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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 COMMUNITY BANCSHARES, 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.
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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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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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(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
Annual Meeting of Stockholders April 22, 2003
FIRST COMMUNITY BANCSHARES, INC.
ONE COMMUNITY PLACE
BLUEFIELD, VIRGINIA 24605-0989
NOTICE OF 2003
ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of First Community Bancshares, Inc.:
The ANNUAL MEETING of Stockholders of First Community Bancshares, Inc.
will be held at Fincastle Country Club, Bluefield, Virginia, at 3:00 p.m. local
time on Tuesday April 22, 2003, for the purpose of considering and voting upon
the following items as more fully discussed herein.
1. Election of directors to serve as members of the Board of
Directors, Class of 2006.
2. Ratification of the selection of Ernst & Young LLP,
Charleston, West Virginia, as independent auditors for the
year ended December 31, 2003.
3. Transacting such other business as may properly come before
the meeting, or any adjournment thereof.
Only stockholders of record at the close of business on March 5, 2003
are entitled to notice of and to vote at such meeting or at any adjournment
thereof.
By Order of the Board of Directors
/s/ Robert L. Buzzo
Robert L. Buzzo, Secretary
IMPORTANT
YOU MAY VOTE BY THE FOLLOWING METHODS:
1. (888) 216-1279; or at
2. www.proxyvotenow.com/fcb until 11:59 p.m. eastern daylight time on
April 21, 2003.
3. Complete, sign and return the enclosed proxy as promptly as possible
whether or not you plan to attend the meeting. An addressed return
envelope is enclosed for your convenience. YOU MAY REVOKE YOUR PROXY AT
ANY TIME PRIOR TO THE TIME IT IS VOTED.
1
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, APRIL 22, 2003
The Board of Directors of First Community Bancshares, Inc. (the
"Corporation") solicits the enclosed proxy for use at the Annual Meeting of
Stockholders of the Corporation (the "Annual Meeting"), which will be held on
Tuesday, April 22, 2003 at 3:00 p.m. local time at Fincastle Country Club,
Bluefield, Virginia, and at any adjournment thereof.
The expenses of the solicitation of the proxies for the meeting,
including the cost of preparing, assembling and mailing the notice, proxy
statement and return envelopes, the handling and tabulation of proxies received,
and charges of brokerage houses and other institutions, nominees or fiduciaries
for forwarding such documents to beneficial owners, will be paid by the
Corporation. In addition to the mailing of the proxy material, solicitation may
be made in person, by telephone or by other means by officers, directors or
regular employees of the Corporation.
This Proxy Statement and the proxies solicited hereby are being first
sent or delivered to stockholders of the Corporation on or about March 21, 2003.
VOTING
Shares of common stock (par value $1 per share) ("Common Stock")
represented by proxies in the accompanying form, which are properly executed and
returned to the Corporation, will be voted at the Annual Meeting in accordance
with the stockholder's instructions contained therein. In the absence of
contrary instructions, shares represented by such proxies will be voted FOR the
election of the nominees as described herein under "Election of Directors" and
FOR ratification of the selection of Ernst & Young LLP as independent public
auditors for the year ended December 31, 2003. Any stockholder has the power to
revoke his proxy at any time before it is voted.
The Board of Directors has fixed March 5, 2003 as the record date for
stockholders entitled to notice of and to vote at the Annual Meeting. Shares of
Common Stock outstanding on the record date are entitled to be voted at the
Annual Meeting and the holders of record will have one vote for each share so
held in the matters to be voted upon by the stockholders. Shareholders of the
Corporation do not have cumulative voting rights.
The presence in person or by proxy of a majority of the shares of the
Common Stock entitled to vote is necessary to constitute a quorum at the Annual
Meeting. Directors are elected by a plurality of the votes cast with a quorum
present. The three persons who receive the greatest number of votes of the
holders of Common Stock represented in person or by proxy at the Annual Meeting
will be elected directors of the Company. The proposal to ratify the appointment
of the independent auditors requires that the number of votes cast in favor of
the proposal exceed the number of votes cast against it. Abstentions are
considered in determining the presence of a quorum but will not affect the vote
required for the election of directors or the ratification of the independent
auditors. Under rules of the New York Stock Exchange, all of the proposals for
consideration at the Annual Meeting are considered "discretionary" items upon
which brokerage firms may vote in their discretion on behalf of their clients if
such clients have not furnished voting instructions. Thus, there are no
proposals to be considered at the Annual Meeting which are considered
"non-discretionary" and for which there will be "broker non-votes."
As of the close of business on March 5, 2003, the outstanding shares of
the Corporation consisted of 9,852,891 shares of Common Stock.
2
1. ELECTION OF DIRECTORS
The Corporation's Board of Directors is comprised of nine directors,
including eight non-employee directors, divided into three classes with
staggered terms. All directors are elected for three-year terms.
The nominees for the Board of Directors to serve until the Annual
Meeting of Stockholders in 2006 are set forth below. All nominees are currently
serving on the Corporation's Board of Directors. In the event any nominee is
unable or declines to serve as a director at the time of the Annual Meeting, the
proxies will be voted for any nominee who shall be designated by the present
Board of Directors to fill the vacancy. In the event that additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them for the nominees listed below. All nominees named
herein have consented to be named and to serve as directors if elected.
No director or executive officer of the Corporation is related to an y
other director or executive officer of the Corporation by blood, or marriage or
adoption, except for Mr. Stafford who is the father of Mr. Stafford, II.
Principal Occupation and Director of Class
Employment Last Five Years; Corporation of
Name Age Principal Directorships Since Directors
---- --- ----------------------- ----- ---------
I. Norris Kantor 73 Of Counsel, Katz, Kantor & Perkins 1989 2006
Attorneys-at-Law; Director, First
Community Bank, N. A.
A. A. Modena 74 Retired Executive Vice President and 1989 2006
Secretary of the Corporation; Director,
First Community Bank, N. A.
William P. Stafford, II 39 Attorney, Brewster, Morhous, Cameron, 1994 2006
Mullins, Caruth, Moore, Kersey & Stafford,
PLLC; Director, First Community Bank, N. A.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF
THE NOMINEES FOR DIRECTOR.
3
CONTINUING DIRECTORS
The following persons will continue to serve as members of the Board of
Directors until the Annual Meeting of Stockholders in the year of the expiration
of their designated terms. The name, age, principal occupation and certain
biographical information for each continuing director are presented below:
Principal Occupation and Director of Class
Employment Last Five Years; Corporation of
Name Age Principal Directorships Since Directors
---- --- ----------------------- ----- ---------
Allen T. Hamner 61 Professor of Chemistry, West Virginia 1993 2004
Wesleyan College; Director, First Community
Bank, N. A.
B. W. Harvey 71 President, Highlands Real Estate Management, 1989 2004
Inc. (a company which provides commercial
property leasing services); Director and
Chairman First Community Bank, N. A.
