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
[_] Soliciting Material Under
Rule
[_] Confidential,
For Use of
the
14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[_] Definitive
Additional Materials
Potomac 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.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of
each class of securities to which transaction applies:
____________________________________________________________________________________
2) Aggregate number of securities to
which transaction applies:
3) Per unit price or
other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the
amount on
which the filing fee is
calculated and state how it was
determined):
4) Proposed maximum aggregate value of
transaction:
____________________________________________________________________________________
5) Total fee paid:
[_] Fee paid previously with preliminary
materials:
[_] Check box if any part of the fee is offset
as provided by Exchange Act Rule
0-11(a)(2) and identify the
filing for which
the offsetting fee was paid
previously. Identify the previous
filing by registration statement number,
or the form
or
schedule and the date of its
filing.
____________________________________________________________________________________
1) Amount
previously paid:
____________________________________________________________________________________
2) Form,
Schedule or Registration Statement No.:
____________________________________________________________________________________
3) Filing
Party:
____________________________________________________________________________________
4) Date
Filed:
POTOMAC BANCSHARES,
INC.
Charles Town, West
Virginia
NOTICE
OF REGULAR ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD MAY 18,
2010
|
To the
Shareholders:
The Regular Annual Meeting of Shareholders of Potomac Bancshares, Inc.
("Potomac") will be held at Quality Hotel Conference Center, Harpers Ferry, West
Virginia, at 10:30 a.m., on May 18, 2010 for the purposes of considering and
voting upon proposals:
1. To elect a class of directors for a
term of three years.
2. To ratify the selection by the Board
of Directors of Yount, Hyde & Barbour, P.C., as independent registered
public accountants for the year 2010 and
To approve any other business that may
properly be brought before the meeting or any adjournment thereof.
Only those shareholders of record at the
close of business on March 12, 2010, shall be entitled to notice of the meeting
and to vote at the meeting.
By
Order of the Board of Directors
|
|
Robert
F. Baronner, Jr.
|
President and Chief Executive
Officer
|
PLEASE SIGN AND RETURN THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON.
IF YOU DO ATTEND THE
MEETING, YOU HAVE THE OPTION TO WITHDRAW YOUR PROXY BEFORE IT IS
VOTED.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF
PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 18,
2010 - THE PROXY STATEMENT AND 2009 ANNUAL REPORT ARE AVAILABLE AT
WWW.PROXYVOTE.COM.
April 9,
2010
POTOMAC BANCSHARES, INC.
111 EAST
WASHINGTON STREET
P.O. BOX 906
CHARLES TOWN, WEST VIRGINIA 25414-0906
(304)
725-8431
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS – MAY 18, 2010
Potomac Bancshares, Inc. is furnishing this statement in connection with
its solicitation of proxies for use at the annual meeting of shareholders of
Potomac Bancshares, Inc. to be held on May 18, 2010, at the time and for the
purposes set forth in the accompanying notice of regular annual meeting of
shareholders.
Solicitation of Proxies
Potomac’s management, at the direction of
Potomac’s board of directors, is making this proxy solicitation. These proxies
enable shareholders to vote on all matters scheduled to come before the meeting.
If the enclosed proxy is signed and returned, it will be voted as directed; or
if not directed, the proxy will be voted "FOR" all of the various proposals to
be submitted to the vote of shareholders described in the enclosed notice of
regular annual meeting and this proxy statement. A shareholder executing the
proxy may revoke it at any time before it is voted by:
-
notifying Potomac in
person,
-
giving written notice to Potomac
of the revocation of the proxy,
-
submitting to Potomac a
subsequently-dated proxy, or
-
attending the meeting and
withdrawing the proxy before it is voted at the meeting.
Potomac will pay the expenses of this
proxy solicitation. In addition to this solicitation by mail, officers and
regular employees of Potomac and Bank of Charles Town may, to a limited extent,
solicit proxies personally or by telephone or telegraph, although no person will
be engaged specifically for that purpose.
Eligibility of Stock for Voting
Purposes
Under Potomac’s bylaws, the board of
directors has fixed March 12, 2010, as the record date for determining the
shareholders entitled to notice of, and to vote at, the meeting or any
adjournment thereof. Only shareholders of record at the close of business on
that date are entitled to notice of and to vote at the annual meeting or any
adjournment thereof. On that day, there were issued and outstanding 3,390,178
shares of common stock. The presence, in person, or by properly executed proxy,
of the holders of a majority of the outstanding shares of the company’s common
stock entitled to vote at the annual meeting is necessary to constitute a quorum
at the annual meeting. Abstentions will be counted as shares present for
purposes of determining the presence of a quorum. Any shares held in street name
that are not voted (“broker non-votes”) in the election of directors or the
proposal to ratify the company’s appointment of Yount, Hyde & Barbour, P. C.
will not be included in determining the number of votes.
As of the record date for the annual
meeting, 3,390,178 shares of the capital stock of Potomac were outstanding and
entitled to vote. The principal holders of Potomac common stock are discussed
under the section of this proxy statement entitled, "Principal Holders of Voting
Securities". As of the record date, Potomac had a total of approximately 1,100
shareholders of record.
1
PURPOSES OF MEETING
1. ELECTION OF DIRECTORS
General
Potomac’s articles of incorporation
currently provide for a classified board of directors. There are three classes
with each being elected for a three-year term. There are presently 11 directors
on the board, four of whom are nominees for election at the 2010 annual meeting.
All of the nominees are non-employee directors.
Directors are elected by a plurality of
the shares voted. As required by West Virginia law, each share is entitled to
one vote per nominee, unless a shareholder requests cumulative voting for
directors at least 48 hours before the meeting. If a shareholder properly
requests cumulative voting for directors, then each shareholder will have the
right to vote the number of shares owned by that shareholder for as many persons
as there are directors to be elected, or to cumulate such shares and give one
candidate as many votes as the number of directors multiplied by the number of
shares owned shall equal, or to distribute them on the same principle among as
many candidates as the shareholder sees fit. If any shares are voted
cumulatively for the election of directors, the proxies, unless otherwise
directed, shall have full discretion and authority to cumulate their votes and
vote for less than all such nominees. For all other purposes, each share is
entitled to one vote. Because director nominees must receive a plurality of the
votes cast at the meeting, a vote withheld will not affect the outcome of the
election.
The Board of Directors has a nominating
committee tasked with identifying potential Board of Director members. The
nominating committee makes nominations based upon its belief that candidates for
director should have certain minimum qualifications, including:
-
Directors should be of the highest
ethical character.
-
Directors should have excellent
personal and professional reputations in the company’s market
area.
-
Directors should be accomplished
in their professions or careers.
-
Directors should be able to read
and understand financial statements and either have knowledge of, or the
ability and willingness to learn, financial institution law.
-
Directors should have relevant
experience and expertise to evaluate financial data and provide direction and
advice to the Chief Executive Officer and the ability to exercise sound
business judgment.
-
Directors must be willing and able
to expend the time to attend meetings of the board of directors of the company
and the bank and to serve on board committees.
-
The board of directors will
consider whether a nominee is independent, as legally defined. In addition,
directors should avoid the appearance of any conflict and should be
independent of any particular constituency and be able to serve all
shareholders of the company.
-
Because the directors of the
company also serve as directors of the bank, a majority of directors must be
residents of West Virginia, as required by state banking law.
