<PAGE>
<PAGE>
SCHEDULE 14A
Information Required in Proxy Statement
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to [SECTION] 240.14a-11(c) or [SECTION]
240.14a-12
First Virginia Banks, Inc.
(Name of Registrant as Specified in Its Charter)
Christopher M. Cole, Vice President and Assistant General Counsel
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14-a6(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:(1)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.
(3) Filing Party:
(4) Date Filed:
<PAGE>
FIRST VIRGINIA BANKS, INC.
6400 Arlington Boulevard
Falls Church, Virginia 22042-2336
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 25, 1997
The Annual Meeting of Stockholders of First Virginia Banks,
Inc. will be held at the main office of First Virginia Banks,
Inc., One First Virginia Plaza, 6400 Arlington Boulevard, Falls
Church, Virginia in the 5th Floor Auditorium at 10:00 a.m. on
Friday, April 25, 1997, for the following purposes:
(1) To elect Class A directors for a term of
three years.
(2) To ratify the appointment by the Board of
Directors of Ernst & Young LLP as independent
auditors of First Virginia Banks, Inc. for
the year ending December 31, 1997.
(3) To transact such other business as may
properly come before the meeting or any
adjournments thereof.
Stockholders of record at the close of business on February
18, 1997, are entitled to notice of and to vote at the meeting or
any adjournments thereof.
STOCKHOLDERS ARE URGED TO COMPLETE, DATE, AND SIGN THE ENCLOSED
PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID RETURN
ENVELOPE REGARDLESS OF WHETHER OR NOT THEY EXPECT TO ATTEND THE
MEETING.
By Order of the Board of Directors,
Thomas P. Jennings
Secretary
Falls Church, Virginia
March 7, 1997
<PAGE>
FIRST VIRGINIA BANKS, INC.
6400 Arlington Boulevard
Falls Church, Virginia 22042-2336
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of First Virginia Banks, Inc. (hereinafter referred to
as "First Virginia") of proxies to be voted at the Annual Meeting of
Stockholders of First Virginia to be held at 10:00 a.m. on Friday, April 25,
1997, or any adjournments thereof. The approximate mailing date of this
Proxy Statement and the accompanying proxy is March 7, 1997.
All properly executed proxies in the accompanying form received by First
Virginia prior to the meeting will be voted at the meeting in accordance with
any direction noted thereon. Proxies on which no specification has been made
will be voted for the nominees listed herein as directors and for Item 2 on
the proxy. Any stockholder who has executed and delivered a proxy may revoke
it at any time before it is voted by attending the Annual Meeting and voting
in person or by giving written notice of revocation of the proxy to the
Secretary or by submitting to First Virginia a signed proxy bearing a later
date.
Both Common and Preferred stockholders of First Virginia are entitled to
vote at the meeting. Each share of Common and Preferred Stock is entitled to
one vote on all matters which may come before the meeting. As of February
18, 1997, the record date for the determination of stockholders entitled to
notice of and to vote at the meeting, there were 32,717,504 shares of Common
Stock and 64,666 shares of Preferred Stock of First Virginia issued and
outstanding. Each share is entitled to one vote. Except for the election of
directors, action submitted to a vote of the stockholders will be approved if
a quorum is present and the votes cast in favor of the matter constitute a
majority of the shares represented at the meeting and entitled to vote on the
matter. With respect to the election of directors, the five Class A nominees
receiving the greatest number of votes cast for the election of directors
will be elected, assuming a quorum is present at the meeting. The presence
in person or by proxy of a majority of the outstanding shares of Common and
Preferred Stock entitled to vote at the meeting will constitute a quorum.
Shares for which the holder has elected to abstain or withhold the proxy's
authority to vote (but not including broker non-votes) on a matter will count
toward a quorum. No person is known by management of First Virginia to own
beneficially, directly or indirectly, more than 5% of the outstanding stock
of First Virginia.
I. ELECTION OF DIRECTORS
The Board of Directors is divided into three classes (A, B and C). The
term of office for Class A directors will expire at this Annual Meeting.
Five persons, all of whom are presently on the Board, have been nominated to
serve as Class A directors. If elected, the five nominees for Class A
directors will serve for a term of three years.
It is the intention of the persons named in the accompanying form of
proxy, unless stockholders specify otherwise by their proxies, to vote for
the election of the five nominees named on the next two pages. Although the
Board of Directors does not expect that any of the persons named will be
unable to serve as a director, should any of them be unable to accept
nomination or election, it is intended that shares represented by the
accompanying form of proxy will be voted by the proxy holders for such other
person or persons as may be designated by the present Board of Directors.
Certain information concerning the nominees for election at
this meeting and the Class B and Class C directors who will
continue in office after the meeting is set forth below and on
the following pages, as furnished by them.
NOMINEES
FOR CLASS A DIRECTORS
Picture Barry J. Fitzpatrick, 56, is Chairman of
the Board, President and Chief Executive
Officer of First Virginia. He is
Chairman of the Board of First Virginia
Bank in Falls Church and a director of a
number of nonbank affiliated companies
including First Virginia Services, Inc.
and First Virginia Credit Services, Inc.
He was appointed Chairman of the Board
and Chief Executive Officer of First
Virginia effective January 1, 1995, and
President effective July 1, 1995. He
was Executive Vice President of First
Virginia from May, 1992, until January
1, 1995, and was Senior Vice President
and Regional Executive Officer from
June, 1982, to May, 1992. He serves on
the Executive Committee, the Public
Policy Committee and the Director
Nominating Committee. He beneficially
owns 49,472 shares of First Virginia
Common Stock. (1)
Picture Elsie C. Gruver, 70, is a community and
civic leader in Arlington, Virginia, and
has been a director of First Virginia
since 1973. She is Chairman of the
Public Policy Committee and a member of
the Audit Committee and beneficially
owns 6,436 shares of Common Stock. (2)
Picture W. Lee Phillips, Jr., 61, is a
professional engineer, also involved in
real estate management and home building
in Falls Church, Virginia, and southern
Maryland, since 1991. Prior to that, he
was a professional engineer and land
surveyor (1959-1991) and Chairman of the
Board, Walter L. Phillips, Inc. (1976-
1991). He has been a director of First
Virginia since 1985 and is a director of
First Virginia Bank, Falls Church,
Virginia. He serves on the Audit
Committee, as well as the Management
Compensation and Benefits Committee, and
beneficially owns 8,254 shares of Common
Stock. (3)
Picture Josiah P. Rowe, III, 68, has been Co-
Publisher and General Manager of The
Free Lance-Star Publishing Co. of
Fredericksburg, Va. since 1949 and has
been a director of First Virginia since
1991. He is a director of First
Virginia Bank, Falls Church, Virginia.
He serves on the Public Policy Committee
and the Director Nominating Committee
and beneficially owns 1,500 shares of
Common Stock and 100 shares of Preferred
Stock.
Picture Albert F. Zettlemoyer, 62, retired in
1995 as President of the Government
Systems Group of UNISYS Corporation in
McLean, Virginia and as Executive Vice
President of UNISYS Corporation. He has
been a director of First Virginia since
1978. Prior to being President of the
Government Systems Group, he was Vice
President of UNISYS (1991-1993) and
President of Paramax Corporation, a
subsidiary of UNISYS (1992). He serves
on the Executive Committee and chairs
the Management Compensation and Benefits
Committee. He beneficially owns 6,000
shares of Common Stock. (4)
CLASS B DIRECTORS
(Serving until the 1998 Annual Meeting)
Picture Edward L. Breeden, III, 61, has been a
partner in the law firm of Breeden,
MacMillan & Green in Norfolk, Virginia,
since 1959 and has been a director of
First Virginia since 1982. He is a
director of First Virginia Bank of
Tidewater, Norfolk, Virginia and of
First Virginia Life Insurance Company.
