UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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| o | Soliciting Material under §240.14a-12 |
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| Veritex Holdings, Inc. | | | | |
| (Name of Registrant as Specified In Its Charter) | | | | |
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Veritex Holdings, Inc.
8214 Westchester Drive, Suite 800
Dallas, Texas 75225
(972) 349-6200
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 19, 2020
NOTICE IS HEREBY GIVEN that the 20202022 annual meeting of shareholders (the “Annual Meeting”) of Veritex Holdings, Inc. (the “Company”) will be held as follows:
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TIMEDATE AND DATETIME: | 3:30 p.m.Tuesday, May 17, 2022, at 10:00 a.m., Central Time
Tuesday, May 19, 2020
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PLACELOCATION: | 8214 Westchester Drive, Suite 735
Dallas, Texas 75225
This year, a live webcast of the Annual Meeting will be accessible over the internet at https://onlinexperiences.com/Launch/QReg/ShowUUID=14364ABD-D97F-4A42-B775-C2C2C13CB697, where you will be able to listen to the meeting live, submit questions and vote. Registration to the webcast is required to join.
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ITEMS OF BUSINESSBUSINESS: | 1.Election of thirteen (13) directors of the Company; 2.Approval of the Company's 2022 Amended and Restated Omnibus Incentive Plan; 3.Non-binding advisoryadvisory vote on the compensation of the Company’s named executive officers; 3.4.Ratification of the appointment of Grant Thornton LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2020;2022; and
4.5.Transaction of such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.
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RECORD DATEDATE: | Only shareholders of record of Company common stock at the close of business on March 31, 2020April 5, 2022 are entitled to receive notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof. |
PROXY VOTING | It is important that your shares be represented and voted at the Annual Meeting. For instructions on voting, please refer to the enclosed proxy card or voting information form. A list of shareholders entitled to vote at the Annual Meeting will be available for examination by any shareholder at the principal place of business of the Company during ordinary business hours for a period of 10 days prior to the Annual Meeting. This list also will be available for inspection to shareholders who attend the Annual Meeting. |
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| | By Order of the Board of Directors, |
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| | C. Malcolm Holland, III Chairman of the Board, Chief Executive Officer and President |
| | Dallas, Texas April 17, 202018, 2022 |
Important Notice Regarding the Availability of Proxy Materials for the 2020 Annual Meeting of Shareholders to Be Held on May 19, 2020: The proxy statement, this accompanying notice of the Annual Meeting, a form of proxy card and our 2019 annual report to shareholders are available at https://ir.veritexbank.com/2020-annual-meeting-shareholders.To obtain directions to attend the Annual Meeting in person, please contact us at (972) 349-6132.
Your Vote is Important
Whether or not you plan to attend the Annual Meeting, please read the proxy statement in its entirety and then vote by completing, signing and dating the enclosed proxy card and promptly mailing it in the enclosed envelope, or vote over the Internet pursuant to the instructions provided in the enclosed proxy card. You may revoke your proxy in the manner described in the proxy statement at any time before it is exercised. See “About the Annual Meeting—May I change my vote after I have submitted a proxy?” for more information on how to vote your shares or revoke your proxy. | | | | | | | | | | | | | | |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS for the 2022 Annual Meeting of Shareholders to be held on May 17, 2022:
The Veritex Holdings, Inc. 2022 Notice of Annual Meeting of Shareholders, the accompanying proxy statement, the 2021 annual report (including the Company's Annual Report on Form 10-K) and other proxy materials are available at https://ir.veritexbank.com/2022-annual-meeting-shareholders. |
Your vote is important! You are encouraged to vote as soon as possible. Whether or not you plan to attend the meeting, please read the proxy statement in its entirety and then vote by completing, signing and dating the enclosed proxy card and promptly mailing it in the enclosed envelope. For your convenience, you may also vote via the Internet or by telephone per the instructions on the proxy card. Enrolling in electronic delivery reduces Veritex's printing and mailing expenses and environmental impact. Submitting your proxy by one of these methods will ensure that your shares are represented at the Annual Meeting. |
TABLE OF CONTENTS
VERITEX HOLDINGS, INC.
8214 Westchester Drive, Suite 800
Dallas, Texas 75225
PROXY STATEMENT FOR
2020 2022 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 19, 202017, 2022
Unless the context otherwise requires, references in this proxy statement to (a) “we,” “us,” “our,” “our company,” the “Company” or “Veritex” refer to Veritex Holdings, Inc., a Texas corporation, and its consolidated subsidiaries as a whole; references to(b) the “Bank” refer to Veritex Community Bank, a wholly owned subsidiary of the Company. In addition, unless the context otherwise requires, references toCompany; and (c) “shareholders” are to the holders of our common stock, par value $0.01 per share (the “common stock”).
This proxy statement is being furnished in connection with the solicitation of proxies by the Board of Directors of the Company (the “Board”) for use at the 20202022 annual meeting of shareholders of the Company to be held on Tuesday, May 17, 2022, at 10:00 a.m., Central Time, at 8214 Westchester Drive, Suite 735, Dallas, Texas 75225 and any adjournment or postponement thereof (the “Annual Meeting”) for the purposes set forth in this proxy statement and the accompanying notice of the Annual Meeting. The Annual Meeting will be held as a “hybrid” meeting on Tuesday, May 19, 2020, at 3:30 p.m., Central Time, with a physical location at 8214 Westchester Drive, Suite 735, Dallas, Texas 75225. Simultaneously, the Annual Meeting willcan be conductedaccessed via live webcast at https://onlinexperiences.com/Launch/QReg/ShowUUID=14364ABD-D97F-4A42-B775-C2C2C13CB697.teleconference by dialing into (877) 703-9880, conference ID 5998479. Shareholders attendingusing the dial-in number to attend the Annual Meeting via live webcast will be able to listen to the meeting live, submit questions and vote. [Please note that shareholders using the dial-in number for the listen-only telephonic conference callteleconference will be able to listen to the meeting live but will not be able to vote or submit questions.]
We intend Even if you plan to hold ourparticipate in the Annual Meeting, in person at, and broadcast the meeting from, 8214 Westchester Drive, Suite 735, Dallas, Texas 75225. However, we are actively monitoring the outbreak of the novel coronavirus (COVID-19) and are sensitive to the public health and travel concerns our shareholders may have and the protocols that federal, state, and local governments may continue to impose. In the event it is not possible or advisable to hold our Annual Meeting at 8214 Westchester Drive, Suite 735, Dallas, Texas 75225, we will conduct our Annual Meeting solely by means of remote communication via https://onlinexperiences.com/Launch/QReg/ShowUUID=14364ABD-D97F-4A42-B775-C2C2C13CB697, and make an announcement to that effect as promptly as practicable. Please monitor our website at www.veritexbank.comfor updated information. If you are planning to attend our Annual Meeting in person, please check the website 10 days prior to the meeting date. As always, we encourageurge you to votesubmit your proxy in advance to ensure your shares prior to our Annual Meeting.are represented.
This proxy statement, the accompanying notice of the Annual Meeting, the 20192021 annual report to shareholders (including the Company's annual report on Form 10-K) and the proxy card (collectively, the “proxy materials”) are first being sent on or about April 17, 202018, 2022 to shareholders of record entitled to vote at the Annual Meeting at theMeeting. Our Board of Directors has fixed close of business on March 31, 2020.April 5, 2022 as the record date. You should carefully read this entirethe proxy statement carefullymaterials in their entirety before voting.
Important Notice Regarding the Availability of Proxy Materials for the 20202022 Annual Meeting of Shareholders to Be Held on May 19, 202017, 2022
ThisThe proxy statement and the Company’s 2019 annual report to shareholdersmaterials are available at https://ir.veritexbank.com/2020-annual-meeting-shareholders2022-annual-meeting-shareholders. We encourageencourage you to access and review all of the information in the proxy materials before voting.
ABOUT THE ANNUAL MEETING
When and where will the Annual Meeting be held?
The Annual Meeting is scheduled to take place at 3:30 p.m.10:00 a.m., Central Time, on Tuesday, May 19, 2020,17, 2022, at 8214 Westchester Drive, Suite 735, Dallas, Texas 75225. Simultaneously, the Annual Meeting willcan be conductedaccessed via live webcast at https://onlinexperiences.com/Launch/QReg/ShowUUID=14364ABD-D97F-4A42-B775-C2C2C13CB697.teleconference by dialing into (877) 703-9880, conference ID 5998479. Shareholders attendingusing the dial-in number to attend the Annual Meeting via live webcastteleconference will be able to listen to the meeting live but will not be able to vote or submit questions and vote.questions.
What is the purpose of the Annual Meeting?
At the Annual Meeting, shareholders will be asked to vote on the following proposals:
•Proposal 1. Election of thirteen (13) directors of the Company;
•Proposal 2. Approval of the Company’s 2022 Amended and Restated Omnibus Incentive Plan;
•Proposal 3. Non-binding advisory vote on the compensation of the Company’s named executive officers; and
•Proposal 3.4. Ratification of the appointment of Grant Thornton LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2020.2022.
Shareholders also will transact any other business that may properly come before the Annual Meeting or any adjournment or postponement thereof. Members of our management team will be present at the Annual Meeting.
Who are the nominees for directors?
The following thirteen persons have been nominated for election as directors:
C. Malcolm Holland, III
Arcilia Acosta
Pat S. Bolin
April Box
Blake Bozman
William D. Ellis
William E. Fallon
Ned N. Fleming, III
Mark C. Griege
Gordon Huddleston
Steven D. Lerner
Manuel J. Mehos
Gregory B. Morrison
John T. Sughrue
Who is entitled to vote at the Annual Meeting?
The holders of record of outstanding common stock at the close of business on March 31, 2020,April 5, 2022, which is the date that the Board has fixed as the record date for the Annual Meeting (the “record date”), are entitled to vote at the Annual Meeting. Each holder of record of our outstanding common stock on the record date will be entitled to one vote for each share of common stock registered in such holder’s name on each matter to be voted upon at the Annual Meeting. On the record date 49,557,364 shares, 53,917,321 shares of common stock were outstanding.
Why will the Annual Meeting be accessible via live webcast [and telephonically]?
We are actively monitoring the outbreak of the novel coronavirus (COVID-19) and are sensitive to the public health and travel concerns our shareholders may have and the protocols that federal, state, and local governments may continue to impose. We are hopeful that making attendance at the Annual Meeting possible via live webcast [and telephonically] will encourage continued shareholder participation and enhance our ability to communicate with shareholders notwithstanding these events.
How can I attend the Annual Meeting via live webcast?
If you plan to attend the Annual Meeting through live webcast at https://onlinexperiences.com/Launch/QReg/ShowUUID=14364ABD-D97F-4A42-B775-C2C2C13CB697, please use your 16-digit control number provided on your proxy card, voting instruction form or notice to enter the live webcast of the Annual Meeting. Instructions on how to attend and participate via the internet webcast, including how to demonstrate proof of common stock ownership, are posted a thttps://onlinexperiences.com/Launch/QReg/ShowUUID=14364ABD-D97F-4A42-B775-C2C2C13CB697.
How do I vote?
You may vote your shares of common stock either in person at the Annual Meeting or by proxy. The process for voting your shares depends on how your shares are held, as described below.
Shareholders of Record: Shares Registered in Your Name
If you are a shareholder of record on the record date for the Annual Meeting, you may vote by proxy or you may attend the Annual Meeting and vote in person. If you are a shareholder of record and want to vote your shares by proxy, you have two ways to vote:
•By Mail: Indicate on the proxy card(s) applicable to your common stock how you want to vote and sign, date and mail your proxy card(s) in the enclosed pre-addressed postage-paid envelope as soon as possible to ensure that it will be received in advance of the Annual Meeting.
•Over the Internet: Visit the website www.cstproxyvote.com. Have your proxy card in hand when you access the website. Enter your control number from your proxy card and follow the instructions for Internet voting on that website.
Please refer to the specific instructions set forth in your proxy card for additional information on how to vote. Voting your shares by proxy will enable your shares of common stock to be represented and voted at the Annual Meeting if you do not attend the Annual Meeting and vote your shares in person or via live webcast.person.
We must receive your proxy card by mail by no later than the time the polls close for voting at the Annual Meeting for your vote to be counted at the Annual Meeting. Please note that Internet voting will close at 10:59 p.m., Central Time, on May 18, 2020.16, 2022.
Beneficial Owners: Shares Registered in the Name of a Broker or Bank
If you hold your shares in “street name,” your bank, broker or other nominee should provide you with a voting instruction card and our proxy materials. By completing the voting instruction card, you may direct your nominee how to vote your shares. If you complete the voting instruction card but do not provide voting instructions with respect to one or more proposals, then your broker will be unable to vote your shares with respect to each proposal as to which you provide no voting instructions, except that your broker has the discretionary authority to vote your shares with respect to the ratification of the appointment of Grant Thornton LLP as our independent registered public accountingaccounting firm (Proposal 3)4). If your sharesshares of common stock are held in “street name,” your ability to vote over the Internet depends on your broker’s voting process. You should follow the instructions on the voting instruction card provided to you by your bank, broker or other nominee.
To vote the shares that you hold in “street name” in person at the Annual Meeting, you must bring a legal proxy from your broker, bank or other nominee (i) confirming that you were the beneficial owner of those shares as of the close of business on the record date, (ii) stating the number of shares of which you were the beneficial owner that were held for your benefit on the record date by that broker, bank or other nominee and (iii) appointing you as the record holder’s proxy to vote the shares covered by that proxy at the Annual Meeting. If you fail to bring a nominee-issued proxy to the Annual Meeting, you will not be able to vote your nominee-held shares in person at the Annual Meeting.
To vote the shares that you hold in “street name” via live webcast at the Annual Meeting, please follow the instructions at https://onlinexperiences.com/Launch/QReg/ShowUUID=14364ABD-D97F-4A42-B775-C2C2C13CB697. If you plan to vote via live webcast, you will need the 16-digit control number provided on your proxy card, voting instruction form or notice.
May I vote my shares at the Annual Meeting telephonically?
No. Those using the dial-in number to access the listen-only telephonic conference call will not be able to vote or submit questions. We encourage all shareholders to vote their shares in advance of the Annual Meeting by signing and returning their proxy cards to us indicating how they wish to vote.
What is the difference between a shareholder of record and a “street name” holder?
If your shares are registered directly in your name with Continental Stock Transfer & Trust Company, our stock transfer agent, you are considered the shareholder of record with respect to those shares. Our proxy materials are being sent directly to you by Continental Stock Transfer & Trust Company at our request.
If your shares are held in a brokerage account or by a bank or other nominee, the nominee is considered the record holder of those shares. You are considered the beneficial owner of these shares, and your shares are held in “street name.” Our proxy materials are being forwarded to you by your nominee along with a voting instruction card. As the beneficial owner, you have the right to direct your nominee how to vote your shares by using the voting instructions card.
What constitutes a quorum for the Annual Meeting?
The holders of a majority of the stock issued and outstanding and entitled to vote at the Annual Meeting present in person, by participation through https://onlinexperiences.com/Launch/QReg/ShowUUID=14364ABD-D97F-4A42-B775-C2C2C13CB697 or represented by proxy, shall constitute a quorum for the transaction of business. On the record date, 49,557,36453,917,321 shares of commoncommon stock were outstanding.
What is a broker non-vote?
A broker non-vote occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power with respect to that proposal and has not received voting instructions from the beneficial owner. Your broker has discretionary authority to vote your shares with respect to the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm (Proposal 3)4). In the absence of specific instructions from you, your broker does not have discretionary authority to vote your shares with respect to anyany other proposal.
What should I do if I receive more than one set of voting materials?
You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. Similarly, if you are a shareholder of record and hold shares in a brokerage account, you will receive a proxy card for shares held in your name and a voting instruction card for shares held in “street name.” Please complete, sign, date and return each proxy card and voting instruction card that you receive to ensure that all your shares are voted.
What are the Board’s recommendations on how I should vote my shares?
The Board recommends that you vote your shares as follows:
Proposal 1—FOR the election of all of the nominees for director;
Proposal 2—FOR the approval of our 2022 Amended and Restated Omnibus Incentive Plan;
Proposal 3—FOR the approval of, on a non-binding advisory basis, the compensation of our named executive officers, as disclosed in this proxy statement;
Proposal 34—FOR the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020.2022.
How will my shares be voted if I return a signed and dated proxy card, but don’t specify how my shares will be voted?
If you are a record holder who returns a completed proxy card that does not specify how you want to vote your shares on one or more proposals, the proxies will vote your shares in accordance with the Board’s recommendations described above in “—What are the Board’s recommendations on how I should vote my shares?”
If you are a “street name” holder and do not provide voting instructions on one or more proposals, your bank, broker or other nominee will be unable to vote those shares, except that the nominee will have discretion to vote on the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm (Proposal 3)4).
What are my choices when voting?
Your choices when voting are as follows:
Proposal 1—Election of directors—You may vote for all director nominees or you may withhold your vote as to one or more director nominees.
Proposal 2—Approval of our 2022 Amended and Restated Omnibus Incentive Plan—You may vote for the proposal, vote against the proposal or abstain from voting on the proposal.
Proposal 3—Approval of, on a non-binding advisory basis, the compensation of our named executive officers—You may vote for the proposal, vote against the proposal or abstain from voting on the proposal.
Proposal 34—Ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm—You may vote for the proposal, vote against the proposal or abstain from voting on the proposal.
What percentage of the vote is required to approve each proposal?
The following votes are required to approve each proposal:
Proposal 1—Election of directors—The affirmative vote ofDirectors are elected by a plurality of the votes cast at the Annual Meeting. For purposes of the election of directors, votes that are “withheld” and broker non-votes will be counted as “present” for purposes of establishing a quorum but will not be counted as votes cast and will have no effect on the result of the vote. Shareholders may not cumulate votes in the election of directors. In accordance with our Director Resignation Policy, any nominee for election as a director who receives a greater number of “withhold” votes than votes “for” election in an uncontested election must tender his or her resignation in writing to the Board no later than ten days after the certification of the shareholder vote. The Board will determine whether to accept the resignation based upon the recommendation of the Corporate Governance and Nominating Committee and consideration of the circumstances. The Company will publicly disclose the Board’s decision and the process by which it was reached.
Proposal 2—Approval of our 2022 Amended and Restated Omnibus Incentive Plan—The affirmative vote of a majority of the votes cast at the Annual Meeting.
Proposal 3—Approval of, on a non-binding advisory basis, the compensation of our named executive officers—The affirmative vote of a majority of the votes cast at the Annual Meeting.
Proposal 34—Ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm—The affirmative vote of a majority of the votes cast at the Annual Meeting.
How are broker non-votes and abstentions treated?
Broker non-votes are counted for purposes of determining the presence or absence of a quorum. Your broker will have discretionary authority to vote your shares with respect to the ratification of Grant Thornton LLP as our independent registered public accounting firm (Proposal 3)4) so we do not expect any broker non-votes in connection with that proposal. Broker non-votes are not considered votes cast and will have no effect on the outcome of the votes onon Proposals 1 or 2.
Votes withheld (for Proposal 1) and abstentionsabstentions (for Proposals 2 and 3) are counted for purposes of determining the presence or absence of a quorum. Votes withheld and abstentions are not considered votes cast. Therefore, votes withheld will have no effect on the outcome of the votes on Proposal 1, and abstentions will have no effect on the outcome of the votes on Proposals 2 or 3.
May I change my vote after I have submitted a proxy?
Yes. Regardless of the method used to cast a vote, if you are a shareholder of record, you may change your vote by:
•delivering to us a written notice of revocation addressed to Veritex Holdings, Inc., 8214 Westchester Drive, Suite 800, Dallas, Texas 75225, Attn: Corporate Secretary,Investor Relations, no later than the time the polls close for voting at the Annual Meeting;
•completing, signing and returning a new proxy card with a later date than your original proxy card, no later than the time the polls close for voting at the Annual Meeting, and any earlier proxy will be revoked automatically;
•casting a new vote over the Internet by visiting the website specified in your proxy card and following the instructions indicated on the proxy card before the Internet voting deadline of 10:59 p.m., Central time, on May 18, 2020;16, 2022; or
•attending the Annual Meeting and voting in person or via live webcast, and any earlier proxy will be revoked. However, attending the Annual Meeting in person or via live webcast will not automatically revoke your proxy unless you vote again in person at the Annual Meeting in person or via live webcast.person.
If your shares are held in “street name” and you desire to change any voting instructions you have previously given to the record holder of the shares of which you are the beneficial owner, you should contact the broker, bank or other nominee holding your shares in “street name” in order to direct a change in the manner your shares will be voted.
What are the solicitation expenses and who pays the cost of this proxy solicitation?
Our Board is asking for your proxy, and we will pay all of the costs of soliciting shareholder proxies. In addition to the solicitation of proxies via mail, our officers, directors and employees may solicit proxies personally or through other means of communication, such as e-mail, without being paid additional compensation for such services. We will reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding the proxy materials to beneficial owners of our common stock.
Are there any other matters to be acted upon at the Annual Meeting?
Management does not intend to present any business at the Annual Meeting for a vote other than the matters set forth in the notice of the Annual Meeting, and management has no information that others will do so. The proxy also confers on the proxies the discretionary authority to vote with respect to any matter properly presented at the Annual Meeting. If other matters requiring a vote of the shareholders properly come before the Annual Meeting, it is the intention of the persons named in the accompanying form of proxy to vote the shares represented by the proxies held by them in accordance with applicable law and their judgment on such matters.
Where can I find voting results?
We will publish the voting results in a Current Report on Form 8-K, which we will file with the Securities and Exchange Commission (the “SEC”) within four business days following the Annual Meeting. If final voting results are not available to us in time to file a Form 8-K within four business days after the Annual Meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form 8-K to publish the final results.
How can I communicate with the Board?
To communicate with the Board, shareholders should submit their comments by sending written correspondence via mail or courier to Veritex Holdings, Inc., 8214 Westchester Drive, Suite 800, Dallas, Texas 75225, Attn: Corporate Secretary;Investor Relations; or via e-mail to scaudle@veritexbank.com.investorrelations@veritexbank.com. Shareholder communications will be sent directly to the specific director or directors indicated in the communication or to all members of the Board if not specified.
PROPOSAL 1. ELECTION OF DIRECTORS
Number of Directors; Term of Office
Our bylaws currently provide that the number of directors which shall constitutethat constitutes the entire Board shall be determined from time to time by resolution adopted by a majority of the Board and shall not be less than three. Each director shall hold office untilfor the next succeeding annual meeting of shareholdersterm for which such director is elected, and until such director’s successor shall have been elected and qualified, or until such director’s earlier death, resignation or removal.
Our Board presently has nine members and our Board has nominated thirteen nominees to be elected at the Annual Meeting. If elected, all nominees will serve for a term commencing on the date of the Annual Meeting and continuing until the 2021 annual meeting of shareholders or until each person’s successor is duly elected and qualified. Each nominee has agreed to serve if elected. If any named nominee is unable to serve, proxies will be voted for the remaining named nominees. Each of the nominees listed below is currently serving as a director on the Board and each nominee was previously elected by our shareholders.
Nominees for Election
Our Board has nominated thirteen nominees to be elected at the Annual Meeting. The Board believes that the experience and qualifications of the nominees enhances our Board’s effectiveness and is aligned with the Company’s long-term strategy. Our directors have a combined wealth of leadership experience derived from extensive service guiding large, complex organizations as executive leaders or board members and in government, academia and public policy, and possess a diversity of qualifications, attributes and skills applicable to our business.
If elected, all nominees will serve for a term commencing on the date of the Annual Meeting and continuing until the 2023 annual meeting of shareholders or until each person’s successor is duly elected and qualified. Each nominee has agreed to serve if elected. We do not anticipate that any nominee will be unable or unwilling to stand for election, but if that occurs, your proxy vote may be voted for another person nominated by the Board or the Board may reduce the number of directors to be elected. Each of the nominees listed below is currently serving as a director on the Board and each nominee was previously elected by our shareholders.
The following table sets forth the name, age and positions with us for each nominee for election as a director:director, together with a list of the committee on which each director currently serves:
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| Name of Nominee | | Age | | Position(s) Held in the Company | | Director Since |
| C. Malcolm Holland, III | | 60 | | Chairman of the Board, Chief Executive Officer and President | | 2009 |
Pat S. Bolin1 | | 69 | | Director | | 2011 |
| April Box | | 56 | | Director | | n/a4 |
| Blake Bozman | | 49 | | Director | | n/a4 |
William D. Ellis2 | | 57 | | Director | | 2019 |
| William E. Fallon | | 66 | | Director | | n/a |
Ned N. Fleming, III1, 2 | | 59 | | Director | | 2017 |
Mark C. Griege1, 3, 5 | | 61 | | Director | | 2009 |
| Gordon Huddleston | | 37 | | Director | | n/a4 |
Steven D. Lerner2 | | 66 | | Director | | 2019 |
Manuel J. Mehos1, 3 | | 65 | | Director | | 2019 |
Gregory B. Morrison2 | | 60 | | Director | | 2017 |
John T. Sughrue3 | | 59 | | Director | | 2009 |
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| | | | | | Committees |
| Name of Nominee | | Age | | Director Since | | Compensation | | Audit | | Corporate Governance and Nominating | | Risk |
| C. Malcolm Holland, III | | 62 | | 2009 | | | | | | | | |
| Arcilia Acosta | | 55 | | 2021 | | | | ü | | ü | | |
| Pat S. Bolin | | 71 | | 2011 | | ü | | | | | | |
| April Box | | 58 | | 2017 | | | | | | ü | | ü |
| Blake Bozman | | 51 | | 2009 | | C | | | | | | |
| William D. Ellis | | 59 | | 2019 | | | | | | | | ü |
| William E. Fallon | | 68 | | 2020 | | ü | | | | | | C |
Mark C. Grieget | | 63 | | 2009 | | ü | | | | ü | | |
| Gordon Huddleston | | 39 | | 2017 | | | | ü | | | | |
| Steven D. Lerner | | 68 | | 2019 | | | | C | | | | |
Manuel J. Mehos | | 67 | | 2019 | | | | | | | | ü |
| Gregory B. Morrison | | 62 | | 2017 | | | | ü | | C | | |
| John T. Sughrue | | 61 | | 2009 | | | | | | ü | | ü |
1ü - Committee Member CompensationC - Committee Chair
2 Member, Audit Committeet
3 Member, Corporate Governance and Nominating Committee
4 Ms. Box and Messrs. Bozman and Huddleston previously served on our Board. Each resigned effective as of January 1, 2019 and has since served as an advisor to the Board.
5 Mr. Griege serves as Lead Independent Director
C. Malcolm Holland, III. C. Malcolm Holland, III founded Veritex and has been Chairman of the Board, Chief Executive Officer and President of Veritex since 2009, and Chairman of the Board of Directors, Chief Executive Officer and President of the Bank since its inception in 2010. Prior to founding Veritex, Mr. Holland served in various analyst, lending and executive management positions at various banking institutions located in the Dallas banking market from 1982 to 2009. Mr. Holland is a past president of the Texas Golf Association and served on the Executive Committee of the United States Golf Association from 2013 through 2018. Mr. Holland is an active member and chairman of the business advisory committee of Watermark Community Church and currently serves as a board member for Cannae Holdings, Inc., a publicly traded company engaged in acquiring and actively managing companies. He served as chairman of the College Golf Fellowship from 2002 to 2013. Mr. Holland received his Bachelor of Business Administration from Southern Methodist University in 1982. With over 35 years of banking experience in the Dallas metropolitan area, Mr. Holland’s extensive business and banking experience, in-depth
knowledge of the company and his community involvement and leadership skills qualify him to serve on our Board and as its Chairman.
Arcilia Acosta. Arcilia C. Acosta is the President and Chief Executive Officer of CARCON Industries & Construction, a private company, specializing in commercial, institutional, and transportation construction, and is also the Chief Executive Officer and controlling principal of STL Engineers, a private company engaged in providing engineering and construction services. Ms. Acosta serves on the board of directors of the Communities Foundation of Texas, is Co-Chairman of the Texas Institute for Women in Leadership, and Chairman-Elect of the Dallas Citizens Council. She is also currently on the board of directors of Vistra Corp., a public company engaged in retail and electric power generation, and Magnolia Oil & Gas, a public company engaged in oil and gas exploration and development. Ms. Acosta previously served on the national advisory Board of BBVA Compass Bank, a global financial services company, and the Texas Tech National Alumni Association. Prior board service includes six years on the board of Legacy Texas Financial Group, Inc., a bank that is now part of Prosperity Bank, and ten years on the board of Energy Future Holdings Corporation, a public company formerly engaged in electric transmission, distribution, generation and retail operations. Ms. Acosta received a Bachelor of Arts from Texas Tech University, Board Director Certification from Southern Methodist University Southwest School of Banking and is a graduate of the Harvard University of Business School Corporate Governance Program. Ms. Acosta is well-qualified to serve as a director because of her leadership skills and extensive experienceas a director of financial service and other companies.
