TOTAL SYSTEM SERVICES, INC.
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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Filed by the
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Filed by a Party other than
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Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to Section 240.14a-12 |
Total System Services, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing. |
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Date Filed: |
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Philip W. Tomlinson
Chairman of the Board and
Chief Executive Officer
March 20, 2006
Dear Shareholder:
You are cordially invited to attend our Annual Meeting of
Shareholders at 10:00 a.m. on Thursday, April 20,
2006, at the TSYS Riverfront Campus Auditorium, 1600 First
Avenue, Columbus, Georgia. Enclosed with this Proxy Statement
are your proxy card and the 2005 Annual Report.
We hope that you will be able to be with us and let us give you
a review of 2005. If you are unable to attend the meeting, you
can listen to it live and view the slide presentation over the
Internet. You can access the meeting by going to our website at
www.tsys.com. Additionally, we will maintain copies of the
slides and audio of the presentation to the 2006 Annual Meeting
on the website for reference after the meeting.
Whether you own a few or many shares of stock and whether or not
you plan to attend in person, it is important that your shares
be voted on matters that come before the meeting. To make sure
your shares are represented, we urge you to vote promptly.
Thank you for helping us make 2005 a good year. We look forward
to your continued support in 2006 and another good year.
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Total System Services, Inc. |
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Post Office Box 2506 |
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Columbus, Georgia 31902-2506 |
TOTAL SYSTEM SERVICES,
INC.®
NOTICE OF THE 2006 ANNUAL MEETING OF SHAREHOLDERS
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TIME |
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10:00 a.m. |
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Thursday, April 20, 2006 |
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PLACE |
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TSYS Riverfront Campus Auditorium |
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1600 First Avenue |
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Columbus, Georgia 31901 |
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ITEMS OF BUSINESS |
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(1) To elect six directors to serve until the 2009 Annual
Meeting of Shareholders. |
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(2) To fix the number of TSYS directors at 19. |
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(3) To approve the Synovus Financial Corp. Executive Cash
Bonus Plan (TSYS is an 81% owned
subsidiary of
Synovus). |
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(4) To ratify the appointment of KPMG LLP as TSYS
independent auditor for the year 2006. |
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(5) To transact such other business as may properly come
before the meeting and any adjournment
thereof. |
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WHO MAY VOTE |
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You can vote if you were a shareholder of record on
February 14, 2006. |
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ANNUAL REPORT |
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A copy of the Annual Report is enclosed. |
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PROXY VOTING |
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Your vote is important. Please vote in one of these ways: |
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(1) Use the toll-free telephone number shown on the proxy
card; |
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(2) Visit the website listed on your proxy card; |
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(3) Mark, sign, date and promptly return the enclosed proxy
card in the postage-paid envelope
provided; or |
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(4) Submit a ballot at the Annual Meeting. |
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G. Sanders Griffith, III |
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Secretary |
Columbus, Georgia
March 20, 2006
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
ANNUAL MEETING, PLEASE VOTE YOUR SHARES PROMPTLY.
TABLE OF CONTENTS
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A-1 |
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PROXY STATEMENT
VOTING INFORMATION
Purpose
This Proxy Statement and the accompanying proxy card are being
mailed to TSYS shareholders beginning on or about March 20,
2006. The TSYS Board of Directors is soliciting proxies to be
used at the 2006 Annual Meeting of TSYS Shareholders which will
be held on April 20, 2006, at 10:00 a.m., at the TSYS
Riverfront Campus Auditorium, 1600 First Avenue, Columbus,
Georgia. Proxies are solicited to give all shareholders of
record an opportunity to vote on matters to be presented at the
Annual Meeting. In the following pages of this Proxy Statement,
you will find information on matters to be voted upon at the
Annual Meeting of Shareholders or any adjournment of that
meeting.
Who Can Vote
You are entitled to vote if you were a shareholder of record of
TSYS stock as of the close of business on February 14,
2006. Your shares can be voted at the meeting only if you are
present or represented by a valid proxy.
Quorum and Shares Outstanding
A majority of the outstanding shares of TSYS stock must be
present, either in person or represented by proxy, in order to
conduct the Annual Meeting of TSYS Shareholders. On
February 14, 2006, 197,433,707 shares of TSYS stock
were outstanding.
Columbus Bank and Trust Company
Columbus Bank and Trust
Company®
(CB&T) owned individually
159,630,980 shares, or 81%, of the outstanding shares of
TSYS stock on February 14, 2006.
CB&T®
is a wholly owned banking subsidiary of Synovus Financial
Corp.®,
a diversified financial services company.
Proxy Card
The Board has designated two individuals to serve as proxies to
vote the shares represented by proxies at the Annual Meeting of
Shareholders. If you properly submit a proxy card but do not
specify how you want your shares to be voted, your shares will
be voted by the designated proxies: (1) FOR the election of
all of the director nominees; (2) FOR fixing the number of
TSYS directors at 19; (3) FOR the Synovus Financial
Corp. Executive Cash Bonus Plan; and (4) FOR the
ratification of the appointment of KPMG LLP as TSYS
independent auditor for the year 2006. The designated proxies
will vote in their discretion on any other matter that may
properly come before the meeting. At the date the Proxy
Statement went to press, we did not anticipate that any other
matters would be raised at the Annual Meeting.
Voting of Shares
Each share of TSYS stock represented at the Annual Meeting is
entitled to one vote on each matter properly brought before the
meeting. All shares entitled to vote and represented in person
or by valid proxies received by phone, Internet or mail will be
voted at the Annual Meeting in accordance with the instructions
indicated on those proxies.
TSYS Dividend Reinvestment and Direct Stock Purchase
Plan: If you participate in this Plan, your proxy card
represents shares held in the Plan, as well as shares you hold
in certificate form registered in the same name.
Required Votes
Directors are elected by a plurality of the votes cast, which
means the six nominees who receive the largest number of
properly executed votes will be elected as directors. Each share
of TSYS stock is entitled to one vote for each of six director
nominees. Shares that are represented by
1
proxies which are marked withhold authority for the
election of one or more director nominees will not be counted in
determining the number of votes cast for those persons.
Pursuant to TSYS Articles of Incorporation, the
affirmative vote of the holders of at least eighty percent (80%)
of the issued and outstanding shares of TSYS stock is required
to fix the number of TSYS directors at 19.
The affirmative vote of a majority of the votes cast is needed
to approve the Synovus Financial Corp. Executive Cash Bonus Plan
and to ratify the appointment of KPMG LLP as TSYS
independent auditor for 2006.
CB&T, the beneficial owner of 81% of the outstanding shares
of TSYS stock, has indicated that it intends to vote FOR
all proposals.
Tabulation of Votes
Under certain circumstances, brokers are prohibited from
exercising discretionary authority for beneficial owners who
have not returned proxies to the brokers (a broker
non-vote). In these cases, and in cases where the
shareholder abstains from voting on a matter, those shares will
be counted for the purpose of determining if a quorum is
present, but will not be included as votes cast with respect to
those matters and, therefore, will have no effect on the vote to
elect directors, approve the Synovus Financial Corp. Executive
Cash Bonus Plan or ratify the appointment of KPMG as TSYS
independent auditor. Because the proposal to fix the number of
TSYS directors at 19 requires the affirmative vote of 80%
of the issued and outstanding shares of TSYS stock, abstentions
and broker non-votes will have the same effect as a vote against
this proposal.
How You Can Vote
You may vote by proxy or in person at the meeting. To vote by
proxy, you may select one of the following options:
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Vote By Telephone: |
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You can vote your shares by telephone by calling the toll-free
telephone number (at no cost to you) shown on your proxy card.
Telephone voting is available 24 hours a day, seven days a
week. Easy-to-follow
voice prompts allow you to vote your shares and confirm that
your instructions have been properly recorded. Our telephone
voting procedures are designed to authenticate the shareholder
by using individual control numbers. If you vote by telephone,
you do NOT need to return your proxy card. |
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Vote By Internet: |
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You can also choose to vote on the Internet. The website for
Internet voting is shown on your proxy card. Internet voting is
available 24 hours a day, seven days a week. You will be
given the opportunity to confirm that your instructions have
been properly recorded, and you can consent to view future proxy
statements and annual reports on the Internet instead of
receiving them in the mail. If you vote on the Internet, you do
NOT need to return your proxy card. |
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Vote By Mail: |
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If you choose to vote by mail, simply mark your proxy card, date
and sign it, and return it in the postage-paid envelope provided. |
Revocation of Proxy
If you vote by proxy, you may revoke that proxy at any time
before it is voted at the meeting. You may do this by
(a) signing another proxy card with a later date and
returning it to us prior to the meeting, (b) voting again
by telephone or on the Internet prior to the meeting, or
(c) attending the meeting in person and casting a ballot.
2
CORPORATE GOVERNANCE AND BOARD MATTERS
Corporate Governance Philosophy
The business affairs of TSYS are managed under the direction of
the Board of Directors in accordance with the Georgia Business
Corporation Code, as implemented by TSYS Articles of
Incorporation and bylaws. The role of the Board of Directors is
to effectively govern the affairs of TSYS for the benefit of its
shareholders and other constituencies. The Board strives to
ensure the success and continuity of business through the
election of qualified management. It is also responsible for
ensuring that TSYS activities are conducted in a
responsible and ethical manner. TSYS is committed to having
sound corporate governance principles.
Independence
The listing standards of the New York Stock Exchange provide
that a director does not qualify as independent unless the Board
of Directors affirmatively determines that the director has no
material relationship with TSYS. The Board has established
categorical standards of independence to assist it in
determining director independence which conform to the
independence requirements in the NYSE listing standards. The
categorical standards of independence are incorporated within
our Corporate Governance Guidelines and are attached to this
Proxy Statement as Appendix A. The Board has determined
that a majority of its members are independent as defined by the
listing standards of the NYSE and meet the categorical standards
of independence set by the Board as G. Wayne Clough has no
relationships with TSYS (other than being a director and
shareholder) and each of the other independent directors has
only immaterial relationships with TSYS. TSYS Board has
determined that the following directors are independent: Richard
Y. Bradley, Kriss Cloninger III, G. Wayne Clough,
Walter W. Driver, Jr., Sidney E. Harris, John P.
Illges, III, Mason H. Lampton, W. Walter Miller, Jr.,
H. Lynn Page and Rebecca K. Yarbrough. Please see
Compensation Committee Interlocks and Insider
Participation and Certain Relationships and Related
Transactions on page 26 which includes information
with respect to immaterial relationships between TSYS and its
independent directors. This information was considered by the
Board in determining a directors independence from TSYS
under TSYS categorical standards of independence and NYSE
listing standards.
Although TSYS is a controlled company under the
rules of the NYSE as a result of its 81% ownership by Synovus
and CB&T, and as such is entitled to an exemption from the
independence requirements for its Board and its Corporate
Governance and Nominating Committee and Compensation Committee,
TSYS is not currently taking advantage of this exemption.
Attendance at Meetings
The Board of Directors held five meetings in 2005. All directors
attended at least 75% of Board and committee meetings held
during their tenure during 2005. The average attendance by
directors at the aggregate number of Board and committee
meetings they were scheduled to attend was 94%. Although TSYS
has no formal policy with respect to Board members
attendance at its annual meetings, it is customary for all Board
members to attend as there is a Board meeting immediately
preceding the annual meeting. All of TSYS directors who
were serving at the time attended the 2005 Annual Meeting of
Shareholders.
Committees of the Board
TSYS Board of Directors has four principal standing
committees an Executive Committee, an Audit
Committee, a Corporate Governance and Nominating Committee and a
Compensation Committee. Each committee has a written charter
adopted by the Board of Directors that complies with the listing
standards of the NYSE pertaining to corporate governance. Copies
of the committee charters are available in the Corporate
Governance section of our website at www.tsys.com/ir/governance.
The Board has determined that each member of the Audit,
Corporate Governance and Nominating and Compensation Committees
is an independent director as defined
3
by the listing standards of the NYSE and our Corporate
Governance Guidelines. The following table shows the membership
of the various committees.
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Corporate Governance |
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Executive |
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Audit |
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and Nominating |
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Compensation |
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James H. Blanchard, Chair
Richard Y. Bradley
G. Wayne Clough
Mason H. Lampton
H. Lynn Page
Philip W. Tomlinson
M. Troy Woods |
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H. Lynn Page, Chair
Kriss Cloninger III
Sidney E. Harris
John P. Illges, III |
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Richard Y. Bradley, Chair
W. Walter Miller, Jr.
Rebecca K. Yarbrough |
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Mason H. Lampton, Chair
G. Wayne Clough
Walter W. Driver, Jr. |
Executive
Committee. TSYS Executive
Committee held four meetings in 2005. During the intervals
between meetings of TSYS Board of Directors, TSYS
Executive Committee possesses and may exercise any and all of
the powers of TSYS Board of Directors in the management
and direction of the business and affairs of TSYS with respect
to which specific direction has not been previously given by
TSYS Board of Directors unless Board action is required by
TSYS governing documents, law or rule.
Audit Committee. TSYS
Audit Committee held nine meetings in 2005. Its Report begins on
page 16. The Board has determined that all four members of
the Committee are independent and financially literate under the
rules of the NYSE and that at least one member, H. Lynn
Page, is an audit committee financial expert as
defined by the rules of the Securities and Exchange Commission.
The primary functions of TSYS Audit Committee include:
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Monitoring the integrity of TSYS financial statements,
TSYS systems of internal controls and TSYS
compliance with regulatory and legal requirements; |
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Monitoring the independence, qualifications and performance of
TSYS independent auditor and internal auditing
activities; and |
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Providing an avenue of communication among the independent
auditor, management, internal audit and the Board of Directors. |
Corporate Governance and Nominating
Committee. TSYS Corporate
Governance and Nominating Committee held four meetings in 2005.
