<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
The Colonial BancGroup, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
----------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
(COLONIAL BANK LOGO)
COLONIAL
BANCGROUP
Montgomery, Alabama
TO OUR STOCKHOLDERS:
The annual meeting of the stockholders of The Colonial BancGroup, Inc.,
will be held at 10:00 a.m., Wednesday, April 19, 2000, at the Colonial Financial
Center, One Commerce Street, Montgomery, Alabama.
Enclosed is a Notice of the meeting, a Proxy Statement, a proxy card and
the Annual Report to Shareholders for 1999. We hope that you will study the
enclosed material carefully and attend the meeting in person.
Whether you plan to attend the meeting or not, please sign and date the
enclosed proxy card and return it in the accompanying envelope as promptly as
possible. The proxy may be revoked by your vote in person at the meeting, by
your execution and submission of a later dated proxy, or by you giving written
notice of revocation to the Secretary of The Colonial BancGroup, Inc., at any
time prior to the voting thereof. Thank you for your support.
Sincerely,
/s/ ROBERT E. LOWDER
Robert E. Lowder
Chairman of the Board and
Chief Executive Officer
March 17, 2000
<PAGE> 3
NOTICE
OF THE
ANNUAL MEETING OF STOCKHOLDERS
OF
THE COLONIAL BANCGROUP, INC.
TO BE HELD APRIL 19, 2000
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of The
Colonial BancGroup, Inc. ("BancGroup"), a Delaware corporation, will be held at
the Colonial Financial Center, One Commerce Street, Montgomery, Alabama, on
Wednesday, April 19, 2000, at 10:00 a.m., central time, for the following
purposes:
1. To elect the nominees named in the Proxy Statement as directors to
serve the terms of either two years or three years as set out therein.
2. To amend the 1992 Incentive Stock Option Plan of The Colonial
BancGroup, Inc. (the "ISO Plan") to increase the number of shares of Common
Stock eligible to be issued under the ISO Plan from 4,200,000 shares to
5,700,000 shares.
3. To adopt the Management Incentive Plan.
4. To amend the 1992 Non-Qualified Stock Option Plan (the "NQSO Plan")
to provide that the maximum number of shares of Common Stock, with respect
to which options may be granted to any eligible employee under the NQSO
Plan during any Plan Year, shall not exceed 200,000.
5. To amend the Stock Bonus and Retention Plan (the "Stock Plan") to
(a) provide that during any Plan Year no participant shall receive more
than 150,000 shares of Common Stock under the Stock Plan and (b) allow
performance-based goals pursuant to Section 162(m) of the Internal Revenue
Code to be used in making awards.
6. To transact such other business as may properly come before the
meeting or any adjournments thereof but which is not now anticipated.
Details respecting these matters are set forth in the accompanying Proxy
Statement. Only stockholders of record at the close of business on March 1, 2000
will be entitled to notice of, and to vote at, the meeting. A complete list of
the stockholders entitled to vote at the meeting, arranged in alphabetical order
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder, shall be open to examination by any stockholder
at BancGroup's principal office at One Commerce Street, Montgomery, Alabama,
during ordinary business hours for any purpose germane to the meeting. Such list
will be open for a period of at least ten days prior to the meeting.
All stockholders of BancGroup are cordially invited to attend the meeting
in person. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE SIGN
AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING ENVELOPE AS
PROMPTLY AS POSSIBLE. ALTERNATIVELY, IF YOUR PROXY CARD CONTAINS INSTRUCTIONS AS
TO VOTING VIA TELEPHONE OR INTERNET, YOU MAY FOLLOW THOSE INSTRUCTIONS. THE
PROXY MAY BE REVOKED BY YOUR VOTE IN PERSON AT THE MEETING, BY YOUR EXECUTION
AND SUBMISSION OF A LATER DATED PROXY BEFORE THE MEETING, OR IF YOU VOTE
ELECTRONICALLY, THEN BEFORE 5:00 P.M. EASTERN TIME ON APRIL 18, 2000, OR BY YOU
GIVING WRITTEN NOTICE OF REVOCATION TO THE SECRETARY OF THE COLONIAL BANCGROUP,
INC. AT ANY TIME PRIOR TO THE VOTING THEREOF.
By Order of the Board of Directors
/s/ W. FLAKE OAKLEY, IV
W. Flake Oakley, IV
Executive Vice President,
Chief Financial Officer and Secretary
March 17, 2000
<PAGE> 4
THE COLONIAL BANCGROUP, INC.
ONE COMMERCE STREET
POST OFFICE BOX 1108
MONTGOMERY, ALABAMA 36101
TELEPHONE: 334-240-5000
---------------------
PROXY STATEMENT
FOR 2000 ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement and the accompanying proxy are furnished on or about
March 17, 2000 by The Colonial BancGroup, Inc. ("BancGroup") to the holders of
record of common stock, par value $2.50, of BancGroup (the "Common Stock") in
connection with BancGroup's annual meeting of stockholders (the "Annual
Meeting"), and any adjournments thereof, to be held on Wednesday, April 19,
2000, at 10:00 a.m. at the Colonial Financial Center, One Commerce Street,
Montgomery, Alabama. The matters to be considered and acted upon, including the
election of directors, are described herein.
The Board of Directors of BancGroup (the "Board") recommends the election
of the six director-nominees named in this Proxy Statement for a term of three
years and the election of one director-nominee named in this Proxy Statement for
a term of two years, as described herein. The Board also recommends approval of
the proposed amendments to the 1992 Incentive Stock Option Plan (the "ISO
Plan"), the 1992 Non-Qualified Stock Option Plan (the "NQSO Plan") and the Stock
Bonus and Retention Plan (the "Stock Plan") and adoption of the Management
Incentive Plan (the "MIP"), all as described herein.
The enclosed proxy is solicited on behalf of the Board and is revocable at
any time prior to the voting of such proxy by giving written notice of
revocation to the Secretary of BancGroup, or by executing or otherwise
submitting a later-dated proxy, or by voting in person at the Annual Meeting.
Mere attendance at the Annual Meeting without submitting a later-dated proxy
will not be sufficient to revoke a previously submitted proxy. All properly
executed proxies delivered pursuant to this solicitation will be voted at the
Annual Meeting and in accordance with instructions, if any. If no instructions
are given, the proxies will be voted FOR election of the director-nominees named
herein, and in accordance with the instructions of management as to the approval
and amendment of the plans described above and any other matters that may come
before the Annual Meeting.
The cost of soliciting proxies will be borne by BancGroup. In addition to
the use of the mail, proxies may be solicited by personal interview, telephone
or telegraph, and banks, brokers, nominees or fiduciaries will be required to
forward the soliciting material to the principals and to obtain authorization of
the execution of proxies. BancGroup also will allow proxies to be delivered by
telephone or via the internet. BancGroup may, upon request, reimburse banks,
brokers and other institutions, nominees and fiduciaries for their expenses in
forwarding proxy material to the principals. BancGroup has retained the firm of
Georgeson & Co. to solicit street-name holders and will pay such firm a fee of
$6,500.
STOCKHOLDERS ELIGIBLE TO VOTE
This Proxy Statement is furnished to the holders of Common Stock who were
holders of record as of the close of business on March 1, 2000. Only those
holders are eligible to vote at the Annual Meeting.
Votes will be tabulated and counted by one or more inspectors of election
appointed by the Chairman of the Board. Proxies marked as abstentions and shares
held in street names which have been designated by brokers on proxy cards as not
voted will not be counted as votes cast. Such proxies will be counted for
purposes of determining a quorum at the Annual Meeting. A quorum consists of a
majority of the shares of Common Stock outstanding.
1
<PAGE> 5
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
As of March 1, 2000, BancGroup had issued and outstanding 111,591,524
shares of Common Stock with approximately 9,722 stockholders of record. Each
such share is entitled to one vote. In addition, as of that date, 1,344,746
shares of Common Stock were subject to issuance upon the exercise of options
pursuant to BancGroup's stock option plans, and up to 602,647 shares of Common
Stock were issuable upon conversion of BancGroup's Convertible Subordinated
Debentures. There are currently 200,000,000 shares of Common Stock authorized.
BancGroup is not aware of any material change in the ownership of Common Stock
since March 1, 2000.
PRINCIPAL STOCKHOLDERS
The following table shows the only person who is known to BancGroup to be
the beneficial owner as of March 1, 2000, of more than 5% of BancGroup's
outstanding Common Stock.
<TABLE>
<CAPTION>
SHARES OF BANCGROUP
BENEFICIALLY OWNED
----------------------------
PERCENTAGE
COMMON OF CLASS
NAME AND ADDRESS STOCK OUTSTANDING(1)
- ---------------- --------- --------------
<S> <C> <C>
Robert E. Lowder............................................ 5,997,573(1) 5.37%
Post Office Box 1108
Montgomery, AL 36101
</TABLE>
- ---------------
(1) Includes 80,000 shares of Common Stock subject to options under BancGroup's
stock option plans. In addition, the total includes 25,960 shares and 20,805
shares owned by Mr. Lowder's wife and stepson, respectively. Mr. Lowder
disclaims beneficial ownership of these shares.
SECURITY OWNERSHIP OF MANAGEMENT
The following table indicates for each director, director-nominee,
executive officer, and all executive officers and directors of BancGroup as a
group the number of shares of outstanding Common Stock beneficially owned on
March 1, 2000.
<TABLE>
<CAPTION>
SHARES OF BANCGROUP
BENEFICIALLY OWNED
-----------------------------
PERCENTAGE
COMMON OF CLASS
NAME STOCK OUTSTANDING(1)
- ---- --------- --------------
<S> <C> <C>
DIRECTORS
Lewis E. Beville............................................ 3,988 *
William Britton............................................. 61,014(1) *
Jerry J. Chesser............................................ 319,659 *
Augustus K. Clements, III................................... 43,659 *
Robert S. Craft............................................. 36,953(2) *
Patrick F. Dye.............................................. 33,000 *
Clinton O. Holdbrooks....................................... 608,271(3) *
Harold D. King.............................................. 297,162(4) *
Robert E. Lowder............................................ 5,997,573(5) 5.37%
John Ed Mathison............................................ 42,216(6) *
Milton E. McGregor.......................................... 100,000 *
John C.H. Miller, Jr........................................ 86,298(7) *
Joe D. Mussafer............................................. 43,155 *
William E. Powell, III...................................... 30,822 *
James W. Rane............................................... 3,661 *
Frances E. Roper............................................ 754,827 *
Simuel Sippial.............................................. 14,602 *
Edward V. Welch............................................. 62,240 *
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
SHARES OF BANCGROUP
BENEFICIALLY OWNED
-----------------------------
PERCENTAGE
COMMON OF CLASS
NAME STOCK OUTSTANDING(1)
- ---- --------- --------------
<S> <C> <C>
EXECUTIVE OFFICERS WHO ARE NOT ALSO DIRECTORS
Young J. Boozer, III........................................ 139,191(8) *
Michelle M. Condon.......................................... 44,688(9) *
P. L. McLeod, Jr. .......................................... 166,290(9) *
Sarah H. Moore.............................................. 18,448(9) *
W. Flake Oakley, IV......................................... 118,009(9) *
All Executive Officers and Directors as a Group............. 9,025,726 8.07%
</TABLE>
- ---------------
* Represents less than 1%.
