SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
First Financial Bankshares, Inc.
(Name of Registrant As Specified in its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
___________
(2) Aggregate number of securities to which transaction applies:
___________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined): $___________
(4) Proposed maximum aggregate value of transaction: $___________
(5) Total fee paid: $___________
[ ] Fee paid previously with preliminary materials: $_____________
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid: $___________
(2) Form, Schedule or Registration Statement No.:___________
(3) Filing Party:___________
(4) Date Filed:___________
<PAGE>
FIRST FINANCIAL BANKSHARES, INC.
400 Pine Street
Abilene, Texas 79601
(915) 627-7155
NOTICE OF THE 2000 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 2000
To our shareholders:
We cordially invite you to attend the annual meeting of our
shareholders, which will be held in the Abilene Civic Center, 1100 North 6th
Street, Abilene, Texas, at 10:30 a.m., Abilene time, on Tuesday, April 25, 2000,
for the following purposes:
(1) To elect 15 directors;
(2) To approve the appointment of Arthur Andersen LLP as our independent
accountants for the year ended December 31, 2000; and
(3) To act on such other business as may properly come before the annual
meeting, or any adjournment thereof. Your board of directors is not
aware of any other business to come before the meeting.
Only shareholders of record at the close of business on March 17, 2000,
are entitled to notice of and to vote at the annual meeting or any continuation
of the meeting if it is adjourned.
We have included, along with this notice and proxy statement, our 1999
annual report, which describes our activities during 1999 and contains our
financial statements for the year ended December 31, 1999. The annual report
does not form any part of the material for solicitation of proxies.
We hope that you are present at the annual meeting and the luncheon to
be held immediately afterward. We respectfully urge you, whether or not you plan
to attend the annual meeting, to sign, date and mail the enclosed proxy card in
the envelope provided in order to eliminate any question of your vote being
counted. You can revoke your proxy in writing at any time before the annual
meeting, so long as your written request is received by our Corporate Secretary
before your proxy is voted. Alternatively, if you submitted a proxy and attend
the annual meeting in person, you may revoke the proxy and vote in person on all
matters submitted at the annual meeting.
By order of the Board of Directors,
KENNETH T. MURPHY, Chairman
March 30, 2000
<PAGE>
FIRST FINANCIAL BANKSHARES, INC.
400 Pine Street
Abilene, Texas 79601
(915) 627-7155
PROXY STATEMENT
2000 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 2000
INTRODUCTION
Your board of directors hereby solicits your proxy for use at the 2000
annual meeting of our shareholders and any continuation of this meeting if it is
adjourned. The annual meeting will be held in the Abilene Civic Center, 1100
North 6th Street, Abilene, Texas, at 10:30 a.m., Abilene time, on Tuesday, April
25, 2000.
Our principal executive office is located at 400 Pine Street, Abilene,
Texas 79601. Our telephone number is (915) 627-7155.
We mailed this proxy statement and the accompanying proxy card on March
31, 2000. The date of this proxy statement is March 30, 2000.
VOTING OF SECURITIES
Record Date
Your board of directors has established the close of business on March
17, 2000, as the record date for determining the shareholders entitled to notice
of, and to vote at, the annual meeting. On the record date, we had 9,974,306
shares of our common stock outstanding.
Quorum
In order for any business to be conducted at the annual meeting, a
quorum consisting of shareholders having voting rights with respect to a
majority of our outstanding common stock on the record date must be present in
person or by proxy. Shares that are represented at the annual meeting but
abstain from voting on any or all matters and shares that are "broker non-votes"
will be counted in determining whether a quorum is present at our annual
meeting. A "broker non-vote" occurs when a broker or nominee votes on some
matters on the proxy card but not others because he does not have authority to
do so.
Required Vote
To elect a nominee for director, the affirmative vote of a majority of
shares entitled to vote at the annual meeting is required. Therefore, if you
abstain from voting or withhold authority to vote in the election of a director,
your abstention or withholding will have the effect of a negative vote with
respect to such election because the election requires the affirmative vote of a
majority of shares entitled to vote. To approve the appointment by your board of
directors of Arthur Andersen LLP as our independent accountants for the year
ended December 31, 2000, the affirmative vote of a majority of votes cast with
respect to this appointment is required. Abstentions will be included in
determining the number of votes cast. Therefore, if you return your proxy card
and expressly abstain from voting on this proposal, your abstention will have
the effect of a negative vote with respect to this proposal because this
proposal requires the affirmative vote of a majority of votes cast with respect
to this proposal. Broker non-votes will be treated as present with respect to
each applicable proposal. But, because broker non-votes are not votes cast for,
against, or as expressly abstained, they will have no effect on the outcome of
any proposal.
