<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
Commission File Number 1-6906
FIRST SECURITY CORPORATION
(Exact name of Registrant as specified in its charter)
State of incorporation Delaware
I.R.S. Employer Identification No. 87-6118148
Address of principal executive offices 79 South Main, P.O. Box 30006
Salt Lake City, Utah
Zip Code 84130-0006
Registrant's telephone number, including area code (801) 246-5976
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(g) of the Act:
Common Stock - $1.25 Par Value.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the Registrant knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of First Security Corporation (FSCO) common
stock held by nonaffiliates was $4,343,669,577 as of February 29, 2000.
The number of shares outstanding of FSCO common stock $1.25 Par Value was
196,013,036 (net of 1,685,346 treasury shares) as of February 29, 2000.
First Security Corporation's Proxy Statement for it's annual meeting of
shareholders is not incorporated by reference because it was not filed
before the due date for this report.
<PAGE> 2
This Amendment No. 1 to First Security Corporation's Annual Report on
Form 10-K for the year ended December 31, 1999 corrects an error in Part III.
Item 11. Executive Compensation. In Table 19 of that item, bonuses for 1999
were reported incorrectly.
Following is the corrected text of Part III. Item 11. Executive Compensation:
Part III
Item 11. Executive Compensation
COMPENSATION OF MANAGEMENT
Director Compensation
Cash Compensation. During 1999, a cash retainer of $12,000 was paid to
each Director, as well as a $1,000 fee for attendance at each meeting of the
Board of Directors (or a fee of $300 for each scheduled meeting not
attended). Director compensation is paid in four quarterly installments in
arrears to those Directors who do not defer their compensation, as described
below, but the full amount of the retainer is paid in advance at the start of
the year for those Directors who defer their compensation as described below.
Messrs. Eccles and Evans do not receive the annual retainer, but they are
paid the per meeting fees. The Bylaws permit payment of Directors' expenses
incurred in travelling to and attending Board of Directors meetings.
Directors of First Security who are not Executive Officers may enter into
a compensation deferral agreement with First Security whereby the payment of
retainers and fees otherwise receivable by a Director for service as a
Director may be deferred and held in an account for the benefit of the
Director. The Director may choose whether this deferred compensation will be
invested in stock equivalency units or earn interest at a predetermined rate.
A Director selecting stock equivalency units will be credited with that
number of stock equivalency units equal to the result of dividing the total
amount of deferred compensation in the Director's account on the Annual
Evaluation Date (usually May 1) by the market price of First Security's
common stock on that date. Moreover, additions are made to the Director's
account to represent the value of dividends that otherwise would be paid on
the stock equivalent units if they were actual shares of Common Stock. A
Director electing to earn interest only will have interest added annually on
the Valuation Date at a rate equal to First Security's cost of funds for the
applicable period. Directors may choose a lump-sum cash distribution upon
retirement from the Board of Directors or a periodic distribution program,
which could involve up to ten annual cash payment installments. Amounts
remaining in a Director's deferral account during any term of periodic
distributions will continue to be revalued annually.
Additional per meeting fees of $1,000 were paid in 1999 to Directors who
were members of the Audit Committee and the Compensation Committee, with the
Chairmen of these committees being paid an annual retainer of $2,000 in
addition to the per meeting fees. Directors who were members of the
Executive Committee and who are not Executive Officers of First Security were
paid an additional fee of $15,000 annually. Committee members who do not
attend a meeting will get no compensation for the missed committee meeting.
These additional fees for Directors' committee service may be deferred in the
same manner (discussed above) as are regular Directors' fees.
Honorary Directors are paid $1,000 per Board of Directors' Meeting that
they attend and $300 per Directors' Meeting not attended.
