SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant X
Filed by a party other than the registrant
Check to appropriate box:
Preliminary proxy statement
X Definitive proxy statement
Definitive additional materials
Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
JEFFERSON BANKSHARES, INC.
(Name of Registrant as Specified in Its Charter)
William M. Watson, Jr.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
X $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
$500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11.
(4) Proposed maximum aggregate value of transaction:
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE>
JEFFERSON BANKSHARES, INC.
123 East Main Street
Charlottesville, Virginia 22901
To the Shareholders of
Jefferson Bankshares, Inc.:
You are cordially invited to attend the annual meeting of
shareholders of Jefferson Bankshares, Inc., which will be held Tuesday,
April 26, 1994, beginning at 10:00 A.M. local time in the Community Room
in the Jefferson National Bank Operations Center at 321 East Main Street
in Charlottesville, Virginia.
The Notice of Meeting, the Proxy Statement containing information
about business to be transacted at the meeting and the form of proxy are
enclosed. The corporation's Annual Report for 1993 has already been
mailed to you under separate cover.
Whether or not you plan to attend the annual meeting in person,
please date and sign the proxy and return it as soon as possible in the
enclosed stamped, addressed envelope. If you are present at the annual
meeting and wish to vote in person, you may withdraw the proxy at that
time.
I appreciate your continuing support of Jefferson Bankshares, Inc.,
and I encourage you to recommend the corporation's services to your
friends and neighbors.
I look forward to seeing you at the meeting.
Sincerely,
O. Kenton McCartney
President and
Chief Executive Officer
CHARLOTTESVILLE, VIRGINIA
MARCH 18, 1994
<PAGE>
JEFFERSON BANKSHARES, INC.
Charlottesville, Virginia
Notice of
Annual Meeting of Shareholders
To be Held April 26, 1994
To the Shareholders of
Jefferson Bankshares, Inc.:
The 1994 annual meeting of shareholders of Jefferson Bankshares,
Inc. will be held in the Community Room of the Jefferson National Bank
Operations Center at 321 East Main Street in Charlottesville, Virginia,
on Tuesday, April 26, 1994, at 10:00 A.M. local time for the following
purposes:
1. To elect directors of Jefferson Bankshares, Inc. for the
following year;
2. To approve the selection of KPMG Peat Marwick as independent
auditors for Jefferson Bankshares, Inc. for 1994; and
3. To act upon such other matters as may properly come before the
meeting.
You are entitled to notice of and to vote at the meeting if you were
a shareholder of record at the close of business on March 8, 1994.
William M. Watson, Jr.
Vice President and
Secretary
CHARLOTTESVILLE, VIRGINIA
MARCH 18, 1994
PLEASE DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED STAMPED, ADDRESSED ENVELOPE SO THAT YOUR
SHARES MAY BE VOTED IF YOU ARE UNABLE TO ATTEND THE MEETING.
<PAGE>
JEFFERSON BANKSHARES, INC.
123 East Main Street
Charlottesville, Virginia
PROXY STATEMENT
GENERAL INFORMATION
Proxy Statement
This Proxy Statement explains the matters on which shareholders will
vote at the 1994 annual meeting and gives information about the persons
who will be nominated for election as directors of Jefferson Bankshares,
Inc. (the "Corporation"). The approximate mailing date of this Proxy
Statement and the enclosed proxy is March 18, 1994. The executive
offices of the Corporation are located in the Jefferson National Bank
Building at 123 East Main Street in Charlottesville, Virginia; and
the mailing address for such offices is Post Office Box 711,
Charlottesville, Virginia 22902.
Voting By Proxy
You may use the enclosed proxy to vote in the election of directors
and on the approval of auditors for the Corporation. If you return the
proxy, your shares will be voted as you specify concerning these matters.
If no choice is specified, your shares will be voted to elect as
directors the persons identified in this Proxy Statement and to approve
KPMG Peat Marwick as independent auditors for the Corporation for 1994.
If you return your proxy, you may revoke it at any time before your
proxy is voted by delivering a written statement to the Secretary of the
Corporation. Proxies which are returned in the form enclosed and
received before the meeting will be voted unless they are revoked.
Solicitation Of Proxies
The proxies are being solicited by the Corporation, which will pay
the cost of solicitation. The solicitation will be made primarily by use
of the mails, although some officers and regular employees of the
Corporation and its subsidiaries may solicit proxies personally or by
telephone (but without any compensation in addition to their regular
salaries). The Corporation will reimburse banks, brokerage firms and
other custodians, nominees and fiduciaries for reasonable expenses which
they incur in sending proxy materials to the beneficial owners of the
Corporation's common stock.
Voting Securities
You are entitled to notice of and to vote at the 1994 annual meeting
if you were a shareholder of record on March 8, 1994. As of that date,
14,611,466 shares of the Corporation's common stock were outstanding.
Each share of common stock is entitled to one vote. In tabulating
votes, abstentions are not counted and, thus, will not affect the outcome
of the vote. Where a proxy has been voted but no choice has been
specified (i.e., "for," "against," "abstain" or "withhold authority," as
the case might be), the unvoted shares will be voted as specified on the
proxy and above under the heading "Voting by Proxy."
Principal Beneficial Owners
As of March 8, 1994, Jefferson National Bank ("Jefferson National"),
a subsidiary of the Corporation, beneficially held more than five percent
of the Corporation's common stock. Jefferson National holds the
Corporation's common stock in its various fiduciary capacities. The
following table sets forth the amount and percent of common stock by type
of power held by Jefferson National.
