ITEM 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers
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On August 23, 2016, First Financial Bankshares, Inc. (the Company) renewed, effective August 26, 2016, its Executive
Recognition Agreement (each, an Agreement) with each of the named executive officers of the Company (each, an Employee):
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Name
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Title
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F. Scott Dueser
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Chairman, President and CEO
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Ronald D. Butler, II
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Executive Vice President and Chief Administrative Officer
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Gary S. Gragg
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Executive Vice President, Lending
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J. Bruce Hildebrand
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Executive Vice President and CFO
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Kirk W. Thaxton
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Chairman, President and CEO, First Financial Trust and Asset Management Company,
N.A.
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A copy of the form of Agreement is attached hereto as Exhibit 10.1 and incorporated herein by reference, and
the following summary of the Agreement is qualified entirely by reference to the text of the Agreement.
Each Employees prior
Executive Recognition Agreement expired on July 1, 2016, and was renewed with the Agreement.
The term of the Agreement commences on
August 26, 2016, and continues until the earliest to occur of (a) the Employees death, disability or retirement, (b) the termination of the Employees employment with the Company prior to a change in control (as
defined in the Agreement) of the Company, or (c) July 1, 2018. Pursuant to the Agreement, if a change in control of the Company occurs during the term of the Agreement, the Agreement shall continue in effect for a period of two years from
the date of any such change in control of the Company; and further, if a second change in control occurs within a period of two years from the date of the first change in control, the Agreement shall continue in effect for a period of two years from
the date of the second change in control of the Company. If any benefit accrues and remains unpaid at the time the Agreement would otherwise have terminated, the Agreement will remain in effect until such benefit is paid in full solely for the
purpose of permitting the Employee to enforce the full payment of such benefit.
The Agreement provides that if a change in control of the
Company occurs, the Employee shall be entitled to benefits (described below) upon the subsequent termination of the Employees employment during the term of the Agreement, unless such termination is (a) because of the Employees
death, disability or retirement, (b) by the Company for cause (as defined in the Agreement), or (c) by the Employee other than for good reason (as defined in the Agreement).
The Agreement also provides that if, within twenty-four months following a change in control of
the Company, the Company terminates the Employee for any reason other than for cause, death, disability or retirement, or the Employee terminates his employment for good reason, then the Company shall pay or provide to the Employee, no later than
the 15th day of the third month following the Employees date of termination, without regard to any contrary provisions of any applicable employee benefit plan, the following: (a) two-hundred-eight percent (208%) of the
Employees annual base salary payable by the Company immediately preceding the Date of Termination; and (b) a lump sum payment of Employees accrued vacation pay.
Notwithstanding the foregoing, if an Employee is a key employee within the meaning of Section 416(i) of the Internal Revenue
Code of 1986, as amended, and the Employee has the right to receive a distribution as a result thereof, then the distribution to such key Employee upon termination of employment shall not commence earlier than six months following the date of
termination.
Provisions related to the reduction of payments pursuant to the Agreement if any of the payments provided for in the
Agreement would constitute a parachute payment (as defined in Internal Revenue Code Section 280G(b)(2)) have been modified from prior Executive Recognition Agreements. Under the Agreement, if any payments or benefits to the Employee
would constitute a parachute payment and would be subject to excise tax, then a calculation shall be made comparing (i) the net benefit to the Employee after payment of such excise tax to (ii) the net benefit to the Employee if
payments are limited to the extent necessary to avoid being subject to the excise tax. Only if the amount calculated under (i) above is less than the amount under (ii) above will the payments be reduced to the minimum extent necessary to
ensure that no portion of the payment to the Employee is subject to the excise tax. As of the date of this report, based on projected parachute payment amounts, no Employee would incur an excise tax and all parachute payments per the net
benefit calculation would be fully deductible by the Company.