanta, Georgia on April 25, 2000, at 11:00
a.m., local time and at any adjournment thereof, with all powers the
undersigned would possess if personally present, as follows:
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS OF THE
UNDERSIGNED. IF NO INSTRUCTION TO THE CONTRARY IS GIVEN, THIS PROXY WILL BE
VOTED IN FAVOR OF THE NOMINEES FOR DIRECTOR DESCRIBED HEREIN AND "FOR"
PROPOSALS 2, 3 AND 4 ON THE REVERSE SIDE. IF ANY OTHER BUSINESS IS PRESENTED
AT THE MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF MANAGEMENT.
(Continued on reverse side)
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<PAGE>
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Please mark
your vote as [X]
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE FOLLOWING PROPOSALS
1. Proposal to elect seven nominees as directors of BB&T for three-year terms
expiring in 2003.
Alfred E. Cleveland Jane P. Helm
A. J. Dooley, Sr. Joseph A. McAleer, Jr.
Paul S. Goldsmith E. Rhone Sasser
L. Vincent Hackley
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the following space.)
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FOR all nominees
listed (except as WITHHOLD
marked to the authority to vote
contrary below) for all nominees
[_] [_]
2. Proposal to approve the amendments to the amended and restated BB&T
Corporation 1995 Omnibus Stock Incentive Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Proposal to ratify the reappointment of Arthur Andersen LLP as BB&T's
auditors for 2000.
[_] [_] [_]
4. To authorize the attorneys-in-fact to vote in accordance with the
recommendations of management on any other matters that may be submitted to a
vote of shareholders at the BB&T meeting.
[_] [_] [_]
The undersigned hereby ratifies and confirms all that said attorneys-in-fact, or
either of them or their substitutes, may lawfully do or cause to be done hereof,
and acknowledges receipt of the notice of the BB&T Meeting and the Proxy
Statement accompanying it.
Dated this day of , 2000.
________________________________________________________________________ (SEAL)
________________________________________________________________________ (SEAL)
Please insert date of signing. Sign exactly as name appears at left. Where
stock is issued in two or more names, all should sign. If signing as attorney,
administrator, executor, trustee or guardian, give full title as such. A cor-
poration should sign by an authorized officer and affix seal.
(YOU ARE REQUESTED TO COMPLETE, SIGN AND RETURN THIS PROXY PROMPTLY)
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