SCHEDULE 14A
(RULE 14A-101)
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SUNTRUST BANKS, INC.
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(SUNTRUST LOGO)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
SunTrust Banks, Inc.
The Annual Meeting of Shareholders of SunTrust Banks, Inc. will be held in
Suite 105 on the 1st floor of SunTrust Plaza Garden Offices, 303 Peachtree
Center Avenue, Atlanta, Georgia, on Tuesday, April 19, 2005, at 9:30 a.m. local
time, for the following purposes:
1. To elect 6 directors to serve until the Annual Meeting of
Shareholders in 2008, 1 director to serve until the Annual Meeting
of Shareholders in 2007 and 2 directors to serve until the Annual
Meeting of Shareholders in 2006;
2. To ratify the appointment of PricewaterhouseCoopers LLP as
independent auditors for 2005;
3. To approve the material terms of the performance goals for the
SunTrust Banks, Inc. Management Incentive Plan;
4. To approve the material terms of the performance goals for the
SunTrust Banks, Inc. Performance Unit Plan; and
5. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only shareholders of record at the close of business on February 25, 2005
will be entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof.
For your convenience, we are also offering an audio webcast of the meeting.
If you choose to listen to the webcast, go to "Investor Relations" located under
"About SunTrust" at www.suntrust.com shortly before the meeting time and follow
the instructions provided. If you miss the meeting, you may listen to a replay
of the webcast on our site beginning the afternoon of April 19.
Your attention is directed to the attached Proxy Statement for more
complete information regarding the matters to be acted upon at the Annual
Meeting.
By Order of the Board of Directors
Raymond D. Fortin
Corporate Secretary
March 8, 2005
IMPORTANT NOTICE
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE YOUR
SHARES BY: (1) A TOLL-FREE TELEPHONE CALL, (2) THE INTERNET, OR (3) COMPLETING,
SIGNING, DATING AND RETURNING THE ENCLOSED PROXY AS SOON AS POSSIBLE IN THE
POSTAGE PAID ENVELOPE PROVIDED.
TABLE OF CONTENTS
PROXY STATEMENT............................................. 1
ELECTION OF DIRECTORS....................................... 2
Director Selection Process................................ 2
Nominees For Directorship (Item 1)........................ 3
Nominees For Term Expiring in 2008........................ 3
Nominee For Term Expiring in 2007......................... 4
Nominees For Term Expiring in 2006........................ 4
Directors Whose Terms Expire in 2007...................... 4
Directors Whose Terms Expire in 2006...................... 5
Board Committees.......................................... 6
Attendance and Compensation............................... 8
Corporate Governance...................................... 9
Shareholder Communications with Directors................. 10
EXECUTIVE COMPENSATION...................................... 10
Executive Officers........................................ 10
Report of the Compensation Committee on Executive
Compensation........................................... 12
Summary of Cash and Certain Other Compensation............ 19
Stock Options............................................. 21
Option Grants During 2004.............................. 21
Aggregated Option Exercises in 2004 and December 31,
2004 Option Values.................................... 22
Equity Compensation Plans................................. 22
Long-Term Incentive Plan.................................. 23
Retirement Plans.......................................... 24
Change in Control Agreements.............................. 25
RATIFICATION OF INDEPENDENT AUDITORS (ITEM 2)............... 26
AUDIT COMMITTEE REPORT...................................... 26
AUDIT FEES AND RELATED MATTERS.............................. 27
Audit and Non-Audit Fees.................................. 27
Audit Committee Policy for Pre-approval of Independent
Auditor Services....................................... 27
STOCK PRICE PERFORMANCE GRAPH............................... 28
STOCK OWNERSHIP OF CERTAIN PERSONS.......................... 28
Stock Ownership of Management............................. 28
Phantom Stock Ownership of Management..................... 30
Stock Ownership of Principal Shareholder.................. 31
OTHER DIRECTOR AND EXECUTIVE OFFICER INFORMATION............ 32
Compensation Committee Interlocks and Insider
Participation.......................................... 32
Section 16(a) Beneficial Ownership Reporting Compliance... 32
PROPOSAL TO APPROVE THE MATERIAL TERMS OF THE PERFORMANCE
GOALS FOR THE SUNTRUST BANKS, INC. MANAGEMENT INCENTIVE
PLAN (ITEM 3)............................................. 32
PROPOSAL TO APPROVE THE MATERIAL TERMS OF THE PERFORMANCE
GOALS FOR THE SUNTRUST BANKS, INC. PERFORMANCE UNIT PLAN
(ITEM 4).................................................. 35
ADDITIONAL INFORMATION...................................... 38
Shareholder Nominations for Election to the Board......... 38
Shareholder Proposals for Next Year's Meeting............. 39
Record Date; Shares Outstanding........................... 39
Quorum and Voting......................................... 39
Proxy Solicitation........................................ 40
Next Year's Annual Meeting................................ 40
Other Matters............................................. 40
i
SUNTRUST BANKS, INC.
303 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30308
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PROXY STATEMENT
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The enclosed proxy is solicited on behalf of the Board of Directors of
SunTrust Banks, Inc. in connection with the Annual Meeting of Shareholders of
SunTrust to be held on Tuesday, April 19, 2005. This Proxy Statement and the
enclosed proxy are being first mailed to SunTrust's shareholders on or about
March 15, 2005.
Voting your shares. The enclosed proxy is for use if you are unable to
attend the Annual Meeting in person or wish to have your shares voted by proxy
even if you attend the Annual Meeting. You may revoke the proxy at any time
before it is exercised by notice to the Corporate Secretary of SunTrust, by
submitting a proxy having a later date, or by appearing at the Annual Meeting
and voting in person. All shares represented by valid proxies received pursuant
to this solicitation and not revoked before they are exercised will be voted in
the manner specified therein. If no specification is made, the proxies for the
proposals described below will be voted as recommended by the Board of
Directors.
IMPORTANT: The Securities and Exchange Commission approved rules that
prohibit brokers or other nominees that are New York Stock Exchange member
organizations from voting in favor of proposals relating to compensation plans
unless they receive specific instructions from the beneficial owner of the
shares to vote in that manner. If your shares are being voted by a broker or
other nominee who is a NYSE member organization, such shares will only be voted
in favor of Items 3 and 4 of this Proxy Statement if you have provided specific
voting instructions to your broker or other nominee to vote such shares in favor
of those proposals. Because the required vote of shareholders to approve these
proposals is based upon the total number of votes cast, the failure to submit a
proxy or vote in person, the abstention from voting, or the failure to give a
broker instructions for how to vote on approval of the material terms of the
performance goals for the SunTrust Banks, Inc. Management Incentive Plan and the
SunTrust Banks, Inc. Performance Unit Plan could, depending on the number of
votes cast, have the same effect as a vote "AGAINST" these proposals.
Method of Voting. You can simplify your voting and reduce SunTrust's costs
by voting your shares via telephone or the Internet. The telephone and Internet
voting procedures are designed to allow shareholders to vote their shares and to
confirm that their instructions have been properly recorded. If your shares are
held in the name of a bank or broker, the availability of telephone and Internet
voting will depend on the voting processes of the applicable bank or broker.
Therefore, we recommend that you follow the voting instructions on the form you
receive. If you do not choose to vote by telephone or the Internet, please date,
sign and return the proxy card.
Webcast of Annual Meeting. SunTrust is pleased to offer an audio webcast
of the 2005 Annual Meeting. If you choose to listen to the webcast, go to
"Investor Relations" located under "About SunTrust" at www.suntrust.com shortly
before the meeting time and follow the instructions provided. If you miss the
meeting, you may listen to a replay of the webcast on our site beginning the
afternoon of April 19 and available until May 19, 2005.
Please note that you will not be able to vote your shares via the webcast.
If you plan to listen to the webcast, please submit your vote using one of the
methods described above prior to the meeting.
ELECTION OF DIRECTORS
DIRECTOR SELECTION PROCESS
SunTrust maintains a standing Governance and Nominating Committee, which we
refer to in this section as the Committee, comprised solely of independent
directors who are responsible for identifying individuals qualified to become
Board members and recommending to the Board director nominees. The Committee
periodically reviews the size and composition of the Board and determines
whether it is necessary to add or replace directors. The Committee's charter is
available on SunTrust's website at www.suntrust.com.
Nominees for director will be selected based on the following criteria: (i)
outstanding achievement in their careers; (ii) broad experience; (iii)
independence; (iv) financial expertise; (v) integrity; (vi) financial integrity;
(vii) ability to make independent, analytical inquiries; (viii) understanding of
the business environment; and (ix) willingness to devote adequate time to Board
duties. The Board believes that each director should have, and nominees are
expected to have, the capacity to obtain a basic understanding of: (i) the
principal operational and financial objectives and plans and strategies of
SunTrust; (ii) the results of operations and financial condition of SunTrust and
of any significant subsidiaries or business segments; and (iii) the relative
standing of SunTrust and its business segments in relation to its competitors.
The Committee considers it essential that the Audit Committee have at least one
member who qualifies as an "audit committee financial expert".
The Committee and the Board consider a variety of sources when selecting
individuals as potential Board members. Generally, SunTrust does not retain a
search firm to assist in the selection of directors. Historically, most of
SunTrust's director nominees have served on one of SunTrust Bank's local boards
or the board of a company acquired by SunTrust, and have had a leadership
position with an entity that is located in a community served by SunTrust. This
practice has served SunTrust well and has been used in part to select the
candidates that were considered as nominees. The Committee and the Board
consider SunTrust Bank local board members to be an excellent source for
nominees because their service provides them a better understanding of SunTrust
and its operations and increases the level of contribution that individual can
make to SunTrust and its constituents. In addition, the Committee considers for
nominees certain chief executive officers of publicly held companies that are
headquartered in SunTrust's markets and directors of companies acquired by
SunTrust. SunTrust senior management assembles the list of candidates that are
to be considered by the Committee. The Committee and Board also take into
consideration the diversity of the Board when selecting nominees. The Committee
will review this process from time to time and may alter the process in its
discretion.
Pursuant to the terms of the merger agreement by and between SunTrust and
National Commerce Financial Corporation, which we refer to as NCF, SunTrust
agreed to appoint 4 members of NCF's Board of Directors to the SunTrust Board at
the effective time of the merger, which was October 1, 2004. The nominees
proposed by NCF were Thomas C. Farnsworth, Jr., Blake P. Garrett, Jr., Thomas M.
Garrott, III and Phail Wynn, Jr. The Committee reviewed the qualifications and
independence of these nominees, applying the criteria described above, and
unanimously voted to nominate and recommend to the Board that the NCF nominees
be elected to serve as SunTrust directors at the effective time of the merger.
On August 10, 2004, the Board adopted a resolution increasing the size of the
Board to 18 members and elected the NCF nominees as directors effective October
1, 2004, to serve for a term expiring on the date of the 2005 Annual Meeting of
Shareholders.
Douglas N. Daft retired as a director of SunTrust on November 8, 2004 after
4 years of service. Upon the recommendation of the Chairman of the Board, the
Committee considered E. Neville Isdell as the nominee to fill the vacancy on the
Board created by Mr. Daft's departure. After evaluating Mr. Isdell using the
criteria described above, the Committee recommended to the Board that E. Neville
Isdell be elected as a director until the 2005 Annual Meeting. Mr. Isdell was
elected a director at the Board's December 9, 2004 meeting.
The Committee will consider candidates for director nominees put forward by
shareholders. The proposal should state how the proposed candidate meets the
criteria described above and the shareholder must comply with the other
requirements set forth in the section entitled "Shareholder Nominations for
Election to the
2
Board" under the heading "Additional Information". The Committee will consider
candidates proposed by shareholders by evaluating such candidates in the same
manner and using the criteria described above. The Committee will also adhere to
all applicable laws and regulations.
NOMINEES FOR DIRECTORSHIP
(ITEM 1)
The Board of Directors, under the terms of SunTrust's bylaws, has
determined that the number of directors constituting the Board shall be 18, with
directors divided into 3 classes serving staggered 3-year terms. There are 9
directors who have been nominated to stand for reelection as directors at the
Annual Meeting in 2005. Thomas C. Farnsworth, Jr., Patricia C. Frist, Blake P.
Garrett, Jr., L. Phillip Humann, M. Douglas Ivester and Karen Hastie Williams
have been nominated to stand for reelection as directors for a term expiring in
2008. Phail Wynn, Jr. has been nominated to stand for reelection as a director
for a term expiring in 2007, and Thomas M. Garrott, III and E. Neville Isdell
have been nominated to stand for reelection as directors for a term expiring in
2006. In addition to the nominees, there are 9 other directors continuing to
serve on the Board, whose terms expire in 2006 and 2007. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" ALL NOMINEES.
You may not vote your proxy for the election of a person to fill a
directorship for which no nominee is named in this Proxy Statement. If, at the
time of the Annual Meeting, any of the nominees named in the enclosed proxy
should be unable or decline to serve as a director, the proxies are authorized
to be voted for such substitute nominee or nominees as the Board recommends. The
Board has no reason to believe that any nominee will be unable or decline to
serve as a director.
The following table sets forth for each nominee and each director whose
term continues after the meeting his or her age, a brief description of his or
her principal occupation and business experience during the last 5 years,
certain other directorships held and how long he or she has been a director of
SunTrust. Except for Mr. Humann and Mr. Garrott, none of the nominees or
directors is employed by SunTrust or any entity that is an affiliate of
SunTrust.
DIRECTOR
NAME, PRINCIPAL OCCUPATION, CERTAIN OTHER DIRECTORSHIPS AND AGE SINCE
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NOMINEES FOR TERM EXPIRING IN 2008
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THOMAS C. FARNSWORTH, JR. is Chairman of Farnsworth Investment 2004
Co. and affiliated companies (real estate development), and
has held such positions since 1985. Mr. Farnsworth was a
director of National Commerce Financial Corporation and
became a director of SunTrust when National Commerce
Financial Corporation merged with SunTrust in October 2004.
Mr. Farnsworth is 67.
PATRICIA C. FRIST is a partner in Frist Capital Partners, which 2000
invests in equities, real estate and venture capital. Mrs.
Frist is also President of Frisco, Inc., an investment
corporation, as well as President of the Patricia C. Frist
and Thomas F. Frist, Jr. Foundation. Mrs. Frist is 65.
BLAKE P. GARRETT, JR. is a partner in Garrett & Garrett 2004
Construction and related companies (commercial real estate
development), and has held such positions since March 1966.
Mr. Garrett was a director of National Commerce Financial
Corporation and became a director of SunTrust when National
Commerce Financial Corporation merged with SunTrust in
October 2004. Mr. Garrett is 64.
L. PHILLIP HUMANN is Chairman of the Board and Chief Executive 1991
Officer of SunTrust. Until December 2004, Mr. Humann also was
President of SunTrust. He is a director of Coca-Cola
Enterprises Inc., Equifax Inc. and Haverty Furniture
Companies, Inc. Mr. Humann is 59.
M. DOUGLAS IVESTER retired as Chairman of the Board and Chief 1998
Executive Officer of The Coca-Cola Company on February 17,
2000. He served as President and Chief Operating Officer of
The Coca-Cola Company from July 1994 until elected Chairman
of the Board and Chief Executive Officer in October 1997. He
is also a director of Georgia-Pacific Corporation and S1
Corporation and is Chairman of the Board of the Woodruff
Health Sciences Center, Inc. Mr. Ivester is 57.
3
DIRECTOR
NAME, PRINCIPAL OCCUPATION, CERTAIN OTHER DIRECTORSHIPS AND AGE SINCE
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KAREN HASTIE WILLIAMS is a recently retired partner in the 2002
Washington, D.C. law firm of Crowell & Moring LLP. She is
also a director of Chubb Corporation, Continental Airlines,
Inc., Gannett Company, Inc. and WGL Holdings, Inc. Ms.
Williams is 60.
NOMINEE FOR TERM EXPIRING IN 2007
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PHAIL WYNN, JR. is President of Durham Technical Community 2004
College. Dr. Wynn was a director of National Commerce
Financial Corporation and became a director of SunTrust when
National Commerce Financial Corporation merged with SunTrust
in October 2004. Dr. Wynn is 57.
NOMINEES FOR TERM EXPIRING IN 2006
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THOMAS M. GARROTT, III served as Chairman of the Board of 2004
Directors of National Commerce Financial Corporation from May
1993 to January 2003. He also served as Chairman of the
Board, President and Chief Executive Officer of National
Commerce Financial Corporation from May 1993 to July 2000.
Mr. Garrott became a director of SunTrust when National
Commerce Financial Corporation merged with SunTrust in
October 2004. Mr. Garrott is also a director of
Anderson-Tully Company and serves on the Advisory Committee
of The Pension Benefit Guaranty Corporation. Mr. Garrott is
67.
E. NEVILLE ISDELL is Chairman of the Board of Directors and 2004
Chief Executive Officer of The Coca-Cola Company and has held
these positions since June 1, 2004. Mr. Isdell served as
Chairman of the Board and Chief Executive Officer of
Coca-Cola Beverages Plc from July 1989 to September 2000. In
2000, he negotiated a merger with Hellenic Bottling Company
to form Coca-Cola HBC, at the time the world's second-largest
Coca-Cola bottler, and was its Vice Chairman and Chief
Executive Officer from September 2000 to December 2001. After
he left Coca-Cola HBC at the end of 2001, Mr. Isdell served
as an international consultant to The Coca-Cola Company from
January 2002 to May 2004. Mr. Isdell is 61.
DIRECTORS WHOSE TERMS EXPIRE IN 2007
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ROBERT M. BEALL, II is Chairman and Chief Executive Officer of 2004
Beall's, Inc., the parent company of Beall's Department
Stores, Inc. and Beall's Outlet Stores, Inc., which operate
retail stores located from Florida to California. He is also
a director of FPL Group, Inc. Mr. Beall is 61.
JEFFREY C. CROWE is Chairman of the Board of Landstar System, 2004
Inc. Landstar System, Inc. and its affiliates provide
transportation services to customers throughout North
America. Until July 2004, Mr. Crowe was also Chief Executive
Officer of Landstar System, Inc. Mr. Crowe was also Chairman
of the U.S. Chamber of Commerce from June 2003 until June
2004. From June 2002 to June 2003, he served as Vice Chairman
of the U.S. Chamber of Commerce. From October 1993 to October
2003, he served as Chairman of the National Defense
Transportation Association. He is also a director of Silgan
Holdings, Inc. Mr. Crowe is 58.
J. HICKS LANIER is Chairman and Chief Executive Officer of 2003
Oxford Industries, Inc., a business engaged in the design,
manufacture, marketing and sale of consumer apparel products.
Mr. Lanier is also a director of Crawford & Company, Genuine
Parts Company and WestPoint Stevens, Inc. Mr. Lanier is 64.
LARRY L. PRINCE is Chairman of the Board of Genuine Parts 1996
Company, a service organization engaged in the distribution
of automotive replacement parts, industrial replacement parts
and office products. Mr. Prince is also a director of
Crawford & Company, Equifax Inc. and John H. Harland Co. Mr.
Prince is 66.
FRANK S. ROYAL, M.D. is President and a member of Frank S. 1998
Royal, M.D., P.C. (family medicine). Dr. Royal is also a
director of Chesapeake Corporation, Columbia/HCA Healthcare
Corporation, CSX Corporation, Dominion Resources, Inc. and
Smithfield Foods, Inc. Dr. Royal is 65.
4
DIRECTOR
NAME, PRINCIPAL OCCUPATION, CERTAIN OTHER DIRECTORSHIPS AND AGE SINCE
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DIRECTORS WHOSE TERMS EXPIRE IN 2006
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J. HYATT BROWN is Chairman of the Board and Chief Executive 1984
Officer of Brown & Brown, Inc., an insurance agency. He is
also a director of BellSouth Corporation, FPL Group, Inc.,
International Speedway Corporation and Rock-Tenn Company. Mr.
Brown is 67.
ALSTON D. CORRELL is Chairman of the Board and Chief Executive 1997
Officer of Georgia-Pacific Corporation, a manufacturer and
distributor of pulp, paper and building products. He is also
a director of Mirant Corporation and Norfolk Southern Corp.
Mr. Correll is 63.
DAVID H. HUGHES is Chairman of the Board of Hughes Supply, 1984
Inc., a distributor of construction materials. Until May
2003, he also served as Chief Executive Officer of Hughes
Supply, Inc. Mr. Hughes is also a director of Brown & Brown,
Inc. and Darden Restaurants, Inc. Mr. Hughes is 61.
G. GILMER MINOR, III is Chairman of the Board and Chief 1998
Executive Officer of Owens & Minor, Inc., a national
distributor of hospital and medical supplies. Mr. Minor was
named Chairman of Owens & Minor, Inc. in May 1994 and also
serves as a director. Mr. Minor is 64.
5
BOARD COMMITTEES
The Board has 5 committees: (1) the Executive Committee; (2) the Audit
Committee; (3) the Governance and Nominating Committee; (4) the Compensation
Committee; and (5) the Risk Committee. The committee membership, the functions
of each committee and the number of meetings held during 2004 are described
below.
NUMBER OF MEETINGS
NAME OF COMMITTEE AND MEMBERS FUNCTIONS OF COMMITTEE IN 2004
EXECUTIVE: - May exercise authority of full Board except 4
that it may not:
L. Phillip Humann, Chairman - approve or propose to shareholders any
J. Hyatt Brown action that must lawfully be approved by
Thomas M. Garrott, III shareholders;
E. Neville Isdell - fill vacancies on the Board or any
committee;
- amend the Articles of Incorporation;
- adopt, amend or repeal the bylaws; or
- approve a dissolution or merger of SunTrust
or the sale of all or substantially all the
assets of SunTrust.
AUDIT:* - Appoints, compensates, retains, and directly 19
oversees the work of SunTrust's independent
M. Douglas Ivester, Chairman auditor (subject to shareholder ratification
Jeffrey C. Crowe if applicable).
J. Hicks Lanier - Monitors the following:
Frank S. Royal, M.D. - the integrity of SunTrust's financial
Karen Hastie Williams statements;
- the independence and qualifications of its
independent auditor;
- SunTrust's system of internal controls;
- the performance of SunTrust's internal
audit process and independent auditor; and
- SunTrust's compliance with laws,
regulations and the codes of conduct.
- Resolves any disagreements between management
and the auditors regarding financial
reporting.
- Pre-approves all audit services and permitted
non-audit services provided to SunTrust by its
independent auditor.
- Performs other related duties as defined in a
written charter approved by the Board.
- Has only members that meet the independence
and experience requirements set forth in
SunTrust's Corporate Governance Guidelines,
as well as the requirements of the Securities
Exchange Act of 1934 and applicable rules,
the rules of the New York Stock Exchange,
where SunTrust's common stock is listed, and
other rules and regulations of the Securities
and Exchange Commission. Mr. Ivester meets
the definition of "audit committee financial
expert" as defined by the Securities and
Exchange Commission's rules and regulations.
* Robert M. Beall, II, Thomas C. Farnsworth, Jr., Patricia C. Frist and Blake P. Garrett, Jr., who
served on the Audit Committee in 2004, were appointed, together with Phail Wynn, Jr., as the
members of the newly formed Risk Committee of the Board of Directors on February 8, 2005, and
they no longer serve on the Audit Committee.
