DEF 14A of Prosperity Bancshares Inc, Mar 14, 2024

DEF 14A of Prosperity Bancshares Inc

Filed Mar 14, 2024 · FY20230000950170-24-031135

Open on EDGAR

  1. What percentage of the vote is required to elect each director nominee?

    What percentage of the vote is required to elect each director nominee? Assuming the presence of a quorum, the five Class II director nominees who receive the most votes from the holders of the shares of our Common Stock for their election will be elected — i.e., the affirmative vote of the holders of a plurality of the shares of Common Stock voting at the Meeting is required for the election of the director nominees (Item 1). However, in an uncontested election, any nominee for election who receives a greater number of “withhold” votes than votes “for” election will promptly tender to the Board his or her offer of resignation. If such an event were to occur, the Nominating and Corporate Governance Committee of the Board will consider the resignation offer and make a recommendation to the Board whether to accept or reject the resignation offer based on all factors it deems relevant. The Board will act on the Nominating and Corporate Governance Committee’s recommendation within 90 days following certification of the shareholder vote.

  2. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS

  3. Election Procedures; Term of Office

    Election Procedures; Term of Office The size of the Board is currently set at fourteen members, with fourteen directors presently serving. In accordance with the Company's Bylaws, members of the Board are divided into three classes, Class I, Class II and Class III. The members of each class are elected for a term of office to expire at the third succeeding annual meeting of shareholders following their election. The term of office of the current Class II directors expires at the Meeting. The terms of the Class I and Class III directors expire at the annual meeting of shareholders in 2026 and 2025, respectively. The Nominating and Corporate Governance Committee (the “Governance Committee”) has recommended to the Board, and the Board has approved, the nomination of James A. Bouligny, W. R. Collier, Dr. Laura Murillo, Robert Steelhammer and H. E. Timanus, Jr. as Class II directors. The five Class II nominees, if elected at the Meeting, will serve until the annual meeting of shareholders in 2027. If all nominees director are elected at the Meeting, the composition of the Board will be four Class I directors, five Class II directors and five Class III directors. Proxies cannot be voted for a greater number of persons than the number of nominees named. The five Class II nominees receiving the affirmative vote of the holders of a plurality of the shares of Common Stock represented at the Meeting will be elected. However, the Company’s Bylaws provide that, in an uncontested election, any nominee for election who receives a greater number of “withhold” votes than votes “for” election will promptly tender to the Board his or her offer of resignation. If such an event were to occur, the Governance Committee will consider the resignation offer and make a recommendation to the Board whether to accept or reject the resignation offer based on all factors it deems relevant, including the stated reasons, if any, why shareholders withheld their votes from the director, the length of service and qualifications of the director, the director’s contributions to the Company and potential adverse consequences of the resignation (such as failure to comply with the listing standards of the New York Stock Exchange (“NYSE”) and SEC rules and regulations). The Board will act on the Governance Committee’s recommendation within 90 days following certification of the shareholder vote. Unless the authority to vote for the election of directors is withheld as to one or more of the nominees, and unless the proxy specifies otherwise, all shares of Common Stock represented by proxy will be voted FOR the election of the nominees. If the authority to vote for the election of directors is withheld as to one or more but not all of the nominees, all shares of Common Stock represented by any such proxy will be voted FOR the election of the nominee or nominees, as the case may be, as to whom such authority is not withheld. If a nominee becomes unavailable to serve as a director for any reason before the election, the shares represented by proxy will be voted for such other person, if any, as may be designated by the Board. The Board has no reason to believe that any nominee will be unavailable to serve as a director. All of the nominees have consented to being named herein and to serve if elected. Any director vacancy occurring after the election may be filled by a majority vote of the remaining directors, even if the remaining directors constitute less than a quorum of the full Board. In accordance with the Company's Bylaws, a director appointed to fill a vacancy will be appointed to serve until the next annual meeting of shareholders held for the election of directors, regardless of whether the class of director in which he or she serves is to be elected at such annual meeting.

  4. Skills Matrix

    Skills Matrix The biography of each of the director nominees, continuing directors and executive officers set forth below contains information regarding the person's service as a director and/or executive officer, business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused the Governance Committee and the Board to determine that the person should serve as a director. The following matrix provides information regarding the members of the Board, including certain types of knowledge, skills, experiences and attributes that the Board believes are relevant to the Company’s business or industry. The matrix does not encompass all of the knowledge, skills, experiences or attributes of the directors, and the fact that a particular knowledge, skill, experience or attribute is not listed does not mean that a director does not possess it. In addition, the absence of a particular knowledge, skill, experience or attribute with respect to any of the directors does not mean the director in question is unable to contribute to the decision-making process in that area. The type and degree of knowledge, skill and experience listed below may vary among the members of the Board.

  5. Nominees for Election

    Nominees for Election The following table sets forth the name, age and position with the Company for each nominee for election as a director of the Company:

  6. Nominees for Election

    | Name | Age | Positions with the Company and the Bank | | James A. Bouligny | 88 | Class II Director of the Company | | W. R. Collier | 85 | Class II Director of the Company; Senior Chairman of West Texas Area of the Bank | | Laura Murillo | 57 | Class II Director of the Company | | Robert Steelhammer | 82 | Class II Director of the Company | | H. E. Timanus, Jr. | 79 | Class II Director and Chairman of the Company; Director, Chairman of the Board and Chief Operating Officer of the Bank |

  7. Nominees for Election

    James A. Bouligny. Mr. Bouligny has been a director of the Company since 1991. Mr. Bouligny was a named partner in the El Campo law firm of Duckett, Bouligny & Collins, LLP prior to 2007 and is currently Of Counsel to the firm. Mr. Bouligny received a Bachelor of Business Administration degree and a Juris Doctor degree from the University of Texas. Mr. Bouligny's civic activities include a 25-year tenure as a member of the Board of Trustees of Wharton County Junior College and an 18-year tenure as City Attorney for El Campo, Texas. He is currently a member of the MG and Lillie Johnson Foundation, a trustee of the St. Philip Catholic School Endowment, and a director of Mid Coast Title. The Company believes Mr. Bouligny's qualifications to serve as a director include his legal background and his years of experience as a director of the Company. W.R. Collier. Mr. Collier joined the Company as a Class II Director and as Senior Chairman for the West Texas Area of the Bank upon completion of the merger of American State Financial Corporation into the Company on July 1, 2012. Mr. Collier began his career with American State Bank in 1959, starting as a teller and rising to become President and Chief Executive Officer in 1974 and then on to Chief Executive Officer and Chairman of American State Financial Corporation in 1988. Mr. Collier graduated with a Bachelor of Science degree from Texas Technological College, now Texas Tech University, in 1961. He also graduated from the Southwestern Graduate School of Banking at Southern Methodist University in Dallas. Active in the Lubbock community, Mr. Collier was a member of the Executive Committee of the Texas Tech University Foundation and served on the President’s Council of both Texas Tech University and Lubbock Christian University. He was a board member of the Independent Bankers Association of Texas and served on both the Government Relations Council and the Deposit Insurance Reform Committee of the American Bankers Association, where he is also a former State Vice President for the Texas division. The Company believes Mr. Collier’s qualifications to serve as a director include his extensive professional experience and involvement in the banking industry, his leadership of American State and his dedication to the Lubbock community. Dr. Laura Murillo. Dr. Murillo was appointed a director of the Company in October 2022. Dr. Murillo has served as the President and CEO of the Houston Hispanic Chamber of Commerce since 2007. From 2003 to 2007, Dr. Murillo served as an executive and oversaw fundraising, capital campaign development and international services, among other areas, for the Memorial Hermann Healthcare System. Prior to 2003, Dr. Murillo served as a University of Houston executive for 14 years in a variety of roles, including University Advancement for the School of Business and University Recruitment and Retention of Minorities. Dr. Murillo currently serves on the Federal Reserve System’s Community Advisory Council, which reports to the Board of Governors, the Federal Reserve Bank of Dallas Business and Community Advisory Council, the Houston-Harris County Sports Authority Foundation and the MD Anderson Cancer Center Board of Visitors, among other organizations. She is the author of LEAD IN LIFE, People. Passion. Persistence: Success in the New Era of Diversity, Equity and Inclusion. Dr. Murillo was recommended as a director candidate by the Company’s Chief Executive Officer, Mr. Zalman, based on recommendations from local bankers and business contacts. The Company believes Dr. Murillo’s qualifications to serve as a director include her years of experience as an executive and her knowledge of and service to the Houston community. Robert Steelhammer. Mr. Steelhammer has been a director of the Company since its inception in 1983. Mr. Steelhammer has been a named partner with Steelhammer & Miller, P.C. in Houston for over thirty years. Mr. Steelhammer filed for Chapter 11 Reorganization personal bankruptcy in January 2018 as a result of a debt originated and held at another bank created by a company that supplied oil field equipment in which Mr. Steelhammer was a partial owner and guarantor. Mr. Steelhammer’s Plan of Reorganization was confirmed on February 11, 2019. He received a Bachelor of Science degree from the University of Texas and a Juris Doctor degree from South Texas College of Law. He is a member of the State Bar of Texas, a registered professional engineer for the State of Texas and a member of the American Institute of Chemical Engineers. The Company believes Mr. Steelhammer's qualifications to serve as a director include his legal, financial and investing experience and role as a director of the Company from its inception. H. E. Timanus, Jr. Mr. Timanus has been a director of the Company and the Bank since 2001. He is currently Chairman of the Company and Chairman and Chief Operating Officer of the Bank. He has served as Chief Operating Officer of the Bank since 2001 and was named Chairman of the Board of the Bank in 2005. Mr. Timanus became an Executive Vice President and the Chief Operating Officer of the Company in 2001 and served in that capacity until 2006 when he became Vice Chairman of the Company and thereafter, became Chairman of the Company in 2019. From 1986 to 2001, Mr. Timanus served as President and Chief Executive Officer of Commercial Bancshares, Inc. and from 1988 to 2001, he served as Chief Executive Officer and Chairman of Heritage Bank. Mr. Timanus also served as a director of Financial Federal Corporation, a financial services company listed on the NYSE, until the sale of the company in 2010. The Company believes Mr. Timanus' qualifications to serve as a director of the Company include his prior experience as President and CEO of Commercial Bancshares, Inc. and his continuing role and experience with the Company. THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE NOMINEES LISTED ABOVE FOR ELECTION TO THE BOARD.

