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 (as permitted by Rule 14a-6(e)(2))
[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 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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:
(Logo)
March 14, 2003
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
Jackson, located at 1001 East County Line Road, Jackson, Mississippi, on
Tuesday, April 15, 2003 at 2:00 p.m.
At the meeting, shareholders will elect a board of directors and transact such
other business as may properly come before the meeting. Prior to the meeting,
please carefully read the accompanying proxy statement for 2002.
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
-------------------------------------------------------------------------------
TIME.......................Tuesday, April 15, 2003, 2:00 p.m.
LOCATION...................Grand Ballroom
Hilton Jackson
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 transact such other business as may
properly come before the meeting.
RECORD DATE................Shareholders of record on February 17, 2003 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
TABLE OF CONTENTS
Page
General Information.................................................... 1
Solicitation by the Board of Directors............................... 1
Annual Meeting....................................................... 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................................................... 2
Board Mission........................................................ 2
Meetings of the Board of Directors................................... 2
Committees of the Board of Directors................................. 2
Audit and Finance Committee........................................ 2
Executive Committee................................................ 3
Human Resources Committee.......................................... 3
Nominating Committee............................................... 3
Strategic Planning Committee....................................... 3
Committee Membership................................................. 3
Director Compensation................................................ 4
Election of Directors.................................................. 4
The Nominees........................................................... 5
Performance Graph...................................................... 9
Stock.................................................................. 10
Securities Ownership by Certain Beneficial Owners and Management..... 10
Section 16(a) Beneficial Ownership Reporting Compliance.............. 11
Executive Compensation................................................. 12
Compensation Table................................................... 12
Option Grants in 2002................................................ 12
Option Exercises and Year-End Option Values.......................... 13
Pension Plan......................................................... 13
Deferred Compensation Plan........................................... 14
Employment Agreements................................................ 14
Human Resources Committee Report on Executive Compensation........... 15
Chief Executive Officer Compensation - 2002........................ 15
Executive Officer Compensation - 2002.............................. 15
Committee Composition.............................................. 16
Transactions with Management........................................... 16
Audit and Finance Committee Report..................................... 16
Independent Public Accountants....................................... 16
Committee Review and Discussion...................................... 16
Accounting Fees...................................................... 17
Audit Charter........................................................ 17
Proposals of Shareholders.............................................. 17
GENERAL INFORMATION
Solicitation by the Board of Directors
This proxy statement is being sent on or about March 14, 2003, in connection
with the solicitation by the Board of Directors of Trustmark Corporation
(Trustmark) of proxies to be voted at the 2003 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.
Annual Meeting
The Annual Meeting of Shareholders will be held in the Grand Ballroom of the
Hilton Jackson, located at 1001 East County Line Road, Jackson, Mississippi
39211, on Tuesday, April 15, 2003, at 2:00 p.m.
Shareholders Entitled to Vote
Shareholders of record at the close of business on February 17, 2003, are
entitled to notice of and to vote at the meeting in person or by proxy. On the
record date, Trustmark had outstanding 60,429,110 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. Abstentions are counted for purposes of determining a
quorum, but are not otherwise counted.
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 for the slate of directors
proposed by the Board of Directors.
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 overall 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.
In July 2001, the Governance Committee recommended that the governance
responsibilities between the Boards of Directors of Trustmark and its principal
operating subsidiary, Trustmark National Bank (TNB), be more formally divided.
Under the recommendation, the Governance Committee proposed to establish a
smaller board for Trustmark and a separate, larger board for TNB whose members
would include the Board of Directors of Trustmark and additional persons to be
elected by Trustmark.
Additional provisions of the new governance structure include a retirement age
of 65 for directors, required notification of changes in professional
responsibilities and residence, a director's attendance policy, a Code of
Conduct for directors, and the authority to seek advice or counsel from external
advisers on an as-needed basis.
Furthermore, the Committee proposed implementing a committee structure and
revised director accountabilities that best enable the Board to address issues
such as business growth, human capital, and technology.
Trustmark's Board of Directors unanimously adopted the recommendations of the
Governance Committee, which became effective on April 9, 2002. The enhanced
structure improves the effectiveness and efficiency of Trustmark's corporate
decision-making processes, as well as improves the oversight of bank-related
operations and functions by TNB.
Board Mission
The role of the Board is to foster Trustmark's long-term success consistent with
its fiduciary responsibility 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.
Meetings of the Board of Directors
The Board of Directors met six times in 2002. 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 2002.
