EXHIBIT 10.4(c)
NOTICE OF
2005 LONG-TERM INCENTIVE PLAN AWARD ("2005 LTIP AWARD")
UNDER 2003 EQUITY COMPENSATION PLAN
1.0 OBJECTIVE:
The purpose of the Long-Term Incentive Plan Award ("LTIP") pursuant to
Section 8 of the First Horizon National Corporation's 2003 Equity
Compensation Plan (the "Plan") is to provide motivation for key executives
to achieve the Company's strategic objectives and ensure incentive rewards
and performance are linked to shareholder value.
2.0 LTIP PERFORMANCE PERIOD:
The LTIP performance period for 40% of the award will be the Company's
fiscal years beginning January 1, 2005 and ending December 31, 2006 (the
2005-06 Performance Period) and the LTIP performance period for 60% of the
award will be the Company's fiscal years beginning January 1, 2005 and
ending December 31, 2007 (the 2005-07 Performance Period).
3.0 ELIGIBILITY:
o Eligibility for executive officers who are subject to Section 16
(as defined in the Plan) or who are Covered Officers (as defined
in the Plan) is approved annually by the Compensation Committee
("Committee").
o Eligibility for all other executives is approved annually by the
CEO.
4.0 AWARD:
2005 LTIP Awards will be granted effective March 4, 2005 in
Performance Share Units using the following formula: The number of
units awarded to each Participant will be equal to the Participant's
base salary effective March 4, 2005 times the Participant's annual
bonus target percentage* times 1.5 (for the 2005-07 Performance
Period) and times 2.25 (for the 2005-07 Performance Period), with the
resulting dollar amount for each Performance Period divided by the
Fair Market Value of one share of the Company's common stock on March
4, 2005 to determine the number of Units. Awards will be rounded to
the nearest whole Unit. Units will not earn dividends during the
Performance Period.
*100% will be used for the annual bonus target percentage if the
Participant's annual bonus is determined using a formula based on
a percentage of the Officer's business unit pre-tax income.
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5.0 DETERMINATION OF INDIVIDUAL PARTICIPANT'S EARNED AWARD AND PAYMENT OF
AWARD:
The number of Units which are earned (vest) following the end of each
Performance Period will be determined by the Committee based on the
following measurement criteria:
100% of the Units will vest if average annual EPS equals or exceeds $___
per share.
o The Compensation Committee may use negative discretion to reduce the
award based on EPS growth during the performance period. A basis for
reducing the award may be competitive EPS growth results for the
Performance Period relative to the "Top 30 Banks" as identified by
American Banker at the beginning of the Performance Period (the "Peer
Group") as follows (results in between the percentiles shown will be
interpolated):
EPS Growth Percentile Percentage of Units Vesting
--------------------- ---------------------------
____ 100%
____ 67%
____ 33%
Below ____ Committee Discretion
The following adjustments may be made to evaluate performance subject
to Compensation Committee negative discretion to determine final
awards:
o One-time acquisition costs will be excluded.
o Material nonrecurring non-operating items (positive or negative)
as required under accounting rules or by our auditors to be
listed and discussed in company financial statements will be
excluded.
o The number of Units earned (vested) may be reduced by the Committee in
its discretion in order to more accurately reflect the Company's total
performance. In determining the amount, if any, by which the number of
Units will be reduced, the Committee may consider measures such as the
following:
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Factor Guideline
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Rating Agencies [guideline redacted]
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Regulatory [guideline redacted]
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Capitalization [guideline redacted]
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Governance [guideline redacted]
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o Notwithstanding the Company's achievement of the above criteria, the
Committee shall have complete discretion to further reduce the number
of Units earned (vested), including payment of no award.
o Vested Units will be paid in shares (one share for each vested Unit).
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6.0 FAIR MARKET VALUE OF SHARES
The Fair Market Value of each share of common stock shall mean, as of any
date, (i) the mean between the high and low sales prices at which shares
were sold on the New York Stock Exchange, or, if the shares are not listed
on the New York Stock Exchange, on any other such exchange on which the
shares are traded, on such date, or in the absence of purported sales on
such date, the mean between the high and low sales prices on the
immediately preceding date on which sales were reported, or (ii) in the
absence of such sales prices for the shares on either of such dates, the
fair market value as determined in good faith by the Committee in its sole
discretion.
7.0 TERMINATION OF EMPLOYMENT AND FORFEITURE OF AWARD:
Except as may otherwise be determined by the Committee, in the event that
the Participant's employment with the Company (including its subsidiaries)
terminates for any reason prior to the end of the Performance Period, the
2005 LTIP Award shall be forfeited, and neither the Participant, nor any
successor, heir, assign or personal representative of the Participant,
shall have any further right to or interest in the 2005 LTIP Award.
Notwithstanding anything herein to the contrary, if a Change in Control (as
defined in Section 7) occurs and if, prior to the date on which the Change
in Control occurs, the Participant's employment with the Company is
terminated or the Participant is reassigned to a position which in the
opinion of the Committee reduces the Participant's ability to make an
impact upon the profitability of the Company through his/her decisions,
actions and counsel and if it is reasonably demonstrated by the Participant
that such termination of employment or reassignment of position (i) was at
the request of a third party who has taken steps reasonably calculated to
effect a Change in Control or (ii) otherwise arose in connection with or in
anticipation of a Change in Control, then for all purposes of this Notice
the 2005 LTIP Award shall not be forfeited by the Participant to the
Company upon such termination or reassignment, and the amount of the 2005
LTIP Award shall be determined by the Committee as described in Section 7.0
below and shall vest and be payable immediately upon the Change in Control.
