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Texas Capital Bancshares DEF 14A 2008 Table of Contents
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
Filed by the Registrant þ
Filed by a Party other than the Registrant o Check the appropriate box:
TEXAS CAPITAL BANCSHARES, INC.
Payment of Filing Fee (Check the appropriate box):
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April 9, 2008
Dear TCBI Shareholder:
I am pleased to present your Company’s 2007 annual report.
Additionally, earnings releases, performance information and
corporate governance may be found in the investor section of the
Company’s website at www.texascapitalbank.com.
I would also like to invite you to attend the Annual Meeting of
Shareholders of Texas Capital Bancshares, Inc., the holding
company for Texas Capital Bank, National Association:
Monday, May 19, 2008
10:00 a.m.
2100 McKinney Avenue, 9th Floor
Dallas, Texas 75201
214.932.6600
The attached Notice of Annual Shareholders’ Meeting
describes the formal business to be transacted at the Annual
Meeting. Certain directors and officers will be present at the
meeting and will be available to answer any questions you may
have.
On behalf of the board of directors and all the employees of
Texas Capital Bancshares, Inc., and its operating entities,
thank you for your continued support.
Sincerely,
Joseph M. Grant
Chairman and Chief Executive Officer
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TEXAS
CAPITAL BANCSHARES, INC.
2100 McKinney Avenue 9th Floor Dallas, Texas 75201
NOTICE IS HEREBY GIVEN that the annual stockholders’
meeting (the “Annual Meeting”) of Texas Capital
Bancshares, Inc. (the “Company”), a Delaware
corporation, and the holding company for Texas Capital Bank,
National Association, will be on Monday, May 19, 2008, at
10:00 a.m. at the offices of the Company located at 2100
McKinney Avenue, 9th Floor, Dallas, Texas 75201.
In accordance with rules and regulations recently adopted by the
Securities and Exchange Commission (“SEC”), instead of
mailing a printed copy of our proxy materials to each
stockholder of record, we are furnishing proxy materials to our
stockholders on the Internet. You will not receive a printed
copy of the proxy materials, unless specifically requested. The
Notice of Internet Availability of Proxy Materials will instruct
you as to how you may access and review all of the important
information contained in the proxy materials. The Notice of
Internet Availability of Proxy Materials also instructs you as
to how you may submit your proxy on the Internet.
The Annual Meeting is for the purpose of considering and voting
upon the following matters:
Information about the matters to be acted upon at the Annual
Meeting is set forth in the accompanying proxy statement.
Stockholders of record at the close of business on
March 31, 2008 are the only stockholders entitled to notice
of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual
Meeting in person. Whether you expect to attend the Annual
Meeting or not, please vote your shares as set forth in the
Notice of Internet Availability of Proxy Materials. If you
attend the Annual Meeting, you may vote your shares in person,
even though you have previously voted your proxy on the Internet.
By order of the board of directors,
Joseph M. Grant
Chairman and Chief Executive Officer
April 9, 2008
Dallas, Texas
PROXY
STATEMENT
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TEXAS
CAPITAL BANCSHARES, INC.
2100 McKinney Avenue 9th Floor Dallas, Texas 75201
PROXY
STATEMENT
FOR THE ANNUAL STOCKHOLDERS’ MEETING ON MAY 19, 2008
This proxy statement is being furnished to the stockholders of
Texas Capital Bancshares, Inc. (the “Company”) on or
about April 9, 2008, in connection with the solicitation of
proxies by the board of directors to be voted at the annual
stockholders’ meeting (the “Annual Meeting”). The
Annual Meeting will be held on May 19, 2008, at
10:00 a.m. at the offices of the Company located at 2100
McKinney, 9th Floor, Dallas, Texas 75201. The Company is
the parent corporation of Texas Capital Bank, National
Association (the “Bank”).
In accordance with rules and regulations recently adopted by the
SEC, instead of mailing a printed copy of our proxy materials to
each stockholder of record, we are furnishing proxy materials to
our stockholders on the Internet. You will not receive a printed
copy of the proxy materials, unless specifically requested. The
Notice of Internet Availability of Proxy Materials will instruct
you as to how you may access and review all of the important
information contained in the proxy materials. The Notice of
Internet Availability of Proxy Materials also instructs you as
to how you may submit your proxy on the Internet.
The purpose of the Annual Meeting is to consider and vote upon:
You are entitled to one vote for each share of voting common
stock you own.
Only those stockholders that owned shares of the Company’s
voting common stock on March 31, 2008, the record date
established by the board of directors, will be entitled to vote
at the Annual Meeting. At the close of business on the record
date, there were 26,631,763 shares of voting common stock
outstanding held by 432 identified holders.
