-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HY70YCO2nwAAxIqdp7ihVKd/03rTVMnIpgguW2skPyswfJZ1kYDnYftKuOtS78sm TwUjPTJ//zcfEwmDJR43Zw== 0000890566-00-000311.txt : 20000321 0000890566-00-000311.hdr.sgml : 20000321 ACCESSION NUMBER: 0000890566-00-000311 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000424 FILED AS OF DATE: 20000320 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEXAS REGIONAL BANCSHARES INC CENTRAL INDEX KEY: 0000787648 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 742294235 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-14517 FILM NUMBER: 573416 BUSINESS ADDRESS: STREET 1: 3700 N TENTH STE 301 STREET 2: PO BOX 5910 CITY: MCALLEN STATE: TX ZIP: 78501 BUSINESS PHONE: 9566315400 MAIL ADDRESS: STREET 1: P O BOX 5910 STREET 2: P O BOX 5910 CITY: MCALLEN STATE: TX ZIP: 78501-5910 DEF 14A 1 SCHEDULE 14A (RULE 14(a) - 101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO.) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12 TEXAS REGIONAL BANCSHARES, INC. (Name of Registrant as Specified in its Charter) _____________________________________________________________________ (Name of Person(s) Filing Proxy Statement if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1. Title of each class of securities to which transaction applies: ______________________________________ 2. Aggregate number of securities to which transaction applies: ______________________________________ 3. Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: (Set forth the amount on which the filing fee is calculated and state how is was determined.) ______________________________________ 4. Proposed maximum aggregate value of transaction: __________________ 5. Total fee paid: ______________________ [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1. Amount Previously Paid: ____________________ 2. Form, Schedule or Registration Statement No.: ______________ 3. Filing Party: ______________________ 4. Date Filed: _________________________ [LOGO] TEXAS REGIONAL BANCSHARES, INC. G. E. Roney Chairman of the Board, President & 3900 North Tenth Street, 11th Floor Chief Executive Officer McAllen, Texas 78501 March 20, 2000 Dear Shareholder: You are cordially invited to attend the annual meeting of the shareholders which will be held at 4:30 p.m. Monday, April 24, 2000 at the McAllen Country Club, 615 Wichita, McAllen, Texas 78503. The notice of the meeting and proxy statement on the following pages details the formal business scheduled for discussion. The Texas Regional Bancshares, Inc. 1999 Annual Report is enclosed and provides you with material, which reviews the financial results for the year 1999. In order for you to be represented at the annual shareholders' meeting, please complete, sign, date and return the enclosed proxy form promptly. The proxy form includes authority to vote all of your shares of Class A Voting Common Stock. By returning the completed proxy form, you are assured of representation. Should you attend the annual shareholders' meeting in McAllen, you retain the right to revoke your proxy and vote in person even though you have previously mailed the enclosed proxy form. Your directors, officers and employees join me in expressing our appreciation for your continued support. Yours very truly, /s/ G. E. RONEY G. E. Roney Chairman of the Board, President & Chief Executive Officer TEXAS REGIONAL BANCSHARES, INC. 3900 North Tenth Street, 11th Floor McALLEN, TEXAS 78501 NOTICE OF ANNUAL MEETING APRIL 24, 2000 The annual meeting of shareholders of Texas Regional Bancshares, Inc. (the "Company") will be held at the McAllen Country Club, 615 Wichita, McAllen, Texas 78503 on April 24, 2000 at 4:30 p.m. for the following purposes: 1. TO ELECT DIRECTORS. 2. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY BE BROUGHT BEFORE THE MEETING AND ANY POSTPONEMENTS OR ADJOURNMENTS THEREOF. Stockholders of record of the Company's Class A Voting Common Stock at the close of business on February 28, 2000 are entitled to notice of and to vote at the annual meeting and any postponements or adjournments thereof. A copy of the Company's annual report containing financial data and a summary of operations for 1999 accompanies this notice. By Order of the Board of Directors, NANCY F. SCHULTZ Senior Vice President, Secretary & Treasurer McAllen, Texas March 20, 2000 PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE AT YOUR EARLIEST CONVENIENCE. TEXAS REGIONAL BANCSHARES, INC. 3900 North Tenth Street, 11th Floor McALLEN, TEXAS 78501 --------------------------- PROXY STATEMENT --------------------------- SOLICITATION AND REVOCABILITY OF PROXIES With this Proxy Statement, the Board of Directors of Texas Regional Bancshares, Inc. ("Texas Regional" or the "Company") is soliciting proxies (the "Proxies") for use at the 2000 annual meeting of the shareholders of the Company. The enclosed Notice of Annual Meeting describes the purposes for which the meeting has been called. The 2000 annual meeting will be held at the McAllen Country Club, 615 Wichita, McAllen, Texas, on April 24, 2000 at 4:30 p.m. The proxies will be used at that meeting and at any and all postponements and adjournments of the meeting. The Company first mailed or delivered this Proxy Statement and the Proxies to the