UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
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[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to § 240.14a-12
CENTRAL VIRGINIA BANKSHARES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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[ ] Fee paid previously with preliminary materials.
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April 21, 2011
To our Shareholders, Customers, and Friends,
While many banks across the country have come and gone, we remain committed to building on our 37 year history. We are encouraged by signs of improvement in the national economy, following the severe economic downturn that led to challenges for all of us. Since the financial crisis unfolded in the fall of 2008, Central Virginia Bank has seen its investment securities decline in value, loan losses increase, and credit quality deteriorate.
In 2010, Central Virginia Bank took many initiatives to improve the strength and stability of the bank. These initiatives include strengthening our credit risk management practices, developing a new strategic and capital plan, and strengthening our executive team. We have worked hard to increase our core deposits, shrink our balance sheet, and reduce our overhead. We continue to adjust our investment portfolio, harvesting gains when possible and reinvesting in higher quality securities. All of these efforts have been made to continue building on the strength of our balance sheet while laying a strong foundation for the future. At December 31, 2010, our tier 1 risk-based capital ratio and leverage ratio remain above the levels to be “well capitalized”, and total risk based capital ratio remains above the level to be “adequately capitalized”.
As you will recall, we decided in September of 2010 to postpone a Rights and Stock Offering as the current market conditions were not conducive to achieving a successful result. We expect to renew our efforts to raise additional capital as market conditions improve. In addition, we continue to evaluate other prospective strategies that would enhance our capital position.
A year ago, we told you that we believed we would see improved performance in 2010; in fact, we continue to see our pre-tax losses decline. For the year ended 2010, our pre-tax net loss was $5.6 million compared to our 2009 pre-tax net loss of $13.4 million. In the third quarter of 2010, we determined that we had to make an adjustment of $12.1 million to establish a deferred tax valuation allowance. Our net loss after taxes for 2010, including the deferred tax adjustment, was $15.9 million compared to our 2009 net loss after taxes of $9.2 million. It is very important to note that the deferred tax valuation allowance does not impact our cash flows, our liquidity or our regulatory capital ratios. This valuation allowance was a necessary accounting adjustment resulting from the cumulative losses we experienced.
Finally and most importantly, we have a strong business model and our mission continues to be to serve our customers and our shareholders, support our employees, and give back to the communities where we live and work. We greatly appreciate your continued support of our efforts.
| James T. Napier | Herbert E. Marth, Jr. |
| Chairman | President & CEO |
CENTRAL VIRGINIA BANKSHARES, INC.
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of Central Virginia Bankshares, Inc., which will be held on Tuesday, May 24, 2011, at 4:30 PM, at the Main Office Branch of Central Virginia Bank located at 2351 Anderson Hwy, Powhatan, Virginia, for the following purposes:
| | (1) | | to elect three directors, HERBERT E. MARTH, JR., ROSELEEN P. RICK, and WILLIAM C. SPROUSE, JR., for a term of three years; |
| | (2) | | to ratify the appointment of Yount, Hyde & Barbour, P.C., an independent registered public accounting firm, to serve as our independent auditors for the year ending December 31, 2011; |
| | (3) | | to consider and approve the following advisory (non-binding) proposal: RESOLVED, that the shareholders approve the compensation of executive officers as disclosed in this proxy statement pursuant to the rules of the Securities and Exchange Commission. |
| | (4) | | to transact such other business as may properly come before the Meeting and any adjournments or postponements thereof. |
Whether or not you plan to attend in person, it is important that your shares be represented at the Annual Meeting. You may vote by telephone, the internet, or by mail, in accordance with the voting instructions on the enclosed proxy card and, should you wish to respond by mail, there is a postage-paid return envelope for your convenience. If you later decide to attend the Annual Meeting and vote in person, or if you wish to revoke your proxy for any reason prior to the vote at the Annual Meeting, you may do so and your proxy will have no further effect.
The Board of Directors and management of Central Virginia Bankshares, Inc. appreciate your continued support and look forward to seeing you at the Annual Meeting.
| Sincerely yours, |
| |
| /s/Herbert E. Marth, Jr. |
| |
| Herbert E. Marth, Jr. |
| President and |
| Chief Executive Officer |
Powhatan, Virginia
April 21, 2011
| CENTRAL VIRGINIA BANKSHARES, INC. |
| 2036 New Dorset Road |
| P.O. Box 39 |
| Powhatan, Virginia 23139-0039 |
| |
| |
| NOTICE OF ANNUAL MEETING OF SHAREHOLDERS |
| To Be Held on May 24, 2011 |
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Central Virginia Bankshares, Inc. will be held at the Main Office Branch of Central Virginia Bank located at 2351 Anderson Hwy, Powhatan, Virginia 23139 on May 24, 2011, at 4:30 PM local time for the following purposes:
| | (1) | | to elect three directors, HERBERT E. MARTH, JR., ROSELEEN P. RICK, and WILLIAM C. SPROUSE, JR., for a term of three years and until their successors are elected and qualified; |
| | (2) | | to ratify the appointment of Yount, Hyde & Barbour, P.C., an independent registered public accounting firm, to serve as our independent auditors for the year ending December 31, 2011; |
| | (3) | | to consider and approve the following advisory (non-binding) proposal: RESOLVED, that the shareholders approve the compensation of executive officers as disclosed in this proxy statement pursuant to the rules of the Securities and Exchange Commission. |
| | (4) | | to transact such other business as may properly come before the Meeting and any adjournments or postponements thereof. |
Management is not aware of any other business, other than procedural matters incident to the conduct of the Meeting. The Board of Directors has fixed the close of business on April 12, 2011 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting.
| | BY ORDER OF THE BOARD OF DIRECTORS | |
| | | | |
| | /s/Elwood C. May | | |
| | Elwood C. May | | |
| | Secretary | | |
| | | | |
| Powhatan, Virginia | | | |
| April 21, 2011 | | | |
| | | | |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 24, 2011:
The proxy statement and the Company’s 2010 annual report on Form 10-K are available at www.centralvabank.com/annualreport-proxy.
| YOU ARE CORDIALLY INVITED TO ATTEND THIS MEETING. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO BE PRESENT, YOU ARE URGED TO VOTE PROMPTLY. IF YOU ATTEND THIS MEETING, YOU MAY VOTE EITHER IN PERSON OR BY YOUR PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF. |
CENTRAL VIRGINIA BANKSHARES, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 24, 2011
GENERAL INFORMATION
The Board of Directors (the “Board”) of Central Virginia Bankshares, Inc. (“we,” “us,” “our” or the “Company”) is furnishing this Proxy Statement to holders of our common stock, $1.25 par value per share (“Common Stock”), in connection with the solicitation of proxies to be used at the Annual Meeting of Shareholders to be held on May 24, 2011, at 4:30 PM at the Main Office Branch of Central Virginia Bank located at 2351 Anderson Hwy, Powhatan, Virginia 23139 and any adjournment or postponement thereof (the “Annual Meeting”).
