SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
SOUTHWEST BANCORPORATION OF TEXAS, INC.
(Name of Registrant as Specified in its Charter)
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
<PAGE>
SOUTHWEST BANCORPORATION OF TEXAS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 28, 1999
To the Shareholders of
Southwest Bancorporation of Texas, Inc.
The Annual Meeting of Shareholders (the "Annual Meeting") of Southwest
Bancorporation of Texas, Inc. (the "Company") will be held at The Junior
League of Houston, 1811 Briar Oaks Lane, Houston, Texas, on Wednesday, April 28,
1999, at 5:00 p.m., Central time, with a reception to follow, for the following
purposes:
1. To elect three Directors of Class III of the Board of Directors to
hold office until the 2002 Annual Meeting of Shareholders and until their
respective successors have been elected and qualified, or until their
earlier resignation or removal;
2. To ratify the selection of PricewaterhouseCoopers LLP as the
Company's independent auditors for the year ending December 31, 1999.
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment hereof.
The close of business on Thursday, March 18, 1999, has been fixed as the
record date for the determination of shareholders entitled to notice of and to
vote at the Annual Meeting; and only shareholders of record at such time will be
entitled to notice and to vote. In compliance with Article 2.27 of the Texas
Business Corporation Act, a list of shareholders entitled to vote at the Annual
Meeting will be available for inspection at the offices of the Company by any
shareholder during usual business hours for a period of ten days prior to the
Annual Meeting. The list of shareholders will also be available for inspection
at the Annual Meeting from 5:00 p.m., local time, until adjournment of the
Annual Meeting.
By Order of the Board of Directors
/s/ DAVID C. FARRIES
David C. Farries
EXECUTIVE VICE PRESIDENT
TREASURER AND SECRETARY
Dated: March 25, 1999
Houston, Texas
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU MAY OWN. THE
COMPANY'S MANAGEMENT SINCERELY DESIRES YOUR PRESENCE AT THE ANNUAL MEETING.
HOWEVER, SO THAT WE MAY BE SURE THAT YOUR VOTE WILL BE INCLUDED, PLEASE SIGN AND
RETURN THE ENCLOSED PROXY PROMPTLY. YOUR PROXY MAY BE REVOKED AT ANY TIME BEFORE
IT IS VOTED.
- --------------------------------------------------------------------------------
<PAGE>
SOUTHWEST BANCORPORATION OF TEXAS, INC.
4400 POST OAK PARKWAY
HOUSTON, TEXAS 77027
(713) 235-8800
------------------------------
PROXY STATEMENT
------------------------------
This proxy statement is furnished to the shareholders of Southwest
Bancorporation of Texas, Inc., a Texas corporation (the "Company"), for
solicitation of proxies on behalf of the Board of Directors of the Company for
use at the 1999 Annual Meeting of Shareholders (the "Annual Meeting") to be
held April 28, 1999, and at any and all adjournments thereof. The purpose of the
meeting and the matters to be acted upon are set forth herein and in the
accompanying Notice of Annual Meeting of Shareholders.
Shares represented at the Annual Meeting by an executed and unrevoked proxy
in the form enclosed, will be voted in accordance with the instructions
contained therein. If no instructions are given on an executed and returned form
of proxy, the proxies intend to vote the shares represented thereby in favor of
each of the proposals to be presented to and voted upon by the shareholders as
set forth herein, and in accordance with their best judgment on any other matter
which may properly come before the Annual Meeting.
The cost of this solicitation of proxies is being borne by the Company.
Solicitations will be made only by the use of the mail, except that, if deemed
desirable, officers and regular employees of the Company may solicit proxies by
telephone, telegraph or personal calls, without being paid additional
compensation for such services. Brokerage houses, custodians, nominees and
fiduciaries will be requested to forward the proxy soliciting material to the
beneficial owners of the Common Stock par value $1.00 per share, of the Company
(the "Common Stock") held of record by such persons, and the Company will
reimburse them for their reasonable expenses incurred in this connection.
The Company's Annual Report to Shareholders, including financial
statements, for the year ended December 31, 1998, accompanies but does not
constitute part of this proxy statement.
The mailing to shareholders of this proxy statement and the enclosed proxy
commenced on or about March 25, 1999.
VOTING SHARES AND VOTING RIGHTS
Only holders of record of Common Stock at the close of business on March
18, 1999, are entitled to notice of and to vote at the Annual Meeting and any
adjournments or postponements thereof. At that time, there were outstanding
23,432,591 shares of Common Stock, which is the only outstanding class of voting
securities of the Company. A majority of the outstanding shares of Common Stock
must be represented at the Annual Meeting in person or by proxy in order to
constitute a quorum for the transaction of business. Each holder of Common Stock
shall have one vote for each share of Common Stock registered, on the record
date, in such holder's name on the books of the Company.
Any proxy given by a shareholder may be revoked by such shareholder at any
time before it is exercised by submitting to the Secretary of the Company a duly
executed proxy bearing a later date, delivering to the Secretary of the Company
a written notice of revocation, or attending the Annual Meeting and voting in
person.
A plurality of the votes cast in person or by proxy by the holders of
Common Stock is required to elect a director. The three Class III nominees
receiving the highest number of votes cast by the holders of the Common Stock
will be elected as directors. There will be no cumulative voting in the election
of directors.
Abstentions and broker non-votes will have no effect on the outcome of the
election of directors, assuming a quorum is present or represented by proxy at
the Annual Meeting. With respect to the ratification of the selection
1
<PAGE>
of independent auditors and any other matters, abstentions will have the same
legal effect as a vote against such matter, and broker non-votes will have no
effect on such matters. A broker non-vote occurs if a broker or other nominee of
shares does not have discretionary authority and has not received voting
instructions with respect to a particular matter.