John M. Mendez 48 President and Chief Executive Officer of the 1994 2004
Corporation; Director, Executive Vice
President, First Community Bank, N. A.;
Director & Chairman, United First Mortgage,
Inc.; Past Vice President, Chief Financial
Officer & Secretary of the Corporation; Past
Senior Vice President - Finance & Chief
Administrative Officer, First Community
Bank, N. A.
Robert E. Perkinson, Jr. 55 Past Vice President-Operations, MAPCO 1994 2005
Coal, Inc., Permac, Inc., Race Fork Coal
Company, South Atlantic Coal, Inc., (all coal
mining operations); Director, First Community
Bank, N. A.
William P. Stafford 69 President, Princeton Machinery Service, Inc. 1989 2005
(a machinery manufacturing repair company);
Chairman of the Board of the Corporation;
Director, First Community Bank, N. A.
W. W. Tinder, Jr. 77 Chairman & Chief Executive Officer, 1989 2005
Tinder Enterprises, Inc. (a truck sales and
servicing company); Chief Executive
Officer, Tinco Leasing Corporation (a real
estate leasing corporation); Director, First
Community N. A.
4
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The name, age, principal occupation and certain biographical
information for each continuing officer are presented below:
Principal Occupation and Officer of
Employment Last Five Years; Corporation
Name Age Principal Title Since
---- --- ----------------------- -----
Robert L. Buzzo 52 President of First Community Bank, N. A.; 2000
Vice President and Secretary of the
Corporation; past Chief Executive Officer
of First Community Bank
E. Stephen Lilly 44 Chief Operating Officer of the Corporation; 2000
Senior Vice President and Chief Operating
Officer of First Community Bank, N. A.;
past Vice President-Operations of First
Community Bank
Robert L. Schumacher 51 Chief Financial Officer of the Corporation; 2000
Senior Vice President-Finance and Secretary
of First Community Bank, N. A.; Past Senior
Vice President-Finance of the Corporation;
Past Senior Vice President and Senior Trust
Officer of First Community Bank
5
COMPENSATION OF DIRECTORS
During the first nine months of 2002, non-employee members of the Board
of Directors received a retainer fee of $500 per month. Beginning in October
2002, this retainer was increased to $700 per month. During the first nine
months of 2002, Audit Committee members received $300 per month fee for meetings
attended. Beginning in October 2002, Audit Committee members received a retainer
fee of $1,000 per quarter. Members of the Corporation's Executive Committee also
receive a fee of $250 per meeting unless held in conjunction with monthly board
meetings in which case no committee fee is paid. Directors of the Corporation
may also be reimbursed for travel or other expenses incurred for attendance at
Board or committee meetings. Directors who are employees of the Corporation
receive no compensation for service on the Board or its committees.
In addition, non-employee directors of the Corporation participate in
the 2001 Directors' Stock Option Plan (the "Directors' Option Plan"). The
Directors' Option Plan was implemented to facilitate and encourage investment in
the Corporation's future growth and continued success. No grants were made under
the Director's Option Plan in fiscal 2002. In fiscal 2001, non-employee
directors were granted options to purchase 49,500 shares of Common Stock. The
exercise price of each option was the market value of a share of Common Stock on
the date of grant. The options are fully vested and must be exercised within 10
years of grant or two years following the director's retirement, whichever
occurs first.
MEETING ATTENDANCE
The Board of Directors held twelve meetings during 2002. All directors
and those nominees, who are currently directors, attended at least 75% of all
meetings of the Board and any committee of which they were members.
BOARD COMMITTEES
The Board of Directors of the Corporation has an Audit Committee
consisting of Chairman Hamner and Messrs. Harvey and Perkinson, all non-employee
members of the Board and independent under the Nasdaq Stock Market listing
standards as well as the recently enacted Sarbanes-Oxley Act of 2002. Mr.
Stafford served on the Audit Committee during 2002 and through the early part of
March, 2003. The Audit Committee of the Board of Directors, which held seven
meetings during 2002, reviews and acts on reports to the Board with respect to
various auditing and accounting matters, the scope of the audit procedures and
the results thereof, the internal accounting and control systems of the
Corporation, the nature of service performed for the Corporation by and the fees
to be paid to the independent auditors, the performance of the Corporation's
independent and internal auditors and the accounting practices of the
Corporation. The Audit Committee is responsible for the appointment of the
independent auditors, subject to stockholders' ratification. The 2002 Report of
the Audit Committee is presented on page 10 of this Proxy Statement. During the
first nine months of 2002, audit committee members received $300 per meeting
attended. Beginning in October 2002, audit committee members receive a retainer
fee of $1,000 per quarter.
The Board of Directors has a Compensation Committee that was formed in
May 1999 consisting of non-employee Directors Hamner, Tinder, and William P.
Stafford, II. The Compensation Committee, which held two meetings in 2002,
reviews and considers the form and amount of compensation and contractual
employment terms of the President and Chief Executive Officer of the
Corporation. Recommendations of the Compensation Committee are made to the Board
of Directors. The 2002 Report of the Compensation Committee is presented on page
9 of this Proxy Statement.
The Board of Directors of the Corporation has an Executive Committee
consisting of Chairman Stafford and Messrs. Hamner, Harvey, Mendez, Modena,
Stafford, II and Tinder. The Executive Committee held four meetings during 2002.
The Executive Committee is empowered to act on behalf of the Board on most
corporate matters not involving business combinations.
The Board does not maintain a Nominating Committee.
6
TRANSACTIONS WITH DIRECTORS AND OFFICERS
Some of the directors and officers of the Corporation and members of
their immediate families are at present, as in the past, customers of the
Corporation's subsidiary bank, and have had and expect to have transactions with
the bank. In addition, some of the directors and officers of the Corporation
are, as in the past, also officers of or partners in entities that are customers
of the bank and have had and expect to have transactions with the bank. Such
transactions were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and did
not involve more than normal risk of collectibility or present other unfavorable
features.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 (the "Exchange
Act") requires the Corporation's officers, directors and persons who own more
than 10% of the Corporation's capital stock (collectively, "Reporting Persons")
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc. The
Reporting Persons are required by regulation to furnish the Corporation with
copies of all forms they file pursuant to Section 16(a) of the Exchange Act.
Based solely on review of the copies of such forms furnished to the
Corporation, or written representations from its officers and directors, the
Company believes that during, and with respect to, fiscal 2002, the Company's
officers and directors complied in all respects with the reporting requirements
promulgated under Section 16(a) of the Exchange Act except for Mr. Modena who
filed a late Form 4 in connection with a sale of shares of Common Stock.
