UNITED
STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, DC 20549
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SCHEDULE 14A INFORMATION
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Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
x
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Filed by a Party other than the
Registrant
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Check the appropriate box:
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x
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Preliminary Proxy Statement
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Confidential, for
Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to
Rule 14a-11(c) or Rule
14a-12
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Virginia
Commerce Bancorp, Inc.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the
appropriate box):
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x
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No fee required.
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Fee computed on table below per
Exchange Act Rules 14a-6(i)(4) and 0-11.
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1.
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Title of each class of securities to
which transaction applies:
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Aggregate number of securities to
which transaction applies:
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Per unit price or other underlying
value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and state how it was
determined):
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4.
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Proposed maximum aggregate value of
transaction:
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5.
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Total fee paid:
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Fee paid previously with preliminary
materials:
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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.
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1.
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Amount Previously Paid:
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2.
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Form, Schedule or Registration
Statement No.:
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Filing Party:
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Date Filed:
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VIRGINIA COMMERCE BANCORP, INC.
5350 Lee Highway
Arlington, Virginia 22207
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To be held April 29, 2009
To the Stockholders:
The Annual Meeting of Stockholders of Virginia
Commerce Bancorp, Inc. (the Company) will be held at:
The Washington Golf & Country Club
3017 North Glebe Road
Arlington, Virginia 22207
on April 29, 2009 at 4:00 p.m. for the following purposes:
(1)
To
elect eight (8) directors to serve until their successors are duly elected
and qualified;
(2)
To
vote on a non-binding advisory resolution approving the compensation of our
executive officers; and
(3)
To transact such other business as may properly come
before the meeting or any adjournment or postponement of the meeting.
Stockholders of record as of the close of business on March 10,
2009 are entitled to notice of and to vote at the meeting or any adjournment or
postponement of the meeting.
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By Order of the
Board of Directors
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Robert H.
LHommedieu
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Secretary
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March 24, 2009
Please sign, date and return your proxy promptly,
whether or not you plan to attend the meeting in person. No postage is required if mailed in the
United States in the enclosed envelope.
If you attend the meeting, you may, if you desire, revoke your proxy and
vote in person.
VIRGINIA COMMERCE BANCORP, INC.
5350 Lee Highway
Arlington, Virginia 22207
ANNUAL MEETING OF STOCKHOLDERS
Proxy Statement
INTRODUCTION
This proxy statement is being sent to stockholders of
Virginia Commerce Bancorp, Inc., a Virginia corporation (the Company),
in connection with the solicitation of proxies by the Board of Directors of the
Company for use at the Annual Meeting of Stockholders to be held at 4:00 p.m.
on April 29, 2009, and at any adjournment or postponement of the
meeting. The purposes of the meeting
are:
(1)
electing eight (8) directors
to serve until their successors are duly elected and qualified;
(2)
voting on a non-binding
advisory resolution approving the compensation of our executive officers; and
(3)
transacting such other
business as may properly come before the meeting or any adjournment or
postponement of the meeting.
The meeting will be held at:
The Washington Golf & Country Club
3017 North Glebe Road
Arlington, Virginia 22207
This proxy statement and proxy card are being sent to
stockholders of the Company on or about March 24, 2009. A copy of our Annual Report on Form 10-K
for the year ended December 31, 2008, which includes our audited financial
statements, also accompanies this proxy statement.
VOTING RIGHTS AND PROXIES
Voting Rights
Only stockholders of record at the close of business
on March 10, 2009, will be entitled to notice of and to vote at the
meeting or any adjournment or postponement of the meeting. On that date, there were 26,688,143 shares of
our common stock, par value $1.00 per share, outstanding. At March 10, 2009, the outstanding
common stock was held by approximately an aggregate of 2,650 beneficial
stockholders, including 586 stockholders of record. The common stock is the
only class of the Companys voting stock of which shares are outstanding. Each
share of common stock is entitled to one vote on all matters submitted to a
vote of the stockholders. Stockholders do not have the right to cumulate votes
in the election of directors. The
presence at the meeting, in person or by proxy, of not less than a majority of
the total number of outstanding shares of common stock is necessary to
constitute a quorum.
Proxies
Properly executed proxies which are received by the
Company in time to be voted at the meeting will be voted as specified by the
stockholder giving the proxy. In the
absence of specific instructions, proxies received will be voted
FOR
the election of the nominees for
election as directors and
FOR
approval of
the resolution approving our executive compensation. Management does not know
of any matters other than those described in this proxy statement that will be
brought before the meeting. If other
matters are properly brought before the meeting, the persons named in the proxy
intend to vote the shares to which the proxies relate in accordance with their
best judgment.