The primary functions of TSYS Corporate Governance and
Nominating Committee include:
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Identifying qualified individuals to become Board members; |
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Recommending to the Board the director nominees for each annual
meeting of shareholders and director nominees to be elected by
the Board to fill interim director vacancies; |
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Overseeing the annual review and evaluation of the performance
of the Board and its committees; and |
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Developing and recommending to the Board corporate governance
guidelines. |
Compensation Committee. TSYS Compensation Committee
held six meetings in 2005. Its Report on Executive Compensation
begins on page 22. The primary functions of TSYS
Compensation Committee include:
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Designing and overseeing TSYS executive compensation
program; |
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Designing and overseeing all compensation and benefit programs
in which employees and officers of TSYS are eligible to
participate; and |
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Performing an annual evaluation of the Chief Executive Officer. |
Consideration of Director Candidates
Shareholder Candidates. The Corporate Governance and
Nominating Committee will consider candidates for nomination as
a director submitted by shareholders. Although the Committee
does not have a separate policy that addresses the consideration
of director candidates recommended by shareholders, the Board
does not believe that such a separate policy is necessary
4
as TSYS bylaws permit shareholders to nominate candidates
and as one of the duties set forth in the Corporate Governance
and Nominating Committee charter is to review and consider
director candidates submitted by shareholders. The Committee
will evaluate individuals recommended by shareholders for
nomination as directors according to the criteria discussed
below and in accordance with TSYS bylaws and the
procedures described under Shareholder Proposals and
Nominations on page 30.
Director Qualifications. TSYS Corporate Governance
Guidelines contain Board membership criteria considered by the
Corporate Governance and Nominating Committee in recommending
nominees for a position on TSYS Board. The Committee
believes that, at a minimum, a director candidate must possess
personal and professional integrity, sound judgment and
forthrightness. A director candidate must also have sufficient
time and energy to devote to the affairs of TSYS, be free from
conflicts of interest with TSYS, must not have reached the
retirement age for TSYS directors and be willing to make, and
financially capable of making, the required investment in
TSYS stock pursuant to TSYS Director Stock Ownership
Guidelines. The Committee also considers the following criteria
when reviewing a director candidate:
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The extent of the directors/potential directors
business acumen and experience; |
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Whether the director/potential director assists in achieving a
mix of Board members that represents a diversity of background
and experience, including with respect to age, gender, race,
place of residence and specialized experience; |
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Whether the director/potential director meets the independence
requirements of the listing standards of the NYSE; |
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Whether the director/potential director would be considered a
financial expert or financially literate
as defined in the listing standards of the NYSE; |
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Whether the director/potential director, by virtue of particular
technical expertise, experience or specialized skill relevant to
TSYS current or future business, will add specific value
as a Board member; and |
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Whether the director/potential director possesses a willingness
to challenge and stimulate management and the ability to work as
part of a team in an environment of trust. |
Identifying and Evaluating Nominees
The Corporate Governance and Nominating Committee has two
primary methods for identifying director candidates (other than
those proposed by TSYS shareholders, as discussed above).
First, on a periodic basis, the Committee solicits ideas for
possible candidates from a number of sources including members
of the Board, TSYS executives and individuals personally known
to the members of the Board. Second, the Committee is authorized
to use its authority under its charter to retain at TSYS
expense one or more search firms to identify candidates (and to
approve such firms fees and other retention terms).
The Committee will consider all director candidates identified
through the processes described above, and will evaluate each of
them, including incumbents, based on the same criteria. The
director candidates are evaluated at regular or special meetings
of the Committee and may be considered at any point during the
year. If based on the Committees initial evaluation a
director candidate continues to be of interest to the Committee,
the Chair of the Committee will interview the candidate and
communicate his evaluation to the other Committee members and
executive management. Additional interviews are conducted, if
necessary, and ultimately the Committee will meet to finalize
its list of recommended candidates for the Boards
consideration.
Meetings of Non-Management and Independent
Directors
The non-management directors of TSYS meet separately at least
four times a year after each regularly scheduled meeting of the
Board of Directors. TSYS independent directors meet at
least once a year. G. Wayne Clough, TSYS Lead
Director, presides at the meetings of non-management and
independent directors.
5
Communicating with the Board
TSYS Board provides a process for shareholders and other
interested parties to communicate with the Board. Shareholders
and other interested parties may communicate with the Board by
writing the Board of Directors, Total System Services, Inc.,
c/o General Counsels Office, 1111 Bay Avenue,
Suite 500, Columbus, Georgia 31901. Additional
procedures by which shareholders and other interested parties
can communicate with the Lead Director or with the
non-management or independent directors individually or as a
group are available in the Corporate Governance section of our
website at www.tsys.com/ir/governance. TSYS process for
handling shareholder and other communications to the Board has
been approved by TSYS independent directors.
Additional Information about Corporate Governance
TSYS has adopted Corporate Governance Guidelines which are
regularly reviewed by the Corporate Governance and Nominating
Committee. We have also adopted a Code of Business Conduct and
Ethics which is applicable to all directors, officers and
employees. In addition, we maintain procedures for the
confidential, anonymous submission of any complaints or concerns
about TSYS, including complaints regarding accounting, internal
accounting controls or auditing matters. Shareholders may access
TSYS Corporate Governance Guidelines, Code of Business
Conduct and Ethics, each committees current charter,
procedures for shareholders and other interested parties to
communicate with the Lead Director or with the non-management or
independent directors individually or as a group and procedures
for reporting complaints and concerns about TSYS, including
complaints concerning accounting, internal accounting controls
and auditing matters in the Corporate Governance section of our
website at www.tsys.com/ir/governance. Copies of these documents
are also available in print upon written request to the
Corporate Secretary, Total System Services, Inc., 1111 Bay
Avenue, Suite 500, Columbus, Georgia 31901.
DIRECTOR COMPENSATION
AND STOCK OWNERSHIP GUIDELINES
Compensation
Directors of TSYS receive the following compensation:
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Annual retainer
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35,000 |
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Annual committee member retainer (Compensation and Corporate
Governance and Nominating)
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5,000 |
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Annual committee member retainer (Audit and Executive)
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10,000 |
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Annual committee chair retainer (Compensation and Corporate
Governance and Nominating)
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$ |
5,000 |
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Annual Audit Committee chair retainer
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10,000 |
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Annual Lead Director retainer
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5,000 |
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Directors may elect to defer all or a portion of their cash
compensation. Deferred amounts are deposited into one or more
investment funds chosen by the director. All deferred fees are
payable only in cash.
Non-management directors also receive an annual award of
500 shares of restricted TSYS stock in the form of a grant
from the TSYS 2002 Long-Term Incentive Plan which vests as
to 100% after three years.
6
The following table presents the compensation provided by TSYS
to directors during 2005.
DIRECTOR COMPENSATION TABLE
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TSYS |
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$ Value of |
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Total |
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Director |
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to Director |
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Annual |
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Annual |
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Restricted |
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Stock |
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Chair |
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Cash |
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Stock |
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Purchase |
Name |
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Retainer |
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Retainer |
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Retainer |
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Retainer |
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Plan |
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James H. Blanchard
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35,000 |
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10,000 |
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45,000 |
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Richard Y. Bradley
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35,000 |
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15,000 |
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5,000 |
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$ |
55,000 |
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$ |
11,960 |
|
|
|
|
|
Kriss Cloninger III
|
|
$ |
35,000 |
|
|
$ |
10,000 |
|
|
|
|
|
|
$ |
45,000 |
|
|
$ |
11,960 |
|
|
$ |
5,000 |
|
G. Wayne Clough
|
|
$ |
35,000 |
|
|
$ |
15,000 |
|
|
$ |
5,000 |
(2) |
|
$ |
55,000 |
|
|
$ |
11,960 |
|
|
$ |
10,000 |
|
Walter W. Driver, Jr.
|
|
$ |
35,000 |
|
|
$ |
5,000 |
|
|
|
|
|
|
$ |
40,000 |
|
|
$ |
11,960 |
|
|
$ |
6,000 |
|
Gardiner W. Garrard, Jr.
|
|
$ |
35,000 |
|
|
$ |
10,000 |
(3) |
|
|
|
|
|
$ |
45,000 |
|
|
$ |
11,960 |
|
|
$ |
10,000 |
|
Sidney E. Harris
|
|
$ |
35,000 |
|
|
$ |
10,000 |
|
|
|
|
|
|
$ |
45,000 |
|
|
$ |
11,960 |
|
|
$ |
2,500 |
|
John P. Illges, III
|
|
$ |
35,000 |
|
|
$ |
20,000 |
(4) |
|
$ |
10,000 |
(4) |
|
$ |
65,000 |
|
|
$ |
11,960 |
|
|
|
|
|
Alfred W. Jones III
|
|
$ |
35,000 |
|
|
|
|
|
|
|
|
|
|
$ |
35,000 |
|
|
$ |
11,960 |
|
|
$ |
10,000 |
|
Mason H. Lampton
|
|
$ |
35,000 |
|
|
$ |
15,000 |
|
|
$ |
5,000 |
|
|
$ |
55,000 |
|
|
$ |
11,960 |
|
|
|
|
|
W. Walter Miller, Jr.
|
|
$ |
35,000 |
|
|
$ |
5,000 |
|
|
|
|
|
|
$ |
40,000 |
|
|
$ |
11,960 |
|
|
|
|
|
H. Lynn Page
|
|
$ |
35,000 |
|
|
$ |
20,000 |
(4) |
|
$ |
10,000 |
(4) |
|
$ |
65,000 |
|
|
$ |
11,960 |
|
|
|
|
|
Philip W. Tomlinson
|
|
$ |
35,000 |
|
|
$ |
10,000 |
|
|
|
|
|
|
$ |
45,000 |
|
|
|
|
|
|
|
|
|
John T. Turner
|
|
$ |
35,000 |
|
|
|
|
|
|
|
|
|
|
$ |
35,000 |
|
|
$ |
11,960 |
|
|
|
|
|
Richard W. Ussery
|
|
$ |
35,000 |
|
|
$ |
10,000 |
|
|
|
|
|
|
$ |
45,000 |
|
|
$ |
11,960 |
|
|
$ |
10,000 |
|
M. Troy Woods
|
|
$ |
35,000 |
|
|
$ |
10,000 |
|
|
|
|
|
|
$ |
45,000 |
|
|
|
|
|
|
|
|
|
James D. Yancey
|
|
$ |
35,000 |
|
|
$ |
10,000 |
(3) |
|
|
|
|
|
$ |
45,000 |
|
|
$ |
11,960 |
|
|
$ |
10,000 |
|
Rebecca K. Yarbrough
|
|
$ |
35,000 |
|
|
$ |
5,000 |
|
|
|
|
|
|
$ |
40,000 |
|
|
$ |
11,960 |
|
|
|
|
|
|
|
(1) |
Market value of TSYS stock on the grant date, February 1,
2005. |
|
(2) |
Dr. Clough received $5,000 as an annual retainer for his
position as Lead Director. |
|
(3) |
Mr. Garrard and Mr. Yancey each received $10,000 as
non-voting advisory members of the Executive Committee. |
|
(4) |
Mr. Illges and Mr. Page each served as Chairman of the
Audit Committee and as a member of the Executive Committee for a
portion of the year. |
When traveling from
out-of-town, members of
the Board of Directors are also eligible for reimbursement of
their travel expenses incurred in connection with attendance at
Board and Committee meetings. These amounts are not included in
the table above.
Director Stock Purchase Plan
TSYS Director Stock Purchase Plan is a nontax-qualified,
contributory stock purchase plan pursuant to which qualifying
TSYS directors can purchase, with the assistance of
contributions from TSYS, presently issued and outstanding shares
of TSYS stock. Under the terms of the Director Stock Purchase
Plan, qualifying directors can elect to contribute up to
$5,000 per calendar quarter to make purchases of TSYS
stock, and TSYS contributes an additional amount equal to 50% of
the directors cash contributions. Participants in the
Director Stock Purchase Plan are fully vested in, and may
request the issuance to them of, all shares of TSYS stock
purchased for their benefit under the Plan.
Consulting Services
Effective June 30, 2005, TSYS and Richard W. Ussery,
the former Chairman of the Board of TSYS, entered into a
one-year Consulting Agreement in conjunction with
Mr. Usserys retirement as an employee of TSYS. Under
the Agreement, Mr. Ussery receives monthly payments of
$26,526 and is also provided with 20 hours of personal use
of corporate aircraft. TSYS also provided Mr. Ussery
7
with an office and secretarial support during 2005 valued at
approximately $33,500 subsequent to his retirement.
Stock Ownership Guidelines
Under TSYS stock ownership guidelines for directors, all
directors are required to accumulate over time shares of TSYS
stock equal in value to at least three times the value of the
annual retainer.
PROPOSALS TO BE VOTED ON
PROPOSAL 1: ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR ALL NOMINEES.
Number
The Board of Directors of TSYS consists of 18 members, which is
the number currently authorized by TSYS shareholders. The
Board is divided into three classes whose terms are staggered so
that the term of one class expires at each Annual Meeting of
Shareholders. The terms of office of the Class I directors
expire at the 2008 Annual Meeting, the terms of office of the
Class II directors expire at the 2006 Annual Meeting and
the terms of office of the Class III directors expire at
the 2007 Annual Meeting. Proxies cannot be voted at the 2006
Annual Meeting for a greater number of persons than the number
of nominees named.
Nominees
The following nominees have been selected by the Corporate
Governance and Nominating Committee and approved by the Board
for submission to the shareholders: James H. Blanchard,
Richard Y. Bradley, Walter W. Driver, Jr.,
Gardiner W. Garrard, Jr., John P.
Illges, III and W. Walter Miller, Jr., each to
serve a three year term expiring at the 2009 Annual Meeting.
The Board believes that each director nominee will be able to
stand for election. If any nominee becomes unable to stand for
election, proxies in favor of that nominee will be voted in
favor of the remaining nominees and in favor of any substitute
nominee named by the Board upon the recommendation of the
Corporate Governance and Nominating Committee. If you do not
wish your shares voted for one or more of the nominees, you may
so indicate on the proxy.