In order to have a quorum to transact business at the Annual
Meeting, at least a majority of the total number of issued and
outstanding shares of common stock must be present at the Annual
Meeting, in person or by proxy. If there are not sufficient
votes for a quorum or to approve any proposal at the time of the
Annual Meeting, the board of directors may postpone or adjourn
the Annual Meeting in order to permit the further solicitation
of proxies. Abstentions and broker non-votes will be counted
toward a quorum but will not be counted in the votes for each of
the proposals presented at the Annual Meeting. Assuming a quorum
is present, abstentions and broker non-votes will have no effect
on the election of directors. A broker non-vote occurs when a
bank, broker or other nominee holding shares for a beneficial
owner does not vote on a particular proposal because it does not
have discretionary voting power with respect to that item and
has not received voting instructions
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from the beneficial owner. A broker will have discretionary
voting power with respect to both proposals set forth herein.
It is important that you are represented by proxy or are present
in person at the Annual Meeting. The Company requests that you
vote your shares by following the instructions as set forth in
the Notice of Internet Availability of Proxy Materials. Your
proxy will be voted in accordance with the directions you
provide.
Other than the election of twelve (12) directors, the
Company is not aware of any additional matters that will be
presented for consideration at the Annual Meeting. However, if
any additional matters are properly brought before the Annual
Meeting, your proxy will be voted in the discretion of the proxy
holder.
You may revoke your proxy at any time prior to its exercise by:
A plurality of the votes cast in person or by proxy by the
holders of voting common stock is required to elect a director.
The 12 nominees receiving a plurality of votes cast by the
holders of voting common stock will be elected as directors.
Abstentions and broker non-votes will have no effect on the
outcome of the election of directors, assuming a quorum is
present or represented by proxy at the Annual Meeting. There
will be no cumulative voting in the election of directors.
The Company’s board of directors is making this
solicitation and the Company will pay the costs of this proxy
solicitation. The directors, officers and regular employees of
the Company and the Bank may also solicit proxies by telephone
or in person but will not be paid additional compensation to do
so.
PROPOSALS FOR
STOCKHOLDER ACTION
The Company currently has thirteen (13) directors on the
board of directors. Twelve (12) of the directors are seeking
re-election, with one director position remaining vacant.
Directors serve a one-year term or until their successors are
elected and qualified. All of the nominees below currently serve
as a director and have indicated their willingness to continue
to serve as a director if elected. However, if any of the
nominees is unable or declines to serve for any reason, your
proxy will be voted for the election of a substitute nominee
selected by the proxy holders.
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At the Annual Meeting, the stockholders will elect twelve
(12) directors. The board of directors recommends a vote
FOR each of the nominees set forth below:
Joseph M. (Jody) Grant has been the Chairman of the Board
and Chief Executive Officer since the Company commenced
operations in 1998. In addition, he currently serves as the
Chairman of the Board of the Bank. Prior to co-founding the
Company, Mr. Grant served as Executive Vice President,
Chief Financial Officer and a member of the board of directors
of Electronic Data Systems Corporation from 1990 to March 1998.
From 1986 to 1989, Mr. Grant had served as the Chairman and
Chief Executive Officer of Texas American Bancshares, Inc.
George F. Jones, Jr. has served as the Chief
Executive Officer and President of the Bank since its inception
in December 1998. Mr. Jones was also a founder of Resource
Bank, the predecessor bank. From 1993 until 1995, Mr. Jones
served as an Executive Vice President of Comerica Bank, which
acquired NorthPark National Bank in 1993. From 1986 until
Comerica’s acquisition of NorthPark in 1993, Mr. Jones
served as either NorthPark’s President or President and
Chief Executive Officer.
Peter B. Bartholow has served as the Chief Financial
Officer since October 6, 2003. Mr. Bartholow had
served as a Managing Partner with Hat Creek Partners, a Dallas,
Texas private equity firm from January 1999 to October 2003.
Prior to joining Hat Creek Partners, he was Vice President of
Corporate Finance of EDS and also served on A.T. Kearney’s
board of directors during that time.
Frederick B. Hegi, Jr. has been a director since
June 1999. He has been a partner of Wingate Partners, an
investment company, since he co-founded it in 1987.
Mr. Hegi currently serves as Chairman of the board of
directors of United Stationers, Inc. and as a director of Drew
Industries Incorporated.
Larry L. Helm has been a director since January
2006. He currently serves as executive vice
president-finance and administration of Houston-based Petrohawk
Energy Corporation, a company engaged in the acquisition,
development, production and exploration of natural gas and oil
properties located in North America. Prior to joining Petrohawk,
Mr. Helm spent 14 years with Bank One, most notably as
Chairman and CEO of Bank One Dallas.
J. R. Holland, Jr. has been a director since
June 1999. He has served as the President and Chief Executive
Officer of Unity Hunt, Inc., a diversified holding company,
since 1991. He has also served as Chief Trustee of the Lamar
Hunt Trust Estate since 1991. Mr. Holland currently
serves on the board of directors of Placid Holding Company and
International Surface Preparation Corporation.
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W. W. McAllister III has been a director since
June 1999. He served as Chairman of the Texas Insurance Agency
Group of Companies, a group of affiliated property and casualty
insurance agencies, from 1992 until his retirement in March 2002.
