Paul A. Ehlers
About Paul A. Ehlers
Paul A. Ehlers is Senior Vice-President and Chief Operations Officer (COO) of City Bank (South Plains Financial, Inc.’s wholly-owned subsidiary). He joined the Bank in 1991, served as VP of Operations and Security Officer from 1997–2007, and has been COO since 2008. He is age 54, holds a B.S. in Agricultural Economics from Texas Tech University (1992), and is a graduate of the Texas Tech School of Banking and the Bank Operations Institute . Company performance context for FY 2024: total shareholder return (TSR) index 180.15, net income $49,717 (USD thousands), diluted EPS $2.92 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| City Bank (SPFI subsidiary) | Joined Bank | 1991–1996 | Entry into operations track |
| City Bank | VP of Operations & Security Officer | 1997–2007 | Operations management and security oversight |
| City Bank | Senior Vice-President & Chief Operations Officer | 2008–Present | Leads enterprise operations execution |
External Roles
| Organization | Role | Years |
|---|---|---|
| Lubbock Cooper Independent School District | Board of Trustees | Current |
Fixed Compensation
| Year | Base Salary ($) | Target Bonus % of Salary | Max Bonus % of Salary | Discretionary Bonus ($) | Non-Equity Incentive ($) | Total Cash Incentive ($) |
|---|---|---|---|---|---|---|
| 2024 | 304,500 | 30% | 45% | 27,405 | 109,620 | 137,025 |
Notes:
- The annual cash incentive structure for 2024 targeted 30% of salary, with a 45% cap; final payout combined the plan result ($109,620) and discretionary “individual performance” bonus ($27,405) .
Performance Compensation
Annual Cash Incentive Plan – FY 2024
| Metric | Weight | Target | Actual | Outcome Basis | Payout Component ($) |
|---|---|---|---|---|---|
| SPFI Net Income vs Budget | 30% | $42,206 (000s) | $49,717 (000s) | 117.8% of target | Part of $109,620 plan payout |
| Bank Efficiency Ratio | 20% | 66.32% | 63.40% | 2.92% favorable variance | Part of $109,620 plan payout |
| Asset Quality (Bank) | 20% | 0.54% | 0.61% | -0.07% variance | Part of $109,620 plan payout |
| Individual Performance | 30% | Committee discretion | Committee discretion | Discretionary | $27,405 |
- Bonus governance: metrics and weights are set near the beginning of the fiscal year; payouts reflect year-end results vs targets and committee-rated individual performance .
Equity Awards Granted in 2024
| Grant Date | Type | Shares (#) | Grant-Date Fair Value ($) | Vesting Terms |
|---|---|---|---|---|
| 02/21/2024 | RSUs | 3,486 | 91,333 | Vests one-fourth on each Feb 21, 2025/2026/2027/2028 |
Equity Ownership & Alignment
Beneficial Ownership (as of 03/24/2025)
| Holder | Shares Beneficially Owned | % of Outstanding | Composition |
|---|---|---|---|
| Paul A. Ehlers | 173,014 | 1.06% | 70,236 direct; 90,447 vested options; 12,331 unvested RSUs |
- Pledging: No pledging disclosed for Ehlers; pledging disclosures exist for other insiders, but not for Ehlers .
- Hedging/pledging policy: Insider Trading Policy discourages hedging, prohibits margin accounts, and discourages pledging (requires preclearance) .
Outstanding Equity Awards at FY 2024 Year-End (Ehlers)
| Instrument | Exercisable (#) | Unexercisable (#) | Strike ($) | Expiration |
|---|---|---|---|---|
| Stock Options | 6,000 | — | 8.60 | 12/31/2025 |
| Stock Options | 7,500 | — | 10.93 | 12/31/2026 |
| Stock Options | 7,500 | — | 12.24 | 12/31/2027 |
| Stock Options | 7,500 | — | 13.88 | 12/31/2028 |
| Stock Options | 7,500 | — | 16.93 | 12/31/2028 |
| Stock Options | 7,500 | — | 19.05 | 12/31/2028 |
| Stock Options | 19,511 | — | 16.00 | 08/21/2029 |
| Stock Options | 15,279 | — | 20.93 | 02/19/2030 |
| Stock Options | 9,117 | 3,040 | 19.62 | 02/24/2031 |
| RSUs (unvested) | — | 1,490 | — | Vests one-half on each Feb 16, 2025 & 2026 |
| RSUs (unvested) | — | 2,393 | — | Vests one-third on each Feb 16, 2025/2026/2027 |
| RSUs (unvested) | — | 3,486 | — | Vests one-fourth on each Feb 21, 2025/2026/2027/2028 |
- Unvested RSU market values (12/31/2024 close $34.75): 1,490 → $51,778; 2,393 → $83,157; 3,486 → $121,139 .