He serves on both the Executive
Committee and the Public Policy
Committee and chairs the Audit
Committee. He beneficially owns 66,158
shares of Common Stock. (5)
Picture Gilbert R. Giordano, 68, has been an
attorney since 1956 and senior partner
in the law firm of Giordano &
Villareale, P.A., in Upper Marlboro,
Maryland since 1972. He has been a
director of First Virginia since 1989.
He is Chairman of the Board of First
Virginia Bank-Maryland, Upper Marlboro,
Maryland. He serves on the Audit
Committee and the Director Nominating
Committee and beneficially owns 223,043
shares of Common Stock. (6)
CLASS B DIRECTORS
(continued)
Picture Eric C. Kendrick, 50, has been President
of Mereck Associates, Inc., a real
estate management and development firm
in Arlington, Virginia, since 1989 and
has been a director of First Virginia
since 1986. He serves on the Management
Compensation and Benefits Committee and
the Public Policy Committee. He
beneficially owns 50,973 shares of
Common Stock. (7)
Picture John B. Melvin, 72, is the retired
Chairman of the Board, Coca-Cola
Bottling Co. of Annapolis, Maryland, and
the former Trustee of the Stanley Family
Bottling Company Trust. He is a
director of Farmers Bank of Maryland, a
subsidiary bank of First Virginia
located in Annapolis, Maryland. He
beneficially owns 19,620 shares of
Common Stock. (8)
Picture Robert H. Zalokar, 69, is the retired
Chairman of the Board and Chief
Executive Officer of First Virginia
(1984-1994). He has been a director of
First Virginia since 1959. He is also a
director of First Virginia Bank in Falls
Church and a director of First Virginia
Life Insurance Company and First
Virginia Mortgage Company. He serves as
Chairman of the Executive Committee and
the Director Nominating Committee and is
a member of the Public Policy Committee.
He beneficially owns 124,301 shares of
Common Stock.
CLASS C DIRECTORS
(Serving until the 1999 Annual Meeting)
Picture Paul H. Geithner, Jr., 66, is the
retired President and Chief
Administrative Officer of First Virginia
(1985-1995) and has been a director of
First Virginia since 1984. He also is a
director of First Virginia Life
Insurance Company, a nonbank affiliate.
He is a member of the Public Policy
Committee and the Executive Committee.
He beneficially owns 39,064 shares of
Common Stock.(9)
Picture L. H. Ginn, III, 63, has been President
since 1975 of Lighting Affiliates, Inc.,
a distributor of electrical fixtures
located in Richmond, Virginia, and has
been a director of First Virginia since
1978. Mr. Ginn is a retired U. S. Army
Reserve Major General. He is Chairman
of the Board of First Virginia Bank-
Colonial, Richmond, Virginia. He is a
member of the Executive Committee and
the Director Nominating Committee and
beneficially owns 12,599 shares of
Common Stock. (10)
Picture T. Keister Greer, 75, has been principal
of T. Keister Greer, P.C., in Rocky
Mount, Virginia, since 1995 and has been
a director of First Virginia since 1976.
Prior to that, he was Counsel to Greer &
Melesco (1972-1994) and Counsel to Greer
& Greer (1990-1991). During 1996, he
was Chairman of the Board of First
Virginia Bank-Franklin County, Rocky
Mount, Virginia. Mr. Greer is a member
of the Public Policy Committee and the
Director Nominating Committee and
beneficially owns 17,100 shares of
Common Stock. (11)
Picture Edward M. Holland, 57, has been an
attorney in Arlington, Virginia, since
1966 and is a former member of the
Virginia General Assembly (Senate)
(1972-1996). He has been a director of
First Virginia since 1974. He also is a
director of First Virginia Bank, Falls
Church, Virginia. He serves on the
Executive Committee and the Management
Compensation and Benefits Committee and
beneficially owns 57,479 shares of
Common Stock. (12)
(1) Includes options to purchase 17,750 shares of Common Stock
which are currently exercisable but does not include options
to purchase 36,000 shares of Common Stock which are not
currently exercisable.
(2) Includes 2,282 shares of Common Stock held in a Keogh Plan,
900 shares held in an Individual Retirement Account and 900
shares held in her spouse's Individual Retirement Account.
(3) Includes 3,000 shares held by a trust of which Mr. Phillips
is a trustee.
(4) All of the shares are held jointly with spouse.
(5) Includes 7,500 shares held by a corporation of which Mr.
Breeden is President, 16,325 shares held by two foundations
of which Mr. Breeden is Chairman, and 38,175 shares held by
two trusts of which Mr. Breeden is trustee.
(6) Includes 271 shares held in a trust for his son, 87 shares
held by his spouse and daughter, 529 shares held by his
spouse and son, 10,819 shares held by the Giordano Family
Foundation, 4,476 shares held by his spouse as custodian for
his son, and 16,133 shares held by his spouse alone.
(7) Includes 7,728 shares held by his spouse and 1,729 shares
held by a corporation of which Mr. Kendrick is a director
and president.
(8) All of the shares are held in a trust.
(9) Includes 31,000 shares held in a revocable trust and 4,220
shares held indirectly through his spouse.
(10) Includes 241 shares held indirectly through his spouse and
1,402 shares held by a trust of which Mr. Ginn is trustee.
(11) Includes 5,400 shares of Common Stock held by a trust in
which Mr. Greer has a beneficial interest.
(12) Includes 34,479 shares held by a corporation of which Mr.
Holland is an officer, director, and owner and 8,000 shares
held in a trust.
As of December 31, 1996, executive officers and directors as
a group beneficially owned 881,490 shares of Common Stock
representing approximately 2.7% of those shares outstanding,
of which 110,337 shares represent shares covered by
currently exercisable options (or options exercisable within
60 days) and 125 shares of Preferred Stock representing
approximately .19% of those shares outstanding. No officer
or director owned as much as 1.0% of First Virginia Common
Stock. Messrs. Breeden, Greer, Holland and Giordano are
members of or are associated with law firms which
have been in the last two years, and are proposed in the
future to be, retained by subsidiaries of First Virginia.
Messrs. Breeden, Fitzpatrick, Geithner, Ginn, Giordano,
Greer, Holland, Melvin, Phillips, Rowe and Zalokar have been
directors of various subsidiaries of First Virginia during
the past five years. Ages of the directors are stated as of
December 31, 1996.
<PAGE>
BENEFICIAL OWNERSHIP OF NAMED EXECUTIVE OFFICERS
The following table sets forth certain information regarding
the named executives' beneficial ownership of First Virginia
Common Stock as of December 31, 1996.
Shares of Common Stock of First Virginia
Beneficially Owned
Name of Officer Number * Percent of Class
Barry J. Fitzpatrick 49,472 .1507
Shirley C. Beavers, Jr. 35,714 .1088
Raymond E. Brann, Jr. 29,882 .0910
Richard F. Bowman 18,489 .0563
Michael G. Anzilotti 7,623 .0232
* The amounts shown represent the total shares owned beneficially
by such individuals together with shares which are issuable upon
the exercise of all stock options that are currently exercisable.
