<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:
[x] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
George Mason Bankshares, 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)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[GEORGE MASON BANKSHARES, INC. LOGO]
11185 MAIN STREET
FAIRFAX, VIRGINIA 22030
APRIL 11, 1997
To Our Shareholders:
I am pleased to enclose the following information relating to the 1997
Annual Meeting of Shareholders of George Mason Bankshares, Inc. ("GMBS") to be
held at The Ritz-Carlton Hotel, 1700 Tysons Boulevard, McLean, Virginia 22102,
on May 16, 1997, at 10:00 a.m.
The notice of Annual Meeting and Proxy Statement which appear on the
following pages, contain information about matters which are to be considered at
the Annual Meeting. You will be asked to vote at the Annual Meeting, on the
ratification of Board action increasing the maximum number of directors, the
election of certain directors, and the ratification of the selection of Ernst &
Young LLP as GMBS' independent auditors for fiscal year 1997.
We hope that you can attend the Annual Meeting. Whether or not you plan to
attend, please complete, sign and date the enclosed proxy card and return it
promptly in the enclosed envelope. Your vote is important regardless of the
number of shares you own. A copy of the Annual Report for 1996 is enclosed
herewith.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ BERNARD H. CLINEBURG
Bernard H. Clineburg
President and Chief Executive Officer
<PAGE> 3
GEORGE MASON BANKSHARES, INC.
11185 MAIN STREET
FAIRFAX, VIRGINIA 22030
------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 1997
------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders (the
"Annual Meeting") of George Mason Bankshares, Inc. ("GMBS") will be held on May
16, 1997, at 10:00 a.m., Eastern time at The Ritz-Carlton Hotel, 1700 Tysons
Boulevard, McLean, Virginia 22102, for the purpose of considering and acting on
the following matters:
(a) To ratify the action of the Board of Directors increasing the
maximum number of directors.
(b) To elect seven directors.
(c) To ratify the selection by the Board of Directors, of Ernst &
Young LLP as GMBS' independent auditors for fiscal year 1997.
(d) To vote on such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed March 28, 1997, as the record date for the
Annual Meeting. All holders of record of GMBS Common Stock at the close of
business on that date are entitled to receive notice of and to vote at the
Annual Meeting or any adjournments or postponements thereof.
All shareholders are urged to attend the Annual Meeting in person. WHETHER
OR NOT YOU NOW PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE ASKED TO COMPLETE,
DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY CARD FOR WHICH A POSTAGE PAID
ENVELOPE IS PROVIDED. If you decide to attend the Annual Meeting, you may revoke
your proxy and vote your shares in person.
By Order of the Board of Directors,
/s/ KEVIN F. DECOSTE
Kevin F. DeCoste
Secretary
April 11, 1997
<PAGE> 4
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 1997
GENERAL INFORMATION
This proxy statement and the enclosed form of proxy are being sent to
Shareholders of GMBS on or about April 11, 1997, in connection with the
solicitation by the Board of Directors of proxies to be used at the Annual
Meeting of Shareholders. The meeting will be held on Friday, May 16, 1997 at
10:00 a.m. local time at The Ritz-Carlton Hotel, 1700 Tysons Boulevard, McLean,
Virginia 22102.
GMBS Shareholders will be asked to ratify the action of the Board of
Directors increasing the maximum number of directors which may constitute the
Board from 15 to 18, to elect seven directors and to ratify the selection of
Ernst & Young LLP as GMBS' independent auditors for fiscal 1997, and to consider
and vote upon such other matters as may properly be brought before the GMBS
Annual Meeting. For descriptions of these proposals, see "Election of
Directors", "Ratification of Board Action Increasing the Maximum Number of
Directors" and "Ratification of the Selection of Independent Auditors."
THE BOARD OF DIRECTORS OF GMBS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF
THE NOMINEES NAMED HEREIN AS DIRECTORS OF GMBS, FOR RATIFICATION OF THE INCREASE
IN THE MAXIMUM NUMBER OF DIRECTORS, AND FOR RATIFICATION OF THE SELECTION OF
ERNST & YOUNG LLP AS THE INDEPENDENT AUDITORS OF GMBS FOR FISCAL YEAR 1997.
The GMBS Board of Directors has fixed the close of business on March 28,
1997, as the GMBS Record Date for determining holders entitled to notice of and
to vote at the GMBS Annual Meeting.
As of the GMBS Record Date, there were 5,057,914 shares of GMBS Common
Stock issued and outstanding, each of which entitles the holder thereof to one
vote at the GMBS Annual Meeting. All shares of GMBS Common Stock represented by
properly executed proxies will, unless such proxies have been previously
revoked, be voted in accordance with the instructions indicated in such proxies.
IF NO INSTRUCTIONS ARE INDICATED, SUCH SHARES OF GMBS COMMON STOCK WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES NAMED HEREIN AS DIRECTORS, FOR RATIFICATION OF
THE INCREASE IN THE MAXIMUM NUMBER OF DIRECTORS, AND FOR RATIFICATION OF THE
SELECTION OF ERNST & YOUNG LLP AS GMBS' INDEPENDENT AUDITORS FOR FISCAL 1997.
GMBS does not know of any matters other than as described in the Notice of
Annual Meeting that are to come before the GMBS Annual Meeting. If any other
matter or matters are properly presented for action at the GMBS Annual Meeting,
the persons named in the enclosed form of proxy and acting thereunder will have
the discretion to vote on such matters in accordance with their best judgment,
unless such authorization is withheld. A GMBS Shareholder who has given a proxy
may revoke it at any time prior to its exercise by giving written notice thereof
to the Secretary of GMBS, by signing and returning a later dated proxy, or by
voting in person at the GMBS Annual Meeting. Mere attendance at the GMBS Annual
Meeting will not in and of itself have the effect of revoking a previously
granted proxy.