shareholders on or about March 20, 2000. Holders of record of the Company's Class A Voting Common Stock ("Common Stock") at the close of business on February 28, 2000 may cast one vote for each share held on each matter which comes before the meeting. Holders of a majority of the shares of Common Stock outstanding on February 28, 2000 must attend the meeting, either in person or by proxy, to constitute a quorum. As of February 28, 2000, the Company had issued and outstanding 14,525,400 shares of Common Stock. The Company maintains its principal executive offices at 3900 North 10th Street, 11th Floor, McAllen, Texas 78501. Any shareholder of record entitled to vote at the annual meeting may revoke a proxy before it has been voted. To revoke a proxy, the shareholder should deliver to the Company either a written notice of revocation or a duly executed proxy bearing a later date or the shareholder may attend the meeting, revoke the proxy and vote in person. Attendance at the annual meeting will not, in itself, constitute revocation of a previously granted proxy. A shareholder entitled to vote for the election of directors can withhold authority to vote for all nominees for directors or can withhold authority to vote for certain nominees for directors. Abstentions are included in the determination of the number of shares present and voting but are not counted for purposes of determining whether a proposal has been approved. Broker nonvotes are not included in the determination of the number of shares present and are not counted for purposes of determining whether a proposal has been approved. The Company will bear the cost of soliciting proxies. The Company will reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses incurred in forwarding soliciting materials to beneficial owners of stock held of record by such persons. Directors, officers or employees of the Company may solicit proxies personally or by further mailing, telephone, telegram or facsimile without additional compensation other than their regular compensation. ITEM 1 -- ELECTION OF DIRECTORS The Board of Directors of the Company has amended the Bylaws to increase the number of directors from seven to eight. The shareholders will elect all 8 directors at the annual meeting. The proxy holders named in the proxies being solicited will vote for the election of the 8 persons named below, unless a shareholder withholds authorization to do so. The Board of Directors of the Company does not contemplate that any of the nominees will be unable to serve. However, if any nominee is unable to serve or for good cause will not serve, the proxy holders may vote for the election of a substitute nominee in the exercise of their own judgment. 1 Each person elected as a director will hold office until the next annual meeting of shareholders and until his successor has been elected and qualified. The name and age of each nominee and the year in which each nominee became a director of the Company are set forth below.
DIRECTOR NAME PRINCIPAL OCCUPATION(1) AGE SINCE - ------------------------------------- ------------------------------------------------------------ --- -------- Morris Atlas Senior and Managing Partner, 73 1994 Atlas & Hall L.L.P. Frank N. Boggus Chairman of the Board, 71 1983 Boggus Motor Company, Inc. Robert G. Farris Chairman of the Board, 69 1983 Valley Transit Company C. Kenneth Landrum, M.D. Gynecologist (Retired) 70 1994 G. E. Roney Chairman of the Board, President and Chief Executive 69 1985 Officer, Texas Regional Bancshares, Inc. and Chairman of the Board, Chief Executive Officer and Trust Officer, Texas State Bank(2) Julie G. Uhlhorn Chairman of the Board, Rio Grande Equipment Company Inc. 69 1983 Jack Whetsel Investments 79 1985 Mario Max Yzaguirre President, Enron de Mexico 39 *
- ------------ (1) Each of the foregoing persons has been engaged in the principal occupation indicated for the past five years, except that Mr. Yzaguirre has been President of Enron de Mexico since February, 1997. He has served as Assistant General Counsel of Enron International from November 1995 to February 1997 and was a partner in the law firm of Atlas & Hall, L.L.P. from May 1994 to November 1995. (2) Subsidiary of the Company. * Nominated by the Board of Directors to be a member of the Board for the first time in 2000. Mr. Yzaguirre has been serving as a Director of the Company's subsidiary, Texas State Bank, and an Advisory Director of the Company since December, 1999. All persons named above are directors of the Company at the present time except as indicated. The only family relationships between directors, executive officers of the Company or persons nominated or chosen by the Company to become a director or executive officer are as follows: Douglas G. Bready, a Director and President of the McAllen location of Texas State Bank, is the son-in-law of G. E. Roney, the Chairman of the Board & Chief Executive Officer of the Company and Texas State Bank; Tudor G. Uhlhorn, a Director of Texas State Bank, is the son of Julie G. Uhlhorn, a member of the Board of Directors of the Company and Texas State Bank; Robert R. Farris, a Director of Texas State Bank, is the son of Robert G. Farris, a member of the Board of Directors of the Company and Texas State Bank; and Robert F. Boggus, a Director of Texas State Bank, is the son of Frank N. Boggus, a member of the Board of Directors of the Company and Texas State Bank. BOARD MEETINGS AND COMMITTEES During 1999, the Board of Directors held twelve meetings and the committees described below each held the number of meetings indicated. Each director attended at least 75% of the total number of meetings of the Board of Directors and Committees on which such director served. 