6
NUMBER OF MEETINGS
NAME OF COMMITTEE AND MEMBERS FUNCTIONS OF COMMITTEE IN 2004
GOVERNANCE AND NOMINATING: - Responsible for making recommendations to the 4
Board regarding the size and composition of
David H. Hughes, Chairman the Board, reviewing qualifications of
Alston D. Correll candidates to the Board and recommending
M. Douglas Ivester nominees to the Board.
G. Gilmer Minor, III - Has sole authority for retaining or
Karen Hastie Williams terminating any search firm used to identify
Phail Wynn, Jr. director candidates and determining such
firm's fees.
- Responsible for taking a leadership role in
shaping the corporate governance of SunTrust.
- Responsible for developing and recommending
to the Board a set of corporate governance
guidelines, and periodically reviewing and
reassessing the adequacy of those principles
and recommending any proposed changes to the
Board for approval.
- Responsible for leading the Board in its
annual review of the Board's performance.
- Responsible for addressing committee
structure and operations, committee reporting
to the Board, committee member qualifications
and committee member appointment and removal.
- Has only members that are independent under
SunTrust's Corporate Governance Guidelines,
as well as the rules of the New York Stock
Exchange.
COMPENSATION: - Responsible for approving the compensation 5
arrangements for senior management.
Larry L. Prince, Chairman - Responsible for oversight and administration
Alston D. Correll of certain executive and employee compensation
David H. Hughes and benefit plans, including the Stock Plans,
G. Gilmer Minor, III Management Incentive Plan, Performance Unit
Plan, 401(k) Excess Plan, Supplemental
Executive Retirement Plan, ERISA Excess
Retirement Plan and Change in Control
Agreements.
- Has only members that are independent under
SunTrust's Corporate Governance Guidelines,
as well as the rules of the New York Stock
Exchange.
7
NUMBER OF MEETINGS
NAME OF COMMITTEE AND MEMBERS FUNCTIONS OF COMMITTEE IN 2004
RISK: - Responsible for assisting the Board in *
overseeing and reviewing information regarding
Thomas C. Farnsworth, Jr. SunTrust's enterprise risk management
Chairman framework, including the significant
Robert M. Beall, II policies, procedures and practices employed
Patricia C. Frist to manage credit risk, market risk and
Blake P. Garrett, Jr. operational risk.
Phail Wynn, Jr. - Responsible for overseeing SunTrust's
implementation plan to qualify for the
advanced regulatory capital approaches
expected to be effective in 2008, including
approval of significant components of
SunTrust's credit risk framework, operational
risk framework, and disclosure policies as
expected to be required by the Federal
Reserve Board.
- Responsible for reviewing and discussing with
various members of senior management matters
related to credit risk, market risk,
operational risk, legal, regulatory and
compliance risk and enterprise risk
management.
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* The Risk Committee was formed by the Board on February 8, 2005, and therefore
had no meetings in 2004.
ATTENDANCE AND COMPENSATION
Attendance. Regular meetings of the Board are held quarterly. During 2004,
the Board held 8 meetings. All SunTrust directors attended at least 75% of the
Board meetings and meetings of committees on which they served. SunTrust
expects, but does not require, directors to attend the Annual Meeting of
Shareholders. Last year all but 1 director attended SunTrust's Annual Meeting of
Shareholders. Mr. Daft did not attend because the annual meeting for The
Coca-Cola Company was held on the same day in Delaware.
Compensation. Each director who is not also an employee of SunTrust or its
subsidiaries received an annual retainer of $45,000 in 2004. The Chairs of the
Governance and Nominating, Compensation, Risk and Audit Committees also each
receive an additional retainer of $10,000. In addition, each director was paid a
fee of $1,500 for each Board meeting and $1,500 for each committee meeting
attended. Directors who were serving on the Board in February 2004 also received
a grant of either 1,200 shares of restricted stock or 1,200 restricted stock
units, at their election. Such restricted stock or restricted stock units vest
after 1 year and each director has the option to defer receipt of the restricted
stock or restricted stock units for various time periods after retirement from
the Board. Directors serving as directors of SunTrust's subsidiaries only
receive meeting attendance fees for service on those Boards. Directors may defer
fees payable to them under SunTrust's Directors Deferred Compensation Plan. The
return on deferred amounts is determined, at the election of the director, as if
such funds had been invested in SunTrust common stock or at a floating interest
rate equal to the prime interest rate in effect at SunTrust Bank computed on a
quarterly basis.
James B. Williams, who retired as SunTrust's Chairman of the Board and
Chief Executive Officer in March 1998, retired as a director of SunTrust and
Chairman of the Executive Committee on April 20, 2004. In his capacity as a
former Chief Executive Officer of SunTrust, Mr. Williams was provided certain
perquisites in 2004, including an office, office equipment and supplies and
general secretarial support; a company car; tax and estate planning services;
home security monitoring; and use of SunTrust's airplane when representing
SunTrust at national, corporate, community and civic events. Tax liability as a
result of these services (other than the car) is fully grossed-up by SunTrust.
Additional Information Regarding Former Crestar Financial Corporation
Directors. Mr. Minor, Dr. Royal and Ms. Williams, all former Crestar directors,
also participate in a Crestar directors' program
8
providing deferred benefits based on 1996 director awards plus their prior
elective deferrals of Crestar retainers. These benefits are calculated in
SunTrust common stock equivalents and paid, after their directorship ends, in
whole shares of SunTrust common stock, with cash for any fractional share.
Additional Information Regarding Former National Commerce Financial
Corporation Directors. Former non-employee directors of NCF could elect to
defer their retainers as well as their meeting fees pursuant to the NCF
Director's Fees Deferral Plan. Mr. Farnsworth, a director of SunTrust since the
NCF merger in October 2004, participates in this plan, and his account balance
is now measured in phantom shares of SunTrust common stock, to be distributed
when he terminates service on the SunTrust Board. No new deferrals are made to
this plan after September 30, 2004.
In addition, on October 1, 2004, the NCF merger date, SunTrust assumed an
existing employment contract entered into between Thomas M. Garrott, III and NCF
effective November 1, 2001. By amendment to this agreement on March 18, 2002,
Mr. Garrott waived his right to receive any special compensation in the event of
a change in control of NCF. On January 6, 2003, Mr. Garrott elected to be
employed on part-time status through July 5, 2006, as provided by his employment
agreement, and he resigned as Chairman of the NCF Board of Directors and ceased
participating in the day-to-day management of NCF. During his part-time
employment status, Mr. Garrott is required to remain available to consult with
the company and its employees, is subject to certain restrictive covenants,
including a non-competition restriction, and is entitled to the following
remuneration: (1) an annual salary of approximately $477,000, adjusted annually
for inflation, (2) continued participation in retirement, compensation
(including stock incentive programs) and welfare plans (with medical and dental
coverage for life for him and his spouse) at a level no less than his highest
levels of participation or coverage during the last 12 months he was employed by
NCF on a full-time basis, and (3) an office and support services. Mr. Garrott is
also entitled to receive stock option grants to purchase 122,488 shares of
SunTrust common stock in each of 2005 and 2006, at the then fair market value.
Each grant is equivalent to the same level of Mr. Garrott's participation in the
NCF stock option plans in 2002. Accordingly, Mr. Garrott received a stock option
grant on February 8, 2005, for 122,488 shares of SunTrust stock at $73.14 per
share. These options vest on February 8, 2008 and may be exercised using cash,
SunTrust common stock or a combination of both. Mr. Garrott also participates in
supplemental pension plans of NCF and SunTrust, which are described later in
this Proxy Statement.
CORPORATE GOVERNANCE
The Board of Directors has determined that the majority of SunTrust's
directors are independent. In determining director independence, the Board
broadly considers all relevant facts and circumstances, including the rules of
the New York Stock Exchange. The Board considers the issue not merely from the
standpoint of a director, but also from that of persons or organizations with
which the director has an affiliation. An independent director is free of any
relationship with SunTrust or its management that may impair the director's
ability to make independent judgments. Particular attention is paid to whether a
director is independent from management and to any credit relationships that may
exist with a director or a related interest. Generally, credit relationships
with directors and their affiliates will not impair independence so long as the
terms of the credit relationship are similar to other comparable borrowers. A
director who is an executive officer of a company that makes payments to or
receives payments from SunTrust for property or services in an amount which, in
any fiscal year, is greater than 2% of such director's company's consolidated
gross revenues will not be considered independent. The following directors have
been deemed by the Board to be independent: Messrs. Beall, Correll, Crowe, Mrs.
Frist, Messrs. Hughes, Isdell, Ivester, Lanier, Minor, Prince, Dr. Royal, Mrs.
Williams and Dr. Wynn.
The Board of Directors conducts a self-assessment annually, which is
reported by the Governance and Nominating Committee to the Board. In addition,
the Governance and Nominating Committee, the Compensation Committee, the Audit
Committee and the Risk Committee also undergo an annual assessment of their
performance. The non-employee directors of the Board typically meet in executive
session at each regularly scheduled meeting, and such meetings are presided over
by a Presiding Director who is selected by a majority of independent directors.
Mr. Prince is currently serving as the Presiding Director.
9
SunTrust has adopted a policy requiring directors who change the job
responsibility they held when they were elected to the Board to submit a letter
of resignation to the Board. The Board, through the Governance and Nominating
Committee, will then make a determination as to whether continued Board
membership is appropriate.
SunTrust has adopted a Senior Financial Officers Code of Ethical Conduct
that applies to SunTrust's senior financial officers, including its principal
executive officer, principal financial officer and controller. SunTrust also has
adopted a SunTrust Code of Conduct that applies to all employees, and a Code of
Business Conduct and Ethics for members of the Board of Directors. These 3 Codes
of Conduct, as well as SunTrust's Corporate Governance Guidelines, and the
charters for the Executive Committee, the Audit Committee, the Governance and
Nominating Committee, the Compensation Committee and the Risk Committee can be
found by clicking the heading "About SunTrust" on SunTrust's website at
www.suntrust.com and then clicking on "Corporate Governance". In addition, this
information is available in print to any shareholder who requests it by
contacting Greg W. Ketron, Director of Investor Relations, at 404-827-6714. The
Board intends that non-employee directors make decisions on matters of corporate
governance. As additional corporate governance standards are adopted, they will
be disclosed on an ongoing basis on SunTrust's website.
SHAREHOLDER COMMUNICATIONS WITH DIRECTORS
The Board of Directors has adopted a process to facilitate written
communications by shareholders or other interested parties to the Board. Persons
wishing to write to the Board of Directors of SunTrust or a specified director,
including the Presiding Director, the non-management directors as a group, or a
committee of the Board should send correspondence to the Corporate Secretary at
SunTrust Banks, Inc., P.O. Box 4418, Mail Code 643, Atlanta, Georgia 30302.
All communications so received from shareholders or other interested
parties will be forwarded to the members of the Board of Directors or to the
applicable director or directors if so designated by such person. Anyone who
wishes to communicate with a specific Board member, the non-management directors
only, or a committee should send instructions asking that the material be
forwarded to the applicable director, group of directors or to the appropriate
committee chairman.
EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS
Executive officers are elected annually by the Board following the Annual
Meeting of Shareholders to serve until the meeting of the Board following the
next Annual Meeting. The following table sets forth the name of each executive
officer as of December 31, 2004 and the principal positions and offices he holds
with SunTrust. Unless otherwise indicated, each of these officers has served as
an executive officer of SunTrust or a principal subsidiary for at least 5 years.
NAME INFORMATION ABOUT EXECUTIVE OFFICERS
---- ------------------------------------
L. Phillip Humann.................... Chairman of the Board and Chief Executive Officer of
SunTrust.
James M. Wells III................... President and Chief Operating Officer of SunTrust since
December 9, 2004. From August 2000 until December 9, 2004,
Mr. Wells was a Vice Chairman of SunTrust with
responsibility for oversight of SunTrust's commercial,
retail, mortgage and private client services lines of
business, as well as senior executive responsibility for
SunTrust's marketing and corporate strategy units. Since
February 2003, Mr. Wells has had responsibility for
SunTrust's technology and operations functions. At
December 9, 2004, Mr. Wells added the Corporate and
Investment Banking Group to his responsibilities. From
January 2000 to August 2000, Mr. Wells served as President
and Chief Executive Officer of SunTrust's Mid-Atlantic
region. Mr. Wells is 58.
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NAME INFORMATION ABOUT EXECUTIVE OFFICERS
---- ------------------------------------
William R. Reed, Jr.................. A Vice Chairman of SunTrust since October 1, 2004, with
responsibility for SunTrust's 4 geographic banking groups
and the Corporate Sales Administration function. From May
2003 to October 2004, Mr. Reed was President and Chief
Executive Officer of National Commerce Financial
Corporation. From July 2000 until May 2003 he was Chief
Operating Officer for National Commerce Financial
Corporation. Prior to the July 2000 merger of National
Commerce Bancorporation and CCB Financial Corporation, he
was vice chairman and director of National Commerce
Bancorporation and chairman and director of National Bank
of Commerce. Mr. Reed is 58.
John W. Clay, Jr..................... A Vice Chairman of SunTrust from August 2000 until December
9, 2004 when he announced his intention to retire, with
management oversight of banking functions, including
corporate and investment banking. Until his retirement on
December 31, 2005, Mr. Clay will be consulting with
SunTrust on Tennessee business development and providing
transition consulting on his previous duties. From 1997
until August 2000 he was an Executive Vice President of
SunTrust. Mr. Clay is 63.
Theodore J. Hoepner.................. A Vice Chairman of SunTrust from August 2000 until December
9, 2004 when he announced his intention to retire, with
responsibility for SunTrust's asset quality, efficiency
and quality initiatives, human resources and legal and
regulatory affairs. Mr. Hoepner was also Chief Risk
Officer from February 2003 until December 9, 2004 and had
responsibility for SunTrust's audit and internal control
functions. Until his retirement on June 30, 2005, Mr.
Hoepner will be consulting with SunTrust on Florida
business development, government affairs, transition of
the new Florida executive team and providing transition
consulting on his previous duties. From August 2000 until
February 2003, Mr. Hoepner also had responsibility for
SunTrust's technology and operations functions. From 1997
until August 2000 he was an Executive Vice President of
SunTrust, with responsibility for SunTrust's Florida
banking operations, SunTrust Service Corporation, Human
Resources and efficiency and quality initiatives. Mr.
Hoepner is 63.
Mark A. Chancy....................... Senior Executive Vice President and Chief Financial Officer
of SunTrust since August 10, 2004. From July 2001 until
August 10, 2004 he was Senior Vice President and Treasurer
of SunTrust. From 1997 to July 2001 he was Chief Financial
Officer of The Robinson-Humphrey Company. Mr. Chancy is
40.
Robert H. Coords..................... Senior Executive Vice President and Chief Risk Officer of
SunTrust since December 9, 2004. Prior to that, he was an
Executive Vice President of SunTrust and Chief Efficiency
and Quality Officer. Mr. Coords is 62.
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NAME INFORMATION ABOUT EXECUTIVE OFFICERS
---- ------------------------------------
David F. Dierker..................... Senior Executive Vice President and Chief Administrative
Officer of SunTrust since December 9, 2004. From January
2000 to November 2004, Mr. Dierker served as Strategic
Financial Officer of SunTrust. Mr. Dierker is 47.
Carl F. Mentzer...................... Senior Executive Vice President and Chief Credit Officer of
SunTrust since December 9, 2004. From January 2000 until
December 2004, Mr. Mentzer was an Executive Vice President
of SunTrust and Commercial Line of Business Head, and from
October 12, 2004 until December 9, 2004 he served as
acting Chief Credit Officer. In May 1995, Mr. Mentzer was
elected Chairman of the Board and Chief Executive Officer
of SunTrust Bank, Tampa Bay and held that position until
December 31, 1999. Mr. Mentzer is 59.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
INTRODUCTION
Decisions regarding the compensation of SunTrust's executives are made by
the Compensation Committee of the Board, which we refer to in this report as the
Committee. Specifically, the Committee has strategic and administrative
responsibility for a broad range of issues, including ensuring that key
management are compensated effectively and in a manner consistent with the
stated compensation strategy of SunTrust and the requirements of the appropriate
regulatory bodies. The Committee also oversees the administration of executive
compensation plans, including the design, performance measures, and award
opportunities for the executive incentive programs, and certain employee
benefits. Each member of the Committee is appointed by the Board and is an
independent director.
With the belief that each executive officer's actions have the potential to
impact the short-term and long-term profitability of SunTrust, the Committee
places considerable importance on its oversight of the design and administration
of the executive compensation program.
OBJECTIVES OF EXECUTIVE COMPENSATION
The objectives of SunTrust's executive compensation program are to: (1)
increase shareholder value, (2) improve SunTrust's overall performance, (3)
align incentives with the business unit directly impacted by the executive's
leadership and performance, (4) enhance the individual executive's performance,
and (5) attract and retain quality executive leadership.
The Committee strives to meet these objectives while maintaining market
competitive pay levels, ensuring the efficient use of shares and predictable
expense recognition. Additionally, in an effort to meet the objectives outlined
above, it has retained a nationally known executive compensation and benefits
consulting firm to advise it on a regular basis as it administers the executive
compensation and benefits program.
COMPENSATION PHILOSOPHY
Overall, SunTrust's compensation philosophy is to ensure that each
executive's pay is tied to financial, operational and individual performance.
The compensation philosophy underlying the policies and programs adopted by the
Committee can be summarized as follows:
Competitive Positioning
SunTrust uses a peer group of financial services companies for benchmarking
executive compensation practices and levels. This peer group includes companies
from the S&P Diversified Banks Index used in the
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Stock Performance Graph. For purposes of 2004 compensation, the peer group
consisted of the following companies:
- Bank of America Corporation - Northern Trust Company
- Bank One Corporation - PNC Financial Services Group
Incorporated
- BB&T Corporation - SouthTrust Corporation
- Fifth Third Bancorp - US Bancorp
- Fleet Boston Financial - Wachovia Corporation
- KeyCorp - Wells Fargo & Company
- National City Corporation
Each component of executive compensation is targeted at a level relative to
this peer group as follows:
- Total Direct Compensation: median of market practice, with significant
upside potential, as warranted by performance.
- Base Salary: median of market practice, tied to incumbent-specific
factors.
- Annual Bonuses and Long-Term Incentives: at expected levels of
performance, targeted at market median practice, with upside
opportunities for superior performance. If performance is below
expectations, payments from both annual and long-term incentive programs
may be significantly reduced or even eliminated.
- Benefits: market median as to both the value and components delivered,
while perquisites are linked to important business needs.
Variable Pay and Shareholder Alignment
While SunTrust emphasizes market practices in the design and administration
of the executive compensation program, there is a greater weight on variable pay
and an emphasis on shareholder alignment. SunTrust's philosophy is that variable
pay should constitute the majority of total direct compensation. Incentive
performance measures should promote shareholder return and earnings growth, and
the plan design should assure clear linkages between performance measures,
participants' ability to influence such measures and award levels. Additionally,
long-term incentive awards should reflect company and individual performance.
EXECUTIVE COMPENSATION PROGRAM OVERVIEW
The 3 primary components of the executive compensation program are:
- Base Salary
- Annual Cash Incentive
- Long-term Incentives: delivered through the Performance Unit Plan and
stock awards.
BASE SALARY
Base salary is designed to provide competitive levels of compensation to
executives based upon their experience, duties and scope of financial
responsibility. Salaries for top executives are reviewed annually and, compared
to the peer group, are generally targeted at median competitive levels.
ANNUAL CASH INCENTIVE
The 2004 bonuses for SunTrust executives and other participants were paid
under the Management Incentive Plan (MIP) that is described below. The 2004
bonuses for the NCF legacy executives (including Mr. Reed) were entirely paid
from the NCF Management Performance Incentive Plan. The NCF legacy executives
and employees will be included in the 2005 SunTrust MIP.
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Management Incentive Plan
The MIP focuses on the achievement of annual financial goals and pays out
in cash. The MIP is designed to: (1) support SunTrust's strategic business
objectives, (2) promote the attainment of profit and revenue goals, (3) reward
achievement of business unit and individual performance objectives, and (4)
encourage teamwork.
Who Is Eligible
Participation in the MIP is limited to a group of key employees,
selected by the Committee, who have a material impact on SunTrust's
performance. MIP participants include all of the executive officers named
in this Proxy Statement (excluding Mr. Reed for 2004 because of his
participation in a similar NCF plan). Awards earned under the MIP are
contingent upon employment with SunTrust through the end of the fiscal
year, except for payments made in the event of death, retirement or
disability, or in the event of a change in control. MIP payouts are set
forth in the Summary Compensation Table under the heading "Bonus".
How It Works
Except for the named executive officers, financial and non-financial
performance measures are established for each participant, with an emphasis
on business unit objectives where appropriate. For 2004, MIP performance
measures for the named executive officers were based exclusively on
consolidated net income. If approved by shareholders at the 2005 Annual
Meeting, the business criteria upon which performance goals for 2005 and
later years may be based will be expanded to include other options as
selected by the Committee. Target, threshold and maximum performance
benchmarks are developed for each performance measure, and each participant
is assigned a target incentive award opportunity expressed as a percentage
of the participant's base salary.
Achievement of the target performance benchmarks for each performance
measure produces a target incentive award payment. Actual performance below
the target performance benchmark produces an award less than the target
award down to zero. Actual performance above the target performance
benchmark produces an award greater than the target award. Maximum
performance benchmarks, which would result in a payout of 150% of the
target award, reflect very ambitious goals, which can only be attained when
business results are exceptional, thus justifying the higher award
payments.
LONG-TERM INCENTIVES
Long-term incentives are designed to focus attention on long-range
objectives and future returns to shareholders, and are delivered through the
Performance Unit Plan and stock option awards.
Performance Unit Plan
The purpose of the Performance Unit Plan, which we refer to as the PUP, is
to: (1) promote the long-term interests of SunTrust and its shareholders, and
(2) motivate, retain and reward those executives who contribute significantly to
SunTrust's long-term strategy development and financial performance.
Who Is Eligible
Participation in this plan is limited to a select group of executive
management, including the executive officers named in this Proxy Statement.
How It Works
Each participant is awarded a number of performance units, based upon
his/her position level within SunTrust and individual performance, with
each unit having an initial value of $30.00. The final value of each unit
is determined at the conclusion of the 3 year performance cycle. Two
measures of corporate performance are established at the beginning of each
performance cycle, and each corresponds to
14
minimum, target, and maximum unit values at given levels of performance.
These performance measures for the 2004-2006 performance cycle are: (1) 3
year cumulative consolidated net income, and (2) 3 year cumulative earnings
per share.
At the end of each performance cycle, the payout value is determined
using the higher of actual net income or earnings per share relative to the
minimum, target, and maximum performance objectives established for the 3
year performance cycle. Straight-line interpolation is used to calculate
payout values between minimum, target, and maximum levels. This method was
employed due to SunTrust's share purchase program and the desire not to
penalize executives for this strategy.
Background on PUP Awards
Pending the completion of a comprehensive executive compensation and
benefits review conducted in 2003, PUP awards were not granted in that
year. Instead, restricted stock grants were made to approximately 170
participants. As the executive compensation study recommended the
resumption of performance unit grants to PUP participants, no further
restricted stock awards are planned. If either restricted stock awards or
stock units are granted in future years, they will reduce the maximum PUP
payout for the cycle beginning in the grant year. This and other changes in
the material terms of the PUP performance goals are being presented to
shareholders for approval at the Annual Meeting. PUP awards for the
2004-2006 performance cycle are shown in the "Long-Term Incentive Plan
Awards in 2004" table. PUP payouts, if earned based on performance, are set
forth in the Summary Compensation Table under the heading "LTIP Payouts".
