SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Central Fidelity Banks, Inc
(Name of Registrant as Specified in its Charter)
Board of Directors of Central Fidelity Banks, Inc.
(Name of Person(s) Filing Proxy Statement)
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(j)(2).
( ) $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:
4) Proposed maximum aggregate value of transaction:
( ) 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>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
CENTRAL FIDELITY BANKS, INC.
Executive Offices
1021 E. Cary Street
Post Office Box 27602
Richmond, Virginia 23261
To the Shareholders:
The Annual Meeting of Shareholders of Central Fidelity Banks, Inc. will be
held in the banking hall of Central Fidelity National Bank, Broad at Third
Street, Richmond, Virginia, at 4:30 p.m. on May 11, 1994:
(1) To elect five directors comprising Class 3 to three year terms of
office and one director in Class 2 to a two year term of office; and
(2) To transact any other business which may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 18, 1994 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the meeting.
Shareholders are cordially invited to attend the meeting in person.
REGARDLESS OF YOUR ATTENDANCE PLANS, PLEASE FILL IN, DATE AND SIGN THE ENCLOSED
PROXY CARD AND MAIL IT IN THE ACCOMPANYING ADDRESSED AND POSTPAID ENVELOPE. The
proxy may be revoked at any time before it is voted.
Your attention is directed to the accompanying Proxy Statement.
By Order of the Board of
Directors,
WILLIAM N. STOYKO
SECRETARY
March 30, 1994
<PAGE>
PROXY STATEMENT
CENTRAL FIDELITY BANKS, INC.
Executive Offices
1021 E. Cary Street
Post Office Box 27602
Richmond, Virginia 23261
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 11, 1994
GENERAL
This Proxy Statement and the accompanying form of proxy, mailed to
shareholders on or about March 30, 1994 are furnished in connection with the
solicitation of proxies on behalf of the Board of Directors (the "Board") of
Central Fidelity Banks, Inc. (the "Company") for use at the Annual Meeting of
Shareholders (the "Meeting") to be held at 4:30 p.m. on May 11, 1994 in the
banking hall of Central Fidelity National Bank, Broad at Third Street, Richmond,
Virginia and at any adjournment thereof. The cost of soliciting proxies will be
borne by the Company. In addition to solicitation by mail, the Company will
request banks, brokers and other custodians, nominees and fiduciaries to send
proxy material to the beneficial owners and to secure their voting instructions,
if necessary. The Company, upon request, will reimburse them for their expenses
in so doing. Officers and regular employees of the Company may solicit proxies
personally, by telephone or telegram, from some shareholders if proxies are not
received promptly.
The Board has fixed the close of business on March 18, 1994 as the record
date for the determination of shareholders entitled to notice of, and to vote
at, the Meeting.
A proxy in the accompanying form which is properly signed and returned and
not revoked will be voted in accordance with instructions contained therein.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by executing another proxy or by appearing at the Meeting and voting
in person.
The Company's Annual Report to Shareholders and Form 10-K for the year
ended December 31, 1993 is being sent to all shareholders concurrently with this
Proxy Statement. Said Annual Report and Form 10-K is not to be considered a part
of the proxy soliciting material.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
At the Meeting, each outstanding share of the Company's $5.00 par value
common stock ("Common Stock") will be entitled to one vote on all matters
submitted to the shareholders. There are no cumulative voting rights. As of
March 18, 1994, there were 39,072,327 shares of the Common Stock outstanding and
entitled to vote.
1
<PAGE>
On March 1, 1994 the trust department of the Company's wholly-owned banking
subsidiary, Central Fidelity National Bank, in its capacity as the trustee for
the Company's Employee Stock and Thrift Plan and Stock Incentive Plan held on
behalf of officers and employees an aggregate of 3,074,340 shares (7.9%) of the
outstanding Common Sock. Employee participants in the Company's Stock and Thrift
Plan retain the power to vote their individual shares. Central Fidelity National
Bank also held on March 1, 1994 an aggregate of 2,124,884 shares (5.4%) of the
outstanding Common Stock in various fiduciary and representative capacities with
either full or shared voting and dispositive powers.
QUORUM AND VOTE REQUIRED
Under the Company's By-Laws, a majority of the shares of Common Stock,
present in person or represented by proxy, shall constitute a quorum for
purposes of the Meeting. If a quorum is present, the affirmative vote of the
majority of the shares present in person or represented by proxy at the Meeting
and entitled to vote on the subject matter shall be the act of the shareholders
with respect to all proposals contained in this proxy statement other than the
election of directors. In the election of directors, those receiving the
greatest number of votes shall be deemed elected even though not receiving a
majority. The tabulation of votes for all proposals and the election of
directors shall be managed by three judges appointed by the Board who shall
certify the results to the Secretary. Abstentions are treated as votes against a
proposal, and broker non-votes have no effect on the vote.
ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide for the Board of Directors
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 1994 Meeting, five directors comprising Class 3 will be elected to
serve until the 1997 Annual Meeting of Shareholders and until their successors
are elected and qualified. One director will be elected in Class 2 to serve
until the 1996 Annual Meeting of Shareholders and until his successor is elected
and qualified. The Board recommends that the six nominees named below be
elected. Proxies received will be voted for the election of such nominees unless
marked to the contrary. A shareholder who desires to withhold voting of the
proxy for all or one or more of the nominees may so indicate on the proxy. All
of said nominees are currently members of the Board. All have consented to be
named and have indicated their intent to serve if elected. However, in the event
any such nominee is not available for election, the proxies will be voted for
such person as shall be designated by the Board as a replacement.
