-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CSC37M2Ly+tFs0Y0SImNrLchdAuIHA6PiNXhaGabGySolNTA9FFe1BBdqqO/jW0V CphiiajhFrIQw/9lLC0D5A== 0000750556-96-000003.txt : 19960304 0000750556-96-000003.hdr.sgml : 19960304 ACCESSION NUMBER: 0000750556-96-000003 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960301 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNTRUST BANKS INC CENTRAL INDEX KEY: 0000750556 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 581575035 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-20611 FILM NUMBER: 96530084 BUSINESS ADDRESS: STREET 1: P.O. BOX 4418 CENTER 633 CITY: ATLANTA STATE: GA ZIP: 30302 BUSINESS PHONE: 4045887711 MAIL ADDRESS: STREET 1: P.O. BOX 4418 CENTER 633 CITY: ATLANTA STATE: GA ZIP: 30302 DEF 14A 1 SUNTRUST BANKS, INC. PROXY STATEMENT 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 SunTrust Bank, Atlanta Tower, 25 Park Place, N.E., Atlanta, Georgia, on Tuesday, April 16, 1996, at 9:30 A.M., local time, for the following purposes: 1. To elect five directors to serve until the 1999 Annual Meeting of Shareholders, and one director to serve until the 1988 Annual Meeting of Shareholders; 2. To ratify the appointment of Arthur Andersen LLP as independent auditors for 1996; and 3. 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, 1996 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 23, 1996 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. 303 PEACHTREE STREET, N.E. ATLANTA, GEORGIA 30308 ---------------------------------- 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 16, 1996 (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 23, 1996. 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, James D. Camp, Jr., Roberto C. Goizueta, L. Phillip Humann and Joseph L. Lanier, Jr., who have been nominated to stand for reelection as directors at the Annual Meeting in 1996. 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. Robert W. Scherer (whose term expires in 1998) and Mr. J. Walter Tucker, Jr. (whose term expires in 1996) will retire as directors in accordance with this provision at the 1996 Annual Meeting. Accordingly, Mr. A. W. Dahlberg and Mr. Larry L. Prince have been nominated to stand for election as directors for a term expiring in 1999 and for a term expiring in 1998, respectively. In addition to the six nominees, there are eight other directors continuing to serve on the Board of Directors, whose terms expire in 1997 and 1998. 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. 1 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 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 3, 1996. 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, 1995, a brief description of his principal occupation and business experience during the last five years, and certain other directorships held. Unless indicated otherwise, each current director has served as a director of the Company since the Company's organization. Directors Whose Term Expires in 1999 Shares of Common Name Business Experience Stock(1) - ----------------------- ----------------------------------- ------------- James D. Camp, Jr.+ President and shareholder of the 197,019(2) law firm of Camp & Camp, P.A., established in October 1988. Mr. Camp is 67. A.W. Dahlberg Chairman of the Board, President and 1,000 Chief Executive Officer of The Southern Company, an investor-owned electric utility group. Prior to 1994, he was President and Chief Executive Officer of Georgia Power Company. He serves as a director of The Southern Company, Equifax, Inc. and Protective Life Corporation. Mr. Dahlberg is 56. Roberto C. Goizueta* He is Chairman of the Board of 186,192(3) 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 64. 2 L. Phillip Humann* President of the Company since April 249,302(4) 1991. From April 1989 through April 1991, he was Senior Executive Vice President of the Company. From October 1985 to April 1989, he was Chairman of the Board and Chief Executive Officer of SunTrust Bank, Atlanta. He is a director of Coca-Cola Enterprises, Inc., Equifax Inc. and Haverty Furniture Companies, Inc. Mr. Humann is 50 and has been a director of the Company since 1991. Joseph L. Lanier, Jr.+ Chairman of the Board and Chief 6,800 Executive Officer of Dan River, Inc., a textile manufacturing company. He is also a director of Dimon, Inc., Flowers Industries, Inc. and Torchmark Corporation. Mr. Lanier is 64. Nominees For Term Expiring in 1998: Shares of Common Name Business Experience Stock(1) - ----------------------- ----------------------------------- ------------- H. G. Pattillo# Chairman of the Board of Directors 40,761(5) of Pattillo Construction Company, Inc. He is also a director of John H. Harland Company and Protective Life Corporation. Mr. Patillo is 69 and has been a director of the Company since 1989. R. Randall Rollins# Chairman of the Board and Chief 30,909(6) 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, Inc., an oil and gas field services and boat manufacturing company. Mr. Rollins is 64 and has been a director of the Company since 1995. James B. Williams* Chairman of the Board of Directors 1,138,984(7) (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 SunTrust Banks of Florida, Inc. and Vice Chairman and President of SunTrust Banks of Georgia, Inc.. He is also a director of The Coca-Cola Company, Genuine Parts Company, Georgia-Pacific Corporation, Rollins, Inc., RPC Inc., and Sonat Inc. Mr. Williams is 62. 