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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
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PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] 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)
NOT APPLICABLE
(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 as provided below per Exchange Act Rule 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which the transaction applies:
Not Applicable.
(2) Aggregate number of securities to which transaction applies:
Not Applicable.
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
Not Applicable.
(4) Proposed maximum aggregate value of the transaction:
Not Applicable.
(5) Total fee paid:
Not Applicable.
[ ] 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.
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<PAGE>
PRELIMINARY COPY
SOUTHWEST BANCORPORATION OF TEXAS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 2000
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 26,
2000, at 5:00 p.m., Central time, with a reception to follow, for the following
purposes:
1. To elect (i) four Directors of Class I of the Board of Directors
to hold office until the 2003 Annual Meeting of Shareholders and until
their respective successors have been elected and qualified, or until their
earlier resignation or removal, and (ii) one director of Class III of the
Board of Directors to hold office until the 2002 Annual Meeting of
Shareholders and until his successor has been elected and qualified, or
until his earlier resignation or removal.
2. To approve an amendment to the Company's 1996 Stock Option Plan to
increase the number of shares of Common Stock issuable thereunder from
2,000,000 shares to 3,000,000 shares.
3. To approve an amendment to the Company's Articles of Incorporation
increasing the number of authorized shares of Common Stock from 50,000,000
to 75,000,000 shares.
4. To ratify the selection of PricewaterhouseCoopers LLP as the
Company's independent auditors for the year ending December 31, 2000.
5. To transact such other business as may properly come before the
Annual Meeting or any adjournment hereof.
The close of business on Monday, March 13, 2000, 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
David C. Farries
EXECUTIVE VICE PRESIDENT
TREASURER AND SECRETARY
Dated: March 17, 2000
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>
ANNUAL REPORT ON
FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
FURNISHED WITHOUT CHARGE TO ANY SHAREHOLDER UPON WRITTEN REQUEST TO R. JOHN
MCWHORTER, SENIOR VICE PRESIDENT AND CONTROLLER, SOUTHWEST BANCORPORATION OF
TEXAS, INC., 4400 POST OAK PARKWAY, HOUSTON, TEXAS 77027. ANY SHAREHOLDER MAKING
SUCH A REQUEST MUST REPRESENT THAT HE OR SHE WAS A SHAREHOLDER OF RECORD AS OF
THE RECORD DATE OF THE ANNUAL MEETING.
<PAGE>
SOUTHWEST BANCORPORATION OF TEXAS, INC.
4400 POST OAK PARKWAY
HOUSTON, TEXAS 77027
(713) 235-8800
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PROXY STATEMENT
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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 2000 Annual Meeting of Shareholders (the "Annual Meeting") to be
held April 26, 2000, 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, 1999, 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 17, 2000.
VOTING SHARES AND VOTING RIGHTS
Only holders of record of Common Stock at the close of business on March
13, 2000, are entitled to notice of and to vote at the Annual Meeting and any
adjournments or postponements thereof. At February 16, 2000 there were
outstanding 28,063,483 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 four Class I nominees and the
Class III nominee 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.
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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 all other matters, abstentions will have the
same legal effect as a vote against such matters, 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
Five directors are to be elected at the Annual Meeting. John B. Brock III,
J. David Heaney, Andres Palandjoglou and Stanley D. Stearns, Jr. have been
nominated to fill the four expiring Class I positions on the Board of Directors,
to hold office until the 2003 Annual Meeting of Shareholders and until their
respective successors have been duly elected and qualified or until their
earlier resignation or removal. Lane Ward has been nominated for election as a
Class III director to fill a new position in that Class created by the Board of
Directors in May 1999. If elected, Mr. Ward, together with the other current
Class III directors (John W. Johnson, Walter E. Johnson and Wilhelmina R.
Morian), will 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.
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 directors and executive officers,
including the four nominees for election to the Class I positions and the
nominee for election to the Class III position 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 and Stearns who were elected in 1997, Mr. Massey
who was elected in 1998, and Mr. Ward who was elected in 1999.
<TABLE>
<CAPTION>
NAME POSITION AGE
- ------------------------------------- --------------------------------------------------- ---
<S> <C> <C>
John B. Brock III*................... Director 67
Ernest H. Cockrell................... Director 54
J. David Heaney*..................... Director 51
John W. Johnson...................... Director and Chairman of the Executive Committee of 54
the Bank's Board of Directors
Walter E. Johnson.................... Chairman of the Board 64
Wilhelmina R. Morian................. Director 53
Paul B. Murphy, Jr................... Director, President and Chief Executive Officer 40
Andres Palandjoglou*................. Director 52
Adolph A. Pfeffer, Jr. .............. Director 69
</TABLE>
(TABLE CONTINUED ON FOLLOWING PAGE)
2
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<TABLE>
<CAPTION>
NAME POSITION AGE
- ------------------------------------- --------------------------------------------------- ---
<S> <C> <C>
Stanley D. Stearns, Jr.*............. Director 57
Michael T. Willis.................... Director 55
Lane Ward*........................... Director and Vice Chairman of the Bank 51
Joseph H. Argue III.................. Executive Vice President 51
J. Nolan Bedford..................... Executive Vice President of the Company and Vice 61
Chairman of the Bank
David C. Farries..................... Executive Vice President, Treasurer and Secretary 53
of the Company and Executive
Vice President and Chief Financial
Officer of the Bank
James R. Massey...................... Executive Vice President and Chief Information 59
Officer
R. John McWhorter.................... Senior Vice President and Controller 35
Steve D. Stephens.................... Executive Vice President 40
</TABLE>
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* Nominee for election at Annual Meeting.
DIRECTORS:
[PICTURE] JOHN B. BROCK III. John B. Brock became a director of the Bank in
1991. He is the past chairman of Ocean Energy, Inc., ("OEI"), a NYSE
oil and gas company. He stepped down from active management of Ocean Energy,
Inc. in March 1999 when OEI merged with Seagull Energy. He had been Chairman of
the Board of Ocean Energy, Inc. since March 27, 1998, when OEI merged with
United Meridian Corporation ("UMC") prior to which he had been the Chairman of
the Board and Chief Executive Officer of UMC since May 1995 and a director of
UMC since November 1989. Mr. Brock served as the President and Chief Operating
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 Gas Association, a director of the U.S. Oil and Gas
Association, director of the Houston Producers' Forum, a director and Vice
Chairman of St. Luke's Episcopal Hospital and a director of St. Luke's Episcopal
Health Systems.
