SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
F&M National Corporation
(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):
( ) $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:
(X) 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>
[F&M logo]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of F&M NATIONAL CORPORATION (the
"Company") will be held at the TraveLodge of Winchester, 1825 Dominion Avenue,
Winchester, Virginia, on Tuesday, April 25, 1995, at 10 a.m. for the following
purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected and qualified;
2. To amend the Articles of Incorporation to increase the number of
authorized shares of common stock from 20,000,000 to 30,000,000 shares;
3. To ratify the selection by the Audit Committee of the Board of
Directors of Yount, Hyde, & Barbour, P. C., independent certified
public accountants, as auditors of the Company for 1995; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on February 28, 1995,
will be entitled to vote at the Annual Meeting.
Attendance at the Annual Meeting will be limited to shareholders of record,
persons holding proxies from shareholders and certain representatives of the
press and financial community. If you wish to attend the Annual Meeting, but
your shares are held in the name of a broker, bank or other nominee, you should
bring with you written confirmation from such nominee of your beneficial
ownership.
You are cordially invited to attend the Annual Meeting in person. Whether
or not you plan to attend the meeting, it is important that your shares be
represented. Please complete, sign, date and return the enclosed proxy card
promptly. If you attend the Annual Meeting, you may withdraw any proxy
previously given and vote in person.
Due to limited seating space, lunch will not be served.
Following the adjournment of the Annual Meeting, officers and directors of
the Company will be available to meet with you.
By Order of the Board of Directors
Alfred B. Whitt
Senior Vice President, Secretary and
Senior Financial Officer
Winchester, Virginia
March 21, 1995
F&M NATIONAL CORPORATION
P R O X Y S T A T E M E N T
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of F&M National Corporation (the "Company") to
be voted at the 1995 Annual Meeting of Shareholders to be held Tuesday, April
25, 1995, at 10 a.m. at the TraveLodge of Winchester, 1825 Dominion Avenue,
Winchester, Virginia, and any adjournment thereof. The distribution of this
Proxy Statement and related proxy material will commence on or about March 21,
1995.
VOTING AND REVOCATION OF PROXIES
All properly executed proxies delivered pursuant to this solicitation will
be voted at the Annual Meeting in accordance with instructions noted thereon
or, if no direction is indicated, they will be voted in favor of the proposals
set forth in the Notice of Annual Meeting. Any shareholder giving a proxy has
the power to revoke it at any time before the proxy is voted by giving written
notice to the Secretary of the Company, by executing or delivering a substitute
proxy or by attending the Annual Meeting and revoking the proxy at the meeting.
For a shareholder who participates in the Company's Dividend Reinvestment
and Stock Purchase Plan, the enclosed proxy also includes the full shares held
by the Plan on the shareholder's behalf.
VOTING RIGHTS OF SHAREHOLDERS
Only shareholders of record at the close of business on February 28, 1995,
will be entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof. As of the close of business on the record date, 15,622,866
shares of Common Stock, par value $2.00 per share, were outstanding and
entitled to vote at the Annual Meeting. The Company has no other class of stock
outstanding. Each share of Common Stock will entitle the holder thereof to one
vote on all matters to come before the Annual Meeting. A majority of the votes
entitled to be cast, represented in person or by proxy, will constitute a quorum
for the transaction of business.
SOLICITATION OF PROXIES
The cost of the solicitation of proxies will be borne by the Company. In
addition to solicitation by use of the mails, certain officers and employees of
the Company (who will not be compensated in addition to their regular salaries)
may solicit proxies personally or by telephone. The Company will reimburse
brokerage firms, and other custodians, nominees and fiduciaries for reasonable
expenses incurred by them in forwarding proxy material to beneficial owners of
Company Common Stock.
ELECTION OF DIRECTORS - PROPOSAL ONE
The fifteen persons named below, each of whom currently serves on the Board
of Directors, will be nominated to serve as directors until the 1996 Annual
Meeting of Shareholders or until their successors have been duly elected and
qualified. The persons named in the proxy will vote for the election of the
nominees named below unless authority is withheld. If for any reason any of the
persons named below should become unavailable to serve, an event which
management does not anticipate, proxies will be voted for the remaining nominees
and such other person or persons as the Board of Directors may designate.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE NOMINEES
SET FORTH BELOW. The fifteen nominees receiving the greatest number of
affirmative votes cast at the Annual Meeting will be elected.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FOR THE LAST FIVE YEARS
NOMINEE AND (AGE) DIRECTOR SINCE AND OTHER INFORMATION
<S> <C> <C>
Frank Armstrong, III (58) 1985 Chairman, President and Chief Executive
Officer of National Fruit Product Company,
Inc., since 1984.
