<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (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 Rule 14a-11(c) or Rule 14a-12
First Virginia Banks, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
FIRST VIRGINIA BANKS, INC.
6400 ARLINGTON BOULEVARD
FALLS CHURCH, VIRGINIA 22042-2336
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 1998
The Annual Meeting of Stockholders of First Virginia Banks, Inc. will
be held at corporate headquarters at One First Virginia Plaza, 6400 Arlington
Boulevard, Falls Church, Virginia, in the 5th Floor Auditorium at 10:00 a.m. on
Friday, April 24, 1998, for the following purposes:
(1) To elect five Class B directors for a term of three years.
(2) To approve an amendment to the Articles of Incorporation
increasing the authorized Common Stock from 60,000,000 to
175,000,000 shares.
(3) To approve the 1998 Stock Incentive Plan and authorize the
issuance of up to 2,500,000 shares of Common Stock under the
Plan.
(4) To ratify the appointment of Ernst & Young LLP as independent
auditors for the year ending December 31, 1998.
(5) 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 17, 1998,
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 6, 1998
<PAGE> 3
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 24,
1998, or any adjournments thereof. The approximate mailing date of this Proxy
Statement and the accompanying proxy is March 6, 1998.
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 Items 2,
3, and 4 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
17, 1998, the record date for the determination of stockholders entitled to
notice of and to vote at the meeting, there were 51,829,006 shares of
Common Stock and 57,251 shares of Preferred Stock of First Virginia
issued and outstanding. 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 B directors will expire at this Annual Meeting.
Five persons, four of whom are presently on the Board, have been nominated to
serve as Class B directors. If elected, the five nominees for Class B director
will serve for a term of three years. Mr. John B. Melvin, a Class B director
since 1995, is retiring at the 1998 Annual Meeting and will not stand for
re-election.
With respect to the election of directors, the five Class B 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 nonvotes) on a matter will count
toward a quorum.
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.
1
<PAGE> 4
Certain information concerning the nominees for election at this
meeting and the Class A 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 B DIRECTORS
(To serve until the Annual Meeting in 2001)
<TABLE>
<CAPTION>
Common Stock
Beneficially
Owned December 31,
Name, Age and Year Principal Occupation, Business Experience in Last Five Years, 1997 and Percentage
Became a Director Other Directorships of Class(1)
------------------- ---------------------------------------------------------------------------- -------- ----------
<S> <C> <C>
EDWARD L. Partner, Breeden, MacMillan & Green, a law firm in Norfolk, Virginia, since 99,403(2)
BREEDEN, III 1968. Director, First Virginia Bank of Tidewater, Norfolk, Virginia, and
Age 62 First Virginia Life Insurance Company, Falls Church, Virginia.
1982
GILBERT R. GIORDANO Portfolio Manager, Titan Financial Advisors, LLC, since 1996. Partner, 295,012(3)
Age 69 Giordano & Villareale, P.A., a law firm in Upper Marlboro, Maryland,
1989 1972-1997. Chairman of the Board, First Virginia Bank-Maryland, Upper
Marlboro.
ERIC C. KENDRICK President, Mereck Associates, Inc., a real estate management and 77,844(4)
Age 51 development firm in Arlington, Virginia, since 1989. President, Murteck
1986 Construction Company, Inc., Upton Corporation, and Old Dominion Warehouse
Corporation, Arlington.
ROBERT M. ROSENTHAL Chairman of the Board since 1990 of Geneva Enterprises, Inc., lead 30,816(5)
Age 69 company of the Rosenthal Automotive Organization, which is comprised of ten
1998 Nominee divisional automotive dealerships and a management company located
throughout the Washington, D.C. Metropolitan Area. Other related companies
on which Mr. Rosenthal also serves as Chairman include: Maryland Imported
Cars, Inc., since 1994; Imported Cars of Maryland, Inc., since 1991;
Fairfax Imports, Inc., since 1988; Rosenthal Landover Enterprises, Inc.,
since 1978; Auto Supply and Parts, Inc., since 1985; Old Dominion Insurance
Company, since 1979; New Dominion Insurance Company, since 1990; and,
Geneva Air Services, Inc., since 1987. President, Arcoa, Inc., an
advertising company, since 1970. Trustee, Capital Automotive REIT, a real
estate investment trust which invests in real property and improvements
used by motor vehicle related businesses in major urban areas across the
country. Director, First Virginia Bank, Falls Church. Trustee, Vice
President and Treasurer, The Phillips Collection, Washington, D.C.
</TABLE>
- -----------------
1 No director or executive officer owned as much as 1.0% of First Virginia
Common Stock.
2 Includes 11,250 shares held by a corporation of which Mr. Breeden is
President, 24,487 shares held by two foundations of which Mr. Breeden is
Chairman, and 57,262 shares held by two trusts of which Mr. Breeden is
trustee.
