UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

☐		Preliminary Proxy Statement
☐		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material Pursuant to §240.14a-12

Independent Bank Group, Inc.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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2020

 

NOTICE OF ANNUAL MEETING

AND PROXY STATEMENT

 

 

 

 

 

LETTER TO SHAREHOLDERS

 

July 27, 2020

DEAR FELLOW SHAREHOLDER:

We are pleased to invite you to attend the 2020 Annual Meeting of Shareholders to be held online via live webcast on Thursday, August 27, 2020, at 3:30 p.m., Central Time. The website and log-in instructions for the meeting are as follows:

https://web.lumiagm.com/212773988

Meeting Passcode: IBTX2020 (case sensitive)

At the meeting, we will vote on Annual Meeting matters, including the election of Class I directors and other routine matters, as described in the Proxy Statement. While our 2020 Proxy Statement provides an overview of our 2019 performance, I think it is important to separately highlight our Company’s response to the challenging times presented in the first six months of 2020. We are proud of our Company’s resiliency in the face of the COVID-19 pandemic. Within our branches and corporate offices, we have embraced new health protocols and procedures to maintain the safety of both our employees and our customers alike. Further, we are working with our borrowers to navigate the economic uncertainties presented by the pandemic. To that end, our Company quickly took action to deliver Paycheck Protection Program loans to over 6,000 customers. Our team has proven to be strategic, nimble and creative in the face of all of the unprecedented challenges created by COVID-19. We are also keenly aware of current social issues at the forefront of our stakeholders’ minds. Guided by our core principles of leading with a courageous heart, building strong, healthy communities, developing resilient solutions, and establishing thriving relationships, our Company is collaborating with community leaders to effect positive social change.

One additional adjustment brought on by the events of 2020 is that our Company will conduct this year’s Annual Meeting exclusively online via live webcast. Whether or not you’re able to join us for our virtual Annual Meeting, it is important that your shares be represented. Please take a moment to carefully read each of the proposals described in this Proxy Statement, and complete, date, sign and return the enclosed proxy card as soon as possible. For your convenience, you may also use Internet or telephone voting according to the instructions on the proxy card.

We appreciate your continued support of our Company and look forward to you joining us for the live webcast of our Annual Meeting.

Sincerely,

 

 

David R. Brooks

Chairman, Chief Executive Officer and President

 

 

 

NOTICE OF 2020 ANNUAL MEETING OF SHAREHOLDERS

 

TO THE SHAREHOLDERS OF INDEPENDENT BANK GROUP, INC:

The annual meeting of shareholders (the “Annual Meeting”) of Independent Bank Group, Inc. (the “Company”), will be held on Thursday, August 27, 2020 at 3:30 p.m., Central Time. The meeting will be conducted exclusively online by live webcast at:

https://web.lumiagm.com/212773988

Meeting Passcode: IBTX2020 (case sensitive)

Only shareholders as of the close of business on July 2, 2020 may attend the Annual Meeting, and any adjournment or postponement thereof. You will be able to access the webcast site fifteen (15) minutes prior to the meeting start time to check-in and to test your computer audio and video equipment. Upon entering the webcast site, you will be prompted to enter your control number found on your proxy card. If you are a beneficial owner, you will need to contact your broker to obtain your meeting control number. Virtual attendance at the meeting constitutes presence in person for purposes of quorum at the meeting. You will be able to vote your shares electronically and view the list of shareholders entitled to vote by following the instructions on the webcast site. You will need the latest version of Chrome, Safari, Internet Explorer 11, Edge or Firefox. Should you require assistance in accessing the webcast, please call 1-800-468-9716.

The 2020 Annual Meeting is being conducted for the following purposes:

 

1.	To elect three (3) directors named in the proxy statement (the “Proxy Statement”);

 

2.	To conduct an advisory, non-binding vote regarding the compensation of the Company’s named executive officers (“Say-on-Pay”);

 

3.	To ratify the appointment of RSM US LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2020; and

 

4.	To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

A Proxy Statement describing these proposals is attached. If you have any questions concerning the Proxy Statement, would like additional copies of the Proxy Statement or need help voting your shares of the Company’s common stock, please contact Nicole Metcalf, the Company’s Corporate Secretary, at (972) 562-9004.

By Order of the Board of Directors,

 

 

Nicole Metcalf

Corporate Secretary

McKinney, Texas

July 27, 2020

 

TABLE OF CONTENTS

 

OUR  PROXY STATEMENT					1
OUR COMMITMENT TO OUR STAKEHOLDERS					3
OUR ANNUAL MEETING					6
OUR PERFORMANCE					11
PROPOSAL I:		ELECTION OF DIRECTORS			12
Our Board of Directors					12
Identification  & Evaluation of Director Candidates					13
Nominees for Election					14
Continuing Directors					17
Executive Officers					19
Board Governance					21

		Director Independence					21
		Board Leadership and Committees					21
		Meetings & Attendance					27
		Board Diversity					27
		Shareholder Engagement					28
		Code of Conduct					28
		Code of Ethics for Financial Professionals					28
		Corporate Governance Guidelines					28
		Compensation Committee Interlocks  and Insider Participation					29

Related Person  and Certain Other Transactions					30
Stock Ownership of Directors, Nominees, Executive Officers and Principal Shareholders					32
Section  16(a) Beneficial Ownership Reporting Compliance					34
Director Compensation					35

PROPOSAL II:		ADVISORY VOTE ON EXECUTIVE COMPENSATION (“SAY-ON-PAY”)			36
Advisory Vote					36
Compensation Discussion & Analysis					37

		Overview					37
		Executive Summary					37
		Compensation Philosophy and Objectives					37
		Say-on-Pay					38
		Elements of Compensation					38
		Merger-Related Compensation Actions					42
		Role of the Compensation Committee and Executives in Establishing Compensation					46
		Compensation Consultant					46

Board of Directors Compensation Committee Report on Executive Compensation					48
Summary Compensation Information					49
Grants of Plan-Based Awards					50
Outstanding Equity Awards at Fiscal Year-End					51
Option Exercises and Stock Vested					52
Potential Payments Upon Termination or Change in Control					53
CEO Pay Ratio					55
PROPOSAL III:		RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2020			56
Fees Paid to Independent Registered Public Accounting Firm					56
Audit Committee Pre-Approval Policies and Procedures					57
Audit Committee Report					57
SUBMISSION OF SHAREHOLDER PROPOSALS FOR 2020 ANNUAL MEETING					59
VOTING					60
OTHER MATTERS					61

 

 

PROXY STATEMENT 2020		|		INDEPENDENT BANK GROUP, INC.		I

OUR PROXY STATEMENT

 

ABOUT OUR PROXY STATEMENT

 

 

Unless the context otherwise requires, references in this Proxy Statement to “we,” “us,” “our,” “our company,” “the Company” or “Independent” refer to Independent Bank Group, Inc., a Texas corporation, and its consolidated subsidiaries as a whole; references to the “Bank” refer to Independent Bank, a wholly owned subsidiary of the Company. In addition, unless the context otherwise requires, references to “shareholders” are to the holders of our voting securities, which consist of our common stock, par value $0.01 per share (“common stock”).

This Proxy Statement is being furnished in connection with the solicitation of proxies by the Board of Directors of the Company for use at the 2020 Annual Meeting of Shareholders of the Company to be held by webcast at https://web.lumiagm.com/212773988 on Thursday, August 27, 2020 at 3:30 p.m., Central Time, and any adjournments thereof for the purposes set forth in this Proxy Statement and the accompanying notice of the meeting. The passcode to access the meeting is IBTX2020. The passcode is case sensitive.

The close of business on July 2, 2020 has been fixed as the Record Date for the determination of shareholders entitled to notice of and to vote at the meeting or at any adjournment thereof. On the Record Date, there were 43,041,119 shares of our common stock issued and outstanding and entitled to vote at the meeting. A list of shareholders entitled to vote at the meeting will be available for inspection by any shareholder at the principal office of the Company during ordinary business hours for a period of at least ten days prior to the meeting. A list of shareholders entitled to vote will also be electronically available by separate web link on the meeting site that will host the webcast of the Annual Meeting. This Proxy Statement, the notice of the meeting and the enclosed proxy card are first being sent to shareholders on or about July 27, 2020.

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS

 

 

Pursuant to rules promulgated by the Securities and Exchange Commission (the “SEC”), the Company is providing access to its proxy materials both by sending you this full set of proxy materials and by notifying you of the availability of its proxy materials on the Internet. You may access the following information at www.ibtx.com.

 

•

Notice of 2020 Annual Meeting of Shareholders to be held by webcast on Thursday, August 27, 2020;

 

•

Proxy Statement for 2020 Annual Meeting of Shareholders;

 

•

Form of Proxy; and

 

•

Annual Report to Shareholders, including the Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 2019.

 

OUR PROXY STATEMENT

 

 

 

YOUR VOTE IS IMPORTANT

You are eligible to vote on the matters described in this Proxy Statement if you were a shareholder as of the close of business on July 2, 2020 (the “Record Date”). For your convenience, you may vote either online, by mail, by phone, or in person during the live webcast of our Annual Meeting of Shareholders. You may attend the Annual Meeting if you were the shareholder of record as of the Record Date, or by providing proof that you are the beneficial owner of share held in “street name” as outlined in the section of this Proxy Statement titled “Our Annual Meeting”.

 

Visit the website listed in your voting materials

Call the toll-free voting number in your voting materials

Mail your completed and signed voting materials

Vote in person during the live webcast of Annual Meeting of Shareholders

 

SUMMARY OF PROPOSALS

 

		Proposal I: Election of Directors The Board of Directors recommends that you vote FOR each nominee.
		Proposal II: Advisory Vote on Executive Compensation (“Say-on-Pay”) The Board of Directors recommends that you vote FOR this proposal.
		Proposal III: Ratification of the Appointment of Our Independent Registered Public Accounting Firm for 2020 The Board of Directors recommends that you vote FOR this proposal.

 

2		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

OUR COMMITMENT TO OUR STAKEHOLDERS

 

REAFFIRMING AND ENHANCING OUR COMMITMENTS

 

 

Independent Bank Group’s Board of Directors and leadership recognize that modern businesses have a responsibility to make the world a better place by emphasizing Environmental, Social, and Governance (ESG) issues in addition to financial results. The Company’s ESG initiatives are outlined in the following sections.

ENVIRONMENTAL & SOCIAL MATTERS

 

 

Over the past year, the Company has continued to focus on the broader concept of stakeholders – shareholders, customers, communities, employees, and society at large. The sections below illustrate some of the Company’s ongoing commitments to serve each group of stakeholders.

TO OUR CUSTOMERS

Our Company has a long track record of developing exceptional relationships with customers. We know their businesses and their needs, and our customers know us. We continually strive to raise our standard of service, and refine our product offerings to serve changing markets. As part of that process, we continue to adapt our technology to improve product availability and delivery. We are committed to enhancing our banking relationships, and will continue to leverage our unique experience and expertise to better understand and serve our customers in each and every market we serve.

With the onset of the COVID-19 pandemic, the Company took quick action to address customer needs. We stood ready to support our small business customers, authorizing over 6,000 Paycheck Protection Program (PPP) loans totaling an aggregate of over $820 million for existing customers. We are also working with customers whose businesses have been impacted by the economic dislocation caused by the pandemic and have developed short-term deferral programs for those customers. We increased education around making the most of mobile banking applications and developed a COVID-19 Resource Center (Resource Center) prominently displayed on our website for our customers. The Resource Center provides a wide range of information to help customers navigate these uncertain times, including fraud prevention, COVID-19 updates, FDIC resources, small business assistance, and frequently asked questions. The Company also remains committed to making sure that our customers feel safe and welcome in our locations. We are regularly sanitizing surfaces, requiring all employees to wear face coverings when interacting with customers, providing sneeze guard shields where appropriate, and adjusting the layout of our branch lobbies to encourage social distancing.

TO OUR COMMUNITIES

Our Company believes that building strong, healthy communities is a fundamental part of building a strong, healthy business. We are committed to serving our customers and the communities in which we do business through active corporate citizenship.

A tangible illustration of this commitment has been our leadership in helping to establish Family Health Center at Virginia Parkway, a Federally Qualified Health Center in McKinney, TX. The clinic, which opened in December 2017, provides a medical home (medical, dental, and behavioral healthcare) for members of our community who are uninsured or underinsured. The clinic operates on a sliding fee scale and no one is denied care because of an inability to pay. The clinic plays a significant role in eliminating health disparities in North Texas. In the period from January 1, 2019 through December 31, 2019, the clinic provided vital medical healthcare services to 3,481 unique patients and provided a total of 13,711 visits. Of those served, 43% were uninsured, and 61% were at or below 100% of poverty guidelines, 22% were African American and 36% were Hispanic or Latino patients. Independent Bank has provided the key financial resources to establish the clinic and is underwriting the clinic’s initial operations. In addition, and perhaps more importantly, Independent Bank has led the partnership and fundraising efforts to support the long-term operations of the clinic and has spearheaded development and construction of the clinic’s permanent home, scheduled to be completed late October of 2020. The total amount raised for this project is approximately $10 million, of which $2.5 million has been provided directly by the Company.