3 James H. Williams# Owner of Jim H. Williams Real Estate, 10,000 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 Agriculture and President of the National Stone Association, a trade association. Mr. Williams is 69. Directors Whose Term Expires in 1998 Shares of Common Name Business Experience Stock(1) - ----------------------- ----------------------------------- ------------- Larry L. Prince Chairman of the Board and Chief 253,000(8) Executive Officer of Genuine Parts Company, a service organization engaged in the distribution of automotive replacement parts, industrial replacement parts and office products. Mr. Prince as also a director of Crawford & Co., Equifax, Inc., John H. Harland Co. and U.A.P. Inc., Canada. Mr Prince is 57. Directors Whose Term Expires in 1997 Shares of Common Name Business Experience Stock(1) - ----------------------- ----------------------------------- ------------- J. Hyatt Brown* Chairman, President and Chief 25,000 Executive Officer of Poe & Brown, Inc., an insurance agency. He is also a director of BellSouth Corporation, FPL Group, Inc., International Speedway Corporation and Rock-Tenn Company. Mr. Brown is 58. T. Marshall Hahn, Jr.+ Honorary Chairman of the Board of 122,930(9) 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 69. 4 David H. Hughes# Chairman of the Board of Directors 24,956(10) and Chief Executive Officer of Hughes Supply, Inc., a distributor of construction materials. He is also a director of Lithium Technologies, Inc. Mr. Hughes is 52. Scott L. Probasco, Jr.* Chairman of the Executive Committee 1,036,693(11) of SunTrust Bank, Chattanooga (since 1989), a banking subsidiary of the Company. 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 67 and has been a director since 1987. * 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, 1995. 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. (2) Includes 13,920 shares as to which Mr. Camp shares voting and investment power. Mr. Camp disclaims beneficial ownership of 24,923 shares. (3) 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. (4) Includes 11,468 shares held for the benefit of Mr. Humann under the Company's 401(k) Plan and 26,650 shares that are the subject of exercisable employee stock options. (5) 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. (6) Mr. Rollins shares voting and investment power with respect to 10,084 shares. (7) Includes 96,737 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. (8) Includes 252,000 shares held by two foundations of which Mr. Prince is a Trustee; Mr. Prince disclaims beneficial ownership of such shares. 5 (9) Includes 112,930 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. (10)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. (11)Mr. Probasco has sole investment power with respect to 362,900 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. 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, 1995. Shares Beneficially Percent Name and Address Owned of Class SunTrust Bank, Atlanta 13,413,529(1)(2) 11.8 % One Park Place, N.E. Atlanta, Georgia 30303 (1) The shares shown were held by SunTrust Bank, Atlanta, a subsidiary of the Company, in various fiduciary or agency capacities. SunTrust Bank, Atlanta has sole voting power with respect to 5,700,433 of such shares and it shares voting power with respect to 523,386 of such shares, not including shares referred to in note 2 below. SunTrust Bank, Atlanta has sole investment power with respect to 4,260,970 of the total shares set forth above and it shares investment power with respect to 2,359,890 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 6,031,438 or 5.3% of the outstanding shares of Company Common Stock at December 31, 1995, held in various fiduciary or agency capacities. These other bank subsidiaries of the Company have sole voting power with respect to 4,940,726 of such shares and they share voting power with respect to 421,136 of such shares; they have sole investment power with respect to 2,242,277 of such shares and they share investment power with respect to 3,081,654 of such shares. The Company, SunTrust Bank, Atlanta and each other subsidiary disclaim any beneficial interest in any of such shares. (2) Includes 6,758,141 shares held by SunTrust Bank, Atlanta 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. 