<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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 Section 240.14a-11(c) or Section
240.14a-12
TEXAS REGIONAL BANCSHARES, 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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>
XY
TEXAS REGIONAL BANCSHARES, INC.
<TABLE>
<S> <C>
G. E. Roney
Chairman of the Board, President & 3700 North Tenth Street, Suite 301
Chief Executive Officer McAllen, Texas 78501
</TABLE>
April 16, 1996
Dear Shareholder:
You are cordially invited to attend the annual meeting of the shareholders
which will be held at 4:30 p.m. Monday, May 20, 1996 at the McAllen Country
Club, 615 Wichita, McAllen, Texas 78503.
The notice of the meeting and proxy statement on the following pages detail
the formal business scheduled for discussion. The Texas Regional Bancshares,
Inc. 1995 Annual Report is enclosed and provides you with material which reviews
the financial results for the year 1995.
In order for you to be represented at the annual shareholders' meeting,
please complete, sign, date and return the enclosed proxy form promptly. The
proxy form includes authority to vote all of your shares of Class A Voting
Common Stock.
By returning the completed proxy form, you are assured of representation.
Should you attend the annual shareholders' meeting in McAllen, you retain the
right to revoke your proxy and vote in person even though you have previously
mailed the enclosed proxy form.
Your directors, officers and employees join me in expressing our
appreciation for your continued support.
Yours very truly,
[/S/ G. E. RONEY]
G. E. RONEY
Chairman of the Board, President &
Chief Executive Officer
<PAGE>
TEXAS REGIONAL BANCSHARES, INC.
3700 NORTH TENTH STREET, SUITE 301
MCALLEN, TEXAS 78501
NOTICE OF ANNUAL MEETING MAY 20, 1996
The annual meeting of shareholders of Texas Regional Bancshares, Inc. (the
"Company") will be held at the McAllen Country Club, 615 Wichita, McAllen, Texas
78503 on May 20, 1996 at 4:30 p.m. for the following purposes:
1. TO ELECT DIRECTORS;
2. TO CONSIDER AND VOTE ON APPROVAL OF THE 1995 NONSTATUTORY STOCK
OPTION PLAN; AND
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY BE BROUGHT BEFORE
THE MEETING AND ANY POSTPONEMENTS OR ADJOURNMENTS THEREOF.
Only stockholders of record of the Company's Class A Voting Common Stock at
the close of business on April 1, 1996 are entitled to notice of and to vote at
the annual meeting and any postponements or adjournments thereof.
A copy of the Company's annual report containing financial data and a
summary of operations for 1995 accompanies this notice to each shareholder.
By Order of the Board of Directors,
[/S/ NANCY SCHULTZ]
NANCY F. SCHULTZ
Senior Vice President, Secretary
and Treasurer
McAllen, Texas
April 16, 1996
PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE AT
YOUR EARLIEST CONVENIENCE.
<PAGE>
TEXAS REGIONAL BANCSHARES, INC.
3700 NORTH TENTH STREET, SUITE 301
MCALLEN, TEXAS 78501
-------------------
PROXY STATEMENT
-----------------
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Texas Regional Bancshares, Inc. ("Texas Regional" or the
"Company"), 3700 North Tenth Street, McAllen, Texas 78501 of proxies for use at
the annual meeting of shareholders on May 20, 1996 and at any and all
postponements and adjournments of the meeting, for the purposes set forth in the
accompanying Notice of Annual Meeting. The meeting will be held at McAllen
Country Club, 615 Wichita, McAllen, Texas 78503 at 4:30 p.m. Holders of record
of the Company's Class A Voting Common stock ("Common Stock") at the close of
business on April 1, 1996 will be entitled to one vote for each share held on
all matters to come before the meeting.
The presence at the annual meeting, in person or by proxy, of the holders of
a majority of the shares of Common Stock outstanding at April 1, 1996 will
constitute a quorum. As of April 1, 1996, there were outstanding 6,196,791
shares of Common Stock. This Proxy Statement and the proxies being solicited
were first mailed or given to shareholders on or about April 16, 1996.
The Company's principal executive offices are located at 3700 North 10th
Street, Suite 301, McAllen, Texas 78501.
Any shareholder of record entitled to vote at the annual meeting may revoke
a proxy before it has been voted by delivering to the Company a written notice
of revocation or by delivering to the Company a duly executed proxy bearing a
later date or by attending the meeting, revoking your proxy and voting in
person. Attendance at the annual meeting will not, in itself, constitute
revocation of a previously granted proxy.
A shareholder entitled to vote for the election of directors can withhold
authority to vote for all nominees for directors or can withhold authority to
vote for certain nominees for directors. Abstentions are included in the
determination of the number of shares present and voting and are not counted for
purposes of determining whether a proposal has been approved. Broker nonvotes
are not included in the determination of the number of shares present and are
not counted for purposes of determining whether a proposal has been approved.
The Company will bear the cost of soliciting proxies. The Company will
reimburse brokerage houses and other custodians, nominees and fiduciaries for
their reasonable expenses incurred in forwarding soliciting materials to
beneficial owners of stock held of record by such persons. Proxies may be
solicited by directors, officers or employees of the Company personally or by
further mailing, telephone, telegram or facsimile without additional
compensation other than their regular compensation.
1
<PAGE>
ITEM 1 -- ELECTION OF DIRECTORS
A board of 9 directors is to be elected by the shareholders at the annual
meeting. The proxy holders named in the proxies being solicited will vote for
the election of the 9 persons named below, unless authorization to do so is
withheld. The Board of Directors of the Company does not contemplate that any of
the nominees will be unable to serve; however, if any nominee is unable to serve
or for good cause will not serve, the proxy holders may vote for the election of
a substitute nominee in the exercise of their own judgment.
Each person elected as a director will hold office until the next annual
meeting of shareholders and until his successor has been elected and qualified.
The name and age of each nominee and the year in which each nominee became a
director of the Company are set forth below.
All persons named below are directors of the Company at the present time.
There is no family relationship between any director, executive officer or
person nominated or chosen by the Company to become a director or executive
officer except that G. E. Roney, the Chief Executive Officer of the Company and
Texas State Bank is the father-in-law of Douglas G. Bready, a Director and
Executive Vice President of Texas State Bank. In addition, Tudor G. Uhlhorn, a
Director of Texas State Bank, is the son of Julie G. Uhlhorn, a member of the
Board of Directors of the Company and Texas State Bank; Robert R. Farris, a
Director of Texas State Bank, is the son of Robert G. Farris, a member of the
Board of Directors of the Company and Texas State Bank; and Robert F. Boggus, a
Director of Texas State Bank, is the son of Frank N. Boggus, a member of the
Board of Directors of the Company and Texas State Bank.
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION(1) AGE SINCE
- ------------------------------------ -------------------------------------------------------------- --- -----------
<S> <C> <C> <C>
Morris Atlas Senior and Managing Partner,
Atlas & Hall L.L.P. 69 1994
Frank N. Boggus Chairman of the Board,
Boggus Motor Company, Inc. 67 1983
Robert G. Farris President, Valley Transit Company 65 1983
Joe M. Kilgore Partner, McGinnis, Lochridge & Kilgore, L.L.P. 77 1983
C. Kenneth Landrum, M.D. Retired 66 1994
G. E. Roney Chairman of the Board, President and Chief
Executive Officer, Texas Regional Bancshares,
Inc. and Chairman of the Board,
Chief Executive Officer and Trust Officer,
Texas State Bank(2) 65 1985
Julie G. Uhlhorn Chairman of the Board, Rio Grande Equipment Company Inc. 65 1983
Paul G. Veale, Sr. Retired, Investments 74 1985
Jack Whetsel Retired, Investments 75 1985
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
2
<PAGE>
- ---------
(1)Each of the foregoing persons has been engaged in the principal
occupation indicated for the past five years, except that Mr. Whetsel's
principal occupation was Chairman of the Board of Broadway Hardware, Inc.
