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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
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 (S) 240.14a-11(c) or (S) 240.14a-12
Union Bankshares Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Union Bankshares Corporation
- --------------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
Union Bankshares Corporation
March 8, 2002
Dear Fellow Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Union Bankshares Corporation. The meeting will be held on Tuesday, April 16,
2002 at 6:00 p.m. at the Richmond County Elementary School located on Maple
Street in Warsaw, Virginia.
The primary business of the meeting will be the election of directors. We
also will report to you on the condition and performance of the Company and its
subsidiaries, and you will have ample opportunity to question management on
matters that affect the interests of all shareholders. The meeting will be
followed by a reception that we hope you will be able to attend.
We hope you will be with us on April 16th. Whether you plan to attend or
not, please complete, sign, date and return the enclosed proxy card as soon as
possible in the postage-paid envelope provided.
We appreciate your continued loyalty and support.
Sincerely,
/s/ G. William Beale
G. William Beale
President and Chief Executive Officer
Union Bankshares Corporation
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
- --------------------------------------------------------------------------------
To be Held on April 16, 2002
The Annual Meeting of Shareholders of Union Bankshares Corporation will be
held at the Richmond County Elementary School located on Maple Street in Warsaw,
Virginia, at 6:00 p.m. on April 16, 2002 for the following purposes:
1. To elect two directors to serve for a three-year term; and
2. To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
The Board of Directors has fixed February 23, 2002, as the record date for
determination of shareholders entitled to notice of and to vote at the meeting
and any adjournments thereof.
By Order of the Board of Directors
D. Anthony Peay
Senior Vice President and Corporate Secretary
March 8, 2002
Please promptly complete and return the enclosed proxy whether or not you
plan to attend the Annual Meeting. If you attend the meeting in person, you may
withdraw your proxy and vote your own shares.
Union Bankshares Corporation
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 16, 2002
GENERAL
The enclosed proxy is solicited by the Board of Directors of Union
Bankshares Corporation (the "Company") for the Annual Meeting of Shareholders of
the Company to be held on Tuesday, April 16, 2002, at the time and place and for
the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders or any adjournment thereof. The approximate mailing date of this
Proxy Statement and accompanying proxy is March 8, 2002.
Revocation and Voting of Proxies
Execution of a proxy will not affect a shareholder's right to attend the
Annual Meeting and to vote in person. Any shareholder who has executed and
returned a proxy may revoke it by attending the Annual Meeting and requesting to
vote in person. A shareholder may also revoke his proxy at any time before it is
exercised by filing a written notice with the Company or by submitting a proxy
bearing a later date. Proxies will extend to, and will be voted at, any
adjourned session of the Annual Meeting.
Voting Rights of Shareholders
Only shareholders of record at the close of business on February 23, 2002
are entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. As of the close of business on February 23, 2002, there were 7,524,839
shares of the Company's common stock outstanding and entitled to vote at the
Annual Meeting. The Company has no other class of stock outstanding. A majority
of the votes entitled to be cast, represented in person or by proxy, will
constitute a quorum for the transaction of business.
Each share of common stock entitles the record holder thereof to one vote
upon each matter to be voted upon at the Annual Meeting. Shares for which the
holder has elected to abstain or to withhold the proxies' authority to vote
(including broker non-votes) on a matter will count toward a quorum, but will
not be included in determining the number of votes cast with respect to such
matter.
Solicitation of Proxies
The cost of solicitation of proxies will be borne by the Company.
Solicitation is being made by mail, and if necessary, may be made in person or
by telephone, or special letter by officers and employees of the Company or its
subsidiaries, acting without compensation other than regular compensation.
1
ELECTION OF DIRECTORS - PROPOSAL ONE
Directors
The Company's Board is divided into three classes (I, II and III). The term
of office for Class III directors will expire at the Annual Meeting and the
nominees to serve as Class III directors are set forth below. Each of the Class
III nominees currently serves as a director of the Company. If elected, the
Class III nominees will serve until the Annual Meeting of Shareholders held in
2005.