2
-
Directors must be acceptable to
the company’s and the bank’s regulatory agencies, including the Federal
Reserve Board, the Federal Deposit Insurance Corporation and the West Virginia
Division of Banking and must not be under any legal disability which prevents
them from serving on the board of directors or participating in the affairs of
a financial institution.
-
Directors must own or acquire
sufficient capital stock to satisfy the requirements of federal law, state law
and the bylaws of Potomac.
-
Directors must be at least 21
years of age.
The nominating committee reserves the right to modify these minimum
qualifications from time to time, except where the qualifications are required
by the laws relating to financial institutions.
The process of identifying and evaluating
nominees is as follows: In the case of incumbent directors whose terms are set
to expire, the committee considers the directors’ overall service to the company
during their term, including such factors as the number of meetings attended,
the level of participation, quality of performance and any transactions between
such directors of the company and the bank. The board also reviews the payment
history of loans, if any, made to such directors of the bank to ensure that the
directors are not chronically delinquent and in default. The committee considers
whether any transactions between the directors and the bank have been criticized
by any banking regulatory agency or the bank’s external auditors and whether
corrective action, if required, has been taken and was sufficient. The
nominating committee also confirms that such directors remain eligible to serve
on the board of directors of a financial institution under federal and state
law. For new director candidates, the committee uses its network of contacts in
the company’s market area to compile a list of potential candidates. The
committee then meets to discuss each candidate and whether he or she meets the
criteria set forth above. The committee then discusses each candidate’s
qualifications and chooses a candidate by majority vote.
The committee will consider director
candidates recommended by shareholders, provided that the recommendations are
received at least 120 days before the next annual meeting of shareholders which
is January 17, 2011 for the 2011 annual meeting. In addition, the procedures set
forth below are to be followed by shareholders submitting nominations. The
committee does not intend to alter the manner in which it evaluates candidates,
regardless of whether or not the candidate was recommended or nominated by a
shareholder.
Potomac’s bylaws provide that nominations
for election to the board of directors, other than those made by or on behalf of
Potomac’s existing management, must be made by a shareholder in writing
delivered or mailed to the President not less than 14 days nor more than 50 days
prior to the meeting called for the election of directors; provided, however,
that if less than 21 days' notice of the meeting is given to shareholders, the
nominations must be mailed or delivered to the President not later than the
close of business on the 7th day following the day on which the notice of
meeting was mailed. The notice of nomination must contain the following
information, to the extent known:
-
name and address of
nominee(s);
-
principal occupation of
nominee(s);
-
total shares to be voted for each
nominee;
-
name and address of notifying
shareholder;
-
number of shares owned by
notifying shareholder; and
-
consent of such nominee(s) to
being named in the proxy statement as a nominee and to serving as such a
director, if elected.
3
Nominations not made in accordance with these requirements may be
disregarded by the chairman of the meeting and in such case the votes cast for
each such nominee will likewise be disregarded.
Although neither the Board of Directors of Potomac Bancshares, Inc. nor
Bank of Charles Town has a formal diversity policy, both of the Boards of
Directors recognize the need for diversity on the respective Boards of Potomac
Bancshares and Bank of Charles Town. Accordingly, diversity is considered when
nominating Board members. We view diversity broadly to include differences in
race, gender, ethnicity, age, viewpoint, professional experience, educational
background, skills, knowledge of Potomac’s and Bank of Charles Town’s market
areas, professional contacts and other personal attributes that can encourage
and maintain Board effectiveness. In selecting a director nominee, we focus on
skills, expertise or background that would complement the existing Board and
allow for differing perspectives, recognizing that Potomac’s businesses and
operations are centered in the Eastern Panhandle region of West Virginia.
The table beginning on page 7 of
this proxy statement contains background information on each director nominee.
Committees of the Board
Potomac’s board of directors has a
standing audit committee and an asset/liability/investment management committee.
Other functions of board committees for Potomac have been carried out by the
board of directors as a whole or through committees of the board of directors of
Bank of Charles Town. While there is no such requirement, the boards of
directors of the bank and Potomac are, and have at all times been, identical.
The report of the audit committee is
given on pages 6 and 7 of this proxy statement.
The audit committee consists of five
independent directors: Dr. Keith Berkeley, J. Scott Boyd, Guy Gareth
Chicchirichi, Mary Clare Eros and Barbara H. Pichot. All members of the
committee meet the NASDAQ definition for independence. That definition is
attached hereto as Exhibit B. The audit committee is appointed and approved by
the boards of Potomac and the bank. The committee is to assist these boards in
monitoring (1) the integrity of the financial statements of the company, (2) the
compliance by the company with legal and regulatory requirements, (3) the
independence of the company’s internal and external auditors and (4) the
effectiveness of internal controls and procedures. During 2009, the audit
committee held seven regular meetings.
The company’s board of directors has
determined that Barbara H. Pichot meets the requirements of an audit committee
financial expert for 2009 and 2010 as defined by the Securities and Exchange
Commission.
The asset/liability/investment
management committee consists of nine members: Robert F. Baronner, Jr., Guy
Gareth Chicchirichi, William R. Harner, David W. Irvin, Gayle Marshall Johnson,
Tim Lewis, Brent Milbourne, C. Larry Togans and Bernadine Wean. The
asset/liability/investment committee is appointed and approved by the boards of
Potomac and the bank. This committee is comprised of board members and officers
whose responsibilities are to manage the balance sheet of the bank by maximizing
and maintaining the spread between interest earned and interest paid while
assuming acceptable business risks and ensuring adequate liquidity. The
committee recommends investment policies to the board and reviews investments as
necessary. This committee held four meetings during 2009.
The bank has a standing Community
Reinvestment Act committee, personnel committee, trust committee, trust
investment review committee, merger and acquisition committee, executive
committee, information technology (IT) committee, Sarbanes-Oxley 404 (SOX 404)
steering committee and nominating committee.
4
The Community Reinvestment Act (CRA)
committee consists of 11 members: Robert F. Baronner, Jr., Margaret Cogswell,
Kim Desarno, Kevin Haymaker, David W. Irvin, Marcia Lerch, Tim Lewis, Susan
Myers, David S. (Joe) Smith, Selene Stevens and Bernadine Wean. The CRA
committee is responsible for recommending to the board of directors policies
that address fair lending concerns and the requirements of the CRA. Fair lending
concerns are directed at preventing lending practices that discriminate either
overtly or that have the effect of discrimination. The Community Reinvestment
Act requires that banks meet the credit needs of their communities, including
those of low and moderate income borrowers. This committee held three meetings
in 2009.
The personnel committee consists of
six members: one employee, Diane Armstrong; one employee director, Robert F.
Baronner, Jr. (ex-officio); and four independent directors, Dr. Keith Berkeley,
J. Scott Boyd, Guy Gareth Chicchirichi and John C. Skinner, Jr. The independence
definition attached as Exhibit B is also applicable for personnel committee
independent members. The committee operates under the same charter as the
company. The personnel committee's responsibilities include evaluating staff
performance and requirements, reviewing salaries, and making necessary
recommendations to the board regarding these responsibilities. The committee
held one meeting in 2009. The executive officer who serves on this committee did
not make recommendations or participate in meetings relating to his own salary.
See "Personnel Committee Report on Executive Compensation.”