(a retail hardware, electronics and home improvements store located in
McAllen) prior to his retirement in 1993, and Dr. Landrum's principal
occupation was as a medical doctor practicing with Landrum-Chester OB-GYN
Associates prior to his retirement in 1994.
(2)Subsidiary of the Company.
Mr. Kilgore is a director of other publicly-held corporations. He serves as
a director of Reno Air, Inc. (a regional airline based in Reno, Nevada) and of
Photo Control, Inc. (a supplier of photographic equipment).
BOARD MEETINGS AND COMMITTEES
During 1995, the Board of Directors held twelve meetings and the committees
described below each held the number of meetings indicated. No director attended
fewer than 75% of the total number of meetings of the Board of Directors and
Committees on which such director served.
The Company has an Audit Committee and a Stock Option and Compensation
Committee but does not have a Nominating Committee. In addition, four of the
Company's directors serve as Trustees of the Texas Regional Bancshares, Inc.
Employee Stock Ownership Trust (the "KSOP Trust") which administers assets held
pursuant to the Company's Employee Stock Ownership Plan (with 401k provisions)
(the "KSOP Plan").
During 1995, Messrs. Boggus, Landrum and Kilgore were members of the Audit
Committee whose function is to recommend independent auditors to the Board of
Directors and review the scope of proposed audits, the adequacy of the Company's
accounting procedures and controls, and the services performed by the auditors.
The Audit Committee held three meetings in 1995.
During 1995, Messrs. Atlas, Boggus, Farris, Kilgore and Whetsel were members
of the Stock Option and Compensation Committee, which recommends to the Board of
Directors the compensation and stock options to be granted to the Company's
officers. Dr. C. Kenneth Landrum was named as an additional member of the Stock
Option and Compensation Committee in January 1996. The Stock Option and
Compensation Committee held four meetings during 1995.
The Trustees of the KSOP Trust, who hold and invest the Trust's assets, held
three meetings during 1995. The Trustees of the KSOP Trust are Messrs. Atlas,
Boggus, Kilgore and Roney.
COMPENSATION OF DIRECTORS
The Company pays directors and advisory directors $700 for each Texas
Regional Board of Directors meeting and reimburses all directors for
out-of-pocket expenses incurred in attending meetings. In addition, during 1995,
the Company paid each non-management director a bonus of $2,000 for service as a
director of the Company and Texas State Bank. Each director of the Company's
subsidiary, Texas State Bank (which includes each director of Texas Regional),
receives $400 for each Texas State Bank Board of Directors meeting.
Non-management directors during 1995 also received bonuses aggregating $2,500
for service as a director of the Bank. Mr. Roney also receives compensation from
the Company as an executive officer of the Company and its subsidiary, as
indicated below.
3
<PAGE>
EXECUTIVE OFFICERS
The Company's executive officers are elected annually by the Board of
Directors, each to serve a one-year term or until his or her successor is
elected and qualified. The name, age, year each first became an officer and
those persons chosen to become executive officers and current and proposed
position held at the Company by each appears in the following table:
<TABLE>
<CAPTION>
OFFICER
NAME AGE SINCE CURRENT POSITION
- -------------------------------- --- ----------- -----------------------------------------------
<S> <C> <C> <C>
G. E. Roney 65 1985 Chairman of the Board, President & Chief
Executive Officer
George R. Carruthers 45 1985 Executive Vice President & Chief Financial
Officer
Nancy F. Schultz 55 1985 Senior Vice President, Secretary & Treasurer
</TABLE>
The Company's subsidiary, Texas State Bank, has the following senior
executive officers. The name, age, year each first became an officer and current
position held at Texas State Bank by each appears in the following table:
<TABLE>
<CAPTION>
OFFICER
NAME AGE SINCE CURRENT POSITION
- -------------------------------- --- ----------- -----------------------------------------------
<S> <C> <C> <C>
G. E. Roney 65 1985 Chairman of the Board, Chief Executive Officer
& Trust Officer
Paul S. Moxley 51 1986 President & Secretary of the Board
Danny L. Buttery 49 1985(1) President -- Harlingen banking location
Frank A. Kavanagh 49 1992 President -- Weslaco banking location
George R. Carruthers 45 1985 Executive Vice President & Chief Financial
Officer
</TABLE>
- ---------
(1)Includes service before and since the merger of Harlingen State Bank into
Texas State Bank.
Each of the executive officers has been engaged in the principal occupation
for the past five years as previously noted and as presented above except for
Frank Kavanagh who served as president of Mid Valley Bank from August 1988 until
its merger with Texas State Bank in 1992.
COMPENSATION COMMITTEE INTERLOCKS
Prior to June 1994 Frank N. Boggus served as President of the Company and
currently serves on the Stock Option and Compensation Committee. However, Mr.
Boggus is not now, nor was he at the time of his service as an officer, an
employee of the Company. Mr. Boggus does not receive compensation from the
Company or Texas State Bank other than director fees and outside director
bonuses indicated above.
4
<PAGE>
EXECUTIVE COMPENSATION
CASH COMPENSATION
The following table sets forth information with respect to the Chief
Executive Officer and the four most highly compensated executive officers of the
Company as to whom the total annual salary and bonus for the year ended December
31, 1995 exceeded $100,000. Except for director fees paid by Texas Regional and
included in the Salary column, all executive compensation as reflected in the
following table is paid by Texas State Bank (the "Bank").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
ANNUAL COMPENSATION NUMBER OF
NAME AND --------------------------------- STOCK OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS GRANTED COMPENSATION(2)
- ------------------------------------------------ --------- ---------- ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
G. E. Roney 1995 $ 406,273 $ 175,000 65,000 $ 99,430
Chairman of the Board, President 1994 385,505 85,000 135,050 99,430
and Chief Executive Officer of the 1993 357,742 100,000 0 139,264
Company and Chairman of the Board, Chief
Executive Officer and Trust Officer of the
Bank
Paul S. Moxley 1995 154,001 28,000 4,000 13,014
President and Secretary of 1994 143,403 18,000 5,270 12,790
the Board of Directors of 1993 134,440 23,200 0 16,150
Texas State Bank
Danny L. Buttery 1995 152,448 23,000 4,000 12,000
President of the Bank's 1994 143,236 18,000 5,270 12,000
Harlingen banking location 1993 134,367 23,200 0 15,284
Frank A. Kavanagh 1995 154,408 25,000 4,000 13,500
President of the Bank's 1994 146,464 18,000 5,270 13,500
Weslaco banking location 1993 139,518 23,200 0 17,576
Douglas G. Bready 1995 99,170 20,000 3,500 10,429
Executive Vice President 1994 92,900 13,500 3,162 9,345
of the Bank's South McAllen 1993 86,546 17,200 0 11,407
banking location
</TABLE>
- ---------
(1)The amounts indicated include wages, automobile allowances and director
fees.
