Robert L. Buzzo, Secretary

PROXY STATEMENT

First Community Bancshares, Inc.

29 College Drive

P. O. Box 989

Bluefield, Virginia 24605

The Board of Directors of First Community Bancshares, Inc. (the “Corporation”, “FCBI”, “First Community”, “we”, “us”, and “our”) solicits the enclosed proxy for use at the Annual Meeting of Stockholders of the Corporation (the “Annual Meeting”), which will be held on Tuesday, April 26, 2011,24, 2012, at 11:30 a.m. local timeEastern Daylight Time at Fincastle Country Club, 1000 Country Club Drive, Bluefield, Virginia and at any adjournment thereof.

The expenses of the solicitation of the proxies for the Annual Meeting, including the cost of preparing, assembling and mailing the notice, proxy statement and return envelopes, the handling and tabulation of proxies received, and charges of brokerage houses and other institutions, nominees or fiduciaries for forwarding such documents to beneficial owners, will be paid by the Corporation. In addition to the mailing of the proxy material, solicitation may be made in person, by telephone or by other means by officers, directors or regular employees of the Corporation.

This proxy statement and the proxies solicited hereby are being first sent or delivered to stockholders of the Corporation on or about March 11, 2011.

Shares of common stock (par value $1.00 per share) (“Common Stock”) represented by proxies in the accompanying form, which are properly executed and returned to the Corporation, will be voted at the Annual Meeting in accordance with the stockholder’s instructions contained therein. In the absence of contrary instructions, shares represented by such proxies will be voted FOR the election of the three (3)2 directors nominated by the Board of Directors and named in this proxy statement, FOR ratification of Dixon Hughes PLLCGoodman LLP as the Corporation’s independent registered public accounting firm, and FOR approval on a non-binding advisory basis, of the Corporation’s executive compensation, and FOR approval, on a non-binding advisory basis, a frequency of every “THREE (3) YEARS” for future stockholder advisory votes on the Corporation’s executive compensation.

Any stockholder has the power to revoke his or her proxy at any time before it is voted. A proxy may be revoked at any time prior to its exercise by the filing of written notice of revocation with the Secretary of the Corporation, by delivering to the Corporation a duly executed proxy bearing a later date, or by attending the Annual Meeting and voting in person. If your FCBI shares of Common Stock are held for you in a brokerage, bank or other institutional account, you must obtain a proxy from that entity andinstitution, bring it with you to the Annual Meeting and submit it with your ballot in order to be able to vote your shares at the meeting.

The Board of Directors has fixed March 1, 20112012 as the record date for stockholders entitled to notice of and to vote at the Annual Meeting. Shares of Common Stock outstanding on the record date are entitled to be voted at the Annual Meeting and the holders of record will have one (1)1 vote for each share so held in the matters to be voted upon by the stockholders. Treasury shares are not voted. Shares of the Corporation’s Series A Preferred Stock are not entitled to be voted on the matters presented at the Annual Meeting. Individual votes of stockholders are kept private, except as appropriate to meet legal requirements. Access to proxies and other individual stockholder voting records is limited to certain employees of First Communitythe Corporation and its agents who acknowledge their responsibility to comply with this policy. Stockholders of the Corporation do not have cumulative voting rights. As of the close of business on March 1, 2011,2012, the outstanding shares of the Corporation consisted of 17,868,67317,849,376 shares of Common Stock and no18,921 shares of preferred stock.