There is set forth hereafter as to each of the nominees, and the remaining
directors who will continue to serve as indicated below, certain information
including age, principal occupation and, as of March 22, 1994, information
respecting beneficial ownership of Common Stock. The dates shown for first
election as a director in the information below represents the year in which the
nominee or continuing director was first elected to the Board of the Company or
one of its predecessor corporations. Unless otherwise indicated, the business
experience and principal occupations shown for each nominee or continuing
director has extended five or more years.
2
<PAGE>
NOMINEES FOR ELECTION
CLASS 3 DIRECTORS -- NOMINEES FOR ELECTION TO SERVE UNTIL THE 1997 ANNUAL
MEETING
JAMES F. BETTS, 62, a director since 1973. Mr. Betts is an independent
management consultant in Richmond, Virginia. Mr. Betts is a director of
Dominion Resources, Inc. Mr. Betts is a member of the Executive and
Nominating Committees.
PHYLLIS L. COTHRAN, 47, a director since 1994. Ms. Cothran of Richmond,
Virginia is President and Chief Executive Officer of Blue Cross Blue Shield of
Virginia. Prior to November 1990 she held the following positions at Blue
Cross Blue Shield of Virginia: Executive Vice President and Chief Operating
Officer, May 1990 to November 1990; Executive Vice President, Operations,
November 1989 to May 1990; and Chief Financial Officer & Treasurer,
January 1989 to November 1989. She is also a director of Tredegar Industries,
Inc.
ROBERT L. FREEMAN, 66, a director since 1970. Mr. Freeman of Newport News,
Virginia is a retired certified public accountant. He is presently a private
investor. Mr. Freeman is a member of the Executive Committee.
G. BRUCE MILLER, 57, a director since 1982. Mr. Miller is President and Chief
Executive Officer of International Home Furnishings Center, High Point, North
Carolina. Mr. Miller is a member of the Executive and Nominating
Committees.
KENNETH S. WHITE, 54, a director since 1976. Mr. White is an attorney at law
and a principal in the law firm of Edmunds & Williams, P.C., Lynchburg,
Virginia. Mr. White is a member of the Executive, Nominating and
Compensation Committees.
CLASS 2 DIRECTOR -- NOMINEE FOR ELECTION TO SERVE UNTIL THE
1996 ANNUAL MEETING
T. JUSTIN MOORE, JR., 68, a director since 1968. Mr. Moore is Counsel to the
law firm of Hunton & Williams, Richmond, Virginia. He is also a director of
Dominion Resources, Inc. and Philip Morris Companies, Inc. Mr.
Moore is a member of the Executive, Nominating and Compensation Committees.
DIRECTORS CONTINUING TO SERVE
CLASS 1 DIRECTORS -- ELECTED TO SERVE UNTIL THE
1995 MEETING
PAULINE ALLEN ELLISON, 70, a director since 1989. Mrs. Ellison is a management
consultant and realtor with The Real Estate Center, Arlington, Virginia. She is
also a consultant in federal and municipal management and
administration. Mrs. Ellison is a member of the Public Policy Committee.
LEWIS N. MILLER, JR., 50, a director since 1984. Mr. Miller is Co-Chief
Executive Officer and President of the Company and the President of
Central Fidelity National Bank, the principal subsidiary of the Company.
Mr. Miller is a member of the Executive, Nominating and Public Policy
Committees.
RICHARD L. MORRILL, 54, a director since 1989. Dr. Morrill is President of
the University of Richmond, Richmond, Virginia. Dr. Morrill is a member of
the Public Policy and Audit Committees.
3
<PAGE>
LLOYD U. NOLAND, III, 50, a director since 1987. Mr. Noland is Chairman of the
Board and President of the Noland Company, Newport News, Virginia, a supplier
of industrial products. Mr. Noland is chairman of the Audit Committee.
WILLIAM G. REYNOLDS, JR., 55, a director since 1977. Mr. Reynolds is Vice
President, Government Relations and Public Affairs of Reynolds Metals Company,
Richmond, Virginia, producers of aluminum and aluminum products. Mr. Reynolds
is a member of the Audit Committee.
CARROLL L. SAINE, 59, a director since 1975. Mr. Saine is Chairman and Co-Chief
Executive Officer of the Company and Chairman of Central Fidelity National Bank,
he principal subsidiary of the Company. Mr. Saine is a member
of the Executive, Nominating and Public Policy Committees.
CLASS 2 DIRECTORS -- ELECTED TO SERVE UNTIL THE
1996 MEETING
ALVIN R. CLEMENTS, 66, a director since 1974. Mr. Clements, a Charlottesville,
Virginia consultant, was Chairman of the Board of the Company prior to 1982.
Mr. Clements is a member of the Executive Committee.
JACK H. FERGUSON, 62, a director since 1986. Mr. Ferguson, retired, was
President and Chief Executive Officer of So-Deep, Inc., Manassas, Virginia,
a subsurface utility engineering firm until March 1992. From January 1990 to
March 1991, he was Chairman of the Flanagan Group, Alexandria, Virginia, a
legislative consulting firm. On March 31, 1989, Mr. Ferguson retired as a
director of Dominion Resources, Inc. and as President and Chief Executive
Officer of its subsidiary, Virginia Electric and Power Company, Richmond,
Virginia. He served as a consultant to Virginia Electric and Power Company
through March 1990. Mr. Ferguson is a member of the Public Policy Committee.
