-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, j7DQkulTp3SM7DXqOtiTg7AK3u/I8+wkj1nAz4qZyzMMcSuVvzny0jDuGCJ92QXA pdW8jwjza1E+L7tnSgs6MQ== 0000036029-94-000002.txt : 19940322 0000036029-94-000002.hdr.sgml : 19940322 ACCESSION NUMBER: 0000036029-94-000002 CONFORMED SUBMISSION TYPE: ARS PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940321 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST FINANCIAL BANKSHARES INC CENTRAL INDEX KEY: 0000036029 STANDARD INDUSTRIAL CLASSIFICATION: 6022 IRS NUMBER: 750944023 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: ARS SEC ACT: 34 SEC FILE NUMBER: 000-07674 FILM NUMBER: 94517068 BUSINESS ADDRESS: STREET 1: 400 PINE STREET THIRD FL STREET 2: P O BOX 701 CITY: ABILENE STATE: TX ZIP: 79601-0701 BUSINESS PHONE: 9156757155 ARS 1 PROXY STATEMENT - NOTICE TO SHAREHOLDERS SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities and Exchange Act of 1934 Filed by Registrant [X] Filed by a party other than the Registrant [ ] Check the appropriate box: [X] Preliminary Proxy Statement [ ] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to par. 240.14a-11(c) or par. 240.14a-12 First Financial Bankshares, Inc. (Name of Registrant as Specified in its Charter) Curtis R. Harvey (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the appropriate box): [X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2). [ ] $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: / 4) Proposed maximum aggregate value of transaction: Set forth the amount on which the filing fee is calculated and state how it was determined. [ ] 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: FIRST FINANCIAL BANKSHARES, INC. 400 Pine Street Abilene, Texas 79601 (915)675-7155 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS April 26, 1994 TO OUR SHAREHOLDERS: The annual meeting of shareholders of First Financial Bankshares, Inc. will be held in the Abilene Civic Center, 1100 North 6th Street, Abilene, Texas, at 10:30 a.m. on Tuesday, April 26, 1994, for the following purposes: (1) To elect 15 Directors of the Company. (2) To approve the appointment by the Board of Directors of Arthur Andersen & Co. as the independent accountants of the Company for the year 1994. (3) To approve amendment to Articles of Incorporation to increase from five million (5,000,000) to ten million (10,000,000) the aggregate number of shares of stock which the Corporation shall have authority to issue. (4) To act on such other business as may properly come before the meeting, or any adjournment thereof. The Board of Directors ("management") is not aware of any other business to come before the meeting. The transfer books of the Company will not be closed, but only the holders of common stock of record at the close of business on March 18, 1994, will be entitled to notice of and to vote at the annual meeting. The management sincerely desires your presence at the annual meeting and luncheon to be held immediately thereafter, but, nevertheless, respectfully urges you to sign and return the enclosed proxy in order to remove any question of your vote being counted. If you sign and return the proxy, but later desire to vote in person, you may revoke your proxy by a written request to either of the named proxies. Revocation of your proxy can be done either before or at the annual meeting, so long as your written request is received by one of the named proxies before your proxy is voted. By order of the Board of Directors. KENNETH T. MURPHY, Chairman March 31, 1994 FIRST FINANCIAL BANKSHARES, INC. 400 Pine Street Abilene, Texas 79601 (915) 675-7155 PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS April 26, 1994 SOLICITATION AND REVOCABILITY OF PROXIES The accompanying proxy is solicited by and on behalf of the Board of Directors of First Financial Bankshares, Inc., a Texas corporation (the "Company"), for use at the annual meeting of shareholders to be held on Tuesday, April 26, 1994, at the time and place and for the purposes set forth in the accompanying notice and at any recess ar adjournments thereof. The solicitation will be by mail. The total expense of such solicitation will be borne by the Company and will include reimbursement paid to brokerage firms and other custodians, nominees and fiduciaries for their expenses in forwarding solicitation material regarding the meeting to beneficial owners. It may be that further solicitation of proxies will be made by telephone or oral communication with some of the shareholders of the Company following the original solicitation. All further solicitation will be made by the officers of the Company who will not be additionally compensated therefor. The accompanying proxy, even though executed and returned, may be revoked at any time prior to voting