David Zalman
PROSPERITY BANCSHARESAbout David Zalman
David Zalman, 68, is Senior Chairman and Chief Executive Officer of Prosperity Bancshares, Inc. (PB) and Prosperity Bank, having joined the Bank in 1986 and serving as CEO since 2001 with elevation to Senior Chairman in 2019; he holds a BBA from the University of Texas at Austin . Under his leadership, 2024 net income was $479.4 million and Company TSR since 2019 rose to $122.89 by year-end 2024, while the Board continued a 22-year streak of dividend increases with a 10.7% CAGR from 2003 to 2025 . The Board employs a combined Chairman/CEO structure with a Lead Independent Director to mitigate independence concerns tied to his dual role .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Prosperity Bank | President | 1986–2001 | Led growth ahead of 2001 CEO appointment |
| Prosperity Bancshares, Inc. | Director; VP/Secretary; President | 1987–2001 | Early corporate governance and executive leadership |
| Prosperity Bancshares, Inc. | President & CEO; Chairman & CEO; Senior Chairman & CEO | 2001–present | Long-tenured CEO; elevated to Senior Chairman in 2019 |
| Commercial State Bank (El Campo) | Cashier → Chief Executive Officer | 1978–1986 | Early banking leadership experience |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Federal Advisory Council to the Federal Reserve Board | 11th District representative | 2021–2024 | Macro-policy insight, banking system engagement |
| Dallas Fed, Houston Branch | Board member | 2016–2021 | Regional monetary/credit oversight |
| New ICM LP | Founding principal; partner/director | 1999–2017 | Private-sector operating experience |
| El Campo City Council | Member | N/A | Community engagement |
| St. Philip Catholic School Endowment Fund | Trustee | Current | Community/education governance |
Fixed Compensation
Multi-year NEO compensation (SEC-reported totals):
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | 1,066,578 | 1,105,186 | 1,092,865 |
| Discretionary Bonus ($) | 1,130,227 | 1,135,000 | 1,135,000 |
| Stock Awards ($) | 154,808 | 160,656 | 2,459,845 (incl. 35,000 sh LT award) |
| Non-Equity Incentive ($) | 464,534 | 589,350 | 732,278 |
| All Other Compensation ($) | 219,427 | 238,816 | 239,487 |
| Total Compensation ($) | 3,035,574 | 3,229,008 | 5,659,475 |
2024 perquisites detail:
| Perquisite | 2024 Amount ($) |
|---|---|
| Personal aircraft use | 74,233 |
| Personal automobile use | 23,865 |
| Life insurance premiums | 43,910 |
| Club dues | 2,106 |
| 401(k) Company match | 11,500 |
| Long-term disability allowance | 300 |
| Dividends on unvested RS | 83,573 |
Additional fixed items: 2024 director fees included $20,100 (Bank) and $15,100 (Company) within compensation . CEO pay ratio was 120:1 in 2024 (88:1 if one-year LT grant value were used) .
Performance Compensation
Structure and metrics:
- Annual incentive paid ~75% cash and ~25% restricted stock, with grants in December; remaining cash paid by March 15 following auditor confirmation .
- 2024 metrics and weights:
| Metric | Weight | Target | Calculation Factor |
|---|---|---|---|
| Total return | 15% | 8.0% | 2% for each 1% above target |
| Asset quality (NCOs/Avg Loans) | 15% | 0.5% | 1% per 0.01% below target |
| EPS increase | 15% | 8.0% | 2% per 1% above target |
| Efficiency ratio | 15% | 55.0% | 2% per 1% below target |
| ROAE | 15% | 8.0% | 2% per 1% above target |
| Dividend increase | 10% | 7.0% | 2% per 1% above target |
| Deposits increase | 5% | 5.0% | 1% per 1% above target |
| Assets increase | 5% | 5.0% | 1% per 1% above target |
| Loans increase | 5% | 5.0% | 1% per 1% above target |
- 2024 payout achieved ~44% of aggregate possible bonus for eligible NEOs; M&A and certain items (FDIC special assessment, security gains) were excluded for target satisfaction in specified metrics .