2 The Company has an Audit Committee and a Stock Option and Compensation Committee but does not have a Nominating Committee. In addition, Company directors serve as Trustees of the Texas Regional Bancshares, Inc. Employee Stock Ownership Trust (the "KSOP Trust") which administers assets held pursuant to the Company's Employee Stock Ownership Plan (with 401k provisions) (the "KSOP Plan"). During 1999, Messrs. Atlas, Boggus, Landrum and Mrs. Uhlhorn were members of the Audit Committee whose function is to recommend independent auditors to the Board of Directors and review the scope of proposed audits, the adequacy of the Company's accounting procedures and controls, and the services performed by the auditors. The Audit Committee held one meeting in 1999. During 1999, Messrs. Atlas, Boggus, Farris, Landrum and Whetsel were members of the Stock Option and Compensation Committee, which recommends to the Board of Directors the compensation and stock options to be granted to the Company's officers. The Stock Option and Compensation Committee held four meetings during 1999. The Trustees of the KSOP Trust hold and invest the KSOP Trust's assets. The Trustees held two meetings during 1999. The Trustees of the KSOP Trust are Messrs. Atlas, Boggus and Roney. COMPENSATION OF DIRECTORS The Company pays directors and advisory directors $800 for each Texas Regional Board of Directors meeting and reimburses all directors for out-of-pocket expenses incurred in attending meetings. In addition, during 1999, the Company paid each non-management director a bonus of $3,000 for service as a director of the Company. Each director of the Company's subsidiary, Texas State Bank, which includes each director of Texas Regional, receives $700 for each Texas State Bank Board of Directors meeting. Each non-management director of Texas State Bank during 1999 also received bonuses aggregating $2,000 for service as a director of the Bank. Mr. Roney also receives compensation from the Company as an executive officer of the Company and Texas State Bank, as indicated below. EXECUTIVE OFFICERS The Company's executive officers are elected annually by the Board of Directors, each to serve a one-year term or until his or her successor is elected and qualified. The name, age, year each first became an executive officer and current and proposed position held at the Company by each executive officer are as follows: OFFICER NAME AGE SINCE CURRENT POSITION - -------------- --- ------- ------------------------------------ G. E. Roney 69 1985 Chairman of the Board, President & Chief Executive Officer Paul S. Moxley 55 1999(1) Senior Executive Vice President R. T. Pigott, Jr. 45 1998(2) Executive Vice President & Chief Financial Officer Nancy F. Schultz 59 1985 Senior Vice President, Secretary & Treasurer - ------------ (1) Mr. Moxley has served a President and Secretary of the Board for the Company's subsidiary, Texas State Bank since 1986. (2) Prior to joining the Company in December 1998, Mr. Pigott was Vice President and Chief Financial Officer of Autobond Acceptance Corporation from April 1997 to August 1998 and served as Executive Vice President & Chief Financial Officer of Franklin Federal Bancorp. and its predecessors from May 1985 to January 1997. 3 The Company's subsidiary, Texas State Bank, has the following senior executive officers. The name, age, year each first became an officer and current position held at Texas State Bank are as follows: OFFICER NAME AGE SINCE CURRENT POSITION - ------------------- --- ------- ------------------------------------- G. E. Roney 69 1985 Chairman of the Board, Chief Executive Officer & Trust Officer Paul S. Moxley 55 1986 President & Secretary of the Board Danny L. Buttery 52 1985(3) President -- Harlingen location Frank A. Kavanagh 53 1992(4) Executive Vice President Douglas G. Bready 44 1985 President -- McAllen location - ------------ (3) Includes service before and since the merger of Harlingen State Bank into Texas State Bank. (4) Includes service in other positions with the Company's subsidiary, Texas State Bank, including President of the Weslaco location and Chief Lending Officer. COMPENSATION COMMITTEE INTERLOCKS Prior to June 1994 Frank N. Boggus served as President of the Company and currently serves on the Stock Option and Compensation Committee. However, Mr. Boggus is not now, nor was he at the time of his service as an officer, an employee of the Company. Mr. Boggus does not receive compensation from the Company or Texas State Bank other than director fees and outside director bonuses as indicated above. 4 EXECUTIVE COMPENSATION CASH COMPENSATION The following table sets forth compensation information with respect to the Chief Executive Officer and the four most highly compensated executive officers of the Company.