The presence in person or by properly executed proxy of holders of a
majority of the issued and outstanding shares of GMBS Common Stock entitled to
vote is necessary to constitute a quorum at the GMBS Annual Meeting. Votes cast
by proxy or in person at the GMBS Annual Meeting will be tabulated by the
election inspectors appointed for the meeting who will determine whether or not
a quorum is present. Where proxies are marked as abstentions on one or more
issues (or shareholders appear in person but abstain from voting) or a broker
indicates on a proxy that it does not have discretionary authority with respect
to certain shares, the shares represented by such proxies will be treated as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum.
REQUIRED VOTE
The ratification of the action of the Board of Directors increasing the
maximum number of directors and the ratification of the selection of independent
auditors each requires the affirmative vote of a majority of the votes cast on
the matter. Proxies indicating abstention as to any matter and "broker
non-votes" will have no effect on whether a proposal is approved. Election of
directors will be by plurality vote, meaning that the individuals who receive
the largest number of votes cast are elected as directors, up to the maximum
number
1
<PAGE> 5
of directors to be elected at the GMBS Annual Meeting. There is no cumulative
voting. It is expected that the shares beneficially owned by the directors and
officers of GMBS will be voted for ratification of the selection of the
independent auditors, for the ratification of the Board's action increasing the
number of directors and for the election of the nominees as directors of GMBS.
ELECTION OF GMBS DIRECTORS
CURRENT NOMINEES AND DIRECTORS
Effective upon the expiration of the terms of the incumbent directors whose
terms otherwise will expire at the 1997 Annual Meeting and who have not been
renominated by the Board, the Board of Directors has reduced the size of the
Board from 18 to 16 directors. Of the 16, and assuming that the nominees are
elected, five directors will have terms expiring in 1998, six will have terms
expiring in 1999 and five will have terms expiring in 2000, such terms in each
case expiring at the Annual Meeting of Shareholders to be held in such year.
The persons named as proxies in the accompanying proxy, who have been
designated by the GMBS Board, intend to vote, unless otherwise instructed in
such proxy, for the election of William G. Buck, C. Barrie Cook, M.D., William
H. Gordon, William A. Hazel and John M. McMahon for terms of three years; Edward
H. Kaplan for a term of two years and Webb C. Hayes, IV for a term of one year,
such term in each case to expire at the Annual Meeting of Shareholders to be
held in such year. The GMBS Board believes that the nominees will stand for
election and will serve, if elected, as directors. Pursuant to the By-Laws, a
person is not eligible to serve as a director of GMBS unless he or she owns at
all times unpledged shares of the capital stock of GMBS in at least the minimum
amount required by law. Should any nominee be unavailable for election by reason
of death or other unexpected occurrence, the enclosed proxy, to the extent
permitted by applicable law, may be voted with discretionary authority in
connection with the nomination by the Board of Directors and election of any
substitute nominee, or alternatively, the Board may reduce the size of the
Board.
THE GMBS BOARD RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
The following table sets forth the name and age of each nominee and
director; all other positions and offices, if any, now held with GMBS; principal
occupations during the last five years; the year in which such person first
became a director of GMBS; and the number and percentage of shares of GMBS
Common Stock beneficially owned as of February 20, 1997.
<TABLE>
<CAPTION>
NUMBER SHARES PRINCIPAL OCCUPATIONS
NOMINEES WITH TERMS EXPIRING APRIL 1998, DIRECTOR OF COMMON STOCK DURING PAST 5 YEARS AND
THEIR AGES & POSITIONS WITH GMBS GMBS SINCE(1) (% OF CLASS)(2) CERTAIN OTHER DIRECTORSHIPS
- ---------------------------------------- ------------- --------------- ----------------------------
<S> <C> <C> <C>
Webb C. Hayes, IV (48),................. 1996 90,221(3) Executive Vice President of
Director of GMBS and Chairman of George (1.79%) GMBS; Chairman, President
Mason Bank, N.A. and Chief Executive Officer
of George Mason Bank, N.A.;
Director of CERBCO, Inc. and
Instituform East, Inc.,
Landover, MD
</TABLE>
<TABLE>
<CAPTION>
NUMBER SHARES PRINCIPAL OCCUPATIONS
NOMINEES WITH TERMS EXPIRING APRIL 1999, DIRECTOR OF COMMON STOCK DURING PAST 5 YEARS AND
THEIR AGES & POSITIONS WITH GMBS GMBS SINCE(1) (% OF CLASS)(2) CERTAIN OTHER DIRECTORSHIPS
- ---------------------------------------- ------------- --------------- ----------------------------
<S> <C> <C> <C>
Edward H. Kaplan (57),.................. 1996 101,747 Self-employed, real estate
Director of GMBS and Director of George (2.02%) investments, Washington,
Mason Bank, N.A. D.C.
(footnotes following table)
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
NUMBER SHARES PRINCIPAL OCCUPATIONS
NOMINEES WITH TERMS EXPIRING APRIL 2000, DIRECTOR OF COMMON STOCK DURING PAST 5 YEARS AND
THEIR AGES & POSITIONS WITH GMBS GMBS SINCE(1) (% OF CLASS)(2) CERTAIN OTHER DIRECTORSHIPS
- ---------------------------------------- ------------- --------------- ----------------------------
<S> <C> <C> <C>
William G. Buck (50),................... 1994 5,677(4) President & CEO, Buck &
Director of GMBS and Director of George (0.11%) Assoc., Inc., Real estate
Mason Bank brokerage, development &
property management,
Arlington
C. Barrie Cook, M.D. (72),.............. 1977 55,276(5,6) Chairman of the Board of
Chairman of GMBS, Director of George (1.10%) American Medical
Mason Bank and Director of GMMC Laboratories, Inc.,
Chantilly; Director of EZ
Communications, Inc.,
Fairfax
William H. Gordon (51),................. 1992 8,870(7) President of William H.
