Director Johnson serves as Chairman, President and CEO of The Wilton Companies. The Wilton Companies isare comprised of three (3) entities under common management. During 2012,2015, an affiliate of the Corporation and its affiliates leased two officesoffice space from twoone (1) of these entities, The Wilton Companies, Inc. and The Wilton Companies, LLC.entities. Director Johnson holds an equity ownership in these two entities.this entity. The combined annual lease payments did not exceed the greater of 5%five percent (5%) of The Wilton Companies’ and its subsidiaries’ consolidated revenues for 20122015 or $200,000, and therefore, the relationship satisfied the standards for independence.

The Board of Directors and Board Meetings

Board Leadership Structure. William P. Stafford, II currently serves as CEO of the Corporation and as Chairman of the Board of Directors. The role of the CEO is to set the strategic direction for the Corporation separatesand manage its performance, while the Chairman of the Board is tasked with setting the agenda for Board meetings and presiding over meetings of the Board. The Board of Directors believes combining the roles of CEO and Chairman of the Board is in recognition of the differences between the two roles. The CEO is responsible for setting the strategic direction for the Corporation and the day-to-day leadership and performancebest interests of the Corporation whileat this time, as doing so best positions the Corporation to carry out its strategic plan for core growth; increases value for shareholders; provides for greater accountability and transparency; enhances oversight of operations; and provides for greater Board involvement. W. C. Blankenship is the Lead Independent Director and serves as Chairman of the Board provides guidance to the CEO and sets the agenda for Board meetings and presides overregularly convened meetings of the full Board.Independent Directors.

The separation of these roles is appropriate for the Corporation because the separation results in a more effective monitoring and objective evaluation of the CEO’s performance. In addition, the CEO is unable to control the Board’s agenda and information flow that reduces the likelihood that the CEO will abuse his power. The Board also believes that directors will be more likely to challenge the CEO if the Chairman of the Board is not the CEO.

Standards of Conduct. All directors, officers and employees of the Corporation must act ethically at all times and in accordance with the policies comprising the Corporation’s Standards of Conduct (“Code”(the “Code”), which is available at the Corporation’s website www.fcbinc.com and available in print to any stockholder upon request.(www.fcbinc.com). Certification of compliance with the Code is required on an annual basis. Only the Board of Directors may waive a provision of the Code for directors and executive officers and will only do so for just cause in an instance where the underlying ethical objective will not be violated. No waivers were granted to any director or officer during 2012.2015. Amendments to the Code will be published on the Corporation’s website, as required by SEC rules. If an actual or potential conflict of interest arises for a director, the director must promptly inform the Board.

Communicating Concerns to Directors. The Audit Committee and the non-management directors have established procedures to enable any employee who has a concern about the Corporation’s conduct, policies, accounting, internal accounting controls or auditing matters, to communicate that concern directly to the Board through an e-mail or written notification directed to the Chairman of the Audit Committee. Such communications may be confidential or anonymous. A notification explaining how to submit any such communication is provided to all new employees during orientation, is available in the employee handbook and on the Corporation’s Intranet, and can be found posted on bulletin boards at each location of the Corporation and its affiliated businesses and is provided to employees in the employee handbook.subsidiaries. The status of any outstanding concern is reported to the non-management directors of the Board periodically by the Chairman of the Audit Committee.

Stockholder Communications. Stockholders may communicate with all or any member of the Board of Directors by addressing correspondence to the Board of Directors or to the individual director and addressingdirector. Stockholders may address such communication to Robert L. Buzzo, Secretary, First Community Bancshares, Inc., P. O. Box 989, Bluefield, Virginia 24605-0989. All24605-0989, and all communications so addressed will be forwarded to the Chairman of the Board of Directors (in case of correspondence addressed to the Board of Directors) or to the individual director to whom such correspondence is directed, without exception.

The Board of Directors and Board Meetings

The. In 2015, the Board of Directors held tennine (9) regular meetings and two joint meetingsas well as one (1) meeting held jointly with the First Community Bank Board in 2012.board. No member attended fewer than 75%seventy-five percent (75%) of the Board meetings andor committee meetings on which the member sits. Each director is expected to devote sufficient time, energy and attention to ensure diligent performance of the director’s duties and to attend all regularly scheduled Board, committee, and stockholder meetings. It is the Board’s policy that the directors should attend the Annual Meeting absent exceptional circumstances. All current directors attended the 20122015 Annual Meeting.

Board Committees

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

Audit Committee.The members of the Audit Committee are Directors Perkinson,Director Blankenship, who chairs the Committee, HallCommittee; Director Johnson; and Johnson.Director Sarver. The Board has determined that Mr. Johnson is the Audit Committee financial expert. The Audit Committee is primarily concerned with the integrity of the Corporation’s financial statements, the independence and qualifications of the independent registered public accounting firm and the performance of the Corporation’s internal audit function and independent registered public accounting firm. Its duties include: (1) selection and oversight of the independent registered public accounting firm; (2) review of the scope of the audit to be conducted by the independent registered public accounting firm, as well as the results of their audit; (3) oversight of the Corporation’s financial reporting activities, including the annual report, and the accounting standards and principles followed; (4) discussion with management of its risk assessment and management policies, including risk relating to the financial statements and financial reporting process and the steps taken by management to monitor and mitigate such risks; (5) approval of audit and non-audit services provided to the Corporation by the independent registered public accounting firm; and (6) review of the organization and scope of the Corporation’s internal audit function and its disclosure and internal controls; and (7) reviews, approves and ratifies transactions with related persons.controls. The Audit Committee held 12eight (8) meetings during 2012.2015. The Audit Committee’s report is on page 31.31.

Executive Committee. The members of the Executive Committee are DirectorsDirector Stafford II, who chairs the Committee, Hall, Johnson, Kantor, Mendez, PerkinsonCommittee; Director Blankenship; Director Davis; Director Elmore; Director Johnson; Director Kantor; Director Sarver; and Director Stafford. Except for Mr. Mendez, each member of the Executive Committee is independent. The Executive Committee did not meet in 2012.2015. The Committee, subject to the supervision and control of the Board of Directors, has been delegated substantially all of the powers of the Board to act between meetings of the Board, except for certain matters reserved to the full Board by law.

Compensation and Retirement Committee. The members of the CRC are Directors Stafford, II,Director Johnson, who chairs the Committee, Johnson,Committee; Director Blankenship; and Stafford.Director Kantor. The CRC’s primary duties and responsibilities are to: (1) review, evaluate and determine annually the executive officers’ and directors’ compensation and the corporate goals and objectives relevant thereto, and to evaluate the executive officers’ performance in light of such goals and objectives; (2) review and evaluate all compensation decisions otherwise made by the President and CEO; (3) review, evaluate and determine all incentive and equity-based incentive awards; (4)  review organizational systems and plans relating to management development and succession planning; and (5) review and discuss with management the proxy statement’s Compensation Discussion and Analysis and produce the CRC report. The CRC does not delegate any of its responsibilities to subcommittees.

