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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
The Colonial BancGroup, 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):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] 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.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[LOGO]
Colonial
BancGroup
Montgomery, Alabama
TO OUR STOCKHOLDERS:
The annual meeting of the stockholders of The Colonial BancGroup,
Inc. will be held at 10:00 a.m., Wednesday, April 17, 2002 at the
Colonial Financial Center, One Commerce Street, Montgomery, Alabama.
Enclosed is a Notice of the meeting, a Proxy Statement, a proxy
card and the Annual Report to Shareholders for 2001. We hope that you
will study the enclosed material carefully and attend the meeting in
person.
Whether you plan to attend the meeting or not, please sign and date
the enclosed proxy card and return it in the accompanying envelope as
promptly as possible. Alternatively, you may submit your vote by
telephone or via the internet if your proxy card contains instructions
for doing so. The proxy may be revoked by your vote in person at the
meeting, by submission of a later dated proxy, or by you giving written
notice of revocation to the Secretary of The Colonial BancGroup, Inc.,
at any time prior to the voting thereof. Thank you for your support.
Sincerely,
/s/ ROBERT E. LOWDER
Robert E. Lowder
Chairman of the Board,
Chief Executive Officer and President
March 18, 2002
NOTICE
of the
ANNUAL MEETING OF STOCKHOLDERS
of
THE COLONIAL BANCGROUP, INC.
To Be Held April 17, 2002
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of The
Colonial BancGroup, Inc. ("BancGroup"), a Delaware corporation, will be held at
the Colonial Financial Center, One Commerce Street, Montgomery, Alabama, on
Wednesday, April 17, 2002 at 10:00 a.m., central time, for the following
purposes:
1. To elect the nominees named in the Proxy Statement as directors to
serve terms of three years as set out therein.
2. To transact such other business as may properly come before the
meeting or any adjournments thereof, but which is not now anticipated.
Details respecting these matters are set forth in the accompanying Proxy
Statement. Only stockholders of record at the close of business on February 20,
2002 will be entitled to notice of, and to vote at, the meeting. A complete
list of the stockholders of record entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number
of shares registered in the name of each stockholder, shall be open to
examination by any stockholder at BancGroup's principal office at One Commerce
Street, Montgomery, Alabama, during ordinary business hours for any purpose
germane to the meeting. Such list will be open for a period of at least ten
days prior to the meeting.
All stockholders of BancGroup are cordially invited to attend the meeting in
person. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE SIGN
AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING ENVELOPE AS
PROMPTLY AS POSSIBLE. ALTERNATIVELY, IF YOUR PROXY CARD CONTAINS INSTRUCTIONS
AS TO VOTING VIA TELEPHONE OR INTERNET, YOU MAY FOLLOW THOSE INSTRUCTIONS. THE
PROXY MAY BE REVOKED BY YOUR VOTE IN PERSON AT THE MEETING, BY YOUR EXECUTION
AND SUBMISSION OF A LATER DATED PROXY BEFORE THE MEETING, OR IF YOU VOTE
ELECTRONICALLY, THEN BEFORE 5:00 P.M. EASTERN TIME ON APRIL 16, 2002, OR BY YOU
GIVING WRITTEN NOTICE OF REVOCATION TO THE SECRETARY OF THE COLONIAL BANCGROUP,
INC. AT ANY TIME PRIOR TO THE VOTING THEREOF.
By Order of the Board of Directors
/s/ W. Flake Oakley
W. Flake Oakley
Executive Vice President,
Chief Financial Officer and Secretary
March 18, 2002
THE COLONIAL BANCGROUP, INC.
One Commerce Street
Post Office Box 1108
Montgomery, Alabama 36101
Telephone: 334-240-5000
-----------------
PROXY STATEMENT
FOR 2002 ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement and the accompanying proxy are furnished on or about
March 18, 2002 by The Colonial BancGroup, Inc. ("BancGroup") to the holders of
record of common stock, par value $2.50 per share, of BancGroup (the "Common
Stock") in connection with BancGroup's annual meeting of stockholders (the
"Annual Meeting"), and any adjournments thereof, to be held on Wednesday, April
17, 2002, at 10:00 a.m. at the Colonial Financial Center, One Commerce Street,
Montgomery, Alabama. The matters to be considered and acted upon, including the
election of directors, are described herein.
The Board of Directors of BancGroup (the "Board") recommends the election of
the six director-nominees named in this Proxy Statement for a term of three
years.
The enclosed proxy is solicited on behalf of the Board and is revocable at
any time prior to the voting of such proxy by giving written notice of
revocation to the Secretary of BancGroup, by submitting a later-dated proxy, or
by voting in person at the Annual Meeting. Mere attendance at the Annual
Meeting without submitting a later-dated proxy will not be sufficient to revoke
a previously submitted proxy. All properly submitted proxies delivered pursuant
to this solicitation will be voted at the Annual Meeting and in accordance with
instructions, if any. If no instructions are given, the proxies will be voted
FOR election of the director-nominees named herein, and in accordance with the
instructions of management as to any other matters that may come before the
Annual Meeting.
The cost of soliciting proxies will be borne by BancGroup. In addition to
the use of the mail, proxies may be solicited by personal interview, telephone,
facsimile, e-mail or any other electronic means, and banks, brokers, nominees
or fiduciaries will be required to forward the soliciting material to the
principals and to obtain authorization of the execution of proxies. BancGroup
also will allow proxies to be delivered by telephone or via the Internet.
BancGroup may, upon request, reimburse banks, brokers and other institutions,
nominees and fiduciaries for their expenses in forwarding proxy material to the
principals. BancGroup has retained the firm of Georgeson & Co. to solicit
street-name holders and will pay such firm a fee of $6,500 plus out of pocket
expenses.
Stockholders Eligible to Vote
This Proxy Statement is furnished to the holders of Common Stock who were
holders of record as of the close of business on February 20, 2002. Only those
holders are eligible to vote at the Annual Meeting.
Votes will be tabulated and counted by one or more inspectors of election
appointed by the Chairman of the Board. Proxies marked as abstentions and
shares held in street names which have been designated by brokers on proxy
cards as not voted will not be counted as votes cast. Such proxies will be
counted for purposes of determining a quorum at the Annual Meeting. A quorum
consists of a majority of the shares of Common Stock outstanding.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
As of February 20, 2002, BancGroup had issued and outstanding 115,395,315
shares of Common Stock with approximately 9,742 stockholders of record. Each
such share is entitled to one vote. In addition, as of that date, 3,855,191
shares of Common Stock were subject to issuance upon the exercise of options
pursuant to BancGroup's stock option plans, and up to 499,546 shares of Common
Stock were issuable upon conversion of BancGroup's Convertible Subordinated
Debentures. There are currently 200,000,000 shares of Common Stock authorized.
BancGroup is not aware of any material change in the ownership of Common Stock
since February 20, 2002.
1
Principal Stockholders
The following table shows the only person who is known to BancGroup to be
the beneficial owner, as of February 20, 2002, of more than 5% of BancGroup's
outstanding Common Stock.
Shares of BancGroup
Beneficially Owned
--------------------------
Percentage of
Common Class
Name and Address Stock Outstanding(1)
---------------- --------- --------------
Robert E. Lowder..... 6,374,441(1) 5.5%
Post Office Box 1108
Montgomery, AL 36101
--------
(1)Includes 240,000 shares of Common Stock subject to options under BancGroup's
stock option plans. In addition, the total includes 25,960 shares and 22,628
shares owned by Mr. Lowder's wife and stepson, respectively. Mr. Lowder
disclaims beneficial ownership of these shares.
Security Ownership of Management
The following table indicates for each director, director-nominee, executive
officer, and all executive officers and directors of BancGroup as a group the
number of shares of outstanding Common Stock beneficially owned on February 20,
2002.
