Deals and People June 2, 2000

Institutional Money Management Legend Tony Gray Retires

June 2, 2000 (PLANSPONSOR.com) - After more than three decades, an institutional money management legend, SunTrust's Anthony (Tony) Gray has announced a surprise decision to retire at the end of July. The move precedes a planned integration of investment management subsidiaries at SunTrust.
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Gray, 60, Chief Investment Officer for STI Capital Management and manager of the STI Classic Capital Appreciation Fund, is a nationally recognized equity portfolio manager and investment industry observer, as well as the author of “A Thousand Miles from Wall Street,” an industry commentary published in 1995. His retirement concludes a 20-year career at SunTrust.

“Tony Gray has been a major contributor to the growth of our investment management firm over many years, and we wish him well in his retirement,” said Douglas S. Phillips, president of Trusco Capital Management, SunTrust’s institutional investment management subsidiary.

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Taking the reins for the STI Classic Capital Appreciation Fund is Robert Rhodes, 53, who has been managing several of Trustco Capital’s largest equity relationships and key mutual funds for more than a decade. Rhodes joined Trusco in 1973, and has 27 years of investment experience.

In January SunTrust announced its intention to combine its three institutional investment management subsidiaries (Trusco Capital management, STI Capital Management, and Crestar Asset Management Company) into a single registered investment advisor.

Benefits May 31, 2000

Flooding the Market– Stock Options Getting More Expensive – Hewitt

May 31, 2000 (PLANSPONSOR.com) - Stock options, long considered a relatively cheap way to retain employees in a tight labor market, are getting more expensive - and employers that have placed those programs on "auto-pilot" might want to reconsider their "options", according to a new survey by consulting firm Hewitt Associates.
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The cost of offering stock options has been steadily increasing over the last three years, Hewitt said Wednesday.

Its study of 63 Fortune 100 US companies showed that the cost of options (as measured through potential dilution) has gone up 2% in the last three years. Although 52% of companies expressed a moderate (48%) or high (13%) level of concern over the cost, few are taking major steps to lower or control costs.

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“The strong earnings and stock price performance in recent years has allowed companies to put the issue of stock option cost on the back burner,” said Ryan Harvey, executive compensation consultant at Hewitt. “If we have a market correction, or if earnings and stock price decline, many shareholders could become more concerned about the whole stock option cost issue, and pressure boards to do something about it.”

Over half of the companies (52%) surveyed don’t lower the number of options granted to compensate for an increase in grant value when stock price increases. Similarly, nearly 50% of companies target stock option levels above the 50th percentile in response to the competitive market for talent. “Companies need to be careful of these practices because they can lead to inflation of award sizes over time in a growing market,” said Harvey.

Forty-two percent of companies said that they expect the overall size of their stock option grants to rise over the next three years. Vesting schedules varied from one to five years, with 45% of companies vesting options over three years, and 26% vesting over four years. The study showed a modest trend toward increasing vesting schedules to four years, in order to more effectively retain talent.

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