UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) of the Securities
SECURITIES EXCHANGE ACT OF 1934 (Amendment
(Amendment No. ___ )
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F & M BANK CORP. |
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F & M BANK CORP.
Timberville, Virginia
Notice of Annual Meeting of Shareholders
To the Shareholders of F & M Bank Corp.
The 20212024 Annual Meeting of Shareholders of F&M & M Bank Corp. (the “Company”) will be held Tuesday,on Saturday, May 4, 202118, 2024, at 10:5:00 a.m.p.m., Eastern Time.Time, at The Annual MeetingBarn at Klines Mill, 5379 Klines Mill Road, Linville, Virginia 22834.
At the meeting, you will be a completely virtual meeting of shareholdersasked to consider and will be conducted via live webcast, at www.virtualshareholdermeeting.com/FMBM2021. You will not be able to attendvote on the Annual Meeting in person.
1. | Election of three (3) directors, Anne B. Keeler, |
2. | Ratification of the appointment of Yount, Hyde & Barbour, P.C. as the Company’s independent |
3. | An advisory vote to approve the compensation of the |
Only shareholders of record at the close of business on March 9, 202128, 2024, are entitled to notice of and to vote at the annual meeting or any adjournments thereof.
Whether or not you plan to attend the virtual meeting, you will need the 16-digit control number included on your proxy card and follow the instructions found on your proxy card.
By Order of the Board of Directors | ||
/s/ Candy F. Barkley | ||
Candy F. Barkley, Corporate Secretary |
April 6, 2021
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 4, 2021.
The proxy statement and the Company's 2020Company’s annual report on Form 10-K for the year ended December 31, 2023
are available at http://.snl.com/irweblinkx/GenPage.aspx?IID::;:l017974&GKP=203204
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F & M BANK CORP.
205 South Main Street
Timberville, Virginia 22853
PROXYSTATEMENT
This Proxy Statement is furnished in connection with the solicitation of proxies for useby the Board of Directors (the “Board”) of F & M Bank Corp. (the “Company”) to be used at the annual meeting of shareholders of F & M Bank Corp. (the Company)the Company to be held on Tuesday,Saturday, May 4, 202118, 2024 at 10:5:00 A.M. in a virtual formatp.m., Eastern Time, at www.virtualshareholdermeeting.com/FMBM2021.The Barn at Klines Mill, 5379 Klines Mill Road, Linville, Virginia 22834 and any adjournment thereof (the “Annual Meeting”). The principal executive offices of the Company are located at
The accompanying proxy is solicited by the Board of Directors of the Company (the Board). The cost of the solicitation of proxies will be borne by the Company. Solicitations will be made only by the use of the mail, except that, if necessary, officers, directors and regular employees of the Company, or its affiliates, may make solicitations of proxies by telephone, telegraph or by personal calls. Brokerage houses and nominees may be requested to forward the proxy solicitation material to the beneficial owners of the stock held of record by such persons, and the Company may reimburse them for their charges and expenses in this regard.
Interested shareholdersmay obtain,without charge, a copy of the Company’s Annual Report on Form 10- K10-K for the fiscal year ended December 31, 2020,2023 as filed with the Securities and Exchange Commission (“SEC”), upon written request to Stephanie Shillingburg,Candy F. Barkley, Corporate Secretary, F & M Bank Corp., P. O.P.O. Box 1111, Timberville, Virginia 22853.
In this Proxy Statement, we refer to F & M Bank Corp. and its subsidiaries as a combined entity as the “Company,” unless the context requires otherwise or unless otherwise noted, and we refer to Farmers & Merchants Bank as the “Bank.”
OUTSTANDING SHARES AND VOTING RIGHTS
Only common shareholders of record at the close of business on March 9, 202128, 2024 will be entitled to vote at the Annual Meeting. As of March 9, 2021,28, 2024, the Company had outstanding 3,238,4933,482,529 shares of its common stock, $5$5.00 par value (Common Stock)per share (the “Common Stock”), each of which is entitled to one vote at the Annual Meeting. On the record date, the Company had outstanding 205,327 shares
Shareholders are encouraged to vote using any of the Company’s 5.10% Series A Noncumulative Mandatorily Convertible Preferred Stock,
A majority of votesthe shares of Common Stock entitled to be cast on matters consideredvote, represented at the Annual Meeting in person or by proxy, constitutes a quorum.quorum for the transaction of business at the Annual Meeting. If a share is represented for any purpose at the Annual Meeting, it is deemed to be present for purposes of establishing a quorum. Abstentions“Withhold” votes, abstentions and shares held of record by a broker or its nominees on behalf of beneficial owners (Broker Shares) that are voted on any matter are included in determining the number of votes present or represented at the Annual Meeting. Conversely, Broker Shares that are not voted on any matter will not be included in determining whether a quorum is present.
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If a quorum is established, directors will be elected by a plurality of the votes cast by shareholders at the Annual Meeting, and the auditors will be ratified and the advisory vote to approve the compensation of theour named executive officers will be approved by a majority of the votes cast by shareholders at the Annual Meeting. Broker shares may not be cast in the election of directors or the advisory vote on executive compensation without instructioninstructions from the beneficial owner of the shares. Votes that are withheld or abstentions and Broker Shares that are not voted will not be included in determining the number of votes cast and will not have any effect on the outcome of any of the matters at the Annual Meeting.
All properly executed proxies delivered pursuant to this solicitation will be voted at the number and percentage of shares of Common Stock beneficially owned, as of March 9, 2021, by each of the Company’s directors and nominees, each of the executive officers named in the “Summary Compensation Table” below and all of the Company’s directors and executive officers as a group. For the purposes of this table, beneficial ownership has been determinedAnnual Meeting in accordance with any instructions thereon. If you are a shareholder whose shares are registered in your name, you may revoke your proxy at any time prior to the provisions of Rule 13d-3 underactual voting thereof by (i) filing written notice thereof with the Securities Exchange Act of 1934, as amended, under which, in general, a person is deemed to be a beneficial owner of a security if he or she has or shares the power to vote or direct the voting of the security or the power to dispose of or direct the disposition of the security, or if he or she has the right to acquire beneficial ownership of the security within 60 days.
The cost of the solicitation of proxies will be borne by the Company. Solicitations will be made only by the use of mail, except that, if necessary, officers, directors and regular employees of the Company, or its affiliates, may make solicitations of proxies by telephone or email. Brokerage houses and nominees may be requested to forward the proxy solicitation material to the beneficial owners of the stock held of record by such persons, and the Company may reimburse them for their charges and expenses in this regard.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of March 9, 2021,28, 2024 regarding the number of shares of Common Stock beneficially owned by each director, each named executive officer (see “Executive Compensation”) and by all directors and executive officers as a group. Unless otherwise indicated, all shares are owned directly, and the named person possesses sole voting and sole investment power with respect to all such shares.
Name of Beneficial Owner Amount and Nature of Beneficial Ownership (1) Percent of Class Edward Ray Burkholder Larry A. Caplinger Hannah W. Hutman * Anne B. Keeler * Michael W. Pugh * Christopher S. Runion * Daphyne Thomas * John A. Willingham * Dean W. Withers Peter H. Wray * Barton E. Black Aubrey Michael Wilkerson * Directors and executive officers as a group (18 individuals) 174,416 (2) 5.01 % 189,149 (3) 5.43 % 1,591 1,321 12,921 (4) 6,944 (5) 397 15,003 48,441 (6) 1.39 % 4,991 180,527 (7) 5.18 % 18,922 (8) 371,432 (9) 10.67 %
____________
* Represents less than 1% of the Common Stock.