(1) Includes 7,232 shares owned by Mr. Britton's wife. Mr. Britton disclaims
beneficial ownership of the shares.
(2) Includes 2,673 shares held by the IRA of Mr. Craft's wife. Mr. Craft
disclaims beneficial ownership of the shares.
(3) Includes 128,996 shares held by Mr. Holdbrooks as trustee.
(4) Includes 40,780 shares owned by Mr. King's wife. Mr. King disclaims
beneficial ownership of the shares.
(5) Includes 80,000 shares of Common Stock subject to options under BancGroup's
stock option plans. In addition, the total includes 25,960 shares and 20,805
shares owned by Mr. Lowder's wife and stepson, respectively. Mr. Lowder
disclaims beneficial ownership of these shares.
(6) Includes 2,000 shares owned by Dr. Mathison's wife. Dr. Mathison disclaims
beneficial ownership of the shares.
(7) Includes 45,000 shares subject to options under BancGroup's stock option
plans.
(8) Young J. Boozer, III holds a power of attorney to vote shares of stock owned
by his father, Young J. Boozer, Jr. This number includes 35,523 shares owned
by Young J. Boozer, Jr. and 4,000 shares owned by Young J. Boozer, Jr. and
Young J. Boozer, III EX U/W Phyllis C. Boozer.
(9) Michelle M. Condon, P.L. McLeod, Jr., Sarah H. Moore and W. Flake Oakley,
IV, hold vested options respecting 22,190, 75,600, 8,500 and 60,000 shares,
respectively, pursuant to BancGroup's stock option plans, excluding options
that are not exercisable within 60 days of March 1, 2000, due to vesting
requirements.
3
<PAGE> 7
ELECTION OF DIRECTORS
The Board recommends that the stockholders elect the seven persons named
below to hold office for terms of two years or three years, as indicated, or
until their successors are elected and qualified. BancGroup's Restated
Certificate of Incorporation provides that the number of directors which shall
constitute the entire Board shall be fixed from time to time by resolutions
adopted by the Board, but shall not be less than three persons. If the
stockholders elect directors as recommended by the Board, then the Board shall
consist of 18 members. By resolution, the Board has fixed the maximum number of
directors at 23.
BancGroup's Restated Certificate of Incorporation provides for the election
of directors by classes to terms of three years, with one class of approximately
one-third of the total number of directors to be elected each year. Six nominees
are proposed for election to the class of directors whose terms expire in 2003.
One director is proposed for election to the class of directors whose terms
expire in 2002 to provide more balance to the classes. At the Annual Meeting,
proxies cannot be voted for more than six directors whose terms expire in 2003
nor more than one director whose term will expire in 2002.
If, prior to the voting at the Annual Meeting, any person proposed for
election as a director is unavailable to serve or for good cause cannot serve,
the shares represented by all valid proxies may be voted for the election of
such substitute as the members of the Board may recommend. BancGroup management
knows of no reason why any nominated person would be unavailable to serve as a
director.
Assuming a quorum is present at the Annual Meeting, a plurality of the
votes cast will be sufficient to elect the directors. On the proxy card, voting
for directors is Proposal 1.
The bylaws of BancGroup contain certain limitations on stockholder
nominations of candidates for election as directors. See "Bylaw Provisions
Regarding Conduct of Stockholders' Meetings."
The following table provides certain biographical information about each
nominee to be proposed on behalf of the Board and the directors whose terms will
not expire until 2001 and 2002. Unless otherwise indicated, each person has been
engaged in the principal occupation shown for the last five years. Executive
officers serve at the discretion of the Board.
DIRECTORS TO BE NOMINATED ON BEHALF OF THE BOARD
FOR A TERM EXPIRING IN 2003:
<TABLE>
<CAPTION>
POSITION AND OFFICE
NAME, AGE AND YEAR HELD WITH BANCGROUP PRESENT AND PRINCIPAL
BECAME DIRECTOR AND SUBSIDIARIES(1) OCCUPATION FOR LAST FIVE YEARS
- ------------------ ------------------------------ ------------------------------
<S> <C> <C>
Lewis E. Beville Director, BancGroup; Director, Vice President of Thames,
48, 1997 Gulf Coast Region; Chairman, Batre, Mattei, Beville and
Audit Committee Ison (insurance agency),
Mobile, AL
Jerry J. Chesser Director, BancGroup; Chairman President, Shelby Contracting
63, 1984 of the Board, Huntsville Co., Inc. (general
Region; Member, Audit contractor), Huntsville, AL
Committee
John Ed Mathison Director, BancGroup; Director, Senior Minister, Frazer
61, 1987 Montgomery Region; Member, Memorial United Methodist
Personnel and Compensation Church, Montgomery, AL
Committee
Joe D. Mussafer Director, BancGroup; Director, President, Montgomery Beverage
60, 1981 Montgomery Region; Member, Company, Inc. (wholesale
Personnel and Compensation beverage distributorship),
Committee Montgomery, AL
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
POSITION AND OFFICE
NAME, AGE AND YEAR HELD WITH BANCGROUP PRESENT AND PRINCIPAL
BECAME DIRECTOR AND SUBSIDIARIES(1) OCCUPATION FOR LAST FIVE YEARS
- ------------------ ------------------------------ ------------------------------
<S> <C> <C>
Frances E. Roper Director, BancGroup; Director, Owner, Roper's Flowers (retail
80, 1984 Huntsville Region; Member, florist); Owner, Frances Roper
Personnel and Compensation Corporation (renting and
Committee; Member, Audit leasing properties),
Committee Huntsville, AL
Edward V. Welch Director, BancGroup; Director, Chairman of the Board, Welch,
67, 1981 Montgomery Region; Member, Hornsby & Welch, Inc,
Asset-Liability Committee (investment advisory firm) and
Trinity Investments, Inc.,
(investments holding company),
since May 1994, Montgomery, AL
DIRECTOR TO BE NOMINATED ON BEHALF OF THE BOARD
FOR A TERM EXPIRING IN 2002:
William E. Powell, III Director, BancGroup; Director, Executive Vice President,
55, 1987 Montgomery Region; Member, Alabama Cattlemen's
Asset-Liability Committee Association (trade association
representing the beef cattle
industry), Montgomery, AL
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 2001:
Augustus K. Clements, III Director, BancGroup; Director, General Agent, New England
57, 1995 Colonial Bank; Director, Financial/The Clements Agency
Montgomery Region; Member, (insurance), Montgomery, AL
Executive Committee; Member,
Asset-Liability Committee
Robert S. Craft Director, BancGroup; Chairman President, Craft Development
48, 1992 of the Board, Gulf Coast Corp. (golf course ownership
Region; Member, Executive and development); Managing
Committee Partner, Pinehurst Development
(real estate development);
President, Craft Land Company,
Inc. (real estate
development); Partner, Craft
Turf Farms (turf grass
production and sales);
President, Wingo Trucking
(trucking company); Managing
Member, Woodlands Management
Co. (golf course management);
Managing Member, Bright's
Creek Development Co. (golf
course ownership); Managing
Member, TRI-TEL, LLC (hotel
ownership); President, Cotton
Creek Condominium Development
Corp. (condominium
development), Foley, AL.
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
POSITION AND OFFICE
NAME, AGE AND YEAR HELD WITH BANCGROUP PRESENT AND PRINCIPAL
BECAME DIRECTOR AND SUBSIDIARIES(1) OCCUPATION FOR LAST FIVE YEARS
- ------------------ ------------------------------ ------------------------------
<S> <C> <C>
Clinton O. Holdbrooks Director, BancGroup; Chairman Chairman of the Board, East
61, 1986 of the Board, East Central Central Region, since January
Region; Member, 1988, Pell City, AL
Asset-Liability Committee;
Member, Audit Committee
Harold D. King Vice Chairman, BancGroup; Vice Chairman, BancGroup,
67, 1986 Director, Birmingham Region; since October 1987, Pell City,
Director, East Central Region; AL
Director, Colonial Bank;
Member, Executive Committee;
Chairman, Asset-Liability
Committee
Robert E. Lowder* Chairman of the Board and Chief Executive Officer and
57, 1981 Chief Executive Officer, Chairman of the Board,
BancGroup; Chairman, Executive Colonial BancGroup; Chairman
Committee; Chairman of the of the Board and Chief
Board and Chief Executive Executive Officer, Colonial
Officer, Colonial Bank; Bank; Chairman of the Board
Director, Birmingham Region; and CEO, Colonial Mortgage
Director, Huntsville Region; Company until 1999; Chairman
Director, Northwest Region; of the Board and President,
Director, East Central Region; Colonial Broadcasting Company,
Director, Gulf Coast Region; Inc. until 1998, Montgomery,
Director, Montgomery Region; AL
Director, Central Florida
Region; Director, South
Florida Region; Director, Bay
Area Region; Director,
Southwest Florida Region;
Chairman of the Board, Atlanta
Region; Director, Dallas
Region; Director, Nevada
Region; Director, Central
Georgia Region
John C. H. Miller, Jr. Director, BancGroup; Director, Partner, Miller, Hamilton
56, 1981 Gulf Coast Region; Chairman, Snider & Odom, L.L.C. (law
Personnel and Compensation firm), Vice President, The
Committee; Member, Executive Pilot Group (consulting firm),
Committee Mobile, AL
James W. Rane Director, BancGroup; Member, President, Great Southern Wood
52, 1997 Audit Committee Preserving, Inc., Great
Southern Wood of Florida, Inc.
and Great Southern Wood of
North Alabama, Inc. (lumber
company), Abbeville, AL
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 2002:
William Britton Director, BancGroup; Director, Muscle Shoals Mack Sales, Inc.
75, 1985 Northwest Region; Member, (truck service and retail
Audit Committee sales business), Muscle
Shoals, AL
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
POSITION AND OFFICE
NAME, AGE AND YEAR HELD WITH BANCGROUP PRESENT AND PRINCIPAL
BECAME DIRECTOR AND SUBSIDIARIES(1) OCCUPATION FOR LAST FIVE YEARS
- ------------------ ------------------------------ ------------------------------
<S> <C> <C>
Patrick F. Dye Director, BancGroup; Member, Special Advisor, Auburn
60, 1981 Asset-Liability Committee University, since December,
1992; Head Football Coach and
Athletic Director, Auburn
University, 1981-1992, Auburn,
AL
Milton E. McGregor Director, BancGroup; Member, President and CEO, Macon
60, 1993 Personnel and Compensation County Greyhound Park d/b/a
Committee Victoryland; President and
CEO, Jefferson County Racing
Association (greyhound racing
facility) since 1992,
Montgomery, AL
Simuel Sippial Director, BancGroup; Director, President, Sippial
56, 1997 Colonial Bank; Director, Enterprises, Inc. (real estate
Montgomery Region; Member, investments), Montgomery, AL
Personnel and Compensation
Committee
</TABLE>
- ---------------
* Indicates that the director is also an executive officer.