BENEFICIAL OWNERSHIP OF COMMON STOCK BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 5, 2003, certain information
as to the Common Stock beneficially owned by (i) each person or entity,
including any "group" as that term is used in Section 13(d)(3) of the Exchange
Act, who or which was known to the Company to be the beneficial owner of more
than 5% of the issued and outstanding Common Stock, (ii) certain directors and
executive officers of the Company and its major subsidiaries and (iii) all
directors and executive officers of the Company and its major subsidiaries, as a
group. Except as otherwise indicated, the persons named in the table below have
sole voting and investment power with respect to the Common Stock shown as
beneficially owned by them.
7
Amount and Nature
Name of Beneficial of Beneficial
Owner or Number of Ownership as of Percent of
Persons in Group March 5, 2003 Common Stock
-----------------------------------------------------------------------------------------------
The H. P. & Anne S. Hunnicutt Foundation (1) 1,111,000 11.28%
P.O. Box 309, Princeton, WV 24740
The Company's Directors and Officers:
Robert L. Buzzo (2) 12,009 *
Allen T. Hamner (3)(4) 13,182 *
B. W. Harvey (3)(5) 16,937 *
I. Norris Kantor (3)(6) 29,876 *
E. Stephen Lilly (7) 5,570 *
John M. Mendez (8) 16,729 *
A. A. Modena (3) 30,636 *
Robert E. Perkinson, Jr. (3)(9) 85,618 *
Robert L. Schumacher (10) 10,915 *
William P. Stafford (11) 224,874 2.28%
William P. Stafford, II 139,796 1.42%
W. W. Tinder, Jr. (3)(12) 69,339 *
All Directors and Executive Officers 655,481 6.63%
as a Group (Twelve Persons)
-----------------------------------------------------------------------------------------------
* Represents less than 1% of the outstanding Class B Shares.
(1) Information obtained from a Schedule 13G dated March 17, 2003. The
H. P. and Anne S. Hunnicutt Foundation ("Foundation") is a private,
tax-exempt charitable foundation under Section 501(c)(3) of the
Internal Revenue Code. The Foundation was created by the family of two
directors, William P. Stafford and William P. Stafford, II. Neither
director exercises voting or dispositive power over the shares held by
the Foundation.
(2) Includes 11,768 shares allocated to Mr. Buzzo's Employee Stock
Ownership and Savings Plan ("ESOP") account.
(3) Includes 5,500 shares issuable upon exercise of currently exercisable
options granted under the Directors' Option Plan.
(4) Includes 4,284 shares held by Mr. Hamner's wife.
(5) Includes 1,278 shares held by Mr. Harvey's wife.
(6) Includes 1,276 shares held by Mr. Kantor's wife.
(7) Includes 2,434 shares allocated to Mr. Lilly's ESOP account.
(8) Includes 15,478 shares allocated to Mr. Mendez's ESOP account.
(9) Includes 32,150 shares held by the Robert E. Perkinson, Sr. Trust and
6,430 shares held by the Robert E. Perkinson, Jr. Trust in which Mr.
Perkinson is deemed to share beneficial ownership. Mr. Perkinson is
co-trustee of the Robert
8
E. Perkinson, Sr. Trust and holds a remainder interest therein with two
of his siblings, and he is co-trustee and sole beneficiary of the
Robert E. Perkinson, Jr. Trust.
(10) Includes 10,894 shares allocated to Mr. Schumacher's ESOP account.
(11) Includes 39,915 shares held by Stafford Farms LLC as to which Mr.
Stafford is deemed to share beneficial ownership. Also includes 147,848
shares held jointly by Mr. Stafford and his wife, and 1,729 shares held
by Mr. Stafford's wife.
(12) Includes 51,700 shares held by Tinder Enterprises Inc., as to which Mr.
Tinder serves as Chairman and Chief Executive Officer. Also includes
1,718 shares held by Mr. Tinder's spouse.
REPORT ON EXECUTIVE COMPENSATION
The Board of Directors maintains a Compensation Committee (the
"Committee") whose role is the establishment and management of employment terms
and the form and levels of compensation paid to the President and Chief
Executive Officer ("CEO"). The Committee also periodically reviews the
compensation of other executive officers named in the Summary Compensation Table
subject to primary salary administration for these officers by the CEO.
Other responsibilities of the Compensation Committee include the
development of proposed contractual terms of employment and establishment of a
framework for a competitive compensation package for the CEO and long-term
compensation programs for all executive officers that adequately reward
performance and provide incentives for retention. In carrying out its
responsibilities, the Compensation Committee considers: i) the need to retain
competent and effective management personnel; ii) competitive terms and levels
of compensation relative to other companies of comparable size and operation
within the commercial banking industry; iii) past performance of the CEO as
measured against predetermined goals and objectives; iv) comparative performance
of the CEO as benchmarked against peer groups of comparable commercial banks;
and v) the achievement of overall corporate goals.
The Committee establishes current compensation based primarily on
review of competitive salary practices by similarly sized banking organizations
locally and nationally giving appropriate weight to regional differences in cost
of living and contrasting relative performance of the Company and the designated
peer group. In performing this analysis, the Committee utilized the Sheshunoff
Executive Compensation Survey as well as compensation data from other
specifically identified banking peers.
In review of cash compensation of the CEO for the 2002 fiscal year, the
committee awarded a 2% cost of living increase which resulted in an increase in
base compensation from $240,000 to $244,800 annually. This salary adjustment was
effective January 1, 2002 and was based on the change in the Consumer Price
Index published by the Bureau of Labor Statistics.
In 2002 there were no recommended changes in the employment contract of
the CEO. The CEO employment contract is for a three year term and renews
annually. The contract provides for salary continuation for a period of 35
months in the event of termination within three years of a change in control of
ownership. The contract also provides for salary continuation for a period of 30
months in the event of termination without cause, absent a change in control of
ownership
For 2002 the Committee recommended to the Board of Directors a
two-tiered incentive compensation strategy for the CEO based upon the Company
meeting specific financial benchmarks and an additional discretionary incentive
based upon both the financial and non-financial performance of the Company. The
actual bonus payment to the CEO in the first quarter of 2002 was $36,000.
9
This report shall not be deemed to be incorporated by reference into
any filing under the Securities Act of 1933 (the "Securities Act") or the
Exchange Act, unless the Corporation specifically incorporates this report by
reference and shall not otherwise be deemed filed under the Securities Act or
the Exchange Act.
Allen T. Hamner
William P. Stafford, II
W. W. Tinder, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Board of Directors is a
current or former officer or employee of the Corporation. No member of the
Committee or executive officer of the Company has a relationship that would
constitute an interlocking relationship with executive officers or directors of
another entity.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board is responsible for providing
independent, objective oversight of the Corporation's accounting functions,
financial reporting process and internal controls. The Audit Committee operates
under a written charter, which has been revised and approved by the
Corporation's Board of Directors to comply with the Sarbanes-Oxley Act of 2002.
A copy of the charter is included as Appendix A to this Proxy Statement.
