TSYS(R)
TOTAL SYSTEM SERVICES, INC.(R)
Richard W. Ussery March 12, 1998
Chairman of the Board
Dear Shareholder:
The Annual Meeting of the Shareholders of Total System Services, Inc. will
be held on April 16, 1998, at The Columbus Museum, 1251 Wynnton Road, in
Columbus, Georgia beginning at 10:00 o'clock A.M., E.T., for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders and Proxy
Statement.
We hope that you will be able to be with us and let us give you a review of
1997. 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 complete and mail the enclosed Proxy Card promptly.
Thank you for helping us make 1997 a good year. We look forward to your
continued support in 1998 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
TSYS(R)
TOTAL SYSTEM SERVICES, INC.(R)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 16, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of Total
System Services, Inc.(R) ("TSYS(R)") will be held at The Columbus Museum, 1251
Wynnton Road, in Columbus, Georgia on April 16, 1998, at 10:00 o'clock A.M.,
E.T., for:
(1) The election of three nominees as Class III directors of TSYS to serve
until the 2001 Annual Meeting of Shareholders; and
(2) The transaction of such other business as may properly come before the
Annual Meeting.
Information relating to the above matters is set forth in the accompanying
Proxy Statement.
Only shareholders of record at the close of business on February 12, 1998
will be entitled to notice of and to vote at the Annual Meeting.
/s/G. Sanders Griffith, III
G. SANDERS GRIFFITH, III
Secretary
Columbus, Georgia
March 12, 1998
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING IN PERSON, PLEASE
VOTE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE WHICH DOES NOT REQUIRE ANY POSTAGE IF MAILED IN THE
UNITED STATES.
TSYS(R)
TOTAL SYSTEM SERVICES, INC.(R)
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 16, 1998
I. INTRODUCTION
A. Purposes of Solicitation - Terms of Proxies.
The Annual Meeting of the Shareholders ("Annual Meeting") of Total System
Services, Inc. ("TSYS") will be held on April 16, 1998 for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders and in this
Proxy Statement. The enclosed Proxy Card ("Proxy") is solicited BY AND ON BEHALF
OF TSYS' BOARD OF DIRECTORS in connection with such Annual Meeting or any
adjournment thereof. The costs of the solicitation of Proxies by TSYS' Board of
Directors will be paid by TSYS. Forms of Proxies and Proxy Statements will also
be distributed through brokers, banks, nominees, custodians and other like
parties to the beneficial owners of shares of the $.10 par value common stock of
TSYS ("TSYS Common Stock"), and TSYS will reimburse such parties for their
reasonable out-of-pocket expenses therefor. TSYS' mailing address is Post Office
Box 2506, Columbus, Georgia 31902-2506.
The shares represented by the Proxy in the accompanying form, which when
properly executed, returned to TSYS' Board of Directors and not revoked, will be
voted in accordance with the instructions specified in such Proxy. If a choice
is not specified in the Proxy, the shares represented by such Proxy will be
voted "FOR" the election of the three nominees for Class III directors named
herein.
Each Proxy granted may be revoked in writing at any time before the
authority granted thereby is exercised. Attendance at the Annual Meeting will
constitute a revocation of the Proxy for such Meeting if the maker thereof
elects to vote in person.
This Proxy Statement and the enclosed Proxy are being first mailed to
shareholders on or about March 12, 1998.
B. TSYS Securities Entitled to Vote and Record Date.
TSYS' outstanding voting securities are TSYS Common Stock, each share of
which entitles the holder thereof to one vote on any matter coming before a
meeting of TSYS' shareholders. Only shareholders of record at the close of
business on February 12, 1998 are entitled to vote at the Annual Meeting or any
adjournment thereof. As of that date, there were 129,331,775 shares of TSYS
Common Stock outstanding and entitled to vote. TSYS owned 151,747 shares of TSYS
Common Stock on February 12, 1998 as treasury shares, which are not considered
to be outstanding and are not entitled to be voted at the Annual Meeting.
C. Shareholder Proposals.
From time to time, TSYS' shareholders may present proposals which may be
proper subjects for inclusion in TSYS' Proxy Statement for consideration at
TSYS' Annual Meeting. To be considered for inclusion, shareholder proposals must
be submitted on a timely basis. Proposals for TSYS' 1999 Annual Meeting, which
has been tentatively scheduled for April 12, 1999, must be received by TSYS no
later than November 12, 1998, and any such proposals, as well as any questions
related thereto, should be directed to Secretary, Total System Services, Inc.,
901 Front Avenue, Suite 301, Columbus, Georgia 31901.
D. 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 at least
60 days but not more than 120 days before the meeting and the notice must
provide information as required in the bylaws. A copy of these bylaw
requirements will be provided upon request in writing to Secretary, Total System
Services, Inc., 901 Front Avenue, Suite 301, Columbus, Georgia 31901. This
requirement does not affect the deadline for submitting shareholder proposals
for inclusion in the Proxy Statement nor does it preclude discussion by any
shareholder of any business properly brought before the Annual Meeting.
E. Columbus Bank and Trust Company.
Columbus Bank and Trust Company(R)("CB&T") owned individually 104,401,292
shares, or 80.7%, of the outstanding shares of TSYS Common Stock on February 12,
1998. CB&T(R) is a wholly owned banking subsidiary of Synovus Financial Corp.(R)
("Synovus"), a multi-financial services company having 175,265,721 shares of
$1.00 par value voting common stock ("Synovus Common Stock") outstanding on
February 12, 1998.
II. ELECTION OF DIRECTORS
A. Information Concerning Number and Classification of Directors and Nominees.
(1) Number and Classification of Directors.
In accordance with the vote of shareholders taken at TSYS' 1988 Annual
Meeting, the number of members of TSYS' Board of Directors was fixed at 18.
TSYS' Board of Directors is currently comprised of 13 members. TSYS has five
directorships which remain vacant. These vacant directorships 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. Any person appointed by TSYS' Board of Directors to a vacant
directorship would not be appointed to serve a classified, three-year term but
would only serve as a director until the next succeeding Annual Meeting. At such
Annual Meeting, such appointee would stand before TSYS' shareholders for
election to a classified term of office as a director. Proxies cannot be voted
at the 1998 Annual Meeting for a greater number of persons than the number of
nominees named.
Pursuant to TSYS' Articles of Incorporation and bylaws, the members who
comprise TSYS' Board of Directors are divided into three classes of directors:
Class I, Class II and Class III directors, with each of such Classes of
directors to be as nearly equal in number as possible. Each Class of directors
serves a staggered 3-year term. At TSYS' 1996 Annual Meeting, Class I directors
were elected to serve 3-year terms to expire at TSYS' 1999 Annual Meeting, and
at TSYS' 1997 Annual Meeting, Class II directors were elected to serve 3-year
terms to expire at TSYS' 2000 Annual Meeting. The terms of office of the Class
III directors expire at TSYS' 1998 Annual Meeting.
