SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-12
TRUSTMARK CORPORATION
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
[GRAPHIC OMITTED]
(LOGO)
April 8, 2005
Dear Shareholder:
You are cordially invited to attend Trustmark Corporation's annual meeting of
shareholders. This meeting will be held in the Grand Ballroom at the Hilton
Hotel, located at 1001 East County Line Road, Jackson, Mississippi, on Tuesday,
May 10, 2005, at 10:00 a.m.
At the meeting, shareholders will elect a board of directors, vote on the
proposed Trustmark Corporation 2005 Stock and Incentive Compensation Plan and
transact such other business as may properly come before the meeting. Prior to
the meeting, please carefully read the accompanying proxy statement.
Thank you for your support of Trustmark.
Sincerely,
/s/ Richard G. Hickson
Richard G. Hickson
Chairman and Chief Executive Officer
Trustmark Corporation
248 East Capitol Street
Jackson, MS 39201
--------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
--------------------------------------------------------------------------------
DATE AND TIME.................Tuesday, May 10, 2005, at 10:00 a.m.
LOCATION......................Grand Ballroom
Hilton Hotel
1001 East County Line Road
Jackson, Mississippi 39211
ITEMS OF BUSINESS.............(1) To elect a board of twelve directors to
hold office for the ensuing year or until
their successors are elected and qualified.
(2) To vote on the proposed Trustmark Corporation
2005 Stock and Incentive Compensation Plan.
(3) To transact such other business as may
properly come before the meeting.
RECORD DATE...................Shareholders of record on March 14, 2005, are
eligible to vote at the meeting in person or by
proxy.
PROXY VOTING/REVOCATION.......You are urged to sign and return the enclosed
proxy promptly, whether or not you plan to attend
the meeting. If you do attend the meeting, you
may revoke your proxy prior to the voting
thereof. You may also revoke your proxy at any
time before it is voted by written notice to the
Secretary of Trustmark Corporation or by delivery
to the Secretary of a subsequently dated proxy.
T. Harris Collier III
Secretary to the Board
TABLE OF CONTENTS
GENERAL INFORMATION............................................................1
Solicitation by the Board of Directors......................................1
Meeting Location, Date and Time.............................................1
Shareholders Entitled to Vote...............................................1
Required Vote...............................................................1
How to Vote.................................................................1
Revocation of Proxies.......................................................1
Voting on Other Matters.....................................................1
Cost of Proxy Solicitation..................................................1
CORPORATE GOVERNANCE...........................................................1
Board Mission...............................................................2
Meetings of the Board of Directors..........................................2
Director Attendance at Annual Meeting.......................................2
Director Independence.......................................................2
Lead Director...............................................................2
Committees of the Board of Directors........................................2
Audit and Finance Committee..............................................2
Executive Committee......................................................2
Human Resources Committee................................................2
Nominating Committee.....................................................3
Strategic Planning Committee.............................................3
Committee Membership........................................................3
Director Compensation.......................................................3
Communications with Directors...............................................4
Nomination of Directors.....................................................4
Director Qualifications.....................................................4
Personal Traits..........................................................4
Leadership Qualities.....................................................5
Individual Competencies..................................................5
PROPOSAL 1: ELECTION OF DIRECTORS.............................................5
THE NOMINEES...................................................................6
PROPOSAL 2: 2005 STOCK AND INCENTIVE COMPENSATION PLAN........................9
PERFORMANCE GRAPH.............................................................13
STOCK.........................................................................14
Securities Ownership by Certain Beneficial Owners and Management...........14
Section 16(a) Beneficial Ownership Reporting Compliance....................15
Securities Authorized for Issuance.........................................15
EXECUTIVE COMPENSATION........................................................15
Compensation Tables........................................................15
Option Grants in 2004......................................................16
Option Exercises and Year-End Option Values................................16
Pension Plan...............................................................16
Supplemental Retirement Plan...............................................17
Employment Agreements......................................................17
Human Resources Committee Report on Executive Compensation.................18
Chief Executive Officer Compensation - 2004.............................18
Executive Officers' Compensation - 2004.................................19
Committee Composition...................................................19
TRANSACTIONS WITH MANAGEMENT..................................................19
AUDIT AND FINANCE COMMITTEE REPORT............................................19
Independent Public Accountants.............................................19
Committee Review and Discussion............................................19
Accounting Fees............................................................20
Pre-Approval Policy........................................................20
Audit and Finance Committee Charter........................................20
PROPOSALS OF SHAREHOLDERS.....................................................20
Exhibit A: 2005 STOCK AND INCENTIVE COMPENSATION PLAN.......................A-1
Exhibit B: AUDIT AND FINANCE COMMITTEE CHARTER..............................B-1
GENERAL INFORMATION
Solicitation by the Board of Directors
This proxy statement is being sent on or about April 8, 2005, in connection with
the solicitation by the Board of Directors of Trustmark Corporation (Trustmark)
of proxies to be voted at the 2005 Annual Meeting of Shareholders and at any
adjournment or postponement thereof for the purposes set forth in the foregoing
Notice of Annual Meeting of Shareholders.
Meeting Location, Date and Time
The Annual Meeting of Shareholders will be held in the Grand Ballroom of the
Hilton Hotel, located at 1001 East County Line Road, Jackson, Mississippi 39211,
on Tuesday, May 10, 2005, at 10:00 a.m.
Shareholders Entitled to Vote
Shareholders of record at the close of business on March 14, 2005, are entitled
to notice of and to vote at the meeting in person or by proxy. On the record
date, Trustmark had outstanding 57,198,010 shares of common stock.
Required Vote
A majority of the shares outstanding constitutes a quorum. In the election of
directors, each shareholder may vote his shares cumulatively by multiplying the
number of shares he is entitled to vote by the number of directors to be
elected. This product constitutes the number of votes the shareholder may cast
for one nominee or by distributing this number of votes among any number of
nominees. Each share is entitled to one vote on other issues, and the issue will
be approved if the votes cast in favor of the action exceed the votes cast
opposing the action. While abstentions and broker non-votes (shares held by
brokerage customers that may not be voted on certain matters because the broker
has not received specific instructions from the customers) are counted for
purposes of determining a quorum, they are not otherwise counted and, therefore,
will have no effect on the outcome of any issue.
All valid proxies received by Trustmark will be voted in accordance with the
instructions indicated in such proxies. If no instructions are indicated in an
otherwise properly executed proxy, it will be voted in accordance with the
recommendations of the Board of Directors of Trustmark.
How to Vote
Shareholders of record can vote in person at the annual meeting or by proxy
without attending the annual meeting.
To vote by proxy, either:
1. Complete the enclosed proxy card, sign, date and return it in the
enclosed postage-paid envelope,
2. Vote by telephone (instructions are on the proxy card) or
3. Vote by Internet (instructions are on the proxy card).
Revocation of Proxies
Any shareholder may revoke a proxy at any time before it is voted by written
notice to the Secretary, by revocation at the meeting or by delivery to the
Secretary of a subsequently dated proxy.
Voting on Other Matters
The Board of Directors is not aware of any additional matters likely to be
brought before the meeting. If other matters do come before the meeting, the
persons named in the accompanying proxy or their substitutes will vote the
shares represented by such proxies in accordance with the recommendations of the
Board of Directors of Trustmark.
Cost of Proxy Solicitation
Solicitation of proxies will be primarily by mail. Associates of Trustmark and
its subsidiaries may be used to solicit proxies by means of telephone or
personal contact but will not receive any additional compensation for doing so.
Banks, brokers, trustees and nominees will be reimbursed for reasonable expenses
incurred in sending proxy materials to the beneficial owners of such shares. The
total cost of the solicitation will be borne by Trustmark.
CORPORATE GOVERNANCE
In December 2000, Trustmark's Board of Directors created a Governance Committee
to perform a comprehensive evaluation of Trustmark's approach to corporate
governance. With the assistance of an outside consulting firm specializing in
corporate governance, the Committee analyzed numerous corporate governance
topics including:
o Role, structure and composition of the Board and committees,
o Committee charters, calendars and decision accountabilities,
o Required Board/Director competencies and traits,
o Nomination, selection and succession procedures for directors and
o Board performance evaluation.
As a result of this analysis, Trustmark implemented an enhanced governance
structure in April 2002. The effectiveness and efficiency of Trustmark's
corporate decision-making processes were improved through the implementation of
a committee structure and revised director accountabilities that best enable the
Board to address issues such as business growth, human capital and technology.
Provisions of Trustmark's governance structure include, among other things, a
retirement age of 65 for directors, required notification of changes in
professional responsibilities and residence, a director's attendance policy, as
well as the authority to seek advice or counsel from external advisers on an
as-needed basis.
Board Mission
The role of the Board is to foster Trustmark's long-term success consistent with
its fiduciary responsibilities to shareholders. As part of this role,
Trustmark's Board is responsible for:
o Providing strategic guidance and oversight,
o Acting as a resource on strategic issues and in matters of planning
and policymaking,
o Ensuring that management's operations contribute to Trustmark's
financial soundness,
o Promoting social responsibility and ethical business conduct,
o Providing insight and guidance on complex business issues and problems
in the banking and financial services industries,
o Ensuring that an effective system is in place to facilitate selection,
succession planning and compensation of the Chief Executive Officer
and
o Ensuring Trustmark's compliance with all relevant legal and regulatory
requirements.
The Board also adopted a formal mission statement for the Board and its
committees to address the governance guidelines and responsibilities of each.
Likewise, the Board has adopted codes of conduct for directors, senior financial
officers and associates. These materials are available on Trustmark's website at
www.trustmark.com or may be obtained by written request addressed to the
Secretary of the Board, Trustmark Corporation, Post Office Box 291, Jackson, MS
39205-0291.
Meetings of the Board of Directors
The Board of Directors met five times in 2004. Each director attended at least
75 percent of the total number of meetings of the Board of Directors and Board
committees of which he or she was a member in 2004.
Director Attendance at Annual Meeting
Directors are expected to attend the Annual Meeting of Shareholders, and in
2004, all directors were present.
Director Independence
The Board has affirmatively determined that all directors, with the exception of
the Chairman and CEO, Richard G. Hickson, meet the requirements of independence
under NASDAQ Rule 4200.
Lead Director
Trustmark's Chairman of the Board also serves as CEO. Therefore, under the
governance guidelines set forth in Trustmark's Board Mission Statement, the
Chairman of the Executive Committee, Matthew L. Holleman III, serves as the
Board's Lead Director. The primary responsibility of the Lead Director is to
chair Board meetings when the CEO is not present and refer to the appropriate
Board committees any issue brought to his attention by shareholders, directors
or others.
Committees of the Board of Directors
There are five committees that collectively provide guidance on strategic
issues, planning and policymaking: Audit and Finance, Executive, Human
Resources, Nominating and Strategic Planning. The committees are comprised
solely of independent directors, with the exception of the Executive Committee.
Audit and Finance Committee
Under the terms of its Charter (Exhibit B hereto), the Audit and Finance
Committee meets at least five times a year and is responsible for, among other
things, annual approval of the independent auditors, oversight of audit
activities, financial reporting and regulatory compliance, as well as review and
approval of Trustmark's profit plan.
The Committee meets with the independent and internal auditors without
management present on a regular basis.
Executive Committee
The Executive Committee acts on behalf of the Board if a matter requires Board
action before a meeting of the full Board can be held. The Committee is
responsible for reviewing the corporate governance structure and annually
evaluating each director's performance against specific performance criteria.
Human Resources Committee
The role of the Human Resources Committee is to ensure that appropriate policies
and practices are in place to facilitate the development of management talent,
orderly CEO succession planning, corporate social responsibility and the setting
of management compensation.
Nominating Committee
The Nominating Committee is charged with the responsibility of seeking,
interviewing and recommending to the Board of Directors qualified candidates for
Board and committee membership.
The Nominating Committee Mission Statement is posted on Trustmark's website at
www.trustmark.com.
Strategic Planning Committee
The Strategic Planning Committee provides guidance to management on the
strategic planning process and issues of strategic importance including business
growth and expansion, material transactions and technology. The Committee is
also responsible for monitoring progress with Trustmark's long-term strategic
and financial objectives.
Committee Membership
The following table shows the current membership of each committee and the
number of meetings held by each committee during 2004:
Audit and Finance Executive Human Resources Nominating Strategic Planning
-----------------------------------------------------------------------------------------------------
J. Kelly Allgood Chair X X X
Reuben V. Anderson X Chair X
John L. Black, Jr. X
William C. Deviney,Jr. X
C. Gerald Garnett X X X X
Richard G. Hickson X
Matthew L. Holleman III Chair Chair Chair
Richard H. Puckett X
Carolyn C. Shanks X
Kenneth W. Williams X
William G. Yates, Jr. X
-----------------------------------------------------------------------------------------------------
2004 Meetings 8 8 5 3 4
Director Compensation
Directors receive an annual retainer of $12,000 plus $1,000 for each Board
meeting attended. The Executive Committee Chairman receives an additional
retainer of $6,000 per year. All other Executive Committee members receive an
additional retainer of $3,000 per year. All committee members and committee
chairs receive $500 and $750, respectively, for each committee meeting attended.
The CEO receives no compensation for Board or committee service.
Trustmark provides non-employee directors the opportunity to participate in a
contributory defined benefit deferred fee plan. Under the plan, participating
directors may defer up to $12,000 of fees annually to fund a portion of the cost
of their defined retirement benefits and death benefits. The amount of the
retirement benefit and death benefit is determined based upon the participant's
annual contribution amount, the length of Board service (with accrual and
vesting occurring prorata assuming Board service to age 65) and the age of the
director at date of entry into the plan. Depending on a number of factors, the
projected annual retirement benefit is payable at age 65 for the longer of life
or 25 years and ranges from $20,000 to $165,000 for current directors electing
to participate in the plan. The vested annual retirement benefit as of December
31, 2004, payable at age 65 to current directors electing to participate in the
plan ranges from $13,000 to $71,000. If a participating director dies prior to
retirement, his beneficiary will receive a scheduled death benefit for ten
years. If the plan is terminated, or a dirctor's Board service is terminated,
within three years after a change in control of Trustmark (as defined in the
plan), affected directors will be credited with an additional five years of
Board service for purposes of determining retirement benefits. Trustmark has
purchased life insurance policies on participating directors to fund this plan.
Non-employee directors are eligible to receive stock option awards under the
Trustmark Corporation 1997 Long Term Incentive Plan. On April 20, 2004, each
non-employee director received an option grant of 2,000 shares pursuant to the
plan. These options vest in equal installments over a four-year period and
expire in 2014. Accelerated vesting and exercisability of these options is
provided upon a change in control of Trustmark (as defined in the plan).
Non-employee directors may defer all or a part of their annual retainer and
meeting fees (excluding any contribution to the deferred fee plan described
above) pursuant to a voluntary non-qualified deferred compensation plan. The
compensation deferred is credited to a liability account, which is deemed
invested in and mirrors the performance of one or more designated investment
funds available under the plan and selected at the option of the director. The
deferred compensation account will be paid in a lump sum or in annual
installments at a designated time upon the occurrence of an unforeseen emergency
or upon a director's cessation of service on the Board.
Communications with Directors
Shareholders desiring to contact Trustmark's Board of Directors may do so by
sending written correspondence to Board of Directors, Trustmark Corporation,
Post Office Box 291, Jackson, MS 39205-0291 or by e-mail to
boardofdirectors@trustmark.com.
Communications will be referred to the Chairman of the Executive Committee, who
will determine the appropriate committee to receive the communication and take
any action deemed necessary by that committee.
Complaints relating to Trustmark's accounting, internal accounting controls or
auditing matters should be directed to Trustmark's General Counsel/Secretary to
the Board, Trustmark Corporation, Post Office Box 291, Jackson, MS 39205-0291 or
by calling 1-800-844-2000 (extension 5088) or 1-601-208-5088.