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<PAGE>
Shareholder List
A list of shareholders entitled to vote at the annual meeting, which
will be arranged in alphabetical order and which will show each shareholder's
address and the number of shares registered in his or her name, will be open to
any shareholder to examine for any purpose related to the annual meeting. Any
shareholder may examine this list during ordinary business hours commencing
March 30, 2000, and continuing through the date of the annual meeting at our
principal office, 400 Pine Street, Abilene, Texas 79601.
SOLICITATION AND REVOCABILITY OF PROXIES
Solicitation
We will bear the expense to solicit proxies, which will include
reimbursement of expenses incurred by brokerage firms and other custodians,
nominees and fiduciaries to forward solicitation materials regarding the annual
meeting to beneficial owners. Our officers may further solicit proxies from
shareholders and other persons by telephone or oral communication. We will not
pay these officers any extra compensation for participating in this
solicitation.
Proxies and Revocation
Each executed and returned proxy card will be voted according to the
directions indicated on that proxy card. If no direction is indicated, the proxy
will be voted according to the board of directors' recommendations, which are
contained in this proxy statement. Your board of directors does not intend to
present, and has no information that others will present, any business at the
annual meeting that requires a vote on any other matter. If any other matter
requiring a vote properly comes before the annual meeting, the proxies will be
voted in the discretion of the proxyholders named on the proxy.
Each shareholder giving a proxy has the power to revoke it at any time
before the shares of our common stock it represents are voted. This revocation
is effective upon receipt, at any time before the annual meeting is called to
order, by our Corporate Secretary of either (i) an instrument revoking the proxy
or (ii) a duly executed proxy bearing a later date than the preceding proxy.
Additionally, a shareholder may change or revoke a previously executed proxy by
voting in person at the annual meeting.
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<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
General
Your board of directors currently consists of 15 directors. At the
annual meeting, 15 directors are to be elected, each for a term of one year.
Under our bylaws, an individual may not stand for election or reelection as a
director upon attaining 72 years of age, unless he owns at least 1% of the
outstanding shares of our common stock and is less than 75 years of age. While
our bylaws fix the number of directors at a number not less than three nor more
than 30, the board of directors has fixed the number of directors at 15.
Although we do not contemplate that any of the nominees will be unable to serve,
if such a situation arises before the annual meeting, the proxies will be voted
to elect any substitute nominee or nominees designated by your board of
directors.
Nominees
The names and principal occupations of the nominees, together with the
length of service as a director and the number of shares of our common stock
beneficially owned by each of them on February 1, 2000, are as follows:
<TABLE>
<CAPTION>
Shares of
Years as Bankshares Percent
Director Principal Occupation Beneficially of Shares
Name Age (1) During Last Five Years Owned Outstanding
- ---- --- --- ---------------------- ----- -----------
<S> <C> <C> <C> <C> <C>
Joseph E. Canon 58 4 Executive Director, 5,591 0.06
Dodge Jones Foundation
Mac A. Coalson 60 4 Real Estate and Ranching 105,404 1.06
David Copeland 44 2 President, Shelton Family 5,121 0.05
F. Scott Dueser 47 9 President and Chief Executive 82,332(2) 0.83
Derrell E. Johnson 60 - Senior Vice President, Kimley- 18,526 0.19
Kade L. Matthews 42 2 Ranching and Investments 75,216 0.75
Raymond A. McDaniel, Jr. 66 8 Investments 41,226 0.41
Bynum Miers 63 8 Ranching 23,122 0.23
Kenneth T. Murphy 62 29 See "Executive Officers" on 121,595 1.22
Dian Graves Stai 60 7 Investments 34,845 0.35
James M. Parker 69 28 President, Parker Properties, 357,681 3.59
Jack D. Ramsey, M.D. 69 3 Physician 77,297 0.77
Craig Smith 58 10 Chairman, President and Chief 53,668 0.54
F. L. Stephens 62 2 Retired Chairman and Chief 16,000 0.16
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Walter F. Worthington 73 4 Investments 185,426 1.86
Shares beneficially owned by all executive officers and directors** 1,215,306 12.18
</TABLE>
*A bank subsidiary.
**See "Security Ownership of Certain Beneficial Owners and Management."
(1) The years indicated are the approximate number of years each person has
continuously served as a director, or, prior thereto, of First National
Bank of Abilene, which became our wholly-owned subsidiary in April 1973,
when all the then directors of First National Bank of Abilene became our
directors.
(2) Includes 2,062 shares of our common stock issuable upon exercise of options
presently exercisable or exercisable within 60 days of February 1, 2000.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" THE ELECTION OF EACH OF THESE NOMINEES.
