American
National Bankshares Inc.
628
Main
Street
Danville,
Virginia 24541
Notice
of
Annual
Meeting,
Proxy
Statement and
2006
Annual Report on Form 10-K
Annual
Meeting of Shareholders
To
Be
Held
April
24, 2007
American
National Bankshares Inc.
628
Main Street
Danville,
Virginia 24541
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
be held April 24, 2007
Notice
is
hereby given that the Annual Meeting of Shareholders of American National
Bankshares Inc. (the “Corporation”) will be held as follows:
Place: The
Wednesday Club
1002
Main
Street
Danville,
Virginia 24541
Date: April
24, 2007
Time: 11:30
a.m.
The
Annual Meeting is being held for the following purposes:
|
1.
|
To
elect four (4) Directors of the Corporation to serve for a three-year
term
as Class II Directors;
|
|
2.
|
To
elect one (1) Director of the Corporation to serve for a one-year
term as
a Class III Director; and
|
|
3.
|
To
transact any other business that may properly come before the meeting
or
any adjournment thereof.
|
Only
shareholders at the close of business on March 7, 2007 are entitled to notice
of
and to vote at the Annual Meeting.
It
is
important that your shares are represented at the meeting. Accordingly, please
sign, date, and mail the enclosed proxy in the enclosed postage-paid envelope,
whether or not you plan to attend the meeting. If you do attend the Annual
Meeting, you may revoke your proxy and vote your shares in person.
By
Order of the Board of
Directors
Neal
A.
Petrovich
Secretary
Danville,
Virginia
March
19,
2007
American
National Bankshares Inc.
_______________
PROXY
STATEMENT
_______________
ANNUAL
MEETING OF SHAREHOLDERS
APRIL
24, 2007
INTRODUCTION
This
Proxy Statement is furnished in conjunction with the solicitation by the Board
of Directors of American National Bankshares Inc. (the “Corporation”) of the
accompanying proxy to be used at the Annual Meeting of Shareholders of the
Corporation (the “Annual Meeting”) and at any adjournments thereof. The meeting
will be held on Tuesday, April 24, 2007, 11:30 a.m., at The Wednesday Club,
1002
Main Street, Danville, Virginia 24541, for the purposes set forth below and
in
the Notice of Annual Meeting of Shareholders. The approximate mailing date
of
this Proxy Statement and the enclosed proxy is March 19, 2007.
Voting
Rights of Shareholders
Only
shareholders of record at the close of business on March 7, 2007 are entitled
to
notice of and to vote at the Annual Meeting or any adjournment thereof. As
of
the close of business on March 7, 2007, there were 6,160,223 shares of the
Corporation’s common stock outstanding and entitled to vote at the Annual
Meeting. The Corporation has no other class of stock outstanding. Each share
of
common stock entitles the record holder thereof to one vote upon each matter
to
be voted upon at the Annual Meeting.
A
majority of the votes entitled to be cast, represented in person or by proxy,
will constitute a quorum for the transaction of business. Shares
for which the holder has elected to abstain or to withhold the proxies’
authority to vote on a matter, and broker non-votes, will count toward a quorum,
but will not be included in determining the number of votes cast with respect
to
such matter.
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 or her proxy at any time before it is exercised
by filing a written notice with the Corporation 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.
Solicitation
of Proxies
The
cost
of solicitation of proxies will be borne by the Corporation. 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 Corporation or its banking
subsidiary, American National Bank and Trust Company (the “Bank”), acting on a
part-time basis and for no additional compensation.
1
PROPOSAL
ONE - ELECTION OF DIRECTORS
The
Corporation’s Board of Directors currently consists of eleven persons. The Board
is divided into three classes (I, II and III), each class to be nearly equal
in
number as possible. The term of office for the Class II Directors will expire
at
the Annual Meeting and the nominees to serve as Class II Directors are set
forth
below. Each of the Class II nominees currently serves as a Director of the
Corporation. If elected, the Class II nominees will serve until the 2010 Annual
Meeting of Shareholders, and until their respective successors are duly elected
and qualified. The Board has also nominated E. Budge Kent, Jr., a current
Director of the Corporation, to serve as a Class III Director for a one-year
term until the 2008 Annual Meeting.
Pursuant
to the Agreement and Plan of Reorganization, dated as of October 18, 2005,
by
and between the Corporation and Community First Financial Corporation
(“Community First”), one member of the Board of Directors for Community First
was named to the Corporation’s Board of Directors. After consummation of the
merger in April 2006, the Corporation’s Board increased in size to eleven
persons and Dr. Frank C. Crist, Jr. was named as a Director. Dr. Crist is
President of Brady & Crist Dentists, Inc.
The
persons named in the accompanying 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 that
management does not anticipate, proxies will be voted for such other persons
as
the Board of Directors may designate.
The
Board of Directors recommends the nominees, as set forth below, for election.
The Board of Directors recommends that shareholders vote FOR these
nominees.
The
election of each nominee requires the affirmative vote of a plurality of the
shares of the Corporation’s common stock cast in the election of
Directors.
The
names
of the nominees for election and the other continuing members of the Board
of
Directors, their principal occupations, their age as of December 31, 2006,
and
certain other information with respect to such persons are as
follows:
|
Name
|
Principal
Occupation
|
Age
|
Director
Since
|
|
Nominees
for Directors of Class II to continue in office until
2010
|
|||
|
Fred
A. Blair
|
President
of Blair Construction, Inc.,
Gretna,
VA, general contractor
|
60
|
1992
|
|
Dr.
Frank C. Crist, Jr.
|
President
of Brady & Crist Dentists, Inc., Lynchburg, VA,
dentist
|
61
|
2006
|
|
Fred
B. Leggett, Jr.
|
Retired
Chairman and Chief Executive Officer,
|
69
|
1994
|
|
Leggett
Stores, Danville, VA, retail department stores
|
|||
|
Claude
B. Owen, Jr.
|
Retired
Chairman and Chief Executive Officer,
|
61
|
1984
|
|
DIMON
Incorporated, Danville, VA, leaf tobacco dealer
|
|||
2
|
Name
|
Principal
Occupation
|
Age
|
Director
Since
|
|
Nominee
for Director of Class III to continue in office until
2008
|
|||
|
E.
