ZIONS BANCORPORATION
One South Main, Suite 1380, Salt Lake City, Utah 84111
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On
April 20, 2001
To the Shareholders:
The Annual Meeting of the Shareholders of Zions Bancorporation (the
"Company") will be held in the Salt Lake City Marriott City Center Hotel, 220
South State Street, Salt Lake City, Utah 84111, on Friday, April 20, 2001, at
1:30 p.m. for the following purposes:
1. To elect three directors for the terms specified in the attached Proxy
Statement (Proposal 1); and
2. To approve an increase in the number of authorized shares of Capital Stock
(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, 2000, 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
March 19, 2001
PROXY STATEMENT
ZIONS BANCORPORATION
One South Main, Suite 1380, Salt Lake City, Utah 84111
ANNUAL MEETING OF SHAREHOLDERS
April 20, 2001
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 increase in the number of authorized capital shares as
described in this Proxy Statement.
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 88,567,900 shares of common stock
outstanding at the close of business on February 28, 2001, the record date for
the meeting. Each share is entitled to one vote.
Shareholders may expressly abstain from voting on Proposal 2 in the
accompanying Notice of Annual Meeting of the Shareholders. 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 three 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 March 19, 2001.
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
three 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
---------------
Roger B. Porter
L.E. Simmons
I.J. Wagner
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
- -------- ------------------------------------------- ----- ------- ---
Roger B. Porter(1, 3) IBM Professor of Business and Government, Harvard 1993 2001 54
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 54
Investment Management), Houston, Texas; Chairman,
Tuboscope, Inc.
I.J. Wagner(1, 2) President, The Keystone Company (Corporate 1965 2001 85
Investments), Salt Lake City, Utah.
2
DIRECTORS WITH UNEXPIRED TERMS OF OFFICE
Jerry C. Atkin(3) Chairman, President and Chief Executive Officer, 1993 2002 52
SkyWest Airlines, St. George, Utah; Director,
SkyWest, Inc.
Grant R. Caldwell(1) Retired, former Partner, KMG Main Hurdman, Salt 1993 2002 76
Lake City, Utah.
R.D. Cash(2) Chairman, President and Chief Executive Officer 1989 2003 58
of Questar Corporation, Salt Lake City, Utah;
Director, Zions First National Bank, and
Associated Electric and Gas Insurance Services
Limited.
Richard H. Madsen(1, 3) Consultant, The May Department Stores Company; 1994 2003 62
Chairman, President and Chief Executive Officer,
ZCMI, 1990-2000.
Robert G. Sarver(4) Chairman and Chief Executive Officer of 1994 2003 39
California Bank & Trust; Executive Director,
Southwest Value Partners and Affiliates,
1991-1999; Director, Meritage Corporation and
SkyWest Airlines, Inc.
Harris H. Simmons(2, 5) President and Chief Executive Officer of the 1989 2003 46
Company; Chairman of Zions First National Bank;
Director, Questar Corporation, and O.C. Tanner Co.
Roy W. Simmons(2, 4) Chairman of the Company; Member of the Board of 1961 2002 85
Directors of Zions First National Bank.
Shelley Thomas(4) Senior Director of Communications and Public 1998 2002 49
Affairs, Huntsman Cancer Institute; Senior Vice
President of 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.
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 $1,000 for each regular and special meeting attended. Members of the
committees receive $750 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 thirteen meetings during the fiscal year ending
December 31, 2000. Of the Board's four standing committees, the Executive
Committee did not meet, the Audit Committee met five times, the Executive
Compensation Committee met three times, and the Credit Review/Compliance
Committee met twice during the fiscal year ending December 31, 2000. Membership
in these committees is indicated previously in the listing of directors. Average
attendance at Board and committee meetings held during the year was 94%. 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 is composed of four independent directors. Information
regarding the functions performed by the Committee and its membership is set
forth in the "Audit Committee Report," included in this annual proxy statement.
The Audit Committee is governed by a written charter approved by the Board of
Directors. A copy of this charter is included in Appendix A.
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 committee composed of directors
from 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, for all of the Company's subsidiary banks.