The restricted stock grants made in 2003 are set forth in the Summary
Compensation Table under the heading "Restricted Stock Awards".
Stock Option Awards
In addition to the PUP, SunTrust makes annual stock option awards to senior
executives. These awards have been a vital component of compensation for many
years and are used to: (1) create a fundamental, long-term linkage between the
interests of executives and shareholders, and (2) recruit and retain talent at
many levels of the organization.
In the past 2 years, the Committee has examined various forms of equity
incentives but considers the use of options as the best method of linking stock
price performance to executive pay over the long-term, and the Committee expects
that options will continue as a significant portion of each executive's total
compensation.
Who Is Eligible
Options are used at many levels of the organization, and in 2004, all
of the named executive officers received option awards.
How It Works
For executive officers, stock options represent at least half of the
individual's long-term incentive compensation. Generally, options have a 10
year term and vest 3 years after the date of grant. SunTrust options have
an exercise price equal to the fair market value of the underlying stock on
the date of grant.
SunTrust has the following plans under which it grants or has granted stock
options and other equity awards:
- 2004 Stock Plan
- 2000 Stock Plan
- 1995 Stock Plan
All of the plans are administered by the Committee, which has the authority
to grant stock options to purchase SunTrust common stock, restricted shares of
SunTrust common stock (which may be subject to both grant and forfeiture
conditions), stock units and stock appreciation rights, which we refer to as
SARs.
15
The Committee has delegated to the Chief Executive Officer limited authority to
grant options. The plans have been used to make stock-based incentives,
especially stock options, important factors in attracting, retaining and
rewarding employees and to closely align employees' interests with those of
SunTrust's shareholders.
2004 Stock Plan
The 2004 Stock Plan was adopted by the Board in February 2004 and was
approved by the shareholders at the 2004 Annual Meeting. The plan allows
for the grant of stock options, restricted stock, stock units and SARs.
There were 14,000,000 shares of SunTrust common stock reserved for use
under the 2004 Stock Plan, of which 2,800,000 could, but need not, be
granted as restricted stock. In addition, authorized but unissued shares
available for issuance under the 2000 Stock Plan and any shares subject to
grants that are later forfeited or expire under the 2000 Stock Plan are
reserved for issuance under the 2004 Stock Plan.
2000 Stock Plan
The 2000 Stock Plan was adopted by the Board in February 2000 and
approved by the shareholders at the 2000 Annual Meeting. The 2000 Stock
Plan provided for grants of options, restricted shares and SARs. Since the
2004 Stock Plan was approved by shareholders, no further grants have been
made or will be made under the 2000 Stock Plan, although awards from this
plan remain outstanding.
1995 Stock Plan
The 1995 Executive Stock Plan, which we refer to as the 1995 Stock
Plan, was designed to use stock based incentives to focus executives and
other eligible participants on SunTrust's long-term performance and to
attract and retain qualified employees. No further grants will be made
under the 1995 Stock Plan, although awards from this plan remain
outstanding.
Restricted Stock Awards
Most salaried employees of SunTrust are eligible for restricted stock
awards under the 2004 Stock Plan. Restricted stock awards often vest based on
the recipient's continued employment with SunTrust, but these awards may also
carry additional vesting requirements, including performance conditions. These
awards are granted on a case-by-case basis to address special retention or
incentive issues. In 2004, no restricted stock awards were made by the Committee
to the executive officers named in the Proxy Statement.
Executive Share Retention Guidelines
One of the Committee's priorities is to encourage executives to be
significant shareholders -- the Committee believes that significant stock
ownership by executives is a contributing factor to superior long-term corporate
performance. Although SunTrust's executive officers already have a significant
equity stake in SunTrust (as reflected in the beneficial ownership information
contained in this Proxy Statement), the Committee has adopted a share retention
policy for upper level management. The policy provides for the executive
officers named in this Proxy Statement to retain all net shares acquired through
SunTrust-sponsored incentive plans until retirement or termination, with a
provision to allow diversification of portfolios for executives age 55 or older.
Other executive officers have similar, but lower, share retention requirements.
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OTHER COMPENSATION PLANS
In addition to the executive compensation plans described above, executive
officers are also eligible for:
401(k) Plan Matching Contributions
SunTrust matches a percentage of eligible employee contributions to its
qualified 401(k) Plan. The matching contributions are currently made in SunTrust
common stock. Up to 50% of such matching contributions made after 2004 will be
eligible for diversification into other investments, and participants who are
age 55 or older may diversify 100% of their matching contributions.
401(k) Excess Plan
SunTrust maintains an unfunded nonqualified 401(k) Excess Plan to provide
benefits that would have otherwise been provided under the qualified 401(k) Plan
to certain participants, except for the imposition of certain statutory limits
on qualified plan benefits. Participants' interests in the 401(k) Excess Plan
are accounted for in phantom units and consist of the participant's deferrals
plus SunTrust's matching contributions. Participants' investment choices mirror
most of the investment options allowed in the 401(k) Plan, except that
participants may not direct any portion of their account to an investment
vehicle tied to the value of SunTrust common stock or a bank collective fund.
SunTrust's matching contributions are accounted for in SunTrust common stock
equivalents. The amounts of SunTrust's matching contributions credited to the
401(k) Excess Plan and matching contributions under the 401(k) Plan on behalf of
the executive officers named in the Proxy Statement are included in the amounts
shown in the Summary Compensation Table under the heading "All Other
Compensation".
SECTION 162(M)
Section 162(m) of the Internal Revenue Code of 1986, as amended, provides
that compensation in excess of $1 million paid for any year to a corporation's
chief executive officer and the 4 other highest paid executive officers at the
end of such year, which executives we refer to as covered employees, will not be
deductible for federal income tax purposes unless the following conditions are
met: (1) the compensation qualifies as "performance-based compensation", and (2)
shareholders must be advised of and must approve the material terms of the
performance goals under which compensation is to be paid and, under certain
conditions, must reapprove the material terms of the performance goals every 5
years.
On February 8, 2000, the Board of Directors approved certain amendments to
the MIP and the PUP which were designed to ensure that, to the extent possible,
awards payable under these plans would be fully deductible by SunTrust for
purposes of Section 162(m). SunTrust's shareholders approved the material terms
of the performance goals under which compensation is paid under the MIP and the
PUP at the 2000 Annual Meeting. SunTrust's shareholders are being asked to do
the same again at the 2005 Annual Meeting. The material terms of the performance
goals of the MIP and the PUP are described in this Proxy Statement in Item 3,
Proposal to Approve the Material Terms of the Performance Goals for SunTrust's
MIP and Item 4, Proposal to Approve the Material Terms of the Performance Goals
for SunTrust's PUP.
In 2004, change in control payments were made to certain then current
officers of NCF, including Mr. Reed, in connection with NCF's merger with
SunTrust. SunTrust was obligated to make these payments under the terms of the
merger agreement and employment contracts the officers then had with NCF. The
change in control payments to Mr. Reed, which are shown in the Summary
Compensation Table under the heading "All Other Compensation", were not subject
to excise taxes or the loss of deductibility of the payments by SunTrust under
Sections 4999 and 280G of the Internal Revenue Code. Such payments, however,
were not entirely deductible as performance based compensation under Section
162(m).
It has been and continues to be the Committee's intent that all incentive
payments be deductible unless maintaining such deductibility would undermine
SunTrust's ability to meet its primary compensation objectives (as discussed at
the beginning of this Report of the Compensation Committee).
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CHIEF EXECUTIVE OFFICER COMPENSATION
The executive compensation policy described above is applied in setting Mr.
Humann's compensation. Mr. Humann participates in the same executive
compensation plans available to other executive officers. After a period of 26
months with no adjustment to his base salary, Mr. Humann received a base salary
merit adjustment of 3.7%, to $985,000, in March 2004. Mr. Humann's target bonus
as a percentage of salary for 2004 remained at 100%.
Mr. Humann's cash compensation in 2004 was $2,335,313, which included a MIP
award of $1,356,146 for 2004. This represented a MIP payout of above target
payment and is the result of SunTrust exceeding the net income target that the
Committee set prior to the start of 2004. The MIP award was adjusted to exclude
any impact (either positive or negative) from the NCF transaction. Mr. Humann
did not earn a PUP award payout for the 2002-2004 performance cycle as SunTrust
failed to meet the cumulative earnings targets set by the Committee. The
Committee believes Mr. Humann's 2004 MIP bonus is consistent with the corporate
performance.
In 2004, Mr. Humann was granted a nonqualified stock option for 150,000
shares of SunTrust common stock. Mr. Humann also received a grant of 12,000
units under the PUP for the 2004-2006 performance cycle. Each PUP unit has a
target value of $30.00, although the ultimate value of the award will depend
upon the extent to which SunTrust meets cumulative net income or cumulative
earnings per share performance objectives over the 2004-2006 performance cycle.
The adjustments to base salary reflect the Committee's confidence in Mr.
Humann, his continued strong leadership, SunTrust's financial performance, and a
desire to ensure that his conservative compensation package gets closer to the
median of peer group practices.
Annually, non-employee members of the Board of Directors evaluate the Chief
Executive Officer's performance, which is a factor in determining the Chief
Executive Officer's compensation.
SUMMARY
In summary, the Committee believes this mix of conservative market-based
salaries, potentially significant variable cash incentives for both long-term
and short-term performance and the potential for equity ownership in SunTrust
represents a balance that will motivate the management team to produce strong
returns. The Committee further believes this program strikes an appropriate
balance between the interests and needs of SunTrust in operating its business
and appropriate rewards based on shareholder value creation.
Submitted by the Compensation Committee of SunTrust's Board of Directors.
Larry L. Prince, Chairman
Alston D. Correll
David H. Hughes
G. Gilmer Minor, III
18
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended December 31, 2002,
2003, and 2004, the cash compensation paid by SunTrust and its subsidiaries, as
well as certain other compensation paid, accrued or granted for those years, to
each of SunTrust's 5 most highly compensated executive officers and to the
retired Vice Chairman and Chief Financial Officer, who would have been included
as one of the 5 most highly compensated executive officers but for the fact that
he was not serving as an executive officer of SunTrust on December 31, 2004.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------- ------------------------- --------
OTHER SECURITIES
ANNUAL RESTRICTED UNDER- ALL OTHER
NAME AND PRINCIPAL COMPEN- STOCK LYING LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION(1) AWARDS(2)(3) OPTIONS(4) PAYOUTS SATION(5)
------------------ ---- -------- ---------- --------- ------------ ---------- -------- ----------
L. Phillip Humann...... 2004 $979,167 $1,356,146 $71,179 $ -- 150,000 $ -- $ 48,998
Chairman of the
Board and Chief 2003 950,000 950,000 54,731 359,876 150,000 -- 48,002
Executive Officer 2002 950,000 -- -- -- -- 294,200 49,783
James M. Wells III..... 2004 675,104 748,015 107,146 -- 100,000 -- 93,421
President and 2003 650,000 520,000 95,915 239,918 100,000 -- 73,400
Chief Operating
Officer 2002 650,000 -- 147,237 -- -- 147,100 78,405
William R. Reed,
Jr.(6)............... 2004 554,613 558,556 -- 278,721 100,000 -- 4,023,242
Vice Chairman
John W. Clay, Jr.(7)... 2004 541,667 600,167 50,367 -- 100,000 -- 29,025
Vice Chairman 2003 525,000 420,000 -- 239,918 100,000 -- 28,452
2002 525,000 -- -- -- -- 147,100 29,356
Theodore J.
Hoepner(8)........... 2004 541,667 600,167 9,098 -- 100,000 -- 29,025
Vice Chairman 2003 525,000 420,000 -- 239,918 100,000 -- 28,452
2002 525,000 -- -- -- -- 147,100 29,356
John W. Spiegel(9)..... 2004 455,000 504,140 1,242 -- 75,000 -- 25,180
Retired Vice Chairman 2003 500,000 400,000 -- 239,918 100,000 -- 27,074
and Chief Financial 2002 500,000 -- -- -- -- 176,520 28,180
Officer
---------------
(1) Includes the cost of providing various perquisites and personal benefits if
the benefit amount exceeds the lesser of $50,000 or 10% of the executive's
salary and bonus. The amount shown for Mr. Humann in 2004 includes $20,967
related to tax return preparation and financial planning services, the
premium amount paid for supplemental disability equal to $6,942, club dues
and fees of $20,777, tax liabilities associated with providing home security
of $360, imputed income related to personal air travel of $4,597 and income
tax gross up of $17,536 for all these amounts (excluding premiums on
supplemental disability and club fees and dues). The amount shown for Mr.
Wells in 2004 includes $65,414 related to a substitute payment for foregone
premiums on a terminated split dollar life insurance policy, tax return
preparation and financial planning services in the amount of $15,894, the
premium amount paid for supplemental disability equal to $6,852, club dues
and fees of $4,710, a car allowance of $2,167, imputed income for personal
air travel of $810 and income tax gross up of $11,299 for all these amounts
(excluding payments for insurance policy, premiums on supplemental
disability, car allowance and club fees and dues). The amount shown for Mr.
Clay includes $17,139 for tax preparation and financial planning services,
the premium amount paid for supplemental disability equal to $7,378, club
dues and fees of $11,396, tax liabilities associated with providing home
security of $360, imputed income related to personal air travel
19
of $1,379 and income tax gross up of $12,715 on all these amounts (excluding
premiums on supplemental disability and club dues and fees). The amount
shown for Mr. Hoepner includes income tax gross up of $9,098. The amount
shown for Mr. Spiegel includes income tax gross up of $1,242.
(2) Restricted stock grants were made in 2003 in lieu of performance units under
the Performance Unit Plan.
(3) Performance-based restricted stock, which we refer to as performance stock,
is held by certain of the executive officers listed above under the 1986
Executive Stock Plan and the 1995 Stock Plan. Three events must occur with
respect to the performance stock before the executive takes full title to
the performance stock. Shares generally are granted, awarded, become vested
and finally are distributed. After performance stock is granted by the
Compensation Committee, 20% increments are awarded if and when there are
comparable 20% increases in the average price of SunTrust's common stock
from the initial price at the time of grant. Most of the awarded shares vest
and are distributed on the earliest of the following dates: (i) 15 years
after the date shares are awarded to participants; (ii) at attaining age 64;
(iii) in the event of the death or disability of a participant; or (iv) in
the event of a change in control of SunTrust as defined in the 1986
Executive Stock Plan or the 1995 Stock Plan. Eighty percent of the
performance-based restricted stock granted in 1996 has been awarded, and the
time period for awarding the remaining shares granted has expired.
Approximately 40% of the granted shares became fully vested as of February
10, 2000 and are no longer subject to service and forfeiture conditions. The
restricted stock awards indicated in the chart above, other than those
granted to Mr. Reed by NCF, were granted pursuant to the 2000 Stock Plan and
are not performance based. The individuals set forth in the table above,
other than Mr. Reed, were awarded, subject to the terms and conditions of
the 1986 Executive Stock Plan, the 1995 Stock Plan or the 2000 Stock Plan,
the number of shares of restricted stock, including performance stock, with
a value as of December 31, 2004, as follows: Messrs. Humann 326,630 shares,
$24,131,424; Wells 4,420 shares, $326,550; Clay 82,420 shares, $6,089,190;
Hoepner 146,420 shares, $10,817,510; and Spiegel 198,420 shares,
$14,659,270. As described above, all such shares have been awarded and about
40% of the performance shares held by the individuals named in this footnote
(excluding Messrs. Wells and Reed) have vested. Dividends were paid in 2004
on shares of awarded restricted stock as follows: Messrs. Humann $653,260;
Wells $8,840; Clay $164,840; Hoepner $292,840; and Spiegel $396,840. With
respect to restricted stock awards to Mr. Reed, see footnote 6 below.
(4) The options that typically would have been granted in November 2002 were
postponed until February 2003 due to a change in the timing of the executive
compensation process.
(5) The amounts shown in this column for 2004 reflect SunTrust contributions
made on behalf of the following named executive officers under SunTrust's
401(k) Plan and accruals under the 401(k) Excess Plan:
COMPANY
COMPANY MATCHING MATCHING
NAME (QUALIFIED PLAN) (NONQUALIFIED PLAN)
---- ---------------- -------------------
L. Philip Humann............................................ $8,200 $30,967
James W. Wells III.......................................... $8,200 $18,804
John W. Clay, Jr. .......................................... $8,200 $13,467
Theodore J. Hoepner......................................... $8,200 $13,467
John W. Spiegel............................................. $8,200 $10,000
Also includes SunTrust premiums paid in 2004 for term life insurance for Mr.
Humann in the amount of $9,831, for Mr. Clay in the amount of $7,358, for
Mr. Hoepner in the amount of $7,358, and for Mr. Spiegel in the amount of
$6,980. The amount shown for Mr. Wells in 2004 also includes above market
interest earned on deferred compensation of $66,417. The amount shown for
Mr. Wells in 2003 also includes above market interest earned on deferred
compensation of $47,400. The amount shown for Mr. Wells in 2002 includes the
actuarial equivalent of benefits from SunTrust premiums on a split-dollar
life insurance policy and above market interest earned on deferred
compensation of $36,617. The amount shown for Mr. Reed in 2004 includes the
components set forth in footnote 6 below.
(6) Prior to the October 2004 merger of NCF with and into SunTrust, Mr. Reed
served as the President and Chief Executive Officer of NCF. Since the
merger, he has served as a Vice Chairman of SunTrust. The
20
amounts reflected in this table consist of 2004 compensation to Mr. Reed
from NCF and from SunTrust as follows: Salary -- $415,200 from NCF, $139,413
from SunTrust; Bonus -- $279,237 from NCF, $279,319 from SunTrust, in each
case paid by SunTrust pursuant to NCF bonus plans; Other Annual
Compensation -- $0 from NCF, $0 from SunTrust; Restricted Stock
Awards -- $278,721 from NCF (8,100 shares of NCF restricted stock converted
into 4,012 shares of SunTrust restricted stock in the NCF merger), with
dividends of $5,245 on these restricted shares from NCF; $0 from SunTrust;
Securities Underlying Options -- does not include 100,800 options issued by
NCF (which converted into 49,926 options for SunTrust common stock), does
include 100,000 options for SunTrust common stock issued by SunTrust; LTIP
Payouts -- $0 from NCF, $0 from SunTrust; All Other Compensation -- premiums
paid on term life insurance of $5,612 from NCF, $1,871 from SunTrust,
company match contributed to NCF qualified 401(k) plan of $6,500 from NCF
and $0 from SunTrust, company match contributions to nonqualified 401(k)
plans of $5,956 from NCF and $544 from SunTrust, and change in control
payment of $4,002,759 from SunTrust pursuant to the merger agreement with
NCF and a change in control agreement between NCF and Mr. Reed.
(7) Mr. Clay is a Vice Chairman of SunTrust Bank Holding Company. Since retiring
from his position as Vice Chairman of SunTrust as of December 9, 2004, he
has served as an employee consultant of SunTrust.
(8) Mr. Hoepner is a Vice Chairman of SunTrust Bank Holding Company. Since
retiring from his position as Vice Chairman of SunTrust as of December 9,
2004, he has served as an employee consultant of SunTrust.
(9) Mr. Spiegel is a Vice Chairman of SunTrust Bank Holding Company. Since
retiring from his position as Vice Chairman and Chief Financial Officer of
SunTrust on August 10, 2004, he has served as an employee consultant of
SunTrust.
STOCK OPTIONS
The following table contains information concerning the grant of stock
options to SunTrust's named executive officers as of the end of the last fiscal
year. SunTrust did not award any stock appreciation rights during the last
fiscal year.
OPTION GRANTS DURING 2004
INDIVIDUAL GRANTS
---------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR SHARE(1) DATE VALUE(2)
---- ---------- ------------ --------- ---------- ----------
L. Phillip Humann...................... 150,000 3.73% $73.19 2/10/14 $1,261,950
James M. Wells III..................... 100,000 2.49% 73.19 2/10/14 841,300
William R. Reed, Jr.(3)................ 100,000 2.49% 71.24 10/1/14 828,700
John W. Clay, Jr. ..................... 100,000 2.49% 73.19 2/10/14 841,300
Theodore J. Hoepner.................... 100,000 2.49% 73.19 2/10/14 841,300
John W. Spiegel........................ 75,000 1.87% 73.19 2/10/14 630,975
---------------
(1) Under the 2000 Stock Plan and the 2004 Stock Plan, the exercise price must
not be less than 100% of the fair market value of SunTrust common stock on
the date the option is granted. These options vest on 2/10/07 for Messrs.
Humann, Wells, Hoepner, Clay and Spiegel, and on 10/1/07 for Mr. Reed.
Options may be exercised using cash, SunTrust common stock or a combination
of both.
(2) These values were established using the Black-Scholes stock option valuation
model. For all grants other than those to Mr. Reed, the Black-Scholes value,
an estimate based on assumptions about future stock price volatility and
dividend yield, was 11.49% of the stock price on the date of grant. The
estimated volatility of 12.99% was based on historical data from the prior 5
years. The estimated value also reflects a risk-free rate of return of
3.082%, a dividend yield of 2.53% and a 10-year option term. Use of this
model should not be construed as an endorsement of its accuracy at valuing
options. All stock option valuation
21
models, including the Black-Scholes model, require a prediction about the
future movement of the stock price. The real value of the options in this
table depends upon the actual changes in the market price of SunTrust common
stock during the applicable period. The Black-Scholes assumptions for Mr.
Reed's option grants are set out in footnote 3 below.
(3) Does not include options for 100,800 shares of NCF common stock granted to
Mr. Reed in 2004 by NCF prior to the NCF merger. The NCF options converted
into options for 49,926 shares of SunTrust common stock at an exercise price
of $56.17 at the effective time of the NCF merger. The Black-Scholes value
for the option grant of 100,000 shares of SunTrust common stock to Mr. Reed
in 2004, an estimate based on assumptions about future stock price
volatility and dividend yield, was 11.63% of the stock price on the date of
grant. The estimated volatility of 12.69% was based on historical data from
the prior 5 years. The estimated value also reflects a risk-free rate of
return of 3.382%, a dividend yield of 2.74% and a 10-year option term.
The following table sets forth information with respect to the named
executives concerning the exercise of options during 2004 and unexercised
options held as of December 31, 2004.
AGGREGATED OPTION EXERCISES IN 2004 AND DECEMBER 31, 2004 OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2004 DECEMBER 31, 2004
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------- ----------- ------------- ----------- -------------
L. Phillip Humann..... 3,300 $ 143,946 375,000 300,000 $4,871,063 $3,043,500
James M. Wells III.... 33,854 2,704,125 360,560 216,000 6,179,822 2,403,080
William R. Reed,
Jr. ................ --(1) -- 215,311(2) 100,000 6,254,586 264,000
John W. Clay, Jr. .... -- -- 179,500 200,000 2,713,648 2,029,000
Theodore J. Hoepner... 6,600 278,718 168,300 200,000 2,224,992 2,029,000
John W. Spiegel....... 6,600 269,082 128,200 175,000 2,191,428 2,011,750
---------------
(1) Does not include NCF option exercises by Mr. Reed prior to the time of the
NCF merger. Mr. Reed exercised options for 20,000 shares of NCF common stock
in May 2004.
(2) The NCF options held by Mr. Reed at the time of the NCF merger were
converted into options to purchase 215,311 shares of SunTrust common stock.
EQUITY COMPENSATION PLANS
The following table provides information as of December 31, 2004 with
respect to the shares of SunTrust common stock that may be issued under
SunTrust's existing equity compensation plans.
