-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Le1FambB5DtBT3MCtH01+lj5CEy9iHzc+jAysd/tbc+OTURSBFjCAtlhtqGupB2I 6Sx07GKkRWn/ih/nBA55HA== 0000036146-02-000010.txt : 20020415 0000036146-02-000010.hdr.sgml : 20020415 ACCESSION NUMBER: 0000036146-02-000010 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020409 FILED AS OF DATE: 20020305 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRUSTMARK CORP CENTRAL INDEX KEY: 0000036146 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 640471500 STATE OF INCORPORATION: MS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-03683 FILM NUMBER: 02567166 BUSINESS ADDRESS: STREET 1: 248 E CAPITOL ST STREET 2: P O BOX 291 CITY: JACKSON STATE: MS ZIP: 39201 BUSINESS PHONE: 6013545111 MAIL ADDRESS: STREET 1: 248 EAST CAPITOL STREET CITY: JACKSON STATE: MS ZIP: 39201 FORMER COMPANY: FORMER CONFORMED NAME: FIRST CAPITAL CORP DATE OF NAME CHANGE: 19900513 DEF 14A 1 proxdef_apr02.txt DEF PROXY APRIL 9, 2002 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-11(c) or 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: TRUSTMARK CORPORATION Post Office Box 291 Jackson, Mississippi 39205-0291 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS APRIL 9, 2002 TO THE SHAREHOLDERS: The annual meeting of the shareholders of Trustmark Corporation, a Mississippi corporation, will be held in Salon A of the Hilton Jackson, located at 1001 East County Line Road, Jackson, Mississippi 39211, on Tuesday, April 9, 2002, at 2:00 P.M., local time, for the following purposes: 1. To elect a board of twelve directors to hold office for the ensuing year and until their successors are elected and qualified. 2. To vote on a proposal to amend Trustmark Corporation's Articles of Incorporation to authorize 20 million shares of preferred stock having such designations, powers, terms, preferences, rights and limitations as may be determined, from time to time, by the Board of Directors. 3. To transact such other business as may properly come before the meeting. Only those shareholders of record at the close of business on February 11, 2002, shall be entitled to receive notice of the meeting and vote at the meeting. You are urged to sign and return the enclosed proxy as promptly as possible, whether or not you plan to attend the meeting. If you do attend the meeting, you may then 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. BY ORDER OF THE BOARD OF DIRECTORS. /s/ T.H. Kendall III /s/ Richard G. Hickson - -------------------- ---------------------- T.H. Kendall III Richard G. Hickson Chairman President and Chief Executive Officer Enclosures: 1. Proxy 2. Business Reply Envelope 3. Annual Report TRUSTMARK CORPORATION Post Office Box 291 Jackson, Mississippi 39205-0291 PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS April 9, 2002 I. GENERAL This proxy statement is being sent on or about March 8, 2002, in connection with the solicitation by the Board of Directors of Trustmark Corporation (Trustmark) of proxies for the annual meeting of shareholders to be held in Salon A of the Hilton Jackson, located at 1001 East County Line Road, Jackson, Mississippi 39211, on Tuesday, April 9, 2002, at 2:00 P.M., local time, and for any adjournment or adjournments thereof. Any shareholder giving a proxy has the right to revoke it 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. 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 and for the proposed amendment to Trustmark's Articles of Incorporation. Shareholders of record at the close of business on February 11, 2002, are entitled to notice of and to vote at the meeting in person or by proxy. A majority of the shares outstanding constitute a quorum. On the record date, Trustmark had outstanding 63,538,271 shares of common stock. Except in the election of directors, each share is entitled to one vote, and action on a matter is 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 otherwise not counted. Solicitation of proxies will be primarily by mail. Employees 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. The Board of Directors is not aware of any additional matters which are 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. II. ELECTION OF DIRECTORS The Board of Directors has fixed the number of directors for the coming year at twelve pursuant to Article III, Section 2 of Trustmark's bylaws. The following slate of twelve directors has 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. In December 2000, Trustmark's Board of Directors created a Governance Committee to evaluate Trustmark's overall approach to corporate