Members of the Board of Directors
Following is the principal occupation, age and certain other
information for each director nominee and other directors
serving unexpired terms.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
|
|
|
TSYS |
|
First |
|
|
|
|
Director |
|
Elected |
|
Principal Occupation and Other |
Name |
|
Age |
|
Classification |
|
Director |
|
Information |
|
|
|
|
|
|
|
|
|
James H. Blanchard(1)
|
|
|
64 |
|
|
|
II |
|
|
|
1982 |
|
|
Chairman of the Board, Synovus Financial Corp.; Chairman of the
Executive Committee, Total System Services, Inc.; Director,
Synovus Financial Corp. and BellSouth Corporation |
|
Richard Y. Bradley
|
|
|
67 |
|
|
|
II |
|
|
|
1991 |
|
|
Partner, Bradley & Hatcher (Law Firm); Director,
Synovus Financial Corp. |
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
|
|
|
TSYS |
|
First |
|
|
|
|
Director |
|
Elected |
|
Principal Occupation and Other |
Name |
|
Age |
|
Classification |
|
Director |
|
Information |
|
|
|
|
|
|
|
|
|
Kriss Cloninger III
|
|
|
58 |
|
|
|
I |
|
|
|
2004 |
|
|
President and Chief Financial Officer, Aflac Incorporated
(Insurance Holding Company); Director, Aflac Incorporated and
Tupperware Brands Corporation |
|
G. Wayne Clough(2)
|
|
|
64 |
|
|
|
I |
|
|
|
2000 |
|
|
President, Georgia Institute of Technology |
|
Walter W. Driver, Jr.(3)
|
|
|
60 |
|
|
|
II |
|
|
|
2002 |
|
|
Chairman-Southeast, Goldman Sachs & Co. (Investment
Banking and Securities) |
|
Gardiner W. Garrard, Jr.
|
|
|
65 |
|
|
|
II |
|
|
|
1982 |
|
|
President, The Jordan Company (Real Estate Development);
Director, Synovus Financial Corp. |
|
Sidney E. Harris(4)
|
|
|
56 |
|
|
|
III |
|
|
|
1999 |
|
|
Professor, Georgia State University; Director, The ServiceMaster
Company, Transamerica Investors, Inc. and STI Classic Funds |
|
John P. Illges, III
|
|
|
71 |
|
|
|
II |
|
|
|
1982 |
|
|
Senior Vice President and Financial Consultant, Retired, The
Robinson-Humphrey Company, Inc. (Stockbroker); Director, Synovus
Financial Corp. |
|
Alfred W. Jones III
|
|
|
48 |
|
|
|
III |
|
|
|
2001 |
|
|
Chairman of the Board and Chief Executive Officer, Sea Island
Company (Real Estate Development and Management); Director,
Synovus Financial Corp. |
|
Mason H. Lampton(5)
|
|
|
58 |
|
|
|
III |
|
|
|
1986 |
|
|
Chairman of the Board, Standard Concrete Products (Construction
Materials Company); Director, Synovus Financial Corp. |
|
W. Walter Miller, Jr.(6)
|
|
|
57 |
|
|
|
II |
|
|
|
1993 |
|
|
Group Executive, Retired, Total System Services, Inc. |
|
H. Lynn Page(6)
|
|
|
65 |
|
|
|
I |
|
|
|
1982 |
|
|
Director, Synovus Financial Corp. |
|
Philip W. Tomlinson(7)
|
|
|
59 |
|
|
|
I |
|
|
|
1982 |
|
|
Chairman of the Board and Chief Executive Officer, Total System
Services, Inc. |
|
John T. Turner(6)
|
|
|
49 |
|
|
|
III |
|
|
|
2003 |
|
|
Private Investor |
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
|
|
|
TSYS |
|
First |
|
|
|
|
Director |
|
Elected |
|
Principal Occupation and Other |
Name |
|
Age |
|
Classification |
|
Director |
|
Information |
|
|
|
|
|
|
|
|
|
Richard W. Ussery(8)
|
|
|
58 |
|
|
|
I |
|
|
|
1982 |
|
|
Chairman of the Board, Retired, Total System Services, Inc. |
|
M. Troy Woods(9)
|
|
|
54 |
|
|
|
III |
|
|
|
2003 |
|
|
President and Chief Operating Officer, Total System Services,
Inc. |
|
James D. Yancey(10)
|
|
|
64 |
|
|
|
III |
|
|
|
1982 |
|
|
Chairman of the Board, Columbus Bank and Trust Company; Chairman
of the Board, Retired, and Director, Synovus Financial Corp. |
|
Rebecca K. Yarbrough
|
|
|
68 |
|
|
|
III |
|
|
|
1999 |
|
|
Private Investor |
|
|
|
|
(1) |
James H. Blanchard was elected Chairman of the Executive
Committee of TSYS in February 1992. From 1982 until 1992,
Mr. Blanchard served as Chairman of the Board of TSYS.
Mr. Blanchard was elected Chairman of the Board of Synovus
in July 2005. Prior to 2005, Mr. Blanchard served as Chief
Executive Officer of Synovus. |
|
|
(2) |
G. Wayne Clough serves as Lead Director of the TSYS Board. |
|
|
(3) |
Walter W. Driver, Jr. has served as Chairman-Southeast of
Goldman Sachs & Co. since January 2006. Prior to 2006,
Mr. Driver served as Chairman of the law firm
King & Spalding LLP. |
|
|
(4) |
Sidney E. Harris has served as a professor at Georgia State
University since July 1997. From 1997 until 2004,
Mr. Harris served as Dean of the J. Mack Robinson College
of Business at Georgia State University. |
|
|
(5) |
Mason H. Lampton was elected Chairman of the Board of Standard
Concrete Products in June 2005. Prior to 2005, Mr. Lampton
served as President and Chief Executive Officer of Standard
Concrete Products. |
|
|
(6) |
W. Walter Miller, Jr. is the first cousin of H. Lynn Page
and Mr. Millers spouse is the first cousin of John T.
Turner. |
|
|
(7) |
Philip W. Tomlinson was elected Chairman of the Board and Chief
Executive Officer of TSYS in January 2006. From 1982 until 2006,
Mr. Tomlinson served in various capacities with TSYS,
including Chief Executive Officer of TSYS. |
|
|
(8) |
Richard W. Ussery retired as an executive employee of TSYS in
June 2005 and served as a non-executive Chairman of the Board
until January 2006. Mr. Ussery was elected Chairman of the
Board in February 1992. |
|
|
(9) |
M. Troy Woods was elected President and Chief Operating Officer
of TSYS in December 2003. From 1987 until 2003, Mr. Woods
served in various capacities with TSYS, including Executive Vice
President of TSYS. |
|
|
(10) |
James D. Yancey retired as an executive employee of Synovus in
December 2004 and served as a non-executive Chairman of the
Board until July 2005. Mr. Yancey was elected Chairman of
the Board of Synovus in October 2003. Prior to 2003,
Mr. Yancey served in various capacities with Synovus and/or
CB&T, including Vice Chairman of the Board and President of
both Synovus and CB&T. |
10
PROPOSAL 2: FIXING THE NUMBER OF TSYS DIRECTORS AT 19
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR FIXING THE NUMBER OF DIRECTORS AT 19.
Our bylaws provide that the Board of Directors shall consist of
a minimum of eight and a maximum of 60 members, the exact number
within these limits to be fixed and determined from time to time
by resolutions adopted by TSYS shareholders. In 1988, the
number of members of the Board was fixed at a level of 18. The
Board has determined that it is desirable to increase TSYS
Board membership to a level of 19 members. Richard E.
Anthony, President and Chief Executive Officer of Synovus, will
be elected by the Board of TSYS to fill this newly created
directorship. Mr. Anthony will not be appointed to serve a
classified, three year term but will only serve as a director
until the 2007 Annual Meeting. At the 2007 Annual Meeting,
Mr. Anthony will stand before TSYS shareholders for
election to a classified term of office as a director.
11
PROPOSAL 3: APPROVAL OF THE SYNOVUS FINANCIAL CORP.
EXECUTIVE CASH BONUS PLAN
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR APPROVAL OF THE SYNOVUS FINANCIAL CORP.
EXECUTIVE CASH BONUS PLAN.
TSYS executive compensation program will include
short-term incentive bonus awards under the Synovus Financial
Corp. Executive Cash Bonus Plan (the Plan). The
purposes of the Plan are to reward selected executive officers
for superior corporate performance and to attract and retain top
quality executive officers. Subject to approval by TSYS
shareholders, compensation paid pursuant to the Plan to
TSYS officers 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)). The Plan is being submitted
to shareholders for approval as required by Section 162(m).
Eligibility and
Participation. The Chief
Executive Officer and the four highest compensated officers of
Synovus and any publicly-traded subsidiary of Synovus (including
TSYS) are eligible to participate in the Plan. Approximately 10
employees are eligible to participate in the Plan. The
Compensation Committee, as described below, has discretion to
select participants from among eligible employees from year to
year.
Description of Awards Under the
Plan. Pursuant to the Plan,
TSYS may award incentive bonus opportunities to participants.
Each fiscal year, the Compensation Committee establishes, in
writing, the performance goals applicable to the current and/or
any succeeding fiscal year. The performance measures which are
used to determine the amount of the incentive bonus award for
each performance period are chosen from among the following for
Synovus, any of its business segments and/or any of its business
units, unless and until the Compensation Committee proposes a
change in the measures for shareholder vote or applicable tax
and/or other regulatory laws change to permit the Compensation
Committee discretion to alter the performance measures without
obtaining shareholder approval: (i) number of cardholder,
merchant and/or other customer accounts processed and/or
converted by TSYS; (ii) successful negotiation or renewal
of contracts with new and/or existing customers by TSYS;
(iii) productivity and expense control; (iv) stock
price; (v) return on capital compared to cost of capital;
(vi) net income; (vii) operating income;
(viii) earnings per share and/or earnings per share growth;
(ix) return on equity; (x) return on assets;
(xi) nonperforming assets and/or loans as a percentage of
total assets and/or loans; (xii) noninterest expense as a
percentage of total expense; (xiii) loan charge-offs as a
percentage of total loans; and (xiv) asset growth. Awards
are determined based on the achievement of the preestablished
performance goals and are awarded based on a percentage of a
participants base salary.
The Compensation Committee has no discretion to increase the
amount of any award under the Plan but will retain the ability
to eliminate or decrease an award otherwise payable to a
participant. The Compensation Committee must certify, in
writing, that the performance goals have been met before any
payments to participants may be made. Payment of the incentive
bonus award earned, if any, are made in cash, as soon as
practicable after Compensation Committee approval or deferred
pursuant to the provisions of the Synovus/ TSYS Deferred
Compensation Plan.
Termination of
Employment. Any participant not
employed by Synovus or a publicly-traded subsidiary of Synovus
on December 31 of any fiscal year will not be entitled to
an award unless otherwise determined by the Compensation
Committee.
Maximum Amount Payable to Any
Participant. The maximum amount
payable for each performance period under the Plan to any
participant is $2 million.
Amendment of the Plan. The
Board of Directors of Synovus may amend the Plan at any time,
including amendments that increase the costs of the Plan and
allocate benefits differently between persons and groups in the
table below; provided, however, that no amendment can be made
without shareholder approval that increases the maximum amount
payable to any participant in excess of the limit set forth
above.
12
Duration of the Plan. The
Plan will remain in effect from the date it is approved by
TSYS shareholders until the date it is terminated by the
Board of Directors of Synovus. The Board of Directors of Synovus
may terminate the Plan at any time.
Administration. The Plan
will be administered by the Compensation Committee of the TSYS
Board of Directors with respect to TSYS participants. The TSYS
Compensation Committee will be comprised of two or more
outside directors within the meaning of
Section 162(m).
Estimate of Benefits. For
the fiscal year 2005, only Messrs. Tomlinson and Woods
would have been selected to participate in the Plan, while
Messrs. Pruett, Tye and Lipham would have participated in
the Synovus Incentive Bonus Plan. Because the amounts that will
be paid pursuant to the Plan are not currently determinable, the
following chart sets forth the amounts that would have been
awarded for fiscal year 2005 if the Chief Executive Officer and
the four other highest compensated officers of TSYS participated
in the Plan.
NEW PLAN BENEFITS
SYNOVUS FINANCIAL CORP. EXECUTIVE CASH BONUS PLAN
|
|
|
|
|
|
|
Name and Position |
|
Dollar Value($) |
|
|
|
Philip W. Tomlinson
|
|
|
|
|
|
Chairman of the Board and Chief Executive Officer
|
|
$ |
1,080,450 |
|
M. Troy Woods
|
|
|
|
|
|
President and Chief Operating Officer
|
|
|
742,000 |
|
William A. Pruett
|
|
|
|
|
|
Senior Executive Vice President
|
|
|
467,469 |
|
Kenneth L. Tye
|
|
|
|
|
|
Senior Executive Vice President and Chief Information Officer
|
|
|
435,225 |
|
James B. Lipham
|
|
|
|
|
|
Senior Executive Vice President and Chief Financial Officer
|
|
|
398,759 |
|
Executive Group
|
|
|
3,123,903 |
|
Non-Executive Director Group
|
|
|
-0- |
|
Non-Executive Officer Employee Group
|
|
|
-0- |
|
13
PROPOSAL 4: RATIFICATION OF
APPOINTMENT OF THE INDEPENDENT AUDITOR
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP
AS THE INDEPENDENT AUDITOR.
The Audit Committee has appointed the firm of KPMG LLP as the
independent auditor to audit the consolidated financial
statements of TSYS and its subsidiaries for the fiscal year
ending December 31, 2006. Representatives of KPMG will be
present at the Annual Meeting with the opportunity to make a
statement if they desire to do so and will be available to
respond to appropriate questions from shareholders present at
the meeting. Although shareholder ratification of the
appointment of TSYS independent auditor is not required by
our bylaws or otherwise, we are submitting the selection of KPMG
to our shareholders for ratification to permit shareholders to
participate in this important corporate decision. If not
ratified, the Audit Committee will reconsider the selection,
although the Audit Committee will not be required to select a
different independent auditor for TSYS.