[PICTURE] 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.
3
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[PICTURE] 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.
[PICTURE] 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 former chairman of the Board
of Trustees of St. John's School, and the 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.
[PICTURE] 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 and Chairman of the Board
and Chief Executive Officer of the Company. In November 1999, he was elected
Chairman of the Board of the Bank and the Company. 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.
[PICTURE] WILHELMINA R. MORIAN. Ms. Morian has been a director of the Bank
since 1982. Since 1980 she has been president of Westview
Development,Inc. (real estate development) and Cockspur, Inc., and partner in
various real estate and oil and gas ventures. She serves on the board of the
Greater Houston Partnership, Houston's chamber organization. She is Chair of the
Board of Cullen Trust for Health Care, past Chair of the Board of the University
of Houston System, and board member of the Cullen Foundation, the Greater
Houston Community Foundation and the Museum of Fine Arts, Houston.
4
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[PICTURE] 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 Executive Officer
in January 2000. 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, Chairman of
the Board and Trustee of Children's Museum of Houston and Board member of St.
Luke's Episcopal Hospital.
[PICTURE] 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.
[PICTURE] 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.
[PICTURE] 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.
[PICTURE] MICHAEL T. WILLIS. Mr. Willis became a director of the Bank in 1988.
He is chairman of the board and chief executive officer of
COMSYS, Inc. During Mr. 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. Mr. 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.
5
<PAGE>
[PICTURE] LANE WARD. Mr. Ward was elected Vice Chairman of the Board of
Directors of the Bank in 1999, prior to which time he had served as
President and Chief Executive Officer and Vice Chairman of the Board of
Directors of Fort Bend Holding Corp, parent company of Federal Savings & Loan
Association since 1996. Mr. Ward joined the Association in 1978 as Financial
Vice President before being promoted to Executive Vice President in 1981 and to
President and Chief Operating Officer in 1987. Mr. Ward is also Chairman of
Mitchell Mortgage Company LLC. He graduated from the University of Texas at
Austin with a B.B.A. in accounting in 1971, and is a certified public
accountant. He is active in a variety of community organiza- tions including
serving as a Trustee for the George Foundation, Polly Ryon Hospital Authority
and the Polly Ryon Foundation.
EXECUTIVE OFFICERS:
[PICTURE] JOSEPH H. ARGUE III. Mr. Argue joined the Company and the Bank in
April 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.
[PICTURE] J. NOLAN BEDFORD. Mr. Bedford was elected Vice Chairman of the Board
of of the Bank 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.
[PICTURE] 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 holds NASD Series 24 (Securities Principal) and
Series 7 (Securities Representative) licenses. He currently serves on the Board
of The Woodlands Christian Academy.
[PICTURE] 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.
[PICTURE] STEVE D. STEPHENS. Mr. Stephens has 20 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 Executive 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 Houston Small Business
Development Corp., Make A Wish Foundation and the Texas Association of Business.
He graduated from the University of Houston with a B.B.A. in accounting in 1980.
[PICTURE] JAMES R. MASSEY. Mr. Massey joined the Bank in February 1998 as
Chief Officer and Executive Vice President with 15 years of executive
management 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.
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.
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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 representatives of the Company's independent auditors and with
representatives of senior management. The Audit Committee held four meetings
during 1999.
The Compensation Committee currently consists of John B. Brock III, John W.
Johnson, Adolph A. Pfeffer Jr., J. David Heaney 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 four meeting during 1999.
During the year ended December 31, 1999, the Board of Directors held four
meetings. In 1999, 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 J. David Heaney and 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 89,500 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 45,000
shares were granted in 2000 for the 1999 calendar year with an exercise price of
$19.81 per share and options for 50,850 shares were granted in 1999 for the 1998
calendar year with an exercise price of $17.94 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. During 1999, directors of the Bank received a
fee of $600 for each meeting of the Bank's Board of Directors attended and
Directors of the Bank and the Company received $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 FIVE NOMINEES FOR DIRECTOR NAMED HEREIN.
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PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of February 29, 2000, 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 persons 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.
PERCENTAGE
NUMBER BENEFICIALLY
DIRECTORS AND NAMED EXECUTIVES OF SHARES OWNED
- ------------------------------------- ---------- -------------
John B. Brock III.................... 112,250(1) *
Ernest H. Cockrell................... 884,598(2) 3.15%
J. David Heaney...................... 107,750(3) *
John W. Johnson...................... 364,100(4) 1.30
Walter E. Johnson.................... 387,022(5) 1.37
Wilhelmina R. Morian................. 465,420(6) 1.66
Paul B. Murphy, Jr. ................. 142,084(7) *
Andres Palandjoglou.................. 63,900(8) *
Adolph A. Pfeffer, Jr................ 569,262(9) 2.03
Stanley D. Stearns, Jr............... 351,084(10) 1.25
Michael T. Willis.................... 257,690(11) *
Lane Ward............................ 93,993(12) *
Joseph H. Argue III.................. 68,673(13) *
J. Nolan Bedford..................... 103,704(14) *
James R. Massey...................... 6,831 *
Directors and executive
officers as a group.................. 4,132,427(15) 14.71
OVER 5% BENEFICIAL OWNER
- -------------------------------------
Robert C. McNair..................... 2,404,046(16) 8.56%
711 Louisiana, 33rd Floor
Houston, Texas 77002
Lazard Freres & Co. LLC.............. 1,621,775(17) 5.77%
30 Rockefeller Plaza
New York, New York 10020
- ------------
* Does not exceed 1.0%.
(1) Includes 12,250 shares which may be acquired within 60 days pursuant to
outstanding stock options.
(2) Includes 874,848 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 9,750 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 11,850 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
104,600 shares which may be acquired within 60 days pursuant to outstanding
stock options.
(5) Includes 7,500 shares held by Walter E. Johnson's wife and 286,560 shares
which may be acquired within 60 days pursuant to outstanding stock options.
