TSYS(SM)
Richard W. Ussery March 9, 2001
Chairman of the Board
Dear Shareholder:
You are cordially invited to attend our Annual Meeting of Shareholders at
10:00 a.m. on Thursday, April 19, 2001, at the TSYS Riverfront Campus
Auditorium, 1600 First Avenue, Columbus, Georgia. Enclosed with this Proxy
Statement are your proxy card and the 2000 Annual Report.
We hope that you will be able to be with us and let us give you a review of
2000. Whether you own a few or many shares of stock and whether or not you plan
to attend in person, it is important that your shares be voted on matters that
come before the meeting. To make sure your shares are represented, we urge you
to vote promptly.
Thank you for helping us make 2000 a good year. We look forward to your
continued support in 2001 and another good year.
Sincerely yours,
/s/Richard W. Ussery
RICHARD W. USSERY
Total System Services, Inc. Post Office Box 2506 Columbus, Georgia 31902-2506
TOTAL SYSTEM SERVICES, INC.(R)
NOTICE OF THE 2001 ANNUAL MEETING OF SHAREHOLDERS
TIME............... 10:00 a.m. E.T.
Thursday, April 19, 2001
PLACE.............. TSYS Riverfront Campus Auditorium
1600 First Avenue
Columbus, Georgia 31901
ITEMS OF BUSINESS.. (1) To elect seven directors to serve until the Annual
Meeting of Shareholders in 2004.
(2) To reapprove the Synovus Financial Corp. Executive
Bonus Plan (TSYS is an 80.8% owned subsidiary of
Synovus).
(3) To approve the DotsConnect, Inc. 2000 Long-Term
Incentive Plan (DotsConnect is a wholly owned
subsidiary of TSYS).
(4) To transact such other business as may properly
come before the meeting and any adjournment thereof.
WHO MAY VOTE....... You can vote if you were a shareholder of record on
February 15, 2001.
ANNUAL REPORT...... A copy of the Annual Report is enclosed.
PROXY VOTING....... Your vote is important. Please vote in one of these ways:
1) Use the toll-free telephone number shown on the proxy
card;
2) Visit the web site listed on your proxy card; or
3) Mark, sign, date and promptly return the enclosed proxy
card in the postage-paid envelope provided.
/s/G. Sanders Griffith, III
G. SANDERS GRIFFITH, III
Secretary
Columbus, Georgia
March 9, 2001
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE VOTE YOUR SHARES PROMPTLY.
TABLE OF CONTENTS
Voting Information.............................................................1
Election of Directors..........................................................3
Board of Directors.............................................................5
Audit Committee Report.........................................................6
Directors' Compensation........................................................7
Executive Officers.............................................................7
Stock Ownership of Directors and Executive Officers............................8
Directors' Proposal to Reapprove the Synovus Financial Corp.
Executive Bonus Plan......................................................9
Directors' Proposal to Approve the DotsConnect, Inc. 2000
Long-Term Incentive Plan.................................................11
Executive Compensation........................................................14
Stock Performance Graph.......................................................17
Compensation Committee Report on Executive Compensation.......................18
Compensation Committee Interlocks and
Insider Participation....................................................20
Transactions With Management..................................................20
Relationships Between TSYS, Synovus, CB&T and
Certain of Synovus' Subsidiaries.........................................21
Section 16(a) Beneficial Ownership Reporting Compliance.......................24
Independent Auditors..........................................................24
General Information:
Financial Information....................................................25
Shareholder Proposals for the 2002 Proxy Statement.......................25
Director Nominees or Other Business for Presentation
at the Annual Meeting...............................................25
Solicitation of Proxies..................................................25
Householding.............................................................25
Appendix A:
Audit Committee Charter.................................................A-1
PROXY STATEMENT
VOTING INFORMATION
PURPOSE
This Proxy Statement and the accompanying proxy card are being mailed to
TSYS shareholders beginning March 9, 2001. The TSYS Board of Directors is
soliciting proxies to be used at the 2001 Annual Meeting of TSYS Shareholders
which will be held on April 19, 2001, at 10:00 a.m., at the TSYS Riverfront
Campus Auditorium, 1600 First Avenue, Columbus, Georgia. Proxies are solicited
to give all shareholders of record an opportunity to vote on matters to be
presented at the Annual Meeting. In the following pages of this Proxy Statement,
you will find information on matters to be voted upon at the Annual Meeting of
Shareholders or any adjournment of that meeting.
WHO CAN VOTE
You are entitled to vote if you were a shareholder of record of TSYS
stock as of the close of business on February 15, 2001. Your shares can be voted
at the meeting only if you are present or represented by a valid proxy.
SHARES OUTSTANDING
A majority of the outstanding shares of TSYS stock must be present, either
in person or represented by proxy, in order to conduct the Annual Meeting of
TSYS Shareholders. On February 15, 2001, 194,761,020 shares of TSYS stock were
outstanding.
COLUMBUS BANK AND TRUST COMPANY
Columbus Bank and Trust Company(R)("CB&T") owned individually 157,455,980
shares, or 80.8%, of the outstanding shares of TSYS stock on February 15,
2001. CB&T(R) is a wholly owned banking subsidiary of Synovus Financial
Corp.(R), a multifinancial services company.
PROXY CARD
The Board has designated two individuals to serve as proxies to vote the
shares represented by proxies at the Annual Meeting of Shareholders.
If you sign the proxy card but do not specify how you want your shares to
be voted, your shares will be voted by the designated proxies in favor of the
election of all of the director nominees and in accordance with the directors'
recommendations on the other proposals listed on the proxy card. The designated
proxies will vote in their discretion on any other matter that may properly come
before the meeting. At the date the Proxy Statement went to press, we did not
anticipate that any other matters would be raised at the Annual Meeting.
VOTING OF SHARES
Each share of TSYS stock represented at the Annual Meeting is entitled to
one vote on each matter properly brought before the meeting. All shares entitled
to vote and represented in person or by properly executed proxies received
before the polls are closed at the Annual Meeting, and not revoked or
superseded, will be voted at the Annual Meeting in accordance with the
instructions indicated on those proxies.
TSYS Dividend Reinvestment and Direct Stock Purchase Plan: If you
participate in this Plan, your proxy card represents shares held in the Plan, as
well as shares you hold in certificate form registered in the same name.
REQUIRED VOTES - ELECTION OF DIRECTOR NOMINEES
Directors are elected by a plurality of the votes, which means the seven
nominees who receive the largest number of properly executed votes will be
elected as directors. Each share of TSYS
1
stock is entitled to one vote for each of seven director nominees. Cumulative
voting is not permitted. Shares that are represented by proxies which are marked
"withhold authority" for the election of one or more director nominees will not
be counted in determining the number of votes cast for those persons.
REQUIRED VOTES - OTHER MATTERS
The affirmative vote of a majority of the shares present (in person or by
proxy and entitled to vote at the Annual Meeting) is needed to approve the
Synovus Executive Bonus Plan and the DotsConnect, Inc. 2000 Long-Term
Incentive Plan.
TABULATION OF VOTES
Under certain circumstances, brokers are prohibited from exercising
discretionary authority for beneficial owners who have not returned proxies to
the brokers (so-called "broker non-votes"). In such cases, and in cases where
the shareholder abstains from voting on a matter, those shares will be counted
for the purpose of determining if a quorum is present, but will not be included
in the vote totals with respect to those matters and, therefore, will have no
effect on the vote.
HOW YOU CAN VOTE
You may vote by proxy or in person at the meeting. To vote by proxy, you
may select one of the following options:
Vote By Telephone:
You can vote your shares by telephone by calling the toll-free telephone
number (at no cost to you) shown on your proxy card. Telephone voting is
available 24 hours a day, seven days a week. Easy-to-follow voice prompts allow
you to vote your shares and confirm that your instructions have been properly
recorded. Our telephone voting procedures are designed to authenticate the
shareholder by using individual control numbers. If you vote by telephone, you
do NOT need to return your proxy card.
Vote By Internet:
You can also choose to vote on the Internet. The web site for Internet
voting is shown on your proxy card. Internet voting is available 24 hours a day,
seven days a week. You will be given the opportunity to confirm that your
instructions have been properly recorded, and you can consent to view future
proxy statements and annual reports on the Internet instead of receiving them in
the mail. If you vote on the Internet, you do NOT need to return your proxy
card.
Vote By Mail:
If you choose to vote by mail, simply mark your proxy card, date and sign
it, and return it in the postage-paid envelope provided.
REVOCATION OF PROXY
If you vote by proxy, you may revoke that proxy at any time before it is
voted at the meeting. You may do this by (a) signing another proxy card with
a later date and returning it to us prior to the meeting, (b) voting again
by telephone or on the Internet prior to the meeting, or (c) attending the
meeting in person and casting a ballot.
2
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" ALL
NOMINEES.
NUMBER
The Board of Directors of TSYS consists of 17 members. As 18 board seats
have been authorized by TSYS' shareholders, TSYS has one directorship which
remains vacant. This vacant directorship could be filled in the future at the
discretion of TSYS' Board of Directors. This discretionary power gives TSYS'
Board of Directors the flexibility of appointing new directors in the periods
between TSYS' Annual Meetings should suitable candidates come to its attention.
The Board is divided into three classes whose terms are staggered so that the
term of one class expires at each Annual Meeting of Shareholders. The terms of
office of the Class I directors expire at the 2002 Annual Meeting, the terms of
office of the Class II directors expire at the 2003 Annual Meeting and the terms
of office of the Class III directors expire at the 2001 Annual Meeting. Proxies
cannot be voted at the 2001 Annual Meeting for a greater number of persons than
the number of nominees named.
NOMINEES
The following nominees have been selected by the Corporate Governance
Committee and approved by the Board for submission to the shareholders: Thomas
G. Cousins, Sidney E. Harris, Alfred W. Jones III, Mason H. Lampton, William B.
Turner, James D. Yancey and Rebecca K. Yarbrough, each to serve a three year
term expiring at the Annual Meeting in the year 2004.
The Board believes that each director nominee will be able to stand for
election. If any nominee becomes unable to stand for election, proxies in favor
of that nominee will be voted in favor of the remaining nominees and in favor of
any substitute nominee named by the Board upon the recommendation of the
Corporate Governance Committee. If you do not wish your shares voted for one or
more of the nominees, you may so indicate on the proxy.