4
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities, the Committee
reviewed the audited financial statements in the Annual Report with management
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgements, and the
clarity of disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as to
the quality, not just the acceptability, of the Company's accounting principles
and such other matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the Committee has discussed
with the independent auditors the auditors' independence from management and the
Company including the matters in the written disclosures required by the
Independence Standards Board and considered the compatibility of nonaudit
services with the auditors' independence.
The Committee discussed with the Company's internal and independent
auditors the overall scope and plans for their respective audits. The Committee
meets with the internal and independent auditors, with and without management
present, to discuss the results of their examinations, their evaluations of the
Company's internal controls, and the overall quality of the Company's financial
reporting.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors that the audited financial statements be
included in the Annual Report on Form 10-K for the year ended December 31, 2000
for filing with the Securities and Exchange Commission.
Audit Committee
Grant R. Caldwell, Chairman
Richard H. Madsen
Roger B. Porter
I.J. Wagner
5
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 85
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 46
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 48
Executive Officer of Vectra Bank Colorado; Executive
Director, Denver Urban Renewal Authority, 1999-2000;
Executive Vice President of Bank One, 1977-2000.
A. Scott Anderson Executive Vice President of the Company; President and Chief 1997(3) 54
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 43
Senior Vice President and General Manager of Zions Data
Services Company.
Gerald J. Dent Executive Vice President of the Company; Executive Vice 1987 59
President of Zions First National Bank.
Dale M. Gibbons Executive Vice President, Chief Financial Officer and 1996 40
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 55
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 57
Chief Executive Officer of The Commerce Bank of Washington.
W. David Hemingway Executive Vice President of the Company; Executive Vice 1997(4) 53
President of Zions First National Bank; Director, Federal
Agricultural Mortgage Corporation.
6
Clark B. Hinckley Senior Vice President of the Company; prior to March 1994, 1994 53
President of Zions First National Bank of Arizona.
William E. Martin Senior Vice President of the Company; President, Chief 2000 59
Executive Officer and Chairman of Nevada State Bank;
President and Chief Executive Officer of Pioneer Citizens
Bank of Nevada, 1989-2000.
Robert G. Sarver Executive Vice President of the Company; Chairman and Chief 1998(5) 39
Executive Officer of California Bank & Trust; Director,
Meritage Corporation and SkyWest Airlines, Inc.; Executive
Director, Southwest Value Partners and Affiliates, 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 February 28, 2001, 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 2,207,360 2.49%
One South Main Street Beneficial(1) 1,814,488 2.05%
Salt Lake City, Utah 84111 --------- -----
4,021,848 4.54%
Zions First National Bank Record(2) 4,083,680 4.61%
One South Main Street
Salt Lake City, Utah 84111
Putnam Investment Management, LLC Beneficial 7,711,564 8.71%
One Post Office Square
Boston, MA 02109
American Express Financial Corporation Beneficial 4,761,575 5.38%
IDS Tower 10
Minneapolis, MN 55440
(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 February 28, 2001, 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 3,234,738
shares (3.65% 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 679,594 shares
(0.77% of the class) and the Zions Bancorporation PAYSOP Plan, which holds
169,348 shares (0.19% of the class) as to which Zions First National Bank
does not have or share voting power.
7
Set forth below is the beneficial ownership, as of February 28, 2001, 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 20,800 *(1)
Grant R. Caldwell 18,700 *(1)
R. D. Cash(3) 37,000 *(1)
Richard H. Madsen 214,411 *(1)
Roger B. Porter(3) 14,000 *(1)
Robert G. Sarver(3) 497,970 *(1)
Harris H. Simmons 2,484,721(2) 2.80
L. E. Simmons(3) 2,144,482(2) 2.42
Roy W. Simmons(3) 4,021,848(2) 4.54
Shelley Thomas 4,825 *(1)
I. J. Wagner(3) 23,000 *(1)
All directors and officers
as a group (22 persons) 6,625,046 7.42
- ---------------
(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, 2000 was as follows:
Mr. Cash, 25,196 shares; Mr. Porter, 10,192 shares; Mr. Sarver, 3,880
shares; Mr. L.E. Simmons, 6,633 shares; Mr. Roy Simmons, 22,162 shares; and
Mr. Wagner, 3,018 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, 2000 through December 31, 2000, its officers
and directors were in compliance with all applicable filing requirements, except
for a report filed late on the non-employee director annual stock option grants
and Mr. Clark Hinckley filed a late report on his dividend reinvestment plan
shares.
