SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant[X]
Filed by a party other than the registrant[ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials Soliciting material pursuant to Rule
14a-11(c) or Rule 14a-12
SUNTRUST BANKS, INC.
- ---------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Raymond D. Fortin
- --------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(j)(4) and 0-
11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
SUNTRUST
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
SunTrust Banks, Inc.
The Annual Meeting of Shareholders of SunTrust Banks, Inc. will be held
in Room 10 of the Corporate Headquarters, 25 Park Place, N.E., Atlanta,
Georgia, on Tuesday, April 18, 1995, at 9:30 A.M., local time, for the
following purposes:
1. To elect five directors to serve until the 1998 Annual Meeting of
Shareholders;
2. To vote upon a proposal to approve performance based compensation
goals under the Management Incentive Plan to preserve the Company's tax
deduction for plan awards;
3. To vote upon a proposal to approve performance based compensation
goals under the Performance Unit Plan to preserve the Company's tax
deduction for plan awards;
4. To vote upon a proposal to approve the 1995 Executive Stock Plan;
5. To ratify the appointment of Arthur Andersen LLP as independent
auditors for 1995; and
6. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Only shareholders of record at the close of business on February 15,
1995 will be entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof.
Your attention is directed to the Proxy Statement accompanying this
Notice for more complete information regarding the matters to be acted upon
at the Annual Meeting.
By Order of the Board of Directors
Raymond D. Fortin
Secretary
February 22, 1995
IMPORTANT NOTICE
Whether or not you plan to attend the Annual Meeting, please complete,
sign, date and return the enclosed proxy as soon as possible in the postage
paid envelope provided.
SUNTRUST BANKS, INC.
25 PARK PLACE, N.E.
ATLANTA, GEORGIA 30303
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PROXY STATEMENT
----------------------------------
The enclosed proxy is solicited on behalf of the Board of Directors of
SunTrust Banks, Inc. (the "Company" or "SunTrust") in connection with the
Annual Meeting of Shareholders of the Company to be held on Tuesday, April
18, 1995 (the "Annual Meeting"). The enclosed proxy is for use at the
Annual Meeting if a shareholder is unable to attend the Annual Meeting in
person or wishes to have his shares voted by proxy even if he attends the
Annual Meeting. The proxy may be revoked by the person giving it at any
time before it is exercised, by notice to the Corporate Secretary of the
Company, by submitting a proxy having a later date, or by such person
appearing at the Annual Meeting and voting in person. All shares
represented by valid proxies received pursuant to this solicitation and not
revoked before they are exercised will be voted in the manner specified
therein. If no specification is made, the proxies will be voted for each
of the proposals described below. This Proxy Statement and the enclosed
proxy are being first mailed to the Company's shareholders on or about
February 24, 1995.
ELECTION OF DIRECTORS
(Item 1)
Under the Bylaws of the Company, the number of directors constituting
the Board of Directors is fixed at 14, with directors divided into three
classes serving staggered three-year terms. There are four directors, H.
G. Pattillo, Robert W. Scherer, James B. Williams and James H. Williams,
who have been nominated to stand for reelection as directors at the Annual
Meeting in 1995. Mr. R. Randall Rollins has been nominated to stand for
election as a director for a term expiring in 1998. In addition to the
five nominees, there are nine other directors continuing to serve on the
Board of Directors, whose terms expire in 1996 and 1997. The Board of
Directors recommends that shareholders vote in favor of all of the
nominees.
The proxy solicited hereby cannot be voted for the election of a person
to fill a directorship for which no nominee is named in this Proxy
Statement. If, at the time of the Annual Meeting of Shareholders, any of
the nominees named in the enclosed proxy should be unable or decline to
serve as a director, the proxies are authorized to be voted for such
substitute nominee or nominees as the Board of Directors recommends. The
Board of Directors has no reason to believe that any nominee will be unable
or decline to serve as a director. The Company's Bylaws provide that a
director shall retire as a director on the date of the annual meeting
immediately succeeding such director's 70th birthday. Mr. Cason will
retire as a director in accordance with this provision at the 1995 Annual
Meeting. With respect to the current nominees, Mr. Scherer will retire at
the 1996 Annual Meeting and H. G. Pattillo and James H. Williams will
retire at the 1997 Annual Meeting in accordance with this provision of the
Bylaws.
Nominations for election to the Board of Directors may be made by any
shareholder entitled to vote for the election of directors. In accordance
with the Bylaws, nominations shall specify the class (term) of directors to
1
which each person is nominated, shall be made in writing and shall be
delivered or mailed to the Company's Chairman of the Board not later than
April 4, 1995. Any such nomination shall contain the following
information: (i) the name and address of the proposed nominee; (ii) the
principal occupation of the proposed nominee; (iii) the total number of
shares of issued and outstanding $1.00 par value per share common stock of
the Company ("Company Common Stock") that, to the knowledge of the
nominating shareholder, will be voted for the proposed nominee; (iv) the
name and residence address of each nominating shareholder; (v) the number
of shares of Company Common Stock owned by the nominating shareholder; (vi)
the total number of shares of Company Common Stock that, to the knowledge
of the nominating shareholder, are owned by the proposed nominee; and (vii)
the signed consent of the proposed nominee to serve, if elected.
The following table sets forth for each nominee and each director whose
term continues after the meeting, his age, the number of shares of Company
Common Stock beneficially owned by him on December 31, 1994, a brief
description of his principal occupation and business experience during the
last five years, and certain other directorships held. Unless indicated
otherwise and except for Mr. Rollins, each nominee and director has served
as a director of the Company since the Company's organization.
Nominees For Term Expiring in 1998:
Shares of
Common
Name Business Experience Stock(1)
- ----------------------- ----------------------------------- -------------
H. G. Pattillo# A director since 1989, he is 40,761(2)
Chairman of the Board of Directors
of Pattillo Construction Company,
Inc. He is also a director of Eaton
Corporation, John H. Harland
Company and Protective Corporation.
Mr. Pattillo is 68.
R. Randall Rollins He is Chairman of the Board and 30,909(3)
Chief Executive Officer of Rollins,
Inc. (since October 1991), a
consumer services company. He is
also the Chairman of the Board and
Chief Executive Officer of RPC
Energy Services, Inc., an oil and
gas field services and boat
manufacturing company. Mr. Rollins
is 63.
Robert W. Scherer# He was Chairman of the Board of 28,437
Directors of Georgia Power Company
until his retirement in May 1989.
Until December 1988, he served as
Chief Executive Officer of Georgia
Power Company and from November
1987 until June 1988, he also
served as President. Mr. Scherer is
69.
2
James B. Williams* He is Chairman of the Board of 1,096,436(4)
Directors (since April 1991) and
Chief Executive Officer (since
April 1990) of the Company. He
previously served as Vice Chairman
and President of the Company,
President of SunBanks, Inc. and
Vice Chairman and President of
Trust Company of Georgia. He is
also a director of The Coca-Cola
Company, Genuine Parts Company,
Georgia-Pacific Corporation,
Rollins, Inc., RPC Energy Services,
Inc. and Sonat Inc. Mr. Williams is
61.
James H. Williams# He is the owner of Jim H. Williams 10,000
Real Estate, Ocala, Florida, a real
estate brokerage and development
firm. He is also a citrus producer
and private investor. He was
Lieutenant Governor of the State of
Florida from January 1975 to
January 1979. He also previously
served as Deputy Secretary of the
United States Department of Agricul
ture and President of the National
Stone Association, a trade
association. Mr. Williams is 68.
Directors Whose Term Expires in 1997
Shares of
Common
Name Business Experience Stock(1)
- ----------------------- ----------------------------------- -------------
J. Hyatt Brown* He is Chairman, President and Chief 25,000
Executive Officer of Poe & Brown,
Inc., an insurance agency. He is
also a director of BellSouth
Telecommunications, Inc., FPL
Group, Inc., International Speedway
Corporation and Rock-Tenn Company.
Mr. Brown is 57.
3
T. Marshall Hahn, Jr.+ He is Honorary Chairman of the 122,448(5)
Board of Georgia-Pacific
Corporation, a manufacturer and
distributor of pulp, paper and
building products. He was Chairman
of the Board of Directors and Chief
Executive Officer of Georgia-
Pacific Corporation from February
1985 until his retirement in 1993.
He is also a director of Coca-Cola
Enterprises, Inc. and Norfolk
Southern Corporation. Mr. Hahn is
68.
David H. Hughes# He is Chairman of the Board of 24,956(6)
Directors and Chief Executive
Officer of Hughes Supply, Inc., a
distributor of construction
materials. Mr. Hughes is 51.
Scott L. Probasco, Jr.* A director since 1987, he is 1,036,693(7)
Chairman of the Executive Committee
of American National Bank and Trust
Company of Chattanooga (since
1989), a banking subsidiary of the
Company. He previously served as
President and Chief Administrative
Officer (1982-1985) and Vice
Chairman (1987-1989) of Third
National Corporation. He is also a
director of Chattem, Inc., Coca-
Cola Enterprises, Inc., Provident
Life and Accident Insurance Company
of America and Provident Life
Capital Corporation. Mr. Probasco
is 66.
