Exhibit 10.3

 

[FORM OF PLAN]

 

ZIONS BANCORPORATION

2003 - 2005 Value Sharing Plan

Subsidiary Banks

 

The Company administers a senior management long term executive incentive
compensation plan (2003-2005 Value Sharing Plan) for each of its subsidiary
banks; namely, California Bank & Trust, The Commerce Bank of Washington,
National Bank of Arizona, Nevada State Bank, Vectra Bank Colorado, and Zions
First National Bank in the form attached hereto.

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[FORM OF PLAN]

 

[Name of Subsidiary Bank]

2003 - 2005 Value Sharing Plan

 

Objective: The purpose of the 2003 – 2005 [Name of Subsidiary Bank] Value
Sharing Plan (the “Plan”) is to provide a three-year incentive plan for selected
members of the senior management group and other key managers of [Name of
Subsidiary Bank] (the “Bank”) and its subsidiaries. It is designed to create
long-term shareholder value by focusing the Participant’s attention on improving
the Bank’s financial results over a three-year period.

 

Eligibility: Selected key members of the senior management group and other key
managers in the Bank its subsidiaries as determined by the Zions Bancorporation
(the “Company”) Board of Directors (the “Board”) or its Executive Compensation
Committee (the “Committee”).

 

Effective Date: January 1, 2003, through December 31, 2005 (the “Award Period”).

 

Frequency of Awards: Subject to the deferral provisions enumerated in the Plan,
the incentives, if any, earned under this Plan will be paid within ninety days
after the end of the Award Period.

 

Plan Administrator: The Plan is to be governed and interpreted by the Committee.

 

How the Plan Works:

 

A) Establishment of Award Fund

 

1)   An Award Fund will be established, the size of which will be based upon the
cumulative pre-tax earnings of the Bank during the Award Period, and the
achievement of return on equity targets, as more fully outlined in the Appendix,
and in “Calculation Methodology,” below.

 

B) Participation Units

 

1)   Each Participant designated by the Committee shall be awarded a specific
number of Participation Units (“Units”), representing a pro-rata claim, in
proportion to the total number of designated Units, on any Award Fund generated
under this Plan during the Award Period.

 

C) Calculation Methodology

 

1)   In order for any Award Fund to be established under this Plan, a minimum
level of cumulative pre-tax earnings (“Qualifying Earnings”) and marginal return
on equity (“Marginal ROE”) must be achieved during the Award Period, as
indicated in the Appendix.

 

2)   Qualifying Earnings is defined as the total of the following items during
the Award Period:

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  a)   cumulative income before taxes;

 

  b)   plus, a pre-tax equivalent adjustment for income from bank-qualified
tax-exempt investments, or from qualifying tax credits, as determined by the
Zions Bancorporation Tax Department;

 

  c)   plus, pre-tax equivalent income arising from any allocation of interest
rate swap income which is not reflected on the Bank’s Call Report, but which is
included in the Bank’s operating segment income on the Company’s Form 10-K for
any year during the Award Period;

 

  [Note:   item d as follows is not included in the Zions First National Bank
(Core Bank plan)]

 

  d)   minus, any gain or loss from investment in Wasatch Venture Funds;

 

  e)   minus (or plus), any adjustment required to bring the Bank’s Allowance
for Loan and Lease Losses (“ALLL”) to a level which is not less than the
mid-point of the acceptable range as established by the Company’s Credit
Examination Department. (In the event that the Credit Examination Department
determines that the ALLL should be at a level greater than the midpoint of the
low-high range, then this adjustment shall be the amount which is required to
bring the actual ALLL to the required level);

 

  f)   minus, the amount by which the Bank’s ALLL at the inception of the Plan
exceeds the mid-point of the low-high range established by the Credit
Examination Department at that point in time (as indicated in the Appendix).

 

  g)   plus (or minus), any adjustment deemed necessary by the Committee to
normalize Qualifying Earnings as a result of changes in internal cost or income
allocations, relative to the Base Period of 2002 (“Base Period”), arising from a
change in allocations procedures which produce a change in costs (or income)
which cannot be offset by a corresponding change in cost or income within the
Bank.

 

  3)   Marginal ROE is defined as:

 

  a)   The cumulative GAAP net income after tax for the three-year Award Period,
less, three times the adjusted net income after tax for the base period of 2002
(“Base Period”) as indicated in the Appendix;

 

         Divided by,

 

         The sum of the average shareholders’ equity in each of the three years
of the Award Period, less, three times the average shareholders’ equity in the
Base Period.