MEMBERS OF THE BOARD OF DIRECTORS
Following is the principal occupation, age and certain other information
for each director nominee and other directors serving unexpired terms.
- ------------------------------------------------------------------------------------
TSYS Year
Director First
Classifi- Elected Principal Occupation
Name Age cation Director and Other Information
- -------------------------- ----- --------- --------- -------------------------------------------
James H. Blanchard (1) 59 II 1982 Chairman of the Board and Chief
Executive Officer, Synovus Financial
Corp.; Chairman of the Executive
Committee, Total System Services, Inc.;
Director, BellSouth Corporation
Richard Y. Bradley 62 II 1991 Partner, Bradley & Hatcher (Law Firm);
Director, Synovus Financial Corp.
G. Wayne Clough 59 I 2000 President, Georgia Institute
of Technology
Thomas G. Cousins 69 III 1999 Chairman of the Board and Chief Executive
Officer, Cousins Properties Incorporated
(Real Estate Development)
Gardiner W. Garrard, Jr. 60 II 1982 President, The Jordan Company (Real
Estate Development); Director, Synovus
Financial Corp.
Sidney E. Harris (2) 51 III 1999 Dean, J. Mack Robinson College of
Business, Georgia State University;
Director, The ServiceMaster Company
and Transamerica Investors, Inc.
3
John P. Illges, III 66 II 1982 Senior Vice President and Financial
Consultant, The Robinson-Humphrey
Company, Inc. (Stockbroker); Director,
Synovus Financial Corp.
Alfred W. Jones III (3) 43 III 2001 Chairman of the Board and Chief
Executive Officer, Sea Island Company
(Real Estate Development and Management);
Director, Synovus Financial Corp.
Mason H. Lampton 53 III 1986 Chairman of the Board and President,
The Hardaway Company and Chairman
of the Board, Standard Concrete Products
(Construction Companies); Director,
Synovus Financial Corp.
W. Walter Miller, Jr. (4) 52 II 1993 Group Executive, Total System
Services, Inc.
Samuel A. Nunn (5) 62 I 1997 Senior Partner, King & Spalding (Law
Firm); Director, The Coca-Cola Company, Dell
Computer Corporation, General Electric Company,
National Service Industries, Inc.,
Scientific-Atlanta, Inc.,
Internet Security Systems Group, Inc.,
Texaco Inc. and Community Health Systems, Inc.
H. Lynn Page 60 I 1982 Director, Synovus Financial Corp.,
Columbus Bank and Trust Company and
Total System Services, Inc.
Philip W. Tomlinson (6) 54 I 1982 President, Total System Services, Inc.
William B. Turner (4) 78 III 1982 Chairman of the Executive Committee,
Columbus Bank and Trust Company and
Synovus Financial Corp.; Advisory
Director, W.C. Bradley Co. (Metal
Manufacturer and Real Estate)
Richard W. Ussery (7) 53 I 1982 Chairman of the Board and Chief
Executive Officer, Total System Services,
Inc.
James D. Yancey 59 III 1982 President and Chief Operating Officer,
Synovus Financial Corp.; Chairman of the Board,
Columbus Bank and Trust Company;
Director, Shoney's, Inc.
Rebecca K. Yarbrough 63 III 1999 Private Investor
- - ---------
(1) James H. Blanchard was elected Chairman of the Executive Committee of TSYS
in February 1992. From 1982 until 1992, Mr. Blanchard served as Chairman of
the Board of TSYS.
(2) Sidney E. Harris was named dean of the J. Mack Robinson College of Business
at Georgia State University in July 1997. From 1991 until 1997, Mr. Harris
served as dean and professor of the Drucker School of Management at the
Claremont Graduate University.
(3) Alfred W. Jones III was elected as a director of TSYS on February 20,
2001 by TSYS' Board of Directors to fill a vacant Board seat.
(4) W. Walter Miller, Jr.'s spouse is the niece of William B. Turner.
(5) Samuel A. Nunn joined the law firm of King & Spalding in January 1997.
From 1972 until 1997, Mr. Nunn represented the State of Georgia in the
United States Senate.
(6) Philip W. Tomlinson was elected President of TSYS in February 1992. From
1982 until 1992, Mr. Tomlinson served as Executive Vice President of TSYS.
(7) Richard W. Ussery was elected Chairman of the Board of TSYS in February
1992. From 1982 until 1992, Mr. Ussery served as President of TSYS.
4
BOARD OF DIRECTORS
CORPORATE GOVERNANCE PHILOSOPHY
The business affairs of TSYS are managed under the direction of the Board
of Directors in accordance with the Georgia Business Corporation Code, as
implemented by TSYS' Articles of Incorporation and bylaws.
The role of the Board of Directors is to effectively govern the affairs of
TSYS for the benefit of its shareholders and other constituencies. The Board
strives to ensure the success and continuity of business through the election of
qualified management. It is also responsible for ensuring that TSYS' activities
are conducted in a responsible and ethical manner. The Corporate Governance
Committee conducts an annual review of corporate governance procedures. A
majority of TSYS' directors are independent, nonemployee directors.
SUBMISSION OF DIRECTOR CANDIDATES
Shareholders who wish to suggest qualified candidates for consideration
as directors of TSYS by the Corporate Governance Committee should write to:
Corporate Secretary, Total System Services, Inc., 901 Front Avenue, Suite 301,
Columbus, Georgia 31901, stating in detail the qualifications of such persons.
BOARD AND COMMITTEE MEETINGS
The Board of Directors held five meetings in 2000. All directors attended
at least 75% of Board and committee meetings held during their tenure during
2000. The average attendance by directors at the aggregate number of Board
and committee meetings they were scheduled to attend was 93%.
COMMITTEES OF THE BOARD
TSYS' Board of Directors has four principal standing committees -- an
Executive Committee, an Audit Committee, a Corporate Governance Committee and a
Compensation Committee. The following table shows the membership of the various
committees.
- - --------------------------------------------------------------------------------
Executive Audit Corporate Governance Compensation
- - ---------- ----- -------------------- -------------
James H. Blanchard, Chair John P. Illges, III, Chair Richard Y. Bradley, Chair Gardiner W. Garrard, Jr., Chair
Richard Y. Bradley Sidney E. Harris Thomas G. Cousins G. Wayne Clough
Gardiner W. Garrard, Jr. H. Lynn Page Samuel A. Nunn Mason H. Lampton
John P. Illges, III Rebecca K. Yarbrough
Philip W. Tomlinson
William B. Turner
Richard W. Ussery
James D. Yancey
Executive Committee. TSYS' Executive Committee held four meetings in 2000.
During the intervals between meetings of TSYS' Board of Directors, TSYS'
Executive Committee possesses and may exercise any and all of the powers of
TSYS' Board of Directors in the management and direction of the business and
affairs of TSYS with respect to which specific direction has not been previously
given by TSYS' Board of Directors.
Audit Committee. TSYS' Audit Committee held four meetings in 2000. Its
Report begins on page 6. The primary functions to be engaged in by TSYS' Audit
Committee include:
. Monitoring the quality and integrity of TSYS' financial reporting
process and systems of internal controls regarding finance,
accounting, regulatory and legal compliance;
. Monitoring the independence and performance of TSYS' independent
auditors and internal auditing activities; and
. Providing an avenue of communication among the independent auditors,
management, internal audit and the Board of Directors.
5
Corporate Governance Committee. TSYS' Corporate Governance Committee held
two meetings in 2000. The primary functions to be engaged in by TSYS' Corporate
Governance Committee include:
. Making recommendations to the Board regarding the governance of
TSYS as reflected in TSYS' Articles of Incorporation and bylaws;
. Making recommendations to the Board regarding Board administration,
including developing criteria for selecting and retaining Board
members, seeking qualified candidates for the Board and recommending
assignment of Board members to appropriate Board committees;
. Making recommendations to the Board regarding a policy and program
regarding director compensation and annual assessment of Board
performance;
. Establishing procedures for the Chief Executive Officer's annual
performance review; and
. Establishing procedures for annual reviews of succession planning
and management development.
Compensation Committee. TSYS' Compensation Committee held five meetings
in 2000. Its Report on Executive Compensation begins on page 18. The primary
functions to be engaged in by TSYS' Compensation Committee include:
. The design and oversight of TSYS' executive compensation program;
. The design and oversight of all compensation and benefit programs in
which employees, officers and directors of TSYS are eligible to
participate; and
. Performing an annual evaluation of the Chief Executive Officer.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is comprised of three
directors who the Board and Audit Committee believe are independent as
defined in the New York Stock Exchange's listing standards.
In accordance with its written charter adopted by the Board of Directors,
which is attached as Appendix A to this Proxy Statement, the Audit Committee
assists the Board with fulfilling its oversight responsibility regarding the
quality and integrity of TSYS' financial reporting process. In discharging its
oversight responsibilities regarding the audit process, the Audit Committee:
. Reviewed and discussed with management TSYS' audited financial
statements as of and for the year ended December 31, 2000;
. Discussed with KPMG LLP, TSYS' independent auditors, the matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees); and
. Received from KPMG LLP the written disclosures and the letter required
by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and has discussed with KPMG LLP
their independence.
Based upon the review and discussions referred to in the preceding
paragraph, the Audit Committee recommended to the Board of Directors that the
audited financial statements referred to above be included in TSYS' Annual
Report on Form 10-K for the year ended December 31, 2000, to be filed with the
Securities and Exchange Commission.
This Audit Committee Report shall not be deemed incorporated by reference
in any document previously or subsequently filed with the Securities and
Exchange Commission that incorporates by reference all or any portion of this
Proxy Statement, except to the extent TSYS specifically requests that the Report
be specifically incorporated by reference.