The trust committee consists of
eight members: Robert F. Baronner, Jr., John P. Burns, Jr., Leslie Crabill,
William R. Harner, John C. Skinner, Jr., David S. (Joe) Smith, C. Larry Togans
and Deborah A. Watts. The trust committee is responsible for the general
supervision of the fiduciary activities performed by One Financial Center in
order to ensure proper administration of all aspects of the bank's fiduciary
business. One Financial Center includes the Trust Department and BCT
Investments. The committee sets forth prudent policies and guidelines under
which the department can fulfill its fiduciary responsibilities in a timely and
efficient manner and meet state and federal regulatory requirements. The
committee makes periodic reports to the board of directors and oversees the
activities of the trust investment review committee. The trust committee held
six regular meetings in 2009.
The trust investment review
committee, consisting of three trust officers, Leslie Crabill, David S. (Joe)
Smith and Deborah A. Watts, and two directors, William R. Harner and C. Larry
Togans, meets regularly to review investments in trust accounts and to determine
that these investments remain within the guidelines of the account. This
committee held 12 meetings during 2009.
The merger and acquisition committee
consists of five members: Robert F. Baronner, Jr., Guy Gareth Chicchirichi, Mary
Clare Eros, Barbara H. Pichot, and John C. Skinner, Jr. The committee has the
authority to review and recommend merger and acquisition transactions and
investment transactions proposed by management to the full Board of Potomac
Bancshares, Inc. The committee held no meetings in 2009.
The executive committee consists of
eight members: Robert F. Baronner, Jr., Dr. Keith Berkeley, J. Scott Boyd, John
P. Burns, Jr., Mary Clare Eros, William R. Harner, John C. Skinner, Jr. and C.
Larry Togans. This committee meets on an as needed basis to review and approve
loans that exceed the Chief Executive Officer’s lending authority. This
committee held five meetings in 2009.
The IT (Information Technology)
committee consists of 13 members: Ryan Armstrong, Robert F. Baronner, Jr., Clara
Carroll, Margaret Cogswell, Kim Desarno, Josh Householder, David W. Irvin, Tim
Lewis, Brent Milbourne, Susan S. Myers (ex-officio), Matt Stickel, Shawn Stotler
and Bernadine Wean. The committee’s responsibilities are to prioritize major IT
projects, establish IT policies and procedures, identify technology related
opportunities, and set IT standards that insure cost effective and efficient
operations. This committee held 11 meetings in 2009.
5
The SOX 404 steering committee
consists of 10 regular members: Robert F. Baronner, Jr., Kim Desarno, David W.
Irvin, Gayle Marshall Johnson, Tim Lewis, Susan S. Myers, Barbara H. Pichot,
Linda Sager, David (Joe) Smith, Shawn Stotler and Bernadine Wean. Additional non
voting committee members attending on an as needed basis are Tammy Frazier of
Yount, Hyde & Barbour, P.C. and Gayla Anderson of Bank of Charles Town. The
SOX 404 steering committee is responsible for assisting with and reviewing
project goals and timelines, reviewing and approving the mapping process of
significant accounts, and reviewing SOX 404 documentation and testing materials
to ensure that the bank will be in compliance with Section 404 of the
Sarbanes-Oxley Act. This committee held one meeting in 2009.
The nominating committee consists of
six members: Robert F. Baronner, Jr., J. Scott Boyd, John P. Burns, Jr., Guy
Gareth Chicchirichi, Margaret Cogswell, and John C. Skinner, Jr. This committee
is made up of five board members whose responsibility is to recommend candidates
for positions on the Boards of Directors. This committee held two meetings
during 2009.
The boards of directors of Potomac
and the bank have regular monthly meetings the second Tuesday of each month and
a regular organizational meeting each May. The Potomac and bank boards each met
for 13 regular meetings in 2009. Special meetings are held by each board from
time to time as required. There were no special meetings held by either board in
2009. During the year, each of the directors attended at least 75% of all
meetings of the boards of Potomac and the bank and all committees of the boards
on which they served.
Audit Committee Report
The members of the audit committee
are all independent in accordance with the requirements of NASDAQ.
The audit committee oversees
Potomac’s financial reporting process on behalf of the board of directors.
Management has the primary responsibility for the financial statements and the
reporting process including the systems of internal controls.
The audit committee has reviewed and
discussed the audited financial statements with management, discussed with the
independent auditor the matters required by SAS 61 as amended, received
communications from the independent auditor as to its independence, and
discussed independence with the auditor.
The audit committee has received the
written disclosures and the letter from the independent accountant required by
Independence Standards Board No. 1, “Independence Discussions with Audit
Committees”, and has discussed with the independent accountant the independent
accountant’s independence.
Based on its review and discussions
with management and the independent auditor, the audit committee recommended to
the board of directors that the audited financial statements be included in the
Annual Report on Form 10-K filed by the company.
The audit committee and the board of
directors have adopted a written charter for the audit committee which is
included as Exhibit A at the end of this proxy statement.
The following fees were paid to
Yount, Hyde & Barbour, P.C., Potomac Bancshares, Inc.’s independent
registered accounting firm, for services provided to the company for the fiscal
years ending December 31, 2009 and 2008.
|
|
2009
|
|
2008
|
|
|
Fees
|
|
Percentage
|
|
Fees
|
|
Percentage
|
Audit fees
|
|
$
|
51,200
|
|
46.6
|
%
|
|
$
|
48,500
|
|
47.4
|
%
|
Audit-related fees
|
|
|
50,651
|
|
46.1
|
%
|
|
|
48,530
|
|
47.4
|
%
|
Tax fees
|
|
|
7,966
|
|
7.3
|
%
|
|
|
5,350
|
|
5.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
109,817
|
|
100.0
|
%
|
|
$
|
102,380
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
A description of these
fees is as follows:
-
Audit fees: Audit and review
services, consents, and review of documents filed with SEC.
-
Audit-related fees: Agreed-upon
procedures related to the Trust Department’s Regulation 9 examination, ACH and
vulnerability assessment, audit of the bank’s pension plan, information
technology attestation and consultation concerning financial accounting and
reporting standards and internal controls over financial
reporting.
-
Tax fees: Preparation of federal
and state tax returns.
The audit committee of the board believes that the non-audit services
provided by Yount, Hyde & Barbour are compatible with maintaining the
auditor’s independence. The audit committee charter requires that the audit
committee pre-approve all services performed by the independent auditors.
However, the pre-approval requirement is waived for non-audit services if the
amount of the non-audit service is not more than 5% of the total amount paid to
the independent auditors during the fiscal year in which the services are
provided and such services were not recognized at the time of the engagement to
be non-audit services and such services are promptly brought to the committee’s
attention and approved prior to the completion of the audit. All of the services
described above for which Yount, Hyde & Barbour, P.C., billed the company
for the fiscal year ended December 31, 2009, were pre-approved by the company’s
audit committee. For the fiscal year ended December 31, 2009, the company’s
audit committee did not waive the pre-approval requirement of any non-audit
services to be provided to the company by Yount, Hyde & Barbour,
P.C.
This report should not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that Potomac specifically
incorporates this report by reference, and shall not otherwise be filed with
such Acts.