Shares of BancGroup
Beneficially Owned
--------------------------------
Common Percentage of Class
Name Stock Outstanding(1)
---- --------- -------------------
DIRECTORS
Lewis E. Beville............................... 3,988(1) *
William Britton................................ 46,919(2) *
Jerry J. Chesser............................... 328,336 *
Augustus K. Clements, III...................... 49,779 *
Robert S. Craft................................ 38,353(3) *
Patrick F. Dye................................. 33,950 *
Clinton O. Holdbrooks.......................... 568,271(4) *
Harold D. King................................. 217,362(5) *
Robert E. Lowder............................... 6,374,441(6) 5.5%
John Ed Mathison............................... 44,924(7) *
Milton E. McGregor............................. 100,000 *
John C.H. Miller, Jr........................... 93,810(8) *
Joe D. Mussafer................................ 45,749 *
William E. Powell, III......................... 33,474 *
James W. Rane.................................. 6,143 *
Frances E. Roper............................... 758,138 *
Simuel Sippial................................. 18,017(9) *
Edward V. Welch................................ 63,519 *
EXECUTIVE OFFICERS WHO ARE NOT ALSO DIRECTORS
W. Flake Oakley................................ 160,336(10) *
Sarah H. Moore................................. 46,437(10) *
Caryn D. Cope.................................. 39,517(10) *
All Executive Officers and Directors as a Group 9,071,380 7.9%
2
--------
* Represents less than 1%.
(1)Includes 356 shares owned by Mr. Beville's son.
(2)Includes 7,232 shares owned by Mr. Britton's wife. Mr. Britton disclaims
beneficial ownership of the shares.
(3)Includes 2,808 shares held by the IRA of Mr. Craft's wife. Mr. Craft
disclaims beneficial ownership of the shares.
(4)Includes 118,996 shares held by Mr. Holdbrooks as trustee.
(5)Includes 40,780 shares owned by Mr. King's wife and 20 shares held in a
trust of which he is beneficiary. Mr. King disclaims beneficial ownership
of the shares.
(6)Includes 240,000 shares of Common Stock subject to options under
BancGroup's stock option plans. In addition, the total includes 25,960
shares and 22,628 shares owned by Mr. Lowder's wife and stepson,
respectively. Mr. Lowder disclaims beneficial ownership of these shares.
(7)Includes 2,000 shares owned by Dr. Mathison's wife. Dr. Mathison disclaims
beneficial ownership of the shares.
(8)Includes 55,000 shares subject to options under BancGroup's stock option
plans. Includes 260 shares owned by Mr. Miller's wife. Mr. Miller disclaims
beneficial ownership of these shares.
(9)Includes 500 shares owned by Mr. Sippial's son.
(10)W. Flake Oakley, Sarah H. Moore and Caryn Cope hold vested options
respecting 98,000, 30,500 and 20,200 shares, respectively, pursuant to
BancGroup's stock option plans, excluding options that are not exercisable
within 60 days of February 20, 2002, due to vesting requirements. Mr.
Oakley's amount includes 4,250 shares owned by his sons. Ms. Moore's amount
includes 4,100 shares owned by her sons.
3
ELECTION OF DIRECTORS
The Board recommends that the stockholders elect the six persons named below
to hold office for terms of three years, or until their successors are elected
and qualified. BancGroup's Amended and Restated Certificate of Incorporation
provides that the number of directors which shall constitute the entire Board
shall be fixed from time to time by resolutions adopted by the Board, but shall
not be less than three persons. If the stockholders elect directors as
recommended by the Board, then the Board shall consist of 18 members. By
resolution, the Board has currently fixed the maximum number of directors at 23.
BancGroup's Amended and Restated Certificate of Incorporation provides for
the election of directors by classes to terms of three years, with one class of
approximately one-third of the total number of directors to be elected each
year. Six nominees are proposed for election to the class of directors whose
terms expire in 2005. At the Annual Meeting, proxies cannot be voted for more
than six directors whose terms expire in 2005.
If, prior to the voting at the Annual Meeting, any person proposed for
election as a director is unavailable to serve or for good cause cannot serve,
the shares represented by all valid proxies may be voted for the election of
such substitute as the members of the Board may recommend. The management of
BancGroup knows of no reason why any nominated person would be unavailable to
serve as a director.
Assuming a quorum is present at the Annual Meeting, a plurality of the votes
cast will be sufficient to elect the directors. On the proxy card, voting for
directors is Proposal 1.
The bylaws of BancGroup contain certain limitations on stockholder
nominations of candidates for election as directors. See "Bylaw Provisions
Regarding Conduct of Stockholders' Meetings" for a description of such
limitations.
The following table provides certain biographical information about each
nominee to be proposed on behalf of the Board and the directors whose terms
will not expire until 2003 and 2004. Unless otherwise indicated, each person
has been engaged in the principal occupation shown for the last five years.
Executive officers serve at the discretion of the Board.
DIRECTORS NOMINATED FOR A TERM EXPIRING IN 2005:
Position and Office
Name, Age and Year Held with BancGroup Present and Principal
Became Director And Subsidiaries(1) Occupation for Last Five Years
--------------- ------------------------------ ----------------------------------------
William Britton Director, BancGroup; Director, Chairman of the Board,
77, 1985 Northern Region; Member, Muscle Shoals Center,
Audit Committee (truck service and retail sales business),
Muscle Shoals, AL
Augustus K. Clements, III Director, BancGroup; Director, General Agent, New England
59, 1997 Colonial Bank; Director, Financial/The Clements Agency
Montgomery Region; Member, (insurance agency); Managing Partner,
Executive Committee; Member, Clements Financial Group
Nominating Committee; Montgomery, AL
Member, Colonial Bank Trust
Committee
Patrick F. Dye Director, BancGroup; Member, Special Advisor, Auburn University,
62, 1981 Asset/Liability Committee since December, 1992; Head Football
Coach and Athletic Director, Auburn
University, 1981-1992; Part Owner,
Craftmasters Printing, 2001; Assistant
to the President, Auburn University
Foundation, 2002; Host of Pat Dye
Outdoors (Radio Show), Owner of
Hunting Preserve, Auburn, AL
4
DIRECTORS NOMINATED FOR TERMS EXPIRING IN 2005:
Position and Office
Name, Age and Year Held with BancGroup Present and Principal
Became Director And Subsidiaries(1) Occupation for Last Five Years
--------------- ----------------------------------- ----------------------------------------
Milton E. McGregor Director, BancGroup; Member, Chief Executive Officer and President,
62, 1993 Personnel and Compensation Macon County Greyhound Park d/b/a
Committee Victoryland; Chief Executive Officer
and President, Jefferson County Racing
Association (greyhound racing facility)
since 1992, Montgomery, AL
William E. Powell, III Director, BancGroup; Director, Executive Vice President, Alabama
57, 1987 Montgomery Region; Member, Audit Cattlemen's Association (trade
Committee association representing the beef cattle
industry), Montgomery, AL
Simuel Sippial Director, BancGroup; Director, President, Sippial Enterprises, Inc. (real
58, 1997 Colonial Bank; Director, Montgomery estate investment company),
Region; Member, Personnel and Montgomery, AL
Compensation Committee; Member,
Audit Committee; Member, Colonial
Bank Trust Committee; Member,
Colonial Bank CRA Committee
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 2004:
Robert S. Craft Director, BancGroup; Chairman of the President, Craft Development Corp.