In addition, Independent Bank has a vibrant community grants program that supports the work of non-profits throughout the communities we serve. In 2019, organizations that we supported addressed a wide variety of current social issues, including educational support for at-risk youth, implementation of women owned small businesses,

 

OUR COMMITMENT TO OUR STAKEHOLDERS

 

 

re-entry of incarcerated individuals into corporate culture, resources for homeless and abused women and single mothers, family stabilization, veteran emergency assistance, first time homeowner education, hunger, and housing maintenance for low-income and disabled populations.

Our Company is proud that its robust partnerships with non-profit organizations goes beyond financial contribution alone, with employees regularly dedicating numerous volunteer and service hours to a variety of non-profit organizations throughout Texas and Colorado. The Company is especially proud of its Community Champions Program (“CCP”). Introduced in 2019, CCP identifies strategic community relationships to provide meaningful skills-based volunteer opportunities for employees. Employees are allotted up to 8 additional hours of paid time off to participate in service activities through CCP. Specific ways in which CCP participants give of their time and talent include:

 

•

Teaching budgeting classes to at-risk youth;

 

•

Conducting new home-buyer classes;

 

•

Walking first-generation college students through mock interviews; and

 

•

Teaching financial literacy in sponsored schools.

In 2019, employees volunteered 5,686 hours for a volunteer value of $144,589.

Our Company also sprang into action to make an impact in our community in the face of COVID-19. On April 1, 2020, our Company announced a $100,000 donation to support food banks and partner with agencies across Texas and Colorado. This investment is expected to result in the delivery of 355,000 meals, and provide meaningful paid employment through a North Texas non-profit organization that provides unemployed shift workers with paid opportunities, including within food banks.    

TO OUR EMPLOYEES

We are proud to be regularly recognized as a great place to work. We consistently strive to build a diverse and inclusive team and empower our employees to grow and develop in their roles. As our business continues to grow, we recognize the importance of maintaining a strong culture of both philanthropy and achievement. By offering educational assistance, self-improvement initiatives, and talent development opportunities, we’re able to encourage our employees to continue their growth and development.

The Company also offers competitive benefits to our employees, and is heavily invested in an active health and wellness program that constantly engages employees throughout the year with the goal of generating positive outcomes for the health and wellness of our team.

Additionally, in the face of COVID-19, the Company implemented safety protocols to protect our employees. These protocols include implementing work-from-home measures, requiring all staff to wear facial coverings, increasing cleaning protocols, providing tissues and hand sanitizer in abundance and emphasizing the importance of social distancing. The Company also provides Special Circumstance Pay to employees impacted by COVID-19 so they are not required to exhaust Personal Time Off to deal with the challenges the pandemic has created in their daily lives. These measures have allowed us to successfully sustain operations in an incredibly challenging environment.

TO OUR SHAREHOLDERS

The Board of Directors and the Company’s leadership remain committed to enhancing shareholder value. Management remains focused on producing consistent, strong earnings and returning those profits to shareholders through dividends and corporate share repurchases. Further, the Board and Company leadership recognize the need for active engagement with shareholders. Feedback from our shareholders influences the continual refinement of our governance objectives. The Company’s leadership regularly engages with, and solicits feedback from, our shareholders to ensure the alignment of interests.

 

GOVERNANCE MATTERS

We also recognize that managing risk is critical to achieve success. The Bank continues to maintain a holistic approach to risk management by emphasizing that all employees have shared ownership of risk management at the Bank and must work in concert to protect our customers and safeguard our stakeholders.

We believe that one of our strengths is our conservative credit culture. This approach toward managing credit risk through prudent underwriting and loan structuring has served us well in this challenging economic environment. Managing credit risk will continue to be the foundation of our approach to governance.

 

4		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

		OUR COMMITMENT TO OUR STAKEHOLDERS

 

 

The Company maintains a joint Risk Oversight Committee of the Board of Directors of the Company and of the Bank, which was originally established in 2018. The Risk Oversight Committee oversees the Bank’s Enterprise Risk Management (“ERM”) framework, which includes monitoring of key risks such as operational, strategic, financial, liquidity, market, credit, compliance and reputational risk. The ERM framework drives the identification, assessment, measurement, monitoring, aggregation, prioritization and reporting of risks across the Bank’s three lines of defense and supports management and the Board of Directors in their continued monitoring and effective management of material risks. The Risk Oversight Committee oversees risk across the entire Company and enhances the understanding of the Company’s overall risk tolerance and enterprise-wide risk management activities and effectiveness. The Risk Oversight Committee reports to the Board of Directors on a quarterly basis. Additional information about the functions and role of the Risk Oversight Committee is provided at page 26.

The Bank also maintains a Business Continuity Program (“BCP”) that has proven critical in the face of COVID-19. The BCP team is comprised of a deep field of expertise, with representatives from ERM, human resources, compliance, branch operations, legal and facilities. Our BCP team has been instrumental in monitoring the COVID-19 landscape and implementing and adjusting protocols and measures to ensure the Bank strikes the right balance between sustaining operations, employee and customer satisfaction, and compliance.

 

 

 

OUR ANNUAL MEETING

 

When and where will the meeting be held?

The Annual Meeting of Shareholders of the Company will be held on Thursday, August 27, 2020 at 3:30 p.m., Central Time. The meeting will be conducted exclusively by online live webcast at:

https://web.lumiagm.com/212773988

Meeting Passcode: IBTX2020 (case sensitive)

You will be able to access the meeting site fifteen (15) minutes prior to the meeting start time to check-in and to test your computer audio and video equipment. Upon entering the webcast site, you will be prompted to enter your control number found on your proxy card. If you are a beneficial owner, you will need to contact your bank or broker to obtain your meeting control number. Virtual attendance at the meeting constitutes presence in person for purposes of quorum at the meeting. You will be able to vote your shares electronically and view the list of shareholders entitled to vote by following the instructions on the webcast site. You will need the latest version of Chrome, Safari, Internet Explorer 11, Edge or Firefox.

Should you require assistance in accessing the webcast, please call 1-800-468-9716.

Why are we holding the Annual Meeting virtually?

The Board of Directors annually considers the appropriate format of our annual meeting of shareholders. As part of our effort to maintain a safe and healthy environment for our directors, members of management and shareholders who wish to attend the Annual Meeting, and in light of the COVID-19 pandemic, the Board of Directors believes that hosting a virtual meeting is in the Company’s and the shareholders’ best interests and enables increased shareholder attendance and participation during a time when many travel and gathering restrictions are in place and may limit attendance at the Annual Meeting. Furthermore, the Board of Directors has determined that hosting a virtual annual meeting of shareholders will provide expanded access, improved communication and cost savings. Hosting a virtual annual meeting enables increased shareholder attendance and participation since shareholders can participate from any location around the world. We believe that the virtual meeting format will provide shareholders a similar level of transparency to the traditional in-person meeting format and we will take steps to ensure such an experience.

What is the purpose of the meeting?

This is the 2020 Annual Meeting of Shareholders. At the meeting, shareholders will act upon the matters outlined in the notice attached to this Proxy Statement, including the following:

 

1.	To elect three (3) Class I directors to serve on the Board of Directors of the Company until the Company’s 2023 annual meeting of shareholders, and each until his or her respective successor is duly elected and qualified or until his or her earlier resignation or removal;

 

2.	To conduct an advisory (non-binding) vote regarding the compensation of the Company’s named executive officers (“Say-On-Pay”);

 

3.	To ratify the appointment of RSM US LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2020; and

 

4.	To transact such other business as may properly come before the meeting or any adjournment thereof.

How do I vote?

You may vote electronically during the webcast of the Annual Meeting by following the instructions provided on the webcast site. You may also vote by proxy via Internet/mobile, by telephone, or by mail.    

What is a proxy?

A proxy is another person that you legally designate to vote your stock. If you designate someone as your proxy in a written document, that document is also called a “proxy” or a “proxy card.” The proxy card sets forth instructions for voting your shares by proxy via Internet/mobile, by telephone or by mail.

 

6		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

		OUR ANNUAL MEETING

 

 

What is a proxy statement?

A proxy statement is a document that describes the matters to be voted upon at the meeting and provides additional information about the Company. Pursuant to regulations of the SEC, we are required to provide you with a proxy statement containing certain information when we ask you to sign and return a proxy card to vote your stock at a meeting of the Company’s shareholders.

Who is entitled to vote at the meeting?

The holders of record of the Company’s common stock as of 5:00 p.m. (Central Time) on July 2, 2020, which is the date that the Company’s Board of Directors has fixed as the Record Date for the meeting, are entitled to vote at the meeting.

What is the Record Date and what does it mean?

The Record Date to determine the shareholders entitled to notice of and to vote at the meeting is the close of business on July 2, 2020. The Record Date is established by the Board of Directors as required by Texas law. On the Record Date, 43,041,119 shares of our common stock were issued and outstanding.

What are the voting rights of the shareholders?

Each holder of common stock is entitled to one vote for each share of common stock registered, on the Record Date, in such holder’s name on the books of the Company on all matters to be acted upon at the Annual Meeting of shareholders. The Company’s Charter prohibits cumulative voting.

The holders of at least a majority of the outstanding shares of common stock must be represented by those attending the live webcast of the Annual Meeting or by proxy, in order to constitute a quorum for the transaction of business. At any virtual or in-person meeting, whether or not a quorum is present, the chairman of the meeting or the holders of a majority of the issued and outstanding common stock attending the meeting or represented by proxy and entitled to vote at the meeting, may adjourn the meeting from time to time without notice or other announcement. In addition, the chairman of the meeting has the right and authority, either before or during the Annual Meeting, to prescribe such rules, regulations and procedures and to do all such acts and things as are necessary or desirable for the proper conduct of the meeting, including, without limitation, the establishment of procedures for the maintenance of order and safety, limitations on the time allotted to questions or comments on the affairs of the Company, restrictions on entry to such meeting, the opening and closing of the voting polls, the presentation, revocation and counting of proxies at the meeting with respect to issues to be presented, and all other aspects of the Annual Meeting of shareholders.

What is the difference between a shareholder of record and a “street name” holder?

If your shares are registered directly in your name with EQ Shareowner Services, the Company’s stock transfer agent, you are considered the shareholder of record with respect to those shares. The Proxy Statement and proxy card have been sent directly to you by EQ Shareowner Services at the Company’s request.

If your shares are held in a stock brokerage account or by a bank or other nominee, the nominee is considered the record holder of those shares. You are considered the beneficial owner of these shares, and your shares are held in “street name.” The Proxy Statement and proxy card have been forwarded to you by your nominee. As the beneficial owner, you have the right to direct your nominee concerning how to vote your shares by using the voting instructions that your nominee included in the mailing or by following its instructions for voting.

What is a broker non-vote?

A broker non-vote occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner. Your broker has discretionary authority to vote your shares with respect to the ratification of the appointment of RSM US LLP as our independent registered public accounting firm (Proposal III). In the absence of specific instructions from you, your broker does not have discretionary authority to vote your shares with respect to the election of directors to our Board of Directors (Proposal I) or with respect to the advisory (non-binding) vote regarding the Say-On-Pay resolution (Proposal II).

What should I do if I receive more than one set of voting materials?

You may receive more than one set of voting materials, including multiple copies of this Proxy Statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage

 

OUR ANNUAL MEETING

 

 

account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. Similarly, if you are a shareholder of record and hold shares in a brokerage account, you will receive a proxy card for shares held in your name and a voting instruction card for shares held in “street name.” Please complete, sign, date and return each proxy card and voting instruction card that you receive to ensure that all your shares are voted.

What do I need to do now?

After you have thoroughly read and considered the information contained in this Proxy Statement, you have two options:

 

1)	Proceed to vote your shares by proxy in one of the following ways:

 

•

simply indicate on the proxy card(s) applicable to your common stock how you want to vote and sign, date and mail your proxy card(s) in the enclosed pre-addressed postage-paid envelope as soon as possible to ensure that it will be received in advance of the meeting;

 

•

call 1-866-883-3382 using a touch-tone telephone and follow the instructions provided on the call; or

 

•

go to the website www.proxypush.com/ibtx and follow the instructions for Internet voting on that website.

OR

 

2)	Attend the live webcast of the Annual Meeting and vote your shares electronically as instructed during the webcast.

Your proxy card must be received by the Company no later than the time the polls close for voting at the meeting for your vote to be counted at the meeting. Please note that telephone and Internet voting will close at 11:59 p.m., Central Time, on August 26, 2020. Voting instruction cards for those who own shares through participation in the Independent Bank 401(K) Profit Sharing Plan must be received no later than 11:59 p.m., Central Time, on August 24, 2020 for those votes to be counted at the meeting.

Voting your shares by proxy will enable your shares of common stock to be represented and voted at the virtual meeting if you do not attend the meeting and vote your shares during the live webcast of the Annual Meeting.

What happens if there are technical difficulties during the Annual Meeting?

