SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
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Check the appropriate box:
[_] 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 Section 240.14a-11(c) or Section 240.14a-12
F&M NATIONAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
F&M NATIONAL CORPORATION
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of F&M NATIONAL CORPORATION (the
"Company") will be held at the TraveLodge of Winchester, 160 Front Royal Pike,
Winchester, Virginia, on Tuesday, April 25, 2000, at 10:00 a.m. for the
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following purposes:
1. To elect ten directors to serve for the ensuing year;
2. To ratify the selection by the Audit Committee of the Board of
Directors of Yount, Hyde & Barbour, P.C., independent certified public
accountants, as auditors of the Company for 2000; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Only shareholders of record at the close of business on February 28, 2000,
will be entitled to notice of and to vote at the Annual Meeting.
Attendance at the Annual Meeting will be limited to shareholders of record,
persons holding proxies from shareholders and certain representatives of the
press and financial community. If you wish to attend the Annual Meeting, but
your shares are held in the name of a broker, bank or other nominee, you should
bring with you written confirmation from such nominee of your beneficial
ownership.
You are cordially invited to attend the Annual Meeting in person. Whether
or not you plan to attend the meeting, it is important that your shares be
represented. Please complete, sign, date and return the enclosed proxy card
promptly. If you attend the Annual Meeting, you may withdraw any proxy
previously given and vote in person.
Following the adjournment of the Annual Meeting, officers and directors of
the Company will be available to meet with you.
By Order of the Board of Directors
Michael L. Bryan
Corporate Secretary
Winchester, Virginia
March 24, 2000
F&M NATIONAL CORPORATION
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of F&M National Corporation (the "Company")
to be voted at the 2000 Annual Meeting of Shareholders to be held Tuesday, April
25, 2000, at 10:00 a.m. at the TraveLodge of Winchester, 160 Front Royal Pike,
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Winchester, Virginia, and any adjournment thereof. The distribution of this
Proxy Statement and related proxy material will commence on or about March 24,
2000.
Voting and Revocation of Proxies
All properly executed proxies delivered pursuant to this solicitation
will be voted at the Annual Meeting in accordance with instructions noted
thereon or, if no direction is indicated, they will be voted in favor of the
proposals set forth in the Notice of Annual Meeting. Any shareholder giving a
proxy has the power to revoke it at any time before the proxy is voted by giving
written notice to the Secretary of the Company, by executing or delivering a
substitute proxy or by attending the Annual Meeting and revoking the proxy at
the meeting.
Voting Rights of Shareholders
Only shareholders of record at the close of business on February 28,
2000, will be entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof. As of the close of business on February 28, 2000,
24,934,076 shares of common stock, par value $2.00 per share, were outstanding
and entitled to vote at the Annual Meeting. The Company has no other class of
stock outstanding. Each share of common stock will entitle the holder thereof to
one vote on all matters to come before the Annual Meeting. A majority of the
votes entitled to be cast, represented in person or by proxy, will constitute a
quorum for the transaction of business. Shares for which the holder has elected
to abstain or to withhold the proxies' authority to vote (including broker non-
votes) on a matter will count toward a quorum, but will not be included in
determining the number of votes cast with respect to such matter.
Solicitation of Proxies
The cost of the solicitation of proxies will be borne by the Company.
In addition to solicitation by use of the mails, certain officers and employees
of the Company (who will not be compensated in addition to their regular
salaries) may solicit proxies personally or by telephone. The Company will
reimburse brokerage firms, and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in forwarding proxy material to beneficial
owners of the Company's common stock.
ELECTION OF DIRECTORS - PROPOSAL ONE
The ten persons named below, each of whom currently serves on the
Board of Directors, will be nominated to serve as directors until the 2001
Annual Meeting of Shareholders or until their successors have been duly elected
and qualified. The persons named in the proxy will vote for the election of the
nominees named below unless authority is withheld. If for any reason any of the
persons named below should become unavailable to serve, an event which
management does not anticipate, proxies will be voted for the remaining nominees
and such other person or persons as the Board of Directors may designate. The
election of each nominee requires the affirmative vote of the holders of a
plurality of the shares of common stock cast in the election of directors.
