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EXHIBIT 10.9
Zions Bancorporation
Senior Management Value Sharing Plan
Award Period: 1994-1997
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 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 mathematical average return on shareholders' equity ("AROE") for each of
the four years in the Award Period, together with the aggregate earnings per
share ("AEPS") during the Award Period.
Each year, the Committee shall establish minimum targets for AROE and AEPS 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 AROE, with upward adjustment possible if higher levels of AEPS are
achieved. The Committee may also designate other conditions and to ensure the
Plan's integrity and consistency with shareholder and depositor interests.
The 1994-1997 Award Period formula for the determination of total Award Funds is
as follows:
* Minimum AROE: 14.00
* Minimum AEPS: $18.20
Funding of 1994-1997 Award Fund Pool:
AROE Cumulative Award
Funds
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14% $ 0
15% 287,000
16% 638,000
17% 1,151,000
18% 1,583,000
19% 2,174,000
20% 2,582,000
21% 3,277,000
22% 3,965,000
Interim amounts shall be calculated by interpolation.
The basic Award Fund amount would be further modified by multiplying the
cumulative Award Funds by l+[(AEPS - $18.20)/21.7], with a maximum AEPS figure
of S25.35 (resulting in a 33% maximum upward adjustment in the Award Funds.
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For the 1994-97 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 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 January 31, 1997, 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 AEPS 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, 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.
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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 shall 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 possible in calculating Award Funds for any Award
Period, and may, in its sole discretion, distribute benefits to the
participants.
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.
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APPENDIX
ZIONS BANCORPORATION VALUE-SHARING PLAN: 1994-97
Calculation of Participation Unit Value
Average Annual ROE ("AROE")
If the AROE is:
Over But not over The basic value of a Participation Unit is
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14.00% 14.99% $0.00 + $.0271 per basis point of the amount
over 14.00%
15.00% 15.99% $2.71 + $.0330 per basis point of the amount
over 15.00%
16.00% 16.99% $6.01 + $.0485 per basis point of the amount
over 16.00%
17.00% 17.99% $10.86 + $.0407 per basis point of the amount
over 17.00%
18.00% 18.99% $14.93 + $.0558 per basis point of the amount
over 18.00%
19.00% 19.99% $20.51 + $.0385 per basis point of the amount
over 19.00%
20.00% 20.99% $24.36 + $.0656 per basis point of the amount
over 20.00%
21.00% 21.99% $30.92 + $.0648 per basis point of the amount
over 21.00%
22.00% $37.40
Aggregate E.P.S. ("AEPS") Modifier:
The basic Participation unit value determined above shall be - adjusted as
follows:
If AEPS for 1994-97 is less than $18.20, the Participation Units shall have no
value.
If AEPS is greater than $18.20, the basic amount determined based on AROE shall
be multiplied by a factor of:
l+[(AEPS-$18.20)/21.7] (with a maximum factor of 1.33) to arrive at a final
total, value of each Participation Unit.
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Example: If AROE is 18.16% and AEPS is $21.03, each Participation Unit would be
worth $17.89.