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SCHEDULE 14A INFORMATION
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
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 Rule 14a-11(c) or Rule 14a-12
First Virginia Banks, Inc.
- ------------------------------------------------------------------------------
Name of Registrant as Specified In Its Charter)
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
2
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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FIRST VIRGINIA BANKS, INC.
6400 ARLINGTON BOULEVARD
FALLS CHURCH, VIRGINIA 22042-2336
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 28, 2000
The Annual Meeting of Stockholders of First Virginia Banks, Inc.
will be held at the Ritz-Carlton Hotel at Tysons Corner, Ballroom Level, 1700
Tysons Boulevard, McLean, Virginia, at 10:00 a.m. on Friday, April 28, 2000, for
the following purposes:
(1) To elect four Class A directors for a term of three years.
(2) To ratify the appointment of KPMG LLP as independent
auditors for the year ending December 31, 2000.
(3) To transact such other business as may properly come before
the meeting or any adjournment thereof.
Stockholders of record at the close of business on February 21, 2000,
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 POSTAGE-PAID RETURN ENVELOPE REGARDLESS OF WHETHER
OR NOT THEY EXPECT TO ATTEND THE MEETING. STOCKHOLDERS MAY ALSO VOTE BY CALLING
THE TOLL-FREE NUMBER SHOWN ON THEIR PROXY OR OVER THE INTERNET USING THE WEB
SITE ADDRESS ALSO SHOWN ON THEIR PROXY.
By Order of the Board of Directors,
Barbara J. Chapman
Vice President and Secretary
Falls Church, Virginia
March 8, 2000
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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 28,
2000, or any adjournment thereof. The approximate mailing date of this Proxy
Statement and the accompanying proxy is March 8, 2000.
For the first time, stockholders may choose any one of three methods
to submit a proxy--by telephone, the Internet, or paper proxy. A proxy was
mailed along with this Proxy Statement, and it contains complete instructions
for submitting proxies. All properly completed proxies received by First
Virginia prior to the meeting will be voted at the meeting in accordance with
any direction noted thereon. Paper proxies on which no instructions are given
will be voted FOR the nominees for election as directors and FOR Proposal 2. Any
stockholder who has submitted a proxy may revoke it at any time before it is
voted by attending the Annual Meeting and voting in person, by giving written
notice of revocation of the proxy to the Secretary, by submitting to First
Virginia a signed proxy bearing a later date, or by submitting a later proxy by
telephone or the Internet.
Holders of Common and Preferred Stock 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 21,
2000, the record date for the determination of stockholders entitled to notice
of and to vote at the meeting, there were 50,184,577 shares of Common Stock and
48,296 shares of Preferred Stock of First Virginia issued and outstanding.
As of February 10, 2000, the following persons beneficially owned
more than five percent of a class of First Virginia stock:
Name and Address of Amount of Beneficial
Title of Class Beneficial Owner Ownership Percent of Class
- -------------- ------------------- --------------------- ----------------
Common American Century 2,837,150 5.7%
Investment
Management,
Inc. ("ACIM")
4500 Main Street,
Kansas City, MO
64141
Preferred Mary S. Harvell
7129 Taylor Road
Lynchburg, VA 24502 2,636 5.4%
According to a Schedule 13G filed with the Securities and Exchange
Commission, ACIM manages the investments of a number of registered investment
companies and some separate institutional investor accounts. The First Virginia
Common Stock it holds is owned by and held for such investment companies and
separate institutional investor accounts. Both ACIM and Ms. Harvell have sole
voting and dispositive power with respect to the First Virginia stock they hold.
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I. ELECTION OF DIRECTORS
The Board of Directors is divided into three classes (A, B and C).
The term of office for Class A directors will expire at this Annual Meeting.
Four persons, three of whom are presently on the Board, have been nominated to
serve as Class A directors, and if elected, the four nominees will serve for a
term of three years. Two Class A directors, Ms. Elsie C. Gruver, who has served
as a director since 1973, and Mr. Josiah P. Rowe, III, who has served since
1991, are not eligible to stand for re-election.
With respect to the election of directors, the four nominees
receiving the greatest number of votes cast for the election of directors will
be elected, if 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 on the matter will constitute a quorum. Shares for which the
holder has elected to abstain or withhold the proxy's authority to vote
(including broker nonvotes) will count toward a quorum.
Proxies received from stockholders will be voted in favor of the four
nominees unless stockholders specify otherwise on their proxies. 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 proxy will
be voted by the proxy holders for such other person or persons as may be
designated by the present Board of Directors. THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" THE ELECTION OF THE NOMINEES.
Certain information concerning the nominees for election at this
meeting and the Class B and Class C 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 A DIRECTORS
(To Serve until the Annual Meeting in 2003)
Common Stock
Beneficially Owned
December 31, 1999,
Name, Age and Year Principal Occupation, Business Experience in and Percentage
Became a Director Last Five Years, Other Directorships of Class(1)
- ----------------- --------------------------------------------- -----------
BARRY J. FITZPATRICK Chairman of the Board, President and Chief Executive Officer of 130,166(2)
Age 59 First Virginia since 1995; Executive Vice President, 1992-1995.
1995 Chairman of the Board, First Virginia Bank in Falls Church,
and a director and principal officer of numerous First
Virginia affiliated nonbanking companies since 1995.
Trustee, Marymount University, Arlington, Virginia. Trustee,
Virginia Foundation for Independent Colleges, Richmond,
Virginia. Member, Executive Advisory Board, Virginia
Coalfield Economic Development Authority.
