SCHEDULE 14A
PROXY STATEMENT
Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:
TEXAS CAPITAL BANCSHARES, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
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March 9, 2017
Dear Stockholder:
I am pleased to present the 2016 Annual Report of Texas Capital Bancshares, Inc., the holding company for Texas Capital Bank, N.A. Earnings releases, performance information and corporate governance documents may be found in the Investors section of our website atwww.texascapitalbank.com.
I would also like to invite you to attend our Annual Meeting of Stockholders, which will be held on Tuesday, April 18, 2017, at 9:00 a.m. at 2000 McKinney Avenue, 7th Floor, Dallas, Texas 75201.
The attached Notice of Annual Stockholders’ Meeting describes the formal business to be transacted at the Annual Meeting. Members of our board of directors and executive officer team will be present at the meeting and will be available to answer questions regarding the Company.
Your vote is very important. Whether or not you plan to attend the Annual Meeting, we urge you to vote and submit your proxy by the Internet, telephone or mail.
The board of directors and our employees thank you for your continued support.
Sincerely,
C. Keith Cargill
President and Chief Executive Officer
TEXAS CAPITAL BANCSHARES, INC.
2000 McKinney Avenue,
7th Floor
Dallas, Texas 75201
NOTICE OF ANNUAL STOCKHOLDERS’ MEETING
To be held on April 18, 2017
NOTICE IS HEREBY GIVEN that the annual stockholders’ meeting (the “Annual Meeting”) of Texas Capital Bancshares, Inc. (the “Company”), a Delaware corporation, and the holding company for Texas Capital Bank, N.A., will be held on Tuesday, April 18, 2017, at 9:00 a.m. at the offices of the Company located at 2000 McKinney Avenue, 7th Floor, Dallas, Texas 75201.
The Annual Meeting is for the purpose of considering and voting upon the following matters:
In addition, we will transact such other business as may properly come before the Annual Meeting or any postponements or adjournments thereof.
We are furnishing our 2016 Annual Report and proxy materials to our stockholders primarily through the Internet in accordance with rules adopted by the Securities and Exchange Commission. Stockholders have been mailed a Notice of Internet Availability of Proxy Materials on or around March 9, 2017, which provides them with instructions on how to vote and how to access the 2016 Annual Report and proxy materials on the Internet. It also provides instructions on how to request paper copies of these materials. Stockholders who previously enrolled in a program to receive electronic versions of the 2016 Annual Report and proxy materials will receive an email notice with details on how to access those materials and how to vote.
Stockholders of record may vote:
By Internet: go to www.proxypush.com/tcbi
By phone: call866-390-5385 (toll-free) or
By mail: complete and return the enclosed proxy card in the postage prepaid envelope provided.
If your shares are held in the name of a broker, bank or other nominee, please follow the voting instructions that you receive from the broker, bank or other nominee entitled to vote your shares.
Stockholders of record at the close of business on February 22, 2017 are the only stockholders entitled to notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in person. Whether you expect to attend the Annual Meeting or not, please vote your shares. If you are a stockholder of record and attend the Annual Meeting, you may vote your shares in person even though you have previously voted your proxy.
By order of the board of directors,
C. Keith Cargill
President and Chief Executive Officer
March 9, 2017
Dallas, Texas
Important Notice Regarding the Availability of Proxy Materials for the Annual Stockholders’
Meeting to be Held on April 18, 2017:
The Proxy Statement for the 2017 Annual Meeting, the Notice of the 2017 Annual Meeting, the form of proxy and the Company’s 2016 Annual Report are available at www.proxydocs.com/tcbi.
PROXY STATEMENT
Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as Permitted by Rule14a-6(e)(2)) | |
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Under Rule14a-12 |
TEXAS CAPITAL BANCSHARES, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
☒ | No fee required. | |||
☐ | Fee computed on table below per Exchange Act Rules14a-6(i)(1) and0-11. | |||
(1) | Title of each class of securities to which transaction applies: | |||
(2) | Aggregate number of securities to which transaction applies: | |||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): | |||
(4) | Proposed maximum aggregate value of transaction: | |||
(5) | Total fee paid: | |||
☐ | Fee paid previously with preliminary materials. | |||
☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
(1) | Amount Previously Paid: | |||
(2) | Form, Schedule or Registration Statement No: | |||
(3) | Filing Party: | |||
(4) | Date Filed: |
March 7, 2019
Dear Stockholder:
I am pleased to present the 2018 Annual Report of Texas Capital Bancshares, Inc., the holding company for Texas Capital Bank, N.A. Earnings releases, performance information and corporate governance documents may be found in the Investors section of our website atwww.texascapitalbank.com.
I would also like to invite you to attend our Annual Meeting of Stockholders, which will be held on Tuesday, April 16, 2019, at 9:00 a.m. at 2000 McKinney Avenue, 7th Floor, Dallas, Texas 75201.
The attached Notice of Annual Stockholders’ Meeting describes the formal business to be transacted at the Annual Meeting. Members of our board of directors and executive officer team will be present at the meeting and will be available to answer questions regarding the Company.
Your vote is very important. Whether or not you plan to attend the Annual Meeting, we urge you to vote and submit your proxy by the Internet, telephone or mail.
The board of directors and our employees thank you for your continued support.
Sincerely,
C. Keith Cargill
President and Chief Executive Officer
TEXAS CAPITAL BANCSHARES, INC.
2000 McKinney Avenue,
7th Floor
Dallas, Texas 75201
NOTICE OF ANNUAL STOCKHOLDERS’ MEETING
To be held on April 16, 2019
NOTICE IS HEREBY GIVEN that the annual stockholders’ meeting (the “Annual Meeting”) of Texas Capital Bancshares, Inc. (the “Company”), a Delaware corporation, and the holding company for Texas Capital Bank, N.A., will be held on Tuesday, April 16, 2019, at 9:00 a.m. at the offices of the Company located at 2000 McKinney Avenue, 7th Floor, Dallas, Texas 75201.
The Annual Meeting is for the purpose of considering and voting upon the following matters:
Proposal One: Election of twelve (12) directors, each to serve until the next annual meeting of stockholders or until their successors are elected and qualified; |
Proposal Two: Approval, on an advisory basis, of the 2018 compensation of the Company’s named executive officers as described in the Proxy Statement; and |
Proposal Three: Ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2019. |
In addition, we will transact such other business as may properly come before the Annual Meeting or any postponements or adjournments thereof.
We are furnishing our 2018 Annual Report and proxy materials to our stockholders primarily through the Internet in accordance with rules adopted by the Securities and Exchange Commission. Stockholders have been mailed a Notice of Internet Availability of Proxy Materials on or around March 7, 2019, which provides them with instructions on how to vote and how to access the 2018 Annual Report and proxy materials on the Internet. It also provides instructions on how to request paper copies of these materials. Stockholders who previously enrolled in a program to receive electronic versions of the 2018 Annual Report and proxy materials will receive an email notice with details on how to access those materials and how to vote.
Stockholders of record may vote:
• | By Internet: go towww.proxypush.com/tcbi |
By phone: call866-390-5385 (toll-free) or
By mail: complete and return the enclosed proxy card in the postage prepaid envelope provided.
If your shares are held in the name of a broker, bank or other nominee, please follow the voting instructions that you receive from the broker, bank or other nominee entitled to vote your shares.
Stockholders of record at the close of business on February 20, 2019 are the only stockholders entitled to notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in person. Whether you expect to attend the Annual Meeting or not, please vote your shares. If you are a stockholder of record and attend the Annual Meeting, you may vote your shares in person even though you have previously voted your proxy.
By order of the board of directors,
C. Keith Cargill
President and Chief Executive Officer
March 7, 2019
Dallas, Texas
Important Notice Regarding the Availability of Proxy Materials for the Annual Stockholders’
Meeting to be Held on April 16, 2019:
The Proxy Statement for the 2019 Annual Meeting, the Notice of the 2019 Annual Meeting, the form of proxy and the Company’s 2018 Annual Report are available atwww.proxydocs.com/tcbi.
PROXY STATEMENT
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COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 16 | |||
Report of the Human Resources Committee on the Compensation Discussion and Analysis | ||||
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HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION | ||||
INDEBTEDNESS OF MANAGEMENT AND TRANSACTIONS WITH CERTAIN RELATED PERSONS | ||||
TEXAS CAPITAL BANCSHARES, INC.
2000 McKinney Avenue
7th Floor
Dallas, Texas 75201
PROXY STATEMENT
FOR THE ANNUAL STOCKHOLDERS’ MEETING
ON APRIL 18, 201716, 2019
This Proxy Statement is being furnished to the stockholders of Texas Capital Bancshares, Inc. (the “Company”) on or about March 9, 2017,7, 2019, in connection with the solicitation of proxies by the board of directors to be voted at the annual stockholders’ meeting (the “Annual Meeting”). The Annual Meeting will be held on April 18, 2017,16, 2019, at 9:00 a.m. at the offices of the Company located at 2000 McKinney Avenue, 7th Floor, Dallas, Texas 75201. The Company is the parent corporation of Texas Capital Bank, N.A. (“Texas Capital Bank” or the “Bank”).
In accordance with rules and regulations adopted by the Securities and Exchange Commission (“SEC”), instead of mailing a printed copy of our proxy materials to each stockholder, we are furnishing proxy materials to our stockholders on the Internet. You will not receive a printed copy of the proxy materials, unless specifically requested. The Notice of Internet Availability of Proxy Materials will instruct you as to how you may access and review all of the important information contained in the proxy materials. The Notice of Internet Availability of Proxy Materials also instructs you as to how you may submit your proxy on the Internet.
The purpose of the Annual Meeting is to consider and vote upon the following matters:
Proposal One: Election of twelve (12) directors, |
Proposal Two: Approval, on an advisory basis, of the |
Proposal Three: |
In addition, we will transact such other business as may properly come before the Annual Meeting or any postponements or adjournments thereof.
RECORD DATE AND VOTING SECURITIES
You are entitled to one vote for each share of common stock you own.
Only those stockholders that owned shares of the Company’s common stock on February 22, 2017,20, 2019, the record date established by the board of directors, will be entitled to vote at the Annual Meeting. At the close of business on the record date, there were 49,557,57250,248,221 shares of common stock outstanding held by 195172 identified holders.
At least a majority of the total number of issued and outstanding shares of common stock as of the record date must be present at the Annual Meeting in person or by proxy and entitled to vote in order to have a quorum to transact business. If there are not sufficient shares present and entitled to vote at the Annual Meeting for a quorum or to approve any proposal, the board of directors may postpone or adjourn the Annual Meeting in order to permit the further solicitation of proxies.
Directors are elected by a plurality of the votes cast at the Annual Meeting. The twelve (12) nominees receiving the highest number of votes “for” will be elected. Votes may be cast “for” or may be “withheld” with respect to any or all nominees. For purposes of the election of directors, votes that are “withheld” and brokernon-votes (described below) will be counted as “present” for purposes of establishing a quorum but will not be counted as votes cast and will have no effect on the result of the vote. Stockholders may not cumulate votes in the election of directors. In accordance with our Majority Voting Policy, any nominee for election as a director who receives a greater number of “withhold” votes than votes “for” election in an uncontested election must deliver his or her resignation to the board of directors. The board of directors will determine whether to accept the resignation based upon the recommendation of the Governance and Nominating Committee and consideration of the circumstances. See “Board and Committee Matters — Corporate Governance” for more information on the Majority Voting Policy.
The affirmative vote of a majority of the shares of the Company’s common stock present in person or by proxy at the Annual Meeting is required to approve Proposal Two (advisory vote on 20162018 executive compensation) and Proposal FourThree (ratification of Ernst & Young LLP as the Company’s independent registered public accounting firm). Votes on these proposals may be cast “for,” “against” or “abstain.” An abstention will have the effect of a vote against ProposalProposals Two and Proposal Four. With respect to Proposal Three (advisory vote on the frequency of stockholder advisory voting on executive compensation), stockholders will choose among holding advisory votes every year, every two years or every three years, or may abstain from voting. The frequency choice receiving the most stockholder votes will be deemed to be the choice of the stockholders.Three. Brokernon-votes will have no effect on the outcome of Proposals Two or Three.Proposal Two. Abstentions, votes against and brokernon-votes will be counted as “present” for purposes of establishing a quorum. The results of voting on Proposals Two Three and FourThree are advisory only and will not be binding upon the Company or its board of directors.
A brokernon-vote occurs when a bank, broker or other nominee holding shares for a beneficial owner submits an executed proxy to the Company but does not vote on a particular proposal because it does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner. If your shares are held in the name of a bank, broker or other nominee, they are not permitted to vote on your behalf on Proposals One Two or ThreeTwo at the Annual Meeting unless you provide specific instructions by following the instructions they provide to you. For your vote to be counted on Proposal One (election of directors), or Proposal Two (advisory vote on 2016 executive compensation) or Proposal Three (advisory vote on the frequency of stockholder advisory voting on2018 executive compensation), you must communicate your voting decisions to your bank, broker or other nominee within the time period stated in their instructions to you. Your bank, broker or other nominee will be permitted to vote on Proposal FourThree (ratification of Ernst & Young LLP as the Company’s independent registered public accounting firm) without instructions from you.
The individuals named as your proxies will vote properly completed proxies received prior to the Annual Meeting in the way you direct. If you do send in a properly completed proxy but do not specify how the proxy is to be voted, the shares represented by your proxy will be voted to elect the twelve (12) director nominees, to approve, on an advisory basis, the 20162018 compensation of our named executive officers, to select the frequency of every year for stockholder advisory voting on executive compensation and to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm.firm for fiscal 2019. If your shares are held by a bank, broker or other nominee and you want to vote in person at the Annual Meeting, you must obtain a legal proxy from the record holder and present it at the Annual Meeting.
If you are a stockholder of record you may revoke a proxy at any time before the proxy is exercised by:
1. | delivering written notice of revocation to Texas Capital Bancshares, Inc., Attn: Corporate Secretary |
2. | submitting another properly completed proxy card that is later dated; |
3. | voting by telephone at a subsequent time; |
4. | voting through the Internet at a subsequent time; or |
5. | voting in person at the Annual Meeting. |
If your shares are held in the name of a broker, bank or other nominee, please follow the instructions that you receive from them in order to instruct them to revoke the voting of your shares.
Please review the proxy materials and follow the relevant instructions to vote your shares. We hope you will exercise your rights and fully participate as a stockholder.
It is important that you are represented by proxy or are present in person at the Annual Meeting. The Company requests that you vote your shares by following the instructions as set forth in the Notice of Internet Availability of Proxy Materials. Your proxy will be voted in accordance with the directions you provide.
Other than the election of twelve (12) directors, approval, on an advisory basis, of 2016 executive compensation, approval, on an advisory basis, of the frequency of stockholder voting on2018 executive compensation, and ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal 2019, the Company is not aware of any additional matters that will be presented for consideration at the Annual Meeting. However, if any additional matters are properly brought before the Annual Meeting, your proxy will be voted in the discretion of the persons designated as proxies on the proxy card.
The Company’s board of directors is making this solicitation and the Company will pay the costs of this proxy solicitation. The directors, officers and employees of the Company and the Bank may also solicit proxies by telephone or in person but will not be paid additional compensation to do so.
We are permitted to send a single Notice of Annual Stockholders’ Meeting (“Notice”) and any other proxy materials we choose to mail to stockholders who share the same last name and address. This procedure is called “householding” and is intended to reduce our printing and postage costs. If you would like to receive a separate copy of a proxy statement or annual report, either now or in the future, please contact us in writing at the following address: Texas Capital Bancshares, Inc., Attn: Investor Relations, 2000 McKinney Avenue, Suite 700,7th Floor, Dallas, Texas 75201. If you hold your shares through a bank, broker or other nominee and would like to receive additional copies of the Notice and any other proxy materials, or if multiple copies of the Notice or other proxy materials are being delivered to your address and you would like to request householding, please contact your broker.bank, broker or nominee.
PROPOSALS FOR STOCKHOLDER ACTION
Proposal 1 — Election of Directors
TwelveThe twelve (12) currently serving members of the board of directors have each been nominated forre-election. Directors serve for aone-year term ending on the date of the following year’s annual meeting of stockholders or until their successors are elected and qualified. All of the nominees below have indicated their willingness to continue to serve as a director if elected. However, if any of the nominees is unable or declines to serve for any reason, your proxy will be voted for the election of a substitute nominee selected by the board of directors.
At the Annual Meeting, the stockholders will elect twelve (12) directors. The board of directors recommends a vote FOR each of the director nominees set forth below:
Name | Age | Position | ||
Larry L. Helm | Director; Chairman | |||
C. Keith Cargill | Director; President and Chief Executive Officer | |||
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James H. Browning | Director | |||
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Charles S. Hyle | Director | |||
Elysia Holt Ragusa | Director | |||
Steven P. Rosenberg | Director | |||
Robert W. Stallings | Director | |||
Dale W. Tremblay | Director | |||
Ian J. Turpin | Director | |||
Patricia A. Watson | Director |
Larry L. Helm has served as a director since January 2006 and was elected Chairmanchairman of the board in May 2012. He currently serves as a Senior Advisor for Accelerate Resources, LLC, a company engaged in the acquisition ofnon-operated oil and natural gas properties and mineral interests located in the Permian Basin and other areas, a position he has held since August 2017. Prior to joining Accelerate Resources, he served as the Executive Vice President of Corporate Affairs at Halcón Resources Corporation, a company engaged in the acquisition, exploration, development and production of oil and natural gas properties located in North America, a position he held from January 2013 until his retirement into March 2016. He has been engaged as an independent investor since March 2016. Previously,Before Halcón Resources, he served as Executive Vice President-FinancePresident, Finance and Administration, offor Petrohawk Energy Corporation.Corporation from June 2004 until its sale to BHP Billiton in July 2011. He served as Vice President-Transition with BHP Billiton prior to joining Halcón Resources in 2012. Prior to joining Petrohawk, in 2004, Mr. Helm spent 14 years with Bank One, most notably as Chairman and Chief Executive Officer of Bank One Dallas. Halcón Resources Corporation filed for reorganization under Chapter 11Dallas and head of the United States Bankruptcy Code in July 2016 and emerged from the proceeding pursuant to a“pre-packaged” plan of reorganization in September 2016.U.S. Middle Market Banking.
As a former banking executive, Mr. Helm has extensive knowledge about our industry. His executive roles in energy companies and experience managing energy and commercial lending groups give him important insights into the Company’s lending activities and make him well qualified to serve as Chairmanchairman of our board of directors and a member of the Credit Risk Committee.
C. Keith Cargill has served as President and Chief Executive Officer (“CEO”) of the Company and as a member of the board of directors since January 1, 2014. He has served as CEO of the Bank since June 2013, after becoming President of the Bank in October 2008. He served as Chief Lending Officer and as a director of the Bank since its inception in December 1998 through July 2013. Mr. Cargill has more than 25 years of banking experience in the North Texas area.
Mr. Cargill has extensive knowledge of all aspects of our business and particularly its lending operations. His many years of experience as a banker and his leadership in building our Company make him well qualified to serve as a director.
Peter B. BartholowJonathan E. Baliff has served as a director since July 2017. Mr. Baliff currently serves as an advisor to the office of the Bristow Group, Inc. Chairman, a position he has held since his retirement from Bristow Group, Inc. in February 2019. Prior to his retirement, he served as President and Chief FinancialExecutive Officer (“CFO”) and as a director sinceof Bristow Group, Inc., from July 2014 until February 2019 and served as Bristow Group’s Senior Vice President and Chief Financial Officer from October 2003 and as Chief Operating Officer (“COO”) since January2010 to June 2014. Prior to joining us in 2003,Bristow, he served as Executive Vice President-Strategy at NRG Energy, where he led the development and implementation of NRG’s corporate strategy, as well as acquisitions and business alliances. Prior to joining NRG, he was managing director of a private equity firm,in Credit Suisse’s Global Energy Group, where he advised energy companies on merger and acquisition assignments and project and corporate financings, most recently as Managing Director. Mr. Baliff started his career at Standard and Poor’s and then worked in JP Morgan’s natural resources group. He also served as a financial executive with Electronic Data Systems Corp., and spent many yearson active duty in the banking industry as an executive officer and memberU.S. Air Force from 1985 until his retirement in 1993 with the rank of the boards of both public and private companies.Captain.
As our CFO and COO, Mr. BartholowBaliff has extensive knowledge of all aspects of our business. His previous businessfinancial and financialleadership experience as anserving in executive officer and director ofroles with other public companies andcompanies. His focus on corporate strategy, coupled with banking organizations makeexperience earlier in his career, makes him wellhighly qualified to serve as a director.director and member of the Risk Committee.
James H. Browninghas served as a director since October 2009. He retired in 2009 as a partner at KPMG LLP, an international accounting firm, in Houston where he served companies in the energy, construction, manufacturing, distribution and commercial industries and has been engaged as a private investor since that time.industries. He began his career at KPMG in 1971, becoming a partner in 1980. He most recently served as KPMG’s Southwest Area Professional Practice Partner, and also served as an SEC Reviewing Partner and as Partner in Charge of the New Orleans audit practice. He currently serves as a directorchairman of the board and member of the Audit Committee, Governance and Nominating Committee and Compensation Committee of RigNet Inc., a global provider of digital technology company providing customized communications services, applications, real-time machine learning and cybersecurity solutions serving remote locations.to enhance customer decision-making and business performance. He also currently serves as a director of Herc Holdings, Inc., a NYSENew York Stock Exchange listed full servicefull-service equipment rental company, where he chairs the Audit Committee and is a member of the FinancingFinance Committee. Previously, he served as a director for Endeavour International Corporation, a NYSE listed international oil and gas exploration and production company.