(6) Includes 325,270 shares held in trust and 19,750 shares which may be
acquired within 60 days pursuant to outstanding stock options.
(7) Includes 118,120 shares which may be acquired within 60 days pursuant to
outstanding stock options.
(8) Includes 23,650 shares which may be acquired within 60 days pursuant to
outstanding stock options.
(9) Includes 529,950 shares held in family partnerships, 7,270 shares held by
trustee, 20,842 owned by Mr. Pfeffer's wife and 11,200 shares which may be
acquired within 60 days pursuant to outstanding stock options.
(10) Includes 5,450 shares which may be acquired within 60 days pursuant to
outstanding stock options.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
8
<PAGE>
(11) Includes 10,650 shares which may be acquired within 60 days pursuant to
outstanding stock options.
(12) Includes 9,679 shares held in ESOP, 725 shares held by Mr Ward's wife, 580
shares held by custodian for his child, 290 shares held by his child and
55,824 shares which may be acquired within 60 days pursuant to outstanding
stock options.
(13) Includes 36,046 shares which may be acquired within 60 days pursuant to
outstanding stock options.
(14) Includes 63,704 shares which may be acquired within 60 days pursuant to
outstanding stock options.
(15) Includes 31,000 shares which may be acquired within 60 days pursuant to
outstanding stock options.
(16) Mr. McNair shares voting and dispositive power with respect to 2,066,746 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.
(17) Lazard Freres & Co. LLC holds these shares for the benefit of its clients.
It has sole voting power with respect to 1,405,075 of such shares and does
not have shared voting power with respect to any of such shares.
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
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, 1999, 1998 and 1997.
<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....................... 1999 $ 400,000 $ 265,000 $1,717 1,800 $ 8,000
Chairman 1998 375,000 225,000 9,827 1,500 8,000
1997 350,000 175,000 7,545 1,250 4,500
Paul B. Murphy, Jr...................... 1999 300,000 162,500 6,000 1,500 8,000
President & Chief Executive 1998 250,000 140,000 8,519 31,650 8,000
Officer 1997 200,000 100,000 9,299 825 4,800
J. Nolan Bedford........................ 1999 190,000 60,000 2,759 1,650 8,000
Vice-Chairman 1998 185,000 50,000 1,494 13,750 8,000
1997 177,575 33,000 2,520 375 5,264
James R. Massey......................... 1999 185,000 100,000 6,356 20,000 8,000
Executive Vice President & 1998 -- -- -- -- --
Chief Information Officer 1997 -- -- -- -- --
Joseph H. Argue III..................... 1999 175,000 75,000 6,432 10,000 8,000
Executive Vice President 1998 165,000 62,000 6,666 10,000 8,000
1997 160,000 48,000 5,516 30,000 --
</TABLE>
- ------------
(1) Consists of the Company's contribution to the Company's 401(k) Plan.
9
<PAGE>
OPTION GRANTS DURING 1999
The following table contains information concerning the grant of stock
options to the Named Executives during fiscal year 1999.
<TABLE>
<CAPTION>
% OF TOTAL POTENTIAL REALIZABLE VALUE AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICES APPRECIATION FOR
UNDERLYING EMPLOYEES IN EXERCISE OPTION TERMS(1)
OPTIONS FISCAL YEAR PRICE EXPIRATION ----------------------------------
NAME GRANTED 1998 ($/SH) DATE 0%($) 5%($) 10%($)
- ---------------------------------------- ---------- ------------ -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Walter E. Johnson....................... 1,800 0.47% $17.94 1/4/2009 $ 3,375 $ 25,803 $ 60,212
Paul B. Murphy, Jr...................... 1,500 0.39% 17.94 1/4/2009 2,813 21,502 50,177
J. Nolan Bedford........................ 1,650 0.43% 17.94 1/4/2009 3,094 23,653 55,194
James R. Massey......................... 20,000 5.24% 12.41 2/3/2009 148,050 397,249 779,570
Joseph H. Argue III..................... 10,000 2.62% 12.41 2/3/2009 74,025 198,625 389,785
</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.
STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth certain information concerning option
exercises during the year ended December 31, 1999 by the Named Executives and
the value of unexercised options held by each of the Named Executives at
December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY-OPTIONS AT
SHARES DECEMBER 31, 1999 DECEMBER 31, 1999(2)
ACQUIRED VALUE ---------------------------- ----------------------------
ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Walter E. Johnson.................... -- -- 285,060 207,500 $3,313,069 $2,433,719
Paul B. Murphy, Jr. ................. -- -- 117,120 97,680 1,554,693 1,026,425
J. Nolan Bedford..................... 8,196 $ 99,742 72,204 13,000 1,054,841 57,688
James R. Massey...................... -- -- -- 48,672 -- 216,146
Joseph H. Argue III.................. -- -- -- 80,000 -- 290,550
</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 $19.8125 per share, which was the closing sale price
reported on The NASDAQ Stock Market on December 31, 1999.
EMPLOYMENT AGREEMENTS
Paul B. Murphy, Jr., Joseph H. Argue III, Steve D. Stephens, David C.
Farries and James R. Massey 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.
On October 28, 1999, the Company entered into an employment agreement with
Walter E. Johnson, which provides for an annual salary of $400,000 commencing
January 1, 2000 through his 65th birthday, on February
10
<PAGE>
17, 2001. Thereafter he receives an annual salary of $300,000 until his 70th
birthday, on February 17, 2006, at which time the contract terminates, unless
terminated earlier pursuant to death, disability, cause or voluntary termination
by Mr. Johnson. Each year of the contract he is entitled to receive a cash bonus
of up to 60% of his annual salary, determined on a discretionary basis by the
Compensation Committee of the Board of Directors using the same criteria as that
used for other senior executives of the Company. The Company has also agreed to
maintain a $3,031,481 "second to die" life insurance policy on Mr. Johnson and
his spouse and a $4,000,000 "ten-year" term life insurance policy on Mr.
Johnson until termination of the contract. As a condition to the Company's
entering into this employment agreement, Mr. Johnson agreed to terminate his
change in control agreement with the Company, which had the same terms as the
change in control agreements described in the preceding paragraph.