8
EXECUTIVE COMPENSATION
The following Summary Compensation Table shows compensation earned from the
Company for services rendered during fiscal years 2000, 1999 and 1998 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 $100,000 in 2000.
Summary Compensation Table
Long-term
Annual Compensation
Compensation(4) Awards
-------------------- -------------------------
Value- Securities All Other
Salary Bonus Sharing Underlying Compensation
Name and Principal Position Year ($)(5)(6) ($)(7) ($)(8) Options(#)(9) ($)(6)(10)(11)(12)
- --------------------------- ---- --------- --------- ------ ------------- ---------------
Harris H. Simmons 2000 501,015 330,203 61,000 68,470
President and Chief Executive 1999 450,000 0(1) 271,830 36,000 113,331
Officer, Zions Bancorporation 1998 434,101 255,000 258,300 36,000 67,672
Robert Sarver(2) 2000 430,019 0 29,000 16,398
Chairman and 1999 408,000 200,000 0 3,900 30
Chief Executive Officer, 1998 125,231 75,000 0 15,000 0
California Bank & Trust
A. Scott Anderson 2000 300,000 232,365 30,000 37,385
President and 1999 280,000 130,000 191,675 24,000 32,787
Chief Executive Officer, 1998 255,000 115,000 175,275 24,000 31,186
Zions First National Bank
Dale M. Gibbons(3) 2000 280,000 150,520 39,000 17,549
Executive Vice President and 1999 230,000 150,000 103,000 22,000 16,928
Chief Financial Officer, 1998 214,140 115,000 40,000 22,000 11,097
Zions Bancorporation
John J. Gisi 2000 254,800 211,669 19,000 38,399
Chairman and Chief Executive 1999 242,923 125,000 174,250 16,000 20,361
Officer, 1998 242,550 125,000 147,600 16,000 53,495
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.
9
(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 2000, 1999 and 1998 were as follows, respectively: Mr.
Simmons, $5,250, $5,000 and $5,000; Mr. Sarver, $5,250, $0, and $0; Mr.
Anderson, $6,375, $1,124 and $6,000; Mr. Gibbons, $6,375, $6,000 and
$6,000; Mr. Gisi, $6,375, $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 2000, 1999 and 1998 were as follows, respectively:
Mr. Simmons, $389,843, $264,581 and $208,193; Mr. Sarver, $60,878, (see
note #1, page 12); Mr. Anderson, $244,347, $189,571 and $148,876; Mr.
Gibbons $248,667, $178,105 and $142,253; Mr. Gisi, $208,103, $165,558 and
$133,045. 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 four years, and expire in six to seven 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
2000, 1999 and 1998 were as follows, respectively: Mr. Simmons, $63,220,
$108,331 and $60,554; Mr. Sarver, $11,148, $30 and $0; Mr. Anderson,
$31,010, $31,663 and $23,068; Mr. Gibbons, $11,174, $10,928 and $2,979; and
Mr. Gisi, $32,024, $14,361 and $45,377.
(11) All Other Compensation amounts are 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 2000, 1999 and 1998 were as follows,
respectively: Mr. Simmons, $0, $0, and $2,118; Mr. Sarver, $0, $0, and $0;
Mr. Anderson, $0, $0, and $2,118; Mr. Gibbons, $0, $0, and $2,118; and Mr.
Gisi, $0, $0, and $2,118. In 1999, the Company terminated this Profit
Sharing Plan and no further contributions are contemplated.
10
Stock Option Grants in Fiscal Year 2000
The following table shows the number of shares with respect to which
options were granted during 2000 to each of the named persons, together with the
percentage of all grants to employees which the grant to the named person
represents, the exercise price of such option, and the expiration date of the
option.