50, 1992 Board, Gulf Coast Region; Member, (golf course ownership and
Executive Committee development company); Managing
Partner, Pinehurst Development (real
estate development company); Partner,
Craft Turf Farms (turf grass production
and sales company); President, Wingo
Trucking (trucking company);
Managing Member, Woodlands
Management Co. (golf course
management company); Managing
Member, Bright's Creek Development
Co. (golf course ownership company);
Managing Member, TRI-TEL, LLC
(hotel ownership company); President,
Cotton Creek Condominium
Development Corp. (condominium
development company); Managing
Member, Turf Properties, LLC and
Turf Properties II, LLC, (turf grass
production and sales company), Foley,
AL
Clinton O. Holdbrooks Director, BancGroup; Chairman of the Chairman of the Board, Central
63, 1986 Board, Central Alabama Region; Alabama Region since June 20, 2000;
Member, Audit Committee Chairman of the Board, East Central
Region, January 1988 to June 2000,
Vestavia Hills, AL
5
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 2004:
Position and Office
Name, Age and Year Held with BancGroup Present and Principal
Became Director And Subsidiaries(1) Occupation for Last Five Years
--------------- ------------------- ------------------------------
Harold D. King Vice Chairman, BancGroup; Director, Vice Chairman, BancGroup, since
69, 1986 Central Alabama Region; Director, October 1987, Pell City, AL
Colonial Bank; Member, Executive
Committee; Chairman, Asset/Liability
Committee; Member, Colonial Bank
Trust Committee; Member, Colonial
Bank CRA Committee
Robert E. Lowder* Chairman of the Board, Chief Chief Executive Officer and Chairman
59, 1981 Executive Officer and President, of the Board, (and President at all
BancGroup; Chairman, Executive relevant times except 1997-2000)
Committee; BancGroup; Chairman of Colonial BancGroup; Chief Executive
the Board, Chief Executive Officer and Officer and Chairman of the Board,
President, Colonial Bank; Director, (and President at all relevant times
Central Alabama Region; Director, except 1997-2000) Colonial Bank;
Northern Region; Director, Gulf Coast Chairman of the Board and CEO,
Region; Director, Montgomery Region; Colonial Mortgage Company until
Director, Central Florida Region; 1999; Chairman of the Board and
Director, South Florida Region; President, Colonial Broadcasting
Director, Bay Area Region; Director, Company, Inc. until 1998,
Southwest Florida Region; Chairman of Montgomery, AL
the Board, Georgia Region; Director,
Texas Region; Director, Nevada
Region; Chairman of the Board,
Colonial Investment Services, Inc.;
Chairman of the Board, Chief
Executive Officer and President,
Colonial BancGroup Building
Corporation
John C. H. Miller, Jr. Director, BancGroup; Director, Gulf Member, Miller, Hamilton Snider &
58, 1981 Coast Region; Chairman, Personnel and Odom, L.L.C. (law firm); Vice
Compensation Committee; Member, President, The Pilot Group (consulting
Executive Committee; Chairman, firm), until 2001, Mobile, AL
Nominating Committee
James W. Rane Director, BancGroup; Member, Asset/ President, Great Southern Wood
54, 1997 Liability Committee Preserving, Inc., Great Southern Wood
of Florida, Inc. and Great Southern
Wood of North Alabama, Inc., Great
Southern Wood - Statesboro, Inc.,
Statesboro GA; Manager, Texas, Great
Southern Wood, LLC (lumber
companies), Abbeville, AL
6
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 2003:
Position and Office
Name, Age and Year Held with BancGroup Present and Principal
Became Director And Subsidiaries(1) Occupation for Last Five Years
--------------- ------------------------------------ ----------------------------------------
Lewis E. Beville Director, BancGroup; Director, Gulf Vice President of Thames, Batre,
50, 1997 Coast Region; Chairman, Audit Mattei, Beville and Ison (insurance
Committee agency), Mobile, AL
Jerry J. Chesser Director, BancGroup; Chairman of the President, Shelby Contracting Co., Inc.
65, 1984 Board, Northern Region; Member, (general contractor), Huntsville, AL
Audit Committee
John Ed Mathison Director, BancGroup; Director, Senior Minister, Frazer Memorial
63, 1987 Montgomery Region; Member, United Methodist Church,
Personnel and Compensation Montgomery, AL
Committee
Joe D. Mussafer Director, BancGroup; Director, President, Montgomery Beverage
62, 1981 Montgomery Region; Member, Company, Inc. (wholesale beverage
Personnel and Compensation distributorship), Montgomery, AL
Committee; Member, Asset/Liability
Committee; Member, Nominating
Committee
Frances E. Roper Director, BancGroup; Director, Owner, Roper's Flowers (retail florist);
82, 1984 Northern Region; Member, Personnel Owner, Frances Roper Corporation
and Compensation Committee; (renting and leasing properties),
Member, Audit Committee Huntsville, AL
Edward V. Welch Director, BancGroup; Director, Chairman of the Board, Welch,
69, 1981 Montgomery Region; Member, Asset/ Hornsby & Welch, Inc, (investment
Liability Committee advisory firm) and Trinity Investments,
Inc., (investments holding company),
since May 1994, Montgomery, AL
* Indicates that the director is also an executive officer.
(1)All references to the word "Region" refer to a region of Colonial Bank.
BancGroup's Amended and Restated Certificate of Incorporation provides that
there shall be an Audit Committee of the Board composed of not less than three
directors appointed by the Board at least annually, none of whom shall be
active officers of BancGroup, whose duty it shall be to make an examination at
least once each year into the financial affairs of BancGroup and to report the
results of their examination in writing to the Board at its next regular
meeting. The Audit Committee may make recommendations to the Board and, with
the approval of the Board, may employ an independent firm of certified public
accountants. The Audit Committee of the Board presently consists of Lewis E.
Beville, Chairman, William Britton, Jerry J. Chesser, Clinton O. Holdbrooks,
William E. Powell, Frances E. Roper, and Simuel Sippial. The Audit Committee
met four times in 2001 (See "Audit Committee Report").
BancGroup has a Personnel and Compensation Committee presently consisting of
John C. H. Miller, Jr., Chairman, John Ed Mathison, Milton E. McGregor, Joe D.
Mussafer, Frances E. Roper, and Simuel Sippial. The principal functions of this
committee are to make recommendations from time to time to the Board regarding
compensation and personnel matters, compensation plans in which officers and
directors are eligible to participate, the establishment of or changes in
benefit plans in which officers and employees participate, and personnel
policies. A subcommittee of this committee consisting of Joe D. Mussafer,
Frances E. Roper, and
7
Simuel Sippial performs these functions regarding executive officers of
BancGroup. The committee met one time, and the subcommittee met three times in
2001 (See "Executive Compensation Committee Report").
BancGroup created a Nominating Committee in January, 2002. This committee's
purpose is to nominate directors to stand for election as directors of
BancGroup. This committee presently consists of John C. H. Miller, Jr.,
Chairman, Augustus K. Clements, III, and Joe D. Mussafer. This committee met
once in 2002 to recommend nomination of the directors listed on pages 4 and 5,
who stand for election at the 2002 annual meeting of stockholders.
BancGroup has an Executive Committee presently consisting of Robert E.
Lowder, Chairman, Augustus K. Clements, III, Robert S. Craft, Harold D. King,
and John C.H. Miller, Jr. The principal functions of this committee are to
perform certain actions in lieu of the Board at times when a meeting of the
full Board is not feasible or practicable. This committee met twice in 2001.
BancGroup has an Asset/Liability Committee (ALCO) presently consisting of
Harold D. King, Chairman, Patrick F. Dye, Joe D. Mussafer, James W. Rane, and
Edward V. Welch. The principal function of this committee is to establish a
framework of procedures, responsibilities and policies regarding the management
of BancGroup's assets and liabilities in order to optimize the net interest
margin and net income under a range of interest rate scenarios while assuming
reasonable business risks. Management provides to this committee detailed
reports on the company's interest rate risk and liquidity position along with
current strategies. The committee met four times in 2001.
During 2001, the Board met four times. All incumbent BancGroup directors
attended 75% or more of the Board meetings and their respective committee
meetings, in which he or she served, except for Robert S. Craft who attended
67%.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires BancGroup's
directors, certain officers and 10% stockholders, if any, to file reports of
ownership and changes in ownership of BancGroup Common Stock with the
Securities and Exchange Commission (the "SEC"). Such officers, directors and
10% stockholders, if any, are required by SEC regulations to furnish BancGroup
with copies of all Section 16(a) reports they file, including reports on Form
5, which are filed with the SEC annually.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no reports on Form
5 were required for those persons, BancGroup believes that during 2001, all
filings applicable to its officers, directors and 10% stockholders were made
timely.
8
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Personnel and Compensation Committee of BancGroup consists of John C.H.
Miller, Jr., Chairman, John Ed Mathison, Milton E. McGregor, Joe D. Mussafer,
Frances E. Roper, and Simuel Sippial. Mr. Miller is a member in the law firm of
Miller, Hamilton, Snider & Odom, L.L.C. Such firm performed legal services for
BancGroup, its subsidiary bank, Colonial Bank, and other operating subsidiaries
in 2001 and received approximately $1,781,996 in fees. In addition, as
described below at "Executive Compensation -- Director Compensation," Mr.