of the proxy by written request to either of the named proxies by the shareholder of record. The proxy materials were mailed to shareholders on March 31, 1994. Only shareholders of record at the close of business on March 18, 1994, will be entitled to vote at such meeting. On such date there were 3,971,367 shares of common stock outstanding and entitled to vote. The holders of common stock will be entitled to one vote per share and cumulative voting is not permitted. ELECTION OF DIRECTORS A Board of Directors is to be elected at the annual meeting. Each Director elected will hold office until the next annual meeting of the shareholders and until his or her successor shall be elected and qualified. Under the Bylaws of the Company, an individual may not stand for election or reelection as Director upon attainment of 72 years of age unless such individual owns at least 1% of the outstanding shares of the Company and is less than 75 years of age. While Bylaws of the Company fix the number of Directors at a number not less than three nor more than thirty, fifteen nominees are named and proposed by management. The reason that the number of Directors authorized exceeds the number of nominees is to avoid the necessity of amending the Bylaws of the Company each time that it would appear to be to the advantage of the Company to increase the number of its Directors. The proxies accompanying this proxy statement cannot be voted by the proxy committee for a greater number of persons than the number of nominees named. Other Directors could be elected after nominations from the floor of the meeting, if such nominees each receive a majority vote of the shareholders. Although the management of the Company does not contemplate that any of the nominees will be unable to serve, if such a situation arises prior to the meeting, the proxy committee will vote in accordance with its best judgment. The names and principal occupations of the nominees, together with the length of service as a Director and the number of shares of common stock of the Company beneficially owned by each of them on December 31, 1993, are as follows:
Shares of The Company Percent Years as Principal Occupation Beneficially of Shares Name Age Office Director (1) During Last Five Years Owned Outstanding J. Allen Baird 71 Director 30 Chairman, Mrs Baird's 7,344 0.2 Bakeries, Inc. since December 16, 1992; President, Mrs Baird's Bakeries, Inc. F. Scott Dueser (2) 40 Director 3 President and Chief 19,733 0.5 Executive Officer, First National Bank of Abilene, Abilene, Texas* since May 18, 1993; President, First National Bank of Abilene, Abilene,Texas*, January 15, 1991, to May 18, 1993; Executive Vice President, First National Bank of Abilene, Abilene, Texas* Patrick N. Gerald 54 Director 13 Chairman and President, 12,401 0.3 First National Bank, Sweetwater, Sweetwater, Texas* Robert E. Hitt 69 Director 21 Investments 41,439 1.1 (2) (3) (4) (5) Ralph N. Hooks (2) (3) 74 Director 38 Chairman, Lydick-Hooks 78,255 2.0 Roofing Company Joe B. Matthews (5) 49 Director 6 Geologist 1,131 Raymond A. McDaniel, 60 Director 2 McDaniel Associates 11,757 0.3 Jr. (3) Bynum Miers (5) 57 Director 2 Ranching and Investments 10,575 0.3 Kenneth T. Murphy (2) 56 Chairman, 22 See "Executive Officers" 37,871 1.0 President on Page 6 and Chief Executive Officer, and Director Dian Graves Owen 54 Director 1 Chairman, Owen Healthcare,Inc. 9,938 0.3 James M. Parker 63 Director 21 President, Parker 158,777 4.0 (2) (3) (4) Properties, Inc. W.V. Ramsey, Jr., M.D. (2) (5) (4) 66 Director 23 Chairman, Abilene Aero, 85,000 2.1 Inc. since July 1, 1991; Radiology Associates Craig Smith 51 Director 4 Chairman and President, 18,221 0.5 Hereford State Bank, Hereford, Texas* H.T. Wilson (2) (5) 66 Director 11 Chairman, Eastland National 41,349 1.0 Bank, Eastland, Texas* Stanley P. Wilson (5) 71 Director 23 Retired Executive Vice 7,101 0.2 President and General Counsel, Central and South West Corporation Shares beneficially owned by all Executive Officers and Directors as a group 541,552 13.6 *The bank shown is a subsidiary of the Company. (1) The years indicated are the approximate number of years each person has continuously served as Director of the Company, or, prior thereto, of First National Bank of Abilene, which became a wholly-owned subsidiary of the Company in April, 1973, when all the then Directors of First National Bank of Abilene became Directors of the Company. (2) This Director/Nominee is a member of the Executive Committee. (3) This Director/Nominee is a member of the Stock Option Committee. (4) This Director/Nominee is a member of the Administrative Committee of the Company Profit Sharing and Pension Plan. (5) This Director/Nominee is a member of the Directors' Audit Committee.
