<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Compass Bancshares, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[COMPASS BANCSHARES LOGO APPEARS HERE]
To the Shareholders of
Compass Bancshares, Inc.
March 30, 1999
In connection with the annual meeting of shareholders of Compass Bancshares,
Inc., to be held on April 26, 1999, we enclose a Notice of Meeting and Proxy
Statement containing information concerning those matters which are to be
considered at the meeting.
Detailed information concerning the Corporation's activities and operations
during 1998 is contained in our annual report, which is also enclosed.
You are cordially invited to attend the annual meeting in person. Please
sign and return the form of proxy in the enclosed postage-prepaid envelope so
that your shares can be voted in the event you are unable to attend the
meeting. You may, of course, vote in person at the meeting, whether or not you
submitted a proxy.
Sincerely yours,
/s/ D. Paul Jones, Jr.
D. Paul Jones, Jr.
Chairman and Chief Executive Officer
Please complete, date, sign and mail promptly the accompanying proxy in the
return envelope furnished for that purpose, whether or not you plan to attend
the meeting.
<PAGE>
COMPASS BANCSHARES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on
April 26, 1999
----------------
The annual meeting of the shareholders of Compass Bancshares, Inc., will be
held at the Corporate Headquarters Building, 15 South 20th Street, Birmingham,
Alabama, on Monday, April 26, 1999, at 10:00 a.m., for the following purposes:
1. To elect two (2) directors, each to serve for a term of three (3) years
or until their successors are elected and qualified.
2. To approve the Compass Bancshares, Inc. 1999 Omnibus Incentive
Compensation Plan.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Shareholders of record at the close of business on March 18, 1999, are
entitled to notice of and to vote at the meeting.
Shareholders who do not expect to attend the meeting are requested to sign
the enclosed proxy and return it immediately in the enclosed envelope in order
that their shares may be represented at the meeting.
By Order of the Board of Directors
/s/ Jerry W. Powell
Jerry W. Powell
General Counsel and Secretary
Birmingham, Alabama
March 30, 1999
<PAGE>
COMPASS BANCSHARES, INC.
Proxy Statement for Annual Meeting of
Shareholders to be Held on April 26, 1999
----------------
INTRODUCTION
This Proxy Statement is furnished to shareholders of Compass Bancshares,
Inc., a Delaware corporation (the "Corporation"), in connection with the
solicitation of proxies by the Board of Directors of the Corporation for use
at the annual meeting of shareholders to be held on April 26, 1999, and at any
adjournments thereof, for the purpose of (i) electing two (2) directors of the
Corporation, (ii) approving the Compass Bancshares, Inc. 1999 Omnibus
Incentive Compensation Plan (the "1999 Plan") and (iii) transacting such other
business as may properly come before the meeting. The executive offices of the
Corporation are located at 15 South 20th Street, Birmingham, Alabama 35233.
This Proxy Statement and the accompanying form of proxy, together with a copy
of the Corporation's annual report for 1998, were mailed to shareholders of
the Corporation on or about March 30, 1999.
Shareholders Entitled to Vote
Each holder of record of the Corporation's common stock as of the close of
business on March 18, 1999, will be entitled to vote at the shareholders'
meeting and at any adjournments thereof. Each shareholder will be entitled to
one vote on each proposal for each share of common stock of the Corporation
held as of such date. At the close of business on March 18, 1999, there were
75,634,959 shares of the Corporation's common stock issued and outstanding.
Notwithstanding the record date specified above, the stock transfer books of
the Corporation will not be closed and stock may be transferred subsequent to
the record date, although all votes must be cast in the names of the
shareholders of record as of the record date.
Vote Required
At the meeting, a majority of the shares entitled to vote, represented in
person or by proxy, shall constitute a quorum for the transaction of business.
Assuming the presence of a quorum, directors shall be elected at the meeting
by a plurality of the votes cast, whether in person or by proxy. The
affirmative vote of a majority of the outstanding shares of the Corporation's
common stock represented at the meeting in person or by proxy and entitled to
vote is required for the approval of the 1999 Plan.
A shareholder may abstain or withhold his vote (collectively, "abstentions")
with respect to each item submitted for shareholder approval. Abstentions will
be counted as present for purposes of determining the existence of a quorum
but will be counted as not voting in favor of the relevant proposal. Since the
election of directors is determined by the votes cast at the meeting,
abstentions will not affect such election. However, since the proposed
approval of the 1999 Plan will require the affirmative vote of at least a
majority of the shares represented at the meeting and entitled to vote,
abstentions will have the effect of a vote against the proposal.
1
<PAGE>
Generally, a broker is entitled to vote shares held in "street name" on
routine matters without instructions from the beneficial owner. On the other
hand, a broker may not be entitled to vote shares held in "street name" on
certain non-routine items absent customer instructions. If a broker votes
shares held in "street name" on some but not all of the proposals submitted
for shareholder approval, the shares so voted will be counted as present for
purposes of determining the existence of a quorum, but they will not be
treated as shares entitled to vote at the meeting on those matters as to which
authority to vote is withheld by the broker (a "broker nonvote"). Generally,
there can be no "broker nonvotes" in the election of directors, because the
election of directors is a matter for which a broker may exercise its
discretion. Since the proposed approval of the 1999 Plan will require the
affirmative vote of at least a majority of the shares represented at the
meeting and entitled to vote, broker nonvotes, if any, will not affect such
proposal.
Proxies
If the enclosed form of proxy is executed and returned, it may nevertheless
be revoked at any time before it has been exercised, but if it is not revoked,
the shares represented thereby will be voted by the persons designated in such
proxy. Shares represented by the proxies received will be voted in accordance
with the instructions therein. In the absence of instructions, proxies will be
voted FOR the election as directors of the nominees for directors named herein
and FOR the proposed approval of the 1999 Plan.
HOLDINGS OF VOTING SECURITIES
The following table contains information concerning the only person known to
the Corporation to be the beneficial owner of more than 5% of the
Corporation's outstanding common shares as of December 31, 1998:
<TABLE>
<CAPTION>
Name and Address Number of Shares Owned Percent of Class
- ---------------- ---------------------- ----------------
<S> <C> <C>
Compass Bancshares, Inc.
Employee Stock Ownership
Plan (the "ESOP") 3,889,132 5.1%
c/o Compass Bank
Asset Management Division
P. O. Box 10566
Birmingham, Alabama 35296
</TABLE>
2
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors has nominated the two (2) persons named below for
election as Class II directors, each to hold office for a term of three (3)
years or until their successors shall have been elected and qualified. It is
intended that the persons named in the proxy will vote for the election of
these persons. The Board of Directors believes that the nominees will be
available and able to serve as directors, but if for any reason any of these
persons should not be available or able to serve, the persons named in the
proxy may exercise discretionary authority to vote for substitutes proposed by
the Board of Directors of the Corporation.
The Board of Directors recommends a vote FOR the election of each of the
nominees.
Certain information about the nominees, directors with unexpired terms, and
executive officers who are not also directors or nominees is set forth in the
following table. D. Paul Jones, Jr., Chairman of the Board of Directors, Chief
Executive Officer, and President of the Corporation is also a director of
Compass Bank, the Corporation's lead bank subsidiary headquartered in
Birmingham, Alabama (sometimes referred to herein as "Compass Bank").
Executive officers who are not also directors of the Corporation serve at the
discretion of the Board of Directors.
Common Stock Ownership of Directors and Executive Officers
<TABLE>
<CAPTION>
Director or Shares Principal Occupation
Executive Officer Beneficially Since January 1,
of Corporation Owned at Percent of 1994 and Other
Name Since 12/31/98 (1) Class (1) Information
---- ----------------- ------------ ---------- -----------------------
<C> <C> <C> <C> <S>
Directors nominated for election to serve until annual meeting in 2001 (Class II)
Tranum Fitzpatrick....... 1989 226,533(2) * Chairman of Guilford
Partners, Inc. and
President of Guilford
Capital Corporation
and Empire Rouse, Inc.
(real estate
investment and
development). Age 60.
John S. Stein............ 1989 78,277 * Chairman and Chief
Executive Officer of
Golden Enterprises,
Inc. (snack food
distribution and
sales). Director of
Golden Enterprises,
Inc. Age 61.
Directors elected to serve until annual meeting in 2000 (Class III)
William Eugene Davenport. 1993 39,721 * President and Chief
Operating Officer,
Russell Lands, Inc.
(resort land
development,
residential
construction and
building supply
stores). Age 58.
Marshall Durbin, Jr...... 1971 751,548(3) 1.0 President of Marshall
Durbin & Company, Inc.
(poultry processing).
Age 67.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Director or Shares Principal Occupation
Executive Officer Beneficially Since January 1,
of Corporation Owned at Percent of 1994 and Other
Name Since 12/31/98 (1) Class (1) Information
---- ----------------- ------------ ---------- ------------------------
<C> <C> <C> <C> <S>
Robert J. Wright........... 1996 248,105(4) * President, Medical
Cities, Inc.
(development and
management of health
care facilities). Age
71.
Directors elected to serve until annual meeting in 2001 (Class I)
Charles W. Daniel.......... 1982 313,001(5) * President, Dantract,
Inc. (real estate
investments). Age 58.
D.Paul Jones, Jr........... 1978 723,039(6) 1.0 Chairman of the Board,
Chief Executive Officer
and President of the
Corporation and Compass
Bank. Director of
Golden Enterprises,
Inc. Age 56.
Carl J. Gessler, Jr., M.D.. 1998 28,027(7) * Physician. Age 43.
Executive Officers Who Are Not Also Directors or Nominees for
Director
Garrett R. Hegel........... 1990 83,867(8) * Chief Financial Officer
of the Corporation and
Compass Bank and
Director of Compass
Bank since February
1999. Age 48.
Charles E. McMahen......... 1990 133,852(9) * Vice Chairman of Compass
Bank since February
1999 and previously
Chairman and Chief
Executive Officer of
Compass Banks of Texas,
Inc. Age 59.
Jerry W. Powell............ 1981 95,377(10) * General Counsel and
Secretary of the
Corporation and Compass
Bank. Age 49.
G.Ray Stone................ 1996 256,704(11) * Senior Executive Vice
President and Chief
Credit Policy Officer
of the Corporation and
Director of Compass
Bank since February
1999. Age 55.
Directors, nominees and 2,978,051 3.9
executive officers as a
group (12 persons)........
</TABLE>
- --------
* Less than 1%
4
<PAGE>
(1) A person is deemed to beneficially own securities which he or she has a
right to acquire within sixty (60) days (i.e., through the exercise of
options, warrants, rights or conversion privileges). Any securities which
are not outstanding but deemed to be beneficially owned by a person are
considered outstanding for the purpose of computing such person's
percentage ownership, but are not considered outstanding when computing
any other person's percentage ownership.
(2) Includes 19,200 shares owned directly by Mr. Fitzpatrick's spouse and
85,605 shares owned by Empire Rouse, Inc., of which Mr. Fitzpatrick is
President, the beneficial ownership of which is disclaimed.
(3) Includes 555,589 shares owned by Marshall Durbin Food Corporation, of
which Mr. Durbin is Chairman of the Board and President.
(4) Includes 57,765 shares owned jointly by Mr. Wright and his spouse.
(5) Includes 25,475 shares held by Mr. Daniel's wife and sons, the beneficial
ownership of which is disclaimed. Does not include 1,440,072 shares owned
by The Daniel Foundation of Alabama, a charitable foundation for which
Mr. Daniel serves as a director.
(6) Includes 29,073 shares subject to options exercisable within 60 days and
26,315 shares allocated to Mr. Jones' ESOP/401(k) account.
(7) Includes 14,463 shares held by Dr. Gessler's wife and children.
(8) Includes 30,226 shares subject to options exercisable within 60 days,
5,510 shares allocated to Mr. Hegel's ESOP/ 401(k) account and 150 shares
owned directly by his child.
(9) Includes 5,652 shares subject to options exercisable within 60 days and
5,404 shares allocated to Mr. McMahen's ESOP/401(k) account.
(10) Includes 20,815 shares subject to options exercisable within 60 days and
21,955 shares allocated to Mr. Powell's ESOP/401(k) account.
