FIRST COMMUNITY BANKSHARES INC /VA/
For the period ended Apr 23, 2024. Filed Mar 11, 2024.
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Apr 23, 2024 · Filed Mar 11, 2024
Contents
What Guides our Program
Compensation Philosophy and Objectives. The overall objectives of the executive compensation program are to align the long-term interests of our named executive officers and other executives as closely as possible with those of shareholders and to motivate high performing executives to continue with the Corporation for long, productive careers. The Board believes that shareholder value is created over time through consistent financial and operating performance coupled with strong leadership. This overriding objective affects all elements of the compensation program.
Components of Executive Compensation. The principal components of the executive compensation program are:
| ● | Base Compensation. Base compensation is intended to provide the executive with a competitive, non-variable source of income. Each named executive officer’s base compensation depends on the scope of their duties, individual performance, length of service, and leadership ability. Current base compensation decisions include an objective evaluation of adjustments relative to peers (within and outside the Corporation). Base compensation is paid in the form of cash at regular payroll intervals along with all other employees of the Corporation and is reviewed by the CRC annually. |
| ● | Annual Incentive Compensation. Annual incentive compensation is intended to directly incentivize the executive to maximize the financial performance of the Corporation while not taking excessive risk. For each named executive officer, annual incentive compensation is paid in the form of cash. Payment of any incentive compensation is completely at-risk and determined based on the Corporation's previous year’s performance as evaluated by the CRC. The Chief Executive Officer and President present their recommendations for Executive Management Team annual incentive compensation for consideration and approval to the CRC, but do not deliberate on their own compensation. |
| ● | Long-Term Equity Compensation. The Corporation’s equity compensation program is designed to align executives’ interests with those of shareholders and to reward long-term performance. The CRC uses stock options and restricted stock awards which are designed to deliver reasonable, but meaningful, equity interests in the Corporation. Payment of any equity compensation is completely at-risk. Vesting of equity awards granted each year is contingent on future years' performance of the Corporation. |
In addition to these principal components, the compensation program also includes retirement programs available to all employees and an option to defer compensation. Perquisites are limited and are generally business-related and granted to facilitate the efficiency and productivity of our executives.
Pay Mix. The Corporation’s pay-for-performance philosophy is reinforced through the variable nature of its annual incentive compensation and long-term equity compensation discussed above. The variable nature of such compensation is an important underpinning of the Corporation’s compensation framework. For 2023, total variable compensation, which includes annual incentive compensation in the form of cash and long-term equity compensation in the form of restricted stock units, paid to the CEO was approximately 27% of the CEO's total compensation, and total variable compensation for the other NEOs was approximately 34% of their total compensation, as graphically illustrated in the charts below. Annual Incentive Compensation based on the Corporation's performance in 2023 has not yet been paid. Accordingly, this calculation is based on compensation actually paid, not necessarily earned, in 2023, including annual incentive compensation paid in March 2023 based on 2022 performance.
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