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term(1)
------------------------------------ -------------------------------------
% of Total
Options
Options Granted to Exercise
Granted Employees Price Expiration
Name (#)(2) in Fiscal Year ($/Sh) Date 5%($) 10%($)
- ----------------- ------ -------------- ------ ---------- ------- ---------
Harris H. Simmons 36,000 4.41 41.625 03-30-2007 509,633 1,156,184
25,000 43.875 07-27-2007 373,042 846,306
- ----------------------------------------------------------------------------------------------------------------
Robert Sarver 24,000 2.10 41.625 03-30-2007 339,756 770,789
5,000 43.875 07-27-2007 74,608 169,261
- ----------------------------------------------------------------------------------------------------------------
A. Scott Anderson 25,000 2.17 41.625 03-30-2007 353,912 802,906
5,000 43.875 07-27-2007 74,608 169,261
- ----------------------------------------------------------------------------------------------------------------
Dale M. Gibbons 26,000 2.82 41.625 03-30-2007 368,069 835,022
13,000 43.875 07-27-2007 193,982 440,079
- ----------------------------------------------------------------------------------------------------------------
John J. Gisi 16,000 1.38 41.625 03-30-2007 226,504 513,860
3,000 43.875 07-27-2007 44,765 101,557
- ---------------------------
(1) Potential realizable 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 seven-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 2000 have an
exercise price equal to the fair market value on the date of grant, vest
33.3% per year beginning one year after date of grant, and have a term of
seven 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 May 2000.
Each grant is an option to purchase 4,000 shares at $44.9375 per share. The
options vest and become exercisable in four equal installments of 1,000 shares
beginning six months after the date of grant and continuing at one-year
intervals thereafter. The 2000 options expire on May 25, 2010.
11
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-end Option Values
The following table sets forth the number of shares acquired by any of
the named persons upon exercise of stock options in 2000, the value realized
through the exercise of such options, and the number of unexercised options held
by such person, including both those which are presently exercisable, and those
which are not presently exercisable.
Shares Number of Value of Unexercised
Acquired Shares Underlying In-the-
Upon Unexercised Money Options
Option Value Options At
Name Exercise(#) Realized($) at 12-31-00(#)(1) 12-31-00($)(2)
- -------------------- ----------- ----------- ------------------------- -------------------------
Not Not
Exercisable Exercisable Exercisable Exercisable
----------- ----------- ----------- -----------
Harris H. Simmons .. -- -- 82,000 116,000 2,339,156 1,519,656
Robert Sarver ...... -- -- 16,475 39,425 409,031 696,844
A. Scott Anderson .. 2,000 78,438 51,000 65,000 1,481,250 937,563
Dale M. Gibbons .... -- -- 33,500 69,500 759,250 707,063
John J. Gisi ....... -- -- 15,500 43,500 330,156 641,657
(1) Of the shares shown as underlying unexercised options for Mr. Sarver, a
total of 8,000 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 2000
year-end ($62.4375) 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
2000 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
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
12
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 2000 ranged in amount from $0 for an adjusted
EPS growth rate of 6% annually over the four years beginning in 2000, to a
maximum of $23.0 million, 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 15%, the award adjustment factor will be 0, and there will be
no amounts paid under the Plan. If the average adjusted ROE is between 15% 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 24% and above. Accordingly,
the maximum aggregate of all payments possible under the 2000 award fund is
$30.6 million. 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 ($0);
Example #1 represents the amount that would be paid if the Company's adjusted
EPS annual growth rate during the period is 9% (as to which there can be no
assurance) and the average adjusted ROE is 16% (also as to which there can be no
assurance); Example #2 represents the amount that would be paid if the Company's
adjusted EPS annual growth rate during the period is 15% (as to which there can
be no assurance) and the average adjusted ROE is 24% (also as to which there can
be no assurance); the maximum amount represents the maximum possible amount
payable to the named individuals from the award fund established in 2000.
Estimated Future Payout
of Value Sharing Plan
------------------------------------------------
Number of Performance Example Example
Performance Period Until Threshold #1 #2 Maximum
Name Units Payout ($) ($) ($) ($)
- ----------------- ----------- ----------- --------- ------- ------- ---------
Harris H. Simmons 21,175 4 Years 0 105,028 668,283 1,704,375
Robert Sarver 9,625 4 Years 0 47,740 303,765 774,716
A. Scott Anderson 9,625 4 Years 0 47,740 303,765 774,716
Dale M. Gibbons 10,588 4 Years 0 52,517 334,157 852,228
John J. Gisi 7,700 4 Years 0 38,192 243,012 619,773
13
Retirement Plan
The Company's retirement plan covers substantially all full-time employees
and provides benefits to those who have five years or more of service with the
Company. The retirement plan is a cash balance defined benefit plan. In general,
it provides a lump sum or monthly annuity at retirement for the 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, a participant's lump sum (account
balance) grows with annual interest credits and pay credits. Annual interest
credits are based on the GATT 30-year bond rate (5.78% for 2001). Cash balance
pay credits are equal to the participant's earnings multiplied by the applicable
pay credit percentage shown in the chart below.
