Prosperity Bancshares Inc 8-K, filed Apr 16, 2025
Prosperity Bancshares Inc (PB)
About this 8-K
Prosperity Bancshares Inc filed this 8-K on April 16, 2025, reporting on events of April 15, 2025.
Items reported
- Item 5.02: Director or officer change, or executive pay
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On April 15, 2025, upon the recommendation of the Compensation Committee of the Board of Directors of Prosperity Bancshares, Inc. (the “Company”), the Company and Prosperity Bank (the “Bank” and, together with the Company, the “Employer”) entered into an employment and change in control agreement (the “Agreement”) with Kevin J. Hanigan, the President and Chief Operating Officer of the Company and the President of the Bank.
The Agreement provides for an initial three-year term, with automatic one-year renewal periods thereafter unless either party provides the other with 60 days’ prior written notice of an election not to extend the Agreement.
Under the Agreement, Mr. Hanigan will receive an annual base salary of $1,092,865, subject to increase but not decrease. Mr. Hanigan will be eligible to participate in any applicable bonus programs of the Company. The decision to provide bonus compensation and the amount and terms of any such bonuses will be in the sole and absolute discretion of the Company.
Under the Agreement, if Mr. Hanigan’s position were to be terminated by the Company without Cause (as defined in the Agreement), or by Mr. Hanigan with Good Reason (as defined in the Agreement), during the period that begins six months before and ends twelve months after a Change in Control (as defined in the Agreement), he would receive a payment equal to three times his base salary then in effect, plus three times the average of his earned annual bonus payment (consisting of the bonus paid under the formulaic annual incentive bonus program and any discretionary cash bonus) for the two years prior to his termination date. In either event, Mr. Hanigan would continue to be subject to the non-competition and non-solicitation provisions of the Agreement until the later of the end of the term of the Agreement or one year following his termination date.
If Mr. Hanigan is terminated by the Company without Cause or terminates his employment for Good Reason, other than in connection with a Change in Control as discussed above, he will be entitled to receive a lump sum cash payment equal to the aggregate of (1) any unpaid portion of his base salary then in effect through the date of termination, (2) any accrued but unpaid vacation pay, (3) reimbursement for incurred business expenses that remain unpaid as of the date of termination, (4) any amounts or benefits which he may be entitled to through the date of termination under then-existing or applicable plans or arrangements, (5) an amount equal to the greater of (a) his base salary through the term of the agreement and (b) one times his base salary then in effect, and (6) a pro rata portion of his average annual bonus that is unpaid for the year in which termination occurs. Additionally, any outstanding restricted stock would be accelerated and vest in one-third increments for each full year worked after the applicable grant date. In either event, Mr. Hanigan would continue to be subject to the noncompetition and non-solicitation provisions of the Agreement until the later of the end of the term of the Agreement or one year following his termination date.
If Mr. Hanigan’s employment is terminated by the Company for Cause or if he terminates his employment without Good Reason, he would be entitled to receive a lump sum cash payment equal to the aggregate of (1) any unpaid portion of his base salary then in effect through the date of termination, (2) any accrued but unpaid vacation pay, (3) reimbursement for incurred business expenses that remain unpaid as of the date of termination, and (4) any amounts or benefits which he may be entitled to through the date of termination under then-existing or applicable plans or arrangements. In either event, Mr. Hanigan would continue to be subject to the non-competition and non-solicitation provisions of the Agreement until the later of the end of the term of the Agreement or one year following his termination date.
If Mr. Hanigan is terminated by the Company for reason of death or Disability (as defined in the Agreement), he will be entitled to receive a lump sum cash payment equal to the aggregate of (1) any unpaid portion of his base salary then in effect through the date of termination, (2) any accrued but unpaid vacation pay, (3) reimbursement for incurred business expenses that remain unpaid as of the date of termination, and (4) any amounts or benefits which he may be entitled to through the date of termination under then-existing or applicable plans or arrangements. In addition, if his employment is terminated for Disability, Mr. Hanigan would continue to be subject to the non-competition and non-solicitation provisions of the Agreement until the later of the end of the term of the Agreement or one year following his termination date.