(2)The amounts in this column represent the amount of the Company's optional
and matching contribution for each listed executive officer under the
KSOP Plan. In addition, with regard to Mr. Roney, the amount indicated
includes the amount accrued during 1995, 1994 and 1993 in the amounts of
$87,430, $87,430 and $115,680, respectively, pursuant to the Deferred
Compensation Plan adopted by the Company for the benefit of G. E. Roney,
described in the Report of the Compensation Committee. The compensation
upon which the KSOP Plan contributions were determined does not differ
substantially from that set forth under the annual compensation table,
except for the 1993 contribution on behalf of Mr. Roney, which was
limited to the maximum allowable under the KSOP Plan and the 1994 and
1995 contributions for Mr. Roney, Mr. Moxley, Mr. Buttery and Mr.
Kavanagh, which were limited to the maximum allowable under the KSOP
Plan.
5
<PAGE>
OPTION GRANTS
The following tables set forth information concerning stock options granted
during 1995 to the executive officers named above.
<TABLE>
<CAPTION>
OPTIONS GRANTED IN LAST FISCAL YEAR
--------------------------------------------------------------------------
INDIVIDUAL GRANTS (1) POTENTIAL REALIZABLE
-------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS EXERCISE OPTION TERM (2)
OPTIONS GRANTED TO PRICE PER EXPIRATION ----------------------
NAME GRANTED EMPLOYEES SHARE DATE 5% 10%
- ----------------------------------------- ----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
G. E. Roney 65,000 72.22 $ 17.25 7-1-2002 $ 422,653 $ 974,363
Paul S. Moxley 4,000 4.44 17.25 7-1-2002 26,009 59,961
Danny L. Buttery 4,000 4.44 17.25 7-1-2002 26,009 59,961
Frank A. Kavanagh 4,000 4.44 17.25 7-1-2002 26,009 59,961
Douglas G. Bready 3,500 3.88 17.25 7-1-2002 22,758 52,466
</TABLE>
- ---------
(1)The options to purchase one-fourth of the shares listed for each of the
executive officers are exercisable commencing on the later of July 1,
1996 or the date of approval of the Plan by the shareholders of the
Company and an additional one-fourth of the shares are exercisable
beginning July 1 of each year thereafter.
(2)The dollar amounts under these columns are the result of calculations at
5% and 10% compounded annual rates. The 5% and 10% rates of growth are
for illustrative purposes only as required by the Securities and Exchange
Commission. They are not intended to forecast the future price of the
Company's Common Stock.
The options granted as described in the foregoing table were granted
pursuant to the 1995 Nonstatutory Stock Option Plan to be considered and voted
on at the annual meeting of the shareholders to be held on May 20, 1996. The
options described in the following table were granted pursuant to various stock
options plans of the Company, including the 1995 Nonstatutory Stock Option Plan.
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
----------------------------------------------------------------------------------------------
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
VALUE REALIZED OPTIONS IN-THE-MONEY OPTIONS AT
SHARES ACQUIRED (MARKET PRICE AT AT FISCAL YEAR-END FISCAL YEAR-END (1)
ON EXERCISE LESS -------------------------- ------------------------------
NAME EXERCISE EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- --------------- ----------------- ----------- ------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
G. E. Roney -- $ -- 135,050 65,000 $ 709,013 $ 0
Paul S. Moxley -- -- 5,270 4,000 27,668 0
Danny L. Buttery -- -- 5,270 4,000 27,668 0
Frank A. Kavanagh -- -- 5,270 4,000 27,668 0
Douglas G. Bready -- -- 3,162 3,500 16,601 0
</TABLE>
- ---------
(1)Calculated on the basis of the closing sale price per share for the
Common Stock of $17.25 on NASDAQ National Market System on December 31,
1995.
6
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND OTHERS
The record date for the determination of shareholders entitled to notice of
and to vote at the annual meeting was the close of business on April 1, 1996
(the "Record Date"). On the Record Date there were 6,196,791 shares of the
Company's Common Stock. Each share of Common Stock is entitled to one vote on
each matter to be acted upon at the meeting, and neither the Company's Articles
of Incorporation nor its Bylaws provide for cumulative voting rights. The
affirmative vote of the holders of a majority of the shares of Common Stock
represented at the meeting is required for the election of directors.
The following table sets forth certain information regarding the ownership
of the Company's voting securities as of the Record Date by each shareholder who
is known by the Company to own beneficially more than 5% of the Company's
outstanding voting securities, each director, each executive officer named in
the Cash Compensation Table and all executive officers and directors as a group.
The number of shares of Common Stock beneficially owned by each person as
indicated in the table is determined under rules of the Securities and Exchange
Commission and the information is not necessarily indicative of beneficial
ownership for any other purpose. Except as otherwise noted, the indicated
shareholders have sole voting and investment power over the number of shares
shown.
<TABLE>
<CAPTION>
COMMON STOCK
----------------------
NAME OF BENEFICIAL OWNER NUMBER (1) %
- ------------------------------------------------------------------------------------------ ----------- ---------
<S> <C> <C>
Morris Atlas(2)........................................................................... 70,779 1.14%
Frank N. Boggus(3)........................................................................ 136,026 2.20%
Douglas G. Bready(4)...................................................................... 16,321 .26%
Danny L. Buttery(5)....................................................................... 18,168 .29%
George R. Carruthers(6)................................................................... 12,652 .20%
James W. Collins(7)....................................................................... 665,239 10.74%
Individually and as Trustee of Vanco, Carvan, KVTC,
Cook Memorial and Vannie Cook Trusts
P. O. Box 1239
McAllen, Texas 78502
Robert G. Farris(8)....................................................................... 4,977 .08%
Frank A. Kavanagh(9)...................................................................... 10,808 .17%
Joe M. Kilgore(10)........................................................................ 187,700 3.03%
C. Kenneth Landrum, M.D.(11).............................................................. 73,928 1.19%
Paul S. Moxley(12)........................................................................ 21,467 .35%
G. E. Roney(13)........................................................................... 769,971 12.16%
3700 North Tenth Street, Suite 301
McAllen, Texas 78501
Julie G. Uhlhorn(14)...................................................................... 77,828 1.26%
Paul G. Veale, Sr.(15).................................................................... 60,908 .98%
Wanger Asset Management, L.P., of which
Wanger Asset Management Ltd. is the
general partner, of which
Ralph Wanger is the principal shareholder............................................... 411,600 6.64%
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
Jack Whetsel(16).......................................................................... 211,839 3.42%
All officers and directors as a group (14 persons)(17).................................... 1,552,433 24.44%
</TABLE>
(FOOTNOTES CONTINUE ON FOLLOWING PAGE)
7
<PAGE>
- ---------
(1)Included in the total indicated for each of Messrs. Atlas, Boggus,
Kilgore and Roney are 2,944 shares which are unallocated shares held by
the KSOP Plan. Messrs. Atlas, Boggus, Kilgore and Roney are the Trustees
for the KSOP Plan. The KSOP Plan gives the Trustees the right to vote
shares not allocated to participant's accounts. Each participant is
entitled to direct the Trustees as to the exercise of any voting rights
attributable to shares of company stock allocated to his account. In the
event voting instructions are not received from participants, the KSOP
Plan provides that the Trustees shall not vote those shares. Each
Director disclaims beneficial ownership of the 2,944 unallocated shares,
except that Mr. Roney does not disclaim beneficial ownership of those
shares later allocated to his account as an employee of the Company in
accordance with the KSOP Plan.
(2)The total includes 2,000 shares held by Mr. Atlas' wife. In addition,
included in this total are 2,944 shares with respect to which Mr. Atlas
holds shared voting power with other Trustees of the Company's KSOP Plan.
Mr. Atlas disclaims any beneficial ownership in such KSOP shares.
