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SUNTRUST BANKS, INC.
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(SUNTRUST LOGO)
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
Suite 105 on the 1st floor of SunTrust Plaza Garden Offices, 303 Peachtree
Center Avenue, Atlanta, Georgia, on Tuesday, April 20, 2004, at 9:30 a.m. local
time, for the following purposes:
1. To elect 5 directors to serve until the Annual Meeting of
Shareholders in 2007;
2. To ratify the appointment of PricewaterhouseCoopers LLP as
independent auditors for 2004;
3. To approve SunTrust's 2004 Stock Plan; and
4. 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 20, 2004
will be entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof.
For your convenience, we are also offering an audio webcast of the meeting.
If you choose to listen to the webcast, go to "Investor Relations" located under
"About SunTrust" at www.suntrust.com shortly before the meeting time and follow
the instructions provided. If you miss the meeting, you may listen to a replay
of the webcast on our site beginning the afternoon of April 20.
Your attention is directed to the attached Proxy Statement 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
Corporate Secretary
March 1, 2004
IMPORTANT NOTICE
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE YOUR
SHARES BY: (1) A TOLL-FREE TELEPHONE CALL, (2) THE INTERNET, OR (3) COMPLETING,
SIGNING, DATING AND RETURNING THE ENCLOSED PROXY AS SOON AS POSSIBLE IN THE
POSTAGE PAID ENVELOPE PROVIDED.
TABLE OF CONTENTS
PROXY STATEMENT............................................. 1
ELECTION OF DIRECTORS....................................... 2
Director Selection Process................................ 2
Nominees for Directorship (Item 1)........................ 3
Nominees for Term Expiring in 2007........................ 3
Directors Whose Terms Expire in 2006...................... 4
Directors Whose Terms Expire in 2005...................... 4
Board Committees.......................................... 7
Attendance and Compensation............................... 9
Corporate Governance...................................... 9
Shareholder Communications with Directors................. 10
EXECUTIVE COMPENSATION...................................... 10
Executive Officers........................................ 10
Report of the Compensation Committee on Executive
Compensation........................................... 11
Summary of Cash and Certain Other Compensation............ 16
Stock Options............................................. 17
Option Grants During 2003.............................. 17
Aggregated Option Exercises in 2003 and December 31,
2003 Option Values.................................... 18
Equity Compensation Plans................................. 18
Pension Plans............................................. 19
Change in Control Agreements.............................. 20
RATIFICATION OF INDEPENDENT AUDITORS (ITEM 2)............... 20
AUDIT COMMITTEE REPORT...................................... 20
AUDIT FEES AND RELATED MATTERS.............................. 21
Audit and Non-Audit Fees.................................. 21
Audit Committee Policy for Pre-approval of Independent
Auditor Services....................................... 22
STOCK PRICE PERFORMANCE GRAPH............................... 22
STOCK OWNERSHIP OF CERTAIN PERSONS.......................... 23
OTHER DIRECTOR AND EXECUTIVE OFFICER INFORMATION............ 24
Compensation Committee Interlocks and Insider
Participation.......................................... 24
Section 16(a) Beneficial Ownership Reporting Compliance... 24
PROPOSAL TO APPROVE SUNTRUST'S 2004 STOCK PLAN (ITEM 3)..... 24
ADDITIONAL INFORMATION...................................... 31
Shareholder Nominations for Election to the Board......... 31
Shareholder Proposals for Next Year's Meeting............. 31
Record Date; Shares Outstanding........................... 32
Quorum and Voting......................................... 32
Proxy Solicitation........................................ 33
Change in Accountant in 2002.............................. 33
Next Year's Annual Meeting................................ 33
Other Matters............................................. 33
AUDIT COMMITTEE CHARTER..................................... A-1
SUNTRUST BANKS, INC. 2004 STOCK PLAN........................ B-1
SUNTRUST BANKS, INC. AUDIT COMMITTEE POLICY FOR PRE-APPROVAL
OF INDEPENDENT AUDITOR SERVICES........................... C-1
i
SUNTRUST BANKS, INC.
303 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30308
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PROXY STATEMENT
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The enclosed proxy is solicited on behalf of the Board of Directors of
SunTrust Banks, Inc. in connection with the Annual Meeting of Shareholders of
SunTrust to be held on Tuesday, April 20, 2004. This Proxy Statement and the
enclosed proxy are being first mailed to SunTrust's shareholders on or about
March 8, 2004.
Voting your shares. The enclosed proxy is for use if you are unable to
attend the Annual Meeting in person or wish to have your shares voted by proxy
even if you attend the Annual Meeting. You may revoke the proxy at any time
before it is exercised by notice to the Corporate Secretary of SunTrust, by
submitting a proxy having a later date, or by 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 for the
proposals described below will be voted as recommended by the Board of
Directors.
IMPORTANT: The Securities and Exchange Commission recently approved new
rules that prohibit brokers or other nominees that are New York Stock Exchange
member organizations from voting in favor of proposals relating to equity
compensation plans unless they receive specific instructions from the beneficial
owner of the shares to vote in that manner. If your shares are being voted by a
broker, or other nominee who is a NYSE member organization, such shares will
only be voted in favor of Item 3 of this Proxy Statement if you have provided
specific voting instructions to your broker or other nominee to vote such shares
in favor of that proposal. Because the required vote of shareholders to approve
this proposal is based upon the total number of votes cast, the failure to
submit a proxy card or vote in person, the abstention from voting, or the
failure to give a broker instructions for how to vote on the 2004 Stock Plan
could, depending on the number of votes cast, have the same effect as a vote
"AGAINST" this proposal.
Method of Voting. You can simplify your voting and reduce SunTrust's costs
by voting your shares via telephone or the Internet. The telephone and Internet
voting procedures are designed to allow shareholders to vote their shares and to
confirm that their instructions have been properly recorded. If your shares are
held in the name of a bank or broker, the availability of telephone and Internet
voting will depend on the voting processes of the applicable bank or broker.
Therefore, we recommend that you follow the voting instructions on the form you
receive. If you do not choose to vote by telephone or the Internet, please date,
sign and return the proxy card.
Webcast of Annual Meeting. SunTrust is pleased to offer an audio webcast
of the 2004 Annual Meeting. If you choose to listen to the webcast, go to
"Investor Relations" located under "About SunTrust" at www.suntrust.com shortly
before the meeting time and follow the instructions provided. If you miss the
meeting, you may listen to a replay of the webcast on our site beginning the
afternoon of April 20 and available until May 20, 2004.
Please note that you will not be able to vote your shares via the webcast.
If you plan to listen to the webcast, please submit your vote using one of the
methods described above prior to the meeting.
ELECTION OF DIRECTORS
DIRECTOR SELECTION PROCESS
SunTrust maintains a standing Governance and Nominating Committee, which we
refer to in this section as the Committee, comprised solely of independent
directors who are responsible for identifying individuals qualified to become
Board members and recommending to the Board director nominees. This Committee
was established in November 2003 when the Board transferred the governance and
nominating functions from the current Compensation Committee (formerly known as
the Compensation and Governance Committee) to the Committee. The Committee will
periodically review the size and composition of the Board and determine whether
it is necessary to add or replace directors. The Committee's charter is
available on SunTrust's website at www.suntrust.com.
Nominees for director will be selected on the basis of outstanding
achievement in their careers; broad experience; independence; financial
expertise; integrity; financial integrity; ability to make independent,
analytical inquiries; understanding of the business environment; and willingness
to devote adequate time to Board duties. The Board believes that each director
should have, and nominees are expected to have the capacity to obtain, a basic
understanding of (i) the principal operational and financial objectives and
plans and strategies of SunTrust, (ii) the results of operations and financial
condition of SunTrust and of any significant subsidiaries or business segments,
and (iii) the relative standing of SunTrust and its business segments in
relation to its competitors. The Committee considers it essential that the Audit
Committee have at least one member who qualifies as an "audit committee
financial expert".
The Committee and the Board consider a variety of sources when selecting
individuals as potential Board members. Generally, SunTrust will not retain a
search firm to assist in the selection of directors. Historically, most of
SunTrust's director nominees have served on one of SunTrust Bank's local boards
or the board of a company acquired by SunTrust, and have had a leadership
position with an entity that is located in a community served by SunTrust. This
practice has served SunTrust well and has been used in part to select the
candidates that were considered as nominees. The Committee and the Board
consider SunTrust Bank local board members to be an excellent source for
nominees because service on a local SunTrust bank board gives an individual an
opportunity to better understand SunTrust and to determine the level of
contribution that individual can make to SunTrust and its constituents. In
addition, the Committee considers certain chief executive officers of publicly
held companies that are headquartered in SunTrust's markets. SunTrust senior
management assembles the list of candidates that are to be considered by the
Committee. The Committee and Board also take into consideration the diversity of
the Board when selecting nominees. The Committee will review this process from
time to time and may alter the process in its discretion.
In August 2003, the Compensation Committee (then acting as the nominating
committee) instructed management to review the SunTrust Bank local directors and
to submit a list of such directors that might be suitable candidates for the
Board. The Compensation Committee considered those candidates and recommended to
the Board that J. Hicks Lanier be elected as a director to fill a vacancy on the
Board until the 2004 Annual Meeting. Mr. Lanier served on SunTrust Bank's local
Atlanta Board for over 20 years. Mr. Lanier was elected a director at the
Board's November 2003 meeting.
In December 2003, the Committee met and reviewed the process for selecting
directors, including the process of identifying and evaluating nominees for
director. The Committee affirmed the process set forth above, reviewed several
candidates from the sources mentioned above and applied the criteria described
above. After deliberation, the Committee selected 2 potential nominees, Robert
M. Beall, II and Jeffrey C. Crowe, to be contacted by the Chairman of the
Committee and/or the Chairman of the Board. Such individuals were contacted and
indicated an interest in serving on the Board. The Committee met on February 10,
2004 and again reviewed the qualifications and independence of Mr. Beall and Mr.
Crowe and unanimously voted to nominate and recommend to the Board that Mr.
Beall and Mr. Crowe serve as directors of SunTrust. On February 10, 2004, after
reviewing the qualifications and independence of the nominees, the Board
unanimously adopted a resolution recommending that the shareholders elect Mr.
Beall and Mr. Crowe as directors at the Annual Meeting as set forth in Item 1
below.
2
The Committee will consider candidates for director nominees put forward by
shareholders. The proposal should state how the proposed candidate meets the
criteria described above and the shareholder must comply with the other
requirements set forth in the section entitled "Shareholder Nominations for
Election to the Board" under the heading "Additional Information". The Committee
will consider candidates proposed by shareholders by evaluating such candidates
in the same manner and using the factors described above. The Committee will
also adhere to all applicable laws and regulations.
NOMINEES FOR DIRECTORSHIP
(ITEM 1)
The Board of Directors, under the terms of SunTrust's bylaws, has
determined that the number of directors constituting the Board shall be 14, with
directors divided into 3 classes serving staggered 3-year terms. There are 3
directors, J. Hicks Lanier, Larry L. Prince and Frank S. Royal, M.D., who have
been nominated to stand for reelection as directors at the Annual Meeting in
2004 for a term expiring in 2007. Two new candidates for election, Robert M.
Beall, II and Jeffrey C. Crowe, have been nominated to stand for election as
directors for terms expiring in 2007. In addition to the 5 nominees, there are 9
other directors continuing to serve on the Board, whose terms expire in 2005 and
2006. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES.
A. W. Dahlberg retired as a director of SunTrust on July 18, 2003 after
more than 7 years of service. Summerfield K. Johnston, Jr., R. Randall Rollins
and James B. Williams, who are currently serving as directors of SunTrust, will
each retire effective the day of the Annual Meeting. Mr. Johnston has served as
a director of SunTrust for the past 7 years, Mr. Rollins has served as a
director for the past 9 years and Mr. Williams has served as a director for the
past 20 years.
You may not vote your proxy 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, 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 recommends. The
Board has no reason to believe that any nominee will be unable or decline to
serve as a director.
The following table sets forth for each nominee and each director whose
term continues after the meeting his or her age, the number of shares of
SunTrust common stock beneficially owned by such person on December 31, 2003, a
brief description of his or her principal occupation and business experience
during the last 5 years, certain other directorships held and how long he or she
has been a director of SunTrust. Except for Mr. Humann, none of the nominees or
directors are employed by entities that are affiliates of SunTrust.
SHARES OF
DIRECTOR SUNTRUST
NAME, PRINCIPAL OCCUPATION, CERTAIN OTHER DIRECTORSHIPS AND AGE SINCE COMMON STOCK(1)(2)
--------------------------------------------------------------- --------- ------------------
NOMINEES FOR TERM EXPIRING IN 2007
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ROBERT M. BEALL, II is Chairman and Chief Executive Officer of (Nominee) 2,000(3)
Beall's, Inc., the parent company of Beall's Department
Stores, Inc. and Beall's Outlet Stores, Inc., which operate
retail stores located from Florida to California. He is also
a director of FPL Group, Inc. Mr. Beall is 60.
JEFFREY C. CROWE is Chairman of the Board and Chief Executive (Nominee) 1,200(4)
Officer of Landstar System, Inc. Landstar System, Inc. and
its affiliates provide transportation services to customers
throughout North America. Mr. Crowe is also Chairman of the
U.S. Chamber of Commerce, and has held this position since
June 2003. From June 2002 to June 2003, he served as Vice
Chairman of the U.S. Chamber of Commerce. From October 1993
to October 2003, he served as Chairman of the National
Defense Transportation Association. He is also a director of
Silgan Holdings, Inc. Mr. Crowe is 57.
3
SHARES OF
DIRECTOR SUNTRUST
NAME, PRINCIPAL OCCUPATION, CERTAIN OTHER DIRECTORSHIPS AND AGE SINCE COMMON STOCK
--------------------------------------------------------------- --------- ----------------
J. HICKS LANIER is Chairman and Chief Executive Officer of 2003 69,481(5)
Oxford Industries, Inc., a business engaged in the design,
manufacture, marketing and sale of consumer apparel products.
Mr. Lanier is also a director of Crawford & Company, Genuine
Parts Company and WestPoint Stevens, Inc. Mr. Lanier is 63.
LARRY L. PRINCE is Chairman of the Board and Chief Executive 1996 512,000(6)
Officer of Genuine Parts Company, a service organization
engaged in the distribution of automotive replacement parts,
industrial replacement parts and office products. Mr. Prince
is also a director of Crawford & Company, Equifax Inc. and
John H. Harland Co. Mr. Prince is 65.
FRANK S. ROYAL, M.D. is President and a member of Frank S. 1998 11,837(7)
Royal, M.D., P.C. (family medicine). Dr. Royal is also a
director of Chesapeake Corporation, Columbia/HCA Healthcare
Corporation, CSX Corporation, Dominion Resources, Inc. and
Smithfield Foods, Inc. Dr. Royal is 64.
DIRECTORS WHOSE TERMS EXPIRE IN 2006
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J. HYATT BROWN is Chairman of the Board and Chief Executive 1984 56,000(8)
Officer of Brown & 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 66.
ALSTON D. CORRELL is Chairman of the Board and Chief Executive 1997 21,235(9)
Officer of Georgia-Pacific Corporation, a manufacturer and
distributor of pulp, paper and building products. He is also
a director of Mirant Corporation and Norfolk Southern Corp.
Mr. Correll is 62.
DOUGLAS N. DAFT is the Chairman of the Board and Chief 2000 9,000(10)
Executive Officer of The Coca-Cola Company, and has held
these positions since February 17, 2000. He served as
President and Chief Operating Officer of The Coca-Cola
Company from December 5, 1999 until February 17, 2000. He
previously served as Senior Vice President of The Coca-Cola
Company from 1991 until December 5, 1999. Mr. Daft also
served as President of the Middle and Far East Group from
January 1995 until December 1999, which included management
responsibility for the Africa Group and the Schweppes
Beverages Division from October 1999 until December 1999. He
is also a director of The McGraw-Hill Companies, Inc. Mr.
Daft is 60.
DAVID H. HUGHES is Chairman of the Board of Hughes Supply, 1984 54,240(11)
Inc., a distributor of construction materials. Until May
2003, he also served as Chief Executive Officer of Hughes
Supply, Inc. Mr. Hughes is also a director of Brown & Brown,
Inc. and Darden Restaurants, Inc. Mr. Hughes is 60.
G. GILMER MINOR, III is Chairman of the Board and Chief 1998 16,044(12)
Executive Officer of Owens & Minor, Inc., a national
distributor of hospital and medical supplies. Mr. Minor was
named Chairman of Owens & Minor, Inc. in May 1994 and also
serves as a director. Mr. Minor is 63.
DIRECTORS WHOSE TERMS EXPIRE IN 2005
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PATRICIA C. FRIST is a partner in Frist Capital Partners, which 2000 6,574(13)
invests in equities, real estate and venture capital. Mrs.
Frist is also President of Frisco, Inc., an investment
corporation, as well as President of the Patricia C. Frist
and Thomas F. Frist, Jr. Foundation. Mrs. Frist is 64.
4
SHARES OF
DIRECTOR SUNTRUST
NAME, PRINCIPAL OCCUPATION, CERTAIN OTHER DIRECTORSHIPS AND AGE SINCE COMMON STOCK
--------------------------------------------------------------- --------- ----------------
L. PHILLIP HUMANN is Chairman of the Board, President and Chief 1991 821,596(14)
Executive Officer of SunTrust. He is a director of Coca-Cola
Enterprises Inc., Equifax Inc. and Haverty Furniture
Companies, Inc. Mr. Humann is 58.
M. DOUGLAS IVESTER retired as Chairman of the Board and Chief 1998 36,000(15)
Executive Officer of The Coca-Cola Company on February 17,
2000. He served as President and Chief Operating Officer of
The Coca-Cola Company from July 1994 until elected Chairman
of the Board and Chief Executive Officer in October 1997. He
is also a director of Georgia-Pacific Corporation, S1
Corporation and Service Central, Inc. Mr. Ivester is 56.
KAREN HASTIE WILLIAMS is a partner in the Washington, D.C. law 2002 4,317(16)
firm of Crowell & Moring LLP. She is also a director of Chubb
Corporation, Continental Airlines, Inc., Gannett Company,
Inc. and WGL Holdings, Inc. Ms. Williams is 59.
---------------
(1) In addition to the shares beneficially owned, the following directors have
elected to defer payment of the directors' fees payable to them under the
SunTrust Directors Deferred Compensation Plan, with such amounts to earn a
return to be determined as if they had been invested in SunTrust common
stock. The deferred compensation account of the directors listed below
included amounts equivalent to the number of shares of SunTrust common
stock listed opposite their names as of December 31, 2003:
NAME NUMBER OF SHARES
---- ----------------
Alston D. Correll 7,001
Douglas N. Daft 3,502
M. Douglas Ivester 6,165
Larry L. Prince 8,545
(2) SunTrust common stock beneficially owned as of December 31, 2003. As of
such date, no nominee or director was a beneficial owner of more than 1% of
the outstanding shares of SunTrust common stock. Except as otherwise
indicated, each director possessed sole voting and investment power with
respect to all shares set forth opposite his or her name.
(3) Reflects beneficial ownership as of February 12, 2004.
(4) Mr. Crowe shares voting and investment power with respect to all such
shares.
(5) Includes 38,495 shares in a family foundation of which Mr. Lanier is
Chairman. Mr. Lanier shares voting and investment power with respect to
these shares. Also includes 10,668 shares held in trust for the estate of
Mr. Lanier's brother, and 6,268 shares held in trust for his sister. Mr.
Lanier disclaims beneficial ownership of all such shares.
(6) Includes 6,000 shares that are the subject of exercisable stock options.
Includes 504,000 shares held by two foundations of which Mr. Prince is a
trustee.
(7) Includes 6,000 shares that are the subject of exercisable stock options.
Includes 1,859 shares of common stock equivalents credited to Dr. Royal's
account under the Crestar Financial Corporation Directors' Equity Program,
as the plan provides for payments in SunTrust common stock.
(8) Includes 6,000 shares that are the subject of exercisable stock options.
Mr. Brown shares voting and investment power with respect to 50,000 shares.
(9) Includes 6,000 shares that are the subject of exercisable stock options.
(10) Includes 6,000 shares that are the subject of exercisable stock options.
(11) Includes 6,000 shares that are the subject of exercisable stock options.
(12) Includes 4,000 shares that are the subject of exercisable stock options.
Includes 1,617 shares of common stock equivalents credited to Mr. Minor's
account under the Crestar Financial Corporation Directors' Equity Program.
5
(13) Includes 6,000 shares that are the subject of exercisable stock options and
74 shares owned by Mrs. Frist's spouse, who has sole voting and investment
power over such shares.
