ZIONS BANCORPORATION
One South Main, Suite 1380, Salt Lake City, Utah 84111
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On
May 26, 2000
To the Shareholders:
The Annual Meeting of the Shareholders of Zions Bancorporation (the
"Company") will be held in the Salt Lake City Marriott Hotel, 75 South West
Temple, Salt Lake City, Utah 84101, on Friday, May 26, 2000, at 11:00 a.m. for
the following purposes:
1. To elect four directors for the terms specified in the attached Proxy
Statement (Proposal 1); and
2. To approve amendments to the Key Employee Incentive Stock Option Plan
(Proposal 2).
The meeting will also be used to transact other business as may properly
come before the shareholders. Your proxy is being solicited by the Board of
Directors. For the reasons stated herein, your Board of Directors unanimously
recommends that you vote "for" proposals 1 and 2.
A Proxy Statement, Proxy Card, and a copy of the Annual Report on the
Company's operations during the fiscal year ended December 31, 1999, accompany
this notice.
IT IS IMPORTANT THAT ALL SHAREHOLDERS BE REPRESENTED AT THE MEETING.
Shareholders who are unable to attend in person SHOULD IMMEDIATELY SIGN, DATE
AND MAIL the accompanying form of proxy in the enclosed envelope, which requires
no postage.
The prompt return of proxies will save the Company the expense of further
requests for proxies, which might otherwise be necessary in order to ensure a
quorum.
By order of the Board of Directors
Dale M. Gibbons
Secretary
Salt Lake City, Utah
April 27, 2000
PROXY STATEMENT
ZIONS BANCORPORATION
One South Main, Suite 1380, Salt Lake City, Utah 84111
ANNUAL MEETING OF SHAREHOLDERS
May 26, 2000
VOTING AT THE MEETING
Your proxy is solicited by your Board of Directors. It will be voted as you
direct. If no contrary direction is given, your proxy will be voted:
- - FOR the election of directors listed below; and
- - FOR the amendments to the Key Employee Incentive Stock Option Plan.
You may revoke your proxy at any time before it is voted by giving written
notice to the Secretary, Zions Bancorporation, or by mailing a later-dated
proxy, or by voting in person at the meeting.
The only shares that may be voted are the 85,695,210 shares of common stock
outstanding at the close of business on April 12, 2000, the record date for the
meeting. Each share is entitled to one vote.
Shareholders may expressly abstain from voting on Proposal 2 regarding the
amendments to the Key Employee Incentive Stock Option Plan. Where some or all of
the shares represented by the duly executed and returned proxy of a broker or
other nominee are not voted on one or more items, pursuant to the rules of the
national securities exchange of which the nominee is a member or of the National
Association of Securities Dealers or otherwise, the shares will be treated as
represented at the meeting but not voted. Directors are elected by a plurality
of the votes cast at the meeting, with the four persons receiving the highest
number of votes to be elected. On all other matters the action will be approved
if a quorum is present and the number of shares voted in favor of the action
exceeds the number of shares voted against the action.
The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokers and others who incur costs to send proxy materials to
beneficial owners of stock held in a broker or nominee name. Directors, officers
and employees of the Company may solicit proxies in person or by mail or
telephone, but will receive no extra compensation for doing so. This Proxy
Statement is first being mailed to the shareholders of Zions Bancorporation on
or about April 27, 2000.
1
NOMINATION AND ELECTION OF DIRECTORS
(Proposal 1)
It is intended that the proxies received will be voted for the election of
nominees for director named herein unless otherwise indicated. In case any of
the nominees named herein is unable or declines to serve, an event which
management does not anticipate, proxies will then be voted for a nominee who
shall be designated by the present Board of Directors to fill such vacancy.
Directors are elected by a plurality of the votes cast at the meeting, with the
four persons receiving the highest number of votes to be elected.
The following persons are nominated for election as directors for the
specified term, and until their successors are elected and qualified, and will,
together with other directors presently in office, constitute the entire elected
Board of Directors:
Three-year Term
---------------
R. D. Cash
Richard H. Madsen
Robert G. Sarver
Harris H. Simmons
The Board of Directors recommends that the Shareholders vote FOR the election of
the nominees for director set forth above.
The following information is furnished with respect to each of the nominees for
election as directors, as well as for directors whose terms of office will not
expire prior to the Annual Meeting of Shareholders:
Present
Director Term
Nominees Principal Occupation During Past Five Years Since Expires Age
- -------- ------------------------------------------- ----- ------- ---
R.D. Cash(2) Chairman, President and Chief Executive Officer 1989 2000 57
of Questar Corporation, Salt Lake City, Utah;
Member of the Board of Directors of Zions First
National Bank, Associated Electric and Gas
Insurance Services Limited; Director of Federal
Reserve Bank (Salt Lake City Branch) of San
Francisco, California.
Richard H. Madsen(1, 3) Chairman, President and Chief Executive Officer, 1994 2000 61
ZCMI.
Robert G. Sarver(4) Chairman and Chief Executive Officer of 1994 2000 38
California Bank & Trust; Executive Director,
Southwest Value Partners and Affiliates
1991-1999; Director, Meritage Corporation and
Skywest Airlines.
2
Harris H. Simmons(2, 5) President and Chief Executive Officer of the 1989 2000 45
Company; Chairman of Zions First National Bank;
Director, Questar Corporation, and O.C. Tanner Co.
DIRECTORS WITH UNEXPIRED TERMS OF OFFICE
Jerry C. Atkin(3) Chairman, President and Chief Executive Officer, 1993 2002 51
SkyWest Airlines, St. George, Utah; Director,
SkyWest, Inc.
Grant R. Caldwell(1) Retired, former Partner, KMG Main Hurdman, Salt 1993 2002 75
Lake City, Utah.
Roger B. Porter(1, 3) IBM Professor of Business and Government, Harvard 1993 2001 53
University; Assistant to the President for
Domestic and Economic Affairs, The White House,
1989-1992; Director, National Life Insurance Co.,
Rightchoice Managed Care Inc., Pactiv
Corporation, and Tenneco Automotive, Inc.
L.E. Simmons(4, 5) President, SCF Partners, L.P. (Private Equity 1978 2001 53
Investment Management), Houston, Texas; Chairman,
Tuboscope, Inc.