  8. CONTINUING DIRECTORS AND EXECUTIVE OFFICERS

    CONTINUING DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth certain information with respect to the Company's Class I and Class III directors whose terms of office do not expire at the Meeting, and the executive officers of the Company who are not also directors:

  9. CONTINUING DIRECTORS AND EXECUTIVE OFFICERS

    | Name | Age | Positions with the Company and the Bank | | Directors: | | | | Kevin J. Hanigan | 67 | Class I Director, President and Chief Operating Officer of the Company; Director and President of the Bank | | William T. Luedke IV | 71 | Class I Director of the Company | | Perry Mueller, Jr. | 90 | Class I Director of the Company | | Harrison Stafford II | 82 | Class I Director of the Company | | Ileana Blanco | 64 | Class III Director of the Company | | Leah Henderson | 57 | Class III Director of the Company | | Ned S. Holmes | 79 | Class III Director of the Company | | Jack Lord | 82 | Class III Director of the Company | | David Zalman | 67 | Class III Director, Senior Chairman of the Board and Chief Executive Officer of the Company; Director, Senior Chairman of the Board and Chief Executive Officer of the Bank | | Executive officers who are not also directors: | | | | J. Mays Davenport | 56 | Executive Vice President and Director of Corporate Strategy of the Company; Director, Senior Executive Vice President and Director of Corporate Strategy of the Bank | | Robert J. Dowdell | 67 | Executive Vice President of the Company; Senior Executive Vice President of the Bank | | Randy Hester | 65 | Executive Vice President of the Company; Senior Executive Vice President and Chief Lending Officer of the Bank | | Asylbek Osmonov | 43 | Chief Financial Officer of the Company and the Bank | | Charlotte M. Rasche | 59 | Executive Vice President and General Counsel of the Company; Senior Executive Vice President and General Counsel of the Bank | | Edward Z. Safady | 66 | Advisory Director and Vice Chairman of the Company; Director and Vice Chairman of the Bank |

  10. CONTINUING DIRECTORS AND EXECUTIVE OFFICERS

    Kevin J. Hanigan. Mr. Hanigan joined the Board of Directors of the Company on November 1, 2019 in connection with the LegacyTexas merger. Mr. Hanigan also serves as President and Chief Operating Officer of the Company and President of the Bank. Mr. Hanigan previously served as a director and Chief Executive Officer of LegacyTexas and LegacyTexas Bank, positions he held since the completion of the Highlands Bank acquisition with and into LegacyTexas in April 2012. Prior to that, Mr. Hanigan was the Chairman and Chief Executive Officer of Highlands Bank, serving in those roles since 2010. Prior to joining Highlands Bank, Mr. Hanigan was employed by Guaranty Bank starting in 1996, serving in numerous capacities including Chief Lending Officer, Executive in charge of Retail Banking, and finally as Chairman and Chief Executive Officer of Guaranty Bank and its parent company, Guaranty Financial Group, Inc. (which filed for bankruptcy in August 2009). Mr. Hanigan began his career with Bank of the Southwest in Houston in June 1980. He earned his undergraduate degree and Master of Business Administration from Arizona State University. Mr. Hanigan serves on the Board of Directors of Goodwill Industries of Dallas and the Dallas Citizen’s Council. The Company believes Mr. Hanigan’s qualifications to serve as a director include his over 37 years of experience working in the banking industry in Texas, serving as chief executive officer of several institutions and his deep understanding of the Dallas-Ft. Worth banking market and issues facing the banking industry. William T. Luedke IV. Mr. Luedke has been a director of the Company since April 2014. On December 31, 2019, Mr. Luedke completed his voluntary partner phase down program and retired from Bracewell LLP, where he had practiced for over 35 years representing numerous financial institutions in corporate finance, mergers and acquisitions and regulatory matters. He received a Bachelor of Arts degree from Williams College and a Juris Doctor degree from Vanderbilt University School of Law. He is a graduate of Wayland Academy, a college preparatory school in Beaver Dam, Wisconsin, and currently serves on its Board of Trustees, after serving as the Chairman of its Board of Trustees from 2012 to 2017. Mr. Luedke currently serves as a Director and member of the executive committee of the Independent Schools Chairpersons Association. The Company believes Mr. Luedke's qualifications to serve as a director include his many years of legal experience and service as an advisor to the Company and other financial institutions. Perry Mueller, Jr., D.D.S. Dr. Mueller was appointed a director of the Company in November 2001. Dr. Mueller, a dentist, has been in private practice in Lake Jackson, Texas for over fifty years. He completed his pre-dental education from the University of Texas and graduated with honors from the University of Texas Dental Branch in the Texas Medical Center. He was one of the original founders of First National Bank in Lake Jackson, Texas and served as Vice Chairman of the Board of that bank from 1963 until 2002. Dr. Mueller was a founder of the Brazosport Day Care Center, a life member of Optimist International, a past officer of the Kiwanis Club and Rotary International and has served as a dental missionary in Haiti, Africa, Mexico and South Korea. Dr. Mueller's interest in banking goes back to his father being in the banking industry for approximately sixty-five years before retiring. Dr. Mueller is the father-in-law of David Zalman. The Company believes Dr. Mueller's qualifications to serve as a director include his many years of service and involvement with First National Bank in Lake Jackson, Texas, and the Company. Harrison Stafford II. Judge Stafford became a director of the Company in April 2000. Now retired, he served as the County Judge for Jackson County, Texas, from January 1991 through December 2010. He also served as Jackson County Auditor from 1972 to 1990. Judge Stafford received a Bachelor of Business Administration degree and a Juris Doctor degree from the University of Texas. He also holds a Master’s degree in Finance from the Wharton School of the University of Pennsylvania. He currently serves as Treasurer of the Jackson County Historical Commission and Treasurer of the Texana Museum and Library Association. Judge Stafford also has previously served as a senior warden of Trinity Episcopal Church and as Chairman of the Lavaca Regional Water Planning Group. The Company believes Judge Stafford's qualifications to serve as a director include his auditing and legal experience and his long term involvement as a director of the Company. Ileana Blanco. Ms. Blanco was appointed a director of the Company in October 2022. Ms. Blanco has had extensive experience with financial institutions and in leadership positions throughout her career. For over 35 years she represented banks in complex commercial litigation and counseled their officers and directors. Ms. Blanco currently serves as Disputes Training, National Leader at global law firm DLA Piper. Ms. Blanco was one of the founders of the Houston office of DLA Piper and served as its managing partner for eight years. Before that, she was a partner at Bracewell LLP, and served on its Management Committee. A champion for diversity, Ms. Blanco served two terms as the President of the Houston Association of Women Attorneys and is currently a director on the Hispanic Bar Association of Houston. As a certified mediator, Ms. Blanco volunteers with the Harris County Disputes Resolution Center to help pro bono litigants settle their disputes. Ms. Blanco was recommended as a director candidate by Mr. Zalman, the Company’s Chief Executive Officer. The Company believes Ms. Blanco’s qualifications to serve as a director include her many years of legal experience representing financial institutions and her service as an office managing partner of a law firm. Leah Henderson. Ms. Henderson became a director of the Company in April 2007. Prior to being appointed to the Board of the Company, she served as a director of the Bank since 2002. Prior to serving on the Board of the Bank, she was a director of Paradigm Bancorporation, Inc. and its member bank, Paradigm Bank Texas, which merged into the Bank in 2002. In 2015, Ms. Henderson retired as Executive Vice President of Sales for PULSE, a Discover Financial Services LLC company and operator of the PULSE electronic funds network, where she had worked for twenty-five years and was part of the executive management team for over eight years. Ms. Henderson received a Bachelor of Business Administration from Stephen F. Austin State University. The Company believes Ms. Henderson's qualifications to serve as a director include her extensive experience in the financial services industry, through her service on the boards of directors of Paradigm Bancorporation, Inc. and the Company and as an executive officer of PULSE. Ned S. Holmes. Mr. Holmes became Chairman of the Board of the Company in February 2001 and served in that capacity until April 2006. Prior to the merger of Commercial Bancshares, Inc. into the Company in 2001, he served as Chairman of the Board of Commercial Bancshares since 1991 and as a director of Commercial Bancshares since 1979. Mr. Holmes was born in Houston, Texas and served as the President of Commercial Bancshares from 1979 to 1986. In 1991, Mr. Holmes was named Senior Chairman of the Board of Heritage Bank. From 1980

