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 (S)240.14a-11(c) or (S)240.14a-12
CARDINAL BANKSHARES CORPORATION
----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N.A.
----
(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)(4) and 0-11.
Not Applicable.
[_] 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.
Not Applicable.
March 25, 2002
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
Cardinal Bankshares Corporation. The meeting will begin at 2:00 p.m. on
Wednesday, April 24, 2002, in the Bank of Floyd Conference Room located adjacent
to the Bank in Floyd, Virginia.
Please sign and date the enclosed proxy and mail it in the envelope provided at
your earliest convenience.
You are also invited to remain after the meeting for light refreshments and
visiting. If you plan to attend, please include the enclosed card with your
proxy.
Sincerely,
Leon Moore
Chairman of the Board
& President
CARDINAL BANKSHARES CORPORATION
101 Jacksonville Circle
P.O. Box 215
Floyd, Virginia 24091
NOTICE OF 2002 ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Cardinal Bankshares Corporation:
NOTICE is hereby given that the 2002 Annual Meeting of Stockholders of
Cardinal Bankshares Corporation will be held at the Bank of Floyd Conference
Room, Floyd, Virginia, on April 24, 2002, at 2:00 p.m. for the following
purposes:
(1) Electing Directors for the ensuing year.
(2) Approving appointment of the Corporation's independent auditor for the
year 2002.
(3) Transacting such other business as may properly come before the
meeting, or any adjournments thereof.
Only stockholders of record at the close of business on March 20, 2002, are
entitled to notice of and to vote at such meeting, or any adjournments thereof.
Your attention is directed to the Proxy Statement accompanying this notice
for a more complete statement regarding matters proposed to be acted upon at the
meeting.
To ensure that your shares are represented at the meeting, please fill in,
date, sign, and mail promptly the enclosed proxy, for which a return envelope is
provided. Your proxy is revocable at any time prior to its exercise.
By Order of the Board of Directors
March 25, 2002
CARDINAL BANKSHARES CORPORATION
101 Jacksonville Circle
P.O. Box 215
Floyd, Virginia 24091
PROXY STATEMENT
FOR 2002 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
APRIL 24, 2002
The Board of Directors of Cardinal Bankshares Corporation (the
Corporation") solicits the enclosed proxy to be used at the 2002 Annual Meeting
of Stockholders to be held at the Bank of Floyd Conference Room, 101
Jacksonville Circle, Floyd, Virginia, on Wednesday, April 24, 2002, at 2:00
p.m., and at any adjournment thereof.
The cost of solicitation of proxies will be borne by the Corporation.
Solicitations will be made only by mail, except that, if necessary, officers and
regular employees of the Corporation and Bank of Floyd may make solicitations of
proxies by telegram, telephone or personal calls. Brokerage houses and other
nominees may request that copies of the proxy soliciting material be furnished
to them for mailing to the beneficial owners of the stock held of record by such
brokerage houses and nominees. The Corporation may reimburse them for their
reasonable expenses in this connection.
All properly executed proxies delivered pursuant to this solicitation will
be voted at the meeting in accordance with the instructions therein contained,
if any. Any person signing and mailing the enclosed proxy may, nevertheless,
revoke the proxy at any time prior to the actual voting thereof. Directors are
elected by a plurality of votes properly cast, assuming a quorum is present. All
matters coming before the meeting will be approved if the votes favoring such
matter exceed those opposing it. Abstentions and broker non-votes will have no
direct effect on the election of directors or any other matter which may be
considered.
An Annual Report to Stockholders, including the Corporation's financial
statements for the year ended December 31, 2001, accompanies this proxy
statement. This proxy statement and the accompanying proxy are first being sent
or delivered to stockholders of the Corporation on or about March 25, 2002.
As of February 28, 2002, the Corporation had outstanding 1,535,733 shares
of its common stock, each of which is entitled to one vote at the Annual
Meeting. Only stockholders of record at the close of business on March 20, 2002,
will be entitled to vote at the meeting, or any adjournment thereof.
ITEM 1: ELECTION OF DIRECTORS
------ ---------------------
At the meeting, seven Directors will be elected, to serve until the 2003
Annual Meeting of Stockholders or if sooner, until their retirement dates under
the director retirement policy adopted by the Board of Directors.