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
further defines the job responsibilities for Mr. Bedford in that his title will
be Vice Chairman of the Board of the Bank.
In connection with the merger of Fort Bend Holding Corp. with the Bank in
April, 1999, the Company entered into a three-year employment agreement with
Lane Ward, providing for a minimum annual salary of $150,000. The agreement
further defines the job responsibilities for Mr. Ward in that his title will be
Director of the Company and Vice Chairman of the Board 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 1999 the
Bank made loans in the ordinary course of business to certain directors and
certain executive officers 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 principal shareholders satisfy the foregoing standards. On
December 31, 1999, all of such loans aggregated approximately $37.6 million,
which was 18.6% 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, 1999, except that Walter E. Johnson, R. John McWhorter, Steve D. Stephens,
David C. Farries, James R. Massey, Joseph H. Argue III and Lane Ward were 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 1999
compensation determinations were made by the Compensation Committee with respect
to the executive officers of the Company, including the Named Executives.
11
<PAGE>
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 reviewed
and adjusted during 1999, 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.
1999 COMPENSATION OF THE CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
In reviewing the 1999 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, 1999. His base salary is
considered to be reasonable and competitive based on published compensation
surveys and other publicly available compensation information. His bonus for
1999 performance was determined in January 2000 based on earnings through
December 1999. The Compensation Committee members were provided data concerning
individual compensation history, executive compensation survey data, and
comparative information concerning performance.
12
<PAGE>
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
J. David Heaney
John W. Johnson
Adolph A. Pfeffer, Jr.
Michael T. Willis
13
<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, 1999. 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.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
JANUARY 27, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1997 1997 1997 1998 1998 1999 1999
------------ --------- ------------- --------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Southwest
Bancorporation of
Texas, Inc............. $ 100.00 $146.25 $171.74 $201.43 $197.30 $198.68 $218.68
S&P 500.................. $ 100.00 $115.82 $126.85 $148.10 $160.65 $176.60 $192.03
KBW 50 Total
Return Index............ $ 100.00 $120.23 $146.19 $163.21 $158.29 $174.41 $152.81
</TABLE>
14
<PAGE>
ITEM 2.
APPROVAL OF INCREASE IN SHARES ISSUABLE UNDER
THE COMPANY'S 1996 STOCK OPTION PLAN
On January 24, 2000, the Board of Directors approved an amendment (the
"Amendment") to the Company's 1996 Stock Option Plan, increasing the number of
shares of Common Stock issuable thereunder from 2,000,000 shares to 3,000,000
shares, and recommended that the Amendment be submitted to the Company's
shareholders for approval at the Annual Meeting. The 1996 Stock Option Plan was
approved by the Company's shareholders on December 17, 1996. On May 26, 1998,
the Company's shareholders approved an amendment to the 1996 Stock Option Plan
increasing the number of shares issuable therunder from 1,300,000 to 2,000,000
shares. The following summary of the material features of the 1996 Stock Option
Plan is qualified in its entirety by reference to the copy of the plan (as
proposed to be amended) attached hereto as Appendix A.
PURPOSE OF THE AMENDMENT
The Company believes that it has been able to attract highly qualified
personnel in part through the use of option grants, and that it is desirable to
have the continued flexibility to attract additional personnel, if needed, and
to retain and reward exceptional performance by employees through additional
option grants. The Company has used the 1996 Stock Option Plan and other stock
option plans for this purpose, and as of February 29, 2000, options to purchase
2,823,171 shares of Common Stock granted to 520 employees and non-employee
directors (including options granted to directors for the 1999 calendar year)
were outstanding under the 1996 Stock Option Plan, and other stock option plans
(including plans assumed by the Company in connection with acquisitions), with
prices ranging from $.20 to $20.19 per share. As of February 29, 2000, options
for only 103,000 shares of Common Stock remained available for grant under the
1996 Stock Option Plan and no further options may be granted under any other
stock option plans. Accordingly, the Company is recommending that the
shareholders approve the Amendment to the 1996 Stock Option Plan.
ADMINISTRATION
The Compensation Committee administers the 1996 Stock Option Plan and has
sole authority to select the employees and directors ("Optionees") eligible to
receive grants of options ("Options") that are either incentive stock options
("Incentive Stock Options") within the meaning of Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code"), or options that do not
constitute incentive stock options ("Nonstatutory Stock Options") thereunder.
The 1996 Stock Option Plan provides for the grant of options to acquire
2,000,000 shares of Common Stock (subject to certain adjustments in the event of
stock dividends, stock splits and certain other events ("adjustments")). The
Committee which administers the 1996 Stock Option Plan must be comprised solely
of two or more outside directors (within the meaning of Section 162(m) of the
Code and applicable interpretive authority thereunder). The Compensation
Committee selects the officers, key employees and non-employee directors of the
Company to whom options may be granted and determines the vesting and other
terms of the option agreements representing such options.
The exercise price of options granted under the 1996 Stock Option Plan is
determined by the Compensation Committee, but in the case of an Incentive Stock
Option, the exercise price shall not be less than the fair market value of the
Common Stock on the date the option is granted. No person may receive any
Incentive Stock Option if, at the time of grant such person owns directly or
indirectly more than 10% of the total combined voting power of the Company
unless the option price is at least 110% of the fair market value of the Common
Stock and the exercise period of such Incentive Stock Option is by its term
limited to five years. There is also a $100,000 limit on the value of stock
(determined at the time of grant) covered by Incentive Stock Options that first
become exercisable by an optionee in any calendar year. The maximum number of
shares subject to options that can be granted under the 1996 Stock Option Plan
to any executive officer or other employee of the Company or any subsidiary
during any calendar year is 250,000 shares. No option may be granted more than
ten years after the effective date of the 1996 Stock Option Plan, which is
November 18, 1996, the date of its adoption by the Board of Directors.
15
<PAGE>
Options granted under the 1996 Stock Option Plan may be accompanied by
stock appreciation rights ("SARs"). The grant of a SAR permits the optionee to
surrender an option and receive in exchange cash or, if specified in the option
agreement, shares of Common Stock with a value equal to the excess of the fair
market value of the stock subject to the option exercise price. None of the
options which have been granted under the 1996 Stock Option Plan are accompanied
by SARs.