The persons named in the proxy will vote for the election of the nominees
named below unless authority is withheld. If for any reason the persons named as
nominees below should become unavailable to serve, an event which management
does not anticipate, proxies will be voted for such other persons as the Board
of Directors may designate.
The Board of Directors recommends that shareholders vote for the nominees
set forth below. The nominees receiving the greatest number of affirmative votes
cast at the Annual Meeting will be elected.
Served as Principal Occupation
Name (Age) Director Since (1) During Past Five Years
---------- ------------------ ----------------------
2002 Class (Nominees):
G. William Beale (52) 1990 President and Chief Executive
Officer of the Company since
its inception; President of
Union Bank & Trust Company since
1991.
B. Walton Mahon (73) 1965 Investor; Formerly served as
Chairman of the Board of the
Company from 1993 to 1998 and as
President of Union Bank & Trust
Company from 1965 to 1991.
2003 Class (Directors Serving Until the 2003 Annual Meeting):
Frank B. Bradley (54) 2001 President, Bradley Properties;
formerly President and Chief
Executive Officer of Fas Mart
Convenient Stores, Inc.,
Mechanicsville, Virginia, until
February 1998.
M. Raymond Piland, III (68) 1980 President, Williamsburg Millwork
Corporation, Bowling Green,
Virginia.
William M. Wright (74) 1962 Chief Executive Officer of Wood
Preservers, Inc., a lumber
treatment company headquartered
in Warsaw, Virginia.
2
Served as Principal Occupation
Name (Age) Director Since (1) During Past Five Years
---------- ------------------ ----------------------
2004 Class (Directors Serving Until the 2004 Annual Meeting):
Ronald L. Hicks (55) 1985 Chairman of the Board of the
Company since 1998;
Attorney, of Counsel to
Jarrell, Hicks and Sasser,
Spotsylvania County,
Virginia; Chairman of the
Board of Union Bank & Trust
Company since 1987.
W. Tayloe Murphy, Jr. (68) 1966 Attorney, in Warsaw,
Virginia; Secretary of
Natural Resources for the
State of Virginia; Delegate
of the Virginia General
Assembly from 1982 until
2000.
A. D. Whittaker (62) 1981 President, A. D. Whittaker,
Inc., a commercial
construction firm in Hanover
County, Virginia.
- ------------------
(1) With the exception of Directors Bradley and Wright, who were appointed to
the Board in January 2001, each director has served on the Board of
Directors of the Company since the consummation of the affiliation of Union
Bancorp, Inc. and Northern Neck Bankshares Corporation in July 1993 which
created the Company. The date above refers to the year in which Messrs.
Beale, Hicks, Mahon, Piland, and Whittaker were first elected to the Board
of Directors of Union Bank & Trust Company, and Messrs. Murphy and Wright
were first elected to the Board of Directors of Northern Neck State Bank.
Board of Directors and Committees
There were eight meetings of the Board of Directors in 2001. Each incumbent
director attended greater than 75% of the aggregate number of meetings of the
Board of Directors and its committees of which he was a member in 2001.
There are no family relationships among any of the directors or among any
directors and any officer. None of the directors serve as directors of other
publicly-held companies.
The Board of Directors has, among others, a standing Executive Committee,
Audit Committee and Compensation Committee.
Executive Committee. The Executive Committee is composed of G. William
Beale, Ronald L. Hicks, W. Tayloe Murphy and A. D. Whittaker. The Committee,
which is subject to the supervision and control of the Board of Directors, has
been delegated substantially all of the powers of the Board of Directors to act
between meetings of the Board, except for certain matters reserved to the Board
by law. In 2001, there were two meetings of the Executive Committee.
Audit Committee. The Audit Committee is composed of A. D. Whittaker, W.