LONG TERM COMPENSATION --------------------------------- ANNUAL COMPENSATION NUMBER OF NAME AND --------------------------------- STOCK OPTIONS ALL OTHER PRINCIPAL POSITION YEAR SALARY(1) BONUS GRANTED COMPENSATION(2) - ------------------------------------- --------- ---------- ---------- ------------- --------------- G. E. Roney 1999 $ 652,897 $ 250,000 0 $ 97,030 Chairman of the Board, President 1998 579,336 0 74,864 93,348 & Chief Executive Officer of the 1997 464,299 100,000 0 97,030 Company and Chairman of the Board, Chief Executive Officer and Trust Officer of the Bank Paul S. Moxley 1999 217,240 32,000 0 9,140 Senior Executive Vice President 1998 195,896 0 10,000 5,606 of the Company and President & 1997 187,956 20,000 0 9,177 Secretary of the Board of Directors of the Bank Danny L. Buttery 1999 190,303 18,000 0 8,000 President of the Bank's 1998 177,788 0 9,000 4,318 Harlingen location 1997 175,226 14,000 0 8,000 Frank A. Kavanagh 1999 205,362 12,000 0 9,600 Executive Vice President 1998 190,728 0 9,000 5,918 1997 183,944 20,000 0 9,600 Douglas G. Bready 1999 166,443 25,000 0 9,600 President of the Bank's 1998 145,273 0 9,000 5,371 McAllen location 1997 126,746 14,000 0 8,420
- ------------ (1) Includes wages, automobile allowances and director fees. (2) Includes the Company's optional and matching contribution for each listed executive officer under the KSOP Plan. KSOP Plan contributions are based upon the lesser of the amounts set forth in the table above or the maximum allowable under the KSOP Plan. In addition, with regard to Mr. Roney, the amount indicated includes $87,430 accrued during each of 1999, 1998 and 1997 pursuant to the Deferred Compensation Plan adopted by the Company for the benefit of Mr. Roney, described in the Report of the Compensation Committee. 5 OPTION EXERCISES AND VALUES AT YEAR-END 1999 The following table sets forth as to each of the named executive officers information with respect to option exercises during 1999 and the status of their options on December 31, 1999.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE ------------------------------------------------------------------------------------------------- NUMBER OF UNEXERCISED VALUE OF UNEXERCISED VALUE REALIZED OPTIONS IN-THE-MONEY OPTIONS AT SHARES (MARKET PRICE AT AT FISCAL YEAR-END FISCAL YEAR-END(1) ACQUIRED ON EXERCISE LESS ---------------------------- ----------- ------------- NAME EXERCISE EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ----------------------------- ----------- ----------------- ----------- ------------- ----------- ------------- G. E. Roney.................. 112,500 $ 1,650,000 225,008 37,432 $ 3,597,846 $ 0 Paul S. Moxley............... 0 0 11,000 5,000 105,000 0 Danny L. Buttery............. 1,500 26,531 9,000 4,500 78,750 0 Frank A. Kavanagh............ 0 0 7,500 4,500 52,500 0 Douglas G. Bready............ 1,000 14,125 8,750 4,500 74,375 0
- ------------ (1) Calculated by subtracting the exercise price from the fair market value of the underlying Common Stock. For purposes of this table, fair market value is deemed to be $29.00, the closing price per share for the Common Stock as reported on the NASDAQ National Market System on December 31, 1999. STOCK OWNERSHIP OF MANAGEMENT AND OTHERS The Board of Directors set the close of business on February 28, 2000 as the record date for the determination of shareholders entitled to notice of and to vote at the 2000 annual meeting (the "Record Date"). On the Record Date there were 14,525,400 shares of the Company's Common Stock. Each share of Common Stock is entitled to one vote on each matter to be acted upon at the meeting. Neither the Company's Articles of Incorporation nor its Bylaws provide for cumulative voting rights. A nominee for a director position must receive the affirmative vote of the holders of a majority of the shares of Common Stock represented at the meeting to be elected. The following table sets forth certain information regarding the ownership of the Company's voting securities as of the Record Date by each shareholder who is known by the Company to own beneficially more than 5% of the Company's outstanding voting securities. The table also includes information regarding ownership by each director, each nominee for director, each executive officer named in the Cash Compensation Table and all executive officers and directors as a group. The number of shares of Common Stock beneficially owned by each person as indicated in the table is determined under rules of the Securities and Exchange Commission and the information is not necessarily indicative of beneficial ownership for any other purpose. Except as otherwise noted, the indicated shareholders have sole voting and investment power over the number of shares shown. 6
COMMON STOCK ------------------ NAME OF BENEFICIAL OWNER NUMBER(1) % - ------------------------------------- --------- ---- Morris Atlas(2)...................... 109,052 .75% Frank N. Boggus(3)................... 210,521 1.45% Douglas G. Bready(4)................. 32,897 .23% Danny L. Buttery(5).................. 31,645 .22% Robert G. Farris(6).................. 22,459 .15% Frank A. Kavanagh(7)................. 18,755 .13% C. Kenneth Landrum, M.D.(8).......... 123,020 .85% Paul S. Moxley(9).................... 167,603 1.15% G. E. Roney(10) 3900 North Tenth Street, 11th Floor McAllen, Texas 78501............... 1,315,819 8.92% Julie G. Uhlhorn(11)................. 226,601 1.56% Wanger Asset Management, L.P., of which Wanger Asset Management Ltd. is the general partner 227 West Monroe Street, Suite 3000 Chicago, Illinois 60606............ 892,000 6.20% Jack Whetsel(12)..................... 250,741 1.73% Mario Max Yzaguirre.................. 2,550 .02% All officers and directors as a group (15 persons)(13)................... 2,202,362 14.88% --------- -----
