COMPASS BANCSHARES, INC.
 
                        2002 INCENTIVE COMPENSATION PLAN
 
         SECTION 1. PURPOSE OF THE PLAN; DEFINITIONS. The purpose of the Compass
Bancshares, Inc. 2002 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 below:
 
         (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 exercise of
good faith and reasonable judgment.
 
         (g) "Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
 
 
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         (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 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, director (including any
Non-Employee Director), consultant or independent contractor 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.
 
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         (x) "Retirement" means Early Retirement and Normal Retirement.
 
         (y) "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 (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. Other than as set forth in Section 12
below, no member of the Committee shall be eligible to receive an Award under
the Plan while serving on the Committee. 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 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 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.
 
 
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         (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, 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.
 
         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), and
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 Six Million Three Hundred Fifty
Thousand (6,350,000); provided, however, that no more than One Million
(1,000,000) shares may be awarded under the Plan in the form of Awards other
than Stock Options. 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 Four Hundred
Thousand (400,000) (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.
 
         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 11, 2002, 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 Option Awards need not be the same with
respect to each Participant. Each Stock Option shall be evidenced by an Award
Agreement in such 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
 
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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 (other
than Non-Employee Directors) 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 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 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 payable
 
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to the Corporation or 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 therefor 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, a Participant granted a Stock Option who voluntarily terminates
employment, other than by reason of Retirement, or whose employment is
terminated involuntarily for Cause, will forfeit all rights under such Stock
Option.
 
         (f) Termination for Any Reason Other Than Cause and Voluntary
Termination. The rights of any Participant granted a Stock Option, whose
employment is terminated for any reason other than as set forth in subsection
(e) above, shall be as determined by the Committee, in its discretion, and
reflected in the applicable Award Agreement.
 
         (g) 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 a Participant during any calendar year under the Plan (and/or any other
stock option plans of the Corporation or any Affiliate) shall not exceed One
Hundred Thousand and No/100 Dollars ($100,000).
 
         SECTION 8. STOCK APPRECIATION RIGHTS. Each Stock Appreciation Right
shall be evidenced by an Award Agreement in such form that is not inconsistent
with the Plan and that the Committee may from time to time approve. Stock
Appreciation Rights 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) Award. A Stock Appreciation Right shall entitle the Participant to
receive upon exercise 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 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 one hundred percent (100%) of the Fair Market Value of the Common Stock at
the time such Stock 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 Stock Options
granted under the Plan, stock 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.
 
         (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.
 
         (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 that have been issued under the Plan.
 
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         (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.
 
         (f) Voluntary Termination and Termination by the Corporation for Cause.
Unless otherwise determined by the Committee and reflected in the applicable
Award Agreement, a Participant granted a Stock Appreciation Right who
voluntarily terminates employment, other than by reason of Retirement, or whose
employment is terminated involuntarily for Cause, will forfeit all rights under
such Stock Appreciation Right.
 
         (g) Termination for Any Reason Other Than Cause and Voluntary
Termination. The rights of any Participant granted a Stock Appreciation Right,
whose employment is terminated for any reason other than as set forth in
subsection (f) above shall be as determined by the Committee, in its discretion,
and reflected in the applicable Award Agreement.
 
         SECTION 9. PERFORMANCE UNITS. The Committee may grant Performance Units
(which may be denominated in either shares of Common 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 Common
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 Section 10
below), subject to forfeiture if the goal is not attained or (ii) transferable
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 Common Stock (based on the
then current fair market value of such Common Stock), at the Committee's
discretion. Each Performance Unit shall be evidenced by an Award Agreement in
such form that is not inconsistent with the Plan and that the Committee may from
time to time approve. Performance Units 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) 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 that 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 Affiliates relative to prior periods, the
performance of the Corporation or its Affiliates relative to other companies or
the performance of the departments or divisions of the Corporation or its
Affiliates with respect to which the
 
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recipient has supervisory responsibility. Multiple performance goals may be
established and may have the same or different weighting.
 
