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

Veritex Holdings, Inc. will hold its 2024 annual meeting of shareholders on May 15, 2024, to elect directors, conduct an advisory vote on executive compensation, and ratify the appointment of its independent accounting firm.

Summary

• Veritex Holdings, Inc. is holding its 2024 annual meeting of shareholders on May 15, 2024, to vote on the election of thirteen directors, a non-binding advisory vote on executive compensation, and the ratification of Grant Thornton LLP as the independent registered public accounting firm for the year ending December 31, 2024.
• The record date for determining shareholders eligible to vote at the Annual Meeting is March 28, 2024.
• The Board recommends voting 'FOR' all director nominees, the advisory vote on executive compensation, and the ratification of Grant Thornton LLP.
• In 2023, non-employee directors received a cash retainer of $30,000, with additional retainers for the Lead Independent Director ($50,000) and committee chairs ($28,000).
• The company is committed to being responsive to shareholders and has increased focus on outreach and engagement activities.
• Based on shareholder feedback, the company decided to increase the portion of long-term incentive awards in the form of performance-based equity, starting in 2024, long-term incentive awards will be 60% in performance-based stock units and 40% in time-based restricted stock units versus the prior 50/50 split.
• Diluted EPS was $1.98 as of December 31, 2023.
• Total Shareholder Return ('TSR') was $86.3 for 2023, which is in line with the KRX index of $87.6.
• Pre-tax, pre-provision operating return on average assets ('PTPP ROAA') was 1.81% for 2023.
• Operating return on average tangible common equity ('ROATCE') was 10.91% for 2023.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While it highlights positive governance changes and shareholder engagement, it also acknowledges challenges in achieving financial goals and addresses concerns about executive compensation. The overall tone is professional and transparent, but the acknowledgment of underperformance and shareholder concerns tempers the positive aspects.

Positives

• The company is actively engaging with shareholders to address concerns about executive compensation.
• The company is increasing the portion of long-term incentive awards in the form of performance-based equity, starting in 2024, long-term incentive awards will be 60% in performance-based stock units and 40% in time-based restricted stock units versus the prior 50/50 split.
• The company has a clawback policy in place to recover excess incentive compensation in the event of a financial restatement.
• The company has stock ownership guidelines for executives to align their interests with those of shareholders.
• The company's Board is committed to corporate governance and sustainability practices.

Negatives

• The company received an unfavorable level of support (affirmative votes of 12.9% of votes cast) at the 2023 Annual Meeting.
• The company's annual incentive payout for NEOs was 40% of target, reflecting the significant risk in the program.
• The company's 2023 financial goals were hampered by regional bank challenges experienced across the industry.

Risks

• The company faces risks related to attracting and retaining talented executives.
• The company faces risks related to the regional bank challenges experienced across the industry.
• The company faces risks related to the achievement of financial performance objectives.

Future Outlook

The company plans to continue its outreach to shareholders on a regular basis and is committed to good governance and aligning programs with shareholder interests.

Management Comments

• The Compensation Committee sought feedback from independent governance advisors to design a shareholder outreach effort and selected Pearl Meyer & Partners, LLC ('Pearl Meyer') as their new independent executive compensation consulting firm to bring a fresh perspective to the banks compensation program design, gain further insight on current pay practices, and ensure that our approach going forward effectively balances competitive market practices, shareholder expectations, best-practice governance standards, and our business strategy.

Industry Context

The document references challenges experienced across the regional banking industry in 2023, including the failure of Silicon Valley Bank and First Republic Bank, which impacted the company's ability to fully achieve its financial goals.

Comparison to Industry Standards

• The company benchmarks its executive compensation program against a peer group of publicly traded regional banks, including Banc of California Inc, CVB Financial Corp, Eagle Bancorp Inc, Enterprise Financial Services Corp, FB Financial Corp, First Bancorp, First Financial Bankshares, Inc., Hilltop Holdings, Inc., Independent Bank Group, Inc., National Bank Holdings Corp, Origin Bancorp, Inc., Seacoast Banking Corporation of Florida, ServisFirst Bancshares Inc, Stellar Bancorp Inc, and TowneBank.
• The 50th percentile of total assets of this group was $13 billion, which is very close to the total assets of the Company ($12.4 million as of December 31, 2023).

Related Party Transactions

• Some of our officers, directors and principal shareholders, as well as their immediate family members and affiliates, are customers of, or have had transactions with, the Bank in the ordinary course of business.
• As of December 31, 2023, we had approximately $30.1 million of loans outstanding to our officers, directors and principal shareholders, as well as their immediate family members and affiliates, and those of the Bank, and we had approximately $9.1 million in unfunded loan commitments to these persons.

Stakeholder Impact

• The company's performance and executive compensation decisions impact shareholders, employees, and the broader community.
• The company is committed to ESG practices, which are critical to attracting and retaining the best talent, meeting the evolving needs of our customers and being good stewards of our communities.

Next Steps

• Shareholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will continue to engage with shareholders to address concerns and improve its executive compensation program.
• The company will implement changes to its long-term incentive awards program in 2024.

Key Dates

Keywords

annual meeting, executive compensation, directors, shareholders, proxy statement, Veritex Holdings, Grant Thornton, corporate governance