The Audit Committee
John P. Illges, III
Sidney E. Harris
H. Lynn Page
6
DIRECTORS' COMPENSATION
COMPENSATION
During 2000, directors received the following compensation:
Annual retainer $20,000
Attendance fee for each Board meeting $ 1,800
Attendance fee for each Executive Committee meeting,
including the chairman $ 1,800
Attendance fee for each committee meeting chaired,
other than executive $ 1,200
Attendance fee for committee meetings,
other than executive $ 750
DIRECTOR STOCK PURCHASE PLAN
TSYS' Director Stock Purchase Plan is a nontax-qualified, contributory
stock purchase plan pursuant to which qualifying TSYS directors can purchase,
with the assistance of contributions from TSYS, presently issued and outstanding
shares of TSYS stock. Under the terms of the Director Stock Purchase
Plan, qualifying directors can elect to contribute up to $5,000 per calendar
quarter to make purchases of TSYS stock, and TSYS contributes an
additional amount equal to 50% of the directors' cash contributions.
Participants in the Director Stock Purchase Plan are fully vested in, and may
request the issuance to them of, all shares of TSYS stock purchased for their
benefit under the Plan.
EXECUTIVE OFFICERS
The following table sets forth the name, age and position with TSYS of each
executive officer of TSYS.
- - --------------------------------------------------------------------------------
Name Age Position with TSYS
- - --------------------------- --- ------------------------------------
James H. Blanchard 59 Chairman of the Executive Committee
Richard W. Ussery 53 Chairman of the Board
and Chief Executive Officer
Philip W. Tomlinson 54 President
William A. Pruett 47 Executive Vice President
James B. Lipham 52 Executive Vice President
and Chief Financial Officer
M. Troy Woods 49 Executive Vice President
Kenneth L. Tye 48 Executive Vice President
and Chief Information Officer
G. Sanders Griffith, III 47 General Counsel and Secretary
Messrs. Blanchard, Ussery and Tomlinson are directors of TSYS. William A.
Pruett was elected as Executive Vice President of TSYS in February 1993. From
1976 until 1993, Mr. Pruett served in various capacities with CB&T and/or TSYS,
including Senior Vice President. James B. Lipham was elected as Executive Vice
President and Chief Financial Officer of TSYS in July 1995. From 1984 until
1995, Mr. Lipham served in various financial capacities with Synovus and/or
TSYS, including Senior Vice President and Treasurer. M. Troy Woods was elected
as Executive Vice President of TSYS in July 1995. From 1987 until 1995, Mr.
Woods served in various capacities with TSYS, including Senior Vice President.
Kenneth L. Tye was elected as Executive Vice President and Chief Information
Officer of TSYS in August 1999. From 1971 until 1999, Mr. Tye served in various
capacities with CB&T and/or TSYS, including Senior Vice President. G. Sanders
Griffith, III has served as General Counsel of TSYS since 1988 and was elected
as Secretary of TSYS in June 1995. Mr. Griffith currently serves as Senior
Executive Vice President, General Counsel and Secretary of Synovus and has held
various positions with Synovus since 1988.
7
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth ownership of shares of TSYS stock
by each director, by each executive officer named in the Summary Compensation
Table on page 14 and by all directors and executive officers as a group as of
December 31, 2000.
- - --------------------------------------------------------------------------------
Shares of Shares of
TSYS Stock TSYS Stock Percentage of
Beneficially Beneficially Total Outstanding
Owned with Owned with Shares of Shares of
Sole Voting Shared Voting TSYS Stock TSYS Stock
and Investment and Investment Beneficially Beneficially
Power as of Power as of Owned as of Owned as of
Name 12/31/00 12/31/00 12/31/00(1) 12/31/00
-------------------------- ------------------- -------------------- ---------------- -------------
James H. Blanchard 784,812 360,480 1,145,292 *
Richard Y. Bradley 23,025 5,000 28,025 *
G. Wayne Clough 358 --- 358 *
Thomas G. Cousins 29,157 --- 29,157 *
Gardiner W. Garrard, Jr. 15,227 --- 15,227 *
Sidney E. Harris 1,368 --- 1,368 *
John P. Illges, III 105,169 81,750 186,919 *
Alfred W. Jones III --- --- --- ---
Mason H. Lampton 40,985 104,234(2) 145,219 *
James B. Lipham 47,153 600 117,953 *
W. Walter Miller, Jr. 88,064 12,831 108,095 *
Samuel A. Nunn 1,999 --- 39,499 *
H. Lynn Page 323,285 328,808 652,093 *
William A. Pruett 160,095 --- 223,095 *
Philip W. Tomlinson 593,433 59,796 779,229 *
William B. Turner 163,309 576,000 739,309 *
Richard W. Ussery 556,098 66,000 748,098 *
M. Troy Woods 66,421 2,808 141,229 *
James D. Yancey 778,039 24,000 802,039 *
Rebecca K. Yarbrough 272,579 520,812(3) 793,391 *
Directors and Executive
Officers as a group
(22 persons) 4,175,504 2,143,119 6,704,595 3.4
* Less than one percent of the outstanding shares of TSYS stock.
- - --------
(1) The totals shown for the following directors and executive officers of TSYS
include the number of shares of TSYS stock that each individual has
the right to acquire within 60 days through the exercise of stock options:
Person Number of Shares
------ ----------------
James B. Lipham 70,200
W. Walter Miller, Jr. 7,200
Samuel A. Nunn 37,500
William A. Pruett 63,000
Philip W. Tomlinson 126,000
Richard W. Ussery 126,000
M. Troy Woods 72,000
In addition, the other executive officers of TSYS have rights to acquire an
aggregate of 9,000 shares of TSYS stock within 60 days through the
exercise of stock options.
(2) Includes 28,800 shares of TSYS stock held in a trust for which Mr.
Lampton is not the trustee. Mr. Lampton disclaims beneficial ownership of
such shares.
8
(3) Includes 72,000 shares of TSYS stock held in a trust for which Mrs.
Yarbrough is not the trustee. Mrs. Yarbrough disclaims beneficial ownership
of such shares.
For a detailed discussion of the beneficial ownership of Synovus stock by
TSYS' named executive officers and directors and by all directors and executive
officers of TSYS as a group, see "Synovus Stock Ownership of Directors
and Management" on page 21.
DIRECTORS' PROPOSAL TO REAPPROVE THE SYNOVUS
FINANCIAL CORP. EXECUTIVE BONUS PLAN
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
TSYS' executive compensation program includes short-term incentive bonus
awards under the Synovus Financial Corp. Executive Bonus Plan (the "Plan"). The
purposes of the Plan are to reward selected executive officers for superior
corporate performance and to attract and retain top quality executive officers.
Subject to reapproval by TSYS' shareholders, compensation paid pursuant to the
Plan to TSYS' officers is intended, to the extent reasonable, to continue to
qualify for tax deductibility under Section 162(m) of the Internal Revenue Code
of 1986, as amended, and the regulations promulgated thereunder, as may be
amended from time to time ("Section 162(m)"). The Plan was originally approved
by TSYS shareholders in 1996. Because Section 162(m) requires shareholder
approval every five years, the Plan is being submitted to shareholders for
reapproval.
Eligibility and Participation. The Chief Executive Officer and the four
highest compensated officers of Synovus and any publicly-traded subsidiary of
Synovus (including TSYS) are eligible to participate in the Plan. Approximately
10 employees are eligible to participate in the Plan. The Committee, as
described below, has discretion to select participants from among eligible
employees from year to year.
Description of Awards Under the Plan. Pursuant to the Plan, Synovus may
award incentive bonus opportunities to participants. Each fiscal year, the
Committee shall establish, in writing, the performance goals applicable to such
and/or any succeeding fiscal year. The performance measures which shall be used
to determine the amount of the incentive bonus award for each such performance
period shall be chosen from among the following for Synovus, any of its business
segments and/or any of its business units, unless and until the Committee
proposes a change in such measures for shareholder vote or applicable tax and/or
securities laws change to permit the Committee discretion to alter such
performance measures without obtaining shareholder approval: (i) number of
cardholder, merchant and/or other customer accounts processed and/or converted
by TSYS; (ii) successful negotiation or renewal of contracts with new and/or
existing customers by TSYS; (iii) productivity and expense control; (iv) stock
price; (v) return on capital compared to cost of capital; (vi) net income;
(vii) operating income; (viii) earnings per share and/or earnings per share
growth; (ix) return on equity; (x) return on assets; (xi) nonperforming assets
and/or loans as a percentage of total assets and/or loans; (xii) noninterest
expense as a percentage of total expense; (xiii) loan charge-offs as a
percentage of total loans; and (xiv) asset growth. Awards shall be determined
based on the achievement of such preestablished performance goals and shall be
awarded based on a percentage of a participant's base salary.
The Committee shall have no discretion to increase the amount of any award
under the Plan but will retain the ability to eliminate or decrease an award
otherwise payable to a participant. The Committee shall certify, in writing,
that the performance goals have been met before any payments to participants may
be made. Payment of the incentive bonus award earned, if any, shall be made in
cash, as soon as practicable after Committee approval or deferred until
retirement (if so elected by the participant prior to the beginning of the year
in which the bonus is to be earned).
9
Termination of Employment. Any participant not employed by Synovus or a
publicly-traded subsidiary of Synovus on December 31 of any fiscal year will not
be entitled to an award unless otherwise determined by the Committee.
Maximum Amount Payable to Any Participant. The maximum amount payable for
each performance period under the Plan to any participant is one hundred fifty
percent (150%) of such participant's base salary; provided, however, that no
participant may receive an award for any performance period in excess of $1.5
million.
Amendment of the Plan. The Board of Directors of Synovus may amend the Plan
at any time, including amendments that increase the costs of the Plan and
allocate benefits differently between persons and groups in the table below;
provided, however, that no amendment shall be made without shareholder approval
that increases the maximum amount payable to any participant in excess of the
limits set forth above.
Duration of the Plan. The Plan shall remain in effect from the date it is
approved by TSYS' shareholders until the date it is terminated by the Board of
Directors of Synovus. The Board of Directors of Synovus may terminate the Plan
at any time.
Administration. The Plan will be administered by the Compensation Committee
of the Synovus Board of Directors (the "Committee") with the approval, as to
matters involving TSYS employees, of the Compensation Committee of the Board of
Directors of TSYS. The Synovus and TSYS Compensation Committees will be
comprised of two or more Synovus and TSYS "outside" directors within the meaning
of Section 162(m).