As a former partner with KPMG with more than 38 years in public accounting, Mr. Browning has demonstrated leadership capability. His public accounting experience with various industries gives him a wealth of knowledge in dealing with financial and accounting matters, as well as extensive knowledge of the responsibilities of public company boards. Mr. Browning is highly qualified to serve as a director and the chairman of our Audit and Risk Committee, where he has been designated a financial expert. He also serves as a member of the Governance and Nominating Committee.
Preston M. Geren IIIDavid S. Huntley has served as a director since July 2012.January 2018. Mr. Geren isHuntley currently theserves as Senior Executive Vice President and CEOChief Compliance Officer of the Sid W. Richardson Foundation,AT&T, Inc., a position he has held since July 2011,December 2014. AT&T Inc. is a leading provider of communications and previously served as its Senior Advisor from April 2010 to July 2011.digital entertainment services in the United States and the world. He served as an executive in the Department of DefenseSenior Vice President and Assistant General Counsel for AT&T Services, Inc. from 2001May 2012 to December 2014 and as Senior Vice President and Assistant General Counsel for AT&T Advertising Solutions and AT&T Interactive from September 2010 to May 2012. From June 2009 completing his service as Secretary of the Army under Presidents Bush and Obama. Heto September 2010, Mr. Huntley served as a memberSenior Vice President of Congress representingAT&T’s Mobility Customer Service Centers. He held positions of increasing responsibility in external affairs, wireless operations, mergers and acquisitions, data operations and other areas within AT&T since joining the 12th Congressional District of Texas for four terms. Mr. Geren previously served as a director of Anadarko Petroleum Corp. Before entering public service Mr. Geren was an attorney and businessmancompany in Fort Worth and served as a director of both privately and publicly held banking organizations.1994.
Mr. Geren’s experienceHuntley’s compliance and leadership in high government positions,legal expertise, as well as his banking experience positiondeveloping policies to safeguard the privacy of customer and employee information, make him to provide us with a valuable perspective on a broad range of business and governmental issues affecting our Company and the businesses and entrepreneurs we serve. He is well suitedhighly qualified to serve as a director and member of the Credit Risk Committee and the Bank’s TrustAudit Committee.
Charles S. Hyle has served as a director since October 2013. He served as Senior Executive Vice President and Chief Risk Officer of Key Corp. from June 2004 to his retirement in December 2012. He has been engaged as an independent investor since December 2012. He served as an executive with Barclays working in the U.S. and in London from 1980 to 2003, rising to serve as Managing Director and Global Head of Credit Portfolio Management–Management — Barclays Capital–Capital — London. Mr. Hyle began his banking career in 1972 at JP Morgan.
Mr. Hyle has many years of experience in managing credit and operational risk for large banking and financial services organizations as a senior executive. This experience provides him with an understanding
of the risks facing the Company and the Bank and the challenges we will face as we continue to grow and are required to comply with enhanced regulatory risk management requirements, which make him well qualified to serve as a director and the chairman of our Credit Risk Committee. He also serves as a member of the Audit and Risk Committee and has been designated as a financial expert.
Elysia Holt Ragusa has served as a director since January 2010. She currently serves as Principal of RCubetti, LLC, a business operations, investment, and sales advisory firm, a position she has held since February of 2018. She served as an International Director of Jones Lang LaSalle a position she has held sincefrom July 2008 and currently provides team leadership for the Central Texas market while also serving clientsuntil her retirement in Austin, San Antonio and Dallas/Fort Worth.December 2017. From 1989 until 2008, she served as President and Chief Operating Officer of The Staubach Company, chaired Staubach’s Executive and Operating Committees and was a member of its board of directors. Jones Lang LaSalle and The Staubach Company merged in 2008. She also servespreviously served as a director of Fossil Group, Inc., a maker of watches and other apparel and accessories, where she servesserved as a member of the Compensation Committee and chairschaired the Nominating and Corporate Governance Committee.
As an executive with extensive experience in all aspects of the commercial real estate business in Texas, Ms. Ragusa provides valuable insight for this important aspect of our business. This expertise, her demonstrated leadership capabilities and her public company board experience are valuable to the Company and make her well qualified to serve as a director, andas chairman of our Governance and Nominating Committee. She also servesCommittee and as a member of the Bank’s TrustHuman Resources Committee.
Steven P. Rosenberg has served as a director since September 2001. He is President of SPR Ventures, Inc., a private investment company, a position he has held since June 1997, and1997. He served as President of SPR Packaging LLC, a manufacturer of flexible packaging for the food industry, a position he has held sincefrom May 2007.2007 until his retirement in January 2018. He currently serves on the board of directors of Cinemark Holdings, a leader in the motion picture exhibition industry, where he serves as chair of the GovernanceNominating and NominatingCorporate Governance Committee and is an Audit Committee member. He previously served as a board member of PRGX Global, a business analytics and information services firm, where he also served on the Human Resources Committee.
Mr. Rosenberg offers valuable experience and insight to the board of directors deriving from his background as an entrepreneur, in a manufacturing business in Texas, as well as a director of other public companies. Mr. Rosenberg is a member of the Human Resources Committee and serves as the chairman of the Bank’s Trust Committee.
Robert W. Stallings has served as a director since August 2001. He has served as Chairman of the board of directors and CEO of Stallings Capital Group, an investment company, since March 2001. He is currently Executive Chairman of the board of Gainsco, Inc., a property and casualty insurance company, a position he has held since August 2001. Prior to joining Gainsco, he served as Chairman and CEO of an asset management company as well as a savings bank.
Mr. Stallings’ experience in the banking and financial services industries provides extensive knowledge about our industry, which makes him highly qualified to serve as a director and member of the Credit Risk Committee and the Bank’s Trust Committee.
Dale W. Tremblay has served as a director since May 2011. He is the President and CEO of C.H. Guenther and Son, Inc.LLC (dba Pioneer Flour Mills), one of the oldest privately held corporations in the U.S., and serves as a member of its board of directors. He joined Guenther in 1998 as Executive Vice President and COO,
Chief Operating Officer, and became President and CEO in April 2001. He haspreviously served as President for The Quaker Oats Company’s worldwide foodservice division and formerly served onwas a member of the Michigan State University School of Finance Advisory Board and the Business and Community Advisory Council of the Federal Reserve Bank of Dallas. He serves as a director of Clear Channel Outdoor Holdings Inc., one of the world’s largest outdoor advertising companies, where he serves as a member of the Audit Committee and Intercompany Note Committee,Special Committees and serves as chairman of the Compensation Committee. He also serves as a director of Nature Sweet Ltd.
Mr. Tremblay’s leadership experience in both private and public companies brings valuable knowledge and insight to our board of directors and his service as chairman of our Human Resources Committee.
Ian J. Turpin has served as a director since May 2001. Since 1992, he has served as President and director of LBJ Family Wealth Advisors, Ltd. (formerly LBJ Asset Management Partners, Ltd. and The LBJ Holding Company, LP) and has managed various companies affiliated with the family of the late President of the United States, Lyndon B. Johnson, which have included radio, real estate and private equity investments and diversified investment portfolios. From 1989 through 2015 he served as CEO of BusinesSuites, LP, a provider of serviced office space.
Mr. Turpin’s business experience in international banking and wealth management and in a variety of industries offers valuable insights to the board of directors. Mr. Turpin’s background in public accounting also qualifies him as an Auditdirectors and Risk Committee financial expert, supporting his service as a member of the AuditGovernance and RiskNominating Committee. Mr. Turpin has reached the retirement age of 72 established in the Company’s Corporate Governance Guidelines; his nomination forre-election in 2017 was approved by the unanimous vote of the other members of the board as contemplated by the Guidelines.
Patricia A. Watson has served as a director since February 2016. She serves as the Senior Executive Vice President and Chief Information Officer of TSYS,Total System Services, Inc., (“TSYS”), a global payment solutions provider for financial andnon-financial institutions. Prior to joining TSYS in September 2016 she served as Vice President and Global Chief Information Officer for The Brinks Company. Prior to joining Brinks she worked with Bank of America for more than 14 years in technology positions of increasing responsibility. She spent 10 years in the United States Air Force as executive staff officer, flight commander and director of operations. Ms. Watson currently serves as a director of Rockwell Automation, Inc., where she is a member of the Audit Committee and the Technology Committee.
Ms. Watson’s expertise in information technology and security in the financial services and payments industries, as well as her strategic leadership skills, make her highly qualified to serve as a director and member of the Audit and Risk Committee.
Directors are elected by a plurality of the votes cast at the Annual Meeting. The twelve (12) nominees receiving the highest number of votes “For” will be elected.
The board of directors unanimously recommends that you vote “FOR” the election of each of the nominees.
Proposal 2 — Approval of Executive Compensation on an Advisory Basis
In accordance with the requirements of Rule14a-21(a) under the Securities Exchange Act of 1934 (the “Exchange Act”), we are providing our stockholders with an advisory vote to approve executive compensation on an annual basis, commonly referred to as a“say-on-pay” vote. We have held asay-on-pay vote annually since the Company’s 2011 Annual Meeting of Stockholders.
We believe that our executive compensation programs effectively align the interests of our named executive officers, or NEOs, with those of our stockholders by creating a combination of incentive compensation arrangements, in both cash and equity-linkedequity-based programs, which are directly tied to performance and creation of stockholder value, coupled with a competitive level of base compensation. The Our
objective foris that the NEOs is toshould have a substantial portion of total compensation derived from performance-based incentives. At our 20162018 Annual Meeting of Stockholders, we received the affirmative support of 97.2%97% of votes cast in favor of our 2017 executive compensation.
The board values stockholders’ opinions, and, as in prior years, the board intends to evaluate the results of the 20172019 vote when making future decisions regarding compensation of the NEOs. We encourage you to carefully review the “Executive Compensation” section of this Proxy Statement and particularly the “Compensation Discussion and Analysis” for a detailed discussion of the Company’s executive compensation programs.
This annual advisory vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the policies and practices with respect to their compensation described in this Proxy Statement. Your vote on Proposal Two is advisory and, therefore, not binding on the Company, the board of directors or the Human Resources Committee. This advisory vote may not be construed as overruling a decision by the board, nor create or imply any additional fiduciary duty of the board.
We are asking our stockholders to indicate their approval, on an advisory basis, for the 20162018 compensation paid to our NEOs by voting FOR the following resolution:
RESOLVED, that the stockholders approve, on an advisory basis, the 20162018 compensation of the Company’s named executive officers, as disclosed in this Proxy Statement pursuant to SECRegulationS-K, Item 402, including the Compensation Discussion and Analysis, the compensation tables and otherthe narrative executive compensation disclosures to the compensation tables included in this Proxy Statement.
Proposal Two requires the affirmative vote of the holders of a majority of the outstanding shares of common stock present, in person or represented by proxy, and entitled to vote on the proposal at the Annual Meeting.
The board of directors unanimously recommends that you vote “FOR” approval of this resolution.
Proposal 3 — Approval of Frequency of Voting on Executive Compensation on an Advisory Basis
As described with regard to Proposal Two above, we have since 2011 provided our stockholders with an annual opportunity to vote, on an advisory basis, on the compensation of our named executive officers. This year, in accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, our stockholders also have the opportunity to cast an advisory vote on how often we should include asay-on-pay proposal in our proxy materials at future stockholder meetings. Our stockholders may vote, on an advisory basis, to hold an advisorysay-on-pay vote every year, every two years, or every three years, or they may abstain.
Our stockholders voted on a similar proposal in 2011, and the overwhelming majority voted to hold the advisory vote on executive compensation every year. We continue to believe thatsay-on-pay votes should be conducted every year so that our stockholders may annually express their views on our executive compensation program.
Your vote on Proposal Three is advisory and, therefore, not binding on the Company, the board of directors or the Human Resources Committee. This advisory vote may not be construed as overruling a decision by the board, nor create or imply any additional fiduciary duty of the board. However, the Human Resources Committee and the board value the opinions expressed by stockholders in their votes on this proposal and will consider the outcome of the vote when making future decisions regarding the frequency of conducting asay-on-pay vote.
Stockholders may cast an advisory vote to conduct advisory voting on executive compensation every year, every two years or every three years, or may abstain from voting on the matter. The frequency choice receiving the most stockholder votes will be deemed to be the choice of the stockholders.
The board of directors unanimously recommends that you vote for a frequency of “EVERY YEAR” fornon-binding, advisory stockholder votes on the compensation of our named executive officers.
Proposal 4 — Ratification of Ernst & Young LLP as the Company’s Independent Registered Public Accounting Firm
The Audit and Risk Committee of the Company’s board of directors has appointed Ernst & Young LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2017.2019. The Company is seeking
stockholder ratification of the appointment of Ernst & Young LLP for fiscal 2017.2019. Stockholder ratification of the appointment of the Company’s independent registered public accounting firm is not required by the Company’s bylaws, state law or otherwise. However, the board of directors is submitting the appointment of Ernst & Young LLP to the Company’s stockholders for ratification as a matter of good corporate governance. If the stockholders fail to ratify the appointment of Ernst & Young LLP, the Audit and Risk Committee will consider this information when determining whether to retain Ernst & Young LLP for future services. See the discussion at “Auditor Fees and Services” for information regarding the services provided to the Company by Ernst & Young LLP.
The ratification of Ernst & Young LLP’s appointment will requireProposal Three requires the affirmative vote of the holders of a majority of the outstanding shares of common stock present, in person or represented by proxy, and entitled to vote on the proposal at the Annual Meeting.
The board of directors unanimously recommends that you vote “FOR” the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal 2017.2019.
The business affairs of the Company are managed under the direction of the board of directors. The board of directors meets on a regularly scheduled basis to review significant developments affecting the Company and to act on matters requiring approval by the board of directors. Special meetings of the board of directors are held as required from time to time when important matters arise that require action between scheduled meetings. The board of directors held six regularly scheduled meetings during 2016.2018. Each of the Company’s directors participated in at least 75% of the meetings of the board of directors and the committees of the board of directors on which the director served during 2016.2018.
The board of directors is committed to providing sound governance for the Company. The board of directors has adopted Corporate Governance Guidelines (the “Guidelines”) and charters for each committee of the board of directors to provide a flexible framework of policies relating to the governance of the Company. These documents are available in the “Governance Documents” section of the Company’s website at:http://investors.texascapitalbank.com/govdocs.govdocs.
Among the policies addressed in the Guidelines are the following:
• | Majority Voting Policy. Any nominee for election as a director who receives a greater number of “withhold” votes than votes “for” election in an uncontested election must deliver his or her resignation to the board of directors. The board of directors will determine whether to accept the resignation based upon the recommendation of the Governance and Nominating Committee and consideration of the circumstances. The Company will disclose the board’s decision and the process by which it was reached. |
• | Retirement |
• | Separation of Chairman and CEO duties. The position of |
• | Limits on other board |
• | Board composition and independence. No more than two members of management may be invited to serve on the board. A substantial majority of the board must qualify as independent under the relevant listing standards of the Nasdaq Stock Market and applicable rules of the SEC. All members of the board of directors other than Mr. Cargill |
• | Term limits. The board of directors does not believe it advisable to establish fixed term limits for directors. As an alternative to term limits, the board of directors seeks to assure that its members remain active, effective and independent contributors through ongoing performance evaluations |
• | Review of significant responsibility changes. Any director who retires from his or her principal employment, or who materially changes the responsibilities of his or her principal employment, must tender a letter of resignation to the board of directors. The board of directors will determine whether to accept the resignation based on the recommendation of the Governance and Nominating Committee after its review of the circumstances. |
• | Director compensation. Director compensation includes a substantial equity component representing approximately half of each director’s annual compensation in order to align director interests with the long-term interests of stockholders. |
• | Director stock ownership. The board of directors has established stock ownership guidelines for directors in order to further align their interests with the long-term interests of stockholders. Directors are expected to own common stock having a value of at least three times the cash portion of the annual retainer paid to outside directors, and may not dispose of any shares of the Company’s common stock unless they own, and will continue to own, common stock with a value at or above that level. |
• | Executive pay governance and stock ownership. As discussed in more detail below at “ |
Executive stock ownership;
Elimination of excise taxgross-ups with respect to executive compensation received upon a change in control;
No “single trigger” payment or acceleration of benefits upon a change in control; and
“Clawback” of incentive compensation upon a restatement of the Company’s financial statements.
• | Access to independent advisors. The board of directors and each committee may, as it deems necessary or appropriate, obtain advice and assistance from independent, outside financial, legal, accounting, human resources or other advisors, at the expense of the Company. |
• | Annual evaluation. The board of directors and each committee conduct annual evaluations of their performance. The Governance and Nominating Committee assists the evaluation process and annually evaluates and recommends each candidate for election orre-election as a director in view of the needs and then-currentmake-up of the board of directors. |
• | Executive sessions of the board of directors and committees. Thenon-management directors meet in regularly scheduled executive sessions of the board of directors and its committees without any management directors or other management present. |
• | Prohibition of poison |
Clawback of Incentive Compensation. The Guidelines include a policy providing that incentive compensation payable to our NEOs under certain of the Company’s incentive compensation arrangements will be subject to recovery by the Company if, in the year such compensation is paid, or within three years thereafter, the Company is required to prepare an accounting restatement due to material noncompliance of the Company with any financial reporting requirement under applicable securities laws. The repayment obligation applies to the extent repayment is required by applicable law, or to the extent the executive’s compensation is determined to be in excess of the amount that would have been payable taking into account any restatement or correction. The board of directors, considering the best interests of the Company and its stockholders and the recommendation of the Human Resources Committee, has the sole discretion to determine whether an executive’s actions have or have not met any particular standard of conduct under law or Company policy, and whether recovery of incentive compensation should be pursued.
Executive Stock Ownership Guidelines. The Guidelines include stock ownership guidelines for the NEOs in order to further align their interests with the long-term interests of stockholders. NEOs are expected to own common stock having a value of at least three times their base compensation (five times for the CEO), and may not dispose of any shares of the Company’s common stock unless they own, and will continue to
own, common stock at that level. Unvested restricted stock, restricted stock units, stock options and stock appreciation rights are not included in an executive’s stock ownership for purposes of this policy. All of the currently serving NEOs are in compliance with the Company’s stock ownership policy, and as of the date of this Proxy Statement Mr. Cargill, Ms. Anderson and Mr. Ackerson have each reached the target level of share ownership.
Hedging of Company securities prohibited. All Company directors, officers and employees are prohibited from purchasing any financial instrument that is designed to hedge or offset any decrease in market value of Company securities, and from participating in derivative or speculative transactions with respect to Company securities, including but not limited to prepaid variable forward contracts, collars, equity swaps, exchange funds, puts, calls and other derivative instruments. All directors, officers and employees are also prohibited from participating in short sales of the Company’s securities.
Pledging of Company securities prohibited. Directors and officers who are reporting persons under Section 16 of the Exchange Act and such additional employees as may be designated by the Governance and Nominating Committee are prohibited from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan.
Our board of directors oversees an enterprise-wide approach to risk management, intended to support the achievement of strategic objectives to optimize our organizational performance and enhance stockholder
value while operating within the guidelines of our risk appetite statement. While the board of directors has the ultimate oversight responsibility for the risk management process, the board has authorized various committees to provide primary oversight of the Company’s enterprise risk enterprise management program. In addition, management has appointed a Risk Management Committee (“RMC”) comprised of executives responsible for all major categories of risk to provide management oversight and guidance related to the Company’s enterprise risk management. Annually, the RMC updates the Risk Appetite Statementour risk appetite statement and establishes various risk tolerances, which are ultimately approved by the board. Specific responsibilities for the board’s committees are discussed in more detail below.
The board of directors has determined that each director other than Mr. Cargill and Mr. Bartholow qualifies as an “independent director” as defined in the Nasdaq Stock Market Listing Rules and as further defined by applicable statutes and regulations.
Board Leadership Structure and Risk Oversight
The CEO and Chairmanchairman positions are separated under the Company’s board leadership structure. Larry L. Helm acts as thenon-executive Chairmanchairman and C. Keith Cargill serves as the CEO. The board of directors determined that this is the most effective way for its leadership to be structured and believes this is a best practice for governance in its industry.governance. The members of the Company’s board of directors also serve as directors of the Bank in order to provide effective oversight of the Bank.
The board of directors is responsible for oversight of management and the business and affairs of the Company, including those relating tothe management of risk. The board of directors has delegated various aspects of its risk oversight responsibilities to the board’s committees. The Audit and Risk Committee during 2016 assistedis charged with oversight of the Company’s policies and processes related to identification, assessment, monitoring and management of market risk, interest rate risk, credit risk, liquidity risk, price risk, operational risk, regulatory compliance risk, strategic risk, legal risk, reputational risk and other material business risks, including the establishment of a comprehensive risk framework for the Company and setting and monitoring the risk appetite of the
Company. The Audit Committee assists the board of directors in monitoring the effectiveness of the Company’s identification and management of compliance risk, interest rate risk, liquidity risk, price risk, operational risk and financial reporting risk. The Credit Risk Committee was charged with oversight ofrisk, which includes the Company’s processes related to identification, management and reporting of credit risk exposures, the determination and adequacyappropriateness of the allowance for loan and lease losses and the establishment and administration of the Company’s credit policies.losses. The Human Resources Committee, in conjunction with its annual review and approval of the compensation of the Company’s CEO and senior management, considers whether the Company’s incentive plans encourage participants to take risks that would be reasonably likely to have a material adverse impact on the Company, and to the extent necessary, reviews and discusses with management any related risk mitigation features and disclosures determined to be advisable.