Executive Officers
Set forth below are our executive officers, and the shares of our
common stock beneficially owned by each of them as of February 1, 2000:
<TABLE>
<CAPTION>
Years Shares of
Served Bankshares Percent of
in Such Principal Occupation Beneficially Shares
Name Age Office Office During Past 5 Years Owned Outstanding
- ---- --- ------ ------ ------------------- ----- -----------
<S> <C> <C> <C> <C>
Kenneth T. Murphy 62 Chairman, 13 years Chairman, President and 121,595 1.22
President and Chief Executive Officer
Chief Executive of Bankshares; Chairman,
Officer First National Bank of
Abilene*
Curtis R. Harvey 54 Executive Vice 9 years Executive Vice President 8,846(1) 0.09
President and Chief and Chief Financial Officer
Financial Officer of Bankshares
F. Scott Dueser 47 Executive Vice 1 year President and Chief 82,332(2) 0.83
President Executive Officer, First
National Bank of Abilene*
Ronald E. Schneider 54 Executive Vice 1 year Chairman, President and 3,410(3) 0.03
President Chief Executive Officer,
The First National Bank
in Cleburne*
</TABLE>
*A bank subsidiary.
(1) Includes 2,231 shares of our common stock issuable upon exercise of options
presently exercisable or exercisable within 60 days of February 1, 2000.
(2) Includes 2,062 shares of our common stock issuable upon exercise of options
presently exercisable or exercisable within 60 days of February 1, 2000.
(3) Includes 2,464 shares of our common stock issuable upon exercise of options
presently exercisable or exercisable within 60 days of February 1, 2000.
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<PAGE>
MANAGEMENT
Amounts and prices related to shares of our common stock have been
adjusted to give effect to all stock splits and stock dividends.
Executive Compensation
The following table provides individual compensation information on the
chief executive officer and our four most highly compensated officers.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
Annual Securities All Other
Compensation Underlying Options Compensation
------------ -------------------
Name and Principal Position Year Salary ($) (#)(1) ($)(2)
- --------------------------- ---- ---------- ------ ----------
<S> <C> <C> <C> <C>
Kenneth T. Murphy, Chairman, President and 1999 386,500 - 30,815(3)
Chief Executive Officer 1998 363,750 3,630 22,497
First Financial Bankshares, Inc. 1997 339,000 - 20,551
F. Scott Dueser, President and 1999 233,333 - 20,801
Chief Executive Officer 1998 221,667 2,420 22,689
First National Bank of Abilene 1997 202,000 - 23,931
Ronald E. Schneider, Chairman, President and 1999 158,333 - 19,129
Chief Executive Officer 1998 140,000 1,100 16,835
First National Bank in Cleburne 1997 133,500 - 14,539
Craig Smith, Chairman, President and 1999 155,000 - 18,497
Chief Executive Officer 1998 150,000 825 20,386
Hereford State Bank 1997 144,000 - 20,199
Curtis R. Harvey, Executive Vice President 1999 151,000 - 18,386
and Chief Financial Officer 1998 143,500 1,100 20,166
First Financial Bankshares, Inc. 1997 136,500 - 17,240
(1) Adjusted for stock splits and stock dividends.
(2) Represents the contributions to our profit sharing plan for the executive
officer.
(3) Includes $11,120 bonus.
</TABLE>
The following table sets forth certain information concerning options
exercised during the last fiscal year by the named executive officers.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired on Value Options at Fiscal Year End (#) at Fiscal Year End ($)(1)
------------------------------ ----------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth T. Murphy 8,286 107,990 - 5,692 - 3,813
F. Scott Dueser 1,718 23,846 2,062 3,795 25,013 2,545
Ronald E. Schneider 300 3,839 2,464 1,788 29,888 1,921
Craig Smith 1,461 16,809 - 1,513 - 3,527
Curtis R. Harvey - - 2,231 1,788 27,061 1,921
(1) Based upon the closing price per share of our common stock of $30.75 on
December 31, 1999.
</TABLE>
5
<PAGE>
Compensation pursuant to Plans
General
We have both a defined benefit pension plan and a profit sharing plan.
An employee is eligible to become a participant in the pension plan and profit
sharing plan on the January 1 coincident with or immediately following the date
his employment begins. With our subsidiary banks we adopted a flexible spending
account benefit plan for all employees that became effective in 1988. The First
National Bank in Cleburne adopted these plans effective in 1991. Stephenville
Bank & Trust Co. adopted these plans effective in 1993. San Angelo National Bank
adopted the pension and flexible spending account benefit plan effective in 1994
and profit sharing plan effective in 1995. Weatherford National Bank adopted
these plans effective in 1996. Texas National Bank adopted all benefit plans
effective in 1998.
