SCHEDULE 14A
PROXY STATEMENT
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TEXAS CAPITAL BANCSHARES, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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(1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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paid previously. Identify the previous filing by registration statement
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(1) Amount Previously Paid: ___________________________________________
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(4) Date Filed: _______________________________________________________
TEXAS CAPITAL BANCSHARES, INC.
2100 McKinney Avenue
9th Floor
Dallas, Texas 75201
April 17, 2003
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
of Texas Capital Bancshares, Inc., a Delaware corporation, and the holding
company for Texas Capital Bank, National Association. The annual meeting will be
on May 20, 2003 at 5:30 p.m. in the offices of Texas Capital Bank, National
Association at 2100 McKinney Avenue, 9th Floor, Dallas, Texas 75201.
The attached Notice of Annual Meeting of Stockholders and Proxy
Statement describe the formal business to be transacted at the annual meeting.
Certain directors and officers will be present at the annual meeting and will be
available to respond to any questions you may have.
We urge you to review carefully the accompanying materials and return
the enclosed proxy card promptly. Please sign, date and return the enclosed
proxy card without delay. If you attend the annual meeting, you may vote in
person even if you have previously mailed a proxy.
On behalf of the board of directors and all the employees of Texas
Capital Bancshares, Inc. and its operating entities, I wish to thank you for
your continued support.
Sincerely,
/s/ JOSEPH M. GRANT
Joseph M. Grant
Chairman and Chief Executive Officer
TEXAS CAPITAL BANCSHARES, INC.
2100 McKinney Avenue
9th Floor
Dallas, Texas 75201
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 17, 2003
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of Texas
Capital Bancshares, Inc., a Delaware corporation, and the holding company for
Texas Capital Bank, National Association, will be on Tuesday, May 20, 2003, at
5:30 p.m. in the offices of Texas Capital Bank, National Association at 2100
McKinney Avenue, 9th Floor, Dallas, Texas 75201.
A proxy statement and proxy card for this annual meeting are enclosed.
The annual meeting is for the purpose of considering and voting upon the
following matters:
1. election of fourteen (14) directors for terms of one year each
or until their successors are elected and qualified,
2. ratification of amendments to the 1999 Omnibus Stock Plan
("Proposal 1"), and
3. other matters as may properly come before the annual meeting
or any postponements or adjournments thereof.
Information about the matters to be acted upon at the annual meeting is
set forth in the accompanying proxy statement. Our board of directors recommends
that you vote FOR each of the nominees for director, and FOR Proposal 1.
Only those stockholders who owned shares of our 6.0% Series A
Convertible Preferred Stock or voting common stock on April 15, 2003, the record
date established by our board of directors, will be entitled to vote at the
annual meeting and at any postponements or adjournments thereof. If there are
not sufficient votes for a quorum or approval of any of the foregoing proposals
at the time of the annual meeting, the board of directors may adjourn or
postpone the annual meeting in order to solicit further proxies.
Stockholders are cordially invited to attend the annual meeting in
person. However, to assure your representation at the annual meeting, we urge
you to mark, sign, date and return the enclosed proxy. If you attend the annual
meeting, you may vote in person even if you have returned a proxy. A list of
stockholders entitled to vote at the annual meeting will be available for
inspection by any stockholder from April 17, 2003 until the annual meeting at
the site of the annual meeting. The list will also be available at the annual
meeting.
By order of the board of directors,
/s/ Larry A. Makel
Larry A. Makel
Secretary
April 17, 2003
Dallas, Texas
PROXY STATEMENT
TABLE OF CONTENTS
MEETING INFORMATION...........................................................................1
RECORD DATE AND VOTING SECURITIES.............................................................1
QUORUM AND VOTING.............................................................................2
SOLICITATION AND VOTING OF PROXIES............................................................2
ELECTION OF DIRECTORS.........................................................................3
Nominees.................................................................................3
Required Vote, Recommendation............................................................5
RATIFICATION OF AMENDMENTS TO THE 1999 OMNIBUS STOCK PLAN.....................................5
Description of the Plan as Amended.......................................................6
Required Vote, Recommendation............................................................7
OTHER MATTERS.................................................................................7
MEETINGS OF THE BOARD OF DIRECTORS............................................................7
COMMITTEES OF THE BOARD OF DIRECTORS..........................................................7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................................8
DIRECTORS' COMPENSATION......................................................................10
MANAGEMENT...................................................................................10
Non-director Management Biographies.....................................................10
Compensation Committee Report on Executive Compensation.................................10
Summary Compensation Table..............................................................12
Fiscal Year-End Option/SAR Values.......................................................12
Compensation Committee Interlocks and Insider Participation.............................13
Indebtedness of Management and Transactions With Certain Related Persons................13
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE......................................13
INDEPENDENT AUDITORS.........................................................................14
AUDIT FEES...................................................................................14
Audit Fees..............................................................................14
Audit Related Fees......................................................................14
Tax Services............................................................................14
All Other Fees..........................................................................14
AUDIT COMMITTEE REPORT.......................................................................14
ADDITIONAL INFORMATION.......................................................................15
Stockholder Nominees for Director for This Annual Meeting...............................15
Stockholder Proposals for Annual Meeting Held in 2004...................................15
Annual Report...........................................................................15
EXHIBIT A....................................................................................16
EXHIBIT B....................................................................................17
EXHIBIT C....................................................................................18
TEXAS CAPITAL BANCSHARES, INC.
2100 McKinney Avenue
9th Floor
Dallas, Texas 75201
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
ON MAY 20, 2003
--------------------------------------------
MEETING INFORMATION
This proxy statement is being furnished to Texas Capital Bancshares,
Inc. ("TCBI") stockholders on April 17, 2003, in connection with the
solicitation of proxies by the board of directors to be voted at the annual
meeting of stockholders. The annual meeting will be on May 20, 2003, at 5:30
p.m. in the offices of Texas Capital Bank, National Association (the "Bank") at
2100 McKinney Avenue, 9th Floor, Dallas, Texas 75201. TCBI is the parent
corporation of the Bank.
The purpose of the annual meeting is to consider and vote upon:
1. election of fourteen (14) directors,
2. ratification of amendments to the 1999 Omnibus Stock Plan
("Proposal 1"), and
3. other matters as may properly come before the annual meeting
or any postponements or adjournments thereof.
RECORD DATE AND VOTING SECURITIES
You are entitled to two votes for each share of 6.0% Series A
Convertible Preferred Stock ("Series A Preferred Stock") or one vote for each
share of voting common stock you own. However, you will not be entitled to vote
any shares of Series A-1 Nonvoting Common Stock you own.
Your proxy will be voted in accordance with the directions you specify
in the proxy. If you do not provide directions in the proxy but sign the proxy
and return it, your proxy will be voted (a) FOR each of the nominees for
director named in the proxy statement, (b) FOR Proposal 1, and (c) in the
discretion of the proxy holders, for any other proposals that properly come
before the annual meeting.