In April 2017, following the Annual Meeting, a Risk Committee of the board of directors will be established to align the Company’s governance structure to provide a more specific focus on risk oversight. The Audit and Risk Committee will be renamed the Audit Committee and its enterprise risk oversight responsibilities will be transferred to the Risk Committee. The Risk Committee will replace the Credit Risk Committee, and assume its responsibilities with regard to credit risk oversight. The Risk Committee will oversee the Company’s policies and processes related to risk identification, assessment, monitoring and management. The scope of its responsibilities will include market risk, interest rate risk, credit risk, liquidity risk, price risk, operational risk, regulatory compliance risk, strategic risk, legal risk, reputational risk and other material business risks.
The Risk Committee will also be charged with overseeing the Company’s comprehensive risk framework and setting and monitoring the risk appetite of the Company. The Risk Committee will provideprovides oversight to the RMC, which currently operates under the oversight of the Audit and Risk Committee.RMC. The RMC will reportreports to the Risk Committee at least quarterly with respect to its risk-related activities. The Chief Risk Officer (“CRO”) will havehas a direct reporting relationship to the Risk Committee. TheAdditionally, the Audit
Committee will continue to receivereceives reports from the CRO and the Internal Audit Department regarding management’s compliance with the Company’s risk appetite statement and applicable risk-related policies, procedures and tolerances that impact the Company’s financial reporting and related internal controls and regulatory compliance.
Committees of the Board of Directors and Meeting Attendance
The board of directors had four standing committees during 2016.2018. A general description of the functions performed by each committee and committee membership as of the date of this Proxy Statement is set forth below.
• | Governance and Nominating Committee. The Governance and Nominating Committee oversees the corporate governance policies for the Company and identifies, screens, recruits and recommends to the board of directors candidates to serve as directors. The Committee makes recommendations concerning the size and composition of the board of directors, considers any corporate governance issues that arise and develops appropriate recommendations, develops specific criteria for director independence and assesses the effectiveness of the board of directors. Governance and Nominating Committee members are Elysia Holt Ragusa |
The Governance and Nominating Committee considers industry knowledge and other business expertise, personal traits such as character, integrity and wisdom, and the candidate’s understanding of business operations, marketing, finance or other aspects relevant to the success of a large publicly traded corporation in today’s business environment, among other factors, when evaluating candidates for the Company’s board of directors. The Committee considers diversity when identifying nominees for director, looking primarily for diversity in professional experiences and skills, but also considering other dimensions of diversity, including gender and cultural background. Director searches in recent years have specified that candidates should provide diversity to the board in addition to specific experience and skill sets being sought; the individuals considered by the Governance and Nominating Committee in these searches have included diverse candidates. It is expected that future director searches will continue this practice. These considerations ensure the board of directors is comprised of individuals who are able to contribute a variety of viewpoints, which the Committee believes is an important component in ensuring that the board exercises good judgment and diligence. The Committee regularly assesses the size of the board of directors, whether any vacancies are expected due to retirement or otherwise, and the need for particular expertise on the board of directors. Candidates may come to the attention of the Committee from current directors, stockholders, professional search firms, officers or other persons. The Committee reviews all candidates in the same manner regardless of the source of the recommendation.
• | Audit |
to |
The board of directors has determined that all of the committee’s members are able to read and understand fundamental financial statements as contemplated by the current listing standards of the Nasdaq Stock Market. The board of directors also determined that threetwo members qualify as “audit committee financial experts” as defined by the SEC and thereforealso satisfy the Nasdaq Stock Market’s financial sophistication requirements as well.requirements.
• | Human Resources Committee. The Human Resources Committee (“HR Committee”) advises management and makes recommendations to the board of directors with respect to the compensation and other employment benefits of executive officers and key employees of the Company. The HR Committee also administers the Company’s long-term incentive and annual incentive |
• |
|
Stockholders may communicate with the board of directors, including thenon-management directors, by sending ane-mail tobod@texascapitalbank.com or by sending a letter to the board of directors,
c/o Corporate Secretary, 2000 McKinney Avenue, 7th Floor, Dallas, Texas 75201. The Corporate Secretary has the authority to disregard any inappropriate communications or to take other appropriate actions with respect to any such inappropriate communications. If deemed an appropriate communication, the Corporate Secretary will submit yourstockholder correspondence to the Chairmanchairman of the board or to any specific director to whom the correspondence is directed.
Report of the Audit and Risk Committee
The Audit and Risk Committee’s general role is to assist the board of directors in overseeing the Company’s financial reporting process and related matters. The Audit and Risk Committee has reviewed and discussed with the Company’s management and the Company’s independent registered public accounting firm the audited financial statements of the Company for the year ended December 31, 2016.2018.
The Audit and Risk Committee has also discussed with the Company’s independent registered public accounting firm the matters required to be discussed pursuant to the Public Company Accounting Oversight Board Auditing Standard,Communications with Audit Committees. The Audit and Risk Committee has received and reviewed the written disclosures and the letter from the Company’s independent registered public accounting firm pursuant to applicable requirements of the Public Company Accounting Oversight Board regarding communication with audit committees concerning independence, and has discussed with the independent registered public accounting firm the firm’s independence. The Audit and Risk Committee has also considered whether the provision ofnon-audit services to the Company by Ernst & Young LLP is compatible with maintaining their independence, and has determined that such independence has been maintained.
Based on the review and discussion referred to above, the Audit and Risk Committee recommended to the board of directors that the audited financial statements be included in the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 2016,2018, filed with the SEC on February 17, 2017.14, 2019.
This report is submitted on behalf of the Audit and Risk Committee of the board of directors of Texas Capital Bancshares, Inc.
James H. Browning, ChairmanChair
David S. Huntley
Charles S. Hyle
Ian J. Turpin
Patricia A. Watson
Code of Business Conduct and Ethics
The Company has adopted a Code of Business Conduct and Ethics (“Code of Conduct”) that applies to all its employees, including its CEO, CFO and controller.Chief Accounting Officer. The Company has made the Code of Conduct available on its website atwww.texascapitalbank.com. Any amendments to, or waivers from, our Code of Conduct applicable to our executive officers will be posted on our website within four days of such amendment or waiver.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth information as of February 22, 201720, 2019 concerning the beneficial ownership of the Company’s common stock by: (a) each person the Company knows to beneficially own more than 5% of the issued and outstanding shares of a class of common stock, (b) each director, director nominee and named executive officer (“NEO”), and (c) all of the Company’s NEOsexecutive officers and directors as a group. The persons named in the table have sole voting and investment power with respect to all shares they owned, unless otherwise noted. In computing the number of shares beneficially owned by a person and the percentage of ownership held by that person, shares of common stock subject to options, restricted stock units (“RSUs”) or stock appreciation rights (“SARs”) held by that person that are currently exercisable or will become exercisable or vest within 60 days of February 22, 201720, 2019 are deemed exercised and outstanding.
Persons Known to Company Who Own More Than 5% of Outstanding Shares of Company Common Stock | Number of Shares of Common Stock Beneficially Owned | Percent of Shares of Common Stock Outstanding* | Number of Shares of Common Stock Beneficially Owned | Percent of Shares of Common Stock Outstanding* | ||||||||||||
The Vanguard Group and certain affiliates | 4,595,191 | (1) | 9.14 | % | ||||||||||||
BlackRock, Inc. and certain affiliates | 5,968,334 | (1) | 12.04 | % | 4,543,746 | (2) | 9.04 | % | ||||||||
State Street Corporation and certain affiliates | 2,921,486 | (3) | 5.81 | % | ||||||||||||
T. Rowe Price Associates, Inc. | 4,396,725 | (2) | 8.87 | % | 2,751,087 | (4) | 5.47 | % | ||||||||
The Vanguard Group, Inc. and certain affiliates | 4,085,411 | (3) | 8.24 | % |
* | Percentage is calculated on the basis of |
(1) | As reported by The Vanguard Group on a Schedule 13G/A filed with the SEC on February 12, 2019, as of December 31, 2018, reporting sole voting power with respect to 26,994 shares, shared voting power with respect to 5,541 shares, sole dispositive power with respect to 4,567,998 shares and shared dispositive power with respect to 27,193 shares. Its address is 100 Vanguard Blvd., Malvern, PA 19355. |
(2) | As reported by BlackRock, Inc. on a Schedule 13G/A filed with the SEC on |
As reported by State Street Corporation on a Schedule 13G filed with the SEC on February 14, 2019, as of December 31, 2018, reporting shared voting power with respect to 2,851,268 shares and shared dispositive power with respect to 2,921,486 shares. Its address is One Lincoln St., Boston, MA 02111. |
(4) | As reported by T. Rowe Price Associates, Inc. on a Schedule 13G/A filed with the SEC on February |
Name(1) | Number of Shares of Common Stock Beneficially Owned | Percent of Shares of Common Stock Outstanding | ||||||
Vince A. Ackerson | 27,349 | (2) | * | |||||
Julie L. Anderson | 28,938 | (3) | * | |||||
Jonathan E. Baliff | 1,475 | (4) | * | |||||
James H. Browning | 12,049 | (5) | * | |||||
C. Keith Cargill | 76,209 | (6) | * | |||||
Larry L. Helm | 21,809 | (7) | * | |||||
John D. Hudgens | 9,928 | (8) | * | |||||
David S. Huntley | 1,179 | (9) | * | |||||
Charles S. Hyle | 3,574 | (10) | * | |||||
Elysia Holt Ragusa | 5,849 | (11) | * | |||||
Steven P. Rosenberg | 37,434 | (12) | * | |||||
Robert W. Stallings | 8,649 | (13) | * | |||||
Dale W. Tremblay | 7,049 | (14) | * | |||||
John G. Turpen | — | * | ||||||
Ian J. Turpin | 27,704 | (15) | * | |||||
Patricia A. Watson | 3,601 | (16) | * | |||||
All executive officers and directors as a group | 272,796 | 0.54 | %** |
Vince A. Ackerson Julie L. Anderson Peter B. Bartholow James H. Browning C. Keith Cargill Preston M. Geren III Larry L. Helm John D. Hudgens Charles S. Hyle Elysia Holt Ragusa Steven P. Rosenberg Robert W. Stallings Dale W. Tremblay Ian J. Turpin Patricia A. Watson All executive officers and directors as a groupName(1) Number of Shares
of Common Stock
Beneficially Owned Percent of Shares of
Common Stock
Outstanding 13,634 (2) * 23,757 * 25,000 * 9,747 (3) * 38,981 * 3,772 * 20,691 (4) * 2,983 * 1,272 * 6,547 (5) * 35,747 (6) * 6,347 (7) * 4,747 * 36,822 (8) * 1,623 (9) * 231,670 0.47 %**
* | Less than 1% of the issued and outstanding shares of the class. |
** | Percentage is calculated on the basis of |
(1) | Unless otherwise stated, the address for each person in this table is 2000 McKinney Avenue, 7th Floor, Dallas, Texas 75201. |
(2) | Includes |
(3) | Includes |
(4) | Includes |
(5) | Includes |
(6) | Includes |
(7) | Includes |
(8) | Includes |
(9) | Includes 234 shares held by Mr. Huntley, as well as 611 RSUs that will vest within 60 days and 334 shares of restricted common stock as to which restrictions lapse as to one half of the shares on each of January 23, 2020 and 2021, but for which he has voting power. |
(10) | Includes 2,731 shares held by Mr. Hyle, as well as 843 RSUs that will vest within 60 days. |
(11) | Includes 5,006 shares held by Ms. Ragusa, as well as 843 RSUs that will vest within 60 days. |
(12) | Includes 30,591 shares held by Mr. Rosenberg, as well as 843 RSUs that will vest within 60 days and 6,000 vested SARs. |
(13) | Includes 7,206 shares held by Mr. Stallings, as well as 843 RSUs that will vest within 60 days and 600 vested SARs. |
(14) | Includes 6,206 shares held by Mr. Tremblay, as well as 843 RSUs that will vest within 60 days. |
(15) | Includes 6,085 shares held by Mr. Turpin, as well as 843 RSUs that will vest within 60 days and 3,600 vested SARs. Also includes 5,951 shares held by Johnson Management Trust, |
Includes |
Our namedcurrently serving executive officers, (“NEOs”) for 2016, and the positions held by them on December 31, 2016as of the date of this proxy statement, are:
C. Keith Cargill,President and CEO of the Company and President and CEO of Texas Capital Bank.Bank. Mr. Cargill, age 64,66, has served as President and Chief Executive Officer (“CEO”)CEO of the Company and as a member of the board of directors since January 1, 2014. He has served as CEO of the Bank since June 2013, after becoming President of the Bank in October 2008. He served as Chief Lending Officer of the Bank since its inception in December 1998 through July 2013. Mr. Cargill has more than 25 years of banking experience in the North Texas area.
Peter B. Bartholow,Julie L. Anderson,CFO and COOSecretary of the Company and COOCFO of Texas Capital Bank.BankMr. Bartholow,. Ms. Anderson, age 68, has served as Chief Financial Officer (“CFO”) and as a director since October 2003 and as Chief Operating Officer (“COO”) since January 2014. Prior to joining us in 2003, he was managing director of a private equity firm, served as a financial executive with Electronic Data Systems Corp., and spent many years in the banking industry as an executive officer and member of the boards of both public and private companies.
John D. Hudgens,Chief Risk Officer of the Company and Chief Risk Officer of Texas Capital Bank.Mr. Hudgens, age 61, assumed the role of Chairman of the Company’s Risk Management Committee in 2009, and in that role became the Chief Risk Officer of Texas Capital Bank. Additionally, he50, has served as the Company’s Chief Risk OfficerCFO since May 2014. He alsoJuly 2017, and served as Chief CreditAccounting Officer from December 2003 through August 2018. She assumed the role of CFO of Texas Capital Bank in July 2013 and the role of Corporate Secretary in May 2014. She served as the Company’s Controller from JanuaryFebruary 1999 to August 2016.June 2017.
Vince A. Ackerson,Texas President and Chief Lending Officer of Texas Capital Bank.Bank. Mr. Ackerson, age 60,62, has served as Texas President and Chief Lending Officer of Texas Capital Bank since July 2013. Prior to holding this position, he served as Dallas Regional President since October 2008 and was previously Executive Vice President of Dallas Corporate Banking since the Bank’s inception in December 1998.
Julie L. Anderson,John G. Turpen,Controller, Chief AccountingRisk Officer and Secretary of the Company and CFOChief Risk Officer of Texas Capital Bank.BankMs. Anderson,. Mr. Turpen, age 48, has served as the Company’s Controller since February 1999 and Chief Accounting Officer since December 2003. In July 2013, she50, assumed the role of CFOChief Risk Officer of Texas Capital Bank and in May 2014, sheSeptember 2018 and assumed the role of SecretaryChief Risk Officer of the Company.Company on January 1, 2019. From April 2016 to September 2018, Mr. Turpen served as chief risk officer for corporate and commercial banking at U.S. Bancorp. Mr. Turpen joined U.S. Bancorp in 2009 after holding increasingly senior positions in credit, risk and strategic planning at HSBC and Wells Fargo. Mr. Turpen’s banking career spans more than 20 years.
Our named executive officers (“NEOs”) for 2018 include Mr. Cargill, Ms. Anderson, Mr. Ackerson and John D. Hudgens. Mr. Hudgens, age 63, served as Chief Risk Officer of the Company from May 2014 to December 31, 2018 and of Texas Capital Bank from May 2014 until September 30, 2018, stepping down from those positions in connection with his planned retirement. He served as chairman of the Company’s Risk Management Committee from 2009 through December 31, 2018, and as Chief Credit Officer of Texas Capital Bank from January 1999 to August 2016.
Compensation Discussion and Analysis
This Compensation Discussion and Analysis describesprovides an overview of our compensation programs, and explains our compensation philosophy, policies and practices, and describes the material compensation decisions we have made under such programs in 2018 with respect to the NEOs identified above.
In view of the Company’s competitive performance, historical earnings levels and growth in earnings, the HR Committee believes that the Company’s current executive compensation philosophy and practices arehave been successful in providing stockholders withattracting and retaining talented, dedicated executive officers atand providing them with competitive compensation levels.levels that are properly aligned with shareholder interests.
20162018 Financial Highlights
Net income of $155.1$300.8 million, increasing 7%53% from 20152017 and 14%94% from 2014;2016;
Net interest income of $639.8$914.9 million compared to $556.5$761.3 million in 2015;2017;
Earnings per share of $3.11$5.79 compared to $2.91$3.73 in 20152017 and $2.88$3.11 in 2014;2016;
11%9% increase in traditional loans held for investment;investment, excluding mortgage finance;
24% increase in total mortgage finance loans, including mortgage correspondent aggregation (“MCA”) loans;
8% increase in total mortgage finance loans, including Mortgage Correspondent Aggregation (“MCA”) loans;
13% increase in deposits and 25% increase innon-interest bearing deposits compared to prior year; and
Efficiency ratio of 54.6%52.9%.
The Company performed well in 2016,2018, reporting record net income of $155.1$300.8 million. We benefitted from continued growth in both traditional loans held for investment which increased 11%, and total mortgage finance loans, including MCA loans, which increased 8%, in 2016 compared to 2015. At the same time we maintained strong credit discipline despite increases in net charge-offs, which were primarily related to energy, achieved significant growth in deposits, particularlynon-interest bearing deposits, and controlled expenses despite increases in costs due to the continued build out of our operations to support our growth and regulatory compliance.loans. Our net interest income reached a record of $639.8$914.9 million, primarily due to an increase of $2.6$2.3 billion in average earning assets.assets as well as the effect of increases in interest rates on loan yields, offset by an increase in interest-bearing liabilities of $2.7 billion and the effect of increased funding costs. These results were accomplished organically without dilutive acquisitions and are consistent with the Company’s high level of performance over the past five years. At $3.11$5.79 per share, including the dilutive effects of our common stock offering of 3.5 million shares in the fourth quarter, 20162018 was the best earnings per share (“EPS”) year for our stockholders in our history.
While our 2016 results were positive, we responded to a number of challenges in 2016, primarily related to a 44.6% increase in the provision for credit losses, from $53.2 million in 2015 to $77.0 million in 2016, However, as a result of continued volatilitythe decline in the energy sector and general loan growth. Our energy lending portfolio produced strong headwindsour stock price, our executives experienced a significant loss in termsvalue of continued higher levels of criticized andnon-performing loans. The continued low interest rate environment and the substantial growth in liquidity assets kept our 2016 net interest margin flat at 3.14% for the year compared to the 3.14% reported in 2015 and 3.78% reported in 2014.
The Company has added to its capital throughtheir owned common stock offerings three times inand 2018 equity incentives along with our stockholders, reflecting the past three years, once in 2016 and twice in 2014, increasing the numberclose alignment of outstanding shares significantly, which has made achieving EPS growth in 2014, 2015 and 2016 more difficult. We increased liquidity assets from $1.2 billion at the end of 2014 to $2.7 billion at the end of 2016, funded primarily throughlow-cost deposits. The increase in liquidity assets, which earned just 0.52% in 2016 as Federal Reserve Bank deposits, has reduced our return on assets (“ROA”) although we continued to earn a small positive spread against our funding cost. These challenges and their effect on our 2016 results impacted the 2016 incentive compensationinterests with those of our executives.stockholders.
Executive Summary
Our compensation philosophy demands that executive compensation track appropriately to the Company’s economic performance, not justas well as management’s performance. The HR Committee and the board of directors believe that the Company’s financial performance and our management’s overall performance in 20162018 were outstanding while the Company’s overall economic performance was outstanding, particularly in view oftempered by the $23.8 million increase in the provision for credit losses and increased regulatory costs. Notably, the Company outperformed other banksdecline in our peer group, a majority of which were not similarly affected by the volatility in the energy industry and its actual and projected impact on the Texas economy.stock price.
The HR Committee believes that executive pay and performance of the Company continue to be stronglyappropriately aligned. The key NEO pay decisions during 2018 were as follows:
• | NEOs received salary increases ranging from 3% to 10% in 2018. Salary increases were determined by the HR Committee, as described in more detail under “Base Salary.” |
• | For 2018, annual incentive payouts for NEOs were at 95.5% of target. As described in more detail under “Annual Incentive Plan,”the annual incentive plan was based on achievement of performance goals related to net income and credit quality, as well as individual management strategic objectives (“MSOs”). |
Long-term incentive awards in the form of time-based restricted stock units (“RSUs”) and performance-based RSUs were granted to NEOs in March 2018. These long-term incentive awards, which are intended to align NEO financial interests with shareholder value creation, declined in value by more than 40% during 2018 as our stock price declined.
The Company added a feature to the nonqualified deferred compensation plan to ensure that NEOs receive the same level of retirement contribution as all other employees
Objectives of Executive Compensation
We increasedprovide a compensation package for our NEOs that is primarily driven by the overall economic performance of the Company, together with a focus on the performance of each executive, which we
believe impacts our overall long-term profitability. The objectives of our executive compensation programs are:
to attract and retain highly qualified executive officers by providing total compensation opportunities that are competitive with those provided in the industry and commensurate with the Company’s business strategy and performance objectives;
to provide incentive and motivation for our executive officers to enhance stockholder value by linking their compensation to the value of our common stock;
to provide an appropriate mix of fixed and variable pay components to establish a“pay-for-performance” oriented compensation program; and
to provide competitive compensation opportunities and financial incentives without imposing excessive risk to the Company, and to ensure that appropriate standards related to asset quality, capital management and expense management are maintained.
