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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ZIONS BANCORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
CALLISTER NEBEKER & McCULLOUGH
Attorneys at Law
Gateway Tower East Suite 900
10 East South Temple
Salt Lake City, Utah 84133
Telephone: (801) 530-7300
Fax: (801) 364-9127
18 March 1999
Securities and Exchange Commission
Via EDGAR Filing System
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Zions Bancorporation - 1999 Definitive Proxy Materials
SEC File #000-02610
Ladies and Gentlemen:
This firm represents Zions Bancorporation (the "Company"). Please find
transmitted herewith, via the EDGAR System, the definitive form of Notice of
Annual Meeting, Proxy Statement and Form of Proxy Card proposed to be utilized
by the Company in connection with its 1999 Annual Meeting of Shareholders.
Inasmuch as the Company proposes to submit to shareholders for approval a
Long-Term Executive Incentive Compensation Plan, a copy of the current year's
Plan is being submitted, via EDGAR, as an appendix to the definitive Proxy
Statement as supplemental information for the Staff. The Plans for prior years
were filed as exhibits to the appropriate Form 10-K's. The text of the Plan
will not be furnished to shareholders. The Company intends on mailing the
definitive Proxy materials to its shareholders on or about 24 March 1999.
If you have any questions with respect to this filing, please contact the
undersigned directly at 801-530-7456.
Very truly yours,
CALLISTER NEBEKER & McCULLOUGH
a Professional Corporation
Laurie S. Hart
LSH:nas
cc: Dale M. Gibbons
ZIONS BANCORPORATION
One South Main, Suite 1380, Salt Lake City, Utah 84111
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On
April 23, 1999
To the Shareholders:
The Annual Meeting of the Shareholders of Zions Bancorporation (the
"Company") will be held in the Founders' Room of Zions First National Bank, One
South Main Street, Salt Lake City, Utah, on Friday, April 23, 1999, at 1:30 p.m.
for the following purposes:
1. To elect four directors for the terms specified in the attached Proxy
Statement (Proposal 1);
2. To approve the Long Term Executive Incentive Compensation 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, 1998, 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 24, 1999
PROXY STATEMENT
ZIONS BANCORPORATION
One South Main, Suite 1380, Salt Lake City, Utah 84111
ANNUAL MEETING OF SHAREHOLDERS
April 23, 1999
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 Long Term Executive Incentive Compensation 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 78,752,711 shares of common stock
outstanding at the close of business on February 26, 1999, the record date for
the meeting. Each share is entitled to one vote.
Shareholders may expressly abstain from voting on Proposal 2 regarding the
Long Term Executive Incentive Compensation 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. On all matters other than the
election of directors, 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 24, 1999.
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
---------------
Jerry C. Atkin
Grant R. Caldwell
Roy W. Simmons
Shelley Thomas
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
- -------- ------------------------------------------- ----- ------- ---
Jerry C. Atkin/3/ Chairman, President and Chief Executive Officer, 1993 1999 50
SkyWest Airlines, St. George, Utah; Director,
SkyWest, Inc.
Grant R. Caldwell/1/ Retired, former Partner, KMG Main Hurdman, Salt 1993 1999 74
Lake City, Utah.
Roy W. Simmons/2/,/4/ Chairman of the Company; Member of the Board of 1961 1999 83
Directors of Zions First National Bank.
Shelley Thomas/4/ Senior Vice President of Communications and 1998 1999 47
Public Affairs, Salt Lake Organizing Committee
for the Olympic Winter Games of 2002; Vice
President of Public Affairs, Smith's Food & Drug
Centers, Inc., 1990-1997.
2
DIRECTORS WITH UNEXPIRED TERMS OF OFFICE
R.D. Cash/2/ Chairman, President and Chief Executive Officer 1989 2000 56
of Questar Corporation, Salt Lake City, Utah;
Member of the Board of Directors of Zions First
National Bank, Energen Corporation, 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 60
ZCMI.