Nomination of Directors
Nominations for election to the Board of Directors may be made by the Board of
Directors or by any shareholder of any outstanding class of capital stock of
Trustmark entitled to vote for the election of directors. Nominations other than
those made by or on behalf of the existing management of Trustmark shall be made
in writing and shall be delivered or mailed to Trustmark's Chairman of the Board
not less than fourteen (14) days nor more than fifty (50) days prior to any
meeting of shareholders called for the election of directors; provided, however,
that if less than twenty-one (21) days' notice of the meeting is given to
shareholders, such nomination shall be mailed or delivered to the Chairman of
the Board not later than the close of business on the seventh (7th) day
following the day on which the notice of the meeting was mailed. Such
notification shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of Trustmark that will be voted for each proposed
nominee; (d) the name and residence address of the notifying shareholder; and
(e) the number of shares of capital stock of Trustmark owned by the notifying
shareholder.
Nominations not made in accordance with the above procedure may be disregarded
by the chairman of the meeting at his discretion, and upon his instructions, all
votes cast for each such nominee may be disregarded.
Trustmark's bylaws permit direct nominations by shareholders. Therefore, the
Nominating Committee does not have a policy for considering nominees recommended
by shareholders. However, if a shareholder wishes to recommend an individual for
Board service, rather than directly nominate the individual as set forth above,
the shareholder may submit the individual's name to the Nominating Committee in
writing addressed to Trustmark Corporation Nominating Committee, Post Office Box
291, Jackson, MS 39205-0291 or by e-mail to boardofdirectors@trustmark.com. In
considering an individual recommended by a shareholder but not directly
nominated, the Nominating Committee will use the same guidelines as set forth in
the Director Qualifications.
When identifying potential candidates for director nominees, the Committee may
solicit suggestions from incumbent directors, management or others. With regard
to the proposed nominees for 2005, two nominees have not previously served on
the Board: John M. McCullouch and R. Michael Summerford, whose names were
submitted for consideration by a non-management director and an independent
third party, respectively.
Director Qualifications
The Board believes that in order to appropriately carry out their roles,
directors must demonstrate a variety of personal traits and competencies. In
considering nominees submitted by the Board or management, the Nominating
Committee will use these traits, leadership qualities and individual
competencies to assess future director nominees' suitability for Board service.
Personal Traits
Board service is an extremely important, high profile role and carries with it
significant responsibility. For that reason, it is important that all directors
possess a certain set of personal traits, including:
o Personal and Professional Integrity
o Accountability
o Informed Business Judgment
o Mature Confidence
o High Performance Standards
o Initiative/Responsiveness
o Business Credibility
Leadership Qualities
When seeking individuals to fill leadership roles, the following skill sets are
required:
o Communication Skills
o Crisis Management Skills
o Facilitation Skills
o Relationship Building/Networking
Individual Competencies
There are certain competencies that must be represented collectively by the
directors on each Board committee, but each individual director need not
necessarily possess all of them. The specific competencies vary by committee, as
illustrated in the chart below:
Board Committees
-----------------------------------------------------
Audit & Executive Human Nominating Strategic
Individual Director Competencies Finance Resources Planning
---------------------------------------------------------------------------------------------------------------
1. Financial Acumen
Accounting & finance knowledge |X| |X| |X| |X|
Financial statement analysis |X|
Knowledge of capital markets |X| |X|
Financial planning |X|
Ability to communicate financial concepts in lay terms |X| |X|
2. Organizational Effectiveness
Talent management |X|
Understanding of compensation issues |X|
Ability to discern candidate qualifications |X|
3. Strategic Direction
Vision |X| |X| |X|
Strategic perspective |X| |X| |X|
Technology knowledge |X|
Industry knowledge |X| |X| |X| |X|
PROPOSAL 1: Election of Directors
The Board of Directors has fixed the number of directors for the coming year at
twelve. The nominees listed herein have been proposed by the Board of Directors
for election at the meeting.
Shares represented by the proxies will, unless authority to vote is withheld, be
voted in favor of the proposed slate of twelve nominees. In the election of
directors, each shareholder may vote his shares cumulatively by multiplying the
number of shares he is entitled to vote by the number of directors to be
elected. This product constitutes the number of votes the shareholder may cast
for one nominee or by distributing this number of votes among any number of
nominees. The proxies reserve the right, in their discretion, to vote
cumulatively. If a shareholder withholds authority for one or more nominees and
does not direct otherwise, the total number of votes the shareholder is entitled
to cast will be distributed among the remaining nominees.
Should any of these nominees be unable to accept the nomination, the votes which
otherwise would have been cast for the nominee(s) will be voted for such other
person(s) as the Board of Directors shall nominate. Each director is elected to
hold office until the next annual meeting of shareholders or until a successor
is elected and qualified. The persons who will be elected to the Board of
Directors will be the twelve nominees receiving the largest number of votes.
The Board of Directors recommends that shareholders vote "for" the proposed
nominees.
THE NOMINEES
Name and Age at Record Date Position, Principal Occupation and Directorships
J. Kelly Allgood.........64 o Retired President, BellSouth Mississippi
(photo) o Director of Trustmark since 1991
o Trustmark Corporation Committees:
Audit and Finance (Chair)
Executive
Nominating
Strategic Planning
o Other Directorships: Trustmark National Bank
Reuben V. Anderson......62 o Partner, Phelps Dunbar, L.L.P. (Attorneys)
(photo) o Director of Trustmark since 1980
o Trustmark Corporation Committees:
Executive
Human Resources (Chair)
Nominating
o Other Directorships: Trustmark National Bank,
BellSouth Corporation, Burlington Resources,
Inc.,The Kroger Company
William C. Deviney, Jr...59 o CEO, Deviney Construction Company, Inc.
(photo) (Telecommunications Construction)
o Director of Trustmark since 1995
o Trustmark Corporation Committees:
Human Resources
o Other Directorships: Trustmark National Bank
C. Gerald Garnett........60 o Retired CEO, Southern Farm Bureau Casualty
(photo) Insurance Company and Southern Farm Bureau
Property Insurance Company
o Director of Trustmark since 1993
o Trustmark Corporation Committees:
Executive
Human Resources
Nominating
Strategic Planning
o Other Directorships: Trustmark National Bank
Richard G. Hickson.......60 o Chairman, President and CEO, Trustmark
(photo) Corporation; Chairman and CEO, Trustmark
National Bank
o Director of Trustmark since 1997
o Trustmark Corporation Committees:
Executive
o Other Directorships: Trustmark National Bank,
Federal Reserve Bank of Atlanta
Matthew L. Holleman III..53 o President and CEO, Galaxie Corporation;
(photo) President, Capitol Street Corporation, H.H.
Corporation and Bay Street Corporation
(Investment Management); President and CEO,
Mississippi Valley Gas Company (1987-2002)
(Natural Gas Distribution)
o Director of Trustmark since 1994
o Trustmark Corporation Committees:
Executive (Chair)
Nominating (Chair)
Strategic Planning (Chair)
o Other Directorships: Trustmark National Bank
John M. McCullouch.......57 o President, BellSouth Mississippi
(photo) o Nominated for Director of Trustmark in 2005
o Other Directorships: Trustmark National Bank
Richard H. Puckett.......50 o President and CEO, Puckett Machinery Company
(photo) (Distributor of Heavy Earth Moving Equipment)
o Director of Trustmark since 1995
o Trustmark Corporation Committees:
Audit and Finance
o Other Directorships: Trustmark National Bank
Carolyn C. Shanks........43 o President and CEO, Entergy Mississippi, Inc.
(photo) o Director of Trustmark since 2001
o Trustmark Corporation Committees:
Human Resources
o Other Directorships: Trustmark National Bank
R. Michael Summerford....56 o Retired President and COO, ChemFirst, Inc.
(photo) (Manufacturer of Electronic and Specialty
Chemicals)
o Nominated for Director of Trustmark in 2005
o Other Directorships: Trustmark National Bank
Kenneth W. Williams......63 o President, Corinth Coca-Cola Bottling Works;
(photo) President, Refreshments, Inc., and
Refreshments of Tennessee, Inc.; Secretary/
Treasurer, Weaver Consolidated Group, Inc.
(Soft Drink Bottler)
o Director of Trustmark since 1998
o Trustmark Corporation Committees:
Audit and Finance
o Other Directorships: Trustmark National Bank
William G. Yates, Jr.....63 o Chairman and President, The Yates Companies,
(photo) Inc. (Construction)
o Director of Trustmark since 2001
o Trustmark Corporation Committees:
Strategic Planning
o Other Directorships: Trustmark National Bank
PROPOSAL 2: 2005 Stock and Incentive Compensation Plan
The Board of Directors is requesting that shareholders approve the Trustmark
Corporation 2005 Stock and Incentive Compensation Plan (2005 Plan), which will
replace the Trustmark Corporation 1997 Long Term Incentive Plan (1997 Plan). The
2005 Plan is designed to provide expanded equity compensation opportunities for
key associates and Board members of Trustmark and its subsidiaries.
As of March 1, 2005, there were 1,839,493 outstanding options under the 1997
Plan, with a weighted-average exercise term to expiration of 6.9 years and a
weighted-average exercise price of $23.72 per share.
The following summary of certain principal features of the 2005 Plan is subject
to the specific provisions contained in the full text of the 2005 Plan attached
as Exhibit A to this proxy statement.
Purpose of the Plan
The 2005 Plan will allow Trustmark to make grants of stock options, stock
appreciation rights (SARs), restricted stock, restricted stock units and
performance units (awards) to key associates and directors. The purpose of these
awards is to promote a greater identity of interest between key associates and
directors and Trustmark's shareholders by increasing the key associates' and
directors' proprietary interests in Trustmark.
Description of the Plan
Plan Term
The 2005 Plan becomes effective on the date of its approval by Trustmark's
shareholders (May 10, 2005) and, subject to earlier termination by the Board of
Directors, terminates on May 9, 2015. Except for performance unit awards payable
only in cash (for which payment is contingent on shareholder approval of the
2005 Plan), no awards may be granted under the 2005 Plan prior to shareholder
approval of the plan.
Administration
The 2005 Plan will be administered by the Human Resources Committee (the
Committee), which will consist only of non-employee directors, as defined in
Rule 16b-3 under the Securities Exchange Act of 1934 (Exchange Act), and
"outside directors," as defined by Section 162(m) under the Internal Revenue
Code (Code). Subject to the terms of the 2005 Plan, the Committee will have,
among other powers, the power to determine the key associates and directors to
whom awards are made, the nature and extent of any such awards, the terms and
conditions upon which awards may be made, exercised and modified, and to make
all other determinations and take all other actions necessary or advisable for
the administration of the 2005 Plan. Repricing of options, however, is not
permitted under the 2005 Plan.
Eligibility
Only key associates and Board members of Trustmark and its subsidiaries are
eligible to receive awards under the 2005 Plan. Key associates include officers
or other associates of Trustmark and its subsidiaries who, in the opinion of the
Committee, can contribute significantly to the growth and profitability of or
perform services of major importance to Trustmark and its subsidiaries. As of
March 1, 2005, there were approximately 142 associates and 18 non-employee
directors who would be eligible to participate in the 2005 Plan.
Shares Available For Grants
The maximum number of shares of Trustmark's common stock available for issuance
under the 2005 Plan is the sum of (1) 6,000,000 common shares plus (2) the
number of outstanding options under the 1997 Plan, which hereafter expire or are
otherwise terminated or forfeited. The 2005 Plan does not limit the number of
shares that may be issued for any particular type of award other than the
maximum amount available under the 2005 Plan.
If any award granted terminates, expires, lapses or is forfeited for any reason
(other than by exercise of a related option in the case of Tandem SARs), the
common shares subject to such award will be available for further awards. In
addition, if the exercise price for a stock option is paid using previously
acquired common shares, the number of common shares available for future awards
under the 2005 Plan will be reduced only by the net number of new common shares
issued upon the exercise of the option. Similarly, if common shares are
surrendered by a participant as full or partial payment of withholding taxes or
if the number of common shares otherwise deliverable is reduced for payment of
withholding taxes, the number of common shares surrendered or withheld shall
again be available for future awards under the 2005 Plan.
The number of shares subject to each outstanding award, the exercise price, and
the annual limit on and aggregate number of shares for which or from which
awards may be made will be adjusted for such stock dividends, stock splits,
recapitalizations, mergers, consolidations or reorganizations.
Annual Limits on Awards
Under the plan, in any calendar year no individual may receive awards of stock
options or SARs with respect to more than 90,000 common shares, awards of
restricted stock or restricted stock units with respect to more than 50,000
common shares or awards of performance units providing for the cash payment of
more than $1,000,000.
Section 162(m) Performance-Based Awards
Awards may be granted that do or do not qualify as "performance-based
compensation" under section 162(m) of the Code.
Under Section 162(m), compensation paid to the Chief Executive Officer and any
other executive officer reported in the summary compensation table in a tax year
is not deductible if it exceeds $1,000,000 unless it is "performance-based"
compensation. Performance-based compensation must be based on achievement of
objective performance goals set by the Committee and the material terms of the
compensation or benefit to be paid, including the performance goals which may be
used and the maximum which may be paid to any associate, must be disclosed to
and approved by shareholders before payment. The Committee must certify that the
applicable performance goals and any other material terms are in fact satisfied.
The performance goals for Section 162(m) performance-based compensation with
respect to the 2005 Plan will be determined by the Committee, may be equal to,
less than or more than one year and may not be the same for all participants,
may relate to performance of a subsidiary, division, strategic business unit or
line of business or may be based on the performance of Trustmark generally.
Under the 2005 Plan, performance goals may be based on:
o Trustmark stock value or increases therein
o earnings per share or earnings per share growth
o net earnings, earnings or earnings growth (before or after one or more
of taxes, interest, depreciation and/or amortization)
o operating profit
o operating cash flow
o operating or other expenses
o operating efficiency
o return on equity, assets, capital or investment
o sales or revenues or growth thereof
o deposits, loan and/or equity levels or growth thereof
o working capital targets or cost control measures
o regulatory compliance
o gross, operating or other margins
o efficiency ratio (as generally recognized and used for bank financial
reporting and analysis)
o interest income
o non-interest income
o credit quality
o net charge-offs and/or non-performing assets (excluding such loans or
classes of loans as may be designated for exclusion)
o productivity
o customer satisfaction
o satisfactory internal or external audits
o improvement of financial ratings
o achievement of balance sheet or income statement objectives
o quality measures
o any component or components of the foregoing (including, without
limitation, determination thereof with or without the effect of
discontinued operations and dispositions of business segments,
non-recurring items, material extraordinary items that are both
unusual and infrequent, special charges, and/or accounting changes) or
o implementation, management or completion of critical projects or
processes.
Performance goals may include a threshold level of performance below which no
payment or vesting may occur, levels of performance at which specified payments
or specified vesting will occur, and a maximum level of performance above which
no additional payment or vesting will occur. Performance goals may be absolute
in their terms or measured against or in relationship to a market index, a group
of other companies comparably, similarly or otherwise situated, or a combination
thereof. Each of the performance goals will be determined, where applicable and
except as provided above, in accordance with generally accepted accounting
principles.
Generally, under the design of the 2005 Plan, all awards of stock options and
all SARs qualify as performance-based compensation. In addition, the 2005 Plan
has been designed to enable any other award granted by the Committee, to the
extent it so elects, to qualify as performance-based compensation.
Option Awards
An option may be either an incentive stock option (ISO) or a non-qualified stock
option (NQSO). Option terms will be determined by the Committee in its
discretion, but generally, an option will not be exercisable in any event after
ten years from its grant date, and the exercise price for an option may not be
less than 100% of the common shares' fair market value at the date the option is
awarded. The aggregate fair market value of common shares, with respect to which
any key associate may first exercise ISOs granted under the plan during any
calendar year, may not exceed $100,000 or such amount specified in the Code and
rules and regulations thereunder.