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Common Stock
Jefferson National Bank Total: 1,348,148 9.23
123 East Main Street Sole Power to Vote: 299,447 2.05
Post Office Box 711 Shared Power to Vote: 411,974 2.82
Charlottesville, VA 22902 Sole Power to Invest: 381,896 2.61
Shared Power to Invest: 818,808 5.60
Jefferson National votes stock of the Corporation only according to
instructions received from co-fiduciaries or persons who own all
beneficial interests of the account for which such shares are held.
Though sole voting power may be granted by an instrument establishing a
fiduciary relationship, Jefferson National is prohibited by Virginia law
from exercising such power.
The Corporation knows of no person other than Jefferson National who
beneficially owns more than five percent of the Corporation's outstanding
common stock.
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
Shares Beneficially Owned By Directors And Executive Officers
Following is a table which indicates as of March 8, 1994, the
amount and the percent of beneficial ownership of the Corporation's
common stock for each director, executive officer named in the
compensation table on page 9, and all directors and executive officers
as a group. Unless otherwise noted, each individual has sole voting and
sole investment power with respect to the number of shares set forth
opposite his name.
Names of Directors, Amount and Nature of Percent of
Executive Officers and Beneficial Ownership Common Stock
Directors and Executive
Officers as a Group
Robert H. Campbell, Jr. 3,342 (1) *
John T. Casteen, III 2,242 *
Hovey S. Dabney 78,000 (2) *
Lawrence S. Eagleburger 100 *
Hunter Faulconer 218,346 (3) 1.49
Fred L. Glaize, III 295,895 (4) 2.03
Henry H. Harrell 9,273 *
Alex J. Kay, Jr. 4,485 *
J. A. Kessler, Jr. 4,082 (5) *
O. Kenton McCartney 3,442 *
W. A. Pace, Jr. 6,538 *
W. A. Rinehart, III 65,086 (6) *
Gilbert M. Rosenthal 7,187 *
Alson H. Smith, Jr. 2,914 *
Lee C. Tait 3,506 *
H. A. Williamson, Jr. 13,892 *
Directors and Executive 721,906 (7) 4.94
Officers as a group
(19 Persons)
* Less than 1%
(1) Does not include 208 shares owned by Mrs. Campbell.
(2) Does not include 1,600 shares owned by Mrs. Dabney.
(3) Includes 134,666 shares held by a trust under the Estate of P. H.
Faulconer. Mr. Faulconer and Jefferson National are co-trustees of
the trust, and Mr. Faulconer has a life interest in a portion of the
income from the trust.
(4) Includes 290,864 shares owned by Amherst Corporation, 24% of the
stock of which is beneficially owned by Mr. Glaize and of which Mr.
Glaize is President and a director, and 1,552 shares owned by Glaize
Developments, Inc., 25% of the stock of which is beneficially owned
by Mr. Glaize and of which Mr. Glaize is a Vice President and a
director.
(5) Does not include 7,308 shares owned by Mrs. Kessler.
(6) Includes 21,000 shares held by a revocable trust in which Mr.
Rinehart has all beneficial interests and of which Jefferson
National is the trustee. Also includes 43,086 shares held by four
trusts of which Mr. Rinehart and Jefferson National are co-trustees.
Mr. Rinehart has a life interest in one of the four trusts and a
residual interest in another. Does not include 1,095 shares owned
by Mrs. Rinehart.
(7) Excludes shares held by spouses of directors and executive officers.
Compliance With Section 16(a) Of The Securities Exchange Act Of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors, executive officers, and persons who own more
than ten percent of the Corporation's common stock, to file with the
Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of the Corporation's common stock and to
provide copies of the reports to the Corporation. To the Corporation's
knowledge, based solely on a review of the copies of such reports
furnished to the Corporation and written representations that no other
reports were required to be filed, during the fiscal year ended December
31, 1993, the Corporation's executive officers, directors and greater
than ten percent beneficial owners complied with their respective Section
16(a) reporting requirements.
Nominations For Directors
Fourteen persons are to be elected as directors of the Corporation,
each to serve until their successors are elected and qualified. The 14
persons who are named below will be nominated at the meeting. Each
person is presently a director, has consented to being named as a nominee
in this Proxy Statement, and has indicated that he is willing to serve as
a director if elected. However, if at the time of the meeting any
nominee is unable or unwilling to serve, shares represented by proxies
will be voted at the discretion of the proxies for such other person or
persons as the Board of Directors may nominate.
Shareholders may nominate other persons at the meeting, if certain
rules are followed. However, only 14 persons will be elected directors,
and, if additional nominations are made at the meeting, the 14 persons
receiving the greatest number of votes will be elected. The rules
governing nominations by shareholders are contained in the Corporation's
bylaws. A shareholder who desires to make an additional nomination at
the meeting must first give a written notice to the President of the
Corporation at its executive office in Charlottesville, Virginia, at
least 14 days before the meeting. The notice must state: (i) the name,
address and principal occupation of each proposed nominee; (ii) to the
extent known, the number of shares of the Corporation's common stock that
will be voted for him or her; (iii) the name and residence address of the
nominating shareholder; and (iv) the number of shares of the
Corporation's common stock which the nominating shareholder owns. Unless
such notice has been given, the chairman of the meeting may disregard the
nomination.