Roger B. Porter/1/3/ IBM Professor of Business and Government, Harvard 1993 2001 52
University; Assistant to the President for
Domestic and Economic Affairs, The White House,
1989-1992; Director, Rightchoice Managed Care
Inc., Tenneco, Inc. and National Life Insurance
Co.
Robert G. Sarver/4/ Chairman and Chief Executive Officer of 1994 2000 37
California Bank & Trust; Executive Director,
Southwest Value Partners and Affiliates;
Director, Meritage Corporation; President,
National Bank of Arizona, 1992-1994.
Harris H. Simmons/2/5/ President and Chief Executive Officer of the 1989 2000 44
Company; Chairman of Zions First National Bank;
Director, Questar Corporation.
L.E. Simmons/4/5/ President, SCF Partners, L.P. (Private Equity 1978 2001 52
Investment Management), Houston, Texas; Chairman,
Tuboscope Vetco International Corp. and Director,
CE Franklin, Ltd.
I.J. Wagner/1/2/ President, The Keystone Company (Corporate 1965 2001 83
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. 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 five meetings during the fiscal year ending
December 31, 1998. Of the Board's four standing committees, the Executive
Committee did not meet, the Audit Committee met five times, the Executive
Compensation Committee met twice, and the Credit Review/Compliance Committee met
four times during the fiscal year ending December 31, 1998. Membership in these
committees is indicated above in the listing of directors. Average attendance
at Board and committee meetings held during the year was 93%. 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 83
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 44
Chairman of Zions First National Bank; Director, Questar
Corporation; prior to January 1998, President and Chief
Executive Officer of Zions First National Bank.
A. Scott Anderson Executive Vice President of the Company; President and Chief 1997/3/ 52
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 41
Senior Vice President and General Manager of Zions Data
Services Company.
Gerald J. Dent Executive Vice President of the Company; Executive Vice 1987 57
President of Zions First National Bank.
Dale M. Gibbons Executive Vice President, Chief Financial Officer and 1996 38
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 53
Chief Executive Officer of National Bank of Arizona;
Director, ASR Investments Corp.
James C. Hawkanson Senior Vice President of the Company, Managing Director and 1998 55
Chief Executive Officer of The Commerce Bank of Washington.
5
W. David Hemingway Executive Vice President of the Company; Executive Vice 1997/4/ 51
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 51
President of Zions First National Bank of Arizona.
George Hofmann III Senior Vice President of the Company; President and Chief 1995 49
Executive Officer of Nevada State Bank; prior to April 1995,
Senior Vice President of Zions First National Bank.
Gary S. Judd Senior Vice President of the Company; President and Chief 1998 58
Executive Officer of Vectra Bank Colorado.
Robert G. Sarver Executive Vice President of the Company; Chairman and Chief 1998/5/ 37
Executive Officer of California Bank & Trust; Executive
Director, Southwest Value Partners; Director, Meritage
Corporation; President, National Bank of Arizona, 1992-1994.
/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 26, 1999, 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 2,273,729 2.89%
One South Main Street Beneficial/1/ 1,991,376 2.53%
Salt Lake City, Utah 84111 --------- ----
4,265,105 5.42%
Zions First National Bank Record/2/ 4,302,721 5.46%
One South Main Street
Salt Lake City, Utah 84111
- -----------------------------------
/1/ Represents Roy W. Simmons' beneficial ownership interest in 1,991,376
shares held by a company in which Mr. Simmons serves as a director.
