Our Board functions in a collaborative fashion that emphasizes active participation by all of its members. Our business is conducted day-to-day by our officers, under the direction of our CEO and President, Lee R. Gibson, with oversight from the Board, to enhance the long-term value of the Company for its shareholders. Mr. Gibson also serves as a member of the Board, which enables him to communicate the Board's strategic findings and guidance to management. Our Board determines who to appoint as our Chairman based on the knowledge and experience of the peoplemembers then serving on our Board and chooses the person whom it believes best meets the needs of the Company. Both the Chairman and the Vice Chairman are independent directors and serve as ex-officio members of the Audit, Corporate Governance and Nominating, Compensation, Risk, and Information Technology,IT, Digital Banking and Innovation Committees.
The Board recognizes that, although day-to-day risk management is primarily the responsibility of the Company’s management team, the Board plays a critical role in the oversight of risk. The Board believes an important part of its responsibility is to assess the major risks the Company faces and review the Company’s options for monitoring and controlling these risks. The Board assumes responsibility for the Company’s overall risk assessment, primarily through the Board's Audit and Risk Committees. The Audit Committee has specific responsibility for oversight of risks associated with financial accounting and audits, as well as internal control over financial reporting. This includes the Company’s risk assessment and management policies, the Company’s major financial risk exposure and the steps taken by management to monitor and mitigate such exposure. The Risk Committee assists the Board in fulfilling its responsibility for overseeing and improving the Company's enterprise-wide risk management practices, which includes ensuring that the executive team has identified and assessed the key risks the Company faces and has established a risk management infrastructure capable of addressing those risks. The Compensation Committee oversees the risks relating to the Company’s compensation policies and practices, as well as management development and leadership succession, in the Company’s various business units. The Board as a whole examines specific business risks including but not limited to credit risk, interest rate risk and operations risk, in its regular strategic reviews on a Company-wide basis.
The Company’s common stock is listed on the NASDAQ Global Select Market under the symbol “SBSI.” NASDAQ listing rules require a majority of our directors to be “independent directors,” as defined in the NASDAQ listing rules. The Board has affirmatively determined that all of the Company’s directors, other than Lee R. Gibson and H. J. Shands, III, are independent directors under the NASDAQ listing rules. Each member of the Board’s Audit, Corporate Governance and Nominating and Compensation Committees qualifies as an independent director, and all other Board committees are comprised of a majority of independent directors. All Board committees are chaired by independent directors.
The Company has adopted a procedure by which shareholders may send communications to one or more members of the Board by writing to such director(s) or to the Board as a whole in care of the Corporate Secretary, Southside Bancshares, Inc., 1201 South Beckham Avenue, Tyler, Texas 75701. Any such communications will be promptly distributed by the Corporate Secretary to such individual director(s) or to all directors if addressed to the Board as a whole.
financial statement of the Company; fraud or deliberate error in the recording and maintainingmaintenance of financial records of the Company; deficiencies in or noncompliance with the Company’s internal
accounting controls; misrepresentation or false statement to or by a senior officer or accountant regarding a matter contained in the financial records, financial reports or audit reports of the Company; or deviation from full and fair reporting of the Company’s financial condition. AnyHuman resource complaints received byare reported directly to the independent company will beHuman Resource Director; all other complaints are reported directly to the Chairman of the Audit Committee and to the Chief Audit Executive of the Company. ComplaintsCompany, and will be reviewed by Internal Audit under the direction of the Audit Committee. ComplaintsAll complaints submitted will be promptly investigated and appropriate corrective action will be taken, as warranted by the investigation. Management is committed to complying with all applicable securities laws and regulations and, therefore, encourages officers and employees to raise concerns regarding any suspected violations of those standardsissues or concerns by using the fraud hotline.online reporting system.
The Company maintains an anti-hedging and anti-pledging policy, which prohibits executive officers, directors and employees who receive equity grants from (1) directly or indirectly engaging in any hedging or monetization transactions, such as exchange funds, prepaid variable forward contracts, equity swaps, puts, calls, collars, forward sale contracts and other derivative instruments, through transactions in the Company’s securities or through the use of financial instruments designed for such purpose, (2) engaging in short sale transactions in the Company’s securities or (3) pledging the Company’s securities as collateral for a loan, including through the use of traditional margin accounts with a broker.
The Company maintains this policy to prevent the appearance of a person trading based on inside information, as hedging transactions might be considered short-term bets and a margin sale or foreclosure sale could occur at a time when the pledger is aware of nonpublic information or during a blackout trading period. In addition, transactions in options may also focus the person’s attention on short-term performance at the expense of the Company's long-term objectives.
Southside Bancshares, Inc.| 20202023 Proxy Statement | 1114
Southside Bancshares, Inc. Board Committees
The Board has five standing committees:
•Audit Committee;
•Compensation Committee;
Information Technology (IT),•IT, Digital Banking and Innovation Committee;
•Corporate Governance and Nominating Committee; and
•Risk Committee.
Each of the Southside Bancshares, Inc. Committees'Committees of the Company's Board have a formal written charter, which can be found on the Company’s website at https://investors.southside.com, under the topic Governance Documents.southside.com/governance.
Southside Bank Board Committees
The Southside Bank Board has five standing committees:
•Executive Committee;
•Loan/Discount Committee;
•Trust Committee;
•Compliance/IT/CRA Committee; and
•Investment/Asset-Liability Committee (ALCO).
The following table presents the compositions of the Committees of both the Company's Board and the Southside Bank Board, as well as the number of meetings held, for the year ended December 31, 2019: |
| | | | | | | | | | | | |
Directors | Southside Bancshares, Inc. | Southside Bank |
Independent | Board | Committees | Board | Committees |
Audit | Compensation | IT, Digital Banking and Innovation | Nominating | Risk | Executive/ Loan and Discount | Trust | Compliance /IT CRA | ALCO |
Lawrence Anderson, M.D. | ü | ü | | ü | C | ü | | ü | ü | | | |
S. Elaine Anderson, CPA | ü | ü | ü | | | | ü | ü | ü | | ü | ü |
Michael J. Bosworth | ü | ü | | | ü | | ü | ü | ü | ü | | |
Herbert C. Buie | ü | ü | | | | ü | | ü | ü | ü | | |
Patricia A. Callan | ü | ü | | C | ü | ü | | ü | ü | | | |
John R. (Bob) Garrett | ü | C | | | | | | C | C | | | |
Lee R. Gibson, CPA | | ü | | | | | | ü | ü | A | | A |
George H. (Trey) Henderson, III | ü | ü | | ü | | | ü | ü | ü | ü | | |
Melvin B. Lovelady, CPA | ü | ü | C | ü | | | | ü | ü | | C | ü |
Tony K. Morgan, CPA | ü | ü | ü | | ü | | | ü | ü | | ü | ü |
John F. Sammons, Jr. | ü | ü | | ü | | ü | | ü | ü | ü | | |
H. J. Shands, III | | ü | | | | | | ü | ü | | | |
William Sheehy | ü | ü | ü | | | | C | ü | ü | | ü | ü |
Preston L. Smith | ü | ü | ü | | ü | C | | ü | ü | | ü | ü |
Donald W. Thedford | ü | VC | | | | | | VC | ü | | | |
Meetings during 2019 | 16 | 18 | 4 | 4 | 4 | 3 | 13 | 50 | 12 | 12 | 12 |
C Chairman
VC Vice Chairman
A Advisory Member
2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Directors | Southside Bancshares, Inc. | Southside Bank |
Independent | Board | Committees | Board | Committees |
Audit | Compensation | IT, Digital Banking and Innovation | Corporate Governance and Nominating | Risk | Executive/ Loan and Discount | Trust | Compliance / IT / CRA | ALCO |
Lawrence Anderson, M.D. | ü | ü | | ü | C | ü | | ü | ü | | | |
S. Elaine Anderson, CPA | ü | ü | ü | | | | C | ü | ü | | ü | ü |
Michael J. Bosworth | ü | ü | | | | | ü | ü | ü | ü | | ü |
Herbert C. Buie | ü | ü | | | | ü | | ü | ü | ü | | |
Patricia A. Callan | ü | ü | | C | ü | ü | | ü | ü | | | |
Shannon Dacus | ü | ü | ü | | | ü | ü | ü | ü | ü | ü | |
Alton L. Frailey | ü | ü | | ü | ü | | | ü | ü | | | |
John R. (Bob) Garrett | ü | C | | | | | | C | C | | | |
Lee R. Gibson, CPA | | ü | | | | | | ü | ü | A | | A |
George H. (Trey) Henderson, III | ü | ü | | ü | | | ü | ü | ü | C | | |
Melvin B. Lovelady, CPA | ü | ü | ü | ü | | | | ü | ü | | ü | ü |
Tony K. Morgan, CPA | ü | ü | C | | ü | | | ü | ü | | C | ü |
John F. Sammons, Jr. | ü | ü | | ü | | ü | | ü | ü | ü | | |
H. J. Shands, III | | ü | | | ü | | ü | ü | ü | | | ü |
William Sheehy | ü | ü | ü | | | | ü | ü | ü | | ü | ü |
Preston L. Smith | ü | ü | ü | | ü | C | | ü | ü | | ü | ü |
Donald W. Thedford | ü | VC | | | | | | VC | ü | | | |
Meetings during 2022 | 14 | 12 | 3 | 4 | 4 | 6 | 13 | 28 | 6 | 12 | 9 |
| | | | | |
C | Chairman |
VC | Vice Chairman |
A | Advisory Member |
Southside Bancshares, Inc.| 20202023 Proxy Statement | 1215
Board of Directors Meeting Attendance
During 2019,2022, each of our directors attended at least 75% of the aggregate of (1) the total number of meetings of the Board (held during the period for which he or she served as a director) and (2) the total number of meetings held by all committees of the Board on which he or she served (during the periods that he or she served). All of the Company’s directors, with the exception of John F. Sammons, Jr., were in attendance at the Company’s 20192022 Annual Meeting. Although the Company has not adopted a formal written policy with respect to director attendance at meetings, we encourage our directors to attend each Annual Meeting of Shareholders and all meetings of the Board and committees on which the directors serve.
These committees were formed to assist the boards of directors of the Company and Southside Bank in the discharge of their respective responsibilities. The purpose and composition of these committees areis described below.
Audit Committee of Southside Bancshares, Inc.
The Audit Committee of the Board was established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Corporate Governance and Nominating Committee of the Board has unanimously determined that S. Elaine Anderson, CPA, Melvin B. Lovelady, CPA, and Tony K. Morgan, CPA, who served in 2022, each qualify as an “audit committee financial expert” as defined by the SEC. The Corporate Governance and Nominating Committee of the Board has also unanimously determined that all Audit Committee members are financially literate under the current NASDAQ listing rules.
The Audit Committee is primarily responsible for the engagement of the Company's independent registered certified public accounting firm, oversight of the Company’s financial statements and controls, assessing and ensuring the independence, qualifications and performances of the independent registered certified public accounting firm, approving the services and fees of the independent registered certified public accounting firm and reviewing and approving the annual audited financial statements of the Company before issuance, subject to the approval of the Board. The Audit Committee manages the Company’s relationship with its independent registered certified public accounting firm, who reportreports directly to the Audit Committee. The Audit Committee also monitors the internal audit function, internal accounting procedures and assures compliance with all appropriate statutes and regulations. The Audit Committee has the authority to obtain advice and assistance from outside legal, accounting or other advisors as the Audit Committee deems necessary to carry out its duties, with funding from the Company for such advice and assistance. No members of the Audit Committee received any compensation from the Company during the last fiscal year other than directors’ fees.
Corporate Governance and Nominating Committee of Southside Bancshares, Inc.
The Corporate Governance and Nominating Committee is responsible for identifying, screening and recommending candidates for election to the Board and seeks to create a Board that is, as a whole, strong in its collective knowledge and diversity of skills and experience and background with respect to accounting and finance, management and leadership, business judgment, industry knowledge and corporate governance. When the Corporate Governance and Nominating Committee reviews a potential new candidate, it looks specifically at the candidate’s qualifications in light of the needs of the Board and the Company at that time, given the then-current mix of director attributes.
The Company’s Board of Directors has established the following process for the identification and selection of candidates for director. The Corporate Governance and Nominating Committee, in consultation with the Chairman of the Board, annually reviews the appropriate experience, skills and characteristics required of Board members in the context of the current membership of the Board to determine whether the Board would be better enhanced by the addition of one or more directors. In considering board of director candidates, the Corporate Governance and Nominating Committee takes into consideration all factors that it deems appropriate, including, but not limited to, the individual’s character, education, experience, knowledge, skills and ownership of the Company’s stock. The Corporate Governance and Nominating Committee will also consider the extent of the individual’s experience in business, education or public service, his or her ability to bring a desired range of skills, diverse perspectives and experience to the Board and whether the individual possesses high ethical standards, a strong sense of professionalism and is capable of serving the interests of the Company's shareholders. A candidate should possess a working knowledge of the Company’s current local market areas. Additionally, the Corporate Governance and Nominating Committee will consider the number of boards the candidate currently serves on when assessing whether the candidate has the appropriate amount of time to devote to serving on the Company’s Board. The Corporate Governance and Nominating Committee, when considering diversity, gives strong consideration to a wide range of diversity factors as a matter of practice when evaluating candidates to the Board and incumbent directors, but the Committee does not have a formal policy regarding Board diversity.
The Corporate Governance and Nominating Committee identifies candidates to the Board by introduction from management, members of the Board, employees or other sources, and shareholders that satisfy the Company’s policy regarding shareholder recommended candidates. The Corporate Governance and Nominating Committee does not evaluate director candidates recommended by shareholders differently than director candidates recommended by other sources. Shareholders wishing to submit director candidate recommendations for the 20212024 Annual Meeting should write to the Corporate Governance and Nominating Committee in care of the Corporate Secretary, Southside Bancshares, Inc., Post Office Box 8444, Tyler, Texas 75711. Any such shareholder must follow the procedures set forth in the Company’s bylaws and the Corporate Governance and Nominating Committee charter. Our bylaws provide that proposals that comply with all rules and requirements of the SEC and are included in our proxy statement are deemeddeemed to comply with the advance notice procedures in our bylaws. RecommendationsShareholder
Southside Bancshares, Inc.| 2023 Proxy Statement | 16
director recommendations must be submitted to the Corporate Secretary on or before November 26, 2020,30, 2023, in order to be included in the proxy statement for the 20212024 Annual Meeting. See “Shareholder Proposals.” The Corporate Governance and Nominating Committee is not obligated to recommend any individual proposed by a shareholder as a nominee for election to the Board. No shareholder recommendations have been received by the Company for this Annual Meeting. Accordingly, no rejections or refusals of such candidates have been made by the Company.
Southside Bancshares, Inc.| 2020 Proxy Statement | 13
In addition, the Corporate Governance and Nominating Committee is responsible for identifying, screening and recommending to the Board candidates to serve on the Compensation Committee, Audit Committee, Risk Committee and Information Technology,IT, Digital Banking and Innovation Committee. These recommendations are submitted to the Board for final approval.
Compensation Committee of Southside Bancshares, Inc.
The Compensation Committee of the Board reviews the Company’s general compensation philosophy and oversees the development of compensation and benefit programs. The Compensation Committee recommends the compensation for the named executive officers of the Company, all of whom are executive officers of the Company and Southside Bank. The boards of directors of the Company and Southside Bank consider the recommendations of the Compensation Committee and approve the compensation of the named executive officers. Pursuant to its charter, the Compensation Committee may form and delegate authority and duties to subcommittees as it deems appropriate. Additional information regarding the Compensation Committee’s processes and procedures for consideration of executive compensation is provided in the Compensation Discussion and Analysis below.
Risk Committee of Southside Bancshares, Inc.
The purpose of the Risk Committee is to assist the Board in fulfilling its oversight responsibilities with regard to the risk appetite of the Company, enterprise-wide risk management, compliance framework and the governance structure that supports it. The primary responsibility of the Risk Committee is to oversee and improve the company-wide risk management practices while assisting the Board by:
•Ensuring that the executive team has identified and assessed the key risks the Company faces and has established a risk management infrastructure capable of addressing those risks;
•Overseeing, in conjunction with other Board-level committees or the full Board, if applicable, risks, such as strategic, financial, credit, liquidity, security, property, information technologyIT (including cyber security), legal, regulatory, reputational and other risks;
•Overseeing the division of risk-related responsibilities to each Board committee as clearly as possible and performing a gap analysis to determine the full oversight of any risks is not missed;all risks; and
•Approving, in conjunction with the full Board, the Company’s enterprise-wide risk management framework.
In addition to the Company's Board members specified above, also serving on the committee is Suni Davis, Chief Risk Officer (“CRO”)CRO of the Company and Southside Bank.
Information Technology,IT, Digital Banking and Innovation Committee of Southside Bancshares, Inc.
The purpose of the Information Technology,IT, Digital Banking and Innovation Committee is to assist the Board in fulfilling its oversight responsibilities with regard to information technology,IT, digital banking and innovation. Specific responsibilities of this committee are:
•Provide oversight on information technologyIT strategies and subjects related to digital innovation, digital banking strategies, products and business/information technology;IT;
•Review management reports and provide oversight of the implementation of major digital banking, technology innovation and business/information technologyIT projects and architecture decisions;
•Review the information technologyIT plan which demonstrates objectives and targets for digital banking, technology innovation and business/information technologyIT risks, proposals and acquisition processes; and
•Ensure the Company’s digital banking, digital innovation and business/information technologyIT programs effectively support its business objectives and strategies.
In addition to the Company's Board members specified above, also serving on the committee are bank officers Cindy Blackstone, Faye Bond, Jason Cathey, Ramon Cocolan, Trent Dawson, Justin Hutcheson, Brian K. McCabe, Gordon Roberts, Leigh Anne Rozell, Daniel SittonJames Schafer and Lora Stockhammer.
Southside Bancshares, Inc.| 2023 Proxy Statement | 17
COMMITTEES OF SOUTHSIDE BANK
Executive Committee and Loan/Discount Committee of Southside Bank
The Executive Committee is authorized to act on behalf of the Board of directors of Southside Bank between scheduled Board meetings, subject to certain limitations. The members of the Executive Committee comprise the Loan/Discount Committee of Southside Bank. It is the Loan/Discount Committee’s responsibility to monitor credit quality, review extensions of credit and approve selected credits in accordance with the loan policy.
In addition to the Company's Board members specified above, also serving on the committee are John F. Walker, M.D.,as an advisory director of Southside Bank and T.L.is T. L. Arnold, Jr., Chief Credit Officer.
Trust Committee of Southside Bank
The Trust Committee of Southside Bank is responsible for the oversight of the operations and activities of the Wealth Management and Trust Department. In addition to the Company's boardBoard members specified above, also serving on thethis committee is John F.
Southside Bancshares, Inc.| 2020 Proxy Statement | 14
Walker, M.D., an advisory director of Southside Bank. Serving as advisory members of the committee are Julie N. Shamburger, Brian K. McCabe and Lonny Uzzell. Officers of Southside Bank who serve on the committee include Bryan Campbell, Ernest King, Kim Christie (Chair) and Kim Partin (Chair).Matt Renick.
Compliance, Information Technology (IT)IT and Community Reinvestment Act (CRA) Committee of Southside Bank
The Compliance/IT/CRA Committee of Southside Bank is responsible for ensuring compliance with all appropriate statutes and reviews information technologyIT and community reinvestment activities. The Compliance/IT/CRA Committee is comprised solely of persons who are directors of the Company and Southside Bank but who are not officers or employees.
Investment/Asset-Liability Committee (ALCO) of Southside Bank
The Investment/Asset-Liability Committee is responsible for reviewing Southside Bank’s overall asset and funding mix, asset-liability management policies and investment policies. In addition to the Company's Board members specified above, officers serving on this committee include Suni Davis (Chair), Julie N. Shamburger, Tim Alexander, T.L.T. L. Arnold, Jr., Peter Boyd, Kyle Gibson, Jared Green, Michael Phea, Amanda Reagan and Lonny Uzzell.
Southside Bancshares, Inc.| 20202023 Proxy Statement | 1518
2019 DIRECTOR COMPENSATION
During 2019, the Compensation Committee, with engagement from compensation consultant Pearl Meyer & Partners, performed a review of our non-employee director compensation, which included a comparison to peers and review of recent regional and national trends. The Committee recommended an increase in fees, effective June 2019, for non-employee directors who are not Chairman or Vice Chairman of the Board or Audit Committee Chairman, as well as recommended a monthly fee for the Compensation Committee Chairman. These recommendations were approved by the Board.
For 2019, the Company paid its Chairman of the Board $11,250 per month and the Vice Chairman of the Board and Chairman of the Audit Committee both received directors' fees of $9,167 per month. All remaining non-employee directors received directors' fees of $5,583 per month until May 2019 and $7,208 per month effective June 2019. Effective June 2019, the Compensation Committee Chairman received an additional fee of $417 per month.
In addition, non-employee directors, who are also directors of Southside Bank, were paid $1,115 per regular Southside Bank Board meeting.