Directors Whose Term Expires in 1996
Shares of
Common
Name Business Experience Stock(1)
- ----------------------- ----------------------------------- -------------
James D. Camp, Jr.+ He is President of the law firm of 197,019(8)
Camp & Camp, P.A., established in
October 1988. Mr. Camp is 67.
4
Roberto C. Goizueta* He is Chairman of the Board of 186,192(9)
Directors and Chief Executive
Officer of The Coca-Cola Company.
He is also a director of Eastman
Kodak Co., Ford Motor Company and
Sonat Inc. Mr. Goizueta is 63.
L. Phillip Humann* Director of Coca-Cola Enterprises, 231,296(10)
Inc., Equifax Inc. and Haverty
Furniture Companies,Inc. Mr. Humann
is 49.
Joseph L. Lanier, Jr.+ He is Chairman of the Board and 6,800
Chief Executive Officer of Dan
River, Inc., a textile
manufacturing company. He
previously served as Chairman of
the Board and Chief Executive
Officer of West Point-Pepperell,
Inc., a consumer soft goods
company. He is also a director of
Dibrell Bros., Inc., Flowers
Industries, Inc. and Torchmark
Corporation. Mr. Lanier is 63.
J. Walter Tucker, Jr.* He is Vice Chairman of the Board of 52,384(11)
Directors of Keystone Consolidated
Industries, Inc., a manufacturer of
steel and wire products. He
previously served as Chairman,
Chief Executive Officer, Vice
Chairman and President of Keystone
Consolidated Industries, Inc. He is
also President, Chief Executive
Officer and a director of Tucker &
Branham, Inc.,a mortgage banking,
real estate and insurance firm. He
is also a director of Valhi, Inc.
Mr. Tucker is 69.
* Member of Executive Committee of the Board of Directors
# Member of Audit Committee of the Board of Directors
+ Member of Compensation Committee of the Board of Directors
(1) Company Common Stock beneficially owned as of December 31, 1994. As
of such date, no nominee or director was a beneficial owner of more
than 1% of the outstanding shares of Company Common Stock. Except as
otherwise indicated, each director possessed sole voting and
investment power with respect to all shares set forth opposite his
name.
5
(2) Includes 18,617 shares held by a foundation of which Mr. Pattillo is
one of 6 directors and 600 shares owned by a foundation of which he is
one of two Trustees; Mr. Pattillo disclaims beneficial ownership of
all such shares and 10,000 shares owned by his spouse.
(3) As of January 31, 1995. Mr. Rollins shares voting and investment
power with repect to 10,084 shares.
(4) Includes 94,189 shares held for the benefit of Mr. Williams under the
Company's 401(k) Plan and 60,000 shares that are the subject of
exercisable employee stock options. Also, includes 555,173 shares held
by three foundations of which Mr. Williams is one of five Trustees;
Mr. Williams disclaims beneficial ownership of all such shares. Mr.
Williams shares investment power with respect to 36,164 shares.
(5) Includes 112,448 shares owned by a university of which Mr. Hahn is a
Trustee and the Chairman of its Investment Committee; Mr. Hahn
disclaims beneficial ownership of such shares.
(6) Includes 836 shares held in a trust as to which Mr. Hughes has sole
voting and investment power; Mr. Hughes disclaims beneficial ownership
of such shares.
(7) Mr. Probasco has sole investment power with respect to 412,900 of such
shares and he shares investment power with respect to 623,793 of such
shares. Mr. Probasco disclaims beneficial ownership of 311,897 of the
shares listed.
(8) Includes 13,920 shares as to which Mr. Camp shares voting and
investment power. Mr. Camp disclaims beneficial ownership of 24,923
shares.
(9) Includes 184,392 shares held by a foundation of which Mr. Goizueta is
one of five Trustees; Mr. Goizueta disclaims beneficial ownership of
such shares.
(10)Includes 11,112 shares held for the benefit of Mr. Humann under the
Company's 401(k) Plan and 25,000 shares that are the subject of
exercisable employee stock options.
(11)Includes 21,097 shares as to which Mr. Tucker shares voting and
investment power.
Principal Shareholder and Management Stock Ownership
The following sets forth certain information concerning persons known
to the Company who may be considered a beneficial owner of more than 5% of
the outstanding shares of Company Common Stock as of December 31, 1994.
Shares
Beneficially Percent
Name and Address Owned of Class
Trust Company Bank One 12,702,013(1)(2) 10.98 %
Park Place, N.E.
Atlanta, Georgia 30303
6
(1) The shares shown were held by Trust Company Bank, a subsidiary of the
Company, in various fiduciary or agency capacities. Trust Company Bank
has sole voting power with respect to 4,852,492 of such shares and it
shares voting power with respect to 704,542 of such shares, not
including shares referred to in note 2 below. Trust Company Bank has
sole investment power with respect to 3,635,931 of the total shares
set forth above and it shares investment power with respect to
2,221,827 of such shares, not including the shares referred to in Note
2 below. Other bank subsidiaries of the Company may be considered the
beneficial owners of an additional 6,335,600 or 5.39% of the
outstanding shares of Company Common Stock at December 31, 1994, held
in various fiduciary or agency capacities. These other bank
subsidiaries of the Company have sole voting power with respect to
4,627,023 of such shares and they share voting power with respect to
1,045,433 of such shares; they have sole investment power with respect
to 2,178,943 of such shares and they share investment power with
respect to 3,434,866 of such shares. The Company, Trust Company Bank
and each other subsidiary disclaim any beneficial interest in any of
such shares.
(2) Includes 6,784,514 shares held by Trust Company Bank as Trustee under
the Company's 401(k) Plan. Shares of Company Common Stock allocated
to a participant's account are voted by the Trustee in accordance with
instructions from such participant. The Trustee votes any unallocated
shares of Company Common Stock and any shares for which it has not
received timely instructions in accordance with its determination of
the best interests of the participant.
The following table sets forth the number of shares of Company Common
Stock beneficially owned on December 31, 1994 by certain executive officers
of the Company and by all directors and executive officers of the Company
as a group (19 persons) and the percentage of the Company's outstanding
shares owned by such group.
Shares Percent
Beneficially of
Beneficial Owner Owned(1) Class(2)
- ----------------------- ------------- ---------
John W. Spiegel 165,994
Edward P. Gould 161,852
Wendell H. Colson 94,244
All Directors and 3,536,975 3.05%
Executive Officers as a
Group
(1) Includes the following shares subject to exercisable stock options:
Mr. Spiegel, 48,630 shares; Mr. Gould, 33,600 shares; Mr. Colson,
29,400 shares; all other executive officers, 106,000 shares.
(2) Outstanding shares represent the 115,679,426 shares of Company Common
Stock outstanding on December 31, 1994, increased by the 217,630
shares subject to employee stock options referred to in Note 1. No
executive officer owns 1% or more of the outstanding shares of Company
Common Stock.
7
Board Committees, Attendance and Compensation
The Company's Board of Directors has three standing committees -- the
Executive Committee, the Audit Committee and the Compensation Committee.
The Executive Committee serves as the Nominating Committee. Regular
meetings of the Board are held quarterly.
The Executive Committee has and may exercise all the lawful authority
of the full Board of Directors, except that the committee may not (1)
approve, or propose to the shareholders, any action that lawfully must be
approved by the shareholders, (2) fill vacancies on the Board of Directors
or any of its committees, (3) amend the Articles of Incorporation, or
adopt, amend, or repeal the Bylaws of the Company, or (4) approve a
dissolution or merger of the Company or the sale of all or substantially
all of the assets of the Company. The Executive Committee serves as the
Nominating Committee and may make recommendations to the Board with respect
to the size and composition of the Board, reviews the qualifications of
potential candidates and recommends nominees to the Board. The Executive
Committee held 5 meetings during 1994.
The Compensation Committee is responsible for approving the
compensation arrangements for senior management. It is also responsible
for administration of certain employee benefit plans, including the
Executive Stock Plan, the Management Incentive Plan, the Performance Unit
Plan, the 401(k) Plan, the 401(k) Excess Plan, the Performance Bonus Plan,
the Retirement Plan and the Supplemental Executive Plan. The Compensation
Committee held 5 meetings during 1994.
The Audit Committee has the responsibility of recommending the
independent auditors; reviewing and approving the annual plans of the
independent auditors; approving the annual financial statements; and
reviewing and approving the annual plan for the internal audit department,
as well as a summary report of such department's findings and
recommendations. The Audit Committee held 4 meetings during 1994.
During 1994, the Board of Directors held 6 meetings. All the Company's
directors attended at least 75% of the Board meetings and meetings of
committees on which they served. Each director who is not also an employee
of the Company or its subsidiaries receives an annual retainer of $35,000
and is paid a fee of $1,500 for each Board or committee meeting attended.
Directors serving as directors of various of the Company's subsidiaries
only receive meeting attendance fees for service on those Boards.