ITEM 1.
ELECTION OF DIRECTORS
Three directors are to be elected at the Annual Meeting. John W. Johnson,
Walter E. Johnson and Wilhelmina R. Morian have been nominated to fill the three
expiring Class III positions on the Board of Directors, to hold office until the
2002 Annual Meeting of Shareholders and until their respective successors have
been duly elected and qualified or until their earlier resignation or removal.
The Class II directors, (Ernest H. Cockrell, Paul B. Murphy, Jr., Adolph A.
Pfeffer, Jr. and Michael T. Willis) presently hold office until the 2001 Annual
Meeting of Shareholders and until their respective successors have been duly
elected and qualified or until their earlier resignation or removal. The Class I
directors (Stanley D. Stearns, Jr., John B. Brock III, J. David Heaney and
Andres Palandjoglou) presently hold office until the 2000 Annual Meeting of
Shareholders and until their respective successors have been duly elected and
qualified or until their earlier resignation or removal.
Although the Board of Directors knows of no reason why any of these
nominees might be unable or refuse to accept nomination or election, if such
situation arises, the persons named in the proxy have the right to use their
discretion to vote for a substitute nominee or nominees designated by the Board
of Directors. All of the nominees have consented to being named herein and to
serve if elected.
The names and ages of the Company's executive officers and directors,
including the three nominees for election to the Class III positions on the
Board of Directors, the principal occupation or employment of each of them
during the past five years and at present, the name and principal business of
the corporation or other organization, if any, in which such occupation or
employment is or was carried on, directorships of other public companies or
investment companies held by them, and the period during which the directors
have served in that capacity with the Company are set forth below. All of the
directors of the Company are also directors of the Company's subsidiary bank,
Southwest Bank of Texas, N.A. (the "Bank"), except for Mr. Palandjoglou, and
all of the directors live in Houston, Texas. Each of the directors and executive
officers was elected to the position with the Company shown below in 1996 with
the exception of Messrs. Argue, Bedford, Heaney, Pfeffer, Stearns and
Torentinos, who were elected in 1997, and Mr. Massey who was elected in 1998.
<TABLE>
<CAPTION>
NAME POSITION AGE
- ------------------------------------- --------------------------------------------------- ---
<S> <C> <C>
John B. Brock III.................... Director 66
Ernest H. Cockrell................... Director 53
J. David Heaney...................... Director 50
John W. Johnson*..................... Director and Chairman of the Executive Committee of 53
the Bank's Board of Directors
Walter E. Johnson*................... Chairman of the Board and Chief Executive Officer 63
Wilhelmina R. Morian*................ Director 52
Paul B. Murphy, Jr................... Director, President and Chief Operating Officer 39
Andres Palandjoglou.................. Director 51
Adolph A. Pfeffer, Jr. .............. Director 68
</TABLE>
(TABLE CONTINUED ON FOLLOWING PAGE)
2
<PAGE>
<TABLE>
<CAPTION>
NAME POSITION AGE
- ------------------------------------- --------------------------------------------------- ---
<S> <C> <C>
Stanley D. Stearns, Jr............... Director 56
Michael T. Willis.................... Director 54
Joseph H. Argue III.................. Executive Vice President 50
J. Nolan Bedford..................... Executive Vice President of the Company and Vice 60
Chairman of the Bank
David C. Farries..................... Executive Vice President, Treasurer and Secretary 52
of the Company and Executive
Vice President and Chief Financial
Officer of the Bank
James R. Massey...................... Executive Vice President 58
R. John McWhorter.................... Senior Vice President and Controller 34
Steve D. Stephens.................... Executive Vice President 39
Anthony D. Torentinos................ Executive Vice President 49
</TABLE>
- ------------
* Nominee for election at Annual Meeting.
JOHN B. BROCK III. Mr. Brock became a director of the Bank in 1991. He has
been Chairman of the Board of Ocean Energy, Inc. ("OEI") since March 27, 1998,
prior to which he had been the Chairman of the Board and Chief Executive Officer
of United Meridian Corp. ("UMC") since May 1995 and a director of UMC since
November 1989. UMC merged with OEI on March 27, 1998, both companies being
engaged in oil and gas exploration and production. Mr. Brock served as the
President of UMC from May 1996 to October 1996, and served as the President and
Chief Executive Officer of UMC from February 1992 to May 1995. Mr. Brock is a
member of the All-American Wildcatters' Association, a director and member of
the Executive Committee of the Texas Oil and Gas Association, a director of the
U.S. Oil and Gas Association, a director of the American Petroleum Institute, a
director and Vice Chairman of St. Luke's Episcopal Hospital and a director of
St. Luke's Episcopal Health Systems.
ERNEST H. COCKRELL. Mr. Cockrell became a director of the Bank in 1982. In
1996 he became Chairman of Cockrell Oil Corporation, a company involved in oil
and gas exploration and production, prior to which he had been President since
1979. Mr. Cockrell holds B.S. in Engineering and MBA degrees from the University
of Texas in Austin and is also involved in ranching, farming and investments. He
is a Director of Pennzoil-Quaker State Company, Denali Incorporated, Independent
Petroleum Association of America, and the Texas Midcontinent Oil and Gas
Association. He is a member of the All-American Wildcatters' Association and the
American Petroleum Institute and is a member and past Chairman of the Houston
chapter of the Young Presidents' Organization. Mr. Cockrell is also President of
The Cockrell Foundation, a private charitable corporation which supports many
Texas charities. He serves on the board of directors and executive committee of
The Methodist Healthcare System, Houston, the board of directors of
MethodistCare, Houston and the board of visitors of the University of Texas M.D.