The change in control payments to be made under the Agreement are subject to a limitation that the total amount of all payments to Mr. Hanigan that would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the “Code”)) will be reduced so that no portion of such payments to Mr. Hanigan would be subject to the excise tax imposed by Section 4999 of the Code, other than in the circumstances specified in the Agreement.
The summary of the Agreement set forth above is qualified in its entirety by reference to Exhibit 10.1, which is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following is filed as an exhibit to this Current Report on Form 8-K:
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Description of Exhibit |
10.1 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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PROSPERITY BANCSHARES, INC. (Registrant) |
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Dated: April 16, 2025 |
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By: |
/s/ Charlotte M. Rasche |
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Charlotte M. Rasche |
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Executive Vice President and General Counsel |
Exhibit 10.1
Executive Employment Agreement
This Executive Employment Agreement (the “Agreement”) is made and entered into by and among Prosperity Bancshares, Inc., a Texas corporation (“Bancshares”), Prosperity Bank (the “Bank”), a Texas banking association and wholly owned subsidiary of Bancshares, and Kevin J. Hanigan, an individual who resides in Texas (“Executive”). Bancshares and the Bank are collectively referred to herein as the “Company.”
WHEREAS, the Board of Directors of Bancshares and the Board of Directors of the Bank, upon the recommendation of the Compensation Committee of the Board of Directors of Bancshares, desire to continue the employment of the Executive as President and Chief Operating Officer of Bancshares and President of the Bank on the terms and conditions set forth herein; and
WHEREAS, the Executive desires to continue to be employed as President and Chief Operating Officer of Bancshares and President of the Bank on such terms and conditions.
NOW, THEREFORE, in consideration of the mutual covenants, promises and obligations set forth herein, the parties agree as follows:
1.1 Term. The Executive’s employment with the Bank under this Agreement shall commence on April 15, 2025 (the “Effective Date”) and shall continue until the date that is three (3) years from the Effective Date (the “Initial Term”). Upon the expiration of the Initial Term, this Agreement shall automatically be extended on the same terms and conditions set forth herein for a one (1) year period (each a “Renewal Term”) (the Initial Term and the Renewal Terms, if any, collectively referred to herein as the “Term”), unless either party provides the other party not less than sixty (60) days’ prior notice in writing of such party’s election not to extend the Agreement for a Renewal Term. If either party provides such notice of non-renewal, this Agreement shall terminate upon the expiration of the Initial Term or the Renewal Term, as applicable. Either party may terminate this Agreement at any time, subject to the terms of this Agreement.
1.2 Termination of Prior Agreements. The Company and Executive are parties to that certain Executive Employment Agreement dated June 16, 2019 (the “Prior Agreement”). The Company and Executive acknowledge that execution of this Agreement shall terminate the Prior Agreement, and upon the termination of the Prior Agreement, Executive shall have no further rights under the Prior Agreement. Executive acknowledges that the benefits that Executive will receive pursuant to this Agreement constitute consideration to which Executive is not otherwise entitled and is adequate consideration to support termination of the Prior Agreements and replacement by this Agreement.
2.1 Position. During the Term, the Executive shall serve as the President and Chief Operating Officer of Bancshares and President of the Bank, or in such other positions designated by the Company with responsibilities and authority commensurate with at least that of President and with Executive’s background and qualifications. The Executive shall have such duties, authority and responsibility as shall be determined from time to time by the Company commensurate with Executive’s position with the Company.
2.2 Duties. During the Term, the Executive shall devote substantially all of Executive’s business time and attention to the performance of the Executive’s duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise without the prior written consent of the Company. Notwithstanding the foregoing, the Executive will be permitted to (i) with prior written consent of the Company, act or serve as a director, trustee, committee member or principal of a civic or charitable organization, and (ii) purchase or own less than five percent (5%) of the publicly traded securities of any corporation; provided that, such ownership represents a passive investment and that the Executive is not a controlling person of, or a member of a group that controls, such corporation; provided further that, the activities described in clauses (i) and (ii) do not interfere with the performance of the Executive’s duties and responsibilities to the Company. During the Term, Executive shall be subject to the Company's policies, rules and regulations. The Executive acknowledges and agrees that he owes a fiduciary duty of loyalty, fidelity and allegiance to the Company.