(2) Nominees for Class III Directors and Vote Required.
TSYS' Board of Directors has selected three nominees which it proposes for
election to TSYS' Board as Class III directors. The three nominees for Class III
directors of TSYS will be elected to serve 3-year terms that will expire at
TSYS' 2001 Annual Meeting. The three nominees for Class III directors of TSYS
are: Mason H. Lampton, William B. Turner and James D. Yancey.
Under TSYS' bylaws and Georgia law, a majority of the issued and
outstanding shares of TSYS Common Stock entitled to vote must be represented at
the 1998 Annual Meeting in order to constitute a quorum and all shares
represented at the Meeting, including shares abstaining and withholding
authority, are counted for purposes of determining whether a quorum exists. The
nominees for election as directors at the Annual Meeting who receive the
greatest number of votes (a plurality), a quorum being present, shall become
directors at the conclusion of the tabulation of votes. Thus, once a quorum has
been established, abstentions and broker non-votes have no effect upon the
election of directors. The shares represented by Proxies executed for TSYS' 1998
Annual Meeting in such manner as not to withhold authority to vote for the
election of any nominee for election as a Class III director on TSYS' Board of
Directors shall be voted "FOR" the election of the three nominees for Class III
directors on TSYS' Board named herein.
If any nominee for Class III director of TSYS becomes unavailable for any
reason before TSYS' 1998 Annual Meeting, the shares represented by executed
Proxies may be voted for such substitute nominee as may be determined by the
holders of such Proxies. It is not anticipated that any nominee will be
unavailable for election.
TSYS' BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE THREE
NOMINEES FOR ELECTION AS CLASS III DIRECTORS ON TSYS' BOARD SET FORTH HEREIN.
B. Information Concerning Directors and Nominees for Class III Directors.
(1) General Information.
The following sets forth the name, age, principal occupation and employment
(which, except as noted, has been for the past five years) of each of the
nominees for election as Class III directors of TSYS and the remaining directors
presently serving on TSYS' Board of Directors, his director classification, his
length of service as a director of TSYS, any family relationships with other
directors or executive officers of TSYS, and any Board of Directors of which he
is a member with respect to any company with a class of securities registered
with the Securities and Exchange Commission ("SEC") pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended ("Exchange Act"), including
Synovus, or any company which is subject to the requirements of Section 15(d) of
that Act, or any company registered with the SEC as an investment company under
the Investment Company Act of 1940 ("Public Company").
TSYS Year
Director First Principal Occupation
Classifi- Elected and Other Directorships
Name Age cation Director of Public Companies
- ------------------------ ----- --------- --------- -------------------------------------------
Griffin B. Bell 79 I 1987 Senior Partner, King & Spalding (Law Firm)
James H. Blanchard<F1> 56 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<F2> 59 II 1991 Partner, Bradley & Hatcher (Law Firm);
Director, Synovus Financial Corp.
Gardiner W. Garrard, Jr. 57 II 1982 President, The Jordan Company (Real
Estate Development); Director, Synovus
Financial Corp.
John P. Illges, III 63 II 1982 Senior Vice President and Financial
Consultant, The Robinson-Humphrey
Company, Inc. (Stockbroker); Director,
Synovus Financial Corp.
Mason H. Lampton 50 III 1986 Chairman of the Board and President,
The Hardaway Company (Construction Company);
Director, Synovus Financial Corp.
W. Walter Miller, Jr.<F3> 49 II 1993 Senior Vice President, Total System
Services, Inc.
Samuel A. Nunn<F4> 59 I 1997 Senior Partner, King & Spalding (Law
Firm); Director, The Coca-Cola Company,
General Electric Company, National Service
Industries, Inc., Scientific-Atlanta, Inc.
and Texaco Inc.
H. Lynn Page 57 I 1982 Vice Chairman of the Board (Retired) and
Director, Synovus Financial Corp.,
Columbus Bank and Trust Company and
Total System Services, Inc.
Philip W. Tomlinson<F5> 51 I 1982 President, Total System Services, Inc.
William B. Turner<F3> 75 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<F6> 50 I 1982 Chairman of the Board and Chief
Executive Officer, Total System Services,
Inc.
James D. Yancey 56 III 1982 Vice Chairman of the Board, Synovus
Financial Corp. and Columbus Bank and
Trust Company; Director, Shoney's, Inc.
<FN>
<F1> 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.
<F2> Richard Y. Bradley formed Bradley & Hatcher in September 1995. From 1991
until 1995, Mr. Bradley served as President of Bickerstaff Clay Products
Company, Inc.
<F3> Mr. Miller's spouse is the niece of William B. Turner.
<F4> Mr. 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.
<F5> Philip W. Tomlinson was elected President of TSYS in February 1992. From
1982 until 1992, Mr. Tomlinson served as Executive Vice President of TSYS.
<F6> 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.
</FN>
(2) TSYS Common Stock Ownership of Directors and Management.
The following table sets forth, as of December 31, 1997, the number of
shares of TSYS Common Stock beneficially owned by each of TSYS' directors and
TSYS' five most highly compensated executive officers. Information relating to
beneficial ownership of TSYS Common Stock is based upon information furnished by
each person or entity using "beneficial ownership" concepts set forth in the
rules of the SEC under Section 13(d) of the Exchange Act.
Shares of TSYS Shares of TSYS Shares of TSYS Percentage of
Common Stock Common Stock Common Stock Total Outstanding
Beneficially Beneficially Beneficially Shares Shares of
Owned with Owned with Owned with of TSYS TSYS Common
Sole Voting Shared Voting Sole Voting but Common Stock Stock
and Investment and Investment no Investment Beneficially Beneficially
Power as of Power as of Power as of Owned as of Owned as of
Name 12/31/97 12/31/97 12/31/97 12/31/97 12/31/97
-------------------------- ------------------- -------------------- ------------------- ---------------- -------------
Griffin B. Bell 59,362 8,007 --- 67,369 .05%
James H. Blanchard 520,800 240,320 --- 761,120 .59
Richard Y. Bradley 14,007 --- --- 14,007 .01
Gardiner W. Garrard, Jr. 6,262 --- --- 6,262 .005
John P. Illges, III 68,053 54,500 --- 122,553 .09
Mason H. Lampton 17,613 78,643<F1> --- 96,256 .07
James B. Lipham 65,498<F2> 800 --- 66,298 .05
W. Walter Miller, Jr. 61,496<F3> 8,306 --- 69,802 .05
Samuel A. Nunn 9,396<F4> --- --- 9,396 .007
H. Lynn Page 375,071 101,614<F5> --- 476,685 .37
William A. Pruett 144,423 --- --- 144,423 .11
Philip W. Tomlinson 418,598 39,864 67,200 525,662 .41
William B. Turner 103,493 384,000 --- 487,493 .38
Richard W. Ussery 293,751 49,850 75,200 418,801 .32
M. Troy Woods 51,229<F6> 250 --- 51,479 .04
James D. Yancey 529,596 16,000 --- 545,596 .42
<FN>
- --------
<F1> Includes 19,200 shares of TSYS Common Stock held in a trust for which Mr.