MEETINGS OF BOARD OF DIRECTORS During the last full year, four regular quarterly meetings of the Board of Directors were called and held. All directors were able to attend at least 75% of the aggregate of the meetings of the Board of Directors and the meetings held by all committees of the Board on which they served. Directors who are not officers of the Company receive $800 for each Board meeting attended. COMMITTEES First Financial Bankshares, Inc. does not have a standing nominating or compensation committee of the Board of Directors. The Company has a standing Executive Committee whose responsibilities include functioning as a compensation committee and a nominating committee with appropriate recommendations to the entire Board. The Executive Committee met nine times during 1993 and, among other items, considered and took action on matters relating to its capacity as Compensation and/or Nominating Committee. In its capacity as Nominating Committee, the Executive Committee will consider director nominations from security holders. There are no prescribed procedures which the security holder must follow. The Company has a Directors' Audit Committee which has the responsibility of acting on behalf of the Board in receiving and reviewing both internal and external audit reports. During 1993 the Audit Committee met two times. The Company also has an Administrative Committee for the Profit Sharing, Pension and Flexible Spending Account Benefit Plans. Pursuant to the 1992 Incentive Stock Option Plan for Key Employees of First Financial Bankshares, Inc. and its Subsidiaries, the Board of Directors has also appointed a Stock Option Committee composed of five members. The directors serving on these committees are indicated in the section titled "ELECTION OF DIRECTORS". Directors who are not officers of the Company receive $400 for each committee meeting attended. APPROVAL OF INDEPENDENT ACCOUNTANTS The Board of Directors has selected Arthur Andersen & Co. to serve as independent certified public accountants to the Company and its subsidiaries for the year 1994 and to serve until the next annual meeting in April, 1995. Arthur Andersen & Co. has served as the Company's independent accountants since 1990. The Company has been advised by Arthur Andersen & Co. that neither its firm nor any of its members has any financial interest, direct or indirect, in the Company or any of its subsidiaries, nor has had any connection with the Company or any of its subsidiaries in any capacity other than independent accountants. The Board of Directors recommends that you vote for the approval of the appointment of Arthur Andersen & Co. If the shareholders do not approve the appointment of Arthur Andersen & Co., then the appointment of independent accountants will be reconsidered by the Board of Directors. Representatives of Arthur Andersen & Co. are expected to be present at the annual Shareholders meeting, and they may have the opportunity to make a statement, if they desire to do so, and to respond to appropriate questions. APPROVAL TO INCREASE AUTHORIZED SHARES The Board of Directors recommends that you vote for the amendment to the Articles of Incorporation to increase from five million (5,000,000) to ten million (10,000,000) the aggregate number of shares of stock which the Corporation shall have authority to issue. The additional authorized shares considered are necessary for future stock dividends and additional acquisitions through exchange of stock. EXECUTIVE OFFICERS The executive officers of First Financial Bankshares, Inc. are:
Term of Years Served Principal Occupation Name Age Office Office In Such Office During Past 5 Years Kenneth T. Murphy 56 Chairman, 1 year 7 years Chairman, President and Chief President and Executive Officer; Chairman, Chief Executive First National Bank of Abilene, Officer Abilene, Texas* Curtis R. Harvey 48 Executive Vice 1 year 3 years Executive Vice President and President and Chief Financial Officer since Chief Financial December 1, 1990; Executive Vice Officer President, Bank One, Texas, N.A. * The bank shown is a subsidiary of the Company.