8.0 CHANGE IN CONTROL:
Notwithstanding anything herein to the contrary, upon a Change in Control,
the Committee shall determine the amount of the 2005 LTIP Award in the
manner set forth in this Section 7.0 (the "CIC LTIP Award"). The CIC LTIP
Award shall equal the maximum potential 2005 LTIP Award, prorated to
reflect the percentage of the Performance Period that has elapsed between
the beginning of the Performance Period and the date of the Change in
Control. The CIC LTIP Award shall vest and be immediately payable upon a
Change in Control. A "Change in Control" means the occurrence of any one of
the following events.
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(i) individuals who, on January 21, 1997, constitute the Board (the
"Incumbent Directors") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director
subsequent to January 21, 1997, whose election or nomination for
election was approved by a vote of at least three-fourths (3/4) of the
Incumbent Directors then on the Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is
named as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; provided, however, that no
individual elected or nominated as a director of the Company initially
as a result of an actual or threatened election contest with respect
to directors or as a result of any other actual or threatened
solicitation of proxies or consents by or on behalf of any person
other than the Board shall be deemed to be an Incumbent Director;
(ii) any "Person" (for purposes of this definition only, as defined under
Section 3(a)(9) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and as used in Section 13(d) or Section 14(d) of
the Exchange Act) is or becomes a "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined
voting power of the Company's then outstanding securities eligible to
vote for the election of the Board (the "Company Voting Securities")
provided, however, that the event described in this paragraph (ii)
shall not be deemed to be a Change in Control by virtue of any of the
following acquisitions: (A) by the Company or any entity in which the
Company directly or indirectly beneficially owns more than 50% of the
voting securities or interest (a "Subsidiary"), (B) by an employee
stock ownership or employee benefit plan or trust sponsored or
maintained by the Company or any Subsidiary, (C) by any underwriter
temporarily holding securities pursuant to an offering of such
securities, or (D) pursuant to a Non-Qualifying Transaction (as
defined in paragraph (iii);
(iii) the shareholders of the Company approve a merger, consolidation,
share exchange or similar form of corporate transaction involving the
Company or any of its Subsidiaries that requires the approval of the
Company's shareholders, whether for such transaction or the issuance
of securities in the transaction (a "Business Combination"), unless
immediately following such Business Combination: (A) more than 50% of
the total voting power of (x) the corporation resulting from such
Business Combination (the "Surviving Corporation"), or (y) if
applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of 100% of the voting securities
eligible to elect directors of the Surviving Corporation (the "Parent
Corporation"), is represented by Company Voting Securities that were
outstanding immediately prior to the consummation of such Business
Combination (or, if applicable, is represented by shares into which
such Company Voting Securities were converted pursuant to such
Business Combination), and such voting power
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among the holders thereof is in substantially the same proportion as
the voting power of such Company Voting Securities among the holders
thereof immediately prior to the Business Combination, (B) no Person
(other than any employee benefit plan sponsored or maintained by the
Surviving Corporation or the Parent Corporation), is or becomes the
beneficial owner, directly or indirectly, of 20% or more of the total
voting power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a majority of
the members of the board of directors of the Parent Corporation (or,
if there is no Parent Corporation, the Surviving Corporation) were
Incumbent Directors at the time of the Board's approval of the
execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the
criteria specified in (A), (B) and (C) above shall be deemed to be a
"Non-Qualifying Transaction"); or
(iv) the shareholders of the Company approve a plan of complete liquidation
or dissolution of the Company or a sale of all or substantially all of
the Company's assets.
Computations required by paragraph (iii) shall be made on and as of the
date of shareholder approval and shall be based on reasonable assumptions
that will result in the lowest percentage obtainable. Notwithstanding the
foregoing, a Change in Control of the Company shall not be deemed to have
occurred solely because any Person acquires beneficial ownership of more
than twenty percent (20%) of the Company Voting Securities as a result of
the acquisition of Company Voting Securities by the Company which reduces
the number of Company Voting Securities outstanding; provided, that if
after such acquisition by the Company such Person becomes the beneficial
owner of additional Company Voting Securities that increases the percentage
of outstanding Company Voting Securities beneficially owned by such Person,
a Change in Control of the Company shall then occur.
9.0 EFFECT ON EMPLOYMENT:
Nothing contained in the LTIP shall confer upon the Participant the right
to continue in the employment of the Company (including its subsidiaries)
or affect any right that the Company (including its subsidiaries) may have
to terminate the employment of the Participant.
10.0 AMENDMENT:
The 2005 LTIP Awards may not be amended except with the consent of the
Committee.
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11.0 WITHHOLDING:
The Company shall have the right to withhold shares from vested Units due
to the Participant (or to require the Participant to remit cash to the
Company) in an amount sufficient to satisfy any federal, state or local
withholding tax requirements prior to distribution of shares to the
Participant.
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