Director of GMBS and Director of George (0.18%) Gordon Associates Inc.,
Mason Bank Chantilly
William A. Hazel (61),.................. 1991 35,497(8) Chairman of the Board of
Director of GMBS (0.70%) William A. Hazel, Inc.,
Chantilly
John M. McMahon (56),................... 1996 140,603 Chairman of the Board of
Director of GMBS and Director of George (2.79%) Miller & Long Co., Inc.,
Mason Bank, N.A. Bethesda, MD
</TABLE>
<TABLE>
<CAPTION>
NUMBER SHARES PRINCIPAL OCCUPATIONS
DIRECTORS WITH TERMS EXPIRING APRIL 1998, DIRECTOR OF COMMON STOCK DURING PAST 5 YEARS AND
THEIR AGES & POSITIONS WITH GMBS GMBS SINCE(1) (% OF CLASS)(2) CERTAIN OTHER DIRECTORSHIPS
- ---------------------------------------- ------------- --------------- ----------------------------
<S> <C> <C> <C>
Elizabeth C. Dahlin (65),............... 1987 4,791 Vice President, George Mason
Director of GMBS and Director of George (0.09%) University, Executive
Mason Bank Director, George Mason
University Foundation, Inc.,
Fairfax
Edward S. DeBolt (58),.................. 1986 31,080(9) Marketing Executive;
Director of GMBS and Director of George (0.62%) President of The DCM Group,
Mason Bank McLean
Barnard F. Jennings (71),............... 1989 35,343(10) Retired Chief Judge of the
Director of GMBS and Director of George (0.70%) 19th Judicial Circuit Court
Mason Bank of Virginia; Former partner
in law firm of Kelly,
Jennings, Louk & Farley
Arthur Kellar (74),..................... 1977 59,236(12) Chairman of the Board, EZ
Director of GMBS(11) (1.17%) Communications, Inc.,
Fairfax
(footnotes following table)
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
NUMBER SHARES PRINCIPAL OCCUPATIONS
DIRECTORS WITH TERMS EXPIRING APRIL 1999, DIRECTOR OF COMMON STOCK DURING PAST 5 YEARS AND
THEIR AGES & POSITIONS WITH GMBS GMBS SINCE(1) (% OF CLASS)(2) CERTAIN OTHER DIRECTORSHIPS
- ---------------------------------------- ------------- --------------- ----------------------------
<S> <C> <C> <C>
Alan L. Box (45),....................... 1993 24,654(14) President, EZ
Director of GMBS, Director of George (0.49%) Communications, Inc.,
Mason Bank, and Director of GMMC(13) Fairfax
Randolph W. Church, Jr. (62),........... 1993 7,891(15) Attorney, Managing Partner,
Director of GMBS, Director of George (0.16%) Hunton & Williams, Fairfax
Mason Bank and of GMMC Office
Bernard H. Clineburg (48),.............. 1992 116,234(16) President and Chief
Director of GMBS, Director of George (2.26%) Executive Officer of GMBS,
Mason Bank and Chairman of GMMC President and Chief
Executive Officer of George
Mason Bank
Lawrence K. Doll (47),.................. 1987 2,449 Residential Land Developer,
Vice Chairman of the Board of GMBS, (0.05%) President of The Lawrence
Director of George Mason Bank, and Doll Company, Fairfax
Director of GMMC
Paul E. Kyle (52),...................... 1993 11,334(17) President, King Wholesale,
Director of GMBS and Director of George (0.22%) Inc., Chantilly
Mason Bank
Beneficial ownership of GMBS Common 860,694
Stock by all Directors and executive (16.46%)
officers as a group (20 persons)
</TABLE>
- ---------------
(1) For Directors whose terms of office show service since 1977 or 1979,
includes terms of office as a Director of George Mason Bank prior to
formation of GMBS.
(2) In calculating the number of shares of GMBS Common Stock which are
beneficially owned (and thus the percentage of GMBS Common Stock
beneficially owned), a person is deemed to own GMBS Common Stock if that
person has the right to acquire beneficial ownership of GMBS Common Stock
within sixty (60) days through the exercise of any option, warrant or
right, or through the conversion of any security.
(3) Includes 2,250 shares held by Sara Hayes, Mr. Hayes' wife.
(4) Includes 1,855 phantom shares pursuant to the GMBS Directors' Stock
Investment and Deferred Fees Plan and 600 shares held as custodian for Mr.
Buck's children.
(5) Includes 1,893 phantom shares pursuant to the GMBS Directors' Stock
Investment and Deferred Fees Plan, 9,930 shares held jointly with Jean C.
Cook, Dr. Cook's wife, 16,875 shares held by Mrs. Cook individually and 234
shares held by Fairfax Pathology Associates Joint Pension & Profit Sharing
Trust for the benefit of Dr. Cook.
(6) Includes 4,702 shares held by his adult son C. Barrie Cook, Jr. of which
Dr. Cook disclaims beneficial ownership.
(7) Includes 2,289 phantom shares pursuant to the GMBS Directors' Stock
Investment and Deferred Fees Plan and 5,025 shares held jointly with Anne
P. Gordon, Mr. Gordon's wife.
(8) Includes 742 phantom shares pursuant to the GMBS Directors' Stock
Investment and Deferred Fees Plan.