Lampton is not the trustee. Mr. Lampton disclaims beneficial ownership of
such shares.
<F2> Includes 4,800 shares of TSYS Common Stock with respect to which Mr. Lipham
has options to acquire.
<F3> Includes 4,800 shares of TSYS Common Stock with respect to which Mr. Miller
has options to acquire.
<F4> Includes 8,333 shares of TSYS Common Stock with respect to which Mr. Nunn
has options to acquire.
<F5> Includes 37,850 shares of TSYS Common Stock held by a charitable foundation
of which Mr. Page is a trustee.
<F6> Includes 6,000 shares of TSYS Common Stock with respect to which Mr. Woods
has options to acquire.
</FN>
The following table sets forth information, as of December 31, 1997, with
respect to the beneficial ownership of TSYS Common Stock by all directors and
executive officers of TSYS as a group.
Percentage of
Shares of Outstanding Shares of
TSYS Common Stock TSYS Common Stock
Name of Beneficially Owned Beneficially Owned
Beneficial Owner as of 12/31/97 as of 12/31/97
- ----------------------- ----------------------- -----------------------------
All directors
and executive
officers of TSYS 3,876,148 3.00%
as a group
(includes
17 persons)
For a detailed discussion of the beneficial ownership of Synovus Common
Stock by TSYS' named executive officers and directors and by all directors and
executive officers of TSYS as a group, see Section IV(C) hereof captioned
"Synovus Common Stock Ownership of Directors and Management."
C. Board Committees and Attendance.
The business and affairs of TSYS are under the direction of TSYS' Board of
Directors. During 1997, TSYS' Board of Directors held five regular meetings and
one special meeting. During 1997, each of TSYS' incumbent directors attended at
least 75% of the meetings of TSYS' Board of Directors and the committees thereof
on which he sat.
TSYS' Board of Directors has three principal standing committees -- an
Executive Committee, an Audit Committee and a Compensation Committee. There is
no Nominating Committee of TSYS' Board of Directors.
Executive Committee. The members of TSYS' Executive Committee are: James H.
Blanchard, Chairman, Richard W. Ussery, Philip W. Tomlinson, William B. Turner,
James D. Yancey, Gardiner W. Garrard, Jr. and Richard Y. Bradley. 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. During 1997, TSYS' Executive Committee held one meeting.
Audit Committee. The members of TSYS' Audit Committee are: Gardiner W.
Garrard, Jr., Chairman, Mason H. Lampton and John P. Illges, III. The primary
functions to be engaged in by TSYS' Audit Committee include: (i) annually
recommending to TSYS' Board the independent certified public accountants
("Independent Auditors") to be engaged by TSYS for the next fiscal year; (ii)
reviewing the plan and results of the annual audit by TSYS' Independent
Auditors; (iii) reviewing and approving the range of management advisory
services provided by TSYS' Independent Auditors; (iv) reviewing TSYS' internal
audit function and the adequacy of the internal accounting control systems of
TSYS; (v) reviewing the results of regulatory examinations of TSYS; (vi)
periodically reviewing the financial statements of TSYS; and (vii) considering
such other matters with regard to the internal and independent audit of TSYS as,
in its discretion, it deems to be necessary or desirable, periodically reporting
to TSYS' Board as to the exercise of its duties and responsibilities and, where
appropriate, recommending matters in connection with the audit function with
respect to which TSYS' Board should consider taking action. During 1997, TSYS'
Audit Committee held four meetings.
Compensation Committee. The members of the Compensation Committee of TSYS'
Board of Directors are: Mason H. Lampton, Chairman, and John P. Illges, III. The
primary functions to be engaged in by TSYS' Compensation Committee include: (i)
evaluating the remuneration of senior management and board members of TSYS and
its subsidiaries and the compensation and fringe benefit plans in which
officers, employees and directors of TSYS are eligible to participate; and (ii)
recommending to TSYS' Board whether or not it should modify, alter, amend,
terminate or approve such remuneration, compensation or fringe benefit plans.
During 1997, TSYS' Compensation Committee held four meetings.
D. 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 56 Chairman of the Executive Committee
Richard W. Ussery 50 Chairman of the Board
and Chief Executive Officer
Philip W. Tomlinson 51 President
William A. Pruett 44 Executive Vice President
James B. Lipham 49 Executive Vice President
and Chief Financial Officer
M. Troy Woods 46 Executive Vice President
G. Sanders Griffith, III 44 General Counsel and Secretary
All of the executive officers of TSYS are members of TSYS' Board of
Directors, except William A. Pruett, James B. Lipham, M. Troy Woods and G.
Sanders Griffith, III. 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. 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.
All of the executive officers of TSYS serve at the pleasure of TSYS' Board
of Directors. There are no family relationships between any of TSYS' executive
officers, and there are no arrangements or understandings between any such
executive officer or any other person pursuant to which any such officer was
elected.
III. EXECUTIVE COMPENSATION
(1) 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<F1> Year Salary<F2> Bonus<F3> sation<F4> <F5> SARs sation<F6>
- ----------------------- ------ -------------- ----------- ------------ -------------- ------------- ------------
Richard W. Ussery 1997 $414,225 $257,806 -0- $ -0- 360,327 $141,895
Chairman of the Board 1996 391,725 491,363 -0- 316,187 65,780 137,152
and Chief Executive 1995 331,400 204,750 -0- 222,015 58,481 102,439
Officer
Philip W. Tomlinson 1997 354,550 202,650 -0- -0- 337,143 115,674
President 1996 335,350 386,000 -0- 223,784 46,557 115,728
1995 283,900 160,500 -0- 157,133 41,391 87,508
William A. Pruett 1997 210,150 131,090 -0- -0- 161,012 73,417
Executive Vice 1996 200,900 246,080 -0- 84,880 17,661 67,486
President 1995 173,000 103,800 -0- 59,604 15,701 50,628
M. Troy Woods 1997 194,375 102,187 -0- -0- 160,082 60,975
Executive Vice 1996 179,375 184,375 -0- 75,792 15,770 53,175
President 1995 150,000 59,375 -0- -0- 8,100 35,356
James B. Lipham 1997 162,500 86,250 -0- -0- 156,653 51,716
Executive Vice President 1996 147,500 152,500 -0- 63,938 13,302 43,755
and Chief Financial 1995 122,500 48,125 -0- -0- 8,100 30,302
Officer
<FN>
- --------------------
<F1> Mr. Blanchard received no cash compensation from TSYS during 1997, other
than director fees.
