Ronald Butler
FIRST FINANCIAL BANKSHARESAbout Ronald D. Butler II
Ronald D. Butler II (age 65) serves as Executive Vice President and Chief Administrative Officer (CAO) of First Financial Bankshares, Inc. (FFIN) and First Financial Bank, and is Chairman and CEO of the Bank’s Abilene Region; he has served 13 years in his current CAO role . FFIN’s 2024 performance backdrop driving incentive outcomes included net income of $223.51 million (EPS $1.56), ROAA of 1.68%, and ROE of 14.51% . Over longer horizons, TSR turned a hypothetical $100 into $288 over 10 years (+188.47%), with 1-year TSR of 21.58% as of 12/31/24 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| First Financial Bankshares, Inc. | EVP & Chief Administrative Officer | 13 years in role (as of 2025) | Enterprise administration; senior executive oversight; concurrently chairs Abilene Region at First Financial Bank |
| First Financial Bank (Abilene Region) | Chairman & CEO | Not disclosed | Regional leadership supporting growth, earnings, and efficiency priorities |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 595,000 | 625,000 | 630,000 |
| Target Bonus (% of salary) | — | — | 60% |
| Actual Bonus (% of salary) | — | — | 52.5% |
| Actual Bonus ($) | 162,000 | 31,500 | 330,750 |
Notes:
- 2025 base salary approved at $640,000 effective March 1, 2025; target/maximum bonus levels for 2025 remained unchanged from 2024 .
Performance Compensation
2024 short-term incentive plan (cash bonus) structure and payout for Butler:
| Metric | Weight | Target | 2024 Actual | Payout to Butler ($) | Vesting/Payment |
|---|---|---|---|---|---|
| Earnings Growth | 40% | 9.00% | 9.48% | 151,200 | Cash, annual |
| Total Loan Growth | 25% | 11.50% | 10.69% | 78,750 | Cash, annual |
| Total Deposit Growth | 25% | 8.00% | 5.66% | 63,000 | Cash, annual |
| Efficiency Ratio | 10% | 47.50% | 47.23% | 37,800 | Cash, annual |
| Total | 100% | — | — | 330,750 | — |
Long-term incentives (LTI) design and 2024 grant:
| Award Type | Grant Date | Quantity | Exercise Price | Vesting | Grant-Date Fair Value ($) |
|---|---|---|---|---|---|
| Stock Options | Aug 14, 2024 | 12,653 | 34.37 | 33.3% per year; 10-year term | 126,024 (2024 option value) |
| RSUs | Aug 14, 2024 | 3,666 | n/a | 33.3% per year | Included in $252,001 (2024 stock awards) |
| PSUs (target) | Aug 14, 2024 | 3,666 | n/a | 3-year, relative ROAA vs $10–$50B bank peers; 0–200% payout | Included in $252,001 (2024 stock awards) |
| Total equity grant fair value (2024) | — | — | — | — | 378,025 (combined grant-date fair value) |
Program notes:
- LTI mix typically 1/3 PSUs (relative ROAA), 1/3 stock options, 1/3 RSUs; PSUs pay 0–200% based on percentile rank; RSUs accrue dividend equivalents payable on vesting; options/RSUs vest over 3 years .
- 2022–2024 PSU cycle paid at 150% of target (EPS growth ~60th percentile; ROAA ~90th percentile) .
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Beneficially owned shares (as of 3/5/2025) | 250,720 |
| Shares outstanding (as of 3/5/2025) | 142,983,467 |
| Ownership (% of outstanding) | ~0.18% (250,720 / 142,983,467) |
| ESOP shares (included above) | 43,964 |
| SERP shares (included above) | 1,092 |
| Options exercisable within 60 days (included above) | 49,546 |
| Unvested RSUs (excluded from beneficial ownership) | 6,939 |
| Unvested PSUs (target; excluded from beneficial ownership) | 9,424 |
| Shares pledged as collateral | 154,729 |
| Executive stock ownership guideline | 3x base salary for executive officers (CEO 5x) |
| Hedging/short sales policy | Prohibited for directors/executives |
| Pledging policy | Prohibited in margin accounts; otherwise permitted in limited cases |
Outstanding option positions (as of 12/31/2024):
| Grant Date | Exercisable | Unexercisable | Strike ($) | Expiration |
|---|---|---|---|---|
| 10/27/2015 | 10,150 | — | 16.95 | 10/27/2025 |
| 06/12/2017 | 20,000 | — | 21.18 | 06/12/2027 |
| 06/26/2019 | 8,000 | 2,000 | 29.70 | 06/26/2029 |
| 08/16/2021 | 3,849 | 2,566 | 48.91 | 08/16/2031 |
| 08/16/2022 | 2,784 | 4,174 | 47.19 | 08/16/2032 |
| 08/16/2023 | 4,763 | 9,526 | 29.53 | 08/16/2033 |
| 08/14/2024 | — | 12,653 | 34.37 | 08/14/2034 |
Signals for potential selling pressure:
- 3-year vesting cadence on RSUs and options from Aug 2024 grant creates annual supply into 2025–2027; PSUs cliff-vest after performance period .
- Pledged shares (154,729) represent a material portion of holdings and may introduce forced-sale risk if collateral values change .
