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THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THIS
PROPOSAL.
 TSYS’
compensation program includes long-term performance awards under
the Synovus Financial Corp. 2000 Long-Term Incentive Plan (the
“Synovus 2000 Plan”). The purpose of the Synovus 2000 Plan is
to attract, retain, motivate and reward employees who make a
significant contribution to Synovus and its subsidiaries’ (including
TSYS) long-term success, and to enable such employees to acquire
and maintain an equity interest in Synovus. Subject to approval
by TSYS’ shareholders, compensation paid to TSYS’ employees
pursuant to the Synovus 2000 Plan is intended, to the extent
reasonable, to qualify for tax deductibility under Section 162(m)
of the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder, as may be amended from time to time
(“Section 162(m)”).
Eligibility
and Participation. Any employee of Synovus or its subsidiaries
(including TSYS), excluding members of the Compensation Committee
and any director who is not also an employee of Synovus or its
subsidiaries, is eligible to be selected to participate in the
Synovus 2000 Plan. Approximately 3,134 employees currently participate
in the Synovus 2000 Plan. The Committee, as described below,
has discretion to select participants from among eligible employees
from year to year.
Shares
Subject to the Plan. The aggregate number of shares of Synovus
common stock which may be granted to participants pursuant to
awards granted under the Synovus 2000 Plan may not exceed twenty
million (20,000,000).
Awards
Under the Synovus 2000 Plan. Pursuant to the Synovus 2000
Plan, Synovus may grant long-term performance awards to participants
in the form of stock options, stock appreciation rights (“SARs”),
restricted stock or performance awards.
Stock
Options. The Committee may grant options under the Synovus
2000 Plan in the form of qualified incentive stock options,
nonqualified stock options or a combination thereof. Options
may be granted either alone or in tandem with other awards granted
under the Synovus 2000 Plan. Subject to the limits described
herein, the Committee shall have discretion in determining the
number of shares subject to options granted to each participant.
The option
price of qualified incentive stock options may be equal to,
or more or less than, one hundred percent (100%) of the fair
market value of a share of Synovus common stock on the date
the option is granted. The option price of nonqualified stock
options shall be at least equal to one hundred percent (100%)
of the fair market value of a share of Synovus common stock
on the date the option is granted. Options shall expire at such
times as the Committee determines at the time of grant; provided,
however, that no option shall be exercisable later than the
tenth anniversary of its grant.
Options
granted under the Synovus 2000 Plan shall be exercisable at
such times and subject to such restrictions and conditions as
the Committee shall approve; provided that no option may be
exercisable prior to six months following its grant. The option
exercise price shall be payable in cash, by check or by such
other instrument as deemed acceptable by the Committee. Payment
of the exercise price and any withholding tax due at exercise
may also be made through any program approved by the Committee
(including a broker-dealer cashless exercise program).
Options
may only be transferred under the laws of descent and distribution
and shall be exercisable only by the participant during his
lifetime unless otherwise specified by the Committee at or after
grant. The participant’s rights in the event of termination
of employment shall be specified by the Committee at or after
grant.
Subject to
the terms of the Synovus 2000 Plan, the Committee may grant
option price adjustment rights in conjunction with all or part
of any option granted under the Synovus 2000 Plan, either at
or after the time of grant of the option. Such adjustment rights
are exercisable only at the same time and to the same extent
as the corresponding option and shall terminate upon the termination
or exercise of such option. Upon exercise, the participant shall
be entitled to have applied as a credit against the exercise
price of the related option an amount equal to the total number
of shares subject to the adjustment right (or a portion thereof
as designated by the participant) multiplied by a fixed percentage
of the fair market value of a share of Synovus common stock
on a date designated by the Committee.