Name, Age and Positions Held with
Principal Occupation the Corporation Year First
for Last Five Years or Subsidiaries Became a Director
John T. Casteen, III (50) Director and a member 1990
President, University of the Executive
of Virginia (prior to 1990, Compensation Committee
President of the University of the Central Region
of Connecticut) Board of Directors of
Jefferson National Bank
Hovey S. Dabney (70) Chairman and a member 1979
Has worked full-time of the Executive
with the Corporation Committee of the
or affiliates Corporation; Chairman
of Jefferson National
Lawrence S. Eagleburger (63)(1) Director and a member 1993
Senior Foreign Policy of the Executive
Advisor, Baker, Worthington, Compensation Committee of
Crossley, Stansberry & the Corporation; a member
Woolf (law firm) of the Central Region
Board of Directors of
Jefferson National
Hunter Faulconer (87) Director and a member of 1979
Farmer, horse breeder the Executive Committee
and investor of the Corporation;
a member of the Central
Region Board of Directors
of Jefferson National
Fred L. Glaize, III (58)(2) Director and a member of 1984
Partner, Glaize and Bros. the Executive Committee
(building supply company) of the Corporation; a
member of the Northern Region
Board of Directors of
Jefferson National
Henry H. Harrell (54)(3) Director and a member of 1979
Chairman and Chief the Audit Committee of the
Executive Officer, Corporation; a member
Universal Corporation of the Eastern Region
(leaf tobacco dealer) Board of Directors of
Jefferson National
Alex J. Kay, Jr. (65) Director and Chairman 1979
Retired Director of of the Audit Committee
Operations Support, of the Corporation;
Philip Morris, U.S.A., a member of the Eastern
Inc. (tobacco products) Region Board of Directors
of Jefferson National
J. A. Kessler, Jr. (66) Director and a member 1979
President, R. E. Lee & of the Executive Committee
Son, Inc. (building of the Corporation; a
contractor) member of the Central
Region Board of Directors
of Jefferson National
O. Kenton McCartney (50) Director, President and 1992
Has worked full-time Chief Executive Officer
with Corporation or of the Corporation;
affiliates Director, President and
Chief Executive Officer
of Jefferson National;
Director of Charter
Insurance Managers, Inc.,
Grace Insurance Agency,
Incorporated, Jefferson
Financial, Inc., and
Jefferson Properties, Inc.
W. A. Rinehart, III (76) Director and Chairman of 1979
Retired; (before 1991 a the Executive Compensation
consultant or Senior Committee of the Corporation
Vice President, Hilb, a member of the Central
Rogal and Hamilton of Region Board of Directors
Charlottesville) of Jefferson National
(independent general
insurance agency)
Gilbert M. Rosenthal (68)(4) Director and a member 1979
Retired; (before October, of the Executive
1993, the Chairman and Committee of the
Chief Executive Officer Corporation; a member
Standard Drug Company) of the Eastern Region
(retail business) Board of Directors
of Jefferson National
Alson H. Smith, Jr. (66) Director and a member 1984
Chairman of the Board, of the Audit Committee
Shenandoah Foods, Inc. of the Corporation;
(wholesale food a member of the Northern
distributor) Region Board of Directors
of Jefferson National
Lee C. Tait (75) Director and a member 1979
Retired Senior Vice Executive Compensation
President, C & P Committee of the
Telephone Company Corporation; a member
of Virginia of the Eastern Region
Board of Directors of
Jefferson National
H. A. Williamson, Jr. (63) Director and a member of 1989
Realtor the Audit Committee
of the Corporation; a
member of the Hampton
Roads Region Board of
Directors of Jefferson
National
(1) From January - March, 1989, Deputy Secretary of State Designate; from
March, 1989 - August, 1992, Deputy Secretary of State; from August,
1992 - January, 1993, Acting Secretary of State and Secretary of
State. Mr. Eagleburger is also a director of Dresser Industries,
Philips Petroleum Company and Universal Corporation, all of which
are subject to the reporting requirements of the Securities Exchange
Act of 1934.
(2) In 1991, the Office of Thrift Supervision ("OTS") advised Mr.
Glaize of its intention to initiate administrative proceedings
against him for failure to obtain the prior approval of OTS and
to file certain required reports in connection with the
acquisition of the stock of a financial institution. Mr. Glaize
consented to the entry of a cease and desist order and the
assessment of a $1,000 penalty during June, 1992. The order
directed Mr. Glaize, among other things, to cease and desist
from any violations of certain federal banking and securities laws.
Mr. Glaize has advised the Corporation that he was unaware
that his actions might have required regulatory approval or the
filing of reports and that he has disposed of all of the shares at
issue.
(3) From October, 1988 through October, 1991, President and Chief
Executive Officer of Universal Corporation. Universal Corporation
is subject to the reporting requirements of the Securities Exchange
Act of 1934.
(4) Mr. Rosenthal is also a director of American Filtrona Corporation,
which is subject to the reporting requirements of the Securities
Exchange Act of 1934.
The Corporation has an Audit Committee which meets with both
internal and independent auditors to discuss and to review their work and
the strengths and weaknesses of financial controls. The Committee met
three times in 1993. Messrs. Harrell, Kay, Smith and Williamson are
members of the Committee.
The Corporation has an Executive Compensation Committee which
establishes the annual compensation for the Chief Executive Officer and
reviews recommendations made by the Chief Executive Officer as to annual
compensation for executive officers and other key employees. The
Committee met three times in 1993. Messrs. Casteen, Eagleburger,
Rinehart and Tait are members of the Committee.
The Corporation has an Executive Committee which can act in lieu of
the Board of Directors with respect to regular business matters. The
Committee met four times in 1993. Messrs. Dabney, Faulconer, Glaize,
Kessler and Rosenthal are members of the Committee.
In 1993, the Corporation's Board of Directors met six times.
Except for Mr. Glaize, no incumbent director attended fewer than 75% of
the meetings for which he was responsible during 1993.
