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:
(X) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
( ) 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)
(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>
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 10, 1995:
(1) To elect five directors comprising Class 1 to three year terms of
office;
(2) To approve the 1995 Stock Incentive Plan; and
(3) To transact any other business which may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 17, 1995 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 , 1995
<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 10, 1995
GENERAL
This Proxy Statement and the accompanying form of proxy, mailed to
shareholders on or about March , 1995 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 10, 1995 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. In addition, the Company has retained Morrow & Company, Inc.
to aid in the solicitation of proxies at an estimated cost of $4,500, plus
out-of-pocket expenses.
The Board has fixed the close of business on March 17, 1995 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, 1994 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
, 1995, there were shares of the Common
Stock outstanding and entitled to vote.
1
<PAGE>
On , 1995 the trust department of the Company's
wholly-owned banking subsidiary, Central Fidelity National Bank (the "Bank"), in
its capacity as the trustee for the Company's Employee Stock and Thrift Plan and
the Employee Stock Incentive Plan, held on behalf of officers and employees an
aggregate of shares ( %) of the outstanding Common Stock. Employee
participants in each of those plans retain the power to vote their individual
shares. The Bank also held on , 1995 an aggregate of
shares ( %) 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 Restated 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 1995 Meeting, five directors comprising Class 1 will be elected to
serve until the 1998 Annual Meeting of Shareholders and until their successors
are elected and qualified. The Board recommends that the five 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 , 1995,
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 1 DIRECTORS -- NOMINEES FOR ELECTION TO SERVE UNTIL
THE 1998 MEETING
JACK H. FERGUSON, 63, 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.
LEWIS N. MILLER, JR., 51, a director since 1984. Mr. Miller is Chairman,
President and Chief Executive Officer 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, 55, a director since 1989. Dr. Morrill is President of the
University of Richmond, Richmond, Virginia. Dr. Morrill is a member of the
Public Policy Committee.
LLOYD U. NOLAND, III, 51, a director since 1987. Mr. Noland is Chairman of the
Board, President and a director of the Noland Company, Newport News, Virginia,
a supplier of industrial products. Mr. Noland is chairman of the Audit
Committee.
WILLIAM G. REYNOLDS, JR., 56, 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.
DIRECTORS CONTINUING TO SERVE
CLASS 2 DIRECTORS -- ELECTED TO SERVE UNTIL THE 1996 MEETING
ALVIN R. CLEMENTS, 67, 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.
THOMAS R. GLASS, 66, 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, 64, 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, 54, 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 director of Ceridian
Corporation. Mr. Lewis is a member of the Executive and Compensation
Committees.
3
<PAGE>
T. JUSTIN MOORE, JR., 69, a director since 1968. Mr. Moore is Counsel to the law
firm of Hunton & Williams, Richmond, Virginia. Mr. Moore is a member of the
Executive, Nominating and Compensation Committees.
CLASS 3 DIRECTORS -- ELECTED 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 member of the
Executive and Nominating Committees.
PHYLLIS L. COTHRAN, 48, a director since 1994. Ms. Cothran of Richmond, Virginia
is President and Chief Executive Officer of Trigon 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; and Executive Vice President, Operations,
November 1989 to May 1990. She is also a director of Tredegar Industries, Inc.
and Ethyl Corporation. Ms. Cothran is a member of the Audit Committee.
ROBERT L. FREEMAN, 68, 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, 59, 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, 55, 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.
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of , 1995,
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 (other than Carroll L. Saine) 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 (1) CLASS
<S> <C> <C>
James F. Betts.............................................. *
Alvin R. Clements........................................... *
Phyllis L. Cothran.......................................... *
Pauline Allen Ellison....................................... *
Rodger W. Fauber............................................ *
Jack H. Ferguson............................................ *
Robert L. Freeman........................................... *
Thomas R. Glass............................................. *
Philip G. Hug............................................... *
Minnie Bassett Lane......................................... *
George R. Lewis............................................. *
Jay O. Livingston........................................... *
G. Bruce Miller............................................. *
Lewis N. Miller, Jr......................................... *
T. Justin Moore, Jr......................................... *
Richard L. Morrill.......................................... *
Lloyd U. Noland, III........................................ *
J. Carson Quarles........................................... *
William G. Reynolds, Jr..................................... *
Kenneth S. White............................................ *
All directors and executive officers as a group............. %
</TABLE>
(1) Includes beneficial ownership of the following shares which may be acquired
within 60 days of , 1995 pursuant to stock options by: Mr.
Fauber, shares; Mr. Hug, shares; Mr. Livingston shares;
Mr. Lewis N. Miller Jr., shares; Mr. Quarles, shares; and all
directors and executive officers as a group, shares.
* 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 eight meetings in 1994. The Board has five standing
committees to assist it in the discharge of its responsibilities: the Executive
Committee, Audit Committee, Nominating Committee, Compensation Committee and
Public Policy Committee. Respective memberships on these committees are
identified in the information on pages 3 and 4 hereof.
5
<PAGE>
The Executive Committee consists of eight members, including Mr. Lewis
Miller. Except to increase the number of directors, to fill vacancies on the
Board, or to approve an amendment to the Restated 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 1994.
The Compensation Committee consists of three non-employee directors who
establish and control compensation and other benefits for the Company's
executive officers. The Compensation Committee held three meetings during 1994.
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 1994.
The Nominating Committee consists of Mr. Lewis 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 two meetings during 1994.
The Public Policy Committee consists of Mr. Lewis 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
the civil rights acts. The Public Policy Committee held two meetings during
1994.
During 1994, each of the Company's directors attended at least 75% of the
meetings of the Board and the committees on which they serve with the exception
of Mrs. Lane.
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 for the election of directors at a
meeting of the shareholders upon compliance with provisions of said By-Laws.
Shareholders intending to nominate candidates for election as director 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 nominating 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
solicitations 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.
6
<PAGE>
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 and meeting fees may, at the election of the individual
director, be paid in cash or deferred in the form of equivalents of Common Stock
for distribution at a determined future date. The number of shares of Common
Stock equivalents deferred for the account of any director for any calendar
quarter shall be determined by dividing the amount of director's fees deferred
by the non-employee director for such calendar quarter by the fair market value
of the Common Stock on the last business day of the calendar quarter in which
such director's fees were earned.
In 1994, directors who were not officers received a $15,000 retainer in the
form of cash or Common Stock equivalents for services as a director. They also
received $1,200 cash or Common Stock equivalents per Board or committee meeting
($600 cash or Common Stock equivalents per committee meeting if on a Board
meeting date) attended.
BOARD COMPENSATION COMMITTEE REPORT
The Company's Compensation Committee (the "Committee") is comprised of
three outside directors. The Committee's principal objective is develop
comprehensive compensation policies 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, represented by
asset level, and performance in the banking industry.
The Committee and senior management initiated a comprehensive review of
management compensation in early 1994 with the assistance of a nationally
recognized consulting firm on executive compensation. The study included an
evaluation of management compensation policies, interviews with a substantial
number of employees to solicit their views on the Company's compensation
policies, a review of compensation plans and practices at other financial
institutions of comparable size and performance, and an analytical review of the
costs and benefits of certain proposed incentive programs.
This review was completed in July, 1994 and recommendations from the study
were used to determine base salary increases for executive officers effective in
July, 1994. The Company engaged another nationally recognized consulting firm on
executive compensation, to evaluate the benefits portion of total compensation
in addition to base salary paid by the Company to its employees, including its
executive officers.
The executive compensation policies developed by the Compensation Committee
are based upon a philosophy of "pay for performance" as the best means to
promote shareholders' interests. Individual performance is also linked to the
Company's financial performance and shareholder interests. The key components of
executive compensation are:
(Bullet) Base salary compensation payable in cash;
(Bullet) Incentive cash bonuses or additional base salary compensation
payable only in the event that the Company achieves certain
financial performance goals; and
(Bullet) Stock option and other stock incentive awards as an incentive to
promoting the Company's long-term growth.
7
<PAGE>
BASE SALARY
The base salary compensation of executive management was most recently
reviewed by the Compensation Committee and the Board of Directors in July, 1994
in conjunction with the findings and recommendations of the consultant study.
Salaries of executive officers were compared with those of other individuals
holding similar positions in comparably sized banking institutions. The median
base salary determined from this comparison was used as a guideline for
establishing 1994 salary levels. The average base salary for Company executives
was targeted at or above the comparison group median to better equalize total
cash compensation with those institutions where substantial cash bonuses are
paid.
A majority of the financial institutions of comparable size and performance
that constitute the base salary survey group used by the Committee in
establishing salary levels are included in the KBW 50 Index shown in the
performance graph on page . Other banking institutions with asset size
similar to the Company's and with comparable performance were added to those
banking institutions in the KBW 50 Index to form the comparison group. The
Committee believes this process resulted in more accurate compensation
comparisons.
Following the determination of a median base salary derived from the
comparison group, each individual executive officer's salary was analyzed using
several factors, including: the Company's attainment of financial performance
goals; the individual's contribution to that performance; the individual's
position within the Company and the duties and responsibilities assigned to such
individual; and their experience and potential for advancement. No specific
weighing was applied to these factors. The Committee reviewed salaries with the
Chief Executive Officer and made judgmental and discretionary determinations as
part of its assessment process.