(A) (B) (C)
-------------------- -------------------- ---------------------------
NUMBER OF SECURITIES
NUMBER OF SECURITIES REMAINING AVAILABLE FOR
TO BE ISSUED UPON WEIGHTED AVERAGE FUTURE ISSUANCE UNDER
EXERCISE OF EXERCISE PRICE OF EQUITY COMPENSATION PLANS
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
------------- -------------------- -------------------- ---------------------------
Equity Compensation Plans Approved
by Shareholders(1).............. 16,484,571 $56.91 14,519,102(2)(3)
Equity Compensation Plans Not
Approved by Shareholders........ 0 0 0
TOTAL(4)................ 16,484,571 $56.91 14,519,102
---------------
(1) Consists of the 1986 Executive Stock Plan, the 1995 Stock Plan, the 2000
Stock Plan and the 2004 Stock Plan, as well as other plans assumed by
SunTrust in connection with certain corporate mergers (other than the NCF
merger).
22
(2) Includes shares available for future issuance under the 2004 Stock Plan. As
of December 31, 2004, an aggregate of 14,519,102 shares of SunTrust common
stock was available for issuance under the 2004 Stock Plan, of which up to
2,554,601 may, but need not, be granted as restricted stock. In addition,
any shares of stock subject to an option which remain unissued after the
cancellation, expiration or exchange of such option and any restricted
shares which are forfeited shall again become available for use under the
2004 Stock Plan. There will be no further issuances under the 1986 Executive
Stock Plan, the 1995 Stock Plan or the 2000 Stock Plan.
(3) There were additional grants of stock options under the 2004 Stock Plan in
February 2005.
(4) Does not include options to purchase an aggregate of 4,840,287 shares, at a
weighted average price of $49.02, granted under plans assumed in connection
with the NCF merger. No additional options will be granted under these
plans.
LONG-TERM INCENTIVE PLAN
The following table provides information concerning SunTrust's Performance
Unit Plan, which we refer to as the PUP. The PUP provides for the award of
performance units, each with a target grant value, to key employees of SunTrust
and its subsidiaries by the Compensation Committee. The grant value and number
of units awarded to a participant for each performance measurement cycle is
determined by the Compensation Committee as of the grant date. The final value
of the units granted under each award may range from zero to 200% of the grant
value and is determined by the Compensation Committee at the end of each
performance measurement cycle based on the achievement of financial goals. For
2004 and prior years, the goals were based on consolidated net income goals or
earnings per share as established by the Compensation Committee for that cycle.
Payment of an award earned under the PUP is contingent upon continuous
employment with SunTrust until the end of the award cycle, except for payments
made in the event of retirement, death, disability or a change in control.
LONG-TERM INCENTIVE PLAN AWARDS IN 2004
ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE PERIOD NON-STOCK PRICE-BASED PLANS
NUMBER UNTIL MATURATION OR -------------------------------
NAME OF UNITS PAYOUT THRESHOLD TARGET MAXIMUM
---- -------- ------------------- --------- -------- --------
L. Phillip Humann................. 12,000 1/1/04-12/31/04 $180,000 $360,000 $720,000
James M. Wells III................ 8,000 1/1/04-12/31/04 120,000 240,000 480,000
William R. Reed, Jr. ............. 5,400 10/1/04-12/31/04 81,000 162,000 324,000
John W. Clay, Jr. ................ 8,000 1/1/04-12/31/04 120,000 240,000 480,000
Theodore J. Hoepner............... 8,000 1/1/04-12/31/04 120,000 240,000 480,000
John W. Spiegel................... 8,000 1/1/04-12/31/04 120,000 240,000 480,000
23
RETIREMENT PLANS
SunTrust maintains several types of retirement plans that provide pension
benefits. The amounts shown in the following 2 tables are aggregated pension
benefits available to the named executive officers.
PENSION PLAN TABLE -- TIER 1 SERP PARTICIPANTS
YEARS OF SERVICE
-------------------------------------------------
REMUNERATION 15 20 25 30 OR MORE
------------ ---------- ---------- ---------- ----------
$ 900,000.................................... $ 540,000 $ 540,000 $ 540,000 $ 540,000
1,000,000................................... 600,000 600,000 600,000 600,000
1,100,000................................... 660,000 660,000 660,000 660,000
1,200,000................................... 720,000 720,000 720,000 720,000
1,600,000................................... 960,000 960,000 960,000 960,000
1,800,000................................... 1,080,000 1,080,000 1,080,000 1,080,000
2,000,000................................... 1,200,000 1,200,000 1,200,000 1,200,000
2,200,000................................... 1,320,000 1,320,000 1,320,000 1,320,000
2,400,000................................... 1,440,000 1,440,000 1,440,000 1,440,000
2,600,000................................... 1,560,000 1,560,000 1,560,000 1,560,000
PENSION PLAN TABLE -- TIER 2 SERP PARTICIPANTS
YEARS OF SERVICE
-------------------------------------------
REMUNERATION 10 15 20 25 OR MORE
------------ -------- -------- -------- ----------
$ 500,000......................................... $100,000 $150,000 $200,000 $250,000
600,000........................................ 120,000 180,000 240,000 300,000
700,000........................................ 140,000 210,000 280,000 350,000
800,000........................................ 160,000 240,000 320,000 400,000
900,000........................................ 180,000 270,000 360,000 450,000
1,000,000........................................ 200,000 300,000 400,000 500,000
1,100,000........................................ 220,000 330,000 440,000 550,000
1,200,000........................................ 240,000 360,000 480,000 600,000
1,400,000........................................ 280,000 420,000 560,000 700,000
SunTrust has 2 qualified pension plans. The SunTrust Retirement Plan is a
broad-based noncontributory pension plan for the benefit of eligible employees
of SunTrust and its subsidiaries who have completed a year of service. As a
result of the NCF merger, SunTrust also maintains the NCF Retirement Plan, a
noncontributory pension equity plan providing benefits for former NCF employees
with service frozen as of December 31, 2004.
SunTrust also has several nonqualified pension plans. The ERISA Excess
Retirement Plan provides benefits to certain executives that cannot be paid to
them under tax-qualified pension plans as a result of federal restrictions.
SunTrust's Supplemental Executive Retirement Plan ("SERP") provides supplemental
retirement benefits to certain key employees of SunTrust and its subsidiaries as
designated by the Compensation Committee.
SunTrust's SERP has 2 levels or tiers of benefits. All the named executive
officers except for Mr. Reed are eligible for the Tier 1 SERP benefit. Mr. Reed
is eligible for the Tier 2 SERP benefit. The Compensation Committee does not
intend to add any additional participants at the Tier 1 level. The maximum
annual SERP benefit is 60% of average covered compensation for a Tier 1
participant and 50% of average covered compensation for a Tier 2 participant.
Covered compensation for a Tier 1 participant means base salary plus
24
awards earned under the Management Incentive Plan and the Performance Unit Plan
(with the February 2003 restricted stock award substituted for the 2003-2005 PUP
award), and for a Tier 2 participant means base salary plus awards earned under
the Management Incentive Plan. Average covered compensation is calculated as the
average of the 3 highest years of covered compensation out of the last 10 full
years. The SERP benefit is reduced by annual benefits payable at retirement
under SunTrust's tax-qualified pension plans, the ERISA Excess Retirement Plan,
Social Security benefits at age 65, and other pension plans assumed by SunTrust
in connection with mergers. Retirement benefits are paid in the form of a lump
sum that is actuarially equivalent to a life annuity. If the participant dies
while actively employed, the death benefits are paid in a lump sum that is
actuarially equivalent to a 50% joint and survivor annuity. Certain Tier 1 SERP
participants are grandfathered at the 100% joint and survivor level. Retirement
benefits under the SERP vested for all Tier 1 participants on February 10, 2000
and for Tier 2 participants on attainment of age 60. Mr. Wells may receive the
benefits earned under the terms of the Crestar SERP or the SunTrust SERP. It is
projected that the SunTrust SERP will provide a larger benefit to Mr. Wells at
normal retirement age.
Mr. Reed became a Tier 2 participant in the SunTrust SERP on January 1,
2005. His pension benefit is calculated somewhat differently because of his
participation in NCF pension plans. Mr. Reed has an NCF SERP benefit that was
frozen as of December 31, 2004 and guaranteed as a minimum pension benefit. Mr.
Reed received a payout of his NCF SERP benefit in 2000 and, therefore, his
service prior to 2000 is disregarded in calculating the amount payable from
either the SunTrust SERP or the frozen NCF SERP. It is estimated that Mr. Reed's
SERP benefit at normal retirement age will be greater under the SunTrust SERP
than under the frozen NCF SERP.
The compensation earned in 2004 for the individuals named in the Summary
Compensation Table included for the computation of benefits payable under the
SERP and credited years of service are as follows: Messrs. Humann, $2,335,313
and 35 years of service; Wells, $1,423,119 and 36 years of service; Reed,
$1,113,169 and 4.4 years of service; Clay, $1,141,834 and 37 years of service;
Hoepner, $1,141,834 and 36 years of service; and Spiegel, $959,140 and 39 years
of service.
The SERP provides that in the event of a change in control of SunTrust (as
defined in the SERP), if participants are involuntarily terminated or they
terminate for good reason within 3 years (2 years for a Tier 2 participant),
benefits will be calculated using the highest SERP compensation for any full
calendar year during the immediately preceding 10 consecutive calendar years.
Also, credited service for a Tier 1 participant will be increased by the lesser
of 36 full months or the number of months between the normal retirement date and
the date of termination or for any participant, any greater number of years
granted under any other agreement with SunTrust. Benefits for a Tier 2
participant are reduced if payment is made before the participant has reached
age 60. Termination for good reason means a termination made primarily because
of a failure to elect or reelect a participant to a position held with SunTrust
prior to the change in control or a substantial change or reduction in
responsibilities or compensation.
CHANGE IN CONTROL AGREEMENTS
SunTrust has entered into change in control agreements with each of the
executive officers named in the Summary Compensation Table and certain other
officers. During a period of up to 3 years following a change in control of
SunTrust, if the executive officer's employment is terminated by SunTrust
without cause, or by the executive officer for good reason within a certain
period of time following a change in control, the executive officer will receive
severance benefits. These benefits will include: (i) a lump sum payment of up to
3 years (2 years for certain other officers) of the executive officer's base
salary and bonus; (ii) a portion of the full bonus which would have been payable
to the executive if such executive had remained employed through the end of such
year; (iii) up to 3 years (2 years for certain other officers) of additional
benefits under certain SunTrust benefit plans, such as health and life; and (iv)
a payment to reimburse the executive officer for any excise taxes on severance
benefits that are considered excess parachute payments under the Internal
Revenue Code of 1986, as amended. Each agreement requires the executive officer
not to use or disclose any of SunTrust's confidential business information and,
with respect to certain officers, not to compete with SunTrust. The change in
control agreements confer no benefits upon termination of the officer's
employment prior to a change in control.
25
At the time of the NCF merger, Mr. Reed became entitled to certain
payments, benefits and rights under an existing employment/change in control
agreement with NCF. In accordance with the terms of the NCF merger agreement,
Mr. Reed was deemed to have been terminated without cause at the time of the
merger. As a result, SunTrust paid Mr. Reed an aggregate lump sum cash payment
of $4,002,759 in satisfaction of certain severance obligations under the NCF
contract, which is reflected in the Summary Compensation Table under the heading
"All Other Compensation".
RATIFICATION OF INDEPENDENT AUDITORS
(ITEM 2)
The Audit Committee has appointed PricewaterhouseCoopers LLP as SunTrust's
independent auditors for 2005, subject to ratification by a majority of the
shares represented at the Annual Meeting. PricewaterhouseCoopers also served as
SunTrust's independent auditors for 2004. SunTrust's auditors are appointed
annually by the Audit Committee. The decision of the Audit Committee is based on
a review of the qualifications, independence, past performance and quality
controls of the auditor. The decision also takes into account the proposed audit
scope, staffing and approach, including coordination of the external auditor's
efforts with SunTrust's internal audit, as well as the estimated audit fees for
the coming year. PricewaterhouseCoopers is considered by management to be well
qualified.
In view of the difficulty and expense involved in changing auditors on
short notice, should the shareholders not ratify the selection of
PricewaterhouseCoopers, it is contemplated that the appointment of
PricewaterhouseCoopers for the fiscal year ending December 31, 2005 will be
permitted to stand unless the Board of Directors finds other compelling reasons
for making a change. Disapproval by the shareholders will be considered a
recommendation that the Board select other auditors for the following year.
Representatives of PricewaterhouseCoopers will be present at the Annual
Meeting of Shareholders and will be given the opportunity to make a statement,
if they desire, and to respond to questions.
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed the audited financial
statements for the year ended December 31, 2004 with management and the
independent auditors for 2004, PricewaterhouseCoopers LLP. Management
represented to the Audit Committee that SunTrust's consolidated financial
statements were prepared in accordance with generally accepted accounting
principles (GAAP), and the Audit Committee has reviewed and discussed the
consolidated financial statements with management and the independent auditors.
The discussions with PricewaterhouseCoopers also included the matters required
by Statement on Auditing Standards No. 61, as amended by Statement on Auditing
Standards No. 90 (Communications with Audit Committees).
The Audit Committee has received the written disclosures and the letter
regarding its independence as required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees). The Audit Committee
discussed this information with PricewaterhouseCoopers.
Based on the discussions with management and PricewaterhouseCoopers, the
Audit Committee's review of the representations of management and the report of
PricewaterhouseCoopers, the Audit Committee recommended to the Board of
Directors that the audited consolidated financial statements be included in
SunTrust's Annual Report on Form 10-K to be filed with the Securities and
Exchange Commission for the year ended December 31, 2004.
Submitted by the Audit Committee of SunTrust's Board of Directors.
M. Douglas Ivester, Chairman Thomas C. Farnsworth, Jr. J. Hicks Lanier
Robert M. Beall, II Patricia C. Frist Frank S. Royal, M.D.
Jeffrey C. Crowe Blake P. Garrett, Jr. Karen Hastie Williams
26
AUDIT FEES AND RELATED MATTERS
AUDIT AND NON-AUDIT FEES
The following table presents fees for professional audit services rendered
by PricewaterhouseCoopers for the audit of SunTrust's annual financial
statements for the years ended December 31, 2004 and December 31, 2003, and fees
billed for other services rendered by PricewaterhouseCoopers during those
periods.
YEAR ENDED
DECEMBER 31
-------------
2003 2004
----- -----
(IN MILLIONS)
Audit Fees(1)............................................... $1.99 $6.16
Audit Related Fees(2)....................................... 1.58 2.20
Tax Fees(3)................................................. .18 .21
All Other Fees.............................................. .06 --
----- -----
Total..................................................... $3.81 $8.57
---------------
(1) Audit Fees consist of fees billed for professional services rendered in
connection with the audit of the annual consolidated financial statements of
SunTrust, review of periodic reports and other documents filed with the SEC,
including the quarterly financial statements included in Forms 10-Q,
statutory audits or financial audits of subsidiaries, and services that are
normally provided in connection with statutory or regulatory filings or
engagements. This category also includes fees billed for services rendered
in 2004 in connection with a special investigation associated with the
Allowance for Loan and Lease Losses.
(2) Audit Related Fees consist of assurance and related services that are
reasonably related to the performance of the audit or review of SunTrust's
financial statements. This category includes fees related to the performance
of audits and attest services not required by statute or regulations, audits
of SunTrust's benefit plans, due diligence related to mergers, acquisitions
and investments, and accounting consultations regarding the application of
GAAP to proposed transactions and new products. This category does not
include the following benefit plan and compliance fees charged by
PricewaterhouseCoopers and paid by the plans and not by SunTrust (not in
millions): benefit plan audits for 2003, $125,000; benefit plan audits for
2004, $205,000; Form 5500 for 2003, $32,000; and Form 5500 for 2004,
$44,800.
(3) Tax Fees consist of the aggregate fees billed for professional services
rendered by PricewaterhouseCoopers for tax compliance and return assistance
(IRS, state and local), tax advice and tax planning.
The Audit Committee has concluded the provision of the non-audit services
listed above is compatible with maintaining the independence of
PricewaterhouseCoopers.
AUDIT COMMITTEE POLICY FOR PRE-APPROVAL OF INDEPENDENT AUDITOR SERVICES
The Audit Committee of the Board of Directors is required to pre-approve
all audit and non-audit services provided by SunTrust's independent auditors in
order to assure that the provision of such services does not impair the
auditor's independence. The Audit Committee has established a policy regarding
pre-approval of permissible audit, audit-related, tax and other services
provided by the independent auditors, which services are periodically reviewed
and revised by the Committee. Unless a type of service has received general pre-
approval under the policy, the service will require specific approval by the
Audit Committee. The policy also includes pre-approved fee levels for specified
services, and any proposed service exceeding the established fee level must be
specifically approved by the Committee.
27
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on SunTrust common stock against the
cumulative total return of the S&P Composite-500 Stock Index and the S&P
Diversified Banks Index for the 5 years commencing December 31, 1999 and ended
December 31, 2004.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG SUNTRUST BANKS, INC., THE S&P 500 INDEX
AND THE S&P DIVERSIFIED BANKS INDEX
(PERFORMANCE GRAPH)
--------------------------------------------------------------------------------------
12/99 12/00 12/01 12/02 12/03 12/04
--------------------------------------------------------------------------------------
SUNTRUST BANKS,
INC. 100.00 94.16 96.05 89.58 115.88 123.24
S & P 500 100.00 90.89 80.09 62.39 80.29 89.02
S & P DIVERSIFIED
BANKS 100.00 119.06 119.08 117.86 155.69 182.96
* Assumes the value of the investment in SunTrust common stock and each index
was $100 on December 31, 1999 and all dividends were reinvested.
STOCK OWNERSHIP OF CERTAIN PERSONS
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth the number and the percentage of shares of
SunTrust common stock that were beneficially owned by the executive officers
named in the Summary Compensation Table, by the directors and by all current
directors and executive officers as a group, as of December 31, 2004.
SHARES BENEFICIALLY PERCENT
NAME OWNED OF CLASS(1)
---- ------------------- -----------
Robert M. Beall, II......................................... 4,200 *
J. Hyatt Brown(2)........................................... 57,200 *
John W. Clay, Jr.(3)........................................ 306,612 *
28
SHARES BENEFICIALLY PERCENT
NAME OWNED OF CLASS(1)
---- ------------------- -----------
Alston D. Correll(4)........................................ 22,883 *
Jeffrey C. Crowe(5)......................................... 2,400 *
Thomas C. Farnsworth, Jr.(6)................................ 519,360 *
Patricia C. Frist(7)........................................ 7,774 *
Blake P. Garrett, Jr.(8).................................... 137,002 *
Thomas M. Garrott, III(9)................................... 1,661,394 *
Theodore J. Hoepner(10)..................................... 414,137 *
David H. Hughes(11)......................................... 55,440 *
L. Phillip Humann(12)....................................... 975,802 *
E. Neville Isdell(13)....................................... 1,000 *
M. Douglas Ivester(14)...................................... 36,000 *
J. Hicks Lanier(15)......................................... 69,481 *
G. Gilmer Minor, III(16).................................... 15,962 *
Larry L. Prince(17)......................................... 513,090 *
William R. Reed, Jr.(18).................................... 498,602 *
Frank S. Royal, M.D.(19).................................... 11,178 *
John W. Spiegel(20)......................................... 441,933 *
James M. Wells III(21)...................................... 494,597 *
Karen Hastie Williams(22)................................... 3,900 *
Phail Wynn, Jr.(23)......................................... 23,132 *
All Directors and Executive Officers as a Group (36
persons).................................................. 7,518,362 2.03%
---------------
* Less than 1% of the outstanding shares of SunTrust common stock.
(1) Outstanding shares represent the 370,578,398 shares of SunTrust common
stock outstanding on December 31, 2004. Except as otherwise indicated, each
director or executive officer possessed sole voting and investment power
with respect to all shares set forth opposite his or her name.
(2) Includes 6,000 shares that are the subject of exercisable stock options.
Mr. Brown shares voting and investment power with respect to 50,000 shares.
(3) Includes 9,018 shares held for the benefit of Mr. Clay under SunTrust's
401(k) Plan, 179,500 shares that are the subject of exercisable stock
options and 40,000 common stock equivalents granted in exchange for
restricted stock. Mr. Clay shares voting power with respect to 3,593 shares
and shares investment power with respect to 5,447 shares. Also includes
8,738 shares owned by Mr. Clay's spouse, for which he disclaims beneficial
ownership.
(4) Includes 6,000 shares that are the subject of exercisable stock options.
(5) Mr. Crowe shares voting and investment power with respect to 1,200 shares.
(6) Includes 6,166 shares that are the subject of exercisable stock options and
247 shares owned by Mr. Farnsworth's spouse, who has sole voting and
investment power over such shares.
(7) Includes 6,000 shares that are the subject of exercisable stock options and
74 shares owned by Mrs. Frist's spouse, who has sole voting and investment
power over such shares.
(8) Includes 7,785 shares that are the subject of exercisable stock options.
Mr. Garrett shares voting and investment power with respect to 962 shares.
(9) Includes 426,551 shares that are the subject of exercisable stock options,
52,538 shares held for the benefit of Mr. Garrott under the NCF Investment
Plan and 29,543 phantom shares acquired under the NCF Equity Investment
Plan, which can be converted into SunTrust common stock at Mr. Garrott's
election. Mr. Garrott disclaims beneficial ownership of 254,880 shares held
in trust for family members.
(10) Includes 22,087 shares held for the benefit of Mr. Hoepner under SunTrust's
401(k) Plan, 168,300 shares that are the subject of exercisable stock
options and 72,000 common stock equivalents
29
granted in exchange for restricted stock. Mr. Hoepner shares voting power
with respect to 15,341 shares. He disclaims ownership of 13,540 shares held
in trust by family members and 15,341 shares owned by his spouse.
(11) Includes 6,000 shares that are the subject of exercisable stock options.
(12) Includes 28,911 shares held for the benefit of Mr. Humann under SunTrust's
401(k) Plan, 140,000 shares of common stock equivalents granted in exchange
for restricted stock, and 375,000 shares that are the subject of
exercisable stock options. Mr. Humann has no voting power over 33,200
shares owned by his spouse and 23,394 shares held in trust for family
members, and disclaims beneficial ownership of such shares.
(13) Reflects beneficial ownership as of January 26, 2005.
(14) Includes 6,000 shares that are the subject of exercisable stock options.
(15) Includes 38,495 shares in a family foundation of which Mr. Lanier is
Chairman. Mr. Lanier shares voting and investment power with respect to
these shares. Also includes 10,668 shares held in trust for the estate of
Mr. Lanier's brother, and 6,268 shares held in trust for his sister. Mr.
Lanier disclaims beneficial ownership of all such shares.
(16) Includes 2,000 shares that are the subject of exercisable stock options.
(17) Includes 6,000 shares that are the subject of exercisable stock options and
504,000 shares held by 2 foundations of which Mr. Prince is a trustee. Also
includes 1,090 shares owned by Mr. Prince's spouse, for which Mr. Prince
disclaims beneficial ownership.
(18) Includes 30,436 shares held for the benefit of Mr. Reed under the NCF
Investment Plan and 215,311 shares that are the subject of exercisable
stock options.
(19) Includes 6,000 shares that are the subject of exercisable stock options.
(20) Includes 692 shares held for the benefit of Mr. Spiegel under SunTrust's
401(k) Plan, 128,200 shares that are the subject of exercisable stock
options and 84,000 common stock equivalents granted in exchange for
restricted stock.