<F2> Amount consists of base salary and director fees for Messrs. Ussery
and Tomlinson.
<F3> Bonus amount for 1997 includes a special recognition award of $5,000 for
Messrs. Pruett, Woods and Lipham.
<F4> 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.
<F5> Amount consists of market value of award on date of grant. As of December
31, 1997, Messrs. Ussery, Tomlinson, Pruett, Woods and Lipham held 108,588,
90,831, 9,026, 4,205 and 3,548 restricted shares, respectively, with a
value of $2,954,657, $2,437,115, $295,602, $137,714 and $116,197,
respectively. On July 1, 1996, restricted stock was awarded in the amount
of 21,927, 15,519, 5,888, 5,256 and 4,434 shares of Synovus Common Stock to
Messrs. Ussery, Tomlinson, Pruett, Woods and Lipham, respectively, with the
following vesting schedule: 20% on July 1, 1997; 20% on July 1, 1998; 20%
on July 1, 1999; 20% on July 1, 2000; and 20% on July 1, 2001. On September
5, 1995, restricted stock was awarded in the amount of 19,494, 13,797 and
5,234 shares of Synovus Common Stock to Messrs. Ussery, Tomlinson and
Pruett, respectively, with the following vesting schedule: 20% on September
5, 1996; 20% on September 5, 1997; 20% on September 5, 1998; 20% on
September 5, 1999; and 20% on September 5, 2000. Dividends are paid on all
restricted shares.
<F6> The 1997 amount consists of contributions or other allocations to defined
contribution plans of $25,600 for each executive; allocations pursuant to
defined contribution excess benefit agreements of $115,678, $89,448,
$47,397, $35,000 and $25,800 for each of Messrs. Ussery, Tomlinson, Pruett,
Woods and Lipham, respectively; premiums paid for group term life insurance
coverage of $510, $510, $420, $375 and $316 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 $107 and $116 for Messrs. Ussery and Tomlinson, respectively.
</FN>
(2) Stock Option Exercises and Grants.
The following tables provide certain information regarding stock options granted
and exercised in the last fiscal year and the number and value of unexercised
options at the end of the fiscal year.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
-----------------------------------------------------------------------------
% of Total Potential
Options/ Realized Value at
SARs Exercise Assumed Annual Rates of
Options/ Granted to or Stock Price Appreciation
SARs Employees Base For Option Term <F1>
Granted in Fiscal Price Expiration --------------------------
Name (#) Year ($/Share) Date 5%($) 10%($)
- ------------------- ----------- ------------- -------- -------------- --------- -------------
Richard W. Ussery 80,327<F2> 3.8% $27.56 06/30/07 $1,057,095 $2,531,923
280,000<F3> 28.6 19.75 11/02/07 2,640,316 6,324,052
Philip W. Tomlinson 57,143<F2> 2.7 27.56 06/30/07 751,996 1,801,159
280,000<F3> 28.6 19.75 11/02/07 2,640,316 6,324,052
William A. Pruett 21,012<F2> 1.0 27.56 06/30/07 276,516 662,302
140,000<F3> 14.3 19.75 11/02/07 1,320,158 3,162,026
M. Troy Woods 20,082<F2> 0.9 27.56 06/30/07 264,277 632,989
140,000<F3> 14.3 19.75 11/02/07 1,320,158 3,162,026
James B. Lipham 16,653<F2> 0.8 27.56 06/30/07 219,152 524,906
140,000<F3> 14.3 19.75 11/02/07 1,320,158 3,162,026
<FN>
- ---------------
<F1> The dollar gains under these columns result from calculations using the
identified growth rates and are not intended to forecast future price
appreciation of Synovus Common Stock or TSYS Common Stock.
<F2> Options to purchase Synovus Common Stock granted on July 1, 1997 at fair
market value to exectives as part of the Synovus 1994 Long-Term Incentive
Plan. Options become exercisable on July 1, 1999 and are transferable to
family members.
<F3> Options to purchase TSYS Common Stock granted on November 3, 1997 at fair
market value to executives as part of the TSYS 1992 Long-Term Incentive
Plan, with following vesting schedule: 10% on November 3, 1998; 10% on
November 3, 1999; 10% on November 3, 2000; 10% on November 3, 2001; and 60%
on November 3, 2002. The options are transferable to family members.
</FN>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of Securities Value of
Underlying Unexercised Unexercised In-the-Money
Shares Value Options/SARs at FY-End (#) Options/SARs at FY-End ($)<F1>
Acquired on Realized -------------------------- -----------------------------
Name Exercise (#) ($)<F1> Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------- ------------ ----------- -------------------------- -----------------------------
Richard W. Ussery -0- -0- 89,593 / 146,107<F2> $2,104,248/ $1,622,436
-0- -0- 0 / 280,000<F3> 0/ 1,400,000
Philip W. Tomlinson -0- -0- 63,404 / 103,700<F2> 1,489,142/ 1,149,819
-0- -0- 0 / 280,000<F3> 0/ 1,400,000
William A. Pruett -0- -0- 24,503 / 38,673<F2> 576,213/ 432,726
-0- -0- 0 / 140,000<F3> 0/ 700,000
M. Troy Woods -0- -0- 0 / 43,952<F2> 0/ 576,599
-0- -0- 6,000 / 140,000<F3> 130,500/ 700,00
James B. Lipham -0- -0- 0 / 38,055<F2> 0/ 513,573
-0- -0- 4,800 / 140,000<F3> 104,400/ 700,000
<FN>
- ----------
<F1> Market value of underlying securities at exercise or year-end, minus the
exercise or base price.
<F2> Options pertain to shares of Synovus Common Stock.
<F3> Options pertain to shares of TSYS Common Stock.
</FN>
(3) Compensation of Directors.
Compensation. During 1997, TSYS' directors received a $12,000 retainer, a
fee of $800 for regular and special meetings of TSYS' Board of Directors they
personally attended and a fee of $500 for meetings of the committees of TSYS'
Board of Directors they personally attended. In addition, directors of TSYS are
entitled to receive an $800 fee for one regular meeting and a fee of $800 for
one special meeting of TSYS' Board of Directors, despite the fact they are
unable to personally attend such meetings.