The judges of election appointed by the Board of
Directors for the meeting will determine the presence of a quorum and will
tabulate the votes cast at the meeting. Abstentions will be treated as present
for purposes of determining a quorum, but as unvoted for purposes of
determining the approval of any matter submitted to the vote of stockholders.
If a broker indicates that he or she does not have discretionary authority to
vote any shares of common stock on a particular matter, such shares will be
treated as present for general quorum purposes, but will not be considered as
present or voted with respect to that matter.
It is important that you vote. If your shares are held in street name, your
bank or broker may not vote your shares unless you provide them with voting
instructions.
Please sign, date, mark and promptly return the
enclosed proxy in the postage-paid envelope provided for this purpose in order
to assure that your shares are voted. You may revoke your proxy at any time
before it is voted at the meeting:
·
by granting a
later proxy with respect to the same shares; or
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by sending
written notice to Peter A. Converse, Chief Executive Officer of the Company, at
the address noted above, at any time prior to the proxy being voted; or
·
by voting in
person at the meeting.
Attendance at the meeting will not, in itself, revoke
a proxy. If your shares are held in the
name of your bank or broker, you will need additional documentation to vote in
person at the meeting. Please see the
voting form provided by your bank or broker for additional information
regarding the voting of your shares.
Many stockholders whose shares are held in an account
at a brokerage firm or bank will have the option to submit their proxies or
voting instructions electronically through the Internet or by telephone.
Stockholders should check the voting form or instructions provided by their
record holder to see which options are available. Stockholders submitting
proxies or voting instructions electronically should understand that there may
be costs associated with electronic access, such as usage charges from Internet
access providers and telephone companies, that would be borne by the
stockholder. To revoke a proxy previously submitted electronically, a
stockholder may simply submit a new proxy at a later date before the taking of
the vote at the meeting, in which case, the later submitted proxy will be
recorded and the earlier proxy will be revoked.
The enclosed proxy is being solicited on behalf of the
Board of Directors of the Company. The
cost of this proxy solicitation is being borne by the Company. In addition to the use of the mail, proxies
may be solicited personally or by telephone, by officers, regular employees or
directors of the Company, who will not be compensated for any such
services. Brokerage firms, fiduciaries
and other custodians who forward soliciting material to the beneficial owners
of shares of common stock held of record by them will be reimbursed for their
reasonable expenses incurred in forwarding such material. The Company has not retained a professional
proxy solicitor or other firm to assist it, for compensation, with the
solicitation of proxies, although it may do so if deemed appropriate.
Important Notice Regarding the Availability of Proxy
Materials for the Stockholder Meeting to be Held on April 29, 2009.
This
Proxy Statement and our Annual Report on Form 10-K for the year ended December 31,
2008 is also available online at
http://www.snl.com/Irweblinkx/docs.aspx?iid=4053565.
2
VOTING SECURITIES AND PRINCIPAL
HOLDERS
Securities Ownership of Directors and Officers
The following table sets forth certain information as
of March 10, 2009, concerning the number and percentage of shares of the
Companys common stock beneficially owned by its directors, nominees for
director, the executive officers who are not members of the Board of Directors,
the compensation of whom is disclosed in this proxy statement (the named
executive officers), and by its directors and all executive officers as a
group. In addition, the table includes information with respect to persons
known to the Company who own or may be deemed to own more than five percent of
the Companys stock as of March 10, 2009. Except as otherwise indicated,
all shares are owned directly, the named person possesses sole voting and sole
investment power with respect to all such shares, and none of such shares are
pledged as security. The Company knows
of no other person or persons, other than street name nominee owners, who,
beneficially or of record, own in excess of five percent of the Companys
common stock. Further, the Company is not
aware of any arrangement which at a subsequent date may result in a change of
control of the Company.
Directors and Nominees for Director:
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Number of Shares
Beneficially Owned
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Percentage of Class
Beneficially Owned(1)
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Leonard Adler,
Director
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985,847
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(2)
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3.65
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%
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Michael G.
Anzilotti, Director and President of the Company
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102,078
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(3)
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0.38
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%
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Peter A.
Converse, Director and Chief Executive Officer of the Company, President and
Chief Executive Officer of the Bank
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1,071,218
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(4)
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3.96
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%
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W. Douglas Fisher,
Chairman of the Board of Directors
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753,161
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(5)
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2.81
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%
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David M.
Guernsey, Vice Chairman of the Board of Directors
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378,043
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(6)
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1.41
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%
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Robert H.
LHommedieu, Director and Secretary
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1,028,075
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(7)
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3.83
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%
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Norris E.
Mitchell, Director
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1,706,405
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(8)
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6.25
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%
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Arthur L.
Walters, Vice Chairman of the Board of Directors
4141 N. Henderson Road
Arlington, Virginia 22203
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3,070,246
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(9)
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11.39
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%
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Named
Executive Officers Who Are Not Directors:
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Richard B.
