SCHEDULE 14A
PROXY STATEMENT
Pursuant to Section 14(a) of the Securities and Exchange Act of 1934
(Amendment No. 1)
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 Section 240.14a-11(c) or Section
240.14a-12
TEXAS CAPITAL BANCSHARES, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(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 Rule 0-11 (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 Rule 0-11(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:
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[TEXAS CAPITAL BANCSHARES, INC. LETTERHEAD]
April 30, 2002
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
of Texas Capital Bancshares, Inc., a Delaware corporation and the holding
company for Texas Capital Bank, National Association. The annual meeting will be
on 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.
The attached Notice of Annual Meeting of Stockholders and Proxy
Statement describe 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.
We urge you to review carefully the accompanying materials 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 behalf of the board 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. LETTERHEAD]
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 be 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 common stock to 100 million shares (the "Common Stock
Amendment"),
3. an Amendment to our Certificate of Incorporation increasing our
authorized preferred stock to 10 million shares (the "Preferred
Stock Amendment"), and
4. 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, FOR the Common Stock
Amendment and FOR the Preferred Stock Amendment.
Only those stockholders who owned shares of our 6% Series A Convertible
Preferred Stock or voting common stock on April 30, 2002, the record date
established by our board of directors, will be entitled to vote at 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 order of the board of directors,
Larry A. Makel
Secretary
April 30, 2002
Dallas, Texas
PROXY STATEMENT
TABLE OF CONTENTS
<Table>
MEETING INFORMATION...........................................................1
RECORD DATE AND VOTING SECURITIES.............................................1
QUORUM AND VOTING.............................................................2
SOLICITATION AND VOTING OF PROXIES............................................2
ELECTION OF DIRECTORS.........................................................3
Nominees.................................................................3
Required Vote, Recommendation............................................6
PROPOSED COMMON STOCK AMENDMENT...............................................6
Required Vote, Recommendation............................................6
PROPOSED PREFERRED STOCK AMENDMENT............................................6
Required Vote, Recommendation............................................7
OTHER MATTERS.................................................................7
MEETINGS OF THE BOARD OF DIRECTORS............................................7
COMMITTEES OF THE BOARD OF DIRECTORS..........................................8
SERIES A PREFERRED STOCK OFFERING.............................................8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................9
DIRECTORS' COMPENSATION......................................................11
EXECUTIVE COMPENSATION.......................................................11
Compensation Committee Report on Executive Compensation.................11
Summary Compensation Table..............................................13
Fiscal Year-End Option/SAR Values.......................................13
Compensation and Stock Option Committee Interlocks and Insider
Participation.........................................................14
Indebtedness of Management and Transactions With Certain Related
Persons...............................................................14
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE......................14
INDEPENDENT AUDITORS.........................................................14
AUDIT FEES...................................................................14
Audit Fees..............................................................14
Audit Related Fees......................................................14
All Other Fees..........................................................14
AUDIT COMMITTEE REPORT.......................................................15
ADDITIONAL INFORMATION.......................................................15
Stockholder Nominees for Director for This Annual Meeting...............15
Stockholder Proposals for Annual Meeting Held in 2002...................16
Annual Report...........................................................16
</Table>
[TEXAS CAPITAL BANCSHARES, INC. LETTERHEAD]
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
ON MAY 21, 2002
--------------------------------------------
MEETING INFORMATION
This proxy statement is being furnished to Texas Capital Bancshares,
Inc. ("TCBI") stockholders on April 30, 2002, in connection with the
solicitation of proxies by the board of directors to be voted at the annual
meeting of stockholders. The annual meeting will be on May 21, 2002, at 5:30
p.m. in the offices of Texas Capital Bank, National Association (the "Bank") at
2100 McKinney Avenue, 9th Floor, Dallas, Texas 75201. TCBI is the parent
corporation 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 common stock to 100 million shares (the "Common Stock
Amendment"),
3. an Amendment to our Certificate of Incorporation increasing our
authorized preferred stock to 10 million shares (the "Preferred
Stock Amendment"), and
4. other matters 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 6% Series A Convertible
Preferred Stock ("Series A Preferred Stock") or voting common 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 accordance with 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 Common Stock Amendment, (c)
FOR the Preferred Stock Amendment and (d) 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.
1
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 and Series A Preferred 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 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, FOR the Common Stock Amendment and FOR the Preferred Stock Amendment.
Other than the matters listed above, we are 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 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.
2
ELECTION 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. The board of directors recommends a vote FOR each of the nominees set
forth below:
<Table>
<Caption>
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
</Table>
3
<Table>
<Caption>
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
</Table>
JOSEPH M. (JODY) GRANT has served as Chairman and Chief Executive
Officer of TCBI since December 1998 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 and 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 COMMON STOCK AMENDMENT
The board of directors has adopted and proposes that the stockholders
of TCBI approve the Common Stock Amendment which would increase the authorized
number of shares of common stock from 20,000,000 to 100,000,000. On March 31,
2002, there were 9,215,123 shares of common stock issued and outstanding, and
2,167,694 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 to have additional
shares of common stock available for issuance at its discretion for future
acquisitions, stock splits, stock dividends, equity financings, employee benefit
plans and other corporate purposes.