Pat S. Bolin. Pat S. Bolin joined our Board in March 2011 upon our acquisition of Fidelity Bank of Dallas. Mr. Bolin is the Executive Chairman of the board directors of Eagle Oil & Gas Co., a private independent oil and gas company based in Dallas founded by Mr. Bolin in 1976. Mr. Bolin began his professional career as a landman for Mitchell Energy Corp. in 1973. Mr. Bolin currently serves on the board of directors of Fidelity Bank in Wichita Falls, Texas and its holding company, FB Bancshares, Inc. Mr. Bolin received a Bachelor of Arts in Psychology from Southern Methodist University in 1973. Mr. Bolin’s diverse business and community banking experience, along with his extensive community involvement, qualify him to serve on our Board.
April Box.April Box served on our Board from 2017 to 2018, and as a Board advisor during 2019.2019 and on our Board during 2020. Mrs. Box is the former President and Chief Executive Officer of Methodist Health System Foundation and Senior Vice president of external affairs for Methodist Health System. Mrs. Box holds a Bachelor of Arts degree from Rhodes College, Memphis, Tennessee, and a Master of Liberal Arts degree from Southern Methodist University in Dallas, Texas. Active in community and philanthropic service, she is a member of the World Presidents Organization, the International Women’s Forum, and currently serves as a board member for the State Fair of Texas. In 2013, Mrs. Box was recognized as the Outstanding Fundraising Executive at the National Philanthropy Day Awards Luncheon, presented by the Association of Fundraising Professionals Greater Dallas Chapter. Ms. Box’s significant experience and executive positions at Methodist Health System Foundation, her longstanding community involvement and her perspective and knowledge of the Dallas market qualify her to serve on our board.
Blake BozmanBozman. Blake Bozman served on our board from 2009 to 2018, and as a Board advisor during 2019.2019 and on our Board during 2020. Mr. Bozman is a Managing Director of Freedom Truck Finance, a secondaryprivate company truck finance company providing truck finance secondary lending services based in Dallas. Mr. Bozman also oversees the operations of Prattco International, Inc., a family-owned business specializing in real estate investments and purchasing oil and gas properties. From 1995 to 2006, Mr. Bozman was with Drive Financial Services, a consumer finance company focused on sub-prime auto finance, which he co-founded in 1995 and served as Executive Vice President of Sales and Originations. Mr. Bozman received a Bachelor of Arts in Marketing from Southern Methodist University in 1993. Mr. Bozman’s business experience, particularly in the consumer financial services industry, qualifies him to serve on our Board.
William D. Ellis. William D. Ellis joined our Board in 2019, having served as Vice Chairman at Green Bancorp, Inc. (“Green”) since October 1, 2015 and as Vice Chairman at Green Bank N.A. (“Green Bank”) since Octoberfrom 2015 through 2019. Green was acquired by the Company on January 1, 2015. Previously,2019. Prior to his service with Green and Green Bank, he was the Founder and Chairman of Patriot Bancshares, Inc., headquartered in Houston, and served as its Chief Executive Officer and a director from its inception in 2005. Prior to his tenure with Patriot Bancshares, Inc., Mr. Ellis held senior executive positions with several other financial institutions, including Texas Regional President for Union Planters Bank in Houston and Senior Vice President Regional Retail Banking Manager for BB&T in Washington, D.C. He currently serves on The Board of Advocates of The Truett Seminary at Baylor University and is a former director of Theater Under the Stars and Mission Centers of Houston. Mr. Ellis received his Bachelor of Science from Mississippi College and his Master of Business Administration from the University of North Alabama. Mr. Ellis's qualifications to serve on our Board include his leadership roles, his in-depth knowledge of Patriot Bancshares, Inc. since its inception,Green (which is now
part of the Company), his extensive experience in the banking industry and his longstanding relationships within the business, political and charitable communities.
William E. Fallon. If elected at the Annual Meeting, this will be William E. Fallon's first year serving onFallon joined our Board.Board in 2020. Mr. Fallon previously served as an Executive Vice President at PNC Bank, N.A., holding various roles, including Chief Commercial Credit OfficeOfficer from 1996 to 2018 and Merger and Acquisition Leader from 2003 to 2018 and oversaw Wholesale Lending Originations from 1978 to 1996. In addition, Mr. Fallon served on the Executive Committee of The United States Golf Association from 2012 to 2017 and currently serves on the Executive Committee of West Penn Golf Association and is a Director-Emeritus of the Pittsburgh Zoo & PPG Aquarium. Mr. Fallon received his Bachelor of Business Administration from the University of Notre Dame and his Master of Business Administration from The Ohio State University. Mr. Fallon's qualifications to serve on our Board include his extensive experience in the banking industry and his longstanding relationships with individuals and institutions in the industry.
Ned N. Fleming, III. Ned N. Fleming served on our Board from 2009 to 2013 and as a Board observer from 2013 to 2016 and rejoined the Board as a director in 2017. Mr. Fleming rejoined our Board and has served as a director since 2017. Mr. Fleming is a founder and Managing Partner of SunTx Capital Partners. He serves as Chairman of Construction Partners which is publicly traded on NASDAQ under ROAD, NationsBuilders Insurance Services and Big Outdoor, LLC. Mr. Fleming also serves as Vice-Chairman of Interface Security Systems. Prior to his time at SunTx Capital Partners, Mr. Fleming served as President and Chief Operating Officer of Spinnaker Industries, a publicly traded materials manufacturing company, until its sale in 1999. During his tenure, the company transformed from a small regional manufacturing business into a publicly traded acquisition platform with a national footprint. Previously, Mr. Fleming worked at a Dallas-based private investment firm where he led acquisitions in the
food and beverage and defense industries. Prior to that, Mr. Fleming was a consultant for The Boston Consulting Group, and worked for Fleming Companies. Mr. Fleming holds a Master of Business Administration with distinction from Harvard Business School and a Bachelor of Arts in Political Science from Stanford University. His significant financial expertise and leadership of SunTx Capital Partners and business experience with publicly traded companies qualify him to serve on our Board.
Mark C. Griege. Mark C. Griege has served onjoined our Board since 2009.board in 2009, and currently serves as the Lead Independent Director of the Company. Mr. Griege is the Chief Executive OfficerCEO and co-founder of RGT Wealth Advisors, a largefull service independent wealth management firm based in Dallas which he co-founded in 1985.that serves the needs of high net worth individuals and family offices with approximately $5.8 billion under management. Prior to founding RGT Wealth Advisors, Mr. Griege worked in the tax departments of a “Big Four” accounting firm and was engaged in legal practice at a regional law firm. He has previously served on the boards of Schwab Institutional, the Institute of Financial Planners, and the editorial advisory board of the Journal of Financial Planning. He is also active in the community, serving on the boards of several philanthropic foundations associated with the charitable efforts of his clients. In addition, he’s an active member of Watermark Community Church and on the board of Dallas National Golf Club. Mark has been recognized by Worth Magazine and D Magazine as one of its “Best Financial Advisors” and he frequently speaks on a variety of investment and financial planning topics. Mark received ahis Bachelor of Business Administration from Southern Methodist University in 1981, and a Jurishis Doctor of Jurisprudence from the University of Texas School of Law in 1985. His significant experience and leadership at RGT Wealth Advisors brings a varietyMr. Grieg’s qualifications to serve on our Board include over 35 years of investment and business perspectivesexperience in the wealth management, accounting and insights to our Boardlegal industries, and qualifies him to serve on our Board.his extensive community involvement.
Gordon Huddleston.Gordon Huddleston served on our board from 2017 to 2018, and as a Board advisor during 2019. Mr. Huddleston ser2019 and on our Board during 2020. ved on the Bank’s board of directors from 2012 to 2018. Mr. Huddleston is a Partner of Aethon Energy, a Texas-based private investment firm focused on direct investments in North American onshore upstream oil and gas assets, and has served as Co-President since 2013. From 2010 to September 2013, Mr. Huddleston served as Aethon’s Chief Investment Officer. Mr. Huddleston graduated from Vanderbilt University with a Bachelor of Science. in Engineering Science. His business experience and leadership at Aethon Energy qualifiesskill qualify him to serve on our Board.
Steven D. Lerner. Steven D. Lerner joined our Board in 2019. He wasserved as an independent director, Chairman of the Audit Committee and Chairman of the Nominating and Corporate Governance Committee at Green and served as aan independent director of Green Bank from 2006 to 2019. Mr. Lerner is the Chief Executive Officer of TRC Ventures, L.P. (formerly The Redstone Companies, LP)., a private real estate investment firm focused on the Texas markets. Previously, he held the position of President of Redstone Companies Real Estate, LLC and was Executive Vice President and General Counsel of The Redstone Companies and numerous Redstone-related entities since 1998. Before that, Mr. Lerner was a partner of the Houston law firm now known as Schlanger, Silver, Barg & Paine, LLP. He is a member of the State Bar of Texas. Mr. Lerner received a Juris Doctor with honors from the University of Texas School of Law, where he was a member of the Texas Law Review. Mr. Lerner is also the Vice-ChairmanChairman of the Board of Directors of Reinvestment Zone 16, City of Houston and the Uptown Development Authority as well as a Director of Harris County Improvement District #1 (the Uptown District in Houston). Mr. Lerner’s extensive financial and investment experience, including his significant financial and accounting expertise, his experience in the development of and investment in real estate, his longstanding relationships within the business, political and charitable communities, as well as his previous service withas an independent director of Green and Green Bank, qualifies him to serve on our Board.
Manuel J. Mehos. Manuel J. Mehos joined our Board in 2019. Mr. Mehos served as chairman of the board of directors of Green Bank and served as Chairman and Chief Executive Officer of Green sincefrom its inception in 2004.2004 through 2019. Green was acquired by the Company on January 1, 2019. Prior to founding Green Bancorp in 2004, Mr. Mehos was the founder, Chairman of the board of directors and Chief Executive Officer of Coastal Bancorp, Inc. and its banking subsidiary, Coastal Banc, a publicly-traded company that was later acquired by Hibernia Corporation. Mr. Mehos is a Certified Public Accountant. He currently serves as a director on the board for Sentinel Trust Company. He has served as a director on the board for Federal Home Loan Bank of Dallas, one year as Chairman of the board. He has also served as a director on the boards of Texas Finance Commission, Texas Savings & Community Bankers Association and America's Community Bankers. Mr. Mehos received his Bachelor of Business Administration and Master of Business Administration from the University of Texas. Mr. Mehos' qualifications to serve on our Board include his extensive experience in the banking industry, his in-depth knowledge of Green (which is now part of the Company) and his previous experience serving as chairman of the board of directors of publicly-traded companies.
Gregory B. Morrison. Gregory B. Morrison has served on our Boardboard since 2017 and2019. Mr. Morrison has served on the Bank’s board of directors since December 2016.2018. Mr. Morrison is the former Senior Vice President and Corporate Chief Information Officer offor Cox Enterprises, Inc., a holding company for communications and is responsible for all facets of the corporation’s information systems and transaction processing requirements. From 1989automotive services companies, a role he held from February 2002 until his retirement in January 2020. Prior to 2002,his role at Cox, Mr. Morrison served as Executive Vice President and Chief Operating Officer of InformationRealEstate.com, an online real estate company that is now part of Zillow, in 2000 and held various information and technology leadership roles at Prudential Financial, Inc. From January, a global financial services company, from 1989 to November 2000,2002. Mr. Morrison served as Chief Operating Officer for RealEstate.com.has extensive knowledge and expertise with large-scale business transformations and technology deployments. Mr. Morrison earned hiswas named among the industry's top performing CIOs who have shown unparalleled leadership to drive innovation and transformation in businesses. Mr. Morrison also serves on the board of directors of Rollins, Inc. and Veritiv Corp, roles he has held since 2021. Mr. Morrison was a commissioned officer in the US Army from 1982 to 1989. Mr. Morrison received a Bachelor of Science in Mathematics and Physics from South Carolina State University, in math and physics, and a Master of Science in industrial engineeringIndustrial Engineering from Northwestern University. Mr. Morrison’s significant leadership and technical experience as Chief Information Officer of Cox Enterprises, Inc. qualifies him to serve on our Board.
John T. Sughrue. John T. Sughrue has served on our Board since 2009. Mr. Sughrue currently serves as the Chairman of FIG Enterprises, Inc., the parent company of the Fashion Industry Gallery, a boutique wholesale venue for the fashion retail trade. Mr. Sughrue also serves as a director and the Chief Executive Officer of Brook Partners, Inc., a diversified real estate company based in Dallas, which he founded in 1994. Mr. Sughrue received a Bachelor of Arts in Economics from Harvard College in 1982 and a Master of Business Administration from the
Amos Tuck School of Business at Dartmouth College in 1988. Mr. Sughrue is the founder of the Dallas Arts Fair, one of the largest arts fairs in the United States, and is active in a variety of civic affairs in Dallas, Texas. Mr. Sughrue’s significant business experience and community involvement qualifies him to serve on our Board.
Shareholder Approval
The affirmative vote of a plurality of the votes cast at the Annual Meeting is required for the election of each of the nominees for director.
THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF ALL OF THE NOMINEES LISTED ABOVE TO THE BOARD.
COMPENSATION OF DIRECTORS
During 2019,2021, each of our non-employee directors received a cash retainer of $25,000 for his or her service as a director of the Company. In addition, the chair of the Audit Committee, the chair of the Compensation Committee, and the chair of the Corporate Governance and Nominating Committee and the chair of the Risk Committee, each received an additional cash retainer of $15,000, $12,500, $10,000$12,500, and $10,000,$12,500 respectively, for their service in those roles. Each director serving on any committee of the Board received an additional cash retainer of $2,500$3,750 for his or her service on a committee. Any director who was also an employee did not receive any fees or other compensation for their service as a director of the Company.
The following table sets forth compensation paid, earned or awarded during 20192021 to each of our non-employee directors. Each of our current non-employee directors is also a director serving on the board of directors of the Bank. In accordance with our director compensation policy, the aggregate amounts reflected below were paid to directors for their service on the Board and the board of directors of the Bank. All of the cash amounts shown in the table below were paid by the Bank.
| | | | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned or Paid in Cash ($) | | Stock Awards ($)1 | | Total ($) |
| C. Malcolm Holland, III | | $ | — | | | | $ | — | | | | $ | — | |
| Pat S. Bolin | | — | | | | 122,890 | | | | 122,890 | |
| William D. Ellis | | 56,250 | | | | 64,140 | | | | 120,390 | |
| Ned N. Fleming, III | | — | | | | 127,890 | | | | 127,890 | |
| Mark C. Griege | | — | | | | 146,640 | | | | 146,640 | |
| Steven D. Lerner | | — | | | | 129,140 | | | | 129,140 | |
| Manuel J. Mehos | | — | | | | 126,640 | | | | 126,640 | |
| Gregory B. Morrison | | — | | | | 120,390 | | | | 120,390 | |
| John T. Sughrue | | — | | | | 129,140 | | | | 129,140 | |
1 The amounts All of the stock awards shown in this column include 3,000the table below constituted restricted stock units
("RSUs") awardedissued by the Company. With respect to directors on March 31, 2019. cash awards, each director has the option to receive additional RSUs in lieu of cash.
| | | | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned or Paid in Cash ($) | | Stock Awards ($)1 | | Total ($) |
| Arcilia Acosta | | $ | 60,000 | | | $ | 75,000 | | | $ | 135,000 | |
Pat S. Bolin2 | | — | | | 133,750 | | | 133,750 | |
| April Box | | 60,000 | | | 75,000 | | | 135,000 | |
Blake Bozman2 | | — | | | 142,500 | | | 142,500 | |
William D. Ellis2 | | — | | | 131,250 | | | 131,250 | |
| William E. Fallon | | 71,250 | | | 75,000 | | | 146,250 | |
Mark C. Griege2 | | — | | | 192,500 | | | 192,500 | |
| C. Malcolm Holland, III | | — | | | — | | | — | |
Gordon Huddleston2 | | — | | | 133,750 | | | 133,750 | |
| Steven D. Lerner | | 67,500 | | | 75,000 | | | 142,500 | |
| Manuel J. Mehos | | 62,500 | | | 75,000 | | | 137,500 | |
Gregory B. Morrison2 | | — | | | 143,750 | | | 143,750 | |
John T. Sughrue2 | | — | | | 137,500 | | | 137,500 | |
1 The RSUs are disclosed as the aggregate grant date fair value of the awards, determined in accordance with ASC Topic 718. The assumptions used in calculating the grant date fair value of these awards are included in note 22Note 21 of the notesNotes to our consolidated financial statementsConsolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2019.2021.
2 Director elected to receive stock in lieu of cash payments during 2021.
All non-employee directors have been and will continue to be reimbursed for their reasonable out-of-pocket travel, food, lodging and other expenses incurred in attending meetings of our Board or any committees thereof. Directors are also entitled to the protection provided by the indemnification provisions in our certificate of formation and bylaws, as well as the articles of association and bylaws of the Bank.
BOARD AND COMMITTEE MATTERS
Board Meetings
Our BoardBoard met 12 times13 times during the 20192021 fiscal year (including regularly scheduled and special meetings). During the 20192021 fiscal year, each director participated in 75% or more of the total number of meetings of the Board (held during the period for which he or she was a director) and each director participated in 75% or more of the total number of meetings of all committees of the Board on which he or she served (held during the period that he or she served). In addition to Board and committee meetings, our directors also engaged in less formal communications between meetings, including discussions, briefings and communications regarding key issues, with our Chairman, lead independent director, committee chairs and members of senior management.
Our 20192021 annual meeting of shareholders, held on May 21, 2019, included the attendance of three directors.18, 2021, seven directors were in attendance. It is our recommendation that each director standing for election at the Annual Meeting attend the Annual Meeting in person or via live webcast.Meeting. We anticipate all of our nominees for election will attend the Annual Meeting in person or via live webcast.Meeting.
Director Independence
Under the applicable ruleslisting standards of the Nasdaq Stock Market, LLC (“Nasdaq”), a majority of the members of our Board are required to be independent. A director is independent for purposes of the Nasdaq listing standards if such director does not have a relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, The rules of Nasdaq listing standards, as well as thosethe rules of the SEC, also impose several other requirements with respect to the independence of our directors.
OurThe Corporate Governance and Nominating Committee and our Board has evaluated the independence of each director and nominee based on these standards and rules. Applying these standards and rules, the Corporate Governance and Nominating Committee and our Board has determined that, with the exception of Mr. Holland, each of our current directors and nominees qualifies as an independent director under applicable legal standards and rules. In making these determinations, our
To assess independence, the Corporate Governance and Nominating Committee was provided with information about relationships between the independent directors (and their immediate family members and affiliated entities) and Company and its affiliates. Among other things, the Board consideredreviewed the following:
•The commercial transactions between the Company and the Bank on the one hand and directors (and their immediate family members and affiliated entities) on the other hand, including loans made by the Bank in the ordinary course of business; and
•The current and prior relationships that each director and nominee has with us and all other facts and circumstances, including that two of our Boarddirectors, William D. Ellis and Manual J. Mehos, are former executives of Green, which was acquired by the Company on January 1, 2019.
The Corporate Governance and Nominating Committee also considered all other facts and circumstances they deemed relevant in determining their independence, including the beneficial ownership of our common stock by each director and nominee, and theany other transactions described under the heading “Certain Relationships and Related Person Transactions” in this proxy statement.
Board Leadership Structure
C. Malcolm Holland, III currently serves as Chairman of the Board and our Chief Executive Officer and President. Mr. Holland’s primary duties are to lead our Board in establishing our overall vision and strategic plan and to lead our management in carrying out that plan.
OurThe Board has the authority to combine or separate the positions of Chairman and Chief Executive Officer,but does not have a policy regardingrequiring the separation of the roles of Chief Executive Officer and Chairman of the Board, as ourBoard.Our Board believes that it is in the best interests of our company to make that determination from time to time based on the position and direction of our company, the identity of the Chief Executive Officer and the membership of our Board. Board, including the ability to identify and appoint a strong and capable lead independent director.Our Board has determined that having our Chief Executive Officer serve as Chairman of the Board is in the best interests of our shareholders at this time. This structure, coupled with oversight from our strong lead independent director, experienced chairs of our Board committees, and our other well-qualified directors, all of whom are independent, makes the best use of the Chief Executive Officer’s extensive knowledge of our company and the banking industry. Our Board views this arrangement as also providing an efficient nexus between our company as a whole and ourthe Board the ability to leverage Mr. Holland's knowledge of the day-to-day business of the Company, enabling our Board to obtain information pertaining to operational matters expeditiously and enabling our Chairman to bring areas of concern before our Board in a timely manner.The combined role, coupled with the strong lead independent director, has enabled the Board to be responsive to challenges and opportunities as they continue to arise.
Mr. Griege currently serves as our lead independent director. Mr. Griege serves as a liaison between the Chairman and the independent directors, presides over executive sessions of the independent directors, and consults with the Chairman on major corporate decisions, strategy and board meeting agendas. The independent lead director chairs regularly scheduled executive sessions which are held without the Chairman being present.The independent directors remain confident in Mr. Griege’s abilities to discharge the duties of lead independent director.
The lead independent director is nominated by the Corporate Governance and Nominating Committee and annually elected by all independent directors of the Board. When nominating and electing the lead independent director, our independent directors consider, among other things, candidates’ independence in accordance with Nasdaq listing standards and other applicable laws and regulations, knowledge of the Board, the Company, and banking industry, familiarity with corporate governance best practices and procedures, ability to achieve consensus and alignment among independent directors and between independent directors and the Chairman and ability to work effectively and constructively with and advise the Chairman.
Board Composition and Reassignments
The Company believes that an effective Board is composed of directors who bring diverse viewpoints and perspectives, exhibit a variety of skills, professional experience and backgrounds, and effectively represent the long-term interests of our shareholders. The Corporate Governance and Nominating Committee and the Board regularly consider these factors in the broader context of the Board’s overall composition, with a view toward selecting nominees who have the best skill set and experience to oversee the Company’s business and the broad set of challenges that it faces.
The Corporate Governance and Nominating Committee and the Board also understand the importance of Board and committee reassignments, and strive to maintain an appropriate balance of continuity and turnover on the Board and committees. The Board believes that new perspectives and new ideas are critical to a forward-looking and strategic board, as is the ability to benefit from the valuable experience and familiarity that longer-serving directors bring.
In the past two years, among other initiatives, our Board has:
•Expanded qualifications and diversity representation on the Board;
•Reassigned 3 Committee Chairs and 5 committee members;
•Established a Risk Committee; and
•Reassigned committee members in direct response to the voting results at the 2021 Annual Meeting as discussed below.
Shareholder Engagement and Outreach
We routinely engage with various stakeholders of the Company, including shareholders, rating agencies, proxy advisory services, and customers on a variety of matters. Our Board and management team greatly value the perspectives and feedback of our shareholders and engage with them on a broad range of topics, including our business strategy, financial performance, executive compensation, corporate governance, regulatory issues, diversity and inclusion and environmental and social goals. Our Board receives summaries and information regarding issues raised by shareholders and shareholder voting results. In addition, management routinely engages with investors, whether at conferences and other forums. We also speak with proxy advisors to discuss, and receive feedback on, our governance practices and other matters.
In 2021, we contacted many of our shareholders for the purpose of having a dialogue with them about a variety of topics, including the voting results of our 2021 annual meeting. A number of shareholders accepted our offer to engage, and we plan to continue this outreach on a regular basis. Members of our Board, including a member of our Corporate Governance and Nominating Committee participated in discussions with certain shareholders. Not all shareholders whom we contacted accepted our invitations to engage, in certain cases noting that they did not have any concerns to raise at that point in time.
| | | | | |
We held in-person and telephonic meetings with 16 of our Top 25 Shareholders | Representing over 27% of our outstanding common stock |
Feedback from these in-person and telephonic meetings was generally positive with many shareholders expressing appreciation for our corporate strategy, Board composition (diversity and skills), Board oversight of risk, our executive compensation program and philosophy, corporate responsibility, ESG strategy and human capital management. See “Board and Committee Matters—Summary of Certain 2021 Shareholder Discussions” below for more details regarding these discussions.
Shareholders who wish to speak to any of our directors, including the lead independent director or the chair of any of our Board committees, or a Company representative may communicate as follows:
By mail:At Veritex Holdings, Inc., 8214 Westchester Drive, Suite 800, Dallas, Texas 75225, Attn: Investor Relations; or
By phone: At (972) 349-6200.
Shareholders can also view information and request documents from the Investor Relations page of our website at https://ir.veritexbank.com/. Shareholder communications are distributed to the Board, or to any individual director or directors, as appropriate, depending on the facts and circumstances outlined in the communication.
Summary of Certain 2021 Shareholder Discussions
At the 2021 annual meeting of shareholders, Manual J. Mehos received a greater number of “withhold” votes than votes “for” his election as a director. Based on discussions with shareholders, the Company believes that the principal reason for this unfavorable voting result did not concern Mr. Mehos’ qualifications or contributions to the Board, but rather that Mr. Mehos was then serving as a member of the Compensation Committee and the Corporate Governance and Nominating Committee of the Board. Although Mr. Mehos qualifies as independent under the Nasdaq listing standards, he is not at present considered to be independent under certain more stringent standards utilized or relied upon by some of our principal shareholders, given that he is a former executive of Green, which was acquired by the Company on January 1, 2019.
In light of the voting results at the 2021 Annual Meeting, and in accordance with our ongoing efforts to engage on key issues with shareholders and other constituencies, we highlight the most significant 2021 shareholder discussions and actions taken in response to feedback from such discussions:
Board Committee Structure: Certain shareholders noted the concern that former executives of Green served on certain Board committees. In particular, Mr. Mehos served as a member of the Compensation Committee and the Corporate Governance and Nominating Committee and Mr. Ellis served as a member of the Audit Committee.
Veritex Action Taken: On June 20, 2021, the Corporate Governance and Nominating Committee and Board approved the following committee reassignments: See “Board and Committee Matters—Board Composition and Reassignments” for more details regarding these changes and our approach to Board committee reassignments.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Committee Assignments Prior to June 20, 2021 | | Committee Assignments Effective June 20, 2021 |
| Name of Board Member | Audit Committee | Compensation Committee | Governance & Nominating Committee | Risk Committee | | Audit Committee | Compensation Committee | Governance & Nominating Committee | Risk Committee |
| C. Malcolm Holland, III | | | | | | | | | |
| Arcilia Acosta | Member | | | | | Member | | Member | |
| Pat S. Bolin | | Member | | | | | Member | | |
| April Box | | | Member | Member | | | | Member | Member |
| Blake Bozman | | Chair | | | | | Chair | | |
| William D. Ellis | Member | | | Member | | | | | Member |
| William E. Fallon | | | | Chair | | | Member | | Chair |
Mark C. Griege2 | | Member | Member | | | | Member | Member | |
| Gordon Huddleston | Member | | | | | Member | | | |
| Steven D. Lerner | Chair | | | | | Chair | | | |
| Manuel J. Mehos | | Member | Member | Member | | | | | Member |
| Gregory B. Morrison | Member | | | Member | | Member | | Chair | |
| John T. Sughrue | | | Chair | | | | | Member | Member |
As a result of these reassignments, Mr. Mehos and Mr. Ellis no longer serve on the Audit Committee, the Compensation Committee or the Corporate Governance and Nominating Committee.
In addition, to address any possible concerns about responsiveness to lack of majority support for directors at Annual Meetings of our stockholders, upon the recommendation of the Corporate Governance and Nominating Committee, we adopted the Director Resignation Policy, which is discussed in detail below under “Director Resignation Policy.” This policy is intended to ensure that, if a director receives more “withhold” votes than “for” votes at an annual director election, such director must resign, and the Board will follow a prescribed process in considering and announcing its response to the director’s resignation.
ESG Strategy: Certain shareholders raised questions concerning our overall ESG strategy. Some investors requested an update regarding our environmental and social programs and goals. In our discussions with shareholders, we reviewed our culture and history as a community bank focused on issues of concern to key constituencies in geographic areas we serve.
Veritex Action Taken: Shareholder feedback was shared with the Corporate Governance and Nominating Committee and we decided to prepare and release our first ESG report. Please see Veritex's 2022 ESG Report on the
"About Us" section of our website, veritexbank.com. Please note that Veritex's 2022 ESG Report does not haveform a part of the proxy materials.
The engagement with shareholders described above was conducted by members of our management, including C. Malcolm Holland, III, our Chief Executive Officer, and Terry Earley, our Chief Financial Officer.Certain independent directors, including Gregory B. Morrison and John T. Sughrue, also participated in discussions with certain shareholders.The results of our shareholder engagement initiative were reported to both the Corporate Governance and Nominating Committee and the Board, which considered what actions would be appropriate to address the issues and concerns raised.