3 Includes 418 shares held in a trust for his son, 130 shares held by his
spouse and daughter, 815 shares held by his spouse and son, 16,720 shares
held by the Giordano Family Foundation, 6,893 shares held by his spouse as
custodian for his son, and 24,817 shares held by his spouse alone.
4 Includes 13,535 shares held by his spouse and 2,593 shares held by a
corporation of which Mr. Kendrick is a director and President.
5 Includes 26,316 shares held by the Marion and Robert Rosenthal Foundation.
2
<PAGE> 5
NOMINEES FOR CLASS B DIRECTORS (CONTINUED)
<TABLE>
<S> <C> <C>
ROBERT H. ZALOKAR Retired Chairman of the Board and Chief Executive Officer of 184,451(6)
Age 70 First Virginia, 1984-1994. Director, First Virginia Bank,
1959 First Virginia Life Insurance Company, and First Virginia
Mortgage Company, Falls Church, Virginia. Trustee, George
Mason University Foundation.
</TABLE>
CLASS C DIRECTORS
(Serving until the 1999 Annual Meeting)
<TABLE>
<CAPTION>
Common Stock
Beneficially
Owned December 31,
Name, Age and Year Principal Occupation, Business Experience in Last Five Years, 1997, and Percentage
Became a Director Other Directorships of Class
------------------ ------------------------------------------------------------------------ -----------------------
<S> <C> <C>
PAUL H. GEITHNER, JR. Retired President and Chief Administrative Officer, First Virginia, 52,518(7)
Age 67 1985-1995. Director, First Virginia Life Insurance Company. Director,
1984 Ellicott Machine Corporation, Baltimore, Maryland. Trustee,
Bridgewater College, Bridgewater, Virginia.
L. H. GINN, III President, Lighting Affiliates, Inc., a distributor of electrical 20,010(8)
Age 64 fixtures located in Richmond, Virginia, since 1975; retired U.S. Army
1974 Reserve Major General. Chairman of the Board, First Virginia
Bank-Colonial, Richmond. Director, J. Sargeant Reynolds Community
College and J. Sargeant Reynolds Community College Educational
Foundation, Richmond; Director, Westminster-Canterbury Foundation, a
foundation associated with a retirement facility in Richmond; Trustee,
Episcopal Diocesan Schools and Episcopal Diocesan Homes, Richmond.
Vice President, SHEPCABEL Corporation, a real estate management
company, and Parking Control Corporation, which owns and operates a
public parking facility, Richmond.
T. KEISTER GREER Principal, T. Keister Greer, P.C., a law firm in Rocky Mount, Virginia, 18,150(9)
Age 76 since 1995; Partner, Greer & Greer, Rocky Mount, 1983-1993. Director,
1976 1971-1997, and Chairman of the Board, 1977-1997, First Virginia
Bank-Franklin County, Rocky Mount.
EDWARD M. HOLLAND Attorney-at-Law in Northern Virginia since 1966; former Senator, 77,968(10)
Age 58 Virginia General Assembly, 1972-1996. Director, First Virginia Bank,
1974 Falls Church.
</TABLE>
- ---------------------
6 Includes 1,500 shares held by a trust of which Mr. Zalokar is trustee.
7 Includes 43,087 shares held in a revocable trust and 6,501 shares held
indirectly through his spouse's trust.
8 Includes 369 shares held indirectly through his spouse's Investment
Retirement Account and 2,447 shares held by a trust of which Mr. Ginn is
trustee.
9 Includes 8,100 shares held by a trust in which Mr. Greer has a
beneficial interest.
10 Includes 51,618 shares held by a corporation of which Mr. Holland is an
officer, director, and owner and 10,500 shares held in a trust.
3
<PAGE> 6
CLASS A DIRECTORS
(Serving until the 2000 Annual Meeting)
<TABLE>
<CAPTION>
Common Stock
Beneficially
Owned December 31, 1997,
Name, Age and Year Principal Occupation, Business Experience in Last Five Years, and Percentage
Became a Director Other Directorships of Class
-------------------- ----------------------------------------------------------------------- ----------------------
<S> <C> <C>
BARRY J. FITZPATRICK Chairman of the Board, President and Chief Executive Officer of First 94,803(11)
Age 57 Virginia since 1995; Executive Vice President, 1992-1995. Chairman of
1995 the Board, First Virginia Bank in Falls Church, and a director and
principal officer of numerous First Virginia affiliated nonbanking
companies since 1995. Trustee, Marymount University, Arlington,
Virginia.
ELSIE C. GRUVER Community and civic leader in Arlington, Virginia. 9,594(12)
Age 71
1973
W. LEE PHILLIPS, JR. Professional engineer and land surveyor since 1959; involved in real 12,281(13)
Age 62 estate management and home building in Falls Church, Virginia, and
1985 southern Maryland since 1991.