Compensation Of Executive Officers And Directors
A. Executive Compensation Committee Report on Executive Compensation
The Corporation's compensation program for executive officers is
administered by the Executive Compensation Committee of the Board of
Directors. The Committee is comprised entirely of non-employee directors
and presently consists of Messrs. Casteen, Eagleburger, Rinehart and
Tait. Mr. Rinehart serves as chairman of the Committee. Mr. Eagleburger
joined the Committee in June, 1993, upon his election to the Board of
Directors. Because Mr. Eagleburger did not join the Committee until
June, 1993, he did not participate in the Committee's 1993 compensation
decisions. Committee members are not eligible to participate in any of
the plans that cover the Corporation's executive officers.
Executive compensation consists primarily of base salary, awards
under the Incentive Stock Plan, and participation in the Profit Sharing
Plan, Pension Plan and, if applicable, Senior Officer's Supplemental
Pension Plan. A brief description of each of these plans is set forth
beginning on page 10. Total compensation is designed to attract and
retain qualified personnel capable of enabling the Corporation to achieve
its objectives in an environment characterized by increased competition and
regulatory oversight.
The Executive Compensation Committee establishes the annual base
salary and incentive stock award for the Chief Executive Officer and
reviews and, as applicable, approves, modifies or rejects recommendations
made by the Chief Executive Officer as to the annual salary and incentive
stock awards for the other executive officers. In reviewing the Chief
Executive Officer's recommendations, the Committee meets with the Chief
Executive Officer to discuss the performance appraisals for the executive
officers and considers the profitability of the Corporation, the salary
structure of the Corporation (including the average annual salary
increase) and the relative importance of the executive officer to enable
the Corporation to achieve its goals. All decisions of the Executive
Compensation Committee are reported to, and ratified by, the entire Board
of Directors. The Executive Compensation Committee has approved all
recommendations of the Chief Executive Officer and the Board of Directors
has ratified the actions of the Executive Compensation Committee for the
most recent fiscal year.
Each year salaries for personnel other than the Chief Executive
Officer are increased, on average, by a target percentage determined
through the Corporation's budgetary process with consideration given
primarily to the Corporation's past and expected financial performance
and, secondarily, to general economic conditions. Methods used to measure the
Corporation's financial performance include net income on both an
aggregate and per share basis, the rate of growth of net income, return
on average equity (i.e., net income divided by average equity), return on
average assets (i.e., net income divided by average assets), and the
measures for safety and soundness used by the various regulatory
agencies. The principal method used by the Corporation is the return on
average assets. In the banking industry a return of one percent is
generally indicative of good corporate performance; for the Corporation a
return of one percent is a minimum goal.
During the five-year period for 1989 through 1993, average annual
salary increases ranged from 3.67% to 6.43%. For the most recent fiscal
year, this average increase was 4.94%. An individual executive officer's
increase may have varied from this average increase depending upon such
officer's performance and contributions during the most recent fiscal
year and upon any changes in such officer's job duties and level of
responsibility.
Participation in the Profit Sharing Plan and Incentive Stock Plan is
designed to align the interests of executives with those of the
Corporation's shareholders by rewarding an executive for improvement in
corporate performance measured by earnings and by increasing the
executive's investment in the Corporation. The amount contributed by the
Corporation to the Profit Sharing Plan is based on a plan formula such
that contributions cannot exceed 5.25% of the Corporation's adjusted net
operating income and is allocated to each executive officer based upon
such officer's compensation relative to that of other participants.
The Incentive Stock Plan was adopted in 1985 and will expire after
the current fiscal year. At the time of the first award of stock units
to each executive officer (including the Chief Executive Officer) under
the plan, the Committee reserved a number of stock units sufficient to
allow comparable annual awards to such officer for the remaining term of
the plan. Whether an executive officer receives any or all of the
reserved award for a given year is based upon such officer's satisfactory
individual performance. In approving the size of the initial award for
an officer, the Committee considered such officer's level of
responsibility and the size of any awards previously approved for other
executive officers. The Committee believes that after the initial
determination, awards should generally be made annually on a consistent
basis, subject to the recipient's individual performance and subject to
changes in job responsibilities. The Committee has not considered it
necessary to discriminate between executives based on their respective
holdings of the Corporation's common stock in order to achieve the plan's
purposes. The actual receipt of stock underlying the award has been,
except for the Chief Executive Officer, contingent upon continued service
with the Corporation.
Compensation for the Chief Executive Officer has been, to a large
degree, subjective and the approach used by the Committee to establish
such compensation is different from that used for other executive
officers. Rather than directly tying the Chief Executive Officer's
salary to corporate performance and, thus, creating the potential for
significant changes for any given year, the Committee sets the salary at
a level that reflects individual performance and that it considers to be
sufficient to attract and retain a qualified person to be the chief
executive officer and afford such person a comfortable, but not
extravagant, life-style given the cost of living in Charlottesville,
Virginia and given the Corporation's trade area. The Committee also
takes into consideration length of service with the Corporation, standing
in the local, as well as the banking, community, and salary levels for
comparable positions at comparable financial institutions. Corporate
performance (principally return on average assets) is also considered by
the Committee but, generally, only to fine tune its decision. The
Committee also receives informal input from the Chief Executive Officer
as to his salary expectations.
In determining salary levels at comparable financial institutions,
the Committee relies on an annual survey prepared by the Federal Reserve
Bank of Richmond for financial institutions that have between 1 and 5
billion dollars in assets and are located in the District of Columbia,
Virginia, North Carolina, South Carolina, Maryland, and all but a small
portion of West Virginia. The annual survey that the Committee used when
making its 1993 compensation decision for the Chief Executive Officer
included information on 17 financial institutions. The survey showed,
for these institutions, the "high," "average" and "low" salary and
applicable bonuses paid to the person occupying the top position for the
immediately preceding year.