The table below summarizes the compensation paid by the Company to directors for the year ended December 31, 2019. Lee R. Gibson, the Company’s President and CEO, and H. J. Shands, III, East Texas Regional President, are not included in the table below, as they are officers of the Company, and thus received no compensation for their service as directors of the Company or Southside Bank during 2019. Both Mr. Gibson's and Mr. Shands' compensation is shown in the Summary Compensation Table under Executive Compensation.
|
| | | | | | | | | | | | |
Name | | Fees Earned or Paid in Cash ($) | | All Other Compensation ($) | | Total ($) |
Lawrence Anderson, M.D. (1) | | $ | 92,875 |
| | $ | — |
| | $ | 92,875 |
|
S. Elaine Anderson, CPA (1) | | 92,875 |
| | — |
| | 92,875 |
|
Michael J. Bosworth (1) | | 92,875 |
| | — |
| | 92,875 |
|
Herbert C. Buie (1) | | 92,875 |
| | — |
| | 92,875 |
|
Alton Cade (2) | | 30,612 |
| | — |
| | 30,612 |
|
Patricia A. Callan (3) | | 95,792 |
| | — |
| | 95,792 |
|
John R. (Bob) Garrett (4) | | 149,500 |
| | — |
| | 149,500 |
|
George H. (Trey) Henderson, III (1) | | 92,875 |
| | — |
| | 92,875 |
|
Melvin B. Lovelady, CPA (5) | | 124,500 |
| | — |
|
| 124,500 |
|
Tony K. Morgan, CPA (1) | | 92,875 |
| | — |
| | 92,875 |
|
John F. Sammons, Jr.(1) | | 92,875 |
| | — |
| | 92,875 |
|
William Sheehy (1) | | 92,875 |
| | — |
| | 92,875 |
|
Preston L. Smith (6) | | 91,760 |
| | — |
| | 91,760 |
|
Donald W. Thedford (7) | | 124,500 |
| | — |
| | 124,500 |
|
M. Richard Warner (2) | | 30,612 |
| | — |
| | 30,612 |
|
| |
(1) | Compensation includes $14,500 and $78,375 for serving as a director of Southside Bank and the Company, respectively. |
| |
(2) | Director's term was complete as of the 2019 Annual Meeting, as such director payments were discontinued effective May 15, 2019. Compensation includes $5,577 and $25,035 for serving as a director of Southside Bank and the Company, respectively. |
| |
(3) | Compensation includes $14,500 for serving as a director of Southside Bank and $81,292 for serving as a director of the Company, including additional fees of $417 per month effective June 2019, for Ms. Callan's role as Chairman of the Compensation Committee. |
| |
(4) | Compensation includes $14,500 for serving as a director of Southside Bank and $135,000 for serving as a Chairman of the Company's Board, |
| |
(5) | Compensation includes $14,500 for serving as a director of Southside Bank and $110,000 for serving as a director of the Company and Chairman of the Audit Committee. |
| |
(6) | Compensation includes $13,385 and $78,375 for serving as a director of Southside Bank and the Company, respectively. |
| |
(7) | Compensation includes $14,500 for serving as a director of Southside Bank and $110,000 for serving as a Vice Chairman of the Company's Board. |
Southside Bancshares, Inc.| 2020 Proxy Statement | 16
DIRECTOR COMPENSATION PROGRAM
The Board adopted a Director Compensation Program (“the(the “Director Program”) for compensating non-employee directors, which will be effective as of the 2020 Annual Meeting. Under the Director Program, non-employee Directors will bedirectors are paid an annual retainer of $101,000, which is payable in quarterly installments, for each year of his or her service on the Board (each, a “Service Year”). Each Service Year will commencecommences on the date of the Company’s Annual Meeting at which Board members are elected or appointed. Non-employeeEmployee directors willdo not receive compensation for service on the Company's Board and all Company directors do not receive compensation for service on the Southside Bank Board.
In addition to the annual retainer, the following positions will receivereceived an additional retainer for 2022 as follows:
PositionAdditional Retainer
Chairman$48,500
Vice Chairman$23,500
Audit Committee Chairman$23,500
Compensation Committee Chairman$5,000 | | | | | |
Position | Additional Retainer |
Chairman | $ | 48,500 | |
Vice Chairman | $ | 23,500 | |
Audit Committee Chairman | $ | 23,500 | |
Compensation Committee Chairman | $ | 12,500 | |
Risk Committee Chairman | $ | 12,500 | |
Corporate Governance and Nominating Committee Chairman | $ | 5,000 | |
Directors may elect to receive all or a specified portion of their annual cash retainer and any additional annual cash retainers in the form of restricted stock units (“RSUs”). The RSUs will beare granted on or about the first day of the Service Year and will have a value on the grant date approximately equal to the amount of the annual cash retainer payment that he or she has elected to receive in the form of RSUs. The RSUs will vest (become non-forfeitable) on the first anniversary of the grant date (or, if earlier, on the date of the Company’s Annual Meeting that occurs in the year immediately following the year of grant, in the event Grantee is not standing for re-election to the Board at such Annual Meeting) (with accelerated vesting on a pro rata basis in the event of death, disability or a change in control of the Company). Directors may elect to receive shares of common stock in settlement of their RSUs on the vesting date, or they may elect to defer the receipt of such shares and instead receive them on a specified anniversary of the grant date or upon termination of their service on the Board (subject, in each case, to earlier settlement upon a change in control of the Company).
2022 DIRECTOR COMPENSATION The table below summarizes the compensation earned by the Company's directors for the year ended December 31, 2022. Lee R. Gibson, the Company’s President and CEO, is not included in the table below, as he is an officer of the Company, and thus received no compensation for his service as a director during 2022. Mr. Gibson's compensation is shown in the Summary Compensation Table under Executive Compensation.
| | | | | | | | | | | | | | | | | | | | | | |
Name | | Fees Earned or Paid in Cash ($) (1) | | | | All Other Compensation ($) | | Total ($) |
Lawrence Anderson, M.D. | | $ | 101,000 | | | | | $ | — | | | $ | 101,000 | |
S. Elaine Anderson, CPA (2) | | 112,370 | | | | | — | | | 112,370 | |
Michael J. Bosworth (3) | | 101,000 | | | | | — | | | 101,000 | |
Herbert C. Buie | | 101,000 | | | | | — | | | 101,000 | |
Patricia A. Callan (4) | | 112,822 | | | | | — | | | 112,822 | |
Shannon Dacus (3) | | 101,000 | | | | | — | | | 101,000 | |
Alton L. Frailey (3) | | 101,000 | | | | | — | | | 101,000 | |
John R. (Bob) Garrett (3)(5) | | 149,500 | | | | | — | | | 149,500 | |
George H. (Trey) Henderson, III (3) | | 101,000 | | | | | — | | | 101,000 | |
Melvin B. Lovelady, CPA | | 101,000 | | | | | — | | | 101,000 | |
Tony K. Morgan, CPA (3)(6) | | 124,500 | | | | | — | | | 124,500 | |
John F. Sammons, Jr. | | 101,000 | | | | | — | | | 101,000 | |
H. J. Shands, III (7) | | 101,000 | | | | | 43,596 | | | 144,596 | |
William Sheehy | | 101,000 | | | | | — | | | 101,000 | |
Preston L. Smith (3)(8) | | 105,548 | | | | | — | | | 105,548 | |
Donald W. Thedford (9) | | 124,500 | | | | | — | | | 124,500 | |
Southside Bancshares, Inc.| 2023 Proxy Statement | 19
(1)Amounts reflect fees earned by each non-employee director in 2022 and includes fees earned during 2022 in which directors elected to receive RSUs in lieu of cash. See table below.
(2)Compensation includes an additional retainer of $12,500 for serving as Risk Committee Chairman. The additional retainer was approved in February 2022 and prorated for the year.
(3)Director elected to receive a portion of director fees in RSUs in lieu of cash. RSUs were granted on May 12, 2021 and May 18, 2022 based on the portion of fees elected to be received in RSUs for the applicable Service Year and the aggregate grant date fair market value, determined in accordance with FASB ASC Topic 718. The table below summarizes grants with fees forgone in 2022, or the portion of grant value earned, during the fiscal year 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | May 12, 2021 Grant | | May 18, 2022 Grant |
Name | | 2022 Fees Foregone ($) (a) | | RSUs Granted (#) (b) | | Total Fair Value of Grant ($) (c) | | Settlement Date (d) | | 2022 Fees Foregone ($) (a) | | RSUs Granted (#) (b) | | Total Fair Value of Grant ($) (c) | | Settlement Date (d) |
Michael J. Bosworth | | $ | 27,180 | | | 1,839 | | | $ | 75,730 | | | 5/12/2024 | | $ | 47,310 | | | 1,949 | | | $ | 75,738 | | | 5/18/2025 |
Shannon Dacus | | 14,499 | | | 981 | | | 40,398 | | | 5/12/2022 | | 22,065 | | | 909 | | | 35,324 | | | 5/18/2023 |
Alton L. Frailey | | — | | | — | | | — | | | — | | | 47,310 | | | 1,949 | | | 75,738 | | | 5/18/2027 |
John R. (Bob) Garrett | | 8,040 | | | 544 | | | 22,402 | | | 5/12/2022 | | 14,006 | | | 577 | | | 22,422 | | | 5/18/2023 |
George H. (Trey) Henderson, III | | 18,120 | | | 1,226 | | | 50,487 | | | 5/12/2022 | | 31,532 | | | 1,299 | | | 50,479 | | | 5/18/2023 |
Tony K. Morgan, CPA | | 22,332 | | | 1,511 | | | 62,223 | | | 5/12/2026 | | 38,863 | | | 1,601 | | | 62,215 | | | 5/18/2027 |
Preston L. Smith | | 18,120 | | | 1,226 | | | 50,487 | | | 5/12/2022 | | 33,086 | | | 1,363 | | | 52,966 | | | 5/18/2023 |
(a)Amount included in the Fees Earned column in the 2022 Director Compensation Table, and reflects the portion of the annual cash retainer earned in 2022, which the director has elected to receive in RSUs and will be received in common shares on the settlement date.
(b)Total RSUs granted for the Service Year based on the annual cash retainer or additional cash retainer the director elected to receive in RSUs and the grant date fair market value, determined in accordance with FASB ASC Topic 718. Since a Service Year runs from the date of the Company’s Annual Meeting to the next Annual Meeting, and RSUs are granted on or about the first day of a Service Year, a portion of the May 12, 2021 grant reflects payment for service in calendar year 2022, and a portion of the May 18, 2022 grant reflects payment for service in calendar year 2023.
(c)Aggregate grant date fair market value, determined in accordance with FASB ASC Topic 718.
(d)Settlement date elected by the director, in which shares of common stock will be received in settlement of the RSUs.
(4)Compensation includes an additional retainer for serving as Compensation Committee Chairman. The retainer was increased in February 2022 from $5,000 to $12,500.
(5)Compensation includes an additional retainer of $48,500 for serving as Chairman of the Board.
(6)Compensation includes an additional retainer of $23,500 for serving as Audit Committee Chairman.
(7)All other compensation reflects RSUs vested in 2022 for equity awards granted while Mr. Shands was serving as an executive of the Company.
(8)Compensation includes an additional retainer of $5,000 for serving as Corporate Governance and Nominating Committee Chairman. The additional retainer was approved in February 2022 and prorated for the year.
(9)Compensation includes an additional retainer of $23,500 for serving as Vice Chairman of the Board.
DIRECTOR STOCK OWNERSHIP POLICY
To help promote the alignment of the personal interests of the Company’s directors with the interests of our shareholders, in February 2014 the Company established a stock ownership policy for all non-employee directors. Under this policy, each non-employee director is required to own at least 5,000 shares of the Company’s common stock within five years after the date he or she is first elected as a director and maintain such ownership while serving on the Board. For new directors, the acquisition period is measured using the calendar year, with the director's five-year accumulation period beginning on January 1 of the year following their election. To facilitate the extent astock ownership requirement, if the director is not in compliance withowns less than 5,000 shares, the policy after the five-year accumulation period, any compensation paid to that director must elect a percentage of their annual retainer to be received in the form of stock compensation andRSUs. Until the director owns 5,000 shares, for years one and two of their term, a minimum election of 35% of their annual retainer in RSUs is required to retain 50%and for years three through five, a minimum election of these stock awards. 40% of their annual retainer in RSUs is required.
As of March 17, 2020,22, 2023, all current non-employee directors met the ownership requirement.
requirement, except Shannon Dacus, who was elected to the Board in 2020, and Alton L. Frailey, who was appointed to the Board in 2022. Ms. Dacus has 4,078 qualifying shares as of March 22, 2023, and will be required to own 5,000 shares as of December 31, 2025. Mr. Frailey has 2,023 qualifying shares as of March 22, 2023, and will be required to own 5,000 shares as of December 31, 2027.
Southside Bancshares, Inc.| 20202023 Proxy Statement | 1720
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
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The following table sets forth information regarding beneficial ownership of our common stock as of March 17, 2020,22, 2023 for the following persons:
•each person known by us to beneficially own more than 5% of our outstanding common stock;
•each of our directors;
•each of our named executive officers included in our Summary Compensation Table; and
•all of our directors and executive officers as a group, including executive officers not named in the table.
Unless otherwise indicated, the address of each of the named individuals is 1201 South Beckham Avenue, Tyler, Texas 75701.
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Name of Beneficial Owner | | Amount and Nature of Beneficial Ownership (1) | | Percent of Class |
Lawrence Anderson, M.D. (2) | | 15,929 | | | * |
S. Elaine Anderson, CPA (3) | | 32,392 | | | * |
Michael J. Bosworth (4) | | 80,047 | | | * |
Herbert C. Buie (5) | | 674,928 | | | 2.2 | |
Patricia A. Callan (6) | | 7,995 | | | * |
Shannon Dacus (7) | | 4,078 | | | * |
Alton L. Frailey | | — | | | — | |
John R. (Bob) Garrett (8) | | 20,606 | | | * |
Lee R. Gibson, CPA (9) | | 163,046 | | | * |
George H. (Trey) Henderson, III (10) | | 44,954 | | | * |
Tony K. Morgan, CPA (11) | | 20,172 | | | * |
John F. Sammons, Jr. (12) | | 28,687 | | | * |
H. J. Shands, III (13) | | 298,352 | | | * |
William Sheehy (14) | | 157,307 | | | * |
Preston L. Smith (15) | | 15,322 | | | * |
Donald W. Thedford | | 14,908 | | | * |
Tim Alexander (16) | | 63,028 | | | * |
T. L. Arnold, Jr.(17) | | 34,290 | | | * |
Brian K. McCabe (18) | | 53,873 | | | * |
Julie N. Shamburger, CPA (19) | | 64,134 | | | * |
BlackRock, Inc. (20) | | 4,707,467 | | | 15.1 | |
The Vanguard Group (21) | | 2,283,882 | | | 7.3 | |
All directors and executive officers of the Company as a group (24 in total). (22) | | 1,834,934 | | | 5.9 | |
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Name of Beneficial Owner | | Amount and Nature of Beneficial Ownership (1) | | Percent of Class |
Lawrence Anderson, M.D. (2) | | 33,358 |
| | * |
|
S. Elaine Anderson, CPA (3) | | 30,392 |
| | * |
|
Michael J. Bosworth (4) | | 76,751 |
| | * |
|
Herbert C. Buie (5) | | 674,928 |
| | 2.0 |
|
Patricia A. Callan (6) | | 7,995 |
| | * |
|
John R. (Bob) Garrett | | 14,988 |
| | * |
|
Lee R. Gibson, CPA(7) | | 140,413 |
| | * |
|
George H. (Trey) Henderson, III | | 40,313 |
| | * |
|
Melvin B. Lovelady, CPA (8) | | 22,742 |
| | * |
|
Tony K. Morgan, CPA (9) | | 15,145 |
| | * |
|
John F. Sammons, Jr. (10) | | 28,187 |
| | * |
|
H. J. Shands, III (11) | | 296,190 |
| | * |
|
William Sheehy (12) | | 152,787 |
| | * |
|
Preston L. Smith (13) | | 10,613 |
| | * |
|
Donald W. Thedford | | 13,306 |
| | * |
|
Tim Alexander (14) | | 36,186 |
| | * |
|
Brian K. McCabe (15) | | 46,853 |
| | * |
|
Julie N. Shamburger, CPA (16) | | 51,176 |
| | * |
|
BlackRock, Inc. (17) | | 4,905,653 |
| | 14.6 |
|
The Vanguard Group (18) | | 2,073,963 |
| | 6.2 |
|
All directors and executive officers of the Company as a group (21 in total). (19) | | 1,737,101 |
| | 5.2 |
|
* Less than 1% of total outstanding shares (33,488,095)(31,249,072) as of March 17, 2020. 22, 2023.
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(1) | Unless otherwise indicated, all shares are beneficially owned and the sole voting and investment power is held by the person named. |
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(2) | Dr. Anderson owns 17,190 shares in an individual retirement account and has sole voting and investment power in these shares. Dr. Anderson also beneficially owns 15,929 shares held by Vida Partnership, LTD of which he is the General Partner. Dr. Anderson is custodian for his daughter for 77 shares and his son for 162 shares, which are included in the total. Dr. Anderson disclaims beneficial ownership of these 239 shares. |
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(3) | Ms. Anderson has sole voting and investment power with respect to 8,568 shares owned individually. Ms. Anderson owns 681 shares in an individual retirement account and has sole voting and investment power in these shares. Also included in the total are 21,143 shares owned by Ms. Anderson's husband, of which she disclaims beneficial ownership. |
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(4) | Mr. Bosworth has joint voting and investment power with his wife with respect to 14,381 shares owned jointly and has sole voting and investment power with respect to 49,413 shares owned individually. Mr. Bosworth beneficially owns 12,957 shares held by Bosworth & Associates, which he owns jointly with his wife. |
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(5) | Mr. Buie has sole voting and investment power with respect to 617,121 shares owned individually. Mr. Buie owns 31,918 shares in individual retirement accounts and has sole voting and investment power in these shares. Mr. Buie is custodian for his granddaughter for 1,000 shares. Also included in the total are 16,553 shares owned by Mr. Buie’s wife, 4,353 shares owned by Mrs. Buie as trustee for their son and 3,983 shares owned by Mrs. Buie as trustee for their daughter. Mr. Buie disclaims beneficial ownership of these 25,889 shares, which are included in the total. |
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(6) | Ms. Callan has sole voting and investment power with respect to 2,956 shares owned individually and 5,039 shares in an individual retirement account. |
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(7) | Mr. Gibson has sole voting and investment power with respect to 24,365 shares owned individually. He also has sole voting power, but not investment power, with respect to 23,757 shares owned in the Company’s ESOP, in which he is 100% vested. Mr. Gibson owns 6,718 shares in an individual retirement account and has sole voting and investment power in these shares. Also included in the total are 85,573 shares subject to stock options that are exercisable within 60 days of the record date. |
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(8) | Mr. Lovelady has sole voting and investment power with respect to 20,742 shares owned individually and 2,000 shares in an individual retirement account. |
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(9) | Mr. Morgan beneficially owns 15,145 shares held by Linden Partners LTD, which is owned jointly with his wife. |
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(10) | Mr. Sammons has sole voting and investment power with respect to 26,687 shares owned individually and 1,500 shares in an individual retirement account. |
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(11) | Mr. Shands has sole voting and investment power with respect to 276,266 shares owned individually and 6,502 shares in an individual retirement account. He also has sole voting power, but not investment power, with respect to 244 shares owned in the Company’s ESOP, in which he is 20% vested. Also included in the total are 5,721 shares owned by Mr. Shands' wife, of which he disclaims beneficial ownership. Also included in the total are 7,457 shares subject to stock options that are exercisable within 60 days of the record date. |
(1)Unless otherwise indicated, all shares are beneficially owned and the sole voting and investment power is held by the person named.
(2)Dr. Anderson beneficially owns 15,929 shares held through a spousal trust.
(3)Ms. Anderson has sole voting and investment power with respect to 8,568 shares owned individually. Ms. Anderson owns 681 shares in an individual retirement account and has sole voting and investment power in these shares. Also included in the total are 23,143 shares owned by Ms. Anderson's husband, of which she disclaims beneficial ownership.
(4)Mr. Bosworth has joint voting and investment power with his wife with respect to 16,115 shares owned jointly and has sole voting and investment power with respect to 49,413 shares owned individually. Mr. Bosworth beneficially owns 14,519 shares held by Bosworth & Associates, which he owns jointly with his wife.
(5)Mr. Buie has sole voting and investment power with respect to 405,511 shares owned individually and 231,053 shares held in an exemption trust. Mr. Buie also owns 29,028 shares in individual retirement accounts and has sole voting and investment power in these shares. Also included in the total are 1,000 shares Mr. Buie holds as custodian for his granddaughter, as well as 4,353 shares held in a trust for the benefit of their son, for which Mrs. Buie (deceased) served as trustee and 3,983 shares held in a trust for the benefit of their daughter, for which Mrs. Buie served as trustee. Mr. Buie disclaims beneficial ownership of these 9,336 shares, which are included in the total.
(6)Ms. Callan has sole voting and investment power with respect to 2,956 shares owned individually and 5,039 shares in an individual retirement account.
(7)Included in the total are 944 RSUs which will vest and convert to shares of common stock within 60 days of the record date.
(8)Included in the total are 599 RSUs which will vest and convert to shares of common stock within 60 days of the record date.
(9)Mr. Gibson has sole voting and investment power with respect to 40,813 shares owned individually. He also has sole voting power, but not investment power, with respect to 27,137 shares owned in the Company’s ESOP, in which he is 100% vested. Mr. Gibson owns 7,522 shares in an individual retirement account and has sole voting and investment power in these shares. Also included in the total are 87,574 shares subject to stock options that are exercisable within 60 days of the record date.
(10)Included in the total are 1,348 RSUs which will vest and convert to shares of common stock within 60 days of the record date.
(11)Mr. Morgan beneficially owns 20,172 shares held by Linden Partners LTD, which is owned jointly with his wife.
(12)Mr. Sammons has sole voting and investment power with respect to 26,687 shares owned individually and 2,000 shares in an individual retirement account.