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 $170,000. 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.
14
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 7% annuity
rate to convert the estimated age 65 cash balance to an annual amount; (2) a
rate of 7% used to calculate all unknown future years' interest on the Cash
Balance; (3) future compensation increasing by 4% per year to age 65.
Estimated Cash Estimated
Balance Annual
at Age 65 Benefit
-------------- ---------
Harris H. Simmons $4,531,364 $458,951
Robert Sarver 2,653,958 268,802
A. Scott Anderson 1,563,674 158,374
Dale M. Gibbons 2,944,974 298,277
John Gisi 1,137,452 115,205
15
PERFORMANCE GRAPH FOR ZIONS BANCORPORATION
INDEXED COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
1995 1996 1997 1998 1999 2000
------ ------ ------ ------ ------ ------
Zions Bancorporation .. 100.00 131.50 232.99 323.55 310.69 333.84
KBW 50 Index .......... 100.00 141.46 206.80 223.91 216.14 259.50
S & P 500 ............. 100.00 122.96 163.98 210.85 255.21 231.98
Note: Assumes $100 invested on 12-31-95 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]
16
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 2000 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 in fiscal year 2000). The
consultant compares the Company's compensation levels with a peer group of
financial institutions. In its 2000 study, the consultant used regression
analysis to determine competitive compensation levels for a financial
institution with the Company's asset size. The consultant used data on 157
institutions with asset sizes ranging from $254 million to $668 billion.
Zions ranked between the 25th and 50th percentile among the peer group in
terms of asset size. The study indicated that the base salary 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 asset
size. This peer group is not the same peer group used in the Performance
Graphs.
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
17
earnings per share and return on equity for the 2000 award fund as well as
the corresponding variation in size of the award fund. In 2000, 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 2000. (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 2000. 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
18
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, 2000, 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
$14,850,000. 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. At December 31, 2000, the balance due on the loan to
Mr. Sarver was $16,988,091.
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 $23,129 for 2000. 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.
19
PROPOSAL TO APPROVE AN INCREASE IN THE NUMBER OF AUTHORIZED SHARES
OF CAPITAL STOCK OF THE COMPANY
(Proposal 2)
The authorized capital stock of the Company now consists of 203,000,000
shares divided into classes as follows: (1) 200,000,000 shares of Common Stock,
without par value, of which 88,567,900 are outstanding as of the record date,
(2) 3,000,000 shares of preferred stock, without par value, none of which are
outstanding as of the record date.
The Board of Directors believes it would be in the best interests of the
Company and its shareholders to amend the Articles of Incorporation to increase
the authorized capital stock from 203,000,000 shares without par value to
353,000,000 shares divided into 350,000,000 shares of Common Stock without par
value, and 3,000,000 shares of Preferred Stock without par value. To effect this
change, Article VIII of the Articles of Incorporation would be amended to read
in its entirety as follows:
ARTICLE VIII
The aggregate number of shares of capital stock which this corporation
shall have authority to issue is 353,000,000, divided into two classes
as follows:
(1) 350,000,000 shares of Common Stock, without par value, which
shares shall be entitled to one vote per share.
(2) 3,000,000 shares of Preferred Stock, without par value.
The Board of Directors of this corporation is expressly vested with the
authority to determine, with respect to any class of Preferred Stock,
the dividend rights (including rights as to cumulative, noncumulative
or partially cumulative dividends) and preferences, dividend rate,
conversion rights, voting rights, rights and terms or redemption
(including sinking fund provisions), redemption price or prices, and
the liquidation preferences of any such class of Preferred Stock. As to
any series of Preferred Stock, the Board of Directors is authorized to
determine the number of shares constituting such series, and to
increase or decrease (but not below the number of shares of such series
then outstanding) the number of shares of that series.