/2/ These shares are owned of record as of February 26, 1999, 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 3,354,842
shares (4.26% 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 681,837 shares
(0.87% of the class) and the Zions Bancorporation PAYSOP Plan, which holds
266,042 shares (0.34% 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 February 26, 1999, 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 12,800 */1/
Grant R. Caldwell 10,700 */1/
R. D. Cash/3/ 29,250 */1/
Richard H. Madsen 203,079 */1/
Roger B. Porter/3/ 6,000 */1/
Robert G. Sarver/3/ 525,246 */1/
Harris H. Simmons 2,496,135/2/ 3.17
L. E. Simmons/3/ 2,297,140/2/ 2.92
Roy W. Simmons/3/ 4,271,191/2/ 5.42
Shelley Thomas 0 */1/
I. J. Wagner/3/ 115,900 */1/
All directors and officers
as a group (22 persons) 6,624,640 8.36
- -------------------------------------
/1/ Immaterial percentage of ownership (Less than 2%)
/2/ Totals include 1,991,376 shares attributed to each individual through
serving as a director in a company holding such shares in the Company. Of
such 1,991,376 shares attributed to Harris H. Simmons, Mr. Simmons holds an
option to acquire 186,792 shares, all of which are vested and presently
exercisable.
/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, 1998 was as follows:
Mr. Cash, 24,395 shares; Mr. Porter, 8,864 shares; Mr. Sarver, 3,757
shares; Mr. L.E. Simmons, 5,613 shares; Mr. Roy Simmons, 20,696 shares; and
Mr. Wagner, 2,922 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, 1998 through December 31, 1998, its officers
and directors were in compliance with all applicable filing requirements, except
that Messrs. Grant Caldwell and Clark Hinckley filed a late report on shares
purchased, Messrs. Robert Sarver and Harris Simmons filed a late report on
shares sold, Messrs. A. Scott Anderson, W. David Hemingway, George Hofmann,
Harris Simmons, L.E. Simmons and I.J. Wagner filed a late report on shares
gifted, Ms. Shelley Thomas and Mr. James C. Hawkanson filed a late initial
statement of beneficial ownership and Messrs. Jerry C. Atkin, R. Don Cash, Grant
R. Caldwell, Richard H. Madsen, L.E. Simmons, Roy Simmons and I.J. Wagner filed
a late report on stock options granted.
7
EXECUTIVE COMPENSATION
The following Summary Compensation Table shows compensation earned from the
Company for services rendered during fiscal years 1998, 1997 and 1996 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 $100,000 in 1998.
Summary Compensation Table
Long-term
Annual Compensation
Compensation/1/ Awards
--------------- ----------------
Value- Securities All Other
Salary Bonus Sharing Underlying Compensation
Name and Principal Position Year ($)/2//3/ ($)/3//4/ ($)/5/ Options(#)/6/ ($)/3//7//8//9/
- --------------------------- ---- --------- --------- ------- ------------- ---------------
Harris H. Simmons 1998 434,101 255,000 258,300 36,000 67,672
President and Chief Executive 1997 385,563 235,000 189,150 40,000 54,093
Officer, Zions Bancorporation 1996 353,103 200,000 144,950 20,000 53,577
A. Scott Anderson 1998 255,000 115,000 175,275 24,000 31,186
President and 1997 207,101 110,000 138,225 20,000 27,600
Chief Executive Officer, 1996 197,647 100,000 115,960 12,000 24,564
Zions First National Bank
John J. Gisi 1998 242,550 125,000 147,600 16,000 53,495
Chairman and Chief Executive 1997 242,925 110,000 0 18,000 17,762
Officer, 1996 216,500 98,000 0 12,000 17,552
National Bank of Arizona
Gary Judd/10/ 1998 231,336 120,000 0 16,000 13,067
President and 1997 0 0 0 0 0
Chief Executive Officer, 1996 0 0 0 0 0
Vectra Bank Colorado
W. David Hemingway 1998 220,932 115,000 175,275 18,000 71,271
Executive Vice President, 1997 188,101 100,000 138,225 16,000 30,123
Zions Bancorporation 1996 173,688 90,000 115,960 9,000 23,125
------------------------------------
/1/ 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.
/2/ 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.
8
/3/ 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 1998, 1997 and 1996 were as follows, respectively: Mr.
