PAGE
SCHEDULE 14A
Information Required in Proxy Statement
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 [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to [SECTION] 240.14a-11(c) or [SECTION]
240.14a-12
First Virginia Banks, Inc.
(Name of Registrant as Specified in Its Charter)
Christopher M. Cole, Vice President and Assistant General Counsel
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box)
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14-a6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies.
(2) Aggregate number of securities to which transaction applies.
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:(1)
(4) Proposed maximum aggregate value of transaction:
(1) Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.
(3) Filing Party:
(4) Date Filed:
PAGE
FIRST VIRGINIA BANKS, INC.
6400 Arlington Boulevard
Falls Church, Virginia 22042-2336
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 26, 1996
The Annual Meeting of Stockholders of First Virginia Banks, Inc. will be
held at the main office of First Virginia Banks, Inc., One First Virginia
Plaza, 6400 Arlington Boulevard, Falls Church, Virginia in the 5th Floor
Auditorium at 10:00 a.m. on Friday, April 26, 1996, for the following
purposes:
(1) To elect Class C directors for a term of three years.
(2) To ratify the appointment by the Board of Directors of Ernst &
Young LLP as independent auditors of First Virginia Banks, Inc.
for the year ending December 31, 1996.
(3) To transact such other business as may properly come before the
meeting or any adjournments thereof.
Stockholders of record at the close of business on February 28, 1996, are
entitled to notice of and to vote at the meeting or any adjournments thereof.
STOCKHOLDERS ARE URGED TO COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY AND
MAIL IT PROMPTLY IN THE ENCLOSED ADDRESSED AND POSTAGE-PAID ENVELOPE
REGARDLESS OF WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING.
By Order of the Board of Directors,
Thomas P. Jennings
Secretary
Falls Church, Virginia
March 11, 1996
FIRST VIRGINIA BANKS, INC.
6400 Arlington Boulevard
Falls Church, Virginia 22042-2336
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of First Virginia Banks, Inc. (hereinafter referred to as
"First Virginia") of proxies to be voted at the Annual Meeting of
Stockholders of First Virginia to be held at 10:00 a.m. on Friday, April 26,
1996, or any adjournments thereof. The approximate mailing date of this
Proxy Statement and the accompanying proxy is March 11, 1996.
All properly executed proxies in the accompanying form received by First
Virginia prior to the meeting will be voted at the meeting in accordance with
any direction noted thereon. Proxies on which no specification has been made
will be voted for the nominees listed herein as directors and for Item 2 on
the proxy. Any stockholder who has executed and delivered a proxy may revoke
it at any time before it is voted by attending the Annual Meeting and voting
in person or by giving written notice of revocation of the proxy to the
Secretary or by submitting to First Virginia a signed proxy bearing a later
date.
Both Common and Preferred stockholders of First Virginia are entitled to
vote at the meeting. Each share of Common and Preferred Stock is entitled to
one vote on all matters which may come before the meeting. As of February
28, 1996, the record date for the determination of stockholders entitled to
notice of and to vote at the meeting, there were 33,952,175 shares of
Common Stock and 68,859 shares of Preferred Stock of First Virginia issued
and outstanding. Each share is entitled to one vote. Except for the election
of directors, action submitted to a vote of the stockholders will be approved
if a quorum is present and the votes cast in favor of the matter constitute a
majority of the shares represented at the meeting and entitled to vote on the
matter. With respect to the election of directors, the four Class C nominees
receiving the greatest number of votes cast for the election of directors
will be elected, assuming a quorum is present at the meeting. The presence
in person or by proxy of a majority of the outstanding shares of Common and
Preferred Stock entitled to vote at the meeting will constitute a quorum.
Shares for which the holder has elected to abstain or withhold the proxy's
authority to vote (but not including broker non-votes) on a matter will count
toward a quorum. No person is known by management of First Virginia to own
beneficially, directly or indirectly, more than 5% of the outstanding stock
of First Virginia.
I. ELECTION OF DIRECTORS
The Board of Directors is divided into three classes (A, B and C). The term
of office for Class C directors will expire at this Annual Meeting. Four
persons, all of whom are presently on the Board, have been nominated to serve
as Class C directors. If elected, the four nominees for Class C directors
will serve for a term of three years.
It is the intention of the persons named in the accompanying form of proxy,
unless stockholders specify otherwise by their proxies, to vote for the
election of the four nominees named on the next two pages. Although the
Board of Directors does not expect that any of the persons named will be
unable to serve as a director, should any of them be unable to accept
nomination or election, it is intended that shares represented by the
accompanying form of proxy will be voted by the proxy holders for such other
person or persons as may be designated by the present Board of Directors.
Certain information concerning the nominees for election at this meeting and
the Class A and Class B directors who will continue in office after the
meeting is set forth below and on the following pages, as furnished by them.
NOMINEES
FOR CLASS C DIRECTORS
Picture Paul H. Geithner, Jr., 65, is the retired President and
Chief Administrative Officer of First Virginia (1985-
1995) and has been a director of First Virginia since
1984. He also is a director of First Virginia Life
Insurance Company, a nonbank affiliate. He is a member
of the Public Policy Committee and the Executive
Committee. He beneficially owns 40,687 shares of Common
Stock.(1)
Picture L. H. Ginn, III, 62, has been President since 1975 of
Lighting Affiliates, Inc., a distributor of electrical
fixtures located in Richmond, Virginia, and has been a
director of First Virginia since 1978. Mr. Ginn is a
retired U. S. Army Reserve Major General. He is
Chairman of the Board of First Virginia Bank-Colonial,
Richmond, Virginia. He is a member of the Executive
Committee and the Director Nominating Committee and
beneficially owns 12,281 shares of Common Stock. (2)
Picture T. Keister Greer, 74, has been principal of T. Keister
Greer, P.C., in Rocky Mount, Virginia, since 1995 and
has been a director of First Virginia since 1976. Prior
to that, he was Counsel to Greer & Melesco (1972-1994)
and Counsel to Greer & Greer (1990-1991). He is
Chairman of the Board of First Virginia Bank-Franklin
County, Rocky Mount, Virginia. Mr. Greer is a member of
the Public Policy Committee and the Director Nominating
Committee and beneficially owns 17,400 shares of Common
Stock. (3)
NOMINEES
(continued)
Picture Edward M. Holland, 56, has been an attorney in
Arlington, Virginia since 1966 and is a former member of
the Virginia General Assembly (Senate) (1972-1995). He
has been a director of First Virginia since 1974. He
also is a director of First Virginia Bank, Falls Church,
Virginia. He serves on the Executive Committee and the
Management Compensation and Benefits Committee and
beneficially owns 59,479 shares of Common Stock. (4)
CLASS A DIRECTORS
(Serving until the 1997 Annual Meeting)
Picture E. Cabell Brand, 72, has been President since 1987 of
Recovery Systems, Inc., a company in Salem, Virginia
that engages in business and environmental consulting
and international development projects. He is a
director and Vice Chairman of the Board of First
Virginia Bank-Southwest, Roanoke, Virginia and has been
a director of First Virginia since 1976. He serves on
the Management Compensation and Benefits Committee and
the Director Nominating Committee and beneficially owns
5,538 shares of Common Stock. (5)
Picture Barry J. Fitzpatrick, 56, is Chairman, President and
Chief Executive Officer of First Virginia. He is
Chairman of First Virginia Bank in Falls Church and a
director of a number of nonbank affiliated companies
including First Virginia Services, Inc. and First
Virginia Credit Services, Inc. He was appointed
Chairman and Chief Executive Officer of First Virginia
effective January 1, 1995, and President effective July
1, 1995. He was Executive Vice President of First
Virginia from May, 1992, until January 1, 1995, and was
Senior Vice President and Regional Executive Officer
from June, 1982, to May, 1992. He serves on the
Executive Committee, the Public Policy Committee and the
Director Nominating Committee. He beneficially owns
49,772 shares of First Virginia Common Stock. (6)
CLASS A DIRECTORS
(Continued)
Picture Elsie C. Gruver, 69, is a community and civic leader in
Arlington, Virginia and has been a director of First
Virginia since 1973. She is Chairman of the Public
Policy Committee and a member of the Audit Committee and
beneficially owns 5,936 shares of Common Stock. (7)
Picture W. Lee Phillips, Jr., 60, has been a professional
engineer involved in real estate management and home
building in Falls Church, Virginia and southern Maryland
since 1991. Prior to that, he was a Professional
Engineer and Land Surveyor (1959-1991) and Chairman of
the Board, Walter L. Phillips, Inc. (1976-1991). He has
been a director of First Virginia since 1985 and is a
director of First Virginia Bank, Falls Church, Virginia.