THOMAS R. GLASS, 65, a director since 1978. Mr. Glass is Publisher Emeritus of
The News and The Daily Advance and former President and Chief Executive Officer
of Carter Glass Newspaper Group, Lynchburg, Virginia. Mr. Glass is a member of
the Audit Committee.
MINNIE BASSETT LANE, 63, a director since 1984. Mrs. Lane, a civic leader in
Lynchburg, Virginia, was a director of Central Fidelity Bank, N.A., Lynchburg,
a former subsidiary of the Company. Mrs. Lane is a member of the
Public Policy Committee.
GEORGE R. LEWIS, 52, a director since 1985. Mr. Lewis is Vice President and
Treasurer of Philip Morris Companies, Inc., New York, New York, producers of
cigarettes, beverages and food products. Mr. Lewis is a member of the
Executive and Compensation Committees.
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of March 22, 1994, regarding
the number of shares of Common Stock beneficially owned by all directors and
nominees, by each of the executive officers named in the "Summary Compensation
Table" herein and by all directors and executive officers as a group. Beneficial
ownership includes shares, if any, held in the name of the spouse, minor
children or other relatives of the director or executive officer living in such
person's home, as well as shares, if any, held in the name of another person
under an arrangement whereby the director or executive officer can vest title in
himself or herself at once or at some future time.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS (2)
<S> <C> <C>
James F. Betts.............................................. 27,367 --
Phyllis L. Cothran.......................................... 100 --
Alvin R. Clements........................................... 38,653 --
Pauline Allen Ellison....................................... 18,329 --
Rodger W. Fauber............................................ 96,739(1) --
Jack H. Ferguson............................................ 4,910 --
Robert L. Freeman........................................... 32,114 --
Thomas R. Glass............................................. 17,772 --
Philip G. Hug............................................... 117,863(1) --
Minnie Bassett Lane......................................... 10,180 --
George R. Lewis............................................. 3,322 --
Jay O. Livingston........................................... 95,225(1) --
G. Bruce Miller............................................. 13,726 --
Lewis N. Miller, Jr......................................... 214,281(1) --
T. Justin Moore, Jr......................................... 49,244 --
Richard L. Morrill.......................................... 2,192 --
Lloyd U. Noland, III........................................ 94,809 --
J. Carson Quarles........................................... 81,424(1) --
William G. Reynolds, Jr..................................... 10,916 --
Carroll L. Saine............................................ 282,020(1) --
William F. Shumadine, Jr.................................... 149,463(1) --
Kenneth S. White............................................ 13,784 --
All directors and executive officers as a group............. 1,907,374 4.8%
</TABLE>
(1) Includes beneficial ownership of the following shares which may be acquired
within 60 days of March 22, 1994 pursuant to stock options by: Mr. Saine,
185,875 shares; Mr. Lewis N. Miller Jr., 120,637 shares; Mr. Hug, 71,475
shares; Mr. Quarles, 68,899 shares; Mr. Livingston 71,900 shares; Mr.
Fauber, 65,000 shares; Mr. Shumadine 62,625 shares; and all directors and
executive officers as a group, 888,884 shares.
(2) No individual director, nominee for director or named officer beneficially
owns 1% or more of Common Stock.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board held six meetings in 1993. The Board has five standing committees
to assist it in the discharge of its responsibilities: the Executive Committee,
Audit Committee, Nominating Committee,
5
<PAGE>
Compensation Committee and Public Policy Committee. Respective memberships on
these committees are identified in the information on pages 3 and 4 hereof.
The Executive Committee consists of nine members, including Messrs. Saine,
and Miller. Except to increase the number of directors, to fill vacancies on the
Board, or to approve an amendment to the Articles of Incorporation, plan of
merger or consolidation or other matters which cannot by law be delegated by the
Board, the Executive Committee has all the powers of the Board in the management
and the conduct of the business and affairs of the Company in the intervals
between meetings of the full Board. The Executive Committee held two meetings
during 1993.
The Compensation Committee consists of three non-employee directors who
establish and control compensation for the Company's executive officers. The
Compensation Committee held two meetings during 1993.
The Audit Committee consists of four members, all non-employee directors.
In general, this Committee is charged with ascertaining that the affairs and
operations of the Company and its subsidiaries are subject to proper audit and
control procedures, with monitoring the Company's business ethics policies and
activities and with assuring that the Company's auditors are free to exercise
their function independently of management. The Audit Committee held four
meetings during 1993.
The Nominating Committee consists of Messrs. Saine and Miller and four
non-employee directors. This Committee was established by the Board to review
qualifications of possible candidates and to recommend candidates to the Board
as nominees for election by the shareholders or by the Board to fill such
vacancies as may occur during the year. The Nominating Committee held one
meeting during 1993.
The Public Policy Committee consists of Messrs. Saine and Miller and four
non-employee directors. This Committee was established by the Board to review
charitable contributions of the Company and to foster Company involvement in
community programs including compliance with the Community Reinvestment Act and
civil rights acts. The Public Policy Committee held three meetings during 1993.
During 1993, each of the Company's directors attended at least 75% of the
meetings of the Board and the committees on which they serve.