The CEO of the Corporation provides the CRC with a performance assessment and compensation recommendation for each of the other executive officers of the Corporation. The CRC has the authority to retain or obtain the advice of any advisors as the CRC deems necessary in the performance of its duties. In 2012, the CRC directly engaged Mathews, Young—Management Consulting (“Mathews Young”) to provide compensation

analysis and advice regarding incentive compensation for employees of the Corporation. At the request of the CRC, Mathews Young: (i) developed a peer group analysis for the CRC’s review of compensation levels; (ii) formulated recommendations for long range performance compensation; and (iii) developed recommendations for an incentive program for the special assets department.Mathews Young was not retained to provide any other services to the Corporation. The CRC is still in the process of reviewing the Mathews Young recommendations and anticipates implementing some or all of them in 2013. Retention of Mathews Young by the CRC raised no conflicts of interest. The CRC held fivesix (6) meetings in 2012.2015. The CRC’s report is on page 20. In 2012, the Board of Directors voted to amend the CRC Charter, which may be found on the Corporation’s website.18.

Compensation and Retirement Committee Interlocks and Insider Participation. None of the members of the CRC are or were formerly officers or employees of the Corporation or any of its subsidiaries. Finally, none of the executive officers of the Corporation served on any compensation committee or any board of directors of another company, of which any of the Corporation’s Board members was also an executive officer.

Governance and Nominating Committee. The members of the Governance and Nominating Committee are Directors Stafford, II,Director Blankenship, who chairs the Committee; Director Kantor; and Director Sarver. All three members of the Committee Kantor, and Stafford.are independent. The Committee’s responsibilities include the selection of director nominees for Board service and the development and review of governance guidelines. The Committee also: (1) oversees the annual self-evaluationsevaluations of the Board, as well as director performance and Board dynamics; and (2) makes recommendations to the Board concerning the structure and membership of the Board committees.committees; and reviews, approves, and ratifies transactions with related persons. This Committee held twosix (6) meetings in 2012.2015.

Director Candidates, Qualifications and Diversity. In considering whether to recommend any candidate for inclusion in the Board’s slate of recommended director nominees, including candidates recommended by stockholders, the Governance and Nominating Committee considers a number of criteria, including, without limitation, the candidate’s integrity, business acumen, age, experience, commitment, diligence, geographic representation, conflicts of interest and the ability to act in the interests of all stockholders. The Governance and Nominating Committee believes diversity should be considered in the director identification and nomination process. The Governance and Nominating Committee seeks nominees with a broad diversity of experience, professions, skills, geographic representation and backgrounds. The Committee does not assign specific weights to particular criteria, and no particular criterion is necessarily applicable to all prospective nominees. The Corporation believes that the backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow the Board to fulfill its responsibilities. The diversity of the Board is evaluated on a continuing basis by assessing whether varying viewpoints are routinely presented, evaluating the individual performance and contributions of each Director, and ensuring that varying perspectives are presented on key issues.

The Committee will consider all stockholder recommendations for candidates for the Board, which should be sent to the Governance and Nominating Committee, c/o Robert L. Buzzo, Vice President and Secretary of First Community Bancshares, Inc., P. O. Box 989, Bluefield, Virginia 24605-0989. The Corporation believes that directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the stockholders. The Corporation strives to maintain a Board with diverse experience in areas relevant to the Corporation’s overall business activities. The Committee also considers candidates recommended by current directors, company officers, employees and others. The Committee evaluates all nominees for directorsdirector in the same manner and typically bases its initial review on any written materials submitted with respect to the candidate.

Meetings of Non-management Directors. The non-management directors met without any management directorsdirector or employeesemployee present two times last year. Director Stafford, II served as chairman of these meetings.on at least three (3) occasions in 2015.

COMPENSATION DISCUSSION AND ANALYSIS

This section provides an overview

The following discussion and explanation of the material information relevant to understanding the objectives, policies and philosophy underlyinganalysis explains the Corporation’s compensation programs for executives and of

program as it applies to the general design philosophy ofexecutive officers named in the Corporation’s compensation policies and practices forSummary Compensation Table on page 19, who we refer collectively to as the “named executive officers,” as well as other employees included in any incentive compensation program. To assistThis discussion and analysis should be read in conjunction with understanding certain disclosuresthe Summary Compensation Table, its accompanying footnotes, and the additional tables and narrative disclosure that follows the Summary Compensation Table. The named executive offers of the Corporation is required to provide in this section, which is referred to aspresently serve without compensation from the “CD&A,”Corporation. They are, however, compensated by the Corporation provides information relating to executiveBank for services rendered.

Compensation Philosophy and director compensation in a series of tables and accompanying narrative. At the 2011 Annual Meeting of Stockholders, the stockholders approved the compensation of the Corporation’s named executives, which the CRC considered in its decisions to continue the objectives, policies and philosophy underlying the Corporation’s compensation programs for executives. The majority of the stockholder votes cast on the frequency of future say on pay advisory votes were in support of an advisory vote occurring once every three years. The next say on pay advisory vote will be held at the 2014 Annual Meeting of Stockholders.Objectives

The Corporation’s Compensation Philosophy

The goal of the Corporation’s executive compensation program is to retain and reward executive officers who create long-term value for stockholders.stockholders through consistent financial and operating performance coupled with strong leadership. This overriding objective affects all elements of the compensation program. The Corporation’sIn addition, the Corporation desires to become the employer of choice and to be viewed as a model of best practices for executive compensation, program rewards continued financial and operating performance coupled with strong leadership. The intent is to align an executives’the overall objective of aligning each executive’s long-term interests as closely as possible with those of stockholders and to motivatemotivating high performing executives to continue with the Corporation for long, productive careers.

AdjustmentsAdministration of the Executive Compensation Program

The CRC meets as often as necessary to 2012 Base Salariesperform its duties and 2011 Discretionary Bonuses of Executive Officers

In February, 2012, theresponsibilities. The CRC met to evaluatesix (6) times during calendar year 2015. The CRC typically meets with the Chief Executive Officer and establish executive compensation in the context of the Corporation’s 2011 performance. Although the Corporation’s performance in 2011 had been strong, on the recommendation of Mr. Mendez, the CRC decided to continue its conservative approach to determining compensation. Except with respect to Mr. Brown, who received a discretionary cash bonus, the CRC awarded no salary increases for 2012 and no discretionary cash bonuses or long-term incentive awards to the named executive officers. In August, 2012, the CRC met and reevaluated the 2011 performancePresident of the Corporation and, consideredwhen appropriate, with legal counsel and/or outside compensation advisors selected and retained by the sustained strongcommittee. The CRC also regularly meets in executive session without the presence of management.

