SCHEDULE 14A
PROXY STATEMENT
Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant
þ
Filed by a Party other than the Registrant
o
Check the appropriate box:
o
|
|
Preliminary Proxy Statement
|
|
o
|
|
Confidential, for Use of the Commission Only (as Permitted by Rule 14a-6(e)(2))
|
|
þ
|
|
Definitive Proxy Statement
|
|
o
|
|
Definitive Additional Materials
|
|
o
|
|
Soliciting Material Under Rule 14a-12
|
TEXAS CAPITAL BANCSHARES, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
þ
|
|
No fee required.
|
|
o
|
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
|
|
|
|
|
|
o
|
|
Fee paid previously with preliminary materials.
|
|
o
|
|
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:
|
|
|
|
|
|
April 8, 2010
Dear TCBI Shareholder:
I am pleased to present your Companys 2009 annual report.
Additionally, earnings releases, performance information and
corporate governance may be found in the Investors section of
the Companys website at www.texascapitalbank.com.
I would also like to invite you to attend the Annual Meeting of
Shareholders of Texas Capital Bancshares, Inc., the holding
company for Texas Capital Bank, National Association:
Tuesday, May 18, 2010
10:00 a.m.
2000 McKinney Avenue, 7th Floor
Dallas, Texas 75201
214.932.6600
The attached Notice of Annual Shareholders Meeting
describes the formal business to be transacted at the Annual
Meeting. Certain directors and officers will be present at the
meeting and will be available to answer any questions you may
have.
On behalf of the board of directors and all the employees of
Texas Capital Bancshares, Inc., and our subsidiary, Texas
Capital Bank, thank you for your continued support.
Sincerely,
George F. Jones, Jr
President and Chief Executive Officer
TEXAS
CAPITAL BANCSHARES, INC.
2000 McKinney Avenue
7th Floor
Dallas, Texas 75201
NOTICE OF ANNUAL
STOCKHOLDERS MEETING
To be held May 18,
2010
NOTICE IS HEREBY GIVEN
that the annual stockholders
meeting (the Annual Meeting) of Texas Capital
Bancshares, Inc. (the Company), a Delaware
corporation, and the holding company for Texas Capital Bank,
National Association, will be on Tuesday, May 18, 2010, at
10:00 a.m. at the offices of the Company located at 2000
McKinney Avenue, 7th Floor, Dallas, Texas 75201.
In accordance with rules and regulations adopted by the
Securities and Exchange Commission (SEC), instead of
mailing a printed copy of our proxy materials to each
stockholder of record, we are furnishing proxy materials to our
stockholders on the Internet. You will not receive a printed
copy of the proxy materials, unless specifically requested. The
Notice of Internet Availability of Proxy Materials will instruct
you as to how you may access and review all of the important
information contained in the proxy materials. The Notice of
Internet Availability of Proxy Materials also instructs you as
to how you may submit your proxy on the Internet.
The Annual Meeting is for the purpose of considering and voting
upon the following matters:
|
|
|
|
1.
|
election of thirteen (13) directors for terms of one year
each or until their successors are elected and
qualified, and
|
|
|
2.
|
approval of the 2010 Long-Term Incentive Plan, and
|
|
|
3.
|
the transaction of such other business as may properly come
before the Annual Meeting or any postponements or adjournments
thereof.
|
Information about the matters to be acted upon at the Annual
Meeting is set forth in the accompanying Proxy Statement.
Stockholders of record at the close of business on
March 31, 2010 are the only stockholders entitled to notice
of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual
Meeting in person. Whether you expect to attend the Annual
Meeting or not, please vote your shares as set forth in the
Notice of Internet Availability of Proxy Materials. If you
attend the Annual Meeting, you may vote your shares in person,
even though you have previously voted your proxy on the Internet.
By order of the board of directors,
George F. Jones, Jr
President and Chief Executive Officer
April 8, 2010
Dallas, Texas
PROXY
STATEMENT
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|
|
|
6
|
|
|
|
|
8
|
|
|
|
|
16
|
|
|
|
|
17
|
|
|
|
|
17
|
|
|
|
|
17
|
|
|
|
|
17
|
|
|
|
|
17
|
|
|
|
|
19
|
|
|
|
|
19
|
|
|
|
|
19
|
|
|
|
|
20
|
|
|
|
|
23
|
|
|
|
|
23
|
|
|
|
|
30
|
|
|
|
|
31
|
|
|
|
|
31
|
|
|
|
|
32
|
|
|
|
|
33
|
|
|
|
|
34
|
|
|
|
|
34
|
|
|
|
|
34
|
|
|
|
|
35
|
|
|
|
|
36
|
|
|
|
|
36
|
|
|
|
|
37
|
|
|
|
|
37
|
|
|
|
|
37
|
|
|
|
|
38
|
|
|
|
|
38
|
|
|
|
|
38
|
|
|
|
|
39
|
|
|
|
|
39
|
|
|
|
|
39
|
|
|
|
|
39
|
|
|
|
|
39
|
|
|
|
|
A-1
|
|
TEXAS
CAPITAL BANCSHARES, INC.
2000 McKinney Avenue
7th Floor
Dallas, Texas 75201
PROXY
STATEMENT
FOR THE ANNUAL STOCKHOLDERS MEETING
ON MAY 18, 2010
MEETING
INFORMATION
This Proxy Statement is being furnished to the stockholders of
Texas Capital Bancshares, Inc. (the Company) on or
about April 8, 2010, in connection with the solicitation of
proxies by the board of directors to be voted at the annual
stockholders meeting (the Annual Meeting). The
Annual Meeting will be held on May 18, 2010, at
10:00 a.m. at the offices of the Company located at 2000
McKinney, 7th Floor, Dallas, Texas 75201. The Company is
the parent corporation of Texas Capital Bank, National
Association (the Bank).
In accordance with rules and regulations adopted by the
Securities and Exchange Commission (SEC), instead of
mailing a printed copy of our proxy materials to each
stockholder of record, we are furnishing proxy materials to our
stockholders on the Internet. You will not receive a printed
copy of the proxy materials, unless specifically requested. The
Notice of Internet Availability of Proxy Materials will instruct
you as to how you may access and review all of the important
information contained in the proxy materials. The Notice of
Internet Availability of Proxy Materials also instructs you as
to how you may submit your proxy on the Internet.
The purpose of the Annual Meeting is to consider and vote upon
the following matters:
|
|
|
|
1.
|
election of thirteen (13) directors for terms of one year
each or until their successors are elected and
qualified, and
|
|
|
2.
|
approval of the 2010 Long-Term Incentive Plan, and
|
|
|
3.
|
the transaction of such other business as may properly come
before the Annual Meeting or any postponements or adjournments
thereof.
|
RECORD
DATE AND VOTING SECURITIES
You are entitled to one vote for each share of common stock you
own.
Only those stockholders that owned shares of the Companys
common stock on March 31, 2010, 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 36,524,313 shares of common stock outstanding
held by 347 identified holders.
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 of the
Annual Meeting, the board of directors may postpone or adjourn
the Annual Meeting in order to permit the further solicitation
of proxies. Abstentions will be counted toward a quorum but will
not be counted in the votes for each of the
1
proposals presented at the Annual Meeting. Assuming a quorum is
present, abstentions will have no effect on the election of
directors; however, with respect to the proposal to approve the
2010 Long-Term Incentive Plan, abstentions will have the same
affect as a negative vote.
A broker non-vote occurs when a bank, broker or other nominee
holding shares for a beneficial owner does not vote on a
particular proposal because it does not have discretionary
voting power with respect to that item and has not received
voting instructions from the beneficial owner. A broker will not
have discretionary voting power with respect to either proposal
set forth herein. If your shares are held in the name of a bank,
broker or other holder of record, the SEC has approved a New
York Stock Exchange (NYSE) rule that changes the
matter in which your vote in the elections of directors will be
handled beginning with the upcoming Annual Meeting. In the past,
if you did not instruct the holder of record how to vote your
shares before the Annual Meeting, your broker could vote on your
behalf on the election of directors and other matters considered
to be routine under NYSE rules. Effective January 1, 2010,
your broker is no longer permitted to vote on your behalf on the
election of directors unless you provide specific instructions
by following the instructions from your broker about voting your
shares by telephone, or Internet or completing and returning the
voting instruction form. For your vote to be counted in the
election of directors, you now will need to communicate your
voting decisions to your bank, broker or other holder of record
before the date of the Annual Meeting. Please review the proxy
materials and follow the relevant instructions to vote your
shares. We hope you will exercise your rights and fully
participate as a stockholder.
SOLICITATION
OF PROXIES
It is important that you are represented by proxy or are present
in person at the Annual Meeting. The Company requests that you
vote your shares by following the instructions as set forth in
the Notice of Internet Availability of Proxy Materials. Your
proxy will be voted in accordance with the directions you
provide.
Other than the election of thirteen (13) directors and
approval of the 2010 Long-Term Incentive Plan, the Company is
not aware of any additional matters that will be presented for
consideration at the Annual Meeting. However, if any additional
matters are properly brought before the Annual Meeting, your
proxy will be voted in the discretion of the 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 the
Company,
|
|
|
2.
|
delivering to the Company 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.
|
The Companys board of directors is making this
solicitation and the Company will pay the costs of this proxy
solicitation. The directors, officers and regular employees of
the Company and the Bank may also solicit proxies by telephone
or in person but will not be paid additional compensation to do
so.
PROPOSALS FOR
STOCKHOLDER ACTION
Election
of Directors
The Company currently has thirteen (13) directors on the
board of directors and all have been nominated for re-election.
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.
2
Nominees
At the Annual Meeting, the stockholders will elect thirteen
(13) directors. The board of directors recommends a vote
FOR each of the nominees set forth below:
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
|
James R. Holland, Jr
|
|
|
66
|
|
|
Director; Chairman of the Board
|
George F. Jones, Jr.
|
|
|
66
|
|
|
Director; President and Chief Executive Officer; Chief Executive
Officer of Texas Capital Bank, N.A.
|
Peter B. Bartholow
|
|
|
61
|
|
|
Director; Chief Financial Officer
|
James H. Browning
|
|
|
60
|
|
|
Director
|
Joseph M. (Jody) Grant
|
|
|
71
|
|
|
Director
|
Frederick B. Hegi, Jr.
|
|
|
66
|
|
|
Director
|
Larry L. Helm
|
|
|
62
|
|
|
Director
|
W. W. McAllister III
|
|
|
68
|
|
|
Director
|
Lee Roy Mitchell
|
|
|
73
|
|
|
Director
|
Elysia Holt Ragusa
|
|
|
59
|
|
|
Director
|
Steven P. Rosenberg
|
|
|
51
|
|
|
Director
|
Robert W. Stallings
|
|
|
60
|
|
|
Director
|
Ian J. Turpin
|
|
|
65
|
|
|
Director
|
|
|
James R. Holland, Jr.
has been a director since June
1999 and has served as Chairman since May 2008. He has served as
the President and Chief Executive Officer of Unity Hunt, Inc., a
diversified holding company, since 1991. He has also served as
Trustee of the Lamar Hunt Trust Estate since 1991.
Mr. Holland currently serves on the board of directors of
Placid Holding Company and National CineMedia, Inc.
As our Chairman, Mr. Holland brings a wealth of knowledge
and leadership capability. His business experience and expertise
in matters of corporate governance, combined with his experience
as a board member for other public and private companies, makes
him exceptionally well qualified to continue to serve as our
Chairman and as chair of the Governance and Nominating Committee.
George F. Jones, Jr.
has served as Chief Executive
Officer since May 2008 and President since 2007. Mr. Jones
has served as a director since 1999. He also served as the Chief
Executive Officer of the Bank since its inception in December
1998 and has served as President of the Bank from December 1998
to October 2008.
As our CEO, and our former Bank President, as well as one of our
original founders, Mr. Jones has extensive knowledge of all
aspects of our business. His extensive business knowledge
combined with his drive for excellence and his demonstrated
leadership in building our Company make him highly qualified to
continue to serve as a director and our CEO.
Peter B. Bartholow
has served as the Chief Financial
Officer and as a director since October 2003. Prior to joining
us in 2003, he was managing director of a private equity firm,
served as a financial executive with EDS, and spent many years
in the banking industry as an executive officer and member of
the boards of both public and private companies.
As our CFO, Mr. Bartholow has extensive knowledge of all
aspects of our business. His previous business and financial
experience as an executive officer and director of other public
companies make him qualified to continue to serve as a director
and our CFO.
James H. Browning
has served as a director since October
2009. He recently retired as a partner at KPMG LLP, an
international accounting firm, in Houston where he served
companies in the energy, construction, manufacturing,
distribution and commercial industries. He began his career at
KPMG in 1971, becoming
3
a partner in 1980. He most recently served as KPMGs
Southwest Area Professional Practice Partner. He has also served
as an SEC Reviewing Partner and as Partner in Charge of the New
Orleans audit practice.
As a former partner with KPMG and having over 38 years in
public accounting, Mr. Browning has demonstrated leadership
capability. His public accounting experience with various
industries gives him a wealth of knowledge in dealing with
financial and accounting matters, as well as extensive knowledge
of the role of boards of directors. Mr. Browning is a
highly qualified director and an audit committee financial
expert on the Companys Audit Committee.
Joseph M. (Jody) Grant
has been a director since 1999 and
became Chairman Emeritus and Senior Executive Advisor in May
2008. He previously served as Chairman of the Board and Chief
Executive Officer since the Company commenced operations in
1998. He is also a partner and senior advisor to BankCap
Partners, LP, a private equity firm based in Dallas providing
growth oriented investments in the banking industry. He
currently serves as a director of Vignette Corporation and
formerly served as director of Chaparral Steel.
As our former Chairman and CEO, as well as one of our original
founders, Mr. Grant is exceptionally well qualified to
serve as a director. His detailed knowledge of our business as
well as his experience as an executive officer and director of
other public companies allow him to provide valuable insight to
the Board.
Frederick B. Hegi, Jr.
has been a director since
June 1999. He has been a partner of Wingate Partners, an
investment company, since he co-founded it in 1987.
Mr. Hegi currently serves as Chairman of the board of
directors of United Stationers, Inc. and as a director of Drew
Industries Incorporated.
As a current member of our board of directors who has served in
that capacity for over 10 years at Texas Capital, and as a
director with other public and private companies, Mr. Hegi
has extensive financial expertise and provides a wealth of
knowledge about the role of the board of directors and effective
corporate governance, The scope and depth of his experiences
make him extremely well qualified to be a director, to lead our
HR Committee and to serve on the Governance and Nominating
Committee.
Larry L. Helm
has been a director since January
2006. He has served as executive vice
president-finance and administration of Petrohawk Energy
Corporation, a company engaged in the acquisition, development,
production and exploration of natural gas and oil properties
located in North America since 2004. Prior to joining Petrohawk,
Mr. Helm spent 14 years with Bank One, most notably as
Chairman and CEO of Bank One Dallas.
As a former banking executive, Mr. Helm has extensive
knowledge about our industry. In addition, his current role as
an executive in an energy company and previous responsibilities
in managing energy and commercial lending groups, gives him
extremely important insight into the Companys lending
activities.
W. W. McAllister III
has been a director since
June 1999. He is a private investor. Prior to retirement, he
served for many years as CEO and director of financial services
companies engaged in the insurance and savings and loan
industries and as trustee of U.S. Global Fund Group.
With Mr. McAllisters experience in the financial
services and investment management businesses he is able to
provide the Board with valuable insight. Mr. McAllister is
an audit committee financial expert and well qualified to serve
as Chairman of the Audit Committee.
Lee Roy Mitchell
has served as a director since June
1999. He has served as Chairman of the board of directors and
Chief Executive Officer of Cinemark USA, Inc., a movie theater
operations company, since 1985.
As a longtime executive and director in the entertainment
services industry, Mr. Mitchell has demonstrated leadership
in numerous capacities. His business and leadership experience
as a CEO of a public company allows him to offer valuable
insight to our Board.
4
Elysia Holt Ragusa
has served as a director since January
2010. She is an International Director of Jones Lang LaSalle and
currently provides team leadership and has P&L
responsibility for the Central Texas market while also serving
clients in Austin, San Antonio, and Dallas/Fort Worth.
From 2001 until 2007, she served as President and Chief
Operating Officer of The Staubach Company, chaired
Staubachs Executive and Operating Committees and was a
member of its board of directors. Jones Lang LaSalle and The
Staubach Company merged in 2008. She also serves as a director
of Fossil, Inc.
As an executive and director with extensive experience in all
aspects of the commercial real estate business in Texas,
Ms. Ragusa will provide valuable insight for this important
aspect of our business. This expertise, her demonstrated
leadership capabilities and the experience gained as a member of
the board of directors of another public company is valuable to
the Company.
Steven P. Rosenberg
has served as a director since
September 2001. He is President of SPR Ventures, Inc., a private
investment company, and President of SPR Packaging LLC, a
manufacturer of flexible packaging for the food industry. He
currently serves on the board of directors of Cinemark Holdings
and PRGX Global.
As an entrepreneur in a manufacturing business in Texas, as well
as a director of other public companies, Mr. Rosenberg
offers valuable insight to the Board. Mr. Rosenberg is also
an audit committee financial expert and serves as a member of
the Audit Committee, as well as a member of the HR Committee.
Robert W. Stallings
has served as a director since August
2001. He has also served as Chairman of the board of directors
and Chief Executive Officer of Stallings Capital Group, an
investment company, since March 2001. He is currently Executive
Chairman of the Board of Gainsco, Inc, a property and casualty
insurance company. He serves as a director for Crescent Realty.
Prior to Gainsco, he acted as Chairman and CEO of an asset
management company as well as a savings bank.
With Mr. Stallings vast experience in the banking and
financial services industry, he has extensive knowledge about
our industry, which makes him highly qualified to lead our
Directors Loan Committee and to serve on the Governance
and Nominating Committee.
Ian J. Turpin
has been a director since May
2001. Since 1992, he has served as President and
director of The LBJ Holding Company and various companies
affiliated with the family of the late President of the United
States, Lyndon B. Johnson, which are involved in radio, real
estate, private equity investments and managing diversified
investment portfolios.
With Mr. Turpins business experience in a variety of
industries, he is able to offer valuable insights to the Board.
With his background in public accounting, Mr. Turpin also
qualifies as an audit committee financial expert serving as a
member of the Audit Committee.
Vote Required
To be elected, nominees for director must receive a plurality of
the votes of the shares present in person or represented by
proxy at the Annual Meeting and entitled to vote. This means
that the director nominees with the most votes are elected,
regardless of whether any nominee receives a majority of the
votes.
The board
of directors recommends a vote FOR the election of each of the
nominees.
5
Approval
of the 2010 Long-Term Incentive Plan
Upon recommendation of the Human Resources Committee of the
Board of Directors of the Company, the Board of Directors of the
Company has adopted, subject to stockholder approval, the Texas
Capital Bancshares, Inc. 2010 Long-Term Incentive Plan
(hereinafter called the 2010 Incentive Plan). The
2010 Incentive Plan is intended to enable the Company to remain
competitive and innovative in its ability to attract, motivate,
reward and retain the services of key employees, certain key
contractors, and non-employee directors. The 2010 Incentive Plan
provides for the granting of stock options, stock appreciation
rights, restricted stock, restricted stock units, performance
awards, dividend equivalent rights, and other awards which may
be granted singly, in combination, or in tandem, and which may
be paid in cash or stock. The 2010 Incentive Plan is expected to
provide flexibility to the Companys compensation methods
in order to adapt the compensation of key employees, certain key
contractors, and non-employee directors to a changing business
environment, after giving due consideration to competitive
conditions and the impact of federal tax laws.
It is the judgment of the Board of Directors of the Company that
the 2010 Incentive Plan is in the best interest of the Company
and its stockholders.
2010 Plan
Share Limits
The maximum number of shares of common stock authorized to be
issued under the 2010 Incentive Plan is 700,000. Shares are
counted against the authorization only to the extent they are
actually issued. Thus, awards which terminate by expiration,
forfeiture, cancellation, or otherwise are settled in cash in
lieu of shares, or exchanged for awards not involving shares,
shall again be available for grant under the 2010 Incentive Plan.
The following table sets forth the number of shares authorized
for future issuance along with the equity dilution represented
by the shares available for future awards as a percentage of the
common shares outstanding on March 15, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Dilution:
|
|
|
|
|
Percent of Basic
|
|
|
Total Shares
|
|
Common Shares
|
|
|
Available
|
|
Outstanding
|
|
|
Shares authorized for future awards under the 2005 Plan
|
|
|
209,000
|
|
|
|
.58
|
%
|
Requested additional shares available in the 2010 Plan
|
|
|
700,000
|
|
|
|
1.95
|
%
|
Total shares authorized for future awards after approval of the
2010 Plan
|
|
|
909,000
|
|
|
|
2.53
|
%
|
|
|
The equity overhang, or the percentage of outstanding shares
(plus shares that could be issued pursuant to the 2010 Incentive
Plan) represented by all stock incentives awarded and those
available for future awards under all Plans was 10.0%
(calculated as all shares issuable upon exercise of outstanding
stock options and vesting of outstanding restricted stock and
restricted stock units plus shares available for future award
divided by (a) basic common shares outstanding +
(b) shares in the numerator).
The following table sets forth information regarding outstanding
stock options and restricted stock and restricted stock units as
of December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
Weighted Average
|
|
Non-vested
|
|
|
|
|
Average
|
|
Remaining Years of
|
|
Restricted
|
|
|
# Outstanding
|
|
Exercise Price
|
|
Contractual Life
|
|
Stock Units
|
|
|
Stock options
|
|
|
1,167,736
|
|
|
$
|
12.07
|
|
|
|
3.52
|
|
|
|
|
|
Stock appreciation rights
|
|
|
1,206,738
|
|
|
|
16.16
|
|
|
|
6.85
|
|
|
|
|
|
Total
|
|
|
2,374,474
|
|
|
|
14.15
|
|
|
|
5.21
|
|
|
|
714,399
|
|
|
|
6
Carve-out
When employees hold
in-the-money
stock options for a long time it can artificially skew the
overhang, or the percentage of outstanding shares represented by
all stock incentives awarded and those available for future
awards under all plans. Therefore, certain proxy advisory firms
have started using a carve-out methodology for this
calculation. A company may apply the carve-out methodology for
purposes of determining the number of new shares that can be
requested, if they have sustained positive stock performance and
high equity overhang (attributable to
in-the-money
options outstanding in excess of six years), along with sound
compensation practices.
Our company has:
|
|
|
demonstrated prolonged favorable total shareholder return
(TSR) as compared to averages in the banking
industry (comparisons of TSR for the banking industry based on
NASDAQ Bank Index) through March 26, 2010
|
|
|
|
|
|
One year TSR 42.2% compared to industry performance of -16.02%
|
|
|
|
3-year TSR -4.4% compared to -45.6% for the industry
|
|
|
|
5-year TSR -12.1% compared to -37.5% for the industry;and
|
|
|
|
10-year TSR (pre-public offering) 204.0% compared to 35.2% for
the banking industry.
|
|
|
|
pay for performance practices aligned with industry standards;
|
|
|
a concentration ratio (ratio of awards granted to named
executive officers) well below the threshold established by
certain proxy advisory firms;
|
|
|
a significant portion of overhang attributed to a large
population of employees who have held stock options due to their
increasing value; and
|
|
|
not provided pension, profit sharing or other deferred
compensation programs for its officers, so stock-based
compensation more effectively links compensation to stockholder
interests by having a high proportion of total compensation
connected to the value of the Companys common stock.
|
We believe the carve-out is applicable to our Company based on
the reasons above.
The following table provides information on vested stock options
outstanding demonstrating the components of the overhang as of
March 15, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
Vested Options
|
|
Weighted Average
|
|
Remaining Years of
|
|
|
Outstanding
|
|
Exercise Price
|
|
Contractual Life
|
|
|
Substantially
in-the-money
options outstanding in excess of six years
|
|
|
695,836
|
|
|
$
|
8.45
|
|
|
|
2.68
|
|
Other options outstanding in excess of six years
|
|
|
125,520
|
|
|
|
14.26
|
|
|
|
3.75
|
|
All options outstanding less than six years
|
|
|
317,850
|
|
|
|
19.36
|
|
|
|
4.79
|
|
|
|
Substantially
in-the-money
options outstanding in excess of six years is defined by
the proxy advisory firm as options with an exercise price of
less than $14.00 and are detailed in the table below. All grants
prior to June 2003 were priced at 7.25 and have been
in-the-money
100% of the trading days since vesting. For grants subsequent to
June 2003 we have included information by grant and included the
percent (%) of time the options have been in the money since
vesting.
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
% of time Vested Options
|
|
Vested Options
|
|
Weighted Average
|
|
Remaining Years of
|
Grant Date
|
|
in the Money
|
|
Outstanding
|
|
Exercise Price
|
|
Contractual Life
|
|
|
12/16/2003
|
|
|
69
|
%
|
|
|
35,515
|
|
|
|
13.95
|
|
|
|
3.72
|
|
12/16/2003
|
|
|
62
|
%
|
|
|
35,515
|
|
|
|
13.95
|
|
|
|
3.72
|
|
12/16/2003
|
|
|
60
|
%
|
|
|
35,515
|
|
|
|
13.95
|
|
|
|
3.72
|
|
8/28/2003
|
|
|
99
|
%
|
|
|
10,000
|
|
|
|
8.25
|
|
|
|
3.41
|
|
8/11/2003
|
|
|
99
|
%
|
|
|
64,000
|
|
|
|
8.25
|
|
|
|
3.37
|
|
7/9/2003
|
|
|
99
|
%
|
|
|
50,000
|
|
|
|
8.25
|
|
|
|
3.28
|
|
2003 prior to 5/31/03
|
|
|
100
|
%
|
|
|
229,600
|
|
|
|
7.25
|
|
|
|
2.96
|
|
2002*
|
|
|
100
|
%
|
|
|
163,650
|
|
|
|
7.25
|
|
|
|
2.00
|
|
2001*
|
|
|
100
|
%
|
|
|
47,041
|
|
|
|
7.25
|
|
|
|
0.87
|
|
2000*
|
|
|
100
|
%
|
|
|
25,000
|
|
|
|
7.25
|
|
|
|
0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total substantially
in-the-money
options
|
|
|
695,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
All options granted in 2000, 2001 and 2002 were granted at the
price shown for each year
|
The Company manages equity awards to market competitive levels
to ensure that the overall compensation program attracts,
retains and motivated our employees. Burn rate is generally
calculated as all stock options, SARs, and RSUs granted in a
fiscal year divided by the number of weighted average common
shares outstanding. RSUs have comparatively long vesting periods
of 5 and 6 years. Approximately 80% of RSUs granted to
named executive officers are performance based, with early
vesting directly related to stock prices ranging from $20 per
share to $32.50. The balance of RSUs granted to named executive
officers vest over 4 years. All RSU grants are subject to
cliff vesting at the end of 5 or 6 years.