Specifically, the following individuals have the right to acquire
the shares indicated after their names, upon the exercise of
stock options: Mr. Fitzpatrick, 17,750; Mr. Beavers, 22,750;
Mr. Brann, 17,300; Mr. Bowman, 15,137; and Mr. Anzilotti, 6,200.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
First Virginia's Board of Directors has a standing Audit
Committee, Director Nominating Committee, Management Compensation
and Benefits Committee, Public Policy Committee, and Executive
Committee.
The Audit Committee, comprised of Directors Breeden, Giordano, Gruver,
Melvin, and Phillips held four meetings during 1996. Functions of the
Committee include (1) reviewing with the independent public accountants and
management such matters as: the financial statements and the scope of First
Virginia's audit, compliance with laws and regulations, and the adequacy of
First Virginia's system of internal procedures and controls and resolution of
material weaknesses; (2) reviewing with First Virginia's internal auditors
the activities and performance of the internal auditors; (3) reviewing with
management the selection and termination of the independent public
accountants and any significant disagreements between the independent public
accountants and management; and (4) reviewing the nonaudit services of the
independent public accountant. Under Section 36 of the Federal Deposit
Insurance Act, the Audit Committee also performs similar functions for some
of the First Virginia member banks.
The Director Nominating Committee, comprised of Directors Zalokar,
Brand, Fitzpatrick, Ginn, Giordano, Greer and Rowe, held one meeting in 1996.
The functions of the Committee include annually recommending to the Board the
names of persons to be considered for nomination and election by First
Virginia's stockholders and, as necessary, recommending to the Board the
names of persons to be elected to the Board between annual meetings.
The Management Compensation and Benefits Committee, comprised of
Directors Zettlemoyer, Brand, Holland, Kendrick, and Phillips, held one
meeting in 1996. The Committee has the authority to establish the level of
compensation (including bonuses) and benefits of management of First
Virginia. In addition, the Committee has authority to award long-term
incentive compensation, e.g., stock options and stock appreciation rights, to
First Virginia's management based on such factors as individual and corporate
performance.
The Public Policy Committee, comprised of Directors Gruver, Breeden,
Fitzpatrick, Geithner, Greer, Kendrick, Rowe, and Zalokar, met four times
during 1996. This Committee supervises First Virginia's contributions and
matching gifts programs. The Committee also monitors the programs developed
for affirmative action and compliance with the Community Reinvestment Act and
Title VII of the Civil Rights Act of 1964.
The Executive Committee, comprised of Directors Zalokar, Breeden,
Fitzpatrick, Geithner, Ginn, Holland, and Zettlemoyer, held 12 meetings in
1996. The Committee exercises all of the powers of the Board of Directors
when the Board is not in session, except for those powers reserved for the
Board under state law and by First Virginia's Articles of Incorporation and
Bylaws.
During 1996, there were 12 meetings of the Board of Directors. All
incumbent directors attended more than 75% of the aggregate total number of
meetings of the Board and committees of the Board on which they served.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires First
Virginia's executive officers and directors to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. Executive officers and directors are required by SEC
regulation to furnish First Virginia with copies of all Section 16(a) forms
they file.
Based on a review of the forms that were filed and written
representations from the executive officers and directors, First Virginia
believes that during the year 1996 all filing requirements applicable to its
officers and directors were met.
<PAGE>
EXECUTIVE COMPENSATION
The Summary Compensation Table shows the annual compensation for the
last three fiscal years for First Virginia's Chief Executive Officer and for
the four most highly compensated executive officers other than First
Virginia's Chief Executive Officer:
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
(a) (b) (c) (d) (e) (f) (g)
Other All
Name Annual Options/ Other
and Compen- SARs Compen-
Principal sation Awarded sation
Position Year Salary($)(1) Bonus($)(2) ($)(3) (#) ($) (4)
Barry J. Fitzpatrick 1996 470,000 269,960 3,724 10,000 56,783
Chairman, President 1995 350,000 156,275 3,636 20,000 45,804
and Chief Executive 1994 209,000 125,144 6,135 0 24,691
Officer of
First Virginia
Shirley C. Beavers, Jr. 1996 241,500 108,433 3,748 5,000 31,426
Executive Vice President 1995 230,000 93,362 3,868 5,000 30,818
of First Virginia and 1994 209,000 94,952 6,919 0 25,963
President, First
Virginia
Services, Inc.
Raymond E. Brann, Jr. 1996 194,500 106,803 4,568 5,000 59,339
Executive Vice President 1995 183,821 61,735 66,360 5,000 57,270
of First Virginia 1994 154,348 34,179 2,394 0 55,700
Richard F. Bowman 1996 168,000 106,088 3,263 5,000 15,943
Senior Vice President, 1995 153,000 60,817 2,858 5,000 14,520
Treasurer and Chief 1994 135,408 44,120 2,871 0 11,170
Financial Officer
of First Virginia
Michael G. Anzilotti 1996 188,400 56,550 2,459 0 15,966
Senior Vice President 1995 173,798 46,524 2,250 5,000 15,034
and Regional Executive 1994 149,741 41,588 4,007 0 13,904
Officer of First Virginia
and President and Chief
Executive Officer of
First Virginia Bank
(1) The Salary Column (Column (c)) includes the base salary earned by
the executive officer, which includes amounts that are deferred under the
First Virginia Banks, Inc. Employees Thrift Plan and the First Virginia
Pre-Tax Health Benefit Plan.
(2) The Bonus Column (Column (d)) includes the amount earned as a bonus
for that year even if paid in the following year. It also includes amounts
earned for that year under the First Virginia Banks, Inc. Profit Sharing
Plan.
(3) The Other Annual Compensation Column (Column (e)) includes the
amount of taxes paid by First Virginia for certain benefits. In Mr. Brann's
case, it also includes for years 1995 and 1996 the interest benefit to
him of a below-market rate residential mortgage loan made to him as an
inducement to relocate to Northern Virginia. During 1995, Mr. Brann had
perquisites or personal benefits whose value amounted to $56,900. Of that
amount, $32,459 was for country club dues and a country club initiation fee
and $17,287 was for moving expenses.
(4) The All Other Compensation Column (Column (g)) includes the amount
paid by the employer under the First Virginia Banks, Inc. Employees Thrift
Plan which, for each of the named officers, was $6,750. It also includes the
amounts paid by the employer under the First Virginia Supplemental Benefits
Plan. This plan provides supplemental retirement benefits for those key
officers who are restricted from receiving further benefits under the Thrift
Plan as a result of the limitation on pretax contributions imposed by the
Internal Revenue Code. For 1996, these amounts were: for Mr. Fitzpatrick,
$26,382; Mr. Beavers, $8,330; Mr. Brann, $4,791; Mr. Bowman, $3,557 and Mr.