         (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) of the Code and the regulations promulgated
thereunder with respect to those Performance Units which are structured to
qualify for an exception to the limitations on deductibility imposed by Section
162(m) of the Code and the regulations promulgated thereunder (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
with respect to 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 on the date of payment. 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 Common 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 Section 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) Voluntary Termination and Termination by the Corporation for Cause.
Unless otherwise determined by the Committee and reflected in the applicable
Award Agreement, a Participant granted a Performance Unit who voluntarily
terminates employment, other than by reason of Retirement, or whose employment
is terminated involuntarily for Cause, will forfeit all rights under such
Performance Unit.
 
         (g) Termination for Any Reason Other Than Cause and Voluntary
Termination. The rights of any Participant granted a Performance Unit, whose
employment is terminated for any reason other than as set forth in subsection
(f) above, shall be as determined by the Committee, in its discretion, and
reflected in the applicable Award Agreement.
 
         (h) Section 162(m) Provisions. The Committee shall determine whether to
award any Performance Units in a manner intended to result in "qualified
performance-based compensation" within the meaning of Section 162(m) of the Code
and the regulations promulgated thereunder (a "Qualifying Performance Unit"). If
the Committee intends that an Award be a Qualifying Performance Unit, the
Committee shall satisfy the requirements of Section 162(m) of the Code and the
regulations promulgated thereunder in connection with such Award.
 
         The maximum amount payable under a Performance Unit will depend on the
value of the Performance Unit; provided, however, the maximum amount payable
with respect to Qualifying Performance Units awarded to any single officer in
any given performance period shall be Two Million Five Hundred Thousand and
No/100 Dollars ($2,500,000) notwithstanding the terms of such Performance Unit.
 
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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 Eligible Persons 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 for such shares by the recipient of Restricted Stock (subject
to Section 10(b) hereof), the period of time during which the transfer of such
shares is restricted and all other terms and conditions of such Awards, which
terms and conditions shall not be inconsistent with the terms and conditions of
the Plan. The Committee may also condition the grant of Restricted Stock, and
the terms and conditions applicable to such Restricted Stock, upon the
attainment of specified performance goals (which grants may be structured as
Performance Units or Qualifying Performance Units in accordance with Section 9
hereof), 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 Participant.
 
         (b) Awards and Certificates. Each Award of shares of Restricted Stock
shall be evidenced by an Award Agreement (a "Restricted Stock Award Agreement")
in such form that is not inconsistent with the Plan and that the Committee may
from time to time approve.
 
                  (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 for such shares, if any, is
         required.
 
                  (ii) A stock certificate representing 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. 2002 Incentive Compensation Plan and a Restricted Stock
                  Award Agreement entered into between the registered owner and
                  the Corporation. Copies of such Plan and Award 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, from the date of grant through such period as
         may be set by the Committee (the "Restriction Period"), the Participant
         shall not be permitted to sell, transfer, pledge or assign shares of
         Restricted Stock awarded under the Plan. The Restriction Period may
         include the performance period with respect to Performance Units
         denominated in shares of stock. Within these limits, the Committee may,
         in its sole discretion, provide for the lapse of such 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
 
 
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         Qualifying Performance Units prior to the expiration of the relevant
         performance period in accordance with Section 9 above, the Committee
         shall not have the discretion to alter the performance goal or
         accelerate the performance period.
 
                  (ii) Except as provided in subsection (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 Common Stock shall be delivered
         to the Participant 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 any shares of
         Restricted Stock which have been fully paid for by the Participant.
 
                  (iv) The Committee may, in its sole discretion, waive in whole
         or in part any or all restrictions with respect to such Participant's
         shares of Restricted Stock.
 