 

  b)  

An adjustment shall be made to neutralize the effect on Marginal ROE of any
dividends or additions to capital which have the effect of

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artificially altering the ratio of average shareholders’ equity to average
assets during the Award Period from the ratio in effect during the Base Period.

 

  4)   Other Adjustments

 

  a)   In the event the Bank engages in one or more acquisitions during the
Award Period, the Committee may make such adjustments to Qualifying Earnings
and/or Marginal ROE as are required to neutralize, to the extent possible, the
effects of any such acquisition on the Award Fund. Such adjustments shall be
made at the Committee’s sole discretion, but shall generally be based upon the
pro-forma financial projections presented to the Board in justification of the
acquisition.

 

  b)   Any Award Fund established under this Plan must be fully accrued and
reflected in Qualifying Earnings.

 

  c)   Unusual or “one-time” gains or losses may be subtracted from or added to
Qualifying Earnings at the sole discretion of the Committee.

 

D)   Other Administrative Provisions

 

  (1)   This is a discretionary Plan governed and interpreted by the Committee,
whose decisions shall be final. The intent of the Plan is to fairly reward
Participants for increasing shareholder value. If any adjustments need to be
made to allow this Plan to accomplish its purpose, the Committee in its sole
discretion can make those adjustments.

 

  (2)   The Board may, at its sole discretion, alter the terms of the Plan at
any time during an Award Period.

 

  (3)   Participants will not vest in any benefits available under the Plan
until the conclusion of the Award Period.

 

  (4)   Participants must be employed by the Company or one of its subsidiaries
at the time payment is made. 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 or any of its
subsidiaries), Participant (or his/her estate) shall be eligible to receive a
pro-rata incentive payment at the conclusion of the Award Period. This award
will be based upon the Participant’s calculated award as approved by the Board
or Committee for the performance achieved for 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.

 

If a Participant elects early retirement and becomes employed by a competitor,
no payment will be made.

 

  (5)  

Each Participant will be required to defer for one year any incentive payment
amount in excess of 100% of his/her base salary (except that, in

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the event the deferred amount is less than $10,000, the entire amount shall be
immediately payable within ninety days of the end of the Award Period). Payment
of the deferred amount will be paid by March 15, 2007, if conditions established
in paragraph D) 4 above are met.

 

  (6)   The Company shall retain the right to withhold payment of incentives to
Participants in the event of a significant deterioration in the Bank’s or 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.

 

  (7)   Designation as a Participant in the Plan does not create a contract of
employment for any specified time, nor shall such act to alter or amend the
Company’s “at-will” policy of employment.

 

  (8)   In the event a Participant transfers within Zions Bancorporation during
the Award Period, he/she will be eligible to receive a pro-rata award from each
participating Zions entity based on the number of months in each entity and each
entity’s financial performance.

 

  (9)   Units that are forfeited after a Participant is no longer eligible to
participate in the Plan will not be transferable without the express approval of
the Committee.

 

  (10)   In the event of a change in control of the Company (as defined in the
Company’s Change in Control Plan), the Plan will be terminated and payments
shall be made in accordance with the provisions of section 3 (b) of the Change
in Control Plan.

 

  (11)   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.

 

  [Note:   Item 12 as follows is part of the Zions First National Bank (Core
Bank) Plan only]

 

  (12)   Zions First National Bank (Core Bank) shall be defined to mean Zions
First National Bank and its subsidiaries, excluding:

 

  (a)   Division D121 (ZFNB Investment Non Bank);

 

  (i)   Except that, cost centers 213 (ZFNB Investment ZIS) and 532 (ZFNB
Investment—Wasatch Venture) shall be included;

 

  (b)   Cost center 324 (ZFNB Corporate Funds Transfer Pricing)

 

  (c)   Cost center 1345 (ZISI Corporate Trading)

 

  (d)   Company 107 (Digital Signature Trust Co.—Inactive)

 

  (e)   Company 122 (Kelling Northcross)

 

  (f)   Company 129 (Enterprise Vault)

 

  (g)   Company 136 (Zions Investment Management, Inc.)

 

  (h)   Company 139 (Wasatch Venture Capital)

 

  (i)   Company 148 (ZFNB SBIC LLC)

 

  (j)   Company 154 (DST Holding Inc)

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  (k)   Tax adjustments and minority interests pertaining to DST, Enterprise
Vault and Wasatch I.