Subject to the Committee's determination, the exercise price of any option may
be paid in cash, by delivery of common shares valued at fair market value at the
time of exercise, or in an approved "cashless exercise," or by a combination of
these methods. The 2005 Plan authorizes the grant of reload options in the event
the participant exercises all or a part of a stock option, including a reload
option, by surrendering stock in payment of the option price. Each reload option
will be granted on the date of exercise of the original option, will cover a
number of shares not exceeding the number of shares surrendered in payment of
the option price under such original option, will have an option price equal to
the fair market value on the date it is awarded, will expire on the stated
expiration date of the original option and will be subject to such
other terms and conditions as the Committee may determine.
SAR Awards
The 2005 Plan authorizes the grant of stock appreciation rights in tandem with
the grant of options (Tandem SARs) in addition to the grant of options (Additive
SARs) and independent of the grant of options (Freestanding SARS, and
collectively, SARs).
A SAR may be exercised in whole or part, and entitles the holder, upon exercise,
to receive cash or common shares or a combination thereof equivalent in value to
the excess of the fair market value on the exercise date of the common shares
represented by the SAR over (i) the option exercise price of the related option
in the case of a Tandem or Additive SAR or (ii) the fair market value on the
grant date of the common shares represented by the SAR in the case of a
Freestanding SAR. Payment for the value of a SAR may be made on exercise or, if
provided for in the award agreement, on a delayed basis either electively or
mandatorily.
A Tandem SAR will expire no later than ten years from its grant date, and is
exercisable and transferable subject to the conditions of, the related option.
If a Tandem SAR is exercised, it will reduce correspondingly the number of
common shares represented by the related option, and exercise of the related
option will similarly reduce the number of shares represented by the Tandem SAR.
The Committee retains sole discretion to approve or disapprove an optionee's
election to receive cash to the extent required by Rule 16b-3 under the Exchange
Act or the terms of the particular agreement.
An Additive SAR is deemed to be exercised upon, and in addition to, the exercise
of the related options. The deemed exercise of Additive SARs will not reduce the
number of common shares with respect to which the related options remain
unexercised. A Freestanding SAR may be exercised upon whatever terms and
conditions the Committee, in its sole discretion, imposes on such SARs.
Restricted Stock Awards
Restricted stock is stock which may not be disposed of by a participant until
the restrictions established by the Committee lapse. The restrictions may take
the form of a period during which the participant must remain employed or may
require the achievement of one or more pre-established performance criteria.
Holders of restricted stock will have voting and, unless otherwise provided by
the Committee, dividend rights. Subject to any exceptions authorized by the
Committee, shares of restricted stock will be forfeited upon termination of
employment or service. Similarly, shares of restricted stock will also be
forfeited if any performance criteria established, with respect to such awards,
are not achieved within the required time period.
Restricted Stock Unit Awards
A restricted stock unit is an award which is valued by reference to a common
share. Payment of the value of restricted stock units may not be made until the
restrictions established by the Committee lapse. The restrictions may take the
form of a period of restriction during which the participant must remain
employed or may require the achievement of one or more pre-established
performance criteria.
Holders of restricted stock units have no right to vote the shares represented
by the units; however, such participants may have added to their rights an
equivalent number of units represented by any dividends or other distributions
which would have been received if the shares represented by the units had been
issued.
Subject to any exceptions authorized by the Committee, restricted stock units
will be forfeited upon termination of employment or service. The Committee may
provide for vesting of restricted stock units in connection with the termination
of a participant's employment or service on such basis as it deems appropriate.
Similarly, restricted stock units will also be forfeited if any performance
criteria established with respect to such awards are not achieved within the
required time period.
Payment for vested restricted stock units may be made on vesting or, if provided
for in the award agreement, on a delayed basis either electively or mandatorily.
If paid on a delayed basis, the payment amount may be adjusted for deemed
interest or earnings on such basis as the Committee may provide.
Performance Unit Awards
A performance unit is a fixed dollar award based on performance goals
established and certified by the Committee. Performance units may be paid in
cash, common shares or a combination thereof.
Change in Control
The Committee may, at the time an award is made or thereafter, take any one or
more of the following actions in connection with a change in control: (i)
provide for the acceleration of any vesting periods; (ii) provide for the
purchase or settlement of any such award for cash; (iii) make an adjustment to
the award as the Committee deems appropriate to reflect the change in control;
or (iv) cause any award to be assumed by the acquiring or surviving corporation.
Non-Transferability
Subject to certain exceptions and, except for certain permitted transfers of
NQSOs to family members and trusts, awards granted under the 2005 Plan generally
may not be assigned, transferred, pledged or otherwise encumbered by a
participant, other than by will or the laws of descent and distribution.
Amendment and Termination of the Plan
The Board of Directors may terminate, amend or modify the 2005 Plan from time to
time in any respect without shareholder approval, unless the particular
amendment or modification requires shareholder approval under the Code, the
rules and regulations under Section 16 of the Exchange Act, the rules and
regulations of the exchange on which Trustmark's common shares are listed or
pursuant to any other applicable laws, rules or regulations. Currently, it is
anticipated that shareholder approval of any amendments will normally be
required if an amendment would materially increase the benefits that can be
provided, materially increase the number of shares which may be issued or the
compensation which may be provided or materially modify the requirements as to
eligibility for participation. No amendment or modification of the 2005 Plan,
other than capital adjustments pursuant to the plan, may adversely affect any
awards previously granted under the plan without the participant's written
consent.
Federal Income Tax Consequences of Awards Granted under the Plan
The following is a brief summary of the federal income tax consequences relating
to awards under the 2005 Plan based upon the federal income tax laws in effect
on the date hereof (other than the compensation deduction limit under Section
162(m) which is described above). This summary is not intended to be exhaustive
and, among other things, does not describe state or local tax consequences.
A participant who exercises a NQSO will realize ordinary income in an amount
measured by the excess of the fair market value of the shares on the date of
exercise over the exercise price. Trustmark generally will be entitled to a
corresponding deduction for federal income tax purposes.
A participant who exercises an ISO will not be subject to taxation at the time
of exercise, nor will Trustmark be entitled to a deduction for federal income
tax purposes. The difference between the exercise price and the fair market
value of shares on the date of exercise is a tax preference item for purposes of
determining a participant's alternative minimum tax. A disposition of the
purchased shares after the expiration of the required holding period will
generate long-term capital gain in the year of disposition, and Trustmark will
not be entitled to a deduction for federal income tax purposes. A disposition of
the purchased shares prior to the expiration of the applicable holding period
will subject the participant to taxation at ordinary income rates in the year of
disposition, and Trustmark generally will be entitled to a corresponding
deduction.
A participant who exercises a SAR will realize ordinary income in an amount
equal to the amount of cash and the fair market value of any shares received.
Trustmark generally will be entitled to a corresponding deduction for federal
income tax purposes. If the participant receives common stock upon exercise of a
SAR, the taxation of the post-exercise appreciation or depreciation is treated
as either a short-term or long-term capital gain or loss, depending upon the
length of time the participant held the shares of common stock.
A participant receiving restricted stock generally will recognize ordinary
income in the amount of the fair market value of the restricted stock at the
time the stock is no longer subject to forfeiture, less the consideration paid
for the stock. However, a participant may elect, under Section 83(b) of the Code
within 30 days of the grant of the stock, to recognize taxable ordinary income
on the date of grant equal to the excess of the fair market value of the shares
of restricted stock (determined without regard to the restrictions) over the
purchase price of the restricted stock. Thereafter, if the shares are forfeited,
the participant will be entitled to a deduction, refund or loss, for tax
purposes only, in an amount equal to any purchase price of the forfeited shares
regardless of whether the participant made a Section 83(b) election. With
respect to the sale of shares after the forfeiture period has expired, the
holding period to determine whether any gain or loss is long- or short-term
begins when the restriction period expires, and the tax basis for such shares
will generally be based on the fair market value of such shares on such date.
However, if the participant makes an election under Section 83(b), the holding
period will commence on the date of grant, the tax basis will be equal to the
fair market value of shares on such date (determined without regard to
restrictions), and Trustmark generally will be entitled to a deduction equal to
the amount that is taxable as ordinary income to the participant in the year
that such income is taxable. Dividends paid on restricted stock generally will
be treated as compensation that is taxable as ordinary income to the participant
and will be deductible by Trustmark, when paid. If, however, the participant
makes a Section 83(b) election, the dividends will be taxable as ordinary income
to the participant but will not be deductible by Trustmark.
A participant will not realize income in connection with the grant of a
restricted stock unit or the credit of any dividend equivalents to his or her
account or the grant of a performance unit. When shares of common stock and/or
cash is delivered to the participant, the participant will generally be required
to include as taxable ordinary income in the year of receipt, an amount equal to
the amount of cash and the fair market value of any shares received. Trustmark
will be entitled to a deduction at the time and in the amount included in the
participant's income by reason of the receipt. For each share of common stock
received in respect of a restricted stock unit, the taxation of the
post-exercise appreciation or depreciation is treated as either a short-term or
long-term capital gain or loss, depending upon the length of time the
participant held the shares of common stock.
On October 22, 2004, the American Jobs Creation Act of 2004 (the Act) was
enacted and included a new tax provision (Section 409A of the Code) affecting
"nonqualified deferred compensation." Any such compensation must, among other
things, meet election timing and payment timing requirements. Failure to meet
these requirements causes the nonqualified deferred compensation to be taxed
when vested, to be subject to an additional 20% federal income tax and to be
subject to interest on federal underpayments from the year the compensation
vests. Under current IRS guidance, certain awards under the 2005 Plan are
excluded from nonqualified deferred compensation to which Section 409A applies.
These excluded awards are stock options under which common shares are issued,
SARs under which common shares are issued, restricted stock and restricted stock
units and performance units which are paid at or shortly after vesting. Other
awards under the 2005 Plan may be treated as nonqualified deferred compensation
to which Section 409A applies, and in such case, it is generally Trustmark's
intent that such awards be designed to comply with the election timing, payment
timing and other requirements of Section 409A.
Recommendation and Vote Required
Shareholder approval of the 2005 Plan requires the affirmative vote of the
holders of a majority of the votes cast on the proposal. Approval of the 2005
Plan by shareholders will be considered approval of the material terms of the
plan, including for performance-based awards, the performance goals which may be
used and the maximum benefit which may be paid to any associate for purposes of
Section 162(m) of the Code.
The Board of Directors recommends that shareholders vote "for" approval of the
2005 Plan.
PERFORMANCE GRAPH
The following graph compares Trustmark's annual percentage change in cumulative
total return on common shares over the past five years with the cumulative total
return of companies comprising the NASDAQ market value index and the CoreData
Industry Group 413. The CoreData Industry Group 413 is an industry index
Published by CoreData, Inc. and consists of 60 bank holding companies located in
the southeastern United States.
This presentation assumes that $100 was invested in shares of the relevant
issuers on December 31, 1999, and that dividends received were immediately
invested in additional shares. The graph plots the value of the initial $100
investment at one-year intervals for the fiscal years shown.
Five-Year Cumulative Total Return
[OBJECT OMITTED]
Company 1999 2000 2001 2002 2003 2004
--------------------------- ------ ------ ------ ------ ------ ------
Trustmark 100 99.91 118.15 119.01 150.24 163.67
CoreData Industry Group 413 100 102.09 128.39 137.41 175.45 201.74
NASDAQ Market 100 62.85 50.10 34.95 52.55 56.97
STOCK
Securities Ownership by Certain Beneficial Owners and Management
The following table reflects the number of Trustmark common shares beneficially
owned by (a) persons known by Trustmark to be the beneficial owners of more than
five percent of its outstanding shares, (b) directors and nominees, (c) each of
the executive officers named within the Executive Compensation section and (d)
directors and executive officers of Trustmark as a group. The persons listed
below have sole voting and investment authority for all shares except as
indicated. Unless otherwise noted, beneficial ownership for each outside
director and nominee includes 5,000 shares, which the individual has the right
to acquire through the exercise of options granted under Trustmark's 1997 Long
Term Incentive Plan (1). The percentage of outstanding shares of common stock
owned is not shown where less than one percent.
Shares
Beneficially Percent of
Owned Outstanding
Name as of 12/31/04 Shares
--------------------------------------- -------------------- -----------
Robert M. Hearin Foundation; 7,895,034(2) 13.80%
Robert M. Hearin Support Foundation
Post Office Box 16505
Jackson, MS 39236
J. Kelly Allgood 55,867
Reuben V. Anderson 27,533(3)
John L. Black, Jr. 283,200(3)
William C. Deviney, Jr. 16,600
Duane A. Dewey 8,750(4)
C. Gerald Garnett 15,416
Richard G. Hickson 284,555(5)
Matthew L. Holleman III 7,944,509(6) 13.89%
Gerard R. Host 134,396(3)(7)
John M. McCullouch 700(8)
Richard H. Puckett 131,160(3)(9)
William O. Rainey 26,428(10)
Carolyn C. Shanks 4,800(3)(11)
R. Michael Summerford 1,500(8)
Harry M. Walker 167,787(3)(12)
Kenneth W. Williams 15,602
Williams G. Yates, Jr. 25,455(11)(13)
Directors and executive officers of
Trustmark as a group 9,618,192 16.82%
(1) Includes options exercisable within 60 days of the Annual Meeting of
Shareholders.
(2) Includes 383,928 shares owned by the Robert M. Hearin Foundation,
2,956,862 shares owned by the Robert M. Hearin Support Foundation,
4,281,244 shares owned by Capitol Street Corporation, and 273,000
shares owned by Bay Street Corporation. Capitol Street Corporation is
a 100% owned subsidiary of Galaxie Corporation, which may be deemed to
be controlled by the Robert M. Hearin Support Foundation. Voting and
investment decisions concerning shares beneficially owned by the
Robert M. Hearin Foundation and the Robert M. Hearin Support
Foundation are made by the Foundations' trustees: Robert M. Hearin,
Jr., Matthew L. Holleman III, Daisy S. Blackwell, E.E. Laird, Jr.,
Laurie H. McRee and Alan W. Perry.
(3) Includes shares owned by spouse and/or minor children.
(4) Includes 8,750 shares that the named individual has the right to
acquire through the exercise of options granted under Trustmark's 1997
Long Term Incentive Plan.
(5) Includes 249,418 shares that the nominee has the right to acquire
through the exercise of options granted under Trustmark's 1997 Long
Term Incentive Plan.
(6) Includes 49,475 shares owned by nominee and immediate family members
and 7,895,034 shares for which nominee has shared voting and
investment authority as a result of serving as one of six trustees of
the Robert M. Hearin Foundation and the Robert M. Hearin Support
Foundation, president and chairman of the board of Galaxie
Corporation, president and director of Capitol Street Corporation and
president and director of Bay Street Corporation. These shares are
reported as beneficially owned by the Robert M. Hearin Foundation and
the Robert M. Hearin Support Foundation.
(7) Includes 87,597 shares that the named individual has the right to
acquire through the exercise of options granted under Trustmark's 1997
Long Term Incentive Plan.
(8) Includes 500 shares that the named individual has the right to acquire
through the exercise of options granted under Trustmark's 1997 Long
Term Incentive Plan.
(9) Includes 45,000 shares owned by Puckett Machinery Company for which
nominee has either sole or shared voting and investment authority.
(10) Includes 7,000 shares that the named individual has the right to
acquire through the exercise of options granted under Trustmark's 1997
Long Term Incentive Plan.
(11) Includes 4,000 shares that the named individual has the right to
acquire through the exercise of options granted under Trustmark's 1997
Long Term Incentive Plan.
(12) Includes 84,486 shares that the named individual has the right to
acquire through the exercise of options granted under Trustmark's 1997
Long Term Incentive Plan.
