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 Section 240.14a-11(c) or Section 240.14a-12
MAINSTREET BANKGROUP INCORPORATED
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) 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:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
Dear Shareholder:
The Directors of MainStreet BankGroup Incorporated invite you to attend
our Annual Meeting of Shareholders to be held at the Rives Cinema, at 215 Church
Street, Martinsville, Virginia on Tuesday, April 23, 1996 at 10:00 a.m.
In addition to the election of directors, my staff and I will report to
our shareholders our progress in moving closer to realizing the vision we set
for our corporation. Of course, we will be available for your questions and
comments.
Whether or not you plan to attend the meeting, after you have reviewed
the Proxy Statement please return the enclosed proxy card, properly completed,
as soon as possible. A postage-paid envelope is enclosed for your convenience.
Your Board of Directors and I look forward to seeing you at our Annual
Meeting.
Sincerely,
Michael R. Brenan
Chairman, President and
Chief Executive Officer
March 22, 1996
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 23, 1996
To the Holders of Common Stock Of
MainStreet BankGroup Incorporated:
The Annual Meeting of Shareholders of MainStreet BankGroup Incorporated will be
held on Tuesday, April 23, 1996, at 10:00 a.m., at the Rives Cinema, at 215
Church Street, Martinsville, Virginia. The items of business are:
1. To elect a Board of Directors consisting of 11 members for the ensuing
year; and
2. To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
These items are more fully described in the accompanying Proxy Statement. The
Board of Directors has determined that holders of Common Stock of record at the
close of business on March 4, 1996 will be entitled to notice of and to vote on
all questions at the Annual Meeting or any adjournment thereof.
By Order of the Board of Directors
Rebecca J. Jenkins
Secretary
March 22, 1996
YOUR VOTE IS IMPORTANT!
Please mark, sign, and date the enclosed proxy card and
mail it promptly in the enclosed pre-paid envelope.
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
April 23, 1996
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation
by and on behalf of the Board of Directors of the enclosed proxy to be used at
the 1996 Annual Meeting of Shareholders of MainStreet BankGroup Incorporated
("BankGroup") to be held at Rives Cinema, at 215 Church Street, Martinsville,
Virginia, on Tuesday, April 23, 1996, at 10:00 a.m., and at any adjournment
thereof. The shares represented by any proxy will be voted as instructed, and in
the absence of instructions will be voted FOR the election of Directors.
Any shareholder who has executed a proxy and attends the Annual Meeting
may elect to vote in person rather than by proxy. A shareholder may revoke their
proxy at any time before it is exercised by filing written notice thereof or by
filing a later valid proxy with the Secretary of BankGroup. However, any such
revocation will not affect any vote previously taken. Presence at the Annual
Meeting does not of itself revoke such proxy.
OUTSTANDING COMMON STOCK, RECORD DATE, AND SOLICITATION
The Directors of BankGroup have fixed March 4, 1996, as the record date
for shareholders entitled to notice of and to vote at the Annual Meeting and
only shareholders of record at the close of business on that date will be
entitled to vote. As of March 4, 1996, 8,573,444 shares of Common Stock were
outstanding. ALL SHARE INFORMATION IN THIS PROXY STATEMENT GIVES EFFECT TO THE
TWO FOR ONE STOCK SPLIT OF BANKGROUP COMMON STOCK EFFECTIVE MAY 15, 1996. Each
share of Common Stock is entitled to one vote on all matters presented at the
meeting. See "Security Ownership of Management and Principal Shareholders."
The cost of solicitation of proxies will be borne by BankGroup.
Solicitations will be made only by the use of the mail, except that Directors,
officers and regular employees of BankGroup, or its affiliates, may make
solicitations of proxies by telephone, telegraph, or by personal calls.
Brokerage houses and nominees will be requested to forward the proxy soliciting
material to the beneficial owners of the Common Stock held of record by such
persons, and BankGroup will reimburse them for their reasonable charges and
expenses in this connection.
1
<PAGE>
A majority of the votes entitled to be cast on matters to be considered
at the meeting constitutes a quorum. If a share is represented for any purpose
at the meeting, for quorum purposes it is present for all matters considered at
the meeting. Abstentions and shares held of record by a broker or its nominee
("Broker Shares") that are voted on any matter are included in determining the
number of votes present or represented at the meeting. Broker Shares that are
not voted on any matter at the meeting are not included in determining whether a
quorum is present. Votes that are withheld and Broker Shares that are not voted
(commonly referred to as "broker non-votes") are not included in determining the
number of votes cast in the election of directors or on other matters.
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<PAGE>
ITEM 1 - ELECTION OF DIRECTORS
At the Annual Meeting, 11 Directors are to be elected to hold office
until the next annual meeting of shareholders or until their respective
successors are duly elected and qualify.
It is the intention of the persons named in the enclosed proxy to vote
for the election of the 11 persons named herein, all of whom currently are
Directors. Proxies will be voted for the election as Directors of the nominees
listed below (or, if unexpectedly unavailable, for such substitutes as the Board
of Directors may designate) to serve until the next annual meeting of
shareholders and until their respective successors have been duly elected and
qualified. The Board of Directors does not anticipate any nominees will be
unavailable for election.