Estimate of Benefits. For the fiscal year 2000, only Mr. Ussery
participated in the Plan, while Messrs. Tomlinson, Pruett, Woods and Lipham
participated in the Synovus Incentive Bonus Plan. Because the amounts that will
be paid pursuant to the Plan are not currently determinable, the following chart
sets forth the amounts that would have been awarded for fiscal year 2000 if the
Chief Executive Officer and the four other highest compensated officers of TSYS
participated in the Plan.
New Plan Benefits
Synovus Financial Corp. Executive Bonus Plan
Name and Position Dollar Value($)
- - ----------------------------------------------------- ---------------
Richard W. Ussery
Chairman of the Board and Chief Executive Officer $ 436,800
Philip W. Tomlinson
President 357,000
William A. Pruett
Executive Vice President 216,720
M. Troy Woods
Executive Vice President 216,720
James B. Lipham
Executive Vice President and Chief Financial Officer 186,900
Executive Group 1,414,140
Non-Executive Director Group -0-
Non-Executive Officer Employee Group -0-
10
DIRECTORS' PROPOSAL TO APPROVE THE DOTSCONNECT, INC.
2000 LONG-TERM INCENTIVE PLAN
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
TSYS' compensation program includes stock options under the DotsConnect,
Inc. 2000 Long-Term Incentive Plan (the "2000 Plan"). The purpose of the 2000
Plan is to attract and retain employees, to provide an additional incentive for
each participant to work to increase the value of DotsConnect, Inc. and to
enable such employees to acquire and maintain an equity interest in DotsConnect,
a wholly owned subsidiary of TSYS. Subject to approval by TSYS' shareholders,
compensation paid to TSYS' employees pursuant to the 2000 Plan is intended, to
the extent reasonable, to qualify for tax deductibility under Section 162(m) of
the Internal Revenue Code of 1986.
Eligibility and Participation. Any employee of DotsConnect or its
affiliates (including TSYS) is eligible to be selected to participate in the
2000 Plan. Approximately 58 employees currently participate in the 2000 Plan.
The Committee, as described below, has discretion to select participants from
among eligible employees.
Shares Subject to the Plan. The aggregate number of shares of DotsConnect
stock which may be granted to participants pursuant to awards granted under the
2000 Plan may not exceed one million five hundred thousand (1,500,000).
Stock Options. The Committee may grant options under the 2000 Plan in the
form of qualified incentive stock options, nonqualified stock options or a
combination thereof. Subject to the limits described herein, the Committee shall
have discretion in determining the number of shares subject to options granted
to each participant.
The option price of both nonqualified and qualified incentive stock options
must be equal to one hundred percent (100%) of the fair market value of a share
of DotsConnect stock on the date the option is granted. Options shall expire at
such times as the Committee determines at the time of grant; provided, however,
that no option shall be exercisable later than the tenth anniversary of its
grant.
Options granted under the 2000 Plan shall be exercisable at such times and
subject to such restrictions and conditions as the Committee shall approve. The
option exercise price shall be payable in cash or by check acceptable by the
Committee. If approved by the Committee, payment of the exercise price may also
be made by a surrender of stock that has been held for six months.
Options may only be transferred under the laws of descent and distribution
and shall be exercisable only by the participant during his lifetime.
Maximum Amount Payable to Any Participant. The maximum number of shares
which may be awarded in any calendar year to any one participant is five hundred
thousand (500,000).
Adjustments in Connection With Certain Events. The 2000 Plan provides that
the Committee shall make a substitution or adjustment in the number of shares
reserved for issuance under the 2000 Plan in the number, kind or class, and
option price of shares subject to outstanding options as it deems appropriate
and equitable in connection with a change in capitalization affecting
DotsConnect's stock.
Duration of the 2000 Plan. The 2000 Plan shall remain in effect from the
date it is adopted by DotsConnect's Board of Directors until the date terminated
by the DotsConnect Board; provided, however, that no award shall be granted on
or after the tenth anniversary of the 2000 Plan's effective date.
11
Administration. The 2000 Plan will be administered by the Board of
Directors of DotsConnect or a committee designated by the Board of Directors;
provided, however, that with respect to options granted to employees of TSYS,
the term "Committee" shall refer to the Compensation Committee of the Board of
Directors of TSYS, which will be comprised of no fewer than two members who must
be "outside directors" within the meaning of Section 162(m).
The Committee shall have authority to determine individuals to whom options
will be granted; determine the terms and conditions upon which options shall be
granted; determine the time after which options shall be exercisable; and make
all other determinations, perform all other acts, exercise all other powers, and
establish any other procedures it deems necessary, appropriate or advisable in
administering the 2000 Plan and maintaining compliance with applicable law.
Amendment of the 2000 Plan. DotsConnect's Board of Directors may amend,
alter or discontinue the 2000 Plan at any time except that no such amendment,
suspension or discontinuation of the 2000 Plan may adversely affect an existing
award under the 2000 Plan without the affected participant's consent. In
addition, if stockholder approval of the 2000 Plan is obtained, no amendment,
alteration or discontinuation shall be made, without the approval of
shareholders, which would: (i) increase the total number of shares reserved
under the 2000 Plan; (ii) decrease the option price of any option to less than
one hundred percent (100%) of the fair market value of a share on the date of
grant; (iii) change the participants or class of participants eligible to
participate in the 2000 Plan; or (iv) materially increase the benefits accruing
to participants.
Change in Control. In the event of a change in control of DotsConnect as
defined in the 2000 Plan, the vesting of any outstanding awards granted under
the 2000 Plan shall be accelerated, and all such awards shall be fully
exercisable. In addition, as part of the option agreement, the Committee may
require that an employee surrender his or her option in exchange for payment by
DotsConnect in an amount equal to the amount by which the then fair market value
of the stock subject to the option exceeds the exercise price of the option, in
which case the option will terminate upon such surrender.
Federal Income Tax Consequences of the 2000 Plan. The income tax
consequences under current federal tax law to participants and to DotsConnect
and its affiliates of incentive compensation awarded under the 2000 Plan are
generally as described below. Local and state tax authorities, however, may also
tax incentive compensation awarded under the 2000 Plan.
Consequences to Participants. The tax consequences to participants of the
individual types of awards which may be granted under the 2000 Plan are
described below.
Qualified Incentive Stock Options. With respect to options which qualify as
incentive stock options, a participant will not recognize ordinary income
for federal income tax purposes at the time options are granted or
exercised. If the participant disposes of shares acquired by exercise of an
incentive stock option before the expiration of two years from the date the
options are granted, or within one year after the issuance of shares upon
exercise of the incentive stock option, the participant will recognize in
the year of disposition: (a) ordinary income, to the extent that the lesser
of either (1) the fair market value of the shares on the date of option
exercise or (2) the amount realized on disposition exceeds the option
price; and (b) capital gain (or loss), to the extent that the amount
realized on disposition differs from the fair market value of the shares on
the date of option exercise. If the shares are sold after expiration of
these holding periods, the participant will realize capital gain or loss
(assuming the shares are held as capital assets) equal to the difference
between the amount realized on disposition and the option price.
Nonqualified Stock Options. With respect to options which do not qualify as
incentive stock options, the participant will recognize no income upon
grant of the option and, upon exercise, will recognize ordinary income to
the extent of the difference between the amount paid by the participant for
the shares and the fair market value of the shares on the date of option
12
exercise. Upon a subsequent disposition of the shares received under the
option, the participant will recognize capital gain or loss, as the case
may be, to the extent of the difference between the fair market value of
the shares at the time of exercise and the amount realized on the
disposition (assuming the shares are held as capital assets).
Consequences to DotsConnect and Its Affiliates. In general, DotsConnect and
its affiliates will receive an income tax deduction at the same time and in the
same amount as the amount which is taxable to the employee as compensation,
except as provided below. To the extent a participant realizes capital gains, as
described above, DotsConnect and its affiliates will not be entitled to any
deduction for federal income tax purposes.
Under Section 162(m), compensation paid by a public company in excess of $1
million for any taxable year to "covered employees" generally is not deductible
by the company or its affiliates for federal income tax purposes unless it is
related to the performance of the company, is paid pursuant to a plan approved
by shareholders of the company and meets certain other requirements.
Generally, "covered employees" is defined under Section 162(m) as any
individual who is the chief executive officer or is among the four other highest
paid executive officers named in the summary compensation table in the company's
proxy statement, other than the chief executive officer, as of the last day of
the taxable year. It is anticipated that awards will qualify as performance
based for purposes of Section 162(m). However, the Committee reserves the
ability to make awards which do not qualify for full deductibility under Section
162(m) if the Committee determines that the benefits of so doing outweigh full
deductibility.
NEW PLAN BENEFITS
The second column in the following table shows all grants of options of
DotsConnect stock to TSYS employees and officers under the 2000 Plan for
fiscal year 2000. All of such options were granted contingent upon approval of
the 2000 Plan by TSYS' shareholders.
Number of Shares Subject
to Options Granted
Name and Position 2000 Plan
------------------------------------ ----------------------------
Richard W. Ussery
Chairman of the Board
and Chief Executive Officer 100,000
Philip W. Tomlinson
President 100,000
William A. Pruett
Executive Vice President 50,000
M. Troy Woods
Executive Vice President 100,000
James B. Lipham
Executive Vice President
and Chief Financial Officer 50,000
Executive Group 475,000
Non-Executive Director Group -0-
Non-Executive Officer Employee Group -0-
13
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the cash and noncash compensation for each
of the last three fiscal years for the chief executive officer of TSYS and for
the other four most highly compensated executive officers of TSYS.
