Zions Shareholders Back Say-on-Pay Plan, Reject Clawback

Zions Bancorporation's (ZION) shareholders overwhelmingly approved the bank's executive compensation despite concerns about low dividend payments and sluggish loan demand.

In a nonbinding advisory vote, more than 97% of the votes cast were for Zions' executive compensation plan. Shareholders rejected a proposal that would have required the bank to review whether to recoup executive bonuses awarded during the last five years, when the bank performed poorly; only 36% voted for it.

During the annual meeting on Friday, one shareholder suggested that the $51.9 billion-asset company could raise its dividend — currently 1 cent per share — without affecting the bank's retained earnings.

Harris Simmons, the chief executive and chairman, joked that he was going to to recommend the shareholder for the Federal Reserve Board.

"I'd like to do it probably as fast as you would like to do it. I love getting those checks in my mailbox and my wife even more," Simmons said.

Pressure by regulators to boost capital and loss reserves made it difficult to do this, Simmons said. Furthermore, economic turmoil in Europe is disrupting financial markets. Both factors make it a good time to build strong capital levels but the bank wants to raise the dividend in the future, he said.

Zions should see credit trends continue to strengthen during 2012 while its core noninterest income should improve slightly, Simmons said.

However, the bank anticipates continuing to see stagnant loan demand, Simmons said. Zions operates in the West, an area that was hard hit by the financial crisis. Its operations in Texas and California have performed better while Colorado has also seen a little improvement. But it remains a "very stubborn environment for loan growth," Simmons said.

Simmons also reiterated that the Salt Lake City company expects to repay the $700 million it still owes the Troubled Asset Relief Program this year.

Overall the meeting had a jovial atmosphere with Simmons drawing chuckles from the crowd and shareholders showering the bank with a few compliments.

"I commend management that I don't see a $2 billion trading loss on derivatives like another big bank in the nation so I appreciate not being in a risk situation," one shareholder joked. He was referring to the $2 billion loss JPMorgan Chase (JPM) suffered from bets made by a London trader.