The Board of Directors recommends that shareholders vote for the
nominees set forth below.
Served as Principal Occupation
Name and Age Director Since During Past Five Years
------------ -------------- ----------------------
Frank Armstrong, III (63) 1985 Chairman, President and Chief Executive Officer of
National Fruit Product Company, Inc. (food processor
and distributor), Winchester, Virginia.
William H. Clement (72) 1988 Vice Chairman, Hidden Creek Industries, Inc. (a
private real estate investment company), Winchester,
Virginia; Retired in 1995 as Chairman of the Board
of Automotive Industries, Inc. and Vice Chairman of
the Board of Automotive Industries Holding, Inc.
(automobile parts manufacturer), Strasburg, Virginia.
Charles E. Curtis (61) 1996 Vice Chairman and Chief Administrative Officer, F&M
National Corporation and Vice Chairman of F&M
Bank-Winchester as of January 1, 1998; President
and Chief Executive Officer of F&M Bank-Northern
Virginia from August 9, 1996 to December 31, 1997;
President and Chief Executive Officer of Fairfax
Bank and Trust Company from July 22, 1985 to August
8, 1996.
W. M. Feltner (80) 1970 Chairman of the Board and Chief Executive Officer of
the Company.
William R. Harris (71) 1986 Chairman of the Board of Harris Heating & Plumbing,
Inc., Richmond, Virginia; Chairman of the Board, F&M
Bank-Richmond.
L. David Horner, III (65) 1986 Chairman of the Board of Horner Properties, Inc.
(real estate developer), Stuart, Florida.
2
Served as Principal Occupation
Name and Age Director Since During Past Five Years
------------ -------------- ----------------------
Jack R. Huyett (67) 1990 Retired President, Chief Administrative Officer and
Vice Chairman of the Board of F&M National
Corporation.
J. D. Shockey, Jr. (57) 1970 Chief Executive Officer of The Shockey Companies,
Inc. (general construction contractor), Winchester,
Virginia.
Ronald W. Tydings (60) 1996 Attorney, Fairfax, Virginia; Chairman of the Board,
F&M Bank-Northern Virginia.
Alfred B. Whitt (61) 1997 President, Vice Chairman and Chief Financial Officer
of F&M National Corporation and Chairman of F&M
Bank-Winchester; Senior Vice President, Senior
Financial Officer and Secretary of F&M National
Corporation and F&M Bank-Winchester from 1991
through 1997.
Messrs. John R. Fernstrom, George L. Romine, and Fred G. Wayland, Jr.,
will not stand for re-election.
Board of Directors and Committees
During 1999, the Board of Directors held eleven regular monthly
meetings. No special Board meetings were held. Each of the nominees to the Board
attended at least 75% of the meetings of the Board and committees on which they
served.
The standing committees of the Board of Directors are the Executive
Committee, the Audit Committee, the Nominating Committee, and the Human
Resources Committee.
Executive Committee. The members of the Executive Committee for 1999
were Messrs. Clement, Feltner, Harris, Huyett, Romine, and Whitt. The Company's
Bylaws empower the Executive Committee to exercise the full authority of the
Board of Directors when it is not in session, except for certain matters
reserved to the Board by law. This committee did not meet during 1999.
Audit Committee. The Audit Committee, whose members are Messrs.
Armstrong, Horner, Huyett, and Romine recommends the independent auditors to be
selected by the Board, discusses with the independent auditors the scope of
their proposed audit, reviews the audit reports, discusses with management the
implementation of the auditors' recommendations, reviews the fee of the
independent auditors for audit and non-audit services, reviews the adequacy of
the Company's system of internal accounting controls and reviews reports of
audit activities performed by the Company's staff of internal auditors. This
committee met four times during 1999.
3
Nominating Committee. The Nominating Committee is composed of Messrs.
Armstrong, Clement, Harris, and Shockey. The Nominating Committee recommends to
the Board of Directors candidates for election as directors of the Company.
This committee met once during 1999.