If we experience technical difficulties at the Annual Meeting and are not able to resolve them within a reasonable amount of time, we will adjourn the Annual Meeting to a later date or time and will provide notice of the date and time of such adjourned meeting on a Current Report on Form 8-K that we will file with the SEC.

What are the Board of Directors’ recommendations on how I should vote my shares?

The Board of Directors recommends that you vote your shares as follows:

 

Proposal I		FOR the election of each nominee for director;
Proposal II		FOR the advisory, non-binding “Say-on-Pay” resolution; and,
Proposal III		FOR the ratification of appointing RSM US LLP as our independent registered public accounting firm for the year ending December 31, 2020.

How will my shares be voted if I return a signed and dated proxy card, but don’t specify how my shares will be voted?

If you are a record holder who returns a completed proxy card that does not specify how you want to vote your shares on one or more proposals, the proxies will vote your shares for each proposal as to which you provide no voting instructions, and such shares will be voted in the following manner:

 

Proposal I		FOR the election of each nominee for director;
Proposal II		FOR the advisory, non-binding “Say-on-Pay” resolution;
Proposal III		FOR the ratification of appointing RSM US LLP as our independent registered public accounting firm for the year ending December 31, 2020.

If you are a “street name” holder and do not provide voting instructions on one or more proposals, your bank, broker or other nominee will be unable to vote those shares, except that the nominee will have discretion to vote on the ratification of the appointment of RSM US LLP (Proposal III).

 

8		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

		OUR ANNUAL MEETING

 

 

What are my choices when voting?

In the election of directors, you may vote for all director nominees or you may withhold your vote as to one or more director nominees. With respect to each of the other proposals, you may vote for the proposal, against the proposal or abstain from voting on the proposal.

Who counts the votes?

All votes will be tabulated by the inspector of election appointed for the meeting. Votes for each proposal will be tabulated separately.

Can I attend the meeting and vote during the meeting?

Yes. All shareholders are invited to attend the live webcast of the Annual Meeting and instructions will be provided within the webcast for how to vote your shares electronically during the meeting.

If your shares of common stock are held in “street name,” then you are not the shareholder of record. In order for you to vote the shares that you beneficially own and that are held in “street name” during the live webcast of the meeting, you must contact your bank or broker and request a legal proxy and a meeting control number to attend the meeting.

May I change my vote after I have submitted my proxy card?

Yes. Regardless of the method used to cast a vote, if a shareholder is a holder of record as of the Record Date, he or she may change his or her vote by:

 

•

delivering to the Company prior to 3:30 p.m. Central time on August 27, 2020 a written notice of revocation addressed to: Nicole Metcalf, Corporate Secretary, 7777 Henneman Way, Floor 6, McKinney, Texas 75070;

 

•

completing, signing and returning a new proxy card with a later date than your original proxy card (such that your new proxy card is received by the Company no later than the time the polls close for voting at the meeting) and any earlier proxy will be revoked automatically;

 

•

logging onto the Internet website specified on your proxy card in the same manner you would to submit your proxy electronically or by calling the telephone number specified on your proxy card, in each case if you are eligible to do so and following the instructions indicated on the proxy card prior to 11:59 p.m. Central Time on August 26, 2020;

 

•

attending the live webcast of the meeting on August 27, 2020 at 3:30 p.m. Central Time and voting electronically as instructed therein, and any earlier proxy will be revoked. However, simply attending the meeting without voting will not revoke your proxy.

If your shares are held in “street name” and you desire to change any voting instructions you have previously given to the record holder of the shares of which you are the beneficial owner, you should contact the broker, bank or other nominee holding your shares in “street name” in order to direct a change in the manner your shares will be voted.

What percentage of the vote is required to approve each proposal?

Assuming the presence of a quorum, the three (3) director nominees who receive an affirmative majority of the votes cast by the shareholders entitled to vote for their election and present during the live webcast of the Annual Meeting or represented by proxy at the meeting will be elected (Proposal I).

The approval of the advisory vote on executive compensation (“Say-on-Pay”) (Proposal II), and the ratification of RSM US LLP’s appointment as the Company’s independent registered public accounting firm for 2020 (Proposal III) will require the affirmative vote of the holders of a majority of the votes cast by the shareholders entitled to vote and present during the live webcast of the Annual Meeting or represented by proxy at the meeting.

How are broker non-votes and abstentions treated?

Brokers, as holders of record, are permitted to vote on certain routine matters, but not on non-routine matters. A broker non-vote occurs when a broker does not have discretionary authority to vote the shares and has not received voting instructions from the beneficial owner of the shares. The only routine matter to be presented at the meeting is the ratification of the appointment of the independent registered public accounting firm (Proposal III). If you hold shares in street name and do not provide voting instructions to your broker, those shares will be counted as broker non-votes for all non-routine matters.

 

OUR ANNUAL MEETING

 

 

A broker non-vote or a withholding of authority to vote with respect to one or more nominees for director will not have the effect of a vote against such nominee or nominees because broker non-votes and abstentions are counted for purposes of determining the presence or absence of a quorum, but are not counted as votes cast at the meeting. Any abstentions will not have the effect of a vote against the proposals with respect to the Say-On-Pay vote (Proposal II) or the ratification of RSM US LLP’s appointment as the Company’s independent registered public accounting firm (Proposal III). Because the ratification of the appointment of the independent registered public accounting firm is considered a routine matter and a broker or other nominee may generally vote on routine matters, no broker non-votes are expected to occur in connection with this proposal. The advisory, non-binding vote on executive compensation is considered a non-routine matter and, as such, broker non-votes will be deemed “shares not present” for voting purposes. “Shares not present” will not count as votes for or against these proposals and will not be included in calculating the number of votes necessary for approval of such matters.

Do I have any dissenters’ or appraisal rights with respect to any of the matters to be voted on at the meeting?

No. None of our shareholders has any dissenters’ or appraisal rights with respect to the matters to be voted on at the meeting.

What are the solicitation expenses and who pays the cost of this proxy solicitation?

Our board is asking for your proxy, and we will pay all of the costs of soliciting shareholder proxies. We may use officers and employees of the Company to ask for proxies, as described below. The Company will reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for their reasonable expense in forwarding the proxy materials to beneficial owners of the Company’s common stock.

Is this Proxy Statement the only way that proxies are being solicited?

No. In addition to the solicitation of proxies by use of the mail, if deemed advisable, directors, officers and regular employees of the Company may solicit proxies personally or by telephone or other means of communication, without being paid additional compensation for such services.

Are there any other matters to be acted upon at the Annual Meeting?

Management does not intend to present any business at the Annual Meeting for a vote other than the matters set forth in the notice and this Proxy Statement, and management has no information that others will do so. The proxy also confers on the proxies the discretionary authority to vote with respect to any other matter presented at the meeting. If other matters requiring a vote of the shareholders properly come before the meeting, it is the intention of the persons named in the accompanying form of proxy to vote the shares represented by the proxies held by them in accordance with applicable law and their judgment on such matters.

Where can I find voting results?

The Company expects to publish the voting results in a current report on Form 8-K, which it expects to file with the SEC within four business days following the meeting.

Who can help answer my questions?

The information provided above in this “Question and Answer” format is for your convenience only. We urge you to carefully read this entire Proxy Statement and the accompanying annual report. If you have additional questions about the Proxy Statement or the Annual Meeting, you should contact Nicole Metcalf, Corporate Secretary, Independent Bank Group, Inc., 7777 Henneman Way, Floor 6, McKinney, Texas 75070, telephone (972) 562-9004.

 

10		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

OUR PERFORMANCE

 

FINANCIAL HIGHLIGHTS

 

                         (IN THOUSANDS)

 

		2019								2018
Total Assets			$14,958,207								$9,849,965
Loans Held for Investment			$11,615,970								$7,887,800
Deposits			$11,941,336								$7,737,794
Net Income			$192,736								$128,259
Earnings per Share (diluted)			$4.46								$4.33
Nonperforming Assets to Total Assets			0.21	%							0.17	%
Nonperforming Loans to Total Loans (held for investment)			0.24	%							0.16	%
Net Charge-Offs to Average Loans Outstanding			0.07	%							0.06	%
Tier 1 Risk-Based Capital Ratio			10.19	%							10.41	%
Total Risk-Based Capital Ratio			11.83	%							12.58	%
Total Shareholders’ Equity			$2,339,773								$1,606,433

Notice: Annual Report on Form 10-K, As Amended

The Company’s Annual Report on Form 10-K, as amended, including consolidated financial statements and related notes, for the fiscal year ended December 31, 2019, as filed with the SEC, accompanies, but does not constitute a part of, this Proxy Statement.

 

PROPOSAL I: ELECTION OF DIRECTORS

 

OUR BOARD OF DIRECTORS

There are twelve (12) total seats on our Board of Directors. The Company currently has nine (9) members serving on the Board, leaving three (3) vacancies, resulting from the resignations of Douglas A. Cifu, Mark K. Gormley, and Tom C. Nichols. The number of directors may be changed only by resolution of the Board of Directors within the range set forth in the Company’s Charter (unless the Board and the Company’s shareholders act to amend the authorized number of directors designated in the Company’s Charter). The Board of Directors has the authority to increase the number of directors by two and fill such vacancies until the next annual meeting of Shareholders. As discussed in greater detail under the caption “Board Governance” below, the Board of Directors has affirmatively determined that seven of its nine current directors qualify as independent directors under Rule 5605(a)(2) of The Nasdaq Stock Market Rules and the regulations of the SEC.

Classification of the Company’s Directors

 

		Expiration of Term		Members		Committee Membership
Class I		2020		Daniel W. Brooks   Craig E. Holmes   G. Stacy Smith		Risk Oversight (Chair)   Audit (Chair), Risk Oversight   Corporate Governance and Nominating Committee (“CGNC”) (Chair), Audit, Compensation, Strategic Planning
Class II		2021		William E. Fair		Compensation (Chair), Strategic Planning
				Donald L. Poarch		CGNC
				Michael T. Viola		CGNC, Risk Oversight
Class III		2022		David R. Brooks   Alicia K. Harrison   J. Webb Jennings III		Strategic Planning (Chair)   CGNC   Audit, Compensation

Board Size and Director Ages, Tenure and Experience

As part of its annual review, the CGNC reviewed the size of the Board, which now stands at nine, and made the decision to recommend to the Board that existing Class I directors Daniel W. Brooks, Craig E. Holmes, and G. Stacy Smith be nominated for re-election. The average age of the Board is 56 years, with ages ranging from 33 to 69. Average tenure is 9 years, ranging from a low of one year to a high of 18 years. The Committee balances the need for board refreshment against the need for continuity, a broad range of experience, and an understanding of the regulatory framework in which the Company operates. The Bank also takes a strategic approach to prior board experience, recognizing that current and prior experience is valuable, but that it must also be measured with capacity and dedication to serving the needs of the Board. For this reason, the Company’s Corporate Governance Guidelines provide that directors may only serve on two (2) other public boards, without approval of the CGNC. None of the board of directors serve on more than two (2) other public boards. Our Board is rich in experience across a variety of industries including lending, real estate, oil and gas, capital markets, healthcare, technology and human resources. We particularly value that our Board is deeply rooted in risk management, corporate governance and financial institutions experience, as demonstrated below.

 

 

12		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

		PROPOSAL I: ELECTION OF DIRECTORS

 

 

IDENTIFICATION & EVALUATION OF DIRECTOR CANDIDATES

 

The Company’s business is conducted under the oversight of the Board of Directors. In the pursuit of a culture of integrity and service throughout the Company, the Board of Directors is focused on ensuring prospective directors are of the highest character and qualifications. Furthermore, the Board of Directors is focused on ensuring the leadership structure is suited to the growing size, complexity and needs of the Company and in the interests of shareholders.

The Board of Directors examines potential candidates, giving preference to candidates with strong character, sound judgment, demonstrated leadership abilities, and deep experience across a broad variety of industries relevant to the Company’s business. The Board of Directors believes that candidates should possess diverse backgrounds and perspectives in furtherance of complementary skills and experiences that can best serve the Company and shareholders’ interests.

The Board of Directors believes that the communities in which the Company operates are best served by a Board of Directors that is deeply mindful of the Company’s corporate citizenship.

Key Director Attributes

 

 

The identification and evaluation of director candidates takes place in the context of the ongoing board renewal and refreshment process. The CGNC is responsible for the assessment of the Board of Directors’ membership and the identification and evaluation of potential director candidates. A brief outline of the CGNC’s process is as follows:

 

1.

Ongoing Review of Directors

One of the primary responsibilities of the CGNC is to ensure that the mix of directors on the Board of Directors is suitable for the Company’s strategy and needs. The CGNC evaluates the collective experiences of directors as well as the gender, race, ethnicity, tenure, and age of all directors with the goal of maintaining a diverse mix of perspectives, experiences, knowledge and insights. The CGNC performs this analysis on an ongoing basis, and balances the benefits of board refreshment against the need for continuity, a broad range of experience, and an understanding of the regulatory framework in which the Company operates.

 

2.

