Steven F. Retzloff
About Steven F. Retzloff
Executive Chairman of Stellar Bancorp, Inc. and Senior Executive Chairman of Stellar Bank; Class III Director (age 69) and director since 2008; joined Stellar via the Allegiance–CBTX merger in 2022 after serving as Chairman/CEO of Allegiance Bank and Allegiance Bancshares . Education: B.S. in Industrial Engineering (Georgia Tech) and MBA (with distinction) from Wake Forest University . 2024 company performance metrics tied to pay include ROATCE, pre-tax pre-provision ROAA, and net charge-offs; 2024 net income was $115.0M, EPS $2.15, ROAE 7.34%, ROATCE 11.91% . Pay elements emphasize variable, TSR-based long-term incentives and formulaic annual incentives aligned to profitability and credit quality .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Allegiance Bank / Allegiance Bancshares, Inc. | Chairman of Allegiance Bank; CEO of Allegiance; Organizer | Pre-2022 (joined STEL via merger in 2022) | Built Houston community bank; merger of equals created Stellar Bank; leadership continuity as Executive Chairman |
| Sterling Bancshares, Inc. / Sterling Bank | Director; Chairman of Sterling Bancshares | 1987–2006; Chairman 1990–1992 and 2004–2005 | Governance of multi-billion financial institution; oversight and strategic leadership |
| Retzloff Industries, Inc. | Chairman & CEO | Ongoing | Private operating leadership and capital allocation experience |
| Travis Body & Trailer, Inc. | Owner/Manager | Prior to Allegiance | Industrial manufacturing operations and growth |
| General Motors; Bristol Myers; Retzloff Capital Corporation | Various roles | Prior career | Blue-chip and investment experience supports operations and finance skill set |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Houston Food Bank | Director; Treasurer; Chair of Finance Committee | Since 2022 | Financial stewardship in major non-profit |
| Greater Houston Partnership | Director; Chair of Finance Committee; Executive Committee; Audit Committee member | Current | Regional economic leadership; governance expertise |
| Faith in Practice | Director | Current | Non-profit leadership |
| Pharos Capital Partners III | Advisory Director | Current | Private equity advisory experience |
| Kinkaid School Investments Foundation; IBAT; Fuller Texas School of Theology; Texas A&M Mays School Banking Program Advisory Board | Various prior roles | Prior | Community, banking, and educational governance |
Fixed Compensation
| Component (2024) | Amount | Notes |
|---|---|---|
| Base Salary | $566,500 | Increased 3.0% vs. 2023 $550,000 |
| Target Annual Bonus (% of Salary) | 45% | Under formulaic AIP with weighted metrics |
| Actual AIP Bonus Paid | $260,873 | 102.33% of target payout for 2024 |
| All Other Compensation | $43,027 | 401(k) match $20,700; HSA $2,000; auto allowance $15,000; dividends on vested RS $5,327 |
Performance Compensation
Annual Incentive Plan (AIP) – 2024
| Metric | Weight | Threshold (0%) | Target (100%) | Max (150%) | Actual | Payout Factor |
|---|---|---|---|---|---|---|
| ROATCE | 50% | 7% | 11.25%–12.25% | 14.0% | 12.00% | Interpolated; contributed to 102.33% overall |
| Pre-tax, Pre-provision ROAA | 30% | 1.10% | 1.40%–1.55% | 1.75% | 1.35% | Interpolated |
| NCO/Avg Loans (bps) | 20% | 35 | 25–20 | 5 | 9 | Interpolated |
| Total AIP Payout vs Target | — | — | — | — | — | 102.33% of target |
Long-Term Incentive (granted March 15, 2024)
| Award Type | Quantity/Value | Performance / Vesting | Notes |
|---|---|---|---|
| Performance Share Units (PSUs) | 12,075 target units; target value $288,915 | 3-year TSR vs S&P U.S. SmallCap Bank Index: 0% <20th pct; 100% at 45–55th; 200% ≥75th; cliff vest Dec 31, 2026 (service condition) | Monte Carlo grant-date fair value $28.68; earned units 0–200% |
| Restricted Stock Awards (RSAs) | 8,050 shares; target value $192,610 | Time-based vesting in equal thirds on Mar 15, 2025/2026/2027 | Subject to 1-year post-vest holding policy for 2025+ grants |
| Options | None outstanding as of 12/31/2024 | — | Company does not currently grant options to NEOs |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 522,862 shares; 1.00% of outstanding |
| Ownership Breakdown | 61,141 (direct); 27,115 PSAs outstanding; 378,240 (Retzloff Holdings, Ltd. LP); 25,531 (Retzloff Industries, Inc.); 12,598 (SF Retzloff Family LP); 18,237 restricted stock |
| Pledging | No pledge disclosed for Retzloff; other insiders have disclosed pledges (e.g., Egge 23,032; Vitulli 52,643; Williams 608,000) |
| Insider Trading Policy | Pre-clearance required; hedging/short sales prohibited; pledging discouraged and requires prior notice; management updates board on pledges |
| Stock Ownership Guidelines | Adopted Feb 2025: CEO 5x salary; other executive officers 2x salary; directors 5x cash retainer; 5-year compliance window |
| Post-Vest Holding | 1-year post-vest holding requirement for executive officers for 2025+ equity grants |
Vested vs Unvested (as of 12/31/2024)
| Award | Unvested Units | Market Value at $28.35/sh |
|---|---|---|
| RSAs (Nov 1, 2022) | 3,771 shares | $106,908 |
| PSAs (Nov 1, 2022) – est. earned | 23,753 units | $673,398 |
| RSAs (Mar 15, 2023) | 4,329 shares | $122,727 |