Human Resources Committee. The members of the Human Resources
Committee are Messrs. Clement, Romine, and Shockey. The primary
responsibilities of this committee are to review and recommend to the Board of
Directors compensation of senior management. This committee also administers
cash awards made under the Company's Officers' Incentive Bonus Plan and the
granting of stock options under the Company's stock option plan. This committee
met once during 1999.
Directors' Fees
During 1999, each director received $650 for each Board meeting
attended. In addition, each non-employee director received an annual retainer
of $8,000. Board members were not compensated for committee meetings attended,
except those members of the Audit Committee and the Human Resources Committee
who received $250 for each committee meeting attended. Directors also received
$1,500 annually to cover travel, lodging, and related expenses incurred in
attending Board and committee meetings.
OWNERSHIP OF COMPANY COMMON STOCK
The following table sets forth, as of February 28, 2000, certain
information with respect to the beneficial ownership of the Company's common
stock held by each director and nominee and each executive officer named in the
Summary Compensation Table below, and by the directors and all executive
officers as a group.
As of February 28, 2000, no person beneficially owned 5% or more of
the Company's common stock. As of that date, no director or executive officer
named in the Summary Compensation Table below beneficially owned 1% or more of
the Company's common stock. The directors and all executive officers as a group
beneficially owned 5.52% of the outstanding shares of common stock as of
February 28, 2000.
4
Stock
Name Ownership (1)
---- -------------
Frank Armstrong, III........................................... 18,794 (2)
William H. Clement............................................. 93,287 (2)
Charles E. Curtis.............................................. 196,135 (3)
W. M. Feltner.................................................. 144,017 (2)(3)
William R. Harris.............................................. 112,132
L. David Horner, III........................................... 100,389
Jack R. Huyett................................................. 101,855 (2)
J. D. Shockey, Jr.............................................. 28,512 (2)
Ronald W. Tydings.............................................. 176,249
Alfred B. Whitt................................................ 127,474 (3)
Betty H. Carroll............................................... 139,994 (3)
F. Dixon Whitworth, Jr......................................... 70,775 (3)
John R. Fernstrom.............................................. 13,691 (2)
George L. Romine............................................... 27,759
Fred G. Wayland, Jr............................................ 8,240
All Directors & Executive Officers as a Group.................. 1,376,939
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(1) Includes shares held by affiliated corporations, spouses and minor
children, and shares held jointly with spouses or as custodians or trustees
for children and others.
(2) Does not include shares held in trust accounts for the directors as
follows: Mr. Armstrong, 700 shares; Mr. Clement, 845 shares; Mr. Feltner,
57,848 shares; Mr. Huyett, 649 shares; Mr. Shockey, 738 shares; and Mr.
Fernstrom, 688 shares. The named directors do not possess voting or
investment power with respect to such shares.
(3) Includes: 32,145 shares issuable to Mr. Curtis; 20,000 shares issuable to
Mr. Feltner; 59,053 shares issuable to Mr. Whitt; 59,053 shares issuable
to Mrs. Carroll; and 25,110 shares issuable to Mr. Whitworth under the
Company's stock option plans.
EXECUTIVE COMPENSATION
The table below sets forth certain information concerning the annual and
long-term compensation earned by the Chief Executive Officer and the other four
most highly compensated executive officers of the Company (collectively, the
"Named Officers") for each of the past three years.