(13)Mr. Shands has sole voting and investment power with respect to 62,269 shares owned individually and 6,502 shares in an individual retirement account. He also has sole voting power, but not investment power, with respect to 274 shares owned in the Company’s ESOP,
Southside Bancshares, Inc.| 20202023 Proxy Statement | 1821
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(12) | Mr. Sheehy has sole voting and investment power with respect to 134,403 shares owned individually and 18,384 shares in an individual retirement account. |
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(13) | Mr. Smith has joint voting and investment power with his wife with respect to 4,277 shares owned jointly and has sole voting and investment power with respect to 4,906 shares owned individually. Also included in the total are 1,430 shares owned by Mr. Smith's wife, of which he disclaims beneficial ownership. |
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(14) | Mr. Alexander has sole voting and investment power with respect to 4,109 shares owned individually. He also has sole voting power, but not investment power, with respect to 1,926 shares owned in the Company’s ESOP, in which he is 100% vested. Mr. Alexander owns 16,455 shares in an individual retirement account and has sole voting and investment power in these shares. Mr. Alexander is custodian for his grandchild for 18 shares, which are included in the total and disclaims beneficial ownership of these shares. Also included in the total are 13,678in which he is 100% vested. Also included in the total are 5,721 shares owned by Mr. Shands' wife and 204,229 shares held in a spousal trust, of which he disclaims beneficial ownership. Also included in the total are 19,357 shares subject to stock options that are exercisable within 60 days of the record date. |
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(15) | Mr. McCabe has sole voting and investment power with respect to 13,992 shares owned individually and has sole voting power, but not investment power, with respect to 11,381 shares owned in the Company's ESOP, in which he is 100% vested. Mr. McCabe owns 6,929 shares in an individual retirement account and has sole voting and investment power in these shares. Also included in the total are 14,551 shares subject to stock options that are exercisable within 60 days of the record date. |
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(16) | Ms. Shamburger has sole voting and investment power with respect to 14,273 shares owned individually. She also has sole voting power, but not investment power, with respect to 5,703 shares owned in the Company’s ESOP, in which she is 100% vested. Ms. Shamburger owns 3,798 shares in an individual retirement account and has sole voting and investment power in these shares. Included in the total are 3,250 shares owned by Ms. Shamburger's husband, of which she disclaims beneficial ownership. Also included in the total are 24,152 shares subject to stock options that are exercisable within 60 days of the record date. |
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(17) | Information obtained solely by reference to the Schedule 13G/A filed with the SEC on February 4, 2020 by BlackRock, Inc. (“BlackRock”). BlackRock reported that it has sole voting power over 4,834,995 shares and sole dispositive power over 4,905,653 shares held as of December 31, 2019. BlackRock also reported that certain persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of our common stock and that one person’s interest is more than five percent of our total outstanding common stock, iShares Core S&P Small-Cap ETF. The address for BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. |
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(18) | Information obtained solely by reference to the Schedule 13G filed with the SEC on February 12, 2020 by The Vanguard Group (“Vanguard”). Vanguard reported that it has sole voting power over 31,315 shares, shared voting power over 6,260 shares, sole dispositive power over 2,040,951 shares and shared dispositive power over 33,012 shares held as of December 31, 2019. The address for Vanguard is 100 Vanguard Blvd., Malvern, PA 19355. |
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(19) | Includes executive officer ownership of 44,778 shares not listed in the table. Included in the 44,778 shares, are 28,434 shares subject to stock options that are exercisable within 60 days of the record date. |
(14)Mr. Sheehy has sole voting and investment power with respect to 139,340 shares owned individually and 17,754 shares in an individual retirement account. Mr. Sheehy is custodian for his grandchild for 213 shares, which are included in the total, of which he disclaims beneficial ownership.
(15)Mr. Smith has joint voting and investment power with his wife with respect to 4,277 shares owned jointly and has sole voting and investment power with respect to 8,198 shares owned individually. Included in the total are 1,417 RSUs which will vest and convert to shares of common stock within 60 days of the record date. Also included in the total are 1,430 shares owned by Mr. Smith's wife, of which he disclaims beneficial ownership.
(16)Mr. Alexander has sole voting and investment power with respect to 5,853 shares owned individually. He also has sole voting power, but not investment power, with respect to 2,697 shares owned in the Company’s ESOP, in which he is 100% vested. Mr. Alexander owns 16,889 shares in individual retirement accounts and has sole voting and investment power in these shares. Mr. Alexander is custodian for his grandchild for 18 shares, which are included in the total, of which he disclaims beneficial ownership. Also included in the total are 37,571 shares subject to stock options that are exercisable within 60 days of the record date.
(17)Mr. Arnold has sole voting and investment power with respect to 11,564 shares owned individually. He also has sole voting power, but not investment power, with respect to 1,115 shares owned in the Company’s ESOP, in which he is 100% vested. Also included in the total are 21,611 shares subject to stock options that are exercisable within 60 days of the record date.
(18)Mr. McCabe has sole voting and investment power with respect to 14,537 shares owned individually and has sole voting power, but not investment power, with respect to 13,282 shares owned in the Company's ESOP, in which he is 100% vested. Mr. McCabe owns 7,758 shares in an individual retirement account and has sole voting and investment power in these shares. Also included in the total are 18,296 shares subject to stock options that are exercisable within 60 days of the record date.
(19)Ms. Shamburger has sole voting and investment power with respect to 17,723 shares owned individually. She also has sole voting power, but not investment power, with respect to 6,925 shares owned in the Company’s ESOP, in which she is 100% vested. Ms. Shamburger owns 4,252 shares in an individual retirement account and has sole voting and investment power in these shares. Included in the total are 3,250 shares owned by Ms. Shamburger's husband, of which she disclaims beneficial ownership. Also included in the total are 31,984 shares subject to stock options that are exercisable within 60 days of the record date.
(20)Information obtained solely by reference to the Schedule 13G/A filed with the SEC on January 23, 2023 by BlackRock, Inc. (“BlackRock”). BlackRock reported that it has sole voting power over 4,649,438 shares and sole dispositive power over 4,707,467 shares held as of December 31, 2022. BlackRock also reported that certain persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of our common stock and that one person’s interest is more than five percent of our total outstanding common stock, iShares Core S&P Small-Cap ETF. The address for BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055.
(21)Information obtained solely by reference to the Schedule 13G/A filed with the SEC on February 9, 2023 by The Vanguard Group (“Vanguard”). Vanguard reported that it has shared voting power over 20,861 shares, sole dispositive power over 2,237,466 shares and shared dispositive power over 46,416 shares held as of December 30, 2022. The address for Vanguard is 100 Vanguard Blvd., Malvern, PA 19355.
(22)Includes executive officer ownership of 40,886 shares not listed in the table. Included in the 40,886 shares, are 15,620 shares subject to stock options that are exercisable within 60 days of the record date.
Southside Bancshares, Inc.| 20202023 Proxy Statement | 1922
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COMPENSATION COMMITTEE REPORT |
The Compensation Committee oversees and makes recommendations for all aspects of executive officer compensation. The Board considers the recommendations of the Compensation Committee and approves the compensation of the executive officers. In fulfilling its oversight responsibilities, the Compensation Committee reviewed and discussed with management the Compensation Discussion and Analysis in this proxy statement.
In reliance on the review and discussion referred to above, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20192022 and its proxy statement on Schedule 14A to be filed in connection with the Company’s 20202023 Annual Meeting, each of which will be filed with the SEC.
This report shall not be deemed to be incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed filed under such acts.
Submitted by the Compensation Committee of the Board.
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Patricia A. Callan, Chairman | Melvin B. Lovelady, CPA |
Lawrence Anderson, M.D. | John F. Sammons, Jr. |
George H. (Trey) Henderson, III |
Lawrence Anderson, M.D. | John F. Sammons, Jr. |
Alton L. Frailey | |
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COMPENSATION DISCUSSION AND ANALYSIS |
Overview of Compensation Program
In the paragraphs that follow, we will give an overview and analysis of our compensation programs and policies, the material compensation decisions we have made under those programs and policies, and the material factors that we considered in making those decisions. Later in this proxy statement under the heading “Executive Compensation” you will find a series of tables containing specific information about the compensation earned or paid in 20192022 to the following executive officers, who are referred to as the “named executive officers” or “NEOs.”
•Lee R. Gibson, CPA - President, Chief Executive Officer and Director of the Company and Southside Bank;
•Julie N. Shamburger, CPA - Chief Financial Officer of the Company and Southside Bank and advisory director of Southside Bank;
•Tim Alexander - Chief Lending Officer of the Company and Southside Bank and advisory director of Southside Bank;
•Brian K. McCabe - Chief Operations Officer of the Company and Southside Bank and advisory director of Southside Bank; and
H. J. Shands, III•T. L. Arnold, Jr. - Regional President, East Texas and DirectorChief Credit Officer of the Company and Southside Bank and advisory director of Southside Bank.
The Compensation Committee of the Board (the “Committee”) has the responsibility for reviewing and establishing the Company’s compensation programs, consistent with the Company’s compensation philosophy. The Committee attempts to ensure the total compensation paid to the NEOs is fair, reasonable, and competitive. The Committee conducts an annual base salary and bonus compensation level review of the NEOs and occasionally engages outside consultants, as discussed below. When determining compensation opportunities, the Committee typically does not establish specific performance goals for the NEOs, but instead evaluates and reviews each NEO’s contribution to the overall performance of the Company, taking into account any changes in duties or responsibilities, the overall banking environment, skills and talents demonstrated during the year and leadership.
During 2019,2022, the Committee reviewed with management the design and operation of the incentive compensation arrangements for the NEOs and other employees of Southside Bank for the purpose of determining whether such programs might encourage inappropriate risk-taking that could have a material adverse effect on the Company. The Committee concluded the incentive plans and policies do not encourage the NEOs or other employees to take risks that are reasonably likely to have a material adverse effect on the long-term well-being of the Company.
The Committee also reviews and develops recommendations for all director compensation.
Southside Bancshares, Inc.| 2023 Proxy Statement | 23
Compensation Philosophy and Objectives
The Committee believes the most effective executive compensation program is one that is designed to reward long-term and strategic performance and which aligns executives’ interests with those of the shareholders, with the ultimate objective of improving long-term shareholder value. The Committee evaluates both performance and compensation to ensure the Company maintains its ability to attract and retain superior officers in key positions and that compensation provided to key officers remains competitive relative to the compensation paid to similarly situated executives of our peer companies (as discussed below). To that end, the Committee believes executive compensation provided by the Company to its NEOs should include both cash, stock-based compensation and other benefits
Southside Bancshares, Inc.| 2020 Proxy Statement | 20
that reward both Company and executive performance. Performance is evaluated in a number of ways. First and most importantly, the Committee evaluates the overall performance of the Company during the year and over a longer term, typically three years. Performance metrics evaluated include profitability, return on equity, ability to pay dividends to shareholders, overall asset quality, capital levels and earnings per share. The Company’s performance is measured against its peers utilizing outside independently produced peer group data. The Committee also takes into consideration the results of outside examinations and audits. The Committee evaluates individual performance of each NEO in their areas of responsibility and to the Company as a whole, taking into consideration the overall banking environment. Using this information as a guide, the Committee then works through its process of evaluating and setting compensation.
Role of Executive Officers in Compensation Decisions
The Committee makes recommendations to the Board regarding all compensation decisions for the NEOs. The CEO provides input regarding the performance of the other NEOs and makes recommendations for compensation amounts payable to the other NEOs. These recommendations are based on the CEO’s personal observation of each NEO's performance, commitment and contribution to the Company. The CEO is not involved with any aspect of determining his own pay.
Setting Executive Compensation
Based on the compensation objectives noted above, the Committee has structured the NEOs’ annual compensation to be competitive and to motivate and reward the NEOs for their performance.
The Committee utilizes a Compensation Peer Group for comparative purposes for compensation and performance-related benchmarks, as well as compensation structure. The Committee reviews the Compensation Peer Group annually to ensure continued appropriateness. In furtherance of this, the Committee occasionally engages an outside consulting firm to conduct a peer review of its overall compensation program for the NEOs. In 2018,2021, the Committee engaged Pearl Meyer &Meridian Compensation Partners, LLC (“PM&P”Meridian”) to serve as an independent outside consultant to the Company, reporting directly to the Committee. PM&P providedMeridian advised the Committee documentation of their independence and the procedures they follow to remain independent. PM&P was engaged to prepare an Executive Compensation Review, specifically for the Committee, which was provided in December 2018. This Executive Compensation Review was based on a custom peer group selected by PM&Ppotential peers based on asset size and location, including metropolitan areas, given Southside's operations in metropolitan areas in Texas. Meridian also advised the Committee to expand the number of companies in the Compensation Peer Group to ensure statistical validity and performance (the “Compensationto account for mergers and acquisitions. The 2022 Compensation Peer Group”).Group approved by the Committee was unchanged from the 2021 Compensation Peer Group. The Compensation Peer Group is comprisedconsists of fourteen public commercial banks16 companies ranging in Alabama, Colorado, Florida, Georgia, Illinois, Indiana, Louisiana, Missouri, Ohio and Texas against which PM&P and the Committee believe the Company competes for talent. Atassets from $3.0 billion to $14.6 billion, as of the time of the study, the Compensation Peer Group assets ranged from $4.6 billion to $9.8 billion with a median asset size of approximately $6.1 billion.focus on metropolitan areas. The companies comprising the 2022 Compensation Peer Group were:
|
| | | | |
1st Source Corporation (SRCE) | Lakeland Financial Corporation (LKFN)2022 Compensation Peer Group |
Enterprise Financial Services Corp (EFSC)Renasant Corporation (RNST) | LegacyTexas Financial Group,Origin Bancorp, Inc. (LTXB)(OBNK) |
Fidelity Southern Corporation (LION)ServisFirst Bancshares, Inc. (SFBS) | National Bank Holdings Corporation (NBHC) |
First BuseyFB Financial Corporation (BUSE)(FBK) | Origin Bancorp,Allegiance Bancshares, Inc. (OBNK)(ABTX)(1) |
First Financial Bankshares, Inc. (FFIN) | Park National Corporation (PRK)Triumph Bancorp, Inc. (TBK) |
First Merchants Corporation (FRME)Veritex Holdings, Inc. (VBTX) | ServisFirst Bancshares, Inc. (SFBS)City Holding Company (CHCO) |
Great Southern Bancorp, Inc. (GSBC) | Seacoast Banking Corporation of Florida (SBCF) | The First Bancshares, Inc. (FBMS) |
Live Oak Bancshares, Inc. (LOB) | Business First Bancshares, Inc. (BFST) |
Amerant Bancorp, Inc. (AMTB) | CBTX, Inc. (CBTX)(1) |
During Committee discussions regarding setting NEO compensation for 2019, the Committee referenced the 2018 Executive Compensation Review performed by PM&P. The Compensation Peer Group data is used for comparative purposes only. We do not target executive officer pay opportunities at any particular percentile relative to our Compensation Peer Group. The Committee evaluates the NEO's compensation(1) ABTX and reviews and discusses performance, job responsibilities and tenure for each NEO position. Based on this review and discussion of each NEO, the Committee determines the NEO's total compensation. There is no pre-established policy or target for the allocation among different types of compensation. In determining the appropriate mix of compensation for 2019, the Committee took into consideration that equity-based compensation would be part of its executive officer compensation program for 2019.CBTX merged effective October 1, 2022.
20192022 Executive Compensation Components
For the fiscal year ended December 31, 2019,2022, the principal components of compensation for NEOs were:
•Base salary;
•Annual incentive program;
Discretionary bonus;
•Long-term equity incentive awards;
•Retirement benefits;
•Perquisites and other personal benefits; and
•Health and welfare benefits.
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20192022 In Review
Southside Bancshares, Inc. financial results for 20192022 included a return on average shareholders' equity of 9.53%13.42% and a return on average assets of 1.17%1.43%. Net income for 2019 increased $0.42022 decreased $8.4 million, or 0.6%7.4%, and diluted earnings per common share increased $0.09,decreased $0.21, or 4.3%6.1%. During 2019,2022, deposits increased 8.3%, loans increased $255.4 million, or 7.7%,13.8% and nonperforming assets as a percentage of total assets decreased to 0.26% of total assets.0.14%.
Base Salary
The Company provides NEOs and other employees with a base salary to compensate them for services rendered during the fiscal year. Base salaries for NEOs are determined based on their position and responsibility by using comparable market data adjusted for duties and responsibilities.
During the review of base salaries for executives, the Committee primarily considers:
•Compensation Peer Group data;
•Internal review of the executive’s compensation, both individually and relative to other officers;
•Overall individual performance of the executive;
•Scope of responsibilities;
•Experience; and
•Tenure with the Company.
Salary levels are typically considered annually as part of the Company’s performance review process, as well as upon a promotion or other change in job responsibility. Merit-based increases to salaries of NEOs are based on the Committee’s assessment of performance after considering recommendations of the CEO (other than with respect to himself). The NEO salaries for 20192022 were approved by the Committee based on the CEO’s recommendations for the other NEOs and Company performance.
After considering all of the relevant factors and the performance of each executive, the Committee decided that Lee R. Gibson and Julie N. Shamburger would receive a 3.0%5.2% and 10.9%4.7% increase in base salary for 2019,2022, respectively. Tim Alexander, Brian K. McCabe and H. J. Shands, IIIT. L. Arnold, Jr. received a 2.4%2.1%, 4.0%2.4% and 2.3%4.4% increase in base salary for 2019,2022, respectively.
Annual Incentive Program
The Company maintains a performance-based annual incentive bonus program, theCompany's Annual Incentive Program (“AIP”) for itsprovides the Company's most senior executive officers.
Participants inofficers with an opportunity to earn cash awards based on achievement of performance measures established by the program for 2019 were Lee R. Gibson, Julie N. Shamburger, Tim Alexander and Brian K. McCabe who had a maximum incentive opportunity equal to 50%, 40%, 40% and 30% of their base salary, respectively.
Committee. We believe a significant amount of executive compensation should be contingent on Company performance. The AIP formalizes this philosophy for our top executives by providing a cash incentive for the attainment of profitable growth and stable financial operating conditions.
Performance measures include quantitative performance goals and a qualitative scorecard. Performance measures are selected based on the role of the participant and their contributions to the Company. For the CEO, CFO, CLO and COO, performance measures selected were Earnings Per Share (“EPS”), Loan Growth, Return on Average Tangible Common Equity (“ROATCE”) and qualitative scorecard. Performance measures selected for the CCO were EPS, ROATCE, Non-Performing Assets (“NPAs”), and qualitative scorecard. For 2019,Weightings are used to differentiate the relative importance or priority of the performance measures. Each participant is assigned a weighting for each performance measure by the Committee, approvedwith a total weighting of 100%. Each performance measure is weighted a minimum of 5%, with the followingtotal quantitative performance goals weighted 75%, and the qualitative scorecard weighted 25%. The payout for performance measures allranges from minimum threshold of which are weighted equally:50%, target of 100% and maximum of 150%. Payout for performance between the minimum threshold, target and maximum is calculated on a straight line basis, and performance below the minimum threshold results in no payout.
Earnings per share (“EPS”) growth (fully-diluted);
Loan growth;
Return on average equity (“ROAE”);
Efficiency ratio, fully-taxable equivalent ("FTE"); and
Non-performing assets (“NPA”)Each participant is assigned a target award by the Committee, calculated as a percentage of base salary for the program year, which represents 100% target payout of all performance measures.
The qualitative scorecard represents 25% of total assets.
We believe a focus on these metrics over time will support sustained performance, and the long-term creation and preservation of shareholder value.
Performance measures,committee sets scorecard goals and weighting are set annually byspecific to each participant at the Committee. In determining the amountbeginning of the annual incentive payment, a threshold levelprogram year. Such goals include developing new programs, succession coaching, developing talent and other strategic initiatives.
See the 2022 Grants of performance is establishedPlan-Based Awards table below for each measure. Participants will earn a cash award based onThreshold, Target and Maximum amounts for the amount by which actual performance exceedsNEOs under the threshold goal as set forth below, up to the set percentage of bonus allocated to each performance measure. In the event the Company's performance is less than the threshold with respect to a particular performance measure, no incentive compensation is payable for that particular measure.AIP.
Our efficiency ratio (FTE) is a non-GAAP measure that provides a measure of productivity in the banking industry. The ratio is designed to reflect the percentage of one dollar which must be expended to generate that dollar of revenue. We calculate this ratio by dividing noninterest expense, excluding amortization expense on intangibles and certain nonrecurring expense by the sum of net interest income (FTE) and noninterest income, excluding net gain (loss) on sale of securities available for sale and certain nonrecurring impairments. The most directly comparable financial measure calculated in accordance with GAAP is our efficiency ratio.
Southside Bancshares, Inc.| 20202023 Proxy Statement | 2225
The following table presents the performance measures and thresholdsperformance goals for 2019.the NEOs determined by the committee, as well as the actual results and payout as a % of the target for 2022:
| | | | | | | | | | | | | | | | | | | | |
Performance Measure | Threshold | Target | Maximum | 2022 | Actual Payout as a % of Target |
50% Payout | 100% Payout | 150% Payout | Results |
EPS | $ | 2.72 | | $ | 3.02 | | $ | 3.47 | | $ | 3.35 | | (1) | 136.7% |
Loan Growth | 7.00 | % | 9.00 | % | 11.00 | % | 13.80 | % | | 150.0% |
NPAs as a % of Total Assets | 0.50 | % | 0.22 | % | 0.10 | % | 0.14 | % | | 133.3% |
ROATCE | 12.15 | % | 13.50 | % | 15.53 | % | 19.09 | % | (1) | 150.0% |
Qualitative Scorecard | | Above Target | 120.0% |
| | | | | | |
|
| | | | |
| Performance Measure | Weighting | Threshold | Award for Achieving Performance Compared to Threshold |
|
| EPS Growth (Fully-Diluted) | 20% | 5.0% | 2.5% for each 1% above the threshold |
| Loan Growth | 20% | 5.0% | 2% for each 1% above the threshold |
| ROAE | 20% | 8.0% | 2.5% for each 1% above the threshold |
| Efficiency Ratio (FTE) | 20% | 58.0% | 2% for each 1% below the threshold |
| NPAs / Assets | 20% | 0.50% | 1.5% for each 0.01% below the threshold |
(1) Net income was adjusted for net securities losses, net of tax, in the amount of $3.0 million for the purpose of this calculation.