Roy W. Simmons(2, 4) Chairman of the Company; Member of the Board of 1961 2002 84
Directors of Zions First National Bank.
Shelley Thomas(4) Consultant; Senior Vice President of 1998 2002 48
Communications and Public Affairs, Salt Lake
Organizing Committee for the Olympic Winter Games
of 2002, 1997-2000; Vice President of Public
Affairs, Smith's Food & Drug Centers, Inc.,
1990-1997.
I.J. Wagner(1, 2) President, The Keystone Company (Corporate 1965 2001 84
Investments), Salt Lake City, Utah.
1 Member of the Audit Committee 4 Member of the Credit Review/Compliance Committee
2 Member of the Executive Committee 5 Son of Roy W. Simmons
3 Member of the Executive Compensation Committee
3
COMPENSATION OF DIRECTORS
The Company's outside directors currently receive a $12,000 annual retainer
and $600 for each regular and special meeting attended. Members of the
committees receive $500 for each committee meeting attended. The Chairman of the
Audit Committee receives an additional $6,000 annual retainer and members of the
Audit Committee receive an additional $3,000 annual retainer. Non-Employee
directors are also granted non-qualified stock options annually. Directors who
are full-time compensated employees of the Company do not receive either the
retainer or any other compensation for meetings of the Board of Directors or its
committees.
The Company maintains a Deferred Compensation Plan for directors whereby a
director may elect to defer receipt of all or a portion of his or her
compensation until retirement or resignation from the Board. The director may
elect to invest the deferred fees in an interest-bearing unsecured note, or in
"phantom" stock, whereby the earnings will be calculated as if the deferred
compensation had been invested in the Company's common stock (although an actual
investment is not made and settlement is made only in cash).
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held nine meetings during the fiscal year ending
December 31, 1999. Of the Board's four standing committees, the Executive
Committee met once, the Audit Committee met seven times, the Executive
Compensation Committee met once, and the Credit Review/Compliance Committee met
three times during the fiscal year ending December 31, 1999. Membership in these
committees is indicated above in the listing of directors. Average attendance at
Board and committee meetings held during the year was 99%. The Company has no
nominating committee and no other established committee acts in that capacity.
The Executive Committee reviews projects or proposals which require prompt
action on the part of the Company. The Executive Committee is authorized to
exercise all powers of the Board of Directors with respect to such projects or
proposals for which it would not be practicable to delay action pending approval
of the entire Board. The Executive Committee does not have authority to amend
the Articles of Incorporation or Bylaws, adopt a plan of merger, or to recommend
to shareholders the sale of all or substantially all of the Company's assets.
The Audit Committee reviews and discusses the plan for, and results of, the
annual audit with the Company's independent auditors and approves non-audit
services provided by them. The Committee also reviews the Company's internal
auditing, control and accounting systems. In addition, the Committee makes
recommendations to the Board concerning the selection of independent auditors.
The Executive Compensation Committee fixes the compensation of corporate
executive officers and approves any employment or consulting contracts with
corporate officers who are not also directors.
The Credit Review/Compliance Committee is a joint committee of the Company
and Zions First National Bank. The Committee monitors the results of internal
credit examinations, and reviews adherence to policies established by the Board
and by management with respect to lending, as well as general management issues.
4
EXECUTIVE OFFICERS OF THE COMPANY
The following information is furnished with respect to certain of the
executive officers of the Company.
Individual Principal Occupation During Past Five Years(2) Officer Since Age
- ---------- ---------------------------------------------- ------------- ---
Roy W. Simmons(1) Chairman of the Company; Member of the Board of Directors of 1961 84
Zions First National Bank; prior to January 1998, Chairman of
Zions First National Bank.
Harris H. Simmons(1) President and Chief Executive Officer of the Company; 1981 45
Chairman of Zions First National Bank; Director, Questar
Corporation and O.C. Tanner Co.; prior to January 1998,
President and Chief Executive Officer of Zions First National
Bank.
Bruce K. Alexander Senior Vice President of the Company; President and Chief 2000 47
Executive Officer; Vectra Bank Colorado; Executive Director,
Denver Urban Renewal Authority, 1999-2000; Executive Vice
President of Bank One, 1977-1999.
A. Scott Anderson Executive Vice President of the Company; President and Chief 1997(3) 53
Executive Officer of Zions First National Bank;
prior to January 1998, Executive Vice President of
Zions First National Bank.
Danne L. Buchanan Executive Vice President of the Company; prior to March 1995, 1995 42
Senior Vice President and General Manager of Zions Data
Services Company.
Gerald J. Dent Executive Vice President of the Company; Executive Vice 1987 58
President of Zions First National Bank.
Dale M. Gibbons Executive Vice President, Chief Financial Officer and 1996 39
Secretary of the Company; Executive Vice President
and Secretary of Zions First National Bank; prior to
August 1996, Senior Vice President of First
Interstate Bancorp.
John J. Gisi Senior Vice President of the Company; Chairman and 1994 54
Chief Executive Officer of National Bank of Arizona;
Director, Federal Home Loan Bank of San Francisco.
James C. Hawkanson Senior Vice President of the Company, Managing Director and 1998 56
Chief Executive Officer of The Commerce Bank of Washington.
5
W. David Hemingway Executive Vice President of the Company; Executive Vice 1997(4) 52
President of Zions First National Bank; Director, Federal
Agricultural Mortgage Corporation.
Clark B. Hinckley Senior Vice President of the Company; prior to March 1994, 1994 52
President of Zions First National Bank of Arizona.
George Hofmann III Senior Vice President of the Company; prior to April 2000, 1995 50
President and Chief Executive Officer of Nevada State Bank.
William E. Martin Senior Vice President of the Company; President, Chief 2000 58
Executive Officer and Chairman of Nevada State Bank;
President and Chief Executive Officer of Pioneer Citizens
Bank of Nevada, 1989-1999.
Robert G. Sarver Executive Vice President of the Company; Chairman and Chief 1998(5) 38
Executive Officer of California Bank & Trust;
Director, Meritage Corporation and Skywest Airlines;
Executive Director, Southwest Value Partners,
1991-1999.
1 Roy W. Simmons (Chairman of the Company) is the father of Harris H. Simmons
(President and Chief Executive Officer of the Company) and L. E. Simmons (a
member of the Board of Directors of the Company).