James L. Bowman (67) 1970 Chairman of the Board, F&M Bank-Martinsburg
since 1986; retired in 1988 as President of
Bowman Trucking Company.
Betty H. Carroll (57) 1986 Senior Vice President of the Company since
1987; President and Chief Executive Officer
of F&M Bank-Winchester.
William H. Clement (67) 1988 Chairman of the Board of Automotive
Industries, Inc., since 1992 and Vice Chairman
of Automotive Industries Holding, Inc.,
since 1975. (1)
W. M. Feltner (75) 1970 Chairman of the Board and Chief Executive
Officer of the Company; Chairman of the Board
of F&M Bank-Winchester.
William R. Harris (66) 1986 Chairman of the Board, F&M Bank-Richmond;
Chairman of the Board of Harris Heating &
Plumbing, Inc., since 1952; a principal in Harris
Farms, Harris Mechanical Co., Inc., and Harris
Land Development Co., Inc.
L. David Horner, III (60) 1986 Chairman of the Board of Horner Properties,
Inc., since 1990; Chairman of Florida Food
Industries, Inc., from 1977 to 1990.
Jack R. Huyett (62) 1990 President and Chief Administrative Officer of
the Company since 1992; President of F&M
Bank-Blakeley from 1969 to 1992.
William A. Julias (60) 1980 Chairman of the Board of F&M Bank-
Massanutten since 1975; Senior Partner of the
law firm of Julias, Blatt & Wolfe, P. C.
Practicing attorney since 1960.
George L. Romine (83) 1986 Retired in 1987 as Vice President and Director
of Abex Corporation; Executive Director of the
Winchester-Frederick County Economic
Development Commission from 1983 to 1990.
John S. Scully, III (84) 1970 President of Winchester Cold Storage Co., Inc.,
since 1984.
J. D. Shockey, Jr. (52) 1970 President of Shockey Industries, Inc., a general
construction contractor.
Fred G. Wayland, Jr. (66) 1994 Retired in 1992 as President and Chief
Executive Officer of PNB Financial
Corporation.
C. Ridgely White (83) 1970 Chairman of the Board of J. V. Arthur, Inc., a
general insurance brokerage firm, from 1966 to
his retirement in 1989; Director of O'Sullivan
Corporation, a molded plastics manufacturer. (1)
F. Dixon Whitworth, Jr. (50) 1985 Executive Vice President of the Company since
1985.
</TABLE>
(1) Automotive Industries Holding, Inc., and O'Sullivan Corp. are publicly
traded companies, subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended.
BOARD OF DIRECTORS AND COMMITTEES
During 1994, the Board of Directors held twelve meetings. All members of
the Board attended at least 75%, in the aggregate, of the meetings of the Board
and committees on which they served. There are no family relationships among
any of the nominees for director or among any such nominee and any executive
officer of the Company.
The standing committees of the Board of Directors are the Executive
Committee, the Audit Committee, the Nominating Committee, and the Human
Resources Committee.
Executive Committee. The members of the Executive Committee are Messrs.
White, Harris, Romine, Feltner, Huyett, and Mrs. Carroll. The Company's Bylaws
empower the Executive Committee to exercise the full authority of the Board of
Directors when it is not in session, except as otherwise provided in the
Virginia Stock Corporation Act.
Audit Committee. The Audit Committee, whose members are Messrs. Armstrong,
Bowman, Horner, Kalbach, and Loy, recommends the independent auditors to be
selected by the Board, discusses with the independent auditors the scope of
their proposed audit, reviews the audit reports, discusses with management the
implementation of the auditors' recommendations, reviews the fee of the
independent auditors for audit and non-audit services, reviews the adequacy of
the Company's system of internal accounting controls and reviews reports of
audit activities performed by the Company's staff of internal auditors. This
committee met four times during 1994.
Nominating Committee. The Nominating Committee is composed of Messrs.
Clement, Harris, Julias, Romine, Shockey, and White. The Nominating Committee
recommends to the Board of Directors candidates for election as directors of the
Company. This committee met twice during 1994.