Board Diversity
While the Board has not adopted a formal written policy regarding director diversity, in selecting nominees to serve as directors, the Corporate Governance and Nominating Committee takes into account the diversity of a director candidate’s perspectives, background and other demographics, including race, gender, ethnicity and nationality. We believe it is important that our Board is composed of individuals reflecting the diversity represented by our employees, our customers, and our communities. The following table sets forth certain Board diversity information with respect to each director, utilizing the template in accordance with NASDAQ's board diversity listing standards. The information is based on voluntary self-identification by each Board member.
| | | | | | | | | | | | | | |
| Board Diversity Matrix (As of April 5, 2022) |
| Total Number of Directors | 13 |
| Female | Male | Non-Binary | Did Not Disclose Gender |
| Part I: Gender Identity | | | | |
| Directors | 2 | 11 | 0 | 0 |
| Part II: Demographic Background | | | | |
| African American or Black | 0 | 1 | 0 | 0 |
| Alaskan Native or Native American | 0 | 0 | 0 | 0 |
| Asian | 0 | 0 | 0 | 0 |
| Hispanic or Latinx | 1 | 0 | 0 | 0 |
| Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 |
| White | 1 | 10 | 0 | 0 |
| Two or More Races or Ethnicities | 0 | 0 | 0 | 0 |
| LGBTQ+ | 0 |
| Did Not Disclose Demographic Background | 0 |
Director Resignation Policy
In accordance with our Director Resignation Policy, by accepting a nomination for election or re-election as a director, each director agrees that if, in an uncontested director election, he or she receives a greater number of “withhold” votes than votes “for” election, such director will tender his or her resignation in writing to the Board promptly, but no later than ten days after the certification of the shareholder vote.
In the event of a resignation pursuant to our Director Resignation Policy, the Corporate Governance and Nominating and Committee will meet to consider all relevant factors, including (a) the reasons expressed by shareholders who cast "withhold" votes in relation to the resigning director, (b) the expected effects on the Company that would result from accepting the resignation and (c) any other factors bearing on the best interest of the Company and its shareholders, and make a recommendation to the Board. The Board will act on the recommendation within 90 days following certification of the election results. In doing so, the Board will take into account the factors considered by the Corporate Governance and Nominating Committee and any additional relevant
information. A resigning director must recuse himself or herself from participating the deliberations of the Corporate Governance and Nominating Committee and the Board in relation to his or her resignation.
The Company, within four business days after the Board takes formal action with respect to the recommendation made by the Corporate Governance and Nominating Committee, will publicly disclose, in a Form 8-K file with the SEC, the decision of the Board as to whether to accept or reject the resignation, together with a brief statement of the reasons for taking such action.
Board and Corporate Governance
The Board is committed to providing sound governance for the Company. The Board has adopted Corporate Governance Guidelines (the “Guidelines”) for the Company and charters for each committee of the Board to provide a flexible framework of policies relating to the governance of the Company. These Guidelines and charters delineate the responsibilities of our directors, Board, and Board committees, as well as standards for Board composition, service, and meetings, and are reviewed annually to ensure standards remain consistent with evolving business needs and best practices. These documents are available in the “Corporate Governance” section of the Company’s website at https://ir.veritexbank.com.
Governance practices include, but are not limited to:
•Our Board conducts an annual performance evaluation to assess whether the Board members and Board committees are functioning effectively;
•Our Board has a lead independent director.director and lead independent chair of each Board committee;
•All directors are independent, other than CEO; All of the members of our principal standing committees (consisting of our Audit, Compensation and Corporate Governance and Nominating Committees) are independent;
•Executive sessions of independent directors are held at each regular Board meeting;
•We have an active ongoing director education;
•We have a strong investor outreach program, including participation by our Chairman and other Directors
•We have adopted stock ownership guidelines for directors and executives;
•We consider Board composition and reassignments on an ongoing basis; and
•Our Board has oversight responsibility for corporate responsibility and ESG matters.
The Board believes that establishing and maintaining an effective Board evaluation process is essential to implementing the Company’s governance program. Accordingly, the Corporate Governance and Nominating Committee reviews and approves the evaluation process annually to ensure that it continues to be an effective tool for identifying areas to enhance the performance of the Board and Board committees. In 2021, the evaluation process involved the following steps. First, each Board member assessed the performance of the Board as a whole and individual directors. Second, the results of the assessments were reviewed by the Corporate Governance and Nominating Committee. Third, the result were reported to the full Board. Fourth, the Corporate Governance and Nominating Committee and the Board considered whether any revisions were needed in light of information reported. In 2021, one of the revisions that flowed from the evaluation process was the adoption of the Director Resignation Policy discussed above.
Risk Management and Oversight
Our Board is responsible for oversight of management and the business and affairs of our company,the Company, including those relating to management of risk. Our Board determines the appropriate risks for us generally, assesses the specific risks faced by us, and reviews the steps taken by management to manage those risks. While our full Board maintains the ultimate oversight responsibility for the risk management process, its committees oversee risk in certain specified areas. In particular, the Audit Committee assists our Board in assessing and managing our exposure to risk, including major financial risk exposures. The Compensation Committee is responsible for reviewing the relationship between our risk management policies and practices, corporate strategy and compensation arrangements, and evaluating whether incentive and other forms of pay encourage unnecessary or excessive risk-taking. Our Corporate Governance and Nominating Committee monitors the risks associated with our governance program. The Risk Committee is responsible for overseeing the independenceCompany's overall risk framework, risk appetite and management's identification, measurement, monitoring and
control/mitigation of our Board.key risks facing the Company. Management regularly reports on applicable risks to the relevant committee or the full Board, as appropriate, with additional review or reporting on risks conducted as needed or as requested by our Board and its committees.
In addition, each standing committee of our
IT Risks
The Board also has oversight responsibility for risks inherent within its area of oversight. For example, the Boardan IT Steering Committee, which oversees the information technology security, including
cybersecurity issues, considerations and developments. Among other responsibilities, the Board IT Steering Committee reviews and discusses with management, as and when appropriate, risk management and risk assessment guidelines and policies regarding information technology security, including the quality and effectiveness of information technology security and disaster recovery capabilities.
Compensation Policies and Practices and Risk Management
We do not believe any risks arise from our compensation policies and practices for our executive officers and other employees that are reasonably likely to have a material adverse effect on our business, results of operations or financial condition.
Board Committees
Our Board has established standing committees in connection with the discharge of its responsibilities. These committees include an Audit Committee, a Compensation Committee, and a Corporate Governance and Nominating Committee and a Risk Committee. The Board also has an IT Steering Committee, which is discussed above.
In the future, our Board may establish such additional committees as it deems appropriate, in accordance with applicable law and regulations and our certificate of formation and bylaws.
Audit Committee
The current members of our Audit Committee are Gregory B. Morrison, Ned. N. Fleming, III,Arcilia Acosta, Gordon Huddleston, Steven D. Lerner and William D. Ellis,Gregory B. Morrison, with Mr. Lerner serving as chair. Our Board has evaluated the independence of the members of the Audit Committee and has determined that (i) each of the members (i) is independent under the applicable rules of Nasdaq, (ii) each of the members satisfies the additional independence standards under applicable SEC rules for service on the Audit Committee service and (iii) each of the members has the ability to read and understand fundamental financial statements. In addition, our Board has determined that Mr. Lerner has the requisite financial sophistication to qualify an “audit committee financial expert” as defined under applicable SEC rules. The AuditAudit Committee met seven times in 2019.2021.
The Audit Committee has responsibility for, among other things:
•appointing our independent auditors and pre-approving and overseeing the services to be performed by our independent auditors;
•reviewing the performance and independence of our independent auditors and approving, in advance, all engagements and fee arrangements;
•overseeing the annual audit and quarterly reviews of our financial statements;
•meeting with management, our internal auditors and our independent auditors to review the adequacy and effectiveness of our accounting policies and our system of internal control over financial reporting, including our internal audit procedures;
•preparing the annual Audit Committee report and reviewing our earnings press releases;
•reviewing our policies relating to the ethical handling of conflicts of interest and reviewing past and proposed transactions between us and members of management; and
•performing such additional activities, and considering such other matters, within the scope the Audit Committee’s responsibilities as the committee or the Board deems necessary or appropriate.
The Board has adopted a written charter that sets forth the committee’s duties and responsibilities. The Audit Committee charter is available on our website at www.veritexbank.com under “About Us—Investor Relations—Corporate Governance.”
Compensation Committee
The current members of our Compensation Committee are Blake Bozman, Pat S. Bolin, Ned N. Fleming, III, Manuel J. MehosWilliam E. Fallon and Mark C. Griege, with Mr. FlemingBozman serving as chair. Our Board has evaluated the independence of the members of the Compensation Committee and has determined that each of the members is independent under the applicable rules of Nasdaq. The Compensation Committee consists exclusively of directors who are “non-employee directors” for purposes of Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act”). The Compensation Committee met fivefour times in 2019.in 2021.
The Compensation Committee has responsibility for, among other things:
•reviewing the goals and objectives of our executive compensation plans and evaluating whether incentive and other forms of pay encourage unnecessary or excessive risk;
•evaluating annually the performance of the Chief Executive Officer and our other executive officers in light of the goals and objectives of our executive compensation plans;
•either as a committee or together with the other independent directors, as directed by the Board, determining and approving the annual compensation of the Chief Executive Officer and our other executive officers;
•evaluating annually the appropriate level of compensation for Board and Board committee service by non-employee directors;
•reviewing perquisites or other personal benefits to our executive officers and directors;
•preparing the Compensation Committee report required by SEC rules to be included in our annual proxy statement or Annual Report on Form 10-K; and
•performing such other functions as are assigned by law, our organizational documents or the Board.
Our Compensation CommitteeThe Board has adopted a written charter that sets forth the committee’s duties and responsibilities. The Compensation Committee charter is available on our website at www.veritexbank.com under “About Us—Investor Relations—Corporate Governance.”
Compensation Committee Interlocks and Insider Participation
During 2019,2021, Messrs. Pat S. Bolin, Blake Bozman, Mark C. Griege, Pat S. Bolin, Ned N. Fleming, III,William E. Fallon and Manuel J. Mehos (until June 20, 2021 when Manuel J. Mehos ceased to serve on the Compensation Committee) served as members of the Compensation Committee. See “Board and Committee Matters—Director Independence.” No such individual is, or was during 2019,2021, an officer or employee of our company or any of our subsidiaries, or had any relationship requiring disclosure in this proxy statement. None of our executive officers serve as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving as a member of our Board or Compensation Committee.
Corporate Governance and Nominating Committee
The current members of our Corporate Governance and Nominating Committee are Arcilia Acosta, April Box, Mark C. Griege, Manuel J. MehosGregory B. Morrison and John T. Sughrue, with Mr. SughrueMorrison serving as chair. Our Board has evaluated the independence of the members of the Corporate Governance and Nominating Committee and has determined that each of the members is independent under the applicable rules of Nasdaq. The Corporate Governance and Nominating Committee met fourthree times in 2019.2021.
The Corporate Governance and Nominating Committee has responsibility for, among other things:
•recommending personsidentifying individuals qualified to be selected by ourbecome members of the Board asand recommending nominees to stand for election as directors and to fill any vacancies on our Board;
•leading the Board in its annual review of the Board's performance;
•recommending Board members for committee membership;
•developing and reviewing our Corporate Governance Guidelines;
•establishing procedures for and exercising oversight of the evaluation of the Board and management;
•reviewing the Company's policies and programs that relate to environmental, social and corporate governance ("ESG") matters; and
•performing any other duties or responsibilities expressly delegated to the committee by the Board from time to time relating to the nomination of Board and committee members.
Our Corporate Governance and Nominating CommitteeThe Board has adopted a written charter that sets forth the committee’s duties and responsibilities. The Corporate Governance and Nominating Committee charter is available on our website at www.veritexbank.com under “About Us—Investor Relations—Corporate Governance.”
Risk Committee
The current members of our Risk Committee are April Box, William D. Ellis, William E. Fallon, Manuel J. Mehos and John T. Sughrue, with Mr. Fallon serving as chair. Our Board has evaluated the independence of the members of the Risk Committee and has determined that each of the members is independent under the applicable rules of Nasdaq. The Risk Committee met four times in 2021.
The Risk Committee has responsibility for, among other things:
��overseeing that the Company has identified, assessed and is managing all of the risks that the Company faces and has established a risk infrastructure capable of addressing those risks;
•reviewing the Company's enterprise risk management framework, which outlines the Company's approach to risk management and the policies, processes and governance structures used by management to execute its risk management strategy; and
•evaluating the division of risk-related responsibilities and performing a gap analysis to determine that the oversight of any risk is not omitted.
Nomination of Directors
Our Corporate Governance and Nominating Committee is responsible for reviewing the skills and characteristics of potential Board nominees, as well as the composition and size of the Board as a whole. In selecting or recommending candidates believedfor election to be qualified to become members of our Board, the Corporate Governance and Nominating Committee takes into consideration the criteria approved by the Board and such other factors as it deems appropriate. These factors may include judgment, skill, diversity, experience with businesses and other organizations of comparable size, background and the extent to which the candidate would be a desirable addition to the Boardother demographics, including race, gender, ethnicity and any committees of the Board.nationality. Other than as described above, there are no stated minimum criteria for director nominees.
The Corporate Governance and Nominating Committee recommends to the Board the standards to be applied in making determinations as to the absence of material relationships between us and our directors. Although we do not have a separate diversity policy, the Corporate Governance and Nominating Committee considers the diversity of the directors and nominees in terms of knowledge, experience, skills, expertise and other characteristics that may contribute to the overall diversity of our Board. Other than as described above, there are no stated minimum criteria for director nominees.
For purposes of identifying nominees for the Board, the Corporate Governance and Nominating Committee relies on personal contacts of the members of the Board as well as their knowledge of members of the communities the Bank serves. Our Corporate Governance and Nominating Committee also considers shareholder recommendations for nominees, provided that the nomination includes a complete description of the nominee's qualifications, experience and background, together with a statement signed by each nominee in which he or she consents to act as a Board member if elected. Such nominations should be addressed to the chair of the Corporate Governance and Nominating Committee c/o the Chief Executive Officer of Veritex Holdings, Inc. at 8214 Westchester Drive, Suite 800, Dallas, Texas 75225. The Corporate
Governance and Nominating Committee does not intend to alter the manner in which it evaluates candidates based on whether the candidate was recommended by a shareholder.
At present, the Board does not engage any third parties to identify and evaluate potential director candidates.
Code of Business Conduct and Ethics
We have a Code of Business Conduct and Ethics in place that applies to all of our directors, officers and employees. The Code of Business Conduct and Ethics sets forth specific standards of conduct and ethics that we expect all of our directors, officers and employees to follow, including our principal executive officer, principal financial officer, principal accounting officer or controller. The Code of Business Conduct and Ethics is available on our website at www.veritexbank.com under “About Us—Investor Relations—Corporate Governance.” Any amendments to the Code of Business Conduct and Ethics, or any waivers of requirements thereof, will be disclosed on our website within four days of such amendment or waiver.
Corporate Governance Guidelines
We have adopted Corporate Governance Guidelines to assist the Board in the exercise of its duties and responsibilities and to serve the best interests of the Company and our shareholders. The Corporate Governance Guidelines are available on our website at www.veritexbank.com under “About Us—Investor Relations—Corporate Governance.”
PROPOSAL 2. ADVISORYAPPROVAL OF 2022 AMENDED AND RESTATED OMNIBUS INCENTIVE PLAN
We are asking shareholders to approve our 2022 Amended and Restated Omnibus Incentive Plan, which amends and restates our 2019 Amended and Restated Omnibus Incentive Plan (the “Equity Plan”) to increase the aggregate number of shares of common stock authorized for issuance under the Equity Plan by an additional 750,000 shares, and to amend certain other terms, as described below. Our Compensation Committee approved the Equity Plan, as amended and restated, on April 14, 2022, subject to, and to be effective upon, the approval of this proposal by our shareholders at the Annual Meeting.
As of April 18, 2022, there were 558,663 shares of our common stock available for issuance under the Equity Plan. If the Equity Plan, as amended and restated, is not approved, we may be unable to continue to offer competitive equity-based compensation and would need to consider other compensation alternatives. The increase in the number of shares available under the Equity Plan will allow us to continue to provide equity incentive awards as part of our compensation objectives to attract and retain talented employees and provide them with the right incentives to execute our strategic objectives while maximizing our shareholders’ investment in our company. Our Board believes that the Equity Plan plays an essential role in providing long-term, performance-based incentives aligned with shareholder interests.
Key Shareholder Protections in Equity Plan
While our Board and the Compensation Committee believe that equity and equity-based awards are an important component of our overall compensation program, the Compensation Committee prioritizes shareholder interests in evaluating the awards to be granted to executives and other employees in its administration of the Equity Plan.The following are features of the Equity Plan designed to provide protection for shareholders (these features will remain in the Equity Plan, as amended and restated):
•Prohibition against discounted stock options and stock appreciation rights (“SARs”). Stock options and SARs may not be granted with exercise prices lower than the fair market value of the underlying shares on the grant date.
•Prohibition against stock option or SAR repricing. The Equity Plan prohibits the reduction of the purchase price of a stock option or SAR without shareholder approval.
•No dividend equivalents paid on unvested awards or unexercised stock options. The Equity Plan does not permit the payment of dividends (or dividend equivalent rights) on any unvested awards or unexercised stock options.
•No “evergreen” provision. The Equity Plan does not contain an “evergreen” provision pursuant to which shares authorized for issuance may be automatically replenished.
•Independent committee. Subject to its right to delegate certain limited authorities, the Equity Plan is administered by the Compensation Committee, which is comprised of independent directors.
•One-year minimum vesting. As described below, generally, no more than 5% of the shares authorized for issuance under the Equity Plan may be granted pursuant to awards that vest earlier than one year after the date of grant.
Summary of the Material Features of the Equity Plan, as Amended and Restated
The following is summary of the material features that will be present in the Equity Plan, as amended and restated, if approved by shareholders.This is a summary only and is qualified in its entirety by reference to the complete text of the Equity Plan, as amended and restated. Shareholders are urged to read the actual text of the Equity Plan, as amended and restated, in its entirety. This summary is not intended to be a complete description of all aspects of the Equity Plan. Copies of the Equity Plan, as amended and restated, are available to any shareholder of the Company upon written request addressed to Veritex Holdings, Inc., 8214 Westchester Drive, Suite 800, Dallas, Texas 75225, Attn: Investor Relations.
A copy of the Equity Plan, as amended and restated, is attached as Appendix A to this proxy statement.
The Equity Plan is being amended to increase the number of shares available for issuance pursuant to awards granted under the Equity Plan. We have also added a one-year minimum vesting requirement on equity awards and clarified certain provisions with respect to (i) the Compensation Committee’s authority and responsibilities in the administration of the Equity Plan, (ii) prohibitions against (x) dividend payments and voting rights with respect to any unvested awards, (y) the repricing of stock options and SARs, and (z) transfers of awards, and (iii) the definitions of termination of service, disability, and retirement.
Purpose of the Equity Plan
The Equity Plan has two complementary purposes: (i) to attract and retain talented individuals to serve as officers, employees, directors and service providers; and (ii) to increase shareholder value by aligning the interests of our officers, employees, directors and service providers with the long-term interests of our company and our shareholders.The Equity Plan offers eligible officers, employees, directors and service providers the opportunity to acquire shares of our common stock, or receive monetary payments, on the potentially favorable terms provided by the Equity Plan.
Administration of the Equity Plan
The Compensation Committee administers the Equity Plan. The Compensation Committee has authority under the Equity Plan to:
•designate participants who may receive awards under the Equity Plan;
•determine the types of awards to be granted under the Equity Plan;
•determine the number of shares to be covered by each award;
•determine the terms and conditions of any award;
•amend the terms and conditions of any award;
•determine whether, to what extent, and under what circumstances awards may be exercised in cash, shares, other securities, other awards or other property, canceled, forfeited or suspended;
•establish, amend, suspend or waive rules and appoint such individuals as it shall deem appropriate for the proper administration of the Equity Plan;
•approve forms of award agreements for use under the Equity Plan;
•determine the terms and conditions, not inconsistent with the terms of the Equity Plan, of any award granted thereunder (such terms and conditions include, but are not limited to, the exercise price, the time or times when awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any award or the shares relating thereto, based in each case on such factors as the Compensation Committee will determine);
•construe and interpret the terms of the Equity Plan and awards granted pursuant to the Equity Plan;
•prescribe, amend and rescind rules and regulations relating to the Equity Plan, including rules and regulations established for the purpose of satisfying applicable foreign laws, for qualifying for favorable tax treatment under applicable foreign laws or facilitating compliance with foreign laws; and
•make any other determination and take any other action that the Compensation Committee deems necessary for the administration of the Equity Plan.
The Compensation Committee, or the Board, may delegate to any of our officers the authority to grant awards under the Equity Plan. However, any officer who receives such a delegation of authority may not grant himself or herself an award under the Equity Plan.
Authorized Shares and Award Limits
An aggregate of 2,500,000 shares of common stock were authorized for issuance under the Equity Plan in April 2019.As of April 18, 2022, 2,025,686 shares of common stock have been granted under the Equity Plan, which represents approximately 3.3% of our issued and outstanding shares as of April 5, 2022.If our shareholders approve this proposal, an additional 750,000 shares of our common stock, representing approximately 1.2% of our issued and outstanding shares as of April 5, 2022, will be authorized for grants under the Equity Plan, as amended and restated. If our shareholders approve this proposal, then an aggregate of 3,250,000 shares of our common stock will be authorized for issuance under the Equity Plan. If our shareholders approve this proposal, the new shares available for issuance under the Equity Plan would represent potential equity dilution of approximately 2.3%. Our Board believes that the potential equity dilution to our shareholders that may result from approval of the proposal is reasonable in light of the benefits and advantages of compensation in the form of equity awards to the success of our company's long-term goals.
Under the current terms of the Equity Plan, the maximum aggregate number of shares subject to awards granted under the Equity Plan in any 12-month period to any single individual in any plan year under the Equity Plan is 500,000, and any single individual may receive an aggregate cash award of up to $1 million per year.
If a recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, disposition, spin-off, combination, repurchase or exchange of shares or other securities of our company, issuance of warrants or other rights to purchase shares or other securities of our company or other similar corporate transaction or event affects the shares such that an adjustment is necessary in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Equity Plan, then the Compensation Committee shall (as deemed appropriate) adjust (i) the number and type of shares subject to, or that may become subject to, outstanding awards; (ii) the purchase price or exercise price with respect to the award; or (iii) any other limitations contained within the Equity Plan. Notwithstanding the foregoing, the Compensation Committee may not make any adjustments to outstanding options or SARs that would constitute a modification, extension, or substitution of such rights under Treasury Regulation Section 1.409A-1(b)(5)(v) that would be treated as the grant of a new stock right or change in the form of payment for purposes of Section 409A of the Code.
The closing price of our common stock on the Nasdaq Global Market on April 17, 2022 was $34.60.
Eligibility
The individuals eligible to receive grants of awards under the Equity Plan are determined at the discretion of the Compensation Committee.
As of April 18, 2022, we employed approximately 742 employees who are eligible for awards under the Equity Plan. Twelve non-employee members of the Board were eligible to receive awards under the Equity Plan.
Types of Awards
Stock Option Awards. Nonqualified stock options may be issued under the Equity Plan. The exercise price of an option may not be less than the fair market value per share of common stock on the date of grant (except for options assumed in a corporate transaction). The Compensation Committee may provide for payment of the exercise price of a stock option in cash or cash equivalents, by an exchange of stock previously owned by the grantee or through a broker-dealer facilitated cashless exercise procedure.
SARs. An SAR is a right to be paid an amount equal to the excess of the fair market value of a share of common stock on the date the SAR is exercised over the exercise price, which is generally the fair market value of a share of common stock on the date of grant. Payment can be made in cash, common stock, or both, as specified in the award agreement or as determined by the Compensation Committee.
Restricted Stock and RSUs. A restricted stock award is an award of common stock subject to restrictions on transferability and any other restrictions as the Compensation Committee may impose. The restrictions may lapse after a specified period of employment and/or the satisfaction of pre-established performance goals, in installments or otherwise as determined by the Compensation Committee. An RSU is an award of the right to receive cash or common stock at a future date.
Stock Grants. The Compensation Committee may grant awards of our common stock that are not subject to vesting or other conditions upon grant, subject to the one-year minimum vesting requirement described below under “Award Requirements—Vesting”.
Other Awards. The Compensation Committee may also grant cash-based awards.
Performance-Based Awards. Any awards granted under the Equity Plan may be granted subject to a performance period and performance goals determined by the Compensation Committee. An explanation of the criteria that may be applicable to such performance goals is provided below under “Performance Goals.”
Performance Goals
The Compensation Committee may grant an award under the Equity Plan for which payment or vesting is based on the attainment of one or more performance goals. The performance goals may relate to the performance of the Company, a subsidiary, affiliate, division or strategic business unit or any combination thereof.
Performance goals are determined by the Compensation Committee and are based on a number of criteria, including (i) earnings per share, (ii) efficiency ratio, (iii) earning asset growth and compensation (loans and securities), (iv) deposit growth and composition, (v) net charge-offs, (vi) nonperforming assets to risk weighted capital and (vii) total shareholder return ("TSR") calculated as described in “Executive Compensation—Compensation Discussion and Analysis—Fiscal Year 2018 Compensation Components—RSUs and Option Awards—RSUs.”
Award Requirements
Dividend and Voting Rights. Participants are not entitled to receive any cash or stock dividends paid to or made with respect to any unvested awards or unexercised stock options and do not have the right to vote the shares subject to such awards.
Consideration. Awards may be granted for no cash consideration or for any cash or other consideration as determined by the Compensation Committee or required by applicable law.
Vesting and Forfeiture. Awards vest according to the vesting schedule provided in the applicable award agreement, provided that no stock-based awards may vest earlier than one year after the date of grant. For awards granted to our non-employee members of the Board, the one-year requirement is met if the award vests on the first annual shareholders meeting following the date of grant (provided the meeting is not less than 50 weeks after the grant date). The Compensation Committee may grant awards that are not subject to the one-year vesting requirement but the shares of common stock subject to such awards cannot exceed 5% of the shares of common stock reserved for issuance. The Compensation Committee may accelerate unvested awards, but such acceleration will count against the 5% limit unless the acceleration is upon a participant’s termination of service (i) due to death, disability, or retirement (as the term is defined in the applicable award agreement), (ii) without cause or for good reason (as both terms are defined in the applicable award agreement), or (iii) upon a change in control if the successor does not assume or substitute the award. Unless otherwise determined by the Compensation Committee or in the award agreement, upon a participant’s termination of service, all unvested awards held by the participant shall be forfeited.
Change in Control
Unless otherwise provided in an award agreement or other agreement between our company and the grantee, in the event of a “change in control” (as defined in the Equity Plan) each outstanding award will be treated as determined by the Compensation Committee.
With respect to each outstanding award that is not assumed or substituted in connection with the change in control, the Compensation Committee may fully vest any unvested awards (and any performance conditions applicable to such awards will be deemed to have been achieved at target level). An award is considered assumed if, following the change in control, the award confers the right to purchase or receive the consideration (whether stock, cash or other securities or property) received in the change of control by the holders of common stock for each share held on the effective date of the transaction.
Clawback
In addition to any forfeiture provisions otherwise applicable to an award, a grantee’s right to payment or benefits with respect to an award is subject to reduction, cancellation, forfeiture, clawback or recoupment under the Compensation Adjustment and Recovery Policy adopted by the Company, as may be amended from time to time, and as required by applicable law.
Transferability
Except as otherwise determined by the Compensation Committee, awards granted under the Equity Plan may be transferred only by will or by the laws of descent and distribution. If the Compensation Committee grants an award that may be transferred by the participant, the award agreement must expressly provide for transferability and the transfer must be for no consideration.
Amendment and Termination
The Compensation Committee may at any time amend, alter, suspend or terminate the Plan, provided that the Company must obtain shareholder approval for any amendment to the extent necessary and desirable to comply with applicable law.
Registration
If this proposal is approved by our shareholders, we intend to file with the SEC a registration statement on Form S-8 covering the increase in the number of shares of common stock authorized for issuance under the Equity Plan.
United States Federal Income Tax Information
The following summary is intended as a general guide to the United States federal income tax consequences relating to the issuance and exercise of awards granted under the Equity Plan. This summary does not attempt to describe all possible federal or other tax consequences of such grants or tax consequences based on particular circumstances.
The federal income tax consequences of awards granted under the Equity Plan will depend on the type of award.
Nonstatutory Stock Options and SARs.An award recipient generally recognizes no taxable income as the result of the grant of a nonstatutory stock option or SAR. Upon the exercise of a nonstatutory stock option or SAR, the optionee normally recognizes ordinary income equal to the difference between the exercise price and the fair market value of the shares on the exercise date. If the optionee is a Company employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of stock acquired by the exercise of a nonstatutory stock option or stock-settled SAR, any subsequent gain or loss, generally based on the difference between the sale price and the fair market value on the exercise date, will be taxed as capital gain or loss. The Company generally is entitled to a deduction equal to the amount of ordinary income recognized by the optionee as a result of the exercise.