(14) Includes 28,005 shares held for the benefit of Mr. Humann under SunTrust's
401(k) Plan, 140,000 shares of common stock equivalents granted in exchange
for restricted stock, and 225,000 shares that are the subject of
exercisable stock options. Does not include 8,785 shares of common stock
equivalents credited to Mr. Humann's stock account under SunTrust's 401(k)
Excess Plan.
(15) Includes 6,000 shares that are the subject of exercisable stock options.
(16) Includes 2,000 shares that are the subject of exercisable stock options.
Includes 1,617 shares of common stock equivalents credited to Ms. Williams'
account under the Crestar Financial Corporation Directors' Equity Program.
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BOARD COMMITTEES
The Board has 4 committees: (1) Executive Committee; (2) Audit Committee;
(3) Governance and Nominating Committee; and (4) Compensation Committee. The
membership during 2003, the functions of each committee and the number of
meetings held are described below.
NUMBER OF MEETINGS
NAME OF COMMITTEE AND MEMBERS FUNCTIONS OF COMMITTEE IN 2003
EXECUTIVE: - May exercise authority of full Board 5
except that it may not:
James B. Williams, Chairman - approve or propose to shareholders any
J. Hyatt Brown action that must lawfully be approved by
Douglas N. Daft shareholders;
L. Phillip Humann - fill vacancies on the Board or any
Summerfield K. Johnston, Jr. committee;
- amend the Articles of Incorporation;
- adopt, amend or repeal the bylaws; or
- approve a dissolution or merger of
SunTrust or the sale of all or
substantially all the assets of SunTrust.
AUDIT: - Appoints, compensates, retains, and 10
directly oversees the work of SunTrust's
M. Douglas Ivester, Chairman independent auditor (subject to
Patricia C. Frist shareholder ratification if applicable).
J. Hicks Lanier - Monitors the following:
R. Randall Rollins - the integrity of SunTrust's financial
Frank S. Royal, M.D. statements;
Karen Hastie Williams - the independence and qualifications of
its independent auditor;
- SunTrust's system of internal controls;
- the performance of SunTrust's internal
audit process and independent auditor; and
- SunTrust's compliance with laws,
regulations and the codes of conduct.
- Resolves any disagreements between
management and the auditors regarding
financial reporting.
- Pre-approves all audit services and
permitted non-audit services provided to
SunTrust by its independent auditor.
- Performs other related duties as defined
in a written charter approved by the Board,
which is attached hereto as Exhibit A to
the Proxy Statement.
- Has only members that meet the
independence and experience requirements set
forth in SunTrust's Corporate Governance
Guidelines, as well as the requirements of
the Securities and Exchange Act of 1934
and applicable rules, the rules of the New
York Stock Exchange, where SunTrust's
common stock is listed, and other rules
and regulations of the Securities and
Exchange Commission. Mr. Ivester meets the
definition of "audit committee financial
expert" as defined by the Securities and
Exchange Commission's rules and
regulations.
7
NUMBER OF MEETINGS
NAME OF COMMITTEE AND MEMBERS FUNCTIONS OF COMMITTEE IN 2003
GOVERNANCE AND NOMINATING: - Responsible for making recommendations to 5(1)
the Board regarding the size and composition
David H. Hughes, Chairman of the Board, reviewing qualifications of
Alston D. Correll candidates to the Board and recommending
M. Douglas Ivester nominees to the Board.
G. Gilmer Minor, III - Has sole authority for retaining or
Karen Hastie Williams terminating any search firm used to identify
director candidates and determining such
firm's fees.
- Responsible for taking a leadership role
in shaping the corporate governance of
SunTrust.
- Responsible for developing and
recommending to the Board a set of corporate
governance guidelines, and periodically
reviewing and reassessing the adequacy of
those principles and recommending any
proposed changes to the Board for
approval.
- Responsible for leading the Board in its
annual review of the Board's performance.
- Responsible for addressing committee
structure and operations, committee
reporting to the Board, committee member
qualifications and committee member
appointment and removal.
- Has only members that are independent
under SunTrust's Corporate Governance
Guidelines, as well as the rules of the
New York Stock Exchange.
COMPENSATION: - Responsible for approving the compensation 6(2)
arrangements for senior management.
Larry L. Prince, Chairman - Responsible for oversight and
Alston D. Correll administration of certain executive and
David H. Hughes employee compensation and benefit plans,
G. Gilmer Minor, III including the Stock Plans, Management
Incentive Plan, Performance Unit Plan,
401(k) Excess Plan, Supplemental Executive
Retirement Plan, ERISA Excess Retirement
Plan and Change in Control Agreements.
- Has only members that are independent
under SunTrust's Corporate Governance
Guidelines, as well as the rules of the
New York Stock Exchange.
(1) Until November 2003, this committee was called the Compensation and
Governance Committee and consisted of the directors that are now serving on
the Compensation Committee. In November, a separate, independent committee
called the Governance and Nominating Committee was formed. Four of the
meetings noted were meetings of the Compensation and Governance Committee,
and 1 was a meeting of the Governance and Nominating Committee.
(2) In November 2003 when the Governance and Nominating Committee was formed,
the name of this committee was changed to the Compensation Committee. Four
of the meetings were held while the committee was known as the Compensation
and Governance Committee and 2 of the meetings were held while the committee
was known as the Compensation Committee.
8
ATTENDANCE AND COMPENSATION
Attendance. Regular meetings of the Board are held quarterly. During 2003,
the Board held 4 meetings. All SunTrust directors attended at least 75% of the
Board meetings and meetings of committees on which they served. SunTrust
expects, but does not require, directors to attend the Annual Meeting of
Shareholders. Last year all directors attended SunTrust's Annual Meeting of
Shareholders.
Compensation. Each director who is not also an employee of SunTrust or its
subsidiaries received an annual retainer of $45,000 in 2003 and was paid a fee
of $1,500 for each Board or committee meeting attended. Directors also received
a grant of 2,000 non-qualified stock options which vested immediately and have a
10 year term. Directors serving as directors of SunTrust's subsidiaries only
receive meeting attendance fees for service on those Boards. Directors may defer
fees payable to them under SunTrust'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 SunTrust common stock or at a floating
interest rate equal to the prime interest rate in effect at SunTrust Bank
computed on a quarterly basis.
Mr. Williams, SunTrust's former Chairman of the Board and Chief Executive
Officer who retired on March 21, 1998, is serving as a non-employee director of
SunTrust and Chairman of the Executive Committee. In his capacity as a former
Chief Executive Officer of SunTrust, Mr. Williams has been provided certain
perquisites, including an office, office equipment and supplies and general
secretarial support.
Additional Information Regarding Former Crestar Financial Corporation
Directors. Mr. Minor, Dr. Royal and Ms. Williams, all former Crestar directors,
also participate in a Crestar directors' program providing deferred benefits
based on 1996 director awards plus their prior elective deferrals of Crestar
retainers. These benefits are calculated in common stock equivalents and paid,
after their directorship ends, in whole shares of SunTrust common stock, with
cash for any fractional share.
CORPORATE GOVERNANCE
The Board of Directors has determined that the majority of SunTrust's
directors are independent. In determining director independence, the Board
broadly considers all relevant facts and circumstances, including the rules of
the New York Stock Exchange. The Board considers the issue not merely from the
standpoint of a director, but also from that of persons or organizations with
which the director has an affiliation. An independent director is free of any
relationship with SunTrust or its management that may impair the director's
ability to make independent judgments. Particular attention is paid to whether a
director is independent from management and to any credit relationships that may
exist with a director or a related interest. Generally, credit relationships
with directors and their affiliates will not impair independence so long as the
terms of the credit relationship are similar to other comparable borrowers. A
director who is an executive officer of a company that makes payments to or
receives payments from SunTrust for property or services in an amount which, in
any fiscal year, is greater than 2% of such director's company's consolidated
gross revenues will not be considered independent.
The Board of Directors conducts a self-assessment annually, which is
reported by the Governance and Nominating Committee to the Board. In addition,
the Governance and Nominating Committee, Compensation Committee and the Audit
Committee also undergo an annual assessment of their performance. The non-
employee directors of the Board typically meet in executive session at each
regularly scheduled meeting and such meetings are presided over by a Presiding
Director who is selected by a majority of independent directors. Mr. Prince is
currently serving as the Presiding Director.
SunTrust has adopted a policy requiring directors who change the job
responsibility they held when they were elected to the Board to submit a letter
of resignation to the Board. The Board, through the Governance and Nominating
Committee, will then make a determination as to whether continued Board
membership is appropriate.
SunTrust has adopted a Senior Financial Officers Code of Ethical Conduct
that applies to SunTrust's senior financial officers, including its principal
executive officer, principal financial officer and controller. SunTrust also has
adopted a SunTrust Code of Conduct that applies to all employees, and a Code of
Business
9
Conduct and Ethics for members of the Board of Directors. These 3 Codes of
Conduct, as well as SunTrust's Corporate Governance Guidelines, and the charters
for the Executive Committee, the Audit Committee, the Governance and Nominating
Committee and the Compensation Committee can be found by clicking the heading
"About SunTrust" on SunTrust's website at www.suntrust.com and then clicking on
"Corporate Governance". In addition, this information is available in print to
any shareholder who requests it by contacting Gary Peacock, Director of Investor
Relations and Corporate Communications, at 404-658-4879. The Board intends that
non-employee directors make decisions on matters of corporate governance. As
additional corporate governance standards are adopted, they will be disclosed on
an ongoing basis on SunTrust's website.
SHAREHOLDER COMMUNICATIONS WITH DIRECTORS
The Board of Directors has adopted a process to facilitate written
communications by shareholders or other interested parties to the Board. Persons
wishing to write to the Board of Directors of SunTrust or a specified director
or committee of the Board should send correspondence to the Corporate Secretary
at SunTrust Banks, Inc., 303 Peachtree Street, NE, Suite 2950, Atlanta, Georgia
30308.
All communications so received from shareholders or other interested
parties will be forwarded to the members of the Board of Directors, or to a
specific Board member or committee if so designated by such person. Anyone who
wishes to communicate with a specific Board member or committee should send
instructions asking that the material be forwarded to the director or to the
appropriate committee chairman.
EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS
Executive officers are elected annually by the Board following the Annual
Meeting of Shareholders to serve until the meeting of the Board following the
next Annual Meeting. The following table sets forth the name of each executive
officer and the principal positions and offices he holds with SunTrust. Unless
otherwise indicated, each of these officers has served as an executive officer
of SunTrust or a principal subsidiary for at least 5 years.
NAME INFORMATION ABOUT EXECUTIVE OFFICERS
---- ------------------------------------
L. Phillip Humann.................... Chairman of the Board, President and Chief Executive Officer
of SunTrust.
John W. Clay, Jr..................... A Vice Chairman of SunTrust since August 2000 with
management oversight of banking functions, including
corporate and investment banking. From 1997 until August
2000 he was an Executive Vice President of SunTrust. Prior
to 1997, he was Chief Executive Officer of SunTrust's
Tennessee banking operations. Mr. Clay is 62.
Theodore J. Hoepner.................. A Vice Chairman of SunTrust since August 2000 with
responsibility for asset quality, efficiency and quality
initiatives, human resources and legal and regulatory
affairs. Mr. Hoepner is also Chief Risk Officer, effective
as of February 2003, to include responsibility for
SunTrust's audit and internal control functions. From
August 2000 until February 2003, Mr. Hoepner also had
responsibility for SunTrust's technology and operations
functions. From 1995 until August 2000 he was an Executive
Vice President of SunTrust, with responsibility for
SunTrust's Florida banking operations. From 1999 through
August 2000 he also had responsibility for SunTrust
Service Corporation, human resources and efficiency and
quality initiatives. Mr. Hoepner is 62.
10
NAME INFORMATION ABOUT EXECUTIVE OFFICERS
---- ------------------------------------
John W. Spiegel...................... A Vice Chairman of SunTrust since August 2000 with
responsibility for SunTrust's finance-related functions. Mr.
Spiegel is also Chief Financial Officer, a position he has
held for more than 5 years. Prior to August 2000 he was an
Executive Vice President of SunTrust. Mr. Spiegel is 62.
James M. Wells III................... A Vice Chairman of SunTrust since August 2000 with
responsibility for oversight of SunTrust's commercial,
retail, mortgage and private client services lines of
business. He also has senior executive responsibility for
SunTrust's marketing and corporate strategy units, and, as
of February 2003, has responsibility for SunTrust's
technology and operations functions. From January 2000 to
August 2000 Mr. Wells served as President and Chief
Executive Officer of SunTrust's Mid-Atlantic region. From
1988 to January 2000 he served as President of Crestar
Financial Corporation and Crestar Bank. Mr. Wells is 57.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
INTRODUCTION
Decisions regarding the compensation of SunTrust's executives are made by
the Compensation Committee of the Board, which we refer to in this report as the
Committee. Each member of the Committee is an independent director. The
Committee believes the actions of each executive officer have the potential to
impact the short term and long term profitability of SunTrust. Consequently, the
Committee places considerable importance on its oversight of the design and
administration of an executive compensation program.
OBJECTIVES OF EXECUTIVE COMPENSATION
The objectives of SunTrust's executive compensation programs are to: (1)
increase shareholder value, (2) improve SunTrust's overall performance, (3)
increase the success of the business unit directly impacted by the executive's
leadership and performance, (4) enhance the individual executive's performance,
and (5) attract and retain quality executive leadership.
COMPENSATION PHILOSOPHY AND PROGRAM REVIEW
The philosophy adopted by the Committee is outlined below and underlies
SunTrust's executive compensation programs.
Executive pay is benchmarked against financial services companies of
similar size with total direct compensation targeted at market median with an
upside opportunity for superior performance. Base salary is targeted at the
market median, tied to incumbent-specific factors. Annual bonuses are targeted
at market median for expected performance. Long term incentives are also
targeted at the market median. However, both annual and long term incentives
have an upside opportunity for superior performance. Benefits are targeted to
market median as to both the value and components delivered, and perquisites
must be linked to important business needs. SunTrust emphasizes market
practices, but with (1) a greater weight on variable pay and (2) shareholder
alignment and ownership emphasized over cash. SunTrust believes that variable
pay should constitute the majority of total direct compensation. Variable pay
performance measures should promote shareholder return and earnings growth, and
the plan design should assure linkage between measurements, participants'
ability to influence such measurements, and award levels. Long term incentive
awards also should reflect company and individual performance. Overall, the
compensation philosophy is to ensure that risk/reward is tied to financial,
operational and individual performance.
During the past year, the Committee engaged a nationally known executive
compensation and benefits consulting firm to complete a comprehensive review of
the SunTrust executive compensation and benefits
11
program. As part of that review, the Committee approved the philosophy stated
above and the following banks as the peer group for collecting compensation
data: Northern Trust Corporation, SouthTrust Corporation, PNC Financial Services
Group Incorporated, BB&T Corporation, Fifth Third Bancorp, KeyCorp, National
City Corporation, US Bancorp, FleetBoston Financial Corporation, Bank One
Corporation, Wachovia Corp., Wells Fargo & Company and Bank of America
Corporation.
Target levels of pay for salary, bonuses and long term incentives were
adjusted based on the results of the study. The total compensation program is
designed to align pay with performance relative to financial targets.
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 competitive levels of compensation to
executives based upon their experience, duties and scope of financial
responsibility. Salaries for top executives are reviewed annually.
CASH INCENTIVE PLANS
SunTrust maintains two cash incentive plans:
- The Management Incentive Plan, which focuses on achieving the annual
earnings plan.
- The Performance Unit Plan, which focuses on earnings performance over a 3
year period.
These variable compensation plans are designed so that: (1) the executive
receives a bonus based on SunTrust's achieving specified performance objectives,
and (2) a significant portion of the executive's total compensation is at risk.
Management Incentive Plan
The Management Incentive Plan, which we refer to as MIP, is a 1 year plan
designed to support SunTrust's strategic business objectives, promote the
attainment of profit plans and revenue goals, reward achievement of business
unit and individual performance objectives and encourage teamwork. Financial and
non-financial performance measures are established for each participant, except
for the named executive officers. MIP awards for the named executive officers
are based exclusively on a quantifiable net income performance measure. For each
performance measure target, threshold and maximum performance benchmarks are
developed. These performance measures and performance benchmarks are set for a 1
year period and are aimed at increasing short term performance results. Each
participant is assigned a target incentive award opportunity expressed as a
percentage of the participant's base wages. Achievement of target performance
benchmarks for each performance measure produces a target incentive award
payment. Performance results between the threshold performance benchmarks and
target performance benchmarks produce an award less than the target award
opportunity percentage. Performance results above the target performance
benchmarks produce an award greater than the target award opportunity
percentage. Maximum performance benchmarks are set at a level reflective of very
ambitious earnings goals which can only be attained when business results are
exceptional, thus justifying the higher award payments.
Participation in MIP is limited to a group of key employees who have a
material impact on SunTrust's performance. The participants are selected by the
Committee and include the executive officers named in this Proxy Statement and
approximately 800 other key employees at different levels of participation.
Awards earned under MIP are contingent upon employment with SunTrust through the
end of the year, except for
12
payments made in the event of death, retirement, disability, or in the event of
a change in control. These payouts are set forth in the Summary Compensation
Table under the heading "Bonus".
Performance Unit Plan
The purpose of the Performance Unit Plan, which we refer to as PUP, is to
promote the long term interests of SunTrust and its shareholders and to
motivate, retain and reward those executives who contribute significantly to
SunTrust's financial performance. Participation in this plan is limited to a
select group of executive management who have significant impact upon the long
term growth and profitability of SunTrust. Each participant is awarded a number
of performance units, based upon the level of position held within SunTrust and
individual performance, with an initial value of $30.00 per unit. The final
value of a unit is determined at the conclusion of the 3 year performance cycle.
Two performance measurements are set for each 3 year performance cycle which
correspond to a minimum, target, and maximum unit value. These performance
measurements are: (1) a 3 year cumulative consolidated net income goal, and (2)
a 3 year cumulative earnings per share goal. At the end of each performance
cycle, the payout value is determined by actual net income and earnings per
share for the 3 year period. The measurement which yields the highest unit value
is the one that is used. This method was employed due to SunTrust's share
purchase 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. Pending the completion of the executive compensation
and benefits review, PUP awards were not granted in 2003. Restricted stock
grants were made to approximately 170 participants in 2003 as a substitution for
performance units. A broad-based grant of restricted stock is not expected to
occur in 2004, as the executive compensation study recommended the resumption of
performance unit grants to PUP participants. Performance unit payouts, if
earned, are set forth in the Summary Compensation Table under the heading "LTIP
Payouts". Restricted stock grants are set forth in the Summary Compensation
Table under the heading "Restricted Stock Award".
STOCK INCENTIVE PLANS
One of the Committee's priorities is to encourage executives to be
significant shareholders to better ensure that the interests of executives are
closely aligned with the interests of shareholders. Although SunTrust's
executive officers have a significant equity stake in SunTrust (as reflected in
the beneficial ownership information contained in this Proxy Statement), the
Committee adopted a share retention policy for upper level management. The
policy provides for the Chief Executive Officer and Vice Chairmen to retain net
shares after acquisition until retirement or termination, with a provision to
allow diversification of portfolios for executives age 55 or older.
2004 Stock Plan
The 2004 Stock Plan was adopted by the Board in February 2004 and is
subject to approval of the shareholders. If approved by the shareholders, future
grants of stock options, restricted stock, stock units and stock appreciation
rights will be made under the 2004 Stock Plan. See Item 3, Proposal to Approve
SunTrust's 2004 Stock Plan, for a detailed description of the Plan. Also, see
Exhibit B for a complete copy of the Plan.
2000 Stock Plan
The 2000 Stock Plan was adopted by the Board in February 2000, and approved
by the shareholders at the 2000 Annual Meeting. The 2000 Stock Plan provided for
grants of options to purchase SunTrust common stock, awards of restricted shares
of SunTrust common stock (which may be subject to both grant and forfeiture
conditions), and grants of stock appreciation rights, which we refer to as SARs.
There were 14,000,000 shares of SunTrust common stock reserved for use under the
2000 Stock Plan, of which 4,000,000 could, but need not, be granted as
restricted stock. The 2000 Stock Plan is administered by the Committee, which
has the authority to grant options, SARs and restricted stock. The Committee has
also delegated to the Chief Executive Officer limited authority to grant
options. The 2000 Stock Plan has been used by the Committee to make stock-based
incentives important factors in attracting, retaining, and rewarding employees
13
and to closely align employee interests with those of SunTrust's shareholders.