Anderson Hospital, Houston. He is a member and the former chairman of the Board
of Trustees of the Houston Museum of Natural Science, of the Sam Houston Area
Council of the Boy Scouts of America, and of The University of Texas College of
Engineering Foundation Advisory Council.
J. DAVID HEANEY. Mr. Heaney became a director of the Bank in 1990. He is a
co-founder of Heaney Rosenthal Inc., a private investment company and serves as
its Chairman. In 1986, Mr. Heaney was one of the founders of Sterling Chemicals,
Inc., which later became a public company traded on the New York Stock Exchange.
During his eight years with Sterling, Mr. Heaney served as Sterling's
Administrative Vice President, and later as Chief Financial Officer. Prior to
joining Sterling in 1986, Mr. Heaney was a partner in the Houston law firm of
Bracewell & Patterson, specializing in business transactions. Mr. Heaney holds
J.D. and B.B.A. degrees from the University of Texas.
JOHN W. JOHNSON. Mr. Johnson became a director and Chairman of the Board
of the Bank in 1982 and served in that capacity until 1996, when he was named
Chairman of the Bank's Executive Committee. For more than five years, he has
been Chairman of Permian Mud Service, Inc., an oil field service company with
several active subsidiaries including Champion Technologies, Inc., Densimix,
Inc., and Johnson & Lindley, Inc. He is a
3
<PAGE>
former chairman of the Board of Trustees of St. John's School, and Houston
Museum of Natural Science and has been nominated by Gov. George W. Bush to serve
on the Texas Transportation Commission. Mr. Johnson received a Bachelor of
Engineering degree from Vanderbilt University in 1968. Mr. Johnson is not
related to Walter E. Johnson.
WALTER E. JOHNSON. Mr. Johnson joined the Bank in July 1989 as President,
Chief Executive Officer and a director. In May 1996 he was elected Chairman of
the Board of Directors of the Bank. From October 1972 to February 1988, he
served as President of Allied Bank of Texas, and upon the purchase of that bank
by First Interstate Bancorp, he served as President Central Office of First
Interstate Bank of Texas, N.A. from March 1988 to June 1989. Mr. Johnson served
on the Trust Committee, Profit Sharing Investment Committee, and Board of
Directors of Allied Bank of Texas. He also served as a director of the holding
company, Allied Bancshares, Inc., which owned 52 banks and reached $9 billion in
assets. Mr. Johnson was the Senior Lending Officer of Allied Bank of Texas and
spent the majority of his time directing the lending staff and business
development. Prior to joining Allied Bank of Texas, he accumulated an additional
12 years of banking experience, primarily with the international department of
Bank of the Southwest. Mr. Johnson is a former member of the Board of Directors
of the Houston Branch of the Dallas Federal Reserve Bank. He is a board member
of the Boy Scouts of America, Junior Achievement and the American Free
Enterprise Society. He is currently active in, and has been chairman of,
numerous major fund raising campaigns for various Houston charities. Mr. Johnson
is a graduate of Texas Christian University.
WILHELMINA R. MORIAN. Ms. Morian became a director of the Bank in 1982.
Since 1980 she has been President of Westview Development, Inc. (real estate
development) and Cockspur, Inc. and a partner in various real estate and oil and
gas ventures. She is Chairman of the Board of the Cullen Trust for Healthcare,
Past Chair, Board of Regents of the University of Houston Systems and serves on
the Board of the Houston Zoological Society, The Neuhaus Education Center, The
Cullen Foundation, The Museum of Fine Arts -- Houston, and a board member of the
Greater Houston Partnership.
PAUL B. MURPHY, JR. Mr. Murphy joined the Bank in January 1990 as an
Executive Vice President, was elected a director in 1994, became President in
1996 and acquired the additional title of Chief Operating Officer in February
1998. He began his banking career with Allied Bank of Texas in 1981, in the
commercial lending division. Mr. Murphy received his B.S. degree from
Mississippi State University and his M.B.A. from the University of Texas at
Austin. He is involved in numerous civic and community organizations including:
Young Presidents Organization, Past Chairman of Houston Arts Fund, Trustee of
Children's Museum of Houston, Board member of St. Luke's Episcopal Hospital and
member of the Advisory Board of University of Texas Health Science Center at
Houston.
ANDRES PALANDJOGLOU. Mr. Palandjoglou was elected a director of the
Company upon its formation in 1996, and has been an advisory director of the
Bank since 1990. For more than five years, he has been President of Rio Largo,
Inc., a company involved in real estate investments and, as a partner in
Memorial Builders, in the development of residential subdivisions and the
construction of custom homes. Also, Mr. Palandjoglou is involved in textile
manufacturing and ranching in Argentina. He is a member of the Greater Houston
Builders Association.
ADOLPH A. PFEFFER, JR. Mr. Pfeffer became a director of the Bank in 1997.
He was an organizing director of Pinemont Bank in 1960, and served on its Board
of Directors, the last 20 years as Chairman of the Board, until its merger with
the Bank in 1997. Mr. Pfeffer is involved in farming, ranching, real estate and
investment activities. He is a director of the Gillson-Longenbaugh Foundation.
STANLEY D. STEARNS, JR. Mr. Stearns became a director of the Bank in 1997,
prior to which time he had served as a director of Pinemont Bank since 1993.
Since June 1968 he has been President of Valco Instruments Co., Inc, a
manufacturer of sampling and flow switching valves for gas and liquid
chromatography and gas analysis instrumentation. Mr. Stearns holds a B.S. from
Florida State University, with graduate studies in chemistry and is also holder
of numerous patents and has published numerous articles in the analytical
instrumentation field. He is former director and chairman of the Spring Branch
Association.