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CALIFORNIA BANK & TRUST

 

APPENDIX

 

  •   Qualifying Earnings shall equal the cumulative pre-tax income of
California Bank & Trust for the period January 1, 2003 through December 31,
2005, (as adjusted in accordance with sections C and D of the Plan)

 

  •   The minimum total Qualifying Earnings of California Bank & Trust which
must be achieved for payment of awards under this Plan is $648,897,000, which
represents 5% annual compounded growth in adjusted pre-tax income over the
course of the Award Period. (Adjusted Base Period pre-tax income is
$196,034,000.)

 

  •   An Award Fund shall be established, equal to 5.52% of the Qualifying
Earnings in excess of $588,102,000.

 

  •   The minimum Marginal ROE of California Bank & Trust that must be achieved
for payment of awards under this Plan is 11.00%.

 

  •   The Award Fund shall be increased by a multiplier, based upon the
achievement of Marginal ROE during the Award Period as follows:

 

If the Marginal ROE is:

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Then the multiplier is:

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11.00% or less

  

– 0 –

14.00%

  

1.00

17.00%

  

1.50

20.00%

  

2.00

21.50% or greater

  

2.25

 

The multiplier will be interpolated for Marginal ROE levels falling between
these benchmarks.

 

  •   The maximum Award Fund that may be created under this Plan is $33,292,000.

 

  •   The value of each Unit shall be equal to the total amount in the Award
Fund, divided by 7,800,000.

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Example:  

 

If a Participant in the California Bank & Trust 2003 – 2005 Value Sharing Plan
is awarded 60,000 units, and the total Qualifying Earnings over the course of
the three-year Award Period amount to $783,000,000 and the Marginal ROE over the
course of the Award Period is 17.5%, the amount of the incentive award would be:

 

Unadjusted Award Fund:

 

$783,000,000

–588,102,000

  194,898,000

        X 5.52%

$  10,758,370

 

Multiplier:

 

1.5 + (.175 – .17) X (2.0 – 1.5) = 1.5833

                    (.20 – .17)

 

Total Award Fund:

 

$10,758,370 X 1.5833 = $17,033,727

 

Individual Unit Value:

 

$17,033,727 / 7,800,000 = $2.1838

 

Total Value of Units:

 

60,000 X $2.1838 = $131,028.00

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COMMERCE BANK OF WASHINGTON

APPENDIX

 

  •   Qualifying Earnings shall equal the cumulative pre-tax income of Commerce
Bank of Washington for the period January 1, 2003 through December 31, 2005, (as
adjusted in accordance with sections C and D of the Plan)

 

  •   The minimum total Qualifying Earnings of Commerce Bank of Washington which
must be achieved for payment of awards under this Plan is $50,377,000, which
represents 5% annual compounded growth in adjusted pre-tax income over the
course of the Award Period. (Adjusted Base Period pre-tax income is
$15,219,000.)

 

  •   An Award Fund shall be established, equal to 4.80% of the Qualifying
Earnings in excess of $45,657,000.

 

  •   The minimum Marginal ROE of Commerce Bank of Washington that must be
achieved for payment of awards under this Plan is 11.00%.

 

  •   The Award Fund shall be increased by a multiplier, based upon the
achievement of Marginal ROE during the Award Period as follows:

 

If the Marginal ROE is:

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Then the multiplier is:

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11.00% or less

  

– 0 –

14.00%

  

1.00

17.00%

  

1.50

20.00%

  

2.00

21.50% or greater

  

2.25

 

The multiplier will be interpolated for Marginal ROE levels falling between
these benchmarks.

 

  •   The maximum Award Fund that may be created under this Plan is $2,246,000.

 

  •   The value of each Unit shall be equal to the total amount in the Award
Fund, divided by 530,000.

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Example:  

 

If a Participant in the Commerce Bank of Washington 2003 – 2005 Value Sharing
Plan is awarded 60,000 units, and the total Qualifying Earnings over the course
of the three-year Award Period amount to $61,000,000 and the Marginal ROE over
the course of the Award Period is 17.5%, the amount of the incentive award would
be:

 

Unadjusted Award Fund:

 

$61,000,000

–45,657,000

  15,343,000

        X 4.80%

$    736,464

 

Multiplier:

 

1.5 + (.175–.17) X (2.0 – 1.5) = 1.5833

                    (.20 –.17)

 

Total Award Fund:

 

$ 736,464 X 1.5833 = $1,166,043

 

Individual Unit Value:

 

$1,166,043 / 530,000 = $2.2001

 

Total Value of Units:

 

60,000 X $2.2001 = $132,006.00

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NATIONAL BANK OF ARIZONA

 

APPENDIX

 

  •   Qualifying Earnings shall equal the cumulative pre-tax income of National
Bank of Arizona for the period January 1, 2003 through December 31, 2005, (as
adjusted in accordance with sections C and D of the Plan)

 

  •   The minimum total Qualifying Earnings of National Bank of Arizona which
must be achieved for payment of awards under this Plan is $194,199,000, which
represents 5% annual compounded growth in adjusted pre-tax income over the
course of the Award Period. (Adjusted Base Period pre-tax income is
$58,668,000.)