3.1 Base Salary. The Bank shall pay the Executive an annual base salary of $1,092,865.00, subject to applicable taxes and withholdings, in periodic installments in accordance with the Bank’s customary payroll practices (the “Base Salary”). The Executive’s Base Salary shall be reviewed annually by Bancshares’ Compensation Committee and may be increased, but not decreased, in the sole discretion of the Compensation Committee.
3.2 Bonus and Incentive Compensation. The Executive shall be eligible to participate in any applicable bonus programs as may be implemented by the Company during the course of Executive’s employment and in accordance with the terms of any such bonus program including that certain executive annual incentive bonus program, or any replacement bonus program for executives of the Company. The decision to provide bonus compensation and the amount and terms of any such bonuses shall be in the sole and absolute discretion of the Company.
3.3 Employee Benefits. During the Term, the Executive shall be entitled to participate in employee benefit plans, practices and programs maintained by the Company, as in effect from time to time, including any stock incentive plan (collectively, “Employee Benefit Plans”), to the extent consistent with applicable law and the terms of the applicable Employee
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Benefit Plans. The Company reserves the right to amend or cancel any Employee Benefit Plans at any time in its sole discretion, subject to the terms of such Employee Benefit Plan and applicable law.
3.4 Business Expenses. The Executive shall be entitled to reimbursement for all reasonable and necessary out-of-pocket business, entertainment and travel expenses incurred by the Executive in connection with the performance of the Executive’s duties hereunder in accordance with the Bank’s expense reimbursement policies and procedures.
3.5 Automobile Benefit. During the Term, the Executive shall be provided with a Bank-leased or Bank-owned automobile.
4.1 Termination. Executive’s employment may be terminated by either the Company or the Executive at any time and for any reason, subject to the terms of this Section 4. Upon termination of employment during the Term, compensation and benefits shall be paid as set forth below.
4.2 Termination With Cause or Without Good Reason. The Company may terminate Executive’s employment at any time with Cause, defined below, by providing the Executive written notice of termination. The Company may place the Executive on paid leave for up to thirty (30) days while it is determining whether there is a basis to terminate the Executive’s employment for Cause, and such leave shall not, in and of itself, give rise to Good Reason, defined below. The Executive may terminate his employment at any time without Good Reason by providing the Company at least thirty (30) days’ notice of resignation. In the event the Company terminates Executive’s employment with Cause or the Executive terminates his employment without Good Reason, the Executive shall be entitled to receive only the Accrued Benefits, defined below.
4.3 Termination of Employment and/or the Agreement Upon Expiration of Term. If either party provides timely notice of non-renewal of the Agreement, as set forth in Section 1, this Agreement shall expire upon the expiration of the Initial Term or the Renewal Term, as applicable. In such event the Executive’s employment may be terminated as of such expiration, or the Executive’s employment may continue on an at-will basis. In the event the Executive’s employment terminates upon expiration of the Agreement, the Executive shall be entitled to receive only the Accrued Benefits.
4.4 Termination Without Cause or For Good Reason. The Company may terminate Executive’s employment at any time without Cause by providing the Executive written notice of termination. The Executive shall also have the right, at his election to terminate his employment with the Bank for Good Reason. In order to terminate his employment for Good Reason, the Executive must provide written notice to the Company of the facts giving rise to his termination for Good Reason and must terminate his employment within thirty (30) days
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of the initial occurrence of the facts giving rise to the ability to terminate for Good Reason should it not be cured by the Company. In the event that the Company terminates the Executive’s employment without Cause or the Executive terminates his employment with Good Reason, the Executive shall be entitled to receive the following:
Payment will be made in a single lump sum cash payment no later than the thirtieth (30th) day after Executive’s Termination Date, provided that the Executive timely executes and does not revoke a general release of claims in a form acceptable to the Company (the “Release”), which such release is effective by the thirtieth (30th) day after Executive’s Termination Date. The Restricted Stock subject to acceleration shall vest on or immediately prior to Executive’s Termination Date.
