COMMERCE BANCSHARES, INC.
2005 EQUITY INCENTIVE PLAN
This 2005 Equity
Incentive Plan originally adopted by Commerce Bancshares, Inc. on
the 28th day of January, 2005 is restated with all amendments as of
July 24, 2009.
EFFECTIVE DATE AND
PURPOSE
1.1 Effective
Date . The Board of Directors of the Company has adopted the
Plan on January 28, 2005, subject to the approval of the
stockholders of the Company within twelve (12) months of such
date.
1.2 Purpose of
the Plan . The Plan is designed to provide a means to attract,
motivate and retain eligible Participants and to further the growth
and financial success of the Company by aligning the interests of
Participants through the ownership of Shares and other incentives
with the interests of the Company’s stockholders.
2.1 The following
words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:
2.2 “
1934 Act ” means the Securities Exchange Act of 1934,
as amended. Reference to a specific section of the 1934 Act or
regulation thereunder shall include such section or regulation, any
valid regulation promulgated under such section, and any comparable
provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
2.3 “
Award ” means, individually or collectively, a grant
under the Plan of Nonqualified Stock Options, Incentive Stock
Options, Restricted Stock, Restricted Stock Units, Performance
Shares, Performance Units, Stock-Based Awards, or Stock
Appreciation Rights.
2.4 “
Award Agreement ” means either (1) the written
agreement setting forth the terms and provisions applicable to each
Award granted under the Plan or (2) a statement issued by the
Company to a Participant describing the terms and provisions of
such Award.
2.5 “
Board ” or “ Board of Directors ”
means the Board of Directors of the Company.
2.6 “
Cause ” means a Participant’s dishonesty, theft,
embezzlement from the Company, willful violation of any rules of
the Company pertaining to the conduct of Employees or the
commission of a willful felonious act while an Employee, or
violation of any, agreement related to non-competing,
non-solicitation of employees or customers or confidentiality
between the Company and the Participant.
2.7 “
Change in Control ” shall have the meaning assigned to
such term in Section 14.
2.8 “
Code ” means the Internal Revenue Code of 1986, as
amended from time to time.
2.9 “
Committee ” means the Compensation and Human Resources
Committee of the Board of Directors.
2.10 “
Company ” means Commerce Bancshares, Inc., a Missouri
corporation, or any successor thereto.
2.11 “
Disability ” means a permanent and total disability
that qualifies a Participant for disability benefits under the
Social Security Act; provided, however, that with respect to
Restricted Stock Units, “Disability” means
“disability” within the meaning of section 409A of the
Code.
2.12 “
Employee ” means any employee of the Company or any of
its Subsidiaries, whether such employee is so employed at the time
the Plan is adopted or becomes so employed subsequent to the
adoption of the Plan.
2.13 “
Exercise Price ” means the price at which a Share may
be purchased by a Participant pursuant to the exercise of an Option
or Stock Appreciation Right.
2.14 “
Fair Market Value ” means, as of any given date,
(i) the closing sales price of the Shares on any national
securities exchange on which the Shares are listed; (ii) the
closing sales price if the Shares are listed on The Nasdaq Stock
Market or other over the counter market; or (iii) if there is
no regular public trading market for such Shares, the fair market
value of the Shares as determined by the Committee.
2.15 “
Fiscal Year ” means the fiscal year of the
Company.
2.16 “
Grant Date ” means, with respect to an Award, the date
such Award is granted to a Participant.
2.17 “
Incentive Stock Option ” means an Option to purchase
Shares which is designated as an Incentive Stock Option and is
intended to meet the requirements of section 422 of the
Code.
2.18 “
Nonqualified Stock Option ” means an Option to
purchase Shares which is not an Incentive Stock Option.
2.19 “
Option ” means an Incentive Stock Option or a
Nonqualified Stock Option.
2.20 “
Participant ” means an employee who has an outstanding
Award under the Plan.