(11) Includes 22,817 shares subject to options and 38,813 shares allocated to
Mr. Stone's ESOP/401(k) account.
Remuneration of Directors
The Corporation pays non-employee directors a monthly retainer of $1,200 and
a fee of $1,665 for each board meeting attended. In addition, members of the
Corporation's audit committee receive $600 for each audit committee meeting
attended. Chairmen of all committees of the Boards of Directors of the
Corporation and Compass Bank receive a monthly retainer of $100 per month.
Meetings of the Board of Directors and Committees
In 1998 the Board of Directors held four regular quarterly meetings and no
special meetings. All incumbent directors of the Corporation attended 75% or
more of the meetings of the Board and the committees on which they served,
except for Charles W. Daniel, who attended two of the four quarterly board
meetings.
Committees of the Board of Directors
Messrs. Jones, Chairman, Daniel and Durbin constitute the standing Executive
Committee of the Board of Directors, which has the full authority of the Board
of Directors to act on all matters between regularly scheduled
5
<PAGE>
Board meetings, except as to certain matters of an extraordinary nature. The
results of each Executive Committee meeting are reported to the full Board at
the next regularly scheduled Board meeting. The Executive Committee did not
meet in 1998.
Messrs. Stein, Chairman, Daniel, Davenport, Fitzpatrick and Gessler
constitute the standing Audit Committee of the Board of Directors. This
committee, which met six times during 1998, meets with the Corporation's
internal auditors and periodically with its independent auditors. The
committee's functions include formulating recommendations with respect to
engaging and discharging the independent auditors and considering the fees
paid to, services performed by and the independence of such auditors. This
committee reviews with the internal and independent auditors the plan for and
results of the audit of the Corporation, the adequacy of procedures for
internal auditing and the adequacy of the system of internal control. The
Audit Committee also reviews with the internal auditors and management the
results of examinations of the Corporation's subsidiary banks by the various
regulatory authorities.
Messrs. Durbin, Chairman, Daniel and Fitzpatrick constitute the standing
Compensation Committee of the Board of Directors. These members are non-
employee directors and are ineligible to participate in any of the plans or
programs administered by the Compensation Committee. The primary function of
the committee is to review and approve senior officers' compensation and to
administer the Corporation's incentive plans. The committee met three times
during 1998.
Messrs. Durbin, Chairman, Davenport, Stein and Wright constitute the
standing Credit Committee of the Board of Directors. This committee has
general supervision over the credit policies of the Corporation and its
subsidiaries, establishes the appropriate credit policies for the Corporation
and its subsidiaries, and provides appropriate instruction to the officers of
the Corporation regarding credit policies and procedures. The committee met
six times during 1998.
The Board of Directors has no standing nominating committee.
Section 16 Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that executive
officers and directors of the Corporation file reports of stock ownership and
changes in ownership with the Securities and Exchange Commission (the "SEC")
on Forms 3 (initial statement of ownership), 4 (monthly reports), and 5
(annual reports). Based solely upon a review of copies of such reports or
representations that no annual reports on Form 5 for the 1998 fiscal year were
required to be filed by officers or directors, the Corporation believes that
Section 16(a) filing requirements applicable to its officers and directors
were complied with during fiscal year 1998, except that director Charles W.
Daniel did not file timely two Forms 4 to report two transactions that
occurred on July 29 and August 3, 1998; director Jack C. Demetree did not file
timely one Form 4 to report one transaction that occurred on August 12, 1998;
and director Carl J. Gessler, Jr., M.D. did not file timely one Form 4 to
report three transactions that occurred in April 1998. Forms 4 were filed by
each of Messrs. Daniel and Demetree and Dr. Gessler on October 13, November 10
and June 10, 1998, respectively, to report their transactions that had not
been reported timely previously.
6
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The Corporation's 1998 compensation program for executive officers consisted
principally of salaries, cash bonuses and compensation pursuant to certain
plans which are described below.
Summary Compensation Information
The following table sets forth certain information regarding compensation
paid by the Corporation and its subsidiaries during the fiscal years 1996,
1997, and 1998 for services rendered to the Corporation and its subsidiaries
during such years by the Corporation's chief executive officer and the
Corporation's four most highly compensated executive officers other than the
chief executive officer who were serving in such capacities at the end of
1998:
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------
Annual Compensation Awards
----------------------- -------------------------
Restricted Securities All Other
Name and Stock Underlying Compensation
Principal Position Year Salary ($) Bonus ($)(1) Awards ($)(2) Options (#) ($)(3)
------------------ ---- ---------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
D. Paul Jones, Jr....... 1998 699,985 492,090 514,317 52,744 57,853(4)
Chairman and Chief
Executive Officer 1997 589,994 404,441 978,551 -0- 50,203(4)
of the Corporation and
Compass Bank 1996 540,000 337,500 352,458 -0- 25,418(4)
Garrett R. Hegel ....... 1998 252,487 124,247 104,083 10,674 9,479(5)
Chief Financial Officer
of the 1997 235,000 112,765 233,396 -0- 11,569(5)
Corporation and Compass
Bank 1996 214,167 93,698 130,113 -0- 8,360(5)
Charles E. McMahen,..... 1998 413,954 274,632 220,409 22,605 28,409(7)
Vice Chairman of 1997 360,000 103,644 436,815 -0- 30,710(7)
Compass Bank (6) 1996 337,322 147,578 219,051 -0- 16,841(7)
Jerry W. Powell, ....... 1998 165,000 57,996 67,356 6,907 13,472(8)
General Counsel and
Secretary of the 1997 157,000 53,812 122,037 -0- 14,024(8)
Corporation and Compass
Bank 1996 157,000 49,063 95,526 -0- 13,929(8)
G. Ray Stone ........... 1998 236,666 137,357 95,922 9,837 17,872(9)
Senior Executive Vice
President and 1997 225,000 129,195 199,136 -0- 18,194(9)
Chief Credit Policy 1996 189,167 98,130 111,996 -0- 13,956(9)
</TABLE>
Officer of the Corporation and Compass Bank
- --------
(1) The bonus amounts shown in this column were paid based on performance
rendered during the years indicated, but the bonuses were paid during the
fiscal years immediately following the years indicated.
(2) All of the restricted stock awards granted in 1998 to the executive
officers named above will vest on January 26, 2003. The restricted shares
are eligible for accelerated vesting if certain performance goals are met.
Dividends will be paid on the restricted stock prior to vesting. The value
of the restricted stock awards
7
<PAGE>
shown above reflects the number of shares awarded during the year indicated
multiplied by the closing market price of the Corporation's unrestricted
common stock on the date of the award. The following table shows the
aggregate number and value of all shares of restricted stock held by the
persons identified in the table above as of December 31, 1998:
<TABLE>
<CAPTION>
Number Market
of Value on
Shares 12/31/98
------ ----------
<S> <C> <C>
D. Paul Jones, Jr....................................... 44,201 $1,682,423
Garrett R. Hegel........................................ 11,377 433,043
Charles E. McMahen...................................... 21,208 807,240
G. Ray Stone............................................ 9,896 376,671
Jerry W. Powell......................................... 6,995 266,251
</TABLE>
(3) The amounts shown in this column include (i) annual contributions by the
Corporation to the ESOP/401(k) accounts of persons named in the table,
(ii) 30% matching contributions by the Corporation with respect to
employee contributions for purchases of Corporation common stock under the
Corporation's Monthly Investment Plan ("MIP"), and (iii) any matching
contributions by the Corporation to the accounts of persons named in the
table maintained under the ESOP Benefit Restoration Plan ("Restoration
Plan"). The ESOP/401(k) plan and the MIP are generally available to
employees of the Corporation and its subsidiaries. The Restoration Plan is
available to select persons whose annual compensation exceeds the $160,000
statutory cap on income which may be considered under the ESOP under
present IRS regulations.
(4) Includes contributions by the Corporation under the ESOP/401(k) of $8,522,
$9,494, and $9,218 in 1998, 1997 and 1996, respectively, matching
contributions made by the Corporation under the MIP of $20,998, $17,700
and $16,200 for 1998, 1997 and 1996, respectively, and matching
contributions under the Restoration Plan of $28,333 and $23,009 in 1998
and 1997, respectively.
(5) Includes contributions by the Corporation under the ESOP/401(k) of $6,922,
$9,494 and $7,718 in 1998, 1997 and 1996, respectively, matching
contributions made by the Corporation under the MIP of $757, $705 and $642
for 1998, 1997 and 1996, respectively, and matching contributions under
the Restoration Plan of $1,800 and $1,370 in 1998 and 1997, respectively.
(6) During 1998, Mr. McMahen served as Chairman and Chief Executive Officer of
Compass Banks of Texas, Inc., which was, until September 14, 1998, a
wholly owned subsidiary of the Corporation. He was named Vice Chairman of
Compass Bank in February 1999.
(7) Includes contributions by the Corporation under the ESOP/401(k) of $8,522,
$9,494 and $9,218 in 1998, 1997 and 1996, respectively, matching
contributions made by the Corporation under the MIP of $12,419, $10,800
and $7,623 for 1998, 1997 and 1996, respectively, and matching
contributions under the Restoration Plan of $7,468 and $10,416 in 1998 and
1997, respectively.
(8) Includes contributions by the Corporation under the ESOP/401(k) of $8,522,
$9,314 and $9,219 in 1998, 1997 and 1996, respectively, and matching
contributions made by the Corporation under the MIP of $4,950, $4,710 and
$4,710 for 1998, 1997 and 1996, respectively.
(9) Includes contributions by the Corporation under the ESOP/401(k) of $8,522,
$9,494 and $8,281 in 1998, 1997 and 1996, respectively, matching
contributions made by the Corporation under the MIP of $7,100, $6,750 and
$5,675 for 1998, 1997 and 1996, respectively, and matching contributions
under the Restoration Plan of $2,250 and $1,950 in 1998 and 1997,
respectively.
8
<PAGE>
Compensation Pursuant to Plans
The Corporation has certain compensation plans, described below, pursuant to
which benefits may be provided to executive officers of the Corporation.
Long Term Incentive Plans
The Corporation's shareholders approved the 1982, 1989 and 1996 Long Term
Incentive Plans (the "Plans"), which provide for the granting of incentive
awards in the form of stock options, stock appreciation rights, performance
units, restricted stock, supplemental cash and in such other forms as may be
deemed appropriate from time to time under the circumstances. The Plans are
administered by the Compensation Committee of the Board of Directors, which
has the sole discretion, subject to the terms of the Plans, to determine those
employees, including executive officers, eligible to receive awards and the
amount and type of such awards. The Compensation Committee also has the
authority to interpret the Plans, formulate the terms and conditions of award
agreements, and make all other determinations required in the administration
thereof. Under the 1982 and 1989 Long Term Incentive Plans, the committee was
authorized to grant awards of up to 3,712,500 and 2,250,000 shares,
respectively, of the Corporation's common stock, giving effect to adjustments
for capital structure changes. Under the 1996 Plan, the Compensation Committee
may grant awards of up to 2,850,000 shares of the Corporations's common stock,
giving effect to adjustments for capital structure changes.
During 1998, the awards made under the Plans to the officers named in the
Summary Compensation Table above consisted of awards of restricted stock and
grants of stock options.
The following table reflects certain information concerning grants of
options to purchase the Corporation's common stock that were made by the
Corporation during 1998 to the executive officers of the Corporation named in
the Summary Compensation Table above.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable Pre-Tax
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term
---------------------------------------------------- -------------------
Number of
Securities % of Total
Underlying Options Granted Exercise or
Options to Employees In Base Price Expiration 5% 10%
Name Granted(#)(1) Fiscal Year ($/Sh) Date ($)(2) ($)(2)
---- ------------- --------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
D. Paul Jones, Jr....... 52,744 5.94 $43.88 1/25/08 1,455,518 3,688,568
Garrett R. Hegel........ 10,674 1.20 $43.88 1/25/08 294,559 746,469
Charles E. McMahen...... 22,605 2.54 $43.88 1/25/08 623,805 1,580,845
Jerry W. Powell......... 6,907 0.78 $43.88 1/25/08 190,605 483,030
G. Ray Stone............ 9,837 1.11 $43.88 1/25/08 271,461 687,935
</TABLE>
- --------
(1) All options were granted under the Corporation's 1996 Long Term Incentive
Plan on January 26, 1998 with an exercise price equal to the closing price
of the Company's common stock on the grant date. These options
9
<PAGE>
become exercisable over a three year period, with 25% immediately
exercisable on the date of grant, and 25% exercisable on each of the
succeeding three anniversaries of the date of grant.