(21) Includes 696 shares held for the benefit of Mr. Wells under SunTrust's
401(k) Plan and 360,560 shares that are the subject of exercisable stock
options. Also includes 12,267 shares owned by Mr. Wells' spouse, who has
sole voting and investment power over such shares. Mr. Wells disclaims
beneficial ownership of these shares.
(22) Includes 2,000 shares that are the subject of exercisable stock options.
(23) Includes 14,955 shares that are the subject of exercisable stock options.
PHANTOM STOCK OWNERSHIP OF MANAGEMENT
A number of SunTrust directors and executive officers participate in plans
that are accounted for using phantom shares of SunTrust common stock. They have
either received awards or deferred the receipt of fees payable to them, with
their ultimate cash payout determined as if such awards or deferred fees had
been invested in shares of SunTrust common stock. The Securities and Exchange
Commission's rules provide that phantom shares are not included in calculating
beneficial ownership of SunTrust common stock, except in limited circumstances.
SunTrust's management considers the disclosure of phantom stock ownership to be
relevant to investors, as the value of the payment ultimately received by the
director or executive officer is directly tied to the performance of SunTrust
common stock. Therefore, the following table sets forth the
30
number of phantom shares of SunTrust common stock owned by the executive
officers named in the Summary Compensation Table and by the directors who have
phantom shares, as of December 31, 2004.
PHANTOM SHARES
NAME BENEFICIALLY OWNED
---- ------------------
John W. Clay, Jr.(1)........................................ 6,249
Alston D. Correll(2)........................................ 8,222
Thomas C. Farnsworth, Jr.(3)................................ 4,070
Thomas M. Garrott, III(4)................................... 21,306
Theodore J. Hoepner(5)...................................... 12,350
L. Phillip Humann(6)........................................ 9,478
M. Douglas Ivester(7)....................................... 9,040
J. Hicks Lanier(8).......................................... 1,200
G. Gilmer Minor, III(9)..................................... 1,664
Larry L. Prince(10)......................................... 11,098
William R. Reed, Jr.(11).................................... 2,838
Frank S. Royal, M.D.(12).................................... 1,914
John W. Spiegel(13)......................................... 7,308
James M. Wells III(14)...................................... 1,471
Karen Hastie Williams(15)................................... 1,664
---------------
(1) Phantom shares credited under SunTrust's 401(k) Excess Plan.
(2) Phantom shares credited under the SunTrust Directors Deferred Compensation
Plan.
(3) Includes 3,589 phantom shares credited under the NCF Director's Fees
Deferral Plan and 481 phantom shares credited under the SunTrust Directors
Deferred Compensation Plan.
(4) Phantom shares credited under the NCF Deferred Compensation Plan.
(5) Phantom shares credited under SunTrust's 401(k) Excess Plan.
(6) Phantom shares credited under SunTrust's 401(k) Excess Plan.
(7) Includes 7,840 phantom shares credited under the SunTrust Directors
Deferred Compensation Plan and 1,200 restricted stock units granted under
the SunTrust 2004 Stock Plan.
(8) Restricted stock units granted under the SunTrust 2004 Stock Plan.
(9) Phantom shares credited under the Crestar Financial Corporation Directors'
Equity Program.
(10) Includes 9,898 phantom shares credited under the SunTrust Directors
Deferred Compensation Plan and 1,200 restricted stock units granted under
the SunTrust 2004 Stock Plan.
(11) Phantom shares credited under the NCF Deferred Compensation Plan.
(12) Phantom shares credited under the Crestar Financial Corporation Directors'
Equity Program.
(13) Phantom shares credited under SunTrust's 401(k) Excess Plan.
(14) Phantom shares credited under SunTrust's 401(k) Excess Plan.
(15) Phantom shares credited under the Crestar Financial Corporation Directors'
Equity Program.
STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDER
The following sets forth certain information concerning the only person
known to us who may be considered a beneficial owner of more than 5% of the
outstanding shares of our common stock as of January 1, 2005.
SHARES BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED OF CLASS
---------------- ------------------- --------
SunTrust Bank............................................... 28,022,641(1)(2) 7.56%
303 Peachtree St., N.E.
Atlanta, Georgia 30308
31
---------------
(1) The shares shown were held by SunTrust Bank, a subsidiary of SunTrust, in
various fiduciary or agency capacities. SunTrust Bank had sole voting power
with respect to 12,849,678 of such shares and it shared voting power with
respect to 624,445 of such shares, not including shares referred to in Note
2 below. SunTrust Bank had sole investment power with respect to 7,186,832
of the total shares set forth above and it shared investment power with
respect to 5,057,739 of such shares, not including the shares referred to in
Note 2 below. SunTrust and SunTrust Bank disclaim any beneficial interest in
any of such shares.
(2) Includes 14,013,137 shares held by SunTrust Bank as Trustee under SunTrust's
401(k) Plan and 58,789 shares held by SunTrust under the SunTrust Retirement
Plan. Shares of SunTrust common stock allocated to a participant's 401(k)
Plan account are voted by the Trustee in accordance with instructions from
such participant, and shares for which there are no instructions from
participants are not voted.
OTHER DIRECTOR AND EXECUTIVE OFFICER INFORMATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Correll, Hughes, Minor and Prince, all of whom are independent,
outside directors of SunTrust, served as members of the Compensation Committee
during all or part of 2004.
During 2004, SunTrust's bank subsidiary engaged in customary banking
transactions and had outstanding loans to certain of SunTrust's directors,
executive officers, their associates and members of the immediate families of
certain directors and executive officers. These loans were made in the ordinary
course of business and were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with others. In the opinion of management, these loans do not
involve more than the normal risk of collectibility or present other unfavorable
features.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires SunTrust's
directors, executive officers and any persons who own more than 10% of
SunTrust's common stock to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. To SunTrust's knowledge, based
solely on a review of the copies of such reports furnished to SunTrust and
written representations that no other reports were required, all filing
requirements under Section 16(a) were complied with during 2004, except for the
following: Larry L. Prince's Form 3 and subsequently filed Form 4s and Form 5s
inadvertently did not include 800 shares of SunTrust common stock owned by his
spouse, and Mr. Prince inadvertently did not report subsequent purchases of
SunTrust common stock by his spouse totaling 290 shares. Richard L. Furr
inadvertently did not report the grant of a reload option that he received
automatically upon exercise of an option that he did report. In addition, the
exercise of an option by James Wells was reported correctly on page 2 of his
Form 4, but the shares acquired were inadvertently omitted from page 1 of his
Form 4. Corrective filings have been made for the above-described transactions.
PROPOSAL TO APPROVE THE MATERIAL TERMS OF THE PERFORMANCE GOALS
FOR THE SUNTRUST BANKS, INC. MANAGEMENT INCENTIVE PLAN
(ITEM 3)
BACKGROUND
In November 1994, the Board of Directors approved, subject to shareholder
approval, certain amendments to the SunTrust Banks, Inc. Management Incentive
Plan, which we refer to as the MIP, so that performance-based bonuses paid under
the MIP could qualify for deduction under Section 162(m) of the Internal Revenue
Code of 1986, as amended. With respect to the MIP, Section 162(m) limits the
federal income tax deductibility of annual compensation to $1 million each for
the individuals who are SunTrust's Chief Executive Officer and the other 4 most
highly compensated executive officers at the end of each calendar year, whom we
refer to as "covered employees". Certain performance-based compensation is
32
excluded from this limitation, and the MIP, as it relates to covered employees,
has been designed to the extent practicable to comply with that exception.
Currently, federal tax regulations provide that every 5 years SunTrust's
shareholders must approve the material terms of the performance goals specified
in the MIP and, further, provide that the material terms include (1) who is
eligible to participate in the MIP, (2) the business criteria on which the
performance goals will be based and (3) the maximum award payable to any
participant. The material terms of the MIP performance goals were last approved
by the shareholders at SunTrust's 2000 Annual Meeting. Accordingly, the material
terms of the performance goals in the MIP as applicable to covered employees are
being presented to the shareholders for approval at the 2005 Annual Meeting.
There has been no change in the criteria with respect to who is eligible to
participate in the MIP, but the business criteria on which the performance goals
are based has been revised to parallel the business criteria in the 2004 Stock
Plan, which was approved by shareholders at the 2004 Annual Meeting. The same
business criteria are also being presented to shareholders for approval for the
Performance Unit Plan at the 2005 Annual Meeting. Finally, the maximum award
payable under the MIP to any individual for 2004 was limited to $2 million. We
are (in accordance with Section 162(m)) asking the shareholders to approve a new
limit of $5 million as the maximum award payable under the MIP to any
individual. If approved, the new limit will be effective for 2005.
PURPOSE
Short term performance is emphasized through the MIP, which has a payout
based on reaching specified performance goals for a 1 year period as set by the
Compensation Committee of the Board of Directors, which we refer to in this
section as the Committee. This 1 year period is the calendar year. Participation
in this plan is limited to a select group of employees who in the judgment of
the Committee have a material impact on SunTrust's performance. The MIP, in
substantially the form described here, has been an important part of SunTrust's
executive compensation program for a number of years and its operation is
further described in the Compensation Committee's report in this Proxy
Statement.
INDIVIDUALS ELIGIBLE
Participants in the MIP must be employees of SunTrust or a subsidiary.
Participants are selected by the Committee based on the employee's contributions
to the growth and profitability of SunTrust and its subsidiaries. For 2004, the
participants included the named executive officers (excluding Mr. Reed) and
approximately 950 other executives.
BUSINESS CRITERIA UPON WHICH PERFORMANCE GOALS ARE BASED
No later than 90 days after the beginning of each calendar year, the
Committee will establish for the individuals who are expected to be covered
employees at year end separate performance goals which will be based on any
business criteria or combination of business criteria as the Committee in its
sole discretion shall select from among one or more of the following:
- SunTrust's return over capital costs or increase in return over capital
costs
- SunTrust's total earnings or the growth in such earnings
- SunTrust's consolidated earnings or the growth in such earnings
- SunTrust's earnings per share or the growth in such earnings
- SunTrust's net earnings or the growth in such earnings
- SunTrust's earnings before interest expense, taxes, depreciation,
amortization and other non-cash items or the growth in such earnings
- SunTrust's earnings before interest and taxes or the growth in such
earnings
33
- SunTrust's consolidated net income or the growth in such income
- The value of SunTrust's common stock or the growth in such value
- SunTrust's stock price or the growth in such price
- SunTrust's return on assets or the growth on such return
- SunTrust's total shareholder return or the growth in such return
- SunTrust's expenses or the reduction of expenses
- SunTrust's sales growth
- SunTrust's overhead ratios or changes in such ratios
- SunTrust's expense-to-sales ratios or changes in such ratios
- SunTrust's economic value added or changes in such value added
- Such other financial performance measures deemed appropriate by the
Committee
Each participant who is expected to be a covered employee will have a
minimum performance goal, a maximum performance goal, and such other performance
goals between the minimum and the maximum as the Committee deems appropriate.
The Committee may set the performance goals in any manner, including achievement
on an absolute or a relative basis as compared to peer groups or indexes, or
achievement by SunTrust as a whole or by 1 or more of its operating entities or
units. In determining whether a performance goal has been satisfied, the
Committee may exclude any or all extraordinary items (as determined under U.S.
generally accepted accounting principles), and any other unusual or
non-recurring items, including but not limited to, charges or costs associated
with restructurings of SunTrust, discontinued operations and the cumulative
effects of accounting changes. In addition, the Committee may adjust any
performance goal for a period as it deems equitable to recognize unusual or
non-recurring events affecting SunTrust, changes in tax laws or accounting
procedures and any other factors as the Committee may determine (including
adjustments that would result in SunTrust's payment of non-deductible
compensation). The Committee shall identify any such exclusions and adjustments
which the Committee will use to determine whether a performance goal for any
calendar year has been satisfied by a covered employee when the Committee sets
the performance goals for the individuals who are expected to be covered
employees at the end of such calendar year.
The Committee may establish performance criteria for participants who are
not expected to be covered employees which are based on business criteria which
are different from the criteria described above. No shareholder approval is
required for the business criteria on which performance goals are based for
participants other than covered employees.
TARGET AND MAXIMUM AWARDS
The Committee will assign to each participant who is expected to be a
covered employee certain award values, specified as percentages of the covered
employee's base wages, which will correspond to the minimum, target and maximum
performance goals. If the covered employee achieves the minimum, target or
maximum performance goal, the covered employee will be paid an award which is
calculated based on the corresponding percentage of the covered employee's base
wages. No award will be paid if the covered employee does not achieve any of his
or her minimum performance goals. Straight line interpolation will be used to
calculate awards when performance falls between any 2 specified performance
goals. For purposes of calculating awards, base wages means the base salary paid
to a participant during a plan year, excluding bonuses, overtime, commissions
and other compensation.
Currently, the maximum award payable to a MIP participant is $2 million.
Based on a review of current practices of SunTrust's peer group members as shown
in the Compensation Committee Report, the Committee has decided to increase the
maximum award payable to a MIP participant to $5 million.
34
Notwithstanding the terms of any award, the Committee in its sole
discretion may reduce the amount of an award payable to any participant for any
reason, including the Committee's judgment that the performance goals have
become an inappropriate measure of achievement, a change in the employment
status, position or duties of the participant, unsatisfactory performance of the
participant, or the participant's service for less than the entire plan year.
Upon a "change in control" as defined in the MIP, the payment of awards
will be accelerated, and the amount of the awards will be determined by the
Committee.
SHAREHOLDER APPROVAL REQUIREMENTS
According to federal income tax regulations under Section 162(m), the 3
material terms of the MIP's performance goals as applicable to covered employees
must be approved by the shareholders every 5 years. If the shareholders approve
these 3 material terms of the performance goals for participants who are
expected to be covered employees, these terms will remain in effect without
further shareholder approval until the Annual Meeting of Shareholders in 2010.
However, the Board of Directors or the Committee may amend the MIP, including
the material terms of the performance goals for participants other than covered
employees, without shareholder approval.
If the 3 material terms of the performance goals for covered employees are
not approved by the shareholders, the MIP as described in this summary for
participants who are not expected to be covered employees may remain in full
force and effect. Further, the Board retains authority to develop and implement
alternate means of fairly compensating executive officers, including the covered
employees, whether or not the 3 material terms of the MIP performance goals are
approved.
We are requesting shareholders to approve (1) the continued use of the
current criteria to determine who participates in the MIP, (2) the change in the
business criteria on which performance goals are based to the criteria described
in this section and (3) the change in the maximum limit for any award that may
be paid to an individual to $5 million.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE (1) THE CONTINUED USE
OF THE CURRENT CRITERIA TO DETERMINE WHO PARTICIPATES IN THE MIP, (2) THE CHANGE
IN THE BUSINESS CRITERIA ON WHICH PERFORMANCE GOALS ARE BASED TO THE CRITERIA
DESCRIBED IN THIS SECTION AND (3) THE CHANGE IN THE MAXIMUM LIMIT FOR ANY AWARD
THAT MAY BE PAID TO AN INDIVIDUAL TO $5 MILLION.
PROPOSAL TO APPROVE THE MATERIAL TERMS OF THE PERFORMANCE GOALS
FOR THE SUNTRUST BANKS, INC. PERFORMANCE UNIT PLAN
(ITEM 4)
BACKGROUND
In November 1994, the Board of Directors approved, subject to shareholder
approval, certain amendments to the SunTrust Banks, Inc. Performance Unit Plan,
which we refer to as the PUP, so that performance-based bonuses paid under the
PUP could qualify for deduction under Section 162(m) of the Internal Revenue
Code of 1986, as amended. With respect to the PUP, Section 162(m) limits the
federal income tax deductibility of annual compensation to $1 million each for
the individuals who are SunTrust's Chief Executive Officer and the other 4 most
highly compensated executive officers at the end of each performance cycle for
the PUP, whom we refer to as covered employees. Certain performance-based
compensation is excluded from this limitation, and the PUP, as it relates to
covered employees, has been designed to the extent practicable to comply with
that exception.
Currently, federal tax regulations provide that every 5 years SunTrust's
shareholders must approve the material terms of the performance goals specified
in the PUP and, further, provide that the material terms include (1) who is
eligible to participate in the PUP, (2) the business criteria on which the
performance goals will be based and (3) the maximum award payable to any
participant. The material terms of the PUP performance goals were last approved
by the shareholders at SunTrust's 2000 Annual Meeting. Accordingly,
35
the material terms of the performance goals in the PUP as applicable to covered
employees are being presented to the shareholders for approval at the 2005
Annual Meeting.
There has been no change in the criteria with respect to who is eligible to
participate in the PUP, but the business criteria on which the performance goals
are based has been revised to parallel the business criteria in the 2004 Stock
Plan, which was approved by shareholders at the 2004 Annual Meeting. The same
business criteria are also being presented to shareholders for approval for the
Management Incentive Plan at the 2005 Annual Meeting. Finally, the maximum award
payable to any individual for 2004 was limited to $2 million. We are (in
accordance with Section 162(m)) asking the shareholders to approve a new
limit -- .5% of SunTrust's net income for the last year of a PUP performance
cycle, less the value of any SunTrust restricted stock or stock units granted in
the first year of the PUP performance cycle. The new limit changes the previous
flat dollar amount to a variable amount based on SunTrust's net income and
coordinates the PUP payout with other long-term incentives. If approved, the new
limit will be effective for the PUP performance cycle which begins in 2005.
PURPOSE
The PUP is designed to motivate officers and other key employees to achieve
SunTrust's operating goals by providing the opportunity for incentive
compensation in addition to annual salaries. Longer-term performance is
emphasized through the PUP, which has a payout based on reaching performance
goal or goals set for each performance cycle for the PUP. Performance cycles
currently run for 3 consecutive calendar years. The goals are set by the
Compensation Committee, which we refer to in this section as the Committee, and
the awards are paid early in the year following each cycle. Participation in
this plan is limited to a select group of senior management who have a material
impact on SunTrust's performance. The PUP, in substantially the form described,
has been an important part of SunTrust's executive compensation program since
1985, and its operation is further described in the Compensation Committee's
report in this Proxy Statement.
INDIVIDUALS ELIGIBLE
Participants in the PUP must be key executive employees of SunTrust or a
subsidiary. Participants are selected by the Committee based on the employee's
potential to contribute to the growth and profitability of SunTrust and its
subsidiaries. For 2004, the participants included the named executive officers
and approximately 200 other senior executives.
BUSINESS CRITERIA UPON WHICH PERFORMANCE GOALS ARE BASED
The Committee will determine the length of each performance cycle for the
PUP which, as noted, currently runs for 3 consecutive years. No later than 90
days after the beginning of each performance cycle, the Committee will establish
performance goals which will be based on any business criteria or combination of
business criteria as the Committee in its sole discretion shall select from
among one or more of the following:
- SunTrust's return over capital costs or increase in return over capital
costs
- SunTrust's total earnings or the growth in such earnings
- SunTrust's consolidated earnings or the growth in such earnings
- SunTrust's earnings per share or the growth in such earnings
- SunTrust's net earnings or the growth in such earnings
- SunTrust's earnings before interest expense, taxes, depreciation,
amortization and other non-cash items or the growth in such earnings
- SunTrust's earnings before interest and taxes or the growth in such
earnings
- SunTrust's consolidated net income or the growth in such income
36
- The value of SunTrust's common stock or the growth in such value
- SunTrust's stock price or the growth in such price
- SunTrust's return on assets or the growth on such return
- SunTrust's total shareholder return or the growth in such return
- SunTrust's expenses or the reduction of expenses
- SunTrust's sales growth
- SunTrust's overhead ratios or changes in such ratios
- SunTrust's expense-to-sales ratios or changes in such ratios
- SunTrust's economic value added or changes in such value added
- Such other financial performance measures deemed appropriate by the
Committee
Each performance goal will have a minimum objective, a maximum objective and
such other objectives between the minimum and maximum objectives as the
Committee deems appropriate. Each objective will have a corresponding final
award value assigned to the objective which will be used to calculate the amount
of the award payable to a participant if that objective is reached. The
Committee shall have the discretion to set more than one performance goal for
each performance cycle and, if there is more than one goal, to determine whether
the award payable for the performance cycle will be based on the objective
achieved under one, or more than one, of the performance goals.
TARGET AND MAXIMUM AWARDS
The Committee will grant to each participant a certain number of
performance units with each unit having an assigned value. The Committee
determines the number of units to grant to each participant based on management
level, base salary, range of possible cash incentive compensation, individual
performance and subjective factors. At the end of each performance cycle, awards
are determined based upon SunTrust's achieving or exceeding the performance
objectives set by the Committee. In determining whether a performance goal has
been satisfied, the Committee may exclude any or all extraordinary items (as
determined under U.S. generally accepted accounting principles), and any other
unusual or non-recurring items, including but not limited to, charges or costs
associated with restructurings of SunTrust, discontinued operations and the
cumulative effects of accounting changes. In addition, the Committee may adjust
any performance goal for a period as it deems equitable to recognize unusual or
non-recurring events affecting SunTrust, changes in tax laws or accounting
procedures and any other factors as the Committee may determine (including
adjustments that would result in SunTrust's payment of non-deductible
compensation). The Committee shall identify any such exclusions and adjustments
which the Committee will use to determine whether a performance goal for any
performance cycle has been satisfied by a covered employee when the Committee
sets the performance goals for such performance cycle. Awards are determined by
multiplying each participant's number of performance units by the final value
which corresponds to the achievement of the performance goals. No awards will be
paid if none of the minimum objectives are met for a performance cycle. Straight
line interpolation will be used to calculate the awards when performance falls
between any 2 specified performance goals.
Previously, the maximum award that could be paid to a PUP participant was
expressed as a flat dollar amount ($2 million for 2004). Based on a review of
current practices of SunTrust's peer group members as shown in the Compensation
Committee Report, the Committee has decided to change the maximum award to a
variable limit, which is equal to .5% (.005) of SunTrust's net income for the
last year in a PUP performance cycle, less the value of any SunTrust restricted
stock or stock units granted in the first year of the PUP performance cycle. For
2004, this new limit would have allowed a maximum per participant payout of $8
million (.5% x $1.6 billion), assuming no restricted stock or stock units were
granted to a participant in 2001. Net income is defined as SunTrust's
consolidated net income, adjusted to exclude extraordinary items (as determined
under U.S. generally accepted accounting principles), and any other unusual or
non-recurring
37
items, including but not limited to, charges or costs associated with
restructurings of SunTrust, discontinued operations and the cumulative effects
of accounting changes. The alignment of the maximum PUP payout minus the grant
of restricted stock and stock units is designed to coordinate these long-term
incentive programs and to limit the total payout.
Notwithstanding the terms of any award, the Committee in its sole
discretion may reduce the amount of an award payable to any participant for any
reason, including the Committee's judgment that the performance objectives have
become an inappropriate measure of achievement, a change in the employment
status, position or duties of the participant, unsatisfactory performance of the
participant, or the participant's service for less than the performance
measurement cycle.
Upon a "change in control" as defined in the PUP, the payment of awards
will be accelerated, and the amount of the awards will be determined by the
Committee.
SHAREHOLDER APPROVAL REQUIREMENTS
According to federal income tax regulations under Section 162(m), the 3
material terms of the PUP's performance goals as applicable to covered employees
must be approved by the shareholders every 5 years. If the shareholders approve
these 3 material terms of the performance goals for covered employees, these
terms will remain in effect without further shareholder approval until the
Annual Meeting of Shareholders in 2010. However, the Board of Directors or the
Committee may amend the PUP, including the material terms of the performance
goals for participants other than covered employees, without shareholder
approval.