(1) | Based on 3,482,529 shares of Common Stock issued and outstanding on March 28, 2024. For purposes of this table, beneficial ownership has been determined in accordance with the provisions of Rule 13d-3 of the Securities Exchange Act of 1934 under which, in general, a person is deemed to be the beneficial owner of a security if he has, or shares, the power to vote, or direct the voting, of the security or the power to dispose of, or direct, the disposition of the security, or if he has the right to acquire beneficial ownership of the security within 60 days. |
(2) | Includes 170,905 shares owned by the Company’s Stock Bonus Plan over which Mr. Burkholder has voting power in his capacity as plan trustee. |
(3) | Includes 7,586 shares owned jointly with his spouse, 6,114 shares in Mr. Caplinger’s Traditional IRA, 573 shares indirectly held for Mr. Caplinger’s grandchildren, 361 shares in Mr. Caplinger’s Deferred Compensation Plan, and 170,905 shares owned by the Company’s Stock Bonus Plan over which Mr. Caplinger has voting power in his capacity as plan trustee. |
(4) | Includes 10,600 shares owned jointly with his spouse, and 1,929 shares held by a simplified employee plan for Mr. Pugh’s benefit. |
(5) | Includes 500 shares owned jointly with his spouse, 500 shares held by Mr. Runion’s Non-Qualified Deferred Compensation Plan, 2,752 shares held in Mr. Runion’s Traditional IRA, 2,000 shares held in Mr. Runion’s Simple IRA, and 771 shares held in Heifer Investments LLC of which Mr. Runion owns 100%. |
(6) | Includes 15,441 shares held in Mr. Withers’ Traditional IRA, 705 shares held in Mr. Withers’ Roth IRA, 9,971 shares held by Mr. Withers’ Non-Qualified Deferred Compensation Plan, and 2,575 shares owned by his spouse. |
(7) | Includes 5,959 shares of unvested restricted stock and 170,905 shares owned by the Company’s Stock Bonus Plan over which Mr. Black has voting power in his capacity as plan trustee. |
(8) | Includes 8,107 shares of unvested restricted stock and 359 shares in the Company’s Stock Bonus Plan. |
(9) | Includes 170,905 shares owned by the Company’s Stock Bonus Plan over which Edward R. Burkholder, Larry A. Caplinger, and Barton E. Black have voting power in their capacity as plan trustees, and 15,254 shares of unvested restricted stock. |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information, as of March 28, 2024, unless otherwise noted, regarding the number of shares of Common Stock beneficially owned by all persons known by us who own, or will own under certain conditions, five percent or more of our outstanding shares of Common Stock.
Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership Percent of Class (1) Fourthstone LLC L. Phillip Stone, IV, Managing Member and Beneficial Owner 575 Maryville Centre Drive, Suite 110 St. Louis, MO 63141 8.68 % Barton E. Black P. O. Box 1111 Timberville, VA 22853 Edward Ray Burkholder P. O. Box 1111 Timberville, VA 22853 Larry A. Caplinger P. O. Box 1111 Timberville, VA 22853 302,178 (2) 180,527 (3) 5.18 % 174,416 (4) 5.01 % 189,149 (5) 5.43 %
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(1) | Based on 3,482,529 shares of Common Stock issued and | ||
(2) | A Schedule 13G filed on February 14, 2024, by Fourthstone LLC reported beneficial ownership of 302,178 shares of voting common stock as of December 31, 2023, with shared voting power over 302,178 shares, and shared dispositive power over 302,178 shares. | ||
(3) | Includes 5,959 shares of unvested restricted stock and 170,905 shares owned by the Company’s Stock Bonus Plan over which Mr. Black has voting power in his capacity as plan trustee. | ||
(4) | Includes 170,905 shares owned by the Company’s Stock Bonus Plan over which Mr. Black | ||
(5) | Includes 7,586 shares owned jointly with his spouse, 6,114 shares in Mr. Caplinger’s Traditional IRA, 573 shares indirectly held for Mr. Caplinger’ s grandchildren, 361 shares in Mr. Caplinger’s Deferred Compensation Plan, and 170,905 shares owned by the Company’s Stock Bonus Plan over which Mr. Caplinger has voting power in his capacity as plan trustee. |
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and executive officers, and any persons who own more than 10% of the Common Stock, to file with the SEC reports of ownership and changes in ownership of Common Stock. Officers and directors are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Based solely on review of the copies of such reports furnished to the Company or written representation that no other reports were required, the Company believes that, during 2020,2023, all filing requirements applicable to its officers and directors were timely complied.
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PROPOSAL ONE
- ELECTION OF DIRECTORSThe Board is divided into three classes, with directors to be apportioned as evenly as possible among the classes and serving staggered three-year terms. The term of office for the current Class A directors expires at the Annual Meeting. The Board has nominated such directors, namely Anne B. Keeler, Mark C. Hanna,Daphyne S. Thomas and Peter H. Wray, for re-election at the Annual Meeting. If elected, the Class A nominees will serve for a three-year term atuntil the Annual Meeting. annual meeting of shareholders in 2027, or each in case until their respective successors have been duly elected and qualified.
The persons named as proxies in the accompanying form of proxy, unless instructed otherwise, intend to vote for the election of each of these nominees for directors. If any nominee should become unavailable to serve, the proxy may be voted for the election of a substitute nominee designated by the Board. The Board has no reason to believe that any of the nominees will be unable to serve if elected.
The Board of Directors recommends that youa vote FOR the election of the directorDirector nominees set forth in the Proxy Statement.
INFORMATION CONCERNING DIRECTORS AND NOMINEES
The following information, including the principal occupation during the past five years, is given with respect to the nominees, all of whom are current directors, for election to the Board at the Annual Meeting, as well as all directors continuing in office.
Director Nominees
Class A Directors to serve until the 2027 annual meeting of shareholders.
Nameand Age | DirectorSince | PrincipalOccupation During the Last Five Years | |||
Anne B. Keeler (61) | |||||
2019 | Anne Keeler is the principal of Clover Lane Advisory Services, a financial services advisory practice she launched in 2021. From 1998 to | ||||
Ms. Keeler began her career in financial services, beginning with Farm Credit as a lender and later leading a statewide agribusiness banking unit in Harrisonburg, VA for First Union Bank. She also has experience in the public higher education sector, having worked in the procurement office of James Madison University as a buyer specialist. Ms. Keeler holds a master’s degree in accounting from | |||||
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Nameand Age | DirectorSince | PrincipalOccupation During the Last Five Years | ||
Daphyne S. Thomas (70) | 2021 | Professor Emeritus, Finance & Business Law, James Madison University. Ms. Thomas is a graduate of Virginia Tech, Washington and Lee School of Law, and James Madison University. She was a professor at JMU from 1981 to 2020 and served as the endowed Adolph Coors Professor of Business Administration | ||
Peter H. Wray (55) | 2017 | President of Wray Realty, Inc., and Principal Broker of Triangle Realtors since 2002. Owner/Partner in multiple commercial real estate developments throughout central and western Virginia. Mr. Wray specializes in commercial and investment real estate. He holds a Bachelor of Arts in Environmental Science from the University of Virginia. Mr. Wray is a licensed Broker in Virginia and North Carolina. He is a member of multiple professional organizations including the National Association of Realtors (NAR), the Virginia Association of Realtors (VAR), Shenandoah Valley Economic Partnership (SVEP), International Council of Shopping Centers (ICSC) and the Certified Commercial Investment Members (CCIM). He is a member of the Board of Directors for the Shenandoah Valley First Tee Program. Mr. Wray has assisted with some of the region’s most successful commercial real estate projects. He has represented many local, regional, and national companies with their purchasing, sales, leasing, and development requirements. Mr. Wray has completed a wide array of commercial real estate transactions from office, industrial, and multifamily to shopping centers, self-storage, and hotels. He has | ||
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Directors Continuing in Office
Class B Directors to serve until the 20232025 annual meeting of shareholders)
Nameand Age | DirectorSince | PrincipalOccupation During the | ||
Edward Ray Burkholder (50) | 2015 | Executive Senior Vice President of Balzer and Associates, Inc. since 2012. Mr. Burkholder holds a Bachelor of Landscape Architecture from Virginia | ||
Larry A. Caplinger (71) | 2012 | Executive Vice President of the Company from November 2007 Mr. Caplinger graduated from Blue Ridge Community College with an Associate Degree in Accounting. Mr. Caplinger is also a graduate of the Virginia Bankers Association School of Bank Management and the ABA Agricultural Lending School. He has completed various classes from the American Institute of Banking. He serves as a director of | ||
Michael W. Pugh (69) | 1994 | Chairman of the Board of the Company and the Bank Mr. Pugh has been President of Old Dominion Realty, Inc. for 43 years. He was issued a Virginia Certified General Appraisal license in 1992, a Virginia real estate broker’s license in 1976 and a West Virginia real estate broker’s license in 1982. He has completed numerous classes and certifications related to the real estate field. He has served as a director in the following entities: Bankers Title Shenandoah, F&M Mortgage, Valley Southern Title, Old Dominion Realty, Inc., |
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Nameand Age | DirectorSince | PrincipalOccupation During the Last Five Years | ||
Christopher S. Runion (65) | 2010 | President of Eddie Edwards Signs, Inc. and managing member of Heifer Investments, Mr. Runion has served in these capacities for over 25 years. In 2019, Mr. Runion was elected to the Virginia House of Delegates, serving the 25th District representing portions of Rockingham, Augusta, and Albemarle counties. He holds a Bachelor of Science – Accounting from Virginia |
Directors Continuing in Office
Class C Directors to serve until the 2026 annual meeting of shareholders.