  11. CONTINUING DIRECTORS AND EXECUTIVE OFFICERS

    through December 31, 2005, Mr. Holmes served as Chairman of the Board and President of Parkway Investments/Texas, Inc. and managed his Houston-based real estate assets, the San Diego Princess Hotel and other special real estate projects. Mr. Holmes is affiliated with NH-5, Inc. and since 1976 has served as Chairman and Chief Executive Officer of Ned S. Holmes Investments, Inc. Mr. Holmes is the Chairman Emeritus of the Greater Houston Partnership. Mr. Holmes served as a director of the Memorial Hermann Hospital System, Baylor College of Medicine, University of Texas M.D. Anderson Cancer Center, Gulf Coast Rail District, Coastal Coordination Council and Transportation Transformation Group. He was appointed to the Texas Transportation Commission in January 2007 and served until June 2012. The Company believes Mr. Holmes's qualifications to serve as a director include his many years of experience as Chairman of Prosperity Bancshares, Inc. and Commercial Bancshares, Inc., as well as his years of service in the public sector. Jack Lord. Mr. Lord has been a director of the Company since April 2016 and had previously served as a director of the Bank since 1995. Mr. Lord is a retired shareholder of the Houston accounting firm of Harper & Pearson Co., PC. With more than forty-five years as a CPA, he has accumulated a wide variety of experience in several industries including oil and gas, manufacturing, banking, retail and service. In addition to building and managing a public accounting firm, he has held several financial and executive positions in various small businesses. He earned a Bachelor of Arts degree with High Honors from the University of Texas at Austin and a Masters of Business Administration from Oklahoma City University, as well as the designation of Certified Public Accountant. Mr. Lord is a member of the Texas Society of CPAs and the American Institute of CPAs. Mr. Lord’s community service and honors include Rotary Club of Houston - Past President and Director; Greater Heights Area Chamber of Commerce - Past Director; Citizens Against Lawsuit Abuse – Trustee; “C” Club; MENSA; Harris County Department of Education – Trustee; University of Houston, Downtown - College of Business Advisory Board; and Rotary Club of Houston Foundation – Trustee. The Company believes Mr. Lord’s qualifications to serve as a director include his wide experience in a variety of businesses, his education and training as a Certified Public Accountant and his years of banking experience as a director of the Bank. David Zalman. Mr. Zalman is a director and the Senior Chairman of the Board and Chief Executive Officer of the Company and the Bank. He joined the Bank as President in 1986, became Chairman of the Board and Chief Executive Officer in 2001 and Senior Chairman and Chief Executive Officer in 2005. Mr. Zalman became a director and Vice President/Secretary of the Company in 1987, President in 2000, President and Chief Executive Officer in 2001 and Chairman of the Board and Chief Executive Officer in 2006, and in 2019 became Senior Chairman and Chief Executive Officer. From 1978 to 1986, Mr. Zalman was employed by Commercial State Bank in El Campo, beginning as cashier and rising to become Chief Executive Officer. Mr. Zalman received a Bachelor of Business Administration degree from the University of Texas at Austin in 1978. He currently serves as the 11th District representative on the Federal Advisory Council to the Board of Governors of the Federal Reserve System in Washington D.C. and served on the Board of Directors of the Dallas Federal Reserve Bank, Houston Branch, from 2016 to 2021. He was a founding principal of New ICM LP, a manufacturer and distributor of children's clothing to national and international companies, and served as a partner and director from 1999 to 2017. He has served as a member of the El Campo City Council and is a current Trustee of the St. Philip Catholic School Endowment Fund, as well as on various other civic clubs and charitable organizations. Mr. Zalman is the son-in-law of Perry Mueller, Jr., D.D.S. The Company believes Mr. Zalman's qualifications to serve as a director of the Company include his years of banking experience and his proven leadership in the success of the Company.

  12. Governance Features and Enhancements

    Governance Features and Enhancements The Company believes that it has implemented appropriate governance policies and practices; however, the Company intends to continue to focus on its enhancing corporate governance policies and practices in 2024. Shareholder Approval Rights and Ability to Amend Bylaws The Company’s Bylaws provide that shareholders may amend, repeal or adopt the Bylaws upon the affirmative vote of a two-thirds majority of the outstanding shares of Company Common Stock. Prior to amendment in 2018, as provided by Texas law, the Company’s Bylaws did not permit shareholders to amend the Bylaws; only the Board could amend the Bylaws. Further, the Company’s articles of incorporation require only a majority of the outstanding shares of Company Common Stock to approve matters, which under Texas law would otherwise require a greater vote, including a merger or other business combination. Stock Ownership Guidelines The Governance Committee and the Board believe that each director and executive officer should have a meaningful personal investment in the Company, which is intended to further align the interests of our directors and executive officers with the long-term interests of our shareholders. Under the Company’s stock ownership guidelines, each director is expected to own shares of Company Common Stock with a market value equal to at least five times such director’s annual cash retainer. Each director must meet this requirement by the later of the fifth anniversary of becoming a director or January 16, 2023. Further, the Company’s Chief Executive Officer is expected to own shares of Company Common Stock with a market value equal to at least four times his annual base salary, and each other executive officer is expected to own shares of Company Common Stock with a market value equal to at least two times such executive officer’s annual base salary. The Chief Executive Officer must meet this requirement by the later of the fifth anniversary of becoming subject to the guidelines or January 16, 2023. Director Resignation Vote Policy The Company’s Bylaws provide for a director majority-vote-plus resignation policy that requires a director who receives a greater number of “withhold” votes than “for” votes in an uncontested election (“Majority Withhold Vote”) to tender his or her resignation to the Board. Pursuant to the Bylaws, the Governance Committee must consider the resignation tender and based on the factors it deems relevant, make a recommendation to the Board regarding whether to accept the director’s resignation. The Board is required to act on the Governance Committee’s recommendation within 90 days following certification of the shareholder vote. Any director who tenders his or her resignation pursuant to the director resignation policy may not participate in the Governance Committee recommendation of the Board action regarding the resignation tender. If a majority of the members of the Governance Committee receive a Majority Withhold Vote at the same election, then all the directors who are “independent” under the listing standards of the NYSE and who did not receive a Majority Withhold Vote will appoint a special committee amongst themselves to consider the resignation tenders and recommend to the Board whether to accept any or all of them. Board Diversity The Company is committed to fostering, cultivating and preserving a culture of diversity and inclusion throughout the Company, including the Board. To further the Company’s commitment to diversity, in February 2021, the Board adopted amended corporate governance guidelines which provide that in selecting management-supported nominees for new director positions, the Governance Committee will include, and will direct any search firm that it engages to include, qualified women and minority candidates in the pool from which it selects candidates. This process is a version of the so-named “Rooney Rule.” The Governance Committee would not be required to follow this process with respect to any director positions added or filled in connection with a merger or acquisition transaction. The Company’s Board currently includes three women, two of whom are ethnically diverse: Leah Henderson who has served as a director since 2007 and Ileana Blanco and Dr. Laura Murillo who were appointed to the Board in October 2022. Ms. Henderson currently serves as a member of the Risk Committee and is a former Chair and member of the Company’s Compensation Committee. Additionally, Ileana Blanco currently serves as a member of the Company’s Compensation Committee. Further, the Bank’s Board includes three women directors, one of whom is ethnically diverse, and one other minority director. Director Tenure and Refreshment The Governance Committee believes there is a balance between seasoned directors with knowledge of and insight into the Company and its operations and new directors who provide fresh ideas and viewpoints. While the Board has not established term limits for the directors, the Governance Committee reviews each director’s continuation of service on the Board at the end of his or her term. The Governance Committee and the Board are focused on directors that provide increasing contributions to the Board over time. The Governance Committee reviews Board composition at least annually to ensure that the Board reflects the appropriate balance of knowledge, experience, skill expertise and diversity. Two of the Company’s fourteen directors joined the Board in October 2022 (Ms. Blanco and Dr. Murillo) and one other director joined the Board in the last five years. Anti-Hedging Policy As part of its Insider Trading Policy, the Board adopted a policy prohibiting all directors, officers and employees of the Company and the Bank from engaging in any hedging transactions with respect to shares of Company Common Stock, including, among other things, prepaid variable forwards, equity swaps, collars and exchange funds. Shareholder Engagement Dialogue with our shareholders is a critical part of the Company’s success. The Company’s Investor Relations team conducts ongoing dialogue with our shareholders via conferences, on-site visits and similar meetings and communicates financial and strategic matters through public disclosures such as quarterly earnings presentations and SEC filings. The Company intends to continue and expand its shareholder engagement efforts in 2024.