The presence in person or by proxy of a majority of the shares of the Common Stock entitled to vote is necessary to constitute a quorum at the Annual Meeting. Abstentions and broker non-votes, which are discussed below, are considered in determining the presence of a quorum. Directors are elected by a plurality of the votes cast at a

stockholders’ meeting with a quorum present. The three (3)2 persons who receive the greatest number of votes of the holders of Common Stock represented in person or by proxy at the Annual Meeting will be elected directors of the Corporation. Approval of the ratification of the independent registered public accounting firm and the advisory approval of the Corporation’s executive compensation program2012 Omnibus Equity Compensation Plan each require that the number of votes cast in favor of the proposal exceeds the number of votes cast against. The advisory approval of the frequency for future stockholder advisory votes on the Corporation’s executive compensation requires that the stockholder choose a frequency of one (1) year, two (2) years, three (3) years, or abstain, with the frequency that receives the highest number of votes cast deemed as the frequency for future advisory votes on executive compensation selected by stockholders.  Abstentions and broker non-votes will have no effect on the election of the three (3)2 directors nominated by the Board of Directors and named in this proxy statement, the ratification of the independent registered public accounting firm, and the advisory approval of the compensation of the Corporation’s named executives, or the advisory approval of the frequency for future stockholder advisory votes on the compensation of the Corporation’s named executives.

If the shares you own are held in “street name”street name by a brokerage firm, your brokerage firm, as the record holder of your shares, is required to vote your shares according to your instructions. In order to vote your shares, you will need to follow the directions your brokerage firm provides you. Many brokers also offer the option of voting by the Internet or by telephone, instructions for which would be provided by your brokerage firm on your vote instruction form. Under the current rules of the New York Stock Exchange, or NYSE, if you do not give instructions to your brokerage firm, it will still be able to vote your shares with respect to only the “discretionary”discretionary matter discussed above, which is the ratification of the independent registered public accounting firm. If you do not provide instructions to your brokerage firm, it will not be able to vote on “non-discretionary”non-discretionary matters, which can result in a broker non-vote. A “broker non-vote”broker non-vote occurs when a bank, broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because it does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner. The election of the three (3)2 directors nominated by the Board of Directors and named in this proxy statement and the advisory approval of the Corporation’s named executive officers’ (“NEO” or “named executives”) compensation, and the advisory approval of the frequency for future stockholder advisory votes on the Corporation’s NEO compensation2012 Omnibus Equity Compensation Plan are “non-discretionary”non-discretionary matters under the current rules of the NYSE.

PROPOSAL 1: ELECTION OF DIRECTORS

The Board of Directors is comprised of eight (8)7 directors, including seven (7)6 non-management directors, currently divided into three (3)3 classes with staggered terms. All directors have been determined to be independent by the Board of Directors except Mr. Mendez, who is employed by FCBIthe Corporation as President and Chief Executive Officer.

Allen T. Hamner served on FCBI’sthe Corporation’s Board of Directors during all of fiscal year 2010.2011. The total number of directors serving in 20102011 was nine (9),8, with eight (8)7 directors classified as non-management. However, Mr. ModenaDirector Hamner retired as a director, effective January 31, 2011.17, 2012. After careful consideration and discussion, and in full complianceaccordance with Article III of the Amended and Restated Bylaws of First Community Bancshares, Inc., effective April 29, 2008, the Board of Directors determinedresolved to reduce the number of directors to eight (8).

The class of directors nominated for re-election at the 20112012 Annual Meeting will be elected to serve until the 20142015 Annual Meeting. All nominees are currently serving on the Corporation’s Board of Directors. In the event any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for an alternate nominee designated by the present Board of Directors to fill the vacancy. In the event that additional persons are nominated for election as directors, the proxy holders intend to vote all proxies received by them for the nominees listed below. All nominees named herein have consented to be named and to serve as directors if elected.

No director or executive officer of the Corporation is related to any other director or executive officer of the Corporation by blood, marriage or adoption, except for Mr. Stafford who is the father of Mr. Stafford, II.

A table of each director and nominee, including his age, the applicable director class, which is based upon the year in which his term of service expires, and title, is set forth below. A biography describing each director’s and nominee’s qualifications and business background is set forth below the table. Each nominee has consented to be named to, and to serve as, a director if elected.  We doThe Corporation does not know of any reason why any nominee would be unable to serve as a director. If any nominee is unable to serve, the shares represented by all valid proxies will be voted for the election of such other person as the Board may nominate.

