SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11-C- or 240.14a-12
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED
BY RULE 14a-(e)(2)
INTERNATIONAL BANCSHARES CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(I)(1)
and 0-11.
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INTERNATIONAL BANCSHARES CORPORATION
Post Office Drawer 1359
Laredo, Texas 78042-1359
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 17, 2001
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
International Bancshares Corporation (the "Company") will be held at the LAREDO
COUNTRY CLUB, 1415 COUNTRY CLUB DRIVE, LAREDO, TEXAS, ON MAY 17, 2001 AT 7:00
P.M. for the following purposes:
(1) To elect ten (10) directors of the Company to serve until the next
Annual Meeting of Shareholders and until their successors shall have been
duly elected and qualified;
(2) To approve the appointment of independent auditors for the 2001 fiscal
year;
(3) To consider and vote on a proposal to approve an amendment to add
300,000 additional shares to the 1996 International Bancshares
Corporation Stock Option Plan;
(4) To transact such other business as may lawfully come before the meeting
or any adjournment thereof.
The record date for the meeting has been fixed at April 5, 2001. Only
shareholders of record at the close of business on that date will be entitled to
vote at the meeting or any adjournment thereof.
In order to ensure the representation of a quorum at the meeting,
shareholders who do not expect to attend the meeting in person are urged to sign
the enclosed proxy and return it promptly to the Trust Division, International
Bank of Commerce, P. O. Drawer 1359, Laredo, Texas 78042-1359. A return envelope
is enclosed for that purpose.
INTERNATIONAL BANCSHARES CORPORATION
Dennis E. Nixon
President
Dated: April 16, 2001
INTERNATIONAL BANCSHARES CORPORATION
1200 San Bernardo Avenue
Laredo, Texas 78040
------------------------
PROXY STATEMENT
------------------------
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of
International Bancshares Corporation, a Texas Corporation (the "Company") to be
voted at the Annual Meeting of Shareholders to be held on May 17, 2001 at
7:00 p.m. at the LAREDO COUNTRY CLUB, 1415 COUNTRY CLUB DRIVE, LAREDO, TEXAS.
The Company will bear the cost of such solicitation. It is expected that the
solicitation of proxies will be primarily by mail. Proxies may be solicited
personally by regular employees of the Company at a nominal cost. Any
shareholder giving a proxy has the power to revoke it at any time prior to the
voting of the proxy by giving notice in person or in writing to the Secretary of
the Company or by appearing at the Annual Meeting and voting in person. The
approximate date on which this proxy statement and the accompanying form of
proxy are first sent or given to security holders is April 16, 2001.
VOTING AT MEETING
Only holders of record of common stock, par value $1.00 per share ("Common
Stock"), of the Company at the close of business on April 5, 2001, shall be
entitled to vote at the meeting. There were 21,312,026 shares of Common Stock
issued and outstanding on the record date held of record by approximately 1988
shareholders. Each share of Common Stock is entitled to one vote.
All shares entitled to vote represented by a properly executed and unrevoked
proxy received in time for the meeting will be voted at the meeting in
accordance with the instructions given, but in the absence of instructions to
the contrary, such shares will be voted affirmatively. Persons empowered as
Proxies will also be empowered to vote in their discretion upon such other
matters as may properly come before the meeting or any adjournment thereof. If
any nominee shall be unable to serve, which is not now contemplated, the proxies
will be voted for such substitute nominee(s) as the Board of Directors
recommends.
A quorum for the transaction of business at the Annual Meeting requires
representation, in person or by proxy, of the holders of a majority of the
issued and outstanding shares of Common Stock. The judges of election will treat
abstentions and broker non-votes as shares that are present for purposes of
determining the presence of a quorum for the transaction of business at the
meeting. A quorum with respect to any specific proposal to be voted on at the
Annual Meeting requires representation, in person or by proxy, of the holders of
a majority of the issued and outstanding shares of Common Stock entitled to vote
on the proposal. Abstentions will be treated as present and entitled to vote
with respect to any proposal submitted to the shareholders for a vote for
purposes of determining both the presence of a quorum with respect to such
proposal and the approval of such proposal. If a broker indicates on a proxy
that it does not have discretionary authority as to certain shares to vote on a
particular matter, the holder(s) of such shares will not be considered as
present and entitled to vote with respect to such matter for purposes of
determining either the presence of a quorum with respect to such matter or the
approval of such matter. With respect to any proposal other than the election of
directors, such proposal shall be determined by the affirmative vote of the
holders of a majority of the shares of Common Stock represented, in person or by
proxy, at the meeting and entitled to vote thereon. Thus, abstention with
respect to any such matter will have the same legal effect as a vote against
such matter, while broker non-votes will not affect the outcome of such matter.
With respect to the election of directors, the directors
1
shall be elected by a plurality vote of the holders of shares of Common Stock
present at the meeting and entitled to vote thereon.