Stock
Appreciation Rights. SARs granted under the Synovus 2000
Plan may be granted alone or in conjunction with all or part
of any option granted under the Synovus 2000 Plan. Subject to
the terms of the Synovus 2000 Plan, the Committee shall have
discretion to determine the terms and conditions of any SAR
granted under the Synovus 2000 Plan. With respect to an SAR
granted in conjunction with an option, the grant price shall
be equal to the option price of the related option, and such
SAR shall terminate upon the termination or exercise of the
related option. No SAR granted under the Synovus 2000 Plan may
be exercisable prior to six months following its grant, except
in the case of death (other than by suicide) or disability of
the participant. The term of any SAR shall be determined by
the Committee, provided that such term may not exceed ten years.
SARs granted
alone may be exercised upon the terms and conditions as are
imposed by the Committee. An SAR granted in conjunction with
an option may be exercised only with respect to the shares of
common stock of Synovus for which the related option is exercisable.
SARs granted in connection with an incentive stock option shall
expire no later than the expiration of such incentive stock
option; the value of the payout for such SARs may be no more
than one hundred percent (100%) of the difference between the
incentive stock option option price and the fair market value
of the shares subject to such incentive stock option at exercise
and may be exercised only when the fair market value of the
shares subject to the incentive stock option exceeds the incentive
stock option option price.
Upon exercise,
a participant will receive the difference between the fair market
value of a share of common stock on the date of exercise and
the grant price multiplied by the number of shares with respect
to which the SAR is exercised. Payment due upon exercise may
be in cash, in shares having a fair market value of the SAR
being exercised, or in a combination of cash and shares, as
determined by the Committee. The Committee may impose such restrictions
on the exercise of SARs as may be required to satisfy the requirements
of Section 16 of the Securities Exchange Act. SARs may only
be transferred under the laws of descent and distribution and
shall be exercisable only by the participant during his lifetime.
Restricted
Stock. Restricted stock may be granted in such amounts and
subject to such terms and conditions as determined by the Committee.
The Committee shall impose such conditions and/or restrictions
on any shares of restricted stock as it deems advisable, including,
but not limited to, a graduated vesting schedule and/or conditioning
the grant of restricted stock on the attainment of performance
goals. Each participant who is awarded restricted stock shall
be issued a stock certificate in respect of such restricted
stock, which shall be held in escrow by an escrow agent designated
by the Committee, as provided under the Synovus 2000 Plan.
During the
six month period following the date of grant of restricted stock,
or such longer period as may be determined by the Committee,
restricted stock may not be sold, transferred, pledged or assigned.
Except as limited by the Synovus 2000 Plan, the Committee may
provide for the lapse of such restrictions or may accelerate
or waive such restrictions based on performance or such other
factors as determined by the Committee.
Participants
holding restricted stock shall have all of the rights of stockholders
of Synovus, including the right to dividends, unless the Committee
determines otherwise at the time of grant. Dividends or distributions
credited during the restriction period and paid in shares shall
be subject to the same restrictions as the shares of restricted
stock with respect to which they were paid. All rights with
respect to restricted stock shall be available only during a
participant’s lifetime, and each restricted stock award agreement
shall specify whether the participant has a right to receive
unvested restricted shares in the event of termination of employment.
Performance
Awards. Shares of stock and/or a payment in cash may be
awarded under the Synovus 2000 Plan in the amounts and subject
to the terms and conditions as determined by the Committee.
The Committee may set performance objectives which, depending
on the extent to which they are met, will determine the value
of performance awards that will be paid out to participants.
Participants shall receive payment of performance awards earned,
in cash and/or shares of common stock, if the specified performance
objectives have been obtained. The Committee may also establish
a minimum level of performance below which no performance award
may be payable. In the event a participant’s employment is terminated
by reason of death (other than by suicide), disability or retirement
during a performance period, the participant shall receive a
prorated payout of the performance award at the time and in
the amount determined by the Committee.
In the event
employment is terminated for any other reason, the participant’s
rights to any performance award shall be forfeited. Performance
awards may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated, other than by will or by the laws
of descent and distribution. A participant’s rights under the
Synovus 2000 Plan shall be exercisable only by the participant
during his lifetime.