The additional shares of common stock authorized by the Common Stock
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 case of consolidations and certain mergers, 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 Common Stock 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 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 Common Stock Amendment. The board of directors
believes that the Common Stock Amendment is in the best interests of TCBI
stockholders and unanimously recommends that TCBI stockholders vote FOR the
Common Stock Amendment.
PROPOSED PREFERRED STOCK AMENDMENT
The board of directors has adopted and proposes that the stockholders
of TCBI approve the Preferred Stock Amendment which would increase the
authorized number of shares of preferred stock from 2,500,000 to 10,000,000. On
March 31, 2002, there were 1,057,142 shares of preferred stock issued and
outstanding, all of which were shares of our Series A Preferred Stock. The board
of directors believes that it is in the best interests of TCBI to have
additional shares of preferred stock available for issuance at its discretion
for future acquisitions, stock splits, stock dividends, equity financings,
employee benefit plans and other corporate purposes.
6
If the Preferred Stock Amendment is approved, our board of directors
will be authorized, subject only to limitations imposed by Delaware law, to
issue preferred stock in one or more series, to establish from time to time the
number of shares to be included in each series, and to fix the rights,
preferences and privileges of the shares of each wholly unissued series and any
of its qualifications, limitations or restrictions. Our board of directors may
also increase or decrease the number of shares of any series, but not below the
number of shares of that series then outstanding, without any further vote or
other action by the stockholders. Our board of directors may authorize the
issuance of preferred stock with voting or conversion rights that could
adversely affect the voting power or other rights of the holders of our common
stock or other series of our preferred stock. The issuance of preferred stock,
while providing flexibility in connection with future equity financings,
acquisitions and other corporate purposes, could have the effect of delaying,
deferring or preventing a change in control of TCBI and could be detrimental to
the market price of our common stock and the voting and other rights of the
holders of our common stock or other series of our preferred stock.
The additional shares of preferred stock authorized by the Preferred
Stock Amendment will be available for issuance at any time in the future without
further stockholder approval, unless such approval were required by Delaware
law, as in the case of consolidations and certain mergers, 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 preferred stock, significant future
issuances could not be effected without the expense and delay associated with
further action by stockholders. Holders of common stock or our Series A
Preferred Stock have no preemptive right to purchase or otherwise acquire any
shares of preferred stock that may be issued in the future.
If the Preferred Stock 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 Preferred Stock Amendment will fix 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 Preferred Stock Amendment. The board of directors
believes that the Preferred Stock Amendment is in the best interests of TCBI
stockholders and unanimously recommends that TCBI stockholders vote FOR the
Preferred Stock 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.
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.
7
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 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 listed on the New
York Preferred Stock Exchange or the Nasdaq National Market and the average
closing price of such stock for 30 days is $17.50 or more; or (d) if, as a
result of a change in the Federal Reserve capital adequacy guidelines, the
Series A Preferred Stock does not qualify as Tier I capital. The Series A
Preferred Stock may also be converted into 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 Preferred 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.
8
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 31, 2002
concerning the beneficial ownership of our voting common stock by: (a) each
director, director nominee and executive officer, (b) each person we know to
beneficially own more than 5% of the issued and outstanding shares of a class of
common stock, and (c) all of our executive 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.
<Table>
<Caption>
Number of Shares of Percent of Shares of
Common Stock Common Stock
Name (1) Beneficially Owned Outstanding(2)
- -------- ------------------ --------------------
Joseph M. (Jody) Grant 406,793(3) 3.96%
Raleigh Hortenstine III 215,000(4) 2.09%
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) *
David Lawson 18,015(17) *
Larry A. Makel 89,600 (12) *
Walter W. (Bo) McAllister III 20,750(17) *
Lee Roy Mitchell 106,109(9) 1.03%
Marshall B. Payne 42,966(17) *
Steve Rosenberg 22,000(17) *
John C. Snyder 170,866(16) 1.66%
Robert W. Stallings 73,428(17) *
Theodore H. Strauss 82,817(10) *
James Cleo Thompson, Jr. 73,169(14) *
Ian Turpin 7,000(17) *
Charles David Wood 49,135(15) *
All 20 officers and directors as a group 1,991,449 19.4%
</Table>
- --------------------------
* Less than 1% of the issued and outstanding shares of the class.
(1) Unless otherwise stated, the address for each person in this table is
2100 McKinney Avenue, Suite 900, Dallas, Texas 75201.
(2) Based upon 9,215,123 shares of voting common stock issued and
outstanding as of March 31, 2002 and 1,057,142 shares of Series A
Preferred Stock issued and outstanding as of March 31, 2002.