JOSIAH P. ROWE, III President and Publisher, The Free Lance-Star Publishing Co. of 2,250
Age 69 Fredericksburg, Va., since 1998; Co-Publisher and General Manager,
1991 1949-1997. Director, First Virginia Bank, Falls Church, Virginia.
Trustee, Union Theological Seminary, Richmond. Also owns 100 shares
of Preferred Stock.
ALBERT F. ZETTLEMOYER Retired President, Government Systems Group of UNISYS Corporation in 10,000
Age 63 McLean, Virginia, 1993-1995; retired Executive Vice President, UNISYS
1978 Corporation, 1993-1995; Vice President, UNISYS, 1988-1993.
</TABLE>
As of December 31, 1997, executive officers and directors as a group
beneficially owned 1,325,436 shares of Common Stock representing approximately
2.6% of those shares outstanding, of which 218,180 shares represent shares
covered by options exercisable as of December 31, 1997 (or sixty days
thereafter) and 125 shares of Preferred Stock representing approximately .21%
of those shares outstanding. 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, 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, 1997.
- ----------------------
11 Includes options to purchase 39,477 shares of Common Stock which are
exercisable as of December 31, 1997 or sixty days thereafter.
12 Includes 4,743 shares of Common Stock held in an Individual Retirement
Account and 1,350 shares held in her spouse's Individual Retirement
Account.
13 Includes 4,500 shares held by a trust of which Mr. Phillips is a trustee.
4
<PAGE> 7
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, 1997.
<TABLE>
<CAPTION>
Shares of Common Stock of First Virginia
Beneficially Owned
Name of Officer Number * Percent of Class
---------------------------------------------------------------------
<S> <C> <C>
Barry J. Fitzpatrick 94,803 .1819
Shirley C. Beavers, Jr. 63,830 .1225
Raymond E. Brann, Jr. 50,776 .0975
Richard F. Bowman 35,277 .0677
Michael G. Anzilotti 18,975 .0364
</TABLE>
* The amounts shown represent the total shares owned beneficially by such
individuals as of December 31, 1997 together with shares which are issuable
upon the exercise of all stock options that are exercisable. Specifically, the
following individuals have options that are exercisable as of December 31, 1997
(or sixty days thereafter) which gives them the right to acquire the shares
indicated after their names, upon the exercise of stock options: Mr.
Fitzpatrick, 39,477; Mr. Beavers, 43,578; Mr. Brann, 27,150; Mr. Bowman,
25,400; and Mr. Anzilotti, 16,800.
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 1997. Functions of the
Committee include (1) reviewing with the independent auditors 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 auditors and any
significant disagreements between the independent auditors and management;
and (4) reviewing the nonaudit services of the independent auditors. 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,
Fitzpatrick, Ginn, Giordano, Greer, and Rowe, held one meeting in 1997. 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 appointed to the Board between annual meetings.
The Management Compensation and Benefits Committee, comprised of
Directors Zettlemoyer, Holland, Kendrick, Melvin, and Phillips, held one
meeting in 1997. 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, to First Virginia's management based on such
factors as individual and corporate performance.
5
<PAGE> 8
The Public Policy Committee, comprised of Directors Gruver, Breeden,
Fitzpatrick, Geithner, Greer, Kendrick, Rowe, and Zalokar, met two times during
1997. This Committee oversees First Virginia's contributions and matching
gifts programs. The Committee also monitors the programs developed for
equal employment and compliance with the Community Reinvestment Act.
The Executive Committee, comprised of Directors Zalokar, Breeden,
Fitzpatrick, Geithner, Ginn, Holland, and Zettlemoyer, held 12 meetings in
1997. 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 1997, 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, except
Mr. Greer, who attended 60% of the required meetings primarily due to an
illness.
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 1997 all filing requirements applicable to its
officers and directors were met.
EXECUTIVE COMPENSATION
The Summary Compensation Table on the next page 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:
6
<PAGE> 9
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
(a) (b) (c) (d) (e) (f) (g)
Other
Annual Options/ All Other
Name and Compensa- SARs Compen-
Principal tion Awarded sation
Position Year Salary ($)(1) Bonus ($)(2) ($)(3) (#)(4) ($)(5)
--------- ---- ------------- ------------ ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Barry J. Fitzpatrick 1997 600,000 346,944 3,395 30,000 66,144
Chairman, President and 1996 470,000 269,960 3,724 15,000 56,783
Chief Executive Officer 1995 350,000 156,275 3,636 30,000 45,804
of First Virginia
Shirley C. Beavers, Jr. 1997 253,500 134,265 3,708 15,000 32,812
Executive Vice President 1996 241,500 108,433 3,748 7,500 31,426
of First Virginia and 1995 230,000 93,362 3,868 7,500 30,818
Vice Chairman and
Chief Executive Officer of
First Virginia Services, Inc.