4
<PAGE>
MICHAEL T. WILLIS. Mr. Willis became a director of the bank in 1988. He is
chairman of the board and chief executive officer of Metamor Worldwide, Inc.
Established in 1993, Metamor Worldwide, Inc. is one of the largest national
providers of information technology services. During Willis' 20-year tenure in
the personnel and temporary services industry, he founded Talent Tree Personnel
Services in 1976, sold the company to Hestair plc in 1987 and continued to serve
as president and chief executive officer until April 1993. Willis also developed
the regional staffing firms of Willis & Associates, Med-Staff, PPI-Seahawk and
Professional HealthCare Providers. Mr. Willis is also a director of Province
HealthCare Company, urban, acute-care hospitals and hospital management; and
Quanta Services, Inc., a consolidator in the electrical contracting and
maintenance services.
JOSEPH H. ARGUE III. Mr. Argue joined the Company and the Bank in April
1997 as Executive Vice President of the Company and Executive Vice President of
the Bank's lending division at the Five Post Oak office, with 24 years of
banking and lending experience at Wells Fargo Bank (Texas), N.A., First
Interstate Bank of Texas, N.A. and Allied Bank of Texas. He has both bachelor's
and master's degrees in business administration from Stephen F. Austin State
University.
J. NOLAN BEDFORD. Mr. Bedford was elected Vice Chairman of the Board of
Directors of the Company in 1997, prior to which time he had served as President
and Chief Executive Officer of Pinemont Bank since 1993. Previously, Mr. Bedford
served as Senior Executive Vice President, Chief Lending Officer and Director of
Lockwood National Bank in Houston from 1985 to 1993.
DAVID C. FARRIES. Mr. Farries joined the Bank in 1993 as Senior Vice
President and Treasurer with 19 years of banking and investment experience with
First City National Bank of Houston and 3 years of public accounting experience
with Price Waterhouse & Co. He was was promoted to Chief Financial Officer of
the Bank in 1994 and Executive Vice President of the Company in 1996. Mr.
Farries has both bachelor's and master's degrees in business administration from
the University of Texas at Austin. He is a certified public accountant and has
his NASD Series 24 (Securities Principal) and Series 7 (Securities
Representative) licenses.
R. JOHN MCWHORTER. Mr. McWhorter joined the Bank as Assistant Vice
President and Controller in 1990. He was promoted to Senior Vice President in
1998 and serves on the ALCO and Operations Management Committees. Prior to
joining the Bank he had been employed by Coopers & Lybrand L.L.P. He graduated
from the University of Texas at Austin with a B.B.A. in accounting in 1987 and
is a certified public accountant. He currently serves on the Finance Council at
Saint Cecilia Catholic Church and has served in other civic organizations.
STEVE D. STEPHENS. Mr. Stephens has over 18 years of commercial lending
experience, and is currently in charge of the Bank's regional commercial lending
offices. Prior to joining the Bank as an Executive Vice President in 1990, he
was Senior Vice President and Manager of Commercial Lending at Texas Commerce
Bank Reagan. Mr. Stephens is active in a variety of community organizations
including a Board member of the Children's Fund, Make A Wish Foundation and the
Muscular Dystrophy Association. He graduated from the University of Houston with
a B.B.A. in accounting in 1980.
ANTHONY TORENTINOS. Mr. Torentinos joined the Bank in May 1997 as
Executive Vice President of Human Resources. Prior to joining the Bank, he has
served as an executive officer for two large regional banking organizations in
the Mid-Atlantic area. He has over 20 years of management and consulting
experience in the areas of human resources, planning and administration. He
started his Houston banking career in 1979 at Interfirst Bank, then moved to
Capital/MBank in 1981 as Vice President, Director of Human Resources. Mr.
Torentinos is a former officer of the University of Texas College of Business
Administration and a graduate of the University of Texas at Austin.
JAMES R. MASSEY. Mr. Massey joined the Bank in February 1998 as Chief
Information Officer and Executive Vice President with 15 years of banking
experience at Bank of Hawaii (Pacific Century Financial Corporation) as well as
19 years of sales and management experience with IBM. He has a bachelor's degree
in Mechanical Engineering from California State University and advanced
certificates from Harvard and UCLA in Management of Information Resources.
5
<PAGE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has established audit and compensation committees.
The Audit Committee currently consists of John B. Brock III, J. David Heaney,
Wilhelmina R. Morian, Andres Palandjoglou and Stanley D. Stearns, Jr., none of
whom is an employee of the Company. The Audit Committee reviews the general
scope of the audit conducted by the Company's independent auditors, the fees
charged therefor and matters relating to the Company's internal control systems.
In performing its functions, the Audit Committee meets separately with
representative of the Company's independent auditors and with representative of
senior management. The Audit Committee held four meetings during 1998.
The Compensation Committee currently consists of John B. Brock III, John W.
Johnson, Adolph A. Pfeffer, Jr. and Michael T. Willis, none of whom is an
employee of the Company. The Compensation Committee administers the Company's
stock option plans and makes recommendations to the Board of Directors as to
option grants to Company employees under such plans. In addition, the
Compensation Committee is responsible for making recommendations to the Board of
Directors with respect to the compensation of the Company's executive officers
and is responsible for the establishment of policies dealing with various
compensation and employee benefit matters for the Company. The Compensation
Committee held one meeting during 1998.
During the year ended December 31, 1998, the Board of Directors held four
meetings. In 1998, each incumbent director attended at least 75% of the
aggregate of the total number of meetings of the Board of Directors and the
total number of meetings held by all committees on which he served (in each case
held during the periods that he served), except for Michael T. Willis.