COMPENSATION OF OFFICERS The following table provides individual compensation information on the Chief Executive Officer and the four most highly compensated officers of the Company and its subsidiaries. SUMMARY COMPENSATION TABLE
Long Term Annual Compensation Compensation Awards All Other Compensation Name and Principal Position Year Salary($) Options(#) (1)(2) Kenneth T. Murphy, Chairman, President & CEO - First Financial Financial Bankshares, Inc. 1993$ 257,000 4,712 $ 79,016 1992 237,000 7,221 36,400 1991 217,750 3,000 22,981 F. Scott Dueser, President & CEO 1993 151,2502,647 18,382 First National Bank of Abilene 1992 130,0002,155 16,305 1991 114,167 2,000 12,415 Patrick N. Gerald, Chairman & 1993 132,0001,507 14,031 President & CEO - First National 1992 125,0004,775 13,702 Bank, Sweetwater 1991 121,000 1,000 11,713 Craig Smith, Chairman and 1993 124,500 1,509 15,299 President & CEO - 1992 117,500 1,817 15,905 Hereford State Bank 1991 110,000 1,500 13,745 Curtis R. Harvey, Executive Vice President and CFO - 1993 117,000 1,225 13,050 First Financial Bankshares, Inc. 1992 110,000 750 13,024 1991 105,000 1,500 10,852 (1) The Company's 1993 contribution to Profit Sharing Plan. (2) The amounts for Mr. Murphy include the Company's accruals for deferred compensation which totaled $52,500 in 1993 and $8,750 in 1992.
COMPENSATION PURSUANT TO PLANS General Effective January 1, 1984, the Company adopted First Financial Bankshares, Inc. Pension and Profit Sharing Plans, at which time the authority for the Plans was placed under the directors of the Company. These Plans were previously under authority of the directors of First National Bank of Abilene as these plans had originated through that bank. Legislation known as TRA '86 requires that all employee benefit plans be amended to comply with said legislation and subsequent regulations. Currently the deadline for amending these plans is December 31, 1994. During 1991 and effective January 1, 1987, the Company and its subsidiaries, except First National Bank in Cleburne, adopted an amendment and restatement of the Company Profit Sharing Plan as required by the aforementioned legislation. Although the Company Pension Plan has not yet been amended and restated, the directors adopted a benefit formula effective January 1, 1989, which complies with new regulations. An employee is eligible to become a participant in the Company Pension and Profit Sharing Plans on January 1, coincident with or immediately following date of employment. The Company and all of its then subsidiary banks adopted a Flexible Spending Account Benefit Plan for all employees which became effective in 1988. First National Bank in Cleburne adopted all benefit plans effective in 1991. Stephenville Bank & Trust Co., which was acquired on February 25, 1993, adopted all benefit plans effective in 1993. Profit Sharing Plan Each participating employer (that is, the Company and each subsidiary which has adopted the Plan) determines on an annual basis the contribution which it will make to the Profit Sharing Plan from such employer's operating profits. Contributions under the Profit Sharing Plan are administered by an Administrative Committee appointed by the Board of Directors of First Financial Bankshares, Inc. for the exclusive benefit of Plan participants under the provisions of a Trust Agreement. Under the Profit Sharing Plan, eligible employees may contribute between 1% and 5% of their eligible earnings, although contributions by employees are not required as a condition of participation. Each employer's annual contribution is allocated among the accounts of the active Plan participants employed by such employer, in the ratio that each participant's compensation bears to the total compensation of all participants of such employer. Compensation means the total amount paid to an employee during the year including bonuses, commissions, and overtime pay, but excluding reimbursed expenses, director fees, group insurance benefits and pension and profit sharing contributions. Notwithstanding the foregoing, the compensation amount used to calculate a participant's benefit is limited by the IRS to a maximum of $235,840. Additionally, the Annual Addition which may be allocated to a participant is limited to $30,000. Effective January 1, 1988, compensation also includes the amount elected by an employee as salary reduction under the Flexible Spending Account Benefit Plan. The Profit Sharing Plan provides for benefits to vest (become nonforfeitable) in graduated percentages for the first six (6) years of