Barbara H. Pichot, CPA, Chairperson
|
Dr. Keith Berkeley
|
J. Scott Boyd
|
Guy Gareth Chicchirichi
|
Mary Clare Eros
|
March 12, 2010
Management Nominees to the Board of
Potomac
|
|
|
|
Served As
|
|
Family
|
|
|
|
|
|
|
|
|
Director
|
|
Relationship
|
|
Year
|
|
|
|
|
|
|
of
|
|
With
|
|
in Which
|
|
|
|
|
|
|
Potomac
|
|
Other
|
|
Term
|
|
Principal Occupation
or
|
Nominees
|
|
Age
|
|
Since
|
|
Nominees
|
|
Expires
|
|
Employment Last Five
Years
|
J. Scott Boyd
|
|
53
|
|
1999
|
|
None
|
|
2010
|
|
Pharmacist, owner Jefferson Pharmacy,
Inc., Jefferson County, West Virginia since 1982; Pharmacist, owner JSB
Enterprises, Inc. dba South Berkeley Pharmacy, Berkeley County, West
Virginia since 2006; President and Chairman of Board of Directors of In
Home Medications West Virginia, Inc; President Mountain Spring Properties,
LLC.
|
|
|
|
|
|
|
|
|
|
|
|
John P. Burns, Jr.
|
|
68
|
|
1994
|
|
None
|
|
2010
|
|
Owner/operator of a beef and grain farm
in Jefferson County, West Virginia; Director emeritus, Jefferson County
Fair Association; past President, Jefferson County Fair Association; past
Director and past Chairman, Valley Farm
Credit.
|
7
Management Nominees to the Board of Potomac
(Continued)
Barbara H. Pichot
|
|
62
|
|
2004
|
|
None
|
|
2010
|
|
Controller, Potomac Construction
Industries, Inc. March 1, 2009 to present. Certified public accountant,
retired partner CoxHollida LLP, a public accounting firm in Berkeley
County, West Virginia, 1981—2006; past President, Hospice of the
Panhandle; past Chair Board of Governors, Shepherd
University.
|
|
|
|
|
|
|
|
|
|
|
|
C. Larry Togans
|
|
63
|
|
2004
|
|
None
|
|
2010
|
|
Retired Deputy, Branch of Human
Resources, U. S. Geological Survey, employed 1973 to
2001.
|
The Board of Directors recommends that
shareholders vote “For” all the nominees listed above.
Directors Continuing to Serve Unexpired
Terms
|
|
|
|
Served As
|
|
Family
|
|
|
|
|
|
|
|
|
Director
|
|
Relationship
|
|
Year
|
|
|
|
|
|
|
of
|
|
With
|
|
in Which
|
|
|
|
|
|
|
Potomac
|
|
Other
|
|
Term
|
|
Principal Occupation
or
|
Directors
|
|
Age
|
|
Since
|
|
Nominees
|
|
Expires
|
|
Employment Last Five
Years
|
Robert F. Baronner, Jr.
|
|
51
|
|
2001
|
|
None
|
|
2011
|
|
Employed by bank as of 1/1/01 as
President and Chief Executive Officer.
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Keith Berkeley
|
|
51
|
|
2008
|
|
None
|
|
2012
|
|
Veterinarian, President of Valley Equine
Associates, Jefferson County, W.V.
|
|
|
|
|
|
|
|
|
|
|
|
Guy Gareth Chicchirichi
|
|
68
|
|
1994
|
|
None
|
|
2011
|
|
Executive Manager, Secretary/Treasurer,
Guy’s Buick-Pontiac-GMC, Inc., Jefferson County, West Virginia; charter
member of Charles Town Rotary Club.
|
|
|
|
|
|
|
|
|
|
|
|
Margaret Cogswell
|
|
51
|
|
2003
|
|
None
|
|
2011
|
|
Chief Executive Officer, Hospice of the
Panhandle, Berkeley, Hampshire, Jefferson and Morgan Counties, West
Virginia since 1987.
|
|
|
|
|
|
|
|
|
|
|
|
Mary Clare Eros
|
|
63
|
|
2008
|
|
None
|
|
2011
|
|
Retired and Of Counsel, Jackson Kelly
PLLC; Employed at Jackson Kelly PLLC from 1981 to 2007.
|
|
|
|
|
|
|
|
|
|
|
|
William R. Harner
|
|
69
|
|
1994
|
|
None
|
|
2012
|
|
Employed at bank 1967 to 2004; Senior
Vice President and Cashier 1988 to 2004 (retired); Senior Vice President
and Secretary of Potomac 1994 to 2004; Member Board of Governors of
Shriner’s Hospital for Children, Philadelphia, PA since 2004.
|
|
|
|
|
|
|
|
|
|
|
|
John C. Skinner, Jr.
|
|
68
|
|
1994
|
|
None
|
|
2012
|
|
Chairman of the Board, Potomac
Bancshares, Inc. and Bank of Charles Town; Attorney, Skinner Law firm,
Jefferson County, West Virginia; bank attorney since 1986; Potomac
attorney since 1994.
|
8
Mr. John C. Skinner, Jr. is the Chairman of the Board of Directors of
Potomac and the bank. Mr. Skinner was chosen as a director for his personal and
professional reputation in the community of Jefferson County, West Virginia
where he has been an attorney for 43 years. Mr. Skinner is a graduate of West
Virginia University and the West Virginia University Law School. In addition to
his professional experience and perspective, Mr. Skinner brings knowledge of the
company’s market area through his business experience. For his role as Chairman
of the Board, Mr. Skinner provides strong leadership and organizational skills
which he obtained through his experiences as an attorney, as a businessman and
as a member of several non-profit and civic organizations. His legal knowledge
is valuable when dealing with the legal and ethical issues that arise from time
to time.
Mr. Robert F. Baronner, Jr. was elected to the Board of Directors after
being named President and Chief Executive Officer of Potomac and Bank of Charles
Town in 2001. Mr. Baronner was chosen to represent management’s perspective on
the Board of Directors. Mr. Baronner has worked in the banking industry for
almost 25 years. In addition, he is currently on the Board of Directors of West
Virginia University Hospitals-East in Martinsburg, West Virginia, and is the
President of the West Virginia Community Bankers Association. Mr. Baronner
should continue on the Board of Directors due to his continued service as
President and CEO, his extensive experience and expertise in managing financial
institutions and his extensive knowledge of Potomac’s and Bank of Charles Town’s
operations.
Dr. Keith Berkeley has served on the Board of Directors since July 2008.
He has been a veterinarian and business owner in the Eastern Panhandle of West
Virginia for approximately 20 years. Dr. Berkeley earned his Doctor of
Veterinary Medicine from the Tuskegee Institute. Dr. Berkeley was elected to the
Board for his business experience and his knowledge of Potomac’s and Bank of
Charles Town’s market areas by virtue of his relationship with the community
through his veterinary practice. Dr. Berkeley should remain on the board because
of his track record as a successful businessman and for his relationship with a
large portion of the community. In addition, Dr. Berkeley has attended the West
Virginia Community Bankers Directors College to further his own knowledge of the
banking industry and his responsibilities as a Director.
J. Scott Boyd is a pharmacist and owner of one pharmacy in both Berkeley
and Jefferson Counties. Mr. Boyd is a graduate of the West Virginia University
School of Pharmacy. Mr. Boyd was chosen for his experience as a business owner
and his knowledge of the market areas of Potomac and Bank of Charles Town in
both Berkeley and Jefferson Counties. He should remain on the board of directors
because of his 28 years of business experience as well as his contacts with an
array of persons from the communities the bank serves.
John P. Burns, Jr. is a lifelong resident of Jefferson County. He has
made his living in the farming industry for over 51 years. Mr. Burns was
originally elected to the Board at a time when agriculture was the largest
industry in the bank’s market area. He is a valuable member of the Board because
of his understanding of the members of the farming community and the farming
industry. As a result of his experience in operating a beef and grain farm, Mr.