- --------
(1) No director or executive officer owned as much as 1.0% of First Virginia
Common Stock.
(2) Includes options to purchase 43,296 shares of Common Stock which are
exercisable as of December 31, 1999, or sixty days thereafter.
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LAWRENCE T. Director, President and Chief Executive Officer (since 1983) of L. 2,300(3)
JENNINGS F. Jennings, Inc., established in 1952 and now one of the largest
Age 57 commercial building contractors in the mid-Atlantic region, involved
New Nominee in a wide range of projects, including shopping centers,
office parks, industrial buildings, and multifamily
housing. Director, First Virginia Bank, Falls Church, 1996-2000.
W. LEE PHILLIPS, JR. Professional engineer since 1959; former Chairman of the Board, Walter 12,181(4)
Age 64 L. Phillips, Inc., engineers, planners and surveyors, Falls Church, Virginia.
1985
ALBERT F. Retired President, Government Systems Group of UNISYS
ZETTLEMOYER Corporation in McLean, Virginia, 1993-1995; retired Executive
Age 65 Vice President, UNISYS Corporation, 1993-1995. 8,000
1978
CLASS B DIRECTORS
(Serving until the Annual Meeting in 2001)
Common Stock
Beneficially Owned
Name, Age and Year Principal Occupation, Business Experience in Last Five Years, December 31, 1999
Became a Director Other Directorships Percentage of Class
- ----------------- -------------------------------------------------------------- -------------------
EDWARD L. Partner, Breeden, MacMillan & Green, P.L.C., a law firm in Norfolk, 99,731(5)
BREEDEN, III Virginia, since 1968. Director, First Virginia Bank-Hampton
Age 64 Roads, Norfolk, and First Virginia Life Insurance Company,
1982 Falls Church. Chairman of the Board and President, The Hunter
Foundation, which operates a Victorian museum and a home for
elderly men in Norfolk, Virginia (1970 to present), and The
Breeden-Adams Foundation, a private foundation which provides
financial support for cancer research (1988 to present).
Managing Partner, The Tanners Creek Company and B&H
Associates, both of which are real estate investment companies
in the Tidewater area of Virginia (1990 to present).
GILBERT R. GIORDANO Portfolio Manager, Titan Financial Advisors, L.L.C., since 1996. 292,964(6)
Age 71 Partner, Giordano & Villareale, P.A., a law firm in Upper
1989 Marlboro, Maryland, 1972-1997. Director, Farmers Bank of
Maryland, Annapolis.
- --------
(3) Includes 2,000 shares held by a trust of which Mr. Jennings is the sole
trustee.
(4) Includes 4,500 shares held by a trust of which Mr. Phillips is a trustee.
(5) Includes 11,250 shares held indirectly by a corporation, of which Mr.
Breeden is Managing Partner, 57,262 shares held by two trusts, of which he
is a trustee, and 24,487 shares held by two foundations, of which Mr.
Breeden is Chairman of the Board and President.
(6) Includes 439 shares held in a trust for his son, 775 shares held by his
spouse and daughter, 857 shares held by his spouse and son, 12,436 shares
held by the Giordano Family Foundation, 7,246 shares held by his spouse as
custodian for his son, and 26,086 shares held by his spouse alone.
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ERIC C. KENDRICK President, Mereck Associates, Inc., a real estate management and 81,220(7)
Age 53 development firm in Arlington, Virginia, since 1989. Director and
1986 President, Murteck Construction Company, Inc., Upton Corporation, and
Old Dominion Warehouse Corporation, Arlington.
ROBERT M. ROSENTHAL President and Chief Executive Officer since 1954 and Chairman of 30,816(8)
Age 71 the Board and CEO since 1996 of Geneva Enterprises, Inc., lead
1998 company of the Rosenthal Automotive Organization, Washington,
D.C. Metropolitan Area. Other related companies on which Mr.
Rosenthal also serves as Chairman or President include: Maryland
Imported Cars, Inc., since 1994; Imported Cars of Maryland, Inc.,
since 1991; Fairfax Imports, Inc., since 1988; Rosenthal Landover
Enterprises, Inc., since 1978; Auto Supply and Parts, Inc., since
1985; Old Dominion Insurance Company, since 1979; New Dominion
Insurance Company, since 1990; and, Geneva Air Services, Inc.,
since 1987. President, Arcoa, Inc., an advertising company, since
1970. Trustee, Capital Automotive REIT, a real estate investment
trust which invests in real property and improvements used by
motor vehicle related businesses in major urban areas across the
country, since 1998. Director, First Virginia Bank, Falls Church.
Director, Metropolitan Washington Airports Authority. Trustee, Vice
President and Treasurer, The Phillips Collection, Washington, D. C.
ROBERT H. ZALOKAR Retired Chairman of the Board and Chief Executive Officer of 185,285
Age 72 First Virginia, 1984-1994. Director, First Virginia Bank, First
1959 Virginia Life Insurance Company, and First Virginia Mortgage Company,
Falls Church, Virginia.
CLASS C DIRECTORS
(To serve until the Annual Meeting in 2002)
Common Stock
Beneficially
Name, Age and Year Principal Occupation, Business Experience in Last Five Years, Owned December 31, 1999,
Became a Director Other Directorships and Percentage of Class
- ----------------- ------------------------------------------------------------- ------------------------
PAUL H. GEITHNER, JR. Retired President and Chief Administrative Officer, First 48,149(9)
Age 69 Virginia, 1985-1995. Director, First Virginia Life Insurance Company.
1984 Director, Ellicott Machine Corporation, Baltimore, Maryland.
Trustee, Bridgewater College, Bridgewater, Virginia.