DIRECTOR COMPENSATION
In an effort to attract and retain qualified directors, the Bank's Board of
Directors approved a methodology of awarding stock options to directors under
the Company's employee stock option plans, effective beginning in 1994 (the
"Director's Plan"), which methodology was assumed and continued by the Company
upon the formation thereof in 1996. Pursuant to the Director's Plan, directors
are awarded options for attendance and participation at monthly directors'
meetings and, additionally, for introducing legitimate business prospects to the
Company. Options to purchase a maximum of 95,450 shares of Common Stock may be
granted under the Directors' Plan during a calendar year with the exercise price
approximating the fair market value of the stock at December 31 of such year.
Directors' options accumulate throughout the year, are issued during the
following year and are considered fully vested upon issuance. Options for 50,850
shares were granted in 1999 for the 1998 calendar year with an exercise price of
$17.94 per share and options for 43,950 shares were granted in 1998 for the 1997
calendar year with an exercise price of $15.38 per share.
Directors of the Company do not receive any cash compensation for attending
Company Board meetings; however, John W. Johnson receives $25,000 per year for
serving as Chairman of the Executive Committee of the Bank and for serving on
the Bank's Management Committee. Directors of the Bank receive a fee of $500 for
each meeting of the Bank's Board of Directors attended and Directors of the Bank
and the Company receive $200 for each Board Committee meeting attended.
Directors of the Bank who are also employees of the Bank do not receive fees for
attending Board Committee meetings.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION OF THE THREE NOMINEES FOR DIRECTOR AND NAMED HEREIN.
6
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of February 28, 1999, by (i) each
director, (ii) each of the Named Executives (as defined under "Executive
Compensation"), (iii) all directors and executive officers as a group and (iv)
the only person known by the Company to own beneficially 5% or more of the
Company's Common Stock. Unless otherwise indicated, each person has sole voting
and dispositive power over the shares indicated as owned by such person.
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER BENEFICIALLY
DIRECTORS AND NAMED EXECUTIVES OF SHARES OWNED
- ------------------------------ ---------- -------------
<S> <C> <C>
John B. Brock III.................... 74,500(1) *
Ernest H. Cockrell................... 708,398(2) 3.02%
J. David Heaney...................... 105,550(3) *
John W. Johnson...................... 359,100(4) 1.53%
Walter E. Johnson.................... 113,135(5) *
Wilhelmina R. Morian................. 462,220(6) 1.97%
Paul B. Murphy, Jr. ................. 92,341(7) *
Andres Palandjoglou.................. 60,450(8) *
Adolph A. Pfeffer, Jr................ 564,962(9) 2.41%
Stanley D. Stearns, Jr............... 348,984(10) 1.49%
Michael T. Willis.................... 286,840(11) 1.22%
Joseph H. Argue III.................. 44,580(12) *
J. Nolan Bedford..................... 116,204(13) *
Steve D. Stephens.................... 52,614(14) *
Directors and executive officers as a
group.............................. 3,589,607(15) 15.32%
OVER 5% BENEFICIAL OWNER
- ------------------------
Robert C. McNair..................... 1,699,404(16) 7.26%
711 Louisiana, 33rd Floor
Houston, Texas 77002
</TABLE>
- ------------
* Does not exceed 1.0%.
(1) Includes 9,500 shares which may be acquired within 60 days pursuant to
outstanding stock options.
(2) Includes 699,848 shares held by family partnerships. Mr. Cockrell's equity
interest in these family partnerships is approximately 50%. Accordingly, he
disclaims beneficial interest in approximately 50% of the shares held by
family partnerships. In addition, includes 8,550 shares which may be
acquired within 60 days pursuant to outstanding stock options.
(3) Includes 37,500 shares owned by Mr. Heaney's wife, 20,000 held in trust for
the benefit of his two children and 9,650 shares which may be acquired
within 60 days pursuant to outstanding stock options.
(4) Includes 60,000 shares held in trust for benefit of his children and 99,100
shares which may be acquired within 60 days pursuant to outstanding stock
options.
(5) Includes 7,500 held by Walter E. Johnson's wife and 1,800 shares which may
be acquired within 60 days pursuant to outstanding stock options.
(6) Includes 16,550 shares which may be acquired within 60 days pursuant to
outstanding stock options.
(7) Includes 62,840 shares which may be acquired within 60 days pursuant to
outstanding stock options.
(8) Includes 20,200 shares which may be acquired within 60 days pursuant to
outstanding stock options.
(9) Includes 20,842 owned by Mr. Pfeffer's wife and 6,900 shares which may be
acquired within 60 days pursuant to outstanding stock options.
(10) Includes 3,350 shares which may be acquired within 60 days pursuant to
outstanding stock options.
(11) Includes 9,800 shares which may be acquired within 60 days pursuant to
outstanding stock options.
(12) Includes 2,000 shares held by trustee for child and 2,000 held by child.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
7
<PAGE>
(13) Includes 76,204 shares which may be acquired within 60 days pursuant to
outstanding stock options.
(14) Includes 46,276 shares which may be acquired within 60 days pursuant to
outstanding stock options.
(15) Includes 385,720 shares which may be acquired within 60 days pursuant to
outstanding stock options.
(16) Mr. McNair shares voting and dispositive power with respect to 783,904 of
such shares and disclaims any beneficial interest in 337,300 of those
shares, which are held by an educational foundation of which he is Chairman
of the Board of Trustees.