4.5 Termination Upon the Executive’s Death or Disability. The Executive’s employment hereunder shall terminate automatically upon the Executive’s death during the Term, and the Company may terminate the Executive’s employment on account of the Executive’s Disability, defined below. In the event this Agreement and/or Executive’s employment terminates due to death or Disability, the Executive (or the Executive’s estate in the event of death) shall be entitled to receive only the Accrued Benefits.
4.6 Termination During Change in Control Period. Notwithstanding any other provision contained herein, if the Executive's employment hereunder is terminated by the Executive for Good Reason or by the Company without Cause (other than on account of the Executive's death or Disability), in each case during the period that begins six (6) months before a Change in Control, defined below, and ends twelve (12) months following such
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Change in Control (the “Change in Control Period”), the Executive shall be entitled to receive the Accrued Benefits and, subject to the Executive's execution of the Release which becomes effective within thirty (30) days following the Termination Date, in lieu of the benefits under Section 4.4 hereunder, the Executive shall be entitled to receive the following:
Payment will be made in a single lump sum cash payment on the thirtieth (30th) day after Executive’s Termination Date, provided that the Release is effective by such date. For the avoidance of doubt, in no event shall Executive be eligible for both the payments set forth in Section 4.4 and the payments set forth in this Section 4.6.
7.1 Confidential Information. “Confidential Information” means and includes the Company’s, and its affiliated entities’, confidential and/or proprietary information and/or trade secrets. Confidential Information includes, but is not limited to, all information not generally known to the public, in spoken, printed, electronic or any other form or medium, including, but not limited to the following: information regarding past, current and prospective customers and investors and business affiliates and contractors; information regarding the industry not generally known to the public; strategies, methods, books, records, and documents; technical information concerning products, equipment, services, and processes; procurement procedures, pricing, and pricing techniques; including contact names, services provided, pricing, type and amount of services used, financial data; pricing strategies and price curves; positions; plans or strategies for expansion or acquisitions; budgets; research; financial and sales data; trading methodologies and terms; communications
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information; evaluations, opinions and interpretations of information and data; marketing and merchandising techniques; electronic databases; models; specifications; computer programs; contracts; bids or proposals; technologies and methods; training methods and processes; organizational structure; payments or rates paid to consultants or other service providers. Confidential Information includes any such information that Executive may originate, learn, have access to or obtain, whether in tangible form or memorized. Additionally, Executive recognizes that the Confidential Information is dynamic and ever-changing. Confidential Information does not include information that is generally available to and known by the public, provided that such disclosure to the public is through no direct or indirect fault of the Executive or person(s) acting on the Executive’s behalf. Executive acknowledges that the Company’s business is highly competitive, that this Confidential Information constitutes a valuable, special and unique asset used by the Company in its business, and that protection of such Confidential Information against unauthorized disclosure and use is of critical importance to the Company.
7.2 Promises of the Company. The Company promises and agrees that, reasonably soon after the execution of this Agreement by Executive and during the Term and as part of the employment under this Agreement, the Company shall provide Executive with Confidential Information, which will enable Executive to perform his job for the Company. In addition, after the Effective Date, Executive will have immediate access to, or knowledge of, Confidential Information of third parties, such as actual and potential customers, suppliers, partners, joint ventures, investors, and financing sources of the Company. Executive acknowledges that: (i) the Company has devoted substantial time, effort, and resources to develop and compile the Confidential Information; (ii) public disclosure of such Confidential Information would have an adverse effect on the businesses of the Company; (iii) the Company would not disclose such information to the Executive, nor would the Company employ or continue to employ the Executive without the agreements and covenants set forth in this Section; and (iv) the provisions of this Section are reasonable and necessary to prevent the improper use or disclosure of Confidential Information.