participation, with benefits being fully vested after seven (7) years of credited service. Generally, an employee's benefit at normal retirement will be the contributions allocated to his account while a participant, increased by gains and decreased by losses from investments of the trust and increased by any forfeitures allocated to his account. An employee is always fully vested with respect to any voluntary contributions he makes, and death or disability of a participant while employed by the Company or one of its subsidiaries results in immediate full vesting with respect to employer contributions. If a participant terminates employment for any other reason, the total amount of his employee contribution account and the vested portion of his employer contribution account are distributed to him. Pension Plan The Company's Pension Plan requires annual contributions sufficient to provide the pension benefits accruing to employees under the Plan. The annual benefit for a participant in the Pension Plan who retires on his normal retirement date is the Accrued Benefit at December 31, 1988, plus 1.25% of average compensation multiplied by years of service from January 1, 1989. "Average Compensation" is the average compensation during the 10 years immediately preceding the date of determination. Compensation means the total amount paid to an employee during the year including bonuses, commissions, and overtime pay, but excluding reimbursed expenses, director fees, group insurance benefits and pension and profit sharing contributions. There are provisions in the Plan for early retirement with reduced benefits. There is no vesting of Plan benefits until a participant has 5 or more years of credited service with participating employers. Full (100%) vesting occurs upon the completion of 5 years of credited service or upon reaching age 65 without regard to credited service. The Company Pension Plan is subject to the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (ERISA) and there is no present funding deficiency. Only one of the six banks is not fully funded where its past service costs require current funding of any significance. Contributions to the Company Pension Plan for the past five years (1989-1993) have been $54,397, $90,042, $99,602, $98,097, and $162,052, respectively. The following table illustrates estimated retirement benefits under the Company Pension Plan for persons in specified remuneration and years of service categories and which benefits are payable annually for life with 10 years certain. The benefits listed in the table are not subject to any deduction for social security or other offset amounts. This illustration does not reflect any benefit which a participant may have accrued at December 31, 1988. PENSION PLAN TABLE
Years of Service Remuneration 15 20 25 30 35 $ 25,000 $ 4,688 $ 6,250 $ 7,813 $ 9,375 $ 10,938 50,000 9,375 12,500 15,625 18,750 21,875 75,000 14,063 18,750 23,438 28,125 32,813 100,000 18,750 25,000 31,250 37,500 43,750 125,000 23,438 31,250 39,063 46,875 54,688 150,000 28,125 37,500 46,875 56,250 65,625 200,000 37,500 50,000 62,500 75,000 87,500 250,000 46,875 62,500 78,125 93,750 109,375
The maximum annual pension benefit payable allowable under current law is $112,221. As of December 31, 1993, Mr. Murphy was credited with 23 years of service under the Company Pension Plan, Mr. Gerald was credited with 18 years of service, Mr. Smith was credited with 24 years of service, Mr. Dueser was credited with 17 years of service, and Mr. Harvey was credited with 3 years of service. The covered compensation of each of these officers and directors during 1993 was $235,840, $132,966, $124,500, $152,482, and $118,810, respectively. Flexible Spending Account Benefit Plan Effective January 1, 1988, the Company and its subsidiaries adopted a Flexible Spending Account Benefit Plan. An employee is eligible to become a participant in this plan on the first day of the month following completion of two months of service. The Flexible Spending Account Benefit Plan allows each participant to redirect a portion of his/her salary, before taxes, to pay certain medical and/or dependent care expenses. This plan is administered by the Administrative Committee appointed by the Board of Directors of First Financial Bankshares, Inc. STOCK OPTIONS At the 1992 Annual Meeting, the "1992 Incentive Stock Option Plan" was approved and adopted. The purposes of the Plan are to attract and retain key employees and to encourage employee performance by providing them with a proprietary interest in the Company through the granting of stock options. The maximum aggregate number of shares of the Company's common stock which may be issued under the Plan is 100,000, subject to adjustment for stock dividends and similar events. The 1992 Plan includes substantially the same features as the expired 1982 Plan and is administered by a Stock Option Committee appointed by the Board of Directors. The following table contains information concerning options granted during 1993 to the Company's chief executive officer and four other most highly compensated executive officers. Option Grants in 1993