(1) All references to the word "Region" refer to a region of Colonial Bank.
BancGroup's Restated Certificate of Incorporation provides that there shall
be an Audit Committee of the Board composed of not less than three directors
appointed by the Board at least annually, none of whom shall be active officers
of BancGroup, whose duty it shall be to make an examination at least once each
year into the financial affairs of BancGroup and to report the results of their
examination in writing to the Board at its next regular meeting. The Audit
Committee may make recommendations to the Board and, with the approval of the
Board, may employ an independent firm of certified public accountants. The Audit
Committee of the Board presently consists of Lewis E. Beville, Chairman, William
Britton, Jerry J. Chesser, Clinton O. Holdbrooks, Frances E. Roper, and James W.
Rane. The Audit Committee met four times in 1999.
BancGroup has a Personnel and Compensation Committee presently consisting
of John C. H. Miller, Jr., Chairman, Joe D. Mussafer, Milton E. McGregor, John
Ed Mathison, Frances E. Roper and Simuel Sippial. The principal functions of
this committee are to make recommendations from time to time to the Board
regarding compensation and personnel matters, compensation plans in which
officers and directors are eligible to participate, the establishment of or
changes in benefit plans in which officers and employees participate, and
personnel policies. A subcommittee of this committee consisting of Joe D.
Mussafer, Frances E. Roper and Simuel Sippial performs these functions regarding
executive officers of BancGroup. The committee met one time, and the
subcommittee met three times in 1999 (See "Executive Compensation Committee
Report").
BancGroup has no nominating committee.
BancGroup has an Executive Committee presently consisting of Robert E.
Lowder, Chairman, Augustus K. Clements, III, Robert S. Craft, Harold D. King,
and John C.H. Miller, Jr. The principal functions of this committee are to
perform certain actions in lieu of the Board at times when a meeting of the full
Board is not feasible or practicable. This committee met one time in 1999.
During 1999, the Board met four times. All incumbent BancGroup directors
attended 75% or more of the Board meetings and their respective committee
meetings except Mr. Dye and Mr. McGregor. Mr. Dye attended 50% of the Board
meetings and 50% of committee meetings. Mr. McGregor attended 75% of the Board
meetings and 50% of committee meetings.
7
<PAGE> 11
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires BancGroup's
directors, certain officers and 10% stockholders, if any, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Such officers, directors and 10% stockholders, if any, are required
by SEC regulations to furnish BancGroup with copies of all Section 16(a) reports
they file, including reports on Form 5 which are filed with the SEC annually.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no reports on Form 5
were required for those persons, BancGroup believes that during 1999 all filings
applicable to its officers, directors and 10% stockholders were made timely,
except as follows:
James W. Rane, a director of BancGroup, was late in filing three reports
required by Section 16(a) of the Exchange Act for one transaction that occurred
in 1998 and three transactions in 1999. Robert S. Craft, a director of
BancGroup, was late in filing one report required by Section 16(a) of the
Exchange Act for a transaction that occurred in 1999.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Personnel and Compensation Committee of BancGroup consists of John C.H.
Miller, Jr., Chairman, Frances E. Roper, Milton E. McGregor, Joe D. Mussafer,
John Ed Mathison, and Simuel Sippial. Mr. Miller is a partner in the law firm of
Miller, Hamilton, Snider & Odom, L.L.C. Such firm performed legal services for
BancGroup and its subsidiary bank, Colonial Bank, in 1999 and received
approximately $1,195,607 in fees. In addition, as described below at "Executive
Compensation -- Director Compensation," Mr. Miller received employment-related
compensation of $42,577 from BancGroup in 1999. See "-- Other Transactions".
Robert E. Lowder is the Chief Executive Officer, Chairman of the Board and
a principal stockholder of BancGroup. For a discussion of certain transactions
between Mr. Lowder and BancGroup, see "Certain Transactions with Mr. Lowder",
which follows immediately below.
CERTAIN TRANSACTIONS WITH MR. LOWDER
BancGroup and its subsidiaries lease office space in the Colonial Financial
Center in Montgomery, Alabama, from GC Associates I, Joint Venture, a company in
which Mr. Lowder has a 16.7% ownership interest. The lease agreements, which
began in 1987 and will expire in 2007, provide that BancGroup and its
subsidiaries will pay rent of approximately $1,483,234 in the aggregate, per
annum, subject to certain adjustments, including reimbursement of certain
operating expenses, to GC Associates I.
Colonial Bank currently leases real estate which is partially owned by Mr.
Lowder and on which one of its Montgomery, Alabama branches is located. Mr.
Lowder receives an annual rental of $2,000 pursuant to this lease. This lease
commenced in 1974, was renewed in 1999 and has a five-year term.
BancGroup currently leases office space in Montgomery, Alabama, from
Colonial Realty Limited Partnership ("Colonial Realty"), a company in which Mr.
Lowder owns 5.5% of the partnership units, including those units held by
Colonial Properties Trust, the general partner of Colonial Realty. This lease
commenced in 1989 and expires in 2000. BancGroup will pay approximately $353,361
per annum, subject to certain adjustments, including reimbursement of certain
operating expenses, to Colonial Realty.
BancGroup and Colonial Bank also lease office and branch office space in
Montgomery, Alabama from Colonial Properties Trust ("Colonial Properties"), in
which Mr. Lowder owns or has an ownership interest in 7.8% of the common shares
of Colonial Properties, including shares issuable upon conversion of units in
Colonial Realty and options exercisable within 60 days. These leases commenced
in 1992 and 1999 and expire in 2002. BancGroup and Colonial Bank pay
approximately $39,708 per annum, subject to certain adjustments, as lease
payments to Colonial Properties.
8
<PAGE> 12
During part of 1999, REL Services Inc. ("REL Services"), a corporation
wholly owned by Mr. Lowder, provided the use of an aircraft to BancGroup and its
subsidiaries pursuant to an agreement entered into in April 1998, and amended in
January 1999. The agreement provided that BancGroup and its subsidiaries pay REL
Services up to $1,920,000 per year for the use of a Cessna Citation aircraft
owned by REL Services for unlimited hours of flight and ground time per year. In
the aggregate, $859,743 was paid to REL Services, Inc. in 1999. This agreement
was terminated during August 1999.
With respect to the preceding transactions, management of BancGroup
believes that such arrangements are at least as favorable to BancGroup as those
which might be negotiated with unaffiliated parties for similar transactions.
OTHER TRANSACTIONS
BancGroup has retained in the past and proposes to retain in the future on
behalf of BancGroup or its subsidiaries the law firm of Miller, Hamilton, Snider
& Odom, L.L.C., Mobile, Alabama, of which a director of BancGroup, John C. H.
Miller, Jr., is a partner. Legal fees paid to this firm by BancGroup and its
subsidiaries were approximately $1,195,607 for 1999.
Management of BancGroup believes that such arrangements and related
transactions are at least as favorable to BancGroup as that which might be
negotiated with an unaffiliated parties for similar arrangements and
transactions.
LOANS
Certain directors, officers and principal stockholders of BancGroup and
their affiliated interests were customers of and had transactions with Colonial
Bank in the ordinary course of its business during the past year. Additional
transactions may be expected to take place in the ordinary course of business.
Included in such transactions were outstanding loans and commitments from
Colonial Bank, all of which were made in the ordinary course of business on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and did
not involve more than the normal risk of collectability or present other
unfavorable features.
9
<PAGE> 13
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table presents for the last three fiscal years of BancGroup
the compensation paid to the Chief Executive Officer of BancGroup and the four
most highly compensated executive officers of BancGroup, in addition to the
Chief Executive Officer, whose total annual salary and bonus for 1999 exceeded
$100,000.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
---------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
--------------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($) OPTIONS(#) COMPENSATION(1)
- --------------------------- ---- --------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Lowder................... 1999 $982,686 $350,000 $298,823(2)(3) 100,000(7) $19,473
Chairman and CEO 1998 848,077 -- 56,532(2) 100,000(6) 6,620
1997 798,492 -- 427,025(2)(3) -- 6,370
P. L. McLeod, Jr................... 1999 256,846 25,000 54,502(3)(4) 10,000(7) 5,213
President 1998 229,231 -- 4,392(4) 40,000(6) 5,288
1997 195,192 50,000 8,541(4) 24,000(5) 4,924
W. Flake Oakley, IV................ 1999 206,923 50,000 52,500(3) 30,000(7) 5,000
Executive Vice President, Chief 1998 179,317 -- -- 40,000(6) 5,000
Financial Officer and Secretary 1997 161,865 25,000 -- 20,000(5) 4,422
Young J. Boozer, III............... 1999 147,231 5,000 -- -- 3,681
Executive Vice President 1998 132,846 -- -- -- 3,321
1997 125,769 -- -- -- 3,269
Michelle M. Condon................. 1999 149,423 -- -- 2,000(7) 3,868
Executive Vice President 1998 130,000 -- -- 2,500(6) 3,427
1997 114,231 3,000 34,438(3) 4,000(5) 3,083
</TABLE>
- ---------------
(1) The amounts shown in this column for Mr. Lowder consist of $13,199 in
compensation for personal use of the company aircraft in 1999. They also
include for Mr. Lowder $5,000, $5,000 and $4,750 contributed in 1999, 1998
and 1997, respectively, to BancGroup's 401(k) and Profit Sharing Plan; and
$1,274, $1,620 and $1,620 in 1999, 1998 and 1997, respectively, for
insurance premiums paid by BancGroup for Mr. Lowder. The amounts for Mr.
McLeod consist of $5,000, $5,000 and $4,750 contributed in 1999, 1998 and
1997, respectively, to BancGroup's 401(k) and Profit Sharing Plan; and $213,
$288 and $174 in 1999, 1998 and 1997, respectively, for insurance premiums
paid by BancGroup. The amounts for Ms. Condon consist of $3,736, $3,325 and
$2,981 in contributions by BancGroup to the 401(k) and Profit Sharing Plan
and $132, $102 and $102 for insurance premiums paid by BancGroup in 1999,
1998 and 1997, respectively. The amounts shown for all other persons reflect
only contributions by BancGroup to the 401(k) and Profit Sharing Plan.
(2) Includes the market value of 3,501, 4,711 and 4,800 shares of Common Stock
as of December 31, 1999, 1998 and 1997, respectively, awarded to Mr. Lowder
in lieu of cash director fees pursuant to BancGroup's Restricted Stock Plan
for Directors. These shares vest at the conclusion of the director's term
during which they were awarded. At December 31, 1999, December 31, 1998 and
December 31, 1997, the per share market values of these shares were $10.375,
$12.00 and $17.2188, respectively.
(3) Includes the market value, on the date of grant, of shares awarded under
BancGroup's Stock Bonus Plan. Mr. Lowder, Mr. McLeod and Mr. Oakley were
granted 25,000, 5,000 and 5,000 shares, respectively, on January 2, 2000,
based on 1999 performance. Mr. Lowder and Ms. Condon were granted 20,000 and
2,000 shares, respectively, on January 2, 1998, based on 1997 performance.