6 The following table sets forth the number of shares of Company Common Stock beneficially owned on December 31, 1995 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. Clay 60,392 Edward P. Gould 172,865 John W. Spiegel 161,316 All Directors and 3,655,232 3.22% Executive Officers as a Group (1) Includes the following shares subject to exercisable stock options: Mr. Clay, 10,050 shares; Mr. Gould, 25,000 shares; Mr. Spiegel, 48,630 shares; all other executive officers, 144,500 shares. (2) Outstanding shares represent the 113,409,139 shares of Company Common Stock outstanding on December 31, 1995, increased by the 195,300 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. 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 4 meetings during 1995. 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 Stock Incentive Plans, 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 1995. 7 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 1995. During 1995, 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 received an annual retainer of $35,000 in 1995 and was paid a fee of $1,500 for each Board or committee meeting attended. Directors will be paid an annual retainer of $40,000 in 1996 and will be 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 SunTrust Bank, Atlanta 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, 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 54. 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 SunTrust Bank, Atlanta a subsidiary bank of the Company. Mr. Wood is 44. John W. Clay, Jr. Chairman of the Board of SunTrust Banks of Tennessee, Inc., the Company's Tennessee banking affiliate. Prior to assuming that position, he was Chairman and Chief Executive Officer of SunTrust Bank, Nashville. Mr. Clay is 54. 8 Edward P. Gould Prior to his retirement in February 1996, Mr. Gould was Chairman of the Board of SunTrust Banks of Georgia, Inc. the Company's Georgia banking affiliate. He was also Chairman of the Board of SunTrust Bank, Atlanta. Mr. Gould is 65. Theodore J. Hoepner Since September 1995, he has been Chairman, President and Chief Executive Officer of SunTrust Banks of Florida, Inc. From January 1990 until August 1995, he was Chairman, President and Chief Executive Officer of SunTrust Bank, Central Florida. Mr. Hoepner is 54. Robert R. Long Since July 1995, he has been the Chief Executive Officer of SunTrust Banks of Georgia, Inc. and SunTrust Bank, Atlanta. He has also been the President of SunTrust Bank, Atlanta since 1985 and the President of SunTrust Banks of Georgia, Inc. since October 1992. Mr. Long is 58. 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 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 comprised of the following bank holding companies: Banc One Corporation, Bank of Boston, Barnett Banks, Inc., CoreStates Financial Corp, First Chicago NBD Corporation, First Interstate Bancorp, First Union Corporation, Fleet Financial Group, KeyCorp, Mellon Bank Corporation, 9 National City Corporation, 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: Job scope and responsibilities 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 Length of service 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. 10 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, 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. 1995 Stock Plan The 1995 Executive Stock Plan (the "1995 Stock Plan") was adopted by the Board in November 1994, and was approved by the shareholders at the 1995 Annual Meeting. 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), and grants of stock appreciation rights ("SARs"). There are 5,000,000 11 shares of Company Common Stock reserved for use under the 1995 Stock Plan, of which 2,500,000 may, but need not be, granted as restricted stock. The 1995 Stock Plan is administered by the Committee, which has the sole authority to grant options, SARs and restricted stock. The Committee will use the 1995 Stock Plan to make stock-based incentives important factors in attracting, retaining, and rewarding employees and to closely align employee interests with those of the Company's shareholders. During 1995, stock options were granted under the 1995 Stock Plan as set forth in the Option Grants During Year Ended December 31, 1995 table set forth on page 16 hereof. 1986 Stock Plan The Executive Stock Plan adopted in 1986 (the "1986 Stock Plan") was designed to focus executives and other eligible participants on long- term performance of the Company. No further grants will be made under the 1986 Stock Plan. Performance-based restricted stock ("Performance Stock") was one of the primary stock-based incentive vehicles 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. Eighty percent of the shares granted in 1992 have been awarded because the stock price increased 80 percent. Executives receive dividends and voting rights on all shares awarded to them. There were no grants of Performance Stock during 1995. 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. 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 12 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." Changes to federal tax law enacted in 1993 impact the deductibility of awards paid under MIP, PUP and the 1995 Stock Plan. 