(13) Includes 9,179 shares held by a corporation controlled by the nominee.
Section 16(a) Beneficial Ownership Reporting Compliance
During 2004, there were late filings reported by beneficial owners as follows:
two late filings were related to the purchase of Trustmark shares by J. Kelly
Allgood and one related to a purchase of Trustmark shares by Carolyn C. Shanks
and her spouse. All directors and officers were late in reporting options
granted to them by Trustmark in April 2004.
Trustmark reviewed the late filers' transactions and determined there were no
short-swing liabilities owed.
Securities Authorized for Issuance
The table below sets forth information with respect to compensation plans under
which equity securities of Trustmark are authorized as of December 31, 2004,
determined without regard to the 2005 Stock and Incentive Compensation Plan
proposed for shareholder approval in this proxy statement:
Number of securities
Number of securities to be Weighted-average remaining available
issued upon exercise of exercise price of for future issuance under
outstanding options, outstanding options, equity compensation
Plan Category warrants and rights (a) warrants and rights plans (excluding (a))
---------------------------- -------------------------- -------------------- -------------------------
Approved by shareholders (1) 1,842,993 $23.71 4,696,162
Not approved by shareholders - - -
-------------------------- -------------------- -------------------------
Total 1,842,993 $23.71 4,696,162
========================== ==================== =========================
(1) Trustmark Corporation 1997 Long Term Incentive Plan.
EXECUTIVE COMPENSATION
Compensation Tables
The following table sets forth the aggregate compensation for the last three
fiscal years paid to Trustmark's Chief Executive Officer and the four highest
compensated executive officers:
Long-Term All Other
Annual Compensation Compensation Compensation (1)
======================== ===================== ==================
Securities
Underlying Stock
Options
Name and Principal Position Year Salary Bonus (Number of Shares)
-----------------------------------------------------------------------------------------------------------------
Richard G. Hickson 2004 $ 646,667 $ 406,310 45,000 $ 9,225
Chairman, President and CEO, 2003 596,458 549,959 45,000 9,000
Trustmark Corporation; 2002 550,000 550,621 45,000 9,000
Chairman and CEO,
Trustmark National Bank
Gerard R. Host 2004 $ 321,667 $ 195,419 25,000 $ 9,225
President 2003 296,791 210,107 25,000 9,000
General Banking, 2002 254,500 194,963 17,000 9,000
Trustmark National Bank
Harry M. Walker 2004 $ 265,417 $ 124,415 15,000 $ 9,225
President 2003 257,624 129,939 15,000 9,000
Jackson Metro, 2002 246,167 141,347 17,000 9,000
Trustmark National Bank
Duane A. Dewey 2004 $ 256,250 $ 163,698 15,000 $ 2,446
President 2003 88,141 167,000 10,000 n/a
Wealth Management, 2002 n/a n/a n/a n/a
Trustmark National Bank
William O. Rainey 2004 $ 188,333 $ 75,558 7,500 $ 9,225
Executive Vice President and 2003 178,041 78,680 6,500 9,000
Chief Banking Officer, 2002 168,667 83,329 6,500 9,000
Trustmark National Bank
(1) All other compensation represents Trustmark contributions to the 401(k)
plan. None of the named executive officers received perquisites or other
personal benefits in excess of $50,000 or 10% of their total cash
compensation in any of the years reported.
Option Grants in 2004
The following table sets forth, as to each named executive officer, information
with respect to options granted during 2004 and the potential realizable value
of such options assuming a 5% and 10% compounded annual rate of appreciation in
the value of Trustmark's shares. The 5% and 10% assumed rates of growth are
required by SEC rules for illustrative purposes only. Options granted during
2004 vest in four annual installments.
Individual Grants
---------------------------------------------------- Potential Realizable Value at
% of Assumed Annual Rates of
Options Options Exercise Appreciation for Option Term
Granted Granted Price Per Expiration -------------------------------
Name in 2004 in 2004 Share (1) Date 5% 10%
------------------------- ---------------------------------------------------- -------------------------------
Richard G. Hickson 45,000 11.15% $ 27.30 4/20/2014 $ 772,597 $ 1,957,913
Gerard R. Host 25,000 6.19 27.30 4/20/2014 429,221 1,087,729
Harry M. Walker 15,000 3.72 27.30 4/20/2014 257,532 652,638
Duane A. Dewey 15,000 3.72 27.30 4/20/2014 257,532 652,638
William O. Rainey 7,500 1.86 27.30 4/20/2014 128,766 326,319
(1) The exercise price of all options was equal to the average market price of
Trustmark's common shares on the grant date.
Option Exercises and Year-End Option Values
The table below reflects information regarding options exercised by each named
executive officer in 2004, as well as the number and value of the remaining
options held by those executive officers at December 31, 2004.
Value of Unexercised
Options at In-the-Money Options
Shares Fiscal Year-End at Fiscal Year-End
Acquired Value ---------------------------- ---------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------------------ ----------- --------- ----------- ------------- ----------- -------------
Richard G. Hickson 36,877 $ 677,936 201,979 119,961 $ 2,014,387 $ 720,058
Gerard R. Host n/a n/a 64,533 63,586 628,811 381,427
Harry M. Walker n/a n/a 66,422 46,086 648,099 288,052
Duane A. Dewey n/a n/a 2,500 22,500 11,863 94,988
William O. Rainey 28,500 285,856 - 17,500 - 101,473
Pension Plan
Trustmark maintains a noncontributory pension plan for associates who are 21
years of age or older and who have completed one year of service with a
prescribed number of hours of credited service. The following table specifies
the estimated annual benefits payable upon retirement at age 65 under the plan
to persons in the following remuneration and years of service classifications:
Five-Year Years of Credited Service
Average Annual ----------------------------------------------------
Compensation 15 20 25 30 35 45
-------------- ------- ------- ------- ------- ------- -------
50,000 6,176 7,302 8,142 8,768 9,232 9,946
75,000 9,264 10,953 12,213 13,151 13,847 14,918
100,000 12,352 14,603 16,283 17,535 18,463 19,891
125,000 15,440 18,254 20,354 21,919 23,079 24,864
150,000 18,528 21,905 24,425 26,303 27,695 29,837
200,000 24,705 29,207 32,567 35,070 36,927 39,783
205,000 25,322 29,937 33,381 35,947 37,850 40,777
Years of credited service for the highest paid executives are: Richard G.
Hickson - 8 years, Gerard R. Host - 21 years, Harry M. Walker - 34 years, Duane
A. Dewey - 0 years, William O. Rainey - 23 years.
Benefits payable under the plan are based on a formula that takes into account
the participant's compensation averaged over the highest consecutive five-year
period out of the most recent seven-year period and the number of years of
credited service. Compensation consists of W-2 taxable income adjusted for
associate contributions to 401(k), qualified transportation fringe benefits and
cafeteria plans. Compensation does not include group term life insurance,
automobile allowance, moving expenses, severance pay or income from stock
options after 2002. After 2003, compensation also excludes all incentive
compensation, bonuses and commissions. For 2004, the maximum benefit allowable
by the Internal Revenue Service was $165,000 and the maximum covered
compensation was $205,000.
The table assumes the entire service period was completed under the benefit
formula that is effective for service on or after January 1, 2004. Amounts
payable pursuant to the plan are not subject to deduction for social security.
Supplemental Retirement Plan
Trustmark provides executive officers with a non-qualified defined benefit plan,
which provides a supplemental retirement benefit to executive officers selected
for plan participation by the Human Resources Committee. The retirement benefit
is payable for life, but not less than ten years, and normally commences at
normal retirement age (65). Benefits payable pursuant to the plan are not
subject to deduction for social security.
The plan provides retirement and death benefits based upon a retirement benefit
amount for each participant established by the Human Resources Committee. The
retirement benefit amount is based on the executive officer's level of
responsibilities and, in part, on specified salary. The following table sets
forth, as to each named executive officer, retirement benefits currently
anticipated to be paid at normal retirement (the anticipated normal retirement
benefit):
Annual
Name Benefit
------------------ ---------
Richard G. Hickson $ 300,000
Gerard R. Host 150,000
Harry M. Walker 125,000
Duane A. Dewey 100,000
William O. Rainey 82,250
The plan permits early retirement, with Human Resources Committee consent, at or
after age 55 with five years of plan participation. Benefits at early retirement
are actuarially reduced.
The plan also provides a deferred vested benefit payable at normal retirement
age to a participant terminating for reasons other than retirement with at least
one year of plan participation. The deferred benefit is accrued and vests at the
rate of 1/10th of the anticipated normal retirement benefit for each year of
plan participation not over ten.
If a participant does not complete at least one year of plan participation, plan
benefits are forfeited (except where the cessation of employment is due to
death, retirement, total disability or just cause as defined in the plan).
Should a participant die prior to retirement, the participant's beneficiary will
receive a death benefit equal to a percentage (100% for the first year and 75%
for the remaining years) of a specified covered salary amount (which amount is
twice the anticipated normal retirement benefit) for ten years or until the
participant would have reached normal retirement age, whichever is later. Life
insurance contracts have been purchased to fund payments under the plan.
Years of plan participation credited to the above participants as of December
31, 2004, are: Richard G. Hickson - 7 years, Gerard R. Host - more than 10
years, Harry M. Walker - more than 10 years, Duane A. Dewey - 1 year, William O.
Rainey - more than 10 years.
Employment Agreements
Mr. Hickson entered into an amended and restated employment agreement with
Trustmark effective March 12, 2002, which provides for his employment as
Chairman and Chief Executive Officer. The agreement provides for the Human
Resources Committee to approve a base salary of not less than $400,000 and award
bonuses, stock options and other customary benefits. Bonus payments must not
exceed current base salary.
If Mr. Hickson's employment is terminated (other than for Cause, death,
disability or retirement) or in the event he resigns for Good Reason within
three years after a change in control of Trustmark, Mr. Hickson is entitled to
an amount equal to the sum of his salary immediately prior to the change in
control and the highest annual bonus earned in any of the preceding three years.
In consideration of Mr. Hickson's agreements relating to confidentiality,
non-solicitation and non-competition, Trustmark is additionally obligated to pay
Mr. Hickson an amount equal to the sum of his salary immediately prior to the
termination or resignation and the highest annual bonus earned in any of the
preceding three years, multiplied by two. Mr. Hickson is entitled to receive
customary benefits for twelve months following his termination, reduced by any
benefits received from later employment. Any outstanding unvested stock options
vest as of the change in control. Finally, Trustmark is obligated to purchase
Mr. Hickson's residence for the lesser of appraised value or $900,000 if he is
unable to sell it within four months.
If, without a change in control, Mr. Hickson is terminated (other than for
Cause, death, disability or retirement) or if he resigns for Good Reason, in
consideration of Mr. Hickson's agreements relating to confidentiality,
non-solicitation and non-competition, Trustmark is obligated to pay Mr. Hickson
an amount equal to the sum of his salary immediately prior to the termination or
resignation and the highest annual bonus earned in any of the preceding three
years, multiplied by two. Trustmark must also provide customary benefits for a
period of eighteen months following termination, reduced by any benefits
received from later employment, and purchase Mr. Hickson's residence for the
lesser of appraised value or $900,000 if he is unable to sell it within four
months.
If Mr. Hickson is terminated for Cause or if he leaves Trustmark voluntarily, he
is not entitled to any payment other than earned salary and bonus.
Effective March 12, 2002, Trustmark entered into amended and restated employment
agreements with Gerard R. Host and Harry M. Walker.
Under these agreements, if Mr. Host or Mr. Walker's employment is terminated
(other than for Cause, death, disability or retirement) or if either resigns for
Good Reason within two years after a change in control of Trustmark, the
executive is entitled to payments equal to the sum of his base salary
immediately prior to the change in control and the highest annual bonus earned
in any of the preceding two years. Trustmark is required to continue certain
benefits for twelve months following termination or resignation, reduced by any
benefits received from later employment. Any outstanding unvested stock options
vest as of the date of termination or resignation. Additionally, Trustmark is
obligated to make certain payments in consideration of the executive's covenants
relating to confidentiality, non-solicitation and non-competition. The amount
payable is the sum of the executive's base salary and the highest annual bonus
earned in any of the preceding three years.
If, without a change in control, either executive is terminated without Cause or
if either resigns for Good Reason, Trustmark is obligated to make certain
payments in consideration of the executive's covenants relating to
confidentiality, non-solicitation and non-competition. The amount payable is the
sum of the executive's base salary and the highest annual bonus earned in any of
the preceding three years.
If Mr. Host or Mr. Walker is terminated for Cause or leaves Trustmark
voluntarily, they are not entitled to any payment other than earned salary and
bonus.
For purposes of these agreements, "Cause" means (i) commission of an act of
personal dishonesty, embezzlement or fraud; (ii) misuse of alcohol or drugs;
(iii) failure to pay any obligation owed to Trustmark or any affiliate; (iv)
breach of a fiduciary duty or deliberate disregard of any rule of Trustmark or
any affiliate; (v) commission of an act of willful misconduct or the intentional
failure to perform stated duties; (vi) willful violation of any law, rule or
regulation (other than misdemeanors, traffic violations or similar offenses) or
any final cease-and-desist order; (vii) unauthorized disclosure of any
confidential information of Trustmark or any affiliate or engaging in any
conduct constituting unfair competition or inducing any customer of Trustmark or
any affiliate to breach a contract with Trustmark or any affiliate.
"Good Reason" means (i) a demotion in status, title or position or the
assignment of the person to duties or responsibilities which are materially
inconsistent with such status, title or position; (ii) a material breach of the
applicable agreement by Trustmark; (iii) a relocation of the person to a
location more than fifty miles outside of Jackson, Mississippi, without the
person's consent or, (iv) in the case of Mr. Hickson, his not being named as the
Chief Executive Officer of any successor by merger to Trustmark. In the case of
Mr. Hickson's agreement, any good faith determination of "Good Reason" made by
him shall be conclusive.
Human Resources Committee Report on Executive Compensation
Trustmark's Human Resources Committee, which held five meetings in 2004,
recommends to the Board the compensation of Trustmark's Chief Executive Officer
and other executive officers and oversees the administration of all executive
compensation, including salary, cash bonuses awarded under the management
incentive program and equity-based awards under Trustmark's 1997 Long Term
Incentive Plan. The Committee is comprised entirely of independent directors.
Committee recommendations with respect to compensation of executive officers
other than the CEO take into account compensation recommendations made by the
CEO.
Trustmark's executive compensation policy is designed to attract and retain
highly qualified executives and to motivate them to maximize shareholder value
by achieving performance goals. Each executive officer's compensation is
dependent upon achieving business and financial goals and realizing individual
performance objectives. The Committee also intends that incentive compensation
paid to the named executive officers normally will be deductible for federal
income tax purposes, but the Committee recognizes that there are circumstances
where deductibility is secondary and may not be obtained. In designing the
proposed 2005 Stock and Incentive Compensation Plan, which includes expanded
types of equity and incentive compensation opportunities, the Committee
contemplated that awards under that plan could be designed to meet the
performance-based compensation requirements for deductibility under Section
162(m) of the Code.
Chief Executive Officer Compensation - 2004
The Committee retained an independent consulting firm to evaluate competitive
compensation levels and make recommendations for Mr. Hickson's compensation for
2004. In establishing Mr. Hickson's salary, the Committee principally considered
the independent consultant's compensation analyses of salaries paid to chief
executive officers of financial institutions with an asset-size similar to
Trustmark's in Trustmark's general geographic market. The Committee also
considered Mr. Hickson's individual performance and contributions relative to
Trustmark's corporate goals in 2003. Although the Committee considered a number
of corporate goals in this context, the Committee gave the greatest weight to
Trustmark's financial performance.