This Proxy Statement, the accompanying proxy card and the Form 10-K Annual Report (which is not part of our soliciting materials) are being mailed to you on or about April 21, 2011. In addition to solicitation by mail, our officers and regular employees may solicit proxies in person or by telephone. The cost of soliciting proxies will be borne by us. We may also reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses in forwarding proxy materials to the beneficial owners of shares of Common Stock.
You may vote by telephone, the Internet, or by mail, in accordance with the voting instructions on the enclosed proxy card. Please check the proxy card for instructions. If you vote your shares by phone or over the Internet, you may incur costs or charges from your phone service or Internet access provider for which you are responsible. Proxies that are properly delivered to us and not revoked prior to use will be voted in accordance with the instructions contained thereon. If no contrary instructions are given, each proxy received will be voted FOR the director nominees and FOR proposals II and III. Any shareholder giving a proxy has the power to revoke it at any time before it is exercised by:
| ● | filing written notice thereof with our Secretary (Secretary, Central Virginia Bankshares, Inc., 2036 New Dorset Road, P.O. Box 39, Powhatan, Virginia 23139-0039); |
| ● | submitting a duly executed proxy bearing a later date; or |
| ● | appearing at the Annual Meeting or at any adjournment or postponement thereof and giving the Secretary notice of his or her intention to vote in person. |
Proxies solicited hereby may be exercised only at the Annual Meeting and any adjournment or postponement thereof and will not be used for any other meeting. We are not aware of any matters that are to come before the Annual Meeting other than those described in this Proxy Statement. However, if other matters do properly come before the Annual Meeting, it is the intention of the persons named in the enclosed proxy card to vote such proxy in accordance with their best judgment. Under certain circumstances, including the election of directors and advisory vote on executive compensation, brokers are prohibited from exercising discretionary authority for beneficial owners who have not provided voting instructions to the broker (a “broker non-vote”). In these cases, and in cases where the shareholder abstains from voting on a matter, those shares will not be included as votes cast with respect to those matters. Abstentions and broker non-votes will have no effect on the outcome of Proposals I through III.
If you hold your shares in a bank or brokerage account, you will receive instructions from your bank or broker that you must follow for your shares to be voted. Please follow those instructions carefully to assure that your shares are voted in accordance with your wishes on the matters presented in this Proxy Statement.
Only shareholders of record at the close of business on April 12, 2011 (the “Record Date”) will be entitled to vote at the Annual Meeting. On the Record Date, there were 2,625,786 shares of Common Stock issued and outstanding. Each share of Common Stock is entitled to one vote at the Annual Meeting. There are no rights of appraisal or similar rights of dissenters under Virginia law or otherwise with regard to the proposals to be addressed at the Annual Meeting.
PROPOSAL I
ELECTION OF DIRECTORS
Election of Directors; The Nominees
Our Articles of Incorporation and Bylaws provide that the Board shall fix the number of directors of the Company and that such directors shall be divided into three classes as nearly equal in number as possible. Currently, the number of directors is fixed at nine.
The members of each class are to be elected for a term of three years and until their successors are elected and qualified. One class of directors is to be elected annually. The following table sets forth the names of the current directors, the class to which they belong and the years in which their terms of office will expire:
Class B 2011(1) | Class A 2012 | Class C 2013 |
| Herbert E. Marth, Jr. | Elwood C. May | Kemper W. Baker |
| Roseleen P. Rick | Clarke C. Jones | John B. Larus |
| William C. Sprouse, Jr. | Phoebe P. Zarnegar | James T. Napier |
| | | |
__________________
| | (1) | The Board has nominated these directors for election to the Board for a three-year term expiring in 2014 and until their successors are elected and qualified. |
Unless authority is withheld in the proxy, each proxy executed by a shareholder will be voted for the election of, Herbert E. Marth, Jr., Roseleen P. Rick, and William C. Sprouse, Jr., the nominees listed above. Proxies distributed in conjunction herewith may not be voted for persons other than the nominees named thereon. If any person named as nominee should be unable or unwilling to stand for election at the time of the Annual Meeting, the proxy holders will nominate and vote for a replacement nominee or nominees recommended by the Board. The nominees listed above have consented to be nominated and to serve if elected, and the Board knows no reason why the nominees would be unable to serve if elected. The proxy also confers discretionary authority upon the persons named therein, or their substitutes, with respect to any other matter that may properly come before the Annual Meeting.
In the election of directors, those nominees receiving the greatest number of votes will be elected even if they do not receive a majority. Abstentions and broker non-votes will not be considered a vote for, or a vote against, a nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” HERBERT E. MARTH, JR., ROSELEEN P. RICK, AND WILLIAM C. SPROUSE, JR.
The Board of Directors
Certain information, including age and principal occupation, regarding each director nominee and each remaining director who will continue to serve on the Board is set forth below. The year shown for initial election as a director represents the year in which the nominee or continuing director was first elected to the Board or previously to the Board of Directors of Central Virginia Bank, our wholly-owned subsidiary (the “Bank”). Unless otherwise indicated, the business experience and principal occupations shown for each nominee or continuing director has extended five or more years. In addition, the following information presents the particular experience, qualifications, attributes or skills that led the board to conclude that the person should serve as a director for the Bank.
Kemper W. Baker, Jr., 66, has been a director since 2006
| | Mr. Baker, an economist, currently teaches economics and finance classes at Virginia Commonwealth University and Longwood University; he formerly served as Vice President of the Federal Reserve Bank of Richmond until his retirement in June 2004. Mr. Baker, at the time of his retirement, oversaw government, media, bank, community and public relations throughout the Fifth Federal Reserve District as Special Assistant to the President of the Federal Reserve Bank of Richmond. Mr. Baker’s banking and regulatory experience with the Federal Reserve Bank of Richmond, as well as his knowledge of economics makes him well qualified to serve as a director of the Company. |
Clarke C. Jones, 62, has been a director since 2008. |
| | Mr. Jones, a retired executive, is currently freelance professional writer. Mr. Jones was President, until 2007, of Scaffolding Solutions, LLC of Richmond Virginia. Prior to then, he had a thirty-one year career with Saunders Oil Company in Richmond Virginia culminating in 2001 as its Executive Vice President. Mr. Jones’ background as an executive of an Oil company and his management experience and leadership abilities provide him the qualifications to serve as a director of the Company. |
John B. Larus, 82, has been a director since 1973. |
| | Mr. Larus serves as Chairman Emeritus of the Board and the Board of Directors of the Bank. He is the retired managing partner of Stony Point Estates, a land development company. Mr. Larus’ experience as one of the original organizing directors coupled with his extensive tenure as a director of the Company make him well suited to continue as a member of the board of directors. |
Ralph Larry Lyons, 62, has been a director since 1983. |
Mr. Lyons is the retired President and Chief Executive Officer of the Company and the Bank and was formerly Vice Chairman of the Board. Mr. Lyons’ thirty-nine years of banking experience with twenty years as President and CEO of the bank make him well qualified to serve as a director of the Company. Mr. Lyons notified the Company’s Board of Directors on April 4, 2011 that he would not stand for re-election as a Director at the 2011 Annual Shareholders’ meeting.