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the Company's
Chairman of the Board and Chief Executive Officer and each of the four other
most highly compensated executive officers of the Company (the "Named
Executives") for the fiscal years ended December 31, 1998, 1997 and 1996.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ------------
------------------------------------------ SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS (#) COMPENSATION(1)
- ---------------------------------------- ---- --------- --------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Walter E. Johnson....................... 1998 $ 375,000 $ 225,000 $ 9,827 1,500 $ 8,000
Chairman & Chief Executive 1997 350,000 175,000 7,545 1,250 4,800
Officer 1996 325,000 662,500 6,006 250,900 4,500
Paul B. Murphy, Jr...................... 1998 250,000 140,000 8,519 31,650 8,000
President and Chief Operating 1997 200,000 100,000 9,299 825 4,800
Officer 1996 175,000 87,500 6,660 60,425 4,500
J. Nolan Bedford........................ 1998 185,000 50,000 1,494 13,750 8,000
Vice-Chairman 1997 177,575 33,000 2,520 375 5,264
1996 -- -- -- -- --
Joseph H. Argue III..................... 1998 165,000 62,000 6,666 10,000 8,000
Executive Vice President 1997 160,000 48,000 5,516 30,000 --
1996 -- -- -- -- --
Steve D. Stephens....................... 1998 157,000 62,000 6,038 10,000 7,850
Executive Vice President 1997 140,000 56,000 10,000 -- 4,200
1996 125,000 50,000 3,000 19,625 3,750
</TABLE>
- ------------
(1) Consists of the Company's contribution to the Company's 401(k) Plan.
OPTION GRANTS DURING 1998
The following table contains information concerning the grant of stock
options to the Named Executives during fiscal year 1998.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
NUMBER OF OPTIONS PRICES APPRECIATION
SECURITIES GRANTED TO FOR
UNDERLYING EMPLOYEES IN EXERCISE OPTION TERMS(1)
OPTIONS FISCAL YEAR PRICE EXPIRATION ----------------------
NAME GRANTED 1998 ($/SH) DATE 5%($) 10%($)
- ---------------------------------------- ---------- ------------ -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Walter E. Johnson....................... 1,500 0.24% $15.38 1/2/08(2) $ -- $ --
Paul B. Murphy, Jr...................... 31,650 5.15% 15.38 1/2/08 434,918 980,775
J. Nolan Bedford........................ 13,750 2.24% 15.38 1/2/08 188,946 426,087
Joseph H. Argue III..................... 10,000 1.63% 19.91 4/3/08 92,102 264,569
Steve D. Stephens....................... 10,000 1.63% 15.38 1/2/08 137,415 309,881
</TABLE>
- ------------
(1) The amounts shown under these columns are the result of calculations at the
5% and 10% rates required by the Securities and Exchange Commission and are
not intended to forecast future appreciation of the Company's stock price.
(2) These options have been exercised.
8
<PAGE>
STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth certain information concerning option
exercises during the year ended December 31, 1998 by the Named Executives and
the value of unexercised options held by each of the Named Executives at
December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY-OPTIONS AT
SHARES DECEMBER 31, 1998 DECEMBER 31, 1998(2)
ACQUIRED VALUE ---------------------------- ----------------------------
ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Walter E. Johnson.................... 272,560 $ 4,156,450 -- 490,760 $ -- $4,792,565
Paul B. Murphy, Jr. ................. 30,000 490,406 53,840 159,460 650,259 1,514,778
J. Nolan Bedford..................... 3,000 41,985 78,750 13,000 1,025,848 32,500
Joseph H. Argue III.................. -- -- -- 70,000 -- 521,250
Steve D. Stephens.................... 38,750 693,266 38,776 61,474 516,169 664,037
</TABLE>
- ------------
(1) The "value realized" represents the difference between the exercise price
of the option shares and the market (sale) price of the option shares on the
date of exercise without considering any taxes which may have been owed.
(2) The value is based on $17.875 per share, which was the closing sale price
reported on The NASDAQ Stock Market on December 31, 1998.
EMPLOYMENT AGREEMENTS
Walter E. Johnson, Paul B. Murphy, Jr., Joseph H. Argue III, Steve D.
Stephens, David C. Farries, James R. Massey and Anthony Torentinos have entered
into change in control agreements with the Company. Each agreement is for a term
of three years and automatically renews each year absent notice to the contrary
from the Company. Each agreement provides that upon the occurrence of a change
in control, (i) the agreement is converted into a three-year employment
agreement, which provides for a minimum annual compensation equal to the
employee's current base salary plus the highest annual cash bonus paid to the
employee during the three preceding years, (ii) all stock options held by the
employee become fully exercisable (regardless of whether then vested) and (iii)
all restrictions on any restricted stock granted to the employee shall lapse.
Such employment agreement also provides that if the employee is thereafter
terminated without cause or the employee terminates his or her employment as a
result of the employer's breach of the agreement, the employee shall be entitled
to receive from the Company a lump-sum severance payment equal to the discounted
present value of the amount of compensation payable under such agreement for the
remainder of the three-year term thereof. The employment agreements also
automatically renew each year absent notice to the contrary from the Company.
In connection with the merger of Pinemont Bank with the bank in August,
1997, the Company entered into a three year employment agreement with J. Nolan
Bedford, providing for a minimum annual salary of $177,575. The agreement
provides that Mr. Bedford will be the senior officer in charge of all lending
and personnel functions and responsibilities over the former branch locations of
Pinemont Bank and will hold the title of Vice Chairman of the Board of Directors
of the Bank.