(3)The total includes 95,364 shares owned by five companies controlled by
Mr. Boggus. In addition, included in this total are 2,944 shares with
respect to which Mr. Boggus holds shared voting power with other Trustees
of the Company's KSOP Plan. Mr. Boggus disclaims any beneficial ownership
in such KSOP shares.
(4)The total includes 3,601 shares held by Mr. Bready's wife, 985 shares
held by an independent trustee for Mr. and Mrs. Bready's Individual
Retirement Accounts, 8,573 shares allocated to Mr. Bready's account as a
participant in the KSOP Plan and 3,162 shares Mr. Bready has the right to
acquire within 60 days through the exercise of options. Not included in
the total are 3,500 shares which represent options granted in 1995 and
not exercisable within 60 days. See "Executive Compensation -- Option
Grants."
(5)The total includes 12,898 shares allocated to Mr. Buttery's account as a
participant in the KSOP Plan and 5,270 shares Mr. Buttery has the right
to acquire within 60 days through the exercise of options. Not included
in the total are 4,000 shares which represent options granted in 1995 and
not exercisable within 60 days. See "Executive Compensation -- Option
Grants."
(6)The total includes 9,160 shares allocated to Mr. Carruthers' account as a
participant in the KSOP Plan and 3,162 shares Mr. Carruthers has the
right to acquire within 60 days through the exercise of options. Not
included in the total are 3,500 shares which represent options granted in
1995 and not exercisable within 60 days.
(7)The total includes 20,204 shares owned by a company controlled by Mr.
Collins, 8,023 shares held by an independent trustee for Mr. and Mrs.
Collins' Individual Retirement Accounts and Money Purchase Pension Plan,
4,854 shares owned by a company controlled 50% by Mr. Collins and 50% by
Mr. Roney, 593,600 shares held by trusts for the benefit of Mr. Collins'
wife, children and others and 6,122 shares held by various family members
who have given Mr. Collins power of attorney to act on their behalf.
(8)The total includes 2,384 shares held by Mr. Farris' wife. Mr. Farris
disclaims beneficial ownership of his wife's shares.
8
<PAGE>
(9)The total includes 5,538 shares allocated to Mr. Kavanagh's account as a
participant in the KSOP Plan and 5,270 shares Mr. Kavanagh has the right
to acquire within 60 days through the exercise of options. Not included
in the total are 4,000 shares which represent options granted in 1995 and
not exercisable within 60 days. See "Executive Compensation -- Option
Grants."
(10)
The total includes 8,333 shares held by Mr. Kilgore's wife, 1,156 shares
held by Mr. Kilgore as custodian for his grandchildren and 34,511 shares
held by an independent trustee for Mr. Kilgore's Individual Retirement
Account. In addition, included in this total are 2,944 shares with
respect to which Mr. Kilgore holds shared voting power with other
Trustees of the Company's KSOP Plan. Mr. Kilgore disclaims any beneficial
ownership in such KSOP shares.
(11)
The total includes 14,258 shares held by a trust for the benefit of Dr.
Landrum, 6,172 shares held by a trust for Dr. Landrum's pension plan and
53,498 shares held in a trust for the benefit of Dr. Landrum's wife. Dr.
Landrum disclaims beneficial ownership of his wife's shares.
(12)
The total includes 406 shares held by Mr. Moxley's wife, 14,209 shares
allocated to Mr. Moxley's account as a participant in the KSOP Plan and
5,270 shares Mr. Moxley has the right to acquire within 60 days through
the exercise of options. Not included in the total are 4,000 shares which
represent the options granted in 1995 and not exercisable within 60 days.
See "Executive Compensation -- Option Grants."
(13)
The total includes 16,166 shares held by Mr. Roney's wife, 5,202 shares
held by Mr. Roney's wife as trustee, 31,383 shares held by a trust for
the benefit of Mr. Roney's wife, 76,704 shares held by trusts at Texas
State Bank for which Mr. Roney and Mr. Whetsel serve as trustees along
with other individuals who are not directors of the Company but in which
they have no interest as beneficiaries, 4,854 shares owned by a company
controlled 50% by Mr. Roney and 50% by Mr. Collins and 42,202 shares
allocated to Mr Roney's account as a participant in the KSOP Plan. In
addition, included in this total are 135,050 shares Mr. Roney has the
right to acquire within 60 days through the exercise of options, and in
addition, included in this total are 2,944 shares with respect to which
Mr. Roney holds shared voting power with other Trustees of the Company's
KSOP Plan. Mr. Roney disclaims any beneficial ownership in such KSOP
shares, except that Mr. Roney does not disclaim beneficial ownership of
those shares later allocated to his account as an employee of the Company
in accordance with the KSOP Plan. Not included in the total are 65,000
shares which represent options granted in 1995 and not exercisable within
60 days. See "Executive Compensation -- Option Grants."
(14)
The total includes 27,016 shares which represent Mrs. Uhlhorn's
beneficial interests in a trust and 26,854 shares held by a partnership
owned 30% by Mrs. Uhlhorn.
(15)
The shares indicated are owned by a limited partnership controlled by Mr.
Veale.
(16)
The total includes 108,087 shares held by trusts at Texas State Bank for
which Mr. Whetsel and Mr. Roney serve as trustees along with other
individuals who are not directors of the Company but in which they have
no interest as beneficiaries and 103,752 shares held in a trust for the
benefit of Mr. Whetsel.
(17)
Includes 1,130,592 shares as to which directors and officers have sole
voting power, 421,841 shares as to which they have shared voting power,
1,038,382 shares as to which they have sole investment
9
<PAGE>
power and 514,051 shares as to which they have shared investment power.
In addition, included in this total are 156,129 shares the officers have
a right to acquire within 60 days through the exercise of options.
STOCK OPTION AND COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND
THE PERFORMANCE GRAPH SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH
FILINGS.
REPORT OF THE COMPENSATION COMMITTEE
This Report of the Stock Option and Compensation Committee of the Board of
Directors of Texas Regional Bancshares, Inc. (the "Compensation Committee" or
the "Committee") describes the basis upon which the Committee has made
recommendations concerning the 1995 compensation payable to the officers of the
Company and its wholly-owned subsidiary, Texas State Bank. It has been the duty
of the Compensation Committee to consider the compensation of all officers,
including the officers named in the compensation tables contained in the Proxy
Statement included with the Notice of Annual Meeting of Shareholders of the
Company scheduled for May 1996. During 1995, the recommendations of the
Compensation Committee were accepted by the Board of Directors of the Company
and by the Board of Directors of the Company's wholly-owned subsidiary, Texas
State Bank.
COMPENSATION PHILOSOPHY
The policy of the Compensation Committee is to make compensation decisions
on the basis of long-term growth and performance objectives of the Company. As
in 1994, the Compensation Committee gave particular emphasis to the Company's
growth in total assets and book value in its consideration of compensation
decisions. For 1995, as in recent prior years, the compensation program has been
based on the following principles:
*The Company is committed to providing a competitive pay program that helps
attract and retain quality personnel. To ensure that pay is competitive,
the Company has regularly compared its pay practices with those of other
financial institutions, particularly banks and bank holding companies, in
the markets served by the Company, and from time to time modifies pay
parameters based on this review.
