Gary R. Mills, President of the Corporation and Chief Executive Officer of First Community Bank.

Mr. Mills has served as President of the Corporation and Chief Executive Officer (“CEO”) of First Community Bank since August 31, 2013, and has been employed by the Corporation since 1998. Mr. Mills served as Chief Executive Officer of the Princeton Division of First Community Bank from 1998 until 2005; Senior Vice President of Credit Administration from 2005 to 2006; and most recently as Chief Credit Officer of the Corporation from 2007 until his appointment as President and Chief Executive Officer. Mr. Mills is a Certified Public Accountant and holds a Bachelor of Science degree in Business Administration with a concentration in Accounting from Concord University.

David D. Brown, Chief Financial Officer of the Corporation and First Community Bank.

Mr. Brown has been CFOChief Financial Officer (“CFO”) of the Corporation and First Community Bank since May 2006.2006, and has been employed by the Corporation since 2005. Prior to joining the Corporation, Mr. Brown served as Financial Reporting Coordinator of the Corporation from April 2005 to May 2006. Prior to joining the

Corporation, Mr. Brown wasin various positions including Corporate Auditor and Audit Manager of United Bankshares, Inc. from September 1999 to April 2005. From 1997 to 1999, Mr. Brown also practiced in the field of public accounting, from 1997 to 1999 where he practicedconcentrating his work on tax, accounting, and auditing across a variety of industries. Mr. Brown is a CPACertified Public Accountant and holds a MPA degreeMaster of Public Accountancy and Bachelor of Science degrees from West Virginia University.

Martyn A. Pell, President of First Community Bank.

Mr. Pell has served as President of First Community Bank since August 31, 2013, and has been employed by the Corporation since 1993. Prior to his current position, Mr. Pell worked in a plethora of business units, including but not limited to accounting, internal audit, credit administration, and commercial lending. He has also previously served as the Chief Financial Officer for Greenpoint Insurance Group, a subsidiary of the Corporation. Mr. Pell holds a Bachelor of Science degree in Business Administration from West Virginia University, where he graduatedmagna cum laude, and a Master of Business Administration degree from Wake Forest University.

Robert L. Buzzo,Vice President and Secretary of the Corporation, President Emeritus 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 2000.2000, and has been employed by the Corporation since 1973. Mr. Buzzo previously served as President of First Community Bank and currently serves as its President Emeritus. From October 1994 until June 2000, Mr. Buzzo was the Chief Executive Officer of First Community Bank—Bank – Bluefield, a division of First Community Bank. Prior to 1994, Mr. Buzzo held otherserved in a variety of leadership positions since joining the Corporation in 1973.positions.

E. Stephen Lilly, Chief Operating Officer of the Corporation, Executive Vice President Chief Operating Officer, and Chief InformationOperating Officer of First Community Bank.

Mr. Lilly has been Chief Operating Officer (“COO”) of the Corporation and First Community Bank since June 2000. On January 25, 2011, Mr. Lilly was promoted to Chief Information Officer of First Community Bank. Mr. Lilly has been employed by the Corporation since 1997. Mr. Lilly has also served in a variety of banking positions and capacities with the Corporation and other banking organizations where he supervised and managed a number of operational elements, implemented new technologies, and successfully migrated and consolidated bank operations and data. Mr. Lilly also has significant experience in process engineering and customer service management.

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,From 2001 until 2005, Mr. Schumacher served as the Corporation’s CFO and Senior Vice President—Finance from 2001 until 2005.President – Finance. In addition, Mr. Schumacher has previously led First Community Bank’s Trust Departmentand 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,Certified Public Accountant, 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 available at the Corporation’s website under the “Governance Documents” tab of “Corporate Profile” at www.fcbinc.com. This section of the website makes available all of the Corporation’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’sBoard’s Role in Risk Oversight. The Corporation’sBoard of Directors believes that each member of its 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 the Board of Directors to be actively engaged in Board discussions, review materials provided to them, and know when it is appropriate to request further information from management and/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 recommendations contained in regulatory examinations.

Because the Corporation believes risk oversight is a responsibility for each member of the Board of Directors, it does not concentrate the Board’s responsibility for risk oversight in a single committee. Instead, each of the committeescommittee concentrates on specific risks for which it has anpossess expertise, and each committee is required to regularly reportreports to the Board of Directors on its findings. For example, the Audit 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 its programs to report and monitor fraud and by monitoring the Corporation’s internal controls over financial reporting. The Corporation’s Compensation and Retirement Committee’sCommittee monitors risks associated with the design and administration of the Corporation’s compensation.

The Board’s role in monitoringrisk oversight of the risks related toCorporation 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 compensation structure is discussedcommittees providing oversight in further detail below.connection with those efforts.

Director Independence. The Corporation currently has 6 independent directors out of 7 directors. Directors

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 expects to continue to satisfy, its objective criteria developed by the NASDAQ listing standards and the SEC rules. Based on the subjective and objective criteria developed by the NASDAQ listing standards and the SEC rules, the Board of Directors determined that at least a majoritythe following nominees and current members of the Board should consist of Directors are independent: W. C. Blankenship, Jr.; Franklin P. Hall; Richard S. Johnson and I. Norris Kantor. William P. Stafford, II is not independent directors. For a director to be considered independent, the Board must determine that the director does not have any direct or indirect material relationship withbecause he is an executive officer of the Corporation. The Board has established guidelines to assist itWilliam P. Stafford is not independent because he is a Family Member, as defined in determining director independence (see Appendix A to this proxy statement), which conform to the independence requirements of the NASDAQ Stock Market listing rules. In addition to applying these guidelines, the Board will consider all relevant facts and circumstancesRules, of William P. Stafford, II. Although neither an Executive Officer nor family member of an Executive Officer, Samuel L. Elmore is not independent because he was employed in making an independence determination.

