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EXHIBIT 10.23
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
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.
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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:
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.
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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 withhold 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.
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.
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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)
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If the ACEPS is:
The basic value of a
Over - But not over- Participation Unit is-
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$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.
$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.
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$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
Average Modified Cash Return on Equity ("AMCROE") Modifier:
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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.
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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
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