The following table presents the actual performance results for 2019 compared to the thresholdseach NEO weightings for the performance measures, total payout as a percentage of base salary, and the resulting Annual Incentive Program percentage earnedtotal payout for 2019.2022:
| | | | | | | | | | | | | | | | | | | | |
Performance Measure | Performance Measure Weighting |
Gibson | Shamburger | Alexander | McCabe | Arnold |
EPS | 40% | 40% | 40% | 40% | 40% |
Loan Growth | 15% | 15% | 20% | 15% | N/A |
ROATCE | 20% | 20% | 15% | 20% | 15% |
NPAs as a % of Total Assets | N/A | N/A | N/A | N/A | 20% |
Scorecard | 25% | 25% | 25% | 25% | 25% |
Target Payout as a % of Base Salary | 45.0% | 37.5% | 32.5% | 32.5% | 32.5% |
Total Payout (%) | 137.2% | 137.2% | 137.2% | 137.2% | 133.8% |
Total Payout ($) | $478,211 | $228,897 | $239,836 | $155,136 | $145,711 |
| | | | | | |
|
| | | | | | | | | | | | | | |
Performance Measure | 2018 Result | 2019 Result | 2019 Growth | Compared to Threshold | Award | Maximum Award Weighting |
EPS Growth (Fully-Diluted) | $ | 2.11 |
| $ | 2.20 |
| 4.27 | % | (0.73 | )% | — |
| — |
|
Loan Growth | $ | 3,312,799 |
| $ | 3,568,204 |
| 7.71 | % | 2.71 | % | 5.42 | % | 5.42 | % |
ROAE | | 9.53 | % | | 1.53 | % | 3.83 | % | 3.83 | % |
Efficiency Ratio (FTE) | | 52.36 | % | | 5.64 | % | 11.28 | % | 11.28 | % |
NPAs / Assets | | 0.26 | % | | 0.24 | % | 36.00 | % | 20.00 | % |
Annual Incentive Earned | 40.52 | % |
Based on these results, Mr. Gibson, Ms. Shamburger, Mr. Alexander and Mr. McCabe each earned 40.52% of their maximum annual incentive opportunity for 2019, or $134,743, $61,111, $82,994 and $37,931, respectively.
Clawback Policy
In the eventThe AIP includes a clawback policy that provides that if an incentive award payout under the AIP is due to error, omission or fraud (as determined by the Compensation Committee), the participant shallis required to reimburse the Bank for part or the entire incentive award made to such participant on the basis of having exceeded specific thresholds for performance periods. For purposes of this policy, (i) the term “incentive awards” means awards under the AIP, the amount of which is determined in whole or in part upon specific performance thresholds relating to the financial results of the Company; and (ii) the term participant means current or former employees who have participated in the AIP.Company for performance periods. The Bank may seek to reclaim incentives within a three-year period of the incentive payout. Reimbursement may be fulfilled through reductions in compensation or other payments to the participant.
Discretionary Bonus
In addition to the AIP, the Board, based on recommendation from the Compensation Committee, from time to time may determine that it is appropriate to pay AIP participants a discretionary bonus as a reward based on overall Company performance or individual contributions, but not tied to achievement of specific performance numbers. The discretionary bonus is limited to 25% of the maximum annual incentive payout opportunity for participants in the AIP, which includes all NEOs except H. J. Shands, III. In 2019, the maximum discretionary amounts allowed for Lee R. Gibson, Julie N. Shamburger, Tim Alexander and Brian K. McCabe were $110,833, $50,267, $68,267 and $31,200, respectively.
Lee R. Gibson, Julie N. Shamburger, Tim Alexander and Brian K. McCabe received discretionary bonuses for 2019 in the amounts of $60,000, $35,000, $35,000 and $25,000, respectively for their individual contributions, leadership and performance during 2019.
H. J. Shands, III is also eligible for a discretionary bonus and received a bonus in the amount of $115,000 in 2019. With input from management, the Board reviewed Mr. Shands' contributions and efforts during 2019 to determine his discretionary bonus amount.
Long-Term Equity Incentive Awards
The Southside Bancshares, Inc. 2017 Incentive Plan (the “2017 Incentive Plan”) provides for the grant of equity awards to our employees, officers, directors and consultants. The primary purpose of the 2017 Incentive Plan is to promote ourCompany success by linking the personal interests of our employees, officers, directors and consultants to those of our shareholders, and by providing participants with an incentive for outstanding performance. The 2017 Incentive Plan outlines the type of incentive awards to be granted under the plan.
Southside Bancshares, Inc.| 2020 Proxy Statement | 23
In 2019, our NEOs were awarded2021, the Committee engaged Meridian to assist in designing a new Long-Term Equity Incentive Program (the "Program"), which started in fiscal year 2022. The Program provides the framework for long-term equity awards having aconsisting of 50% performance-based restrictive stock units (“PSUs”) and 50% time-based restricted stock units ("RSUs"), issuable pursuant to the Company's 2017 Incentive Plan. In 2022, the Committee granted PSUs and RSUs to the NEOs. The RSUs vest in equal annual installments over three years, subject to the grantee's continued employment on each vesting date. The PSUs cliff vest on the third anniversary of the grant date, fair value equalsubject to the grantee's continued employment on such date, and will be earned based on the Company's ROATCE relative to ROATCE of the KBW Nasdaq Regional Bank Index (NASDAQ: KRX) (the “Peer Group”), over a percentage3 year performance period, beginning January 1, 2022. Performance awards may be earned and vest between 0% and 150% of their base salariesthe target award, as follows: Lee R. Gibson, 50%; Julie N. Shamburger, 35%, Tim Alexander, 35% and Brian K. McCabe, 30%. These awards were granted 50%outlined in the formtable below. See further information on the 2022 grants of stock optionsthe RSUs and 50%PSUs in the form of RSUs, based on grant date fair value. Details of the equity awards granted to the NEOs are set forth in the 20192022 Grants of Plan-Based Awards Table below.
Southside Bancshares, Inc.| 2023 Proxy Statement | 26
| | | | | | | | |
Company ROATCE Performance / Funding Scale |
Company ROATCE Percentile Ranking Relative to ROATCE Peer Group | | Percentage of Target Award Earned(1) |
Below 25% | | —% |
25% | | 50% |
40% | | 80% |
50% | | 100% |
60% | | 120% |
75% or greater | | 150% |
(1) Payouts between performance levels will be determined based on straight line interpolation, and performance below the minimum threshold results in no share payout.
Executive Stock Ownership Policy
The Company maintains a stock ownership policy that determines the amount of common stock that should be held by the Company’s executive officers. The policy specifies the value of Company stock (the “Required Market Value”), as a multiple of the executive officer’s base salary in effect as of the time the executive first becomes subject to the policy, which must be held by each executive officer, as follows:
|
| | | | | | | | | | |
| Position | | Multiple |
| Chief Executive Officer | | 3x Base Salary |
| Chief Financial Officer | | 2x Base Salary |
| Chief Lending Officer | | 2x Base Salary |
| Other Executive Officers | | One-half Base Salary |
The CEO, CFO and CLO are strongly encouraged to achieve ownership of a sufficient number of shares to satisfy the Required Market Value within five years of first becoming subject to the policy, and other executive officers are strongly encouraged to comply with the policy within seven years of first becoming subject to the policy.
In order to meet the stock ownership requirement, an executive officer may count all shares of common stock owned by the executive (including shares held in the Company’s 401(k) Plan (the “401(k) Plan”), vested shares held in the Company's Employee Stock Ownership Plan (“ESOP”),ESOP, shares held in an IRA and shares beneficially owned through a trust) and outstanding RSUs, but excluding shares underlying unexercised stock options.options and unearned PSUs.
Once an executive officer has obtained shares having a value equal or greater to the Required Market Value, the executive’s ownership requirement is converted into a number of shares determined by dividing the Required Market Value by the then-current stock price (the “Required Share Level”). Once an executive’s Required Share Level is determined, he or she must continue to beneficially own at least that number of shares in order to be in compliance with the policy. An executive’s Required Market Value and Required Share Level will be recalculated in connection with a salary increase relating to a change in title, but otherwise will not change as a result of changes in base salary or fluctuations in the price of the Company’s stock.
Executive officers who are not in compliance with the policy after the applicable five or seven year period are required to retain 50% of the shares received upon exercise or conversion of equity incentive awards.
For each NEO, the following table shows the number of shares deemed held under the policy and the percentage of the ownership requirement they have reached.
|
| | | | | | | | | | | | | |
| | Stock Ownership at | | Stock Held as a % of |
Name | | March 17, 202022, 2023 | | Ownership Requirement |
Lee R. Gibson | | 63,03083,741 |
| | >100% |
Julie N. Shamburger | | 30,18035,803 |
| | >100% |
Tim Alexander | | 27,59129,458 |
| | >100% |
Brian K. McCabe | | 34,82738,162 |
| | >100% |
H. J. Shands, IIIT. L. Arnold, Jr. | | 291,06415,474 |
| | >100% |
Southside Bancshares, Inc.| 2023 Proxy Statement | 27
Retirement Benefits
Retirement benefits fulfill an important role within the Company’s overall executive compensation program because they provide a financial security component which promotes retention. We place great value on the long-term commitment that many of our employees and the NEOs have made to us and aim to incent those individuals to remain with the Company and to act in a manner that will provide long-term benefits to the Company. The Company believes its retirement program is comparable to those offered by the banks in our Compensation Peer Group and, as a result, is needed to ensure that our executive compensation remains competitive.
Our retirement plans are designed to encourage employees to take an active role in planning, saving and investing for retirement. The Company maintains a 401(k) Plan, a tax-qualified defined contribution plan in which substantially all of our employees, including the NEOs, are eligible to participate. The Company also maintains a tax-qualified defined benefit pension plan (the “Pension Plan”), pursuant to which participants are entitled to benefits, based on final average monthly compensation and years of credited service. In
Southside Bancshares, Inc.| 2020 Proxy Statement | 24
addition, the Company maintainsas well as a non-qualified supplemental retirement plan (the “Restoration Plan”) which provides benefits in addition to the Pension Plan. As of June 18, 2020, the Board approved amendments to the Pension Plan and the Restoration Plan to freeze all future benefit accruals and accrual of benefit service, including consideration of compensation increases, effective December 31, 2020. The participants are entitled to benefits based on average monthly compensation and years of credited service as of December 31, 2020. The Pension Plan and the Restoration Plan are described in more detail under the Pension Benefits Table in this proxy statement.
The Company has entered into deferred compensation agreements with each of the NEOs, with the exception of H. J. Shands, III,T. L. Arnold, Jr., that provide for the payment of a stated amount over a specific period of years. These deferred compensation agreements are described in more detail under the Pension Benefits Table in this proxy statement.
The Company has also entered into a split dollar agreementagreements with Lee R. Gibson and Julie N. Shamburger, which allowsallow the executiveexecutives to designate the beneficiaries of death benefits under a life insurance policy. This agreement isThese agreements are described in more detail under the Summary Compensation Table in this proxy statement.
Perquisites and Other Personal Benefits
The Company provides NEOs with perquisites and other personal benefits the Company and the Committee believe are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain superior employees for key positions. The Committee periodically reviews the levels of perquisites and other personal benefits provided to NEOs. There were no changes in the types of perquisites provided in 2019.2022. Perquisites provided to NEOs during 20192022 were Company paid club dues for each NEO and a Company provided automobile for Lee R. Gibson, Julie N. Shamburger and Tim Alexander. Club memberships are made available to various officers who are expected to routinely entertain customers or prospective customers.
Health and Welfare Benefits
The Company offers a standard range of health and welfare benefits on a uniform basis and subject to insurance policy limitations to employees, including NEOs, and their eligible dependents. The benefits are designed to attract and retain employees and provide security to employees for their health and welfare needs. The benefits include: medical, prescription, dental, vision, employee life, group life, health savings accounts and flexible spending accounts. NEOs participate in these employee benefit plans, which are generally available to full-time employees on the same terms as a similarly situated employee. Another benefit available to officers at or above the Vice President level and meeting a service requirement is a bank-provided long-term disability insurance policy which includes accidental death and travel insurance plans and programs.
Key Employee Retention Compensation
The Company entered into a Key Employee Retention Agreement with H. J. Shands, III on June 12, 2017, in conjunction with the acquisition of Diboll State Bancshares, Inc. The agreement provides for a grant of equity awards, which vest over four years, as well as three retention payments, beginning 90 days after the merger effective date and ending at the second anniversary date.
For a further discussion of retention payments, please see the discussion of the Key Employee Retention Agreement in this proxy statement.
Severance
The Company entered into Employee Agreements with Lee R. Gibson in October 2007, Julie N. Shamburger in June 2008, and Brian K. McCabe in November 2008.2008 and T. L. Arnold, Jr. in April 2014, each of which provide for severance payments and benefits in the event the NEO’s employment is terminated by the Company without “cause,” by the executive for “good reason,” or as a result of a “change in control” (as such terms are defined in the employment agreements). The Board determined that it wasproviding severance protection to the NEOs is in the best interest of the Company because providing severance benefits is a necessary tool in the competitive marketplace to attract and retain the services and encourageof talented executives who are critical to the continued attention and dedicationsuccess of these executives to their assigned duties.the Company. The severance and change in control termination amounts were negotiated based on the NEO's tenure, scope of responsibilities and other provisions in the agreement.
For a further discussion of severance payments, please see the terms of the Employment Agreements in this proxy statement.
Tax and Accounting Considerations
Section 162(m) of the Internal Revenue Code places a limit of $1 million on the amount of compensation that we may deduct in any year with respect to any one of our NEOs. Prior to 2018, the limitation did not apply to compensation that met the requirements under Section 162(m) for “qualifying performance-based” compensation. The exemption from Code Section 162(m)'s deduction limit for performance-based compensation, was repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our covered executive officers in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain written arrangements in place as of November 2, 2017.deductible.
The Committee intends to maximize deductibility of executive compensation while retaining discretion needed to compensate executives in a manner commensurate with performance and the competitive landscape for executive talent.
Southside Bancshares, Inc.| 20202023 Proxy Statement | 2528
The following table sets forth the compensation earned by or paid to each of the NEOs for the fiscal years ended December 31, 2019, 20182022, 2021 and 2017.2020. This information relates to compensation paid to the NEO's by Southside Bank, as the Company does not directly pay compensation to the NEOs.
SUMMARY COMPENSATION TABLE
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name Principal Position | | Year | | Salary ($) (1) | | Bonus ($) (2) | | Stock Awards ($) (3) | | Non-Equity Incentive Plan Compensation ($) (4) | | Change in Pension Value ($) (5) | | All Other Compensation ($) (6) | | Total ($) |
Lee R. Gibson, CPA – President, Chief Executive Officer and Director of the Company and Southside Bank | | 2022 | | $ | 774,744 | | | $ | — | | | $ | 271,144 | | | $ | 478,211 | | | $ | — | | | $ | 25,497 | | | $ | 1,549,596 | |
| 2021 | | 736,450 | | | 500 | | | 125,187 | | | 377,799 | | | 172,927 | | | 29,838 | | | 1,442,701 | |
| 2020 | | 715,000 | | | 119,000 | | | — | | | 172,447 | | | 1,572,177 | | | 75,842 | | | 2,654,466 | |
Julie N. Shamburger, CPA – Chief Financial Officer of the Company and Southside Bank and advisory director of Southside Bank | | 2022 | | 445,000 | | | — | | | 120,128 | | | 228,897 | | | — | | | 26,497 | | | 820,522 | |
| 2021 | | 425,000 | | | 500 | | | 55,247 | | | 181,688 | | | — | | | 23,981 | | | 686,416 | |
| 2020 | | 410,000 | | | 52,000 | | | — | | | 79,108 | | | 907,288 | | | 64,895 | | | 1,513,291 | |
Tim Alexander – Chief Lending Officer of the Company and Southside Bank and advisory director of Southside Bank | | 2022 | | 538,000 | | | 100 | | | 134,486 | | | 239,836 | | | — | | | 94,321 | | | 1,006,743 | |
| 2021 | | 527,000 | | | 600 | | | 57,964 | | | 180,695 | | | 14,644 | | | 28,855 | | | 809,758 | |
| 2020 | | 518,000 | | | 68,400 | | | — | | | 99,947 | | | 440,279 | | | 29,953 | | | 1,156,579 | |
Brian K. McCabe – Chief Operations Officer of the Company and Southside Bank and advisory director of Southside Bank | | 2022 | | 348,000 | | | — | | | 86,986 | | | 155,136 | | | — | | | 23,934 | | | 614,056 | |
| 2021 | | 340,000 | | | 600 | | | 37,418 | | | 122,655 | | | — | | | 23,290 | | | 523,963 | |
| 2020 | | 330,000 | | | 31,000 | | | — | | | 47,754 | | | 577,525 | | | 23,331 | | | 1,009,610 | |
T.L. Arnold, Jr. – Chief Credit Officer of the Company and Southside Bank and advisory director of Southside Bank | | 2022 | | 335,000 | | | 100 | | | 83,730 | | | 145,711 | | | — | | | 18,169 | | | 582,710 | |
| 2021 | | 321,000 | | | 500 | | | 35,314 | | | 139,274 | | | — | | | 17,538 | | | 513,626 | |
| | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name Principal Position | | Year | | Salary ($) (1) | | Bonus ($) (2) | | Stock Awards ($) (3) | | Option Awards ($) (4) | | Non-Equity Incentive Plan Compensation ($)(5) | | Change in Pension Value ($) (6) | | All Other Compensation ($) (7) | | Total ($) |
Lee R. Gibson, CPA – President, Chief Executive Officer and Director of the Company and Southside Bank | | 2019 |
| $ | 665,000 |
|
| $ | 60,000 |
|
| $ | 166,244 |
|
| $ | 166,250 |
|
| $ | 134,743 |
|
| $ | 1,421,114 |
|
| $ | 15,792 |
|
| $ | 2,629,143 |
|
| 2018 |
| 645,750 |
|
| 50,000 |
|
| 161,426 |
|
| 161,437 |
|
| 131,459 |
|
| 423,458 |
|
| 13,796 |
|
| 1,587,326 |
|
| 2017 | | 615,000 |
| | 95,000 |
| | — |
| | — |
| | 182,655 |
| | 885,776 |
| | 86,249 |
| | 1,864,680 |
|
Julie N. Shamburger, CPA – Chief Financial Officer of the Company and Southside Bank and advisory director of Southside Bank | | 2019 | | 377,000 |
|
| 35,000 |
|
| 65,968 |
|
| 65,974 |
|
| 61,111 |
|
| 741,161 |
|
| 11,340 |
| | 1,357,554 |
|
| 2018 | | 340,000 |
|
| 30,000 |
|
| 59,513 |
|
| 59,503 |
|
| 55,372 |
|
| 140,011 |
|
| 10,585 |
|
| 694,984 |
|
| 2017 |
| 320,000 |
|
| 32,000 |
|
| — |
|
| — |
|
| 57,024 |
|
| 424,307 |
|
| 65,859 |
|
| 899,190 |
|
Tim Alexander – Chief Lending Officer of the Company and Southside Bank and advisory director of Southside Bank | | 2019 | | 512,000 |
| | 35,000 |
| | 89,583 |
| | 89,597 |
| | 82,994 |
| | 407,405 |
| | 59,361 |
| | 1,275,940 |
|
| 2018 |
| 500,000 |
|
| 10,000 |
|
| 87,492 |
|
| 87,502 |
|
| 81,430 |
|
| 216,224 |
|
| 12,314 |
|
| 994,962 |
|
| 2017 |
| 485,000 |
|
| 55,000 |
|
| — |
|
| — |
|
| 115,236 |
|
| 255,107 |
|
| 12,715 |
|
| 923,058 |
|
Brian K. McCabe – Chief Operations Officer of the Company and Southside Bank and advisory director of Southside Bank | | 2019 |
| 312,000 |
|
| 25,000 |
|
| 46,812 |
|
| 46,799 |
|
| 37,931 |
|
| 538,942 |
|
| 9,919 |
|
| 1,017,403 |
|
| 2018 |
| 300,000 |
|
| 20,000 |
|
| 44,988 |
|
| 44,997 |
|
| 36,644 |
|
| 49,066 |
|
| 15,065 |
|
| 510,760 |
|
| 2017 |
| 263,461 |
|
| 40,000 |
|
| — |
|
| — |
|
| — |
|
| 316,155 |
|
| 5,524 |
|
| 625,140 |
|
H. J. Shands, III (8) – Regional President, East Texas and Director of the Company and Southside Bank | | 2019 |
| 492,500 |
|
| 163,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 21,275 |
|
| 676,775 |
|
| 2018 | | 481,500 |
| | 347,500 |
| | 132,413 |
| | 132,407 |
| | — |
| | — |
| | 19,389 |
| | 1,113,209 |
|
(1)Includes amounts deferred at the officer’s election pursuant to the Company’s 401(k) Plan. | |
(1) | Includes amounts deferred at the officer’s election pursuant to the Company’s 401(k) Plan. |
| |
(2) | Reflects a discretionary bonus. For Mr. Shands, the 2019 amount includes a discretionary bonus of $115,000 and a retention payment of $48,000 pursuant to his Key Employee Retention Agreement. See below for further discussion of the agreement. |
| |
(3) | Reflects the aggregate grant date fair value of RSUs determined in accordance with FASB ASC Topic 718, based on the fair market value of our common stock on the grant date. |
| |
(4) | Reflects the aggregate grant date fair value of stock options determined in accordance with FASB ASC Topic 718, using the Black-Scholes option valuation model. The assumptions used in calculating these amounts are set forth in the notes to the Company’s consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC. |
| |
(5) | Reflects amounts earned under the Annual Incentive Program. See the discussion above for more information regarding these performance-based cash bonuses. |
| |
(6) | The amounts reported in this column reflect the aggregate actuarial increase in the present value of the NEOs benefits under the Pension Plan and the Restoration Plan determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. The changes in pension values for the NEOs under the Pension Plan were as follows: Lee R. Gibson – $357,772; Julie N. Shamburger – $379,481; Tim Alexander – $142,670; and Brian K. McCabe – $375,301. The changes in pension value for the NEOs under the Restoration Plan were as follows: Lee R. Gibson – $1,063,342; Julie N. Shamburger – $361,680; Tim Alexander – $264,735; and Brian K. McCabe – $163,641. Descriptions of the Pension Plan and Restoration Plan follow the Pension Benefits Table in this proxy statement. |
| |
(7) | Amounts included in this column for 2019 are detailed in the All Other Compensation Table below. |
| |
(8) | H. J. Shands, III will retire as Regional President, East Texas effective April 30, 2020. |
(2)For 2022, amounts reflect a referral incentive of $100 for Tim Alexander and T.L. Arnold, Jr.