Burns has significant management abilities. He should remain on the Board to
continue to represent the perspective of the farming industry and his management
experience. Although farming is no longer the largest industry in the Eastern
Panhandle of West Virginia, it remains an integral part of the local
economy.
Guy Gareth Chicchirichi is a lifelong resident of Jefferson County, West
Virginia and the owner of a local automobile dealership for over 42 years. Mr.
Chicchirichi was elected to the Board of Directors for both his professional
background and personal attributes. Mr. Chicchirichi has taken college level
courses in accounting, finance and management, and has also participated in
educational workshops through General Motors Corporation dealing with
accounting, finance and management in the automotive industry. Mr. Chicchirichi
is also involved in various community organizations such as the Rotary Club of
Charles Town, West Virginia, of which he is a charter member. He should continue
as a director for his unique perspective of the automotive industry.
Additionally, through his involvement in community organizations, he has
knowledge of Potomac’s and the bank’s market areas, as well as knowledge of the
Jefferson County, West Virginia economy and its local leaders.
9
Margaret Cogswell is Chief Executive Officer of Hospice of the Panhandle.
She has an Associate of Science degree in Nursing from Shepherd College. Ms.
Cogswell brings a unique perspective of someone that has been involved in
non-profit organizations most of her adult life and as a result, has a number of
contacts within the company’s and the bank’s market area in Jefferson and
Berkeley Counties, West Virginia. Her duties as CEO include management of a $13
million budget and a paid staff of 130 people. Margaret should remain on the
board because she is and has been involved with the non-profit community and her
management experience is a valuable asset to the board of directors. She has
attended the West Virginia Community Bankers Directors College to further her
knowledge of the banking industry and her responsibilities as a
Director.
Mary Clare Eros is a retired attorney. Ms. Eros was chosen as a Board
member due to her specific experience in representing financial institutions
during her 25 years of law practice. Ms. Eros received her doctor of
jurisprudence degree (law) from Georgetown University Law School in Washington,
D.C. Her area of expertise in her law practice involved advising banks with
regard to consumer protection laws and representing banks and lending
institutions in large commercial transactions. In addition, Ms. Eros was the
Managing Member of the Martinsburg, West Virginia office of Jackson Kelly PLLC
(Attorneys at Law), and as part of her duties routinely reviewed financial
information. Ms. Eros should continue as a Board member due to her extensive
legal experience in representing financial institutions.
William R. Harner has over 35 years of banking experience and is a
retired employee of Bank of Charles Town where he served as cashier for over 25
years. He was elected to the Board of Directors while still an employee of the
bank. Mr. Harner has extensive knowledge of the banking industry in general and
Bank of Charles Town and its operations specifically. Mr. Harner should remain
on the board because of his specific banking experience. Mr. Harner is very
thorough in his analysis of all questions that come before the board. He ensures
that he as well as each board member is aware of each aspect of the decision and
how it might affect the operations of the bank.
Barbara H. Pichot is a Certified Public Accountant, and retired partner
with CoxHollida LLP. Ms. Pichot has over 25 years of experience in public
accounting and continues to work in the accounting field as a controller. She is
a graduate of Shepherd College with a degree in accounting and was elected to
the Board for her financial and accounting expertise. She currently serves as
the company’s Audit Committee financial expert. Ms. Pichot should continue to
serve on the Board of Directors because of her knowledge of accounting and audit
procedures and her business acumen. She has attended the West Virginia Community
Bankers Directors College to further her knowledge of the banking industry and
her responsibilities as a Director.
C. Larry Togans is retired from the U. S. Geological Survey in Reston, VA
where he served as the Deputy Branch Chief of Human Resources and Management
Support. In his position, Mr. Togans served as special advisor to the Senior
Executive Staff (SES) who manages more than 5000 geoscientists and technical
support staff members. Larry received his Bachelors degree from Shepherd
College. Mr. Togans should remain on the Board of Directors because he provides
expertise in the human resources field that no other current Board member can
provide. In addition to his professional background, he has served as board
member in a number of positions including serving on the Shepherd University
Foundation and Jefferson County Board of Education. Larry has taken the time to
advance his knowledge of banking and directorship by attending the West Virginia
Community Bankers Directors College.
Ownership of Securities by Nominees, Directors
and Officers
The following table shows the amount
of Potomac's outstanding common stock beneficially owned by nominees, directors
and principal officers of Potomac individually and as a group. Beneficial
ownership has been determined in accordance with the provisions of Rule 13d-3 of
the Securities Exchange Act of 1934 under which a person is deemed to be the
beneficial owner of a security if he or she 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 or she has the right to acquire beneficial
ownership of the security within sixty days. The information is furnished as of
February 26, 2010, on which date 3,390,178 shares were outstanding.
10
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
Amount and Nature of
|
|
Shares Subject to a
|
|
Percent of
|
Nominees
|
|
of Beneficial Ownership
|
|
Right to Acquire **
|
|
Common Stock
|
J. Scott Boyd
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
201 S Preston Street
|
|
|
7,844 shares
|
|
D
|
|
|
|
|
|
|
|
|
|
Ranson, WV 25438
|
|
|
1,122 shares
|
|
I
|
|
|
|
5,250
|
|
|
|
.2645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John P. Burns, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Burns Farm Road
|
|
|
34,288 shares
|
|
D
|
|
|
|
|
|
|
|
|
|
Charles Town, WV 25414
|
|
|
2,040 shares
|
|
I
|
|
|
|
5,250
|
|
|
|
1.0716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barbara H. Pichot
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12586 Leetown Road
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kearneysville, WV 25430
|
|
|
7,390 shares
|
|
D
|
|
|
|
3,892
|
|
|
|
.2180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Larry Togans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1486 Tuscawilla Drive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles Town, WV 25414
|
|
|
4,096 shares
|
|
D
|
|
|
|
3,892
|
|
|
|
.1208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Nominees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert F. Baronner, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PO Box 906
|
|
|
27,573 shares
|
|
D
|
|
|
|
|
|
|
|
|
|
Charles Town, WV 25414
|
|
|
858 shares
|
|
I
|
|
|
|
15, 660
|
|
|
|
.8386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Keith Berkeley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3291 Old Leetown Pike
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ranson, WV 25438
|
|
|
3,186 shares
|
|
D
|
|
|
|
- -
|
|
|
|
.0940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guy Gareth Chicchirichi
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
139 Blakeley Place
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles Town, WV 25414
|
|
|
32,577 shares
|
|
D
|
|
|
|
5,250
|
|
|
|
.9609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Margaret Cogswell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122 Waverly Court
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martinsburg, WV 25403
|
|
|
5,756 shares
|
|
D
|
|
|
|
5,250
|
|
|
|
.1698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mary Clare Eros
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
214 West German Street
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shepherdstown, WV 25443
|
|
|
50 shares
|
|
D
|
|
|
|
- -
|
|
|
|
.0015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William R. Harner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
259 Fenway Drive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles Town, WV 25414
|
|
|
13,818 shares
|
|
D
|
|
|
|
5,250
|
|
|
|
.4076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John C. Skinner, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PO Box 487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles Town, WV 25414
|
|
|
29,484 shares
|
|
D
|
|
|
|
5,250
|
|
|
|
.8697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officers (Non-Nominees)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David W. Irvin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PO Box 906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles Town WV 25414
|
|
|
9,198 shares
|
|
D
|
|
|
|
8,038
|
|
|
|
.2713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gayle Marshall Johnson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PO Box 906
|
|
|
11,146 shares
|
|
D
|
|
|
|
|
|
|
|
|
|
Charles Town WV 25414-906
|
|
|
1,000 shares
|
|
I
|
|
|
|
8,038
|
|
|
|
.3583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All nominees, directors and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
principal officers as a group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13 persons)
|
|
|
191,426
shares
|
|
|
|
|
|
|
|
|
|
5.6465
|
|
|
D
|
Direct ownership
|
I
|
Indirect ownership
|
**
|
Consists of options
exercisable within 60 days of January 31,
2010.
|
11
Although there is no formal written policy, the company expects all
directors to attend the annual meeting of shareholders. Eleven of eleven
directors attended the annual meeting held on May 19, 2009.