In the event that any nominee becomes unavailable for election, any proxy
voted in his favor will be voted for a substitute nominee. However, the Board of
Directors does not anticipate that any nominee will be unavailable for election,
and all have consented to be named and to serve if elected. Each nominee
hereinafter named has been recommended for election by the Board of Directors.
INFORMATION CONCERNING NOMINEES
-------------------------------
Principal Occupation and
Name Age Director Since Principal Business Conducted Past Five Years
---- --- -------------- --------------------------------------------
K. Venson Bolt 76 3/12/96 Vice Chairman, Bank of Floyd; Farmer
Joseph Howard Conduff, Jr. 43 new Dentist in Private Practice
William R. Gardner, Jr. 59 3/12/96 Director of Pupil Personnel,
Floyd County Public Schools
C. W. Harman 78 3/12/96 Retired Farmer and Merchant
Kevin D. Mitchell 63 3/12/96 Dairy Farmer
Ronald Leon Moore 60 3/12/96 Chairman, President and Chief Executive Officer
of the Corporation and Bank of Floyd
Dorsey H. Thompson 72 3/12/96 Farmer
DIRECTORS MEETINGS, COMMITTEES AND FEES
---------------------------------------
Directors of the Corporation currently receive a fee of $275 for each board
meeting attended and $75 for each committee meeting attended. The Board of
Directors held 14 meetings during 2001. All incumbent directors attended at
least 75 percent of the aggregate number of meetings held by the Board and
meetings of committees on which they served.
The Board of Directors has appointed an Audit Committee consisting of the
following nonemployee directors: K. Venson Bolt, William R. Gardner, Jr., Kevin
D. Mitchell and Dorsey H. Thompson. The Audit Committee, which met two times
during 2001, reviews the financial records and reports of the Corporation and
each of its affiliates.
The Board of Directors has appointed a Nominating Committee, consisting of
Kevin D. Mitchell, C. W. Harman and William R. Gardner, Jr., to consider
nominees to stand for election to the Board of Directors. This committee met one
time during 2001. The Nominating Committee has no formal procedure for
considering nominees proposed by the shareholders. The Board of Directors acts
as the Compensation Committee for the Corporation.
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OWNERSHIP OF COMMON STOCK
-------------------------
The following stockholder beneficially owned in excess of five percent of
the outstanding common stock of the Corporation as of February 28, 2002.
Name and Address Amount and Nature
of Beneficial Owner of Beneficial Ownership Percent of Class
------------------- ----------------------- ----------------
Joseph H. Conduff 146,736 /(1)/ 9.55
P.O. Box 113
Floyd, VA 24091
/(1)/ Includes 17,175 shares owned by his wife.
The following table sets forth the beneficial ownership of the Common Stock of
the Corporation as of February 28, 2002, by each director currently serving
(including the Chief Executive Officer), each nominee, and all directors and
executive officers as a group.
Amount and Nature
Name of Beneficial Owner of Beneficial Ownership Percent of Class
- ------------------------ ----------------------- ----------------
K. Venson Bolt 8,868/(2)/ (1)
Joseph Howard Conduff, Jr. 30,873/(3)/ 2.0
William R. Gardner, Jr. 1,320 (1)
C. W. Harman 6,102/(4)/ (1)
Kevin D. Mitchell 20,910/(5)/ 1.4
Ronald Leon Moore 7,905/(6)/ (1)
Dorsey H. Thompson 8,727/(7)/ (1)
All directors and executive
officers as a group (7 persons) 53,832 3.5
/(1)/ Less than 1 percent.
/(2)/ Includes 528 shares owned with his wife.
/(3)/ Includes 10,074 shares owned with wife and children
/(4)/ Includes 4,758 shares owned with his wife.
/(5)/ Includes 4,620 shares owned by his wife, 1,638 shares owned jointly with
his wife, and 660 shares owned as custodian for his son.
___________________
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/(6)/ Includes 3,300 shares owned by his wife, and 1,519 shares owned jointly
with his wife.
/(7)/ Includes 2,838 shares owned jointly with his wife.
EXECUTIVE COMPENSATION
----------------------
The following table sets forth the compensation of the Corporation's Chief
Executive Officer for the fiscal year ended December 31, 2001, 2000, and 1999.
No other officer received in excess of $100,000 for the current year.
Summary Compensation Table
--------------------------
Name and Capacity in Which Served Year Salary All Other Compensation/(1)/
- --------------------------------- ---- ------ ----------------------
Ronald Leon Moore, 2001 $130,000.00 $3,500.00
President and Chief Executive Officer 2000 $125,000.00 $3,500.00
1999 $115,000.00 $3,500.00
/(1)/ Employer contribution to the Corporation's pension plan for the years
indicated.