Only those stockholders that owned shares of our Series A Preferred
Stock and/or voting common stock on April 15, 2003, 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 18,513,084 shares of voting
common stock outstanding and 1,057,142 shares (which receive 2,114,284 votes) of
Series A Preferred Stock outstanding that are entitled to be voted and are held
by 865 identified holders. Certain holders hold both common and preferred shares
and have only been counted as one holder.
1
QUORUM AND VOTING
In order to have a quorum to transact business at the annual meeting,
at least a majority of the total number of issued and outstanding shares of
common stock and Series A Preferred Stock must be present at the annual meeting,
in person or by proxy. If there are not sufficient votes for a quorum or to
approve any proposal at the time of the annual meeting, the board may postpone
or adjourn the annual meeting in order to permit the further solicitation of
proxies. Abstentions and broker non-votes will be counted toward a quorum but
will not be counted in the votes for each of the proposals presented at the
meeting.
SOLICITATION AND VOTING OF PROXIES
It is important that you are represented by proxy or are present in
person at the annual meeting. We request that you vote by completing the
enclosed proxy card and returning it signed and dated in the enclosed
postage-paid envelope. Your proxy will be voted in accordance with the
directions you provide. If you sign, date and return your proxy but do not
provide any instructions, your proxy will be voted FOR each of the nominees as
directors and FOR Proposal 1.
Other than the matters listed above, we are not aware of any additional
matters that will be presented for consideration at the annual meeting. However,
if any additional matters are properly brought before the annual meeting, your
proxy will be voted in the discretion of the proxy holder.
You may revoke your proxy at any time prior to its exercise by:
1. filing a written notice of revocation with the secretary of TCBI,
2. delivering to TCBI a duly executed proxy bearing a later date, or
3. attending the annual meeting, filing a notice of revocation with
the secretary and voting in person.
Our board of directors is making this solicitation and TCBI will pay
the costs of this proxy solicitation. The directors, officers and regular
employees of TCBI and the Bank may also solicit proxies by telephone or in
person but will not be paid additional compensation to do so.
2
ELECTION OF DIRECTORS
We currently have fourteen (14) directors on the board of directors.
Directors serve a one-year term or until their successors are elected and
qualified. All of the nominees below currently serve as a director and have
indicated their willingness to continue to serve as a director if elected.
However, if any of the nominees is unable or declines to serve for any reason,
your proxy will be voted for the election of a substitute nominee selected by
the proxy holders.
NOMINEES
At the annual meeting, the stockholders will elect fourteen (14)
directors. The board of directors recommends a vote FOR each of the nominees set
forth below:
NAME AGE POSITION
---- --- --------
JOSEPH M. (JODY) GRANT 64 Director; Chairman, Chief Executive Officer
GEORGE F. JONES, JR. 59 Director; President and Chief Executive
Officer of Texas Capital Bank, N.A.
LEO CORRIGAN III 49 Director
JAMES R. ERWIN 58 Director
FREDERICK B. HEGI, JR. 59 Director
JAMES R. HOLLAND, JR. 59 Director
LARRY A. MAKEL 49 Director
WALTER W. (BO) MCALLISTER III 61 Director
LEE ROY MITCHELL 66 Director
STEVE ROSENBERG 44 Director
JOHN C. SNYDER 61 Director
ROBERT W. STALLINGS 53 Director
JAMES CLEO THOMPSON, JR. 72 Director
IAN J. TURPIN 58 Director
Joseph M. (Jody) Grant has been our Chairman of the Board and Chief
Executive Officer since we commenced operations in 1998. In addition, he
currently serves as the Chairman of the Board of our bank. Prior to co-founding
our 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.
3
GEORGE F. JONES, JR. has served as the Chief Executive Officer and
President of our bank since its inception in December 1998. Mr. Jones was also a
founder of Resource Bank, our 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.
LEO CORRIGAN III has been a director since September 2002. He has
served as President of Corrigan Securities, Inc., a real estate investment
company since 1972. Mr. Corrigan was a director of the Bank from December 1998
to September 2002.
JAMES R. ERWIN has served as Managing Director and Partner of Erwin,
Graves & Associates, L.P. since June 2002. In May 2000, he retired as Vice
Chairman, Texas with Bank of America, a position he had held since 1997. In this
position, Mr. Erwin was responsible for corporate banking, corporate finance,
and investment banking in the western half of the United States. Prior to
serving as Vice Chairman, Texas, he held several executive positions with Bank
of America and its predecessors. Mr. Erwin also serves on the board of directors
of Carreker Corporation and Trammell Crow Company. He has been a director since
May 2002.
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 and Lone Star
Technologies, Inc.
JAMES 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 Executive
Officer of Hunt Capital Group, LLC, an investment management company, since
1993. Mr. Holland currently serves on the board of directors of Cinemark USA,
Inc.
LARRY A. MAKEL has been a director since September 2002. He is a
Partner and member of the Executive Committee of Patton Boggs, LLP, a national
law firm, a position he has held since June 1997. He was a director of the Bank
from December 1998 to September 2002.
WALTER (BO) W. MCALLISTER III has been a director since June 1999. He
served as Chairman of 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 been 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.
STEVE ROSENBERG has been a director since September 2002. He has also
served as President and Chief Executive Officer of Centego Marketing Inc., a
marketing services company since 1999. Mr. Rosenberg serves on the board of
directors of Packaged Ice, Inc. He was a director of the Bank from June 1999 to
September 2002.
JOHN C. SNYDER has served as a director since June 1999. He has also
served as Chairman of Snyder Operating Company, 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.
He also currently serves as a director of SOCO International plc, a UK oil and
gas exploration company.
4
ROBERT W. STALLINGS has served as a director since August 2002. He has
also served as Chairman of the board of directors and Chief Executive Officer of
Stallings Capital Group, an investment company, since March 2002. From 1991 to
2002, Mr. Stallings served as Chief Executive Officer of Pilgrim Capital Group,
an investment company. He also currently serves as a director of Gainsco, Inc.
and Crescent Real Estate Equities Co.
JAMES CLEO THOMPSON, JR. has been a director since September 2002. He
has served as Chairman of the board of directors and President of Thompson
Petroleum Corporation, an energy exploration and production company since 1978.
He was a director of the Bank from June 1999 to September 2002.
IAN J. TURPIN has been a director since May 2002. 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.
REQUIRED VOTE, RECOMMENDATION
To elect a nominee, a plurality of the holders of the votes represented
by shares of common stock and Series A Preferred Stock present or represented at
the meeting must be voted FOR that nominee with respect to each director
position.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF
THE NOMINEES.
RATIFICATION OF AMENDMENTS TO THE 1999 OMNIBUS STOCK PLAN
In 1999, our stockholders approved and adopted our 1999 Omnibus Stock
Plan (the "Omnibus Stock Plan"). During 2002, the board of directors approved
and adopted two amendments to the Omnibus Stock Plan, subject to approval and
ratification of the amendments by our stockholders at the next annual meeting of
stockholders.