The board of directors hired a consultant in 2007 with the specific goal
of evaluating the board structure and function. It was decided that the Board
Chairman should be a non-employee director of the company. There are several
reasons for the decision.
The CEO in a small community bank generally has more day-to-day
activities to perform than an executive at larger institutions. Adding the
responsibility of chairing the board puts unnecessary demands on the CEO. Having
a non-employee chairman allows for a more objective view of the operations of
the company. Board members may feel uncomfortable reporting to the CEO
considering he is hired by the board members. Having a non-employee chairman has
the added benefit of allowing concerns with the CEO to be reported to someone
independent of the operations of the company. The consultant and the board
agreed that the separation provided better corporate governance. It is also
considered a “best practice” in the banking industry.
The board of directors is involved in the risk management of the company.
All policies are approved by the board on an annual basis. Risk oversight is
further exhibited by the activities of the committees of the board as described
beginning on page 4 under the topic, “Committees of the Board”. Reports of these
committees are given to the full board on a regular basis.
Executive Compensation
The company does not have a paid
compensation consultant for the purpose of determining the compensation level of
executive officers, directors or employees. We do have a human resources
consultant that provides survey results and research information for the purpose
of determining salary levels of all levels of employees. The use of this
information is at the discretion of management. Neither the compensation
committee nor the board of directors has hired an independent compensation
consultant.
Potomac's officers did not receive
compensation as such during 2009. The Summary Compensation Table sets forth the
annual and long-term compensation for services in all capacities to the bank for
the fiscal years ended December 31, 2009, 2008 and 2007 of the named executive
officers. Neither Potomac nor the bank has any stock option plans, employee
stock ownership plans or other employee benefit plans except for the pension
plan, 401(k) plan and stock incentive plan described in this proxy statement.
There were 36,723 options granted in 2007 through the stock incentive plan. No
options were granted in 2009 and 2008.
SUMMARY COMPENSATION
TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
Incentive Plan
|
|
Compensation
|
|
All
Other
|
|
|
Name and
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
Robert F. Baronner, Jr.
|
|
2007
|
|
190,000
|
|
2,484
|
|
15 040
|
|
- -
|
|
29,395
|
|
|
20,210
|
|
257,129
|
President and
|
|
2008
|
|
201,700
|
|
- -
|
|
- -
|
|
- -
|
|
43,591
|
|
|
19,787
|
|
265,078
|
Chief Executive
Officer
|
|
2009
|
|
207,593
|
|
- -
|
|
- -
|
|
- -
|
|
(2,127
|
)
|
|
21,882
|
|
227,348
|
Gayle Marshall Johnson
|
|
2007
|
|
81,500
|
|
8,500
|
|
7,670
|
|
- -
|
|
58,752
|
|
|
7,200
|
|
163,622
|
Senior Vice President
|
|
2008
|
|
87,021
|
|
- -
|
|
- -
|
|
- -
|
|
58,778
|
|
|
4,325
|
|
150,124
|
and Chief Financial
Officer
|
|
2009
|
|
90,790
|
|
- -
|
|
- -
|
|
- -
|
|
109,482
|
|
|
4,948
|
|
205,220
|
David W. Irvin
|
|
2007
|
|
106,000
|
|
1,260
|
|
7,670
|
|
50,707
|
|
18,836
|
|
|
3,957
|
|
188,430
|
Executive Vice President
|
|
2008
|
|
111,560
|
|
- -
|
|
- -
|
|
36,190
|
|
25,526
|
|
|
6,970
|
|
180,246
|
and Senior
Lender
|
|
2009
|
|
113,450
|
|
- -
|
|
- -
|
|
17 243
|
|
(11,011
|
)
|
|
6,708
|
|
126,390
|
12
Each officer receives option awards, incentive and other compensation.
Option awards are calculated by multiplying the grant date fair value by the
number of options granted. The grant date fair value is calculated under the
provisions set forth by FASB Accounting Standards Codification Topic 718.
Non-equity incentive plan compensation is the incentives paid in cash as opposed
to stock options. The non-equity incentive paid to the Executive Vice President
is 10% of the total fees collected on commercial loans.
The All Other Compensation total in the
Summary Compensation Table for each named executive officer can differ depending
on their position. The table below provides the 2009 detail for this
amount.
Components of All Other
Compensation
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
Contributions
|
|
Director
|
|
Life
|
|
|
|
|
|
|
to 401 (k) Plan
|
|
Fees
|
|
Insurance
|
|
Total
|
Name
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
Robert Baronner, Jr.
|
|
2009
|
|
10,136
|
|
10,800
|
|
946
|
|
21,882
|
Gayle Marshall Johnson
|
|
2009
|
|
4,535
|
|
-
|
|
413
|
|
4,948
|
David W. Irvin
|
|
2009
|
|
6,191
|
|
-
|
|
517
|
|
6,708
|
During 2003, the Potomac board and the shareholders adopted and approved
the 2003 Stock Incentive Plan which reserves 433,600 (183,600 original and
250,000 additional shares approved by shareholders in 2007) shares of common
stock that may be granted as incentive stock options (“ISO”) and nonqualified or
non-statutory stock options. There were 36,723 options granted in 2007. No
options were granted in 2008 and 2009.
The following table provides detail of
the outstanding stock options for each named executive officer. No options have
been exercised as of December 31, 2009.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR
END
|
Option Awards
|
|
Number of
|
Number of
|
|
|
|
Securities Underlying
|
Securities Underlying
|
Options
|
|
|
Unexercised Options
|
Unexercised Options
|
Exercise
|
Options
|
|
(#)
|
(#)
|
Price
|
Expiration
|
Name
|
Exercisable
|
Unexercisable
|
($)
|
Date
|
Robert F. Baronner, Jr.
|
1,600
|
2,400
|
15.60
|
1/09/2017
|
|
3,060
|
2,040
|
17.25
|
1/10/2016
|
|
4,080
|
1,020
|
14.00
|
1/11/2015
|
|
4,080
|
-
-
|
11.28
|
2/10/2014
|
Gayle Marshall Johnson
|
816
|
1,224
|
15.60
|
1/09/2017
|
|
1,591
|
1,061
|
17.25
|
1/10/2016
|
|
2,122
|
530
|
14.00
|
1/11/2015
|
|
2,040
|
-
-
|
11.28
|
2/10/2014
|
David W. Irvin
|
816
|
1,224
|
15.60
|
1/09/2017
|
|
1,591
|
1,061
|
17.25
|
1/10/2016
|
|
2,122
|
530
|
14.00
|
1/11/2015
|
|
2,040
|
-
-
|
11.28
|
2/10/2014
|
For each named executive officer above, an additional 20% of options
granted for each year became exercisable on the anniversary of the grant dates
in January and February of 2010.