Members of the Corporation’s Board of Directors of First Community are expected to have the appropriate skills and characteristics necessary to function in the Corporation’s current operating environment and contribute to its future direction and strategies. These include legal, financial, management and other relevant skills. In addition, the Corporation looks to achieve a diversified Board, including members with varying experience, age, perspective, residence and background.

Mr. Hall is a 1961 graduate of Lynchburg College, Lynchburg, Virginia, with a BS degree in Mathematics and Business Administration. Mr. Hall also graduated from The American University, Washington, DC,D.C., with a MBA degree in 1964 and The American University Law School with a Juris Doctor degree in 1966. Mr. Hall currently serves as Senior Partner in the Hall and& Hall, Family Law FirmPLC in Midlothian, Virginia where he has practiced law since 1969. He served as a delegate in the Virginia General Assembly from 1976 to 2009, and Minority Leader, Virginia House of Delegates from 2002 to 2008. He is a former Chairman of the Board of The CommonWealth Bank in Richmond, Virginia. Mr. Hall has served on the Greater Richmond Chamber of Commerce Foundation Board since 2004. He also has served as a commissioner for the Virginia Department of Alcoholic Beverage Control.

Mr. Johnson earned a BS BA degree from the University of Richmond, Richmond, Virginia in 1973, with a concentration in Economics and Finance, and graduated with a MS degree from Virginia Commonwealth University, Richmond, Virginia in 1977, with a concentration in Real Estate and Urban Land Development. Mr. Johnson has been the President and Chief Executive Officer of The Wilton Companies, a real estate investment, development, brokerage and management group of companies, since 2002. He assumed the role of Chairman of The Wilton Companies in 2010. Prior to joining The Wilton Companies, Mr. Johnson served as President of Southern Financial Corp. of Virginia from 1985 to 2002 and Chairman of the Board of Southern Title Insurance Corporation from 1980 to 1985. Mr. Johnson currently serves as a director/trustee of First Community Bank, N. A., University of Richmond, Fidelity Group, LLC, City of Richmond Economic Development Authority, and the Apartment Trust of America. Mr. Johnson also serves as Director Emeritus of Ducks Unlimited, Inc. and previously served as a director of the State Fair of Virginia, Children’s Museum of Richmond, Ducks Unlimited, Inc., and Ducks Unlimited Canada.

Mr. Johnson’s relevant experience qualifying him for service as a director includes: long-range planning, various aspects of mortgage underwriting, marketing and mortgage portfolio servicing; chairing the Economic Development Authority of the City of Richmond, Virginia; past service as a director and Finance Committee member of Ducks Unlimited, Inc. and Ducks Unlimited Canada; and state and national offices with Ducks Unlimited, Inc., including Assistant Treasurer and member of the Finance and Audit Subcommittee.

Mr. Mendez’ relevant experience qualifying him for service as a director includes: history as a practicing CPA at a regional public accounting firm; external audit experience for a variety of businesses with emphasis in the banking sector while engaged in public accounting; familiarity with bank regulations and bank and parent regulatory examination process; writing, communicating and enforcing company, bank and subsidiary policies; success in negotiating and integrating acquired businesses in the execution of a variety of mergers and acquisitions; past service on a variety of boards and audit committees including a 211-bed community hospital; long term service as CFO of a publicly traded company; and the variety of offices held with increasing management responsibilities during twenty-six (26)27 years in management of a publicly traded financial services company.

Mr. Stafford’s relevant experience qualifying him for service as a director includes: owner and president of a broad rangesuccessful machinery manufacturing and repair business; owner and president of regulatory, business, legalseveral other successful businesses; director and banking related issues encounteredpresident of a charitable foundation; extensive familiarity with the history and operation of the Corporation and its predecessor banks; participation and leadership in the practicea wide variety of law; extensivecommunity and civic organizations; previous experience in elected state and municipallocal government service; extensive civic and community service;offices; and more than fifteen (15)20 years of board service for the Corporation.

