DEF 14A 1 tmb-20210622xdef14a.htm DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant  

Filed by a Party other than the Registrant  

Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12

Hilltop Holdings Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)

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(2)

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(3)

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Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)

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Date Filed:


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Hilltop Holdings Inc.

6565 Hillcrest Avenue

Dallas, Texas 75205

Tel: 214.855.2177

Fax: 214.855.2173

www.hilltop-holdings.com

NYSE: HTH

NOTICE OF 2021 ANNUAL MEETING

AND PROXY STATEMENT

April 29, 2021

You are cordially invited to attend our 2021 Annual Meeting of Stockholders (the “Annual Meeting”) at 10:00 a.m., Dallas, Texas, local time, on July 22, 2021. The meeting will be held at the offices of Hilltop Holdings at 6565 Hillcrest Avenue, 5th Floor, Dallas, Texas 75205. Although we currently intend to hold the Annual Meeting in person, we are actively monitoring the impact that the coronavirus (COVID-19) may have on the meeting. We are committed to maintaining a safe and healthy environment at the Annual Meeting and, as a result, may determine that it is necessary or appropriate to hold the meeting solely by means of remote communication. If we take this step, details about how to participate in the Annual Meeting will be announced in advance via press release, posted on our website at http://ir.hillop-holdings.com and filed with the Securities and Exchange Commission as additional proxy material.

This booklet includes the formal notice of the meeting and our Proxy Statement. The Proxy Statement tells you about the matters to be addressed, and the procedures for voting, at the meeting.

YOUR VOTE IS VERY IMPORTANT. Even if you only have a few shares, we want your shares to be represented. If your shares are held in a brokerage account, your broker does not have discretion to vote on your behalf with respect to electing directors or certain other non-routine matters. Accordingly, you must provide specific voting instructions to your broker in order to vote. Please vote promptly in order to ensure that your shares are represented at the meeting.

The Notice of Internet Availability of Proxy Materials or this Proxy Statement and the accompanying proxy card, as applicable, Notice of 2021 Annual Meeting of Stockholders and annual report for the year ended December 31, 2020 will be provided to stockholders of record on or about June 8, 2021.

We look forward to seeing you at the meeting.

Very truly yours,

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Jeremy B. Ford

President and Chief Executive Officer

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JULY 22, 2021.

Our Proxy Statement and our annual report for the fiscal year ended December 31, 2020 are both available at www.proxyvote.com.



Notice of 2021 Annual Meeting of Stockholders

To Be Held on July 22, 2021


2022

WHEN:

Thursday, July 22, 2021, at 10:00 a.m., Dallas, Texas local time

WHERE:

6565 Hillcrest Avenue, 5th Floor

Dallas, Texas 75205

WHY:

At this meeting, you will be asked to:

1.

Elect nineteen directors to serve on our Board of Directors until the 2022 annual meeting of stockholders or until their successors are duly elected and qualified;

2.

Conduct a non-binding advisory vote to approve executive compensation;

3.

Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2021; and

4.

Transact any other business that may properly come before the meeting and any adjournments or postponements of the meeting.

WHO MAY VOTE:

Stockholders of record at the close of business on May 11, 2021.

ANNUAL REPORT:

Our 2020 Annual Report is enclosed.

Pursuant to rules promulgated by the Securities and Exchange Commission, we are providing access to our proxy materials, including this proxy statement and our annual report for the year ended December 31, 2020, over the Internet. As a result, we are providing to many of our stockholders a Notice of Internet Availability of Proxy Materials instead of a paper copy of our proxy materials. The notice contains instructions on how to access those proxy materials over the Internet, as well as instructions on how to request a paper copy of our proxy materials. All stockholders who are not sent a notice will be sent a paper copy of our proxy materials by mail. This electronic distribution process reduces the environmental impact and lowers the costs of printing and distributing our proxy materials.

Your vote is very important. Please read the Proxy Statement and voting instructions on the enclosed proxy card. Then, whether or not you plan to attend the Annual Meeting in person, and no matter how many shares you own, please vote by Internet, telephone or by marking, signing, dating and promptly returning the enclosed proxy card in the enclosed envelope, which requires no additional postage if mailed in the United States. Please see “General Information – What should I do if I want to attend the Annual Meeting in person?” for information on how to obtain directions to be able to attend the meeting and vote in person.

By Order of the Board of Directors,

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Corey G. Prestidge

Executive Vice President, General Counsel & Secretary

April 29, 2021

Dallas, Texas

Although we currently intend to hold the Annual Meeting in person, we are actively monitoring the impact that the coronavirus (COVID-19) may have on the meeting. We are committed to maintaining a safe and healthy environment at the Annual Meeting and, as a result, may determine that it is necessary or appropriate to hold the meeting solely by means of remote communication. If we take this step, details about how to participate in the Annual Meeting will be announced in advance via press release, posted on our website at http://ir.hilltop-holdings.com and filed with the SEC as additional proxy material.


PROXY STATEMENT

TABLE OF CONTENTS

o

Page

GENERAL INFORMATION

1

PROPOSAL ONE ELECTION OF DIRECTORS

5

General

5

Nominees for Election as Directors

5

Director Independence

10

Meeting Attendance

11

Vote Necessary to Elect Directors

11

Director Compensation

12

Board Committees

14

Corporate Governance

17

Director Nomination Procedures

21

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

23

Principal Stockholders

23

Security Ownership of Management

24

MANAGEMENT

25

Executive Officers

25

Compensation Discussion and Analysis

27

Executive Summary

27

Elements of Total Direct Compensation

32

Governance Highlights

33

Compensation Program Philosophy and Objectives

34

Elements of our Executive Compensation Program

35

Compensation of Our Non-Executive Chairman of the Board

41

Severance and Other Post-Termination Arrangements

41

Executive Compensation Process

44

Executive Compensation Programs and Policies

47

Compensation Committee Report

48

Executive Compensation

49

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

51

Potential Payments Upon Termination or Change-in-Control

57

CEO Pay Ratio

62

Compensation Committee Interlocks and Insider Participation

62

Delinquent Section 16(a) Reports

63

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

64

PROPOSAL TWO — ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

67

Vote Necessary to Approve, on a Non-Binding Advisory Basis, Executive Compensation

67

PROPOSAL THREE — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

68

Vote Necessary to Ratify the Appointment

68

Report of the Audit Committee

68

Independent Auditor’s Fees

69

STOCKHOLDER PROPOSALS FOR 2022

70

OTHER MATTERS

70

MULTIPLE STOCKHOLDERS SHARING ONE ADDRESS

70

ANNUAL REPORT

70

QUESTIONS

71

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HILLTOP HOLDINGS INC.

6565 Hillcrest Avenue

Dallas, Texas 75205

PROXY STATEMENT

2021 Annual Meeting of Stockholders

To be Held on July 22, 2021

GENERAL INFORMATION

The Notice of Internet Availability of Proxy Materials, or this Proxy Statement and the accompanying proxy card, as applicable, Notice of 2021 Annual Meeting of Stockholders and Annual Report for the year ended December 31, 2020 will be provided to stockholders of record on or about June 8, 2021.

Unless the context otherwise indicates, all references in this Proxy Statement to the “Company,” “we,” “us,” “our” or “ours” or similar words are to Hilltop Holdings Inc. and its direct and indirect wholly owned subsidiaries, references to “Hilltop” refer solely to Hilltop Holdings Inc., references to “PlainsCapital” refer to PlainsCapital Corporation (a wholly owned subsidiary of Hilltop), references to “Securities Holdings” refer to Hilltop Securities Holdings LLC (a wholly owned subsidiary of Hilltop), references to “Hilltop Securities” refer to Hilltop Securities Inc. (a wholly owned subsidiary of Securities Holdings), references to the “Bank” refer to PlainsCapital Bank (a wholly owned subsidiary of PlainsCapital), references to “First Southwest” refer to First Southwest Holdings, LLC (a wholly owned subsidiary of Securities Holdings) and its subsidiaries as a whole, references to “PrimeLending” refer to PrimeLending, a PlainsCapital Company (a wholly owned subsidiary of the Bank) and its subsidiaries as a whole, and references to “NLC” refer to National Lloyds Corporation (formerly a wholly owned subsidiary of Hilltop) and its subsidiaries as a whole.

Why am I receiving these proxy materials?

The Board of Directors of Hilltop, or the Board of Directors, has made these materials available to you on the Internet or has delivered printed versions of these materials to you by mail in connection with the Board of Directors’ solicitation of proxies for use at our 2021 Annual Meeting of Stockholders, or the Annual Meeting, which will take place at 10:00 a.m. (Dallas, Texas local time) on Thursday, July 22, 2021, at 6565 Hillcrest Avenue, 5th Floor, Dallas, Texas 75205. This Proxy Statement describes matters on which you, as a stockholder, are entitled to vote. This Proxy Statement also gives you information on these matters so that you can make an informed decision with respect to your vote.

Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of printed proxy materials?

In accordance with rules promulgated by the Securities and Exchange Commission, or the SEC, instead of mailing a printed copy of our proxy materials to all of our stockholders, we have elected to furnish such materials to selected stockholders by providing access to these documents over the Internet. Accordingly, on or about June 8, 2021, we will provide a Notice of Internet Availability of Proxy Materials, or the Notice, to selected stockholders of record and beneficial owners. These stockholders will have the ability to access the proxy materials on a website referred to in the Notice or to request to receive a printed set of the proxy materials by calling the toll-free number found on the Notice. We encourage you to take advantage of the availability of the proxy materials on the Internet in order to help reduce the environmental impact of the printing and distribution of our proxy materials.

How can I get electronic access to the proxy materials?

The Notice provides you with instructions regarding how to:

Øview our proxy materials for the Annual Meeting on the Internet;
Øvote your shares after you have viewed our proxy materials;
Øregister to attend the meeting in person;
Ørequest a printed copy of the proxy materials; and
Øinstruct us to send our future proxy materials to you electronically by email.

1


Copies of the proxy materials are available for viewing at www.proxyvote.com.

You may have received proxy materials by email. Even if you received a printed copy of our proxy materials, you may choose to receive future proxy materials by email. Choosing to receive your future proxy materials by email will lower our costs of delivery and will reduce the environmental impact of printing and distributing our proxy materials. If you choose to receive our future proxy materials by email, you will receive an email next year with instructions containing a link to view those proxy materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it or for so long as the email address provided by you is valid.

What am I voting on?

At the Annual Meeting, stockholders will be asked to:

ØElect nineteen directors to serve on our Board of Directors until the 2022 annual meeting of stockholders or until their successors are duly elected and qualified;
ØConduct a non-binding advisory vote to approve executive compensation;
ØRatify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2021; and
ØTransact any other business that may properly come before the Annual Meeting and any adjournments or postponements of the Annual Meeting.

What are the Board of Directors’ recommendations?

The Board of Directors recommends that you vote your shares:

ØFOR each of our director candidates;
ØFOR the approval, on a non-binding advisory basis, of the compensation of our named executive officers; and
ØFOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2021.

Who is entitled to vote?

Holders of record of our common stock at the close of business on May 11, 2021 are entitled to vote at the Annual Meeting. With respect to each matter presented, a stockholder is entitled to cast one vote for each share of common stock owned at the close of business on May 11, 2021. Our stockholders are not entitled to cumulative voting rights, and dissenters’ rights are not applicable to the matters being voted upon.

How do I vote?

If you are a stockholder of record, there are four ways to vote:

ØIn Person. You may vote in person at the Annual Meeting. Bring your printed proxy card if you received one by mail. Otherwise, we will provide stockholders of record with a ballot at the Annual Meeting. We recommend that you vote by proxy even if you plan to attend the Annual Meeting. You always can change your vote at the Annual Meeting.

ØVia the Internet. You may vote by proxy via the Internet by visiting www.proxyvote.com. Have your proxy card or Notice in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.

ØVia Telephone. If you received or requested printed copies of the proxy materials by mail, you may vote by proxy by calling the toll-free number found on the proxy card.

2


ØVia Mail. If you received or requested printed copies of the proxy materials by mail, you may vote by proxy by marking, signing and dating the proxy card and sending it back in the envelope provided.

If you are the beneficial owner of shares held by a broker or other nominee, you may instruct your broker or nominee to vote your shares by following the instructions that the broker or nominee provides to you. New York Stock Exchange, or NYSE, rules prohibit your broker from voting for the election of directors and the approval of executive compensation on your behalf without specific voting instructions from you. Many brokers allow stockholders to provide voting instructions by mail, telephone and the Internet.

How do proxies work?

Our Board of Directors is asking for your proxy. Giving your proxy to the persons named by us means you authorize them to vote your shares at the Annual Meeting in the manner you direct. You may vote for all of our director candidates or withhold your vote as to one or more director candidates, and you may vote for or against, or abstain from voting on, executive compensation and the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2021.

If you are a stockholder of record and (a) you indicate when voting on the Internet or by telephone that you wish to vote as recommended by our Board of Directors or (b) you sign and return the enclosed proxy card but do not specify how your shares are to be voted, your shares will be voted FOR the election of all of our director candidates, FOR the approval, on a non-binding advisory basis, of our executive compensation, and FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2021.

If you are the beneficial owner of shares held by a broker or other nominee, also referred to as held in “street name,” and you do not provide such broker or nominee with specific voting instructions, under the rules promulgated by the NYSE, the broker or nominee that holds your shares may generally vote on “routine” matters at its discretion, but cannot vote on “non-routine” matters. If the broker or nominee that holds your shares does not receive instructions from you on how to vote your shares on a “non-routine” matter, that broker or nominee will inform the inspector of election that it does not have the authority to vote on such matters with respect to your shares, which is generally referred to as a “broker non-vote.”

You may receive more than one proxy or voting card depending on how you hold your shares. Shares registered in your name are covered by one card. If you also hold shares through a broker or other nominee, you also may receive materials from them asking how you want those shares voted. To be sure that all of your shares are voted, we encourage you to respond to each request you receive.

Which matters are considered “routine” or “non-routine”?

The ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2021 is considered a “routine” matter. A broker or other nominee may generally vote on routine matters and, therefore, no broker non-votes are expected to exist with respect to this matter. All other matters set forth in this Proxy Statement are matters that we believe will be designated “non-routine” matters. A broker or other nominee cannot vote without instructions on non-routine matters and, therefore, there may be broker non-votes on all matters other than the ratification of the appointment of PricewaterhouseCoopers LLP.

Can I change my vote or revoke my proxy after I have voted?

You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting (or before any earlier deadline specified in the Notice or the proxy card) by (a) voting again via the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the Annual Meeting will be counted), (b) signing and returning a new proxy card with a later date or creating a new electronic voting instruction form with a later date or (c) attending the Annual Meeting and voting in person. Your attendance at the Annual Meeting, however, will not automatically revoke your proxy unless you vote again at the Annual Meeting or specifically request that your prior proxy be revoked by delivering, prior to the Annual Meeting, a written notice of revocation to the corporate Secretary at the address listed under “Questions” on page 71.

3


Will my shares be voted if I don’t sign a proxy?

If you hold your shares directly in your own name, they will not be voted unless you provide a proxy or attend the Annual Meeting and vote in person. Under certain conditions, shares that you own that are held by a broker or nominee may be voted even if you do not provide voting instructions to the broker or nominee. As discussed above under “General Information— How do proxies work?”, brokerage firms have the authority under applicable rules to vote on certain “routine” matters, including the ratification of the appointment of auditors.

What constitutes a quorum?

In order to carry on the business of the Annual Meeting, a quorum must be present. This means that the holders of at least a majority of the outstanding shares eligible to be cast must be represented at the Annual Meeting, either in person or by proxy. Any shares that we hold for our own benefit may not be voted and are not counted in the total number of outstanding shares eligible to be voted. Both abstentions and broker non-votes (described above) are counted as present for purposes of determining the presence of a quorum. On April 28, 2021, we had 82,389,924 shares of common stock outstanding.

How many votes are needed for approval?

Election of Directors

The nineteen director candidates receiving the highest number of affirmative votes, or a plurality, will be elected as directors. For purposes of the election of directors, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for purposes of determining a quorum. Stockholders may not cumulate votes in the election of directors.

Advisory Vote to Approve Executive Compensation

The affirmative vote of a majority of the votes cast on the matter is required to approve, on a non-binding advisory basis, our executive compensation. The Compensation Committee of the Board of Directors will review the results of this advisory vote and will take the results into account in making future determinations concerning executive compensation. For purposes of the advisory vote on executive compensation, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for purposes of determining a quorum.

Ratification of Independent Registered Public Accounting Firm

The appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2021 will be ratified if this proposal receives the affirmative vote of a majority of the votes cast on the matter. Brokers have the authority to vote on this proposal in the absence of contrary instructions from a beneficial owner. If this appointment is not ratified by our stockholders, the Audit Committee may reconsider its selection of PricewaterhouseCoopers LLP. With respect to this proposal, abstentions will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for purposes of determining a quorum. Because it is a routine matter, we do not expect any broker non-votes with respect to this proposal.

Who conducts the proxy solicitation?

Our Board of Directors is soliciting the proxies, and we will bear all costs of this solicitation, including the preparation, assembly, printing and mailing of this Proxy Statement and the Notice. Copies of proxy materials will be furnished to banks, brokerage houses and other agents and nominees holding shares in their names that are beneficially owned by others so that they may forward the proxy materials to those beneficial owners. In addition, if asked, we will reimburse these persons for their reasonable expenses in forwarding the proxy materials to the beneficial owners. We have requested banks, brokerage houses and other custodians, nominees and fiduciaries to forward all proxy materials to the beneficial owners of the shares that they hold of record. Certain of our officers and employees also may solicit proxies on our behalf by mail, email, phone or fax or in person.

4


What should I do if I want to attend the Annual Meeting in person?

