SCHEDULE 14A
(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
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
BENCHMARK BANKSHARES, INC.
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(Name of Registrant as Specified in Its Charter)
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(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:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided in 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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BENCHMARK BANKSHARES, INC.
100 South Broad Street
Kenbridge, Virginia 23944
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on April 18, 2002
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Benchmark
Bankshares, Inc. (the "Company") will be held in the lobby of Benchmark
Community Bank (the "Bank"), 100 South Broad Street, Kenbridge, Virginia on
April 18, 2002, at 7:30 p.m. for the following purposes:
I. To elect three (3) directors for a term of three (3) years or until their
respective successors are elected and qualified;
II. To transact such other business as may properly come before the meeting.
Management is not aware of any other business, other than procedural
matters incident to the conduct of the meeting.
The Board of Directors has fixed the close of business on March 1, 2002, as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Wayne J. Parrish
Secretary
Kenbridge, Virginia
March 18, 2002
________________________________________________________________________________
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. IT IS IMPORTANT THAT YOUR
SHARES BE REPRESENTED, REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO BE
PRESENT, YOU ARE URGED TO COMPLETE, SIGN, AND DATE THE ENCLOSED PROXY AND RETURN
IT PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THIS MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY YOUR PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN
WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
________________________________________________________________________________
BENCHMARK BANKSHARES, INC.
_______________________
PROXY STATEMENT
____________
ANNUAL MEETING OF SHAREHOLDERS
April 18, 2002
GENERAL INFORMATION
This Proxy Statement is furnished to holders of common stock, $0.21 par
value per share ("Common Stock"), of Benchmark Bankshares, Inc. (the "Company")
in connection with the solicitation of proxies by the Board of Directors (the
"Board") of the Company to be used at the Annual Meeting of Shareholders to be
held on April 18, 2002 at 7:30 p.m. in the lobby of Benchmark Community Bank
(the "Bank"), 100 South Broad Street, Kenbridge, Virginia 23944, and any
adjournment thereof (the "Annual Meeting").
The principal executive offices of the Company are located at 100 South
Broad Street, Kenbridge, Virginia. The approximate date on which this Proxy
Statement, the accompanying proxy form, and Annual Report to Shareholders (which
is not part of the Company's soliciting materials) are being mailed to the
Company's shareholders is March 18, 2002.
Voting and Revocability of Proxy
The proxy solicited hereby, if properly signed and returned to the Company
and not revoked prior to its use, will be voted in accordance with the
instructions contained thereon. If no contrary instructions are given, each
proxy will be voted FOR the slate of director nominees and FOR any other
proposals designated in the proxy. Any shareholder giving a proxy has the power
to revoke it any time before it is exercised by (i) filing written notice
thereof with the Secretary of the Company (Wayne J. Parrish, Secretary,
Benchmark Bankshares, Inc., P. O. Box 569, Kenbridge, Virginia 23944); (ii)
submitting a duly executed proxy bearing a later date; or (iii) appearing at the
Annual Meeting or at any adjournment thereof and giving the Secretary notice of
his or her intention to vote in person. Proxies solicited hereby may be
exercised only at the Annual Meeting and any adjournment thereof and will not be
used for any other meeting.
Persons Making the Solicitation
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, officers and regular employees of the Company may solicit
proxies in person or by telephone. Also the Company will request
banks, brokers and other custodians, nominees and fiduciaries to send proxy
materials to the beneficial owners and to secure their voting instructions, if
necessary. The Company, upon request, will reimburse such fiduciaries for their
expenses in so doing.
Voting Securities
Only shareholders of record at the close of business on March 1, 2002 (the
"Record Date") will be entitled to vote at the Annual Meeting. On the Record
Date, there were 2,957,199.52 shares of Common Stock issued and outstanding and
943 record holders. Of this number of shares issued and outstanding, 2,956,985
are whole shares, eligible to be voted. Each whole share of Common Stock is
entitled to one vote on each matter presented at the Annual Meeting. The Company
had no other class of equity securities outstanding at the Record Date.
In the election of directors, those receiving the greatest number of votes
will be elected even if they do not receive a majority. Abstentions and broker
non-votes will not be considered a vote for, or a vote against, a director.