EXECUTIVE OFFICERS
The following table sets forth the name, age and position with
TSYS of each executive officer of TSYS.
|
|
|
|
|
|
|
|
Name |
|
Age | |
|
Position with TSYS |
|
|
| |
|
|
James H. Blanchard(1)
|
|
|
64 |
|
|
Chairman of the Executive Committee |
Philip W. Tomlinson(1)
|
|
|
59 |
|
|
Chairman of the Board and Chief Executive Officer |
M. Troy Woods(1)
|
|
|
54 |
|
|
President and Chief Operating Officer |
James B. Lipham(2)
|
|
|
57 |
|
|
Senior Executive Vice President and Chief Financial Officer |
William A. Pruett(3)
|
|
|
52 |
|
|
Senior Executive Vice President |
Kenneth L. Tye(4)
|
|
|
53 |
|
|
Senior Executive Vice President and Chief Information Officer |
G. Sanders Griffith, III(5)
|
|
|
52 |
|
|
General Counsel and Secretary |
|
|
(1) |
As Messrs. Blanchard, Tomlinson and Woods are directors of
TSYS, relevant information pertaining to their positions with
TSYS is set forth under the caption Members of the Board
of Directors on page 8. |
|
(2) |
James B. Lipham was elected as Senior Executive Vice President
and Chief Financial Officer of TSYS in April 2004. From 1995
until 2004, Mr. Lipham served as Executive Vice President
and Chief Financial Officer of TSYS. From 1984 until 1995,
Mr. Lipham served in various financial capacities with
Synovus and/or TSYS, including Senior Vice President and
Treasurer. |
|
(3) |
William A. Pruett was elected as Senior Executive Vice President
of TSYS in April 2004. From 1993 until 2004, Mr. Pruett
served as Executive Vice President of TSYS. From 1976 until
1993, Mr. Pruett served in various capacities with CB&T
and/or TSYS, including Senior Vice President. |
|
(4) |
Kenneth L. Tye was elected as Senior Executive Vice President
and Chief Information Officer of TSYS in April 2004. From 1999
until 2004, Mr. Tye served as Executive Vice President and
Chief Information Officer of TSYS. From 1971 until 1999,
Mr. Tye served in various capacities with CB&T and/or
TSYS, including Senior Vice President. |
|
(5) |
G. Sanders Griffith, III has served as General Counsel of
TSYS since 1988 and was elected as Secretary of TSYS in June
1995. Mr. Griffith currently serves as Senior Executive
Vice President, General Counsel and Secretary of Synovus and has
held various positions with Synovus since 1988. |
14
STOCK OWNERSHIP OF DIRECTORS
AND EXECUTIVE OFFICERS
The following table sets forth ownership of shares of TSYS stock
by each director, each executive officer named in the Summary
Compensation Table on page 18 and all directors and
executive officers as a group as of December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of TSYS |
|
Shares of TSYS |
|
Shares of TSYS |
|
|
|
|
Stock |
|
Stock |
|
Stock |
|
|
|
Percentage of |
|
|
Beneficially |
|
Beneficially |
|
Beneficially |
|
Total |
|
Outstanding |
|
|
Owned with |
|
Owned with |
|
Owned with |
|
Shares of |
|
Shares of |
|
|
Sole Voting |
|
Shared Voting |
|
Sole Voting but |
|
TSYS Stock |
|
TSYS Stock |
|
|
And Investment |
|
And Investment |
|
No Investment |
|
Beneficially |
|
Beneficially |
|
|
Power as of |
|
Power as of |
|
Power as of |
|
Owned as of |
|
Owned as of |
Name |
|
12/31/05 |
|
12/31/05 |
|
12/31/05 |
|
12/31/05(1) |
|
12/31/05 |
|
|
|
|
|
|
|
|
|
|
|
James H. Blanchard
|
|
|
669,569 |
|
|
|
360,480 |
|
|
|
|
|
|
|
1,030,049 |
|
|
|
1 |
|
Richard Y. Bradley
|
|
|
24,803 |
|
|
|
5,000 |
|
|
|
500 |
|
|
|
30,303 |
|
|
|
* |
|
Kriss Cloninger III
|
|
|
657 |
|
|
|
|
|
|
|
500 |
|
|
|
1,157 |
|
|
|
* |
|
G. Wayne Clough
|
|
|
5,575 |
|
|
|
|
|
|
|
500 |
|
|
|
6,075 |
|
|
|
* |
|
Walter W. Driver, Jr.
|
|
|
2,914 |
|
|
|
|
|
|
|
500 |
|
|
|
3,414 |
|
|
|
* |
|
Gardiner W. Garrard, Jr.
|
|
|
22,421 |
|
|
|
|
|
|
|
500 |
|
|
|
22,921 |
|
|
|
* |
|
Sidney E. Harris
|
|
|
5,882 |
|
|
|
|
|
|
|
500 |
|
|
|
6,382 |
|
|
|
* |
|
John P. Illges, III
|
|
|
104,589 |
|
|
|
81,750 |
|
|
|
500 |
|
|
|
186,839 |
|
|
|
* |
|
Alfred W. Jones III
|
|
|
6,419 |
|
|
|
|
|
|
|
500 |
|
|
|
6,919 |
|
|
|
* |
|
Mason H. Lampton
|
|
|
77,768 |
|
|
|
30,614 |
|
|
|
500 |
|
|
|
108,882 |
|
|
|
* |
|
James B. Lipham
|
|
|
54,846 |
|
|
|
600 |
|
|
|
4,728 |
|
|
|
220,174 |
|
|
|
* |
|
W. Walter Miller, Jr.
|
|
|
79,252 |
|
|
|
47,362 |
(2) |
|
|
500 |
|
|
|
127,114 |
|
|
|
* |
|
H. Lynn Page
|
|
|
316,623 |
|
|
|
131,146 |
|
|
|
500 |
|
|
|
448,269 |
|
|
|
* |
|
William A. Pruett
|
|
|
137,635 |
|
|
|
|
|
|
|
5,446 |
|
|
|
177,781 |
|
|
|
* |
|
Philip W. Tomlinson
|
|
|
560,849 |
|
|
|
39,864 |
|
|
|
73,913 |
|
|
|
1,094,626 |
|
|
|
1 |
|
John T. Turner
|
|
|
21,600 |
|
|
|
576,000 |
|
|
|
500 |
|
|
|
598,100 |
|
|
|
* |
|
Kenneth L. Tye
|
|
|
33,006 |
|
|
|
32,500 |
|
|
|
4,810 |
|
|
|
70,316 |
|
|
|
* |
|
Richard W. Ussery
|
|
|
541,061 |
|
|
|
66,000 |
|
|
|
|
|
|
|
927,061 |
|
|
|
* |
|
M. Troy Woods
|
|
|
45,127 |
|
|
|
2,922 |
|
|
|
60,870 |
|
|
|
163,919 |
|
|
|
* |
|
James D. Yancey
|
|
|
690,176 |
|
|
|
42,730 |
|
|
|
500 |
|
|
|
733,406 |
|
|
|
* |
|
Rebecca K. Yarbrough
|
|
|
225,871 |
|
|
|
384,822 |
(3) |
|
|
500 |
|
|
|
611,193 |
|
|
|
* |
|
Directors and Executive Officers as a Group (22 persons)
|
|
|
3,629,331 |
|
|
|
1,801,790 |
|
|
|
173,501 |
|
|
|
6,594,322 |
|
|
|
3.3 |
|
|
|
* |
Less than one percent of the outstanding shares of TSYS stock. |
|
|
(1) |
The totals shown for the following directors and executive
officers of TSYS include the number of shares of TSYS stock that
each individual, as of December 31, 2005, had the right to
acquire within 60 days through the exercise of stock
options: |
|
|
|
|
|
Person |
|
Number of Shares | |
|
|
| |
James B. Lipham
|
|
|
160,000 |
|
William A. Pruett
|
|
|
34,700 |
|
Philip W. Tomlinson
|
|
|
420,000 |
|
Richard W. Ussery
|
|
|
320,000 |
|
M. Troy Woods
|
|
|
55,000 |
|
|
|
(2) |
Includes 44,881 shares of TSYS stock held by a charitable
foundation for which Mr. Millers spouse is among the
trustees. |
|
(3) |
Includes 72,000 shares of TSYS stock held in a trust for
which Mrs. Yarbrough is not the trustee.
Mrs. Yarbrough disclaims beneficial ownership of such
shares. |
For a detailed discussion of the beneficial ownership of Synovus
stock by TSYS named executive officers and directors and
by all directors and executive officers of TSYS as a group, see
Synovus Stock Ownership of Directors and Management
on page 28.
15
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is comprised of
four directors, each of whom the Board has determined to be an
independent director as defined by the listing standards of the
New York Stock Exchange. The duties of the Audit Committee are
summarized in this Proxy Statement under Committees of the
Board on page 4 and are more fully described in the
Audit Committee charter adopted by the Board of Directors.
One of the Audit Committees primary responsibilities is to
assist the Board in its oversight responsibility regarding the
integrity of TSYS financial statements and systems of
internal controls. Management is responsible for TSYS
accounting and financial reporting processes, the establishment
and effectiveness of internal controls and the preparation and
integrity of TSYS consolidated financial statements. KPMG
LLP, TSYS independent auditor, is responsible for
performing an independent audit of TSYS consolidated
financial statements and managements assessment of the
effectiveness of internal control over financial reporting in
accordance with the standards of the Public Company Accounting
Oversight Board (United States) and issuing opinions on whether
those financial statements are presented fairly in conformity
with accounting principles generally accepted in the United
States, on managements assessment of the effectiveness of
internal control over financial reporting and on the
effectiveness of TSYS internal control over financial
reporting. The Audit Committee is directly responsible for the
compensation, appointment and oversight of KPMG LLP. The
function of the Audit Committee is not to duplicate the
activities of management or the independent auditor, but to
monitor and oversee TSYS financial reporting process.
In discharging its responsibilities regarding the financial
reporting process, the Audit Committee:
|
|
|
|
|
Reviewed and discussed with management and KPMG LLP TSYS
audited financial statements as of and for the year ended
December 31, 2005; |
|
|
|
Discussed with KPMG LLP the matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with
Audit Committees); and |
|
|
|
Received from KPMG LLP the written disclosures and the letter
required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) and has
discussed with KPMG LLP their independence. |
Based upon the review and discussions referred to in the
preceding paragraph, the Audit Committee recommended to the
Board of Directors that the audited financial statements
referred to above be included in TSYS Annual Report on
Form 10-K for the
year ended December 31, 2005, to be filed with the
Securities and Exchange Commission.
The Audit Committee
H. Lynn Page, Chair
Kriss Cloninger III
Sidney E. Harris
John P. Illges, III
16
KPMG LLP Fees and Services
The following table presents fees for professional audit
services rendered by KPMG LLP for the audit of TSYS annual
financial statements for the years ended December 31, 2005
and December 31, 2004 and fees billed for other services
rendered by KPMG during those periods.
|
|
|
|
|
|
|
|
|
| |
|
|
2005 | |
|
2004 | |
|
|
| |
|
| |
Audit Fees(1)
|
|
$ |
1,167,000 |
|
|
$ |
991,000 |
|
Audit Related Fees(2)
|
|
|
1,226,000 |
|
|
|
1,251,000 |
|
Tax Fees(3)
|
|
|
355,000 |
|
|
|
273,000 |
|
All Other Fees
|
|
|
-0- |
|
|
|
-0- |
|
|
|
|
|
|
|
|
Total
|
|
$ |
2,748,000 |
|
|
$ |
2,515,000 |
|
|
|
|
|
|
|
|
|
|
(1) |
Audit fees represent fees for professional services provided in
connection with the audit of TSYS financial statements and
internal control over financial reporting, reviews of quarterly
financial information and audit services provided in connection
with other statutory or regulatory filings. |
|
(2) |
Audit related fees consisted principally of certain agreed upon
procedures engagements, employee benefit plan audits, due
diligence services related to business acquisitions and
assurance related services associated with data center reviews. |
|
(3) |
Tax fees consisted of fees for tax compliance/preparation
($88,000 in 2005) and tax consultation ($267,000 in 2005)
services. |
Policy on Audit Committee Pre-Approval
The Audit Committee has the responsibility for appointing,
setting the compensation for and overseeing the work of
TSYS independent auditor. In recognition of this
responsibility, the Audit Committee has established a policy to
pre-approve all audit and permissible non-audit services
provided by the independent auditor in order to assure that the
provision of these services does not impair the independent
auditors independence. TSYS Audit Committee
Pre-Approval Policy addresses services included within the four
categories of audit and permissible non-audit services, which
include Audit Services, Audit Related Services, Tax Services and
All Other Services.
The annual audit services engagement terms and fees are subject
to the specific pre-approval of the Audit Committee. In
addition, the Audit Committee must specifically approve
permissible non-audit services classified as All Other Services.
Prior to engagement, management submits to the Committee for
approval a detailed list of the Audit Services, Audit Related
Services and Tax Services that it recommends the Committee
engage the independent auditor to provide for the fiscal year.
Each specified service is allocated to the appropriate category
and accompanied by a budget estimating the cost of that service.
The Committee will, if appropriate, approve both the list of
Audit Services, Audit Related Services and Tax Services and the
budget for such services.
The Committee is informed at each Committee meeting as to the
services actually provided by the independent auditor pursuant
to the Pre-Approval Policy. Any proposed service that is not
separately listed in the Pre-Approval Policy or any service
exceeding the pre-approved fee levels must be specifically
pre-approved by the Committee. The Audit Committee has delegated
pre-approval authority to the Chairman of the Audit Committee.
The Chairman must report any pre-approval decisions made by him
to the Committee at its next scheduled meeting.
17
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes the cash and noncash compensation
for each of the last three fiscal years for the chief executive
officer of TSYS and for the other four most highly compensated
executive officers of TSYS.
SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term |
|
|
Annual Compensation |
|
Compensation Awards |
|
|
|
|
|
|
|
|
|
Other |
|
|
|
Securities |
|
All |
|
|
|
|
Annual |
|
Restricted |
|
Underlying |
|
Other |
|
|
|
|
Compensa- |
|
Stock |
|
Options/ |
|
Compensa- |
Name and Principal Position(1) |
|
Year |
|
Salary(2) |
|
Bonus |
|
tion(3) |
|
Award(s)(4) |
|
SARs(5) |
|
tion(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip W. Tomlinson
|
|
|
2005 |
|
|
$ |
662,400 |
|
|
$ |
1,080,450 |
|
|
|
-0- |
|
|
$ |
1,700,000 |
|
|
|
65,772 |
|
|
$ |
241,080 |
|
|
Chairman of the Board and |
|
|
2004 |
|
|
|
629,200 |
|
|
|
588,000 |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
58,189 |
|
|
|
117,652 |
|
|
Chief Executive Officer |
|
|
2003 |
|
|
|
536,488 |
|
|
|
249,244 |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
104,297 |
|
M. Troy Woods
|
|
|
2005 |
|
|
|
469,000 |
|
|
|
742,000 |
|
|
|
-0- |
|
|
|
1,400,010 |
|
|
|
22,371 |
|
|
|
164,800 |
|
|
President and Chief |
|
|
2004 |
|
|
|
434,000 |
|
|
|
400,000 |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
27,578 |
|
|
|
71,873 |
|
|
Operating Officer |
|
|
2003 |
|
|
|
315,000 |
|
|
|
110,250 |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
45,063 |
|
William A. Pruett
|
|
|
2005 |
|
|
|
361,250 |
|
|
|
467,469 |
|
|
|
-0- |
|
|
|
125,258 |
|
|
|
14,010 |
|
|
|
119,010 |
|
|
Senior Executive |
|
|
2004 |
|
|
|
334,000 |
|
|
|
233,800 |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
27,578 |
|
|
|
66,280 |
|
|
Vice President |
|
|
2003 |
|
|
|
315,000 |
|
|
|
110,250 |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
45,179 |
|
Kenneth L. Tye
|
|
|
2005 |
|
|
|
336,000 |
|
|
|
435,225 |
|
|
|
-0- |
|
|
|
110,630 |
|
|
|
12,374 |
|
|
|
108,500 |
|
|
Senior Executive |
|
|
2004 |
|
|
|
295,000 |
|
|
|
206,500 |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
23,490 |
|
|
|
58,951 |
|
|
Vice President and |
|
|
2003 |
|
|
|
278,250 |
|
|
|
97,388 |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
39,909 |
|
|
Chief Information Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James B. Lipham
|
|
|
2005 |
|
|
|
308,375 |
|
|
|
398,759 |
|
|
|
-0- |
|
|
|
108,744 |
|
|
|
12,164 |
|
|
|
102,275 |
|
|
Senior Executive Vice |
|
|
2004 |
|
|
|
290,000 |
|
|
|
203,000 |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
23,047 |
|
|
|
57,477 |
|
|
President and Chief |
|
|
2003 |
|
|
|
273,000 |
|
|
|
95,550 |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
38,667 |
|
|
Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Mr. Blanchard received no cash compensation from TSYS
during 2003, 2004 or 2005, other than director compensation. |
|
(2) |
Amount consists of base salary and director fees for
Messrs. Tomlinson and Woods. |
|
(3) |
Perquisites and other personal benefits are excluded because the
aggregate amount does not exceed the lesser of $50,000 or 10% of
annual salary and bonus for the named executives. |
|
(4) |
On January 20, 2005, 73,913 shares of restricted stock
were granted to Mr. Tomlinson and 52,174 shares of
restricted stock were granted to Mr. Woods, both of which
grants have a performance-based vesting schedule. These
restricted shares have seven
1-year performance
periods (2005-2011) during which the Compensation Committee
establishes an earnings per share goal and, if such goal is
attained during any performance period, 20% of the restricted
shares will vest. As of December 31, 2005,
Mr. Tomlinson held 73,913 shares of restricted stock
with a value of $1,462,738, Mr. Woods held
60,870 shares of restricted stock with a value of
$1,204,617, Mr. Pruett held 5,446 shares of restricted
stock with a value of $107,776, Mr. Tye held
4,810 shares of restricted stock with a value of $95,190
and Mr. Lipham held 4,728 shares of restricted stock
with a value of $95,526. Dividends are paid on all restricted
shares. |
|
(5) |
Options granted in Synovus stock. |
|
(6) |
The 2005 amount consists of contributions or other allocations
to defined contribution plans of $42,000 for each executive and
allocations pursuant to defined contribution excess benefit
agreements of $199,080, $122,800, $77,010, $66,500 and $60,275
for each of Messrs. Tomlinson, Woods, Pruett, Tye and
Lipham, respectively. |
18
Stock Option Exercises and Grants
The following tables provide certain information regarding stock
options granted and exercised in the last fiscal year and the
number and value of unexercised options at the end of the fiscal
year.
OPTION/ SAR GRANTS IN LAST FISCAL YEAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants | |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
% of Total | |
|
|
|
|
|
|
|
|
Options | |
|
|
|
Potential Realized Value at | |
|
|
|
|
SARs | |
|
|
|
Assumed Annual Rates of | |
|
|
Options/ | |
|
Granted to | |
|
Exercise | |
|
|
|
Stock Price Appreciation | |
|
|
SARs | |
|
Employees | |
|
or Base | |
|
|
|
For Option Term | |
|
|
Granted | |
|
in Fiscal | |
|
Price | |
|
Expiration | |
|
| |
Name |
|
(#) | |
|
Year | |
|
($/Share) | |
|
Date | |
|
5%($) | |
|
10%($)(1) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Philip W. Tomlinson
|
|
|
65,772 |
(2) |
|
|
9.9 |
% |
|
|
$26.82 |
|
|
|
1/20/2015 |
|
|
|
$1,109,373 |
|
|
|
$2,811,370 |
|
M. Troy Woods
|
|
|
22,731 |
(2) |
|
|
3.4 |
|
|
|
26.82 |
|
|
|
1/20/2015 |
|
|
|
377,331 |
|
|
|
956,230 |
|
William A. Pruett
|
|
|
14,010 |
(2) |
|
|
2.1 |
|
|
|
26.82 |
|
|
|
1/20/2015 |
|
|
|
236,306 |
|
|
|
598,846 |
|
Kenneth L. Tye
|
|
|
12,374 |
(2) |
|
|
1.9 |
|
|
|
26.82 |
|
|
|
1/20/2015 |
|
|
|
208,712 |
|
|
|
528,916 |
|
James B. Lipham
|
|
|
12,164 |
(2) |
|
|
1.9 |
|
|
|
26.82 |
|
|
|
1/20/2015 |
|
|
|
205,170 |
|
|
|
519,940 |
|
|
|
(1) |
The dollar gains under these columns result from calculations
using the identified growth rates and are not intended to
forecast future price appreciation of Synovus stock. |
|
(2) |
Options to purchase Synovus stock granted on January 21,
2005 at fair market value. Options become exercisable on
January 21, 2008 and are transferable to family members. |
AGGREGATED OPTION/ SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/ SAR VALUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of | |
|
|
|
|
|
|
Number of Securities | |
|
Unexercised In-the-Money | |
|
|
|
|
|
|
Underlying Unexercised | |
|
Options/SARs at FY-End | |
|
|
Shares | |
|
Value | |
|
Options/SARs at FY-End (#) | |
|
($)(1) | |
|
|
Acquired on | |
|
Realized | |
|
| |
|
| |
Name |
|
Exercise (#) | |
|
($)(1) | |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Philip W. Tomlinson
|
|
|
-0- |
|
|
|
-0- |
|
|
|
330,025 |
(2) |
|
|
623,961 |
|
|
|
$1,831,521 |
|
|
|
$88,724 |
|
|
|
|
-0- |
|
|
|
-0- |
|
|
|
420,000 |
(3) |
|
|
-0- |
|
|
|
2,780,400 |
|
|
|
-0- |
|
M. Troy Woods
|
|
|
30,123 |
(2) |
|
$ |
260,112 |
|
|
|
97,228 |
|
|
|
449,949 |
|
|
|
400,821 |
|
|
|
40,378 |
|
|
|
|
55,000 |
(3) |
|
|
364,100 |
|
|
|
55,000 |
|
|
|
-0- |
|
|
|
364,100 |
|
|
|
-0- |
|
William A. Pruett
|
|
|
-0- |
|
|
|
-0- |
|
|
|
129,978 |
(2) |
|
|
441,588 |
|
|
|
680,589 |
|
|
|
38,789 |
|
|
|
|
-0- |
|
|
|
-0- |
|
|
|
34,700 |
(3) |
|
|
-0- |
|
|
|
229,714 |
|
|
|
-0- |
|
Kenneth L. Tye
|
|
|
12,375 |
(2) |
|
|
157,567 |
|
|
|
60,090 |
|
|
|
435,864 |
|
|
|
220,159 |
|
|
|
33,123 |
|
James B. Lipham
|
|
|
-0- |
|
|
|
-0- |
|
|
|
107,358 |
(2) |
|
|
435,211 |
|
|
|
552,081 |
|
|
|
32,503 |
|
|
|
|
-0- |
|
|
|
-0- |
|
|
|
160,000 |
(3) |
|
|
-0- |
|
|
|
1,059,200 |
|
|
|
-0- |
|
|
|
(1) |
Market value of underlying securities at exercise or year-end,
minus the exercise or base price. |
|
(2) |
Options pertain to shares of Synovus stock. |
|
(3) |
Options pertain to shares of TSYS stock. |
Change in Control Arrangements
Long-Term Incentive Plans. Under the terms of the TSYS
2000 and 2002 Long-Term Incentive Plans and Synovus 1992,
1994, 2000 and 2002 Long-Term Incentive Plans, all awards become
automatically vested in the event of a Change of Control, as
defined below, unless otherwise determined by the Compensation
Committee at grant. Awards under the Plans may include stock
options, restricted stock, stock appreciation rights and
performance awards. Messrs. Tomlinson, Woods, Pruett, Tye
and Lipham each have received restricted stock and stock options
under the Synovus/ TSYS Long-Term Incentive Plans.
19
Change of Control Agreements. TSYS has entered into
Change of Control Agreements with Messrs. Tomlinson, Woods,
Pruett, Tye and Lipham, and certain other officers. In the event
of a Change of Control, an executive would receive the following:
|
|
|
|
|
Three times the executives base salary and bonus (bonus is
defined as the average bonus over the past three years measured
as a percentage multiplied by the executives current base
salary); |
|
|
|
Three years of medical, life, disability and other welfare
benefits; and |
|
|
|
A pro rata bonus through the date of termination for the
separation year. |
In order to receive these benefits, an executive must be
actually or constructively terminated within two years following
a Change of Control.
With respect to Synovus, a Change of Control under these
agreements is defined as: (i) the acquisition of 20% or
more of the beneficial ownership of Synovus
outstanding voting stock, with certain exceptions for Turner
family members; (ii) the persons serving as directors of
Synovus as of January 20, 2005, and their replacements or
additions, ceasing to comprise at least two-thirds of the Board
members; or (iii) a merger, consolidation, reorganization
or sale of Synovus assets unless the prior owners of
Synovus own more than 60% of the new company, no person owns
more than 20% of the new company, and two-thirds of the new
companys Board members are prior Board members of Synovus.
With respect to TSYS, a Change of Control is generally defined
the same as a Change of Control of Synovus, except that
(a) a spin-off of TSYS stock to Synovus shareholders, and
(b) any transaction in which Synovus continues to own more
than 50% of the outstanding stock of TSYS are specifically
excluded from the Change of Control definition. In the event an
executive is impacted by the Internal Revenue Service excise tax
that applies to certain Change of Control arrangements, and the
Change of Control payments exceed the IRS cap by more than 110%,
the executive would receive additional payments so that he or
she would be in the same position as if the excise tax did not
apply. The Change of Control Agreements do not provide for any
retirement benefits or perquisites.
20
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in
cumulative shareholder return on TSYS stock with the cumulative
total return of the Standard & Poors 500 Index
and the Standard & Poors Systems Software Index
for the last five fiscal years (assuming a $100 investment on
December 31, 2000 and reinvestment of all dividends).
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG TSYS, THE S&P 500 INDEX
AND THE S&P SYSTEMS SOFTWARE INDEX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
2000 | |
|
2001 | |
|
2002 | |
|
2003 | |
|
2004 | |
|
2005 | |
| |
TSYS
|
|
$ |
100 |
|
|
$ |
95 |
|
|
$ |
61 |
|
|
$ |
141 |
|
|
$ |
110 |
|
|
$ |
91 |
|
|
S&P 500
|
|
$ |
100 |
|
|
$ |
88 |
|
|
$ |
69 |
|
|
$ |
88 |
|
|
$ |
98 |
|
|
$ |
103 |
|
|
S&P SS
|
|
$ |
100 |
|
|
$ |
105 |
|
|
$ |
79 |
|
|
$ |
92 |
|
|
$ |
100 |
|
|
$ |
95 |
|
21
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of TSYS is responsible for the
oversight and administration of the TSYS executive compensation
program. The Committees charter reflects these
responsibilities. To fulfill its responsibilities, the Committee
meets at scheduled times during the year, and also takes action
by written consent. The Chairman of the Committee reports on
Committee actions at meetings of the TSYS Board of Directors.
Under its charter, the Committee has the authority to retain
outside advisors to assist the Committee in fulfilling its
responsibilities. In this regard, the Committee has directly
engaged an outside compensation consultant to assist the
Committee in its review of the compensation for TSYS
executive officers.
Overall Compensation Philosophy
The Committees overall compensation philosophy is that a
substantial portion (though not necessarily a majority) of an
executives compensation should be at risk and
vary with the performance of TSYS (and, in some circumstances,
Synovus). Both the short-term and long-term performance of TSYS
(and Synovus) directly affect executive compensation
each executives annual bonus and retirement plan
contributions vary with TSYS short-term performance and
each executives long-term incentive awards vary with the
long-term performance of TSYS (and Synovus). The Committee
believes that the TSYS executive compensation program has a
higher proportion of total compensation at risk
based upon performance than the executive compensation programs
at competitor companies. The Committee believes that its
at risk philosophy effectively aligns the executive
compensation program with the interests of shareholders.
