Note 16 – Stock and Incentive Compensation Plans

Trustmark has granted stock and incentive compensation awards subject to the provisions of the 1997 Long Term Incentive Plan (the 1997 Plan) and the 2005 Stock and Incentive Compensation Plan (the 2005 Plan). New awards have not been issued under the 1997 Plan since it was replaced by the 2005 Plan. At December 31, 2014, no awards remain outstanding under the 1997 Plan. The 2005 Plan is designed to provide flexibility to Trustmark regarding its ability to motivate, attract and retain the services of key associates and directors. The 2005 Plan allows Trustmark to make grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and performance units to key associates and directors. At December 31, 2014, the maximum number of shares of Trustmark’s common stock available for issuance under the 2005 Plan was 5,466,172 shares.

The following table summarizes the stock and incentive plans’ vesting periods and contractual terms in years:

	Vesting		Contractual
	Period		Term
Stock option awards - 1997 plan		4		10
Stock option awards - 2005 plan		5		7
Performance awards (includes achievement shares for grants after 2013)		3		-
Achievement shares from performance grants prior to 2013		3		-
Time-vested awards		3		-

Stock Option Grants

Stock option awards under the 1997 Plan and the 2005 Plan were granted with an exercise price equal to the market price of Trustmark’s stock on the date of grant, and vested equally in annual increments. Compensation expense related to stock options was fully recognized during 2011. Compensation expense for stock options granted under these plans was estimated using the fair value of each option granted using the Black-Scholes option-pricing model and was recognized on the straight-line method over the requisite service period. No stock options have been granted since 2006, when Trustmark began granting restricted stock awards exclusively.

The following table summarizes Trustmark’s stock option activity for the years ended December 31, 2014, 2013 and 2012:

	2014					2013					2012
Options	Shares			Average Option Price		Shares			Average Option Price		Shares			Average Option Price
Outstanding, beginning of year		105,450		$	27.43		699,600		$	27.58		1,205,100		$	27.31
Exercised		-			-		(187,300	)		26.96		(11,125	)		24.09
Expired		(105,450	)		27.43		(406,850	)		27.90		(494,375	)		27.01
Outstanding, end of year		-			-		105,450		$	27.43		699,600		$	27.58

Exercisable, end of year		-			-		105,450		$	27.43		699,600		$	27.58

The total intrinsic value of options exercised was zero in 2014, $191 thousand in 2013 and $16 thousand in 2012.

Restricted Stock Grants

Performance Awards

Trustmark’s performance awards are granted to Trustmark’s executive and senior management team. Performance awards granted vest based on performance goals of return on average tangible equity (ROATE) and total shareholder return (TSR) compared to a defined peer group. Performance awards are valued utilizing a Monte Carlo simulation model to estimate fair value of the awards at the grant date. These awards are recognized using the straight-line method over the requisite service period. These awards provide for achievement shares if performance measures exceed 100%. The restricted share agreement provides for voting rights and dividend privileges.

The following table summarizes Trustmark’s performance award activity for the years ended December 31, 2014, 2013 and 2012:

	2014					2013					2012
	Shares			Weighted- Average Grant-Date Fair Value		Shares			Weighted- Average Grant-Date Fair Value		Shares			Weighted- Average Grant-Date Fair Value
Nonvested shares, beginning of year		160,520		$	25.20		159,583		$	24.26		179,421		$	20.30
Granted		73,726			25.58		62,119			23.65		55,295			25.66
Released from restriction		(38,580	)		25.40		(54,784	)		24.15		(72,632	)		21.38
Forfeited		(14,471	)		24.86		(6,398	)		25.42		(2,501	)		24.70
Nonvested shares, end of year		181,195		$	24.98		160,520		$	25.20		159,583		$	24.26

Time-Vested Awards

Trustmark’s time-vested awards are granted to Trustmark’s Board of Directors, executive and senior management team. Time-vested awards are valued utilizing the fair value of Trustmark’s stock at the grant date. These awards are recognized on the straight-line method over the requisite service period.

The following table summarizes Trustmark’s time-vested award activity for the years ended December 31, 2014, 2013 and 2012:

	2014					2013					2012
	Shares			Weighted- Average Grant-Date Fair Value		Shares			Weighted Average Grant-Date Fair Value		Shares			Weighted Average Grant-Date Fair Value
Nonvested shares, beginning of year		291,634		$	24.48		317,573		$	23.28		334,356		$	21.04
Granted		105,690			24.91		112,964			24.47		141,616			24.66
Released from restriction		(124,869	)		24.74		(122,727	)		24.40		(151,331	)		23.14
Forfeited		(8,550	)		24.77		(16,176	)		25.14		(7,068	)		24.14
Nonvested shares, end of year		263,905		$	24.66		291,634		$	24.48		317,573		$	23.28

The following table presents information regarding compensation expense for all stock and incentive plans for the periods presented ($ in thousands):

	Recognized Compensation Expense for Years Ended December 31,						Unrecognized Compensation		Weighted Average Life of Unrecognized Compensation
	2014		2013		2012		Expense		Expense
Performance awards	$	1,065	$	825	$	868	$	1,197		1.73
Time-vested awards		3,087		2,774		3,105		3,619		1.76
Total	$	4,152	$	3,599	$	3,973	$	4,816