Tayloe Murphy and Frank R. Bradley and also includes Daniel I. Hansen of the
Union Bank & Trust Company Board, William H. Hughes of the Northern Neck State
Bank Board, Elisabeth Jones of the Rappahannock National Bank Board and A.G.W.
Christopher, Jr. of the Bank of Williamsburg Board. The functions of the
Committee are to recommend selection of independent certified public
accountants, to approve the scope of the independent accountants' audit, to
review the reports of examination by the regulatory agencies, the independent
3
accountants and the internal auditor and to issue its report to the Board of
Directors. All members of the Audit Committee are independent directors. The
Audit Committee met four times in 2001.
Compensation Committee. The Compensation Committee consists of Ronald L.
Hicks, W. Tayloe Murphy and A. D. Whittaker. The function of this committee is
to recommend the compensation to be paid to the executive officers of the
Company. It also administers all incentive and stock option plans for the
benefit of such officers and directors eligible to participate in such plans.
The Compensation Committee met one time in 2001.
Directors' Fees
As compensation for their services, each member of the Board of Directors
of the Company receives $600 for each meeting of the Board attended. In
addition, standing committee members receive $200 for each committee meeting
attended. Additionally, an annual retainer of 200 shares of the Company's common
stock is paid to each director attending 75% of all Board meetings. Board
members who are also officers do not receive any additional compensation above
their regular salary for any Board or committee meeting.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee's Report to the Shareholders, which follows, was
approved and adopted by the Committee on February 19, 2002 and by the Board of
Directors on February 28, 2002. The members of the Audit Committee are all
independent directors.
The Audit Committee has reviewed and discussed the audited financial
statements with management, discussed with the auditors the matters required by
SAS 61, received communications from the auditors as to their independence, and
discussed independence with the auditors.
Based on its review and discussions with the auditors, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Form 10-K filed by the Company.
The following fees were paid to Yount, Hyde & Barbour, P.C. ("YHB"), Union
Bankshares Corporation's Certified Public Accountants, for services provided to
the Company for the fiscal year ended December 31, 2001 and to Cherry, Bekaert &
Holland, L.L.P. ("CBH") for services provided to Mortgage Capital Investors for
the fiscal year ended December 31, 2001.
YHB CBH
Audit Fees: $ 64,300 $27,000
Financial Information Systems Design & Implementation Fees: --- ---
All Other Fees: $ 38,126 $ 1,237
Audit fees are fees billed for the audit of the Company's financial
statements and for the required quarterly reviews of those statements. Financial
information systems design and implementation fees are fees billed for financial
information systems design work and implementation fees for services rendered as
part of that work for the most recent fiscal year. All other fees include
payments for any other types of services provided, including, but not limited
to, preparation of income tax returns, audits of benefits plans and compliance
audits.
4
The Audit Committee of the Board of Directors believes that the non-audit
services provided by Yount, Hyde & Barbour, P.C. and Cherry, Bekaert & Holland,
L.L.P are compatible with maintaining the auditor's independence.
W. Tayloe Murphy, Jr., Chairman
A. D. Whittaker
William H. Hughes, CPA
Daniel I. Hansen
Elisabeth Jones
A.G.W. Christopher Jr.
OWNERSHIP OF COMPANY COMMON STOCK
The following table sets forth, as of February 23, 2002, certain
information with respect to the beneficial ownership of the Company's common
stock held by each director and nominee and each executive officer named in the
Summary Compensation Table below, and by the directors and all executive
officers as a group. As of February 23, 2002, no shareholder of the Company
beneficially owned 5% or more of the Company's common stock.
