DEF 14A: Hilltop Holdings Announces 2024 Annual Meeting and Executive Compensation Details

Hilltop Holdings sets date for its 2024 annual meeting and provides details on director nominees, executive compensation, and related matters.

Summary

• Hilltop Holdings Inc. will hold its 2024 Annual Meeting of Stockholders on July 25, 2024.
• Stockholders of record as of April 29, 2024, are eligible to vote.
• The meeting will include the election of sixteen directors, an advisory vote on executive compensation, and the ratification of PricewaterhouseCoopers LLP as the independent registered public accounting firm for 2024.
• The Board of Directors recommends voting for all director candidates, the approval of executive compensation, and the ratification of the accounting firm appointment.
• The proxy statement details the compensation of named executive officers (NEOs) and provides an analysis of the company's compensation programs.
• The company achieved a net income of $110 million in 2023, with a return on average assets (ROAA) of 0.71% and a return on average equity (ROAE) of 5.31%.
• Total assets as of December 31, 2023, were $16.5 billion.
• The company returned $47 million of capital to stockholders through dividends and stock repurchases in 2023.
• The proxy statement also discusses corporate governance practices, related party transactions, and other matters to be considered at the annual meeting.

Sentiment

Score: 7

Explanation: The document is generally positive, highlighting profitable financial results and strategic accomplishments, but also acknowledges ongoing headwinds and challenges.

Positives

• The company achieved profitable consolidated financial results in 2023, with positive results for all reportable business segments other than mortgage origination.
• Hilltop maintained robust capital and liquidity, allowing it to focus on core businesses and customers.
• Hilltop Securities capitalized on market headwinds, driving strong results in its wealth, mortgage, and commodities businesses.
• The company continues to focus on efficiency to combat rising costs.
• Hilltop has grown capital and deployed it in a prudent manner, repurchasing a total of $966 million of its common stock from 2015 through 2023.
• Hilltop increased its quarterly dividend payment by 7% to 16 cents per share.
• Hilltop maintained strong capital levels with a Common Equity Tier 1 Capital Ratio of 19.32% at year end.
• Hilltop, PlainsCapital Bank, Hilltop Securities and PrimeLending were recently included in USA Today's list of Top Workplaces for 2024.

Negatives

• PrimeLending had a loss before taxes of $63 million in 2023, compared to a loss before taxes of $37 million in 2022, due to a decline in mortgage originations.
• Net interest income was compressed from elevated deposit rates at PlainsCapital Bank.

Risks

• The company continues to experience headwinds, including elevated market interest rates and tight housing supply.
• Bank failures in the first half of 2023 led to increased deposit competition.
• The company's future results and financial condition are subject to risks, assumptions, estimates, and uncertainties that are difficult to predict, as detailed in the company's Annual Report on Form 10-K.

Future Outlook

The proxy statement includes forward-looking statements based on current expectations, estimates, and projections, which are subject to risks, assumptions, estimates, and uncertainties.

Industry Context

Hilltop ranked in the 67th percentile of the regional banks included in the KBW Regional Banking Index in total shareholder return for the three-year period ended December 31, 2023.

Comparison to Industry Standards

• The compensation peer group includes institutions of generally similar asset size and, to the extent possible, organizations with significant other operating segments and noninterest income.
• The following banks were included in the peer group for Meridians market study in October 2022: Ameris Bancorp, Flagstar Bancorp, Inc., Texas Capital Bancshares, Inc., Associated Banc-Corp, Hancock Whitney Corporation, TowneBank, BancFirst Corporation, Independent Bank Group, Inc., Trustmark Corporation, Commerce Bancshares, Inc., International Bancshares Corporation, UMB Financial Corporation, FB Financial Corporation, Prosperity Bancshares, Inc., Renasant Corporation, Simmons First National Corporation, WesBanco, Inc., First Financial Bancorp, First Financial Bankshares, Inc., Umpqua Holdings Corporation.
• The review resulted in the removal of Flagstar Bancorp, Inc. and Umpqua Holdings Corporation, and the addition of Eastern Bankshares, Inc., First Busey Corporation and Merchants Bancorp.

Management Changes

Related Party Transactions

• Hilltop Plaza Investment: HTH Diamond Hillcrest Land LLC, owned equally between Hilltop Investments I, LLC and Diamond Ground, LLC (an affiliate of Mr. Gerald J. Ford), purchased land and entered into a ground lease with SPC Park Plaza Partners LLC, HTH Hillcrest Project LLC, and Diamond Hillcrest, LLC.
• Cowboys Stadium Suite: Hilltop leases a suite at Cowboys Stadium from Cowboys Stadium, L.P., a company affiliated with Ms. Jones.
• Leases at The Star: The Bank leases office space and a Bank branch from Frisco HQ Operations, L.P. and Bluestar Frisco Retail L.P., each of which is affiliated with the employer of Ms. Jones.
• Lee Lewis Construction: Hilltop Securities contracted with Lee Lewis Construction to construct tenant improvements at its new headquarters in Dallas, Texas.
• DTF Holdings, LLC: Mr. Sobel, a director of Hilltop, is the managing member of DTF Holdings, LLC. DTF Holdings, LLC has provided investment management services to the Company and its subsidiaries since June 2009 pursuant to an Investment Management Services Agreement.
• Employment of Certain Family Members: Corey G. Prestidge, the brother-in-law of Jeremy B. Ford, our President and Chief Executive Officer, and the son-in-law of Gerald J. Ford, the Chairman of our Board, serves as Hilltops Executive Vice President, General Counsel and Secretary.
• Indebtedness: The Bank has had, and may be expected to have in the future, lending relationships in the ordinary course of business with our directors and executive officers, members of their immediate families and affiliated companies in which they are employed or in which they are principal equity holders.

Stakeholder Impact

• Stockholders are provided with information to make informed voting decisions.
• Executive compensation is designed to align with stockholder interests.
• Employees are recognized through inclusion in Top Workplaces lists.
• The company is committed to environmental, social, and governance (ESG) practices.

Next Steps

• Stockholders are encouraged to vote on the proposals outlined in the proxy statement.
• The Board of Directors will consider the outcome of the advisory vote on executive compensation when making future compensation decisions.
• The Audit Committee may reconsider its selection of PricewaterhouseCoopers LLP if the appointment is not ratified by stockholders.
• Hilltop expects to publish its 2023 Sustainability and Environmental, Social & Governance Report in May 2024.

Key Dates

Keywords

proxy statement, annual meeting, executive compensation, directors, Hilltop Holdings, governance, financial performance