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Section 1: DEF 14A (DEF 14A)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.    )

 

Filed by the Registrant  

 

Filed by a Party other than the Registrant  

 

Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12

 

Hilltop Holdings 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):

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

(1)

Title of each class of securities to which transaction applies:

 

 

 

 

(2)

Aggregate number of securities to which transaction applies:

 

 

 

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

 

(4)

Proposed maximum aggregate value of transaction:

 

 

 

 

(5)

Total fee paid:

 

 

 

Fee paid previously with preliminary materials.

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)

Amount Previously Paid:

 

 

 

 

(2)

Form, Schedule or Registration Statement No.:

 

 

 

 

(3)

Filing Party:

 

 

 

 

(4)

Date Filed:

 

 

 

 

 

 


 

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Picture 1

Hilltop Holdings Inc.

200 Crescent Court, Suite 1330

Dallas, Texas 75201

Tel: 214.855.2177

Fax: 214.855.2173

www.hilltop-holdings.com

NYSE: HTH

 

 

NOTICE OF 2016 ANNUAL MEETING

AND PROXY STATEMENT

 

April 29, 2016

 

You are cordially invited to attend our 2016 Annual Meeting of Stockholders at 10:00 a.m., Dallas, Texas, local time, on June 13, 2016. The meeting will be held at 2323 Victory Avenue, 5th Floor, Dallas, Texas 75219.

 

This booklet includes the formal notice of the meeting and our proxy statement. The proxy statement tells you about the matters to be addressed, and the procedures for voting, at the meeting.

 

YOUR VOTE IS VERY IMPORTANT. Even if you only have a few shares, we want your shares to be represented.  If your shares are held in a brokerage account, your broker no longer has discretion to vote on your behalf with respect to electing directors or certain other non-routine matters. Accordingly, you must provide specific voting instructions to your broker in order to vote. Please vote promptly in order to ensure that your shares are represented at the meeting.

 

The Notice of Internet Availability of Proxy Materials or this proxy statement and the accompanying proxy card, as applicable, Notice of 2016 Annual Meeting of Stockholders and annual report for the year ended December 31, 2015 were first provided to stockholders of record on or about May 4, 2016.

 

We look forward to seeing you at the meeting.

 

 

 

 

Very truly yours,

 

 

 

Picture 2

 

Jeremy B. Ford

 

Chief Executive Officer

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JUNE 13, 2016. 

 

Our proxy statement and our annual report for the fiscal year ended December 31, 2015 are both available at www.proxyvote.com.

 

 


 

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Notice of 2016 Annual Meeting of Stockholders

To Be Held on June 13, 2016

 


 

WHEN:

Monday, June 13, 2016, at 10:00 a.m., Dallas, Texas local time

 

 

WHERE:

2323 Victory Avenue, 5th Floor

 

Dallas, Texas 75219

 

 

WHY:

At this meeting, you will be asked to:

 

 

 

1.

Elect 21 directors to serve on our Board of Directors until the 2017 annual meeting of stockholders or until their successors are duly elected and qualified;

 

 

 

 

2.

Conduct an advisory vote to approve executive compensation;

 

 

 

 

3.

Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2016; and

 

 

 

 

4.

Transact any other business that may properly come before the meeting and any adjournments or postponements of the meeting.

 

 

WHO MAY VOTE:

Stockholders of record at the close of business on April 21, 2016.

 

 

ANNUAL REPORT:

Our 2015 Annual Report is enclosed.

 

Pursuant to rules promulgated by the Securities and Exchange Commission, we are providing access to our proxy materials, including this proxy statement and our annual report for the year ended December 31, 2015, over the Internet. As a result, we are providing to many of our stockholders a Notice of Internet Availability of Proxy Materials instead of a paper copy of our proxy materials. The notice contains instructions on how to access those proxy materials over the Internet, as well as instructions on how to request a paper copy of our proxy materials. All stockholders who are not sent a notice will be sent a paper copy of our proxy materials by mail. This electronic distribution process reduces the environmental impact and lowers the costs of printing and distributing our proxy materials.

 

Your vote is very important. Please read the proxy statement and voting instructions on the enclosed proxy card.  Then, whether or not you plan to attend the annual meeting in person, and no matter how many shares you own, please vote by Internet, telephone or by marking, signing, dating and promptly returning the enclosed proxy card in the enclosed envelope, which requires no additional postage if mailed in the United States. Please see “General Information – What should I do if I want to attend in person?” for information on how to obtain directions to be able to attend the meeting and vote in person.

 

 

 

 

By Order of the Board of Directors,

 

Picture 23

 

Corey G. Prestidge

 

Executive Vice President,

 

General Counsel & Secretary

April 29, 2016

Dallas, Texas

 

 

 

 


 

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PROXY STATEMENT

TABLE OF CONTENTS

 

 

 

 

Page

 

 

GENERAL INFORMATION 

 

 

PROPOSAL ONE — ELECTION OF DIRECTORS 

 

 

General 

Nominees for Election as Directors 

Director Independence 

12 

Meeting Attendance 

12 

Vote Necessary to Elect Directors 

13 

Director Compensation 

13 

Board Committees 

15 

Corporate Governance 

18 

Director Nomination Procedures 

21 

 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 

23 

 

 

Principal Stockholders 

23 

Security Ownership of Management 

24 

 

 

MANAGEMENT 

26 

 

 

Executive Officers 

26 

Compensation Discussion and Analysis 

27 

Compensation Committee Report 

40 

Executive Compensation 

40 

Compensation Committee Interlocks and Insider Participation 

52 

Section 16(a) Beneficial Ownership Reporting Compliance 

52 

 

 

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 

53 

 

 

PROPOSAL TWO — ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION 

55 

 

 

Vote Necessary to Approve, on an Advisory Basis, Executive Compensation 

55 

 

 

PROPOSAL THREE —  RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

56 

 

 

Vote Necessary to Ratify the Appointment 

56 

Report of the Audit Committee 

56 

Independent Auditor’s Fees 

57 

 

 

STOCKHOLDER PROPOSALS FOR 2017 

58 

 

 

OTHER MATTERS 

58 

 

 

MULTIPLE STOCKHOLDERS SHARING ONE ADDRESS 

58 

 

 

ANNUAL REPORT 

58 

 

 

QUESTIONS 

58 

 

 

 

HILLTOP HOLDINGS INC.

200 Crescent Court, Suite 1330

Dallas, Texas 75201

 

PROXY STATEMENT

2016 Annual Meeting of Stockholders

To be Held on June 13, 2016

 

GENERAL INFORMATION

 

The Notice of Internet Availability of Proxy Materials or this Proxy Statement and the accompanying proxy card, as applicable, Notice of 2016 Annual Meeting of Stockholders and Annual Report on Form 10-K for the year ended December 31, 2015 were first provided to stockholders of record on or about May 4, 2016.

 

Unless the context otherwise indicates, all references in this Proxy Statement to the “Company,” “we,” “us,” “our” or “ours” or similar words are to Hilltop Holdings Inc. and its direct and indirect wholly owned subsidiaries, references to “Hilltop” refer solely to Hilltop Holdings Inc., references to “PlainsCapital” refer to PlainsCapital Corporation (a wholly owned subsidiary of Hilltop), references to “Securities Holdings” refer to Hilltop Securities Holdings LLC (a wholly owned subsidiary of Hilltop), references to “Hilltop Securities” refer to Hilltop Securities Inc. (a wholly owned subsidiary of Securities Holdings that was formerly known as Southwest Securities, Inc.), references to “HTS Independent Network” refer to Hilltop Securities Independent Network Inc. (a wholly owned subsidiary of Securities Holdings that was formerly known as SWS Financial Services, Inc.), references to the “Bank” refer to PlainsCapital Bank (a wholly owned subsidiary of PlainsCapital), references to “FNB” refer to First National Bank, references to “SWS” refer to the former SWS Group, Inc., references to “First Southwest” refer to First Southwest Holdings, LLC (a wholly owned subsidiary of Securities Holdings) and its subsidiaries as a whole, references to “FSC” refer to First Southwest Company, LLC (a former wholly owned subsidiary of First Southwest), references to “PrimeLending” refer to PrimeLending, a PlainsCapital Company (a wholly owned subsidiary of the Bank) and its subsidiaries as a whole, references to “NLC” refer to National Lloyds Corporation (a wholly owned subsidiary of Hilltop) and its subsidiaries as a whole, references to “NLIC” refer to National Lloyds Insurance Company (a wholly owned subsidiary of NLC) and references to “ASIC” refer to American Summit Insurance Company (a wholly owned subsidiary of NLC).

 

Why am I receiving these proxy materials?

 

The Board of Directors of Hilltop, or the Board of Directors, has made these materials available to you on the Internet or has delivered printed versions of these materials to you by mail in connection with the Board of Directors’ solicitation of proxies for use at our 2016 Annual Meeting of Stockholders, or the Annual Meeting, which will take place at 10:00 a.m. (Dallas, Texas local time) on Monday, June 13, 2016, at 2323 Victory Avenue, 5th Floor, Dallas, Texas 75219. This Proxy Statement describes matters on which you, as a stockholder, are entitled to vote. This Proxy Statement also gives you information on these matters so that you can make an informed decision with respect to your vote.

 

Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of printed proxy materials?

 

In accordance with rules promulgated by the Securities and Exchange Commission, or the SEC, instead of mailing a printed copy of our proxy materials to all of our stockholders, we have elected to furnish such materials to selected stockholders by providing access to these documents over the Internet. Accordingly, on or about May 4, 2016, we provided a Notice of Internet Availability of Proxy Materials, or the Notice, to selected stockholders of record and beneficial owners. These stockholders have the ability to access the proxy materials on a website referred to in the Notice or to request to receive a printed set of the proxy materials by calling the toll-free number found on the Notice. We encourage you to take advantage of the availability of the proxy materials on the Internet in order to help reduce the environmental impact of the printing and distribution of our proxy materials.

 

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How can I get electronic access to the proxy materials?

 

The Notice provides you with instructions regarding how to:

 

Ø

view our proxy materials for the Annual Meeting on the Internet;

 

Ø

vote your shares after you have viewed our proxy materials;

 

Ø

register to attend the meeting in-person;

 

Ø

request a printed copy of the proxy materials; and

 

Ø

instruct us to send our future proxy materials to you electronically by email.

 

Copies of the proxy materials are available for viewing at www.proxyvote.com.

 

You may have received proxy materials by email. Even if you received a printed copy of our proxy materials, you may choose to receive future proxy materials by email. Choosing to receive your future proxy materials by email will lower our costs of delivery and will reduce the environmental impact of printing and distributing our proxy materials. If you choose to receive our future proxy materials by email, you will receive an email next year with instructions containing a link to view those proxy materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it or for so long as the email address provided by you is valid.

 

What am I voting on?

 

At the Annual Meeting, stockholders will be asked to:

 

Ø

Elect 21 directors to serve on our Board of Directors until the 2017 annual meeting of stockholders or until their successors are duly elected and qualified;

 

Ø

Conduct an advisory vote to approve executive compensation;

 

Ø

Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2016; and

 

Ø

Transact any other business that may properly come before the Annual Meeting and any adjournments or postponements of the Annual Meeting.

 

What are the Board of Directors’ recommendations?

 

The Board of Directors recommends that you vote your shares:

 

Ø

FOR each of our director candidates;

 

Ø

FOR the approval, on an advisory basis, of the compensation of our named executive officers; and

 

Ø

FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2016.

 

Who is entitled to vote?

 

Holders of record of our common stock at the close of business on April 21, 2016, are entitled to vote at the Annual Meeting. With respect to each matter presented, a stockholder is entitled to cast one vote for each share of common stock owned at the close of business on April 21, 2016.

 

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How do I vote?

 

If you are a stockholder of record, there are four ways to vote:

 

Ø

In Person.  You may vote in person at the Annual Meeting. Bring your printed proxy card if you received one by mail. Otherwise, we will provide stockholders of record with a ballot at the Annual Meeting. We recommend that you vote by proxy even if you plan to attend the Annual Meeting. You always can change your vote at the Annual Meeting.

 

Ø

Via the Internet.  You may vote by proxy via the Internet by visiting www.proxyvote.com. Have your proxy card or Notice in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.

 

Ø

Via Telephone.  If you received or requested printed copies of the proxy materials by mail, you may vote by proxy by calling the toll-free number found on the proxy card.

 

Ø

Via Mail.  If you received or requested printed copies of the proxy materials by mail, you may vote by proxy by marking, signing and dating the proxy card and sending it back in the envelope provided.

 

If you are the beneficial owner of shares held by a broker or other nominee, you may instruct your broker or nominee to vote your shares by following the instructions that the broker or nominee provides to you. New York Stock Exchange, or NYSE, rules prohibit your broker from voting for the election of directors and to approve executive compensation on your behalf without specific voting instructions from you. Many brokers allow stockholders to provide voting instructions by mail, telephone and the Internet.

 

How do proxies work?

 

Our Board of Directors is asking for your proxy. Giving your proxy to the persons named by us means you authorize them to vote your shares at the Annual Meeting in the manner you direct. You may vote for all of our director candidates or withhold your vote as to one or more director candidates, and you may vote for or against, or abstain from voting on, executive compensation and the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2016.

 

If you are a stockholder of record and (a) you indicate when voting on the Internet or by telephone that you wish to vote as recommended by our Board of Directors or (b) you sign and return the enclosed proxy card but do not specify how your shares are to be voted, your shares will be voted FOR the election of all of our director candidates, FOR the approval of our executive compensation and FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2016.

 

If you are the beneficial owner of shares held by a broker or other nominee, also referred to as held in “street name,” and you do not provide such broker or nominee with specific voting instructions, under the rules promulgated by the NYSE, the broker or nominee that holds your shares may generally vote on “routine” matters at its discretion, but cannot vote on “non-routine” matters. If the broker or nominee that holds your shares does not receive instructions from you on how to vote your shares on a “non-routine” matter, that broker or nominee will inform the inspector of election that it does not have the authority to vote on such matters with respect to your shares, which is generally referred to as a “broker non-vote.”

 

You may receive more than one proxy or voting card depending on how you hold your shares. Shares registered in your name are covered by one card. If you also hold shares through a broker or other nominee, you also may receive material from them asking how you want those shares voted. To be sure that all of your shares are voted, we encourage you to respond to each request you receive.

 

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Which matters are considered “routine” or “non-routine”?

