H. E. Timanus, Jr.
PROSPERITY BANCSHARESAbout H. E. Timanus, Jr.
Chairman of Prosperity Bancshares, Inc. and Chairman/Chief Operating Officer of Prosperity Bank; director of both since 2001. Age 80; Chairman of the Bank since 2005; became EVP & COO of the Company in 2001, Vice Chairman in 2006, and Chairman of the Company in 2019 . Company performance context: five-year pay-versus-performance disclosure shows TSR value of a $100 investment moved from 99.59 (2020) to 122.89 (2024), with net income ranging $419,316K–$528,904K over 2020–2024 and NPAs/average interest-earning assets at 0.08%–0.23% over the period .
| Performance Snapshot | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| TSR – $100 Investment | 99.59 | 106.69 | 110.55 | 106.79 | 122.89 |
| Net Income ($000s) | 528,904 | 519,297 | 524,516 | 419,316 | 479,386 |
| NPAs / Avg Interest-Earning Assets | 0.21% | 0.09% | 0.08% | 0.21% | 0.23% |
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Commercial Bancshares, Inc. | President & CEO | 1986–2001 | Led operations pre-merger into Prosperity; core banking leadership experience |
| Heritage Bank | CEO & Chairman | 1988–2001 | Executive leadership and board governance at predecessor bank |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Financial Federal Corporation (NYSE) | Director | Until 2010 | Public company directorship; sale concluded in 2010 |
Fixed Compensation
| Year | Base Salary | All Other Compensation (Perqs) | Perq Detail (2024) |
|---|---|---|---|
| 2024 | $559,290 | $86,740 | Club/social $11,044; 401(k) match $11,500; auto $8,247; LTD premium $433; dividends on unvested RS $55,516 |
| 2023 | $582,073 | $75,792 | Not itemized in proxy text for 2023 |
| 2022 | $563,584 | $66,190 | Not itemized in proxy text for 2022 |
The company provides a 401(k) plan with matching contributions; no pension/SERP is provided to NEOs .
Performance Compensation
| Year | Discretionary Cash Bonus | Stock Awards (Grant-Date Fair Value) | Non-Equity Incentive (Formulaic) | Total Compensation |
|---|---|---|---|---|
| 2024 | $616,000 | $1,695,654 (incl. 25,000 RS on 1/16/24; vests 1/16/27; plus $103,154 RS paid as ~25% of annual incentive) | $327,902 | $3,285,586 |
| 2023 | $616,000 | $71,929 | $263,919 | $1,609,713 |
| 2022 | $615,817 | $69,337 | $208,016 | $1,522,944 |
Annual Incentive Program Design (2024)
| Metric | Target | Calculation Factor | Payout Result |
|---|---|---|---|
| Total return | 8.0% | 2% for each 1% above target | Program paid ~44% of max on aggregate indicators |
| Increase in EPS | 8.0% | 2% per 1% above target | ~44% aggregate |
| Increase in deposits | 5.0% | 1% per 1% above target | ~44% aggregate |
| Increase in assets | 5.0% | 1% per 1% above target | ~44% aggregate |
| Increase in loans | 5.0% | 1% per 1% above target | ~44% aggregate |
| ROAE | 8.0% | 2% per 1% above target | ~44% aggregate |
| Efficiency ratio | 55.0% | 2% per 1% below target | ~44% aggregate |
| Increase in dividends | 7.0% | 2% per 1% above target | ~44% aggregate |
| Asset quality | 0.5% | 1% per 0.01% below target | ~44% aggregate |
- 2024 estimated possible payouts under non‑equity plan: Target $435,546; Maximum $978,756 for Timanus .
- Stock vested in 2024: 21,093 shares; value realized $1,344,236 .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 530,653 shares; includes 29,071 shares in Company’s 401(k) Plan as custodian for Mr. Timanus, and 270,260 shares held by Dooley Investments, Ltd., of which Mr. Timanus and his wife are general partners |
| Ownership as % of shares outstanding | <1.0% (star indicated in table) of 95,262,717 shares outstanding |
| Vested vs. unvested | Unvested RS detailed below; vested activity included 21,093 shares vesting in 2024 |
| Pledging | No pledging disclosed for Mr. Timanus; pledging noted only for another director (Steelhammer: 131,005 shares pledged) |
| Hedging policy | Company prohibits hedging transactions for directors/officers/employees |
| Stock ownership guidelines | Directors: ≥5x annual cash retainer; CEO: ≥4x salary; other executive officers: ≥2x salary; compliance expected within 5 years |
Outstanding Equity Awards at 12/31/2024
| Grant | Shares Unvested | Market Value at $75.35 | Vesting Schedule |
|---|---|---|---|
| RS Award (Feb 15 tranche) | 318 | $23,961 | Vested 2/15/2025 |
| RS Award (Feb 15 half/half) | 708 | $53,348 | 50% vested 2/15/2025; 50% vests 2/15/2026 |
| RS Award (three tranches) | 1,369 | $103,154 | 1/3 vested 2/15/2025; 1/3 vests 2/15/2026; 1/3 vests 2/15/2027 |
| RS Award (cliff) | 25,000 | $1,883,750 | Vests 1/16/2027 (granted 1/16/2024) |
Employment Terms
- Role & base salary: Agreement reflects title as Chairman (Company) and Chairman/COO (Bank); base salary referenced at $559,290 with annual review by Compensation Committee .
- Term & auto‑renewal: Three-year initial term; automatically extended one year at each anniversary unless terminated under the agreement .