The responsibilities of the Audit Committee include the appointment of
an accounting firm to be engaged as the Corporation's independent auditors for
the purpose of performing an audit of the Corporation's financial statements and
expressing an opinion as to the conformity of such financial statements with
accounting principles generally accepted within the United States. Additionally,
and as appropriate, the Audit Committee reviews, evaluates, discusses, and
consults with management, internal audit personnel and the independent auditors
regarding the following:
o the plan for, and independent auditors' report on, each audit
of the Corporation's financial statements
o the Corporation's financial disclosure documents, including
all financial statements and reports sent to shareholders
o changes in the Corporation's accounting practices, principles,
controls or methodologies, or in its financial statements
o significant developments in accounting rules
o the adequacy of the Corporation's internal accounting
controls, and accounting, financial and auditing personnel
o the establishment and maintenance of an environment at the
Corporation that promotes ethical behavior
The Audit Committee Charter incorporates standards set forth in
Securities and Exchange Commission regulations and the listing standards of the
National Association of Securities Dealers. After appropriate review and
discussion, the Audit Committee determined that the Committee fulfilled its
responsibilities under the Audit Committee Charter in 2002.
The Audit Committee is responsible for recommending to the Board that
the Corporation's financial statements be included in its annual report. The
Committee held seven meetings during the fiscal year 2002 and took a number of
steps in making the independent auditor recommendation. First, the Audit
Committee discussed with its independent auditors those matters the accountant
communicated to and discussed with the Audit Committee under applicable auditing
standards, including information regarding the scope and results of the audit.
These communications and discussions are intended to assist the Audit Committee
in overseeing the financial reporting and disclosure process. Second, the Audit
Committee discussed the accountant's independence with that firm and received a
letter from the accountant concerning independence as required under applicable
independence standards for auditors of public companies. This discussion and
disclosure informed the Audit Committee of the auditors' independence, and
assisted the Audit Committee in evaluating such independence.
10
Finally, the Audit Committee reviewed and discussed, with the
Corporation management and the accounting firm, the Corporation's audited
consolidated balance sheet at December 31, 2002 and consolidated statement of
income, cash flows and stockholders' equity for the year then ended. Based on
discussions with the auditors concerning the audit, the independence
discussions, and the financial statement review, and such other matters deemed
relevant and appropriate by the Audit Committee, the Audit Committee recommended
to the Board (and the Board approved) that these financial statements be
included in the Corporation's 2002 Annual Report to Shareholders and
incorporated by reference to its Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
This report shall not be deemed to be incorporated by reference
into any filing under the Securities Act or the Exchange Act, unless the
Corporation specifically incorporates this report by reference, and shall not
otherwise be deemed filed under the Securities Act or the Exchange Act.
Allen T. Hamner, Audit Committee Chair
B. W. Harvey, Audit Committee Member
Robert E. Perkinson, Jr., Audit Committee Member
11
EXECUTIVE COMPENSATION FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
The following Summary Compensation Table sets forth information
concerning compensation for services in all capacities awarded to, earned by, or
paid to the Corporation's President and Chief Executive Officer and to other
executive officers of the Corporation whose salary and bonus exceeded $100,000
during the year ended December 31, 2002.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
----------------------
Awards Payouts
---------- --------
Name of Individual / Other Annual Securities LTIP All Other
Capacities Served Year Salary Bonus Compensation (1) Options Payouts Compensation (2)
-----------------------------------------------------------------------------------------------------------------------------------
John M. Mendez 2002 $228,184 $ 36,000 $-- 12,826 $-- 51,430
President & Chief 2001 $224,105 $ 30,000 $-- 12,826 $-- 48,794
Executive Officer 2000 $178,199 $ 30,780 $-- 12,826 $-- 43,089
of the Corporation;
Executive Vice President of
First Community
Bank, N. A.; Director & Chairman
of United First Mortgage, Inc.
Robert L. Buzzo 2002 $135,678 $ 11,221 $-- 6,878 $-- 38,533
Vice President and 2001 $122,069 $ 14,751 $-- 6,878 $-- 34,741
Secretary of the 2000 $106,098 $ 14,450 $-- 6,878 $-- 27,389
Corporation; President of
First Community Bank, N. A.;
Chief Executive Officer of the
Bluefield Division of First
Community Bank, N. A.;
Director & Secretary of
United First Mortgage, Inc.
E. Stephen Lilly 2002 $138,669 $ 14,632 $-- 6,864 $-- 33,970
Chief Operating Officer 2001 $121,618 $ 30,092 $-- 6,864 $-- 33,484
of the Corporation; 2000 $ 90,009 $ 21,035 $-- 6,864 $-- 25,874
Senior Vice President &
Chief Operating Officer of
First Community Bank, N. A
Robert L. Schumacher 2002 $104,391 $ 10,827 $-- 8,424 $-- 27,002
Chief Financial Officer 2001 $ 99,047 $ 8,622 $-- 8,424 $-- 24,825
of the Corporation; 2000 $ 92,555 $ 14,293 $-- 8,424 $-- 26,657
Senior Vice President-
Finance and Secretary of
First Community Bank, N. A
(1) The Company provides perquisites to the named officers, comprised of
dues for country club membership and the personal use of Company
vehicles. The value of such benefits do not exceed the lesser of
$50,000 or 10% of salary and bonus for any of the named officers.
(2) Includes $7,260, $6,127, $6,192 and $4,714 in 401(k) matching
contributions for Messrs. Mendez, Buzzo, Lilly and Schumacher,
respectively, for 2002. Includes $11,000, $9,283, $9,382 and $7,142 in
ESOP contributions for Messrs. Mendez, Buzzo, Lilly and Schumacher,
respectively, for 2002. Includes $11,000, $6,529, $6,665 and $5,010 in
401(k) deferrals for Messrs. Mendez, Buzzo, Lilly and Schumacher,
respectively, for 2002. Includes $5,616, $9,793, $6,665 and $5,010 in
Wrap Plan deferrals for Messrs. Mendez,
12
Buzzo, Lilly and Schumacher, respectively, for 2002. Includes $13,800,
$4,000, $4,043 and $3,078 in Wrap Plan contributions for Messrs.
Mendez, Buzzo, Lilly and Schumacher, respectively, for 2002. Includes
$2,754, $2,801, $1,022 and $2,049 in premium cost of Executive Life
Insurance premiums for Messrs. Mendez, Buzzo, Lilly and Schumacher,
respectively, for 2002.
STOCK OPTIONS
In 1999, the Company instituted a Stock Option Plan to encourage and
facilitate investment in the Common Stock of the Company by key executives and
to assist in the long-term retention of service by those executives. The Plan
covers key executives as determined by the Company's Board of Directors from
time to time. Options under the Plan were granted in the form of non-statutory
stock options with the aggregate number of shares of common stock available for
grant under the Plan set at 302,500 shares. Total options granted under the Plan
at December 31, 2002 represent the right to acquire an aggregate of 289,502
shares. Under the Plan, an optionee is deemed to have been granted options in
five annual installments on January 1 of each year beginning January 1, 1999 and
continuing through 2003. All stock options granted pursuant to the Plan vest
ratably on the first through the seventh anniversary dates of the deemed grant
date. The option price of each stock option is equal to the fair market value of
the Company's Common Stock on the date of each deemed grant during the five-year
grant period. Vested stock options granted pursuant to the Plan are exercisable
for a period of five years after the date of the grantee's retirement (provided
retirement occurs at or after age 62), disability, or death. If employment is
terminated other than by retirement at or after age 62, disability, or death,
vested options must be exercised within 90 days after the effective date of
termination. Any option not exercised within such period will be deemed
cancelled.