Miller received employment-related compensation of $41,000 from BancGroup in
2001. See "-- Other Transactions".
Robert E. Lowder is the Chairman of the Board, Chief Executive Officer,
President and a principal stockholder of BancGroup. BancGroup and its
subsidiaries lease office space in the Colonial Financial Center in Montgomery,
Alabama, from GC Associates I, Joint Venture, a company in which Mr. Lowder has
a 16.7% ownership interest. The lease agreements, which began in 1987 and will
expire in 2007, provide that BancGroup and its subsidiaries will pay rent of
approximately $1,758,506 in the aggregate, per annum, subject to certain
adjustments, including reimbursement of certain operating expenses, to GC
Associates I. Colonial Bank currently leases real estate which is partially
owned by Mr. Lowder and on which one of its Montgomery, Alabama branches is
located. Mr. Lowder receives an annual rental of $2,000 pursuant to this lease.
This lease commenced in 1974, was renewed in 1999 and has a five-year term.
With respect to the preceding transactions, management of BancGroup believes
that such arrangements are at least as favorable to BancGroup as those which
might be negotiated with unaffiliated parties for similar transactions.
Other Transactions
BancGroup has retained in the past and proposes to retain in the future on
behalf of BancGroup or its subsidiaries the law firm of Miller, Hamilton,
Snider & Odom, L.L.C., Mobile, Alabama, of which a director of BancGroup, John
C. H. Miller, Jr., is a member. Legal fees paid to this firm by BancGroup and
its subsidiaries were approximately $1,781,996 for 2001.
Management of BancGroup believes that such arrangements and related
transactions are at least as favorable to BancGroup as that which might be
negotiated with unaffiliated parties for similar arrangements and transactions.
9
Loans
Certain directors, officers and principal stockholders of BancGroup and
their affiliated interests were customers of and had transactions with Colonial
Bank in the ordinary course of its business during the past year. Additional
transactions may be expected to take place in the ordinary course of business.
Included in such transactions were outstanding loans and commitments from
Colonial Bank, all of which were made in the ordinary course of business on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and did
not involve more than the normal risk of collectability or present other
unfavorable features.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table presents for the last three fiscal years of BancGroup
the compensation paid to the Chief Executive Officer of BancGroup, and the four
most highly compensated individuals who served as executive officers of
BancGroup during calendar year 2001, in addition to the Chief Executive
Officer, whose total annual salary and bonus for 2001 exceeded $100,000.
Long Term
Compensation
Awards
Annual Compensation
-------------------------
Restricted
Stock
Name and Principal Position Year Salary($) Bonus($) Awards($)
--------------------------- ---- ---------- --------- ---------------------------------------------
Robert E. Lowder.................. 2001 $ 950,000 $ 419,900(2) $ 1,044,509(3)(4)
Chairman, CEO and President 2000 950,000 189,050 1,354,357(3)(4)
1999 982,686 350,000 298,823(3)(4)
W. Flake Oakley................... 2001 $ 231,000 $ 60,000 $ 28,020(4)
Executive Vice President, Chief 2000 220,000 50,000 --
Financial Officer and Secretary 1999 206,923 50,000 52,500(4)
Sarah H. Moore.................... 2001 $ 215,385 $ 60,000 $ 28,020(4)
Executive Vice President and 2000 182,500 50,000 --
Chief Operations Officer 1999 122,885 10,000 --
Caryn D. Cope(10)................. 2001 $ 175,000 $ 60,000 $ 28,020(4)
Executive Vice President and
Chief Credit Officer
Young J. Boozer, III.............. 2001 $ 157,561 $ -- $ 7,005 (4)
Executive Vice President and 2000 149,000 -- --
General Auditor 1999 147,231 5,000 --
Securities
Underlying All Other
Name and Principal Position Options(#) Compensation(1)
--------------------------- ---------- ----------------
Robert E. Lowder.................. $ 29,444
Chairman, CEO and President 200,000(5) 35,057
100,000(6) 19,473
W. Flake Oakley................... 10,000(8)(9) $ 5,250
Executive Vice President, Chief -- 5,250
Financial Officer and Secretary 30,000(6) 5,000
Sarah H. Moore.................... 5,000(8)(9) $ 5,250
Executive Vice President and 50,000(7) 4,813
Chief Operations Officer 10,000(6) 3,072
Caryn D. Cope(10)................. 5,000(8)(9) $ 11,138
Executive Vice President and
Chief Credit Officer
Young J. Boozer, III.............. 7,500(8) $ 4,726
Executive Vice President and -- 4,366
General Auditor -- 3,681
--------
(1)The amounts shown in this column for Mr. Lowder consist of $23,265, $28,878
and $13,199 in compensation for personal use of the company aircraft in
2001, 2000 and 1999, respectively. They also include for Mr. Lowder $5,250,
$5,250, and $5,000 contributed in 2001, 2000 and 1999, respectively, to
BancGroup's 401(k) and Profit Sharing Plan; and $929, $929 and $1,274 in
2001, 2000 and 1999, respectively, for insurance premiums paid by BancGroup
for Mr. Lowder. The amount shown for Ms. Cope for 2001 consists of $5,138
for contributions by BancGroup to Colonial BancGroup's 401(k) Plan and
$6,000 for a car allowance. The amounts shown for all other persons reflect
only contributions by BancGroup to the 401(k) and Profit Sharing Plan.
(2)Represents a cash bonus awarded under BancGroup's Management Incentive Plan.
(3)Includes the market value of 8,127, 5,289 and 3,501 shares of Common Stock
as of December 31, 2001, 2000 and 1999, respectively, awarded to Mr. Lowder
in lieu of cash director fees pursuant to BancGroup's Restricted Stock Plan
for Directors. These shares vest annually on the day before the annual
meeting of shareholders of the corporation in question. At December 31,
2001, December 31, 2000 and December 31, 1999, the per share market values
of these shares were $14.09, $10.75 and $10.375, respectively.
10
(4)Includes the market value, on the date of grant, of shares awarded under
BancGroup's Stock Bonus Plan. Mr. Lowder was granted 75,000 shares on March
29, 2001, subject to certain performance and/or vesting requirements. Mr.
Lowder was granted 125,000 shares on March 29, 2000, subject to certain
performance and/or vesting requirements. Mr. Lowder and Mr. Oakley were
granted 25,000 and 5,000 shares, respectively, on January 2, 2000, based on
1999 performance. Mr. Oakley, Ms. Moore, and Ms. Cope received 2,000 shares
each on January 2, 2002 based on 2001 performance. Mr. Boozer received 500
shares on January 2, 2002 based on 2001 performance. These shares vest at
20% per year beginning one year from the date of grant. The holder is
entitled to receive dividends on these shares and to vote the shares prior
to vesting. At March 29, 2000, January 2, 2000, March 29, 2001, and January
2, 2002, the per share market value of these shares were $10.38, $10.50,
$12.40 and $14.01, respectively.
The following table provides information about restricted shares not
vested as of December 31, 2001. Awards granted in 2002 for 2001 performance
are not included.
Aggregate # of Market Value on
Name Restricted Shares Held December 31, 2001
---- ---------------------- -----------------
Robert E. Lowder.... 211,843 $2,984,868
W. Flake Oakley..... 4,000 56,360
Sarah H. Moore...... 2,320 32,689
Caryn D. Cope....... 4,240 59,742
Young J. Boozer, III -- --
(5)Represents options awarded on March 29, 2000. 100,000 options vest subject
to BancGroup's stock price reaching $16.71 within five years of the grant
date. The remaining 100,000 options vest on a 20% per year vesting schedule,
beginning one year from the date of grant.
(6)Represents options awarded December 30, 1999, based on 1999 performance.
These options vest at the rate of 20% per year beginning one year from the
date of grant.
(7)Represents options awarded May 16, 2000. These options vest at the rate of
20% per year beginning one year from the date of grant.
(8)Represents options awarded December 28, 2001. These options vest at the rate
of 20% per year beginning one year from the date of grant. Mr. Oakley, Ms.
Moore, and Ms. Cope received options to purchase 10,000, 5,000, and 5,000
shares, respectively. Mr. Boozer was awarded options to purchase 7,500
shares.
(9)Does not include options granted pursuant to an option exchange program on
June 18, 2001. See "Executive Compensation - Ten Year Option Repricing". Mr.
Oakley, Ms. Moore and Ms. Cope received options to purchase 20,000, 10,000,
and 4,000 shares, respectively.