13
Stock options vest 20% per year for a five year period. Fully vested
options are eligible to be exercised for a period of 10 years after the grant
date. Exercisable options represent 100% of the 2004 grant, 80% of the 2005
grant, 60% of the 2006 grant and 40% of the 2007 grant for each named executive
officer.
Employee Benefit Plans
Potomac’s defined benefit pension plan
was frozen as of October 31, 2009. Employees were eligible to participate in the
plan upon completion of at least one year of service and attainment of age 21.
An employee included any person (but not including a person acting only as a
director) who was regularly employed on a full-time basis. Benefits will be
based on average compensation for the five consecutive full calendar years of
service which produces the highest average as of October 31, 2009. No additional
participants may enter the plan, and there will be no further increases in
benefits due to increases in salaries and years of service.
Normal retirement is at age 65 with the
accrued monthly benefit determined on actual date of retirement. An employee may
take early retirement from age 60 and the accrued monthly benefit as of the
normal retirement date is actuarially reduced. There is no reduction if an
employee is 62 years of age and has 30 years service.
Compensation covered by the pension plan
is based upon total pay. Effective for plan years beginning in 2009, Internal
Revenue Code Section 401(a) (17) prohibits taking into account compensation in
excess of $245,000 in determining one’s pension benefit.
During 2002, the company established a
401(k) profit sharing plan available initially to all full-time employees. In
2007, the plan was expanded to include part time employees. After initiation of
the plan, employees become eligible to participate in the plan upon reaching age
21 and completing one year of service. Employees can make a salary deferral
election authorizing the employer to withhold up to the amount allowed by law
each calendar year. In conjunction with the freezing of the pension plan as
described above, the company has increased the match for the 401(k) plan
effective November 1, 2009. The employer may make a discretionary matching
contribution each plan year. The employer may also make other discretionary
contributions to the plan. Part time employees are not eligible to receive
matching contributions under the current plan.
Personnel Committee Report on Executive
Compensation
The personnel committee is comprised of
six members: one employee, Diane Armstrong (Human Resources Director); one
employee director, Robert F. Baronner, Jr. (ex-officio); and four independent
directors, Dr. Keith Berkeley, J. Scott Boyd, Guy Gareth Chicchirichi and John
C. Skinner, Jr. The personnel committee reviews and recommends to the board
changes to the compensation levels of all executive officers of the bank. The
committee seeks to attract and retain highly capable and well-qualified
executives and to compensate executives at levels commensurate with their amount
of service to the bank. The committee met November 24, 2009 to review and
approve the bank's 2010 compensation levels. The bank's Chief Executive Officer
reviews each executive officer's compensation and makes recommendations to the
committee. The committee reviews these recommendations and independently
evaluates each executive's job performance and contribution to the bank. The
committee also considers the inflation rate and the compensation levels of
executive officers holding similar positions with the bank's competitors. For
instance, the committee compares the compensation levels of its executive
officers with the levels, when known, of such institutions as Bank of Clarke
County, First Bank and Marathon Bank. Compensation levels for executives of the
bank are competitive when compared to these institutions.
The Chief Executive Officer's salary and
bonus are tied to performance goals of the bank and the bank's profitability for
the prior fiscal year. Robert F. Baronner, Jr. served on the committee and was
the bank's Chief Executive Officer; however, he did not make any recommendations
relating to his salary and was not present at committee meetings when his
compensation was being discussed.
14
In 2009, Mr. Baronner had the
opportunity to earn up to 22% of his base salary in bonus. This incentive
program is based entirely on the following performance factors: earnings per
share, return on equity, return on assets, average price per share, loan growth,
deposit growth, efficiency ratio, credit quality and the growth of income of BCT
Investments and the Trust Department. During 2009, Mr. Baronner earned no bonus.
In 2001 Potomac and the bank entered
into a written employment agreement with Mr. Baronner. The first year’s base
salary for 2001 for Mr. Baronner as stated in the employment agreement was set
after discussions with a professional executive recruiter as well as research
regarding market rates for similar positions for candidates with equivalent
education and experience. The salary is set each year as the agreement renews
and is based on performance goals of the bank and the bank’s profitability as
discussed above.
This report should not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that Potomac specifically
incorporates this report by reference, and shall not otherwise be filed under
such Acts.
This report is submitted by:
|
|
Robert F. Baronner, Jr.
(ex-officio)
|
Dr. Keith Berkeley
|
J. Scott Boyd
|
Guy
Gareth Chicchirichi
|
John C. Skinner,
Jr.
|
March 12, 2010
Employment Agreement
Potomac and the bank have a written
employment agreement with Robert F. Baronner, Jr., President and Chief Executive
Officer of Potomac and the bank. The agreement is for a one-year term with
automatic renewals for one year each, unless terminated by one of the parties.
The agreement provided for an annual salary of $110,000 plus director’s fees in
2001. The subsequent annual salaries are set each year as the agreement renews.
The personnel committee set the annual salary at $207,443 for 2010. Under the
agreement, if Mr. Baronner’s employment is terminated (other than for cause), he
is entitled to one year’s salary and benefits. In the event of an actual or
constructive termination of Mr. Baronner’s employment after a change in control
of Potomac or the bank, Mr. Baronner would receive two years’ compensation and
benefits for 18 months.
Compensation of Directors
Directors of Potomac were not
compensated for their services as directors for 2009. Directors of the bank were
compensated at the rate of $900 for each regular and each special board meeting
attended in 2009. The Chairman of the Board was paid $500 per month in addition
to director and committee fees. Directors were compensated $110 for each
committee meeting attended in 2009. Directors that serve on the audit committee
were compensated $220 for each audit committee meeting attended in 2009. The
audit committee member that is deemed the financial expert was compensated $330
dollars for each meeting attended in 2009. Directors who are operating officers
of the bank are not compensated for committee meetings attended.
15
DIRECTOR COMPENSATION
|
Fees Earned or Paid
|
|
All Other
|
|
|
in Cash
|
Option Awards
|
Compensation
|
Total
|
Name
|
($)
|
($)
|
($)
|
($)
|
Dr.
Keith Berkeley
|
12,780
|
-
-
|
-
-
|
12,780
|
J.
Scott Boyd
|
13,220
|
-
-
|
-
-
|
13,220
|
John
P. Burns, Jr.
|
12,010
|
-
-
|
-
-
|
12,010
|
Guy
Gareth Chicchirichi
|
12,670
|
-
-
|
-
-
|
12,670
|
Margaret Cogswell
|
11,900
|
-
-
|
-
-
|
11,900
|
Mary
Clare Eros
|
12,230
|
-
-
|
-
-
|
12,230
|
William R. Harner
|
13,440
|
-
-
|
-
-
|
13,440
|
Barbara H. Pichot
|
13,220
|
-
-
|
-
-
|
13,220
|
John
C. Skinner, Jr.
|
18,120
|
-
-
|
-
-
|
18,120
|
C.