PROPOSAL--1
ELECTION OF DIRECTORS
Ten directors, constituting the entire Board of Directors, are to be elected
at the Annual Meeting. Each director is to hold office until the next Annual
Meeting and until his/her successor is elected and qualified. The Proxies named
in the accompanying proxy, who have been designated by the Board of Directors of
the Company, intend to vote for the following nominees, unless otherwise
instructed in such proxy. Certain information concerning each nominee is set
forth below, including information regarding each nominee's positions with
International Bank of Commerce, the Company's lead bank subsidiary ("IBC"):
SERVED AS
NOMINEE FOR DIRECTOR
DIRECTOR SINCE(1)(3) AGE PRINCIPAL OCCUPATION (2)
----------- ----------- -------- ------------------------
Lester Avigael....................... 1966 74 Retail Merchant and Director of IBC
Irving Greenblum..................... 1981 71 Retail Merchant (Muebleria Mexico,
S.A.)
R. David Guerra...................... 1993 48 Vice President of the Company since
1986 and President of the IBC Branch
in McAllen, Texas and Director of IBC
Daniel B. Hastings Jr................ 2000 53 Licensed U.S. Custom Broker and
Director of IBC
Richard E. Haynes.................... 1977 58 Attorney at Law; Real Estate
Investments; and Director of IBC
Sioma Neiman......................... 1981 73 International entrepreneur
Peggy J. Newman...................... 1997 69 Real Estate Investments; President of
Newman Poultry Co. and Director of
IBC since 1996
Dennis E. Nixon...................... 1975 58 Chairman of the Board of the Company
since May 1992 and President of the
Company since 1979; President, Chief
Executive Officer and Director of IBC
Leonardo Salinas..................... 1976 67 Real Estate Investments and Director
of IBC
Antonio R. Sanchez, Jr............... 1995 58 Chairman of the Board of Sanchez
Oil & Gas Corporation; Investments;
and Director of IBC
------------------------
(1) Includes time served as director of IBC prior to July 28, 1980 when the
Company became the successor issuer to IBC.
(2) Except as otherwise noted, each nominee has held the office indicated or
other offices in the same company for the last five years.
2
(3) Leonardo Salinas, who had served as Vice President of the Company and Senior
Executive Vice President of IBC, retired as of June 30, 2000.
None of the nominees for director and none of the executive officers of the
Company have a family relationship with any of the other nominees for director
or executive officers.
None of the above nominees is a director of any other company which has a
class of securities registered under, or is required to file reports under, the
Securities Exchange Act of 1934 or of any company registered under the
Investment Company Act of 1940, except for Mr. Sanchez who serves as director of
Conoco Oil and Zixit Corporation.
EXECUTIVE OFFICERS
The executive officers of the Company are Dennis E. Nixon, President and
Chairman of the Board; David Guerra, Vice President; and Imelda Navarro,
Treasurer, all of whom are nominees for director except for Imelda Navarro.
Imelda Navarro, age 43 is presently Treasurer of the Company and Senior
Executive Vice President of IBC and has served IBC since 1975 and the Company
since 1982.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors during 2000 consisted of
Lester Avigael, Irving Greenblum and Richard E. Haynes. The Committee met five
times during the 2000 fiscal year. Each member of the Committee attended all
five meetings. The primary functions of the Audit Committee are to recommend the
appointment of the independent auditors; to review annual and quarterly
financial reports and to review the results of examinations by the internal
auditor and the independent auditors. Under applicable law, the Audit Committee
is required to review with management and the independent auditors the basis for
all financial reports.
The Stock Option Plan Committee of the Board of Directors during 2000
consisted of Lester Avigael, Irving Greenblum and Richard E. Haynes. The
Committee met three times during the 2000 fiscal year. Each member of the
Committee attended all three meetings. The primary function of the Stock Option
Plan Committee is the administration of the 1996 International Bancshares
Corporation Stock Option Plan.
The Board of Directors of the Company does not have a standing nominating
committee or a committee, which performs similar functions.
During 2000, the Board of Directors held eight meetings. All of the
directors attended at least 75% of the aggregate of the total number of meetings
of the Company's Board of Directors, except for Daniel B. Hastings, Jr., Sioma
Neiman, Peggy J. Newman and Antonio R. Sanchez, Jr. who attended fewer than 75%
of such meetings.
3
PRINCIPAL SHAREHOLDERS
Insofar as is known to the Company, no person beneficially owned, as of
April 5, 2001, more than five percent of the outstanding Common Stock of the
Company, except as follows:
SHARES OF COMMON STOCK PERCENT
NAME AND ADDRESS BENEFICIALLY OWNED AS OF OF
OF BENEFICIAL OWNER APRIL 5, 2001 CLASS
------------------- ------------------------ --------
Alicia M. Sanchez(1)(3)..................................... 1,660,234 7.76%
2119 Guerrero Street
Laredo, Texas 78040
A. R. Sanchez Jr.(2)(3)..................................... 4,655,790 21.78%
P.O. Box 2986
Laredo, Texas 78040
------------------------
(1) All the shares shown for Mrs. Alicia M. Sanchez are held in her name and a
family limited partnership SANTIG, Ltd., for which Mrs. Sanchez serves as
co-general partner. Mrs. Sanchez has the sole power to vote and to dispose
of all of the 856,601 shares held by herself. As a co-general partner of
SANTIG, Ltd., Mrs. Sanchez has shared power to vote or to dispose the
803,633 shares held by such partnership. As the managing general partner of
SANTIG, Ltd., A. R. Sanchez, Jr. also has shared power to vote or to dispose
of the 803,633 shares held by such partnership. Mrs. Sanchez is the mother
of A. R. Sanchez Jr.