7.3 Executive’s Promises.
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(1) Non-Competition Obligations
(A) in any state where the Company maintains banking centers or lending offices, (a) compete in, engage in, or contribute knowledge to, a business similar to or otherwise competitive with the business of the Company, or (b) compete in, engage in, or contribute knowledge to any type of financial services related business which the Company (i) has plans to engage in, or (ii) has engaged in during the preceding twelve (12) month period if, in either the case of (i) or (ii), within the twenty-four (24) months before the Termination Date, Executive had access to information regarding the proposed plans or the business in which the Company engaged; or
(B) take any action to invest in, own, manage, operate, control, participate in, be employed or engaged by or be connected in any manner with any partnership, corporation or other business or entity engaging in a business similar to or otherwise competitive with that of the Company. Notwithstanding the foregoing, the Executive is permitted hereunder to own, directly or indirectly, up to five percent (5%) of the issued and outstanding securities of any publicly traded financial institution conducting business;
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(2) Non-Solicitation Obligations
(A) call on, solicit, service, or attempt to do any of the foregoing with respect to, customers or prospective customers of the Company if, within the eighteen (18) months prior to the Termination Date, Executive had material contact with the customer or prospective customer, or had obtained material information about the customer or prospective customer; or
(B) hire, retain, call on, solicit for hire or induce to leave employment, any individual who is or was an employee of the Company on the date of, or within the three (3) month period before the date of, such hire, retention, solicitation or inducement, provided that such individual is an individual whom Executive had contact with, knowledge of, or association with in the course of Executive’s employment with the Company, and Executive will not assist any other person or entity in such activities.
7.4 Restricted Period. Except as otherwise provided for herein, the non-competition and non-solicitation obligations set forth in Section 7.3 shall apply from the Effective Date through the later of (a) the end of the Term, regardless of whether Executive’s employment terminates prior to the end of the Term or (b) one (1) year following the Termination Date (the “Restricted Period”). The transfer of employment between the Company and any affiliated entities does not constitute termination of employment.
7.5 Restrictive Covenants Reasonable. The parties to this Agreement hereby agree that the Restrictive Covenants set forth in this Section are ancillary to this Agreement, which is an otherwise enforceable agreement. Executive agrees that his promises in this Section are reasonable and reasonably necessary to protect the legitimate business interest of the Company and its affiliated entities.
7.6 Consideration. As consideration for the Restrictive Covenants, Executive is entitled to the compensation set forth in Sections 3 and 4 of this Agreement. Additionally, the Company agrees to provide Executive with continued access to Confidential Information as described more fully in Section 7.2 above.
7.7 Enforcement and Legal Remedies. The Company and Executive acknowledge and agree that breach of any of the covenants made by Executive in this Section 7 would cause irreparable injury to the Company, which could not sufficiently be remedied by monetary damages; and, therefore, that the Company shall be entitled to obtain such equitable relief as declaratory judgments; temporary, preliminary and permanent injunctions, without posting of any bond, and order of specific performance to enforce those covenants or to prohibit any act or omission that constitutes a breach thereof.
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7.8 Tolling. In the event that the Company files a lawsuit in any court of competent jurisdiction alleging a breach of the Restrictive Covenants by the Executive, then any time period set forth in this Agreement including the time periods set forth above, will be extended one month for each month the Executive was in breach of this Agreement, so that the Company is provided the benefit of the full Restricted Period.
8. Governing Law: Jurisdiction and Venue. This Agreement, for all purposes, shall be construed exclusively in accordance with the laws of Texas without regard to conflicts of law principles. Any action or proceeding by either of the parties to enforce this Agreement shall be brought only in a state or federal court located in the state of Texas, Harris County. The parties hereby irrevocably submit to the exclusive jurisdiction of such courts and waive the defense of inconvenient forum to the maintenance of any such action or proceeding in such venue.