ANNUAL INCENTIVES
The Compensation Committee also has approved annual incentive compensation
grants in each of the last three calendar years based on the Company achieving
certain specific financial goals.
In 1993, the Compensation Committee recommended to the full Board a program
of incentive compensation for all employees based on the Company's efficiency
ratio. The efficiency ratio was calculated by dividing the Company's
non-interest expense by the sum of non-interest income and net interest income
on a full tax-equivalent basis. The efficiency ratio for program purposes did
not include nonrecurring expenses which the Committee retained discretion to
adjust. This program provided for a salary increase of 4% to all employees if
the Company's efficiency ratio did not exceed 50% at the end of calendar year
1993. The incentive goal for 1993 was achieved and all employees, including
executive officers, received a 4% salary increase in January, 1994.
The incentive program for calendar year 1994 provided for each employee to
receive a cash bonus of $1,300 if the Company achieved earnings per share of
$3.06 for the year. This goal was not achieved, and no incentive compensation
was paid to employees in 1994.
STOCK INCENTIVES
The Compensation Committee also administers the granting of stock options
to executive officers and employees to encourage their ownership and retention
of the Company's Common Stock. All Options are granted under stock option plans
which have been approved by the shareholders. Under
8
<PAGE>
the existing plans, no stock option can be granted at an exercise price less
than 100% of fair market value of the underlying stock on the date of grant, and
all options have a maximum life of 10 years.
In 1994, stock options were awarded under two programs. One program is
designed for all employees and provides for the grant of options for 100 shares
of Common Stock to employees on each of their successive five year anniversary
dates of employment with the Company. In 1994, Awards of stock options covering
57,000 shares were made under this program to 570 employees, including executive
officers.
In addition, options for 412,000 shares of Common Stock were awarded in
November 1994 to 236 key employees, including 19 executive officers. The size of
option grants ranged from 1,000 to 10,000 shares with 20,000 shares having been
awarded to Mr. Miller, as Chief Executive Officer. The number of option shares
granted to non-executive officers was determined from recommendations made by
the recipient's supervisor and based on the supervisor's judgment of the
employee's contributions to the Company's performance. Awards to executive
officers were made in amounts of 5,000 or 10,000 shares with the larger awards
having been granted to the nine executives who had received fewer option shares
from previous grants.
CEO COMPENSATION
After the untimely death of Carroll L. Saine on August 18, 1994, Lewis N.
Miller, Jr. was appointed by the Board of Directors to the position of Chairman,
President and CEO of the Company. Mr. Miller received an increase in base salary
in July 1994 of 13%, raising his year end 1994 salary to $650,000. No additional
cash compensation was paid to Mr. Miller in 1994 for assuming the position of
Chairman and sole CEO.
The Committee approved the 1994 increase in Mr. Miller's salary after
reviewing the peer group comparison information provided in the consultant
studies which revealed that Mr. Miller, in his position as President of the
Company, received cash compensation slightly below median of the comparison
group and total cash compensation significantly below the median of the
comparison group. Although Mr. Miller's 1994 salary increase and option grant in
1994 were not measured upon the attainment of any specific goals by the Company,
the Committee, in its discretion and judgment in making these determinations,
took into consideration Mr. Miller's assumption of greater responsibilities
during the illness of Mr. Saine and his individual contributions to Company
performance for the prior fiscal year reflected by: (i) a 31.l% increase in net
income (ii) a 13.0% increase in shareholders' equity; and (iii) a 2.6% increase
in return on shareholders' equity.
EMPLOYMENT AGREEMENT AND TAX CONSIDERATIONS
Mr. Quarles, one of the individuals listed in the Summary Compensation
Table, received his 1994 salary pursuant to an agreement for his active
employment until December 31, 1994 and thereafter until December 31, 1996 as a
consultant to Central Fidelity National Bank at his year-end 1994 salary.
Recent tax legislation generally imposes a $1 million limitation on the
amount of annual compensation deduction allowable to a publicly held company in
respect of its chief executive officer and its other four most highly paid
executive officers. An exception is provided for "performance based"
compensation if certain shareholder approval and outside director administration
requirements are met. The Committee does not currently anticipate that any
executive officer's compensation will exceed $1 million.
9
<PAGE>
However, the Committee and the Board of Directors retain the discretion to grant
non-deductible compensation if the Committee and the Board determine that such a
grant would be in the best interests of the Company and the shareholders under
the circumstances.
The Board of Directors is submitting the Company's 1995 Stock Incentive
Plan to the shareholders for approval. Upon approval, the Company believes that
awards under the 1995 Stock Incentive Plan will not otherwise limit the
deductibility by the Company of certain executive compensation for federal
income tax purposes under Section 162(m) of the Code. Because of certain
interpretational issues under the Code, however, and in the absence of final
Internal Revenue Service regulations, there can be no assurance that awards
under the Plan will, in fact, be excepted from "applicable employee
remuneration." Proposed regulations would include stock options and stock
appreciation rights, but exclude restricted stock, from the exception.
COMPENSATION COMMITTEE
T. Justin Moore, Jr.
George R. Lewis
Kenneth S. White
10
<PAGE>
REMUNERATION
The following table sets forth all cash compensation paid or accrued by the
Company and its subsidiaries to the Chief Executive Officer 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............................. 1994 $554,174 $ -- 0 $18,215
Former Chairman and Co-Chief 1993 795,540 -- 25,000 50,253
Executive Officer 1992 732,250 -- -- 46,594
Lewis N. Miller, Jr.......................... 1994 614,176 -- 20,000 21,153
Chairman, Chief Executive 1993 541,742 -- 20,000 35,175
Officer and President 1992 454,500 -- -- 29,679
Philip G. Hug................................ 1994 351,927 -- 5,000 12,177
Corporate Executive 1993 324,633 -- 5,000 21,114
Vice President 1992 292,900 -- -- 19,127
Jay O. Livingston............................ 1994 348,233 -- 5,100 12,047
Corporate Executive 1993 294,039 -- 5,000 19,124
Vice President 1992 267,650 -- -- 17,408
J. Carson Quarles............................ 1994 322,687 -- -- 676,553
President, Southwestern 1993 305,681 -- 5,000 19,882
Region of the Bank 1992 287,850 -- -- 18,797
Rodger W. Fauber............................. 1994 298,144 -- 5,000 10,307
President, Western 1993 278,433 -- 5,000 18,109
Region of the Bank 1992 252,500 -- -- 16,423
</TABLE>
(1) No cash bonus payments.
(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 the named executive
officer in the table.
(3) Includes for 1994 (a) Company contributions to (i) the Stock and Thrift Plan
and (ii) a companion non-qualified plan (Mr. Saine, $16,625; Mr. Miller,
$18,426; Mr. Hug, $10,558; Mr. Livingston, $10,447; Mr. Quarles, $9,681; and
Mr. Fauber, $8,945), (b) Company group insurance payments for individual
employees (Mr. Saine, $1,590; Mr. Miller, $2,727; Mr. Hug, $1,619; Mr.
Livingston, $1,600; Mr. Quarles, $1,498; and Mr. Fauber, $1,362), and (c)
$665,374 accrued for Mr. Quarles under an arrangement that continues his
current salary for a two year period following his leaving active employment
on December 31, 1994.
11
<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 1994, no additional contributions
were made on behalf of any participant.
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>
12
<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, 1994. 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, 1994: Mr. Miller, 22 years;
Mr. Hug, 21 years; Mr. Livingston, 20 years; Mr. Quarles, 8 years and Mr.
Fauber, 29 years. Pension benefits for Mr. Saine, with 35 credited years of
service prior to his death in August, 1994, are payable to his surviving spouse.
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 $120,000 for 1995. 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 sixteen 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. 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
the three-year
13
<PAGE>
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's agreement with Mr. Quarles, who retired from active
employment as the President of the Bank's Southwestern Region on December 31,
1994, provides for his acting as a consultant to the Bank until December 31,
1996 at his year-end 1994 salary.
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 1994 for
the ESRP was approximately $ .
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.
14
<PAGE>
STOCK OPTIONS
The Company has stock options plans which expire in various years to 2004.
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, 1994 for each of the executive officers listed in the Summary
Compensation Table.
OPTIONS GRANTED IN 1994
<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 $45.61) $72.62)
<S> <C> <C> <C> <C> <C> <C>
Lewis N. Miller, Jr. 20,000 4.3% $28.00 11/08/04 $352,181 $ 892,496
Philip G. Hug 5,000 1.1% 28.00 11/08/04 88,045 223,124
Jay O. Livingston 5,000 1.1% 28.00 11/08/04 88,045 223,124
100 -- 24.50 12/30/04 1,541 3,905
J. Carson Quarles -- -- -- -- -- --
Rodger W. Fauber 5,000 1.1% 28.00 11/08/04 88,045 223,124
</TABLE>
(1) The exercise price for each option is equal to the fair market value per
share of the Common Stock on the grant date. All options are currently
exercisable during the ten year life of the options except for 12,858 shares
of Mr. Miller's options, which are exercisable as follows: 3,571 shares
become first exercisable on January 1 in each of 1996, 1997 and 1998, and
the balance of 2,145 shares become first exercisable on January 1, 1999.