These shares vest at 20% per year beginning one year from the date of grant.
The holder is entitled to receive dividends on these shares and to vote the
shares prior to vesting. At January 2, 2000 and January 2, 1998, the per
share market value of these shares were $10.50 and $17.22.
The following table provides information about restricted shares not vested
as of December 31, 1999.
<TABLE>
<CAPTION>
AGGREGATE # OF MARKET VALUE ON
NAME RESTRICTED SHARES HELD DECEMBER 31, 1999
---- ---------------------- -----------------
<S> <C> <C>
Robert E. Lowder............................................ 33,561 $348,195
P. L. McLeod, Jr............................................ 12,200 126,575
W. Flake Oakley, IV......................................... 11,800 122,425
Michelle Condon............................................. 3,600 37,350
</TABLE>
10
<PAGE> 14
(4) Includes the market value as of December 31, 1999, December 31, 1998 and
December 31, 1997, of 193, 366 and 496, respectively, shares of Common Stock
awarded to Mr. McLeod in lieu of cash director fees pursuant to BancGroup's
Restricted Stock Plan for Directors. These shares vest at the conclusion of
the director's term during which they were awarded. At December 31, 1999,
December 31, 1998 and December 31, 1997, the per share market values of
these shares were $10.375, $12.00 and $17.2188, respectively.
(5) Represents options granted January 2, 1998, based on 1997 performance. These
options vest at the rate of 20% per year beginning one year from the date of
the grant.
(6) Represents options awarded December 30, 1998, based on 1998 performance.
These options vest at the rate of 20% per year beginning one year from the
date of grant.
(7) Represents options awarded December 30, 1999, based on 1999 performance.
These options vest at the rate of 20% per year beginning one year from the
date of grant.
FOR A DISCUSSION OF CERTAIN COMPENSATION COMMITTEE INTERLOCKS, SEE "COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION." SEE ALSO "EXECUTIVE
COMPENSATION COMMITTEE REPORT."
OPTIONS
The following table shows certain information respecting exercised and
unexercised options for Common Stock held by BancGroup executive officers at
December 31, 1999. Certain options have been granted pursuant to a vesting
schedule which only permits the holder to exercise options respecting 20% of the
shares for each year the holder is employed after the grant of options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUES OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY
AT OPTIONS AT
DECEMBER 31, 1999 DECEMBER 31, 1999(2)
-------------------- ---------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE
---- --------------- -------------- -------------------- ---------------------
<S> <C> <C> <C> <C>
Robert E. Lowder.............. 0 $ 0 422,040/240,000 $3,230,513/$47,835
P. L. McLeod, Jr.............. 0 0 76,800/69,200 172,692/3,240
W. Flake Oakley, IV........... 0 0 56,000/86,000 125,352/3,240
Young J. Boozer, III.......... 1,500 15,188 47,000/-0- 410,356/-0-
Michelle Condon............... 0 0 21,390/8,800 44,346/648
</TABLE>
- ---------------
(1) Value realized is the difference between the fair market value of the
securities underlying the options and the exercise price on the date of
exercise.
(2) Value is calculated by subtracting the exercise price from the market value
of underlying securities at December 31, 1999.
11
<PAGE> 15
The following table shows certain information respecting grants of options
respecting Common Stock to certain executive officers of BancGroup during 1999.
OPTION GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
--------------------------------- -----------------------------
PERCENT
NUMBER OF TOTAL
OF OPTIONS
SECURITIES GRANTED MARKET
UNDERLYING TO EXERCISE PRICE
OPTIONS EMPLOYEES OR BASE ON DATE
GRANTED IN FISCAL PRICE OF
NAME (#) YEAR ($/SH) GRANT EXPIRATION DATE 0%($) 5%($) 10%($)
---- ---------- --------- -------- ------- ----------------- ----- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert E. Lowder............ 100,000 8.27% $10.50 * December 30, 2009 -0- $660,339 $1,673,430
P. L. McLeod, Jr............ 10,000 0.83% 10.50 * December 30, 2009 -0- 66,034 167,343
W. Flake Oakley, IV......... 30,000 2.48% 10.50 * December 30, 2009 -0- 198,102 502,029
Michelle Condon............. 2,000 0.17% 10.50 * December 30, 2009 -0- 13,207 33,469
</TABLE>
- ---------------
* Same as exercise price
DEFINED BENEFIT PLAN
BancGroup has adopted a Retirement Plan for all of the employees of
BancGroup and its subsidiaries. An employee becomes eligible on January 1 or
July 1 following age 21 and completion of 1,000 hours of service during a year
of employment by BancGroup or one of its subsidiaries.
The following table reflects the estimated annual benefits payable upon
retirement under the Retirement Plan as a single life annuity commencing at age
65. These benefits ignore the lower benefit rate applicable to earnings below
the Social Security Covered Compensation level.
<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL ANNUAL ---------------------------------------------------------------------------
REMUNERATION 5 10 15 20 25
- ------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$100,000 $ 7,600 $15,200 $22,800 $30,400 $38,000
125,000 9,500 19,000 28,500 38,000 47,500
160,000 12,160 24,320 48,640 48,640 60,800
170,000 12,920 25,840 38,760 51,680 64,600
</TABLE>
Over $170,000 benefits are identical to benefits paid per $170,000.
Benefits are based upon the number of years of service (maximum 25 years),
the participant's final earnings, and the amount of Social Security Covered
Compensation. A participant receives credit for a year of service for every year
in which 1,000 hours are completed in the employment of BancGroup or one of its
subsidiaries.
The benefits shown are limited by the current statutory limitations which
restrict the amount of benefits which can be paid from a qualified retirement
plan. The statutory limit on compensation which may be recognized in calculating
benefits is $170,000. This limitation is scheduled to increase periodically with
the cost of living increase.
All compensation, except compensation which relates to director fees, if
any, shown for executive officers in the cash compensation table above is
covered by the Retirement Plan. Robert E. Lowder has 35 years of eligibility, P.
L. McLeod, Jr. has 18 years, W. Flake Oakley has 12 years, Young J. Boozer, III
has 15 years, and Michelle M. Condon has 27 years.
12
<PAGE> 16
COMPENSATION PLANS
Directors' Plan. BancGroup's Restricted Stock Plan for Directors (the
"Directors' Plan") provides a means whereby all directors of BancGroup and its
subsidiaries may receive shares of BancGroup Common Stock in lieu of cash fees
for service as directors.
Upon election as a director, each director may receive, at the option of
the director, in lieu of cash fees, that number of whole shares of Common Stock
of BancGroup, rounded to the nearest whole number, determined by dividing the
Regular Fees the director would have received during the director's current term
of office by the average of the closing prices of the Common Stock as reported
by the New York Stock Exchange for the period of 30 trading days prior to such
election. "Regular Fees" means that amount of fees payable to a director in
cash, and without regard to attendance at meetings, for a full term of office as
a director.
A director may also elect to receive Common Stock at the end of the term,
based upon the amount of Supplemental Fees such director would have been
entitled to receive during such term and subject to certain restrictions and
risks of forfeiture, provided such director has waived the receipt of
Supplemental Fees at the commencement of such director's term. "Supplemental
Fees" means fees paid to a director for attendance at the committee meetings,
special meetings of the Board, or otherwise, and which are paid only on an ad
hoc basis. The number of shares to which the director is entitled shall be
calculated at the end of the director's term and shall be equal to that number
of whole shares of Common Stock, rounded to the nearest whole number, determined
by dividing the Supplemental Fees the director would have received during the
current term by the average of the closing prices of the Common Stock for the
period of 30 trading days prior to the election as a director to such term.
Each director of BancGroup who participates in the Directors' Plan must
enter into a written agreement with BancGroup. Directors of BancGroup may elect
on an annual basis whether to participate in the Directors' Plan for the
following year commencing with the annual meeting of stockholders, in which case
the 30-day period used to determine price expires prior to the annual meeting
which commences the period of annual participation. No director may receive more
than 4,800 shares of Common Stock during any one year, except for shares which
may be received through stock splits, stock dividends, or certain other events
specified in the Directors' Plan.
Directors to whom shares of Common Stock have been awarded in lieu of
Regular Fees under the Directors' Plan have all rights of shareholders with
respect to shares of Common Stock so awarded, subject to certain provisions
regarding forfeiture, which means, among other things, that directors may
receive dividends upon and vote the shares of Common Stock awarded in lieu of
Regular Fees.
Stock Option Plans. In 1992, BancGroup adopted incentive and nonqualified
stock option plans pursuant to which options for Common Stock may be issued to
officers, directors and employees. BancGroup may issue a total of 7,400,000
shares of Common Stock under these plans. See "Approval of Amendment to
Incentive Stock Option Plan" and "Approval of Amendment to Non-Qualified Stock
Option Plan". BancGroup's former stock option plans expired in 1992, but options
issued pursuant to those plans remain outstanding.
Stock Bonus Plan. BancGroup also adopted in 1992 a Stock Bonus and
Retention Plan pursuant to which 3,000,000 shares of Common Stock may be issued.
See "Approval of Amendment to Stock Bonus and Retention Plan".
Director Compensation. Directors of BancGroup receive fees of $2,500 per
quarter, plus $1,000 for each Board meeting attended. Members of BancGroup
committees receive fees of $500 for each BancGroup committee meeting attended.
Certain directors of BancGroup also serve as directors of Colonial Bank or its
regional boards and receive fees that are comparable to those paid by BancGroup.
Fees paid to BancGroup directors in cash for 1999 totaled $90,600. In 1999, a
total of 12,762 shares of Common Stock were earned and 15,262 shares were issued
under the Directors' Plan to BancGroup directors for service as directors of
BancGroup and its subsidiaries.
13
<PAGE> 17
John C. H. Miller, Jr., Clinton O. Holdbrooks, Patrick F. Dye and John Ed
Mathison received employment-related compensation during 1999 of $42,577,
$1,900, $3,116 and $18,692, respectively. Mr. Miller provides advice to
BancGroup management and to the Colonial Bank's Gulf Coast Region that extends
beyond legal work for which Mr. Miller's law firm receives legal fees. Mr.
Holdbrooks, Mr. Dye and Dr. Mathison perform consulting, public relations and/or
customer development services for either BancGroup, Colonial Bank or both.
14
<PAGE> 18
EXECUTIVE COMPENSATION COMMITTEE REPORT
The Personnel and Compensation Committee of BancGroup (the "Committee")
consists of John C. H. Miller, Jr., Chairman, Milton E. McGregor, Joe D.
Mussafer, John Ed Mathison, Frances E. Roper, and Simuel Sippial. The Committee
reviews and determines cash compensation as it relates to officers of BancGroup,
other than BancGroup's executive officers. However, the Board has established a
subcommittee of the Committee (the "Subcommittee"), consisting of Joe D.
Mussafer, Frances E. Roper, and Simuel Sippial, to determine all cash
compensation for executive officers of BancGroup. The Subcommittee also makes
decisions regarding awards of Common Stock under BancGroup's stock option and
stock bonus plans, including awards made to executive officers.