Oversight of Executive Compensation Program
The HR Committee of our board of directors oversees our executive compensation programs. Each member of the HR Committee is an “independent director” as defined by the Nasdaq Stock Market Listing Rules. With approval by the board, the HR Committee has developed and applied a compensation philosophy that focuses on a combination of competitive base salary and incentive compensation, including cash and equity-based programs, which are directly tied to performance and creation of stockholder value.
The HR Committee meets throughout the year, including formal meetings, informal conferences and discussions with management and consultants. The HR Committee works with executive management, primarily our CEO, to assess the compensation approach and compensation levels for our executive officers and key employees other than the CEO. The HR Committee makes recommendations to the board of directors with respect to the overall executive compensation and employment benefits, philosophy and objectives of the Company. The HR Committee establishes objectives for the Company’s CEO and sets the CEO’s compensation based, in part, on the evaluation of market data provided by its independent consultant. The HR Committee also reviews and recommends to the board the Company’s annual and long-term incentive plans for executive officers and key employees.
The HR Committee regularly reviews the Company’s compensation programs to ensure that compensation levels and incentive opportunities are competitive and reflect performance. Factors considered in assessing the compensation of individual officers may include the Company’s overall performance, the officer’s experience, performance and contribution to the Company, the achievement of strategic goals, external equity and market value, internal equity, fairness and retention. There are no material differences in compensation policies and approach among the NEOs, as all relate primarily to performance and contribution in achieving consolidated results. In the case of the NEOs other than the CEO, the CEO makes recommendations to the HR Committee regarding salary increases, annual incentive amounts and total compensation levels.
Compensation Risk Oversight
The HR Committee regularly reviews all compensation plans to identify whether any of the Company’s or the Bank’s compensatory policies or practices incent behavior that creates excessive or unnecessary risk to the Company. In 2018, the HR Committee conducted a risk assessment with the assistance of Pearl Meyer & Partners, LLC (“Pearl Meyer”), its independent compensation advisor. Based upon the results of this assessment, the HR Committee determined that our compensation program does not create risks that are reasonably likely to have a material adverse effect on the Company.
Equity Incentive Philosophy
The HR Committee believes that the direct ownership of substantial amounts of common stock combined with stock-settled incentives combine to strongly align the interests of the Company’s senior executive officers with the interests of stockholders. The Company’s NEO compensation arrangements place a large amount of each individual’s future compensation “at risk” relative to the performance of the Company’s common stock. Our NEOs’ significant investments in our common stock, as required by our executive stock ownership guidelines, also make our executives sensitive to declines in our stock price.
The HR Committee generally considers the returns realized by stockholders through increases or decreases in the price of the Company’s common stock in the course of establishing NEO equity incentive compensation performance targets and in determining annual incentive compensation and vesting of long-term performance-based incentives, but has determined that it would be inappropriate to base specific incentive compensation award amounts or vesting determinations on stockholder return measures such as total stockholder return. This is primarily based upon concern that the Company’s NEO compensation measures not incent excessive risk-taking behavior in times when market perceptions of matters outside of our executives’ control, such as future commodity price risk, interest rate changes, earnings multiples applied to financial services companies generally, tax law changes or the expectation of future easing of regulatory compliance costs, introduce significant volatility into our stock price.
Our long-term performance-based incentives are earned based on achievement of performance measures such as EPS, return on equity (“ROE”), return on assets (“ROA”) and increases in tangible book value (“TBV”). These performance measures are based on the Company’s financial performance and take into account the importance of balancing the risk appetite and risk management framework established by the board of directors, regulatory expectations for safe and sound operation of a federally insured bank and the desire and ability of our executive leadership and employees to achieve long-term, sustainable growth in stockholder value.
Consideration of Most Recent Advisory Stockholder Vote on Executive Compensation
At our 2018 Annual Meeting of Stockholders, we received the affirmative support of 97% of votes cast in favor of our 2017 executive compensation, as disclosed in the 2018 Proxy Statement. The Board and the HR Committee value the perspectives of our stockholders regarding executive compensation. In considering the results of this advisory vote on executive compensation, the HR Committee concluded that the compensation paid to our NEOs and the Company’s overall pay practices enjoy strong stockholder support.
The Company maintains active engagement with our stockholders, communicating directly with the holders of more than 50% of our outstanding common stock each year regarding the Company’s performance and responding to any questions or issues they may raise. Future advisory votes on executive compensation will continue to serve as an additional tool to guide the Board and the HR Committee in 2016evaluating the alignment of the Company’s executive compensation program with the interests of the Company and its stockholders.
An advisory vote at the Company’s 2017 Annual Meeting of Stockholders confirmed that stockholders overwhelmingly favored an annual advisory vote on executive compensation. Consistent with this preference, the Board determined to address specific instancesimplement an annual advisory vote on executive compensation until the next required vote on the frequency of increased responsibilitiesstockholder votes on executive compensation, which is scheduled to occur at the 2023 Annual Meeting of Stockholders.
Role of the Compensation Consultant
The HR Committee engaged Pearl Meyer as its independent executive compensation consulting firm for 2018 to provide:
expertise on compensation strategy and performance expectations as well asprogram design;
information relating to maintain reasonable paritythe selection of the Company’s peer group and compensation practices employed by the peer group and overall market;
advice regarding structuring and establishing executive compensation plans or arrangements that are aligned with the objectives of the Company and the interests of stockholders; and
recommendations to the HR Committee concerning the existing executive compensation programs and changes to such programs.
The HR Committee has determined that a formal executive compensation market/peer review will be performed every other year and engaged Pearl Meyer to perform such review in 2018. Pearl Meyer provided the HR Committee with a market competitive executive compensation analysis for the NEOs, including base salary, annual incentives, long-term incentives andnon-qualified deferred compensation plans, including retirement benefits. The next executive compensation market/peer review will be performed in 2020.
Pearl Meyer provided its executive compensation consulting services under the direction of the HR Committee and did not provide any additional services to the Company. Our management provides input to the compensation consultant but does not direct or oversee its activities with respect to our executive compensation programs. In order not to impair the independence of the compensation consultant, or create the appearance of an impairment, the Committee follows a policy that the compensation consulting firm may not provide other services to the Company. The HR Committee has evaluated Pearl Meyer’s independence, including the factors relating to independence specified in Nasdaq Stock Market Listing Rules, and determined Pearl Meyer to be independent.
Peer Company Compensation Data
The HR Committee works with the independent consultant to collect and review competitive market compensation practices. As one point of reference, the HR Committee reviews compensation practices for a peer group of publicly traded bank holding companies of comparable size. The peer group used in 2018 included the following companies:
Associated Banc-Corp
BOK Financial Corporation
Cullen/Frost Bankers, Inc.
First Midwest Bancorp, Inc.
F.N.B. Corporation
IberiaBank Corporation
MB Financial, Inc.
PacWest Bancorp
Pinnacle Financial Partners, Inc.
Prosperity Bancshares Inc.
Signature Bank
SVB Financial Group
TCF Financial Corporation
TrustMark Corporation
Western Alliance Bancorporation
Wintrust Financial Corporation
The HR Committee targets total compensation paid to the Company’s executive officers to be aligned with the 50th percentile of the Company’s peer group and market. Some executive officers may be below the 50th percentile, while some may be above, depending on the facts and circumstances of each executive including experience, time in position and performance.
Elements of our Compensation Program
Our compensation peer group. NEOprogram for executive officers consists of the following elements:
base salary;
annual incentive compensation;
long-term incentive compensation; and
other standard retirement and health benefits.
Base Salary
Base salaries are designed to compensate executive officers for their roles and responsibilities and to provide competitive levels of fixed compensation that reflects their experience, duties and scope of responsibilities. We pay competitive base salaries in order to recruit and retain executives of the quality necessary to ensure the success of our Company. Base salaries for the NEOs are subject to annual review, but are not always adjusted on an annual basis. The HR Committee determines the appropriate level and timing of changes in base compensation was adjustedfor the NEOs (other than the CEO) based on the recommendation of the CEO. In making determinations of salary levels for the NEOs, the HR Committee considers the entire compensation package for each executive officer, including the equity-based compensation provided under long-term compensation plans.
The HR Committee determines the level of periodic salary increases after reviewing:
the qualifications, experience and performance of each executive officer;
the compensation paid to persons having similar duties and responsibilities in 2016 in responseour peer group companies; and
the nature of the Bank’s business, the complexity of its activities and the importance of the executive’s experience to the success of the business.
After considering these factors, reviewing results of the biennialPearl Meyer peer compensation analysis overseen byreview and discussing proposed salaries for the HR Committee.
Average payouts of annual cash incentive toother NEOs with the NEOs for 2016 ranged between 55% and 84% of the executive’s base salary, with an average payout of 70%. This compares to a 2015 payout range of 47% to 57%, with an average 2015 payout of 48%, and a 2014 payout range of 72% to 100%, with an average 2014 payout of 83%. In each of 2014, 2015 and 2016CEO, the HR Committee setrecommended and the aggregate incentive amount, or pool, at 7%board approved annual salaries, with the indicated percentage increases, effective March 1, 2018, as follows: Mr. Cargill $965,000 (6%), 7%Ms. Anderson $480,000 (10%), Mr. Ackerson $510,000 (5%), and 8%, respectively, ofMr. Hudgens $495,000 (3%).
pre-tax,pre-annual incentive income based on the committee’s consideration of the profitability of the Company, performance of individual business units, number of participants, amounts guaranteed to new officers and other factors. For 2016, the HR Committee used EPS, ROA and tangible book value (“TBV”) to determine incentive compensation payouts, as further described underAnnual Incentive Compensation below. The financial parameters set for each year’s short-term incentive compensation place an effective cap on the amounts that may be awarded and limit the HR Committee’s discretion in determining the payout.
BOK Financial Corporation
Long-term incentive compensation payouts in 2016 were adversely impacted by a number of factors. The performance vesting portions of the long-term grants of cash-settled performance units (“Performance Units”) made to the NEOs in 2014 (50%) were based on EPS and ROA targets set in 2014 and did not anticipate, and were not adjusted for, the increase in the provision for credit losses in 2016 resulting from the decline in energy prices or the large increase in liquidity assets in 2015 and 2016 that significantly lowered ROA results. As a consequence, the NEOs received no payout related to the performance-based portion of the cash-settled Performance Units in 2016. The remainder of the 2016 long-term compensation was attributable to the time-vested portions of the 2014 awards (50%). The 2016 vested long-term incentive payouts for the four NEOs who received these grants in 2014 represented an average decrease of 19% when compared to 2015 and an average decrease of 60% when compared to 2014. Partial adjustments to 2014 and 2015 vestings were made for the EPS impact of the 2014 common stock offerings described above, which further impacted the comparison.Cullen/Frost Bankers, Inc.
As described in more detail below under “Equity Incentive Philosophy”, the HR Committee determined that long-term incentives granted in 2015 and subsequent years to the NEOs will be settled in shares of common stock rather than cash in order to support the accumulation of larger amounts of common stock directly owned by the NEOs. The grants of these stock-settled awards in 2015 and 2016 are reflected in the Summary Compensation Table under the column labeled “Stock Awards.” The accounting for and proxy statement presentation of stock-settled awards is different from cash-settled Performance Units. Stock-settled awards are required to be recognized as compensation expense in the year they are granted based upon an analysis of the probable outcome of the award to the NEO over the ensuing three years, without regard to whether the awards actually vest in future years.Cash-settled awards, on the other hand, are only recognized when they vest, in the amount paid to the NEO. These awards, when vested, appear in the Summary Compensation Table as“Non-Equity Incentive Plan Compensation” under the column labeled “Long-Term Incentive Plan Compensation.”First Midwest Bancorp, Inc.
As a result of the disparity in accounting treatment and proxy statement disclosure between cash-settled and stock-settled units, the Summary Compensation Table for 2015 and 2016 effectively double-counts the long-term incentive awards to the NEOs (only 2016 for Ms. Anderson, who did not receive a stock-settled long-term incentive award in 2015), making their 2015 and 2016 total compensation amounts appear larger than were actually realized.F.N.B. Corporation
Objectives of Executive CompensationIberiaBank Corporation
We seek to provide a compensation package for our NEOs that is driven primarily by the overall financial performance of the Company. We believe that the performance of each of the executives impacts our overall long-term profitability and, therefore, have the following objectives for our executive compensation programs:MB Financial, Inc.
PacWest Bancorp
to provide motivation for the NEOs and to enhance stockholder value by linking their compensation to the value of our common stock;Pinnacle Financial Partners, Inc.
Prosperity Bancshares Inc.
Signature Bank
SVB Financial Group
TCF Financial Corporation
TrustMark Corporation
Western Alliance Bancorporation
Wintrust Financial Corporation
to allow the Company and the Bank to attract and retain highly qualified executive officers by providing total compensation opportunities consistent with those provided in the industry and commensurate with the Company’s business strategy and performance objectives;
to maintain reasonable “fixed” compensation costs by targeting base salaries at competitive levels; and
to assure that the NEO’s objectives have been achieved without imposing excessive risk to stockholders and that appropriate standards related to asset quality, capital management, expense management relative to revenue and the funding composition and level to support loan growth have been maintained.
Oversight of Executive Compensation Program
The HR Committee of our board of directors oversees our executive compensation programs. Each member of the HR Committee is an “independent director” as defined by the Nasdaq Stock Market Listing Rules. With approval by the board, the HR Committee has developed and applied a compensation philosophy that focuses on a combination of competitive base salary and incentive compensation, including cash and equity-linked programs, which are directly tied to performance and creation of stockholder value. The objective for the executive officers and key employees is to have a substantial portion of total compensation derived from performance-based incentives.
The HR Committee meets throughout the year, including conferences, formal meetings and discussions with consultants and management and review of compensation-related materials. The HR Committee works with executive management, primarily our CEO, in assessing the compensation approach and levels for our executive officers and key employees, other than his own compensation. The HR Committee is empowered to advise management and make recommendations to the board of directors with respect to the overall executive compensation and employment benefits, philosophy and objectives of the Company. The HR Committee establishes objectives for the Company’s CEO and sets the CEO’s compensation based, in part, on the evaluation of peer group data. The HR Committee also reviews and recommends to the board the Company’s annual and long-term incentive plans for executive officers and key employees.
The HR Committee regularly reviewstargets total compensation paid to the Company’s compensation programsexecutive officers to ensure that remuneration levels and incentive opportunities are competitive and reflect performance. Factors taken into account in assessing the compensation of individual officers may include the Company’s overall performance, the officer’s experience, performance and contribution to the Company, the achievement of strategic goals, external equity and market value, internal equity, fairness and retention priority. The various components of the compensation programs for the NEOs are discussed below in the “Executive Compensation Program Overview”. There are no material differences in compensation policies for each of the five NEOs, as all relate primarily to performance and contribution in achieving consolidated results. In the case of the four NEOs other than the CEO, the CEO makes recommendations to the HR Committee about each of their individual total compensation levels. The HR Committee may delegate to the CEO the allocation of certain salary increases or annual incentive amounts for the other four NEOs.
Compensation Risk Oversight
The HR Committee regularly reviews all compensation plans to identify whether any the Company’s or the Bank’s compensatory policies or practices incentivize behavior that creates excessive or unnecessary risk to the Company. In 2016, the HR Committee conducted its annual compensation risk assessmentbe aligned with the assistance of Frederic W. Cook & Co, Inc., its independent compensation advisor. The HR Committee also undertook a targeted risk review of the Bank’s incentive programs at all levels in response to recent widely publicized disclosures of control failures in retail bank incentive programs. Based upon the results of
these assessments, the HR Committee determined that our compensation program does not create risks that are reasonably likely to have a material adverse effect on the Company.
50Communication with Stockholdersth
The HR Committee monitors the results of our annual advisory vote on executive compensation each year. Our advisorysay-on-pay proposal at the 2016 annual meeting of stockholders received an affirmative vote of 97.2% in favor of our 2015 executive compensation. The Company maintains active engagement with our stockholders, communicating directly with the holders of more than 80% of our outstanding common stock each year regarding the Company’s performance and responding to any questions or issues they may raise. We encourage stockholders to communicate with us regarding our corporate governance and executive compensation. Communications from stockholders on these subjects are reported to the HR Committee or the Governance and Nominating Committee, as appropriate.
Clawback of Incentive Compensation
Our Corporate Governance Guidelines include a policy providing that incentive compensation payable to our NEOs under certain of the Company’s incentive compensation arrangements will be subject to recovery by the Company if, in the year such compensation is paid, or within three years thereafter, the Company is required to prepare an accounting restatement due to material noncompliance of the Company with any financial reporting requirement under applicable securities laws. The repayment obligation applies to the extent repayment is required by applicable law, or to the extent the executive’s compensation is determined to be in excess of the amount that would have been payable taking into account any restatement or correction. The board of directors, considering the best interests of the Company and its stockholders and the recommendation of the HR Committee, has the sole discretion to determine whether an executive’s actions have or have not met any particular standard of conduct under law or Company policy, and whether recovery of incentive compensation should be pursued.
Equity Incentive Philosophy
In 2014 the Company issued cash-settled Performance Units to its NEOs as their primary long-term equity incentive, a portion of which vest based on the attainment of certain performance metrics developed by the HR Committee and the balance of which vest on the third anniversary of the date of grant if the NEO is employed by the Company or is eligible for approved retirement. The HR Committee determined that 2015 and 2016 equity incentives would be settled in shares of common stock rather than cash in order to support the accumulation of larger amounts of directly- owned shares of common stock by the NEOs. It is expected that grants in future years will similarly emphasize the accumulation of direct ownership of common stock.
The cash-settled awards in 2014 were intended to balance the interest of the Company in providing an incentive to its executives that would vary based upon the performance of the Company’s common stock with the interest of stockholders in experiencing less dilution of their ownership of the Company resulting from the Company’s employee compensation program. The Company performed at or near the top of its peer group over this time period while having less dilution to its stockholders resulting from its employee compensation programs. The HR Committee believes that the direct ownership of substantial amounts of common stock combined with the cash-settled and stock-settled incentives issued over the past three years combine to strongly align the interests of the Company’s senior executive officers with the interests of stockholders.
The following table is provided to indicate the substantial value at risk (VAR) for each of the NEOs resulting from their directly owned common stock, unvested RSUs and unvested cash-settled Performance Units.
Name | Shares Owned(A) | Unvested Stock-Settled RSUs(B) | Unvested Cash-Settled Units(C) | Value at Risk(D) | VAR as % of 2016 Base Salary | |||||||||||||||
C. Keith Cargill | 38,981 | 34,192 | 9,911 | $ | 6,148,216 | 683 | % | |||||||||||||
Peter B. Bartholow | 25,000 | 19,396 | 7,177 | 3,816,402 | 763 | % | ||||||||||||||
John D. Hudgens | 2,983 | 17,370 | 6,408 | 1,980,314 | 417 | % | ||||||||||||||
Vince A. Ackerson | 13,634 | 16,978 | 5,639 | 2,682,574 | 559 | % | ||||||||||||||
Julie L. Anderson | 23,757 | 6,306 | 5,526 | 2,633,586 | 684 | % |
The HR Committee considers the returns realized by stockholders through increases or decreases in the price of the Company’s common stock in the course of establishing NEO equity incentive compensation performance targets, but has determined that it would be inappropriate to base specific incentive compensation award amounts on stockholder return measures such as total stockholder return (“TSR”). This is primarily based upon concern that the Company’s NEO compensation measures not incent excessive risk-taking behavior in times such as 2015 and 2016 when market perceptions of matters outside of our executives’ control, such as future commodity price risk, interest rate changes or the expectation of future easing of regulatory compliance costs, introduce significant volatility into our stock price.
The HR Committee does not believe that strict benchmarking of the Company’s stock price performance against other banking organizations having substantially different business models, funding sources and growth and earnings trajectories will produce an appropriate correlation between the Company’s economic achievements and its executive compensation. The HR Committee believes that basing vesting of incentive compensation on TSR or similar measures can produce unfairness to our executives or to our stockholders due to unforeseeable changes in economic conditions, short-term volatility in our stock price and lack of comparability to the business models of other banks.
The Company’s NEO compensation arrangements place a large amount of each individual’s future compensation “at risk” relative to the performance of the Company’s common stock. Our NEOs’ significant investments in our common stock, as required by our executive stock ownership guidelines, also make our executives sensitive to declines in our stock price. Our performance measures such as EPS, ROA and increases in tangible book value that are based on the Company’s financial performance take into account the importance of balancing the risk appetite and risk management framework established by the board of directors, regulatory expectations for safe and sound operation of a federally insured bank and the desire and ability of our executive leadership and employees to achieve long-term, sustainable growth in stockholder value.
Executive Stock Ownership Guidelines
Our Corporate Governance Guidelines include stock ownership guidelines for the NEOs in order to further align their interests with the long-term interests of stockholders. NEOs are expected to own common stock having a value of at least three times their base compensation (five times for the CEO), and may not dispose of any shares of the Company’s common stock unless they own, and will continue to own, common stock at that level. Unvested restricted stock, restricted stock units, stock options and stock appreciation rights are not included in an executive’s stock ownership for purposes of this policy. All of the NEOs are in compliance with the Company’s stock ownership policy, and as of the date of this Proxy Statement Mr. Bartholow and Ms. Anderson have reached the target levels of share ownership.
