UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
PROXY STATEMENT PURSUANT TO SECTIONProxy Statement Pursuant to Section 14(a) OF THE SECURITIES
EXCHANGE ACT OFof theSecurities Exchange Act of 1934, as amended
Filed by the Registrant þx
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oPreliminary Proxy Statement |
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oConfidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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| x | | Definitive Proxy Statement |
o Definitive Additional Materials |
o Soliciting Material under ss. 240.14a-12 |
FIRST COMMUNITY BANCSHARES, INC.
(Name of Registrant as Specified in Its Charter)
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þ¨ | | Definitive Additional Materials |
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| ¨ | | Soliciting Materialunder § 240.14a-12 |
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| FIRST COMMUNITY BANCSHARES, INC. |
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| (Name of Registrant as Specified in Its Charter) |
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o¨ | | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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3 | | 3. | | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
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o | Fee paid previously with preliminary materials. |
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NOTICE OF 2013 ANNUAL MEETING OF STOCKHOLDERS
April 30, 2013 at 11:30 a.m. Eastern Daylight Time
Corporate Center29 College Drive
Bluefield, Virginia 24605
March 13, 2013
To the Stockholders:
First Community Bancshares, Inc.
’s Annual Meeting of Stockholders will be held at the Corporate Center, located at 29 College Drive, Bluefield, Virginia 24605 at 11:30 a.m. Eastern Daylight Time on Tuesday, April 30, 2013. Following a report of the Corporation’s banking and related business operations, stockholders will:
Vote on the election of two directors to serve as members of the Board of Directors, Class of 2016;
Vote on ratification of the selection of the independent registered public accounting firm for 2013; and
Transact other business that may properly come before the meeting.
Stockholders of record at the close of business on March 1, 2013 will be entitled to vote at the Annual Meeting and any adjournments.
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| /s/ Robert L. Buzzo |
Robert L. Buzzo Secretary |
OneIMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 30, 2013.
The proxy materials for this Annual Meeting of Stockholders of First Community Place
Bancshares, Inc., consisting of the proxy statement, annual report, and form of proxy are available over the Internet at http://www.fcbinc.com.
If you want to receive a paper or e-mail copy of these documents, or similar documents for future stockholder meetings, you must request the copy. There is NO charge for requesting a copy. In order to facilitate timely delivery, your request should be received no later than April 13, 2013. Please choose one of the following methods to make your request:
1. By Internet atwww.proxyvote.com;
2. By telephone: (800) 579-1639; or
3. By e-mail: sendmaterial@proxyvote.com.
All persons attending the 2013 Annual Meeting must present photo identification. Please follow the advance registration instructions on the back cover of this proxy statement.
WHETHER OR NOT YOU ATTEND THE ANNUAL MEETING, YOUR VOTE IS IMPORTANT TO FIRST COMMUNITY BANCSHARES, INC. YOU MAY VOTE BY THE FOLLOWING METHODS:
1. By telephone: (800) 690-6903 until 11:59 p.m. Eastern Daylight Time on April 29, 2013; or
2. On the Internet at http://www.proxyvote.com until 11:59 p.m. Eastern Daylight Time on April 29, 2013; or
3. Complete, sign and return the enclosed proxy as promptly as possible whether or not you plan to attend the Annual Meeting. An addressed return envelope is enclosed for your convenience.
FIRST COMMUNITY BANCSHARES, INC. ENCOURAGES STOCKHOLDERS TO SUBMIT THEIR PROXIES IN ADVANCE OF THE ANNUAL MEETING. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED.
First Community Bancshares, Inc.
29 College Drive
P. O. Box 989
Bluefield, Virginia24605-0989
13, 2013Dear Stockholder,
You are invited to attend the 20102013 Annual Meeting of Stockholders of First Community Bancshares, Inc. (the “Corporation”) to be held on Tuesday, April 27, 201030, 2013 at Fincastle Country Club, 1000 Country Clubthe Corporate Center located at 29 College Drive, Bluefield, Virginia.
The annual meetingAnnual Meeting will begin with a report of ourthe Corporation’s operations. This report will be followed by discussion and voting on the matters set forth in the accompanying notice of annual meetingAnnual Meeting and proxy statement and discussion of other business matters properly brought before the meeting.
If you plan to attend the meeting, please follow the registration instructions on the last page of this proxy statement. An admission ticket, which is required for admission toAll persons attending the meeting, is included as part2013 Annual Meeting of your proxy form.
Stockholders must present photo identification.Whether or not you plan to attend, please ensure that your shares are represented at the meeting by promptly voting and submitting your proxy by telephone, by internet,on the Internet, or by completing, signing, dating and returning your proxy form in the enclosed envelope. All persons attending the 2010 Annual Meeting must present an admission ticket and picture identification.
Please follow the advance registration instructions on the back cover of this proxy statement regarding details for use of the admission ticket.
Very truly yours,
William P. Stafford |
| Very truly yours, |
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| /s/ William P. Stafford, II |
William P. Stafford, II Chairman of the Board |
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PROXY STATEMENT
Notice of 2010
Annual Meeting of Stockholders
April 27, 2010 at 11:30 a.m.
Fincastle Country Club
1000 Country Club Drive
Bluefield, Virginia 24605
March 15, 2010
To the Stockholders:
First Community Bancshares, Inc.
’s Annual Meeting of Stockholders will be held at Fincastle Country Club, located at 1000 Country Club29 College Drive
P. O. Box 989
Bluefield, Virginia 24605 at 11:30 a.m. local time on Tuesday, April 27, 2010. Following a report of the Corporation’s banking and related business operations, stockholders will:
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| • | Vote on the election of three directors to serve as members of the Board of Directors, Class of 2013; |
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| • | Vote on an amendment to the Articles of Incorporation of the Corporation to increase the number of authorized common shares; |
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| • | Vote on ratification of the selection of the independent auditor for 2010; |
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| • | Vote on advisory approval of the Corporation’s executive compensation; and |
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| • | Transact other business that may properly come before the meeting. |
Stockholders of record at the close of business on March 1, 2010 will be entitled to vote at the Annual Meeting and any adjournments.
Robert L. Buzzo, Secretary
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 27, 2010.
The proxy materials for this Annual Meeting of Stockholders of First Community Bancshares, Inc., including the proxy statement and annual report, are available over the Internet at http: www.fcb.com/proxy.
All persons attending the 2010 Annual Meeting must present an admission ticket and picture identification. Please follow the advance registration instructions on the back cover of this proxy statement regarding details for use of the admission ticket.
WHETHER OR NOT YOU ATTEND THE ANNUAL MEETING, YOUR VOTE IS IMPORTANT TO US. YOU MAY VOTE BY THE FOLLOWING METHODS:
1. By telephone:(800) 690-6903 until 11:59 p.m. eastern daylight time on April 26, 2010; or
2. On the internet athttp://www.proxyvote.com until 11:59 p.m. eastern daylight time on April 26, 2010; or
3. Complete, sign and return the enclosed proxy as promptly as possible whether or not you plan to attend the meeting. An addressed return envelope is enclosed for your convenience. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED.
PROXY STATEMENT
First Community Bancshares, Inc.
One Community Place
P.O. Box 989
Bluefield, Virginia 24605
The Board of Directors of First Community Bancshares, Inc. (the “Corporation”, “FCBI”, “First Community”, “we”, “us”, and “our”) solicits the enclosed proxy for use at the Annual Meeting of Stockholders of the Corporation (the “Annual Meeting”), which will be held on Tuesday, April 27, 2010,30, 2013, at 11:30 a.m. local timeEastern Daylight Time at Fincastle Country Club, 1000 Country Clubthe Corporate Center, 29 College Drive, Bluefield, Virginia and at any adjournment thereof.
The expenses of the solicitation of the proxies for the Annual Meeting, including the cost of preparing, assembling and mailing the notice, Proxy Statementproxy statement and return envelopes, the handling and tabulation of proxies received, and charges of brokerage houses and other institutions, nominees or fiduciaries for forwarding such documents to beneficial owners, will be paid by the Corporation. In addition to the mailing of the proxy material,materials, solicitation may be made in person, by telephone or by other means by officers, directors or regular employees of the Corporation.
This Proxy Statementproxy statement and the proxies solicited hereby are being first sent or delivered to stockholders of the Corporation on or about March 15, 2010.
Shares of common stock (par value $1.00 per share) (“Common Stock”) represented by proxies in the accompanying form, which are properly executed and returned to the Corporation, will be voted at the Annual Meeting in accordance with the stockholder’s instructions contained therein. In the absence of contrary instructions, shares represented by such proxies will be voted FOR the election of the two directors nominated by the Board of Directors and named in this proxy statement and FOR ratification of Dixon Hughes PLLCGoodman LLP as the Corporation’s independent registered public accountants, and FOR approval, on a non-binding advisory basis, of the Corporation’s named executive officer compensation.
accounting firm.Any stockholder has the power to revoke his or her proxy at any time before it is voted. A proxy may be revoked at any time prior to its exercise by the filing of written notice of revocation with the Secretary of the Corporation, by delivering to the Corporation a duly executed proxy bearing a later date, or by attending the Annual Meeting and voting in person. However, ifIf your shares of Common Stock are held for you arein a stockholder whose shares are not registeredbrokerage, bank or other institutional account, you must obtain a proxy from that institution, bring it with you to the Annual Meeting and submit it with your ballot in your own name, you will need additional documentation from your record holderorder to be able to vote personallyyour shares at the Annual Meeting.
The Board of Directors has fixed March 1, 20102013 as the record date for stockholders entitled to notice of and to vote at the Annual Meeting. Shares of Common Stock outstanding on the record date are entitled to be voted at the Annual Meeting and the holders of record will have one vote for each share so held in the matters to be voted upon by the stockholders. Each share of Common Stock outstanding as of the record date will be entitled to one vote on each of the proposals set forth in this proxy statement. Treasury shares are not voted. Individual votesShares of stockholdersthe Corporation’s Series A Preferred Stock are kept private, except as appropriatenot entitled to meet legal requirements. Access to proxies and other individual stockholder voting records is limited to certain employees of First Community and its agents who acknowledge their responsibility to comply with this policy.be voted on the matters presented at the Annual Meeting. Stockholders of the Corporation do not have cumulative voting rights. As of the close of business on March 1, 2010,2013, the outstanding shares of the Corporation consisted of 17,765,16420,048,284 shares of Common Stock and no17,421 shares of Preferred Stock.
preferred stock.The presence in person or by proxy of a majority of the shares of the Common Stock entitled to vote is necessary to constitute a quorum at the Annual Meeting. Abstentions and broker non-votes, which are discussed below, are considered in determining the presence of a quorum. Directors are elected by a plurality of the votes cast at a stockholders’ meeting with a quorum present. The threetwo persons who receive the greatest number of votes of the holders of Common Stock represented in person or by proxy at the Annual Meeting will be elected directors of the Corporation. Approval of the amendment to the Articles of Incorporation to increase the authorized common stock requires a majority of the outstanding voting capital stock approve the amendment. Approval of the ratification of the independent registered public accountantsaccounting firm requires that the number of votes cast in favor of the proposal exceeds the number of votes cast against. Advisory approvalAbstentions and broker non-votes will have no effect on the election of the Corporation’s executive compensation program requires thattwo directors nominated by the numberBoard of votes castDirectors and named in favorthis proxy statement and the ratification of the
independent registered public accounting firm.
proposal exceeds the number of votes cast against. If the shares you own are held in “street name”street name by a brokerage firm, your brokerage firm, as the record holder of your shares, is required to vote your shares according to your instructions. In order to vote your shares, you will need to follow the directions your brokerage firm provides you. Many brokers also offer the option of voting overby the Internet or by telephone, instructions for which would be provided by your brokerage firm on your vote instruction form. Under the current rules of the New York Stock Exchange, or NYSE, and the NASDAQ Stock Market LLC or NASDAQ, if you do not give instructions to your brokerage firm, it will still be able to vote your shares with respect to only the “discretionary” items discussed above, including the ratification of the independent registered public accountants and the advisory approval of the Corporation’s named executive officer compensation. Abstentions andaccounting firm. If you do not provide instructions to your brokerage firm, it will not be able to vote on non-discretionary matters, which can result in a broker non-votes will have no effect on the ratification of the independent registered public accountants or the advisory approval of the Corporation’s named executive officer (“NEO” or “named executives”) compensation.non-vote. A “broker non-vote”broker non-vote occurs when a bank, broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because it does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner.
Starting this year, the The election of the two directors nominated by the Board of Directors and named in this proxy statement is a “non-discretionary” item. If you do not instruct your broker how to vote with respect to this item, your broker may not vote with respect to this proposal and those votes will be counted as “broker non-votes”.
You can ensure that your shares are voted atnon-discretionary matter under the meeting by submitting your instructions by telephone, by internet, or by completing, signing, dating and returning the enclosed proxy form in the envelope provided. Submitting your proxy by any of these methods will not affect your right to attend and vote in person at the meeting. We encourage stockholders to submit their proxies in advancecurrent rules of the meeting. A Stockholder who gives a proxy may revoke it at any time before it is exercised by voting in person at the annual meeting, by submitting a subsequent proxy or by notifying the Corporation in writing of such revocation. If your FCBI shares are held for you in a brokerage, bank or other institutional account, you must obtain a proxy from that entityNYSE and bring it with you to submit it with your ballot in order to be able to vote your shares at the meeting.
NASDAQ.PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors is comprised of nineeight directors, including eightseven non-management directors, currently divided into three classes with staggered terms. All directors have been determined to be independent by the Board of Directors except Mr. Mendez, who is employed by FCBIthe Corporation as President and Chief Executive Officer.
At the 2010 Annual Meeting, the currentThe class of directors is nominated tofor re-election at the 2013 Annual Meeting will be elected to officeserve until the 20132016 Annual Meeting. All nominees are currently serving on the Corporation’s Board of Directors. In the event any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for anyan alternate nominee who shall be designated by the present Board of Directors to fill the vacancy. In the event that additional persons are nominated for election as directors, the proxy holders intend to vote all proxies received by them for the nominees listed below. All nominees named herein have consented to be named and to serve as directors if elected.
No director or executive officer of the Corporation is related to any other director or executive officer of the Corporation by blood, or marriage or adoption, except for Mr. Stafford who is the father of Mr. Stafford, II.
A table of each director and nominee, including his age, the applicable director class, which is based upon the year in which his term of service expires, and title, is set forth below. A biography describing each director’s and nominee’s qualifications and business background is set forth below the table. Each nominee has consented to be named to, and to serve as, a director if elected. We doThe Corporation does not know of any reason why any nominee would be unable to serve as a director. If any nominee is unable to serve, the shares represented by all valid proxies will be voted for the election of such other person as the Board may nominate.
Members of the Corporation’s Board of Directors of First Community Bancshares, Inc. are expected to have the appropriate skills and characteristics necessary to function in the Corporation’s current operating environment and contribute to its future direction and strategies. These include legal, financial, management and other relevant skills. In addition,
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the Corporation looks to achieve a diversified Board, including members with varying experience, age, perspective, residence and background.
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Name and Title | | Age | | | Since | | | Directors | |
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| Franklin P. Hall, Director | | | 71 | | | | 2007 | | | | 2011 | |
| Allen T. Hamner, Director Nominee | | | 68 | | | | 1994 | | | | 2010 | |
| Richard S. Johnson, Director Nominee | | | 60 | | | | 2008 | | | | 2010 | |
| I. Norris Kantor, Director | | | 80 | | | | 1989 | | | | 2012 | |
| John M. Mendez, President, CEO and Director Nominee | | | 55 | | | | 1994 | | | | 2010 | |
| A. A. Modena, Director | | | 81 | | | | 1989 | | | | 2012 | |
| Robert E. Perkinson, Jr., Director | | | 62 | | | | 1994 | | | | 2011 | |
| William P. Stafford, Chairman of the Board | | | 76 | | | | 1989 | | | | 2011 | |
| William P. Stafford, II, Director | | | 46 | | | | 1994 | | | | 2012 | |
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Name and Title | | Age | | | Director of
Corporation
Since | | | Class of
Directors | |
W.C. Blankenship, Jr., Director | | | 62 | | | | 2013 | | | | 2015 | |
Franklin P. Hall, Director | | | 74 | | | | 2007 | | | | 2014 | |
Richard S. Johnson, Director Nominee | | | 63 | | | | 2008 | | | | 2013 | |
I. Norris Kantor, Director | | | 83 | | | | 1989 | | | | 2015 | |
John M. Mendez, President, CEO and Director Nominee | | | 58 | | | | 1994 | | | | 2013 | |
Robert E. Perkinson, Jr., Director | | | 65 | | | | 1994 | | | | 2014 | |
William P. Stafford, Director | | | 79 | | | | 1989 | | | | 2014 | |
William P. Stafford, II, Director | | | 49 | | | | 1994 | | | | 2015 | |
NOMINEES FOR THE CLASS OF 20132016
Allen T. Hamner, Professor Emeritus of Chemistry at West Virginia Wesleyan College, Buckhannon, West Virginia.
Mr. Hamner is a 1963 graduate of West Virginia Wesleyan College, Buckhannon, West Virginia and a 1969 graduate of Cornell University. Mr. Hamner joined the faculty of West Virginia Wesleyan College in 1969 and retired in 2008.
Mr. Hamner’s relevant experience qualifying him for service as a director includes: twenty-two combined years of service on this Board and on a predecessor bank board and committees thereof; the ability to understand and discuss complex financial issues; ten years of service as a member of the Corporation’s audit committee; former treasurer of two private companies; and valuable business acumen and experience as a general contractor in the development of retail spaces.
Richard S. Johnson, President and Chief Executive Officer, The Wilton Companies, Richmond, Virginia.
Mr. Johnson earned a BS BA degree from the University of Richmond, Richmond, Virginia in 1973, with a concentration in economics and finance, and graduated with a MS degree from Virginia Commonwealth University, Richmond, Virginia in 1977, with a concentration in real estate and urban land development. Mr. Johnson has been the President and Chief Executive Officer of The Wilton Companies, a real estate investment, development, brokerage and management group of companies, since 2002. Prior to joining The Wilton Companies, Mr. Johnson served as President of Southern Financial Corp. of Virginia from 1985 to 2002 and Chairman of the Board of Southern Title Insurance Corporation from 1980 to 1985. Mr. Johnson currently serves as a director of the University of Richmond, Fidelity Group, LLC, City of Richmond Economic Development Authority, the State Fair of Virginia and Grubb & Ellis Apartment REIT. Mr. Johnson previously served as a director of the Children’s Museum of Richmond, Ducks Unlimited, Inc., and Ducks Unlimited Canada.
Mr. Johnson’s relevant experience qualifying him for service as a director includes: long-range planning, various aspects of mortgage underwriting, marketing and mortgage portfolio servicing; chairing the Economic Development Authority of the City of Richmond, Virginia; past service as a director and finance committee member of Ducks Unlimited, Inc. and Ducks Unlimited Canada; state and national offices with Ducks Unlimited, Inc. as assistant treasurer and as a member of the audit subcommittee; Vice Chairman of the State Fair of Virginia and Chairman of the Finance Committee. In addition, Mr. Johnson has extensive experience in real estate acquisition, development, finance and management through his executive experience as President of The Wilton Companies.
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John M. Mendez, President and Chief Executive Officer, First Community Bancshares, Inc., Bluefield, Virginia.
Mr. Mendez attended Marshall University from 1973 to 1975 and graduated from Concord University in May 1978 with a BS in Business Administration with a concentration in Accounting. Mr. Mendez earned his certification as a Certified Public Accountantcertified public accountant (“CPA”) in 1981. Mr. Mendez1981 and joined First Community Bank N.A. in 1985. Prior to serving as President and Chief Executive Officer (“CEO”) of First Community Bancshares, Inc.,the Corporation, Mr. Mendez served in the positions of Chief Financial Officer (“CFO”) and Chief Administrative Officer. Mr. Mendez served as Audit Manager of Brown, Edwards & Co., CPA’sCompany L.L.P. from 1978 to 1985. Mr. Mendez servespreviously served on the Concord University Board of Governors.Governors and chaired its Finance
and Facilities Committees. He previously served as a director forof the Community Foundation of the Virginias, the West Virginia Bankers Association, Virginia Bankers Association, and Princeton Community Hospital.
Hospital where he served as Chairman of the Audit Committee.Mr. Mendez’ relevant experience qualifying him for service as a director includes: history as a practicing CPA at a regional public accounting firm; external audit experience for a variety of businesses with emphasis in the banking sector while engaged in public accounting; familiarity with bank regulations and bank and parent regulatory examination process;processes; writing, communicating and enforcing company, bank and subsidiary policies; success in negotiating and integrating acquired businesses in the execution of a variety of mergers and acquisitions; past service on a variety of boards and audit committees including a 211-bed community hospital; long term service as CFO of a publicly-tradedpublicly traded company; and the variety of offices held with increasing management responsibilities during twenty-five28 years in management of a publicly-tradedpublicly traded financial services company.
Richard S. Johnson, Chairman, President and Chief Executive Officer, The Wilton Companies, Richmond, Virginia.
Mr. Johnson earned a BS BA degree from the University of Richmond, Richmond, Virginia in 1973, with concentrations in Economics and Finance, and graduated with a MS degree from Virginia Commonwealth University, Richmond, Virginia in 1977, with a concentration in Real Estate and Urban Land Development. Mr. Johnson has been the President and Chief Executive Officer of The Wilton Companies, a real estate investment, development, brokerage and management group of companies, since 2002. He assumed the role of Chairman of The Wilton Companies in 2010. Prior to joining The Wilton Companies, Mr. Johnson served as President of Southern Financial Corp. of Virginia from 1985 to 2002 and Chairman of the Board of Southern Title Insurance Corporation from 1980 to 1985. Mr. Johnson currently serves as a director/trustee of First Community Bank, University of Richmond, Fidelity Group, LLC, and serves as the Chairman of the City of Richmond Economic Development Authority. Mr. Johnson also serves as Director Emeritus of Ducks Unlimited, Inc. and previously served as a director of the State Fair of Virginia, Children’s Museum of Richmond, Ducks Unlimited, Inc., and Ducks Unlimited Canada.
Mr. Johnson’s relevant experience qualifying him for service as a director includes: long-range planning, various aspects of mortgage underwriting, marketing and mortgage portfolio servicing; chairing the Economic Development Authority of the City of Richmond, Virginia; past service as a director and Finance Committee member of Ducks Unlimited, Inc. and Ducks Unlimited Canada; state and national offices with Ducks Unlimited, Inc., including Assistant Treasurer and member of the Finance and Audit Subcommittee; and previous service as a director and Audit Committee member of the Apartment Trust of America.
Your Board recommends a voteFOR the nominees set forth above.
CONTINUING INCUMBENT DIRECTORS
W.C. Blankenship, Jr., State Farm Insurance Agent, Tazewell, Virginia.
Mr. Blankenship received his BS degree in 1972 from Appalachian State University and has served as a successful insurance agent for State Farm since 1976. Mr. Blankenship joined First Community Bank in July of 1996 following its acquisition of Citizens Bank of Tazewell, Inc. He was appointed to Citizens Bank’s Board of Directors during its formation in 1981 and was instrumental in the establishment of that bank, eventually serving as Chairman of the Board from 1984 through its acquisition by First Community Bank.
Mr. Blankenship’s relevant experience qualifying him for service as a director includes: more than 35 years of expertise and knowledge in insurance products and services and more than 30 years of bank board service.
Franklin P. Hall, Retired Commissioner, Virginia Department of Alcoholic Beverage Control, Senior Partner, Hall & Hall, PLC, Richmond, Virginia.
Mr. Hall is a 1961 graduate of Lynchburg College, Lynchburg, Virginia, with a BS degree in Mathematics and Business Administration. Mr. Hall also graduated from The American University, Washington, DC,D.C., with ana MBA degree in 1964 and The American University Law School with a Juris DoctorateDoctor degree in 1966. Mr. Hall currently serves as Senior Partner in the Hall and& Hall, Family Law FirmPLC in Midlothian, Virginia where he has practiced law since 1969. He served as a Delegatedelegate in the Virginia General Assembly from 1976 to 2009, and Minority Leader, Virginia House of Delegates from 2002 to 2008. He is a former Chairman of the Board of the CommonwealthThe CommonWealth Bank in Richmond, Virginia. Mr. Hall has served on the Greater Richmond Chamber of Commerce Foundation Board since 2004. He also has served as a Commissionercommissioner for the Virginia AlcoholDepartment of Alcoholic Beverage Commission.
Control.Mr. Hall’s relevant experience qualifying him for service as a director includes: a wide range of business and legal knowledge gained during an active forty-one44 year law practice; his MBA degree; twenty-five28 years of service on boards of financial service organizations; thirty30 years of overseeing the budget for the Common WealthCommonwealth of Virginia; service as senior member of the Joint Legislative Audit and Review Commission for the Virginia General Assembly; and service as Chair of the House Appropriations Subcommittee on Compensation.
I. Norris Kantor, Of Counsel, Katz, Kantor, Stonestreet & Perkins,Buckner, PLLC, Princeton and Bluefield, West Virginia.
Mr. Kantor received a BA degree in 1953 from the Virginia Military Institute and received a Juris Doctor degree in 1956 from the College of Law at West Virginia University. Mr. Kantor has practiced law for more than fifty50 years and is currently Of Counsel with the law firm of Katz, Kantor, Stonestreet & Perkins,Attorneys-at-Law.Buckner, PLLC. He served as a Judge Advocate USAF from 1956 to 1958. Mr. Kantor is a director of Mercer Realty Inc., a real estate management company, and Gomolco, Inc., a real estate holding company. Mr. Kantor currently serves as ain the following leadership capacities: Board member of the board of directors of the following organizations: Bluefield State College Foundation, Bluefield State College Board of Governors, New River Parkway Authority, and the Bluefield Development Authority; Board member and Secretary of Bluefield State College Research and Development Corp., past President of New River Parkway Authority, the Bluefield Development Authority,; Board member and President and Board Member of the Downtown Health and Wellness Center, Inc.