Section 2.13 of the Company's By-Laws provides that nominations of persons
for election as directors may be made only by or at the direction of the Board
or by any shareholder entitled to vote at the election of directors upon
compliance with provisions of said By-Laws. Shareholders intending to nominate
director candidates at a shareholder meeting shall do so by notice in writing
delivered to the Secretary of the Company or mailed and received by the Company
not less than 60 days nor more than 90 days prior to the meeting (except that,
if public disclosure of the meeting date is made less than 70 days prior to the
meeting, the notice need only be received within 10 days following such public
disclosure). In addition, such notice must set forth the following information:
the name and address and the class and number of shares of the Common Stock
which are beneficially owned by the shareholder; the name, age, principal
occupation or employment, and business and residence addresses of each nominee;
as well as any other information relating to each nominee as is required to be
disclosed in the solicitation of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended, including such person's written consent to be
named in the proxy statement as a nominee and to serve as a director if elected.
DIRECTOR COMPENSATION
A Stock Compensation Plan for Non-Employee Directors (the "Directors'
Plan") was approved by shareholders in 1993. The Directors' Plan provides that
director retainer fees shall be paid in Common
6
<PAGE>
Stock and meeting fees may be paid in Common Stock at the election of the
individual director. The number of shares of Common Stock payable to any
director for any calendar year shall be determined by dividing the amount of
director's fees payable to the non-employee director for such calendar year by
the fair market value of the Common Stock on the first business day of the
calendar year in which such director's fees were earned. A non-employee director
may also elect to defer all or a portion of such director's fees in the form of
equivalents of Common Stock for distribution at a determined future date.
In 1993, directors who were not officers received a $15,000 retainer in the
form of shares of Common Stock or its Common Stock equivalents for services as a
director. They also received $1,200 cash or its Common Stock equivalents per
Board or committee meeting ($600 cash or its Common Stock equivalents per
committee meeting if on a Board meeting date) attended.
BOARD COMPENSATION COMMITTEE REPORT
The principal objective of the Compensation Committee is to provide a
compensation program designed to attract, motivate and retain the executive
management necessary to enhance the profitability of the Company and increase
shareholder value. Total compensation opportunities are intended to be
competitive with those offered by employers of comparable size and performance
in the banking industry.
The foundation of the program for executive compensation is based on
individual performance but is also linked to the Company's financial performance
and shareholder interests. The key components are:
-- Base salary compensation which is reviewed by the Compensation
Committee;
-- Incentive cash bonuses or additional base salary compensation
conditional on the Company's achieving certain financial performance
goals; and
-- The delivering of stock option and stock incentive awards as an
incentive for promoting the Company's long-term growth.
BASE SALARY. The base salary compensation of executive management is
presently reviewed every eighteen months and is approved by the Compensation
Committee and the Board of Directors. The most recent review was performed in
January of 1993. Salaries of executive officers are compared with those of other
individuals holding similar positions with comparably sized banking
institutions. The median base salary of those included in such comparison is
used as a guideline for establishing salary levels. Following the determination
of the market based salary, each officer's individual performance and
contributions to the Company are used to determine the individual's salary.
INCENTIVE COMPENSATION. The Compensation Committee in 1992 recommended to
the full Board a program of incentive compensation for all employees based on
various expense control measures. This program, which was approved by the Board
of Directors, provided for a salary increase of 2% to all employees if
non-interest expenses (excluding FDIC premiums and Other Real Estate expenses)
for each of the first and second six month periods of the year did not exceed
the defined non-interest expenses for the same periods in 1991. Both of these
goals were achieved, and all employees including the Co-Chief Executive Officers
(Co-CEOs) and executive officers received a 2% salary increase in July 1992 and
in January 1993, pursuant to this incentive program.
For 1993, a variation of the 1992 incentive program was recommended by the
Committee and approved by the Board of Directors. This program provided for a
salary increase of 4% to all employees if the Company's efficiency ratio, as
defined, did not exceed 50% at the end of calendar year 1993. The efficiency
ratio calculation for program purposes did not include certain non-recurring
expenses, which
7
<PAGE>
the Compensation Committee retained discretion to adjust. The incentive goal for
1993 was achieved, and all employees including the Co-CEOs and executive
officers received a 4% salary increase in January 1994.
The Company also established for the years 1992 and 1993 an Employee Stock
Incentive Plan for all employees of the Company conditioned upon the Company's
achieving certain financial performance goals. If the Company attained an
earnings per share increase of greater than 10% from the previous year, all
employees receive a graduated 1 1/2 to 3% of their salary in Common Stock of the
Company which is held for their account and distributed upon termination, death
or retirement. For each earnings per share incremental increase of 1% over 10%
all employees were to receive a .3% increase of their salary in Common Stock of
the Company. The earnings per share increase for 1992 and 1993 was in excess of
15% and all employees including the Co-CEOs and executive officers received 3%
of their salary in the form of Common Stock in January of 1993, and in January
of 1994 cash in amount of 3% of their salary was paid to the Plan for the
purchase of Common Stock.
STOCK OPTIONS. The Compensation Committee also administers the granting of
stock options to encourage and create ownership and retention of the Company's
stock by key employees. The stock options are issued under the Company Stock
Option Plans which have been approved by the shareholders. The Stock Option
Plans are intended to provide long-term incentives the ultimate value of which
is determined by increases in the price of the Company's Common Stock.
Under the Plans, no stock option can be granted at an exercise price less
than 100% of fair market value on the day the option is granted. Each option
must be exercised within ten (10) years from the date of grant.
Stock options were granted in 1993 to officers and executives in amounts
which were, in the judgment of the Compensation Committee, directly related to
the level of responsibility of the recipients.