In the course of the Board’s determination regarding independence, it considers any transactions, relationships and arrangements as requireda part-time consulting capacity by First Community Bank, the Corporation’s independence guidelines. In addition, with respect to all directors,wholly owned banking subsidiary, during 2013 in the Board considered the amount of the Corporation’s discretionary charitable contributions to charitable organizations where any of the directors serve as an officer, director or trustee, and determined that the Corporation’s contributions to each of the charitable organizations constituted less than the greater of $200,000 or 5% of the charitable organization’s annual consolidated gross revenues during the applicable organization’s last completed fiscal year.Raleigh County, West Virginia market.

All

The NASDAQ listing standards contain additional requirements for members of the Audit Committee, the Compensation and Retirement Committee and the Governance and Nominating Committee. All of the directors serving on the Audit Committee and Compensation and Retirement Committee are independent under the additional requirements applicable to such committees. Two members of the Governance and Nominating Committee are independent with the third, Samuel L. Elmore, currently serving under the exceptional and limited circumstances exemption under NASDAQ Rule 5605(e)(3). The Corporation's Board of Directors believes that Mr. Elmore's service on the Governance and Nominating Committee is in the best interests of the Corporation and its Shareholders as further described beginning on page 12. The Board considered the following relationship in evaluating the independence of the Corporation’s Directors and determined that this relationship does not constitute a material relationship with the Corporation and satisfies the standards for independence:

Director Johnson serves as Chairman, President and CEO of The Wilton Companies. The Wilton Companies are comprised of three (3) entities under common management. During 2014, the Corporation and its affiliates leased office space from two (2) of these entities, one (1) of which leases expired on August 31, 2014, and was not renewed. Director Johnson holds an equity ownership in this entity. The annual lease payments did not exceed the greater of five percent (5%) of The Wilton Companies’ and its subsidiaries’ consolidated revenues for 2014 or $200,000, and therefore, the relationship satisfied the standards for independence.

The Board of Directors and Board Meetings

Board Leadership Structure. William P. Stafford, II currently serves as CEO of the Corporation and as Chairman of the Board of Directors. The role of the CEO is to set the strategic direction for the Corporation and manage its performance, while the Chairman of the Board is tasked with setting the agenda for Board meetings and presiding over meetings of the Board. The Board of Directors believes combining the roles of CEO and Chairman of the Board is in the best interests of the Corporation at this time, as doing so best positions the Corporation to carry out its strategic plan for core growth; increases value for shareholders; provides for greater accountability and transparency; enhances oversight of operations; and provides for greater Board involvement.

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. Certification of compliance with the Code is required on an annual basis. Only the Board of Directors may waive a provision of the Code for directors and executive officers and shall only do so for just cause in an instance where the underlying ethical objective will not be independentviolated. No waivers were granted to any director or officer during 2014. 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 new employees during orientation, is available in the employee handbook and on the Intranet, and can be found posted on bulletin boards at each location of the Corporation and its subsidiaries. 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. Stockholders may address such communication to Secretary, First Community Bancshares, Inc., P. O. Box 989, Bluefield, Virginia 24605-0989, and all communications so addressed will be forwarded to the Chairman of the Board of Directors or to the individual director to whom such correspondence is directed, without exception.

Board Meetings

The Board of Directors held nine (9) regular meetings, as defined by NASDAQ. Memberswell as five (5) special meetings, three (3) meetings held jointly with the Bank board, and one (1) strategic planning session, in 2014. No member attended fewer than seventy-five percent (75%) of the Board meetings or 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 2014 Annual Meeting.

Board Committees

The Board of Directors has adopted written charters for three (3) of its four (4) standing committees: the Audit Committee, the Compensation and Retirement Committee (the “CRC”), and the Governance and Nominating Committee. A current copy of each committee charter is available for review and/or printing on the Corporation’s website atwww.fcbinc.com.

Audit Committee.The members of the Audit Committee also must satisfyare Director Blankenship, who chairs the Committee; Director Hall; and Director 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; and (6) review of the organization and scope of the Corporation’s internal audit function and its disclosure and internal controls. The Audit Committee held eight (8) meetings during 2014. The Audit Committee’s report is on page 31.

Executive Committee. The members of the Executive Committee are Director Stafford II, who chairs the Committee; Director Blankenship; Director Elmore; Director Hall; Director Johnson; Director Kantor; and Director Stafford. The Executive Committee met on two (2) occasions in 2014. 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 Board by law.

Compensation and Retirement Committee. The members of the CRC are Director Johnson, who chairs the Committee; Director Blankenship; and Director Kantor. 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 President and 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 President and CEO of the Corporation provide the CRC with a separate Securitiesperformance assessment and Exchange Commissioncompensation 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 2014, the CRC directly engaged Mathews, Young – Management Consulting (“SEC”Mathews Young”) independence requirement, which provides that they mayto provide compensation analysis and advice regarding base and 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 base and incentive compensation; and (iii) developed recommendations for an incentive program for the special assets department. Mathews Young was not accept directlyretained to provide any other services to the Corporation.Retention of Mathews Young by the CRC raised no conflicts of interest. The CRC held four (4) meetings in 2014. The CRC’s report is on page 18.