John C. H. Miller, Jr. and John Ed Mathison receive employment-related
compensation from BancGroup, and the law firm of which Mr. Miller is a partner
receives legal fees from BancGroup. See "Executive Compensation Committee
Interlocks and Insider Participation" and "Executive Compensation -- Director
Compensation."
COMPENSATION PRINCIPLES
The Subcommittee determines executive compensation in accordance with five
principles: (1) BancGroup's financial performance, both in terms of the
attainment of short-term and long-term goals; (2) the competitiveness of
executive compensation with BancGroup's peers; (3) the encouragement of stock
ownership by executive officers; (4) the individual performance of each
executive officer; and (5) recommendations of the Chief Executive Officer
regarding all executive officers other than himself. No disproportionate weight
is assigned to any individual principle.
TOTAL CASH COMPENSATION
Cash compensation consists of an annual salary established at the beginning
of the fiscal year and a year-end bonus described further below. In setting
compensation for the 1999 fiscal year, the Subcommittee reviewed the
compensation paid by a peer group of 44 bank holding companies which, as of
September 30, 1998, had total assets of between $3.0 and $10.0 billion, which is
a category designated by the Board of Governors of the Federal Reserve System as
Peer Group 2. A total of 59 bank holding companies were in this category, but
compensation information on 19 companies was not available. In addition,
Alabama's largest bank holding companies, regardless of asset size, were
included in the peer-group because of their direct in-state competition with
BancGroup. BancGroup had total assets of $10.46 billion at year-end 1998.
The Subcommittee determined the salaries of the executive officers of
BancGroup for 1999 in mid-January, 1999. The salaries paid to executive officers
in the peer group companies were analyzed in terms of (1) return on average
assets, (2) return on average equity, (3) nonperforming assets, and (4) stock
performance within ranges comparable to the same performance criteria for
BancGroup. These criteria reflect how well the executives perform for the
benefit of stockholders and provide a range of performance comparable to the
performance of BancGroup.
The Subcommittee accorded equal weight to the performance criteria in
assessing the performance of BancGroup and in making the comparisons with the
peer group. The Subcommittee did not recommend compensation levels based upon a
formula, but, rather, after reviewing the factors outlined above and receiving
recommendations of the Chief Executive Officer for each person reviewed other
than the Chief Executive Officer, the Subcommittee established salaries for 1999
that, in its subjective judgment, were fair in terms of BancGroup's performance
in comparison with the peer group, the responsibilities performed by the
executive within BancGroup and the level of compensation paid to comparable
executives in the peer group companies.
COMPENSATION FOR CHIEF EXECUTIVE OFFICER
The Subcommittee evaluated the salary of the Chief Executive Officer on the
basis of the same criteria used to evaluate salaries of other executive
officers. The Subcommittee's determination of an appropriate level of
compensation for the Chief Executive Officer was thus based on a comparison of
BancGroup's performance
15
<PAGE> 19
with the performance of the peer group, the Chief Executive Officer's
responsibilities within BancGroup, and the compensation paid to chief executive
officers within the peer group. The Subcommittee recommended that Mr. Lowder's
salary for 1999 be set at $950,000.
CASH BONUSES
The Subcommittee approved cash bonuses to BancGroup's executive officers,
other than the Chief Executive Officer, as follows: $5,000 to Young J. Boozer,
III, $25,000 to Purser L. McLeod, Jr., $10,000 to Sarah H. Moore, and $50,000 to
W. Flake Oakley, IV. The Subcommittee based these awards upon the
recommendations of the Chief Executive Officer.
The Subcommittee awarded a bonus of $350,000 to the Chief Executive Officer
at the sole discretion of the Subcommittee. In awarding such bonus, the
Subcommittee considered the same four performance criteria that the Subcommittee
considers in determining annual compensation, although the amount of such bonus
was a subjective judgment of what the Subcommittee deemed to be appropriate.
STOCK BONUSES AND STOCK OPTIONS
In December 1999, the Subcommittee awarded BancGroup stock options and
shares under BancGroup's Incentive Stock Option Plan and Stock Bonus and
Retention Plan as follows: 10,000 options and 5,000 shares to Mr. McLeod, 30,000
options and 5,000 shares to Mr. Oakley, 2,000 options to Ms. Condon, and 10,000
options and 2,000 shares to Ms. Moore. With respect to these awards, the
Subcommittee considered the recommendation of the Chief Executive Officer. The
Subcommittee awarded Mr. Lowder 100,000 options under BancGroup's Non-Qualified
Stock Option Plan and 25,000 shares under BancGroup's Stock Bonus and Retention
Plan. The Subcommittee made these awards to Mr. Lowder based upon what it
subjectively deemed to be appropriate. All stock bonuses awarded by the
Subcommittee vest at the rate of 20% per year for each year the employee is
employed from the date of the grant.
This foregoing report is submitted by the Subcommittee.
Subcommittee:
Joe D. Mussafer
Frances E. Roper
Simuel Sippial
16
<PAGE> 20
COMPARATIVE FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG THE COLONIAL BANCGROUP, INC.,
S&P 500 INDEX AND S&P GROUP INDEX
<TABLE>
<CAPTION>
December 31 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
Colonial BancGroup, Inc. 100.00 169.05 216.46 381.84 271.98 242.53
S&P Group Index 100.00 157.47 215.16 323.53 357.46 306.71
S&P 500 Index 100.00 137.58 169.17 225.61 290.09 351.13
</TABLE>
ASSUMES $100 INVESTED ON DECEMBER 31, 1994
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDED DECEMBER 31, 1999
Neither the foregoing graph nor the Executive Compensation Committee Report
given above is to be deemed to be incorporated by reference into any past or
subsequent filings by BancGroup under the Securities Act of 1933 or the
Securities Exchange Act of 1934.
17
<PAGE> 21
APPROVAL OF AMENDMENT
TO INCENTIVE STOCK OPTION PLAN
THE AMENDMENT
In 1992, the stockholders approved BancGroup's ISO Plan authorizing the
issuance of 2,200,000 shares of common stock (adjusted to reflect two-for-one
stock splits paid in the form of dividends on February 9, 1997 and August 14,
1998, respectively). The stockholders approved raising the number of authorized
shares in the ISO Plan from 2,200,000 to 4,200,000 at their 1998 annual meeting.
Incentive stock options ("ISOs") have been granted during the past eight years
pursuant to this plan. On January 19, 2000, the Board approved an amendment (the
"Amendment") to the ISO Plan, subject to stockholder approval. The Amendment
increases the aggregate number of shares which may be issued upon the exercise
of all options under the ISO Plan from 4,200,000 shares of Common Stock to
5,700,000 shares of Common Stock.
As of March 1, 2000, approximately 1,050,188 shares of Common Stock
remained available for grants under the ISO Plan. The small number of available
shares remaining will limit BancGroup's ability to grant ISOs in the future. The
Board believes that the ISO Plan provides an effective means for BancGroup to
attract and retain skilled managers and executives in a competitive market, and
that it is important to have additional stock available under the ISO Plan for
the purpose of granting ISOs. Therefore, the Board recommends that the
stockholders approve the amendment to the ISO Plan.
ISO PLAN SUMMARY
Generally, the purpose of the ISO Plan is to promote the interests of
BancGroup by providing an incentive to officers and key management employees of
BancGroup and its subsidiaries to remain in the employ of BancGroup or its
subsidiaries and to aid BancGroup in attracting and developing capable
management personnel. Pursuant to the ISO Plan, such persons will continue to be
offered an opportunity to acquire and increase a proprietary interest in
BancGroup through options to purchase Common Stock. Options are typically
granted for no consideration paid by the recipient.
The Common Stock to be delivered upon the exercise of options granted under
the ISO Plan are to be made available from the authorized but unissued shares of
Common Stock, or from shares of Common Stock reacquired by BancGroup, including
shares purchased in the open market. On March 1, 2000, the closing price for the
Common Stock was $8.9375.
The price at which shares of Common Stock may be purchased pursuant to the
ISO Plan is determined by the Subcommittee of the Personnel and Compensation
Committee (the "Subcommittee"). Such price may not be less than 100% of the fair
market value of the shares on the date that an option is granted. The fair
market value is to be determined by, and in accordance with procedures to be
established by, the Subcommittee. No option may be granted after January 15,
2002. Under the terms of the ISO Plan, the optionee must be an employee of
BancGroup or a subsidiary of BancGroup from the date of the granting of the
option until three months (one year in the event of disability) before the date
of exercise (except that if an optionee dies while employed, the option may be
exercised within one year after the date of appointment of a personal
representative for such deceased optionee's estate). If employment is terminated
for misconduct, the option shall be terminated at that time.
Key salaried employees of BancGroup and any of its subsidiaries, including
officers, are eligible to receive options under the ISO Plan; provided, however,
that no person shall be eligible to receive options who, immediately after such
option is granted, would own Common Stock equaling more than 10% of the total
combined voting power of all outstanding Common Stock, unless options are priced
in an amount which equals at least 110% of the fair market value of the Common
Stock (at the time of the grant) and unless the options are required to be
exercised within five years from the date of grant. The Subcommittee determines
which salaried employees are "key" employees for the purposes of the ISO Plan.
Approximately 302 persons are current participants in the ISO Plan as of March
1, 2000.
18
<PAGE> 22
Options granted pursuant to the ISO Plan may not be transferred except by
will or the laws of descent and distribution and, during the lifetime of the
optionee, may be exercised only by such optionee. Because the selection of
participants is discretionary, it is not possible to determine the number of
persons who will receive awards under the ISO Plan during its term.
CERTAIN TAX CONSEQUENCES
The following is a brief summary of certain of the federal income tax
consequences of certain transactions under the ISO Plan. The summary may not
address all tax consequences that may be relevant to a particular optionee. This
summary is not intended to be exhaustive and does not describe state or local
tax consequences. Optionees are strongly urged to consult their tax advisors
concerning the particular federal, state, local or foreign tax consequences to
them of the transactions described below.
Options granted under the ISO Plan generally are intended to qualify as
ISOs under Section 422 of the Internal Revenue Code of 1986 (the "Code"), as
amended. An optionee generally will not recognize income upon the grant or
exercise of an ISO. If shares issued to an optionee pursuant to the exercise of
an ISO are not disposed of in a disqualifying disposition within two years after
the date of grant or within one year after the transfer of the shares to the
optionee, then upon the sale of the shares any amount realized in excess of the
option price generally will be taxed to the optionee as capital gain, and any
loss sustained will be a capital loss. If shares acquired upon the exercise of
an ISO are disposed of prior to the expiration of either holding period
described above, the optionee generally will recognize ordinary income in the
year of disposition in an amount equal to any excess of the fair market value of
the shares at the time of exercise (or, if less, the amount realized on the
disposition of the shares) over the option price paid for the shares. Any
further gain (or loss) realized by the optionee generally will be taxed as
capital gain (or loss).
If permitted by the Subcommittee, options granted under the ISO Plan that
would exceed the limitation described above may be exercised as non-qualified
stock options. In addition, if an optionee is subject to federal "alternative
minimum tax," the exercise of an incentive stock option will be treated
essentially the same as a non-qualified stock option for purposes of the
alternative minimum tax.