Herbert E. Marth, Jr., 59 has been a director since 2011. |
| | Mr. Marth was named President and CEO of the Company and Central Virginia Bank on January 1, 2011. Previously he had been serving the Bank as its Chief Operating Officer since June 2, 2010. Prior to joining the Bank, Mr. Marth spent five years as President of Central Virginia for Regions Bank. Previously, he served as Senior Vice President at Omega Performance Corporation from 2000-2005 where he consulted with financial institutions worldwide on effective strategies to improve their performance. He has also held senior management positions at Crestar Bank (now SunTrust) as Executive Vice President and Private Banking Manager, Regency Bank (now BB&T) as Chairman and Chief Executive Officer, and NCNB (now Bank of America) as Senior Vice President and Private Banking Manager. His thirty-five years of banking experience qualify him to serve as a director of the Company. |
Elwood C. May, 70, has been a director since 1973. |
| | Mr. May serves as Secretary of the Board of Directors of the Company. He is the retired owner/operator of Flatrock Hardware, Inc., a hardware retailer located in Powhatan, Virginia. Mr. May’s experience as one of the original organizing directors, his experience as a small business owner, and his service as a community leader provide the qualifications to serve as an effective director of the Company. |
James T. Napier, 58, has been a director since 1997. |
| | Mr. Napier serves as the Chairman of the Board. He is President of Napier, Realtors ERA which has its main office in Chesterfield County and has branch offices serving Powhatan, Hanover and Henrico Counties and the City of Richmond. Mr. Napier has been President of the firm since 1991 and has been involved in the real estate business since 1976. Mr. Napier’s experience in real estate sales, his knowledge of real estate in general and his experience as the President of a real estate company provide him the leadership skills and attributes desired to serve as a director of the Company. |
| Roseleen P. Rick, 69, has been a director since 2005. |
| | Ms. Rick is an attorney and retired partner at Troutman Sanders, LLP, a law firm in Richmond, Virginia, where she served as the leader of the Multifamily Housing Practice Group. Ms. Rick, with her experience as a practicing attorney dealing with multi-family housing transactions and real estate generally, make her uniquely qualified to serve as a director of the Company. |
William C. Sprouse, Jr., 57, has been a director since 2005. |
| | Mr. Sprouse is President of E. B. Sprouse Co. and Cumberland Building Supply, Inc., one of the largest private businesses in Cumberland County, Virginia. Mr. Sprouse is an experienced President and CEO of a small business and who is well known as a leader in his community, and therefore well qualified to serve as a director of the Company. |
Phoebe P. Zarnegar, 64, has been a director since 2005. |
| | Ms. Zarnegar is a CPA and the principal of the firm Farrell & Zarnegar, Certified Public Accountants. Mrs. Zarnegar, as an active CPA, has an extensive background in accounting and tax. This experience makes her very well qualified to serve as a director of the Company. |
Executive Officers Who Are Not Directors
Charles F. Catlett, III, 62, was named Senior Vice President and Director of CVB Financial Services on March 21, 2011; previously, from December 1999 to March 2011 he was Senior Vice President and Chief Financial Officer. Prior to joining the Company in December 1999, he was President of Franklin Financial Associates, L.L.C. for two years. Prior to establishing Franklin Financial Associates, he was Senior Vice President and Group Manager of Wachovia Bank, the successor by merger in 1997 to Central Fidelity National Bank, where he served in several senior management capacities in the Investment Division, Management Accounting Department, Corporate Accounting Department, and the Internal Audit department beginning in 1973. Mr. Catlett has over 37 years of banking experience.
Leslie S. Cundiff, 62, is Senior Vice President and Senior Credit Officer. Prior to joining us in March 2004, she was Senior Vice President and Statewide Site Manager for the Business Lending Group of Wachovia Bank, the successor by merger in 2001 to First Union. Mrs. Cundiff has over 24 years experience in the commercial lending areas of portfolio risk management, credit underwriting, loan approval, client marketing, and relationship management.
Robert B. Eastep, 47, was named Senior Vice President and Chief Financial Officer on March 21, 2011; previously he had been Vice President and Chief Accounting Officer since May 5, 2010. From June 2008 through December 2009, Mr. Eastep was an instructor in U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) for the accounting and financial training firm GAAP Seminars. Since January 2007, Mr. Eastep had also been Chief Executive Officer of Eagle Sports Management, LLC, a private business consulting firm. From 1999 to December 2006, Mr. Eastep served as Executive Vice President and Chief Financial Officer of Saxon Capital, Inc., a NYSE listed real estate investment trust that was a residential mortgage lender and servicer prior to its sale to Morgan Stanley. From 1998 to 1999, Mr. Eastep served as Director of Internal Audit for Cadmus Communications Corporation and from 1996 to 1998 he was Vice President - Finance Manger of General Accounting for Wachovia (formerly Central Fidelity Bankshares). From 1986 to 1996, Mr. Eastep was a Senior Manager (Financial Services Audit Practice) for KPMG LLP where he directed numerous SEC audit engagements and served as a member of KPMG’s Regulatory Advisory Practice for financial institutions.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
Security Ownership of Management
The following table sets forth information as of April 8, 2011, regarding the beneficial ownership of Common Stock by all directors and nominees, each of the named executive officers and by all directors and executive officers as a group. For the purposes of this table, beneficial ownership has been determined in accordance with the provisions of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), under which, in general, a person is deemed to be a beneficial owner of a security if he has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security or if he has the right to acquire beneficial ownership of the security within 60 days.
| | Name | Amount and Nature of Beneficial Ownership(1) | Percent of Class (2) | |
| | Kemper W. Baker(3) | 933 | * | |
| | Charles F. Catlett, III | 12,061 | * | |
| | Leslie S. Cundiff | 2,027 | * | |
| | Clarke C. Jones | 6,291 | * | |
| | John B. Larus(4) | 52,272 | 1.97% | |
| | Ralph Larry Lyons(5) | 42,203 | 1.59% | |
| | Herbert E. Marth, Jr. | 19,539 | * | |
| | Elwood C. May(6) | 19,979 | * | |
| | James T. Napier | 2,550 | * | |
| | Roseleen P. Rick | 1,388 | * | |
| | William C. Sprouse, Jr. | 2,276 | * | |
| | Phoebe P. Zarnegar | 2,094 | * | |
| | All present executive officers and directors as a group (13 persons) | 179,375 | 6.78% | |
| | *Less than one percent (1%) | | | |
(1) Amounts include the following shares of Common Stock issuable upon the exercise of stock options exercisable within 60 days of April 8, 2011: Mr. Catlett —2,427. In addition, the amounts include the following shares of Restricted Stock awards that are beneficially owned as of April 8, 2011: Mr. Marth – 18,539.