Mr. Kantor is also a former member and Chair of the West Virginia Ethics Commission.Mr. Kantor’s relevant experience qualifying him for service as a director include:includes: a wide range of legal and business experience gained during his more than fifty50 years as a practicing attorney; his legal work in issuing
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numerous utility bonds and refunding of utility bond issues; his ability to understand complex business, legal and financial topics; and twenty23 years of service as a board member of financial service organizations.
A. A. Modena, Retired Executive Vice President and Secretary of First Community Bancshares, Inc.
Mr. Modena received a BS degree in Business Administration from Virginia Tech in 1949, a LLB degree from W & L University Law School in 1954, and is a 1961 graduate of the Stonier Graduate School of Banking at Rutgers University. Mr. Modena has been a member of the Virginia State Bar since 1954. Mr. Modena was previously employed by The Flat Top National Bank of Bluefield serving as Vice President & Trust Officer from 1960 to 1969, Senior Vice President & Trust Officer from 1969 to 1976, Executive Vice President and Trust Officer from 1976 to 1993, and President and Chief Executive Officer from 1993 to his retirement in 1994. Mr. Modena served as Executive Vice President of Flat Top Bankshares, Inc. from 1983 to 1990 and Executive Vice President and Secretary of FCFT, Inc. from 1990 to 1994. Mr. Modena’s past banking activities with the West Virginia Bankers Association included serving as Chairman and Member of the Board of Directors, Past Chairman of Group V and Past President of the Trust Division. In the past five years, Mr. Modena has served as a Member of the Faculty Merit Foundation of West Virginia, Inc., Trustee of United Company Investment Fund, Bristol, Virginia, Board of Trustees of Bluefield College, and Board of Directors of Mission West Virginia.
Mr. Modena’s relevant experience qualifying him for service as a director includes: a broad range of management and customer service experience in trust and commercial banking for more than fifty years; his legal education; investment experience including formation, management and liquidation of common trust funds; longstanding service as a member of a variety of boards of directors for banks, this Corporation, health service organizations, churches, a wealth management firm and statewide bankers’ association; and his knowledge of bank operations and other financial regulations.
Robert E. Perkinson, Jr., Former Vice President-Operations of MAPCO Coal and Alliance Coal Co., Inc., Bluefield, Virginia.
Mr. Perkinson received a BS degree in Civil Engineering — Engineering—Construction Option in 1969 and a Professionalprofessional degree in Soil Mechanics and Foundation Energy in 1970 from North Carolina State University. Prior to Mr. Perkinson’s employment with MAPCO Coal, he was employed as Vice President — President—Operations of South Atlantic Coal Co. and worked for J. A. Jones Construction in Charlotte, North Carolina. Upon leaving the employment of MAPCO Coal, Mr. Perkinson served as Acting Executive Director of the Bluefield Sanitary Board for the City of Bluefield from 20072006 to 20092008 and Mayor of the City of Bluefield, West Virginia. Mr. Perkinson currently servesserved as Chairman of the Board of Bluefield Regional Medical Center and currently serves as a member of the Board of Governors of Bluefield State College.
Mr. Perkinson’s relevant experience qualifying him for service as a director includes: previous service as a member of senior management for various companies in the coal industry; experience in municipal government,
including service as executive director of a municipal sanitary board; and service as board chairman for a non-profit regional medical center coupled with approximately twenty20 years of bank board service.
William P. Stafford, President, Princeton Machinery Service, Inc., a machinery manufacturing and repair company.Princeton, West Virginia.
Mr. Stafford is a graduate of the United States Naval OrdinanceOrdnance Laboratory and U.S.U. S. Naval Gun Factory. He currently serves as the Chairman of the Board of First Community Bancshares, Inc., and Vice Chairman of the Board of First Community Bank, N. A.Bank. He serves as President and Director of the H. P. and Anne S. Hunnicutt Foundation, Inc., and Melrose Enterprises, Ltd., and as a Membermember of Stafford Farms, LLC. In addition to his current serviceMr. Stafford serves as President of Princeton Machinery Service, Inc., a machinery manufacturing and repair company, which is a position he has held since the 1950s. Mr. Stafford previously served as its General Manager. Mr. Stafford also previously served as Membera member of the West Virginia Legislature, a Directordirector of the West Virginia Division of Natural Resources, a Membermember of the Mercer County, West Virginia Economic Development Authority, and a Membermember of the Mercer County, West Virginia Airport Authority.
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Mr. Stafford’s relevant experience qualifying him for service as a director includes: owner and president of a successful machinery manufacturing and repair business; owner and president of several other successful businesses; a director and president of a charitable foundation; extensive familiarity with the history and operation of the Corporation and its predecessor banks; participation and leadership in a wide variety of community and civic organizations; previous experience in elected state and local government offices,offices; and more than twenty20 years of board service for a publicly traded financial services company.
the Corporation.William P. Stafford, II, Attorney, Brewster, Morhous, Cameron, Caruth, Moore, Kersey & Stafford, PLLC.PLLC, Bluefield, West Virginia.
Mr. Stafford is a graduate of Virginia Polytechnic Institute and State University, Blacksburg, Virginia, and holds a Bachelor of ScienceBS degree in Mechanical Engineering. He received his Juris Doctorate,Doctor,cum laude, from the Washington & Lee University School of Law, Lexington, Virginia. Mr. Stafford practices as a member of his firm primarily in the areas of commercial transactions, banking, creditor’s rights, creditor bankruptcy, and trusts and estates. He currently serves as Chairman of the Board of the Corporation. Mr. Stafford serves as Directora director and Corporate Secretary of the H. P. and Anne S. Hunnicutt Foundation, Inc., Princeton Machinery Service, Inc., and Melrose Enterprises, Ltd. He is a member of Stafford Farms, LLC, Vermillion Development, LLC, and Walnut Hill, LLC.LLC, which include real estate and agricultural holdings. Mr. Stafford is a partner in Legal Realty, A Partnership. Mr. Stafford previously served as a member of the West Virginia Infrastructure and Jobs Development Council. Mr. Stafford previously served as a council member and Mayor of the City of Princeton, West Virginia. Mr. Stafford has served, and continues to serve, on numerous civic and community service boards and commissions.
Mr. Stafford’s relevant experience qualifying him for service as a director includes: a broad range of regulatory, business, legal and banking related issues encountered in the practice of law; extensive state and municipal government service; extensive civic and community service; and more than fifteen15 years of boardBoard service for the Corporation.
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Director Qualifications and Experience. The following table identifies the experience, qualifications, attributes and skills that the Board considered in making its decision to appoint and nominate directors to the Corporation’s Board. This information supplements the biographical information provided above. The vertical axis displays the primary factors reviewed by the Governance and Nominating Committee in evaluating a boardBoard candidate.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Blankenship, Jr. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Hall | | Hamner | Kantor | | Kantor | | Johnson | | | Mendez | | Modena | | Perkinson, Jr. | | | Stafford | | | Stafford, II |
| |
| | | | | | | | |
Experience, Qualifications, SkillSkills or AttributeAttributes | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Professional standing in chosen field | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | |
Expertise in financial services or related industry | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | |
Audit Committee Financial Expert (actual or potential) | | | | | | | | | | | X | | | | | | | | X | | | | X | | | | | | | | | | | | | | | | | | | | | |
Civic and community involvement | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | |
Other public company experience (current or past) | | | | | | | | | | | | | | | | | | | | | | | | | | | X | | | | X | | | | | | | | | | | | | | |
Leadership and team building skills | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | |
Diversity of experience, professions, skills, geographic representation and backgrounds | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | |
Specific skills/knowledge: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
- finance | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | |
- technology | | | | | | | | | | | X | | | | | | | | | | | | | X | | | | | | | | X | | | | | | | | X | |
- marketing | | | | | | | | | | | | | | | X | | | | X | | | | | | | | X | |
- marketing | | | X | | | | | | | | | | | | X | | | | X | | | | | | | | | | | | | |
- public affairs | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | |
- HR | | | X | | | | | | | | X | | | | X | | | | X | | | | X | | | | X | | | | | | | | X | |
- governance | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | | | | X | |
NON-DIRECTOR EXECUTIVE OFFICERS
Executive officers who are not directors of the Corporation, including their title, age and date they became an officer of the Corporation isare set forth in the chart below, which is followed by a brief biography describing each executive officer’snamed executive’s business experience.
| | | | | | | | | |
| | | | | Executive of
|
Name and Title | | Age | | Corporation Since |
| |
| David. D. Brown, V., Chief Financial Officer | | | 35 | | | | 2006 | |
| Robert L. Buzzo, Vice-President and Secretary, President and Director of First Community Bank, N.A. | | | 59 | | | | 2000 | |
| E. Stephen Lilly, Chief Operating Officer | | | 51 | | | | 2000 | |
| Gary R. Mills, Chief Credit Officer | | | 42 | | | | 2007 | |
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| | | | | | | | |
Name and Title | | Age | | | Executive of
Corporation Since | |
David D. Brown, Chief Financial Officer of Corporation and First Community Bank | | | 38 | | | | 2006 | |
Robert L. Buzzo, Vice President and Secretary of Corporation, President and Director of First Community Bank | | | 63 | | | | 2000 | |
E. Stephen Lilly, Chief Operating Officer of Corporation, Executive Vice President and Chief Operating Officer of First Community Bank | | | 54 | | | | 2000 | |
Robert L. Schumacher, General Counsel of Corporation, Senior Vice President, General Counsel and Secretary of First Community Bank | | | 62 | | | | 2001 | |
Robert L. Buzzo, Vice President and Secretary of the Corporation, President and Director of First Community Bank, N.A., a wholly-owned subsidiary of the Corporation.
Mr. Buzzo had been President and a Director of First Community Bank, N. A. since June 2000, and Vice- President and Secretary of the Corporation since June 2000. From October 1994 until June 2000, Mr. Buzzo was the Chief Executive Officer of First Community Bank — Bluefield, a division of First Community Bank, N. A. Prior to 1994, Mr. Buzzo held other leadership positions within the Corporation since he joined the bank in 1973.
Stephen Lilly, Chief Operating Officer
Mr. Lilly has been Chief Operating Officer of the Corporation and Senior Vice President and Chief Operating Officer of First Community Bank, N. A. since June 2000. Mr. Lilly has been employed by the Corporation since 1997.
David D. Brown, V, Chief Financial Officer
Mr. Brown has been Chief Financial Officer of the Corporation and
Senior Vice President — FinanceFirst Community Bank.Mr. Brown has been CFO of the Corporation and First Community Bank N.A. since May 2006. Mr. Brown served as Financial Reporting Coordinator of the Corporation from April 2005 to May 2006. Prior to joining the Corporation, Mr. Brown was a Corporate Auditor and Audit Manager of United Bankshares, Inc. from September 1999 to April 2005.
Gary R. Mills, Chief Credit Officer
Mr.
MillsBrown also practiced in the field of public accounting from 1997 to 1999 where he practiced tax, accounting, and auditing across a variety of industries. Mr. Brown is a CPA and holds a MPA degree from West Virginia University.Robert L. Buzzo,Vice President and Secretary of the Corporation, President and Director of First Community Bank.
Mr. Buzzo has been Vice President and Secretary of the Corporation and President and a director of First Community Bank since June 2000. From October 1994 until June 2000, Mr. Buzzo was the Chief CreditExecutive Officer of First Community Bank—Bluefield, a division of First Community Bank. Prior to 1994, Mr. Buzzo held other leadership positions since joining the Corporation in 1973.
E. Stephen Lilly, Chief Operating Officer of the Corporation, Executive Vice President and Chief Operating Officer of First Community Bank.
Mr. Lilly has been Chief Operating Officer (“COO”) of the Corporation and First Community Bank since 2007, and has worked in Credit Administration since 2005.June 2000. Mr. MillsLilly has been employed by the Corporation since 1998.
Robert L. Schumacher, General Counsel of the Corporation and Senior Vice President, General Counsel and Secretary of First Community Bank.
Mr. Schumacher has served as General Counsel of the Corporation and First Community Bank since 2005. He has also served as Senior Vice President and Secretary of First Community Bank since 2001. Prior to his current positions, Mr. Schumacher served as the Corporation’s CFO and Senior Vice President—Finance from 2001 until 2005. In addition, Mr. Schumacher has led First Community Bank’s Trust and Financial Services Division
in the capacity of Senior Vice President and Senior Trust Officer. Prior to joining the Corporation in 1983, Mr. Schumacher engaged in the private practice of law in Princeton, West Virginia. Mr. Schumacher is a CPA, a Certified Financial Planner, is licensed to practice law and holds a Juris Doctor degree from West Virginia University.
CORPORATE GOVERNANCE
Corporate Governance Guidelines. The Board of Directors’ Governance and Nominating Committee has enacted guidelines to determine director independence and qualifications for directors. The Governance and Nominating Committee Charter is published at the Corporation’s website under the “Governance Documents” tab of the “Corporate Profile” atwww.fcbresource.com. This section of the website makes available all of First Community’s governance materials, including various Board committee charters, which are available in print to any Stockholder upon request. The Board regularly reviews corporate governance developments and considers modifications to its governance charter to clarify and augment the Board’s processes, including those relating to risk oversight.
The Board’s Role in Risk Oversight. We believe The Corporation believes that each member of ourthe Board of Directors in his or her fiduciary capacity has a responsibility to monitor and manage risks faced by the Corporation. At a minimum, this requires the members of ourthe Board of Directors to be actively engaged in boardBoard discussions, review materials provided to them, and know when it is appropriate to request further information from managementand/or engage the assistance of outside advisors. Furthermore, because the banking industry is highly regulated, certain risks to the Corporation are monitored by the Board of Directors and the Audit Committee through its review of the Corporation’s compliance with regulations set forth by its regulatory authorities, including the FDIC and recommendations contained in regulatory examinations.
Because we believethe Corporation believes risk oversight is a responsibility for each member of the Board of Directors, we doit does not concentrate the Board’s responsibility for risk oversight in a single committee. Instead, each of ourthe committees concentrates on specific risks for which they haveit has an expertise, and each committee is required to regularly report to the Board of Directors on its findings. For example, the audit committeeAudit Committee regularly monitors the Corporation’s exposure to certain investment risks, such as the effect of interest rate or liquidity changes, the Corporation’s exposure to certain reputational risks by establishing and evaluating the effectiveness of companyits programs to report and monitor fraud and by monitoring the Corporation’s internal controls over financial reporting. OurThe Corporation’s Compensation and Retirement Committee monitors risks associated with the design and administration of the Corporation’s compensation committee’s role in monitoring the risks related to our compensation structure isprograms as discussed in further detail below.
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Director Independence. First Community currently has eight independent directors outThe Board’s role in risk oversight of
nine.the Corporation is consistent with the Corporation’s leadership structure, with the CEO and other members of senior management having responsibility for assessing and managing the Corporation’s risk exposure, and the Board and its committees providing oversight in connection with those efforts. The Board
has satisfied,of Directors annually reviews the relationships of each of its members with the Corporation to determine whether each director is independent. This determination is based on both subjective and
expectsobjective criteria developed by the NASDAQ listing standards and the SEC rules.Independence of Directors
The Board of Directors reviewed the directors’ responses to continuea questionnaire asking about their relationships with the Corporation (and those of their immediate family members) and other potential conflicts of interest, as well as information provided by management related to satisfy, its objective that at least a majoritytransactions, relationships, or arrangements between the Corporation and the directors or parties related to the directors in order to determine the independence of the current members of the Board should consist of independent directors. For a director to be considered independent,Directors and the nominees for election as directors of the Corporation.
Based on the subjective and objective criteria developed by the NASDAQ listing standards and the SEC rules, the Board must determineof Directors determined that the director does not have any direct or indirect material relationship with First Community. The Board has established guidelines to assist it in determining director independence (see Appendix A to this Proxy Statement), which conform to the independence requirementsfollowing nominees and current members of the NASDAQ Stock Exchange listing standards. In addition to applying these guidelines, the Board will consider all relevant factsof Directors are independent: W. C. Blankenship, Jr., Franklin P. Hall, Richard S. Johnson, I. Norris Kantor, Robert E. Perkinson, Jr., William P. Stafford and circumstances in makingWilliam P. Stafford, II. John M. Mendez is not independent because he is an independence determination.
In the courseexecutive officer of the Board’s determination regarding independence, it considers any transactions, relationships and arrangements as required by the corporation’s independence guidelines. In addition, with respect to all directors, the Board considered the amount of First Community’s discretionary charitable contributions to charitable organizations where any of the directors serves as an officer, director or trustee, and determined that First Community’s contributions to each of the charitable organizations constituted less than the greater of $200,000 or five percent of the charitable organization’s annual consolidated gross revenues during the applicable organization’s last completed fiscal year.
AllCorporation.The NASDAQ listing standards contain additional requirements for members of the Audit Committee and the Compensation and Retirement Committee. All of the directors serving on each of these committees are independent under the additional requirements applicable to such committees.
The Board considered the following relationships in evaluating the independence of the Corporation’s Directors and determined that none of the relationships constitute a material relationship with the Corporation and each of the relationships satisfied the standards for independence:
Director Stafford, II serves as a partner of a law firm, which, similar to other firms in other localities, regularly provides legal services to the Corporation and its affiliates. The law firm provided legal services and received payments from the Corporation for such services during 2012. These payments did not exceed the greater of 5% of the law firm’s consolidated revenues for 2012 or $200,000, and therefore, the relationship satisfied the standards for independence.
Director Johnson serves as Chairman, President and CEO of The Wilton Companies. The Wilton Companies is comprised of three entities under common management. During 2012, the Corporation and its affiliates leased two offices from two of these entities, The Wilton Companies, Inc. and The Wilton Companies, LLC. Director Johnson holds an equity ownership in these two entities. The combined annual lease payments did not exceed the greater of 5% of The Wilton Companies’ and its subsidiaries’ consolidated revenues for 2012 or $200,000, and therefore, the relationship satisfied the standards for independence.
Board Leadership Structure. The Corporation separates the roles of CEO and Chairman of the Board in recognition of the differences between the two roles. The CEO is responsible for setting the strategic direction for the Corporation and the day-to-day leadership and performance of the Corporation, while the Chairman of the Board provides guidance to the CEO and sets the agenda for Board meetings and presides over meetings of the full Board.
The separation of these roles is appropriate for the Corporation because the separation results in a more effective monitoring and objective evaluation of the CEO’s performance. In addition, the CEO is unable to control the Board’s agenda and information flow that reduces the likelihood that the CEO will abuse his power. The Board also believes that directors will be more likely to challenge the CEO if the Chairman of the Board is not the CEO.
Standards of Conduct. All directors, officers and employees of the Corporation must act ethically at all times and in accordance with the policies comprising the Corporation’s Standards of Conduct (“Code”), which is available at the Corporation’s website www.fcbinc.com and available in print to any stockholder upon request. Only the Board of Directors may waive a provision of the Code and only for just cause in an instance where the underlying ethical objective will not be violated. No waivers were granted to any director or officer during 2012. Amendments to the Code will be published on the Corporation’s website, as required by SEC rules. If an actual or potential conflict of interest arises for a director, the director must promptly inform the Board.
Communicating Concerns to Directors. The Audit Committee and the non-management directors have established procedures to enable any employee who has a concern about the Corporation’s conduct, policies, accounting, internal accounting controls or auditing matters, to communicate that concern directly to the Board through an e-mail or written notification directed to the Chairman of the Audit Committee. Such communications may be confidential or anonymous. A notification explaining how to submit any such communication is provided to all employees at each location of the Corporation and its affiliated businesses and is provided to employees in the employee handbook. The status of any outstanding concern is reported to the non-management directors of the Board periodically by the Chairman of the Audit Committee.
Stockholder Communications. Stockholders may communicate with all or any member of the Board of Directors by addressing correspondence to the Board of Directors or to the individual director and addressing such communication to Robert L. Buzzo, Secretary, First Community Bancshares, Inc., P. O. Box 989, Bluefield, Virginia 24605-0989. All communications so addressed will be forwarded to the Chairman of the Board of Directors (in case of correspondence addressed to the Board of Directors) or to the individual director, without exception.
The Board of Directors and Board Meetings
The Board of Directors held ten regular meetings and two joint meetings with the First Community Bank Board in 2012. No member attended fewer than 75% of the Board meetings and committee meetings on which the member sits. Each director is expected to devote sufficient time, energy and attention to ensure diligent performance of the director’s duties and to attend all regularly scheduled Board, committee, and stockholder meetings. It is the Board’s policy that the directors should attend the Annual Meeting absent exceptional circumstances. All current directors attended the 2012 Annual Meeting.
Board Committees
The Board of Directors has adopted written charters for three of its four standing committees: the Audit Committee, the Compensation and Retirement Committee (the “CRC”), and the Governance and Nominating Committee. A current copy of each of the committee charters is available for review and print on the Corporation’s website at www.fcbinc.com.
Audit Committee. The members of the Audit Committee are Directors Perkinson, who chairs the Committee, Hall and Johnson. The Board has determined that Mr. Johnson is the Audit Committee financial expert. The Audit Committee is primarily concerned with the integrity of the Corporation’s financial statements, the independence and qualifications of the independent registered public accounting firm and the performance of the Corporation’s internal audit function and independent registered public accounting firm. Its duties include: (1) selection and oversight of the independent registered public accounting firm; (2) review of the scope of the audit to be conducted by the independent registered public accounting firm, as well as the results of their audit; (3) oversight of the Corporation’s financial reporting activities, including the annual report, and the accounting standards and principles followed; (4) discussion with management of its risk assessment and management policies, including risk relating to the financial statements and financial reporting process and the steps taken by management to monitor and mitigate such risks; (5) approval of audit and non-audit services provided to the Corporation by the independent registered public accounting firm; (6) review of the organization and scope of the Corporation’s internal audit function and its disclosure and internal controls; and (7) reviews, approves and ratifies transactions with related persons. The Audit Committee held 12 meetings during 2012. The Audit Committee’s report is on page 31.
Executive Committee. The members of the Executive Committee are Directors Stafford II, who chairs the Committee, Hall, Johnson, Kantor, Mendez, Perkinson and Stafford. Except for Mr. Mendez, each member of the Executive Committee is independent. The Executive Committee did not meet in 2012. The Committee, subject to the supervision and control of the Board of Directors, has been delegated substantially all of the powers of the Board to act between meetings of the Board, except for certain matters reserved to the full Board by law.
Compensation and Retirement Committee. The members of the CRC are Directors Stafford, II, who chairs the Committee, Johnson, and Stafford. The CRC’s primary duties and responsibilities are to: (1) review, evaluate and determine annually the executive officers’ and directors’ compensation and the corporate goals and objectives relevant thereto, and to evaluate the executive officers’ performance in light of such goals and objectives; (2) review and evaluate all compensation decisions otherwise made by the CEO; (3) review, evaluate and determine all equity-based incentive awards; (4) review organizational systems and plans relating to management development and succession planning; and (5) review and discuss with management the proxy statement’s Compensation Discussion and Analysis and produce the CRC report. The CRC does not delegate any of its responsibilities to subcommittees.
The CEO of the Corporation provides the CRC with a performance assessment and compensation recommendation for each of the other executive officers of the Corporation. The CRC has the authority to retain or obtain the advice of any advisors as the CRC deems necessary in the performance of its duties. In 2012, the CRC directly engaged Mathews, Young—Management Consulting (“Mathews Young”) to provide compensation
analysis and advice regarding incentive compensation for employees of the Corporation. At the request of the CRC, Mathews Young: (i) developed a peer group analysis for the CRC’s review of compensation levels; (ii) formulated recommendations for long range performance compensation; and (iii) developed recommendations for an incentive program for the special assets department.Mathews Young was not retained to provide any other services to the Corporation. The CRC is still in the process of reviewing the Mathews Young recommendations and anticipates implementing some or all of them in 2013. Retention of Mathews Young by the CRC raised no conflicts of interest. The CRC held five meetings in 2012. The CRC’s report is on page 20. In 2012, the Board of Directors voted to amend the CRC Charter, which may be found on the Corporation’s website.
Compensation and Retirement Committee Interlocks and Insider Participation. None of the members of the CRC are or were formerly officers or employees of the Corporation or any of its subsidiaries. Finally, none of the executive officers of the Corporation served on any compensation committee or any board of directors of another company, of which any of the Corporation’s Board members was also an executive officer.
Governance and Nominating Committee. The members of the Governance and Nominating Committee must be independent directors as defined by NASDAQ. Membersare Directors Stafford, II, who chairs the Committee, Kantor, and Stafford. The Committee’s responsibilities include the selection of director nominees for Board service and the development and review of governance guidelines. The Committee also: (1) oversees the annual self-evaluations of the AuditBoard, as well as director performance and Board dynamics; and (2) makes recommendations to the Board concerning the structure and membership of the Board committees. This Committee also must satisfy a separate Securities and Exchange Commission (“SEC”) independence requirement, which provides that they may not accept directly or indirectly any consulting, advisory or other compensatory fee from First Community or its subsidiaries other than their directors’ compensation.
held two meetings in 2012.Director Candidates, Qualifications and Diversity. In considering whether to recommend any candidate for inclusion in the Board’s slate of recommended director nominees, including candidates recommended by stockholders, the Governance and Nominating Committee will considerconsiders a number of criteria, including, without limitation, the candidate’s integrity, business acumen, age, experience, commitment, diligence, conflicts of interest and the ability to act in the interests of all stockholders. The Governance and Nominating Committee believes diversity should be considered in the director identification and nomination process. The Governance and Nominating Committee seeks nominees with a broad diversity of experience, professions, skills, geographic representation and backgrounds. The Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees. The Corporation believes that the backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow the Board to fulfill its responsibilities. Nominees are not discriminated against on the basis of race, religion, national origin, sexual orientation, disability or any other basis proscribed by law.