(9) Includes 1,079 shares held in an individual retirement arrangement by
Sharron DeBolt, Mr. DeBolt's wife and 3,696 shares held by Mr. DeBolt in an
individual retirement account.
(10) Includes 5,427 shares held by Nancy Lee Jennings, Judge Jennings' wife.
(11) Mr. Kellar is the father-in-law of Alan L. Box, a Director of GMBS since
1993.
(12) Includes 19,855 shares held by Elizabeth Kellar, Mr. Kellar's wife.
(13) Mr. Box is the son-in-law of Arthur Kellar, a Director of GMBS.
(14) Includes 1,392 shares held by Judy Box, Mr. Box's wife and 23,262 shares
owned jointly with Mrs. Box.
(15) Includes 6,225 shares owned jointly with Lucy C. Church, Mr. Church's wife.
(16) Includes 108,289 shares which may be acquired upon exercise of options
within 60 days.
(17) Includes 1,977 phantom shares pursuant to the GMBS Directors' Stock
Investment and Deferred Fees Plan.
4
<PAGE> 8
COMMITTEES. The Board of Directors of GMBS has the following primary
committees:
The Executive Committee, presently composed of six directors, is
authorized to exercise, to the extent permitted by law, all of the powers
of the Board of Directors. The Executive Committee held 12 meetings during
1996. GMBS Directors who are presently Executive Committee members are
Directors Buck, Clineburg, Cook, Doll, Gordon and Jennings.
The Audit Committee, presently composed of five members, is
responsible for receiving the audit and examination reports of the internal
auditor, the independent public accountants and the federal and state
banking examiners. The Audit Committee held four meetings during 1996. The
present Audit Committee members are Directors Buck, Gordon, Kyle, McMahon
and Prichard.
The Loan Committee, presently composed of six Directors, met 27 times
during 1996. The Loan Committee considers new loan applications which are
in excess of individual officer limits and monitor (with management) GMBS'
loan portfolios. The present Loan Committee members are Directors
Clineburg, DeBolt, Jennings, Kaplan, Prichard and Groom (alternate).
The Human Resources and Compensation Committee, presently composed of
five members, met five times during 1996. Directors of GMBS who are
presently on the Human Resources and Compensation Committee are Directors
Box, Church, Dahlin, DeBolt and McMahon. The Human Resources and
Compensation Committee is responsible for reviewing and approving
compensation policies and levels. See "Compensation Committee Report on
Executive Compensation."
The Branch Selection Committee, presently composed of seven members,
met three times during 1996. Directors who presently are on the Branch
Selection Committee are Box, Church, Clineburg, Groom, Hazel, Kaplan and
Kyle.
The Mergers and Acquisitions Committee, presently composed of five
members, met once during 1996. The present Mergers and Acquisitions
Committee members are Directors Clineburg, Dahlin, Jennings, Kellar and
Prichard.
The Nominating Committee of GMBS, which is responsible for selecting
and nominating Directors, consists of Directors Clineburg, Cook, DeBolt,
Doll, Hazel and Kellar. The Nominating Committee met four times during
1996. The Nominating Committee will consider recommendations for nominees
from shareholders it receives on or before December 12, 1997.
COMPENSATION. Each director other than Messrs. Clineburg and Hayes
receives an annual retainer of $2,500. Mr. Clineburg receives a retainer of
$3,500. Each director of GMBS other than Mr. Hayes receives a fee of $500
for attending each meeting of the Board of Directors. Members of committees
other than Messrs. Clineburg and Hayes receive $250 for attending each
meeting of a committee on which they serve.
Directors may elect to receive all or a portion of their fees, up to
$20,000 per calendar year, in the form of phantom shares of GMBS Common
Stock which are credited to the participating directors' deferred fees
accounts at the close of semi-annual accumulation periods, based upon the
fair market value of GMBS Common Stock on the last day of the semi-annual
period.
The Board of Directors of GMBS met seven times during the year ended
December 31, 1996, and each current member, with the exception of Mr.
Kellar, attended at least 75% of the total meetings of the Board of
Directors and of any committee on which he or she served. Due to
out-of-town travel and other business commitments Mr. Kellar attended 50%
of scheduled meetings.
5
<PAGE> 9
EXECUTIVE OFFICERS
The name, age, current position, and years served with GMBS, George Mason
Bank, George Mason Bank, N.A., and George Mason Mortgage Corporation ("GMMC") of
the current executive officers and the number and percentage of shares of GMBS
Common Stock beneficially owned as of February 20, 1997 are listed below:
<TABLE>
<CAPTION>
NUMBER OF YEARS OF SERVICE
SHARES OF (AND OTHER BUSINESS
AGE AT COMMON STOCK EXPERIENCE DURING
NAME 12/31/96 POSITION (% OF CLASS)(1) PAST FIVE YEARS)
- -------------------------- -------- ------------------------- --------------- -------------------------
<S> <C> <C> <C> <C>
Bernard H. Clineburg...... 48 President and Chief 116,234(2) 7
Executive Officer of (2.26%)
GMBS, President and Chief
Executive Officer of
George Mason Bank and
Chairman of GMMC
Kevin F. DeCoste.......... 42 Secretary of GMBS and 45,808(3) 5; (Senior Credit Officer
Executive Vice President (0.90%) of the Washington Bank;
of George Mason Bank Senior Credit Officer of
Citizens Bank of
Virginia)
Webb C. Hayes, IV......... 48 Executive Vice President 90,221 1; (Chairman, President
of GMBS; Chairman, (1.79%) and Chief Executive
President and Chief Officer of The Palmer
Executive Officer of National Bancorp, Inc.,
George Mason Bank, N.A. and The Palmer National
Bank)
James J. Consagra, Jr. ... 35 Treasurer of GMBS and 22,170(4) 4; (Senior Vice President
Senior Vice (0.44%) and Controller of the
President/Finance of Washington Bank)
George Mason Bank
</TABLE>
- ---------------
(1) In calculating the number of shares of GMBS Common Stock which are
beneficially owned (and thus the percentage of GMBS Common Stock
beneficially owned), a person is deemed to own GMBS Common Stock if that
person has the right to acquire beneficial ownership of GMBS Common Stock
within sixty (60) days through the exercise of any option, warrant or right,
or through the conversion of any security.