The Board of Directors of this corporation is expressly vested with the
authority to divide the above-described class of Preferred Stock into
series and to fix and determine the variations in the relative rights
and preferences of the shares of Preferred Stock of any series so
established, including, without limitation, the following:
(i) the rate of dividend;
(ii) the price at and the terms and conditions on which shares may be
redeemed;
(iii) the amount payable upon shares in event of involuntary
liquidation; (iv) the amount payable upon shares in event of
voluntary liquidation; (v) sinking fund provisions for the
redemption or purchase of shares;
(vi) the terms and conditions on which shares may be converted, if
the shares of any series are issued with the privilege of
conversion; and
20
(vii) such other variations in the relative rights and preferences of
such shares which at the time of the establishment of such
series are not prohibited by law.
The only change effected in Article VIII by the proposed amendment will be
to increase the authorized shares of capital stock from 203,000,000 to
353,000,000 and accordingly increase the authorized shares of Common Stock from
200,000,000 to 350,000,000. The remaining text of Article VIII as set forth
above is unchanged from the text as presently in effect.
The Board of Directors is proposing to increase the authorized Common Stock
to afford the Board of Directors flexibility in responding promptly to future
financing requirements of the Company, including, without limitation, splitting
of the common stock, acquisitions of other businesses for shares of capital
stock on the most favorable terms as opportunities may arise from time to time
in the future, the raising of additional capital, and issuance pursuant to stock
option or other employee benefit or incentive compensation plans. If
authorization of any increase in the capital stock is postponed until a specific
need arises, the delay and expense incident to obtaining the approval of
stockholders at that time could impair the Company's ability to meet its
objectives. The Company has no immediate need for additional authorized common
shares. There is no present intention to issue any of the Preferred Stock.
If the proposed amendment is approved, the additional shares of capital
stock would be generally available for issuance without further action by the
shareholders. The additional shares of Common Stock issued hereafter would be
identical to the Common Stock currently outstanding. No stockholder has any
preemptive rights, and issuance of the additional Common Stock could dilute the
voting rights of present holders of Common Stock. It is possible, depending upon
the transaction in which either Common Stock or Preferred Stock is issued, that
issuance of such capital stock could have a dilutive effect on shareholders'
equity and earnings per share attributable to present holders.
The Board of Directors could issue the additional (as well as the existing
authorized but unissued) capital stock to impede any unsolicited bid for control
of the Company which the Board believed was not in the best interests of the
Company and its stockholders. The availability of the additional capital stock
as a defensive response to a takeover attempt was not a motivating factor in the
Board's approval of the proposed amendment to Article VIII, and the Board is not
aware of any effort to obtain control of the Company.
The affirmative vote of a majority of the outstanding Common Stock is
required for approval of the proposed amendment to Article VIII.
The Board of Directors recommends that stockholders vote FOR the proposed
amendments of Article VIII of the Restated Articles of Incorporation to increase
the number of authorized shares of Common Stock.
21
INDEPENDENT AUDITORS
Effective June 19, 2000 the Company dismissed its independent auditor, KPMG
LLP, and appointed Ernst & Young LLP to perform independent attestation
services. These actions were approved by the Board of Directors of Zions upon
the recommendation of Zions' Audit Committee as described in the Form 8-K filed
with the Securities and Exchange Commission on June 23, 2000. The audit reports
issued by KPMG LLP for each of the last two years in the period ended December
31, 1999 contained no adverse opinion or disclaimer of opinion and were not
modified as to uncertainty, audit scope or accounting principles. There were no
reportable events or disagreements about the application of accounting
principles, disclosures in the financial statements or scope of auditing
procedures in connection with the most recent two audits or subsequent interim
periods.
The Board of Directors has reappointed Ernst & Young LLP as independent
auditors to audit the financial statements of the Company for the current fiscal
year. Fees for the last fiscal year were: Annual audit - $0.8 million, audit
related services - $1.1 million, All Other Nonaudit Services - $0.1 million, and
Financial Information Systems, Design and Implementation fees - none.
Representatives of the firm of Ernst & Young LLP are expected to be present
at the Annual Meeting, will have the opportunity to make a statement of they so
desire, and will be available to respond to appropriate questions.
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
the Company's proxy statement is released to shareholders in connection with the
annual meeting for the preceding year. 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,
22
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.
