EXHIBIT 99.1
REGIONS FINANCIAL CORPORATION
EXECUTIVE BONUS PLAN
Effective Date: January 1, 2005
I. PURPOSE
The purpose of the Plan is to:
A. optimize the soundness, profitability and growth of the Company;
B. promote and encourage excellence in the performance of individual
responsibilities; and
C. provide an incentive opportunity for executive officers of the
Company.
The Plan provides for the payment of annual monetary awards to
Participants based upon the achievement by the Company of Performance Goals.
The Plan is intended, but not required, to preserve the Company's federal
income tax deduction for annual bonus payments made to Participants under the
Plan by meeting the requirements for performance-based compensation under
Section 162(m). No executive officer participating in the Plan with respect
to any Plan Year will be eligible to participate in the Company's Corporate
Annual Bonus Plan with respect to such year.
II. PLAN ADMINISTRATION
The Committee shall be responsible for the management and
administration of the Plan. The Committee has the exclusive authority to
interpret and apply the Plan as it deems to be in the best interests of the
Company and its stockholders. The Committee's interpretation of the Plan and
all decisions and determinations by the Committee relating to the Plan or to
awards issued thereunder shall be final and binding on all parties. The
Committee has the authority to delegate the day-to-day administration of the
Plan to employees in the Company's Human Resources Division or to such other
persons as the Committee deems reasonable under the circumstances.
III. AUTHORITY OF COMMITTEE
The Committee, as plan administrator, has the exclusive power,
authority, and discretion to:
A. designate Participants;
B. determine the Target Award for Participants;
C. establish Performance Criteria and weightings for different
Performance Criteria, and determine whether Performance Goals were achieved
in a given Plan Year;
D. reduce any Incentive Bonus, regardless of the achievement of
Performance Goals;
E. construe and interpret the Plan and adopt any rules and
regulations as it may deem necessary or advisable to administer the Plan;
F. modify or amend the terms of the Plan, as provided herein;
G. cancel the participation of any person who conducts himself in a
manner which the Committee, in the exercise of reasonable discretion,
determines to be inimical to the best interests of the Company;
H. correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, in the manner and to the extent it shall deem
necessary; and
I. perform all other acts it deems necessary to carry out the intent
and purpose of the Plan.
The Committee's determination under the Plan of the persons to
participate and receive awards and the terms and conditions of such awards
need not be uniformly applicable to all Participants and may be made by the
Committee on a selective basis among persons who receive or are eligible to
receive awards under the Plan, whether or not such persons are similarly
situated. The Committee shall have final approval authority over the payment
of all Incentive Bonuses under this Plan, whether individually or
collectively.
IV. EFFECTIVE DATE
The Plan is effective January 1, 2005, and shall continue thereafter
until terminated by the Committee. The Committee will review the Plan
annually to determine its effectiveness in meeting stated objectives. The
Plan Performance Period ("Plan Year") will be the Company's fiscal year
beginning January 1st and ending December 31st annually.
The Company's executive officers shall not be eligible to participate
in the Plan unless and until the stockholders of the Company approve the
Plan. While Target Awards may be established for such persons prior to
stockholder approval, no Incentive Bonus shall be paid to any executive
officer of the Company under the Plan until after stockholder approval of the
Plan has been obtained. To the extent necessary for the Plan to qualify as
performance-based compensation under Section 162(m), the material terms of
the Plan shall be disclosed to, and reapproved by, the stockholders of the
Company no later than the first stockholders meeting that occurs in the fifth
year following the year in which stockholders initially (and subsequently)
approve the material terms of the Plan.
V. ELIGIBILITY
Subject to Section IV of the Plan, all executive officers of the
Company who are selected by the Committee are eligible to participate in the
Plan. Participation in one Plan Year does not guarantee participation in
successive years. The Committee will select Participants no later than March
31 of the Plan Year to which participation relates and will notify
Participants of their eligibility to participate, and the terms thereof, in
writing.
VI. OPERATION OF THE PLAN
Each Participant shall be eligible to receive an Incentive Bonus if the
Company meets or exceeds certain Performance Goals set each year by the
Committee.
A. Performance Goals. Not later than ninety (90) days after the
commencement of any Plan Year (or such other date as may be permitted or
required by Section 162(m), as applicable), the Committee will set in writing
Performance Goals for such Plan Year.