(2) Based on 2,625,786 shares of Common Stock issued and outstanding on April 8, 2011.
(3) Includes 548 shares owned by Mr. Baker’s wife.
(4) Includes 14,585 shares owned by Mr. Larus’ wife.
(5) Includes 7,150 shares owned by Mr. Lyons and his wife’s estate as joint tenants, and 5,500 shares owned by his wife’s estate. |
(6) Includes 5,629 shares owned by Mr. May and his wife as joint tenants. |
Security Ownership of Certain Beneficial Owners
Management of the Company is not aware of any person or group, as that term is used in Section 13(d)(3) of the Exchange Act, known by us to be the beneficial owner of more than 5% of our outstanding Common Stock
as of April 8, 2011.
CORPORATE GOVERNANCE AND
THE BOARD OF DIRECTORS
The Board of Directors
Meetings of the Board of Directors are held regularly each month and there is also an organizational meeting following the Annual Meeting of Shareholders. The Board held fifteen (15) meetings in the year ended December 31, 2010. Mr. Napier has served as Chairman of the Board since 2005. Mr. Lyons served as Vice Chairman of the board from 2008 to December 2010. Ms. Rick was elected as Vice Chairman succeeding Mr. Lyons effective January 2011. Mr. May has served as Secretary of the Board since 2006. To date, the Company has chosen not to combine the positions of Chief Executive Officer (“CEO”) and Chairman. The Company believes that its leadership structure is appropriate because by having an independent Chairman, there exists a certain degree of control and balanced oversight of management and its decision making processes.
The CEO makes frequent reports to the Board, often at the suggestion of the Chairman or other directors and also explains in detail to the Board the reasons for certain recommendations of the Company’s executive management group.
Independence of the Directors
The Board has determined that the following eight individuals of its nine current members are independent as defined by the listing standards of The Nasdaq Stock Market, Inc. (“Nasdaq”): Messrs. Baker, Jones, Larus, May, Napier, and Sprouse and Mmes. Rick and Zarnegar. In reaching this conclusion, the Board considered that the Company and the Bank conduct business with companies of which certain members of the Board or members of their immediate families are or were directors or officers. See “Certain Relationships and Related Transactions.”
Code of Business Conduct and Ethics
The Board has approved a Code of Business Conduct and Ethics for directors, officers and all employees of the Company and its subsidiaries. The Code addresses such topics as compliance with applicable laws and regulations, accuracy and preservation of records, accounting and financial reporting and conflicts of interest. A copy of the Code is posted on our website at www.centralvabank.com. Printed copies of the Code are available to any shareholder upon written request to the Secretary, P.O. Box 39, Powhatan, Virginia 23139-0039.
Committees
The Board has a standing Audit Committee, Compensation Committee and Corporate Governance/Nominating Committee, which are composed entirely of independent directors, as defined by the listing standards of Nasdaq. Each of the standing committees operates under a written charter adopted by the Board. A current copy of each standing committee’s charter is posted on our website at www.centralvabank.com.
Audit Committee. The Audit Committee is chaired by Ms. Zarnegar and includes Messrs. May, Sprouse, and Napier. The Board has not currently designated an “audit committee financial expert.” However, the current members of the Audit Committee have the ability to understand financial statements and generally accepted accounting principles, the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves, an understanding of internal controls and procedures for financial reporting and an understanding of audit committee functions. The Board, therefore, believes that the members of the Audit Committee have the skills and experience needed to ensure that the Committee properly fulfills its duties and responsibilities.
The Audit Committee is responsible for the selection and recommendation of the independent accounting firm for the annual audit and for the assurance of the adherence to a system of internal controls. It reviews and accepts the reports of our independent auditors and federal examiners. The Audit Committee met nine (9) times during the year ended December 31, 2010.
Compensation Committee. The Compensation Committee is chaired by Ms. Rick and includes Messrs. Baker and Sprouse, all of whom are independent directors. The Compensation Committee met six (6) times during the year ended December 31, 2010.
The Compensation Committee is responsible for the oversight and implementation of the Company’s compensation program for its executive officers. In carrying out its responsibilities, the Compensation Committee annually reviews the total aggregate percentage increase in compensation for the Company, reviews and establishes the compensation and bonus for the Company’s chief executive officer, and reviews and concurs with the compensation and bonus proposed by the chief executive officer for the other executive officers. The Compensation Committee then recommends to the Board of Directors, the aggregate salary increases for the Company and the annual salary levels and any bonuses to be paid to the Company’s executive officers, for their approval. The Compensation Committee also makes recommendations to the Board of Directors from time to time regarding the issuance of stock options and other compensation related matters. Any Board of Directors approval is by a majority affirmative vote of the independent directors.
The Compensation Committee may not delegate its authority over the compensation program to other persons. The Compensation Committee engaged a compensation consultant to assist it in carrying out its responsibilities with respect to executive compensation and compliance with the compensation requirements set forth in legislation related to the TARP – Capital Purchase Program. The consultant was Titan Group, LLC, who was engaged directly by the Compensation Committee. For 2010, we paid Titan Group, LLC $11,000 for compensation consulting services. The nature and scope of this engagement principally involved, but was not necessarily limited to, benchmarking salaries and other compensation versus comparable banks in generally similar markets; assistance with development of a comprehensive executive compensation philosophy for the Company; and advice and assistance in construction and drafting of employment, or change of control contracts.
Corporate Governance/Nominating Committee. The Corporate Governance/Nominating Committee is chaired by Messrs. Napier and includes Messrs. Jones, Larus and Ms. Rick. The Corporate Governance/Nominating Committee develops qualifications for director candidates, recommends to the Board persons to serve as directors, monitors developments in certain corporate governance practices, and makes recommendations to the Board concerning such practices. The Corporate Governance/Nominating Committee did not meet during the year ended December 31, 2010.