Profit Sharing Plan
We and each of our subsidiary banks that participates in the profit
sharing plan determine on an annual basis the contribution that it will make to
the profit sharing plan from such employer's operating profits. Contributions
under the profit sharing plan are administered by the administrative committee
for the profit sharing, pension and flexible spending account benefit plans for
the exclusive benefit of plan participants under the provisions of a trust
agreement. Under the profit sharing plan, eligible employees may contribute
between 1% and 5% of their eligible earnings, although contributions by
employees are not required as a condition of participation. Each participating
employer's annual contribution is allocated among the accounts of the active
plan participants employed by such employer, in the ratio that each
participant's compensation bears to the total compensation of all participants
of such employer. Compensation is defined as the total amount paid to an
employee during the year, including bonuses, commissions, overtime pay, and
salary reductions under the flexible spending account benefit plan, but
excluding reimbursed expenses, director fees, group insurance benefits and
pension and profit sharing contributions. However, the Internal Revenue Service
limits the compensation amount used to calculate a participant's benefit to a
maximum of $160,000. Additionally, the annual addition amount (which is the
aggregate of employer and employee contributions) that may be allocated to a
participant is limited to $30,000.
The profit sharing plan provides for benefits to vest (become
nonforfeitable) in graduated percentages for the first six years of
participation, with benefits being fully vested after seven years of credited
service. Generally, an employee's benefit at normal retirement will be the
contributions allocated to his account while a participant, increased by gains
and decreased by losses from investments of the trust, and increased by any
forfeitures allocated to his account. An employee is always fully vested with
respect to any voluntary contributions he makes, and death or disability of a
participant while employed by us or one of our participating subsidiary banks
results in immediate full vesting with respect to employer contributions. If a
participant terminates employment for any other reason, the total amount of his
employee contribution account and the vested portion of his employer
contribution account are distributed to him.
Pension Plan
The pension plan requires annual contributions sufficient to provide
the pension benefits accruing to employees under the pension plan. The annual
benefit for a participant in the pension plan who retires on his normal
retirement date is the accrued benefit (as defined in the pension plan) at
December 31, 1988, plus 1.25% of average compensation multiplied by years of
service from January 1, 1989. "Average compensation" is the average compensation
during the ten years immediately preceding the date of determination.
Compensation means the total amount paid to an employee during the year
including bonuses, commissions, and overtime pay, but excluding reimbursed
expenses, director fees, group insurance benefits and pension and profit sharing
contributions. There are provisions in the pension plan for early retirement
with reduced benefits. There is no vesting of benefits until a participant has
five or more years of credited service with participating employers. Full
vesting (100%) occurs upon the completion of five years of credited service or
upon reaching age 65 without regard to credited service.
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<PAGE>
The pension plan is subject to the minimum funding requirements of the
Employee Retirement Income Security Act of 1974, or ERISA. As of December 31,
1999, there was no present funding deficiency. Our contributions to the pension
plan, including those of our participating subsidiary banks, have been $533,411
in 1995; $491,681 in 1996; $557,915 in 1997; $589,238 in 1998; and $621,030 in
1999.
The following table illustrates estimated retirement benefits under the
pension plan for persons in specified remuneration and years of service
categories, which benefits are payable annually for life (but in no event less
than ten years). The benefits listed in the table below are not subject to any
deduction for social security or other offset amounts. This table does not
reflect any benefit that a participant may have accrued at December 31, 1988.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
----------------------------------------------------------
Remuneration 15 20 25 30 35
- ------------ --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 25,000 $ 4,688 $ 6,250 $ 7,813 $ 9,375 $ 10,938
50,000 9,375 12,500 15,625 18,750 21,875
75,000 14,063 18,750 23,438 28,125 32,813
100,000 18,750 25,000 31,250 37,500 43,750
125,000 23,438 31,250 39,063 46,875 54,688
150,000 28,125 37,500 46,875 56,250 65,625
175,000 32,813 43,750 54,688 65,625 76,563
200,000 37,500 50,000 62,500 75,000 87,500
</TABLE>
As of December 31, 1999, under the pension plan, Mr. Murphy was
credited with 29 years of service, Mr. Dueser was credited with 23 years of
service, Mr. Smith was credited with 30 years of service, Mr. Harvey was
credited with 9 years of service, and Mr. Schneider was credited with 7 years of
service. The covered compensation of each of these persons during 1999 was
$160,000; $160,000; $155,000; $151,000; and $158,333, respectively.