B. Target Award. At the time the Committee sets the Performance Goals
for a particular Plan Year, it will also set in writing the percentage of
each Participant's Base Compensation that will be awarded to the Participant
if the established Performance Goals are achieved (the "Target Award"). The
Target Award will be communicated in writing to each Participant.
The Committee will establish the weightings for each Participant for
performance within any category of the Performance Goals. If established, the
weightings will be expressed as a percent of the Target Award that can be
earned by the Participant from performance in each category.
C. Range of Incentive Bonus Opportunities. Depending upon the level
of achievement of Performance Goals, the actual Incentive Bonus opportunities
for each Participant shall range from zero to a maximum of two (2) times the
Target Award or the Participant's Guaranteed Bonus for a particular year, if
higher. Notwithstanding the foregoing, in no event will any Participant
receive an Incentive Bonus under the Plan in connection with any one Plan
Year which exceeds $2,500,000.
D. Achievement of Performance Goals. The determination of whether
Performance Goals have been met shall be made by the Committee and shall (i)
be based on financial results reflected in the Company's audited financial
statements prepared in accordance with generally accepted accounting
principles and reported upon by the Company's independent accountants or (ii)
otherwise be objective, so that a third party having knowledge of the
relevant facts could determine whether the Performance Goals have been met.
Notwithstanding the foregoing, to the extent permitted under Section
162(m), as applicable, the Committee may determine prospectively, at the time
that Performance Goals are established, whether or not to adjust any
Performance Goals during or after the Plan Year to take into consideration
any of the following events that occur during a Plan Year: (a) asset write-
downs or impairment charges; (b) litigation or claim judgments or
settlements; (c) the effect of changes in tax laws, accounting principles or
other laws or provisions affecting reported results; (d) accruals for
reorganization and restructuring programs; (e) extraordinary nonrecurring
items as described in Accounting Principles Board Opinion No. 30 and/or in
management's discussion and analysis of financial condition and results of
operations appearing in the Company's annual report to stockholders for the
applicable year; (f) acquisitions or divestitures; (g) foreign exchange gains
and losses; or (h) any other identifiable event of a nonrecurring or
extraordinary nature.
VII. PERFORMANCE CRITERIA
The Committee shall establish Performance Goals within the time period
prescribed by Section 162(m) based on one or more of the following
Performance Criteria, which may be expressed in terms of Company-wide
objectives or in terms of objectives that relate to the performance of a
subsidiary or a division, region, department or function within the Company
or a subsidiary: (1) earnings (including, but not limited to, earnings per
share or other corporate measures); (2) profit (including, but not limited
to, net profit, gross profit, operating profit, economic profit, profit
margins or other profit measures); (3) net income; (4) revenue; (5) stock
price or performance; (6) stockholder return; (7) return measures (including,
but not limited to, return on assets, capital, equity or revenue); (8) growth
of loans and deposits; (9) market share; (10) expenses (including, but not
limited to, expense management, expense efficiency ratios or other expense
measures); (11) business expansions or consolidation (including, but not
limited to, acquisitions and divestitures); (12) internal rate of return;
(13) planning accuracy (as measured by comparing planned results to actual
results); (14) number of customers or households; and (15) asset quality and
charge-offs.
Performance Goals with respect to the foregoing Performance Criteria
may be specified in absolute terms, in percentages, or in terms of growth
from period to period or growth rates over time, as well as measured relative
to an established or specially-created performance index of Company
competitors or peers. Any member of a specifically-created index that
disappears during a Plan Year shall be disregarded for the entire Plan Year.
Performance Goals need not be based upon an increase or positive result under
a business criterion and could include, for example, the maintenance of the
status quo or the limitation of economic losses (measured, in each case, by
reference to a specific business criterion). The Performance Goals that will
be applied to the awards under this Plan will be distributed annually to
Participants.
Any payment of an Incentive Bonus must be approved by the Committee and
shall be conditioned upon its receipt of information from the Company's Human
Resource Department that the Performance Goals and any other material
conditions were satisfied. Except as specifically provided herein, no
Incentive Bonus may be amended, nor may the Committee exercise any
discretionary authority it may otherwise have under the Plan with respect to
an Incentive Bonus in any manner to waive the achievement of an applicable
Performance Goal or to increase the amount payable pursuant thereto or the
value thereof, or otherwise in a manner that would cause the Incentive Bonus
to cease to qualify for exemption under Section 162(m). The Committee retains
the discretion to reduce any Incentive Bonuses to be paid under the Plan for
a given Plan Year, without regard to corporate or individual performance.