(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 $28.00 grant price $ 45.61 $ 72.62
Gain per share 17.61 44.62
Aggregate gain that would be realized by all shareholders (based
on 39,267,854 outstanding on the grant date November 9, 1994) 691,506,909 1,752,131,645
Aggregate hypothetical gain on all 1994 options granted to the
named executive officers if the resulting prices are achieved 617,857 1,565,773
Aggregate hypothetical gain on all 1994 options granted to the
named executive officers as a percentage of all shareholders'
gains 0.09% 0.09%
</TABLE>
15
<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 1994 and the value realized, plus the number and value
at December 31, 1994 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 UNEXERCISABLE (2)
<S> <C> <C> <C> <C>
Carroll L. Saine (3) 26,000 $470,298 -- --
Lewis N. Miller, Jr. 27,925 541,244 $99,854/12,858 $ 763,980/0
Philip G. Hug 23,338 496,722 53,237/0 455,021/0
Jay O. Livingston 2,500 33,712 74,500/0 709,159/0
J. Carson Quarles 9,450 174,562 59,449/0 588,732/0
Rodger W. Fauber 9,150 156,587 60,850/0 555,812/0
</TABLE>
(1) The Company has no SARs.
(2) The value is the excess of the market value of Common Stock at December 31,
1994 ($24.25) over the option exercise price.
(3) Information on Mr. Saine is provided only through the date of his death in
August, 1994.
16
<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,
1989 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
INSERT GRAPH HERE
TOTAL RETURN - DATA SUMMARY
<TABLE> Cumulative Total Return
1990 1991 1992 1993 1944 9B4BNCFB
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Central Fid Bks Inc. CFBS 100 91 208 234 240 217 02/07/95
S&P 1500 100 97 126 136 150 152 9B4BB500
KBW 50 IKBW 100 72 114 145 153 145 9B4BBKBW
</TABLE>
* 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, 1989 IN STOCK OR INDEX AND THAT
DIVIDENDS WERE REINVESTED.
17
<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.
PROPOSAL TO ADOPT 1995 STOCK INCENTIVE PLAN
BACKGROUND
During 1994, the Company undertook an extensive review of its compensation
programs and practices including its existing stock option plans. The Company
has historically awarded stock options to employees at all levels to encourage
their ownership and retention of the Company's Common Stock. These option plans
are consistent with the Board's and management's philosophy that ownership of
Company stock by all employees significantly contributes to the long term
success of the Company and the total return to shareholders. More than 65% of
all stock options granted under the plans since 1988 were awarded to employees
of the Company who were not executive officers.
The Board at its January, 1995 meeting approved the adoption of the
Company's 1995 Stock Incentive Plan (the "Plan") subject to its approval at the
1995 Annual Meeting of Shareholders. Management believes that the Plan will
foster the long term success of the Company by authorizing the grant of Awards,
as described below, to attract, motivate and retain the services of skilled and
dedicated employees. The Plan is designed to provide, among other things, more
flexibility in the use of stock options and stock related performance based
awards that will appropriately compensate employees who contribute to the
Company achieving specific financial goals. Although the Plan is similar in form
to plans adopted by other major financial institutions, the Company authorizes
incentives to a broader base of employees than is common for plans of this kind.
The Committee believes that this type of incentive compensation will focus all
employees' attention on the long-term financial performance and growth of the
Company.
The Plan will become effective May 10, 1995, subject to shareholder
approval. The Plan will terminate on May 9, 2005, unless terminated earlier by
the Board. Awards granted under the Plan prior to termination will continue in
effect after such termination until they expire or terminate pursuant to their
terms.
The principal features of the Plan are summarized below. Capitalized terms
not otherwise defined in the following description shall have the same meaning
as ascribed to them in the Plan unless the context otherwise requires. The
summary is qualified by reference to the complete text of the Plan, which is
attached to this Proxy Statement as Exhibit A.
ELIGIBILITY
All present and future employees of the Company or its subsidiaries are
eligible to receive Awards under the Plan. At March 1, 1995, there were
approximately 3,300 employees eligible for Awards under the Plan.
18
<PAGE>
PLAN ADMINISTRATION
The Plan will be administered by the Compensation Committee (the
"Committee") of the Board which shall have the sole and complete authority to
determine the terms and conditions of Awards; to construe and interpret
Agreements and the Plan; to establish, amend, or waive rules and regulations for
Plan administration; to accelerate the exercisability of any Award, the end of a
Performance Period or the termination of any Period of Restriction; and to take
any other action necessary or advisable for Plan administration. No Committee
member will be eligible to participate in the Plan.
DESCRIPTION OF THE PLAN
A maximum of 1,750,000 shares of Common Stock is authorized for issuance
pursuant to Awards made under the Plan, subject to adjustment in the event of a
stock split, stock dividend or other change in the Common Stock as set forth in
the Plan. An Award under the Plan may consist of a grant of Incentive Stock
Options ("ISOs"), Nonqualified Stock Options ("NQSOs"), Stock Appreciation
Rights ("SARs"), Restricted Stock Performance Units, Performance Shares or Other
Stock Unit Awards. No more than one-third of the total number of shares
authorized under the Plan may be issued in connection with Restricted Stock
Awards, Performance Awards or Other Stock Unit Awards. Awards relating to no
more than 50,000 shares of Common Stock may be granted to any single employee in
any twelve month period while the Plan is in effect. If an Award terminates,
expires or lapses unexercised, any unissued shares allocated to such Award may
be subjected again to an Award.
The Common Stock is quoted on The Nasdaq National Market, and on
, 1995, the last sale price was $ . No Awards had
been granted under the Plan as of , 1995.
Awards under the Plan may be made in one or more of the following forms:
1. STOCK OPTIONS
Options to purchase shares of the Company's Common Stock granted under
the Plan may be ISOs or NQSOs. The option price of Common Stock covered by
an ISO may not be less than 100 percent (110 percent in the case of a
shareholder possessing more than 10 percent of the total combined voting
power of all classes of stock) of the fair market value of the Common Stock
on the date of the option grant. The option price of Common Stock covered
by an NQSO also may not be less than 100 percent of the fair market value
of the Common Stock on the date of grant.
The number of shares of Common Stock subject to ISOs that will be
granted by the Committee to any employee is in the sole discretion of the
Committee; provided, however, that Common Stock (determined at the time of
the Award) subject to an employee's first exercise of ISOs under the Plan
during any calendar year may not exceed $100,000 or the amount specified in
Section 422 of the Internal Revenue Code and rules and regulations
thereunder.
Options may only be exercised at such times as may be specified by the
Committee, provided, however, that ISOs may not be exercised after ten
years from the date on which the ISO was granted. The Plan does not set a
limit on the period during which NQSOs may be exercised. No option granted
under the Plan shall be exercisable within the first six months from the
date it is granted, except in the case of a Participant who becomes
disabled or dies or, under certain circumstances, in the case of an option
which becomes exercisable as a result of a change of control as defined in
the Plan.
19
<PAGE>
2. STOCK APPRECIATION RIGHTS
The Committee may award SARs under the Plan either with or without
related options and, if related to an option, either in tandem with, or in
addition to, the option. Further, the Committee may impose such conditions
upon the exercise of SARs as the Committee deems appropriate. When the SAR
is exercised, the holder may elect to receive an amount equal to the
difference between (i) the fair market value on the date of exercise of the
Common Stock covered by the exercised portion of the SAR and (ii) the
exercise price of the Common Stock under the related option, or if not
related to an option, the fair market value of Common Stock on the date the
SAR was awarded. The Committee may limit the amount which can be received
when a SAR is exercised. When a SAR related to and in tandem with an option
is exercised, the underlying option will no longer be exercisable for the
number of shares of Common Stock covered by the exercised portion of the
SAR. Similarly, when an option is exercised, any SAR related to, and in
tandem with, the option will no longer be exercisable. If, however, the SAR
is in addition to a related option, the exercise of the SAR will not reduce
the number of shares for which the option may be exercised and vice versa.
The Company's obligation arising upon exercise of a SAR may be paid in
Common Stock or in cash, or in any combination of the two, as the Committee
may determine.
SARs may be exercised only when the underlying option is exercisable
or, if there is no underlying option, at such times as may be specified by
the Committee. No SAR may be exercised within the first six months from the
date it is granted, except in the case of a Participant who becomes
disabled or dies or, under certain circumstances, in the case of a Change
in Control.
3. RESTRICTED STOCK
The Committee may award Restricted Stock under the Plan in such
amounts as the Committee may determine in accordance with the Plan. Each
Restricted Stock grant shall be subject to an Agreement that shall specify
the Period of Restriction and other terms and conditions, restrictions, and
performance criteria specified by the Committee in accordance with the
Plan. No shares of Restricted Stock granted to a Participant may be sold,
transferred, pledged, assigned or otherwise alienated until the
restrictions on such shares shall have lapsed or been removed under the
provisions of the Plan. If a holder of Restricted Stock ceases to be
employed by the Company, he will forfeit any shares of Restricted Stock on
which the restrictions have not lapsed or otherwise been removed.
The Period of Restriction for shares of Restricted Stock must be at
least twelve months from the date of grant, except in the case of a
Participant who dies or becomes disabled or, under certain circumstances,
in the case of a change in control.
4. PERFORMANCE AWARDS AND OTHER STOCK UNIT AWARDS
In addition to stock options, SARs and Restricted Stock, the Committee
may grant to Participants Performance Awards, the value of which is
determined by the fair market value of the Company's Common Stock
("Performance Shares") or the attainment of preestablished goals relating
to the Company's financial or operating performance ("Performance Units").