Role of the Compensation Consultant
The HR Committee has engaged the services of independent executive compensation consulting firm Frederic W. Cook & Co, Inc. (“Cook”). Cook reports to and acts at the direction of the HR Committee. The HR Committee looks to its compensation consultant to provide:
expertise on compensation strategy and program design;
information relating to the selection percentile of the Company’s peer group and market. Some executive officers may be below the 50th percentile, while some may be above, depending on the facts and circumstances of each executive including experience, time in position and performance.
Elements of our Compensation Program
Our compensation practices employed byprogram for executive officers consists of the peer group;following elements:
base salary;
advice regarding the establishment and administration of executive compensation plans or arrangements that provide benefits to executive officers of the Company in alignment with the objectives of the Company and the interests of stockholders;annual incentive compensation;
long-term incentive compensation; and
recommendations to the HR Committee concerning the existing executive compensation programsother standard retirement and changes to such programs.health benefits.
Base Salary
Base salaries are designed to compensate executive officers for their roles and responsibilities and to provide competitive levels of fixed compensation that reflects their experience, duties and scope of responsibilities. We pay competitive base salaries in order to recruit and retain executives of the quality necessary to ensure the success of our Company. Base salaries for the NEOs are subject to annual review, but are not always adjusted on an annual basis. The HR Committee has determined that a formal executive compensation market/peer review will be performed every other yeardetermines the appropriate level and engaged Cook to perform that review most recentlytiming of changes in 2016, which we refer to as the Cook 2016 Review. The HR Committee has used the Cook 2016 Review to inform its 2016 compensation decisions. Cook provided the HR Committee with a market competitive executive compensation analysis for the NEOs including base salary, annual incentives, long-term incentives andnon-qualified deferred compensation plans, including retirement benefits. Cook assisted the HR Committee in its review of total direct compensation for the NEOs including a review(other than the CEO) based on the recommendation of 2016 incentive compensation and 2017 base salariesthe CEO. In making determinations of salary levels for the NEOs, as discussed under “Base Salary” below. To assist in determining 2016 and 2017 base salaries and 2016 incentive compensation, the HR Committee usedconsiders the Cook 2016 Review and market data regarding performance of comparable financial services companies as well as consideration of the Company’s financial performance andentire compensation package for each NEO’s individual performance. The next executive compensation market/peer review will be performed in 2018.
Cook provided its executive compensation consulting services under the direction of the HR Committee and did not provide any additional services to the Company. Our management provides input to the compensation consultant but does not direct or oversee its activities with respect to our executive compensation programs. In order not to impair the independence of the compensation consultant, or create the appearance of an impairment, the Committee follows a policy that the compensation consulting firm may not provide other services to the Company. The HR Committee has evaluated Cook’s independence,officer, including the factors relating to independence specified in Nasdaq Stock Market Listing Rules, and determined that Cook is independent.
Peer Company Compensation Dataequity-based compensation provided under long-term compensation plans.
The HR Committee determines the level of periodic salary increases after reviewing:
the qualifications, experience and Cook, with input from performance of each executive officer;
the Company’s management, established the Company’s compensation paid to persons having similar duties and responsibilities in our peer group in connectioncompanies; and
the nature of the Bank’s business, the complexity of its activities and the importance of the executive’s experience to the success of the business.
After considering these factors, reviewing results of the Pearl Meyer peer review and discussing proposed salaries for the other NEOs with the Cook 2016 Review and will reevaluate the peer group in
2018. The peer group consists of fifteen bank holding companies and one bank that file public reports and have business operations in commercial banking and financial services. The peer institutions were identified as having assets, long-term performance and market capitalization comparable to the Company. Peer company data is used byCEO, the HR Committee as a reference and not an absolute target for compensation approaches and levels. Two institutions included in the peer group for 2015 were removed for 2016, one because it was acquiredrecommended and the other because its size fell belowboard approved annual salaries, with the lower threshold for inclusion.indicated percentage increases, effective March 1, 2018, as follows: Mr. Cargill $965,000 (6%), Ms. Anderson $480,000 (10%), Mr. Ackerson $510,000 (5%), and Mr. Hudgens $495,000 (3%).
The peer group used in 2016 includes the following companies:
BOK Financial Corporation
Cullen/Frost Bankers, Inc.
FirstMerit Corporation
First Midwest Bancorp, Inc.
F.N.B. Corporation
IberiaBank Corporation
MB Financial, Inc.
PacWest Bancorp
Pinnacle Financial Partners, Inc.
PrivateBancorp, Inc.
Prosperity Bancshares Inc.
Signature Bank
SVB Financial Group
TCF Financial Corporation
TrustMark Corporation
Western Alliance Bancorporation
Wintrust Financial Corporation
The HR Committee targets total compensation paid to the Company’s executive officers to be aligned betweenwith the 50th percentile of the Company’s peer group and given commensurate performance, 75market. Some executive officers may be below the 50th percentilespercentile, while some may be above, depending on the facts and circumstances of the Company’s peer group.each executive including experience, time in position and performance.
ExecutiveElements of our Compensation Program Overview
TheOur compensation program for executive compensation package available to our NEOs is comprised of:officers consists of the following elements:
base salary;
annual incentive compensation;
long-term incentive compensation, consisting of RSUs;compensation; and
other standard retirement and health benefits.
Base Salary
Base salary issalaries are designed to compensate executive officers for their roles and responsibilities and to provide competitive levels of fixed compensation to our executives and to reflectthat reflects their experience, duties and scope of responsibilities. We pay competitive base salaries requiredin order to recruit and retain executives of the quality that we must employnecessary to ensure the success of our Company. Base salaries for the NEOs are subject to annual review, under the terms of the contracts discussed below, but are not always adjusted on an annual basis. The HR Committee determines the appropriate level and timing of changes in base compensation for the CEO and forNEOs (other than the other NEOs upon consideration ofCEO) based on the recommendation of the CEO. In making determinations of salary levels for the named executives,NEOs, the HR Committee considers the entire compensation package for each executive officers,officer, including the equity-linkedequity-based compensation provided under long-term compensation plans. The Company intends for total compensation levels to be consistent with competitive practices of our peer group companies and each executive’s level of responsibility.
The HR Committee determines the level of periodic salary increases after reviewing:
the qualifications, experience and performance of each executive officer;
the compensation paid to persons having similar duties and responsibilities in our peer group companies; and
the nature of the Bank’s business, the complexity of its activities and the importance of the executive’s experience to the success of the business.
After considering these factors, reviewing results of the Cook 2016 Review,Pearl Meyer peer review and discussing proposed salaries for the other NEOs with Mr. Cargill,the CEO, the HR Committee recommended and the board approved salaryannual salaries, with the indicated percentage increases, effective March 1, 2018, as follows: Mr. Cargill $900,000 (13%), Mr. Bartholow $500,000$965,000 (6%), Mr. Hudgens $475,000 (6%Ms. Anderson $480,000 (10%), Mr. Ackerson $480,000 (8%$510,000 (5%), and Ms. Anderson $385,000 (10%). These salary increases were implemented in October 2016 following receipt of the 2016 Cook Review and completion of the HR Committee’s review in order to be consistent with competitive practices of our peer group companies. In February 2017, as part of the annual review of executive compensation, the HR Committee further recommended and the board approved annual salary increases, effective March 1, 2017, as follows: Mr. Cargill $912,000 (1%), Mr. Bartholow $506,000 (1%), Mr. Hudgens $481,000 (1%), Mr. Ackerson $486,000 (1%), and Ms. Anderson $392,000 (2%$495,000 (3%).
Annual Incentive Compensation
AnnualWe provide annual cash incentive compensation is designed to provide competitive levels of compensation based on experience, duties and scope of responsibilities. In addition, our annual incentive program is designed to ensure that variable compensation based on the Company’s profitability is a significant component of total cash compensation for the named executives. The HR Committee compares our performance to peers with an emphasis on performance metrics that drive business success. For 2016, the HR Committee focused on growth in EPS, ROA, and TBV, as well as other business and individual objectives. The HR Committee uses the annual incentive compensationopportunities to motivate and reward the NEOs for achievement of financial results as well as strategic and business and financial objectives.
Pursuant to the annual incentive program approved by the HR Committee, an aggregate incentive pool A target bonus opportunity is establishedset for each year. The size of the incentive pool is derivedNEO as a percentage of base salary, with the Company’spre-tax,pre-annual incentive income. The incentive pool has varied from 5% to 15% of the Company’spre-tax,pre-annual incentive incomepercentage varying depending on the profitability of the Company, performance of individual business units, number of participants, amounts guaranteed to new officers and other factors. Due to our continued profitability, the HR Committee approved an incentive pool for 2016 set at 8% ofpre-tax,pre-annual incentive income. The amount of the incentive pool is incorporated intheir position. For 2018, the annual business and financial plan approved byincentive target amounts for the board of directors and is adjusted during the year based on actual results compared to the approved financial plan. After verification of final results, the total annual incentive pool and allocation of dollars in the incentive pool among the participants are approved by the HR Committee. This approach provides an effective cap on the size of awards that may be made to the NEOs.
The HR Committee can exercise positive or negative discretion over the incentive pool based on their evaluation of the Company in comparison to peer companies in our industry as well as evaluation of overall economic conditions and individual performance. The incentive pool is allocated among three distinct groups: the NEOs relationship managers generally responsible for lending and other service offerings and other key managers, which includes persons who oversee and provide critical support in such areas as finance, human resources, operations, technology, funding, investments and credit policy. Executive management determines allocations within production and key management groups pursuant to the approved program.
The portion of the total incentive pool allocated to the NEOs is based on the performance of the Company compared to plan and other measures of performance. For 2016, it was specifically based on the Company’s
EPS, ROA and TBV compared to targets established by the HRC. In addition, the HRC assessed completion of individual NEO objectives.
The range of specific targets and relative weights for each performance metric were as follows:
EPS 30% of Annual | Payout | ROA 30% of Annual Incentive | Payout | TBV Growth 20% of Annual Incentive | Payout | |||||
$3.05 | 25% | 0.76% | 25% | $32.96 | 25% | |||||
3.10 | 50% | 0.78% | 50% | 33.27 | 50% | |||||
3.21 | 75% | 0.80% | 75% | 33.59 | 75% | |||||
3.33 | 100% | 0.83% | 100% | 33.97 | 100% | |||||
3.45 | 125% | 0.87% | 125% | 34.38 | 125% | |||||
3.56 | 150% | 0.91% | 150% | 34.86 | 150% |
Executive Officer | Target Incentive (% of Base Salary) | Target Incentive ($) | ||||||
C. Keith Cargill | 115 | % | $ | 1,109,750 | ||||
Julie L. Anderson | 80 | % | $ | 384,000 | ||||
Vince A. Ackerson | 80 | % | $ | 408,000 | ||||
John D. Hudgens | 75 | % | $ | 371,250 |
Results falling
Actual incentive amounts that could be earned by the NEOs for 2018 were based on the level of achievement of performance goals relating to the following key metrics: net income (65%), credit quality (25%) and MSOs (10%).
For the net income metric, NEOs could earn between 25% (for performance at threshold levels) and 150% (for performance above target levels) of their respective target bonus amounts. With respect to the specified values reflected abovenet income metric, the target performance goal was $278.0 million, which would result in proportional adjustmenta payout of 100% of the weighted target incentive; the threshold performance goal was $236.3 million, resulting in a payout amounts.of 25% of the weighted target incentive; and the maximum threshold performance goal was $306.1 million, resulting in a payout of 150% of the weighted target incentive.
The remaining 20%For the credit quality metric, NEOs could earn between 0% and 100% of each NEO’s annual incentive compensationthe weighted target for 2016 consistedamount based on performance measured against board-approved guidelines and tolerances reviewed by the Risk Committee throughout the year.
For the MSO metric, NEOs could earn between 0% and 100% of individual objectives submitted tothe weighted target amount based on the HR Committee for approval at the beginning of 2016. Performance and achievementCommittee’s qualitative assessment of the individualNEO’s successful completion of specific business and financial objectives was measured by assessing each NEO’s individual leadership and execution of strategic and organizational objectivesinitiatives related to the NEO’s areas of responsibility in the business. For 2016, the individual objectives included the following:
Successful completion of major initiatives to achieve strategic business objectives;
Completion of thorough talent reviews and assessment of future staffing needs for the NEO’s particular business unit;
Implementation of organizational changes to deliver superior results while also addressing the changing business climate and regulatory requirements;
Personal leadership development planning to ensure each NEO’s own continual learning and skill enhancement; and
Building strong and trusted partnerships with the community, the industry, key stakeholders, the board, stockholders and regulatory agencies, as appropriate.
The NEOs achieved varying percentages of their approved objectives during 2016: Mr. Cargill–80%, Mr. Bartholow–100%, Mr. Hudgens–65%, Mr. Ackerson–100%, and Ms. Anderson 100%.
The HR Committee may give additional discretion and consideration to an NEO who effectively navigates unforeseen industry or economic conditions that may not have been included in their previously approved management objectives for the year. Due to the challenging environment in 2016 arising largely from sustained low oil and gas prices and the resulting impact on the Company’s profitability from increases in the provision for credit losses, primarily related to energy,by the HR Committee determined additional performance-based incentive compensation was appropriate based on the overall performance achieved by the Company to recognize each NEO’s individual contribution under challenging conditions that were not anticipated at the beginning of 2016. The additional performance-based compensation is detailed in the table below.year.
In addition, in determining the amount of annual cash incentives earned, the HR Committee considers the performance of the Company relative to its peer group, and also considers the entire compensation package of each of the NEOs and the performance of that individual. The incentive award potential is intended to be consistent with each NEO’s level of responsibility, position and performance. A percentage of each NEO’s base salary in effect at the end of the prior fiscal year is generally targeted, ranging from 70% to 100%. The
Cook 2016 Review confirmed these amounts are consistent withmid-range opportunities among our peer group companies. Individual incentives can be above or below these targets based on the Company’s and NEO’s performance in any given year.
The HR Committee approves the allocation of the remainder of the incentive pool with input from the CEO. The CEO submits recommendations for incentive compensation for the NEOs other than himself. The HR Committee determines the incentive payment for the CEO and considers the recommendation of the CEO in its final determinations of awards to be paid to the other NEOs.The Committee met with the CEO and considered the individual contributions and responsibilities of the other NEOs in determining their incentive payments.
The HR Committee met in February 20172019 to consider the Company’s performance against incentive goals and to determine the annual incentive pool compensationincentives to be paid to the NEOsNEOs. For 2018, the following results were achieved and considered in determining NEO incentive compensation:
Adjusted net income of $274.0 million, which equaled 93% of target, resulting in a payout of 60.5% of each NEO’s target amount related to this performance metric. Net income for the Company’s 2016 performance. In determiningperiod was adjusted downward for the 2016 incentive compensation, the HR Committee considered the Company’s overall performance and growth in EPS, ROA and TBV compared to targets establishedimpact of interest rate increases that were determined by the HR Committee as well as individual performance by each NEO. The following results were achieved in 2016:
EPS of $3.11 = 52.3% of target metnot to be attributable to management’s performance.
ROA, adjusted for liquidity in excess of plan, of 0.77% = 37.5%Credit quality results were measured against board approved guidelines and tolerances reviewed by the Risk Committee throughout the year and were determined to equal 100% of target, metresulting in a payout of 25.0% of each NEO’s target amount related to this performance metric.
TBVAchievement of $37.17 = 150.0%individual MSOs were reviewed and determined by the HR Committee to equal 100% of target met
ROA results for 2016 were adjusted from the reported leveleach NEO, resulting in a payout of 0.74% to 0.77% to recognize 2016 liquidity levels in excess of plan, resulting primarily from higher than planned generation oflow-cost deposits that had a positive effect on the Company’s economic performance and its safety and soundness, but an adverse effect on ROA. The excess liquidity amount was deducted from total assets, which was used to calculate adjusted ROA.
Based on these performance measures, annual incentive compensation payouts of between 55% and 84%10.0% of each NEO’s base salary in effect at December 31, 2016 were awarded, with an average payout of 70% for eachtarget amount related to this performance metric.
Based on the achievement of the NEOs. Thefinancial, business and individual performance goals described above, the HR Committee awarded the following annual incentive paymentsincentives to the NEOs for each NEO are detailed below and are set forth in the Summary Compensation Table:fiscal year 2018:
Name | Target % of Base | Target Annual Incentive | EPS–30% | ROA–30% | TBV– 20% | Management –20% | Additional Performance Amount | Total Annual Incentive | ||||||||||||||||||||||||||||||||||||
Executive Officer | Target Incentive ($) | Incentive Earned (% of Target) | Incentive Earned ($) | |||||||||||||||||||||||||||||||||||||||||
C. Keith Cargill | 100 | % | $ | 900,000 | $ | 141,210 | $ | 101,250 | $ | 270,000 | $ | 144,000 | $ | 100,000 | $ | 756,460 | $ | 1,109,750 | 95.5 | % | $ | 1,059,256 | ||||||||||||||||||||||
Peter B. Bartholow | 80 | % | 400,000 | 62,760 | 45,000 | 120,000 | 80,000 | 40,000 | 347,760 | |||||||||||||||||||||||||||||||||||
Julie L. Anderson | $ | 384,000 | 95.5 | % | $ | 366,528 | ||||||||||||||||||||||||||||||||||||||
Vince A. Ackerson | $ | 408,000 | 95.5 | % | $ | 389,436 | ||||||||||||||||||||||||||||||||||||||
John D. Hudgens | 70 | % | 332,500 | 52,169 | 37,406 | 99,750 | 43,225 | 30,000 | 262,551 | $ | 371,250 | 95.5 | % | $ | 354,358 | |||||||||||||||||||||||||||||
Vince A. Ackerson | 70 | % | 336,000 | 52,718 | 37,800 | 100,800 | 67,200 | 40,000 | 298,518 | |||||||||||||||||||||||||||||||||||
Julie L. Anderson | 70 | % | 269,500 | 42,285 | 30,319 | 80,850 | 53,900 | 50,000 | 257,353 |
Long-Term IncentivesIncentive Compensation
Long-term incentive awards for our NEOs include equity-based awards that are designed to directly align more directly the interests of the NEOs with those of our stockholders and to motivate the NEOs to increase the stockholder value of the Company to stockholders over the long term. Executive management and the HR CommitteeWe believe that equity-linkedequity-based incentives are mostan effective in aligningway align the interests of employees and stockholders, buildingbuild stockholder value and retainingretain the Company’s key employees.
2018 Grant of Equity Awards
In 2014, long-term incentive grants wereMarch 2018, the Company made an annual grant of equity awards to the NEOs under the Texas Capital Bancshares, Inc. 2010 Long-Term Incentive Plan, or the 2010 Plan, in the formNEOs. The 2018 equity awards consisted of cash-settled Performance Units. In 2015RSUs, 50% of which were time-based awards and 2016 long-term incentive grants50% of which were made to the NEOs under the Texas Capital Bancshares, Inc. 2015
Long-Term Incentive Plan, or the 2015 Plan, in the form of stock-settled RSUs. A percentage of the Performance Units and RSUs vest based on the attainment of certain performance metrics developed by the HR Committee as outlined below, referred to as the performance portion of theperformance-based awards. The vesting of the remaining percentages, referred to as the time-based portion, occursRSUs vest on the third anniversary of the grant date, of grant ifsubject to the named executive is employed by the Company or is eligible for approved retirement.
Vestingexecutive’s continued employment with Company. The performance-based RSUs may be earned in amounts ranging from 0% to 150% of the target award, based on the Company’s level of achievement of performance portions of the Performance Units and RSUs is subjectgoals relating to determinations by the HR Committee that the(i) average EPS ROA and, for 2015 and 2016, TBV objectives have been achieved without imposing excessive risk to stockholders and that the Company has maintained appropriate standards related to asset quality, capital management, regulatory compliance, expense managementgrowth relative to revenuethe Company’s three-year plan (25% weighting), (ii) average EPS growth relative to a peer group (25% weighting), (iii) average ROE relative to the Company’s three-year plan (25% weighting), and the funding composition and level(iv) average ROE relative to support loan growth. For each vesting period, the Committee makes a threshold determination of whether: the Bank’s asset quality and credit controls were at a level of comparable high performing banks’ asset quality and credit controls; the Bank maintained a tangible capital ratio comparable to that of solidly capitalized banks; the Bank was run efficiently, with a guideline efficiency ratio of 60% or better, while appropriately addressing regulatory requirements; and that at least 100% of traditional loans held for investment were supported by core deposits.
The Company made an annual grant of cash-settled Performance Units in May 2014, of which 50% of the grant was tied to performance measures and 50% of the grant was time-based. The performance measures for the 2014 grant were tied to EPS and ROA objectivespeer group (25% weighting) for the three-year period ending December 31, 2016,2020.
When considering the 2018 awards, the HR Committee started with 50% of the performance portion of the grant based upon the EPS objective and 50% based upon the ROA objective. Ms. Anderson was awarded an annual grant of cash-settled Performance Units that are 100% service-based and provideintended target value for annual vesting over the three-year period.
The number of cash-settled Performance Units awarded in 2014each executive officer, which was based on a targeted percentage of his or her base compensationsalary. For 2018, the target values for each of the named executives and recognition that the award would effectively cover a three-year period. Based on the defined objectives for the 50% performance portion of the Performance Units, the NEOs had the opportunity to vest between 0% and 150% of the performance portion of the Performance Units. The value of the Performance Units was determined at December 31, 2016, the end of the three-year period covered by the grants. At December 31, 2016 EPS was $ 3.11 and three-year average ROA was 0.86%.