(2) A. R. Sanchez Jr. owns directly and has the sole power to vote and to
dispose of 1,442,499 shares owned by him. Mr. Sanchez also controls the
disposition of 2,406,338 shares as trustee for trusts in which various
family members, including his children, have a vested interest in the income
and corpus of such trusts. He also serves as managing general partner for
SANTIG, Ltd., a family limited partnership, which owns 803,633 shares.
Mr. Sanchez has shared power with Mrs. Alicia Sanchez to vote or to dispose
of the shares held by SANTIG, Ltd. Mr. Sanchez also has the power to vote
and dispose of 3,320 shares, which were gifted to the A. R. Sanchez and
Maria J. Sanchez Foundation.
(3) Mrs. Alicia M. Sanchez and A. R. Sanchez, Jr. together have either the sole
or shared power to vote or to dispose of a total of 5,512,391 shares
representing 25.8% of the outstanding Common Stock of the Company.
4
SECURITY OWNERSHIP OF MANAGEMENT
Based upon information received from the persons concerned, each of whom is
a director and nominee for director, the following individuals and all directors
and executive officers of the Company as a group owned beneficially as of
April 5, 2001, the number and percentage of outstanding shares of Common Stock
of the Company indicated in the following table:
NAME OF INDIVIDUAL SHARES BENEFICIALLY OWNED PERCENT
OR IDENTITY OF GROUP AS OF APRIL 5, 2001 OF CLASS
-------------------- ------------------------- --------
Lester Avigael(1)........................................... 183,808 *
Irving Greenblum(2)......................................... 201,023 *
R. David Guerra(3).......................................... 174,435+ *
Daniel B. Hastings, Jr...................................... 25,765 *
Richard E. Haynes........................................... 17,728 *
Sioma Neiman(4)............................................. 634,622 2.97%
Peggy J. Newman............................................. 5,062 *
Dennis E. Nixon(5).......................................... 1,048,391+ 4.90%
Leonardo Salinas............................................ 78,151 *
A. R. Sanchez Jr.(6)........................................ 4,655,790 21.78%
All Directors and Executive Officers as a group (11
persons)(7)............................................... 7,115,440 33.28%
------------------------
* Ownership of less than one percent.
+ Include shares, which are issuable upon the exercise of options exercisable
on or prior to June 1, 2001 ("currently exercisable options").
(1) The holdings shown for Mr. Avigael include 100,000 shares held in the name
of Avigael Investments which he has the power to dispose of and to vote.
(2) The holdings shown for Mr. Greenblum include 2,806 shares held in a family
limited partnership, which he has the power to dispose of and to vote.
(3) The holdings shown for Mr. Guerra include 3,067 shares, which are issuable
upon the exercise of currently exercisable options. The holdings shown for
Mr. Guerra include 171,368 shares, which he and his wife hold in their names
jointly.
(4) The holdings shown for Mr. Neiman include 634,622 shares in the name of Inar
Investments, Corp., of which he is the Managing Director.
(5) The holdings shown for Mr. Nixon include 43,662 shares, which are issuable
upon the exercise of currently exercisable options. The holdings shown for
Mr. Nixon also include 3,834 shares held in the name of his wife.
(6) A. R. Sanchez Jr. owns directly and has the sole power to vote and to
dispose of 1,442,499 shares owned by him. Mr. Sanchez also controls the
disposition of 2,406,338 shares as trustee for trusts in which various
family members, including his children, have a vested interest in the income
and corpus of such trusts. He also serves as managing general partner for
SANTIG, Ltd., a family limited partnership, which owns 803,633 shares.
Mr. Sanchez has shared power with Mrs. Alicia Sanchez to vote or to dispose
of the shares held by SANTIG, Ltd. Mr. Sanchez also has the power to vote
and dispose of 3,320 shares, which were gifted to the A. R. Sanchez and
Maria J. Sanchez Foundation.
(7) The holdings shown for all directors and executive officers as a group
include 67,386 shares which are issuable upon the exercise of currently
exercisable options.
Except as reflected in the notes to the preceding table, each of the
individuals listed in the table owns directly the number of shares indicated in
the table and has the sole power to vote and to dispose of such shares.
