EXHIBIT 10.22
Zions Bancorporation
Senior Management Value Sharing Plan
Award Period: 1999 - 2002
Objective:
To provide an ongoing multi-year incentive for the senior managers of Zions
Bancorporation and its subsidiaries which:
A. Focuses managers' attention on the creation of long-term shareholder
value;
B. Creates an incentive that promotes teamwork across departments and
subsidiaries, and which encourages managers to balance profit center
accountability with Company-wide goals; and,
C. Complements the short-range annual bonuses which reflect the achievement
of annual objectives and the Company's short-term profitability.
Eligibility:
Participants in the Plan will consist of specified members of the senior
management group (and certain other key managers) of the Company and its major
subsidiaries. Participants for each Award Period shall be specifically
identified by the Company's Board of Directors (the "Board") or its Executive
Compensation Committee (the "Committee").
Allocation of Awards:
It is anticipated that during the first quarter of each year in which the
Plan operates, the Board of Directors shall approve the establishment of a pool
of Award Funds to be generated during the Award Period, according to the general
formula outlined below. Participants shall be designated by the Board or the
Committee. Claims against the pool of Award Funds for each Award Period shall be
represented by Participation Units ("Units"), and each participant shall be
allocated a specific number of Units by the Committee. The Units shall represent
a pro-rata claim, in proportion to the total Units designated for that Award
Period, on any Award Funds generated by the Plan during the Award Period.
Term:
Each Award Period shall consist of a continuous four-calendar-year period.
The Plan is intended to constitute a "moving four-year-average" incentive plan,
with the anticipation that a new Award Period would be designated each year,
with multiple Award Periods overlapping one another. Nevertheless, the
establishment of a new Award Period each year is subject to the Board's
discretion.
Determination of Award Funds:
The amount of Award Funds in the pool for each Award Period shall be a
function of the Aggregate Cash Earnings Per Share ("ACEPS") during the Award
Period, together with the mathematical Average Tangible Return On Shareholders'
Equity ("TROE") for each of the four years in the Award Period,
Aggregate Cash Earnings Per Share ("ACEPS") shall be defined as the
aggregate, over the four year Award Period, of each year's Net Cash Income
divided by average diluted shares outstanding. Net Cash Income shall be defined
as net income before the cumulative effect of changes in accounting principles,
plus the after-tax cost of amortized goodwill and core deposit intangible
assets, plus the after-tax cost of charges recognized to standardize accounting
practices of acquired entities, plus the after-tax cost of merger charges
realized during the period.
Tangible Return on Shareholders' Equity ("TROE") shall be defined as the
average, for each of the four years in the Award Period, of the Company's Net
Cash Income divided by the average Modified Tangible Equity. Modified Tangible
Equity shall mean total common shareholders' equity, less goodwill and core
deposit intangible assets, except if such intangible assets arise as a result of
acquisitions of businesses, stock or deposits for cash. (If such acquisitions
are made with a combination of cash and stock, goodwill and core deposit
intangible assets shall be deducted from common shareholders' equity only to the
extent that such items exceed the total value of Zions' shares issued in the
transaction.)
Each year, the Committee shall establish minimum targets for TROE and ACEPS
for the Award Period. These minimum targets would BOTH be required to be reached
in order for any Award Funds to be earned. Additionally, the Committee may
designate Award Fund allocation amounts based upon the achievement of higher
levels of TROE, with upward adjustments possible if higher levels of ACEPS are
achieved. The Committee may also designate other conditions and adjustment
factors to ensure the Plan's integrity and consistency with shareholder and
depositor interests.
The 1999-2002 Award Period formula for the determination of the value of
Units is as indicated in the Appendix.
For the 1999-2002 Award Period, the following parameters shall be
established, and adjustments made to the Company's earnings calculations, for
purposes of determining Award Funds available under the Plan:
1). The Plan is intended to create an incentive for increasing shareholder
value. However, this is not to be accomplished by reducing capital levels or
assuming extraordinary or unwarranted risks. Accordingly, it is expected that
total risk-based capital levels shall be maintained at a level at least 125% of
"well-capitalized" regulatory requirements.
2). The Company's reserve levels are to be conservatively maintained. To
the extent that the consolidated Allowance for Loan and Lease Losses is less
than 100% of the peer group level, as expressed in terms of reserves/non-current
loans as reported in the most current Uniform Bank Performance Report available
at December 31, 2002, an appropriate adjustment shall be made to after-tax
earnings (for purposes of calculating Award Funds only) to compensate for any
deficit relative to the 100% minimum target level. Actual reserve levels are, of
course, subject to Board and/or regulatory decisions. No upward adjustments
shall be made in "pro forma" earnings in the event actual reserve levels exceed
100% of the peer group target.
3). Unless determined otherwise by the Board, in the event of any merger
involving an acquisition by Zions for the exchange of Zions' shares in a
pooling-of-interests transaction, earnings per share prior to the acquisition
date shall, for the purpose of calculating ACEPS during the Award Period, be
determined using Zions' un-restated numbers.