Identification of Candidates

In order to adequately develop effective succession planning for the Board of Directors, the CGNC regularly evaluates a diverse group of possible director candidates. Criteria for new directors will mirror the needs of the organization, and will take into account growth into new markets and the changing needs of customers and communities served by the organization. The CGNC recognizes the importance of diversity in its consideration of director candidates, and will continue to include diversity as a part its holistic process for the selection of possible director candidates.

 

3.

Evaluation of Candidates

The CGNC takes a comprehensive approach to the consideration of director candidates, and will take into account available information on a candidate including skills, experience, character, independence, absence of conflicts, and any potential reputational risk. The CGNC will evaluate a candidate’s existing commitments in the context of the substantial time commitment that is required to serve on the Company’s Board of Directors. The CGNC will occasionally review its evaluation criteria to ensure that the Company’s needs and shareholder interests are adequately addressed in the evaluation process.

 

PROPOSAL I: ELECTION OF DIRECTORS

 

 

NOMINEES FOR ELECTION

The Board of Directors is presenting three nominees for election at our Annual Meeting, all of whom currently serve as directors. After the 2019 annual meeting of shareholders, the Company had twelve directors. Douglas A. Cifu, Mark K. Gormley, and Tom C. Nichols resigned from the Board of Directors on July 25, 2019, January 20, 2020, and June 3, 2020, respectively. The Board currently has nine (9) directors. The Board of Directors has adopted resolutions nominating for re-election three existing Class I directors, Daniel W. Brooks, Craig E. Holmes, and G. Stacy Smith.

 

Director Class

Director Since

Age

Gender

Financial Institution Experience

CEO/Business Leader Experience

Class I

Daniel W. Brooks

2002

59

Male

Yes

Yes

Class I

Craig E. Holmes

2013

63

Male

Yes

Yes

Class I

G. Stacy Smith

2013

53

Male

Yes

Yes

The proposed Class I directors would be elected to serve three-year terms, with their terms set to expire at the annual meeting of shareholders in 2023. The number of directors may be changed only by resolution of the Board of Directors within the range set forth in the Company’s Charter unless the Board and the Company’s shareholders act to amend the authorized number of directors designated in the Company’s Charter.

The nominees are well-respected and accomplished leaders who have extensive, varied backgrounds in complex, highly-regulated businesses. Each nominee brings a unique, diverse skillset and background to the Board of Directors. Each of the nominees has served as Class I directors for at least a full term and has demonstrated substantial value to the Company on an ongoing basis and provide continuity in the oversight and execution of the Company’s long-term strategy.

The nominees draw from a deep well of experience across industries and functional areas:

 

 

14		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

		PROPOSAL I: ELECTION OF DIRECTORS

 

 

The biographical information set forth below contains information regarding each nominee’s name, age as of our Annual Meeting date, principal occupation, service as a director and/or executive officer, relevant business experience, other directorships currently or recently held, information regarding the involvement in certain legal or administrative proceedings (if applicable), and the experiences, qualifications, attributes, or skills that caused the CGNC and the Board of Directors to advance nomination of each candidate.

 

DANIEL W. BROOKS Vice Chairman and Chief Risk Officer
Age: 59   Director Since: 2002   Committees: • Risk Oversight (Chair)		Background   Daniel W. Brooks is Vice Chairman, Chief Risk Officer and a director of the Company. He has served as Vice Chairman and a director of the Company since 2009 and as Chief Risk Officer of the Company since April 2013. He previously served as President and a director of the Company from 2002 to 2009 and has functioned as the Company’s Chief Credit Officer throughout his tenure. Mr. Brooks began his banking career in the early 1980s with a large regional bank and has been active in community banking since the late 1980s. Mr. Brooks has served in numerous leadership roles in the Collin County community, including service as Chairman of the Board for Medical Center of McKinney and on the boards of directors of McKinney Christian Academy and the McKinney Education Foundation. Daniel W. Brooks is the brother of David R. Brooks.				Qualifications   Mr. Brooks’ qualifications to serve on the Company’s Board of Directors include his extensive experience in the banking industry, and specifically as an executive officer and director of the Company.

 

CRAIG E. HOLMES Executive Vice President and Chief Financial Officer of Neovia Logistics
Age: 63   Director Since: 2013   Committees: • Audit (Chair) • Risk Oversight		Background   Craig E. Holmes is a member of the board of directors of the Company, joining the board in February 2013. He also serves on the board of directors of Hobi International, Inc., joining the board in August 2009 and the board of directors of Leopard Mobility Inc., joining the board in October 2014. Mr. Holmes currently serves as Executive Vice President and Chief Financial Officer of Neovia Logistics, joining the company in June 2020. From October 2015 through April 13, 2018, Mr. Holmes served in several executive positions at Global Power Equipment Group, Inc., an engineering, manufacturing and services company, including President and Co-Chief Executive Officer, Senior Vice President, and Chief Financial Officer. Mr. Holmes served as Chief Financial Officer of Goodman Networks Incorporated, from December 2014 to March 2015, and as Executive Vice President and Chief Financial Officer of Sizmek, Inc., formerly Digital Generation, Inc., a global advertising campaign management company, from October 2012 until December 2014. Prior to 2012, Mr. Holmes held executive positions at several public and private companies and was a partner at Arthur Andersen, a national public accounting firm, where he worked from 1982 to 1995. Mr. Holmes holds a Master’s and BBA from Texas Tech University. He served on the University of Texas at Dallas School of Management Board of Advisors from January 2003 to December 2009 and the Dallas Summer Musicals Board of Directors from December 2004 to January 2010. Mr. Holmes is currently active in several charitable organizations.				Qualifications   Mr. Holmes’ qualifications to serve on the Company’s Board of Directors include his extensive experiences on other boards and executive management of publicly traded companies, including his experience in strategy, finance, audit and governance and his experience as a director of the Company.

 

PROPOSAL I: ELECTION OF DIRECTORS

 

 

G. STACY SMITH Managing Partner of SCW Capital, L.P.
Age: 53   Director Since: 2013   Committees: • Audit • Compensation • CGNC (Chair) • Strategic Planning		Background   G. Stacy Smith is a member of the Board of Directors of the Company, joining the board in February 2013. Mr. Smith is the Managing Partner of SCW Capital, L.P., a private equity hedge fund focusing on financial and energy sectors, a position he has held since August 2013. Mr. Smith is also co-founder and an active partner in Trinity Investment Group, which invests in private equity and hard assets. Mr. Smith co-founded Walker Smith Capital, a long/short equity hedge fund based in Dallas, Texas, and he served as co-portfolio manager of that firm for sixteen years. From 1994 through 1996, Mr. Smith was a co-founder and manager of Gryphon Partners, a long/short equity hedge fund focused on small and mid-cap domestic equities. He started his investment career as an energy analyst at Wasserstein Perella & Co., an international investment bank. Mr. Smith serves as a director of USD Partners, LP, a master limited partnership involved in the acquisition and development of energy related logistics assets, and WhiteHorse Finance, Inc., a closed end management investment company. He is a member of the Salesmanship Club of Dallas, an association of business professionals that supports local charitable organizations.				Qualifications   Mr. Smith’s qualifications to serve on the Company’s Board of Directors include his extensive experience in overseeing the management of investment firms, his knowledge of banking, financial and energy markets and his experience as a director of the Company.

If a nominee becomes unavailable to serve as a director for any reason before the election, the shares represented by proxy will be voted for such other person, if any, as may be designated by the Board of Directors. The Board of Directors has no reason to believe that any nominee will be unavailable to serve as a director. All of the nominees have consented to being named herein and to serve if elected.

Shareholder Approval

The affirmative vote of a majority of the votes cast by shareholders entitled to vote and in attendance during the live webcast of the Annual Meeting or represented by proxy at the Annual Meeting is required for the election of each of the nominees for director.

 

 

16		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

		PROPOSAL I: ELECTION OF DIRECTORS

 

 

CONTINUING DIRECTORS

 

The biographical information set forth below outlines the community engagement, business experience and banking experience (if applicable) of the Company’s continuing directors who are not up for re-election. Other than described below, no director or director nominee has any family relationship, as defined in Item 401 in Regulation S-K, with any other director or with any of the Company’s executive officers.

 

DAVID R. BROOKS Chairman, CEO and President of Independent Bank Group, Inc.
Age: 61   Director Since: 2002   Committees: • Strategic Planning (Chair)		Background   David R. Brooks is Chairman of the Board of Directors, CEO and President of the Company. He has been active in community banking since the early 1980’s and founded the Company in 1988. Mr. Brooks has a long history of community and civic involvement, and is passionate about education. He served as a McKinney City Councilman. He served five years as President of the Board of Trustees at McKinney Independent School District and three years on both the McKinney Economic Development Corporation Board and the McKinney Chamber of Commerce Board. Mr. Brooks served as the Chief Financial Officer for Baylor University from 2000 to 2004. He served as Chairman of the Board of Directors of Noel-Levitz, Inc., a national higher education consulting company, and also Chairman of the Board of Trustees at Houston Baptist University. He currently serves as Chairman of the Board of Directors of Capital Southwest Corporation (CSWC). Mr. Brooks holds Bachelor’s (1980) and Master’s (1981) degrees in business from Baylor University. Mr. Brooks is the brother of Daniel W. Brooks.				Qualifications   Mr. Brooks’ qualifications to serve on the Company’s Board of Directors include his intimate working knowledge of the Company since its inception, his extensive knowledge and experience in banking and finance, and his knowledge of the Company’s key markets and customers as well as his service on other boards of directors.

 

WILLIAM E. FAIR Chairman and Chief Executive Officer of Home Abstract and Title Company
Age: 59   Director Since: 2009   Committees: • Compensation (Chair) • Strategic Planning		Background   William E. Fair is a member of the Board of Directors of the Company. He joined the board when IBG Central Texas was combined with the Company in 2009, prior to which he served as a director of IBG Central Texas beginning in 2007. Mr. Fair has served as the Chairman and Chief Executive Officer of Home Abstract and Title Company, a title insurance agency located in Waco, Texas, since 1984 and has served on the Board of Directors of Capstone Mechanical, LLC since 2005. He also serves on the board of trustees of Hillcrest Baptist Medical Center, Scott & White Healthcare, further serving as Chairman of the Board of Development for that organization.				Qualifications   Mr. Fair’s qualifications to serve on the Company’s Board of Directors include his extensive experience in the real estate industry and his experience as a director of the Company.

 

PROPOSAL I: ELECTION OF DIRECTORS

 

 

ALICIA K. HARRISON Former EVP of Commercial Banking for Wells Fargo & Company
Age: 61   Director Since: 2019   Committees: • CGNC		Background   Alicia K. Harrison is a member of the Board of Directors of the Company, joining the board in 2019. Ms. Harrison previously worked for Wells Fargo & Company and its predecessor banks from 1986 until 2012, when she retired as Executive Vice President of Commercial Banking. Her responsibilities at Wells Fargo included positions as area manager and group head for the Southwest Regional Commercial Banking Office, manager of the Real Estate Department, and as a member of the integration team for the Government and Institutional Banking Group integrating the employees and clients of Wachovia Corporation following its acquisition in 2008. Ms. Harrison serves on the Board of Directors of Ryan Companies US, Inc., a national commercial real estate development, design and management company, and concurrently serves on the Board of Directors of CIM Real Estate Finance Trust, Inc. a publicly-registered non-listed real estate investment trust focusing on high-quality, income-producing necessity retail properties.				Qualifications   Ms. Harrison’s qualifications to serve on the Company’s Board of Directors include her deep experience in banking and real estate in high-growth organizations and her experience serving on the board of directors for other companies, as well as her experience as a director of the Company.

 

J. WEBB JENNINGS President of Salt Investment Partners
Age: 50   Director Since: 2014   Committees: • Compensation • Audit		Background   J. Webb Jennings, III is a member of the Board of Directors of the Company, joining the Board in April 2014 in connection with the Company’s acquisition of BOH Holdings, Inc. and its subsidiary, Bank of Houston. Mr. Jennings founded Salt Investment Partners in January 2016 to focus on direct investing in lower, middle-market companies. He previously served as a vice president at Hancock Park Associates, a middle market private equity firm with offices in Houston, Texas, and Los Angeles, California, from 2007 to 2015. Mr. Jennings served on the Bank of Houston Board of Directors since that bank was formed in 2005 as well as the BOH Holdings Board of Directors. He currently serves on the Boards of Directors of Alloy Merchant Finance, Automation Technology, Inc., and a privately held, diversified investment company. Mr. Jennings also serves on the boards of directors of several Houston based charitable organizations and foundations. Mr. Jennings graduated with a B.A. from The University of Texas and an M.B.A. from Southern Methodist University.				Qualifications   Mr. Jennings’ qualifications to serve on the Company’s Board of Directors include his extensive business experience in Houston and his experience as a director of the Company.