9. Entire Agreement. Except for any restricted stock agreements or other equity incentive agreements between Executive and Bancshares then in effect, and unless specifically provided herein, this Agreement contains all of the understandings and representations between the Executive and the Company pertaining to the subject matter hereof and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter, including the Prior Agreements. The parties mutually agree that the Agreement can be specifically enforced in court and can be cited as evidence in legal proceedings alleging breach of the Agreement.
10. Modification and Waiver. Except as provided for in Section 11, no provision of this Agreement may be amended or modified unless such amendment or modification is agreed to in writing and signed by the Executive and the Company. No waiver by either of the parties of any breach by the other party hereto of any condition or provision of this Agreement to be performed by the other party hereto shall be deemed a waiver of any similar or dissimilar provision or condition at the same or any prior or subsequent time, nor shall the failure of or delay by either of the parties in exercising any right, power or privilege hereunder operate as a waiver thereof to preclude any other or further exercise thereof or the exercise of any other such right, power or privilege.
11. Severability. Should any provision of this Agreement be held by a court of competent jurisdiction to be enforceable only if modified, or if any portion of this Agreement shall be held as unenforceable and thus stricken, such holding shall not affect the validity of the remainder of this Agreement, the balance of which shall continue to be binding upon the parties with any such modification to become a part hereof and treated as though originally set forth in this Agreement. The parties further agree that any such court is expressly authorized to modify any such unenforceable provision of this Agreement in lieu of severing such unenforceable provision from this Agreement in its entirety, whether by rewriting the offending provision, deleting any or all of the offending provision, adding additional language to this Agreement or by making such other modifications as it deems warranted to carry out the intent and agreement of the parties as embodied herein to the maximum extent permitted by law. The parties expressly agree that this Agreement as so modified by the court shall be binding upon and enforceable against each of them.
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In any event, should one or more of the provisions of this Agreement be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions hereof, and if such provision or provisions are not modified as provided above, this Agreement shall be construed as if such invalid, illegal or unenforceable provisions had not been set forth herein.
12. Captions. Captions and headings of the sections and paragraphs of this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the caption or heading of any section or paragraph.
13. Counterparts. This Agreement may be executed in separate counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.
14. Code Section 409A.
14.1 General Compliance. This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), or an exemption thereunder and shall be construed and administered in accordance with Section 409A or such exemption. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made upon a “separation from service” under Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.
14.2 Specified Executives. Notwithstanding any other provision of this Agreement, if any payment or benefit provided to the Executive in connection with his termination of employment is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A and the Executive is determined to be a “specified Executive” as defined under Section 409A, then such payment or benefit shall not be paid until the first payroll date to occur following the six-month anniversary of the date of the Executive’s separation from service or, if earlier, on the Executive’s death (the “Specified Executive Payment Date”). The aggregate of any payments that would otherwise have been paid before the Specified Executive Payment Date shall be paid to the Executive in a lump sum on the Specified Executive Payment Date and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule.
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14.3 Reimbursements. To the extent required by Section 409A, each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following:
15. Code Section 280G. If any of the payments or benefits received or to be received by the Executive (including, without limitation, any payment or benefits received in connection with a change in control or Executive’s termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement, or agreement, or otherwise) (all such payments collectively referred to herein as the “280G Payments”) constitute “parachute payments” within the meaning of Section 280G of the Code and would, but for this Section 15, be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), then such 280G Payments shall be reduced in a manner determined by the Company that is consistent with the requirements of Section 409A until no amount payable to the Executive will be subject to the Excise Tax.
16. Successors and Assigns. This Agreement is personal to the Executive and shall not be assigned by the Executive. Any purported assignment by the Executive shall be null and void from the initial date of the purported assignment. This Agreement shall inure to the benefit of and be binding upon the each of Bancshares and the Bank and their respective permitted successors and assigns. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization, or otherwise) to all or substantially all of the business and/or assets of Bancshares or the Bank to expressly assume and agree to perform, by written agreement in form and substance satisfactory to Executive, all of the obligations of the Company under this Agreement. As used in this Agreement, the terms “Bancshares,” “Bank,” and “Company” shall have the meanings set forth herein and any successor to their respective business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, written agreement, or otherwise.