He serves on the Audit Committee, as well as the
Management Compensation and Benefits Committee, and
beneficially owns 8,254 shares of Common Stock. (8)
Picture Josiah P. Rowe, III, 68, has been Co-Publisher and
General Manager of The Free Lance-Star Publishing Co. of
Fredericksburg, Va. since 1949 and has been a director
of First Virginia since 1991. He is a director of First
Virginia Bank, Falls Church, Virginia. He serves on the
Public Policy Committee and the Director Nominating
Committee and beneficially owns 1,500 shares of Common
Stock and 100 shares of Preferred Stock.
Picture Albert F. Zettlemoyer, 61, retired in 1995 as President
of the Government Systems Group of UNISYS Corporation in
McLean, Virginia and as Executive Vice President of
UNISYS Corporation. He has been a director of First
Virginia since 1978. Prior to being President of the
Government Systems Group, he was Vice President of
UNISYS (1991-1993) and President of Paramax Corporation,
a subsidiary of UNISYS (1992). He serves on the Audit
Committee and chairs the Management Compensation and
Benefits Committee. He beneficially owns 6,000 shares
of Common Stock. (9)
CLASS B DIRECTORS
(Serving until the 1998 Annual Meeting)
Picture Edward L. Breeden, III, 61, has been a partner in the
law firm of Breeden, MacMillan & Green in Norfolk,
Virginia since 1959 and has been a director of First
Virginia since 1982. He is a director of First Virginia
Bank of Tidewater, Norfolk, Virginia and of First
Virginia Life Insurance Company. He serves on both the
Executive Committee and the Public Policy Committee and
chairs the Audit Committee. He beneficially owns 66,053
shares of Common Stock. (10)
Picture Gilbert R. Giordano, 67, has been an attorney since 1956
and senior partner in the law firm of Giordano,
Villareale & Vaughan, P.A., in Upper Marlboro, Maryland
since 1972. He has been a director of First Virginia
since 1989. He is Chairman of the Board of First
Virginia Bank-Maryland, Upper Marlboro, Maryland. He
serves on the Audit Committee and the Director
Nominating Committee and beneficially owns 220,666
shares of Common Stock. (11)
Picture Eric C. Kendrick, 49, has been President of Mereck
Associates, Inc., a real estate management and
development firm in Arlington, Virginia since 1989 and
has been a director of First Virginia since 1986. He
serves on the Management Compensation and Benefits
Committee and the Public Policy Committee. He
beneficially owns 49,734 shares of Common Stock. (12)
CLASS B DIRECTORS
(continued)
Picture John B. Melvin, 71, is Trustee of the Stanley Family
Bottling Company Trust. In 1991, he retired as Chairman
of the Board, Coca-Cola Bottling Co. of Annapolis,
Maryland. He is a director of Farmers Bank of Maryland,
a subsidiary bank of First Virginia located in
Annapolis, Maryland. He beneficially owns 19,620 shares
of Common Stock. (13)
Picture Robert H. Zalokar, 68, is the retired Chairman of the
Board and Chief Executive Officer of First Virginia
(1984-1994). He has been a director of First Virginia
since 1959. He is also a director of First Virginia
Bank in Falls Church and a director of First Virginia
Life Insurance Company and First Virginia Mortgage
Company. He serves as Chairman of the Executive
Committee and is a member of the Public Policy Committee
and the Director Nominating Committee. He beneficially
owns 124,301 shares of Common Stock.
(1) Includes 31,600 shares held in a revocable trust and 4,114 shares held
indirectly through his spouse.
(2) Includes 235 shares held indirectly through his spouse and 1,366 shares
held by a trust of which Mr. Ginn is trustee.
(3) Includes 5,400 shares of Common Stock held by a trust in which Mr.
Greer has a beneficial interest. During 1995, Mr. Greer's law firm, T.
Keister Greer, P.C. was retained by First Virginia Bank-Franklin County
to perform certain legal services. During 1995, he was paid $37,416
for these services.
(4) Includes 34,479 shares held by a corporation of which Mr. Holland is an
officer, director, and owner.
(5) Includes 264 shares of Common Stock held indirectly through his spouse.
(6) Includes options to purchase 27,250 shares of Common Stock which are
currently exercisable but does not include options to purchase 26,000
shares of Common Stock which are not currently exercisable.
(7) Includes 1,782 shares of Common Stock held in a Keogh Plan, 900 shares
held in an Individual Retirement Account and 900 shares held in her
spouse's Individual Retirement Account.
(8) Includes 3,000 shares held by a trust of which Mr. Phillips is a
trustee.
(9) All of the shares are held jointly with spouse.
(10) Includes 7,500 shares held by a corporation of which Mr. Breeden is
President, 16,325 shares held by two foundations of which Mr. Breeden
is Chairman, and 38,175 shares held by two trusts of which Mr. Breeden
is trustee.
(11) Includes 264 shares held in a trust for his son, 87 shares held by his
spouse and daughter, 550 shares held by his spouse and son, 10,547
shares held by the Giordano Family Foundation and, 4,330 shares held by
his spouse as custodian for his son.
(12) Includes 6,489 shares held by his spouse and 1,729 shares held by a
corporation of which Mr. Kendrick is a director and president.
(13) All of the shares are held in a trust.
As of February 28, 1996, executive officers and directors as a group
beneficially owned 967,272 shares of Common Stock representing approximately
2.8% of those shares outstanding, of which 151,715 shares represent shares
covered by currently exercisable options (or options exercisable within 60
days) and 225 shares of Preferred Stock representing approximately .33% of
those shares outstanding. No officer or director owned as much as 1.0% of
First Virginia Common Stock. Messrs. Breeden, Greer and Giordano are members
of or are associated with law firms which have been in the last two years,
and are proposed in the future to be, retained by First Virginia and its
subsidiaries. Messrs. Brand, Breeden, Fitzpatrick, Geithner, Ginn, Giordano,
Greer, Holland, Melvin, Phillips, Rowe and Zalokar have been directors of
various subsidiaries of First Virginia during the past five years. Ages of
the directors are stated as of February 28, 1996.