The election of each nominee for director requires the affirmative vote
of the holders of a plurality of the shares of Common Stock cast in the election
of directors. Unless otherwise specified in the accompanying form of proxy, it
is intended that votes will be cast for the election of all of the nominees as
directors.
<TABLE>
<CAPTION>
Position with BankGroup or Other Director
Nominees (Age) Principal Occupation and Directorships Since
<S> <C> <C>
W. Christopher Beeler, Jr. President and Chief Operating Officer, Virginia Mirror Company, 2/92
(44) Inc. and Virginia Glass Products Corporation (mirror manufacturer),
Martinsville, Virginia. Mr. Beeler is a Director of Hooker Furniture
Corporation (furniture manufacturer), Martinsville, Virginia.
Michael R. Brenan Chairman of the Board, President, and Chief Executive Officer of 6/94
(43) MainStreet BankGroup Incorporated. Mr. Brenan was President and
Chief Operating Officer of Bank One, Youngstown, N.A., Youngstown,
Ohio from January 1992 to June 1994. Prior to January 1992 Mr.
Brenan was President and Chief Executive Officer of Bank One,
Portsmouth, N.A., Portsmouth, Ohio.
Thomas B. Bishop Owner & Manager, Berry Enterprise (lumber retailer, building 4/93
(42) contractor), Chilhowie, Virginia.
William L. Cooper, III President, Cooper Wood Products (furniture component manufacturer), 4/92
(41) Rocky Mount, Virginia.
Billy P. Craft President, Village Motors, Inc. (franchised automobile dealer), 4/94
(66) Lynchburg, Virginia.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
I. Patricia Henry Plant Manager, Eden - Plant, Miller Brewing Company 2/96
(48) (beverage manufacturer), Eden, North Carolina
Larry E. Hutchens Chairman, Hutchens Petroleum (petroleum marketer), 8/86
(50) Stuart, Virginia.
William O. McCabe, Jr., Physician and retired President, Forest Family 8/85
M.D. (64) Physicians, Inc., Forest, Virginia.
Albert L. Prillaman Chairman, Chief Executive Officer and President, 4/94
(50) Stanley Furniture Company, Inc. (furniture
manufacturer), Stanleytown, Virginia.
Richard M. Simmons, Jr. Retired Corporate Executive. Mr. Simmons is a 3/88
(69) Director of Tultex Corporation (fleecewear
manufacturer), Martinsville, Virginia.
Thomas B. Stanley, Jr. Private Investor. Mr. Stanley is a Director of 10/77
(69) Mead Corporation (diversified paper products and
related services), Dayton, Ohio.
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth information as of January 31, 1996,
concerning the beneficial ownership, direct or indirect, of Common Stock by
Directors, nominees for Director, the Chief Executive Officer, the four other
most highly compensated Executive Officers, all Executive Directors and Officers
as a group, and persons beneficially owning more than 5% of Common Stock.
<TABLE>
<CAPTION>
Sole Voting & Aggregate
Investment Aggregate Percentage
Name Power (1) Other (2) Total Owned
---- --------- --------- ----- -----
<S> <C> <C> <C> <C>
James E. Adams 3,980(3) -- 3,980 *
S. Richard Bagby 3,788(4) -- 3,788 *
W. Christopher Beeler, Jr. 4,284 918 5,202 .1
Thomas B. Bishop 900 -- 900 *
Michael R. Brenan 23,788(5) -- 23,788 .2
William L. Cooper, III 4,512 568 5,080 .1
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Billy P. Craft 97,026 -- 97,026 1.1
Larry E. Hutchens 7,886 6,140 14,026 .2
Rebecca J. Jenkins 3,726(6) 3,020(7) 6,746 .1
William O. McCabe, Jr., MD 11,168 -- 11,168 .1
Albert L. Prillaman 5,250 -- 5,250 .1
R. M. Simmons, Jr. 27,200 25,800 53,000 .6
Thomas B. Stanley, Jr. 624 36,060 36,684 .4
R. Bruce Valley 6,594(8) -- 6,594 .1
Directors and Executive Officers 195,796 -- 268,302 3.1
as a Group (16 persons)
Piedmont Trust Bank (9) 413,422 542,574 1,063,996 12.4
Dr. John R. Clark (10) 438,400 -- 438,200 5.1
</TABLE>
- -----------------------
* Denotes less than .1% of outstanding shares.
(1) Includes 14,250 shares that may be acquired by certain officers pursuant
to options granted under BankGroup's stock option plans.
(2) Includes shares owned by relatives and in certain trust relationships,
which shares may be deemed to be beneficially owned under rules and
regulations of the Securities and Exchange Commission. The inclusion of
these shares does not constitute an admission of beneficial ownership.
(3) Includes 3,580 shares of a restricted stock award as to which Mr. Adams
has current voting rights.
(4) Includes 2,996 shares of a restricted stock award as to which Mr. Bagby
has current voting rights.
(5) Includes 5,900 shares of restricted stock awards as to which Mr. Brenan
has current voting rights.
(6) Includes 2,770 shares of a restricted stock award as to which Ms.