  13. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION For 2023, each director of the Company received a fee of $3,600 for attending the meeting of the Company's Board in January and a fee of $3,700 for each other meeting of the Board attended. Each director also received a fee of $750 for each committee meeting attended as a member in the first quarter of 2023 and a fee of $800 for each meeting thereafter. The Chairman of the Audit Committee received $1,900 for each committee meeting chaired in the first quarter of 2023 and a fee of $1,950 for each meeting thereafter. The Chairman of the Risk Committee received $1,850 for each committee meeting chaired in the first quarter of 2023 and a fee of $1,900 for each meeting thereafter. The Chairman of the Governance Committee and the Chairman of the Compensation Committee received $1,350 for each committee meeting chaired in the first quarter of 2023 and a fee of $1,400 for each meeting thereafter. In December 2023, the Compensation Committee recommended a one-time cash payment of $33,000 for each non-employee director of the Company in recognition that the Company’s directors were compensated below the Company’s peer group, which the Board approved. For 2023, each director of the Bank received a fee of $1,550 for each meeting of the Bank's Board of Directors attended through March and a fee of $1,600 for each other meeting of the Board attended. Each Bank director also received a $500 fee for each committee meeting attended through March and a $550 fee for each committee meeting attended thereafter, but only if the committee meeting was held separately from the Board meeting. The Compensation Committee also recommended a one-time cash payment of $2,000 for each non-employee director of the Bank, which the Board approved. In addition to the director fees listed above, the Compensation Committee recommended, and the Board approved, an award of 1,400 shares of restricted stock to each non-employee director of the Company. The restricted stock awards were granted on April 18, 2023 pursuant to the Company's 2020 Stock Incentive Plan. The forfeiture restrictions with respect to the restricted stock awards will lapse on the date of the 2024 annual meeting of shareholders, being April 16, 2024. For the year ended December 31, 2023, none of the non-employee directors received compensation in the form of perquisites or other personal benefits valued at $10,000 or more. The following table contains information concerning the compensation of the directors of the Company for the fiscal year ended December 31, 2023. Messrs. Hanigan, Timanus and Zalman, who serve as directors of both the Company and the Bank, and Mr. Safady, who serves as an advisory director of the Company and a director of the Bank, are employed by the Company and any compensation for their service on the Board of Directors of the Company or the Bank is included in the Summary Compensation Table on page 33. Mr. Collier, who serves as a director of the Company, is employed by the Bank but is not a named executive officer. His compensation from the Bank is included in the “Fees Earned or Paid in Cash” column in the table below.

  14. Director Compensation for the Fiscal Year Ended December 31, 2023

    Director Compensation for the Fiscal Year Ended December 31, 2023

  15. Director Compensation for the Fiscal Year Ended December 31, 2023

    | Name | Fees Earned or Paid in Cash | Stock Awards(1) | All Other Compensation(2) | Total | | Ileana Blanco(6) | $49,250(3) | $84,518 | $1,540 | $135,308 | | James A. Bouligny | 46,350(3) | 84,518 | 2,970 | 133,838 | | W.R. Collier | 143,900(4) | — | 326,576(5) | 470,476 | | Leah Henderson | 50,050(3) | 84,518 | 2,970 | 137,538 | | Ned S. Holmes | 52,800(3) | 84,518 | 2,970 | 140,288 | | Jack Lord | 50,850(3) | 84,518 | 2,970 | 138,338 | | William T. Luedke IV | 52,800(3) | 84,518 | 2,970 | 140,288 | | Perry Mueller, Jr., D.D.S. | 47,700(3) | 84,518 | 2,970 | 135,188 | | Laura Murillo(6) | 47,700(3) | 84,518 | 1,540 | 133,758 | | Harrison Stafford II | 57,000(3) | 84,518 | 2,970 | 144,488 | | Robert Steelhammer | 54,900(3) | 84,518 | 2,970 | 142,388 |

  16. Director Compensation for the Fiscal Year Ended December 31, 2023

    Represents the aggregate grant date fair value of restricted stock awarded pursuant to the Company's 2020 Stock Incentive Plan in the fiscal year ended December 31, 2023, which was computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation (“ASC Topic 718”). (2) Other than for Mr. Collier, the amount represents dividend payments on unvested restricted stock awards. (3) Includes a cash payment of $33,000. (4) Consists of $14,700 in fees paid for service as a director of the Company and $126,000 received as salary. (5) The amount represents (a) the aggregate incremental cost to the Company of all perquisites and personal benefits provided to Mr. Collier, which includes Company matching contributions under the 401(k) Plan of $6,066, personal use of an automobile of $560 and an allowance of $126 for premiums paid on a long-term disability insurance policy plus (b) $321,156 received pursuant to a deferred compensation agreement assumed by the Company in connection with the acquisition of American State Financial Corporation. Ms. Blanco and Dr. Murillo were appointed as directors on October 5, 2022.

  17. Compensation Discussion and Analysis

    The Compensation Committee believes that the peer group of companies listed below is representative of the sector in which the Company operates. This group includes public bank holding companies with assets between $25 billion and $75 billion as of December 31, 2022. These companies were chosen because of their similarity in size to the Company, as measured by total assets. The Company’s peer group for assessing 2023 compensation consisted of the following companies:

  18. Compensation Discussion and Analysis

    During 2023, the Compensation Committee reviewed the base salary, bonus and value of stock and option compensation of similarly situated executive officers at the bank holding companies included in the Company's peer group and considered the performance of its competitors and general economic and market conditions in setting compensation for each named executive officer. Setting Executive Compensation In setting the 2023 compensation of each of the named executive officers, the Compensation Committee reviewed all components of their respective compensation, including base salary, annual non-equity-based incentive bonus, long-term equity-based incentive compensation, restricted stock awards, accumulated vested and unvested restricted stock awards, the dollar value to the executive and cost to the Company of all perquisites and other personal benefits and the projected payout obligations that may be owed in certain circumstances under any existing employment or other agreements. In addition, the Compensation Committee reviewed each named executive officer's compensation history and comparative performance information. Components of Executive Compensation The principal components of the Company's executive compensation program are: • Base salary; • Annual incentive bonus program; • Long-term equity-based incentive compensation; • Discretionary cash bonus; • 401(k) plan matching contributions; and Perquisites and other personal benefits. Base Salary Salaries provide the named executive officers with a base level of monthly income and help achieve the objectives outlined above by attracting and retaining strong talent. Base salary levels for all named executive officers were reviewed during 2023, and adjustments were approved by the Board based on the recommendation of the Compensation Committee. Salary adjustments, if any, for the named executive officers generally are effective on May 1 of each year. For all named executive officers, other than the Chief Executive Officer, the Compensation Committee considered peer group compensation information, tenure of service, scope of the position, including current job responsibilities, the named executive officer's individual performance and contribution to the Company, the recommendation of the Chief Executive Officer and such other factors as the Compensation Committee deemed appropriate. The base salary level for the Chief Executive Officer was determined by the Compensation Committee based upon the overall performance of the Company, peer group compensation information, current job responsibilities, an evaluation of his individual performance and such other factors as the Compensation Committee deemed appropriate. The base salary for Mr. Hanigan was negotiated as part of his employment agreement entered into in connection with the LegacyTexas merger in 2019 and was approved by the Board. The Compensation Committee monitors the base salary levels and the various incentives of the named executive officers of the Company to ensure that overall compensation is consistent with the Company's objectives and remains competitive within the peer group identified above. In setting the goals and measuring a named executive officer's performance against those goals, the Company considers the performance of its competitors and general economic and market conditions. None of the factors included in the Company's strategic and business goals is assigned a specific weight. Instead, the Compensation Committee recognizes that the relative importance of these factors may change in order to adapt the Company's operations to specific business challenges and to reflect changing economic and marketplace conditions. Incentive Compensation. The Company’s incentive compensation program for the named executive officers, consists of three components, each of which is described below: (1) a formulaic annual incentive bonus program, other than for Mr. Osmonov who does not participate in such program, (2) long-term equity-based incentive awards and (3) discretionary cash bonus awards. Annual Incentive Bonus Program The Company's annual incentive bonus program is designed to help achieve the objectives of the compensation program by rewarding the members of the Company’s executive committee, which includes the named executive officers (other than Mr. Osmonov), for the attainment of profitable growth and stable financial and operating conditions. The annual incentive bonus program provides for cash and short-term equity awards determined pursuant to a formulaic plan based on the Company’s achievement of pre-defined financial performance targets for the applicable year and has no subjective or discretionary component. The annual bonus awarded to the Company's Chief Executive Officer may be an amount up to 200% of his current base salary. The annual bonus that may be awarded to each of the Company's Chairman, Vice Chairman and President and Chief Operating Officer may be an amount up to 175% of such officer’s current base salary. Each of the four other members of the executive committee, each an Executive Vice President, was eligible for an annual bonus amount of up to 100% of his or her current base salary. Each year, based on the recommendation of the Compensation Committee, the Board approves the percentage of the annual incentive bonus program to be paid in cash and in restricted stock. For each of 2023, 2022 and 2021, the annual incentive bonuses were paid approximately 25% in restricted stock and approximately 75% in cash. Generally, all of the restricted stock and approximately 90% of the cash portion of the annual incentive bonus is paid in December of the year earned, and the remaining percentage of the cash portion is paid after the Company’s independent auditors have issued their final report confirming the financial results for the year in which the annual incentive bonus was earned, but no later than March 15 of the following year. The target performance goals and the allocation of the total eligible annual incentive bonus amount to each goal are set annually by the Compensation Committee. For 2023, the performance goals were quantitative in nature and the Compensation Committee determined the 2023 annual incentive bonus based on achievement of those quantitative goals. In determining the amount of the annual incentive bonus, a target performance goal is established with respect to nine performance indicators. These indicators consist of total return, asset quality, increase in earnings per share, increase in deposits, increase in assets, increase in loans, return on average equity, efficiency ratio and increase in dividends. Asset quality is measured by the actual net charge offs as a percentage of average loans for the twelve-month period. A specific percentage weight of the total eligible bonus is allocated to each of these performance indicators. Acquisitions are a part of the Company’s overall strategy and the Board wants to incentivize management to continue to pursue such strategy. Therefore, similar to the treatment of the LegacyTexas merger in 2019, the Compensation Committee approved that for the purpose of satisfying the target performance goals in 2023, the Company’s performance with respect to increase in earnings per share, return on average equity and efficiency ratio should be calculated by excluding the one-time expenses related to the First Bancshares of Texas, Inc. and Lone Star State Bancshares, Inc. mergers. Further, for the purpose of satisfying the same target performance goals in 2023, the Compensation Committee approved the exclusion of the FDIC special assessment of $19.9 million accrued in the fourth quarter of 2023.