Mr. Hickson's cash bonus for 2004 was determined based upon Trustmark's
management incentive plan and was measured in a manner similar to that used for
other executive officers. In measuring corporate performance, actual performance
was measured against profit plan performance targets established at the
beginning of 2004. Under the plan, Mr. Hickson's target incentive was set at 70%
of base compensation with a potential maximum of 100% of base compensation. Mr.
Hickson's incentive award was weighted at 75% on corporate performance,
measuring actual results for earnings per share and return on equity compared to
Trustmark's profit plan performance targets. The remaining 25% was weighted on
actual results for specific strategic operational drivers including operating
efficiency, revenue growth, credit quality and net income after taxes compared
to Trustmark's profit plan.
Pursuant to the same methodology used to grant equity-based awards to other
executive officers under Trustmark's 1997 Long Term Incentive Plan, for 2004,
Mr. Hickson was awarded options to purchase 45,000 shares of Trustmark's stock
at $27.30 per share, which was fair market value of such shares on the award
date. The number of options granted was designed to provide Mr. Hickson with
additional incentive-based compensation.
Executive Officers' Compensation - 2004
Salary
In establishing the salaries of Trustmark's executive officers for 2004, the
Committee considered the recommendations of the CEO, which were principally
based on the individual performance, skills and experience of each executive
officer.
Cash Bonuses
Cash bonuses awarded to executive officers for 2004 were made pursuant to
Trustmark's management incentive plan. Under the plan, the CEO recommends annual
incentive targets for executive officers stated as a percentage of base salary,
which are then reviewed by the Committee and approved by the Board of Directors
of Trustmark National Bank ("TNB"). The incentive awards for executive officers
are based on measured weightings with respect to corporate performance,
strategic operational drivers and business unit goals.
Equity-based Awards
Equity-based awards, designed to provide additional incentive-based
compensation, are made to executive officers pursuant to Trustmark's 1997 Long
Term Incentive Plan. Although the Committee can exercise discretion in making
awards under the plan, for 2004, the Committee awarded executive officers stock
options based on each executive's position and responsibilities.
Committee Composition
No current or former executive officer of Trustmark or any of its subsidiaries
serves or, during 2004, served as a member of the Human Resources Committee. The
Committee, which has submitted the foregoing Report on Executive Compensation,
is composed of the following persons:
Reuben V. Anderson - Chair
William C. Deviney, Jr.
C. Gerald Garnett
Carolyn C. Shanks
TRANSACTIONS WITH MANAGEMENT
No directors, executive officers, nominees, five percent shareholders, their
related entities or their immediate family members have been indebted to
Trustmark, or any subsidiaries other than TNB, at any time since January 1,
2004. In the ordinary course of business, TNB and its subsidiaries have provided
and expect to provide in the future, banking, investment and insurance services
in excess of $60,000 with directors, executive officers, nominees, five percent
shareholders, related entities and immediate family members. Such transactions
are made on substantially the same terms including, in the case of loans,
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons. None of the loans involved more than the normal
risks of collectibility and presented no other unfavorable features.
During 2004, TNB engaged in business relationships with various entities in
which members of the Board of Directors have direct and indirect interests. None
of these relationships were considered material to TNB or such entity.
AUDIT AND FINANCE COMMITTEE REPORT
Trustmark's Audit and Finance Committee, which conducts the usual and necessary
activities in connection with the audit functions of Trustmark, held eight
meetings during 2004.
Independent Public Accountants
On April 29, 2002, the Board of Directors, based on the recommendation of the
Audit and Finance Committee, engaged KPMG LLP (KPMG) as Trustmark's independent
accountants for a three-year period.
Representatives of KPMG are expected to be present at the annual meeting with
the opportunity to make a statement, if they desire to do so, and to be
available to respond to appropriate questions during the period generally
allotted for questions at the meeting.
The Committee has reaffirmed KPMG's engagement as the independent accountants
for 2005.
Committee Review and Discussion
The Committee reviewed and discussed with management and KPMG the consolidated
audited financial statements as of and for the three years ended December 31,
2004. The Committee also discussed with KPMG the matters required by Statement
on Auditing Standards No. 61, Communication with Audit Committees, as amended.
The Committee received the written disclosures and the letter from KPMG required
by Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees, as amended, and discussed the independence of KPMG. Based on
this review, the Committee recommended to the Board of Directors that the
consolidated audited financial statements be included in Trustmark's Annual
Report on Form 10-K for the year ended December 31, 2004.
None of the members of Trustmark's Audit and Finance Committee serve on the
audit committee of another company, and all are independent directors as defined
by NASDAQ rules:
J. Kelly Allgood - Chair
John L. Black, Jr.
Richard H. Puckett
Kenneth W. Williams
The Securities and Exchange Commission (SEC) requires that at least one member
of the audit committee qualify as a financial expert. The Board has determined
that John L. Black, Jr., meets this requirement. Upon Mr. Black's retirement
from the Board of Directors in May 2005, and upon shareholder election of the
proposed slate of directors, Mr. R. Michael Summerford will be named as a member
of the Audit and Finance Committee. The Board has determined that Mr. Summerford
also meets the rules of independence as defined and meets the qualifications set
forth by the SEC to be named Trustmark's financial expert.
Accounting Fees
The following aggregate fees were billed to Trustmark during 2004 and 2003 by
KPMG for services rendered:
1. Audit Fees - Audit fees include fees for professional services in
connection with the audit of Trustmark's consolidated financial
statements, review of internal controls, review of the interim
consolidated financial statements included in quarterly reports and
services provided by KPMG in connection with statutory and regulatory
filings. Audit fees for 2004 and 2003 were $1,006,082 and $260,250,
respectively. Included in 2004 is $743,155 associated with
Sarbanes-Oxley compliance.
2. Audit-Related Fees - Audit-related fees include fees for professional
services in connection with audits of benefit plans and acquisition
consultation. Audit-related fees for 2004 and 2003 were $29,203 and
$58,150, respectively.
3. Tax Fees - Tax fees include fees for professional services rendered in
connection with tax compliance and were $4,128 and $21,325 for 2004
and 2003, respectively.
4. All Other Fees - All other fees include fees for professional services
rendered in connection with consulting services provided. KPMG did not
bill Trustmark for other fees during 2004. Other fees billed during
2003 totaled $700.
Pre-Approval Policy
The Audit and Finance Committee has adopted a policy that sets forth guidelines
and procedures for the pre-approval of services to be performed by the
independent accountants, as well as the fees associated with those services.
Annually, the Committee reviews and establishes the types of services and fee
levels to be provided by the independent accountants. Any additional services or
fees in excess of the approved amount require specific pre-approval by the
Committee. The Committee has delegated to its Chairman the authority to evaluate
and approve services and fees in the event that pre-approval is required between
meetings. If the Chairman grants such approval, he will report that approval to
the full Committee at its next meeting. Non-audit services, as prohibited by the
SEC, are likewise prohibited under the Committee's pre-approval policy.
Audit and Finance Committee Charter
The Audit and Finance Committee reviews and reassesses the adequacy of the
Committee's Charter on an annual basis. The Charter, which has been amended
primarily to address the Committee's review of the reports on internal controls
from management and the independent accountants, accompanies this proxy as
Exhibit B.
PROPOSALS OF SHAREHOLDERS
Shareholders may submit proposals to be considered at the 2006 Annual Meeting of
Shareholders if they do so in accordance with applicable regulations of the SEC.
Any shareholder proposals must be submitted to the Secretary of Trustmark no
later than December 9, 2005, in order to be considered for inclusion in
Trustmark's proxy materials for the 2006 Annual Meeting.
(LOGO)
TRUSTMARK CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
MAY 10, 2005
The shareholder(s) hereby appoints Matthew L. Holleman III and J. Kelly Allgood,
or either of them, as proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote, as designated on the
reverse side of this ballot, all of the shares of Common Stock of Trustmark
Corporation that the shareholder(s) are entitled to vote at the annual meeting
of shareholders to be held in the Grand Ballroom at the Hilton Hotel, located at
1001 East County Line Road, Jackson, Mississippi, on Tuesday, May 10, 2005, at
10:00 a.m., Central Time.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED "FOR"
THE ELECTION OF THE NOMINEES FOR THE BOARD OF DIRECTORS LISTED ON THE REVERSE
SIDE AND "FOR" THE TRUSTMARK CORPORATION 2005 STOCK INCENTIVE COMPENSATION PLAN.
If you noted any Comments above, please mark the corresponding box on the
reverse side.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
REPLY ENVELOPE OR YOU MAY VOTE BY INTERNET OR TELEPHONE (SEE REVERSE SIDE FOR
MORE INFORMATION).
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
(Logo)
Trustmark Corporation
P.O. Box 291
Jackson, MS 39205-0291
Vote by Internet - www.proxyvote.com
Shareholders may use the Internet to transmit their voting instructions and
for electronic delivery of information up until 11:59 P.M. Eastern Time the
day before the meeting date. To vote on-line, have the proxy card in hand,
access the web site above, and follow the instructions given.
Electronic Delivery of Future Shareholder Communications
If you would like to reduce the costs incurred by Trustmark Corporation in
mailing proxy materials, you can consent to receive all future proxy statements,
proxy cards and annual reports electronically via e-mail or the Internet. To
sign up for electronic delivery, please follow the instructions above to vote
using the Internet and, when prompted, indicate that you agree to receive or
access shareholder communications electronically in future years.
Vote by Phone - 1-800-690-6903
Shareholders may use any touch-tone telephone to transmit their voting
instructions up until 11:59 P.M. Eastern Time the day before the meeting date.
To vote by telephone, have the proxy card in hand, call the toll-free number
above, and follow the instructions given.
Vote by Mail
Shareholders should mark, sign and date their proxy card and return it in the
postage-paid envelope provided or return it to Trustmark Corporation, c/o ADP,
51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
TRUST1
KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DETACH AND RETURN THIS PORTION ONLY
TRUSTMARK CORPORATION
Items of Business
1. Election of Directors - To elect a board of twelve directors to hold
office for the ensuing year or until their successors are elected and
qualified.
Nominees:
01) J. Kelly Allgood
02) Reuben V. Anderson
03) William C. Deviney, Jr.
04) C. Gerald Garnett
05) Richard G. Hickson
06) Matthew L. Holleman III
07) John M. McCullouch
08) Richard H. Puckett
09) Carolyn C. Shanks
10) R. Michael Summerford
11) Kenneth W. Williams
12) William G. Yates, Jr.
For All ( )
Withhold All ( )
For All Except ( )
To withhold authority to vote for any individual nominee, mark "For All
Except" and write the nominee's name on the line below.
---------------------------------------
2. Approval of the Trustmark Corporation 2005 Stock and Incentive
Compensation Plan
For ( )
Against ( )
Abstain ( )
3. To transact such other business as may properly come before the meeting.
For comments, please check this box and write them on the back where indicated.
( )
Please indicate if you plan to attend the meeting
Yes ( )
No ( )
---------------------------------- --------
Signature (PLEASE SIGN WITHIN BOX) Date
---------------------------------- --------
Signature (Joint Owners) Date
Exhibit A
TRUSTMARK CORPORATION
2005 STOCK AND INCENTIVE COMPENSATION PLAN
ARTICLE I
Establishment, Purpose and Duration
1.1 Establishment of the Plan. Trustmark Corporation (hereinafter referred to as
the "Company"), a Mississippi corporation, hereby establishes an incentive
compensation plan to be known as the "2005 Stock and Incentive Compensation
Plan" (hereinafter referred to as the "Plan"), as set forth in this document.
Unless otherwise defined herein, all capitalized terms shall have the meanings
set forth in Section 2.1 herein. The Plan permits the grant of Incentive Stock
Options, Non-Qualified Stock Options (including Reload Options), Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units and/or Performance
Units to Key Associates and Directors.
The Plan was adopted by the Board of Directors of the Company on March 8, 2005,
to become effective (the "Effective Date") as of May 10, 2005 if approved at the
May 10, 2005 annual meeting of the Company's shareholders by vote of
shareholders of the Company in accordance with applicable laws and any
applicable rules of any national securities exchange or system on which the
Stock is then listed or reported. Except for Performance Unit Awards payable
only in cash (with payment also contingent on shareholder approval of the 2005
Plan), Awards may not be granted under the Plan prior to shareholder approval of
the Plan.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the success of
the Company and its Subsidiaries by providing incentives to Key Associates and
Directors that will promote the identification of their personal interest with
the long term financial success of the Company and with growth in shareholder
value. The Plan is designed to provide flexibility to the Company in its ability
to motivate, attract, and retain the services of Key Associates and Directors
upon whose judgment, interest, and special effort the successful conduct of its
operation is largely dependent.
In addition, the Plan permits the grant of a Reload Option in order to restore
an Option opportunity on the number of shares of Stock surrendered to exercise
an Option to encourage a Participant to maximize his ownership interest in the
Company without reducing the percentage interests of shareholders.
1.3 Duration of the Plan. The Plan shall commence on the Effective Date, as
described in Section 1.1 herein, and shall remain in effect, subject to the
right of the Board of Directors to terminate the Plan at any time pursuant to
Article XII herein, until May 9, 2015, at which time it shall terminate except
with respect to Awards (including any outstanding Reload Option obligation) made
prior to, and outstanding on, that date which shall remain valid in accordance
with their terms.
ARTICLE II
Definitions
2.1 Definitions. Except as otherwise defined in the Plan, the following terms
shall have the meanings set forth below:
(a) "Agreement" means a written agreement implementing the grant of each
Award signed by an authorized officer of the Company and by the
Participant.
(b) "Award" means, individually or collectively, a grant under the Plan of
Incentive Stock Options, Non-Qualified Stock Options (including Reload
Options), Stock Appreciation Rights, Restricted Stock, Restricted
Stock Units and/or Performance Units.
(c) "Award Date" or "Grant Date" means the date on which an Award is made
by the Committee under the Plan.
(d) "Board" or "Board of Directors" means the Board of Directors of the
Company.
(e) "Change in Control" shall be deemed to have occurred if the conditions
set forth in any one of the following paragraphs shall have been
satisfied:
(i) the acquisition of ownership of, holding or power to vote more
than 20% of the Company's voting stock; or
(ii) the acquisition of the ability to control the election of a
majority of the Company's Board; or
(iii)the acquisition of a controlling influence over the management
or policies of the Company by any person or by persons acting as
a "group" (within the meaning of Section 13(d) of the Exchange
Act); or
(iv) during any period of two consecutive years, individuals (the
"Continuing Directors") who at the beginning of such period
constitute the Board (the "Existing Board") cease for any reason
to constitute at least two-thirds thereof, provided that any
individual whose election or nomination for election as a member
of the Existing Board was approved by a vote of at least
two-thirds of the Continuing Directors then in office shall be
considered a Continuing Director.
Notwithstanding the foregoing, in the case of (i), (ii) and (iii)
hereof, ownership or control of the Company's voting stock by the
Trustmark National Bank (the "Bank') or any associate benefit plan
sponsored by the Company or the Bank shall not constitute a Change in
Control. For purposes of this paragraph only, the term "person" refers
to an individual or a corporation, partnership, trust, association,
joint venture, pool, syndicate, sole proprietorship, unincorporated
organization of any other form of entity not specifically listed
herein.
(f) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(g) "Committee" means the committee of the Board appointed to administer
the Plan pursuant to Article III herein, all of the members of which
shall be "non-employee directors" as defined in Rule 16b-3, as
amended, under the Exchange Act, or any similar or successor rule, and
"outside directors" within the meaning of Section 162(m)(4)(C)(i) of
the Code. Unless otherwise determined by the Board, the Human
Resources Committee of the Board, or any successor committee
responsible for executive compensation, shall constitute the
Committee.
(h) "Company" means Trustmark Corporation, or any successor thereto as
provided in Article XIV herein.