COMPENSATION FOR THE CHIEF EXECUTIVE OFFICERS. These same compensation
policies were applied by the Compensation Committee for the Co-Chief Executive
Officer and Chairman of the Board, Carroll L. Saine, and for the Co-Chief
Executive Officer and President, Lewis N. Miller, Jr. Mr. Saine and Mr. Miller
have served the Company for 36 and 21 years respectively with Mr. Saine as the
CEO for the previous 16 years. During that period, the Company has grown
dramatically in size and profitability, having achieved its nineteenth
consecutive year of increased earnings in 1993.
In January of 1993, the Compensation Committee and the Board of Directors
approved base salary increases of $45,000 for Mr. Saine and $60,000 for Mr.
Miller. Mr. Miller received an additional increase in base salary of $31,819 in
June of 1993 after assuming the responsibility of Co-CEO. The Committee
recommended these increases after completing a review of the salaries and total
compensation of officers with similar responsibilities at comparable sized
banking institutions. The Committee also took into consideration the individual
contributions of Mr. Saine and Mr. Miller and the following performance
accomplishments of the Company for the prior fiscal year: (1) a 29.9% increase
in earnings; (2) a 24.2% increase in shareholders' equity; and (3) 4.6% increase
in return on shareholders' equity.
Preliminary regulations interpreting the Omnibus Budget Reconciliation Act
of 1993 were issued in late December, 1993. The Committee intends during 1994 to
review the impact of this act on the Company's executive compensation once final
regulations are issued.
COMPENSATION COMMITTEE
George R. Lewis
T. Justin Moore, Jr.
Kenneth S. White
8
<PAGE>
REMUNERATION
The following table set forth all cash compensation paid or accrued by the
Company and its subsidiaries to the Co-CEOs and other most highly compensated
executive officers of the Company during the past three fiscal years for all
services rendered:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
NUMBER
ANNUAL COMPENSATION OF
OTHER SECURITIES ALL
NAME AND ANNUAL UNDERLYING OTHER
PRINCIPAL POSITION YEAR SALARY(1) COMPENSATION(2) OPTIONS COMPENSATION(3)
<S> <C> <C> <C> <C> <C>
Carroll L. Saine............................. 1993 $795,540 $ -- 25,000 $60,253
Chairman and Co-Chief 1992 732,250 -- -- 56,594
Executive Officer 1991 678,000 -- 15,000 --
Lewis N. Miller, Jr.......................... 1993 541,742 -- 20,000 45,175
President and Co-Chief 1992 454,500 -- -- 39,679
Executive Officer 1991 415,000 -- 9,000 --
Philip G. Hug................................ 1993 324,633 -- 5,000 31,114
Corporate Executive 1992 292,900 -- -- 29,127
Vice President 1991 268,000 -- 3,750 --
J. Carson Quarles............................ 1993 305,681 -- 5,000 29,882
President, Southwestern 1992 287,850 -- -- 28,797
Region 1991 270,000 -- 3,750 --
Jay O. Livingston............................ 1993 294,039 -- 5,000 29,124
Corporate Executive 1992 267,650 -- -- 27,408
Vice President 1991 250,416 -- 3,750 --
Rodger W. Fauber............................. 1993 278,433 -- 5,000 28,109
President, Western 1992 252,500 -- -- 26,423
Region 1991 235,416 -- 3,750 --
William F. Shumadine, Jr..................... 1993 412,828 -- 10,000 36,389
Former Corporate Executive 1992 363,600 -- -- 33,744
Vice President 1991.. 340,000 -- 6,000 --
</TABLE>
(1) No cash bonus plans.
(2) All benefits which might be considered of a personal nature did not exceed
the lesser of $50,000 or 10% of total annual salary for all the officers
named in the table.
(3) Includes for 1993 (a) Company contributions to (i) the Stock and Thrift
Plan, (ii) a companion non-qualified plan, and (iii) the Stock Incentive
Plan (Mr. Saine, $47,733; Mr. Miller, $32,445; Mr. Hug, $19,478; Mr.
Quarles, $18,341; Mr. Livingston, $17,642; Mr. Fauber, $16,708; and Mr.
Shumadine, $11,924), (b) Company group insurance payment for individual
employees (Mr. Saine, $2,520; Mr. Miller, $2,730; Mr. Hug, $1,636; Mr.
Quarles, $1,541; Mr. Livingston, $1,482; Mr. Fauber, $1,403; and Mr.
Shumadine, $2,081), and (c) Company automobile supplement of $10,000 to each
named officer.
9
<PAGE>
STOCK AND THRIFT PLAN
Under the Stock and Thrift Plan, a qualified plan and a companion
non-qualified plan (the "Thrift Plan"), employees of the Company and its
subsidiaries (the "Employer") who have completed six months of employment may
participate. Participants may contribute up to 6% of annual compensation, and
the Employer contributes an amount at least equal to 50% of the participant's
contribution. The Thrift Plan provides that upon achieving certain defined
return on equity ratios, an amount up to an additional 50% of the participant's
contribution may be made by the Employer. For 1993, no additional contributions
were made on behalf of any participant.
EMPLOYEE STOCK INCENTIVE PLAN
The Employee Stock Incentive Plan (the "Stock Incentive Plan") covers
eligible full-time and regular part-time employees of the Company and its
subsidiaries. The Stock Incentive Plan is intended to be a qualified retirement
plan under Section 401(a) of the Internal Revenue Code.
The Company annually may contribute cash or shares of its Common Stock to
the Stock Incentive Plan, based upon the amount of increase, if any, in earnings
per share on the Common Stock for the fiscal year then ended, under guidelines
set by the Board. Common Stock will be purchased by the Stock Incentive Plan
with any cash contributions authorized by the Board.