(2) The dollar amounts shown are based on certain assumed rates of
appreciation and the assumption that the options will not be exercised
until the end of the expiration periods applicable to the options. Actual
realizable values, if any, on stock option exercises and common stock
holdings are dependent on the future performance of the Company's common
stock and overall stock market conditions. There can be no assurance that
the amounts reflected will be achieved.
The following table reflects certain information concerning exercises of
options with respect to the Corporation's common stock during 1998, and the
value of unexercised options held as of the end of 1998, by the executive
officers of the Corporation named in the Summary Compensation Table above:
Aggregated Option Exercises in 1998 and 1998 Year End Option Values
<TABLE>
<CAPTION>
Number of
Securities
Underlying Value of
Unexercised Unexercised In-
Options at the-Money
1998 Year End Options at 1998
(#) Year End ($)
------------- ---------------
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
---- --------------- ------------------ ------------- ---------------
<S> <C> <C> <C> <C>
D. Paul Jones, Jr....... 4,000 98,240 29,073/39,558 362,426/-0-
Garrett R. Hegel........ -0- -0- 30,226/8,005 641,956/-0-
Charles E. McMahen...... 25,656 873,954 5,652/16,953 -0-/-0-
Jerry W. Powell......... -0- -0- 20,815/5,180 429,679/-0-
G. Ray Stone............ 2,400 59,095 22,817/7,377 454,011/-0-
</TABLE>
10
<PAGE>
Pension Plan
The Corporation has adopted basic and supplemental retirement plans which,
subject to the conditions for vesting, provide retirement benefits based upon
credited years of service and average annual compensation during the five
consecutive years of benefit service which produces the highest average
("Final Average Annual Compensation"). The following table shows the estimated
annual benefits that would be payable upon retirement under the Corporation's
basic and supplemental retirement plans to plan participants, including
executive officers, assuming retirement at normal retirement age 65 on January
1, 1999:
Pension Plan Table
<TABLE>
<CAPTION>
Annual Retirement Benefit if Age 65 in 1999
--------------------------------------------
Highest
Average
Earnings- 10 Years 15 Years 20 Years 25 Years 30 Years
Five Years* Service Service Service Service Service
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000..................... $ 15,032 $ 22,548 $ 30,064 $ 37,580 $ 45,096
$200,000..................... 33,032 49,548 66,064 82,580 99,096
$400,000..................... 69,032 103,548 138,064 172,580 207,096
$600,000..................... 105,032 157,548 210,064 262,580 315,096
$800,000..................... 141,032 211,548 282,064 352,580 423,096
$1,000,000................... 177,032 265,548 354,064 442,580 531,096
$1,200,000................... 213,032 319,548 426,064 532,580 639,096
</TABLE>
- --------
* Reflects all compensation without regard to statutory limits in qualified
plan.
All employees of the Corporation who have attained age 21 and have worked
1,000 hours or more in their first 12 months of employment or 1,000 hours or
more in any calendar year thereafter are eligible to participate in the
Corporation's basic pension plan. However, participation in the supplemental
retirement plans is limited to a select group of management or highly
compensated employees of the Corporation as determined by the Compensation
Committee of the Board of Directors. Each of the executive officers named in
the Summary Compensation Table participates in one of the two supplemental
retirement plans. Under most circumstances employees are vested in their
retirement benefits under the plans after five years of service. Benefits
under the plans are payable monthly commencing on the later of age 65 or the
participant's date of retirement. Eligible participants may retire at reduced
benefit levels after reaching age 55.
The Corporation's basic pension plan is a tax-qualified defined benefit plan
for purposes of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). An individual's Final Average Annual Compensation under the
pension plan is based on a participant's direct cash compensation (exclusive
of bonuses, including any bonuses shown in the Summary Compensation Table
above, and commissions) up to certain maximum dollar limits imposed under the
Internal Revenue Code. The maximum annual dollar amounts recognized under the
basic pension plan were limited to $235,840 for years prior to 1994, $150,000
for years 1994 through 1996, and $160,000 for years after 1996. The percentage
of a participant's Final Average Annual Compensation payable as annual
benefits upon retirement under the pension plan is determined by multiplying
11
<PAGE>
the number of years, up to 30, of a participant's service with the Corporation
by 1.8%. Benefits under the pension plan are reduced by Social Security
payments at the rate of 1.8% of primary Social Security benefits times years
of service up to 30 years. The estimated annual retirement benefits shown in
the foregoing table have been reduced by estimated Social Security benefits.
In 1997, the Corporation adopted both the "Supplemental Retirement Plan" and
the "Special Supplemental Retirement Plan" in order to provide key management
employees a total retirement benefit equal to the retirement benefit which
would have been payable under the basic pension plan but for certain
limitations on calculating a participant's Final Average Annual Compensation
imposed under the Internal Revenue Code. While a participant's Final Average
Annual Compensation under the Supplemental Retirement Plan includes additional
amounts of direct cash compensation otherwise excluded under the basic pension
plan, the Supplemental Retirement Plan, like the pension plan, does not
include a participant's bonuses in such calculations. Such bonuses, however,
are included in calculating a participant's Final Average Annual Compensation
under the Special Supplemental Retirement Plan. Both supplemental pension
plans operate as unfunded non-qualified deferred compensation arrangements for
purposes of ERISA.
The current estimated years of credited service for each of the executive
officers named in the Summary Compensation Table above are as follows: D. Paul
Jones, Jr., 20; Charles E. McMahen, 9; Garrett R. Hegel, 9; Jerry W. Powell,
18; and G. Ray Stone, 33.
Change of Control Employment Agreements
The Corporation entered into change of control employment agreements on
December 14, 1994 (the "Agreements") with each of the individuals named in the
Summary Compensation Table and five additional officers of the Corporation or
its subsidiaries. Since such time, certain other officers of the Corporation
or its
subsidiaries have also entered into change in control employment agreements
with the Corporation. The Agreements are designed to retain such officers and
provide for continuity of management in the event of any actual or threatened
change in control of the Corporation. The Agreements with the persons named in
the Summary Compensation Table are effective for three-year periods and are
automatically extended annually for additional one-year periods unless notice
is given to the contrary. The Agreements are otherwise terminable during their
periods of effectiveness only by termination of the executive's employment.
Such termination in connection with a change in control of the Corporation (as
defined in the Agreements) will entitle an executive to benefits under the
Agreements. The Agreements require continued employment of an executive
following a change of control on an equivalent basis to employment immediately
before such change of control. In the event that during the three-year period
following a change of control, the executive terminates the executive's
employment for good reason (as defined in the Agreements) or, during the
thirty-day period commencing one year after the change of control, for any
reason, or the Company terminates the executive's employment without cause (as
defined in the Agreements), the executive will be entitled to receive an
immediate lump sum payment in an amount equal to previously earned but unpaid
compensation plus an amount equal to a range of between two and three times
the sum of such executive's then current salary and annual bonus. In addition,
the executive will continue to be eligible, together with the executive's
family, to receive benefits under the Corporation's welfare benefit plans
(e.g., medical, group life, etc.) for the remainder of the three-year term,
and any stock
12
<PAGE>
options then held by the executive pursuant to the Corporation's stock option
plans shall remain exercisable in accordance with the terms of any stock
option agreements between the Corporation and the executive, notwithstanding
any provision in such option agreements to the contrary.
Compensation Committee Interlocks and Insider Participation
Directors of the Corporation Charles W. Daniel, Marshall Durbin, Jr., and
Tranum Fitzpatrick constitute the Compensation Committee of the Corporation's
Board of Directors. D. Paul Jones, Jr., Chairman and Chief Executive Officer
of the Corporation, is a member of the Board of Directors and serves on the
Board Compensation Committee of Golden Enterprises, Inc., of which John S.
Stein, a director of the Corporation, is President and Chief Executive
Officer.
Report of Board Compensation Committee on Executive Compensation
The Compensation Committee of the Board of Directors of the Corporation (the
"Committee") is composed entirely of persons who are not also officers of the
Corporation or any of its subsidiaries. The Committee is responsible for
reviewing and appraising the compensation of senior officers of the
Corporation and administering the Corporation's incentive plans. See "ELECTION
OF DIRECTORS--Committees of the Board of Directors."
The base salaries and incentive bonuses of the executive officers of the
Corporation, all of whom are also executive officers of Compass Bank, are paid
by Compass Bank. Management of the Corporation and Compass Bank are
compensated primarily through base salaries, incentive bonuses, and equity-
based compensation programs that are designed to reward for long-term
strategic management and enhancement of shareholder value.
The Committee approves the base salary of the chief executive officer of the
Corporation and Compass Bank, as well as the base salaries of other executive
officers, based on recommendations to the Committee from the Human Resources
Division of Compass Bank. The base salaries of the chief executive officer and
the other executive officers, as approved by the Committee, are then reported
to the full board of Directors at its next regular meeting following the
Committee's approval.
In connection with its recommendations to the Committee regarding the chief
executive officer's base salary, the Human Resources Division of Compass Bank
compiles publicly available data concerning the salaries of the executive
officers of financial institutions that are considered peers of the
Corporation based on their relative assets. Such data is presented to the
Committee for its consideration at one or more Committee meetings in January
or February of each year for salary determinations for the ensuing year. The
compensation levels approved by the Committee with respect to the chief
executive officer have generally been at or above the median compensation
levels of the other companies surveyed. The Committee also undertakes a
subjective analysis of the executive officers' base salaries that is not
related to any particular established qualitative or quantitative criteria.
Based on such objective information and its subjective analysis, the Committee
then determines the executive officers' base salaries for recommendation to
the full Board of Directors.
Bonuses paid to the chief executive officer are based on pre-established,
objective performance goals which are typically approved by the Committee or
by the full Board of Directors of Compass Bank at its regular
13
<PAGE>
meeting held in the first quarter of each year. For fiscal years 1997 and
1998, the chief executive officer's incentive bonus was based solely on the
attainment of an earnings per share goal and a return on common equity goal.
The bonus paid to the chief executive officer is a variable percentage of his
base salary, depending on the extent to which these performance goals are
attained. The chief executive officer's maximum bonus is typically 100% of his
base salary.
Bonuses paid to other executive officers (including the persons named in the
Summary Compensation Table above) are also based wholly or partially upon the
same pre-established, objective performance goals which determine the chief
executive officer's bonus. As in the case of the chief executive officer,
bonuses paid to other executive officers based upon attainment of these goals
are variable percentages of their base salaries, depending on the extent to
which these performance goals are attained. The maximum bonus, based upon
these pre-established, objective performance goals, of each of the other
executive officers ranged in 1998 from 50% to 100% of their base salaries. In
addition, the other executive officers may receive bonuses based upon other
performance goals related to the departments or divisions of the Corporation
or Compass Bank with respect to which they have supervisory responsibility,
the performance of the Corporation or Compass Bank as a whole, and their
respective individual performances.
For fiscal year 1998, the Corporation's chief executive officer and other
executive officers were not entitled to any bonus attributable to earnings per
share if the Corporation failed to achieve an increase in earnings per share
of at least 10% over earnings per share reported for the previous fiscal year.
An increase in earnings per share of at least 15% over the previous fiscal
year's earnings per share was required in order for maximum achievable bonuses
to be paid to the Corporation's chief executive officer and others. As a
result of an increase in earnings per share in 1998 compared to reported
earnings for 1997, excluding the results of the Corporation's December 15,
1998, acquisition of Arizona Bank, Tucson, Arizona, of approximately 10%, the
Corporation's chief executive officer and each of the other named executive
officers whose bonus is based in part upon the achievement of earnings per
share goals received approximately 60% of their maximum achievable bonuses for
earnings per share.