- - --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation Awards
-------------------------------------------------------- ------------------------------
Other Restricted Securities All
Annual Stock Underlying Other
Name and Compen- Award(s) Options/ Compen-
Principal Position(1) Year Salary(2) Bonus(3) sation(4) (5) SARs (6) sation (7)
- - ----------------------- ------ -------------- ----------- ------------ -------------- ------------- ------------
Richard W. Ussery 2000 $513,200 $436,800 $7,500 $325,000 149,050 $145,084
Chairman of the Board 1999 464,000 292,500 -0- -0- 90,170 138,894
and Chief Executive 1998 444,200 276,250 -0- -0- 106,422 116,712
Officer
Philip W. Tomlinson 2000 458,200 357,000 -0- 650,000 135,543 121,101
President 1999 404,000 234,000 -0- -0- 64,937 116,561
1998 383,400 219,000 -0- -0- 75,750 97,145
William A. Pruett 2000 258,000 217,720 -0- 325,000 63,115 73,551
Executive Vice 1999 240,500 145,300 -0- -0- 24,189 72,110
President 1998 224,750 134,850 -0- -0- 27,950 60,931
M. Troy Woods 2000 258,000 217,720 -0- 325,000 113,115 73,606
Executive Vice 1999 240,500 145,300 -0- -0- 24,189 67,381
President 1998 220,000 110,000 -0- -0- 26,718 55,190
James B. Lipham 2000 222,500 187,900 -0- 650,000 61,196 62,713
Executive Vice President 1999 202,500 122,500 -0- -0- 20,098 56,504
and Chief Financial 1998 182,500 91,250 -0- -0- 22,182 46,034
Officer
- - --------------------
(1) Mr. Blanchard received no cash compensation from TSYS during 2000, other
than director compensation.
(2) Amount consists of base salary and director fees for Messrs. Ussery
and Tomlinson.
(3) Bonus amount for 2000 includes a special recognition award of $1,000 for
Messrs. Pruett, Woods and Lipham.
(4) Amount for 2000 includes matching contributions under the Director Stock
Purchase Plan. Perquisites and other personal benefits are excluded because
the aggregate amount does not exceed the lesser of $50,000 or 10% of annual
salary and bonus for the named executives.
(5) Grants for 2000 pertain to shares of Vital Processing Services, LLC, a 50%
owned subsidiary of TSYS. Dividends are not paid on the restricted shares.
As of December 31, 2000, Messrs. Ussery, Tomlinson, Pruett, Woods and
Lipham held 6,579, 4,656, 1,767, 1,577 and 1,331 Synovus restricted shares,
respectively, with a value of $177,222, $125,421, $47,599, $42,480 and
$35,854, respectively. As of December 31, 2000, Messrs. Ussery, Tomlinson,
Pruett, Woods and Lipham held 100,000, 200,000, 100,000, 100,000 and
200,000 Vital restricted shares, respectively, with a value of $325,000,
$650,000, $325,000, $325,000 and $650,000, respectively.
(6) Grants for 2000 include options to purchase 100,000, 100,000, 50,000,
100,000 and 50,000 shares of DotsConnect, Inc., a subsidiary of TSYS, for
each of Messrs. Ussery, Tomlinson, Pruett, Woods and Lipham, respectively.
(7) The 2000 amount consists of contributions or other allocations to defined
contribution plans of $30,000 for each executive; allocations pursuant to
defined contribution excess benefit agreements of $114,462, $90,465,
$43,160, $43,160 and $32,375 for each of Messrs. Ussery, Tomlinson, Pruett,
Woods and Lipham, respectively; premiums paid for group term life insurance
coverage of $450, $450, $391, $446 and $338 for each of Messrs. Ussery,
Tomlinson, Pruett, Woods and Lipham, respectively; and the economic benefit
of life insurance coverage related to split-dollar life insurance policies
of $172 and $186 for Messrs. Ussery and Tomlinson, respectively.
14
STOCK OPTION EXERCISES AND GRANTS
The following tables provide certain information regarding stock options
granted and exercised in the last fiscal year and the number and value of
unexercised options at the end of the fiscal year.
- - ------------------------------------------------------------------------------
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
---------------------------------------------------------
% of Total Potential
Options/ Realized Value at
SARs Exercise Assumed Annual Rates of
Options/ Granted to or Stock Price Appreciation
SARs Employees Base For Option Term(1)
Granted in Fiscal Price Expiration --------------------------
Name (#) Year ($/Share) Date 5%($) 10%($)
- - ------------------- ----------- ------------- -------- -------------- --------- -------------
Richard W. Ussery 49,050(2) 15.12% $18.06 01/19/10 $422,811 $1,012,883
100,000(3) 6.74 .44 06/11/10 28,000 70,000
Philip W. Tomlinson 35,543(2) 10.96 18.06 01/19/10 306,381 733,963
100,000(3) 6.74 .44 06/11/10 28,000 70,000
William A. Pruett 13,115(2) 4.04 18.06 01/19/10 113,051 270,825
50,000(3) 3.37 .44 06/11/10 14,000 35,000
M. Troy Woods 13,115(2) 4.04 18.06 01/19/10 113,051 270,825
100,000(3) 6.74 .44 06/11/10 28,000 70,000
James B. Lipham 11,196(2) 3.45 18.06 01/19/10 96,510 231,197
50,000(3) 3.37 .44 06/11/10 14,000 35,000
- - ---------------
(1) The dollar gains under these columns result from calculations using the
identified growth rates and are not intended to forecast future price
appreciation of Synovus or DotsConnect stock.
(2) Options to purchase Synovus stock granted on January 20, 2000 at
fair market value. Options become exercisable on January 20, 2002 and are
transferable to family members.
(3) Options to purchase DotsConnect stock granted on June 12, 2000 at fair
market value with the following vesting schedule: 25% on June 12, 2001; 25%
on June 12, 2002; and 50% on June 12, 2003.
- - --------------------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of Securities Value of
Underlying Unexercised Unexercised In-the-Money
Shares Value Options/SARs at FY-End (#) Options/SARs at FY-End ($)(1)
Acquired on Realized -------------------------- -----------------------------
Name Exercise (#) ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
- - ------------------- ------------ ----------- -------------------------- -----------------------------
Richard W. Ussery -0- $ -0- 446,823 / 139,370(2) $5,896,244 / $ 802,929
-0- -0- 126,000 / 294,000(3) 1,159,830 / 2,706,270
-0- -0- 0 / 100,000(4) 0 / 0
Philip W. Tomlinson -0- -0- 293,238 / 100,630(2) 3,659,144 / 580,545
-0- -0- 126,000 / 294,000(3) 1,159,830 / 2,706,270
-0- -0- 0 / 100,000(4) 0 0
William A. Pruett -0- -0- 116,065 / 37,454(2) 1,520,472 / 215,958
-0- -0- 63,000 / 147,000(3) 579,915 / 1,353,135
-0- -0- 0 / 50,000(4) 0 / 0
M. Troy Woods -0- -0- 80,346 / 37,454(2) 829,908 / 215,958
-0- -0- 72,000 / 147,000(3) 763,290 / 1,353,135
-0- -0- 0 / 100,000(4) 0 / 0
James B. Lipham -0- -0- 79,115 / 31,444(2) 939,424 / 182,308
-0- -0- 70,200 / 147,000(3) 726,615 / 1,353,135
-0- -0- 0 / 50,000(4) 0 / 0
- - ----------
(1) Market value of underlying securities at exercise or year-end, minus the
exercise or base price.
(2) Options pertain to shares of Synovus stock.
(3) Options pertain to shares of TSYS stock.
(4) Options pertain to shares of DotsConnect stock.
15
CHANGE IN CONTROL ARRANGEMENTS
Long-Term Incentive Plans. Under the terms of the TSYS 2000 Long-Term
Incentive Plan, the DotsConnect 2000 Long-Term Incentive Plan and Synovus' 1992,
1994 and 2000 Long-Term Incentive Plans, all awards become automatically vested
in the event of a Change of Control, as defined below. Awards under the Plans
may include stock options, restricted stock, stock appreciation and performance
awards. Messrs. Ussery, Tomlinson, Pruett, Woods and Lipham each have restricted
stock and stock options under the Synovus/TSYS/DotsConnect Long-Term Incentive
Plans.
Change of Control Agreements. TSYS has entered into Change of Control
Agreements with Messrs. Ussery, Tomlinson, Pruett, Woods and Lipham, and certain
other officers. In the event of a Change of Control, an executive would receive
the following:
. For Messrs. Ussery and Tomlinson, three times their current base
salary and bonus (bonus is defined as the average bonus over the past
three years measured as a percentage multiplied by the executive's
current base salary). Messrs. Pruett, Woods and Lipham would receive
two times their current base salary and bonus, as defined above.
. Three years of medical, life, disability and other welfare benefits
(two years for Messrs. Pruett, Woods and Lipham).
. A pro rata bonus through the date of termination for the separation
year.
. A cash amount in lieu of a long-term incentive award for the year of
separation equal to 1.5 times the normal market grant, if the
executive received a long-term incentive award in the year of
separation, or 2.5 times the market grant if not.
In order to receive these benefits, an executive must be actually or
constructively terminated within one year following a Change of Control, or the
executive may voluntarily or involuntarily terminate employment during the
thirteenth month following a Change of Control.
With respect to Synovus, a Change of Control under these agreements is
defined as: (i) the acquisition of 20% or more of the "beneficial ownership" of
Synovus' outstanding voting stock, with certain exceptions for Turner family
members; (ii) the persons serving as directors of Synovus as of January 1, 1996,
and their replacements or additions, ceasing to comprise at least two-thirds of
the Board members; (iii) a merger, consolidation, reorganization or sale of
Synovus' assets unless the prior owners of Synovus own more than two-thirds of
the new company, no person owns more than 20% of the new company, and two-thirds
of the new company's Board members are prior Board members of Synovus; or (iv) a
triggering event occurs as defined in the Synovus Rights Agreement. With respect
to TSYS, a Change of Control is generally defined the same as a Change of
Control of Synovus, except that (a) a spin-off of TSYS stock to Synovus
shareholders, and (b) any transaction in which Synovus continues to own more
than 50% of the outstanding stock of TSYS are specifically excluded from the
Change of Control definition. In the event an executive is impacted by the
Internal Revenue Service excise tax that applies to certain Change of Control
arrangements, the executive would receive additional payments so that he or she
would be in the same position as if the excise tax did not apply. The Change of
Control Agreements do not provide for any retirement benefits or perquisites.
16
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in cumulative
shareholder return on TSYS stock with the cumulative total return of the
Standard & Poor's 500 Index and the Standard & Poor's Computer Software &
Services Index for the last five fiscal years (assuming a $100 investment on
December 31, 1995 and reinvestment of all dividends).