A participant will receive a proportionate allocation of shares of Common
Stock contributed based upon his or her compensation. A participant in the Stock
Incentive Plan becomes fully vested after he or she has three (3) years of
service, beginning January 1, 1992, with the Company or its subsidiaries.
Distributions from the Stock Incentive Plan will be made only in Common Stock
and only after retirement, death, disability or termination of employment.
The Board retains discretion to determine the amount of Common Stock or
cash to be contributed each year. Based on the performance of the Company in
1993, on January 1, 1994, $3,101,000 was contributed to the Stock Incentive Plan
on behalf of employee participants. The Company has suspended contributions
under the Stock Incentive Plan for calendar year 1994.
RETIREMENT PLAN
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
REMUNERATION 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$125,000....................................... $ 59,198 $ 68,514 $ 77,830 $ 87,146 $ 96,462
200,000....................................... 95,948 111,264 126,580 141,896 157,212
300,000....................................... 144,948 168,264 191,580 214,896 238,212
400,000....................................... 193,948 225,264 256,580 287,896 319,212
500,000....................................... 242,948 282,264 321,580 360,896 400,212
600,000....................................... 291,948 339,264 386,580 433,896 481,212
700,000....................................... 340,948 396,264 451,580 506,896 562,212
800,000....................................... 389,948 453,264 516,580 579,896 643,212
900,000....................................... 438,948.. 510,264 581,580 652,896 724,212
</TABLE>
10
<PAGE>
The Company has a non-contributory, tax qualified retirement plan (the
"Retirement Plan") for full-time and regular part-time employees of the Company
and its subsidiaries. Benefits are based on an employee's salary for the highest
five consecutive years and usually are distributable at age 65. The benefits are
computed on a straight-line annuity basis and are not reduced for Social
Security benefits or any other offset amounts. The Retirement Plan provides for
100% vesting after 5 years, for early retirement at age 55 after 10 years of
vested service and for the payment of benefits to the surviving spouse of an
employee. Depending on the deceased participant's service, payments to a
surviving spouse equal either 100% or 50% of the employee's benefits. Because
the Retirement Plan is a defined benefit plan under which benefits vary with
years of service, average annual salary during a specified period, and age at
retirement, the costs under the Retirement Plan are not included in the
foregoing Summary Compensation Table. The Pension Plan Table shows the estimated
annual benefit payable upon retirement based on specified remuneration and years
of credited service classifications, assuming a participant retired on December
31, 1993. The Pension Plan Table and Summary Compensation Table may be used to
estimate pension benefits for each of the named executive officers based on
their credited years of service as of December 31, 1993: Mr. Saine, 36 years;
Mr. Miller, 21 years; Mr. Hug, 20 years; Mr. Quarles, 7 years; Mr Livingston, 20
years; Mr. Fauber, 28 years; and Mr. Shumadine, 27 years.
Benefits payable under the Company's ESRP, described below, have been added
to the pension amounts in the table. The IRS limit on annual benefits payable
from defined benefit plans will be $118,800 for 1994. This amount is tied to
changes in the Consumer Price Index and may increase in the future. The Tax
Reform Act of 1986 imposes additional limits on the maximum benefits under
defined benefit plans.
ESRP
The Company maintains an Executive Supplemental Retirement Plan (the
"ESRP"), a non-qualified, unfunded defined benefit plan for executives
designated by the Benefits Committee appointed by the Board. Current executives
covered by the ESRP include certain persons named in the Summary Compensation
Table above as well as thirteen other executives. The annual benefit equals 25%
of the executive's salary at age 62 even though the executive may retire at a
later age. If early retirement is elected, pursuant to the provisions of the
Company's Retirement Plan, the benefit is 25% of the executive's salary at that
time. Should the executive's employment terminate due to death or disability,
the benefit to the executive or such deceased executive's beneficiary is 25% of
the executive's salary at that time. The ESRP benefit is payable for twenty
years certain when payout begins. All participating executives accumulate
unfunded, unvested benefits while actively employed; however, benefits are
forfeited if the executive's employment is terminated for any reason other than
retirement, death, disability or a change in control of the Company.
EMPLOYMENT ARRANGEMENTS
The Company has employment agreements with certain executive officers,
including Messrs. Saine, Miller, Hug, Livingston and Fauber that become
effective upon a change in control of the Company. The Company or its successor
agrees to continue these officers in its employ for a term of three years after
the date of a change in control. During the contract term these officers will
retain commensurate authority and responsibilities and compensation benefits.
They will receive base salaries at least equal to the highest monthly salary
paid within one year and bonuses at least equal to the highest annual bonus paid
within three years prior to the change in control. If the officer's employment
during
11
<PAGE>
the three-year term is terminated other than for cause or disability as defined
in the agreements or if the officer should terminate employment because a
material term of the contract is breached by the Company, the officer will be
entitled to a lump sum payment, in cash, within fifteen days after the date of
termination. This lump sum will be equal to three times the sum of the officer's
base salary, annual bonus and performance award rights, if any, at the date of
termination.
The Company has amended its agreement with Mr. Quarles for his services as
the President of Central Fidelity National Bank's Southwestern Region which
originally provided for a term of employment of five years ending April 1, 1994,
at his present base salary. Mr. Quarles, under his amended contract, will
continue in the active employment of the Company until December 31, 1994 and
thereafter until December 31, 1996 as a consultant to Central Fidelity National
Bank at his year end 1994 salary.