Directors may defer fees payable to them under the Company's Directors
Deferred Compensation Plan. The return on such deferred amount is
determined, at the election of the director, as if such funds had been
invested in Company Common Stock or at a floating interest rate equal to
the prime interest rate in effect at Trust Company Bank computed on a
quarterly basis.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Officers
Executive officers are elected annually by the Board following the
Annual Meeting of Shareholders to serve for a one-year term and until their
successors are elected and qualified. The Company's Bylaws provide that any
material change in the title, salary, benefits or other terms of employment
of any officer of the Company who holds the title of Chairman of the Board,
8
President or Chief Executive Officer requires the affirmative vote of at
least two-thirds of the full Board of Directors. The following table sets
forth the name of each executive officer of the Company and the principal
positions and offices he holds with the Company. Unless otherwise
indicated, each of these officers has served as an executive officer of the
Company or a principal subsidiary for at least five years.
Name Information about Executive Officers
- ------------------- -----------------------------------------------------
James B. Williams Chairman of the Board and Chief Executive Officer of
the Company.
L. Phillip Humann President of the Company.
John W. Spiegel An Executive Vice President and Chief Financial
Officer of the Company. Mr. Spiegel is 53.
E. Jenner Wood III An Executive Vice President of the Company since
November 1993 with responsibility for trust and
investment services. Prior to that time, he was an
executive officer of Trust Company Bank, a subsidiary
bank of the Company. Mr. Wood is 43.
John W. Clay, Jr. Chairman of the Board of Third National Corporation,
the Company's Tennessee banking affiliate. Prior to
assuming that position, he was Chairman and Chief
Executive Officer of Third National Bank. Mr. Clay
is 53.
Wendell H. Colson Chairman of the Board and President of SunBanks,
Inc., the Company's Florida banking affiliate. He
has been President of SunBanks, Inc. since April
1989. Prior to that time, he was a Senior Executive
Vice President of SunBanks, Inc. Mr. Colson is 64.
Edward P. Gould Chairman of the Board of Trust Company of Georgia,
the Company's Georgia banking affiliate. He is also
Chairman of the Board and Chief Executive Officer of
Trust Company Bank. He served as Vice Chairman of
Trust Company of Georgia (1985-1990) and President of
Trust Company Bank (1977-1985). Mr. Gould is 64.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Introduction
Decisions on compensation of the Company's executives are made by the
four-member Compensation Committee of the Board (the "Committee"). Each
member of the Committee is a non-employee director. The Committee believes
that the actions of each executive officer have the potential to impact the
short-term and long-term profitability of the Company. Consequently, the
Committee places considerable importance on its task of designing and
9
administering an executive compensation program.
Objectives of Executive Compensation
The objectives of the Company's executive compensation program are to:
(1) increase shareholder value, (2) increase the overall performance of the
Company, (3) increase the success of the banking unit directly impacted by
the executive's performance, and (4) increase the performance of the
individual executive.
Compensation Policy
The general policy underlying the Company's executive compensation
program is designed to:
* Aid the Company in attracting, retaining and motivating high-
performing executives.
* Provide competitive levels of compensation consistent with
achieving the Company's annual and long-term performance goals.
* Reward superior corporate performance.
Executive compensation is reviewed relative to that of the Company's
peer group. However, the Company's emphasis is on programs that provide
incentive compensation rewards based on the Company's performance. The
peer group is made up of the following bank holding companies: Banc One
Corporation, Barnett Banks, Inc., Boatmen's Bancshares, Inc., CoreStates
Financial Corp., First Interstate Bancorp, First Union Corporation,
NationsBank Corporation, NBD Bancorp, Norwest Corporation, PNC Bank Corp.,
US Bancorp, Wachovia Corporation and Wells Fargo & Company (the "Peer
Group"). Base salary will remain conservative compared to the Peer Group
with variable compensation opportunity being a significant part of the
total compensation package. Peer Group comparative information is
relevant, but the Company's position on total compensation is driven more
by the Company's performance, individual performance and a sense of
fairness. Thus, depending on the Company's performance in any particular
year, an executive officer may receive compensation above or below the
level of an officer in a competing company.
Components of Executive Compensation
The three primary components of executive compensation are:
* Base Salary
* Cash Incentive Plans
* Stock Incentive Plans
Base Salary
Base salary is designed to provide acceptable levels of compensation to
executives while helping the Company manage fixed labor expense.
Therefore, the Committee believes that executive officer base salary should
be on the conservative side of a market-competitive range. Salaries for
top executives are reviewed annually and are based on:
10
* Job scope and responsibilities
* Length of service
* Corporate, unit, and individual performance (performance
measures may include net income, earnings per share, return on
assets, return on equity, growth, achievement of specific goals,
etc.)
* Competitive rates for similar positions
* Subjective factors
* Cash Incentive Plans
The Company maintains two incentive plans in this category:
* The Management Incentive Plan, which focuses on annual
performance goal attainment.
* The Performance Unit Plan, which focuses on performance over a
three-year period.
These variable compensation plans are designed so that: (1) the
executive receives a bonus only if the Company or applicable subsidiary
performance targets are met, and (2) a significant part of the executive's
compensation is at risk.
Management Incentive Plan
Awards under the Management Incentive Plan ("MIP") are based on
consolidated net earnings for Company participants, and on attainment
of subsidiary net income goals for subsidiary participants. These
goals are set for a one-year period, and are aimed at increasing short-
term performance. Minimum targets are set and the level of attainment
of such goals results in varying payouts. Maximum targets reflect
ambitious earnings goals which are only attainable in an outstanding
year, and thus, result in larger payouts.
Participation in MIP is limited to a group of senior managers who have
a material impact on Company performance. The participants are
selected by the Committee and include the executive officers named in
this Proxy Statement and approximately 300 other senior managers.
Awards earned under MIP are contingent upon employment with the
Company through the end of the year, except for payments made in the
event of death, retirement, disability, or in the event of a change in
control. Management Incentive Plan payments are presented in the
Summary Compensation Table under the heading "Bonus."
Performance Unit Plan
The Performance Unit Plan ("PUP") is aimed at motivating executives to
attain specific goals set by the Committee over a three-year period.
Approximately 150 participants are selected by the Committee to
receive units (with a stated value of $30 per unit) based upon
management level, scope of position, range of incentive compensation,
individual performance and subjective factors. Two performance
measurements are set for each three-year cycle which correspond to a
minimum, target,
11
and maximum payout value. These performance measurements are: (1) a
three-year cumulative consolidated net income goal, and (2) a three-
year cumulative earnings per share goal. At the end of each cycle,
the payout value is determined by actual net income and earnings per
share for the three-year period. The measurement which yields the
highest award is the one that is used. This method was employed due
to the Company's active share repurchase program and the desire not to
penalize executives for this strategy. Straight line interpolation is
used to calculate payout values between minimum, target, and maximum
levels. These payouts are set forth in the Summary Compensation Table
under the heading "LTIP Payouts."
Stock Incentive Plans
One of the Committee's priorities is for executives to be significant
shareholders so that the interests of executives are aligned with the
interests of shareholders. The Company's executive officers have a
significant equity stake in the Company, as reflected in the beneficial
ownership information contained in this Proxy Statement.
1986 Stock Plan
The existing Executive Stock Plan (the "1986 Stock Plan") is designed
to focus executives and other eligible participants on long-term
performance of the Company. Performance-based restricted stock
("Performance Stock") continues to be the primary stock-based
incentive vehicle made available to executives through the 1986 Stock
Plan. Vesting of Performance Stock is contingent upon two conditions:
(1) stock price increases over a period of five years, and (2) the
participant must remain with the Company for 15 years after the first
condition is met or until age 64 (or until a change of control of the
Company occurs). Awards of Performance Stock occur as the stock price
increases in increments of 20 percent over the grant date value. For
each 20 percent increase in stock price, 20 percent of the shares
granted are "awarded" to the participant. Performance Stock that is
awarded is held in escrow by the Company. The participant must remain
with the Company until the second condition is met before receiving
the stock. If the second condition is not met, the executive forfeits
the awarded shares. Performance Stock was granted to executives in
1990 and 1992. The first grant of Performance Stock has been awarded
because the stock price doubled from the date of grant. Twenty
percent of the shares granted in 1992 have been awarded because the
stock price increased 20 percent. Executives receive dividends and
voting rights on all shares awarded to them. There were no grants of
Performance Stock during 1994.
401(k) Matching Contributions
The Company will match eligible employee contributions to the
Company's 401(k) Plan, if the employee has completed one year of
service with the Company and the Company has met a minimum target net
income goal for the year, as established by the Committee. The
matching contributions made by the Company consist of a guaranteed
component and a performance component. The guaranteed match is
determined by a schedule which yields matching ratios based on a
comparison of net income results to the established target. If the
minimum consolidated net income target is not achieved, no performance
match will be made for the year.