 

The ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2016 is considered to be a “routine” matter. A broker or other nominee may generally vote on routine matters and, therefore, no broker non-votes are expected to exist with respect to this matter. All other matters set forth in this Proxy Statement are matters that we believe will be designated “non-routine” matters. A broker or other nominee cannot vote without instructions on non-routine matters and, therefore, there may be broker non-votes on all matters other than the ratification of the appointment of PricewaterhouseCoopers LLP.

 

Can I change my vote or revoke my proxy after I have voted?

 

You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting (or before any earlier deadline specified in the Notice or the proxy card) by (a) voting again via the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the Annual Meeting will be counted), (b) signing and returning a new proxy card or vote instruction form with a later date or (c) attending the Annual Meeting and voting in person. Your attendance at the Annual Meeting, however, will not automatically revoke your proxy unless you vote again at the Annual Meeting or specifically request that your prior proxy be revoked by delivering, prior to the Annual Meeting, a written notice of revocation to the corporate Secretary at the address listed under “Questions” on page 58.

 

Will my shares be voted if I don’t sign a proxy?

 

If you hold your shares directly in your own name, they will not be voted unless you provide a proxy or attend the Annual Meeting and vote in person. Under certain conditions, shares that you own that are held by a broker or nominee may be voted even if you do not provide voting instructions to the broker or nominee. As discussed above under “— How do proxies work?”, brokerage firms have the authority under applicable rules to vote on certain “routine” matters, including the ratification of the appointment of auditors.

 

What constitutes a quorum?

 

In order to carry on the business of the Annual Meeting, we must have a quorum present. This means that the holders of at least a majority of the outstanding shares eligible to be cast must be represented at the Annual Meeting, either in person or by proxy. Any shares that we hold for our own benefit may not be voted and are not counted in the total number of outstanding shares eligible to be voted. Both abstentions and broker non-votes (described above) are counted as present for purposes of determining the presence of a quorum. On April 21, 2016, we had 98,498,077 shares of common stock outstanding and entitled to vote at the Annual Meeting.

 

How many votes are needed for approval?

 

Election of Directors

 

Election of the director nominees requires the affirmative vote of a plurality of the votes cast on the matter. The director candidates receiving the highest number of affirmative votes will be elected as directors. For purposes of the election of directors, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for purposes of determining a quorum. Stockholders may not cumulate votes in the election of directors.

 

Advisory Vote to Approve Executive Compensation

 

The affirmative vote of a majority of the votes cast on the matter is required to approve, on an advisory basis, our executive compensation. The Compensation Committee of the Board of Directors will review the results of this matter and will take the results into account in making future determinations concerning executive compensation. For purposes of the advisory vote on executive compensation, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for purposes of determining a quorum.

 

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Ratification of Independent Registered Public Accounting Firm

 

The appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2016 will be ratified if this proposal receives the affirmative vote of a majority of the votes cast on the matter. Brokers have the authority to vote on this proposal in the absence of contrary instructions from a beneficial owner. If this appointment is not ratified by our stockholders, the Audit Committee may reconsider its selection of PricewaterhouseCoopers LLP. With respect to this proposal, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for purposes of determining a quorum.

 

Who conducts the proxy solicitation?

 

Our Board of Directors is soliciting the proxies, and we will bear all costs of this solicitation, including the preparation, assembly, printing and mailing of this Proxy Statement. Copies of proxy materials will be furnished to banks, brokerage houses and other agents and nominees holding shares in their names that are beneficially owned by others so that they may forward the proxy materials to those beneficial owners. In addition, if asked, we will reimburse these persons for their reasonable expenses in forwarding the proxy materials to the beneficial owners. We have requested banks, brokerage houses and other custodians, nominees and fiduciaries to forward all proxy materials to the beneficial owners of the shares that they hold of record. Certain of our officers and employees also may solicit proxies on our behalf by mail, email, phone or fax or in person.

 

What should I do if I want to attend in person?

 

You will need an admission ticket to attend the Annual Meeting. Attendance at the Annual Meeting will be limited to stockholders of record at the close of business on April 21, 2016 (or their authorized representatives) having an admission ticket or proof of their share ownership, and guests of the Company. If you plan to attend the Annual Meeting, please indicate that you intend to do so when you are voting by telephone or Internet or follow the instructions on your proxy card, and we will promptly mail an admission ticket to you.

 

If your shares are held in the name of a bank, broker or other nominee and you plan to attend the Annual Meeting, you can obtain an admission ticket in advance by providing proof of your ownership, such as a bank or brokerage account statement, to the corporate Secretary at the address listed under “Questions” on page 58. If you do not have an admission ticket, you must show proof of your ownership of the Company’s common stock at the registration table at the door.

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PROPOSAL ONE — ELECTION OF DIRECTORS

 

General

 

At the recommendation of the Nominating and Corporate Governance Committee, our Board of Directors has nominated the director candidates named under “— Nominees for Election as Directors” below.

 

Our Board of Directors oversees our management on your behalf. The Board of Directors reviews our long-term strategic plans and exercises direct decision-making authority on key issues, such as the approval of business combination transactions, the authorization of dividends, the selection of the Chief Executive Officer, setting the scope of his authority to manage our day-to-day operations and the evaluation of his performance.

 

Our Board of Directors is not classified; thus, all of our directors are elected annually. The Nominating and Corporate Governance Committee has recommended, and our Board of Directors has nominated, for re-election all 21 persons currently serving as directors whose terms are expiring at the 2016 Annual Meeting of Stockholders.

 

If elected, each of the persons nominated as a director will serve until the next annual meeting of stockholders and until his or her successor is duly elected and qualified. Personal information on each of our nominees is given below.

 

Nominees for Election as Directors

 

 

 

 

Charlotte Jones Anderson 

Age 49

 

Ms. Anderson has served as a director of Hilltop since our acquisition of PlainsCapital in November 2012. She previously served as a director of PlainsCapital from September 2009 to November 2012. She currently serves as Executive Vice President and Chief Brand Officer for the Dallas Cowboys Football Club, Ltd., a National Football League team. She has worked in various capacities for the Dallas Cowboys organization since 1990. Since 2012, she has served as Chairman of the NFL Foundation and in 2014 she was appointed by the NFL commissioner to be a member of the NFL Personal Conduct Committee. Ms. Anderson is actively involved with a number of charitable and philanthropic organizations, including The Boys and Girls Clubs of America, the Salvation Army, The Rise School, the Southwest Medical Foundation, the Dallas Symphony, The Dallas Center for Performing Arts Foundation, the Shelton School, TACA, and Make-a-Wish North Texas Foundation.

 

 

 

Rhodes R. Bobbitt 

Age 70

 

Mr. Bobbitt has served as a director of Hilltop since November 2005. Mr. Bobbitt is retired. From 1987 until June 2004, he served as a Managing Director and the Regional Office Manager of the Private Client Service Group of Credit Suisse First Boston/Donaldson, Lufkin & Jenrette. Mr. Bobbitt was formerly Vice President of Security Sales in the Dallas office of Goldman, Sachs & Company from 1969 until 1987. He also serves on the Board of Directors of First Acceptance Corporation, including the Nominating and Corporate Governance, Investment, and Audit Committees of that company.

 

 

 

Tracy A. Bolt 

Age 52

 

Mr. Bolt has served as a director of Hilltop since our acquisition of PlainsCapital in November 2012. He previously served as a director of PlainsCapital from September 2009 to November 2012. In 1994, Mr. Bolt co-founded Hartman Leito & Bolt, LLP, an accounting and consulting firm based in Fort Worth, Texas, where he served as a partner and a member of the firm’s leadership committees until its sale in June 2014. Mr. Bolt holds a Bachelor of Science and Master of Science from the University of North Texas, and he is a certified public accountant. He currently serves as a business advisor to numerous management teams, public and private company boards, not for profit organizations and trusts.

 

 

 

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W. Joris Brinkerhoff 

Age 64

 

Mr. Brinkerhoff has served as a director of Hilltop since June 2005. Mr. Brinkerhoff founded a Native American-owned joint venture, Doyon Drilling Inc. J.V., in 1981 and served as its operations Chief Executive Officer and Chief Financial Officer until selling his venture interests in 1992. Doyon Drilling Inc. J.V. designed, built, leased and operated state of the art mobile drilling rigs for ARCO and British Petroleum in conjunction with their development of the North Slope Alaska petroleum fields. Mr. Brinkerhoff currently manages, on a full-time basis, family interests, including oil and gas production, a securities portfolio and various other business interests. He actively participates in numerous philanthropic organizations.

 

 

 

J. Taylor Crandall 

Age 62

 

Mr. Crandall was appointed as a director of Hilltop effective April 13, 2015. Mr. Crandall is a founding Managing Partner of Oak Hill Capital Management, LLC (“OHCM”) and has served OHCM (or its predecessors) since 1986. He has senior responsibility for originating, structuring and managing investments for OHCM’s Media and Telecom and Technology industry groups. Mr. Crandall has also served as Chief Operating Officer of Keystone, Inc., the primary investment vehicle for Robert M. Bass. Prior to joining OHCM, Mr. Crandall was a Vice President with the First National Bank of Boston. Mr. Crandall serves on the board of directors of Intermedia.net, Inc., Wave Division Holdings, LLC, Dave & Buster’s, Inc., Omada International, Pulsant Limited, Berlin Packaging LLC and Powdr Corporation. Mr. Crandall is the secretary-treasurer of the Anne T. and Robert M. Bass Foundation, the trustee of the Lucile Packard Foundation for Children’s Health and currently serves on the boards of trustees of The Park City Foundation and the U.S. Ski and Snowboard Team Foundation.

 

 

 

Charles R. Cummings 

Age 79

 

Mr. Cummings has served as a director of Hilltop since October 2005. Mr. Cummings currently serves as the Co-Manager of Acoustical Control LLC, a provider of noise abatement equipment primarily for the oil and gas industry; DQB Solutions, LLC, a service provider to the waste industry; and Argyle Equipment, LLC, a lessor of equipment to the waste industry. In addition, Mr. Cummings is the President and Chief Executive Officer of CB Resources LLC, an investor in the oil and natural gas industry, and Container Investments, LLC, a lessor of equipment to the waste industry, each of which positions he has held since 1999 and 1991, respectively. Until its sale in January 2014, he served as the Chairman of Aaren Scientific, Inc., a manufacturer of intraocular lenses used in cataract surgery. From 1998 through 2008, he was the Chairman and Chief Executive Officer of Aaren Scientific, Inc. and its predecessors. In 1994, Mr. Cummings co-founded I.E.S.I. Corporation, a regional, non-hazardous waste management company, and serving as a director until its sale in 2005. Prior to that, he served as a Managing Director of AEA Investors, Inc., a private investment firm. Prior to 1979, he was a partner with Arthur Young & Company.

 

 

 

Hill A. Feinberg 

Age 69

 

Mr. Feinberg serves as Chairman and Chief Executive Officer of Hilltop Securities, a continuation of Mr. Feinberg’s previous role with First Southwest since 1991. He has also served as a director of Hilltop since our acquisition of PlainsCapital in November 2012. He previously served as a director of PlainsCapital from December 31, 2008 (in conjunction with PlainsCapital’s acquisition of First Southwest) to November 2012. Prior to joining First Southwest, Mr. Feinberg was a senior managing director at Bear Stearns & Co. Mr. Feinberg is a past chairman of the Municipal Securities Rulemaking Board, the self-regulatory organization with responsibility for authoring the rules that govern the municipal securities activities of registered brokers. Mr. Feinberg also is a member of the board of directors of Energy XXI (Bermuda) Limited, a public company. Mr. Feinberg also formerly served as a member of the board of directors of Compass Bancshares, Inc. and Texas Regional Bancshares, Inc., as an advisory director of Hall Phoenix Energy, LLC and as the non-executive chairman of the board of directors of General Cryogenics, Inc.

 

 

 

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Gerald J. Ford 

Age 71

 

Mr. Gerald J. Ford has served as Chairman of the Board of Hilltop since August 2007, and has served as a director of Hilltop since June 2005. Mr. Gerald J. Ford served as interim Chief Executive Officer of Hilltop from January 1, 2010 until March 11, 2010. Mr. Gerald J. Ford is a banking and financial institutions entrepreneur who has been involved in numerous mergers and acquisitions of private and public sector financial institutions, primarily in the Southwestern United States, over the past 40 years. In that capacity, he acquired and consolidated 30 commercial banks from 1975 to 1993, forming First United Bank Group, Inc., a multi-bank holding company for which he functioned as Chairman of the Board and Chief Executive Officer until its sale in 1994. During this period, he also led investment consortiums that acquired numerous financial institutions, forming in succession, First Gibraltar Bank, FSB, First Madison Bank, FSB and First Nationwide Bank. Mr. Gerald J. Ford also served as Chairman of the Board of Directors and Chief Executive Officer of Golden State Bancorp Inc. and its subsidiary, California Federal Bank, FSB, from 1998 to 2002. He currently serves as Chairman of the Board of Freeport McMoRan Copper and Gold Inc. and as a director of Scientific Games Corporation and Mechanics Bank. Mr. Gerald J. Ford previously served as Chairman of Pacific Capital Bancorp and a director of First Acceptance Corporation, SWS Group, Inc. and McMoRan Exploration Co. Mr. Gerald J. Ford also currently serves on the Board of Trustees of Southern Methodist University, is the Co-Managing Partner of Ford Financial Fund II, L.P., a private equity fund. Hilltop’s President and Chief Executive Officer, Jeremy B. Ford, is the son of Mr. Gerald J. Ford, and Hilltop’s Executive Vice President, General Counsel and Secretary, Corey G. Prestidge, is the son-in-law of Mr. Gerald J. Ford.

 

 

 

Jeremy B. Ford 

Age 41

 

Mr. Jeremy B. Ford has served as President, Chief Executive Officer and a director of Hilltop since March 2010. Mr. Jeremy B. Ford has worked in the financial services industry for over 15 years, primarily focused on investments in, and acquisitions of, depository institutions and insurance and finance companies. He also is one of the individuals who provided services to Hilltop under the prior Management Services Agreement with Diamond A Administration Company, LLC. Accordingly, he was actively involved in numerous potential acquisitions for Hilltop prior to 2010, and the divestiture of the mobile home communities business in 2007. Mr. Jeremy B. Ford also is currently Chairman of the Board of First Acceptance Corporation. Prior to becoming President and Chief Executive Officer of Hilltop, he was a principal of Ford Financial Fund, L.P., a private equity fund. From 2004 to 2008, he worked for Diamond A-Ford Corporation, where he was involved in various investments made by a family limited partnership. Prior to that, he worked at Liberté Investors Inc. (now First Acceptance Corporation), California Federal Bank, FSB (now Citigroup Inc.), and Salomon Smith Barney (now Citigroup Inc.). Jeremy B. Ford is the son of Gerald J. Ford, Hilltop’s Chairman of the Board, and the brother-in-law of Corey G. Prestidge, Hilltop’s Executive Vice President, General Counsel and Secretary.