The amendments are as follows:
o The first amendment, adopted by the board of directors in April
2002, changed the method by which the amount of issued and
outstanding shares of our common stock were calculated under the
Omnibus Stock Plan. The amendment required all securities which may
be converted into shares of TCBI's common stock to be included in
the calculation of the issued and outstanding shares of TCBI's
common stock on an as-converted basis. As a result, shares of our
Series A Preferred Stock, as well as any other security we issue in
the future that is convertible into our common stock, must be
included, on an as-converted basis, in the calculation of the
number of issued and outstanding shares of our common stock. The
method of calculation of the number of issued and outstanding
shares of our common stock is important under the Omnibus Stock
Plan because the number of shares of our common stock that may be
covered by awards under the Omnibus Stock Plan is determined as a
percentage of the issued and outstanding shares of our common
stock. The current number of issued and outstanding shares of our
common stock, calculated in accordance with the Omnibus Stock Plan
as amended by this first amendment, is 21,322,040. If the Omnibus
Stock Plan had not been amended, the current number of issued and
outstanding shares of our common stock would be 19,207,756. The
complete text of the first amendment is set forth on Exhibit A.
o The second amendment, adopted by the board of directors in July
2002, increased the percentage of the issued and outstanding shares
of our common stock with respect to which awards may be granted
under the Omnibus Stock Plan from 10.0 percent to 12.5 percent. As
a result, awards under the Omnibus Stock Plan, including stock
options, may be issued with respect to 12.5 percent of the number
of shares of the issued and outstanding shares of
5
TCBI's common stock. The current number of shares of our common
stock with respect to which awards may be granted under the Omnibus
Stock Plan, calculated in accordance with the Omnibus Stock Plan as
amended by this second amendment, is 2,665,255. If the Omnibus
Stock Plan had not been amended, the current number of shares of
our common stock with respect to which awards may be granted under
the Omnibus Stock Plan would be 2,132,204. The complete text of the
second amendment is set forth on Exhibit B.
The Omnibus Stock Plan is intended to advance our interests by
providing to our officers and other key employees who have substantial
responsibility for the direction and management incentives to promote the
success of our business, to increase their proprietary interest in our success,
and to encourage them to remain in our employ. We believe that the Omnibus Stock
Plan is a necessary tool to help us compete effectively with our competitors for
the services of new employees and the retention of key employees who may be
required for the future development of our business.
As a result of the amendments described in this proxy statement, no
employee, group of employees or other eligible participant in our Omnibus Stock
Plan will receive or be allocated any additional awards.
DESCRIPTION OF THE PLAN AS AMENDED
A summary of the material features of the Omnibus Stock Plan, as
amended by the amendments described in this proxy statement, is set forth below:
Common Stock Subject to the Omnibus Stock Plan. The maximum number of
shares of our common stock for which awards may be granted under the Omnibus
Stock Plan will be 12.5 percent of the issued and outstanding shares of our
common stock, calculated in accordance with the Omnibus Stock Plan.
Term. Awards may be granted under the Omnibus Stock Plan at any time
after its May 5, 1999 effective date so long as the total number of shares
optioned or purchased under the Omnibus Stock Plan does not exceed 10.0 percent
of the issued and outstanding shares of our common stock. The Omnibus Stock Plan
may be abandoned or terminated at any time by the board of directors, except
with respect to awards then outstanding under the Omnibus Stock Plan.
Eligibility. Employees of TCBI and TCBI's subsidiaries are eligible to
participate in the Omnibus Stock Plan. As of March 31, 2003, there were 224 such
employees.
Administration. The Omnibus Stock Plan shall be administered by the
board of directors. The board of directors shall have full and final authority
in its discretion, subject to the provisions of the Omnibus Stock Plan: (1) to
determine individuals to whom and the time or times at which awards shall be
granted; (2) to determine the terms and provisions of granted awards, which need
not be identical, including, without limitation, terms covering vesting,
exercise dates, and exercise prices; (3) to decide all questions of fact arising
in the application of the Omnibus Stock Plan; and (4) to administer and
interpret the Omnibus Stock Plan in all respects. Except as provided herein, all
determinations made by the board of directors shall be final and conclusive.
Amendment. The board of directors may discontinue the Omnibus Stock
Plan at any time and may amend it from time to time, but no amendment, without
approval of our stockholders, may (1) increase the total number of shares that
may be issued under the Omnibus Stock Plan (except adjustments made in order to
prevent substantial dilution or enlargement of rights under the Omnibus Stock
Plan as a result of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, etc.), (2) materially modify the eligibility
requirements for participants in the Omnibus Stock Plan, or (3) materially
increase the benefits accruing to participants in the Omnibus Stock Plan.
6
REQUIRED VOTE, RECOMMENDATION
A majority of the votes represented by the shares of our common stock
and our Series A Preferred Stock present or represented by proxy at the annual
meeting is required for the approval of Proposal 1 regarding the amendments to
our Omnibus Stock Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
PROPOSAL 1.
OTHER MATTERS
We do not currently know of any other matters that may come before the
annual meeting. However, if any other matters are properly presented at the
annual meeting, the proxy holders will vote your proxy in their discretion on
such matters.
MEETINGS OF THE BOARD OF DIRECTORS
The business of TCBI is managed under the direction of the board of
directors. The board meets on a regularly scheduled basis to review significant
developments affecting the company and to act on matters requiring board
approval. It also holds special meetings when an important matter requires board
action between scheduled meetings. The board of directors met ten times during
the year ended December 31, 2002. With the exception of James Cleo Thompson,
Jr., Larry A. Makel, Walter W. McAllister III, Steve Rosenberg and Lee Roy
Mitchell, all members of the board of directors participated in at least 75% of
all board meetings and their respective committee meetings during 2002.
COMMITTEES OF THE BOARD OF DIRECTORS
The board had three standing committees during 2002. The executive
committee serves as the nominating committee.
o EXECUTIVE COMMITTEE. The Executive Committee has the power to act
on behalf of the board and to direct and manage the business and
affairs of TCBI whenever the board is not in session. Committee
members are James R. Holland, Jr. (Chairman), Joseph M. Grant,
Frederick B. Hegi, Jr., Larry A. Makel, and Robert W. Stallings.
During 2002, the Executive Committee met five times. In its
capacity as the nominating committee, the Executive Committee will
consider nominees to TCBI's board of directors recommended by our
security holders.
o AUDIT COMMITTEE. The Audit Committee reviews the professional
services and independence of the Company's independent auditors and
its accounts, procedures and internal controls. The Audit Committee
recommends to the board the firm selected to be our independent
auditors and monitors the performance of such firm, reviews and
approves the scope of the annual audit, reviews and evaluates with
the independent auditors our annual audit and annual consolidated
financial statements, reviews with management the status of
internal accounting controls, evaluates problem areas having a
potential financial impact on TCBI that may be brought to its
attention by management, the independent auditors or the board, and
evaluates all of our public financial reporting documents.