Raymond E. Brann, Jr. 1997 204,500 132,471 5,052 15,000 62,268
Executive Vice President 1996 194,500 106,803 4,568 7,500 59,339
of First Virginia 1995 183,821 61,735 66,360 7,500 57,270
Richard F. Bowman 1997 183,000 132,245 3,708 15,000 18,662
Senior Vice President, Treasurer 1996 168,000 106,088 3,263 7,500 15,943
and Chief Financial Officer 1995 153,000 60,817 2,858 7,500 14,520
of First Virginia
Michael G. Anzilotti 1997 196,900 69,700 2,250 7,500 16,898
Senior Vice President and 1996 188,400 56,550 2,459 0 15,966
Regional Executive Officer 1995 173,798 46,524 2,250 7,500 15,034
of First Virginia and
President and Chief Executive
Officer of First Virginia Bank
</TABLE>
(1) The Salary 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 (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 (e) includes the amount
of taxes paid by First Virginia for certain benefits. In Mr. Brann's case, it
also includes for years 1995-1997 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) Column (f) includes the number of stock options that were
granted. The 1995 and 1996 awards were adjusted for the three-for-two stock
split in September, 1997.
(5) The All Other Compensation 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 $7,125. 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
7
<PAGE> 10
contributions imposed by the Internal Revenue Code. For 1997, these amounts
were: for Mr. Fitzpatrick, $35,398; Mr. Beavers, $9,173; Mr. Brann, $6,894;
Mr. Bowman, $5,895; and Mr. Anzilotti, $4,291. It also includes the premium
amounts paid by the employer under the First Virginia Split Dollar Life
Insurance Plan. For 1997, these amounts were: for Mr. Fitzpatrick, $21,630;
Mr. Beavers, $14,500; Mr. Brann, $43,913; Mr. Bowman, $5,243; and Mr.
Anzilotti, $4,191. It also includes the "above-market" earnings on deferred
compensation earned during 1997. These amounts were: for Mr. Fitzpatrick,
$1,991; Mr. Beavers, $2,014; Mr. Brann, $4,336; Mr. Bowman, $399; and Mr.
Anzilotti, $1,291.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table shows for each of the named executive officers (1)
the number of options that were granted during 1997, (2) out of the total
number of options granted to all employees, the percentage granted to the named
executive officer, (3) the exercise price, (4) the expiration date, and (5) the
potential realizable value of the options, assuming that the market price of
the underlying securities appreciates in value from the date of grant to the
end of the option term, at a 5% and 10% annualized rate. No freestanding or
tandem SARs were granted in 1997.
STOCK OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
Percent of
Number of Total Potential Realizable
Securities Options Value at Assumed Annual
Underlying Granted to Exercise Rates of Stock Price
Options Employees or Base Appreciation for Option
Granted in Fiscal Price Expiration Term
Name (# Shs.)(1) Year (2) ($/Sh.) Date 5%($) 10%($)
---- ----------- ---------- -------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Barry J. Fitzpatrick 30,000 15.38% 52.31 12/16/2007 986,918 2,501,056
Shirley C. Beavers, Jr. 15,000 7.69% 52.31 12/16/2007 493,459 1,250,527
Raymond E. Brann, Jr. 15,000 7.69% 52.31 12/16/2007 493,459 1,250,527
Richard F. Bowman 15,000 7.69% 52.31 12/16/2007 493,459 1,250,527
Michael G. Anzilotti 7,500 3.85% 52.31 12/16/2007 246,728 625,263
</TABLE>
(1) Options granted to the named executive officers in 1997 vest
over a five-year period. All of the options that were granted in 1997 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 195,000 shares of First Virginia Common
Stock were granted to employees during 1997. No freestanding SARs were granted
in 1997 to employees, and none of the options that were granted had any tandem
SARs.
The following table on the next page 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 1997,
the value realized upon their exercise, the number of unexercised stock options
and SARs at the end of 1997, and the value of unexercised "in-the-money" stock
options and SARs at the end of 1997. 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 yearend.
8
<PAGE> 11
AGGREGATED OPTIONS/SAR EXERCISES IN 1997 AND
YEAREND OPTIONS
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised In-the-Money Options
Options at at
Shares Yearend (#) Yearend ($)
Acquired on Exercisable/ Exercisable/
Name Exercise(#) Value Realized ($) Unexercisable Unexercisable
---- ------------- ------------------ -------------- -----------------------
<S> <C> <C> <C> <C>
Barry J. Fitzpatrick 8,144 253,554 27,478/75,000 958,459/1,056,186
Shirley C. Beavers, Jr. 1,044 37,047 37,578/34,500 1,346,005/475,031
Raymond E. Brann, Jr. 4,500 156,688 23,550/29,700 878,065/332,231
Richard F. Bowman 4,621 166,082 20,150/33,000 704,375/430,250
Michael G. Anzilotti --- --- 13,050/18,000 436,471/276,968
</TABLE>
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, 1997, at age 65. Credited
service in excess of thirty years is 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
<TABLE>
<CAPTION>
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
----------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$200,000 $ 30,535 $ 45,802 $ 61,070 $ 76,337 $ 91,604
$300,000 $ 46,535 $ 69,802 $ 93,070 $116,337 $139,604
$400,000 $ 62,535 $ 93,802 $125,070 $156,337 $187,604
$500,000 $ 78,535 $117,802 $157,070 $196,337 $235,604
$600,000 $ 94,535 $141,802 $189,070 $236,337 $283,604
$700,000 $110,535 $165,802 $221,070 $276,337 $331,604
</TABLE>
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.