The Corporate Governance/Nominating Committee evaluates potential director nominees by reviewing resumes and current personal information requested from the candidates in relation to desired standards and attributes. The following are a representative sample of some but not all of the factors considered.
| ● | the ability of the prospective nominee to represent the interests of our shareholders - the candidate should have an investment in the Company. |
| ● | the prospective nominee’s integrity should be above reproach, and their commitment, independence of thought, and judgment should be exemplified in their vocation and other activities. |
| ● | the prospective nominee’s ability to dedicate sufficient time, energy and attention to the diligent performance of his or her duties should be verified. Consideration should be given to the prospective nominee’s service on other public company, civic and non-profit organization boards. |
| ● | the extent to which the prospective nominee’s talents contribute to, and compliment the range of talent, skill and expertise appropriate for the Board. |
Shareholders entitled to vote for the election of directors may nominate candidates for consideration by the Corporate Governance/Nominating Committee by following the procedures that the Company has established, which are summarized in the “Shareholder Proposals” section of this Proxy Statement.
Risk Oversight
The Board of Directors has the responsibility for oversight of the risk inherent in the Company’s day to day operations. The Board manages this risk through representative participation on the Company’s committees coupled with the review and oversight of the Audit Committee. The Audit committee reviews reports of the results of internal audits, as well as reports on controls over financial reporting pursuant to the Sarbanes-Oxley Act, and reports to the full board. Senior management of the Company, who supervise the day to day operations and risk, also report to the whole board as part of their participation in the monthly board meetings. The Company’s Senior Risk Officer meets with and reports to the Compensation committee regarding whether the Company’s compensation policies encourage the taking of excessive risks. The board determines, based on the information received, if the the Company is identifying, monitoring, and managing its risks appropriately.
Meeting Attendance
During 2010, all Board members attended at least 75% of the aggregate of the meetings of the Board and the committees on which they served. We encourage all members of the Board to attend the annual meeting of shareholders. All directors then serving on the Board attended the 2010 annual meeting, with the exception of Mr. Larus and Ms. Rick.
Communications with Directors
Any director may be contacted by writing to him c/o Central Virginia Bankshares, Inc., P. O. Box 39, Powhatan, Virginia, 23139-0039. Communications to the directors or the non-management directors as a group may be sent to the same address, c/o the Secretary. We promptly forward, without screening, all such correspondence to the indicated directors.
Consideration of Board Diversity
The Nominating Committee considers diversity in board composition. Although the Nominating Committee does not have a written policy regarding board diversity, when considering whether to increase the number of directors or when considering any nominee to fill a board vacancy, the Nominating Committee considers several factors, such as each person’s professional experience, service on other boards, education, race, gender, and the geographic areas where the individual has either resided, worked, or served. A copy of the Company’s Nominating and Corporate Governance Committee Charter is available on the Company’s website: www.centralvirginiabank.com.
Board Members Serving of Other Publicly Traded Company Board of Directors
None of the present directors serve as a director of another publicly traded company.
REMUNERATION
Annual Compensation of Executive Officers
In the tables and discussion below, we summarize the compensation earned during 2009 and 2010 by (1) our chief executive officer and (2) our two most highly compensated executive officers other than our chief executive officer, collectively referred to as the “named executive officers”.
Summary Compensation Table
Name and Principal Position | | Year | | Salary(1) | | | Bonus(2) | | | All Other (3)(4)Compensation | | | Total | |
| | | ($) | | ($) | | | ($) | | ($) | | | ($) | |
| | | | | | | | | | | | | | | | | | | |
Ralph Larry Lyons(5) | | 2010 | | 224,744 | | | | | 0 | | | 142,655 | | | | 367,399 | | |
| President & Chief | | 2009 | | 224,744 | | | | | 0 | | | 35,888 | | | | 260,632 | | |
| Executive Officer | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Charles F. Catlett, III | | 2010 | | 143,000 | | | | | 0 | | | 78,272 | | | | 221,272 | | |
| Senior Vice President & | | 2009 | | 143,000 | | | | | 0 | | | 9,284 | | | | 152,284 | | |
| Chief Financial Officer | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Leslie S. Cundiff | | 2010 | | 137,800 | | | | | 0 | | | 44,038 | | | | 181,838 | | |
| Senior Vice President & | | 2009 | | 137,800 | | | | | 0 | | | 9,988 | | | | 147,788 | | |
| Senior Credit Officer | | | | | | | | | | | | | | | | | | |
| (1) | Salary is the base regular pay. |
| (2) | Reflects the bonus in the year earned, and paid. No annual bonuses were earned in 2009 or 2010. |
| (3) | In 2010, the Company modified its Paid Time Off (“PTO”) policy, which covers all employees, to limit the amount of unused PTO that may be carried over from year to year. All employees with earned PTO in excess of the new maximum carryover amount were paid out in December 2010 and/or January 2011. For the named executive officers, the amount reported represents the total earned excess PTO as of December 31, 2010. |
| (4) | Represents all other types of cash, non-cash, or imputed income not includable in the other columns above for the years 2010 and 2009 respectively for: |
| | Mr. Lyons: directors fees of $15,000 and $17,500; value of a Company provided automobile $4,100 and $4,100; taxable fringe benefits associated with group insurance and split dollar insurance arrangements of $5,313 and $5,048; our match of $7,607 and $8,990 on contributions to the 401(k) plan; earned PTO in excess of the maximum carryover amount $108,050 and $0; and incentive pay, supplemental pay for ATM response, weekend work and other after-hour availability of $85 and $250. |
| | |
| | Mr. Catlett: taxable fringe benefits associated with group insurance and split dollar insurance arrangements of $2,481 and $2,314 ; our match of $4,840 and $5,720 on contributions to the 401(k) plan; earned PTO in excess of the maximum carryover amount $78,272 and $0; and incentive pay, supplemental pay for ATM response, weekend work and other after-hour availability of $0 and $1,250. |
| | |
| | Ms. Cundiff: taxable fringe benefits associated with group insurance and split dollar insurance arrangements of $4,899 and $4,900; our match of $0 and $5,088 on contributions to the 401(k) plan; and earned PTO in excess of the maximum carryover amount $44,038 and $0; and incentive pay of $52 and $0. |
| (5) | Mr. Lyons retired from his position as President and Chief Executive Officer, effective December 31, 2010. |
Our executive compensation program consists of base salaries, annual cash incentive payments in the form of annual bonuses, and long-term incentives in the form of equity awards. In 2006, our shareholders approved the 2006 Stock Incentive Plan, which permits the grant of stock options, stock appreciation rights, stock awards, performance stock awards, incentive awards and stock units. No grants were made under the 2006 Stock Incentive Plan in 2009 or 2010.
Employment Agreement
Mr. Lyons was compensated in 2009 and 2010 pursuant to an Employment Agreement between Mr. Lyons and the Company, dated February 17, 2009. Upon Mr. Lyons’s retirement on December 31, 2010, the agreement terminated pursuant to its terms. However, Mr. Lyons is still required to comply with the covenants in the agreement relating to the protection of confidential information, non-disclosure, non-competition and non-solicitation. The non-competition and non-solicitation covenants continue generally for a period of eighteen months following the last day of Mr. Lyons’s employment.