You will need an admission ticket to attend the Annual Meeting. Attendance at the Annual Meeting will be limited to stockholders of record at the close of business on May 11, 2021 (or their authorized representatives) having an admission ticket or proof of their share ownership, and guests of the Company. If you plan to attend the Annual Meeting, please indicate that you intend to do so when you are voting by telephone or Internet or follow the instructions on your proxy card, and we will promptly mail an admission ticket to you.

If your shares are held in the name of a bank, broker or other nominee and you plan to attend the Annual Meeting, you can obtain an admission ticket in advance by providing proof of your ownership, such as a bank or brokerage account statement, to the corporate Secretary at the address listed under “Questions” on page 71. If you do not have an admission ticket, you must show proof of your ownership of the common stock of the Company at the registration table at the door.

PROPOSAL ONE — ELECTION OF DIRECTORS

General

At the recommendation of the Nominating and Corporate Governance Committee, our Board of Directors has nominated the director candidates named under “— Nominees for Election as Directors” below.

Our Board of Directors oversees our management on your behalf. The Board of Directors reviews our long-term strategic plans and exercises direct decision-making authority on key issues, such as the approval of business combination transactions, the authorization of dividends, the selection of the Chief Executive Officer, setting the scope of executives’ authority to manage our day-to-day operations and the evaluation of executives’ performance.

Our Board of Directors is not classified; thus, all of our directors are elected annually. The Nominating and Corporate Governance Committee has recommended, and our Board of Directors has nominated, for re-election nineteen persons currently serving as directors whose terms are expiring at the Annual Meeting.

If elected, each of the persons nominated as a director will serve until the next annual meeting of stockholders and until his or her successor is duly elected and qualified. Biographical information on each of our nominees is given below.

Nominees for Election as Directors

=

Rhodes R. Bobbitt

Age 75

Mr. Bobbitt has served as a director of Hilltop since November 2005. Mr. Bobbitt is retired. From 1987 until June 2004, he served as a Managing Director and the Regional Office Manager of the Private Client Service Group of Credit Suisse First Boston/Donaldson, Lufkin & Jenrette. Mr. Bobbitt was formerly Vice President of Security Sales in the Dallas office of Goldman, Sachs & Company from 1969 until 1987. He also serves on the Board of Directors of First Acceptance Corporation.

Tracy A. Bolt

Age 57

Mr. Bolt has served as a director of Hilltop since our acquisition of PlainsCapital in November 2012. He previously served as a director of PlainsCapital from September 2009 to November 2012. In 1994, Mr. Bolt co-founded Hartman Leito & Bolt, LLP, an accounting and consulting firm based in Fort Worth, Texas, where he served as a partner and a member of the firm’s leadership committees until its sale in June 2014. Mr. Bolt holds a Bachelor of Science and Master of Science from the University of North Texas, and he is a certified public accountant. He currently serves as a business advisor to numerous management teams, public and private company boards, not for profit organizations and trusts.

5


J. Taylor Crandall

Age 67

Mr. Crandall has served as a director of Hilltop since April 2015. Mr. Crandall is a founding Managing Partner of Oak Hill Capital Management, LLC, or OHCM, and has served OHCM (or its predecessors) since 1986. He has senior responsibility for originating, structuring and managing investments for OHCM’s Media and Telecom and Technology industry groups. Mr. Crandall has also served as Chief Operating Officer of Keystone, Inc., the primary investment vehicle for Robert M. Bass. Prior to joining OHCM, Mr. Crandall was a Vice President with the First National Bank of Boston. Mr. Crandall serves on the board of directors of Intermedia.net, Inc., Wave Division Holdings, LLC, Omada International, Pulsant Limited, Berlin Packaging LLC and Powdr Corporation. Mr. Crandall is the secretary-treasurer of the Anne T. and Robert M. Bass Foundation, the trustee of the Lucile Packard Foundation for Children’s Health and currently serves on the boards of trustees of The Park City Foundation and the U.S. Ski and Snowboard Team Foundation.

Charles R. Cummings

Age 84

Mr. Cummings has served as a director of Hilltop since October 2005. Mr. Cummings currently serves as the Co-Manager of Acoustical Control LLC, a provider of noise abatement equipment primarily for the oil and gas industry. Until the companies were sold in September 2018, he served as the Co-Manager of DCB Solutions, LLC, a service provider to the waste industry, and Argyle Equipment, LLC, a lessor of equipment to the waste industry. In addition, Mr. Cummings is the President and Chief Executive Officer of CB Resources LLC, an investor in the oil and natural gas industry, and Container Investments, LLC, a lessor of equipment to the waste industry, each of which positions he has held since 1999 and 1991, respectively. Until its sale in January 2014, he served as the Chairman of Aaren Scientific, Inc., a manufacturer of intraocular lenses used in cataract surgery. From 1998 through 2008, he was the Chairman and Chief Executive Officer of Aaren Scientific, Inc. and its predecessors. In 1994, Mr. Cummings co-founded I.E.S.I. Corporation, a regional, non-hazardous waste management company, and served as a director until its sale in 2005. Prior to that, he served as a Managing Director of AEA Investors, Inc., a private investment firm. Prior to 1979, he was a partner with Arthur Young & Company.

Hill A. Feinberg

Age 74

Mr. Feinberg serves as Chairman Emeritus of Hilltop Securities, a transition from Mr. Feinberg’s previous role as Chairman of Hilltop Securities until June 30, 2019. Until February 20, 2019, he served as Chief Executive Officer of Hilltop Securities, a position he had held since 1991 with First Southwest. He has also served as a director of Hilltop since our acquisition of PlainsCapital in November 2012. He previously served as a director of PlainsCapital from December 31, 2008 (in conjunction with PlainsCapital’s acquisition of First Southwest) to November 2012. Prior to joining First Southwest, Mr. Feinberg was a senior managing director at Bear Stearns & Co. Mr. Feinberg is a past chairman of the Municipal Securities Rulemaking Board, the self-regulatory organization with responsibility for authoring the rules that govern the municipal securities activities of registered brokers. Mr. Feinberg was a member of the board of directors of Energy XXI (Bermuda) Limited, a public company that filed bankruptcy in 2016. Mr. Feinberg also formerly served as a member of the board of directors of Compass Bancshares, Inc. and Texas Regional Bancshares, Inc., as an advisory director of Hall Phoenix Energy, LLC and as the non-executive chairman of the board of directors of General Cryogenics, Inc.

6


Gerald J. Ford

Age 76

Mr. Gerald J. Ford has served as Chairman of the Board of Hilltop since August 2007, and has served as a director of Hilltop since June 2005. Mr. Gerald J. Ford served as interim Chief Executive Officer of Hilltop from January 1, 2010 until March 11, 2010. Mr. Gerald J. Ford is a banking and financial institutions entrepreneur who has been involved in numerous mergers and acquisitions of private and public sector financial institutions, primarily in the Southwestern United States, over the past 45 years. In that capacity, he acquired and consolidated 30 commercial banks from 1975 to 1993, forming First United Bank Group, Inc., a multi-bank holding company for which he functioned as Chairman of the Board and Chief Executive Officer until its sale in 1994. During this period, he also led investment consortiums that acquired numerous financial institutions, forming in succession, First Gibraltar Bank, FSB, First Madison Bank, FSB and First Nationwide Bank. Mr. Gerald J. Ford also served as Chairman of the Board of Directors and Chief Executive Officer of Golden State Bancorp Inc. and its subsidiary, California Federal Bank, FSB, from 1998 to 2002. He currently serves as a director of Freeport McMoRan Copper and Gold Inc. and Mechanics Bank. Mr. Gerald J. Ford previously served as Chairman of Pacific Capital Bancorp and a director of Scientific Games Corporation, First Acceptance Corporation, SWS Group, Inc. and McMoRan Exploration Co. Mr. Gerald J. Ford also currently serves on the Board of Trustees of Southern Methodist University, is the Co-Managing Partner of Ford Financial Fund II, L.P. and Ford Financial Fund III, L.P., private equity funds. Hilltop’s President and Chief Executive Officer, Jeremy B. Ford, is the son of Mr. Gerald J. Ford, and Hilltop’s Executive Vice President, General Counsel and Secretary, Corey G. Prestidge, is the son-in-law of Mr. Gerald J. Ford.

Jeremy B. Ford

Age 46

Mr. Jeremy B. Ford is the Chief Executive Officer of Hilltop and has served as the Chief Executive Officer or Co-Chief Executive Officer of Hilltop since March 2010. He also has served as President and a director of Hilltop since 2010. Mr. Jeremy B. Ford has worked in the financial services industry for over 23 years, primarily focused on operating and acquiring depository institutions and financial services companies. Mr. Jeremy B. Ford also is currently Chairman of the Board of First Acceptance Corporation. Prior to becoming President and Chief Executive Officer of Hilltop, he worked at Ford Financial Fund, L.P., a private equity fund, Diamond A-Ford Corporation, Liberté Investors Inc., California Federal Bank, FSB, and Salomon Smith Barney. Jeremy B. Ford is the son of Gerald J. Ford, Hilltop’s Chairman of the Board, and the brother-in-law of Corey G. Prestidge, Hilltop’s Executive Vice President, General Counsel and Secretary.

J. Markham Green

Age 77

Mr. Green has served as a director of Hilltop since February 2004. Mr. Green is a private investor. From 2001 to 2003, he served as Vice Chairman of the Financial Institutions and Governments Group in investment banking at JP Morgan Chase. From 1993 until joining JP Morgan Chase, Mr. Green was involved in the start-up, and served on the boards, of eight companies, including Affordable Residential Communities Inc., the predecessor company to Hilltop. From 1973 to 1992, Mr. Green served in various capacities at Goldman, Sachs & Co. in investment banking. He was a general partner of Goldman, Sachs & Co. and co-head of its Financial Services Industry Group. Mr. Green previously served on the board of directors of MENTOR/The National Mentoring Partnership and as Chairman of the Board of PowerOne Media LLC. He actively supports many academic and philanthropic organizations, primarily in Texas.

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William T. Hill, Jr.

Age 78

Mr. Hill has served as a director of Hilltop since April 2008. He currently has his own law firm. Prior to 2012, Mr. Hill was of counsel at Fitzpatrick Hagood Smith & Uhl, a criminal defense firm. Prior to that, Mr. Hill served as the Dallas District Attorney and the Chief Prosecuting Attorney of the Dallas District Attorney’s office. During his tenure at the District Attorney’s office, Mr. Hill restructured the office of 250 lawyers and 150 support personnel, including the computerization of the office in 1999. For more than four decades, Mr. Hill has been a strong community leader serving on a number of charitable boards and receiving numerous civic awards, including President of the SMU Mustang Board of Directors and Chairman of the Doak Walker Running Back Award for its first year. Mr. Hill currently serves on the board of directors of Oncor Electric Delivery Company LLC, Oncor Electric Delivery Holdings Company LLC and Baylor Hospital Foundation, and is actively involved in the Mercy Street Mission. Mercy Street is a Christian-based organization serving West Dallas children by placing mentors with the children.

Charlotte Jones

Age 54

Ms. Jones has served as a director of Hilltop since our acquisition of PlainsCapital in November 2012. She previously served as a director of PlainsCapital from September 2009 to November 2012. She currently serves as Executive Vice President and Chief Brand Officer for the Dallas Cowboys Football Club, Ltd., a National Football League team. She has worked in various capacities for the Dallas Cowboys organization since 1989. Recognized as one of the most powerful women in sports, Ms. Jones is Chairman of the NFL Foundation, and serves on the NFL Conduct Committee, NFL Health and Safety Committee and the NFL Legalized Sports Betting Committee. In the philanthropy space, Ms. Jones served as the first female Chairman of The Salvation Army’s National Advisory Board. She is involved with a number of charitable organizations, including The Boys and Girls Clubs of America, The Rise School, the Southwest Medical Foundation, the Dallas Symphony, The Dallas Center for Performing Arts Foundation, the Shelton School, TACA, and Make-a-Wish North Texas Foundation. Since March 2020, Ms. Jones has served as Chairman of the National Medal of Honor Museum Foundation.

Lee Lewis

Age 69

Mr. Lewis has served as a director of Hilltop since our acquisition of PlainsCapital in November 2012. He previously served as a director of PlainsCapital from 1989 to November 2012. He founded in 1976, and currently serves as the Chief Executive Officer of, Lee Lewis Construction, Inc., a construction firm based in Lubbock, Texas. Mr. Lewis is a member of the American General Contractors Association, West Texas Chapter, Chancellors Council for the Texas Tech University System, and Red Raider Club.

Andrew J. Littlefair

Age 60

Mr. Littlefair has served as a director of Hilltop since our acquisition of PlainsCapital in November 2012. He previously served as a director of PlainsCapital from September 2009 to November 2012. He is a co-founder of Clean Energy Fuels Corp., a provider of compressed and liquefied natural gas in the United States and Canada that is publicly traded on the NASDAQ Global Select Market, and has served as that company’s President, Chief Executive Officer and a director since June 2001. From 1996 to 2001, Mr. Littlefair served as President of Pickens Fuel Corp., and from 1987 to 1996, he served in various management positions at Mesa, Inc., an energy company. From 1983 to 1987, Mr. Littlefair served in the Reagan Administration as a Staff Assistant to the President. He served as the Chairman of NGV America, the leading U.S. advocacy group for natural gas vehicles, from March 1993 to March 2011.

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W. Robert Nichols, III

Age 76

Mr. W. Robert Nichols, III has served as a director of Hilltop since April 2008. Mr. W. Robert Nichols, III has been a leader in the construction machinery business since 1966. He was the president of Conley Lott Nichols, a dealer for several manufacturers of construction machinery, until its sale in 2012. In 2013, he purchased an oilfield services company in Midland, Texas, for which he served as Chairman and President until January 2020. He has served on numerous bank and bank holding company boards, including United New Mexico Bancorp and Ford Bank Group. Mr. W. Robert Nichols, III is active in civic and charitable activities, serving as an active director at M.D. Anderson Hospital, The Nature Conservancy of Texas and Mercy Street.

Thomas C. Nichols

Age 73

Mr. Thomas C. Nichols has served as a director of Hilltop since August 2020. Mr. Thomas C. Nichols is the owner and Chief Executive Officer of Carlile Holdings, Inc., a family investment office. He served as Chairman and Chief Executive Officer of Carlile Bancshares, Inc. from March 2008 until its April 2017 acquisition by Independent Bancshares, Inc., for which he served as a director until June 2020. Mr. Nichols has acquired, merged and sold banking organizations and other financial services companies for over 30 years. He began his banking career in 1969 as a bank examiner with the FDIC.

Kenneth D. Russell

Age 72

Mr. Russell has served as a director of Hilltop since August 2010. Mr. Russell currently serves as the Chief Executive Officer of First Acceptance Corporation. Prior to that, he served as the President and Chief Executive Officer of Mechanics Bank from June 2015 to October 2016. Mr. Russell has been a Principal of Ford Financial Fund II, L.P., a private equity fund based in Dallas, Texas, since 2010. Over a long career at KPMG, he rose from a staff accountant in the U.S. division to become a member of KPMG Germany’s managing Board of Directors. During 20 years in KPMG LLP’s Dallas office, he led the engagement efforts with the firm’s regional banking, thrift and other financial service clients. In 1993, Mr. Russell joined KPMG’s national office in New York and led their financial services advisory unit, which supported many of the nation’s largest banks. In 2001, he joined the Managing Board for KPMG in Germany, where he served as the global lead partner in the firm’s relationship with Deutsche Bank. That position entailed managing and consulting on banking operations in over 50 countries for the multi-national German bank. Mr. Russell retired from the KPMG Germany Managing Board in 2008 in order to lead a new Partner Mentoring Program for KPMG’s offices throughout Europe, working to help young professionals become category and practice leaders. He also serves on the Board of Directors of First Acceptance Corporation and Mechanics Bank.

A. Haag Sherman

Age 55

Mr. Sherman has served as a director of Hilltop since our acquisition of PlainsCapital in November 2012. He previously served as a director of PlainsCapital from September 2009 to November 2012. Mr. Sherman is the Chief Executive Officer of Tectonic Holdings LLC, a financial and bank holding company serving small businesses (e.g. dental practices), and has preferred stock quoted on Nasdaq Global Markets and also owns an energy business. Prior thereto, Mr. Sherman co-founded and served in various executive positions (including Chief Executive Officer and Chief Investment Officer) of Salient Partners, LP, a Houston-based investment firm. In addition, he previously served as an executive officer and partner of The Redstone Companies where he, among other things, managed a private equity portfolio. Mr. Sherman currently serves as a director of CBIZ, Inc. (NYSE: CBZ) and previously served as a director of Miller Energy Resources and ZaZa Energy Corp. Mr. Sherman has served as an adjunct professor of law at The University of Texas School of Law. Mr. Sherman previously practiced corporate law at Akin, Gump, Strauss, Hauer & Feld, LLP and was an auditor at Price Waterhouse, a public accounting firm. Mr. Sherman is an attorney and certified public accountant.

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Jonathan S. Sobel

Age 54

Mr. Sobel has served as a director of Hilltop since July 2019. In addition, he has served as Non-Executive Chairman of Hilltop Securities Inc. since July 2019. Mr. Sobel serves as a Partner of Ford Management II, L.P. and Ford Management III, L.P., and the general partner of Ford Financial Fund II, L.P. and Ford Financial Fund III, L.P. He also is the Managing Member of DTF Holdings, LLC, which provides consulting and advisory services to the Ford family. Prior to forming DTF Holdings, LLC, Mr. Sobel was an employee of Goldman Sachs & Co. from 1987 to 2008, and was a Partner Managing Director from 1998 to 2008. While at Goldman Sachs, Mr. Sobel was Global Head of the Mortgage Department, Global Head of Money Markets, head of the firm’s Global Bank Group, and the Chief Risk Officer for Goldman Sachs Asset Management. Mr. Sobel also was a member of Goldman Sachs’ Capital, Risk and Finance Committees. He is a trustee of the Hospital for Special Surgery and the Whitney Museum. Mr. Sobel holds a B.A. in Economics from Columbia and is a member of the Executive Committee of the Columbia College Alumni Association.