First Virginia also has the First Virginia Supplemental Pension Trust Plan for
certain key employees which provides for the payment of supplemental pension
benefits as a result of the IRS restrictions on
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<PAGE> 12
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 a separate Supplemental Compensation Agreement) participate in
the Supplemental Pension Trust Plan.
Remuneration or 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. For purposes of
determining benefits under the Pension Trust Plan, each of the named
executives had the following years of service as of December 31, 1997 (30 years
is the maximum): Mr. Fitzpatrick, 28.4 years; Mr. Beavers, 28.3 years; Mr.
Brann, 30 years; Mr. Bowman, 22.5 years; and Mr. Anzilotti, 19.2 years. If a
participant retired on December 31, 1997, 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 in the
previous paragraph.
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.
Messrs. Fitzpatrick, Beavers, Brann and Bowman have 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
10
<PAGE> 13
contributions into one or more of three funds that are administered by the
Trust Department of First Virginia Bank. Reference is made to footnote 5 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. 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 5 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 1998, 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 attendance at Board and
Committee meetings.
During 1997, 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 $157,452 and
$126,372, 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 1997, 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 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 $2,958 and $1,488, respectively, during 1997.
During 1997, 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, who is now deceased,
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, which also began in 1983 and 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, 1997, none of the named
executive officers of First Virginia deferred any compensation under the
Deferred Compensation Plans.
11
<PAGE> 14
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 1997, First
Virginia did not make a 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
12
<PAGE> 15
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 Edward M. Holland, Eric C. Kendrick, John B. Melvin, 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
Insurance Services, Inc., a subsidiary of First Virginia. 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.
In its determination of executive compensation, the Committee noted the
potential effect of the one million dollar deduction limitation under Section
13
<PAGE> 16
162(m) of the Internal Revenue Code but declined to alter its policy in
determining executive compensation to meet the requirements for deductibility
under Section 162(m) because the amount of compensation affected, if any, was
not material.
BASE SALARY
The Compensation Committee's policy for determining base salaries is
based on two primary factors:
(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 Crestar Financial Corporation,
Central Fidelity Banks, Inc., and Signet Banking Corporation
based in Virginia, First Maryland Bancorp and Mercantile
Bankshares Corporation based in Maryland, First Tennessee
National Corporation based in Memphis and First American
Corporation of Tennessee based in Nashville. Base salaries
are targeted to be the median salaries of corresponding
positions in the "Local Peer Group". For 1997, Mr.
Fitzpatrick's base salary was $600,000 which was equal to 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
minimum for 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); or
(b) Up to 30% of an executive's bonus 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 exclusively in the banking
and thrift industry; or
(c) Up to 20% of an executive's bonus 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
14
<PAGE> 17
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. Among other things, Mr. Fitzpatrick's bonus
reflected First Virginia's success in achieving a 1.49% return on assets (for
the first nine months) 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 1997, the latest data available to the Committee at the time the incentive
awards were considered.
<TABLE>
<CAPTION>
First Virginia
------------------------
Profit Plan
or Target KBW Southern
Amount Actual Regional Peer Group
------------------------ -------------------
<S> <C> <C> <C>
Earnings (Higher is better)
ROA 1.40% 1.49% 1.29%
ROE 13.09% 13.76% 15.11%
Asset Quality (Lower is better)
NPA .50% .43% .59%
CO .30% .30% .32%
Capital (Higher is better)
Equity/Asset Ratio 9.5% 11.20% 8.46%
Tier I Risk-Based Capital 10.0% 12.79% 10.87%
</TABLE>
First Virginia's actual results equaled or exceeded the profit plan or
target amount in every category and exceeded the Regional Peer Group in every
category except ROE. For that reason, the Committee awarded Mr. Fitzpatrick a
bonus of $325,000.
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.
At the end of 1997, the Committee granted options covering a total of
195,000 shares of First Virginia Common Stock at $52.31 per share to the CEO
and to certain officers. Each option that was awarded by the
Committee vests over a five-year period in equal annual installments.
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 exceeded
those of its Market Area Peer Group 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
15
<PAGE> 18
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 30,000 shares. The size
of his grant was primarily based on the performance of First Virginia as
described above.