- Conflicts/non‑compete: During employment, no participation in competing business; amended to permit reasonable personal investments; no post-employment non‑compete/non‑solicit restrictions in agreements for Timanus/Zalman .
- Good Reason/Cause definitions: Detailed triggers include role diminution, compensation reduction, relocation, failure to assume obligations, and material breach; Cause includes willful misconduct, gross neglect, detrimental acts, felony, substance issues .
- 409A and 280G: 409A timing requirements; 280G cutback to avoid excise tax unless greater net-after-tax without reduction .
Termination & Change-in-Control Economics
| Scenario | Cash Severance | Equity Treatment | Notes |
|---|---|---|---|
| Termination without Cause or with Good Reason (outside CIC) | Lump sum equals accrued amounts plus 3× base salary (if no CIC payment) | Not specified to accelerate (outside CIC) | Payment within 30 days; 409A applies |
| During CIC Period – Double Trigger (termination without Cause or with Good Reason within −6 to +18 months of CIC) | 3× base salary + 3× Average Annual Bonus (average of formulaic bonus and discretionary bonus from prior two years) | Restricted stock accelerates/vests upon CIC | 280G cutback provision applies |
| As-of 12/31/2024 CIC Estimate (company assumptions) | $4,682,961 salary/bonus component | $2,064,213 equity acceleration | Total $6,747,174 based on $75.35 share price; includes annual incentive RS granted 12/31/2024 |
Board Service History, Committees, and Dual-Role Implications
- Board service: Director of the Company and Bank since 2001; Chairman of the Company since 2019; Chairman of the Bank since 2005; COO of the Bank since 2001 .
- Board committees: Audit, Compensation, Governance, and Risk Committees consist entirely of independent directors; committee memberships do not list Timanus (management director) .
- Attendance & sessions: Board met four times in 2024; no director attended <75% of meetings; independent directors held two executive sessions; non‑employee directors held two; Lead Independent Director (Presiding Director) James A. Bouligny has served since 2013 .
- Leadership structure & independence: The CEO also serves as Senior Chairman; independence mitigated via a long‑tenured Lead Independent Director and independent committee chairs .
- Say‑on‑pay context: Compensation Committee attributed 2024 feedback primarily to single‑trigger CIC in CEO’s prior agreement; it has since been amended to remove the single trigger .
Compensation Structure Analysis
- Mix shift: 2024 compensation for Timanus increased substantially via long‑term equity awards (25,000-share, three‑year cliff RS grant plus ~25% of annual incentive paid in RS), raising equity-at-risk exposure versus 2023–2022 .
- Formula vs discretion: Annual incentive has formulaic metrics plus discretionary cash bonuses; Timanus’s discretionary bonus was $616,000 for 2024; formulaic payout approximated 44% of max across nine indicators .
- Options: Company does not grant stock options; equity awards are restricted stock (RS), often three-year cliff vesting; grants made on regular predetermined dates to avoid information timing issues .
- Peer benchmarking: Committee uses a broad peer group (banks with $25–$75B assets) as a reference, not a fixed percentile target; decisions incorporate tenure, scope, performance, and market conditions .
Related Party & Risk Indicators
- Related party policy: Governance Committee reviews/approves related party transactions; loans to insiders in ordinary course under standard terms totaled $266,000 as of 12/31/2024 (~0.01% of Tier 1 capital) .
- Hedging/Pledging: Hedging prohibited for insiders; pledging disclosure shows none for Timanus; one director had pledged shares .
- Governance/controls: Independent Audit/Compensation/Governance/Risk committees; Deloitte & Touche LLP as independent auditor for >10 years, ratification sought for 2025 .
Work History & Career Trajectory
| Organization | Role | Time at Company |
|---|---|---|
| Prosperity Bancshares/Bank | Director since 2001; Chairman (Company) since 2019; Chairman (Bank) since 2005; COO (Bank) since 2001 | 24 years on Board; executive leader through growth phases |
| Prior institutions | Commercial Bancshares (President & CEO); Heritage Bank (CEO & Chairman) | 1986–2001 at Commercial; 1988–2001 at Heritage |
Director Compensation & Ownership Guidelines (for governance context)
- Non-employee director compensation (2024) is disclosed separately; Timanus, as an executive director, is compensated under NEO tables .
- Director ownership guideline: ≥5x annual cash retainer; executive officer guideline: ≥2x salary (CEO ≥4x); anti-hedging policy in place .
Investment Implications
- Alignment and supply: Significant unvested RS tied to multi-year cliff/annual tranches (notably 25,000 shares vesting 1/16/2027) suggests ongoing retention incentives but also identifiable future vesting supply that may create periodic selling pressure upon vest dates; 2024 vesting realized 21,093 shares and $1.34M value .
- CIC economics and retention: The 2025 amended agreement adds 3× base plus 3× average bonus under a double-trigger CIC and accelerates RS; cutback under 280G minimizes excise exposure. Absence of post-employment non‑compete reduces potential lock‑in, but generous CIC severance and equity acceleration increase retention during strategic events .
- Pay-for-performance: Formulaic bonus structure across nine operating/return metrics paid ~44% of max for 2024, complemented by a sizeable discretionary bonus, indicating committee discretion amid mixed TSR trajectory and solid net income levels; increased RS grants heighten long-term alignment .
- Governance balance: Dual leadership (CEO also Senior Chairman; Timanus as Chairman) is counterbalanced by a long-tenured Lead Independent Director and fully independent committees; continued shareholder engagement and adjustment of CIC terms (CEO’s single-trigger removed) suggest responsiveness to governance concerns .