Lee Roy Mitchell has served as a director since June
1999. He has served as Chairman of the board of directors and
Chief Executive Officer of Cinemark USA, Inc., a movie theater
operations company, since 1985.
Steven P. Rosenberg has served as a director since
September 2001. He is President of SPR Ventures, Inc., a private
investment company, and President of SPR Packaging LLC, a
manufacturer of flexible packaging for the food industry. He was
a director of Texas Capital Bank from 1999 to September 2001.
John C. Snyder has served as a director since June 1999.
He has also served as Chairman of Snyder Operating Company LLC,
an investment company, since June 2000. From 1977 to 1999,
Mr. Snyder served as Chairman of the board of directors and
Chief Executive Officer of Snyder Oil Corporation, an energy
exploration and production company. In 1999, Snyder Oil
Corporation was merged into Santa Fe Snyder Corporation, an
energy exploration and production company, where Mr. Snyder
served as Chairman of the board of directors through June 2000
when it was merged into Devon Energy Corporation. He also
currently serves as a director of SOCO International plc, a UK
oil and gas exploration company and advisory director of
4-D Global
Energy, a French private equity company, focused on
international energy investments.
Robert W. Stallings has served as a director since August
2001. He has also served as Chairman of the board of directors
and Chief Executive Officer of Stallings Capital Group, an
investment company, since March 2001. From 1991 to 2001,
Mr. Stallings served as Chief Executive Officer of Pilgrim
Capital Group, an investment company. He is currently Executive
Chairman of the Board of Gainsco, Inc.
Ian J. Turpin has been a director since May
2001. Since 1992, he has served as President and
director of The LBJ Holding Company and various companies
affiliated with the family of the late President of the United
States, Lyndon B. Johnson, which are involved in radio, real
estate, private equity investments and managing diversified
investment portfolios.
The board of directors recommends a vote FOR the election of
each of the nominees.
The Company does not currently know of any other matters that
may come before the Annual Meeting. However, if any other
matters are properly presented at the Annual Meeting, the proxy
holders will vote your proxy in their discretion on such matters.
BOARD AND
COMMITTEE MATTERS
The business affairs of the Company are managed under the
direction of the board of directors. The board of directors
meets on a regularly scheduled basis during the fiscal year of
the Company to review significant developments affecting the
Company and to act on matters requiring approval by the board of
directors. It also holds special meetings as required from time
to time when important matters arise, requiring action between
scheduled meetings. The board of directors had six regularly
scheduled meetings and one special meeting during the 2007
fiscal year. Each of the Company’s directors participated
in at least 75% of the meetings of the board of directors and
the committees of the board on which he served during 2007.
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The board of directors has determined that each director other
than Joseph M. Grant, George F. Jones, Jr., and Peter B.
Bartholow qualifies as an “Independent Director” as
defined in the Nasdaq Stock Market listing standards and as
further defined by recent statutory and rule changes.
The board of directors had three standing committees during 2007.
In evaluating and determining whether to nominate a candidate
for a position on the Company’s board of directors, the
Governance and Nominating Committee considers high professional
ethics and values, relevant management experience and a
commitment to enhancing stockholder value. In evaluating
candidates for nomination, the Committee utilizes a variety of
methods. The Committee regularly assesses the size of the board
of directors, whether any vacancies are expected due to
retirement or otherwise, and the need for particular expertise
on the board of directors. Candidates may come to the attention
of the Committee from current directors, stockholders,
professional search firms, officers or other persons. The
Committee will review all candidates in the same manner
regardless of the source of the recommendation.
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Stockholders may communicate with the board of directors,
including the non-management directors, by sending an
e-mail to
bod@texascapitalbank.com or by sending a letter to the
board of directors,
c/o Corporate
Secretary, 2100 McKinney Avenue, 9th Floor, Dallas, Texas
75201. The Corporate Secretary has the authority to disregard
any inappropriate communications or to take other appropriate
actions with respect to any such inappropriate communications.
If deemed an appropriate communication, the Corporate Secretary
will submit your correspondence to the Chairman of the board or
to any specific director to whom the correspondence is directed.
The Audit Committee’s general role as an audit committee is
to assist the board of directors in overseeing the
Company’s financial reporting process and related matters.
The board of directors adopted a written Amended and Restated
Charter of the Audit Committee dated March 16, 2004, a copy
of which was included as Exhibit A to the
Company’s proxy statement in connection with the 2004
annual meeting of stockholders. Each member of the Audit
Committee is “Independent” as defined in
Rule 4200(a)(14) of the listing standards of the Nasdaq
Stock Market, Inc.
The Audit Committee has reviewed and discussed with the
Company’s management and the Company’s independent
registered public accounting firm the audited financial
statements of the Company contained in the Company’s Annual
Report to Stockholders for the year ended December 31, 2007.