DATE OF SUBMISSION OF SHAREHOLDER PROPOSALS
FOR 2002 SHAREHOLDERS' MEETING
The Company must receive proposals from shareholders on or before December
15, 2001, in order to have such proposals evaluated for inclusion in the proxy
materials relating to the Company's 2002 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.
23
APPENDIX A
Audit Committee Charter
AUTHORITY FOR CHARTER
- ---------------------
The Audit Charter has been approved by the Board of Directors of Zions
Bancorporation. The Audit Committee will review the Charter periodically, but at
least annually, to make modifications as needed, subject to approval by the
Board of Directors.
AUDIT COMMITTEE PURPOSE
- -----------------------
The Audit Committee is appointed by the Board of Directors of Zions
Bancorporation to assist the Board in fulfilling its oversight responsibilities
of financial and regulatory reporting practices. The Audit Committee oversees
the quality of the internal control systems, and financial reporting processes,
through monitoring the performance of the independent auditors, the internal and
any cosource / outsource audit functions, and reviewing periodic reports of the
compliance and legal functions.
The independent auditors and internal auditors are accountable to the Audit
Committee and to the Board of Directors. The Audit Committee has the
responsibility to recommend selection of the independent auditors to the Board
of Directors, evaluate, nominate, or, as needed, recommend replacement of the
independent auditors. When circumstances warrant, the Committee may approve the
replacement of the Director of Internal Audit.
AUDIT COMMITTEE OBJECTIVES
- --------------------------
A) To serve as independent and objective monitors of Zions financial
reporting processes and system of internal controls regarding
finance, accounting, laws, regulations and fiduciary principles.
B) To monitor the independence and performance of the Company's
independent auditors, internal audit and any cosource / outsource
audit functions.
C) To provide an open avenue of communication among the independent
auditors, financial and senior management, the internal audit
department, any cosource / outsource audit function, and the
Board of Directors.
The Audit Committee, in fulfilling these objectives, has the authority to call
upon outside counsel or other advisors it deems necessary to aid in the
performance of these duties.
COMMITTEE COMPOSITION
- ---------------------
The Audit Committee of Zions Bancorporation shall be composed of at least
three members, all of whom shall be outside directors of the Board of Directors
of the Company. All members must be financially literate and at least one member
shall have accounting or related financial management expertise. Each member of
the Committee shall be an independent director and free from any relationship
that, in the opinion of the board, would interfere with the exercise of his or
her independence as a member of the Committee. Additionally, all guidelines, as
set forth by any regulatory body or the accounting profession, must be met by
each Committee member. One member of the Committee shall be designated by the
Board of Directors as Chairman. The Chairman and Committee members will be
appointed by the Board of Directors on an annual basis at its organizational
meeting or at such times as the board deems necessary. The Directors will
arrange to manage continuity on the Committee while bringing fresh perspective
to the Committee as deemed advisable.
24
MEETINGS
- --------
The Audit Committee shall meet on a periodic basis, to coincide with
regular Board of Director meetings. These meetings are expected to occur at
least four times annually. Other meetings may be called by the Chairman, as
circumstances require. After each meeting, the Chairman will report to the full
Board of Directors at its next scheduled meeting.
MEETING ATTENDEES
- -----------------
In addition to the Audit Committee members, the following persons are
invited to attend regular Committee meetings: President and Chief Executive
Officer, Chief Financial Officer, Director of Internal Audit, Controller,
Compliance Officer, Representatives from the Company's independent accounting
firm, Representatives from the Company's internal audit outsourcing firm, and
Others by invitation, as deemed advisable.
Each Audit Committee meeting will include an executive session. Persons
requested to attend this meeting will be the Director of Internal Audit, Audit
Outsource/Cosource representatives, and the representatives from the independent
auditing firm.
COMMITTEE RESPONSIBILITIES REGARDING INDEPENDENT AUDITORS
- ---------------------------------------------------------
1. Engagement of Independent Auditors
a. Obtain the opinion of management and the Director of Internal Audit,
as to the performance of the independent auditors in the conduction of
their engagement.
b. Review engagement letter and proposed fees, composition of the audit
team including partner involvement, industry expertise and timing of
audit.
c. Inquire about results of peer reviews, litigation status and
disciplinary action.
d. Review firm's process to ensure its objectivity and independence; and
annually require from the firm written confirmation that, consistent
with Independence Standards Board Standard 1, it is independent to
perform the Company's audit.
e. Have a clear understanding with the independent auditors as to their
accountability to the Board of Directors and the Audit Committee.
f. Make any other inquiries of the independent auditors deemed necessary
and appropriate by the Audit Committee.
g. If the Committee is satisfied with regard to the foregoing matters,
make a recommendation to the full Board to engage the independent
audit firm.