 

 

 

J. Markham Green 

Age 72

 

Mr. Green has served as a director of Hilltop since February 2004. Mr. Green is a private investor. From 2001 to 2003, he served as Vice Chairman of the Financial Institutions and Governments Group in investment banking at JP Morgan Chase. From 1993 until joining JP Morgan Chase, Mr. Green was involved in the start-up, and served on the boards, of eight companies, including Affordable Residential Communities Inc., the predecessor company to Hilltop. From 1973 to 1992, Mr. Green served in various capacities at Goldman, Sachs & Co. in investment banking. He was a general partner of Goldman, Sachs & Co. and co-head of its Financial Services Industry Group. Mr. Green is a member of the board of directors of MENTOR/The National Mentoring Partnership. Mr. Green previously served as Chairman of the Board of PowerOne Media LLC.

 

 

 

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William T. Hill, Jr. 

Age 73

 

Mr. Hill has served as a director of Hilltop since April 2008. He currently has his own law firm. Prior to 2012, Mr. Hill was of counsel at Fitzpatrick Hagood Smith & Uhl, a criminal defense firm. Prior to that, Mr. Hill served as the Dallas District Attorney and the Chief Prosecuting Attorney of the Dallas District Attorney’s office. During his tenure at the District Attorney’s office, Mr. Hill restructured the office of 250 lawyers and 150 support personnel, including the computerization of the office in 1999. For more than four decades, Mr. Hill has been a strong community leader serving on a number of charitable boards and receiving numerous civic awards, including President of the SMU Mustang Board of Directors and Chairman of the Doak Walker Running Back Award for its first year. Mr. Hill currently serves on the board of directors of Oncor Electric Delivery Company LLC, Oncor Electric Delivery Holdings Company LLC and Baylor Hospital Foundation, and is actively involved in the Mercy Street Mission. Mercy Street is a Christian-based organization serving West Dallas children by placing mentors with the children.

 

 

 

James R. Huffines 

Age 65

 

Mr. Huffines is the President and Chief Operating Officer of PlainsCapital, a position he has held since November 2010. He has served as a director of Hilltop since our acquisition of PlainsCapital in November 2012. He previously served as a director of PlainsCapital from May 2011 to November 2012. Prior to that, Mr. Huffines served as the Chairman of the Central and South Texas region and a director of PlainsCapital Bank, a position he held since joining PlainsCapital in 2001. Mr. Huffines holds a Bachelor of Business Administration in Finance from the University of Texas. He served on the board of Energy Future Holdings (formerly TXU Corp.), from 2007 until 2012. In addition, Mr. Huffines previously served as Chairman of the University of Texas System Board of Regents for over four and a half years. Mr. Huffines also participates in many community and business organizations, including serving as a board member of the Dallas Citizens Council, Board of Advisors of Dallas Chamber, the Board of Trustees of the Bob Bullock Texas State History Museum Foundation, Vice Chair of the Texas Business Leadership Council, the Executive Committee of the Chancellor’s Council at the University of Texas System; and a member of the Texas Philosophical Society.

 

 

 

Lee Lewis 

Age 64

 

Mr. Lewis has served as a director of Hilltop since our acquisition of PlainsCapital in November 2012. He previously served as a director of PlainsCapital from 1989 to November 2012. He founded in 1976, and currently serves as the Chief Executive Officer of, Lee Lewis Construction, Inc., a construction firm based in Lubbock, Texas. Mr. Lewis is a member of the American General Contractors Association, West Texas Chapter, Chancellors Council for the Texas Tech University System, and Red Raider Club.

 

 

 

Andrew J. Littlefair 

Age 55

 

Mr. Littlefair has served as a director of Hilltop since our acquisition of PlainsCapital in November 2012. He previously served as a director of PlainsCapital from September 2009 to November 2012. He is a co-founder of Clean Energy Fuels Corp., a provider of compressed and liquefied natural gas in the United States and Canada that is publicly traded on the NASDAQ Global Select Market, and has served as that company’s President, Chief Executive Officer and a director since 2001. From 1996 to 2001, Mr. Littlefair served as President of Pickens Fuel Corp., and from 1987 to 1996, he served in various management positions at Mesa, Inc., an energy company. From 1983 to 1987, Mr. Littlefair served in the Reagan Administration as a Staff Assistant to the President. He served as the Chairman of NGV America, the leading U.S. advocacy group for natural gas vehicles, from March 1993 to March 2011. Mr. Littlefair served on the board of directors of Westport Innovations Inc., a Canadian company publicly traded on the NASDAQ Global Market from 2007 to June 2010.

 

 

 

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W. Robert Nichols, III 

Age 71

 

Mr. Nichols has served as a director of Hilltop since April 2008. Mr. Nichols has been a leader in the construction machinery business since 1966. He was the president of Conley Lott Nichols, a dealer for several manufacturers of construction machinery, until its sale in 2012. In 2013, he purchased an oilfield services company in Midland, Texas, for which he serves as Chairman and President. He has served on numerous bank and bank holding company boards, including United New Mexico Bancorp and Ford Bank Group. Mr. Nichols is active in civic and charitable activities, serving as an active director at M.D. Anderson Hospital, The Nature Conservancy of Texas and Mercy Street.

 

 

 

C. Clifton Robinson 

Age 78

 

Mr. Robinson has served as a director of Hilltop since March 2007. From 2000 until its acquisition by a subsidiary of Hilltop in January 2007, Mr. Robinson was Chairman of the Board and Chief Executive Officer of NLASCO, Inc., an insurance holding company domiciled in Texas. Until December 2012, Mr. Robinson served as Chairman of the Board of NLASCO, Inc. In 2000, Mr. Robinson formed NLASCO, Inc. in conjunction with the acquisition of American Summit Insurance Company and the reacquisition of National Lloyds Insurance Company, which he had initially acquired in 1964 and later sold. In 1979, he organized National Group Corporation for the purpose of purchasing insurance companies and related businesses. In 1964, he became the President and Chief Executive Officer of National Lloyds Insurance Company in Waco, Texas, one of the two current insurance subsidiaries of NLC (formerly known as NLASCO, Inc.). From 1964 to the present, Mr. Robinson has participated in the formation, acquisition and management of numerous insurance business enterprises. Mr. Robinson established the Robinson-Lanham Insurance Agency in 1961. He previously has held positions with various insurance industry associations, including Vice-Chairman of the Board of Texas Life and Health Guaranty Association, President of the Independent Insurance Agents of Waco-McLennan County and member of the board of directors of the Texas Life Insurance Association and the Texas Medical Liability Insurance Underwriting Association. Mr. Robinson currently serves on the Board of Trustees of the Scottish Rite Hospital for Children in Dallas, Texas and the Baylor University Board of Regents.

 

 

 

Kenneth D. Russell 

Age 67

 

Mr. Russell has served as a director of Hilltop since August 2010. Mr. Russell is a former member of the managing board of directors for KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft (KPMG DTG). While a member of KPMG DTG, Mr. Russell served in leadership of Audit—Financial Services. Subsequent to his service as a member of the German firm leadership, he functioned as a freelance strategic advisory to KPMG DTG’s managing board of directors, working directly with members of its executive committee. Prior to joining KPMG DTG, Mr. Russell was the lead financial services partner in the US KPMG LLP’s Department of Professional Practice in New York. His responsibilities in the Department of Profession Practice included leading the financial instruments, structured financing and securitization topic teams, and he was one of KPMG’s leading consultants on financial instruments, hedging and securitization accounting issues. Prior to joining the Department of Professional Practice at KPMG in 1993, Mr. Russell spent 20 years in KPMG’s Dallas office and had engagement responsibilities for several significant regional banking, thrift and other financial services clients. He currently serves as Chief Executive Officer of Mechanics Bank and a Financial Advisor with Diamond A Administration Company, LLC, an affiliate of Gerald J. Ford. He also serves as a director of First Acceptance Corporation and Mechanics Bank.

 

 

 

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A. Haag Sherman 

Age 50

 

Mr. Sherman has served as a director of Hilltop since our acquisition of PlainsCapital in November 2012. He previously served as a director of PlainsCapital from September 2009 to November 2012. Mr. Sherman is the Chief Executive Officer and Chief Investment Officer of Tectonic Advisors LLC a registered investment advisor, and is a private investor and co-owner of an energy services company. Prior thereto, Mr. Sherman co-founded and served in various executive positions (including Chief Executive Officer and Chief Investment Officer) of Salient Partners, LP, a Houston-based investment firm. In addition, he previously served as an executive officer and partner of The Redstone Companies where he, among other things, managed a private equity portfolio. He previously served as a director of Miller Energy Resources and ZaZa Energy Corp. Mr. Sherman has served as an adjunct professor of law at The University of Texas School of Law. Mr. Sherman previously practiced corporate law at Akin, Gump, Strauss, Hauer & Feld, LLP and was an auditor at Price Waterhouse, a public accounting firm. Mr. Sherman is an attorney and certified public accountant.

 

 

 

Robert C. Taylor, Jr. 

Age 68

 

Mr. Taylor has served as a director of Hilltop since our acquisition of PlainsCapital in November 2012. He previously served as a director of PlainsCapital from 1997 to November 2012. He has been engaged in the wholesale distribution business in Lubbock, Texas since 1971. In February 2009, Mr. Taylor was appointed to serve as Chief Executive Officer for United Supermarkets, LLC, a retail grocery business in Texas since 1915 and has served as its President since its acquisition by Albertsons LLC. He also serves on the board of directors of United Supermarkets, LLC. Prior to that appointment, Mr. Taylor served as the Vice President of Manufacturing and Supply Chain for United Supermarkets since 2007. From 2002 to 2007, Mr. Taylor was the President of R.C. Taylor Distributing, Inc., a business engaged in the distribution of general merchandise, candy and tobacco to retail outlets in West Texas and Eastern New Mexico. He is chairman of the Lubbock Downtown Tax Increment Finance Redevelopment Committee and serves on the Texas Tech Chancellors Advisory Board.

 

 

 

Carl B. Webb 

Age 66

 

Mr. Webb has served as a director of Hilltop since June 2005. From August 2010 until December 2012, Mr. Webb served as the Chief Executive Officer of Pacific Capital Bancorp and as Chairman of the Board and Chief Executive Officer of Santa Barbara Bank & Trust, N.A. He was a Senior Principal of Ford Financial Fund, L.P., a private equity fund that was the parent company of SB Acquisition Company LLC, the majority stockholder of Pacific Capital Bancorp prior to its sale to UnionBanCal Corporation. Mr. Webb also is the Co-Managing Partner of Ford Financial Fund II, L.P., a private equity fund. In addition, Mr. Webb has served as a consultant to Hunter’s Glen/Ford, Ltd., a private investment partnership, since November 2002. He served as the Co-Chairman of Triad Financial Corporation, a privately held financial services company, from July 2007 to October 2009, as was the interim President and Chief Executive Officer from August 2005 to June 2007. Previously, Mr. Webb was the President and Chief Operating Officer and a Director of Golden State Bancorp Inc. and its subsidiary, California Federal Bank, FSB, from September 1994 to November 2002. Prior to his affiliation with California Federal Bank, FSB, Mr. Webb was the President and Chief Executive Officer of First Madison Bank, FSB (1993 to 1994) and First Gibraltar Bank, FSB (1988 to 1993), as well as President and a Director of First National Bank at Lubbock (1983 to 1988). Mr. Webb also is the Chairman of Mechanics Bank and a director of Prologis, Inc. He is a former director of Pacific Capital Bancorp, M&F Worldwide Corp. and Plum Creek Timber Company.

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Alan B. White

Age 67

 

Mr. White is one of PlainsCapital’s founders. He has served as Chairman and Chief Executive Officer of PlainsCapital since 1987. He has served as a director of Hilltop since our acquisition of PlainsCapital in November 2012 and is the Vice-Chairman of the Board of Directors and the Chairman of Hilltop’s Executive Committee. Mr. White’s current charitable and civic service includes serving as a member of the Cotton Bowl Athletic Association Board of Directors, the MD Anderson Cancer Center Living Legend Committee and the Dallas Citizens Council. He was also the founding chairman of the Texas Tech School of Business Chief Executive’s Roundtable; the former Chairman of the Texas Tech Board of Regents, the Covenant Health System Board of Trustees, and the Methodist Hospital System Board of Trustees; and a member of the Texas Tech University President’s Council and the Texas Hospital Association Board.

 

 

Director Independence

 

Our Board of Directors has affirmatively determined that 12 of the 21 nominees for election as directors at the Annual Meeting have no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us) and are independent within the meaning of the director independence requirements of the listing standards of the NYSE. The independent directors are Charlotte Jones Anderson, Rhodes Bobbitt, Tracy A. Bolt, W. Joris Brinkerhoff, J. Taylor Crandall, Charles R. Cummings, J. Markham Green, William T. Hill, Jr., Andrew J. Littlefair, W. Robert Nichols, III, A. Haag Sherman and Robert C. Taylor, Jr.  Jess T. Hay, who served on our Board of Directors until his death in April 2015, was affirmatively determined to be independent. The determinations regarding the independence of these individuals were based upon information known by the members of the Board of Directors concerning each other and supplied by each of the directors for the purpose of this determination.