governance. The Governance Committee engaged outside consultants to assist it in the analysis. In July 2001, the Governance Committee recommended to Trustmark that the governance responsibilities between the Boards of Directors of Trustmark and its principal operating subsidiary, Trustmark National Bank (TNB), be divided between the two boards. Under the recommendation, the Governance Committee proposed to establish a somewhat smaller board for Trustmark and a separate, larger board for TNB whose members would include the entire Board of Directors of Trustmark and additional persons to be elected by Trustmark's Board of Directors. The Governance Committee determined that its recommendation would improve the effectiveness and efficiency of Trustmark's corporate decision making processes, as well as improve the oversight of bank-related operations and functions by TNB. Trustmark's Board of Directors adopted the recommendation of the Governance Committee on July 10, 2001, to become effective on April 9, 2002. The shares represented by the proxies will, unless authority to vote is withheld, be voted in favor of the proposed slate of twelve directors. 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 and until his 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.
PRINCIPAL OCCUPATION/ DIRECTOR NAME AGE OTHER DIRECTORSHIPS (1) SINCE - ----------------- --- ------------------------------ -------- J. Kelly Allgood 61 Retired President, Mississippi 1991 BellSouth Reuben V. Anderson 59 Partner, Phelps Dunbar, L.L.P. (Attorneys) 1980 Other Directorships include: BellSouth Corporation, Burlington Resources, Inc., The Kroger Company and Mississippi Chemical Corporation John L. Black, Jr. 62 Chairman and Chief Executive 1990 Officer, The Waverley Group, Inc. (Owns and Manages Nursing Home Facilities) William C. Deviney, Jr. 56 Chief Executive Officer, 1995 Deviney Construction Company, Inc. (Telecommunications Construction) C. Gerald Garnett 57 Chief Executive Officer, 1993 Southern Farm Bureau Casualty Insurance Company and Southern Farm Bureau Property Insurance Company Richard G. Hickson 57 President and Chief Executive Officer, 1997 Trustmark Corporation and Vice Chairman and Chief Executive Officer, Trustmark National Bank Matthew L. Holleman III 50 President and Chief Executive Officer, 1994 Mississippi Valley Gas Company (Natural Gas Distribution) William Neville III 61 President, The Rogue, Ltd. (Men's Retailer) 1980 Richard H. Puckett 47 President and Chief Executive Officer, 1995 Puckett Machinery Company (Distributor of Heavy Earth Moving Equipment) Carolyn C. Shanks 40 President and Chief Executive Officer, 2001 Entergy Mississippi since July 1999; Vice President-Finance and Administration, Entergy Nuclear from February 1997 to July 1999 Kenneth W. Williams 60 President, Corinth/Tupelo Coca-Cola Bottling Co. 1998 since February 2000; Prior to February 2000, Secretary-Treasurer, Coca-Cola/Dr Pepper Operations of Corinth/Tupelo; President, Refreshments, Inc. (Industrial Vending and Catering) William G. Yates, Jr. 60 President and Chief Executive Officer, 2001 W.G. Yates & Sons Construction Co. (Commercial Contractor)
(1) Each nominee has served in their principal occupation for more than five years, unless otherwise indicated. Other directorships indicated above are with corporations having a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to the requirements of Section 15(d) of that Act. III. AMENDMENT TO THE ARTICLES OF INCORPORATION On February 12, 2002, the Board of Directors adopted resolutions approving, subject to shareholder approval, a proposed amendment to Trustmark's Articles of Incorporation to authorize the issuance of 20 million preferred shares having such designations, powers, terms, preferences, rights and limitations as may be determined by the Board of Directors. Exhibit A to this Proxy Statement contains the text of the proposed amendment. Although Trustmark has no current intention to issue any preferred shares, the Board of Directors believes that authorizing preferred shares for potential issuance is advisable and in the best interests of Trustmark. The ability to issue preferred shares in the future will provide Trustmark with additional financial and management flexibility for general corporate and acquisition purposes. The Board also believes that empowering the Board of Directors to establish the terms of any preferred shares which may be issued without having to call a shareholders' meeting will provide Trustmark with the ability to take maximum advantage of its strategic opportunities