Amount and Nature of
Beneficial Percent
Name Ownership (1) of Class
---- ------------ --------
G. William Beale .............................................. 42,763 (3)(4) (2)
Frank B. Bradley, III ......................................... 1,000 (2) (2)
Ronald L. Hicks ............................................... 26,118 (3) (2)
B. Walton Mahon ............................................... 101,255 (3) 1.33%
W. Tayloe Murphy, Jr .......................................... 165,122 (3) 2.16%
M. Raymond Piland, III ........................................ 10,680 (3) (2)
Charles H. Ryland ............................................. 192,354 (3) 2.52%
A. D. Whittaker ............................................... 57,546 (3) (2)
William M. Wright ............................................. 44,448 (3) (2)
All directors and executive officers
as a group .................................................... 684,668 (5) 8.96%
_________________________
(1) For purposes of this table, beneficial ownership has been determined in
accordance with the provisions of Rule 13d-3 of the Securities Exchange Act
of 1934 under which, in general, a person is deemed to be the beneficial
owner of a security if he has or shares the power to vote or direct the
voting of the security or the power to dispose of or direct the disposition
of the security, or if he has the right to acquire beneficial ownership of
the security within 60 days.
(2) Represents less than 1% of the Company's common stock.
(3) Includes shares held by affiliated corporations, close relatives and
children, and shares held jointly with spouses or as custodians or
trustees, as follows: Mr. Beale, 4,087 shares; Mr. Hicks, 10,818 shares;
Mr. Mahon, 21,455 shares; Mr. Murphy, 70,400 shares; Mr. Piland, 2,880
shares; Mr. Ryland, 49,854 shares; Mr. Whittaker, 30,498 shares; and Mr.
Wright, 4,128 shares.
(4) Includes 28,980 shares that may be acquired pursuant to currently
exercisable stock options granted under the Company's Stock Option Plan.
(5) Includes, 47,168 shares that may be acquired pursuant to currently
exercisable stock options granted under the Company's Stock Option Plan.
5
EXECUTIVE COMPENSATION
The following table sets forth the remuneration accrued or paid by the
Company or its subsidiary during calendar years 2001, 2000 and 1999 for the
chief executive officer and the three other executive officers (the "named
executive officers") who received total annual salary and bonus in excess of
$100,000 in the fiscal year ended December 31, 2001.
Summary Compensation Table
Long-Term
Compensation
------------
Annual Compensation (1) Securities
Name and ----------------------- Underlying All Other
Principal Position Year Salary Bonus Options (2) Compensation (3)
------------------ ---- ------ ----- ---------- ----------------
G. William Beale 2001 $ 184,200 $ 35,177 2,500 $ 40,414
President/CEO 2000 182,545 4,145 1,200 26,609
Union Bankshares 1999 180,250 5,911 --- 25,941
John C. Neal 2001 $ 129,375 $ 24,296 1,500 $ 23,207
EVP/COO 2000 129,375 4,856 1,170 16,498
Union Bank 1999 99,532 3,506 --- 14,807
N. Byrd Newton 2001 $ 115,000 $ 6,634 500 $ 9,077
President/CEO 2000 97,553 5,323 1,000 4,737
Northern Neck 1999 96,728 13,670 1,500 5,095
State Bank
D. Anthony Peay 2001 $ 96,643 $ 18,248 1,500 $ 17,497
SVP/CFO 2000 95,065 3,706 --- 12,394
Union Bankshares 1999 93,085 3,086 --- 13,548
__________________
(1) The amount of compensation in the form of perquisites or other personal
benefits did not exceed the lesser of $50,000 or 10% of the total annual
salary and bonus reported in each year.
(2) While the Company's Stock Option Plan permits the granting of restricted
stock awards, no such awards have been made. This plan is the Company's
only stock-based long term compensation plan currently in effect.
(3) Includes for 2001: (i) $15,393 accrued on behalf of Mr. Beale under
deferred compensation arrangements; (ii) a $ 25,021 matching contribution
to Mr. Beale's, $23,207 to Mr. Neal's, $9,077 to Mr. Newton's and $17,497
to Mr. Peay's 401(k) plan accounts under the Profit Sharing and Thrift
Plan. See the discussion below in the section captioned "Employee Benefit
Plans" for a description of the Company's employee benefit plans; and (iii)
Economic benefit attributable to the Split Dollar Life Insurance Plan of
$699, $524, $647, and $193 for Messrs. Beale, Neal, Newton and Peay,
respectively.