17. Notice. Notices and all other communications provided for in this Agreement shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, or by overnight carrier to the parties at the addresses set forth below (or such other addresses as specified by the parties by like notice):
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To the Company:
Prosperity Bancshares, Inc. and Prosperity Bank
80 Sugar Creek Center Blvd.
Sugar Land, Texas 77478
Attn: General Counsel
To the Executive:
Kevin J. Hanigan
_________________
Dallas, Texas ______
18. Withholding. The Bank shall have the right to withhold from any amount payable hereunder any Federal, state and local taxes in order for the Bank to satisfy any withholding tax obligation it may have under any applicable law or regulation.
19. Survival. Upon the expiration or other termination of this Agreement, the respective rights and obligations of the parties hereto shall survive such expiration or other termination to the extent necessary to carry out the intentions of the parties under this Agreement.
20. Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated below:
20.1 “Accrued Benefits” means:
20.2 “Average Annual Bonus” means an amount equal to the average of (i) the amount earned under the executive formulaic annual incentive bonus program or any replacement bonus program for executives of the Company, whether paid in restricted stock or cash, and
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(ii) any discretionary cash bonus amounts received by the Executive, for the two (2) calendar years immediately preceding the year in which the Executive’s employment terminates; provided that if Executive’s employment terminates in December of any calendar year, after the amount of the bonus payments are approved by the Compensation Committee, the amount earned for that calendar year and the prior year shall be used in the calculation.
20.3 “Cause” means a determination by the Company that the Executive: (i) has engaged in any act of intentional dishonesty with regard to the Company that is intended to result in his personal enrichment or results in any damage to the Company, or any act of theft, fraud, embezzlement, misappropriation or breach of fiduciary duty or duty of loyalty to the Company, (ii) has been convicted of, pleaded guilty or no contest to or received adjudicated probation or deferred adjudication in connection with a crime involving fraud, dishonesty or moral turpitude or any felony (or a crime of similar import in a foreign jurisdiction), (iii) has engaged in insubordination or refusal to follow the lawful instructions of the Company, (iv) has engaged in negligence or willful misconduct in the performance of his duties with respect to the Company, or (v) has materially breached any material provision of this Agreement or any material written agreement or material corporate policy or code of conduct established by the Company. Except for a failure, breach, or refusal which, by its nature, cannot reasonably be expected to be cured, the Executive shall have thirty (30) days from the delivery of written notice by the Company within which to cure any acts constituting Cause.
20.4 “Change in Control” shall mean the occurrence of any of the following after the Effective Date:
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Notwithstanding the foregoing, a Change in Control shall not occur unless such transaction constitutes a change in the ownership of Bancshares or the Bank, a change in effective control of Bancshares or the Bank, or a change in the ownership of a substantial portion of Bancshares’ or the Bank’s assets under Section 409A.
20.5 “Disability” means the Executive's inability, due to physical or mental incapacity, to substantially perform his duties and responsibilities under this Agreement, with or without reasonable accommodation, for one hundred eighty (180) days out of any three hundred sixty-five (365) day period or one hundred twenty (120) consecutive days. Any question as to the existence of the Executive’s Disability as to which the Executive and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Executive and the Company. If the Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Executive shall be final and conclusive for all purposes of this Agreement.
20.6 “Good Reason” means any of the following reasons:
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20.7 “Termination Date” means Executive’s last day of employment with the Company.
21. Acknowledgement of Full Understanding. The Executive acknowledges and agrees that he has fully read, understands and voluntarily enters into this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date written below.
PROSPERITY BANCSHARES, INC. |
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KEVIN J. HANIGAN |
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/s/ Charlotte M. Rasche |
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/s/ Kevin J. Hanigan |
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Charlotte M. Rasche |
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EVP/General Counsel |
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Date: April 15, 2025 |
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Date: April 15, 2025 |
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PROSPERITY BANK |
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/s/ Charlotte M. Rasche |
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Charlotte M. Rasche |
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Senior EVP/General Counsel |
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Date: April 15, 2025 |
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