None of the financial institutions included in the survey was
specifically identified. Thus, the Committee cannot determine whether
the compensation peer group is included within the line of business index
in the Comparison of Five-Year Cumulative Total Return graph included in
this Proxy Statement.
For financial institutions, 1992 was a strong recovery year.
Because of an advantage in the disparity in the effect of lower interest
rates on funding costs relative to asset yields, which widened net
interest margins, banking profits in 1992 eclipsed previous records.
Consistent with industry trends, the Corporation's performance
outdistanced previous records by wide margins. The Corporation's
performance, however, was generally better than that of the industry
because, unlike the industry, the Corporation had a strong financial
performance in 1991 against which the 1992 comparison was made. Net
income increased on an aggregate basis to $20.9 million from $15.9
million in 1991 and on a per share basis to $1.54 from $1.10 in 1991.
In addition, the Corporation achieved a return on average assets of 1.25
percent, thus surpassing its minimum goal of a return of at least one
percent.
The Committee set the Chief Executive Officer's salary for 1993 at
$375,000 and awarded him 8,000 units under the Corporation's Incentive
Stock Plan. The award under the Incentive Stock Plan (after taking into
account the two-for-one stock split declared on March 23, 1993 and
distributed on April 30, 1993) was identical to the award for the
previous year and the salary was $25,000, or approximately 7.14%, greater
than the salary for the previous year. These amounts placed the Chief
Executive Officer's compensation at a level between the average and high
shown in the survey from the Federal Reserve Bank of Richmond.
W. A. Rinehart, III, Chairman
Lee C. Tait John T. Casteen, III Lawrence S. Eagleburger
B. Summary Compensation Table
The following table sets forth information about the compensation
paid by the Corporation during its three most recent fiscal years to
those individuals who were the Corporation's Chief Executive Officer and,
as of the end of 1993, next three highest paid executive officers. Only
these four officers received total annual salary and bonus of at least
$100,000.
<TABLE>
Name and Principal Position Year Salary($) Bonus ($) (5) Restricted Stock All Other
Compensation ($) (7)
<S> <C> <C> <C> <C> <C>
Hovey S. Dabney 1993 375,000 174,311 _ 99,950
Chairman and Chief 1992 350,000 108,275 _ 104,930
Executive Officer (1) 1991 325,000 161,919 _ 99,130
O. Kenton McCartney 1993 185,000 140 72,450 22,454
President and Chief 1992 161,603 159 19,400 17,500
Operating Officer (2) 1991 129,900 160 16,400 11,843
W. A. Pace, Jr. 1993 157,400 370 40,250 26,402
Senior Vice 1992 151,000 399 24,250 24,404
President (3) 1991 145,600 394 20,500 21,247
Robert H. Campbell, Jr. 1993 126,300 381 52,325 18,701
Senior Vice President 1992 110,000 405 19,400 13,961
and Treasurer (4) 1991 100,400 320 16,400 10,835
</TABLE>
(1) Prior to January 1, 1994, Mr. Dabney was also Chief Executive
Officer of Jefferson National. Effective as of January 1, 1994,
Mr. Dabney retired as Chief Executive Officer of the Corporation
and Jefferson National. Mr. Dabney continues as Chairman of the
Board of both companies.
(2) Prior to January 1, 1994, Mr. McCartney was President and
Chief Operating Officer of Jefferson National. Effective as of
January 1, 1994, Mr. McCartney became President and Chief Executive
Officer of both the Corporation and Jefferson National.
(3) Mr. Pace is also Vice Chairman of Jefferson National. Prior to
April 28, 1992, Mr. Pace was President of Jefferson National.
(4) Mr. Campbell is also Executive Vice President and Service Division
Manager of Jefferson National.
(5) Includes a Christmas gift and taxes on such gifts. As to Mr.
Dabney, the amounts also include (i) an amount equal to the amount
by which his allocation under the Profit Sharing Plan was less than
it would have been in the absence of Internal Revenue Code limits on
the amount of compensation considered and (ii) because awards to Mr.
Dabney under the Incentive Stock Plan for each of 1991, 1992, and
1993 vested simultaneously with the grant of the award, the dollar
value of units awarded under such plan. During 1991, 1992, and 1993,
Mr. Dabney was awarded (after giving effect to the two-for-one stock
split declared on March 23, 1993 and distributed on April 30, 1993)
15,000, 8,000, and 8,000 units, respectively, under the Incentive
Stock Plan.
(6) Represents the value of units awarded under the Incentive Stock
Plan, without deduction for units that may be surrendered at the time
of distribution of the award to pay applicable payroll taxes on the
award. In lieu of actual dividends, the grantee receives, at the
end of the year, cash in an amount equal to the dividends that would
have been paid during the year on the awarded units had such units
been actual shares of the Corporation's common stock. During 1993,
Messrs. McCartney, Pace, and Campbell were awarded 3,600, 2,000 and
2,600 units, respectively, under the Incentive Stock Plan.
Units awarded to Mr. Dabney vested at the time of the award and were
distributed to him in a manner to comply with the requirements of
applicable securities laws. Because of the immediate vesting, the
value of such units has been included in this table under the
heading "Bonus." As of December 31, 1993, Mr. Dabney
held no units under the Incentive Stock Plan; all such awards having
previously vested and been distributed. As of that date, Mr.
McCartney held 16,400 units with a value of $321,850; Mr. Pace held
16,000 units with a value of $314,000; and Mr. Campbell held 13,400
units with a value of $262,975. These units will vest in five annual
instalments beginning on May 1, 1995.