The Audit Committee has also discussed with the Company’s
independent registered public accounting firm the matters
required to be discussed pursuant to SAS 61 (Communication with
Audit Committees). The Audit Committee has received and reviewed
the written disclosures and the letter from Ernst &
Young LLP required by Independence Standards Standard No. 1
(titled, “Independence Discussions with Audit
Committees”), and has discussed with Ernst &
Young LLP such independent registered public accounting
firm’s independence. The Audit Committee has also
considered whether the provision of non-audit services to the
Company by Ernst & Young LLP is compatible with
maintaining their independence.
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Based on the review and discussion referred to above, the Audit
Committee recommended to the board of directors that the audited
financial statements be included in the Company’s Annual
Report on
Form 10-K
for the fiscal year ended December 31, 2007, filed with the
Securities and Exchange Commission.
This report is submitted on behalf of the Audit Committee.
W. W. McAllister III, Chairperson
Leo F. Corrigan III Steven P. Rosenberg Ian J. Turpin
The Company has adopted a code of business conduct and ethics
that applies to all its employees, including its chief executive
officer, chief financial officer and controller. The Company has
made the code of conduct available on its website at
www.texascapitalbank.com.
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COMMON
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information as of March 31,
2008 concerning the beneficial ownership of the Company’s
voting common stock by: (a) each director, director nominee
and executive officer, (b) each person the Company knows to
beneficially own more than 5% of the issued and outstanding
shares of a class of common stock, and (c) all of the
Company’s executive officers and directors as a group. The
persons named in the table have sole voting and investment power
with respect to all shares they owned, unless otherwise noted.
In computing the number of shares beneficially owned by a person
and the percentage of ownership held by that person, shares of
common stock subject to options, RSUs, or SARs held by that
person that are currently exercisable or will become exercisable
within 60 days after March 31, 2008 are deemed
exercised and outstanding, while these shares are not deemed
exercised and outstanding for computing percentage ownership of
any other person.
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EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
This Compensation Discussion and Analysis addresses the aspects
of our compensation programs and explains our compensation
philosophy, policies and practices with respect to our chief
executive officer, chief financial officer, president, and chief
lending officer, which are collectively referred to as our named
executive officers.
The Human Resources Committee of our board of directors oversees
our executive compensation programs. Each member of the HR
Committee is an “independent director” as defined in
Rule 4200(a)(14) of the Nasdaq Stock Market, Inc. The HR
Committee has developed and applied a compensation philosophy
that focuses on a combination of incentive compensation, in both
cash and equity-linked programs, which is directly linked to
performance and creation of stockholder value, coupled with a
competitive level of base compensation. The objective for the
named executives, relationship managers and key management is to
have a substantial portion of total compensation derived from
performance-based incentives.
The HR Committee works diligently throughout the year in its
conferences, formal meetings, discussions with consultants,
interaction with management and review of materials developed
for it. The HR Committee works very closely with executive
management, primarily our chief executive officer
(“CEO”), in assessing the appropriate compensation
approach and levels. The HR Committee is empowered to advise
management and make recommendations to the board of directors
with respect to the compensation and other employment benefits
of executive officers and key employees of the Company. The HR
Committee also administers the Company’s long- term
compensation plans for executive officers and key employees and
the Company’s incentive bonus programs for executive
officers and employees.
The HR Committee regularly reviews the Company’s
compensation programs to ensure that remuneration levels and
incentive opportunities are competitive and reflect performance.
Factors taken into account in assessing the compensation of
individual officers include the officer’s performance and
contribution to the Company, experience, strategic impact,
external equity or market value, internal equity or fairness,
and retention priority. The various components of the
compensation programs for executive officers are discussed below
in the Executive Compensation Program Overview.
We seek to provide a compensation package for our named
executive officers that is driven primarily by the overall
financial performance of the Company. We believe that the
performance of each of the executives impacts our overall,
long-term profitability and therefore have the following goals
for compensation programs impacting the named executive officers
of the Company:
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During 2007, the HR Committee engaged the services of an
independent, executive compensation consulting firm, Longnecker
and Associates (“L&A”), to assist the HR
Committee in its review of total direct compensation and change
of control payments and provisions for the named executive
officers. L&A only provides executive compensation
consulting services under the direction of the HR Committee and
does not provide any additional services to the Company.
L&A provided the HR Committee with a market competitive
executive compensation analysis for the named executive officers
including: base salary, annual incentives and long-term
incentives.
This analysis was performed by utilizing two primary sources of
information: 1) peer company proxy statements and
2) published survey sources. Each of the two primary
sources were weighted 50% to create a market 50th and
75th percentile for comparison purposes.
Peer Company Proxy Data. The HR Committee,
management and L&A, with input from the Company’s
management established a list of eight high performance peer
companies for 2007 comparison purposes. The following companies
were selected based upon long-term performance, asset size,
market capitalization size and business operations in commercial
banking and financial services (in millions):
Published Survey Data. L&A relied upon
published survey information provided by recognized sources
including the Economic Research Institute, Watson Wyatt, William
Mercer, and World at Work. L&A procured market competitive
compensation for the respective named executive officers from
these survey sources based upon banking and financial service
companies with comparable asset sizes.