         SECTION 11. SUPPLEMENTAL CASH PAYMENTS. Subject to the Committee's
discretion, Award 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, 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 Stock 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. NON-QUALIFIED STOCK OPTIONS TO NON-EMPLOYEE DIRECTORS. The
Corporation shall issue Non-Qualified Stock Options to Non-Employee Directors in
accordance with this Section 12. For purposes of this Section 12, the following
terms shall be defined as set forth below:
 
         (a) "Director Disability" means that the Non-Employee Director (i) has
         established to the satisfaction of the Board that the Non-Employee
         Director is unable to perform his or her duties as a member of the
         Board by reason of any medically determinable physical or mental
         impairment which can be expected to last for a continuous period of not
         less than twelve (12) months and (ii) has satisfied any requirement
         imposed by the Committee in regard to evidence of such disability.
 
         (b) "Director Misconduct" means the occurrence of any one or more of
         the following (i) the willful and continued failure by a Non-Employee
         Director to substantially perform his or her duties (other than any
         such failure resulting from Director Disability, death or Director
         Retirement), after a written demand for substantial performance is
         delivered by the Board to the Non-Employee Director that specifically
         identifies the manner in which the Board believes that the Non-Employee
         Director has not substantially performed his or her duties, and the
         Non-Employee Director has failed to remedy the situation within thirty
         (30) calendar days of receiving
 
 
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<PAGE>
 
         such notice or (ii) a Non-Employee Director'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 Non-Employee Director in gross
         misconduct materially and demonstrably injurious to the Corporation. No
         act or failure to act, on a Non-Employee's part shall be considered
         "willful" unless done, or omitted to be done, by the Non-Employee
         Director not in good faith and without reasonable belief that his
         action or omission was in the best interest of the Corporation.
         Director Misconduct shall be determined by the Board in exercise of
         good faith and reasonable judgment.
 
         (c) "Director Retirement" means mandatory retirement from service as a
         member of the Board pursuant to the Corporation's policies.
 
         Each Non-Employee Director first elected or appointed to the Board
following the effective date of the Plan shall be granted, as of the date of
such Non-Employee Director's first election or appointment to the Board, a
Non-Qualified Stock Option to purchase Two Thousand (2,000) shares of Common
Stock (subject to adjustment pursuant to Sections 5(c) and 13 hereof). Each
Non-Employee Director shall be granted during the term of the Plan, as of the
date of each Annual Meeting of Stockholders of the Corporation commencing with
the 2002 Annual Meeting of Stockholders of the Corporation, if such Non-Employee
Director's term of office continues after such date, a Non-Qualified Stock
Option to purchase Two Thousand (2,000) shares of Common Stock (subject to
adjustment pursuant to Sections 5(c) and 13 hereof).
 
         Each Non-Qualified Stock Option granted to a Non-Employee Director
pursuant to this Section 12 shall be exercisable in full as of the date of
grant, shall have an exercise price equal to the Fair Market Value of a share of
Common Stock on the date of grant and shall expire on the tenth (10th)
anniversary of the date of grant, except as provided below. Each Non-Qualified
Stock Option granted pursuant to this Section 12 may be transferable pursuant to
terms established by the Committee consistent with the Plan; provided, however,
that a transferred Non-Qualified Stock Option may be exercised by the transferee
only to the extent that the Non-Employee Director would have been entitled to
exercise such Non-Qualified Stock Option had the Non-Qualified Stock Option not
been transferred.
 
         All grants of Non-Qualified Stock Options pursuant to this Section 12
shall be automatic and non-discretionary and shall be made strictly in
accordance with the foregoing terms and the following additional provisions:
 
         (i) A Non-Employee Director granted a Non-Qualified Stock Option
pursuant to this Section and whose service to the Corporation in all capacities
("Service") ceases shall forfeit all rights under such Non-Qualified Stock
Option, except that:
 
                  (A) If such Non-Employee Director's Service ceases for any
         reason other than Director Misconduct, death, Director Disability or
         Director Retirement, such Non-Employee Director may at any time within
         a period of three (3) months after such cessation, but not after the
         stated termination date of the Non-Qualified Stock Option, exercise the
         Non-Qualified Stock Option. If such Non-Employee Director shall die
         following any such cessation and prior to the expiration of such three
         (3) month period, the Non-Qualified Stock Option may be exercised in
         accordance with its terms within such three (3) month period by the
         personal representatives of the estate of such Non-Employee Director or
         by any Person or Persons to whom the Non-Qualified Stock Option has
         been transferred by gift or by will or the applicable laws of descent
         and distribution.
 