Committee members are Walter W. (Bo) McAllister III (Chairman),
Steve Rosenberg, Robert W. Stallings, and Ian J. Turpin. During
2002, the Audit Committee met five times.
o COMPENSATION COMMITTEE. The Compensation Committee reviews and
approves salaries and bonuses for officers and key employees of
TCBI. Committee members are Frederick B. Hegi, Jr. (Chairman),
James R. Erwin, Lee Roy Mitchell, and John C. Snyder. During 2002,
the Compensation Committee met three times.
7
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 31, 2003
concerning the beneficial ownership of our voting common stock and preferred
stock by: (a) each director, director nominee and executive officer, (b) each
person we know to beneficially own more than 5% of the issued and outstanding
shares of a class of common stock, and (c) all of our executive officers and
directors as a group. The persons named in the table have sole voting and
investment power with respect to all shares they owned, unless otherwise noted.
Number of Shares of Percent of Shares of
Common Stock Common Stock
Name (1) Beneficially Owned Outstanding
-------- ------------------- --------------------
C. Keith Cargill 196,368 (2) *
Leo Corrigan III 92,000 (3) *
James R. Erwin 68,000 (4) *
Joseph M. (Jody) Grant 895,586 (5) 4.34%
Frederick B. Hegi, Jr. 217,518 (6) 1.04%
James R. Holland, Jr. 483,036 (7) 2.34%
Gregory B. Hultgren 162,000 (8) *
George F. Jones, Jr. 271,048 (9) 1.31%
Larry A. Makel 187,200 (10) *
Walter W. (Bo) McAllister III 49,500 (11) *
Lee Roy Mitchell 220,218 (12) 1.07%
Steve Rosenberg 52,000 (13) *
John C. Snyder 409,732 (14) 1.99%
Robert W. Stallings 154,856 (15) *
James Cleo Thompson, Jr. 180,358 (16) *
Ian J. Turpin 191,312 (17) *
All 16 officers and directors as a group 3,834,732 18.6% **
----------
* Less than 1% of the issued and outstanding shares of the class.
** Percentage is calculated on the basis of 20,618,968 shares, the total
number of shares of voting common stock and preferred stock (on an
as-converted basis) outstanding on March 31, 2003 (after giving effect
to the one-for-one stock dividend).
(1) Unless otherwise stated, the address for each person in this table is
2100 McKinney Avenue, Suite 900, Dallas, Texas 75201.
(2) Includes 392 shares held by Mr. Cargill and 163,976 shares held by
Cargill Lakes Partners, Ltd., of which Mr. Cargill is the President of
its general partner, Cargill Lakes, Inc. Includes 32,000 shares of
common stock that may be acquired upon exercise of options.
(3) Includes 9,000 shares of preferred stock, which are immediately
convertible into 18,000 shares of common stock, held by Corrigan
Securities, Inc., of which Mr. Corrigan is President, and 62,000 shares
held by Corrigan Holdings, Inc., of which Mr. Corrigan is President.
Includes 12,000 shares that may be acquired upon exercise of options.
(4) Includes 28,000 shares held by Mr. Erwin and 12,000 shares of preferred
stock, which are immediately convertible into 24,000 shares of common
stock, held by Erwin Graves & Associates LP, of which Mr. Erwin is the
Managing Director and Partner. Includes 16,000 shares that may be
acquired upon exercise of options.
8
(5) Includes 56,000 shares that may be acquired upon exercise of options
and 771,586 shares held by Mr. Grant. Also includes 68,000 shares which
are currently held in irrevocable trusts and of which Mr. Grant
disclaims beneficial ownership.
(6) Includes 137,132 shares held by Valley View Capital Corp. Retirement
Savings Trust for the benefit of Mr. Hegi, 24,252 shares held by the
F.B. Hegi Trust of which Mr. Hegi is the beneficiary, and 44,134 shares
held directly by Mr. Hegi. Includes 12,000 shares that may be acquired
upon exercise of options.
(7) Includes 471,036 shares held by Hunt Capital Partners, L.P. of which
Mr. Holland is President and Chief Executive Officer. Also includes
12,000 shares that may be acquired upon exercise of options that are
issued in the name of Hunt Capital Group, LLC.
(8) Includes 103,600 shares held by Mr. Hultgren and Rose M. Hultgren, his
wife, as tenants in common, 6,400 shares held by Mr. Hultgren and
52,000 shares that may be acquired upon exercise of options.
(9) Includes 202,918 shares held by G & M Partners Ltd., of which Mr. Jones
is the Managing General Partner, 28,130 shares held directly by Mr.
Jones, and 40,000 shares that may be acquired upon exercise of options.
(10) Includes 152,198 shares held by The Makel Family Partnership, 1995,
Ltd. of which Mr. Makel is the General Partner, 23,002 shares held by
Mr. Makel, and 12,000 shares that may be acquired upon the exercise of
options.
(11) Includes 37,500 shares held directly by Mr. McAllister and 12,000
shares that may be acquired upon the exercise of options.
(12) Includes 208,218 shares held by T&LRM Family Partnership Ltd. Mr.
Mitchell is the Chief Executive Officer of PBA Development, Inc., which
is the general partner of T&LRM. Also includes 12,000 shares that may
be acquired upon exercise of options.
(13) Includes 40,000 shares held by Mr. Rosenberg and 12,000 shares that may
be acquired upon exercise of options.
(14) Includes 237,732 shares held by Snyder Alternative Investments, L.P.,
of which Snyder Operating Company LLC is the general partner. Mr.
Snyder is the President of Snyder Operating Company LLC. Also, includes
50,000 shares of preferred stock, which is immediately convertible into
100,000 shares of common stock, held by the NTS/JCS Charitable
Remainder Unitrust, of which Mr. Snyder is the trustee and 12,000
shares that may be acquired upon exercise of options. Also includes
30,000 shares of preferred stock, which is immediately convertible into
60,000 shares of common stock, held by the Nancy and John Snyder
Foundation. Mr. Snyder disclaims beneficial ownership of the shares
held by the Nancy and John Snyder Foundation.
(15) Includes 71,428 shares preferred stock that are immediately convertible
into 142,856 shares of common stock and 12,000 shares that may be
acquired upon exercise of options.
(16) Includes 24,218 shares held by Mr. Thompson, 32,040 shares held by Big
T Investments, of which Mr. Thompson is the principal, and 64,080
shares held by J. Cleo Thompson Life Estate Trust, of which Mr.
Thompson is the beneficiary. Also includes 16,020 shares of common
stock that are held by the Jean Christine Thompson Trust II and of
which Mr. Thompson disclaims beneficial ownership and 20,000 shares of
preferred stock that are immediately convertible into 40,000 shares of
common stock. Also includes 4,000 shares that may be acquired upon
exercise of options.
(17) Includes 13,794 shares held by Mr. Turpin, 27,586 shares held by
Windermere LP, an entity of which Mr. Turpin can be deemed a
controlling person, and 137,932 shares held by LBJ Capital, L.P., an
entity of which Mr. Turpin can be deemed a controlling person. Also
includes 12,000 shares that may be acquired upon exercise of options.