Director Stock Options. Each Non-Employee Director elected at the 1998
Annual Shareholders Meeting was granted, as of May 1, 1998, an Option to
purchase 3,000 shares of First Security's Common Stock. Thereafter, on May 1
immediately following the date as of which a new Non-Employee Director is
first elected to the Board of Directors, such new Non-Employee Director will
be granted an Option to purchase a number of shares of Company Common Stock
<PAGE> 3
which corresponds to the remaining vesting period for any pre-existing as yet
unvested Director Options. If a Non-Employee Director remains a Director
through the three-year vesting period of an Option, that Director
automatically will be granted another Option to purchase an additional 3,000
shares of Company Common Stock vesting over another three-year period.
Each Option vests 33 1/3% (normally 1,000 shares) per year over a normal
vesting term of three years from the date of grant. Persons who are first
elected as a Non-Employee Director after the beginning of a three-year
vesting period for Options granted to pre-existing Non-Employee Directors
will receive an Option for fewer shares and with a shortened vesting schedule
to coincide with the operation of the then pending three-year vesting period
applicable to the pre-existing Non-Employee Directors' Options.
The term of each Option is ten years from the date the Option is granted,
subject to earlier termination under specified circumstances. Options become
immediately exercisable in full for their full term upon (i) the death or
disability of the Director, or (ii) the liquidation, dissolution, merger,
consolidation or reorganization of First Security. Upon a Director's
retirement from the Board of Directors or an unsuccessful attempt by a
Director to win re-election to the Board, the Director's Options will be
honored strictly according to their terms.
Once vested, lifetime transfers of options are allowed, subject to
approval of legal counsel to First Security.
The exercise price per share of an Option will be equal to the fair market
value per share of Common Stock on the Grant Date. The fair market value per
share of Common Stock on any date is equal to the Last Sale price per share
of First Security's common stock as reported on the Nasdaq National Market
System on the date immediately preceding such date or, in the event such
immediately preceding date is not a day on which the Nasdaq National Market
System is operating, the next previous date on which the Nasdaq National
Market System was operating.
Summary of Compensation to Certain Executive Officers
Set out in the following Summary Compensation Table are the various
elements of compensation earned during 1999 and during the previous two years
by First Security's Chief Executive Officer and the next five highest paid
Executive Officers (whose compensation for each year was determined for this
purpose on the same basis as for the Chief Executive Officer):
<PAGE> 4
<TABLE>
<CAPTION>
TABLE 19: SUMMARY COMPENSATION TABLE
=========================================================================== ==============================================
Annual Compensation Long-Term Compensation
Awards
=========================================================================== ==============================================
Name and Year Salary(1) Bonus(2) Restricted Options/ All Other
Principal Position ($) ($) Stock SARs(3) Compensation(4)
Award(s) (#) ($)
($)
- --------------------------------------- --------- ------------- ------------- ------------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Spencer F. Eccles, 1999 613,000 414(5) -0- 188,288 26,226
Chairman and Chief Executive Officer 1998 594,504 343,901 -0- 150,528 17,338
1997 550,015 218,858 -0- 106,704 18,088
- --------------------------------------- --------- ------------- ------------- ------------------ ------------ ------------
Morgan J. Evans, 1999 508,396 414(5) -0- 146,496 33,529
President and Chief Operating 1998 452,520 204,054 -0- 69,984 27,411
Officer 1997 435,301 133,563 -0- 84,240 22,760
- --------------------------------------- --------- ------------- ------------- ------------------ ------------ ------------
L. Scott Nelson, 1999 339,655 56,228 -0- 47,296 22,878
Executive Vice President-Retail 1998 324,844 149,524 -0- 38,784 18,049
Lending Services 1997 320,206 98,751 -0- 61,632 17,436
- --------------------------------------- --------- ------------- ------------- ------------------ ------------ ------------
J. Patrick McMurray, 1999 295,327 48,988 -0- 35,456 10,106
Executive Vice President-Community 1998 284,379 130,108 -0- 28,800 6,554
Bank Services 1997 278,917 86,944 -0- 61,632 12,293
- --------------------------------------- --------- ------------- ------------- ------------------ ------------ ------------
Brad D. Hardy 1999 260,414 48,631 -0- 35,456 12,613
Executive Vice President- 1998 232,418 112,778 -0- 25,056 9,998
Corporate Services, Chief Financial 1997 219,450 74,379 -0- 61,632 9,581
Officer, General Counsel and Secretary
- --------------------------------------- --------- ------------- ------------- ------------------ ------------ ------------
Scott C. Ulbrich, 1999 260,414 48,631 -0- 35,456 12,460
Executive Vice President- 1998 232,418 112,778 -0- 25,056 9,998
Capital Markets, Treasury and 1997 219,450 74,679 -0- 61,632 9,427
Investment Management
=========================================================================== ==============================================
</TABLE>
(1) Includes Director's Fees paid by First Security or its affiliates, if
applicable.