Stock Option Grants in 2001
The Company's Stock Option Plan provides for the granting of both
incentive and non-qualified stock options and restricted stock awards to
executive officers and key employees of the Company and its
6
subsidiaries. No restricted stock awards have been granted under the plan. The
following table provides certain information concerning stock options granted
during 2001 to the named executive officers.
Individual Grants
-----------------------------------------------------------------
Percent of
Number of Total
Shares Options
Underlying Granted to Exercise Potential
Options Employees Price per Expiration Realizable Value (1)
--------------------
Name Granted in 2001 Share Date 5% 10%
---- ------- ------- ----- ---- -- ---
G. William Beale 2,500 18.73% $ 12.813 1/25/11 $ 20,144 $ 51,050
John C. Neal 1,500 11.24 12.813 1/25/11 12,087 30,630
N. Byrd Newton 500 3.75 12.813 1/25/11 4,029 10,210
D. Anthony Peay 1,500 11.24 12.813 1/25/11 12,087 30,630
- -----------------
(1) Potential realizable value at the assumed annual rates of stock price
appreciation indicated, based on actual option term (10 years) and annual
compounding, less cost of shares at exercise price.
Stock Option Exercises in 2001 and Year-End Option Values
The following table shows certain information with respect to the
number and value of unexercised options at year-end for the named executive
officers.
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money
Number of Options at Options at
Shares Acquired Value December 31, 2001 December 31, 2001 (1)
---------------------------- ------ ---------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
G. William Beale -0- --- 28,980 4,720 $ 108,129 $ 9,278
John C. Neal -0- --- 8,968 2,702 21,303 6,475
N. Byrd Newton -0- --- 3,320 2,080 1,905 3,534
D. Anthony Peay -0- --- 5,900 1,600 15,988 4,113
- ----------------
(1) Calculated by subtracting the exercise price from the fair market value of
the stock at December 31, 2001.
Employee Benefit Plans
The Company and certain of its subsidiaries maintain several tax
qualified and non-qualified employee benefit plans for their employees which are
described below.
The Company's Plans
-------------------
Profit Sharing and Thrift Plan. The Company has adopted a defined
contribution plan, established in accordance with Section 401(k) of the Internal
Revenue Code (the "401(k) Plan"). Under the 401(k) Plan, employees of the
Company are eligible to participate after six months of employment. The 401(k)
Plan provides for employee pre-tax contributions, not to exceed 50% of the
employee's compensation. The Company is required to match up to 3% of the
employee's contributions. The Company is not required to, but may, make
additional contributions to the 401(k) Plan. Employer contributions vest 20%
after 2 years, 40% after 3 years, 60% after 4 years, 80% after 5 years and are
fully vested after 6 years. Employees have
7
numerous investment options under the 401(k) Plan including various mutual
funds, but may not invest in the Company's stock through the 401(k) Plan.
Employee Stock Ownership Plan. The Company also offers a Non-Contributory
Employee Stock Ownership Plan and Trust (the "ESOP"), under which all salaried
employees (the "Participants") who are at least 18 years of age and who have
been employed by the Company for at least 6 months are eligible to participate.
Allocations of contributions under the ESOP are discretionary at the election of
the Company's and subsidiaries' Boards of Directors, and Participants are not
permitted to make contributions to the ESOP. Contributions to a Participant's
account are based on proportionate "covered compensation" of the employee
(generally total pay as an eligible employee and while a participant). These
contributions vest 20% after 2 years, 40% after 3 years, 60% after 4 years, 80%
after 5 years and are fully vested after 6 years. Service before age 18 does not
count toward vesting.
Distributions under the ESOP are made in common stock and any cash
allocated to the Participant's account in a lump sum payment. In-service
withdrawals and cash dividend withdrawals are permitted in certain cases from
vested account balances.