Nameand Age | DirectorSince | PrincipalOccupation During the Last Five Years | ||
Hannah W. Hutman (43) | 2021 | Attorney, Partner at Hoover Penrod PLC, since 2015. Ms. Hutman is a graduate of Columbia Union College and Marshall-Wythe School of Law, College of William and Mary. She has been an attorney practicing in Dayton, Ohio and Harrisonburg with experience in representing creditors, trustees and debtors in bankruptcy proceedings and insolvency matters. She has represented national and regional banks in all aspects of commercial loan transactions and collections, including restructuring obligations, asset liquidations and dispositions, and foreclosure. She is a member of the panel of Chapter 7 trustees for the Western District of Virginia. In addition, she provides legal counsel and services in entity formation and governance matters, financing transactions, contracts, and business asset transfers. She is a former Chair of the Board of Governors of the Bankruptcy Law Section for the Virginia |
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Nameand Age | DirectorSince | PrincipalOccupation During the Last Five Years | ||
Aubrey Michael (Mike) Wilkerson (66) | 2023 | Chief Executive Officer of the Company and the Bank since April 2023; Executive Vice President/Chief Lending Officer from January 2022 to April 2023, and Executive Vice President/Chief Strategy Officer and Northern Shenandoah Valley Market Executive from January 2021 to January 2022. A graduate of Elon University, Mr. Wilkerson began his banking career at Wachovia Bank on January 4, 1982. Mr. Wilkerson’s banking includes experience in Dealer Financial Services, Retail Banking, Private Banking, Commercial Banking, and senior strategic leadership positions. From 2012 to 2018, Mr. Wilkerson was the Business Banking Division Executive for Virginia, Maryland & Washington DC at Wells Fargo (legacy Wachovia Bank). More recently, Mr. Wilkerson served as the Commercial Banking Market Executive from 2018 through 2020 for the Western Mid-Atlantic Region at Wells Fargo. We believe Mr. Wilkerson’s experience in the banking industry and his position as our Chief Executive Officer qualify him to serve on the Board. | ||
John A. Willingham (46) | 2021 | President of Stoneridge Companies, a real estate development and realty company based in Winchester, Virginia, since 2012, and Chief Executive Officer of Stoneridge Outdoor Living, a regional sunroom and outdoor living contractor, since 2021. Mr. Willingham is a graduate of the Pamplin College of Business at Virginia Tech and holds a current CPA license and real estate agent license. He previously has served as a Market President and Senior Commercial Lender with Wells Fargo, Chief Financial Officer of Premier Community Bankshares Inc., and practiced in public accounting with Yount, Hyde & Barbour, P.C., and PricewaterhouseCoopers. Mr. Willingham currently serves as Chairman for the Frederick Winchester Service Authority and is a member of the Board for Grafton Integrated Health Network. He has previously served on the F&M Advisory Board for Winchester/Northern Shenandoah Valley and as a City Councilor for the City of Winchester. Mr. Willingham’s experience and expertise benefits the Company in his understanding of accounting and the Winchester real estate market and qualifies him to serve on the Board. | ||
Dean W. Withers (67) | 2004 | Vice Chairman of the Company since December 2018; Chief Executive Officer of the Company and the Bank from December 2017 to June 2018; President and Chief Executive Officer of the Company and the Bank from May 2004 to December 2017; Executive Vice President of the Bank from January 2003 to May 2004; Vice President of the Bank from 1993 to 2003. Mr. Withers has 39 years of banking experience, including 14 years as President and CEO of the Company and the Bank. He graduated from James Madison University and Graduate School of Banking at LSU. He also serves as a director of Valley Southern Title. In the past, he has served as a director in the Virginia Association of Community Banks, Virginia Bankers Association Benefits Corporation and Rockingham Memorial Hospital Foundation. Mr. Withers’ education, experience and skills as President and Chief Executive Officer and a former commercial lender benefit the Company through his understanding of bank operations, corporate governance, and lending and qualify him to serve on the Board. |
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CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS
General
The business and affairs of the Company are managed under the direction of the Board of Directors in accordance with the Virginia Stock Corporation Act and the Company’s Articles of Incorporation and Bylaws. Members of the Board are kept informed of the Company’s business through discussions with the Chairman of the Board, the Chief Executive Officer, and other officers, by reviewing materials provided to them and by participating in meetings of the Board and its committees.
Board Leadership
The Board of Directors is currently made up of teneleven members, including seveneight outside directors and three current or former officers of the Company. The Board leadership structure includes the Chairman of the Board and Vice Chairman of the Board, neither of whom currently serve as the principal executive officer of the Company. The Board does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board, as the Board believes it is in the best interests of the Company to make that determination based on the position and direction of the Company and the membership of the Board. The Board has determined that having an independent director serve as Chairman is in the best interest of the Company's shareholders at this time. This structure ensuresencourages a greater role for the independent Directorsdirectors in the oversight of the Company and active participation of the independent Directorsdirectors in setting agendas and establishing Board priorities and procedures. Further, this structure permits the CEOChief Executive Officer to focus on the management of the company'sCompany's day-to-day operations.
Risk Oversight
The Board has appointed several committees of the Company and the Bank, including Audit, Asset/Liability (ALCO), Compensation, Operational Risk, and Corporate Governance. In addition to the Board’s overall policy making authority and risk management responsibilities, these committees are delegated authority with respect to their various areas of operation. One area of significant risk to financial institutions revolves around the risks associated with the monitoring of existing and proposed loan relationships. The Board receives a number of monthly and quarterly reports that assist in tracking and mitigating lending risk. The Board has also established an Executive Loan Committee which convenes periodically, either in person or telephonicallyvirtually, to consider new loan requests.
Code of Ethics
The BoardCompany has adopted a broad-based code of Directorsethics for all employees and directors. The Company has approvedalso adopted a Codecode of Ethics for Senior Financial Officers of the Company and the Bank. This document covers the Company’s President/Chief Executive Officer and the Chief Financial Officer. The Code of Ethics states that the Senior Financial Officers are expectedethics tailored to conduct business and act in an honest and ethical manner; provide full, fair, accurate, timely and understandablesenior officers who have financial reports; report any significant deficiencies in the Company’s internal controls over financial reporting; may not use corporate property, information, or position for improper personal gain or compete with the Company; endeavor to protect the Company’s assets and ensure their efficient use; and respect the rights of and deal fairly with the Company’s customers, suppliers, competitors and employees.responsibilities. A copy of the Code of Ethics is available,codes may be obtained without charge uponby request tofrom the Secretary of the Company at P. O. Box 1111, Timberville, VA 22853.
Independence of Directors
The Board of Directors in its business judgment has determined that the following seven9 of its ten11 members are independent as defined by the listing standards of the Nasdaq Stock Market (“Nasdaq”): Edward Ray Burkholder, John N. Crist, Daniel J. Harshman,Larry A. Caplinger, Hannah W. Hutman, Anne B. Keeler, Michael W. Pugh, Christopher S. Runion, Daphyne S. Thomas, John A. Willingham, and Peter H. Wray and Anne B. Keeler.
Although the Company’s securities are not listed on Nasdaq, the Board uses Nasdaq’s definition of Directors has established standards under which we view the following as impairing a director’s independence:
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Board and Committee Meeting Attendance
There were 12twelve meetings of the Board of Directors of the Company in 2020.2023. Each director attended greater than 75% of the aggregate number of meetings of the Board of Directors and meetings of committees of which the director was a member in 2020.2023. The Board of the Bank, which met 12twelve times in 2020,2023, primarily manages all matters for the Bank. All the directors of the Company are also directors of the Bank.
Committees of the Board
The Company has an Audit Committee. The Company does not have a standing nominating committee. The Company does not have a standing Compensation Committee; however, the Bank has a Compensation Committee. Since compensation is paid through the Bank, the Bank’s Compensation Committee evaluates compensation policies and makes recommendations to the Company’s Board. These recommendations are considered for approval by the independent directors of the Company.
The Company does not have a standing nominating committee. Other standing committees for the Bank include the ALCO Committee, Operational Risk andCommittee, Corporate Governance Committee, and Building Committee.
AuditCommittee
The Audit Committee assists the Board of Directors in fulfilling the Board’s oversight responsibility to the shareholders relating to the integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the qualifications, independence and performance of the Company’s independent auditors and the performance of the internal audit function. The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the work of the independent auditors engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attestation services for the Company. The Board of Directors has adopted a written charter for the Audit Committee which can be found on our website at www.fmbankva.com/About/Investor-Relations.
The members of the Audit Committee are Daniel J. Harshman, Christopher S. Runion,Edward Ray Burkholder, Anne B. Keeler, Daphyne S. Thomas, John A. Willingham, and Peter
The Audit Committee met fivefour times in 2020.2023. For additional information regarding the Audit Committee, see “Audit Information-Audit Committee Report” on pages 19 and 20page 26 of this Proxy Statement.