Human Resources Committee. The members of the Human Resources Committee are
Messrs. White, Clement, Romine, and Shockey. The primary responsibilities of
this committee are to review and recommend to the Board of Directors
compensation of senior management. This committee also administers cash awards
made under the Company's Officers' Incentive Bonus Plan and the granting of
stock options under the Company's stock option plan. This committee met once
during 1994.
DIRECTORS' FEES
During 1994, each director received $500 for each Board meeting attended,
and each nonemployee director received, in addition, an annual retainer of
$5,500. Board members were not compensated for committee meetings attended,
except that members of the Audit Committee and the Human Resources Committee
received $200 for each committee meeting attended. Directors also received
$1,200 to cover travel, lodging, and related expenses incurred in attending
Board and committee meetings.
AMENDMENT TO THE ARTICLES OF INCORPORATION - PROPOSAL TWO
The Board of Directors proposes and recommends that the shareholders
approve an amendment to Article III of the Articles of Incorporation to increase
the number of shares of Common Stock which the Company is authorized to issue
from 20,000,000 shares to 30,000,000 shares (the Amendment). There will be no
change in the presently authorized 5,000,000 shares of Preferred Stock. If the
Amendment is approved, the authorized capital stock of the Company will be
35,000,000 shares, divided into 30,000,000 shares of Common Stock of the par
value of $2.00 per share, and 5,000,000 shares of Preferred Stock without par
value. The first paragraph of Article III will be amended to read as follows:
"The total number of shares of capital stock which the corporation shall be
authorized to issue shall be 35,000,000 shares consisting of 30,000,000
shares of Common Stock of the par value of $2.00 per share and 5,000,000
shares of Preferred Stock without par value. The Board of Directors is
authorized, subject to the limitations prescribed by law and the provisions
of this Article III, to provide for the issuance of shares of preferred
stock in one or more series and to fix and determine the relative rights
and preference of the shares of any series so established."
The Company had outstanding at February 28, 1995, 15,622,866 shares of its
Common Stock. No shares of Preferred Stock have been issued. An additional
299,414 shares are reserved for issuance pursuant to the Company's Incentive and
Non-Qualified Stock Option Plan, 250,529 shares are reserved for issuance under
the Officers' Incentive Bonus Plan, 223,650 shares are reserved for issuance
under the 1993 Employees' Stock Purchase Plan, and 293,259 shares are reserved
for issuance under the Dividend Reinvestment and Stock Purchase Plan. In
addition, the Company has reserved 944,435 shares of Common Stock for issuance
to the shareholders of Bank of the Potomac, Herndon, Virginia, upon consummation
of the Company's proposed affiliation with that institution. Thus, the Company
now has approximately 2.3 million shares of Common Stock available for stock
dividends, stock splits, future acquisitions and for the raising of additional
capital. If the amendment is approved, the Company will have approximately 12.3
million shares available for issuance for these purposes.
The Board of Directors unanimously recommends the adoption of the amendment
to the shareholders so that the Company will have available authorized but
unissued shares of Common Stock, particularly for future acquisitions as well as
for stock dividends, stock splits, and the raising of additional capital as
needed. While the Company has in the past acquired banks in Virginia and West
Virginia by issuing additional shares of Common Stock, the increase in
authorized capital stock is not being proposed because of any specific
contemplated acquisition. In addition, the Company has no present plans to
raise additional capital or to split its Common Stock or declare a stock
dividend. The Board of Directors believes that having the authority to issue
additional shares of Common Stock will avoid the possible delay and expense of
calling a special meeting of shareholders for this purpose.
If the Amendment is adopted, the additional authorized shares of Common
Stock may be issued from time to time upon authorization by the Board of
Directors without further action of the shareholders. The Amendment is not being
proposed as a means of preventing a change in control or takeover of the
Company. However, the Board of Directors could issue the additional shares of
Common Stock to dilute the stock ownership and voting power of persons seeking
to obtain control of the Company and the additional authorized shares could be
issued to purchasers who would support the Board of Directors in opposing a
takeover proposal. The existence of the additional authorized shares could have
the effect of defeating, discouraging, or making less likely proposals for
acquisition of the Company which some or a majority of shareholders might deem
advantageous. The Articles of Incorporation authorize the issuance of 5,000,000
shares of Preferred Stock. These shares could also be issued to dilute the
stock ownership and voting power of persons seeking to control the Company and
could be issued to purchasers supporting the Board of Directors' opposition to a
takeover proposal. In addition, such Preferred Shares could be issued with
relative rights and preferences which would make an acquisition or takeover of
the Company undesirable to persons who might otherwise have an interest in
making offers for the Company or its stock.