5
Summary Compensation Table
Long-Term
Compensation
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Annual Compensation(1) Securities
Name and ------------------------- Underlying All Other
Principal Position Year Salary(2) Bonus Options(3) Compensation(4)
- ------------------------------ ---- ------------- ---------- --------------- ---------------
W. M. Feltner 1999 $609,150 $250,000 20,000 $10,223
Chairman of the Board/ 1998 608,700 225,000 20,000 10,500
Chief Executive Officer 1997 607,800 225,000 20,000 10,375
Alfred B. Whitt 1999 $259,150 $100,000 10,000 $10,223
Vice Chairman, President 1998 218,700 85,000 10,000 10,500
and Chief Financial Officer 1997 191,400 70,000 10,000 10,375
Betty H. Carroll 1999 $270,000 $ 87,500 10,000 $10,223
Senior Vice President; 1998 260,000 85,000 10,000 10,500
President/CEO, F&M 1997 250,000 80,000 10,000 10,375
Bank-Winchester
Charles E. Curtis 1999 $219,150 $ 80,000 10,000 $10,223
Vice Chairman/Chief 1998 208,700 75,000 10,000 10,500
Administrative Officer 1997 177,800 50,000 1,500 10,375
F. Dixon Whitworth, Jr. 1999 $175,000 $ 60,000 5,000 $10,187
Executive Vice President; 1998 165,000 50,000 5,000 10,475
President, F&M Trust 1997 152,000 45,000 5,000 10,222
Company
- --------------------
(1) Each Named Officer received certain perquisites and other personal benefits,
the amounts of which are not shown because the aggregate amount of such
compensation during the year did not exceed the lesser of $50,000 or 10% of
total salary and bonus reported for such executive officer.
(2) Includes directors' fees.
(3) The Company's stock option plan does not permit grants of restricted stock,
and this plan is the Company's only stock-based long-term compensation plan
currently in effect.
(4) These amounts represent Company contributions allocated under the Company's
401(k) Retirement Plan and the Company's Employee Stock Ownership Plan,
respectively, to the Named Officers for 1999 in the following amounts: W. M.
Feltner, $2,223 and $8,000; Alfred B. Whitt, $2,223 and $8,000; Betty H.
Carroll, $2,223 and $8,000; Charles E. Curtis, $2,223 and $8,000; and F.
Dixon Whitworth, Jr., $2,187 and $8,000.
Stock Option Grants in 1999
The Company's stock option plan provides for the granting of both incentive
and non-qualified stock options to executive officers and key employees of the
Company and its subsidiaries. While the option price of incentive options may
not be less than the fair market value of the stock at the date of grant, non-
qualified options may be granted at prices less than the fair market value of
the common stock
6
on the date of grant, but in no event at an exercise price less than one-half of
the market price on the date of grant.
The following table provides certain information concerning non-qualified
stock options granted during 1999 to the Named Officers. No stock appreciation
rights may be granted under the Company's stock option plan.
Individual Grants
------------------------------------------------------------
Percent of
Number of Total
Shares Options Exercise Market
Underlying Granted to Price Price Black-Scholes
Options Employees Per on Grant Expiration Grant Date
Name Granted(1) in 1999 Share Date Date Value(2)(3)
- -------------- ------------- ----------- -------- -------- ---------- -----------------
W. M. Feltner 20,000 29.2% $14.53 $29.066 1/4/09 $374,400
Alfred B. Whitt 10,300 14.6 14.53 29,066 1/4/09 192,816
Betty H. Carroll 10,300 14.6 14.53 29.066 1/4/09 192,816
Charles E. Curtis 10,300 14.6 14.53 29.066 1/4/09 192,816
F.D. Whitworth Jr. 5,150 7.3 14.53 29.066 1/4/09 96,408
- ----------------
(1) The stock options granted during 1999 to the Named Officers were granted on
January 4, 1999, and first became exercisable on that date. The options
have been adjusted for the 3% stock dividend paid on October 26, 1999, with
the exception of Mr. Feltner, who exercised all options before that date.
(2) The values shown reflect standard application of the Black-Scholes pricing
model using (i) 60-month volatility (18.49%) and daily stock prices for the
five years prior to grant date, (ii) an option term of ten years, (iii) an
interest rate that corresponds to the U.S. Treasury rate with a ten-year
maturity (6.5%), and (iv) dividends at the average annualized rate in
place on the date of grant $0.75. The Black-Scholes option pricing model is
a commonly utilized model for valuing options. The model assumes that the
possibilities of future stock returns (dividends plus share price
appreciation) resemble a normal "bell-shaped" curve.
(3) No allowance has been made for income taxes that will be due upon exercise.