(10)Ms. Cope became an Executive Officer in January 2001.
FOR A DISCUSSION OF CERTAIN COMPENSATION COMMITTEE INTERLOCKS, SEE "COMPEN-
SATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION." SEE ALSO "EXECUTIVE
COMPENSATION COMMITTEE REPORT."
Options
The following table shows certain information respecting exercised and
unexercised options for Common Stock held by BancGroup executive officers at
December 31, 2001. Certain options have been granted pursuant to a vesting
schedule which only permits the holder to exercise options respecting 20% of
the shares for each year the holder is employed after the grant of options.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
Number of Securities
Underlying
Unexercised Options Values of Unexercised
At In-the-Money Options
December 31, 2001 At December 31, 2001(2)
-------------------- -----------------------
Shares Acquired Value Exercisable/ Exercisable/
Name On Exercise(#) Realized($)(1) Unexercisable Unexercisable
---- --------------- -------------- --------------- -------------------
Robert E. Lowder.... -- -- 200,000/300,000 $732,302/$1,075,793
W. Flake Oakley..... -- -- 100,000/52,000 444,861/117,959
Sarah H. Moore...... -- -- 29,500/59,000 106,136/221,575
Caryn D.Cope........ -- -- 19,400/24,600 55,468/60,912
Young J. Boozer, III -- -- -- /7,500 -- / --
--------
(1)Value realized is the difference between the fair market value of the
securities underlying the options and the exercise price on the date of
exercise.
(2)Value is calculated by subtracting the exercise price from the market value
of underlying securities at December 31, 2001.
11
The following table shows certain information respecting grants of options
respecting Common Stock to certain executive officers of BancGroup during 2001.
Option Grants in Last Fiscal Year
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term
------------------------------- -----------------------------
Percent of
Total
Number of Options
Securities Granted Market
Underlying to Exercise Price
Options Employees or Base on
Granted in Fiscal Price Date of
Name (#) Year ($/Sh) Grant Expiration Date 0%($) 5%($) 10%($)
---- ---------- ---------- --------- ------- ----------------- ----- ------- --------
Robert E. Lowder.... -- -- -- -- -- -- -- --
W. Flake Oakley..... 10,000 1.47% $ 14.81 * December 28, 2011 -- $93,139 $236,033
Sarah H. Moore...... 5,000 .74% 14.81 * December 28, 2011 -- 46,570 118,017
Caryn D. Cope....... 5,000 .74% 14.81 * December 28, 2011 -- 46,570 118,017
Young J. Boozer, III 7,500 1.10% 14.81 * December 28, 2011 -- 69,854 177,025
--------
* Same as exercise price
Ten Year Option Repricings
Length of
Original
Number of Option
Securities Exercise Term
Underlying Price at Remaining
Options Market Price of Time of at Date of
Repriced Stock at Time Repricing New Repricing
or of Repricing or or Exercise or
Name Date Amended Amendment Amendment Price Amendment
---- ------ ---------- --------------- --------- -------- ----------
W. Flake Oakley....................... (1)(2) 20,000 (4) $ 17.19 $ 12.54 81 months
Executive Vice President,
Chief Financial Officer and Secretary
Sarah H. Moore........................ (1)(2) 5,000 (4) $17.19 $12.54 81 months
Executive Vice President and (1)(3) 5,000 (4) $17.00 $12.54 87 months
Chief Operations Officer
Caryn D. Cope......................... (1)(2) 4,000 (4) $17.19 $12.54 81 months
Executive Vice President and
Chief Credit Officer
--------
(1)The exchanged options were cancelled by an agreement dated as of December
15, 2000. Replacement options were granted as of June 18, 2001.
(2)The original options were granted on January 2, 1998 and were due to expire
on January 2, 2008.
(3)The original options were granted on July 15, 1998 and were due to expire on
July 15, 2008.
(4)The market price (determined by the average of the high and low prices on
the date in question) on December 15, 2000 was $9.66. The market price on
June 18, 2001 was $12.54.
Defined Benefit Plan
BancGroup maintains a Retirement Plan for all of the employees of BancGroup
and its subsidiaries. An employee becomes eligible on January 1 or July 1
commencing at age 21 and after the completion of 1,000 hours of service during
a year of employment by BancGroup or one of its subsidiaries.
12
The following table reflects the estimated annual benefits payable upon
retirement under the Retirement Plan as a single life annuity commencing at age
65. These benefits ignore the lower benefit rate applicable to earnings below
the Social Security Covered Compensation level.
Years of Service
---------------------------------------
Annual
Remuneration 5 10 15 20 25
------------ ------- ------- ------- ------- -------
$100,000 $ 7,600 $15,200 $22,800 $30,400 $38,000
125,000 9,500 19,000 28,500 38,000 47,500
160,000 12,160 24,320 48,640 48,640 60,800
170,000 12,920 25,840 38,760 51,680 64,600
A person's benefits are not increased to the extent his annual compensation
exceeds $170,000.
Benefits are based upon the number of years of service (maximum 25 years),
the participant's final earnings, and the amount of Social Security Covered
Compensation. A participant receives credit for a year of service for every
year in which 1,000 hours are completed in the employment of BancGroup or one
of its subsidiaries.
The benefits shown are limited by the current statutory limitations, which
restrict the amount of benefits that can be paid from a qualified retirement
plan. The statutory limit on compensation that may be recognized in calculating
benefits is $170,000. This limitation is scheduled to increase periodically
with the cost of living increase.
All compensation except compensation which relates to director fees, if any,
shown for executive officers in the cash compensation table above is covered by
the Retirement Plan. Robert E. Lowder has 37 years of eligibility, W. Flake
Oakley, has 14 years, Sarah H. Moore has 5 years, Caryn Cope has 16 years and
Young J. Boozer, III has 16 years.
Compensation Plans
Directors' Plan. BancGroup's Restricted Stock Plan for Directors (the
"Directors' Plan") provides a means whereby directors of BancGroup and its
subsidiaries may receive shares of BancGroup Common Stock in lieu of cash fees
for service as directors. Employees are not currently eligible to participate
in the Directors' Plan.
Upon election as a director, each director may receive, at the option of the
director, in lieu of cash fees, that number of whole shares of Common Stock of
BancGroup, rounded to the nearest whole number, determined by dividing the
Regular Fees the director would have received during the director's current
term of office by the average of the closing prices of the Common Stock as
reported by the New York Stock Exchange for the period of 30 trading days prior
to such election. "Regular Fees" means that amount of fees payable to a
director in cash, and without regard to attendance at meetings, for a full term
of office as a director. Under the terms of the Directors' Plan, a BancGroup
director's term of office begins upon the day of BancGroup's annual meeting of
stockholders and ends the day before the next year's annual meeting.
A director may also elect to receive Common Stock at the end of the term,
based upon the amount of Supplemental Fees such director would have been
entitled to receive during such term and subject to certain restrictions and
risks of forfeiture, provided such director has waived the receipt of
Supplemental Fees at the commencement of such director's term. "Supplemental
Fees" means fees paid to a director for attendance at the committee meetings,
special meetings of the Board, or otherwise, and which are paid only on an ad
hoc basis. The number of shares to which the director is entitled shall be
calculated at the end of the director's term and shall be equal to that number
of whole shares of Common Stock, rounded to the nearest whole number,
determined by dividing the Supplemental Fees the director would have received
during the current term by the average of the closing prices of the Common
Stock for the period of 30 trading days prior to the election as a director to
such term.
13
Each director of BancGroup who participates in the Directors' Plan must
enter into a written agreement with BancGroup. Directors of BancGroup may elect
on an annual basis whether to participate in the Directors' Plan for the
following year commencing with the annual meeting of stockholders, in which
case the 30-day period used to determine price expires prior to the annual
meeting which commences the period of annual participation. No director may
receive more than 4,800 shares of Common Stock during any one year, except for
shares which may be received through stock splits, stock dividends, or certain
other events specified in the Directors' Plan.
Directors to whom shares of Common Stock have been awarded in lieu of
Regular Fees under the Directors' Plan have all rights of shareholders with
respect to shares of Common Stock so awarded, subject to certain provisions
regarding forfeiture, which means, among other things, that directors may
receive dividends upon and vote the shares of Common Stock awarded in lieu of
Regular Fees.