PROPOSAL I. ELECTION OF DIRECTORS
The Nominees
The Company's Articles of Incorporation provide for the Board to be divided
into three classes, as nearly equal in number as possible, each of which will
serve for three years, with one class being elected each year. At the 2002
Annual Meeting, three directors, comprising Class A, will be nominated for
election to serve until the 2005 Annual Meeting of Shareholders or until their
successors are elected and qualified.
There is set forth below as to each of the nominees certain information
including name, age and business experience. The dates shown for first election
as a director represent the year in which the nominee was first elected to the
Board of the Company or to one of its predecessor corporations. Unless otherwise
indicated, the business experience and principal occupations shown for each
nominee has extended five or more years.
Class A (to serve until the 2005 Annual Meeting of Shareholders)
1. Earl C. Currin, Jr., age 58, a Director since 1986. Dr. Currin is
Provost of the John H. Daniel Campus of Southside Virginia Community
College, Keysville, Virginia. He presently serves on the Human
Relations & Compensation, Technology, and Risk Management Committees
of the Bank.
2. Wayne J. Parrish, age 63, a Director since 1979. Mr. Parrish is
principal of Parrish Trucking Company, Inc., Kenbridge, Virginia. He
presently serves on the Policy & Planning, Loan, and Audit & Finance
Committees of the Bank.
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3. Ben L. Watson, III, age 58, a Director since 1976. Mr. Watson is
President and Chief Executive Officer of the Company and of the Bank.
He presently serves as a member of the Executive, Technology, and Risk
Management Committees of the Bank, and is an ex-officio member of the
other standing committees
Election of Directors
Unless authority is withheld in the proxy, each proxy executed and returned
by a shareholder will be voted for the election of the three nominees listed
above. Proxies distributed in conjunction herewith may not be voted for persons
other than the nominees named thereon. If any person named as a nominee should
be unable or unwilling to stand for election at the time of the Annual Meeting,
the proxy holders will nominate and vote for a replacement nominee or nominees
recommended by the Board. All of the nominees listed above have consented to be
nominated and to serve if elected, and at this time, the Board knows of no
reason why any of the nominees listed above may not be able to serve as a
director if elected. The proxy also confers discretionary authority upon the
persons named therein, or their substitutes, with respect to any other matter
that may properly come before the meeting.
THE BOARD RECOMMENDS THAT THE NOMINEES BE ELECTED AS DIRECTORS.
DIRECTORS CONTINUING IN OFFICE
There are seven directors whose present terms of office will continue until
2003 or 2004, as indicated below, or until their respective successors are duly
elected and qualified. Each has served continuously since the year he joined the
Board. Unless otherwise indicated, the business experience and principal
occupations shown for each nominee has extended five or more years.
Class B (to serve until the 2003 Annual Meeting of Shareholders)
1. R. Michael Berryman, age 61, a Director since 1978. Mr. Berryman is
a pharmacist and is a principal of Pharmacy Associates, Inc.,
Kenbridge, Virginia. He presently serves as Chairman of the Board of
the Company and of the Bank, is a member of the Executive Committee of
the Bank, and is an ex-officio member of the other standing
committees.
2. William J. Callis, age 59, a Director since 1989. Mr. Callis is a
principal of Kenbridge Construction Co., Inc., Kenbridge, Virginia. He
presently serves as Vice Chairman of the Board, is a member of the
Executive, and Bank Properties Committees of the Bank, and is an
ex-officio member of the other standing committees.
3. Earl H. Carter, Jr., age 53, elected as a Director in 2000. Mr.
Carter is a principal of Taylor-Forbes Equipment Company, Inc.,
Farmville, Virginia. He presently serves as a member of the Loan,
Technology, and Risk Management Committees of the Bank.
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4. C. Edward Hall, age 61, a Director since 1971. Mr. Hall is a
pharmacist and is a partner in Victoria Drug Company, Victoria,
Virginia. He presently serves as a member of the Loan, Policy &
Planning, and Risk Management Committees of the Bank.
Class C (to serve until the 2004 Annual Meeting of Shareholders)
1. Lewis W. Bridgforth, age 62, a Director since 1971. Dr. Bridgforth
is a physician in private general practice in Victoria, Virginia. He
presently serves on the Policy & Planning, Human Relations &
Compensation, and Audit & Finance Committees of the Bank.
2. J. Ryland Hamlett, age 59, a Director since 1986. Mr. Hamlett
retired in 1997 as Manager of Human Resources for Southside Electric
Cooperative, Crewe, Virginia. He presently serves on the Audit &
Finance, Human Relations & Compensation, and Loan Committees of the
Bank.