Robert C. Taylor, Jr.

Age 73

Mr. Taylor has served as a director of Hilltop since our acquisition of PlainsCapital in November 2012. He previously served as a director of PlainsCapital from 1997 to November 2012. He has been engaged in the wholesale distribution business in Lubbock, Texas since 1971. Mr. Taylor currently serves on the executive team for United Supermarkets, LLC, a retail grocery business in Texas since 1915, with involvement in government relations, real estate, innovation and special projects. Mr. Taylor retired in March 2021 as Chief Executive Officer for United Supermarkets, LLC, a role held since his appointment in February 2009. He also serves on the board of directors of United Supermarkets, LLC. Prior to that appointment, Mr. Taylor served as the Vice President of Manufacturing and Supply Chain for United Supermarkets since 2007. From 2002 to 2007, Mr. Taylor was the President of R.C. Taylor Distributing, Inc., a business engaged in the distribution of general merchandise, candy and tobacco to retail outlets in West Texas and Eastern New Mexico. He is chairman of the Lubbock Downtown Tax Increment Finance Redevelopment Committee and serves on the Texas Tech Chancellors Advisory and Foundation Boards.

Carl B. Webb

Age 71

Mr. Webb has served as a director of Hilltop since June 2005. Mr. Webb is a Co-Managing Member of Ford Financial Fund II, L.P. and Ford Financial Fund III, L.P., private equity funds based in Dallas, Texas. From August 2010 until December 2012, Mr. Webb served as the Chief Executive Officer of Pacific Capital Bancorp and as Chairman of the Board and Chief Executive Officer of Santa Barbara Bank & Trust, N.A. He was a Senior Principal of Ford Financial Fund, L.P., a private equity fund that was the parent company of SB Acquisition Company LLC, the majority stockholder of Pacific Capital Bancorp prior to its sale to UnionBanCal Corporation. In addition, Mr. Webb has served as a consultant to Hunter’s Glen/Ford, Ltd., a private investment partnership, since November 2002. He served as the Co-Chairman of Triad Financial Corporation, a privately held financial services company, from July 2007 to October 2009, and was the interim President and Chief Executive Officer from August 2005 to June 2007. Previously, Mr. Webb was the President and Chief Operating Officer and a Director of Golden State Bancorp Inc. and its subsidiary, California Federal Bank, FSB, from September 1994 to November 2002. Prior to his affiliation with California Federal Bank, FSB, Mr. Webb was the President and Chief Executive Officer of First Madison Bank, FSB (1993 to 1994) and First Gibraltar Bank, FSB (1988 to 1993), as well as President and a Director of First National Bank at Lubbock (1983 to 1988). Mr. Webb also is the Chairman of Mechanics Bank and a director of Prologis, Inc. He is a former director of Pacific Capital Bancorp, M&F Worldwide Corp. and Plum Creek Timber Company.

Director Independence

Our Board of Directors has affirmatively determined that twelve of the nineteen nominees for election as directors at the Annual Meeting have no material relationship with us (either directly or as a partner, stockholder or officer of an organization

10


that has a relationship with us) and are independent within the meaning of the director independence requirements of the listing standards of the NYSE. The independent directors are Charlotte Jones, Rhodes Bobbitt, Tracy A. Bolt, J. Taylor Crandall, Charles R. Cummings, J. Markham Green, William T. Hill, Jr., Andrew J. Littlefair, W. Robert Nichols, III, Thomas C. Nichols, A. Haag Sherman and Robert C. Taylor, Jr.

In conducting its annual review of director independence, the Board of Directors considered transactions and relationships between each director or any member of his or her immediate family and the Company. The Board of Directors considered that one director it determined to be independent —Mr. Littlefair — had, or a member of his immediate family or an affiliated company in which he is employed or in which he is a principal equity holder had, received a loan from the Bank in the ordinary course of business, which our Board of Directors does not view as compensation. In our management’s opinion, this loan was made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions by the Bank with other unaffiliated persons and does not involve more than normal risk of collectability. This loan was repaid in full and terminated on December 3, 2019. In addition, the Board of Directors considered transactions between the Bank and Clean Energy Finance, Inc., a subsidiary of Clean Energy Fuels Corp., a company for which Andrew J. Littlefair serves as a director and president and chief executive officer. Mr. Littlefair also beneficially owned 1.2% of the outstanding shares of common stock of Clean Energy Fuels Corp. at March 25, 2020. From late 2011 through December 31, 2018, the Bank purchased, in a series of transactions, an aggregate of approximately $16.4 million in original principal amount of promissory notes issued by unaffiliated third parties from Clean Energy Finance, Inc. Although purchased at a premium to the outstanding principal balance on the notes, at the time of purchase, the interest rates on the notes exceeded the market rates charged by the Bank on similar-type loans that it originated. Clean Energy Finance, Inc. performs the servicing on the notes at no cost to the Bank, and the Bank purchased these notes with recourse to Clean Energy Finance, Inc. in the event of default. The aggregate yearly payments of the purchase prices in these transactions constituted less than 2% of the consolidated gross revenues of each of Clean Energy Fuels Corp. and the Company in the applicable year purchased and were made in the ordinary course of business in arms-length transactions. Mr. Littlefair did not have a direct financial interest in any of the transactions with Clean Energy Finance, Inc. The Bank did not purchase promissory notes issued by unaffiliated third parties from Clean Energy Finance, Inc. during 2019 and 2020.

The Board of Directors also considered the lease transactions and relationships between companies affiliated with Ms. Jones, a director of the Company, and the Company. The Audit Committee of the Board of Directors reviewed and approved each of these leases and determined such leases were on an arms-length basis. Accordingly, the Board of Directors determined that Ms. Jones is, and continues to be, an independent director of the Company given, among other things, the arrangement and the immaterial nature of the leases to Ms. Jones and the Company.

Meeting Attendance

Our Board of Directors met nine times during 2020. No director attended fewer than 75% of the aggregate number of meetings of the Board of Directors and the committees of the Board of Directors on which he or she served, if applicable, during 2020. Our Board of Directors has not adopted a formal policy with regard to director attendance at the annual meetings of stockholders. We, however, encourage members of the Board of Directors to attend annual meetings. Eighteen directors, Ms. Jones and Messrs. Bobbitt, Bolt, Crandall, Cummings, Feinberg, Gerald J. Ford, Jeremy B. Ford, Green, Hill, Lewis, Littlefair, W. Robert Nichols, III, Russell, Sherman, Sobel, Taylor and Webb, attended the 2020 annual meeting of stockholders.

Vote Necessary to Elect Directors

The nineteen director candidates receiving the highest number of affirmative votes, or a plurality, will be elected as directors. For purposes of the election of directors, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for purposes of determining a quorum. Under applicable NYSE rules, a broker or other nominee does not have the authority to vote for the director nominees in the absence of instructions from the beneficial owner of the relevant shares. Stockholders may not cumulate votes in the election of directors.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES IDENTIFIED ABOVE.

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Director Compensation

General

Members of our Board of Directors who also are full-time employees do not receive any compensation for their service on the Board of Directors or any committee of the Board of Directors. During 2020, the Chairman of the Board of Directors and all other directors received the following compensation for their service on the Board of Directors:

Annual Fee

Annual Fee

Committee

for Chairperson ($)

for Other Members ($)

Board of Directors

210,000

48,000

Audit Committee

70,000

8,000

Nominating and Corporate Governance Committee

15,000

5,000

Compensation Committee

15,000

5,000

Investment Committee

30,000

5,000

Risk Committee

50,000

8,000

Merger and Acquisition Committee

15,000

5,000

Executive Committee (a)

5,000


(a)Jeremy B. Ford, President and Chief Executive Officer of the Company, is chairman of the Executive Committee. Because he is a full-time employee of the Company, no fee is or was paid to the chairman of the Executive Committee.

Members of our Board of Directors may elect to receive their aggregate Board of Directors and board committee compensation:

entirely in the form of cash;
entirely in the form of common stock; or
one-half in cash and one-half in common stock.

Any elections, or changes in elections, by directors regarding the form of compensation to be received may only occur during a “trading window” and only become effective at the “trading window” immediately following such election or change in election. Cash and shares of common stock are paid and issued, respectively, on a calendar quarterly basis, with no vesting requirements. Customarily, these payments and issuances occur by the fifth day of the month following the applicable calendar quarter-end. The value of the common stock awarded is based upon the average closing price per share of our common stock for the last ten consecutive trading days of the applicable calendar quarter. In lieu of fractional shares of common stock that would otherwise be issuable to a director, we pay cash to the director based upon the value of those fractional shares at the value of the shares awarded to the director. If a director does not serve for the entire calendar quarter, that director is compensated based upon the time of service during the applicable calendar quarter.

Under our stock ownership policy, directors are expected to own shares with a value greater than five times their annual retainer for serving on the Board of Directors of the Company, unless they are subject to certain restrictions on receiving director fees or on receiving fees in the form of stock.

Each member of our Board of Directors is reimbursed for out-of-pocket expenses associated with his or her service on, and attendance at, Board of Directors or board committee meetings. Other than as described above, members of our Board of Directors receive no additional compensation for their service on the Board of Directors or board committees.

Compensation of Our Non-Executive Chairman of the Board

Gerald J. Ford, Chairman of the Board of Directors, provides us with significant value given his experience in the financial services industry, including mergers and acquisitions, capital and liquidity management and other operating matters, such as key personnel hires. On a daily basis, our Chairman and Chief Executive Officer discuss matters relating to the Company. Weekly, our Chairman also meets with the executive management of the Company to discuss matters related to the Company. In addition, our Chairman is instrumental in the sourcing, negotiation and completion of acquisitions and

12


dispositions. Accordingly, our Chairman, in addition to his strategic input, spends considerable time and efforts in guiding our business and executive management in creating value for shareholders.

In addition to the fees paid to our Chairman of the Board of Directors described above, we also grant the Chairman of the Board of Directors a restricted stock unit, or RSU, award representing 30,000 shares each year. This RSU award cliff vests on the third anniversary of the date of grant. The RSU award agreement also provides for pro rata vesting upon termination without cause, death or disability. Commencing in 2019, all equity award agreements, including the RSU awards granted to the Chairman of the Board of Directors, contain “double trigger” provisions, which require termination without cause within the six months preceding or the twelve months following a change in control in order for the equity awards to vest in connection with a change in control.

The Compensation Committee evaluates the compensation of directors annually, including grants of RSUs to the Chairman of the Board of Directors. Given the experience and involvement of the Chairman of the Board of Directors, the Compensation Committee believes that the compensation paid to the Chairman of the Board of Directors is considerably less than the cost that we would incur to employ or retain someone else of his caliber to provide guidance and advice to us as frequently as he does.

Political Action Committee Matching Program

The Hilltop Holdings Inc. PAC, or the PAC, is a separate segregated fund that was formed to make political contributions. To encourage participation in the PAC by eligible participants, for each contribution made to the PAC by an eligible individual contributor, Hilltop makes a matching contribution to any Section 501(c)(3) organization of the contributor’s choice, dollar for dollar, up to the maximum amount an eligible individual can contribute to the PAC in a given calendar year. Under this program, no contributor to the PAC receives any financial, tax or other tangible benefit or premium from either the recipient charities or us. This program is completely voluntary. We terminated the NLASCO Political Action Committee as a result of the sale of NLC during 2020.

2020 Director Compensation

Director Compensation Table for 2020

    

Fees Earned or

    

Stock

    

All Other

 

Paid in Cash

Awards

Compensation

Total

 

Name

($)(a)

($)(a)

($)

($)

 

Rhodes R. Bobbitt

 

88,000

 

 

88,000

Tracy A. Bolt

 

41

 

110,959

 

111,000

W. Joris Brinkerhoff (b)

 

30,917

 

 

30,917

J. Taylor Crandall

 

68,000

 

 

68,000

Charles R. Cummings

123,000

 

 

123,000

Hill A. Feinberg

 

 

 

Gerald J. Ford (c)

 

37

 

214,963

 

663,900

(d)

878,900

Jeremy B. Ford

 

 

 

J. Markham Green

 

69,000

 

 

69,000

William T. Hill, Jr.

 

31,547

 

31,453

 

63,000

Charlotte Jones

 

29,040

 

28,960

 

58,000

Lee Lewis

 

53,000

 

 

53,000

Andrew J. Littlefair

 

26,521

 

26,479

 

53,000

W. Robert Nichols, III

 

68,000

 

 

68,000

Thomas C. Nichols (e)

 

20,333

 

 

20,333

Kenneth D. Russell

 

56,000

 

 

56,000

A. Haag Sherman

46

67,954

68,000

Jonathan S. Sobel

 

24,664

 

24,586

 

49,250

Robert C. Taylor, Jr.

 

29,040

 

28,960

 

58,000

Carl B. Webb

 

29

 

52,971

 

53,000


(a)Fees earned for services performed in 2020 include annual retainers and chairperson remuneration. Aggregate fees paid to non-employee directors for annual retainers and committee chairmanships were paid quarterly. Cash was paid in lieu of the issuance of fractional shares. Service for any partial quarter is calculated and paid on the basis of time served during the applicable

13


calendar quarter. Non-employee directors are solely responsible for the payment of taxes payable on remuneration paid by the Company. The number of shares awarded was determined based upon the average closing price per share of our common stock for the last ten consecutive trading days of the calendar quarter during which the stock was earned, and the dollar value reported in the table represents the aggregate dollar amount of cash fees forgone.
(b)Mr. Brinkerhoff resigned as a member of the Board of Directors effective July 23, 2020.
(c)Mr. Gerald J. Ford held an aggregate 90,000 unvested RSUs as of December 31, 2020.
(d)Reflects grant date fair value of an equity award calculated in accordance with the provisions of the Stock Compensation Topic of the Accounting Standards Codification (“ASC”). Such award represents a time-based RSU that will cliff vest upon the earlier of February 20, 2023 and a change of control.
(e)Mr. Thomas C. Nichols was elected to the Board of Directors on August 20, 2020.

As described above, the 2020 stock awards were issued to each non-employee director who elected to receive all or part of his or her director compensation in the form of our common stock generally within five days following each applicable calendar quarter-end. All of our personnel, as well as non-employee directors, are subject to trading restrictions with regard to our common stock, and trading may only occur during a “trading window.” Provided that any such party does not possess material, non-public information about us, this trading period commences on the next trading day following two calendar days after the public release of quarterly or annual financial information and continues until the close of business on the 10th calendar day of the last month of the fiscal quarter.

The following numbers of shares of our common stock were issued to our directors as director fees for services performed during 2020:

Number of

Name

Shares

Tracy A. Bolt

 

5,901

Gerald J. Ford

 

11,432

William T. Hill, Jr.

1,673

Charlotte Jones

1,540

Andrew J. Littlefair

1,408

A. Haag Sherman

3,614

Jonathan S. Sobel

1,297

Robert C. Taylor, Jr.

1,540

Carl B. Webb

2,817

For further information about the stockholdings of these directors and our management, see “Security Ownership of Certain Beneficial Owners and Management” commencing on page 23 of this Proxy Statement.

Board Committees

General

The Board of Directors appoints committees to assist it in carrying out its duties. In particular, committees work on key issues in greater detail than would be practical at a meeting of all the members of the Board of Directors. Each committee reviews the results of its deliberations with the full Board of Directors.

The standing committees of the Board of Directors currently consist of the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee, the Risk Committee, the Investment Committee, the Merger and Acquisition Committee, and the Executive Committee. A more detailed description of these committees is set forth below. Our Board of Directors may, from time to time, establish certain other committees to facilitate our management. The Board of Directors has adopted a written charter for each of these committees. Current copies of the charters for each of the foregoing committees, as well as our Corporate Governance Guidelines, Code of Ethics and Business Conduct, or the General Code of Ethics and Business Conduct, and Code of Ethics for Chief Executive and Senior Financial Officers, or the Senior Officer Code of Ethics, may be found on our website at ir.hilltop-holdings.com, under the heading “Investor Relations — Overview — Governance Documents.” Printed versions also are available to any stockholder who requests them by writing to our corporate Secretary at the address listed under “Questions” on page 71.

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Committee Membership

The following table shows the current membership of, and the 2020 fiscal year meeting information for, each of the committees of the Board of Directors.

    

    

    

Nominating and

    

    

    

Merger and

    

 

Audit

Compensation

Corporate Governance

Risk

    

Investment

Acquisition

Executive

Name

Committee

Committee

Committee

Committee

Committee

Committee

Committee

 

Rhodes Bobbitt *

 

Chairman

Tracy A. Bolt *

Chairman

W. Joris Brinkerhoff **

 

J. Taylor Crandall *

Chairman

Charles R. Cummings *

Hill A. Feinberg

Gerald J. Ford

Jeremy B. Ford

Chairman

J. Markham Green *

William T. Hill, Jr. *

 

Charlotte Jones *

Lee Lewis

Andrew J. Littlefair *

 

W. Robert Nichols, III *

Chairman

Thomas C. Nichols * ^

Chairman

††

Kenneth D. Russell

 

A. Haag Sherman *

Chairman

Jonathan S. Sobel

Robert C. Taylor, Jr.*

Carl B. Webb

Meetings in Fiscal 2020

 

6

 

7

 

4

 

4

 

4

 

1

 

8


*

Denotes independent director.

**

Mr. Brinkerhoff resigned as a member of the Board of Directors effective July 23, 2020.

^

Mr. Thomas C. Nichols was elected as a member of the Board of Directors on August 20, 2020.

Mr. Bolt became the Chairman of the Audit Committee on April 22, 2021.