In addition to the voting common stock, we have also issued a class of
nonvoting common stock entitled Series A-1 Nonvoting Common Stock. As of March
31, 2003, there were 694,672 shares of Series A-1 Nonvoting Common Stock issued
and outstanding, all of which were held by Goff Moore Strategic Partners, L.P.
9
DIRECTORS' COMPENSATION
Directors do not receive any cash fees for attending meetings. During
the first quarter of 2001, each director was awarded options to purchase 4,000
shares of TCBI common stock. Newly elected directors for 2001 were each awarded
options to purchase 4,000 shares of TCBI common stock at the time they joined
the Board. On an annual basis subsequent to 2001, directors were awarded options
to purchase 4,000 shares of TCBI common stock. The options are exercisable at
$7.25 per share. Directors are reimbursed for their travel and reasonable
out-of-pocket expenses incurred by them in performing their duties.
MANAGEMENT
NON-DIRECTOR MANAGEMENT BIOGRAPHIES
Set forth below are the biographies of our executive officers who are
not members of our board of directors, and their ages and positions as of the
date of this Proxy Statement.
GREGORY B. HULTGREN (52) has served as Executive Vice President and
Chief Financial Officer since our formation in 1998. In 1984, Mr. Hultgren
joined Dallas Bancshares, Inc. as Executive Vice President and Chief Financial
Officer. In 1989, TEXOP Bancshares, Inc. acquired the lead bank of Dallas
Bancshares, Inc. and Mr. Hultgren served as the Executive Vice President and
Chief Financial Officer of TEXOP Bancshares, Inc. from 1989 to 1990. From 1994
to 1998, Mr. Hultgren served as a Principal and Chief Financial Officer of
United LP Gas Corporation.
C. KEITH CARGILL (50) has served as an Executive Vice President and
Chief Lending Officer of our bank since its inception in December 1998. 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.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has the following goals for compensation
programs impacting the executive officers of TCBI and the Bank:
o to provide motivation for the executive officers and to enhance
stockholder value by linking their compensation to the value of
common stock,
o to retain the executive officers who have led TCBI and the Bank,
o to allow TCBI and the Bank to attract high quality executive
officers in the future by providing total compensation
opportunities consistent with those provided in the industry and
commensurate with TCBI's and the Bank's level of performance, and
o to maintain reasonable "fixed" compensation costs by targeting base
salaries at a competitive average.
The executive compensation package available to executive officers is
composed of (a) base salary, (b) annual bonus awards, and (c) long-term
incentive compensation, including options and stock awards. In October 2002, we
entered into employment agreements with Joseph M. Grant, Raleigh Hortenstine
III, George F. Jones, Jr. and C. Keith Cargill, members of our executive
management team. The employment agreements have a term of two years, subject to
renewal, and have a compensation
10
package that includes a base salary, bonus and a grant of restricted stock under
our 1999 Omnibus Stock Plan. Also, as part of the compensation paid, each
executive will be eligible to participate in the employee benefit programs and
receive other perquisites generally available to our other employees holding
positions similar to that of the executives.
BASE SALARY. In determining salary levels, the Compensation Committee
considers the entire compensation package for executive officers, including the
equity compensation provided under stock plans. We intend for the salary levels
to be consistent with competitive practices of comparable institutions and each
executive's level of responsibility. The Compensation Committee determines the
level of any salary increase to take effect at the beginning of each fiscal year
after reviewing (a) the qualifications, experience and performance of the
executive officers, (b) the compensation paid to persons having similar duties
and responsibilities in other institutions, and (c) the size of the bank and the
complexity of its operations. The Compensation Committee consulted a survey of
compensation paid to executive officers performing similar duties for depository
institutions and their holding companies, with particular focus on the level of
compensation paid by comparable institutions.
ANNUAL BONUS AWARDS. In determining bonus awards, the Compensation
Committee considers the entire compensation package of the executive officers.
The bonus awards are intended to be consistent with each executive officer's
level of responsibility and with the competitive practices of comparable
financial institutions. The Compensation Committee did not meet during the year
to determine bonus compensation to our executive officers during 2002.
LONG-TERM INCENTIVE COMPENSATION. We maintain the Texas Capital
Bancshares, Inc. 1999 Omnibus Stock Plan under which employees may receive
discretionary grants and awards as determined and awarded solely in the
discretion of the Compensation Committee and approved by the full board. The
Compensation Committee believes that stock ownership is a significant incentive
in aligning the interests of employees and stockholders and building our
stockholders' wealth. In September 2002, the Company granted restricted stock
awards to the following officers: 90,000 shares to Joseph M. Grant; 80,000
shares to Raleigh Hortenstine; 80,000 shares to George Jones; and 50,000 shares
to C. Keith Cargill; however, no shares of restricted stock have vested. In
order to more effectively retain our senior executive officers, we determined it
was in the best interest of TCBI to enter into employment agreements with these
officers. As a result, on October 8, 2002, we entered into Executive Employment
Agreements with Joseph M. Grant, Raleigh Hortenstine III, George F. Jones, Jr.
and C. Keith Cargill.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. After taking into
consideration the factors discussed above, the Compensation Committee entered
into a deferred compensation agreement with Mr. Grant providing him a base
salary of $275,000 for 2000, payable to Mr. Grant in shares of common stock of
TCBI. Pursuant to the timely deferral election by Mr. Grant, as evidenced by a
duly executed deferred compensation agreement, these shares were placed in a
grantor trust of which he is the beneficiary. Pursuant to the terms of the
deferred compensation agreement and grantor trust, these shares shall remain
general assets of TCBI, subject to the claims of TCBI's general creditors and
constitute an unfunded, unsecured promise to pay such compensation to Mr. Grant
at a designated future time. Mr. Grant has not deferred any portion of his
salary for 2001 or 2002. Consistent with 2000 and 2001, his base salary is
$275,000. The Company also granted Mr. Grant 90,000 shares of restricted stock
in 2002. None of the shares of restricted stock have vested.
This report is submitted during 2002 by the members of the Compensation
Committee:
Frederick B. Hegi, Jr., Chairperson
James R. Erwin
Lee Roy Mitchell
John C. Snyder
11
SUMMARY COMPENSATION TABLE
The following table shows, for the years ending December 31, 2002,
2001, and 2000, the cash compensation paid and other compensation paid or
accrued to the Chief Executive Officer and four other executive officers of TCBI
who earned and/or received a salary and bonus in excess of $100,000 (the "Named
Executives").