Compensation and Retirement Committee Interlocks and Insider Participation. None of the members of the CRC are or indirectly any consulting, advisorywere formerly officers or other compensatory fee fromemployees of the Corporation or any of its subsidiaries other than their directors’ compensation.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 are Director Blankenship, who chairs the Committee; Director Kantor; and Director Elmore. Both Mr. Blankenship and Mr. Kantor are independent. Mr. Elmore is currently serving as a non-independent member of this Committee pursuant to the exceptional and limited circumstances exemption under NASDAQ Rule 5605(e)(3). While Mr. Elmore was employed by the Corporation’s banking subsidiary until May 31, 2013, in a part-time consulting capacity and, as such, is not currently deemed to be independent, he is not an Executive Officer, employee or Family Member of an Executive Officer under the NASDAQ Market Rules. The Corporation's Board of Directors has considered the current Board membership, the existing membership of all Board committees, and Mr. Elmore’s extensive qualifications and experience in the banking industry, and believes that Mr. Elmore's service on the Governance and Nominating Committee is necessary to ensure diversification among the independent Board committees, and is therefore in the best interests of the Corporation and its shareholders. 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 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 reviews, approves, and ratifies transactions with related persons. This Committee held five (5) meetings in 2014.

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, geographic representation, 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 prescribed by law.

Board Leadership Structure. The Corporation separates the roles of CEO and Chairman of the Board in recognition of the differences between the 2 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 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. A waiver of any standard 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 2011. 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 held 9 regular meetings and 7 special meetings in 2011. 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 2011 Annual Meeting.

Board Committees

The Board of Directors has adopted written charters for its 4 standing committees: the Audit Committee, the Executive Committee, the Compensation and Retirement Committee (the “CRC”), and the Governance and Nominating Committee. Except for the Executive Committee Charter, 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 Corporation’s compliance with legal and regulatory requirements, 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 them, 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 reportingprocess 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 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) oversight of the Corporation’s compliance program. The Audit Committee held 11 meetings during 2011. The Audit Committee’s report is on page 31. On July 26, 2011, the Board of Directors voted to amend the Audit Committee Charter, which is included as Appendix C to this proxy statement.

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 2011. 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. This CRC’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 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 CRC also administers all incentive and stock option plans for the benefit of such officers and directors eligible to participate in such plans. The CRC held 3 meetings and 2 work sessions in 2011. The CRC’s report is on page 19.

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 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 are 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 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 3 meetings in 2011.

The Committee will consider all stockholder 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, Virginia 24605-0989. The Corporation believes that directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the stockholders. The Corporation strives to have a Board representing diverse experience with respect to policy making decisions in business, government, education and technology, and in areas that are relevant to the Corporation’s overall business activities.

The Committee also considers candidates recommended by current directors, company officers, employees and others. The Committee evaluates all nominees for directorsdirector 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.The non-management directors met without any management directorsdirector or employeesemployee present 2 times last year. Director Stafford, II served as chair of these meetings.on at least two (2) occasions in 2014.

COMPENSATION DISCUSSION AND ANALYSIS

This section provides an overview anda brief explanation of the material information relevant to understanding the objectives, policies and philosophy underlying the Corporation’s compensation programs for named executives and of the general design philosophy of the Corporation’s compensation policies and practices foras well as other employees included in any incentive compensation program. To assist you in understanding certain disclosures that the

The Corporation is required to provide in this section, which is referred to as the “CD&A,” the Corporation provides information relating to executive and director compensation in a series of tables and accompanying narrative. At the 2011 Annual Meeting of Stockholders, the stockholders approved the compensation’s Compensation Philosophy

The goal of the Corporation’s namedexecutive compensation program is to retain and reward officers who create long-term value for stockholders through consistent financial and operating performance coupled with strong leadership. This overriding objective affects all elements of the compensation program. The intent is to align an executive’s long-term interests as closely as possible with those of stockholders and to motivate high performing executives for fiscal year 2010, which the CRC considered in its decisions to continue with the objectives, policies and philosophy underlying the Corporation’s compensation programsCorporation for executives.long productive careers.

2011 CompensationSummary of Executive OfficersAwards in 2014

It is in

The CRC and management believe the Corporation’s best interests to maintainare served by maintaining consistency in its compensation philosophy and implementation but it also believesand that 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,

Based on 2013 performance, which did not meet expectations sufficient to warrant base compensation enhancement or annual incentive compensation, the Corporation believes it is appropriate for some components ofdid not approve any compensation to remain leveladjustments, award any discretionary cash bonuses, or decline during periods of economic downturn.

The CRC and management evaluated and established 2011 executive compensation in the context of the Corporation’s 2010 performance and the current economy coupled with a universal awareness of the current focus placed on executive compensation. While the Corporation believes that the compensation of its executive officers has consistently been balanced and fair, it felt the need to take a conservative approach to settinggrant any long-term incentive equity compensation for in 2011. Consequently, Mr. Mendez proposed, and the CRC agreed, that the named executive officers would receive neither salary adjustments nor bonuses for 2011. In addition, no long-term incentive awards were granted to any of the named executives in 2014.