(3)Reflects the aggregate grant date fair value of RSUs and PSUs determined in accordance with FASB ASC Topic 718. Grant date fair value for RSUs is based on the fair market value of our common stock on the grant date. Grant date fair value for PSUs is based on the fair market value of our common stock on the grant date and the probable outcome of performance-based conditions at the time of grant, excluding the effect of estimated forfeitures. Assuming achievement of the PSU performance conditions at the highest level (rather than at target level), the aggregate grant date fair value of awards reflected in this column for 2022 would be higher by the following amounts: Mr. Gibson, $67,786; Ms. Shamburger, $30,053; Mr. Alexander, $33,642; Mr. McCabe, $21,747; and Mr. Arnold $20,953.
(4)Reflects amounts earned under the Annual Incentive Program. See the discussion above for more information regarding these performance-based cash bonuses.
(5)The amounts reported in this column reflect the change in aggregate actuarial present value of the NEOs accumulated benefits under the Pension Plan and the Restoration Plan determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements, which was a negative value for NEOs in 2022. The negative changes in pension values for the NEOs in 2022 under the Pension Plan were as follows: Lee R. Gibson – $(366,887); Julie N. Shamburger – $(603,150); Tim Alexander – $(121,551); and Brian K. McCabe – $(509,811). The negative changes in pension value for the NEOs under the Restoration Plan were as follows: Lee R. Gibson – $(832,209); Julie N. Shamburger – $(365,570); Tim Alexander – $(169,325); and Brian K. McCabe – $(118,182). Mr. Arnold does not participate in the Pension Plan or the Restoration Plan. Descriptions of the Pension Plan and Restoration Plan follow the Pension Benefits Table in this proxy statement.
(6)Amounts included in this column for 2022 are detailed in the All Other Compensation Table below.
Southside Bancshares, Inc.| 20202023 Proxy Statement | 2629
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2022 ALL OTHER COMPENSATION TABLE | |
| | Gibson | | Shamburger | | Alexander | | McCabe | | Arnold | |
Company Provided Automobile (a) | | $ | — | | | $ | 3,856 | | | $ | 69,150 | | | $ | — | | | $ | — | | |
Club Dues (b) | | 7,328 | | | 4,472 | | | 7,002 | | | 5,765 | | | — | | |
401(k) Matching Contribution (c) | | 12,200 | | | 12,200 | | | 12,200 | | | 12,200 | | | 12,200 | | |
ESOP Contribution (d) | | 5,969 | | | 5,969 | | | 5,969 | | | 5,969 | | | 5,969 | | |
Total | | $ | 25,497 | | | $ | 26,497 | | | $ | 94,321 | | | $ | 23,934 | | | $ | 18,169 | | |
| | | | | | | | | | | |
(a)Julie N. Shamburger and Tim Alexander had use of a Company provided automobile in 2022. The total incremental cost to the Company during 2022 includes fuel, maintenance and insurance costs, and for Tim Alexander, the total includes the cost of a new automobile in the amount of $58,072 (which is treated as incremental cost to the Company in the year of purchase). A new automobile was provided for Ms. Shamburger in 2020. |
| | | | | | | | | | | | | | | | | | | | |
2019 ALL OTHER COMPENSATION TABLE |
| | Gibson | | Shamburger | | Alexander | | McCabe | | Shands |
Company Provided Automobile (a) | | $ | 5,202 |
| | $ | 3,410 |
| | $ | 48,856 |
| | $ | — |
| | $ | — |
|
Club Dues (b) | | 6,514 |
| | 3,854 |
| | 6,429 |
| | 5,843 |
| | 5,999 |
|
401(k) Matching (c) | | — |
| | — |
| | — |
| | — |
| | 11,200 |
|
ESOP Contribution (d) | | 4,076 |
| | 4,076 |
| | 4,076 |
| | 4,076 |
| | 4,076 |
|
Total | | $ | 15,792 |
| | $ | 11,340 |
| | $ | 59,361 |
| | $ | 9,919 |
| | $ | 21,275 |
|
| |
(a) | Lee R. Gibson, Julie N. Shamburger and Tim Alexander had use of a Company provided automobile in 2019. The automobile is included as incremental cost to the Company in the year of purchase. The incremental cost to the Company during 2019 included fuel, maintenance costs and insurance, and for Tim Alexander, the total included the cost of a new automobile in the amount of $41,735. New automobiles were provided for Mr. Gibson and Ms. Shamburger in 2017. |
| |
(b) | The incremental cost of Company provided club dues to the NEOs. |
| |
(c) | H. J. Shands, III is an eligible participant in the Company's 401(k) plan, in which he is 100% vested. During 2019, Mr. Shands received $11,200 in matching 401(k) contributions. |
| |
(d) | All NEO's are participants in the ESOP. H. J. Shands, III is 20% vested in the ESOP and remaining NEO's are 100% vested. |
(b)The incremental cost of Company provided club dues to the NEOs.
(c)All NEO's are 100% vested in our 401(k) Plan. (d)All NEO's are 100% vested in our ESOP.
CEO Pay Ratio Disclosure
The CEO pay ratio figures below are a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under the Exchange Act.
We determined that as of December 31, 2019,2022, our total number of active U.S. employees was 921.869. To determine our median employee pay, we chose gross compensation as our consistently applied compensation measure. We then annualized base salary for those employees who commenced work during 20192022 and any employees who were on leave for a portion of 2019.2022. For hourly employees, we used a reasonable estimate of hours worked to determine annual base pay.
Using this methodology, we identified the median employee, and that person's total annual compensation was $40,687.$47,234. The total annual compensation of our CEO was $2,629,143.$1,549,596. Accordingly, the ratio of CEO pay to median employee pay was 65:33:1.
Employment Agreements
The Company maintains employment agreements with Lee R. Gibson, Julie N. Shamburger, and Brian K. McCabe and T. L. Arnold, Jr. (the “Employment Agreements”). The Employment Agreement with Mr. Gibson was entered into as of October 22, 2007, and had an initial term through October 22, 2010, with automatic one-year term extensions on each anniversary of the effective date, until a party gives 90 days' notice of non-renewal. Mr. Gibson's agreement is now in effect until October 22, 2022.2025. The Employment Agreement with Ms. Shamburger was entered into as of June 4, 2008, and had an initial term through June 4, 2010, with automatic one-year term extensions on each anniversary of the effective date, until a party gives 90 days' notice of non-renewal. The employment term was amended to a three-year term on October 25, 2018, with automatic one- yearone-year term extensions on each anniversary of the amendment date, until a party gives 90 days' notice of non-renewal. This agreement is now in effect until October 25, 2022.2025. The Employment Agreement with Mr. McCabe was entered into as of November 17, 2008 and had an initial term through November 17, 2011, with automatic one-year term extensions on each anniversary of the effective date, until a party gives 90 days' notice of non-renewal. This agreement is now in effect until November 17, 2022.2025. The Employment Agreement with Mr. Arnold was entered into as of April 28, 2014 and had an initial term through April 28, 2017, with automatic one-year term extensions on each anniversary of the effective date, until a party gives 90 days' notice of non-renewal. This agreement is now in effect until April 28, 2025.
The Employment Agreements provide for an annual base salary to be reviewed no less frequently than annually by the Committee, and entitle the executives to participate in the Company's Annual Incentive Programs withannual incentive program (with a payment of not less than 12.5% of base salary.salary, except in the case of Mr. Arnold). The amount actually awarded and paid to the executives each year will be determined by the Committee and may be based on specific performance criteria.
The Employment Agreements entitle the executives to participate in all incentive, savings and retirement plans or programs and welfare and fringe benefits which are generally available to officers of the Company of comparable levels. In addition, the Employment Agreements state that the Company may pay annual country club annual dues and expenses for each of the executives.
The Employment Agreements also provide the executives with severance benefits in the event of certain terminations of employment. These benefits are described in “Potential Payments upon Termination or Change in Control.”
Key Employee Retention Agreement
The Key Employee Retention Agreement with H. J. Shands, III, provides for a grant of options and RSUs within 90 days following the Diboll acquisition, each having a grant date fair value equal to approximately 15% of Mr. Shands' base salary and vesting over four years, as well as three retention payments, beginning 90 days after the merger effective date and ending at the second anniversary date. The last retention payment was made in 2019. The agreement does not provide for accelerated vesting of the equity awards.
Southside Bancshares, Inc.| 20202023 Proxy Statement | 2730
Split Dollar Agreements
In 2004, the Company entered into aThe Bank has split dollar agreementagreements with Lee R. Gibson.Gibson, effective September 7, 2004, and Julie N. Shamburger, effective February 25, 2021. The agreement providesagreements provide that the CompanyBank will be the owner and beneficiary of Bank Owned Life Insurance (commonly referred to as BOLI) insuring the executive’s life. The agreement provides Mr. Gibson withexecutives' lives and provide the executives the right to designate the beneficiaries of the death benefits guaranteed in the agreement. TheMr. Gibson's agreement originally provided for death benefits in an aggregate amount of $700,000. The$700,000, and Ms. Shamburger's agreement originally provided for death benefits of $1.2 million. In both agreements, the amount is increased annually on the anniversary date of the agreement by an inflation adjustment factor of 5%. As of December 31, 2019, the expected death benefits totaled $1.48 million under this agreement. The agreement also states that after Mr. Gibson'sthe executives' retirement date, the Company will pay an annual gross-up bonus to himthe executives in an amount sufficient to enable himthe executive to pay federal income tax on both the economic benefit and on the gross-up bonus itself.
As of December 31, 2022, the expected death benefits for Mr. Gibson and Mr. Shamburger totaled $1.7 million and $1.3 million, respectively, under these agreements. There was noapproximately $27,000 of expense associated with the post retirement liability for the year ended December 31, 2019.2022.
20192022 GRANTS OF PLAN-BASED AWARDS
The table below sets forth information regarding grants of plan-based awards to the NEOs for the fiscal year ended December 31, 2019:2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Award Type | | Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | All Other Stock Awards: Number of Shares of Stock or Units (#) (3) | | Grant Date Fair Value of Stock and Option Awards ($) (4) |
Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum ($) | |
Lee R. Gibson | | AIP | | — | | | $ | 174,317 | | | $ | 348,635 | | | $ | 522,952 | | | — | | | — | | | — | | | — | | | $ | — | |
| PSU | | 2/3/2022 | | — | | | — | | | — | | | 1,624 | | | 3,248 | | | 4,872 | | | — | | | 135,572 | |
| RSU | | 2/3/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 3,248 | | | 135,572 | |
Julie N. Shamburger | | AIP | | — | | | 83,438 | | | 166,875 | | | 250,313 | | | — | | | — | | | — | | | — | | | — | |
| PSU | | 2/3/2022 | | — | | | — | | | — | | | 720 | | | 1,439 | | | 2,159 | | | — | | | 60,064 | |
| RSU | | 2/3/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 1,439 | | | 60,064 | |
Tim Alexander | | AIP | | — | | | 87,425 | | | 174,850 | | | 262,275 | | | — | | | — | | | — | | | — | | | — | |
| PSU | | 2/3/2022 | | — | | | — | | | — | | | 806 | | | 1,611 | | | 2,417 | | | — | | | 67,243 | |
| RSU | | 2/3/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 1,611 | | | 67,243 | |
Brian K. McCabe
| | AIP | | — | | | 56,550 | | | 113,100 | | | 169,650 | | | — | | | — | | | — | | | — | | | — | |
| PSU | | 2/3/2022 | | — | | | — | | | — | | | 521 | | | 1,042 | | | 1,563 | | | — | | | 43,493 | |
| RSU | | 2/3/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 1,042 | | | 43,493 | |
T. L. Arnold, Jr. | | AIP | | — | | | 54,438 | | | 108,875 | | | 163,313 | | | — | | | — | | | — | | | — | | | — | |
| PSU | | 2/3/2022 | | — | | | — | | | — | | | 502 | | | 1,003 | | | 1,505 | | | — | | | 41,865 | |
| RSU | | 2/3/2022 | | — | | | — | | | — | | | — | | | — | | | — | | | 1,003 | | | 41,865 | |
| | | | | | | | | | | | | | | | | | | |
(1)Amounts reflect threshold, target and maximum payout levels for 2022 performance under the 2022 Annual Incentive Program. For more information regarding the 2022 Annual Incentive Program, see the discussion in “Compensation Discussion and Analysis.”
(2)Amounts reflect threshold, target and maximum payout levels for PSUs granted in 2022, pursuant to the Company's 2017 Incentive Plan, which may be earned based on the Company’s level of achievement of performance goals related to ROATCE, and cliff vest on the third anniversary of the grant date, subject to the grantee's continued employment on such date, or earlier upon the death or disability of the grantee, or upon a change in control in which the successor company does not assume or otherwise equitably convert the awards. For more information regarding the PSUs and payout, see the discussion in “Compensation Discussion and Analysis.”
(3)Reflects RSUs granted under the 2017 Incentive Plan. The RSUs vest annually in three equal installments beginning on the first anniversary of the grant date, subject to the grantee's continued employment on such date, or earlier upon the death or disability of the grantee, or upon a change in control in which the successor company does not assume or otherwise equitably convert the awards.
(4)Reflects the aggregate grant date fair value of the award determined in accordance with FASB ASC Topic 718. Grant date fair value for RSUs is based on the fair market value of our common stock on the grant date. Grant date fair value for PSUs is based on the fair market value of our common stock on the grant date and the probable outcome of performance-based conditions at the time of grant, excluding the effect of estimated forfeitures.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | All Other Stock Awards: Number of Shares of Stock or Units (#)(2) | | All Other Option Awards: Number of Securities Underlying Options (#)(3) | | Exercise or Base Price of Option Awards ($/Sh)(4) | | Grant Date Fair Value of Stock and Option Awards ($)(5) |
| Threshold ($) | | Target ($) | | Maximum ($) | |
Lee R. Gibson | | — |
| | $ | 4,988 |
| | — |
| | $ | 332,500 |
| | — |
| | — |
| | $ | — |
| | — |
|
| 11/21/2019 | | — |
| | — |
| | — |
| | 4,773 |
| | — |
| | — |
| | 166,244 |
|
| | 11/21/2019 | | — |
| | — |
| | — |
| | — |
| | 28,178 |
| | 34.83 |
| | 166,250 |
|
Julie N. Shamburger | | — |
| | 2,262 |
| | — |
| | 150,800 |
| | — |
| | — |
| | — |
| | — |
|
| 11/21/2019 | | — |
| | — |
| | — |
| | 1,894 |
| | — |
| | — |
| | 65,968 |
|
| 11/21/2019 | | — |
| | — |
| | — |
| | — |
| | 11,182 |
| | 34.83 |
| | 65,974 |
|
Tim Alexander | | — |
| | 3,072 |
| | — |
| | 204,800 |
| | — |
| | — |
| | — |
| | — |
|
| 11/21/2019 | | — |
| | — |
| | — |
| | 2,572 |
| | — |
| | — |
| | 89,583 |
|
| | 11/21/2019 | | — |
| | — |
| | — |
| | — |
| | 15,186 |
| | 34.83 |
| | 89,597 |
|
Brian K. McCabe
| | — |
| | 1,404 |
| | — |
| | 93,600 |
| | — |
| | — |
| | — |
| | — |
|
| 11/21/2019 | | — |
| | — |
| | — |
| | 1,344 |
| | — |
| | — |
| | 46,812 |
|
| | 11/21/2019 | | — |
| | — |
| | — |
| | — |
| | 7,932 |
| | 34.83 |
| | 46,799 |
|
H. J. Shands, III | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | | |
|
|
| |
(1) | Amounts reflect threshold and maximum payout levels for 2019 performance under the 2019 Annual Incentive Program. The awards do not provide for a target payout. For more information regarding the 2019 Annual Incentive Program, see the discussion in “Compensation Discussion and Analysis.”
|
| |
(2) | Reflects RSUs granted under the 2017 Incentive Plan. The RSUs vest annually in three equal installments. All awards begin vesting on the first anniversary of the grant date, or earlier upon the death or disability of the grantee, or upon a change in control in which the successor company does not assume or otherwise equitably convert the awards. |
| |
(3) | Reflects stock options granted under the 2017 Incentive Plan. The stock options vest annually in three equal installments. All awards begin vesting on the first anniversary of the grant date, or earlier upon the death or disability of the grantee or upon a change in control in which the successor does not assume or otherwise equitably convert the awards. |
| |
(4) | The closing price of the Company's common stock per share on the grant date. |
| |
(5) | Grant date fair value of the RSUs is calculated using the closing stock price on the date of grant. Grant date fair value of the stock options is based on the Black-Scholes option-pricing model. The assumptions used in calculating these amounts are set forth in the notes to the Company’s consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC. |
Southside Bancshares, Inc.| 20202023 Proxy Statement | 2831
OUTSTANDING EQUITY AWARDS AT 20192022 FISCAL YEAR END
The table below sets forth information regarding outstanding stock options and stock awards, which includes RSUs and PSUs, held by the NEOs as of December 31, 2019:2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards (1) | | Stock Awards (2) |
Name | Grant Date | Vesting Period (Years) (3) | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Un-exercisable | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock that have not Vested (#) | | Market Value of Shares or Units of Stock that have not Vested ($) (4) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (5) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (4) |
Lee R. Gibson | 6/18/2015 | 3 | | 18,997 | | | — | | | $ | 26.49 | | | 6/18/2025 | | — | | | $ | — | | — | | | $ | — | |
11/23/2016 | 3 | | 16,304 | | | — | | | 37.28 | | | 11/23/2026 | | — | | | — | | — | | | — | |
6/18/2018 | 3 | | 24,095 | | | — | | | 34.50 | | | 6/18/2028 | | — | | | — | | — | | | — | |
11/21/2019 | 3 | | 28,178 | | | — | | | 34.83 | | | 11/21/2029 | | — | | | — | | — | | | — | |
6/29/2021 | 3 | | — | | | — | | | — | | | — | | | 2,304 | | | 82,921 | | — | | | — | |
2/3/2022 | 3 | | — | | | — | | | — | | | — | | | 3,368 | | | 121,214 | | — | | | — | |
2/3/2022 | 3 | | — | | | — | | | — | | | — | | | — | | | — | | 5,052 | | | 181,821 | |
Julie N. Shamburger | 6/18/2015 | 4 | | 5,460 | | | — | | | 26.49 | | | 6/18/2025 | | — | | | — | | — | | | — | |
11/23/2016 | 3 | | 6,461 | | | — | | | 37.28 | | | 11/23/2026 | | — | | | — | | — | | | — | |
6/18/2018 | 3 | | 8,881 | | | — | | | 34.50 | | | 6/18/2028 | | — | | | — | | — | | | — | |
11/21/2019 | 3 | | 11,182 | | | — | | | 34.83 | | | 11/21/2029 | | — | | | — | | — | | | — | |
6/29/2021 | 3 | | — | | | — | | | — | | | — | | | 1,017 | | | 36,602 | | — | | | — | |
2/3/2022 | 3 | | — | | | — | | | — | | | — | | | 1,492 | | | 53,697 | | — | | | — | |
2/3/2022 | 3 | | — | | | — | | | — | | | — | | | — | | | — | | 2,238 | | | 80,546 | |
Tim Alexander | 6/18/2015 | 4 | | 1,788 | | | — | | | 26.49 | | | 6/18/2025 | | — | | | — | | — | | | — | |
11/23/2016 | 3 | | 7,537 | | | — | | | 37.28 | | | 11/23/2026 | | — | | | — | | — | | | — | |
6/18/2018 | 3 | | 13,060 | | | — | | | 34.50 | | | 6/18/2028 | | — | | | — | | — | | | — | |
11/21/2019 | 3 | | 15,186 | | | — | | | 34.83 | | | 11/21/2029 | | — | | | — | | — | | | — | |
6/29/2021 | 3 | | — | | | — | | | — | | | — | | | 1,066 | | | 38,365 | | — | | | — | |
2/3/2022 | 3 | | — | | | — | | | — | | | — | | | 1,670 | | | 60,103 | | — | | | — | |
2/3/2022 | 3 | | — | | | — | | | — | | | — | | | — | | | — | | 2,505 | | | 90,155 | |
Brian K. McCabe | 11/23/2016 | 4 | | 3,648 | | | — | | | 37.28 | | | 11/23/2026 | | — | | | — | | — | | | — | |
6/18/2018 | 3 | | 6,716 | | | — | | | 34.50 | | | 6/18/2028 | | — | | | — | | — | | | — | |
11/21/2019 | 3 | | 7,932 | | | — | | | 34.83 | | | 11/21/2029 | | — | | | — | | — | | | — | |
6/29/2021 | 3 | | — | | | — | | | — | | | — | | | 688 | | | 24,761 | | — | | | — | |
2/3/2022 | 3 | | — | | | — | | | — | | | — | | | 1,080 | | | 38,869 | | — | | | — | |
2/3/2022 | 3 | | — | | | — | | | — | | | — | | | — | | | — | | 1,620 | | | 58,304 | |
T.L. Arnold, Jr. | 1/8/2015 | 4 | | 3,999 | | | — | | | 23.66 | | | 1/8/2025 | | — | | | — | | — | | | — | |
6/18/2015 | 4 | | 4,667 | | | — | | | 26.49 | | | 6/18/2025 | | — | | | — | | — | | | — | |
11/23/2016 | 4 | | 3,420 | | | — | | | 37.28 | | | 11/23/2026 | | — | | | — | | — | | | — | |
6/18/2018 | 4 | | 4,750 | | | — | | | 34.50 | | | 6/18/2028 | | — | | | — | | — | | | — | |
11/21/2019 | 4 | | 4,775 | | | 1,592 | | | 34.83 | | | 11/21/2029 | | — | | | — | | — | | | — | |
11/21/2019 | 4 | | — | | | — | | | — | | | — | | | 305 | | | 10,977 | | — | | | — | |
6/29/2021 | 3 | | — | | | — | | | — | | | — | | | 650 | | | 23,394 | | — | | | — | |
2/3/2022 | 3 | | — | | | — | | | — | | | — | | | 1,040 | | | 37,430 | | — | | | — | |
2/3/2022 | 3 | | — | | | — | | | — | | | — | | | — | | | — | | 1,560 | | | 56,144 | |
(1)Options were granted under the 2017 Incentive Plan and predecessor plans. All options granted are for 10-year terms with an exercise price equal to the fair market value (closing price) on the NASDAQ on the date of the grant, adjusted for stock dividends.
(2)RSUs and PSUs were granted under the 2017 Incentive Plan and have been adjusted for dividend equivalents. Fractional shares have been rounded for presentation purposes.