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
The Audit and Finance Committee meets at least six 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 approval and review of the budget and privacy policy. The
Committee also 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.
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 2002.
Audit and Human Strategic
Director Finance Executive Resources Nominating 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
William Neville III X X
Richard H. Puckett X
Carolyn C. Shanks X
Kenneth W. Williams X
William G. Yates, Jr. X
2002 Meetings 8 7 8 0 2
Director Compensation
Prior to the new governance structure taking effect on April 9, 2002, the
Chairman of the Board, an independent director at that time, received $4,250 per
month. All members of the Executive Committee were paid $2,125 per month; and
all other directors and each committee chair received $1,000 and $1,250,
respectively, for each Board meeting attended. Those members of the Board of
Directors who were compensated officers of Trustmark or TNB did not receive
compensation for service on the Board or board committees.
Subsequent to April 9, 2002, all directors receive a retainer of $12,000
annually. The Executive Committee members receive a retainer of $3,000 and the
Executive Committee Chair receives an additional retainer of $3,000. Directors
receive $1,000 for each Board meeting attended. Likewise, all committee members
and committee chairs receive $500 and $750, respectively, for each committee
meeting attended. The CEO is the only member of management on the Board and
receives no compensation for Board or committee service.
Trustmark provides directors the opportunity to participate in a deferred fee
plan pursuant to which participants may defer up to 100% of fees to fund a
portion of the cost of specified retirement and death benefits. Trustmark has
purchased life insurance policies on participating directors to fund this plan.
On April 9, 2002, each outside director received an option grant of 2,000 shares
pursuant to the Trustmark Corporation 1997 Long Term Incentive Plan. These
options vest equally over a four-year period and expire in 2012.
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. Shareholders wishing to make nominations to the
Board of Directors must do so in accordance with the provisions of Article II,
Section 10 of Trustmark's Bylaws.
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 that nominee will be voted for such other
persons 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 NOMINEES
Name and Age at Record Date Position, Principal Occupation and Directorships
--------------------------------- ------------------------------------------------
J. Kelly Allgood...............62 o Retired President, BellSouth Mississippi
(Photo) o Director of Trustmark since 1991
o Trustmark Corporate Committees:
Audit and Finance - Chair
Executive
Nominating
Strategic Planning
o Other Directorships: Trustmark National Bank,
Mississippi College, Taxolog, Inc.
Reuben V. Anderson............60 o Partner, Phelps Dunbar, L.L.P. (Attorney)
(Photo) o Director of Trustmark since 1980
o Trustmark Corporate Committees:
Executive
Human Resources - Chair
Nominating
o Other Directorships: Trustmark National Bank, BellSouth
Corporation, Burlington Resources, Inc., The Kroger
Company, Mississippi Chemical Corporation,
National Job Corp. Association
John L. Black, Jr..............63 o Chairman and CEO, The Waverley Group, Inc.
(Photo) (Owns and Manages Nursing Home Facilities)
o Director of Trustmark since 1990
o Trustmark Corporate Committees:
Audit and Finance
o Other Directorships: Trustmark National Bank
William C. Deviney, Jr.........57 o CEO, Deviney Construction Company, Inc.
(Photo) (Telecommunications Construction)
o Director of Trustmark since 1995
o Trustmark Corporate Committees:
Human Resources
o Other Directorships: Trustmark National Bank
C. Gerald Garnett..............58 o CEO, Southern Farm Bureau Casualty Insurance Company
(Photo) and Southern Farm Bureau Property Insurance Company
o Director of Trustmark since 1993
o Trustmark Corporate Committees:
Executive
Human Resources
Nominating
Strategic Planning
o Other Directorships: Trustmark National Bank, Cimarron
Mortgage Company, Mississippi Methodist Hospital &
Rehabilitation Center, National Association of Independent
Insurers
Richard G. Hickson ............58 o Chairman, President and CEO, Trustmark Corporation
(Photo) o Director of Trustmark since 1997
o Trustmark Corporate Committees:
Executive
o Other Directorships: Trustmark National Bank, Federal
Reserve Bank of Atlanta, Millsaps College, Mississippi
Economic Council, St. Dominic-Jackson Memorial Hospital
Matthew L. Holleman III........51 o President and CEO, Galaxie Corporation; President,
(Photo) Capitol Street Corporation, H.H. Corporation and Bay
Street Corporation (Investment Management)
o President and CEO, Mississippi
Valley Gas Company (1987-2002)
(Natural Gas Distribution)
o Director of Trustmark since 1994
o Trustmark Corporate Committees:
Executive - Chair
Nominating - Chair
Strategic Planning - Chair
o Other Directorships: Trustmark National Bank , Galaxie
Corporation, Capitol Street Corporation, Waggoner
Engineering, InTime, Inc.