Award detail (2024):
- Annual incentive components for Zalman: Non-equity incentive $732,278 (cash ~75% share); restricted stock portion of annual incentive included within Stock Awards ($230,345) .
- Long-term equity award: 35,000 shares RS granted 1/16/2024 (three-year cliff vest in Jan 2027), grant-date fair value $2,229,500 .
Stock vested (realization signal):
| Year | Shares Vested | Value Realized ($) |
|---|---|---|
| 2024 | 37,441 | 2,386,354 |
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Beneficial ownership (shares) | 893,943 |
| Shares outstanding | 95,262,717 |
| Ownership % of outstanding | ~0.94% (893,943 / 95,262,717) |
| Ownership guideline | CEO expected ≥4× base salary in PB stock (within 5 years) |
| Guideline compliance status | Not explicitly disclosed; Zalman beneficially owns 893,943 shares |
Unvested/vesting schedule (as of 12/31/2024):
| Award | Unvested Shares | Vesting Terms |
|---|---|---|
| RS grant | 710 | Vested 2/15/2025 |
| RS grant | 1,582 | 50% vested 2/15/2025; 50% vests 2/15/2026 |
| RS grant | 3,057 | 1/3 vested 2/15/2025; 1/3 vests 2/15/2026; 1/3 vests 2/15/2027 |
| RS grant | 35,000 | Vests 1/16/2027 (3-year cliff) |
| Options outstanding | None |
Pledging and hedging:
- No pledged shares disclosed for Zalman; Company anti-hedging policy prohibits hedging for directors/officers/employees .
Employment Terms
Key provisions for David Zalman:
- Amended and restated employment agreement dated Oct 15, 2024, converting change-in-control (CIC) to double-trigger: payment only if terminated without cause or for good reason during the CIC period (six months before to 18 months after a CIC) .
- CIC cash severance: 3× base salary + 3× average annual bonus (formulaic incentive + discretionary) over prior two years; RS awards vest upon CIC per employment agreement (subject to 280G cutback) .
- Non-CIC termination without cause/good reason: 3× base salary (plus accrued amounts) if no CIC payment has been received .
- Death/Disability: 3× base salary (plus accrued amounts) if no CIC payment has been received .
- Non-compete/non-solicit: Not included in Zalman’s agreement; RS forfeiture lapses only upon death/disability under plan terms .
- Contract term: Initial three years with automatic one-year renewals .
Estimated CIC benefits as of 12/31/2024 (illustrative):
| Component | Amount ($) |
|---|---|
| Salary/Bonus multiple | 9,267,579 |
| Equity acceleration (assumes vesting) | 3,040,297 |
| Total | 12,307,876 |
Related parties:
- Son (Cullen Zalman) employed as EVP; arrangement reviewed/approved under Related Party Transactions Policy; compensation >$120,000 .
- Family ties: Son-in-law of director Perry Mueller, Jr. .
Board Governance
- Role: Class III Director; Senior Chairman and CEO of PB and the Bank .
- Board structure: Combined Senior Chairman/CEO with Lead Independent Director (Presiding Director: James A. Bouligny, serving since Jan 2013); independent Committee Chairs; independent director majority .
- Committees and chairs:
- Audit: Chair Harrison Stafford II; members Stafford, Ned S. Holmes, Jack Lord (all independent; all financial experts as defined) .
- Compensation: Chair Ned S. Holmes; members Ileana Blanco, Harrison Stafford II (independent) .
- Governance: Chair William T. Luedke IV; members James A. Bouligny, Robert Steelhammer (independent) .
- Risk: Chair Robert Steelhammer; members Bouligny, Henderson, Luedke (independent) .
- Meetings/attendance: Board met 4 times in 2024; all directors attended ≥75% of aggregate Board/committee meetings; all directors attended 2024 annual meeting .
Director compensation context (non-employee directors): One-time $38,000 cash payment in 2024; equity grants of 1,500 RS shares vesting at 2025 annual meeting . As an employee director, Zalman’s Board-related fees are included in NEO compensation .