CompensationCommittee
The Bank’s Compensation Committee reviews our executive officersofficers’ performance and compensation, reviews and sets guidelines for compensation of all employees and makes compensation recommendations to the Board. All
The members of the Bank’s Compensation Committee are Edward Ray Burkholder, Daniel J. Harshman,Michael W. Pugh, Daphyne S. Thomas, John A. Willingham, and Peter
Corporate Governance Committee
The Company currently does not have a standing nominating committee becauseBank’s Corporate Governance Committee supports process by developing qualifications for director membership. The President/CEO as a management director, abstains from discussions and voting for nominees. When the Board performs its nominating function, the Board acts in accordance with the Company’s Articles of Incorporation and Bylaws but does not have a separate charter related to the nomination process.
The members of the Company,Bank’s Corporate Governance Committee are Larry A. Caplinger, Hannah W. Hutman, Anne B. Keeler, Michael W. Pugh, Christopher S. Runion, Aubrey M. (Mike) Wilkerson, and Dean W. Withers. The Corporate Governance Committee met four times in 2023.
Director Nomination Process
The Bank’s Corporate Governance Committee, among other things, is responsible for seeking and identifying individuals qualified to become Board members, overseeing the evaluation of Board candidates, and recommending director nominees to the Board for election.
Should the Board or Corporate Governance Committee decide to fill a board position, the Committee would look to the Corporate Governance Committee’sfollowing list of director qualifications (listed below) and consider these qualifications in developing a pool of potential nominees from the communities served by the Company. The Corporate Governance Committee is responsible for evaluating the background and qualifications of any candidates for the Board would then appointand recommending candidates to the candidate who was best qualified following discussions amongBoard. The Corporate Governance Committee and the independent directors. The Board also considersconsider potential nominees submitted by shareholders.
The Company’s independent directors consider,Corporate Governance Committee considers, at a minimum, the following factors in recommendingevaluating new candidates for election to the Board, potential new directors, oras well as the continued service of existing directors:
· | The ability of the prospective nominee to represent the interests of the shareholders of the Company; | |
· | The prospective nominee’s standards of integrity, commitment, and independence of thought and judgment; | |
· | The prospective nominee’s ability to dedicate sufficient time, energy, and attention to the diligent performance of his or her duties, including the prospective nominee’s service on other public company boards; and | |
· | The extent to which the prospective nominee contributes to the range of talent, skill, and expertise appropriate for the Board of Directors. |
Shareholders entitled to vote for the election of directors may submit candidates for formal consideration by the Company in connection with an annual meeting of shareholders by providing the Company with timely written notice, in proper form, for each such recommended director nominee. If the notice is not timely and in proper form, the nominee will not be considered by the Company. To be timely for the 20222025 annual meeting, the notice must be received within the time frame set forth in “Shareholder Proposals” on page 2028 of this Proxy Statement. To be in proper form, the notice must include each nominee’s written consent to be named as a nominee and to serve, if elected, and information about the shareholder making the nomination and the person nominated for election. These requirements are more fully described in Section 2.5 of the Company’s Bylaws, a copy of which will be provided, without charge, to any shareholder upon written request to the Secretary of the Company, whose address is P. O. Box 1111, Timberville, VAVirginia 22853.
While the Company does not have a diversity policy, we consider the diversity of the Board based on a number of factors including the geographic locations of potential directors within our branch network, educational background, and work experience.
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Annual Meeting Attendance
The Company encourages members of the Board of Directors to attend the annual meeting of shareholders. All of the directors attended the 2020 virtual2023 annual meeting.
Communications with Directors
Any director may be contacted by writing to him or her c/o P. O. Box 1111, Timberville, VAVirginia 22853. Communications to the non-management directors as a group may be sent to the same address, c/o the Secretary of the Company. The Company promptly forwards, without screening, all such correspondence to the indicated directors.
Anti-Hedging Policy
The Company currently does not have any policies with respect to financial instruments or transactions in derivative securities or otherwise that hedge or offset any decrease in the market value of the Company’s common stock.
Director Compensation
The following table showsprovides compensation information for the compensation earned byyear ended December 31, 2023 for each non-employee director of the Company’s Board of Directors:
Fees Earned or Paid in Cash ($) Stock Awards(1) ($) Total ($) Edward Ray Burkholder Larry A. Caplinger Daniel J. Harshman Hannah W. Hutman Anne B. Keeler Michael W. Pugh Christopher S. Runion Daphyne Thomas John A. Willingham Dean W. Withers Peter H. Wray $ 37,200 $ 2,667 $ 39,867 37,700 2,667 40,367 18,767 2,667 21,434 37,600 2,667 40,267 38,000 2,667 40,667 45,200 2,667 47,867 38,800 2,667 41,467 37,500 2,667 40,167 38,100 2,667 40,767 37,600 2,667 40,267 38,350 2,667 41,017
____________
(1) | The amounts represent the grant date fair value of the awards calculated in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation – Stock Compensation. Assumptions used in the calculation of these amounts are included in Note 16 of the Company’s audited financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 2023. |
All non-employee directors during 2020. Mr. Hanna does not receive any additional compensation for service as a director. Compensation included meeting fees, retainers and bonuses.
| Name | Fees Earned Or Paid in Cash ($) | Total ($) | ||
| Edward Ray Burkholder | 40,290 | 40,290 | ||
| John N. Crist | 38,640 | 38,640 | ||
| Daniel J. Harshman | 41,140 | 41,140 | ||
| Dean W. Withers | 38,640 | 38,640 | ||
| Michael W. Pugh | 47,040 | 47,040 | ||
| Christopher S. Runion | 40,940 | 40,940 | ||
| Larry A. Caplinger | 40,140 | 40,140 | ||
| Peter H. Wray | 38,640 | 38,640 | ||
| Anne B. Keeler | 37,507 | 37,507 | ||
Richard S. Myers1 | 21,813 | 21,813 | ||
Ronald E. Wampler2 | 9,807 | 9,807 |
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In addition to cash compensation, non-employee members of the Board of Directors received stock awards in accordance with the Company’s shareholders approved the 2020 Stock Incentive Plan, pursuant to which the Company may grant stock options, restricted stock and other stock awards, restricted stock units, and stock appreciation rights toPlan.
Mark C. Hanna, the Company’s directors. Whileformer President and Chief Executive Officer, is not included in the table above as he received no awards were made during 2020, the Compensation Committee granted
Barton E. Shillingburg, 59,Black, 53, has served as Executive Vice President/Chief Banking Officer o f t h e Ba n k and t he C om pa ny since July 2016, Executive Vice President/Chief Retail Officer from June 2013 until July 2016 and Senior Vice President/Branch Administrator from February 2005 until June 2013. She also served as Vice President/Branch Administrator from March 2003 until February 2005 and as Branch Manager of the Edinburg Branch from February 2001 until March 2003.
Lisa F. Garth Knight, 38,Campbell, 56, has served as Executive Vice President/Chief Financial Officer of the Company and the Bank since October 2022. Prior to joining the Company, she served as Group Vice President and Chief Financial Officer for Fidelity Bancshares N.C., Inc. in Fuquay-Varina, North Carolina from August 2014 to October 2022. Previously, she served as Executive Vice President, Chief Operating Officer and Chief Financial Officer for New Century Bancorp, Inc. in Dunn, North Carolina from March 2000 to August 2014 and as Senior Vice President and Controller for Triangle Bancorp, Inc. in Raleigh, North Carolina from September 1997 to March 2000. Ms. Campbell also worked in public accounting from September 1990 through September 1997.
Charles C. Driest, 46, has served as Executive Vice President, and Chief LendingExperience Officer since June 2020.April 2023. Prior to that he served as Senior Vice President, Director of Digital Banking of the Bank and the Company from January 2022 to April 2023. Prior to joining F&M Bank,the company, he spent 15 years at Wells Fargo Bank servingserved as Senior Vice President, andDirector of Digital Banking at Essex Bank from July 2017 to January 2022. Mr. Driest holds a Master of Business Acquisition Manager for Mid-Atlantic and Greater PhiladelphiaAdministration (MBA) – Finance from May 2017 until May of 2020, Vice President and Business Banking Manager for North and South Carolina from September of 2010 to May of 2017, and Retail Market leader from June 2005 to September 2010.
Paul E. Eberly, 39,42, has served as Executive Vice President/Chief CreditDevelopment Officer since September 2022. Executive Vice President/Chief Credit Officer from September 2020 to August 2022, Senior Vice President/Agricultural & Rural Programs Leader from January 2020 until September 2020, and Vice President/Agricultural & Rural Programs Leader from January 2019 until January 2020. He also served in various sales, lending, credit, risk management and other leadership roles within the Farm Credit System from June 2005 until January 2019. Mr. Eberly has been in the banking and finance industry since 2005.