  19. Summary Compensation Table

    Summary Compensation Table

  20. Summary Compensation Table for the Last Three Fiscal Years Ended December 31, 2023

    Summary Compensation Table for the Last Three Fiscal Years Ended December 31, 2023

  21. Summary Compensation Table for the Last Three Fiscal Years Ended December 31, 2023

    | Name and Principal Position | Year | Salary | Bonus(1) | Stock Awards(2) | Non-Equity Incentive Plan Compensation(3) | All Other Compensation(4) | Total | | David Zalman | 2023 | $1,105,186(5) | $1,135,000 | $160,656 | $589,350 | $238,816 | $3,229,008 | | Senior Chairman of the Board and Chief Executive Officer | 2022 | 1,066,578(5) | 1,130,227 | 154,808 | 464,534 | 219,427 | 3,035,574 | | | 2021 | 1,041,712(5) | 1,000,000 | 2,666,214 | 612,548 | 213,699 | 5,534,173 | | Asylbek Osmonov | 2023 | 350,859 | 410,000 | — | — | 31,100 | 791,959 | | Chief Financial Officer | 2022 | 337,365 | 410,121 | 522,900 | — | 25,292 | 1,295,678 | | | 2021 | 330,750 | 300,000 | — | — | 23,534 | 654,284 | | H. E. Timanus, Jr. | 2023 | 582,073(5) | 616,000 | 71,929 | 263,919 | 75,792 | 1,609,713 | | Chairman of the Board | 2022 | 563,584(5) | 615,817 | 69,337 | 208,016 | 66,190 | 1,522,944 | | | 2021 | 548,581(5) | 500,000 | 1,498,315 | 274,311 | 62,435 | 2,883,642 | | Edward Z. Safady | 2023 | 581,771(6) | 531,000 | 71,862 | 263,801 | 73,399 | 1,521,833 | | Vice Chairman | 2022 | 563,294(6) | 530,808 | 69,264 | 207,901 | 69,681 | 1,440,948 | | | 2021 | 548,297(6) | 400,000 | 1,498,243 | 274,182 | 58,987 | 2,779,709 | | Kevin J. Hanigan | 2023 | 1,105,186(5) | 531,000 | 140,607 | 515,647 | 158,531 | 2,450,971 | | President and Chief Operating Officer | 2022 | 1,066,577(5) | 530,907 | 2,362,676 | 406,468 | 128,804 | 4,495,432 | | | 2021 | 1,041,712(5) | 400,000 | 178,509 | 535,933 | 133,775 | 2,289,929 |

  22. Summary Compensation Table for the Last Three Fiscal Years Ended December 31, 2023

    (1) For each year shown, the Company awarded discretionary cash bonuses to the named executive officers for their efforts during those years in recognition of such officer’s contribution and the Company’s performance. (2) Represents the aggregate grant date fair value of restricted stock awarded pursuant to the Company's 2020 Stock Incentive Plan in the fiscal years shown, which was computed in accordance with ASC Topic 718. For Messrs. Zalman, Timanus and Safady, for 2023 and 2022, and for Mr. Hanigan for 2023 and 2021, the amount shown was awarded on the last trading day of the year indicated as payment of approximately 25% of the total annual incentive bonus earned by the named executive officer. (a) In 2021, Mr. Zalman received a restricted stock award of 35,000 shares on January 19, 2021 with a grant date fair value of $2,462,250. This award vested in January 2024, three years from the grant date. For SEC reporting purposes, the grant date fair value must be reported in the year of the grant, regardless of the three-year cliff vesting period. Additionally, of the amount shown, $203,958 relates to restricted stock awarded on December 31, 2021 as payment of approximately 25% of the total annual incentive bonus awarded to the named executive officer. (b) In 2022, Mr. Osmonov received a restricted a restricted stock award of 7,500 shares, which vest in July 2025, three years from the grant date. (c) In 2021, Mr. Timanus received a restricted stock award of 20,000 shares on January 19, 2021 with a grant date fair value of $1,407,000. This award vested in January 2024, three years from the grant date. Additionally, of the amount shown, $91,315 relates to restricted stock awarded on December 31, 2021 as payment of approximately 25% of the total annual incentive bonus awarded to the named executive officer. (d) In 2021, Mr. Safady received a restricted stock award of 20,000 shares on January 19, 2021 with a grant date fair value of $1,407,000. This award vested in January 2024, three years from the grant date. Additionally, of the amount shown, $91,243 relates to restricted stock awarded on December 31, 2021 as payment of approximately 25% of the total annual incentive bonus awarded to the named executive officer. (e) In 2022, Mr. Hanigan received a restricted stock award of 30,000 shares with a grant date fair value of $2,227,200. The award will vest in October 2025, three years from the grant date. Additionally, of the amount shown, $135,476 relates to restricted stock awarded on December 30, 2022 as payment of approximately 25% of the total annual incentive bonus awarded to the named executive officer. The amounts in this column represent approximately 75% of the total annual incentive bonus awarded to the named executive officer. The remainder of the annual incentive bonus was paid to such officer in the form of restricted stock rather than cash, as shown in the “Stock Awards” column. The amounts in this column represent all perquisites and personal benefits and other compensation provided to the named executive officers as set forth below. The dividend amounts in this column represents the dollar value of dividends paid (as part of a dividend paid to all shareholders) on unvested restricted stock; such dividends were not factored into the grant date fair value of stock required to be reported in the Stock Awards column of the table. (a) For Mr. Zalman, the 2023 amount includes club membership dues of $1,965, Company matching contributions under the 401(k) Plan of $11,250, personal use of automobiles of $20,148, personal use of aircraft of $83,985 (the aggregate incremental cost to the Company), premiums paid on a life insurance policy of $38,530, an allowance of $300 for premiums paid on a long-term disability insurance policy, and $82,638 in dividend payments on unvested restricted stock awards. The aggregate incremental cost to the Company for personal use of the Company aircraft is based on the following variable costs incurred as a result of personal flight activity: a pro rata portion of ongoing maintenance and fuel costs, co-pilot fees and any travel expenses for the pilots. It excludes non-variable costs, such as hangar rental, insurance and aircraft management services, which would have been incurred regardless of whether there was any personal use. Aggregate incremental cost, if any, of travel by the executive’s family or other guests when accompanying the executive is also included. (b) For Mr. Osmonov, the 2023 amount includes Company matching contributions under the 401(k) Plan of $11,250, personal use of an automobile of $3,050, premiums paid on a long-term disability insurance policy of $300 and $16,500 in dividend payments on unvested restricted stock awards. (c) For Mr. Timanus, the 2023 amount includes club membership dues and a social allowance of $10,206, Company matching contributions under the 401(k) Plan of $11,250, personal use of an automobile of $7,379, premiums paid on a long-term disability insurance policy of $433, and $46,524 in dividend payments on unvested restricted stock awards. (d) For Mr. Safady, the 2023 amount includes club membership dues of $8,639, Company matching contributions under the 401(k) Plan of $10,843, personal use of an automobile of $3,283, premiums paid on a life insurance policy of $3,810, an allowance of $300 for premiums paid on a long-term disability insurance policy, and $46,524 in dividend payments on unvested restricted stock awards. (e) For Mr. Hanigan, the 2023 amount includes club membership dues of $2,100, Company matching contributions under the 401(k) Plan of $11,250, personal use of an automobile of $3,098, personal use of aircraft of $70,403 (the aggregate incremental cost to the Company), premiums paid on a life insurance policy of $446, an allowance of $300 for premiums paid on a long-term disability insurance policy, and $70,934 in dividend payments on unvested restricted stock awards. (5) For 2023, includes $19,050 in fees paid for service as a director of the Bank and $14,700 in fees paid for service as a director of the Company. For 2022, includes $18,450 in fees paid for service as a director of the Bank and $17,900 in fees paid for service as a director of the Company. For 2021, includes $17,880 in fees paid for service as a director of the Bank and $13,805 in fees paid for service as a director of the Company. For 2023, includes $19,050 in fees paid for service as a director of the Bank and $14,700 in fees paid for service as an advisory director of the Company. For 2022, includes $18,450 in fees paid for service as a director of the Bank and $17,900 in fees paid for service as an advisory director of the Company. For 2021, includes $17,880 in fees paid for service as a director of the Bank and $13,805 in fees paid for service as an advisory director of the Company.