 

DONALD L. POARCH Partner and Co-Owner of The Sprint Companies
Age: 69   Director Since: 2014   Committees: • CGNC		Background   Donald L. Poarch is a member of the Board of Directors of the Company, joining the board in April 2014 in connection with the Company’s acquisition of BOH Holdings, Inc. and its subsidiary, Bank of Houston. Mr. Poarch has been a partner and co-owner of The Sprint Companies since 1976. The Sprint Companies are a diverse group of approximately ten different companies operating throughout the Texas Gulf Coast area. He had been a member of the BOH Holdings Board of Directors since 2008, and its chairman since 2012, and he was a member of the Bank of Houston’s Board of Directors since 2005, and its chairman since 2012, until the Company acquired BOH Holdings in April 2014. In the past 25+ years, Mr. Poarch has bought, sold and grown more than twenty companies. Mr. Poarch currently serves on the boards of directors for Keep Houston Beautiful and the Houston Clean City Commission. Mr. Poarch attended The University of Texas at Austin and is currently active in various civic and charitable foundations.				Qualifications   Mr. Poarch’s qualifications to serve on the Company’s Board of Directors include his extensive experience in the Houston business community and his experience as a director of the Company.

 

18		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

		PROPOSAL I: ELECTION OF DIRECTORS

 

 

MICHAEL T. VIOLA President of the Viola family office
Age: 33   Director Since: 2013   Committees: • CGNC • Risk Oversight		Background   Michael T. Viola is a member of the Board of Directors of the Company, joining the board in February 2013. Mr. Viola currently serves as the President of the Viola family office, a position he has held since March 2016. As President of the family’s investment office, Mr. Viola is responsible for overseeing the family’s operating businesses, public and private investment portfolio, banking relationships, and philanthropic work. Before joining the family investment office, Mr. Viola worked at Virtu Financial LLC (“Virtu”), a leading technology-enabled market making company, from 2010 to 2016. While employed at Virtu, Mr. Viola held multiple roles, including operations, project management, and trading, where he worked as a senior trader focused on foreign exchange products and global commodities. Mr. Viola currently serves on the Board of Directors at Virtu (NASDAQ:VIRT), iAero Group, an integrated aviation platform company backed by Blackstone/GSO, Crowheart Energy LLC, a private oil and gas company, and Madava Financial, LLC, an energy-focused finance company. Mr. Viola also serves on the board of The Viola Foundation, working to develop and deliver innovative programs in the education, national security, and faith based sectors. Mr. Viola is the son of the Company’s largest shareholder, Vincent Viola.				Qualifications   Mr. Viola’s qualifications to serve on the Company’s Board of Directors include his knowledge of financial markets, his familiarity with the Company given his family’s ownership of Independent Bank over the past thirty-two years, and his experience as a director of the Company.

EXECUTIVE OFFICERS

 

The biographical information set forth below outlines the background and experience of the Company’s executive officers who do not also serve on the Company’s Board of Directors. All officers of the Company are elected annually by the Board of Directors and serve at the discretion of the Board.

 

MICHELLE S. HICKOX Executive Vice President and Chief Financial Officer
Age: 53		Background   Michelle S. Hickox is Executive Vice President and Chief Financial Officer of the Company. Prior to joining the Company in May 2012, Ms. Hickox was an audit partner with RSM US LLP (formerly McGladrey LLP). Over her twenty-three-year career in public accounting, Ms. Hickox provided audit, financial reporting, internal control assistance and training to community banks and was a designated financial institution specialist. Ms. Hickox serves on the boards of the Baylor Oral Health Foundation and the Texas A&M 12th Man Foundation. She is a licensed certified public accountant and is a member of the AICPA, the Texas Society of Certified Public Accountants and the Dallas CPA Society.

 

JAMES C. WHITE Executive Vice President and Chief Operations Officer
Age: 55		Background   James C. White is the Executive Vice President and Chief Operations Officer of the Company, joining the Company in April 2016. He has over thirty years’ experience in the banking industry and has held a variety of management positions in finance, operations, product development, strategic planning, compliance and information technology. Prior to joining the Company, Mr. White served as Executive Vice President and Chief Operating Officer of Fischer & Company, a global corporate real estate firm that provides consulting, brokerage and technology solutions to many Fortune 500 companies from July 2015 to April 2016. Prior to Fischer, Mr. White served as Executive Vice President and Chief Operations Officer of Texas Capital Bank from February 2000 to June 2015 where he directed key operational areas and introduced and managed changes that supported growth for that bank. Mr. White holds a Bachelor’s of Science degree from the University of North Texas in business and control systems, is certified in Six Sigma, is a Certified Treasury Professional and is a current member of the Association of Financial Professionals.

 

PROPOSAL I: ELECTION OF DIRECTORS

 

 

JAMES P. TIPPIT Executive Vice President Corporate Responsibility
Age: 49		Background   James P. Tippit is Executive Vice President Corporate Responsibility of the Company and Independent Bank, assuming this position effective on January 8, 2018. Mr. Tippit oversees the Company’s and Independent Bank’s community development function. Mr. Tippit has been with Independent Bank since 2011 as Community Reinvestment Act (“CRA”) Officer and then Head of Corporate Responsibility. As Executive Vice President, he will continue to oversee Human Resources, CRA, Community Development, Marketing and Communications. Prior to his tenure at Independent Bank, Mr. Tippit worked for JP Morgan Chase in the Wealth Management Division and American Express Financial Advisors.

 

MARK S. HAYNIE Executive Vice President and General Counsel
Age: 64		Background   Mark S. Haynie is Executive Vice President and General Counsel of the Company and Independent Bank, effective March 1, 2018. Mr. Haynie has over thirty-five years’ experience in representing community banks in a wide variety of corporate, regulatory and securities matters. Prior to joining the Company, Mr. Haynie served as attorney, President and shareholder at Haynie Rake Repass & Klimko, P.C., a law firm, from 1996 to 2018. Mr. Haynie has represented the Company since its formation in 2002, serving as lead counsel on all of the Company’s M&A and capital markets transactions. Mr. Haynie is a graduate of Texas Tech University and The University of Texas School of Law.

 

MICHAEL B. HOBBS Executive Vice President and Chief Banking Officer
Age: 57		Background   Michael B. Hobbs is Executive Vice President and Chief Banking Officer of the Company and Independent Bank. Mr. Hobbs previously served as Executive Vice President and Colorado Market CEO for Independent Bank following the completion of the Guaranty acquisition on January 1, 2019. Prior to the Guaranty acquisition, Mr. Hobbs served as President and Director of Guaranty Bank and Trust Company. Mr. Hobbs has over twenty-five years’ experience in the banking and investment banking sectors, representing Bank of America, KeyBank and St. Charles Capital. Mr. Hobbs holds a Bachelor’s degree in Marketing (1984) and Master’s of Business Administration degree in Finance (1992) from Texas Christian University.

 

20		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

		PROPOSAL I: ELECTION OF DIRECTORS

 

 

BOARD GOVERNANCE

 

Director Independence

 

Under The Nasdaq Stock Market Rules, independent directors must comprise a majority of the Company’s Board of Directors. The Nasdaq Stock Market Rules, as well as those of the SEC, also impose several other requirements with respect to the independence of directors.   The Company’s Board of Directors has evaluated the independence of its members based upon The Nasdaq Stock Market Rules and SEC regulations. Applying these standards, the Board of Directors has affirmatively determined that, with the exception of David R. Brooks and Daniel W. Brooks, each of the Company’s directors is an independent director, as defined under Rule 5605(a)(2) of The Nasdaq Stock Market Rules (and/or other applicable rules) and under the regulations of the SEC. The Board of Directors determined that David R. Brooks and Daniel W. Brooks do not qualify as independent directors because of their positions as executive officers of the Company and/or Independent Bank.

Board Leadership and Committees

The Board of Directors is committed to leadership that provides an active, objective oversight of management and consistently serves the best interests of shareholders by executing strategic objectives and creating sustainable, long-term value. This central tenet of governance is reflected in the Company’s governance documents, including the Company’s Fourth Amended and Restated Bylaws, or the Bylaws, and other applicable policies and guidelines, and is actively shepherded by Board and committee leadership. The Board’s current leadership structure provides for both a Chairman and a Lead Independent Director.

Chairman

David R. Brooks currently serves as the Company’s Chairman of the Board, Chief Executive Officer and President. Mr. Brooks has served as Chairman and Chief Executive Officer since the inception of the Company in 2002. Mr. Brooks became President in 2016. Mr. Brooks’ primary duties are to lead the Company’s Board of Directors in establishing the Company’s overall vision and strategic plan and to lead the Company’s management in carrying out that plan. While the Company recognizes potential issues may arise when the Chairman and Chief Executive Officer positions are held by one person, the Company believes that the overall benefit of Mr. Brooks’ leadership in both roles outweighs any potential disadvantage of this structure, and that any concerns are mitigated by existing safeguards, including:

 

•

the designation of a Lead Independent Director with clearly defined authority, duties and responsibilities;

 

•

the highly regulated nature of the Company’s operations;

 

•

the fact that the Board is comprised of experienced and skilled directors, the majority of whom are independent;

 

•

the fact that the Board’s Audit Committee, Compensation Committee and CGNC consist entirely of independent directors; and

 

•

regular reviews of the Board’s leadership structure and governance practices

The Company has also structured its management team to mitigate any corporate governance risk related to the dual positions held by David R. Brooks. Daniel W. Brooks, the Company’s Vice Chairman and Chief Risk Officer, is responsible for overseeing the Company’s credit function, the most important component of the Company’s operations. By having other executive officers with separate and distinct roles, the Company believes that it will obtain benefits similar to the benefits of having a separate Chairman and Chief Executive Officer.

Lead Independent Director

The Company’s Lead Independent Director is G. Stacy Smith, who began serving in this role in July 2019 upon Mr. Cifu’s resignation. Mr. Smith serves as a liaison between the Chairman and the independent directors, presides over executive sessions of the independent directors, and consults with the Chairman on major corporate decisions.

 

PROPOSAL I: ELECTION OF DIRECTORS

 

 

Board Committees

In February 2013, the Company’s Board of Directors established standing committees at the Company level in connection with the discharge of its responsibilities. These committees include an Audit Committee, a Compensation Committee, CGNC and a Strategic Planning Committee. In 2018, the Board of Directors added a joint Risk Oversight Committee.

In the future, the Company’s Board of Directors also may establish such additional committees as it deems appropriate, in accordance with applicable law and regulations and the Company’s Charter and Bylaws.

 

AUDIT COMMITTEE   Members: Craig E. Holmes (Chair) G. Stacy Smith J. Webb Jennings, III Jack Radke (Bank Board Rep.)   All members Independent   Meetings held in 2019: 10		The Company’s Board of Directors has evaluated the independence of each of the members of the Audit Committee and has affirmatively determined that (i) each of the members meets the definition of an “independent director” under The Nasdaq Stock Market Rules, (ii) each of the members satisfies the additional independence standards under applicable SEC rules for audit committee service and (iii) each of the members has the ability to read and understand financial statements. In addition, the Board of Directors has determined that Mr. Holmes also qualifies as a financial expert and has the required financial sophistication due to his experience and background, which The Nasdaq Stock Market Rules require of at least one such Audit Committee member. Mr. Radke serves as a member of the Audit Committee as a representative of the Independent Bank Board of Directors.   The Company’s Audit Committee has responsibility for, among other things:   •  selecting and reviewing the performance of the Company’s independent auditors and approving, in advance, all engagements and fee arrangements;   •  overseeing the Company’s Internal Audit Department   •  reviewing the independence of the Company’s independent auditors;   •  reviewing actions by management on recommendations of the independent auditors and internal auditors;   •  meeting with management, the internal auditors and the independent auditors to review the effectiveness of the Company’s system of internal controls and internal audit procedures;   •  reviewing the Company’s earnings releases and reports filed with the SEC;   •  reviewing reports of bank regulatory agencies and monitoring management’s compliance with recommendations contained in those reports; and   •  handling such other matters that are specifically delegated to the Audit Committee by the Company’s Board of Directors from time to time.   The Company’s Audit Committee has adopted a written charter, which sets forth the committee’s duties and responsibilities. The charter of the Audit Committee is available on the Company’s website at www.ibtx.com.

 

COMPENSATION COMMITTEE   Members: William E. Fair (Chair) G. Stacy Smith J. Webb Jennings, III   All members Independent   Meetings held in 2019: 6		The Company’s Board of Directors has evaluated the independence of each of the members of the Compensation Committee and has affirmatively determined that each meets the definition of an “independent director” under The Nasdaq Stock Market Rules.   The Board of Directors has determined that each of the members of the Compensation Committee qualifies as a “nonemployee director” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended.   None of the directors who served on the Compensation Committee at any time during fiscal 2019 were officers or employees of the Company or were former officers or employees of the Company. Further, none of the directors who served on the Compensation Committee at any time during fiscal 2019 has any relationship with the Company requiring disclosure under “Related Person and Certain Other Transactions” below, other than William E. Fair, as described in that section. Finally, no executive officer of the Company serves, or in the past fiscal year has served, as a member of the compensation committee (or other board committee performing equivalent functions) of any entity that has one or more of its executive officers serving on the Company’s Compensation Committee.