(2) Includes 108,289 shares which may be acquired upon exercise of options
within 60 days.
(3) Includes 44,308 shares which may be acquired upon exercise of options within
60 days.
(4) Includes 21,527 shares which may be acquired upon exercise of options within
60 days.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION. The following table presents information concerning
the annual and long-term compensation of those individuals who were, at December
31, 1996, GMBS' Chief Executive Officer and the three most highly compensated
executive officers other than the Chief Executive Officer whose annual
compensation exceeds $100,000 (collectively, the "Named Executive Officers").
This table presents compensation for services rendered in all capacities to GMBS
and its subsidiaries in 1996, 1995 and 1994.
6
<PAGE> 10
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------
NAME AND PRINCIPAL ------------------------ STOCK OPTIONS ALL OTHER
OCCUPATION YEAR SALARY(1) BONUS(2) (#)(3) COMPENSATION
- --------------------------------------- ---- ---------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Bernard H. Clineburg................... 1996 $243,417 $240,440 21,000 $18,991(4)
President and Chief Executive 1995 206,525 145,000 18,000 23,361
Officer of GMBS and George Mason 1994 199,400 60,000 0 22,931
Bank
Kevin F. DeCoste....................... 1996 $125,292 $ 90,000 7,500 $14,498(5)
Secretary of GMBS and Executive 1995 112,917 52,000 0 15,106
Vice President of George Mason 1994 103,675 37,500 6,000 11,923
Bank
James J. Consagra, Jr.................. 1996 $ 89,031 $ 90,000 7,500 $ 9,537(6)
Treasurer of GMBS and Senior Vice 1995 78,333 45,000 0 9,492
President of George Mason Bank 1994 62,500 20,000 6,000 1,406
Webb C. Hayes, IV...................... 1996 $192,750(7) $ 75,000 0 $12,740(8)
Executive Vice President of GMBS;
Chairman, President and Chief
Executive Officer of George Mason
Bank, N.A.
</TABLE>
- ---------------
(1) Does not include compensation paid to Mr. Clineburg for services as a
director of GMBS and its subsidiaries, totalling $19,250, $21,300 and
$20,250 for 1996, 1995 and 1994 respectively.
(2) Represents bonuses accrued for the year.
(3) Does not include rights pursuant to employee stock purchase plans which are
generally available to all salaried employees.
(4) Reflects employer contribution of $14,816 to GMBS' combined 401(k) and
profit sharing plan and a $4,175 employer contribution to the executive
deferred compensation plan.
(5) Reflects employer contribution of $13,165 to GMBS' combined 401(k) and
profit sharing plan and a $1,333 employer contribution to the executive
deferred compensation plan.
(6) Reflects employer contribution of $9,537 to GMBS' combined 401(k) and profit
sharing plan.
(7) Mr. Hayes employment with GMBS began at the consummation of the acquisition
by GMBS of Palmer National Bancorp, Inc. (May 17, 1996). The information set
forth in the table above, represents his compensation for the entire year.
(8) Reflects employer contribution of $11,600 to GMBS' combined 401(k) and
profit sharing plan and $1,140 paid in premiums on split-dollar life
insurance.
7
<PAGE> 11
OPTIONS. The following table provides information on grants of stock
options in 1996 to the Named Executive Officers. None of GMBS' benefit plans
permit the granting of stock appreciation rights.
OPTION GRANTS IN 1996(2)
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANT DATE
UNDERLYING GRANTED TO EXERCISE PRESENT
OPTIONS GRANTED EMPLOYEES PRICE PER EXPIRATION VALUE
(#)(1) IN 1996 SHARE ($) DATE ($)(3)
--------------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Bernard H. Clineburg................. 21,000 27.45% $17.83 1/16/06 $ 68,880
Kevin F. DeCoste..................... 7,500 9.80% $17.83 1/16/06 $ 24,600
James J. Consagra, Jr. .............. 7,500 9.80% $17.83 1/16/06 $ 24,600
Webb C. Hayes, IV.................... 0 0% 0 0 0
</TABLE>
- ---------------
(1) These options were granted in January 1996 pursuant to the 1994 Employee
Stock Option Plan and become exercisable six months after the grant date.
(2) Does not include rights pursuant to employee stock purchase plans which are
generally available to all salaried employees.
(3) Option values are based on the Black-Scholes option pricing model which
includes assumptions for variables such as interest rates, stock price
volatility and future dividend yield. The assumptions used in the model are
as follows: expected volatility of .233, risk-free of return of 5.60%,
dividend yield of 2.5%, and time to exercise of 3 years. Whether the model
assumptions used will prove to be accurate cannot be known at the date of
grant. The actual value that an executive officer may realize from his
options (assuming that they are exercised) will depend solely on the gain in
the stock price over the exercise price when the shares are sold.
