SCHEDULE 14A
PROXY STATEMENT================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
Proxy Statement Pursuant to Section 14(a) of the Securities and Exchange Act
of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as
Permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
TEXAS CAPITAL BANCSHARES, INC.Filed by Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
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[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
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Texas Capital Bancshares, Inc.
(Name of Registrant as Specified In Itsin its Charter)
N/A---------------------------------
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TEXAS CAPITAL BANCSHARES, INC.Texas Capital Bancshares, Inc.
2100 McKinney Avenue, 9th FloorSuite 900
Dallas, Texas 75201
April 30,August ___, 2002
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
of
Texas Capital Bancshares, Inc., a Delaware corporation ("TCBI") and the holding
company for Texas Capital Bank, N. A., is proposing to conduct an initial public
offering of our common stock (the "IPO"). In preparation for the IPO, we hereby
seek your written consent to an amendment to TCBI's Certificate of Designation
of 6.0% Series A Convertible Preferred Stock (the "Certificate of Designation").
The board of directors of TCBI deems it advisable and believes that it is
in the best interests of TCBI and its stockholders to amend the Certificate of
Designation prior to the IPO in order to provide for adjustment, in the event of
a stock dividend, stock split, reclassification or other similar corporate
action, of the price which would trigger automatic conversion of the 6.0% Series
A Convertible Preferred Stock (the "Preferred Stock") to common stock upon (a)
consummation of an initial public offering or (b) quotation of the common stock
of TCBI on the New York Stock Exchange or the Nasdaq National Association. The annual meetingMarket for 30
consecutive trading days (the "Amendment").
Although only the rights of the holders of Preferred Stock will be
affected, under Delaware law the Amendment must be approved by holders of each
of (a) a majority of the shares of Preferred Stock, for which TCBI has already
received the requisite number of written consents; and (b) a majority (based on
May 21, 2002 at 5:30 p.m.voting power) of the shares of TCBI's voting common stock, par value $0.01 (the
"Common Stock") and Preferred Stock, voting on an as converted basis as set
forth in the officesCertificate of Texas Capital Bank, National
Association at 2100 McKinney Avenue, 9th Floor, Dallas, Texas 75201.Designation, voting together as a single class (the
Common Stock and Preferred Stock are together referred to as the "Voting
Stock"). We are eager to move forward with the IPO and we believe the Amendment
is necessary in order to adjust the trigger price for the automatic conversion
of the Preferred Stock to reflect the one-for-one stock dividend recently
declared by the Board.
The attached Notice of Annual Meeting of Stockholders and Proxy
Statement describeconsent statement that accompanies this letter provides you with detailed
information about the formal business to be transacted at the annual meeting.
Certain directors and officers will be present at the annual meeting and will be
available to respond to any questions you may have.Amendment. We urge you to review carefully the accompanying materialsconsent
statement and return the enclosed proxy card promptly. Please sign, date and return the enclosed
proxy card without delay. If you attend the annual meeting, you may vote in
person even if you have previously mailed a proxy.
On behalfwritten consent. OUR BOARD OF DIRECTORS RECOMMENDS
THAT YOU CONSENT TO THE APPROVAL OF THE AMENDMENT. IF YOU INTEND TO CONSENT TO
THE AMENDMENT YOU MUST SIGN, DATE AND RETURN THE ENCLOSED WRITTEN CONSENT
PROMPTLY IN ACCORDANCE WITH THE INSTRUCTIONS PROVIDED IN THE CONSENT STATEMENT.
AN ABSTENTION OR FAILURE TO RETURN THE CONSENT WILL HAVE THE EFFECT OF VOTING
AGAINST THE AMENDMENT.
Only holders of Voting Stock as of the boardclose of directors and all the employees of Texas
Capital Bancshares, Inc. and its operating entities, I wish to thank you for
your continued support.
Sincerely,
Joseph M. Grant
Chairman and Chief Executive Officer
TEXAS CAPITAL BANCSHARES, INC.
2100 McKinney Avenue
9th Floor
Dallas, Texas 75201
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 30, 2002
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of Texas
Capital Bancshares, Inc., a Delaware corporation and the holding company for
Texas Capital Bank, National Association, will bebusiness on Tuesday, May 21, 2002, at
5:30 p.m. in the offices of Texas Capital Bank, National Association at 2100
McKinney Avenue, 9th Floor, Dallas, Texas 75201.
A proxy statement and proxy card for this annual meeting are enclosed.
The annual meeting is for the purpose of considering and voting upon the
following matters:
1. election of nineteen (19) directors for terms of one year each
or until their successors are elected and qualified,
2. an Amendment to our Certificate of Incorporation increasing
our authorized capital stock to 100 million shares of common
stock and 10 million shares of preferred stock, and
3. transaction of other business that properly comes before the
annual meeting or any postponement or adjournment thereof.
Information about the matters to be acted upon at the annual meeting is
set forth in the accompanying proxy statement. Our board of directors recommends
that you vote FOR each of the nominees for director and FOR the Amendment to our
Certificate of Incorporation.
Only those stockholders who owned shares of our 6% Series A Convertible
Preferred Stock or voting common stock on April 30,August 9, 2002, the
record date established by our board of directors, will be entitled to vote atconsent
to the annual
meeting and at any postponements or adjournments thereof. If there are not
sufficient votes for a quorum or approval of any of the foregoing proposals at
the time of the annual meeting, the board may adjourn or postpone the annual
meeting in order to solicit further proxies.
Stockholders are cordially invited to attend the annual meeting in
person. However, to assure your representation at that annual meeting, we urge
you to mark, sign, date and return the enclosed proxy. If you attend the annual
meeting, you may vote in person even if you have returned a proxy. A list of
stockholders entitled to vote at the annual meeting will be available for
inspection by any stockholder from April 30, 2002 until the annual meeting at
the site of the annual meeting. The list will also be available at the annual
meeting.
By orderAmendment.
On behalf of the board of directors, Larry A. Makel
Secretary
April 30, 2002
Dallas, TexasI wish to thank you for your continued
support and urge you to consent to the Amendment.
Sincerely,
/s/ Joseph M. Grant
Joseph M. Grant
Chairman and Chief Executive Officer
PROXYCONSENT STATEMENT
TABLE OF CONTENTS
MEETING INFORMATION.....................................................................1SOLICITATION OF CONSENTS ................................................... 1
THE CONSENT PROCEDURE ...................................................... 2
REVOCATION OF SIGNED CONSENTS .............................................. 2
RECORD DATE AND VOTING SECURITIES.......................................................1
QUORUM AND VOTING.......................................................................1
SOLICITATION AND VOTING OF PROXIES......................................................2
ELECTION OF DIRECTORS...................................................................3
Nominees...........................................................................3
Required Vote, Recommendation......................................................6
PROPOSED AMENDMENTSECURITIES .......................................... 2
CONSENT RIGHTS ............................................................. 3
OTHER MATTERS .............................................................. 3
PROPOSAL TO OURAMEND THE CERTIFICATE OF INCORPORATION..................................6
Required Vote, Recommendation......................................................6
OTHER MATTERS...........................................................................6
MEETINGSDESIGNATION OF THE BOARD OF DIRECTORS......................................................7
COMMITTEES OF THE BOARD OF DIRECTORS....................................................76.0% SERIES A
CONVERTIBLE PREFERRED STOCK OFFERING.......................................................7............................................. 3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..........................8
DIRECTORS' COMPENSATION................................................................10
EXECUTIVE COMPENSATION.................................................................10
Compensation Committee Report on Executive Compensation...........................10
Summary Compensation Table........................................................12
Fiscal Year-End Option/SAR Values.................................................12
Compensation and Stock Option Committee Interlocks and Insider Participation......13
Indebtedness of Management and Transactions With Certain Related Persons..........13
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE................................13
INDEPENDENT AUDITORS...................................................................13
AUDIT FEES.............................................................................13
Audit Fees........................................................................13
Audit Related Fees................................................................13
All Other Fees....................................................................13
AUDIT COMMITTEE REPORT.................................................................14............................ 5
INTEREST OF CERTAIN PARTIES IN MATTERS TO BE ACTED UPON .................... 8
FINANCIAL INFORMATION ...................................................... 8
ADDITIONAL INFORMATION.................................................................14
Stockholder Nominees for Director for This Annual Meeting.........................14
Stockholder Proposals For Annual Meeting Held in 2002.............................15
Annual Report.....................................................................15INFORMATION ..................................................... 8
ANNEX A - CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF DESIGNATION
ANNEX B - WRITTEN CONSENT OF STOCKHOLDERS
TEXAS CAPITAL BANCSHARES, INC.