Secretary-Treasurer, Fairfax Symphony Orchestra Foundation.
- --------
(7) Includes 16,911 shares held by his spouse and 2,593 shares held by a
corporation of which Mr. Kendrick is a director and President.
(8) Includes 26,316 shares held by the Marion and Robert Rosenthal Foundation
and 4,500 shares held by a trust of which Mr. Rosenthal is a trustee.
(9) Includes 40,091 shares held in a revocable trust and 6,834 shares held
indirectly through his spouse's trust.
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L. H. GINN, III President, Lighting Affiliates, Inc., a distributor of electrical 21,244(10)
Age 66 fixtures located in Richmond, Virginia, since 1975; retired U.S. Army
1978 Reserve Major General. Chairman of the Board, First Virginia
Bank-Colonial, Richmond. Vice Chairman, Westminster-Canterbury
Foundation, a foundation associated with a retirement facility in
Richmond; Trustee, Episcopal Diocesan Homes, Richmond. President,
SHEPCABEL Corporation, a real estate management company, and
Parking Control Corporation, which owns and operates a public
parking facility, Richmond. President, St. Margaret's School
Foundation, Tappahanock, Virginia.
EDWARD M. HOLLAND Attorney-at-Law in Northern Virginia since 1966; former Senator, 75,818(11)
Age 60 Virginia General Assembly, 1972-1996. Director, First Virginia
1974 Bank, Falls Church. Trustee, Chesapeake Bay Foundation. Trustee, Vice
President and Manager, Tidewater Research Foundation, a private
charitable foundation supporting marine research and aquaculture,
Arlington, Virginia. Member of Council, Virginia Institute of
Marine Science, Gloucester Point, Virginia.
LYNDA S. Director (since 1987), President and Treasurer (since 1995), 11,550(12)
VICKERS-SMITH Snell Construction Corporation, a privately held company
Age 52 headquartered in Arlington, Virginia, which owns and operates
1999 commercial and residential properties located in the Northern
Virginia area. Director (since 1997), Virginia Management, Inc.,
a real estate management company located in Arlington. Trustee
(since 1996), Flint Hill School, an independent school for grades
JK through 12 located in Oakton, Virginia. Corporator, Northeastern University,
Boston, since 1998.
As of December 31, 1999, directors and executive officers as a group
beneficially owned 1,257,751 shares of Common Stock, representing approximately
2.5% of those shares outstanding (including shares covered by options
exercisable as of December 31, 1999 or sixty days thereafter) and 100 shares of
Preferred Stock representing less than one percent of those shares outstanding.
Messrs. Breeden and Holland 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 subsidiaries of First Virginia. Directors Breeden, Fitzpatrick,
Geithner, Ginn, Giordano, Holland, Phillips, Rosenthal, Rowe, Vickers- Smith and
Zalokar, as well as Lawrence T. Jennings, have been directors of various
subsidiaries of First Virginia during the past five years. Ages of the directors
are stated as of December 31, 1999. The total shares outstanding for the
directors and executive officers as a group includes the shares held by the two
directors not eligible for reelection: Elsie G. Gruver, a community and civic
leader in Arlington, and Josiah P. Rowe, III, President and Publisher, The Free
Lance-Star Publishing Co. of Fredericksburg, Va. As of December 31, 1999, Ms.
Gruver owned 9,369 shares (which includes 1,350 shares held in her spouse's IRA)
of First Virginia Common Stock and, as of the same date, Mr. Rowe owned 2,250
shares of First Virginia Common Stock and 100 shares of First Virginia Preferred
Stock.
- --------
(10) Includes 425 shares held indirectly through his spouse's Individual
Retirement Account and 2,727 shares held by a trust of which Mr. Ginn is
trustee.
(11) Includes 51,718 shares held indirectly by two corporations of which Mr.
Holland is an officer, director, and owner and 14,100 shares held in two
trusts in which he is the beneficiary.
(12) Includes 11,250 shares held indirectly by a corporation in which Ms.
Vickers-Smith is an officer and director (shared voting and investment
power).
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BENEFICIAL OWNERSHIP OF NAMED EXECUTIVE OFFICERS
The following table sets forth the shares of First Virginia Common
Stock beneficially owned by the named executive officers as of December 31,
1999.
Number of Shares of Common Stock
Name of Officer of First Virginia Beneficially Owned*
-----------------------------------------------------------------------------
Barry J. Fitzpatrick 130,166
Shirley C. Beavers, Jr. 70,942
Richard F. Bowman 49,409
Raymond E. Brann, Jr. 64,955
Thomas P. Jennings 27,586
* The amounts shown represent the total shares owned beneficially by such
individuals as of December 31, 1999, together with shares which are issuable
upon the exercise of all stock options that are exercisable. Specifically, the
following individuals have stock options that are exercisable as of December 31,
1999 (or sixty days thereafter), which give them the right to acquire the shares
indicated after their name upon the exercise of those options: Mr. Fitzpatrick,
43,296; Mr. Beavers, 49,828; Mr. Bowman, 31,400; Mr. Brann, 34,700; and Mr.
Jennings, 6,850. None of the named executive officers owned as much as 1.0% of
First Virginia Common Stock.
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, Kendrick, and Phillips, held five meetings during 1999. Functions of the
Committee include (1) reviewing with the independent auditors 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 the selection and
termination of the independent auditors and any significant disagreements
between the independent auditors and management; and (4) reviewing the nonaudit
services of the independent auditors. 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 Zalokar,
Fitzpatrick, Ginn, Giordano, Rowe, and Vickers-Smith, held one meeting in 1999.