5
EXECUTIVE COMPENSATION
SUMMARY
The following table contains information concerning the compensation awarded
during each of the last three years for the Chief Executive Officer of the
Company and the other most highly compensated executive officers of the Company
whose total annual salary and bonus exceeded $100,000 in 2000.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
NAME AND -------------------------------- SECURITIES ALL OTHER(3)
PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) UNDERLYING OPTIONS COMPENSATION
------------------ -------- --------- --------- ------------------ ------------
Dennis E. Nixon 1998 341,482 1,000,000 -- 10,416
Chairman of the Board, 1999 348,995 1,000,000 -- 11,648
President and Director 2000 361,166 1,000,000 -- 12,298
of the Company;
President,
CEO and Director of IBC
R. David Guerra 1998 189,023 45,520 -- 11,355
Vice President and 1999 188,586 35,269 2,500 11,605
Director of the Company; 2000 194,114 35,269 -- 11,948
President of IBC branch
in McAllen, Texas and
Director of IBC
Imelda Navarro 1998 103,425 25,733 5,000 7,606
Treasurer of the Company 1999 130,154 29,668 1,750 8,887
Senior Executive Vice 2000 134,570 31,268 -- 9,132
President of IBC
------------------------
(1) These amounts do not include certain perquisites and other personal
benefits, securities or property received by the officers which did not
exceed the lesser of $50,000 or 10% of such executive officer's total salary
and bonus set forth in the table; however, such amounts include directors
fees as well as certain expense allowances. All cash compensation paid to
the named officers was paid by IBC. The Company does not pay any cash
compensation to any officer.
(2) All amounts shown in this column are discretionary cash bonuses except
$500,000 paid to Mr. Nixon for services rendered in 2000, 1999 and 1998
pursuant to the Executive Incentive Compensation Plan.
(3) All amounts shown in this column consist of funds contributed or allocated
by the Company pursuant to the Company's Employee Profit Sharing Plan and
Trust, a deferred profit sharing plan for employees with one year of
continual employment.
Each director of the Company and each director of IBC receives compensation
for his services as a director in the amount of $800 for each meeting of the
Board he attends and $300 for each meeting of a committee of the Board he
attends. Salaried officers who are directors are not compensated for committee
meetings. The director fees paid to the named executive officers are included in
the salary totals set forth in the table.
6
STOCK OPTIONS
During 2000, the Company did not grant options to any of the named executive
officers of the Company.
The following table reflects certain information regarding individual
exercises of stock options with respect to the Common Stock during 2000 and
through April 5, 2001 by each of the named executive officers of the Company.
AGGREGATED OPTION EXERCISES IN 2000
AND FY-END OPTION VALUES
NUMBER OF
UNDERLYING VALUE OF
SHARES OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES 12/31/00 12/31/00
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
NAME (#) ($)(1) (#) ($)(1)
---- ----------- -------- ------------- -------------
Dennis E. Nixon -0- -0- 43,692/ 694,130/
10,226 110,748
R. David Guerra 3,066 29,310 3,067/ 29,345/
4,317 35,095
Imelda Navarro -0- -0- 20,657/ 297,875/
5,828 34,450
------------------------
(1) Based on market value of underlying shares minus aggregate exercise price.
REPORT OF THE SALARY AND STEERING COMMITTEE
The Company's compensation package for each of its executive officers
consists of base salary, annual discretionary bonus and a discretionary
incentive stock option grant. Also, certain executive officer(s) may receive
compensation pursuant to the Company's Executive Incentive Compensation Plan.
Stock option grants are determined by the Company's Compensation Committee and
are discussed under the Committee's separate report below. All cash compensation
paid to executive officers of the Company is paid by IBC. Base salary levels and
annual bonuses are recommended by the Salary and Steering Committee of IBC (the
"Committee").
The Committee's recommendations regarding each executive officer's
compensation is subjective with regard to both the base salary and bonus. The
annual financial performance of IBC is the most important factor in the
subjective analysis. The bonus program is intended to compensate each executive
officer for the officer's contribution to IBC's financial performance during the
previous year. At the end of each year based on the financial performance of IBC
and the perceived contribution by each executive officer, a base salary
recommendation for the next year and a bonus recommendation for the previous
year is made for each executive officer by the Committee. The overall bonus pool
for executive officers is affected by the earnings performance of IBC for the
previous year. All base salary and bonus recommendations of the Committee are
subject to final approval of the Board of Directors of IBC.
With respect to the compensation of Mr. Nixon, the CEO of the Company, the
Committee recommends to the Board of Directors the CEO's salary and bonus based
on its subjective determination. In determining the CEO compensation, the
Committee reviews the objectives of the Company for the previous year and the
attainment thereof, principally including the Company's financial performance.
For
7
services rendered to IBC in 2000, Mr. Nixon received a cash bonus under IBC's
discretionary cash bonus program of $500,000. During 2000, the Company met both
the return on average total assets and the return on average total shareholders'
equity targets established pursuant to the 1998 Executive Incentive Compensation
Plan (the "EICP") by the Committee. Accordingly, Mr. Nixon received an incentive
award under the EICP of $500,000 for services rendered to the Company during
2000. The amounts of the cash bonus and the incentive award were largely
affected by the strong financial results of the Company during 2000, which
included (i) net income of $75.2 million, or $3.51 per share-basic, an amount
which represents a 16% increase in earnings per share compared to the previous
year, (ii) the Company's excellent return on average total assets of 1.33% and
(iii) the Company's strong return on average total shareholders' equity of
20.92%.