For fiscal year 1998, the Corporation's chief executive officer and other of
the executive officers were not entitled to any bonus attributable to return
on common equity if the Corporation failed to achieve a return on common
equity of at least 15% and a return on common equity of at least 18% was
required in order for the maximum bonus to be paid with respect to return on
common equity. As a result of a return on common equity with respect to the
Corporation's common stock in fiscal year 1998, excluding the results of the
Arizona Bank Acquisition of 17%, the Corporation's chief executive officer and
other officers whose bonuses are based in part on return on common equity
received approximately 83% of their maximum achievable bonuses for return on
common equity.
The 1996 Long Term Incentive Plan and the 1989 Long Term Incentive Plan each
provide for grants to the Corporation's officers and key employees of stock
options, stock appreciation rights, restricted stock, performance units and
supplemental cash payments. The payment of equity-based compensation to these
individuals under the Corporation's incentive compensation program is designed
to focus their attention on the enhancement of shareholder value.
During 1998, the Corporation awarded 11,721 shares of restricted stock to
Mr. Jones, 2,372 shares of restricted stock to Mr. Hegel, 5,023 shares of
restricted stock to Mr. McMahen, 1,535 shares of restricted stock
14
<PAGE>
to Mr. Powell, and 2,186 shares of restricted stock to Mr. Stone. The number
of shares of restricted stock awarded to these executive officers was
determined by the Compensation Committee and approved by the Board of
Directors based upon a subjective assessment of executive officers'
performances, their respective compensation and organization management level
in the organization, and other factors. All of the restricted stock awards
granted in 1998 to the executive officers named above will vest on January 26,
2003. The restricted shares are eligible for accelerated vesting if certain
performance goals are met.
During 1998, the Corporation granted options to purchase a total of 888,586
shares of the Corporation's common stock under the 1996 Long Term Incentive
Plan to 351 employees of the Corporation or its subsidiaries. Among these
option grants were grants of non-qualified and incentive stock options to
acquire 52,744 shares to Mr. Jones, 10,674 shares to Mr. Hegel, 22,605 shares
to Mr. McMahen, 6,907 shares to Mr. Powell and 9,837 shares to Mr. Stone. The
size of the option grants to these executive officers was approved by the
Compensation Committee based upon a subjective assessment of executive
officers' performances, their respective compensation and management level in
the organization, and other factors. The exercise price of each option equaled
the fair market value of the common stock as of the date of grant and the
options become exercisable over a three year period, with 25% being
exercisable immediately upon grant and 25% becoming exercisable on each of the
succeeding three anniversaries of the date of grant. Such options will expire
ten (10) years from the date of grant, subject to earlier expiration upon
termination of employment.
The Committee has considered the anticipated tax treatment to the Company
and to the executive officers of various payments and benefits. In addition,
the Committee is aware that some types of compensation payments
and their deductibility (e.g., the spread on exercise of non-qualified
options) depends upon the timing of an executive officer's vesting or exercise
of previously granted rights, and that interpretations of and changes in the
tax laws and other factors beyond the Committee's control also affect the
deductibility of compensation. For those and other reasons, the Committee will
not necessarily and in all circumstances limit executive compensation to that
deductible under Section 162(m) of the Internal Revenue Code of 1986, as
amended. The
Committee will consider various alternatives to preserving the deductibility
of compensation payments and benefits to the extent reasonably practicable and
to the extent consistent with its other compensation objectives.
/s/ Charles W. Daniel /s/ Tranum Fitzpatrick
_____________________________________ _____________________________________
Charles W. Daniel Tranum Fitzpatrick
/s/ Marshall Durbin, Jr.
_____________________________________
Marshall Durbin, Jr.
15
<PAGE>
Corporate Performance Graph
The following graph illustrates, for the period commencing December 31,
1993, and ending at year end 1998, the yearly percentage change in the
cumulative total shareholder return on the Corporation's common stock as
compared with the cumulative total returns of the other companies included
within the Standard & Poor's 500 Stock Index and the National Association of
Securities Dealers, Inc., Automated Quotation System ("NASDAQ") Bank Stocks
Index. The graph reflects shareholder returns measured by dividing (i) the sum
of (A) the cumulative amount of dividends paid between year end 1993 and year
end 1998, assuming dividend reinvestment, and (B) the difference between the
closing price of the Corporation's common stock as reported through the NASDAQ
on December 31, 1998, and December 31, 1993, by (ii) the closing price of the
Corporation's common stock as reported through NASDAQ on December 31, 1993.
[COMPARISON GRAPH APPEARS HERE]
Compass Bancshares Inc. (CBSS)
Cum
12/93 12/94 12/95 12/96 12/97 12/98
----- ----- ----- ----- ----- -----
COMPASS BANCSHARES, INC. 100 104 162 202 343 306
S & P 500 100 101 139 171 229 294
NASDAQ BANK 100 100 148 196 328 325
16
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Some of the executive officers, directors and proposed nominees for director
of the Corporation and their affiliates are and have been customers of or had
transactions with the Corporation and its subsidiaries in the ordinary course
of business. Such transactions include loans made by the Corporation's
subsidiary banks, all of which were made in the ordinary course of business on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with unaffiliated
persons and did not involve more than the normal risk of collectibility or
present other unfavorable features. Additional transactions may be expected to
take place with the subsidiary banks in the ordinary course of business in the
future.
During 1998, D. Paul Jones, Jr., Chairman and Chief Executive Officer of the
Corporation, was indebted to the Corporation in connection with a loan for the
purpose of, among other things, financing the exercise of options to acquire
shares of common stock of the Corporation. Pursuant to a Demand Note and a
Pledge Agreement between Mr. Jones and the Corporation, both dated December
11, 1992, Mr. Jones pledged shares of the Corporation's common stock as
collateral for a loan in the original principal amount of $3,450,000, which is
due on demand, bearing interest at an annual rate equal to the London
Interbank Offering Rate ("LIBOR") plus 1%. The largest aggregate amount of
indebtedness outstanding on such loan during 1998 was $3,031,476, and the loan
was paid in full on April 15, 1998. In addition, during 1998, Mr. Jones was
indebted to the Corporation for an unsecured loan incurred under a line of
credit. The loan is due on demand and bears interest at the rate of LIBOR plus
1.5%. The largest aggregate amount of indebtedness outstanding for such loan
during 1998 was $1,357,655, and the amount outstanding as of March 15, 1999
was $757,655.
During 1998, Garrett R. Hegel, Chief Financial Officer of the Corporation,
was indebted to the Corporation in connection with a loan for the purpose of,
among other things, financing the exercise of options to acquire shares of the
Corporation's common stock. Mr. Hegel's loan bears interest at the rate of
Compass Bank Prime, is payable quarterly with the principal due on demand, and
is secured by shares of the Corporation's common stock. The largest amount of
indebtedness outstanding on such loan during 1998 was $373,000, and the amount
outstanding as of March 15, 1999 was $373,000.
During 1998, Jerry W. Powell, General Counsel and Secretary of the
Corporation, was indebted to the Corporation in connection with a loan for the
purpose of, among other things, financing the exercise of options to acquire
shares of common stock of the Corporation. Mr. Powell's loan bears interest at
the rate of Compass Bank Prime, is payable quarterly with the principal due on
demand, and is secured by shares of the Corporation's common stock. The
largest amount of indebtedness outstanding on such loan during 1998 was
$388,000, and the amount outstanding as of March 15, 1999 was $388,000.
17
<PAGE>
PROPOSAL TWO
1999 OMNIBUS INCENTIVE COMPENSATION PLAN
On January 27, 1999, the Compensation Committee of the Board of Directors
adopted and recommended for submission to the Corporation's shareholders for
their approval the Compass Bancshares, Inc. 1999 Omnibus Incentive
Compensation Plan (the "1999 Plan"). The purpose of the 1999 Plan is to
further the growth in earnings and market appreciation of the Corporation by
providing performance based incentives to those officers and key employees of
the Corporation or its subsidiaries who make substantial contributions to the
Corporation through their ability, loyalty, industry and innovation.
The 1999 Plan is intended to be a continuation of the Corporation's
management incentive program currently provided by the Corporation's 1996 Long
Term Incentive Plan. The Board of Directors believes that stock based awards
are very valuable in attracting and retaining highly qualified management
personnel and in providing additional motivation to management to use their
best efforts on behalf of the Corporation and its shareholders. In addition,
the Board of Directors believes that rewarding managers based upon the
attainment of performance based goals during relevant performance cycles is an
essential element of an effective management incentive program. Accordingly,
the 1999 Plan provides for (i) the grant of future stock based awards to
officers and key employees of the Corporation and (ii) the payment of
performance based compensation upon the attainment of certain performance
goals to be established periodically by the Compensation Committee.
Certain provisions of the Internal Revenue Code of 1986 and the regulations
promulgated thereunder (the "Code") require shareholder approval of any plan
pursuant to which "incentive stock options" (within the meaning of Section 422
of the Code) may be granted or "qualified performance based compensation"
(within the meaning of Section 162(m) of the Code) may be paid. The Board of
Directors is submitting the 1999 Plan for approval at the 1999 annual meeting
of shareholders in order to comply with these provisions of the Code.
The primary features of the 1999 Plan are summarized below. This summary is
qualified in its entirety by reference to the specific provisions of the 1999
Plan, as proposed, the full text of which is set forth as Exhibit A to this
Proxy Statement.
GENERAL INFORMATION
Administration. The 1999 Plan will be administered by the Compensation
Committee of the Board of Directors. The Compensation Committee consists of
three or more members of the Board of Directors who qualify both as "outside
directors" within the meaning of Section 162(m) of the Code and "disinterested
persons" within the meaning of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934.
Types of awards. The 1999 Plan would authorize the Compensation Committee to
grant to the participants in the 1999 Plan (i) stock options (which may be
non-qualified options or incentive stock options for tax purposes), (ii) stock
appreciation rights ("SARs") (which may be issued in tandem with stock
options), (iii) restricted stock awards, (iv) performance units (which may be
denominated in shares of the Corporation's common stock, cash or a combination
thereof), and (v) supplemental cash payments.
18
<PAGE>
Shares Reserved for Issuance. The aggregate number of shares of the
Corporation's common stock which may be issued under the 1999 Plan as proposed
may not exceed 3,750,000. Shares subject to options granted under the 1999
Plan which expire unexercised, or shares subject to awards which are otherwise
forfeited or canceled, will not count against this limit. The maximum number
of shares with respect to which awards may be granted to any individual in any
one year under the 1999 Plan is 200,000.
Eligibility. Persons eligible to participate in the 1999 Plan shall be those
officers and key employees of the Corporation and its subsidiaries who are in
positions in which their decisions, actions and counsel significantly impact
the performance of the Corporation or its subsidiaries. Participants are
chosen from this group by the Compensation Committee, at its discretion.
Currently, there are approximately 400 employees of the Corporation eligible
to participate in the 1999 Plan.
Term of the plan. The effective date of the 1999 Plan, subject to the
approval by the Corporation's shareholders, will be January 27, 1999, the date
it was adopted by the Compensation Committee of the Board of Directors. The
1999 Plan shall continue in effect until all awards under the plan have been
satisfied by the issuance of shares or the payment of cash, but no award may
be granted after the expiration of ten (10) years following such effective
date.
AWARDS
Stock Options. The Compensation Committee will be authorized to grant
options to purchase the Corporation's common stock, which options may be tax-
qualified, including incentive stock options within the meaning of Section 422
of the Code, or non-qualified stock options. The Compensation Committee will
determine the terms and conditions of all option grants, subject to the
specific limitations set forth in Section 7 of the 1999 Plan, as proposed. In
general, no option may be granted with an exercise price of less than the fair
market value of a share of the Corporation's common stock on the date of grant
(110% if the grantee beneficially owns more than 10% of such stock), the term
of an option may not be longer than ten (10) years, and any option shall be
subject to certain restrictions on transferability. Payment of the option
price may be in cash, check or other instrument acceptable to the Compensation
Committee, or, in the discretion of the Compensation Committee, in the form of
unrestricted common stock of the Corporation owned by the optionee.