BENEFICIAL OWNERSHIP OF NAMED EXECUTIVE OFFICERS
The following table sets forth certain information regarding the named
executives' beneficial ownership of First Virginia Common Stock as of
February 28, 1996.
Shares of Common Stock of First Virginia
Beneficially Owned
Name of Officer Number * Percent of Class
Barry J. Fitzpatrick 49,772 .1458
Shirley C. Beavers, Jr. 37,072 .1086
Raymond E. Brann, Jr. 31,590 .0925
Michael G. Anzilotti 8,664 .0254
H. Howard Hicks, Jr. 33,821 .0991
* The amounts shown represent the total shares owned outright by such
individuals together with shares which are issuable upon the exercise of all
stock options that are currently exercisable. Specifically, the following
individuals have the right to acquire the shares indicated after their names,
upon the exercise of stock options: Mr. Fitzpatrick, 27,250; Mr. Beavers,
26,250; Mr. Brann, 21,050; Mr. Anzilotti, 7,500 and Mr. Hicks, 5,300.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
First Virginia's Board of Directors has a standing Audit Committee, Director
Nominating Committee, Management Compensation and Benefits Committee, Public
Policy Committee, and Executive Committee.
The Audit Committee, comprised of Directors Breeden, Giordano, Gruver,
Melvin, Phillips, and Zettlemoyer, held five meetings during 1995. Functions
of the Committee include (1) reviewing with the independent public
accountants and management such matters as: the financial statements and the
scope of First Virginia's audit, compliance with laws and regulations, and
the adequacy of First Virginia's system of internal procedures and controls
and resolution of material weaknesses; (2) reviewing with First Virginia's
internal auditors the activities and performance of the internal auditors;
(3) reviewing with management the selection and termination of the
independent public accountants and any significant disagreements between the
independent public accountants and management; and (4) reviewing the nonaudit
services of the independent public accountant. Under Section 36 of the
Federal Deposit Insurance Act, the Audit Committee also performs similar
functions for some of the First Virginia member banks.
The Director Nominating Committee, comprised of Directors Malone, Brand,
Fitzpatrick, Ginn, Giordano, Greer, Rowe, and Zalokar, held one meeting in
1995. The functions of the Committee include annually recommending to the
Board the names of persons to be considered for nomination and election by
First Virginia's stockholders and, as necessary, recommending to the Board
the names of persons to be elected to the Board between annual meetings.
The Management Compensation and Benefits Committee, comprised of Directors
Zettlemoyer, Brand, Holland, Kendrick, and Phillips, held two meetings in
1995. The Committee has the authority to establish the level of compensation
(including bonuses) and benefits of management of First Virginia. In
addition, the Committee has authority to award long-term incentive
compensation, e.g., stock options and stock appreciation rights, to First
Virginia's management based on such factors as individual and corporate
performance.
The Public Policy Committee, comprised of Directors Gruver, Breeden,
Fitzpatrick, Geithner, Greer, Kendrick, Malone, Rowe, and Zalokar, met four
times during 1995. This Committee supervises First Virginia's contribution
and matching gifts programs. The Committee also monitors the programs
developed for affirmative action and compliance with the Community
Reinvestment Act and Title VII of the Civil Rights Act of 1964.
The Executive Committee, comprised of Directors Zalokar, Breeden,
Fitzpatrick, Geithner, Ginn, Holland, and Malone, held 11 meetings in 1995.
The Committee exercises all of the powers of the Board of Directors when the
Board is not in session, except for those powers reserved for the Board under
state law and by First Virginia's Articles of Incorporation and Bylaws.
During 1995, there were 12 meetings of the Board of Directors. All
directors attended more than 75% of the aggregate total number of meetings of
the Board and committees of the Board on which they served.
SECTION 16 TRANSACTIONS
Section 16(a) of the Securities Exchange Act of 1934 requires First
Virginia's executive officers and directors to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. Executive officers and directors are required by SEC
regulation to furnish First Virginia with copies of all Section 16(a) forms
they file.
Based on a review of the forms that were filed and written representations
from the executive officers and directors, First Virginia believes that
during the year 1995 all filing requirements applicable to its officers and
directors were met.
EXECUTIVE COMPENSATION
The Summary Compensation Table shows the annual compensation for the last
three fiscal years for First Virginia's Chief Executive Officer and for the
four most highly compensated executive officers other than First Virginia's
Chief Executive Officer:
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
(a) (b) (c) (d) (e) (f) (g)
Other All
Name Annual Options/ Other
and Compen- SARs Compen-
Principal sation Awarded sation
Position Year Salary ($)(1) Bonus ($)(2) ($) (3) (#) ($) (4)
Barry J. 1995 350,000 156,275 3,636 20,000 45,804
Fitzpatrick 1994 209,000 125,144 6,135 0 24,691
Chairman, 1993 189,000 90,406 69,099 10,000 25,203
President
and Chief
Executive
Officer of
First Virginia
Shirley C. 1995 230,000 93,362 3,868 5,000 30,818
Beavers Jr. 1994 209,000 94,952 6,919 0 25,963
Executive 1993 189,000 90,406 6,045 10,000 31,385
Vice President
of First
Virginia and
President,
First Virginia
Services, Inc.
Raymond E. 1995 183,821 61,735 66,360 5,000 57,270
Brann, Jr. 1994 154,348 34,179 2,394 0 55,700
Executive 1993 147,000 35,185 16,600 2,000 54,881
Vice
President
of First Virginia
Michael G. 1995 173,798 46,524 2,250 5,000 15,034
Anzilotti 1994 149,741 41,588 4,007 0 13,904
Senior 1993 140,846 42,219 3,290 7,500 13,130
Vice
President
and Regional
Executive
Officer of
First Virginia
and President
and Chief
Executive
Officer of First
Virginia Bank
Henry 1995 178,980 34,975 0 1,500 32,098
Howard 1994 171,288 45,244 0 0 29,402
Hicks, Jr. 1993 162,830 46,013 0 2,000 31,614
Senior
Vice President
and Regional
Executive Officer
of First Virginia
(1) The Salary Column (Column (c)) includes the base salary earned by the
executive officer, which includes amounts that are deferred under the First
Virginia Banks, Inc. Employees Thrift Plan and the First Virginia Pre-Tax
Health Benefit Plan.
(2) The Bonus Column (Column (d)) includes the amount earned as a bonus for
that year even if paid in the following year. It also includes amounts
earned for that year under the First Virginia Banks, Inc. Profit Sharing
Plan.
(3) The Other Annual Compensation Column (Column (e)) includes the amount
of taxes paid by First Virginia for certain benefits. In Mr. Brann's case,
it also includes perquisites or personal benefits whose value amounted to
$56,900. Of that amount, $32,459 was for country club dues and a country
club initiation fee and $17,287 was for moving expenses. During 1995, First
Virginia made a below market rate residential mortgage loan to Mr. Brann as
an inducement for him to relocate to Northern Virginia. The Other Annual
Compensation Column includes the interest benefit to Mr. Brann for 1995 for
that loan.