The Salary and Steering Committee has considered the limitations on
deductibility of compensation of the named executive officers under
Section 162(m) of the Internal Revenue Code. The Steering Committee's current
policy is to ensure that substantially all such compensation is deductible under
Section 162(m) when paid.
Lester Avigael Richard E. Haynes Dennis E. Nixon
REPORT OF THE STOCK OPTION PLAN COMMITTEE
The Stock Option Plan Committee of the Board of Directors determines the
stock option grants to executive officers and key salaried employees of the
Company. During 2000, the Stock Option Plan Committee met and granted options to
purchase a total of 133,000 shares of Common Stock to several of the key
salaried employees of the Company of which 120,000 shares represented the grant
of non-qualified stock options to certain employees of the Gulf Star Group. The
primary purpose of the Company's Stock Option Plan is to increase the interest
of the executive and key salaried employees of the Company and the subsidiary
banks in its future growth and success through the added incentive created by
the opportunity afforded for stock ownership under the Plan. The size of the
option grants were determined by the Stock Option Plan Committee based upon a
subjective assessment of the respective employee's performance, compensation
level and other factors. The exercise price of each option equaled the fair
market value of the Common Stock as of the date of grant.
Lester Avigael Irving Greenblum Richard E. Haynes
REPORT OF THE AUDIT COMMITTEE
The Company's Audit Committee is responsible for providing objective and
independent oversight of the Company's accounting functions and internal
controls. Such oversight responsibility includes, but is not limited to, making
recommendations concerning the engagement of independent public accountants,
reviewing the financial statements and the scope of the independent annual
audit, reviewing and reassessing the adequacy of the Audit Committee's charter,
reviewing the independent public accountants, considering the range of audit and
non-audit fees, monitoring internal financial and accounting controls and
performing such other oversight functions as may be requested from time to time
by the Board of Directors.
REPORT:
The Audit Committee has:
--reviewed and discussed the audited financial statements with management;
--discussed with the independent auditors the matters required to be
discussed by SAS 61; and
--received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1, and discussed
with the auditors the auditors' independence.
8
Based on the review and discussions with management and the Company's
independent accountants referenced above, the Audit Committee has recommended to
the Board of Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 filed
with the SEC.
The Board of Directors has determined that the members of the Audit
Committee are "independent" as defined in Rule 4200(a)(15) of the National
Association of Securities Dealers listing standards. The Audit Committee has
adopted a written charter. The charter is included as "Appendix A" to this proxy
statement.
This report is submitted on behalf of the Audit Committee.
Lester Avigael Irving Greenblum Richard E. Haynes
FEES PAID TO PRINCIPAL ACCOUNTING FIRM
During the year ended December 31, 2000 the Company was billed for the
following fees by the Company's principal accounting firm, KPMG LLP:
AUDIT FEES FOR FISCAL YEAR 2000............................. $225,000
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION..... $ 0
ALL OTHER FEES.............................................. $269,912
The Audit Committee has considered whether the provision of services covered
in billings included under "All Other Fees" listed above is compatible with
maintaining the principal accounting firm's independence. The Audit Committee
has concluded that the provisions of such non-audit services would not
jeopardize the independence of KPMG LLP.
SALARY AND STEERING COMMITTEE AND STOCK OPTION PLAN COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The Salary and Steering Committee members during 2000 were Lester Avigael,
Richard E. Haynes and Mr. Nixon, who serves as President and Chairman of the
Board of the Company and President and CEO of IBC, and who is consulted with
respect to compensation decisions for all executives and key salaried employees
other than for himself. Stock Option grants are determined by the Stock Option
Plan Committee whose members were Lester Avigael, Richard E. Haynes and Irving
Greenblum. Messrs. Richard E. Haynes and Dennis E. Nixon each have total
indebtedness outstanding with the Company and/or the subsidiary banks of the
Company in an amount which exceeds $60,000, which indebtedness is fully
performing and is included in the disclosure regarding the aggregate amount
receivable to the banks and the Company from certain related parties of the
Company set forth on pages 11 and 12, under the caption "Interest of Management
in Certain Transactions".
9
FINANCIAL PERFORMANCE
The following graph illustrates the cumulative return experienced by the
Company's shareholders for the period commencing on December 31, 1995 and ending
at year end 2000 as compared with the cumulative total returns of the other
companies included within the Standard & Poor's 500 Stock Index and Standard &
Poors Regional Banks Index. The calculations were prepared on a
dividends-reinvestment basis.
TOTAL RETURN ANALYSIS
INTERNATIONAL BANCSHARES CORPORATION
VS. MARKET INDICES
YEAR END: 12/31/95 TO 12/31/00
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1995 1996 1997 1998 1999 2000
INT. BCSHS. CORP. 100 152 279 232 261 246
S & P 500 INDEX 100 123 164 211 255 232
MAJOR REGIONAL BANKS 100 137 205 227 195 249
INTEREST OF MANAGEMENT IN
CERTAIN TRANSACTIONS
Some of the directors, executive officers and nominees for directors of the
Company and IBC and principal shareholders of the Company and their immediate
families and the companies with which they are associated were customers of, and
had banking transactions with, the Company's subsidiary banks in the ordinary
course of the subsidiary banks' business during 2000, and the Company
anticipates that such banking transactions will continue in the future. All
loans and commitments to loan included in such banking transactions were made in
the ordinary course of business, on substantially the same terms, including
interest rates and collateral, as those prevailing in the industry at the time
for comparable transactions with non-insiders, and, in the opinion of management
of the Company, did not involve more than a normal risk of collectibility or
present other unfavorable features.