(2) Bonuses are listed in the year earned and normally accrued, although
such bonuses may be paid in the following year. Stock bonuses are valued
at the market value on the date of receipt.
(3) First Security has never issued SARs to Executive Officers.
(4) Amounts shown include premiums paid on insurance policies, contributions
by First Security to the account of each of the named Executive Officers
in the First Security Incentive Savings Plan, a 401(k) plan open to all
full-time employees of First Security, and contributions made by First
Security to the deferred compensation accounts of these Executive
Officers under a program open to all Executive Officers of First Security.
(5) Bonus includes Company-wide Christmas bonus and service awards.
Company Contributions to Employee Savings Plan and Salary Deferral Agreements
Executive Officers, together with all full-time employees of First
Security, are permitted to participate in the Incentive Savings Plan, whereby
a portion of an employee's compensation may be contributed on a pre-tax basis
to an investment account in the employee's name, and that account can be
invested at the direction of the employee into one of several investment
funds, including a First Security Stock Fund composed of First Security's
Common Stock and other Company securities. First Security contributes an
amount equal to 50% of the participating employee's contribution to the plan,
up to a maximum of 3% of compensation. The employer contribution is
separately invested for the employee's benefit in an Employee Stock Ownership
Plan (ESOP) which is a part of the Incentive Savings Plan.
Executive Officers also may enter into a compensation deferral agreement
with First Security, separate and apart from the Incentive Savings Plan
described above, whereby compensation otherwise receivable for service as an
Executive Officer may be deferred and held in an account for the benefit of
the Executive Officer. First Security will match 50% of the Executive
Officer's annual deferred amount up to a maximum of 3% of total compensation,
and will add this amount to the Executive Officer's deferral account (less
any employer contribution to the Executive Officer's Incentive Savings Plan).
The Executive Officer may choose whether this deferred compensation will be
<PAGE> 5
invested in stock equivalency units or earn interest at a predetermined rate.
An Executive Officer selecting stock equivalency units will be credited with
that number of stock equivalency units equal to the result of dividing the
total amount of deferred compensation on the Quarterly Evaluation Date (last
day of each quarter) by the market price of First Security's Common Stock on
that date. Moreover, additions are made to the Executive Officer's account
to represent the value of dividends that otherwise would be paid on the stock
equivalency units if they were actual shares of stock. An Executive Officer
electing to earn interest will have interest added quarterly on the Valuation
Date (last day of each quarter) at a rate equal to the yield on ten-year
treasury securities plus 1%. Treasury yields will be measured as the average
monthly yield each December, March, June and September, as published by the
Federal Reserve. Such rate shall be effective for the quarter commencing
three months later. Executive Officers using this deferred compensation
option may choose a lump sum distribution upon death, disability or
retirement, or in quarterly or annual installments over a period of up to
twenty years. Amounts remaining in a deferral account during any term of
periodic distributions will continue to be revalued quarterly. No switching
between the stock equivalency units and the interest rate option will be
permitted. All payouts to employees will be in cash. At December 31, 1999,
the named Executive Officers had the following balances in their deferred
income accounts: Mr. Eccles, $0; Mr. Evans, $1,105,399; Mr. Nelson,
$216,639; Mr. McMurray, $99,673; Mr. Hardy, $244,028, and Mr. Ulbrich,
$171,871.