The CRC annually reviews the Compensation and Retirement Committee Charter and all incentive plans used throughout the Corporation in all business lines. In this review of the incentive plans, the Committee makes a determination of whether the plans, individually or collectively, encourage excessive risk taking, whether each of the plans have reasonable limits and caps, and whether the overall structure of the incentive plans are aligned with the interests of the stockholders.

The CRC receives and reviews materials in advance of each meeting. These materials include information that management believes will be helpful to the CRC, as well as materials the CRC has specifically requested. Management plays a significant role in the compensation setting process. The most significant aspects of management’s role are: evaluating the performance of the Corporationsenior executive officers; establishing business performance targets and objectives for individual executives other than the first three quartersChief Executive Officer and President; and recommending salary levels and other terms of 2012. Onemployment for individual executives other than the recommendation of Mr. Mendez, the CRC decided to award salary increasesChief Executive Officer and discretionary bonuses to Messrs. Brown, Buzzo, Lilly and Schumacher to recognize specific, significant accomplishments and performance in 2011. President.

The CRC awarded no long-term incentive awards for 2011 performance. The criteria usedmeets in executive session each year to assessevaluate the performance of each individual executive officer isthe Chief Executive Officer and President, to set forth below under the headings “Considerations Used to Determine CEO Base Salary for 2012 and Discretionary Cash Bonus for 2011” and “Determination of 2012 Base Salaries and 2011 Discretionary Cash Bonusesperformance objectives for the Corporation’s other Named Executives.”Chief Executive Officer and President, and to set base compensation for the Chief Executive Officer and President. In addition, the CRC meets in executive session each year to review performance evaluations of the named executive officers, to approve any annual incentive compensation for the current fiscal year, to approve base compensation for the named executive officers for the next calendar year, and to consider and approve any grants of long term retention and equity compensation for all employees.

Considerations Used to Determine Compensation Program

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

Emphasis on ReliableConsistent and RelativeSustained Performance. The Corporation’s compensation program provides pay opportunities for those executives demonstrating superior performance for sustained periods of time.periods. Each of the named executives has served the Corporation for many years, and each has held diverse positions with growing levels of responsibility. Relative compensation reflects previous contributions and anticipated future contributions to the Corporation’s long-term success. In evaluating sustained performance, the Corporation also gives weight to the relative performance of each executive in his or her particular industry segment or function.

Emphasizing consistent, long-term performance impacts annual discretionary cash bonus and any equity incentive compensation. After assessing each named executive’s past performance, and expected future contribution, as well as the performance of the business or function the executive leads, the The CRC also uses its judgment in determining the amount of bonus or equity award,named executive compensation adjustments and incentive awards, if any. The Corporation considers the current year

as well as past and expected performance in compensation decisions. This long-term view has the effect of moderating compensation levels and annual adjustments and awards.encouraging executives to focus on sustaining acceptable, long-term financial performance.

Importance of Corporation Results. The CRC places substantial weight on the named executive’s contribution to the whole Corporation’s overall financial success, as opposed to limiting its focus strictly to an individual business or function.including achievement of short and long-term strategic goals and annual financial results. The CRC is of the opinion that the named executives share the responsibility of supporting the Corporation’s overriding goals and objectives as part of the management team.

Judgment Versus Formula DrivenFormula-Driven. The CRC does not use formulas in determining the level or mix of compensation. It evaluates a wide range of quantitative and qualitative factors, which include consistency in reaching financial and growth targets,targeted goals, the ability to perform in both good and challenging economic times, a history of integrity, evidence that the executive uses good judgment, and his or her ability to lead and create future value for the Corporation.

Risk Considerations in the Compensation Program. The CRC views the Corporation’s compensation program with a long-term focus. Under the program, the greatest amount of compensation can be achieved over long periods of time through sustained superior performance. Larger amounts of compensation are typically deferred or can only be realized upon retirement. The Corporation believes this will provideprovides a strong incentive to manage the Corporation for the long-termlong term with a clear message to avoid excessive risk in the near term. The CRC establishes goals and objectives with a mix of quantitative and qualitative performance elements in order to avoid excessive weight on any one performance measure. The CRC also attempts to balance the various elements of compensation among base salary (current cash payments), deferred cash payments and equity awards. The CRC maintains full discretion to adjust compensation based upon improved performance and adherence to the Corporation’s values.

In 2015, the CRC continued its extensive review of the relationship between risk management and incentive compensation to ensure that incentive compensation does not encourage unnecessary or excessive risks. The CRC reviewsreviewed the incentive compensation arrangements for the Corporation’s named executives and other top executives in various manners including, but not limited to, discussions with the Corporation’s compensation consultant, to ensure that their incentive compensation arrangements do not encourage them to take unnecessary and excessive risks that threaten the value of the Corporation. The CRC also reviews the compensation arrangements of the Corporation’s other top executives. The CRC concluded that the Corporation’s compensation policies and practices do not encourage excessive or inappropriate risk taking and instead encourage behaviors that support sustainable long-term value creation. In reaching this conclusion, the CRC considered the various metrics and elements of the compensation program. For instance, the CRC does not use highly leveraged, short-term incentives that drive high-riskhigh risk investments at the expense of long-term company value. Rather, the Corporation’s annual incentive compensation is based on balanced performance metrics that promote disciplined progress focused on longer-term goals.

Future Compensation Opportunity. The CRC intends to continue to provide a mix of different compensation elements. It considers current compensation versus long-term compensation and cash versus equity elements. It views cash payments as reflective of current or recent performance and stock payments as a means to encourage long-term behavior and retain executives. The CRC believes that each named executive should have a portion of his or her compensation at risk based onbe contingent upon how well the Corporation operates and how well its stock performs in the long run.

In 2012, the CRC continued its intensive review of the relationship between risk management and incentive compensation to ensure that incentive compensation does not encourage unnecessary or excessive risks. The CRC also reviewed the relationship between risk management policies and practices, overall corporate strategy and executive compensation.

Use of Compensation Consultants. The President and CEO of the Corporation provide the CRC with a performance assessment and compensation recommendation for each of the executive officers of the Corporation. Because of the enhanced level of regulation and scrutiny on executive compensation, the CRC retainedexercises its authority to retain independent compensation consultants, as needed, to provide technical advice and information related to compensation for all employees of the Corporation. In 2015, the CRC directly engaged Mathews, Young - Management Consulting (“Mathews Young”) to assist with amendments to anprovide compensation analysis and best practices advice regarding base and incentive compensation plan for employees of the Corporation. Mathews YoungCorporation and the Board of Directors. The consultant’s primary functions were to (1) assist in ensuring that any proposed compensation structure was the independent consultant of the CRC. The Corporation

didcompliant with best governance practices and does not retain a separateimpose excessive risk and (2) assist in ensuring that any proposed compensation consultant. The CRC considers executivewas reasonable and that no proposed compensation at other similarly sized and situated financial service companies as only one of numerous factorslevel was excessive in setting pay.comparison to peers. The CRC does not target a specific percentilecompensation levels within this group of perceived peers andpeer institutions, but rather uses the comparative data only as a reference tool after determining the types and amounts of compensation based upon itsthe CRC’s own evaluation.