12
401(k) Excess Plan
The Company also maintains an unfunded 401(k) Excess Plan to provide
benefits otherwise payable to certain participants under the 401(k)
Plan which exceed the tax qualified benefits under the 401(k) Plan as
a result of certain federal tax restrictions. Under the 401(k) Excess
Plan, the Company credits to an account for each participant an amount
equal to the contribution to the 401(k) Plan that otherwise would have
been made but for federal income tax restrictions on maximum
contributions. Amounts credited to a participant's account generally
have the same investment experience as would an investment by the
participant in Company Common Stock. Contributions on behalf of the
Company are made in cash. The Company contributed or expensed with
respect to the 401(k) Plan and the 401(k) Excess Plan the amounts
shown in the Summary Compensation Table under the heading "All Other
Compensation."
Chief Executive Officer Compensation
The executive compensation policy described above is applied in setting
Mr. Williams' compensation. Mr. Williams participates in the same
executive compensation plans available to other executive officers. The
1994 cash compensation of Mr. Williams was $1,687,790. Over half (61%) of
this amount was earned in performance-driven incentives. Mr. Williams had
a base salary of $650,000, and earned a Management Incentive Plan award of
49% of his base salary, or $317,790.
In keeping with the Committee's desire for the Chief Executive Officer
to maintain a long-term focus for the Company, much of Mr. Williams'
variable compensation is provided through PUP. The number of PUP units
granted to Mr. Williams for the 1992-94 PUP cycle was determined in an
effort to provide a variable compensation opportunity such that if the
aggressive performance target was achieved, Mr. Williams' total
compensation would be competitive with chief executives of the companies in
the Peer Group. Mr. Williams earned a PUP award of $720,000 for the 1992-
94 PUP cycle. This represented a payout at the maximum $60 per unit value
and is the result of the Company achieving the aggressive cumulative
earnings per share target that was set by the Committee prior to the start
of the 1992-94 cycle.
OBRA 93
The Omnibus Budget Reconciliation Act of 1993 ("OBRA") limits the
annual income tax deduction for compensation in excess of $1 million paid
to the Company's five most highly compensated executive officers. Exempt
from this deduction limitation are payments subject to: (1) the attainment
of an objective performance goal, (2) shareholder approval of performance
goals, and (3) administration by a Committee of outside directors. For
1994, no individual earned compensation over $1 million that was not fully
deductible because any amounts over $1 million were paid pursuant to
compensation arrangements grandfathered under OBRA.
In order to maintain the deductibility of awards paid to Covered
Employees under the MIP and PUP in 1995 and thereafter, shareholder
approval of the material terms of the performance goals (the attainment of
which determine the compensation to be paid) is being sought by the Company
at the Annual Meeting. Additionally, shareholder approval is being sought
for a
13
new SunTrust Executive Stock Plan.
Summary
The Committee believes that this mix of conservative market-based
salaries, significant variable cash incentives for both long-term and short-
term performance and the potential for equity ownership in the Company
represents a balance that will motivate the management team to continue to
produce strong returns. The Committee further believes this program
strikes an appropriate balance between the interests and needs of the
Company in operating its business and appropriate rewards based on
shareholder value.
Submitted by the Compensation Committee of the Company's Board of
Directors.
James D. Camp, Jr.
Warren M. Cason, Chairman
T. Marshall Hahn, Jr.
Joseph L. Lanier, Jr.
14
Summary of Cash and Certain Other Compensation
The following table shows, for the fiscal years ending December 31,
1992, 1993 and 1994, the cash compensation paid by the Company and its
subsidiaries, as well as certain other compensation paid, accrued or granted
for those years to each of the six most highly compensated executive
officers of the Company.
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
--------------------------------- ---------------------------
Other Restricted
Annual Stock All Other
Compen- Awards LTIP Compensat
Name and Principal Position Year Salary Bonus sation (Grants) Payouts ion <F2>
- --------------------------- ------- --------- --------- -------- ---------- --------- ---------
James B. Williams 1994 $650,000 $317,790 $9,112 - $720,000 $21,199
Chairman of the Board and 1993 550,000 189,461 16,950 - 720,000 20,743
Chief Executive Officer 1992 500,000 175,000 4,927 $3,750,000 <F1> 367,800 22,032
L. Phillip Humann 1994 390,000 190,674 6,863 - 600,000 12,719
President 1993 330,000 113,676 10,071 - 360,000 12,493
1992 300,000 105,000 4,105 1,500,000 <F1> 140,990 13,219
John W. Spiegel 1994 295,000 144,228 4,665 - 300,000 9,621
Executive Vice President 1993 250,000 86,119 7,608 - 180,000 9,493
and Chief Financial 1992 220,000 77,000 2,628 937,500 <F1> 91,950 9,694
Officer
Edward P. Gould 1994 294,000 81,126 5,591 - 276,000 8,820
Chairman of the Board of 1993 280,000 47,293 6,120 - 276,000 8,518
Trust Company of Georgia 1992 270,000 42,575 3,806 375,000 <F1> 140,990 11,897
Jesse S. Hall 1994 173,250 47,806 3,340 - 176,000 5,318
Executive Vice President 1993 220,000 75,784 4,962 - 180,000 8,360
<F3> 1992 210,000 73,500 2,763 300,000 <F1> 91,950 9,253
<F1>Performance-based restricted stock ("Performance Stock") is held by
the executive officers listed above under the Company's Executive
Stock Plan. Three events must occur with respect to such Performance
Stock before the executive takes full title to the Performance Stock.
Shares are granted, awarded, and finally vest. After Performance
Stock is granted by the Compensation Committee, 20% increments are
awarded if and when there are comparable 20% increases in the average
price of the Company's Common Stock from the initial price at the time
of grant. For purposes of awarding each increment, the average price
of the Company's Common Stock must maintain the target price during a
period of 20 consecutive trading days. Awarded shares vest on the
earliest of the following dates: (i) 15 years after the date shares
are awarded to participants; (ii) at attaining age 64; (iii) in the
event of the death or disability of a participant; or (iv) in the
15
event of a change in control of the Company as defined in the
Executive Stock Plan. The values set forth in the table above are as
of the date of grant. The individuals set forth in the table above
held (were granted), subject to the terms and conditions of the
Executive Stock Plan, the number of shares of restricted stock,
including Performance Stock, with a value as of December 31, 1994, as
follows: Messrs. Williams 340,000 shares, $16,235,000; Humann 140,000
shares, $6,685,000; Spiegel 85,000 shares, $4,058,750; Gould 35,000
shares, $1,671,250; and Colson 65,000 shares, $3,103,750. As
described above, not all such shares have been awarded, and, except
for Mr. Hall and Mr. Colson, no shares held by the named individuals
have vested. The price of the Company's Common Stock would have to
reach $76 for a certain period of time before all the shares listed in
the table above would be awarded. Dividends were paid in 1994 on
shares of awarded Performance Stock as follows: Messrs. Williams
$343,200; Humann $142,560; Spiegel $85,800; Gould $35,640; and Colson
$31,360.
<F2>Amounts contributed by the Company to the 401(k) Plan and the 401(k)
Excess Plan.
<F3>Mr. Hall retired on September 30, 1994.
Shareholder Return
Set forth below is a line graph comparing the yearly percentage change
in the cumulative total shareholder return on the Company Common Stock
against the cumulative total return of the S&P Composite-500 Stock Index
and the S&P Major Regional Bank Composite Index for the period of five
years commencing December 31, 1989 and ended December 31, 1994.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
VALUE OF $100 INVESTED ON DECEMBER 31, 1989 AT:
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
-------- -------- -------- -------- --------
SunTrust $103.50 $187.10 $210.71 $222.49 $242.63
Regional Banks 71.33 127.61 162.50 172.28 163.06
S&P 500 96.89 126.42 136.05 149.76 151.74
* Assumes that the value of the investment in Company Common Stock and
each index was $100 on December 31, 1989 and that all dividends were
reinvested.
Option Exercises and Holdings
The following table sets forth information with respect to the named
executives concerning the exercise of options during 1994 and unexercised
options held as of December 31, 1994. No options were granted to executive
officers in 1994.
16
AGGREGATE OPTION EXERCISES IN 1994 AND DECEMBER 31, 1994 OPTION VALUES
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options at the-Money Options at
Shares December 31, 1994 December 31, 1994
Acquired ----------------------- -----------------------
on Value Exerci- Unexer- Exerci- Unexer-
Name Exercise Realized sable cisable sable cisable
---------------- ---------- ---------- ---------- ---------- ---------- ----------
James B. Williams 13,000 $287,675 60,000 - $1,485,000 -
L. Phillip Humann 8,700 194,163 25,000 - 618,750 -
John W. Spiegel 11,700 346,844 48,630 - 1,274,493 -
Edward P. Gould 4,400 124,850 33,600 20,000 830,525 $507,500
Wendell H. Colson - - 29,400 20,000 730,400 $507,500
Jesse S. Hall - - 20,000 - 507,500 -
Long-Term Incentive Plan
The following table provides information concerning the Company's
Performance Unit Plan ("PUP"). The PUP provides for the award of
performance units ("Units"), each with a stated grant value, to key
employees of the Company and its subsidiaries by the Compensation
Committee. The grant value and number of Units awarded to a participant
for each performance measurement cycle is determined by the Compensation
Committee as of the grant date. The final value of the Units granted under
each award may range from zero to 200% of the grant value and will be
determined by the Compensation Committee at the end of each performance
measurement cycle based on the achievement of either consolidated net
earnings goals or earnings per share goals established by the Compensation
Committee for that cycle. Payment of an award earned under the PUP is
contingent upon continuous employment with the Company until the end of the
award cycle, except for payments made in the event of retirement, death,
disability, or in the event of a change in control.
