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Employee Benefit Plans
 12 Months Ended
Dec. 31, 2024
Retirement Benefits [Abstract]  
Employee Benefit Plans Employee Benefit Plans
Retirement Plans
Retirement Plan and Restoration Plan. We maintain a non-contributory defined benefit plan (the “Retirement Plan”) that was frozen as of December 31, 2001. The plan provides pension and death benefits to substantially all employees who were at least 21 years of age and had completed at least one year of service prior to December 31, 2001. Defined benefits are provided based on an employee’s final average compensation and years of service at the time the plan was frozen and age at retirement. The freezing of the plan provides that future salary increases will not be considered. Our funding policy is to contribute yearly, at least the amount necessary to satisfy the funding standards of the Employee Retirement Income Security Act (“ERISA”).
Our Restoration of Retirement Income Plan (the “Restoration Plan”) provides benefits for eligible employees that are in excess of the limits under Section 415 of the Internal Revenue Code of 1986, as amended, that apply to the Retirement Plan. The Restoration Plan is designed to comply with the requirements of ERISA. The entire cost of the plan, which was also frozen as of December 31, 2001, is supported by our contributions.
We use a December 31 measurement date for our defined benefit plans. Combined activity in our defined benefit pension plans was as follows:
202420232022
Change in plan assets:
Fair value of plan assets at beginning of year$174,611 $161,823 $197,747 
Actual return on plan assets5,306 22,477 (26,108)
Employer contributions1,150 1,105 1,114 
Benefits paid(11,340)(10,794)(10,930)
Fair value of plan assets at end of year169,727 174,611 161,823 
Change in benefit obligation:
Benefit obligation at beginning of year142,372 143,944 185,925 
Interest cost6,647 6,983 4,017 
Actuarial (gain) loss(6,779)2,239 (35,068)
Benefits paid(11,340)(10,794)(10,930)
Benefit obligation at end of year130,900 142,372 143,944 
Funded status of the plan at end of year and accrued benefit (liability) recognized
$38,827 $32,239 $17,879 
Accumulated benefit obligation at end of year$130,900 $142,372 $143,944 
Certain disaggregated information related to our defined benefit pension plans as of year-end was as follows:
Retirement PlanRestoration Plan
2024202320242023
Projected benefit obligation$120,179 $130,750 $10,721 $11,622 
Accumulated benefit obligation120,179 130,750 10,721 11,622 
Fair value of plan assets169,727 174,611 — — 
Funded status of the plan at end of year and accrued benefit (liability) recognized
49,548 43,861 (10,721)(11,622)
The components of the combined net periodic cost (benefit) for our defined benefit pension plans are presented in the table below.
202420232022
Expected return on plan assets, net of expenses$(9,645)$(10,959)$(13,966)
Interest cost on projected benefit obligation6,647 6,983 4,017 
Net amortization and deferral1,673 3,479 2,964 
Net periodic expense (benefit)$(1,325)$(497)$(6,985)
Amounts related to our defined benefit pension plans recognized as a component of other comprehensive income were as follows:
202420232022
Net actuarial gain (loss)$4,112 $12,757 $(2,041)
Deferred tax (expense) benefit(863)(2,679)429 
Other comprehensive income (loss), net of tax$3,249 $10,078 $(1,612)
Amounts recognized as a component of accumulated other comprehensive loss as of year-end that have not been recognized as a component of the combined net periodic benefit cost of our defined benefit pension plans are presented in the following table.
20242023
Net actuarial loss$(26,806)$(30,918)
Deferred tax benefit5,630 6,493 
Amounts included in accumulated other comprehensive income/loss, net of tax(21,176)(24,425)
The weighted-average assumptions used to determine the benefit obligations as of the end of the years indicated and the net periodic benefit cost for the years indicated are presented in the table below. Because the plans were frozen, increases in compensation are not considered after 2001.