The Committee may also grant to Participants other stock awards that are
valued by reference to the Company's Common Stock or other securities
("Other Stock Unit Awards"). The Committee has discretion in determining
the Performance Units, Performance Shares and Other Stock Unit Awards
granted to a Participant, the goals to be achieved (including whether the
goals are absolute or measured against the performance of other companies),
the time period during which the goals must be met,
20
<PAGE>
and the other terms and conditions applicable to the grant of the Award.
The Performance Period for Performance Units and Performance Shares may not
be less than twelve months from the date of the Award. The Company's
obligation arising upon the attainment of the goals underlying Performance
Units or Performance Shares may be paid in cash or shares of Common Stock,
or in any combination of the two, as the Committee may determine.
No Performance Units or Performance Shares granted under the Plan may
be sold, transferred, pledged, assigned or otherwise alienated, except by
will or by the laws of descent and distribution. No Performance Units or
Performance Shares granted to a Participant under the Plan shall be
exercisable within the first twelve months from the date it is granted
except, under certain circumstances, in the case of a change in control.
Until Awards as described above are granted by the Committee, the actual
benefits or amounts that will be received by or allocated to eligible employees
are not determinable.
TRANSFERABILITY OF AWARDS
The Committee may permit the transferability of NQSOs, free standing SARs
and tandem and additive SARs that are related to NQSOs. This authority is
intended primarily to facilitate transfers to family members for estate planning
purposes. Otherwise, no options, SARs, Performance Units or Performance Shares
granted under the Plan, and during the applicable period of restrictions, no
shares of Restricted Stock or any Other Stock Unit Awards may be sold,
transferred, pledged, or otherwise disposed of, other than by will or by the
laws of descent and distribution. All rights granted to a Participant under the
Plan will be exercisable during his lifetime only by such Participant, or his
guardian or legal representative. Upon the death of a Participant, his personal
representative or beneficiary may exercise his rights under the Plan.
CHANGE IN CONTROL
In the event of a Change in Control, the Committee, may cause (i) each
Option then outstanding under the Plan to become fully exercisable, (ii) all
restrictions and conditions related to grants of Restricted Stock to be
satisfied or released, and (iii) the acceleration or release of any or all
restrictions or conditions related to an Award, as specified in the Plan.
AMENDMENT OF THE PLAN AND INCENTIVE AWARDS
The Board may terminate, amend or modify the Plan as it deems advisable;
provided that the shareholders of the Company must approve any amendment as
required under the Internal Revenue Code, Section 16 of the Securities Exchange
Act of 1934, or as stipulated by any other regulatory agency having authority
with respect to such matters. Awards granted under the Plan may be amended with
the consent of the Participant so long as the amended Award is consistent with
the terms of the Plan.
FEDERAL INCOME TAX CONSEQUENCES
An employee will not incur federal income tax when he is granted an NQSO,
ISO, SAR, Restricted Stock, Performance Shares, Performance Unit or Other Stock
Unit Award. Upon exercise of an NQSO or a SAR, an employee generally will
recognize ordinary income, which is subject to income tax withholding by the
Company, equal to the difference between the fair market value of the Common
Stock on the date of the exercise and the exercise price of the option. When an
employee exercises an ISO, he generally will not recognize income, unless he is
subject to the alternative minimum tax.
21
<PAGE>
An employee may deliver shares of Common Stock instead of cash in payment
of the exercise price of an ISO or NQSO without having to recognize taxable gain
(except in some cases with respect to "statutory option stock" described below)
on any appreciation in value of the shares delivered. However, if an employee
delivers shares of "statutory option stock" in satisfaction of all, or any part,
of the exercise price under an ISO, and if the applicable holding periods of the
"statutory option stock" have not been met, he will be considered to have made a
taxable disposition of the "statutory option stock." "Statutory option stock" is
stock acquired upon the exercise of incentive stock options or under a stock
purchase plan qualified under Section 423 of the Internal Revenue Code.
In general, a Participant who has received shares of Restricted Stock,
Performance Shares, Performance Units or Other Stock Unit Awards under the Plan
will include in his gross income as compensation an amount equal to the fair
market value of the shares, or cash amount in the event of nonstock awards, at
the time the restrictions lapse or are removed or performance requirements met.
Such amount will be included in income in the tax year in which such event
occurs. The income recognized will be subject to income tax withholding by the
Company. The Plan permits a Participant to deliver already owned Common Stock or
to have a portion of the shares the Participant would otherwise acquire under an
Award withheld to cover the Participant's tax liability.
The Company usually will be entitled to a business expense deduction at the
time and in the amount that the recipient of an Award recognizes ordinary
compensation income associated with the Award. As stated above, this usually
occurs upon exercise of NQSOs and SARs and, with respect to Restricted Stock,
Performance Shares, Performance Units or Other Stock Unit Awards, when the
restrictions lapse or are removed or other performance requirements met. In some
cases, such as with the exercise of an NQSO, the Company's deduction may be
contingent upon the Company's meeting withholding tax requirements. No deduction
is allowed in connection with an ISO, unless the employee disposes of Common
Stock received upon exercise in violation of the holding period requirements.
There also can be circumstances when the Company may not be entitled to a
deduction for certain transfers of Common Stock or payments to an employee upon
the exercise of an incentive award that has been accelerated as a result of a
Change of Control.
In addition to the limitations described above on the Company's right to a
corresponding business expense deduction, recent tax legislation generally
imposes a $1 million limitation on the amount of annual compensation deduction
allowable to a publicly held company in respect of its chief executive officer
and its other four most highly paid executive officers. An exception is provided
for "performance based" compensation if certain shareholder approval and outside
director administration requirements are satisfied. Because of certain
interpretational issues under the new statute, and in the absence of final
Internal Revenue Service regulations, there can be no assurance that Awards
under the Plan will qualify for this exception. Proposed regulations would
include stock options and stock appreciation rights, but exclude restricted
stock, from the exception.
VOTE REQUIRED FOR APPROVAL OF THE 1995 STOCK INCENTIVE PLAN
The affirmative vote of a majority of the shares of Common Stock which are
present in person or by proxy at the Meeting is required for approval of the
1995 Stock Incentive Plan.
THE BOARD OF DIRECTORS BELIEVES THAT ADOPTION OF THE 1995 STOCK INCENTIVE
PLAN IS IN THE BEST INTERESTS OF THE SHAREHOLDERS AND THE COMPANY AND RECOMMENDS
A VOTE "FOR" THE PLAN.
22
<PAGE>
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 with the Company of their beneficial
ownership and changes in ownership of Common Stock.
Based solely on a review of the forms that were filed with it and
representations of the directors and executive officers, the Company believes
that all required forms were timely filed for the year 1994 and for prior years
with the exception of the untimely filing of a Form 4 report by William J.
Foster, III, an executive officer, disclosing an option exercise and
corresponding sale of 1,200 shares of Common Stock which were timely reported on
a Form 144.
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 1995. 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, 1996 (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 , 1996 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 , 1995
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EXHIBIT A
1995 STOCK INCENTIVE PLAN
ARTICLE I.
ESTABLISHMENT, PURPOSE, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. Central Fidelity Banks, Inc. (hereinafter
referred to as the "Company"), a Commonwealth of Virginia corporation, hereby
establishes an incentive compensation plan to be known as the "1995 Stock
Incentive Plan" (hereinafter referred to as the "Plan"), as set forth in this
document. Unless otherwise defined herein, all capitalized terms shall have the
meanings set forth in Section 2.1 herein. The Plan permits the grant of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock, Performance Awards in the form of Performance Units and
Performance Shares, and Other Stock Unit Awards.
The Plan was adopted by the Board of Directors on January 11, 1995, and
shall become effective as of May 10, 1995 (the "Effective Date"), subject to the
approval by vote of shareholders of the Company in accordance with applicable
laws. Awards may be granted prior to shareholder approval of the Plan, but each
such Award shall be subject to the approval of the Plan by the shareholders.
1.2 PURPOSE OF THE PLAN. The Plan is intended to foster the success of the
Company and its subsidiaries by providing incentives to Eligible Employees to
promote the long-term financial success of the Company. The Plan is designed to
provide flexibility to the Company in its ability to motivate, attract, and
retain the services of Eligible Employees upon whose judgment, interest, and
special effort the successful conduct of the Company's operation is largely
dependent.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date,
as described in Section 1.1 herein, and shall remain in effect, subject to the
right of the Board of Directors to terminate the Plan at any time pursuant to
Article XII herein, until May 9, 2005, at which time it shall terminate except
with respect to Awards made prior to, and outstanding on, that date, which shall
remain valid in accordance with their terms.
ARTICLE II.
DEFINITIONS
2.1 DEFINITIONS. Except as otherwise defined in the Plan, the following
terms shall have the meanings set forth below:
(a) "AFFILIATE" shall have the meaning ascribed to such term in Rule
12b-2 under the Securities Exchange Act of 1934, as amended (the "Exhange
Act").
(b) "AGREEMENT" means a written agreement implementing the grant of
each Award signed by an authorized officer of the Company and by the
Participant.
(c) "AWARD" means individually or collectively, a grant under this
Plan of Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Stock, Performance Units, Performance
Shares, or Other Stock Unit Awards.