Flexible Spending Account Benefit Plan
Effective January 1, 1988, with our subsidiary banks we adopted a
flexible spending account benefit plan. An employee is eligible to become a
participant in this plan on the first day of the month following completion of
two months of service. The flexible spending account benefit plan allows each
participant to redirect a portion of his/her salary, before taxes, to pay
certain medical and/or dependent care expenses.
Deferred Compensation Agreement
In 1992, your board of directors approved a deferred compensation
agreement, which was amended in 1995, between us and Mr. Murphy. We entered into
this agreement in recognition of Mr. Murphy's contribution to our success and as
an inducement to him to remain, subject to the discretion of your board of
directors, in our employ. This agreement provides that, following his retirement
in December 2002, or such later date as may be mutually agreed upon, we would
pay him, or his beneficiary, the sum of $8,750 per month for a period of 84
months. The monthly amount is considered to be an appropriate level of
supplemental income to partially offset Mr. Murphy's reduction in personal
income following retirement and is based on an analysis of the difference in
projected final year compensation and retirement compensation. The agreement
also provides for 70% vesting at age 62, 80% vesting at age 63, and 90% vesting
at age 64.
Executive Recognition Plan
In April 1996, our outside directors, who constituted a majority of
your board of directors, unanimously approved an executive recognition plan.
This plan enables the outside directors of the executive committee of the board
of directors, which functions as the compensation committee, to offer our key
executive officers and those of our subsidiary banks an executive recognition
agreement. Each of our named executive officers and the principal executive
officers of certain of our subsidiary banks have entered into executive
recognition agreements with us. Each executive recognition agreement provides
severance benefits for each executive officer if, within two years following a
change in control (as defined in the executive recognition agreements), his
employment with us or our subsidiary bank is terminated by us or the subsidiary
bank for any reason other than for cause (as defined in the executive
recognition agreements) (except for terminations as a result of the officer's
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<PAGE>
death, disability or retirement (as such terms are defined in the executive
recognition agreements)) or by the executive officer for good reason (as defined
in the executive recognition agreements). Such severance benefits provide that
the executive officer will receive a payment equal to a certain percentage (as
set forth in his executive recognition agreement) of his annual base salary
immediately preceding the date of termination and, for two years following the
date of termination, the continuation of all medical, life and disability
benefit plans covering the officer at no cost to the officer. With respect to
each of the named executive officers, the percentage of annual base salary to be
received upon a change in control pursuant to his executive recognition
agreement is as follows: 200% for Mr. Murphy, 200% for Mr. Dueser, 100% for Mr.
Smith, 100% for Mr. Harvey, and 100% for Mr. Schneider. The total severance
payment for the executive officer cannot, however, exceed the amount that would
cause such payment to be deemed a "parachute payment" under Section 280G of the
Internal Revenue Code.
Each executive recognition agreement has a term of two years, beginning
June 1, 1998. However, if a change in control occurs during the original term of
the executive recognition agreements, then the executive recognition agreements
will continue in effect for an additional period of two years following the
change in control. Similarly, if a second change in control occurs within two
years from the date of the first change in control, then the executive
recognition agreements will continue in effect for a period of two years from
the date of the second change in control.
Stock Option Plan
At the 1992 annual meeting of shareholders, our 1992 incentive stock
option plan was approved and adopted. The purposes of the stock option plan are
to attract and retain key employees and to encourage employee performance by
providing them with a proprietary interest in us through the granting of stock
options. The maximum aggregate number of shares of our common stock that may be
issued under the stock option plan is 354,492, subject to adjustment for stock
dividends and similar events. The stock option plan is administered by our stock
option committee. Only incentive stock options (as defined in the Internal
Revenue Code) may be granted under the stock option plan. Incentive stock
options granted under the stock option plan may be exercised solely by the
grantee, or in the case of the grantee's death or incapacity, by the grantee's
executors, administrators, guardians or other legal representatives and are not
assignable or transferable by a grantee. There were no options granted during
1999.
Meetings of the Board of Directors
Your board of directors has four regularly scheduled meetings each
year. Each of the directors attended at least 75% of the meetings of the board
of directors and the committees of the board of directors on which such director
served.
Committees of the Board of Directors
Your board of directors has four committees. The functions and current
members of each committee are as follows:
Executive Committee. The executive committee acts for your board of
directors between board meetings, except to the extent limited by our bylaws or
Texas law. The current members are Messrs. Dueser, McDaniel, Murphy, Parker,
Ramsey, and Wilson. The executive committee also functions as a nominating
committee with appropriate recommendations to the entire board of directors.