Budge Kent, Jr. *
|
Senior
Adviser to the Bank since January 2006; prior thereto, Executive
Vice
President of the Corporation and Executive Vice President and Chief
Trust and Investment Officer of the Bank
|
67
|
1979
|
|
Directors
of Class I to continue in office until 2009
|
|||
|
Ben
J. Davenport, Jr.
|
Chairman,
First Piedmont Corporation, Chatham,
VA, waste management; Chairman, Davenport Energy Inc., Chatham, VA,
fuel
oil distributor
|
64
|
1992
|
|
Michael
P. Haley
|
Adviser
to Fenway Partners, Inc., New York, NY, private equity investments,
since
April 2006; prior thereto, Retired Chairman, MW Manufacturers, Inc.,
Rocky
Mount, VA, window manufacturer, from June, 2005; prior thereto, Chairman
from January 2005 to June 2005; prior thereto, President and Chief
Executive Officer from June 2001 to January 2005
|
56
|
2002
|
|
Franklin
W. Maddux, M.D.
|
Physician;
Chairman and Chief Executive Officer, Gamewood, Inc., Danville, VA,
information technology service; President and Chairman, Maddux Consulting,
Inc., medical consulting; Former President and Chairman, Danville
Urologic
Clinic, healthcare
|
49
|
2002
|
|
Directors
of Class III to continue in office until 2008
|
|||
|
H.
Dan Davis
|
Retired
Executive Vice President of the Corporation and Senior Vice President
of
the Bank; Retired as Consultant to the Corporation and the Bank in
March
2003
|
69
|
1996
|
|
Lester
A. Hudson, Jr., Ph.D.
|
Professor
and Wayland H. Cato Chair of Leadership, McColl School of Business,
Queens
University of Charlotte, Charlotte, NC, since August, 2003; prior
thereto,
Professor of Strategy, Clemson University, Clemson, SC
|
67
|
1984
|
|
Charles
H. Majors *
|
President
and Chief Executive Officer of the Corporation and the
Bank
|
61
|
1981
|
*
Indicates those directors not considered to be independent.
3
Board
Independence
The
Corporation’s Board of Directors has determined that, except for Messrs. Kent
and Majors, each Director is independent within the director independence
standard of the NASDAQ Stock Market, Inc. (“NASDAQ”), as currently in effect,
and within the Corporation’s director independence standards, as established and
monitored by the Corporation’s Corporate Governance and Nominating Committee.
Board
Members Serving on Other Publicly Traded Company Boards of Directors
Certain
of the Corporation’s Directors are also directors of other publicly traded
companies. Mr. Davenport has been a director of Intertape Polymer Group Inc.
since 1994. Mr. Hudson has been a director of American Electric Power Company,
Inc. since 1987. Mr. Haley has been a director of Stanley Furniture Company,
Inc. since 2003, and LifePoint Hospitals, Inc. since 2005.
Board
of Directors and Committees
Directors
are expected to devote sufficient time, energy, and attention to ensure diligent
performance of their duties, including attendance at Board and committee
meetings. The Board of Directors of the Corporation met five times during 2006.
In accordance with the Corporation’s Corporate Governance guidelines, the
independent directors held three executive sessions during 2006. The Chairman
of
the Corporate Governance and Nominating Committee presides at such sessions.
Directors are encouraged to attend shareholders’ meetings, and ten Directors
attended the 2006 Annual Meeting of Shareholders. The Board of Directors of
the
Bank, which consists of all members of the Corporation’s Board, met thirteen
times during 2006.
The
Boards of Directors of the Corporation and the Bank have established various
committees, including the Audit and Compliance Committee, the Corporate
Governance and Nominating Committee, and the Human Resources and Compensation
Committee. All incumbent Directors and Director nominees attended more than
75%
of the aggregate total number of meetings of the Boards of Directors and
committees on which they served in 2006. Information on the above committees
and
the committee members is detailed below:
The
Audit
and Compliance Committee met
four
times in 2006. This committee currently consists of Messrs. Blair, Haley, and
Maddux. Mr. Blair serves as the Chairman. The committee reviews significant
audit, accounting and compliance principles, policies and practices, is directly
responsible for engaging and monitoring the independent auditors of the
Corporation and the Bank, and provides oversight of the internal auditing and
compliance functions. A more detailed description of the functions of this
committee is contained under the heading “Report of the Audit and Compliance
Committee.” All of the members of this committee are considered independent
within the meaning of Securities and Exchange Commission (“SEC”) regulations,
the listing standards of NASDAQ, and the Corporation’s Corporate Governance
Guidelines. Mr. Haley, a member of the committee, is qualified as an audit
committee financial expert within the meaning of SEC regulations and the Board
has determined that he has accounting and related financial management expertise
within the meaning of the listing standards of NASDAQ.
4
The
Corporate
Governance and Nominating
Committee met
four
times in 2006. Current members
of the committee are Messrs. Crist, Maddux, and Owen. Mr. Owen serves as the
Chairman. The committee is responsible for developing and implementing policies
and practices relating to corporate governance, including reviewing and
monitoring implementation of the Corporation’s Corporate Governance Guidelines.
In addition, the committee develops and reviews background information on
candidates for the Board and makes recommendations to the Board regarding such
candidates. The committee also supervises the Board’s annual review of Director
independence and oversees the Board’s performance self-evaluation. All the
members of this committee are considered independent within the meaning of
SEC
regulations, the listing standards of NASDAQ, and the Corporation’s Corporate
Governance Guidelines.
The
Human
Resources and Compensation Committee
met two
times in 2006. The committee currently consists of Messrs. Davenport, Davis,
and
Hudson. Mr. Hudson serves as the Chairman. This committee is responsible for
establishing and approving the compensation of executive officers of the
Corporation. The committee recommends to the independent Directors the
compensation of the Chief Executive Officer and approves all other executive
officers’ compensation and recommends to the Board promotions, Directors’
compensation, and related personnel matters. Refer to the “Compensation
Discussion and Analysis” section of this Proxy Statement for further information
on the duties and responsibilities of this committee. No
member
of the Human Resources and Compensation Committee of the Board of Directors
is a
current officer or employee of the Corporation. All members of this committee
are considered independent within the meaning of SEC regulations, the standards
of NASDAQ, and the Corporation’s Corporate Governance Guidelines.
The
charters of the Audit and Compliance Committee, the Corporate Governance and
Nominating Committee, and the Human Resources and Compensation Committee are
available at the Corporation’s website at www.amnb.com.