(d) "AWARD DATE" or "GRANT DATE" means the date on which an Award is
made by the Committee under this Plan.
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(e) "BENEFICIAL OWNER" shall have the meaning ascribed to such term in
Rule 13d-3 under the Exchange Act.
(f) "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of
the Company.
(g) "CHANGE IN CONTROL" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied:
(i) Any person, corporation or other entity or group, including any
"group" as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, other than (A) those persons in control of the Company on the
Effective Date, (B) any person or group acquiring securities of the
Company directly from the Company, or (C) a trustee or other fiduciary
holding securities of the Company under an employee benefit plan
sponsored or maintained by the Company or its Subsidiaries, becomes the
beneficial owner of shares of the Company having 10% or more of the
total number of votes that may be cast for the election of directors of
the Company; or
(ii) As the result of, or in connection with, any tender or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing (a
"Transaction"), the persons who were directors of the Company before the
Transaction shall, following the Transaction, cease to constitute a
majority of the Board of Directors of the Company or any successor to
the Company or its assets; or
(iii) If at any time, (w) the Company shall consolidate with, or
merge with, any other Person and the Company shall not be the continuing
or surviving corporation, (x) any Person shall consolidate with, or
merge with, the Company, and the Company shall be the continuing or
surviving corporation and in connection therewith, all or part of the
outstanding Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, (y) the
Company shall be a party to a statutory share exchange with any other
Person after which the Company is a Subsidiary of any other Person, or
(z) the Company shall sell or otherwise transfer 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons.
(h) "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
(i) "COMMITTEE" means the Executive Compensation Committee of the
Board or such other committee as the Board may from time to time appoint to
administer the Plan.
(j) "COMPANY" means Central Fidelity Banks, Inc. including all
Affiliates and Subsidiaries, or any successor thereto as provided in
Article XIV herein.
(k) "ELIGIBLE EMPLOYEE" means any officer or other employee of the
Company or its Subsidiaries (including any entity that becomes a Subsidiary
after the adoption of this Plan). Eligible Employee does not include
directors of the Company who are not also employees of the Company or its
Subsidiaries.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(m) "FAIR MARKET VALUE" on a particular date means as follows:
(i) If the Stock is approved for trading on NASDAQ, the mean
between the high and low sales prices of a share of Common Stock as
reported for such date in the WALL STREET JOURNAL with regard to NASDAQ
issues; or
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(ii) If the Stock is not approved for trading on NASDAQ but is
listed or admitted to trading on a national securities exchange, the
mean between the high and low sales prices of a share of Stock in
consolidated trading as reported for such date in the WALL STREET
JOURNAL with regard to securities listed or admitted to trading on such
national securities exchange; or
(iii) If in (i) or (ii) above, as applicable, there were no sales
on such date reported as provided above, the respective prices on the
most recent prior day on which sales were so reported.
In the case of an Incentive Stock Option, if the foregoing method of
determining fair market value should be inconsistent with section 422 of
the Code, "Fair Market Value" shall be determined by the Committee in a
manner consistent with such section of the Code and shall mean the value as
so determined.
(n) "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase
Stock, granted under Article VI herein, which is designated as an incentive
stock option and is intended to meet the requirements of Section 422 of the
Code.
(o) "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase
Stock, granted under Article VI herein, which is not intended to be an
Incentive Stock Option.
(p) "OPTION" means an Incentive Stock Option or a Nonqualified Stock
Option.
(q) "OTHER STOCK UNIT AWARD" means awards of Stock or other awards
that are valued in whole or in part by reference to, or are otherwise based
on, Shares or other securities of the Company and granted pursuant to
Article X hereof.
(r) "PARTICIPANT" means an Eligible Employee who has been granted an
Award under the Plan.
(s) "PERFORMANCE AWARD" means a performance-based Award, which may be
in the form of either Performance Shares or Performance Units.
(t) "PERFORMANCE SHARE" means an Award, designated as a performance
share, granted to a Participant pursuant to Article IX herein, the value of
which is determined by the Fair Market Value of Company Stock in a manner
deemed appropriate by the Committee and described in the Agreement.
(u) "PERFORMANCE UNIT" means an Award, designated as a performance
unit, granted to a Participant pursuant to Article IX herein, the value of
which is determined, in whole or in part, by the attainment of
preestablished goals relating to Company financial or operating performance
as deemed appropriate by the Committee and described in the Agreement but
which is not determined by reference to the Fair Market Value of Common
Stock.
(v) "PERIOD OF RESTRICTION" means the period during which the transfer
of Shares of Restricted Stock is restricted, pursuant to Article VIII
herein.
(w) "PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d).
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(x) "PLAN" means the Central Fidelity Banks, Inc. 1995 Stock
Incentive Plan as herein described and as hereafter from time to time
amended.
(y) "RELATED OPTION" means an Incentive Stock Option or a
Non-qualified Stock Option granted in conjunction with the grant of a Stock
Appreciation Right.
(z) "RESTRICTED STOCK" means an Award of Stock granted to a
Participant pursuant to Article VIII herein.
(aa) "SECRETARY" means the officer designated as the Secretary of the
Company.
(bb) "STOCK" or "SHARES" means the common stock of the Company.
(cc) "STOCK APPRECIATION RIGHT" or "SAR" means an Award, designated
as Stock Appreciation Right, granted to a participant pursuant to Article
VII herein.
(dd) "SUBSIDIARY" shall mean, with respect to any corporation, a
subsidiary of that corporation within the meaning of Code section 424(f).
ARTICLE III.
ADMINISTRATION
3.1 GENERAL. The Plan shall be administered by a committee of the Board
consisting of two or more directors appointed from time to time by the Board. No
person shall be appointed to or shall serve as a member of such committee unless
at the time of such appointment and service he shall be a "disinterested
person," as defined in SEC Rule 16b-3 and an "outside director," within the
meaning of Section 162(m)(4)(C)(i) of the Internal Revenue Code of 1986 as
amended by the Omnibus Budget Reconciliation Act of 1993. Notwithstanding the
foregoing, the Board may, in its discretion, delegate to another committee of
the Board any or all of the authority and responsibility of the Committee with
respect to awards to employees who are not subject to Section 16 of the Exchange
Act at the time any such delegated authority or responsibility is exercised.
Such other committee may consist of two or more directors who may, but need not,
be officers or employees of the Company or of any of its Subsidiaries. To the
extent that the Board has delegated to such other committee the authority and
responsibility of the Committee pursuant to the foregoing, all references to the
Committee in the Plan shall be to such other committee.
3.2 COMMITTEE POWERS. The Committee shall have all powers necessary or
desirable to administer the Plan. The express grant in this Plan of any specific
power to the Committee shall not be construed as limiting any power or authority
of the Committee. In addition to any other powers and, subject to the provisions
of the Plan, the Committee shall have the following specific powers: (i) to
determine the terms and conditions upon which the Awards may be made and
exercised; (ii) to determine all terms and provisions of each Agreement, which
need not be identical; (iii) to construe and interpret the Agreements and the
Plan; (iv) to establish, amend, or waive rules or regulations for the Plan's
administration; (v) to accelerate the exercisability of any Award, the end of a
Performance Period or termination of any Period of Restriction; and (vi) to make
all other determinations and take all other actions necessary or advisable for
the administration of the Plan.
3.3 SELECTION OF PARTICIPANTS. The Committee shall have the authority to
grant Awards under the Plan, from time to time, to such Eligible Employees as
may be selected by it. Each Award shall be evidenced by an Agreement.
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3.4 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan shall be final, conclusive, and
binding.
3.5 RULE 16B-3 REQUIREMENTS; CODE SECTION 162(M). Notwithstanding any
other provision of the Plan, the Committee may impose such conditions on any
Award, and the Board may amend the Plan in any such respects, as they may
determine, on the advice of counsel, are necessary or desirable to satisfy the
provisions of Rule 16b-3, as amended (or any successor or similar rule), under
the Exchange Act. Any provision of the Plan to the contrary notwithstanding, and
except to the extent that the Committee determines otherwise: (a) transactions
by and with respect to officers and directors of the Company who are subject to
Section 16(b) of the Exchange Act (hereafter, "Section 16 Persons") shall comply
with any applicable conditions of SEC Rule 16b-3; (b) transactions with respect
to persons whose remuneration is subject to the provisions of Section 162(m) of
the Code shall conform to the requirements of Section 162(m)(4)(C) of the Code;
and (c) every provision of the Plan shall be administered, interpreted and
construed to carry out the foregoing provisions of this sentence.
Notwithstanding any provision of the Plan to the contrary, the Plan is intended
to give the Committee the authority to grant Awards that qualify as
performance-based compensation under Code Section 162(m)(4)(C) as well as Awards
that do not so qualify. Every provision of the Plan shall be administered,
interpreted and construed to carry out such intention and any provision that
cannot be so administered, interpreted and construed shall to that extent be
disregarded; and any provision of the Plan that would prevent an Award that the
Committee intends to qualify as performance-based compensation under Code
Section 162(m)(4)(C) from so qualifying shall be administered, interpreted and
construed to carry out such intention and any provision that cannot be so
administered, interpreted and construed shall to that extent be disregarded.
ARTICLE IV.