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 appointed to the Board between annual meetings.
The Management Compensation and Benefits Committee, comprised of
Directors Zettlemoyer, Holland, Kendrick, Phillips, and Rosenthal, held one
meeting in 1999. The Committee has the authority to establish the level
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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, 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, Rowe, Vickers-Smith, and Zalokar, met two times during
1999. This Committee oversees First Virginia's contributions and matching gifts
programs. The Committee also monitors the programs developed for equal
employment.
The Executive Committee, comprised of Directors Zalokar, Breeden,
Fitzpatrick, Geithner, Ginn, Holland, and Zettlemoyer, held twelve meetings in
1999. 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 1999, there were twelve meetings of the Board of Directors.
All incumbent 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(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires First
Virginia's directors and executive officers 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 directors and executive officers, First Virginia
believes that during the year 1999 all filing requirements applicable to its
directors and officers were met on time.
EXECUTIVE COMPENSATION
The Summary Compensation Table on the next page shows the annual
compensation for the last three fiscal years for First Virginia's Chief
Executive Officer and for the four other most highly compensated executive
officers.
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SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
------------------- ------------
(a) (b) (c) (d) (e) (f) (g)
Other
Annual Options/ All Other
Name and Compensa- SARs Compen-
Principal tion Awarded sation
Position Year Salary ($)(1) Bonus ($)(2) ($)(3) (#)(4) ($)(5)
- --------- ---- ------------- ------------ ------------- ------------ ---------
Barry J. Fitzpatrick 1999 660,000 455,265 4,286 30,000 73,519
Chairman, President and 1998 630,000 222,360 3,860 25,000 61,877
Chief Executive Officer 1997 600,000 346,944 3,395 30,000 66,144
of First Virginia
Shirley C. Beavers, Jr. 1999 278,500 197,764 4,599 15,000 33,313
Executive Vice President 1998 266,000 86,435 3,924 12,500 34,688
of First Virginia and 1997 253,500 134,265 3,708 15,000 32,812
Vice Chairman and
Chief Executive Officer of
First Virginia Services, Inc.
Richard F. Bowman 1999 233,000 196,338 4,799 15,000 19,908
Executive Vice President, 1998 208,000 84,894 3,724 12,500 20,935
Treasurer 1997 183,000 132,245 3,708 15,000 18,662
and Chief Financial Officer
of First Virginia
Raymond E. Brann, Jr. 1999 225,500 195,373 3,989 15,000 63,249
Executive Vice President 1998 214,500 84,640 5,531 12,500 64,310
of First Virginia 1997 204,500 132,471 5,052 15,000 62,268
Thomas P. Jennings 1999 171,600 32,829 320 6,500 14,560
Senior Vice President and 1998 164,100 30,313 787 6,500 14,602
General Counsel 1997 158,100 40,716 566 7,500 13,841
(1) The Salary 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, the First Virginia Thrift
Restoration and Deferred Compensation Plan and the First Virginia Pre-Tax Health
Benefit Plan.
(2) The Bonus 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 (e) includes the amount of
taxes paid by First Virginia for certain benefits.
(4) Column (f) includes the number of stock options that were granted
in 1999.
(5) The All Other Compensation 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 $7,200. It also includes the amounts paid by
the employer under the First Virginia Thrift Restoration and Deferred
Compensation 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 1999, these amounts were: for Mr. Fitzpatrick,
$42,631; Mr. Beavers, $9,233; Mr. Bowman, $7,116; Mr. Brann, $6,767; and Mr.
Jennings, $1,886. It also includes the premium amounts
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paid by the employer under the First Virginia Split Dollar Life Insurance Plan.
For 1999, these amounts were: for Mr. Fitzpatrick, $21,100; Mr. Beavers,
$14,262; Mr. Bowman, $5,082; Mr. Brann, $43,581; and Mr. Jennings, $4,279. It
also includes the "above-market" earnings on deferred compensation earned during
1999. These amounts were: for Mr. Fitzpatrick, $2,588; Mr. Beavers, $2,618; Mr.
Bowman, $510; Mr. Brann, $5,701; and Mr. Jennings, $1,195.
STOCK INCENTIVE PROGRAM
The following table shows for each of the named executive officers
(1) the number of stock options that were granted during 1999, (2) out of the
total number of options granted to all employees, the percentage granted to the
named executive officer, (3) the exercise price, (4) the expiration date, and
(5) the potential realizable value of the options, assuming that the market
price of the underlying securities appreciates in value from the date of grant
to the end of the option term, at annualized rates of 5% and 10%. No
freestanding or tandem SARs were granted in 1999.
STOCK OPTION GRANTS IN 1999
Percent of
Number of Total Potential Realizable
Securities Options Value at Assumed
Underlying Granted to Exercise Annual Rates of
Options Employees or Base Stock Price Appreciation
Granted in Fiscal Price Expiration for Option Term
Name (# Shs.)(1) Year (2) ($/Sh.) Date 5% ($) 10% ($)
---- ----------- ---------- -------- --------- ------ -------
Barry J. Fitzpatrick 30,000 11.24% 42.75 12/14/2009 806,557 2,043,975
Shirley C. Beavers, Jr. 15,000 5.62% 42.75 12/14/2009 403,279 1,021,987
Richard F. Bowman 15,000 5.62% 42.75 12/14/2009 403,279 1,021,987
Raymond E. Brann, Jr. 15,000 5.62% 42.75 12/14/2009 403,279 1,021,987
Thomas P. Jennings 6,500 2.43% 42.75 12/14/2009 174,754 442,861
(1) Options granted to the named executive officers in 1999 vest over
a five-year period. All of the options that were granted in 1999 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 267,000 shares of First Virginia Common Stock
were granted to employees during 1999. No freestanding SARs were granted in 1999
to employees, and none of the options that were granted had any tandem SARs.