Director Stock Purchase Plan. TSYS' Director Stock Purchase Plan ("DSPP")
is a non-tax-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 Common Stock. Under
the terms of the DSPP, qualifying directors can elect to contribute up to $1,000
per calendar quarter to make purchases of TSYS Common Stock, and TSYS
contributes an additional amount equal to 50% of the directors' cash
contributions. Participants in the DSPP are fully vested in, and may request the
issuance to them of, all shares of TSYS Common Stock purchased for their benefit
thereunder.
Stock Option Agreement. On January 10, 1997, the Board of Directors of TSYS
granted Samuel A. Nunn an option to purchase 25,000 shares of TSYS Common Stock
at a purchase price of $27.75 per share, which price represents the fair market
value of a share of TSYS Common Stock on the date of the grant.
(4) Change in Control Arrangements.
Messrs. Ussery, Tomlinson, Pruett, Lipham and Woods each hold shares of
restricted stock of, and options to purchase stock of, Synovus and/or TSYS which
were issued pursuant to the 1992 Total System Services, Inc. Long-Term Incentive
Plan and the Synovus Financial Corp. 1994 Long-Term Incentive Plan. Under the
terms of the 1992 Total System Services, Inc. Long-Term Incentive Plan and the
Synovus Financial Corp. 1994 Long-Term Incentive Plan, in the event of a change
in control of TSYS or Synovus, the vesting of any stock options, stock
appreciation and other similar rights, restricted stock and performance awards
will be accelerated so that all awards not previously exercisable and vested
will become fully exercisable and vested.
Effective January 1, 1996, TSYS entered into Change of Control Agreements
("Agreements") with Messrs. Ussery, Tomlinson, Pruett, Woods and Lipham and
certain other officers. The Change of Control Agreements provide severance pay
and continuation of certain benefits in the event of a Change of Control of
Synovus or TSYS. In order to receive benefits under the Agreements, the
executive's employment must be terminated involuntarily, without cause, whether
actual or "constructive" 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" generally is deemed to occur in any of the following
circumstances: (1) the acquisition by any person of 20% or more of the
"beneficial ownership" of Synovus' outstanding voting stock, with certain
exceptions for Turner family members; (2) the persons serving as directors of
Synovus as of January 1, 1996 and those replacements or additions subsequently
approved by a two-thirds (2/3) vote of the Board ceasing to comprise at least
two-thirds (2/3) of the Board; (3) a merger, consolidation, reorganization or
sale of Synovus' assets unless (a) the previous beneficial owners of Synovus own
more than two-thirds (2/3) of the new company, (b) no person owns more than 20%
of the new company, and (c) two-thirds (2/3) of the new company's Board were
members of the incumbent Board which approved the business combination; or (4) a
"triggering event" as defined in the Synovus Rights Agreement. With respect to
TSYS, a Change of Control is generally defined in the same manner as a Change of
Control of Synovus, except that (1) a spin-off of TSYS stock to Synovus
shareholders and (2) any transaction in which Synovus continues to own more than
50% of the outstanding voting stock of TSYS are specifically excluded from the
definition of Change of Control.
Under the Agreements with Messrs. Ussery and Tomlinson, severance pay would
equal three times current base salary and bonus, with bonus being defined as the
average of the previous three years measured as a percentage of base salary
multiplied by current base salary. Under the Agreements with Messrs. Pruett,
Lipham and Woods, severance pay would equal two times current base salary and
bonus, as previously defined. Medical, life, disability and other welfare
benefits will be provided at the expense of TSYS for three years for Messrs.
Ussery and Tomlinson (two years for Messrs. Pruett, Lipham and Woods) with the
level of coverage being determined by the amount elected by the executive during
the open enrollment period immediately preceding the Change of Control.
Executives would also receive a short-year bonus for the year of separation
based on the greater of a half year's maximum bonus or pro rata maximum bonus to
the date of termination and a cash amount in lieu of a long-term incentive award
for the year of separation. If the executive has already received a long-term
incentive award in the separation year, the amount would equal 1.5 times the
market grant and if the executive has not, the amount would equal 2.5 times
market grant.
Executives who are impacted by the Internal Revenue Service excise tax that
applies to certain change of control agreements would receive additional gross
up payments so that they are in the same position as if there were no excise
tax. The Agreements do not provide for retirement benefits or perquisites.
Notwithstanding anything to the contrary set forth in any of TSYS' previous
filings under the Securities Act of 1933, as amended, or the Exchange Act that
might incorporate future filings, including this Proxy Statement, in whole or in
part, the following Performance Graph and Compensation Committee Report on
Executive Compensation shall not be incorporated by reference into any such
filings.
(5) Stock Performance Graph.
The following graph compares the yearly percentage change in cumulative
shareholder return on TSYS Common 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, 1992 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
1992 1993 1994 1995 1996 1997
TSYS $100 $184 $241 $432 $762 $703
S&P 500 $100 $110 $112 $153 $189 $252
S&P CS&S $100 $128 $151 $212 $330 $459
(6) Compensation Committee Report on Executive Compensation.
The Compensation Committee (the "Committee") of the Board of Directors of
TSYS is responsible for evaluating the remuneration of senior management and
board members of TSYS and its subsidiaries and the compensation and fringe
benefit plans in which officers, employees and directors of TSYS and its
subsidiaries are eligible to participate. Because TSYS' mission is to exceed the
expectations of its customers through the delivery of superior service and
continuous quality improvement that rewards its employees and enhances the value
of its shareholders' investment, the Committee's executive compensation policies
and practices are designed to attract, retain and reward its executives for
their performance in accomplishing TSYS' mission.
Elements of Executive Compensation. The four elements of executive
compensation at TSYS are:
o Base Salary
o Annual Bonus
o Long-Term Incentives
o Other Benefits
The Committee believes that a substantial portion, though not a majority,
of an executive's compensation should be "at-risk" based upon TSYS' short-term
performance (through the annual bonus and the Synovus/TSYS Profit Sharing Plan
and the Synovus/TSYS 401(k) Savings Plan) and long-term performance (through
long-term incentives including stock options and restricted stock awards). The
remainder of each executive's compensation is primarily based upon the
competitive practices of companies similar in size to TSYS ("similar companies")
with certain adjustments as described below. The companies used for comparison
are not the same companies included in the peer group index appearing in the
Stock Performance Graph above. A description of each element of executive
compensation and the factors and criteria used by the Committee in determining
these elements is discussed below:
Base Salary. Base salary is an executive's annual rate of pay without
regard to any other elements of compensation. The Committee believes that the
base salary of TSYS executives should reflect the fact that TSYS has had
outstanding stock performance over the previous 10 years, resulting in
significant market value added for its shareholders. The Committee has had
considerable difficulty, however, in obtaining data that reflected the
appropriate market for the compensation of TSYS executives. Positions for which
market matches could be found were targeted at the median level. The Committee
added a premium, however, to the size-based market data designed to reflect pay
at companies with similar strong stock performance and market value added.