The following table presents, for the Named Executive Officers, information
regarding (i) their exercises of stock options in 1996 and (ii) the number and
value of all their unexercised stock options at December 31, 1996.
AGGREGATED OPTION EXERCISES
IN 1996 AND DECEMBER 31, 1996 OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
DEC. 31, 1996(#) DECEMBER 31, 1996
SHARES ACQUIRED VALUE REALIZED EXERCISABLE/ ($)(3) EXERCISABLE/
NAME ON EXERCISE(#)(2) UPON EXERCISE($) UNEXERCISABLE(2) UNEXERCISABLE
- ----------------------------- ------------------ ----------------- ----------------- -------------------
<S> <C> <C> <C> <C>
Bernard H. Clineburg......... 15,000(1) $ 138,300 106,725/0 $1,068,914/$0
Kevin F. DeCoste............. 0 0 43,500/0 $ 445,900/$0
James J. Consagra, Jr. ...... 0 0 21,000/0 $ 183,775/$0
Webb C. Hayes, IV............ 0 0 0/0 0/0
</TABLE>
- ---------------
(1) Options were exercised on February 15, 1996.
(2) Does not include rights pursuant to employee stock purchase plans which are
generally available to all salaried employees.
(3) Based upon a market value of $22.75 per share, which was the closing price
on December 31, 1996.
SUPPLEMENTAL RETIREMENT BENEFITS. Under a Supplemental Retirement
Agreement assumed by the Company in connection with the merger with Palmer
National Bancorp, Inc., the Company is required to pay Mr. Hayes, monthly
installment payments of $8,333, for 15 years following his death or retirement
at the age of 65. The agreement also provides for reduced benefits for early
retirement after age 55 and 10 years of service. A life insurance policy on Mr.
Hayes' life is held in a trust with cash and face values intended to satisfy the
funding of the Company's payment obligation.
8
<PAGE> 12
EMPLOYMENT AGREEMENTS. The Company has entered into employment agreements
with Mr. Clineburg and Mr. Hayes.
Mr. Clineburg's agreement commenced on August 1, 1995, and is for an
initial term of three years. After the third year, the agreement automatically
will be extended from day-to-day, so that on any day the remaining term shall be
three years, provided that in no event shall the term extend more than ten years
from the commencement date. Under the agreement Mr. Clineburg serves as
President and Chief Executive Officer of GMBS and George Mason Bank, and was
entitled to an initial base salary of $216,500, subject to annual increases.
(Mr. Clineburg's current base salary is $250,500). Mr. Clineburg also receives
directors' fees including an annual retainer fee of $3,500. During the term of
the agreement Mr. Clineburg is eligible to receive bonuses and stock options
under GMBS incentive bonus plans, and is entitled to participate in any and all
employment benefit plans in effect for senior executives of GMBS. In the event
of termination without cause (as defined in the agreement), Mr. Clineburg will
continue to receive his base salary in effect on the date of the termination for
a period of 18 months. In the event of a terminating event occurring subsequent
to a change in control of GMBS (as defined in the agreement), Mr. Clineburg will
be entitled to receive an aggregate amount equal to 2.99 times his average
compensation (including salary, bonuses, directors' fees and retainers) over the
most recent five-year period. In the event of a termination of his employment
agreement, Mr. Clineburg will be required to keep certain information
confidential and may not compete with the Company for a period of six months.
Mr. Hayes' agreement commenced on March 18, 1996, for an initial term of
one year. Thereafter, the agreement automatically extends from day-to-day, so
that on any day the remaining term shall be one year. Under the agreement Mr.
Hayes serves as an Executive Vice President of GMBS and initially as President
and Chief Executive Officer of George Mason Bank, N.A. During the term of the
agreement, Mr. Hayes is entitled to an initial base salary of $195,000 (subject
to annual increases), and is eligible to receive bonuses, stock options and
other benefits under such benefit plans in effect for senior executives. In the
event of termination without cause (as defined in the agreement), Mr. Hayes will
continue to receive his base salary and benefits for a period of one year and
will be required to keep certain information confidential and may not compete
with the Company for a period of 12 months.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Human Resources and Compensation Committee during 1996
were Alan L. Box, Randolph W. Church, Elizabeth C. Dahlin, Edward S. DeBolt, and
John M. McMahon. None of these individuals is an executive officer, employee or
former employee of GMBS or any of its subsidiaries.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Human Resources and Compensation Committee (the "Committee"), which
consists of five outside directors has furnished the following report on
executive compensation.
It is the Committee's responsibility to review, recommend and approve
changes to GMBS compensation policies which are designed to provide competitive
levels of compensation in order to attract and retain well-qualified executives,
to integrate total compensation with GMBS annual and long-term performance goals
and to reward individual performance. The Committee also endorses the position
that stock ownership by management is beneficial in aligning management's and
shareholders' interests in the enhancement of shareholder value.
Compensation to GMBS executive officers in 1996 included base salary, cash
bonuses and stock options granted under GMBS' stock option plans. In addition,
compensation included participation in GMBS combined profit sharing and 401(k)
plan, executive deferred compensation plan, and in one instance in a
supplemental executive retirement plan and split-dollar life insurance
agreement.
1996 ANNUAL BASE SALARY. In determining base salary, the Committee uses a
structured program based on a grading system for every executive officer
position. Annual salary adjustments are supported by a formalized review process
with input from the Chief Executive Officer. In its evaluation process the
Committee considers salaries which are being offered in the marketplace and
responsibilities associated with
9
<PAGE> 13
each position, as well as the experience and job performance of each officer.
The Committee considers job performance the single most important measurement
factor in annual salary adjustments. The Chief Executive Officer's compensation
is reviewed by the Committee as discussed below.