Outside directors who serve on the executive committee also function as our
compensation committee. The executive committee met eight times during 1999 and,
among other things, considered and took action on matters relating to its
capacity as the compensation and nominating committee. In its capacity as
nominating committee, the executive committee will consider director nominations
from shareholders. There are no prescribed procedures that the shareholder must
follow to nominate a director.
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<PAGE>
Directors' Audit Committee. The directors' audit committee reviews the
scope and results of the annual audit by Arthur Andersen LLP, our independent
accountants, and receives and reviews internal and external audit reports. Its
members include Messrs. Coalson, Copeland, McDaniel, Miers, and Worthington.
During 1999, the audit committee met twice.
Administrative Committee for the Profit Sharing, Pension and Flexible
Spending Account Benefit Plans. This committee administers our profit sharing,
pension and flexible spending account benefit plans. Current members include
Messrs. Canon, Matthews, Parker, and Stephens. During 1999, the committee met
two times.
Stock Option Committee. The stock option committee was created under
our 1992 incentive stock option plan for key employees. Its current members
include Mrs. Stai and Messrs. Miers, Ramsey, and Wilson. The stock option
committee did not meet in 1999.
Director Compensation
Directors who are our executive officers or employees receive no
compensation as such for service as members of either the board of directors or
committees thereof. Directors who are not our officers receive $1,250 for each
board meeting attended. The directors who serve on committees and who are not
our officers receive $750 for each committee meeting attended.
Compensation Committee Interlocks and Insider Participation
No person who served as a member of the executive committee in its
capacity as the compensation committee was, during 1999, an officer or employee
of us or any of our subsidiary banks, or had any relationship requiring
disclosure in this proxy statement. However, committee members James M. Parker
and Jack D. Ramsey obtained loans from a subsidiary bank during 1999. In each
case, the loans were made in the ordinary course of business, on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions on an arms-length basis and did not involve
more than the normal risk of collectibility or present other unfavorable
features to the subsidiary bank. None of our executive officers served as a
member of the compensation committee (or other board committee performing
equivalent functions or, in the absence of any such committee, the entire board
of directors) of another entity, one of whose executive officers served as a
member of the board of directors.
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<PAGE>
REPORT OF THE EXECUTIVE COMMITTEE
IN ITS CAPACITY AS THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
During 1999, the executive compensation program was administered by
Messrs. McDaniel, Parker, Ramsey and Wilson, the outside director members of the
executive committee acting in the capacity of compensation committee. The
executive compensation program consists of a base salary, profit sharing
contributions, and incentive stock options. Mr. Murphy's annual base salary is
reviewed in March and adjusted effective April 1 of each year. The executive
committee, acting in its capacity as compensation committee, also recommended a
bonus plan for Mr. Murphy, which the board of directors approved on April 27,
1999. This bonus plan calls for Mr. Murphy to receive a cash bonus payable on or
before each February 1 that equals 10% of the amount by which our net earnings
for the year exceed a 10% increase over the prior year. In 1999, Mr. Murphy
earned a bonus of $11,120. Mr. Dueser's annual base salary is reviewed in
February and adjusted effective March 1 of each year. The annual base salaries
for Messrs. Smith, Harvey, and Schneider are reviewed in December of each year
and adjusted effective on the following January 1. Among other things, the
committee considers the following factors when approving annual base salaries:
attainment of planned goals and objectives, scope of responsibility (asset size
of subsidiary bank and/or degree of influence on our profitability and
operations), tenure with First Financial Bankshares, evaluation input from
subsidiary bank directors, and relationship of base salary to the base salaries
of other members of the executive officer group.
The annual base salary for Mr. Murphy was reviewed March 1999 with an
adjustment made effective April 1, 1999. The increase was based on the following
factors:
o our financial performance for 1998,
o performance of the chief executive officer's duties that relate
primarily to leading and managing us within the broad guidelines set
by the board of directors,
o base salary compared to the SNL Securities, Inc. compensation survey
data for chief executive officers of similar size organizations within
the industry, and
o subjective evaluations of Mr. Murphy's contribution to the overall
success of First Financial Bankshares.
Section 162(m) of the Internal Revenue Code generally limits the annual
corporate tax deduction for compensation paid to the chief executive officer and
the four other most highly compensated executive officers unless the
compensation is performance-based. One condition to qualify compensation as
performance-based is to establish the amount of the award on an objective
formula that precludes any discretion. The compensation committee continues to
review the impact of this tax provision on our incentive plans and has
determined that Section 162(m) is currently inapplicable because no named
executive officer receives compensation in excess of $1 million.
EXECUTIVE COMMITTEE IN ITS CAPACITY AS THE COMPENSATION COMMITTEE
Raymond A. McDaniel, Jr.