AWARDS PAYOUTS
-------------------------- ------------
SECURITIES
NAME AND OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS COMPENSATION STOCK (4) OPTIONS/SARS COMPENSATION
------------------ ---- ---------- ------- ------------ ---------- ------------ ------------
JOSEPH M. (JODY) GRANT 2002 $275,000 $ 0 $ 0 90,000 0 $6,603 (3)
Chairman and Chief 2001 $275,000 $ 0 $ 0 0 0 $5,873 (3)
Executive Officerof TCBI 2000 $ 12,000 (1) $ 0 $ 0 0 0 $4,230 (3)
RALEIGH HORTENSTINE III 2002 $250,000 $ 0 $ 7,200 (2) 80,000 0 $6,049 (3)
President of TCBI 2001 $250,000 $ 0 $ 7,200 (2) 0 0 $3,675 (3)
2000 $250,000 $ 0 $ 0 0 0 $4,375 (3)
GEORGE F. JONES, JR. 2002 $238,542 $ 0 $ 7,200 (2) 80,000 0 $6,371 (3)
President and Chief 2001 $225,000 $ 0 $ 7,200 (2) 0 0 $6,971 (3)
Executive Officer of 2000 $225,000 $ 0 $ 7,200 (2) 0 0 $6,796 (3)
the Bank
GREGORY B. HULTGREN 2002 $150,000 $ 0 $ 7,200 (2) 0 0 $ 0
Executive Vice President 2001 $140,000 $ 0 $ 7,200 (2) 0 0 $ 0
and Chief Financial 2000 $140,000 $ 0 $ 7,200 (2) 0 0 $ 0
Officer of TCBI
C. KEITH CARGILL 2002 $187,542 $ 0 $ 7,200 (2) 50,000 0 $ 0
Executive Vice President 2001 $175,000 $ 0 $ 7,200 (2) 0 0 $ 0
and Chief Lending Officer 2000 $175,000 $ 0 $ 7,200 (2) 0 0 $ 0
of TCB
(1) Mr. Grant has entered into a deferred compensation agreement with TCBI
that allows TCBI to pay Mr. Grant in shares of common stock of TCBI.
(2) Represents amounts paid to reimburse automotive expenses.
(3) Represents amounts paid for dues to certain country clubs.
(4) None of the restricted stock is vested at March 31, 2003.
FISCAL YEAR-END OPTION/SAR VALUES
The Named Executives did not exercise any of their options during 2002.
The following table sets forth the number and value of options that the Named
Executives owned as of March 31, 2003:
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS/ IN-THE-MONEY OPTIONS/SARS
NAME SARS AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
---------------------------------- ------------------------------- -------------------------
Joseph M. (Jody) Grant 70,000 (2) $ 70,000
Raleigh Hortenstine III 150,000 (2) $ 150,000
George F. Jones, Jr. 50,000 (2) $ 50,000
Gregory B. Hultgren 60,000 (3) $ 40,000
C. Keith Cargill 40,000 (2) $ 40,000
(1) Value of options based on a fair market value per share of $7.25, which is
based upon the most recent private sales of common stock.
12
(2) Options issued on October 1, 1998 of which four-fifths are currently
exercisable and one-fifth vests on October 1, 2003 with an exercise price
of $6.25 per share.
(3) Options issued on October 1, 1998 of which four-fifths are currently
exercisable and one-fifth vests on October 1, 2003 with an exercise price
of $6.25 per share and 20,000 options issued on April 16, 2002, of which
one-fifth is exercisable on April 16, 2003, with an exercise price of
$7.25 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the executive officers of TCBI or the Bank serves on the
Compensation Committee of the board of directors of TCBI or any compensation
committee of any other company.
INDEBTEDNESS OF MANAGEMENT AND TRANSACTIONS WITH CERTAIN RELATED PERSONS
In the ordinary course of business, the Bank has made loans, and may
continue to make loans in the future, to the Bank's and TCBI's officers,
directors and employees. The Bank makes all loans to executive officers and
directors in the ordinary course of business, on substantially the same terms as
those with other customers.
We are presently a lender in a bank group which has entered into an
Amended and Restated Credit Agreement, dated November 9, 2000, with Ace Cash
Express, Inc., pursuant to which the bank group provides Ace Cash Express with a
revolving credit and term loan facility for working capital, general corporate
purposes, store construction and relocation and other capital expenditures. We
hold less than 5% of the commitments extended to Ace Cash Express pursuant to
the Amended and Restated Credit Agreement, a commitment that represents
approximately $4.6 million if fully funded. Ace Cash Express has entered into an
agreement with H&R Block that contemplates placing Ace Cash Express self-service
check cashing machines at H&R Block locations. Pursuant to an agreement entered
into in January 2002, we agreed to provide the cash to constitute inventory for
those machines in exchange for a fee that varies dependent on the amount of cash
inventory maintained in the machines. The agreement expired in April 2002.
Marshall B. Payne, a former member of our board of directors, is also a member
of the board of directors of Ace Cash Express. We entered into a similar
agreement during the first quarter of 2003.
Larry A. Makel, a member of our board of directors and our Corporate
Secretary, is a partner in the law firm Patton Boggs LLP. We have retained
Patton Boggs LLP on a regular basis to perform legal services.
We have entered into indemnification agreements with each of our
directors and officers, which may be broader than the specific indemnification
provisions contained in our certificate of incorporation, bylaws or under
Delaware law. These indemnification agreements may require us, among other
things, to indemnify our officers and directors against liabilities that may
arise by reason of their status or service as directors or officers. These
indemnification agreements also may require us to advance any expenses incurred
by our 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 our directors, officers,
employees or agents in which indemnification by us is sought, nor are we aware
of any threatened litigation or proceeding that may result in a claim for
indemnification. We have purchased a policy of directors' and officers'
liability insurance that insures our directors and officers against the cost of
defense, settlement or payment of a judgment in certain circumstances.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires our
officers and directors, and persons who own more than 10% of a registered class
of our equity securities, to file initial reports of ownership and reports of
changes in ownership with the SEC. We are not aware of any report that needed to
be filed by any officer, director or 10% stockholder during 2002, except:
Messrs. Corrigan, Erwin, Hortenstine, Snyder, Stallings and Thompson were
delinquent with respect to one filing with respect to one transaction, which
reports were subsequently filed.
13
INDEPENDENT AUDITORS
We selected Ernst & Young LLP as independent auditors to examine our
accounts for 2003. Representatives of Ernst & Young LLP are expected to be
present at the annual meeting and will have the opportunity to make a statement
if they desire to do so. They will also be available to answer appropriate
questions.
AUDIT FEES
AUDIT FEES
We incurred fees of approximately $465,000 related to the audit of our
2002 annual consolidated financial statements and the reviews of the
consolidated financial statements included in our Forms 10-Q for 2002. This
included a June 30, 2002 audit and fees related to the postponed IPO during
2002.
AUDIT RELATED FEES
We incurred fees of approximately $194,000 for audit related services
during 2002. Services included but are not limited to internal audit,
consultations related to employee benefit plans, and procedures related to
management's assertion regarding effective internal controls in compliance with
the requirements of FDICIA.
TAX SERVICES
We incurred other fees of approximately $135,000 related to various
federal, state and local tax services.
ALL OTHER FEES
We did not incur any other fees in 2002.