For
access to the charters, select the “American National Bankshares Inc.” icon,
then select “Governance Documents.”
Compensation
Committee Interlocks and Insider Participation
No
member
of the Committee or executive officer of the Corporation has a relationship
that
would constitute an interlocking relationship with executive officers or
directors of another entity.
Director
Nominations Process
The
Corporation’s Board of Directors has adopted, as a part of its Corporate
Governance Guidelines, a process related to Director nominations (the
“Nominations Process”). The purpose of the Nominations Process is to describe
the manner by which candidates for possible inclusion in the Corporation’s
recommended slate of Director nominees are selected. The Nominations Process
is
administered by the Corporate Governance and Nominating Committee of the
Board.
The
committee considers candidates for Board membership suggested by its members,
other Board members, management, and shareholders. A shareholder who wishes
to
recommend a prospective nominee for the Board may, at any time, notify the
Corporation’s President and Chief Executive Officer or any member of the
committee in writing with supporting material the shareholder considers
appropriate. The committee will decide whether to recommend to the Board the
nomination of any person nominated by a shareholder pursuant to the provisions
of the Corporation’s bylaws relating to shareholder proposals as described below
under “Shareholder Communications and Proposals.”
Once
the
committee has identified a candidate, it makes an initial determination as
to
whether to conduct a full evaluation of the candidate. The initial determination
is based on information accompanying the recommendation, as well as the
committee members’ knowledge of the candidate, which may be supplemented by
inquiries to the person making such recommendation or others. The preliminary
determination is based primarily on the need for additional board members to
fill vacancies or expand the size of the Board and the likelihood that the
candidate can satisfy the evaluation factors described below. The committee
may
seek additional information about the candidate’s background and experience. The
committee then evaluates the candidate against the criteria in the Corporation’s
Corporate Governance Guidelines, including independence, age, diversity,
availability for time commitment, skills such as an understanding of the
financial services industry, general business knowledge and experience, all
in a
context of an assessment of the perceived needs of the Board at that point
in
time. In connection with this evaluation, the committee determines whether
to
interview the candidate, and if warranted, one or more members of the committee
will conduct such interview. After completing the evaluation, the committee
makes a recommendation to the full Board as to the persons who should be
nominated by the Board, and the Board determines the nominees after considering
the recommendation of the committee.
5
SECURITY
OWNERSHIP
As
of
March 7, 2007, no shareholder beneficially owned 5% or more of the Corporation’s
common stock other than Ambro and Company, the nominee name which American
National Bank and Trust Company uses to register the securities it holds in
a
fiduciary capacity for customers. Ambro and Company beneficially owned 674,037
shares of the Corporation’s common stock, or 10.94% of the outstanding shares,
as of March 7, 2007. Of this amount, 218,470 shares
may be voted by existing co-fiduciaries. The Bank may not vote the remaining
shares, but co-fiduciaries may be qualified for the sole purpose of voting
all
or a portion of these remaining shares at the Annual Meeting. The address of
Ambro and Company is P.O. Box 191, Danville, Virginia 24543.
The
following table sets forth, as of March 7, 2007, the beneficial ownership of
the
Corporation’s common stock by all Directors and nominees for Director, all
executive officers of the Corporation named in the Summary Compensation Table
below and all Directors and executive officers of the Corporation as a
group.
|
Name
of Beneficial Owner
|
Shares
of
Common
Stock
Beneficially
Owned (1)
|
Percent
of
Class
|
|
|
Fred
A. Blair
|
5,237
|
(2)
|
*
|
|
Dr.
Frank C. Crist
|
72,283
|
(2)
|
1.17%
|
|
Ben
J. Davenport, Jr.
|
27,393
|
*
|
|
|
H.
Dan Davis
|
129,514
|
(2)
|
2.10%
|
|
R.
Helm Dobbins
|
15,200
|
(3)
|
*
|
|
Jeffrey
V. Haley
|
27,905
|
(2)
(3)
|
*
|
|
Michael
P. Haley
|
1,065
|
*
|
|
|
Lester
A. Hudson, Jr.
|
9,804
|
*
|
|
|
E.
Budge Kent, Jr.
|
53,020
|
(2)
(3)
|
*
|
|
Fred
B. Leggett, Jr.
|
10,116
|
(2)
|
*
|
|
Charles
H. Majors
|
104,911
|
(2)
(3)
|
1.70%
|
|
Dr.
Franklin W. Maddux
|
2,400
|
(2)
|
*
|
|
Claude
B. Owen, Jr.
|
15,632
|
(2)
|
*
|
|
Neal
A. Petrovich
|
11,700
|
(3)
|
*
|
|
All
Directors and executive officers
as
a group (14 persons)
|
486,180
|
(3)
|
7.89%
|
____________________
*
Represents
less than one percent ownership.
(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) Includes
shares held by affiliated corporations, close relatives and children, and shares
held jointly
with
spouses or as custodians or trustees, as follows: Mr.
Blair, 300 shares; Dr. Crist, 523 shares; Mr. Davis, 40,704 shares; Mr. Jeffrey
Haley, 404 shares; Mr. Kent, 1,540
shares;
Mr. Leggett, 9,268 shares; Mr. Majors, 3,593 shares; Dr. Maddux, 1,100 shares;
and Mr. Owen, 4,200 shares.
(3) Includes
shares that may be acquired pursuant to currently exercisable stock options:
Mr.
Dobbins, 14,000 shares; Mr. Jeffrey Haley, 23,270 shares; Mr. Kent, 16,000;
Mr.
Majors,
70,000
shares;
Mr.
Petrovich, 10,000 shares; all
Directors
and
executive officers as a group, 133,270
shares.
6
COMPENSATION
DISCUSSION AND ANALYSIS
The
Corporation’s Executive Compensation Philosophy
The
Human
Resources and Compensation Committee of the Board of Directors (the “Committee”)
is responsible for establishing and approving the compensation of executive
officers of the Corporation. The Committee considers a variety of factors and
criteria in arriving at its decisions and recommendations for compensation.