and, accordingly, benefit Trustmark. The issuance of preferred shares may affect the relative rights of holders of common shares. Although the specific terms of any class or series of preferred shares will not be determined until the shares are to be issued, preferred shares generally have a dividend and/or liquidation preference over common shares. The issuance of preferred shares can also have a dilutive effect on earnings per share of outstanding common shares. Assuming the presence of a quorum, approval of the amendment requires that the number of votes cast favoring the amendment exceed the number of votes cast opposing the amendment. The Board of Directors recommends that shareholders vote FOR the proposed amendment. IV. OWNERSHIP OF EQUITY SECURITIES 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 owner of more than 5% of its outstanding shares, (b) directors and nominees, (c) each of the executive officers named in Section V and (d) directors, nominees 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 director and nominee includes 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 Percent of Beneficially Outstanding Name Owned Shares ---------------- ------------- ----------- Robert M. Hearin 7,905,034 (1) 12.44% Foundation; Robert M. Hearin Support Foundation 711 West Capitol Street Jackson, MS 39207 J. Kelly Allgood 48,408 Reuben V. Anderson 21,508 (2) Adolphus B. Baker 1,350 John L. Black, Jr. 351,950 (2) William C. Deviney, Jr. 12,350 D. G. Fountain, Jr. 129,550 (3) C. Gerald Garnett 1,437,499 (4) 2.26% Richard G. Hickson 157,787 (5) Matthew L. Holleman III 7,948,374 (6) 12.51% Gerard R. Host 88,495 (2)(7) T. H. Kendall III 348,832 (2)(8) Larry L. Lambiotte 46,150 James S. Lenoir 11,750 (9) Dr. Frances Lucas-Tauchar 450 (10) William Neville III 152,950 (11) Richard H. Puckett 247,220 (2)(12) William O. Rainey 42,086 (13) William K. Ray 7,546 Charles W. Renfrow 299,032 (2) Carolyn C. Shanks 450 (10) Harry M. Walker 138,227 (2)(7) LeRoy G. Walker, Jr. 1,812 Paul H. Watson, Jr. 3,142 (2)(14) Kenneth W. Williams 10,575 Allen Wood, Jr. 32,545 (2) William G. Yates, Jr. 16,035 (10)(15) Directors, nominees and executive officers of Trustmark as a group 11,556,073 18.19% (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, 273,000 shares owned by Bay Street Corporation and 10,000 shares owned by Mississippi Valley Gas Company. 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. Does not include 508,854 shares held in the Mississippi Valley Gas Company pension plan, since TNB has voting and investment authority over these shares. 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 111,200 shares held in a charitable foundation for which the named individual has shared voting and investment authority. (4) 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. (5) Includes 153,787 shares which the nominee has the right to acquire through the exercise of options granted under Trustmark's 1997 Long Term Incentive Plan. (6) Includes 42,590 shares owned by nominee and immediate family members and 7,905,034 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 64,287 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 87,136 shares held as trustee for which the named individual nominee has shared voting and/or investment authority. Also includes 112,056 shares owned by The Gaddis Farms, Inc. and 77,642 shares owned by Gaddis & McLaurin, Inc. for which nominee has voting authority. (9) Includes 9,750 shares which the named individual has the right to acquire through the exercise of options granted under Trustmark's 1997 Long Term Incentive Plan. (10) Includes 250 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 17,000 shares held by a corporation controlled by the nominee. (12) Includes 90,000 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. (13) Includes 14,750 shares which the named individual has the right to acquire through the exercise of options granted under Trustmark's 1997 Long Term Incentive Plan. (14) Includes 2,000 shares held in an estate for which the named individual has voting and/or investment authority. (15) Includes 8,509 shares held by a corporation controlled by the nominee. V. COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS Executive Compensation 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 Annual Compensation Compensation ----------------------------- ------------ Securities Name and Underlying All Other(1) Principal Position Year Salary Bonus Options Compensation - ------------------------- ---- -------- -------- ------------ ------------ Richard