Anzilotti, $3,832. It also includes the premium amounts paid by the employer
under the First Virginia Split Dollar Life Insurance Plan. For 1996, these
amounts were: for Mr. Fitzpatrick, $21,904; Mr. Beavers, $14,579; Mr. Brann,
$44,016; Mr. Bowman, $5,283 and Mr. Anzilotti, $4,246. It also includes the
"above-market" earnings on deferred compensation earned during 1996. These
amounts were: for Mr. Fitzpatrick, $1,747; Mr. Beavers, $1,767; Mr. Brann,
$3,782; Mr. Bowman $353 and Mr. Anzilotti, $1,138.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table shows for each of the named executive officers (1)
the number of options that were granted during 1996, (2) out of the total
number of options granted to all employees, the percent granted to the
named executive officer, (3) the exercise price, (4) the expiration date and
(5) the potential realizable value of the options, assuming that the market
price of the underlying securities appreciates in value from the date of
grant to the end of the option term, at a 5% and 10% annualized rate. No
freestanding SARs were granted in 1996.
<PAGE>
Stock Option Grants In 1996
Potential
Realizable
Percent Value at
Number of Assumed Annual
Securities Total Rates of Stock
Underlying Option Price
Options Granted to Exercise Appreciation
Granted Employees or Base for Option
(# Shs.) in Fiscal Price Expiration Term
Name (1) Year(2) ($/Sh.) Date 5%($) 10%($)
Barry J. 10,000 25.32% 46.875 12/17/2006 294,794 747,067
Fitzpatrick
Shirley C. 5,000 12.66% 46.875 12/17/2006 147,397 373,533
Beavers, Jr.
Raymond E. 5,000 12.66% 46.875 12/17/2006 147,397 373,533
Brann, Jr.
Richard F. 5,000 12.66% 46.875 12/17/2006 147,397 373,533
Bowman
Michael G. 0 --- --- --- --- ---
Anzilotti
(1) Options granted to the named executive officers in 1996 are
exercisable over a five-year period provided certain performance goals are
achieved by First Virginia. All of the options that were granted in 1996
include a provision that would accelerate the vesting of the options upon a
"change in control" of First Virginia. For an explanation of the "change in
control" provision, see "Directors' Compensation, Consulting Arrangements and
Plans Which Include Change in Control Arrangements."
(2) Options to purchase 39,500 shares of First Virginia Common Stock
were granted to employees during 1996. No freestanding SARs were granted in
1996 to employees and none of the options that were granted had any tandem
SARs.
The following table shows for each of the named executive officers the
number of shares of First Virginia Common Stock acquired upon the exercise of
stock options and stock appreciation rights during 1996, the value realized
upon their exercise, the number of unexercised stock options and SARs at the
end of 1996, and the value of unexercised "in-the-money" stock options and
SARs at the end of 1996. Stock options or freestanding SARs are
considered "in-the-money" if the fair market value of the underlying
securities exceeds the exercise price of the option or SAR. Some of the
stock options which were granted to First Virginia's executive officers
include a provision that would accelerate the vesting of the options upon a
"change in control" of First Virginia. There were no unexercisable or
exercisable freestanding SARs owned by any of the named executive officers
at year end.
<PAGE>
Aggregated Options/SAR Exercises in 1996 and
Yearend Options/SAR Values
Value of
Unexercised
Number of In-the-
Unexercised Money Options
Options at at
Name Shares Yearend (#) Yearend($)
Acquired on Value Exercisable/ Exercisable/
Exercise(#) Realized($) Unexercisable Unexercisable
Barry J.
Fitzpatrick 9,500 241,959 17,750/36,000 460,136/220,750
Shirley C.
Beavers, Jr. 3,500 99,167 22,750/16,000 584,094/125,750
Raymond E.
Brann, Jr. 2,007 85,313 17,300/11,200 499,288/53,900
Richard F.
Bowman 1,500 49,000 15,137/14,500 393,808/103,062
Michael G.
Anzilotti 1,300 35,425 6,200/9,500 149,775/98,062
PENSION AND THRIFT PLANS AND SUPPLEMENTAL ARRANGEMENTS
The following table shows the estimated annual benefit payable upon
retirement (life only) under the First Virginia Pension Trust Plan and under
the First Virginia Supplemental Pension Trust Plan based on specified
remuneration and years of credited service classifications, assuming a
participant retired on December 31, 1996, at age 65. Credited service in
excess of thirty years is also not taken into account in determining benefits
under either plan.
Annual Benefits Under First Virginia's Pension Trust Plan and
the First Virginia Supplemental Pension Trust Plan
Average
Annual Pay 10 Years 15 Years 20 Years 25 Years 30 Years
for Highest of of of of of
Five Years Service Service Service Service Service
$150,000 $22,621 $ 33,932 $ 45,242 $ 56,553 $ 67,864
$200,000 $30,621 $ 45,932 $ 61,242 $ 76,553 $ 91,864
$250,000 $38,621 $ 57,932 $ 77,242 $ 96,553 $115,864
$300,000 $46,621 $ 69,932 $ 93,242 $116,553 $139,864
$350,000 $54,621 $ 81,932 $109,242 $136,553 $163,864
$400,000 $62,621 $ 93,932 $125,242 $156,553 $187,864
$450,000 $70,621 $105,932 $141,242 $176,553 $211,864
$500,000 $78,621 $117,932 $157,242 $196,553 $235,864
Under the First Virginia Pension Trust Plan, a participant retiring at
age 65 with 30 years of credited service under the Plan will receive a
maximum annual pension benefit equal to 1.1% of average annual pay
multiplied by 30 years of credited service plus 0.5% of average annual pay in
excess of covered compensation multiplied by 30 years of credited service.
The calculation of "average annual pay" is based on annual compensation for
the highest five consecutive years out of the participant's final 10 years of
service. "Covered compensation" is calculated by multiplying the annual
average of Social Security taxable wage bases in effect for the 35 years
ending with the last day of the year in which the participant attains Social
Security retirement age. Effective January 1, 1996, First Virginia adopted
the First Virginia Supplemental Pension Trust Plan for certain key employees
to provide for the payment of supplemental pension benefits as a result of
the IRS restrictions on benefits under the First Virginia Pension Trust Plan.
All of the named executive officers (except for Mr. Fitzpatrick who would
receive benefits at retirement under his Supplemental Compensation Agreement)
participate in the Supplemental Pension Trust Plan.
Remuneration on earnings determining pension benefits under both the
Pension Trust Plan and the Supplemental Pension Trust Plan includes salaries
and bonuses (which are listed in the Summary Compensation Table) and any
other taxable compensation. Effective February 1, 1996, compensation
resulting from the exercise of nonqualified options, SARs, and deferred
compensation are excluded from the computation of benefits under both
plans. Credited service under both plans as of December 31, 1996, for each
of the named executives was as follows: Mr. Fitzpatrick, 27.4 years; Mr.
Beavers, 27.3 years; Mr. Brann, 31 years; Mr. Bowman, 21.5 years and Mr.
Anzilotti, 18.2 years. If a participant retired on December 31, 1996 at age
65, the participant would receive the pension benefits as determined by using
the Summary Compensation and Pension Tables shown above in conjunction with
the formula described above.
Mr. Fitzpatrick's Supplemental Compensation Agreement ("Agreement")
provides him with supplemental retirement benefits in addition to those
pension benefits he would receive from the First Virginia Pension Trust Plan.