10
At December 31, 2000, loans outstanding made by the Company and all
subsidiary banks to directors, executive officers and nominees for directors of
the Company (not including those subsidiary bank executive officers and
directors who do not serve at the Company level) and principal shareholders of
the Company and to persons or entities affiliated with such individuals
aggregated $34,871,655.76. At December 31, 2000, all of such loans were current
with respect to principal and interest.
During 1994, the Company obtained approval from the Federal Reserve Bank of
Dallas to engage in the activity of making loans to certain of its executive
officers, directors, affiliates, and principal shareholders, and to certain
executive officers and directors and their related interests of the subsidiary
banks. In connection with such approval, the Company committed that all loans
would be on terms and under circumstances, including credit standards, that are
substantially the same or at least as favorable to the Company as those
prevailing at the time for comparable transactions with or involving other
non-affiliated borrowers, or in the absence of comparable transactions, on terms
and under circumstances, including credit standards, that in good faith would be
offered to or would apply to non-affiliated companies. As of December 31, 2000,
loans outstanding made by the Company to such persons or entities aggregated
$4,415,740.04 and all of said loans, which are described in the following
paragraph, were made on terms and under circumstances consistent with the
commitment made by the Company to the Federal Reserve Bank of Dallas.
As of December 31, 2000, IBC Partners Investment Joint Venture and IBC
Partners Organizational Joint Venture were indebted to the Company in the amount
of $25,372 and $89,708, respectively. The two loans were extended as part of a
single credit facility in connection with the formation of IBC Partners, Ltd.
The two joint ventures are controlled by certain directors and executive
officers of the Company or its subsidiary banks. The joint ventures repaid
$38,063 and $152,212, respectively, on the credit facility during 2000. As of
December 31, 2000, Dennis E. Nixon and his related interests were indebted to
the Company in the amount of $4,230,740 in connection with three real estate and
two consumer related loans. Mr. Nixon and his related interests repaid $716,399
on the related loans during 2000. As of December 31, 2000, R. David Guerra and
his related interests were indebted to the Company in the amount of $185,000 in
connection with two consumer loans. At December 31, 2000, all of the loans
outstanding in the aggregate principal amount of $4,415,740 (as described in
this paragraph and the foregoing paragraph) were current with respect to
principal and interest.
IBC and Sanchez Oil & Gas Corporation, a related interest of Antonio R.
Sanchez, Jr., who is a director and principal shareholder of the Company,
jointly own, in varying percentages certain aircraft used for business purposes
by IBC, the other bank subsidiaries and Sanchez Oil and Gas Corporation. The net
book value of IBC's aggregate interest in all of the aircraft as of April 5,
2001 was approximately $3.3 million. Each bank subsidiary and Sanchez Oil and
Gas Corporation pay the pro rata expense related to their actual use of the
aircraft.
FILING OF BENEFICIAL OWNERSHIP REPORTS
Under the securities laws of the United States, the Company's directors, its
executive officers and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission. Specific due dates for these reports have
been established and the Company is required to disclose in this proxy statement
any failure to file such reports by the applicable dates during 2000. The
Company believes that all of these filing requirements were timely satisfied
with the exception of one amended report filed by Antonio R. Sanchez, Jr. with
respect to certain stock dividends and other transactions involving a family
limited partnership and various trusts for the benefit of members of his family,
which transactions were inadvertently not reported on a Form 4 filed by
Mr. Sanchez during 2000. In making these disclosures, the Company has relied
solely on written representations of its directors, executive officers and its
ten percent holders and copies of the reports that they have filed with the
Commission.
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PROPOSAL--2
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed the firm of KPMG LLP to
audit the accounts of the Company for the 2001 fiscal year. The firm has audited
the books of the Company and its predecessor, IBC, annually since 1979.
Audit services rendered by KPMG LLP for the fiscal year ended December 31,
2000 included the annual examination of the Company's financial statements,
including reports to shareholders and the Securities and Exchange Commission;
and consultation on accounting and related matters and services performed in
connection with other regulatory filings.
Representatives of KPMG LLP are expected to be present at the annual meeting
of shareholders with the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions.
Approval of the appointment of independent auditors is not a matter which is
required to be submitted to a vote of shareholders, but the Board of Directors
considers it appropriate for the shareholders to express whether they approve or
withhold their approval of the appointment. If shareholder approval should be
withheld, the Board of Directors would consider an alternative appointment for
the succeeding fiscal year. The Board of Directors of the Company recommends
that the shareholders approve the appointment of KPMG LLP as the independent
auditors. The affirmative vote of a majority of the shares present and entitled
to vote thereon will constitute approval.