2 Officers are elected for indefinite terms of office and may be replaced at
the discretion of the Board of Directors.
3 Officer of Zions First National Bank since 1990.
4 Officer of Zions First National Bank since 1977.
5 Member of the Board of Directors since 1994.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth as of April 12, 2000, the record and
beneficial ownership of the Company's common stock by the principal common
shareholders of the Company.
Common Stock
Name and Address Type of Ownership No. of Shares % of Class
- ---------------- ----------------- ------------- ----------
Roy W. Simmons Record and Beneficial 2,263,172 2.64%
One South Main Street Beneficial(1) 1,814,488 2.12%
Salt Lake City, Utah 84111 4,077,660 4.76%
Zions First National Bank Record(2) 4,136,300 4.83%
One South Main Street
Salt Lake City, Utah 84111
(1) Represents Roy W. Simmons' beneficial ownership interest in 1,814,488
shares held by a company in which Mr. Simmons serves as a director.
(2) These shares are owned of record as of April 12, 2000, by Zions First
National Bank, a subsidiary of the Company, in its capacity as fiduciary
for various trust and advisory accounts. Of the shares shown, Zions First
National Bank has sole voting power with respect to a total of 3,254,116
shares (3.80% of the class) it holds as trustee for the Zions
Bancorporation Employee Stock Savings Plan, the Zions Bancorporation
Employee Investment Savings Plan, and the Zions Bancorporation Profit
Sharing Plan. Zions First National Bank also acts as trustee for the Zions
Bancorporation Dividend Reinvestment Plan, which holds 685,621 shares
(0.80% of the class) and the Zions Bancorporation PAYSOP Plan, which holds
196,563 shares (0.23% of the class) as to which Zions First National Bank
does not have or share voting power.
6
Set forth below is the beneficial ownership, as of April 12, 2000, of the
Company's common stock by each of the Company's directors, and all directors and
officers as a group.
No. of Shares % of
Directors Beneficially Owned Class
--------- ------------------ -------
Jerry C. Atkin 16,800 *(1)
Grant R. Caldwell 14,700 *(1)
R. D. Cash(3) 33,000 *(1)
Richard H. Madsen 208,598 *(1)
Roger B. Porter(3) 10,000 *(1)
Robert G. Sarver(3) 532,232 *(1)
Harris H. Simmons 2,436,376(2) 2.84
L. E. Simmons(3) 2,140,464(2) 2.50
Roy W. Simmons(3) 4,077,660(2) 4.76
Shelley Thomas 1,000 *(1)
I. J. Wagner(3) 35,000 *(1)
All directors and officers
as a group (23 persons) 6,721,139 7.79
(1) Immaterial percentage of ownership (Less than 2%)
(2) Totals include 1,814,488 shares attributed to each individual through
serving as a director in a company holding such shares in the Company.
(3) These individuals also own phantom stock through the Company's Deferred
Compensation Plan for Directors which are not included in the above totals.
The amount of phantom stock held as of December 31, 1999 was as follows:
Mr. Cash, 24,748 shares; Mr. Porter, 9,405 shares; Mr. Sarver, 3,811
shares; Mr. L.E. Simmons, 6,024 shares; Mr. Roy Simmons, 21,326 shares; and
Mr. Wagner, 2,964 shares.
Section 16(a) of the Securities Exchange Act of 1934 requires officers and
directors of the Company and persons who own more than 10% of a registered class
of the Company's equity securities to file reports of ownership and changes in
their ownership with the Securities and Exchange Commission. The secretary of
the Company acts as a compliance officer for such filings of its officers and
directors, and prepares reports for such persons based on information supplied
by them. Based solely on its review of such information, the Company believes
that for the period from January 1, 1999 through December 31, 1999, its officers
and directors were in compliance with all applicable filing requirements, except
that Messrs. W. David Hemingway and Harris Simmons filed a late report on
options exercised, Mr. Nolan Bellon filed a late report on shares sold, and Mr.
I.J. Wagner filed a late report on shares gifted.
7
EXECUTIVE COMPENSATION
The following Summary Compensation Table shows compensation earned from the
Company for services rendered during fiscal years 1999, 1998 and 1997 for the
person who was chief executive officer at the end of the last fiscal year, and
the four most highly compensated executive officers of the Company whose
salaries and bonuses exceeded $100,000 in 1999.
Summary Compensation Table
Long-term
Annual Compensation
Compensation(4) Awards
-------------------- -------------------------
Value- Securities All Other
Salary Bonus Sharing Underlying Compensation
Name and Principal Position Year ($)(5)(6) ($)(6)(7) ($)(8) Options(#)(9) ($)(6)(10)(11)(12)
- --------------------------- ---- --------- --------- ------ ------------- ------------------
Harris H. Simmons 1999 450,000 0(1) 271,830 36,000 113,331
President and Chief Executive 1998 434,101 255,000 258,300 36,000 67,672
Officer, Zions Bancorporation 1997 385,563 235,000 189,150 40,000 54,093
Robert Sarver(2) 1999 408,000 200,000 0 3,900 30
Chairman and 1998 125,231 75,000 0 15,000 0
Chief Executive Officer, 1997 0 0 0 0 0
California Bank & Trust
A. Scott Anderson 1999 301,231 130,000 191,675 24,000 32,787
President and 1998 255,000 115,000 175,275 24,000 31,186
Chief Executive Officer, 1997 207,101 110,000 138,225 20,000 27,600
Zions First National Bank
Dale M. Gibbons(3) 1999 230,000 150,000 103,000 22,000 16,928
Executive Vice President and 1998 214,140 115,000 40,000 22,000 11,097
Chief Financial Officer, 1997 174,716 90,000 0 12,000 0
Zions Bancorporation
John J. Gisi 1999 242,923 125,000 174,250 16,000 20,361
Chairman and Chief Executive 1998 242,550 125,000 147,600 16,000 53,495
Officer, 1997 242,925 110,000 0 18,000 17,762
National Bank of Arizona
(1) For 1999, Mr. Simmons, requested that the Executive Compensation Committee
not consider him for a performance bonus in light of the uncertainties and
risks which developed with respect to the Company's proposed merger with
First Security Corporation.
(2) Mr. Sarver's employment by the Company commenced October 1998. He has
served as a Director of the Company since 1994.