AMENDMENT AND TERMINATION
The Board of Directors may amend or terminate the 1996 Stock Option Plan at
any time, except that (i) it may not make any change to a previously granted
Option which would impair the employee's rights without the employee's consent,
(ii) it may not decrease the authority granted to the Compensation Committee
under the Plan in contravention of Rule 16b-3 ("Rule 16b-3") promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and (iii)
it may not make any amendment which would materially increase the benefits
accruing to participants under the Plan, increase the aggregate number of shares
which may be issued pursuant to the provisions of the Plan, change the class of
individuals eligible to receive Options under the Plan or extend the term of the
Plan without the approval of the Company's shareholders. Except with respect to
Options then outstanding, if not sooner terminated, the 1996 Stock Option Plan
shall terminate and no further Options shall be granted after the expiration of
ten years from the date of its adoption.
TAX EFFECTS OF PARTICIPATION IN THE PLAN
STATUS OF OPTIONS. The federal income tax consequences both to the
Optionee and the Company of options granted under the 1996 Stock Option Plan
differ depending on whether an Option is an Incentive Stock Option or a
Nonstatutory Stock Option.
NONSTATUTORY STOCK OPTIONS. No federal income tax is imposed on the
Optionee upon the grant of a Nonstatutory Stock Option (whether or not including
an SAR). Generally, upon the exercise of a Nonstatutory Stock Option, the
Optionee will be treated as receiving compensation taxable as ordinary income in
the year of exercise, in an amount equal to the excess of the fair market value
of the shares at the time of exercise over the option price paid for such
shares. Upon a subsequent disposition of the shares received upon exercise of a
Nonstatutory Stock Option, any difference between the amount realized on the
disposition and the basis of the shares (option price plus any ordinary income
recognized) would be treated as long-term or short-term capital gain or loss,
depending on the holding period of the shares. Upon an Optionee's exercise of a
Nonstatutory Stock Option, the Company may claim a deduction for compensation
paid at the same time and in the same amount as compensation income is
recognized to the Optionee.
INCENTIVE STOCK OPTIONS. No federal income tax is imposed on the Optionee
upon the grant or exercise of an Incentive Stock Option. The difference between
the exercise price and the fair market value of the shares on the exercise date
will, however, be included in the calculation of the Optionee's alternative
minimum tax liability, if any. If the Optionee does not dispose of shares
acquired pursuant to the exercise of an Incentive Stock Option within two years
from the date the Option was granted or within one year after the shares were
transferred to him, no income is recognized by the Optionee by reason of the
exercise of the Option, and the difference between the amount realized upon a
subsequent disposition of the shares and the option price of the shares would be
treated as long-term capital gain or loss. In such event, the Company would not
be entitled to any deduction in connection with the grant or exercise of the
Option or the disposition of the shares so acquired.
If an Optionee disposes of shares acquired pursuant to his exercise of an
Incentive Stock Option prior to the end of the two-year or one-year holding
periods noted above, the disposition would be treated as a disqualifying
disposition and the Optionee would be treated as having received, at the time of
disposition, compensation taxable as ordinary income equal to the excess of the
fair market value of the shares at the time of exercise (or, in the case of a
sale in which a loss would be recognized, the amount realized on such sale, if
less) over the option price. Any amount realized in excess of the fair market
value of the shares at the time of exercise would be treated as long-term or
short-term capital gain, depending on the holding period of the shares. In such
event, the Company may claim a deduction for compensation paid at the same time
and in the same amount as compensation is treated as received by the Optionee.
16
<PAGE>
STOCK APPRECIATION RIGHTS. No federal income tax is imposed on the
Optionee on the grant of an SAR. Upon the exercise of an SAR, the Optionee will
be treated as receiving compensation taxable as ordinary income in the year of
exercise, in an amount equal to the fair market value of the shares of Stock
plus the amount of any distributed to the Optionee. Upon a subsequent
disposition of the shares received upon exercise of an SAR, any difference
between the amount realized on the disposition and the basis of the shares (fair
market value at time of exercise) would be treated as long-term or short-term
capital gain or loss, depending on the holding period for the shares. Upon the
exercise of an SAR, the Company may claim a deduction for compensation paid at
the time and in the same amount as compensation is recognized to the Optionee.
PLAN BENEFITS
Because options under the 1996 Stock Option Plan are granted at the
discretion of the Compensation Committee, it is not possible for the Company to
determine and disclose the amount of options that many be granted to the Named
Executives and the executive officers as a whole, if the Amendment is approved.
SUMMARY AND RECOMMENDATION
The Amendment would provide for an additional 1,000,000 shares of Common
Stock to be made available to be issued upon the exercise of options granted
under the 1996 Stock Option Plan, increasing the aggregate number of shares
subject to the 1996 Stock Option Plan to 3,000,000 shares (subject to
adjustments). Absent the recommended increase, the usefulness of the 1996 Stock
Option Plan as a continuing source of employee incentives is severely impaired.
Shares covered by grants of stock options under the 1996 Stock Option Plan may
be issued by the Company from authorized but unissued stock, from shares
previously issued and reacquired by the Company, or any combination of such
sources.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENT TO THE COMPANY'S 1996 STOCK OPTION PLAN. Assuming the presence of a
quorum, the affirmative vote of the holders of a majority of the shares of
Common Stock present and entitled to vote on this item at the Annual Meeting is
required to approve the proposed Amendment.
ITEM 3.
AMENDMENT OF ARTICLES OF INCORPORATION
The Company's Articles of Incorporation currently authorize a total of
50,000,000 shares of Common Stock, par value $1.00 per share, and 1,000,000
shares of Preferred Stock, par value $0.01 per share. A total 28,095,173 shares
of Common Stock are currently issued and outstanding; and, assuming approval of
the proposed amendment to the 1996 Stock Option Plan, an additional 3,823,171
shares will be reserved for issuance under the Company's stock option plans,
which would leave only 18,081,656 authorized shares available for other purposes
under the Company's current Articles of Incorporation.