James M. Parker
Jack D. Ramsey, M.D.
H. T. Wilson
10
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PERFORMANCE GRAPH
The following performance graph compares cumulative total shareholder
return for our common stock, the S&P 500 Index, and the SNL Banks Index, which
is a banking index prepared by SNL Securities, Inc. and is comprised of banks
with $1 billion to $5 billion in total assets, for a five-year period (December
31, 1994 to December 31, 1999). The performance graph assumes $100 invested in
our common stock at its closing price on December 31, 1994, and in each of the
S&P 500 Index and the SNL Banks Index on the same date. The performance graph
also assumes the reinvestment of all dividends. The dates on the performance
graph represent the last trading day of each year indicated. The amounts noted
on the performance graph have been adjusted to give effect to all stock splits
and stock dividends
Corporate Performance Chart
[LINE GRAPH OMITTED AND REPLACED WITH TABLE]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
FIRST FINANCIAL BANKSHARES $100 $131 $201 $277 $256 $233
S&P 500 $100 $138 $169 $225 $290 $352
SNL Banks $100 $134 $174 $290 $290 $267
</TABLE>
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of February 1, 2000, we were not aware of any person (including any
"group" as that term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934) who is the beneficial owner of more than five percent of our common
stock. However, as of February 1, 2000, First National Bank of Abilene, First
National Bank, Sweetwater, and Stephenville Bank and Trust Co. held of record in
various fiduciary capacities an aggregate of 1,759,380 shares of our common
stock. Of the total shares held, First National Bank of Abilene had sole power
to vote 1,248,747 shares (12.52%), and First National Bank Sweetwater, had sole
power to vote 176,490 shares (1.77%). In addition, First National Bank of
Abilene shared, with other persons, the power to vote the remaining 331,291
shares (3.32%) while Stephenville Bank and Trust Co. had no authority for its
2,452 shares (0.02%). All the shares held by each subsidiary bank, which are
registered in its name as fiduciary or in the name of its nominee, are owned by
many different accounts, each of which is governed by a separate instrument that
sets forth the powers of the fiduciary with regard to the securities held in
such accounts. The board of directors historically has not attempted to, and
does not intend to attempt to in the future, exercise any power to vote such
shares. See "Proposal 1--Election of Directors--Nominees" and "--Executive
Officers" for information with respect to the beneficial ownership of our common
stock by each director nominee and named executive officer as of February 1,
2000. In the aggregate, all director nominees and executive officers as a group
(17 individuals) beneficially owned 1,215,306 shares of our common stock, or
12.18%, as of February 1, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and officers,
and persons who own more than 10% of our common stock, to file with the
Securities and Exchange Commission initial reports of our common stock ownership
and reports of changes in such ownership. A reporting person must file a Form 3
- -- Initial Statement of Beneficial Ownership of Securities within 10 days after
such person becomes a reporting person. A reporting person must file a Form 4 --
Statement of Changes of Beneficial Ownership of Securities within 10 days after
any month in which such person's beneficial ownership of securities changes,
except for certain changes exempt from the reporting requirements of Form 4.
Such exempt changes include stock options granted under a plan qualifying
pursuant to Rule 16b-3 under the Exchange Act. A reporting person must file a
Form 5 -- Annual Statement of Beneficial Ownership of Securities within 45 days
after the end of the issuer's fiscal year to report any changes in ownership
during such year not reported on a Form 4, including changes exempt from the
reporting requirements of Form 4.
The Securities and Exchange Commission's rules require our reporting
persons to furnish us with copies of all Section 16(a) reports that they file.
Based solely upon a review of the copies of such reports furnished to us, we
believe that the reporting persons have complied with all applicable Section
16(a) filing requirements for 1999 on a timely basis.
PROPOSAL 2
APPROVAL OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Your board of directors has selected Arthur Andersen LLP to serve as
independent accountants for us and our subsidiary banks for the year ended
December 31, 2000, and to serve until the next annual meeting in April 2001.
Arthur Andersen LLP has served as our independent accountants since 1990.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL
OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT ACCOUNTANTS
If you do not approve the appointment of Arthur Andersen LLP, then your
board of directors will reconsider the appointment of independent accountants.
Representatives of Arthur Andersen LLP are expected to be present at the annual
meeting. These representatives will be given the opportunity to make a
statement, if they desire to do so, and to respond to appropriate questions.