Anderson, Jr., Executive Vice President, CLO
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237,327
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(10)
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0.88
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%
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William K.
Beauchesne, Executive Vice President, CFO
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138,352
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(11)
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0.52
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%
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John P. Perseo,
Executive Vice President, Operations & Technology
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15,236
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(12)
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0.06
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%
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All directors
and executive officers as a group (13 persons)
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9,561,788
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(13)
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32.82
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%
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(1)
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Based
on
26,688,143
shares outstanding as of
March 10, 2009, except with respect to individuals holding options or
warrants to acquire common stock exercisable within sixty days of
March 10, 2009, in which event represents percentage of shares issued
and outstanding as of March 10, 2009, plus the number of such options
held by such person, and all directors and officers as a group, which
represents percentage of shares outstanding as of March 10, 2009, plus
the number of such options and warrants held by all such persons as a group.
Certain shares beneficially owned by the Companys directors and executive
officers may be held in accounts with third party firms, where such shares
may from time to time be subject to a security interest for margin credit
provided in accordance with such firms policies.
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(2)
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Includes
presently exercisable options and warrants to acquire 341,089 shares of
common stock and 198,133 shares held by Adler NN, LLC, over which
Mr. Adler has sole voting power.
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(3)
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Includes
presently exercisable options and warrants to acquire 73,449 shares of common
stock and 3,449 shares held jointly by Mr. Anzilotti and his wife, over
which they share voting and investment power.
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(4)
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Includes
presently exercisable options and warrants to acquire 333,107 shares of
common stock. Mr. Converse has pledged 506,502 shares of common stock as
collateral
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(5)
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Includes
presently exercisable options and warrants to acquire 130,718 shares of
common stock. Mr. Fisher has pledged 50,000 shares of common stock as
collateral.
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(6)
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Includes
presently exercisable options and warrants to acquire 162,289 shares of
common stock and 10,265 shares held by Guernsey Office Products, Inc.,
of which Mr. Guernsey is Chief Executive Officer and principal
shareowner.
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(7)
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Includes
presently exercisable options and warrants to acquire 158,181shares of common
stock. Mr. LHommedieu has pledged 95,856 shares of common stock as
collateral.
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(8)
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Includes
presently exercisable options and warrants to acquire 604,576 shares of
common stock. Mr. Mitchells options and warrants include 600,000
warrants owned by an LLC in which he has a 50% ownership interest.
Mr. Mitchell disclaims beneficial ownership of 300,000 warrants
attributable to the interests of other members of the LLC.. Mr. Mitchell
has pledged shares in an amount equal to approximately one percent of the
outstanding common stock as collateral.
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(Footnotes continue on the following page)
3
(Footnotes continued from the prior page)
(9)
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Includes
presently exercisable options and warrants to acquire 273,850 shares of
common stock and 2,190,370 shares held jointly by Mr. Walters and his
wife over which they share voting and investment power, and 458,312 shares
held by C.W. Cobb and Associates, of which Mr. Walters is President.
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(10)
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Includes
presently exercisable options and warrants to acquire 162,634 shares of
common stock. Mr. Anderson has pledged 20,000 shares of common stock as
collateral.
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(11)
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Includes
presently exercisable options and warrants to acquire 129,846 shares of
common stock. Mr. Beauchesne has pledged 8,506 shares of common stock as
collateral.
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(12)
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Includes
presently exercisable options to acquire 12,711 shares of common stock.
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(13)
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Includes
presently exercisable options and warrants to acquire 2,447,388 shares of
common stock.
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PROPOSAL
1 - ELECTION OF DIRECTORS
Eight (8) directors
will be elected at the meeting for a one year period until the 2010 Annual
Meeting of Stockholders and until their successors have been elected and
qualified. Unless authority is withheld,
all proxies in response to this solicitation will be voted for the election of
the nominees listed below. Each nominee
has indicated a willingness to serve if elected. However, if any nominee becomes unable to
serve, the proxies received in response to this solicitation will be voted for
a replacement nominee selected in accordance with the best judgment of the
proxy holders named therein. Each of the
nominees for election as director currently serves as a director. The Board of Directors has determined that
each director other than Mr. Converse and Mr. Anzilotti is an independent
director as that term is defined in Rule 4200(a)(15) of The NASDAQ Stock
Market (the NASDAQ). In making this determination, the Board of
Directors was aware of and considered the loan and deposit relationships with
directors and their related interests which the Company enters into in the
ordinary course of its business and the arrangements which are disclosed under Transactions
with Related Parties in this proxy statement.
Vote
Required and Recommendation of the Board of
Directors.
Nominees
receiving a plurality of the votes cast at the meeting in the election of
directors will be elected as directors in the order of the number of votes
received.