[Omitted Stock Performance Graph is represented by the following table.]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
TSYS, S&P 500 AND S&P COMPUTER SOFTWARE & SERVICES INDEX
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- -----
TSYS $100 $177 $163 $232 $162 $222
S&P 500 $100 $123 $164 $211 $255 $232
S&P CS&S $100 $155 $217 $392 $726 $343
17
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee ("Committee") of TSYS is responsible for the
design and oversight of the TSYS executive compensation program, as well as the
compensation and other benefit plans in which officers, employees and directors
of TSYS and its subsidiaries participate. The Committee has designed its
compensation program to attract and retain highly motivated and well-trained
executives in order to create superior shareholder value for TSYS shareholders.
Elements of Executive Compensation. The four elements of executive
compensation at TSYS are:
. Base Salary
. Annual Bonus
. Long-Term Incentives
. Other Benefits
The Committee believes that a substantial portion (though not a majority)
of an executive's compensation should be at risk based upon performance, both in
the short-term (through the annual bonus and the Synovus/TSYS Profit Sharing
Plan and the Synovus/TSYS 401(k) Savings Plan) and long-term (through long-term
incentives such as stock options and restricted stock awards). The remainder of
each executive's compensation is primarily based upon the competitive practices
of computer systems/data processing companies ("similar companies"), with
certain adjustments as described below. The companies used for comparison under
this approach are not the same companies included in the peer group index
appearing in the Stock Performance Graph above. Each element of executive
compensation is discussed in detail below.
Base Salary. Base salary is an executive's annual rate of pay without
regard to any other elements of compensation. The primary consideration used by
the Committee is a market comparison of comparable positions within similar
companies based upon the executive's level of responsibility and experience. The
Committee has had difficulty, however, in obtaining appropriate market data for
certain of TSYS' executives. Market data for most positions is based upon the
50th percentile of the computer systems/data processing market, adjusted to
reflect the size of TSYS. If market data could not be obtained for a particular
position, the Committee targeted the median level of general industry data with
a premium added to reflect the technology component of TSYS' business. Based
solely upon this market data, the Committee increased Mr. Ussery's base salary
in 2000. The Committee also increased the base salaries of TSYS' other executive
officers in 2000 based solely upon this market data, as described above.
Annual Bonus. The Committee may award annual bonuses to TSYS executives
under two different plans, the Synovus Executive Bonus Plan (which was approved
by TSYS shareholders in 1996 and is being submitted for reapproval in 2001) and
the Synovus Incentive Bonus Plan. The Committee selects the participants in each
Plan from year to year. For 2000, Mr. Ussery was selected to participate in the
Synovus Executive Bonus Plan and Messrs. Tomlinson, Pruett, Woods and Lipham
were selected to participate in the Incentive Bonus Plan. Under the terms of the
Plans, bonus amounts are paid as a percentage of base pay based on the
achievement of performance goals that are established each year by the
Committee. The performance goals may be chosen by the Committee from among the
following measurements:
. Number of cardholder, merchant and/or other customer accounts
processed and/or converted by TSYS;
. Successful negotiation or renewal of contracts with new and/or
existing customers by TSYS;
. Productivity and expense control;
. Stock price;
. Return on capital compared to cost of capital;
. Net income;
. Operating income;
. Earnings per share and/or earnings per share growth;
. Return on equity;
18
. Return on assets;
. Non-performing assets and/or loans as a percentage of total assets
and/or loans;
. Non-interest expense as a percentage of total expense;
. Loan charge-offs as a percentage of loans; and
. Asset growth.
The Committee established a payout matrix based on attainment of net income
goals during 2000 for Mr. Ussery and TSYS' other executive officers. The maximum
percentage payouts under the Plans for 2000 were 65% for Mr. Ussery and 60% for
Messrs. Tomlinson, Pruett, Woods and Lipham. The Committee also established a
"super bonus" payout matrix that increased the bonus amount otherwise payable
if certain stock price and net income goals were attained. TSYS' financial
performance and each executive's individual performance can reduce the bonus
awards determined by the attainment of the goals, although this was not the case
for any of TSYS' executive officers. Based upon TSYS' net income and stock
price, Mr. Ussery and TSYS' other executive officers were awarded the bonus
amounts set forth in the Summary Compensation table.
Long-Term Incentives. The Committee has awarded both stock options and
restricted stock awards to executives. Because of the relatively low number of
publicly traded shares of TSYS, the Committee has awarded Synovus stock options
and restricted stock awards to TSYS executives, linking their interests to those
of Synovus and TSYS shareholders. Restricted stock awards are designed to focus
executives on the long-term performance of Synovus and TSYS. Stock options
provide executives with the opportunity to buy and maintain an equity interest
in Synovus and TSYS and to share in their capital appreciation. The Committee
has established a payout matrix for long-term grants that uses total shareholder
return measured by Synovus' performance (stock price increases plus dividends)
and how Synovus' total shareholder return compares to the return of a peer group
of companies. For the long-term incentive awards made in 2000, total
shareholder return and peer comparisons were measured during the 1997 to 1999
performance period. Under the payout matrix, the Committee awarded Messrs.
Ussery, Tomlinson, Pruett, Woods and Lipham stock options of 49,050, 35,543,
13,115, 13,115 and 11,196, respectively.
On June 12, 2000, the Committee made two long-term incentive grants in
subsidiaries of TSYS to TSYS executives. The Committee made these awards to link
the interests of TSYS executives to the ownership interest of TSYS in those
subsidiaries. With respect to DotsConnect, Inc., the Committee awarded Messrs.
Ussery, Tomlinson, Pruett, Woods and Lipham stock options of 100,000, 100,000,
50,000, 100,000 and 50,000 shares, respectively, pursuant to the terms of the
DotsConnect, Inc. 2000 Long-Term Incentive Plan. With respect to Vital
Processing Services, LLC, the Committee awarded Messrs. Ussery, Tomlinson,
Pruett, Woods and Lipham restricted units of 100,000, 200,000, 100,000, 100,000
and 200,000, respectively.
Other Benefits. Executives receive other benefits that serve a different
purpose than the elements of compensation discussed above. In general, these
benefits either provide retirement income or protection against catastrophic
events such as illness, disability and death. Executives generally receive the
same benefits offered to the employee population, with the only exceptions
designed to promote tax efficiency or to replace other benefits lost due to
regulatory limits. The Synovus/TSYS Profit Sharing Plan and the Synovus/TSYS
401(k) Savings Plan, including an excess benefit plan which replaces benefits
lost due to regulatory limits (collectively the "Plan"), is the largest
component of TSYS' benefits package for executives. The Plan is directly related
to the performance of TSYS because the contributions to the Plan, up to a
maximum of 14% of an executive's compensation, depend upon TSYS' profitability.
For 2000, Mr. Ussery and TSYS' other executive officers received a Plan
contribution of 11.45% of their compensation, based upon the Plan's
profitability formula. The remaining benefits provided to executives are
primarily based upon the competitive practices of similar companies.
The Internal Revenue Code limits the deductibility for federal income tax
purposes of annual compensation paid by a publicly held corporation to its chief
executive officer and four other highest paid executives for amounts in excess
of $1 million, unless certain conditions are met.
19
Because the Committee seeks to maximize shareholder value, the Committee has
taken steps to ensure that any compensation paid to its executives in excess of
$1 million is deductible. For 2000, Mr. Ussery would have been affected by this
provision, but for the steps taken by the Committee. The Committee reserves the
ability to make awards which do not qualify for full deductibility under the
Internal Revenue Code, however, if the Committee determines that the benefits of
doing so outweigh full deductibility.
The Committee believes that its executive compensation program serves the
best interests of the shareholders of TSYS. As described above, a substantial
portion of the compensation of TSYS' executives is directly related to TSYS'
performance. The Committee believes that the performance of TSYS to date
validates its compensation philosophy.
The Compensation Committee
Gardiner W. Garrard, Jr.
Mason H. Lampton
G. Wayne Clough
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Gardiner W. Garrard, Jr., Mason H. Lampton and G. Wayne Clough served as
members of TSYS' Compensation Committee during 2000. No member of the Committee
is a current or former officer or employee of TSYS or its subsidiaries.
TRANSACTIONS WITH MANAGEMENT
TSYS has entered into an agreement with CB&T with respect to the use of
aircraft owned or leased by CB&T and W.C.B. Air L.L.C. CB&T and W.C.B. Air are
parties to a Joint Ownership Agreement pursuant to which they jointly own or
lease aircraft. W.C. Bradley Co. owns all of the limited liability company
interests of W.C.B. Air. CB&T and W.C.B. Air have each agreed to pay fixed fees
for each hour they fly the aircraft owned and/or leased pursuant to the Joint
Ownership Agreement. TSYS paid CB&T $1,274,764 for its use of the aircraft
during 2000, which was used by CB&T to satisfy its commitments under the Joint
Ownership Agreement. The charges payable by TSYS to CB&T in connection with its
use of this aircraft approximate charges available to unrelated third parties in
the State of Georgia for use of comparable aircraft for commercial purposes.
William B. Turner, a director of TSYS and Chairman of the Executive Committee of
CB&T and Synovus, is an advisory director and shareholder of W.C. Bradley Co.
James H. Blanchard, Chairman of the Executive Committee of TSYS, Chairman of the
Board of Synovus and a director of CB&T, is a director of W.C. Bradley Co. W.
Walter Miller, Jr., a director of W.C. Bradley Co., is Group Executive and
a director of TSYS. Elizabeth C. Ogie, the niece of William B. Turner and the
sister-in-law of W. Walter Miller, Jr., is a director of W.C. Bradley Co. and a
director of CB&T and Synovus. Stephen T. Butler, the nephew of William B. Turner
and an officer and director of W.C. Bradley Co., is a director of CB&T. W.B.
Turner, Jr. and John T. Turner, the sons of William B. Turner, are officers and
directors of W.C. Bradley Co. and are also directors of CB&T.
King & Spalding, a law firm located in Atlanta, Georgia, performed legal
services on behalf of TSYS during 2000. Samuel A. Nunn, a director of TSYS,
is a senior partner of King & Spalding. Bradley & Hatcher, a law firm located
in Columbus, Georgia, performed legal services on behalf of TSYS during
2000. Richard Y. Bradley, a director of TSYS, CB&T and Synovus, is a partner of
Bradley & Hatcher.
For a description of certain transactions between TSYS and its affiliated
companies, upon whose Boards of Directors certain of TSYS' directors also serve,
see "Bankcard Data Processing Services Provided to CB&T and Certain of Synovus'
Subsidiaries; Other Agreements Between TSYS, Synovus, CB&T and Certain of
Synovus' Subsidiaries" on page 23.