(4) The All Other Compensation Column (Column (g)) includes the amount paid
by the employer under the First Virginia Banks, Inc. Employees Thrift Plan
which, for each of the named officers, was $6,750. It also includes the
amounts paid by the employer under the First Virginia Supplemental Benefits
Plan. This plan provides supplemental retirement benefits for those key
officers who are restricted from receiving further benefits under the Thrift
Plan as a result of the limitation on pretax contributions imposed by the
Internal Revenue Code. For 1995, these amounts were: for Mr. Fitzpatrick,
$15,981; Mr. Beavers, $7,884; Mr. Brann, $3,071; Mr. Anzilotti, $2,953 and
Mr. Hicks, $3,351. It also includes the premium amounts paid by the employer
under the First Virginia Split Dollar Life Insurance Plan. For 1995, these
amounts were: for Mr. Fitzpatrick, $22,541; Mr. Beavers, $14,635; Mr. Brann,
$44,149; Mr. Anzilotti, $4,331 and Mr. Hicks, $15,999. It also includes the
"above-market" earnings on deferred compensation earned during 1995. These
amounts were: for Mr. Fitzpatrick, $532; Mr. Beavers, $1,549; Mr. Brann,
$3,300; Mr. Anzilotti, $1,000 and Mr. Hicks, $5,998.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The table on the following page shows for each of the named executive
officers (1) the number of options that were granted during 1995, (2) out of
the total number of options granted to all employees, the percent granted to
the named executive officer, (3) the exercise price, (4) the expiration date
and (5) the potential realizable value of the options, assuming that the
market price of the underlying securities appreciates in value from the date
of grant to the end of the option term, at a 5% and 10% annualized rate. No
freestanding SARs were granted in 1995.
Stock Option Grants In 1995
Percent of Potential Realizable
Number of Total Value at Assumed
Securities Options Annual Rates of
Underlying Granted to Exercise Stock Price
Options Employees or Base Appreciation for
Granted in Fiscal Price Expiration Option Term
Name (# Shs.)(1) Year(2) ($/Sh.) Date 5%($) 10%($)
Barry J. 20,000 23.95% 41.875 12/19/2005 526,699 1,334,759
Fitzpatrick
Shirley C. 5,000 5.99% 41.875 12/19/2005 131,674 333,689
Beavers, Jr.
Raymond E. 5,000 5.99% 41.875 12/19/2005 131,674 333,689
Brann, Jr.
Michael G. 5,000 5.99% 41.875 12/19/2005 131,674 333,689
Anzilotti
H. Howard 1,500 1.80% 41.875 12/19/2005 39,502 100,107
Hicks, Jr.
(1) Options granted to the named executive officers in 1995 are exercisable
over a five year period provided certain performance goals are achieved by
First Virginia. All of the options that were granted in 1995 include a
provision that would accelerate the vesting of the options upon a "change in
control" of First Virginia. For an explanation of the "change in control"
provision, see "Directors' Compensation, Consulting Arrangements and Plans
Which Include Change in Control Arrangements."
(2) Options to purchase 83,500 shares of First Virginia Common Stock were
granted to employees during 1995. No freestanding SARs were granted in 1995
to employees and none of the options that were granted had any tandem SARs.
The table on the following page shows for each of the named executive
officers the number of shares of First Virginia Common Stock acquired upon
the exercise of stock options and stock appreciation rights during 1995, the
value realized upon their exercise, the number of unexercised stock options
and SARs at the end of 1995 and the value of unexercised "in-the-money" stock
options and SARs at the end of 1995. Stock options or freestanding SARs are
considered "in-the-money" if the fair market value of the underlying
securities exceeds the exercise price of the option or SAR. Some of the
stock options which were granted to First Virginia's executive officers
include a provision that would accelerate the vesting of the options upon a
"change in control" of First Virginia. There were no unexercisable or
exercisable freestanding SARs owned by any of the named executive officers at
yearend.
Aggregated Options/SAR Exercises in 1995 and
Yearend Options/SAR Values
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired Yearend (#) Yearend($)
on Exercisable/ Exercisable/
Name Exercisable(#) Value Realized($) Unexercisable Unexercisable
Barry J. 3,000 67,375 25,250/28,000 525,750/72,000
Fitzpatrick
Shirley C. 4,000 92,334 24,250/13,000 505,792/72,000
Beavers, Jr.
Raymond E. 0 0 20,650/6,600 471,976/15,400
Brann, Jr.
Michael G. 1,522 53,080 6,000/11,000 132,750/54,000
Anzilotti
H. Howard 6,268 138,494 4,900/3,100 87,850/15,400
Hicks, Jr.
PENSION AND THRIFT PLANS AND SUPPLEMENTAL COMPENSATION ARRANGEMENTS
The following table shows the estimated annual benefit payable upon
retirement (life only) under the First Virginia Pension Trust Plan based on
specified remuneration and years of credited service classifications,
assuming a participant retired on December 31, 1995, at age 65. The table
ends at an average annual pay of $150,000 since compensation in excess of
that amount is not taken into account under the Plan because of IRS
regulations. Credited service in excess of thirty years is also not taken
into account in determining benefits under the Plan.
Annual Benefits Under First Virginia's Pension Trust Plan
Average
Annual Pay
for Highest 10 Years 15 Years 20 Years 25 Years 30 Years
Five of of of of of
Years Service Service Service Service Service
$125,000 $18,704 $28,056 $37,408 $46,760 $56,112
$150,000 $22,704 $34,056 $45,408 $56,760 $68,112
Under the First Virginia Pension Trust Plan, a participant retiring at age
65 with 30 years of credited service under the Plan will receive a maximum
annual pension benefit equal to 1.1% of his average annual pay multiplied by
30 years of credited service plus 0.5% of his average annual pay in excess of
his covered compensation multiplied by 30 years of credited service. The
calculation of "average annual pay" is based on annual compensation for the
highest five consecutive years out of the participant's final 10 years of
service. "Covered compensation" is calculated by multiplying the annual
average of Social Security taxable wage bases in effect for the 35 years
ending with the last day of the year in which the participant attains Social
Security retirement age.
Remuneration on earnings determining pension benefits under the Plan
includes salaries and bonuses (which are listed in the Summary Compensation
Table) but it also includes any other taxable compensation including
compensation resulting from the exercise of nonqualified options and SARs.
Credited service as of December 31, 1995, for each of the named executives
was as follows: Mr. Fitzpatrick, 26.4 years; Mr. Beavers, 26.3 years; Mr.
Brann, 30 years; Mr. Anzilotti, 17.2 years and Mr. Hicks, 30 years. If a
participant retired on December 31, 1995 at age 65 under the Plan, the
participant would receive the greater of (1) that participant's accrued
benefits as determined by using the Summary Compensation Table and the
pension table in conjunction with the formula described above or (2) that
participant's accrued benefits as of December 31, 1993, which for the named
executive officers, was as follows: Mr. Fitzpatrick $69,985, Mr. Beavers
$75,605, Mr. Brann, $68,520, Mr. Anzilotti, $39,693 and Mr. Hicks, $86,719.