In general, an optionee will not recognize income at the time a
non-qualified stock option is granted. At the time of exercise, the optionee
will recognize ordinary income in an amount equal to the difference between the
option price paid for the shares and the fair market value of the shares on the
date of exercise. At the time of sale of shares acquired pursuant to the
exercise of a non-qualified stock option, any appreciation (or depreciation) in
the value of the shares after the date of exercise generally will be treated as
capital gain (or loss).
To the extent that an optionee recognizes ordinary income in the
circumstances described above, BancGroup or the subsidiary for which the
participant performs services will be entitled to a corresponding deduction,
provided that, among other things, the income meets the test of reasonableness,
is an ordinary and necessary business expense, is not an "excess parachute
payment" within the meaning of Section 280G of the Code and is not disallowed by
the $1.0 million limitation on certain executive compensation under Section
162(m) of the Code.
VOTE REQUIRED
Approval of the Amendments (Proposal 2 on the Proxy Card) requires the
affirmative vote of a majority of the outstanding shares of Common Stock
represented at the meeting, assuming the presence of a quorum. The Board
recommends that the stockholders vote FOR approval of these Amendments.
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APPROVAL OF AMENDMENT
TO NONQUALIFIED STOCK OPTION PLAN
THE AMENDMENT
On January 19, 2000, the Board approved an amendment to the NQSO Plan,
subject to stockholder approval, and has recommended that the stockholders
approve this amendment to the NQSO Plan. The amendment would provide that the
maximum number of shares of Common Stock, with respect to which options may be
granted to any eligible employee under the NQSO Plan during any Plan Year, shall
not exceed 200,000. The purpose of this amendment is to qualify the NQSO Plan as
a performance-based plan under Section 162(m) of the Code. Under the NQSO Plan,
BancGroup is ordinarily entitled to a tax deduction at the time of exercise of
an option by the employee. Unless the amendment is approved, however, BancGroup
could lose the benefit of the tax deduction if compensation to a "covered
employee", as that term is defined under Section 162(m), including compensation
realized upon exercise of an option granted under the NQSO Plan, exceeded
$1,000,000. Approving the amendment to the NQSO Plan will allow BancGroup to
retain the tax deduction for such compensation, as long as the exercise prices
of such options are not below the fair market price as of the date of grant.
NQSO PLAN SUMMARY
The purpose of the NQSO Plan is to promote the interests of BancGroup by
providing an incentive to directors, officers, and employees of BancGroup and
its subsidiaries, upon whose judgment, initiative and effort BancGroup is
largely dependent for the successful conduct of its business, to acquire and
retain a proprietary interest in BancGroup by ownership of its Common Stock.
Options may be granted for no consideration paid by the recipient.
The shares of stock to be delivered upon the exercise of options granted
under the NQSO Plan shall be made available from the authorized but unissued
shares of Common Stock or from shares reacquired by BancGroup, including shares
purchased in the open market. The aggregate number of shares which may be issued
upon the exercise of all options which may be granted under the NQSO Plan may
not exceed 3,200,000 shares of Common Stock.
The cash price at which shares of common stock may be purchased pursuant to
the NQSO Plan is determined by the Subcommittee. Such price cannot be less than
85% of the fair market value of the shares on the date that the option is
granted. The fair market value is to be determined by, and in accordance with
procedures to be established by, the Subcommittee. No option may be granted
after ten years from the date the 1992 Nonqualified Plan was approved by the
Board, which was January 15, 1992. Upon termination of an optionee's employment
with BancGroup or with any of its subsidiaries, his or her option privileges
shall be limited to the options which were immediately exercisable by him or her
at the date of such termination, and such option privileges shall expire unless
exercised by the optionee within three months after the date of such
termination, unless such termination is a result of deliberate, willful or gross
misconduct, in which case all rights under the option expire upon such
termination. The expiration date of each option shall be fixed by the
Subcommittee, but in no case shall the expiration date be more than ten years
from the date of grant of the option.
Any person who is or who agrees to become a director, officer or employee
(including officers and employees who are directors) of BancGroup or its
subsidiaries are eligible for options under the NQSO Plan. Approximately 17
persons are current participants in the NQSO Plan.
Options granted pursuant to the NQSO Plan may not be transferred except by
will or by the laws of descent and distribution and, during the lifetime of the
employee to whom granted, may be exercised only by such employee.
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CERTAIN TAX CONSEQUENCES
The NQSO Plan is not an "incentive stock option plan" under Section 422 of
the Code. Thus, upon the exercise of an option under the NQSO Plan, ordinary
income will result to the grantee equal to the difference between the price of
the option and the fair market value of the stock subject to the option at the
date of exercise. BancGroup, however, will be entitled to a tax deduction equal
to the amount of ordinary income accruing to the optionee.
VOTE REQUIRED
Approval of the amendment to the NQSO Plan (Proposal 4 on the Proxy Card)
shall be by the affirmative vote of a majority of the votes of the Common Stock
of BancGroup represented at the meeting, assuming the presence of a quorum. The
Board recommends that stockholders vote FOR approval of this amendment.
APPROVAL OF AMENDMENTS
TO THE STOCK BONUS AND RETENTION PLAN
THE AMENDMENTS
The Board adopted on January 19, 2000, two amendments to the Stock Plan
subject to stockholder approval. The first amendment to the Stock Plan would
allow the Subcommittee to issue to Participants stock bonus awards that are
performance-based within the meaning of Section 162(m) of the Code. Performance-
based awards will be made by reference to objective performance goals
established by the Subcommittee in writing that must be achieved prior to
vesting of the awards. Such goals, which would not need to be the same for
different participants, would be established no later than the end of the first
quarter of each Plan Year. If the amendment is approved, the Subcommittee will
still have the discretion to make awards not based on performance. The second
amendment to the Stock Plan will limit to 150,000 the maximum number of shares
of Common Stock that may be granted to any eligible employee for any Plan Year.
If approved by the stockholders, these two amendments will allow BancGroup to
structure awards under the Stock Plan so that BancGroup will have the benefit of
a tax deduction even if the employee's compensation, including compensation
realized through the Stock Plan award, exceeds $1,000,000.
STOCK PLAN SUMMARY
The Stock Plan provides a means whereby directors, officers and employees
of BancGroup and its subsidiaries may receive an award of Common Stock as a
bonus or other incentive. Approximately 202 persons including directors and
officers of BancGroup and its subsidiaries are current participants in the Stock
Plan. The Stock Plan is administered by the Subcommittee in the same manner as
described above under "Approval of Amendment to the Incentive Stock Plan". The
Subcommittee has authority, subject to the limitations of the Stock Plan, to
grant awards of Common Stock and, in addition to the terms and conditions
contained in the Stock Plan, to provide such other terms and conditions (which
need not be identical among participants) in respect to such awards, and the
vesting thereof, as the Subcommittee shall determine. Each member of the
Subcommittee is a "Disinterested Person" as defined under SEC rule 16a-3. At the
time of an award of Common Stock, the Subcommittee shall establish for each
participant the terms and conditions of the award, which terms and conditions
shall include the following: shares awarded shall vest (subject to the
acceleration and forfeiture provisions described below) at a rate of 20% per
year commencing on the first anniversary of the award. Except for that
restriction, the participant, as owner of such shares, shall have all the rights
of a stockholder, including but not limited to the right to receive all
dividends paid on such shares and the right to vote such shares. The
Subcommittee has the authority to accelerate the time at which the vesting
restriction shall lapse, or to remove the restriction, whenever it may determine
that such action is appropriate by reason of changes in applicable tax or other
laws or other changes in circumstances.
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If a participant does not maintain continuous service with BancGroup for
any reason (other than death, total or partial disability or normal or early
retirement) unless the Subcommittee shall otherwise determine, all shares
awarded to such participant and which at the time of such termination of
continuous service are subject to the vesting restriction shall be returned to
BancGroup. If a participant does not maintain continuous service by reason of
death, total or partial disability or normal or early retirement, the shares of
stock awarded to such participant which at the time of such termination of
continuous service are subject to the vesting restriction described above shall
be free of restrictions and shall not be forfeited.
Each certificate for shares of Common Stock awarded under the Stock Plan is
registered in the name of the participant, but contains a legend noting the
restrictions on the shares. Upon the vesting of shares awarded under the Stock
Plan, the participant is entitled to receive a certificate representing the
number of shares as to which restrictions no longer apply, with the remaining
shares subject to the foregoing restrictions.
No award or any right or interest of a participant under the Stock Plan in
any instrument evidencing any award under the Stock Plan may be assigned,
encumbered or transferred except, in the event of the death of a participant, by
will or the laws of descent and distribution.
The total shares to be issued pursuant to the Stock Plan may not exceed
3,000,000 in the aggregate, provided that the total number of shares distributed
under the plan in any fiscal year may not exceed 1% of the outstanding shares of
Common Stock. Shares issued under the Stock Plan may be made available from the
authorized but unissued shares of Common Stock or shares of Common Stock
reacquired by BancGroup, including but not limited to, shares purchased in the
open market. Shares issued under the Stock Plan which are reacquired by
BancGroup as a result of the application of the Stock Plan's restrictions shall
be available for reissue under the Stock Plan.
The Stock Plan may be amended at any time by the Board, provided that no
amendment may be made which materially increases the benefits accruing to
participants under the Stock Plan, materially increases the maximum number of
shares issued under the Stock Plan or materially modifies the requirements as to
eligibility for participation in the Stock Plan without approval of the
stockholders of BancGroup. Shares awarded under the Stock Plan shall become
fully vested in an amount equal to the fair market value of such shares on the
date the risk of forfeiture lapses. BancGroup will be entitled to deductions for
federal income tax purposes in the same amount in BancGroup's taxable year in
which vesting occurs. BancGroup, in addition, may require payment to BancGroup
of any federal, state or local taxes required to be withheld.
VOTE REQUIRED
The amendments to the Stock Plan (Proposal 5 on the Proxy Card) must be
approved by a majority of the votes of the Common Stock represented at the
Annual Meeting assuming the presence of a quorum. The Board recommends that
stockholders vote FOR approval of the amendments to the Stock Plan.
APPROVAL OF THE MANAGEMENT INCENTIVE PLAN
PLAN SUMMARY
On January 19, 2000, the Board adopted the Management Incentive Plan (the
"MIP"), subject to stockholder approval. The Board has directed that it be
submitted to the stockholders for approval at the Annual Meeting. A complete
copy of the MIP is attached to this Proxy Statement as Appendix A. Mr. Lowder
and the other executive officers of BancGroup listed on page 3 of this Proxy
Statement will be eligible to participate in the MIP if so designated by the
Subcommittee. The MIP provides a means whereby executive officers of BancGroup
may receive a cash bonus if certain performance-based criteria are met. The
Subcommittee, prior to the close of each Plan Year, may designate the executive
officers that will participate in the MIP during the next succeeding Plan Year.