G. Hickson 2001 $523,958 $519,868 49,000 $6,239 President and Chief 2000 499,375 423,743 46,500 6,239 Executive Officer, 1999 485,000 485,000 42,000 6,670 Trustmark Corporation; Vice Chairman and Chief Executive Officer, Trustmark National Bank Harry M. Walker 2001 $241,583 $174,188 19,500 $6,239 Secretary, Trustmark 2000 231,708 148,735 18,500 6,239 Corporation; President 1999 225,000 172,835 16,500 6,670 and Chief Operating Officer - General Banking Group, Trustmark National Bank Gerard R. Host 2001 $241,583 $183,985 19,500 $6,239 Treasurer, Trustmark 2000 231,708 151,441 18,500 6,239 Corporation; President 1999 217,917 171,436 16,500 6,670 and Chief Operating Officer - Financial Services Group, Trustmark National Bank James S. Lenoir 2001 $169,592 $ 62,937 7,500 $4,469 Executive Vice 2000 164,600 61,714 7,500 N/A President and Chief 1999 127,282 57,958 5,500 N/A Risk Officer, Trustmark National Bank William O. Rainey 2001 $164,292 $ 68,156 7,500 $6,044 Executive Vice 2000 159,313 62,224 7,500 6,044 President and Chief 1999 155,000 66,102 5,500 6,670 Banking Officer, Trustmark National Bank
(1) All other compensation represents contributions to the 401(k) plan. Option Grants During 2001 and Potential Realizable Values The following table sets forth as to each named executive officer, information with respect to option grants during 2001 and the potential realizable value of such option grants assuming a 5% and 10% compounded annual rate of appreciation in the value of Trustmark's shares. The 5% and 10% assumed rates of growth are for illustrative purposes only. They are not intended to predict future stock prices, which will depend on market conditions and other factors such as Trustmark's performance. Options granted during 2001 vest in four annual installments.
Individual Option Grants in the Last Fiscal Year - ---------------------------------------------------------------------------------------------- Potential Realizable Value at Assumed Annual Rate % of (1) of Appreciation for Options Options Exercise Option Term Granted Granted Price Per Expiration -------------------- Name in 2001 in 2001 Share ($) Date 5.0% 10.0% - ------------------ ------- ------- --------- ---------- -------- ---------- Richard G. Hickson 49,000 13.20% $21.6820 5/08/2011 $668,149 $1,693,221 Harry M. Walker 19,500 5.25% 21.6820 5/08/2011 265,896 673,833 Gerard R. Host 19,500 5.25% 21.6820 5/08/2011 265,896 673,833 James S. Lenoir 7,500 2.02% 21.6820 5/08/2011 102,268 259,166 William O. Rainey 7,500 2.02% 21.6820 5/08/2011 102,268 259,166
(1) The exercise price of all options was equal to the closing price of Trustmark's common shares on the date of grant. Option Exercises and Holdings The following table reflects the number and value of stock options owned by the named executive officers at December 31, 2001. No options were exercised during 2001. Fiscal Year End Option Values - -------------------------------------------------------------------------------- In-the-Money Options Options at Fiscal Year End at Fiscal Year End -------------------------- -------------------------- Name Exercisable Unexercisable Exercisable Unexercisable ----------- ------------- ----------- ------------- Richard G. Hickson 110,222 121,278 $731,518 $403,483 Harry M. Walker 47,222 52,278 362,940 170,731 Gerard R. Host 47,222 52,278 362,940 170,731 James S. Lenoir 4,625 15,875 15,549 57,789 William O. Rainey 8,375 17,125 21,802 59,873 Pension Plan TNB maintains a noncontributory pension plan (the Plan) for employees 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 benefits payable upon retirement under the Plan to persons in the following remuneration and years of service classifications: YEARS OF CREDITED SERVICE 10 Year Average ------------------------------------------------------ Annual Earnings 15 20 25 30 35 - --------------- ------- ------- ------- ------- ------- $50,000 $12,498 $16,664 $20,830 $24,996 $29,162 75,000 20,561 27,414 34,268 41,121 47,975 100,000 28,623 38,164 47,705 57,246 66,787 125,000 36,686 48,914 61,143 73,371 85,600 150,000 44,748 59,664 74,580 89,496 104,412 200,000 51,198 68,264 85,330 102,396 119,462 Years of credited service for the highest paid executives are: Richard G. Hickson - 5 years, Harry M. Walker - 30 years, Gerard R. Host - 18 years, William O. Rainey - 20 years, James S. Lenoir - 3 years. Benefits payable under the Plan are based on a formula that takes into account the participant's average compensation over the highest consecutive ten-year period and the number of years of credited service. Average compensation