- ------------ (1) Included in the total indicated for each of Messrs. Atlas, Boggus and Roney are 3,000 shares, which are unallocated shares held by the KSOP Plan. Messrs. Atlas, Boggus and Roney are the Trustees for the KSOP Plan. The KSOP Plan gives the Trustees the right to vote shares not allocated to participant's accounts. Each participant is entitled to direct the Trustees as to the exercise of any voting rights attributable to shares of Company stock allocated to his account. In the event voting instructions are not received from participants, the KSOP Plan provides that the Trustees shall not vote those shares. Each Director disclaims beneficial ownership of the 3,000 unallocated shares, except that Mr. Roney does not disclaim beneficial ownership of those shares later allocated to his account as an employee of the Company in accordance with the KSOP Plan. (2) The total includes 3,000 shares held by Mr. Atlas' wife. In addition included in this total are 3,000 shares with respect to which Mr. Atlas holds shared voting power with other Trustees of the Company's KSOP Plan. Mr. Atlas disclaims any beneficial ownership in such KSOP shares. (3) The total includes 159,810 shares owned by four companies controlled by Mr. Boggus. In addition included in this total are 3,000 shares with respect to which Mr. Boggus holds shared voting power with other Trustees of the Company's KSOP Plan. Mr. Boggus disclaims any beneficial ownership in such KSOP shares. (4) The total includes 4,224 shares held by Mr. Bready's wife, 829 shares held by an independent trustee for Mr. Bready's IRA, 648 shares held by an independent trustee for Mr. Bready's wife's IRA, 16,175 shares allocated to Mr. Bready's account as a participant in the KSOP Plan and 8,750 shares Mr. Bready has the right to acquire within 60 days through the exercise of options. Not included in the total are 4,500 shares which represents options granted in 1998 and not presently exercisable by Mr. Bready. (5) The total includes 22,645 shares allocated to Mr. Buttery's account as a participant in the KSOP Plan and 9,000 shares Mr. Buttery has the right to acquire within 60 days through the exercise of options. Not included in the total are 4,500 shares, which represent options, granted in 1998 and not presently exercisable by Mr. Buttery. (6) The total includes 3,576 shares held by Mr. Farris' wife. Mr. Farris disclaims beneficial ownership of his wife's shares. (FOOTNOTES CONTINUED ON FOLLOWING PAGE) 7 (7) The total includes 11,255 shares allocated to Mr. Kavanagh's account as a participant in the KSOP and 7,500 shares Mr. Kavanagh has the right to acquire within 60 days through the exercise of options. Not included in the total are 4,500 shares, which represent options, granted in 1998 and not presently exercisable by Mr. Kavanagh. (8) The total includes 25,387 shares held by a trust for the benefit of Dr. Landrum, 12,086 shares held by a trust for Dr. Landrum's pension plan, 3,300 shares held in a Charitable Trust where Dr. Landrum acts as Trustee and 80,247 shares held in a trust for the benefit of Dr. Landrum's wife. Dr. Landrum disclaims beneficial ownership of his wife's shares. (9) The total includes 609 shares held by Mr. Moxley's wife, 25,075 shares allocated to Mr. Moxley's account as a participant in the KSOP Plan, 113,141 shares held by trusts at Texas State Bank for which Mr. Moxley, Mr. Roney, Mrs. Uhlhorn and Mr. Whetsel serve as trustees along with other individuals who are not directors of the Company in which Mr. Moxley has no interest as a beneficiary and 11,000 shares Mr. Moxley has the right to acquire within 60 days through the exercise of options. Not included in the total are 5,000 shares, which represent the options, granted in 1998 and not presently exercisable by Mr. Moxley. (10) The total includes 100,323 shares held by Mr. Roney's wife, 4,500 shares held by a trust for the benefit of Mr. Roney's wife, 108,641 shares held by trusts at Texas State Bank for which Mr. Roney, Mr. Moxley, Mrs. Uhlhorn and Mr. Whetsel serve as trustees along with other individuals who are not directors of the Company but in which Mr. Roney has no interest as beneficiary, 7,281 shares held by a company partly owned by Mr. Roney, 71,226 shares allocated to Mr. Roney's account as a participant in the KSOP Plan, 225,008 shares Mr. Roney has the right to acquire within 60 days through the exercise of options. In addition included in this total are 3,000 shares with respect to which Mr. Roney holds shared voting power with other Trustees of the Company's KSOP Plan. Mr. Roney disclaims any beneficial ownership in such KSOP shares, except that Mr. Roney does not disclaim beneficial ownership of those shares later allocated to his account as an employee of the Company in accordance with the KSOP Plan. Not included in the total are 37,432 shares, which represent options, granted in 1998 and not presently exercisable by Mr. Roney. (11) The total includes 40,524 shares which represent Mrs. Uhlhorn's beneficial interests in a trust, 40,281 shares held by a partnership owned 30% by Mrs. Uhlhorn and 113,141 shares held by trusts at Texas State Bank for which Mrs. Uhlhorn, Mr. Roney, Mr. Moxley and Mr. Whetsel serve as trustees along with other individuals who are not directors of the Company but in which Mrs. Uhlhorn has no interest as a beneficiary. (12) The total includes 113,141 shares held by trusts at Texas State Bank for which Mr. Whetsel, Mr. Moxley, Mrs. Uhlhorn and Mr. Roney serve as trustees along with other individuals who are not directors of the Company but in which Mr. Whetsel has no interest as a beneficiary, 62,600 shares held in a trust for the benefit of Mr. Whetsel and 75,000 shares held in a trust for the benefit of Mr. Whetsel's wife. (13) Includes 1,598,820 shares as to which directors and officers have sole voting power, 603,542 shares as to which they have shared voting power, 1,433,804 shares as to which they have sole investment power and 768,558 shares as to which they have shared investment power. In addition, included in this total are 271,933 shares the officers have a right to acquire within 60 days