 

In conducting its annual review of director independence, the Board of Directors considered transactions and relationships between each director or any member of his or her immediate family and the Company. The Board of Directors considered that two directors it determined to be independent —Messrs. Bolt and Taylor — have, or a member of their respective immediate families or an affiliated company in which they are employed or in which they are a principal equity holder has, received loans from the Bank in the ordinary course of business, in each case which our Board of Directors did not view as compensation. In our management’s opinion, these loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions by the Bank with other unaffiliated persons and do not involve more than normal risk of collectability. In addition, the Board of Directors considered transactions between the Bank and Clean Energy Finance, Inc., a subsidiary of Clean Energy Fuels Corp., a company for which Andrew J. Littlefair serves as a director and president and chief executive officer. Mr. Littlefair also beneficially owned 1.9% of the outstanding shares of common stock of Clean Energy Fuels Corp. at April 4, 2016. From late 2011 through March 31, 2016, the Bank purchased, in a series of transactions, an aggregate of approximately $16.4 million in original principal amount of promissory notes issued by unaffiliated third parties from Clean Energy Finance, Inc. Although purchased at a premium to the outstanding principal balance on the notes, at the time of purchase, the interest rates on the notes exceeded the market rates charged by the Bank on similar-type loans that it originated. Clean Energy Finance, Inc. performs the servicing on the notes at no cost to the Bank, and the Bank purchased these notes with recourse to Clean Energy Finance, Inc. in the event of default. The aggregate yearly payments of the purchase prices in these transactions constituted less than 2% of the consolidated gross revenues of each of Clean Energy Fuels Corp. and the Company in the applicable year purchased and were made in the ordinary course of business in arms-length transactions. Mr. Littlefair did not have a direct financial interest in any of the transactions with Clean Energy Finance, Inc.

 

Meeting Attendance

 

Our Board of Directors met four times during 2015. No director attended fewer than 75% of the meetings of the Board of Directors and of the board committees on which he or she served during 2015. Our Board of Directors has not adopted a formal policy with regard to director attendance at the annual meetings of stockholders. We, however, encourage members of the Board of Directors to attend annual meetings. Messrs. Gerald J. Ford, Jeremy B. Ford, Alan B. White, James R. Huffines, Hill A. Feinberg and Robert Nichols attended the 2015 annual meeting of stockholders.

 

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Vote Necessary to Elect Directors

 

Election of the director nominees requires the affirmative vote of a plurality of the votes cast on the matter. The director candidates receiving the highest number of affirmative votes will be elected as directors. For purposes of the election of directors, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for purposes of determining a quorum. Under applicable NYSE rules, a broker or other nominee does not possess the authority to vote for the director nominees in the absence of instructions from the beneficial owner of the relevant shares. Stockholders may not cumulate votes in the election of directors.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES IDENTIFIED ABOVE.

 

 

Director Compensation

 

General

 

Members of our Board of Directors who also are full-time employees do not receive any compensation for their service on the Board of Directors or any committee of the Board of Directors. The Chairman of the Board of Directors receives an annual retainer of $200,000, plus a participation fee for attendance at each meeting as described below. All other directors receive the following compensation for their service on the Board of Directors:

 

·

$40,000 annual retainer; and

·

$2,000 fee for participation in each meeting of the Board of Directors at which attendance in person is requested (one-half of that fee is paid for participation in any meeting at which attendance is requested by telephone).

 

In addition, members of board committees receive the following additional compensation:

 

·

Audit Committee — $65,000 annual fee for the chairperson of the committee;

·

Nominating and Corporate Governance Committee — $10,000 annual fee for the chairperson of the committee;

·

Compensation Committee — $10,000 annual fee for the chairperson of the committee;

·

Investment Committee — $25,000 annual fee for the chairperson of the committee;

·

Risk Committee — $10,000 annual fee for the chairperson of the committee;

·

Merger and Acquisition Committee — $10,000 annual fee for the chairperson of the committee; and

·

$1,000 fee for participation in each meeting of a board committee.

 

Members of our Board of Directors may elect to receive their aggregate Board of Directors and board committee compensation:

 

·

entirely in the form of cash;

·

entirely in the form of common stock; or

·

one-half in cash and one-half in common stock.

 

Any elections, or changes in elections, by directors regarding the form of compensation to be received may only occur during a “trading window” and only become effective at the “trading window” immediately following such election or change in election. Cash and shares of common stock are paid and issued, respectively, in arrears on a calendar quarterly basis, with no vesting requirements. Customarily, these payments and issuances occur by the 15th day of the month following the applicable calendar quarter-end. The value of the common stock awarded is based upon the

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average closing price per share of our common stock for the last ten consecutive trading days of the applicable calendar quarter.  In lieu of fractional shares of common stock that would otherwise be issuable to directors, we pay cash to the director based upon the value of those fractional shares at the value the shares are awarded to the director. If a director does not serve for the entire calendar quarter, that director is compensated based upon the time of service during the applicable calendar quarter.

 

Each member of our Board of Directors is reimbursed for out-of-pocket expenses associated with his service on, and attendance at, Board of Directors or board committee meetings. Other than as described above, members of our Board of Directors receive no additional compensation for their service on the Board of Directors or board committees.

 

Political Action Committee Matching Program

 

The NLASCO Political Action Committee, or the PAC, is a separate segregated fund that was formed to make political contributions. To encourage participation in the PAC by eligible participants, for each contribution made to the PAC by an eligible individual contributor, NLC makes a matching contribution to any Section 501(c)(3) organization of the contributor’s choice, dollar for dollar, up to the maximum amount an eligible individual can contribute to the PAC in a given calendar year. Under this program, no contributor to the PAC receives any financial, tax or other tangible benefit or premium from either the recipient charities or us. This program is completely voluntary.

 

2015 Director Compensation

 

Director Compensation Table for 2015(a)

 

 

 

 

 

 

 

 

 

 

    

Fees Earned or

    

 

    

 

 

 

 

Paid in Cash

 

Stock Awards

 

Total

 

Name

 

($)

 

($)

 

($)

 

Charlotte Jones Anderson

 

26,533

 

26,467

 

53,000

 

Rhodes R. Bobbitt

 

84,000

 

 —

 

84,000

 

Tracy A. Bolt

 

48

 

63,952

 

64,000

 

W. Joris Brinkerhoff

 

53,000

 

 —

 

53,000

 

J. Taylor Crandall

 

27,500

 

 —

 

27,500

 

Charles R. Cummings

 

122,000

 

 —

 

122,000

 

Hill A. Feinberg

 

 —

 

 —

 

 —

 

Gerald J. Ford

 

57

 

147,943

 

148,000

 

Jeremy B. Ford

 

 —

 

 —

 

 —

 

J. Markham Green

 

66,000

 

 —

 

66,000

 

Jess T. Hay (b)

 

25,000

 

 —

 

25,000

 

William T. Hill, Jr.

 

58,000

 

 —

 

58,000

 

James R. Huffines

 

 —

 

 —

 

 —

 

Lee Lewis

 

53,000

 

 —

 

53,000

 

Andrew J. Littlefair

 

26,533

 

26,467

 

53,000

 

W. Robert Nichols, III

 

63,000

 

 —

 

63,000

 

C. Clifton Robinson

 

48,000

 

 —

 

48,000

 

Kenneth D. Russell

 

60,000

 

 —

 

60,000

 

A. Haag Sherman

 

68,000

 

 —

 

68,000

 

Robert C. Taylor, Jr.

 

26,533

 

26,467

 

53,000

 

Carl B. Webb

 

59

 

47,941

 

48,000

 

Alan B. White

 

 —

 

 —

 

 —

 

 


(a)

Fees earned for services performed in 2015 include annual retainers, meeting fees and chairperson remuneration.  Aggregate fees paid to non-employee directors for annual retainers and committee chairmanships were paid quarterly in arrears. Cash was paid in lieu of the issuance of fractional shares. Service for any partial quarter is calculated and paid on the basis of time served during the applicable calendar quarter. Non-employee directors are solely responsible for the payment of taxes payable on remuneration paid by the Company. The number of shares awarded was determined based upon the average closing price per share of our common stock for the last ten consecutive trading days of the calendar quarter during which the stock was earned; however, the dollar value reported in the table for each stock award was determined in accordance with the provisions of the Stock Compensation Topic of the Accounting Standards Codification (“ASC”).

(b)

Mr. Hay passed away on April 13, 2015.

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As described above, the 2015 stock awards were issued to each non-employee director who elected to receive all or part of his or her director compensation in the form of our common stock, generally within 15 days following each applicable calendar quarter-end. All of our personnel, as well as non-employee directors, are subject to trading restrictions with regard to our common stock, and trading may only occur during a “trading window.” Provided that any such party does not possess material, non-public information about us, this trading period commences on the next trading day following two trading days after the public release of quarterly or annual financial information and continues until the close of business on last day of the month preceding the last month of the next fiscal quarter.

 

The following numbers of shares of our common stock were issued to our directors for services performed during 2015:

 

 

 

 

 

 

 

Number of

 

Name

 

Shares

 

Charlotte Jones Anderson

 

1,281

 

Tracy A. Bolt

 

3,084

 

Gerald J. Ford

 

7,357

 

Andrew J. Littlefair

 

1,281

 

Robert C. Taylor, Jr.

 

1,281

 

Carl B. Webb

 

2,318

 

 

Each of the following directors had outstanding the following aggregate numbers of shares of our common stock awarded for services performed on behalf of us from election or appointment through the end of fiscal 2015:

 

 

 

 

 

 

    

Number of

 

Name

 

Shares

 

Charlotte Jones Anderson

 

4,311

 

Rhodes R. Bobbitt

 

1,562

 

Tracy A. Bolt

 

10,163

 

W. Joris Brinkerhoff

 

9,943

 

Charles R. Cummings

 

5,379

 

Gerald J. Ford

 

10,250

 

J. Markham Green

 

3,872

 

Andrew J. Littlefair

 

4,264

 

Robert C. Taylor, Jr.

 

4,290

 

Carl B. Webb

 

39,796

 

 

For further information about the stockholdings of these directors and our management, see “Security Ownership of Certain Beneficial Owners and Management” commencing on page 23 of this Proxy Statement.

 

Board Committees

 

General

 

The Board of Directors appoints committees to assist it in carrying out its duties. In particular, committees work on key issues in greater detail than would be practical at a meeting of all the members of the Board of Directors. Each committee reviews the results of its deliberations with the full Board of Directors.

 

The standing committees of the Board of Directors currently consist of the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee, the Risk Committee, the Investment Committee, the Merger and Acquisition Committee, and the Executive Committee. A more detailed description of these committees is set forth below. Our Board of Directors may, from time to time, establish certain other committees to facilitate our management. Current copies of the charters for each of the foregoing committees, as well as our Corporate Governance Guidelines, Code of Ethics and Business Conduct, or the General Code of Ethics and Business Conduct, and Code of Ethics for Chief Executive and Senior Financial Officers, or the Senior Officer Code of Ethics, may be found on our website at ir.hilltop-holdings.com, under the heading “Investor Relations  — Corporate Information — Governance

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Documents.” Printed versions also are available to any stockholder who requests them by writing to our corporate Secretary at the address listed under “Questions” on page 58.

 

Committee Membership

 

The following table shows the current membership of, and the 2015 fiscal year meeting information for, each of the committees of the Board of Directors.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Audit

    

Compensation

    

Nominating and Corporate

    

Risk

    

Investment

    

Merger and

    

Executive

 

Name

 

Committee

 

Committee

 

Governance Committee

 

Committee

 

Committee

 

Acquisition Committee

 

Committee

 

Charlotte  Jones Anderson*

 

 

 

 

 

 

 

 

 

 

 

 

Rhodes Bobbit*

 

 

 

 

 

 

 

 

Chairman

 

 

 

 

Tracy A. Bolt*

 

 

 

 

 

 

 

 

 

 

 

 

W. Joris Brinkerhoff*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

J. Taylor Crandall*

 

 

 

 

 

 

 

 

 

 

Chairman

 

 

 

Charles R. Cummings*

 

Chairman

 

 

 

 

 

 

 

 

 

 

 

 

Hill A. Feinberg

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gerald J. Ford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jeremy B. Ford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

J. Markham Green*

 

 

 

 

 

 

 

 

 

 

 

 

William T. Hill, Jr.*

 

 

 

 

 

 

 

 

 

 

 

 

James Huffines

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lee Lewis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Andrew J. Littlefair*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

W. Robert Nichols, III*

 

 

 

 

 

Chairman

 

 

 

 

 

 

 

 

C. Clifton Robinson

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kenneth D. Russell

 

 

 

 

 

 

 

Chairman

 

 

 

 

 

 

 

A. Haag Sherman*

 

 

 

Chairman

 

 

 

 

 

 

 

 

 

 

Robert C. Taylor, Jr.*

 

 

 

 

 

 

 

 

 

 

 

 

 

Carl B. Webb

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alan B. White

 

 

 

 

 

 

 

 

 

 

 

 

 

Chairman

 

Meetings in Fiscal 2015

 

8

 

5

 

4

 

7

 

5

 

0

 

9

 

 


*     Denotes independent director.

 

Audit Committee

 

We have a standing Audit Committee established within the meaning of Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Audit Committee helps our Board of Directors ensure the integrity of our financial statements, the qualifications and independence of our independent registered public accounting firm and the performance of our internal audit function and independent registered public accounting firm. In furtherance of those matters, the Audit Committee assists in the establishment and maintenance of our internal audit controls, selects, meets with and assists the independent registered public accounting firm, oversees each annual audit and quarterly review and prepares the report that federal securities laws require be included in our annual proxy statement, which appears on page 56. Mr. Cummings has been designated as Chairman, and Messrs. Green and Bolt are members, of the Audit Committee. Our Board of Directors has reviewed the education, experience and other qualifications of each member of the Audit Committee. Based upon that review, our Board of Directors has determined that each of Mr. Cummings and Mr. Bolt qualifies as an “audit committee financial expert,” as defined by the rules of the SEC, and each member of the Audit Committee is independent in accordance with the listing standards of the NYSE. Currently, none of our Audit Committee members serve on the audit committees of three or more public companies.

 

Compensation Committee

 

The Compensation Committee reviews and approves the compensation and benefits of our executive officers, administers the Hilltop Holdings Inc. 2012 Annual Incentive Plan, or the Annual Incentive Plan, the Hilltop Holdings Inc. 2003 Equity Incentive Plan, or the 2003 Equity Incentive Plan, and the Hilltop Holdings Inc. 2012 Equity Incentive Plan, or the 2012 Equity Incentive Plan, and produces the annual report on executive compensation for inclusion in our annual proxy statement, which appears on page 40. Each member is independent in accordance with the listing standards of the NYSE.

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Nominating and Corporate Governance Committee

 

The Nominating and Corporate Governance Committee’s purpose is as follows:

 

·

Identify, screen and recommend to our Board of Directors individuals qualified to serve as members, and on committees, of the Board of Directors;

·

Advise our Board of Directors with respect to the composition, procedures and committees of the Board of Directors;

·

Advise our Board of Directors with respect to the corporate governance principles applicable to the Company; and

·

Oversee the evaluation of the Board of Directors and our management.