Change of Control Agreements
On April 21, 2009, we entered into Change of Control Agreements with Charles F. Catlett, III and Leslie S. Cundiff. The agreements provide that within three years following a “change of control” (as defined in the agreements), the employee’s position, authority, duties and responsibilities will be at least commensurate with those held prior to the change of control and will be performed at the location where the employee was employed immediately preceding the control of control or the Company’s headquarters if within 35 miles of such location. The agreements also provide that, within three years following a change of control, the employee’s annual base salary will be at least equal to his or her salary prior to the change of control, and the employee will have the opportunity to earn annual and other incentives generally applicable to peer employees of the Company, but in no event less favorable than such opportunity prior to the change of control.
If the employee is terminated without cause or resigns for good reason within three years following a “change of control,” he or she will be entitled to the following:
| ● | annual salary at the rate in effect immediately prior to termination; |
| ● | any earned and unpaid incentive or bonus compensation; |
| ● | the product of his annual bonus for the most recently completed year and a fraction, the numerator of which is the number of days in the current year through the date of termination, and the denominator of which is 365; |
| ● | any benefits or awards which pursuant to any plans, policies or programs have been earned or become payable, but which have not yet been paid; |
| ● | an amount equal to 2.0 times the sum of the Employee’s salary at the rate in effect immediately prior to termination and his average bonus for the two most recently completed years; and |
| ● | continuation of their then current benefits under group health and dental plans for thirty six months from the date of termination. |
The change of control payments disclosed above are limited by the statutes and regulations that apply to the Company as a consequence of the Company’s participation in TARP. These limitations will only apply so long as the Treasury’s investment in our preferred stock remains outstanding. For further discussion, see “TARP Executive Compensation Standards”.
In addition, we are prohibited under Section 18(k) of the Federal Deposit Insurance Act and 12 C.F.R. Part 359 from making any severance payments to our employees so long as we are considered “troubled” under applicaple federal regulations.
Outstanding Equity Awards at Fiscal Year-End 2010
In the table below, we list information on the holdings of unexercised stock options as of December 31, 2010 for each of the named executive officers.
| | | Option Awards |
Name(1) | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Option Exercise Price ($) | | Option Expiration Date |
Charles F. Catlett, III | | | | | | | |
| | 729 | | | 11.53 | | 7/16/2012 | |
| | 521 | | | 15.21 | | 4/29/2013 | |
| | 347 | | | 15.21 | | 4/29/2013 | |
| | 827 | | | 24.80 | | 7/1/2014 | |
| | | | | | | | |
(1) Mr. Lyons and Ms. Cundiff had no outstanding equity awards at fiscal year-end 2010.
Defined Contribution and Supplemental Retirement Plans
We provide additional compensation to our executive officers through various plans which are also available to all or some of our employees. The Compensation Committee oversees these plans, which are described below.
Defined Contribution Plans. We have a qualified Defined Contribution Plan that provides benefits to all employees meeting the criteria of the ERISA laws, which is the majority of our employees. The Plan has two major components: profit sharing and 401(k). The employee participants are 100% vested upon entrance into the Plan.
| ● | Profit Sharing - Under the profit sharing segment, which is determined based on annual profits, all eligible employees receive a percentage of their base compensation. This amount is directly deposited to the employees’ individual retirement account. For 2010, the Board of Directors did not award a contribution to the profit sharing segment and thus, no contributions were made to the segment. |
| ● | 401(k) Plan - We have a 401(k) Plan where previously the Company would match 100% of the first 3% and 50% of the next 2% of every participant’s pre-tax contributions. The Company match was suspended in November 2011. Over 77% of our employees contribute to the 401(k) Plan. The Company’s matching contribution was $117,573 in 2010 for all participating employees. |
Supplemental Executive Retirement Agreement. We have a non-qualified Supplemental Executive Retirement Agreement with each of the named executive officers as well as three other senior officers and one retiree. Participation is only through selection by and approval of the Board. There are no contributions by the participants. The participants vest in their accrued benefit over an eight year period unless there is a change in control, at which time all participants, if not already 100% vested, become 100% vested in the amount then accrued by us. The agreement provides for an annual benefit upon retirement at age 65, equal to 25% of the participant’s final compensation, to be paid over a fifteen year period. Early retirement is permitted at age 60 with a reduction in the benefit amount paid based on the number of months preceding age 65 the participant retires.
Potential Payments Upon Termination or Change of Control
We have no agreements, plans or arrangements, except as set forth in “Change of Control Agreements” and “Defined Contribution and Supplemental Retirement Plans” above, that provide for payments to a named executive officer at, following, or in connection with the termination of that named executive officer or a change of control of the Company or the Bank.
TARP Executive Compensation Standards
In January 2009, the Company elected to participate in the United States Department of the Treasury’s Capital Purchase Program, commonly known as “TARP”. The Company issued 11,385 shares of preferred stock and a warrant to purchase 263,542 shares of our Common Stock at a price of $6.48 per share to the Treasury in return for $11,385,000.
As a result of participating in the program, the Company is subject to certain executive compensation and corporate governance requirements under section 111 of the Emergency Economic Stabilization Act of 2008, as implemented by Treasury regulations. Those requirements apply to certain of our executive officers and employees, including Ralph Larry Lyons, Charles F. Catlett, III, Leslie S. Cundiff, Robert B. Eastep, and Herbert E. Marth, Jr. (the “SEOs”). Those requirements include:
| ● | Prohibiting the payment of any severance payments to our SEOs and next five most highly compensated employees; |
| ● | Prohibiting the payment or accrual of any bonus payment to Mr. Catlett, our most highly compensated employee, except for (i) an award of long-term restricted stock with a value not exceeding one-third of his annual compensation and (ii) a payment contractually required to be paid and to which he had a legally binding right as of February 11, 2009; |
| ● | Subjecting our SEOs and our next twenty most highly compensated officers to recovery of any bonus or incentive compensation paid to them where the payment was later found to have been based on statements of earnings, gains, or other criteria which prove to be materially inaccurate; and |
| ● | Limiting the Company’s tax deduction for compensation paid to any SEO of $500,000 annually. |
In addition, the regulations generally require the Compensation Committee to meet at least every six months with the Company’s senior risk officers to evaluate compensation plans to ensure that these plans do not encourage unnecessary and excessive risk taking that threaten the value of the Company, to consider ways to limit those risks, and to evaluate these plans to ensure that they do not encourage the manipulation of reported earnings.
Subject to consultation with the appropriate federal banking agency, we are permitted to repay any assistance previously provided to us under TARP at any time. If we choose to repay our TARP assistance, we would no longer be subject to these executive compensation restrictions.