(3)Options and RSUs vest annually in equal installments over the years noted above, beginning on the first anniversary of the grant date, or earlier upon the death or disability of the grantee, or upon a change in control in which the successor company does not assume or otherwise equitably convert the awards. PSUs cliff vest on the third anniversary of the grant date, subject to the grantee's continued service on such date.
(4)Reflects the value calculated by multiplying the number of shares underlying the RSUs and PSUs by $35.99 which was the closing price of our common stock on December 30, 2022, the last business day of 2022.
|
| | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards (1) | Stock Awards (2) |
Name | Grant Date | Vesting Period (Years) (3) | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock that have not vested (#) | | Market Value of Shares or Units of Stock that have not vested ($) (4) |
Lee R. Gibson | 6/9/2011 | 3 |
| 15,116 |
| | — |
| | $ | 14.67 |
| | 6/9/2021 |
| | — |
| | $ | — |
|
8/2/2012 | 3 |
| 16,236 |
| | — |
| | 16.81 |
| | 8/2/2022 |
| | — |
| | — |
|
12/5/2013 | 3 |
| 10,888 |
| | — |
| | 22.88 |
| | 12/5/2023 |
| | — |
| | — |
|
6/18/2015 | 3 |
| 18,997 |
| | — |
| | 26.49 |
| | 6/18/2025 |
| | — |
| | — |
|
11/23/2016 | 3 |
| 16,304 |
|
| — |
|
| 37.28 |
| | 11/23/2026 |
| | — |
| | — |
|
6/18/2018 | 3 |
| 8,032 |
|
| 16,063 |
|
| 34.50 |
| | 6/18/2028 |
| | — |
| | — |
|
6/18/2018 | 3 |
| — |
| | — |
| | — |
| | — |
|
| 3,296 |
|
| 122,413 |
|
11/21/2019 | 3 |
| — |
| | 28,178 |
| | 34.83 |
| | 11/21/2029 |
| | — |
| | — |
|
11/21/2019 | 3 |
| — |
| | — |
| | — |
| | — |
| | 4,817 |
| | 178,903 |
|
Julie N. Shamburger | 6/9/2011 | 4 |
| 1,600 |
|
| — |
|
| 14.67 |
|
| 6/9/2021 |
|
| — |
|
| — |
|
8/2/2012 | 4 |
| 4,558 |
| | — |
| | 16.81 |
| | 8/2/2022 |
| | — |
| | — |
|
12/5/2013 | 4 |
| 3,113 |
| | — |
| | 22.88 |
| | 12/5/2023 |
| | — |
| | — |
|
6/18/2015 | 4 |
| 5,460 |
|
| — |
|
| 26.49 |
|
| 6/18/2025 |
| | — |
| | — |
|
11/23/2016 | 3 |
| 6,461 |
|
| — |
|
| 37.28 |
|
| 11/23/2026 |
| | — |
| | — |
|
6/18/2018 | 3 |
| 2,960 |
| | 5,921 |
| | 34.50 |
| | 6/18/2028 |
| | — |
| | — |
|
6/18/2018 | 3 |
| — |
| | — |
| | — |
| | — |
|
| 1,215 |
|
| 45,125 |
|
11/21/2019 | 3 |
| — |
| | 11,182 |
| | 34.83 |
| | 11/21/2029 |
| | — |
| | — |
|
11/21/2019 | 3 |
| — |
| | — |
| | — |
| | — |
| | 1,912 |
| | 71,012 |
|
Tim Alexander | 6/18/2015 | 4 |
| 1,788 |
|
| — |
|
| 26.49 |
|
| 6/18/2025 |
| | — |
| | — |
|
11/23/2016 | 3 |
| 7,537 |
| | — |
| | 37.28 |
| | 11/23/2026 |
| | — |
| | — |
|
11/23/2016 | 4 |
| — |
| | — |
| | — |
| | — |
|
| 653 |
|
| 24,252 |
|
6/18/2018 | 3 |
| 4,353 |
|
| 8,707 |
|
| 34.50 |
|
| 6/18/2028 |
| | — |
| | — |
|
6/18/2018 | 3 |
| — |
| | — |
| | — |
| | — |
| | 1,787 |
|
| 66,369 |
|
11/21/2019 | 3 |
| — |
| | 15,186 |
| | 34.83 |
| | 11/21/2029 |
| | — |
| | — |
|
11/21/2019 | 3 |
| — |
| | — |
| | — |
| | — |
| | 2,596 |
| | 96,415 |
|
Brian K. McCabe | 8/2/2012 | 4 |
| 2,020 |
| | — |
| | 16.81 |
| | 8/2/2022 |
| | — |
| | — |
|
12/5/2013 | 4 |
| 2,681 |
| | — |
| | 22.88 |
| | 12/5/2023 |
| | — |
| | — |
|
6/18/2015 | 4 |
| 4,875 |
| | — |
| | 26.49 |
| | 6/18/2025 |
| | — |
| | — |
|
11/23/2016 | 4 |
| 2,736 |
|
| 912 |
|
| 37.28 |
|
| 11/23/2026 |
| | — |
| | — |
|
11/23/2016 | 4 |
| — |
| | — |
| | — |
| | — |
|
| 226 |
|
| 8,394 |
|
6/18/2018 | 3 |
| 2,239 |
|
| 4,477 |
|
| 34.50 |
|
| 6/18/2028 |
| | — |
| | — |
|
6/18/2018 | 3 |
| — |
| | — |
| | — |
| | — |
|
| 918 |
|
| 34,095 |
|
11/21/2019 | 3 |
| — |
| | 7,932 |
| | 34.83 |
| | 11/21/2029 |
| | — |
| | — |
|
11/21/2019 | 3 |
| — |
| | — |
| | — |
| | — |
| | 1,356 |
| | 50,362 |
|
H. J. Shands, III | 1/29/2018 | 4 |
| 2,617 |
|
| 7,850 |
|
| 34.60 |
|
| 1/29/2028 |
| | — |
| | — |
|
1/29/2018 | 4 |
| — |
| | — |
| | — |
| | — |
|
| 1,681 |
|
| 62,432 |
|
6/18/2018 | 4 |
| 2,223 |
|
| 6,667 |
|
| 34.50 |
|
| 6/18/2028 |
| | — |
| | — |
|
6/18/2018 | 4 |
| — |
| | — |
| | — |
| | — |
|
| 1,384 |
|
| 51,402 |
|
| |
(1) | Options were granted under the 2017 Incentive Plan and predecessor plans. All options granted are for 10-year terms with an exercise price equal to the fair market value (closing price) on the NASDAQ on the date of the grant, adjusted for stock dividends. |
| |
(2) | RSUs were granted under the 2017 Incentive Plan and predecessor plans have been adjusted for stock dividends and dividend equivalents. Fractional shares have been rounded for presentation purposes. |
| |
(3) | All awards vest annually in equal installments over the years noted above, beginning on the first anniversary of the grant date, or earlier upon the death or disability of the grantee, or upon a change in control in which the successor company does not assume or otherwise equitably convert the awards. |
| |
(4) | Reflects the value calculated by multiplying the number of shares underlying the RSUs by $37.14 which was the closing price of our common stock on December 31, 2019. |
Southside Bancshares, Inc.| 20202023 Proxy Statement | 2932
(5)PSUs may be earned based on the Company’s level of achievement of performance goals relating to ROATCE over a three-year performance period beginning January 1, 2022 and ending December 31, 2024. Amounts reported here reflect maximum levels of achievement of the performance goals.
20192022 OPTION EXERCISES AND STOCK VESTED
The following table shows the number of shares and the value realized upon exercise of stock options and vesting of stock awards for the year ended December 31, 20192022 for each of the NEOs.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Stock Options | | Stock Awards (RSUs) |
Name | | Option Shares Acquired on Exercise (#) | | Option Value Realized on Exercise ($) (1) | | Number of Shares Acquired on Vesting (#) (2) | | Value Realized on Vesting ($) (3) |
Lee R. Gibson | | — | | | $ | — | | | 2,907 | | | $ | 105,977 | |
Julie N. Shamburger | | — | | | — | | | 1,205 | | | 43,940 | |
Tim Alexander | | — | | | — | | | 1,482 | | | 53,973 | |
Brian K. McCabe | | 1,875 | | | 28,599 | | | 838 | | | 30,573 | |
T. L. Arnold, Jr. | | — | | | — | | | 887 | | | 32,515 | |
| | 1,875 | | | $ | 28,599 | | | 7,319 | | | $ | 266,978 | |
|
| | | | | | | | | | | | | | |
| | Stock Options | | Stock Awards (RSUs) |
Name | | Option Shares Acquired on Exercise (#) | | Option Value Realized on Exercise ($) (1) | | Number of Shares Acquired on Vesting (#) (2) | | Value Realized on Vesting ($) (3) |
Lee R. Gibson | | — |
| | $ | — |
| | 2,916 |
| | $ | 98,486 |
|
Julie N. Shamburger | | 1,635 |
| | 32,976 |
| | 1,462 |
| | 49,158 |
|
Tim Alexander | | — |
| | — |
| | 2,569 |
| | 86,939 |
|
Brian K. McCabe | | 1,200 |
| | 22,313 |
| | 980 |
| | 32,717 |
|
H. J. Shands, III |
| — |
|
| — |
|
| 993 |
|
| 33,543 |
|
| | 2,835 |
| | $ | 55,289 |
| | 8,920 |
| | $ | 300,843 |
|
| |
(1) | Value realized represents the excess of the fair market value of the shares at the time of exercise over the exercise price of the options. |
| |
(2) | Number of shares acquired is rounded and includes fractional shares, which were settled as cash in lieu. |
| |
(3) | Value realized represents the fair market value of the shares on the vesting date, including fractional shares, which were settled as cash in lieu. |
(1)Value realized represents the excess of the fair market value of the shares at the time of exercise over the exercise price of the options.
(2)Number of shares acquired does not include fractional shares, which were settled in cash.
(3)Value realized represents the fair market value of the shares on the vesting date, including fractional shares, which were settled in cash.
Southside Bancshares, Inc.| 20202023 Proxy Statement | 3033
20192022 PENSION BENEFITS
The table below shows the number of years of service credited to each NEO, the actuarial present value of each NEO's accumulated benefits (determined using interest rate and mortality table assumptions described below), and the amount of payments during 20192022 to each of the NEOs, under each of the Pension Plan, Restoration Plan and Deferred Compensation Agreements as of December 31, 2019.2022.
| | | | | | | | | | | | | | |
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) |
Lee R. Gibson | Pension Plan | 36.417 | $ | 2,237,404 | | $ | — | |
Restoration Plan | 36.417 | 5,075,115 | | — | |
Deferred Compensation Agreement | N/A | 347,544 | | — | |
Julie N. Shamburger | Pension Plan | 37.583 | 1,509,434 | | — | |
Restoration Plan | 37.583 | 914,870 | | — | |
Deferred Compensation Agreement | N/A | 209,390 | | — | |
Tim Alexander | Pension Plan | 15.500 | 732,989 | | — | |
| Restoration Plan | 15.500 | 1,021,067 | | — | |
| Deferred Compensation Agreement | N/A | 260,658 | | — | |
Brian K. McCabe | Pension Plan | 37.583 | 1,667,624 | | — | |
Restoration Plan | 37.583 | 386,583 | | — | |
Deferred Compensation Agreement | N/A | 200,533 | | — | |
T. L. Arnold, Jr. | (1) | — | — | | — | |
|
| | | | | | | | |
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) |
Lee R. Gibson | Pension Plan | 35.417 | $ | 2,207,249 |
| $ | — |
|
| Restoration Plan | 35.417 | 4,559,262 |
| — |
|
| Deferred Compensation Agreement | N/A | 302,377 |
| — |
|
Julie N. Shamburger | Pension Plan | 36.583 | $ | 1,771,155 |
| $ | — |
|
| Restoration Plan | 36.583 | 778,787 |
| — |
|
| Deferred Compensation Agreement | N/A | 120,954 |
| — |
|
Tim Alexander | Pension Plan | 14.500 | $ | 700,672 |
| $ | — |
|
| Restoration Plan | 14.500 | 889,337 |
| — |
|
| Deferred Compensation Agreement | N/A | 206,061 |
| — |
|
Brian K. McCabe | Pension Plan | 36.583 | $ | 1,851,418 |
| $ | — |
|
| Restoration Plan | 36.583 | 282,098 |
| — |
|
| Deferred Compensation Agreement | N/A | 144,716 |
| — |
|
H. J. Shands, III | (1) | — | $ | — |
| $ | — |
|
(1)Mr. ShandsArnold does not participate in the Pension Plan or the Restoration Plan, nor does he have a Deferred Compensation Agreement with the Company.
Pension Plan
The Pension Plan is a tax-qualified defined benefit pension plan pursuant to which participants are entitled to benefits based on final average monthly compensation and years of credited service.
Entrance into the Pension Plan was frozen effective December 31, 2005. Employees hired after December 31, 2005 are not eligible to participate in the Pension Plan. Furthermore, on June 18, 2020, our Board of Directors approved amendments to the Pension Plan to freeze all future benefit accruals, including service and compensation increases, effective December 31, 2020. All participants in the Pension Plan are fully vested. All NEOs employed by the Company at December 31, 20192022 were participants in the Pension Plan, with the exception of Mr. Shands.Arnold. Benefits are payable monthly commencing on the later of age 65 or the participant’s date of retirement. Eligible participants may retire at reduced benefit levels after reaching age 55.
The benefits under the Pension Plan are determined using the following formula, stated as a single life annuity with 120 payments guaranteed, payable at normal retirement age, which is defined as 65 under the Pension Plan.
Southside Bancshares, Inc.| 2020 Proxy Statement | 31
Formula (1) and Formula (2), calculated using Credit Service, at Normal Retirement Date, multiplied by a service ratio and summed as described below:
|
| | | | | | | | | | |
| | | The fraction in which the numerator is Credited |
Formula (1) | | x | Service as of 12/31/052005 and the denominator is |
| | | total Credited Service at Normal Retirement Date |
| plus | | |
Formula (2) | | | The fraction in which the numerator is Credited |
| | x | Service earned after 12/31/052005 and thethrough |
| | | 12/31/2020 and the denominator is total Credited Service at Normal |
| | | Retirement Date |
Formula (1) is an amount equal to:
2% of Final Average Monthly Compensation times Credited Service up to 20 years, PLUS
1% of Final Average Monthly Compensation times Credited Service, if any, in excess of 20 years, PLUS
0.60% of that portion of Final Average Monthly Compensation which exceeds Monthly Covered Compensation times Credited Service up to 35 years
Southside Bancshares, Inc.| 2023 Proxy Statement | 34
Formula (2) is an amount equal to:
0.90% of Final Average Monthly Compensation times Credited Service, PLUS
0.54% of that portion of Final Average Monthly Compensation which exceeds Monthly Covered Compensation times Credited Service up to 35 years
Benefit Formula Definitions
Credit Service
A participant’s years of credited service are based on the number of years an employee works for the Company.Company, frozen as of December 31, 2020. The Company has no policy to grant extra years of credited service.
Final Average Monthly Compensation (FAMC)
The monthly average of the 60 consecutive months’ compensation during the participant’s period of credited service that gives the highest average. Compensation generally includes all gross income received by the participant for services actually rendered in the course of employment, with certain exclusions, plus any elective deferrals under Section 125 and Section 404(g)(c). Compensation in the Pension Plan is limited as required.
Covered Compensation
A rounded 35-year average of the Maximum Taxable Wages (MTW) under social security. The table in effect during the calendar year proceeding termination or retirement is used.
The Pension Plan was amended several years ago andAll participants must now retire to be eligible to receive payments from the plan. All participants receiving payments from the Pension Plan at the time of the amendment were grandfathered so as to allow them to continue receiving payments from the plan. None of the NEOs were in pay status under the Pension Plan at the time of the amendment, and thus were not grandfathered.Plan.
The pension disclosures have been computed using the FASB ASC Topic 715, “Compensation - Retirement Benefits” assumptions from the financial statements as of the pension measurement date of December 31, 2019,2022, except the FASB ASC Topic 715 retirement age has been replaced by the normal retirement age for this calculation (and the benefit valued is only the accrued, not the projected, benefit).
FASB ASC Topic 715 Discount Rate as of 12/31/18 4.32% | | | | | | | | | | | | | | |
| FASB ASC Topic 715 Discount Rate as of 12/31/2021 | | 2.95% |
| FASB ASC Topic 715 Discount Rate as of 12/31/2022 | | 5.46% |
| Expected Retirement Age | | 65 |
| Post-Retirement Mortality | | Pri-2012 table, projected generationally using MP-2021 scale |
| Pre-Retirement Mortality, Disability or Turnover | | None |
| Form of Payment | | |
| | Qualified Retirement Plan | | 10-Year Certain & Life Annuity |
| | Nonqualified Restoration Plan | | 10-Year Certain & Life Annuity |
FASB ASC Topic 715 Discount Rate as of 12/31/19 3.41%
Expected Retirement Age 65
Post-Retirement Mortality Pri-2012 table, projected generationally using MP-2019 scale
Pre-Retirement Mortality, Disability or Turnover None
Form of Payment
•Qualified Retirement Plan 10-Year Certain & Life Annuity
•Nonqualified Restoration Plan 10-Year Certain & Life Annuity
For a further discussion of the FASB ASC Topic 715 assumptions, please see Note 11“Note 10 - Employee Benefits” to our consolidated financial statements on Form 10-K, filed with the SEC on February 28, 2020.
Southside Bancshares, Inc.| 2020 Proxy Statement | 32
24, 2023.
Restoration Plan
The annual retirement income benefit for NEOs under the Pension Plan is subject to certain limitations imposed by the Internal Revenue Code. Under one such limitation, in determining the benefit accrued for a year under the Pension Plan, the benefit formula excludes a NEOs compensation above a specified compensation limit. In 2019,2022, for example, the ceiling was $280,000,$305,000,which means that the compensation of NEOs in excess of that amount was not considered in the benefit formula for purposes of determining benefits under the Pension Plan. The Company maintains the Restoration Plan, a non-qualified supplemental retirement plan which provides additional benefits by taking into account the excess compensation not taken into account under the Pension Plan. The Restoration Plan is unfunded and noncontributory, which means that benefits are paid from the general assets of the Company and the NEOs are not required to make any contributions. On June 18, 2020, our Board of Directors approved amendments to the Restoration Plan to freeze all future benefit accruals and accrual of benefit service, including consideration of compensation increases, effective December 31, 2020. The formula and assumptions used to calculate the benefit payable pursuant to the Restoration Plan are the same as those used under the Pension Plan described above, except that the amounts payable under the Restoration Plan are reduced by the amounts payable under the Pension Plan.
Deferred Compensation Agreements
Under the terms of their deferred compensation agreements, Lee R. Gibson is entitled to receive $400,000, and Julie N. Shamburger is entitled to receive $500,000, and Tim Alexander and Brian K. McCabe are each entitled to receive $300,000, all of which are payable monthly over 10 years, if the executive remains in the employment of Southside Bank until retirement (on or after age 65), or upon permanent disability or death, whichever occurs first. If the executive’s employment is involuntarily terminated by the Company for any reason other than for “good cause” (as defined in the agreements), such termination shall be treated the same as a retirement, and the executive shall be entitled to receive the payments. If, prior to a “change in control” (as defined in
Southside Bancshares, Inc.| 2023 Proxy Statement | 35
the agreements), the executive terminates his or her employment prior to attainment of age 65 for any reason other than death or disability, no amounts shall be due such executive under his or her deferred compensation agreement. If, after a change in control, the executive terminates employment prior to attainment of age 65 for any reason other than death, disability, or for “good reason” (as defined in the agreements), no amounts shall be due to the executive under histhe agreement. After a change in control, a termination by the executive for good reason shall be treated the same as a retirement, and the executive shall be entitled to receive the payments.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The following discussion summarizes the compensation benefits payable to the NEOs in the event of a termination of their employment under various circumstances, assuming that a termination of employment occurred on December 31, 2019.2022.
Vested Benefits
Upon termination of their employment, the NEOs would receive any vested compensation and benefits for which they had already vested.benefits. This would include accrued but unpaid salary, accrued and unused vacation pay, and any balance under the 401(k) plan.Plan and ESOP. In addition, theeligible NEOs would receive benefits under the Pension Plan and Restoration Plan, plus amounts payable under their deferred compensation agreements, as disclosed and described above in the 20192022 Pension Benefits Table.
Employment Agreements
In addition, the Company has employment agreements with Lee R. Gibson, Julie N. Shamburger, and Brian K. McCabe and T. L. Arnold, Jr. which entitle each of the executives to certain payments and benefits upon termination or change in control, as summarized below.
Voluntary termination by the executive; termination by the Company with Cause. If an executive voluntarily terminates his/his or her employment or the Company terminates the executive’s employment with Cause (as defined in the Employment Agreements), the executive will be entitled to receive his or her accrued salary and previously vested benefits. In this event, no special severance benefits are payable.
Involuntary termination. If the Company terminates the executive’s employment without Cause, the executive will be entitled to receive a single lump sum equal to:
•any accrued but unpaid base salary;
•a severance payment equal to the executive’s monthly salary multiplied by the number of months remaining in the term of the Employment Agreement (which would be between 24 and 36 months), plus $10,000;$10,000 for Lee R. Gibson, Julie N. Shamburger and Brian K. McCabe;
•a pro-rata bonus equal to the product of (i) the executive’s Target Bonus (as defined in the Employment Agreements) for the termination year (or, in the case of T.L. Arnold, Jr., the actual bonus he would have earned for the year of termination) and (ii) a fraction, the numerator of which is the number of days in the current fiscal year through the termination date, and the denominator of which is 365; and
•any vested compensation deferred by the executive (unless otherwise required by an agreement).
Additionally, all equity awards will become immediately vested and exercisable as of the date of termination. Finally, the executive will be entitled to any other amounts or benefits under any other plan pursuant to which the executive is eligible to receive benefits, to the extent officers of a comparable level at the Company received such benefits prior to the date of termination (“Other Benefits”).