 

22		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

		PROPOSAL I: ELECTION OF DIRECTORS

 

 

		In accordance with its charter, the Compensation Committee has the responsibility and authority of establishing the philosophy that underlies the Company’s executive compensation program, for establishing and implementing that program and for reviewing and setting the compensation of each of the Company’s named executive officers and other executive officers. The Company’s Board of Directors has directed the Compensation Committee, in accordance with its charter, to ensure that the Company’s executive compensation program is designed and executed in a manner necessary to reflect the Company’s executive compensation philosophy, to achieve the Company’s goals and objectives and is consistent with regulatory requirements. Specifically, the Compensation Committee has responsibility for, among other things:   •  reviewing, monitoring and approving the Company’s overall compensation structure, policies and programs (including benefit plans) and assessing whether the compensation structure establishes appropriate incentives for the Company’s executive officers and other employees and meets the Company’s corporate objectives;
		•  determining the annual compensation of the Company’s named executive officers as noted in “Executive Compensation and Other Matters”;   •  reviewing the Company’s executive officer compensation program and determining if:   •  such program is appropriately linked to the Company’s short-term and long-term financial and other performance;   •  the interests of the Company’s executive officers are appropriately aligned with the interests of the Company’s shareholders or can be more appropriately aligned through greater equity ownership by the Company’s executive officers and by having a greater proportion of executive officer compensation tied to the Company’s financial and other performance; and   •  the base salaries and incentive compensation opportunities provided to the Company’s executive officers are competitive with those packages offered by other similarly situated and similarly performing financial institutions;   •  addressing such other matters relating to the Company’s executive compensation program as it deems appropriate;   •  reviewing the compensation decisions made by the Company’s named executive officers with respect to the Company’s other executive officers;   •  overseeing the administration of the Company’s equity plans and other incentive compensation plans and programs and preparing recommendations and periodic reports to the Company’s Board of Directors relating to these matters; and   •  handling such other matters that are specifically delegated to the Compensation Committee by the Company’s Board of Directors from time to time.   The Company’s Compensation Committee has adopted a written charter, which sets forth the committee’s duties and responsibilities. The charter of the Compensation Committee is available on the Company’s website at www.ibtx.com.   From time to time, the Compensation Committee may, by resolution of the Compensation Committee, delegate to one or more other committees of the Board of Directors of the Company separate but concurrent authority, to the extent specified in such resolution, to administer such plans with respect to employees of the Company, its subsidiaries, and consultants who are not subject to the short-swing profit restrictions of Section 16(b) of the Exchange Act.

 

PROPOSAL I: ELECTION OF DIRECTORS

 

 

CORPORATE GOVERNANCE AND NOMINATING COMMITTEE (“CGNC”)   Members: G. Stacy Smith, (Chair) Alicia Harrison Donald L. Poarch Michael T. Viola   All members Independent   Meetings held in 2019: 3		The Company’s Board of Directors has evaluated the independence of each of the members of the CGNC and has affirmatively determined that each meets the definition of an “independent director” under The Nasdaq Stock Market Rules and SEC regulations.   The Company’s CGNC has responsibility for, among other things:   •  recommending persons to be selected by the Company’s Board of Directors as nominees for election as directors and to fill any vacancies on the Company’s Board of Directors; provided that if the CGNC is not comprised solely of independent directors under The Nasdaq Stock Market Rules, the CGNC shall make its recommendations to the independent members of the Company’s Board of Directors, who, in turn, shall nominate persons to be selected by the Company’s Board of Directors as nominees for election as directors and to fill any vacancies on the Company’s Board of Directors;   •  monitoring the function of the Company’s standing committees and recommending any changes, including the creation or elimination of any committee;   •  developing, reviewing and monitoring compliance with the Company’s corporate governance guidelines;   •  reviewing and approving all related person transactions for potential conflicts of interest situations on an ongoing basis;   •  reviewing annually the composition of the Company’s Board of Directors as a whole and making recommendations; and   •  handling such other matters that are specifically delegated to the CGNC by the Company’s Board of Directors from time to time.   The Company’s CGNC has adopted a written charter, which sets forth the committee’s duties and responsibilities. The charter of the CGNC is available on the Company’s website at www.ibtx.com.   In carrying out its functions, the CGNC has developed the following qualification criteria for all potential nominees for election, including incumbent directors, board nominees and shareholder nominees:   •  integrity and high ethical standards in the nominee’s professional life;   •  sufficient educational and professional experience, business experience or comparable service on other boards of directors to qualify the nominee for service on the Company’s Board of Directors;   •  evidence of leadership and sound judgment in the nominee’s professional life;   •  whether the nominee is well recognized in the community and has a demonstrated record of service to the community;   •  diversity of viewpoints, background, experience, race, gender, ethnicity and other demographic factors, as more fully set forth in the Board Diversity Policy adopted by the CGNC in 2017;   •  a willingness to abide by any published code of conduct or ethics for the Company; and   •  a willingness and ability to devote sufficient time to carrying out the duties and responsibilities required as a member of the Company’s Board of Directors.   The CGNC evaluates potential nominees for the Company’s Board of Directors to determine if they have any conflicts of interest that may interfere with their ability to serve as effective board members and determines whether they are “independent” in accordance with Nasdaq Global Select Market rules and SEC regulations (to ensure that, at all times, at least a majority of the Company’s directors are independent).   Prior to nominating or, if applicable, recommending to the independent members of the Company’s board of directors, an existing director for re-election to the board of directors, the CGNC will consider and review the following attributes with respect to each existing director:   •  attendance and performance at meetings of the Company’s Board of Directors and the committees on which such director serves;   •  length of service on the Company’s Board of Directors;   •  experience, skills and contributions that the existing director brings to the Company’s Board of Directors;   •  independence and any conflicts of interest; and   •  any significant change in the director’s status, including the attributes considered for initial membership on the Company’s Board of Directors.

 

24		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

		PROPOSAL I: ELECTION OF DIRECTORS

 

 

		Director Nominations   The Company’s Board of Directors does not have a policy with respect to the consideration of any director candidates recommended by shareholders. All candidates timely recommended by shareholders will be considered by the CGNC of the Board of Directors for nomination in light of the attributes specified in this section.   A notice of a shareholder to make a nomination of a person for election as a director of the Company must be made in writing and received by the Corporate Secretary of the Company:   •  for the annual meeting of Shareholders, not more than one hundred twenty (120) days and not less than ninety (90) days in advance of the anniversary date of the immediately preceding annual meeting; provided, however, that in the event that the annual meeting is called on a date that is not within thirty (30) days before or after such anniversary date, notice by the shareholder in order to be timely must be so received not later than the close of business on the fifteenth (15) day following the day on which notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was made, whichever first occurs; or   •  in the event of a Special Meeting of Shareholders, such notice shall be received by the Corporate Secretary not later than the close of business on the fifteenth (15) day following the day on which notice of the meeting is first mailed to shareholders or public disclosure of the date of the special meeting was made, whichever first occurs.   Every such notice by a shareholder must set forth:   •  the name and residence address of the shareholder of the Company who intends to make a nomination or bring up any other matter;   •  a representation that the shareholder is a holder of the Company’s voting stock (indicating the class and number of shares owned) and intends to appear in person or by proxy at the meeting to make the nomination or bring up the matter specified in the notice;   •  with respect to notice of an intent to make a nomination for the election of a person as a director of the Company, a description of all arrangements or understandings among the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; and   •  with respect to an intent to make a nomination, such other information regarding each nominee proposed by such shareholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had each nominee been nominated by the Board of Directors of the Company.   At the meeting of shareholders, the Chairman shall declare out of order and disregard any nomination or other matter not presented in accordance with these requirements.   The shareholder must also submit the nominee’s consent to be elected and to serve. The Board of Directors may require any nominee to furnish any other information that may be needed to determine the eligibility and qualifications of the nominee. Any recommendations in proper form received from shareholders will be evaluated in the same manner that potential nominees recommended by directors or management are evaluated.

 

PROPOSAL I: ELECTION OF DIRECTORS

 

 

STRATEGIC PLANNING COMMITTEE   Members: David R. Brooks (Chair) William E. Fair G. Stacy Smith   2 members Independent   Meetings held in 2019: 1		The Company’s Board of Directors has evaluated the independence of each of the members of the Strategic Planning Committee and has affirmatively determined that Mr. Smith and Mr. Fair meet the definition of an “independent director” under The Nasdaq Stock Market Rules. Mr. Brooks does not meet the definition of “independent director” under The Nasdaq Stock Market Rules because he is a named executive officer of the Company.   The Company’s Strategic Planning Committee has responsibility for, among other things:   • establishing plans for the growth of the Company, including organic growth plans and strategic acquisitions;   • identifying new market areas;   • identifying new management candidates to enhance product and geographic expansion;   • identifying acquisition targets and developing plans to pursue acquisitions of such identified targets; and   • reviewing capital and financing levels, and financial partners, and ensuring continued access to capital and financing.   The Company’s Strategic Planning Committee has adopted a written charter, which sets forth the committee’s duties and responsibilities. The charter of the Strategic Planning Committee is available on the Company’s website at www.ibtx.com.

 

RISK OVERSIGHT COMMITTEE   Members: Daniel W. Brooks (Chair) Craig E. Holmes Michael T. Viola Robert W. Gentry (Bank Board Rep.)   3 members Independent   Meetings held in 2019: 2		The Company’s Board of Directors has evaluated the independence of each of the members of the Risk Oversight Committee and has affirmatively determined that Mr. Holmes and Mr. Viola meet the definition of an “independent director” under the Nasdaq stock market rules. Mr. Brooks does not meet the definition of “independent director” under the Nasdaq Global Select Market rules because he is an executive officer of the Company. Mr. Gentry serves as a member of the Risk Oversight Committee as a representative from the Independent Bank Board of Directors.   The purpose of the Risk Oversight Committee is to assist the Board of Directors through oversight of the Company’s enterprise-wide risk management process, including the strategies, policies and practices established by management to identify, assess, measure and manage significant risks. The Risk Oversight Committee oversees risk across the entire Company and enhances the understanding of the Company’s overall risk tolerance and enterprise-wide risk management activities and effectiveness. The Risk Oversight Committee reports to the Board of Directors on a quarterly basis.   The Risk Oversight Committee has responsibility for, among other things:   • overseeing the Company’s risk management infrastructure, including annual review and approval of the Enterprise Risk Management Policy, which such policy describes the Company’s risk tolerance and strategies for managing risk in the context of the overall business plan;   • overseeing the Company’s financial risk management, capital management, financial performance and compliance, and corporate development, including annual review and approval of the Company’s Capital Management Policy, and its Comprehensive Strategic Plan, which describe the Company’s capital risk tolerances and strategies for strategic management risk related to capital;   • receiving regular reports from management which:   I.   enable the committee to assess the risks involved in the business and how risks are monitored and controlled by management; and   II.  give clear and explicit information on current and forward-looking aspects of risk exposure;   • assessing compliance with the Company’s risk limit structure and policies and procedures relating to risk governance, practices, and risk controls across the enterprise;   • assessing the adequacy of staffing at the Company to ensure the availability of adequate staffing to carry out the objectives of the Enterprise Risk Management Policy, the Capital Management Policy, and the Strategic Plan;

 

26		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

		PROPOSAL I: ELECTION OF DIRECTORS

 

 

		• consulting, as deemed appropriate by the committee, with external experts to review information on emerging practices and risks;   • assessing Management’s success in communicating the Company’s risk culture to employees, regulators, and shareholders as appropriate;   • preparing reports to the Boards of the Company and the Bank on the overall risk profile of the Company (including risk related to capital management), the Committee’s assessment of management’s programs for managing enterprise risk and capital, and information concerning current and prospective macroeconomic and financial factors that may affect the Company’s financial stability;   • retaining, at its discretion, outside advisors to consider from time to time any other matters that the committee believes are required of it in keeping with its responsibilities;   • seeking such assurance as it may deem appropriate that the Company employs a Chief Risk Officer responsible for enterprise risk oversight and management, and which such officer possesses risk management expertise that is commensurate with the Company’s capital structure, risk profile, complexity, activities, size, and other risk-related factors that are appropriate, and that the Chief Risk Officer:   I.   participates in the risk management and oversight process at the highest level on an enterprise-wide basis; and   II.  operates independently from individual business units by reporting administratively to the Chief Executive Officer and functionally to the committee as prescribed by the committee charter; and   • performing any other duties or responsibilities expressly delegated to the committee by the Board of Directors from time to time.   The Company’s Risk Oversight Committee has adopted a written charter, which sets forth the committee’s duties and responsibilities. The charter of the Risk Oversight Committee is available on the Company’s website at www.ibtx.com.

Meetings & Attendance

The Board of Directors of the Company (including regularly scheduled and special meetings) met fifteen times during the 2019 fiscal year. The Audit Committee met ten times during the 2019 fiscal year. The Compensation Committee met six times during the 2019 fiscal year. The CGNC met three times during the 2019 fiscal year. The Strategic Planning Committee met one time during the 2019 fiscal year. The Risk Oversight Committee met two times during the 2019 fiscal year.