2.21 “
Performance Goals ” shall any or all of the following:
mean revenue, earnings, earnings per share, pre-tax earnings and
net profits, stock price, market share, costs, return on equity,
efficiency ratio (non-interest expense, divided by total revenue),
asset management, asset quality, asset growth or budget
achievement. Performance Goals need not be the same with respect to
all Participants and may be established separately for the Company
as a whole or for its various groups, divisions, subsidiaries, and
may be based on performance in comparison to performance by
unrelated businesses specified by the Committee. All calculations
and financial accounting matters relevant to this Plan shall be
determined in accordance with GAAP, except as otherwise directed by
the Committee.
2.22 “
Performance Period ” means the time period during
which the performance objectives must be met.
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2.23 “
Performance Share ” means an Award granted to a
Participant, as described in Section 9 herein.
2.24 “
Performance Unit ” means an Award granted to a
Participant, as described in Section 9 herein.
2.25 “
Period of Restriction ” means the period during which
Restricted Stock awarded hereunder is subject to a substantial risk
of forfeiture. As provided in Section 7, such restrictions may
be based on the passage of time, the achievement of target levels
of performance or the occurrence of other events as determined by
the Committee.
2.26 “
Plan ” means the Commerce Bancshares, Inc. 2005 Equity
Incentive Plan, as set forth in this instrument and as hereafter
amended from time to time.
2.27 “
Restricted Stock ” means an Award granted to a
Participant pursuant to Section 7.
2.28 “
Restricted Stock Unit ” means an Award granted to a
Participant, as described in Section 7 herein.
2.29 “
Retirement ” means a Termination of Service after the
Participant attains age 60 and completes 10 years of
continuous service, measured from the most recent date of
hire.
2.30 “
Section 16 Person ” means a person who, with
respect to the Shares, is subject to Section 16 of the 1934
Act, as determined by the Board.
2.31 “
Shares ” means the shares of common stock, $5.00 par
value, of the Company.
2.32 “
Stock Appreciation Right ” means an Award granted to a
Participant pursuant to Section 8.
2.33 “
Subsidiary ” means any corporation, partnership, joint
venture, limited liability company, or other entity (other than the
Company) in an unbroken chain of entities beginning with the
Company if, at the time of the granting of an Award, each of the
entities other than the last entity in the unbroken chain owns more
than fifty percent (50%) of the total combined voting power in one
of the other entities in such chain.
2.34 “
Termination of Service ” means a cessation of the
employee-employer relationship between a Participant and the
Company or a Subsidiary for any reason but excluding any such
cessation where there is a simultaneous reengagement of the person
by the Company or a Subsidiary.
3.1
Participants . Awards may be granted in the discretion of
the Committee among employees of the Company and its
Subsidiaries.
3.2
Non-Uniformity . Awards granted hereunder need not be
uniform among eligible Participants and may reflect distinctions
based on title, compensation, responsibility or any other factor
the Committee deems appropriate.
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4.1 The
Committee . The Plan will be administered by the Committee,
which, to the extent deemed necessary or appropriate by the Board,
will consist of two or more persons who satisfy the requirements
for a “non-employee director” under Rule 16b-3
promulgated under the 1934 Act and/or the requirements for an
“outside director” under section 162(m) of the Code.
The members of the Committee shall be appointed from time to time
by, and shall serve at the pleasure of, the Board of Directors. In
the absence of such appointment, the Board of Directors shall serve
as the Committee and shall have all of the responsibilities,
duties, and authority of the Committee set forth herein.
4.2 Authority
of the Committee . The Committee shall have the exclusive
authority to administer and construe the Plan in accordance with
its provisions. The Committee’s authority shall include,
without limitation, the power to (a) determine persons
eligible for Awards, (b) prescribe the terms and conditions of the
Awards, (c) interpret the Plan and the Awards, (d) adopt
rules for the administration, interpretation and application of the
Plan as are consistent therewith, and (e) interpret, amend or
revoke any such rules. With respect to any Award that is intended
to qualify as “performance-based compensation” within
the meaning of section 162(m) of the Code, the Committee shall have
no discretion to increase the amount of compensation that otherwise
would be due upon attainment of a Performance Goal, although the
Committee may have discretion to deny an Award or to adjust
downward the compensation payable pursuant to an Award, as the
Committee determines in its sole judgment.