Stock Options and Similar Awards To Management
The following two tables provide information concerning the stock options
and similar awards provided to the Executive Officers listed in Table 19
during 1999 (Table 20) and exercises of stock options and similar awards by
these listed Executive Officers during 1999 (Table 21):
<TABLE>
<CAPTION>
TABLE 20: OPTIONS GRANTED TO CERTAIN EXECUTIVE OFFICERS DURING 1999
======================================================================================================================
% of
Total Black-
Options/SARs Scholes
Options/SARs Granted to Exercise Method Grant
Granted(1) All Employees Base Price(2) Expiration Date Value(3)
Name (#) In Fiscal Year ($/Sh) Date ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Spencer F. Eccles 188,288 9.9 22.75 01/19/09 1,562,790
- ----------------------------------------------------------------------------------------------------------------------
Morgan J. Evans 146,496 7.7 22.75 01/19/09 1,215,917
- ----------------------------------------------------------------------------------------------------------------------
L. Scott Nelson 47,296 2.5 22.75 01/19/09 392,557
- ----------------------------------------------------------------------------------------------------------------------
J. Patrick McMurray 35,456 1.9 22.75 01/19/09 294,285
- ----------------------------------------------------------------------------------------------------------------------
Brad D. Hardy 35,456 1.9 22.75 01/19/09 294,285
- ----------------------------------------------------------------------------------------------------------------------
Scott C. Ulbrich 35,456 1.9 22.75 01/19/09 294,285
======================================================================================================================
</TABLE>
(1) First Security has never issued SARs to Executive Officers. Options
granted in 1999 vest in four equal increments on January 15 of 2000,
2001, 2002 and 2003.
(2) The 1999 Options were awarded by the Compensation Committee on January
19, 1999. The exercise price is the "last sale" price quotation for
First Security's Common Stock on the last business day prior to the date
of grant.
(3) The Black-Scholes model assumes (a) stock volatility of 0.3776; (b) a
risk-free interest rate of 4.596%; (c) a dividend yield of 3.18%; (d) a
full 10-year term; and (e) no discount for the risk of forfeiture or
restrictions on transferability.
<PAGE> 6
<TABLE>
<CAPTION>
TABLE 21: OPTIONS EXERCISED BY CERTAIN EXECUTIVE OFFICERS DURING 1999 AND YEAR-END OPTIONS VALUES
- -----------------------------------------------------------------------------------------------------------------------------
Value of Unexercised
Unexercised In-the-Money Share
stock options options as of 12/31/99(1)
- -----------------------------------------------------------------------------------------------------------------------------
Shares
Acquired on Value
Name Exercise Realized1 Exercisable Unexercisable Exercisable Unexercisable
(#) ($) (#) (#) ($) ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Spencer F. Eccles 284,189 5,382,103 1,512,463 392,660 27,930,827 1,770,487
- -----------------------------------------------------------------------------------------------------------------------------
Morgan J. Evans 147,682 2,957,553 495,448 268,068 7,932,660 1,262,311
- -----------------------------------------------------------------------------------------------------------------------------
L. Scott Nelson 0 0 559,725 121,924 10,106,282 698,926
- -----------------------------------------------------------------------------------------------------------------------------
J. Patrick McMurray 30,000 602,427 321,881 98,456 5,352,147 599,637
- -----------------------------------------------------------------------------------------------------------------------------
Brad D. Hardy 13,500 228,031 81,090 92,984 991,794 558,048
- -----------------------------------------------------------------------------------------------------------------------------
Scott C. Ulbrich 0 0 214,291 92,984 3,491,436 558,048
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Net value is realized from the difference between the exercise price of
First Security option shares and the sale price or fair market value.
Stock options are awarded to key employees, including the named Executive
Officers, upon recommendation of the Compensation Committee under the First
Security Comprehensive Management Incentive Plan ("CMIP"). Under this plan,
First Security may grant key employees bonus shares of Common Stock, stock
options, stock appreciation rights, and other equity-based incentive awards.