The following table sets forth information regarding awards
granted, the burn rate for each of the last three fiscal years,
and the average burn rate over the last three years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2007
|
|
|
FY 2008
|
|
|
FY 2009
|
|
|
3-Year Average
|
|
|
|
|
SARs granted
|
|
|
186,000
|
|
|
|
142,000
|
|
|
|
246,500
|
|
|
|
191,500
|
|
RSUs granted (adjusted for full
value award, or 1.5 times)
|
|
|
308,325
|
|
|
|
307,725
|
|
|
|
385,815
|
|
|
|
333,955
|
|
Weighted average common shares
outstanding
|
|
|
26,187,084
|
|
|
|
27,952,973
|
|
|
|
34,113,285
|
|
|
|
29,417,781
|
|
Burn rate
|
|
|
1.89
|
%
|
|
|
1.61
|
%
|
|
|
1.85
|
%
|
|
|
1.79
|
%
|
|
|
Description
of the 2010 Incentive Plan
The following is a brief description of the 2010 Incentive Plan.
A copy of the 2010 Incentive Plan is attached as Exhibit A
to this Proxy Statement, and the following description is
qualified in its entirety by reference to the 2010 Incentive
Plan.
Effective Date and Expiration.
The 2010
Incentive Plan will become effective on May 18, 2010,
subject to and conditioned upon stockholder approval of the 2010
Incentive Plan, and will terminate on May 17, 2020. No
award may be made under the 2010 Incentive Plan after its
expiration date, but awards made prior thereto may extend beyond
that date.
Share Authorization.
Subject to certain
adjustments, the number of the Companys common shares that
may be issued pursuant to awards under the 2010 Incentive Plan
is 700,000 shares, 100% of which may be delivered pursuant
to incentive stock options. Subject to certain adjustments, with
respect to any participant who is an officer of the Company
subject to Section 16 of the Securities Exchange Act of
1934 or a covered employee
8
as defined in Section 162(m)(3) of the Internal Revenue
Code of 1986, as amended (the Code), a maximum of
200,000 shares may be granted in any one year in the form
of any award to such participant, of which a maximum of
(i) 100,000 shares may be granted to such participant
in the form of stock options or stock appreciation rights, and
(ii) 100,000 shares may be granted to such participant
in the form of restricted stock, restricted stock units,
performance awards or other stock based awards. In addition, no
participant may receive in any calendar year performance-based
stock awards with an aggregate value of more than $1,500,000.
The 2010 Incentive Plan also provides that no more than 10% of
the common shares that may be issued pursuant to an award under
the 2010 Incentive Plan may be designated as exempt
shares. The Human Resources Committee has greater
flexibility to accelerate the vesting for shares designated as
exempt shares.
Shares to be issued may be made available from authorized but
unissued common shares, common shares held by the Company in its
treasury, or common shares purchased by the Company on the open
market or otherwise. During the term of the 2010 Incentive Plan,
the Company will at all times reserve and keep enough common
shares available to satisfy the requirements of the 2010
Incentive Plan. If an award under the 2010 Incentive Plan is
cancelled, forfeited or expires, in whole or in part, the shares
subject to such forfeited, expired or cancelled award may again
be awarded under the 2010 Incentive Plan. In the event that
previously acquired common shares are delivered to the Company
in full or partial payment of the option price for the exercise
of a stock option granted under the 2010 Incentive Plan, the
number of common shares available for future awards under the
2010 Incentive Plan shall be reduced only by the net number of
common shares issued upon the exercise of the stock option or
settlement of an award. Awards that may be satisfied either by
the issuance of common shares or by cash or other consideration
shall be counted against the maximum number of common shares
that may be issued under the 2010 Incentive Plan only during the
period that the award is outstanding or to the extent the award
is ultimately satisfied by the issuance of common shares. Awards
will not reduce the number of common shares that may be issued,
however, if the settlement of the award will not require the
issuance of common shares. Only shares forfeited back to the
Company, shares cancelled on account of termination, expiration
or lapse of an award, shares surrendered in payment of the
exercise price of an option or shares withheld for payment of
applicable employment tax withholding obligations resulting from
the exercise of a stock option shall again be available for
grant of incentive stock options under the 2010 Incentive Plan,
but shall not increase the maximum number of shares described
above as the maximum number of common shares that may be
delivered pursuant to incentive stock options.
On March 31, 2010, the fair market value of a common share
of the Company was $18.99.
Administration.
The 2010 Incentive Plan will
be administered by the Human Resources Committee of the Board of
Directors (the Committee). Currently, the Committee
is comprised of three independent directors who are
non-employee directors in accordance with
Rule 16b-3
under the Securities Exchange Act of 1934, and outside
directors in accordance with Section 162(m) of the
Code. The Committee may delegate certain duties to one or more
officers of the Company as provided in the 2010 Incentive Plan.
The Committee will determine the persons to whom awards are to
be made, determine the type, size and terms of awards, interpret
the 2010 Incentive Plan, establish and revise rules and
regulations relating to the 2010 Incentive Plan and make any
other determinations that it believes necessary for the
administration of the 2010 Incentive Plan.
Eligibility.
Employees (including any employee
who is also a director or an officer), contractors, and
non-employee directors of the Company or its subsidiaries whose
judgment, initiative and efforts contributed to or may be
expected to contribute to the successful performance of the
Company are eligible to participate in the 2010 Incentive Plan.
As of March 31, 2010, the Company had approximately
150 employees, and 11 directors who would be eligible
under the 2010 Incentive Plan.
Financial Effect of Awards.
The Company will
receive no monetary consideration for the granting of awards
under the 2010 Incentive Plan, unless otherwise provided when
granting restricted stock or restricted stock units. The Company
will receive no monetary consideration other than the option
price for common shares
9
issued to participants upon the exercise of their stock options
and the Company will receive no monetary consideration upon the
exercise of stock appreciation rights.
Stock Options.
The Committee may grant either
incentive stock options qualifying under Section 422 of the
Code or non-qualified stock options, provided that only
employees of the Company and its subsidiaries (excluding
subsidiaries that are not corporations) are eligible to receive
incentive stock options. Stock options may not be granted with
an option price less than 100% of the fair market value of a
common share on the date the stock option is granted. If an
incentive stock option is granted to an employee who owns or is
deemed to own more than 10% of the combined voting power of all
classes of stock of the Company (or any parent or subsidiary),
the option price shall be at least 110% of the fair market value
of a common share on the date of grant. Recipients of stock
options may pay the option exercise price (i) in cash,
check, bank draft or money order payable to the order of the
Company, (ii) by delivering to the Company common shares
already owned by the participant having a fair market value
equal to the aggregate option exercise price and that the
participant has not acquired from the Company within six months
prior to the exercise date, (iii) by delivering to the
Company or its designated agent an executed irrevocable option
exercise form together with irrevocable instructions from the
participant to a broker or dealer, reasonably acceptable to the
Company, to sell certain of the common shares purchased upon the
exercise of the option or to pledge such shares to the broker as
collateral for a loan from the broker and to deliver to the
Company the amount of sale or loan proceeds necessary to pay the
purchase price, and (iv) by any other form of valid
consideration that is acceptable to the Committee in its sole
discretion.
Stock options will be exercisable as set forth in the option
agreements pursuant to which they are issued, but in no event
will stock options be exercisable after the expiration of ten
(10) years from the date of grant. Options are not
transferable other than by will or the laws of descent and
distribution, except that the Committee may permit further
transferability of a non-qualified stock option and, unless
otherwise provided in the option agreement, a non-qualified
stock option may be transferred to: (1) one or more members
of the immediate family of the participant; (2) a trust for
the benefit of one or more members of the immediate family of
the participant; (3) a partnership, the sole partners of
which are the participant, members of the immediate family of
the participant, and entities which are controlled by the
participant
and/or
members of the immediate family of the participant; or
(4) a split interest trust or pooled income fund described
in Section 2522(c)(2) of the Code, provided that
(x) there shall be no consideration for any such transfer;
(y) the option agreement must expressly provide for
transferability; and (z) subsequent transfers are
prohibited other than by will or the laws of descent and
distribution.
Stock Appreciation Rights.
Stock appreciation
rights (SARs) may, but need not, relate to options.
A SAR is the right to receive an amount equal to the excess of
the fair market value of a common share on the date of exercise
over the fair market value of a common share on the date of
grant. A SAR granted in tandem with a stock option will require
the holder, upon exercise, to surrender the related stock option
with respect to the number of shares as to which the SAR is
exercised. The Committee will determine the terms of each SAR at
the time of the grant. Any SAR may not be granted at less than
the fair market value of a common share on the date the SAR is
granted and cannot have a term of longer than ten
(10) years. Distributions to the recipient may be made in
common shares, in cash or in a combination of both as determined
by the Committee. SARs may be transferable in a similar manner
as non-qualified stock options, as described above.
Restricted Stock and Restricted Stock
Units.
Restricted stock consists of shares that
are transferred or sold by the Company to a participant, but are
subject to substantial risk of forfeiture and to restrictions on
their sale or other transfer by the participant. Restricted
stock units are the right to receive common shares at a future
date in accordance with the terms of such grant upon the
attainment of certain conditions specified by the Committee,
which include substantial risk of forfeiture and restrictions on
their sale or other transfer by the participant. The Committee
determines the eligible participants to whom, and the time or
times at which, grants of restricted stock or restricted stock
units will be made, the number of shares or units to be granted,
the
10
price to be paid, if any, the time or times within which the
shares covered by such grants will be subject to forfeiture, the
time or times at which the restrictions will terminate, and all
other terms and conditions of the grants. Restrictions or
conditions could include, but are not limited to, the attainment
of performance goals (as described below), continuous service
with the Company, the passage of time or other restrictions or
conditions. The value of the restricted stock units may be paid
in common shares, cash, or a combination of both, as determined
by the Committee.
Performance Awards.
The Committee may grant
performance awards payable in cash or common shares at the end
of a specified performance period. Payment will be contingent
upon achieving pre-established performance goals (as discussed
below) by the end of the performance period. The Committee will
determine the length of the performance period, the maximum
payment value of an award, and the minimum performance goals
required before payment will be made. Subject to Committee
discretion, a performance award will terminate for all purposes
if the participant is not continuously employed by the Company
at all times during the applicable performance period.
Other Awards.
The Committee may grant other
forms of awards payable in cash or common shares if the
Committee determines that such other form of award is consistent
with the purpose and restrictions of the 2010 Incentive Plan.
The terms and conditions of such other form of award shall be
specified by the grant. Such other awards may be granted for no
cash consideration, for such minimum consideration as may be
required by applicable law, or for such other consideration as
may be specified by the grant.
Dividend Equivalent Rights.
The Committee may
grant a dividend equivalent right either as a component of
another award or as a separate award. The terms and conditions
of the dividend equivalent right shall be specified by the
grant. Dividend equivalents credited to the holder of a dividend
equivalent right may be paid currently or may be deemed to be
reinvested in additional common shares. Any such reinvestment
shall be at the fair market value at the time thereof. Dividend
equivalent rights may be settled in cash or common shares.
Performance Goals.
Awards of restricted stock,
restricted stock units, performance awards and other awards
(whether relating to cash or common shares) under the 2010
Incentive Plan may be made subject to the attainment of
performance goals relating to one or more business criteria
which, where applicable, shall be within the meaning of
Section 162(m) of the Code and consist of one or more or
any combination of the following criteria: growth in interest
income and expense; net interest margin; efficiency ratio;
growth in non-interest income and non-interest expense and
ratios to earnings assets; net revenue growth and ratio to
earning assets; capital ratios; asset or liability interest rate
sensitivity and gap; effective tax rate; deposit growth and
composition; liquidity management; securities portfolio (value,
yield, spread, maturity, or duration); earning asset growth and
composition (loans, securities); non-interest income (including,
fees, premiums and commissions, loans, wealth management,
treasury management, insurance, funds management); overhead
ratios, productivity ratios (including EA/FTE, pre-tax
income/FTE); credit quality measures; return on assets; return
on equity; economic value of equity EVE; compliance ratings;
internal controls; enterprise risk measures (including interest
rate, loan concentrations, portfolio composition, credit
quality, operational measures, compliance ratings, balance
sheet, liquidity, insurance); cash flow; cost; revenues; sales;
ratio of debt to debt plus equity; net borrowing, credit quality
or debt ratings; profit before tax; economic profit; earnings
before interest and taxes; earnings before interest, taxes,
depreciation and amortization; gross margin; earnings per share
(whether on a pre-tax, after-tax, operational or other basis);
operating earnings; capital expenditures; expenses or expense
levels; economic value added; ratio of operating earnings to
capital spending or any other operating ratios; free cash flow;
net profit; net sales; net asset value per share; the
accomplishment of mergers, acquisitions, dispositions, public
offerings or similar extraordinary business transactions; sales
growth; price of the Companys common shares; return on
assets, equity or stockholders equity; market share;
inventory levels, inventory turn or shrinkage; or total return
to stockholders (Performance Criteria). Any
Performance Criteria may be used to measure the performance of
the Company as a whole or any business unit of the Company and
may be measured relative to a peer group or index. Any
11
Performance Criteria may include or exclude
(i) extraordinary, unusual
and/or
non-recurring items of gain or loss, (ii) gains or losses
on the disposition of a business, (iii) changes in tax or
accounting regulations or laws, (iv) the effect of a merger
or acquisition, as identified in the Companys quarterly
and annual earnings releases, or (v) other similar
occurrences. In all other respects, Performance Criteria shall
be calculated in accordance with the Companys financial
statements, under generally accepted accounting principles, or
under a methodology established by the Committee prior to the
issuance of an award which is consistently applied and
identified in the audited financial statements, including
footnotes, or the Compensation Discussion and Analysis section
of the Companys Annual Report on
Form 10-K.
However, to the extent Section 162(m) of the Code is
applicable, the Committee may not in any event increase the
amount of compensation payable to an individual upon the
attainment of a Performance Goal.
Vesting of Awards.
Except as otherwise
provided below, the Committee, in its sole discretion, may
determine that an award will be immediately vested in whole or
in part, or that all or any portion may not be vested until a
date, or dates, subsequent to its date of grant, or until the
occurrence of one or more specified events, subject in any case
to the terms of the 2010 Incentive Plan. If the Committee
imposes conditions upon vesting, then, except as otherwise
provided below, subsequent to the date of grant, the Committee
may, in its sole discretion, accelerate the date on which all or
any portion of the award may be vested. The Committee must grant
all full value awards (i.e., awards with a net
benefit to the participant, without regard to certain
restrictions, equal to the aggregate fair market value of the
total common shares subject to the award) in accordance with the
following provisions: (i) all full value awards granted by
the Committee that constitute performance awards must vest no
earlier than one (1) year after the date of grant;
(ii) all full value awards granted by the Committee that
constitute tenure awards (i.e., awards that vest
over time based on the participants continued employment with or
service to the Company) must vest no earlier than over the three
(3) year period commencing on the date of grant on a pro
rata basis; and (iii) the Committee may not accelerate the
date on which all or any portion of a full value award may be
vested or waive the period an award is restricted on a full
value award except upon the participants death, total and
permanent disability, retirement, or the occurrence of a
change in control. Notwithstanding the foregoing,
for full value awards, the Committee may, in its sole
discretion, grant awards with more favorable vesting provisions,
accelerate the vesting, or waive the period an award is
restricted, at any time, provided that the common shares subject
to such awards shall be designated as exempt shares. As
discussed above, only 10% of the common shares that may be
issued pursuant to an award under the 2010 Incentive Plan may be
designated as exempt shares.
Adjustments Upon Changes in Capitalization.
In
the event that any dividend or other distribution,
recapitalization, stock split, reverse stock split, rights
offering, reorganization, merger, consolidation,
split-up,
spin-off, split-off, combination, subdivision, repurchase, or
exchange of the common shares or other securities of the
Company, issuance of warrants or other rights to purchase common
shares or other securities of the Company, or other similar
corporate transaction or event affects the fair value of an
award, then the Committee shall adjust any or all of the
following so that the fair value of the award immediately after
the transaction or event is equal to the fair value of the award
immediately prior to the transaction or event (i) the
number of shares and type of common stock (or the securities or
property) which thereafter may be made the subject of awards,
(ii) the number of shares and type of common shares (or
other securities or property) subject to outstanding awards,
(iii) the number of shares and type of common shares (or
other securities or property) specified as the annual
per-participant limitation under the 2010 Incentive Plan,
(iv) the option price of each outstanding award,
(v) the amount, if any, the Company pays for forfeited
common shares in accordance with the terms of the 2010 Incentive
Plan, and (vi) the number of or exercise price of common
shares then subject to outstanding SARs previously granted and
unexercised under the 2010 Incentive Plan to the end that the
same proportion of the Companys issued and outstanding
common shares in each instance shall remain subject to exercise
at the same aggregate exercise price; provided however, that the
number of common shares (or other securities or property)
subject to any award shall always be a whole number.
Notwithstanding the foregoing, no such adjustment shall be made
or authorized to the extent that such adjustment would cause the
12
2010 Incentive Plan or any stock option to violate
Section 422 of the Code or Section 409A of the Code.
All such adjustments must be made in accordance with the rules
of any securities exchange, stock market, or stock quotation
system to which the Company is subject.
Amendment or Discontinuance of the Plan.
The
Board of Directors of the Company may, at any time and from time
to time, without the consent of the participants, alter, amend,
revise, suspend or discontinue the 2010 Incentive Plan in whole
or in part; provided, however, that (i) no amendment that
requires stockholder approval in order for the 2010 Incentive
Plan and any awards under the 2010 Incentive Plan to continue to
comply with Sections 162(m), 421, and 422 of the Code
(including any successors to such Sections, or other applicable
law) or any applicable requirements of any securities exchange
or inter-dealer quotation system on which the Companys
stock is listed or traded, shall be effective unless such
amendment is approved by the requisite vote of the
Companys stockholders entitled to vote on the amendment;
and (ii) unless required by law, no action by the Board of
Directors of the Company regarding amendment or discontinuance
of the 2010 Incentive Plan may adversely affect any rights of
any participants or obligations of the Company to any
participants with respect to any outstanding award under the
2010 Incentive Plan without the consent of the affected
participant.
Notwithstanding the foregoing, no amendment to the 2010
Incentive Plan that increases the benefits accrued to
participants, increases the maximum number of common shares
which may be issued under the 2010 Incentive Plan, or modifies
the requirements for participation in the 2010 Incentive Plan
shall be effective unless such amendment shall be approved by
the stockholders of the Company entitled to vote thereon in the
manner set forth in the Companys articles of incorporation
and bylaws. Any amendments made shall, to the extent deemed
necessary or advisable by the Committee, be applicable to any
outstanding awards theretofore granted under the 2010 Incentive
Plan, notwithstanding any contrary provisions contained in any
award agreement. In the event of any such amendment to the 2010
Incentive Plan, the holder of any award outstanding under the
2008 Plan shall, upon request of the Committee and as a
condition to the exercisability thereof, execute a conforming
amendment in the form prescribed by the Committee to any award
agreement relating thereto.
Plan Benefits.
To date, the Company has not
granted any awards under the 2010 Incentive Plan. Future
benefits under the 2010 Incentive Plan are not currently
determinable.
Federal Income Tax Consequences.
The following
is a brief summary of certain federal income tax consequences
relating to the transactions described under the 2010 Incentive
Plan as set forth below. This summary does not purport to
address all aspects of federal income taxation and does not
describe state, local or foreign tax consequences. This
discussion is based upon provisions of the Code and the treasury
regulations issued thereunder, and judicial and administrative
interpretations under the Code and treasury regulations, all as
in effect as of the date hereof, and all of which are subject to
change (possibly on a retroactive basis) or different
interpretation.
Law Affecting Deferred Compensation.
In 2004,
Section 409A was added to the Code to regulate all types of
deferred compensation. If the requirements of Section 409A
of the Code are not satisfied, deferred compensation and
earnings thereon will be subject to tax as it vests, plus an
interest charge at the underpayment rate plus 1% and a 20%
penalty tax. Certain performance awards, stock options, stock
appreciation rights, restricted stock units and certain types of
restricted stock are subject to Section 409A of the Code.
Incentive Stock Options.
A participant will
not recognize income at the time an incentive stock option is
granted. When a participant exercises an incentive stock option,
a participant also generally will not be required to recognize
income (either as ordinary income or capital gain). However, to
the extent that the fair market value (determined as of the date
of grant) of the common shares with respect to which the
participants incentive stock options are exercisable for
the first time during any year exceeds $100,000, the incentive
stock options for the common shares over $100,000 will be
treated as non-qualified stock options, and not incentive
13
stock options, for federal tax purposes, and the participant
will recognize income as if the incentive stock options were
non-qualified stock options. In addition to the foregoing, if
the fair market value of the common shares received upon
exercise of an incentive stock option exceeds the exercise
price, then the excess may be deemed a tax preference adjustment
for purposes of the federal alternative minimum tax calculation.
The federal alternative minimum tax may produce significant tax
repercussions depending upon the participants particular
tax status.
The tax treatment of any common shares acquired by exercise of
an incentive stock option will depend upon whether the
participant disposes of his or her shares prior to two years
after the date the incentive stock option was granted or one
year after the common shares were transferred to the participant
(referred to as the Holding Period). If a
participant disposes of common shares acquired by exercise of an
incentive stock option after the expiration of the Holding
Period, any amount received in excess of the participants
tax basis for such shares will be treated as short-term or
long-term capital gain, depending upon how long the participant
has held the common shares. If the amount received is less than
the participants tax basis for such shares, the loss will
be treated as short-term or long-term capital loss, depending
upon how long the participant has held the shares.
If the participant disposes of common shares acquired by
exercise of an incentive stock option prior to the expiration of
the Holding Period, the disposition will be considered a
disqualifying disposition. If the amount received
for the common shares is greater than the fair market value of
the common shares on the exercise date, then the difference
between the incentive stock options exercise price and the
fair market value of the common shares at the time of exercise
will be treated as ordinary income for the tax year in which the
disqualifying disposition occurs. The
participants basis in the common shares will be increased
by an amount equal to the amount treated as ordinary income due
to such disqualifying disposition. In addition, the
amount received in such disqualifying disposition
over the participants increased basis in the common shares
will be treated as capital gain. However, if the price received
for common shares acquired by exercise of an incentive stock
option is less than the fair market value of the common shares
on the exercise date and the disposition is a transaction in
which the participant sustains a loss which otherwise would be
recognizable under the Code, then the amount of ordinary income
that the participant will recognize is the excess, if any, of
the amount realized on the disqualifying disposition
over the basis of the common shares.
Non-qualified Stock Options.
A participant
generally will not recognize income at the time a non-qualified
stock option is granted. When a participant exercises a
non-qualified stock option, the difference between the option
price and any higher market value of the common shares on the
date of exercise will be treated as compensation taxable as
ordinary income to the participant. The participants tax
basis for common shares acquired under a non-qualified stock
option will be equal to the option price paid for such common
shares, plus any amounts included in the participants
income as compensation. When a participant disposes of common
shares acquired by exercise of a non-qualified stock option, any
amount received in excess of the participants tax basis
for such shares will be treated as short-term or long-term
capital gain, depending upon how long the participant has held
the common shares. If the amount received is less than the
participants tax basis for such shares, the loss will be
treated as short-term or long-term capital loss, depending upon
how long the participant has held the shares.
Special Rule if Option Price is Paid for in Common
Shares.
If a participant pays the option price of
a non-qualified stock option with previously-owned shares of the
Companys common shares and the transaction is not a
disqualifying disposition of common shares previously acquired
under an incentive stock option, the common shares received
equal to the number of common shares surrendered are treated as
having been received in a tax-free exchange. The
participants tax basis and holding period for these common
shares received will be equal to the participants tax
basis and holding period for the common shares surrendered. The
common shares received in excess of the number of common shares
surrendered will be treated as compensation taxable as ordinary
income to the participant to the extent of their fair market
value. The
14
participants tax basis in these common shares will be
equal to their fair market value on the date of exercise, and
the participants holding period for such shares will begin
on the date of exercise.
If the use of previously acquired common shares to pay the
exercise price of a non-qualified stock option constitutes a
disqualifying disposition of common shares previously acquired
under an incentive stock option, the participant will have
ordinary income as a result of the disqualifying disposition in
an amount equal to the excess of the fair market value of the
common shares surrendered, determined at the time such common
shares were originally acquired on exercise of the incentive
stock option, over the aggregate option price paid for such
common shares. As discussed above, a disqualifying disposition
of common shares previously acquired under an incentive stock
option occurs when the participant disposes of such shares
before the end of the Holding Period. The other tax results from
paying the exercise price with previously-owned shares are as
described above, except that the participants tax basis in
the common shares that are treated as having been received in a
tax-free exchange will be increased by the amount of ordinary
income recognized by the participant as a result of the
disqualifying disposition.
Restricted Stock.
A participant who receives
Restricted Stock generally will recognize as ordinary income the
excess, if any, of the fair market value of the common shares
granted as Restricted Stock at such time as the common shares
are no longer subject to forfeiture or restrictions, over the
amount paid, if any, by the participant for such common shares.