William Neville III............62 o President, The Rogue, Ltd. (Men's Retailer)
(Photo) o Director of Trustmark since 1980
o Trustmark Corporate Committees:
Executive
Nominating
o Other Directorships: Trustmark National Bank,
Foundation for Public Broadcasting, RetailAdWorld -
Visual Reference Publications
Richard H. Puckett.............48 o CEO and President, Puckett Machinery Company
(Photo) (Distributor of Heavy Earth Moving Equipment)
o Director of Trustmark since 1995
o Trustmark Corporate Committees:
Audit and Finance
o Other Directorships: Trustmark National Bank, Senior
Executive Advisory Board - College of Business &
Industry, Mississippi State University
Carolyn C. Shanks..............41 o President and CEO, Entergy Mississippi, Inc. (since 1999)
(Photo) Vice President -Finance and Administration, Entergy
Nuclear (1997 - 1999)
o Director of Trustmark since 2001
o Trustmark Corporate Committees:
Human Resources
o Other Directorships: Trustmark National Bank, Mississippi Economic Council, Executive
Advisory Board - College of Business & Industry, Mississippi State University,
Business and Industry Political Action Committee
Kenneth W. Williams............61 o President, Corinth Coca-Cola Bottling Works (since 2000);
(Photo) President, Refreshments, Inc., and Refreshments of
Tennessee, Inc.; Secretary/Treasurer, Tupelo Coca-Cola
Bottling Works (1975-2000)
o Director of Trustmark since 1998
o Trustmark Corporate Committees:
Audit and Finance
o Other Directorships: Trustmark National Bank
William G. Yates, Jr...........61 o President and Chairman, The Yates Companies, Inc. (Construction)
(Photo) o Director of Trustmark since 2001
o Trustmark Corporate Committees:
Strategic Planning
o Other Directorships: Trustmark National Bank
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 MG Industry
Group 413. The MG Industry Group 413 is an industry index published by Media
General Financial Services and consists of 68 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, 1997, 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
Company 1997 1998 1999 2000 2001 2002
------------- ---- ------ ------ ------ ------ ------
Trustmark 100 99.52 96.33 96.84 114.52 115.35
MG-SE Banks 100 95.24 79.21 80.87 101.70 108.85
NASDAQ Market 100 141.04 248.76 156.35 124.64 86.94
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
5% 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 1,750 shares which the individual has the right to
acquire through the exercise of options granted under Trustmark's 1997 Long Term
Incentive Plan. 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 12/31/02 Shares
--------------------------------------- ------------------ -----------
Robert M. Hearin Foundation; 7,895,034(1) 13.06%
Robert M. Hearin Support Foundation
711 West Capital Street
Jackson, MS 39207
J. Kelly Allgood 49,408
Reuben V. Anderson 23,157(2)
John L. Black, Jr. 327,950(2)
William C. Deviney, Jr. 13,350
C. Gerald Garnett 1,438,746(3) 2.38%
Richard G. Hickson 204,185(4)
Matthew L. Holleman III 7,939,655(5) 13.14%
Gerard. R. Host 93,139(2)(6)
James S. Lenoir 18,500(7)
William Neville III 153,950(8)
Richard H. Puckett 203,270(2)(9)
William O. Rainey 50,377(10)
Carolyn C. Shanks 1,200(11)
Harry M. Walker 107,233(2)(12)
Kenneth W. Williams 11,825
Williams G. Yates, Jr. 17,000(11)(13)
Directors and executive officers of
Trustmark as a group 10,745,954 17.78%
(1) 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.
(2) Includes shares owned by spouse and/or minor children.
(3) Includes 1,355,102 shares owned by Southern Farm Bureau Casualty Insurance
Company and 72,000 shares owned by Southern Farm Bureau Casualty Insurance
Company Employee Retirement Plan and Trust for which nominee has shared
voting and investment authority.
(4) Includes 191,502 shares which the nominee has the right to acquire through
the exercise of options granted under Trustmark's 1997 Long Term Incentive
Plan.
(5) Includes 44,621 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.
(6) Includes 58,446 shares which the named individual has the right to acquire
through the exercise of options granted under Trustmark's 1997 Long Term
Incentive Plan.
(7) Includes 16,500 shares which the named individual has the right to acquire
through the exercise of options granted under Trustmark's 1997 Long Term
Incentive Plan.