This plan is geared to creating a unity of interest between management and
the Shareholders in looking toward maximizing the share price of First
Security's Common Stock. The grant of options and bonus shares is also a key
element of First Security's compensation policy for its senior managers.
(See "Report of the Compensation Committee.")
Under the CMIP, shares of "Restricted Stock" may be granted to employees
of First Security and its subsidiaries, including the six Executive Officers
named in Table 19. Shares of Restricted Stock have been awarded to Executive
Officers of First Security in the past under the CMIP and its predecessor
plans, but no Restricted Stock awards were made in 1999.
Retirement Benefits
First Security provides a Retirement Plan to its employees, including to
Executive Officers, that is funded by First Security. First Security also
maintains an ERISA Excess Plan which provides for payment to highly paid
executive officers and their beneficiaries of that portion of otherwise
payable benefits under the terms of the Retirement Plan that cannot be paid
by the Retirement Plan because of benefit restrictions imposed on the
Retirement Plan by Section 415 of the Internal Revenue Code. Executive
Officers also have benefits available under a Supplemental Executive
Retirement Plan that provides for the payment of a competitive level of
retirement income to certain key managers in order to attract, retain and
motivate qualified executive officers.
The following table illustrates the estimated annual retirement benefits
payable under historical plans to the Executive Officers listed in the table
of Executive Compensation shown above under all applicable retirement plans
based on various assumptions of final compensation levels and service years
upon which retirement benefits are based:
<PAGE> 7
<TABLE>
<CAPTION>
TABLE 22: PENSION PLAN TABLE
======================================== ================== =================== =====================
Final Average Earnings 15 Years of 20 Years of 24 or More Years of
Service Service Service
======================================== ================== =================== =====================
<S> <C> <C> <C> <C>
$ 150,000 $ 56,250 $ 75,000 $ 90,000
200,000 75,000 100,000 120,000
225,000 84,375 112,500 135,000
250,000 93,750 125,000 150,000
300,000 112,500 150,000 180,000
400,000 150,000 200,000 240,000
450,000 168,750 225,000 270,000
500,000 187,500 250,000 300,000
600,000 225,000 300,000 360,000
750,000 281,250 375,000 450,000
======================================== ================== =================== =====================
</TABLE>
The estimated retirement benefits shown in Table 22 are subject to
reduction for Social Security payments received by the retiree and income
from accumulated employer contributions to the Incentive Savings Plan. These
benefits are computed on a single life annuity basis.
Compensation to Executive Officers for 1999 included in the earnings base
for the purpose of calculating total retirement benefits as shown in Table 22
is equal to the three-year final average salary including bonus. If they
remain employed until they reach the age of 65, the years of credited service
for the five named Executive Officers in Table 19 will be as follows: 39
years for Mr. Eccles, 39 years for Mr. Evans, 34 years for Mr. Nelson, 42
years for Mr. McMurray, 28 years for Mr. Hardy, and 34 years for Mr. Ulbrich.
In contemplation of the FSCO merger with Zions and a subsequent
restructuring of benefit plans, FSCO's retirement plan benefits were frozen
at December 31, 1999 to equal the then-accrued benefits.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors currently consists of
four non-employee Directors. The Committee meets one or more times annually
to review and determine matters pertaining to the compensation of the
Executive Officers of First Security who are members of First Security's
Management Committee, including the six named officers in Table 19, above.
The Committee met on February 28, 2000 to discuss and adopt resolutions
affecting the 1999 short-term compensation for these Executive Officers, but
did not discuss or adopt resolutions affecting base salary or long-term
incentives in anticipation of the closing of the merger with Zions
Bancorporation.
To the Shareholders of First Security Corporation:
The Compensation Committee annually reviews the elements of compensation
for the Executive Officers of the Company who are members of First Security's
Management Committee, and sets the level of compensation for these Executive
Officers. The Committee is provided with detailed information and proposals
from independent compensation consultants as well as from internal
compensation specialists. The Committee's decisions are made within the
context of a uniform structure and set of compensation principles which apply
to all of First Security's executives, including the Executive Officers
subject to the Committee's review.