(3) Mr. Gibbons' employment with the Company commenced August 1996.
(4) The column for other annual compensation has been omitted since the only
items reportable thereunder for the named persons are perquisites, which
did not exceed the lesser of $50,000 or 10% of salary and bonus for any of
the named persons.
8
(5) Includes all contributions to the Company's Employee Stock Savings Plan,
Employee Investment Savings Plan, and Employee Medical Plan made through
salary reductions and deferrals.
(6) All employees of the Company who have at least one year of service, have
worked at least 1,000 hours in the previous twelve months, and are at least
twenty-one years of age are eligible to participate in the Company's
Employee Stock Savings Plan and the Company's Employee Investment Savings
Plan, which are defined contribution plans qualified under 401(k) of the
Internal Revenue Code. The plans require contributions from participants in
increments of one percent of compensation, up to a maximum of fifteen
percent. Contributions made under the Employee Stock Savings Plan are
aggregated with contributions made under the Employee Investment Savings
Plan for purposes of establishing the maximum contribution limitation,
which is fifteen percent. If the participant elects to have his
contributions invested in the Company's common stock through the Employee
Stock Savings Plan, the Company shall contribute to the participant's
account an amount equal to fifty percent of the participant's contribution,
up to five percent of the participant's compensation. The Company shall
contribute an additional amount equal to twenty-five percent of the
participant's contribution to the Employee Investment Savings Plan,
approximately five to ten percent of the participant's compensation.
Additional contributions of up to five percent of compensation may be made
by a participant but are not matched by the Company. The Company's
contributions are determined by reference to the employees' contributions
and are not discretionary. Vesting occurs upon contribution; however,
distribution of Company contributions is made only upon retirement,
permanent disability, death, termination of employment, or special hardship
situations. Participant contributions are included in amounts shown as
"Salary," above. The Company's matching contributions are included under
"All Other Compensation," above. For each of the persons named above, the
amounts accrued for 1999, 1998 and 1997 were as follows, respectively: Mr.
Simmons, $5,000, $5,000 and $4,701; Mr. Sarver, $0, $0, and $0; Mr.
Anderson, $1,124, $6,000 and $5,826; Mr. Gibbons, $6,000, $6,000 and $0;
Mr. Gisi, $6,000, $6,000 and $6,000.
(7) Cash bonuses are reported in the year earned but are paid in the following
year. Bonuses for Mr. Harris H. Simmons are established by the Executive
Compensation Committee of the Board of Directors (the "Compensation
Committee"). Bonuses for the other named officers are recommended by Mr.
Simmons and approved by the Compensation Committee. Bonuses are
discretionary, but are generally based upon the operating results of the
Company and the performance of the individuals.
(8) Awards shown do not include amounts accrued by the Company against its
potential future liability under the Senior Management Value-Sharing Plan,
a deferred bonus plan for senior management. The Company estimates its
annual accrual against future payouts under the plan each year by applying
the formula established for each award fund by the Board of Directors to
the Company's performance in the year. For each of the persons named above,
the amounts accrued for 1999, 1998 and 1997 were as follows, respectively:
Mr. Simmons, $264,581, $208,193 and $390,073; Mr. Sarver, (see note #1,
page 12); Mr. Anderson, $189,571, $148,876 and $273,705; Mr. Gibbons
$178,105, $142,253 and $0; Mr. Gisi, $165,558, $133,045 and $245,703. See
"Long Term Incentive Compensation Plan" that follows.
(9) Options shown were issued under the Company's Stock Option Plan. The plan
is administered by the Compensation Committee. Options granted have an
exercise price equal to the fair market value on the date of grant, vest
over a term of three to five years, and expire in six years.
(10) Includes amounts accrued under
the Company's Supplemental Executive Retirement Plan (SERP). For additional
details regarding the SERP, please see page 13. For each of the persons
named above, the amounts accrued for 1999, 1998 and 1997 were as follows,
respectively: Mr. Simmons, $108,331, $60,554 and $45,810; Mr. Sarver, $30,
$0, and $0; Mr. Anderson, $31,663, $23,068 and $18,192; Mr. Gibbons,
$10,928, $2,979 and $0; and Mr. Gisi, $14,361, $45,377 and $8,180.
(11) Amounts of All Other Compensation are amounts contributed or accrued for
the named officers under the Company's Employee Stock Savings Plan,
Employee Investment Savings Plan, Supplemental Retirement Plan, and
Employee Profit Sharing Plan.
(12) In 1992, the Board of Directors adopted the Zions Bancorporation Employee
Profit Sharing Plan, a defined contribution plan, pursuant to which an
award is made to all employees as a percentage of salary and bonus when the
Company achieves annual profits representing a return on equity (net income
divided by average shareholders' equity) target established by the Board of
Directors of at least 14%. The minimum award is 1% of covered payroll at
14% return on equity, with the award to be a greater percentage of covered
payroll if the return on equity is greater. Amounts accrued to the accounts
of employees are invested in Company common stock. For each of the persons
named above, the amounts accrued for 1999, 1998 and 1997 were as follows,
respectively: Mr. Simmons, $0, $2,118 and $3,582; Mr. Sarver, $0, $0, and
$0; Mr. Anderson, $0, $2,118, and $3,582; Mr. Gibbons, $0, $2,118; and Mr.
Gisi, $0, $2,118 and $3,582. In 1999, the Company terminated this Profit
Sharing Plan and no further contributions are contemplated.
9
Stock Option Grants in Fiscal Year 1999
The following table shows the number of shares with respect to which
options were granted during 1999 to each of the named persons, together with the
percentage of all grants to employees which the grant to the named person
represents, the exercise price of such option, and the expiration date of the
option.
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term(1)
-------------- ---------------------
% of Total
Options
Options Granted to Exercise
Granted Employees Price Expiration
Name (#)(2) in Fiscal Year ($/Sh) Date 5% ($) 10% ($)
---- ------ -------------- ------ ---------- ------- ---------
Harris H. Simmons 36,000 4.66 69.125 04-22-2005 846,328 1,920,030
Robert Sarver 3,900 0.51 69.125 04-22-2005 91,686 208,003
A. Scott Anderson 24,000 3.11 69.125 04-22-2005 564,219 1,280,020
Dale M. Gibbons 22,000 2.85 69.125 04-22-2005 517,200 1,173,351
John J. Gisi 16,000 2.07 69.125 04-22-2005 376,146 853,346
(1) Potential unrealized value is based on an assumption that the price of the
common stock appreciates at the annual rate shown (compounded annually)
from the date of grant until the end of the six-year option term. These
numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not reflect the Company's
estimate of future stock price growth.