Director Compensation in 2010
As compensation for his or her service to us, each member of the Board receives a monthly retainer fee of
$1,250. Fees for attendance at various committee meetings are $1,050 for the Audit Committee and $350 for the Nominating & Corporate Governance Committee and the Compensation Committee. Directors also participate in other various Bank committees for which they receive a meeting fee of $350 when they attend.
The following table shows the compensation earned by each of the non-employee directors during 2010.
Name | | Fees Earned or Paid in Cash ($) | | | Total ($) | |
| James T. Napier | | 24,450 | | | | 24,450 | | |
| John B. Larus | | 15,000 | | | | 15,000 | | |
| Kemper W. Baker, Jr. | | 26,200 | | | | 26,200 | | |
| Clarke C. Jones | | 20,950 | | | | 20,950 | | |
| Elwood C. May | | 26,200 | | | | 26,200 | | |
| Roseleen P. Rick | | 24,450 | | | | 24,450 | | |
| W.C. Sprouse, Jr. | | 26,550 | | | | 26,550 | | |
| Phoebe P. Zarnegar | | 26,550 | | | | 26,550 | | |
Equity Compensation Plan Information
The following table sets forth information as of December 31, 2010, with respect to compensation plans under which shares of our Common Stock are authorized for issuance.
| Plan Category | | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | | | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans(1) | |
| | | | | | | | | | |
Equity Compensation Plans Approved by Shareholders | | | | | | | | | |
| | | | | | | | | | | | |
| 1998 Stock Incentive Plan | | 19,331 | | | $ | 18.46 | | | | |
| | | | | | | | | | | | | |
| 2006 Stock Incentive Plan | | | | | | | | | | 185,389 | |
| | | | | | | | | | | | | |
Equity Compensation Plans Not Approved by Shareholders(2) | | -- | | | | -- | | | -- | |
| (1) | Amounts exclude any securities to be issued upon exercise of outstanding options, warrants and rights. |
| (2) | All of our equity compensation plans have been approved by our shareholders. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Board has a procedure for review and approval of transactions involving us and “related persons” (directors, director nominees, executive officers, shareholders owning five percent or more of our outstanding Common Stock or the immediate family members of any of these persons). The procedure covers any related person transaction that meets the minimum threshold for disclosure in the proxy statement under the relevant Securities and Exchange Commission’s rules (generally, transactions involving amounts exceeding $120,000 in which a related person has a direct or indirect material interest). The procedure generally requires that related person transactions be approved by the Board or by a committee of the Board consisting solely of independent directors, who will approve the transaction only if they determine that it is in our best interest. In considering the transaction, the Board or committee will consider all relevant factors, including as applicable, our business rationale for entering into the transaction and the fairness of the transaction to us. In instances where the transaction is subject to renewal or if we have the right to terminate the relationship, the Board or relevant committee will periodically monitor the transaction to ensure that there are no changed circumstances that would render it advisable for us to amend or terminate the transaction.
Some of our directors and officers, and some of the corporations and firms with which these individuals are associated, are customers of the Bank in the ordinary course of business and may be indebted to the Bank with respect to loans. It is also anticipated that some of the persons, corporations and firms will continue to be customers of, and indebted to, the Bank on a similar basis in the future. All loans extended to such persons, corporations and firms were made in the ordinary course of business, did not involve more than normal collection risk or present other unfavorable features, and were made on substantially the same terms, including interest rates and collateral as those prevailing at the same time for comparable Bank transactions with unaffiliated persons. No such loan at December 31, 2010 was non-accruing, past due or restructured. At December 31, 2010 the aggregate amount of loans outstanding and commitments to all directors and officers of the Bank and members of their immediate families, and corporations and firms with which these individuals are associated, was approximately $6,426,101.
During fiscal year 2010, we did not have any other transactions with related persons within the meaning of Item 404(a) of Regulation S-K.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, and any persons who own more than 10% of the outstanding shares of Common Stock, to file with the Securities and Exchange Commission (“SEC”) reports of ownership and changes in ownership of Common Stock. Directors and executive officers are required by SEC regulations to furnish us with copies of all Section 16(a) reports that they file. Based solely on review of the copies of such reports furnished to us or written representation that no other reports were required, we believe that, during the 2010 year, all directors, executive officers and beneficial owners of more than 10% of the Common Stock have filed with the SEC on a timely basis all reports required to be filed under Section 16(a).
PROPOSAL II
RATIFICATION OF THE APPOINTMENT OF AN
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Yount, Hyde & Barbour, P.C., independent registered public accounting firm, to perform the audit of our financial statements for the year ending December 31, 2011. Yount, Hyde & Barbour, P.C., performed the audit of our financial statements for the years ended December 31, 2010 and 2009. A majority of the votes cast by holders of the Common Stock is required for the ratification of the appointment of the independent registered public accounting firm.
Representatives from Yount, Hyde & Barbour, P.C., will be present at the Annual Meeting, will be given the opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE TO RATIFY THE APPOINTMENT OF YOUNT, HYDE & BARBOUR, P.C., AS OUR INDEPENDENT REGISTERED PUBLC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2011.
AUDIT INFORMATION
Yount, Hyde & Barbour, P.C. audited our consolidated financial statements for the fiscal years ended December 31, 2010 and 2009. The following information is furnished with respect to fees billed for professional services rendered to us by Yount, Hyde & Barbour, P.C. for the fiscal years ended December 31, 2010 and 2009.
Fees of Independent Public Accountants
Audit Fees
The aggregate fees for professional services rendered for the audit of our annual financial statements for the fiscal years ended December 31, 2010 and 2009, billed by Yount, Hyde & Barbour, P.C., and for their review of the financial statements included in our Quarterly Reports on Form 10-Q, and services that are normally provided in connection with statutory and regulatory filings and engagements, for those fiscal years were $112,000 for 2010 and $133,900 for 2009.
Audit Related Fees
The aggregate fees billed for professional services for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and not reported under the heading “Audit Fees” above by Yount, Hyde & Barbour, P.C. for the fiscal years ended December 31, 2010 and 2009 were $25,813 and $27,564 respectively. During 2010 and 2009, such services included the audit of the Bank’s defined contribution plan, as well as the automated clearing house functions (EastPay) of the Bank, research and consultation concerning financial accounting and reporting standards, and consultation related to other than temporary impairment securities.
Tax Fees
There were no tax fees billed to us by Yount, Hyde & Barbour, P.C. for the fiscal years ended December 31, 2010 or 2009.
All Other Fees
There were no other fees billed to us by Yount, Hyde & Barbour, P.C. for the fiscal years ended December 31, 2010 or 2009.
Pre-Approved Services
All audit related services, tax services and other services, as described above, were pre-approved by the Audit Committee, which concluded that the provision of such services by Yount, Hyde & Barbour, P.C. was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions.
Audit Committee Report
Management is responsible for the Company’s internal controls, financial reporting process and compliance with laws and regulations and ethical business standards. The independent auditor is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and issuing a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes on behalf of the Board of Directors.