The following table on the next 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 1999,
the value realized upon their exercise, the number of unexercised stock options
and SARs at the end of 1999, and the value of unexercised "in-the-money" stock
options at the end of 1999. Stock options are considered "in-the-money" if the
fair market value of the underlying securities exceeds the exercise price of the
option. 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.
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AGGREGATED OPTIONS/SAR EXERCISES IN 1999 AND
YEAREND OPTIONS
---------------
Value of
Number of Unexercised In-
Unexercised the-Money Options
Options at at
Shares Yearend (#) Yearend ($)
Acquired on Exercisable/ Exercisable/
Name Exercise(#) Value Realized ($) Unexercisable Unexercisable
---- ----------- ------------------ ------------- -------------
Barry J. Fitzpatrick 26,017 738,815 28,296/95,000 240,881/294,250
Shirley C. Beavers, Jr. 11,250 457,237 43,828/44,500 857,671/101,875
Richard F. Bowman 9,750 353,238 25,400/44,500 373,002/101,875
Raymond E. Brann, Jr. 7,550 282,184 28,700/44,500 549,608/101,875
Thomas P. Jennings 900 15,787 4,300/20,550 17,625/ 37,112
PENSION AND THRIFT PLANS AND SUPPLEMENTAL ARRANGEMENTS
The following table shows the estimated annual benefit payable upon
retirement (life only) under the First Virginia Pension Trust Plan and under the
First Virginia Supplemental Pension Trust Plan based on specified remuneration
and years of credited service classifications, assuming a participant retired on
December 31, 1999, at age 65. Credited service in excess of thirty years is not
taken into account in determining benefits under either plan.
ANNUAL BENEFITS UNDER FIRST VIRGINIA'S PENSION TRUST PLAN AND
THE FIRST VIRGINIA SUPPLEMENTAL PENSION TRUST PLAN
--------------------------------------------------
Average
Annual Pay 10 Years 15 Years 20 Years 25 Years 30 Years
for Highest of of of of of
Five Years Service Service Service Service Service
- ---------- ------- ------- ------- ------- -------
$200,000 $ 30,347 $ 45,521 $ 60,694 $ 75,868 $ 91,041
$300,000 $ 46,347 $ 69,521 $ 92,694 $115,868 $139,041
$400,000 $ 62,347 $ 93,521 $124,694 $155,868 $187,041
$500,000 $ 78,347 $117,521 $156,694 $195,868 $235,041
$600,000 $ 94,347 $141,521 $188,694 $235,868 $283,041
$700,000 $110,347 $165,521 $220,694 $275,868 $331,041
$800,000 $126,347 $189,521 $252,694 $315,868 $379,041
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 average annual pay multiplied by
30 years of credited service plus 0.5% of average annual pay in excess of
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. First
Virginia also has the First
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Virginia Supplemental Pension Trust Plan for certain key employees which
provides for the payment of supplemental pension benefits as a result of the IRS
restrictions on benefits under the First Virginia Pension Trust Plan. All of the
named executive officers (except for Mr. Fitzpatrick who would receive benefits
at retirement under a separate Supplemental Compensation Agreement) participate
in the Supplemental Pension Trust Plan.
Remuneration or earnings determining pension benefits under both the
Pension Trust Plan and the Supplemental Pension Trust Plan includes salaries and
bonuses (which are listed in the Summary Compensation Table) and any other
taxable compensation. Compensation resulting from the exercise of nonqualified
options, SARs, and deferred compensation are excluded from the computation of
benefits under both plans. For purposes of determining benefits under the
Pension Trust Plan, each of the named executives had the following years of
service as of December 31, 1999 (30 years is the maximum): Mr. Fitzpatrick, 30
years; Mr. Beavers, 30 years; Mr. Bowman, 24.5 years; Mr. Brann, 30 years; and
Mr. Jennings, 21.8 years. If a participant retired on December 31, 1999, at age
65, the participant would receive the pension benefits as determined by using
the Summary Compensation and Pension Tables shown above in conjunction with the
formula described in the previous paragraph.
Mr. Fitzpatrick's Supplemental Compensation Agreement ("Agreement")
provides him with supplemental retirement benefits in addition to those pension
benefits he would receive from the First Virginia Pension Trust Plan. Under the
Agreement, if he resigns, retires or leaves First Virginia for any reason, 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, reduced by the amount he would receive under the First Virginia Pension
Trust Plan. 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. To
avoid a possible doubling up of benefits from this Agreement and a separate
Employment Agreement (see below), payments to Mr. Fitzpatrick pursuant to his
Agreement would be delayed for three years upon a change of control. Should Mr.
Fitzpatrick die, his spouse 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.