(7) Includes (i) amounts allocated to the named executives under the
Profit Sharing Plan, (ii) amounts paid to the named executive
officers under the Split Dollar Life Insurance Plan to enable the
executives to pay a portion of the premium for such insurance and,
using an eight percent discount rate, the net present value of the
benefit to the named executives of the portion of the premiums for
such insurance paid by the Corporation, and (iii) amounts accrued
to fund a supplemental retirement payment to Mr. Dabney pursuant to
his employment agreement with the Corporation. During 1993, $21,930,
$17,203, $14,636 and $11,744 was allocated to Messrs. Dabney,
McCartney, Pace and Campbell, respectively, pursuant to the Profit
Sharing Plan; $23,954 $5,251, $11,766, and $6,957 was paid by, or on
behalf of, Messrs. Dabney, McCartney, Pace and Campbell under the
Split Dollar Life Insurance Plan; and $54,065 was accrued to fund
the supplemental retirement payment to Mr. Dabney. No
amounts were accrued to fund payments to Mr. Dabney pursuant to his
deferred compensation agreement with the Corporation.
C. Pension and Profit Sharing Plans
The Corporation has qualified Pension and Profit Sharing Plans
which cover salaried employees and a Senior Officers Supplemental Pension
Plan which covers officers with the title of Senior Vice President and
above.
Under the Profit Sharing Plan, the Corporation contributes up to
5.25% of its net operating income (as adjusted for non-taxable income
from loans and investments, securities gains and losses, loan loss
provisions, and net loan charge-offs) to the plan. The contribution is
allocated among individual accounts based upon each participant's direct
compensation relative to that of other participants. Forfeitures and 75%
of the Corporation's contributions are allocated to a restricted portion,
while the balance of employer contributions is allocated to a non-
restricted portion. The restricted portion vests 20% per year in the
third through seventh years of credited service, while the non-restricted
portion vests 100% after the third year of credited service. The account
is distributable upon retirement, death, termination of employment, or
disability, and the vested portion may be wholly or partially withdrawn
for reasons of hardship. The non-restricted portion is also withdrawable
to the extent that the portion exceeds allocations for the last two
years. During 1993, no withdrawals were made by any of the named
executives.
The Pension Plan provides monthly benefits to participants upon
retirement. Assuming retirement in 1994, the following table sets forth
the amounts that would be paid, on a straight-life basis, annually to
participants in specified remuneration and years-of-service
classifications:
<TABLE>
Highest Consecutive
Five Year Average Estimated Annual Pension for Representative
Compensation Years of Credited Service
<CAPTION>
10 20 30 40 45
<S> <C> <C> <C> <C> <C>
100,000 17,486 34,972 49,200 60,170 65,655
150,000 27,085 54,169 75,939 92,394 100,621
200,000 36,683 73,367 102,678 115,641* 115,641*
250,000 40,374 80,748 112,959 115,641* 115,641*
300,000 46,830 93,661 115,641* 115,641* 115,641*
350,000 55,028 110,055 115,641* 115,641* 115,641*
400,000 63,225 115,641* 115,641* 115,641* 115,641*
450,000 71,422 115,641* 115,641* 115,641* 115,641*
</TABLE>
* Under current provisions of the Internal Revenue Code, these
amounts are adjusted in future years to reflect cost of living
adjustments.
The plan covers only a participant's base pay and excludes bonuses,
deferred or supplemental compensation or other forms of compensation paid
by the Corporation. As to Messrs. Dabney, McCartney, Pace, and Campbell,
the amounts set forth in the Summary Compensation Table under the heading
"Salary" are covered by the plan, although for Mr. Dabney, the benefits
payable solely under this plan are equivalent to the benefits that he
would receive if his highest consecutive five year average compensation
were $219,224. As of December 31, 1993, Messrs. Dabney, McCartney, Pace,
and Campbell had 44, 10, 43 and 22 years of credited service,
respectively, under the plan.
Benefits under the Pension Plan are calculated on a step basis and,
except as noted below, are equal to 1.10% of a participant's "final
average compensation" (i.e., the average of a participant's highest sixty
consecutive months of base pay) plus .65% of a participant's "average
compensation" in excess of the average wage base (i.e., the average of
the taxable Social Security wage bases during a participant's working
lifetime, up to 35 years) multiplied by the participants years of service
up to 25 years plus 1% of "average compensation" multiplied by
participant's years of service in excess of 25 years. For participants
prior to January 1, 1989, there is a minimum benefit based on the accrued
benefit earned at December 31, 1988 plus the formula referred to above
for service after December 31, 1988.
Benefits under the Pension Plan are integrated with, and not offset
by, a participant's Social Security benefits. In situations where a
participant has previously received benefits under the plan, future
benefits are offset by the actuarially determined value of the previously
received benefit.
In addition to benefits under the Pension Plan, officers (other
than Hovey S. Dabney) of the Corporation and its subsidiaries with the
title of Senior Vice President and above are eligible for benefits under
the Senior Officer's Supplemental Pension Plan. The plan provides for
payments equal to ten percent of the monthly benefits payable under the
regular Pension Plan upon retirement after the age of 60 with 25 years of
service to the Corporation or its predecessors. Payments continue until
the earlier of ten years or death. Benefits are subject to forfeiture if
a participant's employment is terminated for cause or if the participant
competes with the Corporation or discloses certain confidential
information within two years after termination of employment. Messrs.