Other Terms and Conditions:
The Plan is to be governed and interpreted by the Committee, whose
decisions shall be final. The terms of the Plan are subject to change or
termination at their sole discretion.
The Company shall retain the right to withold payment of Award Funds to
participants in the event of a significant deterioration in the Company's
financial condition, or if so required by regulatory authorities, or for any
other reason considered valid by the Board in its sole discretion.
Participants shall not vest in any benefits available under the Plan until
the conclusion of each Award Period. Nevertheless, upon death, permanent
disability, or normal or early retirement (unless upon early retirement the
participant becomes employed by an entity which competes with Zions
Bancorporation), participants (or their estates) shall be eligible to receive a
proportionate share of Award Funds based upon the number of Units granted, and
the number of full calendar quarters the participant was engaged as an officer
of the Company or its subsidiaries prior to death, disability, or retirement.
The Units shall not be transferable without the express approval of the
Committee.
In the event of the merger or acquisition of the Company, the Plan may be
terminated as of the end of the fiscal quarter preceding the first full quarter
before the transaction is consummated. The Board may make any reasonable
estimates or adjustments necessary in calculating Award Funds for any Award
Period. The Board may also, at its sole discretion, alter the terms of the Plan
at any time during an Award Period.
This document is intended to provide a guideline for the creation and
distribution of incentive compensation. Nothing herein creates a contractual
obligation binding on the Board, and no Participant shall have any legal rights
with respect to an Award until such Award is distributed.
Earnings per share calculations shall be adjusted to reflect any stock
splits, stock dividends, or other such changes in capitalization, at the
discretion of the Committee.
The award of Units to any participant shall not confer any right with
respect to continuance of employment by the Company or its subsidiaries, nor
limit in any way the right of the Company to terminate his or her employment at
any time, with or without cause.
APPENDIX
ZIONS BANCORPORATION VALUE-SHARING PLAN: 1999-2002
Calculation of Participation Unit Value
Aggregate Cash Earnings Per Share ("ACEPS")
- -------------------------------------------
If the ACEPS is:
The basic value of a
Over- But not over- Participation Unit is-
- ---------------------------------------------------------------------------------------------
$10.84 $11.11 $.3904 plus $.0295 per each cent of the amount over
$10.84
$11.11 $11.38 $1.1867 plus $.0451 per each cent of the amount over
$11.11
$11.38 $11.66 $2.4045 plus $.0591 per each cent of the amount over
$11.38
$11.66 $11.94 $4.0599 plus $.0753 per each cent of the amount over
$11.66
$11.94 $12.23 $6.1693 plus $.0890 per each cent of the amount over
$11.94
$12.23 $12.53 $8.7494 plus $.1023 per each cent of the amount over
$12.23
$12.53 $12.83 $11.8173 plus $.1191 per each cent of the amount over
$12.53
$12.83 $13.13 $15.3905 plus $.1365 per each cent of the amount over
$12.83
$13.13 $13.44 $19.4869 plus $.1496 per each cent of the amount over
$13.13
$13.44 $13.76 $24.1244 plus $.1624 per each cent of the amount over
$13.44
$13.76 $14.08 $29.3217 plus $.1805 per each cent of the amount over
$13.76
$14.08 $14.41 $35.0976 plus $.1932 per each cent of the amount over
$14.08.
$14.41 $14.75 $41.4717 plus $.1335 per each cent of the amount over
$14.41
$14.75 $15.09 $46.0116 plus $.1020 per each cent of the amount over
$14.75
$15.09 $15.43 $49.4792 plus $.1039 per each cent of the amount over
$15.09
$15.43 $15.79 $53.0106 plus $.0666 per each cent of the amount over
$15.43
$15.79 $16.15 $55.4079 plus $.0678 per each cent of the amount over
$15.79
$16.15 $16.52 $57.8487 plus $.0672 per each cent of the amount over
$16.15
$16.52 $16.89 $60.3336 plus $.0513 per each cent of the amount over
$16.52
$16.89 $17.27 $62.2308 plus $.0339 per each cent of the amount over
$16.89
$17.27 $63.5183
Tangible Return On Shareholders' Equity ("TROE") Modifier:
- ----------------------------------------------------------
The basic Participation Unit value determined above shall be adjusted as
follows:
o If TROE for 1999-2002 is less than 15.00%, the Participation Units shall
have no value.
o If TROE is equal to or greater than 15.00% but less than 19.00%, the basic
value of a Participation Unit shall be multiplied by a factor of 1.00.
o If TROE is equal to or greater than 19.00% but less than 24.00%, the basic
value of a Participation Unit shall be multiplied by the following factor:
1+(TROE - .19)6.60.
o If TROE is 24.00% or more, the basic value of a Participation Unit shall be
multiplied by 1.33.
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Example: If ACEPS is $14.15 and TROE is 23.10%, each Participation Unit
would be worth $46.31.
[$35.0976+100($14.15-$14.08)$.1932] X [1+(.2310 - .19)6.6] = $46.31