Chief among these principles is that First Security will provide total
compensation opportunities that are competitive with those provided by
comparable financial institutions and commensurate with First Security's
overall performance. The three main elements of the compensation package are
base salary, short-term (annual) incentives, and long-term incentives. Total
<PAGE> 8
compensation for Executive Officers can be described as consisting of an
average or below-average base salary, an average annual cash incentive
opportunity based on performance, and an above-average long-term equity-based
incentive opportunity tied to increases in Shareholder value. The Committee
believes that this compensation mix is in the best interests of the
Shareholders and supports the business and financial objectives of the
Company.
BASE SALARY. Executive Officer base salaries at First Security are
managed using a structured approach. Each year, the Company participates in
formal third-party compensation surveys that provide compensation statistics
from over 100 financial institutions, both independent and affiliated,
nationwide. Salary data from these surveys are carefully matched by position
and adjusted for institutional size, or other appropriate scope measurement,
to provide a reliable measure of median executive officer salaries for
comparable positions at comparable financial institutions. These market
median salaries are used to establish salary ranges within which the
Company's Executive Officers' base salaries may be periodically increased
based on considerations of performance, experience, and internal equity.
(Participants in the two market surveys relied upon most heavily by the
Company typically include all, or nearly all, of the companies represented in
the KBW index that is used in the cumulative stock performance comparison
shown in Table 24.)
The base salary for each Executive Officer is allowed to vary only within
a 23% range determined by the appropriate market median salary for his/her
position. One of the Company's key salary administration policies is that
the market median represents the maximum base salary that any Executive
Officer can be paid. The Committee believes it is necessary to maintain
salaries within the designated ranges through periods of both strong and weak
corporate performance if the Company is to attract and retain top quality
executives. In times of excellent corporate performance, Executive Officers
may receive substantial supplemental rewards through the short-term and long-
term incentives.
Chief Executive Officer Salary Action. On June 6, 1999, an agreement and
plan of merger between First Security and Zions Bancorporation was approved
by the Board of Directors in a special meeting. At that time it was
anticipated that the merger would be completed during the fourth quarter of
1999. Accordingly, no increase to base pay has been made for the Chief
Executive Officer since that time. Pursuant to an employment agreement and
in connection with the signing of the merger agreement, Mr. Eccles will serve
as Co-Chief Executive Officer in the combined company, and he will receive an
annual base salary equal to the annual base salary paid to the other Co-Chief
Executive Officer of First Security, but in no event less than Mr. Eccles'
annual base salary as in effect prior to the merger.
Other Named Executive Officers. The other five Executive Officers named
in Table 19 received increases averaging 7.2%, effective April 1, 1999.
These increases were based on an examination of incumbents' current salaries
relative to their salary range midpoints and our judgment of these Executive
Officers' contributions and worth to the Company. As a result of the
announced merger with Zions, no increase to base pay has been made for these
Executive Officers. Pursuant to an employment agreement signed by these
officers, except Mr. Evans, in connection with the signing of the merger
agreement, these officers will receive an annual base salary of no less than
the annual base salary in effect on the date of the merger agreement, and
each officer, except Mr. Evans, will receive options (see: "Long-Term
Incentives" below). Mr. Evans will retire a short time after merger closing.
SHORT-TERM INCENTIVES. All the named Executive Officers participate in
the Management Annual Cash Incentive Bonus Plan (MACIBP), which pays the
named Executive Officers for the achievement of pre-set corporate goals. In
<PAGE> 9
1999, these corporate objectives comprised growth in First Security's net
income and performance relative to a peer group for the Company's return on
average assets (ROAA) and percent increase in earnings per share (EPS).
After review and discussion on the merits of the plan, the Committee has
approved the continuation of the MACIBP in 1999, with the following
provisions.