Objective
Performance Measures. Performance objectives applicable
to awards granted under the Synovus 2000 Plan, as determined
by the Committee, shall be chosen from among the following alternatives,
unless and until the Committee proposes a change in such measures
for shareholder vote or applicable tax and/or securities laws
change to permit Committee discretion to alter such performance
measures without obtaining shareholder approval: (i) total shareholder
return; (ii) return on equity; (iii) earnings per share growth;
and (iv) return on assets.
Maximum
Amount Payable to Any Participant. The maximum number of
shares which may be awarded in any calendar year to any one
participant is two million (2,000,000). The maximum cash amount
which may be awarded in any calendar year to any participant
is $1 million.
Adjustments
in Connection With Certain Events. The Synovus 2000 Plan
provides that the Committee shall make a substitution or adjustment
in the number of shares reserved for issuance under the Synovus
2000 Plan in the number and option price of shares subject to
outstanding options and in the number of shares subject to SARs,
restricted stock or performance awards, as it deems appropriate
and equitable in connection with a change in corporate structure
affecting Synovus’ stock.
Duration
of the Synovus 2000 Plan. The Synovus 2000 Plan shall remain
in effect from the date it is adopted by Synovus’ Board until
the date terminated by the Committee or Synovus’ Board of Directors;
provided, however, that no award shall be granted on or after
the tenth anniversary of the Synovus 2000 Plan’s effective date;
provided further, however, that no future awards will be granted
to TSYS’ “covered employees,” as defined below, unless shareholder
approval of the Synovus 2000 Plan is obtained.
Administration.
The Synovus 2000 Plan will be administered by a committee of
the Board of Directors of Synovus (the “Committee”) which will
be comprised of no fewer than two members who must be “outside
directors” within the meaning of Section 162(m). At least two
of the Committee’s members must be directors of both Synovus
and TSYS. Initially, the administering committee shall be the
Compensation Committee of Synovus’ Board.
The Committee
shall have authority to: (i) determine individuals to whom awards
will be granted; (ii) determine the terms and conditions upon
which awards shall be granted, including any restriction based
on performance or other factors; (iii) determine whether and
to what extent awards shall be deferred; and (iv) make all other
determinations, perform all other acts, exercise all other powers,
and establish any other procedures it deems necessary, appropriate
or advisable in administering the Synovus 2000 Plan and maintaining
compliance with applicable law. In accordance with its responsibility
to evaluate the remuneration of TSYS’ senior management, TSYS’
Compensation Committee reviews and approves all awards made
to TSYS’ employees.
Amendment
of the Synovus 2000 Plan. Synovus’ Board of Directors may
amend, alter or discontinue the Synovus 2000 Plan at any time
except that no such amendment, suspension or discontinuation
of the Synovus 2000 Plan may affect an existing award under
the Synovus 2000 Plan without the affected participant’s consent.
In addition, no amendment, alteration or discontinuation shall
be made, without the approval of shareholders, which would:
(i) increase the total number of shares reserved under the Synovus
2000 Plan; (ii) decrease the option price of any option to less
than one hundred percent (100%) of the fair market value of
a share on the date of grant; (iii) change the participants
or class of participants eligible to participate in the Synovus
2000 Plan; or (iv) materially increase the benefits accruing
to participants. The Synovus 2000 Plan, which was originally
named the Synovus Financial Corp. 1996 Long-Term Incentive Plan,
was adopted by Synovus’ Board of Directors in 1996. On February
1, 2000, Synovus’ Board of Directors amended the Synovus 1996
Plan to add additional authorized shares and to rename it the
Synovus 2000 Plan.
Change
in Control. In the event of a change in control of Synovus,
as defined in the Synovus 2000 Plan, the vesting of any outstanding
awards granted under the Synovus 2000 Plan shall be accelerated
and all such awards shall be fully exercisable.