In the event of a change of control or upon dissolution of the
Corporation, the stock options granted under the Plan continue to vest and are
exercisable in accordance with the terms of the original grant. Change of
control provisions further provide that any optionee who is terminated without
cause by the Corporation, its successor or affiliate during the 12 months
preceding, or at any time following a change of control, and any participant who
remains employed by the Corporation or any affiliate during the 90-day period
following a change of control and thereafter resigns, shall continue to receive
grants on the deemed grant dates and vest as if the optionee continued to be
employed, and optionee, or his estate, shall be entitled to exercise such
options within five years after death or attainment of age 62, whichever first
occurs.
Individual Grants in 2002
------------------------------------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration Grant Date
Name Granted (1) Fiscal Year ($/Sh) (1) Dates (2) Present Value (3)
-------------------------------------------------------------------------------------------------------------------
John M. Mendez 12,826 18.76% 27.12 03/01/22 $93,758
Robert L. Buzzo 6,878 10.06% 27.12 04/01/17 $50,278
E. Stephen Lilly 6,864 10.04% 27.12 07/01/25 $50,176
Robert L. Schumacher 8,424 12.32% 27.12 04/01/18 $61,579
19 Optionees
(including the 4
listed above) 68,351 100.00% 27.12 From 05/01/10 $499,646
To 05/01/43
-------------------------------------------------------------------------------------------------------------------
(1) Plan participants may use previously owned shares to pay for an
option's exercise price. Additionally, plan participants may have the
Company withhold their shares due upon exercise of an option to satisfy
their required tax withholding obligations.
(2) Options expire 5 years after the executive's retirement date, death or
disability. In the event of termination other than retirement, death or
disability, options must be exercised within 90 days of effective date
of termination. If not exercised within that period, options are deemed
cancelled. For purposes of this table, retirement age is assumed to
13
be age 62. All executive options vest ratably over the seven year
period following the date of deemed grant as described above.
(3) The grant date present value of options was determined using the
Black-Scholes model with the following assumptions: risk-free interest
rate of 5.15%, dividend yield of 3.20%, expected volatility of the
market price of the Company's common stock of 24.5%, and average
anticipated time to exercise of 13.77 years.
OPTION EXERCISES IN LAST FISCAL YEAR
The following table sets forth certain information concerning exercises
of stock options by the executive officers listed in the Summary Compensation
Table during the fiscal year ended December 31, 2002 and options held at
December 31, 2002.
OPTION EXERCISES IN LAST FISCAL YEAR
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT YEAR END OPTIONS AT YEAR END (1)
ACQUIRED ON VALUE ----------------------------- ---------------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------------------------------------------------------------------------- ---------------------------------------
John M. Mendez - - - 51,304 - $527,662
Robert L. Buzzo - - - 27,512 - $282,961
E. Stephen Lilly - - - 27,457 - $282,394
Robert L. Schumacher - - - 33,696 - $346,564
(1) Represents the market value per share of Common Stock at fiscal
year-end based on its closing price of $30.76 at December 31, 2002,
minus the exercise price per share of the options outstanding times the
number of shares of Common Stock represented by such options.
WRAP PLAN
The Corporation maintains a non-qualified Supplemental 401(k) Plan
("Plan") for the purpose of providing deferred compensation which cannot be
accumulated under the Basic Plan provisions above because of deferral and
covered compensation limitations on tax-qualified pension plan benefits. The
Company makes a non-qualified matching credit on employee contributions at the
rate established in the 401(k) Plan (100% in 2002) of up to 6% of compensation
deferred and also makes contributions in lieu of basic plan ESOP contributions
for compensation in excess of the $200,000 compensation limit. Contributions
under this Plan in 2002 for the covered persons are included in the Summary
Compensation Table and are as follows: Mendez -- $13,800; Buzzo -- $4,000; Lilly
-- $4,043; and Schumacher -- $3,078.
EXECUTIVE RETENTION PLAN
In 1999, the Company established an Executive Retention Plan for key
members of senior management, including the individuals named in the Summary
Compensation Table. This Plan provides for a benefit at normal retirement (age
65) targeted at 15% of final compensation projected at an assumed 3% salary
progression rate. Benefits under the Plan become payable at age 62. Actual
benefits payable under the Retention Plan are dependent on an indexed retirement
benefit formula
14
that accrues benefits equal to the aggregate after-tax income of associated life
insurance contracts less the Company's tax-effected cost of funds for that plan
year. Benefits under the Plan are dependent on the performance of the insurance
contracts and are not guaranteed by the Company.
In connection with the Executive Retention Plan, the Company has also
entered into Life Insurance Endorsement Method Split Dollar Agreements (the
"Agreements") with the executives covered under the Retention Plan. Under the
Agreements, the Company shares 80% of death benefits (after recovery of cash
surrender value) with the designated beneficiaries of the executives under life
insurance contracts referenced in the Retention Plan. The Company as owner of
the policies retains a 20% interest in life proceeds and a 100% interest in the
cash surrender value of the policies.
The Retention Plan also contains provisions for change of control, as
defined, which allow the executives to retain benefits under the Plan in the
event of a termination of service, other than for cause, during the twelve
months prior to a change in control or anytime thereafter, unless the executive
voluntarily terminates his employment within 90 days following the change in
control.
Because the Retention Plan was designed to retain the future services
of key executives, no benefits are payable under the Plan in the event of
voluntary or involuntary termination prior to retirement age of 62.
DIRECTORS' SUPPLEMENTAL RETIREMENT PLAN
In 2001, the Company established a Directors' Supplemental Retirement
Plan for its non-employee Directors. This Plan provides for a benefit upon
retirement from service on the Board at specified ages depending upon length of
service or death. Benefits under the Plan become payable at age 70, 75 and 78
depending upon the individual director's age and original date of election to
the Board. Actual benefits payable under the Plan are dependent on an indexed
retirement benefit formula that accrues benefits equal to the aggregate
after-tax income of associated life insurance contracts less the Company's
tax-effected cost of funds for that plan year. Benefits under the Plan are
dependent on the performance of the insurance contracts and are not guaranteed
by the Company.
In connection with the Directors' Supplemental Retirement Plan, the
Company has also entered into Life Insurance Endorsement Method Split Dollar
Agreements (the "Agreements") with certain directors covered under the Plan.