| PSAs (Mar 15, 2023) – est. earned | 9,740 units | $276,115 |
| RSAs (Mar 15, 2024) | 8,050 shares | $228,218 |
| PSUs (Mar 15, 2024) – est. at 100% | 12,075 units | $342,326 |
Employment Terms
| Provision | Detail |
|---|---|
| Employment Agreement | None; other than CEO, NEOs are not party to employment agreements |
| Severance (Stellar Bancorp, Inc. Change-in-Control Plan) | Double trigger; upon involuntary termination (not for cause) or good reason within 3 months pre- to 18 months post-CoC: 2.0x (salary + target bonus), pro-rata target bonus, 18 months medical subsidy, up to $25K outplacement; 12-month non-solicit; offsets vs other severance |
| Bank Severance Plan (non-CoC) | Job elimination: cash equal to 4 weeks per completed year (min 26 weeks, max 52 weeks); similar medical subsidy for same duration |
| Equity Treatment (CoC) | RSAs fully accelerate; PSAs/PSUs vest based on performance determined at/change-in-control; unearned forfeited |
| 2024 Hypothetical Severance Values | Involuntary termination in connection with CoC: total $3,699,622; cash severance $1,642,850; LTI acceleration $1,749,691; target bonus $254,925; benefits $52,156 |
Board Governance
- Board service: Class III Director; nominated for election to 2028 term; director since 2008 .
- Leadership: Executive Chairman (management director); CEO (Franklin) separate; Lead Independent Director (Beckworth) presides over executive sessions, agenda setting, and shareholder communications .
- Independence: Board determined Retzloff is not independent (management); 12 of 14 directors are independent .
- Committees: Not listed as member of Audit, Compensation, Corporate Governance/Nominating, or Risk Oversight; committee chairs and financial experts designated among non-management directors .
- Governance enhancements: Declassification proposed (phase-in 2026–2028); director resignation policy (majority vote standard via policy); shareholders can call special meetings (25%); bylaw amendment rights expanded; stock ownership & post-vest holding policies adopted .
Performance & Track Record
- Banking/operating track record: 36 years Houston banking experience; led Allegiance organization through merger; prior chairmanships at Sterling Bancshares .
- Company performance tie-ins: 2024 net income $115.0M; ROATCE 11.91%; AIP paid at 102.33% of target based on ROATCE/PTPP ROAA/NCO outcomes .
- Pay-versus-performance and shareholder support: 2024 say-on-pay approval ~96.5% .
Related Party, Compliance, and Risk Indicators
- Related party transactions: Board notes insider banking transactions at market terms; policy requires Audit Committee approval and regulatory compliance (Reg O/23A/23B) .
- Section 16(a) compliance: One inadvertent late filing for Retzloff related to PSA forfeiture .
- Clawback policy: Dodd-Frank/NYSE-compliant compensation recovery for accounting restatements .
- Hedging/pledging: Hedging banned; pledging discouraged and monitored; Retzloff has no disclosed pledge .
Compensation Structure Analysis
- Mix skewed to variable pay: Significant at-risk elements via AIP and PSUs aligned with profitability, credit quality, and TSR; no stock options, no excise tax gross-ups; limited perquisites .
- Metrics changes and rigor: 2024 AIP metrics set below 2023 actuals reflecting industry macro (rates, credit cost expectations); PSU design moved to 3-year TSR relative index with cliff vesting (balancing retention with performance) .
- Ownership alignment strengthened: New 2x salary ownership guideline and 1-year post-vest holding requirement for executives (from Feb 2025) .
Director Service History and Compensation (Dual-role implications)
- Board service: Executive Chairman and Director; not independent, but separation of CEO/Chair roles and presence of Lead Independent Director mitigate governance concerns .
- Committee roles: None disclosed; thus reduced risk of compensation oversight conflicts; Compensation Committee is independent and uses external consultants (Aon) .
- Director fees: Employee-directors do not receive separate director fees; non-employee directors received $60,000 RS grants and cash retainers per schedule (context for board norms) .
Investment Implications
- Alignment and retention: Large personal stake (1.00% of shares) and TSR-based PSUs with 3-year performance horizon align incentives with shareholder returns; new 1-year post-vest holding policy reduces near-term selling pressure from vestings .
- Supply overhang watch: RSA tranches vest Mar 15, 2025/2026/2027; PSUs cliff vest based on TSR at Dec 31, 2026—monitor potential insider share deliveries and any 10b5-1 plans around these dates .
- Change-in-control economics: Double-trigger severance and full RSA acceleration; hypothetical CoC termination value of ~$3.7M indicates meaningful retention economics but manageable relative to role .
- Governance quality: Non-independent Executive Chair mitigated by separate CEO, Lead Independent Director, independent committees, clawback, no options/repricing, and shareholder-friendly declassification and bylaw changes—reduces governance discount risk .
- Risk flags: One late Section 16 filing (minor); pledging risk appears low for Retzloff (none disclosed), though broader insider pledges exist—monitor .