During fiscal year 2019, each director participated in at least 75% or more of the aggregate of:

 

(i)

the total number of meetings of the Board of Directors (held during the period for which he or she was a director);

 

(ii)

the total number of meetings of all committees of the Board of Directors on which he or she served (during the period that he or she served); and

 

(iii)

four directors attended our 2019 Annual Meeting of shareholders.

The Independent Directors of the Board of Directors met once in 2019, and then again in January of 2020 to address 2019 compensation.

Board Diversity

The inclusion of diversity in the criteria for director nominees reflects the Board of Directors’ belief that diversity is important to the effective functioning of the Board of Directors. On December 7, 2017, the Board of Directors of the Company adopted a Board Diversity Policy. This policy recognizes the importance and benefits of having a Board of Directors with a broad range of perspectives, backgrounds and experiences. The policy expresses the Board’s belief that it should be comprised of individuals who have differences in skills, industry experiences, backgrounds, gender and race/ethnicity.

 

PROPOSAL I: ELECTION OF DIRECTORS

 

 

The policy provides that, in its annual review of the Board of Directors’ effectiveness and in connection with its recommendation of the nominees for directors, the CGNC will:

 

•

consider the benefits of all aspects of diversity in order to enable the Board of Directors to discharge its duties and responsibilities effectively;

 

•

consider candidates on merit based on their talents, experiences, areas of expertise, skills, character, qualities and interpersonal communication and acumen, as well as criteria designed to promote diversity;

 

•

consider the balance of skills, experiences, independence and backgrounds of all of the directors and the diversity representation on the Board of Directors, including gender; and

 

•

specifically consider and recommend to the Board of Directors potential strategies for identifying additional female board candidates.

Shareholder Engagement

The Board of Directors and management are actively committed to regular engagement with our shareholders. This ongoing dialogue provides shareholders with transparency and informs the Company’s continued improvement and enhancement of governance standards and practices. Stockholder input is regularly shared with the Board of Directors, its committees and management. The Board of Directors routinely reviews our governance practices and policies, including our stockholder engagement practices, in furtherance of this goal of continual improvement and enhancements.

To communicate with the Company’s directors, shareholders should submit their comments to Nicole Metcalf, Corporate Secretary, either by sending written correspondence via mail or courier to Independent Bank Group, Inc., 7777 Henneman Way, McKinney, Texas 75070 or via email at nmetcalf@ibtx.com. Shareholder communications will be sent directly to the specific director or directors of the Company indicated in the communication or to all of the Company’s directors if not specified.

Code of Conduct

The Company has a Code of Conduct in place that applies to all of the Company’s directors, officers and employees. The Code of Conduct sets forth the standard of conduct that the Company expects all of the Company’s directors, officers and employees to follow, including the Company’s Chief Executive Officer and Chief Financial Officer. The Company’s Code of Conduct is available on the Company’s website at www.ibtx.com. The Company expects that any amendments to the Code of Conduct or any waivers of their respective requirements will be disclosed on the Company’s website, as well as any other means required by The Nasdaq Stock Market Rules or the SEC.

Code of Ethics for Financial Professionals

The Company has a Code of Ethics for the Chief Executive Officer and Senior Financial Officers that applies to each of the Company’s senior executive and senior financial officers, including the Company’s Chief Executive Officer and Chief Financial Officer, principal accounting officer and controller, and sets forth specific standards of conduct and ethics that the Company expects from such individuals in addition to those set forth in the Code of Conduct. The Company’s Code of Conduct and the Company’s Code of Ethics for the Chief Executive Officer and Senior Financial Officers is available on the Company’s website at www.ibtx.com. The Company expects that any amendments to the Code of Ethics for the Chief Executive Officer and Senior Financial Officers, or any waivers of their respective requirements, will be disclosed on the Company’s website, as well as any other means required by Nasdaq Global Select Market rules or the SEC.

Corporate Governance Guidelines

The Company has adopted Corporate Governance Guidelines to assist the Company’s Board of Directors in the exercise of its fiduciary duties and responsibilities and to promote the effective functioning of the Board of Directors and its committees. The Company’s Corporate Governance Guidelines are available on the Company’s website at www.ibtx.com.

 

28		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

		PROPOSAL I: ELECTION OF DIRECTORS

 

 

Compensation Committee Interlocks and Insider Participation

During 2019, no executive officer of the Company served as (1) a member of a compensation committee (or other Board of Directors committee performing equivalent functions or, in the absence of any such committee, the entire Board of Directors) of another entity, one of whose executive officers served on the Company’s Compensation Committee, (2) a director of another entity, one of whose executive officers served on the Company’s Compensation Committee, or (3) a member of the compensation committee (or other Board of Directors committee performing equivalent functions or, in the absence of any such committee, the entire Board of Directors) of another entity, one of whose executive officers served as a director of the Company. In addition, none of the members of the Compensation Committee (a) was an officer or employee of the Company or any of its subsidiaries in 2019, (b) was formerly an officer or employee of the Company or any of its subsidiaries or (c) had any relationship that required disclosure under “Related Person and Certain Other Transactions,” except as is disclosed under such section concerning director William E. Fair and G. Stacy Smith.

 

PROXY STATEMENT 2020		|		INDEPENDENT BANK GROUP, INC.		29

PROPOSAL I: ELECTION OF DIRECTORS

 

 

RELATED PERSON AND CERTAIN OTHER TRANSACTIONS

Related Person Transaction Review Policy

The Company has adopted a formal written policy concerning related party transactions. A related party transaction is a transaction, arrangement or relationship or a series of similar transactions, arrangements or relationships in which the amount involved exceeds $120,000, in which the Company or one of the Company’s consolidated subsidiaries participates (whether or not the Company or the subsidiary is a direct party to the transaction), and in which a director, nominee to become a director, executive officer or employee of the Company or one of the Company’s consolidated subsidiaries or any of his or her immediate family members or any entity that any of them controls or in which any of them has a substantial beneficial ownership interest has a direct or indirect material interest, or in which any person who is the beneficial owner of more than 5% of the Company’s voting securities or a member of the immediate family of such person has a direct or indirect material interest. A copy of the Company’s Related Person Transaction Review Policy may be found on the Company’s website at www.ibtx.com.

The Company’s policy requires the Company’s CGNC to ensure that the Company maintains an ongoing review process for all related party transactions for potential conflicts of interest and requires that the CGNC pre-approve any such transactions or, if for any reason pre-approval is not obtained, to review, ratify and approve or cause the termination of such transactions. The Company’s CGNC evaluates each related party transaction for the purpose of recommending to the disinterested members of the Company’s Board of Directors whether the transaction is fair, reasonable and permitted to occur under the Company’s policy, and should be pre-approved or ratified and approved by the Company’s Board of Directors. Relevant factors considered relating to any approval or ratification include the benefits of the transaction to the Company, the terms of the transaction and whether the transaction will be or was on an arm’s-length basis and in the ordinary course of the Company’s business, the direct or indirect nature of the related party’s interest in the transaction, the size and expected term of the transaction and other facts and circumstances that bear on the materiality of the related party transaction under applicable law and listing standards. Related party transactions entered into, but not approved or ratified as required by the Company’s policy concerning related party transactions, will be subject to termination by the Company or the relevant subsidiary, if so directed by the Company’s CGNC or the Company’s Board of Directors, taking into account factors they deem appropriate and relevant. Lending and other banking transactions in the ordinary course of business and consistent with the insider loan provisions of Regulation O of the Board of Governors of the Federal Reserve System are not treated as related party transactions under this policy and, instead, these transactions are monitored and approved, if necessary, by Independent Bank’s Board of Directors. In addition, any transaction in which the rates or charges are determined by competitive bids are not subject to approval under the policy.

The Company’s directors, officers, beneficial owners of more than 5% of the Company’s voting securities and their respective associates were customers of and had transactions with the Company in the past, and additional transactions with these persons are expected to take place in the future. All outstanding loans and commitments to lend to these persons were made in the ordinary course of business, were made on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to the Company or Independent Bank and did not involve more than the normal risk of collectability or present other unfavorable features. All such loans are approved by Independent Bank’s Board of Directors in accordance with bank regulatory requirements. Similarly, all certificates of deposit and depository relationships with these persons were made in the ordinary course of business and involved substantially the same terms, including interest rates, as those prevailing at the time for comparable depository relationships with persons not related to the Company or Independent Bank.

 

30		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

		PROPOSAL I: ELECTION OF DIRECTORS

 

 

Related Person Transactions

The following is a description of certain transactions in which the Company participated in 2019 or is currently proposed and in which one or more of the Company’s directors, executive officers or beneficial holders of more than 5% of the Company’s capital stock, or their immediate family members or entities affiliated with them, had or will have a direct or indirect material interest.

IBG AIRCRAFT

IBG Aircraft Company III, a subsidiary of Independent Bank, or IBG Aircraft, owns an airplane. The Company and Independent Bank use the airplane to facilitate the travel of the Company’s and Independent Bank’s executives for corporate purposes related to the Company’s business. Independent Bank uses the aircraft to facilitate the travel of Independent Bank employees to and from Independent Bank’s locations across Texas and Colorado. Certain of the Company’s named executive officers elect to receive a portion of their cash bonus in the form of personal use of the aircraft. Under this arrangement, the Compensation Committee establishes the cash bonus for named executive officers. Those officers who elect to personally use the aircraft are then charged a rate per flight hour for use of the aircraft (computed on an hourly basis and including fuel, maintenance reserves and other operating costs) as established by an Aviation Committee, a joint working group of the Company’s and Independent Bank’s boards of directors comprised of David R. Brooks, William E. Fair and David Wood. This amount is then charged against the named executive officers’ bonus amounts, reducing the cash portion of the bonus awarded to those officers. The Compensation Committee and the CGNC have reviewed and approved this arrangement, and the Company believes that this arrangement is in compliance with third party regulations established by bank regulatory agencies.

BRANCH LEASE

Independent Bank leases its Woodway Branch in Waco from Waco Fairbank Realty, Ltd., of which William E. Fair, one of the Company’s directors, is a limited partner. Independent Bank has agreed to pay rent for this 5,462 square foot facility, at the rate of $27.50 per square foot, or $150,204 annually, from 2016 – 2018, $29.00 per square foot, or $158,400 annually, from 2018 – 2021, and $30.60 per square foot plus an amount based upon the increase in consumer price index, or approximately $167,136 annually, from 2021 – 2026. The Company believes that this arrangement is at least as favorable to Independent Bank as could have been arranged with unrelated third parties and is in compliance with third party regulations for transactions with directors and their affiliates established by bank regulatory agencies.

FAMILY HEALTH CENTER AT VIRGINIA PARKWAY

The Company has provided approximately $2.5 million in direct support to establish the Family Health Center at Virginia Parkway, a Federally Qualified Health Center in McKinney, Texas. Two of the Company’s employees, James Tippit and Kathryn Perry, serve as directors and officers of the foundation supporting the Family Health Center at Virginia Parkway.

SCW CAPITAL SHARE REPURCHASE

The Company repurchased 53,096 shares of the Company’s common stock from SCW Capital, LP and 81,904 shares of the Company’s common stock from SCW Capital QP, LP in June of 2019 for a total purchase price of $7,141,500. G. Stacy Smith, a director of the Company, is the Managing Partner of the SCW Capital entities, and the repurchase resulted from the SCW Capital entities implementing a new policy regarding its portfolio companies. The shares were repurchased as part of the Company’s share repurchase program announced October 24, 2018. The repurchase of these shares was approved by the CGNC.

 

PROPOSAL I: ELECTION OF DIRECTORS

 

 

STOCK OWNERSHIP OF DIRECTORS, NOMINEES, EXECUTIVE OFFICERS AND PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the beneficial ownership of the Company’s common stock as of the Record Date, by (1) directors and named executive officers of the Company, (2) each person who is known by the Company to own beneficially 5% or more of the Company’s common stock and (3) all directors and named executive officers as a group. Unless otherwise indicated, based on information furnished by such shareholders, management of the Company believes that each person has sole voting and dispositive power over the shares indicated as owned by such person.

 

Name of Beneficial Owner (1)		Number of Shares          Beneficially Owned					Percentage Beneficially   Owned (2)
Directors and Executive Officers:
David R. Brooks				929,877	(3)				2.2	%
Daniel W. Brooks				122,312	(4)				*
Michelle S. Hickox				29,713	(5)				*
Michael B. Hobbs				27,691					*
James C. White				16,089					*
James P. Tippit				8,983	(6)				*
Mark S. Haynie				25,095					*
William E. Fair				224,457	(7)				*
Alicia K. Harrison				1,411	(8)				*
Craig E. Holmes				17,150					*
J. Webb Jennings, III				52,740					*
Donald L. Poarch				141,435	(9)				*
G. Stacy Smith				97,058					*
Michael T. Viola				25,849					*
All Directors and Executive Officers as a Group (14 persons)				1,719,860					4.0	%
Principal Shareholders:
Vincent J. Viola				4,443,839					10.3	%
BlackRock, Inc.				5,657,189	(10)				13.1	%
The Vanguard Group				3,129,829	(11)				7.3	%
T. Rowe Price Associates, Inc.				2,902,989	(12)				6.7	%
Dimensional Fund Advisors LP				2,512,520	(13)				5.8	%

 

*	Indicates ownership does not exceed 1%.