Under the Agreement, if he resigns, retires or leaves First Virginia for any
reason after reaching the age of 58, he is entitled to receive for the rest
of his life, supplemental compensation equal to sixty percent of the average
of his highest five years of annual salary and bonus, reduced by the amount
he would receive under the First Virginia Pension Trust Plan. Highest annual
salary includes salary and bonus and any profit sharing payments received
under the First Virginia Profit Sharing Plan but does not include any other
form of compensation that is not salary or bonuses, such as compensation
arising from the exercise of SARs and nonqualified options. To avoid a
possible doubling up of benefits from this Agreement and a separate
Employment Agreement (see below), payments to Mr. Fitzpatrick pursuant to his
Agreement would be delayed for three years upon a change of control. Should
Mr. Fitzpatrick die, his wife would be entitled to one-half of his total
annual benefit for the rest of her life. Under his Agreement, once benefits
begin to be paid, Mr. Fitzpatrick is to remain available to provide
consulting and advisory services if he is physically and mentally capable
of doing so. Furthermore, his benefits are forfeitable under certain
circumstances.
On December 31, 1996, Messrs. Fitzpatrick, Beavers, Brann and Bowman
entered into employment agreements with First Virginia which provide for
their continued employment for a three-year period following the date on
which a "change of control" takes place (the "Employment Period"). These
agreements require First Virginia (or any successor corporation) to employ
the executive during the Employment Period following a change of control in a
position with authority, duties and responsibilities at least commensurate to
what the executive had prior to a change of control, and at compensation
levels (including benefits) at least equal to what the executive was making
prior to the change of control. If, during the first year of his Employment
Period, the executive is terminated other than for "cause" or "disability" or
the executive terminates his employment for "good reason" (as those terms
are defined under the employment agreements), then First Virginia (or its
successor) would pay the executive a lump sum equal to 2.99 times the sum of
his annual base salary and bonus. If, during the second or third year of his
Employment Period, the executive is terminated other than for cause or
disability or terminates his employment for good reason, then First
Virginia or its successor would pay the executive a lump sum equal to two
times the sum of his annual base salary and bonus. During a thirty-day
period after the first year, the executive could terminate his employment for
any reason and receive two times the sum of his annual base salary and bonus.
Furthermore, if any payments made under the agreements subject the executive
to taxes under Internal Revenue Code Section 4999, such payments would be
"grossed up" to put the executive in the same after-tax position as if
no excise taxes had been imposed.
Executive officers, like other employees of First Virginia, are eligible
to participate in the First Virginia Banks, Inc. Employees' Thrift Plan
("Thrift Plan"). Under the Thrift Plan, employees of First Virginia and its
subsidiaries who have completed one year of service can contribute up to six
percent of their compensation and receive matching employer contributions
equal to 50% of their employee contributions. For the years when First
Virginia meets an earnings test under the Thrift Plan, First Virginia
contributes 75% of employee contributions. The Thrift Plan complies with
Section 401(k) of the Internal Revenue Code so that employee contributions
can be made on a pretax basis. Employees can direct the investment of their
contributions and the matching employer contributions into one or more of
three funds that are administered by the Trust Department of First Virginia
Bank. Reference is made to footnote 4 of the Summary Compensation Table for
the amount of contributions made on behalf of the named executive officers
under the Thrift Plan.
First Virginia also maintains a First Virginia Supplemental Benefits
Plan which provides supplemental retirement benefits for those key officers
who are restricted from receiving further benefits under the Thrift Plan
as a result of the limitation on pretax contributions imposed by the Internal
Revenue Code for 1996. Under the First Virginia Supplemental Benefits Plan,
executive officers can continue to make pretax contributions in excess of the
IRS limits imposed on the Thrift Plan and receive matching contributions from
First Virginia identical to what they would have received if they were in the
Thrift Plan and there were no limitations on contributions. Reference is
made to Footnote 4 of the Summary Compensation Table for the amount of the
employer contributions made on behalf of the named executive officers under
the First Virginia Supplemental Benefits Plan.
DIRECTORS' COMPENSATION, CONSULTING ARRANGEMENTS
AND PLANS WHICH INCLUDE CHANGE IN CONTROL ARRANGEMENTS
For 1997, directors of First Virginia who are not salaried officers will
be paid an annual retainer of $14,000 per year, a fee of $925 for each
meeting of the Board of Directors attended, and a fee of $725 for each
meeting of a Committee of the Board of Directors attended. Committee
chairmen will receive $875 for each committee meeting they chair. Directors
are reimbursed for out-of-town expenses incurred in connection with Board
and Committee meetings.
During 1996, Edwin T. Holland, the founder and former Chairman and Chief
Executive Officer of First Virginia, and Thomas K. Malone, Jr., former
Chairman and Chief Executive Officer of First Virginia, were paid
$152,568 and $120,336, respectively, under supplemental compensation
agreements, in addition to amounts they received from the First Virginia
Pension Trust Plan and, in the case of Mr. Malone, in addition to his
director fees. When requested, both Holland and Malone are required to
provide consulting services under their supplemental compensation agreements.
Also, during 1996, Robert H. Zalokar, former Chairman and Chief Executive
Officer of First Virginia, and Paul H. Geithner, Jr., former President and
Chief Administrative Officer of First Virginia, were paid $521,316 and
$282,527, respectively, under supplemental compensation agreements, in
addition to amounts they received from the First Virginia Pension Trust Plan
and in addition to their director fees. When requested, both Zalokar and
Geithner are required to provide consulting services under their supplemental
compensation agreements.
First Virginia paid Mr. Zalokar's and Mr. Malone's country club
membership fees of $2,760 and $1,445, respectively, during 1996.
During 1996, Virginia H. Brown, formerly Virginia H. Beeton, received
$71,000 pursuant to her former husband's Supplemental Retirement Agreement
with First Virginia in addition to what she received from the First
Virginia Pension Trust Plan. Her former husband, Ralph A. Beeton, was
Chairman and Chief Executive Officer of First Virginia.
First Virginia also has two key employee salary reduction deferred
compensation plans, one of which began in 1983 and the other in 1986, and two
directors' deferred compensation plans, one of which also began in 1983
and the other in 1986, ("Deferred Compensation Plans"). Under the Deferred
Compensation Plans, participants elect to defer some or all of their
compensation from First Virginia, and First Virginia agrees to pay at normal
retirement age or earlier (or to participant's beneficiary or estate on
participant's death) a sum substantially in excess of what each participant
has deferred. To fund the benefits under the Deferred Compensation Plans,
First Virginia has purchased life insurance contracts on the lives of the
participants, with First Virginia as the beneficiary. For the period ending
December 31, 1996, none of the named executive officers of First Virginia
deferred any compensation under the Deferred Compensation Plans.
The 1983 deferred compensation plans include a provision regarding
"change in control." If there is a "change in control" of First Virginia,
and a director is terminated under the directors' plan, or in the case of the
employee plan, an employee is terminated "without cause" or the employee
terminates his/her employment for "good reason," as those terms are defined
under the employee plan, then the director or employee, as the case may be,
becomes entitled to receive his/her benefits under the 1983 Deferred
Compensation Plans at retirement, notwithstanding the fact that his/her
affiliation with First Virginia has terminated.
First Virginia has a Split Dollar Life Insurance Plan ("Split Dollar
Plan") which currently includes all executive employees of First Virginia
including those named in the Summary Compensation Table. Under the Split
Dollar Plan, an executive can purchase ordinary life insurance policies with
coverage of at least two times what is projected to be the executive's base
salary at retirement, up to a limit of $1,000,000. A portion of the premiums
will be loaned to the executives by First Virginia up to the later of ten
years or the executive's retirement date. At the end of this period, if
assumptions about mortality, dividends and other factors are realized, First
Virginia will recover all of its loans for premiums from the cash value of
the policy. The policy will then be transferred to the executive, who will
pay all further premiums, if any, under the policy. Executives who
participate in the Split Dollar Plan forego any insurance coverage over
$50,000 under the First Virginia Group Life Insurance Plan. During 1989, the
Split Dollar Plan was amended so that in the event of a "change in control,"
only the executive would have the right to terminate the policy.