The Board of Directors recommends that stockholders vote FOR each of the
nominees for election to the Board of Directors.
Nominees for Election as Directors
Name and Age(1)
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Position
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Principal Occupation During
Past Five Years
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Director Since(2)
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Leonard Adler,
73
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Director
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Chairman of the
Board, Adler Financial Group (real estate and investments); Principal, Total
Crafts (retail craft chain)
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1998(3)
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Michael G.
Anzilotti, 59
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Director and
President of the Company
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President of the
Company (July 2004 to present); President and CEO of First Virginia Bank
- Northern Virginia (1995 to 2003)
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2004
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Peter A.
Converse, 58
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Director and CEO
of the Company; President and CEO of the Bank
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President and
CEO of the Bank (January 1994 to present); Senior Vice President/Chief
Lending Officer, Federal Capital Bank (March 1992 to
December 1993); Senior Vice President, Bank of Maryland
(October 1990 to March 1992); Executive Vice President/Chief Lending
Officer, Century National Bank (May 1986 to July 1990)
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1994
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W. Douglas
Fisher, 71
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Chairman of the
Board
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Retired - Vice
President and founder, Aztech Corp. (computer systems) 1969 to 1990 and
1992-1997; Vice President, Executive Systems, Inc. (computer systems)
(1990 to 1992)
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1988
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David M.
Guernsey, 61
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Vice Chairman of
the Board
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Principal
shareowner and Chief Executive Officer, Guernsey Office Products, Inc.
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1988
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Robert H.
LHommedieu, 82
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Director and
Secretary
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Retired, Vice
President and founder, Hess, Egan, Hagerty and LHommedieu, Inc.
(insurance brokerage) (1974 through 1991)
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1988
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Norris E.
Mitchell, 72
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Director
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Co-Owner,
Gardner Homes Realtors
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1988
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4
Name and Age(1)
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Position
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Principal Occupation During
Past Five Years
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Director Since(2)
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Arthur L.
Walters, 89
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Vice Chairman of
the Board
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Owner and
President, TransAmerican Bankshares and various affiliates; President, C. W.
Cobb and Associates, Inc., (mortgage bankers); co-owner of various real
estate development and management companies
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1993
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(1)
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As of
March 10, 2009.
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(2)
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The
Company became the holding company for Virginia Commerce Bank (the Bank),
the Companys wholly owned subsidiary, on December 22, 1999. The date of
commencement of service shown includes service prior to December 23,
1999 as director of the Bank.
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(3)
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Mr. Adler
was appointed to the Board of Directors of the Bank effective
January 1998. He previously served as a member of the Board of Directors
of the Bank from 1989 to 1991.
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Committees, Meetings and Procedures of the Board
of Directors
Meetings.
The Board of Directors
of the Company met twelve (12) times during 2008. All members of the Board of Directors
attended at least 75% of the meetings held by the Board of Directors of the
Company and by all committees on which such members served during the 2008
fiscal year or any portion thereof.
Audit Committee.
The Board of Directors has a standing Audit
Committee, which is a joint committee of the Company and the Bank. The Audit
Committee is responsible for the selection, review and oversight of the Companys
independent accountants,
the approval of all audit, review and attest
services provided by the independent accountants,
the integrity of the Companys reporting practices and the evaluation of
the Companys internal controls and accounting procedures. It also periodically
reviews audit reports with the Companys independent auditors. The Audit Committee is currently comprised of
Messrs.
Fisher, LHommedieu
and Mitchell.
Each of the members of
the Audit Committee is independent, as determined under the definition of
independence adopted by NASDAQ for audit committee members in Rule 4350(d)(2)(A). The Board of Directors has adopted a written
charter for the Audit Committee. A copy of the charter is available on the
Companys website at www.vcbonline.com. During the 2008 fiscal year, the Audit
Committee met four (4) times. The Board of Directors has determined that Mr. Mitchell
is an audit committee financial expert as defined under regulations of the
Securities and Exchange Commission.
The audit committee is also responsible for the
pre-approval of all non-audit services provided by its independent
auditors. Non-audit services are only
provided by the Companys auditors to the extent permitted by law. Pre-approval is required unless a
de minimus
exception is met. To qualify for the
de minimus
exception, the aggregate amount of all such
non-audit services provided to the Company must constitute not more than five
percent of the total amount of revenues paid by the Company to its independent
auditors during the fiscal year in which the non-audit services are provided;
such services were not recognized by the Company at the time of the engagement
to be non-audit services; and the non-audit services are promptly brought to
the attention of the committee and approved prior to the completion of the
audit by the committee or by one or more members of the committee to whom
authority to grant such approval has been delegated by the committee.
Nominations.