Mr. Fitzpatrick has a supplemental compensation agreement which will provide
him with supplemental retirement benefits in addition to those pension
benefits described above. Under Mr. Fitzpatrick's agreement, if he resigns,
retires or leaves First Virginia for any reason after reaching the age of 62,
he is entitled to receive for the rest of his life supplemental compensation
equal to sixty percent of the average of his highest five years of annual
salary and bonus. Highest annual salary includes salary and bonus and any
profit sharing payments received under the First Virginia Profit Sharing Plan
but does not include any other form of compensation that is not salary or
bonuses, such as compensation arising from the exercise of SARs and
nonqualified options. Mr. Fitzpatrick can also receive his benefits under
his agreement prior to age 62 if there is a "change in control," if he
becomes totally and permanently disabled, or if he is dismissed or requested
to leave his employment without "just cause." The amount of benefit Mr.
Fitzpatrick would receive under his agreement would be reduced by the amount
he would receive under the First Virginia Pension Trust Plan. After
receiving benefits, should Mr. Fitzpatrick die, his wife would be entitled to
one-half of his total annual benefit for the rest of her life. Under his
agreement, once benefits begin to be paid, Mr. Fitzpatrick is to remain
available to provide consulting and advisory services if he is physically and
mentally capable of doing so. Furthermore, his benefits are forfeitable
under certain circumstances.
Executive officers, like other employees of First Virginia, are eligible to
participate in the First Virginia Banks, Inc. Employees' Thrift Plan ("Thrift
Plan"). Under the Thrift Plan, employees of First Virginia and its
subsidiaries who have completed one year of service can contribute up to six
percent of their compensation and receive matching employer contributions
equal to 50% of their employee contributions. For the years when First
Virginia meets an earnings test under the Thrift Plan, First Virginia
contributes 75% of employee contributions. The Thrift Plan complies with
Section 401(k) of the Internal Revenue Code so that employee contributions
can be made on a pretax basis. Employees can direct the investment of their
contributions and the matching employer contributions into one or more of
three funds that are administered by the Trust Department of First Virginia
Bank. Reference is made to footnote 4 of the Summary Compensation Table for
the amount of contributions made on behalf of the named executive officers
under the Thrift Plan.
First Virginia also maintains a First Virginia Supplemental Benefits Plan
which provides supplemental retirement benefits for those key officers who
are restricted from receiving further benefits under the Thrift Plan as a
result of the limitation on pretax contributions imposed by the Internal
Revenue Code for 1995. Under the First Virginia Supplemental Benefits Plan,
executive officers can continue to make pretax contributions in excess of the
IRS limits imposed on the Thrift Plan and receive matching contributions from
First Virginia identical to what they would have received if they were in the
Thrift Plan and there were no limitations on contributions. Reference is
made to Footnote 4 of the Summary Compensation Table for the amount of the
employer and employee contributions made on behalf of the named executive
officers under the First Virginia Supplemental Benefits Plan.
DIRECTORS' COMPENSATION, CONSULTING ARRANGEMENTS
AND PLANS WHICH INCLUDE CHANGE IN CONTROL ARRANGEMENTS
For 1996, directors of First Virginia who are not salaried officers will be
paid an annual retainer of $14,000 per year, a fee of $900 for each meeting
of the Board of Directors attended, and a fee of $700 for each meeting of a
Committee of the Board of Directors attended. Committee chairmen will
receive $850 for each committee meeting they chair. Directors are reimbursed
for out-of-town expenses incurred in connection with Board and Committee
meetings. Directors can participate in First Virginia's deferred
compensation plans which allow them to defer their retainers and fees.
During 1995, Edwin T. Holland, the founder and former Chairman and Chief
Executive Officer of First Virginia, and Thomas K. Malone, Jr., former
Chairman and Chief Executive Officer of First Virginia, were paid $148,463
and $114,852, respectively, under their supplemental compensation agreements,
in addition to the amounts they received from the First Virginia Pension
Trust Plan and, in the case of Mr. Malone, in addition to his director fees.
When requested, both Holland and Malone are required to provide consulting
services under their supplemental compensation agreements.
During 1995, Robert H. Zalokar, former Chairman and Chief Executive Officer
of First Virginia, and Paul H. Geithner, Jr., former President and Chief
Administrative Officer of First Virginia, were paid $521,316 and $141,264,
respectively, under their supplemental compensation agreements, in addition
to the amounts they received from the First Virginia Pension Trust Plan and
in addition to their director fees. When requested, both Zalokar and
Geithner are required to provide consulting services under their supplemental
compensation agreements.
First Virginia paid Mr. Zalokar's and Mr. Malone's country club membership
fees during 1995 which amounted to $2,996 and $1,742 respectively.
During 1995, Virginia H. Brown, formerly Virginia H. Beeton, received
$71,000 pursuant to her former husband's Supplemental Retirement Agreement
with First Virginia in addition to what she received from the First Virginia
Pension Trust Plan. Her former husband, Ralph A. Beeton, was Chairman and
Chief Executive Officer of First Virginia.
First Virginia also has two key employee salary reduction deferred
compensation plans, one of which began in 1983 and the other in 1986, and two
directors' deferred compensation plans, one of which also began in 1983 and
the other in 1986, ("Deferred Compensation Plans") for key employees of First
Virginia and its subsidiaries and for directors of First Virginia. Under the
Deferred Compensation Plans, participants elect to defer some or all of their
compensation from First Virginia, and First Virginia agrees to pay at normal
retirement age or earlier (or to participant's beneficiary or estate on
participant's death) a sum substantially in excess of what each participant
has deferred. To fund the benefits under the Deferred Compensation Plans,
First Virginia has purchased life insurance contracts on the lives of the
participants, with First Virginia as the beneficiary. For the period ending
December 31, 1995, none of the named executive officers of First Virginia
deferred any compensation under the Deferred Compensation Plans.
The 1983 deferred compensation plans include a provision regarding "change
in control." Generally, the 1983 Key Employee Salary Reduction Deferred Com-
pensation Plan requires that an employee continue his/her position with First
Virginia and/or its subsidiaries until retirement in order to receive his/her
benefits. If there is a "change in control" of First Virginia, and a
director is terminated under the directors' plan, or in the case of the
employee plan, an employee is terminated "without cause" or the employee
terminates his/her employment for "good reason," as those terms are defined
under the employee plan, then the director or employee, as the case may be,
becomes entitled to his/her benefits under the 1983 Deferred Compensation
Plans at retirement, notwithstanding the fact that his/her affiliation with
First Virginia has terminated.
First Virginia has a Split Dollar Life Insurance Plan ("Split Dollar Plan")
which currently includes all executive employees of First Virginia including
those named in the Summary Compensation Table. Under the Split Dollar Plan,
an executive can purchase ordinary life insurance policies with coverage of
at least two times what is projected to be the executive's base salary at
retirement, up to a limit of $1,000,000. A portion of the premiums will be
loaned to the executives by First Virginia up to the later of ten years or
the executive's retirement date. At the end of this period, if assumptions
about mortality, dividends and other factors are realized, First Virginia
will recover all of its loans for premiums from the cash value of the policy.