First Virginia's Board of Directors approved in 1992 the establishment
of a trust with Chemical Bank (now The Chase Manhattan Bank) as the trustee
to partially secure the benefits of some of First Virginia's nonqualified
compensation plans, including the Deferred Compensation Plans and the First
Virginia Supplemental Benefits Plan, in case of a change in control. Under
the trust agreement establishing the trust, if a "change in control" takes
place, the trustee would pay the benefits under the covered compensation
plans out of the trust assets that have been contributed to the trust by
First Virginia, if First Virginia refused to pay the benefits. The trust is
considered a "grantor trust" subject to the claims of First Virginia's
general creditors. For accounting purposes, the trust assets are considered
corporate assets and, therefore, no balance sheet impact to First Virginia
will result from the establishment of the trust. The trust agreement does
not include a provision which would accelerate the vesting or payment of any
of the benefits under the covered compensation plans in case of a change in
control. During 1996, First Virginia made a $3,600,000 contribution to the
Trust.
The 1983 deferred compensation plans, the Split Dollar Plan, the
above-described trust agreement with The Chase Manhattan Bank, Mr.
Fitzpatrick's Supplemental Compensation Agreement, certain stock option
agreements and the above-described employment agreements all include change
in control provisions. Under this definition, a change in control means:
(a) an acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more
of either (i) the then outstanding shares of First Virginia Common Stock
or(ii) the combined voting power of the then outstanding voting securities of
First Virginia entitled to vote generally in the election of directors (the
"Outstanding First Virginia Voting Securities"); provided, however, that any
acquisition directly from or by First Virginia or any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by First
Virginia or an affiliated company or any acquisition by a company pursuant to
a transaction which complies with clauses (i), (ii) and (iii) of (c) below
would be excluded; or (b) individuals who, as of the date when the change in
control provisions were adopted, constitute the Board (the "Incumbent Board")
of First Virginia, cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director whose
election, or nomination for election by First Virginia's shareholders, was
approved by vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual was a member of
the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board; or (c) consummation of a
reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of First Virginia (a "Business
Combination"), in each case, unless, following such Business Combination, (i)
all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the outstanding First Virginia Common
Stock and Outstanding First Virginia Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns First
Virginia or all or substantially all of First Virginia's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the outstanding First Virginia Common Stock and the
outstanding First Virginia Voting Securities, as the case may be, (ii) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of First Virginia or such
corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent Board
at the time of the execution of the initial agreement, or the action of the
Board, providing for such Business Combination; or (d) approval by the
shareholders of First Virginia of a complete liquidation or dissolution of
First Virginia.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of First Virginia's Management Compensation
and Benefits Committee are E. Cabell Brand, Edward M. Holland, Eric C.
Kendrick, W. Lee Phillips, Jr. and Albert F. Zettlemoyer. Edward M.
Holland is the son of Edwin T. Holland, the founder and former Chairman and
Chief Executive Officer of First Virginia. As noted above, Edwin T. Holland
receives a fee from First Virginia pursuant to a Supplemental Compensation
Agreement. Also, as noted above, Edward M. Holland's sister, Virginia H.
Brown, receives a benefit pursuant to her former husband's Supplemental
Retirement Agreement with First Virginia. Albert F. Zettlemoyer's daughter
is an officer of First Virginia Bank. None of the members of the Management
Compensation and Benefits Committee served as members of the compensation
committees of another entity. No executive officer of First Virginia served
as a director of another entity that had an executive officer serving on
First Virginia's compensation committee. No executive officer of First
Virginia served as a member of the compensation committee of another entity
which had an executive officer who served as a director of First Virginia.
MANAGEMENT COMPENSATION AND BENEFITS COMMITTEE
REPORT CONCERNING FIRST VIRGINIA'S
EXECUTIVE COMPENSATION POLICY
The Management Compensation and Benefits Committee (the "Committee") of
the Board of Directors establishes the policy for the compensation of the
executive officers of First Virginia. It is also responsible for
administering most of First Virginia's executive compensation programs. The
Committee is composed entirely of outside directors who are not eligible,
with the exception of the directors' deferred compensation plans, to
participate in the plans over which it has authority.
The overall goal of First Virginia's compensation policy is to motivate,
reward and retain its key executive officers. The Committee believes this
should be accomplished through an appropriate combination of competitive
base salaries and, at times, both short term and long term incentives.
The primary components of First Virginia's executive compensation
program are base salaries, bonuses, (e.g. short term compensation), and
equity compensation (e.g. long term compensation). Executive officers also
participate in other broad based employee compensation and benefit programs.
Since no First Virginia executive had compensation in 1996 which in total
exceeded one million dollars and since no executive is expected to be
compensated in excess of that amount in 1997, the Committee did not consider
the effect of the one million dollar deduction limitation under Section
162(m) of the Internal Revenue Code in determining executive compensation nor
did they establish any specific policy regarding the deductibility of
executive compensation.
Base Salary
The Compensation Committee's policy for determining base salaries is
that two primary factors should be considered:
(1) the degree of responsibility the executive officer has, his
experience, and the number of years he has been in office, and
(2) the compensation levels of corresponding positions at other banking
companies of comparable size that compete with and serve the same markets as
First Virginia. This "Local Peer Group" of companies consists of Central
Fidelity Banks, Inc., Crestar Financial Corporation and Signet Banking
Corporation based in Virginia, First Maryland Bancorp and Mercantile
Bankshares Corporation based in Maryland, and First Tennessee National
Corporation and First American Corporation of Tennessee. Base salaries are
targeted to be the median salaries of corresponding positions in the "Local
Peer Group". For 1996, Mr. Fitzpatrick's base salary was $470,000 which was
lower than the median (approximately 80% of the median) for salaries paid to
his counterparts in the "Local Peer Group".
Short Term Incentives/Bonuses
The Committee grants bonuses to the executive officers and CEO based on
the extent to which First Virginia achieves or exceeds annual performance
objectives. The Compensation Committee may award bonuses to the CEO and to
the executive officers if First Virginia achieves a return on total average
assets (ROA) of at least 1% (the same basis for determining payments of
profit sharing to all employees). ROA generally is considered by
the Committee to be the most important single factor in measuring the
performance of a banking company, and achievement of a 1% ROA generally is
considered by the Committee to be the mark of a good performing banking
company.
Bonus awards are based on the following:
(a) The Committee establishes target amounts each year for return on
average assets ("ROA"), return on total stockholders' equity
("ROE"), asset quality and capital strength consistent with First
Virginia's Profit Plan target amounts. Up to 50% of an executive's
salary may be awarded if the corporation achieves an ROA equivalent
to 80% or more of the ROA target amount for the year. For the
chief executive officer, First Virginia would also have to achieve
80% of targeted amounts for ROE, asset quality (as determined by
the ratio of nonperforming assets to total loans (NPA ratio) and
net loan charge-offs (CO ratio)) and capital strength (based on the
average equity to asset ratio (Equity/asset ratio) and the Tier I
risk based capital ratio); and
(b) Up to 30% of an executive's salary may be awarded based on the
degree to which First Virginia's earnings, asset quality and
capital ratios exceed the average for the other major banking
companies based in the Southeast, the "Southern Regional Peer
Group," as compiled by Keefe, Bruyette and Woods, the New York
securities firm which specializes in the banking and thrift
industry; and
(c) Up to 20% of an executive's salary may be awarded at the
discretion of the Committee based on an individual executive's
performance.