(i) "Director" means a director of the Company or any subsidiary thereof,
which term shall not include an advisory or honorary director.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
(k) "Fair Market Value" of a Share means the mean between the high and low
sales price of the Stock on the relevant date if it is a trading date,
or if not, on the most recent date on which the Stock was traded prior
to such date, as reported by the NASDAQ National Market System, or if,
in the opinion of the Committee, this method is inapplicable or
inappropriate for any reason, the fair market value as determined
pursuant to a reasonable method adopted by the Committee in good faith
for such purpose.
(l) "Incentive Stock Option" or "ISO" means an option to purchase Stock,
granted under Article VI herein, which is designated as an incentive
stock option and is intended to meet the requirements of Section 422
of the Code.
(m) "Key Associate" means an officer or other key associate of the Company
or its Subsidiaries who, in the opinion of the Committee, can
contribute significantly to the growth and profitability of, or
perform services of major importance to, the Company and its
Subsidiaries. "Key Associates" includes Directors who are also
associates of the Company or its Subsidiaries.
(n) "Non-Qualified Stock Option" or "NQSO" means an option to purchase
Stock, granted under Article VI herein, which is not intended to be an
Incentive Stock Option.
(o) "Option" means an Incentive Stock Option or a Non-Qualified Stock
Option.
(p) "Option Price" means the exercise price per share of Stock covered by
an Option.
(q) "Participant" means a Key Associate or a Director who has been granted
an Award under the Plan and whose Award remains outstanding.
(r) "Performance-Based Compensation Award" means any Award for which
exercise, full enjoyment or receipt thereof by the Participant is
contingent on satisfaction or achievement of the Performance Goal
applicable thereto. If a Performance-Based Compensation Award is
intended to be "performance-based compensation" within the meaning of
Section 162(m)(4)(C) of the Code, the grant of the Award, the
establishment of the Performance Goal, the making of any modifications
or adjustments and the determination of satisfaction or achievement of
the Performance Goal shall be made during the period or periods
required under and in conformity with the requirements of Section
162(m) of the Code therefor. The terms and conditions of each
Performance-Based Compensation Award, including the Performance Goal
and Performance Period, shall be set forth in an Agreement or in a
subplan of the Plan which is incorporated by reference into an
Agreement.
(s) "Performance Goal" means one or more performance measures or goals set
by the Committee in its discretion for each grant of a
Performance-Based Compensation Award. The extent to which such
performance measures or goals are met will determine the amount or
value of the Performance-Based Compensation Award to which a
Participant is entitled to exercise, receive or retain. Performance
Goals may be particular to a Participant, may relate to the
performance of the Subsidiary, division, strategic business unit or
line of business which employs him, or may be based on the performance
of the Company generally. Performance Goals may be based on Stock
value or increases therein, earnings per share or earnings per share
growth, net earnings, earnings or earnings growth (before or after one
or more of taxes, interest, depreciation and/or amortization),
operating profit, operating cash flow, operating or other expenses,
operating efficiency, return on equity, assets, capital or investment,
sales or revenues or growth thereof, deposits, loan and/or equity
levels or growth thereof, working capital targets or cost control
measures, regulatory compliance, gross, operating or other margins,
efficiency ratio (as generally recognized and used for bank financial
reporting and analysis), interest income, non-interest income, credit
quality, net charge-offs and/or non-performing assets (excluding such
loans or classes of loans as may be designated for exclusion),
productivity, customer satisfaction, satisfactory internal or external
audits, improvement of financial ratings, achievement of balance sheet
or income statement objectives, quality measures, and any component or
components of the foregoing (including, without limitation,
determination thereof with or without the effect of discontinued
operations and dispositions of business segments, non-recurring items,
material extraordinary items that are both unusual and infrequent,
special charges, and/or accounting changes), or implementation,
management or completion of critical projects or processes.
Performance Goals may include a threshold level of performance below
which no payment or vesting may occur, levels of performance at which
specified payments or specified vesting will occur, and a maximum
level of performance above which no additional payment or vesting will
occur. Performance Goals may be absolute in their terms or measured
against or in relationship to a market index, a group of other
companies comparably, similarly or otherwise situated, or a
combination thereof. The Committee shall determine the Performance
Period during which the Performance Goal must be met; and attainment
of Performance Goals shall be subject to certification by the
Committee. Each of the Performance Goals shall be determined, where
applicable and except as provided above, in accordance with generally
accepted accounting principles.
(t) "Performance Period" means the time period during which the
Performance Goal must be met in connection with a Performance-Based
Compensation Award. Such time period shall be set by the Committee.
(u) "Performance Unit" means an Award, designated as a performance unit,
granted to a Participant pursuant to Article X herein and valued as a
fixed dollar amount.
(v) "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is restricted, pursuant to Article VIII
herein.
(w) "Plan" means the Trustmark Corporation 2005 Stock and Incentive
Compensation Plan, as herein described and as hereafter from time to
time amended.
(x) "Related Option" means an Option with respect to which a Stock
Appreciation Right has been granted.
(y) "Reload Option" means a Non-Qualified Stock Option granted pursuant to
Section 6.9 in the event the Participant exercises all or a part of an
Option by paying the Option Price pursuant to Section 6.6 with Stock
in order to restore an Option opportunity on the number of shares of
Stock surrendered to exercise an Option.
(z) "Restricted Stock" means an Award of Stock granted to a Participant
pursuant to Article VIII herein which is subject to restrictions and
forfeiture until the designated conditions for the lapse of the
restrictions are satisfied.
(aa) "Restricted Stock Unit" or "RSU" means an Award, designated as a
Restricted Stock Unit, granted to a Participant pursuant to Article IX
herein and valued by reference to Stock, which is subject to
restrictions and forfeiture until the designated conditions for the
lapse of the restrictions are satisfied.
(bb) "Stock" or "Shares" means the common stock of the Company.
(cc) "Stock Appreciation Right" or "SAR" means an Award, designated as a
stock appreciation right, granted to a Participant pursuant to Article
VII herein.
(dd) "Subsidiary" means any subsidiary corporation of the Company within
the meaning of Section 424(f) of the Code.
ARTICLE III
Administration
3.1 Administration of the Plan by the Committee. The Plan shall be administered
by the Committee which shall have all powers necessary or desirable for such
administration. The express grant in the Plan of any specific power to the
Committee shall not be construed as limiting any power or authority of the
Committee. In addition to any other powers and, subject to the provisions of the
Plan, the Committee shall have the following specific powers: (i) to determine
the terms and conditions upon which the Awards may be made and exercised; (ii)
to determine all terms and conditions of each Agreement, which need not be
identical; (iii) to construe and interpret the Agreements and the Plan; (iv) to
establish, amend or waive rules or regulations for the Plan's administration;
(v) to accelerate the exercisability of any Award, the end of a Performance
Period or termination of any Period of Restriction or other restrictions imposed
under the Plan; and (vi) to make all other determinations and take all other
actions necessary or advisable for the administration of the Plan.
The Chairman of the Committee and such other directors and officers of the
Company as shall be designated by the Committee are hereby authorized to execute
Agreements on behalf of the Company and to cause them to be delivered to the
recipients of Awards.
For purposes of determining the applicability of Section 422 of the Code
(relating to Incentive Stock Options), or in the event that the terms of any
Award provide that it may be exercised only during employment or service or
within a specified period of time after termination of employment or service,
the Committee may decide to what extent leaves of absence for governmental or
military service, illness, temporary disability, or other reasons shall not be
deemed interruptions of employment or service or continuous employment or
service.
Subject to limitations under applicable law, the Committee is authorized in its
discretion to issue Awards and/or accept notices, elections, consents and/or
other forms or communications by Participants by electronic or similar means,
including, without limitation, transmissions through e-mail, voice mail,
recorded messages on electronic telephone systems, and other permissible
methods, on such basis and for such purposes as it determines from time to time.
A majority of the entire Committee shall constitute a quorum and the action of a
majority of the members present at any meeting at which a quorum is present (in
person or as otherwise permitted by applicable law), or acts approved in writing
by a majority of the Committee without a meeting, shall be deemed the action of
the Committee.
3.2 Selection of Participants. The Committee shall have the authority to grant
Awards under the Plan, from time to time, to such Key Associates and/or
Directors as may be selected by it. Each Award shall be evidenced by an
Agreement.
3.3 Decisions Binding. All determinations and decisions made by the Board or the
Committee pursuant to the provisions of the Plan shall be final, conclusive and
binding.
3.4 Requirements of Rule 16b-3 and Section 162(m) of the Code. Notwithstanding
any other provision of the Plan, the Board or the Committee may impose such
conditions on any Award, and amend the Plan in any such respects, as may be
required to satisfy the requirements of Rule 16b-3, as amended (or any successor
or similar rule), under the Exchange Act.
Any provision of the Plan to the contrary notwithstanding, and except to the
extent that the Committee determines otherwise: (i) transactions by and with
respect to officers and directors of the Company who are subject to Section
16(b) of the Exchange Act (hereafter, "Section 16 Persons") shall comply with
any applicable conditions of SEC Rule 16b-3; (ii) transactions with respect to
persons whose remuneration is subject to the provisions of Section 162(m) of the
Code shall conform to the requirements of Section 162(m)(4)(C) of the Code; and
(iii) every provision of the Plan shall be administered, interpreted, and
construed to carry out the foregoing provisions of this sentence.
Notwithstanding any provision of the Plan to the contrary, the Plan is intended
to give the Committee the authority to grant Awards that qualify as
performance-based compensation under Section 162(m)(4)(C) of the Code as well as
Awards that do not so qualify. Every provision of the Plan shall be
administered, interpreted, and construed to carry out such intention, and any
provision that cannot be so administered, interpreted, and construed shall to
that extent be disregarded; and any provision of the Plan that would prevent an
Award that the Committee intends to qualify as performance-based compensation
under Section 162(m)(4)(C) of the Code from so qualifying shall be administered,
interpreted, and construed to carry out such intention, and any provision that
cannot be so administered, interpreted, and construed shall to that extent be
disregarded.
3.5 Indemnification of Committee. In addition to such other rights of
indemnification as they may have as directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against
reasonable expenses, including attorneys' fees, actually and reasonably incurred
in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any Award granted or made hereunder, and against all amounts reasonably
paid by them in settlement thereof or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, if such members acted in good faith and
in a manner which they believed to be in, and not opposed to, the best interests
of the Company and its Subsidiaries.
ARTICLE IV
Stock Subject to the Plan
4.1 Number of Shares. Subject to adjustment as provided in Section 4.4 herein,
the maximum aggregate number of Shares that may be issued pursuant to Awards
made under the Plan shall not exceed the sum of (i) 6,000,000 plus (ii) that
number of Shares represented by options under the Second Amended Trustmark
Corporation 1997 Long Term Incentive Plan which expire or are otherwise
terminated or forfeited at any time after the Effective Date of the Plan. Except
as provided in Sections 4.2 and 4.3 herein, the issuance of Shares in connection
with the exercise of, or as other payment for Awards, under the Plan shall
reduce the number of Shares available for future Awards under the Plan.
Stock that may be issued under the Plan may either be authorized but unissued
Shares, Shares held in treasury, or Shares held in a grantor trust created by
the Company.
The Company, during the term of the Plan and thereafter during the term of any
outstanding Award which may be settled in Stock, shall reserve and keep
available a number of Shares sufficient to satisfy the requirements of the Plan.
4.2 Lapsed Awards or Forfeited Shares. If any Award granted under the Plan
terminates, expires, or lapses for any reason other than by virtue of exercise
of the Award, or if Shares issued pursuant to Awards are forfeited, any Stock
subject to such Award again shall be available for the grant of an Award under
the Plan, subject to Section 7.3.
4.3 Delivery of Shares as Payment. In the event a Participant pays the Option
Price for Shares pursuant to the exercise of an Option with previously acquired
Shares, the number of Shares available for future Awards under the Plan shall be
reduced only by the net number of new Shares issued upon the exercise of the
Option. In addition, in determining the number of shares of Stock available for
Awards, if Stock has been delivered or exchanged by a Participant as full or
partial payment to the Company for payment of withholding taxes, or if the
number of shares of Stock otherwise deliverable has been reduced for payment of
withholding taxes, the number of shares of Stock exchanged as payment in
connection with the withholding tax or so reduced shall again be available for
purpose of Awards under the Plan.
4.4 Capital Adjustments. The number and class of Shares subject to each
outstanding Award, the Option Price and the annual limits on and aggregate
number of Shares for which Awards thereafter may be made shall be subject to
such adjustment, if any, as the Committee in its sole discretion deems
appropriate to reflect such events as stock dividends, stock splits,
recapitalizations, mergers, consolidations or reorganizations of or by the
Company.
ARTICLE V
Eligibility
Persons eligible to participate in the Plan include (i) all associates of the
Company and its Subsidiaries (including any corporation which becomes a
Subsidiary after the adoption of the Plan by the Board) who, in the opinion of
the Committee, are Key Associates and (ii) all Directors.
Multiple grants of Awards under the Plan may be made in any calendar year to a
Participant, provided, however, that Awards of Options and SARs (disregarding
any Tandem SARs as defined in Section 7.1) granted in any calendar year to any
one Participant shall not provide for the issuance of, and/or cash payment with
respect to, more than 90,000 Shares in the aggregate, that Awards of Restricted
Stock and Restricted Stock Units granted in any calendar year to any one
Participant shall not provide for the issuance of, and/or cash payment with
respect to, more than 50,000 Shares in the aggregate, and that Performance Units
granted in any calendar year to any one Participant shall not provide for the
payment of more than $1,000,000 in the aggregate.
ARTICLE VI
Stock Options
6.1 Grant of Options. Subject to the terms and conditions of the Plan, Options
may be granted to Key Associates and Directors at any time and from time to time
as shall be determined by the Committee. The Committee shall have complete
discretion in determining the number of Shares subject to Options granted to
each Participant, provided, however, that (i) only Non-Qualified Stock Options
may be granted to Directors who are not associates of the Company or a
Subsidiary, (ii) no Participant may be granted Options in any calendar year for
more than 90,000 Shares (with Options cancelled in the same year as granted
counted against this limit and with Options for which the Option Price is
reduced treated as cancelled and reissued for this annual limit) and (iii) the
aggregate Fair Market Value (determined at the time the Award is made) of Shares
with respect to which any Participant may first exercise ISOs granted under the
Plan during any calendar year may not exceed $100,000 or such amount as shall be
specified in Section 422 of the Code and rules and regulations thereunder.
6.2 Option Agreement. Each Option grant shall be evidenced by an Agreement that
shall specify the type of Option granted, the Option Price (as hereinafter
defined), the duration of the Option, the number of Shares to which the Option
pertains, any conditions imposed upon the exercisability of Options in the event
of retirement, death, disability or other termination of employment or service,
and such other provisions as the Committee shall determine. The Agreement shall
specify whether the Option is intended to be an Incentive Stock Option within
the meaning of Section 422 of the Code, or a Non-Qualified Stock Option not
intended to be within the provisions of Section 422 of the Code, provided,
however, that if an Option is intended to be an Incentive Stock Option but fails
to be such for any reason, it shall continue in full force and effect as a
Non-Qualified Stock Option. If an Option is intended to be a Performance-Based
Compensation Award, the terms and conditions thereof, including the Performance
Goal and Performance Period, shall be set forth in an Agreement or in a subplan
of the Plan which is incorporated by reference into an Agreement and the
requirements to satisfy or achieve the Performance Goal as so provided therein
shall be considered to be restrictions under the Plan.
6.3 Option Price. The Option Price of an Option shall be determined by the
Committee subject to the following limitations. The Option Price shall not be
less than 100% of the Fair Market Value of such Stock on the Grant Date. In
addition, an ISO granted to a Key Associate (including any Director who is a Key
Associate) who, at the time of grant, owns (within the meaning of Section 424(d)
of the Code) stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company, shall have an Option Price which is at
least equal to 110% of the Fair Market Value of such Stock on the Grant Date.
