Exhibit 10.29

 

TEXAS REGIONAL BANCSHARES, INC.

EXECUTIVE  INCENTIVE  COMPENSATION  PLAN

 

                1.             Establishment.   Texas Regional Bancshares, Inc.
(the “Company”) hereby establishes the Texas Regional Bancshares, Inc. Executive
Incentive Compensation Plan (the “Plan”).

 

                2.             Background.  Section 162(m) of the Internal
Revenue Code disallows federal income tax deductions for certain compensation in
excess of $1 million per year paid to certain highly compensated executive
officers of Texas Regional Bancshares, Inc. (the “Company”). Compensation that
qualifies as “other performance-based compensation” is not subject to the
$1,000,000 limit. One of the conditions necessary to qualify certain incentive
awards as “other performance-based compensation” is that this Plan must be
approved by the Texas Regional Bancshares, Inc. shareholders and every five
years the material terms of the performance goals under which the awards are
made must be disclosed to, and approved by, the shareholders before the
incentive compensation is paid. The material terms of the performance goals that
must be approved by the shareholders under Section 162(m) include the employees
eligible to receive the performance-based compensation, a description of the
business criteria on which each performance goal is based, and the maximum
amount that could be paid to any individual employee to whom awards are made.

 

3.             Purpose.  The principal purpose of the Plan is to provide
incentives and rewards to executive officers of the Company who have significant
responsibility for the growth and success of the Company.

 

4.             Administration of the Plan.

 

                (a)           This Plan shall be administered by the Stock
Option and Compensation Committee of the Board of Directors of the Company (the
“Committee”).  The Committee shall at all times while this Plan is in effect be
composed of two or more members of the Board of Directors who meet the
requirement of being independent directors of the Company.

 

                (b)           The Committee shall have all of the powers and
authority set forth in this Plan, and as otherwise required to make grants and
otherwise administer this Plan.  The powers of the Committee include the
authority (within the limitations described herein) to select the persons to be
granted awards under this Plan, to determine the time when awards will be
granted, to determine whether objectives and conditions for earning awards have
been met, to determine when awards will be paid (such as, by way of example
only, at the end of the award period or deferred to a future date or conditioned
upon a future event), and to determine whether an award or payment of an award
should be reduced or eliminated.

 

                (c)           The Committee shall have full power and authority
to administer and interpret this Plan and to adopt such rules, regulations,
agreements, guidelines and instruments for the administration of this Plan and
for the conduct of its business as the Committee deems

 

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necessary or advisable.  The Committee’s interpretations of this Plan, and all
actions taken and determinations made by the Committee pursuant to the powers
vested in it hereunder, shall be conclusive and binding on all parties
concerned, including the Company, its shareholders and any person receiving an
award under this Plan.

 

5.             Eligibility.  The persons eligible to receive awards under this
Plan include the Chief Executive Officer and other senior executive officers of
the Company.

 

6.             Awards.

 

                (a)           Award Recipients.  The senior executive officers
of the Company to be granted incentive awards under this Plan shall be
identified from time to time by the Committee.

 

                (b)           Performance Goals and Targets.

 

                                (i)            There is hereby established for
purposes of this Plan the following performance goals for purposes of
determining eligibility to receive an award made under this Plan:  amount of
annual earnings, amount or percentage of annual earnings growth, amount of
quarterly earnings, amount or percentage of quarterly earnings growth, earnings
growth as compared to comparable prior period (whether composed of one or
several quarterly earnings periods), basic earnings per share, increase in basic
earnings per share, fully diluted earnings per share, increase in fully diluted
earnings per share, total assets, increase in total assets, amount or percentage
of return on average total assets, total equity, amount or percentage of return
on total shareholders’ equity, return on average shareholders’ equity, stock
price (threshold) and increase in stock price, in each case with or without the
exclusion of unusual or extraordinary items.  The Committee shall select one or
more of these performance goals for purposes of determining the performance
targets to be met for purposes of determining eligibility to receive an award
under this Plan

 

                                (ii)           The Committee shall also
determine the target threshold, in terms of either minimum performance or
minimum change, and whether dollar amount or percentage, and whether any unusual
or extraordinary items are to be included or excluded from such computation,
that must be met in order for an award to be earned under this Plan.  Because
the Committee has the authority to set the targets under a performance goal
after shareholder approval, the material terms of the performance goal shall be
disclosed to and reapproved by shareholders as and to the extent required by
Treasury Regulation 1.162-27(e)(4)(vi) or any successor provision of applicable
law.

 

                                (c)           Payment of Awards.  Awards will be
payable in cash at such time or times as determined by the Committee, upon a
decision being made by the Committee that the Company achieved the specified
performance target or targets for the preceding year.  No payment under this
Plan will be made unless at least one of the return targets is met.  Awards
under this Plan may be paid by the Company or any subsidiary of the Company.

 

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                                (d)           Negative Discretion. 
Notwithstanding the attainment by the Company of at least one of the specified
return targets, the Committee has the discretion, on a participant by
participant basis, to reduce or eliminate any award that would be otherwise
paid.

 

                (e)           Maximum Awards.  No individual participant may
receive more than a maximum of 2.5% of the total income before income taxes of
the Company for the year under this Plan in any calendar year.

 

                7.        Miscellaneous.

 

                                (a)           Guidelines.  The Committee shall
adopt from time to time written policies for implementation of this Plan.

 

                                (b)           Withholding Taxes.  The Company
shall deduct from all awards hereunder any amount of federal, state, local or
foreign taxes required by law to be withheld with respect to such awards.

 

                                (c)           No Rights to Awards.  Except as
set forth herein, no employee or other person shall have any claim or right to
be granted an award under this Plan.  Neither this Plan nor the action taken
hereunder shall be construed as giving any employee any right to be retained in
the employ of the Company or any of its subsidiaries or affiliates.

 

                                (d)           Costs and Expenses.  The cost and
expense of administering this Plan shall be borne by the Company and shall not
be charged to any award nor to any employee receiving an award.

 

                                (e)           Funding of Plan.  This Plan shall
be unfunded.  Neither the Company nor any subsidiary shall be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any award under this Plan.

 

                8.        Amendments and Termination.

 

                                (a)           Amendments.  The Committee may
from time to time amend this Plan in whole or in part, or terminate this Plan,
but no such action shall adversely affect any rights or obligations with respect
to any awards theretofore made under this Plan.  Unless the shareholders of the
Company shall have first approved thereof, no amendment of this Plan shall be
effective which would increase the maximum amount which can be paid to any one
participant under this Plan, which would change the specified performance goal
for payment of awards or which would modify the requirements as to eligibility
for participation in this Plan.

 

                                (b)           Termination.  No awards shall be
made under this Plan after December 31, 2008.

 

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