AUDIT COMMITTEE REPORT
The Audit Committee of the board of directors consists of the four
directors whose names appear below.
The Audit Committee's general role as an audit committee is to assist
the board of directors in overseeing the Company's financial reporting process
and related matters. The Audit Committee has adopted a written charter dated as
of August 30, 2002, a copy of which is included as Exhibit C hereto. Each member
of the Audit Committee is "independent" as defined in Rule 4200(a)(14) of the
National Association of Securities Dealers' listing standards.
The Audit Committee has reviewed and discussed with the Company's
management and the Company's independent auditors, the audited financial
statements of the Company contained in the Company's Annual Report to
Stockholders for the year ended December 31, 2002.
The Audit Committee has also discussed with the Company's independent
auditors the matters required to be discussed pursuant to SAS 61 (Codification
of Statements on Auditing Standards, Communication with Audit Committees). The
Audit Committee has received and reviewed the written disclosures and the letter
from Ernst & Young LLP required by Independence Standards Board Standard No. 1
(titled, "Independence Discussions with Audit Committees"), and has discussed
with Ernst & Young LLP such independent auditors' independence. The Audit
Committee has also considered whether the provision of non-audit services to the
Company by Ernst & Young LLP is compatible with maintaining their independence.
14
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, 2002, filed with the Securities and Exchange
Commission.
This report is submitted on behalf of the Audit Committee.
Walter W. McAllister, Chairperson
Steve Rosenberg
Robert W. Stallings
Ian J. Turpin
ADDITIONAL INFORMATION
STOCKHOLDER NOMINEES FOR DIRECTOR FOR THIS ANNUAL MEETING
You may submit proposals for nominees for our board of directors in
accordance with Article II, Section 9 of our bylaws. If you would like to submit
a nomination for director to be considered at this annual meeting, you must
deliver notice of any director nominations to us no later than the close of
business no later than 180 days nor more than 270 days prior to the meeting.
Director nominations should be directed to:
Texas Capital Bancshares, Inc.
2100 McKinney Avenue, 9th Floor
Dallas, Texas 75201
Attn: Secretary
STOCKHOLDER PROPOSALS FOR ANNUAL MEETING HELD IN 2004
In accordance with Article II, Section 10 of our bylaws, stockholder
proposals for the 2004 Annual Meeting of Stockholders must be received by no
later than 180 days nor more than 270 days prior to the meeting to be considered
for inclusion in the proxy statement and proxy for the 2004 Annual Meeting.
Proposals should be directed to:
Texas Capital Bancshares, Inc.
2100 McKinney Avenue, 9th Floor
Dallas, Texas 75201
Attn: Secretary
ANNUAL REPORT
Our Annual Report on Form 10-K accompanies this proxy statement.
15
EXHIBIT A
AMENDMENT TO THE 1999 OMNIBUS STOCK PLAN
The Board of Directors (the "Board") of Texas Capital Bancshares, Inc.
(the "Company"), acting as administrator of the Company's 1999 Omnibus Stock
Plan (the "Plan"), hereby amends the Plan by resolution adopted at a meeting
duly called and held on April 16, 2002 as follows:
1. AMENDMENT OF ARTICLE II. Article II of the Plan is hereby amended by
adding a new Section 2.19 which shall read in its entirety as follows:
2.19 "Common Stock Equivalents" means shares of Common Stock
and any shares of Common Stock that are issuable upon conversion of any
issued and outstanding securities of the Company.
2. AMENDMENT OF ARTICLE V. Article V of the Plan is hereby amended in
its entirety to read as follows:
ARTICLE V
COMMON STOCK AVAILABLE FOR THE PLAN
The aggregate number of shares of Common Stock which may be
issued pursuant to this Plan, subject to adjustment as provided in
Article VII, shall be ten percent (10%) of the then outstanding shares
of Common Stock and Common Stock Equivalents; provided, however, that
the number of shares that may be issued hereunder shall not be reduced
as a result of any redemptions, repurchases or other reduction in the
number of outstanding shares of Common Stock or Common Stock
Equivalents. The Company shall reserve such number of shares for Awards
under the Plan. None of such shares shall be the subject of more than
one Award at any time, but if an Award as to any shares is surrendered
before exercise, or expires or terminates for any reason without having
been exercised in full, or for any other reason ceases to be
exercisable, the number of shares covered thereby shall again become
available for grant under the Plan as if no Awards had been previously
granted with respect to such shares.
16
EXHIBIT B
AMENDMENT TO THE 1999 OMNIBUS STOCK PLAN
The Board of Directors (the "Board") of Texas Capital Bancshares, Inc.
(the "Company"), acting as administrator of the Company's 1999 Omnibus Stock
Plan (the "Plan"), hereby amends the Plan by resolution adopted at a meeting
duly called and held on July 17, 2002 as follows:
1. AMENDMENT OF ARTICLE V. Article V of the Plan is hereby amended in
its entirety to read as follows:
ARTICLE V
COMMON STOCK AVAILABLE FOR THE PLAN
The aggregate number of shares of Common Stock which may be
issued pursuant to this Plan, subject to adjustment as provided in
Article VII, shall be twelve and one-half percent (12.5%) of the then
outstanding shares of Common Stock and Common Stock Equivalents;
provided, however, that the number of shares that may be issued
hereunder shall not be reduced as a result of any redemptions,
repurchases or other reduction in the number of outstanding shares of
Common Stock or Common Stock Equivalents. The Company shall reserve
such number of shares for Awards under the Plan. None of such shares
shall be the subject of more than one Award at any time, but if an
Award as to any shares is surrendered before exercise, or expires or
terminates for any reason without having been exercised in full, or for
any other reason ceases to be exercisable, the number of shares covered
thereby shall again become available for grant under the Plan as if no
Awards had been previously granted with respect to such shares.
17
EXHIBIT C
AMENDED AND RESTATED
AUDIT COMMITTEE CHARTER
as of August 30, 2002
PURPOSE
The Board of Directors is charged with establishing and monitoring
adherence to policies and procedures required by regulatory statutes and
principles of safety and soundness. Consistent with this function, the Board of
Directors hereby establishes an Audit Committee (the "Committee"). The Committee
also functions as the Audit Committee of the Board of Directors of the Company's
subsidiary, Texas Capital Bank, National Association (the "Bank"). References to
the Company herein also include the Bank and all other direct and indirect
subsidiaries of the Company. The Committee shall assist the Board of Directors
in monitoring:
1. The Company's compliance with Board of Directors' policies,
operating policies and procedures, applicable laws and
regulations and the effectiveness of the Company's internal
controls;
2. The effectiveness of the system of reporting financial
information to the shareholders and the integrity of the
consolidated financial statements of the corporation;
3. Compliance by the Company with legal and regulatory
requirements; and
4. The effectiveness and efficiency of the Company's information
systems and the procedures for safeguarding resources against
loss.