However, in both 2013 and 2014, the Corporation achieved a three-year average growth rate in core diluted earnings per share of not less than five percent (5%). Accordingly, a scheduled vesting of restricted stock awarded to named and other than to Mr. Brown, no such awards have been made to anyexecutives and other employees on May 28, 2013 and December 31, 2013, under the First Community Bancshares, Inc. 2012 Omnibus Equity Compensation Plan, occurred on May 28, 2014, resulting in the vesting of 17.2% of the other named executives since 2003.restricted stock awards previously granted and it is anticipated that an additional vesting of 17.2% will occur on May 28, 2015.

Consistent with past practice, going forward the Corporation 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. Although the Corporation made no incentive awards in 2011, ordinarily, it attempts to use the equity portion of its compensation program to reward behavior that produces steady, long-term performance. The Corporation believes 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 CEO Compensation for 2011

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 the Director of Human Resources. Mr. Mendez does not participate in the final determination of his own compensation.

In determining Mr. Mendez’ compensation for 2011, the CRC considered the Corporation’s performance and also considered Mr. Mendez’ individual performance in 2010.

During 2010, Mr. Mendez achieved his principal financial goals, including successful performance against the 2010 operating budget and the continued enhancement of the Corporation’s primary capital ratios. For the year, the Corporation exceeded its budgeted earnings target. Revenue gains along with strong expense control led to favorable budget performance for the year and a substantial turnaround from the preceding year’s results and the recession induced drop in operating performance during the 2 preceding 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 2010, the Corporation also realized earnings and operating benefits drawn from the Corporation’s last banking acquisition in mid-year 2009. Mr. Mendez also assisted in the identification of further acquisition targets in execution of the Corporation’s strategic plan for growth. Mr. Mendez also led renewal of the Corporation’s strategic plan, which was updated 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 2010 as the Corporation managed through a difficult credit and real estate environment and a painfully slow upturn in the regional and national economies. Asset quality measures for the Corporation were maintained at satisfactory levels throughout the year and continued to compare quite well 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 2010, 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 2010.

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 Group, Inc. In 2011, the Corporation was able to return $7.155 million to common stockholders through dividends. As an indication of his alignment with stockholders, Mr. Mendez is the direct and indirect owner of 27,639 shares of the Corporation’s Common Stock.

Determining Compensation for the Corporation’s Other Named Executives in 2011

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.

David D. Brown. Mr. Brown has served as CFO 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 in 2010 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, including FDIC-assisted transactions.

Robert L. Buzzo. Mr. Buzzo has been President of First Community Bank and a member of the Corporation’s executive team since 2000 and has held other leadership positions since 1973. In 2010, Mr. Buzzo was primarily responsible for First Community Bank’s largest banking region, overseeing the achievement of certain loan and core deposit growth objectives. Under Mr. Buzzo’s leadership, the divisions comprising the Southern Region were among the top performing areas, achieving growth and profitability results at or near target levels.

In addition, Mr. Buzzo continued his supervision of the insurance and wealth management divisions of the Corporation. Both divisions fell short of their revenue goals due primarily to the continued weak economic conditions.

E. Stephen Lilly. Mr. Lilly has served as Chief Operating Officer since 2000 and has been employed by the Corporation since 1997. His direct reports include the Director of Information Technology, the Vice President of Project Management, Vice President of Network Administration, Vice President of Operations, and the Vice President of Branch Administration. In 2010, Mr. Lilly designed and implemented the Corporation’s strategic plan for commercial services and implemented an enhanced management information reporting system as well as online teller. Mr. Lilly also successfully renegotiated major operating and technology contracts for the Corporation, reorganized the Corporation’s retail credit and loan operations departments as well as the secondary market lending division, and commenced the Corporation’s core system evaluation. In addition to the preceding performance measures, Mr. Lilly continued oversight of the technology, information security and facilities departments.

Robert L. Schumacher. Mr. Schumacher has served as General Counsel since 2005, Secretary of First Community Bank since 2001, and has been employed by the Corporation since 1983. He is responsible for managing the legal affairs of the Corporation and all subsidiaries. His direct reports include the Director of Human Resources, the Director of Enterprise Risk Management, and the Legal Department.

Mr. Schumacher’s strategic and operational goals in 2010 included the design and implementation of the Corporation’s incentive program; researching and analyzing cost savings and strategic advantages of the Corporation’s wholly-owned subsidiary bank’s conversion from national association to state charter; development and implementation of a comprehensive risk management program; managing and successfully resolving the Corporation’s pending litigation; and assistance in the successful merger and acquisition of suitable candidates located within the Corporation’s footprint. Mr. Schumacher accomplished most of his goals for 2010.

The Corporation’s Compensation Philosophy

The goal of the Corporation’s executive compensation program is to retain and reward officers who create long-term value for stockholders. This overriding objective affects all elements of the compensation program. The Corporation’s compensation program rewards continued financial and operating performance coupled with strong leadership. The intent is to align the executives’ long-term interests with those of stockholders and to motivate the executive team to continue with the Corporation for long productive careers.