††Mr. Thomas C. Nichols became the Chairman of the Risk Committee on April 22, 2021.

Audit Committee

We have a standing Audit Committee established within the meaning of Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Audit Committee helps our Board of Directors ensure the integrity of our financial statements, the qualifications and independence of our independent registered public accounting firm and the performance of our internal audit function and independent registered public accounting firm. In furtherance of those matters, the Audit Committee assists in the establishment and maintenance of our internal audit controls, selects, meets with and assists the independent registered public accounting firm, oversees each annual audit and quarterly review and prepares the report that federal securities laws require be included in our annual proxy statement, which appears on page 48. Mr. Cummings was Chairman of the Audit Committee until April 22, 2021, at which time Mr. Bolt succeeded him as Chairman. Mr. Cummings remains a member of the Audit Committee with Mr. Green. Our Board of Directors has reviewed the education, experience and other qualifications of each member of the Audit Committee. Based upon that review, our Board of Directors has determined that each of Mr. Cummings and Mr. Bolt qualifies as an “audit committee financial expert,” as defined by the rules of the SEC, and each member of the Audit Committee is independent in accordance with the listing standards of the NYSE. Currently, none of our Audit Committee members serve on the audit committees of three or more public companies.

Compensation Committee

The Compensation Committee reviews and approves the compensation and benefits of our executive officers, administers the Hilltop Holdings Inc. 2012 Annual Incentive Plan, or the Annual Incentive Plan, the Hilltop Holdings Inc. 2012 Equity Incentive Plan and 2020 Equity Incentive Plan, or the Equity Incentive Plans, and produces the annual report on executive compensation for inclusion in our annual proxy statement, which appears on page 48. Each member is independent in accordance with the listing standards of the NYSE.

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Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee’s purpose is as follows:

Identify, screen and recommend to our Board of Directors individuals qualified to serve as members, and on committees, of the Board of Directors;
Advise our Board of Directors with respect to the composition, procedures and committees of the Board of Directors;
Advise our Board of Directors with respect to the corporate governance principles applicable to the Company; and
Oversee the evaluation of the Board of Directors and our management.

Each member of the Nominating and Corporate Governance Committee is independent in accordance with the listing standards of the NYSE.

Risk Committee

The purpose of the Risk Committee is to provide assistance to the Board of Directors in its oversight of:

The Company’s risk governance structure;
The Company’s risk tolerance;
The Company’s risk management and risk assessment guidelines and policies regarding market, credit, operational, liquidity, funding, strategic, regulatory and such other risks as necessary;
The Company’s capital and liquidity and funding; and
The performance of the Company’s enterprise risk function.

The duties assigned to the Risk Committee are meant to ensure that there is an effective system reasonably designed to evaluate and control risk throughout the Company.

Investment Committee

The Investment Committee is responsible for, among other things, reviewing investment policies, strategies and programs; reviewing the procedures that we utilize in determining that funds are invested in accordance with policies and limits approved by the Investment Committee; and reviewing the quality and performance of our investment portfolios and the alignment of asset duration to liabilities.

Merger and Acquisition Committee

The purpose of the Merger and Acquisition Committee is to review potential mergers, acquisitions or dispositions of material assets or a material portion of any business proposed by management and to report its findings and conclusions to the Board of Directors. Each member of the Merger and Acquisition Committee is independent in accordance with the listing standards of the NYSE.

Executive Committee

The Executive Committee, with certain exceptions, has the power and authority of the Board of Directors to manage the affairs of the Company between meetings of the Board of Directors.

16


Corporate Governance

General

We are committed to good corporate governance practices and, as such, we have adopted formal corporate governance guidelines to maintain our effectiveness. The guidelines govern, among other things, board member qualifications, responsibilities, education and executive sessions. A copy of the corporate governance guidelines may be found at our corporate website at ir.hilltop-holdings.com under the heading “Investor Relations — Overview — Governance Documents.” A copy also may be obtained upon request from our corporate Secretary at the address listed under “Questions” on page 71.

Board Leadership Structure

We have separated the offices of Chief Executive Officer and Chairman of the Board as a means of separating management of the Company from our Board of Director’s oversight of management. Separating these roles also enables an orderly leadership transition when necessary. We believe, at this time, that this structure provides desirable oversight of our management and affairs. We have in the past appointed, and will continue to appoint, lead independent directors as circumstances require. No lead independent director is appointed at this time.

Risk Oversight

Our Board of Directors and the Risk Committee of the Board of Directors oversee an enterprise-wide approach to risk management, including cybersecurity risks, intended to support the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance stockholder value. Our Board of Directors and the Risk Committee are actively involved in establishing and refining our business strategy, including assessing management’s appetite for risk and determining the appropriate level of overall risk for the Company. The Company conducts continual assessments through its enterprise risk function.

While the Board of Directors has the ultimate oversight responsibility for the risk management process, various committees of the Board of Directors outside of the Risk Committee also have responsibility for risk management. In particular, the Audit Committee focuses on financial risk, including internal controls, and, from time to time, discusses and evaluates matters of risk, risk assessment and risk management with our management team. The Compensation Committee is responsible for overseeing the management of risk associated with our compensation policies and arrangements. The Nominating and Corporate Governance Committee ensures that the internal rule processes by which we are governed are consistent with prevailing governance practices and applicable laws and regulations. Finally, the Investment Committee ensures that our funds are invested in accordance with policies and limits approved by it. Our Senior Officer Code of Ethics, General Code of Ethics and Business Conduct, committee charters and other governance documents are reviewed by the appropriate committees annually to confirm continued compliance, ensure that the totality of our risk management processes and procedures is appropriately comprehensive and effective and that those processes and procedures reflect established practices.

Board Performance

Our Board of Directors conducts an evaluation of performance with a view to improving effectiveness of the Board of Directors. In addition, the full Board of Directors reviews annually the qualifications and effectiveness of the Audit Committee and its members.

Director Qualifications for Service

As described below, the Nominating and Corporate Governance Committee considers a variety of factors when evaluating a potential candidate to fill a vacancy on the Board of Directors or when nomination of an incumbent director for re-election is under consideration. The Nominating and Corporate Governance Committee and the Board of Directors strive to balance a diverse mix of experience, perspective, skill and background with the practical requirement that the Board of Directors will operate collegially, with the common purpose of overseeing our business on behalf of our stockholders. All of our directors possess relevant experience, and each of them approaches the business of the Board of Directors and his or her

17


responsibilities with great seriousness of purpose. The following describes, with respect to each director, his or her particular experience, qualifications, attributes and skills that qualify him or her to serve as a director:

Rhodes R. Bobbitt

Mr. Bobbitt has an extensive investment background. This is particularly important given the investment portfolios at our subsidiaries.

Tracy A. Bolt

Mr. Bolt has significant experience concerning accounting and risk matters that is essential to our Audit Committee’s, Risk Committee’s and Board of Directors’ oversight responsibilities.

J. Taylor Crandall

Mr. Crandall has significant experience in finance and management and board governance, including his experience serving on the boards of directors of public and private companies.

Charles R. Cummings

Mr. Cummings has an extensive operational and accounting background. His expertise in these matters brings considerable strength to our Audit Committee and Board of Directors in these areas.

Hill A. Feinberg

Mr. Feinberg has extensive knowledge and experience concerning the broker-dealer segment and the industry in which it operates through his extended period of service to First Southwest and Hilltop Securities.

Gerald J. Ford

Mr. Gerald J. Ford has been a financial institutions entrepreneur and private investor involved in numerous mergers and acquisitions of private and public sector financial institutions over the past 45 years. His extensive banking industry experience and educational background provide him with significant knowledge in dealing with financial and regulatory matters, making him a valuable member of our Board of Directors. In addition, his service experience on the boards of directors and audit and corporate governance committees of a variety of public companies gives him a deep understanding of the role of the Board of Directors.

Jeremy B. Ford

Mr. Jeremy B. Ford has extensive executive officer experience and knowledge of our operations. Additionally, he has been actively involved in numerous acquisitions, including those consummated by Hilltop.

J. Markham Green

Mr. Green has an extensive background in financial services, as well as board service. His investment banking background also provides our Board of Directors with expertise surrounding acquisitions and investments.

William T. Hill, Jr.

Mr. Hill’s experience with legal and compliance matters, along with his management of a large group of highly skilled professionals, have given him considerable knowledge concerning many matters that come before our Board of Directors. Mr. Hill also serves on several civic and charitable boards, which has given him invaluable experience in corporate governance matters.

Charlotte Jones

Ms. Jones has significant managerial and executive officer experience with large entrepreneurial businesses and brand management.

Lee Lewis

Through his service on our Board of Directors and former service on PlainsCapital’s Board of Directors, Mr. Lewis has many years of knowledge of PlainsCapital and the challenges and opportunities that it is presented. The background of Mr. Lewis as an owner and chief executive officer of a Texas-based company also provides unique insight to the Board of Directors.

Andrew J. Littlefair

Mr. Littlefair has significant experience serving as a chief executive officer and as a director of publicly traded companies and provides the Board of Directors with the perspective of one of PlainsCapital’s customers.

18


W. Robert Nichols III

Mr. W. Robert Nichols III has broad experience in managing and leading enterprises. This significant experience provides our Board of Directors with additional perspectives on our operations.

Thomas C. Nichols

Mr. Thomas C. Nichols has significant experience in managing and leading banking and other financial services enterprises, including merger and acquisition activities. This significant experience provides our Board of Directors with additional perspectives on our operations.

Kenneth D. Russell

Mr. Russell’s extensive background in accounting and operating entities provides valuable insight to our Board of Directors, including merger and acquisition activities.

A. Haag Sherman

Mr. Sherman has significant experience concerning investing, legal and accounting matters that is essential to our Board of Director’s oversight responsibilities.

Jonathan S. Sobel

Mr. Sobel has significant experience in the banking, mortgage and broker-dealer industries, as well as risk management. He also possesses extensive knowledge regarding the Company and its operations, which makes him a valuable member of the Board of Directors.

Robert C. Taylor, Jr.

Through his service on our Board of Directors and former service on PlainsCapital’s Board of Directors, Mr. Taylor has many years of knowledge of PlainsCapital and the challenges and opportunities that it is presented. The background of Mr. Taylor as a manager of a Texas-based company also provides unique insight to the Board of Directors.

Carl B. Webb

Mr. Webb possesses particular knowledge and experience in strategic planning and the financial industry, as well as expertise in finance, that strengthen the Board of Directors’ collective qualifications, skills and experience.

Executive Board Sessions

The current practice of our Board of Directors is to hold an executive session of its non-management directors at least once per quarter. The individual who serves as the chair at these executive sessions is the Chairman of the Board of Directors. Executive sessions of the independent directors of the Board of Directors also are held at least once per fiscal year, and at each executive session the independent directors select the independent director to preside over such executive session.

Communications with Directors

Our Board of Directors has established a process to receive communications from stockholders and other interested parties. Stockholders and other interested parties may contact any member or all members of the Board of Directors, the non-management directors or any group or committee of directors by mail. To communicate with our Board of Directors, any individual director or any group or committee of directors, correspondence should be addressed to the Board of Directors or any such individual director or group or committee of directors by either name or title. The correspondence should be sent to Hilltop Holdings Inc., c/o Corporate Secretary, 6565 Hillcrest Avenue, Dallas, Texas 75205.

All communications received as set forth in the preceding paragraph will be opened by the corporate Secretary or assistant corporate Secretary for the sole purpose of determining whether the contents represent a message to our directors. Any contents that are not in the nature of advertising, promotions of a product or service or patently offensive material will be forwarded promptly to the addressee(s). In the case of communications to the Board of Directors or any group or committee of directors, the corporate Secretary’s office will make sufficient copies of the contents to send to each director who is a member of the group or committee to whom the communication is addressed. If the amount of correspondence received through the foregoing process becomes excessive, our Board of Directors may consider approving a process for review, organization and screening of the correspondence by the corporate Secretary or other appropriate person.

19


Code of Business Conduct and Ethics

We have adopted a Senior Officer Code of Ethics applicable to our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. We also have adopted a General Code of Ethics and Business Conduct applicable to all officers, directors and employees. Both codes are available on our website at ir.hilltop-holdings.com under the heading “Investor Relations — Overview — Governance Documents.” Copies also may be obtained upon request by writing our corporate Secretary at the address listed under “Questions” on page 71. We intend to disclose any amendments to, or waivers from, our Senior Officer Code of Ethics and our General Code of Ethics and Business Conduct at the same website address provided above.

Hedging and Other Securities Transaction Policy

The Company has adopted a written Insider Trading Policy, or the Trading Policy, which sets forth the Company’s policies and procedures. Directors and executive officers are required to receive the permission of the General Counsel prior to entering into any transactions in our securities, including gifts, grants and those involving derivatives. Generally, trading is permitted only during announced trading periods for directors, executive officers and certain employees. Directors, executive officers and employees who are subject to trading restrictions, may enter into a trading plan under Rule 10b5-1 under the Exchange Act. These trading plans may be entered into only during an open trading period and must be approved by the General Counsel. We require trading plans to include a waiting period and the trading plans may not be amended during their term. Such director or employee bears full responsibility if he or she violates our policy by permitting shares to be bought or sold without pre-approval or when trading is restricted.

All employees, executive officers and directors also are prohibited from entering into hedging, short sale and derivative transactions and are subject to restrictions on pledging our securities. Additionally, all employees, executive officers and directors are prohibited from hedging or pledging unvested RSUs. The Trading Policy is available on our website at ir.hilltop-holdings.com under the heading “Investor Relations — Corporate Information — Governance Documents.”

Policies and Procedures for Approval of Related Party Transactions

Transactions with related persons are governed by our General Code of Ethics and Business Conduct, which applies to all officers, directors and employees. This code covers a wide range of potential activities, including, among others, conflicts of interest, self-dealing and related party transactions.

The Company also has adopted a written Related Party Transaction Policy, or the Related Party Policy, which sets forth the Company’s policies and procedures for reviewing and approving transactions with related persons – namely, our directors, executive officers, their respective immediate family members and 5% stockholders. The transactions covered by the Policy include any financial transaction, arrangement or relationship in which the Company is a participant, the related person has or will have a direct or indirect material interest and the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year.

After becoming aware of any transaction which may be subject to the Related Party Policy, the related person is required to report all relevant facts with respect to the transaction to the Chief Executive Officer or General Counsel of Hilltop. Upon determination by the Company’s legal department that a transaction requires review under the Related Party Policy, the material facts of the transaction and the related person’s interest in the transaction are provided to the Audit Committee. The transaction is then reviewed by the disinterested members of the Audit Committee, who determine whether approval of the transaction shall be granted. In reviewing a transaction, the Audit Committee considers facts and circumstances that it deems relevant to its determination, such as: management’s assessment of the commercial reasonableness of the transaction; the materiality of the related person’s direct or indirect interest in the transaction; whether the transaction may involve an actual, or the appearance of, a conflict of interest; and, if the transaction involves a director, the impact of the transaction on the director’s independence.

Certain types of transactions are pre-approved in accordance with the terms of the Related Party Policy. These include transactions in the ordinary course of business involving financial products and services provided by, or to, the Company, including loans, provided that such transactions are in compliance with the Sarbanes-Oxley Act of 2002, Federal Reserve Board Regulation O and other applicable laws and regulations.

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Stockholder Rights and Protections

The Company’s Amended and Restated Charter and By-laws provide stockholders with important rights and protections, including:

The ability to call a special meeting by stockholders holding at least 15% of the outstanding shares of our common stock, subject to a one-year ownership requirement and certain other requirements.
No “poison pill” in effect.
No super-majority vote requirements in our Amended and Restated Charter or By-laws (other than for an action by written consent).

The Company’s Amended and Restated Charter and By-laws are available as exhibits to our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as filed with SEC.

Director Nomination Procedures

The Nominating and Corporate Governance Committee believes that, at a minimum, candidates for membership on the Board of Directors should have a demonstrated ability to make a meaningful contribution to the Board of Directors’ oversight of our business and affairs and have a record and reputation for honest and ethical conduct. The Nominating and Corporate Governance Committee recommends director nominees to the Board of Directors based on, among other things, its evaluation of a candidate’s experience, knowledge, skills, expertise, integrity, ability to make independent analytical inquiries, understanding of our business environment and a willingness to devote adequate time and effort to board responsibilities. In making its recommendations to the Board of Directors, the Nominating and Corporate Governance Committee also seeks to have the Board of Directors nominate candidates who have diverse backgrounds and areas of expertise so that each member can offer a unique and valuable perspective.

The Nominating and Corporate Governance Committee expects, in the future, to identify potential nominees by asking current directors and executive officers to notify the committee if they become aware of persons who meet the criteria described above. The Nominating and Corporate Governance Committee also, from time to time, may engage firms, at our expense, that specialize in identifying director candidates. As described below, the Nominating and Corporate Governance Committee also will consider candidates recommended by stockholders.

Once a person has been identified by the Nominating and Corporate Governance Committee as a potential candidate, the committee expects to collect and review publicly available information regarding the person to assess whether the person should be considered further. If the Nominating and Corporate Governance Committee determines that the candidate warrants further consideration, and if the person expresses a willingness to be considered and to serve on the Board of Directors, the Nominating and Corporate Governance Committee expects to request information from the candidate, review the person’s accomplishments and qualifications, including in light of any other candidates that the committee might be considering, and conduct one or more interviews with the candidate. In certain instances, members of the Nominating and Corporate Governance Committee may contact one or more references provided by the candidate or may contact other members of the business community or other persons that may have greater first-hand knowledge of the candidate’s accomplishments.