However, a participant who receives Restricted Stock may make an
election under Section 83(b) of the Code within
30 days of the date of transfer of the common shares to
recognize ordinary income on the date of transfer of the common
shares equal to the excess of the fair market value of such
shares (determined without regard to the restrictions on such
common shares) over the purchase price, if any, of such shares.
If a participant does not make an election under
Section 83(b) of the Code, then the participant will
recognize as ordinary income any dividends received with respect
to common shares. At the time of sale of such shares, any gain
or loss realized by the participant will be treated as either
short-term or long-term capital gain (or loss) depending on the
holding period. For purposes of determining any gain or loss
realized, the participants tax basis will be the amount
previously taxable as ordinary income, plus the purchase price
paid by the participant, if any, for such shares.
Stock Appreciation Rights.
Generally, a
participant who receives a stand-alone SAR will not recognize
taxable income at the time the stand-alone SAR is granted,
provided that the SAR is exempt from or complies with
Section 409A of the Code. If an employee receives the
appreciation inherent in the SARs in cash, the cash will be
taxed as ordinary income to the recipient at the time it is
received. If a recipient receives the appreciation inherent in
the SARs in stock, the spread between the then current market
value and the grant price, if any, will be taxed as ordinary
income to the employee at the time it is received. In general,
there will be no federal income tax deduction allowed to the
Company upon the grant or termination of SARs. However, upon the
exercise of a SAR, the Company will be entitled to a deduction
equal to the amount of ordinary income the recipient is required
to recognize as a result of the exercise.
Other Awards.
In the case of an award of
restricted stock units, performance awards, dividend equivalent
rights or other stock or cash awards, the recipient will
generally recognize ordinary income in an amount equal to any
cash received and the fair market value of any shares received
on the date of payment or delivery, provided that the award is
exempt from or complies with Section 409A of the Code. In
that taxable year, the Company will receive a federal income tax
deduction in an amount equal to the ordinary income which the
participant has recognized.
Federal Tax Withholding.
Any ordinary income
realized by a participant upon the exercise of an award under
the 2010 Incentive Plan is subject to withholding of federal,
state and local income tax and to withholding of the
participants share of tax under the Federal Insurance
Contribution Act and the Federal Unemployment Tax Act. To
satisfy federal income tax withholding requirements, the Company
will have the right to require that, as a condition to delivery
of any certificate for common shares, the participant remit to
the Company an
15
amount sufficient to satisfy the withholding requirements.
Alternatively, the Company may withhold a portion of the common
shares (valued at fair market value) that otherwise would be
issued to the participant to satisfy all or part of the
withholding tax obligations or may, if the Company consents,
accept delivery of common shares with an aggregate fair market
value that equals or exceeds the required tax withholding
payment.
Withholding does not represent an increase in the
participants total income tax obligation, since it is
fully credited toward his or her tax liability for the year.
Additionally, withholding does not affect the participants
tax basis in the common shares. Compensation income realized and
tax withheld will be reflected on
Forms W-2
supplied by the Company to employees by January 31 of the
succeeding year. Deferred compensation that is subject to
Section 409A of the Code will be subject to certain federal
income tax withholding and reporting requirements.
Tax Consequences to the Company.
To the extent
that a participant recognizes ordinary income in the
circumstances described above, the Company will be entitled to a
corresponding deduction provided that, among other things, the
income meets the test of reasonableness, is an ordinary and
necessary business expense, is not an excess parachute
payment within the meaning of Section 280G of the
Code and is not disallowed by the $1,000,000 limitation on
certain executive compensation under Section 162(m) of the
Code.
Million Dollar Deduction Limit and Other Tax
Matters.
The Company may not deduct compensation
of more than $1,000,000 that is paid to an individual who, on
the last day of the taxable year, is either the Companys
principal executive officer or an individual who is among the
three highest compensated officers for the taxable year (other
than the principal executive officer or the principal financial
officer). The limitation on deductions does not apply to certain
types of compensation, including qualified performance-based
compensation, and only applies to compensation paid by a
publicly-traded corporation (and not compensation paid by
non-corporate entities). To the extent that the Company
determines that Section 162(m) of the Code will apply to
any awards granted pursuant to the 2010 Incentive Plan, the
Company intends that such awards will be constructed so as to
constitute qualified performance-based compensation and, as
such, will be exempt from the $1,000,000 limitation on
deductible compensation.
If an individuals rights under the 2010 Incentive Plan are
accelerated as a result of a change in control and the
individual is a disqualified individual under
Section 280G of the Code, the value of any such accelerated
rights received by such individual may be included in
determining whether or not such individual has received an
excess parachute payment under Section 280G of
the Code, which could result in (i) the imposition of a 20%
Federal excise tax (in addition to Federal income tax) payable
by the individual on the value of such accelerated rights, and
(ii) the loss by the Company of a compensation deduction.
Interest of Directors and Executive
Officers.
All members of the Board of Directors
and all executive officers of the Company are eligible for
awards under the 2010 Incentive Plan and thus, have a personal
interest in the approval of the 2010 Incentive Plan.
Vote
Required
The proposal to approve the 2010 Long-Term Incentive Plan
requires the affirmative vote of the holders of a majority of
the common shares present, in person or by proxy, and entitled
to vote on the proposal.
The board
of directors recommends a vote FOR approval of the 2010
Long-Term Incentive Plan.
Other
Matters
The Company does 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.
16
BOARD AND
COMMITTEE MATTERS
Board of
Directors
The business affairs of the Company are managed under the
direction of the board of directors. The board of directors
meets on a regularly scheduled basis during the fiscal year of
the Company to review significant developments affecting the
Company and to act on matters requiring approval by the board of
directors. It also holds special meetings as required from time
to time when important matters arise, requiring action between
scheduled meetings. The board of directors had six regularly
scheduled meetings and one special meeting during the 2009
fiscal year. Each of the Companys directors participated
in at least 75% of the meetings of the board of directors and
the committees of the board on which the director served during
2009.
Director
Independence
The board of directors has determined that each director other
than Joseph M. Grant, George F. Jones, Jr., and Peter B.
Bartholow qualifies as an Independent Director as
defined in the Nasdaq Stock Market Listing Rules and as further
defined by applicable statues and regulations.
Board
Leadership Structure and Risk Oversight
Under the Companys Board leadership structure, the CEO and
Chairman positions are held by two separate individuals. James
R. Holland, Jr acts as a non-employee Chairman and George F.
Jones is the CEO. The Board determined that this was the most
effective way for its leadership to be structured and believes
this is a best practice for governance in its industry.
The Company has intensified its focus on risk evident in the
industry, its markets and those related to its unique business
model. As a result, the Company created a Risk Management
Committee (RMC) which operates under the direction
of the Audit Committee of the board of directors. The Audit
Committee approved the RMCs charter and defined scope of
activities. The RMC is comprised of executives responsible for
all major categories of risk and reports to the Audit Committee
at least quarterly. The Audit Committee then reports to the
Board at least quarterly on any activities of the RMC. If there
were any risk matters requiring attention, the RMC would alert
the Audit Committee and then elevate any matters necessary to
the Board.
Committees
of the Board of Directors and Meeting Attendance
The board of directors had three standing committees during 2009.
|
|
|
|
|
Governance and Nominating Committee.
The
Governance and Nominating Committee has the power to act on
behalf of the board of directors and to direct and manage the
business and affairs of the Company whenever the board of
directors is not in session. Governance and Nominating Committee
members are James R. Holland, Jr. (Chairman), Frederick B.
Hegi, Jr., and Robert W. Stallings. The Committee evaluates
and recommends candidates for election as directors, makes
recommendations concerning the size and composition of the board
of directors, develops and implements the Companys
corporate governance policies, develops specific criteria for
director independence and assesses the effectiveness of the
board of directors. Each member of the Committee is an
independent director. The Companys board of directors has
adopted a charter for the Governance and Nominating Committee. A
current copy of the charter is available on the Companys
website at
www.texascapitalbank.com
. During 2009, the
Governance and Nominating Committee met twenty five times.
During 2009, the Governance and Nominating Committee acted as
the Pricing Committee for the offering of 4.6 million
shares of the Companys common stock in May 2009. One of
the twenty five meetings noted above was a pricing meeting.
|
17
In evaluating and determining whether to nominate a candidate
for a position on the Companys board of directors, the
Governance and Nominating Committee considers high professional
ethics and values, relevant management experience and a
commitment to enhancing stockholder value. In evaluating
candidates for nomination, the Committee utilizes a variety of
methods. The Committee considers diversity in identifying
nominees for director. Primarily, the Committee looks for
diversity in professional experiences and skills to ensure the
Board is comprised of a group of individuals who will be able to
contribute a variety of viewpoints which the Committee believes
is important in ensuring that the Board exercises broad judgment
and diligence in their role. The Committee regularly assesses
the size of the board of directors, whether any vacancies are
expected due to retirement or otherwise, and the need for
particular expertise on the board of directors. Candidates may
come to the attention of the Committee from current directors,
stockholders, professional search firms, officers or other
persons. The Committee will review all candidates in the same
manner regardless of the source of the recommendation.
|
|
|
|
|
Audit Committee.
The Company has an Audit
Committee comprised of independent directors that reviews the
professional services and independence of the Companys
independent registered public accounting firm and its accounts,
procedures and internal controls. The board of directors has
adopted a written charter for the Audit Committee. A current
copy of the charter is available on the Companys website
at
www.texascapitalbank.com
. The Audit Committee
recommends to the board of directors the firm selected to be the
Companys independent registered public accounting firm and
monitors the performance of such firm, reviews and approves the
scope of the annual audit, reviews and evaluates with the
independent registered public accounting firm the Companys
annual audit and annual consolidated financial statements. The
Committee reviews with management the status of internal
accounting controls, evaluates problem areas having a potential
financial impact on the Company that may be brought to its
attention by management, the independent registered public
accounting firm or the board of directors, and evaluates all of
the Companys public financial reporting documents. The
Committee also directs the activities of the Companys Risk
Management Committee which is comprised of key members of
management, including the CEO, CFO, President of the Bank and
others with responsibility for credit policy and operations. The
Audit Committee is comprised of four Independent directors: W.
W. McAllister III (Chairman), James H. Browning, Steven P.
Rosenberg, and Ian J. Turpin. During 2009, the Audit Committee
met five times.
|
Audit Committee Financial Expert.
The board of
directors has determined that each of the four audit committee
members is financially literate under the current listing
standards of Nasdaq. The board of directors also determined that
all four members qualify as audit committee financial
experts as defined by the SEC and therefore satisfy the
Nasdaq Stock Markets financial sophistication requirements
as well.
|
|
|
|
|
Human Resources Committee.
The Human Resources
Committee (HR Committee) is empowered to advise
management and make recommendations to the board of directors
with respect to the compensation and other employment benefits
of executive officers and key employees of the Company. The HR
Committee also administers the Companys long-term
incentive stock plans for officers and key employees and the
Companys incentive bonus programs for executive officers
and employees. A copy of the HR Committee Charter is available
on the Companys website at
www.texascapitalbank.com.
The HR Committee members are
Frederick B. Hegi, Jr. (Chairman), Lee Roy Mitchell, and
Steven P. Rosenberg. During 2009, the Human Resources Committee
met five times.
|
18
Communications
With the Board
Stockholders may communicate with the board of directors,
including the non-management directors, by sending an
e-mail
to
bod@texascapitalbank.com
or by sending a letter to the
board of directors,
c/o Corporate
Secretary, 2000 McKinney Avenue,
7
th
Floor, Dallas, Texas 75201. The Corporate Secretary has the
authority to disregard any inappropriate communications or to
take other appropriate actions with respect to any such
inappropriate communications. If deemed an appropriate
communication, the Corporate Secretary will submit your
correspondence to the Chairman of the board or to any specific
director to whom the correspondence is directed.
Report of
the Audit Committee
The Audit Committees general role as an audit committee is
to assist the board of directors in overseeing the
Companys financial reporting process and related matters.
Each member of the Audit Committee is Independent as
independence for audit committee members is defined by the
Nasdaq Stock Market Listing Rules.
The Audit Committee has reviewed and discussed with the
Companys management and the Companys independent
registered public accounting firm the audited financial
statements of the Company contained in the Companys Annual
Report on Form 10K for the year ended December 31,
2009.
The Audit Committee has also discussed with the Companys
independent registered public accounting firm the matters
required to be discussed pursuant to Statement on Auditing
Standards No. 61
Communication with Audit Committees
(as amended). The Audit Committee has received and reviewed
the written disclosures and the letter from the Companys
independent registered public accounting firm required by
Rule 3526 of the Public Company Accounting Oversight Board,
Communication with Audit Committees Concerning
Independence
, and has discussed with the independent
registered public accounting firm the firms 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 Companys Annual
Report on
Form 10-K
for the fiscal year ended December 31, 2009, filed with the
Securities and Exchange Commission.
This report is submitted on behalf of the Audit Committee.
W. W. McAllister III, Chairperson
James H. Browning
Steven P. Rosenberg
Ian J. Turpin
Code of
Business Conduct and Ethics
The Company has adopted a code of business conduct and ethics
that applies to all its employees, including its chief executive
officer, chief financial officer and controller. The Company has
made the code of conduct available on its website at
www.texascapitalbank.com
.
19
COMMON
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following tables set forth information as of March 31,
2010 concerning the beneficial ownership of the Companys
voting common stock by: (a) each director, director nominee
and named executive officer, (b) each person the Company
knows to beneficially own more than 5% of the issued and
outstanding shares of a class of common stock, and (c) all
of the Companys named 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. In computing the number of shares beneficially
owned by a person and the percentage of ownership held by that
person, shares of common stock subject to options, RSUs, or SARs
held by that person that are currently exercisable or will
become exercisable within 60 days after March 31, 2010
are deemed exercised and outstanding, while these shares are not
deemed exercised and outstanding for computing percentage
ownership of any other person.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares of
|
|
Percent of Shares
|
Persons Known to Company Who Own More Than 5%
|
|
Common Stock
|
|
of Common Stock
|
of Outstanding Shares of Company Common Stock
|
|
Beneficially Owned
|
|
Outstanding**
|
|
|
T. Rowe Price Associates, Inc.
|
|
|
3,548,500
|
(1)
|
|
|
9.72
|
%
|
BlackRock, Inc.
|
|
|
2,466,769
|
(2)
|
|
|
7.22
|
%
|
NWQ Investment Management Company, LLC
|
|
|
2,466,769
|
(3)
|
|
|
6.75
|
%
|
Lord, Abbett & Co., LLC
|
|
|
2,418,395
|
(4)
|
|
|
6.62
|
%
|
Buckhead Capital Management, LLC
|
|
|
1,840,250
|
(5)
|
|
|
5.04
|
%
|
|
|
|
|
|
**
|
|
Percentage is calculated on the basis of 36,524,313 shares,
the total number of shares of common stock outstanding on
March 31, 2010.
|
|
(1)
|
|
As reported by T. Rowe Price Associates, Inc. on a
Schedule 13G filed with the SEC on February 12, 2010,
as of December 31, 2009. These securities are owned by
various individual and institutional investors for which T. Rowe
Price Associates, Inc. serves as investment adviser with power
to direct investments and/or sole power to vote the securities.
For purposes of the reporting requirements of the Securities
Exchange Act of 1934, T. Rowe Price Associates, Inc. is deemed
to be a beneficial owner of such securities; however, T. Rowe
Price Associates, Inc. expressly disclaims that it is, in fact,
the beneficial owner of such securities.
|
|
(2)
|
|
As reported by BlackRock, Inc. on a Schedule 13G filed with
the SEC on January 29, 2010, as of December 31, 2009.
These securities are owned by various individual and
institutional investors for which BlackRock, Inc. serves as
investment adviser with power to direct investments and/or sole
power to vote the securities.
|
|
(3)
|
|
As reported by NWQ Investment management Company, LLC on a
Schedule 13G filed with the SEC on February 12, 2010,
as of December 31, 2009. These securities are owned by
various individual and institutional investors for which NWQ
Investment Management Company, LLC serves as investment adviser
with power to direct investments and/or sole power to vote the
securities.
|
|
(4)
|
|
As reported by Lord, Abbett & Co., LLC on a
Schedule 13G filed with the SEC on February, 12, 2010, as
of December 31, 2009. These securities are owned by various
individual and institutional investors for which Lord,
Abbett & Co., LLC serves as investment adviser with
power to direct investments and/or sole power to vote the
securities.
|
|
(5)
|
|
As reported by Buckhead Capital Management, LLC on a
Schedule 13G filed with the SEC on January 20, 2010,
as of December 31, 2009. These securities are owned by
various individual and institutional investors for which
Buckhead Capital Management, LLC serves as investment adviser
with power to direct investments and/or sole power to vote the
securities.
|
20
|
|
|
|
|
|
|
|
|
|
|
Number of Shares of
|
|
Percent of Shares
|
|
|
Common Stock
|
|
of Common Stock
|
Name(1)
|
|
Beneficially Owned
|
|
Outstanding**
|
|
|
Vince A. Ackerson
|
|
|
30,140
|
(2)
|
|
|
|
*
|
Peter B. Bartholow
|
|
|
81,936
|
(3)
|
|
|
|
*
|
James H. Browning
|
|
|
2,000
|
(4)
|
|
|
|
*
|
C. Keith Cargill
|
|
|
114,744
|
(5)
|
|
|
|
*
|
Joseph M. (Jody) Grant
|
|
|
501,517
|
(6)
|
|
|
1.37
|
%
|
Frederick B. Hegi, Jr.
|
|
|
226,693
|
(7)
|
|
|
|
*
|
Larry L. Helm
|
|
|
4,200
|
(8)
|
|
|
|
*
|
James R. Holland, Jr.
|
|
|
292,236
|
(9)
|
|
|
|
*
|
Elysia Holt Ragusa
|
|
|
|
|
|
|
|
*
|
John D. Hudgens
|
|
|
53,880
|
(10)
|
|
|
|
*
|
George F. Jones, Jr.
|
|
|
133,845
|
(11)
|
|
|
|
*
|
W. W. McAllister III
|
|
|
53,200
|
(12)
|
|
|
|
*
|
Lee Roy Mitchell
|
|
|
229,418
|
(13)
|
|
|
|
*
|
Steven P. Rosenberg
|
|
|
49,200
|
(14)
|
|
|
|
*
|
Robert W. Stallings
|
|
|
21,200
|
(15)
|
|
|
|
*
|
Ian J. Turpin
|
|
|
100,217
|
(16)
|
|
|
|
*
|
All executive officers and directors as a group
|
|
|
1,894,426
|
|
|
|
5.19
|
%**
|
|
|
|
|
|
*
|
|
Less than 1% of the issued and outstanding shares of the class.
|
|
**
|
|
Percentage is calculated on the basis of 36,524,313 shares,
the total number of shares of common stock outstanding on
March 31, 2010.
|
|
(1)
|
|
Unless otherwise stated, the address for each person in this
table is 2000 McKinney Avenue, 7th Floor, Dallas, Texas 75201.
|
|
(2)
|
|
Includes 12,124 shares held by Mr. Ackerson and
17,000 shares of common stock that may be acquired upon
exercise of options. Also includes 1,016 shares of vested
restricted stock units. Does not include 3,576 vested SARs as
the exercise price is greater than the current market price.
|
|
(3)
|
|
Includes 30,938 shares held by Mr. Bartholow and
50,000 shares of common stock that may be acquired upon
exercise of options. Also includes 998 shares of vested
restricted stock units. Does not include 3,511 vested SARs as
the exercise price is greater than the current market price.
|
|
(4)
|
|
Includes 2,000 shares held by Mr. Browning.
|
|
(5)
|
|
Includes 52,462 shares held by Mr. Cargill and
61,476 shares held by Cargill Lakes Partners, Ltd.
Mr. Cargill is the President of Cargill Lakes
Partners general partner, Cargill Lakes, Inc. Includes
806 shares of vested restricted stock units. Does not
include 2,838 vested SARs as the exercise price is greater than
the current market price.
|
|
(6)
|
|
Includes 493,054 shares held by Mr. Grant. Also
includes 7,700 shares which are currently held in
irrevocable trusts and of which Mr. Grant disclaims
beneficial ownership. Also includes 763 shares of vested
restricted stock units. Does not include 13,419 vested SARs as
the exercise price is greater than the current market price.
|
|
(7)
|
|
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 44,809 shares held
directly by Mr. Hegi. Also includes 20,000 shares that
may be acquired upon exercise of options and 500 shares of
vested restricted stock units. Does not include 4,200 vested
SARs as the exercise price is greater than the current market
price.
|
21
|
|
|
(8)
|
|
Includes 3,700 shares held by Mr. Helm and
500 shares of vested restricted stock units. Does not
include 4,200 vested SARs as the exercise price is greater than
the current market price.
|
|
(9)
|
|
Includes 271,436 shares held by Lamar Hunt
Trust Estate of which Mr. Holland is the Trustee. Also
includes 300 shares held by Hunt Capital Group, LLC of
which Mr. Holland is President and Chief Executive Officer
and 20,000 shares that may be acquired upon exercise of
options that are issued in the name of Hunt Capital Group, LLC.
Also includes 100 shares of vested restricted stock units
that are issued in the name of Hunt Capital Group, LLC and
400 shares of vested restricted stock units issued in the
name of Lamar Hunt Trust Estate. Does not include 4,200
vested SARs as the exercise price is greater than the current
market price.
|
|
(10)
|
|
Includes 14,412 shares held by Mr. Hudgens and
38,500 shares of common stock that may be acquired upon
exercise of options. Also includes 968 shares of vested
restricted stock units. Does not include 3,406 vested SARs as
the exercise price is greater than the current market price.
|
|
(11)
|
|
Includes 131,818 shares held by G & M Partners
Ltd., of which Mr. Jones is the Managing General Partner,
and 859 shares held directly by Mr. Jones. Also
includes 1,168 shares of vested restricted stock units.
Does not include 4,110 vested SARs as the exercise price is
greater than the current market price.
|
|
(12)
|
|
Includes 32,700 shares held by Mr. McAllister and
20,000 shares that may be acquired upon the exercise of
options. Also includes 500 shares of vested restricted
stock units. Does not include 4,200 vested SARs as the exercise
price is greater than the current market price.
|
|
(13)
|
|
Includes 208,218 shares held by T&LRM Family
Partnership Ltd. Mr. Mitchell is the Chief Executive
Officer of PBA Development, Inc., which is the general partner
of T&LRM and 700 shares owned directly by
Mr. Mitchell. Also includes 20,000 shares that may be
acquired upon exercise of options, and 500 shares of vested
restricted stock units. Does not include 4,200 vested SARs as
the exercise price is greater than the current market price.
|
|
(14)
|
|
Includes 28,700 shares held by Mr. Rosenberg,
20,000 shares that may be acquired upon exercise of
options, and 500 shares of vested restricted stock units.
Does not include 4,200 vested SARs as the exercise price is
greater than the current market price.
|
|
(15)
|
|
Includes 700 shares held by Mr. Stallings,
20,000 shares that may be acquired upon exercise of
options, and 500 shares of vested restricted stock units.
Does not include 4,200 vested SARs as the exercise price is
greater than the current market price.
|
|
(16)
|
|
Includes 10,700 shares held by Mr. Turpin and
69,017 shares held by his spouse, Luci Baines Johnson. Also
includes 20,000 shares that may be acquired upon exercise
of options, and 500 shares of vested restricted stock
units. Does not include 4,200 vested SARs as the exercise price
is greater than the current market price.
|
22
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
This Compensation Discussion and Analysis addresses the aspects
of our compensation programs and explains our compensation
philosophy, policies and practices with respect to our chief
executive officer, chief financial officer, president and chief
lending officer of the Bank, chief credit officer of the Bank,
and Dallas regional president which are collectively referred to
as our named executive officers.
Oversight
of Executive Compensation Program
The Human Resources Committee of our board of directors oversees
our executive compensation programs. Each member of the HR
Committee is an independent director as defined by
the Nasdaq Stock Market Listing Rules. The HR Committee has
developed and applied a compensation philosophy that focuses on
a combination of incentive compensation, in both cash and
equity-linked programs, which is directly linked to performance
and creation of stockholder value, coupled with a competitive
level of base compensation. The objective for the named
executives, relationship managers and key management is to have
a substantial portion of total compensation derived from
performance-based incentives.
The HR Committee works diligently throughout the year in its
conferences, formal meetings, discussions with consultants,
interaction with management and review of materials developed
for it. The HR Committee works very closely with executive
management, primarily our chief executive officer
(CEO), in assessing the appropriate compensation
approach and levels. The HR Committee is empowered to advise
management and make recommendations to the board of directors
with respect to the compensation and other employment benefits
of executive officers and key employees of the Company. The HR
Committee also administers the Companys long- term
compensation plans for executive officers and key employees and
the Companys incentive bonus programs for executive
officers and employees.
The HR Committee regularly reviews the Companys
compensation programs to ensure that remuneration levels and
incentive opportunities are competitive and reflect performance.
Factors taken into account in assessing the compensation of
individual officers include the Companys overall
performance, the officers performance and contribution to
the Company, experience, strategic impact, external equity or
market value, internal equity or fairness, and retention
priority. The various components of the compensation programs
for executive officers are discussed below in the Executive
Compensation Program Overview.
Objectives
of Executive Compensation
We seek to provide a compensation package for our named
executive officers that is driven primarily by the overall
financial performance of the Company. We believe that the
performance of each of the executives impacts our overall
long-term profitability and, therefore, have the following goals
for compensation programs impacting the named executive officers
of the Company:
|
|
|
|
|
to provide motivation for the named executive officers and to
enhance stockholder value by linking their compensation to the
value of our common stock;
|
|
|
|
to retain the executive officers, relationship managers, and key
management who lead the Company and the Bank;
|
|
|
|
to allow the Company and the Bank to attract highly qualified
executive officers in the future by providing total compensation
opportunities consistent with those provided in the industry and
commensurate with the Companys business strategy and
performance objectives; and
|
|
|
|
to maintain reasonable fixed compensation costs by
targeting base salaries at a competitive average.
|
23
Role
of the Consultant
During 2009, the HR Committee engaged the services of an
independent, executive compensation consulting firm, Longnecker
and Associates (L&A), to assist the HR
Committee in its review of total direct compensation for the
CEO, CFO and President of the Bank, as well as other senior
executives. L&A only provides executive compensation
consulting services under the direction of the HR Committee and
does not provide any additional services to the Company. In
order not to impair the independence of the compensation
consultant or to create the appearance of an impairment, the
Committee follows a policy that the compensation consulting firm
may not provide other services to the Company.