Stock Awards and Restricted Stock.For a grantee of an award, ordinary income generally will be recognized at the time of payment of cash or delivery of actual shares. Future appreciation on shares held beyond the ordinary income recognition event will be taxable at capital gains rates when the shares are sold. We, as a general rule, will be entitled to a tax deduction that corresponds in time and amount to the ordinary income recognized by the recipient, and we will not be entitled to any tax deduction in respect of capital gain income recognized by the recipient. If shares, when delivered, are subject to a substantial risk of forfeiture, ordinary income taxation and our tax deduction will be delayed until the risk of forfeiture lapses (unless the recipient makes a special election to ignore the risk of forfeiture).
RSUs.For a grantee of an award, ordinary income generally will be recognized at the time of payment of cash or delivery of actual shares. Future appreciation on shares held beyond the ordinary income recognition event will be taxable at capital gains rates when the shares are sold. The Company, as a general rule, will be entitled to a tax deduction that corresponds in time and amount to the ordinary income recognized by the recipient, and the Company will not be entitled to any tax deduction in respect of capital gain income recognized by the recipient.
Exceptions to these general rules may arise under the following circumstances: (i) the Company may not be entitled to a tax deduction for compensation attributable to awards granted to certain current and former employees if and to the extent such compensation exceeds $1 million per taxable year; and (ii) an award may be taxable at 20% above ordinary income tax rates at the time it becomes vested, even if that is prior to the delivery of the cash or stock in settlement of the award, if the award constitutes “deferred compensation” under Section 409A of the Code, and the requirements of Section 409A of the Code are not satisfied.
The foregoing provides only a general description of the application of federal income tax laws to certain awards under the Equity Plan, and is not intended as tax guidance to participants in the Equity Plan, as the tax consequences may vary with the types of awards made, the identity of the recipients and the method of payment or settlement. This summary does not address the effects of other federal taxes (including possible “golden parachute” excise taxes) or taxes imposed under state, local, or non-U.S. tax laws.
Future Grants
Future grants under the Equity Plan will be made at the discretion of the Compensation Committee and, accordingly, are not yet determinable. In addition, benefits under the Equity Plan will depend on a number of factors, including the fair market value of common stock on future dates and the exercise decisions made by optionees. Consequently, it is not possible to determine the benefits that might be received by participants under the Equity Plan.
For information relating to the grants under the Equity Plan for the year ended December 31, 2021 to our named executive officers, see “Executive Compensation—Executive Compensation Tables—Grants of Plan-Based Awards.”
Shareholder Approval
The affirmative vote of a majority of the votes cast at the Annual Meeting is required for the approval of the Equity Plan.
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF OUR 2022 AMENDED AND RESTATED OMNIBUS INCENTIVE PLAN.
Equity Compensation Plan Information
The following table summarizes our equity compensation plan information as of December 31, 2021. We do not have any equity plans that have not been approved by our shareholders.
| | | | | | | | | | | | | | | | | | | | |
| Plan Category | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights1 | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding column (a))2 |
| | (a) | | (b) | | (c) |
| Equity compensation plans approved by shareholders | | 1,000,623 | | | $ | 22.48 | | | 558,663 | |
| Equity compensation plans not approved by shareholders | | — | | | — | | | — | |
| Total | | 1,000,623 | | | $ | 22.48 | | | 558,663 | |
1 The weighted average exercise price is calculated based on 1,000,623 stock options outstanding at December 31, 2021.
.
2 The remaining number of securities available for future issuance under equity compensation plans includes the Equity Plan and the Veritex (Green) 2014 Plan. Our 2010 Plan will not be used to grant future equity awards of any type.
PROPOSAL 3. ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
As of the date of this proxy statement, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and Section 14A of the Exchange Act enable our shareholders to vote to approve, on a non-binding advisory basis, the compensation of our named executive officers, as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our shareholders the opportunity to endorse or not endorse our executive compensation program through the following resolution:
“RESOLVED, that the compensation of the named executive officers, as disclosed in this proxy statement under “Executive Compensation,” including the related compensation discussion and analysis, executive compensation tables and any related disclosures, is hereby approved.”
This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the compensation philosophy, policies and practices described in this proxy statement. As discussed in this proxy statement, the objective of our executive compensation program is to attract and retain a talented management team and provide them with the right incentives to execute our strategic objectives while maximizing our shareholders’ investment in our company. We seek to accomplish this goal in a way that rewards performance and is aligned with our shareholders’ long-term interests. We believe that our executive compensation program satisfies our compensation objectives. Please refer to “Executive Compensation” below for a discussion of our executive compensation program.
As an advisory vote, this proposal is not binding on us and should not be construed as overruling any decision of the Board or Compensation Committee. However, our Compensation Committee, which is responsible for designing and administering our executive compensation program, values the opinions expressed by shareholders in their vote on this proposal. If there are a significant number of negative votes, we will seek to understand the concerns that influenced the vote and intend to address them in making future compensation decisions.
Shareholder Approval
The affirmative vote of a majority of the votes cast at the Annual Meeting is required for the non-binding advisory vote on the compensation of our named executive officers.
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THIS NON-BINDING, ADVISORY PROPOSAL REGARDING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
EXECUTIVE OFFICERS
The following table sets forth the name, age and position with Veritex or the Bank, as indicated, of each of our executive officers.officers for 2022. The business address for all of these individuals is 8214 Westchester Drive, Suite 800, Dallas, Texas 75225.
| | | | | | | | | | | | | | |
| Name | | Age | | Position |
C. MalcomMalcolm Holland, III | | 6062 | | Chairman of the Board, Chief Executive Officer and President, Veritex and the Bank |
| Terry S. Earley | | 6163 | | Senior Executive Vice President and Chief Financial Officer, Veritex and the Bank |
| Clay Riebe | | 5961 | | Senior Executive Vice President, Veritex; Chief Credit Officer, Bank |
Jeff KeslerJames Recer | | 42 | | Senior Executive Vice President, Veritex; Dallas Market President, Bank |
Jon Heine | | 41 | | Senior Executive Vice President, Veritex; Houston Market President, Bank |
LaVonda Renfro | | 5962 | | Senior Executive Vice President, Veritex; Chief AdministrativeBanking Officer, Bank |
| LaVonda Renfro | | 61 | | Senior Executive Vice President, Veritex; Chief Operating Officer, Bank |
| Angela Harper | | 5153 | | Senior Executive Vice President, Veritex; Chief Risk Officer, Bank |
Michael BryanCara McDaniel | | 6356 | | Senior Executive Vice President, Veritex; Chief InformationTalent Officer, Bank |
The following is a brief discussion of the business and banking background and experience of our executive officers. All of our executive officers are appointed by the Board and serve at the discretion of the Board.
C. Malcolm Holland, III. Refer to “Proposal 1. Election of Directors—Nominees for Election” above for a description of Mr. Holland's experience.
Terry S. Earley. Terry Earley has served as the Senior Executive Vice President and Chief Financial Officer of Veritex and the Bank since January 2019, when he joined us in connection with our acquisition of Green. Mr. Earley is responsible for the Finance, Accounting and Treasury functions of the Bank. From March 2017 through January 2019, Mr. Earley was Executive Vice President and Chief Financial Officer of Green, and from July 2017 through January 2019, he was Chief Financial Officer of Green Bank. From December 2011 to March 2017, Mr. Earley served as Executive Vice President and Chief Financial Officer of Yadkin Financial Corporation and its predecessors. Prior to that, Mr. Earley served as President and Chief Executive Officer of Rocky Mountain Bank and Rocky Mountain Capital, located in Jackson, Wyoming, in 2010, and as Chief Financial Officer of Bancorp of the Southeast, LLC, located in Ponte Vedra, Florida, in 2009. Before that, Mr. Earley served as Chief Financial Officer and Chief Operating Officer of RBC Bank (USA), which he joined in 1992. Mr. Earley is a Certified Public Accountant and received his Bachelor of Business Administration with a concentration in Accounting from the University of North Carolina at Chapel Hill.
Clay Riebe. Clay Riebe has served as our Senior Executive Vice President and Chief Credit Officer of the Bank since 2016. Mr. Riebe is responsible for the Bank’s credit quality, credit underwriting and administration functions. From 2009 to 2015 he served in various capacities for American Momentum Bank, including Chief Lending Officer and member of the board of the directors. From 2005 to 2009, Mr. Riebe served in various lending functions at Citibank. He began his career at community banks in Texas, including First American Bank Texas, where he served in various lending functions. Mr. Riebe received a Bachelor of Business Management from Texas Tech University in 1983.
Jeff Kesler.James Recer. Jeff KeslerJim Recer has served as our Senior Executive Vice President and Dallas Market PresidentChief Banking Officer of the Bank since 2014.June 2020. Mr. KeslerRecer is responsible for the Bank’s lending functions, including providing leadershipCompany's efforts in all revenue initiatives and to market managers and lending lines of business.develop scalable strategies designed to support organic growth. From 2013November 2016 to 2014,June 2020, Mr. KeslerRecer served as the Managing Director Regional and Specialty Banking of Loan Originations for United Development, a real estate investment trust. From 2009Texas Capital Bank. Prior to 2013,that, Mr. KeslerRecer served as a Market President of the Bank's North Dallas region.U.S. Corporate Client Coverage Head for Corporate and Investment Banking at BBVA Compass. Mr. Kesler began his career in 2000 at Colonial Bank where he served in various capacities, eventually becoming an area president for the Dallas and Austin markets. Mr. KeslerRecer received a Bachelor of Business Administration from Fort Hays Statein finance at The University in 2000.
Jon Heine. Jon Heine has served as our Senior Executive Vice President and Houston Market President since May 2019. He is responsible for growth and profitability of the banking activities in that market. Mr. Heine joined Veritex Bank after nearly 19 years at Comerica Bank, where he served as the Regional Manager of Comerica’s Wealth Management team in Houston since 2016. Mr. Heine brings broad lending experience, having also held various roles in Private Banking, National Dealer Finance, Middle Market and Entertainment Finance in the markets of Texas and California. Mr. Heine received a Bachelor of Business Administration from Texas Tech University.Texas.
LaVonda Renfro. LaVonda Renfro has served as our Senior Executive Vice President and Chief Administrative Officer of the Bank since 2010. Ms. Renfro is responsible for the overall administration and coordination of the activities of the Bank’s branches, including operations, sales and marketing, deposit operations, merchant services, private banking, business banking and treasury management. From 2005 to 2010, Ms. Renfro served as the Retail Executive of Colonial Bank/BB&T. From 1994 to 2005, Ms. Renfro was Senior Vice President, District Manager for Bank of America’s Austin and San Antonio Markets.
Angela Harper. Angela Harper has served as our Senior Executive Vice President and Chief Risk Officer of the Bank since 2009. Ms. Harper oversees the loan operations, compliance and Bank Secrecy Act departments of Veritex and the Bank. From 2002 to 2009, Ms. Harper served in various capacities at Colonial Bank, including Senior Vice President, Credit Administration Officer and Risk Management Officer for the Texas region. Ms. Harper began her career in banking as a Bank Examiner at the Office of the Comptroller of the Currency from 1991 to 1995 working in the Dallas Duty Station. Ms. Harper received a Bachelor of Business Administration in Finance in 1989 and a Master of Business Administration from Texas Tech University in 1990 and is a Certified Regulatory Compliance Manager.
Michael Bryan.Cara McDaniel. Michael BryanCara McDaniel has served as our Senior Executive Vice President and Chief InformationTalent Officer of the Bank since 2017. Mr. Bryan overseesJune 2020. Ms. McDaniel is responsible for leading and developing the information technology departmentCompany's overall human resource and talent strategy for the bank including talent acquisition, talent management, succession planning and leadership development programs. Ms. McDaniel has served in executive and leadership positions at a number of banks and financial institutions. For the Bank. From 2010 to 2017, Mr. Bryanlast decade she has served as Executive Vice President, Head of Human Resources and Chief Information OfficerTalent Strategy at BNCTexas Capital Bank. From 2007Prior to 2010, Mr. Bryan served as Bank Technology/Operations Practice Principal at DD&F Consulting Group. From 2004 to 2006, Mr. Bryan served as Global Account Manager at Fujitsu. From 2001 to 2004, Mr. Bryan served as Principalthat she held the position of National Head of Human Resources for Citi’s US Commercial Bank. Ms. McDaniel received a Bachelor of Business Administration, special emphasis in marketing and finance, from Texas Woman's University.
Consultant at Hewlett Packard Enterprise. From 1980 to 2003, Mr. Bryan served as Chief Executive Officer/Owner of BancPro Systems, Inc.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The compensation discussion and analysis describes and analyzes our executive officer compensation program with an emphasis on compensation actions taken during fiscal year 2019.2021. For 2019,2021, our named executive officers ("NEOs") were:
•C. Malcolm Holland, III, Chairman of the Board, Chief Executive Officer and President;
•Terry S. Earley, Senior Executive Vice President and Chief Financial Officer;
•Jeff Kesler,James Recer, Senior Executive Vice President and Dallas Market President;
•Jon Heine, Senior Executive Vice President and Houston Market President; andChief Banking Officer;
•Clay Riebe, Senior Executive Vice President and Chief Credit Officer; and
•LaVonda Renfro, Senior Executive Vice President and Chief Operating Officer.
Our Compensation Philosophy
The overall objective of our executive compensation program is to attract and retain a talented management team and provide them with the right incentives to execute our strategic objectives while maximizing our shareholders’ investment in our company. The same principles that govern the compensation of all of our salaried employees apply to the compensation of our executive officers:
•Align executive compensation with strategy, performance and the interests of our shareholders. Our executive compensation programs provide incentive compensation opportunities that promote the achievement of a balanced mix of short- and long-term strategic and financial objectives. In developing our compensation programs and related performance goals, we generally consider our business objectives, market practices, external competitiveness, shareholder interests and advice from our independent compensation consultant.consultants. Generally, our executive compensation program is designed to deliver compensation that approximates the median for a carefully selected peer group but exceeds the median when performance exceeds expectations. Our executive incentive compensation performance metrics support our priorities for creating shareholder value.value and a solid foundation for growth.
•Enhance our ability to attract and retain a talented executive management team. We seek to offer competitive compensation opportunities and packages that enable us to attract and retain highly talented and experienced executives with the critical knowledge and skills necessary for the execution of our strategy.
•Foster non-financial and strategic goals. While financial results are the primary commitment we make to our shareholders, our executive compensation program balances financial results with other key values such as leadership, teamwork and community service. Certain components of our executive compensation program provide flexibility to adjust compensation foralign with these non-financial and strategic goals.
•Support actions needed to respond to changing business environments. We have sought to provideestablished some elements of compensation,guidelines, such as change in control and severance benefits, that give our management team or the Board tools to facilitate decisions about succession planning, acquisitions and other significant corporate events that maywould be in the best interest of the Bank and our shareholders, but that might impact the position or employment status of executive officers.
•Manage risk. Our executive compensation program is designed to minimize risk. In particular, we believe our incentive compensation program is structured to avoid encouragingmitigate excessive risk-taking byrisk to the Company.
The same principles that govern the compensation of our executive officers.officers apply to the broader population of all of our salaried employees
Our Compensation Committee annually reviews the goals and objectives of our executive compensation program and either amends the program or recommends amendments to the Board as appropriate.
Elements of Compensation
We compensate our named executive officersNEOs through a mix of base salary, cash incentive bonuses, long-term incentive ("LTI") compensation and other benefits, which include, to a certain extent and for certain of our named executive officers,NEOs, perquisites. We intend the executive compensation program to provide our executives with target compensation that, on average, approximates the median for our peer group. Individual components of compensation may be greater or lesser than the median, and actual compensation delivered may vary significantly from the target opportunity and the median based on ourBank performance, individual performance, changes in our stock price and shareholder return, among other factors taken into consideration by the Compensation Committee. We intend to deliver the majority of compensation to our executives through ourvariable pay, including incentive programs, resulting in a significant portion of total compensation delivered through variable pay so that factors that impact the value of our shareholders’ investment in our company significantlyare impact our named executive officers’NEOs compensation. We believe the current mix and value of these compensation elements provide our named executive officersNEOs with total annual compensation that is both reasonable and competitive within our markets, appropriately reflects our performance and each executive’s particular contributions to that performance, and takes into account applicable regulatory guidelines and requirements.
Compensation for fiscal year 20192021 was delivered to our named executive officersNEOs through the components listed in the table below, which provides a brief description of the principal types of compensation, how performance factors into each type of compensation and the compensation program objectives served by each type. Detailed descriptions of the componentstype of compensation are discussed below in “—Fiscal Year 20192021 Compensation Components.”
| | | | | | | | | | | | | | | | | | | | |
| Component | | Description | | How Amount was Determined/
Performance Considerations | | Objectives |
| Base Salary | | Fixed cash payment. | | Targeted at market median with adjustments based on level of responsibility, experience and individual performance. | | Provide competitive annual pay to attract and retain our executives. |
| Cash Bonus | | Short-term incentive cash payment based on our company’s performance inover a one-year period. | | Target payouts reference market median and actual payouts are driven by earnings per share, efficiency ratio, earning asset growth and composition (loans and securities), deposit growth and composition, net charge-offs and nonperforming assets to risk-weighted capital, achievement of management/strategic objectives, with adjustments based on individual performance. | | Reward executive performance in achieving annual financial, strategic and operational objectives. |
Restricted share unitsRSUs | | Long-term incentive opportunity based on performance, retention and value created. | | Target award values are driven by individual performance, retention, and value creation for the Bank. | | Reward executives in achieving long-term financial and strategic objectives and align executive officers’ interests with shareholders. |
Performance Share Units ("RSUs"PSUs") | | Long-term incentive opportunity based on performance over multiple years. | | Target award values are based on market median and are driven by return on average tangible common equity, pre-tax pre-provision return on average assets, and our total shareholder return ("TSR") and other performance measures.over time. | | Reward executive performance in achieving long-term financial and strategic objectives and align executive officers’ interests with shareholder returns. |
| Option Awards | | Long-term incentive opportunity based on performance over multiple years. | | Target award values are based on market median. | | Reward executive performance in achieving long-term financial and strategic objectives and align executive officers’ interests with shareholder returns.shareholders. |
| Other Compensation | | Employee benefits and other compensation. | | Benefits available to our employees, as well as other benefits that are individually negotiated by certain of our executives. | | Provide competitive benefit packages to promote the well-being, safety and productivity of our executives. |
Our Compensation Committee annually reviews and establishes the performance measures, targets and payout schedules used for our executive compensation program and the long-term incentive component of awards granted under our 2019 Amended and Restated Omnibus Incentive Plan which amended and restated our 2014 Omnibus Incentive Plan (the "Equity Plan"), or the Veritex (Green) 2014 Omnibus Equity Incentive Plan (the “Veritex (Green) 2014 Plan”), as discussed in the table above and in “—Fiscal Year 20192021 Compensation Components” below. In determining actual performance against these metrics, the Compensation Committee decides whether to include or exclude the impact of items reported in our financial statements that may not reflect underlying operating results for the current or a prior fiscal year. Adjustments from reported earnings are intended to avoid artificial inflation or deflation of awards due to unusual or non-operational items in the applicable period and align pay outcomes with how the Compensation Committee and management view the performance of our business. The Compensation Committee also considers various other factors in determining executive compensation packages, including individual performance and changes in our stock price. In addition, the Board of Directors andvalue created for the Compensation Committee are actively monitoring the effects of the COVID-19 pandemic on the economyBank and our operations and future results. In light of these developments, it is anticipated that the Compensation Committee will re-evaluate the performance goals and incentives associated with our executive compensation program at some point during 2020, and will communicate material changes in accordance with applicable disclosure obligations.shareholders.
Benchmarking
Our Compensation Committee believes that a threshold characteristic of reasonable compensation is that it aligns with compensation provided by our peers, against whom we compete for talent. In preparation for determining executive compensation for fiscal year 2019,2021, the committee benchmarked our executive compensation levels to evaluate the competitiveness of our executive compensation program. As a reference for establishing compensation levels for fiscal year 2019,2021, the Compensation Committee engaged Ernst & Young ("EY") as its independent external compensation consultant to provide independent advice, information and analyses of our executive compensation program, including providing a review of competitive compensation levels.
EY presented, and the Compensation Committee approved, a peer group of 1511 publicly traded banking organizations similar in size, scope and geography to Veritex for benchmarking pay for purposes of setting executive compensation levels for fiscal year 2019.2021. EY collected and analyzed historical compensation data reported by each company in our peer group. The following are the criteria that EY considered in compiling our peer group:
•publicly traded parent holding companies for community banks; and
•reported assets between $5.0 billion and $21.0$20.0 billion.
The following is the list of peer companies listed in our 20192021 Peer Group and Survivorship Policy were used for executive compensation benchmarking purposes for 2019:2021:
| | | | | | | | | | | | | | |
| | Institution Name | | Ticker |
| 1. | | Allegiance Bancshares, Inc. | | ABTX |
| 2. | | BancFirst Corporation | | BANF |
| 3. | | Cadence BancorporationFB Financial Corporation | | CADEFBK |
| 4. | | Chemical Financial Corporation1
First Bancorp | | CHFCFBNC |
| 5. | | CVB Financial Corporation | | CVBF |
6. | | Eagle Bancorp, Inc. | | EGBN |
7. | | First Financial Bankshares, Inc. | | FFIN |
8.6. | | Hilltop Holdings, Inc. | | HTH |
9. | | Independent Bank Group, Inc.2 | | IBTX |
10.7. | | LegacyTexas Financial Group, Inc.3
National Bank Holdings | | LTXBNBHC |
11.8. | | Origin Bancorp, Inc. | | OBNK |
129. | | Pacific Premier Bancorp, Inc.Seacoast Banking Corp of Florida | | PPBISBCF |
13. | | ServisFirst Bancshares, Inc. | | SFBS |
14. | | Simmons First National Corporation | | SFNC |
15.10. | | Southside Bancshares, Inc. | | SBSI |
1Cadence Bancorporation was acquired during 2019 by State Bank Financial Corporation, and as such, will no longer remain in the list of peer companies used for executive compensation benchmarking purposes on a go-forward basis.
2 Independent Bank Group, Inc. announced a planned merger with Texas Capital Bancshares in the middle of 2020 and, as such, will no longer remain in the list of peer companies used for executive compensation benchmarking purposes on a go-forward basis.
3 LegacyTexas Financial Group, Inc. was acquired during 2019 by Prosperity Bancshares, Inc.®, and as such, will no longer remain in the list of peer companies used for executive compensation benchmarking purposes on a go-forward basis.
The following is the list of substitute peer companies listed in our 2019 Peer Group and Survivorship Policy:
| 11. | | TowneBank | | | | | | | | | | | | |
| | Institution Name | | Ticker |
1. | | CBTBX, Inc. | | CBTX |
2. | | Independent Bank Corporation | | INDC |
3. | | 1st Source Corporation | | SRCE |
4. | | First Commonwealth Financial Corporation | | FCFTOWN |
The Compensation Committee expects to update our peer group from time to time to ensure that the peer group continues to be appropriate for purposes of benchmarking executive compensation.
Overall, the Compensation Committee sought to provide total compensation target opportunity (base salary, annual cash bonus, RSUs and option awards)long-term incentives) for our named executive officersNEOs that approximates the median level for comparable positions in our peer group with the opportunity to earn above median compensation based on exceeding performance objectives. Consistent with industry practice, we consider compensation within 15% of the median to be competitive with the median. This margin allows for year-to-year swings in data than can occur based on a number of factors unrelated to underlying compensation strategies. For fiscal year 2019,2021, our target total cash and direct compensation opportunities (which are further discussed below in “—Fiscal Year 20192021 Compensation Components”) established by the Compensation Committee for all named executive officersNEOs were, on average, belowat market median. Within the target total compensation opportunity for each named executive officer,NEO, individual components of compensation may be greater or lesser than median because the committee is primarily concerned with the competitiveness of the entire program, rather than any one element of compensation. Compensation realized by each named executive officerNEO may also vary significantly from target opportunity based on our performance, individual performance and changes in our stock price, among other factors.
Fiscal Year 20192021 Compensation Components
The Compensation Committee, either as a committee or together with our other independent directors, determines the individual components of the compensation program within the overall framework of target values communicated to our executive officers.
Base Salary
Base salary is generally targeted at the market median, with adjustments where the Compensation Committee believes appropriate based on the factors enumerated below, among other factors. The base salaries of our named executive officersNEOs have historically been reviewed and set annually by the Board or the Compensation Committee as part of our company’s performance review process as well as in connection with the promotion of an executive officer to a new position or other change in job responsibility. In establishing base salaries for our named executive officersNEOs for fiscal year 2019,2021, the Compensation Committee relied on external market data obtained from outside sources, including a review of competitive compensation levels for our peer group prepared by EY, as described above. In addition to considering the information obtained from such sources, the Compensation Committee considers, among other factors:
•each named executive officer’sNEOs scope and uniqueness of responsibility;
•each named executive officer’sNEOs years and quality of experience;
•our overall financial performance and performance with respect to other aspects of our operations, such as our growth, including the status of our relationship with banking regulatory agencies; and
•each named executive officer’sNEOs individual performance and contributions to our company-wide performance, including leadership, teamwork and community service.
Base salaries approved for the named executive officersNEOs for fiscal years 20182020 and 20192021 were as follows:
| | | | | | | | | | | | | | | | | | | | |
| Executive Officer | | 2020 Base Salary ($) | | 2021 Base Salary ($) | | % Change |
| C. Malcolm Holland, III, Chairman of the Board, Chief Executive Officer and President | | 725,000 | | | 725,000 | | —% |
| Terry S. Earley, Senior Executive Vice President and Chief Financial Officer | | 450,000 | | | 450,000 | | —% |
| James Recer, Senior Executive Vice President and Chief Banking Officer | | 450,000 | | | 450,000 | | —% |
| Clay Riebe, Senior Executive Vice President and Chief Credit Officer | | 400,000 | | | 400,000 | | —% |
| LaVonda Renfro, Senior Executive Vice President and Chief Operating Officer | | 375,000 | | | 375,000 | | —% |
Annual Cash Bonus
| | | | | | | | | | | | | | | | | | | | |
| Executive Officer | | 2018 Base Salary ($) | | 2019 Base Salary ($) | | % Increase (Decrease) |
| C. Malcom Holland, III, Chairman of the Board, Chief Executive Officer and President | | 460,000 | | | 600,000 | | | 30% | |
| Terry S. Earley, Senior Executive Vice President and Chief Financial Officer | | — | | | 400,000 | | | —% | |
| Jeff Kesler, Senior Executive Vice President and Dallas Market President | | 310,000 | | | 400,000 | | | 29% | |
| Jon Heine, Senior Executive Vice President and Houston Market President | | — | | | 268,205 | | | —% | |
| Clay Riebe, Senior Executive Vice President and Chief Credit Officer | | 285,000 | | | 375,000 | | | 32% | |
For fiscal year 2019, base salaries for our named executive officers were, on average, below market median.
Cash Bonus
We typically pay an annual cash bonus to our named executive officersNEOs to recognize and reward meaningful contributions to our performance for the year. Cash bonuses are intended to approximatetarget the market median and are based on target opportunities established byupon the Compensation Committee at the beginning of each fiscal year. When determining compensation for fiscal year 2019, the Compensation Committee based its determinations in part on a formulaic approach to incentivize achievement of specific performance measures, including efficiency ratio, earning asset growth and composition (loans and securities), deposit growth and composition, net charge-offs and nonperforming assets to risk-weighted capital, among other financial and operational metrics in determiningestablished by the amountCompensation Committee at the beginning of bonuses paid. Bonuses are determined based on the achievement of these performance measures relative to minimum and maximum target performance.each fiscal year. The Compensation Committee used competitive market data from the peer group prepared by EY, as described above, to establish the minimum, target, and maximum bonus amounts. Targets may be established at greater or lesser levels for individual executive officers and actual annual incentive awards may be above or below target depending on our performance forActual cash bonuses paid are determined based upon the fiscal year as measured by theachievement of these performance measures and goals established by the Compensation Committee at the beginning of the fiscal year.relative to those target thresholds. When performance exceeds the target goals for the performance measures, annual incentive awards may exceed target as well, and may exceed market median payouts. In addition, in determining whether to pay cash bonuses to a named executive officerNEO for a given year and the amount of any cash bonus to be paid, the Compensation Committee also considers the personal performance of the executive officer and his or her contributions to our company’s performance for the year, including with respect tohis or her leadership, teamwork and community
service. The Compensation Committee, in its sole discretion, determines whether such bonuses will be paid for any year and the amount of any bonus paid.has discretion to adjust bonuses by reviewing performance goals and extraordinary factors.
For benchmarking purposes, we consider cash bonuses as a component of total cash compensation, which also includes base salary. For fiscal year 2019, total cash compensation for our named executive officers was, on average, below market median.