(2) The Company's Stock Option Plan is administered by the Compensation
Committee of the Board of Directors. The Compensation Committee determines
the eligibility of employees, the number of shares to be granted and the
terms of such grants. All stock options granted in fiscal year 1999 have an
exercise price equal to the fair market value on the date of grant, vest
25% per year beginning one year after date of grant, and have a term of six
years.
In accordance with the terms of the Non-Employee Directors Stock Option Plan,
non-qualified options were granted to each non-employee director as of April
1999. Each grant is an option to purchase 4,000 shares at $69.125 per share. The
options vest and become exercisable in four equal installments of 1,000 shares
beginning six months after the date of grant and continuing at one-year
intervals thereafter. The 1999 options expire on April 22, 2009.
10
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-end Option Values
The following table sets forth the number of shares acquired by any of the
named persons upon exercise of stock options in 1999, the value realized through
the exercise of such options, and the number of unexercised options held by such
person, including both those which are presently exercisable, and those which
are not presently exercisable.
Shares Number of
Acquired Shares Underlying Value of Unexercised
Upon Unexercised In-the-
Option Value Options Money Options
Name Exercise(#) Realized($) at 12-31-99(#)(1) At 12-31-00($)(2)
---- ----------- ----------- ----------------- -------------------------
Not Not
Exercisable Exercisable Exercisable Exercisable
----------- ----------- ----------- -----------
Harris H. Simmons 35,000 1,951,406 49,000 88,000 1,518,531 699,875
Robert Sarver - - 10,750 16,150 289,391 110,666
A. Scott Anderson - - 33,000 55,000 1,793,313 358,938
Dale M. Gibbons - - 17,500 46,500 450,656 82,719
John J. Gisi 16,500 704,247 0 40,000 0 346,125
(1) Of the shares shown as underlying unexercised options for Mr. Sarver, a
total of 7,000 exercisable and 1,000 not exercisable represent nonqualified
options received in 1996 and 1997 as a Director of the Company.
(2) Potential unrealized value is (i) the fair market value at fiscal 1999
year-end ($59.1875) less the option exercise price, times (ii) the number
of shares.
Long Term Executive Incentive Compensation Plan
The following table sets forth certain information regarding awards made in
1999 pursuant to the Company's Senior Management Long Term Executive Incentive
Compensation Plan (Value Sharing Plan). This Plan is intended to encourage the
creation of long-term shareholder value by providing cash bonuses to certain
officers of the Company if certain objective performance criteria are achieved.
The Value Sharing Plan is administered by the Executive Compensation Committee,
which is comprised entirely of outside directors as defined under Section 162(m)
of the Internal Revenue Code. The Committee grants members of senior management
units of participation in each annual Value Sharing Plan. The Value Sharing Plan
is funded based upon objectively measured performance of the Company, its
subsidiaries, or business segments. Distributions under the Plan are determined
by allocating the award fund among the holders of units of participation in the
Plan in proportion to the number of units held by the participant. The size of
each award fund is determined according to a formula, which uses the Company's
aggregate earnings per share ("EPS") over the award period, with an adjustment
based upon the Company's average return on equity ("ROE") over the same period.
Both the aggregate EPS and average ROE numbers are adjusted to exclude the
effects of goodwill and certain merger-related expenses. Relatively higher
levels of EPS and ROE will make the award fund larger. The Plan also provides
for other factors to be considered in determining the size of the award fund,
e.g., pre-tax earnings of subsidiaries or shareholder value added. Different
11
performance criteria may be applied to Plan participants, depending upon their
area of responsibility. The Committee may also curtail the award fund, or the
participation of any employee, in its sole discretion. In any case, no single
award to an employee may exceed $3 million. An additional award fund is
anticipated to be established each year, although future awards are subject to
the discretion of the Compensation Committee and the Board of Directors. Such
award funds have been established annually since the Plan's inception.
The award fund established in 1999 ranged in amount from $0 for an adjusted
EPS growth rate of 4% annually over the four years beginning in 1999, to a
maximum of $18,216,000, corresponding to an adjusted EPS growth rate of 25%
annually for such period. The award fund will then be adjusted by a factor
determined by the average adjusted ROE for the period. If the average adjusted
ROE is less than 16%, the award adjustment factor will be 0, and there will be
no amounts paid under the Plan. If the average adjusted ROE is between 16% and
19%, the factor will be 1. The award adjustment factor will increase to a
maximum of 1.33 at average adjusted ROE levels of 25% and above. Accordingly,
the maximum aggregate of all payments possible under the 1999 award fund is
$24,227,000. Adjustments are to be made for stock splits, stock dividends and
other changes to the Company's capitalization.
Each member of senior management designated by the Compensation Committee
to participate in the award fund established for a given period has been awarded
a number of performance units in the Plan. The following table sets forth
estimated future payouts for the named individuals under the award fund
established in 1998 based on the following assumptions, respectively: the
threshold amount represents the minimum amount payable under the plan ($0);
Example #1 represents the amount that would be paid if the Company's adjusted
EPS annual growth rate during the period is 9% (as to which there can be no
assurance) and the average adjusted ROE is 15% (also as to which there can be no
assurance); Example #2 represents the amount that would be paid if the Company's
adjusted EPS annual growth rate during the period is 15% (as to which there can
be no assurance) and the average adjusted ROE is 25% (also as to which there can
be no assurance); the maximum amount represents the maximum possible amount
payable to the named individuals from the award fund established in 1999.