PROPOSAL--3
AMENDMENT OF THE 1996 INTERNATIONAL BANCSHARES CORPORATION
STOCK OPTION PLAN
On April 5, 2001, the Board of Directors approved for submission to the
shareholders and recommends that the shareholders approve an amendment (the
"Amendment") to the 1996 International Bancshares Corporation Stock Option Plan
(the "Plan"). The amendment provides for the addition of 300,000 new shares of
Common Stock of the Company to the 300,000 shares of Common Stock already
available under the Plan, for a total of 600,000 shares of the Company's Common
stock to be available under the Plan. In the event the number of outstanding
shares of Common Stock is changed by a stock dividend, split or combination of
shares, or a merger, consolidation or recapitalization of the Company, a
proportionate or equitable adjustment will be made in the number or kind of
shares subject to unexercised options or available for options and in the
purchase price for shares subject to unexercised options, to the extent
permitted by the Plan.
The Company has approved the Plan. The primary purpose of the Plan is to
increase the interest of the officers, employees, consultants and advisors of
the company (the "Eligible Persons") in its future growth and success through
the added incentive created by the opportunity afforded for stock ownership
under the Plan. The Company, through the Plan, seeks to motivate officers,
employees, consultants and advisors and to attract highly competent individuals
whose judgment, initiative and continuing effort will contribute to the success
of the Company.
The Plan provides that it will generally be administered by the Compensation
Committee of the Board of Directors (the "Committee") and determines the terms
and conditions under which options ("Options") to purchase shares of Common
Stock may be awarded.
The Committee has full and final authority to select those Eligible Persons
who will be granted Options. The Committee will administer the Plan and will
consist of members of the Board of Directors who are "disinterested persons" (as
that term is defined in the rules and regulations under Section 16 of the
Exchange Act) and "outside directors" (as that term is defined in the
regulations promulgated under Section 162(m) of the Internal Revenue Code (the
"Code"), as may be modified or amended). Within the
12
limits of the Plan, the Committee determines the amounts, times, forms, terms
and conditions of grants under the Plan. Participation in the Plan is determined
by the Committee and may include any Eligible Persons selected by the Committee.
There are approximately 1467 full-time employees of the Company and its
subsidiaries and currently 239 of said employees participate in the 1996 Plan.
Options granted under the Plan may be Incentive Stock Options ("ISO"), as
defined in Section 422 of the Code, or options not qualifying for treatment as
ISOs ("Nonstatutory Stock Options"). Subject to applicable provisions of the
Code, the Committee determines the recipients of Options and the terms of the
Options, including the type of Option, the number of shares for which an Option
is granted, the term of the Option and the time(s) when the Option can be
exercised. Restrictions on the exercise of an Option may, at the discretion of
the Committee, be contained in the agreement with the participant or in the
Committee's procedures. Each ISO must comply with all the requirements of
Section 422 of the Code. The Committee may in its discretion waive any condition
or restriction on the exercise of an Option and may accelerate the time at which
any Option is exercisable.
The price per share of Common Stock subject to an Option (the "Option
Price") is set by the Committee. In the case of ISOs, the Option Price may not
be less than the fair market value of Common Stock (as determined in good faith
by the Committee) on the date of the grant of the ISOs; provided, however, the
Option Price of an ISO granted to an Eligible Person that owns 10% or more of
the Common Stock my not be less than 110% of the fair market value of the Common
Stock on the date of grant of the ISOs. In the case of Nonstatutory Stock
Options, there are no restrictions with respect to the Option Price. The
Committee also determines the manner in which the Option Price of an Option may
be paid, which may include the tender of cash or securities or the withholding
of Common Stock or any other arrangement satisfactory to the Committee.
Options granted under the Plan may be exercisable for a period of up to
10 years from the date of grant, excluding ISOs granted to 10% shareholders
which may be exercisable for a period of up to only 5 years. Within these
limitation periods, the Committee will determine the expiration dates of
Options. Options may be exercised at any time or from time to time, within their
terms, in whole or in part, or otherwise as shall be determined by the
Committee.
Under the Code, a participant receiving a Nonstatutory Stock Option
generally does not recognize taxable income upon the grant of the Option. A
participant does, however, recognize ordinary income upon the exercise of a
Nonstatutory Stock Option to the extent that the fair market value of Common
Stock on the date of exercise exceeds the Option Price. The Company may deduct
for Federal income tax purposes (with certain exceptions) an amount equal to the
ordinary income so realized by the participant.
The grant of an ISO does not result in taxable income to a participant. The
exercise of an ISO also does not result in taxable income, provided that the
employment requirements specified in the Code are satisfied, although such
exercise may give rise to alternative minimum taxable income for the
participant. In addition, if the participant does not dispose of Common Stock
acquired upon exercise of an ISO during the statutory holding period, then any
gain or loss upon the subsequent sale of Common Stock will be long-term capital
gain or loss, assuming the shares represent a capital asset in the participant's
hands. No deduction is allowed to the Company in connection with the grant or
exercise of an ISO. However, the Company will be entitled to a deduction in the
year that a disqualifying disposition occurs equal to the amount of ordinary
income recognized by the participant.