Our management provides input to the compensation consultant but
does not direct or oversee its activities with respect to our
executive compensation programs.
The compensation consultant reports to and acts at the direction
of the HR Committee. The HR Committee directs its compensation
consultant, in the performance of the consultants duties
under its engagement, to provide certain guidance on an ongoing
basis, including:
|
|
|
|
|
Expertise on compensation strategy and program design;
|
|
|
|
Information relating to the selection of the Companys peer
group;
|
|
|
|
Annually establishing focus areas for the Companys Chief
Executive Officer, annually evaluating the Chief Executive
Officers performance in light of the focus areas (with the
participation of the full Board), and setting the Chief
Executive Officers compensation based on the evaluation of
peer group data;
|
|
|
|
Establishing and administering executive compensation plans or
arrangements which provide benefits to executive officers of the
Company in accordance with the goals and objectives of the
Company as established by the Board;
|
|
|
|
Considering and making recommendations to the Board concerning
the existing executive compensation programs and changes to such
programs; and
|
|
|
|
Reviewing and discussing the Compensation Discussion and
Analysis and based upon such discussion recommending to the
Board that the CD&A be included in the Companys Proxy
Statement to shareholders.
|
Market
Competitive Analysis Methodology
L&A provided the HR Committee with a market competitive
executive compensation analysis for the named executive officers
including: base salary, annual incentives and long-term
incentives.
This analysis was performed by utilizing two primary sources of
information: 1) peer company proxy statements and
2) published survey sources. Each of the two primary
sources were weighted 50% to create a market 50th and
75th percentile for comparison purposes.
Peer Company Proxy Data.
The HR Committee and
L&A, with input from the Companys management
established a list of eleven high performance peer companies
which historically had records of high performance for 2008
comparison purposes. The following companies were selected based
upon long-term
24
performance, asset size, market capitalization size and business
operations in commercial banking and financial services (in
millions):
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
Market Cap
|
|
|
as of
|
|
as of
|
Company Name
|
|
12/31/09
|
|
March 2010
|
|
|
Texas Capital Bancshares, Inc.
|
|
$
|
5,699
|
|
|
$
|
682.12
|
|
Amegy Bank(1)
|
|
|
11,089
|
|
|
|
N/A
|
|
Boston Private Financial Holdings
|
|
|
6,049
|
|
|
|
498.51
|
|
Cullen Frost
|
|
|
16,288
|
|
|
|
3,350.79
|
|
Hancock Holding Company
|
|
|
8,697
|
|
|
|
1,540.70
|
|
IberiaBank Corporation
|
|
|
9,700
|
|
|
|
1,248.21
|
|
Pinnacle Financial Partners
|
|
|
5,129
|
|
|
|
499.08
|
|
PrivateBancorp, Inc.
|
|
|
12,059
|
|
|
|
9.3.12
|
|
Renasant Corporation
|
|
|
3,641
|
|
|
|
341.07
|
|
Sterling Bancshares, Inc.
|
|
|
4,937
|
|
|
|
458.36
|
|
SVB Financial Group
|
|
|
12,841
|
|
|
|
1,928.92
|
|
Taylor Capital Group, Inc.
|
|
|
4,404
|
|
|
|
143.82
|
|
Wintrust Financial Corporation
|
|
|
12,216
|
|
|
|
1,007.65
|
|
|
|
|
|
|
(1)
|
|
Amegy Bank is part of Zion Bancorporation and is not a
separately reporting entity for SEC purposes but the Company has
used the compensation information for the Amegy executives that
is included in the Zions proxy statement. Total assets are
as reported in the call report for Amegy Bank.
|
Published Survey Data.
L&A relied upon
published survey information provided by recognized sources
including the Economic Research Institute, Watson Wyatt, William
Mercer, and World at Work. L&A procured market competitive
compensation for the respective named executive officers from
these survey sources based upon banking and financial service
companies with comparable asset sizes.
Summary
According to information provided to the HR Committee by its
independent compensation consultant, the amount of the
Companys compensation paid to its executive officers
during 2009 was competitive. In view of the Companys
competitive performance, turnover of key employees and
historical earnings levels and growth in earnings, the HR
Committee believes that the Companys current executive
compensation philosophy and practices are successful in
providing stockholders with talented, dedicated executive
officers at competitive compensation levels.
Executive
Compensation Program Overview
The executive compensation package available to our named
executive officers is comprised of:
|
|
|
|
|
base salary;
|
|
|
|
annual incentive compensation;
|
|
|
|
long-term incentive compensation, including stock appreciation
rights (SARs), Performance SARs (PSARs),
and restricted stock units (RSUs); and
|
|
|
|
other welfare and health benefits.
|
25
Base
Salary
Base salary is designed to provide competitive levels of base
compensation to our executives and be reflective of their
experience, duties and scope of responsibilities. We pay
competitive base salaries required to recruit and retain
executives of the quality that we must employ to ensure the
success of our Company. Base salaries for the named executive
officers are not always adjusted on an annual basis. As a result
of the study performed by L&A as described in the
Compensation Consultants section, salaries for the CEO, CFO, and
President of the Bank were increased in October 2008. The HR
Committee determines, and recommends to the Board, the
appropriate level and timing of increases in base compensation
for the CEO and the other named executive officers upon
consideration of the recommendation of the CEO with respect to
the other named executives. Based on the evaluation conducted by
L&A and its own analysis of the performance of the named
executives, the HR Committee recommended and the Board approved
increases in annual base compensation, effective in October
2008, annual salaries are currently as follows: Jones $500,000
(by contract was increased to $405,000 in October 2008, and to
$500,000 on March 1, 2009, increasing to $600,000 on
March 1, 2010), Bartholow $325,000, and Cargill $300,000
based on competitive data provided by the compensation
consultants, bank performance, and the time period since the
last salary adjustment. Messrs. Ackerson and Hudgens
salaries were increased to $265,000 and $260,000 respectively in
October 2008 also. Under the terms of the contracts discussed
below annual base salaries for Messrs. Bartholow, Cargill,
Ackerson and Hudgens are not subject to review until March 2010.
Messrs. Cargill, Bartholow, Ackerson, and Hudgens received
3% salary increases effective March 1, 2010.
In making determinations of salary levels for the named
executives, the HR Committee considers the entire compensation
package for executive officers, including the equity
compensation provided under long-term compensation plans. The
Company intends for the salary levels to be consistent with
competitive practices of comparable institutions and each
executives level of responsibility. The HR Committee
determines the level of any salary increase after reviewing:
|
|
|
|
|
the qualifications, experience and performance of the executive
officers;
|
|
|
|
the compensation paid to persons having similar duties and
responsibilities in other competitive institutions; and
|
|
|
|
the nature of the Banks business, the complexity of its
activities and the importance of the executives
experiences to the success of the business.
|
The HR Committee reviewed a survey of compensation paid to
executive officers performing similar duties for depository
institutions and their holding companies and also considered
compensation levels applicable to executives in non-bank
financial and professional services companies. The HR Committee
reviews and adjusts the base salaries of the Companys
executive officers when deemed appropriate.
Annual
Incentive Compensation
Annual incentive compensation is designed to provide competitive
levels of compensation based on experience, duties and scope of
responsibilities. In addition, our annual incentive program is
designed to ensure that variable compensation based on the
Companys profitability is a significant component of total
cash compensation for the named executives. The HR Committee
uses the annual incentive compensation to motivate and reward
the named executive officers for achievement of strategic,
business and financial objectives.
Pursuant to the cash incentive program developed by the Company
and approved by the HR Committee, the Company establishes a
bonus pool each year, and the size of the pool is derived as a
percentage of the Companys pre-tax income. The bonus pool
is generally 11 14% of pre-tax pre-bonus income but
may vary depending on number of additional participants, amounts
guaranteed to new officers and other factors. The
26
amount of the incentive pool is incorporated in the annual
business and financial plan approved by the board of directors
and is adjusted during the year, based on actual results
compared to the approved financial plan. After verification of
final results, the total pool and allocation of dollars in the
pool are approved by the HR Committee. The HR Committee can
exercise positive or negative discretion over the incentive pool
based on their evaluation of the Company in comparison to peer
companies in our industry as well as evaluation of overall
economic conditions. The pool is allocated among three distinct
groups: the named executive officers, relationship managers
generally responsible for lending and other service offerings,
and key management, which includes persons who oversee and
provide critical support in such areas as finance, operations,
funding, investments and credit policy. Executive management
determines allocations within production and key management
groups pursuant to the approved program. Generally, the portion
of the incentive pool allocated to the named executives is
approximately 10 15% of the total pool. The CEO
submits recommendations for incentive compensation for the named
executive officers other than the CEO. The HR Committee
determines the incentive payment for the CEO and considers the
recommendation of the CEO in its final determinations of awards
to be paid to the other named executives.
In determining awards of annual cash incentives the HR Committee
considers the entire compensation package of each of the
executive officers and performance of that individual executive
officer. The bonus award potential is intended to be consistent
with each executive officers level of responsibility,
competitive practices of financial institutions with comparable
business characteristics and interests of stockholders. The HR
Committee met in February and March 2010 to determine bonus
compensation paid to the executive officers of the Company and
the Bank for 2009 performance and the amount of these bonuses
paid to the named executive officers is set forth in the Summary
Compensation Table.
Equity
Awards
Equity awards for our executives are granted from our 2005
Long-Term Incentive Plan (the 2005 Plan). The HR
Committee grants equity-based awards under the 2005 Plan in
order to align the interests of the named executive officers
with our stockholders, and to motivate and reward the named
executive officers to increase the stockholder value of the
Company over the long term. Executive management and the HR
Committee believe that stock ownership is a significant
incentive in aligning the interests of employees and
stockholders, building stockholder value and retaining the
Companys key employees.
The 2005 Plan became effective on May 17, 2005 and will
terminate on May 17, 2015. Employees (including any
employee who is also a director), consultants, contractors and
non-employee directors of the Company or its subsidiaries whose
judgment, initiative and efforts contributed to or may be
expected to contribute to the successful performance of the
Company are eligible to participate in the 2005 Plan. The HR
Committee approves the eligible participants under the 2005
Plan, administers the granting of awards under the 2005 Plan,
sets vesting criteria, establishes performance objectives, and
may amend the Plan in accordance with authority approved by
stockholders.
The 2005 Plan provides for the grant of all types of
equity-based awards to officers and directors; grants may
include, but are not limited to, awards of SARs, PSARs, RSUs,
stock options, and other performance awards. In addition, the HR
Committee may grant other forms of awards payable in cash or
common shares if the HR Committee determines that such other
forms of awards are consistent with the purpose and restrictions
of the 2005 Plan. Certain RSU, SAR and PSAR grants were made in
April 2006, January 2007, and January 2009 to the named
executive officers and are included in the compensation tables
that follow this section.
Other
Benefits
2006 Employee Stock Purchase Plan.
On
January 17, 2006, the board of directors adopted the
Companys 2006 Employee Stock Purchase Plan (the 2006
ESPP), which was approved by our stockholders at our 2006
annual meeting on May 16, 2006. The 2006 ESPP provides
eligible employees of the Company (and its
27
participating subsidiaries) with an incentive to advance the
best interests of the Company and its subsidiaries by providing
them a means of voluntarily purchasing common stock at a
favorable price and upon favorable terms. We believe that the
participants in the 2006 ESPP have an additional incentive to
promote the success of the Companys business by increasing
their proprietary interest in the Company. Participation in the
2006 ESPP is voluntary and dependent upon each eligible
employees election to participate and his or her
determination of the level of participation. We believe that the
2006 ESPP is a necessary tool to help us compete effectively. It
has been and remains the policy of the Company that the named
executive officers are not eligible to participate in the 2006
ESPP.
Retirement Savings Opportunity.
All employees
may participate in our 401(k) Retirement Savings Plan, or 401(k)
Plan. Each employee may make before-tax contributions of up to
10% of their eligible compensation up to current Internal
Revenue Service limits. We provide this 401(k) Plan to help our
employees save some amount of their cash compensation for
retirement in a tax efficient manner. Since 2006, we have
decided to match contributions made by our employees to the
401(k) Plan based upon a formula that considers the amount
contributed by the respective employee and such employees
tenure with the Company. We did not make, however, any
discretionary contributions to the 401(k) Plan in the fiscal
year ended December 31, 2009. We also do not provide an
option for our employees to invest in our common stock through
the 401(k) Plan. Other than the 401(k) Plan, we currently do not
provide or offer any other retirement plans, such as defined
benefit, defined contribution, supplemental executive retirement
benefits, retiree medical or deferred compensation plans, to our
employees or the named executive officers.
Health and Welfare Benefits.
All full-time
employees, including our named executive officers, may
participate in our health and welfare benefit programs,
including medical, dental and vision care coverage, disability
insurance and life insurance. We provide these benefits to meet
the health and welfare needs of employees and their families.
Employment
Agreements
In order to retain the Companys senior executive officers,
the HR Committee and board of directors of the Company
determined it was in the best interests of the Company to enter
into employment agreements with certain officers. The named
executives first entered into employment contracts in 2002 and
2003, and amended and extended in December 2004. New contracts
were executed effective December 31, 2008 (2008
Agreements) for Messrs. Jones, Bartholow, and
Cargill, Ackerson and Hudgens. We entered into these agreements
to ensure that the executives perform their respective roles for
an extended period of time. In addition, we also considered the
critical nature of each of these positions and our need to
retain these executives when we committed to the agreements.
Each of the 2008 Agreements had an initial term of three years,
subject to renewal, and has a compensation package that includes
a base salary and participation in the annual incentive bonus
plan for key executives. Each of the executives is also eligible
to receive grants of equity-based incentive compensation under
our 2005 Plan. During January 2009, equity awards under the 2005
Plan in the form of RSUs were granted to Messrs. Jones,
Bartholow, Cargill, Ackerson and Hudgens in the amount of
73,565, 16,720, 31,344, 12,284, and 11,797 units,
respectively. Vesting of 2/3rds of the RSUs is based on
the attainment of certain stock price targets or cliff vesting
at December 31, 2013. Vesting of the remaining
1/3rd is time based over a period of four years.
The employment agreements also provide for severance payments to
each executive upon (i) termination of his employment by us
on 30 days notice without cause, or (ii) termination
by the executive for good reason.
28
Upon termination without cause or upon resignation for good
reason, each executive is entitled to receive the following
severance payments and benefits:
|
|
|
|
|
a cash payment equal to the greater of the executives base
salary remaining in the executives employment term or
12 months salary, paid in 12 equal monthly installments;
|
|
|
|
an amount equal to the average annual cash bonus paid to the
executive for the two years preceding his termination, paid in
12 equal installments, and
|
|
|
|
continued medical insurance benefits, at the Companys
expense, for a period of twelve months.
|
|
|
|
If following a change in control, an executive subsequently is
terminated either (1) by the Company or the successor
entity without cause, or (2) by the executive for good
reason, during the period beginning 90 days before and
ending 18 months after, the change of control event,
(i) Mr. Jones is entitled to receive a lump sum
payment equal to 2.99 times of his average base salary and the
average of any incentives paid to him during the two years
preceding the change of control; and
(ii) Messrs. Bartholow, Cargill, Ackerson and Hudgens
are each entitled to receive a lump sum payment equal to 2.5
times his average base salary and the average of any bonuses
paid to him during the two years preceding the change of
control. This change of control payment is in lieu of any other
amounts to which each executive would be entitled under his
employment agreement. In addition, each executive will receive,
for 24 months following his termination, continued health
and welfare benefits that are no less favorable than the
benefits to which he was entitled prior to the change of
control, as well as payment of accrued vacation, sick leave,
unreimbursed expenses and any amounts due the executive under
any Company benefit plan.
|
|
|
|
If any amount paid or distributed to the executive in connection
with the change of control is subject to an excise tax, and the
consideration received by stockholders of the Company in
connection with the change of control is at least $22.50 per
share, then each executive shall be entitled to receive an
additional
gross-up
payment in an amount equal to 50% of the amount of the total
excise tax imposed upon all payments made by the Company. If the
consideration received by stockholders of the Company in
connection with the change of control is greater than $22.50 per
share, the applicable percentage of the
gross-up
amount will be increased incrementally on a linear basis for
each increase between $22.50 up to $25.00, such that if the
price per share is $25.00 or greater, the applicable percentage
would be 100%.
|
As a means of providing protection to the Companys
stockholders, under certain adverse condition such as
dissolution, bankruptcy, or any distressed sale of the
Companys assets or stock, the above described payments
would not occur, except for the cash payment related to the
executives base salary in the case of termination without
cause or termination by the executive for good reason, and such
payment would be reduced to 6 months of base salary.
The employment agreements contain other terms and conditions,
including a 12 month non-solicitation provision,
confidentiality obligations and restrictions on each
executives ability to be engaged or involved in a
competing state or national bank with a principal place of
business in Texas, New Mexico, Oklahoma, or Louisiana during his
employment and for the 12 month period following his
termination or resignation.
Indemnification
Agreements
We have entered into indemnification agreements with each of our
directors and officers, which may be broader than the specific
indemnification provisions contained in our certificate of
incorporation, bylaws or under Delaware law. These
indemnification agreements may require us, among other things,
to indemnify our officers and directors against liabilities that
may arise by reason of their status or service as directors or
officers. These indemnification agreements may also require us
to advance any expenses incurred by our directors or
29
officers as a result of any proceeding against them as to which
they could be indemnified. As of the date of this filing, there
is no pending litigation or proceeding involving any of the our
directors, officers, employees or agents in which
indemnification by us is sought, nor are we aware of any
threatened litigation or proceeding that may result in a claim
for indemnification. We have purchased a policy of
directors and officers liability insurance that
insures our directors and officers against the cost of defense,
settlement or payment of a judgment in certain circumstances.
Tax
Implications of Executive Compensation
Although deductibility of compensation is preferred, tax
deductibility is not a primary objective of our compensation
programs. We believe that achieving our compensation objectives
set forth above is more important than the benefit of tax
deductibility and we reserve the right to maintain flexibility
in how we compensate our executive officers, even if it may
result in limiting the deductibility of amounts of compensation
from time to time.
Report of
the Human Resources Committee on the Compensation Discussion and
Analysis
The Human Resources Committee has reviewed and discussed with
management the Compensation Discussion and Analysis
(CD&A) included in this Proxy Statement. Based
on such review and discussion, the HR Committee recommended to
the Board that this CD&A be included in this Proxy
Statement for filing with the Securities and Exchange Commission.
The Report is submitted by the Human Resources Committee of the
Board of Directors of Texas Capital Bancshares, Inc.
Frederick B. Hegi, Chairman
Lee Roy Mitchell
Steven P. Rosenberg
30
2009,
2008 and 2007 Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Non-qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive
|
|
Deferred
|
|
All Other
|
|
|
Name and Principal
|
|
|
|
|
|
|
|
Awards
|
|
Awards
|
|
Plan
|
|
Compensation
|
|
Compensation
|
|
|
Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
(A)
|
|
(A)
|
|
Compensation
|
|
Earnings
|
|
(B)
|
|
Total
|
|
|
George F. Jones, Jr.
|
|
|
2009
|
|
|
$
|
484,167
|
|
|
$
|
|
|
|
|
799,652
|
|
|
|
|
|
|
$
|
250,000
|
|
|
$
|
|
|
|
$
|
28,325
|
|
|
$
|
1,562,144
|
|
CEO and President of Texas
|
|
|
2008
|
|
|
|
378,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175,000
|
|
|
|
|
|
|
|
25,693
|
|
|
|
579,180
|
|
Capital Bancshares; CEO of Texas Capital Bank
|
|
|
2007
|
|
|
|
303,333
|
|
|
|
|
|
|
|
389,200
|
|
|
|
|
|
|
|
218,000
|
|
|
|
|
|
|
|
22,978
|
|
|
|
933,511
|
|
Peter B. Bartholow
|
|
|
2009
|
|
|
|
325,000
|
|
|
|
|
|
|
|
181,746
|
|
|
|
|
|
|
|
166,500
|
|
|
|
|
|
|
|
12,151
|
|
|
|
685,397
|
|
Chief Financial Officer
|
|
|
2008
|
|
|
|
306,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
146,000
|
|
|
|
|
|
|
|
10,941
|
|
|
|
463,191
|
|
|
|
|
2007
|
|
|
|
276,250
|
|
|
|
|
|
|
|
311,360
|
|
|
|
|
|
|
|
196,000
|
|
|
|
|
|
|
|
12,045
|
|
|
|
795,655
|
|
C. Keith Cargill
|
|
|
2009
|
|
|
|
300,000
|
|
|
|
|
|
|
|
340,709
|
|
|
|
|
|
|
|
166,500
|
|
|
|
|
|
|
|
19,108
|
|
|
|
826,317
|
|
President, Chief Lending
|
|
|
2008
|
|
|
|
282,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145,000
|
|
|
|
|
|
|
|
18,125
|
|
|
|
445,125
|
|
Officer and Chief Operating Officer of Texas Capital Bank
|
|
|
2007
|
|
|
|
243,542
|
|
|
|
|
|
|
|
311,360
|
|
|
|
|
|
|
|
189,000
|
|
|
|
|
|
|
|
16,755
|
|
|
|
760,657
|
|
Vince A. Ackerson
|
|
|
2009
|
|
|
|
265,000
|
|
|
|
|
|
|
|
133,527
|
|
|
|
|
|
|
|
190,000
|
|
|
|
|
|
|
|
23,485
|
|
|
|
612,012
|
|
Dallas Regional President of Texas Capital Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John D. Hudgens
|
|
|
2009
|
|
|
|
260,000
|
|
|
|
|
|
|
|
128,233
|
|
|
|
|
|
|
|
154,000
|
|
|
|
|
|
|
|
12,997
|
|
|
|
555,230
|
|
Chief Credit Officer of Texas Capital Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)
|
|
The amounts in these columns reflect the aggregate grant date
fair value of awards granted during the fiscal years ended
December 31, 2009, 2008 and 2007, in accordance with ASC
718 and pursuant to the 2005 Plan. Assumptions used in the
calculation of these amounts are included in footnote 11 of the
Companys audited financial statements for the fiscal year
ended December 31, 2009 included in the companys
Annual Report on
Form 10-K
filed with the SEC on or around February 18, 2010. Stock
awards are comprised of restricted stock units (RSUs). Option
awards are comprised of stock appreciation rights (SARs).
|
|
(B)
|
|
See additional description in 2009 All Other Compensation Table
below.
|
2009 All
Other Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
Perquisites
|
|
|
|
|
|
Contributions
|
|
|
|
Change
|
|
|
|
|
|
|
and Other
|
|
|
|
|
|
to Retirement
|
|
Severance
|
|
in Control
|
|
|
|
|
|
|
Personal
|
|
Tax
|
|
Insurance
|
|
and 401(k)
|
|
Payments /
|
|
Payments /
|
|
|
Name
|
|
Year
|
|
Benefits(A)
|
|
Reimbursements
|
|
Premiums
|
|
Plans
|
|
Accruals
|
|
Accruals
|
|
Total
|
|
|
George F. Jones, Jr.
|
|
|
2009
|
|
|
$
|
22,277
|
|
|
$
|
|
|
|
$
|
1,448
|
|
|
$
|
4,600
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
28,325
|
|
Peter B. Bartholow
|
|
|
2009
|
|
|
|
7,200
|
|
|
|
|
|
|
|
1,501
|
|
|
|
3,450
|
|
|
|
|
|
|
|
|
|
|
|
12,151
|
|
C. Keith Cargill
|
|
|
2009
|
|
|
|
13,186
|
|
|
|
|
|
|
|
1,322
|
|
|
|
4,600
|
|
|
|
|
|
|
|
|
|
|
|
19,108
|
|
Vince A. Ackerson
|
|
|
2009
|
|
|
|
17,721
|
|
|
|
|
|
|
|
1,164
|
|
|
|
4,600
|
|
|
|
|
|
|
|
|
|
|
|
23,485
|
|
John D. Hudgens
|
|
|
2009
|
|
|
|
7,200
|
|
|
|
|
|
|
|
1,197
|
|
|
|
4,600
|
|
|
|
|
|
|
|
|
|
|
|
12,997
|
|
|
|
|
|
|
(A)
|
|
Perquisites include a car allowance of $7,200 for each of the
executives as well as the following club dues: George Jones
$15,077, C. Keith Cargill $5,986 and Vince Ackerson $10,521.
|
31
2009
Grants of Plan Based Awards Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
Option Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards:
|
|
Number of
|
|
Exercise or
|
|
Grant Date Fair
|
|
|
|
|
Estimated Future Payouts Under
|
|
Estimated Future Payouts Under
|
|
Number of
|
|
Securities
|
|
Base Price
|
|
Value of Stock
|
|
|
|
|
Non-Equity Incentive Plan Awards
|
|
Equity Incentive Plan Awards
|
|
Shares of Stock
|
|
Underlying
|
|
of Option
|
|
and Option
|
|
|
Grant Date
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
or Units (B)
|
|
Options (C)
|
|
Awards (C)
|
|
Awards (A)
|
|
|
George F. Jones, Jr.