The Board of Directors recommends a vote in favor of the Amendment because
it believes that the availability of the additional shares of Common Stock is
needed to assure that the Company is in a position to expand through
acquisitions and to meet the opportunities which face the Company in the future.
VOTE REQUIRED
Adoption of the Amendment to the Articles of Incorporation requires the
affirmative vote of the holders of a majority of the votes entitled to be cast.
An abstention has the same effect as a vote against the Amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE AMENDMENT TO
THE ARTICLES OF AMENDMENT.
OWNERSHIP OF COMPANY COMMON STOCK
The following table sets forth, as of February 28, 1995, certain
information with respect to the beneficial ownership of Company Common Stock
held by each director and nominee and each executive officer named in the
Summary Compensation Table below, and by the directors and all executive
officers as a group.
As of February 28, 1995, no person beneficially owned 5% or more of the
Company's Common Stock. Mr. Bowman is the only director who beneficially owned
more than 1% of the Company's Common Stock. His percentage ownership as of
February 28, 1995 was 1.7%, and the directors and all executive officers as a
group beneficially owned as of that date 7.95% of the outstanding shares of
Common Stock.
Name Stock Ownership (1)
Frank Armstrong, III 17,042
Harlan M. Bell 32,537
James L. Bowman 265,113
Betty H. Carroll 60,879 (2)
William H. Clement 65,857
W. M. Feltner 121,576 (2)
William R. Harris 104,668
L. David Horner 96,960
Jack R. Huyett 76,385 (2)
William A. Julias 56,892
Joseph E. Kalbach 35,290
J. Frank Loy 34,834
George L. Romine 23,951
John S. Scully, III 84,185
J. D. Shockey, Jr. 32,660
Fred G. Wayland, Jr. 7,464
C. Ridgely White 41,815
Alfred B. Whitt 55,792 (2)
F. Dixon Whitworth, Jr. 28,345 (2)
All directors and executive officers as a group 1,242,245
(1) Includes shares held jointly with spouse and/or as custodian under the
Virginia Uniform Gifts to Minors Act and as trustee under the terms of
certain trusts.
(2) Includes 21,900 shares issuable to Mrs. Carroll, 30,500 shares issuable to
Mr. Feltner, 10,637 shares issuable to Mr. Huyett, 18,313 shares issuable
to Mr. Whitt, and 7,483 shares issuable to Mr. Whitworth under the
Company's 1992 and 1982 Incentive and Non-Qualified Stock Option Plans.
EXECUTIVE COMPENSATION
The table below sets forth certain information concerning the annual and
long-term compensation earned by the Chief Executive Officer and the other four
most highly compensated executive officers of the Company (collectively, the
Named Officers) for each of the past three years.
SUMMARY COMPENSATION TABLE
<TABLE>
SECURITIES
NAME AND ANNUAL COMPENSATION UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY (1) BONUS OTHER (2) OPTIONS (3) COMPENSATION(4)
<S> <C> <C> <C> <C> <C> <C>
W. M. Feltner 1994 $407,200 $150,000 -- 10,000 $ 9,225
Chairman of the Board/ 1993 357,200 110,000 -- 10,000 21,734
Chief Executive Officer 1992 356,600 95,000 -- 10,000 22,616
Jack R. Huyett 1994 $172,200 $55,000 -- 5,000 $ 9,225
President/Chief 1993 132,200 35,000 -- -- 16,409
Administrative Officer 1992 116,600 20,000 -- 500 14,144
Betty H. Carroll 1994 $197,200 $54,000 -- 5,000 $ 9,225
Senior Vice President/ 1993 182,200 43,000 -- -- 21,921
CEO, F&M Bank- 1992 174,100 35,000 -- 2,500 21,148
Winchester
F. Dixon Whitworth, Jr. 1994 $127,200 $22,500 -- 1,000 $ 8,988
Executive Vice 1993 119,700 20,000 -- -- 12,512
President 1992 119,100 20,000 -- 500 13,934
Alfred B. Whitt 1994 $142,200 $37,500 -- 5,000 $ 9,225
Senior Vice President/ 1993 117,200 30,000 -- -- 13,420
Secretary 1992 101,600 20,000 -- 1,000 11,815
</TABLE>
(1) Includes directors fees.