The Board of Directors believes that it is in the best interests of the
Company and shareholders to have available additional authorized but unissued
shares of Common Stock for use in connection with possible acquisitions, stock
splits, stock dividends and other corporate purposes. The Board of Directors has
no present plans, understandings or agreements for the issuance of any of the
additional shares. If authorization of an increased amount of Common Stock were
postponed until a specific need arose, a significant amount of time and expense
would be consumed incident to shareholder action on the proposed issuance.
Authorized shares of Common Stock may be issued by action of the Board of
Directors from time to time without further approval by the shareholders. The
Board of Directors has therefore approved an amendment to Section 4.1 of the
Company's Articles of Incorporation which would increase the number of
authorized shares of Common Stock from 50,000,000 shares to 75,000,000 shares
but would not affect the number of currently authorized shares of Preferred
Stock. The holders of shares of Common Stock are not entitled to any preemptive
right to purchase or have offered to them any shares or other securities of the
Company whether now or hereafter authorized.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION. The affirmative vote of
the holders of at least two-thirds of the outstanding shares of Common Stock is
required to approve the proposed Amendment.
17
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ITEM 4.
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, 2000. 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.
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 5.
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 2001 Annual
Meeting of Shareholders must be received by the Company at its principal
executive office by November 17, 2000, 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.
18
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ALL SHAREHOLDERS ARE URGED TO COMPLETE, SIGN AND RETURN THE ACCOMPANYING
PROXY CARD IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
David C. Farries
EXECUTIVE VICE PRESIDENT,
TREASURER AND SECRETARY
Houston, Texas
March 17, 2000
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APPENDIX A
SOUTHWEST BANCORPORATION OF TEXAS, INC.
1996 STOCK OPTION PLAN
(AS PROPOSED TO BE AMENDED)
I. PURPOSE OF THE PLAN
The SOUTHWEST BANCORPORATION OF TEXAS, INC. 1996 STOCK OPTION PLAN (the
"Plan") is intended to provide a means whereby certain employees of SOUTHWEST
BANCORPORATION OF TEXAS, INC., a Texas corporation (the "Company"), and its
subsidiaries may develop a sense of proprietorship and personal involvement in
the development and financial success of the Company, and to encourage them to
remain with and devote their best efforts to the business of the Company,
thereby advancing the interests of the Company and its shareholders.
Accordingly, the Company may grant to certain employees ("Optionees") the
option ("Option") to purchase shares of the common stock, $1.00 par value, of
the Company ("Stock"), as hereinafter set forth. Options granted under the
Plan may be either incentive stock options, within the meaning of section 422(b)
of the Internal Revenue Code of 1986, as amended (the "Code"), ("Incentive
Stock Options") or options which do not constitute Incentive Stock Options.
II. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") of, and
appointed by, the Board of Directors of the Company (the "Board"), and the
Committee shall be (a) comprised solely of two or more outside directors (within
the meaning of section 162(m) of the Code and applicable interpretive authority
thereunder), and (b) constituted so as to permit the Plan to comply with Rule
16b-3, as currently in effect or as hereinafter modified or amended ("Rule
16b-3"), promulgated under the Securities Exchange Act of 1934, as amended (the
"1934 Act"). The Committee shall have sole authority to select the Optionees
from among those individuals eligible hereunder and to establish the number of
shares which may be issued under each Option; provided, however, that,
notwithstanding any provision in the Plan to the contrary, the maximum number of
shares that may be subject to Options granted under the Plan to an individual
Optionee during any calendar year may not exceed 500,000 (subject to adjustment
in the same manner as provided in Paragraph VIII hereof with respect to shares
of Stock subject to Options then outstanding). The limitation set forth in the
preceding sentence shall be applied in a manner which will permit compensation
generated under the Plan to constitute "performance-based" compensation for
purposes of section 162(m) of the Code, including, without limitation, counting
against such maximum number of shares, to the extent required under section
162(m) of the Code and applicable interpretive authority thereunder, any shares
subject to Options that are canceled or repriced. In selecting the Optionees
from among individuals eligible hereunder and in establishing the number of
shares that may be issued under each Option, the Committee may take into account
the nature of the services rendered by such individuals, their present and
potential contributions to the Company's success and such other factors as the
Committee in its discretion shall deem relevant. The Committee is authorized to
interpret the Plan and may from time to time adopt such rules and regulations,
consistent with the provisions of the Plan, as it may deem advisable to carry
out the Plan. All decisions made by the Committee in selecting the Optionees, in
establishing the number of shares which may be issued under each Option and in
construing the provisions of the Plan shall be final. If a Committee is not
appointed by the Board, the Board shall act as the Committee for purposes of the
Plan.
III. OPTION AGREEMENTS
(a) Each Option shall be evidenced by a written agreement between the
Company and the Optionee ("Option Agreement") which shall contain such terms
and conditions as may be approved by the Committee. The terms and conditions of
the respective Option Agreements need not be identical. Specifically, an Option
Agreement may provide for the surrender of the right to purchase shares under
the Option in return for a payment in cash or shares of Stock or a combination
of cash and shares of Stock equal in value to the excess of the fair
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market value of the shares with respect to which the right to purchase is
surrendered over the option price therefor ("Stock Appreciation Rights"), on
such terms and conditions as the Committee in its sole discretion may prescribe;
provided, that, except as provided in Subparagraph VIII(c) hereof, the Committee
shall retain final authority (i) to determine whether an Optionee shall be
permitted, or (ii) to approve an election by an Optionee, to receive cash in
full or partial settlement of Stock Appreciation Rights. Moreover, an Option
Agreement may provide for the payment of the option price, in whole or in part,
by the delivery of a number of shares of Stock (plus cash if necessary) having a
fair market value equal to such option price.
(b) For all purposes under the Plan, the fair market value of a share of
Stock on a particular date shall be equal to the mean of the high and low sales
prices of the Stock (i) reported by the National Market System of NASDAQ on that
date or (ii) if the Stock is listed on a national stock exchange, reported on
the stock exchange composite tape on that date; or, in either case, if no prices
are reported on that date, on the last preceding date on which such prices of
the Stock are so reported. If the Stock is traded over the counter at the time a
determination of its fair market value is required to be made hereunder, its
fair market value shall be deemed to be equal to the average between the
reported high and low or closing bid and asked prices of Stock on the most
recent date on which Stock was publicly traded. In the event Stock is not
publicly traded at the time a determination of its value is required to be made
hereunder, the determination of its fair market value shall be made by the
Committee in such manner as it deems appropriate.