Primary Components of Executive Compensation
The primary components of the TSYS executive compensation
program are:
|
|
|
|
|
Base Salary |
|
|
|
Annual Bonus |
|
|
|
Long-Term Incentives |
Each of these primary components is discussed below in detail.
Base Salary. Base salary is an executives annual
rate of pay without regard to any other elements of
compensation. The primary consideration used by the Committee to
determine an executives base salary is a market comparison
of comparable positions with companies engaged in business
services with similar total revenues (similar
companies), based upon the executives level of
responsibility and experience. Base salaries are targeted in the
median range of similar companies. In addition to market
comparisons, internal equity and individual performance are also
considered in determining an executives base salary. Based
upon market comparisons, the Committee increased
Mr. Tomlinsons base salary in 2005, as well as the
base salaries of TSYS other executive officers.
Annual Bonus. The Committee currently awards annual
bonuses under two different plans, the Synovus Executive Bonus
Plan (which was approved by TSYS shareholders in 2001) and the
Synovus Incentive Bonus Plan. The Committee selects the
participants in each Plan from year to year. For 2005, the
Committee selected Messrs. Tomlinson and Woods to
participate in the Executive Bonus Plan while
Messrs. Pruett, Tye 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 earnings based on the
achievement of performance goals that are established each year
by the Committee. The performance goals are chosen by the
Committee from variety of performance measurements. For 2005,
the Committee established a payout matrix based on attainment of
growth in diluted earnings per share goals for
Mr. Tomlinson and Woods and TSYS other executive
officers. The target percentage payouts under the Plans for 2005
were 100% for Messrs. Tomlinson and Woods and 70% for
Messrs. Pruett, Tye and Lipham. TSYS financial
performance and each
22
executives individual performance can reduce the bonus
awards determined by the attainment of the goals. TSYS exceeded
its earnings per share growth goal for 2005. However, based upon
a recommendation from management, the Committee exercised
downward discretion and reduced the bonus awards by 25% based
upon affordability and pending deconversions of TSYS clients.
After exercising downward discretion, the Committee awarded
Messrs. Tomlinson, Woods, Pruett, Tye and Lipham the bonus
amounts as set forth in the Summary Compensation Table.
Long-Term Incentives. The Committee has awarded long-term
incentives in the form of 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 compensation to the returns to Synovus
and TSYS shareholders. Restricted stock awards are designed to
create equity ownership and to focus executives on the long-term
performance of TSYS and Synovus. Stock options provide
executives with the opportunity to buy and maintain an equity
interest in TSYS and Synovus 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 2005 long-term
incentive awards, total shareholder return and peer comparisons
were measured during the 2002 to 2004 performance period. Based
upon Synovus performance as measured by the payout matrix
during the performance period, the Committee awarded
Messrs. Tomlinson, Woods, Pruett, Tye and Lipham Synovus
stock options of 65,772, 22,371, 14,010, 12,374 and
12,164 shares, respectively, and the Committee awarded
Messrs. Woods, Pruett, Tye and Lipham TSYS restricted
shares of 8,696, 5,446, 4,810, and 4,728 shares,
respectively, which options and restricted shares vest on
January 20, 2008. In addition, in order to reflect their
promotion into new roles and their assumption of new
responsibilities, the Committee granted Mr. Tomlinson and
Mr. Woods performance-based restricted shares of 73,913 and
52,174 shares, respectively. These performance-based
restricted shares have seven
1-year performance
periods (2005-2011)
during which the Committee establishes an earnings per share
goal and, if such goal is attained during any performance
period, 20% of the restricted shares will vest.
Stock Ownership Guidelines. The Committee has adopted
Executive Stock Ownership Guidelines to align the interests of
TSYS executive officers to that of TSYS
shareholders. For the named executive officers, the Guideline is
a number of shares equal to five (for Mr. Tomlinson), four
(for Mr. Woods), or three (for Messrs. Pruett, Tye and
Lipham) times the executives base salary as of
January 1, 2006, divided by the average closing price of
TSYS stock for the 2005 calendar year. The Guideline, which was
initially effective January 1, 2004, is recalculated at the
beginning of each calendar year. Executives have a five year
grace period to fully achieve the Guideline, with an interim
three year grace period to attain a specified percentage of the
Guideline. Until the Guideline is achieved, executives are
required to retain all net shares received upon the exercise of
stock options, excluding shares used to pay the options
exercise price and any taxes due upon exercise. The Guidelines
permit the development of an alternative ownership plan by the
Chairman of the Board and Chairman of the Compensation Committee
in the event of an executives severe financial hardship.
Other Compensation Components
TSYS executives receive other benefits in addition to the
components described above. Those benefits, which are described
below, are retirement and health and welfare benefits,
perquisites and change of control/severance agreements.
Retirement Plans. TSYS participates in three qualified
retirement benefit plans: the Synovus/ TSYS Money Purchase
Pension Plan, the Synovus/ TSYS Profit Sharing Plan and the
Synovus/ TSYS 401(k) Savings Plan (collectively the
Retirement Plans). The Retirement Plans, which are
designed to provide retirement income, are directly related to
TSYS performance because, in addition to the annual 7% of
compensation money purchase pension contribution, additional
contributions can be made (up to a maximum of 14% of
compensation), depending upon TSYS performance. For 2005,
Mr. Tomlinson and TSYS other executive officers
received a contribution of 7% of compensation under the Synovus/
TSYS Profit Sharing Plan and 6% of
23
compensation under the Synovus/ TSYS 401(k) Savings Plan
based upon TSYS performance. The Synovus/ TSYS Deferred
Compensation Plan (Deferred Plan) is a non-qualified
deferred compensation plan that replaces benefits lost under the
qualified retirement plans due to legal limits. The Deferred
Plan does not provide executives with an above
market rate of return. Instead, executives deferred
accounts under the Deferred Plan are invested among the
investment alternatives offered under the Synovus/
TSYS 401(k) Savings Plan at the election of each executive.
Health and Welfare
Benefits. Health and welfare
benefits are designed to protect against catastrophic events,
such as illness, disability and death. Executives generally
receive the same health and welfare benefits offered to other
TSYS team members. There were no premiums paid on split-dollar
life insurance policies on behalf of Mr. Tomlinson or any
executive officer during 2005 and, due to recent legislative
changes, the Committee does not anticipate that there will be
any split-dollar premiums paid in the future.
Perquisites. The
Committees philosophy is that perquisites should be an
extremely small portion of total compensation, although some
perquisites are offered as a part of the executive compensation
program in order to attract and retain executives. The
perquisites provided to Mr. Tomlinson and TSYS executives
during 2005 included an auto allowance, personal use of
corporate aircraft, payment of club dues, and financial planning
assistance. Valued on an incremental cost basis, the perquisites
do not exceed the lesser of $50,000 or 10% of the annual salary
and bonus for Mr. Tomlinson and the named executives.
Change of Control/ Severance
Arrangements. With respect to
severance arrangements, the Committees philosophy is that
compensation should be earned while an executive is employed,
and not after the executive has separated employment. The
Committee has approved limited arrangements, however, when it
deems appropriate under the circumstances. For example, the
Committee has approved change of control arrangements for its
executives. During 2004 and the beginning of 2005, the Committee
reviewed the change of control arrangements and determined that
certain provisions were not in line with the Committees
philosophy or market practice. As a result, the Change of
Control Agreements were amended at the beginning of 2005 to:
(1) change the definition of a change in
control from a merger in which less than two-thirds (2/3)
of shareholders carryover to a merger in which less than sixty
percent (60%) of shareholders carryover, (2) eliminate the
ability of an executive to trigger benefits by voluntarily
resigning during the 13th month following a change of
control, (3) extend the time during which an executive can
receive benefits under the agreement upon an involuntary
termination without cause or a voluntary termination for good
reason from one year to two years, and (4) provide that a
gross-up for excise
taxes only occurs if the total change of control payments exceed
110% of the applicable IRS cap.
Section 162(m). Internal
Revenue Code Section 162(m) 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. When
necessary to meet the requirements for deductibility under the
Internal Revenue Code, a member of the Committee may abstain
from voting on performance based compensation. For 2005,
Messrs. Tomlinson and Woods 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.
Total Compensation Review
During 2005, the Committee reviewed all components of executive
compensation for Mr. Tomlinson and TSYS other
executive officers and concluded that the total compensation
amounts (and, in the case of the change of control arrangements,
the potential payout amounts) are reasonable and not excessive.
In addition, a tally sheet for Mr. Tomlinson
was prepared and reviewed by the Committee. The tally
sheet added all of the components of
Mr. Tomlinsons
24
compensation, including base salary, bonus, long-term incentive
compensation, health and welfare benefits, retirement benefits
and perquisites. The tally sheet also set forth the
value of accumulated stock option and restricted stock gains
with respect to both previous and outstanding equity grants. In
addition, the tally sheet projected future salary
and bonus amounts and the potential value of future stock option
and restricted stock grants. The tally sheet also
projected dollar amounts that would be payable to
Mr. Tomlinson in the event of a change of control or under
several potential severance scenarios. The Committee believes
that the executive compensation programs
pay-for-performance philosophy has aligned executive pay at TSYS
with the interests of TSYS shareholders.
The Compensation Committee
Mason H. Lampton, Chair
G. Wayne Clough
Walter W. Driver, Jr.
25
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Mason H. Lampton, G. Wayne Clough and Walter W.
Driver, Jr. served as members of TSYS Compensation
Committee during 2005. No member of the Committee is a current
or former officer or employee of TSYS or its subsidiaries.
King & Spalding, a law firm located in Atlanta,
Georgia, performed legal services on behalf of TSYS during 2005.
The amount of fees paid to King & Spalding for legal
services represents less than 1% of the firms 2005 gross
revenues. Walter W. Driver, Jr. was Chairman of
King & Spalding during 2005 but is no longer affiliated
with the law firm. Mr. Driver did not personally provide
any legal services to TSYS.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TSYS has entered into an agreement with CB&T with respect to
the use of aircraft owned or leased by CB&T and W.C.B. Air
L.L.C. CB&T and W.C.B. Air are parties to a Joint Ownership
Agreement pursuant to which they jointly own or lease aircraft.
W.C. Bradley Co. owns all of the limited liability company
interests of W.C.B. Air. CB&T and W.C.B. Air have each
agreed to pay fixed fees for each hour they fly the aircraft
owned and/or leased pursuant to the Joint Ownership Agreement.
TSYS paid CB&T $1,947,275 for its use of the aircraft during
2005, which was used by CB&T to satisfy its commitments
under the Joint Ownership Agreement. The charges payable by TSYS
to CB&T in connection with its use of this aircraft
approximate charges available to unrelated third parties in the
State of Georgia for use of comparable aircraft for commercial
purposes. During 2005, TSYS also leased office space in
Columbus, Georgia at fair market value from W.C. Bradley Co. for
lease payments of $726,512. Also during 2005, W.C. Bradley Co.
paid a subsidiary of TSYS $1,933,677 for various printing
services. The charges for these services are comparable to
charges between similarly situated unrelated third parties for
similar services. James H. Blanchard, Chairman of the Executive
Committee of TSYS, Chairman of the Board of Synovus and a
director of CB&T, is a director of W.C. Bradley Co. James D.
Yancey, a director of Synovus and TSYS and Chairman of the Board
of CB&T, is a director of W.C. Bradley Co. John T.
Turner, a director of W.C. Bradley Co., is a director of TSYS
and CB&T. William B. Turner, Jr., John T.
Turners brother, is an officer and director of W.C.
Bradley Co. and is also a director of Synovus and CB&T.
W. Walter Miller, Jr., a director of W.C. Bradley Co.,
is a director of TSYS.
During 2005, TSYS paid $712,058 to Communicorp, Inc. for
printing, marketing and promotional services. Communicorp, Inc.
is a wholly owned subsidiary of Aflac Incorporated. Kriss
Cloninger III, a director of TSYS, is President and Chief
Financial Officer of Aflac Incorporated. The payments to
Communicorp, Inc. by TSYS represent less than .01% of Aflac
Incorporateds 2005 gross revenues. The payments for these
services are comparable to payments between similarly situated
third parties for similar services.
John Dale Hester, a
son-in-law of
Richard W. Ussery, a director of TSYS, was employed by TSYS
as a senior director of sales and marketing during 2005.
Mr. Hester received $164,864 in compensation during 2005.
Mack Paul Daffin, Jr., a
son-in-law of
Philip W. Tomlinson, Chairman of the Board and Chief
Executive Officer of TSYS, was employed by TSYS as a senior
director of distributed technology during 2005. Mr. Daffin
received $148,351 in compensation during 2005. Roderick Cowan
Hunter, the son-in-law
of director James D. Yancey, was employed by TSYS as a
director of sales and marketing during 2005. Mr. Hunter
received $121,594 in compensation during 2005. The compensation
received by the employees listed above is determined under the
standard compensation practices of TSYS.
For information about transactions with an entity that is an
affiliate of Walter W. Driver, Jr., a director of
TSYS, see Compensation Committee Interlocks and Insider
Participation immediately above.
26
For a description of certain transactions between TSYS and its
affiliated companies, upon whose boards of directors certain of
TSYS directors also serve, see Electronic Payment
Processing Services Provided to CB&T and Certain of
Synovus Subsidiaries; Other Agreements Between TSYS,
Synovus, CB&T and Certain of Synovus
Subsidiaries on page 29.
RELATIONSHIPS BETWEEN TSYS, SYNOVUS, CB&T
AND CERTAIN OF SYNOVUS SUBSIDIARIES
Beneficial Ownership of TSYS Stock by CB&T
The following table sets forth the number of shares of TSYS
stock beneficially owned by CB&T, the only known beneficial
owner of more than 5% of the issued and outstanding shares of
TSYS stock, as of December 31, 2005.