2100 McKinney Avenue
9th FloorSuite 900
Dallas, Texas 75201
PROXYCONSENT STATEMENT
FOR THE ANNUAL MEETING--------------------------------------------
SOLICITATION OF STOCKHOLDERS
ON MAY 21, 2002
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MEETING INFORMATIONCONSENTS
This proxyconsent statement isand the enclosed written consent are being furnishedmailed to Texas Capital Bancshares,
Inc. ("TCBI")our
stockholders on April 30, 2002, in connection with the solicitation of proxieswritten consents by the
board of directors of Texas Capital Bancshares, Inc., a Delaware corporation
("TCBI") and the holding company for Texas Capital Bank, N.A. This consent
solicitation is first being mailed to stockholders on or about August ___, 2002.
Stockholders are requested to mark, sign, and date the enclosed form of written
consent promptly, and return it via facsimile or regular mail in the enclosed
postage-paid envelope. Specific instructions are provided on the written consent
form.
These materials pertain to the following proposal as further described in this
consent statement:
An amendment to TCBI's Certificate of Designation of 6.0% Series A Convertible
Preferred Stock (the "Certificate of Designation") in order to provide for
adjustment, in the event of a stock dividend, stock split, reclassification or
other similar corporate action, of the price which would trigger automatic
conversion of the 6.0% Series A Convertible Preferred Stock (the "Preferred
Stock") to common stock upon (a) consummation of an initial public offering or
(b) quotation of the common stock of TCBI on the New York Stock Exchange or the
Nasdaq National Market for 30 consecutive trading days (the "Amendment").
The Amendment must be approved by holders of each of (a) a majority of the
outstanding shares of Preferred Stock, for which TCBI has already received the
requisite number of written consents; and (b) a majority (based on voting power)
of the outstanding shares of voting common stock, par value $0.01 (the "Common
Stock") and the Preferred Stock, voting on an as converted basis as set forth in
the Certificate of Designation, voting together as a single class (the Common
Stock and Preferred Stock are together referred to as the "Voting Stock"). As a
result of the one-for-one stock dividend that was declared by TCBI's board of
directors on July 30, 2002, holders of the Preferred Stock will have two votes
for every share of Preferred Stock owned as of the record date. The Amendment
will provide adjustment of the trigger price for the automatic conversion of the
Preferred Stock to Common Stock to reflect the declared one-for-one stock
dividend. No special meeting will be held to seek approval of the Amendment;
instead TCBI is soliciting your written consent for the Amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU CONSENT TO THE AMENDMENT.
PLEASE COMPLETE, SIGN AND RETURN THE ACCOMPANYING WRITTEN CONSENT AS SOON AS
POSSIBLE.
Our principal executive office is located at 2100 McKinney Avenue, Suite
900, Dallas, Texas 75201. If you have any questions about the procedures to be
followed to give your written consent, please call Pat O'Brien of TCBI, at (214)
932-6771.
TCBI will bear the entire cost of preparing, assembling, printing, and mailing
consent materials furnished by the board of directors to be voted atstockholders. In
addition to the annual
meetingsolicitation of stockholders. The annual meeting will be on May 21, 2002, at 5:30
p.m.consents by mail, some of the
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officers, directors, significant stockholders, employees, and agents of TCBI
may, without additional compensation, solicit consents by telephone, facsimile,
electronic mail, or other electronic transmission, or personal interview, the
cost of which TCBI shall bear.
THE CONSENT PROCEDURE
Section 228 of the Delaware General Corporation Law and the bylaws of TCBI state
that, unless otherwise provided in the officescertificate of Texas Capital Bank, National Association (the "Bank")incorporation of TCBI any
action that may be taken at 2100 McKinney Avenue, 9th Floor, Dallas, Texas 75201. TCBI is the parent of the
Bank.
The purpose of the annual meeting is to consider and vote upon:
1. election of nineteen (19) directors,
2. an Amendment to our Certificate of Incorporation increasing
our authorized capital stock to 100 million shares of common
stock and 10 million shares of preferred stock, and
3. other matters as may properly come before theany annual meeting or special meeting of
stockholders may be taken without a meeting, without prior notice, and without a
vote, if consents in writing, setting forth the action so taken, are signed by
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voting, and those
consents are delivered to the corporation. The written consent is attached
hereto as Annex B. We have enclosed an addressed return envelope postage paid
for you to return your executed and dated written consent. You may also send it
by facsimile to ___________ at ___________. In the case of this consent
solicitation by TCBI, written, unrevoked consents of the holders of a majority
(based on voting power) of the outstanding shares, as of August 9, 2002, of
Voting Stock must be delivered to TCBI as described above to effect the action
as to which stockholder consents are being solicited hereunder.
All consents in this solicitation, regardless of when dated, shall expire unless
valid, unrevoked consents constituting a majority (based on voting power) of the
Voting Stock entitled to vote on the matter are delivered to TCBI by October 15,
2002. Upon approval of the Amendment, as required by Delaware law, TCBI shall
promptly notify the stockholders who have not consented to the Amendment.
REVOCATION OF SIGNED CONSENTS
A consent executed by a stockholder may be revoked by executing and delivering
to ________________ a written, dated revocation prior to the time that signed
unrevoked consents by holders of a majority (based on voting power) of the
outstanding shares of Voting Stock entitled to vote on this matter have been
delivered to the attention of _______________________. A revocation may be in
any postponementswritten form validly signed by the record holder as long as it clearly
states that the consent previously given is no longer effective. A revocation
may be delivered via facsimile to the attention of _____________________ or adjournments thereof.via
mail to ______________at the following address: _________________________.
RECORD DATE AND VOTING SECURITIES
You areOur board has fixed the close of business on August 9, 2002 as the record date
for the determination of stockholders entitled to give their consent with
respect to the Amendment. Only those stockholders who were holders of record of
Voting Stock at the close of business on August 9, 2002 will be entitled to
consent to the Amendment. Holders of the Preferred Stock shall vote on as "as
converted" basis and together with holders of Common Stock to consent to the
Amendment. In accordance with TCBI's Certificate of Designation and giving
effect to the one-for-one stock dividend declared by TCBI's board of directors
on July 30, 2002, holders of record of Preferred Stock will have two votes for
every one share of Preferred Stock held of record on August 9, 2002. As of
August 9, 2002, there were 9,225,243 shares of Common Stock and 1,057,142
shares of Preferred Stock outstanding.
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CONSENT RIGHTS
The Amendment must be approved by holders of each of (a) a majority of the
outstanding shares of Preferred Stock, for which TCBI has already received the
requisite number of written consents; and (b) a majority (based on voting power)
of the outstanding shares of Voting Stock.
Each share of Common Stock entitles the holder thereof to one vote foron the
Amendment submitted to the stockholders.
As a result of the stock dividend declared on July 30, 2002, each share of
6% Series A Convertible
Preferred Stock ("Seriesis convertible into two shares of our common stock. Therefore,
when voting together as a single class with the holders of Common Stock with
respect to the Amendment, holders of Preferred Stock will be entitled to two
votes for every share of Preferred Stock held.
If a written consent form is executed but no indication is made as to what
action is to be taken, the written consent form will be deemed to constitute a
consent to the Amendment.
THIS IS A Preferred Stock") or voting commonREQUEST FOR STOCKHOLDERS APPROVAL BY WRITTEN CONSENT. YOU ARE
REQUESTED TO INDICATE WHETHER YOU APPROVE OF THE AMENDMENT ON THE CONSENT
ENCLOSED HEREWITH AS ANNEX B AND TO RETURN THAT CONSENT TO US. AN ABSTENTION OR
FAILURE TO RETURN THE CONSENT WILL HAVE THE AFFECT OF VOTING AGAINST THE
AMENDMENT.
Under Delaware law and TCBI's Certificate of Incorporation, holders of TCBI's
capital stock you own.
However, you will not be entitled to vote any shares of Series A-1 Nonvoting
Common Stock you own.
Your proxy will be voted in accordanceappraisal rights with respect to the
directions you specify
in the proxy. If you do not provide directions in the proxy but sign the proxy
and return it, your proxy will be voted (a) FOR each of the nominees for
director named in the proxy statement, (b) FOR the Amendment to our Certificate
of Incorporation and (c) in the discretion of the proxy holders, for any other
proposals that properly come before the annual meeting.