Board Leadership Structure. We separate the roles of CEO and Chairman of the Board in recognition of the differences between the two roles. The CEO is responsible for setting the strategic direction for the Corporation and the day to day leadership and performance of the Corporation, while the Chairman of the Board provides guidance to the CEO and sets the agenda for Board meetings and presides over meetings of the full Board.
Standards of Conduct. All directors, officers and employees of First Community must act ethically at all times and in accordance with the policies comprising First Community’s Standards of Conduct (“Code”), which is published at First Community’s websitewww.fcbresource.com and available in print to any Stockholder upon request. A waiver of any Standard of Conduct can only be considered by the Board of Directors and may be granted only for just cause in an instance where the underlying ethical objective will not be violated. No waivers were granted to any director or officer during 2009. Amendments to the code will be published on the Corporation’s website, as required by SEC rules. If an actual or potential conflict of interest arises for a director, the director must promptly inform the Board.
Communicating Concerns to Directors. The Audit Committee and the non-management directors have established procedures to enable any employee who has a concern about First Community’s conduct, policies, accounting, internal accounting controls or auditing matters, to communicate that concern directly to the Board through an email or written notification directed to the Chairman of the Audit Committee. Such communications may be confidential or anonymous. A notification explaining how to submit any such communications is provided to all employees at each location of the Corporation and its affiliated businesses and is provided to employees in the employee handbook. The status of any outstanding concern is reported to the non-management directors of the Board periodically by the Chairman of the Audit Committee.
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Stockholder Communications. Stockholders may communicate with all or any member of the Board of Directors by addressing correspondence to the “Board of Directors” or to the individual director and addressing such communication to Robert L. Buzzo, Secretary, First Community Bancshares, Inc., P. O. Box 989, Bluefield, Virginia24605-0989. All communications so addressed will be forwarded to the Chairman of the Board of Directors (in case of correspondence addressed to the “Board of Directors”) or to the individual director without exception.
The Board of Directors and Board Meetings
The Board held nine (9) regular meetings and four (4) special meetings in 2009. No member attended fewer than 75% of the Board meetings and committee meetings on which the member sits. Each director is expected to devote sufficient time, energy and attention to ensure diligent performance of the director’s duties and to attend all regularly scheduled Board, committee, and Stockholder meetings. It is the Board’s policy that the directors should attend our Annual Meeting of Stockholders absent exceptional circumstances. All current directors attended the 2009 Annual Meeting except Chairman Stafford, who was excused for medical reasons.
Board Committees
The Board of Directors has adopted written charters for its four standing committees: the Audit Committee, the Executive Committee, the Governance and Nominating Committee, and the Compensation and Retirement Committee (the “CRC”). Except for the Executive Committee charter, a current copy of each of the committee charters is available for review and print on our website at www.fcbresource.com.
Audit Committee.
The members of the Audit Committee are directors Perkinson, who chairs the committee, Hall, Hamner and Johnson. The Board has determined that Mr. Johnson is the “audit committee financial expert”. The Audit Committee is primarily concerned with the integrity of the Corporation’s financial statements, the Corporation’s compliance with legal and regulatory requirements, the independence and qualifications of the independent auditor and the performance of the Corporation’s internal audit function and independent auditor. Its duties include: (1) selection and oversight of the independent auditor; (2) review of the scope of the audit to be conducted by them, as well as the results of their audit; (3) oversight of our financial reporting activities, including our annual report, and the accounting standards and principles followed; (4) discussion with management of its risk assessment and management policies, including risk relating to the financial statements and financial reporting process and key credit risks, liquidity risks, market risks and the steps taken by management to monitor and mitigate such risks; (5) approval of audit and non-audit services provided to the corporation by the independent auditor; (6) review of the organization and scope of our internal audit function and our disclosure and internal controls; and (7) oversight of the Corporation’s compliance program. The Audit Committee held eleven (11) meetings during 2009. The committee’s report is on page 29.
Executive Committee.
The members of the Executive Committee are directors Stafford, who chairs the committee, Hamner, Kantor, Mendez, Modena, Perkinson and Stafford, II. Except for Mr. Mendez, each member of the Executive Committee is independent. The Executive Committee held one (1) meeting during 2009. The committee, subject to the supervision and control of the Board of Directors, has been delegated substantially all of the powers of the Board to act between meetings of the Board, except for certain matters reserved to the full Board by law.
Compensation and Retirement Committee.
The members of the CRC are directors Stafford, II, who chairs the committee, Hamner and Modena. This committee’s primary responsibilities include: (1) establishing, reviewing and providing recommendations to the full Board regarding CEO compensation and reviewing and overseeing other senior executive compensation, (2) monitoring management resources, structure, succession planning, development and selection processes and the performance of key executives, (3) reviewing incentive compensation arrangements to ensure that incentive pay
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does not encourage unnecessary risk, (4) reviewing and discussing, at least annually, the relationship between risk management policies and practices, corporate strategy and senior executive compensation, and (5) reviewing director compensation and benefits. This committee also administers all incentive and stock option plans for the benefit of such officers and directors eligible to participate in such plans. The Compensation and Retirement Committee held four (4) meetings in 2009. The committee’s report is on page 18.
Compensation and Retirement Committee Interlocks and Insider Participation.
None of the members of the Compensation and Retirement Committee is or was formerly an officer or employee of our Corporation or any of its subsidiaries, nor did any members have a relationship with us that is disclosable as a “Related-Person Transaction” as defined by the SEC. In addition, none of our executive officers served on any compensation committee or any board of directors of another company, of which any of our Board members was also an executive officer.
Governance and Nominating Committee.
The members of the Governance and Nominating Committee are directors Modena, who chairs the committee, Hamner and Kantor. The committee’s responsibilities include the selection of director nominees for Board service and the development and review of Governance Guidelines. The committee also (1) oversees the annual self-evaluations of the Board, as well as director performance and Board dynamics; (2) makes recommendations to the Board concerning the structure and membership of the Board committees; and (3) reviews, approves and ratifies transactions with related persons required to be disclosed under SEC rules. This committee held two (2) meetings in 2009.
The committee will consider all Stockholderstockholder recommendations for candidates for the Board, which should be sent to the Governance and Nominating Committee,c/o Robert L. Buzzo, Vice President and Secretary of First Community Bancshares, Inc., P. O. Box 989, Bluefield, Virginia24605-0989. We believe The Corporation believes that directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long termlong-term interests of the stockholders. We striveThe Corporation strives to havemaintain a Board representingwith diverse experience with respect to policy making decisions in business, government, education and technology, and in areas that are relevant to the corporation’sCorporation’s overall business activities.
The committeeCommittee also considers candidates recommended by current directors, company officers, employees and others. The committeeCommittee evaluates all nominees for directors in the same manner and typically bases its initial review on any written materials submitted with respect to the candidate.
Meetings of Non-management Directors.
Directors. The non-management directors met without any management directors or employees present two times last year. Mr.Director Stafford, II served as chairchairman of these meetings.
COMPENSATION DISCUSSION AND ANALYSIS
This section provides an overview and explanation of the material information relevant to understanding the objectives, policies and philosophy underlying the Corporation’s compensation programs for executives and of
the general design philosophy of the Corporation’s compensation policies and practices for employees included in any incentive compensation program. To assist you inwith understanding certain disclosures that we arethe Corporation is required to provide in this section, which we referis referred to as the “CD&A”, we provide&A,” the Corporation provides information relating to executive and director compensation in a series of tables and accompanying narrative.
2009 Compensation At the 2011 Annual Meeting of Executive Officers
We believe it is inStockholders, the Corporation’s best interests to maintain consistency in ourstockholders approved the compensation philosophy and implementation, but we also believe discretion should be used in times of prosperity as well as times when either the Corporation or the overall economy, or both, are performing below expectations. With this in mind, we believe it is appropriate for some components of compensation to remain level or decline during periods of economic downturn, including periods of reduced earnings and declining stock prices, as was the case in 2008 and 2009.
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The CRC and management evaluated and established 2009 executive compensation in the context of the Corporation’s 2008 performance and the current economy coupled with a universal awareness of the current focus placed on executive compensation. While we believe that the compensation of our executive officers has consistently been balanced and fair, we felt the need to take a conservative approach in 2009 and refrained from payment of increases in executive base salary, with one exception, and awarded neither short nor long term incentives to the executives during 2009.
Specifically, we decided to compensate the named executives, for 2009 as follows:
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| • | Mr. Mendez proposed, and the CRC agreed, that the executive officers would receive no salary adjustments and no bonuses for 2009, with the exception of a salary adjustment for the CFO. The CRC accepted Mr. Mendez’ proposal as appropriate, acknowledging that while the Corporation continued to show strong core operational performance, this performance was negated by an underperforming investment portfolio, which negatively impacted the Corporation’s stock price. The result of these actions maintained the cash compensation paid to Mr. Mendez for 2009 equal to that of 2008. |
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| • | Messrs. Buzzo, Lilly and Mills also received neither salary adjustments nor bonuses. As noted above, Mr. Brown received a salary adjustment, but no bonus. |
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| • | No long term incentive awards were granted to any of the named executives or to any other executive officer employed by the Corporation in 2009 and, other than to Mr. Brown, no such awards have been made to any of the other named executives since 2003. |
Consistent with past practice, going forward we will continue to use discretion coupled with a goals-driven formula to compensate executives. We will not adopt incentives that promote risky behavior for near term rewards. Although we made no incentive awards in 2009, ordinarily, we attempt to use the equity portion of our compensation program to reward behavior that produces steady, long term performance. We believe executive compensation should reflect and be driven by the Corporation’s long- term operating performance and relative stock value compared with similarly situated publicly traded, regional financial services companies.
Considerations Used to Determine Chief Executive Officer Compensation for 2009
At the beginning of each year, Mr. Mendez develops objectives necessary for the Corporation to be successful. Mr. Mendez presents these objectives to the CRC for its consideration in determining how Mr. Mendez’ performance will be evaluated. These objectives are determined in most part from the Corporation’s annual financial and budget planning sessions, during which the Corporation’s growth opportunities are analyzed and goals and objectives are established for the upcoming year. These goals and objectives include both objective financial metrics and qualitative strategic and operational considerations that are evaluated subjectively, without any formal weighting assigned. The CRC and Mr. Mendez use this process to focus on factors they believe create long term stockholder value. The CRC discusses with Mr. Mendez its considerations regarding Mr. Mendez’ own compensation. During this process, Mr. Mendez solicits input from our Vice President of Human Resources. Mr. Mendez does not participate in the final determination of his own compensation.
In determining Mr. Mendez’ compensation for 2009, the CRC considered in its decisions to continue the Corporation performanceobjectives, policies and also considered Mr. Mendez’ individual performance in 2008.
Although Mr. Mendez did not meet allphilosophy underlying the Corporation’s compensation programs for executives. The majority of the
goals and objectives established bystockholder votes cast on the
CRC for 2008, the CRC believes that he performed well given the challenging circumstancesfrequency of
the overall economy, particularlyfuture say on pay advisory votes were in
the financial services sector. Financial goals were set before the bulksupport of
the decline in the Corporation’s investment portfolio, which was attributed in large part to significant declines in market values in pooled trust preferred and collateralized mortgage obligations (“CMOs”).an advisory vote occurring once every three years. The
decline in the pooled trust preferred securities was associated with the underperformance and in some cases the failure of underlying banks, which had originally issued into these investment grade securities. Whole loan CMOs also experienced market value diminution due to homeowners’ inability tonext say on pay
their mortgages as a result of the effects of the recession. Both the pooled trust preferred and the whole loan CMOs were rated as “investment grade”advisory vote will be held at the
time2014 Annual Meeting of
investment. Stockholders.The Corporation’s banking subsidiary produced continued positive, although decreased, core earnings, and the insurance agency and wealth management subsidiaries performed at or beyond expectations for 2009. Unlike other regional banks, the
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Corporation was able to continue to pay cash dividends. Net interest margin and efficiency continue to compare favorably to those of other financial services companies.
Beyond financial goals, the CRC expected Mr. Mendez to continue to search for suitable candidates for banking mergers and acquisitions within the Corporation’s footprint; to lead the Corporation’s strategic planning process; and to retain the Corporation’s management team. These goals were all satisfactorily met during 2008.
Through the Corporation’s public offering, Mr. Mendez was instrumental in helping the Corporation maintain its well-capitalized balance sheet while attracting additional, respected institutional investors. The public offering made possible the accelerated repayment of TARP funds in less than eight months from issue, plus provided funding for continued expansion of the corporation. Mr. Mendez also successfully completed a desired acquisition to supplement the Corporation’s banking presence in the Winston-Salem, North Carolina market, in line with the Corporation’s strategic plan. In addition, Mr. Mendez led the management team and the Board through an update of the Corporation’s strategic plan.
Mr. Mendez has been the Corporation’s CEO since 2000 and has been employed by the Corporation since 1985. He also serves on the Corporation’s Board of Directors. Under his leadership, the Corporation has transformed itself from a community bank into a regional financial services company. The Corporation’s income has been diversified through its acquisition of and continued additions to its insurance agency, Greenpoint Insurance. Despite the difficult economic times in 2009, the Corporation was able to return $4.6 million to common stockholders through dividends and repurchased $167,000 in Treasury shares. As an indication of his alignment with stockholders, Mr. Mendez is the direct and indirect owner of 22,686 shares of the Corporation’s common stock. Mr. Mendez proposed and the CRC agreed that he would receive no bonus or salary increase in 2009. Mr. Mendez proposed these actions because he believed they were appropriate in the current environment. Mr. Mendez was not granted any long term non-cash compensation in 2009 and has received no long term stock based compensation since 2003. His base salary was last increased in 2008.
Determining Compensation for Our Other Named Executives in 2009
The CRC works in conjunction with Mr. Mendez to establish the base and incentive compensation of other named executive officers. Our goal is to achieve a balance of incentives that retain a qualified group of senior managers and ensure that the Corporation remains competitive over the long term.
Each of the other named executives is a leader of an individual business or function of the Corporation. As part of the executive management team, they report directly to Mr. Mendez, who develops the objectives that each individual is expected to achieve, and against which their performance is assessed. Similar to Mr. Mendez, these objectives are reviewed with the CRC and are derived largely from the Corporation’s financial, budget and strategic planning processes.
Like Mr. Mendez, the other executives have objectives that include both quantitative financial measurements and qualitative strategic and operational considerations affecting the Corporation and the businesses or function that the named executives lead. Mr. Mendez assesses each named executive officer’s individual performance against the objectives, the Corporation’s overall performance and the performance of the executives’ business or function. Mr. Mendez then makes a compensation recommendation to the CRC for each named executive. The named executives do not play a role in the determination of their compensation except for their discussion with Mr. Mendez regarding their individual performance against predetermined objectives.
David D. Brown, V. Mr. Brown has served as our Chief Financial Officer since 2006. Since he joined the Corporation in 2005, he has assumed increased responsibilities within the accounting and finance function. As the leader of the Corporation’s finance function, Mr. Brown’s financial objectives, focused on the overall performance of the Corporation similar to Mr. Mendez’. Mr. Brown’s strategic and operational goals included organizing the Corporation’s public offering, providing operational support to achieve financial goals and to strengthen the finance function, while maintaining a strong controllership function and improving regulatory relationships.
During a very challenging economic environment, Mr. Brown’s leadership was crucial to strengthening the Corporation’s liquidity position. He led new and returning staff to enhance the budgeting process and strengthened the finance function. Based upon Mr. Mendez’ recommendation and the assessment of the CRC, Mr. Brown
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received a salary increase of $10,000 and was awarded a long term non-cash incentive of 500 shares of common stock in 2009. Mr. Brown received a similar increase in base salary and long term equity incentive in 2008.
Robert L. Buzzo.Mr. Buzzo has been President and a member of the bank executive team since 2000 and has held other leadership positions since he joined the bank in 1973. Mr. Buzzo’s goals and objectives for 2008 included both bank as well as company goals and objectives, including increasing bank assets, non-interest income, net income and earnings per share, increasing revenues of non-bank affiliates, plus an ongoing focus on managing risk and improving customer service.
Although Mr. Buzzo did not meet all of the financial goals established for him for 2008, he adapted to the increasingly negative economic conditions that emerged after establishment of his goals. In spite of the dire national economic trends and material losses realized in the investment portfolio, the core bank earnings (exclusive of securities impairments) and insurance subsidiary’s earnings totaled $16.9 million for 2009 or $1.14 per diluted common share. Mr. Mendez proposed and the CRC approved that Mr. Buzzo receive no bonus or salary adjustment in 2009. Mr. Mendez proposed these actions because he believed they were appropriate in the current environment.
E. Stephen Lilly. Mr. Lilly has served as our Chief Operating Officer since 2000 and has been employed by the Corporation since 1997. His direct reports include the Chief Risk Officer, the Director of Information Technology, the Marketing Director, Vice-President of Cash Management and Treasury Services, Vice-President of Operations, the officer in charge of secondary market lending, and the Vice-President of Branch Administration. Mr. Lilly’s operational goals and objectives for the bank and the Corporation included analysis of the core operating system, improvement of the bank’s array of treasury services, upgrading the bank’s internet banking service, and integration of acquired businesses.
Mr. Lilly’s leadership was important in helping the Corporation through the current financial downturn. He provided viable solutions to operational issues and his guidance was critical in helping the Corporation continue its operations in a safe and efficient manner. Consistent with Mr. Mendez’ recommendation and CRC’s approval, Mr. Lilly’s base salary remained unchanged and received no bonus or salary increase in 2009.
Gary R. Mills. Mr. Mills has served as our Chief Credit Officer since 2007 and has been employed by the Corporation since 1998. He is responsible for overseeing and maintaining the Corporation’s $1.3 billion loan portfolio, including maintaining an adequate loan loss reserve, compliance with federal and state lending regulations, managing a staff of forty with seven direct reports, working with regulators and internal and external auditors and participation in presentations to analysts and investors.
Mr. Mills’ strategic and operational goals in 2008 included preservation of high credit quality in the loan portfolio, amending and restating loan policy, managing large loan workouts and performing loan portfolio due diligence associated with bank mergers and acquisitions. Although Mr. Mills was unable to meet all of the objectives established for 2008, his diligent efforts allowed the Corporation to maintain its exceptional credit quality, especially when compared to peers, despite serious challenges faced by financial services companies. Mr. Mendez proposed and CRC approved that Mr. Mills receive no bonus or salary increase in 2009.
FCBI Compensation Philosophy
The goal of ourthe Corporation’s executive compensation program is to retain and reward officers who create long termlong-term value for our stockholders. This overriding objective affects all elements of ourthe compensation program. OurThe Corporation’s compensation program rewards continued financial and operating performance coupled with strong leadership. OurThe intent is to align thean executives’ long termlong-term interests with those of our stockholders and to motivate the executive teamhigh performing executives to continue with the Corporation for long productive careers.
Adjustments to 2012 Base Salaries and 2011 Discretionary Bonuses of Executive Officers
In February, 2012, the CRC met to evaluate and establish executive compensation in the context of the Corporation’s 2011 performance. Although the Corporation’s performance in 2011 had been strong, on the recommendation of Mr. Mendez, the CRC decided to continue its conservative approach to determining compensation. Except with respect to Mr. Brown, who received a discretionary cash bonus, the CRC awarded no salary increases for 2012 and no discretionary cash bonuses or long-term incentive awards to the named executive officers. In August, 2012, the CRC met and reevaluated the 2011 performance of the Corporation and considered the sustained strong performance of the Corporation for the first three quarters of 2012. On the recommendation of Mr. Mendez, the CRC decided to award salary increases and discretionary bonuses to Messrs. Brown, Buzzo, Lilly and Schumacher to recognize specific, significant accomplishments and performance in 2011. The CRC awarded no long-term incentive awards for 2011 performance. The criteria used to assess the performance of each individual executive officer is set forth below under the headings “Considerations Used to Determine CEO Base Salary for 2012 and Discretionary Cash Bonus for 2011” and “Determination of 2012 Base Salaries and 2011 Discretionary Cash Bonuses for the Corporation’s other Named Executives.”
Considerations Used to Determine Compensation Program
Below is a summary of important considerations by the CRC affecting compensation for the named executives. For 2009, theThe CRC performedperforms its evaluation of compensation in light of the Corporation’s performance, the current economic recession,situation, and the prevailing public sentiments and concernconcerns regarding executive compensation.
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Emphasis on Reliable and Relative Performance. Our The Corporation’s compensation program provides pay opportunities for those executives demonstrating superior performance for sustained periods of time. Each of ourthe named executives has served the Corporation for many years and each has held diverse positions with growing levels of responsibility. Relative compensation reflects previous contributions and anticipated future contributions to the Corporation’s long termlong-term success. In evaluating sustained performance, wethe Corporation also givegives weight to the relative performance of each executive in his or her particular industry segment or function.
Emphasizing consistent, long termlong-term performance impacts annual discretionary cash bonus and any equity incentive compensation. After assessing each named executive’s past performance, and expected future contribution, as well as the performance of the business or function the executive leads, the CRC uses its judgment in determining the amount of bonus or equity award, if any. We considerThe Corporation considers the current year
as well as past and expected performance in our compensation decisions. This long termlong-term view has the effect of moderating compensation levels and annual adjustments and awards.
Importance of Corporation Results. The CRC places substantial weight on the named executive’s contribution to the whole Corporation’s overall financial success, as opposed to limiting its focus strictly to an individual business or function. The CRC is of the opinion that the named executives share the responsibility of supporting the Corporation’s overriding goals and objectives as part of the management team.
Judgment versusVersus Formula Driven. The CRC does not use formulas in determining the level or mix of compensation. We evaluateIt evaluates a wide range of quantitative and qualitative factors, which include consistency in reaching financial and growth targets, the ability to perform in both good and challenging economic times, a history of integrity, evidence that the executive uses good judgment and his or her ability to lead and create future value for the Corporation.
Risk Considerations in Ourthe Compensation Program. The CRC views the Corporation’s compensation program with a long termlong-term focus. TheUnder the program, the greatest amount of compensation can be achieved over long periods of time through sustained excellentsuperior performance. Larger amounts of compensation are typically to be deferred or can only be realized upon retirement. We believeThe Corporation believes this will provide a strong incentive to manage the Corporation for the long termlong-term with a clear message to avoid excessive risk in the near term. We establishThe CRC establishes goals and objectives with a mix of quantitative and qualitative performance elements in order to avoid excessive weight on any one performance measure. The CRC also attempts to balance the various elements of compensation among base salary (current cash payments), deferred cash payments and equity awards. The CRC maintains full discretion to adjust compensation based upon improved performance and adherence to company values.
As a result of the Corporation’s
participation in the TARP Capital Purchase Program for a portion of 2009, thevalues.The CRC was required to reviewreviews the incentive compensation arrangements offor the Corporation’s named executive officersexecutives in various manners, including, but not limited to, discussions with the Corporation’s senior risk officercompensation consultant, to ensure that their incentive compensation arrangements do not encourage them to take unnecessary and excessive risks that threaten the value of the Corporation. Even though not expressly required, theThe CRC Committee also reviewedreviews the compensation arrangements of the Corporation’s other top executives. The CRC concluded that it does not believe that the Corporation’s compensation policies and practices encouragesdo not encourage excessive or inappropriate risk taking and instead encourage behaviors that support sustainable long termlong-term value creation. In reaching this conclusion, the CRC considered the various metrics and elements of the compensation program. For instance, the CRC does not use highly leveraged, short-term incentives that drive high riskhigh-risk investments at the expense of long termlong-term company value. Rather, the Corporation’s annual incentive compensation is based on balanced performance metrics that promote disciplined progress towardsfocused on longer-term goals.
Future Compensation Opportunity. The CRC’s intentions areCRC intends to continue to provide a mix of different compensation elements. We considerIt considers current compensation versus long termlong-term compensation and cash versus equity elements. We viewIt views cash payments as reflective of current or recent performance and stock payments as a means to encourage long termlong-term behavior and as a means to retain executives. The CRC believes that each named executive should have a portion of his or her compensation at risk based on how well the Corporation operates and how well its stock performs in the long run.
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Beginning in 2010,In 2012, the CRC has begun a morecontinued its intensive review of the relationship between risk management and incentive compensation to ensure that incentive compensation does not encourage unnecessary andor excessive risks. The CRC also reviewsreviewed the relationship between risk management policies and practices, overall companycorporate strategy and executive compensation.
Use of Compensation Consultants. Neither the CRC nor FCBI used a compensation consultant in 2009, or at anytime prior thereto, for any purpose including providing assistance in determining the amount or form of senior executive or director compensation. Recently, because Because of the enhanced level of regulation and scrutiny on executive compensation, the CRC has sought input fromretained Mathews Young — Management Consulting (“Mathews Young”) regarding the 2010to assist with amendments to an incentive compensation plan for non-executive employees of the Corporation, which plan was designed by our Human Resources Department. CRC and the Corporation understands thatCorporation. Mathews Young iswas the independent consultant of the CRC. The CRC and the Corporation will
did not use the sameretain a separate compensation consultant. In regard to benchmark data, theThe CRC considers executive compensation at other similarsimilarly sized and situated financial service companies as only one of numerous factors in setting pay. The CRC does not target a specific percentile within this group of perceived peers and uses the comparative data only as a reference tool after determining the types and amounts of compensation based upon its own evaluation.
The CRC is still in the process of reviewing the Mathews Young recommendations and anticipates implementing some or all of them in 2013.Employment Agreements. Our The named executives have employment agreements, which include change of control protection for the executives and non-compete and non-solicitation requirements for the protection of the Corporation. The employment agreements with Messrs. Mendez, Buzzo, and Lilly were amended and restated as of December 16, 2008 to comply with Section 409A of the Internal Revenue Code of 1986, as amended, and initial employment agreements were entered into with Messrs. BrownSchumacher and Mills. We describeBrown. The Corporation describes all of these agreements in more detail below.
The amended and restated employment agreement (“agreement”) with Mr. Mendez had an initial term of three years and providedprovides that beginning on the commencementJanuary 1st of the employment period under the agreement and on each succeeding January 1styear the term of the Agreement willagreement automatically be extendedextends an additional three years,one year, unless the Corporation or Mr. Mendez gives notice that the employment term will not thereafter be extended.