Messrs. Fitzpatrick, Beavers, Bowman, Brann, and Jennings have
entered into employment agreements with First Virginia which provide for their
continued employment for a three-year period following the date on which a
"change of control" takes place (the "Employment Period"). These agreements
require First Virginia (or any successor corporation) to employ the executive
during the Employment Period following a change of control in a position with
authority, duties and responsibilities at least commensurate to what the
executive had prior to a change of control, and at compensation levels
(including benefits) at least equal to what the executive was making prior to
the change of control. If, during the first year of his Employment Period, the
executive is terminated other than for "cause" or "disability" or the executive
terminates his employment for "good reason" (as those terms are defined under
the employment agreements), then First Virginia (or its successor) would pay the
executive a lump sum equal to 2.99 times the sum of his annual base salary and
bonus. If, during the second or third year of his Employment Period, the
executive is terminated other than for cause or disability or terminates his
employment for good reason, then First Virginia or its successor would pay the
executive a lump sum equal to two times the sum of his annual base salary and
bonus. During a thirty-day period after the first year, the executive could
terminate his employment for any reason and receive two times the sum of his
annual base salary and bonus. Furthermore, if any payments made under the
agreements subject the executive to excise taxes under Internal Revenue Code
Section 4999, such payments would be "grossed up" to put the executive in the
same after-tax position as if no excise taxes had been imposed.
Executive officers 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.
Employees also can contribute up to an additional six percent of their
compensation without receiving a matching contribution. For the years when First
Virginia meets an earnings test
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under the Thrift Plan, employees can receive matching contributions equal to 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 and Asset Management Services Department of First
Virginia Bank. Reference is made to footnote 5 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 Thrift Restoration and
Deferred Compensation 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. Under the First Virginia Thrift Restoration and Deferred
Compensation 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 5 of the Summary Compensation Table for the amount
of the employer contributions made on behalf of the named executive officers
under the First Virginia Thrift Restoration and Deferred Compensation Plan.
DIRECTORS' COMPENSATION, CONSULTING ARRANGEMENTS
AND PLANS WHICH INCLUDE CHANGE IN CONTROL ARRANGEMENTS
In 2000, directors of First Virginia who are not salaried officers
will be paid an annual retainer of $15,000 per year and a fee of $965 for each
meeting of the Board of Directors attended. Committee chairmen will receive $875
for each committee meeting they chair and other Committee members will receive
$725 for each committee meeting they attend. Directors are reimbursed for
out-of-town expenses incurred in connection with attendance at Board and
Committee meetings.
During 1999, 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 $123,048 and
$134,532, respectively, under supplemental compensation agreements, in addition
to amounts they received from the First Virginia Pension Trust Plan and, in the
case of Mr. Malone, in addition to the fees he receives for attending Board
meetings. When requested, both Holland and Malone are required to provide
consulting services under their supplemental compensation agreements. Also,
during 1999, 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 $282,527,
respectively, under supplemental compensation agreements, in addition to amounts
they received from the First Virginia Pension Trust Plan and 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 of
$3,588 and $1,565, respectively, during 1999. During 1999, Virginia H. Brown,
formerly Virginia H. Beeton, received $71,000 pursuant to her former spouse's
Supplemental Retirement Agreement with First Virginia, in addition to what she
received from the First Virginia Pension Trust Plan. Her former spouse, Ralph A.
Beeton, who is now deceased, 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 three
directors' deferred compensation plans, two of which also began in 1983 and
1986, and the other began in 1998 ("Deferred Compensation Plans"). Under the
1983 and 1986 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 1983 and 1986 Deferred Compensation
Plans, First Virginia has purchased life insurance policies on the lives of the
participants, with First Virginia as the beneficiary. For the period ending
December 31, 1999, none of the named
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executive officers of First Virginia deferred any compensation under the
Deferred Compensation Plans. Under the 1998 Directors' Deferred Compensation
Plan, directors may defer their fees and receive earnings on those deferrals at
the distribution date, based on the funds they choose.
The 1983 deferred compensation plans include a provision regarding
"change in control." 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 receive 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 (now The Chase Manhattan 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 Thrift Restoration and Deferred Compensation 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 or its successor 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 accelerate the vesting or payment of
any of the benefits under the covered compensation plans in case of a change in
control.
The 1983 deferred compensation plans, the Split Dollar Plan, the
above-described trust agreement with The Chase Manhattan Bank, Mr. Fitzpatrick's
Supplemental Compensation Agreement, certain stock option agreements, and the
above-described employment agreements all include change in control provisions.
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
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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 Edward M. Holland, Eric C. Kendrick, W. Lee Phillips,
Jr., Robert M. Rosenthal 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 received 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 spouse's Supplemental Retirement Agreement with First
Virginia. Albert F. Zettlemoyer's daughter is an officer of First Virginia
Insurance Services, Inc., a subsidiary of First Virginia. 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.
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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. In its
determination of executive compensation, the Committee noted the potential
effect of the one million dollar deduction limitation under Section 162(m) of
the Internal Revenue Code but declined to alter its policy in determining
executive compensation to meet the requirements for deductibility under Section
162(m) because the amount of compensation affected is not material.
BASE SALARY
The Compensation Committee's policy for determining base salaries is
based on two primary factors:
(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 as First Virginia. This
"Local Peer Group" of companies consists of Compass
Bancshares based in Alabama, Hibernia Corporation based in
Louisiana, Mercantile Bankshares Corporation and Allfirst
Financial, Inc. based in Maryland, First Tennessee National
Corporation based in Tennessee, and Centura Banks, Inc. and
CCB Financial Corporation based in North Carolina. Base
salaries are targeted to be the median salaries of
corresponding positions in the "Local Peer Group". For 1999,
Mr. Fitzpatrick's base salary was $660,000 which was 101.5%
of the median for salaries paid to his counterparts in the
"Local Peer Group".