According to information provided to the HR Committee by its
independent compensation consultant, the amount of the
Company’s compensation paid to its executive officers
during 2007 was competitive. In view of the Company’s
competitive performance, turnover of key employees and
historical earnings levels and growth in earnings, the HR
Committee believes that the Company’s current executive
compensation philosophy and practices are successful in
providing stockholders with talented, dedicated executive
officers at competitive compensation levels.
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The executive compensation package available to our named
executive officers is comprised of:
Base salary is designed to provide competitive levels of base
compensation to our executives and be reflective of their
experience, duties and scope of responsibilities. We pay
competitive base salaries required to recruit and retain
executives of the quality that we must employ to ensure the
success of our Company. Base salaries for the named executive
officers are not always adjusted on an annual basis. As a result
of the study performed by Longnecker as described in the
Compensation Consultants section, salaries for the four named
executive were increased in October 2007. Previously, they were
adjusted in October 2005, but were not adjusted during 2006. The
HR Committee determines, and recommends to the Board, the
appropriate level and timing of increases in base compensation
for the CEO and the other named executive officers upon
consideration of the recommendation of the CEO with respect to
the other named executives. Based on the evaluation conducted by
Longnecker and considering the fact that no review of salaries
was conducted, or increases effected, since October 2005, the HR
Committee recommended and the Board approved increases in annual
base compensation, effective in October 2007, as follows: Grant
$75,000 or 22%, Jones $40,000 or 14%, Bartholow $30,000 or 11%,
and Cargill $41,000 or 17% based on competitive data provided by
the compensation consultants, bank performance, and the time
period since the last salary adjustment. Because the increases
were effective for only the last quarter of 2007, the increases
compared to full year 2006 were: Grant $15,625 or 5%, Jones
$8,333 or 3%, Bartholow $6,250 or 2%, and Cargill $8,542 or 4%.
In making determinations of salary levels for the named
executives, the HR Committee considers the entire compensation
package for executive officers, including the equity
compensation provided under long-term compensation plans. The
Company intends for the salary levels to be consistent with
competitive practices of comparable institutions and each
executive’s level of responsibility. The HR Committee
determines the level of any salary increase after reviewing:
The HR Committee reviewed a survey of compensation paid to
executive officers performing similar duties for depository
institutions and their holding companies and considered
compensation levels applicable to executives in non-bank
financial and professional services companies. The HR Committee
reviews and adjusts the base salaries of the Company’s
executive officers when deemed appropriate.
Annual incentive compensation is designed to provide competitive
levels of compensation based on experience, duties and scope of
responsibilities. In addition, our annual incentive program is
designed to ensure that variable compensation based on the
Company’s profitability is a significant component of total
cash compensation for the named executives. The HR Committee
uses the annual incentive compensation to
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motivate and reward the named executive officers for achievement
of strategic, business and financial objectives.
Pursuant to the cash incentive program developed by the Company
and approved by the HR Committee, the Company establishes a
bonus pool each year, and the size of the pool is derived as a
percentage of the Company’s pre-tax income. The bonus pool
is generally 11 — 12% of pre-tax pre-bonus income. The
amount of the incentive pool is incorporated in the annual
business and financial plan approved by the board of directors
and is adjusted during the year, based on actual results
compared to the approved financial plan. After verification of
final results, the total pool and allocation of dollars in the
pool are approved by the HR Committee. The pool is allocated
among three distinct groups: the named executive officers,
relationship managers generally responsible for lending and
other service offerings, and key management, which includes
persons who oversee and provide critical support in such areas
as finance, operations, funding, investments and credit policy.
Executive management determines allocations within production
and key management groups pursuant to the approved program.
Generally, the portion of the incentive pool allocated to
executives is approximately 13 — 15% of the total
pool. The CEO submits recommendations for incentive compensation
for the named executive officers other than the CEO. The HR
Committee determines the incentive payment for the CEO and
considers the recommendation of the CEO in its final
determinations of awards to be paid to the other named
executives. Amounts approved by the HR Committee have generally
been based on the allocation of the total amount available to
executives proportionate to the base compensation of the
executives.
In determining awards of annual cash incentives the HR Committee
considers the entire compensation package of each of the
executive officers. The bonus awards are intended to be
consistent with each executive officer’s level of
responsibility, competitive practices of financial institutions
with comparable business characteristics and interests of
stockholders. The HR Committee met in February 2008 to determine
bonus compensation paid to the executive officers of the Company
and the Bank during the first quarter of 2008 for 2007
performance and the amount of these bonuses paid to the named
executive officers are set forth below in the Summary
Compensation Table.
Equity awards for our executives are granted from our 2005
Long-Term Incentive Plan (the “2005 Plan”). The HR
Committee grants awards under the 2005 Plan in order to align
the interests of the named executive officers with our
stockholders, and to motivate and reward the named executive
officers to increase the stockholder value of the Company over
the long term.