3. Mark F. Bragg, age 40, a Director since 1999. Mr. Bragg is a
principal of Atlantic Medical, Inc., South Hill, Virginia. He
presently serves on the Audit & Finance, Bank Properties, and
Technology Committees of the Bank.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE MANAGEMENT
The following table sets forth information as of March 1, 2002, regarding
the beneficial ownership of the Company's Common Stock by (i) all directors and
nominees and (ii) its executive officers, and (iii) by all directors and
executive officers as a group. For the purposes of this table, beneficial
ownership has been determined in accordance with the provisions of Rule 13d-3
under the Securities and Exchange Act of 1934 (the "Exchange Act"), as amended,
under which, in general, a person is deemed to be a beneficial owner of a
security if he has or shares the power to vote or direct the voting of the
security or the power to dispose or direct disposition of the security, or if he
has the right to acquire beneficial ownership of the security within 60 days.
Name of Director, Nominee Number of Shares and Nature of Percent of Class
or Executive Officer Beneficial Ownership Shares *Less than 1%
- ------------------------------------------------- ------------------------------- -------------------
R. Michael Berryman 83,113.704 (1) 2.81%
Mark F. Bragg 2,397.409 (2) *
Lewis W. Bridgforth 35,680.657 (3) 1.21%
William J. Callis 32,620.974 (4) 1.11%
Earl H. Carter, Jr. 755.000 *
Earl C. Currin, Jr. 13,178.000 *
C. Edward Hall 36,185.037 (5) 1.23%
J. Ryland Hamlett 44,977.000 (6) 1.52%
Wayne J. Parrish 28,878.872 (7) *
Ben L. Watson, III 23,471.508 (8) *
Janice W. Pernell 11,536.375 *
Michael O. Walker 52,000.000 1.76%
All Directors and Executive Officers as a Group 364,794.536 11.74%
(12 persons)
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(1) Includes 2,114.494 shares held jointly with Mr. Berryman's wife and
45,073.704 shares owned solely by her.
(2) Includes 97.409 shares held jointly with Mr. Bragg's wife.
(3) Includes 20,337.218 shares owned solely by Dr. Bridgforth's wife.
(4) Includes 21,640.644 shares held jointly with Mr. Callis's wife.
(5) Includes 260 shares owned solely by Mr. Hall's wife, and 5,040 shares held
jointly with his mother.
(6) Includes 17,128 shares held as trustee for the John A. Cordle Family Trust
and 17,128 shares held as trustee for the Mary F. Cordle Revocable
Trust.
(7) Includes 6,971.168 shares held jointly with Mr. Parrish's wife, and
7,419.035 shares owned solely by her.
(8) Includes 457.508 shares owned solely by Mr. Watson's wife.
Section 16(a) Beneficial Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who beneficially own
more than 10% of the Company's Common Stock to file initial reports of ownership
and reports of changes in ownership of Common Stock with the Securities and
Exchange Commission. Such persons are required by Commission regulation to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely upon a review of the copies of
such reports furnished to the Company, the Company believes that all applicable
Section 16(a) filing requirements were satisfied for events and transactions
that occurred in 2001.
THE BOARD AND ITS COMMITTEES
Meetings of the Board are held regularly each month, including an
organizational meeting following the conclusion of the Annual Meeting of
Shareholders. The Board held twelve meetings in the year ended December 31,
2001. For such year, none of the Company's ten directors attended fewer than 75%
of the aggregate number of Board Meetings and meetings of committees of which
the respective directors are members.
The Board of Directors has, among others, a Nominating Committee, an Audit
& Finance Committee, and a Human Relations & Compensation Committee.