Only those stockholders that owned shares of our Series A Preferred
Stock and/or voting common stock on April 30, 2002, 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 9,215,123 shares of voting
common stock outstanding and 1,057,142 shares of Series A Preferred Stock
outstanding that are entitled to be voted and are held by 865 identified
holders. Certain holders hold both common and preferred shares and have only
been counted as one holder.
QUORUM AND VOTING
In order to have a quorum to transact business at the annual meeting,
at least a majority of the total number of issued and outstanding shares of
common stock must be present at the annual meeting, in person or by proxy. If
there are not sufficient votes for a quorum or to approve any proposal at the
time
1
of the annual meeting, the board may postpone or adjourn the annual meeting in
order to permit the further solicitation of proxies. Abstentions and broker
non-votes will be counted toward a quorum but will not be counted in the votes
for each of the proposals presented at the meeting.
SOLICITATION AND VOTING OF PROXIES
It is important that you are represented by proxy or are present in
person at the annual meeting. We request that you vote by completing the
enclosed proxy card and returning it signed and dated in the enclosed
postage-paid envelope. Your proxy will be voted in accordance with the
directions you provide. If you sign, date and return your proxy but do not
provide any instructions, your proxy will be voted FOR each of the nominees as
directors and FOR the Amendment to our Certificate of Incorporation.Amendment.
OTHER MATTERS
Other than the mattersmatter listed above, wethere are not aware of anyno 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 proxy holder.
You may revoke your proxy at any time prior to its exercise by:
1. filing a written notice of revocation with the secretary of
TCBI,
2. delivering to TCBI a duly executed proxy bearing a later date,
or
3. attending the annual meeting, filing a notice of revocation
with the secretary and voting in person.
TCBI will pay the costs of this proxy solicitation. The directors,
officers and regular employees of TCBI and the Bank may also solicit proxies by
telephone or in person but will not be paid additional compensation to do so.
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ELECTIONconsent.
PROPOSAL TO AMEND THE CERTIFICATE OF DIRECTORS
We currently have nineteen (19) directors on the board of directors.
Directors serve a one-year term or until their successors are elected and
qualified. All of the nominees below currently serve as a director and 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 proxy holders.
NOMINEES
At the annual meeting, the stockholders will elect nineteen (19)
directors.DESIGNATION
OF THE
6.0% SERIES A CONVERTIBLE PREFERRED STOCK
The board of directors recommends a vote FOR each of the nominees set
forth below:
NAME AGE POSITION
- ---- --- --------
JOSEPH M. (JODY) GRANT 63 Chairman, Chief Executive Officer and Director
RALEIGH HORTENSTINE III 55 President and Director
GEORGE F. JONES, JR. 58 Director; President and Chief Executive
Officer of Texas Capital Bank, N.A.
LEO CORRIGAN III 48 Director
JAMES R. ERWIN 57 Director
FREDERICK B. HEGI, JR. 58 Director
JAMES R. HOLLAND, JR. 58 Director
DAVID LAWSON 54 Director
LARRY A. MAKEL 48 Director
WALTER W. (BO) MCALLISTER III 60 Director
LEE ROY MITCHELL 65 Director
MARSHALL B. PAYNE 45 Director
STEVE ROSENBERG 43 Director
JOHN C. SNYDER 60 Director
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NAME AGE POSITION
- ---- --- --------
ROBERT W. STALLINGS 52 Director
THEODORE H. STRAUSS 77 Director
JAMES CLEO THOMPSON, JR. 71 Director
IAN J. TURPIN 57 Director
CHARLES DAVID WOOD 51 Director
JOSEPH M. (JODY) GRANT has served as Chairman and Chief Executive
Officer of TCBI since December 1998deems it advisable and as Chairman of the Bank since January
1999. Mr. Grant retired as Executive Vice President and Chief Financial Officer
of Electronic Data Systems on March 31, 1998, a position he had held since 1990.
Previously, he was Chairman and Chief Executive Officer of Texas American
Bancshares from 1986 through 1989.
RALEIGH HORTENSTINE III has served as President of TCBI since December
1998 and as a director of TCBI since June 1999. He served as Executive Vice
President of Bank of America, NA in Charlotte, North Carolina from October 1996
to 1998 and as Managing Director from 1994 to October 1996.
GEORGE F. JONES, JR. has served as a director of TCBI since June 1999
and as President and Chief Executive Officer of the Bank since December 1998.
From October 1997 to December 1998, Mr. Jones served as the Chairman of the
board of directors of Resource Bank, N.A., a commercial bank acquired by TCBI.
From March 1995 to October 1997, he served as Vice President of Mack Financial
Group, Inc., a financial investment company. From 1986 to 1995, Mr. Jones served
as President and Chief Executive Officer of NorthPark Bank, which was acquired
by Comerica Bank.
LEO CORRIGAN III has served as President of Corrigan Properties, Inc.,
a commercial real estate investment company since 1998, and is President of
Corrigan Securities, Inc., a real estate and investment company. He was a
director of the Bank from 1999 to September 2001. He has been a director of TCBI
since September 2001.
JAMES R. ERWIN has served as Managing Director and Partner of Erwin,
Graves and Associates, L.P. since July 2001. He retired from Bank of America in
June 2000 after a 30-year career in finance and banking that began at First
National Bank in Dallas and continued through a series of acquisitions and
mergers to his most recent role as Vice Chairman, Texas for Bank of America. In
this position from 1994-2000, he was responsible for corporate banking,
corporate finance, and investment banking in the Western half of the United
States. He has been a director of TCBI since May 2001.
FREDERICK B. HEGI, JR. is a founding partner of Wingate Partners (a
position he has held since July 1987). Mr. Hegi currently serves as Chairman of
United Stationers, Inc., a wholesale distributor of office products, Tahoka
First Bancorp, Inc. and Cedar Creek Bancshares, Inc. Mr. Hegi also currently
serves on the board of directors of Lone Star Technologies, Inc., Cattle
Resources, Inc. and Pro Parts Xpress, Inc. He has been a director of TCBI since
June 1999.
JAMES R. HOLLAND, JR. has served as the President and Chief Executive
Officer of Unity Hunt, Inc. since 1991 and Chief Executive Officer of Hunt
Capital Group, Inc. since 1993. Mr. Holland currently serves on the board of
directors of ProsoftTraining.com Inc. He has been a director of TCBI since June
1999.
4
DAVID LAWSON has served as Chief Executive Officer of Capital One Auto
Finance, Inc. since February 1995. He was a director of the Bank from 1999 to
September 2001. He has been a director of TCBI since September 2001.
LARRY A. MAKEL is a Partner and member of the Executive Committee of
Patton Boggs, LLP, a national law firm, a position he has held since 1998. He
also serves as director of eSports Partners, Mack Financial Inc., and Texas
Financial Asset Management. He was a director of the Bank from 1999 to September
2001. He has been a director of TCBI since September 2001.
WALTER (BO) W. MCALLISTER III served as Chairman of Texas Insurance
Agency, Inc., a property and casualty insurance agency, from 1992 to March 2002.
He has been a director of TCBI since June 1999.
LEE ROY MITCHELL has served as Chairman and Chief Executive Officer of
Cinemark USA, Inc. since 1985 and serves as an executive officer for many of its
subsidiaries. He has been a director of TCBI since June 1999.
MARSHALL B. PAYNE is currently Managing Partner of the Private Equity
Group of Cardinal Investment Company, Inc. and has served as Vice President of
Cardinal since July 1983. Mr. Payne is also Chairman of Express Foods Group LLC.
He also currently serves on the board of directors of LBP, Inc. and ACE Cash
Express, Inc. He has been a director of TCBI since June 1999.
STEVE ROSENBERG has served as Chief Executive Officer of Fuel Partners
since 1997. From January 1992 to February 1997, he served as President of Arrow
Industries. He serves on the board of directors of Packaged Ice, Inc. He was a
director of the Bank from 1999 to September 2001. He has been a director of TCBI
since September 2001.
JOHN C. SNYDER has served as Chairman of Snyder Operating Company since
May 2000. From 1978 to 1999, he served as Chairman and Chief Executive Officer
of Snyder Oil Corporation, a predecessor of Santa Fe Snyder Corporation where he
served as Chairman of the board of directors through May 2000. He also currently
serves as a director of SOCO International plc, a UK oil and gas exploration
company. He has been a director of TCBI since June 1999.
