2006 INCENTIVE COMPENSATION
PLAN
SECTION 1.
Purpose of the Plan; Definitions . The purpose of the Compass
Bancshares, Inc. 2006 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, key employees and other personnel of the
Corporation and its Affiliates (as hereinafter defined) who make
substantial contributions to the Corporation through their ability,
loyalty, industry and invention, and to members of the Board of
Directors of the Corporation who are not also employees of the
Corporation (the “Non-Employee Directors”). The
Corporation intends that the Plan will facilitate securing,
retaining and motivating officers, key employees, other personnel
and Non-Employee Directors of the Corporation.
For purposes of
the Plan, the following terms shall be defined as set
forth
(a) “Act”
means the Securities Exchange Act of 1934, as amended, or any
successor statute thereto.
(b) “Affiliate”
means (i) any entity that, directly or indirectly through one
or more intermediaries, is controlled by the Corporation and
(ii) any entity in which the Corporation has a significant
equity interest, as determined by the Committee.
(c) “Award”
means any Stock Option, Stock Appreciation Right, Restricted Stock,
Performance Unit, supplemental cash payment or other award granted
under the Plan.
(d) “Award
Agreement” means any written agreement, contract or other
instrument or document evidencing any Award granted under the
Plan.
(e) “Board”
means the Board of Directors of the Corporation.
(f) “Cause”
means, unless otherwise determined by the Committee and reflected
in the applicable Award Agreement, the occurrence of any one or
more of the following (i) the willful and continued failure by
a Participant to substantially perform his or her duties (other
than any such failure resulting from the Participant’s
Disability, death or Retirement), after a written demand for
substantial performance is delivered by the Committee to the
Participant that specifically identifies the manner in which the
Committee believes that the Participant has not substantially
performed his or her duties, and the Participant has failed to
remedy the situation within thirty (30) calendar days of
receiving such notice or (ii) a Participant’s conviction
for committing an act of fraud, embezzlement, theft or another act
constituting a felony or a crime involving moral turpitude or
(iii) substantial dependence or addiction to any drug
illegally taken or to alcohol that is in either event materially
and demonstrably injurious to the Corporation or (iv) the
engaging by a Participant in gross misconduct materially and
demonstrably injurious to the Corporation. No act or failure to act
on a Participant’s part shall be considered
“willful” unless done, or omitted to be done, by the
Participant not in good faith and without reasonable belief that
his action or omission was in the best interest of the Corporation.
Cause shall be determined by the Committee in the exercise of good
faith and reasonable judgment.
(g) “Code”
means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
(h) “Commission”
means the Securities and Exchange Commission.
(i) “Committee”
means the Compensation Committee of the Board.
(j) “Common
Stock” means the common stock, par value $2.00 per share, of
the Corporation.
(k) “Disability”
means total and permanent disability as determined under the
Corporation’s long-term disability plan.
(l) “Disinterested
Person” means an individual who qualifies as a
“non-employee director” within the meaning set forth in
Rule 16b-3(b)(3) as promulgated by the Commission under the
Act, or any successor definition
1
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.
(m) “Early
Retirement” means retirement from active employment with the
Corporation or its Affiliates 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.
(n) “Eligible
Person” means any Employee or director (including any
Non-Employee Director), providing services to the Corporation or
any Affiliate who is in a position in which his or her decisions,
actions and/or counsel significantly impact the performance of the
Corporation and its Affiliates and who the Committee determines to
be an Eligible Person.
(o) “Employee”
means any employee of the Corporation or its Affiliates, including
officers of the Corporation or its Affiliates. Non-Employee
Directors shall not be considered Employees for purposes of the
Plan.
(p) “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.
(q) “Incentive
Stock Option” means any Stock Option intended to be and
designated by the Committee as an “incentive stock
option” within the meaning of Section 422 of the
Code.
(r) “Non-Qualified
Stock Option” means any Stock Option that is not an Incentive
Stock Option.
(s) “Normal
Retirement” means retirement from active employment with the
Corporation or its Affiliates on or after the date on which the
Participant reaches the age of 65.
(t) “Participant”
means an Eligible Person designated to be granted an Award under
the Plan.
(u) “Performance
Units” means an Award granted to a Participant pursuant to
Section 9 hereof contingent upon achieving certain performance
targets.
(v) “Person”
means any individual, corporation, partnership, association or
trust.
(w) “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.
(x) “Retirement”
means Early Retirement and Normal Retirement.
(y) “Stock
Appreciation Right” 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 (i) the Fair
Market Value of a specified number of shares of Common Stock at the
time of exercise over (ii) a specified price.
(z) “Stock
Option” means any option to purchase shares of Common Stock
granted pursuant to Section 7 hereof.