The policy will then be transferred to the executive, who will pay all
further premiums, if any, under the policy. Executives who participate in
the Split Dollar Plan forego any insurance coverage over $50,000 under the
First Virginia Group Life Insurance Plan. During 1989, the Split Dollar Plan
was amended so that in the event of a "change in control," only the executive
would have the right to terminate the policy.
First Virginia's Board of Directors approved in 1992 the establishment of a
trust with Chemical Bank as the trustee to partially secure the benefits of
some of First Virginia's nonqualified compensation plans, including the
Deferred Compensation Plans and the First Virginia Supplemental Benefits
Plan, in case of a change in control. Under the trust agreement establishing
the trust, if a "change in control" takes place, the trustee would pay the
benefits under the covered compensation plans out of the trust assets that
have been contributed to the trust by First Virginia, if First Virginia
refused to pay the benefits. The trust is considered a "grantor trust"
subject to the claims of First Virginia's general creditors. For accounting
purposes, the trust assets are considered corporate assets and, therefore, no
balance sheet impact to First Virginia will result from the establishment of
the trust. The trust agreement does not include a provision which would ac-
celerate the vesting or payment of any of the benefits under the covered
compensation plans in case of a change in control. During 1995, First
Virginia did not make a contribution to the Trust.
During 1995, First Virginia amended the 1983 deferred compensation plans,
the Split Dollar Plan, and the above-described trust agreement with Chemical
Bank to provide for a standard "change in control" definition. Some of the
stock option agreements and Mr. Fitzpatrick's supplemental compensation
agreement were also amended to include this definition. Under this
definition, a change in control means: (a) an acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (i) the then
outstanding shares of First Virginia Common Stock or (ii) the combined voting
power of the then outstanding voting securities of First Virginia entitled to
vote generally in the election of directors (the "Outstanding First Virginia
Voting Securities"); provided, however, that any acquisition directly from or
by First Virginia or any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by First Virginia or an affiliated company or
any acquisition by a company pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of (c) below would be excluded; or (b)
individuals who, as of the date when the change in control provisions were
adopted, constitute the Board (the "Incumbent Board") of First Virginia,
cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director whose election, or
nomination for election by First Virginia's shareholders, was approved by
vote of at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual was a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or (c) consummation of a
reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of First Virginia (a "Business
Combination"), in each case, unless, following such Business Combination, (i)
all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the outstanding First Virginia Common
Stock and Outstanding First Virginia Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns First
Virginia or all or substantially all of First Virginia's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the outstanding First Virginia Common Stock and the
outstanding First Virginia Voting Securities, as the case may be, (ii) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of First Virginia or such
corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a majority of
the members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or the action of the Board, providing for
such Business Combination; or (d) approval by the shareholders of First
Virginia of a complete liquidation or dissolution of First Virginia.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of First Virginia's Management Compensation and Benefits
Committee are E. Cabell Brand, Edward M. Holland, Eric C. Kendrick, W. Lee
Phillips, Jr. and Albert F. Zettlemoyer. Edward M. Holland is the son of
Edwin T. Holland, the founder and former Chairman and Chief Executive Officer
of First Virginia. As noted above, Edwin T. Holland receives a fee from
First Virginia pursuant to a Supplemental Compensation Agreement. Also, as
noted above, Edward M. Holland's sister, Virginia H. Brown, receives a
benefit pursuant to her former husband's Supplemental Retirement Agreement
with First Virginia. Albert F. Zettlemoyer's daughter is an officer of First
Virginia Bank. None of the members of the Management Compensation and
Benefits Committee served as members of the compensation committees of
another entity. No executive officer of First Virginia served as a director
of another entity that had an executive officer serving on First Virginia's
compensation committee. No executive officer of First Virginia served as a
member of the compensation committee of another entity which had an executive
officer who served as a director of First Virginia.
MANAGEMENT COMPENSATION AND BENEFITS COMMITTEE
REPORT CONCERNING FIRST VIRGINIA'S
EXECUTIVE COMPENSATION POLICY
The Management Compensation and Benefits Committee (the "Committee") of the
Board of Directors establishes the policy for the compensation of the
executive officers of First Virginia. It is also responsible for
administering most of First Virginia's executive compensation programs. The
Committee is composed entirely of outside directors who are not eligible,
with the exception of the directors' deferred compensation plans, to
participate in the plans over which it has authority.
The overall goal of First Virginia's compensation policy is to motivate,
reward and retain its key executive officers. The Committee believes this
should be accomplished through an appropriate combination of competitive base
salaries and, at times, both short term and long term incentives.
The primary components of First Virginia's executive compensation program
are base salaries, bonuses, (e.g. short term compensation), and equity
compensation (e.g. long term compensation). Executive officers also
participate in other broad based employee compensation and benefit programs.
Since no First Virginia executive had compensation in 1995 which in total
exceeded one million dollars and since no executive is expected to be
compensated in excess of that amount in 1996, the Committee did not consider
the effect of the one million dollar deduction limitation under Section
162(m) of the Internal Revenue Code in determining executive compensation nor
did they establish any specific policy regarding the deductibility of
executive compensation.
Base Salary
The Compensation Committee's policy for determining base salaries is that
two primary factors should be considered:
(1) the degree of responsibility the executive officer has, his experience,
and the number of years he has been in office, and
(2) the compensation levels of corresponding positions at other banking
companies of comparable size that compete with and serve the same
markets as First Virginia. This "Local Peer Group" of companies
consists of Central Fidelity Banks, Inc., Crestar Financial Corporation
and Signet Banking Corporation based in Virginia, First Maryland
Bancorp and Mercantile Bankshares Corporation based in Maryland, and
First Tennessee National Corporation and First American Corporation of
Tennessee. Base salaries are targeted to be the median salaries of
corresponding positions in the "Local Peer Group." For 1995, Mr.
Fitzpatrick's base salary was $350,000 which was in the lower quartile
for salaries paid to his counterparts in the "Local Peer Group".
Short Term Incentives/Bonuses
The Committee grants bonuses to the executive officers including the Chief
Executive Officer ("CEO") based on the extent to which First Virginia
achieves or exceeds annual performance objectives. The Compensation
Committee may award bonuses to the CEO and to the executive officers if First
Virginia achieves a return on total average assets (ROA) of at least 1% (the
same basis for determining payments of profit sharing to all employees). ROA
generally is considered by the Committee to be an important factor in
measuring the performance of a banking company, and achievement of a 1% ROA
generally is considered by the Committee to be the mark of a good performing
banking company.
Bonus awards are based on the following:
(a) The Committee establishes target amounts each year for return on
average assets ("ROA"), return on total stockholders' equity ("ROE"),
asset quality and capital strength consistent with First Virginia's
Profit Plan target amounts. Up to 50% of an executive's salary may be
awarded if the corporation achieves an ROA equivalent to 80% or more of
ROA target amount for the year. For the chief executive officer, First
Virginia would also have to achieve 80% of targeted amounts for ROE,
asset quality (as determined by the ratio of nonperforming assets to
total loans (NPA ratio) and net loan charge-offs (CO ratio)) and
capital strength (based on the average equity to asset ratio
(Equity/asset ratio) and the Tier I risk based capital ratio); or
(b) Up to 30% of an executive's salary may be awarded based on the degree
to which First Virginia's earnings, asset quality and capital ratios
exceed the average for the other major banking companies based in the
Southeast, the "Southeastern Regional Peer Group," as compiled by
Keefe, Bruyette and Woods, the New York securities firm which
specializes exclusively in the banking and thrift industry; or
(c) Up to 20% of an executive's salary may be awarded at the discretion of
the Committee based on an individual executive's performance.