SHORT-TERM INCENTIVES/BONUSES
The Committee grants bonuses to the executive officers and 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 the most
important single factor in measuring the performance of a banking company, and
achievement of a 1% ROA generally is considered by the Committee to be the
minimum for 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 the 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; and/or
(b) Up to 30% of an executive's bonus 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
"Southern Regional Peer Group," as compiled by Keefe,
Bruyette and Woods, the New York securities firm which
specializes in the banking and thrift industry; and/or
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(c) Up to 20% of an executive's bonus 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 each 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. Among other things, Mr. Fitzpatrick's bonus
reflected First Virginia's success in achieving a 1.63% return on assets (for
the first nine months) and the other above-described results. Consistent with
the Committee's avoidance of a strict formula approach, no specific weighing
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
Southern Regional Peer Group based on results for the first nine months of 1999,
the latest data available to the Committee at the time the incentive awards were
considered.
First Virginia
Profit Plan
or Target KBW Southern
Amount Actual Regional Peer Group
------ ------ -------------------
Earnings (Higher is better)
ROA 1.42% 1.63% 1.26%
ROE 13.51% 15.09% 15.18%
Asset Quality (Lower is better)
NPA .40% .35% .53%
CO .25% .17% .27%
Capital (Higher is better)
Equity/Asset Ratio 10.66% 10.83% 8.66%
Tier I Risk Based 10.00% 12.70% 11.58%
Capital
First Virginia's actual results were greater than 80% of the profit
plan or target amount in every category and exceeded the Regional Peer Group in
every category except ROE. For that reason, the Committee awarded Mr.
Fitzpatrick a bonus of $425,000.
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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.
At the end of 1999, the Committee granted options covering a total of
267,000 shares of First Virginia Common Stock at $42.75 per share to the CEO and
to certain officers. Most options that were awarded by the Committee vest over a
five-year period in equal annual installments. Those optionees who are expected
to retire in the next few years were awarded options that vest over a period
that ends shortly before their anticipated retirement.
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 exceeded
those of its Local Peer Group 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
30,000 shares. The size of his grant was primarily based on the performance of
First Virginia as described above.
Edward M. Holland
Eric C. Kendrick
W. Lee Phillips
Robert M. Rosenthal
Albert F. Zettlemoyer
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PERFORMANCE GRAPH
The following performance chart 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.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
First Virginia Banks, Inc., S&P MidCap 400 and
KBW 50 Index (with dividends reinvested)
First Virginia S&P 400
Banks, Inc. Mid Cap KBW 50
----------- ------- ------
1994 100 100 100
1995 135 131 160
1996 160 156 227
1997 266 206 331
1998 248 245 359
1999 234 281 346
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's 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 (year-end 1999 market
capitalization of approximately $2.114 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 in the
banking and thrift industry. The KBW 50 is considered more representative of
price performance of the major banking companies in the United States. 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 1995-1999 with the KBW
Southern Regional Peer Group and with a local peer group consisting of Compass
Bancshares, Hibernia Corporation, Mercantile Bankshares Corporation, First
Tennessee National Corporation, Allfirst Financial, Inc., CCB Financial
Corporation, and Centura Banks, Inc. As noted in the
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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.
COMPARISON OF RETURN ON AVERAGE ASSETS
First Virginia Banks, Inc., Southern Regional
and Local Peer Groups
Southern
First Virginia Regional Local
Banks, Inc. Peer Group Peer Group
----------- ---------- ----------
1995 1.41 1.23 1.38
1996 1.43 1.27 1.34
1997 1.44 1.30 1.35
1998 1.40 1.22 1.43
1999 1.59 1.24 1.42
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. None of the named executive officers had
any 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, 1999,
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 $47,525,000.
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II. APPOINTMENT OF INDEPENDENT AUDITORS
On February 23, 2000, upon recommendation of First Virginia's Audit
Committee, First Virginia's Board of Directors appointed the accounting firm
KPMG LLP as independent accountants for the year ending December 31, 2000.
At the meeting, a vote will be taken on a proposal to ratify the
appointment by the Board of Directors of KPMG LLP as independent auditors for
the year ending December 31, 2000. Ratification will require the affirmative
vote of the holders of a majority of shares of Common and Preferred Stock
present or represented by properly completed proxies at the meeting, provided a
quorum is present and a majority of the outstanding shares of Common and
Preferred Stock vote on the matter. Abstentions and broker nonvotes will be
included in determining the number of votes present or represented at the
meeting with respect to determining a quorum. Broker nonvotes will not be
included among those that vote on the matter. Representatives of KPMG LLP are
expected to be present at the Annual Meeting and will be available to respond to
appropriate questions and to make a statement if they desire to do so.
On February 24, 1999, First Virginia's Audit Committee approved, and
First Virginia's Board of Directors ratified, the appointment of the accounting
firm KPMG LLP as independent accountants for the year ending December 31, 1999
to replace Ernst & Young LLP ("E & Y"), who were dismissed as the independent
accountants effective with such appointment.
The reports of E & Y on First Virginia's consolidated financial
statements for the years ending December 31, 1998 and 1997 did not contain an
adverse opinion or a disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principles. In connection with the
audits of First Virginia's consolidated financial statements for the two years
ended December 31, 1998 and through February 24, 1999, there have been no
disagreements between First Virginia and E & Y on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope and
procedures which, if not resolved to the satisfaction of E & Y, would have
caused them to make reference thereto in their report on the financial
statements for such years. In addition, there were no reportable events (as
defined in SEC Regulation S-K, Item 304(a)(1)(v)) during the two years ending
December 31, 1998 and through February 24, 1999.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31,
2000.