*Officers and other key management personnel rewards are based upon a
combination of performance company-wide, performance of the business unit
for which they are responsible, and individual performance. Among the
performance standards reviewed in 1995 were sustained growth objectives and
an ability to maximize profitability of individual business units, or
contain costs within those units. For officers for whom community
relationships are significant, compensation decisions have also been
considered in light of the activities undertaken by those officers and the
sense of the Board members with respect to the community perceptions of the
officers. Those officers with supervisory authority have also been
evaluated, and compensation in part determined, on their ability to
interact both with those persons who work for them and those persons who
are required to work with them. In each case, the performance criteria are
subjective and therefore the compensation decisions are not based upon a
mathematical application of the performance criteria.
10
<PAGE>
*The Company has also strived for a recognition of the success of the
organization as a whole in matters relative to compensation of individual
officers. At those times when the organization's profitability and growth
are strong, the Company believes that the officers and other employees of
the organization should be entitled to compensation adjustments as a result
of the availability of resources.
The Company has had an ongoing program of evaluation of employees and
executives, in which senior officers set objectives and goals for junior
officers and other employees reporting to them, evaluate the employees and
officers on performance, and compare the results to results of others in the
Company. Managers, including the Chief Executive Officer, review the results of
individual officers and employees, and consider other evaluation information in
making recommendations to the Compensation Committee as to compensation for the
officers of the Company and the Bank. The Committee considered these
recommendations for purposes of 1995 compensation decisions. The Compensation
Committee then made a recommendation to the Board of Directors of each of the
Company and Texas State Bank on the basis of the evaluations as presented with
respect to management other than the Chief Executive Officer, and made a
separate recommendation with respect to the compensation of the Chief Executive
Officer based in part on the evaluation of the Chief Executive Officer made by
the Board of Directors. In 1995, the recommendations of the Compensation
Committee were accepted by the Board of Directors of the Company and the Bank.
In evaluating compensation, the Company is aware of the limitations on
deductibility of compensation paid to highly compensated persons as imposed by
Internal Revenue Code section 162(m). While the Company does not at this time
have any executive officer within the range of compensation for which
limitations are imposed by that section, it is the policy of the Compensation
Committee to review the impact of that section, and the requirements imposed on
performance-based compensation described in that section, in the context of any
qualifying compensation that may be proposed to be paid in the future.
COMPENSATION PROGRAM COMPONENTS
The Compensation Committee regularly reviews the Company's compensation
programs to ensure that the components of the compensation program will allow
the Company to successfully attract and retain key employees. At the present
time, the compensation program components available to the employees of the
Company are:
BASE SALARY. Base Salary levels are largely determined based upon
comparison with peer group members as well as other potential competitors
for the officers. Actual salaries are based upon individual performance
contributions in accordance with the compensation philosophy of the Company.
BONUS. The officers of the Company in 1995 participated in an annual
bonus program. In the past, bonuses have been considered quarterly or as of
the end of the year, based on profitability of the Company and the profit
center for which the particular officer is responsible. Among the factors
considered in awarding bonuses are growth of deposits, profitability and
containment of costs, as well as other factors considered important by the
Company.
EMPLOYEE STOCK OWNERSHIP PROGRAM. The Committee believes that
participation in the employee stock ownership program of the Company
encourages the officers and other employees of the Company to work toward
the long-term goals and objectives of the Company. Decisions relative to
contributions to the employee stock ownership program are made annually,
with the aggregate amount based on a resolution of the Board of Directors,
with individual allocations based on a formula. Any employee who
11
<PAGE>
is employed by the Company as of December 31, 1995 was eligible to
participate in contributions to the Plan for 1995. During 1995, the Plan was
amended to provide that the definition of service under the Plan, and
crediting of service for purposes of vesting under the Plan, would include
periods of employment by First National Bank of South Texas for employees at
the Rio Grande City and Roma, Texas branches acquired during 1995 by Texas
State Bank.
STOCK OPTIONS. The Compensation Committee continues to believe that
stock options provide an appropriate incentive to encourage management,
particularly senior management, to maximize shareholder returns. With that
goal in mind, the Committee during 1995 proposed a new nonstatutory stock
option plan, the 1995 Nonstatutory Stock Option Plan, providing for grant of
options to purchase up to a maximum of 90,000 shares of the Company's common
stock to key employees. The Board of Directors approved the plan and has
recommended its approval by the shareholders at the annual meeting to be
held in May 1996. Pursuant to this plan, the Board granted employees of the
Company options to purchase an aggregate of 90,000 shares of the
Corporation's Class A Voting Common Stock at a price of $17.25 per share
(the closing price of the Corporation's stock for transactions effected on
the NASDAQ National Market System on the date of grant). Options to purchase
an aggregate of 65,000 shares were granted to the Company's Chief Executive
Officer, Glen E. Roney, and options to purchase an aggregate of 25,000
shares were granted to other key officers and employees of the Company. The
options granted during 1995 are exercisable over a four-year vesting
schedule, commencing the later of July 1996 or the date of approval of the
Plan by the shareholders. The options are exercisable at any time prior to
July 1, 2002. Options granted during 1995 and 1994 were the only options
outstanding during 1995.
DEFERRED COMPENSATION PLAN. During 1993, the Company adopted a Deferred
Compensation Plan for the Company's Chief Executive Officer, Glen E. Roney.
The Deferred Compensation Plan provides for payments of $100,000 per year
for fifteen years beginning October 29, 2002, with such payments to be made
to his designated beneficiary in the event of his death prior to full
payout. The Plan benefits will be accelerated in the event that Mr. Roney
should die before October 29, 2002, while still in the employ of the Company
(with certain exceptions). The Company has established a Trust from which
the deferred compensation payments are to be made, which is to be funded in
an amount to be determined periodically at the discretion of the Board of
Directors. An aggregate of $87,430 was transferred by the Company to the
Trust during 1995. Funding of the Trust is to be accelerated in the event of
the occurrence of certain defined events, including a change of control of
the Company. During 1995, the Deferred Compensation Plan and Trust were
amended for certain conforming amendments related to obtaining a favorable
determination letter as to the tax status of the Plan and Trust, and to
change the identity of the trustee of the Trust.
DISCUSSION OF CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation of the Chief Executive Officer of the Company for fiscal
year 1994 was reviewed in connection with his individual performance with
respect to the Company. Among qualitative and quantitative measures of the
Company's performance considered by the Compensation Committee in making
recommendations as to the Chief Executive Officer's compensation were the growth
of the Company, both from internal sources and from acquisition of the Rio
Grande City and Roma branches from First National Bank of South Texas,
increasing profitability of the Company and its subsidiary, the capital of the
Company and its subsidiary in relation to regulatory guidelines, the ability of
the Company and its senior management to work cooperatively with regulatory
authorities, the morale of personnel in the organization, and perception of the
Compensation Committee as to the acceptance of the organization in the
community.
12
<PAGE>
Specifically, in making compensation recommendations with respect to the
Chief Executive Officer for compensation payable during 1995, the Compensation
Committee considered as significant the fact that book value per share of the
Company's Class A Voting Common Stock increased from $7.73 at December 31, 1993,
to $9.00 at December 31, 1994, to $10.12 at December 31, 1995, and that the
ratio of net income to average total assets increased from 1.34% for the year
ended December 31, 1993, to 1.43% for the year ended December 31, 1994. The
Compensation Committee did not consider market price for the stock during 1994
to be an appropriate factor for consideration in the context of compensation
recommendations, due primarily to the relatively thin market for the Company's
stock. However, the Compensation Committee did consider the expanded role of the
Chief Executive Officer as spokesperson for the Company in the public market.