  23. Grants of Plan-Based Awards

    Grants of Plan-Based Awards The following table contains information concerning awards made to each eligible named executive officer under any non-equity incentive plan during the fiscal year ended December 31, 2023:

  24. Grants of Plan-Based Awards for the Fiscal Year Ended December 31, 2023

    Grants of Plan-Based Awards for the Fiscal Year Ended December 31, 2023

  25. Grants of Plan-Based Awards for the Fiscal Year Ended December 31, 2023

    | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | | | Name | Target(1) | Maximum(2) | | David Zalman | $750,006 | $2,142,872 | | Asylbek Osmonov | — | — | | H.E. Timanus, Jr. | 335,848 | 959,565 | | Edward Z. Safady | 335,663 | 959,037 | | Kevin J. Hanigan | 656,255 | 1,875,013 |

  26. Grants of Plan-Based Awards for the Fiscal Year Ended December 31, 2023

    (1) The amount listed in the Target column represents the amount of the annual incentive bonus earned by each of the eligible named executive officers in 2023. This amount is the sum of the amount attributable to the annual incentive bonus and included in the “Stock Awards” column and the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table included above. There were no thresholds included under the Company's annual incentive bonus program. Mr. Osmonov did not participate in the Company’s annual incentive bonus program in 2023. The amount listed in the Maximum column represents the possible incentive bonus the participating named executive officers were eligible to receive pursuant to the Company's annual incentive bonus program based upon certain performance targets of the Company. The program is discussed in greater detail above under “Compensation Discussion and Analysis—Annual Incentive Compensation.” The dollar amount for each award has been determined and is listed in the Target column.

  27. Outstanding Equity Awards

    Outstanding Equity Awards The following table contains information concerning the outstanding restricted stock awards for each named executive officer as of December 31, 2023. As of December 31, 2023, no named executive officer had unexercised stock options.

  28. Outstanding Equity Awards at December 31, 2023

    Outstanding Equity Awards at December 31, 2023

  29. Outstanding Equity Awards at December 31, 2023

    | Name | Number of Shares of Stock That Have Not Vested | Market Value of Shares of Stock That Have Not Vested(1) | | David Zalman | 941(2) | $63,734 | | | 1,420(3) | 96,176 | | | 2,372(4) | 160,656 | | | 35,000(5) | 2,370,550 | | Asylbek Osmonov | 7,500(6) | 507,975 | | H.E. Timanus, Jr. | 421(2) | 28,515 | | | 636(3) | 43,076 | | | 1,062(4) | 71,929 | | | 20,000(5) | 1,354,600 | | Edward Z. Safady | 421(2) | 28,514 | | | 636(3) | 43,076 | | | 1,061(4) | 71,862 | | | 20,000(5) | 1,354,600 | | Kevin J. Hanigan | 823(2) | 55,742 | | | 1,243(3) | 84,188 | | | 2,076(4) | 140,608 | | | 30,000(7) | 2,031,900 |

  30. Outstanding Equity Awards at December 31, 2023

    (1) Based on the closing price of $67.73 per share of the Company's Common Stock on the NYSE on December 29, 2023, the last trading day of the year. (2) These shares of restricted stock vested on February 15, 2024. (3) One-half of these shares of restricted stock vested on February 15, 2024 and the remaining one-half will vest on February 15, 2025. (4) One-third of these shares of restricted stock vested on February 15, 2024. One-third of these shares of restricted stock will vest on February 15, 2025 and the remaining one-third will vest on February 15, 2026. (5) These shares of restricted stock vested on January 19, 2024. (6) These shares of restricted stock will vest on July 19, 2025. These shares of restricted stock will vest on October 18, 2025.

  31. Stock Vested

    Stock Vested The following table contains information concerning the vesting of restricted stock during the fiscal year ended December 31, 2023 for each named executive officer. No named executive officer had any options vested during 2023 or outstanding as of December 31, 2023.

  32. Stock Vested for the Fiscal Year Ended December 31, 2023

    Stock Vested for the Fiscal Year Ended December 31, 2023

  33. Stock Vested for the Fiscal Year Ended December 31, 2023

    | | Stock Awards | | | Name | Number of Shares Acquired on Vesting | Value Realized on Vesting(1) | | David Zalman | 2,938 | $222,377 | | Asylbek Osmonov | — | — | | H.E. Timanus, Jr. | 1,316 | 99,608 | | Edward Z. Safady | 1,315 | 99,532 | | Kevin J. Hanigan | 2,571 | 194,599 |

  34. Stock Vested for the Fiscal Year Ended December 31, 2023

    (1) Based on the closing price of the Company’s Common Stock on the NYSE on the vesting date.

  35. Potential Payments upon Termination or Change in Control

    Potential Payments upon Termination or Change in Control The Company considers the establishment and maintenance of a sound and vital management team to be essential to protecting and enhancing its best interests and those of its shareholders. In this regard, the Company recognizes that the possibility of a change in control may exist and that such possibility, and the uncertainty and questions which it may raise among the named executive officers, may result in the departure or distraction of the named executive officers to the Company's detriment and that of its shareholders. Accordingly, the Company's Board has taken appropriate steps to reinforce and encourage the continued attention and dedication of the Company's Senior Chairman and Chief Executive Officer, Chairman and Vice Chairman to their assigned duties without distraction in the face of the potentially disturbing circumstances arising from the possibility of a change in control. Accordingly, the Company entered into employment and change-in-control agreements with each of David Zalman, H.E. Timanus, Jr. and Edward Z. Safady. On December 29, 2023, upon the recommendation of the Compensation Committee and approval by the Board, the Company and the Bank entered into an amended and restated employment agreement with David Zalman. Among other things, the employment agreement, as amended and restated, removes the age restriction related to extensions of the term of the agreement, so that the agreement now may be extended beyond the year in which Mr. Zalman turned age 67, which was 2023. The employment agreements with Messrs. Zalman and Timanus each provide for an initial term of three years and are automatically extended for an additional year each year thereafter, unless terminated in accordance with its terms. On March 10, 2021, upon the recommendation of the Compensation Committee and approval by the Board, the Company and the Bank entered into a new employment and change-in-control agreement with Edward Z. Safady that replaced his prior employment agreement. The employment agreement with Mr. Safady provides for an initial three-year term, with automatic one-year renewal periods thereafter, unless either party provides the other with 60 days’ prior written notice of an election not to renew the Agreement. Historically, the Bank has also entered into employment agreements with certain key employees of a target financial institution, with the term of employment effective upon the completion of the acquisition. In connection with the LegacyTexas merger, the Bank entered into an employment agreement with Kevin J. Hanigan, which expired in accordance with its terms on November 1, 2022, three years following the effective time of the LegacyTexas merger. Change in Control Provisions in Employment Agreements The employment agreement with Mr. Zalman provides that upon a Change in Control (capitalized terms are defined in the applicable employment agreement), regardless of whether there has been a termination of employment, he will be entitled to receive from the Company a lump sum cash payment equal to three times his base salary then in effect, plus three times the average of his earned annual bonus payment (consisting of the bonus paid under the formulaic annual incentive bonus program and any discretionary cash bonus) for the two years prior to the Change in Control. In addition, the employment agreement provides that any outstanding shares of restricted stock of the Company will vest upon a Change in Control. The employment agreement with Mr. Timanus provides that upon a Change in Control, regardless of whether there has been a termination of employment, the executive will be entitled to receive from the Company a lump sum cash payment equal to three times his base salary then in effect. These employment agreements do not contain post-employment non-competition or non-solicitation restrictions. The employment agreement with Mr. Safady provides that if his position were terminated by the Company without Cause or by Mr. Safady with Good Reason during the period that begins six months before and ends twelve months after a Change in Control, he would receive a payment equal to three times his base salary then in effect, plus three times the average of his earned annual bonus payment (consisting of the bonus paid under the formulaic annual incentive bonus program and any discretionary cash bonus) for the two years prior to his termination date. In either event, Mr. Safady would continue to be subject to the non-competition and non-solicitation provisions of his employment agreement until the later of the end of the term or one year following his termination date. The change in control payments to be made under the employment agreements are subject to a limitation that the total amount of all payments to the executive that would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Internal Revenue Code) shall be reduced so that no portion of such payments to the executive would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, other than in the circumstances specified in the employment agreements. Each of Messrs. Zalman, Timanus and Safady has the power to terminate his employment with the Company on 30 days prior written notice. Change in Control Provisions in Equity Plans and Agreements The named executive officers have been granted restricted stock awards pursuant to the Company’s 2020 Stock Incentive Plan. Under the 2020 Stock Incentive Plan, in the event of a change in control (as defined in the 2020 Stock Incentive Plan) the outstanding awards are not immediately vested or exercisable. However, the Compensation Committee may take one or more of the following actions as it deems appropriate with respect to outstanding awards: (1) accelerate the vesting of any outstanding award, (2) provide a cash payment for any outstanding award and/or (3) provide that any outstanding award may be assumed or substituted by an entity that acquires control of the Company. More specifically, the Compensation Committee, in its sole discretion, may accelerate the vesting date of any outstanding award, the payout of such awards, or both, provided that such action does not conflict with any provision contained in an award agreement unless that provision is amended in accordance with the 2020 Stock Incentive Plan. Payment upon Change in Control The table below reflects the amount of compensation payable to each of the Company's named executive officers in the event of a change in control. The treatment of outstanding restricted stock granted to each of the named executive officers pursuant to the 2020 Stock Incentive Plan upon a change in control will be determined by the Compensation Committee, unless otherwise specified in the executive’s employment agreement. For purposes of this table, it is assumed that such restricted stock will become vested upon a change in control. The amounts shown below assume that a change in control occurred on December 29, 2023 (the last trading day of the year) and includes the shares granted to each of Messrs. Zalman, Timanus, Safady and Hanigan on December 29, 2023 pursuant to the annual incentive bonus program. The amounts also assume a price per share of the Common Stock equal to $67.73 based on the closing price of the Common Stock on the NYSE on December 29, 2023. These amounts are estimates of the amounts that would have been paid to the named executive officer upon a change in control as of that date under the specified circumstances. The actual amounts to be paid can only be determined at the time of such change in control.