Union Bank & Trust Company's Plans
----------------------------------
Deferred Compensation Plan. Prior to 1997, Union Bank & Trust Company
("Union Bank") offered its directors the option to participate in a deferred
supplemental compensation program. Participating directors have entered into
agreements with Union Bank to participate in the program. To participate in this
plan, a director must elect to forego the directors fees that would otherwise be
payable to him by Union Bank for a period of twelve consecutive months beginning
immediately after his election to participate. After the twelve month period
runs, the director again begins to receive the full amount of directors fees
payable by Union Bank.
While its obligation under each agreement represents an unsecured, general
obligation of Union Bank, a substantial portion of the benefits payable under
the agreements is funded by key-person life insurance owned by Union Bank on
each director. The fees deferred by each participating director are applied
towards the first year's premium expense of a life insurance policy and
thereafter Union Bank pays the premiums. Each agreement provides that the
director will receive from Union Bank a designated fixed amount, payable in
equal monthly installments over a period of ten years beginning upon his
retirement at age 65. No interest is paid on the installments. The amount of
each director's monthly benefit is actuarially determined based on, among other
factors, the age and health condition of each director at the time he elects to
participate in the program. In the event a director retires but dies before
receiving all the installments due under the agreement, Union Bank has the
option of making one lump sum payment (based on the discounted present value of
the remaining installment obligation) to the director's designated beneficiary
or his estate or continuing the balance of the installment payments in
accordance with the original payment plan. Each agreement further provides that
a reduced fixed amount is payable in the event of a director's death prior to
reaching retirement age.
The agreement with Mr. Beale calls for Union Bank to pay him $26,500 per
year for ten years upon his retirement at age 65. The agreements with certain
other directors calls for Union Bank to pay an annual installment in the
following amounts upon their retirement, as follows: Mr. Piland, $13,004; Mr.
Hicks, $55,364; Mr. Whittaker, $16,345; and Mr. Mahon, $5,887. As of December
31, 2001, Union Bank had accrued approximately $ 351,572 to cover its
obligations under all these agreements.
While the insurance policies were purchased as a means of funding the
deferred compensation liability created under this plan, there exists no
obligation to use any insurance funds from policy loans or death proceeds to
curtail the deferred compensation liability. Under the terms of the directors'
benefit plan,
8
a participant, or his beneficiary, will receive upon retirement a monthly
retirement payment for life, payable for a minimum of 15 years. The plan also
provides for a reduced payment to a participant's beneficiary in the event that
the participant dies prior to retirement, payable for a period of 15 years from
the date of death. A participant's retirement date is considered to be the later
of the date a participant turns age 65 or completes 10 years of plan
participation.
The company also offers a non-qualified deferred compensation plan for
executives by which designated officers of the company can elect to defer either
salary or bonus to this plan. Eligibility is determined by the board and is
currently available to all officers of the company. The money remains with the
Company as part of a Rabbi Trust which is self directed through mutual fund
choices. There are no Company contributions to this plan. Benefit payments and
form of payment are defined by the participant. Currently participants are only
directing small bonus amounts to this plan.
Split-Dollar Life Insurance Plan
- --------------------------------
Union Bankshares Corporation, Union Bank, Northern Neck State Bank,
Rappahannock National Bank and the Bank of Williamsburg all provide a
Split-Dollar Life Insurance Plan to officers designated by the Board to
participate in the plan. The insurance benefit under this program is equal to
three times the participant's annual salary. The policies funding the plan are
owned by one of the member banks. All policy cash values, plus policy death
benefits in excess of the plan benefit, are retained by the owner-bank.