Under the agreement, Mr. Mendez’ initial annual base salary was $392,902 as of January 1, 2009; Mr. Mendez’ current base salary remains at $392,902.for 2011 and 2012. The Corporation may terminate Mr. Mendez’ employment at any time for “Cause” (as defined in thehis employment agreement) without further obligation owed to Mr. Mendez. If the Corporation terminates Mr. Mendez’ employment for any reason other than for “Cause” or if he terminates his employment for “Good Reason” (as defined in thehis employment agreement), the Corporation will generally be obligated to continue to provide compensation and benefits specified in the agreement for the balance of the term of the agreement, but not less than thirty (30)30 months following the date of termination. Upon the termination of his employment, Mr. Mendez will be subject to non-competition and non-solicitation restrictions.
If Mr. Mendez dies while employed by the Corporation, the Corporation will pay his estate through the end of the month in which his death occurs. If Mr. Mendez’ employment is terminated as a result of permanent disability as determined pursuant to the agreement, then the Corporation has the right to terminate his employment before the end of the applicable term.
In the event that there is a change of control of the Corporation and Mr. Mendez’ employment is terminated by the Corporation or he chooses to terminate his employment within two (2) years after such change of control, the Corporation will pay Mr. Mendez severance pay in the form of a lump sum payment of 2.99 times his base salary then in effect on the date of termination.
On December 16, 2010, the Board of Directors amended the agreement with Mr. Mendez to waive the agreement’s provision for standard cost of living increases.The Corporation also entered into amended and restatedDecember 16, 2008 employment agreements with Messrs. Buzzo and Lilly as of December 16, 2008, again to effectuate compliance with Section 409A; these agreements contain substantially similar terms and are modeled after Mr. Mendez’ agreement. These agreements supersede and replace the employment agreements for Messrs. Buzzo and Lilly entered into in 2002. Each agreement has an initial term of three years, and, similar to Mr. Mendez’ agreement, each is renewed for an additional threeone year term each January 1st1st unless the Corporation or the individual executive gives notice that the employment term will not be extended.
Similar to Mr. Mendez’ agreement, in In the event that there is a change of control of the Corporation and Messrs. Buzzo’s or Lilly’s employment is terminated by the Corporation or either chooses to terminate his
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employment within two (2) years of such change of control, the Corporation will pay that executive severance pay in the form of a lump sum payment of 2.99 times his base salary then in effect on the date of termination.
The Corporation also entered into initial employment agreements with Messrs. BrownSchumacher and MillsBrown as of December 16, 2008. These agreements contain substantially similar terms and are modeled after Mr. Mendez’ agreement. EachMr. Schumacher’s agreement has an initial term of three years and is renewed for an additional year each January 1st unless he or the Corporation gives notice that the employment term will not be extended. The agreement for Mr. Brown has an initial term of two years, and is renewed for an additional two-year termyear each January 1st1st unless the Corporation or the individual executiveMr. Brown gives notice that the employment term will not be extended. EachMr. Schumacher’s agreement provides for a lump sum payment of 2.99 times base salary, and Mr. Brown’s agreement provides for a lump sum payment of two (2) times base salary, in the event of a change of control coupled with terminated employment either without cause“Cause” by the Corporation or by the executiveexecutives for “Good Reason” (as defined in the agreement)their respective agreements).
Compensation Elements Used to Achieve Corporation’s Goals
We useThe Corporation uses the compensation elements discussed below as the means to reward, retain and align executives’ interests with the long termlong-term interests of the Corporation and stockholders.
Base Salary and Bonus. The amount of base salary for each named executive depends upon the scope of the executive’s duties, his or her individual performance and length of service, and his or her leadership ability. Current salary impacts our decisions regarding salary adjustments relevant to peers (within and outside this company)the Corporation). Base salaries are reviewed annually.
Bonus. For each named executive, officer, the CRC may award discretionary cash bonuses during the first quarter of each year based upon the previous year’s performance based uponas evaluated by the evaluation by CRC and the CEO (except the CEO does not participate in his or her own bonus determination).
Stock Options and Restricted Stock Awards. The Corporation’s equity incentive program is designed to recognize responsibility, reward excellent performance, retain named executives, and align their interests with those of our stockholders. The CRC has used stock options and stock awards sparingly and determined that no suchnot to make any awards were merited in 2009 due the inability of the Corporation to attain its performance goals and objectives in an admittedly difficult economic cycle.
Prior to 2009, non-statutory stock options totaling 332,750 in five installments, each vesting over a seven- year period, were awarded under the 1999 Stock Option Plan (“1999 Plan”). All stock options granted pursuant to the 1999 Plan were fully vested as of the end of 2009. Vested stock options granted pursuant to the 1999 Plan are exercisable up to a period of five years after the date of the grantee’s retirement (provided retirement occurs at or after age 62), disability, or death. If employment is terminated other than by retirement at or after age 62, disability, or death, vested options must be exercised within 90 days after the effective date of termination. An option not exercised within such period will be deemed cancelled. All vested but unexercised options under the 1999 Plan are “out of the money” and have no intrinsic value to the named executive officers.
The 2004 Omnibus Stock Option Plan (“2004 Plan”) was adopted bybased on 2011 performance.On February 28, 2012, the Board of Directors approved the First Community Bancshares, Inc. 2012 Omnibus Equity Compensation Plan (the “2012 Plan”), which in January 2004 andturn was approved by stockholders at the 2012 Annual Meeting. The Board of Directors replaced all prior equity plans with this single plan approved by the stockholders at the 2004 Annual Meeting. 200,000 shares of common stock were reserved for future issuance pursuantthat conforms to the 2004 Plan. Grants of incentive stock options and non-qualified stock options under the 2004 Plan generally become vested so that 25% of the award vests ascurrent best governance practices. As of the date of the grant and 25% vests on each one year anniversary thereafter, so that 100%mailing of such awards is vested as ofthis proxy, there have been no grants under the third anniversary of the date of grant. No grants were awarded in 20092012 Plan to any named executive officer. All vested but unexercised grants under the 2004 Plan are “out of the money” and have no intrinsic value. The 2003 acquisition of The CommonWealth Bank added additional stock options for 120,155 shares of common stock (124,380 shares adjusted by the merger conversion factor of .9015 and the 10% stock dividend in 2003). These options included awards to employees and directors and were issued by The CommonWealth Bank in 12 grants beginning in 1994 and ending in 2002 with adjusted exercise prices ranging from $4.75 to $17.40. The 2009 acquisition of TriStone Community Bank added additional stock options for 148,764 shares of Common Stock. These options included awards to employees and directors and were issued by TriStone Community Bank. Options from these two acquired plans are fully vested and are exercisable for up to ten years following the grant date. At December 31, 2009, 5,436 option shares were outstanding and exercisable under the former CommonWealth Plan and 148,764 option shares were outstanding and exercisable under the former TriStone Plan.
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Mr. Brown and Mr. Mills have been granted optionsand/or restricted stock awards under the 2004 Plan. Mr. Brown has previously been the recipient of awards under the 2004 Plan totaling 1,500 shares of stock and a total of 11,000 options. Mr. Mills has 5,000 options. Options are subject to forfeiture if the executive terminates employment prior to a vesting date. Unexercised vested options are also subject to forfeiture if not exercised within 90 days of early retirement or termination of employment.
All stock options under both the 1999 and 2004 Plans have exercise prices not less than fair market value of the common stock on the date of each grant. Stock options under the 1999 Plan vest ratably over seven years, while stock options and restricted stock awards under the 2004 Plan vest ratably over three to four years as recommended by the Board of Directors. The 1999 and 2004 Plans prohibit discounted stock options, reloading of stock options, and stock option repricing. The Corporation does not provide loans to the named executives for purposes of exercising options. The average number of options granted over the past three years as a percentage of basic shares outstanding was less than 1%. Historically, the named executives have not been subject to stock ownership guidelines.
Deferred Compensation. The Corporation offers a qualified defined contribution plan known as the KSOP to most of its employees. However, the named executives are unable to fully participate in the KSOP due to certain restrictions on their deferrals based upon annual testing limits imposed by the Internal Revenue Code. The Corporation provides a non-qualified deferred compensation plan discussed in more detail elsewhere in this proxy statement and referred to as the WRAP plan as a mechanism to allow highly compensated participants to defer a portion of their compensation that cannot otherwise be deferred under the Corporation’s qualified plan. The WRAP plan is intended to promote retention by providing a long termlong-term savings vehicle on a tax efficient basis.
Pension Plans. The Corporation provides a defined retirement benefit to the named executives and others pursuant to separate agreements, each of which is known as a “Supplemental Executive Retention Plan”supplemental executive retention plan (“SERP”). The planEach SERP is unfunded and designed to provide a benefit to be paid at age 62, normal retirement age in the SERP. The benefit is targeted at 35% of final compensation projected at an assumed 3% salary progression rate, and subject to an annual benefit limit of $80,000. Vesting underIn return for certain amendments to his employment agreement, on December 16, 2010, the planBoard of Directors, in concert with the CRC, amended the SERP with respect to Mr. Mendez to remove the annual maximum benefit, with said amendment effective January 1, 2011. Vesting is on a graded schedule as follows: 25% vesting after 5five years of service under the plan;service; 50% vesting after 10ten years of service under the plan;service; 75% vesting after 15 years of service under the plan;service; plus an additional 5% vesting for each year of service beyond 15 years, under the plan, with full vesting after 20 years of service from plan inception or reaching age 62, whichever occurs first.
In connection with the SERP, the Corporation entered into Life Insurance Endorsement Method Split Dollar Agreementslife insurance endorsement method split dollar agreements with Messrs. Mendez, Buzzo, Lilly, and Lilly.Schumacher. Under these agreements, the Corporation shares 80% of death benefits (after recovery of cash surrender value) with the designated beneficiaries of the executives under life insurance contracts. The Corporation, as owner of the policies, retains a 20% interest in life proceeds after reimbursement to the Corporation of retirement benefits paid and a 100% interest in the cash surrender value of the policies.
2012 Discretionary Bonuses and Long-term Incentive Awards
The CRC and management believe it is in the Corporation’s best interests to maintain consistency in its compensation philosophy and implementation, but it also believes discretion should be used in times of
prosperity as well as times when either the Corporation or the overall economy, or both, are performing below expectations. With this in mind, the CRC believes it is appropriate for some components of compensation to remain level or decline during periods of economic downturn.
While the Corporation has taken a conservative approach to setting compensation in recent years, Mr. Mendez proposed, and the CRC approved, modest salary adjustments for the other executive officers in August, 2012. Additionally, the CRC received recommendations for and approved incentive bonuses for executive officers based on the achievement of key operating goals in 2011. These incentive bonuses were generally awarded in the third quarter of 2012. These were the first incentive bonuses awarded since the onset of the 2008 recession and the associated negative credit and real estate cycle. The CRC will meet later this year to evaluate 2012 performance to determine whether to award discretionary cash bonuses and long-term incentive awards to the named executives based on 2012 performance.
Consistent with past practice, going forward the CRC will continue to use discretion coupled with a goals-driven formula to compensate executives. The Corporation will not adopt incentives that promote risky behavior for near-term rewards. The CRC believes executive compensation should include both short-term and long-term elements reflective of, and driven by, the Corporation’s respective current and long-term operating performance compared with similarly situated publicly traded, regional financial services companies.
Considerations Used to Determine CEO Base Salary for 2012 and Discretionary Bonus for 2011.
At the beginning of each year, Mr. Mendez develops recommended objectives necessary for the Corporation to be successful. Mr. Mendez presents these objectives to the CRC for its consideration in determining how Mr. Mendez’ performance will be evaluated. These objectives are determined in most part from the Corporation’s annual financial and budget planning sessions, during which the Corporation’s performance and growth opportunities are analyzed and goals and objectives are established for the upcoming year. These goals and objectives include both objective financial metrics and qualitative strategic and operational considerations that are evaluated subjectively, without any formal weighting assigned. The CRC and Mr. Mendez use this process to focus on factors they believe create long-term stockholder value. The CRC discusses with Mr. Mendez its considerations regarding Mr. Mendez’ own compensation. Mr. Mendez does not participate in the final determination of his own compensation.
In determining Mr. Mendez’ base salary for 2012 and his discretionary bonus compensation for 2011, the CRC considered the Corporation’s performance and Mr. Mendez’ individual performance in 2011. During 2011, Mr. Mendez achieved his principal financial goals, including successful performance against the 2011 operating budget as well as the continued enhancement of the Corporation’s primary capital ratios. Revenue gains and strong expense control led to achievement of budget goals for the year and continuation of the company’s re-establishment of earnings performance at normalized levels following the extended recessionary environment of the preceding three years. These results, along with balance sheet management and other capital strategies, yielded strong and improving leverage and capital ratios, which led the Corporation well beyond capital minimums dictated by regulatory authorities, and placed the Corporation within the top tier among its peers and the industry in terms of capital strength.
In May of 2011 the Corporation’s capital position was significantly advanced as Mr. Mendez organized, directed and led a private placement of the company’s convertible preferred stock resulting in the issuance of $18.9 million in new issue convertible preferred shares, on terms considered favorable to the Corporation. This resulted in significant improvement in the company’s primary capital levels and set the stage for a series of growth initiatives.
In 2011, the Corporation continued to realize earnings and operating benefits drawn from the Corporation’s last banking acquisitions in mid-year 2009 and late 2008. Mr. Mendez also assisted in the identification of further
acquisition targets in execution of the Corporation’s strategic plan for growth. These efforts were instrumental in the completion of additional key business acquisitions in subsequent periods. Mr. Mendez continued work on deployment of the Corporation’s updated strategic plan, which was completed in the first quarter of 2010 and oversaw the execution of key strategies under that plan.
One of the most important objectives for Mr. Mendez and the Corporation was the maintenance of asset quality measures in the top quartile among the industry. This objective was achieved in 2011 as the Corporation continued to manage through a difficult credit and real estate environment. Through the direction of other executives and departments, asset quality measures for the Corporation were maintained at satisfactory strong levels throughout the year and continued to compare favorably with broader industry metrics for non-performing assets, delinquencies and net charge-offs.
Mr. Mendez continues to be charged with the search for suitable candidates for banking mergers and acquisitions within the Corporation’s footprint; to lead the Corporation’s strategic planning process; and to retain and motivate the Corporation’s management team. Throughout 2011, and as noted above, the Corporation’s focus was also directed at capital retention and development, as well as continued improvement of the Corporation’s risk profile and loss mitigation. These goals were all satisfactorily met during 2011.
Determining 2012 Base Salaries and 2011 Discretionary Bonuses for the Corporation’s Other Named Executives
The CRC works in conjunction with Mr. Mendez to establish the base and incentive compensation of other named executives. Its goal is to achieve a balance of incentives that retain a qualified group of senior managers and ensure that the Corporation remains competitive over the long-term.
Each of the other named executives is a leader of an individual business or function of the Corporation. As part of the executive management team, they report directly to Mr. Mendez, who develops the objectives that each individual is expected to achieve, and against which their performance is assessed. Similar to Mr. Mendez, these objectives are reviewed with the CRC and are derived largely from the Corporation’s financial, budget and strategic planning processes.
Like Mr. Mendez, the other named executives have objectives that include both quantitative financial measurements and qualitative strategic and operational considerations affecting the Corporation and the businesses or functions that the named executives lead. Mr. Mendez assesses each named executive’s individual performance against the objectives, the Corporation’s overall performance and the performance of the executive’s business or function. Mr. Mendez then makes a compensation recommendation to the CRC for each named executive. The named executives do not play a role in the determination of their compensation except for their discussion with Mr. Mendez regarding their individual performance against predetermined objectives.
In determining the base salary of the other executive officers, Mr. Mendez and the CRC consider the skill set of the individual executive officer, his or her level of responsibility within the Corporation, and salaries paid by companies of similar size and in similar lines of business as the Corporation. The Corporation does not benchmark to a specific peer group, but uses this information as a general reference for comparing the Corporation’s executive base salary compensation to that of other companies in the industry. With respect to their 2011 discretionary bonuses, Mr. Mendez and the CRC considered the following criteria:
David D. Brown. As the leader of the Corporation’s finance function, Mr. Brown’s financial objectives in 2011 focused on the overall performance of the Corporation similar to Mr. Mendez’. Mr. Brown’s strategic and operational goals included providing operational support to achieve financial goals and strengthen the finance function, while maintaining a strong controllership function and improving regulatory relationships. Mr. Brown also continued to search for suitable candidates for banking mergers and acquisitions within the Corporation’s footprint and FDIC-assisted transactions.
Robert L. Buzzo. In 2011, Mr. Buzzo was primarily responsible for First Community Bank’s largest banking region, along with his Corporate responsibilities. In 2011, Mr. Buzzo’s region achieved its net income, loan and core deposit growth objectives. Mr. Buzzo also achieved his operational strategic objectives in 2011. Under Mr. Buzzo’s leadership, the division comprising the Southern Region was among the top performing areas of the bank.
In addition, Mr. Buzzo continued his supervision of the Trust and Wealth Management Divisions of the Corporation. During 2011, the Trust Department fell just short of its financial objectives while First Community Wealth Management met its financial performance goals.
E. Stephen Lilly. Mr. Lilly completed a core banking system study leading to an integrated, efficient technology platform for the Company and negotiated and executed new technology contracts in October 2011. The new consolidated platform eliminated 11 technology vendors. He also consolidated Secondary Market Mortgage processing into the Credit Administration/Retail Credit Department to provide efficiency and streamlined mortgage processing and underwriting. Consolidation of the departments was completed in May of 2011, which led to reduced costs in producing residential real estate loans. Mr. Lilly completed restructuring of the Corporation’s product/pricing administration, which led to an enhanced net interest margin. His further coordination of Pricing and Product Committees has led to improved net interest margin, which compares favorably to industry peers. Mr. Lilly successfully realigned the Corporation’s Commercial Services Department in February 2011, achieving significant cost savings with the goal of improved delivery of commercial products and generating non-interest income. During 2011, Mr. Lilly established the Office of Project Management to drive strategic initiatives. He restructured Information Technology and was named Chief Information Officer in addition to COO. His efforts to restructure and redefine responsibilities and workflow produced a more efficient organization and produced cost savings.
Robert L. Schumacher. Mr. Schumacher’s strategic and operational goals in 2011 included the organization, launch and management of a newly established Legal Department; assuming control and reporting line responsibility of the Enterprise Risk Management and Compliance functions; and to oversee completion of the first full cycle of internal audits under a new Internal Audit Director and new team since moving this important function in-house. Mr. Schumacher accomplished most of his goals for 2011. These initiatives have been successful, resulting in a reduction in legal fees, continued improvement in overall enterprise risk management, and an improved and more efficient internal audit process.
Compensation and Retirement Committee Report
The Compensation and Retirement CommitteeCRC has reviewed the Compensation Discussion and AnalysisCD&A and discussed that analysis with management. Based on its review and discussions with management, the committeeCRC recommended to ourthe Board of Directors that the Compensation Discussion and AnalysisCD&A be included in the Corporation’s Annual Report onForm 10-K for 20092012 and the Corporation’s 20102013 proxy statement. This report is provided by the following independent directors, who comprise the Committee:
CRC:William P. Stafford, II (Chairman)
Allen T. Hamner
A. A. Modena
18
Richard S. JohnsonWilliam P. Stafford
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | Change in
| | | | |
| | | | | | | | | Aggregate
| | | | | | | | Pension
| | | | |
| | | | | | | | | Date Fair
| | | | | | | | Value and
| | | | |
| | | | | | | | | Value of
| | | | | | Non-
| | Non-
| | | | |
| | | | | | | | | Stock Awards
| | | | | | Equity
| | Qualified
| | | | |
| | | | | | | | | and Option
| | | | | | Incentive
| | Deferred
| | All
| | |
| | | | | | | | | Awards
| | | | | | Plan
| | Compen-
| | Other
| | |
Name of Individual/
| | | | | | | | Granted
| | Stock
| | Option
| | Compen-
| | sation
| | Compen-
| | |
Capacities Served | | Year | | Salary | | Bonus | | in 2009 | | Awards(1) | | Awards(1) | | sation(4) | | Earnings(3) | | sation(2) | | Total |
| |
| John M. Mendez | | | 2009 | | | $ | 392,902 | | | $ | — | | | $ | — | | | | N/A | | | | N/A | | | | N/A | | | $ | 152,922 | | | $ | 49,552 | | | $ | 595,376 | |
| President & Chief | | | 2008 | | | | 392,902 | | | | — | | | | N/A | | | | — | | | | 27,603 | | | | N/A | | | | 124,433 | | | | 44,526 | | | | 589,464 | |
| Executive Officer | | | 2007 | | | | 382,200 | | | | 75,000 | | | | N/A | | | | — | | | | 36,234 | | | | N/A | | | | 39,219 | | | | 49,049 | | | | 581,702 | |
| David D. Brown | | | 2009 | | | | 145,000 | | | | — | | | | 6,100 | | | | N/A | | | | N/A | | | | N/A | | | | 5,388 | | | | 20,184 | | | | 176,672 | |
| Chief Financial Officer | | | 2008 | | | | 135,000 | | | | — | | | | N/A | | | | 17,500 | | | | 23,946 | | | | N/A | | | | 10,303 | | | | 18,249 | | | | 204,998 | |
| | | | 2007 | | | | 110,000 | | | | 40,000 | | | | N/A | | | | 17,465 | | | | 24,820 | | | | N/A | | | | N/A | | | | 13,759 | | | | 206,044 | |
| Robert L. Buzzo | | | 2009 | | | | 217,800 | | | | — | | | | — | | | | N/A | | | | N/A | | | | N/A | | | | 45,112 | | | | 44,564 | | | | 307,476 | |
| Vice President and | | | 2008 | | | | 217,800 | | | | — | | | | N/A | | | | — | | | | 14,805 | | | | N/A | | | | 187,770 | | | | 42,021 | | | | 462,396 | |
| Secretary | | | 2007 | | | | 213,000 | | | | 20,000 | | | | N/A | | | | — | | | | 19,433 | | �� | | N/A | | | | 51,370 | | | | 40,889 | | | | 344,692 | |
| E. Stephen Lilly | | | 2009 | | | | 235,000 | | | | — | | | | — | | | | N/A | | | | N/A | | | | N/A | | | | 22,696 | | | | 44,955 | | | | 302,651 | |
| Chief Operating Officer | | | 2008 | | | | 235,000 | | | | — | | | | N/A | | | | — | | | | 14,777 | | | | N/A | | | | 10,367 | | | | 32,094 | | | | 292,238 | |
| | | | 2007 | | | | 218,000 | | | | 50,000 | | | | N/A | | | | — | | | | 19,390 | | | | N/A | | | | 16,942 | | | | 37,157 | | | | 341,489 | |
| Gary R. Mills | | | 2009 | | | | 172,000 | | | | — | | | | — | | | | N/A | | | | N/A | | | | N/A | | | | 10,504 | | | | 20,024 | | | | 202,528 | |
| Chief Credit Officer | | | 2008 | | | | 172,000 | | | | — | | | | N/A | | | | — | | | | 10,277 | | | | N/A | | | | 56,672 | | | | 18,213 | | | | 257,162 | |
| | | | 2007 | | | | 160,000 | | | | 35,000 | | | | N/A | | | | — | | | | 16,606 | | | | N/A | | | | N/A | | | | 22,797 | | | | 234,403 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name of Individual / Capacities Served | | Year | | | Salary | | | Bonus | | | Stock
Awards | | | Option
Awards | | | Non-
Equity
Incentive
Plan
Compen-
sation (1) | | Change in
Pension
Value and
Non-
qualified
Deferred
Compen-
sation
Earnings (2) | | | All
Other
Compen-
sation (3) | | | Total | |
John M. Mendez | | | 2012 | | | $ | 392,902 | | | $ | 35,000 | | | $ | — | | | $ | — | | | | | $ | 105,137 | | | $ | 56,333 | | | $ | 589,372 | |
President & Chief | | | 2011 | | | | 392,902 | | | | — | | | | — | | | | — | | | | | | 152,509 | | | | 58,790 | | | | 604,201 | |
Executive Officer | | | 2010 | | | | 392,902 | | | | — | | | | — | | | | — | | | | | | 37,200 | | | | 57,985 | | | | 488,087 | |
| | | | | | | | | |
David D. Brown | | | 2012 | | | | 166,400 | | | | 20,000 | | | | — | | | | — | | | | | | 7,216 | | | | 21,050 | | | | 214,666 | |
Chief Financial Officer | | | 2011 | | | | 160,000 | | | | — | | | | — | | | | — | | | | | | 5,356 | | | | 19,023 | | | | 184,379 | |
| | | 2010 | | | | 160,000 | | | | — | | | | — | | | | — | | | | | | 5,219 | | | | 18,352 | | | | 183,571 | |
| | | | | | | | | |
Robert L. Buzzo | | | 2012 | | | | 230,000 | | | | 15,000 | | | | — | | | | — | | | | | | 23,633 | | | | 43,890 | | | | 312,523 | |
Vice President and | | | 2011 | | | | 225,800 | | | | — | | | | — | | | | — | | | | | | 84,234 | | | | 41,855 | | | | 351,889 | |
Secretary | | | 2010 | | | | 225,800 | | | | — | | | | — | | | | — | | | | | | 57,363 | | | | 44,622 | | | | 327,785 | |
| | | | | | | | | |
E. Stephen Lilly | | | 2012 | | | | 252,000 | | | | 25,000 | | | | — | | | | — | | | | | | 38,933 | | | | 39,861 | | | | 355,794 | |
Chief Operating Officer | | | 2011 | | | | 247,000 | | | | — | | | | — | | | | — | | | | | | 33,974 | | | | 37,720 | | | | 318,694 | |
| | | 2010 | | | | 247,000 | | | | — | | | | — | | | | — | | | | | | 24,897 | | | | 37,041 | | | | 308,938 | |
| | | | | | | | | |
Robert L. Schumacher | | | 2012 | | | | 183,600 | | | | 20,000 | | | | — | | | | — | | | | | | 82,788 | | | | 36,131 | | | | 322,519 | |
General Counsel | | | 2011 | | | | 180,000 | | | | — | | | | — | | | | — | | | | | | 72,691 | | | | 34,089 | | | | 286,780 | |
| | | 2010 | | | | 180,000 | | | | — | | | | — | | | | — | | | | | | 50,514 | | | | 36,298 | | | | 266,812 | |
| | |
| (1) | | Reflects grant date fair value of current vesting of awards. |
|
(2) | | These items are detailed in the following table entitled, “Summary of All Other Compensation”. |
|
(3) | | The amounts reported represent the difference between the vested liability balance at the end of 2009 and 2008. |
|
(4) | | The Company currently has no non-equity incentive compensation plan. |
| (2) | The amounts in this column represent the increase in the actuarial net present value of all future retirement benefits under the SERPs. The net present value of the retirement benefits used to calculate the net change in benefits were determined using the same assumptions used to determine our retirement obligations and expense for financial statement purposes. Additional information about our SERPs is included on page 16. We have not provided above-market or preferential earnings on any nonqualified deferred compensation and, accordingly, no such amounts are reflected in the table. |
| (3) | The amounts in this column are detailed on the following table entitled “2012 All Other Compensation.” |
2009 ALL OTHER COMPENSATION2012 All Other Compensation
We provide ourThe Corporation provides the named executives with additional benefits as shown in the “All Other Compensation” column of the 2009 “Summary“2012 Summary Compensation Table” shown above, that we believeit believes are reasonable, competitive and in line with the Corporation’s overall executive program. We provideThe Corporation provides additional detail of those benefits in the table below.