(aa) “Ten
Percent Shareholder” means a Person who owns (after taking
into account the attribution rules of Section 424(d) of the Code)
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. The Committee shall
have full and final authority in its discretion (i) to
interpret the provisions of the Plan (and any Award Agreement and
any other agreement or instrument relating to the Plan) and to
decide all questions of fact arising in its application,
(ii) to designate Participants, (iii) to determine the
Participants to whom Awards shall be made under the Plan,
(iv) to determine the type of Award to be made and the amount,
size, terms and conditions of each such Award, (v) to
determine and establish additional terms and conditions not
inconsistent with the Plan for any Award Agreements entered into
with Participants in connection with the Plan, (vi) to
determine the time when Awards will be granted
2
and when rights
may be exercised, which may be after termination of employment,
(vii) to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time
to time, deem advisable and (viii) to make all other
determinations necessary or advisable for the administration of the
Plan.
(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 shall be the act of the Committee. The
Committee may also act by unanimous written consent. 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 by the Committee 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 attorneys’ 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 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.
(d) The
Committee may, in its sole discretion, delegate any of its powers
to grant Awards under the Plan to any officer of the Corporation
deemed appropriate by the Committee; provided, however,
(i) that no officer to whom the power to grant Awards under
the Plan has been delegated shall have the power to grant Awards
under the Plan to himself or herself or to any director of the
Corporation, and (ii) the Committee’s discretion to
delegate may be limited by applicable Delaware corporate law,
compliance with SEC Rule 16b-3 or similar other
requirements.
SECTION 3.
Eligibility; Participants . Any Eligible Person shall be
eligible to be designated a Participant. Incentive Stock Options
may only be granted to full or part-time Employees (which term as
used herein includes, without limitation, officers and directors
who are also Employees). Incentive Stock Options shall not be
granted to an Employee of an Affiliate unless such Affiliate is
also a “subsidiary corporation” of the Corporation
within the meaning of Section 424(f) of the Code or any successor
provision.
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 total
number of shares of Common Stock reserved and available for
distribution under the Plan shall be Four Million Five Hundred
Thousand (4,500,000). Such shares may consist of, in whole or in
part, authorized and unissued shares or shares previously issued
that have been repurchased by the Corporation. Except as otherwise
provided herein, any shares subject to a Stock Option or right that
for any reason expires or terminates unexercised as to such shares
and any shares of Restricted Stock which are forfeited by a
Participant or otherwise reacquired by the Corporation shall again
be available for award under the Plan.
(b) The
maximum number of shares of Common Stock subject to Awards that may
be granted under the Plan to any individual in any one year is Five
Hundred Thousand (500,000) (subject to appropriate adjustments to
reflect changes in the capitalization of the
Corporation).
(c) In the
event of any change in the outstanding number of shares of Common
Stock by reason of a stock dividend or distribution,
recapitalization, merger, consolidation, split-up, combination,
exchange of shares or 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.
3
SECTION 6.
Effective Date . The Plan has been adopted by the Board subject
to the approval of the stockholders of the Corporation. If the Plan
is approved by the stockholders of the Corporation, the effective
date of the Plan will be February 20, 2006, the date it was
adopted by the Board. 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 Options need
not be the same with respect to each Participant. Each Stock Option
shall be evidenced by an Award Agreement in a form that is not
inconsistent with the Plan and that the Committee may from time to
time approve. Such Award Agreement 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 Option becomes exercisable.
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 Participant Incentive Stock
Options (other than Non-Employee Directors), 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 a Participant
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 such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall
deem desirable, which additional terms and conditions shall be
reflected in the applicable Award Agreement:
(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 not be 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 Common Stock subject to such
Incentive Stock Option shall not be 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. Notwithstanding
the foregoing and except as permitted by the provisions of Sections
5(c) and 13 hereof, the Committee shall not have the power to
(i) amend the terms of previously granted Stock Options to
reduce the option price per share subject to such Stock Option or
(ii) cancel such Stock Options and grant substitute Stock
Options with a lower price per share than the cancelled Stock
Options.
(b)
Option Term . The term of each Stock Option shall be fixed
by the Committee, but no Incentive Stock Option shall be
exercisable more than ten (10) years after the date such
Incentive Stock Option is granted; provided, however, that if a
Stock Option is an Incentive Stock Option granted to a Ten Percent
Shareholder, such Incentive Stock Option shall not be exercisable
more than five (5) years after the date such Incentive Stock
Option is granted.
(c)
Exercisability . Subject to Section 7(g) 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. If any Stock Option is
exercisable only in installments, the Committee, in its discretion,
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 payable to the Corporation
or
4
such other
instrument as may be acceptable to the Committee. As determined by
the Committee, in its sole discretion, at or after the time of
grant, payment in full or in part may also be made in the form of
unrestricted Common Stock owned by the Participant (based on the
Fair Market Value of the Common Stock on the date the Stock 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 therefore has been made.
(e)
Voluntary Termination and Termination by the Corporation for
Cause . Unless otherwise determined by the Committee and
reflected in the applicable Award Agreement, an employment contract
or other applicable agreement, a Participant granted a Stock Option
who voluntarily terminates employment, o
|