LONG-TERM INCENTIVE PLAN - AWARDS IN 1994
Estimated Future Payouts under
Non-Stock Price-Based Plans
------------------------------------
Performance
Period Until
Number of Maturation
Name Units or Payout Threshold Target Maximum
- ----------------- --------- ------------ ---------- ---------- ----------
James B. Williams 12,000 3 years $180,000 $360,000 $720,000
L. Phillip Humann 10,000 3 years 150,000 300,000 600,000
John W. Spiegel 6,000 3 years 90,000 180,000 360,000
Edward P. Gould 4,600 3 years 69,000 138,000 276,000
Wendell H. Colson 4,600 3 years 69,000 138,000 276,000
17
Pension Plans
The following table shows estimated combined retirement benefits
payable to a covered participant at normal retirement age under the
Company's Retirement and Supplemental Executive Plans as described below.
PENSION PLAN TABLE
Years of Service
Remuneration 15 20 25 30 or More
- ------------ ----------- ----------- ----------- -----------
$300,000 $180,000 $180,000 $180,000 $180,000
400,000 240,000 240,000 240,000 240,000
500,000 300,000 300,000 300,000 300,000
600,000 360,000 360,000 360,000 360,000
700,000 420,000 420,000 420,000 420,000
800,000 480,000 480,000 480,000 480,000
900,000 540,000 540,000 540,000 540,000
1,000,000 600,000 600,000 600,000 600,000
1,100,000 660,000 660,000 660,000 660,000
1,200,000 720,000 720,000 720,000 720,000
1,300,000 780,000 780,000 780,000 780,000
1,400,000 840,000 840,000 840,000 840,000
1,500,000 900,000 900,000 900,000 900,000
1,600,000 960,000 960,000 960,000 960,000
1,800,000 1,080,000 1,080,000 1,080,000 1,080,000
2,000,000 1,200,000 1,200,000 1,200,000 1,200,000
2,200,000 1,320,000 1,320,000 1,320,000 1,320,000
The Company's Retirement Plan is a noncontributory retirement plan for
the benefit of eligible employees of the Company and its subsidiaries. The
Company has also established a nonqualified Supplemental Executive Plan
(the "Supplemental Plan") to pay benefits to certain Retirement Plan
participants that exceed the benefits payable to such Plan participants
under the Retirement Plan as a result of federal tax restrictions. The
Supplemental Plan provides such benefits to certain key employees of the
Company and its subsidiaries as designated by the Compensation Committee.
The maximum annual benefits payable under the Supplemental Plan will equal
60% of the average annual income (defined as base salary, and payments made
under the Management Incentive Plan and the Performance Unit Plan, which
are shown in the Summary Compensation Table) earned during the 60
consecutive months of employment preceding retirement, reduced by annual
benefits payable at retirement under the Retirement Plan, Social Security
benefits at age 65, and certain other nonqualified, unfunded retirement
arrangements maintained by the Company. Upon retirement, the Supplemental
Plan benefit will be paid in the form of a life annuity if the participant
is unmarried or in the form of an actuarial equivalent 100% joint and
survivor annuity if the participant is married. The Compensation Committee
may approve the payment of benefits in the form of a lump sum. Retirement
benefits under the Supplemental Plan vest when a participant has completed
ten years of service with the Company and is 60 years old.
The compensation earned in 1994 for the individuals named in the
Summary Compensation Table included for the computation of benefits payable
under the Supplemental Plan and credited years of service is as follows:
Messrs. Williams, $1,687,790, 39 years of service; Humann, $1,180,674, 25
years of
18
service; Spiegel, $739,228, 29 years of service; Gould, $651,126, 39 years
of service; Colson, $626,883, 32 years of service; and Hall, $397,056, 44
years of service.
The Supplemental Plan provides that in the event of a change in control
of the Company (as defined in the Supplemental Plan), all benefits accrued
for participants who are involuntarily terminated or who terminate for good
reason within three years after a change in control shall immediately vest.
Under such circumstances, benefits would be calculated using the highest
compensation for any twelve consecutive month period during the 60
consecutive month period which ends immediately before the termination of
employment. Further, the participant's credited service may be increased
under certain circumstances up to three years. Termination for good reason
means a termination made primarily because of a failure to elect or reelect
a participant to a position he held with the Company prior to the change in
control or a substantial change or reduction in responsibilities or
compensation. The Supplemental Plan further provides that in the event of
a termination as described above, participants in the Supplemental Plan
will continue to receive health, life and disability benefit coverage for
up to two years after such termination.
Compensation Committee Interlocks and Insider Participation
Messrs. Camp, Cason, Hahn and Lanier served as members of the
Compensation Committee throughout 1994. During 1994, the Company's bank
subsidiaries engaged in customary banking transactions and had outstanding
loans to certain of the Company's directors, including Mr. Cason, executive
officers, their associates and members of the immediate families of such
directors and executive officers. These loans were made in the ordinary
course of business and were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for
comparable transactions with others. In the opinion of management, these
loans do not involve more than the normal risk of collectibility or present
other unfavorable features. Holland & Knight, of which Mr. Cason is a
partner, provided legal services to the Company and certain of its
subsidiaries in 1994, and it is anticipated that Holland & Knight will
provide legal services to the Company and its subsidiaries in 1995. Camp &
Camp, P.A., of which Mr. Camp is a partner, provided legal services to a
subsidiary of the Company in 1994, and it is anticipated that Camp & Camp,
P.A. will provide legal services to the Company or its subsidiaries in
1995.
PROPOSAL FOR APPROVAL OF PERFORMANCE BASED COMPENSATION GOALS UNDER THE
MANAGEMENT INCENTIVE PLAN TO PRESERVE THE COMPANY'S TAX DEDUCTION FOR
PLAN AWARDS
(Item 2)
Background
The Company has in the past provided cash awards to certain designated
executive officers under the Company's Management Incentive Plan (the
"MIP"). Short term performance is emphasized through the MIP, which has a
payout based on reaching net income goals for a one-year period that are
set by the Compensation Committee of the Board of Directors (the
"Committee"). Participation in this plan is limited to a select group of
senior management who have a material impact on Company performance. MIP,
in substantially the form described herein, has been an important part of
the Company's executive
19
compensation program for a number of years and its operation is described
earlier in this Proxy Statement.
Changes to federal tax law enacted in 1993 impact the deductibility of
awards paid under the MIP. Section 162(m) of the Internal Revenue Code, as
amended ("Section 162(m)"), provides that compensation in excess of $1
million paid for any year to a corporation's chief executive officer and
the four other highest paid executive officers at the end of such year
("Covered Employees") will not be deductible for federal income tax
purposes unless certain conditions are met. One such condition is that the
compensation qualify as "performance-based compensation". In addition to
other requirements for qualification as performance-based compensation,
shareholders must be advised of and must approve the material terms of the
performance goals under which compensation is to be paid. The proposed
income tax regulations provide that such material terms consist of (i) the
individuals eligible to receive compensation, (ii) a general description of
the business criteria on which the performance goals are based, and (iii)
either the maximum amount of the compensation to be paid or the formula
used to calculate the amount of compensation if the performance goals are
met.
The Company intends that awards to Covered Employees under the MIP
qualify as performance-based compensation within the meaning of Section
162(m). On November 8, 1994 the Board of Directors of the Company approved
certain amendments to the MIP which were designed to ensure that, to the
extent possible, awards payable under the MIP would be fully deductible by
the Company for purposes of Section 162(m). In order to maintain the
deductibility of awards paid to Covered Employees under the MIP,
shareholders are asked at the Annual Meeting to approve the material terms
of the performance goals, which are described below. These performance
goals are substantially similar to the goals used since 1986.
Individuals Eligible
Participants in MIP must be key executive employees of the Company or a
subsidiary. Participants are selected by the Committee based on the
employee's contributions to the growth and profitability of the Company and
its subsidiaries. For 1995, the participants include the Covered Employees
and approximately 300 other senior executives.
Business Criteria upon which Performance Goals are Based
Prior to the beginning of each plan year, the Committee will establish
separate performance objectives for the Company and each subsidiary which
will be based on each such organization's net income. Each entity will
have a minimum net income objective, a maximum net income objective, and
such other net income objectives between the minimum and the maximum as the
Committee deems appropriate. Net income is defined as the consolidated net
income with respect to the Company and, with respect to each subsidiary,
either its net income or certain components of its net income, as specified
by the Committee prior to the commencement of each plan year, adjusted to
exclude items which should be excluded as being extraordinary in nature as
determined by the Committee; provided that no adjustment will be made with
respect to a Covered Employee if the Committee determines that such
adjustment will cause an award to such Covered Employee to fail to qualify
as performance-based compensation under Section 162(m).