Under the Agreements, the Company shares 80% of death benefits (after recovery
of cash surrender value) with the designated beneficiaries of the executives
under life insurance contracts referenced in the Retention Plan. The Company as
owner of the policies retains a 20% interest in life proceeds and a 100%
interest in the cash surrender value of the policies.
The Plan also contains provisions for change of control, as defined,
which allow the Directors to retain benefits under the Plan in the event of a
termination of service, other than for cause, during the twelve months prior to
a change in control or anytime thereafter, unless the Director voluntarily
terminates his service within 90 days following the change in control.
Because the Plan was designed to retain the future services of
Directors, no benefits are payable under the Plan in the event of voluntary or
involuntary termination prior to retirement age as defined in the Plan document.
COMPARATIVE PERFORMANCE OF THE COMPANY
The following chart was compiled by SNL Securities, LC and compares
cumulative total shareholder return on the Corporation's Common Stock for the
five-year period ended December 31, 2002 with cumulative total shareholder
return of: (1) The Standard & Poor's 500 market index ("S&P 500"); and 2) a
group of 21 Peer Bank Holding Companies (Asset Size & Regional Peer Group).
15
[GRAPHIC OMITTED]
The graph assumes an initial investment of $100 on December 31, 1997 in
the Corporation's common stock and each of the comparative investments with
dividends from each of the investments reinvested at year-end in additional
shares of stock at the then current market value.
PERIOD ENDING
-------------------------------------------------------------------------
INDEX 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
----------------------------------------------------------------------------------------------------------------------
First Community Bancshares, Inc. 100.00 99.03 80.92 83.35 143.72 170.51
S&P 500 100.00 128.55 155.60 141.42 124.63 96.95
Asset Size & Regional Peer Group* 100.00 86.33 70.30 63.45 78.43 108.10
*The Asset Size & Regional Peer Group consists of banks that are traded on the
NASDAQ, pink sheet, and bulletin board exchanges, have total assets between $1B
and $5B, and are in the Southeast region.
2. RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
Stockholders are being asked to ratify the selection of Ernst & Young
LLP, Charleston, West Virginia, as independent auditors of the Corporation and
its subsidiaries for the fiscal year ending December 31, 2003. Ernst & Young
served as independent auditors for the Corporation for the fiscal year ended
December 31, 2002. Ernst & Young has no relationship with the Corporation or its
subsidiaries except in its capacity as proposed Independent Auditor. In
connection with its audit of the Corporation's financial statements for the year
ending December 31, 2003, Ernst & Young will review the
16
Corporation's annual report to stockholders and its filings with the Securities
and Exchange Commission and will conduct reviews of quarterly reports to
stockholders.
The Audit Committee of the Board of Directors has recommended to the
Board of Directors that Ernst & Young be appointed as independent auditors for
the year ending December 31, 2003. The Board of Directors has made that
appointment and recommends that the stockholders ratify the selection of Ernst &
Young as independent auditors for the ensuing year.
A representative of Ernst & Young is expected to be present at the
Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF ERNST & YOUNG
AS THE CORPORATION'S INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2003.
FEES FOR SERVICES RENDERED BY PRINCIPAL ACCOUNTANT
Fees for professional services provided by Ernst & Young LLP, the
Corporation's independent auditor and principal accountant, for the respective
fiscal years ended December 31 are set forth below:
2002 2001
--------- ---------
Audit Fees $ 198,800 $ 162,600
Audit-Related Fees $ 7,100 $ 1,200
All Other Fees - -
Tax Fees - -
Fees for audit services include fees associated with the annual audit,
the reviews of the Corporation's quarterly reports on Forms 10-Q and annual
report on Form 10-K, review of other documents filed with the SEC and required
statutory audits. Audit related fees primarily include fees paid for certain
accounting consultations. As indicated above, no fees were paid related to tax
or any other services.
OTHER MATTERS
All properly executed proxies received by the Corporation will be voted
at the Annual Meeting in accordance with the specifications contained thereon.
The Board of Directors knows of no other matter that may properly come before
the Annual Meeting for action. However, if any other matter does properly come
before the Annual Meeting, the persons named in the proxy materials enclosed
will vote in accordance with their judgment upon such matter.
ANNUAL REPORTS
A copy of the Corporation's Annual Report to Stockholders for the year
ended December 31, 2002 accompanies this Proxy Statement. Such annual report is
not part of the proxy solicitation materials.
Upon receipt of a written request, the Corporation will furnish to any
stockholder without charge a copy of the Corporation's Annual Report on Form
10-K for fiscal 2002 required to be filed under the Exchange Act. Such written
requests should be directed to the Chief Financial Officer, First Community
Bancshares, Inc., P. O. Box 989, One Community Place, Bluefield Virginia 24605.
The Form 10-K is not part of the proxy solicitation materials.
17
STOCKHOLDERS' PROPOSALS
If any stockholder intends to include a proposal in the Corporation's
proxy statement for the 2004 Annual Meeting, such proposal must be received by
the Corporation at its principal executive offices on or before November 22,
2003. Otherwise, such proposal will not be considered for inclusion in the
Corporation's Proxy Statement for such meeting.
You are urged to properly complete, execute and return the enclosed
form of proxy or vote via the Internet or toll free number provided elsewhere in
the proxy material.
By Order of the Board of Directors
/s/ Robert L. Buzzo
Robert L. Buzzo, Secretary to the Board
March 20, 2003
18
APPENDIX A
FIRST COMMUNITY BANCSHARES, INC.
AUDIT COMMITTEE
CHARTER
The Board of Directors of First Community Bancshares, Inc. (the
"Company") has constituted and established an Audit Committee (the "Committee")
with authority, responsibility, and specific duties as described in this Audit
Committee Charter.
A. COMPOSITION
The Committee shall consist of three or more directors, each of whom is
"independent" as such term is defined in the Sarbanes-Oxley Act of 2002
(the "Act") and regulations promulgated thereunder and under the rules
of the NASDAQ National Market.
Each director shall be free from any relationship that, in the opinion
of the Board of Directors, as evidenced by its annual selection of such
Committee members, would interfere with the exercise of independent
judgment as a Committee member. Each Committee member shall be able to
read and understand financial statements (including the company's
balance sheet, income statement and cash flow statement).
B. MISSION STATEMENT AND PRINCIPAL FUNCTIONS
The Committee shall have access to all records of the Company and shall
have and may exercise such powers as are appropriate to its purpose.
The Committee shall perform the following functions:
(1) Understand the accounting policies used by the Company for
financial reporting and tax purposes and approve their
application; it shall also consider any significant changes in
accounting policies that are proposed by management or
required by regulatory or professional authorities.
(2) Review the Company's audited financial statements and related
footnotes and the "Management's Discussion and Analysis"
portion of the annual report on Form 10-K prior to the filing
of such report, and recommend to the Board of Directors
whether such financial statements shall be incorporated by
reference in the Company's annual report on Form 10-K, based
upon the Committee's review and discussions with its
independent public accounting firm.