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Shares of TSYS Stock |
|
Percentage of Outstanding Shares of |
|
|
Beneficially Owned |
|
TSYS Stock Beneficially Owned |
Name and Address of Beneficial Owner |
|
as of 12/31/05 |
|
as of 12/31/05 |
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|
|
|
Columbus Bank and Trust Company
|
|
|
159,630,980 |
(1)(2) |
|
|
81 |
% |
1148 Broadway
Columbus, Georgia 31901 |
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(1) |
CB&T individually owns these shares. |
|
(2) |
As of December 31, 2005, Synovus Trust Company, N.A., a
wholly owned trust company subsidiary of CB&T, and the other
banking, brokerage, investment advisory and trust company
subsidiaries of Synovus held in various fiduciary or advisory
capacities a total of 3,116,723 shares (1.6%) of TSYS
stock. Of this total, Synovus Trust Company held
2,763,470 shares as to which it possessed sole voting
power, 2,751,441 shares as to which it possessed sole
investment power, 270,328 shares as to which it possessed
shared voting power and 359,624 shares as to which it
possessed shared investment power. The other banking, brokerage,
investment advisory and trust company subsidiaries of Synovus
held 5,658 shares as to which they possessed sole
investment power. Synovus and its subsidiaries disclaim
beneficial ownership of all shares of TSYS stock which are held
by them in various fiduciary, advisory, non-advisory and agency
capacities. |
CB&T, by virtue of its individual ownership of
159,630,980 shares, or 81%, of the outstanding shares of
TSYS stock on December 31, 2005 is able to, and intends to,
elect a majority of TSYS Board of Directors. CB&T
presently controls TSYS. Synovus presently controls CB&T.
Interlocking Directorates of TSYS, Synovus and
CB&T
Five of the eighteen members of and nominees to serve on
TSYS Board of Directors also serve as members of the
Boards of Directors of Synovus and CB&T. They are
James H. Blanchard, Richard Y. Bradley,
Gardiner W. Garrard, Jr., H. Lynn Page and
James D. Yancey. John P. Illges, III, Alfred W.
Jones III and Mason H. Lampton serve as directors of
Synovus. John T. Turner serves as a director of CB&T.
27
Synovus Stock Ownership of Directors and Management
The following table sets forth the number of shares of Synovus
stock beneficially owned by TSYS directors, each executive
officer named in the Summary Compensation Table on page 18
and all directors and executive officers as a group as of
December 31, 2005.
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| |
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Shares of | |
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Shares of | |
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|
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|
Shares of | |
|
Synovus | |
|
Synovus | |
|
|
|
|
Synovus | |
|
Stock | |
|
Stock | |
|
|
|
|
Stock | |
|
Beneficially | |
|
Beneficially | |
|
|
|
Percentage of | |
|
|
Beneficially | |
|
Owned | |
|
Owned | |
|
|
|
Outstanding | |
|
|
Owned | |
|
with | |
|
with Sole | |
|
Total Shares | |
|
Shares of | |
|
|
with Sole | |
|
Shared | |
|
Voting but | |
|
of Synovus | |
|
Synovus | |
|
|
Voting and | |
|
Voting and | |
|
No | |
|
Stock | |
|
Stock | |
|
|
Investment | |
|
Investment | |
|
Investment | |
|
Beneficially | |
|
Beneficially | |
|
|
Power as of | |
|
Power as of | |
|
Power as of | |
|
Owned as of | |
|
Owned as of | |
Name |
|
12/31/05 | |
|
12/31/05 | |
|
12/31/05 | |
|
12/31/05(1) | |
|
12/31/05 | |
|
|
| |
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| |
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| |
|
| |
|
| |
James H. Blanchard
|
|
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1,336,597 |
|
|
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203,815 |
|
|
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49,687 |
|
|
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2,904,517 |
|
|
|
1.0 |
|
Richard Y. Bradley
|
|
|
23,124 |
|
|
|
84,887 |
|
|
|
500 |
|
|
|
108,511 |
|
|
|
* |
|
Kriss Cloninger III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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G. Wayne Clough
|
|
|
|
|
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|
|
|
|
|
|
|
|
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|
|
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Walter W. Driver, Jr.
|
|
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600 |
|
|
|
|
|
|
|
|
|
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600 |
|
|
|
|
|
Gardiner W. Garrard, Jr.
|
|
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204,147 |
|
|
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793,682 |
|
|
|
500 |
|
|
|
998,329 |
|
|
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* |
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Sidney E. Harris
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|
|
|
|
|
|
|
|
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|
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|
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John P. Illges, III
|
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281,204 |
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|
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441,429 |
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500 |
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|
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723,133 |
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|
|
* |
|
Alfred W. Jones III
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|
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10,079 |
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|
|
|
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500 |
|
|
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10,579 |
|
|
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* |
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Mason H. Lampton
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97,020 |
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178,981 |
(2) |
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500 |
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276,501 |
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* |
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James B. Lipham
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7,945 |
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138,350 |
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|
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* |
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W. Walter Miller, Jr.
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36,135 |
|
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3,470,354 |
(3) |
|
|
|
|
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3,522,022 |
|
|
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1.0 |
|
H. Lynn Page
|
|
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721,418 |
|
|
|
11,515 |
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|
|
500 |
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|
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733,433 |
|
|
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* |
|
William A. Pruett
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11,082 |
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168,638 |
|
|
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* |
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Philip W. Tomlinson
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|
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55,296 |
|
|
|
|
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443,510 |
|
|
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* |
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John T. Turner
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456,808 |
|
|
|
2,872,795 |
(3) |
|
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3,329,603 |
|
|
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1.0 |
|
Kenneth L. Tye
|
|
|
|
|
|
|
|
|
|
|
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|
|
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83,580 |
|
|
|
* |
|
Richard W. Ussery
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|
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37,645 |
|
|
|
|
|
|
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1,076,487 |
|
|
|
* |
|
M. Troy Woods
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|
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1,190 |
|
|
|
|
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|
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|
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125,996 |
|
|
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* |
|
James D. Yancey
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1,110,591 |
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88,532 |
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500 |
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2,680,785 |
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1.0 |
|
Rebecca K. Yarbrough
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47,441 |
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|
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12,273 |
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59,714 |
|
|
|
* |
|
Directors and Executive Officers as a Group (22 persons)
|
|
|
4,639,092 |
|
|
|
5,302,346 |
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89,725 |
|
|
|
14,974,867 |
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4.7 |
|
|
|
* |
Less than one percent of the outstanding shares of Synovus stock. |
|
|
(1) |
The totals shown for the following directors and executive
officers of TSYS include the number of shares of Synovus stock
that each individual, as of December 31, 2005, had the
right to acquire within 60 days through the exercise of
stock options: |
|
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|
Number | |
|
|
of | |
Person |
|
Shares | |
|
|
| |
James H. Blanchard
|
|
|
1,314,418 |
|
James B. Lipham
|
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130,405 |
|
W. Walter Miller, Jr.
|
|
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15,533 |
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William A. Pruett
|
|
|
157,556 |
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Philip W. Tomlinson
|
|
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388,214 |
|
Kenneth L. Tye
|
|
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83,580 |
|
Richard W. Ussery
|
|
|
1,038,842 |
|
M. Troy Woods
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124,806 |
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James D. Yancey
|
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|
1,481,162 |
|
28
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|
In addition, the other executive officers of TSYS had rights to
acquire an aggregate of 209,188 shares of Synovus stock
within 60 days through the exercise of stock options. |
|
|
(2) |
Includes 176,187 shares of Synovus stock held in a trust
for which Mr. Lampton is not the trustee. Mr. Lampton
disclaims beneficial ownership of such shares. |
|
(3) |
Includes 2,859,341 shares of Synovus stock held by a
charitable foundation of which Mr. Millers spouse and
Mr. Turner are among the trustees. |
Electronic Payment Processing Services Provided to
CB&T and Certain of Synovus Subsidiaries; Other
Agreements Between TSYS, Synovus, CB&T and Certain of
Synovus Subsidiaries
The terms of the transactions set forth below are comparable to
those provided for between similarly situated unrelated third
parties in similar transactions.
During 2005, TSYS provided electronic payment processing
services to CB&T and certain of Synovus other banking
subsidiaries. During 2005, TSYS derived $4,996,055 in revenues
from CB&T and certain of Synovus other banking
subsidiaries for the performance of electronic payment
processing services and $6,074,717 in revenues from Synovus and
its subsidiaries for the performance of other data processing,
software and business process management services.
TSYS and Synovus are parties to Lease Agreements pursuant to
which Synovus leased from TSYS office space for lease payments
aggregating $945,382 during 2005.
TSYS and Synovus are parties to Management Agreements pursuant
to which Synovus provides certain management services to TSYS.
During 2005, these services included human resource services,
maintenance services, security services, communications
services, corporate education services, travel services,
investor relations services, corporate governance services,
legal services, regulatory and statutory compliance services,
executive management services performed on behalf of TSYS by
certain of Synovus officers and financial services. As
compensation for management services provided during 2005, TSYS
paid Synovus aggregate management fees of $8,131,427. Management
fees are subject to future adjustments based upon charges at the
time by unrelated third parties for comparable services.
During 2005, Synovus Trust Company served as Trustee of various
employee benefit plans of TSYS. During 2005, TSYS paid Synovus
Trust Company trustees fees under these plans of $563,074.
Also during 2005, Synovus Investment Advisors, Inc., a
subsidiary of Synovus, provided advisory services to various
employee benefit plans of TSYS for advisory fees of $28,453.
During 2005, CB&T paid TSYS Total Debt Management, Inc., a
subsidiary of TSYS, $324,000 for debt collection services.
During 2005, Columbus Depot Equipment Company, a wholly owned
subsidiary of TSYS, and Synovus, CB&T and two of
Synovus other subsidiaries were parties to Lease
Agreements pursuant to which Synovus, CB&T and two of
Synovus other subsidiaries leased from Columbus Depot
Equipment Company computer related equipment for bankcard and
bank data processing services for lease payments aggregating
$9,540.
During 2005, Synovus and CB&T paid TSYS an aggregate of
$1,563,962 for miscellaneous reimbursable items, such as data
links, network services and postage, primarily related to
processing services provided by TSYS.
During 2005, Synovus, CB&T and other Synovus subsidiaries
paid to Columbus Productions, Inc., a wholly owned subsidiary of
TSYS, $607,880 for printing services.
During 2005, CB&T leased office space from TSYS for lease
payments of $39,405. In addition, TSYS leased furniture and
equipment from CB&T during 2005 for lease payments of
$101,592. Also during 2005, TSYS and its subsidiaries were paid
$2,827,759 of interest by CB&T and certain of Synovus
other banking subsidiaries in connection with deposit accounts
with, and commercial paper purchased from, CB&T and certain
of Synovus other banking subsidiaries. Furthermore, during
2005 TSYS paid CB&T and certain of Synovus other
banking subsidiaries fees of $104,831 for the provision of other
banking services and $37,215 of interest.
29
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires TSYS officers and directors, and persons who own
more than ten percent of TSYS stock, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with
the Securities and Exchange Commission and the New York Stock
Exchange. Officers, directors and greater than ten percent
shareholders are required by SEC regulations to furnish TSYS
with copies of all Section 16(a) forms they file.
To TSYS knowledge, based solely on its review of the
copies of such forms received by it, and written representations
from certain reporting persons that no Forms 5 were
required for those persons, TSYS believes that during the fiscal
year ended December 31, 2005, all Section 16(a) filing
requirements applicable to its officers, directors and greater
than ten percent beneficial owners were complied with.
SHAREHOLDER PROPOSALS AND NOMINATIONS
In order for a shareholder proposal to be considered for
inclusion in TSYS Proxy Statement for the 2007 Annual
Meeting of Shareholders, the written proposal must be received
by the Corporate Secretary of TSYS at the address below. The
Corporate Secretary must receive the proposal no later than
November 20, 2006. The proposal will also need to comply
with the SECs regulations under
Rule 14a-8
regarding the inclusion of shareholder proposals in company
sponsored proxy materials. Proposals should be addressed to:
Corporate Secretary
Total System Services, Inc.
1111 Bay Avenue, Suite 500
Columbus, Georgia 31901
For a shareholder proposal that is not intended to be included
in TSYS Proxy Statement, or if you want to nominate a
person for election as a director, you must provide written
notice to the Corporate Secretary at the address above. The
Secretary must receive this notice not earlier than
December 20, 2006 and not later than February 3, 2007.
The notice of a proposed item of business must provide
information as required in the bylaws of TSYS which, in general,
require that the notice include for each matter a brief
description of the matter to be brought before the meeting; the
reason for bringing the matter before the meeting; your name,
address, and number of shares you own; and any material interest
you have in the proposal.
The notice of a proposed director nomination must provide
information as required in the bylaws of TSYS which, in general,
require that the notice of a director nomination include your
name, address and the number of shares you own; the name, age,
business address, residence address and principal occupation of
the nominee; and the number of shares beneficially owned by the
nominee. It must also include the information that would be
required to be disclosed in the solicitation of proxies for the
election of a director under federal securities laws. You must
submit the nominees consent to be elected and to serve. A
copy of the bylaw requirements will be provided upon request to
the Corporate Secretary at the address above.
30
GENERAL INFORMATION
Financial Information
Detailed financial information for TSYS and its subsidiaries for
its 2005 fiscal year is included in TSYS 2005 Annual
Report that is being mailed to TSYS shareholders together
with this Proxy Statement.
Solicitation of Proxies
TSYS will pay the cost of soliciting proxies. Proxies may be
solicited on behalf of TSYS by directors, officers or employees
by mail, in person or by telephone, facsimile or other
electronic means. TSYS will reimburse brokerage firms, nominees,
custodians and fiduciaries for their out-of-pocket expenses for
forwarding proxy materials to beneficial owners.