Jenkins has current voting rights.
(7) Includes 2,094 shares of a restricted stock award as to which Ms.
Jenkins' spouse has current voting rights.
(8) Includes 3,574 shares of a restricted stock award as to which Mr. Valley
has current voting rights.
(9) BankGroup's affiliate, Piedmont Trust Bank, 200 East Church Street,
Martinsville, Virginia, held in its Trust Department, through the normal
conduct of its trust business, 1,063,996 shares of Common Stock as of
January 31, 1996. Of these shares, Piedmont Trust Bank has sole voting
and investment power as to 521,422
5
<PAGE>
shares, shared voting and investment power as to 215,900 shares, and
sole investment power as to 203,468 shares. Virginia law prohibits
Piedmont Trust Bank from voting shares as to which it has sole voting
power, but shares as to which it has shared voting power can be voted
by the person with whom it shares such power. Pursuant to Virginia law,
a co-fiduciary may be appointed for all of the shares held by Piedmont
Trust Bank with sole power to vote, in order that such shares may be
voted at the Annual Meeting.
(10) Information as to Dr. Clark's ownership of shares is based solely upon
representations made to BankGroup by Dr. Clark.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires that
BankGroup's directors and executive officers, and person who own more than 10%
of a registered class of BankGroup's equity securities, file with the Securities
and Exchange Commission initial reports of ownership and reports of change in
ownership of Common Stock and other equity securities of BankGroup. The same
persons are also required by Securities and Exchange Commission regulation to
furnish BankGroup with copies of all Section 16(a) forms that they file.
Based solely on its review of the forms required by Section 16(a) of
the Securities Exchange Act of 1934 that have been received by BankGroup or
written representations from certain reporting persons that no annual statements
on Form 5 were required, BankGroup believes that its officers and Directors and
beneficial owners of greater than 10% of its Common Stock complied with all
applicable filing requirements, except that a Form 4 was filed late by Director
William O. McCabe, Jr., M.D. concerning a purchase of shares by the Trustee of
his Profit Sharing Plan.
COMMITTEES OF THE BOARD
The Board of Directors has established an Audit Committee, a
Compensation Committee, a Corporate Governance and Nominating Committee, a
Corporate Responsibility and Compliance Committee, an Executive Committee and a
Corporate Objectives and Finance Committee and has assigned certain
responsibilities to each of those Committees. The Audit Committee recommends to
the Board of Directors, the firm to be employed as its independent accountants
to audit BankGroup's consolidated financial statements; reviews and approves the
scope, purpose and type of audit services to be performed by the internal and
external auditors; reviews the activities and findings of the internal and
external auditors to determine the effectiveness of the audit function; reviews
procedures for ensuring compliance with BankGroup's policies on conflict of
interest; and renders regular reports to the Board of Directors on its
activities and findings. The Compensation Committee recommends, to the
6
<PAGE>
Board of Directors, the compensation to be paid to the executive officers of
BankGroup and its subsidiaries, approves the general salary administration
policies for BankGroup's other officers and employees, and approves the overall
structure of the benefits program. The COMPENSATION COMMITTEE also administers
BankGroup's stock option plans. The AUDIT COMMITTEE and the COMPENSATION
COMMITTEE each consist of non-employee Directors. The CORPORATE GOVERNANCE and
NOMINATING COMMITTEE reviews the qualifications of possible candidates for the
Board of Directors including candidates recommended by shareholders and
recommends these candidates to the Board of Directors, evaluates the performance
of the Board of Directors and evaluates the performance of the Chief Executive
Officer at least annually. Shareholder recommendation of possible candidates
must be submitted in writing to the Secretary of the Company, must be
accompanied by a statement signed by the recommended candidates of their
willingness to serve, if elected, and must be received at least 90 days before
the date proxy material is mailed to stockholders for the annual meeting at
which the recommended candidates, if approved by the nominating committee and
the board of directors, would be nominated for election by shareholders. The
CORPORATE OBJECTIVES and FINANCE COMMITTEE is responsible for overseeing the
strategic planning process, assisting Management with setting a strategic
direction for the corporation, focusing the attention of the Board of Directors
on long-range objectives, monitoring the operational and financial results of
the corporation and assessing management's achievement of the company's
long-range objectives. The EXECUTIVE COMMITTEE has all powers of the full Board
not prohibited to it under the Virginia Stock Corporation Act and will be called
to meet in the event of emergencies or when action of the Board of Directors is
necessary between meetings and it is not possible or practicable to call a
special meeting. The CORPORATE RESPONSIBILITY and COMPLIANCE COMMITTEE is
responsible for ensuing that standards of ethical behavior and proper compliance
programs are established and maintained throughout the corporation.
EXECUTIVE COMMITTEE -- W. Christopher Beeler, Jr., Michael R. Brenan (Chairman),
William L. Cooper, III, Larry E. Hutchens, Albert L. Prillaman, and Thomas B.
Stanley, Jr.
AUDIT COMMITTEE -- W. Christopher Beeler, Jr. (Chairman), William L. Cooper,
III, Billy P. Craft, and Richard M. Simmons, Jr.