Stock Appreciation Rights. The Compensation Committee will be authorized to
grant SARs either independent of or in connection with stock options granted
under the 1999 Plan. The exercise of SARs will entitle the holder thereof to
an amount (the "appreciation") equal to the difference between the exercise
price of the shares to which the SARs relate under the SAR agreement (or, in
the case of SARs issued in connection with options, the exercise price under
the related option agreement) and the fair market value of a share of common
stock of the Corporation on the date the SAR is exercised. The appreciation
will be payable in cash or common stock of the Corporation, at the discretion
of the Compensation Committee. The exercise of SARs granted in connection with
options will terminate those options.
The exercise of SARs will be treated as the issuance of the shares of common
stock to which the SARs relate for purposes of calculating the maximum number
of shares which have been issued under the 1999 Plan.
19
<PAGE>
Restricted Stock. The Compensation Committee will be authorized to award
restricted stock under the 1999 Plan, subject to such terms and conditions as
the Compensation Committee may determine. The Compensation Committee will have
authority to determine the number of shares of restricted stock to be awarded,
the price, if any, to be paid by the recipient of the restricted stock, and
the date or dates on which the restricted stock will vest. The vesting of
restricted stock may be conditioned upon the completion of a specified period
of service with the Corporation, upon the attainment of specified performance
goals, or upon such other criteria as the Compensation Committee may
determine. The 1999 Plan will give the Compensation Committee discretion to
make loans to the recipients for any purchase price of the restricted stock
and to accelerate the vesting of restricted stock on a case by case basis at
any time.
Stock certificates representing the restricted stock granted to an eligible
employee will be registered in the employee's name. However, no share of
restricted stock may be sold, transferred, assigned, or pledged by the
employee until such share has vested in accordance with the terms of the
restricted stock award. In the event of an employee's termination of
employment before all of his or her restricted stock has vested, or in the
event other conditions to the vesting of restricted stock have not been
satisfied prior to any deadline for the satisfaction of such conditions set
forth in the award, the shares of restricted stock which have not vested will
be forfeited, provided that the participant will be entitled to retain any
shares of restricted stock which have been paid for by the participant. At the
time restricted stock vests, a certificate for such vested shares will be
delivered to the employee (or the beneficiary designated by the employee, in
the event of death), free of all restrictions.
Performance Units. The Compensation Committee may award performance units
(which may be denominated in either shares of stock or cash) under which
payment may be made to the participant upon the attainment of specific
performance goals. If the performance unit is denominated in shares of stock
("performance stock"), such shares may be either (i) transferred to the
participant on the date of the award, subject to forfeiture if the goal is not
attained or (ii) transferrable to the participant only upon attainment of the
relevant performance goal. If the performance unit is denominated in cash, it
may be paid upon attainment of the relevant performance goal either in cash or
shares of the Corporation's common stock (based on the then current fair
market value of such stock), at the Compensation Committee's discretion.
Performance goals will be established by the Compensation Committee and will
relate to a specified performance period (typically a fiscal year of the
Corporation). The performance goals may be based on any business criteria
deemed appropriate by the Compensation Committee, including without
limitation, earnings per share, return on common equity, return on assets, the
ratio of earnings to shareholder's equity, the ratio of earnings to total
capital, or the ratio of operating expenses to total revenue. These
performance goals may be designed to measure corporate performance under any
standards as may be determined by the Compensation Committee, including the
absolute performance of the Corporation or Compass Bank relative to prior
periods, the performance of the Corporation or Compass Bank relative to other
companies, or the performance of the departments or divisions of the
Corporation or Compass Bank or other affiliates of the Corporation with
respect to which the recipient has supervisory responsibility.
As an element of each performance goal, the Compensation Committee may
establish a principal performance target and a minimum performance target.
These targets may be adjusted at any time prior to payment of the performance
unit to reflect major unforeseen events such as changes in laws, regulations
or
20
<PAGE>
accounting procedures, mergers, acquisitions or divestitures or extraordinary,
unusual or nonrecurring items or events, subject to the limitations of Section
162(m) of the Code discussed below. If the principal performance target is
attained, the participant will be entitled to receive 100% of the value of the
performance unit. If the minimum performance target is attained, but not the
principal performance target, the participant will be entitled to receive a
lesser percentage of the value of the performance unit, as determined by the
Compensation Committee. The Compensation Committee shall determine the extent
to which the performance targets have been attained, and what, if any, payment
is due the participant on the performance unit.
Within the first quarter of any performance period (or such earlier or later
date as may be required or permitted by Section 162(m)), the Compensation
Committee will determine whether to award any performance units for that
performance period in a manner intended to result in "qualified performance-
based compensation" within the meaning of Section 162(m) of the Code (a
"Qualifying Performance Unit"). If the Compensation Committee intends to award
any Qualifying Performance Units, the relevant performance goal will be "pre-
established" and "objective" within the meaning of Section 162(m) of the Code,
and the Compensation Committee shall have no discretion to waive or alter the
goal after the expiration of the earlier of (i) the expiration of twenty-five
percent of the performance period or (ii) the date on which the outcome under
the goal is substantially certain. The maximum amount payable under a
performance unit will depend on the value of that performance unit (which, for
cash denominated performance units, is typically a percentage of the
recipient's base salary). However, Qualifying Performance Units awarded to any
single officer in any given performance period are subject to a maximum cash
denomination of $2,500,000.
Supplemental Cash Payments. A stock option, SAR, restricted stock or
performance unit award may provide for the Corporation to make a supplemental
cash payment to a participant. Payments may be made for the purpose of, but
not limited to, assisting the employee in paying income taxes resulting from
an award under the 1999 Plan. In no event shall the amount of cash payment
exceed the value of the award to which it relates.
DISCUSSION OF FEDERAL INCOME TAX CONSEQUENCES
The following statements are based on current interpretations of existing
Federal income tax laws. The law is technical and complex and the statements
represent only a general summary of some of the applicable provisions.
Stock Options. Generally, there are no Federal income tax consequences
either to the optionee or to the Corporation upon the grant of a stock option.
On exercise of an incentive stock option, the optionee will not recognize any
income and the Corporation will not be entitled to a deduction for tax
purposes, although such exercise may give rise to liability for the optionee
under the alternative minimum tax provisions of the Code. Generally, if the
optionee disposes of shares acquired upon exercise of an incentive stock
option within two years of the date of grant or one year of the date of
exercise, the optionee will recognize compensation income and the Corporation
will be entitled to a deduction for tax purposes in the amount equal to the
excess of the fair market value of the shares on the date of exercise over the
option exercise price (or the gain on sale, if less). Otherwise, the
Corporation will not be entitled to any deduction for tax purposes upon
disposition of such shares, and the entire gain for the optionee will be
treated as a capital gain. On exercise of a non-qualified stock option, the
amount by which the fair market value of the shares on the date of exercise
exceeds the option exercise price
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will generally be taxable to the optionee as compensation income and will
generally be deductible for tax purposes by the Corporation, subject to the
limitations of Section 162(m) of the Code. The disposition of shares acquired
upon exercise of a non-qualified stock option will generally result in a
capital gain or loss for the optionee, but will have no tax consequences for
the Corporation.
Stock Appreciation Rights. The grant of an SAR generally does not result in
income to the grantee or in a deduction for the Corporation. Upon the exercise
of an SAR, the grantee will recognize ordinary income and the Corporation will
be entitled to a deduction measured by the fair market value of the shares
plus any cash received, subject to the limitations of Section 162(m) of the
Code.
Restricted Stock. The grant of restricted stock generally does not result in
income to the grantee or in a deduction for the Corporation, assuming the
shares transferred are subject to restrictions which constitute a "substantial
risk of forfeiture." If there are no such restrictions, the grantee would
recognize ordinary income upon receipt of the shares. Dividends paid to the
grantee while the stock is subject to such restrictions would be treated as
compensation for Federal income tax purposes. At the time the restrictions
lapse, the grantee would recognize ordinary income, and the Corporation would
be entitled to a deduction measured by the fair market value of the shares at
the time of lapse, subject to the limitations of Section 162(m) of the Code.
Performance Units. The grant of a performance unit generally does not result
in income to the grantee or in a deduction for the Corporation. Upon the
receipt of cash or shares of common stock under a performance unit, the
grantee will recognize ordinary income and the Corporation will be entitled to
a deduction measured by the fair market value of the shares plus any cash
received, subject to the limitations of Section 162(m) of the Code.
Supplemental Cash Payments. Supplemental Cash Payments will result in
ordinary income to the grantee and a deduction for the Corporation.
Limitations on Deductibility under Section 162(m). As indicated above, the
Corporation will usually be entitled to a deduction at the time and in the
amount a recipient of an award recognizes ordinary compensation income in
connection therewith. However, Section 162(m) imposes a $1,000,000 limitation
on the amount of annual compensation deduction allowable to a publicly held
company in respect of its chief executive officer and its other four most
highly paid executive officers. An exception to this limitation is provided if
certain shareholder approval, outside director administration and other
requirements are satisfied. Assuming the 1999 Plan will be approved by the
Corporation's shareholders, awards may be, but are not required to be,
structured as Qualifying Performance Units which may result "qualified
performance based compensation" not subject to this limitation.
CHANGE OF CONTROL
In the case of a merger or consolidation in which the Corporation is not the
surviving corporation, or a sale of all or substantially all of the business
or property of the Corporation, or liquidation or dissolution of the
Corporation, or in the event of a tender offer or any other change involving a
threatened change in control of the Corporation which, in the opinion of the
Compensation Committee, could deprive the holders of the benefits
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intended to be conferred by awards hereunder, the Committee may, in
anticipation of any such transaction or event, make such adjustments in the
terms and conditions of outstanding awards, as the Compensation Committee in
its sole discretion determines are equitably warranted under the circumstances
including, without limitation, (i) acceleration of exercise terms, or (ii)
acceleration of the lapse of restrictions, performance objectives and other
terms.
BOARD OF DIRECTOR RECOMMENDATION
The Board of Directors believes that the 1999 Plan is in the best interests
of the Corporation and the shareholders for the reasons stated above.
Therefore, the Board of Directors unanimously recommends a vote FOR approval
of this proposal to adopt the 1999 Plan.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any proposal which a shareholder of the Corporation intends to be presented
at the annual meeting of shareholders to be held in 2000 must be received by
the Corporation at the address appearing on the first page of this proxy
statement on or before December 1, 1999 in order to be considered for
inclusion in the Corporation's proxy statement and form of proxy relating to
that meeting. Only proper proposals which are timely received will be included
in the proxy statement and form of proxy.
A shareholder of the Corporation may wish to have a proposal presented at
the annual meeting of shareholders to be held in 2000, but not to have such
proposal included in the Corporation's proxy statement and form of proxy
relating to that meeting. If notice of any such proposal is not received by
the Corporation at the address appearing on the first page of this proxy
statement by February 14, 2000, then the Company will not address the proposal
in its proxy statement relating to that meeting, and all proxies solicited and
received by the Company will be deemed to have conferred discretionary
authority to vote on any such proposal.
OTHER MATTERS
As of February 14, 1999, the Corporation had not received notice of any
matters to be presented at the annual meeting, other than as described in this
Proxy Statement. Should other matters properly come before the meeting, the
persons designated as proxies will vote in accordance with their best judgment
on such matters.
EXPENSES OF SOLICITATION
The cost of soliciting proxies in the accompanying form will be borne by the
Corporation. In addition to the use of the mails, proxies may be solicited by
directors, officers or other employees of the Corporation or its subsidiaries
personally, by telephone or by facsimile or other electronic means, for which
no additional compensation will be paid to those persons engaged in such
solicitation. The Corporation will reimburse brokers, custodians or other
persons holding stock in their names or in the names of nominees for their
expenses in forwarding proxy materials to principals and obtaining their
instructions. The Company has retained Morrow & Co., New York, New York, at an
approximate total cost of $7,500, plus out-of-pocket expenses, to assist in
the solicitation of proxies by mail, personally or by telephone or other means
of communication.