RSUs and Option AwardsLong-Term Incentives
We believe that long-term incentive compensation is a critical part of our executive compensation program because it promotes achievement of our long-term financial and strategic objectiveobjectives and aligns the financial interests of our executive officers with those of our shareholders..shareholders. We generally grant equity awards, including performance-based RSUs, PSUs and stock options, to each of our named executive officersNEOs in order to attract and retain a talented management team and provide them with the right incentives to execute our strategic objectives while maximizing our shareholders’ investment in our company. The Compensation Committee considers market practices, external competitiveness, shareholder interests and advice from our independent compensation consultant in establishing the amount and characteristics of equity award grants. The Compensation Committee determined the level of long-term incentive grants for fiscal year 20192021 at the beginning of the fiscal year. Prior to making the grants, the committeeCompensation Committee established an intended long-term incentive value for each named executive officer.NEO. When setting these intended values, the committeeCompensation Committee considered competitive market data from the peer group prepared by EY, as described above, and target total compensation opportunities. We intend that the target value of long-term incentive awards for our executives approximate the market median and the total compensation opportunity for such executive officers approximate the market median level when combined with base salary and target annual bonuses. Fiscal year 2019 long-term incentive awards were driven by a comparison of our TSR against the composite return of the Peer Group TSR on the last day of 2019 (calculated as described below), and individual performance or other factors may result in awards which are above or below the market median. These factors include tenure and experience, succession planning and retention, subjective evaluations of performance, historical grant levels and other recent compensation actions with respect to the individual. The actual value of equity awards realized by any individual may differ significantly (up or down) from the intended value due to changes in our stock price over the life of the awards and the extent to which performance goals are met in the case of performance-based RSUs.
During fiscal year 2019,2021, we awarded performance-basedPSUs and RSUs and stock options to our named executive officers.NEOs. See “—Executive Compensation Tables—Tables—Grants of Plan-Based Awards” below for information regarding awards for fiscal year 2019.
2021. The value of the 2021 award grants were targeted to market median levels and split with 50% of the value being granted in time-based RSUs and 50% of the value being granted in PSUs.
RSU awards entitleTime-based RSUs (50%): The number of shares is determined by using the recipient to receive one sharevolume weighted average price for the 20 trading days prior of our stock for each RSU at the end of a specified vesting period. Non-performance based RSUs generally vest equally over a service period generally ranging from one to five years from thegrant date of grant. Performance-basedFebruary 1, 2021. Time-based RSUs eligible forhave a 3-year pro-rata vesting will beschedule.
PSUs (50%): The number of shares is determined byusing a Monte Carlo model to estimate the Compensation Committee or its delegee by comparing the Company’s TSR, defined as the percentage change in share value plus dividends paidbased on a share of common stock including any gain/(loss) from reinvestment, during the period from December 31, 2018 through December 31, 2021 (the “Performance Period”), to the TSR of our peer group as discussed above in “—Benchmarking” (the "Peer Group TSR"). The performance-based RSUs granted in 2019 will cliff vest on January 1, 2022, three years from the grant date. The market condition is determinedperformance targets. Company performance at the end of the calendar year3-year period will be compared against the KBW Nasdaq Regional Banking Index ("KRX"). Company performance will be placed into the appropriate quartile of relative performance in whichorder to determine the performance-based RSUsappropriate payout threshold. The performance measures include Return on Average Tangible Common Equity with 50% weighting and Pre-Tax, Pre-Provision Return on Average Assets with 50% weighting. Payout levels range from 0% payout for below 25th quartile performance, to 50% payout for 25th quartile performance, 100% payout for 50th quartile performance, and 150% payouts for 75th quartile performance. Total shares earned are granted.
We usethen subject to a Monte Carlo simulation to estimate the fair valuetotal shareholder return ("TSR") modifier of performance-based RSUs80% - 120% based on our TSR relative Company performance compared to the Index on the last day of 2019 (calculated as described below), which fair value then determines the number of shares of our common stock subject to the RSUs. The payout for 2019 awards was calculated as a functionTSR of the target equity incentive percentage (calculated as percentage of salary) multiplied by the linear interpolation of values between 50% to 150% funding levels divided by the fair value of the performance-based RSUs (calculated as described above). The number of performance-based RSUs granted in 2019 eligible for vesting was determined as detailed below:
•If TSR is less than 24.9% of the Peer Group TSR: 0% of RSUs are eligible for vesting.
•If TSR is within 25% to 49.9% of the Peer Group TSR: 50% of RSUs are eligible for vesting.
•If TSR is within 50% to 74.9% of the Peer Group TSR: 100% of RSUs are eligible for vesting.
•If TSR is at or above 75% of the Peer Group TSR: 150% of RSUs are eligible for vesting.KRX index.
We calculate TSR as follows, with the beginning stock price equaling the closing stock price on the first day of the Performance Period, and the ending stock price equaling the closing stock price on the last day of the Performance Period:
| | | | | |
(ending stock price + dividends paid + dividend reinvestment gain/loss) | – 1 |
beginning stock price | |
The Company’s TSR percentile rank is calculated as follows, with n equaling the number of companies in the peer group plus the Company and "r" equaling the rank of the Company within the peer group (with 1 being the highest rank):
Certain RSUs granted during the year were subject to shareholder approval which was obtained at our 2019 annual meeting. Further, certain RSUs granted during the year immediately vested and were discussed in our 2019 proxy statement. All calculations are done by the Compensation Committee and are binding for all purposes under the recipient's award agreement.
Stock Options
Option awards granted in 2019 were calculated using a target equity incentive percentage based on factors which include tenure and experience, succession planning and retention, subjective evaluations of performance, historical grant levels and other recent compensation actions with respect to the individual. Option awards are time-based and vest in three equal annual installments on each of the first three anniversaries of the grant date. We use a Black-Scholes model to estimate the fair value of stock options.
In determining certain equity awards made in 2019 in connection with our merger with Green as well as our 2019 compensation plan, the Compensation Committee consulted with EY, which prepared a peer bank equity awards study.
For benchmarking purposes, we consider RSUs and option awards as components of total direct compensation, which also includes base salary and cash bonuses (or total cash compensation). For fiscal year 2019, total direct compensation for our named executive officers was, on average, below market median.
Employee Benefits and Other Compensation
Our employee benefit programs are offered and designed to be competitive and to provide reasonable security for employees. Our named executive officersNEOs are eligible to participate in the same benefit plans designed for all of our full-time employees, including health, dental, vision, disability and basic group life insurance coverage. We also provide our employees, including our named executive officers,NEOs, with a 401(k) plan to assist participants in planning for retirement and securing appropriate levels of income during retirement.
401(k) Plan and Employee Stock Ownership Plan
We provide a 401(k) program that allows employees to contribute a portion of their pre-tax earnings towards retirement savings. We offer a Company match to all employees enrolled in our 401(k) plan as a component of total compensation and to encourage them to participate in the 401(k) plan. We match 100% of employee contributions to the first401(k) plan up to 6% of an employee’s contribution dollar for dollartheir eligible compensation and up to the limitations imposed by the Internal Revenue Service.
Effective January 1, 2012, we adopted the Veritex Community Bank Employee Stock Ownership Plan ("ESOP"), which covers substantially all employees (subject to certain exclusions) that meet certain age and service requirements. All ESOP assets are held in trust and managed by C. Malcolm Holland, III, in his capacity as the trustee of the ESOP. Shares of our common stock purchased by the ESOP were initially held in a suspense account until released for allocation to participants. Prior to January 1, 2019, we made contributions to each eligible participant's account each year, generally based on the participant's 401(k) contribution made during that year. Shares were then released from the suspense account and allocated to each participant's account based on the amount of the contribution and the fair value of the shares. The ESOP was amended effective December 31, 2018 to cease new contributions or allocations of the ESOP effective January 1, 2019. For additional information regarding the ESOP, please refer to the notes to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2019.Service
Our named executive officersNEOs did not participate in, or otherwise receive any benefits under, any pension or retirement plan sponsored by us during 20192021 other than benefits received under the 401(k) and ESOP..
Nonqualified Deferred Compensation
Our named executive officersNEOs did not participate in, or earn any benefits under, a nonqualified deferred compensation plan sponsored by us during 2019.2021.
Welfare Benefits
We provide medical, dental and dentalvision coverage, life insurance and disability insurance to executive officers under the same programs offered to all salaried employees. All participating employees pay a portion of the cost of these programs.
Perquisites
In addition to the benefit plans discussed above in “—Employee Benefit Plans and Other Compensation,” we provide our named executive officersNEOs with certain perquisites. In 2019,2021, we reimbursed Messrs. Holland Kesler and HeineRecer for certain country club membership dues in the amounts of $45,442, $28,729$51,148 and $7,028,$7,481, respectively, which ismemberships are used for business purposes.
In addition, we invest in Bank-owned life insurance due to its attractive nontaxable return and protection against the loss of our key employees. During 2019, we paid premiums on Bank-owned life insurance issued in respect of our named executive officers in the amounts described in “—Executive Compensation Tables—Summary Compensation Table” below.
VB Sub 5, LLC, a subsidiary of Veritex Bank, owns an airplane that was purchase during 2019.a corporate airplane. We may allow our executive officers and directors to utilize the corporate airplane for personal use in limited circumstances, We require the executive officers and directors to reimburse the company for such personal use on an operating cost per flight hour. The hourly reimbursement rate represents the aggregate incremental cost for such personal use and takes into account items such as maintenance and repair, operating expenses, the pilot’s salary, landing and ramp fees, fuel costs, taxes and travel expenses.
Roles of the Compensation Committee, Compensation Consultant and Management in the Compensation Process
Compensation Committee Responsibilities
The Compensation Committee is responsible to the Board and to our shareholders for the oversight and governance of our compensation program for executive officers, and for approving the compensation of our executive officers. The Compensation Committee, either as a committee or together with our other independent directors, makes allreviews and ratifies decisions with respect to the compensation of our named executive officers.officers, including our NEOs. The Compensation Committee evaluatesreviews our executive officers’ performance in light of the goals and objectives of our executive compensation plans; determines and approves the overall compensation strategies and policies for our executive officers; reviews all equity compensation plans and awards; evaluates whether incentive and other forms of pay encourage excessive risk-taking by executive officers; and reviews perquisites and other personal benefits to our executive officers. The Compensation Committee also specifically evaluates our Chairman and Chief Executive Officer’s performance in light of our goals and objectives relevant to his compensation and, either as a committee or together with our other independent directors, recommends the compensation of our Chairman and Chief Executive Officer for approval by the Board. Periodically, the Compensation
Committee also undertakes an extensive review of the competitiveness and appropriateness of certain pay practices, such as severance and change in control arrangements.
The Compensation Committee may form subcommittees for any purpose that the committee deems appropriate and may delegate to subcommittees such power and authority as the committee deems appropriate. However, no subcommittee may consist of fewer than two members and the Compensation Committee may not delegate to a subcommittee any power or authority required by any law, regulation or listing standard to be exercised by the committee as a whole.
Engagement of Compensation Consultant
In 2019,2021, the Compensation Committee retained EY as an independent external compensation consultant to provide independent advice, information and analysis on executive compensation. The Compensation Committee established several practices to ensure the external consultant's independence, candor and objectivity. EY was engaged by and reported directly to the Compensation Committee. In addition, EY frequently met separately with the Compensation Committee with no members of management present, andindependently consulted directly with the Compensation Committee chair between meetings. Our management reportedmeetings and also met directly with Compensation Committee members individually or collectively throughout the year. The fees paid for executive compensation consulting services performed by EY toare approved by the Compensation Committee at each meeting and the committee approved in advance of the executive compensation consulting services to be performed.
Pursuant to its engagement, EY provided the Compensation Committee with information regarding marketplace compensation trends and assisted the Compensation Committee with the identification and approval of certain elements of our overall executive compensation program. Aggregate fees for EY’s executive compensation consulting services provided to the committee in 20192021 were approximately $65,000.$76,667. In addition to these compensation services, in 2019,2021, EY provided quarterly tax advisory services. Aggregate fees for these due diligence and tax advisory services were approximately $176,751.$105,500. Together with the fees for executive compensation consulting services, aggregate fees paid to EY for 20192021 were approximately $241,751.$182,167. The decision to engage EY for additional other services was made by management and the Compensation Committee approved the additional services. The Compensation Committee believes
that, given the nature and scope of the additional services, the additional services did not raise a conflict of interest and did not impair EY's ability to provide independent advice to the Compensation Committee concerning executive compensation matters.
The Compensation Committee has assessed the independence of EY pursuant to the rules of the SEC and concluded that EY's work for the Compensation Committee did not raise any conflicts of interest that would prevent EY from independently advising the committee. In making this determination, the committee considered, among other things, the fees paid for services provided to management as a percentage of the consultant’s consolidated revenues, policies and procedures established by the consultant to mitigate conflicts of interest, and the lack of business and personal relationships between the consultant's team members and our executive officers and Compensation Committee members.
Management Input
While the Compensation Committee determines the overall compensation strategy and policies for our executive officers and approves their compensation, it seeks input from the Chief Executive Officer with respect to both overall guidelines and discrete compensation decisions. Specifically, the Chief Executive Officer attends certain meetings of the Compensation Committee to provide input and recommendations with respect to the compensation of officers and other executives, as well as compensation programs and policies for all employees. In addition, our Chief Executive Officer provided advice to the committee in identifying the key contributors and determiningassessing executive officer performance to finalize the appropriate award levels for each individual. However, the Chief Executive Officer is not present during any discussion relating to his own compensation and is not involved in determining his own compensation. Final decisions regarding executive compensation and the Company's overall compensation programsphilosophy and policies are made by the Compensation Committee.
Executive Officer Stock Ownership
In 2019,During 2021, the Compensation Committee did not implementperiodically reviewed the ownership guidelinesstake that requireeach executive officers to maintain a specific ownership stakeofficer had in the Company. However, ourThe Company's ownership guidelines encourage executives are encouraged to build and maintain an investment in our common stock equal to three to five times their base salary for the Chief Executive Officer and three times their base salary for other NEOs to further align our executives’ interests with those of our shareholders.
Hedging and Pledging Policy
We have adopted a policy on insider trading that our employees may not purchase or sell options on Company stock; engage in short sales with respect to Company stock; or trade in puts, calls, straddles, equity swaps or other derivative securities that are directly linked to our stock. It is also our policy that shares of our stock owned by executive officers or directors may not be held in a margin account or pledged as collateral on a loan. Our insider trading policy allows executive officers, directors and certain employees to enter into pre-established trading plans complying with Rule 10b5-1 under the Exchange Act and our internal policies and procedures in connection with sales of our securities.
Clawback Policy
Our Equity Plan and provides that, in addition to any forfeiture provisions otherwise applicable to an award under the Equity Plan, a grantee’s right to payment or benefits with respect to an award is subject to reduction, cancellation, forfeiture, clawback or recoupment under clawback policies that may be adopted by us or as required by applicable law.
Our Veritex (Green) 2014 Plan provides that any award which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement or any policy adopted by the Company.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the compensation discussion and analysis included in this proxy statement with management and, based on that review and discussion, the Compensation Committee recommended to the Board that the compensation discussion and analysis be included in this proxy statement. The Board approved the Compensation Committee’s recommendation.
| | | | | | | | |
| | COMPENSATION COMMITTEE |
| | |
| | Ned N. Fleming, III,Blake Bozman, Compensation Committee Chair
Pat S. Bolin, Compensation Committee Member Manuel J. Mehos,William E. Fallon, Compensation Committee Member
Mark C. Griege, Compensation Committee Member |
Executive Compensation Tables
Summary Compensation Table
The following table sets forth information regarding the compensation paid to our named executive officersNEOs for the fiscal years ended December 31, 2019, 20182021, 2020 and 2017.2019.
| | Name and Position | Name and Position | | Year | | Salary ($)1 | | Bonus ($)2 | | Stock Awards ($)3 | | Option Awards ($)4 | | | All Other Compensation ($) | | Total ($) | Name and Position | | Year | | Salary ($)1 | | Bonus ($)2 | | Stock Awards ($)3 | | Option Awards ($)4 | | | All Other Compensation ($) | | Total ($) |
| C. Malcolm Holland, III, Chairman of the Board, Chief Executive Officer and President | C. Malcolm Holland, III, Chairman of the Board, Chief Executive Officer and President | | 2019 | | $ | 600,000 | | | $ | 360,000 | | | $ | 1,790,722 | | | $ | 1,021,713 | | | | $ | 136,676 | | 5 | $ | 3,909,111 | | C. Malcolm Holland, III, Chairman of the Board, Chief Executive Officer and President | | 2021 | | $ | 725,000 | | | $ | 1,196,250 | | | $ | 928,423 | | | $ | — | | | | $ | 254,469 | | 5 | $ | 3,104,142 | |
| | 2018 | | 460,000 | | | 230,000 | | | 138,000 | | | 138,000 | | | | 57,102 | | 5 | | C. Malcolm Holland, III, Chairman of the Board, Chief Executive Officer and President | | 2020 | | 725,000 | | | 170,000 | | | 1,895,596 | | | 435,141 | | | | 263,767 | | 5 | 3,489,504 | |
| | 2017 | | 375,000 | | | 275,000 | | | 82,549 | | | 93,750 | | | | 64,499 | | 5 | | | 2019 | | 600,000 | | | 360,000 | | | 1,790,722 | | | 1,021,713 | | | | 136,676 | | 5 | 3,909,111 | |
| Terry S. Earley, Senior Executive Vice President and Chief Financial Officer | Terry S. Earley, Senior Executive Vice President and Chief Financial Officer | | 2019 | | 400,000 | | | 192,000 | | | 1,042,100 | | | 80,000 | | | | 752,521 | | 6 | 2,466,621 | | Terry S. Earley, Senior Executive Vice President and Chief Financial Officer | | 2021 | | 450,000 | | | 742,500 | | | 310,307 | | | — | | | | 86,679 | | 6 | 1,589,486 | |
| | 2018 | | — | | | — | | | — | | | — | | | | — | | | | Terry S. Earley, Senior Executive Vice President and Chief Financial Officer | | 2020 | | 450,000 | | | 135,000 | | | 994,776 | | | 196,403 | | | | 90,022 | | 6 | 1,866,201 | |
| | 2017 | | — | | | — | | | — | | | — | | | | — | | | | | 2019 | | 400,000 | | | 192,000 | | | 1,042,100 | | | 80,000 | | | | 752,521 | | 6 | 2,466,621 | |
| Jeff Kesler, Senior Executive Vice President and Dallas Market President | | 2019 | | 400,000 | | | 192,000 | | | 641,799 | | | 447,528 | | | | 58,036 | | 7 | 1,739,363 | | |
| | 2018 | | 310,000 | | | 108,500 | | | 62,000 | | | 37,500 | | | | 32,238 | | 7 | 550,238 | | |
| | 2017 | | 280,000 | | | 150,000 | | | 43,164 | | | 49,000 | | | | 109,393 | | 7 | 631,557 | | |
| Jon Heine, Senior Executive Vice President and Houston Market President | | 2019 | | 268,205 | | | 240,000 | | | 499,069 | | | 282,284 | | | | 7,028 | | | 1,296,586 | | |
| | 2018 | | — | | | — | | | — | | | — | | | | — | | | — | | |
| | 2017 | | — | | | — | | | — | | | — | | | | — | | | — | | |
| | James Recer, Senior Executive Vice President and Chief Banking Officer | | James Recer, Senior Executive Vice President and Chief Banking Officer | | 2021 | | 450,000 | | | 556,875 | | | 288,159 | | | — | | | | 26,833 | | 7 | 1,321,867 | |
| | 2020 | | 450,000 | | | 70,000 | | | 260,700 | | | 62,983 | | | | 16,681 | | 7 | 860,364 | |
| | 2019 | | — | | | — | | | — | | | — | | | | — | | | — | |
| Clay Riebe, Senior Executive Vice President and Chief Credit Officer | Clay Riebe, Senior Executive Vice President and Chief Credit Officer | | 2019 | | 375,000 | | | 120,000 | | | 632,470 | | | 440,253 | | | | — | | | 1,567,723 | | Clay Riebe, Senior Executive Vice President and Chief Credit Officer | | 2021 | | 400,000 | | | 329,500 | | | 236,419 | | | — | | | | 34,260 | | 8 | 1,000,179 | |
| | 2018 | | 285,000 | | | 115,000 | | | 57,000 | | | 36,000 | | | | 4,125 | | | | Clay Riebe, Senior Executive Vice President and Chief Credit Officer | | 2020 | | 400,000 | | | 120,000 | | | 354,575 | | | 96,030 | | | | 31,431 | | 8 | 1,002,036 | |
| | 2017 | | 260,000 | | | 85,500 | | | 40,059 | | | 45,500 | | | | 2,130 | | | | | 2019 | | 375,000 | | | 120,000 | | | 632,470 | | | 440,253 | | | | 27,137 | | 8 | 1,594,860 | |
| | | LaVonda Renfro, Senior Executive Vice President and Chief Operating Officer | | LaVonda Renfro, Senior Executive Vice President and Chief Operating Officer | | 2021 | | 375,000 | | | 247,500 | | | 203,184 | | | — | | | | 38,858 | | 9 | 864,542 | |
| | 2020 | | 375,000 | | | 110,000 | | | 518,023 | | | 90,034 | | | | 28,231 | | 9 | 1,121,288 | |
| | 2019 | | 300,000 | | | 112,000 | | | 409,797 | | | 211,848 | | | | 24,985 | | 9 | 1,058,630 | |
1 The amounts shown in this column represent salaries earned and paid during the fiscal year shown.
2 The amounts of bonuses for each year shown were cash bonuses earned for that year, but that were paid in the following fiscal year.
3 The amounts shown in this column represent PSUs and RSUs, which were valued in accordance with ASC 718. The following provides a breakdown of certain awards, approved by the Compensation Committee, granted to our named executive officersNEOs, excluding James Recer who joined the Bank in 2020, during the year discussed in our 2019 proxy statement which include One-Time Reload Awards, Executive Equity Awards and Merger Appreciation Awards. The Executive Equity Awards and Merger Appreciation Awards immediately vested in 2019.
| | | | | | | | | | | |
| One-Time Reload AwardsA | Executive Equity AwardsB | Merger Appreciation AwardsC |
| C. Malcolm Holland, III | $ | 1,319,500 | | $ | 73,258 | | $ | — | |
| Terry S. Earley | 962,100 | | — | | — | |
| Clay Riebe | 395,850 | | 30,229 | | 106,900 | |
| LaVonda Renfro | 213,800 | | 23,952 | | 106,900 | |
| | | | | | | | | | | |
| One-Time Reload AwardsA | Executive Equity AwardsB | Merger Appreciation AwardsC |
| C. Malcolm Holland | $ | 1,319,500 | | $ | 73,258 | | $ | — | |
| Terry S. Earley | 962,100 | | — | | — | |
| Jeff Kesler | 395,850 | | 32,923 | | 106,900 | |
| Jon Heine | — | | — | | — | |
| Clay Riebe | 395,850 | | 30,229 | | 106,900 | |
A The One-Time Reload Awards consist of non-performance RSUs, all subject to continued employment, with installment vesting over three years for all executives except C. Malcolm Holland, III, our Chief Executive Officer and President, whose One-Time Reload Awards are subject to a five-year vesting schedule.
B On November 6, 2018 and January 10, 2019, the Compensation Committee, unanimously approved the grant of certain equity awards to certain leaders within Veritex (collectively, the "Key Contributors"). The awards approved with respect to certain senior executives were granted subject to shareholder approval in 2019 due to the fact that there were not enough shares reserved under the Equity Plan to be issued upon satisfaction of the conditions to vesting of these equity awards. The Executive Equity Awards assume all vesting and other conditions of the awards are satisfied and performance conditions are achieved at maximum levels.
C During the third and fourth quarters of 2018, the Compensation Committee discussed the need to identify Key Contributors whose knowledge, skills and past performance makes them uniquely positioned to make critical contributions to ensure a successful transition following the Green Bancorp, Inc. merger and promote the continued and future success of Veritex. The Compensation Committee consulted with an external compensation consultant, EY, to determine the most effective way to motivate, retain and reward the future performance of the Key Contributors and the appropriate award level for each individual. In doing so, the Compensation Committee also obtained advice from our Chief Executive Officer to identify Key Contributors and determine the appropriate award level for each individual. These awards are referred within as "Merger Appreciation Awards".
.
4 The option awards were valued on the grant date using the Black-Scholes option-pricing model.
5 The amounts shown in these rows for the fiscal years ended December 31, 2019, 20182021, 2020 and 20172019 include (i) reimbursement for country club membership dues for Mr. Holland of $51,148, $50,551 and $45,442, $45,077 and $54,469, respectivelyrespectively; (ii) $29,307 $4,125 and $2,130 in premiums for Bank-owned life insurance policies with a death benefit of $100,000 payable to the designated beneficiary for Mr. Holland respectively;for 2019; (iii) $5,400 in Company contributions to the ESOP for Mr. Holland for 2018 and 2017; for each year, (iv) $2,500 in premiums for a life insurance policy we maintain that provides a death benefit payable to Mr. Holland’s spouse for each year presented, (iv) $60,374, $89,026 and (v) 59,428$59,428 in aggregate incremental costs from the personal use of the Company's airplane.airplane for the fiscal years ended December 31, 2021, 2020 and 2019, respectively, (v) $17,400 and $17,100 of 401k employer match for the years ended December 31, 2021 and 2020, respectively, and (vi) $123,047 and $104,590 of dividends paid on stock in the years ended December 31, 2021 and 2020, respectively.
6 The amounts shown in this rowthese rows include (i) and $29,307 premiums for Bank-owned life insurance policies with a death benefit of $75,000 payable to the fiscaldesignated beneficiary for Mr. Earley for the year ended December 31, 2019, include (i)(ii) a cash payment of $512,550 in 2019 resulting from the change in the Company's stock price from the date of the Green Bancorp, Inc. merger announcement to the merger consummation date and its associated impact
on 45,000 restricted stock unitsRSUs granted to Mr. Earley pursuant to his employment agreement, (ii)(iii) $168,902 resulting from accelerated vesting of RSUs as
a result of the change in control in connection with our acquisition of Green (iii) $29,307 in premiumsBancorp, Inc. for Bank-owned life insurance policies with a death benefit of $75,000 payable to the designated beneficiary for Mr. Earley for thefiscal year ended December 31, 2019, (iv) $24,000 in rent expenses in accordance with Mr. Earley's employment agreement for the fiscal year ended December 31, 2021, 2020 and 2019,(v) $30,854 and $26,226 of dividends paid on stock during the years ended December 31, 2021 and 2020, respectively, (vi) $17,400 and $17,100 of 401k employer match for the years ended December 31, 2021 and 2020, respectively, and (vii) $14,425, $22,696 and $17,762 in outaggregate incremental costs from the personal use of pocket airfare costs in accordance with Mr. Earley's employment agreement. On occasion, a family member accompanied Mr. Earley, at no incremental cost to the Company, when traveling onCompany's airplane for the Company’s aircraft on business. Mr. Earley paid the taxes on the imputed income as calculated using the Standard Industry Fare Level (SIFL) rate. We did not reimburse Mr. Earley for taxes he paid.fiscal years ended December 31, 2021, 2020, and 2019, respectively.
7 The amounts shown in these rows for the fiscal years ended December 31, 2019, 20182021 and 20172020 include (i) reimbursement for country club membership dues for Mr. KeslerRecer of $28,729, $22,713 and $101,863,$7,481, $2,501, respectively; (ii) $29,307, $4,125$1,952 and $2,130$680 of dividends paid on stock during the years ended December 31, 2021 and 2020, respectively, and (iii) $17,400 and $13,500 of 401k employer match for the years ended December 31, 2021 and 2020, respectively.
8 The amounts shown in premiumsthese rows for Bank-owned life insurance policies with a death benefitthe fiscal year ended December 31, 2021, 2020 and 2019 include (i) $16,860, $14,331 and $10,337 of $100,000 payable todividends paid on stock during the designated beneficiaryyears ended December 31, 2021, 2020 and 2019, respectively, and (ii) $17,400, $17,100 and $16,800 of 401k employer match for Mr. Kesler, respectively; (iii) $5,400the years ended December 31, 2021, 2020 and 2019, respectively.
9 The amounts shown in Company contributions tothese rows for the ESOPfiscal year ended December 31, 2021, 2020 and 2019 include (i) $21,458, $11,131 and $8,185 of dividends paid on stock during the years ended December 31, 2021, 2020 and 2019, respectively, and (ii) $17,400, $17,100 and $16,800 of 401k employer match for Mr. Kesler for 2018the years ended December 31, 2021, 2020 and 2017,2019, respectively.