If the 3 material terms of the performance goals for covered employees are
not approved by the shareholders, the PUP as described in this summary for
participants who are not covered employees may remain in full force and effect.
Further, the Board retains authority to develop and implement alternative means
of fairly compensating executive officers, including the covered employees,
whether or not the 3 material terms of the PUP performance goals are approved.
We are requesting shareholders to approve (1) the continued use of the
current criteria to determine who participates in the PUP, (2) the change in the
business criteria on which performance goals are based to the criteria described
in this section and (3) the change in the maximum limit for any award that may
be paid to an individual to .5% of SunTrust's net income for the last year in a
PUP performance cycle, less the value of any SunTrust restricted stock or stock
units granted in the first year of the PUP performance cycle, which may have the
effect of increasing the maximum award limit.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE (1) THE CONTINUED USE
OF THE CURRENT CRITERIA TO DETERMINE WHO PARTICIPATES IN THE PUP, (2) THE CHANGE
IN THE BUSINESS CRITERIA ON WHICH PERFORMANCE GOALS ARE BASED TO THE CRITERIA
DESCRIBED IN THIS SECTION AND (3) THE CHANGE IN THE MAXIMUM LIMIT FOR ANY AWARD
THAT MAY BE PAID TO AN INDIVIDUAL TO .5% OF SUNTRUST'S NET INCOME FOR THE LAST
YEAR IN A PUP PERFORMANCE CYCLE, LESS THE VALUE OF ANY SUNTRUST RESTRICTED STOCK
OR STOCK UNITS GRANTED IN THE FIRST YEAR OF THE PUP PERFORMANCE CYCLE, WHICH MAY
HAVE THE EFFECT OF INCREASING THE MAXIMUM AWARD LIMIT.
ADDITIONAL INFORMATION
SHAREHOLDER NOMINATIONS FOR ELECTION TO THE BOARD
Any shareholder entitled to vote for the election of directors may make
nominations for election to the Board. In accordance with the bylaws,
nominations must specify the class (term) of directors to which each person is
nominated, must be made in writing and must be delivered to or mailed to and
received by SunTrust's Corporate Secretary not earlier than 120 days and not
later than 90 days prior to the scheduled date for the Annual Meeting of
Shareholders. Next year's meeting is scheduled for April 18, 2006, so
shareholder nominations must be submitted not earlier than December 19, 2005 and
not later than January 18, 2006. You must include the following information: (i)
the name, age, business address and residence address of the proposed nominee;
(ii) the principal occupation or employment of the proposed nominee and an
explanation of how the proposed nominee meets the criteria used by SunTrust for
the selection of directors as
38
set forth in the subsection "Director Selection Process" under the heading
"Election of Directors"; (iii) the total number of shares of SunTrust common
stock that, to your knowledge, will be voted for the proposed nominee; (iv) the
total number of shares of SunTrust common stock that, to your knowledge, are
owned by the proposed nominee; (v) the signed consent of the proposed nominee to
serve, if elected; (vi) your name and residence address; (vii) the number of
shares of SunTrust common stock owned by you; and (viii) any other information
relating to the proposed nominee that is required to be disclosed in
solicitations for proxies for the election of directors under Regulation 14A of
the Securities Exchange Act of 1934, as amended.
SHAREHOLDER PROPOSALS FOR NEXT YEAR'S MEETING
Bylaw Provisions. In accordance with SunTrust's bylaws, a shareholder who
desires to present a proposal for consideration at next year's Annual Meeting
must deliver the proposal to the address set forth below so that it is received
no later than the close of business on January 18, 2006. The submission should
include the proposal and a brief statement of the reasons for it, the name and
address of the shareholder (as they appear in SunTrust's stock transfer
records), the number of SunTrust shares beneficially owned by the shareholder
and a description of any material direct or indirect financial or other interest
that the shareholder (or any affiliate or associate) may have in the proposal.
Proposals should be addressed to SunTrust Banks, Inc., Post Office Box 4418,
Mail Code 643, Atlanta, Georgia 30302, Attention: Corporate Secretary.
Inclusion in Next Year's Proxy Statement. Notwithstanding the bylaw
provisions, a shareholder who desires to have his or her proposal included in
next year's Proxy Statement must deliver the proposal to SunTrust's principal
executive offices (at the address noted above) no later than the close of
business on November 8, 2005.
Presentation at Meeting. For any proposal that is not submitted for
inclusion in next year's Proxy Statement (as described in the preceding
paragraph) but is instead sought to be presented directly at next year's Annual
Meeting, SEC rules permit management to vote proxies in its discretion if
SunTrust (a) receives notice of the proposal before the close of business on
January 29, 2006 and advises shareholders in next year's Proxy Statement about
the nature of the matter and how management intends to vote on such matter or
(b) does not receive notice of the proposal prior to the close of business on
January 29, 2006.
RECORD DATE; SHARES OUTSTANDING
Each shareholder of record at the close of business on February 25, 2005 is
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. Each share of SunTrust common stock entitles the holder to one vote on
any matter coming before a meeting of SunTrust shareholders. On February 25,
2005, the record date for the Annual Meeting, there were 360,888,651 shares of
SunTrust common stock outstanding.
QUORUM AND VOTING
A majority of the shares entitled to vote constitutes a quorum at a meeting
of the shareholders. If a quorum is present, the vote of a plurality of the
votes cast by the shares entitled to vote is necessary for the election of
directors. The presence of a quorum, either in person or by proxy, and the
affirmative vote of the holders of a majority of the shares represented and
entitled to vote at the Annual Meeting is required to take most other actions.
If your shares are held in a brokerage account or by another nominee, you
are considered the "beneficial owner" of shares held in "street name", and these
proxy materials are being forwarded to you by your broker or nominee (the
"record holder") along with a voting instruction card. As the beneficial owner,
you have the right to direct your record holder how to vote your shares, and the
record holder is required to vote your shares in accordance with your
instructions. If you do not give instructions to your record holder, the record
holder will be entitled to vote the shares in its discretion on Item 1 (Election
of Directors) and Item 2 (Ratification of Independent Auditors), but will not be
able to vote your shares on Items 3 and 4 (Approval of the Material Terms of the
Performance Goals for the SunTrust Banks, Inc. Management Incentive Plan and the
SunTrust
39
Banks, Inc. Performance Unit Plan) and your shares will be considered a "broker
non-vote" on those proposals.
If your shares are treated as a broker non-vote or abstention, your shares
will be included in the number of shares represented for purposes of determining
whether a quorum is present. Broker non-votes, however, are not counted as
shares present and entitled to be voted with respect to the matters which the
broker has not expressly voted. Thus, broker non-votes will not affect the
outcome of the voting on Item 1 (Election of Directors) or Item 2 (Ratification
of Independent Auditors) but will have the same effect as a negative vote on
Items 3 and 4 (Approval of the Material Terms of the Performance Goals for the
SunTrust Banks, Inc. Management Incentive Plan and the SunTrust Banks, Inc.
Performance Unit Plan). Abstentions also are counted for purposes of determining
the minimum number of affirmative votes required for approval of proposals and,
accordingly, have the effect of a vote against those proposals. If a quorum is
present, abstentions have no effect on the outcome of voting for directors.
Only shareholders of record on April 15, 2005 will be entitled to ask
questions at the Annual Meeting. If your shares are held in a brokerage account
or by another nominee, you must obtain and bring to the Annual Meeting a proxy
or other evidence of ownership from your broker or nominee giving you the right
to vote such shares if you wish to ask a question.
PROXY SOLICITATION
SunTrust will bear the cost of soliciting proxies. SunTrust has retained
Georgeson Shareholder Communications, Inc. to assist in the solicitation of
proxies for a fee of $9,500 plus expenses. Proxies may also be solicited by
SunTrust employees.
NEXT YEAR'S ANNUAL MEETING
Next year's Annual Meeting of Shareholders of SunTrust will be held at 9:30
a.m. on Tuesday, April 18, 2006 in Suite 105 on the 1st floor of SunTrust Plaza
Garden Offices, 303 Peachtree Center Avenue, Atlanta, Georgia.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought
before this Annual Meeting. If other matters are properly introduced, the
persons named in the enclosed proxy will vote on such matters as the Board
recommends.
March 8, 2005
40
SUNTRUST BANKS, INC. MANAGEMENT INCENTIVE PLAN
Amended and Restated as of March 14, 2005
Section 1. Name and Purpose
The name of this Plan is the SunTrust Banks, Inc. Management Incentive
Plan. The purpose of the Plan is to promote the interests of the Corporation and
its stockholders through the granting of Awards to select employees of the
Corporation and its Subsidiaries in order to motivate and retain superior
employees who contribute in a significant manner to the actual financial
performance of the Corporation as measured against pre-established financial and
other goals.
Section 2. Effective Date, Term and Amendment
The effective date of the amended and restated Plan shall be March 14,
2005, and the amended and restated Plan shall apply to all Awards granted on or
after January 1, 2005; provided, however, if the Corporation's shareholders fail
to approve the material terms of the performance goals for the amended and
restated Plan at their annual meeting in 2005, any Award granted under the Plan
for 2005 to a Participant who is a Covered Employee for 2005 shall be cancelled
and shall have no further force or effect whatsoever and no further Awards shall
be granted to any Covered Employee under the Plan. The Plan shall continue for
an indefinite term until terminated by the Board; provided, however, that the
Corporation and the Committee after such termination shall continue to have full
administrative power to take any and all action contemplated by the Plan which
is necessary or desirable and to make payment of any Awards earned by
Participants during any then unexpired Plan Year. The Board of Directors of the
Corporation or the Committee may amend the Plan in any respect from time to
time.
Section 3. Definitions and Construction
A. As used in this Plan, the following terms shall have the meanings
indicated, unless the context clearly requires another meaning:
1. "Award" means the right to receive a cash payment which represents a
percentage of a Participant's Base Wages determined by the Committee in
accordance with Section 5 hereof in the event the Corporation, Subsidiary,
Business Unit or individual achieves the Financial Goals or other goals
established pursuant to Section 5.
2. "Base Wages" means the base salary paid to a Participant by the
Corporation or a Subsidiary during a Plan Year, excluding bonuses, overtime,
commissions and other extra compensation, reimbursed expenses and contributions
made by the Corporation or a Subsidiary to this or any other employee benefit
plan maintained by the Corporation or a Subsidiary.
3. "Business Unit" means a division or other business unit of the
Corporation or a Subsidiary designated as a distinct entity for the purpose of
setting goals and measuring performance.
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4. "Code" means the Internal Revenue Code of 1986, as amended.
5. "Committee" means the Compensation Committee of the Board or any other
Committee of the Board to which the responsibility to administer this Plan is
delegated by the Board; such Committee shall consist of at least two members of
the Board, who shall not be eligible to receive an Award under the Plan and each
of whom shall be a "disinterested" person within the meaning of Rule 16b-3 under
the Securities Exchange Act of 1934 and shall be or be treated as an "outside
director" for purposes of Section 162(m) of the Code.
6. "Corporation" means SunTrust Banks, Inc. and any successor thereto.
7. "Covered Employee" means for each calendar year the Chief Executive
Officer of the Corporation and the four other most highly compensated executive
officers whose compensation would be reportable on the "summary compensation
table" under the Securities and Exchange Commission's executive compensation
disclosure rules, as set forth in Item 402 of Regulation S-K, 17 C.F.R. 229.402,
under the Securities Exchange Act of 1934, if the report was prepared as of the
last day of such calendar year.
8. "Change in Control" means a change in control of the Corporation of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934 as in effect at the time of such "change in control", provided that such a
change in control shall be deemed to have occurred at such time as (i) any
"person" (as that term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934), is or becomes the beneficial owner (as defined in Rule
13d-3 under the Securities Exchange Act of 1934) directly or indirectly, of
securities representing 20% or more of the combined voting power for election of
directors of the then outstanding securities of the Corporation or any successor
of the Corporation; (ii) during any period of two consecutive years or less,
individuals who at the beginning of such period constitute the Board of
Directors of the Corporation cease, for any reason, to constitute at least a
majority of such Board of Directors, unless the election or nomination for
election of each new director was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning of the
period; (iii) the shareholders of the Corporation approve any reorganization,
merger, consolidation or share exchange as a result of which the common stock of
the Corporation shall be changed, converted or exchanged into or for securities
of another corporation (other than a merger with a wholly-owned subsidiary of
the Corporation) or any dissolution or liquidation of the Corporation or any
sale or the disposition of 50% or more of the assets or business of the
Corporation; or (iv) the shareholders of the Corporation approve any
reorganization, merger, consolidation or share exchange unless (A) the persons
who were the beneficial owners of the outstanding shares of the common stock of
the Corporation immediately before the consummation of such transaction
beneficially own more than 65% of the outstanding shares of the common stock of
the successor or survivor corporation in such transaction immediately following
the consummation of such transaction and (B) the number of shares of the common
stock of such successor or survivor corporation beneficially owned by the
persons described in Section 8(iv)(A) immediately following the consummation of
such transaction is beneficially owned by each such person in substantially the
same proportion that each such person had beneficially owned shares of the
Corporation's common stock immediately before the consummation of such
transaction, provided (C) the percentage described in Section 8(iv)(A) of
A-2
the beneficially owned shares of the successor or survivor corporation and the
number described in Section 8(iv)(B) of the beneficially owned shares of the
successor or survivor corporation shall be determined exclusively by reference
to the shares of the successor or survivor corporation which result from the
beneficial ownership of shares of common stock of the Corporation by the persons
described in Section 8(iv)(A) immediately before the consummation of such
transaction.
9. "Effective Date" means either the date which includes the "closing" of
the transaction which makes a Change In Control effective if the Change in
Control is made effective through a transaction which has a "closing" or the
date a Change in Control is reported in accordance with applicable law as
effective to the Securities and Exchange Commission if the Change in Control is
made effective other than through a transaction which has a "closing".
10. "Employment" means continuous employment with the Corporation or a
Subsidiary from the beginning to the end of each Plan Year, which continuous
employment shall not be considered to be interrupted by transfers between the
Corporation and a Subsidiary or between Subsidiaries.
11. "Final Value" means the value of an Award determined in accordance
with Sections 5 and 6 as the basis for payments to Participants at the end of a
Plan Year.
12. "Financial Goals" means the financial objectives set by the Committee
for each Plan Year pursuant to Section 5 from one or any combination of the
following: (i) the Corporation's return over capital costs or increase in return
over capital costs, (ii) the Corporation's total earnings or the growth in such
earnings, (iii) the Corporation's consolidated earnings or the growth in such
earnings, (iv) the Corporation's earnings per share or the growth in such
earnings, (v) the Corporation's net earnings or the growth in such earnings,
(vi) the Corporation's earnings before interest expense, taxes, depreciation,
amortization and other non-cash items or the growth in such earnings, (vii) the
Corporation's earnings before interest and taxes or the growth in such earnings,
(viii) the Corporation's consolidated net income or the growth in such income,
(ix) the value of the Corporation's common stock or the growth in such value,
(x) the Corporation's stock price or the growth in such price, (xi) the
Corporation's return on assets or the growth on such return, (xii) the
Corporation's total shareholder return or the growth in such return, (xiii) the
Corporation's expenses or the reduction of expenses, (xiv) the Corporation's
sales growth, (xv) the Corporation's overhead ratios or changes in such ratios,
(xvi) the Corporation's expense-to-sales ratios or changes in such ratios,
(xvii) the Corporation's economic value added or changes in such value added, or
(xviii) such other financial performance measures deemed appropriate by the
Committee.
13. "Participant" means a select employee of the Corporation and/or its
Subsidiaries who is selected by the Committee or the Committee's delegate to
participate in the Plan based upon the employee's substantial contributions to
the future growth and future profitability of the Corporation and/or its
Subsidiaries.
14. "Plan" means the SunTrust Banks, Inc. Management Incentive Plan as
amended and restated in this document and all amendments thereto.
A-3
15. "Plan Year" means a single calendar year period as set by the
Committee which commences on the first day of such period.
16. "Proportionate Final Value" means the product of a fraction, the
numerator of which is the actual number of full months in a Plan Year that an
employee was a Participant in the Plan and the denominator of which is the total
number of months in that Plan Year, multiplied by the Final Value of an Award.
17. "Subsidiary" means any bank, corporation or entity which the
Corporation controls either directly or indirectly through ownership of fifty
percent (50%) or more of the total combined voting power of all classes of stock
of such bank, corporation or entity, except for such direct or indirect
ownership by the Corporation while the Corporation or a Subsidiary is acting in
a fiduciary capacity with respect to any trust, probate estate, conservatorship,
guardianship or agency.
18. "Termination Value" means the value of an Award as determined by the
Committee, in its absolute discretion, upon the early termination of a Plan Year
or upon a Participant's termination of Employment before the end of such Plan
Year, which value shall be the basis for the payment of an Award to a
Participant, in accordance with Sections 7(B), 7(C), 7(D), 8(A) or 8(B) of the
Plan based on the Participant's Employment prior to his termination of
Employment or the early termination of such Plan Year.
B. In the construction of the Plan, the masculine shall include the
feminine and the singular shall include the plural in all instances in which
such meanings are appropriate. The Plan and all agreements executed pursuant to
the Plan shall be governed by the laws of Georgia (excluding its choice of law
rules).
Section 4. Committee Responsibilities
A. The Committee may, from time to time, adopt rules and regulations and
prescribe forms and procedures for carrying out the purposes and provisions of
the Plan. The Committee shall have the sole and final authority to designate
Participants, determine Awards, designate the Plan Year, determine Financial
Goals and other goals, determine Final Value of Awards, and answer all questions
arising under the Plan, including questions on the proper construction and
interpretation of the Plan. Any interpretation, decision or determination made
by the Committee shall be final, binding and conclusive upon all interested
parties, including the Corporation and its Subsidiaries, Participants and other
employees of the Corporation or any Subsidiary, and the successors, heirs and
representatives of all such persons. The Committee shall use its best efforts to
ensure that Awards to Covered Employees under the Plan qualify as
"performance-based compensation" for purposes of Section 162(m) of the Code.
B. Subject to the express provisions of the Plan and no later than the end
of the first quarter of a calendar year (or such time as may be permitted for
Awards paid for such year to be treated as performance-based compensation under
Section 162(m)), the Committee shall:
1. Designate the Plan Year which shall begin on the first day of such
year.
2. Designate the Participants for each such Plan Year.
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3. Establish the Financial Goals and other goals for the Corporation,
designated Subsidiaries and Business Units and Participants for each such Plan
Year.
4. Establish the method of calculating the Final Value of each Award.
5. Authorize management (a) to notify each Participant that he has been
selected as a Participant and to inform him of the Financial Goals or other
goals that have been established for such Plan Year and (b) to obtain from him
such agreements and powers and designations of beneficiaries as it shall
reasonably deem necessary for the administration of the Plan.
C. During any Plan Year, the Committee may, if it determines that it will
promote the purpose of the Plan, designate as additional Participants any
employees of the Corporation and its Subsidiaries who have been hired,
transferred or promoted into a position eligible for participation in the Plan.
The individual's designation as a Participant shall be subject to the same
restrictions, limitations, Financial Goals or other goals and other conditions
as those held by other Participants for the same Plan Year and their
participation may be made retroactive to the first day of such Plan Year;
provided, however, no Participant who is added will be paid an Award for any
calendar year to the extent such payment, when added to all his other
compensation for such year, would be nondeductible under Section 162(m) of the
Code.
D. During any Plan Year, the Committee may, if it determines it will
promote the purpose of the Plan, revoke the Committee's prior designation of an
employee as a Participant under the Plan for a Plan Year.
E. Subject to Section 5A, the Committee may revise the Financial Goals or
other goals for any Plan Year to the extent the Committee, in the exercise of
its absolute discretion, believes necessary to achieve the purpose of the Plan
in light of any unexpected or unusual circumstances or events, including, but
not limited to, changes in accounting rules, accounting practices, tax laws and
regulations, or in the event of mergers, acquisitions, divestitures,
unanticipated increases in Federal Deposit Insurance premiums, and extraordinary
or unanticipated economic circumstances.
F. The Committee may delegate any of its responsibilities under this Plan
to such members of management of the Corporation as the Committee shall select,
provided that no such delegation shall be made that has the effect of causing an
award to a Covered Employee to fail to qualify as "performance-based
compensation" for purposes of Section 162 (m).
Section 5. Goals
A. Financial Goals for Covered Employees
For each Plan Year, the Committee shall establish for each Participant who is
expected to be a Covered Employee and, at the Committee's discretion, for any
other Participant one or more Financial Goals. These Financial Goals may be
established in any manner the Committee deems appropriate, including achievement
on an absolute or a relative basis as compared to peer groups or indexes, and
these goals may be established as multiple goals or as alternative goals. The
Committee shall determine the Final Value of each Award as a specified
A-5
percent of the Participant's Base Wages based on the attainment of such
Financial Goals for the Plan Year. The Committee shall fix a minimum Financial
Goal for the Plan Year, and the Final Value of an Award shall be equal to zero
if the minimum Financial Goal is not achieved. The Committee shall also fix a
maximum Financial Goal and such other Financial Goals which fall between the
maximum and minimum Financial Goals as the Committee shall deem appropriate,
with corresponding Final Values for such Awards with respect to the Corporation.
Awards will be determined based upon achieving or exceeding the Financial Goals
set by the Committee. Straight line interpolation will be used to calculate
Awards when performance falls between any two specified Financial Goals. In
determining whether any Financial Goal has been satisfied, the Committee may
exclude any or all extraordinary items (as determined under U.S. generally
accepted accounting principles), and any other unusual or non-recurring items,
including but not limited to, charges or costs associated with restructurings of
the Corporation, discontinued operations and the cumulative effects of
accounting changes. In addition, the Committee may adjust any Financial Goal for
a Plan Year as it deems equitable to recognize unusual or non-recurring events
affecting the Corporation, changes in tax laws or accounting procedures and any
other factors as the Committee may determine (including adjustments that would
result in the Corporation's payment of non-deductible compensation). The
Committee shall identify any such exclusions and adjustments which the Committee
will use to determine whether a Financial Goal has been satisfied by a Covered
Employee when the Committee sets the related Financial Goals. No Participant may
receive an Award in excess of $5 million for any given Plan Year.
B. Goals for Other Participants
For each Plan Year, the Committee may establish for each Participant
(other than a Participant who is expected to be a Covered Employee) goals in
addition to or in lieu of any Financial Goals established under Section 5A based
on the performance of the Corporation, a Subsidiary, a Business Unit or the
individual or any combination of the foregoing. These goals may be established
based on a combination of financial measurements and non-financial measurements
that are deemed to further corporate objectives, including such measurements as
business unit net income, revenue growth, budget management, achievement of
talent management objectives, achievement of corporate objectives, individual
objectives, and service quality. Straight line interpolation will be used to
calculate Awards when results fall between any two specified goals established
under this Section 5B. No Participant may receive an Award in excess of $5
million for any given Plan Year.