INTERESTS OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Many of the directors and executive officers of the Company and their
associates, which include corporations, partnerships and other organizations in
which they are officers or partners or in which they and their immediate
families have at least a 5% interest, are customers of the Bank. During 1998 the
Bank made loans in the ordinary course of business to certain directors of the
Company and their associates, all of which the Company believes were on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with persons unaffiliated
with the Company and did not involve more than the normal risk of collectibility
or present other unfavorable features. Loans to directors, executive officers
and principal shareholders of the Company (i.e., those who own 10% or more of
the outstanding shares of Common Stock) are subject to limitations contained in
the Federal Reserve Act, the principal effect of which is to require that
extensions of credit by the Bank to executive officers, directors and
9
<PAGE>
principal shareholders satisfy the foregoing standards. On December 31, 1998,
all of such loans aggregated approximately $30.7 million, which was 22.2% of the
Bank's Tier 1 capital at such date. The Company expects to have such
transactions or transactions on a similar basis with its directors, executive
officers and principal shareholders and their associates in the future.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers (as defined in Rule 16a-1(f)), directors, and persons who own more than
10% of a registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Such persons are required by SEC regulations to furnish the Company
with copies of all Section 16(a) reports they file. Based solely on its review
of the copies of such reports received by it and representations from certain
reporting persons that they have complied with the relevant filing requirements,
the Company believes that all filing requirements applicable to its officers,
directors and 10% stockholders were complied with during the year ended December
31, 1998, except that (i) Ernest H. Cockrell was late in filing three reports
(covering four transactions), (ii) J. David Heaney was late in filing four
reports (covering five transactions) and (iii) Joseph H. Argue III was late in
filing one report (covering one transaction).
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is pleased to present
this report on executive compensation. This report describes the elements of the
Company's executive officer compensation programs and the basis on which 1998
compensation determinations were made by the Compensation Committee with respect
to the executive officers of the Company, including the Named Executives.
COMPENSATION PHILOSOPHY AND OVERALL OBJECTIVES
The goal of the Company's executive compensation policy is to ensure that
executive compensation is linked directly to continuous improvements in
corporate performance and increases in shareholder value, while concurrently
ensuring that key employees are motivated and retained. The following objectives
have been established by the Compensation Committee as guidelines for
compensation decisions:
o The Company must provide a competitive total compensation package that
enables the Company to attract and retain key executives.
o All of the Company's compensation programs must be integrated with its
annual and long-term business objectives so that executives remain
focused on the fulfillment of these objectives.
o The Company's compensation package must include a variable component
that directly links compensation with the overall performance of the
Company, thereby expressly aligning executive compensation with the
interest of shareholders.
The Compensation Committee regularly reviews the Company's compensation
programs to ensure that remuneration levels and incentive opportunities are
competitive and reflect performance. The various components of the compensation
programs for executive officers are discussed below.
BASE SALARY
Base salary levels are largely determined through comparison with banking
organizations of a size similar to the Company. Both local and regional surveys
are utilized to establish base salaries that are within the range of those
persons holding positions of comparable responsibility at other banking
organizations of a size and complexity similar to the Company. Actual base
salaries also are intended to reflect individual performance contributions as
determined through job evaluations. In addition to individual job performance
and the above-referenced market comparisons, other factors may be taken into
consideration, such as cost of living increases as well as an individual's
perceived potential with the Company. All executive officer base salary levels
are considered by the Compensation Committee to be competitive within a
necessary and reasonable range.
It has become the established practice of the Compensation committee to
review and, if deemed appropriate, adjust the base salaries of the Company's
executive officers on a yearly basis. Accordingly, base salaries were
10
<PAGE>
reviewed and adjusted during 1998, and the base salaries of the Named Executives
in the compensation table appearing in this Proxy Statement reflect the fully
annualized base salaries as adjusted and implemented in 1998.
EMPLOYEE STOCK OPTION PLAN
The Company's officers are eligible to participate in the 1996 Stock Option
Plan referred to in this Proxy Statement. The objective of this Plan (and the
Company's predecessor stock option plans) is to create competitive levels of
compensation tied directly to the attainment of financial objectives which the
Compensation Committee believes are the primary determinants over time of share
price. More specifically, this Plan is designed to foster a systematic
management focus on the corporate goal of consistent and steady earnings growth.
Potential awards for executive officers are intended by the Compensation
Committee to be consistent with incentive bonuses paid by banking companies of a
size similar to that of the Company, provided that actual bonuses remain subject
to increase or decrease on the basis of the Company's actual audited performance
and at the discretion of the Compensation Committee.
1998 COMPENSATION OF THE CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
In reviewing the 1998 compensation of Walter E. Johnson, the Company's
Chairman of the Board and Chief Executive Officer, the Compensation Committee
undertook the same evaluation set forth above with respect to executive
officers. Mr. Johnson's base salary is reviewed on a yearly basis and most
recently was reviewed and adjusted in January, 1998. His base salary is
considered to be reasonable and competitive based on published compensation
surveys and other publicly available compensation information. His bonus for
1998 performance was determined in January 1999 based on earnings through
December 1998. The Compensation Committee members were provided data concerning
individual compensation history, executive compensation survey data, and
comparative information concerning performance.
OTHER
The Compensation Committee does not currently intend to award compensation
that would result in a limitation on the deductibility of a portion of such
compensation pursuant to Section 162(m) of the Internal Revenue Code of 1986, as
amended; however, the Compensation Committee may in the future decide to
authorize compensation in excess of the limits of Section 162(m) if it
determines that such compensation is in the best interest of the Company.
Compensation Committee
John B. Brock III
John W. Johnson
Adolph A. Pfeffer, Jr.
Michael T. Willis
11
<PAGE>
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The Stock Performance Graph compares the cumulative shareholder return on
the Common Stock against the cumulative total return of the S&P 500 Stock Index
("S&P Index") and the Keefe Bruyette & Woods ("KBW") 50 Total Return Index
for the period from January 27, 1997 through December 31, 1998. The graph
assumes that $100 was invested on January 27, 1997 in the Common Stock and the
indices, at the initial public offering of the Company's Common Stock of $8.25
per share and the closing price for the stocks comprising the S&P Index and the
KBW Index, respectively, on such date. The Company's Common Stock began trading
on The NASDAQ Stock Market on January 27, 1997. Dividends are reinvested on the
ex-dividend date.