(3) Review the Company's unaudited financial statements and
related footnotes and the "Management Discussion and Analysis"
portion of the Company's Form 10-Q for each interim quarter
and ensure that the independent public accounting firm also
reviews the Company's interim financial statements before the
Company files its quarterly report on Form 10-Q with the
Securities and Exchange Commission (the "SEC".)
(4) Study the format and timeliness of financial reports presented
to the public or used internally and, when indicated,
recommend changes for appropriate consideration by management.
(5) Meet with the Company's legal counsel to review legal matters
that may have a significant impact on the Company or its
financial reports.
19
(6) Ensure that management has been diligent and prudent in
establishing accounting provisions for probable losses or
doubtful values and in making appropriate disclosures of
significant financial conditions or events.
(7) Review press releases submitted by management in connection
with the release of quarterly, annual, or special financial
statements. In respect thereto, recommend to the Chairman of
the Board any changes that appear necessary to conform
releases with appropriate professional practice.
(8) Review and reassess the adequacy of this Charter annually.
INDEPENDENT ACCOUNTANTS:
(9) Be directly responsible for the appointment and approval,
compensation and oversight of the audit work of an independent
public accounting firm employed for the purpose of preparing
or issuing an audit report with respect to the Company; such
independent public accounting firm shall be duly registered
with the Public Accounting Oversight Board following its
establishment (all references herein to a registered public
accounting firm shall mean an independent public accounting
firm prior to the establishment of the Public Accounting
Oversight Board and a registered public accounting firm
following the establishment of the Public Accounting Oversight
Board); and such registered public accounting firm shall be
instructed to report directly to the Committee.
(10) Approve in advance any non-audit service permitted by the Act,
including tax services, that its registered public accounting
firm renders to the Company, unless such prior approval may be
waived because of permitted exceptions under the Act.
(11) To the extent required by applicable regulations, disclose in
periodic reports filed by the Company approval by the
Committee of allowable non-audit services to be performed for
the Company by the registered public accounting firm
performing the Company's audit.
(12) Delegate to one or more members of the Committee the authority
to grant pre-approvals for auditing and allowable non-auditing
services, which decision shall be presented to the full
Committee at its next scheduled meeting for ratification.
(13) Receive a timely report from its registered public accounting
firm performing the audit of the Company, which details: (1)
all critical accounting policies and practices to be used in
the audit; (2) all alternate treatment of financial
information within generally accepted accounting principles
that have been discussed with management officials of the
Company, ramifications of the use of such alternative
disclosure and the treatment preferred by the registered
public accounting firm; and (3) other material written
communications between the registered public accounting firm
and the management of the Company, including, but not limited
to, any management letter or scheduled or unadjusted
differences.
(14) Ensure that the registered public accounting firm submits to
the Committee written disclosures and the letter from the
registered public accounting firm required by Independence
Standards Board Standard No. 1 [Independence Discussions with
Audit Committees], and discuss with the registered public
accounting firm's their independence.
(15) Discuss with the registered public accounting firm the matters
required to be discussed by SAS 61 [Communication with Audit
Committees] and SAS 90 [Audit Committee Communications].
(16) Engage independent counsel and other advisers, as the
Committee may determine in its sole discretion to be
necessary, to carry out the Committee's duties.
20
(17) Submit to the Chief Financial Officer of the Company both an
annual budget and invoices to fund appropriate compensation to
the registered public accounting firm employed by the Company
for the purpose of rendering or issuing an audit report and
for compensation of others employed by the Committee.
(18) Obtain from the registered public accounting firm, at least
annually, a formal written statement delineating all
relationships between the registered public accounting firm
and the Company, and at least annually discuss with the
registered public accounting firm any relationship or services
which may impact the registered public accounting firm's
objectivity or independence, and take appropriate actions to
ensure such independence.
INTERNAL AUDIT DEPARTMENT:
(19) Cause to be maintained an appropriate internal audit program
covering the Company and all its subsidiaries (each, a
"Subsidiary") by internal auditors who report to the Committee
and the Board of Directors.
(20) Review and approve the audit plan and budget of the Internal
Audit Department, which may be established for any Subsidiary,
which shall report at least annually to the Committee
regarding the staffing plans, financial budget and audit
schedules and the adequacy thereof.
(21) Make the determination in regard to the selection of and/or
the dismissal of the Director of Internal Audit.
(22) Review the scope and coordination efforts of the joint
internal/external audit program with both internal auditors
and the registered public accounting firm.
(23) Review reports of any material defalcations and other
reportable incidents related to the financial statements or
financial reporting of each Subsidiary and supervise and
direct any special projects or investigations considered
necessary by the Committee.
(24) Review reports of internal auditors and examinations made by
regulatory agencies and management's response to them,
evaluate the reports in regard to control and/or compliance
implications and determine whether appropriate corrective
action has been implemented.
(25) Establish procedures for the receipt, retention and treatment
of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters.
REGULATORY COMPLIANCE:
(26) Cause to be maintained an appropriate regulatory compliance
program covering the Company and its Subsidiaries to aid
compliance with the laws and regulations applicable to
financial institutions.
(27) Review reports of the Director of Auditing covering the scope
and adequacy of the compliance program, the degree of
compliance and cooperation, and the implementation of
corrective actions (if necessary or appropriate).
(28) To the extent applicable, receive reports on a Subsidiary's
compliance with Section 112 of the Federal Deposit Insurance
Corporation Improvement Act and review the basis for the
reports issued under the rule with management, the Internal
Audit Department and the registered public accounting firm.
21
INTERNAL CONTROL:
(29) Review periodically the scope and implications of a
Subsidiary's internal financial procedures and consider their
adequacy.
(30) Maintain direct access to the staff of each Subsidiary. If
useful, require that studies be initiated on subjects of
special interest to the Committee.
(31) Review the comments on internal control submitted by the
internal auditors and the registered public accounting firm to
ensure that appropriate suggestions for improvement are
promptly considered for insertion into a Subsidiary's internal
financial procedure.
(32) Establish procedures for the confidential, anonymous
submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
REGULATORY EXAMINERS
(33) Meet with representatives of the applicable regulatory
examiners of the institution and discuss matters relating to
their review and supervision of the organization.
(34) Ensure management has taken appropriate corrective action
regarding any significant regulatory matters reported by the
examiners.
SPECIAL DUTIES:
(35) Make special studies of matters related to the financial
operations of the Company or its Subsidiaries or to
allegations of managerial misconduct by its executives.
C. MEETINGS
Meetings of the Committee will be held at least quarterly and such
other times as shall be required by the Chairman of the Board, or by a
majority of the members of the Committee. All meetings of the Committee
shall be held pursuant to the Bylaws of the Company with regard to
notice and waiver thereof. Written minutes pertaining to each meeting
shall be filed with the Secretary and an oral report shall be presented
by the Committee at each Board meeting.