1996 INCENTIVE COMPENSATION PLAN (CASH BONUSES). The GMBS incentive
compensation plan is based on a two-step process which includes overall
corporate performance as well as individual performance goals.
As the first step in determining incentive compensation for 1996, the
Committee evaluated overall corporate performance by comparing actual results to
performance measurements established at the beginning of the year. For 1996, the
performance measurements and the weight assigned to each measurement were as
follows: (1) net income (45%); (2) return on average equity (15%); (3) return on
average assets (10%); (4) asset growth (20%); and (5) shareholder value (10%).
Annual cash bonuses are based on the achievement of minimum, target and maximum
goals for each of the above named components. This calculation determines the
range of incentive compensation available to each executive based on percentages
of base salaries. The payout for the Chief Executive Officer ranges from 30% of
base salary for achieving minimum targets to 80% of base salary for achieving
maximum goals. For other executive officers, payouts range from 15% to 58% of
base salaries. Once GMBS has exceeded maximum performance levels, additional
bonus awards become discretionary based on the decision of the Committee. In
1996, GMBS exceeded its maximum performance goals. The Chief Executive Officer's
award is based solely on GMBS' overall performance. Individual payouts,
excluding the Chief Executive Officer, are determined based on GMBS' overall
performance as well as the achievement of individual performance measurements
established at the beginning of the year. Total cash bonuses for executive
officers, other than the Chief Executive Officer, in the plan amounted to
$460,000. These bonuses were paid in 1997.
STOCK OPTIONS. GMBS provides long-term incentives through several employee
stock option plans. Stock option awards are intended to provide non-cash
compensation which tie a portion of the executive's compensation to the
performance of GMBS stock price. This approach is designed to incentivize the
creation of total shareholder value by tying the full benefit of the
compensation package to the long-term performance of GMBS. The Committee
recommends stock option grants based on contributions made by each of the
executive officers.
OTHER. All GMBS executive officers are entitled to matching cash
contributions under the executive deferred compensation plan. In addition, Mr.
Hayes receives certain benefits associated with his participation in a
supplemental executive retirement plan and split-dollar life insurance policies
which were established by Palmer National Bancorp, Inc. prior to its acquisition
by GMBS. GMBS executive officers also receive matching cash contributions in
connection with a profit sharing and 401(k) plan, on the same terms as are
available to all employees.
CHIEF EXECUTIVE OFFICER COMPENSATION. During 1996, GMBS exceeded 100% of
the maximum performance goals that were set by the Committee at the beginning of
the year. Also, GMBS consummated its first merger, opened its first branch in
Maryland, and posted record earnings, despite over $550 thousand in
non-recurring merger related expenses. In addition, GMBS stock price increased
by 24.1% and cash dividends increased by 21.1%, providing a total return to
shareholders of 26.6%. Based on these exceptional results, Mr. Clineburg earned
a bonus of $240,440 for 1996. Mr. Clineburg's base salary for 1996 was $250,500
an increase of 15.7% over 1995. Mr. Clineburg also was granted 21,000 incentive
stock options in January of 1996. The ultimate value of these stock options will
be determined by the actual performance of GMBS stock price over time.
HUMAN RESOURCES AND
COMPENSATION COMMITTEE
Alan L. Box, Chairman
Randolph W. Church, Jr., Member
Elizabeth C. Dahlin, Member
Edward S. DeBolt, Member
John M. McMahon, Member
10
<PAGE> 14
GMBS STOCK PERFORMANCE GRAPH
The following graph shows the total annualized return generated by
investing $100 in the Standard & Poors 500 Stock Index, the Nasdaq Bank Stocks
Index, and George Mason Bankshares, Inc. for the period of July 1, 1993 through
December 31, 1996. Total return is defined as the change in stock price plus
reinvestment of dividends. The Standard & Poors 500 Stock Index is a widely
publicized measure of the performance of domestic equity markets. The Nasdaq
Bank Stocks Index is the accepted measure of total shareholder return for the
widely published Nasdaq Bank Index and is a creation of the University of
Chicago Graduate School of Business.
COMPARISON OF TOTAL CUMULATIVE RETURN* AMONG GEORGE MASON
BANKSHARES, INC., STANDARD & POORS 500 INDEX AND NASDAQ BANK
STOCKS (SIC 6020-6029, 6710-6719 U.S. AND FOREIGN COMPANIES)
<TABLE>
<CAPTION>
NASDAQ BANK
STOCKS (SIC 6020-
MEASUREMENT PERIOD STANDARD & POORS 6029, 6710-6719 GEORGE MASON
(FISCAL YEAR COVERED) 500 STOCK INDEX COMPANIES) BANKSHARES, INC.
<S> <C> <C> <C>
7/1/93 100 100 100
12/31/93 105.18 106.11 97.11
12/30/94 106.62 105.73 96.06
12/29/95 146.73 157.46 151.63
12/31/96 180.90 208.16 192.41
</TABLE>
* Assumes $100 investment in the common stock of George Mason Bankshares, Inc.,
Standard & Poors 500 Index, and Nasdaq Bank Stocks (SIC 6020-6029, 6710-6719
Companies), derived from compounded daily returns with dividend reinvestment
on the exdate.
11
<PAGE> 15
PRINCIPAL SHAREHOLDERS
As of February 20, 1997, there was no person who owned of record or was
known by management to own beneficially more than 5% of the outstanding shares
of GMBS Common Stock, its only issued and outstanding class of voting
securities.