(2) Each Named Officer received certain perquisites and other personal
benefits, the amounts of which are not shown because the aggregate amount
of such compensation during the year did not exceed the lesser of $50,000
or 10% of total salary and bonus reported for such executive officer.
(3) The Company's stock option plan does not permit grants of restricted
stock, and this plan is the Company's only stock-based long term
compensation plan currently in effect.
(4) These amounts represent Company contributions allocated under the
Company's 401(k) Retirement Plan and the Company's Employee Stock
Ownership Plan, respectively, to the Named Officers for 1994 in the
following amounts: W. M. Feltner, $1,725 and $7,500; Jack R. Huyett,
$1,725 and $7,500; Betty H. Carroll, $1,725 and $7,500; F. Dixon
Whitworth, $1,708 and $7,280; and Alfred B. Whitt, $1,725 and $7,500.
STOCK OPTION GRANTS IN 1994
The Company's stock option plan provides for the granting of both incentive
and non-qualified stock options to executive officers and key employees of the
Company and its subsidiaries. While the option price of incentive options may
not be less than the fair market value of the stock at the date of grant,
non-qualified options may be granted at prices less than the fair market value
at the date of grant, but in no event at an exercise price less than one-half of
the market price at the date of grant.
The following table provides certain information concerning stock options
granted during 1994 to the 7 Named Officers. No stock appreciation rights may
be granted under the Company's stock option plan.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
PERCENT OF
NUMBER OF TOTAL
SHARES OPTIONS MARKET
UNDERLYING GRANTED TO EXERCISE PRICE
OPTIONS EMPLOYEES PRICE PER ON GRANT EXPIRATION POTENTIAL REALIZABLE VALUE (2)
NAME GRANTED (1) IN 1994 SHARE DATE DATE 0% 5% 10%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
W. M. Feltner 10,000 38.5% $8.13 $16.25 1/3/04 $81,200 $125,967 $191,465
Jack R. Huyett 5,000 19.2 8.13 16.25 1/3/04 40,600 62,984 95,733
Betty H. Carroll 5,000 19.2 8.13 16.25 1/3/04 40,600 62,984 95,733
F. Dixon
Whitworth, Jr. 1,000 3.5 8.13 16.25 1/3/04 8,120 12,597 19,147
Alfred B. Whitt 5,000 19.2 8.13 16.25 1/3/04 40,600 62,984 95,733
</TABLE>
________________________
(1) The stock options granted during 1994 to the Named Officers were granted on
January 3, 1994 and first became exercisable on that date.
(2) Potential realizable value at the assumed annual rates of stock price
appreciation based on actual option term (10 years) and annual compounding.
STOCK OPTION EXERCISES IN 1994 AND YEAR-END OPTION VALUES
The following table shows certain information with respect to the stock
options exercised during 1994 and the number and value of unexercised options
at year-end.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SHARES UNDER- UNEXERCISED
NUMBER OF LYING UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED VALUE OPTIONS AT OPTIONS AT
NAME ON EXERCISE REALIZED (1) DECEMBER 31, 1994 (2) DECEMBER 31, 1994 (3)
<S> <C> <C> <C> <C>
W. M. Feltner 0 $ 0 20,500 $157,838
Jack R. Huyett 0 0 5,637 44,837
Betty H. Carroll 0 0 22,025 189,585
F. Dixon Whitworth, Jr. 2,050 18,800 6,483 53,679
Alfred B. Whitt 1,000 9,500 13,313 108,281
</TABLE>
________________________
(1) Market value of the underlying shares on the date of exercise, minus the
option exercise price.
(2) All the stock options shown for each Named Officer are currently
exercisable.
(3) Values are calculated by subtracting the exercise price from the fair
market value of the stock at December 31, 1994.
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Human Resources Committee of the Board of Directors of the Company
(the "Committee") has furnished the following report on executive compensation:
The Committee has developed and implemented compensation policies and
plans which seek to enhance the profitability of the Company and, thus,
shareholder value. In furtherance of these goals, the policies and plans are
designed to provide competitive levels of compensation that rely on annual and
longer term incentive compensation to attract and retain corporate officers and
other key employees of outstanding abilities and to motivate them to perform to
the full extent of their abilities. Both types of incentive compensation are
variable and closely tied to corporate and individual performance in a manner
that encourages a continuing focus on building profitability and shareholder
value.