Melody Emswiler, 50, has served as Executive Vice PresidentPresident/Chief Human Resources Officer since January 2022, Senior Vice President/Human Resources Director from January 2019 to December 2021, Vice President/Director of Human Resources from February 2015 to December 2018, and Assistant Vice President/Human Resources Manager from February 2011 to January 2015. Ms. Emswiler has been in the human resources profession since 1997.
Kevin Russell, 47, has served as the Executive Vice President/President of Mortgage, Title and Financial Services at the Bank and the Company since June 16, 2020. Prior to that he served as the President of F&M Mortgage since 2000.
Jason C. Withers, 41, has served as Executive Vice President/Chief Credit Officer since September 2022, and Senior Vice President/Credit Manager since March 2021. Prior to joining the Commercial Banking Market ExecutiveCompany, he served as a Senior Credit Analyst at Blue Ridge Bank from 2018 through 2020April 2017 to March 2021, and as a Credit Analyst for Western Mid-Atlantic Region.
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EXECUTIVE COMPENSATION
SummaryCompensation
The Summary Compensation Table below sets forth the compensation of the Company’s named executive officers for all services rendered to the Company and the Bank for 2020.2023. See the Summary of Compensation Policies beginning on pages 15 to 18page 17 of this Proxy Statement for further information regarding our compensation program, including summaries of the Company’s employment agreements and other compensation arrangements.
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary ($) | Non-Equity Incentive Plan Compensation ($)1 | All Other Compensation ($)2 | Total ($) |
Mark C. Hanna President & CEO | 2020 | 389,384 | 116,384 | 60,824 | 566,592 |
| 2019 | 380,714 | 49,350 | 41,975 | 472,039 | |
Stephanie E. Shillingburg EVP/Chief Banking Officer | 2020 2019 | 186,067 182,979 | 55,476 18,258 | 31,374 26,522 | 272,917 227,759 |
Barton E. Black EVP/Chief Strategy & Risk Officer | 2020 | 259,452 | 77,480 | 55,155 | 392,087 |
Name and Principal Position Year Salary ($) Stock Awards ($) (1) Non-Equity Incentive Plan Compensation ($) (2) All Other Compensation ($) (3) Total ($) Mark C. Hanna (4) 2023 Former President and CEO 2022 Aubrey M. (Mike) Wilkerson (5) 2023 Chief Executive Officer 2022 Barton E. Black 2023 President 2022 Paul E. Eberly 2023 EVP & Chief Development Officer 2022 183,324 86,115 0 694,622 964,061 427,359 81,999 86,547 61,790 657,695 336,997 39,738 0 56,501 433,237 263,440 37,483 56,445 45,638 403,006 305,343 42,979 35,000 48,435 431,757 285,388 40,938 57,617 51,526 435,468 204,322 29,994 26,624 33,060 294,000 193,174 27,209 42,600 30,707 292,461
____________
(1) | The amounts represent the grant date fair value of the awards calculated in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation – Stock Compensation. Awards consist of time-based restricted stock that vest over a period of four years. Assumptions used in the calculation of these amounts are included in Note 16 of the Company’s audited financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 2023. Stock Awards granted to Mark C. Hanna in 2023 were forfeited in 2023 in connection with his departure from the Company. |
(2) | The amounts in this column represent non-equity incentive plan compensation pursuant to the Executive Incentive Plan approved for the year listed; however, the actual payments were not made until after the end of each year. |
(3) | The amounts in this column are detailed in the table titled “All Other Compensation” below. |
(4) | Mr. Hanna served as President/CEO until April 10, 2023. |
(5) | Mr. Wilkerson was appointed CEO on April 10, 2023. |
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ALL OTHER COMPENSATION TABLE
| Name | Year | 401(k) Company Match | Company ESOP Contribution1 | Company Deferred Compensation Contribution2 | Life Insurance Premiums3 | Personal and Other Benefits4 | Total ($) |
Mark Hanna | 2020 | 7,796 | 11,200 | 25,037 | 2,520 | 14,272 | 60,824 |
2019 | 7,294 | 9,625 | 25,536 | 2,520 | ---- | 41,975 | |
Stephanie Shillingburg | 2020 | 7,117 | 8,104 | 11,980 | 902 | 3,271 | 31,374 |
2019 | 7,142 | 7,332 | 11,191 | 857 | --- | 26,522 | |
Barton Black | 2020 | 9,829 | 11,200 | 16,668 | 2,100 | 15,358 | 55,155 |
FISCAL YEAR 2023
Name Severance ($) 401(k)Company Contribution($) Company ESOP Contribution ($) (1) Company Deferred Compensation Contribution ($) (2) Life Insurance Premiums ($) (3) Restricted Stock Dividends ($) (4) Personal and Other Benefits ($) (5) Total ($) Mark C. Hanna Aubrey M. (Mike) Wilkerson Barton E. Black Paul E. Eberly 675,000 (6) 7,124 0 0 380 8,358 3,760 694,622 8,802 10,675 21,900 588 3,088 11,448 56,501 4,741 10,675 18,615 1,011 4,171 9,221 48,435 7,117 9,072 12,480 706 2,805 880 33,060
____________
(1) |
The Company has established a Stock Bonus Plan that covers all eligible full and part-time employees, including the executive officers. The plan serves as a long-term incentive for employees to promote the achievement of goals which create value for our shareholders. See Stock Bonus Plan on page 21 of this Proxy Statement for further details.
(2)
The Company has established a nonqualified deferred compensation plan for the benefit of our directors and certain employees, including the executive officers, to defer receipt of salary or bonus payments. See Deferred Compensation Plan on page 20 of this Proxy Statement for further details.
(3)
The amounts in this column represent the annual premium of group term life insurance with a death benefit equal to three times annual compensation.
(4)
The amounts in this column represent dividends received during 2023 on unvested shares of restricted stock. Under the 2020 Stock Incentive Plan, holders are entitled to dividends from the grant date through the vesting period.
(5)
The amounts in this column include personal use of a company vehicle, bank-owned life insurance premiums and country club dues.
(6)
See “Separation Agreement with Mark C. Hanna” on page 20 of this Proxy Statement for further details.
Holdings of Stock Awards
The following table contains certain information regarding the value of restricted stock awards for each of the Company’s named executive officers as of December 31, 2023.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Stock Awards Name Grant Date Number of Shares or Units of Stock that Have Not Vested (#) (1) Market Value of Shares or Units of Stock that Have Not Vested ($) (2) Aubrey M. (Mike) Wilkerson 3/5/2021 3/7/2022 3/7/2023 1778 Barton E. Black 3/5/2021 3/7/2022 3/7/2023 1923 Paul E. Eberly 3/7/2021 3/7/2022 3/7/2023 1342 187 3,599 911 17,587 34,315 729 14,060 995 19,208 37,114 463 8,926 662 12,767 25,901
(1) | These amounts are comprised of unvested shares of time-based restricted stock at December 31, 2023. All shares granted vest over a four-year period whereby the executive receives one-fourth of the shares on the anniversary of the grant date if that executive is employed on the anniversary date. |
(2) | These amounts represent the fair market value of the restricted stock awards on December 31, 2023. The closing price of the Common Stock was $22.87 on that date. |
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Equity Compensation Plan Information
The following table summarizes information, as of December 31, 2023, relating to the Company’s stock-based compensation plans under which shares of Common Stock are authorized for issuance.
Plan Category | Number of Shares to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | |||||||||
Equity Compensation Plans | ||||||||||||
Approved by Shareholders: | ||||||||||||
2020 Stock Incentive Plan | - | - | 152,166 | |||||||||
Equity Compensation Plans Not Approved by Shareholders: (1) | - | - | - | |||||||||
Total | - | - | 152,166 | |||||||||
(1) | The Company does not have any equity compensation plans that have not been approved by shareholders. |
Summary of Compensation Policies on pages 13 to 15 of the Proxy Statement for further details.
Overview.
This section provides information regarding the compensation program in place during 2023 for Mark Hanna, our former President/CEO,The independent members of our Board of Directors administer the Company’s executive compensation program based on the recommendations of the Bank’s Compensation Committee, which the Company’s independent directors review and approve.
General Compensation Objectives.
To this end, we followassist in its review, the Compensation Committee obtains and reviews certain procedures,industry data, including the following:
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We rely upon our judgment in making sound compensation decisions, after reviewing the performance of the Company and carefully evaluating the executive’s performance during the year against established goals, leadership qualities, operational performance, business responsibilities, career with the Company, current compensation arrangements and long-term potential to enhance shareholder value. Specific factors affecting compensation decisions for the named executive officers include:
· | Financial measures, such as net profit, return on equity, return on assets and efficiency ratio, relative to the peer group; | |
· | Strategic objectives, such as the establishment of new branch offices; | |
· | Launching new or improved products that help us reach our goals of being a market leader and attracting and retaining customers; | |
· | Achievement of specific operational goals for the Company, including improved productivity, risk management or portfolio management goals; | |
· | Achieving excellence in their organizational structure and among their employees; and | |
· | Supporting our corporate values by promoting integrity through compliance with laws and regulations. |
We generally do not strive for rigid formulas or react to short termshort-term changes in business performance in determining the amount or mix of compensation and benefits. The mix of compensation elements is based on the review of the factors outlined above in order to provide the executive with a combination of salary, non-equity incentives and long-term equity and other compensation commensurate with responsibilities and competitive with other banks of similarcomparable size and characteristics.