Without limiting the foregoing, the Committee may take into account any
personal performance evaluation of a Participant (including, but not limited
to, the chief executive officer) as a basis for exercising such discretion.
VIII. PLAN FUNDING AND PAYOUT
The Plan is intended to be an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
Participant pursuant to the Plan, nothing contained in the Plan shall give
the Participant any rights that are greater than those of a general creditor
of the Company or any subsidiary. Incentive Bonuses will be paid by the Award
Payment Date.
IX. NEW PARTICIPANTS
If an individual begins employment as an executive or is promoted to an
executive position during the Plan Year, the Committee, in its discretion,
may determine whether such executive may participate in the Plan and, if so,
the terms of such participation, which will be pro-rated based on the number
of days he or she participated in the Plan during the Plan Year, unless the
Committee determines otherwise.
X. TERMINATION OF EMPLOYMENT
If a Participant terminates employment during a Plan Year for any
reason other than Retirement, Disability, or death, no Incentive Bonus will
be payable under the Plan.
If a Participant's employment terminates during a Plan Year as a result
of Retirement, Disability, or death, the Participant, his Beneficiary, or his
estate in the absence of a Beneficiary, will receive a pro-rata portion of
the Incentive Bonus determined as of the end of the Plan Year, based upon the
number of days he or she was employed by the Company during the Plan Year.
The proration will be based on the Participant's year-to-date Base
Compensation for the Plan Year and the level of achievement of the
Performance Goals as of the end of the Plan Year. The pro-rated award will be
paid at the same time as Incentive Bonuses are paid to active Participants.
If a Participant's employment terminates between the end of the Plan
Year and the Award Payment Date for any reason other than for Cause, the full
Incentive Bonus earned as of December 31 of the Plan Year will be paid. If
the Participant's employment is terminated during this period for Cause, no
Incentive Bonus will be paid.
XI. MISCELLANEOUS PROVISIONS
A. Nonalienation of benefit. No right or interest of any Participant in
the Plan shall be assignable or transferable, or subject to any lien,
directly or indirectly, by operation of law, or otherwise, including
garnishment, attachment, pledge, or bankruptcy.
B. Withholding of taxes. The Company shall have the authority and the
right to deduct or withhold from any award payable under this Plan, or to
require a Participant to remit to the Company, an amount sufficient to
satisfy federal, state, and local taxes (including the Participant's FICA
obligation) required by law to be withheld with respect to any taxable event
arising as a result of the Plan.
C. Establishment of Base Compensation. Subject to Section VI(C) (Range
of Incentive Bonus Opportunities), all awards under the Plan shall be
calculated on Base Compensation earned during the Plan Year.
D. Other benefit plans. No awards, payments, or benefits paid under
this Plan shall be taken into account in determining any benefits under any
retirement, profit sharing, or other associate benefit plan or arrangement to
which the Company contributes, unless otherwise provided in such other
benefit plan or arrangement.
E. Plan expenses. Any expenses incurred in the administration of this
Plan shall be borne by the Company.
F. Right to continued employment. Participation in this Plan shall not
be construed as giving any Participant the right to be retained in the employ
of the Company. Nothing in the Plan shall interfere in any way with the right
of the Company or any subsidiary to dismiss any Participant with or without
Cause, such dismissal to be free from any liability or any claim under the
Plan, except as provided herein.
G. Construction of the Plan. The Plan shall be governed and interpreted
in accordance with the laws of the State of Alabama, and shall be binding on
and inure to the benefit of any successor or successors of the Company.
H. Headings. The heading and subheadings in the Plan have been inserted
for convenience and reference only and are not to be used in construing the
instrument or any provisions hereof.
I. Number and gender. The masculine pronoun used shall include the
feminine pronoun, and the singular number shall include the plural number,
unless the context of the Plan requires otherwise.