Federal
Income Tax Consequences of the Synovus 2000 Plan. The income
tax consequences under current federal tax law to participants
and to Synovus and its subsidiaries of incentive compensation
awarded under the Synovus 2000 Plan is generally as described
below. Local and state tax authorities, however, may also tax
incentive compensation awarded under the Synovus 2000 Plan.
Consequences
to Participants. Generally, for federal income tax purposes,
a participant will realize ordinary income and will incur tax
liability upon receipt of the payment of an award under the
Synovus 2000 Plan in an amount equal to such payment, if in
cash, or the fair market value of any unrestricted shares of
stock received. The tax consequences to participants of the
individual types of awards which may be granted under the Synovus
2000 Plan are described below.
Qualified
Incentive Stock Options. With respect to options which
qualify as incentive stock options, a participant will not
recognize ordinary income for federal income tax purposes
at the time options are granted or exercised. If the participant
disposes of shares acquired by exercise of an incentive stock
option before the expiration of two years from the date the
options are granted, or within one year after the issuance
of shares upon exercise of the incentive stock option, the
participant will recognize in the year of disposition: (a)
ordinary income, to the extent that the lesser of either (1)
the fair market value of the shares on the date of option
exercise or (2) the amount realized on disposition exceeds
the option price; and (b) capital gain (or loss), to the extent
that the amount realized on disposition differs from the fair
market value of the shares on the date of option exercise.
If the shares are sold after expiration of these holding periods,
the participant will realize capital gain or loss (assuming
the shares are held as capital assets) equal to the difference
between the amount realized on disposition and the option
price.
Nonqualified
Stock Options. With respect to options which do not
qualify as incentive stock options, the participant will recognize
no income upon grant of the option and, upon exercise, will
recognize ordinary income to the extent of the difference
between the amount paid by the participant for the shares
and the fair market value of the shares on the date of option
exercise. Upon a subsequent disposition of the shares received
under the option, the partici-pant will recognize capital
gain or loss, as the case may be, to the extent of the difference
between the fair market value of the shares at the time of
exercise and the amount realized on the disposition (assuming
the shares are held as capital assets).
Stock Appreciation
Rights. Ordinary income will be recognized by a participant
upon the exercise of an SAR, in an amount equal to the cash
received or the fair market value of the shares received on
the exercise date.
Restricted
Stock. Participants holding restricted stock will
recognize ordinary income in the year in which the restrictions
lapse, in the amount of the fair market value of the shares
as of the date of lapse of the restrictions, unless the participant
elects to include the fair market value of the shares as of
the date of grant in ordinary income at that time.
Performance
Awards. Ordinary income will be recognized by a participant
in the year in which it is received in an amount equal to
the amount of the performance award on the date of receipt.
Consequences
to Synovus and Its Subsidiaries. In general, Synovus and
its subsidiaries will receive an income tax deduction at the
same time and in the same amount as the amount which is taxable
to the employee as compensation, except as provided below. To
the extent a participant realizes capital gains, as described
above, Synovus and its subsidiaries will not be entitled to
any deduction for federal income tax purposes.
Under Section
162(m), compensation paid by a public company in excess of $1
million for any taxable year to “covered employees” generally
is not deductible by the company or its affiliates for federal
income tax purposes unless it is related to the performance
of the company, is paid pursuant to a plan approved by shareholders
of the company and meets certain other requirements.
Generally,
“covered employees” is defined under Section 162(m) as any individual
who is the chief executive officer or is among the four other
highest paid executive officers named in the summary compensation
table in the company’s proxy statement, other than the chief
executive officer, as of the last day of the taxable year. It
is anticipated that future awards will qualify as performance
based for purposes of Section 162(m), except for options subject
to adjustment rights and restricted stock not subject to preestablished
performance goals. Synovus does not presently anticipate making
any such awards. However, Synovus and TSYS reserve the ability
to make awards which do not qualify for full deductibility under
Section 162(m) if the Committee determines that the benefits
of so doing outweigh full deductibility.
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