The
Committee’s objective is to align the interests of the Corporation’s executive
officers with those of the Corporation and its shareholders. The Committee
believes that increases in earnings per share, dividends, and shareholder’s
equity improve shareholder market value. Accordingly, compensation should be
structured to enhance the profitability of the Corporation and the total return
to the shareholders; therefore, the executive compensation program is designed
to reward achievements that make a positive impact on the profitability of
the
Corporation, thus increasing shareholder value. Executive officer compensation
generally consists of salary, participation in the Bank’s profit sharing,
incentive compensation plans, and benefits. Eligibility for payment under the
Bank’s profit sharing and incentive compensation plans in 2006 was based upon
achievement of a predetermined adjusted earnings per share value, in addition
to
the achievement of specific operational goals within areas under the control
of
each executive.
The
Committee’s policy on the tax deductibility of compensation for the Chief
Executive Officer and other executive officers is to maximize the deductibility,
to the extent possible, while preserving the Corporation’s flexibility to
maintain a competitive compensation program. The Corporation expects all
executive compensation paid or awarded during 2006 to be fully
deductible.
Each
Director who served on the Human Resources and Compensation Committee during
2006 qualifies as a “non-employee director” as such term is defined in Rule
16b-3 promulgated under the Securities Exchange Act of 1934, and is an
“independent director” as such term is defined in NASDAQ Marketplace Rule
4200(a)(15).
Salary
The
base
salary of each executive officer named in the Summary Compensation Table below
(the “named executive officer”) is designed to be competitive with that of the
Corporation’s peer banks. In establishing the base salary for the named
executive officers, the Committee relies on an evaluation of the officers’ level
of responsibility and performance and on comparative information, including
the
Virginia Bankers Association’s Salary Survey of Virginia Banks and the SNL Bank
Compensation Review. In establishing the base salary, other than for the Chief
Executive Officer, the Committee also receives and takes into account the
individual compensation recommendations from the Chief Executive Officer. The
salary of the Chief Executive Officer is approved by the independent members
of
the Board of Directors, upon recommendation of the Committee.
Profit
Sharing Plan
The
Corporation’s profit sharing plan is designed to recognize and reward the
efforts of all full-time eligible employees for their contribution towards
the
attainment of the Corporation’s financial goals. For
2006,
payout under the profit sharing plan was based on the achievement of stated
values of adjusted earnings per share and calculated as a percentage of base
salary. Payout for the named executive officers was based on the same criteria
as that of all other eligible employees. The disbursement of rewards earned
in
2006 under the profit sharing plan was made in the first quarter of 2007. For
2006, adjusted earnings per share equaled basic earnings per share adjusted
for
certain purchase accounting entries resulting from the acquisition of Community
First Financial Corporation.
7
Stock
Option Plan
For
the
last ten years, the Corporation maintained a stock option plan designed to
attract and retain qualified personnel in key positions, provide employees
with
a proprietary interest in the Corporation as an incentive to contribute to
the
success of the Corporation and the Bank and reward employees for outstanding
performance and the attainment of targeted goals. The stock option plan was
approved by shareholders at the April 1997 Annual Meeting and expired December
31, 2006. The plan provided for the grant of incentive stock options intended
to
comply with the requirements of Section 422 of the Internal Revenue Code of
1986
(“incentive stock options”), as well as non-qualified stock options.
The
stock
option plan was administered by a committee of the Board of Directors of the
Corporation comprised of independent Directors. Under the plan, the committee
determined which employees would be granted options, whether such options would
be incentive or non-qualified options, the number of shares subject to each
option, whether such options may be exercised by delivering other shares of
common stock and when such options became exercisable. In general, the per
share
exercise price of an incentive stock option must be at least equal to the fair
market value of a share of common stock on the date the option is
granted.
Stock
options became vested and exercisable in the manner specified by the committee.
Each stock option or portion thereof was exercisable at any time on or after
it
vested until ten years after its date of grant. A review was performed in 2007
of all stock option grants. The review verified that all options were priced
at
or above the closing stock price on the day the option was approved by the
Board
of Directors and granted.
There
were no stock options awarded during 2006, due primarily to changes in
accounting standards for stock options and the impact of those changes on
reported earnings. The committee’s ongoing review of executive compensation will
include a determination as to whether use of stock option plans or other equity
awards is to be recommended.
Incentive
Compensation
The
Corporation’s incentive compensation plan is designed to recognize the officers
of the Corporation (including the named executive officers) whose achievements
have resulted in a positive impact to the profitability of the Corporation.
The
Corporation’s 2006 incentive compensation plan was available to full-time exempt
employees (elected and appointed officers who are not eligible for overtime
and
who are not otherwise on a commission or otherwise specifically excluded from
this plan) who were employed as of December 31, 2006 (and who were not
disqualified by their performance evaluation). Payout under the incentive
compensation plan was based on the achievement of stated values of adjusted
earnings per share and calculated as a percentage of base salary. A percentage
of this calculated potential incentive amount is then earned based upon the
officer’s specific performance goals achieved for 2006.
For
2007,
incentive compensation for the named executive officers will be based on the
financial performance of the Corporation and will no longer include
consideration of completion of individual performance goals. The amount of
incentive compensation will be calculated on a range of four to twelve percent
of the executive’s base salary. Payments to each executive officer will relate
to a specific level of company performance, with a higher level of performance
resulting in a higher amount of incentive compensation earned, based on the
base
salary percentage range set forth above.
8
Deferred
Compensation
The
Board
of Directors of the Bank adopted the Executive Compensation Continuation Plan,
a
non-contributory deferred compensation plan, in 1982. Under the plan, certain
key executives who, in the opinion of the Bank’s Board, are making substantial
contributions to the overall growth and success of the Corporation and the
Bank
and who must be retained in order for the Bank to expand and continue
satisfactory long-term growth are eligible to receive benefits afforded by
the
plan. Under agreements with eligible key executives pursuant to this plan,
if
any such executive dies or retires while employed by the Corporation, such
executive or his designated beneficiary will receive annual payments commencing
at death or retirement and continuing for 10 years.
The
Bank
entered into a deferred compensation agreement on February 22, 1993 with Charles
H. Majors, Chief Executive Officer, which requires an annual payment to Mr.
Majors, or designated beneficiaries, of $50,000 for 10 years, commencing at
his
retirement or death. The amount of this payment is fixed and the funds for
this
payment are not established in an account that allows for additional
contributions or earnings growth.
Retirement
Plan
The
Bank’s retirement plan is a non-contributory defined benefit pension plan which
covers all full-time employees of the Bank who are 21 years of age or older
and
who have had at least one year of service. Advanced funding is accomplished
by
using the actuarial cost method known as the collective aggregate cost method.
