8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 25, 2006

ALABAMA NATIONAL BANCORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware	0-25160	63-1114426
(State of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)

1927 First Avenue North, Birmingham, Alabama 35203

(Address of principal executive offices, including zip code)

(205) 583-3600

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry Into a Material Definitive Agreement.

Annual Incentive Plan – Establishment of Performance Criteria for 2006 Bonuses

On January 25, 2006, the Compensation Committee of Alabama National BanCorporation (the “Company”) approved the performance criteria pursuant to which cash bonuses will be paid to the Chief Executive Officer and the next four most highly compensated executive officers of the Company (the “Executives”) for fiscal year 2006 under the Company’s Annual Incentive Plan. These criteria are also used to establish cash bonuses for other officers and certain key employees of the Company. For all of the Executives other than the Chief Executive Officer, the criteria established by the Committee for 2006 bonuses under the Annual Incentive Plan are (i) growth in the Company’s earnings per share (diluted) in 2006 as compared to earnings per share results in 2005, (ii) individual goal achievement in 2006 and (iii) departmental performance in 2006. The weighting of these factors for the Executives is as follows: earnings per share goals - 50%, individual goals - 25%, and departmental goals - 25%. For the Chief Executive Officer of the Company, the sole performance criteria selected was growth in the Company’s earnings per share (diluted) in 2006 as compared to earnings per share results in 2005. Bonus criteria for earnings per share (diluted) growth is based on target annual growth of 10% over prior year.

A copy of the Annual Incentive Plan is attached as Appendix C to the Company’s 2002 Proxy Statement on Schedule 14A that was filed with the Securities and Exchange Commission on March 28, 2002.

Performance Share Award Grants and Establishment of Performance Criteria Under the Performance Share Plan

Also at the January 25, 2006 meeting of the Compensation Committee, based on criteria set by the Board of Directors, the Committee approved the grant to the Executives of 2006 equity awards under the Company’s Performance Share Plan. The Performance Share Plan authorizes the award of performance shares to a select group of executive officers and key employees of the Company. The awards vest based on the Company’s attainment of certain pre-established levels of performance with respect to certain objective measurements of performance set forth in the Performance Share Plan. Each award granted generally represents one share of the Company’s common stock.

At the time of grant of an award under the Performance Share Plan, the Committee establishes a target award amount and a maximum eligible award amount. At the time the Compensation Committee grants awards under the Performance Share Plan, the Compensation Committee is required to fix an award period not to exceed five calendar years. The payout of the award occurs after the completion of the applicable award period and the payout can range from 0% to a set maximum percentage of the target award amount. The level of satisfaction of the performance criteria established by the Committee at the time of grant determines the exact amount of the payout.

For the 2006 awards that have been granted to the Executives, the performance criteria established by the Board and the Committee to determine the percentage of the 2006 award payable is the compounded annual growth rate of the annual earnings per share (diluted) of the Company during the award period. Also, the Committee selected an award period of four years. The target award for each Executive is based on a compounded annual growth rate of the Company’s earnings per share (diluted) of 10%. The payout of the 2006 awards granted to Executives under the Performance Share Plan will occur in 2010, after the completion of the award period.

A copy of the form of Notice of Award for Executives under the Performance Share Plan is included with this Current Report on Form 8-K as Exhibit 10.1. A copy of the Performance Share Plan is attached as an Exhibit to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on May 6, 2005.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number	Exhibit
10.1	Form of Notice of Award under the Performance Share Plan

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Alabama National Bancorporation
By:	/s/ William E. Matthews, V William E. Matthews, V
	Executive Vice President and Chief Financial Officer

Dated: January 27, 2006

INDEX TO EXHIBITS

Exhibit Number	Exhibit
10.1	Form of Notice of Award under the Performance Share Plan

EX-10.1

EXHIBIT 10.1

Form of Notice of Award under the Performance Share Plan

To:	[Name of Executive Officer]
From:	Compensation Committee of the Board of Directors
	of Alabama National BanCorporation
Date:	, 20
Re:	Performance Share Plan Award

We are pleased to inform you that Alabama National BanCorporation (“ANB”) has granted you an Award under the Alabama National BanCorporation Performance Share Plan (the “Plan”). Your Award has been set at a target award amount of              shares (the “Target Award”) and a maximum eligible award amount of              shares (the “Maximum Award”). This memorandum sets forth some of the specific terms of your Award, and you should retain it for future reference. References to defined terms in the Plan are capitalized in this memorandum. The prospectus for the Plan, which attaches a copy of the Plan, is being separately delivered to you.

The Award Period applicable to this Award is the four year period beginning on January 1, 20     and ending on December 31, 20    . The payout of the Award will occur after the completion of the Award Period and the amount of the payout can range from 0% to 170% of the Target Award. There are no Interim Periods. The criteria established by the Compensation Committee to determine the percentage of the Award payable is the Compounded Annual Growth Rate of the Annual Earnings Per Share of ANB (“EPSCAGR”) during the Award Period. If the EPSCAGR during the Award Period is equal to             %, the Target Award is achieved. If the EPSCAGR during the Award Period is equal to or greater than             %, the Maximum Award is achieved. No Award pay-out will be achieved unless the EPSCAGR during the Award Period is equal to or greater than             %. The Compensation Committee has set incremental achievement levels between the threshold and Target Award, and between the Target and Maximum Award, based on EPSCAGR benchmarks during the Award Period.

The Compensation Committee will meet after the close of the Award Period to determine whether the conditions for payment of the Award have been satisfied and the amount of the Award payable. If, at the close of the Award Period, the Compensation Committee determines that a percentage of the Target Award is payable, then, unless otherwise directed by the Compensation Committee, such percentage of the Target Award will be paid to you as promptly as possible. The Award is payable in shares of ANB’s common stock. ANB has the right to withhold and pay taxes that it determines are appropriate and necessary with respect to any payment of the Award.

The Award is deemed to be made as of January 1 of the year of the Award, regardless of the actual date of grant.

If eligible, you may elect to defer payment of the Award in accordance with any applicable deferral plan in effect at the time of the payout.

This memorandum is the Award agreement required by Section 5(d) of the Plan. In addition to the matters covered by this memorandum, you should pay particular attention to the Plan, since it sets forth other provisions applicable to your Award. Furthermore, in the event of any inconsistency between the terms set forth herein and the terms of the Plan, the terms of the Plan shall govern the Award.

We congratulate you on your Award. Thank you for your service to ANB.

Acknowledged this              day of                     , 20    .

(Signature)