COMPENSATION COMMITTEE -- William L. Cooper, III (Chairman), Larry E. Hutchens,
William O. McCabe, Jr., M.D., and Albert L. Prillaman.
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE -- Thomas B. Bishop, Michael R.
Brenan, William L. Cooper, III, Billy P. Craft, Albert L. Prillaman, Richard M.
Simmons, Jr., and Thomas B. Stanley, Jr. (Chairman).
CORPORATE OBJECTIVES AND FINANCE COMMITTEE -- W. Christopher Beeler, Jr.,
William L. Cooper, III, Billy P. Craft, Larry E. Hutchens, Albert L. Prillaman
(Chairman), Richard M. Simmons, Jr., and Thomas B. Stanley, Jr.
CORPORATE RESPONSIBILITY AND COMPLIANCE COMMITTEE -- Thomas B. Bishop, Larry E.
Hutchens (Chairman), and William O. McCabe, Jr., M.D.
7
<PAGE>
ATTENDANCE
The Board of Directors held six meetings during 1995. In 1995, the
Audit Committee of the Board met four times, the Compensation Committee met
three times, the Nominating Committee met twice, the Corporate Objectives and
Finance Committee met twice and the Corporate Responsibility and Compliance
Committee met three times. During 1995, each director attended more than 75% of
the meetings of the Board and of any committee on which he served with the
exception of Thomas B. Bishop.
COMPENSATION OF DIRECTORS
In 1995, Directors of BankGroup who were not officers of BankGroup
received an annual retainer of $1,000, a fee of $250 for each meeting attended
and their expenses for attending the meetings.
REPORT OF COMPENSATION COMMITTEE
This report by the Compensation Committee is required by rules of the
Securities and Exchange Commission. It is not to be deemed incorporated by
reference by any general statement which incorporates by reference this Proxy
Statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, and it is not to be otherwise deemed filed under either
such Act.
In 1995, the Compensation Committee consisted of four members of the
BankGroup Board of Directors who were not officers of BankGroup or a subsidiary
bank. This committee considered the recommendations of the subsidiary bank
boards of directors and made final compensation decisions on the Chief Executive
Officers of the subsidiary Banks and BankGroup Executive Officers.
Compensation Policies and Overall
Objectives of Executive Compensation Programs
The 1995 executive compensation program of BankGroup and of each
subsidiary Bank was designed to provide each executive the opportunity to earn a
competitive level of compensation relative to the officer's individual
performance, experience and responsibility and the financial success of the
bank. The following objectives express the fundamental philosophy of the
BankGroup, subsidiary Bank Boards and the Compensation Committee:
(bullet) Provide a competitive compensation package that would enable
BankGroup to attract and retain key executives by evaluating
comparable historical and industry information.
8
<PAGE>
(bullet) Evaluate bonus programs that would be based upon the annual and
long-term performance of BankGroup and the Banks and individual
performance.
(bullet) Provide variable stock compensation opportunities that would be
directly linked with the performance of BankGroup and the Banks,
aligning executive remuneration with the interests of
shareholders.
Compensation Program Components
BankGroups' overall compensation programs have been established with
the objectives of having pay levels and incentive opportunities be competitive
and reflect the performance of the holding company and the banks. The programs
consisted of three main components: base salary, the potential for an executive
officer to receive an annual bonus based on overall performance and stock based
incentives. The particular elements of the compensation program for executive
officers are further explained below.
SALARY - The BankGroup Compensation Committee and the Subsidiary Bank
Boards determined salary parameters through comparisons with companies of
similar size and complexity of BankGroup. The subsidiary Bank Boards and the
BankGroup Compensation Committee relied on the Watson Wyatt salary information
service and survey data from the Virginia Bankers Association for comparative
historical compensation information and comparative industry information. The
objective was to have base salaries when considered as part of total
compensation to be adequate and competitive with the Subsidiary Bank's peer
group, based on asset size. BankGroup's salary administration policy and
procedures for executive compensation which were approved by the Compensation
Committee permit the Boards of Directors of the subsidiary banks to set the base
salaries of their executive officers in accordance with the salary
administration guidelines prepared from peer group data. The salaries of the
Chief Executive Officers of the subsidiary Banks are approved by the
Compensation Committee in consultation with the subsidiary Bank Boards of
Directors.
ANNUAL BONUS - In 1995, the Compensation Committee established a Key
Management Incentive Plan (the "Plan") for the subsidiary Bank Chief Executive
Officers and the principal officers of BankGroup. The Plan is designed to offer
incentives to those employees whose performance directly affects BankGroup's
profitability as determined by the Compensation Committee. Each individual
selected as a Plan participant is assigned a target potential bonus award
computed as a predetermined percentage ranging from 20% to 30% of the
participant's annual base salary based upon achievement of performance goals set
by the Compensation Committee on an annual basis relating to Return On Assets,
Return on Equity, Net Income and Efficiency Ratios. Under the Plan a participant
could receive from a minimum of 50% of the target salary percentage award to a
maximum of 200% of the target salary percentage depending upon the performance
of BankGroup as a whole and that of each individual subsidiary bank. The formula
for the subsidiary Bank Chief Executive Officers was weighted more heavily to
the performance of the individual Bank while the Plan
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<PAGE>
as applied to BankGroup principal Officers was based entirely upon the
consolidated performance of the BankGroup. The 1995 performance of BankGroup
resulted in the principal Officers of BankGroup receiving cash bonus awards
equal to 100.67% of their target salary percentages and the subsidiary Bank
Chief Executive Officers receiving bonus awards ranging from 89.69% to 118.55%
of their target salary percentages.