The 2005 Plan became effective on May 17, 2005 and will
terminate on May 17, 2015. Employees (including any
employee who is also a director), consultants, contractors and
non-employee directors of the Company or its subsidiaries whose
judgment, initiative and efforts contributed to or may be
expected to contribute to the successful performance of the
Company are eligible to participate in the 2005 Plan. The 2005
Plan provides for the grant of all equity awards to officers and
directors; grants may include, but are not limited to, awards of
SARs, PSARs, RSUs, options, and other performance awards. In
addition, the HR Committee may grant other forms of awards
payable in cash or common shares if the HR Committee determines
that such other form of award is consistent with the purpose and
restrictions of the 2005 Plan.
Certain RSU, SAR and PSAR grants were made in April 2006 and
January 2007 to the named executive officers and are included in
the compensation tables that follow this section. The HR
Committee administers awards under the 2005 Plan, sets vesting
criteria, establishes performance objectives and may amend the
Plan in accordance with authority approved by stockholders.
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Executive management and the HR Committee believe that stock
ownership is a significant incentive in aligning the interests
of employees and stockholders, building stockholder value and
retaining the Company’s key employees.
2006 Employee Stock Purchase Plan. On
January 17, 2006, the board of directors adopted the
Company’s 2006 Employee Stock Purchase Plan (the “2006
ESPP”), which was approved by our stockholders at our 2006
annual meeting on May 16, 2006. The 2006 ESPP provides
eligible employees of the Company (and its participating
subsidiaries) with an incentive to advance the best interests of
the Company and its subsidiaries by providing them a means of
voluntarily purchasing common stock at a favorable price and
upon favorable terms. We believe that the participants in the
2006 ESPP have an additional incentive to promote the success of
the Company’s business by increasing their proprietary
interest in the success of the Company. Participation in the
2006 ESPP is voluntary and dependent upon each eligible
employee’s election to participate and his or her
determination of the level of participation. We believe that the
2006 ESPP is a necessary tool to help us compete effectively. It
has been and remains the policy of the Company that the named
executive officers are not eligible to participate in the 2006
ESPP.
Retirement Savings Opportunity. All employees
may participate in our 401(k) Retirement Savings Plan, or 401(k)
Plan. Each employee may make before-tax contributions of up to
10% of their eligible compensation up to current Internal
Revenue Service limits. We provide this 401(k) Plan to help our
employees save some amount of their cash compensation for
retirement in a tax efficient manner. As of 2006, the HR
Committee decided that the Company would match contributions
made by our employees to the 401(k) Plan based upon a formula
that considers the amount contributed by the respective employee
and such employee’s tenure with the Company. We did not
make, however, any discretionary contributions to the 401(k)
Plan in the fiscal year ended December 31, 2006. We also do
not provide an option for our employees to invest in our stock
in the 401(k) Plan. Other than the 401(k) Plan, the Company
currently does not provide or offer any retirement plans, such
as defined benefit, defined contribution, supplemental executive
retirement benefits, retiree medical or deferred compensation
plans, to its employees or the named executive officers.
Health and Welfare Benefits. All full-time
employees, including our named executive officers, may
participate in our health and welfare benefit programs,
including medical, dental and vision care coverage, disability
insurance and life insurance. We provide these benefits to meet
the health and welfare needs of employees and their families.
In order to retain the Company’s senior executive officers,
the HR Committee and board of directors of the Company
determined it was in the best interests of the Company to enter
into employment agreements with certain officers. The named
executives first entered into employment contracts in 2002 and
2003. The employment agreements with the named executives were
amended and extended in December 2004 (the “2004
Agreements”). The employment contracts are referenced as
exhibits to our Report on
Form 10-K.
We entered into these agreements to ensure that the executives
perform their respective roles for an extended period of time.
In addition, we also considered the critical nature of each of
these positions and our need to retain these executives when we
committed to the agreements.
Each of the 2004 Agreements had an initial term of two years,
subject to annual renewal, and has a compensation package that
includes a base salary and the right to participate in the
annual incentive program, as well as certain non-compete,
non-solicitation and confidentiality covenants. The initial
two-year term of the 2004 Agreements ended in December 2006,
and, upon expiration of the initial term, the 2004 Agreements
were automatically renewed for an additional one-year period.
Also, as part of the compensation
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paid, each executive is eligible to participate in the employee
benefit programs and receive other perquisites generally
available to the Company’s other employees holding
positions similar to that of the executives.
Compensation upon termination is outlined in the agreements and
described in detail below. Generally, if an executive is
terminated without cause or if the executive terminates the
agreement for good reason, then the executive would receive:
In addition, under the agreements, the executive will receive
upon a change in control, if terminated without cause or by the
executive for good reason:
The Company has entered into indemnification agreements with
each of its directors and officers, which may be broader than
the specific indemnification provisions contained in its
certificate of incorporation, bylaws or under Delaware law.