(c) Each Option and all rights granted thereunder shall not be
transferable other than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or Title
I of the Employee Retirement Income Security Act of 1974, as amended, or the
rules thereunder, and shall be exercisable during the Optionee's lifetime only
by the Optionee or the Optionee's guardian or legal representative.
IV. ELIGIBILITY OF OPTIONEE
Options may be granted only to individuals who are employees (including
officers and directors who are also employees) of the Company or any parent or
subsidiary corporation (as defined in section 424 of the Code) of the Company at
the time the Option is granted; provided, however, that Options which do not
constitute Incentive Stock Options may be granted to individuals who are
directors (but not also employees) of the Company or any such parent or
subsidiary corporation. Options may be granted to the same individual on more
than one occasion. No Incentive Stock Option shall be granted to an individual
if, at the time the Option is granted, such individual owns stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company or of its parent or subsidiary corporation, within the meaning of
section 422(b)(6) of the Code, unless (i) at the time such Option is granted the
option price is at least 110% of the fair market value of the Stock subject to
the Option and (ii) such Option by its terms is not exercisable after the
expiration of five years from the date of grant. To the extent that the
aggregate fair market value (determined at the time the respective Incentive
Stock Option is granted) of stock with respect to which Incentive Stock Options
are exercisable for the first time by an individual during any calendar year
under all incentive stock option plans of the Company and its parent and
subsidiary corporations exceeds $100,000, such excess Incentive Stock Options
shall be treated as Options which do not constitute Incentive Stock Options. The
Committee shall determine, in accordance with applicable provisions of the Code,
Treasury Regulations and other administrative pronouncements, which of an
Optionee's Incentive Stock Options will not constitute Incentive Stock Options
because of such limitation and shall notify the Optionee of such determination
as soon as practicable after such determination.
V. SHARES SUBJECT TO THE PLAN
The aggregate number of shares which may be issued under Options granted
under the Plan shall not exceed 3,000,000 shares of Stock. Such shares may
consist of authorized but unissued shares of Stock or previously issued shares
of Stock reacquired by the Company. Any of such shares which remain unissued and
which are not subject to outstanding Options at the termination of the Plan
shall cease to be subject to the Plan, but, until termination of the Plan, the
Company shall at all times make available a sufficient number of shares to meet
the requirements of the Plan. Should any Option hereunder expire or terminate
prior to its exercise in full, the shares theretofore subject to such Option may
again be subject to an Option granted under the Plan to the extent
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permitted under Rule 16b-3. The aggregate number of shares which may be issued
under the Plan shall be subject to adjustment in the same manner as provided in
Paragraph VIII hereof with respect to shares of Stock subject to Options then
outstanding. Exercise of an Option in any manner, including an exercise
involving a Stock Appreciation Right, shall result in a decrease in the number
of shares of Stock which may thereafter be available, both for purposes of the
Plan and for sale to any one individual, by the number of shares as to which the
Option is exercised. Separate stock certificates shall be issued by the Company
for those shares acquired pursuant to the exercise of an Incentive Stock Option
and for those shares acquired pursuant to the exercise of any Option which does
not constitute an Incentive Stock Option.
VI. OPTION PRICE
The purchase price of Stock issued under each Option shall be determined by
the Committee, but in the case of an Incentive Stock Option, such purchase price
shall not be less than the fair market value of Stock subject to the Option on
the date the Option is granted.
VII. TERM OF PLAN
The Plan shall be effective upon the date of its adoption by the Board,
provided the Plan is approved by the shareholders of the Company within twelve
months thereafter. Notwithstanding any provision in this Plan or in any Option
Agreement, no Option shall be exercisable prior to such shareholder approval.
Except with respect to Options then outstanding, if not sooner terminated under
the provisions of Paragraph IX, the Plan shall terminate upon and no further
Options shall be granted after the expiration of ten years from the date of its
adoption by the Board.
VIII. RECAPITALIZATION OR REORGANIZATION
(a) The existence of the Plan and the Options granted hereunder shall not
affect in any way the right or power of the Board or the shareholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities, the
dissolution or liquidation of the Company or any sale, lease, exchange or other
disposition of all or any part of its assets or business or any other corporate
act or proceeding.
(b) The shares with respect to which Options may be granted are shares of
Stock as presently constituted, but if, and whenever, prior to the expiration of
an Option theretofore granted, the Company shall effect a subdivision or
consolidation of shares of Stock or the payment of a stock dividend on Stock
without receipt of consideration by the Company, the number of shares of Stock
with respect to which such Option may thereafter be exercised (i) in the event
of an increase in the number of outstanding shares shall be proportionately
increased, and the purchase price per share shall be proportionately reduced,
and (ii) in the event of a reduction in the number of outstanding shares shall
be proportionately reduced, and the purchase price per share shall be
proportionately increased.