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<PAGE>
 
                  (B) If such Non-Employee Director's Service ceases by reason
         of Director Misconduct during the course of such Non-Employee
         Director's term, the Non-Employee Director's rights to such
         Non-Qualified Stock Option shall be forfeited as of the date of the
         occurrence of such Director Misconduct.
 
                  (C) If such Non-Employee Director's Service ceases by reason
         of Director Disability or Director Retirement, such Non-Employee
         Director may exercise the Non-Qualified Stock Option in accordance with
         the terms thereof as though such cessation had never occurred. If such
         Non-Employee Director shall die following any such cessation, the
         Non-Qualified Stock Option may be exercised in accordance with its
         terms by the personal representatives of the estate of such
         Non-Employee Director or by any Person or Persons to whom the
         Non-Qualified Stock Option has been transferred by gift or by will or
         the applicable laws of descent and distribution.
 
                  (D) If such Non-Employee Director shall die while a
         Non-Employee Director of the Corporation, the Non-Qualified Stock
         Option may be exercised in accordance with its terms by the personal
         representatives of the estate of such Non-Employee Director or by any
         Person or Persons to whom the Non-Qualified Stock Option has been
         transferred by gift or by will or the applicable laws of descent and
         distribution for a period of three (3) years from the date of such
         death or until the expiration of the stated term of such Non-Qualified
         Stock Option, whichever period is shorter.
 
         (ii) Non-Qualified Stock Options granted to Non-Employee Directors 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. A
Non-Employee Director may, at such Non-Employee Director's election, pay the
purchase price in cash, by check payable to the Corporation or in unrestricted
shares of Common Stock owned by such Non-Employee Director (based on the Fair
Market Value of the Common Stock on the date the Non-Qualified Stock Option is
exercised) or in any combination thereof having a Fair Market Value on the date
the Non-Qualified Stock Option is exercised equal to the applicable purchase
price.
 
         SECTION 13. SALE, MERGER OR 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 assets 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 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 14. 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 (i) 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 (ii) the consent or approval of any government regulatory
authority, or (iii) 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
 
                                       12
<PAGE>
 
 
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 Affiliates, or affect any right which the Corporation or such Affiliates 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. Unless otherwise determined by the Committee and
reflected in the applicable Award Agreement, no Award under the Plan shall be
assignable or transferable by a Participant except by will or by the laws of
descent and distribution and all Awards shall be exercisable, during the
Participant's lifetime, only by the Participant or by the Participant's legal
guardian. A transferee of an Award shall have only those rights that the
Participant would have had had the Award not been transferred. In addition, if
the Committee allows an Award to be transferable or assignable, such Award shall
be subject to such additional terms and conditions as the Committee deems
appropriate.
 
         (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 by the Corporation, nothing set forth
herein shall give any such Participant 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 Eligible Persons to
receive Awards, the form, amount and timing of such Awards, the terms and
provisions of Awards and the Award Agreements, and the establishment of values
and performance targets) need not be uniform and may be made by it selectively
among Eligible Persons who receive, or are eligible to receive, Awards under the
Plan, whether or not such Eligible 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 Sections 5(c) and 13
hereof), change the class of Persons 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 adversely affect a
 
 
                                       13
<PAGE>
 
Participant's rights under an Award previously granted without the consent of
such Participant. The Committee may amend the terms of any Award theretofore
granted, prospectively or retroactively, but no such amendment shall impair the
rights of any Participant or permitted transferee without his or her consent.
 
         (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 Act 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.
 
         (l) Award Agreement. The prospective recipient of an Award under the
Plan shall not have any rights with respect to such Award, unless and until such
recipient has executed an Award Agreement evidencing the Award and has delivered
a fully executed copy thereof to the Corporation, and has otherwise complied
with the then-applicable terms and conditions.
 
         (m) 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.
 
         (n) 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.
 
 
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