Section 6. Payment of Awards
A. Promptly after the date on which the necessary information for a
particular Plan Year becomes available, the Committee, or such persons as the
Committee shall designate, shall determine in accordance with Section 5 the
extent to which the Financial Goals or other goals have been achieved for such
Plan Year and authorize the cash payment of the Final Value of an Award, if any,
to each Participant. The Committee shall review and ratify the Award
determinations and shall certify such Award determinations in writing. Payment
of Awards shall be made as soon as practical after the certification of Awards
by the Committee, but no later than March 15 of the year following the Plan Year
to which the Award relates. Each Award shall be paid in cash after deducting the
amount of applicable Federal, State, or Local withholding taxes of any kind
required by law to be withheld by the Corporation. All Awards, whether paid
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currently or paid under any plan which defers payment, shall be payable out of
the Corporation's general assets. Each Participant's claim, if any, for the
payment of an Award, whether made currently or made under any plan which defers
payment, shall not be superior to that of any general and unsecured creditor of
the Corporation. If an error or omission is discovered in any of the
determinations, the Committee shall cause an appropriate equitable adjustment to
be made in order to remedy such error or omission.
B. Notwithstanding the terms of any Award, the Committee in its sole and
absolute discretion, may reduce the amount of the Award payable to any
Participant for any reason, including the Committee's judgment that the
Financial Goals or other goals have become an inappropriate measure of
achievement, a change in the employment status, position or duties of the
Participant, unsatisfactory performance of the Participant, or the Participant's
service for less than the entire Plan Year.
C. In accordance with the procedures set forth in the SunTrust Banks, Inc.
Deferred Compensation Plan, a Participant may elect to defer receipt of either
fifty percent (50%) or one hundred percent (100%) of the Final Value of his
Award, if any, for each Plan Year, and any such election shall be made in
accordance with the procedures established under such deferred compensation
plan.
Section 7. Participation for Less Than a Full Plan Year
A. Except as otherwise provided in this Section 7, an Award to a
Participant shall be forfeited if the Participant's Employment terminates during
any Plan Year and no payment shall be due the Participant for any forfeited
Award.
B. If a Participant's Employment terminates prior to the end of any Plan
Year on account of his death, the Committee shall waive the Employment condition
and shall authorize the payment of an Award on behalf of such Participant in
accordance with Section 9B at the end of such Plan Year based on the
Proportionate Final Value, if any, of his Award, unless the Committee in its
discretion feels the Award should be forfeited.
C. If a Participant's Employment terminates prior to the end of any Plan
Year on account of disability under a long-term disability plan maintained by
the Corporation or a Subsidiary, the Committee shall waive the Employment
condition and shall authorize, as of commencement of disability benefits to such
Participant, the payment of an Award to such Participant at the end of such Plan
Year based on the Proportionate Final Value, if any, of his Award, unless the
Committee in its discretion feels the Award should be forfeited.
D. If a Participant's Employment terminates prior to the end of any Plan
Year on account of his early or normal retirement under any pension plan
maintained by the Corporation or any Subsidiary or on account of a reduction in
force which will result in a severance benefit payment to the Participant
pursuant to the terms of the SunTrust Banks, Inc. Severance Pay Plan or any
successor to such plan, the Committee shall waive the Employment condition and
shall authorize the payment of an Award to such Participant at the end of such
Plan Year based on the Proportionate Final Value, if any, of his Award, unless
the Committee in its discretion feels the Award should be forfeited.
Section 8. Premature Satisfaction of Plan Conditions
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A. In the event the Effective Date of a Change in Control of the
Corporation is prior to the end of any Plan Year, the Committee shall waive any
and all Plan conditions and shall authorize the payment of an Award immediately
to each Participant based on the Termination Value, if any, of his Award;
provided, however, if an Award is then subject to Section 409A of the Code, the
payment of such Award pursuant to this Section 8A shall not be made unless the
Change in Control also constitutes a change in the ownership or effective
control of the Corporation or in the ownership of a substantial portion of the
assets of the Corporation within the meaning of Section 409A(a)(2)(A)(v) of the
Code.
B. If a tender or exchange offer is made other than by the Corporation for
shares of the Corporation's stock prior to the end of any Plan Year, the
Committee may waive any and all Plan conditions and authorize, at any time after
the commencement of the tender or exchange offer and within thirty (30) days
following completion of such tender or exchange offer, the payment of an Award
immediately to each Participant based on the Termination Value, if any, of his
Award; provided, however, if an Award is then subject to Section 409A of the
Code, the payment of such Award pursuant to this Section 8B shall not be made
unless the tender or exchange offer also constitutes a change in the ownership
or effective control of the Corporation or in the ownership of a substantial
portion of the assets of the Corporation within the meaning of Section
409A(a)(2)(A)(v) of the Code.
C. A Plan Year for an Award shall terminate upon the Committee's
authorization of the payment of such Award during such Plan Year pursuant to
this Section 8 and no further payments shall be made for such Plan Year with
respect to such Award.
Section 9. Non-Transferability of Rights and Interests
A. A Participant may not alienate, assign, transfer or otherwise encumber
his rights and interests under this Plan and any attempt to do so shall be null
and void.
B. In the event of a Participant's death, the Committee shall authorize
payment of any Award due a Participant under Section 7B to the Participant's
designated beneficiary as specified or, in the absence of such written
designation or its effectiveness, then to his estate. Any such designation may
be revoked and a new beneficiary designated by the Participant by written
instrument delivered to the Committee.
Section 10. Limitation of Rights
Nothing in this Plan shall be construed to give any employee of the
Corporation or a Subsidiary any right to be selected as a Participant or to
receive an Award or to be granted an Award other than as is provided herein.
Nothing in this Plan or any agreement executed pursuant hereto shall be
construed to limit in any way the right of the Corporation or a Subsidiary to
terminate a Participant's employment at any time, without regard to the effect
of such termination on any rights such Participant would otherwise have under
this Plan, or give any right to a Participant to remain employed by the
Corporation or a Subsidiary in any particular position or at any particular rate
of remuneration.
Executed this 14th day of March, 2005.
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(CORPORATE SEAL) SUNTRUST BANKS, INC.
Attest: ______________________________ By: ________________________________
Title: Assistant Corporate Secretary Title: _____________________________
A-9
SUNTRUST BANKS, INC. PERFORMANCE UNIT PLAN
Amended and Restated as of March 14, 2005
Section 1. Name and Purpose
The name of this Plan is the SunTrust Banks, Inc. Performance Unit Plan.
The purpose of the Plan is to promote the long-term interests of the Corporation
and its stockholders through the granting of Performance Units to key executive
employees of the Corporation and its Subsidiaries in order to motivate and
retain superior executives who contribute in a significant manner to the actual
financial performance of the Corporation as measured against one or more
pre-established performance goals for the Corporation.
Section 2. Effective Date, Term and Amendments
The effective date of the amended and restated Plan shall be March 14,
2005, and the amended and restated Plan shall apply to all awards granted on or
after January 1, 2005; provided, however, if the Corporation's shareholders fail
to approve the material terms of the performance goals for the amended and
restated Plan at their annual meeting in 2005, any award granted under the Plan
for the Performance Measurement Cycle which started on January 1, 2005 to a
Participant who is a Covered Employee for such cycle shall be cancelled and
shall have no further force or effect whatsoever and no further awards shall be
granted to any Covered Employee under the Plan. The Plan shall continue for an
indefinite term until terminated by the Board; provided, however, that the
Corporation and the Committee after such termination shall continue to have full
administrative power to take any and all action contemplated by the Plan which
is necessary or desirable and to make payment of any awards earned by
Participants during any then unexpired Performance Measurement Cycle. The Board
or the Committee may amend the Plan in any respect from time to time. The Plan
as in effect on March 13, 2005 shall continue in effect for awards granted
before January 1, 2005.
Section 3. Definitions and Construction
A. As used in this Plan, the following terms shall have the meanings
indicated, unless the context clearly requires another meaning:
1. "Board" means the Board of Directors of the Corporation.
2. "Calendar Year Report" means the report prepared for each calendar year
by the Controller's office of the Corporation entitled "SunTrust Banks, Inc.
Contribution to Consolidated Net Income for the Calendar Year", which is
prepared in accordance with generally accepted accounting principles, or any
successor to such report.
3. "Code" means the Internal Revenue Code of 1986, as amended.
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4. "Committee" means the Compensation Committee of the Board or any other
Committee of the Board to which the responsibility to administer this Plan is
delegated by the Board; such Committee shall consist of at least two members of
the Board, who shall not be eligible to receive an award under the Plan and each
of whom shall be a "disinterested" person within the meaning of Rule l6b-3 under
the Securities Exchange Act of 1934, and shall be or be treated as an "outside
director" for purposes of Section 162(m) of the Code.
5. "Corporation means SunTrust Banks, Inc. and any successor thereto.
6. "Covered Employee" means for each Performance Measurement Cycle the
Chief Executive Officer and the four other most highly compensated executive
officers whose compensation would be reportable on the "summary compensation
table" under the Securities and Exchange Commission's executive compensation
disclosure rules, as set forth in Item 402 of Regulation S-K, 17 C.F.R. 229.402,
under the Securities Exchange Act of 1934, if the report was prepared as of the
last day of such Performance Measurement Cycle.
7. "Change in Control" means a change in control of the Corporation of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934 as in effect at the time of such "change in control", provided that such a
change in control shall be deemed to have occurred at such time as (i) any
"person" (as that term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934), is or becomes the beneficial owner (as defined in Rule
13d-3 under the Securities Exchange Act of 1934) directly or indirectly, of
securities representing 20% or more of the combined voting power for election of
directors of the then outstanding securities of the Corporation or any successor
of the Corporation; (ii) during any period of two consecutive years or less,
individuals who at the beginning of such period constitute the Board cease, for
any reason, to constitute at least a majority of the Board, unless the election
or nomination for election of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of the period; (iii) the shareholders of the Corporation approve any
reorganization, merger, consolidation or share exchange as a result of which the
common stock of the Corporation shall be changed, converted or exchanged into or
for securities of another corporation (other than a merger with a wholly-owned
subsidiary of the Corporation) or any dissolution or liquidation of the
Corporation or any sale or the disposition of 50% or more of the assets or
business of the Corporation; or (iv) the shareholders of the Corporation approve
any reorganization, merger, consolidation or share exchange unless (A) the
persons who were the beneficial owners of the outstanding shares of the common
stock of the Corporation immediately before the consummation of such transaction
beneficially own more than 65% of the outstanding shares of the common stock of
the successor or survivor corporation in such transaction immediately following
the consummation of such transaction and (B) the number of shares of the common
stock of such successor or survivor corporation beneficially owned by the
persons described in Section 7(iv)(A) immediately following the consummation of
such transaction is beneficially owned by each such person in substantially the
same proportion that each such person had beneficially owned shares of the
Corporation's common stock immediately before the consummation of such
transaction, provided (C) the percentage described in Section 7(iv)(A) of the
beneficially owned shares of the successor or survivor corporation and the
number described in Section 7(iv)(B) of the beneficially owned shares of the
successor or survivor corporation shall be determined exclusively by reference
to the shares of the successor
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or survivor corporation which result from the beneficial ownership of shares of
common stock of the Corporation by the persons described in Section 7(iv)(A)
immediately before the consummation of such transaction.
8. "Effective Date" means either the date which includes the "closing" of
the transaction which makes a Change in Control effective if the Change in
Control is made effective through a transaction which has a "closing" or the
date a Change in Control is reported in accordance with applicable law as
effective to the Securities and Exchange Commission if the Change in Control is
made effective other than through a transaction which has a "closing".
9. "Employment" means continuous employment with the Corporation or a
Subsidiary from the beginning to the end of each Performance Measurement Cycle,
which continuous employment shall not be considered to be interrupted by
transfers between the Corporation and a Subsidiary or between Subsidiaries.
10. "Fair Market Value" means "fair market value" as defined in the
SunTrust Banks, Inc. 2004 Stock Plan or any successor to such plan.
11. "Final Value" means the value of a Performance Unit determined in
accordance with Section 6 as the basis for payments to Participants at the end
of a Performance Measurement Cycle.
12. "Grant Value" means the initial value assigned to a Performance Unit
as determined by the Committee.
13. "Net Income" means the Corporation's consolidated net income for each
calendar year in each Performance Measurement Cycle (as set forth in the
Calendar Year Report for each such year), adjusted to exclude items which should
be excluded as being extraordinary in nature as determined by the Committee;
provided, however, no such adjustment shall be made with respect to a Covered
Employee if the Committee determines that such adjustment shall cause an award
to such Covered Employee to fail to qualify as "performance-based compensation"
under Section 162(m) of the Code.
14. "Participant" means any key executive employee of the Corporation
and/or its Subsidiaries who is selected by the Committee or the Committee's
delegate to participate in the Plan based upon the employee's substantial
contributions to the growth and profitability of the Corporation and/or its
Subsidiaries.
15. "Performance Goal" means the performance objective of the Corporation
which is established pursuant to Section 6 by the Committee for each Performance
Measurement Cycle as the basis for determining the Final Value of a Performance
Unit, and which consists of one or any combination of the following: (i) the
Corporation's return over capital costs or increase in return over capital
costs, (ii) the Corporation's total earnings or the growth in such earnings,
(iii) the Corporation's consolidated earnings or the growth in such earnings,
(iv) the Corporation's earnings per share or the growth in such earnings, (v)
the Corporation's net earnings or the growth in such earnings, (vi) the
Corporation's earnings before interest expense, taxes, depreciation,
amortization and other non-cash items or the growth in such earnings, (vii) the
Corporation's earnings before interest and taxes or the growth in such earnings,
(viii) the
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Corporation's consolidated net income or the growth in such income, (ix) the
value of the Corporation's common stock or the growth in such value, (x) the
Corporation's stock price or the growth in such price, (xi) the Corporation's
return on assets or the growth on such return, (xii) the Corporation's total
shareholder return or the growth in such return, (xiii) the Corporation's
expenses or the reduction of expenses, (xiv) the Corporation's sales growth,
(xv) the Corporation's overhead ratios or changes in such ratios, (xvi) the
Corporation's expense-to-sales ratios or changes in such ratios, (xvii) the
Corporation's economic value added or changes in such value added, or (xviii)
such other financial performance measures deemed appropriate by the Committee.
16. "Performance Measurement Cycle" shall mean a period of consecutive
calendar years as set by the Committee which commences on the first day of the
first calendar year in such period.
17. "Performance Unit" means a unit awarded to a Participant under the
Plan for a Performance Measurement Cycle, and each unit shall have an assigned
value for accounting purposes which shall be determined by the Committee.
18. "Plan" means the SunTrust Banks, Inc. Performance Unit Plan as amended
and restated in this document and all amendments thereto.
19. "Proportionate Final Value" means the product of a fraction, the
numerator of which is the actual number of full months in a Performance
Measurement Cycle that an employee was a Participant in the Plan and the
denominator of which is the total number of months in that Performance
Measurement Cycle, multiplied by the Final Value of a Performance Unit.
20. "Subsidiary" means any bank, corporation or entity which the
Corporation controls either directly or indirectly through ownership of fifty
percent (50%) or more of the total combined voting power of all classes of stock
of such bank, corporation or entity, except for such direct or indirect
ownership by the Corporation while the Corporation or a Subsidiary is acting in
a fiduciary capacity with respect to any trust, probate estate, conservatorship,
guardianship or agency.
21. "Termination Value" means the value of a Performance Unit as
determined by the Committee, in its absolute discretion, upon the early
termination of a Performance Measurement Cycle or upon a Participant's
termination of Employment before the end of such a cycle, which value shall be
the basis for the payment of an award to a Participant based on the
Participant's Employment prior to his termination of Employment or the early
termination of such cycle.
B. In the construction of the Plan, the masculine shall include the
feminine and the singular shall include the plural in all instances in which
such meanings are appropriate. The Plan and all agreements executed pursuant to
the Plan shall be governed by the laws of Georgia (excluding its choice of law
rules).
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Section 4. Committee Responsibilities
A. The Committee may, from time to time, adopt rules and regulations and
prescribe forms and procedures for carrying out the purposes and provisions of
the Plan. The Committee shall have the final authority to select Participants
and to designate the number of Performance Units to be awarded to each
Participant. The Committee shall have the sole and final authority to determine
awards, designate the periods for Performance Measurement Cycles, assign
Performance Unit values, determine Performance Goals, and answer all questions
arising under the Plan, including questions on the proper construction and
interpretation of the Plan. Any interpretation, decision or determination made
by the Committee shall be final, binding and conclusive upon all interested
parties, including the Corporation and its Subsidiaries, Participants and other
employees of the Corporation or any Subsidiary, and the successors, heirs and
representatives of all such persons.
B. Subject to the express provisions of the Plan and prior to the
beginning of a Performance Measurement Cycle (or such later time as may be
permitted for awards paid for such cycle to be treated as performance-based
compensation under Section 162(m)), the Committee shall:
1. Designate the period of consecutive calendar years for each Performance
Measurement Cycle which shall begin on the first day of such year.
2. Select the Participants for each such Performance Measurement Cycle.
3. Establish the Performance Goals for each such Performance Measurement
Cycle.
4. Designate the number of Performance Units to be awarded to each
Participant.
5. Assign a Grant Value to each Performance Unit and establish the method
of calculating the Final Value of each Performance Unit.
6. Authorize management (a) to notify each Participant that he has been
selected as a Participant and to inform him of the number of Performance Units
awarded to him and the Performance Goals that have been established for such
Performance Measurement Cycle and (b) to obtain from him such agreements and
powers and designations of beneficiaries as it shall reasonably deem necessary
for the administration of the Plan.
C. During any Performance Measurement Cycle, the Committee may if it
determines that it will promote the purpose of the Plan:
1. Select as additional Participants any key executive employees of the
Corporation and its Subsidiaries who have been hired, transferred or promoted
into a position eligible for participation in the Plan and may award Performance
Units to such Participants for such Performance Measurement Cycle. The
Performance Units awarded to any such Participant shall be subject to the same
restrictions, limitations, Performance Goals and other conditions as those held
by other Participants for the same Performance Measurement Cycle and their
participation may be made retroactive to the first day of such cycle; provided,
however, no Participant who is
B-5
added will be paid an award for any cycle to the extent such payment, when added
to all his other compensation for such year, would be nondeductible under
Section 162(m) of the Code.
2. Revoke the designation of an individual as a Participant under the
Plan, revoke the grant to a Participant of Performance Units subject to an
award, if any, under a specific Performance Measurement Cycle and authorize
management to inform him in writing of such revocation.
D. Subject to Section 6, the Committee may revise the Performance Goals
for any Performance Measurement Cycle to the extent the Committee, in the
exercise of its absolute discretion, believes necessary to achieve the purpose
of the Plan in light of any unexpected or unusual circumstances or events,
including but not limited to changes in accounting rules, accounting practices,
tax laws and regulations, or in the event of mergers, acquisitions,
divestitures, unanticipated increases in Federal Deposit Insurance premiums, and
extraordinary or unanticipated economic circumstances.
Section 5. Performance Units
The Committee shall determine the aggregate Grant Value (Grant Value times
the number of Performance Units) of the Performance Units awarded at the date of
grant to each Participant.
Section 6. Performance Goals
For each Performance Measurement Cycle, the Committee shall establish one
or more Performance Goals which shall determine individually or jointly the
Final Value of the Performance Units under each award for such cycle. These
goals may be established in any manner the Committee deems appropriate,
including achievement on an absolute or a relative basis as compared to peer
groups or indexes, and these goals may be established as multiple goals or as
alternative goals. The Committee shall fix a minimum Performance Goal for the
cycle, and the Final Value of such units shall be equal to zero if actual
performance falls below the minimum, as established by the Committee. The
Committee shall also fix a maximum Performance Goal and such other Performance
Goals which fall between the minimum and maximum Performance Goals as the
Committee shall deem appropriate, with corresponding Final Values for such
units. Awards will be determined based upon achieving or exceeding the
Performance Goals set by the Committee. Awards are determined by multiplying
each Participant's number of Performance Units by the Final Value. Straight line
interpolation will be used to calculate the awards when performance falls
between any two specified Performance Goals, as applicable. In determining
whether any Performance Goal has been satisfied, the Committee may exclude any
or all extraordinary items (as determined under U.S. generally accepted
accounting principles), and any other unusual or non-recurring items, including
but not limited to, charges or costs associated with restructurings of the
Corporation, discontinued operations and the cumulative effects of accounting
changes. In addition, the Committee may adjust any Performance Goal for a
Performance Measurement Cycle as it deems equitable to recognize unusual or
non-recurring events affecting the Corporation, changes in tax laws or
accounting procedures and any other factors as the Committee may determine
(including adjustments that would result in the Corporation's payment of
non-deductible compensation).
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The Committee shall identify any such exclusions and adjustments which the
Committee will use to determine whether a Performance Goal has been satisfied
when the Committee sets the related Performance Goals to the extent the
Committee deems necessary or appropriate to make an award payable to a Covered
Employee deductible under Section 162(m). No individual may receive an award for
any Performance Measurement Cycle in excess of .5% of Net Income for the last
calendar year of such Performance Measurement Cycle reduced by (1) the Fair
Market Value of any restricted stock grant made (as such Fair Market Value is
determined on the date the restricted stock grant is made) by the Corporation to
such individual during the first calendar year of such Performance Measurement
Cycle and (2) the Fair Market Value of the shares of stock described in any
restricted stock unit grants made (as such Fair Market Value is determined on
the date the restricted stock unit grant is made) by the Corporation to such
individual during the first calendar year of such Performance Measurement Cycle.
Section 7. Payment of an Award
A. Upon completion of each Performance Measurement Cycle, the Committee,
or such persons as the Committee shall designate, shall determine in accordance
with Section 6 the extent to which the Performance Goals have been achieved and
authorize the cash payment of an award, if any, to each Participant. Each award
shall equal the Final Value of the Performance Units times the number of the
Performance Units awarded. The Committee shall review and ratify the award
determinations and shall certify such award determinations in writing. Payment
of awards shall be made as soon as practical after the certification of awards
by the Committee but no later than March 15 of the calendar year following the
calendar year in which the Performance Measurement Cycle ends. Each award shall
be paid in cash after deducting the amount of applicable Federal, State, or
Local withholding taxes of any kind required by law to be withheld by the
Corporation. All awards, whether paid currently or paid under any plan which
defers payment, shall be payable out of the Corporation's general assets. Each
Participant's claim, if any, for the payment of an award, whether made currently
or made under any plan which defers payment, shall not be superior to that of
any general and unsecured creditor of the Corporation. If an error or omission
is discovered in any of the determinations, the Committee shall cause an
appropriate equitable adjustment to be made in order to remedy such error or
omission.
B. Notwithstanding the terms of any award, the Committee in its sole and
absolute discretion, may reduce the amount of the award payable to any
Participant for any reason, including the Committee's judgment that the
Performance Goals have become an inappropriate measure of achievement, a change
in the employment status, position or duties of the Participant, unsatisfactory
performance of the Participant, or the Participant's service for less than the
Performance Measurement Cycle.
C. In accordance with the procedures set forth in the SunTrust Banks, Inc.
Deferred Compensation Plan, a Participant may elect to defer receipt of either
fifty percent (50%) or one hundred percent (100%) of the Final Value of his
Performance Units, if any, for each Performance Measurement Cycle, and any such
election shall be made in accordance with the procedures established under such
deferred compensation plan.
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Section 8. Participation for Less than a Full Performance Measurement Cycle
A. Except as otherwise provided in this Section 8, Performance Units
awarded to a Participant shall be forfeited if the Participant's Employment
terminates during any Performance Measurement Cycle and no payments shall be due
the Participant for any forfeited Performance Units.
B. If a Participant's Employment terminates prior to the end of any
Performance Measurement Cycle on account of his death, the Committee shall waive
the Employment condition and shall authorize the payment of an award on behalf
of such Participant in accordance with Section 10B at the end of such cycle
based on the Proportionate Final Value, if any, of his Performance Units, unless
the Committee in its discretion feels the award should be forfeited.