STOCK SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. Subject to adjustment as provided in Section 4.4
herein, the maximum aggregate number of Shares that may be issued pursuant to
Awards made under the Plan shall not exceed 1,750,000. No more than one-third of
the aggregate number of such Shares shall be issued in connection with
Restricted Stock Awards, Performance Awards, or Other Stock Unit Awards.
Further, subject to Section 4.4, the maximum Award that may be made under the
Plan to any Participant in a consecutive twelve month period shall not exceed
50,000 shares. Except as provided in Sections 4.2 and 4.3 herein, the issuance
of Shares in connection with the exercise of, or as other payment for, Awards
under the Plan shall reduce the number of Shares available for future Awards
under the Plan.
4.2 LAPSED AWARDS OR FORFEITED SHARES. If any Award granted under this
Plan terminates, expires, or lapses for any reason other than by virtue of
exercise of the Award, or if Shares issued pursuant to Awards are forfeited, any
Stock subject to such Award again shall be available for the grant of an Award
under the Plan; provided that any such Stock shall be available for the grant of
an Award to a Section 16 Person only if the forfeiting employee received no
benefits of ownership such as dividends (but excluding voting rights) from the
Stock and SEC Rule 16b-3 would in the opinion of the Committee otherwise be
satisfied.
4.3 DELIVERY OF SHARES AS PAYMENT. In the event a Participant pays the
Option Price for Shares pursuant to the exercise of an Option with previously
acquired Shares, the number of Shares available for future Awards under the Plan
shall be reduced only by the net number of new Shares issued upon
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the exercise of the Option; provided that the number of Shares available for
future Awards to Section 16 Persons under the Plan shall be reduced only by the
net number of new Shares issued upon the exercise of the Option only if Rule
16b-3 would in the opinion of the Committee be satisfied.
4.4 CAPITAL ADJUSTMENTS. If the outstanding Shares of the Company are
increased, decreased or exchanged, through merger, consolidation, sale of all or
substantially all of the property of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split or other
distribution in respect of such Shares, for a different number or kind of
Shares, or if additional Shares or new or different Shares are distributed in
respect of such Shares, an appropriate and proportionate adjustment shall be
made by the Committee, whose determination shall be binding on all persons. The
number and class of Shares subject to each outstanding Award, the Option Price
and the aggregate number and class of Shares for which Awards thereafter may be
made shall be subject to such adjustment. If the adjustment would produce
fractional Shares with respect to any then outstanding Awards, the Committee may
adjust appropriately the number of Shares covered by the outstanding Awards so
as to eliminate the fractional shares. Any adjustments to be made with respect
to Incentive Stock Options shall comply with sections 422 and 424 of the Code.
ARTICLE V.
ELIGIBILITY
All Eligible Employees of the Company and its Subsidiaries may participate
in the Plan. Directors of the Company who are not employees of the Company or
its Subsidiaries are not eligible to participate.
ARTICLE VI.
STOCK OPTIONS
6.1 GRANT OF OPTIONS TO ELIGIBLE EMPLOYEES. Subject to the terms and
provisions of the Plan, Options may be granted to Eligible Employees at any time
and from time to time as shall be determined by the Committee. Subject to
Section 4.1 above, the Committee shall have complete discretion in determining
the number of Shares subject to Options granted to each Eligible Employee,
provided, however, that the aggregate Fair Market Value (determined at the time
the Award is made) of Shares with respect to which an Eligible Employee may
first exercise ISOs granted under the Plan during any calendar year may not
exceed $100,000 or such amount as shall be specified in Section 422 of the Code
and rules and regulations thereunder.
6.2 OPTION AGREEMENT. Each Option grant shall be evidenced by an Agreement
that shall specify the type of Option granted, the Option Price (as hereinafter
defined), the duration of the Option, the number of Shares to which the Option
pertains, any conditions imposed upon the exercisability of Options in the event
of retirement, death, disability, or other termination of employment, and such
other provisions as the Committee shall determine. The Agreement shall specify
whether the Option is intended to be an Incentive Stock Option within the
meaning of Section 422 of the Code, or a Nonqualified Stock Option not intended
to be within the provisions of Section 422 of the Code.
6.3 OPTION PRICE. The exercise price per share of Stock covered by an
Option ("Option Price") shall be determined by the Committee subject to the
following limitations. In the case of an ISO, the Option Price shall not be less
than 100% of the Fair Market Value of such Stock on the Grant Date or in
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the case of any optionee who, at the time such Incentive Stock Option is
granted, owns stock possessing more than 10% of the total combined voting power
of all classes of stock of his employer corporation or of its parent or
subsidiary corporation, not less than 110% of the Fair Market Value of such
Stock on the date the Incentive Stock Option is granted. In the case of a NQSO,
the Option Price shall not be less than 100% of the Fair Market Value of the
Stock on the Grant Date. In no event shall the Option Price of any option be
less than the par value of the Stock.
6.4 DURATION OF OPTIONS. Each Option shall expire on the earliest of (a)
ten years from the date it is granted, (b) such date as the Company's Board of
Directors shall determine, (c) after the third month following the optionee's
ceasing to be employed continuously by the Company or its Subsidiaries for any
reason except (i) optionee's retirement at or after the then normal retirement
age or earlier if approved by the Committee or (ii) optionee's disability, or
(d) twelve months after the optionee dies; provided, however, that no ISO shall
be exercisable later than the tenth (10th) anniversary date of its Award Date
and no Incentive Stock Option which is granted to any optionee who, at the time
such Option is granted, owns Stock possessing more than 10% of the total
combined voting power of all classes of stock of his employer corporation or of
its parent or subsidiary corporation, shall be exercisable after the expiration
of five years from the date such Option is granted.
6.5 EXERCISABILITY. Options granted under the Plan shall be exercisable at
such times and be subject to such restrictions and conditions as the Committee
shall determine, which need not be the same for all Participants. No Option,
however, shall be exercisable until the expiration of at least six months after
the Award Date, except that such limitation shall not apply in the case of death
or disability of the Participant, or as set forth in Article XI of this Plan.
6.6 METHOD OF EXERCISE. Options may be exercised by the delivery of a
written notice to the Company in the form prescribed by the Committee setting
forth the number of Shares with respect to which the Option is to be exercised.
The Option Price shall be payable to the Company in full by the Participant who,
if so provided in the Option Agreement, may: (i) deliver cash in satisfaction of
all or any part of the Option Price; (ii) deliver, or cause to be withheld from
the Option, Shares of Stock, valued at Fair Market Value on the date of
exercise, in satisfaction of all or any part of the Option Price; or (iii)
deliver a properly executed exercise notice together with irrevocable
instructions to a broker to sell immediately some or all of the Shares acquired
by exercise of the Option and to promptly deliver to the Company an amount of
the sale proceeds (and in lieu of or pending a sale, loan proceeds) sufficient
to pay the Option Price. For purposes of payment described in (iii) above, the
exercise shall be deemed to have occurred on the date the Company receives the
exercise notice, accompanied by the broker instructions.
6.7 NONTRANSFERABILITY OF OPTIONS.
(a) Except as specifically provided in an Agreement pursuant to
subsection (b) of this Section or Section 15.2 below, no Options granted
under the Plan may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, otherwise than by will or by the laws of descent
and distribution. During the lifetime of a Participant to whom an Incentive
Stock Option is granted, the Incentive Stock Option may be exercised only
by the Participant.
(b) In addition to nontransferable Options, the Committee may grant
Nonqualified Stock Options (with or without tandem SARs) that are
transferable during the lifetime of the Participant, provided that (i) no
consideration is paid for the transfer and (ii) no Options granted to
persons subject to Section 16 of the Exchange Act may be transferable
unless and except to the extent
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such transferability would not result in the loss of any Rule 16b-3
exemptions for nontransferable Options granted or to be granted under the
Plan. The transferee of an Option shall be subject to all restrictions
applicable to the Option prior to its transfer. The Agreement granting the
Option shall set forth the transfer conditions and restrictions. The
Committee may impose on any transferable Option and on Stock issued upon
the exercise of an Option such limitations and conditions as the Committee
deems appropriate.
6.8 CONTRIBUTION LIMITATIONS. No Participant shall make any elective
contribution or employee contribution to the Plan (within the meaning of
Treasury Regulation section 1.401(k)-1(d)(2)(iv)(B)(4)) during the balance of
the calendar year after the Participant's receipt of a hardship distribution
from a plan of the Company or a related party within the provisions of Code
sections 414(b), (c), (m) or (o) containing a cash or deferred arrangement under
section 401(k) of the Code, or during the following calendar year. The preceding
sentence shall not apply if and to the extent that the Committee determines it
is not necessary to qualify any such plan as a cash or deferred arrangement
under section 401(k) of the Code.
6.9 No optionee shall have any rights as a shareholder with respect to
Shares subject to an Option until the date of exercise of such Option.
ARTICLE VII.
STOCK APPRECIATION RIGHTS
7.1 GRANT OF STOCK APPRECIATION RIGHTS. Subject to the terms and
conditions of the Plan, Stock Appreciation Rights may be granted to
Participants, at the discretion of the Committee, in any of the following forms:
(a) In connection with the grant, and exercisable in lieu of Options
("Tandem SARs");
(b) In connection with and exercisable in addition to the grant of
Options ("Additive SARs");
(c) Independent of the grant of Options ("Freestanding SARs"); or
(d) In any combination of the foregoing.