Matthews Young did not propose any specific compensation calculation, structure, or amount and Mathews Young was not retained to provide any other services to the Corporation. Retention of Mathews Young by the CRC raised no conflicts of interest.

Components of Executive Compensation

The principal components of the executive compensation program are:

The CRC is still inattempts to balance the processvarious elements of reviewing the Mathews Young recommendations and anticipates implementing some or all of them in 2013.

Employment Agreements. The named executives have employment agreements, which include change of control protection for the executives and non-compete and non-solicitation requirements for the protection of the Corporation. The employment agreements with Messrs. Mendez, Buzzo, and Lilly were amended and restated as of December 16, 2008 to comply with Section 409A of the Internal Revenue Code of 1986, as amended, and initial employment agreements were entered into with Messrs. Schumacher and Brown. The Corporation describes all of these agreements in more detail below.

The amended and restated employment agreement with Mr. Mendez had an initial term of three years and provides that on January 1^st of each succeeding year the term of the agreement automatically extends an additional one year, unless the Corporation or Mr. Mendez gives notice that the employment term will not thereafter be extended. Mr. Mendez’compensation among annual base salary was $392,902 for 2011compensation (current cash payments), annual incentive awards (when appropriate), and 2012. The Corporation may terminate Mr. Mendez’long-term retention and equity awards. In addition to these principal components, the compensation program also includes employment at any time for “Cause” (as definedcontracts, change in his employment agreement) without further obligation owed to Mr. Mendez. If the Corporation terminates Mr. Mendez’ employment for any reasoncontrol agreements, deferred compensation elections, retirement plans, a bank owned life insurance program, a supplemental executive retirement plan and other than for “Cause” or if he terminates his employment for “Good Reason” (as defined in his employment agreement), the Corporation will generally be obligated to provide compensationperquisites and benefits, specifiedeach of which are discussed in the agreement for the balance of the term of the agreement, but not less than 30 months following the date of termination. Upon the termination of his employment, Mr. Mendez will be subject to non-competitionthis Compensation Discussion 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 pursuantAnalysis with respect to the agreement, then the Corporation has the right to terminate his employment before the end of the applicable term. In the event there is a change of control of the Corporation and Mr. Mendez’ employment is terminated by the Corporation or he chooses to terminate his employment within two years after such change of control, the Corporation will pay Mr. Mendez severance paynamed executive officers.

Base Compensation.Named executive officers receive base compensation in the form of a lump sum paymentbase salary. Levels of 2.99 timesbase salary are established annually under a program intended to maintain parity among the Corporation’s and bank’s executive officers based on levels of responsibility and with the competitive market for executives in comparable positions. Base salary is a critical element of executive compensation because it provides executives with a base level of monthly income. In determining base salaries, the CRC considers the executive’s qualifications and experience, scope of responsibilities and future potential, the goals and objectives established for the executive, the executive’s past performance, competitive salary practices at competitive companies, internal pay equity, and the tax deductibility of base salary.

Based on the above criteria, as well as compensation data provided by the CRC’s independent compensation consultant, the Chief Executive Officer and President recommend base salaries for all named executive officers to the CRC for their consideration, except with respect to their own base compensation. The CRC then considers and approves or declines base salary adjustments for all named executive officers. Based on the above criteria, the CRC also adjusts base salary for the Chief Executive Officer and President.

Prior to appointment to their present positions, Mr. Stafford, II had served as a Board member since 1994 and as Chairman of the Board since 2010, and Mr. Mills had served as an officer of the subsidiary bank since 1998 and as its Chief Credit Officer since 2007. When Mr. Stafford, II, and Mr. Mills assumed their present positions in the third (3^rd) quarter of 2013, the CRC set base compensation for each commensurate with the responsibilities of each position and their prior experience, but which also reflected their absence of prior experience in their new roles. With respect to Mr. Stafford, II, initial base compensation also reflected his agreement with the Board to spend the significant majority, but less than all, of his time in management of the Corporation, which allowed Mr. Stafford, II to remain a member of his firm and continue his law practice on a much reduced scale. Based on consideration of the above factors, and the relatively short time since assuming their present positions, the CRC did not adjust base compensation for the Chief Executive Officer or President in 2014. For the 2015 fiscal year, the CRC noted that Messrs. Stafford, II’s and Mills’ base salary was below the lowest end of the peer review data.  Accordingly, the CRC adopted a plan to increase their base salary over a period of three years, with each annual increase independently considered by the CRC at that time. Based on the aforesaid consideration, Mr. Stafford, II and Mr. Mills received a 40% increase in their respective base salaries for the 2015 fiscal year.  Mr. Brown received a 7% increase in his base salary in effect onto align his salary more closely with the date of termination. On December 16, 2010, the Board of Directors amended the agreement withpeer group.  Mr. Mendez to waive the agreement’s provision for standard cost of living increases.

The December 16, 2008 employment agreements with Messrs. Buzzo and Lilly supersede and replace employment agreements for Messrs. Buzzo and Lilly entered intoPell received a 2% performance based increase in 2002. Each agreement has an initial term of three years, and, similar to Mr. Mendez’ agreement, each is renewed for an additional one year term each January 1^st unless the Corporation or the individual executive gives notice that the employment term will not be extended. In the event there is a change of control of the Corporation and Messrs. Buzzo’s or Lilly’s employment is terminated by the Corporation or either chooses to terminate his employment within two 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 effectsalary. Please see the Summary Compensation Table on page 19 for more information about the date2015 base salaries of termination.

The Corporation entered into initial employment agreements with Messrs. Schumacher and Brown as of December 16, 2008. These agreements contain substantially similar terms and are modeled after Mr. Mendez’ agreement. Mr. Schumacher’s agreement has an initial term of three years and is renewed for an additional year each January 1^st unless he or the Corporation gives notice that the employment term will not be extended. The agreement for Mr. Brown has an initial term of two years, and is renewed for an additional year each January 1^st unless the Corporation or Mr. Brown gives notice that the employment term will not be extended. Mr. Schumacher’s agreement provides for a lump sum payment of 2.99 times base salary, and Mr. Brown’s agreement provides for a lump sum payment of two times base salary, in the event of a change of control coupled with terminated employment either without “Cause” by the Corporation or by the executives for “Good Reason” (as defined in their respective agreements).