The KBW Index is a market-capitalization-weighted index measuring
bank-stock price performance.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
<TABLE>
<CAPTION>
JANUARY 27, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1997 1997 1997 1998 1998
------------ --------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C>
Southwest Bancorporation of Texas,
Inc. .............................. $ 100.00 $146.25 $171.74 $201.43 $198.68
S&P 500 ............................. $ 100.00 $115.82 $126.85 $148.10 $160.65
KBW 50 Total Return Index ........... $ 100.00 $120.23 $146.19 $163.21 $158.29
</TABLE>
12
<PAGE>
ITEM 2.
APPOINTMENT OF AUDITORS
Pursuant to the recommendation of the Audit Committee, the Board of
Directors appointed PricewaterhouseCoopers LLP, independent public accountants,
to audit the consolidated financial statements of the Company for the year
ending December 31, 1999. PricewaterhouseCoopers LLP has audited the Bank's
financial statements since 1983 and the Company's consolidated financial
statements since its inception in 1996. The Company is advised that no member of
PricewaterhouseCoopers LLP has any direct or material indirect financial
interest in the Company or, during the past three years, has had any connection
with the Company in the capacity of promoter, underwriter, voting trustee,
officer or employee.
Ratification of this appointment shall be effective upon receiving the
affirmative vote of the holders of a majority of the Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting. Under Texas
law, an abstention would have the same effect as a vote against this proposal,
but a broker non-vote would not be counted for purposes of determining whether a
majority had been achieved.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THIS APPOINTMENT.
In the event the appointment is not ratified, the Board of Directors will
consider the appointment of other independent auditors. A representative of
PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting, will
be offered the opportunity to make a statement if such representative desires to
do so and will be available to respond to appropriate questions.
ITEM 3.
OTHER MATTERS
The Board of Directors does not know of any other matters that are to be
presented for action at the Annual Meeting. However, if any other matters
properly come before the Annual Meeting or any adjournment(s) thereof, it is
intended that the enclosed proxy will be voted in accordance with the judgment
of the person voting the proxy.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2000 Annual
Meeting of Shareholders must be received by the Company at its principal
executive office by November 26, 1999, in order for such proposals to be
included in the Company's proxy statement and form of proxy for such meeting.
Shareholders submitting such proposals are requested to address them to the
Secretary, Southwest Bancorporation of Texas, Inc., 4400 Post Oak Parkway,
Houston, Texas 77027.
In addition, the Company's Bylaws provide that only such business as is
properly brought before the Annual Meeting will be conducted. For business to be
properly brought before the meeting or nominations of persons for election to
the Board of Directors to be properly made at the Annual Meeting by a
shareholder, notice must be received by the Secretary at the Company's offices
not later than the close of business on the 70th day prior to the anniversary
date of the immediately preceding Annual Meeting; provided, however, that in the
event that the date of Annual Meeting is more than 20 days before such
anniversary date, such notice must be so delivered not later than the close of
business on the 10th day following the day on which public disclosure of the
date of such meeting is first made by the Company. Such notice to the Company
must also provide certain information set forth in the Bylaws. A copy of the
Bylaws may be obtained upon written request to the Secretary.
13
<PAGE>
ALL SHAREHOLDERS ARE URGED TO COMPLETE, SIGN AND RETURN THE ACCOMPANYING
PROXY CARD IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
/s/ DAVID C. FARRIES
David C. Farries
EXECUTIVE VICE PRESIDENT,
TREASURER AND SECRETARY
Houston, Texas
March 25, 1999
14
<PAGE>
PROXY SOUTHWEST BANCORPORATION OF TEXAS, INC. PROXY
PROXY FOR 1999 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Walter E. Johnson, John W. Johnson and David
C. Farries, and each of them, with or without the others, with full power of
substitution, to vote all shares of stock that the undersigned is entitled to
vote at the 1999 Annual Meeting of Shareholders of Southwest Bancorporation of
Texas, Inc. (the "Company"), to be held at The Junior League of Houston, 1811
Briar Oaks Lane, Houston, Texas, on April 28, 1999 at 5:00 p.m. (Houston time)
and all adjournments and postponements thereof as follows:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS: [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed below
</TABLE>
INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, MARK A LINE
THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
John W. Johnson Walter E. Johnson Wilhelmina R. Morian
2. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as
independent public accountants for the year ended December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(CONTINUED ON REVERSE SIDE)
- --------------------------------------------------------------------------------
3. In their discretion, upon any other business as may properly come before
said meeting.
This proxy will be voted as you specify above. If no specification is made,
this Proxy will be voted with respect to item (1) FOR the nominees listed, and
with respect to item (2) FOR ratification of the appointment of
PricewaterhouseCoopers LLP as independent accountants for the year ended
December 31, 1999. The undersigned hereby acknowledges receipt of the Notice of
the 1999 Annual Meeting and related Proxy Statement and the Company's 1998
Annual Report to Shareholders.
Dated __________________________, 1999
______________________________________
______________________________________
Stockholder's Signature(s)
______________________________________
Signature if held jointly
NOTE: Joint owners must each sign.
Please sign your name exactly as it
appears on your stock certificate.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title. If held by a
corporation, please sign in the full
corporate name by the president or
other authorized officer.
(PLEASE RETURN THIS SIGNED PROXY CARD IN THE ACCOMPANYING ADDRESSED ENVELOPE)