Considerations Used to Determine Compensation Program

Below is a summary of important considerationsfactors considered by the CRC affecting compensation for the named executives. For 2011, theexecutive officers. The CRC performed its evaluation of compensation in light of the executive’s performance, the Corporation’s performance, the current economic situation,environment, and the prevailing public sentiments and concern regardingCorporation’s long-standing practice of prudent executive compensation.compensation administration.

Emphasis on ReliableConsistent and RelativeSustained Performance. The Corporation’s compensation program provides pay opportunities for those executives demonstrating superior performance for sustained periods of time.periods. Each of the 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-term success. In evaluating sustained performance, the Corporation also gives weight to the relative performance of each executive in his or her particular industry segment or function.

Emphasizing consistent, long-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 The CRC also uses its judgment in determining the amount of bonus or equity award,named executive compensation adjustments and incentive awards, if any. The Corporation considers the current year as well as past and expected performance in compensation decisions. This long-term view has the effect of moderating compensation levels and annual adjustments and awards.encouraging executives to focus on sustaining acceptable, long-term financial performance.

Importance of Corporation Results. The CRC places substantial weight on the named executive’s contribution to the Corporation’s overall financial success, as opposed to limiting its focus strictly to an individual business or function.including achievement of short and long-term strategic goals and annual financial results. 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 versus Formula DrivenVersus Formula-Driven. The CRC does not use formulas in determining the level or mix of compensation. It evaluates a wide range of quantitative and qualitative factors, which include consistency in reaching financial and growth targets,targeted goals, 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 the Compensation Program. The CRC views the Corporation’s compensation program with a long-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 deferred or can only be realized upon retirement. The Corporation believes this will provideprovides a strong incentive to manage the Corporation for the long-termlong term with a clear message to avoid excessive risk in the near term. The CRC establishes goals and objectives with a mix of quantitative and qualitative performance elements in order to avoid excessive weight on 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 the Corporation’s values.

The CRC reviews the incentive compensation arrangements of the Corporation’s named executives with the Corporation’s senior risk officer to ensure that their incentive compensation arrangements do not encourage them to take unnecessary and excessive risks that threaten the value of the Corporation. The CRC also reviews the compensation arrangements of the Corporation’s other top executives. The CRC concluded that the Corporation’s compensation policies and practices do not encourage excessive or inappropriate risk taking and instead encourage behaviors that support sustainable long-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 risk investments at the expense of long-term company value. Rather, the Corporation’s annual incentive compensation is based on balanced performance metrics that promote a disciplined progress focused on longer-term goals.

Future Compensation Opportunity. The CRC intends to continue to provide a mix of different compensation elements. It considers current compensation versus long-term compensation and cash versus equity elements. It

views cash payments as reflective of current or recent performance and stock payments as a means to encourage long-term behavior and 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.

In 2011,2014, the CRC continued its intensive review of the relationship between risk management and incentive compensation to ensure that incentive compensation does not encourage unnecessary or excessive risks. The CRC also reviewsreviewed the relationship between risk managementincentive compensation arrangements for the Corporation’s named executives and other top executives in various manners to ensure that their incentive compensation arrangements do not encourage them to take unnecessary and excessive risks that threaten the value of the Corporation. The CRC concluded that the Corporation’s compensation policies and practices overall corporate strategydo not encourage excessive or inappropriate risk and instead encourage behaviors that support sustainable long-term value creation. For instance, the CRC does not use highly leveraged, short-term incentives that drive high-risk investments at the expense of long-term company value. Rather, the Corporation’s annual incentive compensation is based on balanced performance metrics that promote disciplined progress focused on longer-term goals.

Future Compensation Opportunity. The CRC intends to continue to provide a mix of different compensation elements. The CRC believes that each named executive compensation.should have a portion of his or her compensation be contingent upon how well the Corporation operates and how well its stock performs in the long run.

Use of Compensation Consultants. Because of the enhanced level of regulation and scrutiny on executive compensation, the CRC sought input from Mathews, Young—Management Consulting (“Mathews Young”) regarding the 2011 incentiveretains independent compensation planconsultants as needed to provide technical advice and information related to compensation for all employees of the Corporation. In 2014, Mathews, Young - Management Consulting was the independent consultant of the CRC. The Corporation did not retain a separate compensation consultant. In regard to benchmark data,With the guidance of Mathews Young, the CRC considersconsidered executive compensation at otheras a whole, including all of the aforementioned factors, as well as comparison to a long-established peer group of similarly sized and situated financial service companies as only 1 of numerous factors in setting pay.institutions. The CRC does not target a specific percentilecompensation levels within this group of perceived peers andinstitutions, but rather uses the comparative data only as a reference tool after determining the types and amounts of compensation based upon itsthe CRC’s own evaluation.

Employment Agreements. ThePrior to his employment as CEO of the Corporation, Mr. Stafford, II, served solely as an independent director and Chairman of the Board of the Corporation, and was accordingly under no employment agreement. Upon Mr. Stafford’s employment and since reorganization of the executive management team, management and the CRC have been developing an improved, prototype executive employment agreement. When complete, the CRC anticipates each of the Corporation’s key executives, including each of the named executives, haveexecuting the new prototype agreement. The new agreements will result in greater uniformity among the executive officers concerning the terms of their employment and treat the executive officers as a team. The execution of said agreements will be reported on a Form 8-K upon execution.

With the exception of Mr. Stafford, II, all named executives were covered in 2014 by previously executed employment agreements, each of which include change of control protection for the executivesexecutive and non-compete and non-solicitation requirements for the protection of the Corporation.