Stock Option Exercises in 1999 and Year-End Option Values
The following table shows certain information with respect to the stock
options exercised during 1999 and the number and value of unexercised options at
year end:
Number of Value of
Number of Shares Underlying Unexercised
Shares Unexercised In-the-Money
Acquired Value Options at Options at
Name on Exercise Realized(1) December 31, 1999(2) December 31, 1999(3)
- -------------------------- ----------- ------------- -------------------- --------------------
W. M. Feltner 90,125 $1,847,284 -0- $ -0-
Alfred B. Whitt -0- -0- 49,053 768,574
Betty H. Carroll -0- -0- 49,053 768,574
Charles E. Curtis 18,801 395,780 22,145 272,888
F. Dixon Whitworth, Jr. -0- -0- 20,110 299,124
- --------------
7
(1) Market value of underlying shares on the date of exercise, minus the option
exercise price.
(2) All the stock options shown for each Named Officer are currently
exercisable.
(3) Values are calculated by subtracting the exercise price from the fair
market value of the stock at December 31, 1999.
Employment Arrangements
The Company has employment agreements with certain executive officers,
including Mrs. Carroll and Messrs. Curtis, Whitt, Whitworth, and 21 senior
officers that become effective upon a change in control of the Company. In the
case of the Named Officers, with the exception of Mr. Feltner, the Company or
its successor agrees to continue these officers in its employ for a term of
three years after the date of a change in control. During the contract term,
these officers will retain commensurate authority and responsibilities and
compensation benefits. They will receive base salaries at least equal to the
immediate prior year and bonuses at least equal to the annual bonus paid prior
to the change in control. If the officer's employment is terminated during the
three year period following a change in control other than for cause or
disability as defined in the agreement, or if the officer should terminate
employment because a material term of the contract is breached by the Company,
the officer will be entitled to a lump sum payment, in cash, within thirty days
after the date of termination. This lump sum will be equal to 2.99 times the
sum of the officer's base salary, annual bonus, and equivalent benefits for Mrs.
Carroll and Messrs. Curtis, Whitt, and Whitworth, and 1.0 to 1.5 times the sum
of the other senior officers' base salaries, annual bonuses, and equivalent
benefits.
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following Human Resources Committee Report on Executive Compensation and
the graph of Shareholder Return shall not be deemed incorporated by reference by
any general statement incorporating this Proxy Statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
The Human Resources Committee of the Board of Directors of the Company (the
"Committee") has furnished the following report on executive compensation:
The Committee has implemented compensation policies and plans which seek to
enhance the profitability of the Company and, thus, shareholder value. In
furtherance of these goals, the policies and plans are designed to provide
competitive levels of compensation that rely on annual and long-term incentive
compensation to attract and retain corporate officers and other key employees of
outstanding abilities and to motivate them to perform to the full extent of
their abilities. Both types of incentive compensation are variable and closely
tied to corporate and individual performance in a manner that encourages a
continuing focus on building profitability and shareholder value.
In its review of management performance and compensation, the Committee has
taken into account management's consistent commitment to the long-term success
of the Company. Based on its evaluation of these factors, the Committee
believes that the senior management of the Company is dedicated to achieving
significant improvements in long-term financial performance and that the
compensation policies and plans the Committee has implemented and administered
have contributed to achieving this management focus.
8
Compensation for each of the Named Officers, as well as other senior
executives, consists of a base salary and annual and long-term incentive
compensation. The Committee fixes base salaries at levels that are competitive
or somewhat below the competitive amounts paid to senior executives with
comparable qualifications, experience, and responsibilities, after comparing
salary ranges of other bank holding companies and other large locally
headquartered companies. The annual incentive compensation is approved as a
percentage of the net income of the Company. The long-term incentive
compensation is closely tied to the Company's success in achieving significant
financial performance goals. The Committee considers the total compensation
(earned or potentially available) of each of the Named Officers and the other
senior executives in establishing each element of compensation.
During the fourth quarter of each year, the Chief Executive Officer submits to
the Committee the annual salaries for the past three years for the Company's
senior executives (other than the Chief Executive Officer), and the Committee
reviews the salaries and responsibilities of the officers, and makes any
modifications it deems appropriate. Salary proposals are developed by the
Company's Chief Executive Officer based on industry peer groups, surveys, and
performance judgments as to the past and expected future contributions of the
individual senior executives.