(8) Includes 17,000 shares held by a corporation controlled by the nominee.
(9) Includes 45,000 shares owned by Puckett Machinery Company and 60,360 shares
held by Puckett Machinery Company Profit Sharing Plan for which nominee has
either sole or shared voting and investment authority.
(10) Includes 21,500 shares which the named individual has the right to acquire
through the exercise of options granted under Trustmark's 1997 Long Term
Incentive Plan.
(11) Includes 1,000 shares which the named individual has the right to acquire
through the exercise of options granted under Trustmark's 1997 Long Term
Incentive Plan.
(12) Includes 47,943 shares which the named individual has the right to acquire
through the exercise of options granted under Trustmark's 1997 Long Term
Incentive Plan.
(13) Includes 8,724 shares held by a corporation controlled by the nominee.
Section 16(a) Beneficial Ownership Reporting Compliance
As part of Trustmark's on-going regulatory and compliance review process during
2002, it was determined that certain additional persons should have been filing
reports under Section 16. The following individuals, who were deemed to have not
filed timely reports in 2002, have subsequently filed all required reports: T.
Harris Collier III, Louis E. Greer, James S. Lenoir, James M. Outlaw, William O.
Rainey, and Zach L. Wasson.
In addition, Gerard R. Host made one late filing related to three charitable
gifts made in prior years and one late filing related to a transfer to his
spouse made in 2002 for estate planning purposes.
Trustmark reviewed the late filers' transactions and determined there were no
short-swing liabilities owed.
EXECUTIVE COMPENSATION
Compensation Table
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)
=================== ==================== ================
Name and Principal Securties Underlying
Position at Stock Options
December 31, 2002 Year Salary Bonus (Number of Shares)
----------------------------- ---- -------- -------- -------------------- ----------------
Richard G. Hickson 2002 $550,000 $550,621 45,000 $9,000
Chairman and CEO, 2001 523,958 519,868 49,000 6,239
Trustmark Corporation; 2000 499,375 423,743 46,500 6,239
Chairman and CEO,
Trustmark National Bank
Gerard R. Host 2002 $254,500 $194,963 17,000 $9,000
President and COO 2001 241,583 183,985 19,500 6,239
Consumer Services Division, 2000 231,708 151,441 18,500 6,239
Trustmark National Bank
Harry M. Walker 2002 $246,167 $141,347 17,000 $9,000
President and COO 2001 241,583 174,188 19,500 6,239
Commercial Services Division, 2000 231,708 148,735 18,500 6,239
Trustmark National Bank
James S. Lenoir 2002 $173,967 $81,846 6,500 $5,219
Executive Vice President and 2001 169,592 62,937 7,500 4,469
Chief Risk Officer, 2000 164,600 61,714 7,500 N/A
Trustmark National Bank
William O. Rainey 2002 $168,667 $83,329 6,500 $9,000
Executive Vice President and 2001 164,292 68,156 7,500 6,044
Chief Banking Officer, 2000 159,313 62,224 7,500 6,044
Trustmark National Bank
(1) All other compensation represents contributions to the 401(k) plan.
Option Grants in 2002
The following table sets forth, as to each named executive officer, information
with respect to options granted on April 9, 2002 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 2002 vest in four annual installments.
Individual Grants
=========================================== Potential Realizable Value at
Options % of Assumed Annual Rates of
Granted Options Exercise Appreciation for Option Term
in Granted Price Per Expiration =============================
Name 2002 in 2002 Share (1) Date 5% 10%
---------------------- -------- ------- --------- ---------- -----------------------------
Richard G. Hickson 45,000 11.47% $25.4569 4/9/2012 $720,437 $1,825,728
Gerard R. Host 17,000 4.33 25.4569 4/9/2012 272,165 689,720
Harry M. Walker 17,000 4.33 25.4569 4/9/2012 272,165 689,720
James S. Lenoir 6,500 1.66 25.4569 4/9/2012 104,063 263,716
William O. Rainey 6,500 1.66 25.4569 4/9/2012 104,063 263,716
(1) The exercise price of all options was equal to the closing price of
Trustmark's common shares on the grant date.
Option Exercises and Year-End Option Values
The following table reflects information regarding options exercised by each
named executive officer in 2002 as well as the number and value of the remaining
options held by those executive officers at December 31, 2002.