As
of
December 31, 2006, the normal retirement benefit formula was 1.3% per year
of
service multiplied by compensation, plus .65% per year of service multiplied
by
compensation in excess of social security covered compensation, with years
of
service limited to 35. At normal retirement, the monthly benefit is calculated
based on any consecutive five-year period that will produce the highest average
rate of basic monthly compensation. Basic monthly compensation includes salary
but excludes incentive and bonus compensation. This is based on a straight
life
annuity assuming full benefit at age 65. Annual compensation at December 31,
2006 was also limited to $220,000 by Internal Revenue Service regulations.
Cash
benefits under the plan generally commence on retirement at age 65, death,
or
termination of employment. Partial vesting of the retirement benefits under
the
plan occurs after three years of service and full vesting occurs after seven
years of service. As of December 31, 2006, the named executive officers have
completed the following years of credited service under the Bank’s retirement
plan: Mr. Majors, 14; Mr. Haley, 10; Mr. Petrovich, 3; and Mr. Dobbins, 4.
401(k)
Employee Savings Plan
The
Bank
sponsors a 401(k) Employee Savings Plan, for which all full-time employees
(age
21 and older) are eligible to participate. The Bank matches 50% of employee
contributions on the first 6% of earned compensation. Perquisites received
by
executive officers, such as an automobile allowance, are not included as earned
compensation. While employee contributions are immediately vested, the Bank
contributions are subject to a stated vesting schedule.
Executive
Severance Agreements
The
Corporation recognizes that, as a publicly held corporation in the financial
services industry, there exists the possibility of a change in the control
of
the Corporation. In order to minimize such uncertainty among executive
management and to promote continuity in the event of a control change
transaction, the Corporation has entered into agreements with each of the named
executive officers.
9
The
terms
of each “change in control” agreement generally reflect provisions used in
current industry practice. The terms of the agreement are only effective upon
a
change in control and for three years thereafter. In general, a “change in
control” is defined as a change in the majority composition of the Board of
Directors over a 24-month period, a change in the ownership of a majority of
the
Corporation’s voting stock, or a sale of a majority of the Corporation’s assets.
The agreement provides that each executive officer’s base salary and profit
sharing and incentive compensation cannot be reduced during such three-year
period.
Each
agreement also provides for the executive officer to receive continued salary
and benefits if his employment is terminated “without cause” (as such term is
defined in the Agreement) during the term of the agreement. If employment is
terminated during the first year after a control change, the Chief Executive
Officer will receive continued salary and benefits for 24 months after such
termination and the other executive officers will receive continued salary
and
benefits until the second anniversary of the change of control. If the
termination of employment occurs more than 12 months after the control change,
the Chief Executive Officer will receive continued salary and benefits until
the
third anniversary of the control change and the other executive officers will
receive continued salary and benefits until the earlier of the first anniversary
of termination of employment or the third anniversary of the control change.
The
agreements also provide for continued salary and benefits if the executive
officer resigns under certain circumstances. Beginning in the fourth month
after
a control change and through the twelfth month after the transaction, each
executive officer may resign for any reason and receive continued salary and
benefits for 24 months (in the case of Mr. Majors) or 12 months (in the case
of
the other executives). After the first anniversary of the control change, an
executive officer may resign and receive continued salary and benefits for
the
same period (but not beyond the third anniversary of the control change) if
his
resignation is on account of a reduction in the executive’s compensation, a
required relocation of his office more than thirty miles from Danville,
Virginia, or a reduction in the duties or title assigned to him as of the first
anniversary of the control change.
Based
upon a hypothetical change in control date of December 31, 2006, the following
table identifies the estimated total change in control termination benefits
for
the named executive officers during the periods following the change in
control.
|
Executive
Officer
|
Base
Salary
|
Bonus
|
Healthcare
and Other Insurance Benefits
|
Change
in
Pension
Value
|
|||||||||
|
Charles
H. Majors
|
$
|
627,692
|
$
|
94,627
|
$
|
13,308
|
$
|
99,724
|
|||||
|
Neal
A. Petrovich
|
258,923
|
39,785
|
12,486
|
12,784
|
|||||||||
|
Jeffrey
V. Haley
|
278,462
|
41,521
|
12,759
|
26,606
|
|||||||||
|
R.
Helm Dobbins
|
249,002
|
39,279
|
12,355
|
26,902
|
|||||||||
The
calculations are based on an assumption that each named executive officer’s
employment would be terminated on December 31, 2006. Such an assumption would
require payment of salary, bonus, and coverage under the Corporation’s
healthcare, other insurance benefits, and pension plans through December 31,
2008. The salary and bonus amounts used in the table are 2006 amounts. The
change in pension value was based on the assumption that the change in values
was equivalent to that reflected in the Summary Compensation Table for 2006.
The
value of healthcare and other insurance benefits is based upon the type of
coverage provided to the executive officer as of December 31, 2006, and valued
at the premiums in effect at that time.
Perquisites
The
Corporation provides the Chief Executive Officer with an automobile and the
cost
of gas and maintenance for the vehicle. Additionally, the Corporation reimburses
him for the estimated amount of personal income tax on his personal use of
the
vehicle. The value of this perquisite is included in the Summary Compensation
Table.
Other
Benefit Plans
Executive
management participates in the Corporation’s benefit plans on the same terms as
other employees. These plans include medical, dental, life, and disability
insurance. The Corporation provides life insurance coverage equal to four times
the employee’s salary for all eligible employees. A cap on this coverage of
$530,000 is dictated by the plan. Coverage in excess of $50,000 is subject
to
taxation based on Internal Revenue Service guidelines.
10
Summary
Compensation Table
The
following table reflects total compensation paid or earned during 2006 for
the
named executive officers.
|
Name
and Principal Position
|
Salary
($)
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
Change
in
Pension
Value
and
Non-qualified
Deferred
Compensation
Earnings
($)
|
|
All
Other
Compensation
($)
|
|
Total
($)
|
|
||||||
|
Charles
H. Majors
President
and Chief Executive Officer
of
the Corporation and the Bank
(Principal
Executive Officer)
|
$
|
313,846
|
$
|
47,313
|
$
|
49,862
|
$
|
24,416
|
$
|
435,438
|
||||||
|
Neal
A. Petrovich
Senior
Vice President of the Corporation;
Executive
Vice President and Chief
Financial
Officer of the Bank
(Principal
Financial Officer)
|
129,462
|
19,492
|
6,392
|
10,603
|
165,949
|
|||||||||||
|
Jeffrey
V. Haley
Senior
Vice President of the Corporation;
Executive
Vice President and Chief
Operating
Officer of the Bank
|
139,231
|
20,761
|
13,303
|
11,073
|
184,367
|
|||||||||||
|
R.