If the 2004 Stock Plan is approved by shareholders, no further grants will be
made under the 2000 Stock Plan and authorized but unissued shares plus shares
subject to forfeited or expired grants will be available for issuance under the
2004 Stock Plan.
1995 Stock Plan
The 1995 Executive Stock Plan, which we refer to as the 1995 Stock Plan,
was designed to use stock-based incentives to focus executives and other
eligible participants on SunTrust's long term performance and to attract and
retain qualified employees. No further grants will be made under the 1995 Stock
Plan.
401(k) Plan Matching Contributions
SunTrust matches a percentage of eligible employee contributions to its
qualified 401(k) Plan. The matching contributions are made in SunTrust common
stock.
401(k) Excess Plan
SunTrust also maintains an unfunded non-qualified 401(k) Excess Plan to
provide benefits for certain participants that would have otherwise been
provided under the qualified 401(k) Plan except for the imposition of certain
statutory limits on qualified plan benefits. Participants' interests in the
401(k) Excess Plan are accounted for in phantom units. Under the 401(k) Excess
Plan, SunTrust credits each participant's account with the participant's
deferrals plus applicable matching contributions. Participants generally have
investment choices with returns that mirror most of the investment options
allowed under the 401(k) Plan. Participants may not, however, direct any portion
of their account to an investment vehicle that is tied to the value of SunTrust
common stock. SunTrust's matching contributions are accounted for in SunTrust
common stock equivalents. The amounts of SunTrust's matching contributions
credited to the 401(k) Excess Plan and matching contributions under the 401(k)
Plan on behalf of the 5 named executive officers are included in the amounts
shown in the Summary Compensation Table under the heading "All Other
Compensation".
SECTION 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended, provides
that compensation in excess of $1 million paid for any year to a corporation's
chief executive officer and the 4 other highest paid executive officers at the
end of such year, which executives we refer to as 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, and under certain conditions, must reapprove the material terms of the
performance goals every 5 years. SunTrust intends that most awards to covered
employees under the 2004 Stock Plan, the 2000 Stock Plan, MIP and PUP will
qualify as performance-based compensation within the meaning of Section 162(m).
On February 8, 2000, the Board of Directors approved the 2000 Stock Plan and
certain amendments to MIP and PUP which were designed to ensure that, to the
extent possible, awards payable under the 2000 Stock Plan, MIP and PUP would be
fully deductible by SunTrust for purposes of Section 162(m). At the 2000 Annual
Meeting, SunTrust's shareholders approved the material terms of the performance
goals under which compensation is paid under the 2000 Stock Plan, MIP and PUP.
The material terms of the performance goals for grants of restricted stock and
stock units under the 2004 Stock Plan are described in Item 3, Proposal to
Approve SunTrust's 2004 Stock Plan, and shareholders are being asked to approve
the performance goals, as well as the Plan.
CHIEF EXECUTIVE OFFICER COMPENSATION
The executive compensation policy described above is applied in setting Mr.
Humann's compensation. Mr. Humann participates in the same executive
compensation plans available to other executive officers. His 2003 cash
compensation was $1,900,000. Mr. Humann had a base salary of $950,000 and
received no salary
14
adjustment in 2003. Mr. Humann earned a MIP award of $950,000 for the 2003
calendar year. This represented a payout at target and is the result of SunTrust
meeting the net income target that the Committee set prior to the start of 2003.
Mr. Humann did not earn a PUP award for the 2001-2003 cycle because SunTrust did
not meet the cumulative earnings per share target that the Committee set prior
to the start of the 2001-2003 cycle. In addition, Mr. Humann was granted a
non-qualified stock option for 150,000 shares of SunTrust common stock, and was
granted 6,630 restricted shares of SunTrust common stock. The grant of
restricted stock did not qualify as performance-based compensation under Section
162(m). The restricted stock grant in 2003 was in lieu of PUP units and is not
expected to be repeated in 2004. In 2004 SunTrust will resume a grant of PUP
units to Mr. Humann that will be based on earnings growth over a 3 year period.
Annually, non-employee members of the Board of Directors evaluate the Chief
Executive Officer's performance, which is a factor in determining the Chief
Executive Officer's future compensation.
SUMMARY
The Committee believes this mix of conservative market-based salaries,
potentially significant variable cash incentives for both long term and short
term performance and the potential for equity ownership in SunTrust represents a
balance that will motivate the management team to produce strong returns. The
Committee further believes this program strikes an appropriate balance between
the interests and needs of SunTrust in operating its business and appropriate
rewards based on shareholder value creation.
Submitted by the Compensation Committee of SunTrust's Board of Directors.
Larry L. Prince, Chairman
Alston D. Correll
David H. Hughes
G. Gilmer Minor, III
15
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ending December 31, 2001,
2002, and 2003 the cash compensation paid by SunTrust and its subsidiaries, as
well as certain other compensation paid, accrued or granted for those years, to
each of SunTrust's 5 most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------- ------------------------- --------
OTHER SECURITIES
ANNUAL RESTRICTED UNDER- ALL OTHER
NAME AND PRINCIPAL COMPEN- STOCK LYING LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION(1) AWARDS(2)(3) OPTIONS(4) PAYOUTS SATION(5)
------------------ ---- -------- -------- --------- ------------ ---------- -------- ---------
L. Phillip Humann.......... 2003 $950,000 $950,000 $ 54,731 $359,876 150,000 $ -- $48,002
Chairman of the Board, 2002 950,000 -- -- -- -- 294,200 49,783
President and Chief 2001 815,000 851,594 -- -- 150,000 551,280 33,395
Executive Officer
James M. Wells III......... 2003 650,000 520,000 95,915 239,918 100,000 -- 73,400
Vice Chairman 2002 650,000 -- 147,237 -- -- 147,100 78,405
2001 600,000(6) 501,540(6) 68,749 -- 75,000 229,700 62,840
John W. Spiegel............ 2003 500,000 400,000 -- 239,918 100,000 -- 27,074
Vice Chairman and 2002 500,000 -- -- -- -- 176,520 28,180
Chief Financial Officer 2001 485,000 405,412 -- -- 50,000 321,580 21,608
Theodore J. Hoepner........ 2003 525,000 420,000 -- 239,918 100,000 -- 28,452
Vice Chairman 2002 525,000 -- -- -- -- 147,100 29,356
2001 450,000 376,155 -- -- 100,000 275,640 19,877
John W. Clay, Jr........... 2003 525,000 420,000 -- 239,918 100,000 -- 28,452
Vice Chairman 2002 525,000 -- -- -- -- 147,100 29,356
2001 450,000 376,155 -- -- 100,000 275,640 19,781
---------------
(1) Includes the cost of providing various perquisites and personal benefits if
the benefit amount exceeds the lesser of $50,000 or 10% of the executive's
salary and bonus. The amount shown for Mr. Humann in 2003 includes $26,136
related to tax return preparation and financial planning services that were
provided to Mr. Humann, the premium amount paid for supplemental disability
coverage and tax liabilities associated with various perquisites. The amount
shown for Mr. Wells in 2003 includes $65,414 related to an equivalent
payment for termination of a split dollar life insurance arrangement under
the Crestar Executive Life Insurance Plan because of the Sarbanes-Oxley Act
and the tax liability associated with tax return preparation and financial
planning services that were provided to Mr. Wells. The amount shown for Mr.
Wells in 2002 includes $60,000 for a club membership and $58,549 for
reimbursement of the tax liability associated with the club membership and
the tax liability associated with tax return preparation and financial
planning services that were provided to Mr. Wells. The amount shown for Mr.
Wells for 2001 includes $30,000 for a relocation bonus. The amounts shown
for Mr. Wells for all 3 years include $6,852 per year for insurance premiums
for supplemental disability coverage.
(2) Restricted stock grants were made in 2003 in lieu of performance units under
the Performance Unit Plan.
(3) Performance-based restricted stock, which we refer to as performance stock,
is held by certain of the executive officers listed above, under the 1986
Executive Stock Plan and the 1995 Stock Plan. Three events must occur with
respect to the performance stock before the executive takes full title to
the performance stock. Shares generally are granted, awarded, become vested
and finally are distributed. 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 SunTrust's common stock
from the initial price at the time of grant. Most of the awarded shares vest
and are distributed on the earliest of the following dates: (i) 15 years
after the date shares are awarded to participants; (ii) at attaining age 64;
16
(iii) in the event of the death or disability of a participant; or (iv) in
the event of a change in control of SunTrust as defined in the 1986
Executive Stock Plan or the 1995 Stock Plan. Eighty percent of the
performance-based restricted stock granted in 1996 has been awarded, and the
time period for awarding the remaining shares granted has expired.
Approximately 40% of the granted shares became fully vested as of February
10, 2000 and are no longer subject to service and forfeiture conditions. The
restricted stock awards indicated in the chart above were granted pursuant
to the 2000 Stock Plan and are not performance based. The individuals set
forth in the table above were awarded, subject to the terms and conditions
of the 1986 Executive Stock Plan, the 1995 Stock Plan or the 2000 Stock
Plan, the number of shares of restricted stock, including performance stock,
with a value as of December 31, 2003, as follows: Messrs. Humann 326,630
shares, $23,354,045; Wells 4,420 shares, $316,030; Clay 82,420 shares,
$5,893,030; Hoepner 146,420 shares, $10,469,030; and Spiegel 198,420 shares,
$14,187,030. As described above, all such shares have been awarded and about
40% of the performance shares held by most of the individuals named in this
footnote have vested. Dividends were paid in 2003 on shares of awarded
restricted stock as follows: Messrs. Humann $587,934; Wells $7,956; Clay
$148,356; Hoepner $263,556; and Spiegel $357,156.
(4) The options that typically would have been granted in November 2002 were
deferred until February 2003 due to a change in the timing of the executive
compensation process.
(5) Amounts contributed by SunTrust to the 401(k) Plan and credited under the
401(k) Excess Plan. Also includes SunTrust premiums paid on term life
insurance. The amount shown for Mr. Wells in 2003 also includes above market
interest earned on deferred compensation. The amount shown for Mr. Wells in
2002 and 2001 includes the actuarial equivalent of benefits from SunTrust
premiums on a split-dollar life insurance policy and above market interest
earned on deferred compensation.
(6) In accordance with his prior employment agreement with SunTrust entered into
in connection with the acquisition of Crestar.
STOCK OPTIONS
The following table contains information concerning the grant of stock
options to SunTrust's named executive officers as of the end of the last fiscal
year. SunTrust did not award any stock appreciation rights during the last
fiscal year.
OPTION GRANTS DURING 2003
INDIVIDUAL GRANTS
---------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR SHARE(1) DATE VALUE(2)
---- ---------- ------------ --------- ---------- ----------
L. Phillip Humann.......................... 150,000 3.94% $54.28 2/11/13 $928,650
James M. Wells III......................... 100,000 2.63% 54.28 2/11/13 619,100
John W. Spiegel............................ 100,000 2.63% 54.28 2/11/13 619,100
Theodore J. Hoepner........................ 100,000 2.63% 54.28 2/11/13 619,100
John W. Clay, Jr........................... 100,000 2.63% 54.28 2/11/13 619,100
---------------
(1) Under the 2000 Stock Plan, the exercise price must not be less than 100% of
the fair market value of SunTrust's common stock on the date the option is
granted. These options vest on February 11, 2006. Options may be exercised
using cash, SunTrust common stock or a combination of both.
(2) These values were established using the Black-Scholes stock option valuation
model. For all grants, the Black-Scholes value, an estimate based on
assumptions about future stock price volatility and dividend yield, was
11.41% of the stock price on the date of grant. The estimated volatility of
15.53% was based on historical data from the prior 5 years. The estimated
value also reflects a risk-free rate of return of 2.956%, a dividend yield
of 3.21% and a 10-year option term. Use of this model should not be
construed as an endorsement of its accuracy at valuing options. All stock
option valuation models, including the
17
Black-Scholes model, require a prediction about the future movement of the
stock price. The real value of the options in this table depends upon the
actual changes in the market price of SunTrust common stock during the
applicable period.
The following table sets forth information with respect to the named
executives concerning the exercise of options during 2003 and unexercised
options held as of December 31, 2003.
AGGREGATED OPTION EXERCISES IN 2003 AND
DECEMBER 31, 2003 OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS
SHARES 2003 AT DECEMBER 31, 2003
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
L. Phillip Humann...... 3,300 $129,855 225,000 303,300 $3,056,250 $3,758,625
James M. Wells III..... 24,188 906,687 340,880 176,000 7,216,119 751,800
John W. Spiegel........ 6,600 171,270 81,500 153,300 1,699,375 2,204,625
Theodore J. Hoepner.... -- -- 71,600 203,300 1,291,000 2,551,125
John W. Clay, Jr....... -- -- 76,200 203,300 1,480,750 2,551,125
EQUITY COMPENSATION PLANS
The following table provides information as of December 31, 2003 with
respect to the shares of SunTrust common stock that may be issued under
SunTrust's existing equity compensation plans.
(A) (B) (C)
-------------------- -------------------- ----------------------------
NUMBER OF SECURITIES
NUMBER OF SECURITIES REMAINING AVAILABLE FOR
TO BE ISSUED UPON WEIGHTED AVERAGE FUTURE ISSUANCE UNDER EQUITY
EXERCISE OF EXERCISE PRICE OF COMPENSATION PLANS
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
------------- -------------------- -------------------- ----------------------------
Equity Compensation Plans Approved
by Shareholders(1).............. 14,164,063 $ 57.14 4,310,320(2)(3)
Equity Compensation Plans Not
Approved by Shareholders........ -- -- --
TOTAL................... 14,164,063 $ 57.14 4,310,320
---------------
(1) Consists of the 1986 Executive Stock Plan, the 1995 Stock Plan and the 2000
Stock Plan.
(2) Includes shares available for future issuance under the 2000 Stock Plan. As
of December 31, 2003, an aggregate of 4,310,320 shares of common stock were
available for issuance under the 2000 Stock Plan, of which up to 3,755,310
may, but need not, be granted as restricted stock. In addition, any shares
of stock subject to an option which remain unissued after the cancellation,
expiration or exchange of such option and any restricted shares which are
forfeited shall again become available for use under the Plan. There will be
no further issuances under the 1986 Executive Stock Plan or the 1995 Stock
Plan.
(3) There were additional grants of stock options and restricted stock under the
2000 Stock Plan in February 2004. If the 2004 Stock Plan is approved by
shareholders, there will be no additional grants made under this Plan and
authorized but unissued shares will be available for issuance under the 2004
Stock Plan.
18
PENSION PLANS
The following table shows estimated combined retirement benefits payable to
a covered participant at normal retirement age under SunTrust's Retirement Plan,
ERISA Excess Retirement Plan and Tier 1 Supplemental Executive Retirement Plan,
which we refer to as the SERP, as described below.
PENSION PLAN TABLE
YEARS OF SERVICE
-------------------------------------------------
REMUNERATION 15 20 25 30 OR MORE
------------ ---------- ---------- ---------- ----------
$ 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
1,600,000.................................... 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
2,400,000.................................... 1,440,000 1,440,000 1,440,000 1,440,000
SunTrust's Retirement Plan is a noncontributory pension plan for the
benefit of eligible employees of SunTrust and its subsidiaries. SunTrust has
also established the ERISA Excess Retirement Plan to pay benefits to certain
Retirement Plan participants that cannot be paid to them under the Retirement
Plan as a result of federal tax restrictions. In addition, the SERP provides
supplemental retirement benefits to certain key employees of SunTrust and its
subsidiaries as designated by the Compensation Committee. There are 2 tiers to
the SERP. All 5 named executive officers are eligible for the Tier 1 benefit.
The maximum annual benefit under the SERP is 60% of average covered compensation
for a Tier 1 participant and 50% of average covered compensation for a Tier 2
participant. Covered compensation for a Tier 1 participant means base salary
plus awards earned under the Management Incentive Plan and Performance Unit
Plan, and for a Tier 2 participant means base salary plus awards earned under
the Management Incentive Plan. Average covered compensation is calculated as the
average of the 3 highest years of covered compensation out of the last 10 years.
The SERP benefit is reduced by annual benefits payable at retirement under the
Retirement Plan, the ERISA Excess Retirement Plan, Social Security benefits at
age 65, and certain other nonqualified, unfunded retirement arrangements
maintained by SunTrust. Upon an executive's retirement, the SERP benefit is paid
in the form of a lump sum that is actuarially equivalent to a life annuity. If
the participant dies while actively employed, the benefit is paid in the form of
a lump sum that is actuarially equivalent to a 50% joint and survivor annuity.
Certain Tier 1 SERP participants are grandfathered at the 100% joint and
survivor level. Retirement benefits under the SERP vested for all Tier 1
participants on February 10, 2000.
The compensation earned in 2003 for the individuals named in the Summary
Compensation Table included for the computation of benefits payable under the
SERP and credited years of service are as follows: Messrs. Humann, $1,900,000,
34 years of service; Clay, $945,000, 36 years of service; Hoepner, $945,000, 35
years of service; Spiegel, $900,000, 38 years of service; and Wells, $1,170,000,
35 years of service.
The SERP provides that in the event of a change in control of SunTrust (as
defined in the SERP), for Tier 1 participants who are involuntarily terminated
or who terminate for good reason within 3 years, benefits would be calculated
using the highest SERP compensation for any full calendar year during the 10
19
consecutive full calendar years ending immediately before the termination.
Furthermore, credited service will be increased by the lesser of 36 full months
or the number of months between the normal retirement date and the date of
termination. Termination for good reason means a termination made primarily
because of a failure to elect or reelect a participant to a position held with
SunTrust prior to the change in control or a substantial change or reduction in
responsibilities or compensation.
CHANGE IN CONTROL AGREEMENTS
SunTrust has entered into change in control agreements with each of the
executive officers named in the Summary Compensation Table, and certain other
officers. During a period of up to 3 years following a change in control of
SunTrust, if the executive officer's employment is terminated by SunTrust
without cause, or by the executive officer for good reason within a certain
period of time following a change in control, the executive officer will receive
severance benefits. These benefits will include: (i) a lump sum payment of up to
3 years (2 years for certain other officers) of the executive officer's base
salary and bonus; (ii) a portion of the full bonus which would have been payable
to the executive if such executive had remained employed through the end of such
year; (iii) up to 3 years (2 years for certain other officers) of additional
benefits under certain SunTrust benefit plans, such as health and life; and (iv)
a payment to reimburse the executive officer for any excise taxes on severance
benefits that are considered excess parachute payments under the Internal
Revenue Code of 1986, as amended. Each agreement requires the executive officer
not to use or disclose any of SunTrust's confidential business information and,
with respect to certain officers, not to compete with SunTrust. The change in
control agreements confer no benefits upon termination of the officer's
employment prior to a change in control.
RATIFICATION OF INDEPENDENT AUDITORS
(ITEM 2)
The Audit Committee has appointed PricewaterhouseCoopers LLP as SunTrust's
independent auditors for 2004, subject to ratification by a majority of the
shares represented at the Annual Meeting. PricewaterhouseCoopers also served as
SunTrust's independent auditors for 2003. SunTrust's auditors are appointed
annually by the Audit Committee. The decision of the Audit Committee is based on
a review of the qualifications, independence, past performance and quality
controls of the auditor. The decision also takes into account the proposed audit
scope, staffing and approach, including coordination of the external auditor's
efforts with SunTrust's internal audit, as well as the estimated audit fees for
the coming year. PricewaterhouseCoopers is considered by management to be well
qualified.
In view of the difficulty and expense involved in changing auditors on
short notice, should the shareholders not ratify the selection of
PricewaterhouseCoopers, it is contemplated that the appointment of
PricewaterhouseCoopers for the fiscal year ending December 31, 2004 will be
permitted to stand unless the Board of Directors finds other compelling reasons
for making a change. Disapproval by the shareholders will be considered a
recommendation that the Board select other auditors for the following year.
Representatives of PricewaterhouseCoopers will be present at the Annual
Meeting of Shareholders and will be given the opportunity to make a statement,
if they desire, and to respond to questions.
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed the audited financial
statements for the year ended December 31, 2003 with management and the
independent auditors for 2003, PricewaterhouseCoopers LLP. Management
represented to the Audit Committee that SunTrust's consolidated financial
statements were prepared in accordance with generally accepted accounting
principles (GAAP), and the Audit Committee has reviewed and discussed the
consolidated financial statements with management and the independent auditors.
The discussions with PricewaterhouseCoopers also included the matters required
by Statement on Auditing Standards No. 61, as amended by Statement on Auditing
Standards No. 90 (Communications with Audit Committees).
20
The Audit Committee has received the written disclosures and the letter
regarding its independence as required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees). The Audit Committee
discussed this information with PricewaterhouseCoopers.