The HR Committee and the board of directors determined that these results were achieved without imposing excessive risk to stockholders and that the Company maintained appropriate standards related to asset quality, capital management, expense management relative to revenue and the funding composition and level to support loan growth. However, EPS of $3.11 and three-year average ROA of 0.86% were below the minimum performance targets set in 2014, resulting in no payout for either performance target. The remaining 50% time-based portion was paidequity awards to the NEOs, and is included in the compensation tables below.
In June 2015, the HR Committee moved away from the cash-settled Performance Units and made annual grantsas a percentage of RSUs. The grantstheir respective base salaries, were structured in a manner consistent with the 2014 grants described above; however the 50% performance portion of the grant is 40% based upon the EPS objective, 40% based upon the ROA objective and 20% based upon a newly defined growth in TBV objective. The NEOs have the opportunity to vest between 0% and 150% of the performance portion of the RSUs under this grant, which covers the three-year period ending December 31, 2017. Unlike the 2014 grants, settlement of these awards will be made in shares of the Company’s common stock.as follows: Mr. Cargill, 230%; Ms. Anderson, was awarded annual grants of cash-settled Performance Units that are 100% service-based; Mr. Ackerson, 100%; and provide for annual vesting over the applicable three-year period.
On May 17, 2016, the HR Committee approved the grant of a service-based special retention award to Ms. Anderson consisting of cash-settled Performance Units valued at $100,000 vesting 25% over the next
four anniversaries of the grant date. The award has no performance components and was granted pursuant to the Company’s 2015 Long-Term Incentive Plan.
The Company made an annual grant of RSUs in September 2016 following completion of the Cook 2016 Review. The grants were structured in a manner consistent with the 2015 grants described above; however the 50% time-based portion of the grant vests 66% on March 15, 2019 and 34% on September 28, 2019 so that 66% of the award will vest in accord with the Company’s ordinary effective dates for such grants and 34% of the award will vest on September 28, 2019 in accord with the three-year vesting fromdate-of-grant requirement for time-based awards under the 2015 Plan. Similar to the 2015 grants described above, the NEOs will have the opportunity to vest between 0% and 150% of the performance portion of the RSUs under this grant, which covers the three-year period ending December 31, 2018.
AllMr. Hudgens, 85%.The amounts of the grants were based on a variety of factors deemed relevant by the HR Committee, including the Company’s performance, the NEO’s level of responsibility, an assessment of individual performance made by the Committee and competitive market data. Because grants are expressed in specific share numbersThe number of time-based RSUs and the performance criteria specify minimumtarget number of performance-based RSUs (including the threshold and maximum qualifying performance levels,number of performance-based RSUs that could be earned) granted to each NEO are set forth below in the amounts that an NEO may receive from vesting2018 Grants of long-term equity incentives is effectively capped.Plan-Based Awards Table.
The following summarizes the range of performance targets for the performance portions of the, 2014, 2015, and 2016 grants of Performance Units and RSUs discussed above:
2014 Grant:
EPS targets ranging from $3.33 to $4.33 for the year ended December 31, 2016 with payouts ranging from 12.5% to 37.5% of total vested value.
Average ROA over a three-year period ending December 31, 2016 ranging from 1.07% to 1.15%, with payouts ranging from 12.5% to 37.5% of total vested value.
2015 Grant:
EPS targets ranging from $3.70 to $4.50 for the year ended December 31, 2017 with payouts ranging from 10.0% to 30.0% of total vested value.
Average ROA over a three-year period ending December 31, 2017 ranging from 0.98% to 1.11%, with payouts ranging from 10.0% to 30.0% of total vested value.
Average growth in TBV over a three-year period ending December 31, 2017 ranging from 9.00% to 16.00%, with payouts ranging from 5.0% to 15.0% of total vested value.
2016 Grant:
EPS targets ranging from $3.90 to $4.90 for the year ended December 31, 2018 with payouts ranging from 10.0% to 30.0% of total vested value.
Average ROA over a three-year period ending December 31, 2018 ranging from 0.80% to 1.00%, with payouts ranging from 10.0% to 30.0% of total vested value.
Average growth in TBV over a three-year period ending December 31, 2018 ranging from 9.00% to 16.00%, with payouts ranging from 5.0% to 15.0% of total vested value.
The Performance Units and RSUs will be forfeited upon an NEO’s termination of employment, except as otherwise provided below. The Performance UnitsRSUs provide for accelerated vesting upon a change in control, as defined under the 2010 Plan, with 50% to vest upon the effective date of the change in control and 50% to vest upon the original vesting date of the Performance Unit, or two years following the effective
date of the change in control, whichever occurs earlier. If theif an NEO is terminated without cause or terminates his employment for good reason (each as defined in the NEO’s employment agreement) within 90 days immediately preceding or following the effective date of the change in control, the unvested Performance Units will become vested on the later of the effective date of the change in control or the NEO’s termination date. In addition, the Performance Units become immediately vested upon the NEO’s death or total and permanent disability. If an NEO retires upon reaching the age of 65 with 12 years of service, the Performance Units become fully vested with the payout to occur at the end of the three-year performance period, subject to board approval and the execution ofnon-competition andnon-solicitation agreements by the executive.
The RSUs provide for accelerated vesting of 100% of the unvested units upon a change in control, as defined under the 2015 Plan, if the NEO is terminated without cause or terminates hisher employment for good reason (each as defined in the NEO’s employment agreement) following thea change in control effective upon such termination, andof the Company, regardless of whether the performance criteria have been achieved. If an NEO retires upon reaching the age of 65 with 12 years of service, a prorated portion of the time-based RSUs will vest based on the number of full years the NEO has been employed since the date of grant, and the performance-based RSUs will continue to vest based on the achievement of the performance goals within the time periods established for such grant. If an NEO violates the provisions of any agreement with the Company that contains confidentiality,non-solicitation or other protective or restrictive covenant provisions, any unvested awards will cease to vest, any undelivered shares will be forfeited and any net shares delivered to the NEO with respect to the awards must be immediately returned to the Company.
2016 Grants of Performance-Based RSUs – Performance Results and Payouts
The Company made an annual grant of RSUs in September 2016. The grants were structured in a manner consistent with the 2018 grants described above, with awards consisting of 50% time-based RSUs and 50% performance-based RSUs. The 2016 performance-based RSUs could be earned in amounts ranging from 0% to 150% of the target award, based on the Company’s level of achievement of performance goals relating to EPS, ROA and increases in TBV over a three-year performance period.
The following table sets forth the range of specific targets, relative weights and resulting payouts for the 2016 performance-based RSUs for the three-year period ending December 31, 2018, as established at the time the awards were granted:
Target EPS (40% Weight) | Payout (as a % of Target Award) | Target Average ROA (40% Weight) | Payout (as a % of Target Award) | Target TBV Growth (20% Weight) | Payout (as a % of Target Award) | |||||
$3.90 | 50% | 0.80% | 50% | 9.0% | 50% | |||||
$4.20 | 75% | 0.84% | 75% | 10.0% | 75% | |||||
$4.41 | 100% | 0.89% | 100% | 11.5% | 100% | |||||
$4.60 | 125% | 0.94% | 125% | 13.5% | 125% | |||||
$4.90 | 150% | 1.00% | 150% | 16.0% | 150% |
Payouts for results falling between the specified values reflected above are determined based on straight-line interpolation.
The three-year performance period with respect to the 2016 performance-based RSUs concluded on December 31, 2018. The following table sets forth the Company’s actual achievement of performance goals for the 2016 performance-based RSUs and the resulting payout percentages. Actual EPS was adjusted downward for the impact of a reduction in the Company’s income tax rate as a result of the Tax Cuts and Jobs Act enacted in December 2017 that the HR Committee determined did not result from management’s performance.
Adjusted EPS (40% Weight) | Payout (as a % of Weighted Target Award) | Actual Average ROA (40% Weight) | Payout (as a % of Target Award) | Actual (20% Weight) | Payout (as a % of Target Award) | Total Payout (as a % of Target Award) | ||||||||||||||||||||
$4.73 | 136 | % | 0.93 | % | 122 | % | 13.63 | % | 126 | % | 128.4 | % |
Based on the Company’s actual achievement of performance goals for the three-year period ending December 31, 2018, the NEOs who received 2016 performance-based RSUs earned the following payouts:
Named Executive Officer | Target Award of 2016 Performance-Based | Aggregate Payout (% of Target | Shares Earned and Paid Out | |||||||||
C. Keith Cargill | 10,895 | 128.4 | % | 13,990 | ||||||||
Julie L. Anderson | 3,153 | 128.4 | % | 4,049 | ||||||||
Vince A. Ackerson | 4,998 | 128.4 | % | 6,417 | ||||||||
John D. Hudgens | 5,056 | 128.4 | % | 6,491 |
Other Benefits
2006 Employee Stock Purchase Plan. In 2006, the board of directors adopted and our stockholders approved the Company’s 2006 Employee Stock Purchase Plan (the “2006 ESPP”). The 2006 ESPP provides eligible employees of the Company (and its participating subsidiaries) with an incentive to advance the best interests of the Company and its subsidiaries by providing them a means of voluntarily purchasing common stock at 95% of the market price and upon favorable terms. We believe that the participants in the 2006 ESPP have an additional incentive to promote the success of the Company’s business by increasing their economic interest in the Company. Participation in the 2006 ESPP is voluntary and dependent upon each eligible employee’s election to participate and determination of the level of participation. We believe that the 2006 ESPP is an important part of our compensation program that helps us compete effectively for talent. It has been and remains the policy of the Company that the NEOs are not eligible to participate in the 2006 ESPP.
Retirement Savings Opportunity. All employees may participate in our 401(k) Retirement Savings Plan, or 401(k) Plan. Each employee may makebefore-tax contributions of up to 85% of their eligible compensation up to current Internal Revenue Service limits. We provide the 401(k) Plan to help our employees save some amount of their cash compensation for retirement in a tax efficient manner. Since 2006, we have matched contributions made by our employees to the 401(k) Plan based upon a formula that considers the amount contributed by the respective employee with a vesting scheduled based upon suchthe employee’s tenure with the Company. The matching contributions for each NEO are set forth in the below2018 All OtherCompensation Table.Table. We do not provide an option for our employees to invest in our common stock through the 401(k) Plan. We have not historically provided in 2016 or in prior years any retirement plans, such as defined benefit, defined
contribution, supplemental executive retirement benefits, retiree medical or deferred compensation plans requiring mandatory Company contributions, to our employees or the NEOs, other than the 401(k) Plan and the Nonqualified Deferred Compensation Plan described below.
Nonqualified Deferred Compensation Plan.Effective for fiscal 2016, we implemented The Company offers a nonqualified deferred compensation plan for our executives and key members of management in order to assist us in attracting and retaining these individuals. Participants in the plan may elect to defer up to 75% of their
annual salary and/or short-term incentive payout into deferral accounts that mirror the gains or losses of specified investment funds or market indexes approved by the HR Committee and selected by the participants. These investment alternatives are similar to the choices under the 401(k) plan.Plan. The gains and losses credited to each participant’s deferral account are subject to the same investment risk as an actual investment in the specified investment funds or market indexes. The Company does not currentlyrestores any lost company match deferralsin the 401(k) Plan due to legal limits on qualified plans. Beginning in 2018, we have matched contributions made pursuant toby participants into the plan.nonqualified deferred compensation plan based upon a formula that considers the amount contributed by the respective employee with a vesting scheduled based upon the employee’s tenure with the Company. All participant contributions to the plan and any related earnings are immediately vested and may be withdrawn upon the participant’s separation from service, death or disability or upon a date specified by the participant.
The plan allows the Company to make discretionary contributions on behalf of a participant. On February 14, 2017, the HR Committee recommended and the board approved discretionary contributions to be made by the Company on behalf of the NEOs as follows: Mr. Cargill $100,000, Mr. Bartholow $40,000, Mr. Hudgens $40,000, Mr. Ackerson $40,000, and Ms. Anderson $40,000. The discretionary contributions may be allocated among the approved investment alternatives as selected by each NEO. As established by the Company on the date of approval and in the award agreement, the discretionary contributions and any related earnings vest 50% on the second anniversary of the date of approval, with the remainder vesting on the third anniversary. Discretionary contributions become immediately vested upon the participant’s death or disability, or termination without cause or with good reason within 18 months of a change in control. Company contributions and any related earnings, once vested, may only be withdrawn upon the participant’s separation from service, death or disability, or on apre-determined date specified by the participant or by the Company in an award agreement. The discretionary contributions for each NEO are set forth in the All Other Compensation and Nonqualified Deferred Compensation tables below.
Health and Welfare Benefits.All full-time employees, including our NEOs, may participate in our health and welfare benefit programs, including medical, dental and vision care coverage, disability insurance and life insurance. We provide these benefits to meet the health and welfare needs of employees and their families.
Employment Agreements
The Company maintains employment agreements with each of its NEOs. The material terms of each NEO’s employment agreement are described below.
Employment Agreement for Mr. Cargill
Mr. Cargill’s amended and restated employment agreement, which we refer to as the “Cargill Agreement,” has a term of one year and will be automatically renewed for successiveone-year terms unless notice ofnon-renewal is given by either party. The Cargill Agreement will terminate upon Mr. Cargill’s death or disability, upon his voluntary termination of employment or upon his termination for cause. “Cause” as defined in the agreement includes: (1) fraud, misappropriation or embezzlement; (2) the material breach of executive responsibilities, restrictive covenants or fiduciary duties; (3) conviction of a felony or crime of moral turpitude; (4) illegal use of drugs interfering with the performance of his duties; or (5) acceptance of other employment without permission. Upon any such termination Mr. Cargill would be entitled to receive his base salary,pro-rated through the termination date, any unpaid but accrued vacation benefits and any unreimbursed business expenses.
If terminated by the Company without cause or bynon-renewal, or by Mr. Cargill for “good reason,” Mr. Cargill would receive a cash payment equal to twelve months’ base salary, a cash payment equal to the average annual incentive payment for the two prior years, and continued medical insurance benefits for twelve months following termination. “Good reason” is defined as (1) an assignment of duties that are functionally inferior to the duties set forth in the Cargill Agreement; (2) a change of employment location which is more than 50 miles from the Company’s current executive offices; or (3) a reduction in salary, other than as part of a proportionate reduction affecting all other senior officers.
If, in connection with a change in control, as defined in the Cargill Agreement, Mr. Cargill’s employment is terminated either (1) by the Company or the successor entity without cause, or (2) by Mr. Cargill for good
reason, Mr. Cargill will receive a lump sum payment equal to 2.5 times his average base salary and the average of any annual incentive amounts paid to him during the two years preceding the change in control. This change in control payment is in lieu of any other amounts to which he would be entitled under the Cargill Agreement.
As a means of providing protection to the Company’s stockholders, under certain adverse conditions such as dissolution, bankruptcy or a distressed sale of the Company’s assets or stock for the purpose of avoiding a bankruptcy proceeding or at the recommendation of regulatory authorities, the above described payments would not occur, except for the cash payments described above that would be owing upon Mr. Cargill’s voluntary termination of employment.
The Cargill Agreement contains other terms and conditions, includingnon-competition andnon-solicitation provisions, confidentiality obligations and restrictions on Mr. Cargill’s ability to be involved with a competing bank or company with a place of business in Texas.
Employment Agreements for Mr. Bartholow, Mr. Hudgens, Mr. Ackerson and Ms. Anderson
In order to retain the Company’s senior executive officers, the HR Committee and board of directors of the Company determined it was in the best interests of the Company to enter into employment agreements with Messrs. Bartholow, Hudgens and Ackerson and Ms. Anderson. We entered into these agreements to ensure that the executives perform their respective roles for an extended period of time in view of the critical nature of each of their positions. The Company entered into Amended and Restated Executive Employment AgreementsAgreement between Ms. Anderson and the Company
The Company entered into an Amended and Restated Executive Employment Agreement with Ms. Anderson effective July 1, 2017 (the “2014 Agreements”“Anderson Agreement”). Pursuant to the Anderson Agreement, in addition to serving as CFO of the Bank, Ms. Anderson began serving as CFO of the Company. The Anderson Agreement has an18-month initial term and is automatically renewable for successiveone-year terms unless earlier terminated.
The Anderson Agreement will terminate upon Ms. Anderson’s death or disability, upon her voluntary termination of employment or upon her termination for cause. Upon any such termination, Ms. Anderson would be entitled to receive her base salary,pro-rated through the termination date, any unpaid but accrued vacation benefits and any unreimbursed business expenses.
Termination for cause means the Company’s termination of Ms. Anderson’s employment for any of the following: (1) fraud, misappropriation or embezzlement; (2) the material breach of Ms. Anderson’s executive responsibilities or of the protective covenants in the Anderson Agreement; (3) conviction of a felony or crime of moral turpitude; (4) intentional breach of anynon-disclosure ornon-competition/non-solicitation agreement with Mr. Bartholow,the Company or the Bank; (5) intentional failure to perform the duties and responsibilities required by the Anderson Agreement; (6) illegal use of drugs interfering with Ms. Anderson’s performance of her duties under the Anderson Agreement; (7) acceptance of other employment without permission; or (8) material breach of fiduciary duties owed to the Company.
If Ms. Anderson’s employment is terminated by the Company without cause or upon notice, or Ms. Anderson terminates her employment for good reason, Ms. Anderson is entitled to a cash severance benefit of twelve months’ base salary plus her average annual cash bonus for the two preceding bonus plan years, and continued medical insurance benefits for twelve months following termination. If Ms. Anderson’s employment is terminated without cause or for good reason within the period beginning 90 days before and ending 18 months following a change in control of the Company, Ms. Anderson is entitled to a cash severance benefit equal to 2.5 times her average base salary and average cash bonus for the two preceding bonus plan years, and continued health and welfare benefits that are no less favorable than the benefits to which Ms. Anderson was entitled prior to thechange-in-control for a period of 18 months following termination. “Good reason” is defined as: (1) an assignment of duties that are functionally inferior to the duties set forth in the Anderson Agreement; (2) a change of employment location which is more than 50 miles from the Company’s current executive offices; (3) a reduction in salary, other than as part of a proportionate reduction affecting all other senior officers; or (4) the delivery by the Company of a notice ofnon-renewal of the Anderson Agreement in connection with certain change in control events.
As a means of providing protection to the Company’s stockholders, under certain adverse conditions such as dissolution, bankruptcy or a distressed sale of the Company’s assets or stock for the purpose of avoiding a bankruptcy proceeding or at the recommendation of regulatory authorities, the above described payments would not occur except for the cash payments described above that would be owing upon Ms. Anderson’s termination of employment due to death or disability, voluntary termination of employment or termination for cause. If the described adverse conditions occur and Ms. Anderson’s termination of employment is without cause or for good reason, the above described payments would be for a period of six months in lieu of twelve months.
The Anderson Agreement contains other terms and conditions, includingnon-competition andnon-solicitation provisions, confidentiality obligations and restrictions on Ms. Anderson’s ability to be involved with a competing state or national bank or company providing similar services with a place of business in Texas during her employment and for theone-year period following her termination or resignation.
Retirement Transition and Award Agreement between Mr. Hudgens and the Company
On August 6, 2018, the Company announced Mr. Hudgens’ planned retirement from the Company, which will become effective August 31, 2019 (the “Separation Date”). In connection with his retirement, Mr. Hudgens entered into a Retirement Transition and Award Agreement (the “Retirement Agreement”) with the Company that provides for Mr. Hudgens to receive the following compensation in connection with his retirement and continuation ofnon-competition andnon-solicitation obligations through February 28, 2021:
(1) | Cash payments equal to an aggregate amount of $1,385,626 (the “Cash Separation Payments”) payable in equal semi-monthly installments over a period of eighteen (18) months in accordance with the Company’s regular payroll practices. |
(2) | Continued vesting of the performance portion of outstanding RSUs and any other performance-based awards granted to Mr. Hudgens pursuant to the Amended and Restated 2015 Long-Term Incentive Plan (the “2015 Plan”) prior to December 31, 2018, in accordance with their terms and subject to the achievement of the applicable performance conditions that remain outstanding as of August 31, 2019. |
(3) | Continued vesting of the time-based portion of outstanding RSUs that did not otherwise vest on or before the Separation Date, in accordance with their terms; provided, however, that the value of the time-based portion of outstanding RSUs has been determined using the average closing price of the Company’s common stock for the twenty (20) consecutive trading days immediately prior to December 31, 2018 ($53.09) and all time-based RSUs were converted into the right to receive payment solely in cash on the applicable payment date for each such award. |
(4) | Aone-time lump sum payment of $20,000 as reimbursement for Mr. Hudgens’out-of-pocket legal expenses and reasonable expenses incurred in connection with the Retirement Agreement and other office and administrative expenses. |
Mr. Hudgens will also receive certain health benefits for a period of 18 months following his retirement.
If Mr. Hudgens’ employment is terminated without cause or for disability prior to August 31, 2019, or upon death prior to the date that all Cash Separation Payments have been paid, Mr. Hudgens or his estate will be entitled to receive the Cash Separation Payments as set forth in the Retirement Agreement. If a change in control (as defined in the 2015 Plan) should occur prior to the Separation Date, in lieu of the amounts described above, Mr. Hudgens will be entitled to receive 2.5 times his average annual base salary and bonus in effect for the two years immediately preceding the change in control.