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EXHIBIT A
COMPASS BANCSHARES, INC.
1999 OMNIBUS INCENTIVE COMPENSATION PLAN
Section 1. PURPOSE OF THE PLAN; DEFINITIONS. The purpose of the Compass
Bancshares, Inc. 1999 Omnibus Incentive Compensation Plan (the "Plan") is to
further the growth in earnings and market appreciation of Compass Bancshares,
Inc. (the "Corporation"). The Plan provides long-term incentives to those
officers and key employees of the Corporation or its subsidiaries who make
substantial contributions to the Corporation through their ability, loyalty,
industry and invention. The Corporation intends that the Plan will thereby
facilitate securing, retaining and motivating officers and key employees of
high caliber and good potential.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Board" means the Board of Directors of the Corporation.
(b) "Cause" means (i) a willful and material violation of applicable
banking laws and regulations, (ii) dishonesty, (iii) theft, (iv) fraud, (v)
embezzlement, (vi) commission of a felony or a crime involving moral
turpitude, (vii) substantial dependence or addiction to alcohol or any
drug, (viii) conduct disloyal to the Corporation or its affiliates, or (ix)
willful dereliction of duties or disregard of lawful instructions or
directions of the officers or directors of the Corporation or its
affiliates relating to a material matter.
(c) "Code" means the Internal Revenue Code of 1986, as amended, or any
successors thereto.
(d) "Committee" means the Compensation Committee of the Board.
(e) "Common Stock" means the common stock, par value $2.00 per share, of
the Corporation.
(f) "Corporation" means Compass Bancshares, Inc., a Delaware corporation.
(g) "Disability" means total and permanent disability as determined under
the Corporation's long-term disability plan.
(h) "Disinterested Person" shall mean an individual who qualifies as a
"disinterested person" within the meaning set forth in Rule 16b-3(d)(3) as
promulgated by the Securities and Exchange Commission (the "Commission")
under the Securities Exchange Act of 1934, or any successor definition
adopted by the Commission and who qualifies as an "outside director" within
the meaning set forth in Section 162(m) of the Code and the regulations
promulgated thereunder, or any successor definition thereto.
(i) "Early Retirement" means retirement from active employment with the
Corporation or its Subsidiary on or after the date on which the participant
reaches the age of 55 but before the date on which the participant reaches
the age of 65.
(j) "Fair Market Value" means, as of any given date, the closing price of
the Common Stock (or if no transactions were reported on such date on the
next preceding date on which transactions were reported) in the principal
market in which such Common Stock is traded on such date.
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(k) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422
of the Code.
(l) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(m) "Normal Retirement" means retirement from active employment with the
Corporation or its Subsidiary on or after the date on which the participant
reaches the age of 65.
(n) "Performance Units" means an award granted to a participant pursuant
to Section 9 hereof contingent upon achieving certain performance targets.
(o) "Plan" means the Compass Bancshares, Inc. 1999 Omnibus Incentive
Compensation Plan.
(p) "Restricted Stock" means an award of shares of Common Stock granted
to a participant pursuant to and subject to the restrictions set forth in
Section 10 hereof.
(q) "Stock Appreciation Rights" means a right granted under Section 8
hereof, which entitles the holder to receive cash or Common Stock in an
amount equal to the excess of (a) the Fair Market Value of a specified
number of shares of Common Stock at the time of exercise over (b) a
specified price.
(r) "Stock Option" means any option to purchase shares of Common Stock
granted pursuant to Section 7 hereof.
(s) "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Corporation if each of the corporations
(other than the last corporation in the unbroken chain) owns stock
possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in the chain.
(t) "Ten Percent Shareholder" means a person who owns (after taking into
account the attribution rules of Code Section 424(b)) more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Corporation.
Section 2. ADMINISTRATION.
(a) The Plan shall be administered by the Committee. The Committee shall be
appointed by the Board and shall consist of three or more members of the Board
who are Disinterested Persons. No member of the Committee shall be eligible to
receive awards under the Plan while serving on the Committee, and no member of
the Committee shall have been eligible to receive awards for one year prior to
serving on the Committee. The Committee shall have full and final authority in
its discretion to interpret the provisions of the Plan (and any agreements
relating thereto) and to decide all questions of fact arising in its
application; to determine the employees to whom awards shall be made under the
Plan; to determine the type of award to be made and the amount, size, terms
and conditions of each such award; to determine and establish additional terms
and conditions not inconsistent with the Plan for any agreements entered into
with participants in connection with the Plan; to determine the time when
awards will be granted and when rights may be exercised, which may be after
termination of employment; to adopt, alter and repeal such administrative
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable; and to make all other determinations necessary or
advisable for the administration of the Plan.
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(b) A majority of the Committee shall constitute a quorum, and the action of
a majority of members of the Committee present at any meeting at which a
quorum is present, or acts unanimously adopted in writing without the holding
of a meeting, shall be the acts of the Committee. Any decision made, or action
taken, by the Committee arising out of or in connection with the
interpretation and administration of the Plan shall be final and conclusive;
provided, however, that any such decision made or action taken may be reviewed
by the Board, in which event the determination of the Board shall be final and
conclusive. This provision shall not be construed to grant to any person any
right to review by the Board of any decision made or action taken by the
Committee.
(c) Neither the Board nor any member thereof shall be liable for any act,
omission, interpretation, construction or determination made in connection
with the Plan in good faith, and the members of the Board may be entitled to
indemnification and reimbursement by the Corporation in respect of any claim,
loss, damage or expense (including attorney's fees) arising therefrom to the
full extent permitted by law and under any directors' and officers' liability
insurance that may be in effect from time to time, in all events as a majority
of the Board then in office may determine from time to time, as evidenced by a
written resolution thereof. In addition, no member of the Board and no
employee of the Corporation shall be liable for any act or failure to act
hereunder, by any other member or other employee or by any agent to whom
duties in connection with the administration of this Plan have been delegated
or for any act or failure to act by such member or employee, in all events
except in circumstances involving such member's or employee's bad faith, gross
negligence, intentional fraud, or violation of a statute.
Section 3. PARTICIPANTS. Persons eligible to participate in the Plan shall
be those officers and key employees of the Corporation or its Subsidiaries who
are in positions in which their decisions, actions and counsel significantly
impact the performance of the Corporation or its Subsidiaries. Directors of
the Corporation who are not otherwise salaried employees of the Corporation
shall not be eligible to participate in the Plan.
Section 4. AWARDS UNDER THE PLAN. Awards by the Committee under the Plan may
be in the form of Incentive Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Performance Units, Restricted Stock, supplemental cash
payments and such other forms as the Committee may in its discretion deem
appropriate, including any combination of the above. No fractional shares
shall be issued under the Plan, and the minimum value of any shares issued
under the Plan shall be the par value at the time of award.
Section 5. SHARES SUBJECT TO PLAN.
(a) The shares that may be issued under the Plan shall not exceed in the
aggregate 3,750,000 shares of Common Stock. Such shares may be authorized and
unissued shares or treasury shares. Except as otherwise provided herein, any
shares subject to an option or right which for any reason expires or is
terminated unexercised as to such shares shall again be available under the
Plan.
(b) The maximum number of shares subject to awards which may be granted
under the Plan to any individual in any one year is 200,000 (subject to
appropriate adjustments to reflect changes in the capitalization of the
Corporation)
(c) In the event of any change in the outstanding Common Stock of the
Corporation by reason of a stock dividend or distribution, recapitalization,
merger, consolidation, split-up, combination, exchange of shares or
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otherwise, the Committee shall adjust the number of shares of Common Stock
which may be issued under the Plan and the Committee shall provide for an
equitable adjustment of any shares issuable pursuant to awards outstanding
under the Plan.
Section 6. EFFECTIVE DATE. The effective date of this Plan shall be the date
it is adopted by the Board, provided that the stockholders of the Corporation
shall approve this Plan in accordance with Rule 16b-3 of the Securities
Exchange Act of 1934 and, to the extent this Plan provides for the issuance of
Incentive Stock Options, the stockholders of the Corporation shall approve
those portions of this Plan related to the granting of Incentive Stock Options
within twelve (12) months after the date of adoption. If any awards are
granted under the Plan before the date of such stockholder approval, such
awards automatically shall be granted subject to such approval.
Section 7. STOCK OPTIONS. Stock Options may be granted either alone or in
addition to other awards granted under the Plan. Any Stock Option granted
under the Plan shall be in such form as the Committee may from time to time
approve, and the provisions of Stock Option awards need not be the same with
respect to each optionee. Each Stock Option shall be evidenced by a written
option agreement that shall specify, among other things, the type of Stock
Option granted, the option price, the duration of the Stock Option, the number
of shares of Common Stock to which the Stock Option pertains, and the schedule
on which such Stock Options become exercisable.
The Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options.
The Committee shall have the authority to grant any optionee Incentive Stock
Options, Non-Qualified Stock Options, or both types of Stock Options (in each
case with or without Stock Appreciation Rights). To the extent that any Stock
Option does not qualify as an Incentive Stock Option, it shall constitute a
separate Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of this Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be so exercised,
so as to disqualify either the Plan or any Incentive Stock Option under
Section 422 of the Code. Notwithstanding the foregoing, in the event an
optionee voluntarily disqualifies a Stock Option as an Incentive Stock Option
within the meaning of Section 422 of the Code, the Committee may, but shall
not be obligated to, make such additional grants, awards or bonuses as the
Committee shall deem appropriate, to reflect the tax savings to the
Corporation which result from such disqualification.
Stock Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem
desirable:
(a) Option Price. The option price per share of Common Stock purchasable
under a Stock Option shall be determined by the Committee at the time of
grant but shall be not less than the Fair Market Value of the Common Stock
on the date of the grant of the Stock Option; provided, however, if the
Stock Option is an Incentive Stock Option granted to a Ten Percent
Shareholder, the option price for each share of
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Common Stock subject to such Incentive Stock Option shall be no less than
one hundred ten percent (110%) of the Fair Market Value of a share of
Common Stock on the date such Incentive Stock Option is granted.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten (10)
years after the date such Stock Option is granted.
(c) Exercisability. Subject to Section 7(i) hereof with respect to
Incentive Stock Options, Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by
the Committee at grant. If the Committee provides, in its discretion, that
any Stock Option is exercisable only in installments, the Committee may
waive such installment exercise provisions at any time, in whole or in
part, based on performance and/or such other factors as the Committee may
determine in its sole discretion.
(d) Method of Exercise. Stock Options may be exercised in whole or in
part at any time during the option period, by giving written notice of
exercise to the Corporation specifying the number of shares to be
purchased, accompanied by payment in full of the purchase price, in cash,
by check or such other instrument as may be acceptable to the Committee. As
determined by the Committee, in its sole discretion, at or after grant,
payment in full or in part may also be made in the form of unrestricted
Common Stock owned by the optionee (based on the Fair Market Value of the
Common Stock on the date the option is exercised, as determined by the
Committee). No shares of Common Stock resulting from the exercise of a
Stock Option shall be issued until full payment therefor has been made. An
optionee shall have the rights to dividends or other rights of a
stockholder with respect to shares subject to the Stock Option when the
optionee has given written notice of exercise and has paid in full for such
shares.
(e) Non-transferability of Options. Except as otherwise set forth in this
Section 7(e), no Stock Option shall be transferable by the optionee
otherwise than by will or by the laws of descent and distribution, and all
Stock Options shall be exercisable, during the optionee's lifetime, only by
the optionee. For purposes of paragraphs (f), (g), (h) and (i) of this
Section 7, a transferred option may be exercised by the transferee only to
the extent that the optionee would have been entitled had the option not
been transferred.
(f) Termination by Death. Unless otherwise determined by the Committee at
grant, if any optionee's employment with the Corporation or any Subsidiary
terminates by reason of death, the Stock Option may thereafter be
immediately exercised, to the extent then exercisable (or on such
accelerated basis as the Committee shall determine at or after grant), by
the legal representative of the estate or by the legatee of the optionee
under the will of the optionee, for a period of three (3) years from the
date of such death or until the expiration of the stated term of such Stock
Option, whichever period is the shorter. In the event of termination of
employment by reason of death, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of
Section 422 of the Code, such Stock Option will thereafter be treated as a
Non-Qualified Stock Option.