The Compensation Committee also reviewed the base salary and bonus for the
Chief Executive Officer in the context of the compensation packages available
for executives of similar-sized financial institutions, and the Committee
considered the significant dependence of the organization on the continued
involvement of the Chief Executive Officer with the organization, and the need
to treat the Chief Executive Officer fairly in light of the responsibilities he
has undertaken with respect to the growth and development of the organization.
In part as a result of that review, the Compensation Committee recommended and
Board of Directors granted additional stock options to Glen E. Roney as
described above to encourage Mr. Roney's continued involvement with and service
to the Company.
Compensation Committee of the Board of Directors of Texas Regional
Bancshares, Inc.
Joe M. Kilgore, Chairman
Morris Atlas
Frank N. Boggus
Robert G. Farris
C. Kenneth Landrum, M.D.
Jack Whetsel
13
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the performance of the Company's
Common Stock to the S&P 500 Index and to the CRSP Total Return Index for NASDAQ
Bank Stocks, which has been prepared by The Center for Research in Securities
Prices (CRSP) at the University of Chicago for NASDAQ, for the last five years.
The graph assumes that the value of the investment of the Company's Common Stock
and each index was $100 at December 31, 1990 and that all dividends were
reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TEXAS REGIONAL S&P 500 INDEX NASDAQ BANK STOCKS INDEX
<S> <C> <C> <C>
1990 100 100 100
1991 100 131 164
1992 129 141 239
1993 192 154 272
1994 206 157 271
1995 293 215 404
</TABLE>
14
<PAGE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Some of the Company's officers and directors and their related parties have
had, in the ordinary course of business, banking transactions with the
subsidiary of the Company. All such transactions have been in the ordinary
course of business, on substantially the same terms including interest rates and
collateral, as those prevailing for comparable transactions with others, and
have not included more than the normal risk of collectibility or other
unfavorable features.
Texas State Bank, along with other banks in the Rio Grande Valley, sells
credit life insurance for Texas State Life Insurance Company. Texas State Life
Insurance Company is owned fifty percent by Mr. G. E. Roney and fifty percent by
Mr. James W. Collins. Mr. Roney is the Chairman of the Board, President and
Chief Executive Officer of the Company and Mr. Collins, individually and as
Trustee of certain Trusts, holds in excess of 5% of the Company's outstanding
voting securities. Commission fee income received by Texas State Bank from Texas
State Life Insurance Company totaled $82,475 for the year ended December 31,
1995.
Mr. Joe Kilgore, a Director of the Company, is a partner in the law firm of
McGinnis, Lochridge & Kilgore, L.L.P. His firm received fees for legal services
rendered to the Company and its subsidiary during 1995, but the amount of the
fees received did not exceed either 5% of his firm's gross revenues for 1995 or
5% of the Company's total operating expenses for the year ended December 31,
1995.
Mr. Morris Atlas, a Director of the Company, is a partner in the law firm of
Atlas & Hall L.L.P. His firm received fees for legal services rendered to the
Company and its subsidiary during 1995, but the amount of the fees received did
not exceed either 5% of his firm's gross revenues for 1995 or 5% of the
Company's total operating expenses for the year ended December 31, 1995.
During 1995, Texas State Bank purchased a tract of real estate from Scott &
White Memorial Hospital and Scott, Sherwood & Brindley Foundation ("Scott &
White"), a Texas nonprofit corporation, for $227,000. Texas State Bank intends
to hold the property for possible future development as a branch bank facility.
Mr. Roney and Mr. Kilgore each serve as members of the Board of Directors of
Scott & White.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished
to the Company during its most recent fiscal year and Form 5 and amendments
thereto furnished to the Company with respect to its most recent fiscal year,
and written representations from reporting persons that no Form 5 was required,
the Company believes that no officer or director has failed to report
transactions in the Company's securities on a timely basis.
INDEPENDENT PUBLIC ACCOUNTANTS
On August 14, 1995, the Company engaged KPMG Peat Marwick to perform an
examination of its financial statements for the year ended December 31, 1995. It
is the normal practice of the Board of Directors to select its independent
public accountants at a Board meeting subsequent to the annual meeting. The
Audit Committee has not yet made a recommendation to the Board of Directors
concerning the appointment of auditors for the year ending December 31, 1996. It
is anticipated that the Audit Committee will make their recommendation for the
selection of the auditors to the Board of Directors at a meeting of the Board
held subsequent to the annual meeting.
15
<PAGE>
A representative of KPMG Peat Marwick is expected to be present at the
annual meeting of shareholders with the opportunity to make a statement if such
firm desires to do so and to respond to appropriate questions.
ITEM 2 -- APPROVAL OF 1995 NONSTATUTORY STOCK OPTION PLAN
On December 12, 1995, the Board of Directors adopted, subject to approval by
the Company's shareholders, the 1995 Nonstatutory Stock Option Plan (the
"Plan"). The Plan is designed to provide a special incentive to selected key
employees of the Company and its subsidiary. The Plan is designed to accomplish
this purpose by offering such employees an opportunity to purchase shares of the
Common Stock of the Company.
DESCRIPTION OF THE PLAN
The following summary of the Plan is qualified in its entirety by reference
to the full text of the Plan which is attached to this Proxy Statement as
Exhibit A.
The Plan is for the benefit of key employees of the Company and its
subsidiaries. No option may be granted under the Plan after December 1, 2005,
but options theretofore granted may extend beyond that date. Subject to
adjustment as provided in the Plan, the number of shares of Common Stock of the
Company which may be issued under the Plan may not exceed 90,000 in the
aggregate. The stock to be issued under the Plan may constitute an original
issue of authorized stock or may consist of previously issued stock acquired by
the Company, as determined by the Board of Directors.
The Plan will be administered by a Nonstatutory Option Committee established
by the Board of Directors of the Company to consist of three or more members,
one of whom shall be neither an officer nor an employee of the Company. The
committee will have authority, consistent with the Plan, to determine which of
the key employees of the Company and its subsidiaries will be granted options,
to determine when options will be granted and the number of shares of Common
Stock to be subject to each option, to determine the option price of the shares
subject to each option and the method of payment of such price, to determine the
time or times when each option becomes exercisable and the duration of the
exercise period, subject to limitations contained in the Plan, to prescribe the
form or forms of the instruments evidencing any options granted under the Plan
and of any other instruments required under the Plan and to change such forms
from time to time, to adopt, amend and rescind rules and regulations for the
administration of the Plan and the options and for its own acts and proceedings,
and to decide all questions and settle all controversies and disputes which may
arise in connection with the Plan. All decisions, determinations and
interpretations of the committee shall be binding on all parties concerned.
The Board of Directors of the Company appointed the Company's Stock Option
and Compensation Committee as the Nonstatutory Option Committee for purposes of
the Plan.
OPTION GRANTS
Option grants under the Plan for an aggregate of 90,000 shares were made
December 12, 1995 at a purchase price equal to the closing price of the Common
Stock on the NASDAQ National Market System that date.
The following table and the Option Grants table under "Executive
Compensation" set forth information concerning the options granted under the
Plan on December 12, 1995.
16
<PAGE>
1995 NONSTATUTORY STOCK OPTION PLAN
<TABLE>
<CAPTION>
DOLLAR
NAME NUMBER OF SHARES VALUE(1)
- --------------------------------------------------------------------- ----------------- --------------
<S> <C> <C>
G. E. Roney 65,000 $ 308,750
Paul S. Moxley 4,000 19,000
Danny L. Buttery 4,000 19,000
Frank A. Kavanagh 4,000 19,000
Douglas G. Bready 3,500 16,625
All current executive officers as a group(2) 90,000 427,500
</TABLE>
- ---------
(1)Based on the closing price of $22.00 as of March 31, 1996.