Compensation Elements Used to Achieve Corporation’s Goals

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.

Base Salary. The amount of base salary for each named executive depends upon the scope of the executive’s duties, his or her individual performance and length of service, and his or her leadership ability. Current salary impacts decisions regarding salary adjustments relevant to peers (within and outside the Corporation). Base salaries are reviewed annually.officers.

Bonus. DiscretionaryAnnual Incentive Compensation.For each named executive, the CRC may award discretionary cash bonusesincentive compensation based upon the previous year’s performance as evaluated by the CRC, CEO and the CEOPresident (except the CEO doesand President do not participate in his or hertheir own bonus determination)incentive determinations). Please see the Summary Compensation Table on page 19 for more information about annual incentive compensation awarded to named executive officers in 2015 based on 2014 performance.

Stock Options

In 2014, the Corporation’s budgetary, strategic and Restricted Stock Awardsoperational achievements were such that the CRC considered them sufficient to warrant payment in 2015 of a reasonable amount of discretionary annual incentive compensation to the named executive officers and other employees. The CRC, with input from management regarding budget and performance, chose to award incentive compensation to the named executive officers as set forth in the Summary Compensation Table on page 19. Such incentives were paid in the form of cash (75%) and restricted stock (25%). The CRC believes that paying some portion of incentive compensation in the form of stock is a best practice that serves to facilitate its goal of aligning the interest of the named executives with those of the shareholders by giving them a long-term stake in the Corporation’s equitysuccess.

In December 2015, the CRC adopted an executive and board incentive program is designedcompensation methodology which provides suggested amounts of annual incentive compensation, paid to recognize responsibility, reward excellent performance, retain named executives and other employees in the form of cash bonuses (75%) and restricted Corporation stock (25%). The methodology is partially based on certain evaluation criteria, including but not limited to Corporation performance compared to strategic objectives as measured by incentive compensation scorecards, Corporation performance compared to strategic objectives not measured by scorecards, and the overall financial and strategic performance of the Corporation. The methodology will be first employed to provide suggested awards in 2016 for 2015 performance. Scorecards are developed and/or reviewed on an annual basis by the CRC in conjunction with the Board of Directors’ review of the Corporation strategic plan. Financial measurements within the scorecard are calculated using audited financial information obtained from the Corporation’s filed Form 10-K. The scorecard methodology defines suggested maximum incentive compensation payout as a percentage of each executive’s base compensation within a defined return on average equity (“ROAE”) range. Equity compensation, incentive compensation, or other forms of compensation for executives are excluded from the incentive compensation calculation. No incentive compensation is awarded if annual ROAE is 6.50% or less. The scorecard methodology encompasses key performance indicators (“KPI”), which align theirwith Corporation strategic plan objectives and annual financial budget. Each KPI is assigned a weighting. Some KPI’s vary over time (both as to identity and amount). The KPI’s under the current scorecard methodology include: Return on Average Assets (ROAA); Earnings Per Share (EPS); and Efficiency Ratio among others, and include a discretionary component. A performance objective, or target, is established for each KPI. Recognizing the difficulty in precisely defining the appropriate target, and to further discourage imprudent or excessive risk taking, a range of acceptable performance is defined representing the minimum level of performance and maximum level of performance relative to target that results in an incentive compensation payout for that KPI.

However, this methodology provides only a suggested incentive compensation amount based on general guidelines that the CRC may consider in its decision making process. Sole discretion as to the terms and conditions of any award, including whether or not to grant incentive compensation and in what amounts, remains with the Board, acting directly through the CRC. The CRC continues to oversee all aspects of the design, payment, and oversight of executive incentive compensation. Further, the Corporation’s Board of Directors retains authority to review and ratify all CRC action. The ultimate goal of the both the CRC and the Board in granting incentive compensation is to align the interests of participants with Company shareholders and encourage long-term strategic thinking and performance while at the same time discouraging imprudent, unreasonable or excessive risk taking.

Long-Term Retention and Equity Compensation. The CRC believes that long-term retention and equity compensation is an important component of the compensation program because it has the effect of retaining and motivating executives, aligning executives’ financial interests with thosethe interests of stockholders.stockholders, and rewarding the achievement of the Corporation’s long-term strategic goals. The CRC has usedmay grant either stock options andor restricted stock awards sparinglyto executive officers under the Corporation’s long-term retention and determined notequity compensation methodology. Stock options provide executive officers with the opportunity to makepurchase and maintain an equity interest in the Corporation and to share in the appreciation of the value of our stock. When granting restricted stock, the CRC determines the applicable vesting schedule reflecting attainment of designated performance goals and/or other criteria specified in the award documents. The CRC may provide for the payment of any awards based on 2011 performance.applicable dividends paid with respect to any shares of common stock subject to a restricted stock award during the period prior to lapse.

On February 28, 2012, the Board of Directors approved the First Community Bancshares, Inc. 2012 Omnibus Equity Compensation Plan (the “2012 Plan”), which in turn was approved by stockholders at the 2012 Annual Meeting. The Board of Directors effectively replaced all prior equity plans with this single plan approved by the stockholders that conforms to current best governance practices. As of the date of the mailing of this proxy, there have been noeight (8) grants under the 2012 Plan to anythe named executive officer.officers, none of which occurred in 2015.

Deferred Compensation.

The Corporation offers a qualified defined contribution plan known as the KSOP to most of its employees. However, the named executives are unable to fully participate in the KSOP due to certain restrictions on their deferrals based upon annual testing limits imposed by the Internal Revenue Code. The Corporation provides a non-qualified deferreddid not grant any long-term incentive equity compensation plan discussed in more detail elsewhere in this proxy statement and referred to as the WRAP plan as a mechanism to allow highly compensated participants to defer a portion of their compensation that cannot otherwise be deferred under the Corporation’s qualified plan. The WRAP plan is intended to promote retention by providing a long-term savings vehicle on a tax efficient basis.

Pension Plans. The Corporation provides a defined retirement benefit to the named executives in 2015. However, in 2014, the Corporation achieved a three-year average growth rate in core diluted earnings per share of not less than five percent (5%). Accordingly, a scheduled vesting of restricted stock awarded to named and others pursuantother executive officers, as well as certain other employees under the First Community Bancshares, Inc. 2012 Omnibus Equity Compensation Plan, occurred on May 28, 2015, resulting in the vesting of 17.2% of the restricted stock awards previously granted. No additional stock awards under the 2012 Omnibus Equity Compensation Plan have been granted or are expected to separate agreements, eachvest, and no stock option awards were granted to named executive officers in 2015.