J. Power to amend and terminate the Plan. The Committee may, at any
time, without the need for obtaining approval of the stockholders or the
Participants, by an instrument in writing, amend or terminate the Plan, in
whole or in part, or amend it in such respects as the Committee, in its sole
discretion, deems appropriate and in the best interests of the Company and
its stockholders. The Committee may condition any amendment or modification
on the approval of the stockholders of the Company if such approval is
necessary or deemed advisable with respect to tax, securities, or other
applicable laws, policies, or regulations, including, without limitation
Section 162(m). If any amendment or termination occurs during a Plan Year,
the Committee shall determine when and to what extent Incentive Bonuses, if
any, shall be paid for the portion of the Plan Year preceding the amendment
or termination. Termination or amendment of the Plan during a Plan Year may
be retroactive to the beginning of the Plan Year, at the discretion of the
Committee. Termination of the Plan after a Plan Year but before the Award
Payment Date will not reduce Participants' rights to receive Incentive
Bonuses for such Plan Year.
K. Deferral of award. Subject to compliance with Code Section 409A and
other applicable law, the Committee may permit a Participant to defer such
Participant's receipt of the payment of Incentive Bonuses. If any such
deferral is permitted, the Committee shall, in its sole discretion, establish
rules and procedures for such payment deferrals, which must be in compliance
with Code Section 409A.
XII. DEFINITIONS
When used herein, the following words and phrases shall have the
meanings set forth below, unless a different meaning is clearly required by
the context of the Plan.
A. Award Payment Date shall mean the date on which Incentive Bonuses
are paid to Participants, which may not be later than March 15 of the year
following the Plan Year.
B. Base Compensation shall mean income provided to the Participant
for services rendered, (i.e., base salary, whether deferred or not, but
excluding overtime, commissions, awards from other incentive programs,
Company contributions to fringe benefit programs (other than pre-tax
contributions by the Participant to plans maintained under Sections 125 or
401(k) of the Internal Revenue Code), and other "non-salary" income).
C. Beneficiary shall mean the person or persons designated by the
Participant to receive amounts payable under the Plan in the event of the
Participant's death.
D. Cause, as a reason for a Participant's termination of employment
shall have the meaning assigned such term in the employment, severance or
similar agreement, if any, between such Participant and the Company or a
subsidiary.
E. Code shall mean the Internal Revenue Code of 1986, as amended.
F. Committee shall mean the Compensation Committee of the Board of
Directors of Regions Financial Corporation.
G. Company shall mean Regions Financial Corporation, its affiliates
and subsidiaries, or any successor(s) thereto.
H. Disability shall mean a physical or mental condition which renders
the Participant incapable of performing the work for which he was employed or
similar work, as evidenced by eligibility for and actual receipt of benefits
payable under the Company's long-term disability program and/or Social
Security.
I. Incentive Bonus shall mean the bonus paid to an eligible
Participant under the Plan in connection with a particular Plan Year.
J. Guaranteed Bonus shall mean any minimum annual bonus amount that a
Participant is entitled to for a Plan Year pursuant to the terms of an
employment agreement or change of control agreement as in effect on January
1, 2005 between such Participant and the Company.
K. Participant shall mean any executive officer who is selected by
the Compensation Committee to participate in the Plan with respect to a
particular Plan Year.
L. Performance Criteria shall mean those specific criteria listed in
Section VII from among which the Committee may set Performance Goals in each
Plan Year.
M. Performance Goal shall mean the performance goals established each
Plan Year by the Committee based upon the Performance Criteria.
N. Plan shall mean the Regions Financial Corporation Executive Bonus
Plan, as set forth herein or in any amendments hereto.
O. Plan Year shall mean any performance period which begins on
January 1 and ends on December 31.
P. Section 162(m) shall mean Section 162(m) of the Code and the
regulations thereunder, as they may be amended from time to time.
Q. Retirement shall mean the cessation of active employment by a
Participant, whether such cessation is designated as "normal" (at age 65) or
"early" (prior to age 65) retirement under the terms and conditions of the
applicable Company-sponsored retirement plan.
IN WITNESS WHEREOF, the Company has caused this Executive Bonus Plan to
be executed this 6th day of April, 2005, to be effective as of the 1st day of
January, 2005, subject to approval by the stockholders at the 2005 annual
meeting.
REGIONS FINANCIAL CORPORATION
By: /s/ Carl E. Jones, Jr.
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Carl E. Jones, Jr.
Chairman and
Chief Executive Officer
ATTEST:
/s/ R. Alan Deer
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R. Alan Deer
Corporate Secretary