Nominating Committee
Since the 2001 Annual Meeting, the Nominating Committee has consisted of
Messrs. Bridgforth, Hall, and Carter. The duties of this committee are to advise
the Board with respect to the nomination of directors. It recommends candidates
to the Board as nominees for election at the Annual Meeting. Directors are
selected on the
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basis of recognized achievements and their ability to bring skills and
experience to the deliberations of the Board. The Nominating Committee met once
and recommended the nominees named herein. The Company's By-Laws provide,
however, that shareholders entitled to vote for the election of directors may
name nominees for election to the Board. In order for such a nomination to be
effective, a nominating shareholder must strictly comply with the applicable
provisions of the Bylaws, which include: (a) such nomination shall be made at a
meeting of shareholders; (b) the nominating shareholder shall give notice to the
Company, which notice shall be received by the Company not less than 60 days nor
more than 90 days prior to the shareholders' meeting, provided, however, that in
the event that less than 70 days' notice or prior public disclosure of the date
of the meeting is given or made to shareholders, notice by the nominating
shareholder must be received not later than the close of business on the tenth
day following the day on which such notice of the date of the meeting was mailed
or such public disclosure was made; and (c) the nominating shareholder's notice
shall set forth (i) as to each director nominee proposed by the shareholder, the
name, age, business address and residence of such nominee, the principal
occupation or employment of such nominee, the class and number of shares of the
Company beneficially owned by the nominee and any other information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or as otherwise required, pursuant to Regulation 14A
under the Exchange Act, and (ii) as the nominating shareholder, his or her name
and address as they appear on the Company's books and the class and number of
shares of the Company which are beneficially owned by such shareholder.
Audit & Finance Committee
The Audit & Finance Committee (the "Audit Committee") consists of Messrs.
Bragg, Bridgforth, Hamlett, and Parrish. The responsibilities of the Audit
Committee are discussed below under "Auditors." The Audit Committee met five
times during the year ended December 31, 2001.
Human Relations & Compensation Committee
The Human Relations & Compensation Committee consists of Messrs.
Bridgforth, Currin, and Hamlett. It is responsible for reviewing, and making
recommendations with respect to, the compensation of all employees of the
Company. This committee met six times during the past fiscal year.
DIRECTORS' FEES
No fees are paid to Directors for service on the Board of the Company.
During 2001, for service on the board of directors of the Bank, a fee was paid
to each Director in the amount of $250 for each Bank board meeting attended and,
except for Mr. Watson, $175 for each Bank board committee meeting attended
during the year.
Effective April 20, 1995, the Company adopted the Outside Directors' Stock
Option Plan (the "Outside Directors' Plan"). On October 2, 1997, the Common
Stock split two-for-one (the "Stock Split"), and pursuant to Section 3(d) of the
Outside Directors' Plan, the Board of Directors increased the maximum aggregate
number of shares of Common Stock that may be issued pursuant to the Outside
Directors' Plan from 40,000 shares to 80,000 shares. The Outside Directors' Plan
is administered by a committee appointed by the Board of Directors, and the Plan
will terminate on March 16, 2005, unless terminated earlier by the Board.
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When the Company's shareholders approved the Outside Directors' Plan on
April 15, 1995, each outside director then serving on the Board received an
award of a stock option to purchase three thousand (3,000) shares of the Common
Stock on the effective date of the Outside Directors' Plan. Thereafter, any
outside director elected to the Board who had not previously received such an
award will automatically be granted an award consisting of a stock option to
purchase three thousand (3,000) shares, except that following the two-for-one
stock split on October 2, 1997, the number of shares already granted to
directors became 6,000, and the number of shares to be granted to any
newly-elected directors became 6,000. Concurrent with the Stock Split and
pursuant to Section 3(d) of the Outside Directors' Plan, the Board adjusted the
exercise price of stock options granted under the Outside Directors' Plan from
the Fair Market Value (as defined therein) of the Common Stock, plus $1.00, on
the date of the grant, to the Fair Market Value, plus $0.50, on the date of the
grant. Each stock option is granted for a term of ten years and is first
exercisable on the date which is one year from the date of the grant of the
option. Options granted under the Outside Directors' Plan may be exercised by
the outside director, by a legatee or legatees of such stock option under the
outside director's last will or by his or her executors, personal
representatives or distributees, by delivering to the Secretary of the Company
written notice of the number of shares of Common Stock with respect to which the
stock is being exercised.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
1. Michael O. Walker, age 51, Recording Secretary of the Company since
1983. He has also served as Senior Vice President of the Bank since 1993 with
responsibility for branch administration and marketing. He joined the Bank in
1974, and previous positions include Branch Manager, Assistant Vice President
and Vice President.
2. Janice W. Pernell, age 55, Cashier and Treasurer of the Company since
1985. She has served as Senior Vice President, Cashier, Assistant Secretary and
Compliance Officer for the Bank since 1993. She joined the bank in 1971, and
previous positions include Operations Officer, Assistant Vice President and Vice
President.