In December 2015, the CRC adopted an executive and board equity compensation methodology to bring additional consistency and objectivity to the design and award of equity compensation which is knownwill be used as a supplemental executive retention plan (“SERP”). Each SERP is unfundedconsideration in awarding such equity compensation beginning in 2016. Whether to award equity compensation, as well as the level and designed to provide a benefit paid at age 62, normal retirement agestructure of any award remains the responsibility and in the SERP. The benefit is targeted at 35%sole discretion of final compensation projected at an assumed 3% salary progression rate,the CRC, and subject to an annual benefit limit of $80,000. In return for certain amendments to his employment agreement, on December 16, 2010, the Board of Directors in concert with theretains authority to review and ratify all CRC amended the SERPactions with respect to Mr. Mendezequity compensation. The Board of Directors believes that directors, executive officers and certain other key employees of the Company should own and hold a reasonable amount of FCBC common stock to remove the annual maximum benefit, with said amendment effective January 1, 2011. Vesting is on a graded schedule as follows: 25% vesting after five years of service; 50% vesting after ten years of service; 75% vesting after 15 years of service; plus an additional 5% vesting for each year of service beyond 15 years, with full vesting after 20 years of service or reaching age 62, whichever occurs first. In connectionfurther align their interests with the SERP,long-term interests of stockholders, further promote the Corporation entered into life insurance endorsement method split dollar agreements with Messrs. Mendez, Buzzo, Lilly,Company’s commitment to sound corporate governance, and Schumacher. Under these agreements, the Corporation shares 80% of death benefits (after recovery of cash surrender value) with the designated beneficiariesto specifically discourage imprudent, unreasonable or excessive risk taking. All officers and directors of the executives under life insurance contracts. The Corporation,Company are encouraged to hold as ownermany shares of the policies, retainsCompany as possible given their individual situation. The equity compensation methodology is designed and administered to promote and assist directors, officers and other employees to achieve the aforesaid stock ownership objectives. The Board of Directors believes that equity compensation should be an integral and ongoing component of total compensation for Executives and Directors. The equity compensation methodology participants are Executives, Directors, and Employees. Under the methodology, any grant of stock to an executive or director is subject to a 20% interest in life proceeds after reimbursementratable three (3)-year vesting schedule and is further subjected to the Corporationa five (5)-year holding period subsequent to vesting. Any grant of retirement benefits paid and a 100% interest in the cash surrender value of the policies.

2012 Discretionary Bonuses and Long-term Incentive Awards

The CRC and management believe itstock to other employees is in the Corporation’s best interestsform of incentive stock options with a three (3)-year cliff vesting schedule. Subsequent to maintain consistencyvesting, the recipient has 10 years in itswhich to exercise the option. Annual grants of equity compensation philosophyare contingent upon the Company obtaining a minimum three (3)-year rolling Return on Average Equity (ROAE) of 7.00%. Equity compensation will not be paid in a year in which the Company’s minimum three (3)-year ROAE is below 7.00%. It is anticipated that the aforesaid ROAE will be adjusted from time to time to reflect economic conditions, improving bank operating results, and implementation, but it also believes discretion should be used in times of

prosperity as well as times when eitheradjustments to the Corporation or the overall economy, or both, are performing below expectations. With this in mind, the CRC believes it is appropriate for some components of compensation to remain level or decline during periods of economic downturn.

While the Corporation has taken a conservative approach to setting compensation in recent years, Mr. Mendez proposed, and the CRC approved, modest salary adjustments for the other executive officers in August, 2012. Additionally, the CRC received recommendations for and approved incentive bonuses for executive officers based on the achievement of key operating goals in 2011. These incentive bonuses were generally awardedCompany’s strategic plan goals. The financial measurements utilized in the third quarter of 2012. These were the first incentive bonuses awarded since the onsetadministration of the 2008 recession and the associated negative credit and real estate cycle. The CRC will meet later this year to evaluate 2012 performance to determine whether to award discretionary cash bonuses and long-term incentive awards to the named executives based on 2012 performance.equity compensation methodology are calculated using audited financial information.

Consistent with past practice, going forward the CRC will continue to use discretion coupled with a goals-driven formula to compensate executives. The Corporation will not adopt incentives that promote risky behavior for near-term rewards. The CRC believes executive compensation should include both short-term and long-term elements reflective of, and driven by, the Corporation’s respective current and long-term operating performance compared with similarly situated publicly traded, regional financial services companies.

Considerations Used to Determine CEOin Setting Base SalaryCompensation for 20122015 and Discretionary BonusAnnual Incentive Compensation for 2011.2014 Performance

At

Each year, and on a continuing basis, the beginning of each year, Mr. MendezCorporation develops recommendedshort and long-term objectives necessary for the Corporationit 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 infor the most part frommirror the Corporation’s strategic plan and annual financial and budget planning sessions, during which the Corporation’s performance and growth opportunities are analyzed and goals and objectives are established for the upcoming year.year(s). These goals and objectives include both objective financial metrics and quantitative and qualitative strategic and operational considerations that are evaluated subjectively, without any formal weighting assigned.goals. The CRC uses these objectives to evaluate the performance of the CEO and Mr. Mendez usePresident. However, each financial metric or quantitative goal used by the CRC in this process to focusis only one of many considerations. Resulting evaluations and any resulting incentive or other compensation is not exclusively formula-driven. The CRC, President and CEO believe this process focuses the Board, CRC, CEO, President and the entire management team on factors they believethat create long-term stockholder value. The CRC discusses with Mr. Mendez its considerations regarding Mr. Mendez’ ownthe President and the CEO these factors as they relate to their respective compensation. Mr. Mendez doesThe President and CEO do not participate in the final determination of his owntheir respective compensation.

In determining Mr. Mendez’ base salary for 2012 and his discretionary bonus compensation for 2011,2015, the CRC considered the Corporation’s performance and Mr. Mendez’ individual performance in 2011. During 2011, Mr. Mendez achieved his principal financial goals, including successful performance against the 2011 operating budget as well as the continued enhancement of the Corporation’s primary capital ratios. Revenue gains and strong expense control led to achievement of budget goals for the year and continuation of the company’s re-establishment of earnings performance at normalized levels following the extended recessionary environment of the preceding three years. These results, along with balance sheet management and other capital strategies, yielded strong and improving leverage and capital ratios, which led the Corporation well beyond capital minimums dictated by regulatory authorities, and placed the Corporation within the top tier among its peers and the industry in terms of capital strength.

In May of 2011 the Corporation’s capital position was significantly advanced as Mr. Mendez organized, directed and led a private placement of the company’s convertible preferred stock resulting in the issuance of $18.9 million in new issue convertible preferred shares, on terms considered favorable to the Corporation. This resulted in significant improvement in the company’s primary capital levels and set the stage for a series of growth initiatives.