The employment agreementsagreement with Messrs. Mendez, Buzzo, andMr. Lilly, wereoriginally entered into on October 7, 2002, was amended and restated as of December 16, 2008, to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “IRS Code”), and initial employment agreements were entered into with Messrs. Schumacher and Brown. The Corporation describes all of these agreements in more detail below.

The amended and restated employmentamended. Mr. Lilly’s agreement with Mr. Mendez hadhas an initial term of 3three (3) years and provides that beginning on the commencement of the employment period under the agreement and on each succeeding January 1^st the term of the agreement would automatically be extendedis renewed for an additional 3 years,three (3) year term each January 1^st unless the Corporation or Mr. Mendez givesLilly give notice that the employment term will not thereafter be extended.

In the event there is a change of control of the Corporation and Mr. Mendez’ annualLilly’s employment is terminated, either voluntarily or by the Corporation, within two (2) years of such change of control, the Corporation will pay Mr. Lilly severance pay in the form of a lump sum payment of 2.99 times his base salary was $392,902 for 2011. Thethen in effect on the date of termination. Furthermore, the Corporation may terminate Mr. Mendez’Lilly’s employment at any time for “Cause” (as defined in histhe employment agreement) without further obligation owed to Mr. Mendez.owed. If the Corporation terminates Mr. Mendez’ employment for any reason other than for “Cause” or if heMr. Lilly terminates his employment for “Good Reason” (as defined in histhe employment agreement), the Corporation will generally be obligated to provide the compensation and benefits specified in the agreement for the balance of the term of the agreement, but not less than 30thirty (30) months following the date of termination. Upon the termination of his employment, Mr. MendezLilly will be subject to non-competition and non-solicitation restrictions.

If Mr. MendezLilly 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’his 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 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 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 in effect on the date of termination.

On December 16, 2010, the Board of Directors, in concert with the CRC, amended the agreement with Mr. Mendez to waive the agreement’s provision for standard cost of living increases.

The December 16, 2008 employment agreements with Messrs. Buzzo and Lilly supersede and replace the employment agreements for Messrs. Buzzo and Lilly entered into in 2002. Each agreement has an initial term of 3 years, and, similar to Mr. Mendez’ agreement, each is renewed for an additional 3 year term each January 1^st unless the Corporation or the individual executive gives notice that the employment term will not be extended.

In the event 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 employment within 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 previously entered into initial employment agreements with Messrs. SchumacherMills, Brown and Brown as ofPell on December 16, 2008. These agreements contain substantially similar terms and are modeled after the agreement with Mr. Mendez’ agreement. Mr. Schumacher’s agreement hasLilly. The agreements with Messrs. Mills, Brown and Pell have an initial term of 3two (2) years, and isare renewed for an additional 3 year termtwo (2) years each January 1^st 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 2 years, and is renewed for an additional 2 year term each January 1^st unless the Corporation or Mr. Brownthe respective executive gives notice that the employment term will not be extended. Mr. Schumacher’s agreement providesMills’, Mr. Brown’s, and Mr. Pell’s agreements provide for a lump sum payment of 2.99 times base salary, and Mr. Brown’s agreement provides for a lump sum payment of 22.00 times base salary, in the event of a change of control coupled with terminated employment either without “Cause” by the Corporation or by the executives for “Good Reason” (as defined in their respective agreements). Furthermore, the Corporation may terminate the employment of Messrs. Mills, Brown, or Pell at any time for “Cause” (as defined in each respective officer’s employment agreement) without further obligation owed. If the Corporation terminates employment for any reason other than for “Cause” or if Messrs. Mills, Brown, or Pell terminates his employment for “Good Reason” (as defined in the respective employment agreement), the Corporation will generally be obligated to provide compensation and benefits specified in the agreement for the balance of the term of the agreement, but not less than eighteen (18) months following the date of termination. Upon the termination of their employment, Messrs. Mills, Brown, and Pell will be subject to non-competition and non-solicitation restrictions. If Messrs. Mills, Brown, or Pell die while employed by the Corporation, the Corporation will pay his estate through the end of the month in which his death occurs. If their employment is terminated as a result of permanent disability as determined pursuant to the agreement, then the Corporation has the right to terminate employment before the end of the applicable term.

Compensation Elements Used to Achieve Corporation’sthe Corporation’s Goals

The Corporation uses the compensation elements discussed below as thea means to reward, retain and align executives’ interests with the long-term interests of the Corporation and stockholders.

The CRC attempts to balance the various elements of compensation among annual base compensation (current cash payments), annual incentive awards (when appropriate), and long-term retention and incentive equity awards.

Base Salary and BonusCompensation. The amount of base salarycompensation 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 decisions regarding salary adjustments relevantrelative to peers (within and outside the Corporation). Base salaries arecompensation is paid in the form of cash at regular payroll intervals along with all other employees of the Corporation and reviewed annually.

Annual Incentive Compensation. For each named executive, the CRC may award discretionary cash bonuses during the first quarter of each yearand/or restricted stock incentive compensation based upon the previous year’s performance as evaluated by the CRC, CEO and the CEOPresident (except the CEO doesand President do not participate in his or hertheir own bonus determination)incentive determinations).