20
Target and Maximum Awards
The Committee will assign to each participant certain award values,
specified as percentages of the participant's base wages, which will
correspond to the minimum, target and maximum net income objectives. If
the participant's employer achieves the minimum, target or maximum net
income objective, the participant will be paid an award which is calculated
based on the corresponding percentage of the participant's base wages. No
award will be paid if the participant's employer does not achieve the
minimum net income objective. Straight line interpolation will be used to
calculate awards when net income falls between any two specified net income
objectives. The highest level of award that may be paid for any plan year
to a participant is $1 million. For purposes of calculating awards, base
wages means the base salary paid to a participant by the Company or a
subsidiary during a plan year, excluding bonuses, overtime, commissions and
other compensation.
Notwithstanding the terms of any award, the Committee in its sole
discretion may reduce the amount of an award payable to any participant for
any reason, including the Committee's judgment that the performance
objectives have become an inappropriate measure of achievement, a change in
the employment status, position or duties of the participant,
unsatisfactory performance of the participant, or the participant's service
for less than the entire plan year.
The amounts that will be awarded to the MIP participants are not
currently determinable. The following table sets forth the bonus amounts
that would have been paid to the individuals and classes of participants
listed in such table under MIP for 1995 assuming 1994 payout percentages
and 1995 base wages. Actual bonuses paid for 1995 could be less than or
greater than those assumed below depending on the extent to which net
income objectives are met.
1995 Possible Management Incentive Plan Payments
Name and Position Dollar Value
- ----------------------------------------------------- -------------
James B. Williams Chairman of the Board and Chief 342,236
Executive Officer
L. Phillip Humann President 207,786
John W. Spiegel Executive Vice President and Chief 158,895
Financial Officer
Edward P. Gould Chairman of the Board of Trust 84,437
Company of Georgia
Wendell H. Colson Chairman of the Board of Sun Banks, 80,022
Inc.
Executive Group (including the persons named above) 993,409
Non-Executive Officer Employee Group 4,000,000
21
Shareholder Approval Requirements
According to the proposed income tax regulations under Section 162(m),
no changes can be made to the material terms of the performance goals
unless such changes are approved by the shareholders. Furthermore, if the
Committee has authority to change the objectives under the performance
goals, as provided in the MIP, the material terms of the performance goals
must be reapproved by the shareholders five years after initial shareholder
approval. Otherwise, the Board of Directors or the Committee may amend the
MIP without shareholder approval.
If the material terms of the performance goals are not approved by the
shareholders, the MIP will remain in effect and awards may be granted to
participants who are not Covered Employees. Further, the Board retains
authority to develop and implement alternate means of fairly compensating
executive officers, including the Covered Employees.
The Board of Directors believes it is in the best interests of the
Company for the shareholders to approve the material terms of the
performance goals under which awards are paid pursuant to the MIP. Thus,
the Board recommends that shareholders vote FOR the proposal described
above.
PROPOSAL FOR APPROVAL OF PERFORMANCE BASED COMPENSATION GOALS UNDER THE
PERFORMANCE UNIT PLAN TO PRESERVE THE COMPANY'S TAX DEDUCTION FOR PLAN
AWARDS
(Item 3)
Background
The Company has in the past provided cash awards to certain designated
executive officers under the Company's Performance Unit Plan ("PUP").
Longer-term performance is emphasized through the PUP, which has a payout
based on reaching either net income goals or earnings per share goals over
a three year cycle. The goals are set by the Committee, and the awards are
paid early in the year which follows each cycle. Participation in this
plan is limited to a select group of senior management who have a material
impact on Company performance. PUP, in substantially the form described,
has been an important part of the Company's executive compensation program
for a number of years and its operation is described earlier in this Proxy
Statement.
The Company intends that awards to Covered Employees under the PUP
qualify as performance-based compensation within the meaning of Section
162(m). On November 8, 1994 the Board of Directors of the Company approved
certain amendments to the PUP which were designed to ensure that, to the
extent possible, awards payable under the PUP would be fully deductible by
the Company. In order to maintain the deductibility of awards paid to
Covered Employees under the PUP for purposes of Section 162(m),
shareholders are asked to approve the material terms of the performance
goals, which are described below. These performance goals are
substantially similar to the goals used since 1988.
22
Individuals Eligible
Participants in PUP must be key executive employees of the Company or a
subsidiary. Participants are selected by the Committee based on the
employee's potential to contribute to the growth and profitability of the
Company and its subsidiaries. For 1995, the participants include the
Covered Employees and approximately 150 other senior executives.
Business Criteria upon which Performance Goals are Based
Prior to the beginning of each performance measurement cycle (which is
generally a period of three consecutive calendar years), the Committee will
establish two performance measurements for each cycle. The first
performance measurement is a three-year consolidated net income objective
and the second performance measurement is a three-year cumulative earnings
per share objective. Each performance measurement will have a minimum
objective, a maximum objective, and such other objectives between the
minimum and maximum as the Committee deems appropriate. The minimum,
maximum and other objectives between the minimum and maximum will have
corresponding final values assigned to them which will be used to calculate
the amount of awards to participants.
Net income is defined as the Company's consolidated net income for each
calendar year in each performance measurement cycle, adjusted to exclude
items which should be excluded as being extraordinary in nature as
determined by the Committee; provided that no adjustment will be made with
respect to a Covered Employee if the Committee determines that such
adjustment will cause an award to such Covered Employee to fail to qualify
as performance-based compensation under Section 162(m). Earnings per share
for each calendar year in each performance measurement cycle means the
primary earnings per common share of the Company, subject to the same
adjustments as described above for net income.
Target and Maximum Awards
The Committee will grant to each participant a certain number of
performance units with each unit having an assigned value. The Committee
determines the number of units to grant to each participant based on
management level, base salary, range of possible cash incentive
compensation, individual performance and subjective factors. At the end of
each cycle, awards are determined based upon the Company's achieving or
exceeding the performance objectives set by the Committee. Currently,
whichever measurement (net income or earnings per share) produces the
higher award value is the one which is used. Awards are determined by
multiplying each participant's number of performance units by the final
value which corresponds to the achievement of the performance goals. No
awards will be paid if both net income and earnings per share fall below
the minimum objectives. Straight line interpolation will be used to
calculate the awards when net income or earnings per share fall between any
two specified net income or earnings per share objectives, as applicable.
No participant may receive an award in excess of $1 million for any
performance measurement cycle.
Notwithstanding the terms of any award, the Committee in its sole
discretion may reduce the amount of an award payable to any participant for
any reason, including the Committee's judgment that the performance
objectives have become an inappropriate measure of achievement, a change in
23
the employment status, position or duties of the participant,
unsatisfactory performance of the participant, or the participant's service
for less than the performance measurement cycle.
The amounts that will be awarded under the 1995 - 1997 PUP cycle are
not currently determinable. The following table sets forth the maximum
possible bonus amounts that could be paid to the individuals and classes of
participants listed in such table under the 1995 - 1997 PUP cycle. The
amounts disclosed in the table have been computed assuming attainment of
the maximum net income and/or earnings per share objectives for the
Company. Actual bonuses will be less than those assumed below if maximum
net income objectives and/or earnings per share objectives are not met.
1995 - 1997 Cycle Maximum Possible Performance Unit Plan Payments
Name and Position Dollar Value
- ----------------------------------------------------- -------------
James B. Williams Chairman of the Board and Chief $720,000
Executive Officer
L. Phillip Humann President 600,000
John W. Spiegel Executive Vice President and Chief 360,000
Financial Officer
Edward P. Gould Chairman of the Board of Trust 276,000
Company of Georgia
Wendell H. Colson Chairman of the Board of Sun Banks, 276,000
Inc.
Executive Group (including the persons named above) 2,706,000
Non-Executive Officer Employee Group 10,263,000
Shareholder Approval Requirements
According to the proposed income tax regulations under Section 162(m),
no changes can be made to the material terms of the performance goals
unless such changes are approved by the shareholders. Furthermore, if the
Committee has authority to change the objectives under the performance
goals, as provided in the PUP, the material terms of the performance goals
must be reapproved by the shareholders five years after initial shareholder
approval. Otherwise, the Board of Directors or the Committee may amend the
PUP without shareholder approval.
If the material terms of the performance goals are not approved by the
shareholders, the PUP will remain in effect and awards may be granted to
participants who are not Covered Employees. Further, the Board retains
authority to develop and implement alternate means of fairly compensating
executive officers, including the Covered Employees.
The Board of Directors believes it is in the best interests of the
Company for the shareholders to approve the material terms of the
performance goals under which awards are paid pursuant to the PUP. Thus,
the Board recommends that shareholders vote FOR the proposal described
above.