|
|
|
1/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,043
|
|
|
|
|
|
|
$
|
|
|
|
$
|
533,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,522
|
|
|
|
|
|
|
|
|
|
|
|
266,554
|
|
Peter B. Bartholow
|
|
|
1/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,147
|
|
|
|
|
|
|
|
|
|
|
|
121,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,573
|
|
|
|
|
|
|
|
|
|
|
|
60,579
|
|
C. Keith Cargill
|
|
|
1/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,896
|
|
|
|
|
|
|
|
|
|
|
|
227,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,448
|
|
|
|
|
|
|
|
|
|
|
|
113,570
|
|
Vince A. Ackerson
|
|
|
1/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,189
|
|
|
|
|
|
|
|
|
|
|
|
89,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,095
|
|
|
|
|
|
|
|
|
|
|
|
44,513
|
|
John D. Hudgens
|
|
|
1/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,865
|
|
|
|
|
|
|
|
|
|
|
|
85,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,932
|
|
|
|
|
|
|
|
|
|
|
|
42,741
|
|
|
|
|
|
|
(A)
|
|
The amounts in the column reflect the aggregate grant date fair
value of awards granted during the fiscal year ended
December 31, 2009 in accordance with ASC 718 and pursuant
to the 2005 Plan. Stock awards are comprised of restricted stock
units (RSUs). The grant date fair value is based on the closing
price on the date of grant, or $10.87.
|
|
(B)
|
|
The first line represents award of restricted stock units on
1/27/2009 under the 2005 Plan which cliff vest at the end of
five years, or earlier if certain price targets are met. The
second line represents awards of restricted stock units on
1/27/2009 under the 2005 Plan which vest equally over a four
year period.
|
|
(C)
|
|
Option awards are comprised of stock appreciation rights (SARs),
of which there were none granted to named executive officers in
2009.
|
32
2009
Outstanding Equity Awards at Fiscal Year-end Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
Number of
|
|
Value of
|
|
|
|
Equity Incentive Plan
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Equity Incentive
|
|
Awards: Market or
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Units of
|
|
Units of
|
|
Plan Awards: Number
|
|
Payout Value of
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Stock
|
|
Stock
|
|
of Unearned Shares,
|
|
Unearned Shares,
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
That
|
|
That
|
|
Units or Other
|
|
Units or Other
|
|
|
Options (#)(A)
|
|
Options (#)
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
|
Rights That
|
|
Rights That
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Options
|
|
Price
|
|
Date
|
|
Vested (B)
|
|
Vested (C)
|
|
Have Not Vested
|
|
Have Not Vested
|
|
|
George F. Jones, Jr.
|
|
|
3,083
|
|
|
|
2,054
|
|
|
|
|
|
|
$
|
22.65
|
|
|
|
04/24/2016
|
|
|
|
2,336
|
|
|
$
|
32,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
698,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,043
|
|
|
|
684,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,522
|
|
|
|
342,327
|
|
|
|
|
|
|
|
|
|
Peter B. Bartholow
|
|
|
2,633
|
|
|
|
1,755
|
|
|
|
|
|
|
|
22.65
|
|
|
|
04/24/2016
|
|
|
|
1,996
|
|
|
|
27,864
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
8.25
|
|
|
|
07/09/2013
|
|
|
|
40,000
|
|
|
|
558,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,147
|
|
|
|
155,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,573
|
|
|
|
77,799
|
|
|
|
|
|
|
|
|
|
C. Keith Cargill
|
|
|
2,129
|
|
|
|
1,418
|
|
|
|
|
|
|
|
22.65
|
|
|
|
04/24/2016
|
|
|
|
1,613
|
|
|
|
22,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
558,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,896
|
|
|
|
291,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,448
|
|
|
|
145,854
|
|
|
|
|
|
|
|
|
|
Vince A. .Ackerson
|
|
|
2,682
|
|
|
|
1,788
|
|
|
|
|
|
|
|
22.65
|
|
|
|
04/24/2016
|
|
|
|
2,032
|
|
|
|
28,367
|
|
|
|
|
|
|
|
|
|
|
|
|
17,000
|
|
|
|
|
|
|
|
|
|
|
|
13.95
|
|
|
|
12/16/2013
|
|
|
|
14,000
|
|
|
|
195,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,189
|
|
|
|
114,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,095
|
|
|
|
57,166
|
|
|
|
|
|
|
|
|
|
John D. Hudgens
|
|
|
2,555
|
|
|
|
1,707
|
|
|
|
|
|
|
|
22.65
|
|
|
|
04/24/2016
|
|
|
|
1,936
|
|
|
|
27,027
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
7.25
|
|
|
|
04/16/2012
|
|
|
|
6,000
|
|
|
|
83,760
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
7.25
|
|
|
|
03/18/2013
|
|
|
|
7,865
|
|
|
|
109,795
|
|
|
|
|
|
|
|
|
|
|
|
|
8,500
|
|
|
|
|
|
|
|
|
|
|
|
13.95
|
|
|
|
12/16/2013
|
|
|
|
3,932
|
|
|
|
54,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)
|
|
First line represents award of stock appreciation rights on
4/24/2006 under the 2005 Plan which vest equally over a five
year period. All other lines represent stock options awarded
under the 1999 Omnibus Plan that are vested and exercisable.
|
|
(B)
|
|
The first line represents award of restricted stock units on
4/24/2006 under the 2005 Plan which vest equally over a five
year period. The second line represents award of restricted
stock units on 1/31/2007 under the 2005 Plan which cliff vest at
the end of six years, or earlier if certain price targets are
met. The third line represents awards of restricted stock units
on 1/27/2009 which will cliff vest at the end of five years, or
earlier if certain price targets are met. The fourth line
represents awards of restricted stock units granted on 1/27/2009
which will vest equally over four years.
|
|
(C)
|
|
Uses 12/31/09 ending market price of $13.96.
|
33
2009
Option Exercises and Stock Vested Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of Shares
|
|
Value Realized on
|
|
Number of Shares
|
|
Value Realized on
|
Name
|
|
Acquired on Exercise
|
|
Exercise (A)
|
|
Acquired on Vesting (B)
|
|
Vesting (C)
|
|
|
George F. Jones, Jr.
|
|
|
|
|
|
$
|
|
|
|
|
1,169
|
|
|
$
|
15,431
|
|
Peter B. Bartholow
|
|
|
|
|
|
|
|
|
|
|
998
|
|
|
|
13,174
|
|
C. Keith Cargill
|
|
|
|
|
|
|
|
|
|
|
806
|
|
|
|
10,639
|
|
Vince A. Ackerson
|
|
|
10,000
|
|
|
|
96,039
|
|
|
|
1,017
|
|
|
|
13,424
|
|
|
|
|
20,000
|
|
|
|
199,011
|
|
|
|
7,000
|
|
|
|
91,000
|
|
John D. Hudgens
|
|
|
|
|
|
|
|
|
|
|
969
|
|
|
|
12,791
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
39,000
|
|
|
|
|
|
(A)
|
|
The value realized is equal to the amount that is taxable to the
executive, which was the difference between the market price of
the underlying securities at exercise and the exercise price of
the options.
|
|
(B)
|
|
The shares included in the table represent shares vested; shares
issued to executives net of taxes were 859, 783, 806, 5,896 and
2,918 to Messrs. Jones, Bartholow, Cargill, Ackerson and
Hudgens, respectively.
|
|
(C)
|
|
The value realized by the named executive officer upon the
vesting of stock is calculated by multiplying the number of
shares of stock vested by the market value of the underlying
shares on the vesting date and is equal to the amount that is
taxable to the executive.
|
2009
Pension Benefits
The table disclosing the actuarial present value of each
executives accumulated benefit under defined benefit
plans, the number of years of credited service under each plan,
and the amount of pension benefits paid to each Senior Executive
during the year is omitted because the Company does not have a
defined benefit plan for Senior Executives. The only retirement
plan available to named executive officers in 2009 was the
Companys qualified 401(k) savings and retirement plan,
which is available to all employees.
2009
Non-qualified Deferred Compensation
The table disclosing contributions to non-qualified and other
deferred compensation plans, each executives withdrawals,
earnings and fiscal year balances in those plans is omitted
because, in 2009 the Company had no non-qualified deferred
compensation plans or benefits for executive officers or other
employees of the Company.
34
2009
Potential Payments Upon Termination or Change in Control
Table
The following table summarizes the estimated payments to be made
under each executives contract, described more completely
in the
Employment Agreements
section in the Compensation
Discussion and Analysis starting on page 15. For the
purposes of the quantitative disclosure in the following table,
and in accordance with SEC regulations, we have assumed that the
termination took place on December 31, 2009 and that the
price per share of our common stock is the closing market price
as of that date, $13.96.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Control:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Involuntary or For
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without Cause
|
|
|
Good Reason
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
Termination
|
|
|
or For Good
|
|
|
Termination
|
|
|
|
|
|
|
|
Name
|
|
Termination
|
|
|
for Cause
|
|
|
Reason (E)
|
|
|
(A) (B) (C)
|
|
|
Death
|
|
|
Disability
|
|
|
|
|
George F. Jones, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
696,667
|
|
|
$
|
1,925,043
|
|
|
$
|
|
|
|
$
|
|
|
Death/disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
500,000
|
|
Accelerated vesting of long-term incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
878,789
|
|
|
|
|
|
|
|
|
|
Other benefits(D)
|
|
|
|
|
|
|
|
|
|
|
21,917
|
|
|
|
43,835
|
|
|
|
|
|
|
|
21,917
|
|
Peter B. Bartholow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
|
|
|
|
|
|
|
|
481,250
|
|
|
|
1,179,688
|
|
|
|
|
|
|
|
|
|
Death/disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
325,000
|
|
|
|
325,000
|
|
Accelerated vesting of long-term incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
409,838
|
|
|
|
|
|
|
|
|
|
Other benefits(D)
|
|
|
|
|
|
|
|
|
|
|
18,483
|
|
|
|
36,967
|
|
|
|
|
|
|
|
18,483
|
|
C. Keith Cargill
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
|
|
|
|
|
|
|
|
446,500
|
|
|
|
1,116,875
|
|
|
|
|
|
|
|
|
|
Death/disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
300,000
|
|
Accelerated vesting of long-term incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
509,240
|
|
|
|
|
|
|
|
|
|
Other benefits(D)
|
|
|
|
|
|
|
|
|
|
|
21,791
|
|
|
|
43,583
|
|
|
|
|
|
|
|
21,791
|
|
Vince A. Ackerson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
|
|
|
|
|
|
|
|
452,500
|
|
|
|
1,110,416
|
|
|
|
|
|
|
|
|
|
Death/disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
265,000
|
|
|
|
265,000
|
|
Accelerated vesting of long-term incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
197,646
|
|
|
|
|
|
|
|
|
|
Other benefits(D)
|
|
|
|
|
|
|
|
|
|
|
20,588
|
|
|
|
41,176
|
|
|
|
|
|
|
|
20,588
|
|
John D. Hudgens
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
|
|
|
|
|
|
|
|
406,250
|
|
|
|
989,584
|
|
|
|
|
|
|
|
|
|
Death/disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
260,000
|
|
|
|
260,000
|
|
Accelerated vesting of long-term incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
137,736
|
|
|
|
|
|
|
|
|
|
Other benefits(D)
|
|
|
|
|
|
|
|
|
|
|
17,790
|
|
|
|
35,579
|
|
|
|
|
|
|
|
17,790
|
|
|
|
|
|
|
(A)
|
|
Assumes 50% vesting of RSUs. SARs are not included in the
accelerated vesting for Long Term Incentives as the exercise
price is greater than the 12/31/09 stock price of $13.96.
|
|
(B)
|
|
All stock options are vested therefore a change in control is
not a triggering event.
|
|
(C)
|
|
Severance is equal to 2.5 times average salary plus average
incentive compensation paid during the prior two-year period for
Messrs. Bartholow, Cargill, Ackerson and Hudgens. The
factor for Mr. Jones is 2.99. Severance will be paid in a
lump sum within thirty days of the Executives termination.
|
|
|
|
(D)
|
|
Other benefits include the following insurance: medical, dental,
vision, life, accidental death and disability, short-term
disability, long-term disability and supplemental long-term
disability. Cost includes both employer and employee coverage.
|
35
|
|
|
(E)
|
|
Severance includes twelve months salary and an amount equal to
the average incentive compensation paid during the prior
two-year period. Severance will be paid over a period of twelve
months.
|
2009 Director
Compensation Table
The following table contains information pertaining to the
compensation of the Companys board of directors for the
2009 fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
Stock
|
|
|
Option
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
Or Paid
|
|
|
Awards
|
|
|
Awards
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
Name
|
|
In Cash
|
|
|
(B)
|
|
|
(B)
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
|
|
|
James H. Browning(D)
|
|
$
|
3,000
|
|
|
$
|
49,560
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
52,560
|
|
Joseph M. Grant(E)
|
|
|
|
|
|
|
7,075
|
|
|
|
8,475
|
|
|
|
|
|
|
|
|
|
|
|
502,067
|
|
|
|
517,617
|
|
Frederick B. Hegi, Jr.
|
|
|
47,000
|
|
|
|
14,170
|
|
|
|
17,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,260
|
|
Larry L. Helm
|
|
|
29,000
|
|
|
|
14,170
|
|
|
|
17,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,260
|
|
James R. Holland, Jr.(A)
|
|
|
65,500
|
|
|
|
14,170
|
|
|
|
17,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96,760
|
|
W. W. McAllister III
|
|
|
31,000
|
|
|
|
14,170
|
|
|
|
17,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,260
|
|
Lee Roy Mitchell
|
|
|
20,250
|
|
|
|
14,170
|
|
|
|
17,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,510
|
|
Steven P. Rosenberg
|
|
|
23,250
|
|
|
|
14,170
|
|
|
|
17,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,510
|
|
John C. Snyder(C)
|
|
|
9,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
Robert W. Stallings
|
|
|
55,750
|
|
|
|
14,170
|
|
|
|
17,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,010
|
|
Ian J. Turpin
|
|
|
21,750
|
|
|
|
14,170
|
|
|
|
17,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,010
|
|
|
|
|
|
|
(A)
|
|
2009 RSU and SAR grants and fees were paid in the name of Lamar
Hunt Trust Estate.
|
|
(B)
|
|
The amounts in these columns reflect the aggregate grant date
fair value of awards granted during the fiscal year ended
December 31, 2009 in accordance with ASC 718 and pursuant
to the 2005 Plan. Stock awards are comprised of restricted stock
units (RSUs). All directors except for Mr. Browning and
Mr. Grant received 1,000 RSUs with a grant date fair
value of $14.17. Option awards are comprised of stock
appreciation rights (SARs). All directors except for
Mr. Browning and Mr. Grant received 3,000 SARs
which had a grant date Black Scholes value of $5.70.
|
|
(C)
|
|
Mr. Snyder resigned as a Director effective May 19,
2009.
|
|
(D)
|
|
Mr. Browning was elected as a new director on
October 20, 2009. He was granted 3,000 RSUs with a grant
date fair value of $16.52 which will vest equally over a period
of three years.
|
|
(E)
|
|
Mr. Grant served on the Board of Directors the entire year
and was an employee of the Company until November 19, 2009.
He then transitioned into a consulting role. He was granted
1,500 SARs and 500 RSUs on November 19, 2009. The grant
date Black-Scholes value of the SARs was $5.65 and the grant
date value of the RSUs was $14.15. All Other Compensation
includes salary, bonus, car allowance and club dues.
|
Non-director
Management Biography
Set forth below is the biographies of three of the named
executives who are not members of the Companys board of
directors or officers of Texas Capital Bancshares, as of the
date of this Proxy Statement.
C. Keith Cargill
(57) has served as President
and Chief Operating Officer of the Bank since October 2008 and
Chief Lending Officer of the Bank since its inception in
December 1998.
Vince A. Ackerson
(53) has served as Dallas Regional
President since October 2008 and was previously Executive Vice
President of Dallas Corporate Banking since the Banks
inception in December 1998.
John D. Hudgens
(54) has served as Chief Credit
Officer of the Bank since January 1999.
36
HUMAN
RESOURCES COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
During 2009, none of the employees or executive officers of the
Company or the Bank served on the Human Resources Committee of
the board of directors of the Company. In addition, none of the
executive officers of the Company served on the board of
directors or on the compensation committee of any other entity,
for which any executive officers of such other entity served
either on our board of directors or on our HR Committee.
INDEBTEDNESS
OF MANAGEMENT AND TRANSACTIONS WITH CERTAIN RELATED
PERSONS
In the ordinary course of business, the Bank has made loans, and
may continue to make loans in the future, to the Banks and
the Companys 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. All related party transactions,
including, but not limited to loans to directors, are reviewed
and approved by our Board of Directors, prior to consummation of
any such transaction.
In June 2003, the Company committed to invest up to $500,000 in
Blue Sage Investments, LP, a limited partnership approved as a
Small Business Investment Company by the U.S. Small
Business Administration and has invested approximately $367,000
as of December 31, 2009. Blue Sage Investments may be
considered to be an affiliate of Ian J. Turpin, a member of the
Companys board of directors.
In June 2003, the Company relocated its Austin office to a
building owned by a company that may be considered to be an
affiliate of Ian J. Turpin, a member of the Companys board
of directors. The net rental payments due under the lease
agreement are approximately $227,000 annually.
In November 2009, Joseph M. Grant became a consultant to the
Company pursuant to the agreement entered into between the
Company and Mr. Grant at the time of his transition from
Chairman and CEO to Chairman Emeritus and Senior Executive
Advisor effective immediately following the 2008 Annual Meeting
of Stockholders. The new agreement was entered into as of
April 8, 2008 and Mr. Grant continued his employment
through November 18, 2009. From November 19, 2009
through January 31, 2013, Mr. Grant will be retained
as a consultant at an annual consulting fee of $50,000.
The Company has entered into indemnification agreements with
each of its directors and officers, which may be broader than
the specific indemnification provisions contained in its
certificate of incorporation, bylaws or under Delaware law.
These indemnification agreements may require the Company, among
other things, to indemnify its officers and directors against
liabilities that may arise by reason of their status or service
as directors or officers. These indemnification agreements also
may require the Company to advance any expenses incurred by the
Companys directors or officers as a result of any
proceeding against them as to which they could be indemnified.
As of the date of this filing, there is no pending litigation or
proceeding involving any of the Companys directors,
officers, employees or agents in which indemnification by it is
sought, nor is the Company aware of any threatened litigation or
proceeding that may result in a claim for indemnification. The
Company has purchased a policy of directors and
officers liability insurance that insures its directors
and officers against the cost of defense, settlement or payment
of a judgment in certain circumstances.
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the
Companys officers and directors, and persons who own more
than 10% of a registered class of its equity securities, to file
initial reports of ownership and reports of changes in ownership
with the SEC. During 2009, based solely on the Companys
review of these reports, it believes that the Companys
Section 16(a) reports were filed timely by its executive
officers and directors.
37
EQUITY
COMPENSATION PLAN INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Securities to be
|
|
|
|
Number of
|
|
|
Issued Upon
|
|
Weighted Average
|
|
Securities
|
|
|
Exercise of
|
|
Exercise Price of
|
|
Remaining Available
|
|
|
Outstanding
|
|
Outstanding
|
|
for Future Issuance
|
|
|
Options, Warrants
|
|
Options, Warrants
|
|
Under Equity
|
Plan Category
|
|
and Rights
|
|
and Rights
|
|
Compensation Plans
|
|
|
Equity compensation plans approved by security holders
|
|
|
2,221,950
|
|
|
$
|
14.22
|
|
|
|
367,470
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,221,950
|
|
|
$
|
14.22
|
|
|
|
367,470
|
|
|
|
AUDITOR
FEES AND SERVICES
The Audit Committee has selected Ernst & Young LLP to
continue as our independent registered public accounting firm
for the 2010 fiscal year. A representative of Ernst &
Young LLP is expected to be present at the Annual Meeting and
will be available to respond to appropriate questions.
Fees for professional services provided by the Companys
independent registered public accounting firm in each of the
last two fiscal years, in each of the following categories are
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
|
Audit fees
|
|
$
|
744
|
|
|
$
|
733
|
|
Audit-related fees
|
|
|
11
|
|
|
|
14
|
|
Tax fees
|
|
|
262
|
|
|
|
343
|
|
|
|
|
$
|
1,017
|
|
|
$
|
1,090
|
|
|
|
Fees for audit services include fees associated with the audit
of the Companys annual consolidated financial statements,
the reviews of the consolidated financial statements included in
the Companys
Forms 10-Q,
accounting consultations and managements assertions
regarding effective internal controls in compliance with the
requirements of Section 404 of the Sarbanes Oxley Act and
Federal Deposit Insurance Corporation Improvement Act, and
comfort letter procedures. Tax fees included various federal,
state and local tax services.
Pre-approval
Policies and Procedures
The Audit Committee has adopted a policy that requires advance
approval of all audit, audit-related and tax services performed
by the independent registered public accounting firm. The policy
provides for pre-approval by the Audit Committee of specifically
defined audit and non-audit services. Unless the specific
service has been previously pre-approved with respect to that
year, the Audit Committee must approve the permitted service
before the independent registered public accounting firm is
engaged to perform it. The Audit Committee has delegated to the
Chairman of the Audit Committee authority to approve permitted
services provided that the Chairman reports any decisions to the
Audit Committee at its next scheduled meeting.
38
ADDITIONAL
INFORMATION
Stockholder
Nominees for Director
Stockholders may submit nominees for director in accordance with
the Companys bylaws. Under the Companys bylaws, a
stockholders notice to nominate a director must be in
writing and set forth (1) as to each proposed nominee, all
information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors,
or is otherwise required pursuant to Regulation 14A under
the Exchange Act, including, without limitation, such
persons written consent to being named in the proxy
statement as a nominee and to serving as a director if elected;
and (2) as to such stockholder, the stockholders name
and address, and the class and number of shares of stock of the
Company that are beneficially owned by such stockholder.
Nominations for director for the 2011 annual meeting of
stockholders must generally be delivered no later than
180 days, nor more than 270 days, prior to the 2011
annual meeting of stockholders. Nominations should be directed
to: Texas Capital Bancshares, Inc., 2000 McKinney Avenue,
7
th
Floor, Dallas, Texas 75201, Attn: Secretary.
Stockholder
Proposals for 2011
Stockholders interested in submitting a proposal for inclusion
in the proxy materials for the Companys annual meeting of
stockholders in 2011 may do so by following the procedures
prescribed in Exchange Act
Rule 14a-8.
To be eligible for inclusion, stockholder proposals must be
received by the Company at the following address: Texas Capital
Bancshares, Inc., 2000 McKinney Avenue, 7th Floor, Dallas, Texas
75201, Attn: Secretary, no later than December 9, 2010.
Advance
Notice Procedures
Under the Companys bylaws, no business may be brought
before an annual meeting unless it is brought before the meeting
by or at the direction of the Board or by a stockholder who has
delivered timely notice to the Company. Such notice must contain
certain information specified in the bylaws and be delivered no
later than 180 days, nor more than 270 days, prior to
the meeting to the following address: Texas Capital Bancshares,
Inc., 2000 McKinney Avenue,
7
th
Floor, Dallas, Texas 75201, Attn: Secretary. These requirements
are separate from the SECs requirements that a stockholder
must meet in order to have a stockholder proposal included in
the Companys proxy statement pursuant to
Rule 14a-8
under the Securities Exchange Act of 1934.
Annual
Report
A copy of the Companys 2009 Annual Report to Stockholders
is available on the Internet as set forth in the Notice of
Internet Availability of Proxy Materials. This report is not
part of the proxy solicitation materials.
Upon written request, the Company will furnish to any
stockholder without charge a copy of its Annual Report on
Form 10-K
for the year ended December 31, 2009 pursuant to the
instructions set forth in the Notice of Internet Availability of
Proxy Materials.
39
EXHIBIT A
TEXAS
CAPITAL BANCSHARES, INC.
2010
LONG-TERM INCENTIVE PLAN
The Texas Capital Bancshares, Inc. 2010 Long-Term Incentive Plan
(the
Plan
) was adopted by the Board of
Directors of Texas Capital Bancshares, Inc., a Delaware
corporation (the
Company
), effective
as of April 2, 2010, subject to approval by the
Companys stockholders.
ARTICLE 1
PURPOSE
The purpose of the Plan is to attract and retain the services of
key employees, key contractors and Outside Directors of the
Company and its Subsidiaries and to provide such persons with a
proprietary interest in the Company through the granting of
incentive stock options, nonqualified stock options, stock
appreciation rights, restricted stock, restricted stock units,
performance awards, dividend equivalent rights, and other
awards, whether granted singly, or in combination, or in tandem,
that will
(a) increase the interest of such persons in the
Companys welfare;
|
|
|
|
(b)
|
furnish an incentive to such persons to continue their services
for the Company or its Subsidiaries; and
|
|
|
|
|
(c)
|
provide a means through which the Company may attract able
persons as Employees, Contractors and Outside Directors.
|
With respect to Reporting Participants, the Plan and all
transactions under the Plan are intended to comply with all
applicable conditions of
Rule 16b-3
promulgated under the Securities Exchange Act of 1934 (the
1934 Act
). To the extent any
provision of the Plan or action by the Committee fails to so
comply, such provision or action shall be deemed null and void
ab initio
, to the extent permitted by law and deemed
advisable by the Committee.
ARTICLE 2
DEFINITIONS
For the purpose of the Plan, unless the context requires
otherwise, the following terms shall have the meanings indicated:
|
|
|
|
2.1
|
Award
means the grant of any Incentive Stock
Option, Nonqualified Stock Option, Reload Option, Restricted
Stock, SAR, Restricted Stock Units, Performance Award, Dividend
Equivalent Right or Other Award, whether granted singly or in
combination or in tandem (each individually referred to herein
as an
Incentive
).
|
|
|
2.2
|
Award Agreement
means a written agreement
between a Participant and the Company which sets out the terms
of the grant of an Award.
|
|
|
2.3
|
Award Period
means the period set forth in
the Award Agreement during which one or more Incentives granted
under an Award may be exercised.
|
|
|
2.4
|
Board
means the board of directors of the
Company.
|
A-1
|
|
|
|
2.5
|
Change in Control
means any of the following,
except as otherwise provided herein:
|
|
|
|
|
(a)
|
any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities
acquired directly from the Company or its Affiliates)
representing 51% or more of the combined voting power of the
Companys then outstanding securities, excluding any Person
who becomes such a Beneficial Owner in connection with a
transaction described in clause (i) of paragraph
(c) below; or
|
|
|
|
|
(b)
|
the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals
who, on the Effective Date of this Plan, constitute the Board
and any new director (other than a director whose initial
assumption of office is in connection with an actual or
threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board or
nomination for election by the Companys stockholders was
approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors
on the Effective Date of this Plan or whose appointment,
election or nomination for election was previously so approved
or recommended; or
|
|
|
|
|
(c)
|
there is consummated a merger or consolidation of the Company or
any direct or indirect subsidiary of the Company with any other
corporation, other than (i) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent
thereof) at least 51% of the combined voting power of the
securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company (not
including the securities Beneficially Owned by such Person any
securities acquired directly from the Company or its Affiliates
other than in connection with the acquisition by the Company or
its Affiliates of a business) representing 51% or more of the
combined voting power of the Companys then outstanding
securities; or
|
|
|
|
|
(d)
|
the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the
Company of all or substantially all of the Companys
assets, other than a sale or disposition by the Company of all
or substantially all of the Companys assets to an entity,
at least 51% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the
Company immediately prior to such sale.
|
For purposes hereof:
Affiliate
shall have the meaning set forth in
Rule 12b-2
promulgated under Section 12 of the 1934 Act.