In addition to internal measurements and goals, the Committee considers return
on average assets (ROAA) and growth in total assets when evaluating the
performance of executive officers. ROAA is a measure used in the industry to
compare the profitability of banking companies. For the period ending December
31, 1998, the Company's ROAA was 1.32%, compared to 1.20% for its 152 Peer Group
Banks (152 financial institutions, like the Company, between $1 billion and $3
billion in asset size, as supplied by the Federal Reserve Board's Division of
Banking).
CEO Compensation
The Committee reviews and fixes the base salary of the Chief Executive Officer
based on similar competitive compensation data similar to senior executives and
the Committee's assessment of his past performance and its expectation as to his
future contributions in leading the Company.
No salary increase was recommended for 1998 and 1999, or has been recommended
for 2000.
Although the 1999 salary and option grant were not measured upon the
attainment of any specific goals by the Company, the Committee, in its
discretion and judgment in making these decisions, took into consideration his
individual contribution to the Company's performance for the prior fiscal year
reflected by: (1) a $3,681,000 increase in net income, and (2) a $22,254,000
increase in shareholders' equity. The growth of the Company for 1998 exceeded
$210,779,000 or 7.9%. Although the Committee, in establishing this salary, uses
a subjective approach and does not rely on a formula or weights of specific
factors, it carefully considers all the factors listed above.
Annual Incentives
The Incentive Compensation Plan stresses rewards for achievement of goals set
each year. Financial goals include operating earnings and return on
shareholders' equity. The formula for 1999 adopted by the Board of Directors
was as follows: 12% of net income in excess of 10% return on equity capital,
plus 6% of net income in excess of 11.5% return on equity capital. At the end
of each year, this formula defines the total fund available for distribution as
bonuses.
9
The Committee distributes the incentive fund to eligible employees based on
the Committee's subjective evaluation of individual performance and contribution
to the Company and recommendations by certain senior officers.
In determining the awards for 1999 from the incentive fund to other eligible
employees, including other Named Officers other than the Chief Executive
Officer, the Committee reviewed with the Chief Executive Officer recommendations
based on individual performance, as well as its evaluation of factors
substantially comparable to those considered in establishing the award for the
Chief Executive Officer.
In determining the Chief Executive Officer's award for 1999, in addition to
the factors discussed above, the Committee considered its evaluation of the
Company's performance and the state of the economy in the Company's service
area. The growth of the Company for the nine months ending September 30, 1999,
was 3.6% or $102,800,000. Net income growth was 14.5% for the same time period.
It considered these factors both on an absolute basis and relative to the
performance of the Company's peers.
Stock Incentives
The Committee considered the desirability of granting awards under the
Company's stock option plan, which provides the Committee the flexibility to
grant longer-term incentives in stock options. The Committee believes that its
past grant of options has successfully focused the Company's senior management
on building profitability and shareholder value. Stock options granted in 1999
are reflected in the table, "Stock Option Grants in 1999."
The awards were based, among other things, on a review of competitive
compensation data from selected peer companies and information on their total
compensation as well as the Committee's evaluation of their past and expected
future contributions to the Company's achievement of its long-term goals. Like
other compensation decisions, the Committee does not use a formula or weight
specific factors in recommending stock options awards, but rather relies on its
own subjective evaluation.
Compensation Committee Interlocks and Insider Participation
During 1999 and up to the present time, there were transactions between
certain of the Company's banking subsidiaries and certain members of the Human
Resources Committee, or their associates, all consisting of extensions of credit
by the banks in the ordinary course of business. Each transaction was made on
substantially the same terms, including interest rates, collateral and repayment
terms, as those prevailing at the time for comparable transactions with the
general public. In the opinion of management, none of the transactions involve
more than the normal risk of collectibility or present other unfavorable
features.
None of the members of the Human Resources Committee has served as an officer
or employee of the Company or any of its affiliates.