Grants of Plan-Based Awards
The following table provides information concerning plan-based awards madegranted to named executive officersNEOs in fiscal year 2019.2021.
| | | | Estimated Future Payouts Under Equity Incentive Plan Awards1 | | | All Other Stock Awards: Number of Shares of Stock or Units | | All Other Option Awards: Number of Securities Underlying Options2 | | Exercise or Base Price of Option Awards | | Grant Date Fair Value of Stock and Option Awards3 | | | Estimated Future Payouts Under Equity Incentive Plan Awards1 | | All Other Stock Awards: Number of Shares of Stock or Units | | | Grant Date Fair Value of Stock Awards2 |
| Name | Name | | Award Type | | Grant Date | | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | | | | | | | | Name | | Award Type | | Grant Date | | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | | | Grant Date Fair Value of Stock Awards2 |
| C. Malcolm Holland, III | C. Malcolm Holland, III | | Performance-based RSUs4 | | 1/1/2019 | | | — | | | 15,236 | | | 22,854 | | | | | | | | $ | 397,964 | | C. Malcolm Holland, III | | PSUs3 | | 2/1/2021 | | | — | | | 18,642 | | | 27,963 | | | | | $ | 483,573 | |
| | Non-performance based RSUs4 | | 1/1/2019 | | | | | | 50,000 | | | | | | | | | | 1,319,500 | | | Time-based RSUs3 | | 2/1/2021 | | | | 17,031 | | | | $ | 444,850 | |
| | Non-performance based RSUs4 | | 1/9/2019 | | | | | | 3,291 | | | | | | | | | | 73,258 | | |
| Stock options4 | | 1/1/2019 | | | | | | | | | | 39,512 | | | $ | 21.38 | | | 436,213 | | |
| | Stock options4 | | 1/1/2019 | | | | | | | | | | 50,000 | | | $ | 21.38 | | | 585,500 | | |
| Terry S. Earley | Terry S. Earley | | Performance-based RSUs5 | | 1/1/2019 | | | — | | | 4,063 | | | 6,095 | | | 80,000 | | Terry S. Earley | | PSUs4 | | 2/1/2021 | | | — | | | 6,231 | | | 9,347 | | | | | | $ | 161,632 | |
| | Non-performance based RSUs5 | | 1/1/2019 | | | | 45,000 | | | | | | | | | | 962,100 | | | Time-based RSUs4 | | 2/1/2021 | | | | 5,692 | | | | $ | 148,675 | |
| | Stock options5 | | 1/1/2019 | | | | | | | | | | | | 10,537 | | | 21.38 | | 80,000 | | |
| Jeff Kesler | | Performance-based RSUs4 | | 1/1/2019 | | | — | | | 4,063 | | | 6,095 | | | 106,126 | | |
| James Recer | | James Recer | | PSUs3 | | 2/1/2021 | | | — | | | 5,786 | | | 8,679 | | | | | | $ | 150,089 | |
| | Non-performance based RSUs4 | | 1/1/2019 | | | | | | 15,000 | | | | | | | | | | 395,850 | | | Time-based RSUs3 | | 2/1/2021 | | | | 5,286 | | | | $ | 138,070 | |
| | Non-performance based RSUs4 | | 1/1/2019 | | | | | | 5,000 | | | | | | | | | | 106,900 | | |
| Non-performance based RSUs4 | | 1/9/2019 | | | | | | 1,479 | | | | | | | | | | 32,923 | | |
| Stock options4 | | 1/1/2019 | | | | | | | | | | 10,537 | | | 21.38 | | | 116,328 | | |
| | Stock options4 | | 1/1/2019 | | | | | | | | | | 30,000 | | | 21.38 | | | 331,200 | | |
| Jon Heine | | Performance-based RSUs4 | | 5/1/2019 | | | — | | | 4,063 | | | 6,095 | | | | | | | | | | | 106,369 | | |
| | Non-performance based RSUs4 | | 5/1/2019 | | | | | | | | | | | | 15,000 | | | | | | | | 392,700 | | |
| | Stock options4 | | 5/1/2019 | | | | | | | | | | | | | | | | 10,537 | | | 26.18 | | 72,284 | | |
| | | Stock options4 | | 5/1/2019 | | | | | | | | | | | | | | | | 30,000 | | | 26.18 | | 210,000 | | |
| Clay Riebe | Clay Riebe | | Performance-based RSUs4 | | 1/1/2019 | | | 0 | | 3809 | | 5714 | | | | | | | | | | | | 99,491 | | Clay Riebe | | PSUs3 | | 2/1/2021 | | | — | | | 4,747 | | | 7,121 | | | | | | $ | 123,137 | |
| | | Non-performance based RSUs4 | | 1/1/2019 | | | | | | 15,000 | | | | | | | | | | 395,850 | | | Time-based RSUs3 | | 2/1/2021 | | | | 4,337 | | | | $ | 113,282 | |
| | Non-performance based RSUs4 | | 1/1/2019 | | | | | | 5,000 | | | | | | | | | | 106,900 | | |
| LaVonda Renfro | | LaVonda Renfro | | PSUs3 | | 2/1/2021 | | | — | | | 4,080 | | | 6,120 | | | | | | 105,835 | |
| | Non-performance based RSUs4 | | 1/9/2019 | | | | | | 1,358 | | | | | | | | | | 30,229 | | | | Time-based RSUs3 | | 2/1/2021 | | | | | | | | | 4,080 | | | | 97,349 | |
| Stock options4 | | 1/1/2019 | | | | | | | | | | 9,878 | | | 21.38 | | | 109,053 | | |
| Stock options4 | | 1/1/2019 | | | | | | | | | | 30,000 | | | 21.38 | | | 331,200 | | |
|
1 Represents the threshold, target and maximum value of shares of performance-based RSUsPSUs that may be earned based on our performance for the performance period beginning on January 1, 20192022 and ending on December 31, 20212024 under our long-term incentive plans. If the performance criteria meet or exceed the threshold levels, a prorated portion of the incentive award could still be earned by the named executive officer.NEO. For more information regarding our performance-based RSUs,PSUs, see “—Elements of Compensation” and the Outstanding Equity Awards at Fiscal Year-End table below.
2 Represents non-qualified stock option awards which vest in three equal installments beginning on the first anniversary of the grant date. For more information regarding the terms of these awards, see “—Elements of Compensation” and the Outstanding Equity Awards at Fiscal Year-End table below.
3 Represents the grant date fair value of the awards determined in accordance with ASC Topic 718. The assumptions used in calculating the grant date fair value of these awards are included in Note 2221 of the Notes to our Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2019.2021. For performance-based RSUsPSUs , the grant date fair value is calculated using the target share amount potentially payable.
3
4 These awards were granted from the Equity Plan.
4
5 These awards were granted from the Veritex (Green) 2014 Plan
Outstanding Equity Awards at Fiscal Year-End
The following table provides information regarding outstanding unvested stock awards held by our named executive officersNEOs as of December 31, 2019.2021.
| | | Option Awards | | | Stock Awards | | | Option Awards | | Stock Awards |
| | | | | | Number
of
Shares
of Stock
that
Have
Not
Vested | | Market
Value of
Shares
of Stock
that
Have
Not
Vested | | | | | | | Number
of
Shares
of Stock
that
Have
Not
Vested | | Market
Value of
Shares
of Stock
that
Have
Not
Vested | |
| | Number of Securities
Underlying Unexercised
Options | | | | | | | | Number of Securities
Underlying Unexercised
Options | | | Number
of
Shares
of Stock
that
Have
Not
Vested | | Market
Value of
Shares
of Stock
that
Have
Not
Vested |
| | | | | | | Number
of
Shares
of Stock
that
Have
Not
Vested | | Market
Value of
Shares
of Stock
that
Have
Not
Vested | | | Number of Securities
Underlying Unexercised
Options | | Number
of
Shares
of Stock
that
Have
Not
Vested | | Market
Value of
Shares
of Stock
that
Have
Not
Vested |
| | | | Option
Exercise
Price | | Market
Value of
Shares
of Stock
that
Have
Not
Vested | | Number of Securities
Underlying Unexercised
Options | |
| Name | Name | | Grant Date | | Exercisable (#) | | Unexercisable (#)1 | | | | Name | | Grant Date | |
| C. Malcolm Holland, III. | | 1/1/2011 | | 125,000 | | | — | | | $ | 10.00 | | | — | | | $ | — | | | |
| C. Malcolm Holland, III | | | 1/1/2015 | | 12,777 | | | — | | | $ | 14.17 | | | 1/1/2025 | | | | | |
| | | 1/1/2016 | | 12,379 | | | — | | | 16.21 | | | 1/1/2026 | | |
| | | 1/1/2017 | | 9,375 | | | — | | | 26.71 | | | 1/1/2027 | | |
| | | 1/1/2018 | | 14,496 | | | — | | | 27.59 | | | 1/1/2028 | | |
| | | 1/1/2019 | 2 | 26,341 | | | 13,171 | | | 21.38 | | | 1/1/2029 | | |
| | | 1/1/2019 | 1 | 20,000 | | | 30,000 | | | 21.38 | | | 1/1/2029 | | |
| | | 1/1/2020 | 3 | 21,214 | | | 42,428 | | | 29.13 | | | 1/1/2030 | | |
| | | 1/1/2015 | | 12,777 | | | — | | | 14.17 | | | 1/1/2025 | | — | | | — | | | | 1/1/2019 | | 5 | 15,236 | | | 606,088 | | |
| | | 1/1/2016 | | 12,379 | | | — | | | 16.21 | | | 1/1/2026 | | — | | | — | | | | 1/1/2020 | | 6 | 17,469 | | | 694,917 | | |
| | | 1/1/2017 | | 9,375 | | | — | | | 26.71 | | | 1/1/2027 | | — | | | — | | | | 2/1/2021 | | 7 | 18,642 | | | 741,579 | | |
| | | 1/1/2018 | | 14,496 | | | — | | | 27.59 | | | 1/1/2028 | | — | | | — | | | | 1/1/2019 | | 8 | 30,000 | | | 1,193,400 | | |
| | | 1/1/2019 | 1 | — | | | 50,000 | | | 21.38 | | | 1/1/2029 | | 50,000 | | 4 | 1,456,500 | | | | 6/11/2020 | | 11 | 85,000 | | | 3,381,300 | | |
| | | 1/1/2019 | 2 | — | | | 39,512 | | | 21.38 | | | 1/1/2029 | | 22,854 | | 6 | 665,737 | | | | 2/1/2021 | | 12 | 17,031 | | | 677,493 | | |
| Terry S. Earley | Terry S. Earley | | 4/4/2017 | | 55,300 | | | — | | | 21.90 | | | 4/4/2027 | | — | | | — | | | Terry S. Earley | 2 | 1/1/2019 | 2 | 7,024 | | | 3,513 | | | 21.38 | | | 1/1/2029 | | |
| | | 1/1/2019 | 2 | — | | | 10,537 | | | 21.38 | | | 1/1/2029 | | 45,000 | | 5 | 1,310,850 | | | | 1/1/2020 | 3 | 6,847 | | | 13,694 | | | 29.13 | | | 1/1/2030 | | |
| | | 1/1/2019 | | — | | | — | | | — | | | — | | | 6,095 | | 6 | 177,547 | | | | 1/1/2019 | | 5 | 4,063 | | | 161,626 | | |
| Jeff Kesler | | 6/1/2014 | | 10,000 | | | — | | | 12.90 | | | 6/1/2024 | | — | | | — | | | |
| | | 1/1/2015 | | 5,381 | | | — | | | 14.17 | | | 1/1/2025 | | — | | | — | | | | 1/1/2020 | | 6 | 5,639 | | | 224,319 | | |
| | | 1/1/2016 | | 5,713 | | | — | | | 16.21 | | | 1/1/2026 | | — | | | — | | | | 2/1/2021 | | 7 | 6,231 | | | 247,869 | | |
| | | 1/1/2017 | | 4,900 | | | — | | | 26.71 | | | 1/1/2027 | | — | | | — | | | | 1/1/2019 | | 9 | 15,000 | | | 596,700 | | |
| | | 1/1/2018 | | 6,513 | | | — | | | 27.59 | | | 1/1/2028 | | — | | | — | | | | 6/11/2020 | | 11 | 50,000 | | | 1,989,000 | | |
| | | 1/1/2019 | 2 | — | | | 30,000 | | | 21.38 | | | 1/1/2029 | | 15,000 | | 5 | 436,950 | | | | 2/1/2021 | | 12 | 5,692 | | | 226,429 | | |
| James Recer | | James Recer | | 6/15/2020 | 4 | — | | | 15,000 | | | 17.38 | | | 6/15/2030 | | |
| | | 1/1/2019 | 2 | — | | | 10,537 | | | 21.38 | | | 1/1/2029 | | 6,095 | | 6 | 177,547 | | | | | 1/1/2021 | | 7 | 5,786 | | | 230,167 | | |
| Jon Heine | | 5/1/2019 | 3 | — | | | | 30,000 | | | | 26.18 | | | 5/1/2029 | | 15,000 | | 7 | | 436,950 | | | |
| | | | 6/15/2020 | | 10 | 15,000 | | | 596,700 | | |
| | | 5/1/2019 | 2 | — | | | | 10,537 | | | | 26.18 | | | 5/1/2029 | | 6,095 | | 6 | | 177,547 | | | | | 2/1/2021 | | 12 | 5,286 | | | 210,277 | | |
| Clay Riebe | Clay Riebe | | 3/30/2016 | | 10,000 | | | — | | | 14.82 | | | 3/30/2026 | | — | | | — | | | Clay Riebe | | 1/1/2017 | | 4,550 | | | — | | | 26.71 | | | 1/1/2027 | | |
| | | 1/1/2017 | | 4,550 | | | — | | | 26.71 | | | 1/1/2027 | | — | | | — | | | | 1/1/2018 | | 5,987 | | | — | | | 27.59 | | | 1/1/2028 | | |
| | | 1/1/2018 | | 5,987 | | | — | | | 27.59 | | | 1/1/2028 | | — | | | — | | | | 1/1/2019 | 2 | 6,585 | | | 3,293 | | | 21.38 | | | 1/1/2029 | | |
| | | 1/1/2019 | 2 | — | | | | 30,000 | | | | 21.38 | | | 1/1/2029 | | 15,000 | | 5 | | 436,950 | | | | 1/1/2019 | 2 | 20,000 | | | 10,000 | | | 21.38 | | | 1/1/2029 | | |
| | | 1/1/2019 | 2 | — | | | | 9,878 | | | | 21.38 | | | 1/1/2029 | | 5,714 | | 6 | | 166,449 | | | | 1/1/2020 | 3 | 4,681 | | | 9,364 | | | 29.13 | | | 1/1/2030 | | |
| | | 1/1/2019 | | 5 | 3,809 | | | 151,522 | | |
| | | 1/1/2020 | | 6 | 3,856 | | | 153,392 | | |
| | | 2/1/2021 | | 7 | 4,747 | | | 188,836 | | |
| | | 1/1/2019 | | 9 | 5,000 | | | 198,900 | | |
| | | 6/11/2020 | | 11 | 15,000 | | | 596,700 | | |
| | | 2/1/2021 | | 12 | 4,337 | | | 172,527 | | |
| LaVonda Renfro | | LaVonda Renfro | | 1/1/2015 | | 3,114 | | | — | | | 14.17 | | | 1/1/2025 | | |
| | | 1/1/2016 | | 4,114 | | | — | | | 16.21 | | | 1/1/2026 | | |
| | | 1/1/2017 | | 3,500 | | | — | | | 26.71 | | | 1/1/2027 | | |
| | | 1/1/2018 | | 4,727 | | | — | | | 27.59 | | | 1/1/2028 | | |
| | | 1/1/2019 | 2 | 5,268 | | | 2,634 | | | 21.38 | | | 1/1/2029 | | |
| | | 1/1/2019 | 2 | 13,333 | | | 6,667 | | | 21.38 | | | 1/1/2029 | | |
| | | 1/1/2020 | 3 | 4,389 | | | 8,779 | | | 29.13 | | | 1/1/2030 | | |
| | | 1/1/2019 | | 5 | 3,047 | | | 121,210 | | |
| | | 1/1/2020 | | 6 | 3,615 | | | 143,805 | | |
| | | 2/1/2021 | | 7 | 4,080 | | | 162,302 | | |
| | | 1/1/2019 | | 9 | 3,334 | | | 132,627 | | |
| | | 6/11/2020 | | 11 | 25,000 | | | 994,500 | | |
| | | 2/1/2021 | | 12 | 3,727 | | | 148,259 | | |
1 Time-based options vest in five equal annual installments beginning January 1, 2020.
2 Time-based options vest in three equal annual installments beginning January 1, 2020.
3 Time-based options vest in three equal annual installments beginning May 1, 2020.
4 Non-performance RSUs vest in five equal installments beginning January 1, 2020.2021.
5 Non-performance RSUs4Time-based options cliff vest in three equal installments beginning January 1, 2020.on May 15, 2023.
6 Performance RSUs5 PSUs granted on January 1, 2019. The number of shares eligible for vesting is based on a comparison of our TSR against the Peer Group TSR calculated at December 31, 2021,during the performance period, and the shares will cliff vest on January 1, 2022.
6 PSUs granted on January 1, 2020. The number of shares eligible for vesting is based on a comparison of our TSR against the Peer Group TSR during the performance period, and the shares will cliff vest on January 1, 2023.
7PSUs granted on February 1, 2021. The number of shares eligible for vesting is based on a comparison of our TSR against the Peer Group TSR during the performance period, and the shares will cliff vest on January 1, 2024.
8 Non-performance RSUs vest in five equal installments beginning January 1, 2020.
9 Non-performance RSUs vest in three equal installments beginning MayJanuary 1, 2020.
10 Non-performance RSUs will cliff vest on May 15, 2023.
11 Non-performance RSUs will cliff vest on June 11, 2025.
12 Non-performance RSUs vest in three equal installments beginning January 1, 2022.
Option Exercises and Stock Vested
The following table provides information concerning the stock options exercised and RSUs that vested during the fiscal year ended December 31, 20192021 for each named executive officer. The RSUs that vested during the fiscal year ended December 31, 2019 were a result of change in control accelerated vesting in connection withour acquisition of Green.NEO.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
| Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting($)1 |
| C. Malcolm Holland, III | | — | | | $ | — | | | 10,000 | | | $ | 256,600 | |
| Terry S. Earley | | 55,300 | | | 1,183,730 | | | 15,000 | | | 384,900 | |
| James Recer | | — | | | — | | | — | | | — | |
| Clay Riebe | | 10,000 | | | 277,300 | | | 5,000 | | | 128,300 | |
| LaVonda Renfro | | — | | | — | | | 3,333 | | | 85,525 | |
1
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | | | Stock Awards | | |
| Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting($)1 |
| C. Malcolm Holland,III | | — | | | $ | — | | | 19,534 | | | $ | 420,533 | |
| Terry S. Earley | | — | | | — | | | 7,900 | | | 168,902 | |
| Jeff Kesler | | — | | | — | | | 11,625 | | | 249,844 | |
| Jon Heine | | — | | | — | | | — | | | — | |
| Clay Riebe | | — | | | — | | | 12,804 | | | 274,945 | |
| | | | | | | | |
1 Represents the value realized upon vesting of RSUs based on the market value of shares on the vesting date.
Potential Payments upon Termination or Change in Control
The occurrence or potential occurrence of a change in control could create uncertainty regarding the continued employment of our executive officers. Providing change in control benefits offers executive officers a level of security that we believe allows them to continue normal business operations, remain dedicated to our strategic goals, maintain a balanced perspective during potentially uncertain periods and serve in the best interest of us and our shareholders. Accordingly, executive officer severance and change in control arrangements are provided to support major corporate and management transitions. The Compensation Committee believes these arrangements benefit our company and our shareholders. The Compensation Committee periodically reviews these arrangements in depth for market competitiveness and to ensure they remain appropriate for our company.
As part of our acquisition with of Green Bancorp, Inc., we entered into a change in control agreement with Mr. Earley, our Senior Executive Vice President and Chief Financial Officer. Pursuant to this agreement, in the case of an involuntary termination with no change in control, Mr. Earley will continue to (i) receive payments of his base salary for a period of 12 months following termination, (ii) receive the target annual bonus for the year in which termination occurs, multiplied by a fraction, the numerator of which is the number of calendar days in such year that he was employed by the Bank and the denominator of which is three hundred sixty-five and (iii) receive the annual cash bonus and annual long-term incentive equity grant earned for the year preceding the year of termination. In case of an involuntary termination with withwithin the change in control protection period, which is defined as the period commencing on the earlier to occur of (i) execution of an acquisition agreement contemplating a change in control and (ii) consummation of a change in control and ending eighteen (18) months following a consummation of such change in control, Mr. Earley will receive (i) 2.5 times his base salary, (ii) 2.5 times the target bonus in the year of termination, (iii) an amount equal to (A) the sum of the target annual bonus plus the target annual long term incentive equity grant for the year in which termination occurs multiplied by (B) a fraction, the numerator of which is the number of calendar days in such year that he was employed by the Bank and denominator of which is three hundred and sixty-five, to be paid in cash in a lump sum, (iv) an amount equal to 2.5 times the annual Bank contribution to the costs associated with Mr. Earley and his spouse to participate in the Bank's medical, dental and vision coverage, calculated based on the Bank's contribution cost for such coverage for the month immediately preceding the termination of employment to be paid in a lump sum and (v) be provided with outplacement services not to exceed $25,000.
We have established aThe Compensation Committee maintains our severance and change in control policyguidelines to provide protection to full-time employees, including our named executive officers,NEOs, who are terminated from employment for certain reasons, including involuntary termination without cause. Under the policy, our named executive officersOur NEOs, excluding Mr. Earley, are entitled to the following severance amounts, which vary according to several factors, including whether the qualifying termination occurs within 24 months following a change in control:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Position | Involuntary terminationTermination without cause or good reason (no change in control) | | | | Termination without cause or good reason within 24 months following a change in control | | | | |
| Base Salary | | Annual Incentive | | Health & Welfare Benefits | | Base Salary | | Annual Incentive | | Health & Welfare Benefits |
| Chief Executive Officer | 4 weeks per year of service (maximum of 52 weeks)24 months | | Prorated at target2x Annual Cash Incentive (average of prior 2 years) | | 3 times | | 3 times most recently paid | | Lump sum in amount of Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") benefits paidbenefit costsfor 12 months | | 36 months | | 3x Annual Cash Incentive (average of prior 2 years) | | Lump sum in amount of Consolidated Omnibus Budget Reconciliation Act of 1985, as amended COBRA benefit costsfor 18 months |
| Other NEOs | 12 months | | 1x Annual Cash Incentive (average of prior 2 years) | | Lump sum in amount of COBRA benefit costs for 12 months | | 30 months | | 2.5x Annual Cash Incentive (average of prior 2 years) | | Lump sum in amount of COBRA benefit costs for 18 months |
Executives that Directly Report to the Chief Executive Officer | 4 weeks per year of service (maximum of 52 weeks) | | Prorated at target | | 2 times | | 2 times most recently paid | | COBRA benefits paid for 18 months |
Executive Vice Presidents | 4 weeks per year of service (maximum of 52 weeks) | | None | | 5 weeks per year of service* | | Prorated at target | | None |
* For an Executive Vice President with five or more years of service, severance will be equal to 52 weeks. Maximum salary severance is 52 weeks and minimum salary severance is 13 weeks for all Executive Vice Presidents.
Severance payments are calculated based on position and years of service with our company, including any tenure at companies we have acquired. Severance paymentsnot related to a change in control are generally paid in a lump sum no later than 60 daysour over 12 months following termination and are based on the employee's base salary at the time of termination. Severance payment tied to a change in control are normally paid in a lump sum within the time period required by applicable law. The Compensation Committee believes our policy,the severance benefits tied to a change in control, which includes a "double-trigger" change in control benefit,requirement, will provide necessary security to help attract and retain a talented management team while protecting our shareholders' interests.
Payments of any long-term incentives, in any severance situation, are governed by the individual award agreements.
Payments of any long-term incentive awards are governed by individual award agreements and our policy requires one or more years of service with our company in order to receive payments attributable to any annual incentive awards. The consummation of our acquisition of Green on January 1, 2019 constituted a change in control of the Company under certain of our compensation and incentive plans. Certain of our named executive officers has been granted equity awards under two equity incentive plans, our First Amended 2010 Stock Option Plan and Equity Incentive Plan (the "2010 Plan") and the Equity Plan. The terms of the 2010 Plan required that all unvested stock options and RSUs issued under the 2010 Plan fully vest as of the consummation of the Green acquisition. Under the terms of the Equity Plan, accelerated vesting upon a change in control is permissible, and our Board determined that all unvested stock options, RSUs and other equity awards issued under the Equity Plan would fully vest as of the consummation of the acquisition on January 1, 2019. As a result, unvested stock options, RSUs and other equity awards under the 2010 Plan and the Equity Plan fully vested on January 1, 2019, and each participant under the ESOP became fully vested in his or her account.
In connection with the acquisition of Green and pursuant to the terms of the related definitive agreement, all of Green’s outstanding and unvested equity awards prior to the close date, including stock options and restricted stock units, became fully vested as of the close date. The acceleration of vesting of Green’s restricted stock units according to the terms of the acquisition consisted of a modification of the original awards, with exception of certain awards that had original accelerated vesting terms.
The following table summarizes the amounts each of our named executive officersNEOs would be entitled to receive as of December 31, 20192021 following certain types of terminations of employment or in connection with a change in control.control based on the severance and change in control guidelines in place as of December 31, 2021. The amounts shown in the following table are approximate and reflect certain assumptions that we have made in accordance with SEC rules. These assumptions are that the termination of employment or change in control occurred on December 31, 20192021 (the last day of our 20192021 fiscal year), and that the value of a share of our common stock on that day was $29.13,$39.78, the closing price on December 31, 2019,2021, the last trading day of the calendar year. In addition, in keeping with SEC rules, the table does not include payments and benefits that are not enhanced by the termination of employment or change in control.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Benefit | | Retirement | | Death ($) | | Disability ($) | | Termination Without Cause or Good Reason (Not In Connection with Change in Control) ($) | | Termination Without Cause or Good Reason (In Connection with Change in Control) ($) |
| C. Malcolm Holland, III | | | | | | | | | | |
Severance1 | | — | | | — | | | — | | | 2,816,250 | | | 4,224,375 | |
RSUs2 | | — | | | 7,294,777 | | | 7,294,777 | | | 7,294,777 | | | 7,294,777 | |
Stock options2 | | — | | | 1,246,205 | | | 1,246,205 | | | 1,246,205 | | | 1,246,205 | |
Bank-owned life insurance (“BOLI”)3 | | — | | | 100,000 | | | — | | | — | | | — | |
Outplacement and healthcare4 | | — | | | — | | | — | | | 16,027 | | | 24,040 | |
| Terry S. Earley | | | | | | | | | | |
Severance5 | | — | | | — | | | — | | | 1,952,807 | | | 3,015,000 | |
RSUs2 | | — | | | 3,445,943 | | | 3,445,943 | | | 3,445,943 | | | 3,445,943 | |
Stock options2 | | — | | | 210,480 | | | 210,480 | | | 210,480 | | | 210,480 | |
BOLI3 | | — | | | 75,000 | | | — | | | — | | | — | |
Outplacement and healthcare6 | | — | | | — | | | — | | | — | | | 75,853 | |
| James Recer | | | | | | | | | | |
Severance7 | | — | | | — | | | — | | | 763,438 | | | 1,908,594 | |
RSUs2 | | — | | | 1,037,144 | | | 1,037,144 | | | 1,037,144 | | | 1,037,144 | |
Stock options2 | | — | | | 336,000 | | | 336,000 | | | 336,000 | | | 336,000 | |
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Outplacement and healthcare4 | | — | | | — | | | — | | | 16,166 | | | 24,249 | |
| Clay Riebe | | | | | | | | | | |
Severance7 | | — | | | — | | | — | | | 624,750 | | | 1,561,875 | |
RSUs2 | | — | | | 1,461,875 | | | 1,461,875 | | | 1,461,875 | | | 1,461,875 | |
Stock options2 | | — | | | 344,318 | | | 344,318 | | | 344,318 | | | 344,318 | |
Outplacement and healthcare4 | | — | | | — | | | — | | | 16,166 | | | 24,249 | |
| LaVonda Renfro | | | | | | | | | | |
Severance7 | | — | | | — | | | — | | | 553,750 | | | 1,384,375 | |
RSUs2 | | — | | | 1,702,703 | | | 1,702,703 | | | 1,702,703 | | | 1,702,703 | |
Stock options2 | | — | | | 264,635 | | | 264,635 | | | 264,635 | | | 264,635 | |
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Outplacement and healthcare4 | | — | | | — | | | — | | | 13,737 | | | 20,606 | |
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| Benefit | | Retirement | | Death ($) | | Disability ($) | | Involuntary or Good Reason Termination (Not In Connection with Change in Control) ($) | | Involuntary or Good Reason Termination (In Connection with Change in Control) ($) |
| C. Malcolm Holland, III | | | | | | | | | | |
Severance1 | | — | | | | — | | | | — | | | | 960,000 | | | | 2,880,000 | |
RSUs2 | | — | | | | 1,900,325 | | | | 1,900,325 | | | | — | | | | 1,900,325 | |
Stock options2 | | — | | | | 693,718 | | | | 693,718 | | | | — | | | | 693,718 | |
Bank-owned life insurance (“BOLI”)3 | | — | | | | 100,000 | | | | — | | | | — | | | | — | |
Outplacement and healthcare4 | | — | | | | — | | | | — | | | | — | | | | 17,990 | |
| Terry S. Earley | | | | | | | | | | | | | | | | | | | |
Severance5 | | — | | | | — | | | | — | | | | 560,000 | | | | 1,400,000 | |
RSUs2 | | — | | | | 1,429,205 | | | | 1,429,205 | | | | — | | | | 1,429,205 | |
Stock options2 | | — | | | | 81,662 | | | | 81,662 | | | | — | | | | 81,662 | |
BOLI3 | | — | | | | 75,000 | | | | — | | | | — | | | | — | |
Outplacement and healthcare4 | | — | | | | — | | | | — | | | | — | | | | 25,767 | |
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| Jeff Kesler | | | | | | | | | | | | | | | | | | | |
Severance5 | | — | | | | — | | | | — | | | | 592,000 | | | | 1,184,000 | |
RSUs2 | | — | | | | 555,305 | | | | 555,305 | | | | — | | | | 555,305 | |
Stock options2 | | — | | | | 314,162 | | | | 314,162 | | | | — | | | | 314,162 | |
BOLI3 | | — | | | | 100,000 | | | | — | | | | — | | | | — | |
Outplacement and healthcare4 | | — | | | | — | | | | — | | | | — | | | | 37,740 | |
| Jon Heine | | | | | | | | | | | | | | | | | | | |
Severance5 | | — | | | | — | | | | — | | | | 212,631 | | | | 1,184,000 | |
RSUs2 | | — | | | | 555,305 | | | | 555,305 | | | | — | | | | 555,305 | |
Stock options2 | | — | | | | 119,584 | | | | 119,584 | | | | — | | | | 119,584 | |
Outplacement and healthcare4 | | — | | | | — | | | | — | | | | — | | | | 26,395 | |
| Clay Riebe | | | | | | | | | | | | | | | | | | | |
Severance5 | | — | | | | — | | | | — | | | | 495,000 | | | | 990,000 | |
RSUs2 | | — | | | | 547,906 | | | | 547,906 | | | | — | | | | 547,906 | |
Stock options2 | | — | | | | 309,055 | | | | 309,055 | | | | — | | | | 309,055 | |
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Outplacement and healthcare4 | | — | | | | — | | | | — | | | | — | | | | 18,194 | |
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1The amount reflected in the “Involuntary Without Cause or Good Reason Termination (Not In Connection with Change in Control)” column includes the payment to Mr. Holland of (i) his annual base salary for 1224 months following termination and (ii) 2 times the prorated portionaverage of any earned but unpaid targetthe prior 2 years annual cash incentive for the year.incentive. The amount reflected in the “Involuntary Without Cause or Good Reason Termination (In Connection with Change in Control)” column includes a lump sum payment to Mr. Holland equal to (a) 36 months of his annual base salary and (b) three3 times the most recentaverage of the prior 2 years annual cash incentive paid to him immediately preceding the date of termination.incentive.