These indemnification agreements may require the Company, among
other things, to indemnify its officers and directors against
liabilities that may arise by reason of their status or service
as directors or officers. These indemnification agreements also
may require the Company to advance any expenses incurred by the
Company’s directors or officers as a result of any
proceeding against them as to which they could be indemnified.
As of the date of this filing, there is no pending litigation or
proceeding involving any of the Company’s directors,
officers, employees or agents in which indemnification by it is
sought, nor is the Company aware of any threatened litigation or
proceeding that may result in a claim for indemnification. The
Company has purchased a policy of directors’ and
officers’ liability insurance that insures its directors
and officers against the cost of defense, settlement or payment
of a judgment in certain circumstances
We do not currently intend to award compensation that would
result in a limitation on the deductibility of a portion of such
compensation pursuant to Section 162(m) of the Internal
Revenue Code of 1986, as amended, other than awards that may be
made under the 2005 Long-Term Incentive Plan; however, we may in
the future decide to authorize other compensation in excess of
the limits of Section 162(m) if we determine that such
compensation is in the best interests of the Company.
Although deductibility of compensation is preferred, tax
deductibility is not a primary objective of our compensation
programs. We believe that achieving our compensation objectives
set forth above is more important than the benefit of tax
deductibility and we reserve the right to maintain flexibility
in how we compensate our executive officers that may result in
limiting the deductibility of amounts of compensation from time
to time.
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The Human Resources Committee has reviewed and discussed with
management the Compensation Discussion and Analysis
(“CD&A”) included in this Proxy Statement. Based
on such review and discussion, the HR Committee recommended to
the Board that this CD&A be included in the Company’s
Report on
Form 10-K
and this Proxy Statement for filing with the Securities and
Exchange Commission.
Submitted by the Human Resources Committee of the Board of
Directors of Texas Capital Bancshares, Inc.
Frederick B. Hegi, Chairman
Lee Roy Mitchell Steven P. Rosenberg John C. Snyder
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2007 and
2006 Summary Compensation Table
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2007
Grants of Plan Based Awards Table
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2007
Outstanding Equity Awards at Fiscal Year-end Table
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The table disclosing the actuarial present value of each
executive’s accumulated benefit under defined benefit
plans, the number of years of credited service under each plan,
and the amount of pension benefits paid to each Senior Executive
during the year is omitted because the Company does not have a
defined benefit plan for Senior Executives. The only retirement
plan available to Senior Executives in 2007 was the
Company’s qualified 401(k) savings and retirement plan,
which is available to all employees.
The table disclosing contributions to non-qualified and other
deferred compensation plans, each executive’s withdrawals,
earnings and fiscal year balances in those plans is omitted
because, in 2007 the Company had no non-qualified deferred
compensation plans or benefits for executive officers or other
employees of the Company.
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2007
Potential Payments Upon Termination or Change in Control
Table
The following table summarizes the estimated payments to be made
under each executive’s contract, described more completely
in the Employment Agreements section in the Compensation
Discussion and Analysis starting on page 15. For the
purposes of the quantitative disclosure in the following table,
and in accordance with SEC regulations, we have assumed that the
termination took place on December 31, 2007 and that the
price per share of our common stock is the closing market price
as of that date, $18.25.
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2007 Director
Compensation Table
The following table contains information pertaining to the
compensation of the Company’s board of directors for the
2007 fiscal year. On July 23, 2007, each director was
granted 2,000 stock appreciation rights and 500 restricted stock
units. The SAR grant date fair value is $7.87 and the RSUs were
granted at $22.47. In addition, Larry Helm was granted an
additional 3,000 restricted stock units on the same day that
will vest over two years.
Set forth below is the biography of the Company’s executive
officer who is not a member of its board of directors, and his
age and positions as of the date of this Proxy Statement.
C. Keith Cargill (55) has served as Chief
Lending Officer of the Bank since its inception in December
1998, and most recently also as President — Dallas
Region. Mr. Cargill has more than 20 years of banking
experience. He began his banking career at Texas American Bank
in 1977, where he was the manager of the national corporate
lending division of the flagship bank in Fort Worth. In
1985, Mr. Cargill became President and Chief Executive
Officer of Texas American Bank/Riverside, Ft. Worth. In
1989, Mr. Cargill joined NorthPark National Bank as an
Executive Vice President and Chief Lending Officer. When
NorthPark was acquired by Comerica Bank in 1993,
Mr. Cargill joined Comerica as Senior Vice President and
middle market banking manager.
None of the executive officers of the Company or the Bank serves
on the Human Resources Committee of the board of directors of
the Company or any Human Resources Committee or Compensation
Committee of any other company.
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In the ordinary course of business, the Bank has made loans, and
may continue to make loans in the future, to the Bank’s and
the Company’s officers, directors and employees. The Bank
makes all loans to executive officers and directors in the
ordinary course of business, on substantially the same terms as
those with other customers.