Based on the discussions with management and PricewaterhouseCoopers, the
Audit Committee's review of the representations of management and the report of
PricewaterhouseCoopers, the Audit Committee recommended to the Board of
Directors that the audited consolidated financial statements be included in
SunTrust's Annual Report on Form 10-K to be filed with the Securities and
Exchange Commission for the year ended December 31, 2003.
Submitted by the Audit Committee of SunTrust's Board of Directors.
M. Douglas Ivester, Chairman
Patricia C. Frist
J. Hicks Lanier
R. Randall Rollins
Frank S. Royal, M.D.
Karen Hastie Williams
AUDIT FEES AND RELATED MATTERS
AUDIT AND NON-AUDIT FEES
The following table presents fees for professional audit services rendered
by PricewaterhouseCoopers for the audit of SunTrust's annual financial
statements for the years ended December 31, 2003 and December 31, 2002, and fees
billed for other services rendered by PricewaterhouseCoopers during those
periods. Certain amounts for 2002 have been reclassified to conform to the 2003
presentation.
YEAR ENDED
DECEMBER 31
-------------
2002 2003
----- -----
(IN MILLIONS)
Audit Fees.................................................. $1.68 $1.99
Audit Related Fees(1)....................................... .81 1.58
Tax Fees(2)................................................. .75 .18
All Other Fees(3)........................................... 1.28 .06
----- -----
Total..................................................... $4.52 $3.81
---------------
(1) Audit Related Fees consist of assurance and related services that are
reasonably related to the performance of the audit or review of SunTrust's
financial statements. This category includes fees related to the performance
of audits and attest services not required by statute or regulations, audits
of SunTrust's benefit plans, due diligence related to mergers, acquisitions
and investments, and accounting consultations regarding the application of
GAAP to proposed transactions and new products. This category does not
include the following benefit plan and compliance fees charged by
PricewaterhouseCoopers and paid by the plans and not by SunTrust (not in
millions): benefit plan audits for 2002, $125,000; benefit plan audits for
2003, $125,000; Form 5500 for 2002, $32,000; and Form 5500 for 2003,
$32,000.
(2) Tax Fees consist of the aggregate fees billed for professional services
rendered by PricewaterhouseCoopers for tax compliance and return assistance
(IRS, state and local), tax advice and tax planning.
(3) All Other Fees consist principally of services supporting SunTrust's
business continuity planning initiatives. Also included in the above fees
were $1,200,000 of information technology services provided by a unit of
PricewaterhouseCoopers that was sold in 2002.
21
The Audit Committee has concluded the provision of the non-audit services
listed above is compatible with maintaining the independence of
PricewaterhouseCoopers.
AUDIT COMMITTEE POLICY FOR PRE-APPROVAL OF INDEPENDENT AUDITOR SERVICES
The Audit Committee has adopted the Policy for Pre-approval of Independent
Auditor Services attached hereto as Exhibit C.
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on SunTrust common stock against the
cumulative total return of the S&P Composite-500 Stock Index and the S&P
Diversified Banks Index* for the 5 years commencing December 31, 1998 and ended
December 31, 2003.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN**
AMONG SUNTRUST BANKS, INC., THE S&P 500 INDEX
AND THE S&P DIVERSIFIED BANKS INDEX
(PERFORMANCE GRAPH)
-------------------------------------------------------------------------------------
12/98 12/99 12/00 12/01 12/02 12/03
-------------------------------------------------------------------------------------
SUNTRUST BANKS, INC. 100.00 91.83 86.46 88.20 82.26 106.41
S & P 500 100.00 121.04 110.02 96.95 75.52 97.18
S & P DIVERSIFIED BANKS 100.00 86.20 102.63 102.65 101.60 134.20
* The S&P Diversified Banks Index is the same index as the S&P Diversified Bank
Composite Index, which SunTrust used in last year's Proxy Statement. Standard
& Poor's recently restructured and renamed this index.
** Assumes the value of the investment in SunTrust common stock and each index
was $100 on December 31, 1998 and all dividends were reinvested.
22
STOCK OWNERSHIP OF CERTAIN PERSONS
The following sets forth certain information concerning persons known to us
who may be considered a beneficial owner of more than 5% of the outstanding
shares of our common stock as of January 1, 2004.
SHARES BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED OF CLASS
---------------- ------------------- --------
SunTrust Bank............................................... 30,880,473(1)(2) 10.49%
303 Peachtree St., N.E.
Atlanta, Georgia 30308
---------------
(1) The shares shown were held by SunTrust Bank, a subsidiary of SunTrust, in
various fiduciary or agency capacities. SunTrust Bank had sole voting power
with respect to 15,383,645 of such shares and it shared voting power with
respect to 854,007 of such shares, not including shares referred to in Note
2 below. SunTrust Bank had sole investment power with respect to 9,624,816
of the total shares set forth above and it shared investment power with
respect to 4,988,834 of such shares, not including the shares referred to in
Note 2 below. SunTrust and SunTrust Bank disclaim any beneficial interest in
any of such shares.
(2) Includes 14,283,256 shares held by SunTrust Bank as Trustee under SunTrust's
401(k) Plans. Shares of SunTrust common stock allocated to a participant's
account are voted by the Trustee in accordance with instructions from such
participant. Shares for which there are no instructions from participants
are not voted.
The following table sets forth the number of shares of SunTrust common
stock beneficially owned on December 31, 2003 by certain executive officers of
SunTrust and by all directors and executive officers of SunTrust as a group (27
persons) and the percentage of SunTrust's outstanding shares owned by such
group.
BENEFICIAL OWNER SHARES BENEFICIALLY OWNED(1) PERCENT OF CLASS(2)
---------------- ---------------------------- -------------------
John W. Clay, Jr....................................... 207,756
Theodore J. Hoepner.................................... 312,867
John W. Spiegel........................................ 389,453
James M. Wells III..................................... 458,611
All Directors and Executive Officers as a Group........ 5,887,604 2%
---------------
(1) Includes the following shares subject to exercisable stock options: Mr.
Clay, 76,200 shares; Mr. Hoepner, 71,600 shares; Mr. Spiegel, 81,500 shares;
Mr. Wells, 340,880 shares; all other executive officers and directors,
688,814 shares. Also includes the following common stock equivalents granted
in exchange for restricted stock: Mr. Clay, 40,000 shares; Mr. Hoepner,
72,000 shares; Mr. Spiegel, 84,000 shares; all other executive officers,
255,200 shares. Does not include the following common stock equivalents
credited under SunTrust's 401(k) Excess Plan: Mr. Clay, 5,887; Mr. Hoepner,
11,813; Mr. Spiegel, 6,929; Mr. Wells, 1,175; all other executive officers
and directors, 15,709. All the executive officers and directors have sole
voting power with respect to their respective shares, except as follows: Mr.
Clay, 21,253 shares; Mr. Hoepner, 15,341 shares; Mr. Spiegel, 192 shares;
Mr. Wells, 12,267 shares; all other executive officers and directors,
665,845 shares. All the executive officers and directors have sole
investment power with respect to their respective shares, except as follows:
Mr. Clay, 21,253 shares; Mr. Spiegel, 192 shares; all other executive
officers and directors, 780,883 shares.
(2) Outstanding shares represent the 294,162,757 shares of SunTrust common stock
outstanding on December 31, 2003. No executive officer owns 1% or more of
the outstanding shares of SunTrust common stock.
23
OTHER DIRECTOR AND EXECUTIVE OFFICER INFORMATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Correll, Hughes, Minor and Prince, all of whom are independent,
outside directors of SunTrust, served as members of the Compensation Committee
during all or part of 2003. In November 2003, the committee formerly known as
the Compensation and Governance Committee was split into two separate
committees: the Compensation Committee and the Governance and Nominating
Committee. All the individuals listed above previously served on the
Compensation and Governance Committee. Mr. A. W. Dahlberg also served on such
committee until his resignation from the Board of Directors in July 2003. Mr.
Theodore J. Hoepner served as a member of the Compensation Committee of the
Board of Directors of Brown & Brown, Inc., of which Mr. J. Hyatt Brown is
Chairman, President and Chief Executive Officer, until Mr. Hoepner's resignation
from such committee in October 2003.
During 2003, SunTrust's bank subsidiary engaged in customary banking
transactions and had outstanding loans to certain of SunTrust's directors,
executive officers, their associates and members of the immediate families of
certain 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires SunTrust's
directors, executive officers and any persons who own more than 10% of
SunTrust's common stock to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. To SunTrust's knowledge, based
solely on a review of the copies of such reports furnished to SunTrust and
written representations that no other reports were required, all filing
requirements under Section 16(a) were complied with during 2003, except for the
following: Karen Hastie Williams' Form 3 inadvertently did not include 1,538
phantom stock units she had acquired for past service on the Board of Crestar
Financial Corporation, which was acquired by SunTrust, and William H. Rogers,
Jr.'s Form 4 inadvertently did not include 1,380 shares of restricted stock
granted to him on February 11, 2003. Corrective filings have been made for each
of the above-described transactions.
PROPOSAL TO APPROVE SUNTRUST'S 2004 STOCK PLAN
(ITEM 3)
BACKGROUND
The SunTrust Banks, Inc. 2004 Stock Plan, which we refer to as the 2004
Stock Plan, was adopted by the Board of Directors of SunTrust on February 10,
2004 and will become effective on the date it is approved by the shareholders.
Upon approval of the 2004 Stock Plan, any authorized but unused shares available
for issuance under the 2000 Stock Plan and any shares subject to grants that are
later forfeited or expire under the 2000 Stock Plan will be reserved for
issuance under the 2004 Stock Plan. Therefore, no further grants will be made
under the 2000 Stock Plan after the effective date of the 2004 Stock Plan. The
Board of Directors continues to believe that stock-based incentives are
important factors in attracting, retaining and rewarding employees and directors
and closely aligning their interests with those of shareholders. The following
is a summary of the material terms of the 2004 Stock Plan. This summary is
qualified in its entirety by the complete terms of the 2004 Stock Plan as set
forth in Exhibit B hereto.
GRANTS
The 2004 Stock Plan provides for grants of options to purchase SunTrust
common stock, restricted shares of SunTrust common stock (which may be subject
to both issuance and forfeiture conditions), which we refer to as restricted
stock, stock units (entitling the grantee to cash payments based on the value of
SunTrust common stock on the date the payment is called for under the stock unit
grant) and stock appreciation rights
24
(entitling the grantee to receive the appreciation in value of the underlying
SunTrust common stock between the date of exercise and the date of grant), which
we refer to as SARs. SARs may be either freestanding or granted in tandem with
an option. Options to purchase SunTrust common stock may be either incentive
stock options, which we refer to as ISOs, which are intended to satisfy the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended,
which we refer to as the Code, or options which are not intended to satisfy the
requirements of Section 422 of the Code, which we refer to as NQOs. Neither
SunTrust nor any of its subsidiaries will receive any consideration for the
granting of options, restricted stock, stock units or SARs.
Grants that will be made under the 2004 Stock Plan are not currently
determinable. The following chart sets forth the grants that were made in 2003
under the 2000 Stock Plan to each of the following individuals or groups:
SunTrust's 5 most highly compensated executive officers, all executive officers
as a group, all current directors who are not executive officers as a group, and
all employees, including all current officers who are not executive officers, as
a group. If the 2004 Stock Plan had been in effect in 2003, grants to those
individuals and groups would be substantially similar to those grants under the
2000 Stock Plan set forth below.
GRANTS MADE IN 2003 UNDER
SUNTRUST BANKS, INC. 2000 STOCK PLAN
NUMBER OF
SECURITIES NUMBER OF SHARES OF
UNDERLYING OPTIONS RESTRICTED STOCK
NAME AND POSITION DOLLAR VALUE($) GRANTED GRANTED(1)
----------------- --------------- ------------------ -------------------
L. Phillip Humann,
Chairman, President and CEO............... $1,288,879 150,000 6,630
James M. Wells III,
Vice Chairman............................. 859,252 100,000 4,420
John W. Spiegel,
Vice Chairman and CFO..................... 859,252 100,000 4,420
Theodore J. Hoepner,
Vice Chairman............................. 859,252 100,000 4,420
John W. Clay, Jr.,
Vice Chairman............................. 859,252 100,000 4,420
Executive Group............................. 2,258,938 104,000 29,750
Non-Executive Director Group................ 173,414 28,000 --
Non-Executive Officer Employee Group........ 27,573,390 3,125,550 144,925
---------------
(1) Restricted stock grants were made in 2003 in lieu of performance units under
the Performance Unit Plan.
SECURITIES TO BE OFFERED
As of February 20, 2004, the closing price of a share of SunTrust common
stock was $72.99. There will be reserved for issuance under the 2004 Stock Plan
(a) 14,000,000 shares of SunTrust common stock plus (b) the number of shares of
SunTrust common stock that would remain available for issuance under the 2000
Stock Plan if shares were issued sufficient to satisfy all grants outstanding
under the 2000 Stock Plan on the effective date of the 2004 Stock Plan plus (c)
the number of shares subject to grants under the 2000 Stock Plan which are
outstanding on the effective date of the 2004 Stock Plan and which are later
forfeited or later expire on or after the effective date of the 2004 Stock Plan
in accordance with the terms of the grants. Except as described in (b) and (c)
of the preceding sentence, the 2004 Stock Plan shall not affect any grants that
are outstanding under the 2000 Stock Plan and none of the shares originally
reserved under the 2000 Stock Plan may be issued in connection with the exercise
of ISOs. Up to 2,800,000 of the shares reserved for issuance under the 2004
Stock Plan may, but need not, be granted as restricted stock. Any shares of
restricted stock issued under the 2004 Stock Plan which are forfeited and any
shares which are used to pay an option price or tendered to SunTrust to satisfy
any condition of restricted stock will again become available for issuance under
25
the 2004 Stock Plan. Any shares issued in the exercise of a SAR or a surrender
right in an option reduce the number of shares available for issuance under the
2004 Stock Plan, and any shares of SunTrust common stock used to satisfy a
withholding obligation shall not again become available for use under the 2004
Stock Plan. No shares are issued in connection with stock unit grants.
No further grants will be made under the 2000 Stock Plan on or after the
date the shareholders approve the 2004 Stock Plan. No further grants will be
made under the 2004 Stock Plan on and after the earlier of (1) the tenth
anniversary of the date the Board adopts the 2004 Stock Plan and (2) the date on
which all shares of stock reserved for issuance under the 2004 Stock Plan have
been issued or are no longer available for issuance. SunTrust will use the
proceeds received from the sale of any shares of common stock under the 2004
Stock Plan for general corporate purposes.
ADMINISTRATION OF PLAN
The 2004 Stock Plan will be administered by the Compensation Committee,
which we refer to in this Item 3 as the Committee. The Committee has the sole
authority to grant options, SARs, stock units and restricted stock. The
Committee must consist of at least 2 directors, each of whom is a non-employee
director under Rule 16b-3 under the Securities Exchange Act of 1934 and each of
whom shall be or be treated as an "outside director" for purposes of Section
162(m) of the Code. The Committee has the power, authority and sole and
exclusive discretion to construe, interpret and administer the 2004 Stock Plan,
including the power and authority to make factual determinations relating to
entitlements and to correct errors. The Committee shall determine the employees
and directors to receive grants, the number of shares to be granted, the terms
of option and stock unit grants and restrictions on shares, the provisions of
the respective option, stock unit, restricted stock and SAR agreements (which
need not be identical) and to take such other action in the administration and
operation of the 2004 Stock Plan as the Committee deems equitable under the
circumstances. The Committee may appoint agents (who may be employees) to aid in
the administration of the 2004 Stock Plan, and may delegate to such agents any
powers and duties that the Committee deems appropriate.
The Board of Directors, however, has reserved to itself the right to act in
the event of a change in control (as defined in the 2004 Stock Plan) when there
is no assumption or substitution of the 2004 Stock Plan's outstanding options,
SARs, stock units or restricted stock, in which case the Board may unilaterally
cancel options and SARs either (i) in exchange for a payment of whole shares of
SunTrust common stock, and cash in lieu of fractional shares, if any, which the
holder would have received on exercise of the SAR in full or on exercise of a
right to surrender the outstanding option in full; or (ii) if the option price
or SAR share value at grant equals or exceeds the fair market value of a share
of SunTrust common stock on that date. The Board may also deem the grant and
forfeiture conditions on restricted stock and the forfeiture conditions on stock
units to be satisfied in full.
The Board also has reserved for itself the right to adjust the number, kind
or class of shares reserved for issuance under the 2004 Stock Plan and the grant
limitations, as well as the number, kind or class of shares of stock specified
in the 2004 Stock Plan and available for options, SARs (and the exercise price)
and restricted stock and stock unit awards so as to equitably reflect any change
in the capitalization of SunTrust, including, but not limited to SunTrust common
stock dividends or stock splits, or to reflect certain corporate transactions.
The Board may also amend or terminate the 2004 Stock Plan. However, no amendment
may be effected without approval of SunTrust's shareholders to the extent such
approval is required under applicable law, Section 422 of the Code, Rule 16b-3
or any applicable stock exchange rule. The Board or the Committee may modify,
amend or cancel, prospectively or retroactively, any grant made under the 2004
Stock Plan with the written consent of the affected employee or director or if
there is a dissolution or liquidation of SunTrust or a merger, restructuring or
change in control of SunTrust. In no case can options be repriced either by
cancellation and regrant or by lowering the exercise price of a previously
granted award.
26
ELIGIBILITY
The Committee will select employees and directors to participate in the
2004 Stock Plan. An employee means a selected employee of SunTrust or a
subsidiary whose performance is, in the judgment of the Committee, directly or
indirectly material to the success of SunTrust or a subsidiary and who is not a
10% shareholder of SunTrust. Approximately 2,400 (which is approximately 9%) of
SunTrust's employees initially will be eligible to participate in the 2004 Stock
Plan. Employees are eligible for the grant of options, stock units, restricted
stock and SARs. Directors are eligible for the grant of options, stock units and
restricted stock. Assuming election of the directors listed in Item 1, there
will be 14 directors eligible to participate.
TERMS OF OPTIONS
The 2004 Stock Plan authorizes the grant of ISOs or NQOs, both of which are
exercisable for shares of SunTrust common stock. All option grants to directors
shall be NQOs.
The Committee may grant options for any reason it deems appropriate under
the circumstances, including in lieu of compensation otherwise payable in cash.
The price at which an option may be exercised for a share of SunTrust common
stock may not be less than the fair market value of a share of SunTrust common
stock on the date the option is granted. The "fair market value" means the
closing price per share of SunTrust 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
immediately preceding business day. Except for adjustments related to changes in
capital structure, mergers or a change in control of SunTrust, the Committee may
not, absent the approval of shareholders, reduce the option price of any
outstanding options.
The Committee determines the period during which an option may be
exercised. The period is determined at the time of option grant and may not
extend more than 10 years from the date of grant. All or part of an option 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 an employee or the status of an individual as a director has
terminated for any reason, including death or disability.
The aggregate fair market value of ISOs granted to an employee under the
2004 Stock Plan and incentive stock options granted under any other stock option
plan adopted by SunTrust or a subsidiary which first become exercisable in 2004
or any later calendar year may not exceed $100,000. Furthermore, an employee may
not be granted in any calendar year options, or SARs, or one or more options and
SARs in any combination which, in the aggregate, relate to more than 250,000
shares of SunTrust common stock. The directors as a group may not over the life
of the 2004 Stock Plan be granted options and restricted stock which, in the
aggregate, exceeds 500,000 shares of SunTrust common stock. Generally, options,
SARs and surrender rights are transferable only by will or by the laws of
descent and distribution unless the Committee deems otherwise and in accordance
with any tax and securities laws.
STOCK APPRECIATION RIGHTS
Under the 2004 Stock Plan, stock appreciation rights may be granted for all
or a portion of the shares of SunTrust common stock subject to an option, which
we refer to as a tandem SAR, or may be granted separately, which we refer to as
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 SunTrust 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 SunTrust
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 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 SunTrust
common stock on the date of exercise. On the exercise of a tandem SAR for a
number of shares, the related option is deemed to be surrendered to the extent
of the same number of shares and the
27
payment is based on the increase in fair market value of SunTrust common stock
on the exercise date over the value stated in the option agreement. Payment may
be made in cash or stock, or a combination of cash and stock. The Committee
determines the form and timing of payments and has the right to take into
account whatever facts the Committee deems appropriate, including but not
limited to securities law rules. Any cash payment is made from SunTrust's
general assets.
RESTRICTED STOCK
Shares of restricted stock may be granted to employees and directors. An
employee may not receive restricted stock grants in a calendar year for more
than 100,000 shares of restricted stock. Directors, as a group and over the life
of the 2004 Stock Plan, may not be issued more than 500,000 nonforfeitable
shares of stock in connection with both restricted stock grants and the exercise
of options.