TRANSACTIONS WITH DIRECTORS, OFFICERS AND ASSOCIATES
Certain directors and officers of GMBS and certain corporations and firms
with which these individuals are associated are customers of George Mason Bank
and George Mason Bank, N.A. in the ordinary course of business, or are indebted
to George Mason Bank and George Mason Bank, N.A. for loans of $60,000 or more,
and it is anticipated that they will continue to be customers of and indebted to
George Mason Bank and George Mason Bank, N.A. in the future. All such loans,
however, were made in the ordinary course of business, did not involve more than
normal risk of collectibility or present other unfavorable features, and were
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the same time for comparable George Mason Bank and George
Mason Bank, N.A. transactions with unaffiliated persons, although directors were
regularly allowed the lowest interest rate available on personal loans. Total
director, officer and associate loans represented 24.7% of shareholders' equity
at December 31, 1996.
In connection with his resignation as Chief Executive Officer and Chairman
of GMBS in 1994, the Company entered into an agreement with Marshall H. Groom
pursuant to which the Company agreed to pay him $85,000 annually, to provide
coverage for him and his spouse under the Company's group health insurance plan
and to maintain a term life insurance policy for Mr. Groom in the amount of
$408,000. Under the terms of this ten-year agreement, Mr. Groom has agreed to
provide consulting services from time to time as required in the discretion of
the Chief Executive Officer and Board of Directors.
Outside of normal customer relationships with George Mason Bank and George
Mason Bank, N.A., none of the directors or officers of GMBS or the corporations
or firms with which such persons are associated, currently maintains or has
maintained within the past 12 months any significant business with GMBS.
RATIFICATION OF BOARD ACTION INCREASING THE MAXIMUM
NUMBER OF DIRECTORS
In connection with the acquisition by GMBS, of Palmer National Bancorp,
Inc. and its subsidiaries (collectively, "PNBI") in 1996, PNBI was granted the
right to designate three of its then-current directors to serve as members of
GMBS Board of Directors. To accommodate these PNBI directors, the Board of
Directors acted to amend GMBS By-Laws to increase the maximum number of
directors which may constitute the Board to 18 from its previous level of 15.
The actual number of directors may be fixed by resolution of the Board of
Directors from time to time, subject to the maximum number set forth in the By-
Laws. The number of Directors presently is fixed at 18, subject to decrease to
16 effective upon the expiration of the terms of incumbent Directors whose terms
are expiring at the 1997 Annual Meeting of Shareholders and who are not being
renominated for election.
Pursuant to the Virginia Stock Corporation Act, shareholder approval is
required to increase the maximum number of director seats on the GMBS Board of
Directors. Therefore, the Board of Directors asks that the shareholders ratify
the Board's action increasing the maximum number of directors by approving the
following resolution:
RESOLVED, that the action of the Board of Directors in amending
Section 2.2 of Article II of the By-Laws of GMBS to increase to eighteen
(18) the maximum number of directors that may constitute the whole Board of
Directors be, and hereby is, ratified, approved and confirmed in all
respects.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE GMBS SHAREHOLDERS VOTE FOR
RATIFICATION OF THE BOARD'S ACTION INCREASING THE MAXIMUM SIZE OF THE BOARD.
12
<PAGE> 16
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP as the firm of
certified public accountants to audit the books and accounts of GMBS and its
subsidiaries for fiscal year 1997. The Board of Directors asks that the
shareholders of GMBS ratify its selection. For fiscal year 1996, GMBS was
audited by Ernst & Young LLP. Representatives of Ernst & Young LLP are expected
to be present at the Annual Meeting. At that time, such representatives will
have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
Ratification of the Board of Directors' appointment of Ernst & Young LLP as
the independent auditors of GMBS for fiscal year 1997 will require the
affirmative vote of a majority of the shares represented and entitled to vote at
the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT ALL GMBS SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS THE INDEPENDENT AUDITORS
OF GMBS FOR FISCAL YEAR 1997.
SHAREHOLDER PROPOSALS
Shareholders who wish for a proposal to be included in GMBS proxy statement
and form of proxy relating to the 1998 Annual Meeting of GMBS Shareholders
should deliver a written copy of their proposal to the principal office of GMBS
no later than December 12, 1997. Proposals should be directed to President,
George Mason Bankshares, Inc., 11185 Main Street, Fairfax, Virginia 22030.
Proposals must comply with the proxy rules of the Commission relating to
shareholder proposals in order to be included in GMBS proxy materials.
SOLICITATION OF PROXIES
GMBS will bear its own cost of solicitation of proxies. In addition to the
use of the mails, proxies may be solicited by the directors and officers of GMBS
by personal interview, telephone or telegram. Such directors and officers will
not receive additional compensation for such solicitation but may be reimbursed
for out-of-pocket expenses incurred in connection therewith. Arrangements may
also be made with brokerage firms and other custodians, nominees and fiduciaries
to forward solicitation materials to the beneficial owners of shares of GMBS
Common Stock held of record by such persons, in which case GMBS will reimburse
such brokerage firms, custodians, nominees and fiduciaries for reasonable
out-of-pocket expenses incurred by them in connection therewith.
13
<PAGE> 17
OTHER MATTERS
It is not expected that any matters other than those described in this
Proxy Statement will be brought before the GMBS Annual Meeting. If any other
matters are presented, however, it is the intention of the persons named in the
GMBS proxy to vote the proxy in accordance with the discretion of the persons
named in such proxy.
Management urges each Shareholder, whether or not he or she intends to be
present and vote at the Annual Meeting, to complete, sign, and return the
enclosed proxy as promptly as possible.
GEORGE MASON BANKSHARES, INC.
/s/ BERNARD H. CLINEBURG
By: Bernard H. Clineburg
President
Fairfax, Virginia
April 11, 1997
14