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 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, PUP and the 1995 Stock Plan qualify as performance-based compensation within the meaning of Section 162(m). On November 8, 1994 the Board of Directors of the Company approved the 1995 Stock Plan and certain amendments to MIP and PUP which were designed to ensure that, to the extent possible, awards payable under the 1995 Stock Plan, MIP and PUP would be fully deductible by the Company for purposes of Section 162(m). At the 1995 Annual Meeting, the Company's shareholders approved the material terms of the performance goals under which compensation is paid under the 1995 Stock Plan, MIP and PUP. 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 $1,722,329. Over half (59%) of this amount was earned in performance-driven incentives. Mr. Williams had a base salary of $700,000, and earned a Management Incentive Plan award of 43% of his base salary, or $302,329. 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 1993-95 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 1993-95 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 13 target that was set by the Committee prior to the start of the 1993-95 cycle. Also, in an effort to maintain a long-term focus and to align his interests with the Company's shareholders, the Compensation Committee granted to Mr. Williams, on August 8, 1995, an option to purchase 100,000 shares of Company Common Stock at the then current market price of $60.50. This action was consistent with stock option grants made to the chief executive officers of certain Peer Group companies. 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. T. Marshall Hahn, Jr., Chairman Joseph L. Lanier, Jr. Robert W. Scherer 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, 1990 and ended December 31, 1995. (PERFORMANCE GRAPH APPEARS HERE--SEE TABLE BELOW FOR PLOT POINTS) December 31, 1990 1991 1992 1993 1994 1995 STI $100 180.78 203.59 214.97 234.43 344.66 S&P 500 100 130.47 140.41 154.56 156.60 215.45 S&P Banks 100 178.89 227.81 241.52 228.59 359.93 Summary of Cash and Certain Other Compensation The following table shows, for the fiscal years ending December 31, 1993, 1994 and 1995, 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. 14 SUMMARY COMPENSATION TABLE SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation --------------------------------- --------------------------- Other Securities Annual Under- All Other Compen- lying LTIP Compensat Name and Principal Position Year Salary Bonus sation Options Payouts ion - --------------------------- ------- --------- --------- -------- ---------- --------- --------- James B. Williams 1995 $700,000 $302,329 $25,548 100,000 $720,000 $23,015 Chairman of the Board and 1994 650,000 317,790 9,112 - 720,000 23,069 Chief Executive Officer 1993 550,000 189,461 16,950 - 720,000 22,613 L. Phillip Humann 1995 425,000 183,557 10,571 16,500 600,000 13,959 President 1994 390,000 190,674 6,863 - 600,000 13,841 1993 330,000 113,676 10,071 - 360,000 13,615 John W. Spiegel 1995 325,000 140,367 7,916 16,500 360,000 10,665 Executive Vice President 1994 295,000 144,228 4,665 - 300,000 10,471 and Chief Financial 1993 250,000 86,119 7,608 - 180,000 10,343 Officer Edward P. Gould 1995 306,000 72,807 6,771 - 276,000 7,032 Chairman of the Board of 1994 294,000 81,126 5,591 - 276,000 9,772 Trust Company of Georgia 1993 280,000 47,293 6,120 - 276,000 9,470 John W. Clay 1995 275,000 65,431 5,995 - 240,000 9,062 Chairman of the Board of 1994 262,000 72,296 4,641 - 240,000 9,395 SunTrust Banks of 1993 220,000 75,784 4,962 - 156,000 5,850 Tennessee, Inc. Wendell H. Colson 1995 199,640 47,501 711 - 245,333 7,037 Chairman of the Board of 1994 275,000 75,883 - - 276,000 9,819 SunTrust Banks of 1993 250,000 46,006 1,000 - 192,000 10,153 Tennessee, Inc. 15 Performance-based restricted stock ("Performance Stock") is held by the executive officers listed above, except Mr. Colson, under the Company's 1986 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. 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 event of a change in control of the Company as defined in the 1986 Stock Plan. The individuals set forth in the table above held (were granted), subject to the terms and conditions of the 1986 Stock Plan, the number of shares of restricted stock, including Performance Stock, with a value as of December 31, 1995, as follows: Messrs. Williams 340,000 shares, $23,290,000; Humann 140,000 shares, $9,590,000; Spiegel 85,000 shares, $5,822,500; Gould 4,000 shares, $274,000; and Clay 33,000 shares, $2,260,500. As described above, not all such shares have been awarded, and, except for Mr. Gould, no shares held by the individuals named in this footnote 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 this footnote would be awarded. Dividends were paid in 1995 on shares of awarded Performance Stock as follows: Messrs. Williams $422,400; Humann $174,880; Spiegel $105,600 and Clay $38,336. Amounts contributed by the Company to the 401(k) Plan and the 401(k) Excess Plan. Also includes premiums paid on term life insurance. Mr. Colson retired on August 31, 1995.