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the next Annual
Meeting in 2001 and included in First Virginia's Proxy Statement in 2001 must be
received by First Virginia no later than November 8, 2000. 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 90 nor more than 120 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,
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(i) 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 the Internet, by directors, officers and employees of
First Virginia and its subsidiaries. In addition, First Virginia has engaged
Morrow & 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
$5,000, 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 1999, 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, 1999, ON FORM 10-K, WHICH REPORT
WILL BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OR BEFORE MARCH 30,
2000. STOCKHOLDERS OF RECORD ON FEBRUARY 21, 2000, AND BENEFICIAL OWNERS OF SUCH
SECURITIES SHOULD SUBMIT REQUESTS FOR SUCH REPORT TO BARBARA J. CHAPMAN,
SECRETARY, 6400 ARLINGTON BOULEVARD, FALLS CHURCH, VIRGINIA 22042-2336.
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March 6, 2000
Securities and Exchange Commission
450 Fifth Street, Northwest
Washington, D.C. 20549
Re: Definitive Proxy Statement for First Virginia Banks, Inc.
Gentlemen:
Enclosed for filing electronically is First Virginia's definitive proxy
statement and form of proxy. These proxy materials are being sent to
shareholders on or about March 8, 2000. Since only routine matters will be
considered at this year's Annual Meeting, no preliminary proxy statement was
filed.
Sincerely,
Christopher M. Cole
Vice President and
Assistant General Counsel
Enclosures
CMC:pah
26
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIRST VIRGINIA
BANKS, INC.
ANNUAL MEETING OF STOCKHOLDERS
April 28, 2000
10:00 a.m. local time
The undersigned hereby appoints Elsie C. Gruver, Robert M. Rosenthal and Lynda
S. Vickers-Smith (the Proxy Committee) as proxies, with power to act without the
other and with power of substitution, and hereby authorizes them to represent
and vote all the shares of stock of FIRST VIRGINIA BANKS, INC., standing in the
name of the undersigned at the Annual Meeting of Stockholders to be held Friday,
April 28, 2000, at the Ritz-Carlton Hotel at Tysons Corner, Ballroom Level, 1700
Tysons Boulevard, McLean, Virginia, at 10:00 a.m., local time, and any
adjournment thereof, in accordance with instructions given in this proxy and, at
their discretion, upon any other business not now known which properly may come
before the meeting, all as more fully set forth in the accompanying proxy
statement, receipt of which is acknowledged.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR
VOTE VIA THE INTERNET OR BY TELEPHONE.
(Continued, and to be marked, dated and signed, on the other side)
FIRST VIRGINIA BANKS, INC. - ANNUAL MEETING, APRIL 28,2000
YOUR VOTE IS IMPORTANT!
You can vote in one of three ways:
1. Call toll free 1-888-221-0698 on a Touch Tone telephone and follow the
instructions on the reverse side. There is NO CHARGE to you for this call.
2. Via the Internet at www.proxyvoting.com/fvb and follow the instructions. or
3. Mark, sign and date your proxy card and return it promptly in the enclosed
envelope.
PLEASE VOTE
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The Board of Directors recommends a vote "FOR" Proposals 1 and 2.
Please mark your voted as indicated in this example (X)
1. The election as directors of all nominees listed below, except as marked
to the contrary.
For Withhold For All Except
( ) ( ) ( )
(01) B. Fitzpatrick (02) L. Jennings
(03) W. Phillips (04) A. Zettlemoyer
INSTRUCTION: To withhold authority to vote for any nominee(s), mark "For
All Except" and write that nominee(s) name(s) in the space provided below.
- --------------------------------------------------------------------------------
2. Ratification of KPMG LLP as Auditors.
For Against Abstain
( ) ( ) ( )
If no instructions are specified above, this proxy will be voted "FOR"
each of the proposals listed.
Please be sure to sign and date this Proxy in the box below.
- ----------------------------------- ---------------
Stockholder sign above - Date
Co-holder (if any) sign above
PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS CARD. When signing as an
attorney, executor, administrator, trustee or guardian, please give full title.
If a corporation or partnership, write in the full corporate or partnership name
and have the President or other authorized officer sign. If shares are held
jointly, each holder should sign, but only one signature is required.
***IF YOU WISH TO VOTE BY TELEPHONE OR INTERNET, PLEASE READ THE
INSTRUCTIONS BELOW***
FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
VOTE BY TELEPHONE/INTERNET
QUICK***EASY***IMMEDIATE
Your telephone/internet vote authorizes the named proxies to vote your shares in
the same manner as if you marked, signed and returned your proxy card.
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Please have this card handy when you call. You'll need it in front of you in
order to complete the voting process.
VOTE BY PHONE: You will be asked to enter the Control Number (look below at
right).
OPTION A: To vote as the Board of Directors recommends on ALL proposals,
press 1. Your vote will be confirmed.
OPTION B: If you choose to vote on each proposal separately, press 0. You
will hear these instructions:
Item 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees, press
9. To vote FOR ALL NOMINEES EXCEPT for certain of the nominees, press
0 and listen to the instructions.
Item 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0. When asked,
you must confirm your vote by pressing 1.
VOTE BY INTERNET: The web address is www.proxyvoting.com/fvb
You will be asked to enter the Control Number (look below at right).
If you vote by telephone or internet, DO NOT mail back your proxy.
THANK YOU FOR VOTING
Call Toll Free On a Touch Tone Telephone FOR TELEPHONE/INTERNET
1-888-221-0698 - ANYTIME VOTING:
There is NO CHARGE to you for this call CONTROL NUMBER
TELEPHONE/INTERNET VOTING DEADLINE:
12 midnight-April 27, 2000