 

Each member of the Nominating and Corporate Governance Committee is independent in accordance with the listing standards of the NYSE.

 

Risk Committee

 

The purpose of the Risk Committee is to provide assistance to the Board of Directors in its oversight of:

 

·

The Company’s risk governance structure;

·

The Company’s risk tolerance;

·

The Company’s risk management and risk assessment guidelines and policies regarding market, credit, operation, liquidity, funding, reputational, regulatory, and such other risks as necessary;

·

The Company’s capital and liquidity and funding; and

·

The performance of the Company’s Chief Risk Officer.

 

The duties assigned to the Risk Committee are meant to ensure that there is an effective system reasonably designed to evaluate and control risk throughout the Company.

 

Investment Committee

 

The Investment Committee is responsible for, among other things, reviewing investment policies, strategies and programs; reviewing the procedures that we utilize in determining that funds are invested in accordance with policies and limits approved by the Investment Committee; and reviewing the quality and performance of our investment portfolios and the alignment of asset duration to liabilities.

 

Merger and Acquisition Committee

 

The purpose of the Merger and Acquisition Committee is to review potential mergers, acquisitions or dispositions of material assets or a material portion of any business proposed by management and to report its findings and conclusions to the Board of Directors. Each member of the Merger and Acquisition Committee is independent in accordance with the listing standards of the NYSE.

 

Executive Committee

 

The Executive Committee, with certain exceptions, has the power and authority of the Board of Directors to manage the affairs of the Company between meetings of the Board of Directors.

 

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Corporate Governance

 

General

 

We are committed to good corporate governance practices and, as such, we have adopted formal corporate governance guidelines to maintain our effectiveness. The guidelines govern, among other things, board member qualifications, responsibilities, education, management succession and executive sessions. A copy of the corporate governance guidelines may be found at our corporate website at ir.hilltop-holdings.com under the heading “Investor Relations — Corporate Information — Governance Documents.” A copy also may be obtained upon request from our corporate Secretary at the address listed under “Questions” on page 58.

 

Board Leadership Structure

 

We have separated the offices of Chief Executive Officer and Chairman of the Board as a means of separating management of the Company from our Board of Director’s oversight of management. Separating these roles also enables an orderly leadership transition when necessary. We believe, at this time, that this structure provides desirable oversight of our management and affairs. We have in the past appointed, and will continue to appoint, lead independent directors as circumstances require.

 

Risk Oversight

 

Our Board of Directors and the Risk Committee of the Board of Directors oversee an enterprise-wide approach to risk management, intended to support the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance stockholder value. Our Board of Directors and the Risk Committee are actively involved in establishing and refining our business strategy, including assessing management’s appetite for risk and determining the appropriate level of overall risk for the Company. The Company conducts continual assessments through the Chief Risk Officer who is overseen by the Risk Committee.

 

While the Board of Directors has the ultimate oversight responsibility for the risk management process, various committees of the Board of Directors outside of the Risk Committee also have responsibility for risk management. In particular, the Audit Committee focuses on financial risk, including internal controls, and, from time to time, discusses and evaluates matters of risk, risk assessment and risk management with our management team. The Compensation Committee is responsible for overseeing the management of risk associated with our compensation policies and arrangements. The Nominating and Corporate Governance Committee ensures that the internal rule processes by which we are governed are consistent with prevailing governance practices and applicable laws and regulations. Finally, the Investment Committee ensures that our funds are invested in accordance with policies and limits approved by it. Our Senior Officer Code of Ethics, General Code of Ethics and Business Conduct, committee charters and other governance documents are reviewed by the appropriate committees annually to confirm continued compliance, ensure that the totality of our risk management processes and procedures is appropriately comprehensive and effective and that those processes and procedures reflect established best practices.

 

Board Performance

 

Our Board of Directors conducts a survey of its members regarding its performance and reviews the results of the survey with a view to improving efficacy and effectiveness of the Board of Directors. In addition, the full Board of Directors reviews annually the qualifications and effectiveness of the Audit Committee and its members.

 

Director Qualifications for Service

 

As described below, the Nominating and Corporate Governance Committee considers a variety of factors when evaluating a potential candidate to fill a vacancy on the Board of Directors or when nomination of an incumbent director for re-election is under consideration. The Nominating and Corporate Governance Committee and the Board of Directors strive to balance a diverse mix of experience, perspective, skill and background with the practical requirement that the Board of Directors will operate collegially, with the common purpose of overseeing our business on behalf of our stockholders. All of our directors possess relevant experience, and each of them approaches the business of the Board of

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Directors and their responsibilities with great seriousness of purpose. The following describes, with respect to each director, his or her particular experience, qualifications, attributes and skills that qualify him or her to serve as a director:

 

 

 

 

Charlotte Jones Anderson

 

Ms. Anderson has significant managerial and executive officer experience with large entrepreneurial businesses and provides the Board of Directors the perspective of one of PlainsCapital’s significant customers.

 

 

 

Rhodes Bobbitt

 

Mr. Bobbitt has an extensive investment background. This is particularly important given our available cash on hand and the investment portfolios at our subsidiaries.

 

 

 

Tracy A. Bolt

 

Mr. Bolt has significant experience concerning accounting matters that is essential to our Audit Committee’s and Board of Directors’ oversight responsibilities.

 

 

 

W. Joris Brinkerhoff

 

Mr. Brinkerhoff has participated, and continues to participate, in a number of business interests. Accordingly, he brings knowledge and additional perspectives to our Board of Directors from experiences with those interests.

 

 

 

J. Taylor Crandall

 

Mr. Crandall has significant experience in finance and management and board governance, including his experience serving on the Boards of Directors of several public and private companies.

 

 

 

Charles R. Cummings

 

Mr. Cummings has an extensive operational and accounting background. His expertise in these matters brings considerable strength to our Audit Committee and Board of Directors in these areas.

 

 

 

Hill A. Feinberg

 

Mr. Feinberg has extensive knowledge and experience concerning the broker-dealer segment and the industry in which it operates through his extended period of service to First Southwest and Hilltop Securities.

 

 

 

Gerald J. Ford

 

Mr. Gerald J. Ford has been a financial institutions entrepreneur and private investor involved in numerous mergers and acquisitions of private and public sector financial institutions over the past 40 years. His extensive banking industry experience and educational background provide him with significant knowledge in dealing with financial and regulatory matters, making him a valuable member of our Board of Directors. In addition, his service on the boards of directors and audit and corporate governance committees of a variety of public companies gives him a deep understanding of the role of the Board of Directors.

 

 

 

Jeremy B. Ford

 

Mr. Jeremy B. Ford’s career has focused on mergers and acquisitions in the financial services industry. Accordingly, he has been actively involved in numerous acquisitions, including our acquisitions of NLC, PlainsCapital, substantially all of the assets of FNB, and SWS. His extensive knowledge of our operations makes him a valuable member of our Board of Directors.

 

 

 

J. Markham Green

 

Mr. Green has an extensive background in financial services, as well as board service. His investment banking background also provides our Board of Directors with expertise surrounding acquisitions and investments.

 

 

 

William T. Hill, Jr.

 

Mr. Hill’s experience with legal and compliance matters, along with his management of a large group of highly skilled professionals, have given him considerable knowledge concerning many matters that come before our Board of Directors. Mr. Hill has also served on several civic and charitable boards, which has given him invaluable experience in corporate governance matters.

 

 

 

James R. Huffines

 

Mr. Huffines’ significant banking and managerial experience provide unique insights and experience to our Board of Directors.

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Lee Lewis

 

Through his service on our Board of Directors and PlainsCapital’s Board of Directors, Mr. Lewis has many years of knowledge of PlainsCapital and the challenges and opportunities that it is presented. The background of Mr. Lewis as an owner and chief executive officer of a Texas-based company also provides unique insight to the Board of Directors.

 

 

 

Andrew J. Littlefair

 

Mr. Littlefair has significant experience serving as a chief executive officer and as a director of publicly traded companies and provides the Board of Directors with the perspective of one of PlainsCapital’s significant customers.

 

 

 

W. Robert Nichols III

 

Mr. Nichols has broad experience in managing and leading enterprises. This significant experience provides our Board of Directors with additional perspectives on our operations.

 

 

 

C. Clifton Robinson

 

Mr. Robinson possesses particular knowledge and experience in the insurance industry, as we purchased NLC from him in 2007. Mr. Robinson provides our Board of Directors with expertise in regards to our insurance operations.

 

 

 

Kenneth D. Russell

 

Mr. Russell’s extensive background in accounting and operating entities provides valuable insight to our Board of Directors, including merger and acquisition activities.

 

 

 

A. Haag Sherman

 

Mr. Sherman has significant experience concerning investing, legal and accounting matters that is essential to our Board of Director’s oversight responsibilities.

 

 

 

Robert C. Taylor, Jr.

 

Through his service on our Board of Directors and PlainsCapital’s Board of Directors, Mr. Taylor has many years of knowledge of PlainsCapital and the challenges and opportunities that it is presented. The background of Mr. Taylor as a manager of a Texas-based company also provides unique insight to the Board of Directors.

 

 

 

Carl B. Webb

 

Mr. Webb possesses particular knowledge and experience in strategic planning and the financial industry, as well as expertise in finance, that strengthen the Board of Directors’ collective qualifications, skills and experience.

 

 

 

Alan B. White

 

Mr. White possesses knowledge of our business and industry through his lengthy tenure as PlainsCapital’s Chief Executive Officer that aids him in efficiently and effectively identifying and executing our strategic priorities.

 

Executive Board Sessions

 

The current practice of our Board of Directors is to hold an executive session of its non-management directors at least once per quarter. The individual who serves as the chair at these executive sessions is the Chairman of the Board of Directors. Executive sessions of the independent directors of the Board of Directors also are held at least once per fiscal year, and the independent directors select the independent director to preside over each executive session.

 

Communications with Directors

 

Our Board of Directors has established a process to receive communications from stockholders and other interested parties. Stockholders and other interested parties may contact any member or all members of the Board of Directors by mail. To communicate with our Board of Directors, any individual director or any group or committee of directors, correspondence should be addressed to the Board of Directors or any such individual director or group or committee of directors by either name or title. The correspondence should be sent to Hilltop Holdings Inc., c/o Secretary, 200 Crescent Court, Suite 1330, Dallas, Texas 75201.

 

All communications received as set forth in the preceding paragraph will be opened by the office of our General Counsel for the sole purpose of determining whether the contents represent a message to our directors. Any contents that are not in the nature of advertising, promotions of a product or service or patently offensive material will be forwarded

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promptly to the addressee(s). In the case of communications to the Board of Directors or any group or committee of directors, the General Counsel’s office will make sufficient copies of the contents to send to each director who is a member of the group or committee to whom the communication is addressed. If the amount of correspondence received through the foregoing process becomes excessive, our Board of Directors may consider approving a process for review, organization and screening of the correspondence by the corporate Secretary or other appropriate person.

 

Code of Business Conduct and Ethics

 

We have adopted a Senior Officer Code of Ethics applicable to our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer. We also have adopted a General Code of Ethics and Business Conduct applicable to all officers, directors and employees. Both codes are available on our website at ir.hilltop-holdings.com under the heading “Investor Relations — Corporate Information — Governance Documents.” Copies also may be obtained upon request by writing our corporate Secretary at the address listed under “Questions” on page 58. We intend to disclose any amendments to, or waivers from, our Senior Officer Code of Ethics and our General Code of Ethics and Business Conduct at the same website address provided above.

 

Director Nomination Procedures

 

The Nominating and Corporate Governance Committee believes that, at a minimum, candidates for membership on the Board of Directors should have a demonstrated ability to make a meaningful contribution to the Board of Directors’ oversight of our business and affairs and have a record and reputation for honest and ethical conduct. The Nominating and Corporate Governance Committee recommends director nominees to the Board of Directors based on, among other things, its evaluation of a candidate’s experience, knowledge, skills, expertise, integrity, ability to make independent analytical inquiries, understanding of our business environment and a willingness to devote adequate time and effort to board responsibilities. In making its recommendations to the Board of Directors, the Nominating and Corporate Governance Committee also seeks to have the Board of Directors nominate candidates who have diverse backgrounds and areas of expertise so that each member can offer a unique and valuable perspective.

 

The Nominating and Corporate Governance Committee expects, in the future, to identify potential nominees by asking current directors and executive officers to notify the committee if they become aware of persons who meet the criteria described above. The Nominating and Corporate Governance Committee also, from time to time, may engage firms, at our expense, that specialize in identifying director candidates. As described below, the Nominating and Corporate Governance Committee also will consider candidates recommended by stockholders.

 

Once a person has been identified by the Nominating and Corporate Governance Committee as a potential candidate, the committee expects to collect and review publicly available information regarding the person to assess whether the person should be considered further. If the Nominating and Corporate Governance Committee determines that the candidate warrants further consideration, and if the person expresses a willingness to be considered and to serve on the Board of Directors, the Nominating and Corporate Governance Committee expects to request information from the candidate, review the person’s accomplishments and qualifications, including in light of any other candidates that the committee might be considering, and conduct one or more interviews with the candidate. In certain instances, members of the Nominating and Corporate Governance Committee may contact one or more references provided by the candidate or may contact other members of the business community or other persons that may have greater first-hand knowledge of the candidate’s accomplishments.