Restricted stock grants may be subject to one or more objective employment,
performance or other forfeiture conditions as established by the Committee at
the time of grant. The related stock agreement will set forth the conditions, if
any, which will need to be satisfied and the applicable deadline before the
grant will be effective and the conditions, if any, under which the employee's
or director's interest in the restricted stock will be forfeited. Any shares of
restricted stock that are forfeited will again become available for issuance
under the 2004 Stock Plan. As soon as practicable after a grant has become
effective, the shares are registered to or for the benefit of the employee or
director, subject to the conditions and subject to a stock power in favor of
SunTrust in order to effect any forfeitures.
In the case of restricted stock grants which vest only on the satisfaction
of performance goals, the Committee shall determine the performance goals to be
used in connection with restricted stock awards and shall determine the extent
to which such goals have been met. Performance goals may vary from participant
to participant and between groups of participants and shall be based upon such
performance factors and criteria as the Committee in its sole discretion shall
select among one or more of the following:
- SunTrust's return over capital costs or increases in return over capital
costs
- SunTrust's total earnings or the growth in such earnings
- SunTrust's consolidated earnings or the growth in such earnings
- SunTrust's earnings per share or the growth in such earnings
- SunTrust's net earnings or the growth in such earnings
- SunTrust's earnings before interest expense, taxes, depreciation,
amortization and other non-cash items or the growth in such earnings
- SunTrust's earnings before interest and taxes or the growth in such
earnings
- SunTrust's consolidated net income or the growth in such income
- The value of SunTrust's common stock or the growth in such value
- SunTrust's stock price or the growth in such price
- SunTrust's return on assets or the growth on such return
- SunTrust's total shareholder return or the growth in such return
- SunTrust's expenses or the reduction of expenses
- SunTrust's sales growth
- SunTrust's overhead ratios or changes in such ratios
- SunTrust's expense-to-sales ratios or the changes in such ratios
28
- SunTrust's economic value added or changes in such value added
- Such other financial performance measures deemed appropriate by the
Committee
The Committee may set the performance goals in any manner, including
achievement on an absolute or a relative basis as compared to peer groups or
indexes, or achievement by SunTrust as a whole or by one or more operating
units. In determining whether a performance goal has been satisfied, the
Committee may exclude any or all extraordinary items (as determined under U.S.
generally accepted accounting principles), and any other unusual or
non-recurring items, including but not limited to, charges or costs associated
with restructurings of SunTrust, discontinued operations and the cumulative
effects of accounting changes. In addition, the Committee may adjust any
performance goal for a period as it deems equitable to recognize unusual or
non-recurring events affecting SunTrust, changes in tax laws or accounting
procedures and any other factors as the Committee may determine (including
adjustments that would result in SunTrust's payment of non-deductible
compensation).
The restricted stock agreement will state whether the employee or director
has the right to receive any cash dividends paid with respect to the shares of
restricted stock. If the employee or director has no right to receive cash
dividends, the agreement may give the employee or director the right to receive
a cash payment in the future in lieu of the dividend payments, provided certain
conditions are met. Any such cash payments are made from SunTrust's general
assets. 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 or director has the
right to vote the shares of restricted stock after grant until they are
forfeited or become nonforfeitable.
Prior to the time they become nonforfeitable, no restricted stock grant and
no shares issued pursuant to a restricted stock grant shall be transferable by
an employee or director other than by will or by the laws of descent and
distribution.
STOCK UNITS
A stock unit is a contractual right to receive a cash payment based on the
fair market value of a share of SunTrust common stock on the date the cash
payment is called for under the terms of the stock unit grant. No payments shall
be made pursuant to stock unit grants with respect to more than 2,800,000 shares
of SunTrust common stock, and no stock unit grant shall be made to an employee
with respect to shares of SunTrust common stock which have a fair market value
of more than $1,000,000 on the date of the grant. An employee or a director who
receives a stock unit grant shall be a general and unsecured creditor of
SunTrust with respect to any cash payment called for under the related stock
unit agreement. Unless otherwise provided in a stock unit agreement, cash
dividends and stock dividends on stock shall increase the number of shares of
stock with respect to which a cash payment can be made under a stock unit grant.
A stock unit grant may be made subject to the same conditions as a restricted
stock grant. No interest in a stock unit grant shall be transferable by an
employee or director other than by will or the laws of descent and distribution.
TAX WITHHOLDING
The exercise or surrender of any option or SAR granted under the 2004 Stock
Plan and the acceptance of a stock unit or restricted stock grant shall
constitute an employee's or director's full and complete consent to whatever
actions the Committee deems necessary to satisfy the minimum federal and state
tax withholding requirements, if any, which the Committee in its discretion
deems applicable with respect to such option, SAR, stock unit or restricted
stock grant. The Committee also may provide that an employee or director may
elect to satisfy minimum federal and state tax withholding requirements by
having a reduced number of shares of SunTrust common stock actually transferred
to the employee or director under the 2004 Stock Plan or by having a reduced
cash payment made under a stock unit grant. Any such election and any such
reduction shall satisfy the conditions to the exemption under Rule 16b-3.
29
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary generally describes the current principal federal
income tax consequences of certain events under the 2004 Stock Plan. The 2004
Stock Plan is not qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended, which we refer to as the Code. The summary is general in
nature and is not intended to cover all tax consequences that may apply to a
particular employee, director or to SunTrust. The provisions of the Code and
regulations thereunder relating to these matters are complicated, they change
and their impact in any one case may depend upon the particular circumstances.
(a) Options and Stock Appreciation Rights
A grantee will not be subject to any federal income tax upon the grant
of an option or SAR pursuant to the 2004 Stock Plan.
A grantee will not recognize income for federal income tax purposes
(and SunTrust 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 grantee will recognize
ordinary income equal to the lesser of (a) the excess of the amount
realized on the disposition over the price paid for the shares or (b) the
excess of the fair market value of the shares subject to such disposition
on the date the ISO was exercised over the price paid for the shares. Any
additional gain realized on the disposition will be long term capital gain
or short term capital gain, depending on the time period over which the
grantee has held the shares. In such case, SunTrust ordinarily will be
entitled to a tax deduction for the same amount that the grantee recognizes
as ordinary income.
If the shares transferred upon the exercise of an ISO are disposed of
after the ISO holding periods referred to above have been satisfied, long
term capital gain or long term capital loss is recognized on the
disposition. SunTrust will not be entitled to a federal income tax
deduction as a result of such a disposition.
The grantee will recognize ordinary income upon the exercise of an NQO
equal to the excess of the fair market value of the shares of SunTrust
common stock purchased at exercise over the option price for such stock
unless the sale of the stock at a profit within six months after the
"purchase" of the shares subject to the NQO could subject the grantee to a
suit under Section 16(b) of the Securities Exchange Act of 1934, in which
event the grantee either will need to make an election to be taxed on such
spread at the time of such purchase pursuant to Section 83(b) of the Code
or will recognize ordinary income equal to the excess of the fair market
value of the stock on the earlier of the end of such six month period or
the first date within such six month period on which the grantee could sell
the stock at a profit without being subject to such a suit over the
exercise price for the stock. The US Tax Court has held that the "purchase"
of shares subject to an option for this purpose occurs when the option is
granted. An employee will also recognize ordinary income upon exercising a
SAR equal to the total of any cash received and the fair market value of
any shares of the SunTrust common stock received.
Income tax withholding from the grantee is required on the income
recognized by the grantee upon exercise of an NQO or a SAR. SunTrust
ordinarily will receive a deduction for federal income tax purposes equal
to the ordinary income recognized by the grantee upon exercise of an NQO or
a SAR or the ordinary income recognized by the grantee on the disposition
of SunTrust common stock acquired pursuant to the exercise of an ISO before
the end of the ISO holding period, all subject to the restrictions on
deductibility described under "Performance-Based Compensation -- Section
162(m) Requirements" below.
30
(b) Restricted Stock
A grantee will generally 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. Cash dividends paid to a grantee on shares of
restricted stock are treated as ordinary income of the grantee in the year
received. SunTrust will receive a deduction for federal income tax purposes
equal to the ordinary income recognized by the grantee, subject to the
limitations on deductibility contained in Section 162(m).
(c) Stock Units
A grantee will recognize ordinary income in an amount equal to the
cash payment made to the grantee pursuant to a stock unit grant, and
SunTrust will receive a deduction for federal income tax purposes equal to
the ordinary income recognized by the grantee, subject to the limitations
on deductibility contained in Section 162(m).
(d) Performance-Based Compensation -- Section 162(m) Requirements
The terms of the 2004 Stock Plan are intended to allow the Committee
to preserve SunTrust's tax deduction under certain events by complying with
the terms of Section 162(m) of the Code and applicable regulations. The
Committee, therefore, may ensure that grants of options, SARs, stock units
and restricted stock to participants who are anticipated to be covered
employees under the 2004 Stock Plan qualify as "performance-based
compensation" for purposes of Section 162(m), unless the Committee
determines it is preferable to do otherwise.
SHAREHOLDER APPROVAL
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE 2004 STOCK PLAN,
INCLUDING THE MATERIAL TERMS OF THE PERFORMANCE GOALS UNDER WHICH AWARDS ARE
GRANTED.
ADDITIONAL INFORMATION
SHAREHOLDER NOMINATIONS FOR ELECTION TO THE BOARD
Any shareholder entitled to vote for the election of directors may make
nominations for election to the Board. In accordance with the bylaws,
nominations must specify the class (term) of directors to which each person is
nominated, must be made in writing and must be delivered to or mailed to and
received by SunTrust's Corporate Secretary not earlier than 120 days and not
later than 90 days prior to the scheduled date for the Annual Meeting of
Shareholders. Next year's meeting is scheduled for April 19, 2005, so
shareholder nominations must be submitted not earlier than December 20, 2004 and
not later than January 19, 2005. You must include the following information: (i)
the name, age, business address and residence address of the proposed nominee;
(ii) the principal occupation or employment of the proposed nominee and an
explanation of how the proposed nominee meets the criteria used by SunTrust for
the selection of directors as set forth in the subsection "Director Selection
Process" under the heading "Election of Directors"; (iii) the total number of
shares of SunTrust common stock that, to your knowledge, will be voted for the
proposed nominee; (iv) the total number of shares of SunTrust common stock that,
to your knowledge, are owned by the proposed nominee; (v) the signed consent of
the proposed nominee to serve, if elected; (vi) your name and residence address;
(vii) the number of shares of SunTrust common stock owned by you; and (viii) any
other information relating to the proposed nominee that is required to be
disclosed in solicitations for proxies for the election of directors under
Regulation 14A of the Securities Exchange Act of 1934, as amended.
SHAREHOLDER PROPOSALS FOR NEXT YEAR'S MEETING
Bylaw Provisions. In accordance with SunTrust's bylaws, a shareholder who
desires to present a proposal for consideration at next year's Annual Meeting
must deliver the proposal to the address set forth below so that it is received
no later than the close of business on January 19, 2005. The submission should
include the proposal and a brief statement of the reasons for it, the name and
address of the shareholder (as
31
they appear in SunTrust's stock transfer records), the number of SunTrust shares
beneficially owned by the shareholder and a description of any material direct
or indirect financial or other interest that the shareholder (or any affiliate
or associate) may have in the proposal. Proposals should be addressed to
SunTrust Banks, Inc., Post Office Box 4418, Mail Code 643, Atlanta, Georgia
30302, Attention: Corporate Secretary.
Inclusion in Next Year's Proxy Statement. Notwithstanding the bylaw
provisions, a shareholder who desires to have his or her proposal included in
next year's Proxy Statement must deliver the proposal to SunTrust's principal
executive offices (at the address noted above) no later than the close of
business on November 2, 2004.
Presentation at Meeting. For any proposal that is not submitted for
inclusion in next year's Proxy Statement (as described in the preceding
paragraph) but is instead sought to be presented directly at next year's Annual
Meeting, SEC rules permit management to vote proxies in its discretion if
SunTrust (a) receives notice of the proposal before the close of business on
January 16, 2005 and advises shareholders in next year's Proxy Statement about
the nature of the matter and how management intends to vote on such matter or
(b) does not receive notice of the proposal prior to the close of business on
January 16, 2005.
RECORD DATE; SHARES OUTSTANDING
Each shareholder of record at the close of business on February 20, 2004 is
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. Each share of SunTrust common stock entitles the holder to one vote on
any matter coming before a meeting of SunTrust shareholders. On February 20,
2004, the record date for the Annual Meeting, there were 283,641,030 shares of
SunTrust common stock outstanding.
QUORUM AND VOTING
A majority of the shares entitled to vote constitutes a quorum at a meeting
of the shareholders. If a quorum is present, the vote of a plurality of the
votes cast by the shares entitled to vote is necessary for the election of
directors. 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 take most other actions.
If your shares are held in a brokerage account or by another nominee, you
are considered the "beneficial owner" of shares held in "street name", and these
proxy materials are being forwarded to you by your broker or nominee (the
"record holder") along with a voting instruction card. As the beneficial owner,
you have the right to direct your record holder how to vote your shares, and the
record holder is required to vote your shares in accordance with your
instructions. If you do not give instructions to your record holder, the record
holder will be entitled to vote the shares in its discretion on Item 1 (Election
of Directors) and Item 2 (Ratifying the Appointment of Auditors), but will not
be able to vote your shares on Item 3 (Approval of 2004 Stock Plan) and your
shares will be considered a "broker non-vote" on that proposal.
If your shares are treated as a broker non-vote or abstention, your shares
will be included in the number of shares represented for purposes of determining
whether a quorum is present. Broker non-votes, however, are not counted as
shares present and entitled to be voted with respect to the matters which the
broker has not expressly voted. Thus, broker non-votes will not affect the
outcome of the voting on Item 1 (Election of Directors) or Item 2 (Ratifying the
Appointment of Auditors) but will have the same effect as a negative vote on
Item 3 (Approval of 2004 Stock Plan). 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.
Only shareholders of record on April 16, 2004 will be entitled to ask
questions at the Annual Meeting. If your shares are held in a brokerage account
or by another nominee, you must obtain and bring to the Annual Meeting a proxy
or other evidence of ownership from your broker or nominee giving you the right
to vote such shares if you wish to ask a question.
32
PROXY SOLICITATION
SunTrust will bear the cost of soliciting proxies. SunTrust has retained
Georgeson Shareholder Communications, Inc. to assist in the solicitation of
proxies for a fee of $8,500 plus expenses. Proxies may also be solicited by
SunTrust employees.
CHANGE IN ACCOUNTANT IN 2002
Arthur Andersen LLP served as SunTrust's independent accountants for 2001.
On February 12, 2002 SunTrust determined not to renew the engagement of Arthur
Andersen and appointed PricewaterhouseCoopers as its new independent
accountants, effective on such date. This determination followed SunTrust's
decision to seek proposals from independent accountants to audit SunTrust's
financial statements for the fiscal year ending December 31, 2002. The decision
not to renew the engagement of Arthur Andersen and to retain
PricewaterhouseCoopers was approved by SunTrust's Board of Directors upon the
recommendation of its Audit Committee. SunTrust's Chief Financial Officer had
made this recommendation to the Audit Committee. The decision was based on
proposals from large accounting firms and reflected the Chief Financial
Officer's and Audit Committee's judgment as to which firm was best suited to
deliver external audits to SunTrust in light of relevant factors such as the
firm's depth of experience, breadth of resources, commitment to provide
exceptional service, ability to handle transition issues and location of key
personnel. Effective March 15, 2002, in conjunction with the filing of
SunTrust's Annual Report on Form 10-K for the year ended December 31, 2001,
Arthur Andersen was dismissed.
During SunTrust's fiscal year ended December 31, 2001, and the subsequent
interim period through March 15, 2002, there were no disagreements between
SunTrust and Arthur Andersen on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to Arthur Andersen's satisfaction would have
caused them to make reference to the subject matter of the disagreement in
connection with their reports.
None of the reportable events described under Item 304(a)(1)(v) of
Regulation S-K occurred within 2001 and the subsequent interim period through
March 15, 2002.
The audit reports of Arthur Andersen on the consolidated financial
statements of SunTrust and subsidiaries as of and for the fiscal years ended
December 31, 2002 and 2001 did not contain any adverse opinion or disclaimer of
opinion, nor were they qualified or modified as to uncertainty, audit scope or
accounting principles. Furthermore, the audit reports of PricewaterhouseCoopers
on such financial statements for the fiscal years ended December 31, 2003,
December 31, 2002 and December 31, 2001 did not contain any adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles.
During SunTrust's two most recent fiscal years ended December 31, 2003, and
the subsequent interim period through March 1, 2004, SunTrust did not consult
with PricewaterhouseCoopers regarding any of the matters or events set forth in
Item 304(a)(2)(i) and (ii) of Regulation S-K.
NEXT YEAR'S ANNUAL MEETING
Next year's Annual Meeting of Shareholders of SunTrust will be held at 9:30
a.m. on Tuesday, April 19, 2005 in Suite 105 on the 1st floor of SunTrust Plaza
Garden Offices, 303 Peachtree Center Avenue, Atlanta, Georgia.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought
before this Annual Meeting. If other matters are properly introduced, the
persons named in the enclosed proxy will vote on such matters as the Board
recommends.
March 1, 2004
33
EXHIBIT A
SUNTRUST BANKS, INC.
AUDIT COMMITTEE CHARTER
PURPOSE
The audit committee (the "Committee") is appointed by the board of directors of
the company to assist the board of directors in fulfilling its oversight
responsibilities for the company's accounting and financial reporting processes
and audits of the financial statements of the company, by monitoring (1) the
integrity of the company's financial statements, (2) the independence and
qualifications of its external auditor, (3) the company's system of internal
controls, (4) the performance of the company's internal audit process and
external auditor, and (5) the company's compliance with laws, regulations and
the codes of conduct. The Committee shall prepare the report required by the
rules of the Securities and Exchange Commission (the "Commission") to be
included in the company's annual meeting proxy statement.
COMPOSITION
The Committee will consist of at least three members of the board of directors.
The board will appoint Committee members and the Committee chair on the
recommendation of the company's Governance and Nominating Committee. Committee
members may be replaced by the board of directors.
Each Committee member shall meet the independence and experience requirements of
the New York Stock Exchange, Section 10A(m)(3) of the Exchange Act, Rule 10A-3
thereunder and the other rules and regulations of the Commission. At least one
member shall satisfy the definition of, and be designated as, an "audit
committee financial expert", as defined by the Commission; provided, however,
that if no member of the Committee satisfies such definition, the Committee
shall direct the company to include appropriate disclosures in Commission
filings as required by the Commission rules and regulations then in effect. The
Committee also shall direct the company to include appropriate disclosures in
Commission filings with regard to service by Audit Committee members on the
audit committees of other public companies as required by Commission rules and
regulations then in effect. No director shall serve as a member of the Committee
if such member serves on the audit committee of more than two other public
companies unless the board of directors determines that such simultaneous
service would not impair the ability of such director to effectively serve on
the Committee.
Committee members shall be barred from accepting any consulting, advisory or
other compensatory fee from the company or any subsidiary thereof, other than in
the member's capacity as a member of the board of directors and any board
committee and that any member shall not be an "affiliated person" of the company
or any subsidiary apart from his or her capacity as a member of the board and
any board committee.
MEETINGS
The Committee will meet as often as it determines is appropriate, but not less
frequently than quarterly. All Committee members are expected to attend each
meeting, in person or via tele- or videoconference. The Committee periodically
will hold private meetings with management, the internal auditor and the
external auditor. The Committee may invite any officer or employee of the
company, the external auditor, the company's outside counsel, the Committee's
counsel or others to attend meetings and provide pertinent information. Meeting
agendas will be prepared by the chief audit executive and provided in advance to
members, along with appropriate briefing materials. Minutes will be kept by a
member of the Committee or a person designated by the Committee.
A-1
AUTHORITY AND RESPONSIBILITY
The Committee has authority to conduct or authorize examinations into any
matters within its scope of responsibility. It has sole authority and
responsibility to (1) appoint, compensate, retain, and directly oversee the work
of the company's external auditor (subject to shareholder ratification if
applicable), (2) resolve any disagreements between management and the auditors
regarding financial reporting, and (3) pre-approve all audit services and
permitted non-audit services provided to the company by its external auditor. It
also has authority to:
- Retain outside advisors, including counsel, as it determines necessary or
advisable to carry out its duties.
- Seek any information it requires from employees--all of whom are directed
to cooperate with the Committee's requests--or external parties.
- Meet with company officers, external auditors, or outside counsel, as
necessary.
- Form and delegate to subcommittees consisting of one or more members when
appropriate, including the authority to grant pre-approvals of audit
services and permitted non-audit services, provided that decisions of
such subcommittee to grant pre-approvals shall be presented to the full
Committee at its next scheduled meeting.