Pace and Campbell have 44 and 22 years of service, respectively, with the
Corporation for purposes of this plan and Mr. McCartney has 10 years of
service with the Corporation for purposes of this plan. It is estimated
that, upon retirement at age 65, Mr. Pace would receive $9,875 per year
under this plan and Mr. Campbell would receive $5,515 per year. Mr.
McCartney would not be entitled to any benefits under the plan if he
retired at age 65, although he would receive a benefit in the event of
retirement at a later time.
D. Contracts with Executives
Contracts with Hovey S. Dabney
The Corporation has employment and deferred compensation agreements
with Mr. Dabney. The employment agreement provided that he would be
employed as the Corporation's Chairman, President and Chief Executive
Officer until January 1, 1994, at a salary no less than the greater of
$255,000 or the highest salary in effect at any January 1 during the
period of employment and would be entitled to reimbursement for
reasonable expenses incurred in the promotion of the Corporation's
business. The employment agreement also provided for (i) a cash bonus
annually equal to the amount by which Mr. Dabney's allocation under the
Profit Sharing Plan was less than it would have been in the absence of
Internal Revenue Code limits upon the amount of compensation considered
and (ii) a supplemental pension equal to the amount by which the monthly
pension under the Pension Plan is reduced as a result of statutory
provisions which limit the annual benefit under such plan. For 1993 all
of the above features were in effect. Because of Mr. Dabney's retirement
as Chief Executive Officer, only that portion of the agreement regarding
the payment of the supplemental pension is now effective. Under the
employment agreement, Mr. Dabney is to receive a supplemental pension of
$73,180 during 1994.
The deferred compensation agreement with Mr. Dabney provides for
the payment to him after retirement of $525,000 payable in 143 monthly
instalments of approximately $2,622 each and thereafter an additional 96
monthly instalments of approximately $1,562 each. The Corporation
commenced making these payments in January, 1994. In the event of Mr.
Dabney's death prior to receiving all of the required payments, the
Corporation will pay the balance of such instalments to Mr. Dabney's
designated beneficiary. The Corporation has maintained insurance to
provide for the payments under the deferred compensation agreement.
Executive Severance Agreements
The Board of Directors has determined that it is in the best
interests of the Corporation and its shareholders to assure that the
Corporation will have the continued dedication of its executive officers,
notwithstanding the possibility, threat or occurrence of a change of
control of the Corporation. Therefore, during the fourth quarter of
1993, agreements were executed with Messrs. McCartney and Campbell and
eight other officers of the Corporation or its affiliates, which relate
to the officers' employment following a change of control of the
Corporation. The initial term of each agreement is for a period of two
years. The term is extended for an additional one-year period on the
anniversary date of the agreement, unless 60 days prior to any
anniversary date the Corporation gives notice that the term of the
agreement will not be extended.
Each agreement provides for the officer's continued employment for
two years following a change of control event (the "Employment Period").
During the Employment Period, the officer will be entitled to annual
salary and bonus at the level applicable to the officer during the 12
months immediately preceding the change of control event. The officer
also will be entitled to participate in incentive and other benefit
programs on terms at least as favorable as those in effect at the time of
the change of control event.
The agreements also provide certain benefits if, following a change
of control, an officer's employment is terminated by the Company or its
successor other than for death or disability, or if the officer resigns
for "good reason" such as a reduction in responsibilities or
compensation. In such event, the Corporation will be obligated to pay to
the officer a lump sum amount equal to a specified percentage of his
salary paid within the 12 months preceding the change of control. The
Board of Directors determined the percentage for each individual officer
who received an agreement. Under the agreements no officer is to receive
less than 100% or more than 299% of his salary. Messrs. McCartney and
Campbell would each receive 299% of their respective salaries. The lump
sum amount will be reduced to take into account any other payment or
benefit that arises or accrues contingent on a change of control so that
the excise tax which may be imposed pursuant to Section 4999 of the
Internal Revenue Code will not apply and the Corporation's payment will
generally be deductible.
E. Director Compensation
Non-employee directors of the Corporation and its subsidiaries
receive fees for their services. For 1993, the Corporation paid a
retainer of $4,500, $750 for each Board meeting attended and $250 for
each Committee meeting attended. In 1993 Jefferson National paid (i)
non-employee members of its board of directors a retainer of $2,500, $300
for each board meeting attended and $175 for each committee meeting
attended, (ii) non-employee members of boards of directors for regions a
quarterly retainer of $400 and a fee for attending meetings of $225, and
(iii) non-employee members of boards for local offices a quarterly
retainer of $200 and a fee for attending meetings of $125.
The Corporation and its subsidiaries have a plan for deferral of
fees earned as a director or a member of a subsidiary board. Any fees
deferred will be credited with interest at an assumed rate equal to what
would have been credited on such deferred fees had they been invested in
a six-month certificate of deposit of Jefferson National on the last day
of the preceding fiscal quarter. The deferred fees and earnings are
payable upon a person's ceasing to be a director or a member of a
subsidiary board or death. Payment may be made in a lump sum or in
instalments as specified by a committee administering the plan. Messrs.
Glaize, Rosenthal and Tait have elected to defer fees from the
Corporation and its affiliates. Messrs. Harrell and Kay have elected to
defer fees from affiliates of the Corporation.
F. Performance Table
The following table compares the cumulative total return, assuming
the reinvestment of dividends, for the period from December 31, 1988
through December 31, 1993 from an investment of $100 in each of the
Corporation's common stock, NASDAQ Market Index and Standard Industrial
Classification Code 602 - Commercial Banks ("SIC Code 602") Index.