C. If a Participant's Employment terminates prior to the end of any
Performance Measurement Cycle on account of disability under a long-term
disability plan maintained by the Corporation or a Subsidiary, the Committee
shall waive the Employment condition and shall authorize, as of commencement of
disability benefits to such Participant, the payment of an award to such
Participant at the end of such cycle based on the Proportionate Final Value, if
any, of his Performance Units, unless the Committee in its discretion feels the
award should be forfeited.
D. If a Participant's Employment terminates prior to the end of any
Performance Measurement Cycle on account of his early or normal retirement under
any pension plan maintained by the Corporation or any Subsidiary or terminates
in the last year of any Performance Measurement Cycle on account of a reduction
in force which will result in a severance benefit payment to the Participant
pursuant to the terms of the SunTrust Banks, Inc. Severance Pay Plan or any
successor to such plan, the Committee shall waive the Employment condition and
shall authorize the payment of an award to such Participant at the end of such
cycle based on the Proportionate Final Value, if any, of his Performance Units,
unless the Committee in its discretion feels the award should be forfeited.
Section 9. Premature Satisfaction of Plan Conditions
A. In the event the Effective Date of a Change in Control of the
Corporation is prior to the end of any Performance Measurement Cycle, the
Committee shall waive any and all Plan conditions and authorize the payment of
an award immediately to each Participant based on the Termination Value, if any,
of his Performance Units; provided, however, if an award is then subject to
Section 409A of the Code, the payment of such award pursuant to this Section 9A
shall not be made unless the Change in Control also constitutes a change in the
ownership or effective control of the Corporation or in the ownership of a
substantial portion of the assets of the Corporation within the meaning of
Section 409A(a)(2)(A)(v) of the Code.
B. If a tender or exchange offer is made other than by the Corporation for
shares of the Corporation's stock prior to the end of any Performance
Measurement Cycle, the Committee may waive any and all Plan conditions and
authorize, at any time after the commencement of the tender or exchange offer
and within thirty (30) days following completion of such tender or
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exchange offer, the payment of an award immediately to each Participant based on
the Termination Value, if any, of his Performance Units; provided, however, if
an award is then subject to Section 409A of the Code, the payment of such award
pursuant to this Section 9B shall not be made unless the tender offer also
constitutes a change in the ownership or effective control of the Corporation or
in the ownership of a substantial portion of the assets of the Corporation
within the meaning of Section 409A(a)(2)(A)(v) of the Code.
C. A Performance Measurement Cycle for an award shall terminate upon the
Committee's authorization of the payment of such award during such cycle
pursuant to this Section 9 and no further payments shall be made for such award
for such cycle.
Section 10. Non-Transferability of Rights and Interests
A. A Participant may not alienate, assign, transfer or otherwise encumber
his rights and interests under this Plan and any attempt to do so shall be null
and void.
B. In the event of a Participant's death and subject to the terms of
Section 8(B), the Committee shall authorize payment of any award due a
Participant to the Participant's designated beneficiary as specified or, in the
absence of such written designation or its ineffectiveness, then to his estate.
Any such designation may be revoked and a new beneficiary designated by the
Participant by written instrument delivered to the Committee.
Section 11. Limitation of Rights
Nothing in this Plan shall be construed to give any employee of the
Corporation or a Subsidiary any right to be selected as a Participant or to
receive an award or to be granted Performance Units other than as is provided
herein. Nothing in this Plan or any agreement executed pursuant hereto shall be
construed to limit in any way the right of the Corporation or a Subsidiary to
terminate a Participant's employment at any time, without regard to the effect
of such termination on any rights such Participant would otherwise have under
this Plan, or give any right to a Participant to remain employed by the
Corporation or a Subsidiary in any particular position or at any particular rate
of remuneration.
Executed this 14th day of March, 2005.
SUNTRUST BANKS, INC.
Attest:
______________________________ By: ______________________________
Title: _______________________ Title: ___________________________
(CORPORATE SEAL)
B-9
INSTRUCTIONS TO THE SUNTRUST BANKS, INC. 401(k) PLAN TRUSTEE
The undersigned hereby directs that all shares of SunTrust Banks, Inc. Common
Stock allocated to his/her account under the SunTrust Banks, Inc. 401(k) Plan be
voted at the SunTrust Banks, Inc. Annual Meeting of Shareholders to be held
April 19, 2005, and at any adjournments thereof, in accordance with the
following instructions for the matters described herein. For any other business
that may properly come before the Annual Meeting, all such shares shall be voted
as the Board of Directors may recommend. THIS INSTRUCTION IS SOLICITED BY THE
BOARD OF DIRECTORS. THE PLAN TRUSTEE WILL NOT VOTE SHARES FOR WHICH NO
PARTICIPANT INSTRUCTION IS RECEIVED AND WILL VOTE COMBINED FRACTIONAL SHARES IN
THE MANNER MOST CLOSELY REFLECTING PARTICIPANTS' INSTRUCTIONS.
Please mark
your votes as
indicated in
this example. [ X ]
DIRECTORS RECOMMEND VOTING FOR THE FOLLOWING PROPOSALS:
1. Proposal to elect as Directors: (01) Thomas C. Farnsworth, Jr., (02) Patricia
C. Frist, (03) Blake P. Garrett, Jr., (04) L. Phillip Humann, (05) M.
Douglas Ivester, and (06) Karen Hastie Williams to serve until the Annual
Meeting of Shareholders in 2008, and (07) Phail Wynn, Jr. to serve until
the Annual Meeting of Shareholders in 2007, and (08) Thomas M. Garrott, III
and (09) E. Neville Isdell to serve until the Annual Meeting of
Shareholders in 2006.
FOR all nominees WITHHOLD
listed above (except AUTHORITY to
as indicated to vote for all nominees
the contrary) listed above
[ ] [ ]
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
HIS OR HER NAME ON THE LINE BELOW:
------------------------------------------------------------------------------
2. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as
independent auditors for 2005.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to approve the material terms of the performance goals for the
SunTrust Banks, Inc. Management Incentive Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Proposal to approve the material terms of the performance goals for the
SunTrust Banks, Inc. Performance Unit Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(CONTINUED ON THE OTHER SIDE.)
--------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
[SUNTRUST LOGO]
March 8, 2005
To our employee shareholders:
SunTrust's stronger performance in 2004 reflects the efforts of employees
like you to expand our revenue, enhance our credit quality and manage our
expenses. The acquisition of Memphis-based National Commerce Financial
Corporation, which continues to occupy the time and energy of so many of us, has
been a highlight of the past year, helping us expand into growth markets.
As employees and as shareholders through the SunTrust 401(k) Plan, your
efforts help us reap the rewards of our successes. We count on you to vote your
shares on the important issues to be brought before the Annual Shareholders
Meeting to be held on April 19, 2005.
The "Instructions to the Plan Trustee" card enclosed gives you the
guidelines you need. PLEASE NOTE THAT THE PLAN TRUSTEE CAN VOTE YOUR SHARES ONLY
IF YOU VOTE. CHOOSE THE METHOD MOST CONVENIENT FOR YOU - BY TELEPHONE,
INTERNET OR MAIL.
In addition, we are sending you:
o The 2004 SunTrust Banks, Inc. Annual Report that details our continuing
momentum within a weak economy, and
o The Notice of Annual Meeting and Proxy Statement describing the business
of the 2005 Annual Meeting of Shareholders.
We are grateful for all you do to exemplify the SunTrust Mission "to help
people and institutions prosper."
Sincerely,
[PHILLIP HUMANN LOGO]
L. Phillip Humann
Chairman of the Board and
Chief Executive Officer
The undersigned acknowledges receipt of a copy of the Notice
of Annual Meeting of Shareholders and Proxy Statement dated
March 8, 2005 and a copy of the SunTrust Banks, Inc. 2004
Annual Report.
IMPORTANT: PLEASE DATE AND SIGN THIS INSTRUCTION EXACTLY AS
YOUR NAME OR NAMES APPEAR TO THE LEFT.
Date_________________________________________________ , 2005
Signature___________________________________________________
--------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
DETACH CARD Please detach proxy at perforation before mailing.
OR YOU MAY VOTE BY TELEPHONE OR VIA THE INTERNET.
IF YOU ARE VOTING BY TELEPHONE OR VIA THE INTERNET, PLEASE DO NOT MAIL YOUR
PROXY.
VOTE BY TELEPHONE VOTE BY INTERNET VOTE BY MAIL
Call toll-free using a Go online to Return your proxy in the
touch-tone phone www.votefast.com postage-paid envelope
1-800-542-1160. to cast your vote. provided.
VOTE 24 HOURS A DAY, 7 DAYS A WEEK!
Your telephone or Internet vote must be received by 11:59 p.m. Eastern Time
on April 18, 2005, to be counted in the final tabulation.
VOTE BY TELEPHONE
Have your proxy card available when you call the toll-free number 1-800-542-1160
using a touch-tone phone and follow the simple instructions to record your vote.
VOTE BY INTERNET
Have your proxy card available when you go online to www.votefast.com and follow
the simple instructions to record your vote.
VOTE BY MAIL
Please mark, sign and date your proxy card and return it in the postage-paid
envelope provided or return it to: SunTrust Bank, P.O. Box 4625, Atlanta, GA
30302.
TO CHANGE YOUR VOTE
Any subsequent vote by any means will change your prior vote. For example, if
you voted by telephone, a subsequent Internet vote will change your vote. The
last vote received before 11:59 p.m. Eastern Time, April 18, 2005, will be the
one counted. You may also revoke your proxy by voting in person at the Annual
Meeting.
INSTRUCTIONS TO THE NATIONAL COMMERCE FINANCIAL CORPORATION
INVESTMENT PLAN TRUSTEE
The undersigned hereby directs that all shares of SunTrust Banks, Inc. Common
Stock allocated to his/her account under the National Commerce Financial
Corporation Investment Plan be voted at the SunTrust Banks, Inc. Annual Meeting
of Shareholders to be held April 19, 2005, and at any adjournments thereof, in
accordance with the following instructions for the matters described herein. For
any other business that may properly come before the Annual Meeting, all such
shares shall be voted as the Board of Directors may recommend. THIS INSTRUCTION
IS SOLICITED BY THE BOARD OF DIRECTORS. THE PLAN TRUSTEE WILL VOTE WHOLE SHARES
AND A PROPORTIONATE NUMBER OF COMBINED FRACTIONAL SHARES IN ACCORDANCE WITH
INSTRUCTIONS FROM PARTICIPANTS. THE PLAN TRUSTEE VOTES REMAINING SHARES FOR
WHICH NO PARTICIPANT INSTRUCTIONS ARE RECEIVED.
Please mark
your votes as
indicated in
this example. [ X ]
DIRECTORS RECOMMEND VOTING FOR THE FOLLOWING PROPOSALS:
1. Proposal to elect as Directors: (01) Thomas C. Farnsworth, Jr., (02) Patricia
C. Frist, (03) Blake P. Garrett, Jr., (04) L. Phillip Humann, (05) M.
Douglas Ivester, and (06) Karen Hastie Williams to serve until the Annual
Meeting of Shareholders in 2008, and (07) Phail Wynn, Jr. to serve until
the Annual Meeting of Shareholders in 2007, and (08) Thomas M. Garrott, III
and (09) E. Neville Isdell to serve until the Annual Meeting of
Shareholders in 2006.
FOR all nominees WITHHOLD
listed above (except AUTHORITY to
as indicated to vote for all nominees
the contrary) listed above
[ ] [ ]
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
HIS OR HER NAME ON THE LINE BELOW:
--------------------------------------------------------------------------------
2. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as
independent auditors for 2005.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to approve the material terms of the performance goals for the
SunTrust Banks, Inc. Management Incentive Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Proposal to approve the material terms of the performance goals for the
SunTrust Banks, Inc. Performance Unit Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(CONTINUED ON THE OTHER SIDE.)
--------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
[SUNTRUST LOGO]
March 8, 2005
To our employee shareholders:
SunTrust's stronger performance in 2004 reflects the efforts of employees
like you to expand our revenue, enhance our credit quality and manage our
expenses. The acquisition of Memphis-based National Commerce Financial
Corporation, which continues to occupy the time and energy of so many of us, has
been a highlight of the past year, helping us expand into growth markets.
As employees and as shareholders through the NCF Investment Plan, your
efforts help us reap the rewards of our successes. We count on you to vote your
shares on the important issues to be brought before the Annual Shareholders
Meeting to be held on April 19, 2005.
The "Instructions to the Plan Trustee" card enclosed gives you the
guidelines you need. YOU MAY INSTRUCT THE PLAN TRUSTEE HOW TO VOTE YOUR SHARES.
CHOOSE THE METHOD MOST CONVENIENT FOR YOU - BY TELEPHONE, INTERNET OR MAIL.
In addition, we are sending you:
o The 2004 SunTrust Banks, Inc. Annual Report that details our continuing
momentum within a weak economy, and
o The Notice of Annual Meeting and Proxy Statement describing the business
of the 2005 Annual Meeting of Shareholders.
We are grateful for all you do to exemplify the SunTrust Mission "to help people
and institutions prosper."
Sincerely,
[PHILLIP HUMANN LOGO]
L. Phillip Humann
Chairman of the Board and
Chief Executive Officer
The undersigned acknowledges receipt of a copy of the Notice
of Annual Meeting of Shareholders and Proxy Statement dated
March 8, 2005 and a copy of the SunTrust Banks, Inc. 2004
Annual Report.
IMPORTANT: PLEASE DATE AND SIGN THIS INSTRUCTION EXACTLY AS
YOUR NAME OR NAMES APPEAR TO THE LEFT.
Date_________________________________________________ , 2005
Signature___________________________________________________
--------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
DETACH CARD Please detach proxy at perforation before mailing.
OR YOU MAY VOTE BY TELEPHONE OR VIA THE INTERNET.
IF YOU ARE VOTING BY TELEPHONE OR VIA THE INTERNET, PLEASE DO NOT MAIL YOUR
PROXY.
VOTE BY TELEPHONE VOTE BY INTERNET VOTE BY MAIL
Call TOLL-FREE using a Go online to Return your proxy in the
touch-tone phone WWW.VOTEFAST.COM POSTAGE-PAID envelope
1-800-542-1160. to cast your vote. provided.
VOTE 24 HOURS A DAY, 7 DAYS A WEEK!
Your telephone or Internet vote must be received by 11:59 p.m. Eastern Time
on April 18, 2005, to be counted in the final tabulation.
VOTE BY TELEPHONE
Have your proxy card available when you call the toll-free number 1-800-542-1160
using a touch-tone phone and follow the simple instructions to record your vote.
VOTE BY INTERNET
Have your proxy card available when you go online to WWW.VOTEFAST.COM and follow
the simple instructions to record your vote.
VOTE BY MAIL
Please mark, sign and date your proxy card and return it in the postage-paid
envelope provided or return it to: SunTrust Bank, P.O. Box 4625, Atlanta, GA
30302.
TO CHANGE YOUR VOTE
Any subsequent vote by any means will change your prior vote. For example, if
you voted by telephone, a sub- sequent Internet vote will change your vote. The
last vote received before 11:59 p.m. Eastern Time, April 18, 2005, will be the
one counted. You may also revoke your proxy by voting in person at the Annual
Meeting.
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 19,2005.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned hereby appoints Mark A. Chancy and Raymond D.Fortin, and each of
them, proxies with full power of substitution, to vote for the undersigned all
shares of the Common Stock of SunTrust Banks, Inc. that the undersigned would be
entitled to vote if personally present at the Annual Meeting of Shareholders to
be held on Tuesday, April 19, 2005, at 9:30 a.m. local time, in Suite 105 on the
1st floor of SunTrust Plaza Garden Offices, 303 Peachtree Center Avenue,
Atlanta, Georgia, and at any adjournments thereof, upon the matters described on
the reverse hereof and in the accompanying Proxy Statement dated March 8, 2005,
and upon any other business that may properly come before such Annual Meeting or
any adjournments thereof.
Pursuant to the Proxy Statement, said proxies are directed to vote as indicated
on the reverse hereof, and otherwise as the Board of Directors may recommend
with respect to any other business that may properly come before the meeting or
at any adjournment thereof. By the execution of this Proxy, I acknowledge
receipt of a copy of the Notice of Annual Meeting of Shareholders and Proxy
Statement dated March 8, 2005 and a copy of the SunTrust Banks, Inc. 2004 Annual
Report.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
--------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO DIRECTION IS INDICATED, WILL BE
VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS. DIRECTORS RECOMMEND VOTING FOR
THE FOLLOWING PROPOSALS:
1. Proposal to elect as Directors: (01) Thomas C. Farnsworth, Jr., (02)
Patricia C. Frist, (03) Blake P. Garrett, Jr., (04) L. Phillip Humann, (05)
M. Douglas Ivester, and (06) Karen Hastie Williams to serve until the
Annual Meeting of Shareholders in 2008, and (07) Phail Wynn, Jr. to serve
until the Annual Meeting of Shareholders in 2007, and (08) Thomas
M. Garrott, III and (09) E. Neville Isdell to serve until the Annual Meeting
of Shareholders in 2006.
Please mark
your votes as
indicated in
this example. [ X ]
FOR all nominees WITHHOLD
listed above (except AUTHORITY to
as indicated to vote for all nominees
the contrary) listed above
[ ] [ ]
2. Proposal to ratify the appointment of PricewaterhouseCoopers
LLP as independent auditors for 2005.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to approve the material terms of the performance
goals for the SunTrust Banks, Inc. Management Incentive Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Proposal to approve the material terms of the performance
goals for the SunTrust Banks, Inc. Performance Unit Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
INSTRUCTIONS:TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE,WRITE HIS OR HER NAME ON THE LINE BELOW:
--------------------------------------------------------------------------------
-----------------------------------------------------------------
Signature(s) of Shareholder
Date______________________________, 2005
IMPORTANT: Please date and sign this Proxy exactly as your name
or names appear hereon; if shares are held jointly, all joint
owners must sign. An executor, administrator, trustee, guardian,
or other person signing in a representative capacity must give
his or her full title. A corporation must sign in full corporate
name by its president or other authorized officer. A partnership
must sign in partnership name by an authorized person.
--------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
DETACH CARD Please detach proxy at perforation before mailing.
OR YOU MAY VOTE BY TELEPHONE OR VIA THE INTERNET.
IF YOU ARE VOTING BY TELEPHONE OR VIA THE INTERNET,PLEASE DO NOT MAIL YOUR
PROXY.
VOTE BY TELEPHONE VOTE BY INTERNET VOTE BY MAIL
Call TOLL-FREE using a Go online to Return your proxy in the
touch-tone phone WWW.VOTEFAST.COM POSTAGE-PAID envelope
1-800-542-1160. to cast your vote. provided.
VOTE 24 HOURS A DAY,7 DAYS A WEEK!
Your telephone or Internet vote must be received by 11:59 p.m. Eastern Time
on April 18, 2005, to be counted in the final tabulation.
VOTE BY TELEPHONE
Have your proxy card available when you call the toll-free number 1-800-542-1160
using a touch-tone phone and follow the simple instructions to record your vote.
VOTE BY INTERNET
Have your proxy card available when you go online to WWW.VOTEFAST.COM and follow
the simple instructions to record your vote.
VOTE BY MAIL
Please mark, sign and date your proxy card and return it in the postage-paid
envelope provided or return it to: SunTrust Bank, P.O. Box 4625, Atlanta, GA
30302.
TO CHANGE YOUR VOTE
Any subsequent vote by any means will change your prior vote. For example, if
you voted by telephone, a subsequent Internet vote will change your vote. The
last vote received before 11:59 p.m. Eastern Time, April 18, 2005, will be the
one counted. You may also revoke your proxy by voting in person at the Annual
Meeting.
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 19,2005.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned hereby appoints Mark A. Chancy and Raymond D. Fortin, and each
of them, proxies with full power of substitution, to vote for the undersigned
all shares of the Common Stock of SunTrust Banks, Inc. that the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Shareholders to be held on Tuesday, April 19, 2005, at 9:30 a.m. local time, in
Suite 105 on the 1st floor of SunTrust Plaza Garden Offices, 303 Peachtree
Center Avenue, Atlanta, Georgia, and at any adjournments thereof, upon the
matters described on the reverse hereof and in the accompanying Proxy Statement
dated March 8, 2005, and upon any other business that may properly come before
such Annual Meeting or any adjournments thereof.
Pursuant to the Proxy Statement, said proxies are directed to vote as indicated
on the reverse hereof, and otherwise as the Board of Directors may recommend
with respect to any other business that may properly come before the meeting or
at any adjournment thereof. By the execution of this Proxy, I acknowledge
receipt of a copy of the Notice of Annual Meeting of Shareholders and Proxy
Statement dated March 8, 2005 and a copy of the SunTrust Banks, Inc. 2004 Annual
Report.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
--------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
THIS PROXY WILL BE VOTED AS DIRECTED, OR,IF NO DIRECTION IS INDICATED, WILL BE
VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS. DIRECTORS RECOMMEND VOTING FOR
THE FOLLOWING PROPOSALS:
1. Proposal to elect as Directors: (01) Thomas C. Farnsworth, Jr.,
(02) Patricia C. Frist, (03) Blake P. Garrett, Jr., (04) L. Phillip Humann,
(05) M. Douglas Ivester, and (06) Karen Hastie Williams to serve until the
Annual Meeting of Shareholders in 2008, and (07) Phail Wynn, Jr. to serve
until the Annual Meeting of Shareholders in 2007, and (08) Thomas M.
Garrott, III and (09) E. Neville Isdell to serve until the Annual Meeting
of Shareholders in 2006.
Please mark
your votes as
indicated in
this example. [X]
FOR all nominees WITHHOLD
listed above (except AUTHORITY to
as indicated to vote for all nominees
the contrary) listed above
[ ] [ ]
2. Proposal to ratify the appointment of PricewaterhouseCoopers
LLP as independent auditors for 2005.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to approve the material terms of the performance
goals for the SunTrust Banks, Inc. Management Incentive Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Proposal to approve the material terms of the performance
goals for the SunTrust Banks, Inc. Performance Unit Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
INSTRUCTIONS:TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE,WRITE HIS OR HER NAME ON THE LINE BELOW:
--------------------------------------------------------------------------------
------------------------------------------------------------
Signature(s) of Shareholder
Date__________________________________________________, 2005
IMPORTANT: Please date and sign this Proxy exactly as your
name or names appear hereon; if shares are held jointly, all
joint owners must sign. An executor, administrator, trustee,
guardian, or other person signing in a representative
capacity must give his or her full title. A corporation
must sign in full corporate name by its president or
other authorized officer. A partnership must sign in
partnership name by an authorized person.
--------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
DETACH CARD Please detach proxy at perforation before mailing.
VOTING
Please mark, sign and date your proxy card and return it in the envelope
provided. If you do not have the return envelope, please return your proxy card
either by regular mail to SunTrust Bank Retirement Services, P.O. Box 4655, 11th
Floor Tower, Atlanta, GA 30302-4655, or by interoffice mail to SunTrust Bank
Retirement Services, Mail Code GA-ATL-0210.
TO CHANGE YOUR VOTE
If you would like to change your prior vote, you may request a new proxy card by
calling 404-658-4666. Any subsequent vote will change your prior vote. The last
vote received before 11:59 p.m. Eastern Time, April 18, 2005, will be the one
counted. You may also revoke your proxy by voting in person at the Annual
Meeting.