STOCK AWARD PROGRAM - As part of the Plan which included the potential
for awarding stock-based incentives to principal officers of BankGroup and its
subsidiary Banks in an amount equal to 37.5% of each participant's base salary
as of the date of the award if BankGroup's performance goals were achieved, the
Compensation Committee determined the award of stock incentives to the principal
officers of BankGroup and the subsidiary Banks. The philosophy of the committee
is to award the principal officers of BankGroup and its subsidiaries for
outstanding performance of BankGroup on a consolidated basis. In 1995, 12,920
shares of restricted stock were awarded to the Named Executive Officers of
BankGroup and its subsidiary Banks as set forth in the Summary Compensation
Table.
COMPENSATION OF CHIEF EXECUTIVE OFFICER - In establishing the salary of
the Chief Executive Officer of BankGroup, the Compensation Committee retained an
independent consulting firm which designed a customized peer group for BankGroup
consisting of banks and bank holding companies determined to be similar in size
and complexity to BankGroup. The Compensation Committee also reviewed data from
Watson Wyatt Data Services, Financial Institutions Benchmark Compensation
Report; BAI Foundation, The Bank Key Executive Compensation Survey; and the
Virginia Bankers Association current salary survey data. The Compensation
Committee established a salary range designed with a midpoint reflecting the
median compensation for Chief Executive Officers in the established peer group
and the minimum set at 80% of the midpoint. Mr. Brenan's annual base salary was
increased from $157,500 to $180,000 in June of 1995 to bring his salary in line
with the minimum of the newly established salary guidelines for his position. In
July of 1995, Mr. Brenan was awarded a merit increase of an additional 2.78%
bringing his annual salary to $185,000.
Mr. Brenan participates in the Plan both with regard to cash bonus and
stock incentives. Mr. Brenan's target salary percentage for cash bonus purposes
is set at 35% of his annual base salary and the stock incentive target
percentage is 52.5%. The performance benchmarks for Mr. Brenan under the Plan
with regard to ROA, ROE, net income and efficiency ratios were identical with
those set for the other principal officers of BankGroup and his awards were
determined by the consolidated performance of the Company. In 1995, BankGroup's
performance exceeded all historical benchmarks with regard to earnings and
return on assets. Based on this performance the application of the Plan formula
resulted in Mr. Brenan being awarded a cash bonus equal to 100.67% of his target
salary percentage and an award of restricted stock equal to $97,125 as of the
award date and more fully described in Footnote (2) of the Summary Compensation
Table.
10
<PAGE>
Compensation Committee
William L. Cooper, III (Chairman)
Larry E. Hutchens
William O. McCabe, Jr. M.D.
Albert L. Prillaman
SUMMARY COMPENSATION TABLE
The following table presents information relating to total compensation
of the Chief Executive Officer and the four other most highly compensated
executive officers of BankGroup and its subsidiaries for the fiscal year ended
December 31, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
- --------------------------------------------------------------------------------------------------------------------
Other Restricted Securities All Other
Annual Stock Underlying Compen-
Name and Compensation(1) Award(s)(2) Option/ sation(2)(3)
Principal Position Year Salary($) Bonus($) $ $ SARS(#) ($)
- ------------------ ---- --------- -------- - - ------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Michael R. Brenan 1995 $171,309 $65,182 $42,849(4) $97,125 --- $15,179
Chairman of the 1994 85,312 75,000 50,014 64,000 20,000(5) ---
Board, President 1993 --- --- --- --- --- ---
and Chief Executive
Executive Officer,
MainStreet BankGroup
Incorporated (hired 6/94)
R. Bruce Valley 1995 $131,078 $47,123 --- $49,613 --- $ 9,019
President and CEO 1994 114,580 18,207 --- --- 3,400 6,351
Piedmont Trust Bank 1993 108,446 10,177 --- --- --- 7,143
James E. Adams 1995 $128,249 $40,015 --- $49,688 --- $ 7,561
Group Executive 1994 20,592 25,000 $13,200(6) --- --- ---
Chief Financial 1993 --- --- --- --- --- ---
Officer & Treasurer
(hired 11/94)
S. Richard Bagby 1995 $107,350 $27,960 --- $41,588 --- $ 6,332
Senior Vice President 1994 101,156 --- --- --- 1,000 5,334
Chief Credit Officer 1993 93,199 --- --- --- --- 6,668
Rebecca Jenkins 1995 $97,871 $30,955 --- $38,438 --- $ 5,783
Group Executive 1994 29,124 11,500 --- --- --- ---
General Counsel 1993 --- --- --- --- --- ---
and Secretary
(hired 9/94)
</TABLE>
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<PAGE>
- --------------------------------------
(1) Amounts of Other Annual Compensation earned by the named executive
officers other than Mr. Brenan for 1995, 1994 and 1993 and Mr. Adams for
1994 did not meet the threshold reporting requirements.