2. Audit Plan
a. Review the annual audit plan with the Director of Internal Audit and
the independent auditors, and determine if coordination has been
achieved.
b. Discuss the general scope, reliance upon management and internal
audit, and how internal auditing and the independent auditors will
interface to provide adequate coverage in the Information Technology
area.
c. Review with the independent auditors changes in accounting standards
or rules promulgated by the FASB, the SEC, the NASD or other
regulatory bodies that could impact the Company's financial
statements.
d. Make independent auditors aware of the Committee's desire to be
informed in a timely manner of matters requiring special attention.
25
3. Continuous and Post Audit Functions
a. Review, on a timely basis, the quarterly and annual financial reports
with financial management and the independent auditors.
b. Review with management and the independent auditors any material
estimates and reserves impacting financial statements and how they
were determined.
c. Discuss with management, independent auditors and internal auditors
any significant financial risk exposures and the steps management has
taken to monitor, control and report on such exposures.
d. Discuss with the independent auditors and management any significant
issues regarding accounting principles, practices or judgments.
Discuss any major audit concerns, unusual transactions and the
adequacy of their disclosure.
e. Discuss with the independent auditors, the items required to be
communicated under SAS 61 and SAS 71; inquire as to the quality, as
well as the acceptability of accounting principles applied by the
company in its' financial reporting.
f. Review the independent auditors' recommendation letter to management
and review the Company's response to the recommendations.
g. Meet privately with the independent auditors to obtain the benefit of
their evaluation and opinion on financial and accounting personnel,
internal audit and credit review staff.
h. Consider whether there are any items for the independent auditors to
report directly to the full Board of Directors.
COMMITTEE RESPONSIBILITY IN REGARD TO INTERNAL AUDIT FUNCTION
- -------------------------------------------------------------
1. Review coordination of audit plans between the internal auditors and the
independent auditors.
2. Approve auditing procedures manual and internal auditing charter.
3. Annually review with the Director of Internal Audit the scope and
scheduling of internal audits planned for the year, including the audits to
be outsourced or cosourced.
4. At least annually, discuss the adequacy of the audit risk identification
process and procedures with the Director of Internal Audit, management and
the independent auditors.
5. The Director of Internal Audit will attend all regularly scheduled Audit
Committee meetings and will report, as needed, on the annual audit plan,
audit plan variances, staff training, major concerns, staffing
requirements, past due corrective measures on significant concerns,
modifications to policy and procedures, modifications to the audit charter,
and any known violations of law.
6. The Director of Internal Audit will arrange for the Company's Compliance
Officer to report at each regularly scheduled Audit Committee meeting
whether the fiduciary activities of the Company are being administered in
accordance with laws and regulations, and with sound principles.
7. At least annually, the Director of Internal Audit will report on the
effectiveness of the outsourced and cosourced audits, including an
evaluation of the firm engaged to perform these services.
26
OTHER COMMITTEE RESPONSIBILITIES
- --------------------------------
1. Review all disclosures and confirmations, as requested by the SEC, for
inclusion in the annual proxy statement for the Company.
2. After Committee review and approval, recommend to the Board of Directors
that the audited Financial Statements be included in the Company's annual
report on Form 10-K.
3. The Audit Committee is granted the authority to take whatever action,
whether or not covered herein, it deems necessary to fulfill the
responsibilities assigned to the Committee by the Board of Directors.
27
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH SHAREHOLDER, ON WRITTEN REQUEST,
A COPY OF THE COMPANY'S ANNUAL REPORT (FORM 10-K) FOR 2000, 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
www.zionsbancorporation.com
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 April 20, 2001 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:
Roger B. Porter L.E. Simmons I.J. Wagner
2. To approve the increase in the number of authorized shares of Capital
Stock of the Company.
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.