ROBERT W. STALLINGS has served as Chairman and Chief Executive Officer
of Stallings Capital Group since March 2001. From February 1991 to March 2001,
he served as Chief Executive Officer of Pilgrim Capital Group. He also currently
serves as Director of Gainsco, a publicly traded company. He has been a director
of TCBI since August 2001.
THEODORE H. STRAUSS has served as a Senior Managing Director of Bear
Stearns & Co., Inc. since 1986. Mr. Strauss also serves on the board of
directors of Hollywood Casino Corporation, Clear Channel Communications, Inc.
and Sizeler Property Investors, Inc. He has been a director of TCBI since June
1999.
JAMES CLEO THOMPSON, JR. has served as President and Chairman of
Thompson Petroleum Corporation since 1978 and as an executive officer of other
Thompson oil and gas production companies and partnerships. He also currently
serves as Chairman of Crockett National Bank. He was a director of the Bank from
1999 to September 2001. He has been a director of TCBI since September 2001.
IAN J. TURPIN has served as President and Director since 1992 of The
LBJ Holding Company and various Johnson family affiliates, which are involved in
radio, real estate, private equity investments and managing diversified
investment portfolios. Prior to moving to Texas from Toronto, Canada to assume
these responsibilities, he had an 18-year banking career specializing in
international banking, which included extensive management and financial
experience as an executive with several multi-national banks. He has been a
director of TCBI since May 2001.
5
CHARLES DAVID WOOD has served as President and Chief Executive Officer
of AMS Staff Leasing, Inc. since inception. He was a director of the Bank from
1999 to September 2001. He has been a director of TCBI since September 2001.
REQUIRED VOTE, RECOMMENDATION
To elect a nominee, a plurality of the holders of the votes represented
by shares of common stock or Series A Preferred Stock present or represented at
the meeting must be voted FOR that nominee with respect to each director
position. The board of directors recommends a vote FOR the election of each of
the nominees.
PROPOSED AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
The Board of Directors has adopted and proposes that the stockholders
of TCBI approve an Amendment to our Certificate of Incorporation which would
increase the authorized number of shares of common stock from 20,000,000 to
100,000,000 and the number of shares of preferred stock from 2,500,000 to
10,000,000. On March 31, 2002, there were 9,215,123 shares of common stock
issued and outstanding, and 1,412,870 shares of common stock reserved for future
issuance upon (1) the conversion of our Series A Preferred Stock and Series A-1
Nonvoting Common Stock and (2) the exercise of our outstanding warrants and
options. The Board of Directors believes that it is in the
best interests of TCBI and its stockholders to have additional sharesamend the Certificate of
common and preferredDesignation to provide for adjustment, in the event of a stock available for
issuance at its discretion for future acquisitions,dividend, stock
splits, stock
dividends, equity financings, employee benefit plans andsplit, reclassification or other similar corporate purposes.
The additional sharesaction, of the price which
would trigger automatic conversion of the Preferred Stock to common stock authorized by the Amendment will
be available for issuance at any time in the future without further stockholder
approval, unless such approval were required by law, as in the caseupon
(a) consummation of consolidations and certain mergers,an initial public offering or by the rules of any securities exchanges
on which the common stock were to be then listed. In the absence of additional
authorization of common stock, significant future issuances could not be
effected without the expense and delay associated with further action by
stockholders. Holders of common stock have no preemptive right to purchase or
otherwise acquire any shares of common stock that may be issued in the future.
If the Amendment is approved by the requisite vote, TCBI will file a
Certificate of Amendment to its Certificate of Incorporation with the Delaware
Secretary of State promptly following the conclusion of the Annual Meeting. The
proposed Amendment will fix the number of shares of authorized Common Stock at
100,000,000 and the number of shares of authorized Preferred Stock at 10,000,000
and will become effective on the date of filing with the Delaware Secretary of
State.
REQUIRED VOTE, RECOMMENDATION
The affirmative vote of the holders of a majority of the votes
represented by outstanding shares of common stock and Series A Preferred Stock
is required to approve the Amendment. The Board of Directors believes that the
Amendment to our Certificate of Incorporation is in the best interests of TCBI
stockholders and unanimously recommends that TCBI stockholders vote FOR the
Amendment.
OTHER MATTERS
We do not currently know of any other matters that may come before the
annual meeting. However, if any other matters are properly presented at the
annual meeting, the proxy holders will vote your proxy in their discretion on
such matters.
6
MEETINGS OF THE BOARD OF DIRECTORS
The business of TCBI is managed under the direction of the board of
directors. The board meets on a regularly scheduled basis to review significant
developments affecting the company and to act on matters requiring board
approval. It also holds special meetings when an important matter requires board
action between scheduled meetings. The board met seven times during the year
ended December 31, 2001. With the exception of James R. Erwin, Larry A. Makel,
Marshall B. Payne, Steve Rosenberg, James Cleo Thompson, Jr. and Ian J. Turpin,
all members of the board of directors participated in at least 75% of all board
meetings and their respective committee meetings during 2001.
COMMITTEES OF THE BOARD OF DIRECTORS
The board had three standing committees during 2001. The executive
committee serves as the nominating committee.
o EXECUTIVE COMMITTEE. The Executive Committee has the power to act
on behalf of the board and to direct and manage the business and
affairs of TCBI whenever the board is not in session. Committee
members are James R. Holland, Jr. (Chairman), Joseph M. Grant,
Frederick B. Hegi, Jr., Larry A. Makel, Marshall B. Payne, Robert
W. Stallings, and Theodore H. Strauss. During 2001, the Executive
Committee met eight times.
o AUDIT COMMITTEE. The Audit Committee reviews the professional
services and independence of the Company's independent auditors and
its accounts, procedures and internal controls. The Audit Committee
recommends to the board the firm selected to be our independent
auditors and monitors the performance of such firm, reviews and
approves the scope of the annual audit, reviews and evaluates with
the independent auditors our annual audit and annual consolidated
financial statements, reviews with management the status of
internal accounting controls, evaluates problem areas having a
potential financial impact on TCBI that may be brought to its
attention by management, the independent auditors or the board, and
evaluates all of our public financial reporting documents.
Committee members are Walter W. (Bo) McAllister III (Chairman),
Marshall B. Payne, Steve Rosenberg, Robert W. Stallings, and Ian J.
Turpin. During 2001, the Audit Committee met five times.
o COMPENSATION COMMITTEE. The Compensation Committee reviews and
approves salaries and bonuses for officers and key employees of
TCBI. Committee members are Frederick B. Hegi, Jr. (Interim
Chairman), James R. Erwin, Lee Roy Mitchell, John C. Snyder, and
Charles David Wood. The Board, in its entirety, agreed not to
increase salaries, grant bonuses, or grant additional stock options
to executive management during 2001. As a result, the Compensation
Committee did not meet during 2001.
SERIES A PREFERRED STOCK OFFERING
In December 2001 and January 2002, we sold 753,301 shares and 303,841
shares, respectively, of Series A Preferred Stock for $17.50 per share in a
private offering pursuant to Rule 506 under the United States Securities Act of
1933. With respect to each of the private offerings pursuant to Rule 506, we
determined the exemption was available based on our compliance with the
requirements of Rule 506 and the representations by each investor in such
offering that such investor qualified as an "accredited investor" under Rule 506
or was represented by an appropriate purchaser representative.
The Series A Preferred Stock has an annual dividend rate of 6.0%,
payable quarterly. Each share of the Series A Preferred Stock is convertible
into one share(b) quotation of the common
stock of the Company. The Series A Preferred Stock
is automatically converted into common stock in the event of (a) a change of
control; (b) a public offering of the common stock of the Company at a price of
$17.50 per share or more; (c) if the Company's common stock is listedTCBI on the New York Preferred Stock Exchange or the Nasdaq 7
National Market and the average closing price of suchfor
30 consecutive trading days. TCBI has already declared a one-for-one stock
dividend on common stock for stockholders of record on July 30, days2002. Under the
current Certificate of Designation, without regard to the Amendment, the price
at which automatic conversion would be triggered would not be adjusted to
account for the recent one-for-one stock dividend or any other subsequent stock
dividend, stock split or reclassification. The Amendment is $17.50 or more; or (d) if, as a resultnecessary in order
to adjust the trigger price for the automatic conversion of a change in the Federal Reserve
capital adequacy guidelines, the Series A Preferred Stock
does not qualifyto reflect the one-for-one stock dividend recently declared by the board and any
other subsequent stock dividend, stock split or reclassification. The proposed
Amendment to the Certificate of Designation is attached hereto as Tier I capital. The Series AAnnex A.