20
RELATIONSHIPS BETWEEN TSYS, SYNOVUS, CB&T AND CERTAIN OF SYNOVUS'
SUBSIDIARIES
BENEFICIAL OWNERSHIP OF TSYS STOCK BY CB&T
The following table sets forth the number of shares of TSYS stock
beneficially owned by CB&T, the only known beneficial owner of more than 5% of
the issued and outstanding shares of TSYS stock, as of December 31, 2000.
- - --------------------------------------------------------------------------------
Percentage of
Shares of Outstanding Shares of
TSYS Stock TSYS Stock
Name and Address of Beneficially Owned Beneficially Owned
Beneficial Owner as of 12/31/00 as of 12/31/00
- - ------------------------ ------------------------ -----------------------------
Columbus Bank
and Trust Company 157,455,980(1)(2) 80.9%
1148 Broadway
Columbus, Georgia 31901
- - ------------
(1) CB&T individually owns these shares.
(2) As of December 31, 2000, Synovus Trust Company, a wholly owned trust
company subsidiary of CB&T, held in various fiduciary capacities a total of
1,625,550 shares (.83%) of TSYS stock. Of this total, Synovus Trust
Company held 1,310,464 shares as to which it possessed sole voting power,
1,269,825 shares as to which it possessed sole investment power, 268,665
shares as to which it possessed shared voting power and 275,535 shares as
to which it possessed shared investment power. In addition, as of December
31, 2000, Synovus Trust Company held in various agency capacities an
additional 2,108,339 shares of TSYS stock as to which it possessed
no voting or investment power. Synovus and its subsidiaries disclaim
beneficial ownership of all shares of TSYS stock which are held by
Synovus Trust Company in various fiduciary and agency capacities.
CB&T, by virtue of its individual ownership of 157,455,980 shares, or
80.9%, of the outstanding shares of TSYS stock on December 31, 2000 is able to,
and intends to, elect a majority of TSYS' Board of Directors. CB&T presently
controls TSYS.
INTERLOCKING DIRECTORATES OF TSYS, SYNOVUS AND CB&T
Seven of the seventeen members of and nominees to serve on TSYS' Board of
Directors also serve as members of the Boards of Directors of Synovus and CB&T.
They are James H. Blanchard, Richard Y. Bradley, Gardiner W. Garrard, Jr., John
P. Illges, III, H. Lynn Page, William B. Turner and James D. Yancey. Alfred W.
Jones III serves as a director of Synovus and Mason H. Lampton serves as an
Advisory Director of CB&T and as a director of Synovus.
SYNOVUS STOCK OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth the number of shares of Synovus
stock beneficially owned by TSYS' directors, by each executive officer named in
the Summary Compensation Table on page 14 and by all directors and executive
officers as a group as of December 31, 2000.
21
- - ---------------------------------------------------------------------------------------------------
Shares of Shares of Shares of
Synovus Stock Synovus Stock Synovus Stock Percentage
Beneficially Beneficially Beneficially of
Owned with Owned with Owned with Total Outstanding
Sole Voting Shared Sole Voting Shares of Shares of
and Voting and but no Synovus Stock Synovus Stock
Investment Investment Investment Beneficially Beneficially
Power as of Power as of Power as of Owned as of Owned as of
Name 12/31/00 12/31/00 12/31/00 12/31/00(1) 12/31/00
- - -------------------- -------------- ------------ --------------- ------------ ------------
James H. Blanchard 1,387,547 211,360 162,127 3,056,389 1.0
Richard Y. Bradley 21,617 84,887 --- 106,504 *
G. Wayne Clough --- --- --- --- ---
Thomas G. Cousins --- --- --- --- ---
Gardiner W. Garrard, Jr. 204,147 1,263,616 --- 1,467,763 *
Sidney E. Harris --- --- --- --- ---
John P. Illges, III 282,727 504,096 --- 786,823 *
Alfred W. Jones III 4,135 --- --- 4,135 *
Mason H. Lampton 79,996 302,451(2) --- 382,447 *
James B. Lipham 6,131 --- 1,330 106,524 *
W. Walter Miller, Jr. 30,744 99,174 --- 158,081 *
Samuel A. Nunn --- --- --- --- ---
H. Lynn Page 797,886 11,515 --- 809,401 *
William A. Pruett 9,315 --- 1,767 151,186 *
Philip W. Tomlinson 50,642 --- 4,654 413,321 *
William B. Turner 73,246 30,209,047(3) --- 30,282,293 10.6
Richard W. Ussery 86,310 4,293 6,579 634,025 *
M. Troy Woods 2,241 --- 1,577 108,203 *
James D. Yancey 1,022,406 61,677 7,810 1,868,999 *
Rebecca K. Yarbrough 45,542 19,804 --- 65,346 *
Directors and Executive
Officers as a group
(22 persons) 4,207,886 32,771,976 246,174 40,817,291 14.2
* Less than one percent of the outstanding shares of Synovus stock.
- - -------------------
(1) The totals shown for the following directors and executive officers of TSYS
include the number of shares of Synovus stock that each individual has
the right to acquire within 60 days through the exercise of stock options:
Person Number of Shares
------ ----------------
James H. Blanchard 1,295,355
James B. Lipham 99,063
W. Walter Miller, Jr. 28,163
William A. Pruett 140,104
Philip W. Tomlinson 358,025
Richard W. Ussery 536,843
M. Troy Woods 104,385
James D. Yancey 777,106
In addition, the other executive officers of TSYS have rights to acquire an
aggregate of 415,851 shares of Synovus stock within 60 days through
the exercise of stock options.
(2) Includes 276,187 shares of Synovus stock held in a trust for which
Mr. Lampton is not the trustee. Mr. Lampton disclaims beneficial ownership
of such shares.
(3) Includes 27,621,025 shares of Synovus stock beneficially owned by TB&C
Bancshares, Inc., of which Mr. Turner is an officer, director and
shareholder.
22
BANKCARD DATA PROCESSING SERVICES PROVIDED TO CB&T AND CERTAIN OF SYNOVUS'
SUBSIDIARIES; OTHER AGREEMENTS BETWEEN TSYS, SYNOVUS, CB&T AND CERTAIN OF
SYNOVUS' SUBSIDIARIES
During 2000, TSYS provided bankcard data processing services to CB&T and
certain of Synovus' other banking subsidiaries. The bankcard data processing
agreement between TSYS and CB&T can be terminated by CB&T upon 60 days prior
written notice to TSYS or terminated by TSYS upon 180 days prior written notice
to CB&T. During 2000, TSYS derived $12,281,914 in revenues from CB&T and certain
of Synovus' other banking subsidiaries for the performance of bankcard data
processing services and $256,126 in revenues from Synovus and its subsidiaries
for the performance of other data processing services. TSYS' charges to CB&T and
Synovus' other subsidiaries for bankcard and other data processing services are
comparable to, and are determined on the same basis as, charges by TSYS to
similarly situated unrelated third parties.
Synovus Service Corp., formerly a wholly owned subsidiary of Synovus,
provided various services to Synovus' subsidiary companies during 2000,
including TSYS. TSYS and Synovus Service Corp. were parties to a Lease Agreement
pursuant to which Synovus Service Corp. leased from TSYS office space for lease
payments aggregating $197,597 during 2000. Synovus Service Corp. also paid TSYS
$63,806 during 2000 for data processing services. The terms of these
transactions are comparable to those which could have been obtained in
transactions with unaffiliated third parties.
During 2000, TSYS and Synovus and TSYS and Synovus Service Corp. were
parties to Management Agreements pursuant to which Synovus and Synovus Service
Corp. provided certain management services to TSYS. During 2000, these services
included human resource services, maintenance services, security services,
communications services, corporate education services, travel services, investor
relations services, corporate governance services, legal services, regulatory
and statutory compliance services, executive management services performed on
behalf of TSYS by certain of Synovus' officers and financial services. As
compensation for management services provided during 2000, TSYS paid Synovus and
Synovus Service Corp. management fees of $1,703,840 and $8,070,260,
respectively. In addition, Synovus and TSYS are parties to Management Agreements
pursuant to which TSYS provided management services to Synovus in connection
with TSYS' assistance in managing the businesses of ProCard, Inc. and TSYS Total
Debt Management, Inc., both of which are wholly owned subsidiaries of Synovus.
As compensation for management services provided during 2000, Synovus paid TSYS
management fees of $504,967 in connection with TSYS Total Debt Management, Inc.
and $176,544 in connection with ProCard, Inc. Management fees are subject to
future adjustments based upon charges at the time by unrelated third parties for
comparable services.
During 2000, Synovus Trust Company served as Trustee of various employee
benefit plans of TSYS. During 2000, TSYS paid Synovus Trust Company trustee's
fees under these plans of $391,414.
During 2000, Columbus Depot Equipment Company, a wholly owned subsidiary of
TSYS, and CB&T and nine of Synovus' other subsidiaries were parties to Lease
Agreements pursuant to which CB&T and nine of Synovus' other subsidiaries leased
from Columbus Depot Equipment Company computer related equipment for bankcard
and bank data processing services for lease payments aggregating $64,004. The
terms, conditions and rental rates provided for in these Agreements are
comparable to corresponding terms, conditions and rates provided for in leases
of similar equipment offered by unrelated third parties.
During 2000, Synovus Technologies, Inc., formerly a wholly owned subsidiary
of Synovus, paid TSYS $118,322 for data links, network services and other
miscellaneous items related to the data processing services which Synovus
Technologies provided to its customers, which amount was reimbursed to Synovus
Technologies by its customers. During 2000, Synovus Technologies paid TSYS
$24,900, primarily for computer processing services. During 2000 TSYS paid
Synovus Technologies $1,688,676 for lockbox services. The charges for processing
and other services are comparable to those between unrelated third parties.
During 2000, pointpathbank, N.A., a wholly owned subsidiary of Synovus,
paid DotsConnect, Inc. $514,640 in connection with Web hosting services and CB&T
paid DotsConnect $30,867
23
in connection with online customer support services. The charges paid for these
services are comparable to those between unrelated third parties.