10
SHAREHOLDER RETURN
The Company is subject to the rules of the Securities and Exchange Commission
(the "SEC") that require all public companies to present a graph of total
investment return in their annual proxy statements. The rules require a line
graph which compares the Company's five-year cumulative shareholder return on
its common stock with the Standard's & Poor's 500 Stock Index and either a
published industry index or an index of peer companies selected by the Company.
The graph below presents a comparison of the Company's performance with the S&P
500 Stock Index and the SNL Securities $1 to $5 Billion Bank Asset-Size Index,
assuming that investments of $100 were made on December 31, 1994, and that
dividends were reinvested. SNL Securities, based in Charlottesville, Virginia,
is a research and publishing firm specializing in the collection and
dissemination of data on the financial services industry.
In the period of December 1998 and December 1999, the SNL $1B-$5B Bank Asset-
Size Index declined 23.5 basis points while F&M's decline was 4.6 basis points.
Comparison of Five Year Cumulative Total Return Among
F&M National Corporation, the S&P 500 Stock Index
and the SNL $1B-$5B Bank Asset-Size Index
(insert graph)
1994 1995 1996 1997 1998 1999
------ ------ ------ ------ ------ ------
F&M National Corporation 100.00 130.59 144.97 239.56 213.83 209.27
S&P 500 Stock Index 100.00 137.58 169.03 225.44 289.79 350.50
11
SNL $1B-$5B Bank Asset-Size Index 100.00 134.48 174.33 290.73 290.06 266.58
12
INTEREST OF DIRECTORS AND OFFICERS IN CERTAIN TRANSACTIONS
During 1999, the Company's banking subsidiaries extended credit to directors
and officers of the Company and its subsidiaries. All such loans (i) were made
in the ordinary course of business, (ii) were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons, and (iii) did not involve more
than the normal risk of collectibility or present unfavorable features.
The banking subsidiaries of the Company, pursuant to the Company's employee
loan policy, make individual general purpose loans on a nondiscriminatory basis
to employees of subsidiaries at interest rates below those for comparable
transactions with other persons. The banking subsidiaries are prohibited from
making loans, with the exception of residential mortgages and educational loans,
to executive officers in excess of certain dollar limits fixed by banking laws.
J. D. Shockey, Jr., a director of the Company and F&M Bank-Winchester,
performed work for F&M Bank-Winchester during 1999 in connection with the
renovation of the bank's main lobby and the Miller Hardware Building, which were
under contract with Shockey Industries, Inc. Ronald W. Tydings, a director of
the Company, is also Chairman of the Board of F&M Bank-Northern Virginia, a
subsidiary of the Company. Mr. Tydings serves as legal counsel for that bank.
Section 16(a) Beneficial Ownership Reporting Compliance
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, directors
and executive officers of the Company are required to file reports with the SEC
indicating their holdings of and transactions in the Company's stock. To the
Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, insiders of the Company complied with all filing requirements during
1999 with the exception of Mr. Huyett, who, on one occasion with respect to one
transaction, was late in filing a report.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS - PROPOSAL TWO
The Board of Directors, upon recommendation of the Audit Committee, has
appointed Yount, Hyde & Barbour, P.C., as the Company's independent public
accountants for the year ending December 31, 2000, and has further directed that
management submit the selection of independent public accountants for
ratification by the shareholders at the Annual Meeting. Yount, Hyde & Barbour,
P.C., has been serving the Company for many years. This firm has advised the
Company that neither the firm nor any member of the firm now has, or has held
during the past five years, any direct or indirect financial interest in the
Company or any of its subsidiaries. Representatives of the firm are expected to
be present at the Annual Meeting and will be given an opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
OTHER MATTERS
As of the date of this Proxy Statement, management of the Company has no
knowledge of any matters to be presented for consideration at the Annual Meeting
other than those referred to above. If any
13
other matter properly comes before the Annual Meeting, the persons named in the
accompanying proxy intend to vote such proxy, to the extent entitled, in
accordance with their best judgment.