Beneficial Owner
shall have the meaning set
forth in
Rule 13d-3
under the 1934 Act.
Person
shall have the meaning given in
Section 3(a)(9) of the 1934 Act, as modified and used
in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding
securities under
A-2
an employee benefit plan of the Company or any of its
Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities or
(iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
Notwithstanding the foregoing provisions of this
Section 2.5
, in the event an Award issued under the
Plan is subject to Section 409A of the Code, then, in lieu
of the foregoing definition and to the extent necessary to
comply with the requirements of Section 409A of the Code,
the definition of Change in Control for purposes of
such Award shall be as follows:
Change in Control
of the Company occurs upon
a change in the Companys ownership, its effective control
or the ownership of a substantial portion of its assets, as
follows:
|
|
|
|
(a)
|
Change in Ownership.
A change in
ownership of the Company occurs on the date that any
Person (as defined in
Section 2.5(d)
below), other than (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any
of its Affiliates, (iii) an underwriter temporarily holding
stock pursuant to an offering of such stock, or (iv) a
corporation owned, directly or indirectly, by the shareholders
of the Company in substantially the same proportions as their
ownership of the Companys stock, acquires ownership of the
Companys stock that, together with stock held by such
Person, constitutes more than 51% of the total fair market value
or total voting power of the Companys stock. However, if
any Person is considered to own already more than 51% of the
total fair market value or total voting power of the
Companys stock, the acquisition of additional stock by the
same Person is not considered to be a Change of Control. In
addition, if any Person has effective control of the Company
through ownership of 30% or more of the total voting power of
the Companys stock, as discussed in paragraph
(b) below, the acquisition of additional control of the
Company by the same Person is not considered to cause a Change
in Control pursuant to this paragraph (a); or
|
|
|
|
|
(b)
|
Change in Effective Control.
Even
though the Company may not have undergone a change in ownership
under paragraph (a) above, a change in the effective
control of the Company occurs on either of the following dates:
|
|
|
|
|
(i)
|
the date that any Person acquires (or has acquired during the
12-month
period ending on the date of the most recent acquisition by such
Person) ownership of the Companys stock possessing 30% or
more of the total voting power of the Companys stock.
However, if any Person owns 30% or more of the total voting
power of the Companys stock, the acquisition of additional
control of the Company by the same Person is not considered to
cause a Change in Control pursuant to this subparagraph
(b)(i); or
|
|
|
(ii)
|
the date during any
12-month
period when a majority of members of the Board is replaced by
directors whose appointment or election is not endorsed by a
majority of the Board before the date of the appointment or
election; provided, however, that any such director shall not be
considered to be endorsed by the Board if his or her initial
assumption of office occurs as a result of an actual or
threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
|
|
|
|
|
(c)
|
Change in Ownership of Substantial Portion of
Assets.
A change in the ownership of a
substantial portion of the Companys assets occurs on the
date that a Person acquires (or has acquired during the
12-month
period ending on the date of the most recent acquisition by such
Person) assets of the Company, that have a total gross fair
market value equal to at least 40% of the total gross fair
market value of all of the Companys assets immediately
before such acquisition or acquisitions.
|
A-3
|
|
|
|
|
However, there is no Change in Control when there is such a
transfer to (i) a shareholder of the Company (immediately
before the asset transfer) in exchange for or with respect to
the Companys stock; (ii) an entity, at least 50% of
the total value or voting power of the stock of which is owned,
directly or indirectly, by the Company; (iii) a Person that
owns directly or indirectly, at least 50% of the total value or
voting power of the Companys outstanding stock; or
(iv) an entity, at least 50% of the total value or voting
power of the stock of which is owned by a Person that owns,
directly or indirectly, at least 50% of the total value or
voting power of the Companys outstanding stock.
|
|
|
|
|
(d)
|
Definitions.
For purposes of
subparagraphs (a), (b) and (c) above:
|
|
|
|
|
(i)
|
Person
shall have the meaning given in
Section 7701(a)(1) of the Internal Revenue Code of 1986, as
amended (the
Code
). Person shall
include more than one Person acting as a group as defined by the
Final Treasury Regulations issued under Section 409A of the
Code.
|
|
|
|
|
(ii)
|
Affiliate
shall have the meaning set forth in
Rule 12b-2
promulgated under Section 12 of the Securities Exchange Act
of 1934, as amended.
|
|
|
|
|
(e)
|
Interpretation.
The provisions of this
Section 2.5
shall be interpreted in accordance with
the requirements of the Final Treasury Regulations under Code
Section 409A, it being the intent of the parties that this
Section 2.5 shall be in compliance with the requirements of
said Code Section and said Regulations.
|
|
|
|
|
2.6
|
Code
means the Internal Revenue Code of 1986,
as amended.
|
|
|
2.7
|
Committee
means the Human Resources Committee
of the Board, unless the Board appoints or designates a
different committee to administer the Plan in accordance with
Article 3
of this Plan.
|
|
|
2.8
|
Common Stock
means the common stock, par
value $0.01 per share, which the Company is currently authorized
to issue or may in the future be authorized to issue, or any
securities into which or for which the common stock of the
Company may be converted or exchanged, as the case may be,
pursuant to the terms of this Plan.
|
|
|
2.9
|
Company
means Texas Capital Bancshares, Inc.,
a Delaware corporation, and any successor entity.
|
|
|
|
|
2.10
|
Contractor
means any natural person, who is
not an Employee, rendering
bona fide
services to the
Company or a Subsidiary, with compensation, pursuant to a
written independent contractor agreement between such person and
the Company or a Subsidiary, provided that such services are not
rendered in connection with the offer or sale of securities in a
capital raising transaction and do not directly or indirectly
promote or maintain a market for the Companys securities.
|
|
|
2.11
|
Corporation
means any entity that (i) is
defined as a corporation under Section 7701 of the Code and
(ii) is the Company or is in an unbroken chain of
corporations (other than the Company) beginning with the
Company, if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing a
majority of the total combined voting power of all classes of
stock in one of the other corporations in the chain. For
purposes of clause (ii) hereof, an entity shall be treated
as a corporation if it satisfies the definition of a
corporation under Section 7701 of the Code.
|
|
|
2.12
|
Date of Grant
means the effective date on
which an Award is made to a Participant as set forth in the
applicable Award Agreement; provided, however, that solely for
purposes of Section 16 of the 1934 Act and the rules
and regulations promulgated thereunder, the Date of Grant of an
|
A-4
|
|
|
|
|
Award shall be the date of stockholder approval of the Plan if
such date is later than the effective date of such Award as set
forth in the Award Agreement.
|
|
|
|
|
2.13
|
Dividend Equivalent Right
means the right of
the holder thereof to receive credits based on the cash
dividends that would have been paid on the shares of Common
Stock specified in the Award if such shares were held by the
Participant to whom the Award is made.
|
|
|
2.14
|
Employee
means common law employee (as
defined in accordance with the Regulations and Revenue Rulings
then applicable under Section 3401(c) of the Code) of the
Company or any Subsidiary of the Company.
|
|
|
2.15
|
Executive Officer
means an officer of the
Company or a Subsidiary subject to Section 16 of the
1934 Act or a covered employee as defined in
Section 162(m)(3) of the Code.
|
|
|
2.16
|
Fair Market Value
means, as of a particular
date, (a) if the shares of Common Stock are listed on any
established national securities exchange, the closing sales
price per share of Common Stock on the consolidated transaction
reporting system for the principal securities exchange for the
Common Stock on that date, or, if there shall have been no such
sale so reported on that date, on the last preceding date on
which such a sale was so reported, (b) if the shares of
Common Stock are not so listed but are quoted on the Nasdaq
National Market System, the closing sales price per share of
Common Stock on the Nasdaq National Market System on that date,
or, if there shall have been no such sale so reported on that
date, on the last preceding date on which such a sale was so
reported, (c) if the Common Stock is not so listed or
quoted, the mean between the closing bid and asked price on that
date, or, if there are no quotations available for such date, on
the last preceding date on which such quotations shall be
available, as reported by Nasdaq, or, if not reported by Nasdaq,
by the National Quotation Bureau, Inc., or (d) if none of
the above is applicable, such amount as may be determined by the
Committee (acting on the advice of an Independent Third Party,
should the Committee elect in its sole discretion to utilize an
Independent Third Party for this purpose), in good faith, to be
the fair market value per share of Common Stock. The
determination of Fair Market Value shall, where applicable, be
in compliance with Section 409A of the Code.
|
|
|
2.17
|
Independent Third Party
means an individual
or entity independent of the Company having experience in
providing investment banking or similar appraisal or valuation
services and with expertise generally in the valuation of
securities or other property for purposes of this Plan. The
Committee may utilize one or more Independent Third Parties.
|
|
|
2.18
|
Incentive
is defined in
Section 2.1
hereof.
|
|
|
2.19
|
Incentive Stock Option
means an incentive
stock option within the meaning of Section 422 of the Code,
granted pursuant to this Plan.
|
|
|
2.20
|
Nonqualified Stock Option
means a
nonqualified stock option, granted pursuant to this Plan, which
is not an Incentive Stock Option.
|
|
|
2.21
|
Option Price
means the price which must be
paid by a Participant upon exercise of a Stock Option to
purchase a share of Common Stock.
|
|
|
2.22
|
Other Award
means an Award issued pursuant to
Section 6.9
hereof.
|
|
|
2.23
|
Outside Director
means a director of the
Company who is not an Employee or a Contractor.
|
|
|
2.24
|
Participant
means an Employee, Contractor or
Outside Director of the Company or a Subsidiary to whom an Award
is granted under this Plan.
|
A-5
|
|
|
|
2.25
|
Plan
means this Texas Capital Bancshares,
Inc. 2010 Long-Term Incentive Plan, as amended from time to time.
|
|
|
2.26
|
Performance Award
means an Award hereunder of
cash, shares of Common Stock, units or rights based upon,
payable in, or otherwise related to, Common Stock pursuant to
Section 6.7
hereof.
|
|
|
2.27
|
Performance Goal
means any of the goals set
forth in
Section 6.10
hereof.
|
|
|
2.28
|
Reload Stock Option
means a Nonqualified
Stock Option or an Incentive Stock Option granted pursuant to
Section 8.3(c)
hereof.
|
|
|
2.29
|
Reporting Participant
means a Participant who
is subject to the reporting requirements of Section 16 of
the 1934 Act.
|
|
|
2.30
|
Restricted Stock
means shares of Common Stock
issued or transferred to a Participant pursuant to
Section 6.4
of this Plan which are subject to
restrictions or limitations set forth in this Plan and in the
related Award Agreement.
|
|
|
2.31
|
Restricted Stock Units
means units awarded to
Participants pursuant to
Section 6.6
hereof, which
are convertible into Common Stock at such time as such units are
no longer subject to restrictions as established by the
Committee.
|
|
|
2.32
|
Retirement
means any Termination of Service
solely due to retirement upon or after attainment of age
sixty-five (65), or permitted early retirement as determined by
the Committee.
|
|
|
2.33
|
SAR
or
stock appreciation
right
means the right to receive an amount, in cash
and/or
Common Stock, equal to the excess of the Fair Market Value of a
specified number of shares of Common Stock as of the date the
SAR is exercised (or, as provided in the Award Agreement,
converted) over the SAR Price for such shares.
|
|
|
2.34
|
SAR Price
means the exercise price or
conversion price of each share of Common Stock covered by a SAR,
determined on the Date of Grant of the SAR.
|
|
|
2.35
|
Stock Option
means a Nonqualified Stock
Option, a Reload Stock Option or an Incentive Stock Option.
|
|
|
2.36
|
Subsidiary
means (i) any corporation in
an unbroken chain of corporations beginning with the Company, if
each of the corporations other than the last corporation in the
unbroken chain owns stock possessing a majority of the total
combined voting power of all classes of stock in one of the
other corporations in the chain, (ii) any limited
partnership, if the Company or any corporation described in item
(i) above owns a majority of the general partnership
interest and a majority of the limited partnership interests
entitled to vote on the removal and replacement of the general
partner, and (iii) any partnership or limited liability
company, if the partners or members thereof are composed only of
the Company, any corporation listed in item (i) above or
any limited partnership listed in item (ii) above.
Subsidiaries means more than one of any such
corporations, limited partnerships, partnerships or limited
liability companies.
|
|
|
2.37
|
Termination of Service
occurs when a
Participant who is (i) an Employee of the Company or any
Subsidiary ceases to serve as an Employee of the Company and its
Subsidiaries, for any reason; (ii) an Outside Director of
the Company or a Subsidiary ceases to serve as a director of the
Company and its Subsidiaries for any reason; or (iii) a
Contractor of the Company or a Subsidiary ceases to serve as a
Contractor of the Company and its Subsidiaries for any reason.
Except as may be necessary or desirable to comply with
applicable federal or state law, a Termination of
Service shall not be deemed to have occurred when a
Participant who is an
|
A-6
|
|
|
|
|
Employee becomes an Outside Director or Contractor or vice
versa. If, however, a Participant who is an Employee and who has
an Incentive Stock Option ceases to be an Employee but does not
suffer a Termination of Service, and if that Participant does
not exercise the Incentive Stock Option within the time required
under Section 422 of the Code upon ceasing to be an
Employee, the Incentive Stock Option shall thereafter become a
Nonqualified Stock Option. Notwithstanding the foregoing
provisions of this
Section 2.37
, in the event an
Award issued under the Plan is subject to Section 409A of
the Code, then, in lieu of the foregoing definition and to the
extent necessary to comply with the requirements of
Section 409A of the Code, the definition of
Termination of Service for purposes of such Award
shall be the definition of separation from service
provided for under Section 409A of the Code and the
regulations or other guidance issued thereunder.
|
|
|
|
|
2.38
|
Total and Permanent Disability
means a
Participant is qualified for long-term disability benefits under
the Companys or Subsidiarys disability plan or
insurance policy; or, if no such plan or policy is then in
existence or if the Participant is not eligible to participate
in such plan or policy, that the Participant, because of a
physical or mental condition resulting from bodily injury,
disease, or mental disorder, is unable to perform his or her
duties of employment for a period of six (6) continuous
months, as determined in good faith by the Committee, based upon
medical reports or other evidence satisfactory to the Committee;
provided
that
, with respect to any Incentive Stock
Option, Total and Permanent Disability shall have the meaning
given it under the rules governing Incentive Stock Options under
the Code. Notwithstanding the foregoing provisions of this
Section 2.38
, in the event an Award issued under the
Plan is subject to Section 409A of the Code, then, in lieu
of the foregoing definition and to the extent necessary to
comply with the requirements of Section 409A of the Code,
the definition of Total and Permanent Disability for
purposes of such Award shall be the definition of
disability provided for under Section 409A of
the Code and the regulations or other guidance issued thereunder.
|
ARTICLE 3
ADMINISTRATION
|
|
3.1
|
General Administration; Establishment of
Committee.
Subject to the terms of this
Article 3
, the Plan shall be administered by the
Human Resources Committee of the Board, such other committee of
the Board as is designated by the Board to administer the Plan,
or, if the Board so elects, the Board (the
Committee
). The Committee shall
consist of not fewer than two persons. Any member of the
Committee may be removed at any time, with or without cause, by
resolution of the Board. Any vacancy occurring in the membership
of the Committee may be filled by appointment by the Board. At
any time there is no Committee to administer the Plan, any
references in this Plan to the Committee shall be deemed to
refer to the Board.
|
Membership on the Committee shall be limited to those members of
the Board who are outside directors under
Section 162(m) of the Code and non-employee
directors as defined in
Rule 16b-3
promulgated under the 1934 Act. The Committee shall select
one of its members to act as its Chairman. A majority of the
Committee shall constitute a quorum, and the act of a majority
of the members of the Committee present at a meeting at which a
quorum is present shall be the act of the Committee.
|
|
3.2
|
Designation of Participants and Awards
.
|
|
|
|
|
(a)
|
The Committee or the Board shall determine and designate from
time to time the eligible persons to whom Awards will be granted
and shall set forth in each related Award Agreement, where
applicable, the Award Period, the Date of Grant, and such other
terms, provisions,
|
A-7
|
|
|
|
|
limitations, and performance requirements, as are approved by
the Committee, but not inconsistent with the Plan. The Committee
shall determine whether an Award shall include one type of
Incentive or two or more Incentives granted in combination or
two or more Incentives granted in tandem (that is, a joint grant
where exercise of one Incentive results in cancellation of all
or a portion of the other Incentive). Although the members of
the Committee shall be eligible to receive Awards, all decisions
with respect to any Award, and the terms and conditions thereof,
to be granted under the Plan to any member of the Committee
shall be made solely and exclusively by the other members of the
Committee, or if such member is the only member of the
Committee, by the Board.
|
|
|
|
|
(b)
|
Notwithstanding
Section 3.2(a)
, to the extent
permitted by applicable law, the Board may, in its discretion
and by a resolution adopted by the Board, authorize one or more
officers of the Company (an
Authorized
Officer
) to (i) designate one or more
Employees as eligible persons to whom Awards will be granted
under the Plan and (ii) determine the number of shares of
Common Stock that will be subject to such Awards; provided,
however, that the resolution of the Board granting such
authority shall (x) specify the total number of shares of
Common Stock that may be made subject to the Awards,
(y) set forth the price or prices (or a formula by which
such price or prices may be determined) to be paid for the
purchase of the Common Stock subject to such Awards, and
(z) not authorize an officer to designate himself as a
recipient of any Award.
|
|
|
3.3
|
Authority of the Committee.
The Committee, in
its discretion, shall (i) interpret the Plan,
(ii) prescribe, amend, and rescind any rules and
regulations necessary or appropriate for the administration of
the Plan, (iii) establish performance goals for an Award
and certify the extent of their achievement, and (iv) make
such other determinations or certifications and take such other
action as it deems necessary or advisable in the administration
of the Plan. Any interpretation, determination, or other action
made or taken by the Committee shall be final, binding, and
conclusive on all interested parties. The Committees
discretion set forth herein shall not be limited by any
provision of the Plan, including any provision which by its
terms is applicable notwithstanding any other provision of the
Plan to the contrary.
|
The Committee may delegate to officers of the Company, pursuant
to a written delegation, the authority to perform specified
functions under the Plan. Any actions taken by any officers of
the Company pursuant to such written delegation of authority
shall be deemed to have been taken by the Committee.
With respect to restrictions in the Plan that are based on the
requirements of
Rule 16b-3
promulgated under the 1934 Act, Section 422 of the
Code, Section 162(m) of the Code, the rules of any exchange
or inter-dealer quotation system upon which the Companys
securities are listed or quoted, or any other applicable law,
rule or restriction (collectively,
applicable
law
), to the extent that any such restrictions are
no longer required by applicable law, the Committee shall have
the sole discretion and authority to grant Awards that are not
subject to such mandated restrictions
and/or
to
waive any such mandated restrictions with respect to outstanding
Awards.
ARTICLE 4
ELIGIBILITY
Any Employee (including an Employee who is also a director or an
officer), Contractor or Outside Director of the Company whose
judgment, initiative, and efforts contributed or may be expected
to contribute to the successful performance of the Company is
eligible to participate in the Plan; provided that only
Employees of a corporation shall be eligible to receive
Incentive Stock Options. The Committee, upon its own action, may
grant, but shall not be required to grant, an Award to any
Employee, Contractor or Outside Director of the Company or any
Subsidiary. Awards may be granted by the Committee at any time
and from time to time to new Participants, or to then
Participants, or to a greater or lesser number of Participants,
and may include or
A-8
exclude previous Participants, as the Committee shall determine.
Except as required by this Plan, Awards granted at different
times need not contain similar provisions. The Committees
determinations under the Plan (including without limitation
determinations of which Employees, Contractors or Outside
Directors, if any, are to receive Awards, the form, amount and
timing of such Awards, the terms and provisions of such Awards
and the agreements evidencing same) need not be uniform and may
be made by it selectively among Participants who receive, or are
eligible to receive, Awards under the Plan.
ARTICLE 5
SHARES SUBJECT
TO PLAN
|
|
5.1
|
Number Available for Awards.
Subject to
adjustment as provided in
Articles 11 and 12
, the
maximum number of shares of Common Stock that may be delivered
pursuant to Awards granted under the Plan is two million five
hundred thousand (700,000) shares, 100% of which may be
delivered pursuant to Incentive Stock Options. Subject to
adjustment pursuant to
Articles 11 and 12
, no
Executive Officer may receive in any calendar year
(i) Stock Options or SARs relating to more than One Hundred
Thousand (100,000) shares of Common Stock, or
(ii) Restricted Stock, Restricted Stock Units, Performance
Awards or Other Awards that are subject to the attainment of
Performance Goals relating to more than One Hundred Thousand
(100,000) shares of Common Stock; provided, however, that all
such Awards to any Executive Officer during any calendar year
shall not exceed an aggregate of more than Two Hundred Thousand
(200,000) shares of Common Stock. Shares to be issued may be
made available from authorized but unissued Common Stock, Common
Stock held by the Company in its treasury, or Common Stock
purchased by the Company on the open market or otherwise. During
the term of this Plan, the Company will at all times reserve and
keep available the number of shares of Common Stock that shall
be sufficient to satisfy the requirements of this Plan.
|
|
5.2
|
Reuse of Shares.
To the extent that any Award
under this Plan shall be forfeited, shall expire or be canceled,
in whole or in part, then the number of shares of Common Stock
covered by the Award or stock option so forfeited, expired or
canceled may again be awarded pursuant to the provisions of this
Plan. In the event that previously acquired shares of Common
Stock are delivered to the Company in full or partial payment of
the exercise price for the exercise of a Stock Option granted
under this Plan, the number of shares of Common Stock available
for future Awards under this Plan shall be reduced only by the
net number of shares of Common Stock issued upon the exercise of
the Stock Option. Awards that may be satisfied either by the
issuance of shares of Common Stock or by cash or other
consideration shall be counted against the maximum number of
shares of Common Stock that may be issued under this Plan only
during the period that the Award is outstanding or to the extent
the Award is ultimately satisfied by the issuance of shares of
Common Stock. Awards will not reduce the number of shares of
Common Stock that may be issued pursuant to this Plan if the
settlement of the Award will not require the issuance of shares
of Common Stock, as, for example, a SAR that can be satisfied
only by the payment of cash. Notwithstanding any provisions of
the Plan to the contrary, only shares forfeited back to the
Company, shares canceled on account of termination, expiration
or lapse of an Award, shares surrendered in payment of the
exercise price of an option or shares withheld for payment of
applicable employment taxes
and/or
withholding obligations resulting from the exercise of an option
shall again be available for grant of Incentive Stock Options
under the Plan, but shall not increase the maximum number of
shares described in
Section 5.1
above as the maximum
number of shares of Common Stock that may be delivered pursuant
to Incentive Stock Options.
|
A-9
ARTICLE 6
GRANT OF
AWARDS
|
|
|
|
(a)
|
The grant of an Award shall be authorized by the Committee and
shall be evidenced by an Award Agreement setting forth the
Incentive or Incentives being granted, the total number of
shares of Common Stock subject to the Incentive(s), the Option
Price (if applicable), the Award Period, the Date of Grant, and
such other terms, provisions, limitations, and performance
objectives, as are approved by the Committee, but (i) not
inconsistent with the Plan, (ii) to the extent an Award
issued under the Plan is subject to Section 409A of the
Code, in compliance with the applicable requirements of
Section 409A of the Code and the regulations or other
guidance issued thereunder, and (iii) to the extent the
Committee determines that an Award shall comply with the
requirements of Section 162(m) of the Code, in compliance
with the applicable requirements of Section 162(m) of the
Code and the regulations and other guidance issued thereunder.
The Company shall execute an Award Agreement with a Participant
after the Committee approves the issuance of an Award. Any Award
granted pursuant to this Plan must be granted within ten
(10) years of the date of adoption of this Plan. The Plan
shall be submitted to the Companys stockholders for
approval; however, the Committee may grant Awards under the Plan
prior to the time of stockholder approval. Any such Award
granted prior to such stockholder approval shall be made subject
to such stockholder approval. The grant of an Award to a
Participant shall not be deemed either to entitle the
Participant to, or to disqualify the Participant from, receipt
of any other Award under the Plan.
|
|
|
|
|
(b)
|
If the Committee establishes a purchase price for an Award, the
Participant must accept such Award within a period of thirty
(30) days (or such shorter period as the Committee may
specify) after the Date of Grant by executing the applicable
Award Agreement and paying such purchase price.
|
|
|
|
|
(c)
|
Any Award under this Plan that is settled in whole or in part in
cash on a deferred basis may provide for interest equivalents to
be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms
and conditions as may be specified by the grant.
|
|
|
6.2
|
Option Price.
The Option Price for any share
of Common Stock which may be purchased under a Nonqualified
Stock Option for any share of Common Stock may be equal to or
greater than the Fair Market Value of the share on the Date of
Grant. The Option Price for any share of Common Stock which may
be purchased under an Incentive Stock Option must be at least
equal to the Fair Market Value of the share on the Date of
Grant; if an Incentive Stock Option is granted to an Employee
who owns or is deemed to own (by reason of the attribution rules
of Section 424(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Company (or
any parent or Subsidiary), the Option Price shall be at least
110% of the Fair Market Value of the Common Stock on the Date of
Grant.
|
|
6.3
|
Maximum ISO Grants.