During the 2000 fiscal year, the Board of Directors approved the granting of
several stock options to Eligible Persons of subsidiaries of the Company. The
optionees have the right to purchase 133,000 shares of Common Stock of the
Company at prices of $31.00 or $41.00 per share. The Company believes these
prices to be the average fair market value of the Common Stock at the time of
the grants. Most recently, on April 5, 2001 the closing sales price of the
Company's Common Stock was $37.00.
13
The Board of Directors may at any time terminate the Plan. The benefits that
will be received under the Plan by particular individuals or groups are not
determinable at this time. The benefits that were received for the 2000 fiscal
year by the named executive officers pursuant to the Plan are summarized on
tables on pages 9 and 10.
The affirmative vote of the holders of a majority of the shares entitled to
vote on this matter and represented in person or by proxy is required to approve
the Amendment of the Plan. The Board of Directors recommends that the
shareholders vote FOR the Amendment of the Plan. The accompanying proxy will be
voted in favor of approval of the Amendment unless contrary instructions are
noted on the proxy.
SHAREHOLDER PROPOSALS FOR YEAR 2002 ANNUAL MEETING
The 2002 Annual Meeting of Shareholders will be held on May 20, 2002.
Proposals from shareholders intending to be present at the 2002 Annual Meeting,
must be received in writing by the Company at its principal executive offices
not later than December 17, 2001. The Company's principal executive offices are
located at 1200 San Bernardo Avenue, Laredo, Texas 78040.
OTHER MATTERS
No business other than the matters set forth in this proxy statement is
expected to come before the meeting, but should any other matters requiring a
vote of shareholders arise, including a question of adjourning the meeting, the
persons named in the accompanying proxy will vote thereon according to their
best judgment in the interest of the Company. In the event that any of the
nominees for director should withdraw or otherwise become unavailable for
reasons not presently known, the persons named as Proxies will vote for such
substitute nominee(s) as the Board of Directors recommends, or in the absence of
such recommendation, such other persons as they consider to be in the best
interest of the Company.
INTERNATIONAL BANCSHARES CORPORATION
Dennis E. Nixon
President
Dated: April 16, 2001
THE COMPANY WILL PROVIDE SHAREHOLDERS WITH A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K, FOR THE PERIOD ENDED DECEMBER 31, 2000, INCLUDING FINANCIAL
STATEMENTS AND SCHEDULES, WITHOUT CHARGE, UPON WRITTEN REQUEST ADDRESSED TO THE
TREASURER OF THE COMPANY, MS. IMELDA NAVARRO AT:
INTERNATIONAL BANCSHARES CORPORATION
P. O. Box 1359
Laredo, Texas 78042-1359
(956) 722-7611 Extension 6222
14
INTERNATIONAL BANCSHARES CORPORATION
FOR THE ANNUAL MEETING OF SHAREHOLDERS
CALLED FOR MAY 17, 2001
The undersigned shareholder(s) of International Bancshares Corporation, a
Texas corporation (the "Company"), hereby appoints Lester Avigael, Irving
Greenblum, and Richard E. Haynes, and each of them, as Proxies, each with power
to appoint his substitute, and hereby authorizes them to vote, as designated
below, all the shares of Common Stock which the undersigned may be entitled to
vote at the Annual Meeting of Shareholders of the Company, to be held on
Thursday, May 17, 2001 at 7:00 P.M., local time, and at any adjournment of such
meeting, with all powers which the undersigned would possess if personally
present:
1. ELECTION OF DIRECTORS. Nominees: L. Avigael, I. Greenblum, R.D. Guerra,
R.E. Haynes, D.B. Hastings, Jr., S. Neiman, P.J. Newman, D.E. Nixon,
L. Salinas, A.R. Sanchez, Jr.
/ / FOR, all nominees listed above / / WITHHOLD AUTHORITY, to vote for all
nominees listed above
/ / FOR, all nominees listed above, except for the
nominee(s) set forth on the line below
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
--------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR all nominees.
2. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG LLP as the independent auditors
of the Company for the 2001 fiscal year.
FOR / / AGAINST / / ABSTAIN / /
The Board of Directors recommends a vote FOR the above proposal.
3. PROPOSAL TO APPROVE AN AMENDMENT TO ADD 300,000 ADDITIONAL SHARES to the
1996 International Bancshares Corporation Stock Option Plan as amended and
restated.
FOR / / AGAINST / / ABSTAIN / /
The Board of Directors recommends a vote FOR the above proposal.
4. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS
MADE THEREON. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ALL THE
NOMINEES AND "FOR" PROPOSALS 2 AND 3 ABOVE.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement of the Company dated April 16, 2001.
Dated:
--------------------------------- , 2001
---------------------------------------------------------
Signature(s)
------------------------------------
(Signature should agree with name of
stock Certificate as stenciled thereon. Executors, Administrators, Trustees,
etc. should so indicate when
signing).
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO ITS EXERCISE
I / / do / / do not plan to attend the Meeting.