The Board of Directors does not have a standing Nominating Committee. It
is the policy of the Board of Directors that all members of the Board of
Directors who are independent within the meaning of NASDAQ Rule 4200(a)(15)
participate in the nomination of directors, in order that the broadest
viewpoints and perspectives may be brought into the evaluation of sitting
directors, the decision whether to invite new directors and the determination
and evaluation of potential candidates for nomination as director. The Board of
Directors has adopted a charter addressing the nominations process. A copy of
the charter is available on the Companys website at www.vcbonline.com.
With the exception of Mr. Converse, who, in accordance
with the law then applicable to the Bank, was appointed as a director of the
Bank when he became President in 1994, Mr. Adler, who became a director of the
Bank shortly after its organization and returned to the Board in 1998, and Mr.
Anzilotti, who was appointed a director when he became President of the Company
in 2004, each of the directors of the Company was an original, or early,
director of the Bank. To date, the
operations and management of the Company have not required the
5
expansion of the Board of Directors, and as such, the Board has not
developed a formal policy for the identification or evaluation of nominees. In
general, if the Board determined that expansion of the Board or replacement of
a director was necessary or appropriate, the Board expects that it would
review, through candidate interviews with members of the Board and management,
consultation with the candidates associates and through other means, a
candidates honesty, integrity, reputation in and commitment to the community,
judgment, personality and thinking style, willingness to invest in the Company,
residence, willingness to devote the necessary time, potential conflicts of
interest, independence, understanding of financial statements and issues, and
the willingness and ability to engage in meaningful and constructive discussion
regarding Company issues. The Board would review any special expertise, for
example, expertise that qualify a person as an audit committee financial
expert, and membership or influence in a particular geographic or business
target market, or other relevant business experience.
The Board of Directors, or those directors performing the nominating
function, will consider director candidates nominated by stockholders during
such times as the Company is actively considering obtaining new directors. Candidates recommended by stockholders will
be evaluated based on the same criteria described above. Stockholders desiring
to suggest a candidate for consideration should send a letter to the Companys
Secretary and include: (a) a statement that the writer is a stockholder
(providing evidence if the persons shares are held in street name) and is
proposing a candidate for consideration; (b) the name and contact
information for the candidate; (c) a statement of the candidates business
and educational experience; (d) information regarding the candidates
qualifications to be director, including but not limited to an evaluation of
the factors discussed above which the Board would consider in evaluating a
candidate; (e) information regarding any relationship or understanding
between the proposing stockholder and the candidate; (f) information
regarding potential conflicts of interest; and (g) a statement that the
candidate is willing to be considered and willing to serve as director if
nominated and elected. Because of the limited resources of the Company and the
limited opportunity to seek additional directors, there is no assurance that
all stockholder proposed candidates will be fully considered, that all
candidates will be considered equally, or that the proponent of any candidate
or the proposed candidate will be contacted by the Company or the Board, and no
undertaking to do so is implied by the willingness to consider candidates
proposed by stockholders.
Compensation.
The Personnel and Compensation
Committee (the Compensation Committee), composed of all the directors of the Company who are
independent directors within the meaning of NASDAQ Rule 4200(a)(15)
,
is responsible for the adoption of the Companys personnel policies and
establishing salary and compensation guidelines and levels for all Company
officers and personnel, as well as the salary and compensation of all executive
officers. The Compensation Committee is also responsible for annually
nominating the officers of the Company, evaluating the performance thereof and
recommending the grant of stock options under the Companys 1998 Stock Option
Plan. The Compensation Committee has sole responsibility for making the
determinations on salary, bonus and other compensation matters for executive
officers. During the 2008 fiscal year,
the Compensation Committee met one (1) time. The Compensation Committee does not have a
charter. See further information on
compensation below under Executive Officer Compensation and Certain
Transactions.
Compensation Committee Interlocks
and Insider Participation.
No member of the Compensation Committee has served as one of our officers
or employees at any time. None of our executive officers serve as a member of
the compensation committee of any other company that has an executive officer
serving as a member of our Board of Directors.
None of our executive officers serve as a member of the board of
directors of any other company that has an executive office serving as a member
of the Compensation Committee. Except for loans and deposit transactions in the
ordinary course of business made on substantially the same terms, including
interest rates and collateral, as those for comparable transactions with
unaffiliated parties, and not presenting more than the normal risk of
collectibility or other unfavorable features, no member of the Compensation
Committee or any of their related interests has any material interest in any
transaction involving more than $120,000 to which the Company is a party.
Stockholder Communications.