- Establish detailed pre-approval policies for permitted non-audit
services.
The company shall provide appropriate funding, as determined by the Committee,
for payment of compensation to any registered public accounting firm engaged for
the purpose of rendering or issuing an audit report or related work or
performing other audit, review or attest services for the company and to any
advisors employed by the Committee.
The Committee, to the extent it deems necessary or appropriate, will carry out
the following specific responsibilities:
FINANCIAL STATEMENTS
- Review and discuss with management and the external auditor significant
accounting and financial reporting issues, including complex or unusual
transactions and judgments concerning significant estimates or
significant changes in the company's selection or application of
accounting principles, and recent professional, accounting and regulatory
pronouncements and initiatives, and understand their impact on the
company's financial statements.
- Review with management and the external auditor the results of the audit,
including any difficulties encountered in the course of the audit work,
any restrictions on the scope of activities or access to requested
information and any significant disagreements with management.
- Review and discuss with management and the external auditor the annual
financial statements along with any off-balance sheet structures,
including disclosures made in management's discussion and analysis, and
recommend to the board of directors whether they should be included in
the company's Form 10-K.
- Review and discuss with management and the external auditor interim
financial statements, including the results of the external auditor's
review of the quarterly financial statements, before filing the company's
Form 10-Q with the Commission or other applicable regulatory filings with
regulators.
- Review disclosures made to the Committee by the company's CEO and CFO
during their certification process for the Form 10-K and Forms 10-Q about
any significant deficiencies in the design or operation of internal
controls or material weaknesses therein and any fraud involving
management or other employees who have a significant role in the
company's internal controls.
- At least annually prior to the filing of the audit report with the
Commission (and more frequently if appropriate), review and discuss
reports from the external auditor on (1) all critical accounting policies
A-2
and practices to be used, (2) all alternative treatments of financial
information within generally accepted accounting principles that have
been discussed with management, including ramifications of the use of
such alternative disclosures and treatments and the treatment preferred
by the external auditor and (3) other material written communications
between the external auditor and management, such as any management
letter or schedules of unadjusted differences.
- Review with management and the external auditor all matters required to
be communicated to the Committee under generally accepted auditing
standards, including matters required to be discussed by Statement on
Auditing Standards No. 61 relating to conduct of the audit.
- Discuss with management the company's earnings press releases, including
the use of "pro forma" or "adjusted" non-GAAP information, as well as
financial information and earnings guidance provided to analysts and
rating agencies. Such discussion may be done generally (consisting of
discussing the types of information to be disclosed and the types of
presentations to be made).
- Understand how management prepares interim financial information, and the
nature and extent of internal and external auditor involvement.
INTERNAL CONTROLS AND RISK MANAGEMENT
- Consider the effectiveness of the company's internal control systems,
including information technology security and control.
- Meet with management to review the company's major financial risk
exposures and the steps management has taken to monitor and control such
exposures, including the company's risk assessment and risk management
policies.
- Understand the scope of internal audit's and external auditor's reviews
of internal control over financial reporting, and obtain reports on
significant findings and recommendations, together with management's
responses.
INTERNAL AUDIT
- Review with management, the external auditor and the chief audit
executive the plans, activities, staffing and organizational structure of
the internal audit function, and any recommended changes thereto, as well
as staff qualifications. Determine through discussion that internal audit
activities conform with the International Standards for the Professional
Practice of Internal Auditing promulgated by the Institute of Internal
Auditors.
- Review significant reports to management prepared by internal audit and
management's responses.
- Ensure there are no unjustified restrictions or limitations on the chief
audit executive's scope of activities or access to information, and
review and concur in the appointment, replacement, or dismissal of the
chief audit executive.
- On a regular basis, meet separately with the chief audit executive to
discuss any matters that the Committee or internal audit believes should
be discussed privately.
- Review and concur in the appointment, replacement or dismissal of the
chief audit executive and have the chief audit executive report,
functionally, to the Committee.
EXTERNAL AUDIT
- Have the external auditor report directly to the Committee.
- Meet with the external auditor to discuss the external auditor's proposed
audit planning, scope, staffing and approach, including coordination of
its effort with internal audit. Discuss the coordination of audit efforts
to assure completeness of coverage, avoidance of redundant efforts and
effective use of audit resources.
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- Obtain and review a report from the external auditor regarding its
quality control procedures, and material issues raised by the most recent
internal quality control review, or peer review, of the firm or by any
inquiry or investigation by governmental or professional authorities
within the preceding five years respecting one or more of the independent
audits carried out by the firm, and any steps taken to deal with any such
issues and all relationships between the external auditor and the
company.
- Evaluate, and present to the board of directors its conclusions
regarding, the qualifications, performance and independence of the
external auditor, including considering whether the auditor's quality
controls are adequate and permitted non-audit services are compatible
with maintaining the auditor's independence, and taking into account the
opinions of management and the internal auditors.
- Ensure the rotation of the audit partners as required by law and consider
whether in order to assure continuing auditor independence it is
appropriate to adopt a policy of rotating the external audit firm on a
regular basis.
- Establish policies concerning the company's hiring of employees or former
employees of the external auditor, as required by law and by applicable
listing standards.
- On a regular basis, meet separately with the external auditor to discuss
any matters that the Committee or external auditor believes should be
discussed privately.
COMPLIANCE
- Review the effectiveness of the system for monitoring compliance with
laws and regulations. The results of management's investigation and
follow-up (including disciplinary action) of any instances of
noncompliance should also be reviewed.
- Obtain from the external auditor assurance that Section 10A(b) of the
Exchange Act has not been implicated.
- Advise the board of directors with respect to the company's policies and
procedures regarding compliance with applicable laws and regulations and
with the company's codes of conduct, including review of the process for
communicating the codes of conduct to company personnel and for
monitoring compliance.
- Review with management the policies and procedures with respect to
executive officers' expense accounts and perquisites, including their use
of corporate assets.
- Establish procedures for the receipt, retention and treatment of
complaints received by the company regarding accounting, internal
accounting controls or auditing matters and the confidential, anonymous
submission by employees of concerns regarding questionable accounting or
auditing matters.
- Review and discuss with management and the external auditor any
correspondence with, or the findings of any examinations by, regulatory
agencies, published reports or auditor observations that raise
significant issues regarding the company's financial statements or
accounting policies.
- Obtain regular updates from management and company counsel regarding
compliance matters and legal matters that may have a significant impact
on the financial statements or the company's compliance policies,
including disclosures of insider and affiliated party transactions.
REPORTING RESPONSIBILITIES
- Prepare the report required by the rules of the Commission to be included
in the company's annual proxy statement.
- Regularly report to the board of directors about Committee activities,
issues and related recommendations.
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- Provide an open avenue of communication between internal audit, the
external auditor, and the board of directors.
- Review any other reports the company issues that relate to Committee
responsibilities.
OTHER RESPONSIBILITIES
- Perform other activities related to this charter as requested by the
board of directors.
- Institute and oversee special investigations as needed.
- Review and assess the adequacy of the Committee charter, annually,
requesting board approval for proposed changes, and ensure appropriate
disclosure as may be required by law or regulation.
- Annually review the Committee's own performance.
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EXHIBIT B
SUNTRUST BANKS, INC.
2004 STOCK PLAN
SECTION 1. BACKGROUND AND PURPOSE
The name of this Plan is the SunTrust Banks, Inc. 2004 Stock Plan. The
purpose of this Plan is to promote the interests of SunTrust and its
Subsidiaries through grants to Employees and Directors of Options to purchase
Stock, grants of Stock Appreciation Rights and grants of Restricted Stock and
Stock Units in order (1) to attract and retain Employees and Directors, (2) to
provide an additional incentive to each Employee and Director to work to
increase the value of Stock and (3) to provide each Employee and Director with a
stake in the future of SunTrust which corresponds to the stake of each of
SunTrust's shareholders.
SECTION 2. DEFINITIONS
Each term set forth in this Section 2 shall have the meaning set forth
opposite such term for purposes of this Plan and, for purposes of such
definitions, the singular shall include the plural and the plural shall include
the singular.
2.1. Board -- means the Board of Directors of SunTrust.
2.2. Change in Control -- means a change in control of SunTrust of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act as in effect
at the time of such "change in control", provided that such a change in control
shall be deemed to have occurred at such time as (i) any "person" (as that term
is used in Sections 13(d) and 14(d)(2) of the Exchange Act), is or becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) directly or
indirectly, of securities representing 20% or more of the combined voting power
for election of directors of the then outstanding securities of SunTrust or any
successor of SunTrust; (ii) during any period of two consecutive years or less,
individuals who at the beginning of such period constitute the Board cease, for
any reason, to constitute at least a majority of the Board, unless the election
or nomination for election of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of the period; (iii) the shareholders of SunTrust approve any
reorganization, merger, consolidation or share exchange as a result of which the
common stock of SunTrust shall be changed, converted or exchanged into or for
securities of another corporation (other than a merger with a wholly-owned
subsidiary of SunTrust) or any dissolution or liquidation of SunTrust or any
sale or the disposition of 50% or more of the assets or business of SunTrust; or
(iv) the shareholders of SunTrust approve any reorganization, merger,
consolidation or share exchange unless (A) the persons who were the beneficial
owners of the outstanding shares of the common stock of SunTrust immediately
before the consummation of such transaction beneficially own more than 65% of
the outstanding shares of the common stock of the successor or survivor
corporation in such transaction immediately following the consummation of such
transaction and (B) the number of shares of the common stock of such successor
or survivor corporation beneficially owned by the persons described in Section
2.2(iv)(A) immediately following the consummation of such transaction is
beneficially owned by each such person in substantially the same proportion that
each such person had beneficially owned shares of SunTrust common stock
immediately before the consummation of such transaction, provided (C) the
percentage described in Section 2.2(iv)(A) of the beneficially owned shares of
the successor or survivor corporation and the number described in 2.2(iv)(B) of
the beneficially owned shares of the successor or survivor corporation shall be
determined exclusively by reference to the shares of the successor or survivor
corporation which result from the beneficial ownership of shares of common stock
of SunTrust by the persons described in Section 2.2(iv)(A) immediately before
the consummation of such transaction.
2.3. Code -- means the Internal Revenue Code of 1986, as amended.
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2.4. Committee -- means a Committee of the Board to which the
responsibility to administer this Plan is delegated by the Board and which shall
consist of at least two members of the Board, each of whom shall be a
"non-employee director" within the meaning of Rule 16b-3 under the Exchange Act
and each of whom shall be (or be treated as) an "outside director" for purposes
of Section 162(m) of the Code.
2.5. Covered Employee -- means an Employee whom the Committee on the date
he or she is granted an Option, an SAR, Restricted Stock or Stock Units deems
likely to be a "covered employee" (within the meaning of Section 162(m) of the
Code) as of any date on or after the date of such grant.
2.6. Director -- means a member of the Board who is not an employee of
SunTrust or any Subsidiary or Parent Corporation.
2.7. Employee -- means a select employee of SunTrust or any Subsidiary
whose performance is, in the judgment of the Committee acting in its absolute
discretion, directly or indirectly material to the success of SunTrust or such
Subsidiary and who is not a Ten Percent Shareholder.
2.8. Exchange Act -- means the Securities Exchange Act of 1934, as
amended.
2.9. Fair Market Value -- means (1) the closing price on any date for a
share of Stock as reported by The Wall Street Journal under the New York Stock
Exchange Composite Transactions quotation system (or under any successor
quotation system) or, if Stock is no longer traded on the New York Stock
Exchange, under the quotation system under which such closing price is reported
or, if The Wall Street Journal no longer reports such closing price, such
closing price as reported by a newspaper or trade journal selected by the
Committee or, if no such closing price is available on such date, (2) such
closing price as so reported in accordance with Section 2.9(1) for the
immediately preceding business day, or, if no newspaper or trade journal reports
such closing price, (3) the price which the Committee acting in good faith
determines through any reasonable valuation method that a share of Stock might
change hands between a willing buyer and a willing seller, neither being under
any compulsion to buy or to sell and both having reasonable knowledge of the
relevant facts. If the closing price for a share of Stock is misquoted or
omitted by the applicable publication, the Committee shall directly solicit the
information from officials of the stock exchange or from other informed
independent market sources.
2.10. ISO -- means an Option granted under Section 7 of this Plan to
purchase Stock which is evidenced by an Option Agreement which provides that the
Option is intended to satisfy the requirements for an incentive stock option
under Section 422 of the Code.
2.11. NQO -- means an Option granted under Section 7 of this Plan to
purchase Stock which is evidenced by an Option Agreement which provides that the
Option shall not be treated as an incentive stock option under Section 422 of
the Code.
2.12. Option -- means an ISO or a NQO.
2.13. Option Agreement -- means the written agreement or instrument which
sets forth the terms of an Option granted to an Employee or Director under this
Plan.
2.14. Option Price -- means the price which shall be paid to purchase one
share of Stock upon the exercise of an Option granted under this Plan.
2.15. Parent Corporation -- means any corporation which is a parent
corporation (within the meaning of Section 424(e) of the Code) of SunTrust.
2.16. Plan -- means this SunTrust Banks, Inc. 2004 Stock Plan, as amended
from time to time.
2.17. Predecessor Plan -- means the SunTrust Banks, Inc. 2000 Stock Plan
as in effect on the effective date of this Plan and as thereafter amended.
2.18. Restricted Stock -- means Stock granted to an Employee or Director
pursuant to Section 8 of this Plan.
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2.19. Rule 16b-3 -- means the exemption under Rule 16b-3 to Section 16(b)
of the Exchange Act or any successor to such rule.
2.20. Stock -- means the One Dollar ($1.00) par value common stock of
SunTrust.
2.21. Stock Agreement -- means the written agreement or instrument which
sets forth the terms of a Restricted Stock grant or Stock Unit grant to an
Employee or Director under this Plan.
2.22. Stock Appreciation Right or SAR -- means a right which is granted
pursuant to the terms of Section 7 of this Plan to the appreciation in the Fair
Market Value of a share of Stock in excess of the SAR Share Value for such a
share.
2.23. SAR Agreement -- means the written agreement or instrument which
sets forth the terms of a SAR granted to an Employee under this Plan.
2.24. SAR Share Value -- means the figure which is set forth in each SAR
Agreement and which is no less than the Fair Market Value of a share of Stock on
the date the related SAR is granted.
2.25. Stock Unit -- means a contractual right granted to an Employee or
Director pursuant to Section 8 to receive a cash payment based on the Fair
Market Value of the number of shares of Stock described in such grant.
2.26. Subsidiary -- means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) of SunTrust
except a corporation which has subsidiary corporation status under Section
424(f) of the Code exclusively as a result of SunTrust or a SunTrust subsidiary
holding stock in such corporation as a fiduciary with respect to any trust,
estate, conservatorship, guardianship or agency.
2.27. SunTrust -- means SunTrust Banks, Inc., a Georgia corporation, and
any successor to such corporation.
2.28. Ten Percent Shareholder -- means a person who owns (after taking
into account the attribution rules of Section 424(d) of the Code) more than ten
percent of the total combined voting power of all classes of stock of either
SunTrust, a Subsidiary or a Parent Corporation.
SECTION 3. SHARES RESERVED UNDER PLAN
3.1. Shares. There shall (subject to Section 11) be reserved for issuance
under this Plan (a) 14,000,000 shares of Stock plus (b) the number of shares of
Stock which would remain available for issuance under the Predecessor Plan if
shares were issued on the effective date of this Plan sufficient to satisfy all
grants then outstanding under the Predecessor Plan plus (c) the number of shares
of Stock subject to grants under the Predecessor Plan which are outstanding on
the effective date of this Plan and which are forfeited or expire on or after
such effective date in accordance with the terms of such grants; provided,
however, only the shares of Stock described in Section 3.1(a) shall be issued in
connection with the exercise of ISOs and nothing in this Plan shall affect any
grants under the Predecessor Plan which are outstanding on the effective date of
this Plan until such time, if any, that any shares of Stock subject to such
grants are forfeited or grants respecting any shares of Stock expire on or after
such effective date in accordance with the terms of such grants.
3.2. Source of Shares. The shares of Stock described in Section 3.1 shall
be reserved to the extent that SunTrust deems appropriate from authorized but
unissued shares of Stock and from shares of Stock which have been reacquired by
SunTrust. Furthermore, any shares of Stock issued pursuant to a Restricted Stock
grant which are forfeited thereafter shall again become available for issuance
under this Plan, but any shares of Stock used to satisfy a withholding
obligation under Section 14.4 shall not again become available for issuance
under this Plan. The exercise of a SAR or a surrender right in an Option shall
reduce the number of shares available for issuance under this Plan only to the
extent of the shares of Stock, if any, actually issued upon such exercise.
Finally, if the Option Price of an Option is paid in whole or in part in shares
of Stock or if shares of Stock are tendered to SunTrust in satisfaction of any
condition to a grant of Restricted Stock, such shares thereafter shall be
treated the same as any other shares of Stock available for issuance under this
Plan.
B-3
3.3. Use of Proceeds. The proceeds which SunTrust receives from the sale
of any shares of Stock under this Plan shall be used for general corporate
purposes and shall be added to the general funds of SunTrust.
3.4. Predecessor Plan. No grants shall be made under the Predecessor Plan
on or after the date this Plan becomes effective.
SECTION 4. EFFECTIVE DATE
This Plan shall be effective on the date the shareholders of SunTrust
(acting at a duly called meeting of such shareholders) approve the adoption of
this Plan.
SECTION 5. COMMITTEE
This Plan shall be administered by the Committee. Subject to the provisions
of this Plan (including Sections 11, 12, 13 and 14), the Committee shall have
the power, authority, and sole and exclusive discretion to construe, interpret
and administer this Plan, including without limitation, the power and authority
to make factual determinations relating to Plan grants and correct mistakes in
Option, SAR or Stock Agreements, and to take such other action in the
administration and operation of this Plan as the Committee deems equitable under
the circumstances. Such actions of the Committee shall be binding on SunTrust,
on each affected Employee and Director and on each other person directly or
indirectly affected by such action. The Committee may delegate such powers and
duties, whether ministerial or discretionary, as the Committee may deem
appropriate, including, but not limited to, authorizing the Committee's delegate
to execute agreements evidencing the grant of Options, SARs, Restricted Stock
and Stock Units or other documents on the Committee's behalf.
SECTION 6. ELIGIBILITY
Employees shall be eligible for the grant of Options, SARs, Restricted
Stock and Stock Units under this Plan. Directors shall be eligible for the grant
of Options, Restricted Stock and Stock Units under this Plan.
SECTION 7. OPTIONS AND SARs
7.1. Options. The Committee acting in its absolute discretion shall have
the right to grant Options to Employees and Directors under this Plan from time
to time to purchase shares of Stock, and Options may be granted for any reason
the Committee deems appropriate under the circumstances, including in lieu of
compensation otherwise payable in cash. Each grant of an Option shall be
evidenced by an Option Agreement, and each Option Agreement shall set forth
whether the Option is an ISO or a NQO and shall set forth such other terms and
conditions of such grant as the Committee acting in its absolute discretion
deems consistent with the terms of this Plan. All Options granted to Directors
shall be NQOs.
7.2. $100,000 Limit. The aggregate Fair Market Value of ISOs granted to an
Employee under this Plan and incentive stock options granted to such Employee
under any other stock option plan adopted by SunTrust, a Subsidiary or a Parent
Corporation which first become exercisable in any calendar year (which begins on
or after January 1, 2004) shall not exceed $100,000. Such Fair Market Value
figure shall be determined by the Committee on the date the ISO or other
incentive stock option is granted, and the Committee shall interpret and
administer the limitation set forth in this Section 7.2 in accordance with
Section 422(d) of the Code.
7.3. Share Limitations.
(a) Employees. An Employee may not be granted in any calendar year
Options, or SARs, or one or more Options and SARs in any combination which
in the aggregate relate to more than 250,000 shares of Stock.
(b) Directors. The Directors as a group may not over the life of this
Plan be issued in the aggregate more than 500,000 nonforfeitable shares of
Stock in connection with the exercise of Options and Restricted Stock
grants.
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7.4. Option Price and Exercise Period.
(a) Option Price. The Option Price for each share of Stock subject to
an Option shall be no less than the Fair Market Value of a share of Stock
on the date the Option is granted. The Option Price shall be payable in
full upon the exercise of any Option. Except in accordance with the
provisions of Section 11 of this Plan, the Committee shall not, absent the
approval of SunTrust's shareholders, take any action, whether through
amendment, cancellation, replacement grants, or any other means, to reduce
the Option Price of any outstanding Options.