(c) If the Company recapitalizes, reclassifies its capital stock, or
otherwise changes its capital structure (a "recapitalization"), the number and
class of shares of Stock covered by an option theretofore granted shall be
adjusted so that such Option shall thereafter cover the number and class of
shares of stock and securities to which the Optionee would have been entitled
pursuant to the terms of the recapitalization if, immediately prior to the
recapitalization, the Optionee had been the holder of record of the number of
shares of Stock then covered by such Option. If (i) the Company shall not be the
surviving entity in any merger, consolidation or other reorganization (or
survives only as a subsidiary of an entity), (ii) the Company sells, leases or
exchanges all or substantially all of its assets to any other person or entity,
(iii) the Company is to be dissolved and liquidated, (iv) any person or entity,
including a "group" as contemplated by Section 13(d)(3) of the 1934 Act,
acquires or gains ownership or control (including, without limitation, power to
vote) of more than 50% of the outstanding shares of the Company's voting stock
(based upon voting power), or (v) as a result of or in connection with a
contested election of directors, the persons who were directors of the Company
before such election shall cease to constitute a majority of the Board (each
such event is referred to herein as a "Corporate Change"), then all
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outstanding Options shall fully vest and become fully exercisable, effective as
of the first business day immediately preceding the effective date of such
Corporate Change (or as of an earlier date determined by the Committee pursuant
to the following clause); provided, however, that, subject to such acceleration
of vesting of the outstanding Options, no later than (a) ten days after the
approval by the shareholders of the Company of such merger, consolidation,
reorganization, sale, lease or exchange of assets or dissolution or such
election of directors or (b) thirty days after a change of control of the type
described in Clause (iv), the Committee, acting in its sole discretion without
the consent or approval of any Optionee, may, in its discretion, also act to
effect one or more of the following alternatives, which may vary among
individual Optionees and which may vary among Options held by any individual
Optionee: (1) provide that the Options may be exercised in full only for a
limited period of time on or before a specified date (before or after such
Corporate Change) fixed by the Committee, after which specified date all
unexercised Options and all rights of Optionees thereunder shall terminate, (2)
require the mandatory surrender to the Company by selected Optionees of some or
all of the outstanding Options held by such Optionees as of a date, before or
after such Corporate Change, specified by the Committee, in which event the
Committee shall thereupon cancel such Options and the Company shall pay to each
Optionee an amount of cash per share equal to the excess, if any, of the amount
calculated in Subparagraph (d) below (the "Change of Control Value") of the
shares subject to such Option over the exercise price(s) under such Options for
such shares, (3) make such adjustments (other than vesting) to Options then
outstanding as the Committee deems appropriate to reflect such Corporate Change
or (4) provide that the number and class of shares of Stock covered by an Option
theretofore granted shall be adjusted so that such Option shall thereafter cover
the number and class of shares of stock or other securities or property
(including, without limitation, cash) to which the Optionee would have been
entitled pursuant to the terms of the agreement of merger, consolidation or sale
of assets and dissolution if, immediately prior to such merger, consolidation or
sale of assets and dissolution, the Optionee had been the holder of record of
the number of shares of Stock then covered by such Option.
(d) For the purposes of clause (2) in Subparagraph (c) above, the "Change
of Control Value" shall equal the amount determined in clause (i), (ii) or
(iii), whichever is applicable, as follows: (i) the per share price offered to
shareholders of the Company in any such merger, consolidation, reorganization,
sale of assets or dissolution transaction, (ii) the price per share offered to
shareholders of the Company in any tender offer or exchange offer whereby a
Corporate Change takes place, or (iii) if such Corporate Change occurs other
than pursuant to a tender or exchange offer, the fair market value per share of
the shares into which such Options being surrendered are exercisable, as
determined by the Committee as of the date determined by the Committee to be the
date of cancellation and surrender of such Options. In the event that the
consideration offered to shareholders of the Company in any transaction
described in this Subparagraph (d) or Subparagraph (c) above consists of
anything other than cash, the Committee shall determine the fair cash equivalent
of the portion of the consideration offered which is other than cash.
(e) Any adjustment provided for in Subparagraphs (b) or (c) above shall be
subject to any required shareholder action.
(f) Except as hereinbefore expressly provided, the issuance by the Company
of shares of stock of any class or securities convertible into shares of stock
of any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
shares of Stock subject to Options theretofore granted or the purchase price per
share.
IX. AMENDMENT OR TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan at any time with respect
to any shares for which Options have not theretofore been granted. The Board
shall have the right to alter or amend the Plan or any part thereof from time to
time; provided, that no change in any Option theretofore granted may be made
which would impair the rights of the Optionee without the consent of such
Optionee; and provided, further, that (i) the Board may not make any alteration
or amendment which would decrease any authority granted to the Committee
hereunder in contravention of Rule 16b-3 and (ii) the Board may not make any
alteration or amendment which would
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materially increase the benefits accruing to participants under the Plan,
increase the aggregate number of shares which may be issued pursuant to the
provisions of the Plan, change the class of individuals eligible to receive
Options under the Plan or extend the term of the Plan, without the approval of
the shareholders of the Company.
X. SECURITIES LAWS
(a) The Company shall not be obligated to issue any Stock pursuant to any
Option granted under the Plan at any time when the offering of the shares
covered by such Option have not been registered under the Securities Act of 1933
and such other state and federal laws, rules or regulations as the Company or
the Committee deems applicable and, in the opinion of legal counsel for the
Company, there is no exemption from the registration requirements of such laws,
rules or regulations available for the offering and sale of such shares.
It is intended that the Plan and any grant of an Option made to a person
subject to Section 16 of the 1934 Act meet all of the requirements of Rule
16b-3. If any provision of the Plan or any such Option would disqualify the Plan
or such Option under, or would otherwise not comply with, Rule 16b-3, such
provision or Option shall be construed or deemed amended to conform to Rule
16b-3.
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FRONT SIDE OF PROXY
PROXY SOUTHWEST BANCORPORATION OF TEXAS, INC. PROXY
PROXY FOR 2000 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Walter E. Johnson, John W. Johnson and Paul
B. Murphy, Jr., 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 2000 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 26, 2000 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 B. Brock III Lane Ward Andres Palandjoglou
J. David Heaney Stanley D. Stearns, Jr.
2. Proposal to amend the Company's 1996 Stock Option Plan to increase the
number of shares of Common Stock issuable thereunder from 2,000,000
shares to 3,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To amend the Company's Articles of Incorporation to increase the number
of authorized shares of stock from 50,000,000 shares to 75,000,000
shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(CONTINUED ON REVERSE SIDE)
BACK SIDE OF PROXY
(CONTINUED FROM OTHER SIDE)
4. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as
independent public accountants for the year ending December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. 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, with
respect to item (2) FOR the proposal to amend the Company's 1996 Stock Option
Plan, with respect to item (3) FOR amendment to the Company's Articles of
Incorporation, and with respect to item (4) FOR ratification of the appointment
of PricewaterhouseCoopers LLP as independent accountants for the year ending
December 31, 2000. The undersigned hereby acknowledges receipt of the Notice of
the 2000 Annual Meeting and related Proxy Statement and the Company's 1999
Annual Report to Shareholders.
Dated ___________________________________, 2000
_______________________________________________
_______________________________________________
Shareholder'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)