Stock Option Plans. Effective July 1, 2001, BancGroup adopted The Colonial
BancGroup, Inc., 2001 Long-Term Incentive Plan (the "LTIP") pursuant to which
equity based incentives, including but not limited to options for Common Stock
and grants of Common Stock, may be issued to officers, directors and employees.
BancGroup may issue a total of 10,000,000 shares of Common Stock under the
LTIP. BancGroup's former stock option and stock bonus plans expired on June 30,
2001, but options issued pursuant to those plans remain outstanding.
Management Incentive Plan. In 2000, BancGroup adopted a management
incentive plan pursuant to which BancGroup's Executive Compensation
Subcommittee may award certain executive officers of BancGroup cash
compensation, the receipt of which is dependant on BancGroup achieving one or
more pre-selected performance goals. No Common Stock is issued in connection
with the Management Incentive Plan.
Director Compensation. Directors of BancGroup receive fees of $2,500 per
quarter, plus $1,000 for each Board meeting attended. Members of BancGroup
committees receive fees of $500 ($750 for the Chairman) for each BancGroup
committee meeting attended. Certain directors of BancGroup also serve as
directors of Colonial Bank or its regional boards and receive fees that are
comparable to those paid by BancGroup. Fees paid to BancGroup directors in cash
for 2001 totaled $302,412. In 2001, a total of 15,689 shares of Common Stock
were earned for service in 2001 and 25,272 shares were issued for service in
2000 under the Directors' Plan to BancGroup directors for service as directors
of BancGroup and its subsidiaries.
John C. H. Miller, Jr., Clinton O. Holdbrooks, Patrick F. Dye and John Ed
Mathison received employment-related compensation during 2001 of $40,100,
$1,900, $3,000 and $18,000, respectively. Mr. Miller provides advice to
BancGroup management and to the Colonial Bank's Gulf Coast Region that extends
beyond legal work for which Mr. Miller's law firm receives legal fees. Mr.
Holdbrooks, Mr. Dye and Dr. Mathison perform consulting, public relations
and/or customer development services for either BancGroup, Colonial Bank or
both.
14
EXECUTIVE COMPENSATION COMMITTEE REPORT
The Personnel and Compensation Committee of BancGroup (the "Committee")
consists of John C. H. Miller, Jr., Chairman, Milton E. McGregor, Joe D.
Mussafer, John Ed Mathison, Frances E. Roper, and Simuel Sippial. The Board has
established a subcommittee of the Committee (the "Subcommittee"), consisting of
Joe D. Mussafer, Frances E. Roper, and Simuel Sippial, to determine all cash
compensation for executive officers of BancGroup. The Subcommittee also makes
decisions regarding stock-based awards under BancGroup's Long-Term Incentive
Plan, including awards made to executive officers.
John C. H. Miller, Jr. and John Ed Mathison receive employment-related
compensation from BancGroup, and the law firm of which Mr. Miller is a partner
receives legal fees from BancGroup. See "Executive Compensation Committee
Interlocks and Insider Participation" and "Executive Compensation -- Director
Compensation."
Compensation Principles
The Subcommittee determines executive compensation in accordance with five
principles: (1) BancGroup's financial performance, both in terms of the
attainment of short-term and long-term goals; (2) the competitiveness of
executive compensation with BancGroup's peers; (3) the encouragement of stock
ownership by executive officers; (4) the individual performance of each
executive officer; and (5) recommendations of the Chief Executive Officer
regarding all executive officers other than himself. No disproportionate weight
is assigned to any individual principle.
Total Cash Compensation
Cash compensation consists of an annual salary established at the beginning
of the fiscal year and a year-end bonus described further below. In setting
compensation for the 2001 fiscal year, the Subcommittee reviewed the
compensation paid by a peer group of 52 bank holding companies which, as of
June 30, 2000, had total assets greater than $10.0 billion, which is a category
designated by the Board of Governors of the Federal Reserve System as Peer
Group 1. A total of 61 bank holding companies were in this category, but
compensation information on nine companies was not available. BancGroup had
total assets of $11.7 billion at year-end 2000.
The Subcommittee determined the salaries of the executive officers of
BancGroup for 2001 in mid-January, 2001. The salaries paid to executive
officers in the peer group companies were analyzed in terms of (1) return on
average assets, (2) return on average equity, (3) nonperforming assets, and (4)
stock performance within ranges comparable to the same performance criteria for
BancGroup. These criteria reflect how well the executives perform for the
benefit of stockholders and provide a range of performance comparable to the
performance of BancGroup.
The Subcommittee accorded equal weight to the performance criteria in
assessing the performance of BancGroup and in making the comparisons with the
peer group. The Subcommittee did not recommend compensation levels based upon a
formula, but, rather, after reviewing the factors outlined above and receiving
recommendations of the Chief Executive Officer for each person reviewed other
than the Chief Executive Officer, the Subcommittee established salaries for
2001 that, in its subjective judgment, were fair in terms of BancGroup's
performance in comparison with the peer group, the responsibilities performed
by the executive within BancGroup and the level of compensation paid to
comparable executives in the peer group companies.
Compensation for Chief Executive Officer
The Subcommittee evaluated the salary of the Chief Executive Officer on the
basis of the same criteria used to evaluate salaries of other executive
officers. The Subcommittee's determination of an appropriate level of
compensation for the Chief Executive Officer was thus based on a comparison of
BancGroup's performance with
15
the performance of the peer group, the Chief Executive Officer's
responsibilities within BancGroup, and the compensation paid to chief executive
officers within the peer group. The Subcommittee left the Chief Executive
Officer's salary for 2001 unchanged at $950,000.
Cash Bonuses
The Subcommittee approved cash bonuses to BancGroup's current executive
officers, other than the Chief Executive Officer, as follows: $60,000 to W.
Flake Oakley, $60,000 to Sarah H. Moore, and $60,000 to Caryn Cope. The
Subcommittee based these awards upon the recommendations of the Chief Executive
Officer.
In January 2000, the Board approved the Management Incentive Plan of The
Colonial BancGroup, Inc. (the "MIP") for the purpose of providing short-term,
performance-based cash bonus opportunities to BancGroup's executive officers.
In December 2000, the Subcommittee selected the Chief Executive Officer to
participate in the MIP in 2001 and subsequently developed a payout matrix upon
which the Chief Executive Officer's bonus under the MIP would be based. Under
the payout matrix established by the Subcommittee, the Chief Executive Officer
was eligible to receive a bonus ranging from zero to 100% of his base salary
depending upon BancGroup's performance with respect to four business criteria:
return on average assets, return on average equity, earnings per share, and
nonperforming assets. At a meeting held on January 24, 2002, the Subcommittee
reviewed BancGroup's 2001 performance with respect to these measures and
certified that the Chief Executive Officer was entitled to receive a cash bonus
for 2001 in an amount equal to $419,900.
Stock Bonuses and Stock Options
In March 2000, the Subcommittee awarded the Chief Executive Officer 125,000
shares of restricted stock under BancGroup's Stock Bonus and Retention Plan.
The vesting of 62,500 of these shares is contingent upon BancGroup's Common
Stock price reaching a certain level within five years of the date the shares
were granted, while the vesting of the remaining 62,500 shares of restricted
stock is contingent upon the level of BancGroup's return on average assets,
return on average equity, earnings per share, and nonperforming assets. At its
meeting held on January 24, 2002, the Subcommittee certified that 8,706 shares
of restricted stock vested as a result of BancGroup's performance in 2001 with
respect to these four financial measures.
In addition, in March 2001, the Subcommittee awarded the Chief Executive
Officer 75,000 shares of restricted stock under BancGroup's Stock Bonus and
Retention Plan. The vesting of 37,500 of these shares is contingent upon
BancGroup's Common Stock price reaching a certain level within five years of
the date the shares were granted, while the vesting of the remaining 37,500
shares of restricted stock is contingent upon the level of BancGroup's return
on average assets, return on average equity, earnings per share, and
nonperforming assets. At its meeting held on January 24, 2002, the Subcommittee
certified that 16,575 shares of restricted stock vested as a result of
BancGroup's performance in 2001 with respect to these four financial measures.