(3) Includes 21,000 shares that may be acquired upon exercise of options.
(4) Includes 104,699 shares held by Hortenstine Family Investments, L.P.,
of which Mr. Hortenstine is the General Partner, 101 shares held by
Hortenstine Liquidity Trust, of which Mr. Hortenstine is the
beneficiary, and 65,000 shares that may be acquired upon exercise of
options.
(5) Includes 101,459 shares held by G & M Partners Ltd., of which Mr. Jones
is the Managing General Partner, and 15,000 shares that may be acquired
upon exercise of options.
9
(6) Includes 51,800 shares held by Mr. Hultgren and Rose M. Hultgren, his
wife, as tenants in common, 12,000 shares that may be acquired upon
exercise of options held by Mr. Hultgren and 6,000 shares that may be
acquired upon exercise of options held by Ms. Hultgren.
(7) Includes 68,566 shares held Valley View Capital Corp. Retirement
Savings Trust for the benefit of Mr. Hegi and 12,126 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 Family Partnership Ltd. Mr. Mitchell is the
Chief Executive Officer of PBA Development, Inc., the general partner
of T & LRM. Includes 2,000 shares that may be acquired upon exercise of
options that are issued in Mr. Mitchell's name.
(10) Includes 47,000 shares held by the Theodore H. Strauss 1999 Irrevocable
Trust Agreement, of which Mr. Strauss is the beneficiary. Includes
2,000 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.
(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) Includes 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 shares held
by the NTS/JCS Charitable Remainder Unitrust, of which Mr. Snyder is
the trustee and a beneficiary. Includes 2,000 shares that may be
acquired upon exercise of options that are issued in Mr. Snyder's name.
(17) Includes 2,000 shares that may be acquired upon exercise of options.
In addition to the voting common stock, we have also issued a class of
nonvoting common stock entitled Series A-1 Nonvoting Common Stock. As of March
31, 2002, there were 355,728 shares of Series A-1 Nonvoting Common Stock issued
and outstanding, all of which were held by Goff Moore Strategic Partners, L.P.
10
DIRECTORS' COMPENSATION
Directors do not receive any cash fees for attending meetings. During
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.
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.
11
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 the terms of the
deferred compensation agreement 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 deferred any portion of his
salary for 2001. Consistent with 2000, his base salary is $275,000.
This report is submitted during 2001 by the members of the Compensation
Committee:
Frederick B. Hegi, Jr.
James R. Erwin
Lee Roy Mitchell
John C. Snyder
Charles David Wood
12
SUMMARY COMPENSATION TABLE
The following table shows, for the years ending December 31, 2001,
2000, and 1999, the cash compensation paid and other compensation paid or
accrued to the Chief Executive Officer and three other executive officers of
TCBI who earned and/or received a salary and bonus in excess of $100,000 (the
"Named Executives").
<Table>
<Caption>
PAYOUTS
--------------------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND COMPEN- OPTIONS/ COMPEN-
PRINCIPAL POSITION YEAR SALARY($) 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 140,000 $ 0 $ 7,200(2) 0 $ 0
and Chief Financial
Officer of TCBI
1999 $144,200 $ 0 $ 7,200(2) 0 $ 0
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 the
Bank
1999 $229,200 $ 0 $ 7,200(2) 0 $ 6,106(3)
</Table>
- --------------------------
(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 grant 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:
<Table>
<Caption>
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
</Table>
- ------------------------
(1) Value of options based on a fair market value per share of $14.50, which
is based upon the most recent private sales of common stock.
13
(2) Options issued on October 1, 1998 of which three-fifths are currently
exercisable 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 consolidated financial statements and the reviews of the
consolidated financial statements included in our Forms 10Q for 2001.
AUDIT RELATED FEES
We incurred fees of approximately $255,000 for audit related services
during 2001. Services included but are not limited 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.
14
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 Report on Form 10-K for the
fiscal year ended December 31, 2001, filed with the Securities and Exchange
Commission.
This report is submitted on behalf 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 proposals 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 director to be considered at this annual meeting, you must
deliver notice of any director nominations to us no later than the close of
business on May 10, 2002. Director nominations should be directed to:
Texas Capital Bancshares, Inc.
2100 McKinney Avenue, 9th Floor
Dallas, Texas 75201
Attn: Secretary
15
STOCKHOLDER PROPOSALS FOR ANNUAL MEETING HELD IN 2002
In accordance with Article II, Section 10 of our bylaws, stockholder
proposals for the 2003 Annual Meeting of Stockholders must be received by
November 25, 2002 to be considered for inclusion in the proxy statement and
proxy for the 2003 Annual Meeting. Proposals should be directed to:
Texas Capital Bancshares, Inc.
2100 McKinney Avenue, 9th Floor
Dallas, Texas 75201
Attn: Secretary
ANNUAL REPORT
Our Annual Report on Form 10-K accompanies this proxy statement.
16