Within the above parameters, prior to the beginning of any year, the
Committee establishes for the CEO a target bonus which is based on a
projected return on assets for First Virginia. At the end of the year, the
Committee considers a preliminary bonus after taking into account the target
bonus, First Virginia's actual return on assets for the year and a formula
which is based on a set relationship between the actual versus the projected
return on assets.
The Committee then exercises its judgment in light of the foregoing
parameters and other considerations, including the Committee's view of
individual performance and potential and the recommendations of the CEO for
the executive officers (other than himself), to reach a bonus decision for
each executive officer and for the CEO. The Committee does not use a formula
to determine a final bonus decision. In 1995, the final bonus decision for
the CEO was at variance to the preliminary bonus amount. Among other things,
Mr. Fitzpatrick's bonus reflected First Virginia's success in achieving a
1.42% return on assets for the first nine months (1.41% for the year) and the
other above described results. Consistent with the Committee's avoidance of
a strict formula approach, no specific weighting among the above 50%, 30% and
20% factors was specified. The Committee believes that the use of the above
approach provides a flexible yet effective method of motivating First
Virginia's management.
Listed below are the annualized ratios for First Virginia and the
Southeastern Regional Peer Group based on results for the first nine months
of 1995, the latest data available to the Committee at the time the incentive
awards were considered.
First Virginia
Profit Plan
or Target KBW Southeastern
Amount Actual Regional Peer Group
Earnings (Higher is better)
ROA 1.54% 1.42% 1.30%
ROE 14.24% 13.53% 15.82%
Asset Quality (Lower is better)
NPA .60% .56% .66%
CO .15% .17% .20%
Capital (Higher is better)
Equity/Asset Ratio 8.5% 10.42% 8.26%
Tier I Risk Based 10.0% 15.05% 11.10%
Capital
Even though First Virginia's ROA and ROE did not exceed the profit plan or
target amounts, they did substantially exceed the Regional Peer Group results
except for ROE which would have also exceeded the goal if adjusted for
relative capital outstanding. For that reason, the Committee awarded Mr.
Fitzpatrick a bonus of $140,000.
Long Term Compensation/Stock Options
The Committee believes that the granting of stock options is the most
appropriate form of long term compensation for executives and that such
awards of equity encourage the executive to achieve a significant ownership
stake in the success of First Virginia.
Equity compensation awards may be made only if First Virginia exceeds the
weighted average of the returns reported by the major competitors in its
banking markets (Central Fidelity, Signet, Crestar, Mercantile Bankshares,
First Tennessee and First American of Tennessee). The performance ratios are
weighted as follows: ROA 35%, ROE 25%, five year cumulative total return to
shareholders ("Five Year Return") 15%, Nonperforming Asset Ratio 15% and
Charge-off Ratio 10%. The following table shows the performance ratios of
First Virginia and the average for its major market area competitors of
comparable size for the first nine months of 1995:
Market Area
First Virginia Major Competitors
ROA 1.42% 1.33%
ROE 13.53% 15.14%
Five Year Return 410.24% 634.63%
NPA .56% .66%
CO .17% .40%
As of September 30, 1995 (the latest date information is available for the
peer group), the weighted average of the performance factors for First
Virginia was 110.61% of the peer group.
The Committee granted, at the end of 1995, options covering a total of
50,500 shares of First Virginia Common Stock at an exercise price of $41.875
per share to the CEO and to all other First Virginia executive officers. The
size of each option award was not based on a formula and did not necessarily
correlate to the degree by which First Virginia's results exceed those of its
Market Area Major Competitors or the amount of each executive's current
stock-based holdings. Instead, the size of each award was based on a number
of factors, some of which were subjective, including the performances of the
CEO and each executive officer and the degree of responsibility each
executive officer has with First Virginia. Mr. Fitzpatrick received options
covering 20,000 shares. The size of his grant was primarily based on the
performance of First Virginia as described above. Each option that was
awarded will vest over a five-year or less period in equal annual
installments beginning one year from the date of grant. However, each
installment can only be exercised if the performance goals for that year are
met; otherwise, that portion of the option lapses.
E. Cabell Brand
Edward M. Holland
Eric C. Kendrick
W. Lee Phillips
Albert F. Zettlemoyer
PERFORMANCE GRAPH
The following performance graph compares the yearly percentage change in
First Virginia's cumulative total shareholder return on its Common Stock with
(1) the cumulative total return of a broad market index that includes
companies whose equity securities are traded on the same exchange or are of
comparable market capitalization and (2) the cumulative total return of a
published industry or line-of-business index.
FIRST VIRGINIA BANKS, INC.
CUMULATIVE TOTAL RETURN
GRAPH INFORMATION
First S&P
Virginia 400
Banks, Inc. MidCap KBW 50
1990 100 100 100
1991 163 150 158
1992 260 168 202
1993 240 191 213
1994 243 185 202
1995 329 242 324
First Virginia believes the most appropriate equity market indices to be
used to measure the price performance of First Virginia's Common Stock are
the "S&P MidCap 400" and the "KBW 50." First Virginia is included as a
component of the S&P MidCap 400.
The Standard & Poor MidCap 400 is comprised of 400 securities with market
value between approximately $200 million and $4 billion. First Virginia
considers it more representative of companies its size (yearend 1995 market
capitalization of approximately $1.417 billion) than the S&P 500 index which
is heavily dominated by large capitalization stocks (the 50 largest stocks
account for 50% of the total value of the S&P 500). Also, financial stocks
represent approximately 15% of the S&P MidCap 400 index.
The KBW 50 is an index comprised of 50 banking companies, including all the
money center banks and most large regional banks. It was developed by Keefe,
Bruyette & Woods, a New York securities firm which specializes exclusively in
the banking and thrift industry. The KBW 50 is considered more
representative of price performance of the major banking companies in
America. As is the case with the S&P MidCap 400 index, the KBW 50 is a
market capitalization weighted index and assumes quarterly reinvestment of
dividends.
As indicated in the Management Compensation and Benefits Committee Report
above, return on average assets (ROA) is an important factor for determining
First Virginia's performance and for determining short term and long term
compensation for First Virginia's executive officers. The following chart
compares First Virginia's ROA during the period 1991-1995 with the KBW
Southeastern Regional Peer Group and with a local peer group consisting of
Central Fidelity Banks, Inc., Crestar Financial Corporation, Signet Banking
Corporation, Mercantile Bankshares Corporation, First Tennessee National
Corporation and First American Corporation of Tennessee. As noted in the
Management Compensation and Benefits Committee Report, the Compensation
Committee compared First Virginia's ROA with both these groups as part of
their evaluation of executive compensation.
FIRST VIRGINIA BANKS, INC.