Edward M. Holland
Eric C. Kendrick
John B. Melvin
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
<TABLE>
<CAPTION>
First Virginia S&P 400
Banks, Inc. Mid Cap KBW 50
-------------- ------- ------
<S> <C> <C> <C>
1992 100 100 100
1993 92 114 106
1994 93 110 100
1995 126 144 160
1996 150 171 227
1997 249 227 332
</TABLE>
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 1997 market
capitalization of approximately $2.684 billion) than the S&P 500 index which is
heavily
16
<PAGE> 19
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 1993-1997 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. (Riggs National
Corporation's and F&M National Corporation's fourth quarter ROAs were
substituted for the fourth quarter ROAs of Central Fidelity Banks, Inc. and
Signet Banking Corporation due to the acquisitions of both those bank holding
companies.) 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, 1997
<TABLE>
<CAPTION>
First Virginia Southern Local
Banks, Inc. Region Peer
-------------- -------- -----
<S> <C> <C> <C>
1993 1.68 1.21 0.81
1994 1.58 1.24 1.25
1995 1.41 1.23 1.45
1996 1.43 1.27 1.40
1997 1.44 1.30 1.42
</TABLE>
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
17
<PAGE> 20
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, 1997, 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 $4,592,582.
II. APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION
The Board of Directors has recommended an amendment to First
Virginia's Articles of Incorporation, in the form below, to increase the
authorized Common Stock, $1.00 par value, from 60,000,000 shares to 175,000,000
shares. As of February 17, 1998, First Virginia had 51,829,006 shares of
Common Stock outstanding. The amendment would not change the currently
authorized 3,000,000 shares of Preferred Stock.
If authorized, additional Common Stock will be available for a
possible future financings of, or acquisitions by, First Virginia, for future
stock splits and for general corporate purposes without any legal requirement
that further shareholder authorization for issuance be obtained. First
Virginia has no present plans for the issuance of any Common Stock other than
with respect to existing stock option plans and First Virginia's Dividend
Reinvestment Plan and the 1998 Stock Incentive Plan as described in this Proxy
Statement.
Shareholders should be aware that the issuance of additional shares of
Common Stock could cause a dilution of voting rights and net income and net
book value per share of Common Stock. First Virginia, however, would receive
consideration for any additional shares of Common Stock issued, thereby
reducing or eliminating the economic effect to each stockholder of such
dilution.
The affirmative vote of a majority of all shares of stock, Common and
Preferred, including a majority of all shares of Common Stock entitled to vote
on the matter will be required for the adoption of this amendment.
The proposed amendment to First Virginia's Articles of Incorporation
consists of revising the first sentence of Article III to read as follows
(change underlined):
The Corporation shall have the authority to issue 175,000,000
shares of Common Stock, $1.00 par value, and 3,000,000 shares
of Preferred Stock, $10.00 par value.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDMENT TO FIRST VIRGINIA'S ARTICLES OF INCORPORATION TO INCREASE THE
AUTHORIZED COMMON STOCK TO 175,000,000 SHARES.
III. APPROVAL OF THE 1998 STOCK INCENTIVE PLAN
The Board of Directors proposes that the shareholders approve the
First Virginia Banks, Inc. 1998 Stock Incentive Plan (the "Plan"). Approval of
the Plan requires the affirmative vote of the holders of a majority of the
shares of Common and Preferred Stock present or represented by properly
executed and delivered proxies at the meeting. Abstentions and Broker Shares
voted as to any matter at the meeting will be included in determining the
number of votes present or represented at the meeting with respect to
determining the vote on the Plan. Broker
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<PAGE> 21
Shares that are not voted on any matter at the meeting will not be included in
determining the number of shares present or represented at the meeting with
respect to determining the vote on the Plan.
The Board believes that the Plan will benefit First Virginia by (i)
assisting it in recruiting and retaining employees with ability and initiative,
(ii) providing greater incentive for employees of First Virginia and its
related entities, and (iii) associating the interests of employees with those
of First Virginia, its related entities, and its shareholders through
opportunities for increased stock ownership. A maximum of 2,500,000 shares of
Common Stock may be issued under the Plan. The Plan is intended to conform to
the requirements of Section 162(m) of the Internal Revenue Code of 1986, as
amended, for performance-based compensation.
The following paragraphs summarize the principal features of the Plan.
This summary is subject, in all respects, to the terms of the Plan. First
Virginia will provide promptly, upon request and without charge, a copy of the
full text of the Plan to each person to whom a copy of this Proxy Statement is
delivered. Requests should be directed to: Secretary's Office, First Virginia
Banks, Inc., 6400 Arlington Boulevard, Falls Church, Virginia 22042-2336
(800-995-9416).
SUMMARY OF THE PLAN
The Plan shall be administered by the Management Compensation and
Benefits Committee of the Board of Directors or any delegate
of that Committee (as used in this summary, the "Administrator"). Each employee
of First Virginia or a related entity is eligible to participate in the Plan.
The Administrator will select the individuals who participate in the Plan
("Participants"). The Administrator may, from time to time, grant stock
options, stock appreciation rights ("SARs"), stock awards or performance shares
to Participants.