 

In addition to formally nominating individuals for election as directors in accordance with our Second Amended and Restated Bylaws, as summarized below on page 58 under “Stockholder Proposals for 2017,” stockholders may send written recommendations of potential director candidates to the Nominating and Corporate Governance Committee for its consideration. Such recommendations should be submitted to the Nominating and Corporate Governance Committee “c/o Secretary” at Hilltop Holdings Inc., 200 Crescent Court, Suite 1330, Dallas, Texas 75201. Director recommendations submitted by stockholders should include the following information regarding the stockholder making the recommendation and the individual(s) recommended for nomination:

 

·

name, age, business address and residence address;

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·

the class, series and number of any shares of Hilltop stock or other securities of Hilltop or any affiliate of Hilltop owned, beneficially or of record (including the name of the nominee holder if beneficially owned);

·

the date(s) that shares of Hilltop stock or other securities of Hilltop or any affiliate of Hilltop were acquired and the investment intent of such acquisition;

·

any short interest (including any opportunity to profit or share in any benefit from any decrease in the price of such stock or other security) in any securities of Hilltop or any affiliate of Hilltop;

·

whether and the extent to which such person, directly or indirectly (through brokers, nominees or otherwise), is subject to or during the prior six months has engaged in, any hedging, derivative or other transaction or series of transactions or entered into any other agreement, arrangement or understanding (including any short interest, any borrowing or lending of securities or any proxy or voting agreement), the effect or intent of which is to (a) manage risk or benefit of changes in the price of Hilltop securities or any security of any entity listed in the peer group in the stock performance graph included in the materials distributed with this Proxy Statement or (b) increase or decrease the voting power of such person in Hilltop disproportionately to such person’s economic interest in Hilltop securities (or, as applicable, any security of any entity listed in the peer group in the stock performance graph included in the materials distributed with this Proxy Statement);

·

any substantial interest, direct or indirect (including, without limitation, any existing or prospective commercial, business or contractual relationship with us), by security holdings or otherwise of such person in us or in any of our affiliates, other than an interest arising from the ownership of securities where such person receives no extra or special benefit not shared on a pro rata basis by all other holders of the same class or series;

·

the investment strategy or objective, if any, of the stockholder making the recommendation and a copy of the prospectus, offering memorandum or similar document, if any, provided to investors, or potential investors, in such stockholder (if not an individual);

·

to the extent known by the stockholder making the recommendation, the name and address of any other stockholder supporting the nominee for election or reelection as a director;

·

a certificate executed by the proposed nominee that certifies that the proposed nominee is not, and will not, become a party to any agreement, arrangement or understanding with any person or entity other than us in connection with service or action as a director that has not been disclosed to us and that the proposed nominee consents to being named in a proxy statement and will serve as a director if elected;

·

completed proposed nominee questionnaire (which will be provided upon request by writing or telephoning our corporate Secretary at the address or phone number listed under “Questions” on page 58); and

·

all other information that would be required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act and the rules promulgated thereunder.

 

The stockholder recommendation and information described above must be delivered to the corporate Secretary not earlier than the 120th day and not later than 5:00 p.m., Dallas, Texas local time, on the 90th day prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting of stockholders; provided, however, that if the date of the annual meeting is advanced more than 30 days prior to, or delayed by more than 30 days after, the first anniversary of the date of the preceding year’s annual meeting, the stockholder recommendation and information must be delivered not earlier than the 120th day prior to the date of such annual meeting and not later than 5:00 p.m., Dallas, Texas local time, on the later of the 90th day prior to the date of such annual meeting of stockholders and the 10th day following the date on which public announcement of the date of such annual meeting is first made. In the event, however, the number of directors to be elected to the Board of Directors is increased and there is no public announcement of such action at least 100 days prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting, a stockholder recommendation also will be considered timely, but only with respect to nominees for any new positions created by the increase, if it is delivered to the corporate Secretary not later than 5:00 p.m., Dallas, Texas local time, on the 10th day following the day on which the public announcement is first made.

 

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The Nominating and Corporate Governance Committee expects to use a similar process to evaluate candidates to the Board of Directors recommended by stockholders as the one it uses to evaluate candidates otherwise identified by the committee.

 

No fee was paid to any third party or parties to identify or evaluate, or assist in identifying or evaluating, potential nominees.

 

The Nominating and Corporate Governance Committee did not receive the name of any stockholder recommendations for director nominees with respect to the Annual Meeting.

 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

Principal Stockholders

 

The following table sets forth information regarding our common stock beneficially owned on April 21, 2016 by any person or “group,” as that term is used in Section 13(d)(3) of the Exchange Act, known to us to beneficially own more than five percent of the outstanding shares of our common stock.

 

 

 

 

 

 

 

 

    

Amount and Nature of

    

Percent of

 

Name and Address of Beneficial Owner

 

Beneficial Ownership

 

Class (a)

 

 

 

 

 

 

 

Gerald J. Ford (b)

 

15,560,490

 

15.8

%

200 Crescent Court, Suite 1350

 

 

 

 

 

Dallas, Texas 75201

 

 

 

 

 

Wellington Management Group LLP (c)

 

5,509,936

 

5.6

%

c/o Wellington Management Company LLP

 

 

 

 

 

280 Congress Street

 

 

 

 

 

Boston, Massachusetts 02210

 

 

 

 

 

The Vanguard Group Inc. (d)

 

5,411,570

 

5.5

%

100 Vanguard Boulevard

 

 

 

 

 

Malvern, Pennsylvania 19355

 

 

 

 

 

 


(a)

Based on 98,498,077 shares of common stock outstanding on April 21, 2016. Shares issuable under instruments to purchase our common stock that are exercisable within 60 days of April 21, 2016 are treated as if outstanding for computing the percentage ownership of the person holding these instruments, but are not treated as outstanding for purposes of computing the percentage ownership of any other person.

(b)

The shares of common stock beneficially owned by Mr. Gerald J. Ford include 7,950 shares that are owned by Turtle Creek Revocable Trust, a revocable trust for the benefit of the members of Mr. Gerald J. Ford’s family, and indirectly by Mr. Gerald J. Ford as settlor of the trust. Mr. Gerald J. Ford disclaims beneficial ownership of the shares held by the trust except to the extent of his pecuniary interest therein. Also includes 15,544,674 shares owned by Diamond A Financial, LP. Mr. Gerald J. Ford is the sole general partner of Diamond A Financial, LP. Mr. Gerald J. Ford has sole voting and dispositive power of these shares. Excludes 60,000 restricted stock units (“RSUs”) that will not vest within 60 days of April 21, 2016.

(c)

Based on the Schedule 13G filed with the SEC by Wellington Management Group LLP on February 11, 2016. According to the Schedule 13G, Wellington Management Group LLP has shared voting power over 4,888,214 shares of our common stock and shared dispositive power over 5,509,936 shares of our common stock. The shares of our common stock that are beneficially owned by Wellington Management Group LLP are owned of record by clients of one or more investment advisers directly or indirectly controlled by Wellington Management Group LLP. These clients have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, such shares. No such client is known to have such right or power with respect to more than five percent of the shares of our common stock.

(d)

Based on the Schedule 13G filed with the SEC by Vanguard Group Inc. on February 11, 2016. According to the Schedule 13G, Vanguard Group Inc. has sole voting power over 122,966 shares of our common stock, shared voting power over 4,600 shares of our common stock, sole dispositive power over 5,288,274 shares of our common stock and shared dispositive power over 123,296 shares of our common stock. The Schedule 13G reports that Vanguard Fiduciary Trust Company, a wholly owned subsidiary of Vanguard Group Inc., is the beneficial owner of 118,696 shares of our common stock as a result of its serving as investment manager of collective trust accounts and that Vanguard Investments Australia, Ltd., a wholly owned subsidiary of Vanguard Group Inc., is the beneficial owner of 8,900 shares of our common stock as a result of its serving as investment manager of Australian investment offerings.

 

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Security Ownership of Management

 

The following table sets forth information regarding the number of shares of our common stock beneficially owned on April 21, 2016, by:

 

·

each of our directors;

·

each of our named executive officers; and

·

all of our directors and executive officers presently serving, as a group.

 

Except as otherwise set forth below, the address of each of the persons listed below is c/o Hilltop Holdings Inc., 200 Crescent Court, Suite 1330, Dallas, Texas 75201. Except as otherwise indicated in the footnotes to this table, the persons named in the table have specified that they have sole voting and investment power with respect to all shares of stock shown as beneficially owned by them, subject to any applicable community property law.

 

 

 

 

 

 

 

 

 

Common Stock

 

 

    

Amount and Nature of

    

Percent of

 

Name of Beneficial Owner

 

Beneficial Ownership

 

Class (a)

 

Charlotte Jones Anderson

 

7,093

 

*

 

Rhodes Bobbitt

 

126,059

(b)  

*

 

Tracy A. Bolt

 

12,945

 

*

 

W. Joris Brinkerhoff

 

25,228

 

*

 

J. Taylor Crandall

 

 —

(c)  

*

 

Charles R. Cummings

 

37,476

 

*

 

Hill A. Feinberg

 

1,236,752

(d)  

1.3%

 

Gerald J. Ford

 

15,560,490

(e)  

15.8%

 

200 Crescent Court, Suite 1350

 

 

 

 

 

Dallas, Texas 75201

 

 

 

 

 

Jeremy B. Ford

 

617,438

(f)  

*

 

J. Markham Green

 

119,152

 

*

 

William T. Hill, Jr.

 

54,350

(g)  

*

 

James R. Huffines

 

369,730

(h)  

*

 

Lee Lewis

 

656,199

(i)  

*

 

Andrew J. Littlefair

 

10,546

 

*

 

W. Robert Nichols, III

 

41,000

(j)  

*

 

Darren Parmenter

 

5,361

(k)  

*

 

C. Clifton Robinson

 

1,235,024

 

1.3%

 

Kenneth D. Russell

 

 —

 

*

 

Todd L. Salmans

 

14,662

(l)  

*

 

A. Haag Sherman

 

14,422

 

*

 

Robert C. Taylor, Jr.

 

32,585

 

*

 

Carl B. Webb

 

108,490

 

*

 

Alan B. White

 

1,686,947

(m)  

1.7%

 

 

 

 

 

 

 

All Directors and Executive Officers,

 

 

 

 

 

as a group (26 persons)

 

22,276,414

(n)  

22.6%

 

 


*     Represents less than 1% of the outstanding shares of such class.

 

(a)

Based on 98,498,077 shares of common stock outstanding on April 21, 2016. Shares issuable under instruments to purchase our common stock that are exercisable within 60 days of April 21, 2016 are treated as if outstanding for computing the percentage ownership of the person holding these instruments, but are not treated as outstanding for purposes of computing the percentage ownership of any other person.

(b)

Includes 62,100 shares of common stock held in an IRA account for the benefit of Mr. Bobbitt.

(c)

Excludes 1,488 shares held by Oak Hill Capital Management LLC, 69,014 shares held by Oak Hill Capital Management Partners III, L.P. and 2,101,418 shares held by Oak Hill Capital Partners III, L.P.

(d)

Includes 25,776 shares of common stock held directly by Mr. Feinberg’s wife. Also includes 776 shares of common stock held by the Max McDermott Trust for the benefit of Mr. Feinberg’s stepson. Mr. Feinberg’s wife is the trustee of the trust. Excludes 40,579 shares of common stock deliverable upon the vesting of RSUs that will not vest within 60 days of April 21, 2016.

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(e)

The shares of common stock beneficially owned by Mr. Gerald J. Ford include 7,950 shares that are owned by Turtle Creek Revocable Trust, a revocable trust for the benefit of the members of Mr. Gerald J. Ford’s family, and indirectly by Mr. Gerald J. Ford as settlor of the trust. Mr. Gerald J. Ford disclaims beneficial ownership of the shares held by the trust except to the extent of his pecuniary interest therein. Also includes 15,544,674 shares owned by Diamond A Financial, LP. Mr. Gerald J. Ford is the sole general partner of Diamond A Financial, LP. Mr. Gerald J. Ford has sole voting and dispositive power of these shares. Excludes 60,000 RSUs that will not vest within 60 days of April 21, 2016.

(f)

Jeremy B. Ford is a beneficiary of a trust that owns a 49% limited partnership interest in Diamond A Financial, LP (see footnote (e)). Excludes 105,341 shares of common stock deliverable upon the vesting of RSUs that will not vest within 60 days of April 21, 2016 and 15,544,674 shares of common stock held by Diamond A Financial, LP.

(g)

Includes 7,300 shares of common stock held in a SEP IRA account for the benefit of Mr. Hill and 15,750 shares of common stock held by the William T. Hill P.C. retirement account for the benefit of Mr. Hill.

(h)

Includes 47,000 shares of common stock held by the James Huffines 1994 Trust for the benefit of Mr. Huffines and 12,028 shares of common stock held in a self-directed individual retirement account. Excludes 65,744 shares of common stock deliverable upon the vesting of RSUs that will not vest within 60 days of April 21, 2016.

(i)

Includes 603,417 shares of common stock held by Lee Lewis Construction. Mr. Lewis is the sole owner of Lee Lewis Construction and may be deemed to have voting and/or investment power with respect to the shares owned by Lee Lewis Construction.

(j)

Includes 11,000 shares of common stock held in an IRA account for the benefit of Mr. Nichols.

(k)

Excludes 27,394 shares of common stock deliverable upon the vesting of RSUs that will not vest within 60 days of April 21, 2016.

(l)

Excludes 54,787 shares of common stock deliverable upon the vesting of RSUs that will not vest within 60 days of April 21, 2016.

(m)

Includes (a) 9,785 shares of common stock held directly by Mr. White’s wife, (b) 453 shares of common stock held in a self-directed individual retirement account of Mr. White’s wife, (c) 23,806 shares of common stock held by Double E Investments (“Double E”), (d) 12,883 shares of common stock held by EAW White Family Partnership, Ltd. (“EAW”), (e) 8,045 shares of common stock held by Maedgen, White and Maedgen (“MW&M”), (f) 1,366,458 shares of common stock held by Maedgen & White, Ltd., and (g) 95,844 shares of common stock held in a self-directed individual retirement account of Mr. White. As the manager of Double E, the managing partner of MW&M and the sole member of the general partner of EAW, Mr. White has exclusive authority to vote and/or dispose of the securities held by Double E, MW&M and EAW, respectively, and may, therefore, be deemed to have sole voting and dispositive power over the shares of common stock held by Double E, MW&M and EAW. Mr. White is the sole general partner of Maedgen & White, Ltd. and may be deemed to beneficially own the shares held by Maedgen & White, Ltd. As the sole general partner of Maedgen & White, Ltd., Mr. White has the power to vote the shares held by Maedgen & White, Ltd. The Agreement of Limited Partnership of Maedgen & White, Ltd. requires the approval of 80% of the limited partnership interests in Maedgen & White, Ltd. before its general partner may dispose of the shares held by Maedgen & White, Ltd. Mr. White, directly and indirectly, controls approximately 77% of the limited partnership interests of Maedgen & White, Ltd. and therefore may be deemed to share dispositive power over the shares held by Maedgen & White, Ltd. Excludes 109,573 shares of common stock deliverable upon the vesting of RSUs that will not vest within 60 days of April 21, 2016.

(n)

Represents 26 persons and includes 100,000 shares of common stock exercisable pursuant to stock options that are vested. Excludes 597,254 shares of common stock deliverable upon the vesting of RSUs that will not vest within 60 days of April 21, 2016.