The Committee may not
grant Incentive Stock Options under the Plan to any Employee
which would permit the aggregate Fair Market Value (determined
on the Date of Grant) of the Common Stock with respect to which
Incentive Stock Options (under this and any other plan of the
Company and its Subsidiaries) are exercisable for the first time
by such Employee during any calendar year to exceed $100,000. To
the extent any Stock Option granted under this Plan which is
designated as an Incentive Stock Option exceeds this limit or
otherwise fails to qualify as an Incentive Stock Option, such
Stock Option (or any such portion thereof) shall be a
Nonqualified Stock Option. In such case, the Committee shall
designate which stock will be treated as Incentive Stock Option
stock by causing the
|
A-10
|
|
|
issuance of a separate stock certificate and identifying such
stock as Incentive Stock Option stock on the Companys
stock transfer records.
|
|
|
6.4
|
Restricted Stock.
If Restricted Stock is
granted to or received by a Participant under an Award
(including a Stock Option), the Committee shall set forth in the
related Award Agreement: (i) the number of shares of Common
Stock awarded, (ii) the price, if any, to be paid by the
Participant for such Restricted Stock and the method of payment
of the price, (iii) the time or times within which such
Award may be subject to forfeiture, (iv) specified
Performance Goals of the Company, a Subsidiary, any division
thereof or any group of Employees of the Company, or other
criteria, which the Committee determines must be met in order to
remove any restrictions (including vesting) on such Award, and
(v) all other terms, limitations, restrictions, and
conditions of the Restricted Stock, which shall be consistent
with this Plan, to the extent applicable and in the event the
Committee determines that an Award shall comply with the
requirements of Section 162(m) of the Code, in compliance
with the requirements of Section 162(m) of the Code and the
regulations and other guidance issued thereunder and, to the
extent Restricted Stock granted under the Plan is subject to
Section 409A of the Code, in compliance with the applicable
requirements of Section 409A of the Code and the
regulations or other guidance issued thereunder. The provisions
of Restricted Stock need not be the same with respect to each
Participant.
|
|
|
|
|
(a)
|
Legend on Shares.
The Company shall
electronically register the Restricted Stock awarded to a
Participant in the name of such Participant, which shall bear an
appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock, substantially
as provided in
Section 15.9
of the Plan. No stock
certificate or certificates shall be issued with respect to such
shares of Common Stock, unless, following the expiration of the
Restriction Period (as defined in
Section 6.4(b)(i)
)
without forfeiture in respect of such shares of Common Stock,
the Participant requests delivery of the certificate or
certificates by submitting a written request to the Committee
(or such party designated by the Company) requesting deliver of
the certificates. The Company shall deliver the certificates
requested by the Participant to the Participant as soon as
administratively practicable following the Companys
receipt of such request.
|
|
|
|
|
(b)
|
Restrictions and Conditions.
Shares of
Restricted Stock shall be subject to the following restrictions
and conditions:
|
|
|
|
|
(i)
|
Subject to the other provisions of this Plan and the terms of
the particular Award Agreements, during such period as may be
determined by the Committee commencing on the Date of Grant or
the date of exercise of an Award (the
Restriction
Period
), the Participant shall not be permitted to
sell, transfer, pledge or assign shares of Restricted Stock.
Except for these limitations, the Committee may in its sole
discretion, remove any or all of the restrictions on such
Restricted Stock whenever it may determine that, by reason of
changes in applicable laws or other changes in circumstances
arising after the date of the Award, such action is appropriate.
|
|
|
(ii)
|
Except as provided in
sub-paragraph
(i) above or in the applicable Award Agreement, the
Participant shall have, with respect to his or her Restricted
Stock, all of the rights of a stockholder of the Company,
including the right to vote the shares, and the right to receive
any dividends thereon. Certificates for shares of Common Stock
free of restriction under this Plan shall be delivered to the
Participant promptly after, and only after, the Restriction
Period shall expire without forfeiture in respect of such shares
of Common Stock or after any other restrictions imposed on such
shares of Common Stock by the applicable Award Agreement or
other agreement have expired. Certificates for the shares of
Common Stock forfeited under the provisions of the Plan and the
applicable Award Agreement shall be
|
A-11
|
|
|
|
|
promptly returned to the Company by the forfeiting Participant.
Each Award Agreement shall require that each Participant, in
connection with the issuance of a certificate for Restricted
Stock, shall endorse such certificate in blank or execute a
stock power in form satisfactory to the Company in blank and
deliver such certificate and executed stock power to the Company.
|
|
|
|
|
(iii)
|
The Restriction Period of Restricted Stock shall commence on the
Date of Grant or the date of exercise of an Award, as specified
in the Award Agreement, and, subject to
Article 12
of the Plan, unless otherwise established by the Committee in
the Award Agreement setting forth the terms of the Restricted
Stock, shall expire upon satisfaction of the conditions set
forth in the Award Agreement; such conditions may provide for
vesting based on such Performance Goals, as may be determined by
the Committee in its sole discretion.
|
|
|
(iv)
|
Except as otherwise provided in the particular Award Agreement,
upon Termination of Service for any reason during the
Restriction Period, the nonvested shares of Restricted Stock
shall be forfeited by the Participant. In the event a
Participant has paid any consideration to the Company for such
forfeited Restricted Stock, the Committee shall specify in the
Award Agreement that either (i) the Company shall be
obligated to, or (ii) the Company may, in its sole
discretion, elect to, pay to the Participant, as soon as
practicable after the event causing forfeiture, in cash, an
amount equal to the lesser of the total consideration paid by
the Participant for such forfeited shares or the Fair Market
Value of such forfeited shares as of the date of Termination of
Service, as the Committee, in its sole discretion shall select.
Upon any forfeiture, all rights of a Participant with respect to
the forfeited shares of the Restricted Stock shall cease and
terminate, without any further obligation on the part of the
Company.
|
|
|
6.5
|
SARs.
The Committee may grant SARs to any
Participant, either as a separate Award or in connection with a
Stock Option. SARs shall be subject to such terms and conditions
as the Committee shall impose, provided that such terms and
conditions are (i) not inconsistent with the Plan,
(ii) to the extent a SAR issued under the Plan is subject
to Section 409A of the Code, in compliance with the
applicable requirements of Section 409A of the Code and the
regulations or other guidance issued thereunder, and
(iii) to the extent the Committee determines that a SAR
shall comply with the requirements of Section 162(m) of the
Code, in compliance with the applicable requirements of
Section 162(m) and the regulations and other guidance
issued thereunder. The grant of the SAR may provide that the
holder may be paid for the value of the SAR either in cash or in
shares of Common Stock, or a combination thereof. In the event
of the exercise of a SAR payable in shares of Common Stock, the
holder of the SAR shall receive that number of whole shares of
Common Stock having an aggregate Fair Market Value on the date
of exercise equal to the value obtained by multiplying
(i) the difference between the Fair Market Value of a share
of Common Stock on the date of exercise over the SAR Price as
set forth in such SAR (or other value specified in the agreement
granting the SAR), by (ii) the number of shares of Common
Stock as to which the SAR is exercised, with a cash settlement
to be made for any fractional shares of Common Stock. The SAR
Price for any share of Common Stock subject to a SAR may be
equal to or greater than the Fair Market Value of the share on
the Date of Grant. The Committee, in its sole discretion, may
place a ceiling on the amount payable upon exercise of a SAR,
but any such limitation shall be specified at the time that the
SAR is granted.
|
|
6.6
|
Restricted Stock Units.
Restricted Stock Units
may be awarded or sold to any Participant under such terms and
conditions as shall be established by the Committee, provided,
however, that such terms and conditions are (i) not
inconsistent with the Plan, (ii) to the extent a Restricted
Stock Unit issued under the Plan is subject to Section 409A
of the Code, in compliance with the applicable requirements of
|
A-12
|
|
|
Section 409A of the Code and the regulations or other
guidance issued thereunder, and (iii) to the extent the
Committee determines that a Restricted Stock Unit award shall
comply with the requirements of Section 162(m) of the Code,
in compliance with the applicable requirements of
Section 162(m) and the regulations and other guidance
issued thereunder. Restricted Stock Units shall be subject to
such restrictions as the Committee determines, including,
without limitation, (a) a prohibition against sale,
assignment, transfer, pledge, hypothecation or other encumbrance
for a specified period; or (b) a requirement that the
holder forfeit (or in the case of shares of Common Stock or
units sold to the Participant, resell to the Company at cost)
such shares or units in the event of Termination of Service
during the period of restriction.
|
|
|
|
|
(a)
|
The Committee may grant Performance Awards to one or more
Participants. The terms and conditions of Performance Awards
shall be specified at the time of the grant and may include
provisions establishing the performance period, the Performance
Goals to be achieved during a performance period, and the
maximum or minimum settlement values, provided that such terms
and conditions are (i) not inconsistent with the Plan and
(ii) to the extent a Performance Award issued under the
Plan is subject to Section 409A of the Code, in compliance
with the applicable requirements of Section 409A of the
Code and the regulations or other guidance issued thereunder. If
the Performance Award is to be in shares of Common Stock, the
Performance Awards may provide for the issuance of the shares of
Common Stock at the time of the grant of the Performance Award
or at the time of the certification by the Committee that the
Performance Goals for the performance period have been met;
provided, however, if shares of Common Stock are issued at the
time of the grant of the Performance Award and if, at the end of
the performance period, the Performance Goals are not certified
by the Committee to have been fully satisfied, then,
notwithstanding any other provisions of this Plan to the
contrary, the Common Stock shall be forfeited in accordance with
the terms of the grant to the extent the Committee determines
that the Performance Goals were not met. The forfeiture of
shares of Common Stock issued at the time of the grant of the
Performance Award due to failure to achieve the established
Performance Goals shall be separate from and in addition to any
other restrictions provided for in this Plan that may be
applicable to such shares of Common Stock. Each Performance
Award granted to one or more Participants shall have its own
terms and conditions.
|
To the extent the Committee determines that a Performance Award
shall comply with the requirements of Section 162(m) of the
Code and the regulations and other guidance issued thereunder,
and if it is determined to be necessary in order to satisfy
Section 162(m) of the Code, at the time of the grant of a
Performance Award (other than a Stock Option) and to the extent
permitted under Section 162(m) of the Code and the
regulations issued thereunder, the Committee shall provide for
the manner in which the Performance Goals shall be reduced to
take into account the negative effect on the achievement of
specified levels of the Performance Goals which may result from
enumerated corporate transactions, extraordinary events,
accounting changes and other similar occurrences which were
unanticipated at the time the Performance Goal was initially
established. In no event, however, may the Committee increase
the amount earned under such a Performance Award, unless the
reduction in the Performance Goals would reduce or eliminate the
amount to be earned under the Performance Award and the
Committee determines not to make such reduction or elimination.
With respect to a Performance Award that is not intended to
satisfy the requirements of Code Section 162(m), if the
Committee determines, in its sole discretion, that the
established performance measures or objectives are no longer
suitable because of a change in the
A-13
Companys business, operations, corporate structure, or for
other reasons that the Committee deemed satisfactory, the
Committee may modify the performance measures or objectives
and/or
the
performance period.
|
|
|
|
(b)
|
Performance Awards may be valued by reference to the Fair Market
Value of a share of Common Stock or according to any formula or
method deemed appropriate by the Committee, in its sole
discretion, including, but not limited to, achievement of
Performance Goals or other specific financial, production, sales
or cost performance objectives that the Committee believes to be
relevant to the Companys business
and/or
remaining in the employ of the Company for a specified period of
time. Performance Awards may be paid in cash, shares of Common
Stock, or other consideration, or any combination thereof. If
payable in shares of Common Stock, the consideration for the
issuance of such shares may be the achievement of the
performance objective established at the time of the grant of
the Performance Award. Performance Awards may be payable in a
single payment or in installments and may be payable at a
specified date or dates or upon attaining the performance
objective. The extent to which any applicable performance
objective has been achieved shall be conclusively determined by
the Committee.
|
|
|
|
|
(c)
|
Notwithstanding the foregoing, in order to comply with the
requirements of Section 162(m) of the Code, if applicable, no
Participant may receive in any calendar year Performance Awards
intended to comply with the requirements of Section 162(m)
of the Code which have an aggregate value of more than
$1,500,000 and if such Performance Awards involve the issuance
of shares of Common Stock, said aggregate value shall be based
on the Fair Market Value of such shares on the time of the grant
of the Performance Award. In no event, however, shall any
Performance Awards not intended to comply with the requirements
of Section 162(m) of the Code be issued contingent upon the
failure to attain the Performance Goals applicable to any
Performance Awards granted hereunder that the Committee intends
to comply with the requirements of Section 162(m) of the
Code.
|
|
|
6.8
|
Dividend Equivalent Rights.
The Committee may
grant a Dividend Equivalent Right to any Participant, either as
a component of another Award or as a separate Award. The terms
and conditions of the Dividend Equivalent Right shall be
specified by the grant. Dividend equivalents credited to the
holder of a Dividend Equivalent Right may be paid currently or
may be deemed to be reinvested in additional shares of Common
Stock (which may thereafter accrue additional dividend
equivalents). Any such reinvestment shall be at the Fair Market
Value at the time thereof. Dividend Equivalent Rights may be
settled in cash or shares of Common Stock, or a combination
thereof, in a single payment or in installments. A Dividend
Equivalent Right granted as a component of another Award may
provide that such Dividend Equivalent Right shall be settled
upon exercise, settlement, or payment of, or lapse of
restrictions on, such other Award, and that such Dividend
Equivalent Right granted as a component of another Award may
also contain terms and conditions different from such other
Award.
|
|
6.9
|
Other Awards.
The Committee may grant to any
Participant other forms of Awards, based upon, payable in, or
otherwise related to, in whole or in part, shares of Common
Stock, if the Committee determines that such other form of Award
is consistent with the purpose and restrictions of this Plan.
The terms and conditions of such other form of Award shall be
specified by the grant. Such Other Awards may be granted for no
cash consideration, for such minimum consideration as may be
required by applicable law, or for such other consideration as
may be specified by the grant.
|
|
6.10
|
Performance Goals.
Awards of Restricted Stock,
Restricted Stock Units, Performance Award and Other Awards
(whether relating to cash or shares of Common Stock) under the
Plan may be made subject to the attainment of Performance Goals
relating to one or more business criteria which, where
applicable, shall be within the meaning of Section 162(m)
of the Code and consist of one or more or any combination of
|
A-14
|
|
|
the following criteria: growth in interest income and expense;
net interest margin; efficiency ratio; growth in non-interest
income and non-interest expense and ratios to earnings assets;
net revenue growth and ratio to earning assets; capital ratios;
asset or liability interest rate sensitivity and gap; effective
tax rate; deposit growth and composition; liquidity management;
securities portfolio (value, yield, spread, maturity, or
duration); earning asset growth and composition (loans,
securities); non-interest income (including, fees, premiums and
commissions, loans, wealth management, treasury management,
insurance, funds management); overhead ratios, productivity
ratios (including EA/FTE, pre-tax income/FTE); credit quality
measures; return on assets; return on equity; economic value of
equity EVE; compliance ratings; internal controls; enterprise
risk measures (including interest rate, loan concentrations,
portfolio composition, credit quality, operational measures,
compliance ratings, balance sheet, liquidity, insurance); cash
flow; cost; revenues; sales; ratio of debt to debt plus equity;
net borrowing, credit quality or debt ratings; profit before
tax; economic profit; earnings before interest and taxes;
earnings before interest, taxes, depreciation and amortization;
gross margin; earnings per share (whether on a pre-tax,
after-tax, operational or other basis); operating earnings;
capital expenditures; expenses or expense levels; economic value
added; ratio of operating earnings to capital spending or any
other operating ratios; free cash flow; net profit; net sales;
net asset value per share; the accomplishment of mergers,
acquisitions, dispositions, public offerings or similar
extraordinary business transactions; sales growth; price of the
Companys Common Stock; return on assets, equity or
stockholders equity; market share; inventory levels,
inventory turn or shrinkage; or total return to stockholders
(
Performance Criteria
). Any
Performance Criteria may be used to measure the performance of
the Company as a whole or any business unit of the Company and
may be measured relative to a peer group or index. Any
Performance Criteria may include or exclude
(i) extraordinary, unusual
and/or
non-recurring items of gain or loss, (ii) gains or losses
on the disposition of a business, (iii) changes in tax or
accounting regulations or laws, (iv) the effect of a merger
or acquisition, as identified in the Companys quarterly
and annual earnings releases, or (v) other similar
occurrences. In all other respects, Performance Criteria shall
be calculated in accordance with the Companys financial
statements, under generally accepted accounting principles, or
under a methodology established by the Committee prior to the
issuance of an Award which is consistently applied and
identified in the audited financial statements, including
footnotes, or the Compensation Discussion and Analysis section
of the Companys annual report. However, to the extent
Section 162(m) of the Code is applicable, the Committee may
not in any event increase the amount of compensation payable to
an individual upon the attainment of a Performance Goal.
|
|
|
6.11
|
Tandem Awards.
The Committee may grant two or
more Incentives in one Award in the form of a tandem
Award, so that the right of the Participant to exercise
one Incentive shall be canceled if, and to the extent, the other
Incentive is exercised. For example, if a Stock Option and a SAR
are issued in a tandem Award, and the Participant exercises the
SAR with respect to 100 shares of Common Stock, the right
of the Participant to exercise the related Stock Option shall be
canceled to the extent of 100 shares of Common Stock.
|
ARTICLE 7
AWARD
PERIOD; VESTING
|
|
7.1
|
Award Period.
Subject to the other provisions
of this Plan, the Committee may, in its discretion, provide that
an Incentive may not be exercised in whole or in part for any
period or periods of time or beyond any date specified in the
Award Agreement. Except as provided in the Award Agreement, an
Incentive may be exercised in whole or in part at any time
during its term. The Award Period for an Incentive shall be
reduced or terminated upon Termination of Service. No Incentive
granted under the Plan may be exercised at any time after the
end of its Award Period. No portion of any Incentive may be
|
A-15
|
|
|
exercised after the expiration of ten (10) years from its
Date of Grant. However, if an Employee owns or is deemed to own
(by reason of the attribution rules of Section 424(d) of
the Code) more than 10% of the combined voting power of all
classes of stock of the Company (or any parent or Subsidiary)
and an Incentive Stock Option is granted to such Employee, the
term of such Incentive Stock Option (to the extent required by
the Code at the time of grant) shall be no more than five
(5) years from the Date of Grant.
|
|
|
7.2
|
Vesting.
The Committee, in its sole
discretion, may determine that an Incentive will be immediately
vested in whole or in part, or that all or any portion may not
be vested until a date, or dates, subsequent to its Date of
Grant, or until the occurrence of one or more specified events,
subject in any case to the terms of the Plan. If the Committee
imposes conditions upon vesting, then, subsequent to the Date of
Grant, the Committee may, in its sole discretion, accelerate the
date on which all or any portion of the Incentive may be vested.
|
ARTICLE 8
EXERCISE
OR CONVERSION OF INCENTIVE
|
|
8.1
|
In General.
A vested Incentive may be
exercised or converted, during its Award Period, subject to
limitations and restrictions set forth in the Award Agreement
|
|
8.2
|
Securities Law and Exchange Restrictions.
In
no event may an Incentive be exercised or shares of Common Stock
be issued pursuant to an Award if a necessary listing or
quotation of the shares of Common Stock on a stock exchange or
inter-dealer quotation system or any registration under state or
federal securities laws required under the circumstances has not
been accomplished.
|
8.3
Exercise of Stock Option.
|
|
|
|
(a)
|
In General.
If a Stock Option is exercisable
prior to the time it is vested, the Common Stock obtained on the
exercise of the Stock Option shall be Restricted Stock which is
subject to the applicable provisions of the Plan and the Award
Agreement. If the Committee imposes conditions upon exercise,
then subsequent to the Date of Grant, the Committee may, in its
sole discretion, accelerate the date on which all or any portion
of the Stock Option may be exercised. No Stock Option may be
exercised for a fractional share of Common Stock. The granting
of a Stock Option shall impose no obligation upon the
Participant to exercise that Stock Option.
|
|
|
|
|
(b)
|
Notice and Payment.
Subject to such
administrative regulations as the Committee may from time to
time adopt, a Stock Option may be exercised by the delivery of
written notice to the Company setting forth the number of shares
of Common Stock with respect to which the Stock Option is to be
exercised and the date of exercise thereof (the
Exercise Date
) which shall be at least
three (3) days after giving such notice unless an earlier
time shall have been mutually agreed upon. On the Exercise Date,
the Participant shall deliver to the Company consideration with
a value equal to the total Option Price of the shares to be
purchased, payable as provided in the Award Agreement, which may
provide for payment in any one or more of the following ways:
(a) cash or check, bank draft, or money order payable to
the order of the Company, (b) Common Stock (including
Restricted Stock) owned by the Participant on the Exercise Date,
valued at its Fair Market Value on the Exercise Date, and which
the Participant has not acquired from the Company within six
(6) months prior to the Exercise Date, (c) by delivery
(including by FAX) to the Company or its designated agent of an
executed irrevocable option exercise form together with
irrevocable instructions from the Participant to a broker or
dealer, reasonably acceptable to the Company, to sell certain of
the shares of Common Stock
|
A-16
|
|
|
|
|
purchased upon exercise of the Stock Option or to pledge such
shares as collateral for a loan and promptly deliver to the
Company the amount of sale or loan proceeds necessary to pay
such purchase price,
and/or
(d) in any other form of valid consideration that is
acceptable to the Committee in its sole discretion. In the event
that shares of Restricted Stock are tendered as consideration
for the exercise of a Stock Option, a number of shares of Common
Stock issued upon the exercise of the Stock Option with an
Option Price equal to the value of Restricted Stock used as
consideration therefor shall be subject to the same restrictions
and provisions as the Restricted Stock so tendered.
|
|
|
|
|
(c)
|
Reload Stock Options.
In the event that shares
of Common Stock are delivered by a Participant in payment of all
or a portion of the exercise price of a Stock Option as set
forth in
Section 8.3(b)
above
and/or
shares of Common Stock are delivered to or withheld by the
Company in satisfaction of the Companys tax withholding
obligations upon exercise in accordance with
Section 15.6
hereof, then, subject to
Article 10
hereof, the Committee may authorize the
automatic grant to a Participant so exercising a Nonqualified
Stock Option, a replacement Nonqualified Stock Option, and to a
Participant so exercising an Incentive Stock Option, a
replacement Incentive Stock Option (in either case, a
Reload Stock Option
), to purchase that
number of shares so delivered to or withheld by the Company, as
the case may be, at an option exercise price equal to the Fair
Market Value per share of the Common Stock on the date of
exercise of the original Stock Option (subject to the provisions
of the Plan regarding Incentive Stock Options and, in any event
not less than the par value per share of the Common Stock). The
option period for a Reload Stock Option will commence on its
Date of Grant and expire on the expiration date of the original
Stock Option it replaces (subject to the provisions of the Plan
regarding Incentive Stock Options), after which period the
Reload Stock Option cannot be exercised. The Date of Grant of a
Reload Stock Option shall be the date that the Stock Option it
replaces is exercised. A Reload Stock Option shall automatically
vest and be exercisable in full after the expiration of six
(6) months from its Date of Grant. It shall be a condition
to the grant of a Reload Stock Option that promptly after its
Date of Grant, a stock option agreement shall be delivered to
the Participant and executed by the Participant and the Company
which sets forth the total number of shares subject to the
Reload Stock Option, the option exercise price, the option
period of the Reload Stock Option and such other terms and
provisions as are consistent with the Plan.
|
|
|
|
|
(d)
|
Issuance of Certificate.
Except as otherwise
provided in
Section 6.4
hereof (with respect to
shares of Restricted Stock) or in the applicable Award
Agreement, upon payment of all amounts due from the Participant,
the Company shall cause the Common Stock then being purchased to
be registered in the Participants name (or the person
exercising the Participants Stock Option in the event of
his or her death), but shall not issue certificates for the
Common Stock unless the Participant or such other person
requests delivery of the certificates for the Common Stock, in
writing in accordance with the procedures established by the
Committee. The Company shall deliver certificates to the
Participant (or the person exercising the Participants
Stock Option in the event of his or her death) as soon as
administratively practicable following the Companys
receipt of a written request from the Participant or such other
person for delivery of the certificates. Notwithstanding the
forgoing, if the Participant has exercised an Incentive Stock
Option, the Company may at its option retain physical possession
of the certificate evidencing the shares acquired upon exercise
until the expiration of the holding periods described in
Section 422(a)(1) of the Code. Any obligation of the
Company to deliver shares of Common Stock shall, however, be
subject to the condition that, if at any time the Committee
shall determine in its discretion that the listing,
registration, or qualification of the Stock Option or the Common
Stock upon any securities exchange or inter-
|
A-17
|
|
|
|
|
dealer quotation system or under any state or federal law, or
the consent or approval of any governmental regulatory body, is
necessary as a condition of, or in connection with, the Stock
Option or the issuance or purchase of shares of Common Stock
thereunder, the Stock Option may not be exercised in whole or in
part unless such listing, registration, qualification, consent,
or approval shall have been effected or obtained free of any
conditions not reasonably acceptable to the Committee.
|
|
|
|
|
(e)
|
Failure to Pay.
Except as may otherwise be
provided in an Award Agreement, if the Participant fails to pay
for any of the Common Stock specified in such notice or fails to
accept delivery thereof, that portion of the Participants
Stock Option and right to purchase such Common Stock may be
forfeited by the Participant.
|
|
|
8.4
|
SARs.