Stock OptionsLong Term Retention and Restricted Stock AwardsIncentive Equity Compensation. The Corporation’s equity incentive program is designed to recognize responsibility, reward excellentlong-term performance, retain named executives, and align theirexecutives’ interests with those of stockholders. The CRC has useduses stock options and stock awards sparingly and determined that no such awards were meritedwhich are designed to deliver reasonable, but meaningful, equity interests in 2011 due to the inability of the Corporation to attain its performance goals and objectives in an admittedly difficult economic cycle.

Prior to 2011, non-statutory stock options totaling 332,750 were awarded under the 1999 Stock Option Plan (“1999 Plan”) in 5 installments, each vesting over a 7rolling five (5) year period. 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 5 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. As of the date of the mailing of this proxy statement, all vested but unexercised options under the 1999 Plan are “out of the money” and have no intrinsic value to the named executives.

The 2004 Omnibus Stock Option Plan (“2004 Plan”) was adopted by the Board of Directors in January 2004 and approved by the stockholders at the 2004 Annual Meeting. Two hundred thousand shares of Common Stock were reserved for future issuance pursuant 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 as of the date of the grant and 25% vests on each 1 year anniversary thereafter, so that 100% of such awards is vested as of the third anniversary of the date of grant. No grants were awarded in 2011 to any named executive; however, Mr. Brown has been granted options and/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. 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. As of the date of the mailing of this proxy statement, all vested but unexercised option grants under the 2004 Plan are “out of the money” and have no intrinsic value.

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 7 years, while stock options and restricted stock awards under the 2004 Plan vest ratably over 3 to 4 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 3 years as a percentage of basic shares outstanding was less than 1%. Historically, the named executives have not been subject to stock ownership guidelines.

The 2003 acquisition of The CommonWealth Bank (“CommonWealth”) 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) (“CommonWealth Plan”). These options included awards to employees and directors and were issued by CommonWealth 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 (“TriStone Plan”). These options included awards to employees and directors and were issued by TriStone Community Bank. Options from these 2 acquired plans are fully vested and are exercisable for up to 10 years following the grant date. At December 31, 2011, no option shares were outstanding and exercisable under the former CommonWealth Plan and 137,874 option shares were outstanding and exercisable under the former TriStone Plan.

On February 28, 2012, the Board of Directors approved the First Community Bancshares, Inc. 2012 Omnibus Equity Compensation Plan (the “2012 Plan”), subject to stockholder approval. The terms and conditions ofwhich in turn was approved by stockholders at the 2012 Plan are discussed in great detail below in Proposal 3, and the 2012 Plan itself is provided as Appendix B to this proxy statement. It is the intent of theAnnual Meeting. The Board of Directors to replaceeffectively replaced all prior equity plans with athis single plan approved by the stockholders that conforms to all current best governance practices. As of the date of the mailing of this proxy, there have been eight (8) grants under the 2012 Plan to the named executive officers, none of which occurred in 2014.

Deferred Compensation. The Corporation offers a qualified defined contribution plan known as the KSOP“KSOP” to most of its employees.employees, including the named executives. However, the named executives, as well as certain other key executives, are unable to fully participate in the KSOP due to certain restrictions on their deferrals based upon annual testing limits imposed by the IRSInternal Revenue Code. The Corporation accordingly provides a non-qualified deferred compensation plan discussed(discussed in more detail elsewhere in this proxy statement andstatement) referred to as the WRAP“WRAP” plan as a mechanism to allow highly compensated participants to defer a portion of their compensation that cannotmay not otherwise be deferred under the Corporation’s qualified plan. The WRAP plan is intended to promote retention of key executives by providing a long-term savings vehicle on a tax efficient basis.

Pension Plans. The Corporation provides a defined retirement benefit to the named executives and otherscertain other key executives pursuant to separate agreements, each of which is known as a supplemental executive retention plan (“SERP”). TheEach executive’s SERP is unfunded and designed to provide a benefit to be paid upon separation from service at or after age 62, normal retirement age in the SERP.62. The benefit is targeted at 35%thirty-five percent (35%) of final compensation projected at an assumed 3%three percent (3%) salary progression rate, and subject to an annual benefit limit of $80,000. On December 16, 2010, the Board 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%twenty-five percent (25%) vesting after 5 years of

service; 50% vesting after 10five (5) years of service; 75%fifty percent (50%) vesting after 15ten (10) years of service; plusseventy-five percent (75%) vesting after fifteen (15) years of service; an additional 5%five percent (5%) vesting for each year of service beyond 15fifteen (15) years, withand full vesting after 20twenty (20) years of service or reaching age 62, whichever occurs first.

In connection with the SERP, the Corporation entered into life insurance endorsement method split dollar agreements with Messrs. Mendez, Buzzo, Lilly, and 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.

Considerations Used in Setting BaseCompensation for 2014 andAnnual Incentive Compensationfor 2013 Performance

Each year, and on a continuing basis, the Corporation develops short and long term objectives necessary for it to be successful. These objectives for the most part mirror the Corporation’s strategic plan and annual financial budget planning sessions, during which the Corporation’s performance and growth opportunities are analyzed and goals and objectives are established for the upcoming year(s). These objectives include both objective financial metrics and quantitative and qualitative strategic and operational goals. The CRC Reportuses these objectives to evaluate the performance of the CEO and President. However, each financial metric or quantitative goal used by the CRC in this process is only one of many considerations. Resulting evaluations and any resulting incentive or other compensation is not formula-driven. The CRC, President and CEO believe this process focuses the Board, CRC, CEO, President and the entire management team on factors that create long-term stockholder value. The CRC discusses with the President and the CEO these factors as they relate to their respective compensation. The President and CEO do not participate in the final determination of their respective compensation.