Option Grants, Exercises and Holdings The following table contains information concerning the grant of stock options under the Company's 1995 Stock Plan to the named executive officers as of the end of the last fiscal year. The Company did not award any stock appreciation rights during the last fiscal year. 16 OPTION GRANTS DURING YEAR ENDED DECEMBER 31, 1995
% of Total Potential Realizable Value Number of Options at Assumed Annual Rates Securities Granted to of Stock Price Appreciation Underlying Employees Exercise for Option Term Options in Fiscal Price per Expiration --------------------------- Name Granted Year Share Date 5% 10% - -------------------- ---------- ---------- --------- ---------- ------------ ------------- James B. Williams 100,000 17.131 $60.50 08/08/05 $3,804,812 $9,642,142 L. Phillip Humann 16,500 2.827 60.50 08/07/05 627,794 1,590,953 John W. Spiegel 16,500 2.827 60.50 08/07/05 627,794 1,590,953 John W. Clay 16,500 2.827 60.50 08/07/05 627,794 1,590,953 The dollar gains under these columns result from calculations assuming 5% and 10% growth rates over a 10 year period as set by the Securities and Exchange Commission and are not intended to forecast future price appreciation of the Company's Common Stock. The gains reflect a future value based upon growth at these prescribed rates. These values have also not been discounted to present value. It is important to note that options have value to the listed executives and to all option recipients only if the stock price advances beyond the exercise price shown on the table during the effective option period. Option becomes exercisable in March 1998. Options become exercisable over a ten year period in 10% annual increments. Under the 1995 Stock Plan, the exercise price must not be less than 100% of the fair market value of the Company's Common Stock on the date the option is granted. Options may be exercised using cash, Company Common Stock or a combination of both. The following table sets forth information with respect to the named executives concerning the exercise of options during 1995 and unexercised options held as of December 31, 1995.
AGGREGATE OPTION EXERCISES IN 1995 AND DECEMBER 31, 1995 OPTION VALUES
Number of Securities Underlying Unexercised Value of Unexercised In- Options at the-Money Options at Shares December 31, 1995 December 31, 1995 Acquired ----------------------- ----------------------- on Value Exerci- Unexer- Exerci- Unexer- Name Exercise Realized sable cisable sable cisable ---------------- ---------- ---------- ---------- ---------- ---------- ---------- James B. Williams - - 60,000 100,000 $2,730,000 $800,000 L. Phillip Humann - - 26,650 14,850 1,150,700 118,800 John W. Spiegel 34,530 $1,195,058 15,750 14,850 686,313 118,800 Edward P. Gould 8,600 289,175 25,000 20,000 1,137,500 922,500 John W. Clay 3,000 97,875 10,050 14,850 402,888 118,800 Wendell H. Colson 29,400 1,274,300 20,000 - 922,500 - 17 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 1995
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 John W. Clay, Jr. 4,600 3 years 69,000 138,000 276,000 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 - ------------ ----------- ----------- ----------- ----------- 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 18 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 1995 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, $1,722,329, 40 years of service; Humann, $1,208,557, 26 years of service; Spiegel, $825,367, 30 years of service; Gould, $654,807, 40 years of service; Clay, $580,431, 29 years of service; and Colson, $492,474, 32 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, Hahn, Lanier and Scherer served as members of the Compensation Committee during 1995. During 1995, the Company's bank subsidiaries engaged in customary banking transactions and had outstanding loans to certain of the Company's directors, 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 19 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. Camp & Camp, P.A., of which Mr. Camp is a shareholder, provided legal services to a subsidiary of the Company in 1995, and it is anticipated that Camp & Camp, P.A. will provide legal services to the Company or its subsidiaries in 1996. Mr. James B. Williams is a member of the Compensation Committee of the Board of Directors of Rollins, Inc. and RPC, Inc., of which Mr. R. Randall Rollins is Chairman and Chief Executive Officer. Mr. Theodore J. Hoepner is a member of the Compensation Committee of the Board of Directors of Poe & Brown, Inc., of which Mr. J. Hyatt Brown is Chairman, President and Chief Executive Officer. RATIFICATION OF APPOINTMENT OF AUDITORS (Item 2) 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 1996. Arthur Andersen LLP also audited the Company's financial statements for 1995. 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 1997 Annual Meeting must submit such proposals so that they are received by the Company no later than October 27, 1996 in order to be considered for inclusion in the Company's 1997 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, 1996 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, 1996, the record date for the Annual Meeting, there were 113,597,111 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. 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 20 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 23, 1996 21
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