In November of 1993, an agreement was entered into with Mr. Shumadine upon
his separation from the Company after 27 years of service. The agreement
provides for two and one-half years of salary continuation and the equivalent of
ESRP and excess benefit pension plan benefits to which he would have been
entitled upon retirement at age 55. The approximate present value of these
benefits exclusive of salary is $1.4 million.
If there is a change in the control of the Company, in order to ensure that
accrued benefits will be paid as required by the ESRP, the Company immediately
will make a lump-sum contribution to a trustee, or under certain circumstances
to participants, in an amount sufficient to pay anticipated benefits under the
ESRP. The Company is the owner of insurance policies on the lives of the
participating executives under which it will recover certain benefit costs
incurred upon the death of a participant. Total cost to the Company for 1993 for
the ESRP was approximately $1,179,099.
As stated above, certain officers, including the individuals listed in the
Summary Compensation Table, have employment agreements that become effective
upon a change in control of the Company. Because of Section 280G of the Internal
Revenue Code lump-sum payments under such agreements may subject an officer to
excise taxes. The agreements were amended in 1990 to hold an officer harmless
from any and all excise taxes levied on any payment caused by a change in
control. Such payments may be determined to be non-deductible by the Company for
federal income tax purposes under said section.
12
<PAGE>
STOCK OPTIONS
The Company has Incentive Stock Options Plans (the "Stock Option Plans")
which expire in various years to 2003. These plans provide for the granting of
options to eligible employees of the Company and its subsidiaries to purchase
shares of the Company's Common Stock.
The following table reflects grants of stock options made during the year
ended December 31, 1993 for each of the executive officers listed in the Summary
Compensation Table.
OPTIONS GRANTED IN 1993
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION
% OF TOTAL FOR OPTION TERM (2)
NUMBER OF OPTIONS 5% ($) 10% ($)
SECURITIES GRANTED (ASSUMES (ASSUMES
UNDERLYING TO EMPLOYEES EXERCISE A COMMON A COMMON
OPTIONS IN FISCAL PRICE PER EXPIRATION PRICE OF PRICE OF
NAME GRANTED (1) YEAR SHARE ($) DATE $48.05) $76.52
<S> <C> <C> <C> <C> <C> <C>
Carroll L. Saine 25,000 9.9% $29.50 5/12/2003 $388,750 $1,175,500
Lewis N. Miller, Jr. 20,000 7.9% 29.50 5/12/2003 311,000 940,400
Philip G. Hug 5,000 2.0% 29.50 5/12/2003 77,750 235,100
J. Carson Quarles 5,000 2.0% 29.50 5/12/2003 77,750 235,100
Jay O. Livingston 5,000 2.0% 29.50 5/12/2003 77,750 235,100
Rodger W. Fauber 5,000 2.0% 29.50 5/12/2003 77,750 235,100
William F. Shumadine, Jr. 10,000 3.9% 29.50 5/12/2003 155,500 470,200
</TABLE>
(1) The only Option Plans that the Company maintains are Incentive Stock Option
Plans. The exercise price for each option is equal to the fair market value
per share of the Common Stock on the grant date. Options are exercisable at
any time during the ten year life of the option.
(2) The amounts shown are the result of calculations at 5% and 10% assumed rates
of appreciation as suggested by the Securities and Exchange Commission
rules. No assurance can be given that the actual value, if any, realized by
an executive upon the exercise of these options will approximate the values
shown. To put these hypothetical values into perspective, the following is
provided:
<TABLE>
<CAPTION>
ANNUAL RATE OF STOCK PRICE
APPRECIATION
5% 10%
<S> <C> <C>
Resulting stock price based on $29.50 grant price $ 48.05 $ 76.52
Gain per share 18.55 47.02
Aggregate gain that would be realized by all shareholders (based
on 38,671,691 outstanding on the grant date May 13, 1993) 717,359,868 1,818,342,911
Aggregate hypothetical gain on all 1993 options granted to the
named executive officers if the resulting prices are achieved 1,166,250 3,526,500
Aggregate hypothetical gain on all 1993 options granted to the
named executive officers as a percentage of all stockholders'
gains 0.2% 0.2%
</TABLE>
13
<PAGE>
The following table shows, for each of the executive officers listed in the
Summary Compensation Table, the number of shares acquired upon exercise of
existing options during 1993 and the value realized, plus the number and value
at December 31, 1993 of unexercised options.
AGGREGATED OPTION/SAR (1) EXERCISES IN
LAST FISCAL YEAR AND FY-END OPTION/SAR (1) VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS IN-THE-MONEY
SHARES AT FISCAL OPTIONS AT FISCAL
ACQUIRED ON VALUE YEAR END (#) YEAR END ($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE (2) UNEXERCISABLE (2)
<S> <C> <C> <C> <C>
Carroll L. Saine 15,000 $266,152 185,875 $ 2,273,160
Lewis N. Miller, Jr. 6,000 138,414 120,637 1,429,147
Philip G. Hug 1,775 31,678 71,475 977,625
J. Carson Quarles 3,976 68,089 68,899 922,157
Jay O. Livingston -- -- 71,900 994,684
Rodger W. Fauber 4,500 132,625 65,000 883,373
William F. Shumadine, Jr. 6,000 122,125 62,625 748,974
</TABLE>
(1) The Company has no SARS.
(2) All options issued by the Company are exercisable upon grant. The value is
the excess of the market value of Common Stock at December 31, 1993 ($28.00)
over the option exercise price.