Termination due to death, Disability or Retirement. If an executive’s employment is terminated due to death, Disability or Retirement (as such capitalized terms are defined in the Employment Agreements), he or she (or his or her estate) will receive accrued salary and Other Benefits.
Southside Bancshares, Inc.| 2020 Proxy Statement | 33
Termination in connection with Change in Control. If an executive’s employment is terminated due to a Change in Control (as such capitalized term is defined in the Employment Agreements), he or she will be entitled to the same payments and benefits as if he or she had been terminated without cause.cause (except, in the case of T.L. Arnold, Jr., the pro-rata bonus would be based on his Target Bonus). However, instead of the severance payment described above, the severance payment will be calculated as follows:follows for Lee R. Gibson, Julie N. Shamburger and Brian K. McCabe:
(a) if the termination occurs more than six (6) months prior to the closing of a pending event that results in a change of control or more than two (2) years after the occurrence of a change of control, the severance payment shall be the product of two times the sum of (1) the executive’s salary in effect as of the termination (ignoring any decrease in the salary unless consented to by the executive), and (2) the greater of the average of the annual bonuses earned by the executive for the two fiscal years in which annual bonuses were paid immediately preceding the year in which the termination occurs, or the executive’s Target Bonus for the year in which the termination occurs; or
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(b) | if the termination occurs within six months prior or within two years after the occurrence of a change of control, the severance payment shall be the product of 2.99 for Lee R. Gibson and 2.0 for Julie N. Shamburger and Brian K. McCabe times the sum of (1) the executive’s salary in effect as of the termination, and (2) the greater of the average of the annual bonuses earned by the executive for the two fiscal years in which annual bonuses were paid immediately preceding the year in which the termination occurs, or the executive’s Target Bonus for the year in which the termination occurs. |
(b) if the termination occurs within six months prior or within two years after the occurrence of a change of control, the severance payment shall be the product of 2.99 for Lee R. Gibson and 2.0 for Julie N. Shamburger and Brian K. McCabe times the sum of (1) the executive’s salary in effect as of the termination, and (2) the greater of the average of the annual
Southside Bancshares, Inc.| 2023 Proxy Statement | 36
bonuses earned by the executive for the two fiscal years in which annual bonuses were paid immediately preceding the year in which the termination occurs, or the executive’s Target Bonus for the year in which the termination occurs.
For T. L. Arnold, Jr. the severance payment will be calculated as follows:
(a) if the date of termination occurs (i) following a Change in Control and during the same calendar year in which the Change in Control occurs or (ii) prior to the closing of a pending event that results in a Change in Control and during the same calendar year in which the Change in Control occurs, the Prorata Target Bonus shall equal the product of (x) Employee’s Target Bonus for the year of termination, and (y) a fraction, the numerator of which is the number of days in the calendar year through the date of termination, and the denominator of which is 365;
(b) a severance payment equal to the monthly salary for the remainder of the Initial Term or the then-current Extended Term, whichever is applicable, provided, however, that if the Date of Termination occurs within two years after the occurrence of a Change of Control, an additional severance payment in an amount equal to one times the Employee’s Base Salary in effect as of the Date of Termination shall be payable;
Restrictive covenants. The Employment Agreements contain confidentiality provisions and subject Lee R. Gibson and T. L. Arnold, Jr. to certain non-compete and non-solicitation obligations during the term of employment with the Company for a one-year period and Julie N. Shamburger and Brian K. McCabe for a six-month period following termination of employment.
Reduction in certain benefits. The Employment Agreements also state that in the event that any of the severance benefits described above are subject to federal excise taxes under the “golden parachute” provisions under Section 280G of the Internal Revenue Code, the payments will be reduced to the extent necessary to avoid such excise taxes, but only if such reduction would result in a greater net benefit for the executive.
The following table quantifies the severance payments payable to Lee R. Gibson, Julie N. Shamburger, and Brian K. McCabe and T. L. Arnold, Jr. pursuant to their Employment Agreements, and to H. J. Shands, III, pursuant to his Key Employee Retention Agreement, had their employment been involuntarily terminated as of December 31, 2019,2022, either absent or in connection with a Change in Control, and the value of equity acceleration the NEOs would receive upon an involuntary termination following a Change in Control pursuant to the terms of the stock option, RSU and RSUPSU award agreements. No amounts for pro rata bonuses are included in the table because the disclosure assumes a termination of employment as of the last day of the Company's fiscal year. Actual amounts earned as annual incentives for 20192022 are disclosed in the “Non-Equity“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.
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| Severance Payment ($) | Equity Acceleration ($)(4) | Total ($) |
By the Company without cause without a change in control | | | | | |
Lee R. Gibson | $ | 2,187,774 | | (1) | $ | 325,349 | | (5) | $ | 2,513,123 | |
Julie N. Shamburger | 1,264,534 | | (1) | 143,996 | | (5) | 1,408,530 | |
Brian K. McCabe | 1,013,003 | | (1) | 102,499 | | (5) | 1,115,502 | |
Tim Alexander | — | | | — | | (6) | — | |
T. L. Arnold, Jr. | 779,219 | | (1) | 111,078 | | (5) | 890,297 | |
By the Company without cause or by the executive for good reason in connection with a change in control | | | | | |
Lee R. Gibson | 3,358,903 | | (2) | 325,349 | | (5) | 3,684,252 | |
Julie N. Shamburger | 1,223,750 | | (2) | 143,996 | | (5) | 1,367,746 | |
Brian K. McCabe | 922,200 | | (2) | 102,499 | | (5) | 1,024,699 | |
Tim Alexander | — | | | 116,833 | | (6) | 116,833 | |
T. L. Arnold, Jr. | 1,114,219 | | (3) | 111,078 | | (5) | 1,225,297 | |
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| Severance Payment ($) | Equity Acceleration ($)(3)(4) | Total ($) |
By the Company without cause without a change in control | | | | |
Lee R. Gibson | $ | 1,879,288 |
| (1) | $ | 408,814 |
| $ | 2,288,102 |
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Julie N. Shamburger | 1,072,830 |
| (1) | 157,599 |
| 1,230,429 |
|
Brian K. McCabe | 909,244 |
| (1) | 122,993 |
| 1,032,237 |
|
Tim Alexander | — |
| | 245,102 |
| 245,102 |
|
H. J. Shands, III | — |
| | 151,374 |
| 151,374 |
|
By the Company without cause or by the executive for good reason in connection with a change in control | | | | |
Lee R. Gibson | 2,674,725 |
| (2) | 408,814 |
| 3,083,539 |
|
Julie N. Shamburger | 928,396 |
| (2) | 157,599 |
| 1,085,995 |
|
Brian K. McCabe | 720,644 |
| (2) | 122,993 |
| 843,637 |
|
Tim Alexander | — |
| | 245,102 |
| 245,102 |
|
H. J. Shands, III | — |
| | 151,374 |
| 151,374 |
|
(1) Reflects a severance payment equal to the executive's monthly salary multiplied by the number of months remaining in the term of his or her employment agreement as of December 31, 2022, plus an additional $10,000 for Lee R. Gibson, Julie N. Shamburger and Brian K. McCabe.
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(1) | (2) Reflects a severance payment equal to the product of 2.99, in the case of Lee R. Gibson, or 2.0, in the case of Julie N. Shamburger and Brian K. McCabe, times the sum (1) of the executive's salary in effect as of the termination, and (2) the greater of the average of the annual bonuses earned by the executive for the two fiscal years in which annual bonuses were paid immediately preceding the year in which the termination occurs, or the executive’s Target Bonus for the year in which the termination occurs. (3) Reflects a severance payment equal to the executive's monthly salary multiplied by the number of months remaining in the term of his employment agreement as of December 31, 2022, plus an additional severance payment equal to the product of 1.0 times the sum of the executive's salary in effect as of the termination. (4) Under the terms of the stock option and RSU award agreements, the awards become fully vested and exercisable upon termination due to death or disability. Also, in accordance with the terms of the award agreements, the equity awards become fully vested and exercisable upon a severance payment equal to the executive's monthly salary multiplied by the number of months remaining in the term of his or her employment agreement as of December 31, 2019 plus an additional $10,000. |
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(2) | Reflects a severance payment equal to the product of 2.99, in the case of Lee R. Gibson, or 2.0, in the case of Julie N. Shamburger and Brian K. McCabe, times the sum (1) of the executive's salary in effect as of the termination, and (2) the greater of the average of the annual bonuses earned by the executive for the two fiscal years in which annual bonuses were paid immediately preceding the year in which the termination occurs, or the executive’s Target Bonus for the year in which the termination occurs. |
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(3) | Reflects the excess of the fair market value of the underlying shares as of December 31, 2019 over the exercise price of all unvested stock options and the fair market value as of December 31, 2019 of unvested RSUs, all of which would accelerate upon the executive's termination of employment under the specified circumstances. |
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(4) | Under the terms of the award agreements, the awards shall become fully vested and exercisable upon termination due to death or disability. Also, in accordance with the terms of the award agreements, the awards shall become fully vested and exercisable upon |
Southside Bancshares, Inc.| 2020 Proxy Statement | 34
change in control, unless the equity award isawards are assumed by the surviving entity, in such event,which case, the equity awards shall vest upon
Southside Bancshares, Inc.| 2023 Proxy Statement | 37
termination of employment without cause or resignation for good reason within two years after the effective date of the change in control. Under the terms of the PSU award agreements, upon termination due to death, disability or retirement, the PSUs become vested on a pro-rata basis (based on the number of months between the grant and and the termination), and assuming achievement of 100% of the target award if the termination occurs in the first half of the performance period, or if during the second half of the performance period, the Company's actual ROATCE ranking relative to the Company's ROATCE Peer Group. Also, the PSUs will become vested on a pro-rata basis upon a change in control, unless the awards are assumed by the surviving entity, in which case the awards will become vested on termination of employment without cause or resignation within two years after the effective date of change in control, in either case assuming achievement of 100% of the target award if the event occurs in the first half of the performance period, or if during the second half of the performance period, the Company's actual ROATCE ranking relative to the Company's ROATCE Peer Group.
(5) Reflects the excess of the fair market value of the underlying shares as of December 31, 2022 over the exercise price of all unvested stock options and the fair market value as of December 31, 2022 of shares underlying unvested RSUs and PSUs (assuming target payout), which would all accelerate upon the executive's termination of employment under the specified circumstances pursuant to the officer's employment agreement.
(6) Mr. Alexander does not have an employment agreement, and as such, his unvested RSUs and PSUs would accelerate and become vested pursuant to the terms of the award agreements, as described in footnote (4) above. Accordingly, none of Mr. Alexander's equity awards would vest upon termination of employment absent a change in control.
Split Dollar Agreement
Under the terms of the split dollar agreementagreements with Lee R. Gibson and Julie N. Shamburger, upon a termination of employment by reason of death, disability (as defined in the split dollar agreement), or retirement at or after age 65, or a termination following a change in control (as defined in the split dollar agreement), payment of the specified death benefits under the split dollar agreement would be triggered. If Mr. Gibson’s or Ms. Shamburger's employment is terminated for Cause (as defined in the split dollar agreement), he or she will forfeit benefits under the split dollar agreement.
The following table quantifies the death benefit payable to the beneficiaries of Mr. Gibson and Ms. Shamburger, pursuant to his or her split dollar agreement in the event his or her employment is terminated due to death while still employed by the Company, or in connection with death after termination from the Company due to termination without cause, retirement after age 65 or a change in control. This assumes the event occurred on December 31, 2019.2022.
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Reason for Termination | | Gibson | | Shamburger |
Death benefit while still employed by the Company at time of death | | $ | 1,710,959 | | | $ | 1,313,309 | |
Death benefit after termination from Company without cause, retirement after age 65, or a change in control | | $ | 1,549,488 | | | $ | 890,000 | |
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|
| | | | | |
Reason for Termination | | Gibson | |
Death benefit while still employed by the Company at time of death | | $ | 1,477,991 |
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Death benefit after termination from Company without cause, retirement after age 65, or a change in control | | $ | 1,330,000 |
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EQUITY COMPENSATION PLAN INFORMATION
The table below provides information as of December 31, 20192022 regarding shares of common stock that may be issued under the Company’s equity compensation plans.
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Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants, and rights (a) | | Weighted-average exercise price of outstanding options, warrants and rights (b) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
Equity compensation plans approved by security holders | | 912,454 | | $33.45 | | 1,092,652 |
Equity compensation plans not approved by security holders | | — | | — | | — |
Total | | 912,454 | | $33.45 | | 1,092,652 |
(a)Reflects stock options, RSUs and PSUs outstanding under the 2017 Incentive Plan and predecessor plans. PSUs are reflected at maximum payout of 150%.
(b)Reflects weighted-average exercise price of 673,011 stock options outstanding.
(c)Reflects shares available for issuance pursuant to the grant of awards (including full-value stock awards) under the 2017 Incentive Plan.
Southside Bancshares, Inc.| 2023 Proxy Statement | 39
|
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Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants, and rights (a) | | Weighted-average exercise price of outstanding options, warrants and rights (b) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
Equity compensation plans approved by security holders | | 1,252,850 | | $31.55 | | 1,307,964 |
Equity compensation plans not approved by security holders | | — | | — | | — |
Total | | 1,252,850 | | $31.55 | | 1,307,964 |
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(a) | Reflects stock options and RSUs outstanding under the 2017 Incentive Plan and predecessor plans.PAY VERSUS PERFORMANCE |
The table below shows total compensation, as set forth in the summary compensation table, and compensation actually paid ("CAP"), calculated in accordance with SEC Pay versus Performance regulations for our PEO and other NEOs, as well as certain performance measures, for the fiscal years ended December 31, 2022, 2021 and 2020.
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Year | | Summary Compensation Table Total for PEO ($)(1) | | Compensation actually paid to PEO ($)(2) | | Average Summary Compensation Table Total for other NEOs ($)(3) | | Average Compensation Actually Paid to other NEOs ($)(2)(3) | | Value of Initial Fixed $100 Investment Based on: | | Net Income ($ in Millions) | | ROATCE %(6) |
TSR(4) | | Peer Group TSR(5) |
2022 | | $ | 1,549,596 | | | $ | 1,476,916 | | | $ | 756,008 | | | $ | 726,766 | | | $ | 108.56 | | | $ | 119.01 | | | $ | 105.0 | | | 18.56 | % |
2021 | | 1,442,701 | | | 1,517,567 | | | 633,441 | | | 721,480 | | | 121.77 | | | 129.55 | | | 113.4 | | | 17.04 | % |
2020 | | 2,654,466 | | | 1,108,641 | | | 1,014,518 | | | 553,073 | | | 87.26 | | | 101.71 | | | 82.2 | | | 13.79 | % |
(1)The Principal Executive Officer ("PEO") is Lee R. Gibson for all periods presented.
(2)The amount reported is calculated in accordance with SEC Pay versus Performance regulations and does not represent compensation received by our NEOs. See the detail of the calculation in the table below.
(3)For 2022 and 2021, the other NEOs are Julie N. Shamburger, Tim Alexander, Brian K. McCabe and T.L. Arnold, Jr. For 2020, the other NEOs are Julie N. Shamburger, Tim Alexander, Brian K. McCabe and Mark Drennan.
(4)Total Shareholder Return ("TSR").
(5)The peer group consists of the same companies included in our Form 10-K for the performance graph required by Item 201(e) of Regulation S-K. The peer group consists of Cullen/Frost Bankers, Inc. (CFR), First Financial Bankshares, Inc.(FFIN), Hilltop Holdings (HTH), Independent Bank Group, Inc. (IBTX), Prosperity Bancshares, Inc. (PB), Texas Capital Bancshares, Inc. (TCBI) and Veritex Holdings, Inc. (VBTX).
(6)The company-selected measure is ROATCE, a non-GAAP measure. In calculating ROATCE, Southside adds back the after tax amortization expense to net income available to common and subtracts average intangible assets for the period from average shareholders’ equity.
The table below shows the calculation and related adjustments for compensation actually paid. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year | | Executive | | Summary Compensation Table Total | | Subtract: Change in Pension Value | | Add: Service Cost and Prior Service Cost (1) | | Subtract: Equity Grants at Grant Date Fair Value | | Add: Equity Awards Granted at Year-End Value (2)(3) | | Add: Change in Value of Unvested Equity Awards (3)(4) | | Add: Change in Value of Vested Equity Awards (3)(5) | | Compensation Actually Paid |
2022 | | PEO | | $ | 1,549,596 | | | $ | — | | | $ | — | | | $ | 271,144 | | | $ | 242,428 | | | $ | (9,250) | | | $ | (34,714) | | | $ | 1,476,916 | |
| Other NEOs | | 756,008 | | | — | | | — | | | 106,333 | | | 95,050 | | | (4,777) | | | (13,182) | | | 726,766 | |
2021 | | PEO | | 1,442,701 | | | 172,927 | | | — | | | 125,187 | | | 139,344 | | | 82,083 | | | 151,553 | | | 1,517,567 | |
| Other NEOs | | 633,441 | | | 3,661 | | | — | | | 46,486 | | | 51,742 | | | 34,621 | | | 51,823 | | | 721,480 | |
2020 | | PEO | | 2,654,466 | | | 1,572,177 | | | 198,992 | | | — | | | — | | | (94,661) | | | (77,979) | | | 1,108,641 | |
| Other NEOs | | 1,014,518 | | | 481,273 | | | 80,415 | | | 3,684 | | | 3,739 | | | (32,719) | | | (27,923) | | | 553,073 | |
(1)Reflects the actuarially determined service cost for services rendered by executives during the reported year (i.e. service cost). We note our Pension Plan was frozen effective December 31, 2020, thus no service cost for 2021 and 2022. Additionally, there was no prior service cost in any of the reported years.
(2)The amount reported reflects equity awards granted during the fiscal year and dividends equivalents accrued during the year of grant, valued as of fiscal year end.
(3)NQSO grant date fair values were calculated using the Black-Scholes option pricing model as of the grant date. We note no NQSOs were granted in any of the years presented. NQSOs have been remeasured as of each measurement date using the
Southside Bancshares, Inc.| 2023 Proxy Statement | 40
stock price as of the measurement date and updated assumptions: expected term, volatility, dividend yield and risk-free rate as of the measurement date. RSU fair values are calculated using the stock price as of the grant date, and stock price was updated for each measurement period to reflect the stock price on such date. PSUs fair values are calculated using the stock price as of the grant date assuming target performance and was updated for each measurement period to reflect the stock price and expected payout levels as of such date.
(4)The amount reported reflects the increase (decrease) in fair value from prior fiscal year end to fiscal year end for the reporting period for equity awards. Dividend equivalents accrued in the year of the period presented are presented at fair value as of year end. Dividend equivalents accrued in prior periods reflect the change in fair value from prior fiscal year end to the fiscal year end for the reporting period.
(5)The amount reported reflects the increase (decrease) in fair value from prior fiscal year end to the vesting date in the reporting period. Dividend equivalents are included. Dividend equivalents accrued in the year of the period presented are presented at fair value as of the vest date. Dividend equivalents accrued in prior periods reflect the change in fair value from prior fiscal year end to the vesting date for the reporting period.
Financial Performance Measures
As discussed in our CD&A, the Committee uses several performance measures throughout compensation programs to align NEO pay with performance. Below are the financial performance measures we believe represent the most important financial measures used to link compensation to company performance for NEOs for 2022. See CD&A for discussion of these measures.
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(b) | Reflects weighted-average exercise price of 1,109,559 stock options outstanding. |
| Financial Performance Measure |
(c)EPS |
Reflects shares available for issuance pursuant to the grant of awards (including full-value stock awards) under the 2017 Incentive Plan.ROATCE |
Loan Growth |
Relationship between Compensation Actually Paid and Performance
The graphs below show the relationship of CAP for our PEO and other NEOs in 2020, 2021 and 2022, to total shareholder return, the Company's net income and the Company's ROATCE.
Southside Bancshares, Inc.| 20202023 Proxy Statement | 3541
Southside Bancshares, Inc.| 2023 Proxy Statement | 42
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PROPOSAL 2 - NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION |
Pursuant to Section 14A of the Exchange Act, we are providing our shareholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our named executive officers. At the 20192022 Annual Meeting of Shareholders, approximately 97.5%93.9% of the shares represented at the meeting in person or by proxy and entitled to vote were voted in support of the Company’s compensation program. At the 2017 Annual Meeting, the Company’s shareholders selected, on a non-binding, advisory basis, an annual vote for the frequency at which the Company should include a Say-on-Pay vote in its proxy statement for shareholder consideration. In light of this result and other factors considered by the Board, the Board determined that the Company will hold Say-on-Pay votes every year until the next required non-binding, advisory vote on the frequency of such votes, which is requiredbeing provided to be held no later thanshareholders at the Company’s 2023 Annual Meeting of Shareholders.(see Proposal 3 below).
Accordingly, the Board is providing shareholders with the opportunity to cast a non-binding advisory vote on the named executive officer compensation program at our 20202023 Annual Meeting. This vote will not be binding on or overrule any decisions by the Board, and will not create or imply any additional fiduciary duty on the part of the Board. However, our Compensation Committee will take into account the outcome of the vote when considering future named executive officer compensation arrangements.
As described in greater detail in our Compensation Discussion and Analysis above, we believe that our executive officer compensation program is structured in a manner that most effectively supports the Company and our business objectives. Our executive officer compensation program is designed to reward long-term and strategic performance, and is substantially tied to our key business objectives and the success of our shareholders. We monitor the various short-term and long-term aspects of our executive officer compensation program, including base salary, annual cash bonus and equity incentives, in comparison to similar programs and practices at comparable companies, so that we may ensure that our executive officer compensation program is within the competitive range of market practices.
The Board invites our shareholders to review carefully the Compensation Discussion and Analysis and the tabular and other disclosures on compensation under Executive Compensation, and cast a vote to approve the Company’s executive compensation programs through the following resolution:
“RESOLVED, that the shareholders approve the compensation paid to the Company’s named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and related narrative discussion.”
The Board recommends a vote FOR the non-binding advisory vote on the compensation of the Company's named executive compensation.officers.
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PROPOSAL 3 - NON-BINDING ADVISORY VOTE ON FREQUENCY OF "SAY ON PAY" VOTE |
Under the Dodd-Frank Act, the Company must conduct a separate non-binding shareholder advisory vote at least every six (6) years to determine whether the Say-on-Pay vote will occur every one (1), two (2) or three (3) years.