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| | | | | Total
| | | | | | | | | | |
| | | | | Retirement
| | | | | | | | | | |
| | | | | Plan
| | Total
| | Split Dollar
| | Executive
| | | | |
| | | | | Matching
| | KSOP
| | Life
| | Life
| | | | |
Name of Individual | | Year | | Contribution(1) | | Contribution | | Insurance(2) | | Insurance(3) | | Perquisites(4) | | Total |
| |
| John M. Mendez | | | 2009 | | | $ | 21,970 | | | $ | — | | | $ | 3,097 | | | $ | 11,905 | | | $ | 12,580 | | | $ | 49,552 | |
| | | | 2008 | | | | 20,500 | | | | — | | | | 2,793 | | | | 8,095 | | | | 13,138 | | | | 44,526 | |
| | | | 2007 | | | | 15,000 | | | | 12,972 | | | | 784 | | | | 7,393 | | | | 12,900 | | | | 49,049 | |
| David D. Brown | | | 2009 | | | | 8,924 | | | | — | | | | — | | | | 1,080 | | | | 10,180 | | | | 20,184 | |
| | | | 2008 | | | | 6,973 | | | | — | | | | — | | | | 538 | | | | 10,738 | | | | 18,249 | |
| | | | 2007 | | | | 2,115 | | | | 2,805 | | | | — | | | | 618 | | | | 8,221 | | | | 13,759 | |
| Robert L. Buzzo | | | 2009 | | | | 19,480 | | | | — | | | | 4,339 | | | | 8,345 | | | | 12,400 | | | | 44,564 | |
| | | | 2008 | | | | 18,496 | | | | — | | | | 4,206 | | | | 6,361 | | | | 12,958 | | | | 42,021 | |
| | | | 2007 | | | | 14,184 | | | | 7,092 | | | | 953 | | | | 5,940 | | | | 12,720 | | | | 40,889 | |
| E. Stephen Lilly | | | 2009 | | | | 26,621 | | | | — | | | | 1,160 | | | | 4,594 | | | | 12,580 | | | | 44,955 | |
| | | | 2008 | | | | 15,500 | | | | — | | | | 1,083 | | | | 3,251 | | | | 12,260 | | | | 32,094 | |
| | | | 2007 | | | | 13,684 | | | | 7,242 | | | | 350 | | | | 2,981 | | | | 12,900 | | | | 37,157 | |
| Gary R. Mills | | | 2009 | | | | 12,633 | | | | — | | | | — | | | | 1,391 | | | | 6,000 | | | | 20,024 | |
| | | | 2008 | | | | 11,287 | | | | — | | | | — | | | | 926 | | | | 6,000 | | | | 18,213 | |
| | | | 2007 | | | | 10,560 | | | | 5,280 | | | | — | | | | 957 | | | | 6,000 | | | | 22,797 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name of Individual | | Year | | | Total
Retirement
Plan
Matching
Contribution | | | Total KSOP
Contribution | | | Split Dollar
Life
Insurance (1) | | | Executive
Life
Insurance (2) | | | Perquisites (3) | | | Total | |
John M. Mendez | | | 2012 | | | $ | 32,047 | | | $ | — | | | $ | 901 | | | $ | 14,426 | | | $ | 8,959 | | | $ | 56,333 | |
| | | 2011 | | | | 32,163 | | | | — | | | | 860 | | | | 13,198 | | | | 12,569 | | | | 58,790 | |
| | | 2010 | | | | 30,335 | | | | — | | | | 3,497 | | | | 12,086 | | | | 12,067 | | | | 57,985 | |
| | | | | | | |
David D. Brown | | | 2012 | | | | 8,300 | | | | — | | | | — | | | | 1,022 | | | | 11,728 | | | | 21,050 | |
| | | 2011 | | | | 7,983 | | | | — | | | | — | | | | 871 | | | | 10,169 | | | | 19,023 | |
| | | 2010 | | | | 7,744 | | | | — | | | | — | | | | 941 | | | | 9,667 | | | | 18,352 | |
| | | | | | | |
Robert L. Buzzo | | | 2012 | | | | 18,742 | | | | — | | | | 1,007 | | | | 10,674 | | | | 13,467 | | | | 43,890 | |
| | | 2011 | | | | 18,525 | | | | — | | | | 977 | | | | 9,784 | | | | 12,569 | | | | 41,855 | |
| | | 2010 | | | | 18,841 | | | | — | | | | 4,686 | | | | 9,028 | | | | 12,067 | | | | 44,622 | |
| | | | | | | |
E. Stephen Lilly | | | 2012 | | | | 20,432 | | | | — | | | | 396 | | | | 5,551 | | | | 13,482 | | | | 39,861 | |
| | | 2011 | | | | 19,707 | | | | — | | | | 375 | | | | 5,069 | | | | 12,569 | | | | 37,720 | |
| | | 2010 | | | | 19,027 | | | | — | | | | 1,287 | | | | 4,660 | | | | 12,067 | | | | 37,041 | |
| | | | | | | |
Robert L. Schumacher | | | 2012 | | | | 14,977 | | | | — | | | | 860 | | | | 7,719 | | | | 12,575 | | | | 36,131 | |
| | | 2011 | | | | 14,762 | | | | — | | | | 835 | | | | 7,123 | | | | 11,369 | | | | 34,089 | |
| | | 2010 | | | | 14,937 | | | | — | | | | 3,910 | | | | 6,584 | | | | 10,867 | | | | 36,298 | |
| | |
| (1) | | Includes $5,320 for correction to 2008 matching contribution for Mr. Lilly. |
|
(2) | | Imputed income on CompanyCorporation funded premiums or split dollar plan. |
19
| (2) | | |
(3) | | CompanyCorporation funded premium on executive life program. |
|
(4) | (3) | Perquisites consist of country club dues and/or automobile allowance in each instance. |
The Corporation provides other perquisites and personal benefits that the Corporation and the CRC believe are reasonable and consistent with its overall compensation program to better enable the Corporation to attract and retain superior employees for key positions. The CRC periodically reviews the levels of perquisites and other personal benefits provided to the named executives. Perquisites include the following:
Use of Aircraft — The Corporation’s banking subsidiary holds a fractional interest in a private aircraft through its ownership interest (20%) in a LLC. The aircraft is used by the Corporation for travel throughout the subsidiary bank’s branch network, which spans four states, by the named executives, members of the Board and other employees. The Corporation has determined that the aircraft is an efficient use of both capital and personnel time and significantly enhances productivity of key personnel. Personal use of the aircraft is prohibited.
Corporate Automobiles/Allowance — In lieu of company vehicles, Messrs. Mendez, Buzzo and Lilly were each provided an annual automobile allowance of $8,400; Mr. Brown and Mr. Mills were provided $6,000 as an auto allowance. Automobile allowances provide a cost effective means of compensation for business travel and shift the burden of maintenance costs to the executive. Taxable auto allowances also avoid time and cost associated with documentation of business and personal use of Corporate vehicles.
Country Club Dues — The Corporation advanced country club dues on behalf of Messrs. Mendez ($4,180), Buzzo ($4,000), Lilly ($4,180) and Brown ($4,180) as an added perquisite commensurate with job performance, level of responsibility and as a means to provide the named executives comparable benefits to those availableOutstanding Equity Awards at other similarly located and like-sized companies. The Corporation considers the payment of country club dues to be an appropriate part of the overall compensation packages in order to provide an appropriate setting for the named executives to conduct business on behalf of the Corporation, to socialize with other business and community leaders and to entertain the Corporation’s business customers and prospects. All costs associated with personal use of a country club by the named executive or family members are borne by the individual named executive and not the Corporation.
2009 GRANTS OF PLAN-BASED AWARDSDecember 31, 2012
The following table provides information about equity awards granted (if any) to the named executives in 2009: (1) the grant date, (2) estimated future payouts under equity incentive plan awards, (3) the number of shares underlying all other stock awards, (4) all other awards, (5) the exercise price of the stock option awards, which reflects the closing price of company stock on the date of the grant and (6) the grant date fair value of each equity award computed under FASB ASC Topic 718 (formerly SFAS 123R).
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | All Other
| | | | | | | |
| | | | | Estimated Future
| | | All Other Stock
| | | Awards: Number
| | | Exercise or
| | | | |
| | | | | Payouts Under
| | | Awards: Number
| | | of Securities
| | | Base Price
| | | Full Grant
| |
| | Grant
| | | Equity Incentive
| | | of Shares of
| | | Underlying
| | | of Option
| | | Date Fair
| |
Name of Executive
| | Date | | | Plan Awards | | | Stock or Units | | | Options | | | Awards | | | Value | |
|
John M. Mendez | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
David D. Brown | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
Robert L. Buzzo | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
E. Stephen Lilly | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
Gary R. Mills | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
20
2009 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table includes information on the current holdings of stock option and stock awards by the named
executives.executives as of December 31, 2012. This table includes unexercised and unvested option awards, and vesting conditions that were not satisfied as of December 31,
2009.2012. Each equity grant is shown separately for each named executive.
The vesting schedule for each outstanding award is shown following this | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | | Stock Awards | |
| | | | | | | | | | | | | | | | | | | | | | | | Equity Incentive
Plan Awards | |
| | | Number of
Securities Underlying
Unexercised Options | | | Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options | | | Option
Exercise
Price | | | Option
Expiration
Date | | | Number
of Shares
or Units
of Stock
That Have
Not
Vested | | | Market
Value of
Shares or
Units of
Stock
That Have
Not
Vested | | | Number
of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested | | | Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested | |
Name | | Exercisable | | | Unexercisable | | | | | | | | |
John M. Mendez | | | 12,092 | | | | — | | | | — | | | $ | 19.80 | | | | 2/3/2022 | | | | — | | | $ | — | | | | — | | | $ | — | |
| | | 2,015 | | | | — | | | | | | | | 13.94 | | | | 2/3/2022 | | | | | | | | | | | | | | | | | |
| | | 14,108 | | | | — | | | | | | | | 24.65 | | | | 2/3/2022 | | | | | | | | | | | | | | | | | |
| | | 14,108 | | | | — | | | | | | | | 29.15 | | | | 2/3/2022 | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
David D. Brown | | | 10,000 | | | | — | | | | — | | | | 35.00 | | | | 10/24/2016 | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | |
Robert L. Buzzo | | | 7,566 | | | | — | | | | — | | | | 19.80 | | | | 3/30/2017 | | | | — | | | | — | | | | — | | | | — | |
| | | 7,566 | | | | — | | | | | | | | 16.00 | | | | 3/30/2017 | | | | | | | | | | | | | | | | | |
| | | 5,404 | | | | — | | | | | | | | 13.94 | | | | 3/30/2017 | | | | | | | | | | | | | | | | | |
| | | 7,566 | | | | — | | | | | | | | 24.65 | | | | 3/30/2017 | | | | | | | | | | | | | | | | | |
| | | 7,565 | | | | — | | | | | | | | 29.15 | | | | 3/30/2017 | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
E. Stephen Lilly | | | 7,551 | | | | — | | | | — | | | | 19.80 | | | | 6/26/2025 | | | | — | | | | — | | | | — | | | | — | |
| | | 2,156 | | | | — | | | | | | | | 13.94 | | | | 6/26/2025 | | | | | | | | | | | | | | | | | |
| | | 7,550 | | | | — | | | | | | | | 24.65 | | | | 6/26/2025 | | | | | | | | | | | | | | | | | |
| | | 7,550 | | | | — | | | | | | | | 29.15 | | | | 6/26/2025 | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Robert L. Schumacher | | | 1,323 | | | | — | | | | — | | | | 13.94 | | | | 3/24/2018 | | | | — | | | | — | | | | — | | | | — | |
| | | 3,970 | | | | — | | | | | | | | 24.65 | | | | 3/24/2018 | | | | | | | | | | | | | | | | | |
| | | 9,266 | | | | — | | | | | | | | 29.15 | | | | 3/24/2018 | | | | | | | | | | | | | | | | | |
All options listed in the above table based on the grant date.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| | | | | | | | | | | | | | | | | Equity Incentive
|
| | | | | | | | | | | | | | | | | Plan Awards |
| | | | | | | Equity
| | | | | | | | | | | | Market or
|
| | | | | | | Incentive
| | | | | | | | | | Number
| | Payout
|
| | | | | | | Plan
| | | | | | | | | | of
| | Value of
|
| | | | | | | Awards:
| | | | | | | | Market
| | Unearned
| | Unearned
|
| | | | | | | Number
| | | | | | Number
| | Value of
| | Shares,
| | Shares,
|
| | | | | | | of
| | | | | | of Shares
| | Shares or
| | Units or
| | Units or
|
| | | | | | | Securities
| | | | | | or Units
| | Units of
| | Other
| | Other
|
| | | Number of
| | Underlying
| | | | | | of Stock
| | Stock
| | Rights
| | Rights
|
| | | Securities Underlying
| | Unexercised
| | Option
| | Option
| | That Have
| | That Have
| | That Have
| | That Have
|
| | | Unexercised Options | | Unearned
| | Exercise
| | Expiration
| | Not
| | Not
| | Not
| | Not
|
Name | | Exercisable | | Unexercisable | | Options | | Price | | Date | | Vested | | Vested | | Vested | | Vested |
| |
| John M. Mendez | | | 12,092 | | | | — | | | | — | | | $ | 19.80 | | | | 2/3/2022 | | | | — | | | $ | — | | | | — | | | $ | — | |
| | | | — | | | | — | | | | | | | | 16.00 | | | | 2/3/2022 | | | | | | | | | | | | | | | | | |
| | | | 2,015 | | | | — | | | | | | | | 13.94 | | | | 2/3/2022 | | | | | | | | | | | | | | | | | |
| | | | 14,108 | | | | — | | | | | | | | 24.65 | | | | 2/3/2022 | | | | | | | | | | | | | | | | | |
| | | | 14,108 | | | | — | | | | | | | | 29.15 | | | | 2/3/2022 | | | | | | | | | | | | | | | | | |
| David D. Brown | | | — | | | | — | | | | — | | | | | | | | | | | | — | | | | — | | | | — | | | | — | |
| | | | 7,500 | | | | 2,500 | | | | | | | | 35.00 | | | | 10/24/2016 | | | | | | | | | | | | | | | | | |
| Robert L. Buzzo | | | 7,566 | | | | — | | | | — | | | | 19.80 | | | | 3/30/2017 | | | | — | | | | — | | | | — | | | | — | |
| | | | 7,566 | | | | — | | | | | | | | 16.00 | | | | 3/30/2017 | | | | | | | | | | | | | | | | | |
| | | | 5,404 | | | | — | | | | | | | | 13.94 | | | | 3/30/2017 | | | | | | | | | | | | | | | | | |
| | | | 7,566 | | | | — | | | | | | | | 24.65 | | | | 3/30/2017 | | | | | | | | | | | | | | | | | |
| | | | 7,565 | | | | — | | | | | | | | 29.15 | | | | 3/30/2017 | | | | | | | | | | | | | | | | | |
| E. Stephen Lilly | | | 7,551 | | | | — | | | | — | | | | 19.80 | | | | 6/26/2025 | | | | — | | | | — | | | | — | | | | — | |
| | | | 2,156 | | | | — | | | | | | | | 13.94 | | | | 6/26/2025 | | | | | | | | | | | | | | | | | |
| | | | 7,550 | | | | — | | | | | | | | 24.65 | | | | 6/26/2025 | | | | | | | | | | | | | | | | | |
| | | | 7,550 | | | | — | | | | | | | | 29.15 | | | | 6/26/2025 | | | | | | | | | | | | | | | | | |
| Gary R. Mills | | | 233 | | | | — | | | | — | | | | 13.94 | | | | 2/5/2035 | | | | — | | | | — | | | | — | | | | — | |
| | | | 865 | | | | — | | | | | | | | 24.65 | | | | 2/5/2035 | | | | | | | | | | | | | | | | | |
| | | | 3,025 | | | | — | | | | | | | | 29.15 | | | | 2/5/2035 | | | | | | | | | | | | | | | | | |
| | | | 5,000 | | | | — | | | | | | | | 32.50 | | | | 6/28/2015 | | | | | | | | | | | | | | | | | |
2009 OPTION EXERCISES AND STOCK VESTED2012 Pension Benefits
The following table provides information for the named executives on (1) stock option awards exercised during 2009, including the number of shares acquired upon exercise and the value realized at such time, and (2) the number of shares acquired upon the vesting of stock awards and the value realized at such time, before the payment of any applicable withholding tax and brokerage commissions.
| | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| | | Shares
| | | | Shares
| | |
| | | Acquired on
| | Value
| | Acquired on
| | Value
|
Name | | Exercise | | Realized | | Vesting | | Realized |
| |
| John M. Mendez | | | — | | | $ | — | | | | — | | | $ | — | |
| David D. Brown | | | — | | | | — | | | | 500 | | | | 6,100 | |
| Robert L. Buzzo | | | — | | | | — | | | | — | | | | — | |
| E. Stephen Lilly | | | — | | | | — | | | | — | | | | — | |
| Gary R. Mills | | | — | | | | — | | | | — | | | | — | |
21
2009 PENSION BENEFITS
The table below sets forth the details on pension benefits for the named executives under the following plan:
The FCBICorporation’s Executive SERP. The FCBICorporation’s SERP is unfunded and not qualified for tax purposes. Refer to page 1816 of this proxy statement for a more detailed discussion of the SERP and to Footnote 10Note 11 to the Consolidated Financial Statements in the Annual Report onForm 10-Kfor the year ended December 31, 20092012 for discussion of the methodologies and assumptions underlying the projected SERP benefits.
| | | | | | | | | | | | | | | | | |
| | | | | Number of Years
| | Present Value of
| | Payments During
|
Name | | Plan Name | | Credited Service | | Accumulated Benefit | | Last Fiscal Year |
| |
| John M. Mendez | | | SERP | | | | 24 | | | $ | 559,745 | | | $ | — | |
| David D. Brown | | | SERP | | | | 4 | | | | 15,691 | | | | — | |
| Robert L. Buzzo | | | SERP | | | | 36 | | | | 582,329 | | | | — | |
| E. Stephen Lilly | | | SERP | | | | 11 | | | | 162,111 | | | | — | |
| Gary R. Mills | | | SERP | | | | 10 | | | | 67,176 | | | | — | |
| | | | | | | | | | | | | | | | |
Name | | Plan Name | | | Number of Years
Credited Service | | | Present Value of
Accumulated Benefit | | | Payments During
Last Fiscal Year | |
John M. Mendez | | | SERP | | | | 28 | | | $ | 854,591 | | | | — | |
David D. Brown | | | SERP | | | | 8 | | | | 33,482 | | | | — | |
Robert L. Buzzo | | | SERP | | | | 40 | | | | 747,559 | | | | — | |
E. Stephen Lilly | | | SERP | | | | 15 | | | | 259,915 | | | | — | |
Robert L. Schumacher | | | SERP | | | | 29 | | | | 665,629 | | | | — | |
2012 Non-Qualified Deferred Compensation2009 NONQUALIFIED DEFERRED COMPENSATION
Deferral of Salary.Salary. Any employee otherwise ineligible to fully participate in the qualified retirement plan (KSOP)KSOP and who meetmeets the Internal Revenue Code definition of being “highly compensated”,compensated,” including the named executives, have historically been eligible to elect to defer up to 75% of their compensation to the FCBI 401(k)Corporation’s WRAP plan. Deferrals to this plan are invested as directed by each participant and are matched at the discretion of the Board of Directors in conjunction with and subject to limits established each year by the Board of Directors for elective deferrals to the KSOP. The Board of Directors authorized a match of 100% of up to 8% of participant salary for 20092012 when deferred under the 401(k) plan.KSOP. The table below provides detail regarding nonqualifiednon-qualified deferred compensation of the named executives, which for 20092012 included only the deferral of a portion of salaries to the 401(k) WRAP plan. Balances previously deferred by the named executives to a second non-qualified plan, known as the “Deferred Compensation Plan”,Plan,” which the Corporation amended and terminated on December 22, 2010, with said termination effective December 31, 2010, have been combined with the 401(k) WRAP deferrals and reported in a single table below:
| | | | | | | | | | | | | | | | | | | | | |
| | | Executive
| | Company
| | Aggregate
| | | | |
| | | Contributions
| | Contributions
| | Earnings
| | Aggregate
| | Aggregate
|
| | | in Last
| | in Last
| | in Last
| | Withdrawals/
| | Balance at Last
|
Name | | Fiscal Year(1) | | Fiscal Year(1) | | Fiscal Year | | Distributions | | Fiscal Year-End |
| |
| John M. Mendez | | $ | 8,335 | | | $ | 3,570 | | | $ | 1,791 | | | | N/A | | | $ | 185,307 | |
| David D. Brown | | | — | | | | — | | | | — | | | | N/A | | | | — | |
| Robert L. Buzzo | | | 9,339 | | | | 1,080 | | | | 24,856 | | | | N/A | | | | 100,861 | |
| E. Stephen Lilly | | | — | | | | 8,221 | | | | 4,507 | | | | N/A | | | | 79,360 | |
| Gary R. Mills | | | 601 | | | | — | | | | (8,001 | ) | | | N/A | | | | 45,490 | |
| | | | | | | | | | | | | | | | | | | | |
Name | | Executive
Contributions in
Last Fiscal Year (1) | | | Corporation
Contributions in
Last Fiscal Year (1) | | | Aggregate
Earnings in
Last Fiscal Year (2) | | | Aggregate
Withdrawals/
Distributions | | | Aggregate
Balance at Last
Fiscal Year End | |
John M. Mendez | | $ | 12,900 | | | $ | 15,304 | | | $ | 26,456 | | | $ | — | | | $ | 299,427 | |
David D. Brown | | | — | | | | — | | | | — | | | | — | | | | — | |
Robert L. Buzzo | �� | | 7,621 | | | | 2,732 | | | | 17,784 | | | | — | | | | 165,440 | |
E. Stephen Lilly | | | 561 | | | | 3,689 | | | | 27,809 | | | | — | | | | 126,389 | |
Robert L. Schumacher | | | 20,950 | | | | 2,183 | | | | (2,619 | ) | | | — | | | | 194,948 | |
| | |
| (1) | | The amounts reported under “Executive Contributions” are included in each NEO’snamed executive’s amount under the “Salary” column in the “Summary“2012 Summary Compensation Table”.Table.” The amounts reported under “Company“Corporation Contributions” are included in each NEO’snamed executive’s amount under the “All“2012 All Other Compensation” column in the “Summary“2012 Summary Compensation Table”.Table.” The CompanyCorporation contributions reflected in the above table are reflective of amountsamount deferred by the executives in the prior plan year, but matched by the CompanyCorporation in the subsequent year. The CompanyCorporation does not match Executive Contributionsexecutive contributions to the Deferreddeferred compensation plan. |
| (2) | The amounts reported under “Aggregate Earnings” are not included in each named executive’s amount under the “Salary” column in the “2012 Summary Compensation Plan.Table.” |
POTENTIAL PAYMENTS UPON TERMINATIONPotential Payments Upon Termination
The information below describes the compensation that would become payable under existing plans and agreements based on the named executive’s actual termination of employment coupled with the assumption that the named executive’s employment had terminated on December 31, 2009,2012, given the named executive’s compensation, years of service and a presumed age of sixty-two (62).
22
These benefits are in addition to benefits generally available to other non-executive officers, who are salaried employees, such as distributions under the KSOP and disability insurance benefits. We haveThe Corporation has estimated the amounts of compensation payable to each named executive under a variety of termination circumstances, including: early retirement, involuntary termination not for cause,“Cause,” termination for cause,“Cause,” termination following a change of control and in the event of the death of the named executive.
Since a variety of factors might affect the nature and amount of any benefits payable upon the events discussed below, actual amounts may vary from what we havethe Corporation has projected.