202420232022
Benefit obligations:
Discount rate5.58 %4.95 %5.14 %
Net periodic benefit cost:
Discount rate4.95 %5.14 %2.79 %
Expected return on plan assets5.70 7.00 7.25 
Management uses an asset allocation optimization model to analyze the potential risks and rewards associated with various asset allocation strategies on a quarterly basis. As of December 31, 2024, management’s investment objective for our defined benefit plans is to achieve current income with growth through price appreciation. This strategy provides for a target asset allocation of approximately 64% invested in fixed income debt securities and approximately 31% invested in equity securities with any remainder invested in cash or short-term cash equivalents. The asset allocation optimization process provides portfolio allocations which best represent the potential risk associated with a given asset allocation over a full market cycle. This is used to help management determine an appropriate mix of assets in order to achieve the plan's long term investment goals. The plan assets are reviewed annually to determine if the obligations can be met with the current investment mix and funding strategy.
The major categories of assets in our Retirement Plan as of year-end are presented in the following table. Assets are segregated by the level of the valuation inputs within the fair value hierarchy established by ASC Topic 820 “Fair Value Measurements and Disclosures,” utilized to measure fair value (see Note 16 - Fair Value Measurements). Our Restoration Plan is unfunded.
20242023
Level 1:
Mutual funds and ETFs$34,564 $38,793 
U.S. Treasury24,341 26,633 
Common stock14,921 13,001 
Cash and cash equivalents431 1,241 
Level 2:
Corporate bonds and notes62,405 58,669 
U.S. government agency securities7,232 7,041 
States and political subdivisions25,833 29,233 
Total fair value of plan assets$169,727 $174,611 
Mutual funds and exchange traded funds (“ETFs”) include various equity, fixed-income and blended funds with varying investment strategies. Approximately 74% of mutual fund investments consist of equity investments as of December 31, 2024. The investment objective of equity funds and other equity investments is long-term capital appreciation with current income. The remaining mutual fund investments consist of diversified corporate bonds and notes; U.S. and international government securities; mortgage-related and other asset-backed securities and loan participations. The investment objective of fixed-income funds and other fixed-income investments is to maximize investment return while preserving investment principal. Our investment strategies prohibit selling assets short and the use of derivatives. Additionally, our defined benefit plans do not directly invest in real estate, commodities, or private investments.
The asset allocation optimization model is used to estimate the expected long-term rate of return for a given asset allocation strategy. Expectations of returns for each asset class are based on comprehensive reviews of historical data and economic/financial market theory. During periods with volatile interest rates and equity security prices, the model may call for changes in the allocation of plan investments to achieve desired returns. Management assumed a long-term rate of return of 5.70% in the determination of the net periodic benefit cost for 2024. The expected long-term rate of return on assets was selected from within the reasonable range of rates determined by historical real returns, net of inflation, for the asset classes covered by the plan’s investment policy and projections of inflation over the long-term period during which benefits are payable to plan participants.
As of December 31, 2024, expected future benefit payments related to our defined benefit plans were as follows:
2025$12,080 
202612,025 
202711,905 
202811,596 
202911,488 
2030 through 203449,199 
$108,293 
We expect to contribute $1.1 million to the defined benefit plans during 2025.
Savings Plans
401(k) Stock Purchase Plan and Other Plans. We maintain a 401(k) stock purchase plan that permits each participant to make before-tax contributions in an amount not less than 2% and not exceeding 50% of eligible compensation and subject to dollar limits from Internal Revenue Service regulations. We match 100% of the employee’s contributions to the plan based on the amount of each participant’s contributions up to a maximum of 6% of eligible compensation. Eligible employees must complete 30 days of service in order to enroll and vest in our matching contributions immediately. Our matching contribution is initially invested in the common stock of Cullen/Frost. Employees may immediately reallocate our matching portion, as well as invest their individual contribution,
to any of a variety of investment alternatives offered under the 401(k) Plan. We may also make discretionary profit sharing contributions to eligible participants. Expense related to the plan, including both 401(k) and profit sharing contributions, totaled $30.4 million in 2024, $32.3 million in 2023 and $28.0 million in 2022.
We maintain a thrift incentive stock purchase plan and a separate non-qualified profit sharing plan to offer certain employees, whose participation in the 401(k) plan is limited, an alternative means of receiving comparable benefits. Expense related to these plans was not significant during 2024, 2023 and 2022.