AUDIT COMMITTEE REPORT
----------------------
The Audit Committee of the Board is responsible for providing independent,
objective oversight of the Corporation's accounting functions and internal
controls. The Audit Committee is composed of independent directors, and acts
under a written charter adopted and approved by the Board of Directors. Each of
the members of the Audit Committee is independent as defined by corporate policy
and by Rule 4200(a)(14) of the National Association of Securities Dealers
listing standards. A copy of the Audit Committee Charter is attached to this
proxy statement as Appendix A.
The responsibilities of the Audit Committee include recommending to the Board an
accounting firm to be engaged as the Corporation's independent accountants.
Additionally, and as appropriate, the Audit Committee reviews and evaluates, and
discusses and consults with the Corporation's management, the Corporation's
internal audit personnel and the independent accountants regarding the
following:
. the plan for, and independent accountants' report on, each audit of
the Corporation's financial statements
. the Corporation's financial disclosure documents, including all
financial statements and reports filed with the (Primary securities
regulator) or sent to shareholders
. changes in the Corporation's accounting practices, principles,
controls or methodologies, or in the Corporation's financial
statements
. significant developments in accounting rules
. the adequacy of the Corporation's internal accounting controls, and
accounting, financial and auditing personnel
. the establishment and maintenance of an environment at the Corporation
that promotes ethical behavior
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The Audit Committee is responsible for recommending to the Board that the
Corporation's financial statements be included in the Corporation's annual
report. The Committee took a number of steps in making this recommendation for
2001. First, the Audit Committee discussed with the Corporation's independent
accountants for 2001, those matters they communicated to and discussed with the
Audit Committee under applicable auditing standards, including information
regarding the scope and results of the audit. These communications and
discussions are intended to assist the Audit Committee in overseeing the
financial reporting and disclosure process. Second, the Audit Committee
discussed its independent accountants' independence with that firm and received
a letter from its independent accountants concerning independence as required
under applicable independence standards for auditors of public companies. This
discussion and disclosure informed the Audit Committee of its independent
accountants' independence, and assisted the Audit Committee in evaluating such
independence. Finally, the Audit Committee reviewed and discussed, with the
Corporation's management and (Accountant), the Corporation's audited
consolidated balance sheets at December 31, 2001 and 2000, and consolidated
statements of income, cash flows and stockholders' equity for the three years
ended December 31, 2001. Based on the discussions with its independent
accountants concerning the audit, the independence discussions, and the
financial statement review, and such other matters deemed relevant and
appropriate by the Audit Committee, the Audit Committee recommended to the Board
that these financial statements be included in the Corporation's 2001 Annual
Report on Form 10-KSB.
K. Venson Bolt,
---------------
William R. Gardner, Jr.,
------------------------
Kevin D. Mitchell
-----------------
Dorsey H. Thompson
------------------
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Based on a review of the forms submitted to the Corporation during or with
respect to its fiscal year ended December 31, 2001, no person required to file
reports pursuant to Section 16 of the Securities Exchange Act of 1934 failed to
file any such report on a timely basis during that year.
CERTAIN TRANSACTIONS
--------------------
Some of the directors and officers of the Corporation and their families
are at present, as in the past, customers of the Corporation, and have had and
expect to have transactions with the Corporation in the ordinary course of
business. In addition, some of the directors and officers of the Corporation are
at present, as in the past, also directors and officers of corporations which
are customers of the Corporation and which have had and expect to have
transactions with the Corporation in the ordinary course of business. Such
transactions were made in the ordinary course of business 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 normal risk of collectibility or present other unfavorable features.
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ITEM 2: APPOINTMENT OF INDEPENDENT AUDITOR
------ ----------------------------------
Larrowe & Company, PLC is being recommended to the stockholders of the
Corporation for appointment as independent auditor for the year ending December
31, 2002. Representatives of this firm are expected to attend the meeting and
have the opportunity to make a statement and respond to appropriate questions
from stockholders.
Services and Fees During 2001. As the Company's independent accountants for
-----------------------------
2001, Larrowe & Company, PLC provided various audit and non-audit services for
which the Company was billed for fees as further described below. None of the
hours expended on Larrowe & Company, PLC's audit of the Company's financial
statements were attributed to work performed by persons other than the principal
accountant's full-time, permanent employees. The Company's Audit Committee has
considered whether Larrowe & Company, PLC's provision of non-audit services is
compatible with maintaining its independence.