At the invitation of the Chairman of the Committee, the meetings shall
be attended by the Chief Executive Officer, the Chief Financial
Officer, the representatives of the registered public accounting firm,
and such other persons whose attendance is appropriate to the matters
under consideration.
Amended by Committee
as of March 18, 2003
Approved by Board
as of March 18, 2003
22
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF FIRST COMMUNITY BANCSHARES, INC.
ANNUAL MEETING OF STOCKHOLDERS
April 22, 2003
3:00 local time
To The Stockholders of First Community Bancshares, Inc.:
The ANNUAL MEETING of Stockholders of First Community Bancshares, Inc. will
be held at Fincastle Country Club, Bluefield, Virginia, at 3:00 p.m. local time
on April 22, 2003, for the purpose of considering and voting upon the following
items as more fully discussed herein.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR
VOTE VIA THE INTERNET OR BY TELEPHONE.
(Continued, and to be marked, dated and signed, on the other side)
FOLD AND DETACH HERE
-------------------------------------------------------------------------------
FIRST COMMUNITY BANCSHARES, INC.-- ANNUAL MEETING, APRIL 22, 2003
YOUR VOTE IS IMPORTANT!
PLEASE VOTE
PLEASE SEE REVERSE SIDE FOR VOTING INSTRUCTIONS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
PLEASE MARK YOUR WITH- FOR ALL
VOTES AS INDICATED [ X ] FOR HOLD EXCEPT
IN THIS EXAMPLE
1. Election of directors to serve as [ ] [ ] [ ]
members of the Board of Directors,
Class of 2006.
(01) I. NORRIS KANTOR (02) A. A. MODENA
(03) WILLIAM P. STAFFORD, II
INSTRUCTION:TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), MARK "FOR ALL
EXCEPT" AND WRITE THAT NOMINEE(S) NAME(S) IN THE SPACE PROVIDED BELOW.
---------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Ratification of the selection of Ernst & Young LLP, [ ] [ ] [ ]
Charleston, West Virginia, as independent audi-
tors for the year ending December 31, 2003.
3. Transacting such other business as may properly come before the meet-
ing, or any adjournment thereof.
Only stockholders of record at the close of business on March 5, 2003 are
entitled to notice of and to vote at such meeting or at any adjournment there-
of.
IF NO INSTRUCTIONS ARE SPECIFIED ABOVE, THIS PROXY WILL BE VOTED "FOR" EACH OF
THE PROPOSALS LISTED.
Mark here if you plan to attend the meeting [ ]
Mark here for address change and note change [ ]
Please be sure to sign and date Date ---------------------
this Proxy in the box below.
---------------------------- -----------------------------------
Stockholder sign above Co-holder (if any) sign above
PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS CARD. When signing as an
attorney, executor, administrator, trustee or guardian, please give full title.
If a corporation or partnership, write in the full corporate or partnership name
and have the President or other authorized officer sign. If shares are held
jointly, each holder should sign, but only one signature is required.
x x x IF YOU WISH TO VOTE BY TELEPHONE OR INTERNET,
PLEASE READ THE INSTRUCTIONS BELOW x x x
--------------------------------------------------------------------------------
FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
INSTRUCTIONS FOR VOTING YOUR PROXY
Stockholders of record have three alternative ways of voting their proxies:
1. By Mail (traditional method); or
2. By Telephone (using a Touch-Tone Phone); or
3. By Internet
Your telephone or Internet vote authorizes the named proxies, Michael J. Earle
and Jeff Farmer, or either of them, to vote your shares in the same manner as if
you marked, signed, dated and returned your proxy card. Please note all votes
cast via the telephone or internet must be cast prior to 12 midnight, April 21,
2003.
VOTE BY TELEPHONE VOTE BY INTERNET
It's fast, convenient, and immediate! It's fast, convenient, and
Call Toll-Free on a Touch-Tone Phone your vote is immediately
1-888-216-1279. confirmed and posted.
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement and Proxy Card. Statement and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-888-216-1279. https://www.proxyvotenow.com/fcb
3. Enter your 9 digit Control Number 3. Enter your 9 digit Control Number
located on your Proxy Card below. located on your Proxy Card below.
4. Follow the recorded instructions. 4. Follow the recorded instructions.
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-888-216-1279 anytime! Go to https://www.proxyvotenow.com/fcb
FOR TELEPHONE/
INTERNET VOTING:
CONTROL NUMBER
IT IS NOT NECESSARY TO RETURN YOUR PROXY CARD IF YOU ARE VOTING
BY TELEPHONE OR INTERNET
PLEASE NOTE THAT THE LAST VOTE RECEIVED, WHETHER BY TELEPHONE,
INTERNET OR BY MAIL, WILL BE THE VOTE COUNTED.
PLEASE MARK VOTES REVOCABLE PROXY
[ X ] AS IN THIS EXAMPLE FIRST COMMUNITY BANCSHARES,INC.
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Michael J. Earle and Jeff
Farmer, or either of them, attorney and proxy with full power of substitution,
to represent the undersigned at the Annual Meeting of Stockholders of First
Community Bancshares, Inc.(the "Corporation") to be held on Tuesday, April 22,
2003, at the Fincastle Country Club, Double Gates, Bluefield, Virginia, at 3:00
p.m. local time, and any adjournments thereof, with all power then possessed by
the undersigned, and to vote, at that meeting or any adjournment thereof, all
shares which the undersigned would be entitled to vote if personally present.
With- For All
For Hold Except
1. The election of three directors - [ ] [ ] [ ]
Class of 2006.
01 I. NORRIS KANTOR
02 A. A. MODENA
03 WILLIAM P. STAFFORD,II
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. Ratification of the selection of Ernst & [ ] [ ] [ ]
Young LLP, Charleston, West Virginia, as
independent auditors for the year ending
December 31, 2003.
3. To vote upon such other business as may properly come before
this meeting.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED, IF AUTHORITY IS
NOT WITHHELD OR IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR ITEMS 1
AND 2 ABOVE.
PLEASE CHECK BOX IF YOU PLAN TO
ATTEND THE STOCKHOLDER'S MEETING ------------------------- [ ]
ON APRIL 22, 2003.
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
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DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
FIRST COMMUNITY BANCSHARES, INC.
ONE COMMUNITY PLACE
BLUEFIELD, VIRGINIA 24605
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In lieu of using this proxy card, you may also vote upon the items set
forth above by entering your voting instructions by telephone at 1-888-216-1279
or on the world wide web at (https//www.proxyvotenow.com/fcb) until 11:59 p.m.
eastern daylight time on April 21, 2003. If you wish to use this proxy card,
please sign your name(s) exactly as shown imprinted hereon. If more than one
name appears as part of registration name, all names must sign. If acting in
executor, trustee or other fiduciary capacity, please sign as such.
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PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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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