Stock Compensation Plans
We have three active stock compensation plans (the 2007 Outside Directors Incentive Plan, the 2015 Omnibus Incentive Plan, and the 2024 Equity Incentive Plan). All of the plans have been approved by our shareholders. The 2024 Equity Incentive Plan (the “2024 Plan”) was approved by our shareholders on April 24, 2024 to replace the 2015 Omnibus Incentive Plan (the “2015 Plan”). Under the 2024 Plan, shareholders approved the issuance, pursuant to the plan, of 2,576,038 shares of our common stock. This amount included 2,350,000 newly authorized shares and the 226,038 shares remaining available for issuance under the superseded 2015 Plan. The 2015 Plan had previously superseded the 2007 Outside Directors Incentive Plan (the “2007 Directors Plan”) and the 2005 Omnibus Incentive Plan, which is no longer active. Our stock compensation plans were established to (i) motivate superior performance by means of performance-related incentives, (ii) encourage and provide for the acquisition of an ownership interest in our company by employees and non-employee directors and (iii) enable us to attract and retain qualified and competent persons as employees and to serve as members of our board of directors.
Under the 2024 Plan, we may grant, among other things, nonqualified stock options, incentive stock options, stock awards, stock appreciation rights, restricted stock units, performance share units or any combination thereof to certain employees and non-employee directors. Any of the authorized shares may be used for any type of award allowable under the Plan. The Compensation and Benefits Committee (“Committee”) of our Board of Directors has sole authority to (i) establish the awards to be issued, (ii) select the employees and non-employee directors to receive awards, and (iii) approve the terms and conditions of each award contract. Each award under the stock plans is evidenced by an award agreement that specifies the award price, the duration of the award, the number of shares to which the award pertains, and such other provisions as the Committee determines. For stock options, the option price for each grant is at least equal to the fair market value of a share of Cullen/Frost’s common stock on the date of grant. Options granted expire at such time as the Committee determines at the date of grant and in no event does the exercise period exceed a maximum of ten years. As defined in the plans, outstanding unvested awards may immediately vest upon a change-in-control of Cullen/Frost and subsequent termination resulting from the change in control.
A combined summary of activity in our active stock plans is presented in the table. Performance stock units outstanding are presented assuming attainment of the maximum payout rate as set forth by the performance criteria. The target award level for performance stock units granted in 2024, 2023 and 2022 was 21,554, 66,471 and 35,015, respectively. As of December 31, 2024, there were 2,361,570 shares remaining available for grant for future awards.
Director Deferred
Stock Units
Outstanding		Non-Vested
Restricted Stock Units
Outstanding		Performance Stock Units OutstandingStock Options
Outstanding
Number of UnitsWeighted-
Average
Fair Value
at Grant		Number
of Shares/Units		Weighted-
Average
Fair Value
at Grant		Number of UnitsWeighted-
Average
Fair Value
at Grant		Number
of Shares		Weighted-
Average
Exercise
Price
January 1, 202156,301 $79.21 449,337 $93.05 202,460 $84.71 877,681 $69.02 
Granted5,382 133.67 119,176 142.56 52,527 133.40 — — 
Exercised/vested(16,022)74.89 (97,154)94.81 (25,180)87.18 (261,454)63.72 
Forfeited/expired— — (6,040)93.28 (16,058)87.18 — — 
December 31, 202245,661 87.15 465,319 105.36 213,749 96.20 616,227 71.27 
Granted8,503 103.47 217,561 85.39 99,710 74.71 — — 
Exercised/vested— — (108,920)94.00 (28,151)85.74 (130,286)71.37 
Forfeited/expired— — (7,154)114.53 (18,254)85.74 — — 
December 31, 202354,164 89.71 566,806 99.77 267,054 89.99 485,941 71.25 
Granted7,997 116.84 176,892 129.44 32,334 119.17 — — 
Exercised/vested(9,382)80.99 (232,617)91.78 (45,818)57.89 (301,965)74.98 
Forfeited/expired— — (3,219)106.74 (22,913)57.89 — — 
December 31, 202452,779 95.37 507,862 113.72 230,657 103.65 183,976 65.11
Director deferred stock units granted to non-employee directors generally have immediate vesting. Upon retirement from our board of directors, non-employee directors will receive one share of our common stock for each director deferred stock unit held. Non-vested restricted stock units granted to employees generally have a three-year-cliff vesting period although awards granted prior to 2021 generally had a four-year-cliff vesting period. Outstanding non-vested restricted stock units and director deferred stock units receive equivalent dividend payments as such dividends are declared on our common stock.