consists of W-2 taxable income adjusted for employee contributions to 401(k) and cafeteria plans, as well as excess group term life insurance, automobile allowance, moving expenses and any severance pay. For 2001, the maximum benefit was $135,000 and maximum covered compensation was $170,000. The table assumes that the entire service period was completed under the benefit formula that is effective for service on or after January 1, 1989. Amounts payable pursuant to the Plan are not subject to deduction for social security. Deferred Compensation Plan TNB provides executive officers with the opportunity to participate in a defined benefit deferred compensation plan pursuant to which TNB is obligated to provide participants certain retirement and death benefits. Benefits following normal retirement equal 50% of covered salary payable for life, but not less than 10 years. Should a participant die prior to normal retirement, the beneficiary receives a death benefit equal to specified percentages of covered salary for a period of up to 10 years. Life insurance contracts have been purchased which may be used to fund payments under the plan. Employment and Termination of Employment Agreements Mr. Hickson entered into an employment agreement effective May 13, 1997, which provides for his employment as President and Chief Executive Officer of Trustmark. The agreement provides for a base salary of not less than $400,000, a bonus up to 100% of base salary, certain stock options and customary employee benefits. Trustmark is obligated to make certain payments to Mr. Hickson in the event his contract is terminated or in the event he resigns for "Good Reason," within three years after a change in control of Trustmark. The amount payable is the sum of his salary immediately prior to the change and the highest annual bonus earned in any of the three years preceding the change, multiplied by 3.0. In addition, Trustmark is required to provide certain employee benefits for a period of years equal to the severance multiple shown above, reduced by any employee benefits received from later employment. Previously granted stock options which have not vested, shall vest immediately. If, without a change in control, Trustmark terminates Mr. Hickson for a reason other than for cause, death, disability or retirement, Trustmark is obligated to pay Mr. Hickson an amount equal to the product of 1.5 times the sum of his annual salary and "Target" bonus of 50% of annual compensation for the year in which the termination occurs. Mr. Hickson will also be entitled to certain employee benefits for a period of 18 months following the termination, reduced by any employee benefits received from later employment. In December 1997, Trustmark entered into agreements with Harry M. Walker and Gerard R. Host which provide for certain payments to these individuals in the event their employment is terminated or if they resign for "Good Reason" within two years after a change in control of Trustmark. The amount payable is the sum of the product of the individual's salary immediately prior to the change in control and the highest annual bonus earned in the two years preceding the change in control, multiplied by 2.0. Trustmark is required to continue certain employee benefits for the two year period following the termination or resignation, reduced by any employee benefits received from later employment. Any previously granted stock options vest as of the date of termination or resignation. Compensation Committee Report on Executive Compensation The purpose of Trustmark's Executive Compensation Committee, which held six meetings in 2001, is to determine the compensation of Trustmark's Chief Executive Officer (CEO), as well as review and approve the compensation of other executive officers as recommended by the CEO. Compensation includes salary, bonuses, and stock options. Compensation of Chief Executive Officer in 2001 - 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 2001, Mr. Hickson was awarded options to purchase 49,000 shares of Trustmark's stock at $21.6820 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. Compensation of Other Executive Officers in 2001 - In establishing the salaries of Trustmark's executive officers, the committee considered the recommendations of the CEO, which are principally based on compensation levels of similar positions at comparable financial institutions. Bonuses awarded to executive officers in 2001 were based on a bonus program, which measures performance goals. These goals measure corporate performance, line of business performance