Regardless of the manner in which a named executive’s employment terminates, he or she may be entitled to receive amounts earned during his or her term of employment. Such amounts include:
option or stock award grants made pursuant to the 1999 Plan, 2004 Plan, or 2012 Plan that vest through the most recently completed fiscal year;
amounts contributed under the KSOP and the Corporation’s non-qualified deferred compensation plans;
| | |
| • | option or stock award grants made pursuant to the 1999 Plan or 2004 Plan that vest through the most recently completed fiscal year; |
|
| • | amounts contributed under the KSOP and the Corporation’s non-qualified deferred compensation plans; |
|
| • | amounts accrued and vested through the Corporation’s SERP would be payable as benefits for the life of the executive beginning at age 62; and |
|
| • | cash surrender value of life insurance would be payable. |
amounts accrued and vested through the Corporation’s SERP payable as benefits for the life of the named executive beginning at age 62; and
cash surrender value of life insurance payable.
In the event of an involuntary termination without cause, he“Cause,” a named executive officer would receive severance payments outlined in the respective employment agreement.
Payments Made Upon Retirement
In the event of the retirement of a named executive, in addition to the items identified above:
for options granted under the 1999 Plan, he or she will retain vested options for up to five years after normal retirement at age 62 and 90 days after early retirement; and
for options granted under the 2004 Plan, he or she will retain vested options for the remainder of the outstanding ten year term.
| | |
| • | for options granted under the 1999 Plan, he will retain vested options for up to five years after normal retirement at age 62 and ninety (90) days after early retirement; and |
|
| • | for options granted under the 2004 Plan, he will retain vested options for the remainder of the outstanding ten-year term. |
for options granted under the 2012 Plan, he or she will retain vested options for the period of up to three months, or any statutorily required period.
Payments Made Upon Death or Disability
In the event of the death or disability of a named executive, in addition to the benefit payments made upon termination or retirement, the named executive or his or her beneficiaries will receive benefits under the Corporation’s disability plan or executive life insurance plan, as appropriate. In addition, if the named executives had died on December 31, 2009,2012, the survivors of Messrs. Mendez, Buzzo, Lilly and LillySchumacher would have received projected amounts of $848,451, $716,020,$807,666, $685,372, $439,891, and $460,222,$616,606, respectively, from the proceeds of individual split dollar life insurance policies on each of these threefour named executives, the premiums of which are included in the “Summary of“2012 All Other Compensation Table”Compensation” table on page 19.21. The estimated amounts payable to the beneficiaries are derived by reflecting a deduction for repayment to the Corporation of the cash surrender value of the split dollar life insurance policies and distribution of 80% of the face value of any remaining insurance proceeds to the respective beneficiaries and 20% to the Corporation.
Payments Made Upon a Change of Control
TheAs previously stated, the Corporation has entered into employment agreements with each of the named executives, which agreements include change of control provisions. Pursuant to these agreements, if an executive’s employment is terminated following a change of control (other than a termination by the Corporation for cause)“Cause”) or if the executive terminates his or her employment in certain circumstances defined in the agreement, in addition to the benefits listed under the heading “Payments Made“Potential Payments Upon Termination”,Termination,” the named executive will receive a severance payment consisting of 2.0two to 2.99 times current salary.
The employment agreements for Messrs. Mendez, Buzzo, Lilly, Brown, and Mills are substantially similar. The form of the agreements was filed as an Exhibit to the Corporation’sForm 8-K filed on December 16, 2008.
23
Generally, pursuant to these agreements, a change of control is defined as:
(i) A change in ownership of the Corporation when one person (or a group) acquires stock that, when combined with stock previously owned, controls more than 50% of the value or voting power of the stock of the Corporation.
(ii) A change in the effective control of the Corporation on the date that, during any12-month period, either (1) any person (or group) acquires stock possessing 30% of the voting power of the Corporation, or (2) a majority of the members of the Board of Directors is replaced by persons whose appointment or election is not endorsed by a majority of the incumbent Board.
(iii) A change in ownership of a substantial portion of the assets of the Corporation when a person (or a group) acquires, during any12-month period, assets of the Corporation having a total gross fair market value equal to 40% or more of the total gross fair market value of all of the Corporation’s assets.
| | | | | | | | | | | | | | | | | | | | | |
| | | Salary &
| | | Nonqualified
| | | | | | Executive
| | | | |
| | | Benefits | | | Def Comp(4) | | | SERP | | | Life Ins(6) | | | Total | |
| |
John M. Mendez | | | | | | | | | | | | | | | | | | | | |
| If early retirement occurred at Dec. 31, 2009 | | $ | — | | | $ | 185,307 | | | $ | 80,000 | (1,5) | | $ | 19,186 | | | $ | 284,493 | |
| If retirement occurred at Dec. 31, 2009 | | | — | | | | 185,307 | | | | 80,000 | (2,5) | | | 19,186 | | | | 284,493 | |
| If termination for cause occurred at Dec. 31, 2009 | | | — | | | | 185,307 | | | | — | | | | 19,186 | | | | 204,493 | |
| If termination without cause occurred at Dec. 31, 2009 | | | 994,647 | | | | 185,307 | | | | 80,000 | (1,5) | | | 19,186 | | | | 1,279,140 | |
| If “change in control” termination occurred at Dec. 31, 2009 | | | 1,174,777 | | | | 185,307 | | | | 559,745 | (4) | | | 19,186 | | | | 1,939,015 | |
| If disability occurred at Dec. 31, 2009 | | | 1,218,258 | | | | 185,307 | | | | 80,000 | (1,5) | | | 19,186 | | | | 1,502,751 | |
| If death occurred at Dec. 31, 2009(3) | | | — | | | | 185,307 | | | | 80,000 | (1,5) | | | 983,000 | (4) | | | 1,248,307 | |
David D. Brown | | | | | | | | | | | | | | | | | | | | |
| If early retirement occurred at Dec. 31, 2009 | | $ | — | | | $ | — | | | $ | 7,267 | (1,5) | | $ | — | | | $ | 7,267 | |
| If retirement occurred at Dec. 31, 2009 | | | — | | | | — | | | | 80,000 | (2,5) | | | — | | | | 80,000 | |
| If termination for cause occurred at Dec. 31, 2009 | | | — | | | | — | | | | — | | | | — | | | | — | |
| If termination without cause occurred at Dec. 31, 2009 | | | 209,935 | | | | — | | | | 7,267 | (1,5) | | | — | | | | 217,202 | |
| If “change in control” termination occurred at Dec. 31, 2009 | | | 270,000 | | | | — | | | | 15,691 | (4) | | | — | | | | 285,691 | |
| If disability occurred at Dec. 31, 2009 | | | 3,228,008 | | | | — | | | | 7,267 | (1,5) | | | — | | | | 3,235,275 | |
| If death occurred at Dec. 31, 2009(3) | | | — | | | | — | | | | 7,267 | (1,5) | | | 338,000 | (4) | | | 345,267 | |
Robert L. Buzzo | | | | | | | | | | | | | | | | | | | | |
| If early retirement occurred at Dec. 31, 2009 | | $ | — | | | $ | 100,861 | | | $ | 60,340 | (1,5) | | $ | 23,905 | | | $ | 185,106 | |
| If retirement occurred at Dec. 31, 2009 | | | — | | | | 100,861 | | | | 67,475 | (2,5) | | | 23,905 | | | | 192,241 | |
| If termination for cause occurred at Dec. 31, 2009 | | | — | | | | 100,861 | | | | — | | | | 23,905 | | | | 124,766 | |
| If termination without cause occurred at Dec. 31, 2009 | | | 556,892 | | | | 100,861 | | | | 60,340 | (1,5) | | | 23,905 | | | | 741,998 | |
| If “change in control” termination occurred at Dec. 31, 2009 | | | 651,222 | | | | 100,861 | | | | 582,329 | (4) | | | 23,905 | | | | 1,358,317 | |
| If disability occurred at Dec. 31, 2009 | | | 619,711 | | | | 100,861 | | | | 60,340 | (1,5) | | | 23,905 | | | | 804,817 | |
| If death occurred at Dec. 31, 2009(3) | | | — | | | | 100,861 | | | | 60,340 | (1,5) | | | 545,000 | (4) | | | 706,201 | |
E. Stephen Lilly | | | | | | | | | | | | | | | | | | | | |
| If early retirement occurred at Dec. 31, 2009 | | $ | — | | | $ | 79,360 | | | $ | 28,609 | (1,5) | | $ | 1,962 | | | $ | 109,931 | |
| If retirement occurred at Dec. 31, 2009 | | | — | | | | 79,360 | | | | 75,903 | (2,5) | | | 1,962 | | | | 157,225 | |
| If termination for cause occurred at Dec. 31, 2009 | | | — | | | | 79,360 | | | | — | | | | 1,962 | | | | 81,322 | |
| If termination without cause occurred at Dec. 31, 2009 | | | 599,892 | | | | 79,360 | | | | 28,609 | (1,5) | | | 1,962 | | | | 709,823 | |
| If “change in control” termination occurred at Dec. 31, 2009 | | | 702,650 | | | | 79,360 | | | | 162,111 | (4) | | | 1,962 | | | | 946,083 | |
| If disability occurred at Dec. 31, 2009 | | | 1,555,846 | | | | 79,360 | | | | 28,609 | (1,5) | | | 1,962 | | | | 1,665,777 | |
| If death occurred at Dec. 31, 2009(3) | | | — | | | | 79,360 | | | | 28,609 | (1,5) | | | 588,000 | (4) | | | 695,969 | |
Gary R. Mills | | | | | | | | | | | | | | | | | | | | |
| If early retirement occurred at Dec. 31, 2009 | | $ | — | | | $ | 45,490 | | | $ | 21,368 | (1,5) | | $ | 4,221 | | | $ | 71,079 | |
| If retirement occurred at Dec. 31, 2009 | | | — | | | | 45,490 | | | | 80,000 | (2,5) | | | 4,221 | | | | 129,711 | |
| If termination for cause occurred at Dec. 31, 2009 | | | — | | | | 45,490 | | | | — | | | | 4,221 | | | | 49,711 | |
| If termination without cause occurred at Dec. 31, 2009 | | | 265,435 | | | | 45,490 | | | | 21,368 | (1,5) | | | 4,221 | | | | 336,514 | |
| If “change in control” termination occurred at Dec. 31, 2009 | | | 344,000 | | | | 45,490 | | | | 67,176 | (4) | | | 4,221 | | | | 460,887 | |
| If disability occurred at Dec. 31, 2009 | | | 2,632,229 | | | | 45,490 | | | | 21,368 | (1,5) | | | 4,221 | | | | 2,703,308 | |
| If death occurred at Dec. 31, 2009(3) | | | — | | | | 45,490 | | | | 21,368 | (1,5) | | | 430,000 | (4) | | | 496,858 | |
| (i) | A change in ownership of the Corporation when one person (or a group) acquires stock that, when combined with stock previously owned, controls more than 50% of the value or voting power of the stock of the Corporation. |
| (ii) | A change in the effective control of the Corporation on the date that, during any 12 month period, either: (1) any person (or group) acquires stock possessing 30% of the voting power of the Corporation; or (2) a majority of the members of the Board of Directors is replaced by persons whose appointment or election is not endorsed by a majority of the incumbent Board. |
| (iii) | A change in ownership of a substantial portion of the assets of the Corporation when a person (or a group) acquires, during any 12 month period, assets of the Corporation having a total gross fair market value equal to 40% or more of the total gross fair market value of all of the Corporation’s assets. |
| | | | | | | | | | | | | | | | | | | | | | |
John M. Mendez | | Salary &
Benefits | | | Nonqualified
Def Comp (4) | | | SERP | | | | | Executive
Life Ins (6) | | | Total | |
If early retirement occurred at Dec. 31, 2012 | | $ | — | | | $ | 299,427 | | | $ | 100,549 | | | (1,5) | | $ | 9,589 | | | $ | 409,565 | |
If retirement occurred at Dec. 31, 2012 | | | — | | | | 299,427 | | | | 133,215 | | | (2,5) | | | 9,589 | | | | 442,231 | |
If termination for “Cause” occurred at Dec. 31, 2012 | | | — | | | | 299,427 | | | | — | | | | | | 9,589 | | | | 309,016 | |
If termination without “Cause” occurred at Dec. 31, 2012 | | | 998,931 | | | | 299,427 | | | | 100,549 | | | (1,5) | | | 9,589 | | | | 1,408,496 | |
If change in control termination occurred at Dec. 31, 2012 | | | 1,174,777 | | | | 299,427 | | | | 854,591 | | | (4) | | | 9,589 | | | | 2,338,384 | |
If disability occurred at Dec. 31, 2012 | | | 891,661 | | | | 299,427 | | | | 100,549 | | | (1,5) | | | 9,589 | | | | 1,301,226 | |
If death occurred at Dec. 31, 2012 (3) | | | — | | | | 299,427 | | | | 100,549 | | | (1,5) | | | 983,000 | (4) | | | 1,382,976 | |
| | | | | | |
David D. Brown | | | | | | | | | | | | | | | | | |
If early retirement occurred at Dec. 31, 2012 | | $ | — | | | $ | — | | | $ | 12,983 | | | (1,5) | | $ | — | | | $ | 12,983 | |
If retirement occurred at Dec. 31, 2012 | | | — | | | | — | | | | 80,000 | | | (2,5) | | | — | | | | 80,000 | |
If termination for “Cause” occurred at Dec. 31, 2012 | | | — | | | | — | | | | — | | | | | | — | | | | — | |
If termination without “Cause” occurred at Dec. 31, 2012 | | | 259,605 | | | | — | | | | 12,983 | | | (1,5) | | | — | | | | 272,588 | |
If change in control termination occurred at Dec. 31, 2012 | | | 332,800 | | | | — | | | | 33,482 | | | (4) | | | — | | | | 366,282 | |
If disability occurred at Dec. 31, 2012 | | | 2,936,522 | | | | — | | | | 12,983 | | | (1,5) | | | — | | | | 2,949,505 | |
If death occurred at Dec. 31, 2012 (3) | | | — | | | | — | | | | 12,983 | | | (1,5) | | | 338,000 | (4) | | | 350,983 | |
| | | | | | |
Robert L. Buzzo | | | | | | | | | | | | | | | | | |
If early retirement occurred at Dec. 31, 2012 | | $ | — | | | $ | 165,440 | | | $ | 67,475 | | | (1,5) | | $ | 47,082 | | | $ | 279,997 | |
If retirement occurred at Dec. 31, 2012 | | | — | | | | 165,440 | | | | 67,475 | | | (2,5) | | | 47,082 | | | | 279,997 | |
If termination for “Cause” occurred at Dec. 31, 2012 | | | — | | | | 165,440 | | | | — | | | | | | 47,082 | | | | 212,522 | |
If termination without “Cause” occurred at Dec. 31, 2012 | | | 590,008 | | | | 165,440 | | | | 67,475 | | | (1,5) | | | 47,082 | | | | 870,005 | |
If change in control termination occurred at Dec. 31, 2012 | | | 687,700 | | | | 165,440 | | | | 747,559 | | | (4) | | | 47,082 | | | | 1,647,781 | |
If disability occurred at Dec. 31, 2012 | | | 287,697 | | | | 165,440 | | | | 67,475 | | | (1,5) | | | 47,082 | | | | 567,694 | |
If death occurred at Dec. 31, 2012 (3) | | | — | | | | 165,440 | | | | 67,475 | | | (1,5) | | | 545,000 | (4) | | | 777,915 | |
| | | | | | |
E. Stephen Lilly | | | | | | | | | | | | | | | | | |
If early retirement occurred at Dec. 31, 2012 | | $ | — | | | $ | 126,389 | | | $ | 37,939 | | | (1,5) | | $ | 9,272 | | | $ | 173,600 | |
If retirement occurred at Dec. 31, 2012 | | | — | | | | 126,389 | | | | 75,903 | | | (2,5) | | | 9,272 | | | | 211,564 | |
If termination for “Cause” occurred at Dec. 31, 2012 | | | — | | | | 126,389 | | | | — | | | | | | 9,272 | | | | 135,661 | |
If termination without “Cause” occurred at Dec. 31, 2012 | | | 646,676 | | | | 126,389 | | | | 37,939 | | | (1,5) | | | 9,272 | | | | 820,276 | |
If change in control termination occurred at Dec. 31, 2012 | | | 753,480 | | | | 126,389 | | | | 259,915 | | | (4) | | | 9,272 | | | | 1,149,056 | |
If disability occurred at Dec. 31, 2012 | | | 1,239,152 | | | | 126,389 | | | | 37,939 | | | (1,5) | | | 9,272 | | | | 1,412,752 | |
If death occurred at Dec. 31, 2012 (3) | | | — | | | | 126,389 | | | | 37,939 | | | (1,5) | | | 588,000 | (4) | | | 752,328 | |
| | | | | | |
Robert L. Schumacher | | | | | | | | | | | | | | | | | |
If early retirement occurred at Dec. 31, 2012 | | $ | — | | | $ | 194,948 | | | $ | 60,234 | | | (1,5) | | $ | 34,232 | | | $ | 289,414 | |
If retirement occurred at Dec. 31, 2012 | | | — | | | | 194,948 | | | | 62,041 | | | (2,5) | | | 34,232 | | | | 291,221 | |
If termination for “Cause” occurred at Dec. 31, 2012 | | | — | | | | 194,948 | | | | — | | | | | | 34,232 | | | | 229,180 | |
If termination without “Cause” occurred at Dec. 31, 2012 | | | 475,676 | | | | 194,948 | | | | 60,234 | | | (1,5) | | | 34,232 | | | | 765,090 | |
If change in control termination occurred at Dec. 31, 2012 | | | 548,964 | | | | 194,948 | | | | 665,629 | | | (4) | | | 34,232 | | | | 1,443,773 | |
If disability occurred at Dec. 31, 2012 | | | 391,593 | | | | 194,948 | | | | 60,234 | | | (1,5) | | | 34,232 | | | | 681,007 | |
If death occurred at Dec. 31, 2012 (3) | | | — | | | | 194,948 | | | | 60,234 | | | (1,5) | | | 430,000 | (4) | | | 685,182 | |
| (1) | | Annual payment deferred to age 60. |
24
| | |
| (2) | | Annual payment; presumed to be 62 on Dec.December 31, 2009.2012. |
|
| (3) | | Payment to beneficiary upon death of NEO.named executive. |
|
| (4) | | Presumes lump sum payout. |
|
| (5) | | Represents an annuity payable over the life of the NEOnamed executive at a reduced amount beginning at age 60, a larger amount beginning at age 62 or for 10ten years certain to a named beneficiary in event of death. |
|
| (6) | | Other than the life insurance proceeds payable upon death, presumed at Dec.December 31, 2009,2012, the other amounts listed under “Executive Life Ins” represent Cash Surrender Value. |
DIRECTOR COMPENSATION2009 NON-MANAGEMENT DIRECTORS’ COMPENSATION2012 Non-Management Directors’ Compensation
The compensation and benefit package for non-management directors is intended to fairly compensate directors for work required for the Corporation and to align the directors’ interests with the long termlong-term interests of stockholders. The compensation package for the directors is simple, direct and easy to understand from a stockholder perspective. The table belowon the next page indicates that non-management directors’ compensation includes the following:
Compensation. During 2009,2012, non-employee members of the Board of Directors received a retainer fee of $700 per month. Audit Committee members received a retainer fee of $1,500 per quarter ($2,000 for Chairman). Members of the Executive Committee also receive a fee of $250 per meeting unless held in conjunction with monthly Board meetings, in which case no committeeadditional fee is paid. Members of the Governance and Nominating Committee receive a fee of $200 per meeting. Members of the Compensation and Retirement CommitteeCRC receive a fee of $250 per meeting unless held in conjunction with monthly Board meetings, in which case no committeeadditional fee is paid. Non-management directors are reimbursed for travel or other expenses incurred for attendance at Board and committee meetings. Director Mendez, the Corporation’s CEO, receives no Board compensation for service on the Board or committees.
Deferral of Cash Compensation.
Compensation. Directors are permitted on an annual basis, prior to the beginning of each calendar year to choose to elect to defer Board and committee fees to a non-qualified deferred compensation plan established solely for that purpose. Each director electing to defer fees is responsible for the investment of such deferrals and the Corporation does not provide either a preferential investment or interest rate for such deferred compensation. Each director, who has deferred any such compensation, has the ability to access such deferred compensation upon retirement from active Board service.
In addition, non-managementOptions. Like the Corporation’s named executive officers, the directors participate in the 2001 Directors’ Stock Option Plan (the “directors’ option plan”). The directors’ option plan was designed to facilitate and encourage investment in the Corporation and for directors to become more closely aligned with the long term interests2012 Plan. As of stockholders. Non-employee directors have each been granted options to purchase a total 6,050 shares of Common Stock. The outstanding options exercisable at December 31, 2009 by non-management directors were 24,200 shares. The exercise price of each option is the market value of a share of Common Stock on the date of grant adjusted for stock dividends. The options are fully vested and must be exercised within 10 yearsthe mailing of grant or two years followingthis proxy, no grants have been made to the director’s retirement, whichever occurs first. Presuming all directors continue as Board members, these options are scheduled to expire in 2011 withunder the exception of those granted to Mr. Johnson in 2008.
Directors’ Supplemental Retirement2012 Plan.
FCBI established a Directors’ Supplemental Retirement Plan. The Corporation established a directors’ supplemental retirement plan (“directors’Directors’ SERP” or “plan”) for its non-management directors in 2001. In 2003, as part of its acquisition of The CommonwealthCommonWealth Bank, (“Commonwealth”), the Corporation assumed responsibility for administration of a similar plan for the benefit of Director Hall and other former directors and officers of Commonwealth.The CommonWealth Bank. These plans provide for a benefit upon retirement from Board
25
service service. On December 16, 2010, the Corporation amended the Directors’ SERP in order to remain in compliance with Internal Revenue Code Section 409A and to provide for certain changes in the benefit formula and various other provisions. The Directors’ SERP amendment substitutes a defined benefit in lieu of the previous indexed benefit. The amended Directors’ SERP provides for an annual retirement benefit of 100% of the highest consecutive three years’ average compensation. Benefits are payable at specified ages dependingnormal retirement age of 70 and continue for ten years. Full vesting is attained upon lengthcompletion of 15 years of service. Benefits under the directors’ SERP become payable at age 70, 75 and 78 depending upon the individual director’s age and original date of election to the Board. Benefits payable under these plans vary based on the age of the director at the date of implementation of the plan.
In connection with the directors’Directors’ SERP, the Corporation has also entered into Life Insurance Endorsement Method Split Dollar Agreements (the “agreements”)life insurance endorsement method split dollar agreements with certain directors covered under the directors’Directors’ SERP. Under the agreements, the Corporation shares 80% of death benefits (after recovery of cash surrender value) with the designated beneficiaries of the directors under life insurance contracts referenced in the directors’Directors’ SERP. The Corporation as owner of the policies retains a 20% interest in life insurance proceeds and a 100% interest in the cash surrender value of the policies.
The directors’Directors’ SERP also contains provisions for change of control, as defined, which allows the directors to retain benefits under the planDirectors’ SERP in the event of a termination of service, other than for cause,“Cause,” during the twelve12 months prior to a change in control or anytime thereafter, unless the director voluntarily terminates his or her service within 90 days following the change in control.
FCBIInsurance. The Corporation provides liability insurance for its directors and officers as well as indemnification agreements. The annual cost of the directorsdirectors’ and officersofficers’ insurance is approximately $25,000$70,709 and the coverage currently extends until May 10, 2010.
September 1, 2013No Other Compensation.
Compensation. Non-management directors do not receive any other cash or equity compensation except as set forth above.