PROPOSALS FOR THE 2001 ANNUAL MEETING
The Company's Bylaws provide that, in addition to any other applicable
requirements, for business (including shareholder nominations of Director
candidates) to be properly brought before the Annual Meeting by a shareholder,
the shareholder must give timely notice in writing to the Secretary of the
Company at least 90 days prior to the Annual Meeting. As to each matter, the
notice must comply with certain informational requirements set forth in the
Bylaws. These requirements are separate and apart from and in addition to the
SEC's requirements that a shareholder must meet to have a shareholder proposal
included in the Company's proxy materials. To be considered for inclusion in
the Company's proxy materials relating to the 2001 Annual Meeting of
Shareholders, shareholders proposals must be received by the Secretary of the
Company no later than November 24, 2000.
The 2001 Annual Meeting of Shareholders is scheduled for April 24, 2001.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for 1999 filed with the
SEC, excluding exhibits, can be obtained without charge by writing to Alfred B.
Whitt, President, F&M National Corporation, P.O. Box 2800, Winchester, VA
22604.
By Order of the Board of Directors
Michael L. Bryan
Corporate Secretary
Winchester, Virginia
March 24, 2000
14
INSTRUCTIONS TO TRAVELODGE OF WINCHESTER
Travelling East from WINCHESTER.
Take Route 50 East. After crossing over the Interstate I-81 overpass, turn
right at the intersection stoplight onto Route 522 South (Front Royal Pike).
TraveLodge is on the right.
Travelling West on Route 50.
At the intersection of Route 50 East and Route 522 (Front Royal Pike), turn left
at the intersection stoplight. TraveLodge is on the right.
Travelling Northbound on I-81. EXIT 313.
Take Exit 313 for Route 50 - Winchester. After coming off the Exit, continue
straight through stoplight across Route 50 (and onto Route 522 South / Front
Royal Pike). TraveLodge will be on the right after going through the
intersection.
Travelling Southbound on I-81. EXIT 313-A.
Take Exit 313-A onto Route 50 East in Winchester. At the intersection
stoplight, turn right onto Route 522 (Front Royal Pike). TraveLodge is on the
right.
PLEASE USE THE "BANQUET ROOM" ENTRANCE.
TraveLodge's address is 160 Front Royal Pike, Winchester, VA 22602, and its
telephone number is 540-665-0685.
15
F&M NATIONAL CORPORATION
Winchester, Virginia
This Proxy is solicited on behalf of the Board of Directors.
The undersigned, revoking all prior proxies, hereby appoints Joseph E. Kalbach,
Thom F. Hanes, and Russell K. Henry, Jr., as proxies, and each or any of them
with full power of substitution, and hereby authorizes them to represent and to
vote, as designated below, all the shares of Common Stock of F&M NATIONAL
CORPORATION held of record by the undersigned on February 28, 2000, at the
Annual Meeting of Shareholders to be held April 25, 2000, or any adjournment
thereof, on each of the following matters:
1. Election of directors:
[_] FOR all Nominees listed below [_] WITHHOLD AUTHORITY TO VOTE FOR THOSE
INDICATED BELOW
Frank Armstrong, III; William H. Clement; Charles E. Curtis; W. M. Feltner;
William R. Harris; L. David Horner, III; Jack R. Huyett; J. D. Shockey, Jr.;
Ronald W. Tydings; and Alfred B. Whitt
INSTRUCTIONS: To withhold authority to vote for an individual Nominee, print
the name of the Nominee in the space provided below.
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2. To ratify the selection by the Audit Committee of the Board of Directors of
Yount, Hyde & Barbour, P.C., independent certified public accountants, as
auditors of the Company for 2000:
[_] FOR [_] AGAINST [_] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. The Board of Directors has
not been notified of any such matters.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this Proxy will be
voted "FOR" each proposal. All joint owners MUST sign.
Please sign exactly as your name appears hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
DATED
--------------- -----------------------------------------------------
Signature
NUMBER OF SHARES
- -------------------- -----------------------------------------------------
Signature (if jointly owned)
- -----------------------------------------------------------------------------
PLEASE MARK, SIGN, DATE & RETURN THIS PROXY PROMPTLY IN ENCLOSED ENVELOPE.