Mr. Brown has been CFO of the Corporation and First Community Bank N. A. since May 2006. Mr. Brown served as Financial Reporting Coordinator of the Corporation from April 2005 to May 2006. Prior to joining the

Corporation, Mr. Brown was a corporate auditorCorporate Auditor and Audit Manager of United Bankshares, Inc. from September 1999 to April 2005. Mr. Brown also practiced in the field of public accounting from 1997 to 1999 where he practiced tax, accounting, and auditing across a variety of industries. Mr. Brown is a CPA and holds a MPA degree from West Virginia University.

Mr. Buzzo has been Vice President and Secretary of the Corporation and President and a director of First Community Bank N. A. since June 2000. 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, N. A.Bank. Prior to 1994, Mr. Buzzo held other leadership positions since joining the Corporation in 1973.

Mr. Lilly has been Chief Operating Officer of the Corporation and First Community Bank N. A. since June 2000. On January 25, 2011, Mr. Lilly was promoted to Chief Information Officer of First Community Bank, N. A.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.

Because we believethe Corporation believes risk oversight is a responsibility for each member of the Board of Directors, we doit does not concentrate the Board’s responsibility for risk oversight in a single committee. Instead, each of ourthe committees concentrates on specific risks for which it has an expertise, and each committee is required to regularly report 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 First Communityits programs to report and monitor fraud and by monitoring the Corporation’s internal controls over financial reporting. OurThe Corporation’s Compensation and Retirement Committee’s role in monitoring the risks related to ourits compensation structure is discussed in further detail below.

In the course of the Board’s determination regarding independence, it considers any transactions, relationships and arrangements as required by the Corporation’s independence guidelines. In addition, with respect to all directors, the Board considered the amount of First Community’sthe Corporation’s discretionary charitable contributions to charitable organizations where any of the directors serve as an officer, director or trustee, and determined that First Community’sthe Corporation’s contributions to each of the charitable organizations constituted less than the greater of $200,000 or five percent (5%)5% of the charitable organization’s annual consolidated gross revenues during the applicable organization’s last completed fiscal year.

All members of the Audit Committee, Compensation and Retirement Committee, and Governance and Nominating Committee must be independent directors as defined by NASDAQ. Members of the Audit Committee also must satisfy a separate Securities and Exchange Commission (“SEC”) independence requirement, which provides that they may not accept directly or indirectly any consulting, advisory or other compensatory fee from First Communitythe Corporation or its subsidiaries other than their directors’ compensation.

The Board held nine (9)9 regular meetings and three (3)7 special meetings in 2010.2011. No member attended fewer than seventy-five percent (75%)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 ourthe Annual Meeting absent exceptional circumstances. All current directors attended the 20102011 Annual Meeting.

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. We believeThe 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. We striveThe 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 directors in the same manner and typically bases its initial review on any written materials submitted with respect to the candidate.

It is in the Corporation’s best interests to maintain consistency in ourits compensation philosophy and implementation, but weit also believebelieves discretion should be used in times of prosperity as well as times when either the Corporation or the overall economy, or both, are performing below expectations. With this in mind, we believethe Corporation believes it is appropriate for some components of compensation to remain level or decline during periods of economic downturn, including periods of reduced earnings and declining stock prices, as was the case in 2008, 2009 and 2010.

The CRC and management evaluated and established 20102011 executive compensation in the context of the Corporation’s 20092010 performance and the current economy coupled with a universal awareness of the current focus placed on executive compensation. While we believethe Corporation believes that the compensation of ourits executive officers has consistently been balanced and fair, weit felt the need to take a conservative approach to setting compensation for in 20102011. Consequently, Mr. Mendez proposed, and returnthe 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 modest base salary increases following more than two (2) yearsany of no executive level compensation increases.

Consistent with past practice, going forward wethe Corporation will continue to use discretion coupled with a goals-driven formula to compensate executives. WeThe Corporation will not adopt incentives that promote risky behavior for near-term rewards. Although wethe Corporation made no incentive awards in 2010,2011, ordinarily, we attemptit attempts to use the equity portion of ourits compensation program to reward behavior that produces steady, long-term performance. We believeThe 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.