(2)Represents all options subject to grant under the Plan.
One-fourth of the shares for which options were granted are exercisable
commencing on the later of July 1, 1996 or the date of approval of the Plan by
the shareholders of the Company. Provided that the Plan has received the
approval of the shareholders of the Company, options to purchase an additional
one-fourth of the shares for which options were granted are exercisable
beginning July 1 of each year thereafter. In each case the options granted are
exercisable thereafter at any time prior to July 1, 2002.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The options granted under the Plan will be non-statutory options not
intended to qualify under Section 422 of the Internal Revenue Code of 1986, as
amended. The grant of options will generally not result in taxable income to the
officer or a tax deduction for the Company. The exercise of an option will
result in taxable ordinary income to the officer and a corresponding deduction
for the Company, in each case equal to the difference between the fair market
value of the shares on the date the option was granted (the option price) and
fair market value on the date the option was exercised.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1995
NONSTATUTORY STOCK OPTION PLAN. PROXIES SOLICITED HEREBY WILL BE VOTED IN FAVOR
OF ADOPTION OF THE PLAN UNLESS THE STOCKHOLDER SPECIFIES OTHERWISE.
SHAREHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
In order to be included in the proxy materials for the 1997 annual meeting
of shareholders, shareholder proposals for the 1997 annual meeting of
shareholders must be received by the Company on or before November 6, 1996. Any
shareholder proposal must also comply with applicable requirements of the proxy
solicitation rules of the Securities and Exchange Commission.
OTHER BUSINESS
The Board of Directors does not know of any other matters likely to be
brought before the meeting for action. However, if any matters do properly come
before the meeting, it is intended that the enclosed proxy will be voted in
accordance with the judgment of the persons voting this proxy.
17
<PAGE>
FORM 10-K
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS BEING
SOLICITED, UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995, REQUIRED
TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO. REQUESTS FOR COPIES OF SUCH REPORT SHOULD BE
DIRECTED TO ANN M. SEFCIK, CONTROLLER AND ASSISTANT SECRETARY, TEXAS REGIONAL
BANCSHARES, INC., P. O. BOX 5910, MCALLEN, TEXAS 78502-5910.
BY ORDER OF THE BOARD OF DIRECTORS,
[/S/ NANCY SCHULTZ]
NANCY F. SCHULTZ
Senior Vice President, Secretary and
Treasurer
April 16, 1996
18
<PAGE>
EXHIBIT A
TEXAS REGIONAL BANCSHARES, INC.
1995 NONSTATUTORY STOCK OPTION PLAN
PURPOSE. The purpose of the 1995 Nonstatutory Stock Option Plan
(hereinafter "Plan") is to provide a special incentive to selected key employees
of Texas Regional Bancshares, Inc. (hereinafter "Company") and its subsidiaries
to promote the Company's business. The Plan is designed to accomplish this
purpose by offering such employees an opportunity to purchase shares of the
Class A voting common stock (hereinafter "Common Stock") of the Company. For
purposes of the Plan a subsidiary is any corporation in which the Company owns,
directly or indirectly, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock or over which the Company
has effective operating control.
II.
ADMINISTRATION. The Plan shall be administered by a Nonstatutory Option
Committee (hereinafter "Committee") to be established by the Board of Directors
of the Company. The Committee shall consist of three or more members, one of
whom shall be neither an officer nor an employee of the Company. The Committee
shall have authority, consistent with the Plan,
(a) to determine which of the key employees of the Company and its
subsidiaries shall be granted options;
(b) to determine the time or times when options shall be granted and the
number of shares of Common Stock to be subject to each option;
(c) to determine the option price of the shares subject to each option
and the method of payment of such price;
(d) to determine the time or times when each option becomes exercisable
and the duration of the exercise period, subject to the limitations
contained in Paragraph VI(b);
(e) to prescribe the form or forms of the instruments evidencing any
options granted under the Plan and of any other instruments required under
the Plan and to change such forms from time to time;
(f) to adopt, amend and rescind rules and regulations for the
administration of the Plan and the options and for its own acts and
proceedings; and
(g) to decide all questions and settle all controversies and disputes
which may arise in connection with the Plan. All decisions, determinations
and interpretations of the Committee shall be binding on all parties
concerned.
III.
PARTICIPANTS. The participants in the Plan shall be key employees of the
Company or of any of its subsidiaries, whether or not also officers or
directors, as may be selected from time to time by the Committee in its
discretion. Directors who are not employees shall not be eligible. In any grant
of options after the initial grant, employees who were previously granted
options or sold shares under the Plan may be included or excluded.
A-1
<PAGE>
IV.
LIMITATIONS. No option shall be granted under the Plan after December 1,
2005, but options theretofore granted may extend beyond that date. Subject to
adjustment as provided in Section VIII of the Plan, the number of shares of
Common Stock of the Company which may be issued under the Plan shall not exceed
90,000 in the aggregate. To the extent that any option granted under the Plan
shall expire or terminate unexercised or for any reason become unexercisable as
to any shares subject thereto, such shares shall thereafter be available for
further grants under the Plan, within the limit specified above.
V.
STOCK TO BE ISSUED. Stock to be issued under the Plan may constitute an
original issue of authorized stock or may consist of previously issued stock
acquired by the Company, as shall be determined by the Board of Directors. The
Board of Directors and the proper officers of the Company shall take any
appropriate action required for such issuance.
VI.
TERMS AND CONDITIONS OF OPTIONS. All options granted under the Plan shall
be subject to the following terms and conditions (except as provided in Section
VII) and to such other terms and conditions as the Committee shall determine to
be appropriate to accomplish the purposes of the Plan:
(a) OPTION PRICE. The option price under each option shall be
determined by the Committee and may be more, equal to or less than the then
current fair market value of the Company's Class A common stock as the
Committee may deem to be appropriate, but in no event may such price be less
than par value; provided, however, that in the event the Committee shall
determine to grant an option at less than the then current fair market value
of the Company's Class A common stock, such option shall not be granted
without the prior approval of the Board of Directors.
(b) PERIOD OF OPTIONS. The period of an option shall not exceed ten
years from the date of grant.
(c) EXERCISE OF OPTIONS.
(i) Each option shall be made exercisable at such time or times,
whether or not in installments, as the Committee shall prescribe at the
time the option is granted.
(ii) A person electing to exercise an option shall give written
notice to the Company, as specified by the Committee, of his election and
of the number of shares he has elected to purchase, such notice to be
accompanied by such instruments or documents as may be required by the
Committee, and unless otherwise directed by the Committee shall at the
time of such exercise tender the purchase price of the shares he has
elected to purchase.
(d) PAYMENT FOR ISSUANCE OF SHARES. Upon exercise of any option
granted hereunder, payment in full shall be made at the time of such
exercise for all such shares then being purchased.
The Company shall not be obligated to issue any shares unless and until,
in the opinion of the Company's counsel, (i) all applicable laws and
regulations have been complied with, (ii) in the event the outstanding
Common Stock is at the time listed upon any stock exchange, the shares to be
issued have been listed or authorized to be added to the list upon official
notice of issuance upon such exchange, and (iii) all other legal matters in
connection with the issuance and delivery of shares have been approved by
the Company's counsel. Without limiting the generality of the foregoing, the
Company may require
A-2
<PAGE>
from the participant such investment representation or such agreement, if
any, as counsel for the Company may consider necessary in order to comply
with the Securities Act of 1933 as then in effect, and may require that the
participant agree that any sale of the shares will be made only in such
manner as is permitted by the Committee and that he will notify the Company
when he intends to make any disposition of the shares whether by sale, gift
or otherwise. The participant shall take any action reasonably requested by
the Company in such connection. A participant shall have the rights of a
stockholder only as to shares actually acquired by him under the Plan.