The Board is providing the shareholders with the opportunity to cast a non-binding advisory vote on the frequency of the Say-on-Pay at the 2023 Annual Meeting. This vote will not be binding on or overrule any decisions by the Board and will not create or imply any additional fiduciary duty on the part of the Board. However, our Board will take into account the outcome of the vote when considering the frequency of the Say-on-Pay vote in future years.
We believe that holding an advisory vote on executive compensation every year is the most appropriate policy for the Company at this time, and recommend that shareholders vote for future Say-on-Pay every year. The Board believes that holding an annual advisory vote on executive compensation provides the Company with more direct and immediate feedback on its annual compensation program and disclosures.
Although we recognize the potential benefits of having less frequent advisory votes on executive compensation (including allowing the Company additional time to conduct a more detailed review of its pay practices in response to the outcome of shareholder advisory votes), we recognize that the widely adopted standard, both among peer companies as well as outside our industry, is to hold Say-on-Pay votes annually. We also acknowledge current shareholder expectations regarding having the opportunity to express their views on the Company’s compensation of its executive officers on an annual basis. In light of investor expectations and prevailing market practice, the Board of Directors recommends that the advisory vote on executive compensation occur every year.
The Board recommends shareholders vote for “1 Year” on the proposal to recommend the frequency of future Say-on-Pay votes.
Southside Bancshares, Inc.| 2023 Proxy Statement | 43
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee, during the fiscal year ended December 31, 2019,2022, are a current or former officer or employee of the Company.
During the fiscal year ended December 31, 2019:2022:
•No executive officer of the Company served as a member of the compensation committee or other board committee performing similar functions (or on the board of directors of any entity without such a committee) of another entity, one of whose executive officers served on the Compensation Committee of the Company.
•No executive officer of the Company served on the board of directors of another entity, one of whose executive officers served on the Compensation Committee of the Company.
•No executive officer of the Company served as a member of the compensation committee or other board committee performing similar functions (or on the board of directors of any entity without such a committee) of another entity, one of whose executive officers served as a director of the Company.
For information concerning transactions by the Company and Southside Bank with certain members of the board of directors of Southside Bank, please see “Transactions with Directors, Officers and Associates.”
Southside Bancshares, Inc.| 2023 Proxy Statement | 44
TRANSACTIONS WITH DIRECTORS, OFFICERS AND ASSOCIATES
The Board of Directors reviews and discusses each potential transaction between the Company and a director, executive officer, significant shareholder or any of their immediate family members and votes to approve or disapprove such transactions. Directors or executive officers who are interestedhave an interest in a particular transaction do not vote on such transaction. The Company’s Board has adopted a Conflict of Interest Policy that addresses transactions with related persons.
Certain of the executive officers and directors of the Company and Southside Bank (and their associates) have been customers of Southside Bank and have been granted loans in the ordinary course of business. Southside Bank is subject to Federal Reserve Regulation O, which governs loans to directors, executive officers and certain shareholders of banks and bank holding companies. All loans or other extensions of credit made by Southside Bank to executive officers and directors of the Company and Southside Bank
Southside Bancshares, Inc.| 2020 Proxy Statement | 36
were made in the ordinary course of business on substantially the same terms, including interest rates, maturities and collateral, as those prevailing at the time for comparable transactions with persons not related to the Company or Southside Bank and did not involve more than the normal risk of collection or present other features that are unfavorable to Southside Bank. Prior approval by a majority of the Board of Directors, with the interested party abstaining, must be obtained for any loan to a director or a director’s related interest(s) which, when aggregated with all loans to the director and/or to that director’s related interest(s) exceed 10% of Southside Bank’s capital plus unimpaired surplus. Prior approval requirements for individual advances for the Board of Directors will be satisfied by annual Board approval of a line of credit for a director’s personal borrowing and similar approval of a line of credit for director-owned or controlled business borrowing. All advances made pursuant to an approved line of credit within 12 months of the date of approval shall be treated as approved. Loans to persons employed by Southside Bank who are considered under Regulations of the Federal Reserve Board to be executive officers shall be subject to prior approval by the Board of Directors. The Company expects ongoing transactions with its executive officers and directors as well as directors and officers of Southside Bank.
Richard K. Gibson, son of Lee R. Gibson, is employed by Southside Bank and received compensation of $263,820$283,955 in 2019. Joe C. (Trey) Denman, III, brother-in-law2022. Toni Brooks, sister of M. Richard Warner, who served as a director until the 2019 Annual Meeting,T. L. Arnold, Jr., is employed by Southside Bank and received compensation of $125,891 in 2019 of $503,273,2022. The Company has insurance policies through Bosworth & Associates, which includes a retention payment of $33,000, pursuant to Mr. Denman's Key Employee Retention Agreement.is owned by director Michael Bosworth. In addition, George H. (Trey) Henderson, III, a member of the Company’s Board, owns a 20% interest in HFive Partners, Ltd., together2022, premiums paid for our policies with Bosworth & Associates totaled $1,079,946 and equally with his four siblings, and exercises managerial authority over the partnership. HFive Partners, Ltd. owns 9.9% of Coss Partners, Ltd. First Bank & Trust East Texas, which the Company acquired on November 30, 2017, entered into a loan agreement with Coss Partners, Ltd. in 2016. The loan was made in the ordinary course of business and on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to First Bank & Trust East Texas. At the time this loan was made, the loan did not involve more than the normal risk of collectability. Mr. Henderson provided a limited personal guaranty of approximately 4.0% of the principal balance of the loan. The loan wascommissions paid in full in August 2019.
totaled $148,317.
Southside Bancshares, Inc.| 20202023 Proxy Statement | 3745
DELINQUENT SECTION 16(a) REPORTS
Section 16(a) of the Exchange Act requires the Company’s executive officers and directors, and any persons who own more than 10% of the Company’s common stock, to file reports of initial ownership of the Company’s common stock and subsequent changes in that ownership with the SEC. Based solely upon a review of Forms 3, 4 and 5 and any amendments thereto filed with the SEC, or written representations from certain reporting persons that no Form 5’s were required, the Company believes that during fiscal year 20192022 all Section 16(a) filing requirements were complied with on a timely basis except that:
CLO •Tim Alexander, Chief Lending Officer, filed a late Form 4 on February 16, 2022 to report the acquisition of 1,611 shares granted on February 3, 2022.
•T. L. Arnold, Jr., Chief Credit Officer, filed a late Form 4 on February 16, 2022 to report the acquisition of 1,003 shares granted on February 3, 2022.
•Suni Davis, Chief Risk Officer, filed a late Form 4 on February 16, 2022 to report the acquisition of 666 shares granted on February 3, 2022.
•Lee R. Gibson, Chief Executive Officer, filed a late Form 4 on February 16, 2022 to report the acquisition of 3,248 shares granted on February 3, 2022.
•Brian K. McCabe, Chief Executive Officer, filed a late Form 4 on February 16, 2022 to report the acquisition of 1,042 shares granted on February 3, 2022.
•Julie N. Shamburger, Chief Financial Officer, filed a late Form 4 on February 16, 2022 to report the acquisition of 1,439 shares granted on February 3, 2022.
•H. J. Shands, III, Director, filed a late Form 4 on March 15, 20197, 2022 to report the acquisitionwithholding of 43178 shares received pursuant to dividend equivalent rights attached to restricted stock units held by the reporting personsatisfy tax withholding requirements for a RSU vesting on March 7, 2019.
Regional President, Central Texas, Jim Alfred filed a late Form 4 on March 15, 2019 to report the acquisition of 30 shares received pursuant to dividend equivalent rights attached to restricted stock units held by the reporting person on March 7, 2019.
Former officer Earl W. (Bill) Clawater, III, filed a late Form 4 on March 15, 2019 to report the acquisition of 18 shares received pursuant to dividend equivalent rights attached to restricted stock units held by the reporting person on March 7, 2019.
CRO Suni Davis filed a late Form 4 on March 15, 2019 to report the acquisition of 9 shares received pursuant to dividend equivalent rights attached to restricted stock units held by the reporting person on March 7, 2019.
Regional President, North Texas, Mark Drennan filed a late Form 4 on March 15, 2019 to report the acquisition of 27 shares received pursuant to dividend equivalent rights attached to restricted stock units held by the reporting person on March 7, 2019.
CEO and Director Lee R. Gibson filed a late Form 4 on March 15, 2019 to report the acquisition of 54 shares received pursuant to dividend equivalent rights attached to restricted stock units held by the reporting person on March 7, 2019.
COO Brian McCabe filed a late Form 4 on March 15, 2019 to report the acquisition of 18 shares received pursuant to dividend equivalent rights attached to restricted stock units held by the reporting person on March 7, 2019.
Officer Emily S. Moore filed a late Form 4 on March 15, 2019 to report the acquisition of 4 shares received pursuant to dividend equivalent rights attached to restricted stock units held by the reporting person on March 7, 2019.
CFO Julie N. Shamburger filed a late Form 4 on March 15, 2019 to report the acquisition of 23 shares received pursuant to dividend equivalent rights attached to restricted stock units held by the reporting person on March 7, 2019.
Regional President, East Texas, and Director H. J. Shands, III filed a late Form 4 on March 15, 2019 to report the acquisition of 30 shares received pursuant to dividend equivalent rights attached to restricted stock units held by the reporting person on March 7, 2019.
January 29, 2022.
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AUDIT COMMITTEE REPORT
The following report of the Audit Committee does not constitute “soliciting material” and should not be deemed to be “filed” with the SEC or incorporated by reference into any other filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this report by reference in any of those filings.
The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. The Company’s management has the primary responsibility for the financial statements and for maintaining effective systems of internal control based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed the audited consolidated financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 20192022 with Company management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
The Audit Committee discussed with the independent registered certified public accounting firm, EY, which is responsible for expressing an opinion on the conformity of those audited consolidated financial statements with U.S. generally accepted accounting principles and an audit on the effectiveness of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (the “PCAOB”) (United States), its judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee by the PCAOB, the rules of the SEC, and other applicable regulations.
The Audit Committee has received the written disclosures from EY regarding the auditors' independence required by the PCAOB.
The Audit Committee discussed with EY the overall scope and plans for their audit. The Audit Committee met with EY with and without management present, to discuss the results of their financial statement audit, their evaluations of the Company’s internal control and the overall quality of the Company’s financial reporting.
Based on the Audit Committee’s review and discussions referred to above, the Audit Committee recommended to the Company’s Board of Directors that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20192022 for filing with the SEC.
Submitted by the Audit Committee of the Board.
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Melvin B. Lovelady,Tony K. Morgan, CPA, Chairman | William Sheehy |
S. Elaine Anderson, CPA | Preston L. Smith |
Tony K. Morgan, CPA | |
Southside Bancshares, Inc.| 20202023 Proxy Statement | 3947
INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM
EY served as the Company’s independent registered certified public accounting firm for the year ended December 31, 20192022 and has been selected by the Audit Committee as the Company's independent registered certified public accounting firm for the year ended December 31, 2020.2023.
Independent Registered Certified Public Accounting Firm Fees
The following table sets forth aggregate fees incurred by the Company for fiscal years ended December 31, 20192022 and 20182021 to EY, the Company’s independent registered certified public accounting firm. All fees were pre-approved by the Audit Committee.
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| | YEARS ENDED |
| | 2022 | | 2021 |
Audit Fees(1) | | $ | 1,152,900 | | | $ | 1,037,650 | |
Audit Related Fees(2) | | 57,500 | | | 55,000 | |
Tax Fees(3) | | 76,927 | | | 69,989 | |
All Other Fees(4) | | 156,756 | | | 2,024 | |
Total Fees | | $ | 1,444,083 | | | $ | 1,164,663 | |
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| | YEARS ENDED |
| | 2019 | | 2018 |
Audit Fees | | $ | 1,003,254 |
| | $ | 792,750 |
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Audit Related Fees | | 36,000 |
| | 51,810 |
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Tax Fees | | 133,052 |
| | 320,602 |
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All Other Fees | | 2,165 |
| | 2,165 |
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Total Fees | | $ | 1,174,471 |
| | $ | 1,167,327 |
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(1)Audit fees consist primarily of fees for services provided in connection with the annual audit of our financial statements and internal control over financial reporting, reviews of quarterly financial statements and other documents filed with the SEC, compliance engagements and implementation of accounting guidance.(2)Audit related fees consist of fees for the audit of our 401(k) Plan.
(3)Tax fees consist of fees primarily related to the performance of tax compliance services, including the preparation, review and filing of tax returns and consulting services for various matters.
(4)All other fees consist of technology related charges, as well as data advisory services.
Auditor Fees Pre-Approval Policy
The Audit Committee has a formal policy concerning approval of audit and non-audit services to be provided by the independent registered certified public accounting firm to the Company, currently EY. The Policypolicy requires that all services EY may provide to the Company, including audit services and permitted audit-related and non-audit services, be pre-approved by the Audit Committee. The Audit Committee pre-approved all audit, audit-related and non-audit services provided by EY during 2019.2022.
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PROPOSAL 34 - RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM |
The Audit Committee of the Board has selected EY to serve as the Company’s independent registered certified public accounting firm for the year ending December 31, 2020.2023. EY has served as the Company’s independent registered certified public accounting firm since 2012. We have been advised by EY that neither it nor any of its members had any financial interest, direct or indirect, in us nor has it had any connection with us or any of our subsidiaries in any capacity other than as independent auditors. The Board recommends that you vote for the ratification of the selection of EY. Shareholder ratification of the selection of EY as our independent registered certified public accounting firm is not required by our certificate of formation, bylaws or otherwise. Nevertheless, the Board is submitting this matter to the shareholders as a matter of good corporate practice. If our shareholders do not ratify the appointment of EY, then the appointment of an independent registered certified public accounting firm will be reconsidered by our Audit Committee. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered certified public accounting firm at any time during the year if it is determined that such a change would be in the best interests of the Company and its shareholders. Representatives of EY are expected to be present virtuallyin attendance at the Annual Meeting and will have the opportunity to make a statement if they desire to do so, and to respond to appropriate questions.
The Board of Directors recommends a vote FOR the ratification of Ernst & Young LLP as the Company’s independent registered certified public accounting firm for the year 2020.ending December 31, 2023.
ANNUAL REPORT TO SHAREHOLDERS
The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019,2022, accompanies this Proxy Statement. The Annual Report does not constitute outside solicitation materials. Additional copies of Form 10-K are available at no expense; exhibits to Form 10-K are available for a copying expense to any shareholder by sending a written request to: Southside Bancshares, Inc., 1201 South Beckham Avenue, Tyler, Texas 75701, Attn: Investor Relations. The Company’s public filings with the SEC may also be obtained free of charge aton the Company’s website:website at https://investors.southside.com, under the topic Filings and Financials then Documents.southside.com/filings.
Southside Bancshares, Inc.| 2023 Proxy Statement | 48
SHAREHOLDER PROPOSALS
SEC rules establish the eligibility requirements and the procedures that must be followed for a shareholder’s proposal to be included in the Board’s proxy solicitation materials. Under those rules, any shareholder wishing to have a proposal considered for inclusion in the Board’s proxy solicitation materials for the 20212024 Annual Meeting must set forth his or her proposal in writing and file it with the Secretary of the Company on or before November 26, 2020.30, 2023. Proposals must comply with all applicable SEC rules. The Board will review any proposals received by that date and will determine whether applicable requirements have been met for including the proposal in the 20212024 proxy solicitation materials.
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In addition, the Company’s bylaws establish advance notice procedures that must be followed for a shareholder proposal to be presented at an Annual Meeting but not included in the Board’s proxy solicitation materials. Any shareholder wishing to have a proposal considered for the 20212024 Annual Meeting, but who does not submit the proposal for inclusion in the Board’s proxy statement, assuming that the 20212024 Annual Meeting occurs on a date that is not more than 30 days before or 60 days after the anniversary of the Annual Meeting, must submit the proposal as set forth above not earlier than January 13, 202118, 2024 and no later than February 13, 2021.17, 2024.
For any proposal that is not submitted for inclusion in next year’s proxy solicitation materials, but is submitted for presentation at the 20212024 Annual Meeting, SEC rules permit the persons named as proxies in the proxy solicitation materials to vote proxies in their discretion if: (1) the proposal is received before February 13, 202117, 2024 and we advise shareholders in the 20212024 proxy solicitation materials about the nature of the matter and how managementthe Board intends to vote on such matter, or (2) the proposal is not received before February 13, 2021.17, 2024.
In addition to satisfying the foregoing requirements with respect to director nominations, to comply with the SEC's universal proxy card rules, shareholders who intend to solicit proxies in support of director nominees other than the Board's nominees in accordance with Rule 14a-19 under the Exchange Act must provide notice that sets forth the information required by Rule 14a-19 no later than March 18, 2024.
HOUSEHOLDING
The Securities and Exchange CommissionSEC rules permit us, with your permission, to send a single set of proxy statements and annual reports to any household at which two or more shareholders reside if we believe that they are members of the same family. Each shareholder will continue to receive a separate proxy card. This procedure, known as “householding,” reduces the volume of the duplicate information youhouseholds receive, while also reducing our expenses and helps to reduce our expenses.associated environmental impact. In order to take advantage of this opportunity, we have delivered only one proxy statement to multiple shareholders who share an address, unless we received contrary instructions from the impacted shareholders prior to the mailing date. We will deliver a separate copy of the proxy statement, as requested, to any shareholder at a shared address to which a single copy of that document was delivered. If you prefer to receive separate copies of a proxy statement, either now or in the future, you can request a separate copy of the proxy statement by calling us at (877) 639-3511 or by writing to us at any time at the following address: Southside Bancshares, Inc., 1201 South Beckham Avenue, Tyler, Texas 75701, Attn: Investor Relations.
GENERAL
The Board does not know of any other business, other than that set forth above, to be transacted at the Annual Meeting. However, if any other matters requiring a vote of the shareholders properly come before the Annual Meeting, the persons designated as Proxies will vote the shares of common stock represented by the proxies in accordance with their best judgment on such matters. If a shareholder specifies a different choice on the proxy, those shares of common stock will be voted in accordance with the specification so made.
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| | | VOTE BY INTERNET | |
| | | Before the Meeting - | Go to www.proxyvote.com |
SOUTHSIDE BANCSHARES, INC.
ATTN: LINDSEY BAILES
1201 S. BECKHAM AVE
TYLER, TX 75701-3320
| | | Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on May 12, 2020. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. |
| | | Before the Meeting - | Go to www.virtualshareholdermeeting.com/SBSI2020 |
| | | You may attend the meeting via the Internet and vote during the meeting. You will be required to enter your control number, identified below, to enter the meeting. |
| | | VOTE BY PHONE - 1-800-690-6903 | |
| | | Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on May 12, 2020. Have your proxy card in hand when you call and then follow the instructions. |
| | | VOTE BY MAIL | | |
| | | Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to: Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
| | | | | | | | D07485-Z76823 | KEEP THIS PORTION FOR YOUR RECORDS |
| | | | | | | | | | DETACH AND RETURN THIS PORTION ONLY |
| | THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
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SOUTHSIDE BANCSHARES, INC. | | | For All | Withhold All | For All Except | | To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. |
1. | Election of Directors | | | | o | o | o | |
| Nominees with Terms Expiring 2023: | | | | | | | | |
| 01) | Lawrence Anderson, M.D. | | 05) | William Sheehy | | | | | | | | |
| 02) | Melvin B. Lovelady, CPA | | 06) | Preston L. Smith | | | | | | | | |
| 03) | John F. Sammons, Jr. | | | | | | | | | | | |
| 04) | H. J. Shands, III | | | | | | | | | | | |
| Nominee with Term Expiring 2022: | | | | | | | | |
| 07) | Shannon Dacus | | | | | | | | | | | |
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The Board of Directors recommends you vote FOR the following proposals: | | For | Against | Abstain |
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2. | Approve a non-binding advisory vote on the compensation of the Company's named executive officers. | | | o | o | o |
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3. | Ratify the appointment by our Audit Committee of Ernst & Young LLP to serve as the independent registered public accounting firm for the Company for the year ended December 31, 2020.
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The shares represented by this proxy when properly executed will be voted in the manner directed herein by the undersigned Shareholder(s). If no direction is made, this proxy will be voted FOR items 1, 2 and 3. If any other matters properly come before the meeting, the persons named in this proxy will vote in their discretion. |
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For address changes and/or comments, please check this box and write them on the back where indicated. | | o | | | | |
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Please sign your name exactly as it appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please add your title as such. When signing as joint tenants, all parties in the joint tenancy must sign. If a signer is a corporation, please sign in full corporate name by duly authorized officer. |
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Signature [PLEASE SIGN WITHIN BOX] | Date | | | | Signature (Joint Owners) | Date |
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: |
The Notice and Proxy Statement, Annual Report and Form 10-K are available at www.proxyvote.com. |
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| | | | D07486-Z76823 |
| SOUTHSIDE BANCSHARES, INC. | |
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS |
| 2020 ANNUAL MEETING OF SHAREHOLDERS | |
| May 13, 2020 | |
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Due to the emerging public health concerns related to the novel coronavirus (COVID-19) pandemic, the Annual Meeting of Shareholders will be a virtual meeting held online at www.virtualshareholdermeeting.com/SBSI2020. |
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The shareholder(s) hereby appoint(s) S. Elaine Anderson, CPA, Michael J. Bosworth, Herbert C. Buie, Patricia A. Callan, John R. (Bob) Garrett, George H. (Trey) Henderson, III, Tony K. Morgan, CPA and Donald W. Thedford, or any of them, as proxies, each with the power to appoint his/her substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of Southside Bancshares, Inc. that the shareholder(s) is/are entitled to vote at the Annual Meeting of Shareholders to be held on Wednesday, May 13, 2020, 11:30 a.m. central time, at the virtual meeting, and any adjournment or postponement thereof. |
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THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS AND FOR PROPOSALS 2 AND 3. |
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PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE |
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| Address Changes/Comments: | | |
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| (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) | |
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| CONTINUED AND TO BE SIGNED ON REVERSE SIDE | |