24
PROPOSAL TO APPROVE THE SUNTRUST BANKS, INC. 1995 EXECUTIVE STOCK PLAN
(Item 4)
Background
The SunTrust Banks, Inc. 1995 Executive Stock Plan ("the 1995 Stock
Plan") was adopted by the Board of Directors of the Company on November 8,
1994, subject to and effective upon approval by the shareholders at the
Annual Meeting. Upon approval of the 1995 Stock Plan by the shareholders,
management anticipates that no further grants will be made under the
Executive Stock Plan currently in place, which is referred to elsewhere in
this Proxy Statement as the 1986 Stock Plan. Grants that may be made under
the 1995 Stock Plan are not currently determinable. The Board of Directors
continues to believe that stock-based incentives are important factors in
attracting, retaining and rewarding employees and closely aligning their
interests with those of shareholders. The following is a summary of the
material terms of the 1995 Stock Plan. This summary is qualified in its
entirety by the complete terms of the 1995 Stock Plan as set forth in
Exhibit A hereto.
Grants
The 1995 Stock Plan provides for grants of options to purchase Company
Common Stock, restricted shares of Company Common Stock (which may be
subject to both grant and forfeiture conditions) ("Restricted Stock"), and
grants of stock appreciation rights (entitling the grantee to receive the
difference in value between the underlying Company Common Stock on the date
of exercise and the value of such Company Common Stock on the date of
grant) ("SARs"), which may be either freestanding or granted in tandem with
an option. Options to purchase Company Common Stock may be either
incentive stock options ("ISOs"), which are intended to satisfy the
requirements of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or options which are not intended to satisfy the
requirements of Section 422 of the Code ("NQOs").
Securities to be Offered
There will be 5,000,000 shares of Company Common Stock reserved for use
under the 1995 Stock Plan, of which up to 2,500,000 may, but need not be,
granted as Restricted Stock. Any shares subject to an option that remain
unissued after the cancellation, expiration or exchange of an option and
any shares of Restricted Stock which are forfeited will again become
available for use under the 1995 Stock Plan. Any shares which are
surrendered for cash or Company Common Stock, or a combination thereof, and
any shares of Company Common Stock used to satisfy a withholding obligation
shall not again become available for use under the 1995 Stock Plan.
Administration of Plan
The 1995 Stock Plan will be administered by the Committee, which has
the sole authority to grant options, SARs and Restricted Stock. The
Committee must consist of at least two Directors, none of whom are eligible
to receive benefits under the 1995 Stock Plan and each of whom is a
disinterested person under Rule 16b-3 under the Securities Exchange Act of
1934 ("16b-3") and each of whom shall be or be treated as an "outside
director" for purposes of Section 162(m). The Board has authorized the
Committee to
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interpret the 1995 Stock Plan, to determine the key employees to receive
grants, the number of shares to be granted, the terms of option grants and
restrictions on shares, the provisions of the respective option, Restricted
Stock and SAR agreements (which need not be identical) and to take such
other action in the administration and operation of the 1995 Stock Plan as
the Committee deems equitable under the circumstances. The Board of
Directors, however, has reserved to itself the right to act with respect to
any matters concerning: (1) certain corporate transactions in which there
is a change in control (as defined in the 1995 Stock Plan) with no
assumption or substitution of options, SARs or Restricted Stock granted
under the 1995 Stock Plan (in which case (i) options and SARs may be
cancelled unilaterally by the Company in exchange for a payment of whole
shares of Company Common Stock, and cash in lieu of fractional shares, if
any, which the holder would have received if on the date set by the Board
he or she had exercised his or her SAR in full or if he or she had
exercised a right to surrender his or her outstanding option in full; (ii)
options and SARs may be cancelled unilaterally if the option price or SAR
share value at grant equals or exceeds the fair market value of a share of
Company Common Stock on such date; and (iii) the grant and forfeiture
conditions on Restricted Stock may be deemed satisfied); or (2) any
adjustment in the number of shares reserved for issuance under the 1995
Stock Plan, in the number of shares of Restricted Stock granted and any
related restrictions, the number of shares of Company Common Stock subject
to options, the option price, the SAR grant value and the number of shares
of Company Common Stock related to any SAR to equitably reflect any change
in the capitalization of the Company, including, but not limited to Company
Common Stock dividends or Company Common Stock splits or to reflect certain
corporate transactions; or (3) the amendment or termination of the 1995
Stock Plan. However, no amendment may be effected without approval of the
Company's shareholders that would (i) increase the number of shares of
Company Common Stock reserved under the 1995 Stock Plan (other than to
reflect a change in the capitalization of the Company or to reflect certain
corporate transactions); (ii) extend the term of the 1995 Stock Plan or
extend the maximum exercise period of Company Common Stock options or
decrease the minimum option price or the minimum SAR value; (iii) change
the class of employees eligible to receive options, SARs or Restricted
Stock under the 1995 Stock Plan or materially modify the eligibility
requirements of the 1995 Stock Plan; or (iv) otherwise materially increase
(within the meaning of 16b-3) the benefits accruing to key employees under
the 1995 Stock Plan.
Eligibility
The Committee will select key employees to participate in the 1995
Stock Plan. A key employee means any employee of the Company or any
subsidiary, who, in the judgment of the Committee, is important to the
success of the Company or a subsidiary and who is not a 10% shareholder of
the Company.
Terms of Options
The 1995 Stock Plan authorizes the grant of ISOs or NQOs, both of which
are exercisable for shares of Company Common Stock. The price at which an
option may be exercised for a share of Company Common Stock may not be less
than the fair market value of a share of Company Common Stock on the date
the option is granted. The "fair market value" means the closing price per
share of Company Common Stock on the New York Stock Exchange as reported in
The Wall Street Journal on the date the option is granted, or if no such
closing price is available on such day, the closing price for the
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immediately preceding business day.
The period during which an option may be exercised shall be determined
by the Committee at the time of option grant and may not extend more than
10 years from the date of grant. An option or portion thereof that is not
exercised before expiration of the applicable option period shall
terminate. An option agreement may provide for the exercise of an option
after the employment of a key employee has terminated for any reason,
including death or disability. No grants will be made after December 31,
2004.
The aggregate fair market value of ISOs granted to a key employee under
the 1995 Stock Plan and incentive stock options granted under any other
stock option plan adopted by the Company or a subsidiary which first
becomes exercisable in any calendar year which begins on or after January
1, 1995 may not exceed $100,000. Furthermore, a key employee, other than
the Company's chief executive officer, may be granted in any calendar year
one or more options, or one or more SARs, or one or more options and SARs
in any combination which, individually or in the aggregate, relate to no
more than 60,000 shares of Company Common Stock. The Company's chief
executive officer is subject to the same limitation, except that the
maximum number of shares of Company Common Stock is increased to 100,000.
Stock Appreciation Rights
Under the 1995 Stock Plan, stock appreciation rights may be granted as
part of an option (a "Related Option") with respect to all or a portion of
the shares of Company Common Stock subject to the Related Option (a "Tandem
SAR") or may be granted separately (a "Freestanding SAR") ("Tandem SARs and
Freestanding SARs are collectively referred to as "SARs"). The share value
of a Freestanding SAR shall be set forth in the related SAR agreement, and
may not be less than the fair market value of a share of Company Common
Stock on the date of grant of the SAR. The share value of a Tandem SAR
shall be determined by the exercise price of the Related Option, which also
may not be less than the fair market value of a share of Company Common
Stock on the date of grant. The grant of SARs may be subject to such other
terms as the Committee deems appropriate.
When a Freestanding SAR is exercised, the key employee receives a
payment determined by calculating the difference between the share value at
grant as set forth in the SAR agreement and the fair market value of a
share of Company Common Stock on the date of exercise. On the exercise of
a Tandem SAR, the Related Option is deemed to be surrendered to the extent
of the number of shares of Company Common Stock for which the Tandem SAR is
exercised, and the payment is based on the increase in fair market value of
a share of Company Common Stock on the exercise date over the share value
stated in the option agreement. Payment may be made in cash or stock, or a
combination of cash and stock. The form and timing of payments shall be
determined by the Committee.
Restricted Stock
Shares of Restricted Stock may be granted to key employees and may be
subject to one or more contractual restrictions applicable generally or to
a key employee in particular, as established by the Committee at the time
of grant and as set forth in the related Restricted Stock agreement. The
agreement will set forth the conditions, if any, which will need to be
satisfied before the grant will be effective and the conditions, if any,
27
under which the key employee's interest in the Restricted Stock will be
forfeited. Such restrictions must include a prohibition on the sale or
transfer of such shares until the employee fulfills one or more employment,
performance or other grant or forfeiture conditions, if any, established by
the Committee at the time of grant. As soon as practicable after a grant
has become effective, the shares are registered to or for the benefit of
the employee. The Restricted Stock agreement will state whether the
employee has the right to receive any cash dividends paid with respect to
the shares of Restricted Stock. If the employee has no right to receive
cash dividends, the agreement may give the employee the right to receive a
cash payment in the future in lieu of the dividend payments, provided
certain conditions are met. Company Common Stock dividends declared on the
shares of Restricted Stock after grant but before the shares are forfeited
or become nonforfeitable are treated as part of the grant of the related
Restricted Stock. An employee has the right to vote the shares of
Restricted Stock after grant until they are forfeited or become
nonforfeitable.