(e) NONTRANSFERABILITY OF OPTIONS. No option may be transferred by the
participant otherwise than by will or by the laws of descent and
distribution, and during the participant's lifetime the option may be
exercised only by him.
(f) CONSIDERATION FOR OPTION. Each person receiving a stock option
must agree that he will remain in the employ of the Company upon the terms
of employment then existing (unless different terms are mutually agreed
upon) for at least one (1) year from (i) the date of the granting of the
option or (ii) the date of expiration of the then current employment
contract, whichever is later, subject to the right of the Company to
terminate his employment at any time.
(g) TERMINATION OF EMPLOYMENT. If the employment of a participant
terminates for any reason other than his death or permanent disability (as
hereinafter defined), he may thereafter exercise his option as provided
below, but only to the extent he was entitled to exercise the option on the
date when his employment terminated. If such termination of employment is
voluntary on the part of the participant, he may exercise his option only
within ten days after the date of termination of his employment (unless a
longer period not in excess of three months is allowed by the Committee). If
such termination of employment is involuntary on the part of the
participant, he may exercise his option only within three months after the
date of termination of his employment. In no event, however, may such
participant exercise his option at a time when the option would not be
exercisable had the participant remained an employee. For purposes of this
subsection (g), a participant's employment shall not be considered
terminated in the case of sick leave or other bona fide leave of absence
approved by the Company or a subsidiary, or in the case of a transfer to the
employment of a subsidiary or to the employment of the Company. Anything
herein to the contrary notwithstanding, an option may be exercised only to
the extent exercisable on the date of termination of employment by death,
disability or otherwise.
(h) RETIREMENT. If prior to the expiration date of his option an
optionee shall retire with the Company's consent, such option may be
exercised in the same manner as if the optionee had continued in the
Company's employ; provided however, the Committee may terminate all
unexercised options if it shall determine that the retired optionee had
engaged in any activity detrimental to the Company's interests.
(i) DEATH OR PERMANENT DISABILITY. If a participant dies or becomes
"permanently disabled" (as hereinafter defined) at a time when he is
entitled to exercise an option, then at any time or times within one (1)
year after his death or determination of permanent disability (or such
further period as the Committee may allow) such option may be exercised, as
to all or any of the shares which the participant was entitled to purchase
immediately prior to his death or determination of permanent disability, by
his executor or administrator or the person or persons to whom the option is
transferred by will or the applicable laws of descent and distribution (in
the case of death) or by his legal guardian (in the case of permanent
disability), and except as so exercised such option shall expire at the end
of such period. In no event, however, may an option be exercised after the
expiration of the option period.
A-3
<PAGE>
For purposes of the Plan, the term "permanent disability" shall mean any
physical and/or mental condition which, in the sole discretion of a majority of
the Committee, renders the participant unable to discharge his duties in the
employ of the Company or any subsidiary for a period of ninety (90) consecutive
days.
VII.
REPLACEMENT OPTIONS. The Company may grant options under the Plan on terms
differing from those provided for in Section VI where such options are granted
in substitution for options held by employees of other corporations who
concurrently become employees of the Company or a subsidiary as the result of a
merger, consolidation or other reorganization of the employing corporation with
the Company or subsidiary, or the acquisition by the Company or a subsidiary of
the business, property or stock of the employing corporation. The Committee may
direct that the substitute options be granted on such terms and conditions as
the Committee considers appropriate in the circumstances.
VIII.
CHANGES IN STOCK. In the event of a stock dividend, stock split or
recapitalization or merger in which the Company is the surviving corporation, or
other similar capital change, the number and kind of shares of stock of the
Company to be subject to the Plan and to options then outstanding or to be
granted thereunder, the maximum number of shares which may be issued or sold
under the Plan, the option price and other relevant provisions shall be
appropriately adjusted by the Board of Directors of the Company, the
determination of which shall be binding on all persons.
IX.
EMPLOYMENT RIGHTS. The adoption of the Plan does not confer upon any
employee of the Company or a subsidiary any right to continue employment with
the Company or a subsidiary, as the case may be, nor does it interfere in any
way with the right of the Company or a subsidiary to terminate the employment of
any of its employees at any time.
X.
AMENDMENTS. The Committee may at any time discontinue granting options
under the Plan. The Board of Directors of the Company may at any time or times
amend the Plan or amend any outstanding option or options for the purpose of
satisfying the requirements of any changes in applicable laws or regulations or
for any other purpose which may at the time be permitted by law, provided that
except to the extent required or permitted under Section VIII no such amendment
shall, without the approval of the stockholders of the Company, increase the
maximum number of shares available under the Plan, or without the consent of the
participant void or diminish options previously granted, nor increase or
accelerate the conditions and actions required for the exercise of the same,
except that nothing herein shall limit the Company's right to call stock issued
for deferred payment to be evidenced by promissory note, where the participant
is in default of his obligations on such note.
IN WITNESS whereof, this Plan shall be effective upon adoption by the
Company's Board of Directors and shall continue in effect until its termination
is recommended by said Board.
A-4
<PAGE>
The undersigned hereby appoints Frank N.
Boggus, G. E. Roney, and Jack
TEXAS REGIONAL BANCSHARES, INC.
Whetsel, and each of them, proxies, with
full power of substitution, to vote in
ANNUAL MEETING OF SHAREHOLDERS -- MAY 20,
1996
the manner indicated on the reverse side
hereof on proposal (1) and (2) and in
PROXY SOLICITED BY BOARD OF DIRECTORS
their discretion on such other business as
may properly come before the meeting, any
and all of my (our) shares of record of
Texas Regional Bancshares, Inc. Class A
Voting Common Stock at the annual meeting
of shareholders to be held May 20, 1996 at
the McAllen Country Club, 615 Wichita,
McAllen, Texas 78503 and at all
postponements and adjournments of the
meeting.
Dated ______________________________, 1996
__________________________________________
__________________________________________
Signatures
Signature(s) should agree with the name(s)
to the left.
<PAGE>
(PLEASE MARK, DATE, SIGN AND RETURN IN THE ENCLOSED ENVELOPE)
UNLESS OTHERWISE SPECIFIED, PROXIES WILL BE VOTED FOR PROPOSAL (1) AND (2)
The Board of Directors recommends a vote FOR proposal (1) and (2)
(1) Election of Directors
<TABLE>
<S> <C>
/ / 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 to vote for any individual nominee strike
a line through the nominee's name in the list below.
Morris Atlas, Frank N. Boggus, Robert G. Farris, Joe M. Kilgore, C. Kenneth
Landrum, M.D.,
G. E. Roney, Julie G. Uhlhorn, Paul G. Veale, Sr. and Jack Whetsel
(2) Approval of the 1995 Nonstatutory Stock Option Plan
/ / FOR / / AGAINST / / ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE BOARD OF DIRECTORS' RECOMMENDATIONS. THIS PROXY
ALSO CONFERS DISCRETIONARY AUTHORITY TO VOTE FOR THE ELECTION OF ANY PERSON AS A
DIRECTOR FOR WHICH A NOMINEE IS NAMED ABOVE IF SUCH NOMINEE IS UNABLE TO SERVE
OR FOR GOOD CAUSE WILL NOT SERVE.