While we consider the compensation paid by other banks in the benchmarking report and salary survey,others, we do not attempt to maintain a certain target percentile within thesethose peer groups.
Consideration of Say on Pay Vote Results. At the Company’s 2023 annual meeting of shareholders, the Company’s shareholders overwhelmingly approved the annual non-binding advisory vote on executive compensation, receiving approximately 95% support. We believe that these results reinforce shareholder support for our compensation philosophy and the appropriateness of our compensation structure.
Base Salaries.
Executive Incentive Plan. Executive officers may earn an annual incentive award that is a predetermined percentage of total base salary. The components of the Executive Incentive Plan as approved by the Compensation Committee during 2023 were: percentage of non-performing assets to strategic goal, percentage 30+ days delinquent to strategic goal excluding nonaccrual, net income, total demand deposit growth, total deposit growth, total loan growth, and a discretionary component around personal, department, and corporate performance. Achievement levels for the components are predetermined around the annual budget amounts considering achievements that are above, below, and on budget. The maximum opportunity an executive could earn in 2023 was 35% of base salary.
Equity Compensation. The Compensation Committee may provide equity compensation to employees, directors, and rely onconsultants pursuant to the benchmarking report and other survey information.
Equity compensation has been made to executive officers in the form of restricted stock, which is vested over a four-year period whereby the executive receives one-fourth of the shares on each anniversary of the grant date if that executive is employed on such anniversary date. The Board believes thatgoal of the plan willCompensation Committee in granting equity compensation is to stimulate the efforts of employees, directors and consultants upon whose judgment, interest, and efforts the Company depends for the successful conduct of its businesses and willto further the alignment ofalign those persons’ interests with the interests of the Company’s shareholders.
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On March 7, 2023, the Company at that time.
Employment Agreements
.Barton E. Black. The term of Mr. Hanna’sBlack’s employment agreement began on December 30, 2020 and will continueinitially continued until December 31, 2021, unless terminated earlier in accordance with its terms.2021. On December 31, 2020, and each December 31 thereafter, the term of the agreement shall be renewed and extended by one year, such that the extended term of this Agreementhis agreement on December 31, 2020 or the applicablesuch anniversary thereof is two years, unless either Mr. Hanna or the Company gives advance notice to the other in writing.
Mr. Black’s employment agreement provides for the termination of Mr. Black’s employment by the Company without “Cause” or by him for “Good Reason” in the absence of a “Change of Control” (as those terms are defined in the agreement). In such cases, Mr. Black will be entitled to receive (i) his then-current base salary for the greater of the remainder of the term or 12 months, (ii) any bonus or other short-term incentive compensation earned, but not yet paid, for prior years and (iii) a welfare continuance benefit in an amount equal to 12 times the excess of COBRA premiums that would apply as of Mr. Black’s date of termination for continued health, dental and vision coverage, if COBRA continuation were elected for such coverage, over the amount that he paid for such coverage immediately before his termination of employment. Mr. Black’s employment agreement also provides for the termination of Mr. Black's employment by the Company following a “Change of Control” or by him for “Good Reason” following a “Change of Control.” In such cases, Mr. Black will be entitled to receive, among other things, a lump sum amount equal to (i) the welfare continuance benefit described above, substituting 24 for 12 and (ii) 2.99 times the sum of his base salary and the greater of his target annual bonus or actual annual bonus for the most recent year. Mr. Black’s entitlement to the foregoing severance payments is subject to Mr. Black's release and waiver of claims against the Company and his compliance with certain restrictive covenants as provided in the employment agreement.
Mr. Black will not be entitled to any compensation or other benefits under his employment agreement if his employment is terminated upon his death, by the Company for “Cause,” or by him in the absence of “Good Reason.”
Mr. Black’s employment agreement contains restrictive covenants relating to the protection of confidential information, non-disclosure, non-competition and non-solicitation. The non-compete and non-solicitation covenants generally continue for a period of 18 months following the last day of Mr. Black’s employment.
Aubrey M. (Mike) Wilkerson. The term of Mr. Wilkerson’s employment agreement began on January 4, 2021, and initially continued until December 31, 2022. On December 31, 2021, and each December 31 thereafter, the term of the agreement shall be renewed and extended by one year, such that the extended term of his agreement on such anniversary is two years, unless either Mr. Wilkerson or the Company gives advance notice to the other in writing.
Mr. Wilkerson’s employment agreement provides for the termination of Mr. Wilkerson’s employment by the Company without “Cause” or by him for “Good Reason” in the absence of a “Change of Control” (as those terms are defined in the agreement). In such cases, Mr. Wilkerson will be entitled to receive (i) his then-current base salary for the greater of the remainder of the term or 12 months, (ii) any bonus or other short-term incentive compensation earned, but not yet paid, for prior years and (iii) a welfare continuance benefit in an amount equal to 12 times the excess of COBRA premiums that would apply as of Mr. Wilkerson’s date of termination for continued health, dental and vision coverage, if COBRA continuation were elected for such coverage, over the amount that he paid for such coverage immediately before his termination of employment. Mr. Wilkerson’s employment agreement also provides for the termination of Mr. Wilkerson's employment by the Company following a “Change of Control” or by him for “Good Reason” following a “Change of Control.” In such cases, Mr. Wilkerson will be entitled to receive, among other things, a lump sum amount equal to (i) the welfare continuance benefit described above, substituting 24 for 12 and (ii) 2.99 times the sum of his base salary and the greater of his target annual bonus or actual annual bonus for the most recent year. Mr. Wilkerson’s entitlement to the foregoing severance payments is subject to Mr. Wilkerson's release and waiver of claims against the Company and his compliance with certain restrictive covenants as provided in the employment agreement.
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Mr. Wilkerson will not be entitled to any compensation or other benefits under his employment agreement if his employment is terminated upon his death, by the Company for “Cause,” or by him in the absence of “Good Reason.”
Mr. Wilkerson’s employment agreement contains restrictive covenants relating to the protection of confidential information, non-disclosure, non-competition and non-solicitation. The non-compete and non-solicitation covenants generally continue for a period of 18 months following the last day of Mr. Wilkerson’s employment.
Separation Agreement with Mark C. Hanna. The Company and Mr. Hanna entered into a Separation Agreement and General Release on November 16, 2023 (the “Separation Agreement”). Under the terms of the Separation Agreement, the Company agreed to pay Mr. Hanna $675,000 in consideration of his acceptance of the Separation Agreement and promise to abide by its terms. Mr. Hanna and the Company mutually agreed to release one another from any and all claims. Mr. Hanna also agreed to certain confidentiality and non-disparagement provisions.
Retirement Benefits.
Pension Plan.
Deferred Compensation Plan.
Each year we consider whether to make a discretionary Company contribution to the plan for the benefit of the participants, including the executive officers. Contributions to the plan are based on a number ofseveral factors including an evaluation of overall bank performance and an evaluation of the total contributions to the bank’s other retirement plans, including the ESOP and 401(k) plans. This contribution is shared on a pro-rated basis by the participants in the plan based on each participant’s salary as a percentage of the total salaries of the participants in the plan. For 20202023 and 2019,2022, the total contributions to the plan were $125,000$214,403 and $125,000,$198,000, respectively. Distributions are paid upon termination and the employee may elect to receive payments in either a lump sum or a series of installments.
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401(k) Savings Plan.
The Savings Plan limits the “annual additions” that can be made to an employee’s account to $44,000$66,000 per year.year for 2023. “Annual additions” include our matching contributions, before-tax contributions made by our employee under Section 401(k) of the Internal Revenue Code and employee after-tax contributions. Of those annual additions, the current maximum before-tax contribution is $18,500was $22,500 per year. Participant’s ageyear in 2023. Participants aged 50 and over maycould also contribute, on a before-tax basis, and without regard to the $44,000$66,000 limitation on annual additions or the $18,500$22,500 general limitation on before-tax contributions, catch-up contributions of up to $6,000$7,500 per year.year in 2023. The Company’s matching contribution for each of the named executive officers is contained in the Summary Compensation Table.
Stock OwnershipBonus Plan (ESOP)(“ESOP”).