4.3 Delegation
by the Committee . The Committee, in its sole discretion and on
such terms and conditions as it may provide, may delegate all or
any part of its authority and powers under the Plan to one or more
officers of the Company; provided, however, that the Committee may
not delegate its authority and powers in any way which would
jeopardize the Plan’s qualification under Rule 16b-3 and
may not delegate its authority and powers with respect to any Award
that is intended to qualify as performance-based
compensation.
4.4 Factors to
Consider for Granting Awards . In making the determination as
to the persons to whom an Award shall be granted, the Committee or
any delegate may take into account such individual’s salary
and tenure, duties and responsibilities, their present and
potential contributions to the success of the Company, the
recommendation of supervisors, and such other factors as the
Committee or any delegate may deem important in connection with
accomplishing the purposes of the Plan.
4.5 Decisions
Binding . All determinations and decisions made by the
Committee and any of its delegates pursuant to Section 4.3
shall be final, conclusive, and binding on all persons, and shall
be given the maximum deference permitted by law.
SHARES SUBJECT TO THE
PLAN
5.1 Number of
Shares . Subject to adjustment as provided in Section 5.3,
the total number of Shares available for grant under the Plan shall
not exceed 4,000,000 Shares. Shares granted under the Plan may be
either authorized but unissued Shares or treasury Shares, or any
combination thereof. No more than 800,000 Shares may be granted as
Restricted Stock, Restricted Stock Units, Performance Shares and
Stock-Based Awards.
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5.2 Lapsed
Awards . Unless determined otherwise by the Committee, Shares
related to Awards that are forfeited, terminated or expire
unexercised, shall be available for grant under the Plan. Shares
that are tendered by a Participant to the Company in connection
with the exercise of an Award, withheld from issuance in connection
with a Participant’s payment of tax withholding liability,
settled in cash in lieu of Shares, or settled in such other manner
so that a portion or all of the Shares included in an Award are not
issued to a Participant shall not be available for grant under the
Plan.
5.3 Adjustments
in Awards and Authorized Shares . In the event of a stock
dividend or stock split, the number of Shares subject to
outstanding Awards and the numerical limits of Sections 5.1
and 6.1 shall automatically be adjusted to prevent the dilution or
diminution of such Awards, except to the extent directed otherwise
by the Committee. In the event of a merger, reorganization,
consolidation, recapitalization, separation, liquidation,
combination, or other similar change in the corporate structure of
the Company affecting the Shares, the Committee shall adjust the
number and class of Shares which may be delivered under the Plan,
the number, class and price of Shares subject to outstanding
Awards, and the numerical limits of Sections 5.1 and 6.1 in
such manner as the Committee shall determine to be advisable or
appropriate to prevent the dilution or diminution of such Awards.
Any such numerical limitations shall be subject to adjustment under
this Section only to the extent such adjustment will not affect the
status of any Award intended to qualify as “performance-based
compensation” under section 162(m) of the Code or the ability
to grant or the qualification of Incentive Stock Options under the
Plan. In addition, other than with respect to Options, Stock
Appreciation Rights, and Awards intended to constitute
“performance-based compensation” under section 162(m)
of the Code, the Committee is authorized to make adjustments to the
terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events affecting the
Company, or in response to changes in applicable laws, regulations,
or accounting principles. The determination of the Committee as to
the foregoing adjustments, if any, shall be conclusive and binding
on all Participants.
5.4 Repurchase
Option . To the extent consistent with the requirements of
section 409A of the Code, the Committee may include in the terms of
any Award Agreement, other than an Award Agreement with respect to
Stock Appreciation Rights, that the Company shall have the option
to repurchase Shares of any Participant acquired pursuant to the
Award granted under the Plan upon a Participant’s Termination
of Service. The terms of such repurchase right shall be set forth
in the Award Agreement.