- Upcoming vesting triggers may create supply from automatic net-share-settlements, depending on tax withholding mechanics; company policy requires preclearance for certain transactions .
2024 Equity Activity
| Type | Shares | Value Realized ($) |
|---|---|---|
| Option Exercises (Ehlers) | 4,978 | 171,890 |
| RSUs Vested (Ehlers) | — | — |
Employment Terms
Change-in-Control Severance (Executive Plan)
- Eligibility: Ehlers participates in the Executive Change in Control Severance Plan (Severance Plan) .
- Double-trigger: Benefits require involuntary termination without cause or resignation for good reason within 24 months post-change-in-control .
- Benefits: Lump-sum equal to 1.5× annual base salary, pro-rata target annual bonus for year of termination, and 1.5× annual health premium cost for Ehlers and dependents; acceleration of equity awards with performance goals deemed at target .
- 280G Cutback: Payments reduced to avoid excise tax if better net-after-tax position than paying full amounts .
Potential Payments – Illustrative Company Cost at 12/31/2024
| Scenario | Cash Severance ($) | Equity Acceleration ($) | Salary Continuation Plan ($) | Health Coverage ($) | Total ($) |
|---|---|---|---|---|---|
| Termination w/o Cause or Resignation w/ Good Reason | — | 302,069 | — | — | 302,069 |
| Change in Control (no termination) | — | 302,069 | — | — | 302,069 |
| Termination w/o Cause or Resignation w/ Good Reason in Connection with a Change in Control | 548,100 | 302,069 | 806,400 | 13,481 | 863,650 (as reported) |
Notes:
- The “in connection with a change in control” table also shows enhanced deferred compensation amounts representing cumulative lifetime benefits; the reported “Total” column in the proxy presents a figure that does not arithmetically sum the components, indicating the Company’s reporting approach rather than a simple addition of the components .
Deferred Compensation (Salary Continuation Plan)
| Participant | Vested Status | Annual Benefit | Commencement Trigger | FY2024 Company Contribution ($) | Aggregate Balance at YE ($) |
|---|---|---|---|---|---|
| Paul A. Ehlers | 100% vested | $40,320 | Earlier of age 65 or separation within 2 years post-change-in-control; forfeiture upon termination for cause, death, or covenant violations | 18,824 | 181,364 |
Clawback & Trading Policies
- Clawback: Incentive Award Recoupment Policy effective Oct 2, 2023, compliant with SEC Rule 10D-1 and Nasdaq 5608, allows recovery of excess incentive-based compensation upon accounting restatements (three prior fiscal years) .
- Insider Trading Policy: Strongly discourages hedging, prohibits margin accounts, discourages pledging (requires preclearance); preclearance required for certain transactions .
Compensation Structure Analysis
- Cash vs equity mix: For 2024, Ehlers’ cash incentives totaled $137,025 on a $304,500 base (45% of salary), with additional RSUs granted (3,486 units; $91,333 grant-date value), reflecting a balanced short-term/long-term mix and no 2024 option grant specific to Ehlers .
- Performance-metric alignment: Annual cash bonus tied to net income, efficiency ratio, and asset quality, plus individual performance—clear linkage to profitability, cost discipline, and credit quality .
- Governance safeguards: Clawback policy in place; no option repricing; hedging discouraged and pledging discouraged (preclearance required) .
- Peer benchmarking: Committee reviews peer group data alongside local market and industry norms; uses discretion in evaluation .
Investment Implications
- Alignment and retention: Ehlers holds 1.06% beneficial ownership via direct shares, vested options, and unvested RSUs; upcoming vesting dates through 2028 support retention but create periodic supply from settlement-related share issuance/withholding .
- Incentive levers tied to fundamentals: Bonus metrics emphasize net income, efficiency, and asset quality—areas where operational leadership can influence outcomes; 2024 payouts reflect outperformance on profitability and efficiency despite slightly weaker asset quality metric .
- Change-in-control economics: Double-trigger severance (1.5× salary, pro-rata bonus, 1.5× health premiums) plus equity acceleration and substantial deferred compensation benefit indicate security in transition scenarios—reduces forced-seller risk but could increase personal liquidity post-event .
- Trading signals: 2024 option exercises (4,978 shares; $171,890 value) show some monetization; combined with near-term vesting events (Feb 16/21), monitor Form 4 filings for incremental selling pressure during open windows .
- Governance risk: No pledging disclosed for Ehlers; company-wide policies and clawback reduce headline risk; related-party transactions disclosed elsewhere do not involve Ehlers .
Citations: All data above is sourced from South Plains Financial, Inc. 2025 DEF 14A proxy statement .