In addition to formally nominating individuals for election as directors in accordance with our Third Amended and Restated Bylaws, as summarized below on page 70 under “Stockholder Proposals for 2022,” stockholders may send written recommendations of potential director candidates to the Nominating and Corporate Governance Committee for its consideration. Such recommendations should be submitted to the Nominating and Corporate Governance Committee “c/o Corporate Secretary” at Hilltop Holdings Inc., 6565 Hillcrest Avenue, Dallas, Texas 75205. Director recommendations submitted by stockholders should include the following information regarding the stockholder making the recommendation and the individual(s) recommended for nomination:

name, age, business address and residence address;
the class, series and number of any shares of Hilltop stock or other securities of Hilltop or any affiliate of Hilltop owned, beneficially or of record (including the name of the nominee holder if beneficially owned);
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the date(s) that shares of Hilltop stock or other securities of Hilltop or any affiliate of Hilltop were acquired and the investment intent of such acquisition;
any short interest (including any opportunity to profit or share in any benefit from any decrease in the price of such stock or other security) in any securities of Hilltop or any affiliate of Hilltop;
whether and the extent to which such person, directly or indirectly (through brokers, nominees or otherwise), is subject to or during the prior six months has engaged in, any hedging, derivative or other transaction or series of transactions or entered into any other agreement, arrangement or understanding (including any short interest, any borrowing or lending of securities or any proxy or voting agreement), the effect or intent of which is to (a) manage risk or benefit of changes in the price of Hilltop securities or any security of any entity listed in the peer group in the stock performance graph included in the materials distributed with this Proxy Statement or (b) increase or decrease the voting power of such person in Hilltop disproportionately to such person’s economic interest in Hilltop securities (or, as applicable, any security of any entity listed in the peer group in the stock performance graph included in the materials distributed with this Proxy Statement);
any substantial interest, direct or indirect (including, without limitation, any existing or prospective commercial, business or contractual relationship with us), by security holdings or otherwise of such person in us or in any of our affiliates, other than an interest arising from the ownership of securities where such person receives no extra or special benefit not shared on a pro rata basis by all other holders of the same class or series;
the investment strategy or objective, if any, of the stockholder making the recommendation and a copy of the prospectus, offering memorandum or similar document, if any, provided to investors, or potential investors, in such stockholder (if not an individual);
to the extent known by the stockholder making the recommendation, the name and address of any other stockholder supporting the nominee for election or reelection as a director;
a certificate executed by the proposed nominee that certifies that the proposed nominee is not, and will not, become a party to any agreement, arrangement or understanding with any person or entity other than us in connection with service or action as a director that has not been disclosed to us and that the proposed nominee consents to being named in a proxy statement and will serve as a director if elected;
completed proposed nominee questionnaire (which will be provided upon request by writing or telephoning our corporate Secretary at the address or phone number listed under “Questions” on page 71); and
all other information that would be required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act and the rules promulgated thereunder.

The stockholder recommendation of potential director candidates and information described above must be delivered to the corporate Secretary not earlier than the 120th day and not later than 5:00 p.m., Dallas, Texas local time, on the 90th day prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting of stockholders; provided, however, that if the date of the annual meeting is advanced more than 30 days prior to, or delayed by more than 60 days after, the first anniversary of the date of the preceding year’s annual meeting, the stockholder recommendation and information must be delivered not earlier than the 120th day prior to the date of such annual meeting and not later than 5:00 p.m., Dallas, Texas local time, on the later of the 90th day prior to the date of such annual meeting of stockholders or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the date on which public announcement of the date of such annual meeting is first made. In the event, however, the number of directors to be elected to the Board of Directors is increased and there is no public announcement of such action at least 100 days prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting, a stockholder recommendation also will be considered timely, but only with respect to nominees for any new positions created by the increase, if it is delivered to the corporate Secretary not later than 5:00 p.m., Dallas, Texas local time, on the 10th day following the day on which the public announcement is first made.

The Nominating and Corporate Governance Committee expects to use a similar process to evaluate candidates for nomination to the Board of Directors recommended by stockholders as the one it uses to evaluate candidates otherwise identified by the committee.

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No fee was paid to any third party or parties to identify or evaluate, or assist in identifying or evaluating, potential nominees.

The Nominating and Corporate Governance Committee did not receive the name of any stockholder recommendations for director nominees with respect to the Annual Meeting.

The Nominating and Corporate Governance Committee did not receive any recommendations for director nominees from any non-management stockholder or group of stockholders that beneficially owns more than 5% of our common stock.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Principal Stockholders

The following table sets forth information regarding our common stock beneficially owned as of April 28, 2021 by any person or “group,” as that term is used in Section 13(d)(3) of the Exchange Act, known to us to beneficially own more than five percent of the outstanding shares of our common stock.

    

Amount and Nature of

    

Percent of

 

Name and Address of Beneficial Owner

Beneficial Ownership

Class (a)

 

Gerald J. Ford (b)

15,742,952

 

19.1

%

6565 Hillcrest Avenue, 6th Floor

 

Dallas, Texas 75205

BlackRock, Inc. (c)

10,006,930

12.1

%

55 East 52nd Street

New York, New York 10055

The Vanguard Group (d)

6,164,083

7.5

%

100 Vanguard Boulevard

Malvern, Pennsylvania 19355

Dimensional Fund Advisors LP (e)

5,135,970

6.2

%

Building One

6300 Bee Cave Road

Austin, Texas 78746


(a)Based on 82,389,924 shares of common stock outstanding on April 28, 2021. Shares issuable under instruments to purchase our common stock that are exercisable within 60 days of April 28, 2021 are treated as if outstanding for computing the percentage ownership of the person holding these instruments, but are not treated as outstanding for purposes of computing the percentage ownership of any other person.
(b)The shares of common stock beneficially owned by Mr. Gerald J. Ford include 70,102 shares that are owned by Turtle Creek Revocable Trust, a revocable trust for the benefit of the members of Mr. Gerald J. Ford’s family, and indirectly by Mr. Gerald J. Ford as settlor and trustee of the trust. Mr. Gerald J. Ford disclaims beneficial ownership of the shares held by the trust except to the extent of his pecuniary interest therein. Also includes 15,544,674 shares owned by Diamond A Financial, LP. Mr. Gerald J. Ford is the sole member of Diamond HTH Stock Company GP, LLC, which is the sole general partner of Diamond HTH Stock Company, LP, which is the sole general partner of Diamond A Financial, LP. Mr. Gerald J. Ford is the sole limited partner of Diamond HTH Stock Company, LP. Each of Mr. Gerald J. Ford, Diamond A Financial, LP, Diamond HTH Stock Company, LP and Diamond HTH Stock Company GP, LLC may be deemed to have shared voting and dispositive power of these shares. Excludes 90,000 RSUs that will not vest within 60 days of April 28, 2021.
(c)Based on the Schedule 13G (Amendment No. 3) filed with the SEC by BlackRock, Inc. on March 10, 2021. According to the Schedule 13G (Amendment No. 3), BlackRock, Inc. has sole voting power over 9,878,940 shares of our common stock and sole dispositive power over 10,006,930 shares of our common stock. According to the Schedule 13G (Amendment No. 3), BlackRock, Inc. is a parent holding company or control person, and various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of our common stock. The Schedule 13G (Amendment No. 3) reports that Blackrock Fund Advisors, a wholly owned subsidiary of Blackrock, Inc., is the beneficial owner of 5% or greater of the outstanding shares of the security class reported on the Schedule 13G (Amendment No. 3).
(d)Based on the Schedule 13G (Amendment No. 5) filed with the SEC by The Vanguard Group on February 10, 2021. According to the Schedule 13G (Amendment No. 5), The Vanguard Group has shared voting power over 68,535 shares of our common stock, sole dispositive power over 6,036,631 shares of our common stock and shared dispositive power over 127,452 shares of our common stock. The Schedule 13G (Amendment No. 5) reports that Vanguard Asset Management, Limited, Vanguard Fiduciary Trust Company, Vanguard Global Advisors, LLC, Vanguard Group (Ireland) Limited, Vanguard Investments Australia Ltd, Vanguard Investments Canada Inc., Vanguard Investments Hong Kong Limited and Vanguard Investments UK, Limited, each wholly owned subsidiaries of The Vanguard Group, are the beneficial owners of 5% or greater of the outstanding shares of the security class reported on the Schedule 13G (Amendment No. 5).
(e)Based on the Schedule 13G (Amendment No. 4) filed with the SEC by Dimensional Fund Advisors LP on February 12, 2021. According to the Schedule 13G (Amendment No. 4), Dimensional Fund Advisors LP has sole voting power over 5,042,063 shares of our common stock and sole dispositive power over 5,135,970 shares of our common stock. Dimensional Fund Advisors LP is an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of

23


1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Funds”). In certain cases, subsidiaries of Dimensional Fund Advisors LP may act as an adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-adviser and/or manager, Dimensional Fund Advisors LP or its subsidiaries (collectively, “Dimensional”) may possess voting and/or investment power over the securities of Hilltop that are owned by the Funds, and may be deemed to be the beneficial owner of the shares of Hilltop held by the Funds. However, according to the Schedule 13G (Amendment No. 4), all securities reported are owned by the Funds. Dimensional disclaims beneficial ownership of such securities. In addition, the Schedule 13G (Amendment No. 4) disclaims that the reporting person or any of its affiliates is the beneficial owner of any securities covered by the Schedule 13G (Amendment No. 4) for any purposes other than Section 13(d) of the Securities Exchange Act of 1934.

Security Ownership of Management

The following table sets forth information regarding the number of shares of our common stock beneficially owned as of April 28, 2021, by:

each of our directors;
each of our named executive officers; and
all of our directors and executive officers presently serving, as a group.

Except as otherwise set forth below, the address of each of the persons listed below is c/o Hilltop Holdings Inc., 6565 Hillcrest Avenue, Dallas, Texas 75205. Except as otherwise indicated in the footnotes to this table, the persons named in the table have specified that they have sole voting and investment power with respect to all shares of stock shown as beneficially owned by them, subject to any applicable community property law.

Common Stock

    

Amount and Nature of

    

Percent of

Name of Beneficial Owner

Beneficial Ownership

Class (a)

Rhodes Bobbitt

 

126,059

(b)  

*

Tracy A. Bolt

 

36,486

*

J. Taylor Crandall

 

*

Charles R. Cummings

 

37,476

*

Hill A. Feinberg

 

711,812

(c)  

*

Gerald J. Ford

 

15,742,952

(d)  

19.1%

6565 Hillcrest Avenue, 6th Floor

Dallas, Texas 75205

Jeremy B. Ford

867,621

(e)  

1.1%

William B. Furr

57,894

(f)  

*

J. Markham Green

 

114,763

*

William T. Hill, Jr.

35,968

(g)  

*

Charlotte Jones

 

13,930

*

Lee Lewis

 

107,951

(h)  

*

Andrew J. Littlefair

 

16,902

*

W. Robert Nichols, III

 

16,000

(i)  

*

Thomas C. Nichols

 

16,180

(j)  

*

Kenneth D. Russell

 

*

Jerry L. Schaffner

 

144,479

(k)  

*

A. Haag Sherman

 

23,502

*

Jonathan S. Sobel

 

1,887

(l)  

*

Robert C. Taylor, Jr.

 

39,395

*

Stephen Thompson

 

16,413

(m)  

*

Carl B. Webb

121,058

*

M. Bradley Winges

 

716

(n)  

*

All Directors and Executive Officers,

 

as a group (26 persons)

18,381,286

(o)  

22.3%


*     Represents less than 1% of the outstanding shares of such class.

(a)Based on 82,389,924 shares of common stock outstanding on April 28, 2021. Shares issuable under instruments to purchase our common stock that are exercisable within 60 days of April 28, 2021 are treated as if outstanding for computing the percentage ownership of the person holding these instruments, but are not treated as outstanding for purposes of computing the percentage ownership of any other person.

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(b)Includes 62,100 shares of common stock held in an IRA account for the benefit of Mr. Bobbitt.
(c)Includes 25,776 shares of common stock held directly by Mr. Feinberg’s wife.
(d)The shares of common stock beneficially owned by Mr. Gerald J. Ford include 70,102 shares that are owned by Turtle Creek Revocable Trust, a revocable trust for the benefit of the members of Mr. Gerald J. Ford’s family, and indirectly by Mr. Gerald J. Ford as settlor of the trust. Mr. Gerald J. Ford disclaims beneficial ownership of the shares held by the trust except to the extent of his pecuniary interest therein. Also includes 15,544,674 shares owned by Diamond A Financial, LP. Mr. Gerald J. Ford is the sole member of Diamond HTH Stock Company GP, LLC, which is the sole general partner of Diamond HTH Stock Company, LP, which is the sole general partner of Diamond A Financial, LP. Mr. Gerald J. Ford is the sole limited partner of Diamond HTH Stock Company, LP. Each of Mr. Gerald J. Ford, Diamond A Financial, LP, Diamond HTH Stock Company, LP and Diamond HTH Stock Company GP, LLC may be deemed to have shared voting and dispositive power of these shares. Excludes 90,000 restricted stock units, or RSUs, that will not vest within 60 days of April 28, 2021.
(e)Jeremy B. Ford is a beneficiary of a trust that owns a 49% limited partnership interest in Diamond A Financial, LP (see footnote (d)). Excludes 398,296 shares of common stock deliverable upon the vesting of RSUs that will not vest within 60 days of April 28, 2021 and 15,544,674 shares of common stock held by Diamond A Financial, LP.
(f)Excludes 85,150 shares of common stock deliverable upon the vesting of RSUs that will not vest within 60 days of April 28, 2021.
(g)Includes 14,550 shares of common stock held in a SEP IRA account for the benefit of Mr. Hill.
(h)Includes 55,169 shares of common stock held by Lee Lewis Construction. Mr. Lewis is the sole owner of Lee Lewis Construction and may be deemed to have voting and/or investment power with respect to the shares owned by Lee Lewis Construction.
(i)Includes 16,000 shares of common stock held in an IRA account for the benefit of Mr. W. Robert Nichols, III.
(j)Includes 2,000 shares of common stock held in an IRA account for the benefit of Mr. Thomas C. Nichols.
(k)Includes 1,459 shares of common stock held in an IRA account for the benefit of Mr. Schaffner’s wife. Excludes 59,325 shares of common stock deliverable upon the vesting of RSUs that will not vest within 60 days of April 28, 2021.
(l)Excludes 20,000 shares of common stock deliverable upon the vesting of RSUs that will not vest within 60 days of April 28, 2021.
(m)Excludes 54,081 shares of common stock deliverable upon the vesting of RSUs that will not vest within 60 days of April 28, 2021
(n)Excludes 143,356 shares of common stock deliverable upon the vesting of RSUs that will not vest within 60 days of April 28, 2021.
(o)Represents 26 persons. Excludes 952,815 shares of common stock deliverable upon the vesting of RSUs that will not vest within 60 days of April 28, 2021.

MANAGEMENT

Executive Officers

General

We have identified the following officers as “executive officers,” consistent with the definition of that term as used by the SEC, as of April 28, 2021:

Name

Age

Position

Officer
Since

Keith E. Bornemann

48

Executive Vice President, Chief Accounting Officer

2017

Jeremy B. Ford

46

President and Chief Executive Officer

2010

William B. Furr

43

Executive Vice President, Chief Financial Officer

2016

Darren E. Parmenter

58

Executive Vice President, Chief Administrative Officer

2007

Corey G. Prestidge

47

Executive Vice President, General Counsel and Secretary

2008

Jerry L. Schaffner

63

President and Chief Executive Officer of PlainsCapital Bank

2012

Stephen Thompson

59

President and Chief Executive Officer of PrimeLending

2020

M. Bradley Winges

53

President and Chief Executive Officer of Hilltop Securities

2019

Business Experience of Executive Officers

Information concerning the business experience of Mr. Jeremy B. Ford is set forth above under “Proposal One — Election of Directors — Nominees for Election as Directors” beginning on page 5.

Keith E. Bornemann. Mr. Bornemann has served as the Executive Vice President and Chief Accounting Officer of Hilltop since July 2020. Mr. Bornemann previously served as Executive Vice President and Principal Accounting Officer of Hilltop from November 2017 to July 2020 and Corporate Controller of Hilltop from February 2017 to July 2020. He also served as Senior Vice President and Director of Accounting and Reporting of Hilltop from January 2016 to January 2017 and Vice President of Financial Reporting of Hilltop from January 2013 to January 2016. Prior to joining Hilltop in 2013, Mr. Bornemann was the Vice President and Corporate Controller at First Acceptance Corporation and spent nine years working for the accounting firm Ernst & Young LLP.

25


William B. Furr. Mr. Furr has served as the Chief Financial Officer of Hilltop since September 2016. Prior to joining Hilltop, Mr. Furr served as Executive Vice President and Community Bank Chief Financial Officer for KeyCorp from November 2012 to August 2016. Before joining KeyCorp, Mr. Furr served in various financial leadership roles at Regions Financial Corporation and Bank of America Corporation.

Darren E. Parmenter. Mr. Parmenter has served as Executive Vice President and Chief Administrative Officer of Hilltop since September 2016. Mr. Parmenter previously served as Executive Vice President and Principal Financial Officer of Hilltop from February 2014 to September 2016 and as Senior Vice President of Finance of Hilltop from June 2007 to February 2014. From January 2000 to June 2007, Mr. Parmenter was with Hilltop’s predecessor, Affordable Residential Communities Inc., and served as the Controller of Operations from April 2002 to June 2007. Prior to 2000, Mr. Parmenter was employed by Albertsons Inc. as an Assistant Controller.

Corey G. Prestidge. Mr. Prestidge has served as an Executive Vice President of Hilltop since February 2014 and General Counsel and Secretary of Hilltop since January 2008. From November 2005 to January 2008, Mr. Prestidge was the Assistant General Counsel of Mark Cuban Companies. Prior to that, Mr. Prestidge was an associate in the corporate and securities practice group at Jenkens & Gilchrist, a Professional Corporation, which is a former national law firm. Mr. Prestidge is the son-in-law of our Chairman of the Board, Gerald J. Ford, and the brother-in-law of our President and Chief Executive Officer, Jeremy B. Ford.