Simmons, $5,000, $4,701 and $3,750; Mr. Anderson, $6,000, $5,826 and
$1,841; Mr. Gisi, $6,000, $6,000 and $5,625; Mr. Judd, $5,000, $0 and $0;
and Mr. Hemingway, $6,000, $6,000 and $5,353.
/4/ 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.
/5/ 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 1998, 1997 and 1996 were as follows, respectively:
Mr. Simmons, $208,193, $390,073 and $390,165; Mr. Anderson, $148,876,
$273,705 and $274,519; Mr. Gisi, $133,045, $245,703 and $199,173; Mr. Judd,
$56,298, $0 and $0; Mr. Hemingway, $141,047, $256,124 and $259,941. See
"Long Term Incentive Compensation Plan" that follows.
/6/ 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.
/7/ Includes amounts accrued under the Company's Supplemental Executive
Retirement Plan (SERP). For additional details regarding the SERP, please
see page 12. For each of the persons named above, the amounts accrued for
1998, 1997 and 1996 were as follows, respectively: Mr. Simmons, $60,554,
$45,810 and $46,466; Mr. Anderson, $23,068, $18,192 and $19,362; Mr. Gisi,
$45,377, $8,180 and $8,566; Mr. Judd, $5,949, $0 and $0; and Mr. Hemingway,
$63,153, $20,541 and $14,411.
/8/ 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.
/9/ 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 1998, 1997 and 1996 were
as follows, respectively: Mr. Simmons, $2,118, $3,582 and $3,361; Mr.
Anderson, $2,118, $3,582 and $3,361; Mr. Gisi, $2,118, $3,582 and $3,361;
Mr. Judd, $2,118, $0, and $0; and Mr. Hemingway, $2,118, $3,582 and $3,361.
In 1998, the Company terminated this Profit Sharing Plan and no further
contributions are contemplated.
/10/ Mr. Judd's employment by the Company commenced January 6, 1998.
9
Stock Option Grants in Fiscal Year 1998
The following table shows the number of shares with respect to which
options were granted during 1998 to each of the named persons, together with the
percentage of all grants to employees which the grant to the named person
represents, the exercise price of such option, and the expiration date of the
option.
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term/1/
------------------- -----------------------------
% of Total
Options
Options Granted to Exercise
Granted Employees Price Expiration
Name (#)(2) in Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- ------------------------- ------ -------------- -------- ------------- ------- ---------
Harris H. Simmons 36,000 4.34 48.50 04-23-2004 593,807 1,347,146
Gary Judd 16,000 1.93 48.50 04-23-2004 263,914 598,731
John J. Gisi 16,000 1.93 48.50 04-23-2004 263,914 598,731
A. Scott Anderson 24,000 2.89 48.50 04-23-2004 395,871 898,097
W. David Hemingway 18,000 2.17 48.50 04-23-2004 296,903 673,573
- -------------------------------------
/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 1998 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
1998. Each grant is an option to purchase 4,000 shares at $48.50 per share.
The options vest and become exercisable in four equal installments of 1,000
shares beginning six months after the date of grant and continuing at one-year
intervals thereafter. The 1998 options expire on April 23, 2008.
10
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-end Option Values
The following table sets forth the number of shares acquired by any of the
named persons upon exercise of stock options in 1998, the value realized through
the exercise of such options, and the number of unexercised options held by such
person, including both those which are presently exercisable, and those which
are not presently exercisable.