In this context, the Audit Committee has reviewed and discussed the audited financial statements with management and the independent auditors. The Audit Committee has discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, as amended or supplemented (Professional Standards). In addition, the Audit Committee has received from the independent auditors the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with them their independence from the Company and its management. Moreover, the Audit Committee has considered whether the independent auditor’s provision of non-audit services to the Company is compatible with maintaining the auditor’s independence.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, for filing with the Securities and Exchange Commission. By recommending to the Board of Directors that the audited financial statements be so included, the Audit Committee is not opining on the accuracy, completeness or presentation of the information contained in the audited financial statements.
| Audit Committee |
| Phoebe P. Zarnegar, Chairman |
| Elwood C. May |
| James T. Napier |
| W. C. Sprouse |
PROPOSAL III
NON-BINDING VOTE ON EXECUTIVE COMPENSATION
On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (the “ARRA”) into law. The ARRA includes a provision, commonly referred to as “Say-on-Pay,” that requires any recipient of funds in the Troubled Assets Relief Program (the “TARP”) to permit a separate shareholder vote to approve the compensation of executives, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission.
In order to comply with ARRA as a recipient of TARP funds, the Board of Directors of the Company is providing you the opportunity, as a shareholder, to endorse or not endorse our executive pay programs and policies through the following resolution:
“RESOLVED, that the shareholders approve the compensation of executive officers as disclosed in this proxy statement pursuant to the rules of the Securities and Exchange Commission.”
Non-binding approval of the Company’s executive compensation program would require that a majority of the shares present or represented at the annual meeting vote in favor of the proposal. Abstentions and broker non-votes will not be counted as votes cast and therefore will not affect the determination as to whether the Company’s executive compensation program as disclosed in this proxy statement is approved.
Because your vote is advisory, it will not be binding upon the Board of Directors, overrule any decision made by the Board of Directors or create or imply any additional fiduciary duty by the Board of Directors. The Compensation Committee may, however, take into account the outcome of the vote when considering future executive compensation arrangements.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL III – NON-BINDING VOTE ON EXECUTIVE COMPENSATION.
SHAREHOLDER PROPOSALS
Under the regulations of the SEC, any shareholder desiring to make a proposal to be included in the Proxy Statement and acted upon at the 2012 Annual Meeting of Shareholders must cause such proposal to be delivered, in proper form, to our Secretary, whose address is P.O. Box 39, Powhatan, Virginia 23139-0039, no later than December 23, 2011.
Our Bylaws also prescribe the procedure a shareholder must follow to nominate directors or to bring other business before shareholders’ meetings outside of the proxy statement process. For a shareholder to nominate a candidate for director or to bring other business before a meeting, notice must be received by our Secretary not less than 60 days and not more than 90 days prior to the date of the meeting. Based upon an anticipated date of May 22, 2012 for the 2012 Annual Meeting of Shareholders, we must receive such notice no later than March 23, 2012 and no earlier than February 22, 2012. Notice of a nomination for director must describe various matters regarding the nominee and the shareholder giving the notice. Notice of other business to be brought before the meeting must include a description of the proposed business, the reasons therefor and other specified matters. Any shareholder may obtain a copy of our Bylaws, without charge, upon written request to our Secretary.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of our Annual Report to Shareholders for the year ended December 31, 2010 accompanies this Proxy Statement. Additional copies may be obtained by written request to our Secretary at the address indicated below. Such Annual Report is not part of the proxy solicitation materials.
UPON RECEIPT OF A WRITTEN REQUEST OF ANY PERSON WHO, ON THE RECORD DATE, WAS RECORD OWNER OF COMMON STOCK OR WHO REPRESENTS IN GOOD FAITH THAT HE OR SHE WAS ON SUCH DATE THE BENEFICIAL OWNER OF SUCH STOCK ENTITLED TO VOTE AT THE ANNUAL MEETING OF SHAREHOLDERS, WE WILL FURNISH TO SUCH PERSON, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010 AND THE EXHIBITS THERETO REQUIRED TO BE FILED WITH THE SEC UNDER THE EXCHANGE ACT. ANY SUCH REQUEST SHOULD BE MADE IN WRITING TO SECRETARY, CENTRAL VIRGINIA BANKSHARES, INC., 2036 NEW DORSET ROAD, P.O. BOX 39, POWHATAN, VIRGINIA 23139-0039. THE FORM 10-K IS NOT PART OF THE PROXY SOLICITATION MATERIALS.
[FORM OF PROXY]
x PLEASE MARK VOTES AS IN THIS EXAMPLE | REVOCABLE PROXY CENTRAL VIRGINIA BANKSHARES, INC. |
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS | |
| Proxy Solicited by the Board of Directors | |
The undersigned hereby constitutes John B. Larus and James T. Napier, or either one of them, attorneys and proxies, with power of substitution in each, to act for the undersigned with respect to all shares of Common Stock of Central Virginia Bankshares, Inc. held of record by the undersigned on April 12, 2011, at the Annual Meeting of Shareholders to be held at the Main Office Branch of Central Virginia Bank located at 2351 Anderson Hwy, Powhatan, Virginia 23139 on Tuesday, May 24, 2011, at 4:30 p.m. local time, or any adjournment or postponement thereof, for the following purposes: |
| |
For Withhold For All Except 1. Election of Directors: o o o Herbert E. Marth, Jr., Roseleen P. Rick and William C. Sprouse, Jr. INSTRUCTION: To withhold authority to vote for any individual nominee, mark “For All Except” and write that nominee’s name in the space provided below. | | For Against Abstain 2. To ratify the appointment of o o o Yount, Hyde & Barbour, P.C., an independent registered public accounting firm, to serve as our Independent auditors for the year ending December 31, 2011. |
For Against Abstain 3. To approve an advisory o o o (non-binding) resolution approving the compensation of the Company’s executive officers as disclosed in the proxy statement. | | 4. To vote on such other business as may properly come before the meeting |
| . | | |
| | | Please check this box if you plan to attend the Annual Meeting of Shareholders. o |
| | | | |
| Please be sure to sign and date this Proxy in the box below. | Date | | THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN ITEM 1 AND FOR ITEMS 2 THROUGH 4. |
| | | Please sign your name exactly as it appears on the stock certificate. All of several joint owners should sign. Fiduciaries should give full title. |
| Shareholder sign above Co-holder (if any) sign above | | |
| | | |
w Detach above card, sign, date and mail in postage paid envelope provided. w |
CENTRAL VIRGINIA BANKSHARES, INC. 2036 New Dorset Road P. O. Box 39 Powhatan, Virginia 23139-0039 |
PLEASE ACT PROMPTLY SIGN, DATE & MAIL YOUR PROXY CARD TODAY |
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