Say-on-Pay & Shareholder Feedback
| Year | Approval % | Key Issues/Actions |
|---|---|---|
| 2022 | 94% | — |
| 2023 | 95% | — |
| 2024 | 58% | ISS negative recommendation due to single-trigger CIC; Company amended CEO agreement (Oct 2024) and Chairman agreement (Jan 2025) to double-trigger CIC |
Management engaged top holders and Governance Chair in follow-ups; investors indicated no ongoing compensation concerns post amendment and requested enhanced disclosure .
Compensation Peer Group (Benchmarking)
Peer group used for 2024 decisions: U.S. bank holding companies with $25–$75B assets (e.g., SouthState, Bank OZK, Cadence, Webster, Wintrust, Cullen/Frost, Texas Capital, Synovus, etc.); data used as reference point rather than strict percentile benchmarking .
Related Party Transactions & Red Flags
- Anti-hedging policy in place; disclosure of pledged shares includes 131,005 shares pledged by director Robert Steelhammer (none disclosed for Zalman) .
- Aircraft personal use disclosed and costed at aggregate incremental cost methodology; no tax gross-ups provided for personal travel; income imputed .
- Loans to insiders conducted on market terms; aggregate $266,000 outstanding as of 12/31/2024 .
Compensation Structure Analysis
- Shift toward RS grants over options (Company does not grant options); predominant use of restricted stock with three-year cliff vesting supports retention and alignment .
- Annual incentive is formulaic, diversified across nine metrics; 2024 payout ~44% of possible indicates performance gating and discipline .
- Discretionary bonuses remain meaningful ($1.135M in 2024 for Zalman), reflecting Board judgment on M&A execution and relative performance .
Equity Ownership & Alignment (Additional Detail)
- Beneficial ownership footnote: Includes 17,469 shares in 401(k), 19,280 held as custodian for children, 9,950 held by daughter, and 351,451 held by the David and Vicki Jo Zalman 2006 Children’s Trust; Zalman disclaims beneficial ownership of the trust shares .
- Unvested RS exposure (2027 cliff) could temper near-term selling; substantial vesting in February dates suggests seasonal Form 4 activity around vest events .
Employment & Contracts
- Auto-renewal with evergreen one-year extensions provides continuity; absence of non-compete/non-solicit for Zalman increases external mobility but is offset by significant unvested equity .
- CIC cutback (280G) reduces excise tax exposure, potentially limiting windfall optics .
Performance & Track Record
| Year | TSR (Start 12/31/2019, $100 basis) | Net Income ($000s) | NPAs / Avg Interest-Earning Assets |
|---|---|---|---|
| 2020 | $99.59 | 528,904 | 0.21% |
| 2021 | $106.69 | 519,297 | 0.09% |
| 2022 | $110.55 | 524,516 | 0.08% |
| 2023 | $106.79 | 419,316 | 0.21% |
| 2024 | $122.89 | 479,386 | 0.23% |
Dividend policy: Board increased Q4 2025 dividend to $0.60/share; dividends CAGR 10.7% (2003–2025), signaling capital return commitment alongside M&A expansion .
Investment Implications
- Alignment: ~0.94% ownership and significant unvested RS through 2027 provide strong alignment and retention; absence of pledging and anti-hedging policy mitigate downside governance risks .
- Incentive design: Nine-metric, formulaic annual plan and material LT equity awards suggest pay-for-performance discipline; 2024 ~44% bonus attainment implies gating, while discretionary cash remains sizable—monitor rationale and disclosure quality .
- Governance risk resolved: Transition to double-trigger CIC reduces shareholder concern on windfall risk; CIC benefits remain large—watch for M&A-triggered acceleration scenarios and 280G cutback impacts .
- Trading signals: February and January vest schedules and December incentive RS grants are potential windows for Form 4 activity; monitor insider transactions around these dates for selling pressure indicators .
- Perks: Aircraft and other perquisites are disclosed and modest relative to total; no tax gross-ups for personal travel reduces shareholder-unfriendly optics .