Audit Fees. Larrowe & Company, PLC audited the Company's annual financial
----------
statements included in its 2001 Annual Report on Form 10-KSB and, during 2001,
reviewed the financial statements included in the Company's Quarterly Reports on
Form 10-QSB. The aggregate amount of fees billed to the Company for those
services was $46,800.
Financial Information Systems Design and Implementation Fees. During 2001,
------------------------------------------------------------
Larrowe & Company, PLC provided no services related to financial information
systems design and implementation.
All Other Fees. In addition to the services listed above, during 2001,
--------------
Larrowe & Company, PLC, provided a number of other services to the Company for
which the aggregate amount of fees billed to the Company was $15,200.
STOCKHOLDER PROPOSALS FOR 2003
------------------------------
If any eligible stockholder intends to present a proposal at the 2003
Annual Meeting of Stockholders, such proposal must be received by the
Corporation at its principal executive office, 101 Jacksonville Circle, P.O. Box
215, Floyd, Virginia, on or before December 6, 2002. Otherwise, such proposal
will not be considered for inclusion in the Corporation's proxy statement for
such meeting.
MISCELLANEOUS
-------------
All properly executed proxies received by the Corporation will be voted at
the meeting in accordance with the instructions contained therein.
The Board of Directors knows of no matter not identified herein which may
properly come before the meeting for action. However, if any other matter does
properly come before the meeting, the person or persons named in the proxy form
enclosed will vote in accordance with their judgment upon such matter.
You are urged to execute and return promptly the enclosed form of proxy.
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CARDINAL BANKSHARES CORPORATION
101 Jacksonville Circle
P.O. Box 215
Floyd, Virginia 24091
PROXY SOLICITED BY BOARD OF DIRECTORS
The undersigned hereby appoints Eugene E. Derryberry, Dorsey H. Thompson,
Ronald Leon Moore and William R. Gardner, Jr. or any one or more of them, as
proxies, with full power of substitution, to vote all common stock of the
undersigned at the Annual Meeting of Stockholders of the Corporation, to be held
on April 24, 2002, at 2:00 p.m., and at any adjournment thereof, as follows:
(1) To vote FOR election to the Board of Directors of all nominees listed below
as a group, unless you insert the word "NO" in the blank at the end of this
paragraph. If you insert the word "NO", you will cause your shares not to
---
be voted in favor of anyone in the group. _________________.
YOU MAY INSTRUCT THE ABOVE PERSONS NOT TO VOTE FOR A PARTICULAR INDIVIDUAL
NOMINEE BY WRITING THE NAME OF THE NOMINEE OR NOMINEES IN THE FOLLOWING BLANK
_______________________. Your shares will then be voted for those nominees which
you have not so named.
Nominees for Directors to serve until the 2003 Annual Meeting of Stockholders
and until their successors are elected and have qualified, (or if sooner, until
their retirement dates under the director retirement policy adopted by the Board
of Directors) are:
K. Venson Bolt Kevin D. Mitchell
Joseph Howard Conduff, Jr. Ronald Leon Moore
William R. Gardner, Jr. Dorsey H. Thompson
C. W. Harman
(2) To vote for appointment of Larrowe & Company, PLC, as independent auditor
of the Corporation for the year 2002, unless one of the following two
alternatives is chosen: AGAINST ( ); ABSTAIN ( ).
(3) To vote upon such other business as may be properly brought before the
meeting.
THE STOCK REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED.
IF AUTHORITY TO VOTE IS NOT WITHHELD, OR IF NO CHOICE IS SPECIFIED, THE STOCK
REPRESENTED BY THIS PROXY WILL BE VOTED FOR ALL NOMINEES NAMED ABOVE TO BE
ELECTED TO THE BOARD OF DIRECTORS AND FOR APPOINTMENT OF LARROWE & COMPANY, PLC
AS INDEPENDENT AUDITOR FOR THE CORPORATION FOR 2001.
Please sign your name(s) exactly as shown imprinted hereon. If acting as
executor or trustee or otherwise in a fiduciary capacity, please sign as such
fiduciary.
Date: _________________ ___________________________________
Signature of Stockholder
___________________________________
Signature of Stockholder