Shares Number of Value of
Acquired Shares Underlying Unexercised
Upon Unexercised In-the-
Option Value Options Money Options
Name Exercise(#) Realized($) at 12-31-98(#)/1/ At 12-31-98($)/2/
---- ---------- ---------- ----------------- -----------------
Not Not
Exercisable Exercisable Exercisable Exercisable
----------- ------------ ----------- -----------
Harris H. Simmons - - 55,000 81,000 2,580,781 2,141,844
Gary Judd - - 46,236 16,000 2,501,599 222,000
John J. Gisi 67,300 2,758,510 14,400 40,500 864,108 1,169,656
A. Scott Anderson - - 31,000 47,000 1,466,813 1,172,563
W. David Hemingway 4,000 170,250 36,544 43,456 1,869,843 1,337,813
- -------------------------------------
/1/ Of the shares shown as underlying unexercised options for Mr. Gisi, a total
of 14,400 exercisable represent options received in exchange for options of
National Bancorp of Arizona, Inc. upon its acquisition by the Company. Of
the shares shown as underlying unexercised options for Mr. Judd, a total of
46,236 exercisable represent options received in exchange for options of
Vectra Banking Corporation upon its acquisition by the Company.
/2/ Potential unrealized value is (i) the fair market value at fiscal 1998
year-end ($62.375) less the option exercise price, times (ii) the number of
shares.
LONG TERM EXECUTIVE INCENTIVE COMPENSATION PLAN
(Proposal 2)
The Board has adopted, subject to shareholder approval, the 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 Plan was established in 1991 by the Board of
Directors upon the recommendation of the Compensation Committee. Shareholder
approval of this Plan is now being sought to ensure the tax deductibility of
such bonuses in the event that a bonus, when aggregated with each officer's
other compensation, exceeds one million dollars. As amended in 1993, the
Internal Revenue Code requires that compensation in excess of one million
dollars paid to the Company's chief executive officer and four other highest
paid executive officers be paid pursuant to a shareholder-approved, performance-
based compensation plan in order to retain the tax-deductibility of such
payments.
The Value Sharing Plan is administered by the Compensation Committee,
which is comprised entirely of outside directors as defined under section 162(m)
of the 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
11
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 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 1998 ranged in amount from $0 for an adjusted
EPS growth rate of less than 4% annually over the four years beginning in 1998,
to a maximum of $12,378,600, 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 24% and above. Accordingly,
the maximum aggregate of all payments possible under the 1998 award fund is
$16,463,538. 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 ($0);
Example #1 represents the amount that would be paid if the Company's adjusted
EPS annual growth rate during the period is 13% (as to which there can be no
assurance) and the average adjusted ROE is 18% (also as to which there can be no
assurance); Example #2 represents the amount that would be paid if the Company's
adjusted EPS annual growth rate during the period is 16% (as to which there can
be no assurance) and the average adjusted ROE is 21% (also as to which there can
be no assurance); the maximum amount represents the maximum possible amount
payable to the named individuals from the award fund established in 1998.
Estimated Future Payout
of Value Sharing Plan
----------------------------------------
Number of Performance Example Example
Performance Period Until Threshold #1 #2 Maximum
Name Units Payout ($) ($) ($) ($)
- ---- ----------- ------------ --------- ------- ------- -------
Harris H. Simmons 11,000 4 Years 0 178,814 360,510 905,495
A. Scott Anderson 8,000 4 Years 0 128,592 262,189 658,542
John J. Gisi 7,000 4 Years 0 112,518 229,416 576,224
Gary Judd 7,000 4 Years 0 112,518 229,416 576,224
W. David Hemingway 7,750 4 Years 0 124,574 253,996 637,962
12
The affirmative vote of a majority of votes cast is required for approval
of the Long Term Incentive Compensation Plan. No payments will be made under
this Plan unless shareholder approval is obtained. However, shareholder approval
of this Plan does not affect the Company's authority to grant compensation to a
covered employee outside of this Plan that does not satisfy the Internal Revenue
Code for tax-deductibility. The Company retains this authority because the
objective formula for determining awards under the Plan does not consider
individual contributions outside of the criteria evaluated, e.g., development of
a new business line or achievement of other corporate objectives.
The Board of Directors recommends that the Shareholders vote FOR the approval of
the Long Term Executive Incentive Compensation Plan as described above.
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 (6.11% for 1998).