Mr. Hudgens is subject to an eighteen month restriction on his right to compete with, and solicit customers of, the Bank. If Mr. Hudgens violates these restrictions, he will forfeit any unpaid portion of the retirement benefits described above. Subject to the arrangements described above, Mr. Hudgens’s employment during 2018 continued to be subject to his Employment Agreement, the terms of which are substantially identical to those of the Ackerson Agreement described below.
Employment Agreement for Mr. Ackerson
The Company entered into an Amended and Restated Executive Employment Agreement with Mr. Ackerson effective December 18, 2014. The Company’s Employment Agreement with Ms. Anderson is dated May 5, 20062014 (the “2006 Agreement”, which together with the 2014 Agreements is referred to as an “NEO“Ackerson Agreement”).
Each of the NEO AgreementsThe Ackerson Agreement has a term of one year and will be automatically renewed for successiveone-year terms unless notice ofnon-renewal is given by either party or unless earlier terminated in accordance with the terms of the agreement, and each provides for compensation including base salary and participation in the annual incentive plan for key executives. Each of the executives is also eligible to receive grants of equity-based incentive compensation under our long-term incentive plans.
Each NEOThe Ackerson Agreement terminates upon the executive’s death or disability, upon the executive’s voluntary termination of employment or upon the executive’s termination for cause. Upon any such termination the executive would be entitled to his or her base salary,pro-rated through the termination date, any unpaid but accrued vacation benefits and any unreimbursed business expenses. “Cause” is defined substantially identically to the Cargill Agreement. Upon termination of the 2006 Agreement for death or disability, Ms. Anderson would receive the lesser of (i) the balance of her base salary remaining in the term of her Agreement or (ii) twelve months’ base salary.
The NEO Agreements provideAckerson Agreement provides for severance payments to the executive upon termination of the executive’s employment by us without cause or by the executive for good reason, at which time the executive is entitled to receive: (1) a cash payment equal to 12 months’ base salary as then in effect; (2) an amount equal to the average annual incentive paid to the executive for the two years preceding his or her termination; and (3) continued medical insurance benefits, at the Company’s expense, for a period of twelve months following termination. “Good reason” is defined substantially identically to the Cargill Agreement.
The NEO Agreements includeAckerson Agreement includes provisions relating to payments upon a change in control that are substantially identical to the terms of the Cargill Agreement, as well as protective provisions triggered
under adverse conditions that limit the payments due to the NEOsMr. Ackerson andnon-competition andnon-solicitation provisions, confidentiality obligations and restrictions on the executive’s ability to be involved with a competing state or national bank.
Indemnification Arrangements
Our certificate of incorporation, bylaws and applicable Delaware law provide indemnification rights to our directors and officers. Our board of directors has granted broader rights to indemnity pursuant to Indemnification Agreements between the Company and each of its directors and NEOs. These indemnification arrangements may require us to, among other things, indemnify our officers and directors against liabilities that may arise by reason of their status or service as directors or officers. These indemnification arrangements may also require us to advance any expenses incurred by our directors or officers as a result of any proceeding against them as to which they could be indemnified. As of the date of this filing, there is no pending litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification by us is sought, nor are we aware of any threatened litigation or proceeding that may result in a claim for indemnification. We have purchased a policy of directors’ and officers’ liability insurance that insures our directors and officers against the cost of defense, settlement or payment of a judgment in certain circumstances.
Tax Implications of Executive Compensation
Although deductibility of compensation is preferred, tax deductibility is not a primary objective of our compensation programs. We believe that achieving our compensation objectives set forth above is more important than the benefit of tax deductibility and we reserve the right to maintain flexibility in how we compensate our executive officers, even if it may result in limiting the deductibility of amounts of compensation from time to time.
Report of the Human Resources Committee on the Compensation Discussion and Analysis
The Human Resources Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this Proxy Statement. Based on such review and discussion, the Human Resources Committee recommended to the board of directors that this Compensation Discussion and Analysis be included in this Proxy Statement for filing with the SEC.
The ReportThis report is submitted by the Human Resources Committee of the board of directors of Texas Capital Bancshares, Inc.
Dale W. Tremblay, ChairmanChair
Elysia Holt Ragusa
Steven P. Rosenberg
20162018 Summary Compensation Table*
Non-Equity Incentive Plan Compensation | ||||||||||||||||||||||||||||
Name and Principal Position | Year | Salary | Stock (A) | Annual Incentive (B) | Long-Term Incentive (C) | All Other Compensation (D) | Total | |||||||||||||||||||||
C. Keith Cargill President and CEO of the Company; President and CEO of Texas Capital Bank | 2016 | $ | 825,000 | $ | 887,915 | $ | 756,460 | $ | 384,943 | $ | 131,398 | $ | 2,985,716 | |||||||||||||||
2015 | 729,167 | 471,291 | 425,000 | 393,563 | 31,894 | 2,050,915 | ||||||||||||||||||||||
2014 | 625,000 | — | 625,000 | 754,291 | 35,171 | 2,039,462 | ||||||||||||||||||||||
Peter B. Bartholow CFO and COO of the Company; COO of Texas Capital Bank | 2016 | 478,000 | 460,936 | 347,760 | 278,755 | 75,262 | 1,640,713 | |||||||||||||||||||||
2015 | 455,333 | 307,227 | 208,200 | 393,563 | 34,526 | 1,398,849 | ||||||||||||||||||||||
2014 | 439,167 | — | 330,000 | 788,598 | 50,586 | 1,608,351 | ||||||||||||||||||||||
John D. Hudgens Chief Risk Officer of the Company; Chief Risk Officer of Texas Capital Bank | 2016 | 455,833 | 412,039 | 262,551 | 248,887 | 65,051 | 1,444,361 | |||||||||||||||||||||
2015 | 431,833 | 275,847 | 182,250 | 324,896 | 26,426 | 1,241,252 | ||||||||||||||||||||||
2014 | 413,333 | — | 300,000 | 657,139 | 40,731 | 1,411,203 | ||||||||||||||||||||||
Vince A. Ackerson Texas President and Chief Lending Officer of Texas Capital Bank | 2016 | 454,166 | 407,312 | 298,518 | 219,019 | 69,263 | 1,448,278 | |||||||||||||||||||||
2015 | 425,000 | 265,315 | 180,500 | 289,401 | 34,876 | 1,195,092 | ||||||||||||||||||||||
2014 | 395,833 | — | 300,000 | 597,154 | 46,760 | 1,339,747 | ||||||||||||||||||||||
Julie L. Anderson Controller, Chief Accounting Officer and Secretary of the Company; CFO of Texas Capital Bank | 2016 | 355,000 | 256,981 | 257,353 | 122,483 | 64,810 | 1,056,627 | |||||||||||||||||||||
2015 | 306,667 | — | 158,500 | 133,163 | 24,903 | 623,233 | ||||||||||||||||||||||
2014 | 288,333 | — | 235,000 | 106,547 | 30,369 | 660,249 | ||||||||||||||||||||||
Non-Equity Incentive Plan Compensation | ||||||||||||||||||||||||||||
Name and Principal Position | Year | Salary | Stock (A) | Annual Incentive (B) | Long-Term Incentive (C) | All Other Compensation (D) | Total | |||||||||||||||||||||
C. Keith Cargill President and CEO of the Company; President and CEO of Texas Capital Bank | 2018 | $ | 956,167 | $ | 2,020,454 | $ | 1,059,256 | $ | — | $ | 108,342 | $ | 4,144,219 | |||||||||||||||
2017 | 910,000 | 1,589,270 | 1,083,912 | — | 29,462 | 3,612,644 | ||||||||||||||||||||||
2016 | 825,000 | 887,915 | 756,460 | 384,943 | 131,398 | 2,985,716 | ||||||||||||||||||||||
Julie L. Anderson CFO and Secretary of the Company; CFO of Texas Capital Bank | 2018 | 472,500 | 440,932 | 366,528 | 159,491 | 25,385 | 1,464,836 | |||||||||||||||||||||
2017 | 412,333 | 572,672 | 361,898 | 173,047 | 24,192 | 1,544,142 | ||||||||||||||||||||||
2016 | 355,000 | 256,981 | 257,353 | 122,483 | 64,810 | 1,056,627 | ||||||||||||||||||||||
Vince A. Ackerson Texas President and Chief Lending Officer of Texas Capital Bank | 2018 | 506,000 | 505,202 | 389,436 | — | 71,067 | 1,471,705 | |||||||||||||||||||||
2017 | 485,000 | 400,017 | 433,208 | — | 42,913 | 1,361,138 | ||||||||||||||||||||||
2016 | 454,166 | 407,312 | 298,518 | 219,019 | 69,263 | 1,448,278 | ||||||||||||||||||||||
John D. Hudgens Former Chief Risk Officer of the Company | 2018 | 492,667 | 385,794 | 354,358 | — | 25,945 | 1,258,764 | |||||||||||||||||||||
2017 | 480,000 | 395,888 | 428,751 | — | 25,243 | 1,329,882 | ||||||||||||||||||||||
2016 | 455,833 | 412,039 | 262,551 | 248,887 | 65,051 | 1,444,361 |
For a description of the employment agreements applicable to the NEOs, refer to the “Employment Agreements” section of the “Compensation Discussion and AnalysisAnalysis.”.
* | Columns for which no amounts are reported have been deleted. |
(A) | Amounts represent the aggregate grant date fair value of RSUs, determined in accordance with Accounting Standard Codification (ASC) Topic 718. With respect to the |
(B) | Amounts represent payouts under our annual incentive program. For further details of the targets and performance related to the payout of these amounts, refer to the “Annual Incentive Compensation” section of the “Compensation Discussion and |
(C) | Amounts represent payouts related to cash-settled |
(D) | See additional description in |
20162018 All Other Compensation Table
Name | Year | Perquisites and Other Personal | Insurance Premiums | Company to 401(k) Plans | Company Contributions to Nonqualified Deferred Compensation Plans | Total | Year | Perquisites and Other Personal | Insurance Premiums | Company Contributions to 401(k) Plans | Company Contributions to Nonqualified Compensation | Total | ||||||||||||||||||||||||||||||||||||
C. Keith Cargill | 2016 | $ | 12,362 | $ | 2,698 | $ | 16,338 | $ | 100,000 | $ | 131,398 | 2018 | $ | 33,038 | $ | 2,033 | $ | 15,901 | $ | 57,370 | $ | 108,342 | ||||||||||||||||||||||||||
Peter B. Bartholow | 2016 | 16,400 | 2,033 | 16,829 | 40,000 | 75,262 | ||||||||||||||||||||||||||||||||||||||||||
Julie L. Anderson | 2018 | 7,200 | 1,603 | 16,582 | — | 25,385 | ||||||||||||||||||||||||||||||||||||||||||
Vince A. Ackerson | 2018 | 22,259 | 2,371 | 16,077 | 30,360 | 71,067 | ||||||||||||||||||||||||||||||||||||||||||
John D. Hudgens | 2016 | 7,200 | 2,446 | 15,405 | 40,000 | 65,051 | 2018 | 7,200 | 2,446 | 16,299 | — | 25,945 | ||||||||||||||||||||||||||||||||||||
Vince A. Ackerson | 2016 | 10,655 | 2,371 | 16,237 | 40,000 | 69,263 | ||||||||||||||||||||||||||||||||||||||||||
Julie L. Anderson | 2016 | 7,200 | 1,603 | 16,007 | 40,000 | 64,810 |
(A) | Perquisites include a car allowance of $7,200 for each of the executives as well as the following club dues: Mr. Cargill |
20162018 Grants of Plan Based Awards Table*
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units | Grant Date Fair Value of Stock and Option Awards | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(A) | Estimated Future Payouts Under Equity Incentive Plan Awards(B) | All Other Stock Awards: Number of Shares of Stock or Units(C) | Grant Date Fair Value of Stock and Option Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold | Target | Maximum | Threshold | Target | Maximum | Grant Date | Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C. Keith Cargill | 9/28/2016 | (A) | $ | — | $ | — | $ | — | 5,448 | 10,895 | 16,343 | — | $ | 295,990 | 3/27/2018 | $ | — | $ | — | $ | — | 5,753 | 11,506 | 17,259 | — | $ | 1,010,227 | |||||||||||||||||||||||||||||||||||||||||||||
9/28/2016 | (B) | — | — | — | — | — | — | 10,895 | 591,925 | 3/27/2018 | — | — | — | — | — | — | 11,506 | 1,010,227 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Peter B. Bartholow | 9/28/2016 | (A) | — | — | — | 2,828 | 5,656 | 8,484 | — | 153,645 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9/28/2016 | (B) | — | — | — | — | — | — | 5,656 | 307,290 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John D. Hudgens | 9/28/2016 | (A) | — | — | — | 2,528 | 5,056 | 7,584 | — | 137,346 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9/28/2016 | (B) | — | — | — | — | — | — | 5,056 | 274,692 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vince A. Ackerson | 9/28/2016 | (A) | — | — | — | 2,499 | 4,998 | 7,497 | — | 135,771 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9/28/2016 | (B) | — | — | — | — | — | — | 4,998 | 271,541 | N/A | 277,438 | 1,109,750 | 1,470,419 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Julie L. Anderson | 5/17/2016 | (C) | N/A | 178,282 | N/A | — | — | — | — | — | 3/27/2018 | — | — | — | 1,256 | 2,511 | 3,767 | — | 220,466 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
9/28/2016 | (A) | — | — | — | 1,577 | 3,153 | 4,730 | — | 85,678 | 3/27/2018 | — | — | — | — | — | — | 2,511 | 220,466 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
9/28/2016 | (B) | — | — | — | — | — | — | 3,153 | 171,302 | N/A | 96,000 | 384,000 | 508,800 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vince A. Ackerson | 3/27/2018 | — | — | — | 1,439 | 2,877 | 4,316 | — | 252,601 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/27/2018 | — | — | — | — | — | — | 2,877 | 252,601 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
N/A | 102,000 | 408,000 | 540,600 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John D. Hudgens | 3/27/2018 | — | — | — | 1,099 | 2,197 | 3,296 | — | 192,897 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/27/2018 | — | — | — | — | — | — | 2,197 | 192,897 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
N/A | 92,813 | 371,250 | 491,906 | — | — | — | — | — |
* | Columns for which no amounts are reported have been deleted. |
(A) |
|
(B) | Amounts represent awards of RSUs made under the 2015 Plan that will vest based upon the Company’s achievement of certain performance |
Amounts represent awards of RSUs made under the 2015 Plan that will cliff vest |
20162018 Outstanding Equity Awards at FiscalYear-end Table*
Stock Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested(B) | Market Value of Shares or Units of Stock That Have Not Vested(A)(B) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(C) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(A)(C) | Grant Date | Number of Shares or Units of Stock That Have Not Vested(A) | Market Value of Shares or Units of Stock That Have Not Vested(A)(B) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(C) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(B)(C) | ||||||||||||||||||||||||||||||
C. Keith Cargill | 9/28/2016 | 10,895 | $ | 854,168 | 10,895 | $ | 854,168 | 3/27/2018 | 11,506 | $ | 587,842 | 11,506 | $ | 587,842 | ||||||||||||||||||||||||||
6/1/2015 | 6,201 | 486,158 | 6,201 | 486,158 | 3/22/2017 | 10,008 | 511,309 | 10,008 | 511,309 | |||||||||||||||||||||||||||||||
Peter B. Bartholow | 9/28/2016 | 5,656 | 443,430 | 5,656 | 443,430 | |||||||||||||||||||||||||||||||||||
9/28/2016 | 10,895 | 556,626 | — | — | ||||||||||||||||||||||||||||||||||||
Julie L. Anderson | 3/27/2018 | 2,511 | 128,287 | 2,511 | 128,287 | |||||||||||||||||||||||||||||||||||
7/18/2017 | 2,564 | 130,995 | — | — | ||||||||||||||||||||||||||||||||||||
3/22/2017 | 2,032 | 103,815 | 2,032 | 103,815 | ||||||||||||||||||||||||||||||||||||
9/28/2016 | 3,153 | 161,087 | — | — | ||||||||||||||||||||||||||||||||||||
Vince A. Ackerson | 3/27/2018 | 2,877 | 146,986 | 2,877 | 146,986 | |||||||||||||||||||||||||||||||||||
3/22/2017 | 2,519 | 128,696 | 2,519 | 128,696 | ||||||||||||||||||||||||||||||||||||
6/1/2015 | 4,042 | 316,893 | 4,042 | 316,893 | 9/28/2016 | 4,998 | 255,348 | — | — | |||||||||||||||||||||||||||||||
John D. Hudgens | 9/28/2016 | 5,056 | 396,390 | 5,056 | 396,390 | 3/27/2018 | 2,197 | 112,245 | 2,197 | 112,245 | ||||||||||||||||||||||||||||||
6/1/2015 | 3,629 | 284,514 | 3,629 | 284,514 | 3/22/2017 | 2,493 | 127,367 | 2,493 | 127,367 | |||||||||||||||||||||||||||||||
Vince A. Ackerson | 9/28/2016 | 4,998 | 391,843 | 4,998 | 391,843 | |||||||||||||||||||||||||||||||||||
6/1/2015 | 3,491 | 273,694 | 3,491 | 273,694 | 9/28/2016 | 5,056 | 258,311 | — | — | |||||||||||||||||||||||||||||||
Julie L. Anderson | 9/28/2016 | 3,153 | 247,195 | 3,153 | 247,195 |
* | Columns for which no amounts are reported have been deleted. |
(A) | Awards granted 3/27/2018 cliff vest at the end of three years on |
three years on 3/22/2020. Awards granted 9/28/2016 cliff vest 66% on 3/15/2019 and 34% on 9/28/2019. |
(B) | Based on |
(C) | Awards granted |
20162018 Option Exercises and Stock Vested Table*
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Vesting(A) | Value Realized on Vesting(B) | Number of Shares Acquired on Vesting(A) | Value Realized on Vesting(B) | ||||||||||||
C. Keith Cargill | — | $ | — | 20,191 | $ | 1,441,600 | ||||||||||
Peter B. Bartholow | 4,388 | 42,608 | ||||||||||||||
Julie L. Anderson | 4,690 | 301,949 | ||||||||||||||
Vince A. Ackerson | 9,908 | 724,422 | ||||||||||||||
John D. Hudgens | — | — | 10,120 | 742,326 | ||||||||||||
Vince A. Ackerson | — | — | ||||||||||||||
Julie L. Anderson | — | — |
* | Columns for which no amounts are reported have been deleted. |
(A) | The shares included in the table represent gross shares |
(B) | The value realized by the NEO upon the vesting of |
20162018 Pension Benefits Table
The table disclosing the actuarial present value of each executive’s accumulated benefit under defined benefit plans, the number of years of credited service under each plan and the amount of pension benefits paid to each NEO during the year is omitted because the Company does not have a defined benefit plan for NEOs.
20162018 Nonqualified Deferred Compensation Table*
Name | NEO Contributions in Last | Company Contributions in Last | Aggregate Earnings/(Loss) in Last Fiscal Year(C) | Aggregate Balance at Last Fiscal Year End(D) | NEO Contributions in Last Fiscal Year(A) | Company Contributions in Last Fiscal | Aggregate Earnings/(Loss) in Last Fiscal Year(C) | Aggregate Balance at Last Fiscal Year End(D) | ||||||||||||||||||||||||
C. Keith Cargill | $ | 75,000 | $ | 100,000 | $ | 6,561 | $ | 181,561 | $ | 564,216 | $ | 57,370 | $ | (97,208 | ) | $ | 1,133,140 | |||||||||||||||
Peter B. Bartholow | 4,580 | 40,000 | 367 | 44,947 | ||||||||||||||||||||||||||||
Julie L. Anderson | — | — | 558 | 40,734 | ||||||||||||||||||||||||||||
Vince A. Ackerson | 419,004 | 30,360 | (61,315 | ) | 1,084,054 | |||||||||||||||||||||||||||
John D. Hudgens | — | 40,000 | — | 40,000 | — | — | 558 | 40,734 | ||||||||||||||||||||||||
Vince A. Ackerson | 215,000 | 40,000 | 25,983 | 280,983 | ||||||||||||||||||||||||||||
Julie L. Anderson | — | 40,000 | — | 40,000 |
For a description of thenon-qualified deferred compensation plan, refer to the “Other Benefits–Benefits — Nonqualified Deferred Compensation Plan” section of the “Compensation Discussion and Analysis”.
* | Columns for which no amounts are reported have been deleted. |
(A) | Participants in the plan may elect to defer up to 75% of their annual salary and/or short-term incentive payout. All participant contributions to the plan and any related earnings are immediately vested and may be withdrawn upon the participant’s separation from service, death or disability, or upon a date specified by the participant. |
(B) | Company contributions are detailed in the |
(C) | Aggregate earnings do not reflect “above market or preferential earnings” and are not included in the |
(D) | Amounts represent the total compensation deferred by each NEO and |
20162018 Potential Payments Upon Termination or Change in Control Table
The following table summarizes the estimated payments that would be payable to be made under each executive’s contractNEO upon a termination of service for each of the reasons stated below, described more completely in the “Employment Agreements” section of the “Compensation Discussion and Analysis”.below. For the purposes of the quantitative disclosure in the following table, and in accordance with SEC regulations, we have assumed that the termination took place on December 30, 201631, 2018 and that the price per share of our common stock was the closing market price as of that date, $78.40.$51.09.