Options granted under the Plan may be incentive stock options (ISOs)
or nonqualified stock options. A stock option entitles the Participant to
purchase shares of Common Stock from First Virginia at the option price. The
option price will be fixed by the Administrator at the time the option is
granted, but the price cannot be less than the shares' fair market value on the
date of grant. The option price may be paid in cash, with shares of Common
Stock, or with a combination of cash and Common Stock.
SARs entitle the Participant to receive the lesser of (i) the excess
of the fair market value of a share of Common Stock on the date of exercise
over the initial value of the SAR or (ii) the initial value. The initial value
of the SARs is determined by the Administrator at the time of the grant but
cannot be less than the fair market value of a share of Common Stock on the
date of grant. The amount payable upon an exercise of the SAR may be paid in
cash, Common Stock, or a combination of the two.
SARs may be granted in relation to option grants ("Corresponding
SARs") or independently of option grants. The difference between these two
types of SARs is that to exercise a Corresponding SAR, the Participant must
surrender unexercised that portion of the stock option to which the
Corresponding SAR relates.
Participants may also be awarded shares of Common Stock pursuant to a
stock award. The Administrator, in its discretion, may prescribe that a
Participant's rights in a stock award shall be nontransferable or forfeitable
or both unless certain conditions are satisfied. These conditions may include,
for example, a requirement that the Participant continue employment with First
Virginia or a related entity for a specified period or that First Virginia, a
related entity, or the Participant achieves stated objectives. If a
Participant's rights in a stock award are restricted, the period during which
the restriction applies cannot be less than one year.
The Plan also provides for the award of performance shares. A
performance share award entitles the Participant to receive a payment equal to
the fair market value of a specified number of shares of Common Stock if
certain performance standards are met. The Administrator will prescribe the
requirements that must be satisfied before a performance share award is earned.
The performance share requirements may include, for example, a
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<PAGE> 22
requirement that the Participant continue employment with First Virginia or a
related entity for a specified period or that First Virginia, a related entity,
or the Participant achieve stated objectives. The period in which any
performance criteria must be satisfied cannot be less than one year. To the
extent that performance shares are earned, the obligation may be settled in
cash, in Common Stock or by a combination of the two.
Incentive awards also may be granted which will be subject to certain
performance objectives of First Virginia or a related entity being achieved, as
specified by the Administrator. No Participant may receive an incentive award
in any calendar year that exceeds the lesser of $1,000,000 or 150% of the
Participant's annual base salary.
All awards made under the Plan will be evidenced by written agreement
between First Virginia and the Participant. A maximum of 2,500,000 shares of
Common Stock may be issued under the Plan. Subject to this aggregate maximum,
the maximum number of shares that may be issued under the Plan as stock awards,
including the settlement of performance share awards, is 800,000. The share
limitation and the terms of outstanding awards will be adjusted, as the
Administrator deems appropriate, in the event of a stock dividend, stock split,
combination, reclassification, recapitalization, or similar events.
No option, SAR, or stock awards may be granted and no performance
shares may be awarded under the Plan after April 24, 2008. The Board may
sooner terminate the Plan without further action by shareholders. The Board
may also amend the Plan, except that no amendment that increases the number of
shares of Common Stock that may be issued under the Plan or changes the class
of individuals who may be selected to participate in the Plan will become
effective until it is approved by shareholders.
Neither the number of individuals who will be selected to participate
in the Plan or the type or size of awards that will be approved by the
Administrator can be determined. First Virginia is also unable to determine
the number of individuals who would have participated in the Plan or the type
or size of awards that would have been made under the Plan had it been in
effect in 1997.
FEDERAL INCOME TAX CONSEQUENCES
First Virginia has been advised by counsel regarding the federal
income tax consequences of the Plan. No income is recognized by a Participant
at the time the option is granted. If the option is an ISO, no income will be
recognized upon the Participant's exercise of the option. Income is recognized
by a Participant when he disposes of shares acquired under an ISO. The
exercise of a nonqualified stock option generally is a taxable event that
requires the Participant to recognize as ordinary income, the difference
between the shares' fair market value and the option price.
The exercise of an ISO may result in a tax to the optionee under the
alternative minimum tax because, as a general rule, the excess of the fair
market value of stock received on the exercise of an ISO over the exercise
price is defined as an item of "tax preference" for purposes of determining
alternative minimum taxable income.
No income is recognized upon the grant of a SAR. The exercise of a
SAR generally is a taxable event. The Participant generally must recognize
income equal to any cash that is paid and the fair market value of Common Stock
that is received in settlement of a SAR.
The Participant will recognize income on account of a stock award on
the first day that the shares are either transferable or not subject to a
substantial risk of forfeiture. The amount of income recognized by the
Participant is equal to the fair market value of the Common Stock received on
that date.