Director Compensation Table
The following table summarizes non-management director compensation, including compensation for fiscal year 2009.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Change in
| | | | |
| | | | | | | | | | | Pension Value
| | | | |
| | | | | | | | | | | and
| | | | |
| | | Fees
| | | | | | | | Non-qualified
| | | | |
| | | Earned
| | | | | | Non-Equity
| | Deferred
| | | | |
| | | or Paid in
| | Stock
| | Option
| | Incentive Plan
| | Compensation
| | All Other
| | |
Name | | Cash | | Awards | | Awards | | Compensation | | Earnings | | Compensation | | Total |
| |
| Franklin P. Hall | | $ | 29,200 | | | $ | — | | | $ | — | | | $ | — | | | $ | 28,807 | | | $ | — | | | $ | 58,007 | |
| Allen T. Hamner | | | 20,350 | | | | — | | | | — | | | | — | | | | 120,051 | | | | — | | | | 140,401 | |
| Richard S. Johnson | | | 26,600 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 26,600 | |
| I. Norris Kantor | | | 24,850 | | | | — | | | | — | | | | — | | | | 7,007 | | | | — | | | | 31,857 | |
| A. A. Modena | | | 14,250 | | | | — | | | | — | | | | — | | | | 5,831 | | | | — | | | | 20,081 | |
| Robert E. Perkinson, Jr. | | | 29,750 | | | | — | | | | — | | | | — | | | | 37,172 | | | | — | | | | 66,922 | |
| William P. Stafford | | | 22,400 | | | | — | | | | — | | | | — | | | | 1,777 | | | | — | | | | 24,177 | |
| William P. Stafford, II | | | 25,950 | | | | — | | | | — | | | | — | | | | 38,485 | | | | — | | | | 64,435 | |
26
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Fees
Earned
or Paid in
Cash | | | Stock
Awards | | | Option
Awards | | | Non-Equity
Incentive Plan
Compensation | | | Change in
Pension Value
and
Non-qualified
Deferred
Compensation
Earnings (1) | | | All Other
Compensation | | | Total | |
W. C. Blankenship, Jr. (2) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Franklin P. Hall | | | 30,900 | | | | — | | | | — | | | | — | | | | 14,327 | | | | — | | | | 45,227 | |
Richard S. Johnson | | | 28,375 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 28,375 | |
I. Norris Kantor | | | 26,250 | | | | — | | | | — | | | | — | | | | 30,261 | | | | — | | | | 56,511 | |
Robert E. Perkinson, Jr. | | | 30,500 | | | | — | | | | — | | | | — | | | | 29,800 | | | | — | | | | 60,300 | |
William P. Stafford | | | 20,600 | | | | — | | | | — | | | | — | | | | (2,239 | ) | | | — | | | | 18,361 | |
William P. Stafford, II | | | 25,600 | | | | — | | | | — | | | | — | | | | 5,824 | | | | — | | | | 31,424 | |
| (1) | The amounts reported represent the difference between the present value of accrued benefits of the director’s SERP at the end of 2012 and 2011. |
| (2) | Mr. Blankenship became a director in January, 2013. |
OWNERSHIP AND RELATED PERSON TRANSACTIONSInformation on Stock Ownership
The following table includes the stock-based holdings at December 31, 20092012 of significant stockholders having beneficial ownership greater than 5%, ourthe directors and the named executives, and ourthe directors and executive officers as a group.
| | | | | | | | | |
| | | Amount and
| | |
| | | Nature
| | |
| | | of Beneficial
| | Percent of
|
| | | Ownership as of
| | Common
|
Name and Address of Beneficial Owner or Number of Persons in Group | | December 31, 2009 | | Stock |
| |
| Wellington Management Company, LLP | | | 1,573,199 | | | | 8.86 | % |
| 75 State Street, Boston, MA 02109 | | | | | | | | |
| The H. P. & Anne S. Hunnicutt Foundation(1) | | | 1,222,100 | | | | 6.88 | % |
| P.O. Box 309, Princeton, WV 24740 | | | | | | | | |
| The Corporation’s Directors and Named Executive Officers: | | | | | | | | |
| David D. Brown(2) | | | 10,186 | | | | | * |
| Robert L. Buzzo(3) | | | 52,984 | | | | | * |
| Franklin P. Hall(4) | | | 38,405 | | | | | * |
| Allen T. Hamner(5)(6) | | | 20,025 | | | | | * |
| Richard S. Johnson(5) | | | 21,150 | | | | | * |
| I. Norris Kantor | | | 28,000 | | | | | * |
| E. Stephen Lilly(7) | | | 36,067 | | | | | * |
| John M. Mendez(8) | | | 65,009 | | | | | * |
| Gary R. Mills(9) | | | 13,987 | | | | | * |
| A. A. Modena(5) | | | 29,150 | | | | | * |
| Robert E. Perkinson, Jr.(5)(10) | | | 41,704 | | | | | * |
| William P. Stafford(11) | | | 247,358 | | | | 1.39 | % |
| William P. Stafford, II | | | 155,675 | | | | | * |
| All Directors and Executive Officers as a Group | | | 789,837 | | | | 4.45 | % |
| | | | | | | | |
Name and Address of Beneficial Owner or Number of Persons in Group | | Amount and
Nature
of Beneficial
Ownership as of
December 31, 2012 | | | Percent of
Common
Stock | |
| | |
| | |
| | |
| | |
Richard G. Preservati (1) | | | 1,521,033 | | | | 7.58 | % |
P.O. Box 1003, Princeton, WV 24740 | | | | | | | | |
| | |
Wellington Management Company, LLP (2) | | | 1,227,553 | | | | 6.12 | % |
75 State Street, Boston, MA 02109 | | | | | | | | |
| | |
The H. P. & Anne S. Hunnicutt Foundation (3) | | | 1,222,100 | | | | 6.09 | % |
P.O. Box 309, Princeton, WV 24740 | | | | | | | | |
| | |
BlackRock (2) | | | 1,020,479 | | | | 5.09 | % |
40 East 52nd Street, New York, NY 10022 | | | | | | | | |
| | |
Wells Fargo (2) | | | 1,019,744 | | | | 5.09 | % |
420 Montgomery Street, San Francisco, CA 94104 | | | | | | | | |
| | |
The Corporation’s Directors and Named Executive Officers: | | | | | | | | |
W. C. Blankenship, Jr. (4) | | | 26,439 | | | | * | |
David D. Brown (5) | | | 13,910 | | | | * | |
Robert L. Buzzo (6) | | | 57,983 | | | | * | |
Franklin P. Hall (7) | | | 41,855 | | | | * | |
Richard S. Johnson (8) | | | 31,100 | | | | * | |
I. Norris Kantor (9) | | | 29,725 | | | | * | |
E. Stephen Lilly (10) | | | 41,062 | | | | * | |
John M. Mendez (11) | | | 77,826 | | | | * | |
Robert E. Perkinson, Jr. (12) | | | 43,981 | | | | * | |
Robert L. Schumacher (13) | | | 37,854 | | | | * | |
William P. Stafford (14) | | | 268,058 | | | | 1.34 | % |
William P. Stafford, II (15) | | | 170,441 | | | | * | |
All Directors and Executive Officers as a Group | | | 856,890 | | | | 4.27 | % |
| | |
| * | | Represents less than 1% of the outstanding shares. |
|
| (1) | Number of shares are as of Form 13G filing with SEC as of December 31, 2011. |
| (2) | Number of shares are as of Form 13G filing with SEC as of December 31, 2012. |
| (3) | The H. P. and Anne S. Hunnicutt Foundation (“Foundation”) is a charitable, tax-exempt, private foundation.Foundation. The Foundation was created by the family of two directors, William P. Stafford and William P. Stafford, II. Neither director holds beneficial ownership of the shares held by the Foundation. |
|
(2) | (4) | Includes 33625,467 shares held jointly by Mr. Blankenship and his wife and 350 shares held jointly by Mr. Blankenship and his brother. |
| (5) | Includes 1,910 shares allocated to Mr. Brown’s Employee Stock Ownership and Savings Plan (“KSOP”)KSOP account. 1,5001,000 shares have been pledged as security by Mr. Brown. |
|
(3) | (6) | Includes 15,99519,232 shares allocated to Mr. Buzzo’s KSOP account. Also includesaccount and 35,667 shares issuable upon exercise of currently exercisable options granted under the 1999 Stock Option Plan. |
|
(4) | | Includes 2,338 shares issuable upon exercise of currently exercisable options granted under The CommonWealth Bank Option Plan. Also includes 33,2121,725 shares that may be issued upon a conversion of Series A Preferred Stock. |
| (7) | Includes 34,550 shares held jointly by Mr. Hall and his wife, and 760 shares held by Mr. Hall’s wife. Also includes 3,450 shares that may be issued upon a conversion of Series A Preferred Stock. |
|
(5) | (8) | Includes 6,050 shares issuable upon exercise of currently exercisable options granted under the 2001 Directors’ Option Plan. Also includes 3,450 shares that may be issued upon a conversion of Series A Preferred Stock. |
|
(6) | (9) | Includes 4,7121,725 shares held by Mr. Hamner’s wife.that may be issued upon a conversion of Series A Preferred Stock. |
|
(7) | (10) | Includes 2,9796,324 shares allocated to Mr. Lilly’s KSOP account. Also includes 24,807 shares issuable upon exercise of currently exercisable options granted under the 1999 Stock Option Plan. |
|
(8) | (11) | Includes 18,87022,299 shares allocated to Mr. Mendez’s KSOP account. Also includesaccount and 42,323 shares issuable upon exercise of currently exercisable options granted under the 1999 Stock Option Plan. In addition, 1,151 shares have been pledged as security by Mr. Mendez. |
27
| | |
(9) | | Includes 2,763 shares allocated to Mr. Mills’ KSOP account. Also includes 9,1238,280 shares issuablethat may be issued upon exercisea conversion of currently exercisable options granted under the 1999 Stock Option Plan.Series A Preferred Stock. |
|
(10) | (12) | Includes 2,061 shares held by the Robert E. Perkinson, Sr. Trust, 5,138 shares held by the Robert E. Perkinson, Jr. Trust in which Mr. Perkinson is deemed to share beneficial ownership and 5,938 shares held as agent for Mr. Perkinson’s wife. Mr. Perkinson is co-trustee of the Robert E. Perkinson, Sr. Trust and holds a remainder interest therein with two of his siblings, and he is co-trustee and sole beneficiary of the Robert E. Perkinson, Jr. Trust. In addition, 9,138Also includes 3,450 shares have been pledged as security by Mr. Perkinson.that may be issued upon a conversion of Series A Preferred Stock. |
|
(11) | (13) | Includes 43,90516,431 shares allocated to Mr. Schumacher’s KSOP account and 14,559 shares issuable upon exercise of currently exercisable options granted under the 1999 Plan. Also includes 4,830 shares that may by issued upon a conversion of Series A Preferred Stock. |
| (14) | Includes 247,058 shares held by Stafford Farms LLC as to which Mr. Stafford is deemed to share beneficial ownership. Also includes 162,63220,700 shares held jointly by Mr. Stafford and his wife, and 1,901that may be issued upon a conversion of Series A Preferred Stock. |
| (15) | Includes 14,766 shares held by Mr. Stafford’s wife.that may be issued upon a conversion of Series A Preferred Stock. |
Related Person TransactionsRelated-Person Transactions
Review and Approval of Related-PersonRelated Person Transactions. We review The Corporation reviews relationships and transactions in which the Corporation and ourits directors and executive officers or their immediate family members are participants to determine whether such related parties have a direct or indirect material interest in such transaction.transactions. Although these policies are not currently in writing, the Corporation’s in-house counsel is primarily responsible for developing and implementing processes and controls to obtain information from the directors and executive officers with respect to related person transactions and for then determining whether a related person has a direct or indirect material interest in the transaction.transaction that would require approval of such transaction by the Audit Committee and disclosure of such transaction in this proxy statement. Part of this process includes a requirement that each director and executive officer respondresponds to an annual proxy statement questionnaire, which is designed to obtain detailed information regarding the directors and officers, including updated information on their backgrounds, which serves as a basis to determine an individual’s qualifications to continue to serve as a director. Responses to the annual “D&O” questionnaire also provide disclosure of related person transactions. When it is determined that a related person transaction may have occurred itor management of the Corporation desires to enter into a related person transaction, the transaction is then scrutinized to establish whether or not such related person transaction is directly or indirectly material, in which case such transaction is approved or ratified by the Audit Committee and then disclosed in this proxy statement pursuant to SEC requirements.
In the course of reviewing a disclosable related-personrelated person transaction, counsel considers:
the nature and extent of the related person’s interest in the transaction;
the material terms of such transaction, including dollar amount and type;
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| • | the nature and extent of the related person’s interest in the transaction; |
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| • | the material terms of such transaction, including dollar amount and type; |
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| • | the importance of the transaction to the related person; |
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| • | the importance of the transaction to the Corporation; and |
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| • | any other matters deemed relevant. |
the importance of the transaction to the related person;
the importance of the transaction to the Corporation; and
any other matters deemed relevant.
If in-house counsel determines that there is a related person transaction, to be disclosed, hethe transaction is approved or ratified by the Audit Committee. In-house counsel then reviews itthe related person transaction with outside counsel with expertise in SEC matters prior to including itdetermine whether the transaction must be disclosed in this proxy.proxy statement. No
disclosable related person transactions are reported within this proxy statement other than those discussed below.
All related person transactions since January 1, 2012, which were required to be reported in this proxy statement, were approved by the Audit Committee.Related-PersonDescription of Related Person Transactions. Directors Stafford and Stafford, II are related to a stockholder of an incorporated construction firm, which has on occasion performed construction work for the Corporation. Messrs. Staffords’ relative is neither an officer nor voting stockholder of the construction firm. During 2007 and 2008, the construction firm built a branch office for the The Corporation’s subsidiary bank at a costhas made from time-to-time loans to directors and executive officers of $702,437 in 2007 and $594,764 in 2008. The construction firm also performed other work for the Corporation and to certain companies in 2008which they are officers or have significant ownership interests. All such loans and 2009commitments have been made: (i) in the natureordinary course of routine repairsbusiness; (ii) on substantially the same terms, including interest rates and maintenancecollateral, as those prevailing at the time for comparable transactions with total expenditures in each year of $10,850 and $300 respectively. In regardother persons not related to the branch office construction,Corporation and subsidiary bank; and (iii) did not involve more than the contract fornormal risk of collectability or present other unfavorable terms. Loans made to directors and executive officers are in compliance with federal banking regulations and are thereby exempt from insider loan prohibitions included in the Sarbanes-Oxley Act of 2002.
In-house counsel reviewed all transactions with related parties since January 1, 2012 to determine if such work was entered into only after completion of a competitive bidding process. These transactions were not deemedrequired to be significant to director Stafford or Stafford, II as they have no financial interestreported in the construction firm.this proxy statement. The Corporation has had occasion to build and improve other office facilities using other construction companies before andnot entered into any transactions with related persons since completion of constructionJanuary 1, 2012 that met the threshold for disclosure in this proxy statement under the relevant SEC rules, nor has the Corporation entered into a current transaction in which the amount of the branch office mentioned abovetransaction exceeds $120,000 and has determined that this transaction andin which a related person had or will have a direct or indirect material interest. In-house counsel reviewed the other work performed by the construction firm has insignificant importance to bothlease of two offices of the Corporation and its directors.affiliates from The amount of such expenditures in each fiscal year was immaterial individuallyWilton Companies as further described on Page 10, and concluded that Director Johnson did not have a material interest in the aggregate.
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Director Stafford, II serves as a partner of a law firm, which, similar to other firms in other localities, regularly performs legal services each fiscal year for the Corporation. The legal fees paid to this firm in 2009 amounted to $71,180. Mr. Stafford, II performs an insignificant portion of these legal services personally for the Corporation and deems the importance of the relationship with the law firm to be immaterial. The Corporation uses this law firm to a lesser extent than other outside legal counsel and the dollar amounts paid to the law firm are not material.
Director Johnson serves as President of a real estate firm, which previously leased space to the Corporation for a bank branch prior to Mr. Johnson becoming a director. Since the date of Mr. Johnson’s appointment as a director, the prior lease space has been abandoned by the Corporation, but an alternate lease agreement of bank branch space has been executed by the Corporation and the real estate firm since Mr. Johnson’s appointment as a director. The real estate company also has occasion to enter into a credit relationships with our subsidiary bank on the same terms and conditions as other comparable loan customers. The amount of lease payments paid and owed by the Corporation to the real estate firm and the amount of loan payments and any outstanding loan balance due and payable by the real estate firm to our subsidiary bank have been determined to be insignificant from both the perspective of the Corporation and the real estate firm. In addition, any business loans made by First Community Bank to the real estate company were determined to be in the usual course of business, with interest rates and terms no better than loans advanced to similar customers of the Bank.
Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934, as amended requires First Community’sand the SEC regulations, require the Corporation’s directors and executive officers, and persons who beneficially own more than ten percent10% of our Common Stock, to file initial reports of ownership and reports of changes in ownership of our Common Stock with the SEC. As a practical matter, First Communitythe Corporation assists it directors and officers by monitoring and completing and filing Section 16 reports on their behalf. In 2009, basedBased solely upon the review of Forms 3, 4 and 45, and amendments thereto filed in accordance with the instructions and information provided to the Corporation by its officers and directors, First Community’sthe Corporation believes that all Section 16(a) filing requirements applicable to its directors, executive officers and directors complied in all respects with these reporting requirements.
Reportpersons who beneficially own more than 10% of the Audit CommitteeCommon Stock were complied with during fiscal year 2012.REPORT OF THE AUDIT COMMITTEE
The Audit Committee reviews First Community’sthe Corporation’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for establishing and maintaining adequate internal financial controls, for preparing the financial statements and for the public reporting process. Dixon Hughes PLLC (Dixon Hughes)Goodman LLP (“Dixon Hughes”), ourthe Corporation’s independent auditorregistered public accounting firm for 2009,2012, is responsible for expressing opinions on the conformity of the Corporation’s audited financial statements with generally accepted accounting principles and on the Corporation’s internal control over financial reporting.
In this context, the committeeAudit Committee has reviewed and discussed with management and Dixon Hughes the audited financial statements for the year ended December 31, 20092012 and Dixon Hughes’ evaluation of the Corporation’s internal control over financial reporting. The committeeAudit Committee regularly communicates with Dixon Hughes regarding the matters that are required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA Professional Standards, Vol. 1 AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T as well as other relevant Standards.standards. Dixon Hughes has provided to the committeeAudit Committee the written disclosures and the letter required by applicable requirements of the Public
Company Accounting Oversight Board regarding the independent accountant’sregistered public accounting firm’s communications with the Audit Committee concerning independence, and the committeeAudit Committee has discussed with Dixon Hughes that firm’s independence. The Audit Committee has concluded that Dixon Hughes’ provision of audit and non-audit services to First Communitythe Corporation and its affiliates is compatible with Dixon Hughes’ independence.
Based on the review and discussions referred to above, the Audit Committee recommended to ourthe Board of Directors (and the Board approved) that the audited financial statements for the year ended December 31, 20092012 be included in our 2009the Annual Report to Stockholders and out Annual Report onForm 10-K for 20092012 for filing with the SEC. This report is provided by the following independent directors, who comprise the Audit Committee.
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Robert E. Perkinson, Jr. (Chairman) | | Allen T. Hamner |
Franklin P. Hall | | Richard S. Johnson |
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Robert E. Perkinson, Jr. (Chairman)Franklin P. Hall
Richard S. JohnsonIndependent AuditorINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
On behalf of First Community Bancshares, Inc.the Corporation and itits affiliates, the Audit Committee retained Dixon Hughes to audit our consolidated financial statements and our internal control over financial reporting for 2009.2012. In addition, the Audit Committee retained Dixon Hughes, as well as other accounting firms, to provide other auditing and advisory services in 2009. We understand2012. The Corporation understands the need for Dixon Hughes to maintain objectivity and independence in its audit of ourthe Corporation’s financial statements and ourits internal control over financial reporting. To minimize relationships that could appear to impair the objectivity of Dixon Hughes, ourthe Audit Committee has limited the non-audit services that Dixon Hughes provides to usit primarily to tax services and merger and acquisition due diligence and integration services. It is the committee’sAudit Committee’s goal that the fees that the Corporation pays Dixon Hughes for non-audit services should not exceed the audit fees and that goal has been achieved for 20092012 and 2008.
2011.The Audit Committee has also adopted policies and procedures for pre-approval of all non-audit work performed by Dixon Hughes. In each case, the committeeAudit Committee has also required pre-approval from the committee for any engagement over $10,000. The chair of the committeeAudit Committee is authorized to pre-approve any audit or non-audit service on behalf of the committee,Audit Committee, provided such decisions are presented to the full committeeAudit Committee at its next regularly scheduled meeting.
The Audit Committee has preapproved all expenses of audit-related services.The aggregate fees billed by Dixon Hughes in 20092012 and 20082011 for these services were:
| | | | | | | | | |
| | | 2009 | | 2008 |
| |
| Audit fees | | $ | 510,234 | | | $ | 453,631 | |
| Audit related fees | | | 18,940 | | | | 1,500 | |
| All other fees | | | — | | | | — | |
| Tax fees | | | — | | | | — | |
| | | | | | | | |
| | | 2012 | | | 2011 | |
Audit fees | | $ | 547,473 | | | $ | 374,565 | |
Audit related fees | | | 5,500 | | | | 19,490 | |
All other fees | | | — | | | | — | |
Tax fees | | | 101,375 | | | | 59,035 | |
In the above table, in accordance with SEC’s rules, “audit“Audit fees” are fees paid by First Communitythe Corporation to Dixon Hughes for the audit of First Community’sthe Corporation’s financial statements included in the Annual Report onForm 10-K and for the review of financial statements included in the Quarterly Report on10-Qs, for the audit of First Community’sthe Corporation’s internal control over financial reporting with the goal of obtaining reasonable assurance regarding whether or not the effectiveness of the internal control over financial reporting was maintained in all material respects, and for services typically provided by the auditor in connection with statutory and regulatory filings. “Audit
“Audit related fees” also include merger and acquisition due diligence and audit services, but do not include employee benefit plan audits or “Tax Fees”, neither of which are not performed by Dixon Hughes for First Community.
Ourthe Corporation.The Audit Committee has adopted restrictions on ourthe hiring of any Dixon Hughes partner, director, manager, staff, advising member of the department of professional practice, reviewing partner, reviewing tax professional and any other persons having responsibility for providing audit assurance on any aspect of their certification of First Community’sthe Corporation’s financial statements. These restrictions are contained in theThe Audit Committee Charter. The committee also requires key Dixon Hughes partners assigned to ourthe Corporation’s audit to be rotated at least every five years.
Representatives of Dixon Hughes are expected to be present at the Annual Meeting and will have the opportunity to make a statement if they desire to do so. The representatives of Dixon Hughes also will be available to respond to appropriate questions the stockholders may have at the meeting.
PROPOSAL 2: AMENDMENT TO THE ARTICLES OF INCORPORATION OF
THE COMPANY TO INCREASE THE AUTHORIZED COMMON STOCK
At the Annual Meeting, stockholders will be asked to consider and approve a proposal to amend the Corporation’s Articles of Incorporation, as amended (“Articles of Incorporation”), to increase the number of shares of authorized common stock, $1.00 par value (the “Common Stock”), from 25,000,000 to 50,000,000. The amendment to increase the number of authorized shares of Common Stock was unanimously approved by the Board of Directors of the Corporation on January 26, 2010.
The Articles of Incorporation currently authorize 25,000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock. The proposed amendment to the Articles of Incorporation would increase the aggregate number of shares of authorized capital stock by 25,000,000, from 26,000,000 to 51,000,000 shares. If the amendment is
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authorized by the stockholders, the first sentence of Article FOURTH of the Corporation’s Articles of Incorporation would be amended to read as follows:
“The total number of shares of capital stock that the Corporation has authority to issue is 51,000,000 shares, including Fifty Million (50,000,000) shares of common stock, with a par value of One Dollar ($1.00) per share (hereinafter, the “Common Stock”), and One Million (1,000,000) shares of preferred stock (hereinafter, the “Preferred Stock”), whose par value, voting powers designations, preferences, interest rate, limitations, restrictions and relative rights shall be determined from time to time by resolution of the Board of Directors of the Corporation.”
The Corporation is seeking Stockholder approval to amend its Articles of Incorporation and increase the number of authorized shares of Common Stock for several reasons. First, the Board of Directors has determined that the number of shares of authorized Common Stock should be increased to provide the Corporation with the flexibility to conduct the Corporation’s intended future operations and business strategy, including the issuance, distribution, exchange or reservation of shares of Common Stock for stock dividends, acquisitions, financing, and employee stock compensation plans. Although the Corporation has no present plans, arrangements or understandings with respect to a possible acquisition, newly authorized shares could be used for such purposes. Further, the Board of Directors currently has no specific plans to issue additional Common Stock, except as may be issued pursuant to the Corporation’s stock compensation plan.
Second, under certain circumstances, authorized but unissued shares of Common Stock and Preferred Stock can provide the Board of Directors with a means of discouraging an unsolicited change in control of the Corporation. Considering the current economic climate, the Board of Directors believes that having the flexibility to potentially discourage an unsolicited change in control would be in the best interests of the Corporation and its stockholders. Although the proposed amendment may enable the Board of Directors to issue additional shares of Common Stock in the event of an unsolicited attempt to acquire control of the Corporation as a means of discouraging a hostile acquirer, the Board of Directors has no present intention of using the existing or proposed authorized but unissued Common Stock or the existing authorized but unissued Preferred Stock for such purpose. Further, the Board of Directors is not presently aware of any plans to acquire control of the Corporation.
If stockholders of the Corporation approve the proposed amendment to the Articles of Incorporation, the Corporation will file Articles of Amendment to the Articles of Incorporation of the Corporation with the Secretary of State of the State of Nevada reflecting the increase in authorized capitalization.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE ARTICLES OF INCORPORATION BE AMENDED TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK TO 50,000,000 SHARES.
PROPOSAL 3: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORREGISTERED PUBLIC ACCOUNTING FIRM
For purposes of determining whether to select Dixon Hughes as the independent auditorregistered public accounting firm to perform the audit of ourthe Corporation’s financial statements and ourits internal control over financial reporting for 2010,2013, the Audit Committee conducted a thorough review of Dixon Hughes’ performance. The committeeAudit Committee reviewed:
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| • | Dixon Hughes’ historical and recent performance on the First CommunityDixon Hughes’ historical and recent performance on the Corporation’s audit, including the quality of the engagement team and the firm’s experience, service level, responsiveness and expertise; |
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| • | the accounting firm’s leadership, management structure, client and employee retention and compliance and ethics programs; |
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| • | the record of the firm compared to other similarly sized and reputable accounting firms in various matters, including regulatory, litigation and accounting matters; |
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| • | the PCOAB report of selected Dixon Hughes’ audits; |
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| • | the appropriateness of fees charged; |
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| • | the firm’s familiarity with First Community’s accounting policies and practices and internal control over financial reporting; and |
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| • | the firm’s role and performance in matters involving the SEC. |
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the accounting firm’s leadership, management structure, client and employee retention and compliance and ethics programs;the record of the firm compared to other similarly sized and reputable accounting firms in various matters, including regulatory, litigation and accounting matters;
the Public Company Accounting Oversight Board report of selected Dixon Hughes’ audits;
the appropriateness of fees charged;
the firm’s familiarity with the Corporation’s accounting policies and practices and internal control over financial reporting; and
the firm’s role and performance in matters involving the SEC.
During the course of the committee’sAudit Committee’s review of Dixon Hughes’ performance, companythe Corporation’s representatives interviewed senior management of Dixon Hughes with respect to certain of the matters listed above. Dixon Hughes has been ourthe Corporation’s independent auditor since 2006. The firm is a registered public accounting firm.
Dixon Hughes’ representatives are expected to attend the 2010 Annual Meeting. They will be available to respond to Stockholder questions and will have an opportunity to make a statement if they desire to do so.
We areThe Corporation is asking our stockholders to ratify the selection of Dixon Hughes as ourits independent auditor.registered public accounting firm. Although ratification is not required by ourthe Corporation’s bylaws or otherwise, the Board is submitting the selection of Dixon Hughes to our stockholders for ratification as a matter of good corporate practice. If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select another registered public accounting firm. If the selection is ratified, the Audit Committee still has the discretion to select a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Corporation and our stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTEFOR THE RATIFICATION OF DIXON HUGHES AS THE CORPORATION’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2010.2013.