Larry Togans
|
13,660
|
-
-
|
-
-
|
13,660
|
Certain Transactions with Directors, Officers
and Their Associates
Potomac and the bank have had, and
expect to have in the future, transactions in the ordinary course of business
with directors, officers, principal shareholders and their associates. All of
these transactions remain on substantially the same terms, including interest
rates, collateral and repayment terms on the extension of credit, as those
prevailing at the same time for comparable transactions with unaffiliated
persons, and in the opinion of management of Potomac and the bank, did not
involve more than the normal risk of collectibility or present other unfavorable
features.
The company does not have a policy
on related transactions. As stated in the previous paragraph, transactions with
directors are on the same terms and require the same documentation as those
transactions with unaffiliated persons. These transactions are voted on by the
Board of Directors with the particular director absent for the discussion and
voting. The transactions and voting are recorded in the minutes. These
transactions are designated so the information is accessible as needed for
reporting purposes.
Dr. Keith Berkeley, J. Scott Boyd
and John P. Burns, Jr., directors of the bank and Potomac, have been indebted to
the bank during 2009 in excess of $120,000. In the opinion of Potomac and the
bank, these loans 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 do
not involve more than the normal risk of collectability or present other
unfavorable features.
2. RATIFICATION OF SELECTION OF AUDITORS
The board of directors has selected
the firm of Yount, Hyde & Barbour, P.C. to serve as independent auditors for
Potomac for the calendar year 2010. If the shareholders do not ratify the
appointment of Yount, Hyde & Barbour, P.C., the board will consider the
appointment of other auditors. Potomac is advised that no member of this
accounting firm has any direct or indirect material interest in Potomac, or any
of its subsidiaries.
A representative of Yount, Hyde
& Barbour, P.C., will be present at the annual meeting to respond to
appropriate questions and to make a statement if he or she so desires. The
enclosed proxy will be voted "FOR" the ratification of the selection of Yount,
Hyde & Barbour, P.C., unless otherwise directed. The affirmative vote of a
majority of the shares of Potomac's common stock represented at the annual
meeting of shareholders is required to ratify the appointment of Yount, Hyde
& Barbour, P.C. Because a majority of the votes cast will be sufficient for
the ratification of the appointment of Yount, Hyde & Barbour, P. C., neither
broker non-votes nor abstentions will affect the outcome of the proposal. Any
shares held in street name that are not voted (“broker non-votes”) will not be
included in determining the number of votes cast.
The Audit Committee and the Board of
Directors unanimously recommend that shareholders vote “For” such ratification.
16
FORM 10-K ANNUAL REPORT TO THE SECURITIES AND
EXCHANGE COMMISSION
Upon written request by any
shareholder to Gayle Marshall Johnson, Sr. Vice President and Chief Financial
Officer, Potomac Bancshares, Inc., 111 East Washington Street, PO Box 906,
Charles Town, West Virginia 25414-0906, a copy of Potomac's 2009 Annual Report
on Form 10-K will be provided without charge.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities
Exchange Act of 1934 requires Potomac's directors and executive officers, and
persons who own more than ten percent of a registered class of Potomac's equity
securities, to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of common stock and other
equity securities of Potomac. Officers, directors and shareholders owning more
than ten percent are required by SEC regulation to furnish Potomac with copies
of all Section 16(a) forms which they file.
To Potomac's knowledge, based solely
upon review of the copies of such reports furnished to Potomac and written
representations that no other reports were required, during the two fiscal years
ended December 31, 2009, all Section 16(a) filing requirements applicable to its
officers, directors and persons owning more than ten percent were complied with
except as follows: the late filing by Director John C. Skinner, Jr. for one
transaction in 2009. Form 4 for this transaction was filed in August 2009.
OTHER MATTERS
If any of the nominees for election
as directors should be unable to serve as a director by reason of death or other
unexpected occurrence, a proxy will be voted for a substitute nominee or
nominees designated by the board of Potomac unless the board of directors adopts
a resolution pursuant to the bylaws reducing the number of directors.
The board of directors is unaware of
any other matters to be considered at the meeting but, if any other matters
properly come before the meeting, persons named in the proxy will vote such
proxy in accordance with their judgment on such matters.
SHAREHOLDER COMMUNICATIONS WITH THE
BOARD
Any shareholder desiring to contact
the Board of Directors or any individual director serving on the Board may do so
by written communication mailed to: Board of Directors, Attention: (name of
director(s), as applicable), c/o Corporate Secretary Gayle Marshall Johnson,
Potomac Bancshares, Inc., PO Box 906, Charles Town WV 25414. Any proper
communication so received will be processed by the Corporate Secretary as agent
for the Board. Unless, in the judgment of the Corporate Secretary, the matter is
not intended or appropriate for the Board (and subject to any applicable
regulatory requirements), the Corporate Secretary will prepare a summary of the
communication for prompt delivery to each member of the Board or, as
appropriate, to the member(s) of the Board named in the communication. Any
director may request the Corporate Secretary to produce for his or her review
the original of the shareholder communication.
17
SHAREHOLDER PROPOSALS FOR 2010
Any shareholder who wishes to have a
proposal included in the company’s proxy statement for the next Annual Meeting
of Shareholders pursuant to Securities Exchange Act Regulation 14a - 8 must
submit the proposal to Robert F. Baronner, Jr., President and Chief Executive
Officer of Potomac, at its executive offices, no later than December 14, 2010,
to have it considered for inclusion in the proxy statement of the annual meeting
in 2011. SEC rules establish a different deadline for submission of shareholder
proposals that are not intended to be included in our proxy statement with
respect to discretionary voting. The deadline for these proposals is February
28, 2011 for the 2011 annual meeting. If a stockholder gives notice of such a
proposal after this deadline, our proxies will be allowed to use their
discretionary voting authority to vote against the stockholder proposal when and
if it is raised at the annual meeting.
DIRECTIONS TO THE 2010 REGULAR ANNUAL MEETING
OF SHAREHOLDERS
From the Charles Town Branch:
Start on Washington Street
proceeding east. Washington Street becomes U S Route 340 north. Proceed on U S
Route 340 north approximately 4 miles to the entrance of the Quality Hotel
Conference Center. Should you reach the traffic light at the entrance to the
Town of Bolivar and/or the Harpers Ferry National Park, you have gone too far.
From Martinsburg, WV:
Take Route 9 east to the U S Route 340 exit
toward Charles Town/Harpers Ferry. Proceed to the traffic light. Make a left
turn onto U S Route 340 north. Proceed on U S Route 340 north approximately 4
miles to the entrance of the Quality Hotel Conference Center. Should you reach
the traffic light at the entrance to the Town of Bolivar and/or the Harpers
Ferry National Park, you have gone too far.
From Winchester, VA:
Take Route 7 east approximately 8 miles to U S
Route 340 toward Berryville/Charles Town. Upon exiting Route 7 make a left turn
onto U S Route 340 north at the traffic light at the end of the exit. Proceed
approximately 15 miles to Charles Town, WV and merge onto U S Route 340 north.
Proceed on U S Route 340 north approximately 4 miles to the entrance of the
Quality Hotel Conference Center. Should you reach the traffic light at the
entrance to the Town of Bolivar and/or the Harpers Ferry National Park, you have
gone too far.
From Frederick, MD:
Take U S Route 340 south approximately 20
miles to the entrance of the Quality Hotel Conference Center. Should you reach
the traffic light at the intersection of Route 230, you have gone too far.
|
Robert F. Baronner, Jr.
|
|
President and Chief Executive Officer
|
Charles Town, West Virginia
|
|
April 9, 2010
|
|
18