Employment Terms
| Topic | Terms |
|---|---|
| Employment agreement | No employment agreements; executives are covered by “Executive Recognition” severance/change-in-control (CIC) agreements |
| CIC trigger | Double-trigger: termination without cause or resignation for good reason within 2 years following a CIC; detailed CIC/Good Reason definitions apply |
| CIC cash multiple | 200% of base salary for executive officers (CEO 300%); plus pro-rata target bonus and unused PTO |
| CIC estimated payout (Butler) | Cash: $1,260,000; Estimated accelerated equity value: $685,953 (valuation uses 12/31/24 price $36.05) |
| Equity acceleration on CIC | Unvested stock options vest immediately upon CIC under the 2021 Omnibus Plan; additional award acceleration governed by plan terms (values reflected above) |
| Clawback | Compensation Recovery Policy (Section 16 officers, regional presidents/chairs) for restatements; covers incentive-based comp |
| Non-compete / non-solicit | Required in RSU/PSU and option award agreements; confidentiality; recoupment provisions apply |
| Hedging/short sales | Prohibited; pledging permitted outside margin accounts per policy |
| General severance | Company policy tied to years of service for restructuring/layoff (non-CIC) |
Multi-Year Compensation (Butler)
| Component ($) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | 595,000 | 625,000 | 630,000 |
| Stock Awards | 159,974 | 239,960 | 252,001 |
| Option Awards | 92,541 | 120,028 | 126,024 |
| Non-Equity Incentive (Cash) | 162,000 | 31,500 | 330,750 |
| SERP/Deferred Comp (Change in value/earnings) | 39,883 | 22,416 | 46,984 |
| All Other Compensation | 32,535 | 22,350 | 56,088 |
| Total Compensation | 1,081,933 | 1,061,254 | 1,441,847 |
Other plan features and governance:
- Executive ownership guidelines: CEO 5x salary; other executive officers 3x salary; enforced via equity/transfer restrictions if not met .
- “What We Don’t Do”: Repricing options; tax gross-ups; excessive perquisites; hedging; short sales .
- Compensation peer group includes regional bank peers such as Prosperity, Independent Bank Group, Renasant, ServisFirst, and others (asset/geography aligned) .
- Say-on-Pay approval: 98.9% of votes cast in 2024 .
Performance & Track Record (Company context for incentive alignment)
| Metric | 2024 Value |
|---|---|
| Net Income | $223.51 million |
| ROAA | 1.68% |
| ROE | 14.51% |
| Net Interest Margin (TE) | 3.50% |
| Efficiency Ratio | 47.23% |
| Loans HFI | $7.91 billion |
| Deposits | $12.10 billion |
| 10-Year TSR | +188.47% (FFIN $288 on $100) |
Compensation Structure Analysis
- Cash vs equity mix shifted meaningfully in 2024 as the annual bonus rebounded (52.5% of salary; $330,750) while equity grants remained steady to slightly higher versus 2023; total pay rose to $1.44 million from ~$1.06 million in 2023 .
- LTI risk remains balanced across PSUs (relative ROAA), options (price appreciation), and RSUs (retention), aligning with shareholder returns and bank operating efficiency/credit quality priorities .
- No tax gross-ups; clawback policy in place; option repricing prohibited; hedging banned; pledging allowed only outside margin accounts—Butler has pledged 154,729 shares (a governance/prudential red flag) .
- Bonus metrics (earnings growth, loan/deposit growth, efficiency) are tightly coupled to core banking performance; Butler’s 2024 payout tracked group outcomes (e.g., ROAA 1.68%, efficiency 47.23%) .
Risk Indicators & Red Flags
- Shares pledged as collateral: 154,729 (potential forced-sale/credit/collateral risk) .
- Single vs double-trigger CIC: double-trigger design mitigates windfall risk; CIC cash multiple 2x salary is moderate for regional banks; estimated Butler CIC cash $1.26 million plus accelerated equity $685,953 (as of 12/31/24) .
- Clawback and anti-hedging present; no option repricing or tax gross-ups (shareholder-friendly) .
- Ownership concentration moderate: ~0.18% beneficial ownership; robust company-wide ownership culture via ESOP and profit-sharing .
Employment Terms (Details)
- Executive Recognition Agreements renewed July 1, 2024; term through June 30, 2026; auto-renew for 2 years unless terminated; if CIC occurs, agreement extends 2 years post-CIC .
- “Good Reason” includes material diminutions, relocations, compensation cuts, budget cuts, and other specified adverse changes; “Cause” narrowly defined (willful nonperformance or injurious conduct) .
- Equity award agreements require confidentiality, non-solicitation, and non-competition commitments; clawback provisions apply to LTI since 2017 (options) and under broader policy .
Say-on-Pay & Shareholder Feedback
- Say-on-Pay passed with 98.9% approval in 2024; Compensation Committee maintained plan design, monitoring performance and peer practices; Pearl Meyer retained as independent consultant .
Investment Implications
- Alignment: Butler’s incentive mix (earnings/loan/deposit growth and efficiency) and relative ROAA PSU framework are tightly linked to value drivers for regional banks; 2024 payouts reflect improved fundamentals (ROAA 1.68%, efficiency 47.23%) .
- Supply/overhang: Multi-year vesting from 2024 RSU/option grants and sizeable pledged shares (154,729) introduce potential selling/forced-sale pressure around vest dates or adverse collateral moves .
- Retention/CIC: Double-trigger CIC agreements (2x salary cash; equity acceleration) provide retention without excessive windfalls; estimated Butler CIC cash $1.26 million and accelerated equity ~$0.69 million as of 12/31/24 .
- Governance: Strong guardrails—anti-hedging, clawback, no repricing/gross-ups, ownership guidelines—offset pledge risk; exceptionally high Say-on-Pay support (98.9%) signals broad shareholder acceptance of pay structure .