Company
stockholders who wish to communicate with the Board of Directors or an
individual director can write to Virginia Commerce Bancorp, Inc., 5350 Lee
Highway, Arlington, Virginia 22207, Attention: Lynda Cornell, Assistant to the
Chief Executive Officer. Your letter should indicate that you are a
stockholder, and whether you own your shares in street name. Depending on the
subject matter, management will: (a) forward the communication to the
director or directors to whom it is addressed; (b) handle the inquiry
directly or delegate it to appropriate employees, such as where the
communication is a request for information, a stock related
6
matter, or a matter related to ordinary course matters in the conduct of
the Companys banking business; or (c) not forward the communication where
it is primarily commercial or political in nature, or where it relates to an
improper, frivolous or irrelevant topic. Communications which are not forwarded
will be retained until the next Board meeting, where they will be available to
all directors.
Director Attendance at the
Annual Meeting.
The Board believes it is
important for all directors to attend the annual meeting of stockholders in
order to show their support for the Company and to provide an opportunity for
stockholders to communicate any concerns to them. Accordingly, it is the policy
of the Company to encourage all directors to attend each annual meeting of
stockholders unless they are unable to attend by reason of personal or family
illness or pressing matters.
All
of the
Companys directors, except W. Douglas Fisher, attended the 2008 annual meeting
of stockholders.
Audit Committee Report
The Audit Committee has been appointed to assist the
Board of Directors in fulfilling the Boards oversight responsibilities by
reviewing the financial information that will be provided to the stockholders
and others, the systems of internal controls established by management and the
Board and the independence and performance of the Companys audit process.
The Audit Committee has:
(1) reviewed and discussed with management the
audited financial statements included in the Companys Annual Report on Form 10-K;
(2) discussed with Yount, Hyde &
Barbour, P.C., the Companys independent auditors, the matters required to be
discussed by statement of Auditing Standards No. 61,
Communications
with Audit Committees
, as amended, as adopted by the Public Company
Accounting Oversight Board in Rule 3200T; and; and
(3) received the written disclosures and letter
from Yount, Hyde & Barbour, as required by applicable requirements of
the Public Company Accounting Oversight Board regarding the independent
accountants communications with the audit committee concerning independence,
and discussed with Yount, Hyde & Barbour, its independence.
Based
on these reviews and discussions, the Audit Committee has recommended to the
Board of Directors that the audited financial statements be included in the
Companys Annual Report on Form 10-K for the year ended December 31,
2008. The Audit Committee has also
considered whether the amount and nature of non-audit services provided by
Yount, Hyde & Barbour is compatible with the auditors independence.
|
Members of the
Audit Committee
|
|
|
|
Robert H.
LHommedieu, Chairman
|
|
W. Douglas
Fisher
|
|
Norris E.
Mitchell
|
7
Director
Compensation
The following table sets forth information regarding compensation paid
to non-employee directors during the fiscal year ended December 31, 2008.
Director Compensation
Name
|
|
Fees
Earned or
Paid in Cash
|
|
Option
Awards(1)(2)
|
|
All Other
Compensation
|
|
Changes
in Pension Value
and Nonqualified Deferred
Compensation Earnings
|
|
Total
|
|
Leonard Adler
|
|
$
|
48,000
|
|
$
|
4,329
|
|
|
|
|
|
$
|
52,329
|
|
W. Douglas
Fisher
|
|
$
|
48,000
|
|
$
|
4,329
|
|
|
|
|
|
$
|
52,329
|
|
David M.
Guernsey
|
|
$
|
48,000
|
|
$
|
4,329
|
|
|
|
|
|
$
|
52,329
|
|
Robert H.
LHommedieu
|
|
$
|
48,000
|
|
$
|
4,329
|
|
|
|
|
|
$
|
52,329
|
|
Norris E.
Mitchell
|
|
$
|
48,000
|
|
$
|
4,329
|
|
|
|
|
|
$
|
52,329
|
|
Arthur L.
Walters
|
|
$
|
48,000
|
|
$
|
4,329
|
|
|
|
|
|
$
|
52,329
|
|
(1)
Represents the amount of expense recognized in 2008 with respect to
option awards for financial reporting purposes.
The grant date fair value of the 2008 option awards for each director
was $23,483. Please refer to note 12 to
the Companys Consolidated Financial Statements for the year ended December 31,
2008, for a discussion of the assumptions used in calculating the grant date
fair value.
(2)
At December 31, 2008, the non-employee directors had outstanding
option awards, vested and unvested, to purchase shares of common stock as
follows: Mr. Adler 109,713 shares; Mr. Fisher 79,342 shares; Mr. Guernsey
80,913 shares; Mr. LHommedieu 46,805 shares; Mr. Mitchell
13,200 shares and Mr. Walters 12,474 shares.
During the fiscal year ended December 31, 2008, the directors
received an aggregate of $336,000 for attendance at meetings of the Board of
Directors of the Company and the Bank.