14
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the cumulative total shareholder
returns for the Company as compared with the S&P 500 Index and the KBW 50* Index
for the Company's last five years. The graph assumes that the value of the
investment in the Company's Common Stock and each index was $100 at December 31,
1988 and that all dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN**
AMONG CENTRAL FIDELITY BANKS, INC., THE S & P 500 INDEX AND THE KBW 50 INDEX
(GRAPH HERE AS DEFINED BY THE FOLLOWING DATA POINTS)
1988 1989 1990 1991 1992 1993
Central Fidelity Banks, Inc. 100 114 103 237 266 272
S & P 500 100 132 128 166 179 197
KBW 50 100 119 85 135 172 182
* THE KBW 50 IS AN INDEX COMPRISED OF 50 BANKING COMPANIES, INCLUDING ALL
THE MONEY CENTER BANKS AND MOST LARGE REGIONAL BANKS. IT HAS BEEN
DEVELOPED BY KEEFE, BRUYETTE & WOODS, A NEW YORK SECURITIES FIRM WHICH
SPECIALIZES EXCLUSIVELY IN THE BANKING AND THRIFT INDUSTRY. THE KBW 50 IS
CONSIDERED MORE REPRESENTATIVE OF PRICE PERFORMANCE OF THE MAJOR BANKING
COMPANIES IN AMERICA.
** ASSUMES $100 INVESTED ON DECEMBER 31, 1988 IN STOCK OR INDEX AND THAT
DIVIDENDS WERE REINVESTED.
15
<PAGE>
CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS WITH MANAGEMENT
During the past year some nominees, directors and executive officers of the
Company, their affiliates and members of their immediate families were customers
of, and had borrowing transactions with, the Company's principal banking
subsidiary in the normal course of business. All outstanding loans and
commitments included in such transactions were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons, and did not involve more than
normal risk of collectibility or present other unfavorable features.
SECTION 16 TRANSACTIONS
Under Section 16(a) of the Securities Exchange Act of 1934, directors and
executive officers of the Company are required to file reports with the
Securities and Exchange Commission and the Company of their beneficial ownership
and changes in ownership of Common Stock.
Based on a review of the forms that were filed and representations of the
directors and executive officers, the Company believes that all required forms
were timely filed for the year 1993 and for prior years with the exception of a
Form 5 Report for Jane D. Sorah, an executive officer, which did not include 42
shares of Common Stock held in the Company's dividend reinvestment plan; and the
untimely filing of a Form 4 Report for a director Minnie Bassett Lane disclosing
the sale of 113 shares of Common Stock held in a trust.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of KPMG Peat Marwick has been selected to audit the
consolidated financial statements of the Company for 1994. Representatives of
such accounting firm are expected to be present at the Annual Meeting of
Shareholders, will have the opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions.
INFORMATION RELATING TO SHAREHOLDER PROPOSALS
In the event shareholders of the Company intend to make any proposals to be
presented at the next annual meeting of shareholders of the Company to be held
in May, 1995 (or such date as shall be designated by the Board), such proposals
must be received at the Company's principal executive offices at 1021 E. Cary
Street, Richmond, Virginia, 23219, Attn: William N. Stoyko, not less than 120
days prior to March 30, 1995 in order for such proposals to be included in the
Company's proxy statement and form of proxy relating to such meeting.
OTHER MATTERS
Management has no knowledge of any other matters which may come before the
Meeting and does not itself intend to present any such other matters. However,
if any such matters shall properly come before the Meeting or any adjournment
thereof, the persons named as proxies will have discretionary authority to vote
those shares represented by the accompanying proxy in accordance with their own
best judgment.
By Order of the Board of Directors,
WILLIAM N. STOYKO
SECRETARY
March 30, 1994
16
CENTRAL FIDELITY BANKS, INC.
1021 E. Cary Street, Richmond, Virginia 23219
Proxy for Annual Meeting of Shareholders
This proxy is Solicited on Behalf of the Board of Directors
The undersigned, revoking any proxy heretofore given, hereby appoints Carroll
L. Saine, Lewis N. Miller, Jr., and William H. Schwarzschild, III, or any of
them (with full power to act in the absence of the others, the act of a
majority of those present to be controlling, each with full power of
substitution) as Proxies to vote all the shares of Common Stock of Central
Fidelity Banks, Inc. held of record on March 18, 1994, by the undersigned at
the Annual Meeting of Shareholders of said Company to be held in the banking
hall of Central Fidelity National Bank, Broad at Third Street, Richmond,
Virginia, at 4:30 p.m. on May 11, 1994, and at any and all adjournments
thereof as follows:
1. ELECTION OF DIRECTORS
( ) FOR all nominees listed below
(except as indicated to the contrary below)
( ) WITHHOLD AUTHORITY to
vote for all nominees listed below
Three year term as Class 3 Director:
James F. Betts, Phyllis L. Cothran, Robert L. Freeman, G. Bruce Miller,
Kenneth S. White
Two year term as Class 2 Director:
T. Justin Moore, Jr.
(Instruction: to withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
2. In their discretion, the Proxies are authorized to vote upon 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 undersigned shareholder. If no direction is made, this proxy will be
voted for the election of all directors listed under Proposal 1.
Please sign below exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney-in-fact, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name
by authorized person.
Signature
Signature if held jointly
Dated , 1994
I plan to attend the Annual Meeting YES NO
Number in party
The number of shares shown above and covered by this proxy include, where
applicable, shares held in the Stock Purchase Program (formerly the Dividend
Reinvestment Plan). Please Mark, Sign, Date and Return the Proxy Card Promptly
Using the Enclosed Envelope.