PROPOSAL 4: ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION
The American Recovery and Reinvestment Act of 2009 (the “ARRA”) was signed into law on February 17, 2009, and imposes significant new requirements for, and restrictions relating to, the compensation arrangements of financial institutions that sold preferred securities to the United States Treasury. These new executive compensation compliance requirements are effective for both new and existing TARP participants during the period that any Treasury Preferred under the TARP remains outstanding pursuant to the TARP CPP, excluding any period in which the U.S. Department of the Treasury only holds warrants to purchase the common stock of the Corporation. The ARRA requires, among other things, that all participants in the TARP permit a non-binding stockholder vote to approve the compensation of the Corporation’s executives, commonly referred to as a“say-on-pay” proposal.
In June 2009, the Corporation, through a public offering, raised sufficient capital that it redeemed in full the outstanding shares of preferred stock held by the United States Treasury. As a result, the Corporation is no longer required to seek an advisory vote on executive compensation. Nevertheless, the Board of Directors has determined that the best way to allow stockholders to vote on the Corporation’s executive pay programs and policies is through this non-binding“say-on-pay” proposal. The Corporation believes that its compensation policies and procedures are strongly aligned with the long term interests of its stockholders. Accordingly, stockholders of the Corporation are being asked to approve the following resolution:
“RESOLVED, that the stockholders approve the compensation of the Corporation’s executives named in the Summary Compensation Table of the Corporation’s Proxy Statement for the 2010 Annual Meeting of Stockholders, including the Compensation Discussion and Analysis and the tabular disclosure regarding named executive compensation (together with the accompanying narrative disclosure) in this Proxy Statement.”
This vote will not be binding on or overrule any decisions by the Corporation’s Board of Directors, will not create or imply any additional fiduciary duty on the part of the Board, and will not restrict or limit the ability of the Corporation’s stockholders to make proposals for inclusion in proxy materials related to executive compensation. However, the Compensation Committee intends to take into account the outcome of the vote when considering future executive compensation arrangements.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
THE STOCKHOLDERS VOTE FOR THE APPROVAL OF THE CORPORATION’S NAMED
EXECUTIVE OFFICER COMPENSATION.
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ADDITIONAL INFORMATION
Stockholder Proposals for Inclusion in Next Year’s Proxy Statement
To be considered for inclusion in next year’s proxy statement, Stockholderstockholder proposals, submitted in accordance with SEC’sRule 14a-8, must be received at ourthe Corporation’s principal executive office by November 20, 2010.13, 2013. Proposals should be addressed to Robert L. Buzzo, Secretary, First Community Bancshares, Inc., P.O. Box 989, Bluefield, Virginia24605-0989.
Other Stockholder Proposals and Stockholder Nominations for Directors for Presentation at Next Year’s Annual Meeting
Our by-lawsThe Corporation’s amended and restated bylaws require that any Stockholderstockholder proposal that is not submitted for inclusion in the next year’s proxy statement under SECRule 14a-8, but is instead sought to be presented directly at the 20112014 Annual Meeting, and any stockholder nominations for directors, must be received at ourthe Corporation’s principal executive office not less than sixty (60)60 days nor more than ninety (90)90 days prior to the anniversary date of the 20102013 Annual Meeting. As a result, proposals, including director nominations, submitted pursuant to these provisions of ourthe bylaws, must be received no sooner than January 27, 201130, 2014 and no later than February 28, 2011.March 1, 2014. Proposals should be addressed to Robert L. Buzzo, Secretary, First Community Bancshares, Inc., P.O. Box 989, Bluefield, Virginia24605-0989 and include the information set forth in those by-laws,bylaws, which are posted on ourthe Corporation’s website. Shareholder nominations for directors may be made only if such nominations are made in accordance with the procedures set forth in Section 2.3 of the Corporation’s amended and restated bylaws. SEC rules permit management to vote proxies in its discretion in certain cases if the Stockholderstockholder does not comply with this deadline, and in certain other cases regardless of Stockholder’sstockholder’s compliance with this deadline.
Other than proposals properly omitted from this proxy statement pursuant to SEC rules and other matters discussed in this proxy statement, the Board of Directors has not received timely notice of any other matter that may come before the annual meeting.
Annual Meeting.Solicitation of Proxies
Proxies may be solicited on behalf of the Board of Directors by mail, telephone, and other electronic means or in person. Copies of proxy materials and the 20092012 Annual Report will be supplied to brokers, dealers, banks and voting trustees, or their nominees, for the purpose of soliciting proxies from the beneficial owners, and wethe Corporation will reimburse such record holders for their reasonable expenses.
Stockholders of Record Requesting Copies of 20092012 Annual Report
Stockholders who own their shares in their individual names (directly) and
who have elected notProxy MaterialsUpon written request, the Corporation will provide, without charge, to receive an annual reportstockholders of record and beneficial owners as of close of business on March 1, 2013 a copy of this proxy statement and the 2012 Annual Report. Any written request for a specific account may request that we promptly mail our 2009copy of this proxy statement or the 2012 Annual Report should be mailed to that account by writing toRobert L. Buzzo, Secretary, First Community Bancshares, Inc. at P. O., P.O. Box 989, Bluefield, Virginia 24605, or calling276-326-9000.
24605-0989.Delivery of Documents to Stockholders Sharing Same Address (Householding)
To reduce the expenses of delivering duplicate proxy materials to its stockholders, the Corporation may deliver only one proxy statement and Annual Report to multiple stockholders who share an address unless the Corporation receives contrary instructions from any stockholders at that address. If you are the beneficial owner, but not the record holder, of shares of First Community Bancshares Stock,the Corporation’s stock, your broker, bank or other nominee may only deliver one copy of this proxy statement and our 20092012 Annual Report to multiple stockholders at the same address, unless that nominee has received contrary instructions from one or more of the stockholders. WeThe Corporation will deliver, upon request, a separate copy of this proxy statement and our 20092012 Annual Report to a Stockholderstockholder at a shared address to which a single copy of the documents was delivered. A Stockholderstockholder desiring to receive a separate copy of the proxy statement and annual report,Annual Report, now or in the future, should submit this request by writing to Broadridge Financial Solutions, Inc. (“Broadridge”), either by calling toll free at(800) 542-1061 or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. Also, beneficial ownersstockholders sharing an address who are receiving multiple copies of proxy materials and annual reports and who wish to receive a single copy of such materials in the future will need to, in the case of beneficial owners, contact their broker, bank or other nominee or, in the case of record owners, contact Broadridge (using the above contact information) to request that only a single copy of each document be mailed to all stockholders at the same address in the future.
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Electronic Access to Proxy Statement and Annual Report
This proxy statement and ourthe 2012 Annual Report may be viewed online at www.proxyvote.com.www.fcbinc.com. If you are a Stockholderstockholder of record, you can elect to access future annual reports and proxy statements electronically by marking the appropriate box on your proxy form or by following the instructions provided if you vote on the internetInternet or by telephone. If you choose electronic access, you will receive a proxy form in mid to late-Marchlate March providing the website address and your choice will remain in effect until you notify usthe Corporation by mail that you wish to resume delivery of a paper copycopies of annual reports and proxyproxies by mail. If your stock is held for you by a bank, broker or another holder of record, please refer to the information provided by that entity holding the stock on your behalf for instructions on how to elect the paper option.
Financial and Other Information — Incorporation by Reference
Financial and other information required to be disclosed in this proxy statement is set forth in our Annual Report onForm 10-K for the fiscal year ended December 31, 2009 under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Quantitative and Qualitative Disclosures About Market Risk”, “Financial Statements and Supplementary Data”, and “Changes in and Disagreements with Accountants on Accounting and Financial Disclosure”, is hereby incorporated herein by reference.
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Appendix A
Independence Guidelines
In accordance with NASDAQ rules, the independence determinations under the guidelines below will be based upon a director’s relationships with First Community Bancshares, Inc. (“FCBI”) during the 36 months preceding the determination (“evaluation period”). For purposes of these guidelines, “family member” means a person’s spouse, parents, children and siblings, whether by blood, marriage or adoption, or anyone residing in such person’s home.
A director will not be independent if the director:
(A) was employed by FCBI during the evaluation period;
(B) accepted or has a family member who accepted any compensation from FCBI in excess of $120,000 during any period of twelve consecutive months within the evaluation period, other than the following;
(i) compensation for Board or committee service;
(ii) compensation paid to a family member who is an employee (other than an executive officer) of FCBI; or
(iii) benefits under a tax qualified retirement plan or non-discretionary compensation.
(C) is a family member of an individual who is employed by FCBI during the evaluation period as an executive officer;
(D) is a family member of an individual who is a partner in or a controlling Stockholder or an executive officer of any organization to which the Corporation made or received payments for property or services that exceed 5% of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more, other than payments:
(i) arising solely from investments in FCBI securities; or
(ii) under non-discretionary charitable contribution matching programs.
(E) is or has a family member who is employed as an executive officer of another entity where any of the executive officers of FCBI serve on the compensation committee of such entity; or
(F) is or has a family member who is a current partner of the Corporation’s outside auditor, or was a partner or employee of the Corporation’s outside auditor who worked on the Corporation’s audit during the evaluation period.
In addition to these guidelines, Audit Committee members are also subject to additional more stringent requirements under NASDAQ Rule 5605(c)(2).
First Community Bancshares, Inc. Annual Meeting of Stockholders
11:30 a.m., local time, Eastern Daylight Time, April 27, 2010
Fincastle Country Club
1000 Country Club30, 2013Corporate Center
29 College Drive
Bluefield, Virginia 24605
Information About Advance Registration for Attending the Meeting
The top portion of your proxy form serves as your admission ticket and it will be required to enter the annual meeting. Upon arrival at the annual meeting you will be asked to present this ticket and appropriate picture identification to enter the meeting.
Attendance at the annual meetingAnnual Meeting is limited to First Communitythe Corporation’s stockholders, members of their immediate family or their named representative. We reserveUpon arrival at the Annual Meeting, stockholders, members of their immediate family or their named representative will be asked to present appropriate identification to enter. The Corporation reserves the right to limit the number of representatives who may attend the meeting.
If you hold your shares directly with the Corporation and you plan to attend the Annual Meeting, you are not required to follow any additional instructions.
A-1
If your shares are held for you by a bank, broker or other institution and you wish to attend the Annual Meeting, please send a meeting registration request containing the information listed below to:
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| • | If you hold your shares directly with the Corporation and you plan to attend the annual meeting, please follow the instructions on the proxy form, which was included in the mailing from the Corporation. |
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| • | If your shares are held for you by a bank, broker or other institutional account and you wish to attend the annual meeting, please send a meeting registration request containing the information listed below to: |
First Community Bancshares, Inc.
Bluefield, Virginia 24605
24605-0989Please include the following information:
Your name and complete mailing address;
The name(s) of any family members who will accompany you;
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| • | Your name and complete mailing address; |
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| • | The name(s) of any family members who will accompany you; |
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| • | If you wish to name a representative to attend the meeting on your behalf, the name, address and telephone number of that individual; and |
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| • | Proof that you own First Community Bancshares, Inc. shares such as a letter from your bank or broker or photocopy of your bank or brokerage account statement. |
If you wish to name a representative to attend the meeting on your behalf, the name, address and telephone number of that individual; and
Proof that you own Corporation shares such as a letter from your bank or broker or photocopy of your bank or brokerage account statement.
If you have any questions regarding admission to the annual meeting, please visit our website atwww.fcbinc.com or call FCB Shareowner Services at(800) 425-0839.
Attendance at First Community Bancshares, Inc.’s Annual Meeting, will be limited to persons presenting an admission ticket and picture identification. To obtain an admission ticket, please follow the instructions above.
call Stockholder Services at (800) 425-0839.Voting in Person at the Meeting
We encourageThe Corporation encourages stockholders to submit proxies in advance of the annual meetingAnnual Meeting by telephone, internetInternet or mail. Alternatively, stockholders may also vote in person at the meeting or may execute a proxy to vote for them at the meeting. If your shares are held for you by a broker, bank or other institution, you must obtain a proxy from that entityinstitution and bring it with you to the meeting to deliver with your ballot in order to be able to vote your shares at the meeting.
A-2Annual Meeting.
P.O. BOX 989 BLUEFIELD, VA 24605-0989 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 NAME THE COMPANY NAME INC. — COMMON THE COMPANY NAME INC. — CLASS A THE COMPANY NAME INC. — CLASS B THE COMPANY NAME INC. — CLASS C THE COMPANY NAME INC. — CLASS D THE COMPANY NAME INC. — CLASS E THE COMPANY NAME INC. — CLASS F THE COMPANY NAME INC. — 401 K 1 OF 2 1 1 VOTE BY INTERNET — www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. Electronic Delivery of Future PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. CONTROL # 000000000000 SHARES 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 PAGE 1 OF 2 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY 0000000000 02 For Withhold For All To withhold authority to vote for any All All Except individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. The Board of Directors recommends that you vote FOR the following: 1. Election of Directors Nominees 01 Allen T. Hamner 02 Richard S. Johnson 03 John M. Mendez For Against Abstain The Board of Directors recommends you vote FOR the following proposal(s): 2 To approve an amendment to the Articles of Incorporation of the Corporation to increase the number of authorized common shares. 3 The ratification of Dixon Hughes PLLC as independent registered public accountants. 4 To approve, on a non-binding advisory basis, the Corporation’s executive compensation. 5 To transact such other business as may properly come before the meeting or any adjournment thereof. NOTE: The shares represented by this proxy when properly executed will be voted in the manner directed herein by the undersigned Stockholder(s). If no direction is made, this proxy will be voted FOR items 1, 2, 3, 4 and 5. If any other matters properly come before the meeting, or if cumulative voting is required, the person named in this proxy will vote in their discretion. 0000044826_1 R2.09.05.010 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnershi p name, by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date JOB # Signature (Joint Owners) SHARES CUSIP # SEQUENCE # Date |
ADMISSION TICKET You are cordially invited to attend the annual meeting of shareholders of First Community Bancshares, Inc. to be held on Tuesday, April 27, 2010 at 11:30 a.m. at Fincastle Country Club, 1000 Country Club Drive, Bluefield, Virginia. You should present the top portion of this card as your admission ticket, and a form of personal identification, in order to gain admittance to the meeting. This ticket admits only the share ho lder(s) listed on the reverse side and one guest, and is not transferable. If shares are held in the name of a broker, trust, bank or other nominee, you should bring with you a proxy or letter from your broker, trustee, bank or nominee confirming your beneficial ownership of the shares. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, Form 10-K is/are available at www.proxyvote.com. FIRST COMMUNITY BANCSHARES, INC. This proxy is solicited on behalf of the Board of Directors Annual Meeting of Shareholders April 27, 2010 The undersigned appoints Samuel G. Hill and Jeffery L. Farmer, or either of them proxies to vote all shares of stock which the undersigned is entitled to vote at the annual meeting of shareholders of First Community Bancshares, Inc., to be held April 27, 2010 or at any adjournment thereof, or on the matter as set forth in the Proxy Statement and on all matters properly presented at the meeting. This instruction and proxy card is also solicited by the Board of Directors of First Community Bancshares, Inc. (“FCBI”) for persons who participate in the FCBI Employee Stock Ownership and Savings Plan. By signing this instruction and proxy card, or by phone or internet, the undersigned hereby instructs First Community Bank, N. A. the trustee of the Plan named above, to exercise the voting rights relating to any shares of Common Stock of FCBI allocable to his or her account(s) as of March 1,2010. The trustee will tabulate the votes received from all participants by April 23, 2010, and shall vote the shares of FCBI Common Stock for which it does not receive voting instruction in the same proportion as the shares voted under the Plan pursuant to instruction. Proxies will be voted as directed. In the absence of specific direction, signed proxies will be voted in accordance with the recommendations of the Board of Directors. Continued and to be signed on reverse side |
*** Exercise YourRightto Vote *** |
IMPORTANT NOTICERegarding the Availability of Proxy Materials |
FIRST COMMUNITY BANCSHARES, INC. |
Investor Address Line 1 1 Investor Address Line 2 15 12 |
Investor Address Line 3 OF Investor Address Line 4 Investor Address Line 5 2 John Sample 1234 ANYWHERE STREET |
Meeting Type:Annual MeetingFor holders as of:March 01, 2010 |
Date:April 27, 2010Time:11:30 AM ESTLocation:Fincastle Country Club 1000 Country Club Drive Bluefield, Virginia |
You are receiving this communication because you hold shares in the above named company. |
This is not a ballot. You cannot use this notice to vote these shares. This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. You may view the proxy materials online atwww.proxyvote.comor easily request a paper copy (see reverse side). |
We encourage you to access and review all of the important information contained in the proxy materials before voting. |
See the reverse side of this notice to obtain proxy materials and voting instructions. |
Broadridge Internal Use Only Job # Envelope # Sequence # # of # Sequence # |
How to Access the Proxy Materials |
Proxy Materials Available to VIEW or RECEIVE: |
1. Notice & Proxy Statement 2. Form 10-K |
Have the 12-Digit Control Number available (located on the following page) and visit:www.proxyvote.com. |
How to Request and Receive a PAPER or E-MAIL Copy: |
If you want to receive a paper or e-mail copy of these documents, you must request one. There is NO charge for requesting a copy. Please choose one of the following methods to make your request: |
1)BY INTERNET: www.proxyvote.com |
2)BYTELEPHONE: 1-800-579-1639 |
3)BY E-MAIL*: sendmaterial@proxyvote.com * If requesting materials by e-mail, please send a blank e-mail with the 12-Digit Control Number (located on the following page) in the subject line. |
Requests, instructions and other inquiries sent to this e-mail address will NOT be forwarded to your investment and other inquiries sent to this e-mail address will NOT be forwarded to your investment advisor. Please make the request as instructed above on or before April 13, 2010 to facilitate timely delivery. To facilitate timely delivery please make the request as instructed above on or before |
Please Choose One of The Following Voting Methods |
Vote In Person:Many shareholder meetings have attendance requirements including, but not limited to, the possession of an attendance ticket issued by the entity holding the meeting. Please check the meeting materials for any special requirements for meeting attendance. At the Meeting you will need to request a ballot to vote these shares.Vote By Internet:To vote now by Internet, go towww.proxyvote.com.Have the 12 Digit Control Number available and follow the instructions. |
Vote By Mail:You can vote by mail by requesting a paper copy of the materials, which will include a proxy card. |
The Board of Directors recommends that |
you vote FOR the following: |
|01 Allen T. Hamner 02 Richard S. Johnson 03 John M. Mendez |
The Board of Directors recommends you vote FOR the following proposal(s): |
2To approve an amendment to the Articles of Incorporation of the Corporation to increase the number of authorized common shares. |
3The ratification of Dixon Hughes PLLC as independent registered public accountants.4To approve, on a non-binding advisory basis, the Corporation’s executive compensation.5To transact such other business as may properly come before the meeting or any adjournment thereof. |
NOTE:The shares represented by this proxy when properly executed will be voted in the manner directed herein by the undersigned Stockholder(s). If no direction is made, this proxy will be voted FOR items 1, 2, 3, 4 and 5. If any other matters properly come before the meeting, or if cumulative voting is required, the person named in this proxy will vote in their discretion. |
Broadridge Internal Use Only xxxxxxxxxx xxxxxxxxxx Cusip Job # Envelope # Sequence # # of # Sequence # |
THE COMPANY NAME INC. — COMMON 123,456,789,012.12345 |
THE COMPANY NAME INC. — CLASS A 123,456,789,012.12345 |
THE COMPANY NAME INC. — CLASS B 123,456,789,012.12345 |
THE COMPANY NAME INC. — CLASS C 123,456,789,012.12345 |
THE COMPANY NAME INC. — CLASS D 123,456,789,012.12345 |
THE COMPANY NAME INC. — CLASS E 123,456,789,012.12345 |
THE COMPANY NAME INC. — CLASS F 123,456,789,012.12345 |
THE COMPANY NAME INC. — 401 K 123,456,789,012.12345 |
THIS SPACE RESERVED FOR SIGNATURES IF APPLICABLE |
Broadridge Internal Use Only Job # Envelope # Sequence # # of # Sequence # |
VOTE BY INTERNET — www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. P.O. BOX 989 BLUEFIELD, VA 24605 ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE — 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: M21186-P90996 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY FIRST COMMUNITY BANCSHARES, INC. For Withhold For All To withhold authority to vote for any individual All All Except nominee(s), mark “For All Except” and write the The Board of Directors recommends that you number(s) of the nominee(s) on the line below. vote FOR the following: Vote on Directors 0 0 0 1. Election of Directors Nominees: 01) Allen T. Hamner 02) Richard S. Johnson 03) John M. Mendez Vote on Proposals For Against Abstain The Board of Directors recommends you vote FOR the following proposals: 2. To approve an amendment to the Articles of Incorporation of the Corporation to increase the number of authorized common shares. 0 0 0 3. To ratify the appointment of Dixon Hughes PLLC as the Corporation’s independent registered public accountants. 0 0 0 4. To approve, on a non-binding advisory basis, the Corporation’s executive compensation program for fiscal 2009. 0 0 0 5. To transact such other business as may properly come before the meeting or any adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date |
ADMISSION TICKET Your are cordially invited to attend the annual meeting of stockholders of First Community Bancshares, Inc. to be held on Tuesday, April 27, 2010 at 11:30 a.m. at Fincastle Country Club, 1000 Country Club Drive, Bluefield, Virginia. You should present the top portion of this card as your admission ticket, and a form of personal identification, in order to gain admittance to the meeting. This ticket admits only the stockholder(s) listed on the reverse side and one guest, and is not transferable. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and the Report on Form 10-K are available at www.proxyvote.com. M21187-P90996 FIRST COMMUNITY BANCSHARES, INC. This proxy is solicited on behalf of the Board of Directors Annual Meeting of Stockholders April 27, 2010 The undersigned appoints Samuel G. Hill and Jeffery L. Farmer, or either of them, proxies to vote all shares of stock which the undersigned is entitled to vote at the annual meeting of stockholders of First Community Bancshares, Inc., to be held April 27, 2010 or at any adjournment thereof, or on the matter as set forth in the Proxy Statement and on all matters properly presented at the meeting. This instruction and proxy card is also solicited by the Board of Directors of First Community Bancshares, Inc. (“FCBI”) for persons who participate in the FCBI Employee Stock Ownership and Savings Plan (“Plan”). By signing this instruction and proxy card, or by phone or internet, the undersigned hereby instructs First Community Bank, N. A., the trustee of the Plan named above, to exercise the voting rights relating to any shares of Common Stock of FCBI allocable to his or her account(s) as of March 1, 2010. The trustee will tabulate the votes received from all participants by April 23, 2010, and shall vote the shares of FCBI Common Stock as directed. In the event any participant in the Plan does not provide voting directions, the Trustee of the Plan shall vote such shares as the Trustee, in its sole discretion shall deem appropriate. Proxies will be voted as directed. In the absence of specific direction, signed proxies will be voted in accordance with the recommendations of the Board of Directors and, in the discretion of the proxy holders upon such other matters as may properly come before the meeting. Continued and to be signed on reverse side |
*** Exercise Your Right to Vote *** IMPORTANT NOTICE Regarding the Availability of Proxy Materials Annual Stockholder Meeting Information FIRST COMMUNITY BANCSHARES, INC. For stockholders as of: March 1, 2010 Date: April 27, 2010 Time: 11:30 a.m. EDT Location: Fincastle Country Club 1000 Country Club Drive Bluefield, Virginia 24605 You are receiving this communication because you hold shares in the above named company. P.O. BOX 989 This is not a ballot. You cannot use this notice to vote BLUEFIELD, VA 24605 these shares. This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. You may view the proxy materials online at www.proxyvote.com or easily request electronic or paper copies of these materials and our 2009 Annual Report on Form 10-K (see reverse side). We encourage you to access and review all of the important information contained in the proxy materials P90996 before voting. See the reverse side of this notice to obtain M21202- proxy materials and voting instructions. |
Before You Vote How to Access the Proxy Materials Proxy Materials Available to VIEW or RECEIVE: 1. NOTICE AND PROXY STATEMENT 2. ANNUAL REPORT ON FORM 10-K 3. FORM OF PROXY How to View Online: Have the 12-Digit Control Number available (located on the following page) and visit: www.proxyvote.com. How to Request and Receive a PAPER or E-MAIL Copy: If you want to receive a paper or e-mail copy of these documents, you must request one. There is NO charge for requesting a copy. Please choose one of the following methods to make your request: 1) BY INTERNET: www.proxyvote.com 2) BY TELEPHONE: 1-800-579-1639 3) BY E-MAIL*: sendmaterial@proxyvote.com * If requesting materials by e-mail, please send a blank e-mail with the 12-Digit Control Number (located on the following page) in the subject line. Requests, instructions and other inquiries sent to this e-mail address will NOT be forwarded to your investment advisor. Please make the request as instructed above on or before April 13, 2010 to facilitate timely delivery. How To Vote Please Choose One of the Following Voting Methods Vote In Person: All persons attending the Annual Meeting must present an admission ticket and picture identification. P90996 Please check the proxy materials for specific instructions on the admission ticket and attending and voting at the Annual Meeting. Vote By Internet: To vote by Internet, go to www.proxyvote.com. Have the 12 Digit Control Number available and M21203- follow the instructions to vote the shares by submitting a proxy via the Internet. Vote By Mail: You can vote by mail by requesting a paper copy of the materials, which will include a proxy card. |
Voting Items The Board of Directors recommends that you vote FOR the following: 1. Election of Directors Nominees: 01) Allen T. Hamner 02) Richard S. Johnson 03) John M. Mendez The Board of Directors recommends you vote FOR the following proposals: 2. To approve an amendment to the Articles of Incorporation of the Corporation to increase the number of authorized common shares. 3. To ratify the appointment of Dixon Hughes PLLC as independent registered public accountants. 4. To approve, on a non-binding advisory basis, the Corporation’s executive compensation. 5. To transact such other business as may properly come before the meeting or any adjournment thereof. This is not a ballot or proxy. You cannot use this notice to vote these shares. P90996 - - M21204 |