 

  •   An Award Fund shall be established, equal to 6.04% of the Qualifying
Earnings in excess of $176,004,000.

 

  •   The minimum Marginal ROE of National Bank of Arizona that must be achieved
for payment of awards under this Plan is 11.00%.

 

  •   The Award Fund shall be increased by a multiplier, based upon the
achievement of Marginal ROE during the Award Period as follows:

 

If the Marginal ROE is:

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Then the multiplier is:

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11.00% or less

  

– 0 –

14.00%

  

1.00

17.00%

  

1.50

20.00%

  

2.00

21.50% or greater

  

2.25

 

The multiplier will be interpolated for Marginal ROE levels falling between
these benchmarks.

 

  •   The maximum Award Fund that may be created under this Plan is $10,907,000.

 

  •   The value of each Unit shall be equal to the total amount in the Award
Fund, divided by 2,560,000.

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Example:

 

If a Participant in the National Bank of Arizona 2003 – 2005 Value Sharing Plan
is awarded 60,000 units, and the total Qualifying Earnings over the course of
the three-year Award Period amount to $234,000,000 and the Marginal ROE over the
course of the Award Period is 17.5%, the amount of the incentive award would be:

 

            Unadjusted Award Fund:

            $    234,000,000

              –  176,004,000

                    57,996,000

                         X 6.04%

                $    3,502,958

            Multiplier:

            1.5 + (.175 – .17) X (2.0 – 1.5) = 1.5833

                                    (.20   –.17)

            Total Award Fund:

            $ 3,502,958 X 1.5833 = $5,546,233

            Individual Unit Value:

            $5,546,233 / 2,560,000 = $2.1665

            Total Value of Units:

            60,000 X $2.1665 = $129,990.00

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NEVADA STATE BANK

 

APPENDIX

 

  •   Qualifying Earnings shall equal the cumulative pre-tax income of Nevada
State Bank for the period January 1, 2003 through December 31, 2005, (as
adjusted in accordance with sections C and D of the Plan)

 

  •   The minimum total Qualifying Earnings of Nevada State Bank which must be
achieved for payment of awards under this Plan is $198,663,000, which represents
5% annual compounded growth in adjusted pre-tax income over the course of the
Award Period. (Adjusted Base Period pre-tax income is $60,083,000.)

 

  •   An Award Fund shall be established, equal to 4.17% of the Qualifying
Earnings in excess of $180,249,000.

 

  •   The minimum Marginal ROE of Nevada State Bank that must be achieved for
payment of awards under this Plan is 11.00%.

 

  •   The Award Fund shall be increased by a multiplier, based upon the
achievement of Marginal ROE during the Award Period as follows:

 

If the Marginal ROE is:

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Then the multiplier is:

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11.00% or less

  

–0–

14.00%

  

1.00

17.00%

  

1.50

20.00%

  

2.00

21.50% or greater

  

2.25

 

The multiplier will be interpolated for Marginal ROE levels falling between
these benchmarks.

 

  •   The maximum Award Fund that may be created under this Plan is $7,616,000.

 

  •   The value of each Unit shall be equal to the total amount in the Award
Fund, divided by 1,800,000.

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Example:

 

If a Participant in the Nevada State Bank 2003 – 2005 Value Sharing Plan is
awarded 60,000 units, and the total Qualifying Earnings over the course of the
three-year Award Period amount to $240,000,000 and the Marginal ROE over the
course of the Award Period is 17.5%, the amount of the incentive award would be:

 

            Unadjusted Award Fund:

            $    240,000,000

            –  180,249,000

                    59,751,000

                        X 4.17%

             $      2,491,617

            Multiplier:

            1.5 + (.175 – .17) X (2.0 – 1.5) = 1.5833

                                  (.20 – .17)

            Total Award Fund:

            $ 2,491,617 X 1.5833 = $3,944,977

            Individual Unit Value:

            $3,944,977 / 1,800,000 = $2.1917

            Total Value of Units:

            60,000 X $2.1917 = $131,502.00

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VECTRA BANK COLORADO

 

APPENDIX

 

  •   Qualifying Earnings shall equal the cumulative pre-tax income of Vectra
Bank Colorado for the period January 1, 2003 through December 31, 2005, (as
adjusted in accordance with sections C and D of the Plan)

 

  •   The minimum total Qualifying Earnings of Vectra Bank Colorado which must
be achieved for payment of awards under this Plan is $101,975,000, which
represents 5% annual compounded growth in adjusted pre-tax income over the
course of the Award Period. (Adjusted Base Period pre-tax income is
$30,807,000.)