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table shows, for the fiscal years ended December 31, 2001,
2000, and 1999, the cash compensation paid by the Bank, as well as certain other
compensation paid or accrued for those years, to the Chief Executive Officer of
the Company in all capacities in which he served, and to other Executive
Officers whose total compensation exceeded $100,000 in any of the three years:
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SUMMARY COMPENSATION TABLE
--------------------Annual Compensation-----------------------
Other
Name and Incentive Annual All Other
Principal Position Year Salary Bonus Compensation Compensation
- --------------------- ---- -------- ------- ---------------- --------------
Ben L. Watson, III, 2001 $121,812 $22,022 * None
President and 2000 $116,004 $24,039 * None
Chief Executive 1999 $116,004 $21,442 * None
Officer
Michael O. Walker, 2001 $89,268 $15,835 * None
Senior Vice Presi- 2000 $85,008 $16,709 * None
dent 1999 $85,008 $15,167 * None
Janice W. Pernell , 2001 $89,268 $15,835 * None
Senior Vice Presi- 2000 $85,008 $16,709 * None
dent 1999 $85,008 $15,167 * None
* Did not exceed $50,000
Stock Options and Option Exercises and Holdings
No stock options were granted to the executive officers named in the
summary table during the fiscal year ended December 31, 2001. The following
table sets forth information with respect to the value of all stock options held
by such officers as of the end of the fiscal year:
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Exercises in Last Fiscal Year and Fiscal Year End Option Values
Shares Number of Securities Under- Value of Unexercised
Acquired lying Unexercised Options In-the-Money Options
on Value at Fiscal Year End (1) at Fiscal Year End (2)
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ----- -------- -------- ----------- ------------- ----------- -------------
Ben L. Watson, III, President 0 $0 6,000 0 $15,720 $0
and Chief Executive Officer
Michael O. Walker, Senior 0 $0 6,000 0 $15,720 $0
Vice President
Janice W. Pernell, Senior 0 $0 5,850 0 $15,327 $0
Vice President
(1) The options were granted on March 16, 1995. The options became vested and
exercisable on March 16, 1996.
(2) The value of the unexercised options at fiscal year end is calculated by
determining the difference between the fair market value of the Common
Stock on December 31, 2001 and the exercise price of such options. The
average of the high and low sales prices of the Common Stock of the
Company on December 31, 2001, as reported by the OTC Bulletin Board, was
$10.00.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Under rules established by the Commission, the Company is required to
provide certain information with respect to the compensation and benefits
provided to the Company's Chief Executive Officer, Ben L. Watson, III, and the
other Named Executive Officers. The following report of the Compensation
Committee of the Board addresses the Company's compensation policies in effect
during 2001.
Role of Compensation Committee
Decisions on compensation of certain executive officers of the Company are
made by the Compensation Committee of the Board of Directors. The Compensation
Committee is responsible for reviewing and making recommendations with respect
to the compensation of all employees of the Company and recommends to the Board
of Directors such other forms of remuneration as the Company deems appropriate.
All decisions by the Compensation Committee relating to the compensation of the
Company's executive officers are reported to the full Board of Directors.
The following is the text of the report adopted by the Compensation
Committee with respect to executive compensation for 2001.
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Executive Compensation Policies
The Compensation Committee's executive compensation policies are designed
to provide competitive levels of compensation that integrate pay with the
Company's annual and long-term performance goals, recognize individual
initiative and achievement and assist the Company in attracting and retaining
highly qualified executives. They provide for competitive base salaries which
reflect individual performance and level of responsibility, annual bonuses
payable in cash on the basis of Company financial success, individual merit and
achievement in obtaining annual performance goals and long-term stock-based
incentive opportunities which strengthen the mutuality of interests between
management and the Company's shareholders.
In furtherance of its responsibility to determine executive compensation,
the Compensation Committee annually, or more frequently, reviews the Company's
executive compensation program. The Compensation Committee evaluates the
salaries and compensation structures of executive officers of peer companies in
the industry in order to establish general parameters within which it may fix
competitive compensation for its executive officers. The Compensation Committee
then determines the appropriate salary and management incentive opportunity for
each executive officer using a number of factors, including the executive
officer's individual duties and responsibilities in the Company, tenure, his or
her relative importance to the overall success of the Company's short- and
long-term goals and attainment of individual performance goals, if appropriate.