In 2011, the Corporation continued to realize earnings and operating benefits drawn from the Corporation’s last banking acquisitions in mid-year 2009 and late 2008. Mr. Mendez also assisted in the identification of further

acquisition targets in execution of the Corporation’s strategic plan for growth. These efforts were instrumental in the completion of additional key business acquisitions in subsequent periods. Mr. Mendez continued work on deployment of the Corporation’s updated strategic plan, which was completed in the first quarter of 2010 and oversaw the execution of key strategies under that plan.

One of the most important objectives for Mr. Mendez and the Corporation was the maintenance of asset quality measures in the top quartile among the industry. This objective was achieved in 2011 as the Corporation continued to manage through a difficult credit and real estate environment. Through the direction of other executives and departments, asset quality measures for the Corporation were maintained at satisfactory strong levels throughout the year and continued to compare favorably with broader industry metrics for non-performing assets, delinquencies and net charge-offs.

Mr. Mendez continues to be chargedworked closely with the search for suitable candidates for banking mergersCEO and acquisitions within the Corporation’s footprint;President to lead the Corporation’s strategic planning process; and to retain and motivate the Corporation’s management team. Throughout 2011, and as noted above, the Corporation’s focus was also directed at capital retention and development, as well as continued improvement of the Corporation’s risk profile and loss mitigation. These goals were all satisfactorily met during 2011.

Determining 2012 Base Salaries and 2011 Discretionary Bonuses for the Corporation’s Other Named Executives

The CRC works in conjunction with Mr. Mendez to establish themonitor base and incentive compensation of other named executives. ItsThe CRC’s goal is to achieve a balance of base compensation and incentives that retainboth contributes to retention of a qualified group of senior managersmanagement team and ensureensures that the Corporation remains competitive over the long-term.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,the President, who develops the objectives that each individual is expected to achieve, and against which their performance is assessed. Similar to Mr. Mendez, theseThese objectives are reviewed with the CRC and are also 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 The President assesses each named executive’s individual performance against the objectives, the Corporation’s overall performance and the performance of the executive’s business or function. Mr. MendezThe President and CEO then makes areport base compensation recommendation to the CRClevels, including any adjustments, as well as proposed annual incentive compensation for each named executive.executive to the CRC. The CRC then approves proposed annual incentive compensation and/or long-term retention and incentive equity compensation, if any, for the named executives, other members of the management team, and other employees. The named executives do not play a role in the determination of their compensation except for their discussion with Mr. Mendezthe President, CEO and/or CRC regarding their individual performance against predetermined objectives.

In determining

Retirement Plans

The Corporation maintains an Employee Stock Ownership and 401(k) Plan for all employees, and a Supplemental Employee Retirement Plan, which we refer to as the base salarySERP, for certain executive officers.

KSOP Plan.The Corporation offers a qualified defined contribution plan known as the “KSOP” to most of its employees, including the named executives. The KSOP Plan is administered by a Committee appointed by the Board of Directors of the Corporation.

WRAP Plan.In addition to the KSOP, the Corporation provides a non-qualified deferred compensation plan (discussed in more detail elsewhere in this proxy statement) referred to as the “WRAP” plan because the named executives, as well as certain other key executives, are unable to fully participate in the KSOP due to certain restrictions on their deferrals based upon annual testing limits imposed by the Internal Revenue Code. The WRAP plan allows highly compensated participants to defer a portion of their compensation that may not otherwise be deferred under the Corporation’s qualified plan. The WRAP plan is intended to promote retention of key executives by providing a long-term savings vehicle on a tax efficient basis.

SERP.The Corporation provides a defined retirement benefit to the named executives and certain other key executives pursuant to a supplemental executive retention plan (“SERP”). Each executive’s SERP is unfunded and designed to provide a benefit paid upon separation from service at or after age 62. The benefit is targeted at thirty-five percent (35%) of final compensation projected at an assumed three percent (3%) salary progression rate, and subject to an annual benefit limit of $80,000. Vesting is on a graded schedule as follows: twenty-five percent (25%) vesting after five (5) years of service; fifty percent (50%) vesting after ten (10) years of service; seventy-five percent (75%) vesting after fifteen (15) years of service; an additional five percent (5%) vesting for each year of service beyond fifteen (15) years, and full vesting after twenty (20) years of service and reaching age 62.

Why We Maintain the KSOP, WRAP and SERP

The Corporation is a product of an active mergers and acquisitions program and we have evolved and grown from a local community bank into a regional bank holding company over a period of years. The Corporation adopted an employee stock ownership plan in 1992, which evolved into a 401(k) benefit plan. Additionally, the limitations of our KSOP caused us to pursue other strategies designed to provide salary replacement programs for retirement planning for our executive officers. Recruitment of experienced executive officers Mr. Mendezalso required more flexible benefit programs to offset career change disadvantages and to offer offsetting benefit programs. The CRC believes that the benefit plans offered are competitive with those provided by other banks with which we compete for executive talent.

Perquisites and Other Benefits

In addition to the annual and long-term compensation described above, named executive officers receive other benefits and items of compensation. Such benefits and other items of compensation include, among others: group life insurance, club dues, and automobile allowance. These benefits are provided to increase the availability of the executives to focus on the business of the enterprise. The costs associated with providing these benefits and other items of compensation for our named executive officers are reflected in the Summary Compensation Table on page 19. A chart disclosing the value of these additional items is found on page 20 entitled “All Other Compensation.”

Executive officers participate in other employee benefit plans generally available to all employees on the same terms as similarly situated employees. These plans include medical, dental, group life insurance and group disability programs, as well as health savings accounts for reimbursement of medical expenses. The CRC has chosen to disclose all perquisites provided to our named executive officers in the Summary Compensation Table on page 19 even if the perquisites fall below the disclosure thresholds under the SEC rules.

Deferred Compensation Opportunities

Another aspect of our executive compensation program is the First Community Bancshares, Inc., Deferred Compensation Plan, which we refer to as the WRAP and a separate Directors’ Deferred Compensation Plan. The WRAP (Executives) and the Deferred Compensation Plan (Directors) are voluntary, non-tax qualified, deferred compensation plans available to our directors and certain employees, which employees include all of the named executive officers, to enable them to save for retirement by deferring a portion of their base and/or annual incentive compensation or director fees. The Directors’ Deferred Compensation Plan does not require the Corporation to make matching contributions. The WRAP, which is intended to mirror the Company’s qualified KSOP can include a discretionary match that coincides with a match made to the KSOP to the extent any employee, including the named executive officers, cannot otherwise receive a match in the KSOP. Balances for participating employees and directors are deemed invested in investment vehicles permitted from time to time by the Board of Directors in advance and credits (or debits) for investment experience may be made from time to time based on individual fund elections similar to what participants in the KSOP are permitted to make. The CRC believes that these deferred plans are competitive with that provided by other banks with which we compete for executive and director talent. Please see the Nonqualified Deferred Compensation table on page 24 for additional information about the Deferred Compensation Plan for named executive officers.