7.2 EXERCISE OF TANDEM SARS. Tandem SARs may be exercised with respect to
all or part of the Shares subject to the Related Option. The exercise of Tandem
SARs shall cause a reduction in the number of Shares subject to the Related
Option equal to the number of Shares with respect to which the Tandem SAR is
exercised. Conversely, the exercise, in whole or part, of a Related Option,
shall cause a reduction in the number of Shares subject to the Tandem Option
equal to the number of Shares with respect to which the Related Option is
exercised. Shares with respect to which the Tandem SAR shall have been exercised
may not be subject again to an Award under the Plan.
Notwithstanding any other provision of the Plan to the contrary, a Tandem
SAR shall expire no later than the expiration of the Related Option, shall be
transferable only when and under the same conditions as the Related Option and
shall be exercisable only when the Related Option is eligible to be exercised.
In addition, if the Related Option is an ISO, a Tandem SAR shall be exercised
for no more than 100% of the difference between the Fair Market Value of Shares
subject to the Related Option at the time the Tandem SAR is exercised and the
Option Price of the Related Option.
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7.3 EXERCISE OF ADDITIVE SARS. Additive SARs shall be deemed to be
exercised upon, and in addition to, the exercise of the Related Option. The
deemed exercise of Additive SARs shall not reduce the number of Shares with
respect to which the Related Option remains unexercised.
7.4 EXERCISE OF FREESTANDING SARS. Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes
upon such SARs.
7.5 OTHER CONDITIONS APPLICABLE TO SARS. No SAR granted under the Plan
shall be exercisable until the expiration of at least twelve months after the
Grant Date, except that such limitation shall not apply in the case of the death
or disability of the Participant, or as set forth in Article XI of this Plan. In
no event shall the term of any SAR granted under the Plan exceed ten years from
the Grant Date. A SAR may be exercised only when the Fair Market Value of a
Share exceeds either (a) the Fair Market Value per Share on the Grant Date in
the case of a Freestanding SAR or (b) the Option Price of the Related Option in
the case of either a Tandem or Additive SAR. A SAR shall be exercised by
delivery to the Committee of a notice of exercise in the form prescribed by the
Committee.
7.6 PAYMENT UPON EXERCISE OF SARS. Subject to the provisions of the
Agreement, upon the exercise of a SAR, the Participant is entitled to receive,
without any payment to the Company (other than required tax withholding
amounts), an amount equal to the product of multiplying (i) the number of shares
with respect to which the SAR is exercised by (ii) an amount equal to the excess
of (A) the Fair Market Value per Share on the date of exercise of the SAR over
(B) either (x) the Fair Market Value per Share on the Award Date in the case of
a Freestanding SAR or (y) the Option Price of the Related Option in the case of
either a Tandem or Additive SAR. Payment to the Participant shall be made in
Shares, valued at the Fair Market Value on the date of exercise, in cash if the
Participant has so elected in his written notice of exercise, or a combination
thereof. To the extent required to satisfy the conditions of Rule 16b-3(e) under
the Exchange Act, or any successor or similar rule, or as otherwise provided in
the Agreement, the Committee shall have the sole discretion to consent to or
disapprove the election of any Participant to receive cash in full or partial
settlement of an SAR. In cases where an election of settlement in cash must be
consented to by the Committee, the Committee may consent to, or disapprove, such
election at any time after such election, or within such period for taking
action as is specified in the election, and failure to give consent shall be
disapproval. Consent may be given in whole or as to a portion of the SAR
surrendered by the Participant. If the election to receive cash is disapproved
in whole or in part, the SAR shall be deemed to have been exercised for Shares,
or, if so specified in the notice of exercise and election, not to have been
exercised to the extent the election to receive cash is disapproved.
7.7 NONTRANSFERABILITY OF SARS. Unless the Committee provides otherwise
pursuant to Section 6.7(b) above or 15.2 below, no SAR granted under the Plan
may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, otherwise than by will or by the laws of descent and distribution.
Further, all SARs granted to a Participant under the Plan shall be exercisable
during his lifetime only by such Participant or his guardian or legal
representative.
ARTICLE VIII.
RESTRICTED STOCK
8.1 GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant shares of
Restricted Stock under the Plan to such Participants and in such amounts as it
shall determine. Participants receiving Restricted Stock Awards shall
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not be required to pay the Company therefor (except for applicable tax
withholding) other than the rendering of services and/or until other conditions
are satisfied as determined by the Committee in its sole discretion, unless
required by applicable law.
8.2 RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by an Agreement that shall specify the Period of Restriction; the
conditions which must be satisfied prior to removal of the restriction; the
number of Restricted Stock shares granted; and such other provisions as the
Committee shall determine.
8.3 TRANSFERABILITY. Except as provided in this Article VIII and subject
to the limitation in the next sentence, the shares of Restricted Stock granted
hereunder may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until satisfaction of performance criteria as
specified by the Committee in its sole discretion and set forth in the
Agreement, or upon termination of the applicable Period of Restriction. No
restriction shall be removed until the expiration of at least twelve months
after the Award Date, except that such limitation shall not apply in the case of
death or disability of the Participant, or as set forth in Article XI of this
Plan. All rights with respect to the Restricted Stock granted to a Participant
under the Plan shall be exercisable during his lifetime only by such Participant
or his guardian or legal representative.
8.4 OTHER RESTRICTIONS. The Committee shall impose such other restrictions
on any shares of Restricted Stock granted pursuant to the Plan as it may deem
advisable including, without limitation, restrictions under applicable Federal
or state securities laws, and may legend the certificates representing
Restricted Stock to give appropriate notice of such restrictions. Alternatively,
the Committee, in its sole discretion, may have shares of Restricted Stock
issued without legend and held by the Secretary until such time all restrictions
are satisfied.
8.5 CERTIFICATE LEGEND. In the event the Committee elects to legend the
certificates representing Restricted Stock, and in addition to any legends
placed on certificates pursuant to Section 8.4 herein, each certificate
representing shares of Restricted Stock granted pursuant to the Plan shall bear
the following legend:
The sale or other transfer of the shares of Stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is
subject to certain restrictions on transfer set forth in the 1995 Incentive
Stock Plan of Central Fidelity Banks, Inc., in the rules and administrative
procedures adopted pursuant to such Plan, and in an Agreement dated
. A copy of the Plan, such rules and procedures,
and such Restricted Stock Agreement may be obtained from the Secretary of
Central Fidelity Banks, Inc.
8.6 REMOVAL OF RESTRICTIONS. Except as otherwise provided in this Article
VIII, Shares of Restricted Stock covered by each Restricted Stock Award made
under the Plan shall become freely transferable by the Participant after the
last day of the Period of Restriction and/or upon the satisfaction of other
conditions as determined by the Committee in its sole discretion. Once the
Shares are released from the restrictions, the Participant shall be entitled to
have removed any legend that may have been placed on certificates pursuant to
Sections 8.4 and 8.5 herein.
8.7 VOTING RIGHTS. During the Period of Restriction, Participants in whose
name shares of Restricted Stock are granted hereunder may exercise full voting
rights with respect to those Shares.
8.8 DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of Restriction,
Participants in whose name shares of Restricted Stock are granted hereunder
shall be entitled to receive all dividends and
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other distributions paid with respect to those Shares. If any such dividends or
distributions are paid in Shares, the Shares shall be subject to the same
restrictions on transferability as the shares of Restricted Stock with respect
to which they were distributed.
8.9 TERMINATION OF EMPLOYMENT DUE TO RETIREMENT. Unless otherwise provided
in the Agreement, in the event that a Participant terminates his employment with
the Company or one of its Subsidiaries due to retirement defined as the earlier
of attaining age 65, or age 55 plus at least 10 years of service with the
Company and with the consent of the Company, any remaining Period of Restriction
applicable to the Restricted Stock shares pursuant to Section 8.3 herein shall
automatically terminate and, except as otherwise provided in Section 8.4 herein,
the shares of Restricted Stock shall thereby be delivered to such Participant
free of restrictions.
8.10 TERMINATION OF EMPLOYMENT DUE TO DEATH OR DISABILITY. In the event a
Participant's employment is terminated because of death or disability during the
Period of Restriction, any remaining Period of Restriction applicable to the
Restricted Stock pursuant to Section 8.3 herein shall automatically terminate
and, except as otherwise provided in Section 8.4 herein, the shares of
Restricted Stock shall thereby be released and free of restrictions.
8.11 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. Unless otherwise
provided in the Agreement, in the event that a Participant terminates his
employment with the Company for any reason other than for death, disability, or
retirement, as set forth in Section 8.9 and 8.10 herein, during the Period of
Restriction, then any shares of Restricted Stock still subject to restrictions
as of the date of such termination shall automatically be forfeited and, if held
by the Participant, returned to the Company.
ARTICLE IX.
PERFORMANCE AWARDS
9.1 GRANT OF PERFORMANCE AWARDS. Subject to the terms and provisions of
the Plan, Performance Awards in the form of either Performance Units or
Performance Shares may be granted to Participants at any time and from time to
time as shall be determined by the Committee. Subject to Section 4.1 above, the
Committee shall have complete discretion in determining the number of
Performance Units or Performance Shares granted to each Participant; provided
that on each date that any cash is paid to any Participant pursuant to
Performance Units, the amount of cash shall be divided by the Fair Market Value
of a share of the Common Stock, and the result shall be deducted from the number
of shares that may be issued to such Participant under Section 4.1 above
pursuant to Awards made to such Participant in the 12-month period in which such
Performance Units were granted. Participants receiving Performance Awards shall
not be required to pay the Company therefor (except for applicable tax
withholding) unless required by applicable law.