Growth in earnings per share (EPS) and return on average assets (ROAA)
were each weighted 25%, and net income was weighted 50%. In 1998, these
three components were all weighted equally. In reviewing First Security and
peer group results from throughout the year, it became apparent that the peer
group-based relative goals (i.e., EPS and ROAA) were subject to considerable
variation. For example, in the fourth quarter of 1998, a large number of
companies in the peer group reported significant non-recurring charges,
generally associated with merger and restructuring costs. This led to year-
end First Security bonus payments that were much higher than third quarter
projections. In general, it is believed that placing greater weight on the
net income component better met the objectives of the plan and the interests
of FSC, while still incorporating peer group results.
The peer group used for the relative measurements, ROAA and EPS included
the companies in the KBW index. The Committee still believes that a good
measurement of relative performance will be attained by including a large
number of banking companies in the peer group. Consequently, the companies
in the KBW index, which are already utilized in the cumulative stock
performance comparison (Table 24, below) and which collectively provide much
of the market data used for compensation comparisons, continued to be used as
the peer group for the MACIBP relative performance measurements. Threshold
and Target performance goals for 1999 were established as the 35th and 50th
percentiles, respectively, of the peer group result.
As in recent years, Target performance for net income represented full
achievement of the annual business plan; Threshold performance was set at 90%
of target. No bonus was paid in any category for performance which was below
threshold.
Chief Executive Officer Bonus. Mr. Eccles was eligible to receive a bonus
of up to 92% of his salary range midpoint for outstanding performance under
the MACIBP. Mr. Eccles' bonus was based entirely on the Company's results in
the 1999 corporate performance categories outlined above. In 1999, the
Company's performance for both ROAA and percent increase in EPS fell below
the threshold objectives established by this Committee, while the result for
Net Income was above the threshold objective but less than the target.
Accordingly, Mr. Eccles earned a 1999 bonus equal to 20.5% of his maximum
bonus opportunity, the bonus amount being entirely determined by the
relationship of the performance results to the performance targets as
stipulated by the terms of the MACIBP.
Other Named Executive Officers. The other named Executive Officers were
eligible in 1999 to earn bonuses of up to 80% of their salary range midpoints
for outstanding performance under MACIBP, with the bonus amounts being
entirely determined by the Company's results in the 1999 corporate
performance categories outlined above. These five named Executive Officers
earned bonuses equal to 20.5% of their maximum bonus opportunities.
LONG-TERM INCENTIVES. Historically, the Committee awarded Non-Statutory
Stock Options (NSOs) as the only long-term incentive award for Executive
Officers. The Company made these awards to a group comprising all Executive
Officers and up to 85 other key executives every year since 1987, with the
exception of 1995.
<PAGE> 10
In anticipation of the merger, it is believed that the Committee for the
combined company should approve any future awards. However, pursuant to the
Employment Agreement with Mr. Eccles, upon completion of the merger, First
Security will grant Mr. Eccles an option to acquire 60,000 shares of First
Security common stock, which will vest in three equal installments over the
period ending on the annual stockholders' meeting in 2002, will have an
exercise price equal to the fair market value of First Security common stock
on the date of grant and will have a term of, and remain exercisable for, 10
years from the date of grant without regard to Mr. Eccles' earlier
termination of employment.
Additionally, the Employment Agreements for each of the five Executive
Officers named in Table 19, except for Mr. Evans, provide for the grant of
25,000 options each, effective with the closing of the merger. Said options
will vest on the anniversary of the merger closing and will have a 10 year
term.
Repricing of Options. The Company has never repriced options (other than
as a result of stock splits). The Compensation Committee has no such
intention at this time.
/s/ Rodney H. Brady, Chair
/s/ James R. Wilson
/s/ G. Frank Joklik
/s/ Thomas D. Dee II
<PAGE> 11
SIGNATURES
FIRST SECURITY CORPORATION
Registrant
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
First Security Corporation, by
/s/ Brad D. Hardy April 19, 2000
- ------------------------------------------ ------------------
Brad D. Hardy Date
Executive Vice President Corporate Services,
General Counsel,
Chief Financial Officer, and
Secretary of First Security Corporation
(Principal Financial and Accounting Officer)