In its review of management performance and compensation, the Committee
has taken into account management's consistent commitment to the long-term
success of the Company. Based on its evaluation of these factors, the Committee
believes that the senior management of the Company is dedicated to achieving
significant improvements in long-term financial performance and that the
compensation policies and plans the Committee has implemented and administered
have contributed to achieving this management focus.
Compensation for each of the Named Officers, as well as other senior
executives, consists of a base salary and annual and longer term incentive
compensation. The Committee fixes base salaries at levels generally below the
competitive amounts paid to senior executives with comparable qualifications,
experience, and responsibilities, after comparing salary ranges of other bank
holding companies and other large locally headquartered companies. The annual
incentive compensation is approved as a percentage of the net income of the
Company. The longer-term incentive compensation is closely tied to the
Company's success in achieving significant financial performance goals. The
Committee considers the total compensation (earned or potentially available)
of each of the Named Officers and the other senior executives in establishing
each element of compensation.
During the fourth quarter of each year, the Chief Executive Officer
submits to the Committee the annual salaries for the past three years for the
Company's senior executives (other than the Chief Executive Officer), and the
Committee reviews the salaries and responsibilities of the officers, and makes
any modifications it deems appropriate. Salary proposals are developed by the
Company's Chief Executive Officer based on industry peer groups, surveys, and
performance judgments as to the past and expected future contributions of the
individual senior executives. The Committee reviews and fixes the base salary
of the Chief Executive Officer based on similar competitive compensation data
and the Committee's assessment of his past performance and its expectation as
to his future contributions in leading the Company. The growth of the Company
for 1994 exceeded $249,000,000 or 17.8%. Peer group banks at September 30,
1994, increased in asset size by an average of 12.4%. Although the Committee,
in establishing these salaries, uses a subjective approach and does not rely on
a formula or weights of specific factors, it carefully considers all the
factors listed above.
In addition to internal measurements and goals, the Committee considers
return on average assets ("ROAA") and growth in total assets when evaluating
the performance of executive officers. ROAA is a measure used in the industry
to compare the profitability of banking companies. For the period ending
September 30, 1994, the Company's ROAA was 1.20%, compared to 1.08% for its
115 Peer Group Banks (115 financial institutions, like the Company, between $1
billion and $3 billion in asset size, as supplied by the Federal Reserve
Board's Division of Banking). During the same period, the Company's total
assets grew at 18.6%, compared to 12.4% for the Peer Group Banks. For a
four-year average comparison of the Company's performance to the Peer Group
Banks, please see the table on page 12.
The Incentive Compensation Plan stresses rewards for achievement of goals
set each year. Financial goals include operating earnings and return on
shareholder equity. The formula for 1994 was adopted by the Board of Directors
and was as follows: 12% of net income in excess of 10% return on equity
capital, plus 6% of net income in excess of 11.5% return on equity capital. At
the end of each year, this formula defines the total fund available for
distribution as bonuses.
The Committee distributes the incentive fund to eligible employees based
on the Committee's subjective evaluation of individual performance and
contribution to the Company and recommendations by certain senior officers. In
determining the Chief Executive Officer's award for 1994, in addition to the
factors discussed above, the Committee considered its evaluation of the
Company's performance and the state of the economy in the Company's service
area. It considered these factors both on an absolute basis and relative to
the performance of the Company's peers. In determining the awards for 1994 from
the incentive fund to other eligible employees, including other Named Officers,
the Committee reviewed with the Chief Executive Officer recommendations based
on individual performance, as well as its evaluation of factors substantially
comparable to those considered in establishing the award for the Chief
Executive Officer.
The Committee considered the desirability of granting awards under the
Company's 1992 Incentive and Non-Qualified Stock Option Plan which provides the
Committee the flexibility to grant longer-term incentives in stock options. The
Committee believes that its past grant of options have successfully focused the
Company's senior management on building profitability and shareholder value.
Stock options were granted for 1994 and are reflected in the above table,
"Stock Options Granted in 1994".
The awards were based, among other things, on a review of competitive
compensation data from selected peer companies and information on their total
compensation as well as the Committee's perception of their past and expected
future contributions to the Company's achievement of its long-term goals. Like
other compensation decisions, the Committee does not use a formula or weight
specific factors in recommending stock options awards, but rather relies on its
own subjective evaluation.
The foregoing report has been furnished by Messrs. White, Romine, and
Shockey.