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 7%
annuity rate to convert the estimated age 65 cash balance to an annual amount;
(2) the November 1998 treasury bill rate of 5.25% used to calculate all years'
interest on the Cash Balance; (3) 1998 compensation increasing by 4% per year to
age 65.
Estimated Estimated
Cash Balance Annual
at Age 65 Benefit
--------- -------
Harris H. Simmons $3,889,983 $344,240
Gary Judd 277,758 24,580
John J. Gisi 693,311 61,353
A. Scott Anderson 1,224,197 108,334
W. David Hemingway 1,398,299 123,741
14
[PERFORMANCE GRAPH APPEARS HERE]
1993 1994 1995 1996 1997 1998
- --------------------------------------------------------------------------------------------------------------------
S & P 500 100.00 101.32 139.39 171.40 228.58 293.91
KBW 50 Index 100.00 94.90 152.00 215.01 314.32 340.34
Zions Bancorporation 100.00 99.96 229.42 301.69 534.51 742.27
- --------------------------------------------------------------------------------------------------------------------
Note: Assumes $100 invested on 12-31-93 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 1998 is summarized below:
. 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 "Proposal 2."
. 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.
. 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
. 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 1998 award fund as well as the
corresponding variation in size of the award fund. In 1998, 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 1998. (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.
. 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.
. The Company periodically grants stock options to executives. Grants were made
in April 1998. 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, 1998, 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
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.
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.
18
Pursuant to the Company's Bylaws, business must be properly brought before
an annual meeting in order to be considered by stockholders. The Bylaws specify
the procedure for stockholders to follow in order to bring business before a
meeting of the stockholders. Notice of any proposal to be presented by any
stockholder or the name of any person to be nominated by any stockholder for
election as a director of the Company at any meeting of stockholders 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:
. The shareholder's name, address, and stock ownership of the Company,
. The text of the proposal to be presented,
. A brief written statement of the reasons why such shareholder favors the
proposal, and
. Any material interest of such stockholder 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:
. The shareholder's name, address, and stock ownership of the Company,
. The name of the person to be nominated,
. The name, age, business address, residential address, and principal
occupation or employment of each nominee,
. The nominee's signed consent to serve as a director of the Company, if
elected,
. The number of shares of the Company's stock owned by each nominee,
. A description of all arrangements and understandings between the
stockholder and nominee pursuant to which the nomination is to be made,
and
. 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 stockholder 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 1998, and is expected to continue to do
so. Representatives of KPMG LLP are expected to be present at the Annual
Meeting and will be able to respond to questions.
DATE OF SUBMISSION OF SHAREHOLDER PROPOSALS
FOR 1999 SHAREHOLDERS' MEETING
The Company must receive proposals from stockholders on or before December
15, 1999, in order to have such proposals evaluated for inclusion in the proxy
materials relating to the Company's 2000 Annual Meeting of Stockholders. Any
proposal submitted for the proxy materials will be subject to the rules of the
Securities and Exchange Commission concerning stockholder proposals.
19
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH SHAREHOLDER, ON WRITTEN REQUEST,
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR 1998, 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
20
Zions Bancorporation
Senior Management Value Sharing Plan
Award Period: 1998 - 2001
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 shall consist of designated 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 ("PU's), and each participant shall be
allocated a specific number of PU's by the Committee. The PU's shall represent a
pro-rata claim, in proportion to the total PU's 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.
1
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 Modified Cash Return On
Shareholders' Equity ("AMCROE") 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 diluted earnings per
share before the cumulative effect of changes in accounting principles, plus the
after-tax cost per share of amortization of goodwill and core deposit intangible
assets, plus the after-tax cost per share of charges recognized to standardize
accounting practices of acquired entities, less the after-tax cost per share of
capitalized transaction costs which would have been expensed if pooling-of-
interests accounting treatment had been employed.