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

In determining Mr. Mendez’ compensation for 2010,2011, the CRC considered the Corporation’s performance and also considered Mr. Mendez’ individual performance in 2009.

During 2010, Mr. Mendez did not meet allachieved his principal financial goals, including successful performance against the 2010 operating budget and the continued enhancement of the goals and objectives established byCorporation’s primary capital ratios. For the CRC for 2009, principally dueyear, the Corporation exceeded its budgeted earnings target. Revenue gains along with strong expense control led to the failure to achieve budgeted earningsfavorable budget performance for the year becauseand 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 impairment of a segmentCorporation’s strategic plan for growth. Mr. Mendez also led renewal of the investment portfolio.  However,Corporation’s strategic plan, which was updated in the CRC believesfirst quarter of 2010 and oversaw the execution of key strategies under that he performed well given the challenging circumstancesplan.

One of the overall economy, particularly in the financial services sector.  The Corporation’s banking subsidiary produced continued positive, although decreased, core earnings,most important objectives for Mr. Mendez and the insurance agency and wealth management subsidiaries performed at or beyond expectations for 2009.  Unlike other financial services companies, the Corporation was able to continue to pay cash dividends.  Net interest marginthe 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 efficiency continuereal 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 favorably to those of other financial services companies.

Mr. Mendez continues to be charged with continuedthe 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 2009,2010, 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 2009 and included a $60 million stock offering and the substantial resolution of impaired investment securities, together resulting in a stronger balance sheet and capital position.

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 2010,2011, the Corporation was able to return $7.1$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 25,43027,639 shares of the Corporation’s Common Stock.  Mr. Mendez proposed and the CRC agreed that he would receive no bonus or salary increase in 2010.  Mr. Mendez proposed these actions because he believed they were appropriate in the current environment.  Mr. Mendez’ salary was not increased in 2010 (from 2009) and he was not granted any long-term non-cash compensation in 2010 and has received no long-term stock based compensation since 2003.  His base salary was last increased in 2008.

The CRC works in conjunction with Mr. Mendez to establish the base and incentive compensation of other named executives. OurIts 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 executives’

executive’s business or function. Mr. Mendez then makes a compensation recommendation to the CRC for each named executive. The named executives do not play a role in the determination of their compensation except for their discussion with Mr. Mendez regarding their individual performance against predetermined objectives.

In addition, Mr. Buzzo continued his supervision of the insurance and wealth management divisions of the Corporation, which ledCorporation. Both divisions fell short of their revenue goals due primarily to revenue and profitability gains in both for fiscal year 2009.  Consequently, Mr. Mendez proposed and the CRC approved that Mr. Buzzo receive no bonus but a salary adjustment of $8,000 in 2010.

Mr. Schumacher’s strategic and operational goals in 20092010 included implementing internal processes to meet the legal needsdesign and implementation of the Corporation while minimizing external costs, assuming supervisory responsibility overCorporation’s incentive program; researching and analyzing cost savings and strategic advantages of the DirectorCorporation’s wholly-owned subsidiary bank’s conversion from national association to state charter; development and implementation of Human Resources,a comprehensive risk management program; managing and modifying certain SEC required filings to meet new statutory requirements.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 met allaccomplished most of his goals for 2009.  Consistent with Mr. Mendez’ recommendation and CRC’s approval, Mr. Schumacher received no bonus but a salary adjustment of $8,000.

Considerations Used to Determine Compensation Program

Below is a summary of important considerations by the CRC affecting compensation for the named executives. For 2010,2011, the CRC performed its evaluation of compensation in light of the Corporation’s performance, the current economic situation, and the prevailing public sentiments and concern regarding executive compensation.