Shares of Restricted Stock may vest in installments or in lump sum
amounts upon satisfaction of the stipulated conditions. If the
restrictions are not satisfied, the shares are forfeited back to the
Company and again become available under the 1995 Stock Plan. To enforce
the restrictions, all shares of Restricted Stock will be held by the
Company until the restrictions are satisfied. The exercise or surrender of
any option granted under the 1995 Stock Plan and the acceptance of a
Restricted Stock grant shall constitute an employee's full and complete
consent to whatever actions the Committee deems necessary to satisfy the
federal and state tax withholding requirements, if any, which the Committee
in its discretion deems applicable to such exercise or surrender of such
Restricted Stock. The Committee also can provide in an option agreement or
Restricted Stock agreement that an employee may elect to satisfy federal
and state tax withholding requirements through a reduction in the number of
shares of Company Common Stock actually transferred to the employee under
the 1995 Stock Plan, and any such election and any such reduction shall be
effected so as to satisfy the conditions to the exemption under 16b-3.
Grants of Restricted Stock will be effective for periods as determined by
the Committee, provided no Restricted Stock may be granted after the
earlier of December 31, 2004 or the date on which all shares of Company
Common Stock reserved under the 1995 Stock Plan have been issued or are
unavailable for the 1995 Stock Plan use, in which event the 1995 Stock Plan
also shall terminate on such date.
In the case of Restricted Stock grants which vest only on the
satisfaction of performance objectives, the Committee shall determine the
performance objectives to be used in connection with Restricted Stock
awards and shall determine the extent to which such objectives have been
met. Performance objectives may vary from participant to participant and
between groups of participants and shall be based upon such Company and/or
subsidiary performance factors and criteria as the Committee in its sole
discretion shall select among one or more of the following: stock price,
earnings per share, return on equity, net income, return on assets or total
return to shareholders.
Certain Federal Income Tax Consequences
The following summary generally describes the principal federal income
tax consequences of certain events under the 1995 Stock Plan. The summary
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is general in nature and is not intended to cover all tax consequences that
may apply to a particular employee or to the Company. The provisions of
the Code and regulations thereunder relating to these matters are
complicated and their impact in any one case may depend upon the particular
circumstances.
(a) Options and Stock Appreciation Rights
An employee will not be subject to any federal income tax upon
the grant of an option or SAR granted pursuant to the 1995 Stock
Plan.
An employee will not recognize income for federal income tax
purposes (and the Company will not be entitled to any federal
income tax deduction) as a result of the exercise of an ISO and
the related transfer of shares to the employee. However, the
excess of the fair market value of the shares transferred upon the
exercise of an ISO over the exercise price for such shares
generally will constitute an item of alternative minimum tax
adjustment to the employee for the year in which the option is
exercised. Thus certain employees may have an increase in their
federal income tax liability as a result of the exercise of an ISO
under the alternative minimum tax rules of the Code.
If the shares transferred pursuant to the exercise of an ISO
are disposed of within two years from the date the ISO is granted
or within one year from the date the ISO is exercised (the "ISO
holding periods"), the employee will recognize ordinary income
equal to the lesser of (i) the excess of the amount realized on
the disposition over the price paid for the shares (the "gain
realized") or (ii) the excess of the fair market value of the
shares when transferred to the employee at exercise over the
exercise price for such shares.
If the shares transferred upon the exercise of an ISO are
disposed of after the ISO holding periods have been satisfied,
such disposition generally results in long term capital gain or
long term capital loss with respect to the gain or loss realized
on the disposition. The Company will not be entitled to a federal
income tax deduction as a result of a disposition of such shares
after the ISO holding periods have been satisfied.
Ordinary income will be recognized upon exercise of an NQO.
Generally, the ordinary income realized is the excess, if any, of
the fair market value of the shares of Company Common Stock
received upon the exercise of the NQO over the exercise price. An
employee will also recognize ordinary income upon exercising a
SAR. The amount of such income is the amount of any cash received
and the fair market value of any shares of the Company's Common
Stock received upon exercise of the SAR.
Income tax withholding from the employee is required on the
income recognized by the employee upon exercise of an NQO or a
SAR. The Company ordinarily will receive a deduction for federal
income tax purposes equal to the ordinary income recognized by the
employee upon exercise of an NQO or a SAR, subject to the
restrictions on deductibility described under the subheading
"Performance-Based Compensation - Section 162(m) Requirements"
below or the ordinary
29
income recognized on the disposition of Company Common Stock
acquired pursuant to the exercise of an ISO.
(b) Restricted Stock
An employee will recognize ordinary income in an amount equal
to the fair market value of the shares subject to the Restricted
Stock grant at the time of vesting. Dividends paid to an employee
on shares of Restricted Stock prior to the vesting of such shares
are treated as ordinary income of the employee in the year
received. The Company will receive a deduction for federal income
tax purposes equal to the ordinary income recognized by the
employee, subject to the limitations on deductibility contained in
Section 162(m).
(c) Performance-Based Compensation - Section 162(m) Requirements
The 1995 Stock Plan is intended to preserve the Company's tax
deduction for certain events by complying with the terms of
Section 162(m) and proposed regulations thereunder. Except when
the Committee deems it in the best interest of the Company, the
Committee will use its best efforts to ensure that grants of
options, SARs and Restricted Stock to participants who are
anticipated to be Covered Employees under the 1995 Stock Plan
qualify as "performance-based compensation" for purposes of
Section 162(m).
Shareholder Approval
The Board of Directors believes it is in the best interest of the
Company for the shareholders to approve the 1995 Stock Plan, including the
material terms of the performance goals under which awards are granted.
Thus, the Board recommends that shareholders vote FOR the proposal
described above.
RATIFICATION OF APPOINTMENT OF AUDITORS
(Item 5)
Subject to ratification by a majority of the shares represented at the
Annual Meeting, Arthur Andersen LLP has been appointed by the Board of
Directors as auditors of the Company for 1995. Arthur Andersen LLP also
audited the Company's financial statements for 1994. Representatives of
Arthur Andersen LLP will be present at the Annual Meeting and will be given
the opportunity to make a statement, if they desire, and to respond to
questions.
The appointment of auditors is approved annually by the Board of
Directors and subsequently submitted to the shareholders for ratification.
The decision of the Board of Directors is based on the recommendation of
the Audit Committee, which reviewed both the proposed audit scope and
estimated audit fees for the coming year.
SHAREHOLDER PROPOSALS
Shareholders who intend to submit proposals to the Company's share
holders at the 1996 Annual Meeting must submit such proposals so that they
30
are received by the Company no later than October 26, 1995 in order to be
considered for inclusion in the Company's 1996 proxy materials.
Shareholder proposals should be submitted to SunTrust Banks, Inc., Post
Office Box 4418, Atlanta, Georgia 30302, Attention: Corporate Secretary.
VOTING AT THE MEETING
Each shareholder of record at the close of business on February 15,
1995 is entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. Each share of Company Common Stock entitles the
holder to one vote on any matter coming before a meeting of shareholders of
the Company. On February 15, 1995, the record date for the Annual Meeting,
there were 115,645,592 shares of Company Common Stock outstanding.
A majority of the shares entitled to vote constitutes a quorum at a
meeting of the shareholders. The presence of a quorum, either in person or
by proxy, and the affirmative vote of the holders of a majority of the
shares represented and entitled to vote at the Annual Meeting is required
to ratify the appointment of auditors and to take most other actions,
including approval of Items 2, 3 and 4. If a quorum is present, the vote
of a plurality of the votes cast by the shares entitled to vote shall be
necessary for the election of Directors. Shares beneficially held in
street name are counted for quorum purposes if such shares are voted on at
least one matter to be considered at the meeting. Broker non-votes are
neither counted for purposes of determining the number of affirmative votes
required for approval of proposals nor voted for or against matters
presented for shareholder consideration. Consequently, so long as a quorum
is present, such non-votes have no effect on the outcome of any vote.
Abstentions with respect to a proposal are counted for purposes of
establishing a quorum. Abstentions also are counted for purposes of
determining the minimum number of affirmative votes required for approval
of proposals and, accordingly, have the effect of a vote against those
proposals. If a quorum is present, abstentions have no effect on the
outcome of voting for directors.
The cost of soliciting proxies will be borne by the Company. Corporate
Investors Communications has been retained to assist in the solicitation of
proxies for a fee of $6,500 plus expenses. Proxies may also be solicited
by employees of the Company.
The Board of Directors knows of no other matters which will be brought
before the Annual Meeting. If other matters are properly introduced, the
persons named in the enclosed proxy will vote on such matters as the Board
recommends.
February 22, 1995
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