|
 The
Compensation Committee (“Committee”) of TSYS is responsible
for evaluating the compensation of senior management of TSYS
and its subsidiaries and TSYS Board members, as well as the
compensation and other benefit plans in which officers, employees
and directors of TSYS and its subsidiaries participate. The
Committee has designed its compensation program to attract and
retain highly motivated and well-trained executives in order
to create superior shareholder value for TSYS shareholders.
Elements
of Executive Compensation. The four elements of executive
compensation at TSYS are:
 Base
Salary |
Annual
Bonus |
| Long-Term
Incentives |
Other
Benefits |
The
Committee believes that a substantial portion (though not a
majority) of an executive’s compensation should be at risk based
upon performance, both in the short-term (through the annual
bonus and the Synovus/TSYS Profit Sharing Plan and the Synovus/TSYS
401(k) Savings Plan) and long-term (through long-term incentives
such as stock options and restricted stock awards). The remainder
of each executive’s compensation is primarily based upon the
competitive practices of companies similar in size to TSYS (“similar
companies”), with certain adjustments as described below. The
companies used for comparison under this approach are not the
same companies included in the peer group index appearing in
the Stock Performance Graph above. Each element of executive
compensation is discussed in detail below.
Base Salary. Base salary is an executive’s annual rate of
pay without regard to any other elements of compensation. The
Committee believes the base salary of TSYS executives should
reflect the outstanding stock performance of TSYS over the past
10 years, which resulted in significant value for TSYS shareholders.
The Committee had difficulty, however, in obtaining appropriate
market data for determining the compensation of TSYS executives.
Positions for which market data could be obtained were targeted
at the median level after the Committee added a premium to size-based
market data to reflect pay at companies with similar strong
stock performance. Positions for which market data could not
be obtained were determined based upon internal equity considerations.
Based solely upon these comparisons, the Committee increased
Mr. Ussery’s base salary in 1999. The Committee also increased
the base salaries of TSYS’ other executive officers in 1999
based solely upon these comparisons and internal equity considerations,
as described above.
Annual
Bonus. The Committee may award annual bonuses to TSYS executives
under two different plans, the Synovus Executive Bonus Plan
(which was approved by TSYS shareholders) and the Synovus Incentive
Bonus Plan. The Committee selects the participants in each Plan
from year to year. For 1999, the Committee selected Mr. Ussery
to participate in the Executive Bonus Plan while Messrs. Tomlinson,
Pruett, Woods and Lipham were selected to participate in the
Incentive Bonus Plan. Under the terms of the Plans, bonus amounts
are paid as a percentage of base pay based on the achievement
of performance goals that are established each year by the Committee.
The performance goals may be chosen by the Committee from among
the following measurements:
The
Committee established a payout matrix based on attainment of
net income goals during 1999 for Mr. Ussery and TSYS’ other
executive officers. The maximum percentage payouts under the
Plans for 1999 were 65% for Mr. Ussery and 60% for Messrs. Tomlinson,
Pruett, Woods and Lipham. TSYS’ financial performance and each
executive’s individual performance can reduce the bonus awards
determined by the attainment of the goals, although this was
not the case for any of TSYS’ executive officers. Because the
maximum net income target for 1999 under the Plans was exceeded
and the overall financial results of TSYS were favorable, Mr.
Ussery and TSYS’ other executive officers were awarded the maximum
bonus amount for which each executive was eligible under the
Plans’ payout matrix.
Long-Term
Incentives. The Committee has awarded both stock options
and restricted stock awards to executives. Because of the relatively
low number of publicly traded shares of TSYS, the Committee
has awarded Synovus stock options and restricted stock awards
to TSYS executives, linking their interests to those of Synovus
and TSYS shareholders. Restricted stock awards are designed
to focus executives on the long-term performance of Synovus
and TSYS. Stock options provide executives with the opportunity
to buy and maintain an equity interest in Synovus and TSYS and
to share in their capital appreciation. The Committee has established
a payout matrix for long-term grants that uses total shareholder
return measured by Synovus’ performance (stock price increases
plus dividends) and how Synovus’ total shareholder return compares
to the return of a peer group of companies. For the long-term
incentive awards made in 1999, total shareholder return and
peer comparisons were measured during the 1996 to 1998, performance
period. Under the payout matrix, the Committee awarded Messrs.
Ussery, Tomlinson, Pruett, Woods and Lipham stock options of
90,170, 64,937, 24,189, 24,189 and 20,198, respectively.
Benefits.
Executives receive other benefits that serve a different purpose
than the elements of compensation discussed above. In general,
these benefits either provide retirement income or protection
against catastrophic events such as illness, disability and
death. Executives generally receive the same benefits offered
to the employee population, with the only exceptions designed
to promote tax efficiency or to replace other benefits lost
due to regulatory limits. The Synovus/TSYS Profit Sharing Plan
and the Synovus/TSYS 401(k) Savings Plan, including an excess
benefit plan which replaces benefits lost due to regulatory
limits (collectively the “Plan”), is the largest component of
TSYS’ benefits package for executives. The Plan is directly
related to the performance of TSYS because the contributions
to the Plan, up to a maximum of 14% of an executive’s compensation,
depend upon TSYS’ profitability. For 1999, Mr. Ussery and TSYS’
other executive officers received a Plan contribution of 12.05%
of their compensation, based upon the Plan’s profitability formula.
The remaining benefits provided to executives are primarily
based upon the competitive practices of similar companies.
The
Internal Revenue Code limits the deductibility for federal income
tax purposes of annual compensation paid by a publicly held
corporation to its chief executive officer and four other highest
paid executives for amounts in excess of $1 million, unless
certain conditions are met. Because the Committee seeks to maximize
shareholder value, the Committee has taken steps to ensure that
any compensation paid to its executives in excess of $1 million
is deductible. For 1999, Mr. Ussery would have been affected
by this provision, but for the steps taken by the Committee.
The Committee reserves the ability to make awards which do not
qualify for full deductibility under the Internal Revenue Code,
however, if the Committee determines that the benefits of doing
so outweigh full deductibility.
The Committee believes that its executive compensation program
serves the best interests of the shareholders of TSYS. As described
above, a substantial portion of the compensation of TSYS’ executives
is directly related to TSYS’ performance. The Committee believes
that the performance of TSYS to date validates its compensation
philosophy.
Mason H. Lampton
John P. Illges, III
|