Employment Contracts

The Corporation and its subsidiaries provide certain executive officers, including our named executive officers, with written employment contracts. There are no golden parachute type provisions, tax gross up provisions or other similar provisions contained in the contracts. See the section entitled “Potential Payments Upon Termination,” including the related tables, beginning on page 25 for an estimate of the benefits that the named executive officers would be entitled to receive pursuant to their respective employment agreements under various employment termination scenarios.

Subsequent to reorganization of the executive management team in 2013 and 2014, management and the CRC consider the skill setdeveloped an improved, prototype executive employment agreement. Each of the individualCorporation’s key executives, including each of the named executives, has executed the new prototype agreement. The new agreements result in greater uniformity among the executive officer,officers concerning the terms of their employment and treat the executive officers as a team. The execution and provisions of said agreements was previously reported on a Form 8-K.

The prototype agreement has an initial term of three (3) years, automatically extend for an additional year each January 1^st unless the Corporation or the respective executive gives notice that the employment term will not be extended. Each provides for continuation of base salary for thirty-six (36) months, in the event of a change of control coupled with terminated employment either without “Cause” by the Corporation or by the executives for “Good Reason” (as defined in their respective agreements). The Corporation may terminate the employment of any executive at any time for “Cause” (as defined in the prototype agreement) without further obligation owed. If the Corporation terminates employment for any reason other than for “Cause” or the executive terminates his employment for “Good Reason” (as defined in the prototype 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. Upon the termination of employment, the executive will be subject to non-competition and non-solicitation restrictions. If the executive dies while employed by the Corporation, the Corporation will pay his or her levelestate through the end of responsibility withinthe month in which his death occurs. If their employment is terminated as a result of permanent disability as determined pursuant to the agreement, then the Corporation has the right to terminate employment before the end of the applicable term.

Tax Deductibility of Compensation

Under Section 162(m) of the Code, publicly held corporations generally may not take a tax deduction for compensation in excess of $1 million paid to any named executive officer during any fiscal year. There is an exception to the $1 million limitation for performance-based compensation meeting certain requirements. To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the CRC has not adopted a policy requiring all compensation to be deductible. However, the CRC considers deductibility under Section 162(m) with respect to compensation arrangements for executive officers. In 2015, none of our executive officers received compensation that the Corporation could not deduct by reason of Section 162(m).

Stock Ownership Guidelines

The Board of Directors believes that it is in the best interests of stockholders for executive officers and salaries paid by companiesdirectors to own a significant amount of similar size and in similar linesCommon Stock of business as the Corporation. To that end, the Corporation has adopted the First Community Bancshares, Inc., Stock Ownership Policy. The Corporation does not benchmark to a specific peer group, but uses this information as a general reference for comparing the Corporation’s executive base salary compensation to that of other companies in the industry. With respect to their 2011 discretionary bonuses, Mr. Mendez and the CRC considered the following criteria:

David D. Brown. As the leaderpolicy encourages ownership of the Corporation’s finance function, Mr. Brown’s financial objectivesCommon stock by the directors and executive management in 2011 focused onorder to align the overall performanceinterests of the Corporation’s stockholders with the Corporation’s key decision makers. Although minimum stock ownership guidelines are set forth in the policy for certain executive officers and directors, all officers and directors of the Corporation similarare encouraged to Mr. Mendez’. Mr. Brown’s strategic and operational goals included providing operational support to achieve financial goals and strengthen the finance function, while maintaining a strong controllership function and improving regulatory relationships. Mr. Brown also continued to search for suitable candidates for banking mergers and acquisitions within the Corporation’s footprint and FDIC-assisted transactions.

Robert L. Buzzo. In 2011, Mr. Buzzo was primarily responsible for First Community Bank’s largest banking region, along with his Corporate responsibilities. In 2011, Mr. Buzzo’s region achieved its net income, loan and core deposit growth objectives. Mr. Buzzo also achieved his operational strategic objectives in 2011. Under Mr. Buzzo’s leadership, the division comprising the Southern Region was among the top performing areashold as many shares of the bank.

In addition, Mr. Buzzo continued his supervisionCorporation as possible given their individual situation, ideally in excess of the Trust and Wealth Management Divisions of the Corporation. During 2011, the Trust Department fell just short of its financial objectives while First Community Wealth Management met its financial performance goals.

E. Stephen Lilly. Mr. Lilly completed a core banking system study leading to an integrated, efficient technology platform for the Company and negotiated and executed new technology contracts in October 2011. The new consolidated platform eliminated 11 technology vendors. He also consolidated Secondary Market Mortgage processing into the Credit Administration/Retail Credit Department to provide efficiency and streamlined mortgage processing and underwriting. Consolidation of the departments was completed in May of 2011, which led to reduced costs in producing residential real estate loans. Mr. Lilly completed restructuring of the Corporation’s product/pricing administration, which led to an enhanced net interest margin. His further coordination of Pricing and Product Committees has led to improved net interest margin, which compares favorably to industry peers. Mr. Lilly successfully realigned the Corporation’s Commercial Services Department in February 2011, achieving significant cost savings with the goal of improved delivery of commercial products and generating non-interest income. During 2011, Mr. Lilly established the Office of Project Management to drive strategic initiatives. He restructured Information Technology and was named Chief Information Officer in addition to COO. His efforts to restructure and redefine responsibilities and workflow produced a more efficient organization and produced cost savings.

Robert L. Schumacher. Mr. Schumacher’s strategic and operational goals in 2011 included the organization, launch and management of a newly established Legal Department; assuming control and reporting line responsibility of the Enterprise Risk Management and Compliance functions; and to oversee completion of the first full cycle of internal audits under a new Internal Audit Director and new team since moving this important function in-house. Mr. Schumacher accomplished most of his goals for 2011. These initiatives have been successful, resulting in a reduction in legal fees, continued improvement in overall enterprise risk management, and an improved and more efficient internal audit process.any applicable minimum guideline below.

Compensation and Retirement Committee Report

The CRC has reviewed the CD&ACompensation Discussion and Analysis and discussed that analysis with management. Based on its review and discussions with management, the CRC recommended to the Board of Directors that the CD&ACompensation Discussion and Analysis be included in the Corporation’s 2015 Annual Report on Form 10-K for 2012 and the Corporation’s 20132016 proxy statement. This report is provided by theThe following independent directors, who comprise the CRC:CRC, provide this report:

William P. Stafford, II (Chairman)

Richard S. Johnson (Chairman)

William P. StaffordW.C. Blankenship, Jr.

I. Norris Kantor

2015 Summary Compensation Table