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Individual Grants Option Term (a) (b) (c) (d) (e) (f) (g) % of Total Options Granted toExercise Options Employees or Base Granted in Fiscal Price Expiration Name (#)(1) Year ($/Sh) Date 5% ($) 10% ($) Kenneth T. Murphy 395 1.10 % $ 13.77 10/02/94 $ - $ - 454 1.26 10.77 07/28/97 176,813 223,970 413 1.15 13.50 03/12/00 181,383 274,782 450 1.25 18.18 11/26/01 187,918 313,218 3,000(2) 8.32 40.00 06/29/03 70,581 183,468 F. Scott Dueser 182 .50 10.77 07/28/97 - - 165 .46 13.50 03/12/00 43,527 65,940 300 .83 18.18 11/26/01 125,279 208,812 2,000(2) 5.55 40.00 06/29/03 47,054 122,312 Patrick N. Gerald 109 .30 10.77 07/28/97 42,432 53,749 248 .69 13.50 03/12/00 108,838 164,881 150 .42 18.18 11/26/01 62,639 104,406 1,000(2) 2.77 40.00 06/29/03 23,527 61,156 Craig Smith 36 .10 10.77 07/28/97 - - 248 .69 13.50 03/12/00 65,311 98,941 225 .62 18.18 11/26/01 93,959 156,609 1,000(2) 2.77 40.00 06/29/03 23,527 61,156 Curtis R. Harvey 225 .62 18.18 11/26/01 75,167 125,287 1,000(2) 2.77 40.00 06/29/03 23,527 61,156 (1) All 1993 grants, except those labeled (2), represent adjustment to options granted in prior years and resulted from the Company's ten percent stock dividend issued on June 1, 1993. (2) Granted under incentive stock option plan.
The following table contains information concerning each exercise of stock options during the last fiscal year by each of the persons named below and the fiscal year-end value of unexercised options. Aggregated Option Exercises in 1993 and FY-End Option Values
(a) (b) (c) (d) (e) Value of Number of Unexercised Unexercised In-the-Money Options at Options at FY-End (#) FY-End ($) Shares Acquired Value Exercisable/ Exercisable/ Name on Exercise (#) Realized ($) UnexercisableUnexercisable Kenneth T. Murphy 4,343$ 113,536 7,797 213,248 9,683 170,485 F. Scott Dueser 2,723 77,611 660 15,391 5,729 100,869 Patrick N. Gerald - - 2,617 71,575 3,954 69,617 Craig Smith 1,851 50,921 495 11,543 4,614 81,237 Curtis R. Harvey 495 11,296 - - 2,980 36,982
The following line graph compares the Company's cumulative total shareholder return with a broad market index (S & P 500 Index) and a published banking industry index (KBW 50 Total Return Index): The required performance graph is not included in this electronic filing. The graph has been provided to shareholders of the Company and has been filed separately in paper under cover of Form SE to the Securities and Exchange Commission. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION No person who served as a member of the Executive Committee in its capacity as Compensation Committee was, during the past fiscal year, an officer or employee of the Company or any of its subsidiaries, or had any relationship requiring disclosure in this Notice to Shareholders except for Mr. Tom Wilson who is a former subsidiary bank officer. However, committee members Ralph Hooks, James Parker, and Dr. Wayne Ramsey, Jr. did obtain loans from a subsidiary bank during the past year. In each case, such loans were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectibility or present other unfavorable features. No executive officer of the Company served as a member of the Compensation Committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served as a director of the Company. EXECUTIVE COMMITTEE REPORT ON EXECUTIVE COMPENSATION During the past fiscal year the Company's executive compensation program was administered by the Executive Committee acting in the capacity of Compensation Committee. The Company's executive compensation program consists of base salary, profit sharing, and incentive stock options. With the exception of the Chief Executive Officer, the base salaries for the executive officers named on page 6 of this Notice are reviewed in December of each year with adjustments made effective January 1. Included among the factors which the Committee considers when approving annual base salaries are: attainment of planned goals and