Average Modified Cash Return on Equity ("AMCROE") 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. Net Cash Income
shall mean the net income available to common shareholders, plus the after-tax
cost of amortization of goodwill and core deposit intangible assets, plus the
after-tax cost of charges recognized to standardize accounting practices of
acquired entities, less the after-tax cost of capitalized transaction costs
which would have been expensed if pooling-of-interests accounting had been
employed. 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 AMCROE 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 AMCROE, 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 1998-2001 Award Period formula for the determination of the value of
PU's is as indicated in the Appendix.
For the 1998-2001 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:
2
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 110% 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, 2001, 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 110% 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
110% 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 PU's 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 PU's 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.
3
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 PU's 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: 1998-2001
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 -
- ------------------------------------------------------------------------------
$8.57 $ 8.78 $.00 plus $.015 per each cent of the amount
over $8.57.
$8.78 $ 9.00 $.322 plus $.030 per each cent of the amount
over $8.78.
$9.00 $ 9.22 $.979 plus $.046 per each cent of the amount
over $9.00.
$9.22 $ 9.44 $1.983 plus $.062 per each cent of the amount
over $9.22.
$9.44 $ 9.67 $3.349 plus $.076 per each cent of the amount
over $9.44.
$9.67 $ 9.90 $5.089 plus $.093 per each cent of the amount
over $9.67.
4
$9.90 $10.14 $7.217 plus $.105 per each cent of the amount
over $9.90.
$10.14 $10.38 $9.748 plus $.123 per each cent of the amount
over $10.14
$10.38 $10.63 $12.695 plus $.135 per each cent of the amount
over $10.38.
$10.63 $10.88 $16.074 plus $.153 per each cent of the amount
over 10.63.
$10.88 $11.14 $19.90 plus $.165 per each cent of the amount
over $10.88.
$11.14 $11.40 $24.187 plus $.183 per each cent of the amount
over $11.14.
$11.40 $11.67 $28.952 plus $.195 per each cent of the amount
over $11.40.
$11.67 $11.94 $34.209 plus $.179 per each cent of the amount
over $11.67
$11.94 $12.22 $39.030 plus $.159 per each cent of the amount
over $11.94.
$12.22 $12.50 $43.493 plus $.146 per each cent of the amount
over $12.22.
$12.50 $12.78 $47.584 plus $.132 per each cent of the amount
over $12.50.
$12.78 $13.07 $51.286 plus $.114 per each cent of the amount
over $12.78.
$13.07 $13.37 $54.585 plus $.096 per each cent of the amount
over $13.07.
$13.37 $13.67 $57.463 plus $.081 per each cent of the amount
over $13.37.
$13.67 $13.98 $59.905 plus $.064 per each cent of the amount
over $13.67.
$13.98 $61.893
5
Average Modified Cash Return on Equity ("AMCROE") Modifier:
- -----------------------------------------------------------
The basic Participation Unit value determined above shall be adjusted as
follows:
. If AMCROE for 1998-2001 is less than 16.00%, the Participation Units shall
have no value.
. If AMCROE is equal to or greater than 16.00% but less than 19.00%, the
basic value of a Participation Unit shall be multiplied by a factor of
1.00.
. If AMCROE 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+(AMCROE - .19)6.60.
. If AMCROE is 24.00% or more, the basic value of a Participation Unit shall
be multiplied by 1.33.
******************************
Example: If ACEPS is $10.19 and AMCROE is 22.60%, each Participation Unit
would be worth $36.71.
[$9.748+100($10.19-$10.14)$.123] X [1+(.2260 - .19)6.6] = $12.825
6
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 Bancorporation at the Annual Shareholders' Meeting to be
held on April 23, 1999 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:
Jerry C. Atkin Grant R. Caldwell Roy W. Simmons Shelley Thomas
2. To approve the Long Term Executive Incentive Compensation Plan. FOR [_] AGAINST [_] ABSTAIN [_]
3. To transact any other such 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 ______, 1999. ____________________________________________________
Please sign exactly as name appears on reverse side.