(2) As part of the 1995 Key Management Incentive Plan in January 1996,
Messrs. Brenan, Valley, Adams, and Bagby and Ms. Jenkins each received a
restricted grant of BankGroup Common Stock scheduled to vest ratably
over a three year period beginning in January of 1997. Mr. Brenan
received 7,000 shares, Mr. Valley 3,574 shares, Mr. Adams 3,580 shares,
Mr. Bagby 2,996 shares and Ms. Jenkins 2,770 shares. All of the
recipients are entitled to current receipt of dividends on the unvested
shares.
(3) Consists of contributions made by Piedmont Trust Bank and BankGroup
pursuant to BankGroup's pension and profit-sharing plan and a 401(K)
"match" which BankGroup's Plan provides for all Plan participants. The
profit-sharing contribution amounts for the named executive officers
reflect a pro forma distribution made to Plan Participants as of
9/30/95. With the addition of the Defined Benefit Retirement Plan in
1995, BankGroup discontinued pension and profit-sharing contributions
under its existing Plan and instituted a 401(k) matching program in the
fourth quarter of 1995. The 401(k) "match" for named executive officers
reflects only the fourth quarter of 1995. Amounts for each named
executive are as follows: Mr. Brenan, $13,791 profit-sharing and $1,388
401(k) match; Mr. Adams, $6,557 profit-sharing and $994 401(k) match;
Mr. Valley, $10,426 profit-sharing and $992 401(k) match; and Ms.
Jenkins, $5,014 profit-sharing and $769 401(k) match.
(4) The Other Annual Compensation paid to Mr. Brenan in 1995 included the
vesting of 1,600 shares of restricted BankGroup Common Stock valued at
$20,500.00 and $15,532 for "gross-up" of taxes regarding the value of
the stock award.
(5) Mr. Brenan's initial compensation package in June 1994 included a
restricted award of 8,000 shares of BankGroup Common Stock which shares
are scheduled to vest ratably on his anniversary date over a period of
five years. Mr. Brenan receives dividends on the total number of awarded
shares vested and unvested. The 1,600 shares which vested in June 1994
and June 1995 are reflected as Other Annual Compensation. The value of
the remaining 4,800 shares of restricted stock held by Mr. Brenan as of
December 31, 1995 was $62,400.
(6) The other annual compensation paid to Mr. Adams in 1994 his year of hire
was comprised of gross-up for taxes regarding relocation payments and
expenses.
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<PAGE>
STOCK OPTION PLANS
The following table presents information concerning stock options and
stock appreciation rights ("SARs") for the individuals named in the Summary
Compensation Table(1).
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Number of Shares Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired Value Options/SARs at FY-End Options/SARs at FY-End(2)
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael R. Brenan 0 0 8,000 12,000 22,000.00(2) 3,000.00
R. Bruce Valley 0 0 4,650 0 18,187.50 0
S. Richard Bagby 0 0 1,000 0 2,500.00 0
</TABLE>
- -------------------
(1) Mr. Adams and Ms. Jenkins have not been awarded any Options or SARs.
(2) Computed based upon the difference between aggregate market value at
the exercise date or December 31, 1995, as the case may be, and
aggregate exercise price.
PENSION PLAN
BankGroup and its subsidiaries have a non-contributory retirement plan
established in 1995 covering substantially all employees who meet certain age,
tenure, and hours worked criteria, and a supplemental executive retirement plan
covering certain key executives, including those in the Summary Compensation
Table. The Summary Compensation Table does not include the amount of the
contribution payment or accrual for any executive officer in these plans, as
these amounts cannot be readily separated or individually calculated and are
based upon actuarial assumptions for the population as a whole.
The retirement plan formula provides 1.5% for each year of service up
to the Social Security covered compensation level, and an additional .65% for
each year of service for compensation above the Social Security covered
compensation level not to exceed 35 years, times the average of the highest five
years compensation. Early retirement date is age 60, with five years of services
subsequent to May 1, 1995.
The supplemental retirement plan provides for 65% of highest
compensation in the last five years, provided the executive has completed five
years of total service, subsequent to November 1, 1995 and attained age 65,
offset by any payments received from primary Social Security, the participants'
accrued benefit under the retirement plan, and the
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<PAGE>
participants' defined contribution offset amount from a prior plan. Normal
retirement is age 65. Benefits are reduced by .42% for each month of early
retirement, which may be elected at age 55 or later, provided the participant
has completed at least five years of service subsequent to November 1, 1995. The
company has purchased life insurance contracts on the participants in the plan,
payable to the company.