Helm Dobbins
Senior
Vice President of the Corporation;
Executive
Vice President and Chief
Credit
Officer of the Bank
|
124,501
|
19,040
|
13,451
|
10,371
|
167,362
|
The
non-equity incentive plan compensation reflected in the table above includes
earnings under the Corporation’s profit sharing and incentive compensation plans
related to 2006 performance. The earnings under these plans are as follows:
profit sharing, Majors, $12,600; Petrovich, $5,200; Haley, $5,600; and Dobbins,
$5,000; incentive compensation, Majors, $34,713; Petrovich $14,292; Haley,
$15,161; and Dobbins, $14,040.
All
other
compensation includes an automobile allowance with tax gross-ups for commuting
expense for Mr. Majors, company contributions to defined contribution plans,
and
company paid insurance premiums for all named executive officers. None of these
compensation items individually exceeds $10,000 and therefore, are not
identified separately.
Grants
of Plan-Based Awards
The
Grants of Plan-Based Awards table is not presented since there were no stock
or
option awards granted during 2006.
11
Outstanding
Equity Awards at Fiscal Year-End
The
following table reflects the outstanding stock options as of December 31, 2006
for the named executive officers.
|
Option
Awards
|
|||||||
|
Name
|
Number
of Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|||
|
Charles
Majors
|
4,000
|
15.6250
|
|
2/17/2008
|
|||
|
4,000
|
17.1875
|
|
2/17/2008
|
||||
|
2,000
|
18.7500
|
2/17/2008
|
|||||
|
9,000
|
13.6875
|
4/20/2009
|
|||||
|
10,000
|
20.0000
|
12/21/2009
|
|||||
|
10,000
|
19.9500
|
3/19/2012
|
|||||
|
10,000
|
26.2000
|
12/16/2013
|
|||||
|
25,000
|
24.5000
|
12/21/2014
|
|||||
|
Neal
A. Petrovich
|
5,000
|
21.3800
|
6/15/2014
|
||||
|
5,000
|
24.5000
|
12/21/2014
|
|||||
|
Jeffrey
Haley
|
1,000
|
18.7500
|
2/17/2008
|
||||
|
1,000
|
15.6250
|
2/17/2008
|
|||||
|
1,000
|
17.1875
|
2/17/2008
|
|||||
|
4,000
|
13.6875
|
4/20/2009
|
|||||
|
3,000
|
16.5000
|
3/20/2011
|
|||||
|
1,000
|
19.9500
|
3/19/2012
|
|||||
|
3,000
|
26.1000
|
12/17/2012
|
|||||
|
5,000
|
26.2000
|
12/16/2013
|
|||||
|
5,000
|
24.5000
|
12/21/2014
|
|||||
|
R.
Helm Dobbins
|
4,000
|
24.0000
|
6/17/2013
|
||||
|
5,000
|
26.2000
|
12/16/2013
|
|||||
|
5,000
|
24.5000
|
12/21/2014
|
|||||
All
stock
options awarded were issued with a ten year expiration date. The Corporation
has
issued stock options on the same day with different exercise prices. Such
options were issued for an amount equal to or greater than the market price
on
the day of grant. In 1998, stock options were granted on one day to Mr. Majors
and Mr. Haley in three groups, with exercise prices equal to 100% of fair market
value, 110% of fair market value, and 120% of fair market value, respectively.
There were no stock options awarded in 2006. All stock options awarded were
earned, fully vested, and exercisable prior to January 1, 2006; therefore,
the
columns regarding unexercisable and unearned options are omitted from the table.
Because the Corporation has never awarded shares of common stock to the named
executive officers, the columns for stock awards are also omitted from the
table.
12
Option
Exercises and Stock Vested
The
following table reflects stock options exercised and the value realized on
exercise during 2006 for certain of the named executive officers.
|
Option
Awards
|
||||||
| Name |
Number
of Shares
Acquired
on Exercise
|
Value
Realized
on
Exercise
|
||||
|
Charles
H. Majors
|
200
|
$
|
1,780
|
|||
|
Charles
H. Majors
|
1,000
|
9,213
|
||||
|
Charles
H. Majors
|
3,000
|
28,575
|
||||
|
Jeffrey
V. Haley
|
200
|
1,910
|
||||
Because
the Corporation has never awarded shares of common stock to the named executive
officers, the columns regarding stock awards have been omitted from the table.
There were no options exercised by the other two named executive officers during
2006. The value realized on exercise is calculated by multiplying the difference
between the market value on the date of exercise and the option price times
the
number of options exercised.
Pension
Benefits
The
following table reflects the actuarial present value of the named executive
officers’ accumulated benefit under the Bank’s pension plan and the number of
years of service credited under the plan as of December 31, 2006.
|
Name
|
Plan
Name
|
Number
of Years
Credited
Service
(#)
|
|
Present
Value
of
Accumulated
Benefit
($)
|
|
|||
|
Charles
H. Majors
|
Pension
|
14
|
$
|
410,022
|
||||
|
Neal
A. Petrovich
|
Pension
|
3
|
15,717
|
|||||
|
Jeffrey
V. Haley
|
Pension
|
10
|
56,787
|
|||||
|
R.
Helm Dobbins
|
Pension
|
4
|
39,870
|
There
were no payments made from the pension plan to any of the named executive
officers during 2006.
Nonqualified
Deferred Compensation
The
Nonqualified Deferred Compensation Table is not presented since the Corporation
does not offer a deferred compensation plan that requires or allows any named
executive officer to make annual contributions, nor does it have a fund of
monies established for any named executive officer that increases in value
due
to earnings on that fund.