The MIP will be administered by the Subcommittee, which has authority,
subject to the limitations of the MIP, to determine the terms and conditions
under which a participant will receive a cash award. Each member of the
Subcommittee is a "Disinterested Person" as defined under SEC rule 16a-3. The
terms and
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conditions determined by the Subcommittee (which need not be identical among
participants) include the amount of the award that each participant will be
eligible to earn during the year, and the performance goals that must be
achieved in order for the participant to earn the award. The possible
performance goals that will be used as criteria include return on equity, return
on assets, earnings per share, nonperforming assets, stock price and net income.
No participant may be granted an award that could result in the participant
earning an amount under the MIP award greater than $3,000,000 in any Plan Year.
Performance goals will be "objective performance goals" within the meaning
of Section 162(m) of the Code. Section 162(m) limits an employer's ability to
deduct employee compensation if such compensation exceeds $1,000,000 in certain
circumstances. Under the MIP, BancGroup will be entitled to a tax deduction
equal to the amount of ordinary income accruing to the participant even if the
award under the MIP increases the participant's compensation above $1,000,000.
The participant will recognize amounts paid pursuant to the MIP as ordinary
income.
After each Plan Year, the Subcommittee will determine if the terms and
conditions of each award granted were met and certify their findings to the
participant and to the Board of Directors. The awards will be paid in cash as
soon as administratively possible after the certification, but in no event later
than 75 days following the close of the Plan Year.
If a participant terminates employment during a Plan Year for any reason
other than retirement, disability or death, no award will be payable under the
MIP. If the employment terminates as a result of retirement, disability or death
or if the participant's employment is terminated for any reason other than
willful dishonesty or gross misconduct, the participant or the participant's
beneficiary will receive a pro-rata portion of the incentive award determined as
of the end of the Plan Year.
The Subcommittee may suspend, terminate or amend the MIP at any time by an
instrument in writing without stockholder approval, provided that stockholder
approval shall be required for any amendment that changes the material terms of
the MIP applicable to any participant.
VOTE REQUIRED
The adoption of the MIP (Proposal 3 on the Proxy Card) must be approved by
a majority of the votes of the Common Stock represented at the annual meeting
assuming the presence of a quorum. The Board recommends that stockholders vote
FOR approval of the MIP.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANT
BancGroup has selected the firm of PricewaterhouseCoopers LLP to act as its
independent public accountant for the current year. It is expected that
representatives of this firm will be present at the Annual Meeting and will have
an opportunity to make a statement to, and to answer questions from,
stockholders.
BYLAW PROVISIONS REGARDING CONDUCT OF STOCKHOLDERS' MEETINGS
BancGroup's bylaws contain two provisions relating to the conduct of
stockholders' meetings. The first provision requires that certain procedures be
followed by a stockholder of record who wishes to present business at the annual
meeting of stockholders, including the nomination of candidates for election as
directors. In order to nominate persons for election as a director or to present
other business at a meeting, a stockholder must provide written notice thereof
to the Secretary of BancGroup not less than 60 days nor more than 90 days prior
to the first anniversary of the preceding year's annual meeting, provided that,
if the date of the annual meeting is advanced by more than 30 days or delayed by
more than 60 days from such anniversary date, notice by the stockholder to be
timely must be delivered not earlier than the 90th day prior to such annual
meeting and not later than the close of business on the later of the 60th day
prior to such annual meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made.
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As it relates to director nominations, the written notice must state all
information as to each nominee required to be disclosed in solicitations of
proxies for election of directors under SEC regulations, including the written
consent of each such nominee. As for any other business that the stockholder
proposes to bring before the meeting, the written notice must contain a brief
description of the business, the reasons for conducting the business at the
meeting and any material interest in such business of such stockholder. The
notice must also contain the name and address of such stockholder and the class
and number of shares of BancGroup owned beneficially and of record, as well as
the same information for each beneficial owner who may be nominated for election
as a director.
The Board is not required to nominate a person designated by a stockholder
or to take up such other business as may be contained in a written notice from a
stockholder; however, compliance with this procedure would permit a stockholder
to nominate the individual at the stockholders' meeting, and any stockholder may
vote shares in person or by proxy for any individual such stockholder desires.
The procedures relating to nominating directors and presenting other business at
a stockholders' meeting may only be used by a stockholder who is a stockholder
of record at the time of the giving of the notice by the stockholder to the
secretary of BancGroup. The procedures do not prohibit or apply to stockholder
proposals under SEC rule 14a-8 as described at "Proposals of Stockholders."
The second provision of BancGroup's bylaws relates to the conduct of the
business at a stockholders' meeting. Under that provision, the Board has the
authority to adopt rules for the conduct of meetings, and, unless inconsistent
with any such rules, the Chairman of the meeting may prescribe such rules,
regulations and procedures as, in his judgment, are appropriate for the proper
conduct of the meeting.
PROPOSALS OF STOCKHOLDERS
Subject to certain rules of the SEC, proposals by stockholders intended to
be presented at BancGroup's 2001 annual meeting of stockholders must be received
at BancGroup's principal executive offices not less than 120 calendar days in
advance of March 17, 2001 (November 17, 2000), for inclusion in the proxy or
information statement relating to the 2001 annual meeting.
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OTHER MATTERS
BancGroup does not know of any matters to be presented for action at the
meeting other than those listed in the notice of the meeting and referred to
herein.
BancGroup will furnish stockholders, upon written request and payment of a
reasonable fee for copying charges, copies of the exhibits to its annual report
on Form 10-K filed with the SEC for the year ended December 31, 1999. Requests
should be made to:
Chief Financial Officer and Secretary
The Colonial BancGroup, Inc.
Post Office Box 1108
Montgomery, Alabama 36101
PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE
ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. ALTERNATIVELY, IF YOUR PROXY CARD
CONTAINS INSTRUCTIONS REGARDING DELIVERING YOUR PROXY VIA TELEPHONE OR THE
INTERNET, YOU MAY FOLLOW THOSE INSTRUCTIONS.
YOU MAY REVOKE THE PROXY BY GIVING WRITTEN NOTICE OF REVOCATION TO THE
SECRETARY OF BANCGROUP AT ANY TIME PRIOR TO THE VOTING THEREOF, BY EXECUTING AND
SUBMITTING A LATER DATED PROXY BEFORE THE MEETING, OR IF YOU VOTE
ELECTRONICALLY, THEN BEFORE 5:00 P.M. EASTERN TIME ON APRIL 18, 2000, OR BY
ATTENDING THE MEETING AND VOTING IN PERSON.
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APPENDIX A
MANAGEMENT INCENTIVE PLAN
OF
THE COLONIAL BANCGROUP, INC.
This Management Incentive Plan of THE COLONIAL BANCGROUP, INC., a Delaware
corporation with its principal place of business in Montgomery, Alabama, is
dated as of the 1st day of January, 2000.
WITNESSETH:
WHEREAS, the Executive Compensation Subcommittee is responsible for certain
aspects of compensation for executive officers of The Colonial BancGroup, Inc.;
and
WHEREAS, the Executive Compensation Subcommittee developed this Management
Incentive Plan in order to compensate and reward executive officers of The
Colonial BancGroup, Inc. for outstanding job performance which contributes to
the financial success of The Colonial BancGroup, Inc.; and
WHEREAS, the Board of Directors of The Colonial BancGroup, Inc., upon
recommendation of the Executive Compensation Subcommittee, desires to adopt this
Management Incentive Plan for the purposes set forth herein;
NOW, THEREFORE, the Board of Directors of The Colonial BancGroup, Inc.
hereby adopts, subject to shareholder approval, this Management Incentive Plan
as follows:
1. DEFINITIONS.
1.1. "BancGroup" means The Colonial BancGroup, Inc., a corporation
organized and existing under the laws of the State of Delaware, with its
principal place of business in Montgomery, Alabama, and any successor thereto,
whether by merger, consolidation, sale of assets, liquidation or otherwise.
1.2. "Board" means the Board of Directors of BancGroup.
1.3. "Code" means the Internal Revenue Code of 1986, as amended.
1.4. "Compensation" means the base salary paid to Participants excluding
overtime, commissions, awards from other incentive programs, BancGroup
contributions to fringe benefit programs, and other "non-salary" income.
1.5. "Executive Officer" means those persons who are full-time employees of
BancGroup and who are serving as the Chairman, President, or as an Executive
Vice President of BancGroup.
1.6. "Participant" means an Executive Officer who has been designated for
participation in the Plan by the Subcommittee in accordance with Section 3 of
the Plan and who has commenced participation in the Plan.
1.7. "Performance Agreement" means the written notice described in Section
3.2 of the Plan, executed by an Executive Officer of BancGroup and transmitted
on behalf of the Subcommittee by BancGroup to each Participant, setting forth
the terms and conditions of each Participant's participation in the Plan.
1.8. "Plan" means the Management Incentive Plan of BancGroup established by
this document, as amended from time to time, and any related Performance
Agreements.
1.9. "Plan Year" means any performance period which begins on January 1 of
a particular year and ends on December 31 of that same year.
1.10. "Subcommittee" means the Executive Compensation Subcommittee of the
Board.
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2. PURPOSE.
The Plan is intended to promote and encourage excellence in the performance
of responsibilities by the Executive Officers; to maximize BancGroup's
soundness, profitability and growth, and to provide an incentive opportunity
that will permit those members of management who are positioned to make
significant contributions to BancGroup's success to receive appropriate total
cash compensation.
3. PARTICIPATION.
3.1. Selection to Participate. The Subcommittee, prior to the close of
each Plan Year, may designate in writing one or more Executive Officers as
persons eligible to participate in the Plan during the next succeeding Plan
Year, except that in the case of the Plan Year ending December 31, 2000, the
Subcommittee may make such designation not later than ninety (90) days after the
commencement of that Plan Year. The Subcommittee shall solicit the
recommendation of the Chairman with respect to the participation of an Executive
Officer, other than the Chairman, in the Plan. Participation in the Plan is
conditional; participation in one Plan Year does not guarantee participation in
successive years.
3.2. Designation of Award and Performance Goals.
3.2.1. Not later than ninety (90) days after the commencement of each
Plan Year, the Subcommittee shall approve and establish, and communicate in
writing to each Participant in the Plan for such Plan Year, the terms and
conditions of each such Participant's participation in the Plan for such
Plan Year, including the award that each such Participant will be eligible
to earn during such Plan Year (which shall be expressed as a percentage of
each such Participant's Compensation as of the first day of such Plan Year
and which shall specify a minimum, maximum, and target award for each such
Participant) and the performance goals that must be achieved in order for
each such Participant to earn such award; provided, however, that in no
event shall the Subcommittee grant any Participant under the Plan an award
that could result in such Participant earning an amount under the Plan
greater than $3,000,000 with respect to any Plan Year.
3.2.2. The Subcommittee shall establish corporate performance goals of
one or more of the following business criteria: return on equity, return on
assets, earnings per share, nonperforming assets, stock price, and net
income. Performance goals established by the Subcommittee shall be
objective performance goals within the meaning of Section 162(m) of the
Code and Treasury Regulations promulgated thereunder. Furthermore, and
notwithstanding any other provision of the Plan to the contrary, once the
Subcommittee has established performance goals for a Participant, the
Subcommittee shall have no discretion to (i) increase the amount of
compensation that would otherwise be due upon the attainment of the goals,
or (ii) alter the goals for the Plan Year to which they relate.