12
<PAGE>
INTEREST IN CERTAIN TRANSACTIONS
As has been true in the past, some of our officers and directors,
members of their families, and other businesses with which they are affiliated,
are or have been customers of one or more of our subsidiary banks. As customers,
they have entered into transactions in the ordinary course of business with such
banks, including borrowings, all of which were on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions on an arms-length basis and did not involve more than a
normal risk of collectibility or present any other unfavorable features to the
subsidiary banks involved. None of the transactions involving our subsidiary
banks and our officers and directors, or other businesses with which they may be
affiliated, have been classified or disclosed as nonaccrual, past due,
restructured or potential problems.
INCORPORATION BY REFERENCE
With respect to any future filings with the Securities and Exchange
Commission into which this proxy statement is incorporated by reference, the
material under the headings "Executive Committee Report on Executive
Compensation" and "Performance Graph" shall not be incorporated into such future
filings.
FORWARD-LOOKING STATEMENTS
This proxy statement contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. When used in this proxy statement, words such
as "anticipate," "believe," "estimate," "expect," "intend," "predict,"
"project," and similar expressions, as they relate to us or our management,
identify forward-looking statements. These forward-looking statements are based
on information currently available to our management. Actual results could
differ materially from those contemplated by the forward-looking statements as a
result of certain factors, including but not limited to general economic
conditions, actions taken by the Board of Governors of the Federal Reserve
System, legislative and regulatory actions and reform, competition and other
factors. Such statements reflect the current views of our management with
respect to future events and are subject to these and other risks, uncertainties
and assumptions relating to our operations, results of operations, growth
strategy and liquidity. All subsequent written and oral forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by this paragraph.
FORM 10-K
We will furnish a copy of our Form 10-K for the year ended December 31,
1999, without charge to any person whose proxy is solicited herewith upon such
person's written request therefor. This written request must contain a good
faith representation that, as of the record date for the annual meeting, the
person making the request was a beneficial owner of our common stock. This
request should be addressed to Curtis R. Harvey, Executive Vice President and
Chief Financial Officer, First Financial Bankshares, Inc., P. O. Box 701,
Abilene, Texas 79604. Exhibits to our Form 10-K will also be furnished upon the
payment of a fee, which fee shall be limited to our reasonable expenses in
furnishing these exhibits.
13
<PAGE>
SHAREHOLDER PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING
To be considered for inclusion in our proxy statement for the 2001
annual meeting, shareholder proposals must be received at our principal
executive offices no later than December 1, 2000. Under Rule 14a-4(c)(1) of the
Securities Exchange Act of 1934, if any shareholder proposal intended to be
presented at the 2001 annual meeting without inclusion in our proxy statement
for this meeting is received at our principal executive offices after February
14 , 2001, then a proxy will have the ability to confer discretionary authority
to vote on this proposal.
By Order of the Board of Directors,
KENNETH T. MURPHY, Chairman
March 30, 2000
14
<PAGE>
FIRST FINANCIAL BANKSHARES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
FIRST FINANCIAL BANKSHARES, INC.
FOR THE ANNUAL MEETING OF SHAREHOLDERS
APRIL 25, 2000
I hereby appoint Bynum Miers and David Copeland, or either one of them
acting in the absence of the other, as proxyholders, each with the power to
appoint his substitute, and hereby authorize them to represent me and to vote
for me as designated below at the annual meeting of First Financial Bankshares,
Inc., a Texas corporation, to be held on April 25, 2000, at 10:30 a.m., Abilene
time, in the Abilene Civic Center, 1100 North 6th Street, Abilene, Texas, and at
any postponement or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed
below, or if no direction is indicated below, in accordance with the
recommendation of the board of directors on each proposal. This proxy will be
voted, in the discretion of the proxyholders, upon such other business as may
properly come before the annual meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING:
(1) The election of directors:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as written to the to vote for all nominees
contrary below) listed below
Joseph E. Canon, Mac A. Coalson, David Copeland, F. Scott Dueser, Derrell E.
Johnson, Kade L. Matthews, Raymond A. McDaniel, Jr., Bynum Miers, Kenneth T.
Murphy, Dian Graves Stai, James M. Parker, Jack D. Ramsey, M.D., Craig Smith,
F.L. Stephens and Walter F. Worthington.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided .)
- -------------------------------------------------------------------------------
(2) The proposal to approve the appointment by the board of directors of
Arthur Andersen LLP as independent accountants for the year ended
December 31, 2000:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The undersigned hereby acknowledges receipt of the proxy statement
dated March 30, 2000, and hereby revokes any proxy or proxies heretofore given
to vote at the annual meeting or any adjournment thereof. Please date your proxy
and sign, exactly as your name or names appear below; when signing as attorney,
executor, administrator, trustee or guardian, please give title. Each joint
owner is required to sign.
(PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED SELF-ADDRESSED
AND POSTMARKED ENVELOPE.)
Signature(s): Date: , 2000.
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