Within the above parameters, at the beginning of each year, the
Committee establishes for the CEO a target bonus which is based on a
projected return on assets for First Virginia. At the end of the year, the
Committee considers a preliminary bonus after taking into account the target
bonus, First Virginia's actual return on assets for the year and a formula
which is based on a set relationship between the actual versus the projected
return on assets.
The Committee then exercises its judgment in light of the foregoing
parameters and other considerations, including the Committee's view of
individual performance and potential and the recommendations of the CEO for
the executive officers (other than himself), to reach a bonus decision for
each executive officer and for the CEO. The Committee does not use a formula
to determine a final bonus decision. In 1996, the final bonus decision for
the CEO was at variance to the preliminary bonus amount. Among other things,
Mr. Fitzpatrick's bonus reflected First Virginia's success in achieving a
1.43% return on assets and the other above described results. Consistent
with the Committee's avoidance of a strict formula approach, no specific
weighting among the above 50%, 30% and 20% factors was specified. The
Committee believes that the use of the above approach provides a flexible yet
effective method of motivating First Virginia's management.
Listed below are the annualized ratios for First Virginia and the
Southern Regional Peer Group based on results for the first nine months of
1996, the latest data available to the Committee at the time the incentive
awards were considered.
<PAGE>
First Virginia
Profit Plan
or Target KBW Southern
Amount Actual Regional Peer Group
Earnings (Higher is better)
ROA 1.42% 1.40% 1.25%
ROE 12.79% 13.13% 14.81%
Asset Quality (Lower is better)
NPA .60% .49% .62%
CO .20% .24% .26%
Capital (Higher is better)
Equity/Asset Ratio 8.5% 10.60% 8.31%
Tier I Risk Based Capital 10.0% 14.17% 11.20%
First Virginia actual results exceeded the profit plan or target amount
in every category except ROA and CO and exceeded the Regional Peer Group in
every category except ROE. By yearend, First Virginia had also exceeded the
Profit Plan for ROA, achieving a 1.43% ROA. For that reason, the Committee
awarded Mr. Fitzpatrick a bonus of $250,000.
Long Term Compensation/Stock Options
The Committee believes that the granting of stock options is the most
appropriate form of long term compensation for executives and that such
awards of equity encourage the executive to achieve a significant ownership
stake in the success of First Virginia.
The Committee granted at the end of 1996 options covering a total of
39,500 shares of First Virginia Common Stock at $46.875 per share to the CEO
and to certain executive officers. The size of each option award was not
based on a formula and did not necessarily correlate to the degree by which
First Virginia's results exceed those of its Market Area Major Competitors or
the amount of each executive's current stock-based holdings. Instead, the
size of each award was based on a number of factors, some of which were
subjective, including the performances of the CEO and each executive officer
and the degree of responsibility each executive officer has with First
Virginia. Mr. Fitzpatrick received options covering 10,000 shares. The size
of his grant was primarily based on the performance of First Virginia as
described above.
Each option that was awarded by the Committee will vest over a five-year
period in equal annual installments beginning one year from the date of
grant. However, each installment can only be exercised if the performance
goal for that year is met; otherwise, that portion of the option lapses. The
performance goal in any year is based on whether First Virginia exceeds the
weighted average of the returns reported by the major competitors in its
banking markets (Central Fidelity, Signet, Crestar, First Maryland Bancorp,
Mercantile Bancshares, First Tennessee and First American of Tennessee) for
that year. The performance ratios are weighted as follows: ROA 35%, ROE
25%, five year cumulative total return to shareholder 15%, Nonperforming
Asset Ratio 15% and Charge-off Ratio 10%.
E. Cabell Brand
Edward M. Holland
Eric C. Kendrick
W. Lee Phillips
Albert F. Zettlemoyer
PERFORMANCE GRAPH
The following performance graph compares the yearly percentage change in
First Virginia's cumulative total shareholder return on its Common Stock with
(1) the cumulative total return of a broad market index that includes
companies whose equity securities are traded on the same exchange or are of
comparable market capitalization and (2) the cumulative total return of a
published industry or line-of-business index.
FIRST VIRGINIA BANKS, INC.
CUMULATIVE TOTAL RETURN
GRAPH INFORMATION
First S&P
Virginia 400
Banks, Inc. MidCap KBW 50
1991 100 100 100
1992 160 112 127
1993 148 128 134
1994 149 123 128
1995 202 161 204
1996 239 192 289
First Virginia believes the most appropriate equity market indices to be
used to measure the price performance of First Virginia's Common Stock are
the "S&P MidCap 400" and the "KBW 50." First Virginia is included as a
component of the S&P MidCap 400.
The Standard & Poor's MidCap 400 is comprised of 400 securities with
market value between approximately $200 million and $4 billion. First
Virginia considers it more representative of companies its size (yearend 1996
market capitalization of approximately $1.551 billion) than the S&P 500 index
which is heavily dominated by large capitalization stocks (the 50 largest
stocks account for 50% of the total value of the S&P 500). Also, financial
stocks represent approximately 15% of the S&P MidCap 400 index.
The KBW 50 is an index comprised of 50 banking companies, including all
the money center banks and most large regional banks. It was developed by
Keefe, Bruyette & Woods, a New York securities firm which specializes in the
banking and thrift industry. The KBW 50 is considered more representative of
price performance of the major banking companies in America. As is the case
with the S&P MidCap 400 index, the KBW 50 is a market capitalization weighted
index and assumes quarterly reinvestment of dividends.
As indicated in the Management Compensation and Benefits Committee
Report above, return on average assets (ROA) is an important factor for
determining First Virginia's performance and for determining short term
and long term compensation for First Virginia's executive officers. The
following chart compares First Virginia's ROA during the period 1992-1996
with the KBW Southern Regional Peer Group and with a local peer group
consisting of Central Fidelity Banks, Inc., Crestar Financial Corporation,
Signet Banking Corporation, Mercantile Bankshares Corporation, First
Tennessee National Corporation and First American Corporation of Tennessee.
As noted in the Management Compensation and Benefits Committee Report, the
Compensation Committee compared First Virginia's ROA with both these groups
as part of their evaluation of executive compensation.
FIRST VIRGINIA BANKS, INC.
CALCULATION OF FIVE YEAR RETURN ON AVERAGE ASSETS
YEAR ENDED DECEMBER 31, 1996
First Peer Group
Virginia Southern Local
Banks, Inc. Regional Peer
1992 1.50 1.03 0.98
1993 1.68 1.21 1.36
1994 1.58 1.24 1.34
1995 1.41 1.24 1.29
1996 1.43 1.31 1.33
TRANSACTIONS WITH MANAGEMENT
During the past year, certain of the directors and officers of First
Virginia and their associates had loans outstanding from First Virginia's
banking subsidiaries. Each of these loans was made in the ordinary course of
the lending bank's business. In some cases, where officers of First Virginia
or its subsidiaries had to be relocated, residential mortgage loans were made
by First Virginia at favorable interest rates. During 1995, First Virginia
made a below market rate residential mortgage loan in the amount of $400,000
at 7-5/8% to Raymond E. Brann, Jr., Executive Vice President of First
Virginia, as an inducement for him to relocate to Northern Virginia. The
interest benefit to him of that loan is included in the Summary Compensation
Table. However, none of the other named executive officers had any other
below market rate loans from First Virginia and none of them had any loans
from any of First Virginia's banking subsidiaries at favorable interest
rates. All other loans have been made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve more than the
normal risk of collectibility or present other unfavorable features. As of
December 31, 1996, the aggregate amount of loans outstanding to all directors
and executive officers of First Virginia and associates and members of their
immediate families was approximately $5,755,433.