All directors other than Mr. Anzilotti were entitled to receive
$4,000 monthly for attendance at Board and committee meetings. Mr. Anzilotti
is not entitled to receive fees for his service as a director. Mr. Converse receives payment of cash
fees for Board service, which are reflected in the Summary Compensation Table
under All Other Compensation.
Additionally, in January 2008, each of the six outside directors
was granted options to purchase 6,600 shares of common stock, at an exercise
price of $10.67 per share, as adjusted for a 10% dividend paid in May 2008. The options vest in five equal annual
installments commencing on the first anniversary of the date of grant, and have
a term of 10 years from the date of grant.
The directors
receive no separate compensation for attendance at committee meetings. Directors are currently entitled to receive a
fee of $4,000 per month for attendance at all board and committee meetings. In January 2009,
each of the six outside directors was granted options to purchase 3,000 shares
of common stock, at an exercise price of $4.31 per share, vesting in five
annual installments commencing on the first anniversary of the grant date and
having a ten-year term from the date of grant.
The grant date fair value of the 2009 option awards for each director
was $4,595.
Outside directors are entitled to defer all or a portion of their fees
pursuant to the Companys Deferred Compensation Plan discussed below. No
director deferred any fees in 2008 under the plan. The Company does not maintain any non-equity
incentive plans or compensation programs, or defined benefit retirement plans,
for directors.
Executive
Officers Who Are Not Directors
The following information is provided with respect to the current
executive officers of the Company who are not directors.
Name
|
|
Age
|
|
Position
|
Richard B.
Anderson, Jr.
|
|
54
|
|
Executive Vice
President and Chief Lending Officer
|
William K. Beauchesne
|
|
52
|
|
Executive Vice
President and Chief Financial Officer
|
Patricia M. Ostrander
|
|
42
|
|
Executive Vice
President - Human Resources
|
John P.
Perseo, Jr.
|
|
63
|
|
Executive Vice
President - Operations & Technology
|
Steven A. Reeder
|
|
42
|
|
Executive Vice
President - Retail Banking
|
8
Richard B. Anderson, Jr.
- Mr. Anderson,
Executive Vice President and Chief Lending Officer of the Bank, joined Virginia
Commerce Bank in May 1996. Prior to
joining the Bank, Mr. Anderson was a Senior Vice President and Senior
Commercial Loan Officer at Allegiance Bank, N.A., Bethesda, Maryland, (March 1987
to April 1996). Mr. Anderson has over 32 years of managerial,
administrative and operational lending experience.
William K. Beauchesne
- Mr. Beauchesne,
Executive Vice President and Chief Financial Officer of the Bank, joined the
Bank in August 1995. Prior to
joining the Bank, Mr. Beauchesne served as Chief Operations Officer and
Director of Metropolitan Bank for Savings, FSB, Arlington, Virginia (November 1986
to May 1993). Mr. Beauchesne
has over 33 years of accounting, operations and financial management experience
in the banking industry.
Patricia
M. Ostrander
- Ms. Ostrander, Executive Vice President -
Human Resources, joined the Bank in May 1994 as Loan Administration
Officer. Prior to joining the Bank, Ms. Ostrander
was a Loan Administration Officer at Tysons National Bank, McLean, Virginia (December 1992
to April 1994). Ms. Ostrander
has over 20 years of managerial, administrative and operational lending
experience in the banking industry.
John P.
Perseo, Jr.
-
Mr. Perseo,
Executive Vice President - Operations and Technology, joined the Bank in April 2005
as Senior Vice President - Information Technology, and assumed his current
title in January 2006. Prior to
joining the Bank, Mr. Perseo served as Senior Vice President, IT
Application Development, at First Virginia Bank Northern Virginia, from 1999
until its merger with BB&T in 2004 and Project Manager, at Management Technology
Inc. from 2004 until 2005. Mr. Perseo
has over 36 years of experience in banking technology and operations.
Steven A.
Reeder -
Mr. Reeder, Executive Vice President - Retail
Banking, joined the Bank in June 2005. Prior to joining the Bank, Mr. Reeder
served as Senior Vice President and Retail Banking Manager for BB&Ts
branch network in Loudoun, Prince William, Stafford, and Spotsylvania
counties. He served in a similar
capacity with First Virginia Bank - Northern Virginia from 2001 until its
merger with BB&T in 2003. Mr. Reeder
has over 20 years of retail experience in the banking industry.