objectives, scope of responsibility (asset size of subsidiary bank and/or degree of influence on the Company's profitability and operations), tenure with the Company, evaluation input from subsidiary bank directors, and relationship of base salary to the base salaries of other members of the executive officer group. The base salary for Mr. Murphy was reviewed in March 1993 with an adjustment made effective April 1, 1993. The increase was based on the following factors: - - The Company's financial performance for 1992 which reflected a 27% increase in net income. - - Performance of Chief Executive Officer's duties which relate primarily to leading and managing the Company within the broad guidelines set by the Board of Directors. - - Successful negotiation and completion of acquisition transaction. - - Base salary compared to Wyatt Data Services compensation survey data for chief executive officers of similar size organizations within the industry. - - Subjective evaluations of Mr. Murphy's contribution to the overall success of the Company. In 1992 the Board of Directors approved a deferred compensation agreement between First Financial Bankshares, Inc. and Kenneth T. Murphy, Chairman, President and Chief Executive Officer. The agreement was made in recognition of his contribution to the success of the Company and as an inducement to remain, subject to the discretion of the Board of Directors, in the employ of the Company. The agreement provides that following retirement in December 2002, or such later date as may be mutually agreed upon by the parties, the Company will pay Mr. Murphy, or his beneficiary, the sum of $6,250 per month for a period of 84 months. The monthly amount is considered to be an appropriate level of supplemental income to partially offset Mr. Murphy's reduction in personal income following retirement and is based on an analysis of the difference in projected final year compensation and retirement compensation. The agreement also provides for 70% vesting at age 62, 80% vesting at age 63, and 90% vesting at age 64. Stock options are granted under the Incentive Stock Option Plan upon recommendation of the Stock Option Committee of the Board of Directors. The Executive Committee believes that the Stock Option Plan is an integral part of the executive compensation program which encourages key employees to align their long-range interest with those of shareholders by accomplishing longer-term corporate goals. When granting options to all named executive officers for 1993, the Committee evaluated the total number of shares available, the number of unexercised options held by the individual, Company's and individual's performance, and the individual's level of responsibility. The line graph on page 10 compares cumulative total shareholder return with a performance indication of the overall stock market, the S&P 500 Stock Index, and a nationally-recognized banking industry index, the Keefe, Bruyette and Woods, Inc. (KBW) 50 Total Return Index, which is comprised of fifty of the nation's top banking companies. Robert E. Hitt W.V. Ramsey, Jr., M.D. Ralph N. Hooks H.T. Wilson James Parker PRINCIPAL SHAREHOLDERS OF FIRST FINANCIAL BANKSHARES, INC. At December 31, 1993, management was not aware of any person [including any "group" as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934] who is the beneficial owner of more than five percent (5%) of the Company's common stock. However, First National Bank of Abilene and First National Bank, Sweetwater, held of record in various fiduciary capacities an aggregate of 803,156 shares of such stock. Of the total shares held, these subsidiaries of the Company had sole power to vote 386,275 shares (10.3%) and 64,548 shares (1.7%), respectively. First National Bank of Abilene also shared, with other persons, the power to vote the remaining 352,423 shares. All the shares held by each subsidiary Bank, which are registered in its name as fiduciary or in the name of its nominee, are owned by many different accounts, each of which is governed by a separate instrument which sets forth the powers of the fiduciary with regard to the securities held in such accounts. INTEREST IN CERTAIN TRANSACTIONS As has been true in the past, some of the Company's officers and directors, members of their families, and other businesses with which they are affiliated, are or have been customers of one or more of the subsidiary banks of the Company (First National Bank of Abilene, Abilene, Texas; Hereford State Bank, Hereford, Texas; First National Bank, Sweetwater, Sweetwater, Texas; Eastland