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 7,683 $ 95,720 146,104 122,713 $ 696,141 $ 234,682
Gerard R. Host 23,489 292,642 40,798 52,213 135,060 105,883
Harry M. Walker 33,992 383,470 30,295 52,213 68,442 105,883
James S. Lenoir N/A N/A 9,750 17,250 28,570 33,595
William O. Rainey N/A N/A 14,750 17,250 34,182 33,595
Pension Plan
Trustmark maintains a noncontributory pension plan (the Plan) for associates who
are 21 years 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:
Three-Year
Average Annual ------------Years of Credited Service--------------
Compensation 15 20 25 30 35
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$ 50,000 $7,574 $ 8,953 $ 9,982 $10,748 $11,317
75,000 11,361 13,429 14,973 16,122 16,976
100,000 15,148 17,906 19,964 21,496 22,634
125,000 18,935 22,382 24,954 26,870 28,293
150,000 22,722 26,859 29,945 32,244 33,951
200,000 30,296 35,812 39,927 42,992 45,268
Years of credited service for the highest paid executives are: Richard G.
Hickson - 6 years, Gerard R. Host - 19 years, Harry M. Walker - 31 years,
William O. Rainey - 21 years, James S. Lenoir - 4 years.
Benefits payable under the Plan are based on a formula that takes into account
the participant's average compensation over the highest consecutive three-year
period and the number of years of credited service. Average compensation
consists of W-2 taxable income adjusted for associate contributions to 401(k)
and cafeteria plans, excess group term life insurance, automobile allowance,
moving expenses and any severance pay. For 2002, the maximum benefit was
$160,000 and the maximum covered compensation was $200,000. The table assumes
the entire service period was completed under the benefit formula that is
effective for service on or after January 1, 2002. Amounts payable pursuant to
the Plan are not subject to deduction for social security.
Deferred Compensation Plan
Trustmark provides executive officers with a non-qualified defined benefit plan,
which vests over ten years and provides retirement and death benefits based upon
a specified covered salary. The Human Resources Committee capped the covered
salary under the plan based on the executive officers' level of
responsibilities. Normal retirement benefits under the plan are equal to fifty
percent of covered salary payable for life, but not less than ten years. Should
a participant die prior to normal retirement while the plan is in effect, the
participant's beneficiary will receive a death benefit equal to a percentage of
covered salary 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.
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 Harry M. Walker and Gerard R. Host.
Under these agreements, if Mr. Walker or Mr. Host'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 and Mr. Walker are terminated for Cause or leave 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 eight meetings in 2002,
determines the compensation of Trustmark's Chief Executive Officer, as well as
reviews and approves the compensation of other executive officers as recommended
by the CEO. Compensation includes salary, bonus, and stock options.
Chief Executive Officer Compensation - 2002
In establishing Mr. Hickson's salary, the Committee principally considered the
salaries of chief executive officers in comparable financial institutions. Also,
the Committee considered Mr. Hickson's performance and contributions to
Trustmark.
Mr. Hickson's bonus was determined based upon Trustmark's performance-based
bonus program and was measured on individual management effectiveness and
corporate performance with regard to net income, efficiency ratio, return on
equity and earnings per share growth. In measuring corporate performance, actual
performance was measured against profit plan performance targets established at
the beginning of the year.
In 2002, Mr. Hickson was awarded options to purchase 45,000 shares of
Trustmark's stock at $25.4569 per share, which was the market price of such
shares on the award date. The number of options granted was designed to provide
Mr. Hickson with additional incentive-based compensation.
Executive Officer Compensation - 2002
In establishing the salaries of Trustmark's executive officers, the Committee
considered the recommendations of the CEO, which were principally based on
compensation levels of similar positions at comparable financial institutions.
Bonuses awarded to executive officers in 2002 were based on an incentive program
that measures performance goals. These goals measure corporate performance, line
of business performance and individual management effectiveness.
In 2002, the Committee awarded executive officers stock options, designed to
provide additional incentive-based compensation, pursuant to Trustmark's 1997
Long Term Incentive Plan. The number of options granted is determined by
specified percentages, which varies with levels of job responsibility, of the
participants' base salaries.
Committee Composition
During 2002, no current or former executive officer of Trustmark or any of its
subsidiaries served as a member of the Human Resources Committee. The Committee
is composed of the following persons:
Reuben V. Anderson - Chair
William C. Deviney, Jr.
C. Gerald Garnett
Carolyn C. Shanks
Reuben V. Anderson is a partner in the law firm of Phelps Dunbar, L.L.P. In
2002, Trustmark retained this firm on various legal matters. It is anticipated
this firm will be retained during 2003 until the conclusion of a particular
legal matter. Trustmark does not expect to retain this firm thereafter.