Positions for which such market data could not be obtained were slotted using
internal equity considerations. Based solely upon these comparisons, the
Committee increased Mr. Ussery's base salary in 1997. The Committee also
increased the base salaries of TSYS' other executive officers in 1997 based upon
these comparisons and internal equity considerations, as described above.
Annual Bonus. Annual bonuses are awarded to the executive officers of TSYS
pursuant to the terms of the Synovus Executive Bonus Plan and the Synovus
Incentive Bonus Plan (collectively, the "plans"). The Committee has the
discretion from year-to-year to select participants in the Synovus Executive
Bonus Plan, which was approved by the shareholders of TSYS in 1996. For 1997,
the Committee selected Mr. Ussery to participate in the Synovus Executive Bonus
Plan, while the Committee selected Messrs. Tomlinson, Pruett, Woods and Lipham
to participate in the Synovus Incentive Bonus Plan. Under the terms of the
plans, bonus amounts are paid as a percentage of base pay based on the
achievement of previously established performance goals. The performance
measures for such goals may be chosen by the Committee from among the following
for Synovus, any of its business segments and/or any of its business units: (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. The maximum percentage
payouts under the Incentive Bonus Plan are 65% for Mr. Ussery, 60% for Messrs.
Tomlinson and Pruett and 50% for Messrs. Woods and Lipham. For Mr. Ussery and
TSYS' other executive officers, the Committee established a payout matrix based
upon the attainment of net income targets during 1997. TSYS' financial
performance and individual performance, separate from the financial performance
goals established at the beginning of the year, can reduce bonus awards
determined by the attainment of the established goals, although this was not the
case for any of TSYS' executive officers. Because the maximum net income target
for 1997 under the plans was exceeded and the overall financial results of TSYS
were favorable, Mr. Ussery and TSYS' other executive officers were awarded the
maximum bonus amount for which each executive was eligible.
Long-Term Incentives. The two types of long-term incentives awarded to
executives to date are stock options and restricted stock awards. Because of the
relatively low number of previously traded shares of TSYS, the Committee has
decided to award stock options and restricted stock awards of Synovus stock to
TSYS executives, thereby linking their interests to the interests of TSYS and
Synovus shareholders. Restricted stock awards are designed to focus executives
on the long-term performance of TSYS and Synovus. Stock options provide
executives with the opportunity to buy and maintain an equity interest in TSYS
and Synovus and to share in the appreciation of the value of TSYS and Synovus
Common Stock. In 1994, the Committee established a payout matrix for future
long-term incentive grants that uses total shareholder return as 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 1997, total shareholder return and
peer comparisons were measured during the 1994-1996 performance period. Applying
the results of the 1994-1996 performance period to the payout matrix, during
1997 the Committee granted Messrs. Ussery, Tomlinson, Pruett, Woods and Lipham
Synovus stock options of 80,327, 57,143, 21,012, 20,082 and 16,653 shares,
respectively. In addition, the Committee also made a retention grant of TSYS
stock options to Messrs. Ussery, Tomlinson, Pruett, Woods and Lipham of 280,000,
280,000, 140,000, 140,000 and 140,000 shares, respectively. The Committee made
these retention grants because the Committee believed the retention of these key
executives was critical for TSYS' continued growth over the next several years.
Benefits. Benefits offered to executives serve a different purpose than the
other elements of total compensation. In general, these benefits provide either
retirement income or protection against catastrophic events such as illness,
disability and death. Executives generally receive the same benefits offered to
the general 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 excess benefit arrangements designed to replace 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 corporate
performance because the amount of employer contributions to the Plan (to a
maximum of 14% of an executive's compensation) is a function of TSYS'
profitability. For 1997, Mr. Ussery and TSYS' other executive officers received
a Plan contribution of 9% of their compensation based upon the profitability
formula under the Plan. The remaining benefits provided to executives are
primarily based upon the competitive practices of similar companies.
In 1993, the Internal Revenue Code of 1986, as amended (the "Code"), was
amended to limit 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 greater than $1 million
unless certain conditions are met. Because the Committee seeks to maximize
shareholder value, the Committee has taken steps to ensure the deductibility of
compensation in excess of $1 million. For 1997, 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 Section 162(m) of the Code, however, if the Committee
determines that the benefits of so doing outweigh full deductibility.
The Committee believes that the executive compensation policies serve the
best interests of the shareholders and of TSYS. A substantial portion of the
compensation of TSYS' executives is directly related to and commensurate with
TSYS' performance. The Committee believes that the performance of TSYS to date
validates the Committee's compensation philosophy.
Mason H. Lampton
John P. Illges, III
(7) Compensation Committee Interlocks and Insider Participation.
Gardiner W. Garrard, Jr., Mason H. Lampton and John P. Illges, III served
as members of TSYS' Compensation Committee during 1997. No member of the
Committee is a current or former officer or employee of TSYS or its
subsidiaries.
Gardiner W. Garrard, Jr. is President of The Jordan Company. TSYS leases
from The Jordan Company approximately 10,000 square feet of office space in
Columbus, Georgia for $5,900 per month, which lease expires on September 30,
1999. The lease was made on substantially the same terms as those prevailing at
the time for leases of comparable property between unrelated third parties.
Gardiner W. Garrard, Jr., a director of TSYS, CB&T and Synovus, is an officer,
director and shareholder of The Jordan Company. Richard M. Olnick, the
brother-in-law of Gardiner W. Garrard, Jr. and a director of CB&T, is an
officer, director and shareholder of The Jordan Company.
Mason H. Lampton is Chairman of the Board and President of The Hardaway
Company. James H. Blanchard, Chairman of the Executive Committee of TSYS, served
on the Board of Directors of The Hardaway Company during 1997.
(8) Transactions with Management.
During 1997, TSYS paid to Communicorp, Inc. an aggregate of $535,342. These
payments were made in the ordinary course of business on substantially the same
terms as those prevailing at the time for comparable transactions with unrelated
third parties, and were primarily for various printing and business
communication services provided by Communicorp, Inc. to TSYS. Communicorp, Inc.
is a wholly owned subsidiary of AFLAC Incorporated. Daniel P. Amos, a director
of CB&T and Synovus during 1997, is Chief Executive Officer and a director of
AFLAC Incorporated.
TSYS leases various properties in Columbus, Georgia from W.C. Bradley Co.
for office space and storage. The rent paid for the space in 1997, which is
approximately 71,915 square feet, is approximately $718,236. The lease
agreements were made on substantially the same terms as those prevailing at the
time for comparable leases for similar facilities with an unrelated third party
in Columbus, Georgia.