The maximum annual benefits payable at normal retirement age to
eligible participants in the retirement plan and the supplemental retirement
plan combined, including the executives named in the Summary Compensation Table,
are illustrated in the following table:
Highest Base
Salary in Years of Service
Previous 5
Years 10 15 20 25 30 35
- ----- -- -- -- -- -- --
$100,000 $ 65,000 $ 65,000 $ 65,000 $ 65,000 $ 65,000 $ 69,381
125,000 81,250 81,250 81,250 81,250 81,250 88,193
150,000 97,500 97,500 97,500 97,500 97,500 107,006
175,000 113,750 113,750 113,750 113,750 113,750 113,750
200,000 130,000 130,000 130,000 130,000 130,000 130,000
250,000 162,500 162,500 162,500 162,500 162,500 162,500
(1) Benefit amounts include benefits from the retirement plan and the
supplemental plan, if participant is eligible for both.
(2) Supplemental retirement benefits amounts listed are offset by payments
received under primary Social Security, the participants' accrued
benefit, and the participants' defined contribution offset amount from a
prior plan.
(3) Retirement plan calculations are based on straight life annuity assuming
full benefit at age 65, and covered compensation of $25,800 for a person
age 65 in 1995. Benefit amounts are not subject to any deduction for
Social Security or other offsets. Compensation is currently limited to
$150,000 by federal tax law.
The compensation covered by the retirement plan is base salary and
wages, paid or accrued to the employee (plus any contribution by the employee to
any tax qualified 401-k plans, excluding overtime pay, bonus, fringe benefits
and any other form of additional compensation).
Ages and credited years of service under the retirement plan for such
persons are as follows: Mr. Brenan (43) -- 2; Mr. Valley (55) -- 18; Mr. Adams
(51) -- 1; Mr. Bagby (56) -- 15; Ms. Jenkins (46) -- 1.
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
BankGroup's officers and Directors, and other corporations, business
organizations, and persons with which some of BankGroup's officers and Directors
are associated, customarily have banking transactions with subsidiary banks of
BankGroup. All such transactions were made in the ordinary course of business on
substantially the same terms, including interest rates and security for loans,
as those prevailing at the time in comparable
14
<PAGE>
transactions with others and did not involve more than the normal risk of
collectibility or present other unfavorable features.
TERMINATION OF EMPLOYMENT AND CHANGE
OF CONTROL ARRANGEMENTS
BankGroup has a severance agreement arrangement with Messrs. Brenan,
Valley, Adams, and Bagby, Ms. Jenkins and 14 other officers of BankGroup and its
affiliates. The agreements for all the officers, except Mr. Brenan, are
identical except for the period for which benefits will be paid and are designed
to solidify employment arrangements.
The agreements provide for certain benefits in the event of a "change
in control" of BankGroup, which is not approved by the Board of Directors,
followed by termination of employment without cause, demotion, or
disproportionate reduction of compensation within 12 months of the change in
control. If a change in control occurs, which is not approved by the Board of
Directors, the principal benefits an employee receives under the agreements are:
(i) Salary payments continue for 12 months with an officer being paid the
average monthly salary as in effect for the 12-month period preceding his
termination date, or the monthly salary as in effect for the full month prior to
such date; (ii) Insurance benefits continue for one year; (iii) In addition to
benefits entitled to be received under the Profit Sharing Plan and Pension Plan
(or any successor plan or program in effect on the date of termination) there
shall be full vesting in the Profit Sharing and Pension Plan (or successor plan
or program) as of the date of termination; and (iv) If during the one-year
period the officer obtains employment which requires relocation extending beyond
100 miles of the city where the officer was principally employed, BankGroup will
purchase the employee's principal residence at its appraised value or pay the
employee a sum in cash equal to the difference between the sales price and
appraised value, if the employee fails to sell the principal residence or fails
to receive upon any sale at least the appraised value of the principal
residence.
No benefits are payable under the agreement if the change in control is
approved by BankGroup's Board of Directors.
All agreements provide for initial terms of three years, with reviews
by the Board of Directors to consider extending the term for an additional year.
During 1995, the Board of Directors extended the term of each of the severance
agreements for one additional year.
Mr. Brenan's agreement is identical with the previously described
agreements, except for the addition of a clause entitling Mr. Brenan to receive
a payment equal to three times his total compensation in the event that a change
in control occurs within three years of his employment date followed by
termination of employment without cause, demotion or disproportionate reduction
of compensation within 12 months of the change of control. If a
15
<PAGE>
change of control occurs after June 15, 1997, Mr. Brenan's benefits under the
change of control agreement would be identical to those of the other officers
set forth above.
PERFORMANCE OF BANKGROUP COMMON STOCK
Set forth below is a graph comparing the total returns (assuming
reinvestment of dividends) of BankGroup Common Stock, the Nasdaq US Stocks
Index, the SNL Securities Southeast Bank Index and the SNL Securities Bank ($500
million - $1 billion assets) Index. The graph assumes $100 invested on December
31, 1990 in BankGroup Common Stock and each of the indices. The shareholder
return graph is not necessarily indicative of future performance.