TRANSACTIONS WITH MANAGEMENT
No executive officer, director, nominee, 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, 2002. 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
executive officers, directors, nominees, 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 2002, 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 2002.
Independent Public Accountants
On April 29, 2002, the Board of Directors, based on the recommendation of the
Audit and Finance Committee, announced the engagement of KPMG LLP (KPMG) as
Trustmark's independent accountants to replace Arthur Andersen LLP (Andersen),
dismissed on April 9, 2002. Andersen had served as the independent accountant
since 1992. None of Andersen's reports on the financial statements contained an
adverse opinion or a disclaimer of opinion, or were qualified or modified as to
uncertainty, audit scope, or accounting principles. There were no disagreements
with Andersen on any matter of accounting principles or practices, financial
statement disclosures, or auditing scope or procedure.
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.
Committee Review and Discussion
The Committee reviewed and discussed with management and KPMG the audited
financial statements as of and for the three years ended December 31, 2002. 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 audited
financial statements be included in Trustmark's Annual Report on Form 10-K for
the year ended December 31, 2002.
Accounting Fees
(1) Audit Fees - The aggregate audit fees billed to Trustmark during 2002 by
KPMG were $470,719. These fees were for work in connection with the audit
of Trustmark's consolidated financial statements as of and for the
three-years ended December 31, 2002, as well as limited reviews of
Trustmark's unaudited consolidated interim financial statements included in
Trustmark's quarterly reports on Form 10-Q.
(2) Financial Information Systems Design and Implementation Fees - During 2002,
KPMG did not bill Trustmark for design and implementation of financial
information systems.
(3) All Other Fees - The aggregate fees billed by KPMG to Trustmark during 2002
for audit-related and other services, totaled $19,156 and $72,987,
respectively. The Committee has considered whether the rendering of such
non-audit services by KPMG is compatible with maintaining the principal
accountant's independence and concluded it would not affect KPMG's
independence.
Audit Charter
The Audit and Finance Committee reviews and reassesses the adequacy of the
Committee's Charter on an annual basis. During 2002, no changes were made to the
Charter filed as an exhibit to the proxy statement dated April 10, 2001.
All members of Trustmark's Audit and Finance Committee are independent directors
as defined by NASD rules:
J. Kelly Allgood - Chair
John L. Black, Jr.
Richard H. Puckett
Kenneth W. Williams
PROPOSALS OF SHAREHOLDERS
Shareholders may submit proposals to be considered at the 2004 Annual Meeting of
Shareholders if they do so in accordance with applicable regulations of the
Securities and Exchange Commission.
Any shareholder proposals must be submitted to the Secretary of Trustmark no
later than November 15, 2003, in order to be considered for inclusion in
Trustmark's proxy materials for the 2004 Annual Meeting.
(Logo)
TRUSTMARK CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDS
APRIL 15, 2003
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 Jackson, located
at 1001 East County Line Road, Jackson, Mississippi, on Tuesday, April 15, 2003,
at 2:00 p.m., Central Time.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDERS, 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.
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).
Address Changes/Comments:
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(If you noted any address changes/comments above, please mark corresponding box
on the reverse side).
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
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 p.m. Eastern Time the day before the
meeting date. Have your proxy card in hand when you access the web site. You
will be prompted to enter your 12-digit Control Number which is located below to
obtain your records and to create an electronic voting instruction form.
Vote by Phone - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59
p.m. Eastern Time the day before the meeting date. Have your proxy card in hand
when you call. You will be prompted to enter your 12-digit Control Number which
is located below and then follow the simple instructions the Vote Voice provides
you.
Vote by Mail
Mark, sign, and date your proxy card and return it in the postage-paid envelope
we have 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
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) John L. Black, Jr.
04) William C. Deviney, Jr.
05) C. Gerald Garnett
06) Richard G. Hickson
07) Matthew L. Holleman III
08) William Neville III
09) Richard H. Puckett
10) Carolyn C. Shanks
11) Kenneth W. Williams
12) William G. Yates, Jr.
For All ( )
Withhold All ( )
For All Except ( )
To withhold authority to vote, mark "For All Except" and write
the nominee's number on the line below.
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2. To transact such other business as may properly come before the meeting.
For address changes and/or comments, please write them on the back where
indicated and check this box. ( )
If you plan to attend the meeting, please check this box. ( )
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Signature (PLEASE SIGN WITHIN BOX) Date
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Signature (Joint Owners) Date