Employment Contracts and Termination and Change in Control Arrangements
The Company and Mr. Beale entered into an employment agreement effective
April 1, 1999. The agreement had a two year initial term and is extended for
successive one-year terms unless the Company elects not to extend the term of
the agreement by providing at least twelve months prior notice, which it has not
done. The initial employment agreement provided for an annual base salary of
$170,000, which has been adjustable annually at the discretion of the Board, and
annual cash bonuses in such amounts as determined by the Board. The Company may
terminate Mr. Beale's employment at any time for "Cause" (as defined in the
agreement) without incurring any additional obligations to him. If the Company
terminates Mr. Beale's employment for any reason other than for "Cause" or if
Mr. Beale terminates his employment for "Good Reason" (as defined in the
agreement), the Company will be obligated to continue to provide the
compensation and benefits specified in the agreement until the expiration of its
term. The employment agreement will terminate in the event that there is a
change in control of the Company, at which time the change in control agreement
described below between the Company and Mr. Beale will become effective and any
termination benefits will be determined and paid solely pursuant to the change
in control agreement.
The Company also has an agreement with each of Mr. Beale and Mr. Peay that
becomes effective upon a change in control of the Company. Under the terms of
these agreements, the Company or its successor agrees to continue Mr. Beale and
Mr. Peay in its employ for a term of three years after the date of a change in
control. During the term of the contracts, Mr. Beale and Mr. Peay will retain
commensurate authority and responsibilities and compensation benefits. They will
receive base salaries at least equal to the immediate prior year and bonuses at
least equal to the annual bonuses paid prior to the change in control. If Mr.
Beale's or Mr. Peay's employment is terminated during the three years other than
for cause or disability as defined in the agreement, or if either should
terminate employment because a material term of their contract is breached by
the Company, he will be entitled to a lump sum payment, in cash, within thirty
days after the date of termination. This lump sum will be equal to 2.9 times the
sum of Mr. Beale's base salary, annual bonus, and equivalent benefits, and 2.0
times the sum of Mr. Peay's base salary, annual bonus and equivalent benefits.
9
Compensation Committee Report on Executive Compensation
Compensation for the President and Chief Executive Officer of the Company
is determined by the Board of Directors, excluding the President and Chief
Executive Officer, based on the recommendation of the Compensation Committee of
the Board. The Compensation Committee bases its recommendation on consideration
of various factors, including the financial performance of the Company, the
individual performance of the President and Chief Executive Officer and the
compensation paid to persons in comparable positions within the industry.
Compensation for executive officers other than the President and Chief
Executive Officer is determined by the Board of Directors based on the
recommendation of the President and Chief Executive Officer. Compensation levels
for all executive officers are determined based on the performance of the
Company, performance judgments as to the past and future contributions of the
individual officers and compensation paid to executives in similar positions in
the industry.
The Board and the Compensation Committee use a subjective approach to the
determination of compensation based on the factors noted above. They do not rely
on formulas or weights of specific factors and neither the profitability of the
Company nor the market value of its stock are directly utilized in computing the
executive officer base compensation. The Company's executive compensation
program has relied almost exclusively on base salary as its primary component.
Members of the Compensation Committee
Ronald L. Hicks
W. Tayloe Murphy
A. D. Whittaker
Compensation Committee Interlocks and Insider Participation
During 2001 and up to the present time, there were transactions between
Union Bank and Northern Neck State Bank and the members of the Compensation
Committee (Messrs. Hicks, Murphy and Whittaker), or their associates, all
consisting of extensions of credit by either Bank in the ordinary course of its
business. Each transaction was made on substantially the same terms, including
interest rates, collateral and repayment terms, as those prevailing at the time
for comparable transactions with the general public. In the opinion of
management, none of the transactions involve more than the normal risk of
collectibility or present other unfavorable features.
10
SHAREHOLDER RETURN
The Company is subject to the rules of the Securities and Exchange
Commission that require all public companies to present a graph of total
investment return in their annual proxy statements. The graph below compares the
yearly percentage change in the Company's cumulative total shareholder return
with the cumulative total return of the Nasdaq Stock Market Index and of the
Nasdaq National Market ("Nasdaq/NM") Bank Index, assuming that investments of
$100 were made on December 31, 1996, and that dividends were reinvested.