(g) Termination by Reason of Disability. Unless otherwise determined by
the Committee at grant, if any optionee's employment with the Corporation
or any Subsidiary terminates by reason of Disability, any Stock Option held
by such optionee may thereafter be exercised, to the extent it was
exercisable at the time of termination due to Disability (or on such
accelerated basis as the Committee shall determine at or after grant), but
may not be exercised after three (3) years from the date of such
termination of employment or
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the expiration of the stated term of such Stock Option, whichever period is
the shorter; provided, however, that, if the optionee dies within such
three year period, any unexercised Stock Option held by such optionee shall
thereafter be exercisable to the extent to which it was exercisable at the
time of death for a period of twelve (12) months from the date of such
death or for the stated term of such Stock Option, whichever period is the
shorter. In the event of termination of employment by reason of Disability,
if an Incentive Stock Option is exercised after the expiration of the
exercise periods that apply for purposes of Section 422 of the Code, such
Stock Option will thereafter be treated as a Non-Qualified Stock Option.
(h) Termination by Reason of Retirement. Unless otherwise determined by
the Committee at grant, if an optionee's employment with the Corporation or
any Subsidiary terminates by reason of Normal Retirement or Early
Retirement (with Committee consent), under a formal plan or policy of the
Corporation, any Stock Option held by such optionee shall expire upon the
earlier of (i) the expiration date set forth in the Stock Option agreement
to which such Stock Option is subject, or (ii) three (3) years from the
date of such Normal or Early Retirement. An optionee shall not be deemed to
have retired during any leave of absence of the optionee authorized by the
Corporation or any Subsidiary under its standard personnel practices. In
the event of termination of employment by reason of Retirement, if an
Incentive Stock Option is exercised after the exercise periods that apply
for purposes of Section 422 of the Code, such Stock Option will thereafter
be treated as a Non-Qualified Stock Option.
(i) Limit on Value of Incentive Stock Option First Exercisable
Annually. The aggregate Fair Market Value (determined at the time of grant)
of the Common Stock for which Incentive Stock Options are exercisable for
the first time by an optionee during any calendar year under the Plan
(and/or any other stock option plans of the Corporation or any Subsidiary)
shall not exceed $100,000.
Section 8. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights shall be
evidenced by Stock Appreciation Rights agreements in such form not
inconsistent with the Plan as the Committee shall approve from time to time,
which agreements shall contain in substance the following terms and
conditions:
(a) Award. A Stock Appreciation Right shall entitle the grantee to
receive upon exercise the excess of (a) the Fair Market Value of a
specified number of shares of Common Stock at the time of exercise over (b)
a specified price which shall not be less than one hundred percent (100%)
of the Fair Market Value of the Common Stock at the time the Stock
Appreciation Right was granted, or, if granted in connection with a
previously issued Stock Option, not less than 100% of the Fair Market Value
of the Common Stock at the time such option was granted. A Stock
Appreciation Right may be granted in connection with all or any portion of
a previously or contemporaneously granted Stock Option (including, in
addition to options granted under the Plan, options granted under other
plans of the Corporation), or not in connection with a Stock Option.
(b) Term. Stock Appreciation Rights shall be granted for a period of not
more than ten (10) years, and shall be exercisable in whole or in part at
such time or times and subject to such other terms and conditions as shall
be prescribed by the Committee at the time of grant.
(c) Payment. Upon exercise of a Stock Appreciation Right, payment shall
be made in the form of Common Stock (at the Fair Market Value on the date
of exercise), in cash, or in a combination thereof, as the Committee may
determine.
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(d) Effect on Shares. The exercise of a Stock Appreciation Right shall be
treated as the issuance of a share of Common Stock for purposes of
calculating the maximum number of shares which have been issued under the
Plan.
(e) Stock Appreciation Right Granted with Incentive Stock Option. A Stock
Appreciation Right granted in connection with an Incentive Stock Option may
be exercised only if and when the Fair Market Value of the Common Stock
subject to the Incentive Stock Option exceeds the exercise price of such
Stock Option.
Section 9. PERFORMANCE UNITS. The Committee may grant Performance Units
(which may be denominated in either shares of stock or cash) under which
payment may be made to the participant upon the attainment of specific
performance goals. If the Performance Unit is denominated in shares of stock,
such shares may be either (i) transferred to the participant on the date of
the award (in the form of Restricted Stock in accordance with paragraph 10
below), subject to forfeiture if the goal is not attained or (ii)
transferrable to the participant only upon attainment of the relevant
performance goal. If the performance unit is denominated in cash, it may be
paid upon attainment of the relevant performance goal either in cash or shares
of the Corporation's common stock (based on the then current fair market value
of such stock), at the Compensation Committee's discretion. Performance Units
shall be evidenced by performance unit agreements in such form not
inconsistent with the Plan as the Committee shall approve from time to time.
Such agreements shall contain in substance the following terms and conditions:
(a) Performance Period. The performance period for a Performance Unit
shall be established by the Committee and shall be not more than ten (10)
years.
(b) Valuation of Units. A value for each Performance Unit shall be
established by the Committee, together with principal and minimum
performance targets to be achieved with respect to the Performance Unit
during the performance period. The participant shall be entitled to receive
one hundred percent (100%) of the value of the Performance Unit if the
principal target is achieved during the performance period, but shall be
entitled to receive nothing for such Performance Unit if the minimum target
is not achieved during the performance period. The participant shall be
entitled to receive a stated portion of the value of the Performance Unit
for performance during the performance period which meets or exceeds the
minimum target but fails to meet the principal target.
(c) Performance Goals. The Committee may establish performance goals
based on any business criteria deemed appropriate by the Committee
including without limitation, earnings per share, return on common equity,
return on assets, the ratio of earnings to shareholder's equity, the ratio
of earnings to total capital, or the ratio of operating expenses to total
revenue. These performance goals may be designed to measure corporate
performance under any standards as may be determined by the Committee,
including the absolute performance of the Corporation or its subsidiaries
relative to prior periods, the performance of the Corporation or its
subsidiaries relative to other companies, or the performance of the
departments or divisions of the Corporation or its subsidiaries with
respect to which the recipient has supervisory responsibility. Multiple
performance goals may be established and may have the same or different
weighting.
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(d) Adjustments. At any time prior to payment of the Performance Units,
the Committee may adjust previously established performance goals and other
terms and conditions, to reflect major unforeseen events such as changes in
laws, regulations or accounting policies or procedures, mergers,
acquisitions or divestitures or extraordinary, unusual or nonrecurring
items or events, subject to the limitations of Section 162(m) with respect
to those Performance Units which are structured to qualify for an exception
to the limitations on deductibility imposed by Section 162(m) (as discussed
below).
(e) Payments of Performance Units. Following the conclusion of each
performance period, the Committee shall determine the extent to which
performance goals have been attained for such period as well as the other
terms and conditions established by the Committee. With respect to
Performance Units denominated in cash, the Committee shall determine what,
if any, payment is due on the Performance Units and whether such payment
shall be made in cash, in Common Stock, or partially in cash and partially
in Common Stock. Any payments made in Common Stock shall be calculated
based on the Fair Market Value of the Common Stock. Payments shall be made
as promptly as practicable following the end of the performance period
unless deferred subject to such terms and conditions as may be prescribed
by the Committee. With respect to Performance Units denominated in shares
of stock, the Committee shall determine the extent to which either (i)
shares previously transferred to the participant on the date of the award
(in the form of Restricted Stock in accordance with paragraph 10 below)
shall be forfeited, if the relevant performance goal is not attained or
(ii) shares shall be transferred to the participant, if the relevant
performance goal is attained.
(f) Termination by Death, Disability or Retirement. Any employee granted
a Performance Unit pursuant to this Section 9, who, by reason of death,
Disability or Normal or Early Retirement, terminates employment before the
end of the performance period, may be entitled to receive a portion of any
earned Performance Unit. The Committee, in its discretion, will determine
the amount, if any, of the Performance Unit earned and the time at which
payment will be made.
(g) Other Termination. An employee who voluntarily terminates employment
or whose employment is terminated involuntarily for Cause will forfeit all
rights under the Performance Unit.
(h) Section 162(m) Provisions. Within the first quarter of any
performance period (or such earlier or later date as may be required or
permitted by Section 162(m)), the Committee will determine whether to award
any performance units for that performance period in a manner intended to
result in "qualified performance-based compensation" within the meaning of
Section 162(m) of the Code (a "Qualifying Performance Unit"). If the
Committee intends to award any Qualifying Performance Units, the relevant
performance goal will be "pre-established" and "objective" within the
meaning of Section 162(m) of the Code, and the Committee shall have no
discretion to waive or alter the goal after the expiration of the earlier
of (i) the expiration of twenty-five percent of the performance period or
(ii) the date on which the outcome under the goal is substantially certain.
The maximum amount payable under a performance unit will depend on the
value of that performance unit. However, Qualifying Performance Units
awarded to any single officer in any given performance period are subject
to a maximum cash denomination of $2,500,000.
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Section 10. RESTRICTED STOCK AWARDS.
(a) Administration. Shares of Restricted Stock may be issued either alone or
in addition to other awards granted under the Plan. The Committee shall
determine the officers and key employees of the Corporation and its
Subsidiaries to whom, and the time or times at which, grants of Restricted
Stock will be made, the number of shares to be awarded, the price, if any, to
be paid by the recipient of Restricted Stock (subject to Section 10(b)
hereof), the time or times within which such awards may be subject to
forfeiture, and all other conditions of the awards. The Committee may also
condition the grant of Restricted Stock upon the attainment of specified
performance goals (which grants may be structured as Performance Units or
Qualifying Performance Units in accordance with paragraph 9 above), or such
other criteria as the Committee may determine, in its sole discretion. The
provisions of Restricted Stock awards need not be the same with respect to
each recipient.
(b) Awards and Certificates. The prospective recipient of an award of shares
of Restricted Stock shall not have any rights with respect to such award,
unless and until such recipient has executed an agreement evidencing the award
(a "Restricted Stock Award Agreement") and has delivered a fully executed copy
thereof to the Corporation, and has otherwise complied with the then
applicable terms and conditions.
(i) Awards of Restricted Stock must be accepted within a period of ninety
(90) days (or such shorter period as the Committee may specify) after the
award date by executing a Restricted Stock Award Agreement and paying
whatever price, if any, is required.
(ii) A stock certificate in respect of shares of Restricted Stock shall
be issued in the name of each participant who is awarded Restricted Stock.
Such certificate shall be registered in the name of the participant, and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such award, substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Compass Bancshares, Inc. 1999 Omnibus Incentive
Compensation Plan and a Restricted Stock Award Agreement entered into
between the registered owner and the Corporation. Copies of such Plan and
Agreement are on file in the offices of the Corporation, 15 South 20th
Street, Birmingham, Alabama 35233."
(iii) The Committee shall require that the stock certificates evidencing
such shares be held in custody by the Corporation until the restrictions
thereon shall have lapsed, and that, as a condition of any Restricted Stock
award, the participant shall have delivered a stock power, endorsed in
blank, relating to the Common Stock covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Section 10 shall be subject to the following restrictions and
conditions:
(i) Subject to the provisions of this Plan and the Restricted Stock Award
Agreements, during such period as may be set by the Committee commencing on
the grant date, which may include the performance period with respect to
Performance Units denominated in shares of stock (the "Restriction
Period"), the participant shall not be permitted to sell, transfer, pledge
or assign shares of Restricted Stock awarded under the Plan. Within these
limits, the Committee may, in its sole discretion, provide for the lapse of
such
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restrictions in installments and may accelerate or waive such restrictions
in whole or in part based on performance and/or such other factors as the
Committee may determine, in its sole discretion; provided, however, that
with respect to Restricted Stock transferred to participants pursuant to
Qualifying Performance Units prior to the expiration of the relevant
performance period in accordance with paragraph 9 above, the Committee
shall not have the discretion to alter the performance goal or accelerate
the performance period.