through the exercise of options. STOCK OPTION AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND THE PERFORMANCE GRAPH SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS. 8 REPORT OF THE COMPENSATION COMMITTEE This Report of the Compensation Committee of the Board of the Directors of Texas Regional Bancshares, Inc. (the "Compensation Committee" or "Committee") describes the basis upon which the Committee has made recommendations concerning the 1999 compensation payable to the officers of the Company and its wholly-owned subsidiary, Texas State Bank. It has been the duty of the Compensation Committee to consider the compensation of all officers, including the officers named in the compensation tables contained in the Proxy Statement included with the Notice of the Annual Meeting of Shareholders of the Company scheduled for April 2000. During 1999, the recommendations of the Compensation Committee were accepted by the Board of Directors of the Company and by the Board of Directors of the Company's wholly-owned subsidiary, Texas State Bank. COMPENSATION PHILOSOPHY The Compensation Committee seeks to make compensation decisions based on long-term growth and performance objectives of the Company. As in prior years, the Compensation Committee during 1999 emphasized the Company's growth in total assets and book value, and the earnings of the Company, in its consideration of compensation decisions. For 1999, as in recent prior years, the compensation program has been based on the following principals: o The Company recognizes that a competitive pay program helps attract and retain quality personnel and the Company is committed to being competitive in its compensation programs. To ensure that pay is competitive, the Company regularly compares its pay practices with those of other financial institutions, particularly banks and bank holding companies, in the markets served by the Company. From time to time the Company modifies pay parameters based on this review. o The Company makes salary adjustments and other compensation awards to officers and other key management personnel upon a combination of performance company-wide, performance of the business unit for which they are responsible, and individual performance. Among the performance standards reviewed in 1999 were sustained growth objectives and an ability to maximize profitability of individual business units, or contain costs within those units. For officers for whom community relationships are significant, the Company also considers the activities undertaken by those officers and the sense of the Board members of the community perceptions of the officers. Those officers with supervisory authority have also been evaluated, and compensation in part determined, on their ability to interact both with persons who work for them and persons who work with them. In each case, the performance criteria are subjective and therefore the compensation decisions are not based upon a mathematical application of performance criteria. o The Company also considers the success of the organization as a whole in matters relative to compensation of individual officers. At those times when the organization's profitability and growth are strong, the Company believes that the officers and other employees of the organization should be entitled to compensation adjustments as a result of the availability of resources which they helped create. In the Company's ongoing evaluation program, senior officers set objectives and goals for junior officers and other employees reporting to them, evaluate the employees and officers on performance, and compare the results to the performance of others in the Company. Managers, including the Chief Executive Officer, review the results of individual officers and employees, and consider other evaluation information in making recommendations to the Compensation Committee as to compensation for the officers of the Company and the Bank. The Committee considered these evaluations and recommendations for purposes of the Committee's compensation recommendations to the Board of Directors of each of the Company and Texas State Bank. The Committee also made a separate recommendation for the compensation of the Chief Executive Officer based in part on the evaluation of the Chief Executive Officer made by the Board of 9 Directors. In 1999, the recommendations of the Compensation Committee were accepted by the Board of Directors and the Bank. In evaluating compensation, the Company is aware of the limitations on deductibility of compensation paid to highly compensated persons as imposed by the Internal Revenue Code section 162(m). While the Company does not at this time have any executive officer within the range of compensation for which limitations are imposed by that provision, the Compensation Committee's policy is to review the impact of section 162(m), and the requirements imposed on performance-based compensation described in the section, in the context of any qualifying compensation that may be proposed to be paid in the future. COMPENSATION PROGRAM COMPONENTS The Compensation Committee regularly reviews the Company's compensation programs to ensure that the components of the compensation program will allow the Company to successfully attract and retain key employees. The compensation program components available to the employees of the Company are: BASE SALARY. Base salary levels are largely determined based upon comparison with peer group members as well as potential competitors and other companies which might seek to employ officers and employees of the Company. Actual salaries are based upon individual performance contributions in accordance with the compensation philosophy of the Company. BONUSES. The officers of the Company in 1999 participated in a performance-based bonus as a component of their compensation. Each officer's bonus is based on the over-all profitability of the Company and the profit center for which a particular officer is responsible. Among