 

  •   An Award Fund shall be established, equal to 7.58% of the Qualifying
Earnings in excess of $92,421,000.

 

  •   The minimum Marginal ROE of Vectra Bank Colorado that must be achieved for
payment of awards under this Plan is 11.00%.

 

  •   The Award Fund shall be increased by a multiplier, based upon the
achievement of Marginal ROE during the Award Period as follows:

 

If the Marginal ROE is:

--------------------------------------------------------------------------------

    

Then the multiplier is:

--------------------------------------------------------------------------------

11.00% or less

    

-0-

14.00%

    

1.00

17.00%

    

1.50

20.00%

    

2.00

21.50% or greater

    

2.25

 

The multiplier will be interpolated for Marginal ROE levels falling between
these benchmarks.

 

  •   The maximum Award Fund that may be created under this Plan is $7,185,000.

 

  •   The value of each Unit shall be equal to the total amount in the Award
Fund, divided by 1,690,000.

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Example:

 

If a Participant in the Vectra Bank Colorado 2003 – 2005 Value Sharing Plan is
awarded 60,000 units, and the total Qualifying Earnings over the course of the
three-year Award Period amount to $123,000,000 and the Marginal ROE over the
course of the Award Period is 17.5%, the amount of the incentive award would be:

 

            Unadjusted Award Fund:

            $  123,000,000

            –  92,421,000

                  30,579,000

                      X 7.58%

            $     2,317,888

            Multiplier:

            1.5 + (.175 – .17) X (2.0 – 1.5) = 1.5833

                                  (.20 – .17)

            Total Award Fund:

            $ 2,317,888 X 1.5833 = $3,669,912

            Individual Unit Value:

            $3,669,912 / 1,690,000 = $2.1715

            Total Value of Units:

            60,000 X $2.1715 = $130,290.00

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ZIONS FIRST NATIONAL BANK (CORE BANK)

 

APPENDIX

 

  •   Qualifying Earnings shall equal the cumulative pre-tax income of Zions
First National Bank (Core Bank) for the period January 1, 2003 through December
31, 2005, (as adjusted in accordance with sections C and D of the Plan)

 

  •   The minimum total Qualifying Earnings of Zions First National Bank (Core
Bank) which must be achieved for payment of awards under this Plan is
$626,702,000, which represents 5% annual compounded growth in adjusted pre-tax
income over the course of the Award Period. (Adjusted Base Period pre-tax income
is $189,329,000.)

 

  •   An Award Fund shall be established, equal to 5.28% of the Qualifying
Earnings in excess of $567,987,000.

 

  •   The minimum Marginal ROE of Zions First National Bank (Core Bank) that
must be achieved for payment of awards under this Plan is 11.00%.

 

  •   The Award Fund shall be increased by a multiplier, based upon the
achievement of Marginal ROE during the Award Period as follows:

 

If the Marginal ROE is:

--------------------------------------------------------------------------------

  

Then the multiplier is:

--------------------------------------------------------------------------------

11.00% or less

  

–0–

14.00%

  

1.00

17.00%

  

1.50

20.00%

  

2.00

21.50% or greater

  

2.25

 

The multiplier will be interpolated for Marginal ROE levels falling between
these benchmarks.

 

  •   The maximum Award Fund that may be created under this Plan is $30,785,000.

 

  •   The value of each Unit shall be equal to the total amount in the Award
Fund, divided by 7,200,000

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Example:

 

If a Participant in the Zions First National Bank (Core Bank) 2003 – 2005 Value
Sharing Plan is awarded 60,000 units, and the total Qualifying Earnings over the
course of the three-year Award Period amount to $756,000,000 and the Marginal
ROE over the course of the Award Period is 17.5%, the amount of the incentive
award would be:

 

 

            Unadjusted Award Fund:

            $    756,000,000

            –    567,987,000

                  188,013,000

                        X 5.28%

                $    9,927,086

            Multiplier:

            1.5 + (.175–.17) X (2.0 – 1.5) = 1.5833

                                   (.20–.17)

            Total Award Fund:

            $ 9,927,086 X 1.5833 = $15,717,555

            Individual Unit Value:

            $15,671,100 / 7,200,000 = $2.1830

            Total Value of Units:

            60,000 X $2.1830 = $130,980.00