[CHART]
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
Union Bankshares Performance Index $100.00 $178.48 $146.00 $126.20 $ 94.40 $146.00
Nasdaq Stock Market Index 100.00 122.48 172.68 320.83 192.98 153.12
Nasdaq/NM Bank Index 100.00 167.41 166.33 159.89 182.38 197.44
INTEREST OF DIRECTORS AND OFFICERS IN CERTAIN TRANSACTIONS
Certain directors and officers of the Company and its subsidiaries and
members of their immediate families, and corporations, partnerships and other
entities with which such persons are associated, are customers of Union Bank,
Northern Neck State Bank, Rappahannock National Bank, Bank of Williamsburg,
Union Investment Services and Mortgage Capital Investors. As such, these persons
engaged in transactions with the Company and its subsidiaries in the ordinary
course of business during 2001, and will have additional transactions with these
companies in the future. All loans extended and commitments to lend by the banks
to such persons are made in the ordinary course of business upon substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with unaffiliated persons and do not
involve more than the normal risk of collectibility or present other unfavorable
features.
11
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, directors
and executive officers of the Company are required to file reports with the
Securities and Exchange Commission indicating their holdings of and transactions
in the Company's common stock. To the Company's knowledge, based solely on a
review of the copies of such reports furnished to the Company, insiders of the
Company complied with all filing requirements during 2001.
SHAREHOLDER PROPOSALS
In order for a shareholder proposal to be considered for possible inclusion
in the 2003 Proxy Statement, it must be received by the Company's Corporate
Secretary, D. Anthony Peay, Union Bankshares Corporation, 212 N. Main Street,
P.O. Box 446, Bowling Green, Virginia 22427 on or before November 8, 2002.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 2001, excluding exhibits, to be filed with the Securities and
Exchange Commission prior to March 31, 2002, can be obtained without charge by
writing to D. Anthony Peay, Senior Vice President and Corporate Secretary, Union
Bankshares Corporation, P. O. Box 446, Bowling Green, Virginia 22427.
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE UNION BANKSHARES CORPORATION
ANNUAL MEETING OF STOCKHOLDERS 1. To elect two Class III directors With- For All
APRIL 16, 2002 to serve until the Annual Meeting For hold Except
of Shareholders in 2005. (except as [_] [_] [_]
The undersigned hereby appoints Frank B. Bradley, M. Raymond marked to the contrary below):
Piland III, and William M. Wright, jointly and severally,
proxies, with full power to act alone and with full power of G. William Beale and B. Walton Mahon
substitution, to represent the undersigned at the Annual Meeting
of Shareholders of Union Bankshares Corporation to be held on
Tuesday, April 16, 2002, at 6:00 p.m. at the Richmond County INSTRUCTION: To withhold authority to vote for any individual
Elementary School located east of Warsaw, Virginia on Maple Street nominee(s), mark "For All Except" and write that nominee's name
near the intersection of Route 360 and Maple Street, or any in the space provided below.
adjournment thereof, on each of the following matters:
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2. The transaction of any other business which may properly
come before the Annual Meeting. Management at present knows
of no other business to be presented at the Annual Meeting
The meeting will followed by a reception. [_]
Please check this box if you plan to attend.
This proxy, when properly executed, will be voted in the
manner directed by the undersigned shareholder. If no direction
is made, this proxy will be voted "FOR" each proposal.
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Please be sure to sign and date Date
this Proxy in the box below.
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- --Stockholder sign above---------Co-holder (if any) sign above---
. Detach above card, sign, date and mail in postage paid envelope provided. .
UNION BANKSHARES CORPORATION
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When signing as attorney, executor, administrator, trustee or guardian, please give full title. If more than one fiduciary, all
should sign. All joint owners MUST sign
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE
ENVELOPE PROVIDED.
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