the factors considered in awarding bonuses are growth of deposits, profitability, containment of costs, and other factors the Company considers important. EMPLOYEE STOCK OWNERSHIP PROGRAM. The Committee believes that participation in the employee stock ownership program of the Company encourages the officers and other employees of the Company to work toward the long-term goals and objectives of the Company. Decisions relative to contributions to the employee stock ownership program are made annually, with the aggregate amount based on a resolution of the Board of Directors, with individual allocations based on a formula. Any participant in the Plan who was employed by the Company as of December 31,1999 and credited with at least 1,000 hours of service was eligible to participate in contributions to the Plan for 1999. DEFERRED COMPENSATION PLAN. In 1993, the Company adopted a Deferred Compensation Plan for the Company's Chief Executive Officer, Glen E. Roney. The Deferred Compensation Plan provides for payment of $100,000.00 per year for fifteen years beginning October 29, 2002, with such payments to be made to his designated beneficiary in the event of his death prior to full payout. The Plan benefits will be accelerated in the event that Mr. Roney should die before October 29, 2002, while still in the employ of the Company (with certain exceptions). The Company has established a Trust from which the deferred compensation payments are to be made, which is to be funded in an amount to be determined periodically at the discretion of the Board of Directors. An aggregate of $87,430.00 was transferred by the Company to the Trust during 1999. Funding of the Trust is to be accelerated in the event of the occurrence of certain defined events, including a change of control of the Company. DISCUSSION OF CHIEF EXECUTIVE OFFICER COMPENSATION The Compensation Committee reviewed compensation of the Chief Executive Officer of the Company for fiscal year 1999 in connection with his individual performance for the Company. The following were some of the qualitative and quantitative measures for the Company's performance considered by the Committee in making recommendations for the Chief Executive Officer's compensation: o Continued growth of the Company and the corresponding growth in the Chief Executive Officer's responsibility for the Company. 10 o Profitability of the Company and its subsidiary and the capital of the Company and its subsidiary in relation to regulatory guidelines. o The ability of the Company and its senior management to work cooperatively with regulatory authorities, and the morale of personnel in the organization. o Perception of the Compensation Committee as to the acceptance of the organization in the community. Specifically, in making compensation recommendations for the Chief Executive Officer for compensation payable during 1999, the Compensation Committee considered the increase in book value per share of the Company's Class A Voting Common Stock from $12.31 at December 31, 1998, to $12.96 at December 31, 1999, and the ratio of net income to average total assets increased from 1.36% for the year ended December 31, 1998, to 1.63% for the year ended December 31, 1999. The critical role of the chief executive officer as spokesperson for the Company in the public market was also considered. The Compensation Committee also reviewed the base salary and bonus for the Chief Executive Officer in the context of the compensation packages available for executives of similar-sized financial institutions, and the Committee considered the significant dependence of the organization on the continued involvement of the Chief Executive Officer with the organization, and the need to treat the Chief Executive Officer fairly in light of the responsibilities he has undertaken for the growth and development of the organization. Stock Option and Compensation Committee of the Board of Directors of Texas Regional Bancshares, Inc. Morris Atlas, Chairman Frank N. Boggus Robert G. Farris C. Kenneth Landrum Jack Whetsel 11 PERFORMANCE GRAPH The following performance graph compares the performance of the Company's Common Stock to the S&P 500 Index and to the CRSP Total Return Index for NASDAQ Bank Stocks for the last five years. The CRSP Total Return Index is prepared by The Center for Research in Securities Prices (CRSP) at the University of Chicago for NASDAQ. The graph assumes that the value of the investment of the Company's Common Stock and each index was $100 at December 31, 1994 and that all dividends were reinvested. [LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW] Proxy graph coordinants for the 2000 Proxy Statement graph 1994 1995 1996 1997 1998 1999 ---- ---- ---- ---- ---- ----- TRBS 100 142 285 388 326 384.3 S&P500 100 138 170 226 292 353.7 NASDAQ Bank stks 100 149 197 329 327 314.4 12 TRANSACTIONS WITH MANAGEMENT AND OTHERS During 1999 as in prior years, Company officers and directors and their related parties have had banking transactions with Texas State Bank. All such transactions have been in the ordinary course of business, on substantially the same terms including interest rates and collateral, as those prevailing for comparable transactions with others, and have not included more than the normal risk of collectibility or other unfavorable features. Texas State Bank, along with other banks in the Rio Grande Valley, sells credit life insurance for Texas State Life Reinsurance, Ltd. and in the past sold life insurance for Texas State Life Insurance Company. G.E. Roney, Chairman of the Board and Chief Executive Officer of the Company, owns thirty-three percent of Texas State Life Reinsurance, Ltd. and thirty-three percent of Texas State Life Insurance Company. Texas State Bank received $318,705 in commission fee income from the insurance companies for the year ended December 31, 1999. Mr. Morris Atlas, a Director of the Company, is a partner in the law firm of Atlas & Hall L.L.P. His firm received fees for legal services rendered to the Company and its subsidiary during 1999, but the amount of the fees received did not exceed either 5% of his firm's gross revenues for 1999 or 5% of the Company's total operating expenses for the year ended December 31, 1999. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT Based solely upon a review of Forms 3, 4 and 5 (and amendments) furnished to the Company during 1999 and in 2000 through the date of this Proxy Statement, and written representations from reporting persons that no Form 5 was required, the Company believes that no officer or director has failed to report transactions in the Company's securities on a timely basis. INDEPENDENT PUBLIC ACCOUNTANTS On April 15, 1999, the Company engaged KPMG LLP to exam its financial statements for the year ended December 31, 1999. Normal practice of the Board of Directors is to select the Company's independent public accountants at a Board meeting subsequent to the annual meeting. The Audit Committee has not yet made a recommendation to the Board of Directors concerning the appointment of auditors for the year ending December 31, 2000. The Company expects the Audit Committee to make a recommendation for the selection of the auditors to the Board of Directors at a meeting of the Board held after the annual meeting. The Company expects a representative of KPMG LLP to be present at the annual meeting of shareholders to make a statement if such firm desires to do so and to respond to appropriate questions. SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING Shareholders who desire to have a proposal considered for inclusion in the Company's proxy materials for the 2001 Annual Meeting of Shareholders must submit the proposal to the Company no later than November 20, 2000. Shareholders who intend to present a proposal at the 2001 Annual Meeting of Shareholders without inclusion of such proposal in the Company's proxy materials must provide notice of such proposal to the Company no later than February 3, 2001. Any shareholder proposal must comply with applicable requirements of the proxy solicitation rules of the Securities and Exchange Commission. OTHER BUSINESS The Board of Directors does not know of any other matters likely to be brought before the meeting for action. However, if any matters do properly come before the meeting, the enclosed proxy grants authority to vote on the matter in accordance with the judgment of the persons voting the proxy. 13 FORM 10-K UPON WRITTEN REQUEST, THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999, TO EACH PERSON WHOSE PROXY IS BEING SOLICITED. APPLICABLE RULES REQUIRE THAT FORM 10-K, WHICH INCLUDES FINANCIAL STATEMENTS AND SCHEDULES, BE FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS FOR COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K MUST BE IN WRITING AND SHOULD BE DIRECTED TO ANN M. SEFCIK, CONTROLLER & ASSISTANT SECRETARY, TEXAS REGIONAL BANCSHARES, INC., P. O. BOX 5910, MCALLEN, TEXAS 78502-5910. BY ORDER OF THE BOARD OF DIRECTORS, NANCY F. SCHULTZ SENIOR VICE PRESIDENT, SECRETARY & TREASURER March 20, 2000 14 PROXY TEXAS REGIONAL BANCSHARES, INC. PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 24, 2000 The undersigned hereby appoints Frank N. Boggus, G.E. Roney and Jack Whetsel, and each of them, as the lawful agents and Proxies of the undersigned (with all the powers the undersigned would possess if personally present, including full power of substitution), and hereby authorizes them to represent and to vote, as designated below and on the reverse side hereof, all the shares of Class A Voting Common Stock of Texas Regional Bancshares, Inc. held of record by the undersigned on February 28, 2000, at the Annual Meeting of Shareholders of Texas Regional Bancshares, Inc. to be held at 615 Wichita, McAllen, Texas 78503 on April 24, 2000 at 4:30 p.m., or any adjournment or postponement thereof. By execution this proxy confers discretionary authority to vote on matters incident to the conduct of the meeting and to elect any person as director if a nominee named on the reverse side is unable to serve or for good cause will not serve. If any other matter should properly come before the meeting, then the persons named as proxies will also have discretionary authority to vote this proxy with respect thereto in accordance with their judgment. It is understood that when properly executed, this proxy will be voted in the manner directed herein by the undersigned shareholder. Where no choice is specified by the Shareholder, the proxy will be voted "FOR" the proposal set forth in 1, on the reverse side. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. (Continued and to be signed on reverse side.) - -------------------------------------------------------------------------------- 5063--TEXAS REGIONAL BANCSHARES, INC. TEXAS REGIONAL BANCSHARES, INC. PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ] [ ] 1. ELECTION OF DIRECTORS- For Withhold For All Nominees: Morris Atlas, All All (Except) Frank N. Boggus, [ ] [ ] [ ] Robert G. Farris, C. Kenneth Landrum, M.D., _________________________________________ G.E. Roney, LIST ALL NOMINEE EXCEPTIONS FOR WHOM Julie G. Uhlhorn AUTHORITY TO VOTE IS WITHHELD. Jack Whetsel, and Mario Max Yzaguirre. The undersigned hereby revokes all previous proxies relating to the shares of Class A Voting Common Stock covered hereby and confirms all that said Proxy may do by virtue hereof. Dated: ______________________________, 2000 Signature(s)_______________________________ ------------------------------------------- This proxy must be signed exactly as the name appears hereon. Executors, administrators, trustees, etc., should give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer. - -------------------------------------------------------------------------------- FOLD AND DETACH HERE YOUR VOTE IS IMPORTANT. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. 5063--TEXAS REGIONAL BANCSHARES, INC. -----END PRIVACY-ENHANCED MESSAGE-----