(1)

The address of the persons shown in the foregoing table who are beneficial owners of more than 5% of the common stock are as follows: Vincent J. Viola, 7777 Henneman Way, McKinney, Texas 75070; BlackRock, Inc., 55 East 52nd Street, New York, New York 10055; The Vanguard Group, 100 Vanguard Boulevard, Malvern, Pennsylvania 19355; T. Rowe Price Associates, Inc., 100 East Pratt Street, Baltimore, Maryland 21202; Dimensional Fund Advisors LP, Building One, 6300 Bee Cave Road, Austin, Texas 78746.

 

(2)	The percentages are based upon 43,041,119 shares issued and outstanding as of July 2, 2020.

 

(3)	Of these shares, 809,877 are held of record by David R. Brooks and 120,000 shares are held of record by trusts for his children of which he and his wife are trustees. Included in Mr. Brooks total shares are 375,000 shares pledged as security for bank loans.

 

(4)	Includes 40,000 shares pledged as security for bank loans.

 

(5)	Includes 29,370 shares held of record by Michelle S. Hickox and 343 shares held of record by Independent Bank 401(k) Profit Sharing Plan, of which Ms. Hickox is beneficiary.

 

(6)	Includes 8,576 shares held of record by James P. Tippit and 407 shares held of record by Independent Bank 401(k) Profit Sharing Plan, of which Mr. Tippit is beneficiary.

 

(7)

Includes 215,810 shares held of record by William E. Fair and 7,547 shares held of record by an IRA of which he is beneficiary, and 1,100 shares held of record by Fair Title, Inc. dbd Hatco Investments, of which Mr. Fair is President. Included in his total shares are 130,476 shares pledged as security for bank loans.

 

(8)	Includes 1,036 shares held of record by Alicia K. Harrison, 100 shares and 275 shares held of record by a revocable living trust and a revocable living trust IRA, respectively, of which Ms. Harrison is beneficiary.

 

32		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

		PROPOSAL I: ELECTION OF DIRECTORS

 

 

(9)	Of these shares, 125,000 shares are held of record by Poarch Family Limited Partnership, of which Mr. Poarch is the President of its General Partner, Donald L. Poarch, Inc., and 16,435 shares are held of record by Donald Poarch.

(10)	According to Schedule 13G/A as filed with the SEC on July 10, 2020, by BlackRock, Inc., on behalf of itself and certain of its subsidiaries. BlackRock, Inc. has sole voting power over 5,556,646 shares, and sole dispositive power over 5,657,189 shares.

 

(11)

According to Schedule 13G/A filed with the SEC on February 12, 2020, by The Vanguard Group, on behalf of itself and certain of its subsidiaries. The Vanguard Group has sole voting power over 45,179 shares, shared voting power over 5,641 shares, sole dispositive power over 3,084,230 shares, and shared dispositive power over 45,599 shares. Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd., wholly-owned subsidiaries of The Vanguard Group, are the beneficial owners of 39,958 and 10,862 shares respectively.

 

(12)	According to a Schedule 13G/A filed with the SEC on February 14, 2020, by T. Rowe Price Associates, Inc., on behalf of itself and certain of its subsidiaries. T. Rowe Price Associates, Inc. has sole voting power over 598,111 shares, and sole dispositive power over 2,902,989 shares.

 

(13)	According to a Schedule 13G/A filed with the SEC on February 12, 2020, by Dimensional Fund Advisors LP, on behalf of itself and certain of its subsidiaries. Dimensional Fund Advisors LP has sole voting power over 2,461,165 shares, and sole dispositive power over 2,512,520 shares.

There are no arrangements currently known to us, the operation of which may at a subsequent date result in a change in control of the Company.

The Company has adopted an Insider Trading Policy and Stock Ownership and Pledging Guidelines, as more thoroughly discussed at pages 44 and 45 below.

 

PROPOSAL I: ELECTION OF DIRECTORS

 

 

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers and persons who own more than 10% of the outstanding common stock to file reports of ownership and changes in ownership of common stock and other equity securities of the Company with the SEC. Such persons are required by the SEC’s regulations to furnish the Company with copies of all Section 16 forms that they file.

Based solely on its review of the copies of such report forms received by it with respect to fiscal year 2019, the Company believes that all filing requirements applicable to its directors, executive officers and persons who own more than 10% of a registered class of the Company’s equity securities have been timely complied with in accordance with Section 16(a) of the Exchange Act, except for the following late filings:

 

•

Filing made by Alicia K. Harrison in connection with common stock ownership upon her appointment to the Board of Directors on May 23, 2019. The Form 3 was filed with the SEC on June 13, 2019.

 

•

Filing made by Alicia K. Harrison in connection with common stock acquired on May 29, 2019. The Form 4 was filed with the SEC on June 13, 2019.

 

34		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

		PROPOSAL I: ELECTION OF DIRECTORS

 

 

DIRECTOR COMPENSATION

 

 

During 2019, our director compensation program provided for each of the Company’s non-management directors to receive annual compensation, including a cash retainer of $55,000 and an award of shares of restricted stock under the 2013 Equity Incentive Plan with a market value of $55,000 for his or her service as a director. In addition, the chairman of the Audit Committee of the Company’s Board of Directors received an additional cash retainer of $15,000, the chairman of the Company’s Compensation Committee received an additional cash retainer of $10,000, and the CGNC chair and Strategic Planning Committee chair members received an additional cash retainer of $5,000 for their service in those roles. The Company’s directors were reimbursed for the reasonable out-of-pocket expenses they incurred in connection with their service as directors, including travel costs to attend the meetings of the Board of Directors and committees. The Company’s directors who were also the Company’s named executed officers did not receive fees or other compensation for their service as directors of the Company. Mr. David R. Brooks and Mr. Daniel W. Brooks, who are directors and executive officers of the Company, do not receive any compensation in their capacity as directors of the Company.

In 2019, the Compensation Committee changed the timing of the payment of director compensation to coincide with the Company’s annual meeting. As a result of this change in timing, each director received two restricted stock awards in 2019: an award made on January 25, 2019 for service as director in 2018, and an award made on June 11, 2019 for service from June 2019 to June 2020.

The following table sets forth information regarding 2019 compensation for those of the Company’s directors during 2019 who were not named executive officers of the Company for 2019:

 

Name		Fees Earned or Paid in Cash					Stock Awards(1)					All Other Compensation					Total
Douglas A. Cifu(2)				$60,000					$110,377					$—					$170,377
William E. Fair				65,000					110,377					—					175,377
Mark K. Gormley(3)				55,000					110,377					—					165,377
Alicia K. Harrison(4)				55,000					55,063					—					110,063
Craig E. Holmes				70,000					110,377					—					180,377
J. Webb Jennings III				55,000					110,377					—					165,377
Tom C. Nichols(5)				55,000					110,377					—					165,377
Donald L. Poarch				55,000					110,377					—					165,377
G. Stacy Smith				60,000					110,377					—					170,377
Michael T. Viola				55,000					110,377					—					165,377

 

(1)	Reflects awards granted in 2019 calculated by multiplying the restricted stock grant shares by the grant date fair value of $52.78 on January 25, 2019 for 1,048 shares of common stock and $53.15 on June 11, 2019 for 1,036 shares of common stock.

 

(2)	Douglas A. Cifu resigned as director on July 25, 2019. Mr. Cifu’s resignation was not a result of a disagreement between the Company or its management and Mr. Cifu related to the Company’s operations, policies or practices.

 

(3)	Mark K. Gormley resigned as director on January 20, 2020. Mr. Gormley’s resignation was not a result of a disagreement between the Company or its management and Mr. Gormley related to the Company’s operations, policies or practices.

 

(4)	Alicia K. Harrison was elected as a director on May 23, 2019.

 

(5)	Tom C. Nichols resigned as a director on June 3, 2020. Mr. Nichols’ resignation was not a result of a disagreement between the Company or its management and Mr. Nichols related to the Company’s operations, policies or practices.

 

PROXY STATEMENT 2020		|		INDEPENDENT BANK GROUP, INC.		35

PROPOSAL II: ADVISORY VOTE ON EXECUTIVE COMPENSATION (“SAY-ON-PAY”)

 

ADVISORY VOTE

We are conducting our annual advisory vote to approve our executive compensation for 2019. This advisory vote, commonly referred to as a “Say-on-Pay” vote, is non-binding and advisory. At our 2019 Annual Meeting, our shareholders approved our “Say-on-Pay” resolution with over 96% of votes cast “for” the resolution (excluding broker non-votes). Although this vote is non-binding, the Board of Directors and the Compensation Committee will review and consider the voting results when making future decisions regarding the Company’s executive compensation program.

The Company urges shareholders to read this section of the Proxy Statement in its entirety, which describes in detail how its executive compensation policies and procedures operate and are designed to achieve compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative, which provide detailed information on the compensation of the Company’s named executive officers. The Compensation Committee and the Board of Directors believe that the policies and procedures articulated in the Compensation Discussion and Analysis are effective in achieving its goals and that the compensation of its named executive officers reported in this Proxy Statement has contributed to the Company’s recent and long-term success.

The Company is asking for shareholder approval of the compensation of its named executive officers as disclosed in this Proxy Statement in accordance with SEC rules, which disclosures include the information contained in the Compensation Discussion and Analysis, the compensation tables and the narrative discussion following the compensation tables. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the Company’s named executive officers and the policies and practices described in this Proxy Statement.

 

 

 

 

 

36		INDEPENDENT BANK GROUP, INC.		|		PROXY STATEMENT 2020

		PROPOSAL II: ADVISORY VOTE ON EXECUTIVE COMPENSATION (“SAY ON PAY”)

 

 

COMPENSATION DISCUSSION & ANALYSIS

 

 

Overview

The Compensation Committee of the Board of Directors is responsible for making recommendations to the Board of Directors relating to the compensation of the Company’s Chairman of the Board, Chief Executive Officer and President, the other named executive officers, and the directors. William E. Fair (Chair), J. Webb Jennings, III, and G. Stacy Smith, each of whom the Board of Directors has determined to be an independent director, as defined in The Nasdaq Stock Market Rules and SEC regulations, serve on the Compensation Committee.

This discussion and analysis describes the components of the Company’s compensation program for its named executive officers and describes the basis on which the Compensation Committee made its 2019 compensation determinations with respect to the named executive officers of the Company.

The individuals who served as the Company’s Chief Executive Officer and Chief Financial Officer during 2019, as well as the Company’s other most highly compensated executive officers for 2019, are collectively referred to as the Company’s “named executive officers.” The compensation of our named executive officers is discussed below.

Executive Summary

2019 Performance

For the year ended December 31, 2019, the Company reported net income of $192.7 million, or $4.46 per diluted share, compared to $128.3 million, or $4.33 per diluted share, for the year ended December 31, 2018, representing a 50.3% year-over-year increase in reported net income.

Highlights of the Company’s performance include:

 

•

Reported robust organic deposit growth of 10.4% and disciplined organic loan growth of 4.8% for the year;

 

•

Strong credit quality metrics remained at low levels;

 

•

Returned capital to shareholders by increasing quarterly dividend to $0.25 per share from $0.14 per share and repurchasing $49.0 million of Company stock through share repurchase program; and

 

•

Successfully closed, converted and integrated the Guaranty Bancorp acquisition, expanding the Company’s presence in the fast-growing Colorado Front Range market.

2019 Compensation Outcomes

Early in 2019, the Compensation Committee established incentive targets for each of the named executive officers and approved a new incentive structure for 2019, which included a formulaic component based on Adjusted (Non-GAAP) EPS (weighted 60%), Adjusted (Non-GAAP) Efficiency Ratio (weighted 20%) and Non-Performing Assets (weighted 20%), as well as a qualitative review of corporate and individual performance. Based on the Company’s performance against these targets, as well as each individual’s performance, the Compensation Committee determined to pay incentives ranging from 102% to 117% of target for 2019. These incentives were paid as a combination of cash and time-based restricted stock based on a prescribed mix for each named executive officer. These incentive awards are discussed under “Incentive Compensation” on Page 39.

Compensation Philosophy and Objectives

The Company compensates the Company’s named executive officers through a mix of base salary, cash incentive bonuses, restricted stock grants and other benefits, including, to a limited extent, perquisites. The Company believes the current mix of these compensation elements and the amounts of each element provide the Company’s named executive officers with compensation that is reasonable and competitive within the Company’s markets, and also appropriately reflects the Company’s performance and the officer’s particular contributions to that performance, and takes into account applicable regulatory guidelines and requirements.

The Compensation Committee’s philosophy is to provide a compensation package that attracts and retains executive talent, provides rewards for superior performance and produces consequences for underperformance. It is also the Compensation Committee’s practice to provide a balanced mix of cash and equity-based compensation that the committee believes appropriate to mitigate risk and align the short-term and long-term interests of the