In December 2001 the Subcommittee approved awards of incentive stock options
under the LTIP to Mr. Oakley, Ms. Moore and Ms. Cope, BancGroup's other current
executive officers, for 10,000, 5,000 and 5,000 shares respectively, and awards
of restricted stock under the LTIP to these executive officers of 2,000 shares
each. The Subcommittee based these awards upon recommendations of the Chief
Executive Officer.
Stock Option Exchanges
On November 30, 2000, the Subcommittee elected to allow all employees who
had stock options with exercise prices above $13.00 to participate in an option
exchange program in order to retain key employees and
16
provide the incentive originally intended from the options. Most employees who
participated relinquished their original options on December 15, 2000 and were
granted new options on June 18, 2001. Of the employees who elected to
participate in the stock option exchange program, three are currently executive
officers of BancGroup. Pursuant to the stock option exchange program, Mr.
Oakley, Ms. Moore and Ms. Cope received options on June 18, 2001 with an
exercise price of $12.54 per share exercisable for 20,000, 10,000 and 4,000
shares, respectively, of BancGroup's Common Stock. (See "Executive Compensation
- Ten Year Option Repricing").
This foregoing report is submitted by the Subcommittee.
Subcommittee:
Joe D. Mussafer
Frances E. Roper
Simuel Sippial
17
[CHART]
COMPARATIVE FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG THE COLONIAL BANCGROUP, INC.,
S&P 500 INDEX AND S&P GROUP INDEX
COLONIAL BANCGROUP S&P GROUP INDEX S&P 500 INDEX
1996 100.00 100.00 100.00
1997 176.40 150.37 133.36
1998 125.65 166.13 171.47
1999 112.04 142.55 207.56
2000 121.56 182.51 188.66
2001 165.43 170.14 166.24
ASSUMES $100 INVESTED ON DECEMBER 31, 1996
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDED DECEMBER 31, 2001
Neither the foregoing graph nor the Executive Compensation Committee Report
given above is to be deemed to be incorporated by reference into any past or
subsequent filings by BancGroup under the Securities Act of 1933 or the
Securities Exchange Act of 1934.
18
AUDIT COMMITTEE REPORT
The Audit Committee of BancGroup consists of Lewis E. Beville, Chairman,
William Britton, Jerry J. Chesser, Clinton O. Holdbrooks, William E. Powell,
Frances E. Roper and Simuel Sippial. The members of the Audit Committee satisfy
the independence and experience requirements of the New York Stock Exchange.
The Audit Committee has adopted a charter, which was amended on January 19,
2002. The amended charter is attached to this Proxy Statement as Appendix A.
The Audit Committee reviews its charter for adequacy on an annual basis. In
accordance with its charter, the Audit Committee met four times in 2001. The
Audit Committee has reviewed BancGroup's audited financial statements with
management to determine whether such statements were consistent with
BancGroup's audit policy and whether BancGroup's internal controls were
adequate for the preparation of the financial statements.
The Audit Committee also reviewed with management and BancGroup's
independent auditor the quarterly financial statements of BancGroup prior to
the filing of BancGroup's Quarterly Reports on Form 10-Q in 2001.
One of the Audit Committee's responsibilities is to recommend to the
BancGroup's Board of Directors an independent auditor. The Audit Committee has
recommended PricewaterhouseCoopers LLP as BancGroup's independent auditor for
2002(See "Relationship with Independent Public Accountant").
In making its recommendation for 2002, the Audit Committee considered the
fees paid to PricewaterhouseCoopers LLP in relation to the services
PricewaterhouseCoopers LLP provided and the compatibility of any non-audit
services that PricewaterhouseCoopers LLP provided to BancGroup with
PricewaterhouseCoopers LLP's status as its independent auditor. See
"Relationship with Independent Public Accountant -- Audit Fees" for more
information regarding fees paid to PricewaterhouseCoopers LLP during 2001.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANT
Selection
BancGroup has selected the firm of PricewaterhouseCoopers LLP to act as its
independent public accountant for 2002. It is expected that representatives of
this firm will be present at the Annual Meeting and will have an opportunity to
make a statement to, and to answer questions from, stockholders.
Audit Fees
For the 2001 audit of BancGroup's annual financial statements, including the
review of the quarterly financial statements included in BancGroup's Quarterly
Reports on Form 10-Q filed in 2001, BancGroup has agreed to pay
PricewaterhouseCoopers LLP $385,000. As of December 31, 2001, $325,000 of these
fees had been billed by PricewaterhouseCoopers LLP.
Financial Information Systems Design and Implementation Fees
For the year ending December 31, 2001, PricewaterhouseCoopers was not
engaged to and did not provide any of the professional services described in
Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X.
All Other Fees
For the year ended December 31, 2001, PricewaterhouseCoopers LLP billed
$1,889,000 to BancGroup for services other than those described above. These
fees primarily relate to internal audit services and tax advisory services,
which amounted to $995,000 and $654,000 respectively.
Compatibility of Fees
BancGroup's Audit Committee has considered the provision of non-audit
services by PWC and the fees paid to PWC for such services, and believes that
the provision of such services and their fees are compatible with maintaining
PWC's independence (See "Audit Committee Report").
19
BYLAW PROVISIONS REGARDING CONDUCT OF STOCKHOLDERS' MEETINGS
BancGroup's bylaws contain two provisions relating to the conduct of
stockholders' meetings. The first provision requires that certain procedures be
followed by a stockholder of record who wishes to present business at the
annual meeting of stockholders, including the nomination of candidates for
election as directors. In order to nominate persons for election as a director
or to present other business at a meeting, a stockholder must provide written
notice thereof to the Secretary of BancGroup not less than 60 days nor more
than 90 days prior to the first anniversary of the preceding year's annual
meeting, provided that, if the date of the annual meeting is advanced by more
than 30 days or delayed by more than 60 days from such anniversary date, notice
by the stockholder to be timely must be delivered not earlier than the 90th day
prior to such annual meeting and not later than the close of business on the
later of the 60th day prior to such annual meeting or the 10th day following
the day on which public announcement of the date of such meeting is first made.
As it relates to director nominations, the written notice must state all
information as to each nominee required to be disclosed in solicitations of
proxies for election of directors under SEC regulations, including the written
consent of each such nominee. As for any other business that the stockholder
proposes to bring before the meeting, the written notice must contain a brief
description of the business, the reasons for conducting the business at the
meeting and any material interest in such business of such stockholder. The
notice must also contain the name and address of such stockholder and the class
and number of shares of BancGroup owned beneficially and of record, as well as
the same information for each beneficial owner who may be nominated for
election as a director.
The Board is not required to nominate a person designated by a stockholder
or to take up such other business as may be contained in a written notice from
a stockholder; however, compliance with this procedure would permit a
stockholder to nominate the individual at the stockholders' meeting, and any
stockholder may vote shares in person or by proxy for any individual such
stockholder desires. The procedures relating to nominating directors and
presenting other business at a stockholders' meeting may only be used by a
stockholder who is a stockholder of record at the time of the giving of the
notice by the stockholder to the secretary of BancGroup. The procedures do not
prohibit or apply to stockholder proposals under SEC Rule 14a-8 as described at
"Proposals of Stockholders."
The second provision of BancGroup's bylaws relates to the conduct of the
business at a stockholders' meeting. Under that provision, the Board has the
authority to adopt rules for the conduct of meetings, and, unless inconsistent
with any such rules, the Chairman of the meeting may prescribe such rules,
regulations and procedures as, in his judgment, are appropriate for the proper
conduct of the meeting.
PROPOSALS OF STOCKHOLDERS
Subject to certain rules of the SEC, proposals by stockholders intended to
be presented at BancGroup's 2003 annual meeting of stockholders must be
received at BancGroup's principal executive offices not less than 120 calendar
days in advance of March 18, 2003 (November 19, 2002), for inclusion in the
proxy or information statement relating to the 2003 annual meeting.
20
OTHER MATTERS
BancGroup does not know of any matters to be presented for action at the
meeting other than those listed in the notice of the meeting and referred to
herein.
BancGroup will furnish stockholders, upon written request and payment of a
reasonable fee for copying charges, copies of the exhibits to its annual report
on Form 10-K filed with the SEC for the year ended December 31, 2001. Requests
should be made to:
Chief Financial Officer and Secretary
The Colonial BancGroup, Inc.