  36. Potential Payments upon Termination or Change in Control

    | Name | Salary/Bonus | Acceleration and Continuation of Equity Awards(1) | Total Change in Control Benefits | | David Zalman(2) | $8,666,169(3) | $2,691,116 | $11,357,285 | | Asylbek Osmonov | — | 507,975 | 507,975 | | H.E. Timanus, Jr.(2) | 1,644,969(4) | 1,498,120 | 3,143,089 | | Edward Z. Safady(2) | 4,156,017(5) | 1,498,052 | 5,654,069 | | Kevin J. Hanigan | — | 2,312,438 | 2,312,438 |

  37. Potential Payments upon Termination or Change in Control

    Reflects the value of any unvested shares of restricted stock that would vest and become freely tradable based on the closing price of $67.73 per share of the Company’s Common Stock on the NYSE on December 29, 2023, the last trading day of the year. (2) The payments to be made to this named executive officer under his employment agreement are subject to a limitation that the total amount of all payments to the named executive officer that would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Internal Revenue Code) shall be reduced so that no portion of such payments to such executive officer would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, other than in the circumstances specified in the employment agreement. (3) In connection with payments to be made pursuant to Mr. Zalman’s employment agreement, this number reflects an amount equal to three times his annual base salary as of December 31, 2023 and three times the average of his annual bonus payment (consisting of the bonus paid under the annual incentive bonus program and the discretionary cash bonus) for the years 2023 and 2022. (4) In connection with payments to be made pursuant to Mr. Timanus’ employment agreement, this number reflects an amount equal to three times his annual base salary as of December 31, 2023. (5) In connection with payments to be made pursuant to Mr. Safady’s employment agreement in the event of a termination of employment, which is assumed for purposes of this table, this number reflects an amount equal to three times his annual base salary as of December 31, 2023 and three times the average of his annual bonus payment (consisting of the bonus paid under the annual incentive bonus program and the discretionary cash bonus) for the years 2023 and 2022. Termination Provisions in Employment Agreements Without Cause or for Good Reason. If Mr. Zalman or Mr. Timanus, as the case may be, is terminated by the Company without Cause or terminates his employment for Good Reason, such executive officer will be entitled to receive a lump sum cash payment equal to the aggregate of (1) any unpaid portion of such officer's base salary then in effect through the date of termination, (2) any compensation previously deferred and not yet paid by the Company, (3) any accrued but unpaid vacation pay, (4) any amounts or benefits which such executive officer may be entitled through the date of termination under then-existing or applicable plans, programs, arrangements, and policies of the Company and (5) an amount equal to three times such executive officer's base salary then in effect, but only if such executive officer has not received a payment for a Change in Control. If Mr. Safady is terminated by the Company without Cause or terminates his employment for Good Reason, other than in connection with a Change in Control as discussed above, he will be entitled to receive a lump sum cash payment equal to the aggregate of (1) any unpaid portion of his base salary then in effect through the date of termination, (2) any accrued but unpaid vacation pay, (3) reimbursement for incurred business expenses that remain unpaid as of the date of termination, (4) any amounts or benefits which he may be entitled to through the date of termination under then-existing or applicable plans or arrangements, (5) an amount equal to the greater of (a) his base salary through the term of the agreement and (b) one times his base salary then in effect and (6) a pro rata portion of his average annual bonus that is unpaid for the year in which termination occurs. Additionally, any outstanding restricted stock would be accelerated and vest in one-third increments for each full year worked after the applicable grant date. In either event, Mr. Safady would continue to be subject to the non-competition and non-solicitation provisions of his employment agreement until the later of the end of the term or one year following his termination date. With Cause or Without Good Reason. If Mr. Zalman or Mr. Timanus, as the case may be, is terminated by the Company for Cause or terminates his employment without Good Reason, such executive officer will be entitled to receive from the Company a lump sum cash payment equal to the aggregate of (1) any unpaid portion of such executive officer's base salary then in effect through the date of termination, (2) any compensation previously deferred by such executive officer and not yet paid by the Company, (3) any accrued but unpaid vacation pay and (4) any amounts or benefits which such executive officer may be entitled through the date of termination under then-existing or applicable plans, programs, arrangements, and policies of the Company. If Mr. Safady’s employment is terminated by the Company for Cause or if he terminates his employment without Good Reason, he would be entitled to receive a lump sum cash payment equal to the aggregate of (1) any unpaid portion of his base salary then in effect through the date of termination, (2) any accrued but unpaid vacation pay, (3) reimbursement for incurred business expenses that remain unpaid as of the date of termination, (4) any amounts or benefits which he may be entitled to through the date of termination under then-existing or applicable plans or arrangements. In either event, Mr. Safady would continue to be subject to the non-competition and non-solicitation provisions of his employment agreement until the later of the end of the term or one year following his termination date. Upon Death or Disability. If Mr. Zalman or Mr. Timanus, as the case may be, is terminated by the Company by reason of death or Disability, such executive officer (or his legal representative) will be entitled to receive a lump sum cash payment equal to the aggregate of (1) any unpaid portion of such executive officer's base salary then in effect through the date of death or disability, (2) any compensation previously deferred and not yet paid by the Company, (3) any accrued but unpaid vacation pay, (4) any amounts or benefits which the executive may be entitled through the date of termination under then-existing or applicable plans, programs, arrangements, and policies of the Company and (5) an amount equal to three times such executive officer's base salary then in effect, but only if such executive officer has not received a payment for a Change in Control. If Mr. Safady is terminated by the Company for reason of death or Disability, he will be entitled to receive a lump sum cash payment equal to the aggregate of (1) any unpaid portion of his base salary then in effect through the date of termination, (2) any accrued but unpaid vacation pay, (3) reimbursement for incurred business expenses that remain unpaid as of the date of termination, and (4) any amounts or benefits which he may be entitled to through the date of termination under then-existing or applicable plans or arrangements. In addition, if his employment is terminated for Disability, Mr. Safady would continue to be subject to the non-competition and non-solicitation provisions of his employment agreement until the later of the end of the term or one year following his termination date. Termination Provisions in Incentive Plans and Agreements For all restricted stock awards granted under the 2020 Stock Incentive Plan, the individual award agreements between the Company and the awardee provide that if an awardee ceases to be a director, officer or employee of the Company or the Bank, as the case may be, for any reason other than as a result of death or disability, the restricted shares subject to the award will be forfeit. If the awardee’s service to the Company or the Bank is terminated because of death or disability, to the extent the restricted shares are subject to forfeiture restrictions on the date of such termination, the forfeiture restrictions will lapse.

  38. CEO Pay Ratio Disclosure

    CEO Pay Ratio Disclosure As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, the Company is providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of David Zalman, the Company’s Chief Executive Officer. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. To identify the median of the annual total compensation of all of the Company’s employees, as well as to determine the annual total compensation of the Company’s median employee and the Chief Executive Officer, the Company took the following steps: • We determined that, as of December 31, 2023, the Company’s full-time and part-time employee population consisted of 3,872 individuals, (including the Chief Executive Officer) and all of these individuals were located in the United States. • To identify the “median employee” (other than the Chief Executive Officer), we compared the compensation amounts from the Company’s payroll records as reported to the Internal Revenue Service on Form W-2 for 2023. In making this determination, we did not annualize the compensation of full or part-time employees who were hired in 2023, but did not work for the Company for the entire fiscal year. Further, in accordance with SEC rules we did not make full-time equivalent adjustments to the Company’s 240 part-time employees. • Once we identified the median employee, we combined all of the elements of such employee's compensation for 2023 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K resulting in annual total compensation of our median employee of $44,345. • To determine the annual total compensation of the Chief Executive Officer, we used the amount reported in the “Total” column of the Summary Compensation Table appearing on page 33, which was calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. Total compensation for the Chief Executive Officer in 2023, calculated using the methodology described above, was $3,228,008. Based on this information, for 2023, the ratio of the annual total compensation of the Chief Executive Officer to the median of the annual total compensation of all employees is 73 to 1. SEC rules for identifying the median employee and calculating the pay ratio allow companies to apply various methodologies and various assumptions and, as a result, the pay ratio reported by the Company may not be comparable to the pay ratio reported by other companies. The information disclosed in this section was developed and is provided solely to comply with specific, legal requirements. The Company does not use any of this information in managing the Company. The Company does not believe this information provides shareholders with a useful mechanism for evaluating management's effectiveness, operating results, or business prospects, nor for comparing the Company with any other company in any meaningful respect.