In 2014, the CRC worked closely with the CEO and President to monitor base and incentive compensation of other named executives. The CRC’s goal is to achieve a balance of base compensation and incentives that both contributes to retention of a qualified management team and ensures 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 the President, who develops the objectives that each individual is expected to achieve, and against which their performance is assessed. These objectives are reviewed with the CRC and are also derived largely from the Corporation’s financial, budget and strategic planning processes. The President 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. The President and CEO then report base compensation levels, including any adjustments, as well as proposed annual incentive compensation for each named executive to the CRC. The CRC then approves proposed annual incentive compensation and/or long-term retention and incentive equity compensation, if any, for the named executives, other members of the management team, and other employees. The named executives do not play a role in the determination of their compensation except for their discussion with the President, CEO and/or CRC regarding their individual performance against predetermined objectives.

Prior to appointment to their present positions, Mr. Stafford, II, served as a Board member since 1994 and as Chairman of the Board since 2010, and Mr. Mills served as an officer of the subsidiary bank since 1998 and as its Chief Credit Officer since 2007. When Mr. Stafford, II, and Mr. Mills assumed their present positions in the third (3^rd) quarter of 2013, the CRC set base compensation for each commensurate with the responsibilities of each position and their prior experience, but which also reflected their absence of prior experience in their new roles. With respect to Mr. Stafford, II, initial base compensation also reflected his agreement with the Board to spend the significant majority, but less than all, of his time in management of the Corporation, which allowed Mr. Stafford, II, to remain a member of his firm and continue his law practice on a much reduced scale. Based on consideration of the above factors, and the relatively short time since assuming their present positions, the CRC did not adjust base compensation for the CEO or President in 2014. In addition, based on 2013 performance and the change in strategic direction, the CRC did not award any annual incentive compensation to the named executives in 2014.

Determination Not to Award AnyAnnual Incentive Compensationor Equity Compensation in 2014

As noted above, the CRC determined not to award any discretionary annual incentive compensation or grant any long-term retention and incentive equity compensation to the named executive officers in 2014. This should not be viewed as a negative reflection on the performance of the named executives; rather, this decision reflects less than desired performance of the Corporation in 2013 under a previous strategic plan, the length of time since some of the named executives assumed management of the Corporation in the third (3^rd) quarter of 2013, and the Company’s dedication to focusing on the long-term interests of the shareholders.

Compensation and Retirement Committee Report

The CRC has reviewed the CD&A and discussed that analysis with management. Based on its review and discussions with management, the CommitteeCRC recommended to the Board of Directors that the CD&A be included in the Corporation’s 2014 Annual Report on Form 10-K for 2011 and the Corporation’s 20122015 proxy statement. This report is provided by theThe following independent directors, who comprise the CRC:CRC, provide this report:

William P. Stafford, II (Chairman)

Richard S. Johnson (Chairman)

William P. StaffordW.C. Blankenship, Jr.

I. Norris Kantor

20112014 Summary Compensation Table

(2) (3)

These items The amounts in this column are detailed inon the following table entitled “All“2014 All Other Compensation.”

(3) (4)

The Salary and bonus amounts reported represent the difference between the present value of accrued benefits ofpaid to the named executive’s SERP at the endexecutive officers as a percentage of 2011total compensation are as follows for 2014: Mr. Stafford, II – thirty-six percent (36%); Mr. Mills – eighty-eight percent (88%), Mr. Brown – eighty-seven percent (87%); Mr. Pell – eighty-seven percent (87%) and 2010.

(4)	The Company currently has no non-equity incentive compensation plan.Mr. Lilly – seventy-two percent (72%).

20112014 All Other Compensation

The Corporation provides the named executives with additional benefits as shown in the “All Other Compensation” column of the 2011 “Summary“2014 Summary Compensation Table” shown above, that it believes are reasonable, competitive and in line with the Corporation’s overall executive compensation program. The Corporation provides additional detail of those benefits in the table below.

20112014 Other Benefits

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 of 20% in a LLC. The aircraft is used by the Corporation for travel throughout the subsidiary bank’s operating network, which spans 4 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. Messrs. Mendez, Buzzo, and Lilly were each provided an annual automobile allowance of $8,400; Mr. Schumacher was provided $7,200; and Mr. Brown was 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, Buzzo, Lilly, Schumacher and Brown in the amount of $4,169 as an added perquisite commensurate with job performance, level of responsibility and as a means to provide the named executives comparable benefits to those available 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.

2011 Grants of Plan-Based Awards

The table below provides the following information about equity awards granted (if any) to the named executives in 2011: (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 the Corporation’s 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).

2011 Outstanding Equity Awards at Fiscal Year-EndDecember 31, 2014

The following table includes information on the current holdings of unexercised stock option and stock awards that have not yet vested by the named executivesexecutive officers as of December 31, 2011. This table includes unexercised and unvested option awards, and vesting conditions that were not satisfied as of December 31, 2011.2014. Each equity grant is shown separately for each named executive. The vesting schedule for each outstanding award is shown following this table, based on the grant date.