Post Office Box 1108
Montgomery, Alabama 36101
PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE
ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. ALTERNATIVELY, IF YOUR PROXY
CARD CONTAINS INSTRUCTIONS REGARDING DELIVERING YOUR PROXY VIA TELEPHONE OR THE
INTERNET, YOU MAY FOLLOW THOSE INSTRUCTIONS.
YOU MAY REVOKE THE PROXY BY GIVING WRITTEN NOTICE OF REVOCATION TO THE
SECRETARY OF BANCGROUP AT ANY TIME PRIOR TO THE VOTING THEREOF, BY EXECUTING
AND SUBMITTING A LATER DATED PROXY BEFORE THE MEETING, OR IF YOU VOTE
ELECTRONICALLY, THEN BEFORE 5:00 P.M. EASTERN TIME ON APRIL 16, 2002, OR BY
ATTENDING THE MEETING AND VOTING IN PERSON.
21
APPENDIX A
AUDIT COMMITTEE CHARTER
The Audit Committee of The Colonial BancGroup, Inc. (the "Company") is
appointed by the Board to assist the Board in monitoring the integrity of the
financial statements of the Company, the compliance by the Company with legal
and regulatory requirements and the independence and performance of the
Company's internal and external auditors.
The members of the Audit Committee shall meet the independence and
experience requirements of the New York Stock Exchange. The members of the
Audit Committee shall be appointed by the Board on the recommendation of the
Chief Executive Officer.
The Audit Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Committee. The Audit Committee
may request any officer or employee of the Company or the Company's outside
counsel or independent auditor to attend a meeting of the Committee or to meet
with any members of, or consultants to, the Committee.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall:
1.Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
2.Meet at least four times in each fiscal year.
3.Review the annual audited financial statements with management, including
(i)major issues regarding accounting and auditing principles and
practices,
(ii)compliance with the Company's audit policy, and
(iii)the adequacy of internal controls that could significantly affect the
Company's financial statements.
4.Review an analysis prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection
with the preparation of the Company's financial statements.
5.Review with management and the independent auditor the Company's
quarterly financial statements prior to the filing of quarterly reports
on Form 10-Q.
6.Meet periodically with management to review the Company's major
financial risk exposures and the steps management has taken to monitor
and control such exposures.
7.Review major changes to the Company's auditing and accounting principles
and practices as suggested by the independent auditor, internal auditors
or management.
8.Recommend to the Board the appointment of the independent auditor, which
firm is ultimately accountable to the Audit Committee and the Board.
9.Review the fees to be paid to the independent auditor, for both audit
and non-audit services.
10.Receive periodic reports from the independent auditor regarding the
auditor's independence, discuss such reports with the auditor, and if so
determined by the Audit Committee, recommend that the Board take
appropriate action to satisfy itself of the independence of the auditor.
11.Evaluate the performance of the independent auditor and, if so
determined by the Audit Committee, recommend that the Board replace the
independent auditor.
A-1
12.Review the appointment and replacement of a General Auditor and review
annually the performance of the Company's internal audit staff.
13.Review the significant reports to management prepared by the internal
auditing department, the internal loan review department and any other
departments performing controls monitoring activities; review
management's responses to those reports.
14.Make recommendations to management regarding outsourcing of internal
audit services.
15.If internal audit services are outsourced, annually review the proposed
scope of internal audit services, schedule and audit plan presented by
the General Auditor and the outsourcing firm.
16.Review annually the performance of any such outsourcing firm.
17.Meet with the independent auditor prior to the audit to review the
planning and staffing of the audit.
18.Obtain from the independent auditor representation that its audit
procedures and communications are in compliance with the requirements of
Section 10A of the Private Securities Litigation Reform Act of 1995.
19.Obtain reports from management and the Company's senior internal
auditing executive that the Company's subsidiary affiliated entities are
in material conformity with applicable legal requirements and the
material provisions of the Company's employee conduct policies.
20.Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit.
21.Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the Company's response to that letter. Such review should
include:
(a)Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to
required information.
(b)Any changes required in the planned scope of the internal audit.
(c)The internal audit department responsibilities, budget and
22.Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
23.Review and advise the Board with respect to the Company's policies and
procedures regarding compliance with applicable laws and regulations.
24.Review with the Company's counsel legal matters that may have a material
impact on the financial statements, the Company's compliance policies
and any material reports or inquiries received from regulators or
governmental agencies.
25.Meet at least annually with the chief financial officer, the senior
internal auditing executive and the independent auditor in separate
executive sessions.
26.Perform such additional oversight functions relating to the Company's
audit process as may be requested from time to time by the Board.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
These duties are the responsibility of management and/or the independent
auditor. Nor is it the duty of the Audit Committee to conduct investigations,
to resolve disagreements, if any, between management and the independent
auditor or to assure compliance with laws and regulations.
A-2
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
THE COLONIAL BANCGROUP, INC.
Annual Meeting of Stockholders
April 17, 2002
The undersigned hereby appoints Robert E. Lowder and Joe D. Mussafer, and
either of them, or such other persons as the Board of Directors of The Colonial
BancGroup, Inc. ("BancGroup") may designate, proxies for the undersigned, with
full power of substitution, to represent the undersigned and to vote all of the
shares of common stock, par value $2.50 per share, of BancGroup (the "Common
Stock") which the undersigned would be entitled to vote at the annual meeting
of stockholders to be held on April 17, 2002, and at any and all adjournments
thereof. The proxies, in their discretion, are further authorized to vote (i)
for the election of a person to the Board of Directors if any nominee named
herein becomes unable to serve or for good cause will not serve, and (ii) on
any other matter that may properly come before the meeting, including matters
incident to the conduct of the meeting.
(Continued and to be signed on reverse side.)
--------------------------------------------------------------------------------
(up triangle) FOLD AND DETACH HERE (up triangle)
Please mark
your votes as
indicated in this example.
FOR all nominees WITHHOLD
listed except as authority to vote
marked to the for all nominees
contrary - - - - - - -
1. To elect the following Directors
for terms expiring in 2005: [_] [_] - - - - - - -
(01) William Britton (04) Milton E. McGregor
(02) Augustus K. Clements, III (05) William E. Powell, III
(03) Patrick F. Dye (06) Simuel Sippial
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL, STRIKE A LINE THROUGH THE NOMINEE'S
NAME IN THE ABOVE LIST.
PLEASE MARK ONE OF THE BOXES ON THE PROPOSAL ABOVE TO REFLECT YOUR VOTE.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED
AS DIRECTED HEREIN. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
PERSONS NAMED IN PROPOSAL 1 ABOVE.
PLEASE SIGN AND DATE THIS PROXY.
Signature(s) _______ Phone No: _______________________ Dated: __________, 2002
Please sign exactly as your name appears on this card. Agents, executors,
administrators, guardians, and trustees must give full title as such.
Corporations should sign by their President or authorized officer.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
DETACH CARD
(up triangle) Please detach proxy at perforation before mailing. (up triangle)
YOU MAY VOTE BY TELEPHONE OR THE INTERNET.
If you are voting by telephone or the internet, please do not mail your proxy.
VOTE BY TELEPHONE
Call Toll-Free using a Touch-Tone phone
1-800-542-1160
VOTE BY INTERNET
Access the Website and cast your vote
http://www.votefast.com
VOTE BY MAIL
Return your proxy in the postage-paid envelope provided.
Vote 24 hours a day, 7 days a week!
Your telephone or internet vote must be received by 11:59 p.m. eastern daylight
time
on April 16, 2002 to be counted in the final tabulation.
YOUR CONTROL NUMBER IS____________
Vote by Telephone
Have your proxy card available when you call the Toll-Free number
1-800-542-1160 using a touch-tone phone. You will be prompted to enter your
control number and then you can follow the simple prompts that will be
presented to you to record your vote.
Vote by Internet
Have your proxy card available when you access the website
http://www.votefast.com. You will be prompted to enter your control number
and then you can follow the simple prompts that will be presented to you to
record your vote.
To Change Your Vote
Any subsequent vote by any means will change your prior vote. For example,
if you voted by telephone, a subsequent internet vote will change your vote.
The last vote received before 5:00 p.m. eastern daylight time, April 16, 2002
will be the one counted. You may also revoke your proxy by voting in person at
the Annual Meeting.