2001 Base Salaries and Annual Incentives
In 2001, Ben L. Watson, III, Chief Executive Officer, received a base
salary of $121,812. This annual base salary was set based on Mr. Watson's
individual duties and responsibilities, his tenure, and salaries paid to the
chief executive officers of the Company's peer group companies. In addition, Mr.
Watson is to receive an annual incentive bonus as established and modified from
time to time by the Committee. In awarding the annual incentive bonus to Mr.
Watson for 2001 the Committee considered his individual merit and achievement in
attaining annual performance goals, the Company's financial success and Mr.
Watson's leadership in strategically focusing the Company. Mr. Watson is also
entitled to receive stock option awards as determined by the Company. Of the
incentive bonus awarded for the year of 2000, 75% was paid to Mr. Watson in
2000, and the final 25%, or $6,613, was paid in February, 2001 upon receipt of
audited financial statements for the year. On December 15, 2001, the
Compensation Committee awarded Mr. Watson an incentive bonus of $20,545, based
on profitability projections for the year of 2001, 75% of which, or $15,409, was
paid in December of 2001. Thus, total incentive bonus payments to Mr. Watson
during calendar year 2001 amounted to $22,022.
No stock options were granted to any of the executive officers during the
fiscal year ended December 31, 2001.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS:
J. Ryland Hamlett
Lewis W. Bridgforth
Earl C. Currin, Jr.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Ben L. Watson, III, Chief Executive Officer, serves as an ex-officio member
of the Board's committees, including the Compensation Committee.
SHAREHOLDER RETURN
The Company is subject to the rules of the Securities and Exchange
Commission that require certain public companies to present a graph of total
investment return in their annual proxy statements. The graph below compares the
yearly percentage change in the Company's cumulative total shareholder return
with the cumulative total return of the Nasdaq Stock Market Index which is a
broad equity market index, and the Nasdaq National Market ("Nasdaq/NM") Bank
Index, assuming that investments of $100 were made on December 31, 1996, and
that dividends were reinvested.
[PERFORMANCE GRAPH]
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
Benchmark Bankshares, Inc. Performance Index $100.00 $182.84 $162.90 $128.35 $111.19 $120.12
Nasdaq Stock Market Index $100.00 $121.64 $169.84 $315.20 $191.36 $151.07
Nasdaq/NM Bank Index $100.00 $163.59 $144.33 $132.81 $152.30 $167.64
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CERTAIN TRANSACTIONS
Some of the directors and officers of the Company and some of the
corporations and firms with which these individuals are associated are also
customers of the Company in the ordinary course of business, or are indebted to
the Company with respect to loans, and it is anticipated that some of the
persons, corporations and firms will continue to be customers of, and indebted
to, the Company on a similar basis in the future. All loans extended to such
persons, corporations and firms were made in the ordinary course of business,
did not involve more than normal collection risk or present other unfavorable
features, and were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the same time for comparable Bank
transactions with unaffiliated persons. No such loan as of December 31, 2001,
was non-accruing, past due or restructured. At December 31, 2001, the aggregate
amount of loans outstanding to all directors and executive officers of the
Company and members of their immediate families was approximately $5,540,819
representing 23.6% of the total equity of the Company. Also as of December 31,
2001, only one director, W. J. Callis, had aggregate outstanding loans in excess
of 5% of shareholders' equity, which total of loans amounted to $3,321,515 as of
that date.
Management is not aware of any arrangements which may at a subsequent date
result in a change in control of the Company.
Management of the Company is not aware of any material proceedings to which
any director, officer or affiliate of the Company, any owner of record or
beneficial owner of more than five percent of the Company's Common Stock, or any
associate of any such director, officer, affiliate of the Company, or
shareholder is a party adverse to the Company or the Bank or has a material
interest adverse to the Company.
AUDITORS
Creedle, Jones & Alga, P.C., of South Hill, Virginia ("Creedle, Jones"),
served as the Company's independent auditors for the year ended December 31,
2001. Representatives from Creedle, Jones will be present at the Annual Meeting
and will be given the opportunity to make a statement, if they so desire, and
will be available to respond to appropriate questions from stockholders.
Audit Fees
The aggregate fees billed for professional services rendered by Creedle,
Jones for the audit of the Company's annual financial statements for the fiscal
year ended December 31, 2001, and for the reviews of the financial statements in
the Company's Quarterly Reports on Form 10-Q for that fiscal year were
approximately $33,000.
