COMMERCE BANCSHARES, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
AMENDMENT AND RESTATEMENT OF OCTOBER 4, 1996
1. PURPOSE
The policy of Commerce Bancshares, Inc. ("Commerce") is to
compensate its officers based on performance. The purpose of
this Executive Incentive Compensation Plan ("Plan") is to provide
incentive compensation awards to those individuals whose
management efforts reflect a desire to meet commonly agreed upon
objectives or to those who by their superior performance directly
contribute to the profitability of Commerce and to encourage the
retention of outstanding contributors.
2. ADMINISTRATION
The Plan shall be administered by the Compensation and
Benefits Committee of the Board of Directors ("Board") of
Commerce, which shall consist solely of two or more directors who
are "non-employee directors" under Rule 16b-3(b)(3) promulgated
under the Securities Exchange Act of 1934, as amended, or any
successor provision thereto. The Committee shall have authority
in its sole discretion to interpret the Plan and make all
determinations, including the determination of incentive
compensation awards eligible to be deferred under the Plan. All
determinations made by the Committee shall be final and binding.
3. ELIGIBLE PARTICIPANTS
All chief executive officers, Chairmen of the Board,
Presidents, and Vice Presidents of Commerce or any of its
affiliated banks or subsidiary companies shall be eligible to
participate in the Plan, together with such other officers of
Commerce and its affiliated banks and subsidiary companies as the
Committee shall determine. Directors who are not officers or
employees of Commerce, an affiliated bank, or a subsidiary
company, are not eligible to participate in the Plan.
4. DETERMINATION OF AWARD
The Board of Commerce shall at its sole discretion approve
the amount of the aggregate incentive compensation awards to be
granted based on the recommendations of the Committee. Incentive
compensation awards made under this Plan shall be determined with
reference to performance during the preceding year. The
incentive compensation awards to be made to the Chairman of the
Board, President and/or Chief Executive Officer of Commerce shall
be determined by the Committee and all other awards to be made
under this Plan may be determined by the Committee or, should the
Committee so direct, by a committee consisting of the Chief
Executive Officer, a Vice Chairman designated by the Chief
Executive Officer, and the chief human resources officer.
5. PAYMENT OF INCENTIVE AWARD
Incentive compensation awards are generally determined and
made on or before the date of the annual meeting of shareholders
of Commerce. The normal method of payment will be in the form of
cash and awards will be paid as soon as practicable after the
awards are determined; provided, that the recipient of an award
shall not have elected to defer receipt of the incentive
compensation award as hereinafter provided.
6. DEFERRAL OPTIONS
a. An eligible employee may elect to defer all or a
portion of an incentive compensation award until the
earlier to occur of retirement, death, or termination.
A deferral must be expressed either as "all" or as a
specified dollar amount. Any incentive compensation
award above the specified amount will be paid in cash,
and if the award is less than the amount deferred, the
total award will be deferred. The granting of an
incentive compensation award is discretionary and
neither delivery of deferral election materials nor an
election to defer shall affect entitlement to such an
award. All deferral elections made under the Plan are
irrevocable.
b. In order to ensure that elections to defer incentive
compensation awards are effective under applicable tax
laws, all persons eligible to participate in this Plan
will be given the opportunity to defer payment of all
or a portion of an incentive compensation award. An
election to defer must be made prior to December 31 of
the year preceding the year for which performance is
measured to determine the granting of an incentive
compensation award.
c. An eligible employee in electing a deferred payment
shall also elect the account which Commerce shall make
available to the participating employee and to which
the relevant portion of the award deferral will be
credited. The available accounts for deferral of an
incentive compensation award shall consist of (a) the
Treasury Bill Account, (b) the Treasury Note Account,
and (c) the Commerce Stock Account. Amounts may not be
transferred between accounts.
d. The Treasury Bill Account and the Treasury Note Account
are both bookkeeping accounts. The Treasury Bill
Account will have interest credited on the deferred
amount at a rate equal to the six-month treasury bill
yield with the interest credited on the first day of
each calendar quarter. The Treasury Note Account will
have interest credited on the deferred amount at a rate
equal to the four-year treasury note rate (with the
rate adjusted at the end of each four-year period) with
interest credited on the first day of each calendar
quarter. Amounts credited to either of these accounts
will be compounded on the first day of each calendar
quarter.
The Commerce Stock Account is a bookkeeping account the
value of which will be based upon the performance of
the $5.00 par value common stock of Commerce ("Commerce
Stock"). Amounts deferred into the Commerce Stock
Account will be credited to such account with units,
each reflecting one share of Commerce Stock.