TSYS has entered into an agreement with CB&T with respect to the use of
aircraft owned or leased by B&C Company, a Georgia general partnership in which
CB&T and W.C. Bradley Co. were equal partners during 1997. CB&T and W.C. Bradley
Co. each agreed to remit to B&C Company fixed fees for each hour they flew the
aircraft owned and/or leased by B&C Company. TSYS paid CB&T $853,515 for its use
of the B&C Company aircraft during 1997, which $853,515 was remitted to B&C
Company by CB&T. The charges payable by TSYS to CB&T in connection with its use
of this aircraft approximate charges made 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 Senior Vice President 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. Samuel
M. Wellborn, III, Chairman of the Board of CB&T, is a director of W.C. Bradley
Co. 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 1997. Griffin B. Bell and Samuel A. Nunn,
directors of TSYS, are Senior Partners of King & Spalding.
Bradley & Hatcher, a law firm located in Columbus, Georgia, was paid
$77,144 by TSYS during 1997 for the performance of legal services on behalf of
TSYS. Richard Y. Bradley, a director of Synovus, CB&T and TSYS, is a partner of
Bradley and Hatcher.
For information about transactions with companies that are affiliates of
Gardiner W. Garrard, Jr., a director of TSYS, see Section III (7) hereof
captioned "Compensation Committee Interlocks and Insider Participation."
For a description of certain transactions between TSYS and its affiliated
companies, upon whose Boards of Directors certain of TSYS' directors also serve,
see Section IV(D) hereof captioned "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."
IV. RELATIONSHIPS BETWEEN TSYS, SYNOVUS, CB&T AND CERTAIN OF SYNOVUS'
SUBSIDIARIES
A. Beneficial Ownership of TSYS Common Stock by CB&T.
The following table sets forth, as of December 31, 1997, the number of
shares of TSYS Common Stock beneficially owned by CB&T, the only known
beneficial owner of more than 5% of the issued and outstanding shares of TSYS
Common Stock.
Percentage of
Shares of Outstanding Shares of
TSYS Common Stock TSYS Common Stock
Name and Address Beneficially Owned Beneficially Owned
Beneficial Owner as of 12/31/97 as of 12/31/97
- ------------------------ ------------------------ -----------------------------
Columbus Bank
and Trust Company 104,401,292<F1><F2> 80.7%
1148 Broadway,
Columbus, Georgia 31901
<FN>
- ------------
<F1> CB&T individually owns these shares.
<F2> As of December 31, 1997, Synovus Trust Company, a wholly owned trust
company subsidiary of CB&T ("Synovus Trust"), held in various fiduciary
capacities a total of 1,012,449 shares (.78%) of TSYS Common Stock. Of this
total, Synovus Trust held 753,739 shares as to which it possessed sole
voting power, 743,962 shares as to which it possessed sole investment
power, 207,410 shares as to which it possessed shared voting power and
210,510 shares as to which it possessed shared investment power. In
addition, as of December 31, 1997, Synovus Trust held in various agency
capacities an additional 1,310,790 shares of TSYS Common Stock as to which
it possessed no voting or investment power. Synovus and its subsidiaries
disclaim beneficial ownership of all shares of TSYS Common Stock which are
held by Synovus Trust in various fiduciary and agency capacities.
</FN>
CB&T, by virtue of its individual ownership of 104,401,292 shares, or
80.7%, of the outstanding shares of TSYS Common Stock on December 31, 1997 is
able to, and intends to, elect a majority of TSYS' Board of Directors. CB&T
presently controls TSYS.
B. Interlocking Directorates of TSYS, Synovus and CB&T.
Seven of the thirteen 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. Mason H.
Lampton serves as an Advisory Director of CB&T and as a director of Synovus.
C. Synovus Common Stock Ownership of Directors and Management.
The following table sets forth, as of December 31, 1997, the number of
shares of Synovus Common Stock beneficially owned by TSYS' directors and TSYS'
five most highly compensated executive officers.
Shares of Shares of Shares of
Synovus Synovus Synovus Percentage
Common Stock Common Stock Common Stock of
Beneficially Beneficially Beneficially Total Outstanding
Owned with Owned with Owned with Shares of Shares of
Sole Voting Shared Sole Voting Synovus Synovus
and Voting and but no Common Stock Common Stock
Investment Investment Investment Beneficially Beneficially
Power as of Power as of Power as of Owned as of Owned as of
Name 12/31/97 12/31/97 12/31/97 12/31/97 12/31/97
- -------------------- -------------- ------------ --------------- ------------ ------------
Griffin B. Bell 29,556 15,109 --- 44,665 .03%
James H. Blanchard 1,210,708<F1> --- 219,217 1,429,925 .82
Richard Y. Bradley 12,520 84,330 --- 96,850 .06
Gardiner W. Garrard, Jr. 135,461 920,382 --- 1,055,843 .60
John P. Illges, III 202,132 342,437<F2> --- 544,569 .31
Mason H. Lampton 51,286 193,473<F3> --- 244,759 .14
James B. Lipham 2,529 --- 3,548 6,077 .003
W. Walter Miller, Jr. 19,881 42,253 --- 62,134 .04
Samuel A. Nunn --- --- --- --- ---
H. Lynn Page 560,546 7,677 --- 568,223 .32
William A. Pruett 29,532<F4> --- 9,026 38,558 .02
Philip W. Tomlinson 76,637<F5> --- 23,631 100,268 .06
William B. Turner 53,735 20,255,054<F6> --- 20,308,789 11.59
Richard W. Ussery 123,187<F7> 2,616 33,384 159,187 .09
M. Troy Woods 1,051 --- 4,205 5,256 .003
James D. Yancey 762,078<F8> 41,118 39,630 842,826 .48
<FN>
- -------------------
<F1> Includes 176,993 shares of Synovus Common Stock with respect to which Mr.
Blanchard has options to acquire.
<F2> Includes 41,778 shares of Synovus Common Stock held by a charitable
foundation of which Mr. Illges is a trustee.
<F3> Includes 176,458 shares of Synovus Common Stock held in a trust for which
Mr. Lampton is not the trustee. Mr. Lampton disclaims beneficial ownership
of such shares.
<F4> Includes 24,503 shares of Synovus Common Stock with respect to which Mr.
Pruett has options to acquire.
<F5> Includes 63,404 shares of Synovus Common Stock with respect to which Mr.
Tomlinson has options to acquire.
<F6> Includes 1,712,137 shares held by a charitable foundation of which Mr.
Turner is a trustee.
<F7> Includes 89,593 shares of Synovus Common Stock with respect to which Mr.
Ussery has options to acquire.