 

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MANAGEMENT

 

Executive Officers

 

General

 

We have identified the following officers as “executive officers,” consistent with the definition of that term as used by the SEC:

 

 

    

    

    

    

    

 

Name

    

Age

    

Position

    

Officer
Since

Hill A. Feinberg

 

69 

 

Chairman and Chief Executive Officer of Hilltop Securities

 

2012

Jeremy B. Ford

 

41 

 

President, Chief Executive Officer and Director

 

2010

James R. Huffines

 

65 

 

President and Chief Operating Officer of PlainsCapital

 

2012

John A. Martin

 

68 

 

Executive Vice President, Chief Financial Officer of PlainsCapital

 

2012

Darren E. Parmenter

 

53 

 

Executive Vice President, Principal Financial Officer

 

2007

Corey G. Prestidge

 

42 

 

Executive Vice President, General Counsel and Secretary

 

2008

Todd L. Salmans

 

67 

 

Chief Executive Officer of PrimeLending

 

2012

Jerry L. Schaffner

 

58 

 

President and Chief Executive Officer of PlainsCapital Bank

 

2012

Alan B. White

 

67 

 

Chairman and Chief Executive Officer of PlainsCapital

 

2012

 

Business Experience of Executive Officers

 

Information concerning the business experience of Messrs. Hill A. Feinberg, Jeremy B. Ford, James R. Huffines and Alan B. White is set forth above under “Proposal One — Election of Directors — Nominees for Election as Directors” beginning on page 6.

 

John A. Martin.  Mr. Martin has served as the Executive Vice President and Chief Financial Officer of PlainsCapital since November 2010 and has continued in that position since our acquisition of PlainsCapital in November 2012. Mr. Martin also serves on the board of directors of the Bank and various other subsidiaries of PlainsCapital. Prior to joining PlainsCapital, Mr. Martin most recently served as executive vice president and chief financial officer of Family Bancorp, Inc. and its subsidiary, San Antonio National Bank, from April 2010 until October 2010. Before joining Family Bancorp, from 2009 to 2010, Mr. Martin served as a consultant to community banks, providing strategic planning services. Beginning in 2005, Mr. Martin served as chief financial officer of Texas Regional Bancshares, Inc. and later served as director of financial planning and analysis for BBVA Compass after its acquisition of Texas Regional Bancshares in 2006.

 

Darren E. Parmenter.  Mr. Parmenter has served as Executive Vice President and Principal Financial Officer of Hilltop since February 2014 and previously served as Senior Vice President of Finance of Hilltop from June 2007 to February 2014. From January 2000 to June 2007, Mr. Parmenter was with Hilltop’s predecessor, Affordable Residential Communities Inc., and served as the Controller of Operations from April 2002 to June 2007. Prior to 2000, Mr. Parmenter was employed by Albertsons Inc. as an Assistant Controller.

 

Corey G. Prestidge.  Mr. Prestidge has served as an Executive Vice President of Hilltop since February 2014 and General Counsel and Secretary of Hilltop since January 2008. From November 2005 to January 2008, Mr. Prestidge was the Assistant General Counsel of Mark Cuban Companies. Prior to that, Mr. Prestidge was an associate in the corporate and securities practice group at Jenkens & Gilchrist, a Professional Corporation, which is a former national law firm. Mr. Prestidge is the son-in-law of our Chairman of the Board, Gerald J. Ford, and the brother-in-law of our President and Chief Executive Officer, Jeremy B. Ford.

 

Todd L. Salmans.  Mr. Salmans has served as Chief Executive Officer of PrimeLending since January 2011 and has continued in that position since our acquisition of PlainsCapital in November 2012. He also previously held the office of President of PrimeLending until August 2013. As Chief Executive Officer, Mr. Salmans is responsible for the strategic direction and day-to-day management of PrimeLending, including financial performance, compliance, business development, board and strategic partner communications and team development. He also serves as a member of PrimeLending’s Board of Directors. Mr. Salmans joined PrimeLending in 2006 as Executive Vice President and Chief

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Operating Officer, with responsibility over daily operations, loan processing and sales. He was promoted to President in April 2007. Mr. Salmans has over 30 year of experience in the mortgage banking industry. Prior to joining PrimeLending, he served as regional executive vice president of CTX/Centex, regional senior vice president of Chase Manhattan/Chase Home Mortgage Corp., and regional senior vice president of First Union National Bank/First Union Mortgage Corp. Mr. Salmans is currently a board member of the Texas Mortgage Bankers Association.

 

Jerry L. Schaffner.  Mr. Schaffner has served as the President and Chief Executive Officer of the Bank since November 2010 and has continued in that position since our acquisition of PlainsCapital in November 2012. He currently serves as a director of the Bank and various other subsidiaries, and previously served as a director of PlainsCapital from 1993 until March 2009. Mr. Schaffner joined PlainsCapital in 1988 as part of its original management group.

 

Terms of Office and Relationships

 

Our executive officers are elected annually or, as necessary, to fill vacancies or newly created offices by our Board of Directors.  Each executive officer holds office until his successor is duly elected and qualified or, if earlier, until his death, resignation or removal. Any officer or agent elected or appointed by our Board of Directors may be removed by our Board of Directors whenever, in its judgment, our best interests will be served, but any removal will be without prejudice to the contractual rights, if any, of the person so removed.

 

Except as disclosed under “Proposal One — Election of Directors — Nominees for Election as Directors” commencing on page 6 and under “Management — Executive Officers — Business Experience of Executive Officers” on page 26, (a) there are no familial relationships among any of our current directors or executive officers and (b) none of our director nominees hold directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or pursuant to Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.

 

Except as set forth in this Proxy Statement, there are no arrangements or understandings between any nominee for election as a director or officer and any other person pursuant to which that director was nominated or that officer was selected.

 

Compensation Discussion and Analysis

 

This Compensation Discussion & Analysis section reviews the compensation program for our five current named executive officers (“NEOs”), which include our principal executive officer, principal financial officer and our three other most highly-compensated executive officers for the year ended December 31, 2015.

 

Our 2015 NEOs were:

 

 

 

 

Named Executive Officer

    

Title/Role

Jeremy B. Ford

 

President and Chief Executive Officer

Darren E. Parmenter

 

Executive Vice President, Principal Financial Officer

Alan B. White

 

Chief Executive Officer of PlainsCapital

James R. Huffines

 

President and Chief Operating Officer of PlainsCapital

Todd L. Salmans

 

Chief Executive Officer of PrimeLending

 

 

2015 Business and Financial Highlights

 

2015 represented another strong year for the Company. In 2015, we continued to grow and expand into a diversified financial holding company through the completion of our acquisition of SWS in January 2015. In addition, we had the following accomplishments during 2015:

 

·

We generated $209 million in income applicable to common stockholders, or $2.09 per diluted share, during 2015. Return on average equity was 12.32% and return on average assets was 1.70% for 2015.

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·

Asset quality improved and remained strong compared to peers with non-performing assets as a percentage of total assets of 0.21% as of December 31, 2015, excluding covered loans and covered other real estate owned.

·

Hilltop capital ratios remained strong with a Tier 1 Leverage Ratio at 12.65% and a Total Risk Based Capital Ratio of 18.89% at December 31, 2015.

·

Integrated Southwest Securities, FSB into PlainsCapital Bank by May 2015 and made significant progress on the integration of our broker-dealer subsidiaries allowing us to complete the reorganization of the broker-dealers into one unit in January 2016.

·

Completed a senior notes offering on favorable terms that provided us with the proceeds to redeem all of our Small Business Lending Fund, or SBLF, preferred stock. The SBLF preferred stock dividend rate would have increased in 2016.

 

All of this contributed to an increase in our book value per share from $14.93 at December 31, 2014 to $17.56 at December 31, 2015. Additional detail regarding our results and achievements can be found in our Annual Report on Form 10-K for the year ended December 31, 2015.

 

Our 2015 Executive Compensation Program

Overview

 

The Compensation Committee, or, in this Compensation Discussion and Analysis, the Committee, has the responsibility to establish, implement and monitor adherence with our compensation philosophy. The Committee ensures that the total compensation paid to executive officers is fair, reasonable, competitive, performance-based and aligned with stockholder interests. The Committee administers the Company’s executive compensation program in light of our unique structure and acquisition history. As a holding company that conducts its operations through its subsidiaries, we are focused on providing entrepreneurial-based compensation to the chief executives of each of our business units.

 

Philosophy and Objectives of Our Executive Compensation Program

 

Our compensation program continues to focus on performance-based pay that reflects our achievements on an annual basis and our ability to deliver long-term value to our stockholders. The Compensation Committee regularly reviews the Company’s compensation programs to ensure they are consistent with safe and sound business practices, regulatory requirements, emerging industry trends and stockholder interests.

 

With this in mind, the following principles help guide our decisions regarding compensation of our NEOs:

 

·

Compensation opportunities should be competitive with market practices.  We are committed to providing competitive total annual compensation opportunities in order to attract and retain executives with the experience and skills necessary to lead our Company and motivate them to deliver strong performance to our stockholders.

·

A significant portion of compensation should be performance-based.  Our executive compensation program emphasizes pay-for-performance. Both our annual and long-term incentives are earned based on a combination of corporate, business unit and individual performance. Our annual incentive compensation also can be reduced based upon improper risk taking and non-compliance with applicable laws and regulations.

·

Management’s interests should be aligned with those of our stockholders.  Our long-term incentive compensation is delivered in the form of RSUs to support our goals for alignment, ownership and retention. Half of the RSUs awarded vest upon achievement of predefined performance goals. The value of previous awards ultimately depends upon our relative total stockholder return and our cumulative earnings per share, or EPS, over a three-year period. Commencing in 2016, the percentage of these awards that vest is based first on cumulative earnings per share over a three-year period and then multiplied by a modifier based on our relative total stockholder return during the same period.

·

Compensation should be perceived as fair.  We strive to create a compensation program that will be perceived as fair and equitable, both internally and externally.

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·

Our compensation program should be balanced and mitigate risk taking.  We have a balanced approach to total compensation that includes a mix of base/fixed pay, a proportion of cash and equity and a proportion of short- and long-term incentive compensation that we believe effectively aligns our pay with performance while discouraging inappropriate risk taking.

 

For the fiscal year 2015, our target pay mix for the Chief Executive Officer, or CEO, of Hilltop and our remaining NEOs was the following:

 

Picture 12

 

Governance highlights

 

The Compensation Committee continued to maintain the following compensation best practices:

 

·

Robust stock ownership guidelines for executive officers and directors

·

Clawback policy for incentive compensation

·

Anti-hedging and pledging policy

·

Limited perquisites

·

No excise tax gross-ups in new employment agreements

·

One year holding requirement on all vested equity awards

·

Annual compensation risk assessment

 

How We Determine and Assess Executive Compensation Generally

 

Background

 

We completed the acquisition of PlainsCapital Corporation on November 30, 2012, and the compensation of our NEOs who were employed by PlainsCapital Corporation is, therefore, in part based upon the compensation they were paid by PlainsCapital Corporation prior to the acquisition. Three of our NEOs, Messrs. White, Huffines and Salmans, were employed by PlainsCapital Corporation or its subsidiaries prior to the acquisition. In connection with the acquisition of PlainsCapital Corporation, we entered into a retention agreement with Mr. White to ensure continuity following the closing that was negotiated based upon the pre-existing rights in his employment agreement with PlainsCapital Corporation. All other existing employment arrangements at PlainsCapital Corporation were amended to terminate on November 30, 2014. Following the expiration of the employment agreements with Messrs. Huffines and Salmans, we entered into new employment agreements with them that are consistent with our current compensation philosophy. For a more detailed discussion of these employment agreements and Mr. White’s retention agreement, see “Executive Compensation —  Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table  Employment Contracts and Incentive Plans —  Employment Contracts.”

 

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Role of the Compensation Committee

 

The Committee is responsible for reviewing and approving all aspects of the compensation programs for our NEOs and making all decisions regarding specific compensation to be paid or awarded to them. The Committee is responsible for, among its other duties, the following:

 

·

Review and approval of corporate incentive goals and objectives relevant to compensation;

·

Evaluation of individual performance results in light of these goals and objectives;

·

Evaluation of the competitiveness of the total compensation package; and

·

Approval of any changes to the total compensation package, including, but not limited to, base salary, annual and long-term incentive award opportunities and payouts and retention programs.

 

The Committee is responsible for determining all aspects of compensation of the Chief Executive Officers of Hilltop and PlainsCapital, as well as assessing their individual performance.

 

In setting the compensation of our NEOs, the Committee, in its discretion, considers (i) the transferability of managerial skills, (ii) the relevance of each NEO’s experience to other potential employees, and (iii) the readiness of the NEO to assume a different or more significant role, either within our organization or with another organization. When the Committee makes pay-related decisions, the Committee considers our acquisition and growth strategy, our desire to attract, retain and motivate talent, and the importance of compensation in supporting the achievement of our strategic objectives.

 

Information about the Committee and its composition, responsibilities and operations can be found under the “Board Committees” section.

 

Role of the Chief Executive Officers in Compensation Decisions

 

The Chief Executive Officers of Hilltop and PlainsCapital recommend to the Committee any compensation changes affecting the other NEOs. The Chief Executive Officers provide input and recommendations to the Committee with regards to compensation decisions for their direct reports. These recommendations are made within the framework of the compensation programs approved by the Committee and based on market data provided by the Committee’s independent consultant. The input includes base salary changes, annual incentive and long-term incentive opportunities and payouts, specific individual performance objectives, and individual performance assessments. The Chief Executive Officers make their recommendations based on their assessment of the individual officer’s performance, performance of the officer’s respective business or function and employee retention considerations. The Committee reviews and considers the Chief Executive Officers’ recommendations when determining any compensation changes affecting our officers or executives. Each Chief Executive Officer does not play any role with respect to any matter impacting his own compensation.

 

Role of Stockholder Say-on-Pay Votes

 

The Company provides its stockholders with the opportunity to cast an annual advisory vote on executive compensation. At the Company’s annual meeting of stockholders held in June 2015, over 98% of the votes cast (excluding abstentions and broker non-votes) on the say-on-pay proposal at that meeting were voted in favor of the proposal.  Given this significant level of support from the Company’s stockholders, the Committee and the Board of Directors believe that the Company is taking a measured, informed and responsible approach to executive compensation that incorporates all of the Company’s objectives and policies set forth above, including, but not limited to, a pay for performance culture that retains executives who perform strongly. Accordingly, the Committee will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for the NEOs.