5.5 Buy-Out
Provision . To the extent consistent with the requirements of
section 409A of the Code, the Committee may at any time offer on
behalf of the Company to buy-out, for a payment in cash or Shares,
an Award previously granted, based on such terms and conditions as
the Committee shall establish and communicate to the Participants
at the time such offer is made; provided, however, to the extent
Sections 13(e) and/or 14(e) of the 1934 Act and the rules and
regulations thereunder are applicable to any such offer, the
Company shall comply with the requirements of such
sections.
5.6
Restrictions on Share Transferability . The Committee may
impose such restrictions on any Award of Shares or Shares acquired
pursuant to the exercise of an Award as it may deem advisable or
appropriate, including, but not limited to, restrictions related to
applicable Federal securities laws, the requirements of any
national securities exchange or system upon which Shares are then
listed or traded, and any blue sky or state securities
laws.
5.7 Minimum
Vesting . Except for Awards with a value of less than $10,000
at the Grant Date, no more than 25% of an Award may be vested prior
to the first anniversary of the Grant Date; provided, that an Award
may become fully vested prior to the first anniversary of the Grant
Date in the event of a Termination of Service due to death,
Disability or Retirement.
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6.1 Grant of
Options . Subject to the terms and provisions of the Plan,
Options may be granted to Participants at any time and from time to
time as determined by the Committee. The Committee shall determine
the number of Shares subject to each Option. The Committee may
grant Incentive Stock Options, Nonqualified Stock Options, or any
combination thereof. No more than 4,000,000 Shares may be issued as
Incentive Stock Options under the Plan. The maximum aggregate
number of Shares that may be granted in the form of Options in any
one Fiscal Year to a Participant shall be 250,000.
6.2 Award
Agreement . Each Option shall be evidenced by an Award
Agreement that shall specify the Exercise Price, the expiration
date of the Option, the number of Shares to which the Option
pertains, any conditions to exercise of the Option and such other
terms and conditions as the Committee shall determine. The Award
Agreement shall also specify whether the Option is intended to be
an Incentive Stock Option or a Nonqualified Stock
Option.
6.3 Exercise
Price . Subject to the provisions of this Section 6.3, the
Exercise Price for each Option shall be determined by the Committee
and shall be provided in each Award Agreement.
6.3.1
Nonqualified Stock Options . In the case of a Nonqualified
Stock Option, the Exercise Price shall not be less than one hundred
percent (100%) of the Fair Market Value of a Share on the Grant
Date; provided, however, in no case shall the Exercise Price be
less than the par value of such Share.
6.3.2 Incentive
Stock Options . In the case of an Incentive Stock Option, the
Exercise Price shall be not less than one hundred percent (100%) of
the Fair Market Value of a Share on the Grant Date; or one hundred
ten percent (110%) of the Fair Market Value of a Share if the
Participant (together with persons whose stock ownership is
attributed to the Participant pursuant to section 424(d) of the
Code) owns on the Grant Date stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company
or any of its Subsidiaries; provided, however, in no case shall the
Exercise Price be less than the par value of such Share.
6.3.3
Substitute Options . Notwithstanding the provisions of
Sections 6.3.1 and 6.3.2, in the event that the Company
consummates a transaction described in section 424(a) of the Code,
persons who become Participants on account of such transaction may
be granted Options in substitution for options granted by such
former employer or recipient of services. If such substitute
Options are granted, the Committee, consistent with section 424(a)
of the Code, may determine that such substitute Options shall have
an exercise price less than one hundred (100%) of the Fair Market
Value of the Shares on the Grant Date.
6.4 Expiration
of Options .
6.4.1
Expiration Dates . Except as provided in Section 6.7.3
regarding Incentive Stock Options, each Option shall terminate upon
the earliest to occur of the following events:
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(a)
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The
date(s) for termination of the Option set forth in the Award
Agreement;
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(b)
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The
date determined under Section 6.8 regarding Termination of
Service; or
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(c)
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The
expiration of ten (10) years from the Grant Date.
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6.4.2 Committee
Discretion . Subject to the limits of Section 6.4.1, the
Committee shall provide in each Award Agreement when each Option
expires and becomes unexercisable.