3
In order to become effective, the Amendment must be approved by holders of each
of (a) a majority of the outstanding shares of Preferred Stock, may also be converted intofor which TCBI
has already received the requisite number of written consents; and (b) a
majority (based on voting power) of the outstanding shares of authorized but unissued common stock at the conversion rate at any time, at
the discretion of the holder. The Series A Preferred Stock is mandatorily
converted upon the fifth anniversary of the issuance date of the Series A
PreferredVoting Stock.
The voting rights with respect to the Series A Preferred Stock
are identical to those of the common stock of the Company with each share of the
Series A Preferred Stock having one vote.4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forthpresents information as of March 31, 2002
concerning theregarding beneficial ownership of our
voting common stock as of June 30, 2002, as adjusted for the one-for-one stock dividend
declared on July 30, 2002, by:
(a) each
director, director nominee and executive officer, (b). each person we knowknown by us to beneficially ownhold more than 5% of the issued and outstanding shares of a class ofour
common stock or preferred stock;
. each of our directors;
. each of our named executive officers; and
(c). all of our executive officers and directors as a group.
TheBeneficial ownership is determined under the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. Unless indicated below, to our knowledge, the persons and
entities named in the table have sole voting and sole investment power with
respect to all shares theybeneficially owned, unless otherwise noted.subject to community property laws
where applicable. Shares of common stock subject to options and Preferred Stock
that are currently exercisable or convertible within 60 days of June 30, 2002
are deemed to be outstanding and to be beneficially owned by the person holding
the options or Preferred Stock for the purpose of computing the percentage
ownership of that person but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person. Percentage ownership is
based on 18,450,486 shares of our Common Stock outstanding (after giving effect
to the one-for-one stock dividend declared on July 30, 2002) and 1,057,142 of
convertible preferred stock outstanding on June 30, 2002.
Shares Beneficially Owned
----------------------------------------------------------------------
Name Number of SharesPercentage Number of Percent of SharesPercentage
Common Stock of Common Preferred of Preferred
Shares Stock** Stock CommonShares Stock
Name (1) Beneficially Owned Outstanding(2)
- -------- ------------------- ---------------------------------------------------------------- --------------- -------------- --------------- --------------
C. Keith Cargill 188,368(1) 1.02% - -
Leo Corrigan III 88,000(2) * 9,000 *
James R. Erwin 62,000(3) * 12,000 1.14%
Joseph M. (Jody) Grant 406,793(3) 3.96%881,586(4) 4.77% - -
Frederick B. Hegi, Jr. 213,518(5) 1.16% - -
James R. Holland, Jr. 479,036(6) 2.60% - -
Raleigh Hortenstine III 215,000(4) 2.09%430,000(7) 2.31% 10,000 *
Gregory B. Hultgren 146,000(8) * - -
George F. Jones, Jr. 130,524(5) 1.27%
Leo Corrigan III 42,000(11) *
James R. Erwin 26,000(13) *
Frederick B. Hegi, Jr. 104,759(7) 1.02%
James R. Holland, Jr. 237,518(8) 2.31%
Gregory B. Hultgren 73,000(6) *261,048(9) 1.41% - -
David Lawson 18,015(17)40,030(10) * - -
Larry A. Makel 89,600 (12)183,200(11) * - -
Walter W. (Bo) McAllister III 20,750(17)45,500(12) * - -
5
Lee Roy Mitchell 106,109(9) 1.03%
Marshall B. Payne 42,966(17) *216,218(13) 1.17% - -
Kenneth Morrison 494,093 2.67% 57,143 5.41%
Steve Rosenberg 22,000(17)48,000(14) * - -
John C. Snyder 170,866(16) 1.66%405,732(15) 2.19% 80,000 7.57%
Robert W. Stallings 73,428(17)150,856(16) * Theodore H. Strauss 82,817(10) *71,428 6.76%
SunTrust Banks, Inc. 114,284(17) - 57,142 5.41%
James Cleo Thompson, Jr. 73,169(14)176,358(18) * 20,000 1.89%
Ian J. Turpin 7,000(17) *187,312(19) 1.01% - -
U.S. Bancorp Piper Jaffray Inc. 114,286(20) - 57,143 5.41%
Charles David Wood 49,135(15)102,270(21) * - -
All 20executive officers and directors as a
group 1,991,449 19.4%(19 persons) 4,305,032 22.39%*** 202,428 19.15%
- ----------------------------
* Less than 1% of the issued and outstanding shares of the class.
(1) Unless otherwise stated, the address forshares.
** Percentages with respect to each person in this table is
2100 McKinney Avenue, Suite 900, Dallas, Texas 75201.
8
(2) Based upon 9,215,123have been calculated on the
basis of 18,450,486 shares, the total number of shares of voting common
stock issued and
outstanding ason June 30, 2002, plus the number of March 31, 2002 and 1,057,142 shares of Series A
Preferred Stock issuedvoting
common stock which such person or group of persons has the right to
acquire based on the exercise of options or conversion of preferred
stock within 60 days after June 30, 2002.
*** Percentage is calculated on the basis of 18,450,486 shares, the total
number of shares of voting common stock outstanding on June 30, 2002,
plus the aggregate number of shares of voting common stock which the
executive officers and outstanding asdirectors have the right to acquire based on the
exercise of March 31,options or conversion of preferred stock within 60 days
after June 30, 2002.
(1) Includes 392 shares held by Mr. Cargill and 163,976 shares held by
Cargill Lakes Partners, Ltd., of which Mr. Cargill is te President of
its general partner, Cargill Lakes, Inc. Includes 24,000 shares of
common stock that may be acquired upon the exercise of options.
(2) Includes 9,000 shares of preferred stock, which are immediately
convertible into 18,000 shares of common stock, held by Corrigan
Securities, Inc., of which Mr. Corrigan is President, and 62,000 shares
held by Corrigan Securities, Inc., of which Mr. Corrigan is President.
Also includes 8,000 shares that may be acquired upon exercise of
options.
(3) Includes 21,00028,000 shares held by Mr. Erwin and 12,000 shares of preferred
stock, which are immediately convertible into 24,000 shares of common
stock, held by Erwin, Graves & Associates, LP, of which Mr. Erwin is
the Managing Director and Partner. Also includes 10,000 shares that may
be acquired upon exercise of options.
(4) Includes 104,69942,000 shares that may be acquired upon exercise of options
and 771,586 shares held by Mr. Grant. Also includes 68,000 shares which
are currently held in irrevocable trusts and of which Mr. Grant
disclaims beneficial ownership.
(5) Includes 137,132 shares held by Valley View Capital Corp. Retirement
Savings Trust for the benefit of Mr. Hegi 24,252 shares held by the
F.B. Hegi Trust, of which Mr. Hegi is the beneficiary and 44,134 shares
held directly by Mr. Hegi. Includes 8,000 shares that may be acquired
upon exercise of options.
(6) Includes 471,036 shares held by Hunt Capital Partners, L.P. of which
Mr. Holland is President and Chief Executive Officer. Also includes
8,000 shares that may be acquired upon exercise of options that are
issued in the name of Hunt Capital Group, LLC.
(7) Includes 209,398 shares held by Hortenstine Family Investments, L.P.,
of which Mr. Hortenstine is the General Partner, 101202 shares held by
Hortenstine Liquidity Trust, of which Mr. Hortenstine is the beneficiary,trustee,
70,400 shares held by Mr. Hortenstine, 10,000 shares of preferred stock
that are immediately convertible into 20,000 shares of common stock,
and 65,000130,000 shares that may be acquired upon exercise of options.
(5)(8) Includes 101,459103,600 shares held by Mr. Hultgren and Rose M. Hultgren, as
tenants in common, 6,400 shares held by Mr. Hultgren and 36,000 shares
that may be acquired upon exercise of options.
6
(9) Includes 202,918 shares held by G & M Partners Ltd., of which Mr. Jones
is the Managing General Partner, 28,130 shares held directly by Mr.
Jones, and 15,00030,000 shares that may be acquired upon exercise of options.
(6)(10) Includes 51,80032,030 shares held by Mr. HultgrenLawson and Rose M. Hultgren, his
wife, as tenants in common, 12,0008,000 shares that may be
acquired upon the exercise of options.
(11) Includes 152,198 shares held by The Makel Family Partnership, 1995,
Ltd. of which Mr. Makel is the General Partner, 23,002 shares held by
Mr. Makel and 8,000 shares that may be acquired upon exercise of
optionsoptions.