Estimated Future Payout
of Value Sharing Plan
-----------------------------------------
Number of Performance Example Example
Performance Period Until Threshold #1 #2 Maximum
Name Units Payout ($) ($) ($) ($)
- ---- ----------- ------------ --------- ------- -------- ---------
Harris H. Simmons 12,500 4 Years 0 81,413 514,513 1,316,688
Robert Sarver(1)
A. Scott Anderson 9,000 4 Years 0 58,617 370,449 948,015
Dale M. Gibbons 9,250 4 Years 0 60,245 380,739 974,349
John J. Gisi 7,500 4 Years 0 48,848 308,708 790,013
(1) Mr. Sarver did not receive participation units for the 1999 through 2002
Value Sharing Plan. However, he does participate in a long-term incentive
compensation program for certain California Bank & Trust employees. This
program recognizes some of the unique challenges posed in successfully
integrating Grossmont Bank, First Pacific National Bank and The Sumitomo
Bank of California. As such, it provides for a potentially larger award to
participants than the Value Sharing Plan if robust earnings are achieved.
Specifically, if California Bank & Trust's aggregate operating earnings
before taxes, provision and goodwill amortization from 1999 through 2002
are below $336 million, at $536 million, or above $596 million, Mr. Sarver
would receive an award of $0, $1,501,725, or $3,000,000, respectively. The
Executive Compensation Committee may reduce any award for asset quality
deterioration or for any other reason in its sole discretion.
12
Retirement Plan
The Company's retirement plan covers substantially all full-time employees
who have five years or more of service with the Company. The retirement plan is
a cash balance defined benefit plan. It provides a lump sum at retirement for
participating employees according to a formula which takes into account an
employee's age and annual compensation. Compensation for these purposes includes
salary, bonuses and payouts under incentive plans.
For each year of credited service, cash balance pay credits are equal to
the participant's earnings multiplied by the applicable pay credit percentage
shown in the chart below. Annual interest credits are based on the GATT 30-year
bond rate (5.25% for 1999).
AGE PAY CREDIT
Less than 30 2.25%
30-39 3%
40-49 4%
50-54 5.25%
55-59 7%
60 or over 9.25%
The maximum benefits payable pursuant to the Company's retirement plan
are limited by Sections 415 and 401(a)(17) of the Internal Revenue Code of 1986,
as amended. Under current regulations, earnings for the purpose of determining
benefits cannot exceed $160,000. Effective January 1, 1994, the Company adopted
its Executive Management Pension Plan, which is a supplemental executive
retirement plan (SERP), to restore pension benefits limited by the Code sections
referred to above. The SERP is an unfunded, nonqualified plan under which
benefits are paid from the Company's general assets. The Board of Directors
determines the participants in the SERP from among those employees of the
Company who are or have been, on or after the effective date of the SERP,
members of the Company's Executive Management Committee and who (1) are employed
in a management position with the Company having principal responsibility for
the management, direction and success of the Company as a whole or a particular
business unit thereof, or (2) are highly compensated employees of the Company
within the meaning of ERISA Section 401. Each of the named individuals is a
participant in the SERP.
13
The following table illustrates the estimated annual benefits and
equivalent Lump Sum Cash Balance payable under the plan at age 65 based on a
combination of the basic pension plan and the SERP. Estimated annual pension and
lump sum cash balance amounts at age 65 assume the following: (1) a 6.15%
annuity rate to convert the estimated age 65 cash balance to an annual amount;
(2) the November 1999 treasury bond rate of 6.15% used to calculate all future
years' interest on the Cash Balance; (3) 1999 compensation increasing by 4% per
year to age 65.
Estimated Cash Estimated
Balance Annual
at Age 65 Benefit
---------- --------
Harris H. Simmons $4,185,870 $423,959
Robert Sarver 1,999,250 202,491
A. Scott Anderson 1,399,500 141,746
Dale M. Gibbons 2,306,901 219,212
John Gisi 1,254,473 127,057
14
PERFORMANCE GRAPH FOR ZIONS BANCORPORATION
INDEXED COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
1994 1995 1996 1997 1998 1999
------ ------ ------ ------ ------ ------
Zions Bancorporation 100.00 227.62 298.56 527.71 731.70 702.75
KBW 50 Index 100.00 160.16 226.58 331.21 358.63 346.18
S & P 500 100.00 137.58 169.17 225.61 290.08 351.12
Note: Assumes $100 invested on 12-31-94 in Zions Bancorporation, the S & P
500 stock market index and Keefe, Bruyette & Woods (KBW) 50 bank stock
index. Assumes reinvestment of all dividends on a quarterly basis.
[AVERAGE EQUITY GRAPH APPEARS HERE]
15
COMPENSATION COMMITTEE REPORT
Summary of Compensation Policies for Executive Officers
The Executive Compensation Committee (the "Compensation Committee") of the Board
of Directors has furnished the following report on executive compensation:
Under the supervision of the Compensation Committee, the Company has
developed and implemented compensation policies, plans and programs which
attempt to enhance the profitability of the Company, and thus shareholder value,
by aligning closely the financial interests of the Company's senior managers
with those of its shareholders. For the Company, earnings per share growth and
return on average shareholders' equity are critical elements in the
establishment of long-term incentive programs. The process involved in the
executive compensation determination for 1999 is summarized below:
o Compensation for each of the persons named in the Summary Compensation
Table, as well as other senior executives, consists of a base salary, an
annual bonus and long-term incentive compensation. Long-term incentives
consist primarily of annual grants of units of participation under the
Company's Long Term Executive Incentive Compensation Plan (the "Value
Sharing Plan"), supplemented by grants of stock options. The Value Sharing
Plan is closely tied to Company performance as measured by earnings per
share and return on shareholders' equity. See "Long Term Executive
Incentive Compensation Plan."
o The Compensation Committee determines base salaries and annual bonuses
after a subjective evaluation of various factors, including salaries paid
to senior managers with comparable qualifications, experience and
responsibilities at other institutions, individual job performance, local
market conditions and the Committee's perception of the overall financial
performance of the Company (particularly operating results), without
considering specific performance targets or objectives, and without
assigning particular weight to individual factors. As to executive officers
other than the chief executive officer, the Compensation Committee also
considers the recommendations made by the chief executive officer.
o Information regarding salaries paid by other financial institutions is
provided annually through an independent survey, and normally every three
years by an independent consultant (most recently for 1996). The consultant
compares the Company's compensation levels with a peer group of financial
institutions selected by asset size from the consultant's database. In its
most recent study, the consultant selected 23 institutions with asset sizes
ranging from $2.5 billion to $20.1 billion. Zions ranked in the 43rd
percentile among the peer group in terms of asset size. The study
indicated, based on a regression analysis, that the base and annual bonus
compensation in total for the Company's chief executive officer and the
other executive officers was somewhat below the median total compensation
level for the peer group as adjusted for institution size. This peer group
is not the same peer group used in the Performance Graphs.