Householding
The Securities and Exchange Commission has adopted amendments to
its proxy rules which permit companies and intermediaries, such
as brokers and banks, to satisfy delivery requirements for proxy
statements with respect to two or more shareholders sharing the
same address by delivering a single proxy statement to those
shareholders. This method of delivery, often referred to as
householding, should reduce the amount of duplicate information
that shareholders receive and lower printing and mailing costs
for companies. TSYS is not householding proxy materials for its
shareholders of record in connection with its 2006 Annual
Meeting. However, we have been notified that certain
intermediaries will household proxy materials. If you hold your
shares of TSYS stock through a broker or bank that has
determined to household proxy materials:
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|
Only one annual report and proxy statement will be delivered to
multiple shareholders sharing an address unless you notify your
broker or bank to the contrary; |
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|
You can contact TSYS by calling
(706) 649-5220 or
by writing Investor Relations Manager, Total System Services,
Inc., P.O. Box 120, Columbus, Georgia 31902 to request
a separate copy of the annual report and proxy statement for the
2006 Annual Meeting and for future meetings or you can contact
your bank or broker to make a similar request; and |
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|
|
You can request delivery of a single copy of annual reports or
proxy statements from your bank or broker if you share the same
address as another TSYS shareholder and your bank or broker has
determined to household proxy materials. |
The above Notice of Annual Meeting and Proxy Statement are sent
by order of the TSYS Board of Directors.
|
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|
|
|
Philip W. Tomlinson |
|
Chairman of the Board and |
|
Chief Executive Officer |
March 20, 2006
31
APPENDIX A
TOTAL SYSTEM SERVICES, INC.
DIRECTOR INDEPENDENCE STANDARDS
The following independence standards have been approved by
the Board of Directors and are included within TSYS
Corporate Governance Guidelines.
A majority of the Board of Directors will be independent
directors who meet the criteria for independence required by the
NYSE. The Corporate Governance and Nominating Committee will
make recommendations to the Board annually as to the
independence of directors as defined by the NYSE. To be
considered independent under the NYSE Listing Standards, the
Board must determine that a director does not have any direct or
indirect material relationship with the Company. The Board has
established the following standards to assist it in determining
director independence. A director is not independent if:
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|
The director is, or has been within the last three years, an
employee of the Company or an immediate family member is, or has
been within the last three years, an executive officer of the
Company. |
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|
|
The director has received, or has an immediate family member who
has received, during any twelve-month period within the last
three years, more than $100,000 in direct compensation from the
Company, other than director and committee fees and pension or
other forms of deferred compensation for prior service (provided
such compensation is not contingent in any way on continued
service). (Compensation received by an immediate family member
for service as an employee of the Company (other than an
executive officer) is not taken into consideration under this
independence standard). |
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|
(A) The director or an immediate family member is a current
partner of a firm that is the Companys internal or
external auditor; (B) the director is a current employee of
such a firm; (C) the director has an immediate family
member who is a current employee of such a firm and who
participates in the firms audit, assurance or tax
compliance (but not tax planning) practice; or (D) the
director or an immediate family member was within the last three
years (but is no longer) a partner or employee of such a firm
and personally worked on the Companys audit within that
time. |
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|
The director or an immediate family member is, or has been
within the last three years, employed as an executive officer of
another company where any of the Companys present
executive officers at the same time serves or served on that
companys compensation committee. |
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|
The director is a current employee, or an immediate family
member is a current executive officer, of a company that has
made payments to, or received payments from, the Company for
property or services in an amount which, in any of the last
three fiscal years, exceeds the greater of $1 million, or
2% of such other companys consolidated gross revenues. |
The following relationships will not be considered to be
material relationships that would impair a directors
independence:
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|
The director is a current employee, or an immediate family
member of the director is a current executive officer, of a
company that has made payments to, or received payments from,
the Company for property or services (including financial
services) in an amount which, in the prior fiscal year, is less
than the greater of $1 million, or 2% of such other
companys consolidated gross revenues. (In the event this
threshold is exceeded, and where applicable in the standards set
forth below, the three year look back period
referenced above will apply to future independence
determinations). |
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|
The director or an immediate family member of the director is a
partner of a law firm that provides legal services to the
Company and the fees paid to such law firm by the Company in the
prior fiscal year were less than the greater of $1 million,
or 2% of the law firms total revenues. |
A-1
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|
The director or an immediate family member of the director is an
executive officer of a tax exempt organization and the
Companys contributions to the organization in the prior
fiscal year were less than the greater of $1 million, or 2%
of the organizations consolidated gross revenues. |
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|
The director received less than $100,000 in direct compensation
from the Company during the prior twelve month period, other
than director and committee fees and pension or other forms of
deferred compensation for prior service (provided such
compensation is not contingent in any way on continued service). |
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The directors immediate family member received in his or
her capacity as an employee of the Company (other than as an
executive officer of the Company), less than $250,000 in direct
compensation from the Company in the prior fiscal year, other
than director and committee fees and pension or other forms of
deferred compensation for prior service (provided such
compensation is not contingent in any way on continued service). |
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|
The director or an immediate family member of the director has,
directly, in his or her individual capacities, or, indirectly,
in his or her capacity as the owner of an equity interest in a
company of which he or she is not an employee, lending
relationships, deposit relationships or other banking
relationships (such as depository, trusts and estates, private
banking, investment banking, investment management, custodial,
securities brokerage, insurance, cash management and similar
services) with the Company provided that: |
|
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|
|
1) |
such relationships are in the ordinary course of
business of the Company and are on substantially the same terms
as those prevailing at the time for comparable transactions with
non-affiliated persons; and |
|
|
2) |
no event of default has occurred under any extension of
credit from an affiliate of the Company. |
For relationships not described above or otherwise not covered
in the above examples, a majority of the Companys
independent directors, after considering all of the relevant
circumstances, may make a determination whether or not such
relationship is material and whether the director may therefore
be considered independent under the NYSE Listing Standards. The
Company will explain the basis of any such determinations of
independence in the next proxy statement.
For purposes of these independence standards an immediate
family member includes a persons spouse, parents,
children, siblings, mothers and
fathers-in-law, sons
and daughters-in-law,
brothers and
sisters-in-law, and
anyone (other than domestic employees) who shares such
persons home.
For purposes of these independence standards Company
includes any parent or subsidiary in a consolidated group with
the Company.
A-2
SYNOVUS FINANCIAL CORP.
EXECUTIVE CASH BONUS PLAN
ARTICLE I
OBJECTIVE OF THE PLAN
The purposes of this Synovus Financial Corp. Executive Cash
Bonus Plan (Plan) are to reward selected officers of
Synovus Financial Corp. (the Company) and certain of
its subsidiaries (Subsidiaries) for superior
corporate performance measured by achievement of financial
performance and strategic corporate objectives and to attract
and retain top quality executives.
ARTICLE II
PLAN ADMINISTRATION
This Plan is administered by the Compensation Committee (the
Committee) of the Companys Board of Directors
(the Board); provided, however, that with respect to
matters involving employees of any publicly-traded Subsidiary of
the Company, the Committee shall be the compensation
committee of such publicly-traded Subsidiary. The Committee (and
the compensation committee of any publicly-traded Subsidiary of
the Company) shall be composed of two or more outside directors
as defined in Section 162(m) of the Internal Revenue Code
of 1986, as amended (Code).
ARTICLE III
PARTICIPANTS
Participation is limited to the Chief Executive Officer and the
four highest compensated officers of the Company and any
publicly-traded Subsidiary of the Company as selected from
year-to-year by the members of the Committee
(Participants).
ARTICLE IV
PERFORMANCE OBJECTIVES
Each fiscal year, the Committee shall establish
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performance objectives for such and/or the succeeding fiscal
year for the Company, any Subsidiary, or any business segment or
business unit of the Company or any Subsidiary, based upon such
criteria as may be from time to time considered by the
Committee, which criteria may include, not to the exclusion of
other criteria, criteria that has been approved by the
shareholders of the Company or the shareholders of any
publicly-traded Subsidiary of the Company; and |
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a system which equates the attainment of various performance
objectives by the Company and Subsidiaries for such and/or the
succeeding fiscal year into various percentages of the base
salaries of eligible officers of the Company and Subsidiaries
for such and/or the succeeding fiscal year which may be awarded
to such Employees who are selected to be Participants in the
Plan as bonuses. |
The maximum award under this Plan to any participant for any
performance period shall be $2,000,000.
ARTICLE V
AWARD OF BONUSES
As soon as practicable after each fiscal year for which
performance objectives have, pursuant to Article IV, been
established, the Committee shall determine whether the Company
and each Subsidiary attained the previously-established
performance objectives. Assuming such performance objectives
shall be attained, the Committee shall determine, in its sole
and exclusive discretion, whether any bonuses shall be awarded
for such fiscal year. In determining the amount of bonuses
to be awarded under the Plan, the Committee shall have the right
to exercise negative discretion or decrease an award otherwise
payable to a Participant, but the Committee shall have no
discretion to increase the amount of any award under the Plan.
Such bonuses shall be awarded as soon as practicable thereafter
and the officers who are determined to be entitled to receive
such bonuses shall be promptly notified of the award thereof.
ARTICLE VI
DEFERRAL OF BONUSES
Any bonus or any portion of any bonus awarded to a Participant
may, at the election of such Participant, be deferred pursuant
to the provisions of the Synovus Financial Corp./ Total System
Services, Inc. Deferred Compensation Plan (Deferred
Plan), as such Deferred Plan may be amended from time to
time. All bonus amounts deferred under the Deferred Plan shall
be paid in accordance with the distribution provisions of the
Deferred Plan, as such provisions may be amended from time to
time.
ARTICLE VII
NO ENTITLEMENT TO BONUS
Participants are entitled to a distribution under this Plan only
upon the approval of the award by the Committee and no
Participant shall be entitled to a bonus under the Plan due to
the attainment of performance objectives. In addition, any
Participant not employed by the Company or a Subsidiary on
December 31 of any fiscal year will not be entitled to a bonus
unless otherwise determined by the Committee.
ARTICLE VIII
TERMINATION OF PLAN
The Company Board of Directors may amend or terminate the Plan
at any time and for any reason without prior notice.
ARTICLE IX
PARTICIPANTS RIGHT OF ASSIGNABILITY
Bonus amounts hereunder shall not be subject to assignment,
pledge or other disposition, nor shall such amounts be subject
to garnishment, attachment, transfer by operation of law, or any
legal process.
ARTICLE X
GOVERNING LAW
The validity, construction, performance and effect of the Plan
shall be governed by Georgia law.
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PROXY |
TOTAL SYSTEM SERVICES, INC. |
PROXY |
POST OFFICE BOX 2506, COLUMBUS, GEORGIA 31902-2506
ANNUAL MEETING OF SHAREHOLDERS OF TSYS TO BE HELD APRIL 20,
2006
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF TSYS
The undersigned shareholder of Total System Services, Inc.,
hereby appoints James B. Lipham and Dorenda K. Weaver
as Proxies, each of them singly and each with power of
substitution, to vote all shares of Common Stock of TSYS of the
undersigned or with respect to which the undersigned is entitled
to vote on February 14, 2006 at the ANNUAL MEETING OF THE
SHAREHOLDERS OF TSYS to be held on the 20th day of April, 2006,
and at any adjournments or postponements thereof, with all the
powers the undersigned would possess if personally present.
The Board of Directors is not aware of any matters likely to be
presented for action at the Annual Meeting of Shareholders of
TSYS, other than the matters listed herein. However, if any
other matters are properly brought before the Annual Meeting,
the persons named in this Proxy or their substitutes will vote
upon such other matters in accordance with their best judgement.
This Proxy is revocable at any time prior to its use.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY
THE UNDERSIGNED. IF THIS PROXY IS SIGNED AND RETURNED AND DOES
NOT SPECIFY A VOTE ON ANY PROPOSAL, THE PROXY WILL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
IF YOU DO NOT VOTE BY PHONE OR OVER THE INTERNET, PLEASE VOTE,
DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
Please mark, date and sign exactly as your name appears on the
proxy card. When shares are held jointly, both holders should
sign. When signing as attorney, executor, administrator,
trustee, custodian, or guardian, please give your full title. If
the holder is a corporation or partnership, the full corporate
or partnership name should be signed by a duly authorized
officer.
Address Change/ Comments (Mark the corresponding box on the
reverse side)
FOLD AND DETACH HERE
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Mark Here for Address Change or Comments
SEE REVERSE SIDE |
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSALS
LISTED BELOW.
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For All |
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For All |
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Nominees |
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Withhold |
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Except |
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ABSTAIN |
1.
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To elect the following individuals as directors to serve
until the Annual Meeting of Shareholders in 2009: |
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To approve the Synovus Financial Corp. Executive Cash Bonus
Plan (TSYS is an 81% subsidiary of Synovus). |
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(01) James H. Blanchard
(02) Richard Y. Bradley
(03) Walter W. Driver, Jr.
(04) Gardiner W. Garrard, Jr.
(05) John P. Illges, III
(06) W. Walter Miller, Jr. |
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FOR |
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AGAINST |
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ABSTAIN |
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Note: If you do not wish your shares voted For a
particular nominee, mark the For All Except box and
strike a line through the name(s) of the nominee(s). Your shares
will be voted for the remaining nominee(s) in the list above. |
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To ratify the appointment of KPMG LLP as TSYS
independent auditor for the year 2006. |
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FOR |
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ABSTAIN |
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To fix the number of TSYS directors at 19. |
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Choose
MLINKsm
for fast, easy and secure 24/7 online access to your
future proxy materials, investment plan statements, tax
documents and more. Simply log on to Investor
ServiceDirect® |
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The undersigned hereby acknowledges receipt of NOTICE of the
ANNUAL MEETING and the PROXY STATEMENT and hereby revokes all
Proxies previously given by the undersigned for the ANNUAL
MEETING. |
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at www.melloninvestor.com/isd where step- by-step instructions
will prompt you through enrollment. |
PLEASE BE SURE TO SIGN AND DATE THIS PROXY.
Shareholder sign
here
Co-owner
sign
here
Date
FOLD AND DETACH HERE
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting are available through 11:59 PM
Eastern Time
the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies
to vote your shares in the same
manner as if you marked, signed and returned your proxy
card.
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Internet
http://www.proxyvoting.com/tss |
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Telephone
1-866-540-5760 |
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Mail |
Use the Internet to vote your proxy. Have your proxy card in
hand when you access the web site. |
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Use any touch-tone telephone to vote your proxy. Have your proxy
card in hand when you call. |
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Mark, sign and date your proxy card and return it in the
enclosed postage-paid envelope. |
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If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.
You can view the Annual Report and Proxy Statement
on the Internet at http://annualreport.tsys.com/