 

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Role of Compensation Consultant

 

Pursuant to its charter, the Committee is authorized to retain and terminate any consultant, as well as to approve the consultant’s fees and other terms of the engagement. The Committee also has the authority to obtain advice and assistance from internal or external legal, accounting or other advisors. In 2015, the Committee continued its engagement of Meridian Compensation Partners, LLC (“Meridian”) as its independent compensation consultant. 

 

Meridian provides research, data analyses, survey information and design expertise in developing compensation programs for executives and incentive programs for eligible employees. In addition, Meridian keeps the Committee apprised of regulatory developments and market trends related to executive compensation practices. Meridian does not determine or recommend the exact amount or form of executive compensation for any of the NEOs.  A representative of Meridian generally attends meetings of the Committee, is available to participate in executive sessions and communicates directly with the Committee and the chairman of the Committee.

 

Pursuant to the Committee’s charter, if the Committee elects to use a compensation consultant, the Committee must assess the consultant’s independence, taking into account the following factors:

 

·

The provision of other services to the Company by the consultant;

·

The amount of fees the consultant received from the Company;

·

the policies and procedures the consultant has in place to prevent conflicts of interest;

·

any business or personal relationships between the consulting firm and the members of the Committee;

·

any ownership of Company stock by the individuals at the firm performing consulting services for the Committee; and

·

any business or personal relationship of the firm with an executive officer of the Company.

 

Meridian has provided the Committee with appropriate assurances and confirmation of its independent status pursuant to the charter and other factors. The Committee believes that Meridian has been independent throughout its service for the Committee and there is no conflict of interest between Meridian and the Committee.

 

Other Factors

 

The Committee makes executive compensation decisions following a review and discussion of both the financial and operational performance of our businesses and the annual performance reviews of the NEOs and other members of the management team.

 

Benchmarking Compensation

 

The Committee regularly assesses the components of the executive compensation program with advice from its independent compensation consultant. In November 2014, Meridian provided an analysis of base salary, annual incentive and long-term incentive practices of comparable companies in the financial industry. Meridian considered individual compensation elements as well as the total compensation package.

 

In performing this analysis, Meridian used a peer group of financial institutions. In order to reflect the Company’s continued growth, and in anticipation of the merger with SWS, the Committee approved a new peer group in July 2014.  The peer group included institutions of generally similar asset size and, to the extent possible, organizations with significant other operating segments. The peer group is comprised of 22 banks with assets between $6.3 billion and $26.5 billion as of June 30, 2014. Hilltop’s post-merger asset size of $12.6 billion was positioned slightly below the median of the new peer group.

 

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The peer group used in the report presented for consideration in the determination of 2015 pay consisted of the following financial institutions:

 

Associated Banc-Corp

Cullen/Frost Bankers, Inc.

First Citizens BancShares, Inc.

First Horizon National Corporation

First Midwest Bancorp, Inc.

FirstMerit Corporation

Hancock Holding Company

IBERIABANK Corporation

International Bancshares Corporation

MB Financial, Inc.

Old National Bancorp

Prosperity Bancshares, Inc.

South State Corporation

TCF Financial Corporation

Texas Capital Bancshares, Inc.

Trustmark Corporation

UMB Financial Corporation

Umpqua Holdings Corporation

Union Bankshares Corporation

United Bankshares, Inc.

WesBanco, Inc.

Wintrust Financial Corporation

 

 

 

 

 

 

 

 

In addition to the peer group, Meridian included data from industry-specific compensation surveys. The information from these competitive data sources and the peer group were used to make 2015 compensation decisions.

 

Elements of our Executive Compensation Program

 

The basic elements of our executive compensation program are summarized below. Our compensation policies and programs are considered by the Committee in a total rewards framework, which considers both “pay” — base salary, annual incentive awards and long-term incentive awards and “benefits” — perquisites and other benefits and other compensation. Our executive compensation program consists primarily of the following components:

 

 

    

 

Compensation Component

 

Purpose

Base Salary

 

Fixed component of pay intended to compensate the individual fairly for the responsibility level of the position held.

 

 

 

Annual Incentive Awards

 

Variable component of pay intended to motivate and reward the individual’s contribution to achieving our short-term/annual objectives.

 

 

 

Long-term Incentive Awards

 

Variable component of pay intended to retain, motivate and reward the individual’s contribution to achieving our long-term objectives and creating stockholder value.

 

 

 

Perquisites and Other Benefits

 

Fixed component of pay intended to provide an economic benefit to us in attracting and retaining executive talent.

 

Base Salary

 

We provide base salaries for each NEO commensurate with the services each provides to us. We believe a portion of total direct compensation should be provided in a form that is fixed and liquid. In reviewing base salaries, the Committee evaluated the salaries of other executive officers of the Company and its peers and any increased level of responsibility, among other items. As a result of that analysis, the Committee determined to increase the annual salaries of Messrs. Ford and Parmenter effective April 1, 2015. With respect to the other NEOs of the Company, the Committee determined to maintain the current salary for 2015, as they were found to be competitive with the Company’s peers. The following are the base salaries for our NEOs in 2014 and 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Base Salary

 

 

 

 

Name

    

2014

    

2015

    

$ Change

 

Jeremy B. Ford

 

$

550,000

 

$

700,000

 

$

150,000

 

Darren E. Parmenter

 

$

330,000

 

$

335,000

 

$

5,000

 

Alan B. White

 

$

1,350,000

 

$

1,350,000

(a)  

$

 —

 

James R. Huffines

 

$

690,000

 

$

690,000

 

$

 —

 

Todd L. Salmans

 

$

750,000

 

$

750,000

 

$

 —

 


(a)

Mr. White’s base salary is set forth in his retention agreement, which became effective upon the closing of the acquisition of PlainsCapital Corporation.

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In February 2016, the Committee assessed base salaries of the NEOs and decided to maintain the current salary of the Company’s NEOs.

 

Annual Incentive Awards

 

Our NEOs and other employees are eligible to participate in the Annual Incentive Plan and receive annual cash incentive awards based upon our financial performance and other factors, including individual performance. The Committee believes that this element of compensation is important to focus management efforts on, and provide rewards for, annual financial and strategic results that are aligned with creating value for our stockholders.

 

Target Annual Incentive Opportunities

 

Target incentive awards are defined at the start of the year in consideration of market data provided by the Committee’s consultant, each executive’s total compensation package and the entity’s budgetary considerations. In consideration of these factors, the Committee slightly increased 2015 targets for Messrs. Ford, Huffines and Parmenter but maintained target incentive opportunities for the other NEOs.

 

 

 

 

 

 

 

 

 

 

 

 

Annual Incentive Value

 

 

 

    

Target

    

 

 

 

Threshold

 

 

 

% of Annual

 

Maximum

Name

    

($)

 

($)

 

Base Salary

 

($)

Jeremy B. Ford

 

108,000

 

600,000

 

86

%  

750,000

Darren E. Parmenter

 

28,200

 

235,000

 

70

%  

293,750

Alan B. White (a)

 

1,350,000

 

1,350,000

 

100

%  

1,350,000

James R. Huffines

 

99,900

 

555,000

 

80

%  

693,750

Todd L. Salmans

 

90,000

 

750,000

 

100

%  

937,500

(a)

Mr. White’s annual incentive compensation is determined pursuant to his retention agreement for the achievement of specified performance criteria.

 

Performance Measures

 

Each NEO had pre-defined performance objectives based upon measurable performance of both the individual and our Company, other than Mr. White, whose pre-defined performance objectives are based solely upon PlainsCapital’s performance. Our 2015 goals were intended to be realistic and reasonable but challenging in order to drive performance. The Committee and management believe that by using these metrics we are encouraging profitable top line growth and value for stockholders without creating excessive risk. For 2015, the applicable performance goals included:

 

·

Consolidated net income for Hilltop for NEOs employed by Hilltop;

·

Consolidated net income of PlainsCapital for employees of PlainsCapital and its subsidiaries;

·

Net income results of lines of business for business heads; and

·

Pre-determined strategic initiatives and individual objectives.

 

The weights of these factors are summarized in the following table:

 

 

 

 

 

 

 

 

 

 

 

 

    

Hilltop

    

PlainsCapital

    

Business Unit

    

Strategic

 

Name

 

Performance

 

Performance

 

Performance

 

Initiatives

 

Jeremy B. Ford

 

70

%

 —

 

 —

 

30

%

Darren E. Parmenter

 

50

%

 —

 

20

%

30

%

Alan B. White (a)

 

 —

 

100

%

 —

 

 —

 

James R. Huffines

 

 —

 

70

%

 —

 

30

%

Todd L. Salmans

 

 —

 

20

%

50

%

30

%


(a)

Determined pursuant to Mr. White’s retention agreement for the achievement of earnings threshold.

 

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The individual strategic objectives for the NEOs are developed through an iterative process between the Committee and management. Management develops an initial set of recommendations based upon the business needs. The Committee reviews the proposed goals and revises/amends them at their discretion, ensuring that goals are aligned with the Board of Director’s strategic focus. The following goals, among others, were established for the NEOs in 2015:

 

·

Mr. Jeremy B. Ford’s strategic initiatives included: execute the Company’s 2015 strategic plan, continue to identify strategic acquisition opportunities that complement the Company’s business mix, continue to integrate recent acquisitions and increase net earnings.

·

Mr. Parmenter’s strategic initiatives included: facilitate acquisition activity including effective integration of accounting departments and consolidation of Hilltop’s financials, and provide effective leadership of his responsible business units.

·

Mr. Huffines strategic initiatives included: grow core business and achieve quantitative cost savings through integration of mergers and acquisitions.

·

Mr. Salmans’s strategic initiatives included: execute three-year business strategy for PrimeLending, continue succession planning and talent development for key positions and achieve cost savings from implementation of strategic plan.

 

Performance Results and Payouts

 

The Committee, in its sole discretion, determines the final amount of each participant’s award based on attainment of the applicable performance goals and assessments of individual and strategic performance. Additionally, a forfeiture of up to 15% of any available Annual Incentive Plan award can occur in the event that any improper risk management or non-compliance with applicable laws or regulations is identified.

 

Each element of the annual cash incentive award is independent of the other. Accordingly, the executive officer may achieve certain performance goals, while at the same time failing to achieve others. In that case, the executive officer will be entitled to receive the award for the performance goal achieved, but not an award for a performance goal for which threshold performance is not achieved. Potential awards ranged from 50% for threshold performance to a maximum of 150% for stretch performance. 

 

At the end of the fiscal year, the Committee determined a payout based on net income performance. 2015 performance goals and actual net income performance were as follows (dollars in millions):

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

2015 Performance Goal

 

Threshold ($)

 

Target ($)

 

Stretch ($)

 

Actual ($)

 

Achievement

 

Hilltop Adjusted Net Income (a)

 

65.1

 

108.4

 

162.6

 

145.2

 

134

%

 

 

 

 

 

 

 

 

 

 

 

 

PlainsCapital Net Income

 

57.9

 

96.5

 

144.7

 

140.5

 

146

%

 

 

 

 

 

 

 

 

 

 

 

 

PrimeLending Net Income

 

11.5

 

19.2

 

28.8

 

32.4

 

169

%


(a)

Hilltop net income was adjusted to exclude bargain purchase gain and acquisition and integration costs, which were not included in the 2015 strategic plan.

 

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Based upon evaluation of their respective individual performance in 2015, the Committee awarded each of the NEOs a score of 100% for strategic initiatives. Based on the above financial and individual performance measures and the Committee’s discretion, the 2015 annual cash incentive payments were awarded as follows relative to the 2015 target value:

 

 

 

 

 

 

 

 

 

2015 Annual

 

% of 2015 Target

 

Name

    

Incentive Payment ($)

    

Annual Incentive

 

Jeremy B. Ford

 

740,000

 

123

%

Darren E. Parmenter

 

290,000

 

123

%

Alan B. White (a)

 

1,350,000

 

100

%

James R. Huffines

 

555,000

 

100

%

Todd L. Salmans

 

1,000,000

 

133

%


(a)

Determined pursuant to Mr. White’s retention agreement for the achievement of earnings threshold.

 

See “Executive Compensation — Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table — Annual Incentive Plan” for more information on possible future payments to the NEOs.

 

Long-Term Incentive Awards

 

As described above, we believe that a portion of each NEO’s compensation should be tied to the performance of our stock price, aligning the officer’s interest with that of our stockholders. In this regard, the Committee determined that the award vehicle mix should be:

 

 

 

 

 

    

 

Award Vehicle Mix

 

% of Award

Time-Based Restricted Stock Units

 

50%

Performance-Based Restricted Stock Units

 

50%

 

Time-based RSUs cliff vest on the third anniversary of grant date. Performance-based RSUs are earned and cliff vest after the three-year performance period from January 1, 2015 through December 31, 2017. Performance awards are earned based on Hilltop’s three-year cumulative EPS and based on relative total stockholder return, or TSR, relative to the KBW Regional Banking Index.

 

Commencing in 2016, a revision was made to the method of calculating performance for awarding performance-based RSUs. Under the revised form of award, the percentage of performance-based RSUs that vest following a performance period is based on Hilltop’s three-year cumulative EPS multiplied by a modifier that is determined based on Hilltop’s TSR relative to the KBW Regional Banking Index. The new method of measuring performance puts more weight on EPS and uses TSR as a modifier, instead of weighting each measure equally. The EPS component of performance calculation ranges from 50% at threshold to 150% at the max, and the TSR modifier ranges from 80% at threshold to 120% at max. The total number of shares earned from the performance awards can range from 40% to 180% of the target number of RSUs granted.

 

All shares of common stock delivered pursuant to the RSUs are subject to a one-year holding period requirement after vest. Further discussion of the 2012 Equity Incentive Plan pursuant to which such RSUs were awarded is found under “Executive Compensation — Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table” below.

 

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In 2015, long-term incentive awards were made in consideration of each executive’s role, competitive market practice, and performance. Grants were made in the form of RSUs on February 24, 2015, to the following NEOs as set forth below:

 

 

 

 

 

 

 

 

 

 

    

 

    

Performance-Based

    

 

 

 

 

Time-Based RSUs

 

RSUs Awarded

 

Total RSUs

 

Name

 

Awarded

 

(at Target)