SHAREHOLDER RETURN
The Company is subject to the rules of the Securities and Exchange
Commission (the "SEC") that require all public companies to present a graph of
total investment return in their annual proxy statements. The rules require a
line graph which compares the Company's five-year cumulative shareholder return
on its Common Stock with the Standard's & Poor's ("S&P") 500 Stock Index and
either a published industry index or an index of peer companies selected by the
Company. The graph below presents a comparison of the Company's performance
with the S&P 500 Stock Index and the SNL Securities $1 to $5 Billion Bank Index
(the "SNL $1B-$5B Bank Index"), assuming that investments of $100 were made on
December 31, 1989, and that dividends were reinvested. This is the first year
the Company has used this index, which is a published industry index based on
banking organizations throughout the country with total assets of between $1
billion and $5 billion. The Company believes the SNL $1B-$5B Bank Index
provides a more representative peer group comparison in view of the Company's
current asset size. SNL Securities, based in Charlottesville, Virginia, is a
research and publishing firm specializing in the collection and dissemination
of data on the financial services industry.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
F&M NATIONAL CORPORATION, S&P 500 STOCK INDEX AND
THE SNL $1B-$5B BANK INDEX
[insert graph here]
1989 1990 1991 1992 1993 1994
F&M National Corporation 100 65 80 136 133 138
SNL $1B-$5B Bank Index 100 67 97 141 169 179
S&P 500 Stock Index 100 97 127 136 150 152
In prior years, the Company has used the Independent Bank Index, an
industry index published by the Carson Medlin Company that consists of 21
financial institutions located in Virginia, North Carolina, South Carolina,
Georgia, Tennessee, Alabama and Florida (the "Independent Bank Index"). Since
the Company changed this year to the SNL $1B-$5B Bank Index, the proxy rules of
the SEC require the Company to show for comparison purposes the following
performance graph using the Independent Bank Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
F&M NATIONAL CORPORATION, S&P 500 STOCK INDEX AND
THE INDEPENDENT BANK INDEX
[insert graph here]
1989 1990 1991 1992 1993 1994
F&M National Corporation 100 65 80 136 133 138
SNL $1B-$5B Bank Index 100 67 97 141 169 179
S&P 500 Stock Index 100 97 127 136 150 152
While the growth in the Company's stock price over the past five years
has lagged behind the market, the Company has outperformed its peer group for
the last four years according to other measurements. Data is not available
for the Independent Bank Index for that period, but a review of certain
performance measurements for the four-year period ending September 30, 1994,
for the 115 Peer Group Banks with assets ranging from $1 billion to $3
billion, as furnished by the Federal Reserve System, indicates that the
Company s performance compares favorably to this peer group. The table below
presents a comparison of selected annual performance measurements,
averaged for the four-year period ending September 30, 1994, for the
Company and the Peer Group Banks.
Peer Group
Financial Institutions
F&M National Corporation Between $1 - $3 Billion
Return on assets 1.32% 0.80%
Asset growth 18.40% 9.14%
Equity capital to assets 9.69% 7.97%
Cash dividends/net income 46.43% 27.75%
Overhead expenses/assets 3.21% 3.55%
INTEREST OF DIRECTORS AND OFFICERS IN CERTAIN TRANSACTIONS
During 1994, the Company's banking subsidiaries extended credit to directors
and officers of the Company and its subsidiaries. All such loans (i) were made
in the ordinary course of business, (ii) 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 (iii) did not involve more
than the normal risk of collectibility or present unfavorable features.
The banking subsidiaries of the Company, pursuant to the Company's employee
loan policy, make individual general purpose loans on a nondiscriminatory basis
to employees of subsidiaries at interest rates below those for comparable
transactions with other persons. No such loans were outstanding to any officer
or director of the Company during 1994. The banking subsidiaries are prohibited
from making loans, with the exception of residential mortgages and educational
loans, to executive officers in excess of certain dollar limits fixed by banking
laws.