6.4 Duration of Options. Each Option shall expire at such time as the Committee
shall determine, provided, however, that no Option shall be exercisable after
the expiration of ten years from its Award Date. In addition, an ISO granted to
a Key Associate (including any Key Associate who is a Director) who, at the time
of grant, owns (within the meaning of Section 424(d) of the Code) stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, shall not be exercisable after the expiration of five
years from its Award Date.
6.5 Exercisability. Options granted under the Plan shall be exercisable at such
times and be subject to such restrictions and conditions as the Committee shall
determine, which need not be the same for all Participants.
6.6 Method of Exercise. Options shall be exercised by the delivery of a written
notice to the Company in the form prescribed by the Committee setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares and payment of (or an arrangement
satisfactory to the Company for the Participant to pay) any tax withholding
required in connection with the Option exercise. The Option Price shall be
payable to the Company in full either in cash, by delivery of Shares of Stock
valued at Fair Market Value at the time of exercise or by a combination of the
foregoing.
To the extent permitted under the applicable laws and regulations, at the
request of the Participant and with the consent of the Committee, the Company
agrees to cooperate in a "cashless exercise" of an Option. The cashless exercise
shall be effected by the Participant delivering to a securities broker
instructions to exercise all or part of the Option, including instructions to
sell a sufficient number of shares of Stock to cover the costs and expenses
associated therewith.
As soon as practicable, after receipt of written notice and payment of the
Option Price and completion of payment of (or an arrangement satisfactory to the
Company for the Participant to pay) any tax withholding required in connection
with the Option exercise, the Company shall deliver to the Participant, stock
certificates in an appropriate amount based upon the number of Options
exercised, issued in the Participant's name.
6.7 Restrictions on Stock Transferability. The Committee shall impose such
restrictions on any Shares acquired pursuant to the exercise of an Option under
the Plan as it may deem advisable, including, without limitation, restrictions
under applicable Federal securities law, under the requirements of the National
Association of Securities Dealers, Inc. or any stock exchange upon which such
Shares are then listed and under any blue sky or state securities laws
applicable to such Shares. The Committee may specify in an Agreement that Stock
delivered on exercise of an Option is Restricted Stock or Stock subject to a
buyback right by the Company in the amount of, or based on, the Option Price
therefor in the event the Participant does not complete a specified service
period after exercise.
6.8 Nontransferability of Options. No Option granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, all Options
granted to a Participant under the Plan shall be exercisable during his lifetime
only by such Participant or his guardian or legal representative.
Notwithstanding the foregoing or any other provision of the Plan to the
contrary, to the extent permissible under Rule 16b-3 of the Exchange Act, a
Participant who is granted Non-Qualified Stock Options pursuant to the Plan may
transfer such Non-Qualified Stock Options to his or her spouse, lineal
ascendants, lineal descendants, or to trusts for their benefit, provided that
the Non-Qualified Stock Option so transferred may not again be transferred other
than to the Participant originally receiving the grant of Non-Qualified Stock
Options or to an individual or trust to whom such Participant could have
transferred Non-Qualified Stock Options pursuant to this Section 6.8.
Non-Qualified Stock Options which are transferred pursuant to this Section 6.8
shall be exercisable by the transferee subject to the same terms and conditions
as would have applied to such Non-Qualified Stock Options in the hands of the
Participant originally receiving the grant of such Non-Qualified Stock Options.
6.9 Reload Options. The Committee shall have the authority to specify at the
Award Date for an Option that a Participant receiving the Option shall be
granted the right to a further Non-Qualified Stock Option (a "Reload Option") in
the event the Participant exercises all or a part of the Option, including a
Reload Option (an "Original Option"), by surrendering in accordance with Section
6.6 hereof already owned shares of Stock in full or partial payment of the
Option Price under such Original Option. Each Reload Option shall be granted on
the date of exercise of the Original Option, shall cover a number of shares of
Stock not exceeding the whole number of shares of Stock surrendered in payment
of the Option Price under such Original Option, shall have an Option Price equal
to the Fair Market Value on the Award Date of such Reload Option, shall expire
on the stated expiration date of the Original Option and shall be subject to
such other terms and conditions as the Committee may determine.
ARTICLE VII
Stock Appreciation Rights
7.1 Grant of Stock Appreciation Rights. Subject to the terms and conditions of
the Plan, Stock Appreciation Rights may be granted to Key Associates and
Directors, at the discretion of the Committee, in any of the following forms,
provided, however, that no Participant may be granted more than 90,000 SARs in
any calendar year (with SARs cancelled in the same year as granted counted
against this limit and with SARs for which the base amount on which the SAR
payment at exercise is calculated is reduced treated as cancelled and reissued
for this annual limit):
(a) Inconnection with the grant, and exercisable in lieu of, Options
("Tandem SARs");
(b) In connection with and exercisable in addition to the grant of Options
("Additive SARs");
(c) Independent of grant of the Options ("Freestanding SARs"); or
(d) In any combination of the foregoing.
7.2 SAR Agreement. Each SAR grant shall be evidenced by an Agreement that shall
specify its type of SAR and its terms and conditions. If an SAR grant is
intended to be a Performance-Based Compensation Award, the Performance Goal and
Performance Period shall be set forth in an Agreement or in a subplan of the
Plan which is incorporated by reference into an Agreement and the requirements
to satisfy or achieve the Performance Goal as so provided therein shall be
considered to be restrictions under the Plan.
7.3 Exercise of Tandem SARs. Tandem SARs may be exercised with respect to all or
part of the Shares subject to the Related Option. The exercise of Tandem SARs
shall cause a reduction in the number of Shares subject to the Related Option
equal to the number of Shares with respect to which the Tandem SAR is exercised.
Conversely, the exercise, in whole or part, of a Related Option, shall cause a
reduction in the number of Shares subject to the Related Option equal to the
number of Shares with respect to which the Related Option is exercised. Shares
with respect to which the Tandem SAR shall have been exercised may not be
subject again to an Award under the Plan.
Notwithstanding any other provision of the Plan to the contrary, a Tandem SAR
shall expire no later than the expiration of the Related Option, shall be
transferable only when and under the same conditions as the Related Option and
shall be exercisable only when the Related Option is eligible to be exercised.
In addition, if the Related Option is an ISO, a Tandem SAR shall be exercised
for no more than 100% of the difference between the Option Price of the Related
Option and the Fair Market Value of Shares subject to the Related Option at the
time the Tandem SAR is exercised.
7.4 Exercise of Additive SARs. Additive SARs shall be deemed to be exercised
upon, and in addition to, the exercise of the Related Options. The deemed
exercise of Additive SARs shall not reduce the number of Shares with respect to
which the Related Options remains unexercised.
7.5 Exercise of Freestanding SARs. Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes
upon such SARs.
7.6 Other Conditions Applicable to SARs. In no event shall the term of any SAR
granted under the Plan exceed ten years from the Grant Date. A SAR may be
exercised only when the Fair Market Value of a Share exceeds either (i) the Fair
Market Value per Share on the Grant Date in the case of a Freestanding SAR or
(ii) the Option Price of the Related Option in the case of either a Tandem or
Additive SAR. A SAR shall be exercised by delivery to the Committee of a notice
of exercise in the form prescribed by the Committee.
7.7 Payment after Exercise of SARs. Subject to the provisions of the Agreement,
upon the exercise of a SAR, the Participant is entitled to receive, without any
payment to the Company (other than required tax withholding amounts), an amount
equal (the "SAR Value") to the product of multiplying (i) the number of Shares
with respect to which the SAR is exercised by (ii) an amount equal to the excess
of (A) the Fair Market Value per Share on the date of exercise of the SAR over
(B) either (x) the Fair Market Value per Share on the Award Date in the case of
a Freestanding SAR or (y) the Option Price of the Related Option in the case of
either a Tandem or Additive SAR. The Agreement may provide for payment of the
SAR Value at the time of exercise or, on an elective or non-elective basis, for
payment of the SAR Value at a later date, adjusted (if so provided in the
Agreement) from the date of exercise based on an interest, dividend equivalent,
earnings, or other basis (including deemed investment of the SAR Value in
Shares) set out in the Agreement (the "adjusted SAR Value"). The Committee is
expressly authorized to grant SARs which are deferred compensation covered by
Section 409A of the Code, as well as SARs which are not deferred compensation
covered by Section 409A of the Code.
Payment of the SAR Value or adjusted SAR Value to the Participant shall be made
in Shares, valued at the Fair Market Value on the date of exercise in the case
of an immediate payment after exercise or at the Fair Market Value on the date
of settlement in the event of an elective or non-elective delayed payment, in
cash or a combination thereof as determined by the Committee, either at the time
of the Award or thereafter, and as provided in the Agreement.
7.8 Nontransferability of SARs. No SAR granted under the Plan, and no right to
receive payment in connection therewith, may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, all SARs, and rights in connection
therewith, granted to a Participant under the Plan shall be exercisable during
his lifetime only by such Participant or his guardian or legal representative.
ARTICLE VIII
Restricted Stock
8.1 Grant of Restricted Stock. Subject to the terms and conditions of the Plan,
the Committee, at any time and from time to time, may grant Shares of Restricted
Stock under the Plan to such Key Associates and Directors and in such amounts as
it shall determine, provided, however, that no Participant may be granted more
than 50,000 Shares of Restricted Stock in any calendar year. Participants
receiving Restricted Stock Awards are not required to pay the Company therefor
(except for applicable tax withholding) other than the rendering of services. If
determined by the Committee, custody of Shares of Restricted Stock may be
retained by the Company until the termination of the Period of Restriction
pertaining thereto.
8.2 Restricted Stock Agreement. Each Restricted Stock Award shall be evidenced
by an Agreement that shall specify the Period of Restriction, the number of
Restricted Stock Shares granted, and the applicable restrictions and such other
provisions as the Committee shall determine. If an Award of Restricted Stock is
intended to be a Performance-Based Compensation Award, the terms and conditions
of such Award, including the Performance Goal and Performance Period, shall be
set forth in an Agreement or in a subplan of the Plan which is incorporated by
reference into an Agreement and the requirements to satisfy or achieve the
Performance Goal as so provided therein shall be considered to be restrictions
under the Plan.
8.3 Nontransferability of Restricted Stock. Except as provided in this Article
VIII and subject to the limitation in the next sentence, the Shares of
Restricted Stock granted hereunder may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the termination of the
applicable Period of Restriction or upon the earlier satisfaction of other
conditions as specified by the Committee in its sole discretion and set forth in
the Agreement. All rights with respect to the Restricted Stock granted to a
Participant under the Plan shall be exercisable during his lifetime only by such
Participant or his guardian or legal representative.
8.4 Other Restrictions. The Committee may impose such other restrictions on any
Shares of Restricted Stock granted pursuant to the Plan as it may deem advisable
including, without limitation, restrictions under applicable Federal or state
securities laws, and may legend the certificates representing Restricted Stock
to give appropriate notice of such restrictions.
8.5 Certificate Legend. In addition to any legends placed on certificates
pursuant to Section 8.4 herein, each certificate representing Shares of
Restricted Stock granted pursuant to the Plan shall bear the following legend:
The sale or other transfer of the Shares of Stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is
subject to certain restrictions on transfer set forth in the Trustmark
Corporation 2005 Stock and Incentive Compensation Plan, in the rules and
administrative procedures adopted pursuant to such Plan, and in an
Agreement dated (date of grant) . A copy of the Plan, such rules and
procedures, and such Restricted Stock Agreement may be obtained from the
Secretary of Trustmark Corporation.
8.6 Removal of Restrictions. Except as otherwise provided in this Article,
Shares of Restricted Stock covered by each Restricted Stock Award made under the
Plan shall become freely transferable by the Participant after the last day of
the Period of Restriction and, where applicable, after a determination of the
satisfaction or achievement on any applicable Performance Goal. Once the Shares
are released from the restrictions, the Participant shall be entitled to have
the legend required by Section 8.5 herein removed from his Stock certificate.
8.7 Voting Rights. During the Period of Restriction, Participants holding Shares
of Restricted Stock granted hereunder may exercise full voting rights with
respect to those Shares.
8.8 Dividends and Other Distributions. Unless otherwise provided in the
Agreement, during the Period of Restriction, Participants entitled to or holding
Shares of Restricted Stock granted hereunder shall be entitled to receive all
dividends and other distributions paid with respect to those Shares while they
are so held. If any such dividends or distributions are paid in Shares, the
Shares shall be subject to the same restrictions on transferability and the same
rules for custody as the Shares of Restricted Stock with respect to which they
were distributed.
8.9 Termination of Employment or Service. Unless otherwise provided in the
Agreement, in the event that a Participant terminates his employment or service
with the Company for any reason during the Period of Restriction, then any
Shares of Restricted Stock still subject to restrictions as of the date of such
termination shall automatically be forfeited and returned to the Company. The
Committee may provide for vesting of Restricted Stock in connection with the
termination of a Participant's employment or service on such basis as it deems
appropriate.
ARTICLE IX
Restricted Stock Units
9.1 Grant of Restricted Stock Units. Subject to the terms and conditions of the
Plan, the Committee, at any time and from time to time, may grant Restricted
Stock Units under the Plan (with one Unit representing one Share) to such Key
Associates and Directors and in such amounts as it shall determine, provided,
however, that no Participant may be granted more than 50,000 Restricted Stock
Units in any calendar year. Participants receiving Restricted Stock Unit Awards
are not required to pay the Company therefor (except for applicable tax
withholding) other than the rendering of services.
9.2 Restricted Stock Unit Agreement. Each Restricted Stock Unit Award shall be
evidenced by an Agreement that shall specify the Period of Restriction, the
number of Restricted Stock Units granted, and the applicable restrictions and
such other provisions as the Committee shall determine. If an Award of
Restricted Stock Units is intended to be a Performance-Based Compensation Award,
the terms and conditions of such Award, including the Performance Goal and
Performance Period, shall be set forth in an Agreement or in a subplan of the
Plan which is incorporated by reference into an Agreement and the requirements
to satisfy or achieve the Performance Goal as so provided therein shall be
considered to be restrictions under the Plan.
Unless otherwise provided in the Agreement, during the Period of Restriction,
Participants holding Restricted Stock Units shall have added to their rights all
dividends and other distributions which would have been paid with respect to the
Shares represented by those Restricted Stock Units if such Shares were
outstanding, and such deemed dividends or distributions shall be subject to the
same restrictions, vesting and payment as the Restricted Stock Units to which
they are attributable. Unless otherwise provided in the Agreement, during the
Period of Restriction, any such deemed dividends and other distributions shall
be deemed converted to additional Restricted Stock Units based on the Fair
Market Value of a Share on the date of payment or distribution of the deemed
dividend or distribution.
9.3 Payment after Lapse of Restrictions. Subject to the provisions of the
Agreement, upon the lapse exercise of restrictions with respect to a Restricted
Stock Unit, the Participant is entitled to receive, without any payment to the
Company (other than required tax withholding amounts), an amount equal (the "RSU
Value") to the product of multiplying (i) the number of Shares with respect to
which the restrictions lapse by (ii) the Fair Market Value per Share on the date
the restrictions lapse.
The Agreement may provide for payment of the RSU Value at the time of exercise
or, on an elective or non-elective basis, for payment of the RSU Value at a
later date, adjusted (if so provided in the Agreement) from the date of exercise
based on an interest, dividend equivalent, earnings, or other basis (including
deemed investment of the RSU Value in Shares) set out in the Agreement (the
"adjusted RSU Value"). The Committee is expressly authorized to grant Restricted
Stock Units which are deferred compensation covered by Section 409A of the Code,
as well as Restricted Stock Units which are not deferred compensation covered by
Section 409A of the Code.