13
Director
Compensation
The
following table reflects the director compensation earned or paid during 2006.
|
Name
|
Fees
Earned
or
Paid in
Cash
|
Total
|
|||||
|
Willie
G. Barker, Jr.
|
$
|
12,000
|
$
|
12,000
|
|||
|
Richard
G Barkhouser
|
6,400
|
6,400
|
|||||
|
Fred
A. Blair
|
16,400
|
16,400
|
|||||
|
Frank
C. Crist, Jr.
|
10,000
|
10,000
|
|||||
|
Ben
J Davenport, Jr.
|
14,800
|
14,800
|
|||||
|
H.
Dan Davis
|
16,000
|
16,000
|
|||||
|
Michael
P. Haley
|
14,800
|
14,800
|
|||||
|
Lester
A. Hudson, Jr.
|
15,200
|
15,200
|
|||||
|
E.
Budge Kent, Jr. *
|
-
|
-
|
|||||
|
Fred
B. Leggett, Jr.
|
19,200
|
19,200
|
|||||
|
Franklin
W. Maddux
|
17,200
|
17,200
|
|||||
|
Charles
H. Majors **
|
-
|
-
|
|||||
|
Claude
B. Owen, Jr.
|
21,600
|
21,600
|
*
Mr. E.
Budge Kent, Jr. served as an executive officer of the Corporation and the Bank
through December 2005. He served as Senior Adviser to the Bank in 2006, for
which he received compensation of $30,000. He will continue to serve in this
role for 2007, with compensation of $32,500. Mr. Kent also received $25,000
under a deferred compensation agreement that was entered into with the Bank
in
June 1997. This deferred compensation agreement entitled him, or designated
beneficiaries, to annual payments of $25,000 for ten years, the payment in
2006
being the first of ten. As a Senior Adviser to the Bank, he did not receive
any
compensation as a director in 2006.
**
As an
executive officer of the Corporation and the Bank, Mr. Majors did not receive
any compensation as a director in 2006.
In
2006,
each non-officer director received a monthly retainer of $800 and an attendance
fee of $400 for each committee meeting and Bank Board meeting attended. In
2006,
the Committee approved the reimbursement of meeting-related transportation
and
lodging expenses for all Directors living outside the Danville area. The Board
approved an increase in the monthly retainer to $1,000, effective January 1,
2007. Dr. Frank C. Crist, Jr. was appointed to the Board in April following
the
Community First Financial Corporation acquisition. His monthly retainer and
attendance fee began in May 2006. Mr. Richard G. Barkhouser retired from the
Board of Directors effective with the 2006 Annual Meeting of Shareholders;
therefore, he was paid a monthly retainer and attendance fee for four months
in
2006. Mr. Willie G. Barker, Jr. serves as Director Emeritus for the period
April
25, 2006 through April 24, 2007. He will receive the monthly retainer and be
eligible for the attendance fee through April 2007. Officer members of the
Board
of Directors are not paid separately for their service on the Board or its
committees. Non-officer Directors are excluded from the Bank’s retirement plan;
therefore, do not qualify for pension benefits.
14
COMPENSATION
COMMITTEE REPORT
The
Human
Resources and Compensation Committee of the Board of Directors has reviewed
and
discussed the Corporation’s Compensation Discussion and Analysis with
management. Based upon this review and discussion, the Committee recommended
to
the Board of Directors that the Compensation Discussion and Analysis be included
in the Corporation’s definitive proxy statement on Schedule 14A for its 2007
Annual Meeting, which is incorporated by reference in the Corporation’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2006, as filed with
the Securities and Exchange Commission.
Respectfully
submitted,
Ben
J. Davenport,
Jr.
H.
Dan Davis
Lester
A. Hudson,
Jr., Ph.D., Chairman
15
RELATED
PARTY TRANSACTIONS
Some
of
the Directors and officers of the Corporation and the companies with which
they
are associated were customers of, and had banking transactions with, the Bank
in
the ordinary course of the Bank’s business during 2006. Other than these banking
transactions, there were no other reportable related party transactions. All
loans and commitments to lend included in such transactions 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,
in
the opinion of the management of the Corporation, do not involve more than
a
normal risk of collectibility or present other unfavorable features. These
loans
are monitored by the Board of Directors on a routine basis.
REPORT
OF THE AUDIT AND COMPLIANCE COMMITTEE
The
Audit
and Compliance Committee assists the Board of Directors in its oversight of
(1)
the integrity of the Corporation’s financial statements and its financial
reporting and disclosure practices, (2) the appointment, compensation, retention
and oversight of the independent accountants engaged to prepare or issue an
audit report on the financial statements of the Corporation, (3) the soundness
of the Corporation’s systems of internal controls regarding finance and
accounting compliance, (4) the independence and performance of the Corporation’s
internal audit staff, and (5) compliance with significant applicable legal,
ethical, and regulatory requirements. The committee strives to provide an open
avenue of communication between the Board of Directors, management, the internal
auditor, the compliance officer, and the independent accountants.
All
of
the members of this committee are considered independent within the meaning
of
SEC regulations, the listing standards of NASDAQ, and the Corporation’s
Corporate Governance Guidelines. All are considered an “independent director,”
as defined by NASDAQ Marketplace Rule 4200(a)(15).
Mr.
Michael P. Haley, a member of the committee, is qualified as an audit committee
financial expert within the meaning of SEC regulations and the Board has
determined he has accounting and related financial management expertise within
the meaning of the listing standards of NASDAQ.
The
Audit
and Compliance Committee has reviewed and discussed with management the
Corporation’s audited consolidated financial statements as of and for the year
ended December 31, 2006. The committee has discussed with Yount, Hyde and
Barbour, P.C., the Corporation’s independent accountants during fiscal year
2006, the matters required to be discussed by Statement of Auditing Standards
No. 61, Communications with
Audit Committees,
as
amended, by the Auditing Standards Board of the American Institute of Certified
Public Accountants. The committee received from Yount, Hyde and Barbour, P.C.
and reviewed the written disclosures and the letter required by Auditing
Standards Board Standard No. 1,
Independence Discussions with Audit Committees,
and has
discussed with Yount, Hyde and Barbour, P.C. the auditing firm’s independence.
Based
on the
reviews and discussions referred to above, the Audit and Compliance Committee
recommended to the Board of Directors that the Corporation’s audited
consolidated financial statements be included in the Corporation’s Annual Report
on Form 10-K for the year ended December 31, 2006 and be filed with the
SEC.