16
o Units of participation in the Value Sharing Plan's award funds are granted
on a discretionary basis, in a laddered structure reflecting the position
and proportionate responsibility for overall corporate results of each
executive officer in the Company. The allocation of units is not based on
any measure of Company performance, but is based on a subjective evaluation
of individual performance and the scope of individual responsibilities. The
Committee reviewed and approved the Value Sharing Plan's target levels of
earnings per share and return on equity for the 1999 award fund as well as
the corresponding variation in size of the award fund. In 1999, as in every
year since the Value Sharing Plan was first adopted, the Company's adjusted
aggregate EPS and adjusted average ROE have been within ranges which, if
continued throughout the applicable four-year period covered by each award
fund, would provide payouts under the plan. A payout occurred under the
Value Sharing Plan in 1999. (See "Summary Compensation Table," n.6.) The
Company's consultant has reported that in comparison to the peer group
selected by the consultant, the Company's compensation package, for the
Executive Officers as a group, provides proportionately less compensation
through salary and bonus, and an appropriately competitive level of
long-term incentive compensation, consisting of the Value Sharing Plan and
stock options. Consultant reports are merely one factor taken into
consideration by the Committee in the process of making an independent and
subjective determination as to compensation.
o The Compensation Committee reviews the salary of the chief executive
officer and compares it to those in peer positions in companies of similar
size and performance levels, using information obtained through the
Company's independent compensation consultant concerning salary
competitiveness, and extrapolating from information obtained in previous
years when no survey has been conducted for the latest year. The
Compensation Committee establishes the chief executive officer's base
salary and annual bonus based on the Compensation Committee's subjective
assessment of the chief executive officer's past performance, its
expectation as to his future contributions in leading the Company, and the
information provided by the compensation consultant. A similar process is
used by the Compensation Committee to determine the number of units of
participation the chief executive officer receives in the Value Sharing
Plan.
o The Company periodically grants stock options to executives. Grants were
made in April 1999. Such grants are discretionary by the Compensation
Committee, and are typically made in a laddered structure reflecting the
position of each executive officer in the Company and that person's
proportionate responsibility for overall corporate performance. Typically,
the chief executive officer recommends the quantity and terms of options to
be granted to the executive officers other than to himself. The allocation
of stock options among executive officers is not based on any measure of
Company performance, but is based on a subjective evaluation of individual
performance and the scope of the individual's responsibilities. Information
regarding the quantity and terms of stock options granted by other
financial institutions has been provided by the Company's independent
consultant with respect to the peer group selected by the consultant.
Executive Compensation Committee
Jerry C. Atkin, Chairman
Richard H. Madsen
Roger B. Porter
17
Compensation Committee Interlocks and Insider Participation
None
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain directors and officers and/or their affiliates borrow from time to
time from Zions First National Bank and other subsidiaries of the Company, at
regular rates and terms, and are subject to all rules and regulations applicable
to banks. Aggregate loans to the directors, executive officers and principal
shareholders of the Company in excess of $60,000 to any such persons as of
December 31, 1999, comprised less than 2% of total shareholders' equity of the
Company, not including the loan to Mr. Sarver discussed below. Such borrowings
were made in the ordinary course of business, do not involve more-than-normal
risks of collectibility, and are made on terms comparable to borrowings by
others of similar credit risk.
In order to provide an appropriate incentive to Robert G. Sarver, a
director of Zions, to expand the Company's California banking operations and
distribution network, the Company entered into an agreement with Mr. Sarver in
1998 regarding California Bank & Trust. In accordance with the terms of the
agreement, the following actions were agreed to and taken:
(i) Mr. Sarver will serve as the chief executive officer of California Bank &
Trust; and
(ii) The Company sold to Mr. Sarver, individually, a 2.5% minority interest in
California Bank & Trust; and
(iii) The Company sold in aggregate to two limited partnerships, of which Mr.
Sarver is the sole general partner, a 2.5% minority interest in California
Bank & Trust.
The limited partners of the limited partnerships include, among others,
individuals who are currently senior officers of California Bank & Trust. The 5%
minority interest in California Bank & Trust was sold for the Company's cost
basis, or approximately $33 million.
The Company financed a portion of the purchase price paid by Mr. Sarver for
the minority interest in California Bank & Trust. The Company lent to Mr. Sarver
approximately $14.8 million. This loan is non-recourse to Mr. Sarver, and is
secured by (i) 200,000 shares of the Company's common stock, and (ii) the 2.5%
minority interest in California Bank & Trust owned by Mr. Sarver. The loan bears
interest at 200 basis points over the five-year U.S. treasury rate, compounded
annually and is payable at maturity in 2003. At such time, for a period of 90
days, Mr. Sarver and the limited partnerships will have the right to make the
Company buy back the 5% minority interest they own in California Bank & Trust
for the value as determined by appraisal.
A company controlled by Mr. Sarver owns a jet aircraft that is used by him
as well as other employees of California Bank & Trust and the Company. This
company is reimbursed at commercial coach fares for such usage, which aggregated
to $62,075 for 1999. The Company believes that the costs to operate the
aircraft, which are borne by Mr. Sarver's company, are substantially greater
than the coach fare reimbursement provided.
18
PROPOSAL TO AMEND THE ZIONS BANCORPORATION
KEY EMPLOYEE INCENTIVE STOCK OPTION PLAN
(Proposal 2)
The Company's Key Employee Incentive Stock Option Plan (the "Plan"), was
adopted on December 28, 1981, by the Board of Directors of the Company and
approved on April 28, 1982, by the shareholders of the Company. The Plan was
amended by the Company's shareholders on April 27, 1990, April 28, 1995 and
April 24, 1998. The proposed amendment to the Plan would automatically make
available for options under the Plan, in any one calendar year, two percent (2%)
of the issued and outstanding shares of the Company's common stock as of the
first day of each calendar year for which the Plan is in effect. Any shares of
common stock available in any year using the two percent (2%) formula that are
not granted under the Plan will be available for use under the terms of the Plan
in subsequent years. The common stock available for issuance under the Plan
pursuant to the two percent (2%) per year formula will not include common stock
which the Company is now or may become obligated to issue as a result of an
acquisition, merger or reorganization involving the Company. The exact wording
of the proposed amendment is set forth below.