Payment of the RSU Value or adjusted RSU Value to the Participant shall be made
in Shares, valued at the Fair Market Value on the date the restrictions therefor
lapse in the case of an immediate payment after vesting or at the Fair Market
Value on the date of settlement in the event of an elective or non-elective
delayed payment, in cash or a combination thereof as determined by the
Committee, either at the time of the Award or thereafter, and as provided in the
Agreement.
9.4 Nontransferability of Restricted Stock Units. No Restricted Stock Unit
granted under the Plan, and no right to receive payment in connection therewith,
may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
Further, all Restricted Stock Units, and rights in connection therewith, granted
to a Participant under the Plan shall be exercisable during his lifetime only by
such Participant or his guardian or legal representative.
9.5 Termination of Employment or Service. Unless otherwise provided in the
Agreement, in the event that a Participant terminates his employment or service
with the Company for any reason during the Period of Restriction, then any
Restricted Stock Units still subject to restrictions as of the date of such
termination shall automatically be forfeited and returned to the Company. The
Committee may provide for vesting of Restricted Stock Units in connection with
the termination of a Participant's employment or service on such basis as it
deems appropriate.
ARTICLE X
Performance Units
10.1 Grant of Performance Units. Subject to the terms and conditions of the
Plan, Performance Units may be granted to Key Associates and Directors at any
time and from time to time as shall be determined by the Committee, provided,
however, that no Participant may be granted Performance Units with a dollar
value in excess of $1,000,000 in any calendar year. Otherwise, the Committee
shall have complete discretion in determining the number of Performance Units
granted to each Participant. Participants receiving such Awards are not required
to pay the Company therefor (except for applicable tax withholding) other than
the rendering of services.
10.2 Performance Unit Agreement. Each Performance Unit is intended to be a
Performance-Based Compensation Award, and the terms and conditions of each such
Award, including the Performance Goal and Performance Period (which may be equal
to, less than or more than one year), shall be set forth in an Agreement or in a
subplan of the Plan which is incorporated by reference into an Agreement. The
Committee shall set the Performance Goal in its discretion for each Participant
who is granted a Performance Unit.
10.3 Settlement of Performance Units. After a Performance Period has ended, the
holder of a Performance Unit shall be entitled to receive the value thereof
based on the degree to which the Performance Goals and other conditions
established by the Committee and set forth in the Agreement (or in a subplan of
the Plan which is incorporated by reference into an Agreement) have been
satisfied.
10.4 Form of Payment. Payment of the amount to which a Participant shall be
entitled upon the settlement of a Performance Unit shall be made in cash, Stock
or a combination thereof as determined by the Committee. Payment may be made in
a lump sum or installments as determined by the Committee.
10.5 Nontransferability of Performance Units. No Performance Unit granted under
the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, otherwise than by will or by the laws of descent and distribution.
All rights with respect to Performance Units granted to a Participant under the
Plan shall be exercisable during his lifetime only by such Participant or his
guardian or legal representative.
ARTICLE XI
Change in Control
In the event of a Change in Control of the Company, the Committee, as
constituted before such Change in Control, in its sole discretion may, as to any
outstanding Award, either at the time the Award is made or any time thereafter,
take any one or more of the following actions: (i) provide for the acceleration
of any time periods relating to the exercise or realization of any such Award so
that such Award may be exercised or realized in full on or before a date
initially fixed by the Committee; (ii) provide for the purchase or settlement of
any such Award by the Company, upon a Participant's request, for an amount of
cash equal to the amount which could have been obtained upon the exercise of
such Award or realization of such Participant's rights had such Award been
currently exercisable or payable; (iii) make such adjustment to any such Award
then outstanding as the Committee deems appropriate to reflect such Change in
Control; or (iv) cause any such Award then outstanding to be assumed, or new
rights substituted therefor, by the acquiring or surviving corporation in such
Change in Control.
ARTICLE XII
Modification, Extension and Renewal of Awards
Subject to the terms and conditions and within the limitations of the Plan, the
Committee may modify, extend or renew outstanding Awards and may modify the
terms of an outstanding Agreement, provided that the exercise price of any Award
may not be lowered other than pursuant to Section 4.4 herein. In addition, the
Committee may accept the surrender of outstanding Awards (to the extent not yet
exercised) granted under the Plan or outstanding awards granted under any other
equity compensation plan of the Company and authorize the granting of new Awards
pursuant to the Plan in substitution therefor so long as the new or substituted
awards do not specify a lower exercise price than the surrendered Awards or
awards, and otherwise the new Awards may be of a different type than the
surrendered Awards or awards, may specify a longer term than the surrendered
Awards or awards, may provide for more rapid vesting and exercisability than the
surrendered Awards or awards, and may contain any other provisions that are
authorized by the Plan. Notwithstanding the foregoing, however, no modification
of an Award, shall, without the consent of the Participant, adversely affect the
rights or obligations of the Participant.
ARTICLE XIII
Amendment, Modification and Termination of the Plan
13.1 Amendment, Modification and Termination. At any time and from time to time,
the Board may terminate, amend, or modify the Plan. Such amendment or
modification may be without shareholder approval except to the extent that such
approval is required by the Code, pursuant to the rules under Section 16 of the
Exchange Act, by any national securities exchange or system on which the Stock
is then listed or reported, by any regulatory body having jurisdiction with
respect thereto or under any other applicable laws, rules or regulations.
13.2 Awards Previously Granted. No termination, amendment or modification of the
Plan other than pursuant to Section 4.4 herein shall in any manner adversely
affect any Award theretofore granted under the Plan, without the written consent
of the Participant.
ARTICLE XIV
Withholding
14.1 Tax Withholding. The Company shall have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, State and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any grant, exercise, or payment made under or as a result of the Plan.
14.2 Stock Withholding. With respect to withholding required upon the exercise
of Non-Qualified Stock Options, or upon the lapse of restrictions on Restricted
Stock, or upon the occurrence of any other taxable event with respect to any
Award, Participants may elect, subject to the approval of the Committee, or the
Committee may require Participants to satisfy the withholding requirement, in
whole or in part, by having the Company withhold Shares of Stock having a Fair
Market Value equal to the amount required to be withheld. The value of the
Shares to be withheld shall be based on Fair Market Value of the Shares on the
date that the amount of tax to be withheld is to be determined. All elections by
Participants shall be irrevocable and be made in writing and in such manner as
determined by the Committee in advance of the day that the transaction becomes
taxable.
ARTICLE XV
Successors
All obligations of the Company under the Plan, with respect to Awards granted
hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE XVI
General
16.1 Requirements of Law. The granting of Awards and the issuance of Shares of
Stock under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or self
regulatory organizations as may be required.
16.2 Effect of the Plan. The establishment of the Plan shall not confer upon any
Key Associate or Director any legal or equitable right against the Company, a
Subsidiary or the Committee, except as expressly provided in the Plan. The Plan
does not constitute an inducement or consideration for the employment or service
of any Key Associate or Director, nor is it a contract between the Company or
any of its Subsidiaries and any Key Associate or Director. Participation in the
Plan shall not give any Key Associate or Director any right to be retained in
the service of the Company or any of its Subsidiaries. No Key Associate or
Director who receives an Award shall have rights as a shareholder of the Company
prior to the date Shares are issued to the Participant pursuant to the Plan.
16.3 Creditors. The interests of any Participant under the Plan or any Agreement
are not subject to the claims of creditors and may not, in any way, be assigned,
alienated or encumbered.
16.4 Governing Law. The Plan, and all Agreements hereunder, shall be governed,
construed and administered in accordance with and governed by the laws of the
State of Mississippi and the intention of the Company is that ISOs granted under
the Plan qualify as such under Section 422 of the Code.
16.5 Severability. In the event any provision of the Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.
16.6 Unfunded Status of Plan. The Plan is intended to constitute an "unfunded"
plan for incentive and deferred compensation. With respect to any payments as to
which a Participant has a fixed and vested interest but which are not yet made
to a Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general unsecured
creditor of the Company.
16.7 Nonqualified Deferred Compensation Plan Omnibus Provision. It is intended
that any compensation, benefits or other remuneration which is provided pursuant
to or in connection with the Plan which is considered to be nonqualified
deferred compensation subject to Section 409A of the Code shall be provided and
paid in a manner, and at such time and in such form, as complies with the
applicable requirements of Section 409A of the Code to avoid the unfavorable tax
consequences provided therein for non-compliance. The Committee is authorized to
amend any Award Agreement as may be determined by it to be necessary or
appropriate to evidence or further evidence required compliance with IRC Section
409A.
Exhibit B
TRUSTMARK CORPORATION
AUDIT AND FINANCE COMMITTEE CHARTER
The Audit and Finance Committee (the Committee) is a committee of the Board of
Directors. Its primary function is to assist the Board in fulfilling its
oversight responsibilities by monitoring Trustmark's accounting and financial
reporting process, the systems of internal controls that management and the
Board of Directors have established, and the audit process. The Committee is
neither intended nor equipped to guarantee with certainty to the full Board and
shareholders the accuracy and quality of Trustmark's financial statements and
accounting practices. Proper financial reporting, accounting, and audit
functions are collaborative efforts conducted by full-time professionals
dedicated to these purposes. The Committee oversees the work of others involved
in the financial reporting process-management, including the internal auditor,
and the independent accountant - and assesses practices and safeguards, and
encourages procedures that promote accountability on the part of the full-time
professionals.
Audit and Finance Committee members shall meet the requirements of the National
Association of Securities Dealers and the Securities and Exchange Commission.
The Audit and Finance Committee shall be comprised of three or more Directors as
determined by the Board, each of whom shall be independent directors, free from
any relationship that would interfere with the exercise of his or her
independent judgment. No member of the Committee shall participate in the
preparation of the financial statements of the company or any of its
subsidiaries. Audit and Finance Committee members must not accept any
consulting, advisory, or other compensatory fees from the company other than for
board service, and they must not be an affiliated person of the company. All
members of the Committee shall have a basic understanding of finance and
accounting and be able to read and understand fundamental financial statements,
including Trustmark's balance sheet, income statement and cash flow statement
and at least one member of the Committee shall meet the requirements of an audit
committee financial expert as defined, or the reasons why not will be disclosed.
Audit and Finance Committee members shall be appointed by the Board of Directors
on recommendation of the Executive Committee. If an Audit and Finance Committee
chairperson is not designated or present, the members of the Committee may
designate a chairperson by majority vote of the Committee membership.
The Committee shall meet at least five times annually, or more frequently as
circumstances dictate. The Audit and Finance Committee chairperson shall prepare
or approve an agenda in advance of each meeting. The Committee shall meet
privately on a regular basis with management, the director of the internal
auditing department, the independent accountants, and as a committee to discuss
any matters that the Committee or each of these groups believe should be
discussed. The Committee shall provide an open avenue of communication between
the internal auditors, the independent accountant, management, and the Board of
Directors.
The Committee shall have the power, including funding, to conduct or authorize
investigations into any matters within the Committee's scope of
responsibilities. The Committee shall be empowered to retain independent
counsel, accountants, or others to assist it in the conduct of any
investigation.
The Audit and Finance Committee's responsibilities include:
I. Oversight of Trustmark's Audit Activities
A. Recommend to the Board of Directors the independent accountants to be
nominated, approve the compensation of the independent accountants,
evaluate the independent accountants; and where appropriate, replace
the independent accountants.
B. Instruct the independent accountants that they are ultimately
accountable to the Board of Directors and the Audit and Finance
Committee and that they must directly report to the Audit and Finance
Committee.
C. Assure the objectivity and the independence of the internal auditor
and the independent accountants, including a review of management
consulting services and related fees provided by the independent
accountants. Inquire of any other relationships that the independent
accountants might have that would impair their objectivity and
independence. Actively engage in a dialogue with the independent
accountants with respect to any disclosed relationships or services.
Obtain from the independent accountants written disclosures required
by the Independence Standards Board. Establish and monitor adherence
to a pre-approval policy for use of the independent accountant.
D. Review and concur in the appointment, replacement, reassignment,
performance, or dismissal of the director of internal auditing.
E. Consider, in consultation with the independent accountants and the
director of internal auditing, the audit scope and plan of the
internal auditors and the independent accountants. Review and approve
the independent accountants' engagement letter.
F. Review with the director of internal auditing and the independent
accountants the coordination of audit effort to assure completeness of
coverage, reduction of redundant efforts, and the effective use of
audit resources.
G. Consider and review with management and the director of internal
auditing:
1. Significant findings during the year and management's responses
thereto (including the status of previous audit recommendations).
2. Any difficulties encountered in the course of their audits,
including any restrictions on the scope of their work or access
to required information.
3. Any changes required in the planned scope of their audit plan.
4. The internal auditing department budget and staffing.
5. The internal auditing department charter.
6. Internal auditing's compliance with The IIA's Standards for the
Professional Practice of Internal Auditing.
H. Inquire of management, the director of internal auditing, and their
independent accountants about significant risks or exposures and
assess the steps that management has taken to minimize such risks to
Trustmark.
I. Consider and review with the director of internal auditing and the
independent accountants the adequacy of Trustmark's internal controls
including computerized information system controls and security.
II. Oversight of Financial Reporting
A. Review with management and the independent accountants at the
completion of the annual examination:
1. Trustmark's annual financial statements and related footnotes.
Discuss critical accounting policies, including an assessment of
management's disclosures.
2. The independent accountants' audit of the financial statements
and his or her report thereon.
3. Any significant findings during the year and management's
responses thereto, including the status of previous audit
suggestions.
4. Any significant changes required in the independent accountants'
audit plan.
5. Any serious difficulties or disputes with management encountered
during the course of the audit.
6. All alternatives within GAAP for material items that were
discussed with management.
7. Management's report on internal controls.
8. The Independent Auditor's audit of internal controls and the
report thereon.
9. Other matters related to the conduct of the audit, which are to
be communicated to the Committee under generally accepted
auditing standards.
B. Advise management and the independent accountants that they are
expected to provide a timely analysis of significant current financial
reporting issues and practices.
C. Provide that management and the independent accountants discuss with
the Audit and Finance Committee their judgments about the quality, not
just the acceptability, of Trustmark's accounting principles as
applied in its financial reporting. Inquire as to the consistency of
Trustmark's accounting principles and their application, and the
clarity and completeness of Trustmark's financial statements, which
include related disclosures. Inquire regarding items that have a
significant impact on the representational faithfulness,
verifiability, and neutrality of the accounting information included
in the financial statements.
D. Discuss any items required to be communicated by the independent
accountants prior to filing interim financial statements. Inquire of
any disagreements with management and its resolution quarterly.
E. Review annually with general counsel legal and regulatory matters that
may have a material impact on the financial statements, related
company compliance policies, and programs and reports or inquiries
received from regulators or other governmental agencies.
F. Submit reports as required by the Securities and Exchange Commission
and/or the National Association of Securities Dealers.
G. Establish and review procedures for the receipt, retention, and
treatment of complaints regarding accounting, internal accounting
controls or auditing matters, including procedures for the
confidential, anonymous submission by associates of the company of
concerns regarding questionable accounting or auditing matters.
III. Other Audit and Finance Committee Responsibilities
A. Annually review a summary of Directors' and officers' related
transactions and potential conflicts of interest.
B. Review annually with the director of internal auditing and the
independent accountants the results of their review of Trustmark's
monitoring of compliance with Trustmark's codes of conduct.
C. Consider with management and the independent accountants the rationale
for employing audit firms other than the principal independent
accountant.
D. Maintain minutes and report committee actions to the Board of
Directors with such recommendations as the Committee may deem
appropriate.
E. Annually perform a self-assessment of Audit and Finance Committee
performance.
F. Perform such other functions as assigned by law, Trustmark's charter
or bylaws, or the Board.
G. Review and reassess the adequacy of the Committee's charter annually.
The Charter shall be approved by the Board of Directors and published
at least every three years in accordance with SEC regulations.