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 CRC uses its judgment in determining the amount of bonus or equity award, if any. We considerThe Corporation considers the current year as well as past and expected performance in our compensation decisions. This long-term view has the effect of moderating compensation levels and annual adjustments and awards.

The CRC reviewedreviews 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 reviewedreviews the compensation arrangements of the Corporation’s other top executives. The CRC concluded that it does not believe that the Corporation’s compensation policies and practices 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 towardsfocused on longer-term goals.

In 2010,2011, the CRC began a morecontinued its intensive review of the relationship between risk management and incentive compensation to ensure that incentive compensation does not encourage unnecessary andor excessive risks. The CRC also reviews the relationship between risk management policies and practices, overall First Communitycorporate strategy and executive compensation.

Mr. Mendez’ annual base salary was $392,902 for 2010.2011. The Corporation may terminate Mr. Mendez’ employment at any time for “Cause” (as defined in thehis employment agreement) without further obligation owed to Mr. Mendez. If the Corporation terminates Mr. Mendez’ employment for any reason other than for “Cause” or if he terminates his employment for “Good Reason” (as defined in thehis employment agreement), the Corporation will generally be obligated to provide compensation and benefits specified in the agreement for the balance of the term of the agreement but not less than thirty (30)30 months following the date of termination. Upon the termination of his employment, Mr. Mendez will be subject to non-competition and non-solicitation restrictions.

If Mr. Mendez dies while employed by the Corporation, the Corporation will pay his estate through the end of the month in which his death occurs. If Mr. Mendez’ employment is terminated as a result of permanent disability as determined pursuant to the agreement, then the Corporation has the right to terminate his employment before the end of the applicable term.

In the event that there is a change of control of the Corporation and Mr. Mendez’ employment is terminated by the Corporation or he chooses to terminate his employment within two (2)2 years after such change of control, the Corporation will pay Mr. Mendez severance pay in the form of a lump sum payment of 2.99 times his base salary then in effect on the date of termination.

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

In the event that there is a change of control of the Corporation and Messrs. Buzzo’s or Lilly’s employment is terminated by the Corporation or either chooses to terminate his employment within two (2)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 uses the compensation elements discussed below as the means to reward, retain and align executives’ interests with the long-term interests of the Corporation and stockholders.

Prior to 2010,2011, non-statutory stock options totaling 332,750 in five (5) installments, each vesting over a seven (7) year period, were awarded under the 1999 Stock Option Plan (“1999 Plan”). in 5 installments, each vesting over a 7 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 five (5)5 years after the date of the grantee’s retirement, provided retirement occurs at or after age sixty-two (62),62, disability, or death. If employment is terminated other than by retirement at or after age sixty-two (62),62, disability, or death, vested options must be exercised within ninety (90)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 (200,000)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 twenty-five percent (25%)25% of the award vests as of the date of the grant and twenty-five percent (25%)25% vests on each one (1)1 year anniversary thereafter, so that one hundred percent (100%)100% of such awards is vested as of the third anniversary of the date of grant. No grants were awarded in 20102011 to any named executive.  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 seven (7)7 years, while stock options and restricted stock awards under the 2004 Plan vest ratably over three (3)3 to four (4)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 three (3)3 years as a percentage of basic shares outstanding was less than one percent (1%)1%. Historically, the named executives have not been subject to stock ownership guidelines.

The CRC has reviewed the CD&A and discussed that analysis with management. Based on its review and discussions with management, the Committee recommended to ourthe Board of Directors that the CD&A be included in the Corporation’s Annual Report on Form 10-K for 20102011 and the Corporation’s 20112012 proxy statement. This report is provided by the following independent directors, who comprise the Committee:

The Corporation provides the named executives with additional benefits as shown in the “All Other Compensation” column of the 20102011 “Summary Compensation Table” shown above, that we believeit believes are reasonable, competitive and in line with the Corporation’s overall executive program. We provideThe Corporation provides additional detail of those benefits in the table below.

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:

The table below provides the following information about equity awards granted (if any) to the named executives in 2010:2011: (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 First Communitythe 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).