MEMBERSHIP
The Committee shall be comprised of:
1. Not less than three members of the Board of Directors;
2. Members of the Board of Directors who have no relationship to
the Company that may interfere with the exercise of their
independence from management and the Company, such as
accepting any consulting, advisory or other fees from the
Company; and
3. Members of the Board of Directors who are, in the Board of
Directors' judgment, financially literate or who shall become
financially literate within a reasonable period of time after
appointment to the Committee. In addition, at least one member
of the Committee will have accounting or related financial
management expertise sufficient to be considered a "Financial
Expert."
AUTHORITY
The Board of Directors authorizes the Committee within the scope of its
responsibilities to:
1. Seek any information it requires from any Company employee or
any other source deemed advisable. All employees and external
parties are directed by the Board of Directors to cooperate
with any request made by the Committee;
2. Obtain outside legal or other independent professional advice;
and
3. Ensure the attendance at Committee meetings of external
parties with relevant experience and expertise.
18
MEETINGS
The Committee shall meet four times per year or more frequently as
circumstances require. The Committee may ask members of management or others to
attend meetings and provide pertinent information as necessary. The proceedings
of all meetings will be documented in minutes, which will be approved by the
Committee and presented at meetings of the Board of Directors.
RESPONSIBILITIES
The Committee shall, in the course of its operation:
1. Provide an open avenue of communication between the Company's
independent auditor, its internal auditors, and the Board of
Directors;
2. Instruct the independent auditor that the Board of Directors
is the auditor's client;
3. Be directly responsible for the appointment, compensation and
oversight of the work of the Company's independent auditor for
approval by the Board of Directors, and review and recommend
the discharge of the independent auditor. On an annual basis,
the Committee will require the independent auditor to submit a
formal written statement regarding relationships and services
which may affect its objectivity and independence and
recommending any actions the Board of Directors should
consider to address such matters;
4. Meet with the independent auditor and financial management of
the Company to review the scope of the proposed audit for the
current year and, at the conclusion thereof, review such
audit, including any comments or recommendations of the
independent auditor;
5. Consider the independent auditor's judgments regarding the
quality and appropriateness of the Company's accounting
principles as applied in its financial reporting;
6. Review quarterly with the independent auditor, before the
Company files its Quarterly Report Form 10-Q, any significant
events, transactions and changes in accounting estimates which
were considered by the independent auditor, in performing the
quarterly review, to have affected the quality of the
Company's financial reporting. The Chairperson of the
Committee or the Chairperson's designated representative may
represent the entire Committee for purposes of this review;
7. Review the program of the Company's internal audit
department's coverage and schedule for each quarter, including
proposed recommendations made regarding audits of areas the
Committee, management or the auditors believe to be of
specific concern;
8. Receive, prior to each meeting of the Committee, a summary of
findings from completed internal audits and compliance audits
for the prior period, a progress report on the current
internal audit plan, and a report of outstanding weaknesses
from prior audits;
9. Provide sufficient opportunity for the Company's internal and
independent auditors to meet privately with the members of the
Committee to discuss any audit findings or other matters they
deem relevant;
10. Have periodic reviews with the Company's auditors and legal
counsel regarding developments and changes in the various
federal banking rules, regulations and other laws and the
status of the Company's compliance record;
19
11. Establish procedures for properly receiving, retaining and
treating complaints received by the Company regarding
auditing, internal accounting controls and accounting matters;
12. Establish procedures for properly handling confidential,
anonymous submissions by the Company's employees regarding
questionable accounting or auditing matters;
13. Annually review and assess the Committee's Charter and
recommend any proposed changes to the Board of Directors;
14. Insure that the independent auditors do not perform the
non-audit services listed below on behalf of the Company
during the time the independent auditors are contemporaneously
preparing a mandatory audit: (i) bookkeeping or other services
related to the accounting records or financial statements of
the Company; (ii) financial information systems design and
implementation; (iii) appraisal or valuation services,
fairness opinions, or contribution-in-kind reports; (iv)
actuarial services; (v) internal audit outsourcing services;
(vi) management functions or human resources; (vii) broker or
dealer, investment adviser, or investment banking services;
(viii) legal services and expert services unrelated to the
audit; and (ix) any other service that the Public Accounting
Oversight Board determines, by regulation, is impermissible;
and
15. Approve in advance of performance by the independent auditors
of permitted non-audit services, such as tax services, and
cause disclosure of such non-audit services performed by the
independent auditors to be made in the Company's periodic
reports.
While the Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty of
the Committee to conduct investigations, to resolve disagreements, if any,
between management and the independent auditor or to assure that the Company is
in compliance with laws and regulations.
20
REVOCABLE PROXY
TEXAS CAPITAL BANCSHARES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 2003, 5:30 P.M
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joseph M. Grant and Gregory B. Hultgren, each
with full power of substitution, to act as proxies for the undersigned, and to
vote all shares of preferred stock and common stock of Texas Capital Bancshares,
Inc. that the undersigned is entitled to vote at the Annual Meeting of
Stockholders, on Tuesday, May 20, 2003 at 5:30 p.m. at the offices of Texas
Capital Bank, National Association at 2100 McKinney Avenue, 9th Floor, Dallas,
Texas 75201, and at any and all adjournments thereof, as set forth below.
This proxy is revocable and will be voted as directed, but if no instructions
are specified, this proxy will be voted:
o FOR THE NOMINEES FOR DIRECTORS SPECIFIED, AND
o FOR PROPOSAL #1.
If any other business is presented at the annual meeting, including whether or
not to adjourn the meeting, this proxy will be voted by those named in this
proxy in their discretion. At the present time, the board of directors knows of
no other business to be presented at the annual meeting.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES FOR DIRECTOR
AND "FOR" PROPOSAL #1.
[X] Please mark your votes as indicated
ELECTION AS DIRECTOR OF ALL NOMINEES (EXCEPT AS MARKED BY STRIKING THROUGH THE
NOMINEE'S NAME BELOW):
[ ] FOR ALL NOMINEES EXCEPT AS INDICATED [ ] VOTE WITHHELD FROM ALL NOMINEES
Leo Corrigan III Frederick B. Hegi, Jr Larry A. Makel Steve Rosenberg James C. Thompson, Jr.
James R. Erwin James R. Holland, Jr. Walter W. (Bo) McAllister III John C. Snyder Ian J. Turpin
Joseph M. (Jody) Grant George F. Jones, Jr. Lee Roy Mitchell Robert. W. Stallings
APPROVAL OF PROPOSAL #1:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. Please sign exactly as your name appears on the label on
the reverse side of this card. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title. If shares are
held jointly, each holder may sign but only one signature is required.
The undersigned acknowledges receipt from Texas Capital
Bancshares, Inc. prior to the execution of this proxy of a --------------------------------------------- ------------------
Notice of Annual Meeting of Stockholders dated April 17, Signature of Stockholder Date
2003, a Proxy Statement dated April 17, 2003, and the
Annual Report on Form 10-K for the year ended December 31, --------------------------------------------- ------------------
2002. Signature of Stockholder Date