Fractional units will also be credited to such account
if applicable. The number of such credited units will
be determined by dividing the value of the incentive
compensation award which is deferred into the Commerce
Stock Account by the last sale price of the Commerce
Stock as reported by the National Association of
Securities Dealers National Market System on the last
trading day in January on which a trade of Commerce
Stock is so reported. Dividends paid on the Commerce
Stock shall be reflected in a participant's Commerce
Stock Account. The crediting of additional units in
such account shall be equal to the value of the
dividends divided by the last sale price of the
Commerce Stock on the date such dividend is paid.
e. Commerce shall provide periodically to each participant
(but not less frequently than once per calendar year) a
statement setting forth the balance to the credit of
such participant in each of the accounts.
f. Amounts deferred under the provisions of this Plan will
be disbursed to participants in accordance with the
following:
(1) Deferrals held in the Treasury Bill Account
and the Treasury Note Account will be paid by
Commerce in a single distribution as soon as
reasonably practicable after retirement,
disability, death or termination of
employment, except that a participant may
elect to have distributions from such
accounts made in up to ten annual equal
installments or in such installments after
receiving a lump sum payment of a portion of
the account balances. Annual installments
will be paid in an amount, less applicable
withholding taxes, determined by multiplying
the balance in either account by a fraction,
the numerator of which is one (1) and the
denominator of which is a number equal to
remaining unpaid annual installments.
(2) If a participant dies after the commencement
of payments from such participant's Treasury
Bill Account or Treasury Note Account, the
designated beneficiary shall receive the
remaining installments over the elected
installment period.
(3) With respect to a participant's Commerce
Stock Account, upon such participant's
employment terminating for disability, death,
retirement, or termination of employment, the
whole units in the participant's Commerce
Stock Account shall be converted into shares
of Commerce Stock with each whole unit
representing one share of such stock with
cash paid in lieu of any fractional shares.
No distribution, however, shall be made from
the Commerce Stock Account until arrangements
satisfactory to Commerce shall have been made
to provide for the payment to Commerce of
federal, state, local, and payroll
withholding taxes attributable to the
Commerce Stock Account.
(4) Each participant shall have the right at any
time to designate any person or persons as
beneficiary or beneficiaries (both principal
as well as contingent) to whom payment under
this Plan shall be made in the event of death
prior to complete distribution to the
participant of the amounts due under this
Plan. Any beneficiary designation may be
changed by a participant by the filing of
such change in writing on a form prescribed
by Commerce. The filing of a new beneficiary
designation form will cancel all beneficiary
designations previously filed and will apply
to all deferrals in the account. If a
beneficiary has not been designated or if all
designated beneficiaries predecease the
participant, then any amounts payable to the
beneficiary shall be paid to the
participant's estate in one lump sum.
(5) If there is any change in the number or class
of shares of Commerce stock through the
declaration of stock dividend or other
extraordinary dividends or recapitalization
resulting in stock splits or combinations or
exchanges of such shares or in the event of
similar corporate transactions, each
participant's Commerce Stock Account shall be
equitably adjusted to reflect any such change
in the number or class of issued shares of
common stock of Commerce or to reflect such
similar corporate transaction.
(6) The Human Resources/Salary Committee of
Commerce, upon 30 days written notice, may
approve a "hardship" request for distribution
of a deferred award. Unless the participant
presents proof satisfactory to
such committee of financial need, requests
for hardship distribution will be denied.
Each request will be evaluated on the basis
of uniformly applied criteria.
7. AMENDMENT AND TERMINATION OF PLAN
The Board of Directors may at its discretion and at any time
amend the Plan in whole or in part. The Committee may terminate
the Plan in its entirety at any time, and, upon such termination
or such later date or dates, each participant shall: receive, in
a single distribution, the shares and cash for the fractions
thereof of Commerce Stock reflected in the Commerce Stock
Account; and shall be paid, in a single distribution or over such
period of time as determined by the Committee, the then remaining
balance in such participant's Treasury Bill Account and Treasury
Note Account.
8. MISCELLANEOUS
a. A participant under this Plan is merely a general
unsecured creditor and nothing contained in this Plan
shall create a trust of any kind or a fiduciary
relationship between Commerce and the participant or
the participant's estate. Nothing contained herein
shall be construed as conferring upon the participant
the right to continued employment with Commerce or its
subsidiaries or to an incentive compensation award.
Except as otherwise provided by applicable law,
benefits payable under this Plan may not be assigned or
hypothecated, and no such benefits shall be subject to
legal process or attachment for the payment of any
claim of any person entitled to receive the same.
b. The amendment of the Plan to allow a Commerce Stock
deferral option shall become effective on the date the
shareholders of Commerce approve the same. Subject to
such approval, an employee having a deferred option may
elect (but prior to June 30, 1994) to transfer his
balance in the Treasury Bill Account and/or the
Treasury Note Account as of April 1, 1994 to the
Commerce Stock Account with the number of units
credited to his account determined as provided in
Section 6d hereof but based on the last sale price as
of the last day in March 1994 on which a trade of
Commerce Stock is reported. An employee who in 1993
deferred a potential incentive compensation award with
respect to performance in 1994 and elected either a
Treasury Bill Account or a Treasury Note Account may
elect prior to June 30, 1994 to defer such award for
1994 to the Common Stock Account.