The Participant will recognize income on account of the settlement of
a performance share award. The Participant will recognize income equal to any
cash that is paid and the fair market value of Common Stock (on the
20
<PAGE> 23
date that the shares are first transferable or not subject to a substantial
risk of forfeiture) that is received in settlement of the award.
The employer (either First Virginia or a related entity) will be
entitled to claim a federal income tax deduction on account of the exercise of
a nonqualified option or SAR, the vesting of a stock award, the settlement of a
performance share award, and the payment of an incentive award. The amount of
deduction is equal to the ordinary income recognized by the Participant. The
employer will not be entitled to a federal income tax deduction on account of
the grant or the exercise of an ISO. The employer may claim a federal income
tax deduction on account of certain dispositions of Common Stock acquired upon
the exercise of an ISO.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE FIRST
VIRGINIA BANKS, INC. 1998 STOCK INCENTIVE PLAN AND AUTHORIZATION TO ISSUE UP TO
2,500,000 SHARES OF COMMON STOCK UNDER THE PLAN.
IV. 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, 1998. Ratification will require the
affirmative vote of the holders of a majority of shares of Common and Preferred
Stock present or represented by properly executed and delivered proxies at the
meeting. Abstentions and Broker Shares voted as to any matter at the meeting
will be included in determining the number of votes present or represented at
the meeting with respect to determining the vote on ratification. Broker
Shares that are not voted on any matter at the meeting will not be included in
determining the number of shares present or represented at the meeting with
respect to determining the vote on the ratification. Ernst & Young LLP has
served as independent auditors for First Virginia since 1974. Representatives
of the firm are expected to be present at the Annual Meeting and will be
available to respond to appropriate questions and to make a statement if they
desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR 1998.
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the 1999 Annual
Meeting and included in First Virginia's 1999 Proxy Statement must be received
by First Virginia no later than November 7, 1998. 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
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<PAGE> 24
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 Morrow & 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 1997, 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, 1997, ON FORM 10-K, WHICH REPORT
WILL BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OR BEFORE MARCH
31, 1998. STOCKHOLDERS OF RECORD ON FEBRUARY 17, 1998, 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.
22
<PAGE> 25
REVOCABLE PROXY
FIRST VIRGINIA BANKS, INC.
X PLEASE MARK VOTES
AS IN THIS EXAMPLE
Proxy for Annual Meeting of Stockholders
Friday, April 24, 1998
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Elsie C. Gruver, John B. Melvin and W. Lee
Phillips, Jr., 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 24, 1998,
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 B (for a term of 3 years):
O Edward L. Breeden, III
M Gilbert R. Giordano
M Eric C. Kendrick
O Robert M. Rosenthal
N Robert H. Zalokar
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 AMEND ( ) ( ) ( )
THE ARTICLES OF
INCORPORATION to
increase the
authorized shares
of Common Stock
to 175,000,000.
For Against Abstain
3. PROPOSAL TO ADOPT ( ) ( ) ( )
THE 1998 STOCK
INCENTIVE PLAN and
to approve the
authorization of
2,500,000 shares
for the Plan.
For Against Abstain
4. PROPOSAL TO RATIFY ( ) ( ) ( )
THE APPOINTMENT OF
ERNST & YOUNG LLP
as independent
auditors for the
year 1998.
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.
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 each of
the proposals. The stockholder's signature should be exactly as the name
appears above. 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 ACT PROMPTLY
SIGN, DATE & MAIL
YOUR PROXY CARD TODAY
<PAGE> 26
REVOCABLE PROXY
FIRST VIRGINIA BANKS, INC.
X PLEASE MARK VOTES
AS IN THIS EXAMPLE
Proxy for Annual Meeting of Stockholders
Friday, April 24, 1998
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Elsie C. Gruver, John B. Melvin and W. Lee
Phillips, Jr., 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 24, 1998,
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
( ) ( ) ( )
P Class B (for a term of 3 years):
R Edward L. Breeden, III
E Gilbert R. Giordano
F Eric C. Kendrick
E Robert M. Rosenthal
R Robert H. Zalokar
R
E
D
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.
- ------------------------------------
<PAGE> 27
For Against Abstain
2. PROPOSAL TO AMEND ( ) ( ) ( )
THE ARTICLES OF
INCORPORATION to
increase the
authorized shares
of Common Stock
to 175,000,000.
For Against Abstain
3. PROPOSAL TO ADOPT ( ) ( ) ( )
THE 1998 STOCK
INCENTIVE PLAN and
to approve the
authorization of
2,500,000 shares
for the Plan.
For Against Abstain
4. PROPOSAL TO RATIFY ( ) ( ) ( )
THE APPOINTMENT OF
ERNST & YOUNG LLP
as independent
auditors for the
year 1998.
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.
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 each of
the proposals. The stockholder's signature should be exactly as the name
appears above. 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 ACT PROMPTLY
SIGN, DATE & MAIL
YOUR PROXY CARD TODAY