Potential Payments upon Termination of Employment or Change in Control
Potential Payments Upon Termination Following Change in Control. In the event of ControlBenefits
Potential Payments Upon Involuntary Termination Without Cause or Good Reason. In the event of termination ofwithout “Cause” or resignation for “Good Reason” (as those terms are defined in their agreements), the Company’s employment including termination following a change of control. See Summary of Compensation Policies—Employment Agreements on pages 15 to 16 of the Proxy Statement.
Termination for Good Reason or Without Cause1 | Termination for Good Reason or Without Cause Following Change2 of Control | |||
| Mark C. Hanna | 556,476 | 1,383,212 | ||
| Barton E. Black | 337,480 | 854,880 | ||
Certain Relationships and Related Transactions
Banking Relationships. The Company’sCompany, through its subsidiary Bank, grants loans to and accepts deposits from its directors, andprincipal officers and other corporations, business organizations, andrelated parties of such persons with whom some of the Company’s directors and officers are associated, had loan transactions at December 31, 2020 with the Bank totaling approximately $22,525,000 or about 24.06% of average shareholders' equity and had loan transactions at December 31, 2019 totaling approximately $21,722,000 or about 23.72% of average shareholders’ equity. All such transactions were made induring the ordinary course of businessbusiness. Loans are granted on substantially the same terms, including interest rates and collateral, as those prevailing at the time infor comparable transactions with personsother customers not related to the Company and diddo not involve more than the normal risk of collectability or present other unfavorable features.
In February 2007, the Board approved the Loan Credit Policy which includes guidelines as contained in Regulation O with regards toaddition, any extensions of credit to directors and officers are required to be on substantially the same terms as comparable transactions to non-related parties at the time of the extension of credit, pursuant to Regulation O – Loans to Executive Officers, Directors, and Principal Shareholders of Member Banks of the banking regulations applicable to us.
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Employment of Family Member of Director. Jason Withers, the son of director Dean Withers, is employed by the Bank as Executive Vice President/Chief Credit Officer. Jason Withers received total cash compensation of $147,121 in 2023 and stock awards with a grant date fair value of $13,991. Jason Withers also received benefits under certain employee benefit plans that are generally available to all similarly situated Bank employees. Dean Withers does not have an interest in Jason Withers’s compensation.
Legal Services. Hannah W. Hutman, a director of the Company, is a partner at the law firm of Hoover Penrod PLC. The Company paid Hoover Penrod approximately $242,000 in 2023 for various legal services. The Company obtains such services at rates that are substantially the same as those the firm charges other clients, and the firm is one of several law firms retained by the Company.
PAY VERSUS PERFORMANCE
Pay versus Performance Table
The following table provides information on total compensation and compensation actually paid to our principal executive officer (“PEO”) and to our remaining named executive officers directors(“NEOs”) for the fiscal years ended December 31, 2023, 2022, and principal shareholders. All such requests are presented to2021, and the full Board of Directors for approval. Undercumulative shareholder return on our Common Stock and our net income over the policy, no executive officer, board member or principal shareholder may participate in the review of a transaction in which such member has an interest.
Year Summary Compensation Table Total for PEO Mark C. Hanna(1) Summary Compensation Table Total for PEO Aubrey M. Wilkerson (2) Compensation Actually Paid to PEO Mark C. Hanna(1)(2) Compensation Actually Paid to PEO Aubrey M. Wilkerson(2) Average Summary Compensation Table Total for Non-PEO NEOs(3) Average Compensation Actually Paid to Non-PEO NEOs(3)(4) Value of Initial Fixed $100 Investment Based on Total Shareholder Return(5) Net Income 2023 2022 2021 $ 964,061 $ 433,237 $ 938,515 $ 423,478 $ 362,878 $ 352,213 $ 141 $ 2,771,000 $ 657,695 $ 625,140 $ 390,110 $ 376,410 $ 110 $ 8,300,000 $ 657,525 $ 663,365 $ 392,457 $ 394,955 $ 129 $ 10,700,000
_________________
(1) | Mark C. Hanna was our PEO until April 2023 and all of 2022. Aubrey M. (Mike) Wilkerson was PEO beginning April 2023. |
(2) | The following table sets forth the adjustments made during each year represented in the table above to arrive at compensation “actually paid” to our PEO during each of the years in question: |
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Adjustments to determine compensation “actually paid” for PEO, Mike Hanna 2023 2022 2021 Deduction for amounts reported under the “Stock Awards” column in the Summary Compensation Table Deduction for amounts reported under the “Option Awards” column in the Summary Compensation Table Increase for fair value of awards granted during year that remained unvested at year-end Increase for fair value of awards granted during year that vested during year Change in fair value from prior year-end to year-end of awards granted in a prior year that were outstanding and unvested at year-end Change in fair value from prior year-end to vesting date of awards granted in a prior year that vested during year Deduction for fair value of awards granted in a prior year that were forfeited during year Increase based upon incremental fair value of awards modified during year Increase based on dividends or other earnings paid during year prior to vesting Total Adjustments $ (86,115 ) $ (81,999 ) $ (78,110 ) $ 0 $ 0 $ 0 $ 74,363 $ 60,788 $ 83,950 $ 0 $ 0 $ 0 $ (12,329 ) $ (12,877 ) $ 0 $ (1,464 ) $ 1,533 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ (25,546 ) $ (32,555 ) $ 5,840
(3) | During 2023, our remaining NEOs consisted of Barton E. Black and Paul E. Eberly. During 2022, our remaining NEOs consisted of Barton E. Black Aubrey M. (Mike) Wilkerson. |
(4) | The following table sets forth the adjustments made during each year represented in the table above to arrive at average compensation “actually paid” to our remaining NEOs during each of the years in question: |
Adjustments to determine compensation “actually paid” for PEO, Aubrey M. Wilkerson 2023 2022 2021 Deduction for amounts reported under the “Stock Awards” column in the Summary Compensation Table Deduction for amounts reported under the “Option Awards” column in the Summary Compensation Table Increase for fair value of awards granted during year that remained unvested at year-end Increase for fair value of awards granted during year that vested during year Change in fair value from prior year-end to year-end of awards granted in a prior year that were outstanding and unvested at year-end Change in fair value from prior year-end to vesting date of awards granted in a prior year that vested during year Deduction for fair value of awards granted in a prior year that were forfeited during year Increase based upon incremental fair value of awards modified during year Increase based on dividends or other earnings paid during year prior to vesting Total Adjustments $ (39,738 ) $ 0 $ 34,315 $ 0 $ (3,919 ) $ (416 ) $ 0 $ 0 $ 0 $ (9,758 )
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Adjustments to determine compensation “actually paid” for non-PEO NEOs 2023 2022 2021 Deduction for amounts reported under the “Stock Awards” column in the Summary Compensation Table Deduction for amounts reported under the “Option Awards” column in the Summary Compensation Table Increase for fair value of awards granted during year that remained unvested at year-end Increase for fair value of awards granted during year that vested during year Change in fair value from prior year-end to year-end of awards granted in a prior year that were outstanding and unvested at year-end Change in fair value from prior year-end to vesting date of awards granted in a prior year that vested during year (602) Deduction for fair value of awards granted in a prior year that were forfeited during year Increase based upon incremental fair value of awards modified during year Increase based on dividends or other earnings paid during year prior to vesting Total Adjustments $ (36,487 ) $ (39,211 ) $ (23,808 ) $ 0 $ 0 $ 0 $ 31,507 $ 29,068 $ 26,306 $ 0 $ 0 $ 0 $ (5,083 ) $ (4,037 ) $ 0 $ $ 480 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ (10,665 ) $ (13,700 ) $ 2,499
(5) | Total shareholder return is calculated assuming a fixed investment of $100 in the Common Stock based on the closing price on December 31, 2020, the last trading day prior to January 1, 2021, assuming reinvestment of dividends, through and including the end of each fiscal year. |
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Relationship between Financial Performance and approval of other related person transactions by our Board of Directors. The Board, however, does review all such transactions that are proposed to it for approval. During such a review, the Board will consider, among other things, the related person’s relationship to the Company, the facts and circumstances of the proposed transaction, the aggregate dollar amount of the transaction, the related person’s relationship to the transaction and any other material information. Our Audit Committee also has the responsibility to review significant conflicts of interest involving directors or executive officers.