During 2000, Synovus, CB&T and other Synovus subsidiaries paid to Columbus
Productions, Inc. and TSYS Total Solutions, Inc., wholly owned subsidiaries of
TSYS, an aggregate of $6,529,779 for printing, correspondence and facilities
management services. The charges for these services are comparable to those
between unrelated third parties.
During 2000, CB&T leased office space from TSYS for lease payments of
$39,405. During 2000, TSYS and its subsidiaries were paid $4,772,461 of interest
by CB&T in connection with deposit accounts with, and commercial paper purchased
from, CB&T. The lease payments and interest rates paid are comparable to those
provided for between unrelated third parties.
The Board of Directors of TSYS has resolved that transactions with
officers, directors, key employees and their affiliates shall be approved by a
majority of its independent and disinterested directors, if otherwise permitted
by applicable law, and will be on terms no less favorable than could be obtained
from unrelated third parties.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires TSYS'
officers and directors, and persons who own more than ten percent of TSYS
stock, to file reports of ownership and changes in ownership on Forms 3,4 and 5
with the Securities and Exchange Commission and the New York Stock Exchange.
Officers, directors and greater than ten percent shareholders are required by
Securities and Exchange Commission regulations to furnish TSYS with copies of
all Section 16(a) forms they file.
To TSYS' knowledge, based solely on its review of the copies of such forms
received by it, and written representations from certain reporting persons that
no Forms 5 were required for those persons, TSYS believes that during the fiscal
year ended December 31, 2000, all Section 16(a) filing requirements applicable
to its officers, directors and greater than ten percent beneficial owners were
complied with, except that Mrs. Yarbrough reported two transactions late on a
Form 4.
INDEPENDENT AUDITORS
APPOINTMENT OF INDEPENDENT AUDITORS
On March 7, 2001, TSYS' Board of Directors appointed KPMG LLP as the
independent auditors to audit the financial statements of TSYS and its
subsidiaries for the fiscal year ending December 31, 2001. The Board of
Directors knows of no direct or material indirect financial interest by KPMG in
TSYS or of any connection between KPMG and TSYS in the capacity of promoter,
underwriter, voting trustee, director, officer, shareholder or employee.
Representatives of KPMG will be present at TSYS' 2001 Annual Meeting with
the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
FEES
The following table sets forth the aggregate fees billed to TSYS in the
indentified categories for the fiscal year ended December 31, 2000 by KPMG.
Financial Information
Systems Design and All other
Audit Fees Implementation Fees Fees
- - ---------- --------------------- ---------
$215,000 $ 0 $697,279
The Audit Committee has considered whether the provision of services to
TSYS, other than audit services, is compatible with maintaining KPMG's
independence.
24
GENERAL INFORMATION
FINANCIAL INFORMATION
Detailed financial information for TSYS and its subsidiaries for its 2000
fiscal year is included in TSYS' 2000 Annual Report that is being mailed to
TSYS' shareholders together with this Proxy Statement.
SHAREHOLDER PROPOSALS FOR THE 2002 PROXY STATEMENT
Any shareholder satisfying the Securities and Exchange Commission
requirements and wishing to submit a proposal to be included in the Proxy
Statement for the 2002 Annual Meeting of Shareholders should submit the proposal
in writing to the Secretary, Total System Services, Inc., 901 Front Avenue,
Suite 301, Columbus, Georgia 31901. TSYS must receive a proposal by November 9,
2001 in order to consider it for inclusion in the Proxy Statement for the 2002
Annual Meeting of Shareholders.
DIRECTOR NOMINEES OR OTHER BUSINESS FOR PRESENTATION AT THE ANNUAL MEETING
Shareholders who wish to present director nominations or other business at
the Annual Meeting are required to notify the Secretary of their intent between
December 10, 2001 and January 24, 2002 and the notice must provide information
as required in the bylaws, or the persons appointed as proxies may exercise
their discretionary voting authority with respect to the proposal. A copy of
these bylaw requirements will be provided upon request in writing to the
Secretary, Total System Services, Inc., 901 Front Avenue, Suite 301, Columbus,
Georgia 31901. This requirement does not apply to the deadline for submitting
shareholder proposals for inclusion in the Proxy Statement (see "Shareholder
Proposals for the 2002 Proxy Statement" above), nor does it apply to questions a
shareholder may wish to ask at the meeting.
SOLICITATION OF PROXIES
TSYS will pay the cost of soliciting proxies. Proxies may be solicited on
behalf of TSYS by directors, officers or employees by mail, in person or by
telephone, facsimile or other electronic means. TSYS will reimburse brokerage
firms, nominees, custodians and fiduciaries for their out-of-pocket expenses
for forwarding proxy materials to beneficial owners.
HOUSEHOLDING
The Securities and Exchange Commission recently adopted amendments to
its proxy rules which permit companies and intermediaries, such as brokers and
banks, to satisfy delivery requirements for proxy statements with respect to two
or more shareholders sharing the same address by delivering a single proxy
statement to those shareholders. This method of delivery, often referred to as
householding, should reduce the amount of duplicate information that
shareholders receive and lower printing and mailing costs for companies. TSYS is
not householding proxy materials for its shareholders of record in connection
with its 2001 Annual Meeting. However, we have been notified that certain
intermediaries will household proxy materials. If you hold your shares of TSYS
stock through a broker or bank that has determined to household proxy materials:
. Only one annual report and proxy statement will be delivered
to multiple shareholders sharing an address unless you notify
your broker or bank to the contrary;
. You can contact TSYS by calling (706) 649-5220 or by writing
Investor Relations Manager, Total System Services, Inc., P.O.
Box 120, Columbus, Georgia 31902 to request a separate copy of
the annual report and proxy statement for the 2001 Annual
Meeting and for future meetings or you can contact your bank
or broker to make a similar request; and
. You can request delivery of a single copy of annual reports or
proxy statements from your bank or broker if you share the
same address as another TSYS shareholder and your bank or
broker has determined to household proxy materials.
25
The above Notice of Annual Meeting and Proxy Statement are sent by order of
the TSYS Board of Directors.
/s/Richard W. Ussery
Richard W. Ussery
Chairman of the Board
March 9, 2001
26
APPENDIX A
TOTAL SYSTEM SERVICES, INC.
Charter of the Audit Committee of the Board of Directors
I. Audit Committee Purpose
The Audit Committee is appointed by the Board of Directors to assist it
in fulfilling its oversight responsibilities. The Audit Committee's primary
duties and responsibilities are to:
. Monitor the quality and integrity of the Company's financial
reporting process and systems of internal controls regarding
finance, accounting, regulatory and legal compliance.
. Monitor the independence and performance of the Company's
independent auditors and internal auditing activities.
. Provide an avenue of communication among the independent
auditors, management, internal audit, and the Board of
Directors.
The primary responsibility of the Audit Committee is to oversee the
Company's financial reporting process on behalf of the Board and report the
results of their activities to the Board. Management is responsible for
preparing the Company's financial statements and the independent auditors are
responsible for auditing those financial statements. The Committee will
recommend actions to the Board of Directors as the Committee deems appropriate.
The Committee will undertake such additional activities within the scope of its
primary functions as the Committee deems appropriate.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the
independent auditors as well as anyone in the organization. The Audit Committee
has the ability to retain, at the Company's expense, special legal, accounting,
or other consultants or experts it deems necessary in the performance of its
duties.
II. Audit Committee Composition
Audit Committee members shall meet the requirements of the New York
Stock Exchange. The Audit Committee shall be comprised of three or more
directors as determined by the Board of Directors, each of whom shall be
independent directors, free from any relationship that would interfere with the
exercise of his or her independent judgment. All members of the Committee shall
have a basic understanding of finance and accounting and be able to read and
understand fundamental financial statements, and at least one member of the
Committee shall have accounting or related financial management expertise.
III. Audit Committee Responsibilities and Duties
Review Procedures
1. The Audit Committee shall review and reassess the adequacy of
this Charter at least annually, submit the Charter to the
Board of Directors for approval and include a copy of the
Charter as an appendix to the Company's proxy statement at
least every three years, in accordance with SEC regulations.
2. The Audit Committee shall review the Company's annual audited
financial statements prior to filing or distribution and
discuss with management and the independent auditors any
significant issues regarding accounting principles, practices,
and judgments.
A-1
3. The Audit Committee shall review significant findings prepared
by the independent auditors and internal audit, together with
management's responses.
Independent Auditors
4. The independent auditors are ultimately accountable to the
Audit Committee and the Board of Directors. The Audit
Committee and the Board of Directors are responsible for
selection, evaluation and replacement of the independent
auditors. The Audit Committee shall review the independence
and performance of the auditors and annually recommend to the
Board of Directors the appointment of the independent auditors
or approve any discharge of auditors when circumstances
warrant.
5. The Audit Committee is responsible for ensuring that the
outside auditors submit on a periodic basis to the Audit
Committee a formal written statement delineating all
relationships between the auditors and the Company and is
responsible for actively engaging in a dialogue with the
outside auditors with respect to any disclosed relationships
or services that may impact the objectivity and independence
of the outside auditors. The Audit Committee is responsible
for recommending that the Board of Directors take appropriate
action in response to the outside auditors' report to satisfy
itself of the outside auditors' independence.
6. The Audit Committee shall approve the fees and other
significant compensation to be paid to the independent
auditors.
7. The Audit Committee shall review the independent auditors'
audit plan, including discussion of the scope, staffing,
reliance upon management, and internal audit and general audit
approach.
8. Prior to the Company filing its Annual Report on Form 10-K
with the SEC, the Audit Committee shall discuss the results of
the audit with the independent auditors, and shall discuss
certain matters required to be communicated by independent
auditors to audit committees in accordance with AICPA
Statement of Auditing Standards No. 61.
Internal Audit
9. The Audit Committee shall review the budget, plan,
organizational structure, and staffing of internal audit.
10. The Audit Committee shall review significant reports prepared
by internal audit together with management's response and
follow-up to these reports.
Other Audit Committee Responsibilities
11. The Audit Committee shall review the appointment, performance
and replacement of the senior internal audit executive.
12. The Audit Committee shall annually prepare a report to
shareholders as required by the Securities and Exchange
Commission. The report should be included in the Company's
annual proxy statement.
A-2