  39. Pay versus Performance

    Pay versus Performance The following table provides information required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K. For information regarding the way in which the Company aligns executive compensation with the Company’s performance, refer to “Compensation Discussion and Analysis” above. The following table provides information showing the relationship during 2023, 2022, 2021 and 2020 between (1) executive compensation “actually paid” (as defined by SEC rule and further described below) to (a) each person serving as the Company’s principal executive officer (“PEO”), and (b) the Company’s non-PEO named executive officers (also referred to as the “other named executive officers”), on an average basis, and (2) the Company’s financial performance. The Company’s selected performance measure included in the chart below is nonperforming assets to average interest-earning assets. Information presented in this section will not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act or the Exchange Act, except as the Company may specifically do so by reference to this section.

  40. Pay versus Performance

    | | | | | | Value of initial fixed $100 investment based on: | | | | | Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(2) | Average Summary Compensation Table Total for Non-PEO NEOs(3) | Average Compensation Actually Paid to Non-PEO NEOs | Total Shareholder Return | Peer Group Total Shareholder Return(4) | Net Income (in thousands)(5) | NPAs to Average Interest-Earning Assets(6) | | 2023 | $3,229,008 | $3,052,914 | $1,593,619 | $1,496,454 | $106.79 | $95.12 | $419,316 | 0.21% | | 2022(7) | 3,035,574 | 3,064,051 | 2,088,997 | 2,080,990 | 110.55 | 101.92 | 524,516 | 0.08% | | 2021(8) | 5,534,173 | 5,627,711 | 2,151,891 | 2,227,148 | 106.69 | 124.84 | 519,297 | 0.09% | | 2020 | 3,484,221 | 3,404,844 | 1,548,064 | 1,529,470 | 99.59 | 89.37 | 528,904 | 0.21% |

  41. Pay versus Performance

    (1) David Zalman, the Company’s Chief Executive Officer, was the PEO for each of the years presented. (2) The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized or received by the Company’s named executive officers. These amounts reflect the total compensation as reflected in the Summary Compensation Table with certain adjustments as described below. (3) The Company’s non-PEO named executive officers for 2023, 2021 and 2020 consisted of Asylbek Osmonov, H. E. Timanus, Jr., Edward Z. Safady and Kevin Hanigan. The non-PEO named executives officers for 2022 consisted of Asylbek Osmonov, H. E. Timanus, Jr., Edward Z. Safady, Kevin Hanigan and J. Mays Davenport. (4) The Peer Group total shareholder return (“TSR”) is the cumulative total shareholder return of the NASDAQ Bank Index which the Company also uses in the stock performance graph included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Both the Company TSR and Peer Group TSR assume $100 was invested for the period starting December 31, 2019 through the end of the listed fiscal year. Dividend reinvestment has been assumed. Historical stock performance is not necessarily indicative of future stock performance. (5) As reported in the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2023. (6) Represents the Company’s nonperforming assets to average interest-earning assets for each fiscal year. (7) Non-PEO compensation for 2022 includes the grant date fair value of a three-year cliff vested restricted stock award of $2,227,200 for Mr. Hanigan and $742,000 for Mr. Davenport. Messrs. Hanigan and Davenport did not receive such an award in 2023, 2021 or 2020. PEO compensation for 2021 includes the grant date fair value of a three-year cliff vested restricted stock award of $2,462,250. Mr. Zalman did not receive such an award for 2023, 2022 or 2020. Non-PEO compensation for 2021 includes the grant date fair value of a three-year cliff vested restricted stock award of $1,407,000 for each Mr. Timanus and Mr. Safady. Messrs. Timanus and Safady did not receive such an award in 2023, 2022 or 2020. Compensation “actually paid” (“CAP”) reflects adjusted values for unvested and vested equity awards during the years shown in the tables based on year-end stock prices but does not reflect actual amounts paid out for those awards. To calculate CAP, the following amounts were deducted from and added to the amount of total compensation as reflected in the Summary Compensation Table (“SCT”) on page 33. PEO SCT Total to CAP Reconciliation

  42. Pay versus Performance

    | Year | Salary(1) | Bonus and Non-Equity Incentive Compensation(2) | Other Compensation(3) | SCT Total | Deductions from SCT Total(4) | Additions to SCT Total(5) | CAP | | 2023 | $1,105,186 | $1,724,350 | $238,816 | $3,229,008 | $160,656 | $(15,438) | $3,052,914 | | 2022 | 1,066,578 | 1,594,761 | 219,427 | 3,035,574 | 154,808 | 183,285 | 3,064,051 | | 2021 | 1,041,712 | 1,612,548 | 213,699 | 5,534,173 | 2,666,214 | 2,759,752 | 5,627,711 | | 2020 | 1,020,807 | 1,958,704 | 236,703 | 3,484,221 | 268,007 | 188,630 | 3,404,844 |

  43. Pay versus Performance

    Average Non-PEO NEO’s SCT Total to CAP Reconciliation

  44. Pay versus Performance

    | Year | Salary(1) | Bonus and Non-Equity Incentive Compensation(2) | Other Compensation(3) | SCT Total | Deductions from SCT Total(4) | Additions to SCT Total(5) | CAP | | 2023 | $654,972 | $782,842 | $84,706 | $1,593,619 | $71,100 | $(26,065) | $1,496,454 | | 2022 | 597,934 | 664,508 | 66,625 | 2,088,997 | 759,929 | 751,922 | 2,080,990 | | 2021 | 617,335 | 671,107 | 69,683 | 2,151,891 | 793,767 | 869,024 | 2,227,148 | | 2020 | 602,555 | 780,569 | 46,334 | 1,548,064 | 118,606 | 100,012 | 1,529,470 |

  45. Pay versus Performance

    (1) Reflects amounts reported in the Salary column in the SCT for each year shown. (2) Reflects amounts reported in the total of the Bonus and Non-Equity Incentive Plan Compensation columns in the SCT for each year shown. (3) Reflects amounts reported in the All Other Compensation column in the SCT for each year shown. (4) Represents the grant date fair value of the restricted stock awards granted each year as reported in the Stock Awards column in the SCT. The Company does not maintain a pension plan; therefore, a deduction from SCT total compensation related to pension value is not needed. (5) Reflects the value of equity calculated in accordance with the requirements set forth in Item 402(v) of Regulation S-K for determining CAP for each year shown. The equity component of CAP for fiscal years 2023, 2022, 2021 and 2020 is further detailed in the supplemental tables below: PEO Equity Component of CAP

  46. Pay versus Performance

    | Year | Fair Value of Current Year Equity Awards at 12/31 | Change in Value of Prior Years' Awards Unvested at 12/31 | Change in Value of Prior Years' Awards that Vested in FY | Equity Value Included in CAP | | | (a) | (b) | (c) | (d) = (a) + (b) + (c) | | 2023 | $160,656 | $(184,937) | $8,843 | $(15,438) | | 2022 | 154,808 | 14,504 | 13,973 | 183,285 | | 2021 | 2,734,458 | 12,186 | 13,108 | 2,759,752 | | 2020 | 268,007 | (86,895) | 7,518 | 188,630 |

  47. Pay versus Performance

    Average Non-PEO NEOs Equity Component of CAP

  48. Pay versus Performance

    | Year | Fair Value of Current Year Equity Awards at 12/31 | Change in Value of Prior Years' Awards Unvested at 12/31 | Change in Value of Prior Years' Awards that Vested in FY | Equity Value Included in CAP | | | (a) | (b) | (c) | (d) = (a) + (b) + (c) | | 2023 | $71,100 | $(101,079) | $3,914 | $(26,065) | | 2022 | 751,889 | 3,552 | (3,519) | 751,922 | | 2021 | 813,267 | 52,160 | 3,597 | 869,024 | | 2020 | 118,606 | (37,910) | 19,316 | 100,012 |

  49. Pay versus Performance

    Relationship between Pay and Performance The graphs below show (1) the relationship of CAP to the Company’s Chief Executive Officer and the other named executive officers in 2023, 2022, 2021 and 2020 to the TSR of the Company for such years, the Company’s net income for such years, and the Company’s nonperforming assets to average interest-earning assets for such years and (2) the Company’s TSR to the NASDAQ Bank Index TSR for such years. PEO and Average NEO Compensation Actually Paid Versus Properity Bancshares TSR Prosperity Bancshares Net Income PEO and Average NEO Compensation Actually Paid Versus NPAs to Average Interest-Earning Assets Prosperity Bancshares TSR versus NASDAQ Bank Index TSR Financial and Nonfinancial Performance Measures Presented below is an unranked list of the performance measures that represent the most important metrics the Company used to link executive compensation actually paid to the Company’s named executive officers for the most recently completed fiscal year to the Company’s performance, in addition to the financial measures set forth in the Pay versus Performance Table on page 42: • Return on Average Assets • Increase in Earnings Per Share • Efficiency Ratio • Increase in Dividends • Merger and Acquisitions Strategy, Negotiation and Integration Compensation decisions at the Company are made independently of disclosure requirements. CAP is a supplemental measure to be viewed alongside performance measures as an addition to the philosophy and strategy of compensation-setting discussed elsewhere in the overview of the executive compensation program, not in replacement.