(b) Exercise Period. Each Option granted under this Plan shall be
exercisable in whole or in part at such time or times as set forth in the
related Option Agreement, but no Option Agreement shall make an Option
exercisable before the date such Option is granted or on or after the date
which is the tenth anniversary of the date such Option is granted. In the
discretion of the Committee, an Option Agreement may provide for the
exercise of an Option after the employment of an Employee or the status of
an individual as a Director has terminated for any reason whatsoever,
including death or disability.
7.5. Method of Exercise.
(a) Committee Rules. An Option may be exercised as provided in this
Section 7.5 pursuant to procedures (including, without limitation,
procedures restricting the frequency or method of exercise) as shall be
established by the Committee or its delegate from time to time for the
exercise of Options.
(b) Notice and Payment. An Option shall be exercised by delivering to
the Committee or its delegate during the period in which such Option is
exercisable, (1) written notice of exercise in a form acceptable to the
Committee indicating the specific number of shares of Stock subject to the
Option which are being exercised and (2) payment in full of the Option
Price for such specific number of shares. An Option Agreement, at the
discretion of the Committee, may provide for the payment of the Option
Price by any of the following means:
(1) in cash, electronic funds transfer or a check acceptable to the
Committee;
(2) in Stock which has been held by the Employee or Director for a
period acceptable to the Committee and which Stock is otherwise
acceptable to the Committee, provided that the Committee may impose
whatever restrictions it deems necessary or desirable with respect to
such method of payment;
(3) through a broker-facilitated cashless exercise procedure
acceptable to the Committee; or
(4) in any combination of the methods described in this Section
7.5(b) which is acceptable to the Committee.
Any payment made in Stock shall be treated as equal to the Fair Market Value of
such Stock on the date the properly endorsed stock certificate for such Stock is
delivered to the Committee or, if payment is effected through a certification of
ownership of Stock in lieu of a stock certificate, on the date the Option is
exercised.
(c) Restrictions. The Committee may from time to time establish
procedures for restricting the exercise of Options on any given date as the
result of excessive volume of exercise requests or any other problem in the
established system for processing Option exercise requests or for any other
reason the Committee or its delegate deems appropriate or necessary.
7.6. Nontransferability. Except to the extent the Committee deems
permissible under Section 422(b) of the Code and Rule 16b-3 and consistent with
the best interests of SunTrust, neither an Option granted under this Plan nor
any related surrender rights nor any SAR shall be transferable by an Employee or
a Director other than by will or by the laws of descent and distribution. Any
such Option grant and surrender rights under this Plan and any SAR granted under
this Plan shall be exercisable during an Employee's or Director's lifetime, as
the case may be, only by the Employee or the Director, provided that in the
event an Employee or Director is incapacitated and unable to exercise such
Employee's or Director's Option or SAR, such Employee's or Director's legal
guardian or legal representative whom the Committee (or its delegate) deems
appropriate based on all applicable facts and circumstances presented to the
Committee (or its
B-5
delegate) may exercise such Employee's or Director's Option or SAR, in
accordance with the provisions of the Plan and the applicable Option Agreement
or SAR Agreement. The person or persons to whom an Option or a SAR is
transferred by will or by the laws of descent and distribution thereafter shall
be treated as the Employee or the Director under this Plan.
7.7. SARs and Surrender Rights.
(a) SARs. The Committee acting in its absolute discretion may grant an
Employee a SAR which will give the Employee the right to the appreciation
in one, or more than one, share of Stock, and any such appreciation shall
be measured from the related SAR Share Value. The Committee shall have the
right to make any such grant subject to such additional terms as the
Committee deems appropriate, and such terms shall be set forth in the
related SAR Agreement.
(b) Option Surrender Rights. The Committee acting in its absolute
discretion also may incorporate a provision in an Option Agreement to give
an Employee the right to surrender his or her Option in whole or in part in
lieu of the exercise (in whole or in part) of that Option to purchase Stock
on any date that
(1) the Fair Market Value of the Stock subject to such Option
exceeds the Option Price for such Stock, and
(2) the Option to purchase such Stock is otherwise exercisable.
(c) Procedure. The exercise of a SAR or a surrender right in an Option
shall be effected by the delivery of the related SAR Agreement or Option
Agreement to the Committee (or to its delegate) together with a statement
signed by the Employee which specifies the number of shares of Stock as to
which the Employee, as appropriate, exercises his or her SAR or exercises
his or her right to surrender his or her Option and (at the Employee's
option) how he or she desires payment to be made with respect to such
shares.
(d) Payment. An Employee who exercises his or her SAR or right to
surrender his or her Option shall (to the extent consistent with an
exemption under Rule 16b-3) receive a payment in cash or in Stock, or in a
combination of cash and Stock, equal in amount on the date such exercise is
effected to (i) the number of shares of Stock with respect to which, as
applicable, the SAR or the surrender right is exercised times (ii) the
excess of the Fair Market Value of a share of Stock on such date over, as
applicable, the SAR Share Value for a share of Stock subject to the SAR or
the Option Price for a share of Stock subject to an Option. The Committee
acting in its absolute discretion shall determine the form and timing of
such payment, and the Committee shall have the right (1) to take into
account whatever factors the Committee deems appropriate under the
circumstances, including any written request made by the Employee and
delivered to the Committee (or to its delegate) and (2) to forfeit an
Employee's right to payment of cash in lieu of a fractional share of Stock
if the Committee deems such forfeiture necessary in order for the surrender
of his or her Option under this Section 7.7 to come within an exemption
under Rule 16b-3. Any cash payment under this Section 7.7 shall be made
from SunTrust's general assets, and an Employee shall be no more than a
general and unsecured creditor of SunTrust with respect to such payment.
(e) Restrictions. Each SAR Agreement and each Option Agreement which
incorporates a provision to allow an Employee to surrender his or her
Option shall incorporate such additional restrictions on the exercise of
such SAR or surrender right as the Committee deems necessary to satisfy the
conditions to the exemption under Rule 16b-3.
SECTION 8. RESTRICTED STOCK AND STOCK UNITS
8.1. Committee Action.
(a) General. The Committee acting in its absolute discretion shall
have the right to grant Restricted Stock and Stock Units to Employees and
Directors under this Plan from time to time.
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(b) Limitations. Subject to the rules set forth in Section 3 and
Section 7.3(b), no more than 2,800,000 nonforfeitable shares of Stock shall
be issued pursuant to Restricted Stock grants, and no cash payments shall
be made with respect to more than 2,800,000 shares of Stock pursuant to
Stock Unit grants. In addition, no Restricted Stock grant may be made to an
Employee in any calendar year with respect to more than 100,000 shares of
Restricted Stock, and the Fair Market Value of the shares of Stock
described in any Stock Unit grant to any Employee shall not exceed
$1,000,000 on the date as of which the grant is made. Each Restricted Stock
grant and each Stock Unit grant shall be evidenced by a Stock Agreement,
and each Stock Agreement shall set forth the conditions, if any, which will
need to be timely satisfied before the grant will be effective and the
conditions, if any, under which the Employee's or Director's interest in
the related Stock or cash payment will be forfeited.
8.2. Conditions.
(a) Issuance Conditions for Restricted Stock. The Committee acting in
its absolute discretion may make the issuance of Restricted Stock to an
Employee or Director subject to the satisfaction of one, or more than one,
objective employment, performance or other grant condition (which may or
may not include performance criteria described in Section 8.2(c)) which the
Committee deems appropriate under the circumstances, and the related Stock
Agreement shall set forth each such condition and the deadline for
satisfying each such condition.
(b) Forfeiture Conditions for Restricted Stock and Stock Units. The
Committee may make Restricted Stock issued to an Employee or Director or
the cash otherwise payable under any Stock Unit grant subject to one, or
more than one, objective employment, performance or other forfeiture
condition (which may or may not include any performance goals described in
Section 8.2(c)) which the Committee acting in its absolute discretion deems
appropriate under the circumstances, and the related Stock Agreement shall
set forth each such forfeiture condition and the deadline for satisfying
each such forfeiture condition. An Employee's or Director's nonforfeitable
interest in the shares of Stock issued pursuant to a Restricted Stock grant
or the cash payment due under any Stock Unit grant shall depend on the
extent to which each such condition is timely satisfied. Each share of
Stock issued pursuant to a Restricted Stock grant shall again become
available under Section 3 if such share is forfeited as a result of a
failure to timely satisfy a forfeiture condition, in which event such share
of Stock shall again become available under Section 3 as of the date of
such failure. When a Stock certificate is issued for shares of Restricted
Stock, such certificate shall be issued subject to (i) the conditions, if
any, described in this Section 8.2(b) and Section 8.2(c) to, or for the
benefit of, the Employee or Director and (ii) a stock power in favor of
SunTrust in order for SunTrust to effect any forfeitures of such Restricted
Stock called for under this Section 8.2(b).
(c) Performance Goals.
(1) A performance goal is described in this Section 8.2(c) if such
goal relates to (i) SunTrust's return over capital costs or increases in
return over capital costs, (ii) SunTrust's total earnings or the growth
in such earnings, (iii) SunTrust's consolidated earnings or the growth
in such earnings, (iv) SunTrust's earnings per share or the growth in
such earnings, (v) SunTrust's net earnings or the growth in such
earnings, (vi) SunTrust's earnings before interest expense, taxes,
depreciation, amortization and other non-cash items or the growth in
such earnings, (vii) SunTrust's earnings before interest and taxes or
the growth in such earnings, (viii) SunTrust's consolidated net income
or the growth in such income, (ix) the value of SunTrust's Stock or the
growth in such value, (x) SunTrust's Stock price or the growth in such
price, (xi) SunTrust's return on assets or the growth on such return,
(xii) SunTrust's total shareholder return or the growth in such return,
(xiii) SunTrust's expenses or the reduction of expenses, (xiv)
SunTrust's sales growth, (xv) SunTrust's overhead ratios or changes in
such ratios, (xvi) SunTrust's expense-to-sales ratios or the changes in
such ratios, (xvii) SunTrust's economic value added or changes in such
value added, or (xviii) such other financial performance measures deemed
appropriate by the Committee. A performance goal described in this
Section 8.2(c)(1) may be set in any manner determined by the Committee,
including looking to achievement on an absolute or relative basis in
relation to peer
B-7
groups or indexes, and may relate to SunTrust as a whole or one or more
operating units of SunTrust.
(2) When the Committee determines whether a performance goal has
been satisfied for any period, the Committee may exclude any or all
"extraordinary items" as determined under U.S. generally accepted
accounting principles and any other unusual or non-recurring items,
including, without limitation, the charges or costs associated with
restructurings of SunTrust, discontinued operations, and the cumulative
effects of accounting changes. The Committee may also adjust any
performance goal for a period as it deems equitable in recognition of
unusual or non-recurring events affecting SunTrust, changes in
applicable tax laws or accounting principles, or such other factors as
the Committee may determine (including, without limitation, any
adjustments that would result in SunTrust paying non-deductible
compensation to an Employee).
(3) If the Committee determines that a performance goal has been
satisfied and the satisfaction of such goal was intended to meet the
requirements of Section 162(m) of the Code, the Committee shall certify
that the goal has been satisfied in accordance with the requirements set
forth under such section of the Code.
8.3. Dividends and Voting Rights.
(a) Cash Dividends. Each Stock Agreement which evidences a Restricted
Stock grant shall state whether the Employee or Director shall have a right
to receive any cash dividends which are paid after any shares of Restricted
Stock are issued to him or to her and before the first day that the
Employee's or Director's interest in such Stock is forfeited completely or
becomes completely nonforfeitable. If such a Stock Agreement provides that
an Employee or Director has no right to receive a cash dividend when paid,
such agreement shall set forth the conditions, if any, under which the
Employee or Director will be eligible to receive one, or more than one,
payment in the future to compensate the Employee or Director for the fact
that he or she had no right to receive any cash dividends on his or her
Restricted Stock when such dividends were paid. If such a Stock Agreement
calls for any such payments to be made, SunTrust shall make such payments
from SunTrust's general assets, and the Employee or Director shall be no
more than a general and unsecured creditor of SunTrust with respect to such
payments. Unless otherwise set forth in the Stock Agreement which evidences
a Stock Unit grant, if a cash dividend is paid on the shares of Stock
described in a Stock Unit grant, such cash dividend shall be treated as
reinvested in shares of Stock and shall increase the number of shares of
Stock described in such Stock Unit grant.
(b) Stock Dividends. If a Stock dividend is declared on a share of
Restricted Stock, such Stock dividend shall be treated as part of the grant
of the related Restricted Stock, and an Employee's or Director's interest
in such Stock dividend shall be forfeited or shall become nonforfeitable at
the same time as the Stock with respect to which the Stock dividend was
paid is forfeited or becomes nonforfeitable. Unless otherwise set forth in
the Stock Agreement which evidences a Stock Unit grant, if a Stock dividend
is declared on any shares of Stock described in a Stock Unit grant, such
dividend shall increase the number of shares of Stock described in such
Stock Unit grant.
(c) Non-cash and Non-Stock Dividends. If a dividend is paid on a share
of Restricted Stock or on a share of Stock described in a Stock Unit grant
other than in cash or Stock, the disposition of such dividend with respect
to such Restricted Stock grant and the treatment of such dividend with
respect to such Stock Unit grant shall be effected in accordance with such
rules as the Committee shall adopt with respect to each such dividend.
(d) Voting Rights. An Employee or Director shall have the right to
vote shares of Restricted Stock which have been issued pursuant to Section
8.2(b) before his or her interest in such Stock has been forfeited or has
become nonforfeitable.
(e) Nontransferability. No Restricted Stock grant and no shares issued
pursuant to a Restricted Stock grant shall be transferable by an Employee
or a Director other than by will or by the laws of descent and distribution
before an Employee's or Director's interest in such shares have become
B-8
completely nonforfeitable, and no interests in a Stock Unit grant shall be
transferable other than by will or the laws of descent and distribution
except as otherwise provided in the related Stock Agreement.
(f) Creditor Status. An Employee or a Director to whom a Stock Unit is
granted shall be no more than a general and unsecured creditor of SunTrust
with respect to any cash payment due under such grant.
8.4 Satisfaction of Forfeiture Conditions. A share of Stock shall cease to
be Restricted Stock at such time as an Employee's or Director's interest in such
Stock becomes nonforfeitable under this Plan, and the certificate representing
such share shall be reissued as soon as practicable thereafter without any
further restrictions related to Section 8.2(b) or Section 8.3 and shall be
transferred to the Employee or Director.
SECTION 9. SECURITIES REGISTRATION
Each Option Agreement, SAR Agreement and Stock Agreement shall provide
that, upon the receipt of shares of Stock as a result of the exercise of an
Option (or any related surrender right) or a SAR or the satisfaction of the
forfeiture conditions under a Stock Agreement for Restricted Stock, the Employee
or Director shall, if so requested by SunTrust, hold such shares of Stock for
investment and not with a view of resale or distribution to the public and, if
so requested by SunTrust, shall deliver to SunTrust a written statement
satisfactory to SunTrust to that effect. As for Stock issued pursuant to this
Plan, SunTrust at its expense shall take such action as it deems necessary or
appropriate to register the original issuance of such Stock to an Employee or
Director under the Securities Act of 1933, as amended, or under any other
applicable securities laws or to qualify such Stock for an exemption under any
such laws prior to the issuance of such Stock to an Employee or Director;
however, SunTrust shall have no obligation whatsoever to take any such action in
connection with the transfer, resale or other disposition of such Stock by an
Employee.
SECTION 10. LIFE OF PLAN
No Option or SAR or Restricted Stock or Stock Unit shall be granted under
this Plan on or after the earlier of
(1) the tenth anniversary of the date the Board adopts this Plan, in
which event this Plan otherwise thereafter shall continue in effect until
all outstanding Options (and any related surrender rights) and SARs have
been exercised in full or no longer are exercisable and all Restricted
Stock and Stock Unit grants under this Plan have been forfeited or the
forfeiture conditions on the related Stock or cash payments have been
satisfied in full, or
(2) the date on which all of the Stock reserved under Section 3 of
this Plan has (as a result of the exercise of all Options (and any related
surrender rights) and all SARs granted under this Plan and the satisfaction
of the forfeiture conditions on Restricted Stock) been issued or no longer
is available for use under this Plan and all cash payments due under any
Stock Unit grants have been paid or forfeited, in which event this Plan
also shall terminate on such date.
SECTION 11. ADJUSTMENT
11.1. Capital Structure. The number, kind or class (or any combination
thereof) of shares of Stock reserved under Section 3 of this Plan, the grant
limitations described in Section 7.3 and Section 8.1 of this Plan, the number,
kind or class (or any combination thereof) of shares of Stock subject to Options
or SARs granted under this Plan and the Option Price of such Options and the SAR
Share Value of such SARs as well as the number, kind or class of shares of Stock
subject to Restricted Stock grants and the number, kind or class of shares of
Stock described in Stock Unit grants under this Plan shall be adjusted by the
Board in an equitable manner to reflect any change in the capitalization of
SunTrust, including, but not limited to, such changes as stock dividends or
stock splits.
11.2. Mergers. The Board as part of any corporate transaction described in
Code Section 424(a) shall have the right to adjust (in any manner which the
Board in its discretion deems consistent with Code Section 424(a)) the number,
kind or class (or any combination thereof) of shares of Stock reserved under
B-9
Section 3 of this Plan and the grant limitations described in Section 7.3 and
Section 8.1 of this Plan. Furthermore, the Board as part of any corporate
transaction described in Code Section 424(a) shall have the right to adjust (in
any manner which the Board in its discretion deems consistent with Code Section
424(a)) the number, kind or class (or any combination thereof) of shares of
Stock underlying any Restricted Stock and Stock Unit grants previously made
under this Plan and any related grant conditions and forfeiture conditions, and
the number, kind or class (or any combination thereof) of shares subject to
Option and SAR grants previously made under this Plan and the related Option
Price and SAR Share Value for each such Option and SAR, and, further, shall have
the right (in any manner which the Board in its discretion deems consistent with
Code Section 424(a) and without regard to the grant limitations described in
Section 7.3 or Section 8.1 of this Plan) to make Restricted Stock, Stock Unit,
Option and SAR grants to effect the assumption of, or the substitution for,
restricted stock, stock unit, option and stock appreciation right grants
previously made by any other corporation to the extent that such corporate
transaction calls for such substitution or assumption of such restricted stock,
stock unit, option or stock appreciation rights grants.
11.3. Fractional Shares. If any adjustment under this Section 11 would
create a fractional share of Stock or a right to acquire a fractional share of
Stock, such fractional share shall be disregarded and the number of shares of
Stock reserved under this Plan and the number subject to any Options, SAR grants
and Restricted Stock grants shall be the next lower number of shares of Stock,
rounding all fractions downward. Any adjustment made under this Section 11 by
the Board shall be conclusive and binding on all affected persons.
SECTION 12. CHANGE IN CONTROL
If there is a Change in Control and the Board determines that no adequate
provision has been made as part of such Change in Control for either the
assumption of the Options, SARs, Restricted Stock and Stock Unit grants
outstanding under this Plan or for the granting of comparable, substitute stock
options, stock appreciation rights and restricted stock and stock unit grants,
(1) each outstanding Option and SAR at the direction and discretion of the Board
(a) may (subject to such conditions, if any, as the Board deems appropriate
under the circumstances) be cancelled unilaterally by SunTrust in exchange for
the number of whole shares of Stock (and cash in lieu of a fractional share), if
any, which each Employee would have received if on the date set by the Board he
or she had exercised his or her SAR in full or if each Employee's and each
Director's Option included a right to surrender his or her outstanding Option in
full under Section 7.7 of this Plan and such Option had been surrendered in full
or (b) may be cancelled unilaterally by SunTrust if the Option Price or SAR
Share Value equals or exceeds the Fair Market Value of a share of Stock on such
date and (2) the conditions, if any, for the issuance of Restricted Stock and
the conditions, if any, for making nonforfeitable all outstanding Restricted
Stock grants and all Stock Unit grants may be deemed completely satisfied on the
date set by the Board.
SECTION 13. AMENDMENT OR TERMINATION
This Plan may be amended by the Board from time to time to the extent that
the Board deems necessary or appropriate; provided, however, no such amendment
shall be made absent the approval of the shareholders of SunTrust to the extent
such approval is required under applicable law, Code Section 422, Rule 16b-3 or
any applicable stock exchange rule. The Board also may suspend the granting of
Options, SARs, Restricted Stock and Stock Units under this Plan at any time and
may terminate this Plan at any time. The Board or the Committee shall have the
right to modify, amend or cancel (retroactively or prospectively) any Option,
SAR, Restricted Stock or Stock Unit granted before such suspension or
termination if (1) the Employee or Director consents in writing to such
modification, amendment or cancellation (except that in no case can Options be
repriced either by cancellation and regrant or by lowering the exercise price of
a previously granted award) or (2) there is a dissolution or liquidation of
SunTrust or a transaction described in Section 11 or Section 12 of this Plan.