3.2.3. In establishing the award and performance goals of Participants
in the Plan, the Subcommittee shall consider the Participant's level of
responsibility with BancGroup and the Participant's potential contribution
to the performance goals of BancGroup. In establishing the award and
performance goals of any Participant other than the Chairman of BancGroup,
the Subcommittee shall solicit the recommendation of BancGroup's Chairman.
3.2.4. The Subcommittee shall assign weightings to indicate the
relative importance of each business criteria in determining incentive
awards earned under the Plan. The sum of weightings assigned to any
Participant must equal 100%. These weightings may vary from Plan Year to
Plan Year, and, except with respect to the Chairman, shall be based on
recommendations by the Chairman subject to approval by the Subcommittee.
The Subcommittee shall assign such weightings not later than ninety (90)
days after the commencement of each Plan Year, and such weightings shall
remain in effect for the remainder of the Plan Year.
4. PAYMENT OF AWARDS.
4.1 Calculation of Award Payments. Within sixty (60) days following the
close of each Plan Year in which a Participant is participating in the Plan, the
Subcommittee shall compare the terms and conditions of
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the award of each Participant and the performance goals assigned to each such
Participant. Following such determination, and prior to the payment of awards
pursuant to Section 4.2 below, the Subcommittee shall certify in writing to each
Participant and to the Board whether each Participant has met the terms and
conditions of the award for the Plan Year in question.
4.2 Payment of Award Amounts. All awards determined to have been earned
pursuant to Section 4.1 of the Plan shall be payable in cash, as soon as
administratively possible following the certification described in Section 4.1
above, but in no event later than seventy-five (75) days following the close of
the Plan Year to which such award related.
4.3 Effect of Termination of Employment on Payment of Award.
4.3.1. If a Participant terminates employment during a Plan Year for
any reason other than retirement, disability, or death, no award will be
payable under the Plan.
4.3.2. If a Participant's employment terminates during a Plan Year as
a result of retirement, disability, or death, the Participant, his
Beneficiary, or his estate will receive a pro-rata portion of the incentive
award determined as of the end of the Plan Year. The proration will be
based on the Participant's year-to-date Compensation for the Plan Year and
the achieved levels of performance as of the end of the Plan Year. The
pro-rated award will be paid at the same time as awards are paid to active
Participants.
4.3.3. If a Participant's employment is terminated during a Plan Year
for willful dishonesty or gross misconduct, no award will be payable. If a
Participant's employment is terminated other than for willful dishonesty or
gross misconduct, the Participant will receive a pro-rata portion of the
incentive award determined as of the end of the Plan Year. The proration
will be based on the Participant's year-to-date Compensation for the Plan
Year and the achieved levels of performance as of the end of the Plan Year.
The pro-rated award will be paid at the same time as awards are paid to
active Participants.
5. ADMINISTRATION.
5.1. The Subcommittee, as Plan administrator, is authorized to administer
the Plan, subject to and in accordance with the provisions set forth herein, and
shall have all powers necessary and appropriate to enable it to properly
administer the Plan, including but not limited to the power to:
5.1.1. approve the establishment and range of corporate goals,
recommendations regarding participation, the amount of individual award
payments, and all matters relating to the day-to-day operation of the Plan;
5.1.2. construe and interpret the Plan, establish rules and
regulations, delegate such administrative responsibilities as it deems
proper, and to perform all other acts it deems necessary to carry out the
intent and purpose of the Plan;
5.1.3. suspend or terminate, in whole or in part, or amend the terms
of the Plan, at any time, without the need for obtaining approval of the
shareholders, by an instrument in writing; provided, however, that
shareholder approval shall be required for any amendment that changes the
material terms of the Plan applicable to any Participant;
5.1.4. cancel the participation of any person who conducts himself in
a manner which the Subcommittee, in the exercise of reasonable discretion,
determines to be inimical to the best interests of BancGroup; and
5.1.5. correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, in the manner and to the extent it shall deem
necessary.
5.2. The Subcommittee's determination under the Plan of the persons to
participate and receive awards and the terms and conditions of such awards need
not be uniformly applicable to all Participants, but may be made by the
Subcommittee on a selective basis among persons who receive or are eligible to
receive awards
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<PAGE> 32
under the Plan, whether or not such persons are similarly situated. The
Subcommittee shall have final approval authority over the payment of all awards
under this Plan, whether individually or collectively.
6. PLAN FUNDING AND ACCRUALS OF AWARDS
The Plan is unfunded and awards hereunder shall be paid from general
corporate funds.
7. NEW PARTICIPANTS, PROMOTIONS, OR TRANSFERS
All participation in the Plan is subject to approval by the Subcommittee.
Newly hired or promoted employees who enter positions which are considered to be
eligible for participation in the Plan normally will, upon approval by the
Subcommittee, enter the Plan on January 1 next following the date of hire or
promotion. The Chairman, however, subject to approval by the Subcommittee, may
authorize immediate participation upon hire or promotion.
8. MISCELLANEOUS.
8.1. Construction of Plan. Except as provided under federal law, the
provisions of the Plan shall be governed by and construed in accordance with the
laws of the State of Delaware, and shall be binding on and inure to the benefit
of any successor or successors to BancGroup.
8.2. Right to Employment. Participation in this Plan shall not be
construed as giving any Participant the right to be retained in the employ of
BancGroup. Further, BancGroup expressly reserves the right at any time to
dismiss any Participant with or without cause, such dismissal to be free from
any liability or any claim under the Plan, except as provided herein.
8.3. Nonalienation of benefit. No benefit under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to do so shall be void.
8.4. Withholding of taxes. BancGroup shall have the right to deduct from
any award payable under this Plan all applicable withholding and employment
taxes at such times as they are due.
8.5. Plan expenses. Any expenses incurred in the administration of this
Plan shall be borne by BancGroup.
8.6. Entire Agreement. This Plan, as completed and executed by BancGroup,
the Performance Agreements, and all amendments thereto, will constitute the
entire agreement between BancGroup and Participants regarding the Plan.
8.7. Captions. The captions or headings in this Agreement are made for
convenience and general reference only and shall not be construed to describe,
define, or limit the scope or intent of the provisions of this Agreement.
8.8. Number and gender. The masculine pronoun used shall include the
feminine pronoun and the singular number shall include the plural number unless
the context of the Plan requires otherwise.
IN WITNESS WHEREOF, The Colonial BancGroup, Inc. has caused this Management
Incentive Plan to be executed as of this the 1st day of January, 2000.
THE COLONIAL BANCGROUP, INC.
By: /s/ ROBERT E. LOWDER
------------------------------------
Robert E. Lowder
Chairman & Chief Executive Officer
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<PAGE> 33
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
THE COLONIAL BANCGROUP, INC.
Annual Meeting of Stockholders
April 19, 2000
The undersigned hereby appoints Robert E. Lowder and Augustus K. Clements, III,
and either of them, or such other persons as the Board of Directors of The
Colonial BancGroup, Inc. ("BancGroup"), may designate, proxies for the
undersigned, with full power of substitution, to represent the undersigned and
to vote all of the shares of common stock, par value $2.50, of BancGroup (the
"Common Stock") which the undersigned would be entitled to vote at the annual
meeting of stockholders to be held on April 19, 2000, and at any and all
adjournments thereof. The proxies, in their discretion, are further authorized
to vote (i) for the election of a person to the Board of Directors if any
nominee named herein becomes unable to serve or for good cause will not serve,
and (ii) on any other matter that may properly come before the meeting,
including matters incident to the conduct of the meeting.
(Continued and to be signed on reverse side.)
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-- FOLD AND DETACH HERE --
<PAGE> 34
[ X ] Please mark
your votes as
indicated in
this example.
1. To elect the following Directors:
Lewis E. Beville, Jerry J. Chesser, John Ed Mathison, Joe D. Mussafer,
Frances E. Roper and Edward V. Welch for terms expiring in 2003 and William
E. Powell, III for a term expiring in 2002
[ ] FOR all nominees listed [ ] WITHHOLD authority to vote
except as marked to the for all nominees
contrary
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE ABOVE LISTS.
2. To amend the 1992 Incentive Stock Option Plan of The Colonial BancGroup, Inc.
to increase the number of shares of Common Stock eligible to be issued under
this plan from 4,200,000 shares to 5,700,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To adopt the Management Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To amend the 1992 Non-Qualified Stock Option Plan to provide that the maximum
number of shares of Common Stock, with respect to which options may be
granted to any eligible employee under this plan during any Plan Year, shall
not exceed 200,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To amend the Stock Bonus and Retention Plan to (a) provide that during any
Plan Year no participant shall receive more than 150,000 shares of Common
Stock under this plan and (b) allow performance-based goals pursuant to
Section 162(m) of the internal Revenue Code to be used in making awards.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE MARK ONE OF THE BOXES ON EACH
PROPOSAL ABOVE TO REFLECT YOUR VOTE.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS AND WILL BE VOTED AS
DIRECTED HEREIN. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR THE
PERSONS NAMED IN PROPOSAL 1, AND IN
ACCORDANCE WITH THE DISCRETION OF THE
PROXY HOLDERS RESPECTING PROPOSALS 2, 3,
4 AND 5.
PLEASE SIGN AND DATE THIS PROXY.
Signature(s) _____________________ Phone No: ___________ Dated ___________, 2000
Please sign exactly as your name appears on this card. Agents, executors,
administrators, guardians, and trustees must give full title as such.
Corporations should sign by their President of authorized officer.
- --------------------------------------------------------------------------------
DETACH CARD -- Please detach proxy at perforation before mailing. --
YOU MAY VOTE BY TELEPHONE OR THE INTERNET.
If you are voting by telephone or the internet, please do not mail your proxy.
[LOGO] VOTE BY TELEPHONE [LOGO]
Call Toll-Free using a Touch-Tone phone
1-800-250-9081
VOTE BY INTERNET
Access the Website and cast your vote
http://www.votefast.com
VOTE BY MAIL
Return your proxy in the postage-paid envelope provided.
Vote 24 hours a day, 7 days a week!
Your telephone or internet vote must be received by 5:00 p.m. eastern daylight
time on April 18, 2000, to be counted in the final tabulation.
YOUR CONTROL NUMBER IS _______________
Vote by Telephone
Have your proxy card available when you call the Toll-Free number
1-800-250-9081 using a Touch-Tone phone. You will be prompted to enter your
control number and then you can follow the simple prompts that will be
presented to you to record your vote.
Vote by Internet
Have your proxy card available when you access the website
http:www.votefast.com. You will be prompted to enter your control number and
then you can follow the simple prompts that will be presented to you to
record your vote.
To Change Your Vote
Any subsequent vote by any means will change your prior vote. For example, if
you voted by telephone, a subsequent internet vote will change your vote. The
last vote received before 5:00 p.m. eastern daylight time, April 18, 2000, will
be the one counted. You may also revoke your proxy by voting in person at the
Annual Meeting.