Performance stock units represent shares potentially issuable in the future. For performance stock units granted in 2024, and years prior to 2021, issuance is based upon the measure of our achievement of relative return on assets over a three-year performance period compared to an identified peer group's achievement of relative return on assets over the same three-year performance period. For performance stock units granted in 2023, 2022, and 2021, issuance is based upon the measure of our achievement of growth in adjusted net revenue, averaged over the three-year performance period, compared to the 2023, 2022, and 2021 base-year amounts, respectively. Performance stock units are eligible to receive equivalent dividend payments based on declared dividends on our common stock during the performance period. Equivalent dividend payments are based upon the ultimate number of shares issued under each performance award and are deferred until such time that the units vest and shares are issued.
Options granted to employees generally have a ten-year life and vest in equal annual installments over a four-year period. No stock options have been granted since 2015. At December 31, 2024, all outstanding options were fully exercisable at an exercise price of $65.11 per share and had a remaining contractual life of 0.82 years. The total intrinsic value of outstanding options was $12.7 million at December 31, 2024.
Shares issued in connection with stock compensation awards are issued from available treasury shares. If no treasury shares are available, new shares are issued from available authorized shares. Shares issued in connection with stock compensation awards along with other related information were as follows:
202420232022
New shares issued from available authorized shares— 49,887 118,389 
Shares issued from available treasury stock589,782 217,470 281,421 
Total589,782 267,357 399,810 
Proceeds from stock option exercises$22,643 $9,299 $16,659 
Intrinsic value of stock options exercised13,454 3,614 19,616 
Fair value of restricted/director deferred stock units vested35,922 13,445 19,308 
Stock-based Compensation Expense. Stock-based compensation expense is recognized ratably over the requisite service period for all awards. For most stock option awards, the service period generally matches the vesting period. For stock options granted to certain executive officers and for non-vested restricted stock units granted to all participants, the service period does not extend past the date the participant reaches 65 years of age. Director deferred stock units granted to non-employee directors generally have immediate vesting and the related expense is fully recognized on the date of grant. For performance stock units, the service period generally matches the three-year performance period specified by the award, however, the service period does not extend past the date the participant reaches 65 years of age. Expense recognized each period is dependent upon our estimate of the number of shares that will ultimately be issued.
Stock-based compensation expense and the related income tax benefit is presented in the following table. The service period for performance stock units granted each year begins on January 1 of the following year.
202420232022
Non-vested restricted stock units$19,457 $16,734 $13,162 
Director deferred stock units934 880 720 
Performance stock units(628)6,976 4,440 
Total$19,763 $24,590 $18,322 
Income tax benefit$4,776 $4,120 $2,969 
Unrecognized stock-based compensation expense and the weighted-average period over which the expense is expected to be recognized at December 31, 2024 is presented in the table below. Unrecognized stock-based compensation expense related to performance stock units is presented assuming attainment of the maximum payout rate as set forth by the performance criteria.
Unrecognized ExpenseWeighted-Average Number of Years for Expense Recognition
Non-vested restricted stock units$25,827 2.20
Performance stock units12,912 2.02
Total$38,739 
Valuation of Stock-Based Compensation. For the purposes of recognizing stock-based compensation expense, the fair value of non-vested restricted stock units and director deferred stock units is generally the market price of the stock on the measurement date, which, for us, is the date of the award. The fair value of performance stock units is determined in a similar manner except that the market price of the stock on the measurement date is discounted by the present value of the dividends expected to be paid on our common stock during the service period of the award because dividend equivalent payments on performance stock units are deferred until such time that the units vest and shares are issued. In applying this discount to the market price of our stock on the measurement date, we assumed we would pay a flat quarterly dividend during the service period equal to our most recent dividend payment, which was $0.95, $0.92 and $0.87 in 2024, 2023 and 2022, respectively, discounted at a weighted-average risk-free rate of 4.09%, 5.01% and 4.45% in 2024, 2023 and 2022, respectively.
The fair value of employee stock options granted is estimated on the measurement date, which, for us, is the date of grant. The fair value of stock options is estimated using a binomial lattice-based valuation model that takes into account employee exercise patterns based on changes in our stock price and other variables and allows for the use of dynamic assumptions about interest rates and expected volatility. No stock options have been granted since 2015.