6.5
Exercisability of Options . Options granted under the Plan
shall be exercisable at such times and be subject to such
restrictions and conditions as the Committee shall determine. After
an Option is granted, the Committee may accelerate or waive any
condition constituting a substantial risk of forfeiture applicable
to the Option. The Committee may not, after an Option is granted,
extend the maximum term of the Option.
6.6 Payment
. Options shall be exercised by a Participant’s delivery of a
written notice of exercise to the Secretary of the Company (or its
designee), setting forth the number of Shares with respect to which
the Option is to be exercised, accompanied by full payment for the
Shares.
Upon the exercise
of an Option, the Exercise Price shall be payable to the Company in
full in cash or its equivalent. The Committee may also permit
exercise (a) by tendering previously acquired Shares having an
aggregate Fair Market Value at the time of exercise equal to the
total Exercise Price, or (b) by any other means which the
Committee determines to provide legal consideration for the Shares,
and to be consistent with the purposes of the Plan.
As soon as
practicable after receipt of a written notification of exercise and
full payment for the Shares purchased, the Company shall deliver to
the Participant, Share certificates (which may be in book entry
form) representing such Shares. Until the issuance of the stock
certificates, no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the Shares as
to which the Option has been exercised. No adjustment will be made
for a dividend or other rights for which a record date is
established prior to the date the certificates are
issued.
6.7 Certain
Additional Provisions for Incentive Stock Options .
6.7.1
Exercisability . The aggregate Fair Market Value (determined
on the Grant Date(s)) of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by any Participant
during any calendar year (under all plans of the Company and its
Subsidiaries) shall not exceed $100,000.
6.7.2 Company
and Subsidiaries Only . Incentive Stock Options may be granted
only to Participants who are employees of the Company or a
subsidiary corporation (within the meaning of section 424(f) of the
Code) on the Grant Date.
6.7.3
Expiration . No Incentive Stock Option may be exercised
after the expiration of ten (10) years from the Grant Date;
provided, however, that if the Option is granted to an employee
who, together with persons whose stock ownership is attributed to
the employee pursuant to section 424(d) of the Code, owns stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any of its Subsidiaries, the
Option may not be exercised after the expiration of five
(5) years from the Grant Date.
6.8 Termination of
Service.
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6.8.1
Termination for Cause . Unless otherwise specifically
provided in the Award Agreement, an Option may not be exercised
after a Participant’s Termination of Service by the Company
or a Subsidiary for Cause.
6.8.2
Termination Due To Death . Unless otherwise specifically
provided in the Award Agreement, an Option may not be exercised
more than one (1) year after a Participant’s Termination
of Service due to death, but in no event after the expiration of
the term of the Option.
6.8.3
Termination Due to Disability . Unless otherwise
specifically provided in the Award Agreement, an Incentive Stock
Option may not be exercised more than one year from the date of
Termination of Service due to Disability, and a Nonqualified Stock
Option may not be exercised more than 36 months from the date
of Termination of Service due to Disability, but in no event after
the expiration of the term of the Option.
6.8.4
Termination Due to Retirement . Unless otherwise
specifically provided in the Award Agreement, an Incentive Stock
Option may not be exercised more than three months after a
Termination of Service due to Retirement, and a Nonqualified Stock
Option may not be exercised more than 36 months from the date
of Termination of Service due to Retirement, but in no event after
the expiration of the term of the Option.
6.8.5 Other
Voluntary Terminations . Unless otherwise specifically provided
in the Award Agreement, an Option may not be exercised after the
date of Termination of Service due to voluntary termination other
than for Retirement.
6.8.6
Termination For Other Reasons . Unless otherwise
specifically provided in the Award Agreement, an Option may not be
exercised more than three months after a Participant’s
Termination of Service for any reason other than described in
Section 6.8.1 through 6.8.5, but in no event after the
expiration of the term of the Option.
6.8.7 Leave of
Absence . The Committee may make such provision as it deems
appropriate with respect to Participants on a leave of
absence.
6.9 Restriction
on Option Tr
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