and individual management effectiveness. In 2001, the committee awarded executive officers stock options pursuant to Trustmark's 1997 Long Term Incentive Plan. Options are designed to provide additional incentive-based compensation to participants. The number of options granted is generally designed to comprise specified percentages of the participants' base salaries. The percentage varies with levels of job responsibility. Executive Compensation Committee -------------------------------- C. Gerald Garnett, Chairman D.G. Fountain, Jr. Matthew L. Holleman III T.H. Kendall III William Neville III Compensation Committee Interlocks and Insider Participation in Compensation Decisions The Executive Compensation Committee is composed of the persons identified above. During 2001, no executive officer of Trustmark or any of its subsidiaries served as a member of the compensation committee (or other board or committee performing similar functions) or the board of directors of another entity, one of whose executive officers served on the Compensation Committee or the Board of Directors of Trustmark. Compensation of Directors Directors' meetings of Trustmark are held in conjunction with meetings of the Board of Directors of TNB. Eleven meetings of the Board of Directors were held during 2001. Of those directors serving during 2001, none attended fewer than 75% of the aggregate number of meetings of the Board and the committees of which they were members. During 2001, the Chairman of the Board received $4,250 per month; all members of the Executive Committee were paid $2,125 per month; and all other directors and each committee chairman received $1,000 and $1,250, respectively, for each board meeting attended. Members of the Board of Directors who are salaried officers of Trustmark or TNB do not receive additional compensation for service on the Board. Trustmark provides nonemployee 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 death and retirement benefits. Trustmark has purchased life insurance policies on participating directors to fund this plan over the long term. On May 8, 2001, each director, other than those who are salaried officers of TNB, received an option grant of 1,000 shares pursuant to the Trustmark Corporation 1997 Long Term Incentive Plan. These options vest over a four-year period and expire in 2011. 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 60 regional bank holding companies located in the southeast United States. This presentation assumes that $100 was invested in shares of the relevant issuers on December 31, 1996, and that dividends received were immediately invested in additional shares. The graph plots the value of the initial $100 investment at one-year intervals. Five Year Cumulative Total Return ----------------------Fiscal Year Ending------------------------- Company 1996 1997 1998 1999 2000 2001 ----------------------------------------------------------------- Trustmark 100 185.07 184.18 179.39 179.22 211.94 MG-SE Banks 100 173.04 164.80 137.07 139.94 175.99 NASDAQ Market 100 122.32 172.52 304.29 191.25 152.46 VI. 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, 2001. 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. Reuben V. Anderson is a partner in the law firm of Phelps Dunbar, L.L.P. For the year 2001, the law firm of Phelps Dunbar, L.L.P., was retained by Trustmark on various legal matters and it is anticipated that this firm will be retained during 2002. During 2001, 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. VII. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Directors, certain officers of Trustmark and its subsidiaries and holders of more than 10% of Trustmark's outstanding shares are required to file reports under Section 16 of the Securities Exchange Act of 1934. Federal regulations require disclosure of any failures to file these reports on a timely basis. Trustmark believes that during 2001, its officers, directors and greater than 10% beneficial owners complied with all filing requirements except Director John L. Black, Jr., who filed one late report covering one transaction. VIII. AUDIT COMMITTEE Audit Committee Report Trustmark's Audit Committee held eight meetings during 2001. The committee reviewed and discussed with management and Arthur Andersen LLP (Andersen) the audited financial statements as of and for the year ended December 31, 2001. The committee also discussed with Andersen 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 Andersen required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, as amended, and discussed with Andersen their independence. 