(12) Includes 37,500 shares held directly by Mr. HultgrenMcAllister and 6,0008,000 shares
that may be acquired upon the exercise of options held by Ms. Hultgren.
(7)options.
(13) Includes 68,566 shares held Valley View Capital Corp. Retirement
Savings Trust for the benefit of Mr. Hegi and 12,126208,218 shares held by the
F.B. Hegi Trust of which Mr. Hegi is the beneficiary. Includes 2,000
shares that may be acquired upon exercise of options that are issued in
Mr. Hegi's name.
(8) Shares held by Hunt Capital Partners, L.P. of which Mr. Holland is
President and Chief Executive Officer. Includes 2,000 shares that may
be acquired upon exercise of options that are issued in the name of
Hunt Capital Growth, L.P.
(9) Shares held by T & LRM&LRM Family Partnership Ltd. Mr.
Mitchell is the Chief Executive Officer of PBA Development, Inc., which
is the general partner of T & LRM. Includes 2,000&LRM. Also includes 8,000 shares that may be
acquired upon exercise of options that are issued in Mr. Mitchell's name.
(10)options.
(14) Includes 47,00040,000 shares held by the Theodore H. Strauss 1999 Irrevocable
Trust Agreement, of which Mr. Strauss is the beneficiary. Includes
2,000Rosenberg and 8,000 shares that may
be acquired upon exercise of options that are
issued in Mr. Strauss' name.
(11) Includes 9,000 shares held by Corrigan Securities, Inc., of which Mr.
Corrigan is President, and 31,000 shares held by Corrigan Holdings,
Inc., of which Mr. Corrigan is President. Includes 2,000 shares that
may be acquired upon exercise of options that are issued in Mr.
Corrigan's name.
(12) Includes 76,099 shares held by The Makel Family Partnership, of which
Mr. Makel is the General Partner. Includes 2,000 shares that may be
acquired upon exercise of options that are issued in Mr. Makel's name.
(13) Includes 12,000 shares held by Erwin Graves & Associates Limited
Partnership, of which Mr. Erwin is the Managing Director and Partner.
(14) Includes 21,020 shares held by Big T Investments, of which Mr. Thompson
is the principal, and 37,040 shares held by J. Cleo Thompson Life
Estate Trust, of which Mr. Thompson is the beneficiary. Includes 2,000
shares that may be acquired upon exercise of options that are issued in
Mr. Thompson's name.options.
(15) Includes 47,055 shares held by Wood Limited Partnership, of which Mr.
Wood is the General Partner. Includes 2,000 shares that may be acquired
upon exercise of options that are issued in Mr. Wood's name.
(16) Includes237,732 shares held by Snyder Alternative Investments, L.P.,
of which Snyder Operating Company LLC is the general partner. Mr.
Snyder is the President of Snyder Operating Company LLC. Also includes
50,000 shares of preferred stock, which is immediately convertible into
100,000 shares of common stock, held by the NTS/JCS Charitable
Remainder Unitrust, of which Mr. Snyder is the trustee and a8,000 shares
that may be acquired upon exercise of options. Also includes 30,000
shares of preferred stock, which is immediately convertible into 60,000
shares of common stock, held by the Nancy and John Snyder Foundation.
Mr. Snyder disclaims beneficial ownership of the shares held by the
Nancy and John Snyder Foundation.
(16) Includes 71,428 shares preferred stock that are immediately convertible
into 142,856 shares of common stock and 8,000 shares that may be
acquired upon exercise of options.
(17) Includes 57,142 shares of preferred stock, which is immediately
convertible into 114,284 shares of common stock.
(18) Includes 16,218 shares held by Mr. Thompson, 32,040 shares held by Big
T Investments, of which Mr. Thompson is the principal, and 64,080
shares held by J. Cleo Thompson Life Estate Trust, of which Mr.
Thompson is the beneficiary. Includes 2,000Also includes 16,020 shares of common
stock and 20,000 shares of preferred stock that are immediately
convertible into 40,000 shares of common stock and 8,000 shares that
may be acquired upon exercise of options that are issued in Mr.
Snyder'sThompson's name.
(17)(19) Includes 2,00013,794 shares held by Mr. Turpin, 27,586 shares held by
Windermere LP, an entity of which Mr. Turpin can be deemed a
controlling person, and 137,932 shares held by LBJ Capital, L.P., an
entity of which Mr. Turpin can be deemed a controlling person. Also
includes 8,000 shares that may be acquired upon the exercise of
options.
(20) Includes 57,143 shares of preferred stock, which is immediately
convertible into 114,286 shares of common stock.
(21) Includes 160 shares held by Mr. Wood and 94,110 shares held by Wood
Limited Partnership, of which Mr. Wood is the General Partner. Also
includes 8,000 shares that may be acquired upon exercise of options.
In addition to the voting common stock, we have alsooptions
that are issued a classin Mr. Wood's name.
7
INTEREST OF CERTAIN PARTIES IN MATTERS TO BE ACTED UPON
Several of nonvoting common stock entitled Series A-1 Nonvoting Common Stock. As of March
31, 2002, there were 355,728TCBI's directors and executive officers own, directly or indirectly,
shares of Series A-1 NonvotingPreferred Stock and such shares would be covered by the Amendment, if
adopted, thereby causing automatic conversion of the Preferred Stock to Common
Stock issued
and outstanding, all of which were held by Goff Moore Strategic Partners, L.P.
9
DIRECTORS' COMPENSATION
Directors do not receive any cash fees for attending meetings. Duringunder certain circumstances. It should be noted, however, that under the
first quarter of 2000, each director was awarded options to purchase 2,000
shares of TCBI common stock. Newly elected directors for 2001 were each awarded
2,000 shares of TCBI common stock at the time they joined the Board. The options
are exercisable at $14.50 per share. Directors are reimbursed for their travel
and reasonable out-of-pocket expenses incurred by them in performing their
duties.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has the following goals for compensation
programs impacting the executive officers of TCBI and the Bank:
o to provide motivation for the executive officers and to enhance
stockholder value by linking their compensation to the value of
common stock,
o to retain the executive officers who have led TCBI and the Bank,
o to allow TCBI and the Bank to attract high quality executive
officers in the future by providing total compensation
opportunities consistent with those provided in the industry and
commensurate with TCBI's and the Bank's level of performance, and
o to maintain reasonable "fixed" compensation costs by targeting base
salaries at a competitive average.
The executive compensation package available to executive officers is
composed of (a) base salary, (b) annual bonus awards, and (c) long-term
incentive compensation, including options and stock awards. None of TCBI's or
the Bank's executive officers have employment agreements.
BASE SALARY In determining salary levels, the Compensation Committee
considers the entire compensation package for executive officers, including the
equity compensation provided under stock plans. We intend for the salary levels
to be consistent with competitive practices of comparable institutions and each
executive's level of responsibility. The Compensation Committee determines the
level of any salary increase to take effect at the beginning of each fiscal year
after reviewing (a) the qualifications, experience and performance of the
executive officers, (b) the compensation paid to persons having similar duties
and responsibilities in other institutions, and (c) the size of the bank and the
complexity of its operations. The Compensation Committee consulted a survey of
compensation paid to executive officers performing similar duties for depository
institutions and their holding companies, with particular focus on the level of
compensation paid by comparable institutions.
ANNUAL BONUS AWARDS In determining bonus awards, the Compensation
Committee considers the entire compensation package of the executive officers.
The bonus awards are intended to be consistent with each executive officer's
level of responsibility and with the competitive practices of comparable
financial institutions. The Compensation Committee did not meet during the year
to determine bonus compensation because the board determined not to pay any
bonuses to our executive officers during 2001.
10
LONG-TERM INCENTIVE COMPENSATION We maintain the Texas Capital
Bancshares, Inc. 1999 Omnibus Stock Plan under which employees may receive
discretionary grants and awards as determined and awarded solely in the
discretion of the Compensation Committee and approved by the full board. The
Compensation Committee believes that stock ownership is a significant incentive
in aligning the interests of employees and stockholders and building our
stockholders' wealth.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER After taking into
consideration the factors discussed above, the Compensation Committee entered
into a deferred compensation agreement with Mr. Grant providing him a base
salary of $275,000 for 2000, payable to Mr. Grant in shares of common stock of
TCBI. Pursuant to the timely deferral election by Mr. Grant, as evidenced by a
duly executed deferred compensation agreement, these shares were placed in a
grantor trust of which he is the beneficiary. Pursuant to thecurrent terms of the deferred compensation agreementPreferred Stock, such directors and grantor trust, these shares shall remain
general assets of TCBI, subject to the claims of TCBI's general creditors and
constitute an unfunded, unsecured promise to pay such compensation to Mr. Grant
at a designated future time. Mr. Grant has not deferredexecutive officers, as
well as any portion of his
salary for 2001. Consistent with 2000, his base salary is $275,000.