Financial Information System Design and Implementation Fees
Creedle, Jones did not perform any financial information system design or
implementation work for the Company during the fiscal year ended December 31,
2001.
All Other Fees
The aggregate fees billed for all other professional services rendered by
Creedle, Jones for the fiscal year ended December 31, 2001, were approximately
$2,500. The Audit Committee considered whether, and has determined that, the
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provision of these services is compatible with maintaining the independent
auditor's independence.
Audit Committee Report
The Audit Committee is responsible for monitoring the integrity of the
Company's consolidated financial statements, its system of internal controls and
the independence and performance of its internal and independent auditors. The
Audit Committee also recommends to the Board the selection of the Company's
independent auditors. The Board has not adopted a written charter for the Audit
Committee. Each member of the Audit Committee is independent as defined by the
National Association of Securities Dealers listing standards.
Management is responsible for the Company's internal controls, financial
reporting process and compliance with laws and regulations and ethical business
standards. The independent auditor is responsible for performing an independent
audit of the Company's consolidated financial statements in accordance with
generally accepted auditing standards and issuing a report thereon. The Audit
Committee's responsibility is to monitor and review these processes on behalf of
the Board.
In this context, the Audit Committee held five meetings during the past
fiscal year and discussed with the Company's internal and independent auditors
the overall scope and plans for their respective audits. The Audit Committee
reviewed and discussed with management the audited consolidated financial
statements for the fiscal year ended December 31, 2001. The Audit Committee has
also discussed with the independent auditors the matters required to be
discussed under generally accepted auditing standards, including, among other
things, matters related to the conduct of the audit of the Company's
consolidated financial statements and the matters required to be discussed by
Statement on Auditing Standards No. 61, as amended (Communications with Audit
Committees).
The Audit Committee has received from the independent auditors the written
disclosures and the letter required by Independence Standards Board Standard No.
1 (Independence Discussions with Audit Committees) and discussed with Creedle,
Jones their independence from the Company and its management. When considering
Creedle, Jones' independence, the Audit Committee considered whether their
provision of services to the Company beyond those rendered in connection with
their audit and review of the Company's consolidated financial statements was
compatible with maintaining their independence. The Audit Committee also
reviewed, among other things, the amount of fees paid to Creedle, Jones for
audit and non-audit services.
Based on its review and these meetings, discussions and reports, the Audit
Committee recommended to the Board that the Company's audited consolidated
financial statements for the fiscal year ended December 31, 2001 be included in
the Company's Annual Report on Form 10-K for filing with the Commission. By
recommending to the Board that the audited financial statements be so included,
the Audit Committee is not opining on the accuracy, completeness or presentation
of the information contained in the audited financial statements.
Audit Committee
Wayne J. Parrish, Chair
Mark F. Bragg
Lewis W. Bridgforth
J. Ryland Hamlett
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SHAREHOLDER PROPOSALS
Under the regulations of the Securities and Exchange Commission, any
shareholder desiring to make a proposal to be acted upon at the 2003 Annual
Meeting of Shareholders must cause such proposal to be delivered, in proper
form, to the Secretary of the Company, whose address is P. O. Box 569, 100 South
Broad Street, Kenbridge, Virginia 23944, no later than November 20, 2002, in
order for the proposal to be considered for inclusion in the Company's Proxy
Statement. The Company anticipates holding the 2003 Annual Meeting on April 17,
2003. It is recommended that such proposals be sent by certified mail, return
receipt requested.
The Company's Bylaws also prescribe the procedure a shareholder must follow
to nominate directors or to bring other business before shareholders' meetings.
For a shareholder to nominate a candidate for director or to bring other
business before a meeting, written notice must be received by the Company not
less than 60 days and not more than 90 days prior to the date of the meeting.
Based on an anticipated meeting date of April 17, 2003, for the 2003 Annual
Meeting of Shareholders, the Company must receive such notice no later than
February 17, 2003 and no earlier than January 18, 2003. If shareholders receive
notice less than 70 days prior to the meeting or public disclosure of the
meeting date is made less than 70 days prior to the meeting, written notice must
be received by the Company not later than the close of business on the tenth day
on which such notice of the date of the annual meeting was made or such public
disclosure was made.