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, 2001. Independent Public Accountants Fees The Audit Committee considered whether the provision of non-audit services by Andersen is compatible with maintaining auditor independence. Fees were billed by Andersen during fiscal year 2001 for services in the following categories and amounts. Audit Fees - Fees billed by Andersen for professional services rendered in connection with the audit of Trustmark's annual financial statements for the fiscal year ended December 31, 2001, and for the review of the financial statements included in Trustmark's quarterly report on Form 10-Q for that fiscal year were $183,000. Financial Information Systems Design and Implementation Fees - No fees were billed by Andersen for professional services rendered for information technology services relating to financial information systems design and implementation for the fiscal year ended December 31, 2001. All Other Fees - Fees billed by Andersen for services rendered to Trustmark for audit-related services and other services, which are not included in those described above for the fiscal year ended December 31, 2001, were $64,765 and $108,250, respectively. Independent Public Accountants Andersen has served as the independent auditors of Trustmark since the audit for the year ended December 31, 1992. During this period, there have been no disagreements between Trustmark and Andersen. The contract between Trustmark and Andersen concludes with the audit for the year ended December 31, 2001, and the Audit Committee has not completed the process of selecting an independent auditor for 2002. Representatives of Andersen 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. Audit Committee Charter The Audit Committee reviews and reassesses the adequacy of the committee's charter on an annual basis. During 2001, no changes were made to the charter filed as an exhibit to the proxy statement dated April 10, 2001. The listing agreement executed by Trustmark to enable its shares to be traded on the NASDAQ system requires that a majority of the members of the Audit Committee be independent directors. All of the members of Trustmark's Audit Committee are independent directors. Audit Committee --------------- J. Kelly Allgood, Chairman Harry H. Bush Fred A. Jones Richard H. Puckett William K. Ray Paul H. Watson, Jr. Kenneth W. Williams Allen Wood, Jr. IX. PROPOSALS OF SHAREHOLDERS Shareholders may submit proposals to be considered at the 2003 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 8, 2002, in order to be considered for inclusion in Trustmark's proxy materials for the 2003 Annual Meeting. BY ORDER OF THE BOARD OF DIRECTORS. /s/ T.H. Kendall III /s/ Richard G. Hickson -------------------- ---------------------- T.H. Kendall III Richard G. Hickson Chairman President and Chief Executive Officer APPENDIX I PROXY CARD TRUSTMARK CORPORATION POST OFFICE BOX 291 JACKSON, MISSISSIPPI 39205-0291 This Proxy is Solicited on Behalf of the Board of Directors for the Annual Meeting of Shareholders on April 9, 2002. The undersigned, having received Notice of Meeting and Proxy Statement dated March 8, 2002, appoint D. G. Fountain, Jr., T. H. Kendall III and William Neville III and each or any of them as proxies, with full power of substitution and revocation, to represent the undersigned and to vote all shares of the Common Stock of Trustmark Corporation which the undersigned is entitled to vote at the Annual Meeting of the Shareholders of Trustmarkn to be held on April 9, 2002, in Salon A of the Hilton Jackson, located at 1001 East County Line Road, Jackson, Mississippi, at 2:00 P.M., local time, and any adjournment thereof, as follows: 1. Election of Directors J. Kelly Allgood, Reuben V. Anderson, John L. Black, Jr., William C. Deviney, Jr., C. Gerald Garnett, Richard G. Hickson, Matthew L. Holleman III, William Neville III, Richard H. Puckett, Carolyn C. Shanks, Kenneth W. Williams, and William G. Yates, Jr. 2. Amend Articles of Incorporation An amendment to Trustmark's Articles of Incorporation to authorize 20 million shares of preferred stock having such designations, powers, terms, preferences, rights and limitations as may be determined, from time to time, by the Board of Directors. Management knows of no other matters that may properly be, or which are likely to be, brought before the meeting. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting in accordance with the decision of the Board of Directors. SEE REVERSE SIDE (X) Please mark your vote as in this example When properly executed, this proxy will be voted in the manner directed by the undersigned shareholder. If no direction is made, or if any other matter properly comes before the meeting for which no choice has been specified, the shares will be voted in accordance with the recommendation of the Board of Directors. Unless authority is withheld as to a particular nominee, the proxy will be voted for each nominee listed. The undersigned hereby authorizes the proxies, in their discretion, to vote the undersigned's shares cumulatively. 1. Election of Directors (see reverse) ( ) FOR all nominees ( ) WITHHOLD all nominees ( ) FOR, EXCEPT vote withheld from the following nominee(s): -------------------------------------------------------- 2. Amend Articles of Incorporation (see reverse) ( ) FOR ( ) AGAINST ( ) ABSTAIN Please sign exactly as name appears. When shares are held as joint tenants, both are requested to sign. Trustees, attorneys, executors, administrators, guardians, and others signing in a representative capacity should indicate the capacity in which they sign. If a corporation or other entity, please sign in the name of the entity by authorized person. Signature Date -------------------------------------- ------------------ Signature Date -------------------------------------- ------------------ Please mark, sign, date and return proxy card promptly using the enclosed envelope. DETACH CARD DETACH CARD EXHIBIT A AMENDMENT TO ARTICLES OF INCORPORATION OF TRUSTMARK CORPORATION Article Fourth of the Articles of Incorporation of Trustmark Corporation is hereby amended as follows: The aggregate number of shares Trustmark is authorized to issue is (i) two hundred fifty million (250,000,000) shares of no-par common stock, and (ii) twenty million (20,000,000) shares of no-par preferred stock. The common stock of Trustmark may be issued in such amounts and for such consideration as determined from time to time by the Board of Directors. The holders of common stock shall have unlimited voting rights and, subject to the preferences and rights, if any, of any holders of any other class of stock, holders of common stock shall have the right to receive such dividends as may be declared, from time to time, by the Board of Directors and shall be entitled to receive the net assets of Trustmark upon liquidation. The Board of Directors of Trustmark is authorized, subject only to any limitations prescribed by law and the Articles of Incorporation of Trustmark, to provide for the issuance of shares of preferred stock of Trustmark in one or more classes or series without any further action of the shareholders of Trustmark by filing such Articles of Amendment as may be required by law establishing the number of such shares to be issued and the designation, powers, terms, preferences, rights and limitations thereof. The authority of the Board of Directors with respect to a class or series shall include, but not be limited to, the authority to determine the following: (i) The number of shares constituting that class or series and the distinctive designation of that class or series; (ii) The dividend rate on the shares of that class or series, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights and priorities, if any, of the right to the payment of dividends on shares of that class or series; (iii) Whether that class or series shall have voting rights in addition to any voting rights required by law, and, if so, the terms of such voting rights; (iv) Whether that class or series shall have conversion privileges, and, if so, the terms and conditions of such conversion, including provisions for adjustment of the conversion rate as a consequence of such events as the Board of Directors shall determine; (v) Whether or not the shares of that class or series shall be redeemable, and, if so, the terms and conditions of such redemption, including the date, dates or events upon or after which they shall be redeemable, and the amount or method of determining the amount payable in case of redemption; (vi) Whether that class or series shall have a sinking fund for the redemption or purchase of shares of that class or series, and, if so, the terms and amount of such sinking fund; (vii) The rights of the shares of that class or series in the event of voluntary or involuntary liquidation, dissolution, or winding-up of Trustmark, and the relative rights and priorities, if any, of payment of shares of that class or series; and (viii) Any other relative rights, preferences, and limitations of that class or series. -----END PRIVACY-ENHANCED MESSAGE-----