Jerry L. Schaffner. Mr. Schaffner has served as the President and Chief Executive Officer of PlainsCapital Bank since November 2010. He currently serves as a director of PlainsCapital Bank and various other subsidiaries, and previously served as a director of PlainsCapital from 1993 until March 2009. Mr. Schaffner joined PlainsCapital in 1988 as part of its original management group.

Stephen Thompson. Mr. Thompson has served as the President and Chief Executive Officer of PrimeLending since January 2020, a continuation of his previous role as President of PrimeLending since 2017. Mr. Thompson joined PrimeLending in 2011 and has held the roles of Regional Production Leader, Divisional Production Leader and National Production Leader. Mr. Thompson has over 30 years of mortgage banking experience.

M. Bradley Winges. Mr. Winges has served as the President and Chief Executive Officer of Hilltop Securities since February 2019. Prior to joining Hilltop Securities, Mr. Winges most recently served as Senior Executive Managing Director at Piper Jaffray, where he had worked since February 1991. While at Piper Jaffray, he was a member of the firm’s leadership team and held the roles of Head of Fixed Income Services and Firm Investments and Trading, President of Piper Jaffray Investment Management, Firm Risk Management, Head of Hopewood Lane Trading, Co-Head of Piper Jaffray Financial Products, Head of Municipal Sales and Trading and Institutional Municipal Sales Representative. Mr. Winges also is a member of the Board of the Bond Dealers of America and a committee member of the Fixed Income Market Structure at the SEC.

Terms of Office and Relationships

Our executive officers are elected by our Board of Directors annually or, as necessary, to fill vacancies or newly created offices. Each executive officer holds office until his successor is duly elected and qualified or, if earlier, until his death, resignation or removal. Any officer or agent elected or appointed by our Board of Directors may be removed by our Board of Directors whenever, in its judgment, our best interests will be served, but any removal will be without prejudice to the contractual rights, if any, of the person so removed.

Except as disclosed under “Proposal One — Election of Directors — Nominees for Election as Directors” commencing on page 5 and under “Management — Executive Officers — Business Experience of Executive Officers” on page 25, (a) there are no familial relationships among any of our current directors or executive officers and (b) none of our director nominees hold, or in the last five years have held, directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or pursuant to Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.

Except as set forth in this Proxy Statement, there are no arrangements or understandings between any nominee for election as a director or officer and any other person pursuant to which that director was nominated or that officer was selected.

26


Compensation Discussion and Analysis

This Compensation Discussion and Analysis, or this CD&A, reviews the compensation program for our named executive officers, or NEOs, which include our principal executive officer, principal financial officer and our three other most highly-compensated executive officers who served during the year ended December 31, 2020.

For 2020, our NEOs were:

Named Executive Officer

    

Title/Role

Jeremy B. Ford

President and Chief Executive Officer

William B. Furr

Executive Vice President, Chief Financial Officer

Jerry L. Schaffner

President and Chief Executive Officer of PlainsCapital Bank

Stephen Thompson

President and Chief Executive Officer of PrimeLending

M. Bradley Winges

President and Chief Executive Officer of Hilltop Securities

Executive Summary

COVID and Environmental, Social and Governance Response

Graphic

Business Highlights

Hilltop reported record earnings in 2020. Pre-tax income from continuing operations increased 99.6% compared to 2019 and 264.1% compared to 2018. The implementation of our strategic initiatives over the past few years, several of which are described below, allowed us to capitalize on available opportunities. These robust financial results and continued enhancements position Hilltop for further growth.

Key Financial Results

The charts below illustrate our strong financial and market performance in 2020. Additional details regarding our results can be found in our Annual Report on Form 10-K for the year ended December 31, 2020.

27


Graphic

Graphic

Graphic

28


Graphic

In addition to the results shown above, we also achieved the following in 2020:

Average loans held for investment, net grew by $466 million, or 7% (PPP loan balance of $487 million at December 31, 2020), and average deposits grew 25% compared to December 31, 2019.
Mortgage origination volume increased by 47% to $23.0 billion, as the business capitalized on the rate environment.
Hilltop Securities reported a pre-tax margin of 21.8% in 2020 compared to 19.7% in 2019, as Structured Finance and Fixed Income business lines realized net revenue growth.
Book value per share at December 31, 2020 grew by 22% versus the prior year to $28.28.
Hilltop maintained strong capital levels with a Tier 1 Leverage Ratio of 12.64% and a Common Equity Tier 1 Capital Risk Based Ratio of 18.97% at December 31, 2020.
Net charge-offs equated to $21.1 million for the full year 2020.

Strategic Highlights

During 2020, we had several key accomplishments in support of our business strategy:

Graphic

29


Additional highlights include:

Launched our Platform for Growth and Efficiency in January 2019, designed to deliver $84 million in run-rate Pre-Provision Net Revenue (“PPNR”) improvements by the year end 2021, and we achieved our goal by year-end 2020 through actions including:
ØStreamlining our mortgage operations;
ØEnhancing our capital markets/securitized products platform;
ØExecuting on targeted leadership changes and succession planning;
ØImplementing multiple enhanced programs for our strategic sourcing efforts; and
ØConsolidating functions across our organization.

Completed the implementation of two new core platforms:
ØBlue Sage – Mortgage Loan Origination System; and
ØFIS Operation Platform – Securities Brokerage/Clearing System.

Implemented Current Expected Credit Loss, including governance structure.

Completed the integration of three general ledgers into one system (Hilltop, PrimeLending and PlainsCapital Bank).

Leadership

2020 was the first full year of our leadership team following the completion of succession planning. As a result of executing on that plan and the sale of National Lloyds Corporation, the following is the reporting structure for our operating subsidiaries:

Graphic

30


Executive Compensation Highlights

Over the past several years, we have completed leadership transitions and streamlined our executive team. As illustrated in the graphs to the right, these changes have resulted, and are expected to continue to result, in a substantial reduction in executive base salary expense as compared to 2016 (38% decrease in 2020). With 2020 results triggering maximum annual incentive payouts at 185% (as compared to a maximum of 154% in 2016), and our award of discretionary bonuses, aggregate Section 16 officer compensation in 2020 was only 41% higher than aggregate Section 16 officer compensation in 2016. For reference, pre-tax earnings from continuing operations were $210 million and $564 million in 2016 and 2020, respectively (a 168% increase from 2016 to 2020). Additionally, these transitions resulted in the termination of certain legacy compensation arrangements and allowed us to fully align our executive team with our pay-for-performance compensation program, as evidenced by the chart and outlined in this CD&A.

Graphic

* Reflects base salary for the year shown plus annual incentives paid at 185% and long-term incentives awarded the following year, as well as one-time and discretionary awards and payments due to record performance during pandemic.

Our 2020 Executive Compensation Program

The Compensation Committee, or, as used in this CD&A, the Committee, has the responsibility to establish, implement and monitor adherence with our compensation philosophy. The Committee believes that the total compensation paid to executive officers should be fair, reasonable, market competitive, performance-based and aligned with stockholder interests. The Committee administers our executive compensation program taking into consideration our unique business structure and acquisition activity. As a holding company that conducts its operations through its subsidiaries, we provide performance-based compensation to the chief executives of each of our business units that is based on both the results of the business unit and the consolidated Company.

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Elements of Total Direct Compensation

Base Salary

    Intended to compensate the individual fairly for the responsibility level of the position held.

Annual Incentives

    Variable component of pay intended to motivate and reward the individual’s contributions to achieving our short-term/annual objectives;

    Payouts are determined based on financial results (weighted 70%) and each executive’s performance with respect to strategic and individual goals (weighted 30%);

    Financial results are based on our consolidated net income and, for executives of our subsidiaries, the net income of their respective business unit; and

    Discretionary bonuses are awarded only in exceptional circumstances.

Long-Term Incentives

    Variable component of pay intended to retain, motivate and reward the individual’s contributions to achieving our long-term objectives and creating stockholder value;

    Delivered through an equal grant value mix of Performance-Based Restricted Stock Units, or PRSUs, and Time-Based Restricted Stock Units, or TRSUs; and

    The vesting of PRSUs varies based on performance results with respect to cumulative EPS goals over a three-year period, with a modifier based on our three-year total shareholder return, or TSR, relative to other banks in the KBW Regional Banking Index.

Graphic

As illustrated in the chart, total variable compensation represents 83% of the Chief Executive Officer’s target total direct compensation.

32


Governance Highlights

The Committee maintains strong governance features for our executive compensation program as outlined below and further discussed in this CD&A.

What We Do

What We Don’t Do

þ

We tie a significant portion of NEO compensation to our performance through a balance of annual and long-term incentives with multiple performance measures

Executive officers are prohibited from entering into hedging, short sale and derivative transactions and are subject to restrictions on pledging our securities

þ

We maintain robust stock ownership guidelines for executive officers and directors

We do not provide for any excise tax gross-ups in any new employment agreements

þ

We require all equity awarded to executive officers to be held for one year following vesting

We do not grant equity awards with single trigger vesting upon a change in control (commencing with 2019 awards)

þ

We maintain a clawback policy for incentive compensation

We do not pay dividends on unvested equity awards

þ

We subject annual incentives to downward adjustment for improper risk taking or significant compliance issues

We do not provide excessive perquisites

þ

We annually conduct a risk assessment of our compensation programs

þ

We retain an independent compensation consultant reporting directly to the Committee

Role of Stockholder Say-on-Pay Votes and Stockholder Engagement

We provide our stockholders with the opportunity to cast an annual non-binding advisory vote on executive compensation. At our annual meeting of stockholders held in July 2020, over 97% of the votes cast (excluding abstentions and broker non-votes) on the say-on-pay proposal were voted in favor of the proposal.

In January 2021, we contacted a total of seventeen of our largest stockholders, other than the Chairman of the Board of Directors, who represented approximately 20% of our outstanding common stock at that time. In connection with this stockholder outreach, eight stockholders who represented approximately 12% of our outstanding common stock at that time scheduled and conducted calls with the Chairman of the Committee. In those calls, the Chairman specifically addressed the compensation of the Chairman of the Board of Directors of the Company.

Graphic

After the resulting discussion of the Chairman’s compensation, these stockholders understood the reasoning for his compensation and appreciate the value that he provides to the Company. We also committed to provide additional disclosure regarding the reasons supporting his compensation, which we have included in this CD&A and this Proxy Statement. With respect to our compensation program and philosophy in general, those stockholders were supportive. Some of these stockholders suggested other specific metrics for possible use in measuring executive compensation, including return on average assets, return on average equity and tangible book value per share growth. The Committee will continue to evaluate these metrics for inclusion. These stockholders also expressed that they view our executive compensation to be in line with our peers.

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The Committee remains committed to understanding the perspectives of our stockholders and being responsive to their feedback on our executive compensation program. The Committee will continue to consider the outcome of the Company’s say-on-pay votes and stockholder feedback when making future compensation decisions for the NEOs and directors, including the Chairman of the Board.

Compensation Program Philosophy and Objectives

Our compensation program continues to focus on performance-based pay that reflects our achievements on an annual basis and our ability to deliver long-term value to our stockholders. The Committee regularly reviews the Company’s compensation programs to ensure they are consistent with sound business practices, regulatory requirements, emerging industry trends and stockholder interests.

With this in mind, the following principles help guide our decisions regarding compensation of our NEOs:

Compensation opportunities should be competitive with market practices. We are committed to providing competitive total annual compensation opportunities to attract and retain executives with the experience and skills necessary to lead our Company and motivate them to deliver strong performance to our stockholders.
A significant portion of compensation should be performance-based. Our executive compensation program emphasizes pay-for-performance. Both our annual and long-term incentives are earned based on a combination of corporate, business unit and individual performance. Our annual incentive compensation also can be reduced based upon improper risk taking and non-compliance with applicable laws and regulations.
Management’s interests should be aligned with those of our stockholders. Our long-term incentive compensation is delivered in the form of restricted stock units, or RSUs, to support our goals for alignment, ownership and retention. Half of the RSUs awarded vest upon achievement of predefined performance goals. The percentage of these awards that vest is based first on cumulative EPS over a three-year period and then multiplied by a modifier based on our TSR, relative to members of the KBW Regional Banking Index during the same period. The calculation for the vesting of performance RSUs is as follows:

Graphic

Compensation should be perceived as fair. We strive to create a compensation program that will be perceived as fair and equitable, both internally and externally.
Our compensation program should be balanced and mitigate risk taking. We have a balanced approach to total compensation that includes a mix of fixed and performance-based pay, including cash and equity compensation and short- and long-term incentive compensation. We believe this approach effectively aligns our pay with performance, while discouraging inappropriate risk taking.

34


Elements of our Executive Compensation Program

This section describes the 2020 compensation arrangements for our NEOs.

Base Salary

We provide base salaries for each NEO based on the Committee’s assessment of the scope of each individual’s responsibilities, performance and experience. We believe a portion of total direct compensation should be provided in a form that is fixed and liquid. In reviewing base salaries, the Committee evaluated the salaries of other executive officers of the Company and its peers and any increased level of responsibility, among other items. The following table lists the base salaries for our NEOs in 2019 and 2020:

Base Salaries

 

Name

    

2019

    

2020

    

% Increase

 

Jeremy B. Ford

$

750,000

$

775,000

(a)  

3.3

%

William B. Furr

$

485,000

$

500,000

(a)  

3.1

%

Jerry L. Schaffner

$

625,000

$

650,000

(a)  

4.0

%

Stephen Thompson

$

650,000

$

725,000

(b)  

11.5

%

M. Bradley Winges

$

500,000

(c)  

$

500,000


(a)Base salary increases became effective on March 29, 2020.
(b)Mr. Thompson’s base salary increase became effective on January 1, 2020 upon being promoted to CEO of PrimeLending.
(c)Mr. Winges’ base salary was established in connection with the commencement of his employment on February 20, 2019.

In February 2021, the Committee assessed base salaries of the NEOs and decided to provide the following increases beginning on March 28, 2021: $25,000 for Mr. Jeremy B. Ford (new salary $800,000); $50,000 for Mr. Furr (new salary $550,000); $10,000 for Mr. Schaffner (new salary $660,000); and $75,000 for Mr. Thompson (new salary $800,000). These increases were determined to be appropriate given performance by these individuals.

Annual Incentive Program

Target Incentive Opportunities

Target incentive awards are defined at the start of the year in consideration of market data provided by the Committee’s consultant, each NEO’s total compensation package and the Company’s budgetary considerations. The Committee increased the annual incentive target (as a percent of salary) in 2020 as compared to 2019 for Messrs. Schaffner and Winges following a review of market practices and in order to place more emphasis on pay-for-performance. The following table sets forth information concerning Annual Incentive Plan opportunities for 2020:

Annual Incentive Opportunity

    

Target

    

Threshold

Amount

% of

Maximum

Name

    

($)

($)

Base Salary

($) (a)

Jeremy B. Ford

 

387,500

775,000

100

%  

1,433,750

William B. Furr

 

225,000

450,000

90

%  

832,500

Jerry L. Schaffner

 

292,500

585,000

90

%  

1,082,250

Stephen Thompson

 

362,500

725,000

100

%  

1,341,250

M. Bradley Winges

 

625,000

1,250,000

250

%  

2,312,500


(a)Awards are capped at 185% of the target amount.

Plan Structure and Performance Measures

Each NEO had pre-defined performance objectives based upon measurable performance of both the Company and the individual. At least 70% of each executive’s incentive was based on the net income of the Company and/or their relevant business unit. The Committee and management believe that by using these metrics we are encouraging profitable top line growth and value for stockholders without creating excessive risk.

35


The measures and weights of the performance objectives for 2020 are summarized in the following graph:

Graphic

In addition to the above criteria, all payouts under the Annual Incentive Plan are subject to forfeiture and clawback in the event of any improper risk management or non-compliance with applicable laws and regulations.

2020 Goals and Results

The Committee, in its sole discretion, determines the final amount of each participant’s annual cash incentive award based on attainment of the applicable performance goals and assessments of individual and strategic performance.

Each element of the annual cash incentive award is independent of the other. Accordingly, the executive officer may achieve certain performance goals, while at the same time failing to achieve others. In that case, the executive officer will be entitled to receive the award for the performance goal achieved, but not an award for a performance goal for which threshold performance is not achieved. Potential awards ranged from 50% for threshold performance to a maximum of 185% for stretch performance (with a 200% maximum for financial performance and a 150% maximum for strategic goals).

Early in 2020, the Committee established earnings goals for Hilltop and each business unit. Our 2020 goals were intended to be realistic and reasonable but challenging in order to drive performance. At the end of the fiscal year, the Committee determined a payout based on net income performance. 2020 performance goals and actual net income performance were as follows (dollars in millions):

2020 Performance Goal (a)

Threshold ($)

Target ($)

Maximum ($)

Actual ($)

Achievement (b)

 

Hilltop Adjusted Net Income

 

95.5

158.6

198.3

411.0

200

%

PlainsCapital Adjusted Pre-Tax Income

 

90.8

151.3

189.1

185.0

122

%

Hilltop Securities Adjusted Pre-Tax Income

 

44.0

73.3

91.6

117.0

160

%

PrimeLending Adjusted Pre-Tax Income

21.7

36.1

45.1

396.0

200

%


(a)The Compensation Committee established goals and determines performance results based on adjusted non-GAAP results that exclude the impact of items including CECL, leadership changes, business realignment and disposition, and efficiencies that are not indicative of ongoing operations.
(b)Awards are capped at 200% of the target amount under the plan.

The individual and strategic objectives for the NEOs are developed through an iterative process between the Committee and management. Management develops an initial set of recommendations based upon the business needs. The Committee reviews the proposed goals and revises/amends them at its discretion, ensuring that goals are aligned with the strategic plan approved by the Board of Directors.