<TABLE>
JEFFERSON BANKSHARES, INC.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
<CAPTION>
1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
Jefferson Bankshares, Inc. $100.00 $106.39 $83.29 $131.20 $185.60 $212.02
SIC Code 602 $100.00 $117.45 $90.14 $128.41 $152.78 $180.39
NASDAQ Market $100.00 $112.89 $91.57 $117.56 $118.71 $142.40
</TABLE>
Media General Financial Services, Inc. supplied the necessary information
to construct the table and prepared both the NASDAQ Market Index and the
SIC Code 602 Index. The NASDAQ Market Index consists of the equity
securities of all companies whose securities have been traded in the
NASDAQ over-the-counter market at any time during the period from
December 31, 1988 through December 31, 1993. The SIC Code 602 Index
consists of the equity securities of all commercial banks in the United
States whose securities are traded on either the New York Stock Exchange
or American Stock Exchange or in the NASDAQ over-the-counter market at
any time during the period from December 31, 1988 through December 31,
1993. As of December 31, 1993, approximately 4,500 companies were
included in the NASDAQ Market Index and 539 commercial banks were
included in the SIC Code 602 Index.
The performance of any individual company's common stock is
influenced not only by its own performance and future prospects, but also
by a number of external factors over which the company and its management
have indirect or no control, including general economic conditions,
expectations for the company's future performance, and conditions
affecting or expected to affect the company's industry. In addition,
stock performance can be affected by factors such as trading volume,
analytical research coverage by the investment community, and the
propensity of shareholders to hold the stock for investment purposes.
The relative weight of these factors also varies over time.
Consequently, stock performance, including measurement against indices,
may not be representative of a company's financial performance for given
periods of time.
Loans To Officers And Directors
The Corporation's subsidiary bank has made loans to some of the
Corporation's directors and officers. All such loans were made in the
ordinary course of business on substantially the same terms, including
interest rates and collateral, as were in effect at the time the loans
were made for comparable transactions with other persons and did not
involve more than the normal risk of collectibility or present other
unfavorable features.
INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick, Richmond,
Virginia, as independent auditors for the Corporation for 1994, but the
selection is subject to the approval of shareholders. The firm audited
the books and records of the Corporation and its subsidiaries for 1993.
Representatives from the firm are expected to be present at the annual
meeting with the opportunity to make a statement and to answer any
questions you may have.
KPMG Peat Marwick has advised the Corporation that neither it nor
any of its members have any direct financial interest or material
indirect financial interest in the securities of the Corporation or any
of its subsidiaries or any connection with the Corporation or any of its
subsidiaries in the capacity of promoter, underwriter, voting trustee,
director, officer or employee.
SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Any shareholder wishing to make a proposal to be acted upon at the
1995 Annual Meeting must present such proposal to the Secretary of the
Corporation at its executive offices in Charlottesville, Virginia not
later than November 18, 1994, in order for the proposal to be included in
the Corporation's 1995 proxy materials. Any such proposal should meet
applicable requirements of the Securities Exchange Act of 1934 and the
rules and regulations thereunder.
OTHER MATTERS
The Corporation is not aware of any other matters to come before
the meeting. However, if other matters are properly raised at the
meeting, the persons named in the enclosed form of proxy will vote the
proxy in their discretion.
William M. Watson, Jr.
Vice President and
Secretary
CHARLOTTESVILLE, VIRGINIA
MARCH 18, 1994
<PAGE>
Jefferson Bankshares, Inc. / 123 East Main Street / Charlottesville, Virginia
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS ON APRIL 26, 1994
I appoint JAMES S. KENNAN, ROBERT E. STROUD and HOWARD B. WATKINS, or any
one of them, with power of substitution to each, proxies to vote my shares of
the stock of Jefferson Bankshares, Inc. at the annual meeting of shareholders
to be held on April 26, 1994, or at any subsequent session of such meeting.
The Board of Directors recommends a vote "FOR" the following proposals.
1. ELECTION OF DIRECTORS: Jefferson's Nominees:
John T. Casteen, III; Hovey S. Dabney; Lawrence S. Eagleburger;
Hunter Faulconer; Fred L. Glaize, III; Henry H. Harrell; Alex J.
Kay, Jr.; J. A. Kessler, Jr.; O. Kenton McCartney; W. A. Rinehart, III;
Gilbert M. Rosenthal; Alson H. Smith, Jr.; Lee C. Tait; H. A.
Williamson, Jr.
( ) FOR the nominees listed above ( ) WITHHOLD AUTHORITY to vote for
(unless specifically written below) all nominees listed above
If you wish to withhold authority to vote only for a particular nominee listed
above, check "FOR" and then write that nominee's name in the following space.
(back)
2. APPROVAL OF AUDITORS: To approve the selection of KPMG Peat Marwick as
independent auditors for 1994.
( ) FOR ( ) AGAINST ( ) ABSTAIN
3. The proxies are authorized to vote in their discretion upon such other
matters as may properly come before the meeting and to vote for any
person recommended by the Board of Directors as a substitute for any
nominee mentioned above if, at the time of the meeting, such nominee is
unable or unwilling to serve.
WHEN THIS FORM IS PROPERLY EXECUTED, THE PROXIES WILL VOTE AS SPECIFICALLY
INDICATED ABOVE. THE PROXIES WILL VOTE "FOR" NOMINEES IN PROPOSAL 1, UNLESS
AUTHORITY TO DO SO IS WITHHELD, AND WILL VOTE "FOR" PROPOSAL 2, UNLESS
ANOTHER CHOICE IS INDICATED.
Please date and sign exactly as name(s)
appear(s) at left, including joint names.
A person signing in a representative
capacity should indicate any title or
the capacity.
Date:
Signature
Signature