This report is submitted during 2001 by the membersother holders of the Compensation
Committee:
Frederick B. Hegi, Jr.
James R. Erwin
Lee Roy Mitchell
John C. Snyder
Charles David Wood
11
SUMMARY COMPENSATION TABLE
The following table shows, forPreferred Stock, have the years ending December 31, 2001,
2000, and 1999, the cash compensation paid and other compensation paid or
accruedright to the Chief Executive Officer and three other executive officers of
TCBI who earned and/or received a salary and bonus in excess of $100,000 (the
"Named Executives").
PAYOUTS
------------------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND COMPEN- OPTIONS/ COMPEN-
PRINCIPAL POSITION YEAR SALARY ($) BONUS SATION SARS SATION
- ------------------ ---- ---------- ----- ------ ---------- ------
JOSEPH M. (JODY) GRANT 2001 $ 275,000 $ 0 $ 0 0 $5,873(3)
Chairman and Chief 2000 $ 12,000(1) $ 0 $ 0 0 $4,230(3)
Executive Officer of TCBI 1999 $ 6,500(1) $ 0 $ 0 0 $5,976(3)
RALEIGH HORTENSTINE III 2001 $ 250,000 $ 0 $7,200(2) 0 $3,675(3)
President of TCBI 2000 $ 250,000 $ 0 $7,200(2) 0 $4,375(3)
1999 $ 251,800 $ 0 $ 0 0 $4,377(3)
GREGORY B. HULTGREN 2001 $ 140,000 $ 0 $7,200(2) 0 $ 0
Executive Vice President 2000 $ 140,000 $ 0 $7,200(2) 0 $ 0
and Chief Financial 1999 $ 144,200 $ 0 $7,200(2) 0 $ 0
Officer of TCBI
GEORGE F. JONES, JR 2001 $ 225,000 $ 0 $7,200(2) 0 $6,971(3)
President and Chief 2000 $ 225,000 $ 0 $7,200(2) 0 $6,796(3)
Executive Officer of 1999 $ 229,200 $ 0 $ 7,200 (2) 0 $6,106(3)
the Bank
- ----------
(1) Mr. Grant has entered into a deferred compensation agreement with TCBI
that allows TCBI to pay Mr. Grant in shares of common stock of TCBI.
(2) Represents amounts paid to reimburse automotive expenses.
(3) Represents amounts paid for dues to certain country clubs.
FISCAL YEAR-END OPTION/SAR VALUES
We did not grantvoluntarily
convert at any options to the Named Executives during 2001. The
Named Executives did not exercise any of their options during 2001. The
following table sets forth the number and value of options that the Named
Executives owned as of March 31, 2002:
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS/ IN-THE-MONEY OPTIONS/SARS
NAME SARS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
---- ------------------------------- -------------------------
Joseph M. (Jody) Grant 35,000 (2) $ 70,000
Raleigh Hortenstine III 75,000 (3) $ 220,500
Gregory B. Hultgren 20,000 (2) $ 40,000
George F. Jones, Jr. 25,000 (2) $ 50,000
- ----------
(1) Value of options based on a fair market value per share of $14.50,
which is based upon thetime.
FINANCIAL INFORMATION
TCBI's most recent private sales of common stock.
12
(2) Options issued on October 1, 1998 of which three-fifths are currently
exercisableaudited and one-fifth vests on each of October 1, 2002 and 2003
with an exercise price of $12.50 per share.
(3) Includes 25,000 options issued on October 1, 1998 of which 15,000
options are currently exercisable and 5,000 options vest on each of
October 1, 2002 and 2003 with an exercise price of $12.50 per share;
and 50,000 options issued in lieu of founder's shares on July 1, 1998
of which all are currently exercisable with an exercise price of $11.09
per share.
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the executive officers of TCBI or the Bank serves on the
Compensation Committee of the board of directors of TCBI or any compensation
committee of any other company.
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 TCBI's officers,
directors and employees. The Bank makes all loans to executive officers and
directors in the ordinary course of business, on substantially the same terms as
those with other customers.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires our
officers and directors, and persons who own more than 10% of a registered class
of our equity securities, to file initial reports of ownership and reports of
changes in ownership with the SEC. We are not aware of any report that need be
filed by any officer, director or 10% stockholder that was not timely filed
during 2000.
INDEPENDENT AUDITORS
We selected Ernst & Young LLP as independent auditors to examine our
accounts for 2001. Representatives of Ernst & Young LLP are expected to be
present at the annual meeting and will have the opportunity to make a statement
if they desire to do so. They will also be available to answer appropriate
questions.
AUDIT FEES
AUDIT FEES
We incurred fees of approximately $132,000 related to the audit of our
2001 annual consolidatedunaudited financial statements and the reviewsnotes thereto,
and Management's Discussion and Analysis of the
consolidated financial statements included in our Forms 10Q for 2001.
AUDIT RELATED FEES
We incurred feesFinancial Condition and Results of
approximately $255,000 for audit related services
during 2001. Services included butOperations are not limitedincorporated herein by reference to internal audit,
consultations related to employee benefit plans, and procedures related to
management's assertion regarding effective internal controls in compliance with
the requirements of FDICIA.
ALL OTHER FEES
We incurred other fees of approximately $91,000 related to various
state and local tax services.
13
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors consists of the five
directors whose names appear below. Each member of the Audit Committee is
"independent" as defined in Rule 4200(a)(14) of the National Association of
Securities Dealers' listing standards.
The Audit Committee's general role as an audit committee is to assist
the Board of Directors in overseeing the Company's financial reporting process
and related matters. The Audit Committee has adopted a written charter, a copy
of which is included as Exhibit A hereto.
The Audit Committee has reviewed and discussed with the Company's
management and the Company's independent auditors, the audited financial
statements of the Company contained in the Company's Annual Report to
Shareholders for the year ended December 31, 2001.
The Audit Committee has also discussed with the Company's independent
auditors the matters required to be discussed pursuant to SAS 61 (Codification
of Statements on Auditing Standards, Communication with Audit Committees). The
Audit Committee has received and reviewed the written disclosures and the letter
from Ernst & Young LLP required by Independence Standards Board Standard No. 1
(titled, "Independence Discussions with Audit Committees"), and has discussed
with Ernst & Young LLP such independent auditors' independence. The Audit
Committee has also considered whether the provision of non-audit services to the
Company by Ernst & Young LLP is compatible with maintaining their independence.
Based on the review and discussion referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual ReportTCBI's Registration Statement
on Form 10-K for the
fiscal year ended December 31, 2001,S-3 filed with the Securities and Exchange Commission.
This report is submittedCommission on behalfAugust 9, 2002,
including any subsequent amendments thereto.
ADDITIONAL INFORMATION
Stockholder Proposals for Annual Meeting Held in 2003
To be included in the proxy statement and form of proxy for the annual meeting
of stockholders to be held in 2003, a stockholder proposal must be received by
the Secretary of TCBI at the address on the front of this Consent Statement not
later than December 31, 2002. Any such proposal will be subject to Rule 14a-8 of
the Audit Committee.
Walter W. McAllister, Chairperson
Marshall B. Payne
Steve Rosenberg
Robert W. Stallings
Ian J. Turpin
ADDITIONAL INFORMATION
STOCKHOLDER NOMINEES FOR DIRECTOR FOR THIS ANNUAL MEETING
You may submit proposalsrules and regulations of the SEC.
The bylaws of TCBI provide an advance notice procedure for nominees for our board of directors in
accordance with Article II, Section 9 of our bylaws. If you would like to submit
a nomination for directorcertain business to
be considered at this annualbrought before the Annual Meeting. In order for a stockholder to properly
bring business before the Annual Meeting, the stockholder must give written
notice to the Secretary of TCBI not less than one hundred eighty (180) days nor
more than two hundred seventy (270) days before the time originally fixed for
such meeting; provided, however, that in the event that less than thirty (30)
days notice or prior public disclosure of the date of the meeting youis given or
made to stockholders, notice by the stockholder to be timely must deliver notice of any director nominations to us nobe received
not later than the close of business on May 10, 2002. Directorthe tenth day following the day on which
such notice of the date of the Annual Meeting was mailed or such public
disclosure was made. The notice must include the stockholder's name, record
address and the class and number of shares owned by the stockholder and describe
briefly the proposed business, the reasons for bringing the business before the
Annual Meeting, and any material interest of the stockholder in the proposed
business. In the case of nominations shouldto the Board, certain information regarding
the nominee must be directed to:provided.