In June 2003, the Company committed to invest up to $500,000 in
Blue Sage Investments, LP, a limited partnership approved as a
Small Business Investment Company by the U.S. Small
Business Administration and has invested approximately $317,000
as of December 31, 2007. Blue Sage Investments may be
considered to be an affiliate of Ian J. Turpin, a member of the
Company’s board of directors.
In June 2003, the Company relocated its Austin office to a
building owned by a company that may be considered to be an
affiliate of Ian J. Turpin, a member of the Company’s board
of directors. The lease expense is approximately $145,000
annually.
The Company has entered into indemnification agreements with
each of its directors and officers, which may be broader than
the specific indemnification provisions contained in its
certificate of incorporation, bylaws or under Delaware law.
These indemnification agreements may require the Company, among
other things, to indemnify its officers and directors against
liabilities that may arise by reason of their status or service
as directors or officers. These indemnification agreements also
may require the Company to advance any expenses incurred by the
Company’s directors or officers as a result of any
proceeding against them as to which they could be indemnified.
As of the date of this filing, there is no pending litigation or
proceeding involving any of the Company’s directors,
officers, employees or agents in which indemnification by it is
sought, nor is the Company aware of any threatened litigation or
proceeding that may result in a claim for indemnification. The
Company has purchased a policy of directors’ and
officers’ liability insurance that insures its directors
and officers against the cost of defense, settlement or payment
of a judgment in certain circumstances.
Section 16(a) of the Securities and Exchange Act of 1934
requires the Company’s officers and directors, and persons
who own more than 10% of a registered class of its equity
securities, to file initial reports of ownership and reports of
changes in ownership with the SEC. During 2007, based solely on
the Company’s review of these reports, it believes that the
Company’s Section 16(a) reports were filed timely by
its executive officers and directors.
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A representative of Ernst & Young LLP is expected to
be present at the Annual Meeting and will be available to
respond to appropriate questions.
Fees for professional services provided by the Company’s
independent registered public accounting firms in each of the
last two fiscal years, in each of the following categories are
(in thousands):
Fees for audit services include fees associated with the audit
of the Company’s annual consolidated financial statements,
the reviews of the consolidated financial statements included in
the Company’s
Forms 10-Q,
accounting consultations and management’s assertions
regarding effective internal controls in compliance with the
requirements of Section 404 of the Sarbanes Oxley Act and
Federal Deposit Insurance Corporation Improvement Act. Tax fees
included various federal, state and local tax services.
The Audit Committee has adopted a policy that requires advance
approval of all audit, audit-related and tax services performed
by the independent registered public accounting firm. The policy
provides for pre-approval by the Audit Committee of specifically
defined audit and non-audit services. Unless the specific
service has been previously pre-approved with respect to that
year, the Audit Committee must approve the permitted service
before the independent registered public accounting firm is
engaged to perform it. The Audit Committee has delegated to the
Chairman of the Audit Committee authority to approve permitted
services provided that the Chairman reports any decisions to the
Audit Committee at its next scheduled meeting.
ADDITIONAL
INFORMATION
Stockholders may submit nominees for director in accordance with
the Company’s bylaws. Nominations for director for the 2009
annual meeting of stockholders must be delivered no later than
180 days, or November 20, 2008, nor more than
270 days, or August 22, 2008 prior to the 2009 annual
meeting of stockholders. Nominations should be directed to:
Texas Capital Bancshares, Inc., 2100 McKinney Avenue,
9th Floor, Dallas, Texas 75201, Attn: Secretary.
Stockholders interested in submitting a proposal for inclusion
in the proxy materials for the Company’s annual meeting of
stockholders in 2009 may do so by following the procedures
prescribed in SEC
Rule 14a-8.
To be eligible for inclusion, stockholder proposals must be
received by the Company at the following address: Texas Capital
Bancshares, Inc., 2100 McKinney Avenue, 9th Floor, Dallas,
Texas 75201, Attn: Secretary, no later than December 31,
2008.
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Under the Company’s bylaws, no business may be brought
before an annual meeting unless it is brought before the meeting
by or at the direction of the Board or by a stockholder who has
delivered timely notice to the Company. Such notice must contain
certain information specified in the bylaws and be delivered no
later than 180 days, or November 20, 2008, nor more
than 270 days, or August 22, 2008, prior to the
meeting to the following address: Texas Capital Bancshares,
Inc., 2100 McKinney Avenue, 9th Floor, Dallas, Texas 75201,
Attn: Secretary. These requirements are separate from the
SEC’s requirements that a stockholder must meet in order to
have a stockholder proposal included in the Company’s proxy
statement pursuant to
Rule 14a-8
under the Securities Exchange Act of 1934.
A copy of the Company’s 2007 Annual Report to Stockholders
is available on the Internet as set forth in the Notice of
Internet Availability of Proxy Materials. This report is not
part of the proxy solicitation materials.
Upon written request, the Company will furnish to any
stockholder without charge a copy of its annual report on
Form 10-K
for the year ended December 31, 2007 pursuant to the
instructions set forth in the Notice of Internet Availability of
Proxy Materials.
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