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PROPOSAL TWO
RATIFICATIONOF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
General The Audit Committee has appointed the firm of Yount, Hyde & Barbour, P.C., (“YHB”) Although our Bylaws do not require shareholder ratification or other approval of the retention of our independent registered public accounting firm, as a matter of good corporate governance, the Board of Directors is requesting that the shareholders ratify the appointment of YHB, as our independent registered public accounting firm for the fiscal year ending December 31, 2024. A majority of the votes cast by holders of The Board of Directors recommends AUDITINFORMATION AuditCommittee The Audit Committee operates under a written charter that the Board has adopted. The Fees of Independent Registered Public Accounting Firm Audit Audit Related Tax All Other Audit Committee Report Management is responsible for establishing and maintaining the Company’s internal controls over financial reporting, the preparation, presentation and integrity of the Company’s consolidated financial statements and compliance with laws and regulations and ethical business standards. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and issuing a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes on behalf of the Board of Directors. The Audit Committee is responsible for overseeing the Company’s overall financial reporting process. In fulfilling its oversight responsibilities for the financial statements for fiscal year · · · · · · Based upon its discussions with management and YHB and its review of the representations of management and the report of YHB to the Audit Committee, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, AuditCommittee Edward Ray Burkholder Anne B. Keeler Daphyne S. Thomas John A. Willingham Peter H. Wray Audit Committee Pre-Approval Policies All audit related services and tax services were pre-approved by the Audit Committee, PROPOSAL THREE ADVISORY (NON-BINDING) VOTE ON COMPENSATION OF THE NAMED EXECUTIVE OFFICERS The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and Accordingly, the Company is asking shareholders to approve the compensation “RESOLVED, that the shareholders approve the compensation of the named executive officers of the Company as set forth under the heading “Executive Compensation” in the Company’s The Company has opted to hold this advisory vote on an annual basis. Because your vote is advisory, it will not be binding on the Company or the Board of Directors. However, the Compensation Committee of the Bank will A majority of the votes cast by holders of The Board of Directors unanimously recommends that shareholders vote “FOR” approval of the SHAREHOLDER PROPOSALS Under SEC regulations, any shareholder desiring to make a proposal to be acted upon at the The Company’s Bylaws also prescribe the procedure that a shareholder must follow to nominate directors or to bring other business before shareholders’ meetings outside of the proxy statement process. For a shareholder to nominate a candidate for director at the In addition to satisfying the requirements under our bylaws with respect to advance notice of any nomination, shareholders who intend to solicit proxies in support of director nominees other than the Company’s director nominees must also comply with the requirements of SEC Rule 14a-19 under the Exchange Act relating to universal proxies. OTHER MATTERS As of the date of this Proxy Statement, the Board of Directors By Order of the Board of Directors /s/ Candy F. Barkley Candy F. Barkley, Corporate Secretary April served as the independent registered public accounting firm to audit the consolidated financial statements of the Company for the year ended December 31, 2020 and 2019 and has been appointed by the Audit Committee to serve as the Company’s independent registered public accounting firm for thefiscal year ending December 31, 2021.The Board of Directors is requesting that the shareholders ratify the appointment of2024. YHB, as the independent registered public accounting firm, audited the consolidated financial statements of the Company for the fiscal yearyears ending December 31, 2021.2023 and 2022. A representative of YHB is expected to be present at the Annual Meeting, will have the opportunity to make a statement if he/she desires to do so, and is expected to be available to respond to appropriate questions from shareholders.Vote Requiredcommon stockCommon Stock is required for the ratification of the appointment of YHB, as our independent registered public accounting firm. Even if the appointment is ratified, the ratification is not binding and the Audit Committee may in its discretion select a different independent public accountants.athe shareholders vote “FOR” Proposal Two.foursix members of the Audit Committee are independent as that term is defined in SEC regulations and Nasdaq’s listing standards.FeesYHBYount, Hyde & Barbour, P.C. (“YHB”) for professional services rendered for the audit of the Company’s annual consolidated financial statements for the fiscal years ended December 31, 20202023 and 2019,2022, and for the review of the consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q, and services that are normally provided in connection with statutory and regulatory filings and engagements, for those fiscal years were$75,400 for 2020 $166,505 in 2023 and $104,750 for 2019, respectively by YHB.20Fees$25,873$19,500 in 20202023 and $29,032$30,650 in 2019.2022. For both years, the fees consisted of audits of the Bank’s benefit plans.Fees$5,625$12,507 in 20202023 and $5,355$10,537 in 2019.Fees2020 and 2019.Pre-Approval PoliciesAll audit related services and tax services were pre-approved by the Audit Committee, which concluded that the provision of such services by YHB was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. The Audit Committee’s Charter provides for pre-approval of audit, audit-related and tax services. The Charter authorizes the Audit Committee to delegate to one2023 or more of its members pre-approval authority with respect to permitted services.28 2020,2023, the Audit Committee:Monitored the preparation of quarterly and annual financial reports by the Company’s management.Reviewed and discussed the annual audit process and the audited financial statements for the fiscal year ended December 31, 2020 with management and YHB, the Company’s independent registered public accountant;Discussed with management, YHB and the Company’s Internal Auditor the adequacy of the system of internal controls;Discussed with YHB the matters required to be discussed by the auditing standards of the Public Company Accounting Oversight Board (“PCAOB”), including Auditing Standard No. 1301 “Communications with Audit Committees,” and Rule 2-07 of Regulation S-X promulgated by the SEC, as modified or supplemented;Received written disclosures and a letter from YHB as required by applicable requirements of the PCAOB, including PCAOB Rule 3526, regarding YHB’s communications with the Audit Committee concerning independence. The Audit Committee discussed with YHB its independence.Conducted an assessment of the Company’s relationship with YHB and evaluated YHB’s performance and the quality of audits.Monitored the preparation of quarterly and annual financial reports by the Company’s management. Reviewed and discussed the annual audit process and the audited financial statements for the fiscal year ended December 31, 2023 with management and YHB, the Company’s independent registered public accountant; Discussed with management, YHB and the Company’s Internal Auditor the adequacy of the system of internal controls; Discussed with YHB the matters required to be discussed by the auditing standards of the Public Company Accounting Oversight Board (“PCAOB”), including Auditing Standard No. 1301 “Communications with Audit Committees,” and Rule 2-07 of Regulation S-X promulgated by the SEC, as modified or supplemented; Received written disclosures and a letter from YHB as required by applicable requirements of the PCAOB, including PCAOB Rule 3526, regarding YHB’s communications with the Audit Committee concerning independence. The Audit Committee discussed with YHB its independence. Conducted an assessment of the Company’s relationship with YHB and evaluated YHB’s performance and the quality of audits. 2020, for filing2023, which was filed with the Securities and Exchange Commission. By recommending to the Board of Directors that the audited financial statements be so included,Commission on March 27, 2024.is not opining onwhich concluded that the accuracy, completenessprovision of such services by YHB was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. The Audit Committee’s Charter provides for pre-approval of audit, audit-related and tax services. The Charter authorizes the Audit Committee to delegate to one or fairnessmore of the audited financial statements.Audit CommitteeDaniel J. Harshman, Christopher S. Runion, Anne B. Keeler, Peter H. Wray2129 regulations promulgatedrules adopted by the SEC thereunder require the Company to conductgive shareholders the opportunity to vote, on a separate shareholder votenon-binding, advisory basis, to approve the compensation of named executive officers commonlyas disclosed in this proxy statement pursuant to SEC rules (commonly known as “say on pay”, as disclosed pursuant).disclosure rules of the SEC. The Dodd-Frank Act further provides that this shareholder vote shall not be binding on the issuer or board of directors of an issuer.The above-referenced provisions give you as a shareholder the right to endorse or not endorse our named executive compensationofficers through the following resolution:20212024 Proxy Statement, including the compensation tables, narrative discussion, and related material.”take into accountconsider the voting results when considering future executive compensation arrangements.common stockCommon Stock is required to approve the non-binding vote on the compensation of the named executive officers.resolution.20222025 annual meeting of shareholders must cause such proposal to be delivered, in proper form, to the Secretary of the Company, at its principal executive offices,whose address is P. O. Box 1111, Timberville, Virginia 22853, no later than December 7, 2021,13, 2024, in order for the proposal to be considered for inclusion in the Company’s Proxy Statementproxy statement for that meeting. The Company anticipates holding the 2022 annual meeting of shareholders on May 7, 2022.20222025 annual meeting of shareholders, notice of the nomination must be received by the Secretary of the Company not less than 60 days and not more than 90 days prior to the date of the 20222025 annual meeting. The notice must describe various matters regarding the nominee and the shareholder giving the notice. For a shareholder to bring other business before the 20222025 annual meeting of shareholders, notice of the proposed business must be received by the Secretary of the Company not less than 60 days and not more than 90 days prior to the date of the 20222025 annual meeting. The notice must include a description of the proposed business, the reasons therefor, and other specified matters. Any shareholder may obtain a copy of the Company’s Bylaws, without charge, upon written request to the Secretary of the Company. Based upon anIt is presently anticipated date of May 7, 2022 forthat the 2022Company’s 2025 annual meeting of shareholders will be held on or about May 17, 2025, in which case the Company must receive any notice of nomination or other business no later than March 8, 202218, 2025 and no earlier than February 6, 2022.By Order16, 2025.30 6, 2021Stephanie E. Shillingburg, Secretary22