The purpose of the Plan is to promote the long-term success of the Company
by providing financial incentives to key employees of the Company and its
subsidiaries who are in positions to make significant contributions toward such
success. The Plan is designed to attract individuals of outstanding ability to
employment with the Company or a subsidiary and to encourage key employees to
acquire a proprietary interest in the Company, to continue employment with the
Company or a subsidiary, and to render superior performance during such
employment.
The Plan will expire on April 28, 2005, unless extended by approval of the
shareholders. Currently, the aggregate number of common shares with respect to
which options can be granted under the Plan cannot exceed one percent (1%) of
the issued and outstanding shares of the Company's common stock as of the first
day of each calendar year for which the Plan is in effect.
The Board of Directors believes it would be in the best interests of the
Company and its shareholders to amend the Plan to increase the aggregate number
of shares available under the Plan from 1% to 2% annually. The amendment will
provide the Company with more latitude to award equity-based compensation when
appropriate to attract and retain key personnel.
It is proposed that Paragraph 1.3(a) of the Plan be amended to read in its
entirety as follows:
1.3 Aggregate Limitation
(a) The aggregate number of shares of Common Stock
with respect to which Incentive Stock Options
may be granted under this Plan on an annual
basis shall not exceed two percent (2%) of the
issued and outstanding shares of Common Stock as
of the first day of each calendar year for which
the Plan is in effect, subject to adjustment in
accordance with Section 3.1. Any shares
available in any year using this formula that
are not granted under this Plan will be
available for use in subsequent years.
The Board of Directors recommends that the shareholders vote FOR the above
proposal.
19
OTHER BUSINESS
Except as set forth herein, management has no knowledge of any other
business to come before the meeting. If, however, any other matters of which
management is now unaware properly come before this meeting, it is the intention
of the persons named in the Proxy to vote the Proxy in accordance with their
judgment on such matters.
Pursuant to the Company's Bylaws, business must be properly brought before
an annual meeting in order to be considered by shareholders. The Bylaws specify
the procedure for shareholders to follow in order to bring business before a
meeting of the shareholders. Notice of any proposal to be presented by any
shareholder or the name of any person to be nominated by any shareholder for
election as a director of the Company at any meeting of shareholders must be
delivered to the Secretary of the Company at least 120 days prior to the date of
the meeting. The notice of a proposal must contain the following items:
o The shareholder's name, address, and stock ownership of the Company,
o The text of the proposal to be presented,
o A brief written statement of the reasons why such shareholder favors
the proposal, and o Any material interest of such shareholder in the
proposal.
The notice stating a desire to nominate any person for election as a
director of the Company must contain the following items:
o The shareholder's name, address, and stock ownership of the Company,
o The name of the person to be nominated,
o The name, age, business address, residential address, and principal
occupation or employment of each nominee,
o The nominee's signed consent to serve as a director of the Company, if
elected,
o The number of shares of the Company's stock owned by each nominee,
o A description of all arrangements and understandings between the
shareholder and nominee pursuant to which the nomination is to be
made, and
o Such other information concerning the nominee as would be required in
a proxy statement soliciting proxies for the election of the nominee
under the rules of the Securities and Exchange Commission.
A copy of the Company Bylaws specifying the requirements will be furnished
to any shareholder upon written request to the Secretary.
INDEPENDENT AUDITORS
The firm KPMG LLP, independent auditors, has audited the accounts of the
Company for a number of years, including 1999. Representatives of KPMG LLP are
expected to be present at the Annual Meeting and will be able to respond to
questions.
20
DATE OF SUBMISSION OF SHAREHOLDER PROPOSALS
FOR 2001 SHAREHOLDERS' MEETING
The Company must receive proposals from shareholders on or before December
15, 2000, in order to have such proposals evaluated for inclusion in the proxy
materials relating to the Company's 2001 Annual Meeting of Shareholders. Any
proposal submitted for the proxy materials will be subject to the rules of the
Securities and Exchange Commission concerning shareholder proposals.
21
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH SHAREHOLDER, ON WRITTEN REQUEST,
A COPY OF THE COMPANY'S ANNUAL REPORT (FORM 10-K) FOR 1999, INCLUDING THE
FINANCIAL STATEMENTS AND SCHEDULES THERETO, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. WRITTEN REQUESTS FOR SUCH INFORMATION SHOULD BE DIRECTED TO
THE CORPORATE SECRETARY, ONE SOUTH MAIN, SUITE 1380, SALT LAKE CITY, UTAH 84111.
ZIONS BANCORPORATION- ONE SOUTH MAIN, SUITE 1380 - SALT LAKE CITY, UTAH 84111 -
(801) 524-4787
ZIONS BANCORPORATION
SOLICITED ON BEHALF OF
PROXY THE BOARD OF DIRECTORS
The undersigned hereby appoints A. SCOTT ANDERSON, DALE M. GIBBONS and W.
DAVID HEMINGWAY or any of them with full power of substitution, the lawful
attorneys and proxies of the undersigned, to vote all of the shares held by the
undersigned in Zions Bancorporaiton at the Annual Shareholders' Meeting to be
held on May 26, 2000 and at all adjournments thereof upon the matters listed
below.
1. To elect Directors
All nominees listed below (except as marked to the contrary)
FOR / / WITHHOLD AUTHORITY / /
INSTRUCTION: to withhold authority for any individual, cross a line through
the nominee's name in the list below:
R.D. Cash Richard H. Madsen Robert G. Sarver Harris H. Simmons
2. To approve the amendments to the Zions Bancorporation Key Employee
Incentive Stock Option Plan.
FOR / / AGAINST / / ABSTAIN / /
3. To transact any other business as may properly come before the meeting.
AUTHORITY / / WITHHOLD AUTHORITY / /
UNLESS A CONTRARY CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS, IN FAVOR OF PROPOSAL 2 and OTHERWISE IN THE DISCRETION OF
ANY OF THE APPOINTEES AS PROXIES.
-----------------------------
Dated ____________, 2000. -----------------------------
Please sign exactly as name
appears on reverse side.