Suspension or termination of the Plan shall not affect the Committee's ability
to exercise the powers granted to it with respect to Options, SARs or surrender
rights, Restricted Stock or Stock Units granted under this Plan prior to the
date of such suspension or termination.
B-10
SECTION 14. MISCELLANEOUS
14.1. Shareholder Rights. No Employee or Director shall have any rights as
a shareholder of SunTrust as a result of the grant of an Option or a SAR under
this Plan or his or her exercise of such Option or SAR pending the actual
delivery of the Stock subject to such Option to such Employee or Director.
Subject to Section 8.4, an Employee's or Director's rights as a shareholder in
the shares of Stock related to a Restricted Stock grant which is effective shall
be set forth in the related Stock Agreement.
14.2. No Contract of Employment or Director Status. The grant of an
Option, SAR, Restricted Stock or Stock Unit to an Employee or a Director under
this Plan shall not constitute a contract of employment or an agreement to
continue his or her status as an Employee or a Director and shall not confer on
an Employee or Director any rights in addition to those rights, if any,
expressly set forth in the Option Agreement which evidences his or her Option,
the SAR Agreement which evidences his or her SAR or the Stock Agreement related
to his or her Restricted Stock or Stock Unit grant.
14.3. Share Retention Guidelines. Shares of Stock acquired by an Employee
under this Plan upon the exercise of an Option (or related surrender rights) or
SAR or upon a grant of Restricted Stock becoming nonforfeitable may be subject
to share retention guidelines established by SunTrust.
14.4. Withholding. The exercise of any Option or SAR granted under this
Plan and the acceptance of a Restricted Stock or Stock Unit grant shall
constitute an Employee's or Director's full and complete consent to whatever
action the Committee deems necessary to satisfy the minimum federal and state
tax withholding requirements, if any, which the Committee acting in its
discretion deems applicable to such exercise or such Restricted Stock or Stock
Unit grant. The Committee also shall have the right to provide in an Option
Agreement, SAR Agreement or Stock Agreement that an Employee or Director may
elect to satisfy minimum federal and state tax withholding requirements, if any,
through a reduction in the number of shares of Stock actually transferred, or
the cash payments to be made, to him or to her under this Plan, and any such
election and any such reduction shall be effected so as to satisfy the
conditions to the exemption under Rule 16b-3.
14.5 Construction.
(a) Governing Law. This Plan shall be construed under the laws of the
State of Georgia (excluding its choice-of-law rules) to the extent not
superseded by federal law.
(b) Invalid Provisions. In the event any provision of this Plan shall
be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of this Plan, and this Plan shall be
construed and enforced as if the illegal or invalid provision had not been
included.
B-11
(c) Conflicts. In the event of a conflict between the terms of this
Plan and any Option Agreement, Stock Agreement or SAR Agreement, the terms
of the Plan shall prevail.
Executed this ________ day of
________, 2004.
SUNTRUST BANKS, INC.
By:
------------------------------------
Title:
--------------------------------------
ATTEST:
--------------------------------------
Title:
------------------------------------
(CORPORATE SEAL)
B-12
EXHIBIT C
SUNTRUST BANKS, INC.
AUDIT COMMITTEE POLICY FOR PRE-APPROVAL
OF INDEPENDENT AUDITOR SERVICES
I. STATEMENT OF PRINCIPLES
The Audit Committee of SunTrust Banks, Inc. (the "Committee") is required
to pre-approve the audit and non-audit services performed by the independent
auditor in order to assure that the provision of such services does not impair
the auditor's independence. Unless a type of service to be provided by the
independent auditor has received general pre-approval, it will require specific
pre-approval by the Committee. Any proposed services exceeding pre-approved cost
levels will require specific pre-approval by the Committee.
The appendices to this Policy describe the Audit, Audit-related, Tax and
All Other Services that have the pre-approval of the Committee. The term of any
pre-approval is 12 months from the date of pre-approval, unless the Committee
specifically provides for a different period. The Committee will periodically
revise the list of pre-approved services, based on subsequent determinations.
II. DELEGATION
The Committee may delegate pre-approval authority to one or more of its
members. The member or members to whom such authority is delegated shall report
any pre-approval decisions to the Committee at its next scheduled meeting. The
Committee does not delegate its responsibilities to pre-approve services
performed by the independent auditor to management.
III. AUDIT SERVICES
The annual audit services engagement terms and fees will be subject to the
specific pre-approval of the Committee. The Committee will approve, if
necessary, any changes in terms, conditions and fees resulting from changes in
audit scope, Company structure or other matters.
In addition to the annual audit services engagement approved by the
Committee, the Committee may grant pre-approval for other audit services, which
are those services that only the independent auditor reasonably can provide. The
Committee has pre-approved the audit services listed in Appendix A. All other
audit services not listed in Appendix A must be pre-approved separately by the
Committee.
IV. AUDIT-RELATED SERVICES
Audit-related services are assurance and related services that are
reasonably related to the performance of the audit or review of the Company's
financial statements and that are traditionally performed by the independent
auditor. The Committee believes that the provision of audit-related services
does not impair the independence of the auditor, and has pre-approved the
services listed in Appendix B. All other audit-related services not listed in
Appendix B must be pre-approved separately by the Committee.
V. TAX SERVICES
The Committee believes that the independent auditor can provide tax
services to the Company such as tax compliance, tax planning and tax advice
without impairing the auditor's independence. However, the Committee will not
permit the retention of the independent auditor in connection with a transaction
initially recommended by the independent auditor, the purpose of which may be
tax avoidance and the tax treatment of which may not be supported in the
Internal Revenue Code and related regulations. The Committee has pre-approved
the tax services listed in Appendix C. All tax services involving large and
complex transactions not listed in Appendix C must be pre-approved separately by
the Committee.
C-1
VI. ALL OTHER SERVICES
The Committee may grant pre-approval to those permissible non-audit
services classified as all other services that it believes are routine and
recurring services, and would not impair the independence of the auditor. The
Committee has pre-approved all other services listed in Appendix D. Permissible
all other services not listed in Appendix D must be pre-approved separately by
the Committee.
A list of the SEC's prohibited non-audit services is attached to this
policy as Appendix E. The SEC's rules and relevant guidance should be consulted
to determine the precise definitions of these services and the applicability of
exceptions to certain of the prohibitions.
VII. PRE-APPROVAL FEE LEVELS
Pre-approval fee levels for all services to be provided by the independent
auditor will be established periodically by the Committee. Any proposed services
exceeding these levels will require specific pre-approval by the Committee.
VIII. SUPPORTING DOCUMENTATION
With respect to each proposed pre-approved service, the independent auditor
will provide to the Committee detailed back-up documentation regarding the
specific services to be performed.
IX. PROCEDURES
Requests or applications to provide services that require separate approval
by the Committee will be submitted to the Committee by both the independent
auditor and company management, and must include a joint statement as to
whether, in their view, the request or application is consistent with the SEC's
rules on auditor independence.
C-2
APPENDIX A
PRE-APPROVED AUDIT SERVICES FOR 2004*
MAXIMUM FEE PER ENGAGEMENT
SERVICE NOT TO EXCEED**
Statutory audits or financial audits for subsidiaries or $100,000
affiliates of the Company
Services associated with SEC registration statements,
periodic reports and other documents filed with the SEC or
other documents issued in connection with securities $ 75,000
offerings (e.g., comfort letters, consents), and assistance
in responding to SEC comment letters
Consultations by the Company's management as to the
accounting or disclosure treatment of transactions or events
and/or the actual impact of final or proposed rules, $ 50,000
standards or interpretations by the SEC, FASB, or other
regulatory or standard setting bodies
* These services are in addition to those that are approved in connection with
the annual engagement letter with PricewaterhouseCoopers LLP, expected to be
entered into in February 2004 and in addition to any services that are
specifically pre-approved.
** The fees for all engagements entered into pursuant to this Appendix A not to
exceed an aggregate of $300,000.
C-3
APPENDIX B
PRE-APPROVED AUDIT-RELATED SERVICES FOR 2004*
MAXIMUM FEE PER ENGAGEMENT
SERVICE NOT TO EXCEED**
Due diligence services pertaining to potential business $75,000
acquisitions/dispositions
Financial statement audits of employee benefit plans $25,000
Reviews of internal controls over financial activities and $50,000
reporting requirements, including SAS 70 and similar reports
Attestation and agreed-upon procedures related to accounting
and/or billing records required to respond to or comply with $50,000
financial, accounting or regulatory matters
Subsidiary, equity investee or other related entity audits
or audits of pools of assets not required by statute or $50,000
regulation that are incremental to the audit of the
consolidated financial statements
Assistance with implementation of the requirements of SEC
rules or listing standards promulgated pursuant to the $50,000
Sarbanes-Oxley Act
* These services are in addition to those that are approved in connection with
the annual engagement letter with PricewaterhouseCoopers LLP, expected to be
entered into in February 2004 and in addition to any services that are
specifically pre-approved.
** The fees for all engagements entered into pursuant to this Appendix B not to
exceed an aggregate of $300,000.
C-4
APPENDIX C
PRE-APPROVED TAX SERVICES FOR 2004*
MAXIMUM FEE PER ENGAGEMENT
SERVICE NOT TO EXCEED**
U.S. federal, state and local tax planning and advice
regarding the tax consequences of proposed or actual $25,000
transactions or the operation of corporate programs
Assistance with U.S. federal, state and local tax filings
(such as preparation of returns and related matters and $25,000
assistance with audits by taxing authorities)
Tax advice regarding new statutory, regulatory or $25,000
administrative developments
* These services are in addition to those that are approved in connection with
the annual engagement letter with PricewaterhouseCoopers LLP, expected to be
entered into in February 2004 and in addition to any services that are
specifically pre-approved.
** The fees for all engagements entered into pursuant to this Appendix C not to
exceed an aggregate of $75,000.
C-5
APPENDIX D
PRE-APPROVED ALL OTHER SERVICES FOR 2004*
MAXIMUM FEE PER ENGAGEMENT
SERVICE NOT TO EXCEED**
Risk management advisory services regarding financial or
operational matters, e.g., assessment and testing of $50,000
security infrastructure controls
Advisory services related to issues involving regulatory
bodies such as the Federal Reserve Board, the Office of the
Comptroller of the Currency and the Financial Services $50,000
Authority and other domestic and international regulatory
bodies
* These services are in addition to those that are approved in connection with
the annual engagement letter with PricewaterhouseCoopers LLP, expected to be
entered into in February 2004 and in addition to any services that are
specifically pre-approved.
** The fees for all engagements entered into pursuant to this Appendix D not to
exceed an aggregate of $200,000.
C-6
APPENDIX E
PROHIBITED NON-AUDIT SERVICES
- Bookkeeping or other services related to the accounting records or
financial statements of the audit client
- Financial information systems design and implementation
- Appraisal or valuation services, fairness opinions or
contribution-in-kind reports
- Actuarial services
- Internal audit outsourcing services
- Management functions
- Human resources
- Broker-dealer, investment adviser or investment banking services
- Legal services or other expert services unrelated to the audit
C-7
RECYCLED PAPER LOGO
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 20,2004.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned hereby appoints John W. Spiegel and Raymond D. Fortin, and each
of them, proxies with full power of substitution, to vote for the undersigned
all shares of the Common Stock of SunTrust Banks, Inc. (the "Company") that the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Shareholders to be held on Tuesday, April 20, 2004, at 9:30 a.m.
local time, in Suite 105 on the 1st floor of SunTrust Plaza Garden Offices, 303
Peachtree Center Avenue, Atlanta, Georgia, and at any adjournments thereof, upon
the matters described on reverse and in the accompanying Proxy Statement dated
March 1, 2004, and upon any other business that may properly come before such
Annual Meeting or any adjournments thereof.
Pursuant to the Proxy Statement, said proxies are directed to vote as indicated
on the reverse hereof, and otherwise as the Board of Directors may recommend
with respect to any other business that may properly come before the meeting or
at any adjournment thereof. By the execution of this Proxy, I acknowledge
receipt of a copy of the Notice of Annual Meeting of Shareholders and Proxy
Statement dated March 1, 2004 and a copy of the SunTrust Banks, Inc. 2003 Annual
Report.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
--------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO DIRECTION IS INDICATED, WILL BE
VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS.
DIRECTORS RECOMMEND VOTING FOR THE FOLLOWING PROPOSALS: Please mark [X]
your votes as
indicated in
this example.
1. Proposal to elect as Directors: (01) J. Hicks Lanier, (02) Larry
L. Prince, (03) Frank S. Royal, M.D., (04) Robert M. Beall, II and (05)
Jeffrey C. Crowe to serve until the Annual Meeting of Shareholders in
2007.
FOR all nominees WITHHOLD INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
listed above (except AUTHORITY to NOMINEE,WRITE HIS NAME ON THE LINE BELOW:
as indicated to vote for all nominees
the contrary) listed above ------------------------------------------------------------
[ ] [ ]
2. Proposal to ratify the appointment of FOR AGAINST ABSTAIN
PricewaterhouseCoopers LLP as independent [ ] [ ] [ ]
auditors for 2004.
3. Proposal to approve the Company's 2004 [ ] [ ] [ ]
Stock Plan.
-----------------------------------------------------------------
-----------------------------------------------------------------
Signature(s) of Shareholder
Date , 2004
-------------------------------------------------------
IMPORTANT: Please date and sign this Proxy exactly as your
name or names appear hereon; if shares are held jointly, all
joint owners must sign. An executor, administrator, trustee,
guardian, or other person signing in a representative
capacity, must give his or her full title. A corporation must
sign in full corporate name by its president or other
authorized officer. A partnership must sign in partnership
name by an authorized person.
-------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
DETACH CARD Please detach proxy at perforation before mailing.
OR YOU MAY VOTE BY TELEPHONE OR VIA THE INTERNET.
IF YOU ARE VOTING BY TELEPHONE OR VIA THE INTERNET,
PLEASE DO NOT MAIL YOUR PROXY.
VOTE BY TELEPHONE VOTE BY INTERNET VOTE BY MAIL
Call TOLL-FREE using a Go online to Return your proxy in the
touch-tone phone WWW.VOTEFAST.COM POSTAGE-PAID envelope
1-800-542-1160. to cast your vote. provided.
VOTE 24 HOURS A DAY,7 DAYS A WEEK!
Your telephone or Internet vote must be received by 11:59 p.m. Eastern Time
on April 19, 2004, to be counted in the final tabulation.
YOUR CONTROL NUMBER IS
VOTE BY TELEPHONE
Have your proxy card available when you call the toll-free number 1-800-542-1160
using a touch-tone phone. You will be prompted to enter your control number.
Then follow the simple prompts to record your vote.
VOTE BY INTERNET
Have your proxy card available when you go online to WWW.VOTEFAST.COM.You will
be prompted to enter your control number. Then follow the simple prompts to
record your vote.
VOTE BY MAIL
Please mark, sign and date your proxy card and return it in the postage-paid
envelope provided or return it to: SunTrust Bank, P.O.Box 4625, Atlanta, GA
30302.
TO CHANGE YOUR VOTE
Any subsequent vote by any means will change your prior vote. For example, if
you voted by telephone, a subsequent Internet vote will change your vote. The
last vote received before 11:59 p.m. Eastern Time, April 19, 2004, will be the
one counted. You may also revoke your proxy by voting in person at the Annual
Meeting.
INSTRUCTIONS TO THE SUNTRUST BANKS, INC. 401(K) PLAN TRUSTEE
The undersigned hereby directs that all shares of SunTrust Banks, Inc. Common
Stock allocated to his/her account under the SunTrust Banks, Inc. 401(k) Plan be
voted at the SunTrust Banks, Inc. Annual Meeting of Shareholders to be held
April 20, 2004, and at any adjournment thereof, in accordance with the following
instructions for the matters described herein. For any other business that may
properly come before the Annual Meeting, all such shares shall be voted as the
Board of Directors may recommend. THIS INSTRUCTION IS SOLICITED BY THE BOARD OF
DIRECTORS. IF YOU DO NOT RETURN YOUR CARD, THE PLAN TRUSTEE WILL NOT VOTE YOUR
SHARES.
Please mark [X]
your votes as
indicated in
this example.
DIRECTORS RECOMMEND VOTING FOR THE FOLLOWING PROPOSALS:
1. Proposal to elect as Directors: (01) J. Hicks Lanier, (02) Larry L.
Prince, (03) Frank S. Royal, M.D., (04) Robert M. Beall, II and (05)
Jeffrey C. Crowe to serve until the Annual Meeting of Shareholders in
2007.
FOR all nominees WITHHOLD INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE HIS
listed above (except AUTHORITY to NAME ON THE LINE BELOW:
as indicated to vote for all nominees
the contrary) listed above -----------------------------------------------------------------------------------
[ ] [ ]
FOR AGAINST ABSTAIN
2. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as [ ] [ ] [ ]
independent auditors for 2004.
FOR AGAINST ABSTAIN
3. Proposal to approve the Company's 2004 Stock Plan. [ ] [ ] [ ]
(CONTINUED ON THE OTHER SIDE.)
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- FOLD AND DETACH HERE -
[SUNTRUST LOGO]
March 1, 2004
To our employee shareholders:
An improving economy, combined with investments and programs we have
put into place, enabled SunTrust to end 2003 with a promising earnings trend.
The efforts of our employees resulted in revenue gains in our major lines of
business. You are helping us improve efficiency every day and embracing our
S(3) + E(2) formula for success.
As shareholders through the SunTrust 401(k) Plan, we count on you to
vote your shares. Read the Instructions to the Plan Trustee card, which gives
you the guidelines you need. NOTE: IF YOU DO NOT VOTE YOUR SHARES BY TELEPHONE,
INTERNET, OR MAIL, THE PLAN TRUSTEE WILL NOT VOTE YOUR SHARES.
In addition, we are sending you:
- The 2003 SunTrust Banks, Inc. Annual Report that details our
continuing momentum within a weak economy, and
- The Proxy Statement describing the business of the 2004 Annual
Meeting scheduled for Tuesday, April 20.
When potential customers or investors ask "Why SunTrust?" we know the answer:
Our employees will work hard to exceed their expectations in serving their
financial needs.
Sincerely,
/s/ Phil Hummann
-----------------------------------------
L. Phillip Humann
Chairman of the Board, President
and Chief Executive Officer
The undersigned acknowledges receipt of a
copy of the Notice of Annual Meeting of
Shareholders and Proxy Statement dated March
1, 2004 and a copy of the SunTrust Banks,
Inc. 2003 Annual Report.
IMPORTANT: PLEASE DATE AND SIGN THIS
INSTRUCTION EXACTLY AS YOUR NAME OR NAMES
APPEAR TO THE LEFT.
Date , 2004
----------------------------------
Signature
-----------------------------------
--------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
DETACH CARD Please detach proxy at perforation before mailing.
OR YOU MAY VOTE BY TELEPHONE OR VIA THE INTERNET.
IF YOU ARE VOTING BY TELEPHONE OR VIA THE INTERNET,
PLEASE DO NOT MAIL YOUR PROXY.
VOTE BY TELEPHONE VOTE BY INTERNET VOTE BY MAIL
Call TOLL-FREE using a Go online to Return your proxy in the
touch-tone phone WWW.VOTEFAST.COM POSTAGE-PAID envelope
1-800-542-1160. to cast your vote. provided.
VOTE 24 HOURS A DAY, 7 DAYS A WEEK!
Your telephone or Internet vote must be received by 11:59 p.m. Eastern Time
on April 19, 2004, to be counted in the final tabulation.
YOUR CONTROL NUMBER IS
VOTE BY TELEPHONE
Have your proxy card available when you call the toll-free number 1-800-542-1160
using a touch-tone phone. You will be prompted to enter your control number.
Then follow the simple prompts to record your vote.
VOTE BY INTERNET
Have your proxy card available when you go online to WWW.VOTEFAST.COM. You will
be prompted to enter your control number. Then follow the simple prompts to
record your vote.
VOTE BY MAIL
Please mark, sign and date your proxy card and return it in the postage-paid
envelope provided or return it to: SunTrust Bank, P.O. Box 4625, Atlanta, GA
30302.
TO CHANGE YOUR VOTE
Any subsequent vote by any means will change your prior vote. For example, if
you voted by telephone, a subsequent Internet vote will change your vote. The
last vote received before 11:59 p.m. Eastern Time, April 19, 2004, will be the
one counted. You may also revoke your proxy by voting in person at the Annual
Meeting.