36


The following strategic and individual goals, among others, were established for the NEOs in 2020:

Executive

Key Objectives

Key Outcomes

Jeremy B. Ford

   Execute strategic plan to drive revenue growth and manage expenses

   Continued execution on platform initiatives of enhanced business operations, strategic sourcing and shared services

   Execute capital management through M&A sourcing and stockholder returns

   Lead strategic projects

   Effectively manage business through the Coronavirus pandemic

   Executed strategic plan and platform initiatives

   Completed platform initiatives ahead of schedule

   Delivered quantifiable benefits of efficiency initiatives and capital management

   Identified strategic projects completed

   Effectively managed business through pandemic with record earnings

William B. Furr

   Effective delivery against operational priorities, including remediation of material weakness; launch of corporate profitability and performance management; manage financial risks, reporting and controls; support delivery of net interest margin budget

   Effective delivery against strategic priorities, including finance simplification; mortgage enhancement model; LIBOR readiness; and overall strategic planning

   Effectively manage the business through the pandemic

   Remediated material weakness

Effectively managed financial risks, reporting and controls
Delivered quantifiable benefits through management of capital and liquidity during pandemic
Delivered against strategic priorities

Jerry L. Schaffner

   Meet strategic objectives for managed loan growth, deposit market share, treasury management verticals, private banking, expense and compensation

Effectively manage the business through the pandemic

Effectively manage credit portfolio

Support customers through the pandemic

   Effectively managed credit during the pandemic

Delivered deposit growth

Supported those affected by pandemic through PPP loans and payment deferrals

Effectively managed expense

Provided effective leadership during pandemic

Stephen Thompson

   Drive success across four strategic initiatives

Direct the business and adapt as market conditions dictate to achieve targeted business and enterprise objectives

Drive succession planning and talent management

Protect and cultivate culture and high employee engagement

Actively support Hilltop shared services initiatives

Effectively manage the business through the pandemic

   Provided effective leadership of PrimeLending

   Effectively assumed PrimeLending CEO position

Fostered growth initiatives, drove culture improvements and oversaw implementation of strategic priorities

Effectively managed the business through pandemic with record volumes

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M. Bradley Winges

   U.S. Agency to-be-announced, or TBA, mortgage-backed securities business maturity

Support and drive FIS core system conversion

Continue to build Public Finance Services business line and focus on profitability

Implement compensation plans

Foster culture to grow the business

Actively support Hilltop shared services initiatives

Effectively manage the business through pandemic, including risk, liquidity and work from home

   Effectively converted to FIS system during the pandemic

Effectively managed risk during the conversion and delivered record financial results for the firm

Implemented compensation plans, including mandatory deferral and garden leave

Provided effective leadership during the pandemic

Implemented improvements to the firm in line with long-term strategic plans

The Committee evaluated the individual performance of each executive, including the factors noted in the table above, and recognized the results each executive achieved that drove the Company’s outstanding performance in 2020. Based upon these evaluations of each NEO’s individual performance in 2020, the Committee awarded each NEO the maximum of 150% for his strategic and individual goals. The Committee also assessed risk and compliance performance for each NEO and determined that no reductions were warranted.

Based on the above financial and individual performance measures and the Committee’s discretion, the 2020 annual cash incentive payments were awarded as follows relative to the 2020 target value:

2020 Annual

% of 2020 Target

 

Name

    

Incentive Payment ($)

    

Annual Incentive

 

Jeremy B. Ford

 

1,433,750

 

185

%

William B. Furr

 

832,500

 

185

%

Jerry L. Schaffner

 

789,750

 

135

%

Stephen Thompson

 

1,341,250

 

185

%

M. Bradley Winges

 

2,061,339

 

165

%

See “Executive Compensation — Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table — Annual Incentive Plan” for more information with respect to our stockholder-approved Annual Incentive Plan.

Discretionary Cash Bonuses

As a result of the extraordinary and record performance achieved during 2020, especially in light of the ongoing pandemic, the Committee reviewed and evaluated the annual incentive bonus that may have been paid in the event the caps were removed. The Committee also evaluated the performance of these individuals in response to the pandemic. Further, the Committee recognized the special and annual bonuses paid to non-executive employees for their performance and the performance of the Company, which increased 99.6% on a pre-tax basis from the prior year. In particular, with respect to Mr. Thompson, PrimeLending had record mortgage origination volume of $23.0 billion (an increase of 47% from prior year) and adjusted pre-tax income of $396 million (an increase of 456% from prior year). Based upon that evaluation, the Committee determined it to be in the best interests of the Company to provide additional cash payments to the following NEOs.

2020 Discretionary

Name

    

Bonus Payment ($)

Jeremy B. Ford

 

William B. Furr

 

500,000

Jerry L. Schaffner

 

140,000

Stephen Thompson

 

2,225,000

M. Bradley Winges

 

650,000

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Each of the NEOs above that currently has an employment agreement with us (Messrs. Furr, Schaffner, Thompson and Winges) agreed and acknowledged that the discretionary bonus paid will not be included in the calculation of any termination or change in control payments under their respective agreement.

The Committee believes these additional payments to be an extraordinary event in light of the record financial results in 2020, and considers them to be non-recurring. Accordingly, the performance criteria for compensation awards granted in 2021 were adjusted to reflect that such compensation earned will likely be more in line with prior incentive compensation levels.

Long-Term Incentives

As described above, we believe that a portion of each NEO’s compensation should be tied to the performance of our stock price, aligning the officer’s interest with that of our stockholders. In this regard, in 2020 the Committee determined that the award vehicle mix should continue to provide an equal mix of PRSUs and TRSUs.

PRSUs granted in 2020 will be earned and cliff vest subject to certain performance goals being met after the three-year performance period from January 1, 2020 through December 31, 2022. The PRSUs provide that the percentage of performance-based shares that will vest at the end of the performance period will be determined based on Hilltop’s cumulative EPS relative to pre-established performance objectives, multiplied by a modifier that is determined based on Hilltop’s TSR relative to banks in the KBW Regional Banking Index. The EPS component of the performance calculation ranges from 50% at threshold (for results at 75% of the EPS goal) to 150% at maximum (for results at 125% of the EPS goal), and the TSR modifier ranges as follows:

Graphic

Accordingly, the total number of shares earned from the performance awards can range from 40% to 180% of the target number of PRSUs granted. No shares will be awarded if EPS results are below threshold. The calculation for the vesting of PRSUs is as follows:

Graphic

For example, if EPS is above stretch performance and Relative TSR is below threshold, the payout percentage would be as follows:

Graphic

TRSUs cliff vest on the third anniversary of the date of grant.

All shares of common stock delivered pursuant to the RSUs are subject to a one-year holding period requirement after vesting. All equity-based awards, including those made to the NEOs, prior to July 2020 were made pursuant to the 2012 Equity Incentive Plan. Since July 2020, all equity-based awards have been made pursuant to the 2020 Equity Incentive Plan, which was adopted by stockholders at the 2020 Annual Meeting of Stockholders held in July 2020. All equity-based awards made to the NEOs are approved by the Committee and not pursuant to delegated authority. Further discussion of the 2012 Equity Incentive Plan and the 2020 Equity Incentive Plan pursuant to which such RSUs were awarded is found under “Executive Compensation — Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table” below.

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2020 Long-Term Incentive Grants

In 2020, long-term incentive awards were made in consideration of each executive’s role, competitive market practice, and performance. Grants were made in the form of RSUs on February 20, 2020, to the following NEOs as set forth below:

PRSUs

Total RSUs

TRSUs

Awarded

Awarded

Name

Awarded

(at Target)

(at Target)

Jeremy B. Ford

 

67,782

 

67,781

135,563

William B. Furr

 

11,297

11,297

22,594

Jerry L. Schaffner

 

9,603

9,602

19,205

Stephen Thompson

 

6,779

6,778

13,557

M. Bradley Winges

 

13,557

13,556

27,113

In 2020, Mr. Thompson received an additional grant of 5,014 TRSUs that will cliff vest on the third anniversary of the date of grant. The additional TRSUs were granted in connection with Mr. Thompson’s promotion to Chief Executive Officer of PrimeLending. Additionally, in 2020 Mr. Jeremy Ford received a grant of 41,667 TRSUs that cliff vest on third anniversary of the date of grant. These TRSUs were awarded in connection with the successful, and resulting gain from, sale of National Lloyds Corporation on June 30, 2020.

2021 Long-Term Incentive Grants

On February 23, 2021, the Committee adjusted the mix of long-term incentive awards to increase the allocation to PRSUs based upon performance during 2020 and approved a grant of RSUs to the NEOs, as set forth below:

PRSUs

Total RSUs

TRSUs

Awarded

Awarded

Name

Awarded

(at Target)

(at Target)

Jeremy B. Ford

 

50,603

 

80,117

 

130,720

William B. Furr

 

10,107

 

16,133

 

26,240

Jerry L. Schaffner

7,284

 

8,886

16,170

Stephen Thompson

9,917

 

20,593

30,510

M. Bradley Winges

 

10,678

 

12,202

 

22,880

In determining the grants for 2021, which generally had higher grant values than 2020 while maintaining similar share usage, the Committee gave consideration to the Company’s exceptional results in 2020 that were well above the maximum performance levels allowed for in the Annual Incentive Plan (which is capped at 185% of the target amount). In particular, the Committee gave special consideration to the leadership of Messrs. Jeremy B. Ford, Furr, Winges and Thompson in driving the Company’s record financial performance and successful execution of multiple key strategic priorities. The consideration given by the Committee to increase 2021 grant values in recognition of outstanding performance is expected to be non-recurring; however, such considerations will be evaluated by the Committee as it deems necessary.

Payout of the 2018-2020 PRSUs

The following table provides the calculation of the payout for the PRSUs granted in 2018, which resulted in 180% of the target number of shares being earned. Similar to the 2020 awards described above, payouts for the PRSUs granted in 2018 cliff vested in three years, or early 2021, based on three-year cumulative EPS performance multiplied by a modifier of the payout based on our three-year TSR relative to the banks in the KBW Regional Banking Index.

Metric

Threshold

Target

Maximum

Actual

Cumulative EPS

$

3.75

$

5.00

$

6.25

$

8.74

% of Target Payout

50%

100%

150%

150%

Relative TSR percentile ranking

25th

50th

75th

89th

Modifier

80%

100%

120%

120%

Final Payout

180%

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Perquisites and Other Benefits

We provide various perquisites and other benefits to certain NEOs. Mr. Jeremy B. Ford is provided access to company aircraft for personal use and such personal use is treated as income to him. Mr. Schaffner is provided with a company-owned vehicle for his use. Otherwise, our NEOs generally receive only medical benefits, life insurance and long-term disability coverage, as well as matching contributions to the Company’s 401(k) program, on the same terms and conditions as generally available to all employees. See “Executive Compensation — All Other Compensation Table” below.

Compensation of Our Non-Executive Chairman of the Board

Gerald J. Ford, Chairman of the Board of Directors, provides us with significant value given his experience in the financial services industry, including mergers and acquisitions, capital and liquidity management and other operating matters, such as key personnel hires. On a daily basis, our Chairman and Chief Executive Officer discuss matters relating to the Company. Weekly, our Chairman also meets with the executive management of the Company to discuss matters related to the Company. In addition, our Chairman is instrumental in the sourcing, negotiation and completion of acquisitions and dispositions. Accordingly, our Chairman, in addition to his strategic input, spends considerable time and efforts in guiding our business and executive management in creating value for shareholders.

In addition to the fees paid to our Chairman of the Board of Directors described above, we also grant the Chairman of the Board of Directors a restricted stock unit, or RSU, award representing 30,000 shares each year. This RSU award cliff vests on the third anniversary of the date of grant. The RSU award agreement also provides for pro rata vesting upon termination without cause, death or disability. Commencing in 2019, all equity award agreements, including the RSU awards granted to the Chairman of the Board of Directors, contain “double trigger” provisions, which require termination without cause within the six months preceding or the twelve months following a change in control in order for the equity awards to vest in connection with a change in control.

The Compensation Committee evaluates the compensation of directors annually, including grants of RSUs to the Chairman of the Board of Directors. Given the experience and involvement of the Chairman of the Board of Directors, the Compensation Committee believes that the compensation paid to the Chairman of the Board of Directors is considerably less than the cost that we would incur to employ or retain someone else of his caliber to provide guidance and advice to us as frequently as he does.

Severance and Other Post-Termination Arrangements

We generally do not currently maintain any severance or change in control programs other than the change in control provisions in our 2012 Equity Incentive Plan and 2020 Equity Incentive Plan (with exceptions noted below). We have, however, historically paid severance, the amount of which is generally determined based on both length of tenure and level of compensation, when termination occurs other than for cause and pursuant to which certain benefits may be provided to the NEOs. Absent the negotiation of specific agreements with the NEOs, severance benefits would be provided on the same basis as provided to other employees of the Company.

Furr Employment Agreement

Pursuant to our employment agreement with Mr. Furr, as amended, upon termination of his employment by us other than for cause, Mr. Furr is entitled to receive his base salary through the effective date of such termination, all earned and unpaid and/or vested, nonforfeitable amounts owed to him at such time under the employment agreement, RSU award agreements or under any compensation or benefit plans, and reimbursement for any unreimbursed business expenses incurred prior to the effective date of such termination (collectively, the “Furr Accrued Amounts”) and a lump-sum cash payment equal to the sum of (i) his annual base salary rate immediately prior to the effective date of such termination, and (ii) an amount equal to the annual incentive cash bonus paid to him in respect of the calendar year immediately preceding the year of the termination, provided that Mr. Furr executes and delivers a release to the Company. If his employment is terminated without “cause” within the twelve months immediately following, or the six months immediately preceding, a “change in control,” he will be entitled to receive the Furr Accrued Amounts and a lump-sum cash payment equal to two times the sum of (i) his annual base salary rate immediately prior to the effective date of such termination and (ii) an amount equal to the annual incentive cash bonus paid to him in respect of the calendar year immediately preceding the year of the termination, provided that Mr. Furr executes and delivers a release to the Company. The immediately foregoing cash amount represents a “double trigger”

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benefit. Finally, if any payment made as a result of a change in control would constitute a “parachute payment” as defined under Section 280G of the Internal Revenue Code, or the Code, the benefits payable will be reduced to $1 below the parachute limit.

Mr. Furr’s employment agreement was amended on August 30, 2019, to extend the term of the agreement to August 31, 2022, add a customer non-solicitation provision and extend the employee non-solicitation provision, among other changes to be consistent with other employment agreements with the Company.

Schaffner Retention Agreement

On November 30, 2012, in connection with the Company’s acquisition of PlainsCapital, the Company entered into a retention agreement with Mr. Schaffner. If Mr. Schaffner’s employment contract is terminated by the Company for cause, by Mr. Schaffner or due to his death or disability (as such terms are defined below), he or his estate, as applicable, is entitled to:

his annual base salary through the date of termination, to the extent not already paid and not deferred;
any annual bonus earned for a prior award period, to the extent not already paid and not deferred;
any business expenses he incurred that are not yet reimbursed as of the date of termination; and
any other amounts or benefits, including all unpaid and/or vested, nonforfeitable amounts owing or accrued to him, required to be paid or provided or which he is eligible to receive under any plan, program, policy or practice or contract or agreement, to the extent not already paid and not deferred, through the date of termination.

In addition, if Mr. Schaffner’s employment is terminated, he or his estate, as applicable, is entitled to a lump-sum cash payment equal to $2,448,000, which represents the amount Mr. Schaffner would have been entitled to receive under his prior employment agreement with PlainsCapital if his employment was terminated at the time of our acquisition of PlainsCapital, plus interest.

Thompson Employment Agreement

In connection with the promotion of Mr. Thompson as President and Chief Executive Officer of PrimeLending, on October 25, 2019, the Company and Mr. Thompson entered into an employment agreement that became effective as of January 1, 2020 and will remain in effect until December 31, 2022. If the employment agreement is terminated by the Company for “cause” (as such term is defined in the employment agreement), Mr. Thompson will be entitled to receive his base salary through the effective date of such termination, all earned and unpaid and/or vested, nonforfeitable amounts owed to him at such time under the employment agreement, RSU award agreements or under any compensation or benefit plans, and reimbursement for any unreimbursed business expenses incurred prior to the effective date of such termination (collectively, the “Thompson Accrued Amounts”), provided that Mr. Thompson executes and delivers a release to the Company. With respect to a termination resulting from Mr. Thompson’s death or disability, Mr. Thompson (or his estate) will be entitled to receive (i) the Thompson Accrued Amounts, (ii) any portion of the sign-on grant of RSUs with a market value of $125,000 or of any other long-term incentive plan that vests pursuant to the terms of the applicable award agreement, (iii) an amount equal to the cost of COBRA for Mr. Thompson and his immediate family for a period of twelve months following such termination of employment and (iv) a pro rata portion of his target Incentive Bonus for such period, provided that Mr. Thompson executes and delivers a release to the Company.

 

If Mr. Thompson’s employment is terminated by the Company without “cause” (other than pursuant to a “Change in Control” (as such term is defined in the employment agreement)), Mr. Thompson will be entitled to receive the Thompson Accrued Amounts and, subject to his execution and delivery to the Company of a release, (i) a lump-sum cash payment equal to the sum of (A) his annual base salary rate immediately prior to the effective date of such termination and (B) an amount equal to the Incentive Bonus paid to him in respect of the calendar year immediately preceding the year of the termination, (ii) an amount equal to the cost of COBRA for his immediate family and himself for a period of twelve months following such termination of employment, and (iii) any portion of the sign-on grant or any other long-term incentive plan award granted to Mr. Thompson that vests pursuant to the terms of the applicable award agreement.