<F8>Includes 106,311 shares of Synovus Common Stock with respect to which Mr.
Yancey has options to acquire.
</FN>
The following table sets forth information, as of December 31, 1997, with
respect to the beneficial ownership of Synovus Common Stock by all directors and
executive officers of TSYS as a group.
Percentage of
Shares of Outstanding Shares of
Synovus Common Stock Synovus Common Stock
Name of Beneficially Owned Beneficially Owned
Beneficial Owner as of 12/31/97 as of 12/31/97
- ------------------------ ----------------------- -----------------------------
All directors
and executive
officers of TSYS as a 25,680,947 14.61%
group (includes 17
persons)
D. 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 1997, TSYS provided bankcard data processing services to CB&T and 29
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 1997, TSYS derived $2,609,762 in revenues from CB&T and 29 of Synovus'
other banking subsidiaries from the performance of bankcard data processing
services and $148,036 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. ("SSC"), a wholly owned subsidiary of Synovus,
provides various services to Synovus' subsidiary companies, including TSYS. TSYS
and SSC are parties to Lease Agreements pursuant to which SSC leased from TSYS
office space for lease payments aggregating $26,169 during 1997 and TSYS leased
from SSC office space for lease payments aggregating $31,274 during 1997. The
terms of these transactions are comparable to those which could have been
obtained in transactions with unaffiliated third parties.
TSYS and Synovus and TSYS and SSC are parties to Management Agreements
(having one year, automatically renewable, unless terminated, terms), pursuant
to which Synovus and SSC provide certain management services to TSYS. During
1997, 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
1997, TSYS paid Synovus and SSC management fees of $1,216,089 and $9,232,001,
respectively. Management fees are subject to future adjustments based upon
charges at the time by unrelated third parties for comparable services.
During 1997, Synovus Trust Company served as Trustee of various employee
benefit plans of TSYS. During 1997, TSYS paid Synovus Trust Company trustee's
fees under these plans of $187,115.
During 1997, Columbus Depot Equipment Company ("CDEC"), a wholly owned
subsidiary of TSYS, and CB&T and 6 of Synovus' other subsidiaries were parties
to Lease Agreements pursuant to which CB&T and 6 of Synovus' other subsidiaries
leased from CDEC computer related equipment for bankcard and bank data
processing services for lease payments aggregating $97,037. During 1997, CDEC
sold CB&T and certain of Synovus' other subsidiaries computer related equipment
for bankcard and bank data processing services for payments aggregating $18,224.
In addition, CDEC was paid $2,100 by CB&T and certain of Synovus' other
subsidiaries for monitoring such equipment. The terms, conditions, rental rates
and/or sales prices provided for in these Agreements are comparable to
corresponding terms, conditions and rates provided for in leases and sales of
similar equipment offered by unrelated third parties.
During 1997, Synovus Data Corp., a wholly owned subsidiary of Synovus, paid
TSYS $224,154 for data links, network services and other miscellaneous items
related to the data processing services which Synovus Data Corp. provides to its
customers, which amount was reimbursed to Synovus Data Corp. by its customers.
During 1997, Synovus Data Corp. paid TSYS $24,900, primarily for computer
processing services. During 1997, TSYS and Synovus Data Corp. were parties to a
Lease Agreement pursuant to which TSYS leased from Synovus Data Corp. portions
of its office building for lease payments aggregating $240,000. The charges for
processing and other services, and the terms of the Lease Agreement, are
comparable to those between unrelated third parties.
During 1997, TSYS and CB&T were parties to Lease Agreements pursuant to
which CB&T leased from TSYS portions of its maintenance and warehouse facilities
for lease payments aggregating $11,628. During 1997, TSYS and CB&T were also
parties to a Lease Agreement pursuant to which TSYS leased office space from
CB&T for lease payments of $4,483 per month. The terms, conditions and rental
rates provided for in these Lease Agreements are comparable to corresponding
terms, conditions and rates provided for in leases of similar facilities offered
by unrelated third parties in the Columbus, Georgia area.
During 1997, 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 $1,000,403 for printing and correspondence services. The
charges for these services are comparable to those between unrelated third
parties.
During 1997, TSYS and its subsidiaries were paid $2,075,315 of interest by
CB&T in connection with deposit accounts with, and commercial paper purchased
from, CB&T. During 1997, a subsidiary of TSYS paid CB&T $123,420 of interest in
connection with a loan from CB&T. These interest rates 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.
V. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires TSYS' officers and directors,
and persons who own more than ten percent of TSYS Common Stock, to file reports
of ownership and changes in ownership on Forms 3,4 and 5 with the SEC and the
New York Stock Exchange. Officers, directors and greater than ten percent
shareholders are required by SEC 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, 1997, all Section 16(a) filing requirements applicable
to its officers, directors, and greater than ten percent beneficial owners were
complied with, except that Mr. Turner reported one transaction late on an
amended Form 4.
VI. INDEPENDENT AUDITORS
On March 2, 1998, TSYS' Board of Directors appointed KPMG Peat Marwick LLP
as the independent auditors to audit the financial statements of TSYS and its
subsidiaries for the fiscal year ending December 31, 1998. The Board of
Directors knows of no direct or material indirect financial interest by KPMG
Peat Marwick LLP in TSYS or of any connection between KPMG Peat Marwick LLP and
TSYS in the capacity of promoter, underwriter, voting trustee, director,
officer, shareholder or employee.
Representatives of KPMG Peat Marwick LLP will be present at TSYS' 1998
Annual Meeting with the opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions.
VII. FINANCIAL INFORMATION WITH REFERENCE TO TSYS CONTAINED IN TSYS' 1997
ANNUAL REPORT
Detailed financial information for TSYS and its subsidiaries for its 1997
fiscal year is included in TSYS' 1997 Annual Report that is being mailed to
TSYS' shareholders together with this Proxy Statement.
VIII. OTHER MATTERS
At the time of preparation of this Proxy Statement, TSYS' Board of
Directors has not been informed of any matters to be presented by or on behalf
of TSYS' Board of Directors or its management for action at TSYS' 1998 Annual
Meeting which are not referred to herein. If any other matters come before the
Annual Meeting or any adjournment thereof, it is the intention of the persons
named in the accompanying Proxy to vote thereon in accordance with their best
judgment.
TSYS' shareholders are urged to vote, date and sign the enclosed Proxy Card
solicited on behalf of TSYS' Board of Directors and return it at once in the
envelope which is enclosed for that purpose. This should be done whether or not
the TSYS shareholder plans to attend TSYS' 1998 Annual Meeting.
By Order of the Board of Directors
/s/Richard W. Ussery
Richard W. Ussery
Chairman of the Board, Total System Services, Inc.
Columbus, Georgia
March 12, 1998