II. APPOINTMENT OF INDEPENDENT AUDITORS
At the meeting a vote will be taken on a proposal to ratify the
appointment by the Board of Directors of Ernst & Young LLP as independent
auditors for the year ending December 31, 1997. Ernst & Young LLP has
served as independent auditors for First Virginia since 1974.
Representatives of the firm are expected to be present at the stockholders'
meeting and will be available to respond to appropriate questions and to make
a statement if they desire to do so.
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the 1998 Annual
Meeting and included in First Virginia's 1998 Proxy Statement must be
received by First Virginia no later than November 8, 1997. Upon receipt
of any such proposal, First Virginia will determine whether or not to include
such proposal in the Proxy Statement and proxy in accordance with regulations
governing the solicitation of proxies.
Under First Virginia's Bylaws, in order for a stockholder to nominate a
candidate for director, written notice of the nomination must be given to
First Virginia in advance of the meeting. Ordinarily, such notice must
be given not less than 60 nor more than 90 days before the meeting. However,
if First Virginia gives less than 70 days notice or prior public disclosure
of the meeting, then the stockholder must give such notice within 10 days
after notice of the meeting is mailed or other public disclosure of the
meeting is made. The notice must include, among other things, (1) the name
and record address of, and the class and amount of voting securities of First
Virginia owned by, the stockholder proponent, (ii) the name, age, address and
occupation of, and the class and amount of voting securities of First
Virginia owned by, the nominee, and (iii) all information that would be
required under Securities and Exchange Commission rules in a proxy statement
soliciting proxies for such nominee. In order for a stockholder to bring
other business before an annual meeting of stockholders, written notice must
be given to First Virginia within the same time limits described above for
the nomination of a candidate for director. The notice must include, among
other things, (i) the name and record address of, and the class and amount of
voting securities of First Virginia owned by, the stockholder proponent and
any other stockholder known to be supporting such proposal, (ii) a brief
description of the proposed business, the reasons for conducting such
business at the annual meeting, and (iii) any financial or other interest of
the stockholder in such proposal. These advance notice requirements are
separate from and in addition to the requirements a stockholder must meet to
have a proposal included in First Virginia's Proxy Statement. In each case,
the notice must be given to the Secretary of First Virginia at its principal
executive offices, 6400 Arlington Boulevard, Falls Church, Virginia
22042-2336.
The foregoing summary of certain provisions of First Virginia's Bylaws
is not intended to be complete and is qualified in its entirety by reference
to the Bylaws of First Virginia, copies of which will be furnished without
charge to any stockholder upon written request to the Secretary.
OTHER MATTERS
Management does not know of any other business to be presented to the
meeting except for matters incident to the conduct of the meeting. The
persons named in the accompanying proxy will vote in accordance with the
specifications on the proxy form and will vote in accordance with their best
judgment on any other matters which properly come before the meeting.
The cost of soliciting proxies will be borne by First Virginia. In
addition to solicitation by mail, proxies may be solicited in person, by
telephone or telegraph, or by directors, officers and employees of First
Virginia.
In addition, First Virginia has engaged D. F. King & Co., Inc. to aid in
the distribution of proxy materials and to solicit proxies from brokers,
nominees and security-holding companies for a fee of $6,500 plus
out-of-pocket expenses. First Virginia does not expect to pay any other
compensation for the solicitation of proxies, but will pay brokers, nominees,
fiduciaries and other custodians their reasonable expenses for sending proxy
material to principals and obtaining their instructions.
A copy of First Virginia's Annual Report for 1996, including financial
statements, is being mailed with this Proxy Statement to all stockholders of
record. The Annual Report is not to be regarded as proxy soliciting
material.
First Virginia will provide without charge, upon the written request of
any stockholder entitled to vote at the Annual Meeting, a copy of its Annual
Report for the fiscal year ended December 31, 1996, on Form 10-K, which
report will be filed with the Securities and Exchange Commission on or before
March 31, 1997. Stockholders of record on February 18, 1997, and beneficial
owners of such securities should submit requests for such report to
Thomas P. Jennings, Secretary, 6400 Arlington Boulevard, Falls Church,
Virginia 22042-2336.
<PAGE>
First Virginia will provide without charge, upon the written request of any
stockholder entitled to vote at the Annual Meeting, a copy of its Annual
Report for the fiscal year ended December 31, 1996, on Form 10-K, which
report will be filed with the Securities and Exchange Commission on or before
March 31, 1997. Stockholders of record on February 18, 1997, and beneficial
owners of such securities should submit requests for such report to Thomas P.
Jennings, Secretary, 6400 Arlington Boulevard, Falls Church, Virginia 22042-
2336.
REVOCABLE PROXY
FIRST VIRGINIA BANKS, INC.
X PLEASE MARK VOTES
AS IN THIS EXAMPLE
Proxy for Annual Meeting of Stockholders
Friday, April 25, 1997
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints E. Cabell Brand,
Thomas K. Malone, Jr. and Richard T. Selden, and
each of them, proxies with full power to vote all of
the stock of FIRST VIRGINIA BANKS, INC., which the
undersigned has the power to vote at the Annual
Meeting of Stockholders to be held Friday, April 25,
1997, at 6400 Arlington Boulevard, Falls Church,
Virginia, in the Fifth Floor Auditorium at 10:00
a.m., local time, and any adjournment thereof, in
accordance with instructions noted below, and at
their discretion, upon any other business not now
known which properly may come before the said
meeting, all as more fully set forth in the
accompanying proxy statement, receipt of which is
acknowledged.
With- For All
1. ELECTION OF DIRECTORS For hold Except
( ) ( ) ( )
C Class A (for a term of 3 years):
O Barry J. Fitzpatrick
M Elsie C. Gruver
M W. Lee Phillips, Jr.
O Josiah P. Rowe, III
N Albert F. Zettlemoyer
INSTRUCTION: To withhold authority to
vote for any individual nominee, mark
"For All Except" and write that nominee's
name in the space provided below.
For Against Abstain
2. PROPOSAL TO RATIFY ( ) ( ) ( )
THE APPOINTMENT OF
ERNST & YOUNG LLP
as independent
auditors for the
year 1997.
If no choice is indicated above, this proxy shall be deemed to grant
authority to vote FOR the election of director nominees and to vote FOR the
proposal. The stockholder's signature should be exactly as the name appears
below. 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 the President or other authorized officer. If a partnership, please
sign in partnership name by authorized person.
Please be sure to sign and date
this Proxy in the box below. Date
Stockholder sign above. Co-holder (if any)
sign above
- -----------------------------------------------------------------------------
- - Detach above card, sign, date and mail in postage paid envelope provided.
FIRST VIRGINIA BANKS, INC.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL
YOUR PROXY CARD TODAY