The
Audit and
Compliance Committee pre-approves all audit, audit related, and tax services
on
an annual basis, and in addition, authorizes individual engagements that
exceed
pre-established thresholds. Any additional engagement that falls below the
pre-established thresholds must be reported by management at the Audit and
Compliance Committee meeting immediately following the initiation of such
an
engagement.
A
copy of
the Audit and Compliance Committee charter is available at the Corporation’s
website at www.amnb.com.
For access to the charter, select the “American National Bankshares Inc.” icon,
then select “Governance Documents.”
Respectfully
submitted,
Fred
A. Blair,
Chairman
Michael
P.
Haley
Franklin
W. Maddux,
M.D.
INDEPENDENT
PUBLIC ACCOUNTANTS
The
Audit
and Compliance Committee of the Board of Directors of the Corporation annually
considers the selection of the Corporation’s independent public accountants. On
March 9, 2007, the Audit and Compliance Committee selected Yount, Hyde and
Barbour, P.C. to serve as the Corporation’s independent public accountants for
the fiscal year ending December 31, 2007.
Yount,
Hyde and Barbour, P.C. has served as the Corporation’s independent public
accountants since May 2002.
Representatives
of Yount, Hyde and Barbour, P.C. will be present at the Annual Meeting and
they
will have an opportunity to make a statement if they so desire. The
representatives also will be available to respond to appropriate
questions.
Fees
to Independent Auditors for Fiscal 2006 and 2005
Yount,
Hyde and Barbour, P.C. audited the financial statements included in the
Corporation’s Annual Report on Form 10-K for the year ended December 31, 2006;
reviewed the Corporation’s quarterly reports on Form 10-Q; and audited
management’s assessment of internal control over financial reporting as of
December 31, 2006. The
following table presents aggregate
fees paid or to be paid by the Corporation and the Bank for
professional services rendered by Yount, Hyde and Barbour, P.C. for the years
2006 and 2005.
|
2006
|
2005
|
||||||
|
Audit
Fees
|
$
|
113,545
|
$
|
107,340
|
|||
|
Audit-related
Fees
|
5,798
|
4,009
|
|||||
|
Tax
Fees
|
7,500
|
7,250
|
|||||
All
non-audit services provided by Yount, Hyde and Barbour, P.C. described above
were approved by the Audit and Compliance Committee, which concluded that the
provision of such services was compatible with maintaining the independence
of
Yount, Hyde and Barbour, P.C. Audit-related fees for 2006 include those
related to the acquisition of Community First Financial Corporation and mortgage
loan accounting. Tax fees are for the preparation of the annual consolidated
federal and state income tax returns.
16
CODE
OF CONDUCT
The
Board
of Directors has adopted a Code of Conduct, which applies to all Directors
and
employees of the Corporation and the Bank. A portion of the Code of Conduct
has
special provisions for senior financial officers of the Corporation and the
Bank, which apply to the Corporation’s principal executive officer and principal
financial officer as well as the Bank’s Controller or person performing similar
functions for the Corporation and/or the Bank. The Code of Conduct for senior
financial officers meets the requirements of a “code of ethics” as defined by
Item 406 of the SEC’s Regulation S-K. The Code of Conduct is available at the
Corporation’s website at www.amnb.com.
Select
the “American National Bankshares Inc.” icon, then select “Governance
Documents.”
SECTION
16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under
the
federal securities laws, the Corporation’s Directors and executive officers are
required to report their beneficial ownership of Corporation common stock and
any changes in that ownership to the SEC. Specific dates for such reporting
have
been established by the SEC, and the Corporation is required to report in this
Proxy Statement any failure to file by the established dates during 2006. 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 2006.
SEPARATE
COPIES FOR BENEFICIAL OWNERS
Pursuant
to SEC rules, institutions that hold shares in “street name” for two or more
beneficial owners with the same address are permitted to deliver a single proxy
statement and annual report to that address. Any such beneficial owner can
request a separate copy of the Proxy Statement or Annual Report by writing
the
Corporation at Investor Relations, P.O. Box 191, Danville, Virginia 24543 or
by
telephoning 1-434-773-2220.
SHAREHOLDER
COMMUNICATIONS AND PROPOSALS
Shareholders
interested in communicating directly with the Corporate Governance and
Nominating Committee, which is charged with handling all such communication
to
non-management members of the Board of Directors of the Corporation, may do
so
in writing to Corporate Governance and Nominating Committee, P.O. Box 191,
Danville, Virginia, 24543.
The
Corporate Governance Committee has approved a process for handling
correspondence received by the Corporation and addressed to non-management
members of the Board. Under the process, the Assistant Secretary of the
Corporation will forward all mail specifically addressed to a member of the
Board of Directors. If correspondence is specifically addressed only to a
committee, the Assistant Secretary of the Corporation will forward the mail
to
the Chairman of said committee. If any mail is received that is addressed only
to “Board of Directors,” or “Non-Management Member of the Board of Directors,”
said mail will be forwarded by the Assistant Secretary of the Corporation to
the
Chairman of the Corporate Governance and Nominating Committee. Correspondence
relating to accounting, internal controls or auditing matters are brought to
the
attention of the Chairman of the Audit and Compliance Committee with respect
to
such matters.
To
be
considered for inclusion in the Corporation’s proxy statement relating to the
2008 Annual Meeting, shareholder proposals, including recommendations for
Director nominees, must be received by the Corporation at its principal office
in Danville, Virginia no later than November 20, 2007.
In
addition to any other applicable requirements, for business to be properly
brought before next year’s Annual Meeting by a shareholder, even if the proposal
is not to be included in the Corporation’s proxy statement, the Corporation’s
bylaws provide that the shareholder must give notice in writing to the Secretary
of the Corporation no later than January 18, 2008. As to each such matter,
the
notice must contain (i) a brief description of the business desired to be
brought before the annual meeting and the
reasons
for conducting such business at the annual meeting, (ii) the name, record
address of, and number of shares beneficially owned by the shareholder proposing
such business and (iii) any material interest of the shareholder in such
business.
OTHER
BUSINESS
As
of the
date of this Proxy Statement, the Board of Directors knows of no other matters
to be presented at the Annual Meeting other than those referred to above.
However, if any other matters should properly come before the Annual Meeting,
it
is the intention of the persons named in the enclosed form of proxy to vote
such
proxy in accordance with their best judgment on such matters.
By
Order
of the Board of Directors
Charles
H. Majors
President
and Chief Executive Officer
March
19,
2007
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