[GRAPHIC]
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
--------------------------------------------------------
MainStreet BkGrp 100.00 114.98 200.84 222.68 204.06 291.73
Nasdaq Total 100.00 160.56 186.86 214.51 209.68 296.30
SNL Southeast 100.00 178.09 247.46 263.11 264.94 397.64
Banks $500M - $1B 100.00 117.20 171.84 220.53 233.72 314.38
16
<PAGE>
SUBMISSION OF SHAREHOLDER PROPOSALS
Under Securities and Exchange Commission rules, proposals of
shareholders intended to be presented at the 1997 annual meeting of shareholders
of BankGroup must be received by BankGroup not later than November 22, 1996 in
order to be included in the proxy statement and form of Proxy relating to such
Annual Meeting. Such proposals should be sent to the Secretary at BankGroup's
principal office in Martinsville, Virginia by certified mail, return receipt
requested.
In addition to other applicable requirements, the Bylaws establish an
advance notice procedure for the nomination of candidates for election as
directors, other than by the Board of Directors of BankGroup, and for certain
matters to be brought before an annual shareholders' meeting of BankGroup. A
shareholder must give BankGroup notice not less than 90 days prior to a
shareholders' meeting to: (a) nominate persons to be elected directors of
BankGroup at such meeting or (b) propose business matters to be considered at
such meeting. A shareholder must give BankGroup notice, within seven days
following the announcement of a special meeting to elect directors, to nominate
persons to be elected directors at such special meeting.
BankGroup's bylaws provide that a shareholder of BankGroup entitled to
vote for the election of directors may nominate persons for election to the
Board at any meeting of shareholders by mailing written notice to the Secretary
of BankGroup not later than (i) with respect to an election to be held at an
annual meeting of shareholders, 90 days prior to such meeting, and (ii) with
respect to an election to be held at a special meeting of shareholders for the
election of directors, the close of business on the seventh day following the
date on which notice of such meeting is given o shareholders. Any such
shareholder's notice shall include (i) the name and address of the shareholder
and of each person to be nominated, (ii) a representation that the shareholder
is a holder of record of stock of BankGroup entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate each person
specified, (iii) a description of all arrangements or understandings between the
shareholder and each nominee and any other person (naming such person) pursuant
to which the nomination is made by the shareholder, (iv) such other information
regarding each nominee as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission had
the nominee been nominated by the Board, and (v) the consent of each nominee to
serve as a director of BankGroup if so elected.
1995 ANNUAL REPORT ON FORM 10-K
BankGroup's 1995 Annual Report on Form 10-K, which includes
consolidated balance sheets as of December 31, 1995 and 1994 and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1995,
together with related notes and the independent
17
<PAGE>
auditors' report of Coopers & Lybrand L.L.P., BankGroup's independent public
accountants for 1995, is being mailed along with this Proxy Statement to
shareholders of record as of the close of business on March 4, 1996.
OTHER BUSINESS
The Board of Directors does not know of any matters which may be
presented for consideration at the meeting other than those specifically set
forth in the Notice of Annual Meeting. However, in the event other proper
matters are presented at the meeting, it is the intention of the proxy holders
named in the enclosed proxy to take such action as shall be in accordance with
their best judgment with respect to such matters.
Shareholders are urged to specify choices on the enclosed Proxy and to
date and return it in the enclosed envelope. Your prompt response and
cooperation will be appreciated.
By Order of the Board of Directors
Rebecca J. Jenkins
Secretary
Dated: March 22, 1996
18
REVOCABLE PROXY
MAINSTREET BANKGROUP INCORPORATED
[ x ] PLEASE MARK VOTES AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
APRIL 23, 1996
This proxy is solicited on behalf of
the Board of Directors
The undersigned hereby appoints James E. Adams and Michael R. Blevins,
and each of them, with full power of substitution in each, Proxies to vote
all the shares of Common Stock of MainStreet BankGroup Incorporated, which
the undersigned is entitled to vote, at the Annual Meeting of Stockholders
of the Corporation to be held Tuesday, April 23, 1996, at 10:00 a.m., and
at any and all adjournments thereof.
ITEM 1. Election of Directors For Withhold For All Except
[ ] [ ] [ ]
THE NOMINEES FOR DIRECTORS ARE:
W.C. Beeler, Jr.; T.B. Bishop; M.R. Brenan; W.L. Cooper, III; B.P. Craft;
L.P. Henry; L.E. Hutchens; W.O. McCabe, Jr., M.D.; A.L. Prillaman;
R.M. Simmons, Jr. and T.B. Stanley, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below.
ITEM 2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.
For Against Abstain
[ ] [ ] [ ]
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE MEETING. [ ]
This Proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder(s). If no direction is made, this Proxy will be
voted FOR Item 1.
Please sign exactly as your name appears hereon. Joint owners should each sign.
When signing as Executor, Administrator, Attorney, Trustee or Guardian, please
give full title as such. If a corporation, please sign in full corporate name
by President, or other authorized officer, giving full title. If a partnership,
please sign in partnership name by an authorized person, giving full title.
Please be sure to sign and date this Proxy in the box below.
Date:_______________________________________________________
[___________________________________________________________]
Stockholder sign above ------- Co-holder (if any) sign above
- -------------------------------------------------------------------------------
Detach above card, sign, date and mail in postage paid envelope provided.
MAINSTREET BANKGROUP INCORPORATED
c/o Registrar and Transfer Company, 10 Commerce Drive, Cranford, NJ 07016
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