Name | Termination Without Cause or For Good Reason | Change in Control: Termination Without Cause or For Good Reason | Death | Disability | Retirement | Termination Without Cause or For Good Reason | Change in Control: Termination Without Cause or For Good Reason | Death | Disability | Retirement | ||||||||||||||||||||||||||||||
C. Keith Cargill | ||||||||||||||||||||||||||||||||||||||||
Severance(A) | $ | 1,490,730 | $ | 3,419,535 | $ | — | $ | — | $ | — | $ | 2,036,584 | $ | 5,011,670 | $ | — | $ | — | $ | — | ||||||||||||||||||||
Death/disability(B) | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Accelerated vesting of long-term incentives and nonqualified deferred compensation plan discretionary contributions(C) | — | 2,780,653 | 2,780,653 | 2,780,653 | — | |||||||||||||||||||||||||||||||||||
Accelerated vesting of long-term incentives(C) | — | 2,754,926 | 2,754,926 | 2,754,926 | 2,754,926 | |||||||||||||||||||||||||||||||||||
Other benefits(D) | 26,301 | 52,602 | — | — | — | 32,206 | 64,412 | — | — | — | ||||||||||||||||||||||||||||||
Peter B. Bartholow | ||||||||||||||||||||||||||||||||||||||||
Julie L. Anderson | ||||||||||||||||||||||||||||||||||||||||
Severance(A) | 777,980 | 1,861,618 | — | — | — | 844,213 | 2,016,575 | — | — | — | ||||||||||||||||||||||||||||||
Death/disability(B) | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Accelerated vesting of long-term incentives and nonqualified deferred compensation plan discretionary contributions(C) | — | 1,560,646 | 1,560,646 | 1,560,646 | 1,520,646 | |||||||||||||||||||||||||||||||||||
Other benefits(D) | 31,069 | 46,604 | — | — | — | |||||||||||||||||||||||||||||||||||
John D. Hudgens | ||||||||||||||||||||||||||||||||||||||||
Severance(A) | 697,400 | 1,665,583 | — | — | — | |||||||||||||||||||||||||||||||||||
Death/disability(B) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Accelerated vesting of long-term incentives and nonqualified deferred compensation plan discretionary contributions(C) | — | 1,401,808 | 1,401,808 | 1,401,808 | — | |||||||||||||||||||||||||||||||||||
Accelerated vesting of long-term incentives(C) | — | 845,846 | 845,846 | 845,846 | — | |||||||||||||||||||||||||||||||||||
Other benefits(D) | 29,970 | 44,955 | — | — | — | 29,807 | 44,710 | — | — | — | ||||||||||||||||||||||||||||||
Vince A. Ackerson | ||||||||||||||||||||||||||||||||||||||||
Severance(A) | 719,509 | 1,697,730 | — | — | — | 921,322 | 2,267,055 | — | — | — | ||||||||||||||||||||||||||||||
Death/disability(B) | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Accelerated vesting of long-term incentives and nonqualified deferred compensation plan discretionary contributions(C) | — | 1,371,075 | 1,371,075 | 1,371,075 | — | |||||||||||||||||||||||||||||||||||
Accelerated vesting of long-term incentives(C) | — | 806,711 | 806,711 | 806,711 | — | |||||||||||||||||||||||||||||||||||
Other benefits(D) | 29,922 | 44,883 | — | — | — | 34,631 | 51,946 | — | — | — | ||||||||||||||||||||||||||||||
Julie L. Anderson | ||||||||||||||||||||||||||||||||||||||||
Severance(A) | 592,927 | 1,125,854 | — | — | — | |||||||||||||||||||||||||||||||||||
Death/disability(B) | — | — | 355,000 | 355,000 | — | |||||||||||||||||||||||||||||||||||
Accelerated vesting of long-term incentives and nonqualified deferred compensation plan discretionary contributions(C) | — | 967,629 | 967,629 | 967,629 | — | |||||||||||||||||||||||||||||||||||
John D. Hudgens | ||||||||||||||||||||||||||||||||||||||||
Severance(E) | 1,385,626 | 2,194,720 | — | — | 1,385,626 | |||||||||||||||||||||||||||||||||||
Death/disability(E) | — | — | 1,385,626 | 1,385,626 | — | |||||||||||||||||||||||||||||||||||
Accelerated vesting of long-term incentives(C) | — | 737,535 | 737,535 | 737,535 | 737,535 | |||||||||||||||||||||||||||||||||||
Other benefits(D) | 25,946 | 51,892 | — | 25,946 | — | 35,591 | 53,386 | — | — | 53,386 |
(A) |
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(B) | Employment agreements |
(C) | Includes immediate vesting at target of any performance-based awards for which performance conditions have not yet been satisfied, based on the |
(D) | Other benefits include the following insurance: medical, dental, vision, life, accidental death and disability, short-term disability, long-term disability and supplemental long-term disability. |
(E) | Mr. Hudgens’ Retirement Agreement provides for a severance payment equal to eighteen months base salary in effect as of his Separation Date plus a cash payment equal to $828,751 (the “Cash Severance Payment”). In the event of his termination without cause or disability occurring prior to the Separation Date, Mr. Hudgens will receive the Cash Severance Payment. In the event of his death, any unpaid Cash Severance Payments will be paid to Mr. Hudgens’ estate. If a change in control occurs prior to the Separation Date, severance is equal to 2.5 times his average salary plus average incentive compensation paid during the priortwo-year period. If a change in control occurs subsequent to his Separation date, he will receive any unpaid Cash Severance Payments. See Employment Agreements —Retirement Transition and Award Agreement between Mr. Hudgens and the Company for more information regarding the terms of Mr. Hudgens’ retirement. |
20162018 Director Compensation Table*
For service on our board of directors in 2016,2018, ournon-employee directors were paid an annual retainer of $50,000 and a fee of $1,500 per meeting. Our Chairmanchairman received an additional $65,000 per year for serving in that role. In addition, each member of a committee was paid a fee of $1,500 per committee meeting attended. Directors serving as chairman of the Audit and Risk Committee and HR Committee received an additional $20,000 per year for serving in those roles and the directors serving as chairman of the Governance and Nominating Committee and Credit Risk Committee received an additional $15,000 per year for serving in those roles. Members attending special meetings of the board and committees were paid $1,500 per meeting, or $750 for telephonic meetings. In addition to cash retainer fees, eachnon-employee director receives an annual grant of restricted stock unitsRSUs with an aggregate grant date fair value of approximately $45,000 ($55,000 beginning in 2017), granted$55,000 at the board meeting immediately following each year’s annual meeting of stockholders, thatwhich vest in full on the first anniversary of the date of grant and are distributed to the director in equal amounts on the first, second and third anniversaries of the date of grant in accordance with the 2015 Plan. New directors receive a grant of restricted common stock with an aggregate grant date fair value of $50,000 as to which restrictions lapse as to equal numbers of shares on the first, second and third anniversaries of the date of grant.
The following table contains information pertaining to the compensation of the Company’s board of directors for the 20162018 fiscal year. Amounts below also include fees paid for service on subsidiary board committees. Members of subsidiary board committees receive $1,500 per committee meeting attended.
Name | Fees Earned Or Paid In Cash(A) | Stock Awards(B) | All Other Compensation | Total | Fees Earned Or Paid In Cash(A) | Stock Awards(B) | Total | |||||||||||||||||||||
Jonathan E. Baliff(D) | $ | 63,500 | $ | 55,021 | $ | 118,521 | ||||||||||||||||||||||
James H. Browning(C) | $ | 90,000 | $ | 44,981 | $ | — | $ | 134,981 | 113,000 | 55,021 | 168,021 | |||||||||||||||||
Preston M. Geren III(C) | 63,250 | 44,981 | — | 108,231 | ||||||||||||||||||||||||
Fred Hegi(D) | 49,750 | — | — | 49,750 | ||||||||||||||||||||||||
Larry L. Helm(C) | 122,250 | 44,981 | — | 167,231 | 139,000 | 55,021 | 194,021 | |||||||||||||||||||||
David S Huntley(E) | 43,500 | 118,857 | 162,357 | |||||||||||||||||||||||||
Charles S. Hyle(C) | 72,500 | 44,981 | — | 117,481 | 95,750 | 55,021 | 150,771 | |||||||||||||||||||||
William W. McAllister(D) | 37,000 | — | — | 37,000 | ||||||||||||||||||||||||
Elysia Holt Ragusa(C) | 80,000 | 44,981 | — | 124,981 | 91,250 | 55,021 | 146,271 | |||||||||||||||||||||
Steven P. Rosenberg(C) | 77,000 | 44,981 | — | 121,981 | 89,000 | 55,021 | 144,021 | |||||||||||||||||||||
Robert W. Stallings(C) | 58,750 | 44,981 | — | 103,731 | 69,500 | 55,021 | 124,521 | |||||||||||||||||||||
Dale W. Tremblay(C) | 81,000 | 44,981 | — | 125,981 | 88,000 | 55,021 | 143,021 | |||||||||||||||||||||
Ian J. Turpin(C) | 58,750 | 44,981 | — | 103,731 | 79,250 | 55,021 | 134,271 | |||||||||||||||||||||
Patricia A. Watson(E) | 32,850 | 106,229 | — | 139,079 | ||||||||||||||||||||||||
Patricia A. Watson(C) | 74,750 | 55,021 | 129,771 |
* | Columns for which no amounts are reported have been deleted. |
(A) | Amounts represent meeting fees paid upon attendance of board and committee meetings, annual retainer fees and fees for service as |
(B) | Amounts represent the aggregate grant date fair value determined in accordance with ASC 718 of all stock awards granted pursuant to the 2015 Plan. On |
(C) | As of December 31, |
(D) | As of December 31, |
(E) | As of December 31, 2018, Mr. Huntley held 749 unvested RSUs and 334 shares of restricted stock subject to continuing restrictions. |
Item 402(u) of RegulationS-K, implementing a requirement of the Dodd-Frank Wall Street Reform and Consumer Protection Act, requires that we disclose a ratio that compares the annual total compensation of our median employee to that of our CEO.
In order to determine the median employee, we prepared a list of all employees as of December 31, 2018, along with their gross income as reported on IRS formW-2 for 2018. Gross income as reported on IRSform W-2 for 2018 was annualized for those employees that were not employed for the full year.
After identifying the median employee, we calculated that employee’s annual total compensation using the same methodology we use for our NEOs as set forth in the2018 Summary Compensation Table.
The annual compensation for 2018 for the CEO was $4,144,219 and for the median employee was $88,658. The resulting ratio of our CEO’s pay to that of our median employee for 2018 was 46.7 to 1.
HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the HR Committee of the board of directors of the Company was an officer or employee of the Company during 20162018 or any other time. In addition, none of the executive officers of the Company served on the board of directors or on the compensation committee of any other entity, for which any executive officers of such other entity served either on our board of directors or on our HR Committee.
INDEBTEDNESS OF MANAGEMENT AND TRANSACTIONS WITH CERTAIN RELATED PERSONS
In the ordinary course of business, the Bank has made loans, and may continue to make loans in the future, to the Bank’s and the Company’s officers, directors and employees. However, it is the Bank’s policy to not extend loans to executive officers of the Bank and the Company. The Bank makes loans to directors and their affiliates in the ordinary course of business on substantially the same terms as those with other customers. All loans to directors are reviewed and approved by our board of directors prior to making any such loans. The Bank also provides wealth management services for managed accounts to directors at discounted fees.
In February 2018, the Bank signed an agreement with TSYS, under which TSYS will provide transaction processing services to the Bank in exchange for a fee, estimated to be $400,000 to $600,000 per year. Patricia A. Watson, a member of the Company’s board of directors, is the Senior Executive Vice President and Chief Information Officer of TSYS. The board determined that the transaction did not affect Ms. Watson’s independence.
The Company also has other policies and procedures for reviewing related party transactions involving the Company’s and the Bank’s directors, executive officers and their affiliates. Each director and named executive officerNEO of the Company and the Bank is required to complete a questionnaire annually, and each director who serves on the Audit and Risk Committee must complete a certification of independence annually. Both of these documents are designed to disclose all related party transactions, including loans, and this information is reviewed by management, the Audit and Risk Committee and the board of directors, as appropriate. Such transactions are subject to the standards set forth in the Company’s Code of Conduct for executive officers and in applicable laws and regulations and the Nasdaq Stock Market Listing Rules for determining the independence of directors. The questionnaires, certifications and Code of Conduct are all in writing.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who own more than 10% of a registered class of its equity securities, to file initial reports of ownership and reports of changes in ownership with the SEC. The Company, based solely on a review of its Section 16(a) reports filed during 2016,2018, believes that the required Section 16(a) reports were filed on a timely basis by its executive officers and directors, except that a Form 4 for Steven P. Rosenberg reflecting the sale of 15,000 shares of the Company’s stock on November 10, 2016, was filed on December 1, 2016.directors.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 20162018 regarding common stock that may be issued under the Company’s existing equity compensation plans.
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | ||||||||||||||||||
Equity compensation plans approved by security holders | 550,918 | $ | 31.68 | 2,270,699 | (B) | 390,883 | (A) | $ | 29.13 | 2,121,515 | (B) | |||||||||||||
Equity compensation plans not approved by security holders | — | — | — | — | — | — | ||||||||||||||||||
Total | 550,918 | $ | 31.68 | 2,270,699 | 390,883 | $ | 29.13 | 2,121,515 | ||||||||||||||||
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(A) | Includes |
(B) | All of these shares are available for issuance pursuant to grants of full-value awards. |
The Audit and Risk Committee has appointed Ernst & Young LLP to continue as our independent registered public accounting firm for the 20172019 fiscal year. A representative of Ernst & Young LLP is expected to be present at the Annual Meeting and will be available to respond to appropriate questions.
Fees for professional services provided by the Company’s independent registered public accounting firm in each of the last two fiscal years, in each of the following categories are (in thousands):were:
2016 | 2015 | |||||||||||||||
(in thousands) | 2018 | 2017 | ||||||||||||||
Audit fees | $ | 1,675 | $ | 1,450 | $ | 1,644 | $ | 1,455 | ||||||||
Audit-related fees | — | — | — | — | ||||||||||||
Tax fees | 330 | 423 | 480 | 273 | ||||||||||||
Total | $ | 2,005 | $ | 1,873 | $ | 2,124 | $ | 1,728 | ||||||||
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Fees for audit services include fees associated with the audit of the Company’s annual consolidated financial statements, the reviews of the consolidated financial statements included in the Company’s Forms10-Q, accounting consultations and management’s assertions regarding effective internal controls in compliance with the requirements of Section 404 of the Sarbanes Oxley Act and Federal Deposit Insurance Corporation Improvement Act, and comfort letter procedures.Act. Tax fees included various federal, state and local tax services.services, as well as tax consultations.
Pre-approval Policies and Procedures
The Audit and Risk Committee has adopted a policy that requires advance approval of all audit, audit-related and tax services performed by the independent registered public accounting firm. The policy provides forpre-approval by the Audit and Risk Committee of specifically defined audit andnon-audit services. Unless the specific service has been previouslypre-approved with respect to that year, the Audit and Risk Committee must approve the permitted service before the independent registered public
accounting firm is engaged to perform it. The Audit and Risk Committee has delegated to the Chairmanchairman of the Audit and Risk Committee authority to approve permitted services provided that the Chairmanchairman reports any decisions to the Audit and Risk Committee at its next scheduled meeting.
Stockholder Nominees for Director
Stockholders may submit nominees for director in accordance with the Company’s bylaws. Under the Company’s bylaws, a stockholder’s notice to nominate a director must be in writing and set forth (1) as to each proposed nominee, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required pursuant to Regulation 14A under the Exchange Act, including, without limitation, such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; and (2) as to such stockholder, the stockholder’s name and address, and the class and number of shares of stock of the Company that are beneficially owned by such stockholder. Nominations for director for the 20182020 annual meeting of stockholders must generally be delivered noto the Company’s principal executive offices not later than 180100 days and no more than 270130 days prior to the 2018one year anniversary of the preceding year’s annual meeting, provided such meeting is held within 30 days of stockholders.such anniversary date. Nominations should be directed to: Texas Capital Bancshares, Inc., Attn: Secretary, 2000 McKinney Avenue, 7th Floor, Dallas, Texas 75201, Attn: Secretary.75201.
Stockholder Proposals for 20182020
Stockholders interested in submitting a proposal for inclusion in the proxy materials for the Company’s annual meeting of stockholders in 20182020 may do so by following the procedures prescribed in Exchange Act Rule14a-8. To be eligible for inclusion, stockholder proposals must be received by the Company at the following address: Texas Capital Bancshares, Inc., Attn: Secretary, 2000 McKinney Avenue, 7th Floor, Dallas, Texas 75201, Attn: Secretary, no later than November 9, 2017.8, 2019.
Under the Company’s bylaws, no business may be brought before an annual meeting unless it is brought before the meeting by or at the direction of the board of directors or by a stockholder who has delivered timely notice to the Company. Such notice must contain certain information specified in the bylaws and be delivered noreceived not later than 180100 days and no more than 270130 days prior to the one year anniversary of the preceding year’s annual meeting, provided such meeting is held within 30 days of such anniversary date, to the following address: Texas Capital Bancshares, Inc., Attn: Secretary, 2000 McKinney Avenue, 7th Floor, Dallas, Texas 75201, Attn: Secretary.75201. These requirements are separate from the SEC’s requirements that a stockholder must meet in order to have a stockholder proposal included in the Company’s proxy statement pursuant to Rule14a-8 under the Exchange Act.
A copy of the Company’s 20162018 Annual Report to Stockholders is available on the Internet as set forth in the Notice of Internet Availability of Proxy Materials.
Upon written request, the Company will furnish to any stockholder without charge a copy of its Annual Report on Form10-K for the year ended December 31, 20162018 pursuant to the instructions set forth in the Notice of Internet Availability of Proxy Materials.
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TEXAS CAPITAL BANCSHRES, INC: ANNUAL MEETING OF TEXAS CAPITAL BANCSHARES, INC.
Date: Tuesday, April 16, 2019 Time: 9:00 A.M. (Central Daylight Time) Place: 2000 McKinney Avenue, 7th Floor, Dallas, Texas 75201 See Voting Instruction on Reverse Side. Please make your marks like this:☒ Use dark black pencil or pen only
The Board of Directors Recommendsrecommends a Votevote FORthe election of the director nominees in proposal 11 YEARon proposal 3 andFORproposals 2 and 4.
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3. 1: Election of Directors Recommend Directors For Withhold 01 C. Keith Cargill For 02 Jonathan E. Baliff For 03 James H. Browning For 04 Larry L. Helm For 05 David S. Huntley For 06 Charles S. Hyle For 07 Elysia Holt Ragusa For 08 Steven P. Rosenberg For 09 Robert W. Stallings For 10 Dale W. Tremblay For 11 Ian J. Turpin For 12 Patricia A. Watson For For Against Abstain 2: executive Advisory vote officers on .compensation of named For 3: Ratification Ernst & Young of the LLP appointment as the independent of For registered the Company public . accounting firm of To attend the meeting and vote your shares in person, please mark this box. Authorized Signatures - This section must be completed for your Instructions to be executed. Please Sign Here Please Date Above Please Sign Here Please Date Above Please sign exactly as your name(s) appears on your stock certificate. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy. Please separate carefully at the perforation and return just this portion in the envelope provided. TEXAS CAPITAL BANCSHRES, INC: Annual Meeting of Texas Capital Bancshares, Inc.
to be held on Tuesday, April 18, 2017
16, 2019 for Holders as of February 22, 2017
20, 2019 This proxy is being solicited on behalf of the Board of Directors VOTE BY: INTERNET TELEPHONE Call www. Go To proxypush.com/TCBI 866-390-5385 •Cast your vote online. • Use any touch-tone telephone. OR View meeting documents. • Have your Proxy Card/Voting Instruction Form ready. • • Follow the simple recorded instructions. MAIL OR • Mark, sign and date your Proxy Card/Voting Instruction Form. • Detach your Proxy Card/Voting Instruction Form. • Return your Proxy Card/Voting Instruction Form in the postage-paid envelope provided. The undersigned hereby appoints C. Keith Cargill and Julie L. Anderson, and each of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes each of them to vote all the shares of capital stock of Texas Capital Bancshares, Inc. that the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED FOR THE ELECTION OF THE DIRECTOR NOMINEES IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. All votes by ESPP participants must be received by 5:00 P.M., Eastern Time, April 11, 2019. PROXY TABULATOR FOR TEXAS CAPITAL BANCSHARES, INC. P.O. BOX 8016 CARY, NC 27512-9903
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Please separate carefully at the perforation and return just this portion in the envelope provided. Revocable Proxy — Texas Capital Bancshares, Inc. Annual Meeting of Stockholders April 16, 2019 9:00 a.m. (Central Daylight Time) This Proxy is Solicited on Behalf of the Board of Directors The undersigned appoints C. Keith Cargill and Julie L. Anderson, each with full power of substitution, to act as proxies for the undersigned, and to vote all shares of common stock of Texas Capital Bancshares, Inc. that the undersigned is entitled to vote at the Annual Meeting of Stockholders on Tuesday, April 16, 2019, at 9:00 a.m. at the offices of Texas Capital Bancshares, Inc. at 2000 McKinney Avenue, 7th Floor, Dallas, Texas 75201, and any and all adjournments thereof, as set forth below. This proxy is revocable and will be voted as directed. However, if no instructions are specified, the proxy will be voted FOR the election of the director nominees specified in Proposal 1 and FOR Proposals 2 and 3. (CONTINUED AND TO BE SIGNED ON REVERSE SIDE) | ||||
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