William A. Julias, a director of the Company, is also Chairman of the Board
of F&M Bank-Massanutten, a subsidiary of the Company. He is senior partner of
the Harrisonburg, Virginia, law firm of Julias, Blatt & Wolfe, P. C., which
serves as legal counsel for that bank.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS-PROPOSAL THREE
The Board of Directors, upon recommendation of the Audit Committee, has
appointed Yount, Hyde & Barbour, P. C., as the Company's independent public
accountants for the year ending December 31, 1995, and has further directed that
management submit the selection of independent public accountants for
ratification by the shareholders at the Annual Meeting. Yount, Hyde & Barbour,
P. C., has been serving the Company for many years. This firm has advised the
Company that neither the firm nor any member of the firm now has, or has held
during the past five years, any direct or indirect financial interest in the
Company or any of its subsidiaries. Representatives of the firm are expected to
be present at the Annual Meeting and will be given an opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
OTHER MATTERS
As of the date of this Proxy Statement, management of the Company has no
knowledge of any matters to be presented for consideration at the Annual Meeting
other than those referred to above. If any other matter properly comes before
the Annual Meeting, the persons named in the accompanying proxy intend to vote
such proxy, to the extent entitled, in accordance with their best judgment.
SHAREHOLDERS' PROPOSALS
Proposals which shareholders wish to be presented for action at the 1996
Annual Meeting of Shareholders, scheduled for April 23, 1996, must be received
by the Company in writing prior to November 17, 1995. Proposals should be
addressed to the Secretary of the Company, F&M National Corporation, P. O. Box
2800, Winchester, Virginia 22604.
FINANCIAL STATEMENTS
A copy of the Annual Report of the Company for the year ended December 31,
1994, accompanies this Proxy Statement and Notice, but is not a part of the
proxy solicitation material.
By Order of the Board of Directors
Alfred B. Whitt, Senior Vice President and Secretary
Winchester, Virginia
March 21, 1995
INSTRUCTIONS AND MAP TO TRAVELODGE OF WINCHESTER
Coming from Town.
Take Route 50 East. After you cross over Interstate I-81, turn
right at stoplight onto Route 522 South. TraveLodge will be on the
right.
Coming from the South on I-81 (i.e., traveling northbound). EXIT 313.
Take Exit 313 for Route 50 in Winchester. After coming off the
Exit, continue straight through stoplight across Route 50 (and
onto Route 522 South). TraveLodge will be on the right after
going through the intersection.
Coming from the North on I-81 (i.e., traveling southbound). EXIT
313-A.
Take Exit 313-A onto Route 50 East in Winchester. At stoplight,
turn right onto Route 522. TraveLodge will be on the right.
PLEASE USE "BANQUET ROOM" ENTRANCE.
(MAP)
*******************************APPENDIX***********************************
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
OF F&M NATIONAL CORPORATION TO BE HELD APRIL 25, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, revoking all prior proxies, hereby appoints C.D. BOYER, JR.,
GEORGE L. ROMINE and EDWARD P. SHANK as proxies, and each or any of them with
full power of substitution, and hereby authorizes them to represent and to
vote, as designated below, all the shares of Common Stock of F&M NATIONAL
CORPORATION held of record by the undersigned on February 28, 1995, at the
Annual Meeting of Shareholders to be held April 25, 1995, or any adjournment
thereof, on each of the following matters:
1. Election of directors proposed in the accompanying proxy statement.
[ ] FOR ALL OF THE NOMINEES [ ] WITHHOLD AUTHORITY
(except as indicated to the (to vote for nominee(s)
contrary below) listed below)
Frank Armstrong, III; James L. Bowman; Betty H. Carroll; William H.
Clement; W. M. Feltner; William R. Harris; L. David Horner, III; Jack R.
Huyett; William A. Julias; George L. Romine; John S. Scully, III;
J. D. Shockey, Jr.; Fred G. Wayland, Jr.; C. Ridgely White;
F. Dixon Whitworth, Jr.
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE,
STRIKE THROUGH THAT NOMINEE'S NAME ABOVE.
2. To amend the Articles of Incorporation to increase the number of authorized
shares of capital stock from 25,000,000 to 35,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the selection by the Audit Committee of the Board of Directors of
Yount, Hyde & Barbour, P.C., independent certified public accountants, as
auditors of the Company for 1995.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. The Board of Directors
has not been notified of any such matters.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" EACH PROPOSAL AND IN THE DISCRETION OF THE PROXY AGENTS ON
OTHER MATTERS.
Please sign exactly as your name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
DATED ______________ __________________________________________________
Signature
NUMBER OF SHARES
____________________ __________________________________________________
Signature (if jointly owned)
__________________________________________________________________________
PLEASE MARK, SIGN, DATE & RETURN THIS PROXY PROMPTLY IN ENCLOSED ENVELOPE.
__________________________________________________________________________