CALCULATION OF FIVE YEAR RETURN ON AVERAGE ASSETS
YEAR ENDED DECEMBER 31, 1995
First Peer Group
Virginia Southern Local
Banks, Inc. Regional Peer
1991 1.22 0.76 0.61
1992 1.50 1.03 0.98
1993 1.68 1.21 1.36
1994 1.58 1.24 1.34
1995 1.41 1.24 1.29
TRANSACTIONS WITH MANAGEMENT
During the past year, certain of the directors and officers of First
Virginia and their associates had loans outstanding from First Virginia's
banking subsidiaries. Each of these loans was made in the ordinary course of
the lending bank's business. In some cases, where officers of First Virginia
or its subsidiaries had to be relocated, residential mortgage loans were made
by First Virginia at favorable interest rates. During 1995, First Virginia
made a below market rate residential mortgage loan in the amount of $400,000
at 7 5/8% to Raymond E. Brann, Jr., Executive Vice President of First
Virginia, as an inducement for him to relocate to Northern Virginia. The
interest benefit to him of that loan is included in the Summary Compensation
Table. However, none of the other named executive officers had any other
below market rate loans from First Virginia and none of them had any loans
from any of First Virginia's banking subsidiaries at favorable interest
rates. All other loans have been made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve more than the
normal risk of collectibility or present other unfavorable features. As of
December 31, 1995, the aggregate amount of loans outstanding to all directors
and executive officers of First Virginia and associates and members of their
immediate families was approximately $6,594,310.
II. APPOINTMENT OF INDEPENDENT AUDITORS
At the meeting a vote will be taken on a proposal to ratify the appointment
by the Board of Directors of Ernst & Young LLP as independent auditors for
the year ending December 31, 1996. Ernst & Young LLP has served as
independent auditors for First Virginia since 1974. Representatives of the
firm are expected to be present at the stockholders' meeting and will be
available to respond to appropriate questions and to make a statement if they
desire to do so.
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the 1997 Annual Meeting
and included in First Virginia's 1997 Proxy Statement must be received by
First Virginia no later than November 11, 1996. Upon receipt of any such
proposal, First Virginia will determine whether or not to include such
proposal in the Proxy Statement and proxy in accordance with regulations
governing the solicitation of proxies.
Under First Virginia's Bylaws, in order for a stockholder to nominate a
candidate for director, written notice of the nomination must be given to
First Virginia in advance of the meeting. Ordinarily, such notice must be
given not less than 60 nor more than 90 days before the meeting. However, if
First Virginia gives less than 70 days notice or prior public disclosure of
the meeting, then the stockholder must give such notice within 10 days after
notice of the meeting is mailed or other public disclosure of the meeting is
made. The notice must include, among other things, (1) the name and record
address of, and the class and amount of voting securities of First Virginia
owned by, the stockholder proponent, (ii) the name, age, address and
occupation of, and the class and amount of voting securities of First
Virginia owned by, the nominee, and (iii) all information that would be
required under Securities and Exchange Commission rules in a proxy statement
soliciting proxies for such nominee. In order for a stockholder to bring
other business before an annual meeting of stockholders, written notice must
be given to First Virginia within the same time limits described above for
the nomination of a candidate for director. The notice must include, among
other things, (i) the name and record address of, and the class and amount of
voting securities of First Virginia owned by, the stockholder proponent and
any other stockholder known to be supporting such proposal, (ii) a brief
description of the proposed business, the reasons for conducting such
business at the annual meeting, and (iii) any financial or other interest of
the stockholder in such proposal. These advance notice requirements are
separate from and in addition to the requirements a stockholder must meet to
have a proposal included in First Virginia's Proxy Statement. In each case,
the notice must be given to the Secretary of First Virginia at its principal
executive offices, 6400 Arlington Boulevard, Falls Church, Virginia 22042-
2336.
The foregoing summary of certain provisions of First Virginia's Bylaws is
not intended to be complete and is qualified in its entirety by reference to
the Bylaws of First Virginia, copies of which will be furnished without
charge to any stockholder upon written request to the Secretary.
OTHER MATTERS
Management does not know of any other business to be presented to the
meeting except for matters incident to the conduct of the meeting. The
persons named in the accompanying proxy will vote in accordance with the
specifications on the proxy form and will vote in accordance with their best
judgment on any other matters which properly come before the meeting.
The cost of soliciting proxies will be borne by First Virginia. In addition
to solicitation by mail, proxies may be solicited in person, by telephone or
telegraph, or by directors, officers and employees of First Virginia. In
addition, First Virginia has engaged D. F. King & Co., Inc. to aid in the
distribution of proxy materials and to solicit proxies from brokers, nominees
and security-holding companies for a fee of $6,500 plus out-of-pocket
expenses. First Virginia does not expect to pay any other compensation for
the solicitation of proxies, but will pay brokers, nominees, fiduciaries and
other custodians their reasonable expenses for sending proxy material to
principals and obtaining their instructions.
A copy of First Virginia's Annual Report for 1995, including financial
statements, is being mailed with this Proxy Statement to all stockholders of
record. The Annual Report is not to be regarded as proxy soliciting
material.
First Virginia will provide without charge, upon the written request of any
stockholder entitled to vote at the Annual Meeting, a copy of its Annual
Report for the fiscal year ended December 31, 1995, on Form 10-K, which
report will be filed with the Securities and Exchange Commission on or before
March 31, 1996. Stockholders of record on February 28, 1996, and beneficial
owners of such securities should submit requests for such report to Thomas P.
Jennings, Secretary, 6400 Arlington Boulevard, Falls Church, Virginia
22042-2336.
REVOCABLE PROXY
FIRST VIRGINIA BANKS, INC.
X PLEASE MARK VOTES
AS IN THIS EXAMPLE
Proxy for Annual Meeting of Stockholders
Friday, April 26, 1996
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas K.
Malone, Jr., E. Cabell Brand and W. Lee
Phillips, Jr. and each of them, proxies with
full power to vote all of the stock of FIRST
VIRGINIA BANKS, INC., which the undersigned
has the power to vote at the Annual Meeting of
Stockholders to be held Friday, April 26, 1996,
at 6400 Arlington Boulevard, Falls Church,
Virginia in the Fifth Floor Auditorium at
10:00 a.m., local time, and any adjournment
thereof, in accordance with instructions
noted below, and at their discretion, upon any
other business not now known which properly
may come before the said meeting, all as more
fully set forth in the accompanying proxy
statement, receipt of which is acknowledged.
With- For All
1. ELECTION OF DIRECTORS For hold Except
( ) ( ) ( )
C Class C (for a term of 3 years):
O Paul H. Geithner, Jr.
M L. H. Ginn, III
M T. Keister Greer
O Edward M. Holland
N
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. PROPOSAL TO RATIFY ( ) ( ) ( )
THE APPOINTMENT OF
ERNST & YOUNG as
independent auditors
for the year 1996
If no choice is indicated above, this proxy shall be deemed to grant
authority to vote FOR the election of director nominees and to vote FOR
the proposal. The stockholder's signature should be exactly as the name
appears below. When shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Please be sure to sign and date
this Proxy in the box below. Date
Stockholder sign above. Co-holder (if any)
sign above
- -----------------------------------------------------------------------------
- - Detach above card, sign, date and mail in postage paid envelope provided.
FIRST VIRGINIA BANKS, INC.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL
YOUR PROXY CARD TODAY