National Bank, Eastland, Texas; First National Bank in Cleburne, Cleburne, Texas; Stephenville Bank & Trust Co., Stephenville, Texas). As customers, they have had transactions in the ordinary course of business with such banks including borrowings, all of which were on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than a normal risk of collectibility or present any other unfavorable features to the subsidiary banks involved. None of the transactions involving subsidiary banks of the Company and the Company's officers and directors, or other businesses with which they may be affiliated, have been classified or disclosed as nonaccrual, past due, restructured or potential problems. PROPOSALS OF SHAREHOLDERS Proposals of shareholders intended to be presented at the next annual meeting, to receive consideration, must be submitted in writing and delivered to the Company no later than December 1, 1994. UNDERTAKING TO FURNISH INFORMATION The Company will furnish a copy of its Annual Report for the year 1993 on Form 10-K, including the financial statements and schedules thereto required to be filed with the Securities and Exchange Commission, without charge to any person whose proxy is solicited herewith upon such person's written request therefor, which request shall contain a good faith representation that, as of the record date for the annual meeting of the Company's shareholders, the person making the request was a beneficial owner of securities entitled to vote at such meeting and such request shall be addressed to Curtis R. Harvey, Executive Vice President and Chief Financial Officer, First Financial Bankshares, Inc., P.O. Box 701, Abilene, Texas 79604. Exhibits to the 10-K Annual Report shall also be furnished upon the payment of a specified reasonable fee, which fee shall be limited to the Company's reasonable expenses in furnishing such exhibits. OTHER BUSINESS Management does not know of any other matters that are 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 person voting the proxy. By Order of the Board of Directors. KENNETH T. MURPHY, Chairman March 31, 1994 FIRST FINANCIAL BANKSHARES, INC. PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING OF SHAREHOLDERS APRIL 26, 1994 The undersigned hereby appoints Ralph N. Hooks and Robert E. Hitt as Proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated below, all the shares of common stock of First Financial Bankshares, Inc. held of record by the undersigned on March 18, 1994, at the annual meeting of shareholders to be held on Tuesday, April 26, 1994, at 10:30 a.m. in the Abilene Civic Center, 1100 North 6th Street, Abilene, Texas, or any adjournments thereof. The Proxies are authorized to vote in their discretion upon such other business as may properly come before the meeting. The Board of Directors recommends a vote "FOR" 1.ELECTION OF DIRECTORS [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY (except as written to the contrary below) to vote for all nominees listed below J.A. Baird, F.S. Dueser, P.N. Gerald, R.E. Hitt, R.N. Hooks, J.B. Matthews, R.A. McDaniel, Jr., B. Miers, K.T. Murphy, D.G. Owen, J.M. Parker, W.V. Ramsey, Jr., M.D., C. Smith, H.T. Wilson, and S.P. Wilson. (INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name on the space provided below.) 2. PROPOSAL TO APPROVE APPOINTMENT OF ARTHUR ANDERSEN & CO. AS INDEPENDENT ACCOUNTANTS [ ] FOR [ ] AGAINST [ ] ABSTAIN 3. PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO INCREASE FROM FIVE MILLION (5,000,000) TO TEN MILLION (10,000,000) THE AGGREGATE NUMBER OF SHARES WHICH THE CORPORATION SHALL HAVE AUTHORITY TO ISSUE [ ] FOR [ ] AGAINST [ ] ABSTAIN SHARES WILL BE VOTED IN ACCORDANCE WITH THE ABOVE SPECIFICATIONS. IF NO SPECIFICATION IS MADE ABOVE, THE PROXY WILL BE EXERCISED AND VOTED FOR THE MATTERS STATED ABOVE. Receipt of the annual report, financial information, notice of meeting and proxy statement is hereby acknowledged. Please date your proxy and sign, exactly as your name or names appear below; when signing as attorney, executor, administrator, trustee or guardian, please give title. Each joint owner is required to sign. SIGNED: DATED: 1994. Whether or not you plan to attend the meeting in person, please date, sign and return this proxy as promptly as possible in the enclosed envelope to Sandy Lester, First Financial Bankshares, Inc., P.O. Box 701, Abilene, Texas 79604. You may withdraw your proxy by a request in writing to either of the named proxies at any time before this proxy is voted. -----END PRIVACY-ENHANCED MESSAGE-----