Subject to the conditions of this
Section 8.4
and such administrative regulations as
the Committee may from time to time adopt, a SAR may be
exercised by the delivery (including by FAX) of written notice
to the Company setting forth the number of shares of Common
Stock with respect to which the SAR is to be exercised and the
date of exercise thereof (the
Exercise
Date
) which shall be at least three (3) days
after giving such notice unless an earlier time shall have been
mutually agreed upon. Subject to the terms of the Award
Agreement and only if permissible under Section 409A of the
Code and the regulations or other guidance issued thereunder
(or, if not so permissible, at such time as permitted by
Section 409A of the Code and the regulations or other
guidance issued thereunder), the Participant shall receive from
the Company in exchange therefor in the discretion of the
Committee, and subject to the terms of the Award Agreement:
|
|
|
|
|
(i)
|
cash in an amount equal to the excess (if any) of the Fair
Market Value (as of the date of the exercise, or if provided in
the Award Agreement, conversion, of the SAR) per share of Common
Stock over the SAR Price per share specified in such SAR,
multiplied by the total number of shares of Common Stock of the
SAR being surrendered;
|
|
|
|
|
(ii)
|
that number of shares of Common Stock having an aggregate Fair
Market Value (as of the date of the exercise, or if provided in
the Award Agreement, conversion, of the SAR) equal to the amount
of cash otherwise payable to the Participant, with a cash
settlement to be made for any fractional share interests; or
|
|
|
(iii)
|
the Company may settle such obligation in part with shares of
Common Stock and in part with cash.
|
The distribution of any cash or Common Stock pursuant to the
foregoing sentence shall be made at such time as set forth in
the Award Agreement.
|
|
8.5
|
Disqualifying Disposition of Incentive Stock
Option.
If shares of Common Stock acquired upon
exercise of an Incentive Stock Option are disposed of by a
Participant prior to the expiration of either two (2) years
from the Date of Grant of such Stock Option or one (1) year
from the transfer of shares of Common Stock to the Participant
pursuant to the exercise of such Stock Option, or in any other
disqualifying disposition within the meaning of Section 422
of the Code, such Participant shall notify the Company in
writing of the date and terms of such disposition. A
disqualifying disposition by a Participant shall not affect the
status of any other Stock Option granted under the Plan as an
Incentive Stock Option within the meaning of Section 422 of
the Code.
|
A-18
ARTICLE 9
AMENDMENT
OR DISCONTINUANCE
Subject to the limitations set forth in this
Article 9
, the Board may at any time and from time
to time, without the consent of the Participants, alter, amend,
revise, suspend, or discontinue the Plan in whole or in part;
provided, however, that no amendment for which stockholder
approval is required either (i) by any securities exchange
or inter-dealer quotation system on which the Common Stock is
listed or traded or (ii) in order for the Plan and
Incentives awarded under the Plan to continue to comply with
Sections 162(m), 421, and 422 of the Code, including any
successors to such Sections, or other applicable law, shall be
effective unless such amendment shall be approved by the
requisite vote of the stockholders of the Company entitled to
vote thereon. Any such amendment shall, to the extent deemed
necessary or advisable by the Committee, be applicable to any
outstanding Incentives theretofore granted under the Plan,
notwithstanding any contrary provisions contained in any Award
Agreement. In the event of any such amendment to the Plan, the
holder of any Incentive outstanding under the Plan shall, upon
request of the Committee and as a condition to the
exercisability thereof, execute a conforming amendment in the
form prescribed by the Committee to any Award Agreement relating
thereto. Notwithstanding anything contained in this Plan to the
contrary, unless required by law, no action contemplated or
permitted by this
Article 9
shall adversely affect
any rights of Participants or obligations of the Company to
Participants with respect to any Incentive theretofore granted
under the Plan without the consent of the affected Participant.
ARTICLE 10
TERM
The Plan shall be effective from the date that this Plan is
approved by the Board. Unless sooner terminated by action of the
Board, the Plan will terminate on April 2, 2020, but
Incentives granted before that date will continue to be
effective in accordance with their terms and conditions.
ARTICLE 11
CAPITAL
ADJUSTMENTS
In the event that any dividend or other distribution (whether in
the form of cash, Common Stock, other securities, or other
property), recapitalization, stock split, reverse stock split,
rights offering, reorganization, merger, consolidation,
split-up,
spin-off, split-off, combination, subdivision, repurchase, or
exchange of Common Stock or other securities of the Company,
issuance of warrants or other rights to purchase Common Stock or
other securities of the Company, or other similar corporate
transaction or event affects the fair value of an Award, then
the Committee shall adjust any or all of the following so that
the fair value of the Award immediately after the transaction or
event is equal to the fair value of the Award immediately prior
to the transaction or event (i) the number of shares and
type of Common Stock (or the securities or property) which
thereafter may be made the subject of Awards, (ii) the
number of shares and type of Common Stock (or other securities
or property) subject to outstanding Awards, (iii) the
number of shares and type of Common Stock (or other securities
or property) specified as the annual per-participant limitation
under
Section 5.1
of the Plan, (iv) the Option
Price of each outstanding Award, (v) the amount, if any,
the Company pays for forfeited shares of Common Stock in
accordance with
Section 6.4
, and (vi) the
number of or SAR Price of shares of Common Stock then subject to
outstanding SARs previously granted and unexercised under the
Plan to the end that the same proportion of the Companys
issued and outstanding shares of Common Stock in each instance
shall remain subject to exercise at the same aggregate SAR
Price; provided however, that the number of shares of Common
Stock (or other securities or property) subject to any Award
shall always be a whole number. Notwithstanding the foregoing,
no such adjustment shall be made or authorized to the extent
that such
A-19
adjustment would cause the Plan or any Stock Option to violate
Section 422 of the Code or Section 409A of the Code.
Such adjustments shall be made in accordance with the rules of
any securities exchange, stock market, or stock quotation system
to which the Company is subject.
Upon the occurrence of any such adjustment, the Company shall
provide notice to each affected Participant of its computation
of such adjustment which shall be conclusive and shall be
binding upon each such Participant.
ARTICLE 12
RECAPITALIZATION,
MERGER AND CONSOLIDATION
|
|
12.1
|
No Effect on Companys Authority.
The
existence of this Plan and Incentives granted hereunder shall
not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations, or other changes in the
Companys capital structure and its business, or any Change
in Control, or any merger or consolidation of the Company, or
any issuance of bonds, debentures, preferred or preference
stocks ranking prior to or otherwise affecting the Common Stock
or the rights thereof (or any rights, options, or warrants to
purchase same), or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
|
|
12.2
|
Conversion of Incentives Where Company
Survives.
Subject to any required action by the
stockholders and except as otherwise provided by
Section 12.4
hereof or as may be required to comply
with Section 409A of the Code and the regulations or other
guidance issued thereunder, if the Company shall be the
surviving or resulting corporation in any merger, consolidation
or share exchange, any Incentive granted hereunder shall pertain
to and apply to the securities or rights (including cash,
property, or assets) to which a holder of the number of shares
of Common Stock subject to the Incentive would have been
entitled.
|
|
12.3
|
Exchange or Cancellation of Incentives Where Company Does Not
Survive.
Except as otherwise provided by
Section 12.4
hereof or as may be required to comply
with Section 409A of the Code and the regulations or other
guidance issued thereunder, in the event of any merger,
consolidation or share exchange pursuant to which the Company is
not the surviving or resulting corporation, there shall be
substituted for each share of Common Stock subject to the
unexercised portions of outstanding Incentives, that number of
shares of each class of stock or other securities or that amount
of cash, property, or assets of the surviving, resulting or
consolidated company which were distributed or distributable to
the stockholders of the Company in respect to each share of
Common Stock held by them, such outstanding Incentives to be
thereafter exercisable for such stock, securities, cash, or
property in accordance with their terms.
|
|
12.4
|
Cancellation of Incentives.
Notwithstanding
the provisions of
Sections 12.2 and 12.3
hereof, and
except as may be required to comply with Section 409A of
the Code and the regulations or other guidance issued
thereunder, all Incentives granted hereunder may be canceled by
the Company, in its sole discretion, as of the effective date of
any Change in Control, merger, consolidation or share exchange,
or any issuance of bonds, debentures, preferred or preference
stocks ranking prior to or otherwise affecting the Common Stock
or the rights thereof (or any rights, options, or warrants to
purchase same), or of any proposed sale of all or substantially
all of the assets of the Company, or of any dissolution or
liquidation of the Company, by either:
|
|
|
|
|
(a)
|
giving notice to each holder thereof or his personal
representative of its intention to cancel those Incentives for
which the issuance of shares of Common Stock involved payment by
the Participant for such shares, and permitting the purchase
during the thirty (30) day period next
|
A-20
|
|
|
|
|
preceding such effective date of any or all of the shares of
Common Stock subject to such outstanding Incentives, including
in the Boards discretion some or all of the shares as to
which such Incentives would not otherwise be vested and
exercisable; or
|
|
|
|
|
(b)
|
in the case of Incentives that are either (i) settled only
in shares of Common Stock, or (ii) at the election of the
Participant, settled in shares of Common Stock, paying the
holder thereof an amount equal to a reasonable estimate of the
difference between the net amount per share payable in such
transaction or as a result of such transaction, and the price
per share of such Incentive to be paid by the Participant
(hereinafter the
Spread
), multiplied
by the number of shares subject to the Incentive. In cases where
the shares constitute, or would after exercise, constitute
Restricted Stock, the Company, in its discretion, may include
some or all of those shares in the calculation of the amount
payable hereunder. In estimating the Spread, appropriate
adjustments to give effect to the existence of the Incentives
shall be made, such as deeming the Incentives to have been
exercised, with the Company receiving the exercise price payable
thereunder, and treating the shares receivable upon exercise of
the Incentives as being outstanding in determining the net
amount per share. In cases where the proposed transaction
consists of the acquisition of assets of the Company, the net
amount per share shall be calculated on the basis of the net
amount receivable with respect to shares of Common Stock upon a
distribution and liquidation by the Company after giving effect
to expenses and charges, including but not limited to taxes,
payable by the Company before such liquidation could be
completed.
|
|
|
|
|
(c)
|
An Award that by its terms would be fully vested or exercisable
upon a Change in Control will be considered vested or
exercisable for purposes of
Section 12.4(a)
hereof.
|
ARTICLE 13
LIQUIDATION
OR DISSOLUTION
Subject to
Section 12.4
hereof, in case the Company
shall, at any time while any Incentive under this Plan shall be
in force and remain unexpired, (i) sell all or
substantially all of its property, or (ii) dissolve,
liquidate, or wind up its affairs, then each Participant shall
be entitled to receive, in lieu of each share of Common Stock of
the Company which such Participant would have been entitled to
receive under the Incentive, the same kind and amount of any
securities or assets as may be issuable, distributable, or
payable upon any such sale, dissolution, liquidation, or winding
up with respect to each share of Common Stock of the Company. If
the Company shall, at any time prior to the expiration of any
Incentive, make any partial distribution of its assets, in the
nature of a partial liquidation, whether payable in cash or in
kind (but excluding the distribution of a cash dividend payable
out of earned surplus and designated as such) and an adjustment
is determined by the Committee to be appropriate to prevent the
dilution of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such
manner as it may deem equitable, make such adjustment in
accordance with the provisions of
Article 11
hereof.
ARTICLE 14
INCENTIVES
IN SUBSTITUTION FOR
INCENTIVES
GRANTED BY OTHER ENTITIES
Incentives may be granted under the Plan from time to time in
substitution for similar instruments held by employees,
independent contractors or directors of a corporation,
partnership, or limited liability company who become or are
about to become Employees, Contractors or Outside Directors of
the Company or any Subsidiary as a result of a merger or
consolidation of the employing corporation with the Company, the
A-21
acquisition by the Company of equity of the employing entity, or
any other similar transaction pursuant to which the Company
becomes the successor employer. The terms and conditions of the
substitute Incentives so granted may vary from the terms and
conditions set forth in this Plan to such extent as the
Committee at the time of grant may deem appropriate to conform,
in whole or in part, to the provisions of the Incentives in
substitution for which they are granted.
ARTICLE 15
MISCELLANEOUS
PROVISIONS
|
|
15.1
|
Investment Intent.
The Company may require
that there be presented to and filed with it by any Participant
under the Plan, such evidence as it may deem necessary to
establish that the Incentives granted or the shares of Common
Stock to be purchased or transferred are being acquired for
investment and not with a view to their distribution.
|
|
15.2
|
No Right to Continued Employment.
Neither the
Plan nor any Incentive granted under the Plan shall confer upon
any Participant any right with respect to continuance of
employment by the Company or any Subsidiary.
|
|
15.3
|
Indemnification of Board and Committee.
No
member of the Board or the Committee, nor any officer or
Employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith
with respect to the Plan, and all members of the Board and the
Committee, each officer of the Company, and each Employee of the
Company acting on behalf of the Board or the Committee shall, to
the extent permitted by law, be fully indemnified and protected
by the Company in respect of any such action, determination, or
interpretation.
|
|
15.4
|
Effect of the Plan.
Neither the adoption of
this Plan nor any action of the Board or the Committee shall be
deemed to give any person any right to be granted an Award or
any other rights except as may be evidenced by an Award
Agreement, or any amendment thereto, duly authorized by the
Committee and executed on behalf of the Company, and then only
to the extent and upon the terms and conditions expressly set
forth therein.
|
|
15.5
|
Compliance With Other Laws and
Regulations.
Notwithstanding anything contained
herein to the contrary, the Company shall not be required to
sell or issue shares of Common Stock under any Incentive if the
issuance thereof would constitute a violation by the Participant
or the Company of any provisions of any law or regulation of any
governmental authority or any national securities exchange or
inter-dealer quotation system or other forum in which shares of
Common Stock are quoted or traded (including without limitation
Section 16 of the 1934 Act and Section 162(m) of
the Code); and, as a condition of any sale or issuance of shares
of Common Stock under an Incentive, the Committee may require
such agreements or undertakings, if any, as the Committee may
deem necessary or advisable to assure compliance with any such
law or regulation. The Plan, the grant and exercise of
Incentives hereunder, and the obligation of the Company to sell
and deliver shares of Common Stock, shall be subject to all
applicable federal and state laws, rules and regulations and to
such approvals by any government or regulatory agency as may be
required.
|
|
15.6
|
Tax Requirements.
The Company or, if
applicable, any Subsidiary (for purposes of this
Section 15.6
, the term
Company
shall be deemed to include any applicable Subsidiary), shall
have the right to deduct from all amounts paid in cash or other
form in connection with the Plan, any Federal, state, local, or
other taxes required by law to be withheld in connection with an
Award granted under this Plan. The Company may, in its sole
discretion, also require the Participant receiving shares of
Common Stock issued under the Plan to pay the Company the amount
of any taxes that the Company is required
|
A-22
|
|
|
to withhold in connection with the Participants income
arising with respect to the Award. Such payments shall be
required to be made when requested by Company and may be
required to be made prior to the delivery of any certificate
representing shares of Common Stock. Such payment may be made
(i) by the delivery of cash to the Company in an amount
that equals or exceeds (to avoid the issuance of fractional
shares under (iii) below) the required tax withholding
obligations of the Company; (ii) if the Company, in its
sole discretion, so consents in writing, the actual delivery by
the exercising Participant to the Company of shares of Common
Stock that the Participant has not acquired from the Company
within six (6) months prior to the date of exercise, which
shares so delivered have an aggregate Fair Market Value that
equals or exceeds (to avoid the issuance of fractional shares
under (iii) below) the required tax withholding payment;
(iii) if the Company, in its sole discretion, so consents
in writing, the Companys withholding of a number of shares
to be delivered upon the exercise of the Award, which shares so
withheld have an aggregate fair market value that equals (but
does not exceed) the required tax withholding payment; or
(iv) any combination of (i), (ii), or (iii). The Company
may, in its sole discretion, withhold any such taxes from any
other cash remuneration otherwise paid by the Company to the
Participant. The Committee may in the Award Agreement impose any
additional tax requirements or provisions that the Committee
deems necessary or desirable.
|
|
|
15.7
|
Assignability.
Incentive Stock Options may not
be transferred, assigned, pledged, hypothecated or otherwise
conveyed or encumbered other than by will or the laws of descent
and distribution and may be exercised during the lifetime of the
Participant only by the Participant or the Participants
legally authorized representative, and each Award Agreement in
respect of an Incentive Stock Option shall so provide. The
designation by a Participant of a beneficiary will not
constitute a transfer of the Stock Option. The Committee may
waive or modify any limitation contained in the preceding
sentences of this
Section 15.7
that is not required
for compliance with Section 422 of the Code.
|
Except as otherwise provided herein, Nonqualified Stock Options
and SARs may not be transferred, assigned, pledged, hypothecated
or otherwise conveyed or encumbered other than by will or the
laws of descent and distribution. The Committee may, in its
discretion, authorize all or a portion of a Nonqualified Stock
Option or SAR to be granted to a Participant on terms which
permit transfer by such Participant to (i) the spouse (or
former spouse), children or grandchildren of the Participant
(
Immediate Family Members
),
(ii) a trust or trusts for the exclusive benefit of such
Immediate Family Members, (iii) a partnership in which the
only partners are (1) such Immediate Family Members
and/or
(2) entities which are controlled by Immediate Family
Members, (iv) an entity exempt from federal income tax
pursuant to Section 501(c)(3) of the Code or any successor
provision, or (v) a split interest trust or pooled income
fund described in Section 2522(c)(2) of the Code or any
successor provision,
provided that
(x) there shall
be no consideration for any such transfer, (y) the Award
Agreement pursuant to which such Nonqualified Stock Option or
SAR is granted must be approved by the Committee and must
expressly provide for transferability in a manner consistent
with this Section, and (z) subsequent transfers of
transferred Nonqualified Stock Options or SARs shall be
prohibited except those by will or the laws of descent and
distribution.
Following any transfer, any such Nonqualified Stock Option and
SAR shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer,
provided that for purposes of
Articles 8, 9, 11, 13 and
15
hereof the term
Participant
shall be deemed to include the transferee. The events of
Termination of Service shall continue to be applied with respect
to the original Participant, following which the Nonqualified
Stock Options and SARs shall be exercisable or convertible by
the transferee only to the extent and for the periods specified
in the Award Agreement. The Committee and the Company shall have
no obligation to inform any transferee of a Nonqualified Stock
Option or SAR of any expiration, termination, lapse or
acceleration of such Stock Option or SAR.
A-23
The Company shall have no obligation to register with any
federal or state securities commission or agency any Common
Stock issuable or issued under a Nonqualified Stock Option or
SAR that has been transferred by a Participant under this
Section 15.7.
|
|
15.8
|
Use of Proceeds.
Proceeds from the sale of
shares of Common Stock pursuant to Incentives granted under this
Plan shall constitute general funds of the Company.
|
|
15.9
|
Legend.
Each certificate representing shares
of Restricted Stock issued to a Participant shall bear the
following legend, or a similar legend deemed by the Company to
constitute an appropriate notice of the provisions hereof (any
such certificate not having such legend shall be surrendered
upon demand by the Company and so endorsed):
|
On the face of the certificate:
Transfer of this stock is restricted in accordance with
conditions printed on the reverse of this certificate.
On the reverse:
The shares of stock evidenced by this certificate are
subject to and transferable only in accordance with that certain
Texas Capital Bancshares, Inc. 2010 Long-Term Incentive Plan, a
copy of which is on file at the principal office of the Company
in Dallas, Texas. No transfer or pledge of the shares evidenced
hereby may be made except in accordance with and subject to the
provisions of said Plan. By acceptance of this certificate, any
holder, transferee or pledgee hereof agrees to be bound by all
of the provisions of said Plan.
The following legend shall be inserted on a certificate
evidencing Common Stock issued under the Plan if the shares were
not issued in a transaction registered under the applicable
federal and state securities laws:
Shares of stock represented by this certificate have been
acquired by the holder for investment and not for resale,
transfer or distribution, have been issued pursuant to
exemptions from the registration requirements of applicable
state and federal securities laws, and may not be offered for
sale, sold or transferred other than pursuant to effective
registration under such laws, or in transactions otherwise in
compliance with such laws, and upon evidence satisfactory to the
Company of compliance with such laws, as to which the Company
may rely upon an opinion of counsel satisfactory to the
Company.
ARTICLE 16
ACCELERATION
OF AWARD VESTING
|
|
16.1
|
Application.
The provisions of this
Article 16
shall apply notwithstanding any
provisions of this Plan to the contrary.
|
|
16.2
|
Definitions.
|
|
|
|
|
(a)
|
Exempt Shares
means shares of Common Stock
designated as Exempt Shares pursuant to
Section 16.3.
|
|
|
|
|
(b)
|
Full Value Award
means any Award with a net
benefit to the Participant, without regard to any restrictions
such as those described in
Section 6.4(b)
, equal to
the aggregate Fair Market Value of the total shares of Common
Stock subject to the Award. Full Value Awards include Restricted
Stock and Restricted Stock Units, but do not include Stock
Options and SARs.
|
A-24
|
|
|
|
(c)
|
Tenure Award
means an Award hereunder of
cash, shares of Common Stock, units or rights based upon,
payable in, or otherwise related to, Common Stock that vests
over time based upon the Participants continued employment
with or service to the Company or its Subsidiaries.
|
|
|
16.3
|
Number of Shares Available for Awards.
No
more than 10% of the shares of Common Stock that may be
delivered pursuant to Awards under
Section 5.1(a)
may be shares designated as Exempt Shares.
|
|
16.4
|
Full Value Award Vesting.
Except as otherwise
provided herein, the Committee must grant all Full Value Awards
in accordance with the following provisions:
|
|
|
|
|
(i)
|
All Full Value Awards granted by the Committee that constitute
Performance Awards must vest no earlier than one (1) year
after the Date of Grant.
|
|
|
(ii)
|
All Full Value Awards granted by the Committee that constitute
Tenure Awards must vest no earlier than over the three
(3) year period commencing on the Date of Grant on a pro
rata basis.
|
|
|
(iii)
|
The Committee may not accelerate the date on which all or any
portion of a Full Value Award may be vested or waive the
Restriction Period on a Full Value Award except upon the
Participants death, Total and Permanent Disability or
Retirement or the occurrence of a Change in Control.
|
Notwithstanding the foregoing, the Committee may, in its sole
discretion, grant Full Value Awards with more favorable vesting
provisions than set forth in this
Section 16.3
or
accelerate the vesting or waive the Restriction Period for Full
Value Awards at any time, provided that the shares of Common
Stock subject to such Awards shall be Exempt Shares.
A copy of this Plan shall be kept on file in the principal
office of the Company in Dallas, Texas.
***************
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed as of April 2, 2010, by its Chief Executive
Officer and Secretary pursuant to prior action taken by the
Board.
TEXAS CAPITAL BANCSHARES, INC.
|
|
|
|
By:
|
/s/ George F. Jones, Jr.
|
|
|
|
|
Name:
|
George F. Jones, Jr.
|
|
|
Attest:
|
/s/ Peter B. Bartholow
|
CFO & Secretary
A-25
ANNUAL MEETING OF TEXAS CAPITAL BANCSHARES, INC. Date: Tuesday, May 18, 2010 Time: 10:00 a.m.
(Central Daylight Time) Place: 2000 McKinney Avenue 7th Floor, Dallas, Texas 75201 See Voting Instruction
on Reverse Side. Please make your marks like this: Use dark black pencil or pen only Board of Directors
Recommends a Vote FOR proposal 1 and proposal 2. 1: Election of Directors Vote For Withhold Vote *Vote For
All Nominees From All Nominees All Except *INSTRUCTIONS: To withhold authority to vote for any nominee, mark
the Exception box and write the number(s) in the space provided to the right. For Against Abstain 2: Approval
of the 2010 Long Term Incentive Plan. PROPOSAL(S) 1: Election of Directors Nominees: 01 George F. Jones, Jr. 08
Lee Roy Mitchell 02 Peter B. Bartholow 09 Steven P. Rosenberg 03 Joseph M. (Jody) Grant 10 Robert W. Stallings 04
Frederick B. Hegi, Jr. 11 Ian J. Turpin 05 Larry L. Helm 12 James H. Browning 06 James R. Holland, Jr. 13 Elysia
Holt Ragusa 07 W. W. McAllister III 2: Approval of the 2010 Long Term Incentive Plan. 3: The transaction of such
other business as may properly come before the Annual Meeting or any postponements or adjournments thereof.
To attend the meeting and vote your shares in person, please mark this box. Authorized Signatures This section
must be completed for your Instructions to be executed. Please Sign Here Please Date Above Please Sign Here Please
Date Above Annual Meeting of Texas Capital Bancshares, Inc. to be held Tuesday, May 18, 2010 For Holders as of March
31, 2010 INTERNET TELEPHONE Go To 866-390-5385 www.proxypush.com/tcbi UCast your vote online. OR UUse any touch-tone
telephone. UView Meeting Documents. UHave your Voting Instruction Form ready. UFollow the simple recorded instructions.
MAIL OR UMark, sign and date your Voting Instruction Form/Proxy Card. UDetach your Voting Instruction Form/Proxy Card.
UReturn your Voting Instruction Form/Proxy Card in the postage-paid envelope provided. All votes must be received by
5:00 P.M., May 17, 2010 (Eastern Daylight Time). PROXY TABULATOR FOR P.O. Box 8016 Cary, NC 27512-9903 EVENT #
CLIENT #
|
Revocable Proxy Texas Capital Bancshares, Inc. Annual Meeting of Shareholders May 18, 2010, 10:00 a.m. (Central
Daylight Time) This Proxy is Solicited on Behalf of the Board of Directors The undersigned appoints George F.
Jones, Jr. and Peter B. Bartholow, each with full power of substitution, to act as proxies for the undersigned,
and to vote all shares of common stock of Texas Capital Bancshares, Inc. that the undersigned is entitled to vote
at the Annual Meeting of Shareholders on Tuesday, May 18, 2010 at 10:00 a.m. at the offices of Texas Capital Bank,
National Association at 2000 McKinney Avenue, 7th Floor, Dallas, Texas 75201, and any and all adjournments
thereof, as set forth below. This proxy is revocable and will be voted as directed. However, if no instructions
are specified, the proxy will be voted FOR the nominees for directors specified in Item 1 and FOR Item 2.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
|