9.2 VALUE OF PERFORMANCE AWARDS. The Committee shall determine the number
of Performance Units or Performance Shares granted to each Participant as a
Performance Award. The Committee shall set performance goals in its discretion
for each Participant who is granted a Performance Award. The extent to which
such performance goals are met will determine the value of the Performance Unit
or Performance Share to the Participant. Such performance goals may be
particular to a Participant, may relate to the performance of the Subsidiary
which employs him, may be based on the performance of the Company generally, or
a combination of the foregoing. The performance goals may be based on
achievement of balance sheet or income statement objectives, or any other
objectives established by
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the Committee. The performance goals may be absolute in their terms or measured
against or in relationship to other companies comparably, similarly or otherwise
situated. The Committee shall determine the time period during which the
performance goals must be met ("Performance Period"), provided, however, that
the Performance Period may not be less than twelve months from the Award Date.
The terms and conditions of each Performance Award shall be set forth in an
Agreement.
9.3 SETTLEMENT OF PERFORMANCE AWARDS. After a Performance Period has
ended, the holder of a Performance Unit or Performance Share shall be entitled
to receive the value thereof based on the degree to which the performance goals
established by the Committee and set forth in the Agreement have been satisfied.
9.4 FORM OF PAYMENT. Payment of the amount to which a Participant shall be
entitled upon the settlement of Performance Award shall be made in cash, Stock,
or a combination thereof as determined by the Committee. Payment may be made in
a lump sum or installments as prescribed by the Committee.
9.5 NONTRANSFERABILITY. Unless the Committee provides otherwise pursuant
to Section 15.2 below, no Performance Units or Performance Shares granted under
the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, otherwise than by will or by the laws of descent and distribution.
Subject to Section XI, all rights with respect to Performance Units and
Performance Shares granted to a Participant under the Plan shall not be
exercisable until the expiration of twelve months after the Award Date and
thereafter during his lifetime only by such Participant or his guardian or
personal representative.
ARTICLE X.
OTHER STOCK UNIT AWARDS
10.1 GRANT. The Committee is authorized to grant to Participants, either
alone or in addition to other Awards made under the Plan, Other Stock Unit
Awards to be issued at such times, subject to or based upon achievement of such
performance or other goals and on such other terms and conditions as the
Committee shall deem appropriate and specify in the Agreement relating thereto,
which need not be the same with respect to each Participant. Stock or other
securities granted pursuant to Other Stock Unit Awards may be issued for no cash
consideration or for such minimum consideration as may be required by applicable
law.
10.2 SALE AND TRANSFERABILITY. Stock or other securities issued pursuant
to Other Stock Unit Awards may not be sold by a Participant until the expiration
of at least twelve months from the Award Date, except that such limitation shall
not apply in the case of death or disability of a Participant, or as set forth
in Article XI of this Plan. To the extent Other Stock Unit Awards are deemed to
be derivative securities within the meaning of Rule 16b-3 under the Exchange
Act, a Participant's rights with respect to such Awards shall not vest or be
exercisable until the expiration of at least twelve months from the Award Date.
To the extent an Other Stock Unit Award granted under the Plan is deemed to be a
derivative security within the meaning of Rule 16b-3 of the Exchange Act, it may
not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, otherwise than by will or by the laws of descent and distribution,
unless the Committee provides otherwise pursuant to Section 15.2 below. All
rights with respect to such Other Stock Unit Awards granted to a Participant
under the Plan shall be exercisable during his lifetime only by such Participant
or his guardian or personal representative.
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ARTICLE XI.
CHANGE IN CONTROL
In the event of a Change in Control of the Company, the Committee may, in
its complete discretion, cause: (i) each Option then outstanding under the Plan
to become fully exercisable and remain so for the duration of the Option as
specified in the Agreement; (ii) all restrictions or conditions related to
grants of Restricted Stock to be deemed immediately and fully satisfied and all
certificates representing such Shares of Restricted Stock to be released or have
any legend removed by the Secretary, and thereby become freely transferable; and
(iii) the acceleration or release of any or all restrictions or conditions
related to an Award, in such a manner, in the case of Section 16 Persons, as to
conform to the provisions of Rule 16b-3.
ARTICLE XII.
AMENDMENT, MODIFICATION, AND TERMINATION OF THE PLAN
12.1 AMENDMENT, MODIFICATION, AND TERMINATION. At any time and from time
to time, the Board may terminate, amend, or modify the Plan. The Board is
specifically authorized to amend the Plan and take such other action as it deems
necessary or appropriate to comply with Code Section 162(m) and regulations
issued thereunder. Such amendment or modification may be without shareholder
approval except to the extent that such approval is required by the Code,
pursuant to the rules under Section 16 of the Exchange Act, by any national
securities exchange or system on which the Stock is then listed or reported, by
any regulatory body having jurisdiction with respect thereto or under any other
applicable laws, rules, or regulations.
12.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification
of the Plan, other than pursuant to Section 4.4 herein, shall in any manner
adversely affect any Award theretofore granted under the Plan, without the
written consent of the Participant.
ARTICLE XIII.
WITHHOLDING
13.1 TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, State, and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any grant, exercise, or payment under or as a result of this Plan.
13.2 STOCK WITHHOLDING. To the extent the Code requires withholding upon
the exercise of Nonqualified Stock Options, or upon the lapse of restrictions on
Restricted Stock, or upon the occurrence of any other similar taxable event, the
Committee may permit or require, subject to any rules it deems appropriate, the
withholding requirement, to be satisfied, in whole or in part, with or without
the consent of the participant, by having the Company withhold Shares of Stock
having a Fair Market Value equal to the amount required to be withheld. The
value of the Shares to be withheld shall be based on Fair Market Value of the
Shares on the date that the amount of tax to be withheld is to be determined.
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ARTICLE XIV.
SUCCESSORS
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE XV.
GENERAL
15.1 REQUIREMENTS OF LAW. The granting of Awards and the issuance of
shares of Stock under this Plan shall be subject to all applicable laws, rules,
and regulations, and to such approvals by any governmental agencies as may be
required. No shares of Stock shall be issued or transferred pursuant to this
Plan unless and until all legal requirements applicable to such issuance or
transfer have, in the opinion of counsel to the Company, been complied with. In
connection with any such issuance or transfer, the person acquiring the Shares
shall, if requested by the Company, give assurances satisfactory to counsel to
the Company in respect to such matters as the Company may deem desirable to
assure compliance with all applicable legal requirements.
15.2 EFFECT OF PLAN. The establishment of the Plan shall not confer upon
any Participant any legal or equitable right against the Company, a Subsidiary,
or the Committee, except as expressly provided in the Plan. The Plan does not
constitute an inducement or consideration for the employment of any Participant,
nor is it a contract between the Company or any of its Subsidiaries and any
Participant. Participation in the Plan shall not give any Participant any right
to be retained in the service of the Company or any of its Subsidiaries. No
Award and no right under the Plan, contingent or otherwise, shall be assign-
able or subject to any encumbrance, pledge or charge of any nature except that,
under such rules and regulations as the Committee may establish pursuant to the
terms of the Plan, a beneficiary may be designated in respect to the Award in
the event of the death of the holder of the Award and except, also, that if the
beneficiary shall be the executor or administrator of the estate of the holder
of the Award, any rights in respect to such Award may be transferred to the
person or persons or entity (including a trust) entitled thereto under the will
of the holder of such Award or under the laws relating to descent and
distribution.
15.3 CREDITORS. The interests of any Participant under the Plan or any
Agreement are not subject to the claims of creditors and may not, in any way, be
assigned, alienated, or encumbered.
15.4 GOVERNING LAW. The Plan, and all Agreements hereunder, shall be
governed by, and construed and administered in accordance with, the laws of the
Commonwealth of Virginia. It is the intention of the Company that ISOs granted
under the Plan qualify as such under Section 422 of the Code.
15.5 SEVERABILITY. In the event any provision of the Plan or any Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Plan or Agreement, and the Plan
shall be construed and enforced as if the illegal or invalid provision had not
been included.
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******************************Appendix*************************************
<PAGE>
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 Lewis
N. Miller, Jr., Jay O. Livingston 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 17, 1995, 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
10, 1995, and at any and all adjournments thereof as follows:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS ( ) FOR all nominees listed (except as ( ) WITHHOLD AUTHORITY to vote for all
indicated to nominees listed below
the contrary below)
</TABLE>
THREE YEAR TERM AS CLASS 1 DIRECTOR: JACK H. FERGUSON, LEWIS N. MILLER, JR.,
RICHARD L. MORRILL, LLOYD U. NOLAND, III, WILLIAM G. REYNOLDS, JR.
(Instruction: to withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
2. PROPOSAL TO APPROVE THE 1995 STOCK INCENTIVE PLAN
( ) FOR ( ) AGAINST ( ) ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE>
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 and for
approval of the 1995 Stock Incentive Plan under Proposal 2.
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 , 1995
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.