2Reflects the value of unvested RSUs, both time- and performance-based,PSUs, and stock options which vest in full in the circumstances indicated. The value of RSUs is based on the December 31, 20192021 closing price of our common stock of $29.13.$39.78. The value of the stock options is based on the excess, if any, of the $29.13$39.78 closing price and the option exercise price. Performance-based RSUsPSUs are assumed to pay out at the “target” level (100%) under the “Death”, “Disability” and “Involuntary Without Cause or Good Reason Termination (In Connection with Change in Control)” columns.
3Amounts represent the death benefit portion of bank-owned life insurance paid to a designated beneficiary if the insured dies while employed at our company.
4Amounts representThe amount reflected in the “Involuntary Without Cause or Good Reason Termination (Not In Connection with Change in Control)” column includes the estimated cost of outplacement services12 months of COBRA premiums for NEO and eligible dependents in effect at the time of termination, collectively "outplacement and healthcare." The amount reflected in the “Involuntary Without Cause or Good Reason Termination (In Connection with Change in Control)” column includes 18 months of COBRA premiums for NEO and eligible dependents in effect at the time of termination.
5The amount reflected for termination of the executive in the “Involuntary Without Cause or Good Reason Termination (Not In Connection with Change in Control)” are (i) their respective annual base salaries for 12 months, (ii) the amount equal to the target annual cash incentive and (iii) the amount equal to annual cash incentive earned and annual long-term incentive equity granted earned for the year preceding the year of termination. The amounts reflected in the “Involuntary Without Cause or Good Reason Termination (In Connection with Change in Control)” column include a lump sum payment equal to (a) 2.5 times of the executive’s annual base salary, (b) 2.5 times the amount equal to the target annual cash incentive and ( c) the target annual bonus plus the target annual long-term incentive equity grant for the year in which termination occurs.
6Amount represents 2.5 times the estimated annual cost of the hospitalization, medical, dental, prescription drug and other health benefits required to be provided under COBRA that will be provided to the named executive officerNEO in the event of involuntary without cause or good reason terminations in connection with a change in control for 18 months,within the change in control protection period, as well as certain$25,000 for outplacement services.
57The amounts reflected for termination of each of the executives in the “Involuntary Without Cause or Good Reason Termination (Not In Connection with Change in Control)” are (i) their respective annual base salaries for 12 months and (ii) 1 times the prorated portionaverage of any earned but unpaid targetthe prior 2 years annual cash incentive for the year.incentive. The
amounts reflected in the “Involuntary Without Cause or Good Reason Termination (In Connection with Change in Control)” column include a lump sum payment equal to (a) 2430 months of the executive’s annual base salary and (b) two2.5 times the average of the prior 2 years annual cash bonus for the three years preceding the date of termination.
Equity Compensation Plan Information
The following table summarizes our equity compensation plan information as of December 31, 2019. As described further below, we do not have any equity plans that have not been approved by our shareholders.
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| Plan Category | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights1 | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding column (a))2 |
| | (a) | | (b) | | (c) |
| Equity compensation plans approved by shareholders | | 2,094,655 | | | $ | 17.44 | | | 1,581,481 | |
| Equity compensation plans not approved by shareholders | | — | | | — | | | — | |
| Total | | 2,094,655 | | | $ | 17.44 | | | 1,581,481 | |
1 The weighted average exercise price is calculated based on 2,094,655 stock options outstanding at December 31, 2019.
2 The remaining number of securities available for future issuance under equity compensation plans includes the Equity Plan and the Veritex (Green) 2014 Plan. Our 2010 Plan will not be used to grant future equity awards of any type.incentive.
CHIEF EXECUTIVE OFFICER PAY RATIO
Item 402(u) of Regulation S-K, implementing a requirement of the Dodd-Frank Act, requires that we disclose a ratio that compares the annual total compensation of our median employee to that of our Chief Executive Officer.
In order to determine our median employee, we prepared a list of all employees (excluding our Chief Executive Officer) as of December 31, 2019,2021, along with their gross income as reported on IRS form W-2 for the year ended December 31, 2019.2021. Gross income as reported on IRS form W-2 for the year ended December 31, 20192021 was annualized for those employees that were not employed for the full year.
After identifying the median employee, we calculated that employee’s annual total compensation using the same methodology we use for our named executive officersNEOs as set forth in the Summary Compensation Table above.
The annualannual compensation for 20192021 for our Chief Executive Officer was $3,909,111$3,104,142 and for our median employee was $70,000.$72,968. The resulting ratio of our Chief Executive Officer’s pay to that of our median employee for the year ended December 31, 20192021 was 5643 to 1.
PROPOSAL 3.4. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Pursuant to the recommendation of the Audit Committee, the Board has appointed Grant Thornton LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2020.2022. Grant Thornton LLP has served as our independent auditors since 2014. We have been advised by Grant Thornton LLP that neither Grant Thornton LLP nor any of its members had any financial interest, direct or indirect, in us nor has Grant Thornton LLP had any connection with us or any of our subsidiaries in any capacity other than independent auditors. The Board is seeking ratification of the appointment of Grant Thornton LLP for the 20202022 fiscal year. Shareholder ratification of the selection of Grant Thornton LLP as our independent registered public accounting firm for the 20202022 fiscal year is not required by our bylaws, state law or otherwise. However, the Board is submitting the selection of Grant Thornton LLP to our shareholders for ratification as a matter of good corporate governance. If our shareholders fail to ratify the selection, the Audit Committee will consider this information when determining whether to retain Grant Thornton LLP for future services.
Representatives of Grant Thornton LLP are expected to be in attendance at the Annual Meeting either in person or via live webcast and will be afforded the opportunity to make a statement. The representatives will also be available to respond to questions submitted in person or via live webcast.questions.
The ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the year ending December 31, 20202022 will require the affirmative vote of a majority of the votes cast at the Annual Meeting.
THE BOARD RECOMMENDS A VOTE “FOR” THE PROPOSAL TO RATIFY THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2020.2022.
Report of the Audit Committee
The Audit Committee oversees Veritex’s financial reporting process on behalf of the Board. Management has primary responsibility for preparing Veritex’s financial statements and the reporting process, including developing, maintaining and evaluating Veritex’s internal control over financial reporting in accordance with generally accepted accounting principles. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management Veritex’s audited financial statements for the fiscal year ended December 31, 2019,2021, including a discussion of the quality, and not just the acceptability, of the accounting principles, the reasonableness of significant judgments and accounting estimates, and the clarity of disclosures in the financial statements.
The Audit Committee discussed with Grant Thornton LLP their audit of Veritex’s 20192021 financial statements, including Veritex’s internal control over financial reporting. During 2019,2021, the Audit Committee met with Grant Thornton LLP, with and without management present, to discuss the results of their examinations, their evaluations of Veritex’s internal control over financial reporting, and the overall quality of Veritex’s financial reporting. In addition, the Audit Committee discussed with Grant Thornton LLP the matters required to be discussed pursuant to Auditing Standard No. 1301, Communications with Audit Committees, adopted by the Public Company Accounting Oversight Board (“PCAOB”) and such other matters as are required by the PCAOB to be discussed with the Audit Committee. The Audit Committee has received the written disclosures and the letter from Grant Thornton LLP required by applicable requirements of the PCAOB regarding Grant Thornton LLP’s communications with the Audit Committee concerning independence, and has discussed with Grant Thornton LLP the auditors’ independence from management and Veritex, considered the compatibility of non-audit services with the auditors’ independence and concluded that the auditors’ independence had been maintained.
Based on its review and discussions noted above, the Audit Committee recommended to the Board that the audited financial statements be included in Veritex’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.2021.
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| | AUDIT COMMITTEE
Steven D. Lerner, Audit Committee Chair Arcilia Acosta, Audit Committee Member Gregory B. Morrison, Audit Committee Member Ned N. Fleming, III, Audit Committee Member
William D. Ellis,Gordon Huddleston, Audit Committee Member
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Audit Committee Pre-Approval Policy
The Audit Committee has adopted a policy and related procedures regarding the pre-approval of all audit, audit-related and non-audit services to be performed by our independent auditors. The Audit Committee will approve the engagement of auditors for a term of 12 months, unless the Audit Committee considers a different period and specifically states otherwise. The Audit Committee annually reviews and pre-approves the services, and the associated cost levels or budgeted amounts that may be provided by our independent auditors without obtaining specific pre-approval from the Audit Committee.
The Audit Committee may delegate pre-approval authority to one or more of its members. All requests or applications for services to be provided by the independent auditors that do not require specific approval by the Audit Committee will be submitted to the chair of the committee in order to determine whether such services are included within the list of services that have been pre-approved by the committee.
Fees Paid to Independent Registered Public Accounting Firm
The Audit Committee has reviewed the following audit and non-audit fees that we have paid to Grant Thornton LLP for 20192021 and 20182020 for purposes of considering whether such fees are compatible with maintaining the independence of Grant Thornton LLP, and concluded that such fees did not impair Grant Thornton LLP’s independence. The policy of the Audit Committee is to pre-approve all audit and non-audit services performed by our independent auditors before the services are performed, including all of the services, if any, described under “Audit Fees,” “Audit-Related Fees,” “Tax Fees” and “All Other Fees” in the footnotes to the table below. The Audit Committee pre-approved all of the services provided by Grant Thornton LLP and all of the fees described below in accordance with the policies and procedures described below.
| | | 2019 | | 2018 | | 2021 | | 2020 |
Audit Fees1 | Audit Fees1 | $ | 1,066,704 | | | $ | 677,313 | | Audit Fees1 | $ | 931,294 | | | $ | 883,851 | |
| Audit-Related fees | Audit-Related fees | — | | | | — | | Audit-Related fees | — | | | — | |
| Tax Fees | Tax Fees | — | | | | — | | Tax Fees | — | | | — | |
| All Other Fees | All Other Fees | — | | | | — | | All Other Fees | — | | | — | |
| Total fees | Total fees | $ | 1,066,704 | | | $ | 677,313 | | Total fees | $ | 931,294 | | | $ | 883,851 | |
1 Audit Fees reflect the aggregate fees billed for services related to the reviews of our quarterly reports filed on Form 10-Q, the audit of our consolidated financial statements and the preparation of financial statements in accordance with PCAOB standards, audit of internal controls to meet the reporting requirements of Section 112 of the Federal Deposit Insurance Corporation Act, registration statements and other SEC filings.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTION
General
In addition to the relationships, transactions and the director and executive officer compensation arrangements discussed above under “Executive Compensation,” the following is a description of transactions since January 1, 2019,2021, including currently proposed transactions, to which we have been or will be a party, in which the amount involved exceeded or will exceed $120,000, and in which any of our directors (including nominees), executive officers or beneficial holders of more than 5% of our capital stock, or their immediate family members or entities affiliated with them, had or will have a direct or indirect material interest. We believe the terms and conditions set forth in such agreements are reasonable and customary for transactions of this type.
Ordinary Banking Relationships
Some of our officers, directors and principal shareholders, as well as their immediate family members and affiliates, are customers of, or have had transactions with, the Bank in the ordinary course of business. These transactions including deposits, loans, mortgages and other financial services transactions, all of which were effected on substantially the same terms and conditions, including interest rate and collateral (where applicable), as those prevailing from time to time for comparable transactions with unaffiliated persons and did not involve more than the normal risk of collectability or other unfavorable features.
As of December 31, 2019,2021, we had approximately $68.1approximately $12.7 million of loans outstanding to our officers, directors and principal shareholders, as well as their immediate family members and affiliates, and those of the Bank, and we had approximately $0.8$4.0 million in unfunded loan commitments to these persons. As of April 17, 2020,18, 2022, no relatedrelated person loans were categorized as nonaccrual, past due, restructured or potential problem loans. We expect to continue to enter into similar transactions in the ordinary course of business on similar terms and conditions with our officers, directors and principal shareholders, as well as their immediate families and affiliates, in the future.
Review and Approval of Transactions with Related Persons
Transactions by us or the Bank with related persons are subject to regulatory requirements and restrictions. These requirements and restrictions include Sections 23A and 23B of the Federal Reserve Act (which govern certain transactions by the Bank with its affiliates) and the Federal Reserve’s Regulation O (which governs certain loans by the Bank to its executive officers, directors and principal shareholders). We and the Bank have adopted policies to comply with these regulatory requirements and restrictions.
In addition, we have adopted a written Related Person Transactions Policy, which provides that any related person transaction is generally prohibited unless the Audit Committee determines that such transaction is fair to our company and, if necessary, we have developed an appropriate plan to manage any conflicts of interest. A “related person transaction” is a transaction between us and a director, executive officer or 5% or more shareholder, any of their respective immediate family members or a company or other entity in which any of these persons have a direct or indirect material interest. Such transactions may include financial transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements or relationships. Pursuant to the Related Person Transactions Policy, all related person transactions must be reviewed and approved by the Audit Committee before such transaction is entered into, or, in the event of an inadvertent failure to bring the transaction to the Audit Committee for preapproval, ratified by the committee. In deciding whether to approve or ratify a related person transaction, the Audit Committee considers the benefits of the transaction to the Company, the impact on a director’s independence if a director or a director’s family member or affiliate is involved, the availability of comparable sources for products and services, the terms of the transaction and terms available to third parties for similar transactions.
STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table presents information regarding the beneficial ownership of our common stock, as of March 31, 2020,April 5, 2022, by (i) each nominee for election as a director, (ii) each named executive officer, (iii) each person who is known by us to own beneficially 5% or more of our common stock and (iv) all directors and executives as a group. Unless otherwise indicated, based on information furnished by such shareholders, our management believes that each person has sole voting and investment powers for all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable. The table below calculates the percentage of beneficial ownership based on 49,557,36453,917,321 shares of common stock outstanding as of March 31, 2020.
April 5, 2022.
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Name of Beneficial Owner1 | | Number of Shares Beneficially Owned | | Percentage Beneficially Owned2 |
| Directors, Nominees and Named Executive Officers: | | | | |
C. Malcolm Holland, III3 | | 231,756 | | | * |
Pat S. Bolin4 | | 166,905 | | | * |
Terry Earley5 | | 105,429 | | | * |
William D. Ellis6 | | 477,604 | | | * |
Ned N. Fleming, III7 | | 11,568 | | | * |
Mark C. Griege8 | | 112,272 | | | * |
Jon Heine9 | | 18,512 | | | * |
Jeff Kesler10 | | 95,982 | | | * |
Steven D. Lerner11 | | 35,645 | | | * |
Manuel J. Mehos12 | | 569,381 | | | 1.1 | % |
Gregory B. Morrison13 | | 10,644 | | | * |
LaVonda Renfro14 | | 50,732 | | | * |
Clay Riebe15 | | 54,904 | | | * |
John T. Sughrue16 | | 56,790 | | | * |
| Directors and executive officers of the Company as a group (20 persons) | | 2,642,530 | | | |
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| Principal Shareholders: | | | | |
| 5% Security Holders: | | | | |
BlackRock, Inc.17 | | 7,360,324 | | | 14.9 | % |
Vanguard18 | | 3,170,576 | | | 6.4 | % |
FJ Capital Management19 | | 2,788,447 | | | 5.6 | % |
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Name of Beneficial Owner1 | | Number of Shares Beneficially Owned | | Percentage Beneficially Owned2 |
| Directors, Nominees and Named Executive Officers: | | | | |
C. Malcolm Holland, III3 | | 327,398 | | | * |
Arcilia Acosta4 | | 54,480 | | | * |
Pat S. Bolin5 | | 201,649 | | | * |
April Box6 | | 12,239 | | | * |
Blake Bozman7 | | 114,251 | | | * |
Terry Earley8 | | 97,933 | | | * |
William D. Ellis9 | | 454,707 | | | * |
William E. Fallon10 | | 11,679 | | | * |
Mark C. Griege11 | | 130,371 | | | * |
Gordon Huddleston12 | | 30,573 | | | * |
Steven D. Lerner13 | | 31,460 | | | * |
Manuel J. Mehos14 | | 312,172 | | | * |
Gregory B. Morrison15 | | 20,601 | | | * |
James Recer16 | | 5,006 | | | * |
LaVonda Renfro17 | | 85,030 | | | * |
Clay Riebe18 | | 78,470 | | | * |
John T. Sughrue19 | | 74,790 | | | * |
| Directors and executive officers of the Company as a group (19 persons) | | 1,820,325 | | | 3.38 | % |
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| Principal Shareholders: | | | | |
| 5% Security Holders: | | | | |
BlackRock, Inc.20 | | 7,049,187 | | | 13.1 | % |
Vanguard21 | | 3,186,680 | | | 5.9 | % |
* Represents beneficial ownership of less than 1%.
1 Except as otherwise indicated, the address for each of the following is 8214 Westchester Drive, Suite 800, Dallas, Texas 75225.
2 OwnershipOwnership percentages reflect the ownership percentage assuming that such person, but no other person, exercises all options and warrants to acquire shares of our common stock held by such person that are currently exercisable or exercisable within 60 days of March 31, 2020.April 5, 2021. The ownership percentage of all executive officers and directors, as a group, assumes that all 2019 persons, but no other persons, exercise all options and warrants to acquire shares of our common stock held by such persons that are currently exercisable or exercisable within 60 days of March 31, 2020.April 5, 2021.
3 Includes (i) 143,809160,681 shares held in Mr. Holland’s name, (ii) 10,000 shares held by Pershing LLC IRA for his benefit, (iii) 5,750 shares held by The Holland III FLP, and (iv)(iii) stock options to purchase 72,197160,967 shares of Veritex common stock.
4 Includes 54,480 shares held in Ms. Acosta's name.
5 Includes (i) 12,00922,243 shares held in Mr. Bolin’s name, (ii) 10,000 shares held by Red Star Yield Holdings, Inc., an entity controlled by Mr. Bolin (iii) 24,249 shares held by the DHB Family Partnership, LP, which is controlled by Mr. Bolin, (iv) 22,250 shares held by the PSB Family Trust II, of which Mr. Bolin’s wife is the trustee, (v) 73,07996,237 shares held by Anasazi Capital, LP, which is controlled by Mr. Bolin, and (vi) 21,67026,670 shares held by Bolin Investments, LP, which is controlled by Mr. Bolin, (vii) 1,148 RSUs that will vest within 60 days of the record date, and (viii) options to purchase 2,500Bolin.
6 Includes 12,239 shares of our common stock.held in Ms. Box's name.
57 Includes (i) 39,81786,946 shares held in Mr. Bozman's name and (ii) 27,305 held by Bozman DFS Partnership, which is controlled by Mr. Bozman.
8 Includes (i) 66,902 shares held in Mr. Earley’s name, (ii) 6,800 held by Mr. Earley in an IRA for his benefit and (iii) options to purchase 58,81224,231 shares of our common stock.
69 Includes (i) 197,653175,400 shares held in Mr. Ellis’s name, (ii) 279,307 shares held by Multus Analytics LLC and (iii) 644 RSUs that will vest within 60 days of the record date. Multus Analytics LLC received and holds the 279,307 shares in exchange for Green Bancorp, Inc. common stock in connection with Veritex's acquisition of Green Bancorp. Mr. Ellis is the manager of Multus Analytics LLC and has voting power and dispositive power over the shares held for the entity.
710 Includes (i) 7,98111,679 shares held in Mr. Fleming's name, (ii) 875 shares held by Mr. Fleming together with certain entities of SunTx Veritex Holdings, LP, a Delaware limited partnership (the “Fund”), (iii) 1,212 RSUs that will vest within 60 days of the record date and (iv) 1,500 shares owned by Mr. Fleming's spouse. The business address of each of the entities and Mr. Fleming is 5420 LBJ Freeway, Suite 1000, Dallas, Texas 75240. Mr. Fleming serves as director of SunTx Capital II Management Corp. (the “Fund GP Corp”), which acts as the general partner of SunTx Capital Partners II GP, LP (the “Fund GP”), the general partner of the Fund, and which serves as the investment manager to the Fund. As a result of this relationship, Mr. Fleming serves on our Board as a representative of the Fund and received RSUs in such capacity. Pursuant to the offering documents of the Fund, the Fund is entitled to an indirect pecuniary interest in these shares. Solely as a result of his ownership interest in the Fund, including through the Fund GP Corp, Mr. Fleming may be deemed to have an indirect pecuniary interest in these 875 shares (i.e. no direct pecuniary interest). Mr. Fleming has the sole right to vote and dispose of these shares held by him individually. Mr. Fleming disclaims beneficial ownership of these securities, except to the extent of Mr. Fleming’s pecuniary interest in the securities.Fallon's name.
811 Includes (i) 108,120130,371 shares held in Mr. Griege’s name.
12 Includes (i) 28,073 shares held in Mr. Huddleston's name and (ii) 1,652 RSUs that will vest within 60 days of the record date, and (iii)stock options to purchase 2,500 shares of our common stock.
913 Includes (i) options to purchase 3,512 shares of our common stock (ii) options to purchase 10,000 shares of our common stock that will vest within 60 days of the record date and (iii) 5,000 RSUs that will vest within 60 days of the record date.
10 Includes (i) 39,96331,460 shares held in Mr. Kesler’s name, (ii) 10,000Lerner’s name.
14 Includes 312,172 shares held by Charles Schwab IRA forin Mr. Kesler's benefitMehos’s name.
15 Includes 20,601 shares held in Mr. Morrison’s name.
16 Includes 5,006 shares held in Mr. Recer's name.
17 Includes (i) 32,895 shares held in Mrs. Renfro's name and (iii)(ii) stock options to purchase 46,01952,135 shares of our common stock.
1118 Includes (i) 25,721 shares held in Mr. Lerner’s name, (ii) options to purchase 9,280 shares of our common stock and (iii) 644 RSUs that will vest within 60 days of the record date.
12 Includes (i) 513,633 shares held in Mr. Mehos’s name, (ii) options to purchase 55,104 shares of our common stock and (iii) 644 RSUs that will vest within 60 days of the record date.
13 Includes (i) 10,000 shares held in Mr. Morrison’s name and (ii) 644 RSUs that will vest within 60 days of the record date.
14 Includes (i) 25,977 shares held individually by Ms. Renfro and (ii) options to purchase 24,755 shares of our common stock.
15 Includes (i) 21,07526,667 shares held in Mr. Riebe’s name and (ii) stock options to purchase 33,82951,803 shares of our common stock.
1619 Includes (i) 45,80466,677 shares held individually by Mr. Sughrue, (ii) 7,208 share held by Mr. Sughrue’s spouse and (iii) 55905 shares held by Mr. Sughrue’s son, (iv) 1,223 RSUs that will vest within 60 days of the record date and (v) options to purchase 2,500 shares of our common stock.son.
1720 Based solely on information reported on a Schedule 13G/A filed with the SEC on February 4, 2020January 27, 2022 by or on behalf of BlackRock, Inc. The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055.
1821 Based solely on information reported on a Schedule 13G/A filed with the SEC on February 12, 20209, 2022 by or on behalf of Vanguard Group, Inc. The address of Vanguard Group, Inc. is 455 Devon Park Drive Wayne,100 Vanguard Blvd., Malvern, PA 19087.
19 Based solely on information reported on a Schedule 13G/A filed with the SEC on February 13, 2020 by or on behalf of FJ Capital Management, LLC. The address of FJ Capital Management, LLC is 1313 Dolley Madison Blvd #306, McLean, VA 22101.
19355.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRACTICES
Corporate responsibility and sustainability play an important role in our business, operating strategies and long-term value creation for our shareholders, customers and team members. We believe that environmental, social and governance (“ESG”) practices are critical to attracting and retaining the best talent, meeting the evolving needs of our customers and being good stewards of our communities. We are committed to conducting operations and activities in a manner that provides and maintains safe and healthful working conditions, protects the environment and conserves natural resources. We maintain practices so that our operations are managed and operated in compliance with applicable laws and regulations. We recognize the importance of ESG considerations and are firmly committed to conducting business in a responsible manner.
Please view our ESG Report at www.veritexbank.com. Our ESG Report are not a part of our proxy solicitation materials.
HOUSEHOLDING OF PROXY MATERIALS
With respect to eligible shareholders who share a single address, we are sending only one copy of this proxy statement and accompanying notice of the Annual Meeting to that address unless we have received instructions to the contrary from any shareholder at that address. Eligible shareholders will continue to have access to and receive separate proxy cards. This practice, known as “householding,” is designed to reduce our printing and postage costs. However, a shareholder of record who wishes to receive a separate copy of this proxy statement and the accompanying notice of the Annual Meeting in the future may contact us by mail at Veritex Holdings, Inc., 8214 Westchester Drive, Suite 800, Dallas, Texas 75225, Attn: Corporate Secretary,Investor Relations, or by phone at (972) 349-6200. Eligible shareholders of record receiving multiple copies of this proxy statement and the accompanying notice of the Annual Meeting can request householding by contacting us in the same manner. Shareholders who own shares through a bank, broker or other nominee can request householding by contacting such bank, broker or other nominee.
DATE FOR SUBMISSION OF SHAREHOLDER
PROPOSALS FOR 20212023 ANNUAL MEETING
If a shareholder desires to submit a shareholder proposal pursuant to Rule 14a-8 under the Exchange Act for inclusion in the proxy statement for the 20212023 annual meeting of shareholders, such proposal and supporting statements, if any, must be received by us at our principal executive offices, located at 8214 Westchester Drive, Suite 800, Dallas, Texas 75225, Attn: Corporate Secretary,Investor Relations, no later than 120 calendar days before the one-year anniversary of the date this proxy statement is released to shareholders. Any such proposal must comply with the requirements of Rule 14a-8.
OTHER MATTERS
The Board does not intend to bring any other matter before the Annual Meeting and does not know of any other matters that are to be presented for action at the Annual Meeting. However, if any other matter does properly come before the Annual Meeting or any adjournment or postponement thereof, the proxies will be voted in accordance with the discretion of the person or persons voting the proxies.
A copy of this proxy statement and our 20192021 annual report to shareholders is available without charge from our website at https://ir.veritexbank.com/. The annual report is not incorporated into this proxy statement and is not considered proxy-soliciting material.
A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019,2021, including financial statements and schedules but not including exhibits, as filed with the SEC, will be sent to any shareholder of record on March 31, 2020as of the record date without charge upon written request addressed to 8214 Westchester Drive, Suite 800, Dallas, Texas 75225, Attn: Corporate Secretary.Investor Relations. A reasonable fee will be charged for copies of exhibits. You also may access this proxy statement and our Annual Report on Form 10-K at www.ctsproxyvote.com. You also may access our Annual Report on Form 10-K for the fiscal year ended December 31, 20182021 at https://ir.veritexbank.com/financial-information/sec-filings.