Although the bylaw provisions do not give the board of directors any power to
approve or disapprove of stockholder nominations for the election of directors
or any other business desired by a stockholder to be conducted at the Annual
Meeting, the bylaw provisions may have the effect of precluding a nomination for
the election of directors or precluding the conduct of business at a particular
meeting if the proper procedures are not followed, and may discourage or deter a
third party from conducting a solicitation of proxies to elect its own slate of
directors or otherwise attempt to obtain control of TCBI, even if the conduct of
such business or such attempt might be beneficial to TCBI and its stockholders.
By Order of the Directors
/s/ Larry A. Makel
Larry A. Makel
Secretary
8
ANNEX A
CERTIFICATE OF AMENDMENT OF THE
CERTIFICATE OF DESIGNATION OF THE
6.0% SERIES A CONVERTIBLE PREFERRED STOCK
Texas Capital Bancshares, Inc.
2100 McKinney Avenue, 9th Floor
Dallas, Texas 75201
Attn: Secretary
14
STOCKHOLDER PROPOSALS FOR ANNUAL MEETING HELD IN 2002
In, a corporation organized and existing under
and by virtue of Section 242 of the General Corporation Law of the State of
Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: That the holders of the 6.0% Series A Convertible Preferred Stock,
$0.01 par value per share and the holders of common stock, par value $.01 par
value per share, adopted a resolution by written consent, in accordance with
Article II, Section 10228 of our bylaws, stockholder
proposals for the 2003 Annual MeetingGeneral Corporation Law, proposing and declaring the
following amendment to the Certificate of Stockholders must be receivedDesignation of the 6.0% Series A
Convertible Preferred Stock of said Corporation (the "Certificate of
Designation"):
RESOLVED, that Section 4(a) of the Certificate of Designation is hereby
amended in its entirety to read as follows:
4(a). The Series A Preferred Stock will automatically convert into one (1)
share of authorized but unissued Common Stock (the "Conversion Rate")
upon the occurrence of any of the following: (i) any transaction,
whether by November 25, 2002 to be considered for inclusionmerger, consolidation, asset sale, tender offer, reverse
stock split, or otherwise, which results in the proxy statementacquisition of
beneficial ownership (as such term is defined under the rules and
proxyregulations promulgated under the Securities Exchange Act of 1934, as
amended) by any person or entity, or any group of persons or entities
acting in concert, of 50% or more of the outstanding shares of Common
Stock of the Corporation; (ii) the sale of all or substantially all
of the assets of the Corporation, (iii) the Common Stock is
authorized for trading on the 2003 Annual Meeting. Proposals shouldNew York Stock Exchange or the Nasdaq
National Market and the market value per share of the Common Stock is
$17.50 per share or greater (the "Quoted Price") as of the market
close for thirty consecutive trading days; (iv) the Corporation
consummates an underwritten public offering of any shares of Common
Stock at a price of $17.50 per share or higher (the "IPO Price"), or
(v) the capital adequacy guidelines published by the Board of
Governors of the United States Federal Reserve system are changed in
any manner which results in the Series A Preferred Stock no longer
qualifying as Tier I Capital under such guidelines.
The Quoted Price and the IPO Price shall be directed to:adjusted accordingly,
consistent with Section 4(f)(i), if the Corporation on or after July
30, 2002 (A) declares or makes a distribution or dividend on its
Common Stock in shares of its capital stock, (B) subdivides its
outstanding shares of Common Stock into a greater number of shares,
(C) combines its outstanding shares of Common Stock into a smaller
number of shares or (D) issues by reclassification of its shares of
Common Stock (including any reclassification in connection with a
consolidation or merger in which the Corporation is the continuing
corporation) any shares of Common Stock.
ANNEX B
WRITTEN CONSENT OF STOCKHOLDERS
OF TEXAS CAPITAL BANCSHARES, INC.
TO ACTION WITHOUT A MEETING
THIS CONSENT IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF TEXAS CAPITAL BANCSHARES, INC.
Unless otherwise indicated below, the undersigned, a stockholder on August
9, 2002 (the "Record Date"), of Texas Capital Bancshares, Inc, Inc.
2100 McKinney Avenue, 9th Floor
Dallas,, a Delaware
corporation ("TCBI") and the holding company for Texas 75201
Attn: Secretary
ANNUAL REPORT
Our Annual ReportCapital Bank, N.A.,
hereby consents, pursuant to Section 228 of the General Corporation Law of the
State of Delaware, with respect to all shares of common stock, par value $0.01
per share, and all shares of 6.0% Series A Convertible Preferred Stock par value
$0.01 per share, of TCBI, held by the undersigned, to the following action
without a meeting, without prior notice and without a vote.
RESOLVED, that Section 4(a) of the Certificate of Designation is hereby
amended in its entirety to read as follows:
4(a). The Series A Preferred Stock will automatically convert into one (1)
share of authorized but unissued Common Stock (the "Conversion Rate")
upon the occurrence of any of the following: (i) any transaction,
whether by merger, consolidation, asset sale, tender offer, reverse
stock split, or otherwise, which results in the acquisition of
beneficial ownership (as such term is defined under the rules and
regulations promulgated under the Securities Exchange Act of 1934, as
amended) by any person or entity, or any group of persons or entities
acting in concert, of 50% or more of the outstanding shares of Common
Stock of the Corporation; (ii) the sale of all or substantially all
of the assets of the Corporation, (iii) the Common Stock is
authorized for trading on Form 10-K accompanies this proxy statement.
15the New York Stock Exchange or the Nasdaq
National Market and the market value per share of the Common Stock is
$17.50 per share or greater (the "Quoted Price") as of the market
close for thirty consecutive trading days; (iv) the Corporation
consummates an underwritten public offering of any shares of Common
Stock at a price of $17.50 per share or higher (the "IPO Price"), or
(v) the capital adequacy guidelines published by the Board of
Governors of the United States Federal Reserve system are changed in
any manner which results in the Series A Preferred Stock no longer
qualifying as Tier I Capital under such guidelines.
The Quoted Price and the IPO Price shall be adjusted accordingly,
consistent with Section 4(f)(i), if the Corporation on or after July
30, 2002 (A) declares or makes a distribution or dividend on its
Common Stock in shares of its capital stock, (B) subdivides its
outstanding shares of Common Stock into a greater number of shares,
(C) combines its outstanding shares of Common Stock into a smaller
number of shares or (D) issues by reclassification of its shares of
Common Stock (including any reclassification in connection with a
consolidation or merger in which the Corporation is the continuing
corporation) any shares of Common Stock.
[__] CONSENT [__] WITHHOLD CONSENT [__] ABSTAIN
To consent, withhold consent or abstain from consenting to the Amendment set
forth above, check the appropriate box above. If no box is marked above with
respect to the Amendment, you will be deemed to have consented to the Amendment.
DATED: ________________________________
_______________________________________ ____________________________________
(Print name, or names if held jointly) Number of Shares of Voting Common
Stock owned as of August 9, 2002
_______________________________________
(Signature of record shareholder or
person authorized to sign on behalf ____________________________________
of record shareholder) Number of Shares of Preferred
Stock owned as of August 9, 2002
(Preferred Stock will receive
two votes for each share of
Preferred Stock owned)
________________________________________
(Title or authority of authorized person,
if applicable)
________________________________________
(Signature, if held jointly)
Please sign exactly as your name(s) appears on your stock certificate. If shares
of stock stand of record in the names of two or more persons or in the name of
husband and wife, whether as joint tenants or otherwise, both or all of such
persons should sign the consent. If shares of stock are held of record by a
corporation, the consent should be executed by a duly authorized officer,
indicating his or her title. Executors, trustees, guardians, administrators or
other fiduciaries should sign in their official capacity, giving their full
title as such. If a partnership, please sign in the partnership name by an
authorized person(s) and indicate full title of signatory. Please date the
consent above.
PLEASE MARK, DATE, SIGN AND RETURN THE CONSENT PROMPTLY, USING THE ENCLOSED
ENVELOPE, IF RETURNING THE CONSENT BY MAIL, OR FAX THE COMPLETED CONSENT TO THE
ATTENTION OF ______________ TO ________________.