Notice of a nomination for director must describe various matters regarding
the nominee and the shareholder giving notice. Notice of other business to be
brought before the meeting must include a description of the proposed business,
the reasons therefor, and other specified matters. Any shareholder may obtain a
copy of the Company's Bylaws, without charge, upon written request to the
Secretary of the Company.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 2001, accompanies this Proxy Statement. Additional copies may be
obtained by written request to the Treasurer of the Company at the address
indicated below. Such Annual Report is not part of the proxy solicitation
materials.
UPON RECEIPT OF A WRITTEN REQUEST FROM ANY PERSON WHO, ON THE RECORD DATE,
WAS RECORD OWNER OF THE COMPANY'S COMMON STOCK OR WHO REPRESENTS IN GOOD FAITH
THAT HE OR SHE WAS ON SUCH DATE THE BENEFICIAL OWNER OF SUCH STOCK ENTITLED TO
VOTE AT THE ANNUAL MEETING OF SHAREHOLDERS, THE COMPANY WILL FURNISH TO SUCH
PERSON, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM 10K FOR THE FISCAL
YEAR ENDED DECEMBER 31, 2001, AND THE EXHIBITS THERETO REQUIRED TO BE FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION UNDER THE EXCHANGE ACT. ANY SUCH REQUEST
SHOULD BE MADE IN WRITING TO MRS. JANICE W. PERNELL, TREASURER, BENCHMARK
BANKSHARES, INC., P.O. BOX 569, KENBRIDGE, VIRGINIA 23944. THE FORM 10-K IS NOT
PART OF THE PROXY SOLICITATION MATERIALS.
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In accordance with a notice sent earlier to eligible shareholders who share
a single address, the Company is sending only one annual report and proxy
statement to that address unless the Company received instructions to the
contrary from any shareholder at that address. This practice, known as
"householding", is designed to reduce the Company's printing and postage costs.
However, if a shareholder of record residing at such an address wishes to
receive a separate annual report or proxy statement in the future, he or she may
contact the Company by calling (434) 676-9054 or by sending a written request to
(Mrs.) Janice W. Pernell, Treasurer, Benchmark Bankshares, Inc., P. O. Box 569,
Kenbridge, Virginia 23944. If an eligible shareholder of record is receiving
multiple copies of the Company's annual report and proxy statement, the
shareholder can request householding by contacting the Company in the same
manner. If a shareholder owns his or her shares through a bank, broker or other
holder of record, the shareholder can request householding by contacting the
holder of record.
OTHER MATTERS
The Board is not aware of any other matters that may come before the Annual
Meeting. However, the proxies may be voted with discretionary authority with
respect to any other matters that may properly come before the Annual Meeting.
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P R O X Y
---------
FOR ANNUAL MEETING OF SHAREHOLDERS
April 18, 2002
BENCHMARK BANKSHARES, INC.
100 South Broad Street
Kenbridge, Virginia 23944
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints William J. Callis and J. Ryland Hamlett,
jointly and severally, as proxies, with full power to act alone, and with full
power of substitution, to represent the undersigned and to vote, as designated
below, all shares of Common Stock which the undersigned would be entitled to
vote at the Annual Meeting of Shareholders of Benchmark Bankshares, Inc., (the
"Company"), to be held on Thursday, April 18, 2002, at 7:30 p.m., local time, or
any adjournments thereof, for the following purposes:
_ _
I. ELECTION OF DIRECTORS: |_| FOR all nominees listed below |_| WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees
NOMINEES: EARL C. CURRIN, JR. WAYNE J. PARRISH BEN L. WATSON, III
__________________________________________________
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
such nominee's name on the line above.)
II. In their discretion, the proxies are authorized to vote on such other
business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed herein
by the shareholder. If no direction is given, this proxy will be voted FOR all
nominees listed in Item I.
IMPORTANT NOTE: For this proxy to be valid,
ALL PARTIES, as shown on the pre-printed label to
the right, MUST SIGN. SIGNATURES MUST BE
PRECISELY as shown. In the case of Custodial ac-
counts, CUSTODIAN(S), not Beneficiaries, must sign.
_____________________________ _____________________________
_____________________________ _____________________________ _____________________________
(Signature, 1st Party) (Signature, 2nd Party, if one) (Signature, 3rd Party, if one)
DATE:_______________________ PLEASE MARK, SIGN, AND DATE THIS PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THANK YOU.