(ii) Except as provided in paragraph (c)(i) of this Section 10, the
participant shall have, with respect to the shares of Restricted Stock, all
of the rights of a stockholder of the Corporation, including the right to
vote and to receive any dividends. Dividends paid in stock of the
Corporation or stock received in connection with a stock split with respect
to Restricted Stock shall be subject to the same restrictions as on such
Restricted Stock. Certificates for shares of unrestricted Stock shall be
delivered to the participant promptly after, and only after, the period of
forfeiture shall expire without forfeiture in respect of such shares of
Restricted Stock.
(iii) Subject to the provisions of the Restricted Stock Award Agreement
and this Section 10, upon termination of employment for any reason during
the Restriction Period, all shares still subject to restriction shall be
forfeited by the participant; provided, however, that the participant shall
be entitled to retain the shares of Restricted Stock which have been paid
for by the participant.
(iv) In the event of death or Disability or in the event that a
participant's employment is terminated as the result of special hardship
circumstances (other than for Cause), the Committee may, in its sole
discretion, waive in whole or in part any or all remaining restrictions
with respect to such participant's shares of Restricted Stock.
Section 11. SUPPLEMENTAL CASH PAYMENTS. Subject to the Committee's
discretion, Stock Options, Stock Appreciation Rights, Performance Units, or
Restricted Stock agreements may provide for the payment by the Corporation of
a supplemental cash payment after the exercise of a Stock Option or Stock
Appreciation Right, at the time of payment of a Performance Unit or at the end
of the restriction period of a Restricted Stock award. Supplemental cash
payments shall be subject to such terms and conditions as shall be provided by
the Committee at the time of grant, provided that in no event shall the amount
of each payment exceed:
(a) In the case of a Stock Option, the excess of the Fair Market Value
of a share of Common Stock on the date of exercise over the option price,
multiplied by the number of shares for which such option is exercised, or
(b) In the case of a Stock Appreciation Right, Performance Unit or
Restricted Stock award, the value of the shares and other consideration
issued in payment of such award.
Section 12. SALE OR MERGER OF CHANGE IN CONTROL. In the case of a merger or
consolidation in which the Corporation is not the surviving corporation, or a
sale of all or substantially all of the business or property of the
Corporation, or liquidation or dissolution of the Corporation, or in the event
of a tender offer or any other change involving a threatened change in control
of the Corporation which, in the opinion of the Committee, could deprive the
holders of the benefits intended to be conferred by awards hereunder, the
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<PAGE>
Committee may, in anticipation of any such transaction or event, either at the
time of grant or thereafter, make such adjustments in the terms and conditions
of outstanding awards, as the Committee in its sole discretion determines are
equitably warranted under the circumstances including, without limitation, (i)
acceleration of exercise terms, or (ii) acceleration of the lapse of
restrictions and/or performance objectives or other terms.
Section 13. GENERAL PROVISIONS.
(a) Governmental or Other Regulations. Each award under the Plan shall be
subject to the requirement that, if at any time the Committee shall determine
that (a) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any
state or federal law, or (b) the consent or approval of any government
regulatory authority, or (c) an agreement by the recipient of an award with
respect to the disposition of shares of Common Stock, is necessary or
desirable as a condition of, or in connection with, the granting of such award
or the issue or purchase of shares of Common Stock thereunder, such award may
not be consummated in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee. A participant
shall agree, as a condition of receiving any award under the Plan, to execute
any documents, make any representations, agree to restrictions on stock
transferability and take any actions which in the opinion of legal counsel to
the Corporation is required by any applicable law, ruling or regulation.
(b) Rights of a Stockholder. The recipient of any award under the Plan,
unless otherwise provided by the Plan, shall have no rights as a stockholder
with respect thereto unless and until certificates for shares of Common Stock
are issued to the recipient.
(c) No Additional Rights. Nothing set forth in this Plan shall prevent the
Board from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may
be either generally applicable or applicable only in specific cases. Nothing
in the Plan or in any agreement entered into pursuant to the Plan shall confer
upon any participant the right to continue in the employment of the
Corporation or its Subsidiaries, or affect any right which the Corporation or
such Subsidiaries may have to terminate the employment of the participant.
(d) Withholding. Whenever the Corporation proposes or is required to issue
or transfer shares of Common Stock under the Plan, the Corporation shall have
the right to require the recipient to remit to the Corporation or provide
indemnification satisfactory to the Corporation for, an amount sufficient to
satisfy any federal, state or local withholding tax requirements prior to the
issuance or delivery of any certificate or certificates for such shares.
Whenever payments are to be made in cash, such payments shall be net of an
amount sufficient to satisfy any federal, state or local withholding tax
requirements.
(e) Non-Assignability. No award under the Plan shall be assignable or
transferable by the participant except by will or by the laws of descent and
distribution. During the life of a participant, such award shall be
exercisable only by the participant or by the participant's guardian or legal
representative.
(f) Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a participant or optionee by the
A-11
<PAGE>
Corporation, nothing set forth herein shall give any such participant or
optionee any rights that are greater than those of a general creditor of the
Corporation. In its sole discretion, the Committee may authorize the creation
of trusts or other arrangements to meet the obligations created under the Plan
to deliver Common Stock or payments in lieu of or with respect to awards
hereunder; provided, however, that the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.
(g) Non-Uniform Determination. The Committee's determinations under the Plan
(including, without limitation, determinations of the persons to receive
awards, the form, amount and timing of such awards, the terms and provisions
of awards and the agreements evidencing the awards, and the establishment of
values and performance targets) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, awards
under the Plan, whether or not such persons are similarly situated.
Notwithstanding anything contained in the Plan, the Corporation may make loans
to participants in connection with awards under the Plan or otherwise.
(h) Amendment or Termination. The Board may amend, modify, suspend or
terminate the Plan at any time; provided, however, that without stockholder
approval, the Board may not increase the maximum number of shares which may be
issued under the Plan (except increases pursuant to Section 5(c) hereof),
change the class of employees eligible to receive awards, extend the period
during which any award may be exercised, extend the term of the Plan or change
the minimum option price. The termination or any modification, suspension or
amendment of the Plan shall not, without the consent of a participant,
adversely affect the participant's rights under an award previously granted.
The Committee may amend the terms of any award or option theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights
of any holder without his consent. The Committee may also substitute new Stock
Options for previously granted Stock Options including options granted under
other plans applicable to the participant and previously granted Stock Options
having higher option prices.
(i) Use of Proceeds. The proceeds received by the Corporation from the sale
of Common Stock pursuant to the sale or exercise of awards under the Plan
shall be added to the Corporation's general funds and used for general
corporate purposes.
(j) Section 16. It is intended that the Plan and any grants made to a person
subject to Section 16 of the Securities Exchange Act of 1934 meet all of the
requirements of Rule 16b-3 thereunder. If any provision of the Plan or any
award hereunder would disqualify the Plan or such award, or would otherwise
not comply with Rule 16b-3, such provision or award shall be construed or
deemed amended to conform to Rule 16b-3.
(k) No Restriction on Right of Company to Effect Corporate Changes. Nothing
in the Plan shall affect the right or power of the Corporation or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Corporation's capital structure or its
business, or any merger or consolidation of the Corporation, or any issue of
stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to
or affect the Common Stock or the rights thereof or which are convertible into
or exchangeable for Common Stock, or the dissolution or liquidation of the
Corporation, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
A-12
<PAGE>
(l) Construction of Plan. The validity, interpretation, and administration
of the Plan and of any rules, regulations, determinations, or decisions made
thereunder, and the rights of any and all persons having or claiming to have
any interest therein or thereunder, shall be determined exclusively in
accordance with the laws of the State of Alabama.
(m) Duration of the Plan. The Plan shall remain in effect until all awards
under the Plan have been satisfied by the issuance of shares or the payment of
cash, but no award shall be granted more than ten (10) years after the
effective date hereof.
A-13
<PAGE>
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ITEMS LEFT BLANK WILL NOT BE CONSIDERED INSTRUCTIONS TO THE PLAN TRUSTEE.
1. ELECTION OF DIRECTORS OF COMPASS 2. APPROVE THE CORPORATION'S 1999
BANCSHARES, INC.: OMNIBUS INCENTIVE COMPENSATION PLAN.
NOMINEES: TRANUM FITZPATRICK AND
JOHN S. STEIN
FOR [_] WITHHELD [_] FOR [_] AGAINST [_] ABSTAIN [_]
[_] ________________________________
For all nominees except as noted
above
MARK HERE FOR ADDRESS CHANGE AND NOTE
AT LEFT [_]
(Important: Please sign exactly as
name appears hereon.)
Signature:
-------------------------------
Date:
------------------------------------
Signature:
-------------------------------
Date:
------------------------------------
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TO: Compass Bank, as Plan Trustee of the Compass Bancshares, Inc.
Employee Stock Ownership/401(k) Plan
I hereby direct you, as Trustee of the Compass Bancshares, Inc. Employee Stock
Ownership/401(k) Plan (the "Plan") to act in accordance with the instructions I
have specified on the reverse side hereof in voting each of Compass Bancshares,
Inc. common stock ("Bancshares Stock") allocated to my account under the Plan at
the 1999 Annual Meeting of Stockholders of Compass Bancshares, Inc. to be held
on April 26, 1999, and at any adjournment thereof. Any previous instructions to
the Plan Trustee relating to the 1999 Annual Meeting of Stockholders of Compass
Bancshares, Inc. hereby are revoked. Under the terms of the Plan and subject to
the Plan and subject to the Plan Trustee's responsibilities under ERISA, the
Plan Trustee will vote Bancshares Stock allocated to the accounts of Plan
participants and beneficiaries ("Participants") in accordance with timely
instructions received from such Participants and will not vote Bancshares Stock
allocated to Plan Participants if the Plan Trustee does not receive timely
instructions from such Participants on or before the date designated below.
IMPORTANT: YOUR INSTRUCTIONS SHOULD BE MAILED IN THE ENCLOSED SELF-ADDRESSED
ENVELOPE. NO POSTAGE IS REQUIRED. IN ORDER TO COMPLY WITH YOUR INSTRUCTIONS,
THIS CARD MUST BE PROPERLY EXECUTED AND MAILED TO CONTINENTAL STOCK TRANSFER &
TRUST COMPANY AS TO BE RECEIVED BEFORE 5:00 P.M. EASTERN TIME ON APRIL 21, 1999.
YOUR INSTRUCTIONS WILL BE KEPT CONFIDENTIAL.
DO NOT MAIL THESE INSTRUCTIONS TO COMPASS BANK OR COMPASS BANCSHARES, INC.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
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<PAGE>
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IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS PROPERLY MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT.
1. ELECTION OF DIRECTORS. 2. APPROVE THE CORPORATION'S 1999 OMNIBUS
NOMINEES: TRANUM FITZPATRICK INCENTIVE COMPENSATION PLAN.
AND JOHN S. STEIN
FOR [_] WITHHELD [_] FOR [_] AGAINST [_] ABSTAIN [_]
[_] ________________________________
FOR ALL NOMINEES EXCEPT AS NOTED
ABOVE MARK HERE FOR ADDRESS CHANGE AND NOTE AT
LEFT [_]
WHEN SIGNING AS ATTORNEY, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH
IF AS CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP
PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
PLEASE SIGN EXACTLY AS NAME APPEARS
HEREIN, WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. PLEASE MARK,
SIGN, DATE AND RETURN THE PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
SIGNATURE:
-------------------------------
DATE:
------------------------------------
SIGNATURE:
-------------------------------
DATE:
------------------------------------
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COMPASS BANCSHARES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Garrett R. Hegel, Jerry W. Powell, and E.
Lee Harris, Jr. or any one of them, proxies, each with the power to appoint his
substitute, and hereby authorize them to represent and to vote all shares of
common stock of Compass Bancshares, Inc., held of record by the undersigned on
March 18, 1999, at the annual meeting of stockholders to be held on April 26,
1999, or at any adjournment(s) or postponement(s) thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER, IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE), BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTOR'S RECOMMENDATIONS. THE PROXIES CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
(CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE)
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