2022 AMENDED AND RESTATED OMNIBUS INCENTIVE PLAN
FOR VERITEX HOLDINGS, INC.
1 Purpose and Effect Date.
(a) Purpose. The 2022 Amended and Restated Omnibus Incentive Plan for Veritex Holdings, Inc. has two complementary purposes: (i) to attract and retain outstanding individuals to serve as officers, employees, directors and service providers; and (ii) to increase shareholder value. This Plan will provide participants incentives to increase shareholder value by offering the opportunity to acquire shares of the Company’s common stock, or receive monetary payments, on the terms that this Plan provides. In addition, the Plan is intended to advance the Company’s growth and success and to advance its interests by attracting and retaining well-qualified Outside Directors upon whose judgment the Company is largely dependent for the successful conduct of its operations and by providing such individuals with incentives to put forth maximum efforts for the long-term success of the Company’s business.
(b) Effective Date. This Plan was originally adopted by the Board of Directors (the “Board”) of the Company on September 2, 2014 (the “Original Effective Date”) and approved by the Company’s shareholders on September 16, 2014, and was amended and restated on April 5, 2019 (the “Restatement Effective Date”). This amended and restated Plan was approved by the Committee on April 14, 2022 (the “Effective Date”) and amends, restated, and supersedes the prior plan document in its entirety as it applies to Awards granted after the Effective Date.
2. Definitions. Capitalized terms used in this Plan have the meanings given below. Additional defined terms are set forth in other sections of this Plan.
(a) “Applicable Law” means the requirements relating to the administration of equity-based awards under U.S. and state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or jurisdiction where Awards are, or will be, granted under the Plan.
(b) “Authorized Officer” is defined in Section 5(b) below.
(c) “Award” means a grant of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Stock, performance-based Awards, cash-based Awards, or any other type of award permitted under the Plan.
(d) “Award Agreement” means a written agreement between a Participant and the Company which sets out the terms of the grant of an Award.
(e) “Board” means the board of directors of the Company.
(f) “Change in Control” except as may otherwise be provided in an Award Agreement, or other applicable agreement, means the occurrence of any of the following:
(i) The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if the Company’s shareholders immediately prior to such merger, consolidation or reorganization cease to directly or indirectly own immediately after such merger, consolidation or reorganization at least a majority of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation or other reorganization;
(ii) The consummation of the sale, transfer or other disposition of all or substantially all of the Company’s assets (other than (x) to a corporation or other entity of which at least a majority of its combined voting power is owned directly or indirectly by the Company, (y) to a corporation or other entity owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership of the common stock of the consolidation or corporate reorganization which does not result in a Change in Control as defined herein);
(iii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board are replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this clause, if any person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same person will not be considered a Change in Control;
(iv) The consummation of any transaction as a result of which any person becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing at least 50% of the total voting power represented by the Company’s then outstanding voting securities. For purposes of this paragraph (iv), the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude:
(1) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or an affiliate of the Company;
(2) a corporation or other entity owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership of the common stock of the Company;
(3) the Company; and
(4) a corporation or other entity of which at least a majority of its combined voting power is owned directly or indirectly by the Company; or
(v) A complete winding up, liquidation or dissolution of the Company. A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transactions.
Notwithstanding the foregoing provisions of this Section 2(f), if an Award issued under the Plan is subject to Code Section 409A, then an event shall not constitute a Change in Control for purposes of such Award under the Plan unless such event also constitutes a change in the Company’s ownership, its effective control or the ownership of a substantial portion of its assets within the meaning of Code Section 409A.
(g) “Claim” means any claim, liability or obligation of any nature, arising out of or relating to this Plan or an alleged breach of this Plan or an Award Agreement.
(h) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a specific provision of the Code includes any successor provision and the regulations promulgated under such provision.
(i) “Commission” means the United States Securities and Exchange Commission or any successor agency.
(j) “Committee” means the Compensation Committee of the Board (or a successor committee with the same or similar authority), or such other committee of the Board as designated or authorized by the Board to administer the Plan. Unless otherwise determined by the Board, the Committee shall be composed of no fewer than two directors, each of whom is an Outside Director provided that if no such committee shall be in existence at any time, the functions of the Committee shall be carried out by the Board.
(k) “Company” means Veritex Holdings, Inc., a Texas corporation, or any successor thereto.
(l) “Consultant” means any natural person, who is not an Employee, rendering bona fide services to the Company or a Subsidiary, with compensation, pursuant to a written independent contractor agreement between such person and the Company or a Subsidiary, provided that such services are not rendered in connection with the offer or sale of securities in a capital raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities.
(m) “Director” means a member of the Board.
(n) “Disability” means (i) the inability of Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months or (ii) the receipt of income replacements by Participant, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, for a period of not less than three months under a disability, accident or group health plan sponsored by the Company). Notwithstanding the foregoing provisions of this Section 2(n), in the event an Award issued under the Plan is subject to Code Section 409A, then, in lieu of the foregoing definition and to the extent necessary to comply with the requirements of Code Section 409A, the definition of “Disability” for purposes of such Award shall be the definition of “disability” provided for under Code Section 409A and the regulations or other guidance issued thereunder.
(0) “Employee” means a common law employee (as defined in accordance with the Regulations and Revenue Rulings then applicable under Code Section 3401(c)) of the Company or any Subsidiary of the Company.
(p) “Exchange Act” means the Securities Exchange Act of 1934, as amended. Any reference to a specific provision of the Exchange Act includes any successor provision and the regulations and rules promulgated under such provision.
(q) “Fair Market Value” means, as of a particular date (i) if the stock is listed on a securities exchange, the closing sales price on the principal such exchange on such date or, in the absence of reported sales on such date, the closing sales price on the immediately preceding date on which sales were reported, or (ii) if the stock is not listed on a securities exchange, a value that will be determined by such other method as the Committee determines in good faith to be reasonable and in compliance with Code Section 409A.
(r) “Option” means the right, granted to a Participant pursuant to this Plan, to purchase Shares at a stated price for a specified period of time.
(s) “Outside Director” means a Director who meets the qualifications of a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, and any other qualifications required by the applicable stock exchange on which the Shares are traded.
(t) “Participant” means an individual selected by the Committee to receive an Award.
(u) “Performance Goals” is defined in Section 11(f)(ii).
(v) “Performance Period” is defined in Section 11(f)(i).
(w) “Plan” means this 2022 Amended and Restated Omnibus Incentive Plan for Veritex Holdings, Inc., as may be amended from time to time.
(x) “Restriction Period” means the length of time established relative to an Award during which the Participant cannot sell, assign, transfer, pledge or otherwise encumber the Stock or Stock Units subject to such Award and at the end of which the Participant obtains an unrestricted right to such Stock or Stock Units.
(y) “Restricted Stock” means a Share that is subject to a risk of forfeiture and a Restriction Period.
(z) “Restricted Stock Unit” or “RSU” means the right to receive either Stock or a cash payment equal to the Fair Market Value of one Share that is subject to a risk of forfeiture and a Restriction Period.
(aa) “Share” means a share of Stock.
(bb) “Stock” means the common stock of the Company, par value of $0.01 per share.
(cc) “Stock Appreciation Right” or “SAR” means the right to receive either Stock or a cash payment equal to the appreciation of the Fair Market Value of a Share during a specified period of time.
(dd) “Stock Unit” means a right to receive a payment equal to the Fair Market Value of one Share.
(ee) “Subsidiary” means any corporation, limited liability company or other limited liability entity in an unbroken chain of entities beginning with the Company if each of the entities (other than the last entity in the chain) owns the stock or equity interest possessing more than 50% of the total combined voting power of all classes of stock or other equity interests in one of the other entities in the chain.
(ff) “Termination of Service” occurs when a Participant who is (i) an Employee of the Company or any Subsidiary ceases to serve as an Employee of the Company and its Subsidiaries, for any reason; (ii) an Outside Director of the Company or a Subsidiary ceases to serve as a director of the Company and its Subsidiaries for any reason; or (iii) a Consultant of the Company or a Subsidiary ceases to serve as a Consultant of the Company and its Subsidiaries for any reason. Except as may be necessary or desirable to comply with applicable federal or state law, a “Termination of Service” shall not be deemed to have occurred when a Participant who is an Employee becomes an Outside Director or Consultant or vice versa. Notwithstanding the foregoing provisions of this Section 2(ff), in the event an Award issued under the Plan is subject to Code Section 409A, then, in lieu of the foregoing definition and to the extent necessary to comply with the requirements of Code Section 409A, the definition of “Termination of Service” for purposes of such Award shall be the definition of “separation from service” provided for under Code Section 409A and the regulations or other guidance issued thereunder.
3. Shareholder Approval. In September 2014 the Board adopted and the Company’s shareholders approved the original statement of this Plan, and in April of 2019 the Committee adopted and, in May of 2019, the Company’s shareholders approved the first amendment and restatement of this Plan (the “First Restatement Date”). This amended and restated Plan has been adopted by the Committee
pursuant to Section 14 of the Plan and shall be submitted to the Company’s shareholders for approval. Any Awards payable in Shares and granted under the Plan in excess of the number of Shares reserved under the Plan as of the First Restatement Date and prior to shareholder approval of this amended and restated Plan will be granted subject to such shareholder approval.
4. Eligibility. The persons eligible to receive Awards under the Plan shall be designated as Participants by the Committee. The Committee may, in its discretion, designate any Employee, Outside Director, Consultant or other services provider of the Company or its Subsidiaries as a Participant.
5. Administration.
(a) The Plan shall be administered by the Committee, which shall have the full power and authority to (i) designate Participants; (ii) determine the types of Awards to be granted under the Plan; (iii) determine the number of Shares to be covered by each Award; (iv) determine the terms and conditions of any Award; (v) amend the terms and conditions of any Award; (vi) determine whether, to what extent, and under what circumstances Awards may be exercised in cash, Shares, other securities, other Awards or other property, as well as determine whether, to what extent, and under what circumstances Awards may be cancelled, forfeited or suspended; (vii) establish, amend, suspend or waive rules and appoint such individuals as it shall deem appropriate for the proper administration of the Plan; (viii) to approve forms of Award Agreements for use under the Plan; (ix) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Committee will determine; (x) to construe and interpret the terms of the plan and Awards granted pursuant to the Plan; (xi) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations established for the purpose of satisfying applicable foreign laws, for qualifying for favorable tax treatment under applicable foreign laws or facilitating compliance with foreign laws; sub-plans may be created for any of these purposes; and (xii) make any other determination and take any other action that the Committee deems necessary for the administration of the Plan. Any interpretation, determination or other action made or take by the Committee shall be final, binding, and conclusive on all interested parties.
(b) The Committee may delegate to officers of the Company, pursuant to a written delegation, the authority to perform specified functions under the Plan. Any actions taken by any officers of the Company pursuant to such written delegation of authority shall be deemed to have been taken by the Committee. In addition, notwithstanding anything to the contrary in this Section 5, to the extent permitted by Applicable Law, the Board or the Committee may, in its discretion and by a resolution adopted by the Board or the Committee, as applicable, authorize one or more officers of the Company (an “Authorized Officer”) to grant Awards to one or more Employees under the Plan and determine the number of Shares that will be subject to such Awards or to modify or amend the terms of any outstanding Award, including the time or times when Awards may be exercised; provided, however, that the resolution of the Board or Committee granting such authority shall (x) specify the total number of Shares that may be made subject to the Awards, (y) if the Award is an Option or SAR, set forth the price or prices (or a formula by which such price or prices may be determined) to be paid for the purchase of the Shares subject to such Awards, and (z) not authorize an officer to designate himself or herself as a recipient of any Award and not allow the officer to modify or amend the terms of any award granted to such officer by the Board or the Committee.
(c) The Committee will consist of two or more individuals each of whom will be an Outside Director.
(d) The terms of the Plan outlined below apply to all Awards granted under the Plan, unless otherwise stipulated in an Award’s individual Award Agreement, provided however, in the event of a conflict between the terms of the Plan and the terms of an individual Award Agreement, the individual Award Agreement shall control.
6. Indemnification of the Board and the Committee. No member of the Board or the Committee, nor any officer or Employee of the Company acting on behalf of the Board or the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Board and the Committee, each Authorized Officer, each other officer of the Company, and each Employee of the Company acting on behalf of the Board or the Committee shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination, or interpretation to the fullest extent provided by law. Except to the extent required by any unwaiveable requirement under applicable law, no member of the Board or the Committee (and no Subsidiary of the Company) shall have any duties or liabilities, including without limitation any fiduciary duties, to any Participant (or any person claiming by and through any Participant) as a result of this Plan, any Award Agreement or any Claim arising hereunder and, to the fullest extent permitted under applicable law, each Participant (as consideration for receiving and accepting an Award Agreement) irrevocably waives and releases any right or opportunity such Participant might have to assert (or participate or cooperate in) any Claim against any member of the Board or the Committee, any Authorized Officer and any Subsidiary of the Company arising out of this Plan.
7. Shares Available for Awards. The aggregate number of Shares that are available for grant under the Plan shall be 3,250,000 Shares.
8. Limitation on Awards. The maximum aggregate number of Shares subject to Awards granted under the Plan in any 12-month period to any one Participant (including any Outside Director) shall be 500,000. The maximum aggregate cash-based Award that may be paid under the Plan to any one Participant (including any Outside Director) in any fiscal year shall be $1,000,000.
9. Accounting for Awards. If an Award entitles Participant to receive or purchase Shares, the number of Shares covered by such Award, or to which such Award relates, shall be counted on the date of the grant of such Award against the aggregate number of Shares available for grant under the Plan. Any Shares subject to an Award that terminates or is forfeited or cancelled shall become available again for grant under the Plan. Shares otherwise deliverable pursuant to an Award that are withheld upon exercise or vesting of an Award to pay the exercise price or to satisfy tax withholdings obligations shall again be available for grant and shall not be counted against the maximum number of shares of Common Stock that may be issued under this Plan.
10. Adjustments. In the event of a recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, disposition, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the Shares such that an adjustment is necessary in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall (as deemed appropriate) adjust (i) the number and type of Shares subject to, or that may become subject to, outstanding Awards; (ii) the purchase price or exercise price with respect to the Award; or (iii) any other limitations contained within the Plan. Notwithstanding the foregoing, the Committee shall not make any adjustments to outstanding Options or Stock Appreciation Rights that would constitute a modification, extension, or substitution of such rights under Treas. Reg. Section 1.409A-1(b)(5)(v) that would be treated as the grant of a new stock right or change in the form of payment for purposes of Code Section 409A.
11. Award Types.
(a) Stock Options
(i) Exercise Price - The exercise price applicable to an Option shall not be less than 100% of the Fair Market Value of a Share on the date of grant,
(ii) Stock Option Term - Options will remain exercisable for no longer than 10 years from the date of grant.
(iii) Dividend and Voting Rights - Prior to the vesting and exercise of any Option, Participants shall not be entitled to receive any cash or Stock dividends paid to or made with respect to the Shares underlying such Option and shall not have the right to vote the Shares underlying such Option.
(iv) Time and Manner of Exercise - Unless otherwise provided in an Award Agreement, payment of the exercise price of an Option may be made in whole or in part, in the form of (i) cash or cash equivalents, (ii) delivery of previously-acquired Shares based on the Fair Market Value of the Shares on the date the Option is exercised, (iii) withholding of Shares from the Option based on the Fair Market Value of the Shares on the date the Option is exercised, (iv) broker-assisted market sales, or (iv) any other cashless exercise arrangement.
(b) Stock Appreciation Rights
(i) Exercise Value - The excess of (i) the Fair Market Value of one Share on the date of exercise over the grant price of the SAR - with the grant price not being less than 100% of the Fair Market Value of a Share on the date of grant.
(ii) SAR Term - SARs will remain exercisable for no longer than 10 years from the date of grant.
(iii) Form of Payment - SARs may be settled in cash or Stock as specified in the applicable Award Agreement.
(iv) Dividend and Voting Rights - Prior to the vesting and exercise of any SARs, Participants shall not be entitled to receive any cash or Stock dividends paid to or made with respect to the Shares underlying such SAR and shall not have the right to vote the Shares underlying such SAR.
(c) Restricted Stock and RSUs
(i) Dividend and Voting Rights - Participants who receive Shares of restricted Stock and/or RSUs shall not be entitled to receive any cash or Stock dividends paid to or made with respect to such Shares and shall not have the right to vote the Shares until such Shares have vested, or in the case of RSUs, have vested and been converted into Shares
(ii) Form of Payment - RSUs may be settled in cash or Stock as specified in the applicable Award Agreement.
(iii) Code Section 409A - All RSUs must be settled or paid before the 15th day of the third month following the end of the Participant’s (or the Company’s, if later) taxable year in which the RSU vests, or at such other time as determined by the Committee, taking into account the requirements of Code Section 409A.
(d) Cash-Based Awards
(i) Performance Period - The applicable “Performance Period” shall be determined by the Committee and provided in the Participants’ Award Agreements or other relevant documentation.
(ii) Payout Opportunities - The Committee shall approve a threshold, target, and maximum Awards payout opportunity for each Participant for the fiscal year.
(iii) Payment of Cash-Based Awards - Cash-based Awards must be payable solely as a result of the Company’s performance during the Performance Period and as determined after the end of the Performance Period.
(iv) Code Section 409A - All cash-based Awards must be settled or paid before the 15th day of the third month following the end of the Participant’s (or the Company’s, if later) taxable year in which the cash-based Award vests, or at such other time as determined by the Committee, taking into account the requirements of Code Section 409A.
(e) Stock Awards – Subject to the requirements of Section 11(g)(ii), the Committee may grant Awards of Stock.
(f) Performance-based Awards - Any Award granted under the Plan may be subject to the Performance Goals.
(i) Performance Period - The applicable Performance Period shall be determined by the Committee, as set forth in the Participants’ Award Agreements.
(ii) Performance Goals - Performance Goals shall be determined by the Committee and may consist of any of the following (without limitation) or such other goals as may be selected by the Committee from time to time: growth in interest income and expense; net-income; net interest margin; efficiency ratio; reduction in non-accrual loans and non-interest expense; growth in non-interest income and ratios to earnings assets; net revenue growth and ratio to earning assets; capital ratios; asset or liability interest rate sensitivity and gap; effective tax rate; deposit growth and composition; liquidity management; securities portfolio (value, yield, spread, maturity, or duration); earning asset growth and composition (loans, securities); non-interest income (e.g., fees, premiums and commissions, loans, wealth management, treasury management, insurance, funds management); overhead ratios, productivity ratios; credit quality measures; return on assets; return on equity; economic value of equity; compliance and regulatory ratings; internal controls; enterprise risk measures (e.g., interest rate, loan concentrations, portfolio composition, credit quality, operational measures, compliance ratings, balance sheet, liquidity, insurance); volume in production or loans; cash flow; cost; revenues; sales; ratio of debt to debt plus equity; net borrowing, credit quality or debt ratings; profit before tax; economic profit; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; gross margin; profit margin; earnings per Share; operating earnings; capital expenditures; expenses or expense levels; economic value added; ratio of operating earnings to capital spending or any other operating ratios; free cash flow; net profit; net sales; net asset value per Share; the accomplishment of mergers, acquisitions, dispositions, public offerings or similar extraordinary business transactions; sales growth; price of the Company’s common shares; return on investment; return on assets, equity or shareholders’ equity; market share; inventory levels, inventory turn or shrinkage; customer satisfaction; or total return to shareholders. The Performance Goals shall be computed in accordance with generally accepted accounting principles or under a methodology established by the Committee.
(iii) Payment/Settlement - Performance-based Awards will be paid or settled only upon the attainment of the Performance Goals specified in a Participant’s Award Agreement.
(iv) Dividend and Voting Rights - With respect to any performance-based Awards that are settled in Stock, Participants shall not be entitled to receive any cash or Stock dividends paid to or made with respect to the Shares underlying such Award and shall not have the right to vote the Shares underlying such Award, prior to the vesting of such Awards following the attainment of the Performance Goals specified in the Award Agreement.
(v) Code Section 409A - All performance-based Awards must be settled or paid before the 15th day of the third month following the end of the Participant’s (or the Company’s, if later) taxable year in which the performance-based Award vests, or at such other time as determined by the Committee, taking into account the requirements of Code Section 409A.
(g) Other Requirements
(i) Consideration for Awards - Awards may be granted for no cash consideration or for any cash or other consideration as determined by the Committee or required by Applicable Law.
(ii) Vesting - Awards shall vest according to the vesting schedule provided within the applicable Award Agreement; provided, however, that, other than Awards that are solely cash-based Awards (i) no Award may vest earlier than the date that is one year after the date of grant, and (ii) with respect to grants of Awards made on the date of an annual shareholders meeting to Outside Directors, such one-year vesting period shall be deemed satisfied if such Awards vest on the earlier of the first anniversary of the date of grant or the first annual shareholders meeting following the date of grant (provided that it is not less than fifty weeks following the date of grant). Notwithstanding the foregoing, the Committee may, in its sole discretion, grant Awards with more favorable vesting provisions than set forth in the preceding sentence, provided that no more than 5% of the Shares that may be delivered pursuant to Awards under Section 7 may be granted with more favorable vesting provisions (referred to “Exempt Shares”). The Committee may accelerate the date on which all or any portion of an Award may be vested for any reason, provided however, that the Shares underlying such Award shall count against the Exempt Share limit in this Section 11(g)(ii) unless such acceleration of vesting is upon the Participant’s Termination of Service (i) due to the Participant’s death, Disability, or retirement (as such term is defined in the Participant’s applicable Award Agreement), (ii) without cause or for good reason (as such terms are defined in the Participant’s applicable Award Agreement); or (iii) upon a Change in Control if the successor corporation does not assume or substitute for the Award, as provided in Section 17 below.
(iii) Forfeiture - Unless otherwise determined by the Committee pursuant to Section 5(a)(ix) or provided in the Participant’s applicable Award Agreement, upon a Participant’s Termination of Service all unvested Awards held by the Participant shall be forfeited. Notwithstanding the foregoing, the Committee may provide in the Participant’s applicable Award Agreement or may determine at any time after an Award is granted, that the unvested Awards shall not be forfeited upon a Participant’s Termination of Service due to the Participant’s death, Disability, or retirement (as such term is defined in the Participant’s applicable Award Agreement) or for cause or good reason (each as defined in the Participant’s Award Agreement).
(iv) Clawback Policy - Notwithstanding any other provision of this Plan or any Award Agreement to the contrary, any Award received by the Participant, issued hereunder, and/or any amount received with respect to any sale of any such Shares, shall be subject to potential cancellation, recoupment, rescission, payback or other action in accordance with the terms of the Company’s Compensation Adjustment and Recovery Policy, as it may be amended from time to time (the “Policy”). The Participant agrees and consents to the Company’s application, implementation and enforcement of (i) the Policy or any similar policy established by the Company that may apply to the Participant and (ii) any provision of Applicable Law relating to cancellation, rescission, payback or recoupment of compensation, and expressly agrees that the Company may take such actions as are necessary to effectuate the Policy, any similar policy (as applicable to the Participant) or Applicable Law without further consent or action being required by the Participant. To the extent that the terms of this Plan or of any Award Agreement conflict with the Policy or any similar policy, then the terms of such policy shall prevail.
(h) Tax Withholding - The Company or the Committee may take such action as appropriate to ensure all applicable federal, state, or local payroll, withholding, income or other taxes (that are the responsibility of the Participant) are withheld and collected from the Participant. The Participant shall make appropriate arrangements for the payment to the Company of all amounts which the Company is required to withhold in connection with the vesting, exercise, purchase, or distribution of an Award. Such arrangements may include making cash payments, transferring vested Shares to the Company, electing to have Shares withheld from the Award that is vesting or being exercised or settled, or electing to have taxes withheld from other wages.
(i) Prohibition on Repricing - No Option or SAR may be “repriced” without the approval of the Company’s shareholders. For purposes of this section, “reprice” means any of the following or any other action that has the same effect: (i) amending an Option or SAR to reduce its exercise price or grant price, (ii) canceling an Option or SAR at a time when its exercise price or grant price exceeds the Fair Market Value of a Share in exchange for cash or an Option, SAR, award of Restricted Stock, or other equity award with an exercise price or grant price less than the exercise price or base price of the original Option or SAR, or (iii) taking any other action that is treated as a repricing under generally accepted accounting principles, provided that nothing in this paragraph shall prevent the Committee from making adjustments pursuant to Section 10 or from cancelling or substituting Awards pursuant to Section 17.
(j) Rights as Shareholders - Except with respect to vested Shares, or as otherwise provided in an Award Agreement, a Participant shall not have any rights and privileges of a shareholder of the Company.
(k) Award Agreement - No Participant will have rights under an Award granted to such Participant unless and until an Award Agreement shall have been duly executed on behalf of the Company and, if requested by the Company, signed by the Participant.
In the case of an Award that is not subject to any vesting conditions, the Award may be evidenced by the grant of a share of stock and the terms of such Award shall be determined by the Plan.
(l) Fractional Shares - No fractional Shares shall be granted or delivered pursuant to the Plan or any Award. In the event an Award would result in a fractional Share, the number of Shares will be rounded down and the value of the fractional Share shall be paid to the Participant in cash.
12. No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship with the Company or any of its Subsidiaries, nor will they interfere in any way with the Company’s, a Subsidiary’s, or the Participant’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Law.
13 Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Committee makes the determination granting such Award, or such other later date as is determined by the Committee. Notice of the determination will be provided to each Participant within a reasonable period of time after the date of such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Committee may at any time amend, alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Company will obtain shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Law.
(c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Committee, which agreement must be in writing and signed by the Participant and the Company. No amendment to the Plan shall be effective with respect to an Award that was issued prior to the adoption of the amendment and is outstanding as of such date, if, and to the extent that, such amendment would otherwise constitute a modification of the Award. Termination of the Plan will not affect the Committee’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.
15. Conditions for Issuance of Shares. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Law and will be further subject to the approval of counsel for the Company with respect to such compliance.
16. Transferability of Awards. Unless determined otherwise by the Committee, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. Notwithstanding the foregoing, the Committee may, in its discretion, authorize an Award to be granted to a Participant on terms which permit transfer by such Participant, provided that (i) there shall be no consideration for any such transfer, (ii) the Award Agreement pursuant to which such Award is granted must expressly provide for transferability in a manner consistent with this paragraph, and (iii) the Award Agreement may include such additional terms and conditions on transfer as the Committee deems appropriate.
17. Dissolution or Liquidation; Merger or Change in Control.
(a) Dissolution or Liquidation. In the event of the proposed winding up, dissolution or liquidation of the Company, the Committee will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action.
(b) Change in Control. Subject to Section 11(g)(ii), in the event of a merger or Change in Control, each outstanding Award will be treated as the Committee determines, including, without limitation, that each Award be assumed, cancelled or an equivalent option or right substituted by the successor corporation or a parent or Subsidiary of the successor corporation. The Committee will not be required to treat all Awards similarly in the transaction.
Except as set forth in an Award Agreement, in the event that the successor corporation does not assume or substitute for the Award, the Committee may, in its sole discretion, elect to fully vest all unvested outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, waive all restrictions on Restricted Stock and Restricted Stock Units, and, with respect to Awards with performance-based vesting, determine that all Performance Goals or other vesting criteria shall be deemed achieved at 100% of target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right is not assumed or substituted in the event of a Change in Control, the Committee will notify the Participant in writing or electronically that the Option
or Stock Appreciation Right will be exercisable for a period of time determined by the Committee in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period.
For the purpose of this subsection (b), an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the Change in Control by holders of common stock for each Share held on the effective date of the transaction (and if the holders were offered a choice consideration, the type consideration chosen by the holders of a majority of outstanding Shares); provided; however, that if such consideration received in the Change in Control is not solely common stock of the successor corporation or its parent, the Committee may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit or performance-based Award, for each Share subject to such Award, to be solely common stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of common stock in the Change in Control.
Notwithstanding anything in this subsection (b) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more Performance Goals will not be considered assumed if the Company or its successor modifies any of such Performance Goals without the Participant’s consent; provided, however, a modification to such Performance Goals only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.
18. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which requisite authority will not have been obtained.
19. Governing Law. The Plan shall be governed by, construed, and enforced in accordance with the laws of the State of Texas (excluding any conflict of laws, rule or principle of Texas law that might refer the governance, construction, or interpretation of this Plan to the laws of another state). A Participant’s sole remedy for any Claim shall be against the Company, and no Participant shall have any claim or right of any nature against any Subsidiary of the Company or any shareholder or existing or former director, officer or Employee of the Company or any Subsidiary of the Company. The individuals and entities described above in this Section 19 (other than the Company) shall be third-party beneficiaries of this Plan for purposes of enforcing the terms of this Section 19.
2022 Amended and Restated Plan approved by the Committee as of [DATE].
Approved by the shareholders of the Company as of [DATE].