 

If Mr. Thompson’s employment is terminated without “cause” within the twelve months immediately following, or the six months immediately preceding, a “Change in Control,” Mr. Thompson will be entitled to receive the Thompson Accrued Amounts and (i) a lump-sum cash payment equal to two times the sum of (A) his annual base salary rate immediately prior to

42


the effective date of such termination and (B) an amount equal to the Incentive Bonus paid to him in respect of the calendar year immediately preceding the year of the termination and (ii) an amount equal to the cost of COBRA for his immediate family and himself for a period of twelve months following such termination of employment, provided that Mr. Thompson executes and delivers a release to the Company. Any unvested RSU awards, including the sign-on grant, also will vest if Mr. Thompson is terminated without “cause” within the twelve months immediately following, or the six months immediately preceding, a “Change in Control”. The foregoing benefits described in this paragraph represent “double trigger” benefits. Notwithstanding the above, any amounts payable to Mr. Thompson upon a “Change in Control” shall not constitute a “parachute payment” and will be reduced accordingly.

Winges Employment Agreement

The Company entered into an employment agreement with Mr. Winges effective upon his commencement of employment with us on February 20, 2019, which remains in effect until February 20, 2022. The employment agreement provides that if Mr. Winges had been terminated without “cause” or due to death or disability within one year of the effective date of his employment agreement, provided that Mr. Winges executed and delivered a release to the Company, he would have received his base salary through the effective date of such termination, all earned and unpaid and/or vested, nonforfeitable amounts owed to him at such time under the employment agreement, RSU award agreements or under any compensation or benefit plans, and reimbursement for any unreimbursed business expenses incurred prior to the effective date of such termination (collectively, the “Winges Accrued Amounts”) and (i) a payment of $2,000,000 less any salary and incentives received during his employment, and this payment would be in lieu of any shares vesting from the grant of any award under a long-term incentive program, (ii) the full vesting and acceleration of, and waiver of any restrictions on transfer, sale or other disposal with respect to, the equity grant of 83,000 TRSUs, and (iii) any portion of the sign-on grant of RSUs with a market value of $200,000 that vested pursuant to the terms of the applicable award agreement. Following the first anniversary of his employment, provided that Mr. Winges executes and delivers a release to the Company, if he is terminated without “cause” he will receive the Winges Accrued Amounts and (i) a lump-sum cash payment equal to one times the sum of (A) his annual base salary rate immediately prior to the effective date of such termination and (B) an amount equal to the annual incentive cash bonus paid to him in respect of the calendar year immediately preceding the year of the termination, (ii) the full vesting and acceleration of, and waiver of any restrictions on transfer, sale or other disposal with respect to, the equity grant of 83,000 TRSUs, (iii) any portion of the sign-on grant of RSUs with a market value of $200,000 that vests pursuant to the terms of the applicable award agreement, and (iv) any other long-term incentive program award granted to Mr. Winges that vests pursuant to the terms of the applicable award agreement.

If Mr. Winges’s employment is terminated without “cause” within the twelve months immediately following, or the six months immediately preceding, a “Change in Control,” Mr. Winges will be entitled to receive the Winges Accrued Amounts and the full vesting of the equity grant, sign-on grant and any other long-term incentive plan awards granted to him, provided that Mr. Winges executes and delivers a release to the Company. In the event the “Change in Control” is on or after the first anniversary of his employment and Mr. Winges is terminated without “cause,” Mr. Winges will be entitled to receive the Winges Accrued Amounts and (i) the full vesting of the equity grant, sign-on grant and any other long-term incentive plan awards granted to him, and (ii) a lump-sum cash payment equal to two times the sum of (A) his annual base salary rate immediately prior to the effective date of such termination and (B) an amount equal to the annual incentive cash bonus paid to him in respect of the calendar year immediately preceding the year of the termination, provided that Mr. Winges executes and delivers a release to the Company. The foregoing benefits described in this paragraph represent “double trigger” benefits. Notwithstanding, any amounts payable to Mr. Winges upon a “Change in Control” shall not constitute a “parachute payment” and will be reduced accordingly.

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Incentive Plans

2012 Equity Incentive Plan

The 2012 Equity Incentive Plan, under which we have granted awards to the NEOs, contains specific termination and change in control provisions. We originally determined to include a change in control provision in the plan (i) to be competitive with what we believe to be the standards for the treatment of equity upon a change in control for similar companies and (ii) to ensure employees who remain after a change in control would be treated the same with regard to equity as the general stockholders who could sell or otherwise transfer their equity upon a change in control. Under the terms of the 2012 Equity Incentive Plan, if a change in control (as defined below in the discussion of the plan under “Executive Compensation — Potential Payments Upon Termination or Change-in-Control”) were to occur, all awards then outstanding would become vested and/or exercisable and any applicable performance goals with respect thereto would be deemed to be fully achieved. For equity grants after January 1, 2019, all equity award agreements contain “double trigger” provisions, which require termination without cause within the six months preceding or the twelve months following a change in control for the equity awards to vest in connection with a change in control. Further discussion of the change in control payments that may be made pursuant to the 2012 Equity Incentive Plan may be found in the “Executive Compensation — Potential Payments Upon Termination or Change-in-Control” section below.

2020 Equity Incentive Plan

The 2020 Equity Incentive Plan was approved by the Board of Directors on April 30, 2020, and approved by our stockholders on July 23, 2020. Upon a change in control of Hilltop, awards will not vest unless the participant incurs a termination of service by us without cause or by the participant for good reason within six months prior to or twelve months following the change in control. A change in control generally includes (i) the acquisition by a third-party of 33% or more of the outstanding voting stock or equity securities of Hilltop, (ii) a merger, reorganization, consolidation, or similar transaction with a third-party after which the stockholders of Hilltop do not retain over 50% of the outstanding voting stock or equity securities following the transaction, (iii) a majority of the members of our Board of Directors are members who were not appointed by the then existing Board of Directors, or (iv) the complete liquidation or dissolution of Hilltop. In connection with a change in control, outstanding awards may be converted into new awards; exchanged or substituted for new awards; or canceled for no consideration, provided participants were given notice and an opportunity to purchase or exercise such awards, or cancelled and cashed out based on the positive difference between the per share amount to be received in connection with the transaction and the purchase/exercise price per share of the award, if any. Further discussion of the change in control payments that may be made pursuant to the 2020 Equity Incentive Plan may be found in the “Executive Compensation — Potential Payments Upon Termination or Change-in-Control” section below.

Annual Incentive Plan

The Annual Incentive Plan, pursuant to which annual incentive bonuses are awarded, does not contain specific change in control provisions. Accordingly, the Committee, in its discretion, may determine what constitutes a change in control and what effects such an event may have on any awards made pursuant to such plan.

Executive Compensation Process

Role of the Compensation Committee

The Committee is responsible for reviewing and approving all aspects of the compensation programs for our NEOs and making all decisions regarding specific compensation to be paid or awarded to them. The Committee is responsible for, among its other duties, the following:

Review and approval of corporate incentive goals and objectives relevant to compensation;
Evaluation of individual performance results in light of these goals and objectives;
Evaluation of the competitiveness of the total compensation package; and
Approval of any changes to the total compensation package, including, but not limited to, base salary, annual and long-term incentive award opportunities and payouts and retention programs.

44


The Committee is responsible for determining all aspects of compensation of the Chief Executive Officer, as well as assessing his individual performance.

In setting the compensation of our NEOs, the Committee, in its discretion, considers (i) the transferability of managerial skills, (ii) the relevance of each NEO’s experience to other potential employees, and (iii) the readiness of the NEO to assume a different or more significant role, either within our organization or with another organization. When the Committee makes pay-related decisions, the Committee considers our acquisition and growth strategy, our desire to attract, retain and motivate talent, and the importance of compensation in supporting the achievement of our strategic objectives.

 

Information about the Committee and its composition, responsibilities and operations can be found under the “Board Committees” section above.

Role of the Chief Executive Officer in Compensation Decisions

The Chief Executive Officer provides input and recommendations to the Committee regarding compensation decisions for his direct reports, including the other NEOs. These recommendations are made within the framework of the compensation programs approved by the Committee and based on market data provided by the Committee’s independent consultant. The input includes base salary changes, annual incentive and long-term incentive opportunities and payouts, specific individual performance objectives, and individual performance assessments. The Chief Executive Officer makes recommendations based on his assessment of the individual officer’s performance, performance of the officer’s respective business or function and employee retention considerations. The Committee reviews and considers the Chief Executive Officer’s recommendations when determining any compensation changes affecting our executive officers.

Role of Compensation Consultant

Pursuant to its charter, the Committee is authorized to retain and terminate any consultant, as well as to approve the consultant’s fees and other terms of the engagement. The Committee also has the authority to obtain advice and assistance from internal or external legal, accounting or other advisors. In 2020, the Committee continued its engagement of Meridian Compensation Partners, LLC, or Meridian, as its independent compensation consultant. Meridian is engaged directly by the Committee.

Pursuant to its engagement, Meridian provides research, data analyses, survey information and design expertise in developing compensation programs for executives and incentive programs for eligible employees. In addition, Meridian keeps the Committee apprised of regulatory developments and market trends related to executive compensation practices. Meridian does not determine or recommend the exact amount or form of executive compensation for any of the NEOs. A representative of Meridian generally attends meetings of the Committee, is available to participate in executive sessions of the Committee and communicates directly with the Committee and the chairman of the Committee.

 

Pursuant to the Committee’s charter, if the Committee elects to use a compensation consultant, the Committee must assess the consultant’s independence, taking into account the following factors:

The provision of other services to the Company by the consultant;
The amount of fees the consultant received from the Company;
The policies and procedures the consultant has in place to prevent conflicts of interest;
Any business or personal relationships between the consulting firm and the members of the Committee;
Any ownership of Company stock by the individuals at the firm performing consulting services for the Committee; and
Any business or personal relationship of the firm with an executive officer of the Company.

Meridian has provided the Committee with appropriate assurances and confirmation of its independent status pursuant to these and other factors. The Compensation Committee evaluated whether the work provided by Meridian raised any conflict of interest, and determined that Meridian has been independent throughout its service for the Committee and no conflict of interest was raised by the work of Meridian described in this Proxy Statement.

45


Peer Group and Benchmarking Approach

The Committee regularly assesses the components of the executive compensation program with advice from its independent compensation consultant. In October 2019, Meridian provided an analysis of base salary, annual incentive and long-term incentive practices of comparable companies in the financial industry. Meridian considered individual compensation elements as well as the total compensation package. This analysis was considered by the Committee when it established 2020 pay opportunities for executives.

In performing this analysis, Meridian developed market data using publicly disclosed compensation information from a peer group of comparable financial institutions, as well as compensation surveys. Survey data reflected financial institutions of similar size to Hilltop and our operating subsidiaries. The Committee did not review the specific companies included in the survey data.

The compensation peer group includes institutions of generally similar asset size and, to the extent possible, organizations with significant other operating segments and non-interest income. In evaluating the peer group, the Committee considers that our combination of businesses adds complexity relative to other banks with similar asset sizes.

The following banks were included in the peer group for Meridian’s market study in October 2019:

Ameris Bancorp

Flagstar Bancorp, Inc.

South State Corporation

BancFirst Corporation

Hancock Whitney Corporation

Texas Capital Bancshares, Inc.

BancorpSouth Bank

Independent Bank Group, Inc.

TowneBank

Cadence Bancorporation

International Bancshares Corporation

Trustmark Corporation

Commerce Bancshares, Inc.

Prosperity Bancshares, Inc.

UMB Financial Corporation

First Financial Bancorp.

Renasant Corporation

Umpqua Holdings Corporation

First Financial Bankshares, Inc.

Simmons First National Corporation

WesBanco, Inc.

First Midwest Bancorp, Inc.

With Meridian’s assistance, the Committee reviewed the peer group in July 2020 and determined to make changes to the group based upon merger and acquisition and other activity among the peers. The review resulted in the removal of Texas Capital Bancshares, Inc. given its asset size exceeded two times that of the Company.

Risk Considerations in Our Compensation Program

We do not believe that our compensation policies and practices for 2020 gave rise to risks that were reasonably likely to have a material adverse effect on our Company. In reaching this conclusion for 2020, we considered the following factors:

Base salary is fixed and the only compensation components that are variable are the annual incentives and PRSUs awarded to NEOs, which were awarded based upon attainment of pre-determined levels of earnings.
Annual Incentive Plan payments to the NEOs were determined or approved following the completion of the audit of the Company’s consolidated financial statements by the Company’s independent registered public accounting firm. Thus, the Committee had ample knowledge of the financial condition and results of the Company, as well as reports of other committees of the Board of Directors, upon which to base its decisions.
We have a balanced program that includes multiple performance goals, rewards short-term and multi-year performance, pays in cash and equity and provides a meaningful portion of pay in stock, which is tied to our long-term performance.
Annual Incentive Plan, 2012 Equity Incentive Plan and 2020 Equity Incentive Plan awards are subject to clawback and adjustments for improper risk taking and significant compliance issues.
Each year the Committee reviews all compensation programs to ensure existing programs are not reasonably likely to have a material adverse effect on the Company.

46


Executive Compensation Programs and Policies

Stock Ownership Guidelines

In February 2014, the Committee recommended, and the Board of Directors adopted, a stock ownership policy applicable to our executive officers and directors. Within five years of the later of appointment or the date the policy was adopted, executive officers are required to achieve and maintain ownership of a defined market value of Company common stock equal to a minimum number of equity or equity-based securities as follows:

Six times annual base salary for the Chief Executive Officer; and
Three times annual base salary for the other executive officers.

Under this policy, directors are expected to own shares with a value greater than five times their annual retainer for serving on the Board of Directors of the Company, unless they are subject to certain restrictions on receiving director fees, or fees in the form of stock. Our director compensation program permits directors to elect to receive their director compensation in cash, Company common stock or a combination of cash and Company common stock.

In calculating equity ownership for purposes of the stock ownership guidelines, we include all shares beneficially owned by an individual, such as shares owned by an individual in the Company’s benefit plans (e.g., 401(k) and Employee Stock Purchase Plan), shares of restricted stock and shares with respect to which an individual has voting or investment power. Unexercised stock options and unearned performance shares are excluded when determining ownership for these purposes.

Executive officers are expected to hold 50% of any net shares received through compensatory equity-based grants until the ownership guidelines are achieved. Once such officer achieves the ownership requirement, he or she is no longer restricted by this holding requirement, provided his or her total stock ownership level does not fall below the ownership guidelines.

In addition, all awards of RSUs granted since February 2014 to NEOs are, subject to certain exceptions, required to be held for one year after vesting.

As of April 28, 2021, all NEOs are on track to meet the ownership guidelines.

Clawback Policy

Our compensation program also includes a clawback from any annual cash or long-term incentive award for improper risk taking and significant compliance issues. Annual Incentive Plan, 2012 Equity Incentive Plan and 2020 Equity Incentive Plan awards are subject to any clawback, recoupment or forfeiture provisions (i) required by law or regulation and applicable to Hilltop or its subsidiaries or (ii) set forth in any policies adopted or maintained by Hilltop or any of its subsidiaries.

Trading Controls and Hedging, Short Sale and Pledging Policies

Executive officers, including the NEOs, are required to receive the permission of the General Counsel prior to entering into any transactions in our securities, including gifts, grants and those involving derivatives. Generally, trading is permitted only during announced trading periods. Employees who are subject to trading restrictions, including the NEOs, may enter into a trading plan under Rule 10b5-1 under the Exchange Act. These trading plans may be entered into only during an open trading period and must be approved by the General Counsel. We require trading plans to include a waiting period and the trading plans may not be amended during their term. The NEO bears full responsibility if he or she violates our policy by permitting shares to be bought or sold without pre-approval or when trading is restricted.

Executive officers are prohibited from entering into hedging, short sale and derivative transactions and are subject to restrictions on pledging our securities. All employees are prohibited from hedging or pledging unvested RSUs.

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Tax Considerations

Section 162(m) of the Code imposes a $1.0 million limit on the tax-deductibility of compensation paid to certain named executive officers. Prior to the Tax Cuts and Jobs Act of 2017, or the Tax Legislation, exceptions were provided for compensation that is “performance-based” and paid pursuant to a plan meeting certain requirements of Section 162(m) of the Code. The Committee has historically considered the implications of Section 162(m) of the Code in the design of its executive compensation programs. The Committee, however, reserved the flexibility, where appropriate, to approve compensation arrangements that may not have been tax deductible to the Company, such as base salary and awards of TRSUs.

The performance-based exception from 162(m) deductibility limits have been repealed, effective for taxable years beginning after December 31, 2017. The Tax Legislation included certain transition relief for historical arrangements that were in place as of November 2, 2017, so long as such arrangements were not materially modified after that date. To the extent that compensation is payable pursuant to such a historical arrangement, if the Company determines that Section 162(m) of the Code will apply to any such awards, the Company generally intends that the terms of those awards will not be materially modified and will be constructed so as to constitute qualified performance-based compensation and, as such, will be exempt from the $1,000,000 limitation on deductible compensation. The Committee continues to reserve flexibility to provide compensation arrangements that it believes are consistent with its compensation philosophy even if the arrangements will result in non-deductible compensation.

Compensation Committee Report

The Compensation Committee of the Board of Directors of Hilltop Holdings Inc. has reviewed and discussed with management the Compensation Discussion and Analysis contained in this Proxy Statement. Based on its review, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Proxy Statement.

The foregoing report has been submitted by the following members of the Compensation Committee:

A. Haag Sherman (Chairman)Rhodes Bobbitt

William T. Hill, Jr.Andrew Littlefair

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Executive Compensation

The following tables set forth information concerning the compensation earned for services performed during 2020, 2019 and 2018 by the NEOs, who were either serving in such capacities on December 31, 2020, during 2020, or are reportable pursuant to applicable SEC regulations.

Summary Compensation Table

Fiscal Years 2020, 2019 and 2018