EXECUTIVE OFFICER COMPENSATION AND CERTAIN TRANSACTIONS
Compensation
Disclosure and Analysis
In this
Compensation Disclosure and Analysis (CD&A), we give an overview and
analysis of our compensation program and policies, the material compensation
decisions we have made under those programs and policies, and the material
factors that we considered in making those decisions. Later in this proxy
statement under the heading Executive Compensation Tables, you will find a
series of tables containing specific information about the compensation earned
or paid in 2008 to Mr. Converse, the Chief Executive Officer of the
Company, Mr. Beauchesne, the Chief Financial Officer, and the three most
highly compensated executive officers of the Company (including officers of the
Bank) who received total compensation of $100,000 or more during the fiscal
year ended December 31, 2008, referred to as our named executive officers.
Compensation
Objectives
The primary objectives of the Compensation Committee of our Board of
Directors with respect to executive compensation is to tie annual and long-term
cash and stock incentives to the achievement of measurable Company and individual
performance objectives, thereby aligning the executives incentive with
maintaining and increasing stockholder value.
We attempt to achieve these objectives through compensation plans that
tie a substantial portion of our named executive officers overall compensation
to our financial performance. Our compensation philosophy is to reward our
executives with compensation at market competitive rates, while rewarding
outstanding bank performance with above-average total compensation.
During 2006, the Compensation Committee engaged the services of Clark
Consulting (Clark) to review executive compensation at the Company and to
recommend potential improvements regarding existing practices. The Compensation
Committee requested Clarks review, as an objective third party, to summarize
issues relative to topics such as competitive executive compensation and
incentive practices with the intent to identify appropriate compensation
9
levels. The review
utilized 2006 proxy data for a custom peer group of 20 publicly traded
banks(1), the selection of which was based upon similarities in asset size,
geographic location, and performance. The executive compensation paid in 2005
for this proxy peer group then was increased 4%, to reflect general market
movement in executive compensation from 2005 to 2006, and to provide therefore
a more current comparison to the Company. In comparing 2005 year-end financial
information filed with the 2006 proxies, it was found that the Companys
performance was higher than that of its peers, with the majority of the Companys
financial measures above the 75
th
percentile of the peer group. Therefore, based
on our review of this peer group information, we believe that our executive
compensation is in line with our compensation philosophy as stated above.
Compensation
Components
The key components of our executive compensation program consist of a
base salary and various performance-based compensation plans including our
Annual Bonus Plan, 1998 Stock Option Plan, and 401(k) Plan. Base salary and bonus, or cash compensation,
comprise the substantial portion of total executive compensation.
Base
Salary
The Compensation Committee believes that base salary for named
executive officers should be targeted at market competitive levels while
rewarding outstanding bank performance with above-average total compensation.
Base salaries are reviewed annually and adjusted from time to time, based on
our review of market data and assessment of Company and individual executive
performance. Changes made to base salaries for 2007 were targeted to the 50
th
percentile of the custom peer group developed
by Clark, despite the majority of our performance measures being above the 75
th
percentile.
For 2008, base salaries for all executive officers increased only by an
average of 3.21 percent due to the changes made in 2007 and in recognition of
continued challenges facing the banking industry and U.S. economic conditions
in 2008. For 2009 base salaries were unchanged.
Annual
Bonus Plan
Executive management participates in the Companys Annual Bonus Plan.
Under the Plan, an executive is eligible to potentially receive a percentage of
his base salary based on achievement of Company and individual performance
objectives. Historically, and for the year ended December 31, 2006, the
Company paid bonuses on a discretionary basis based on its performance against
budget with percentage increases, or decreases, generally in proportion to the
year-over-year increases in net earnings, if budget was met or exceeded. There
was no specific policy in terms of the bonus as a percentage of base salary.
For 2007 and beyond, the Annual Bonus Plan remains discretionary; however,
bonus payments will be guided by ranges within tiers according to position and
based on performance relative to both Company and individual departmental goals
and objectives. The table below details
the range of percentage bonus to base salary each executive could earn in 2008,
and the percentage of total bonus applicable to Company and
departmental/individual goals and objectives. These ranges are more closely
aligned with the 75
th
percentile of the peer group as well as
industry data for banks with assets of $1-5 billion. These ranges are a matter of guidance and not
an entitlement. The actual bonus which
an individual named executive officer may receive may be above or below the
range indicated, and may be based on an alternative weighting of the factors
indicated.
|
|
|
|
|
|
Goals & Objectives
|
|
|
|
Award as a % of Salary
|
|
|
|
Departmental/
|
|
Executive
|
|
Target Range
|
|
Maximum
|
|
Company
|
|
Individual
|
|
CEO
|
|
60%-100%
|
|
100%-150%
|
|
100
|
%
|
0
|
%
|
President-Holding
Company
|
|
40% - 60%
|
|
60%- 80%
|
|
75
|
%
|
25
|
%
|
EVP-CLO
|
|
40% - 60%
|
|
60%-120%
|
|
25
|
%
|
75
|
%
|
(1)
|
Sterling Financial Corporation (SLFI), TrustCo Bank
Corp NY (TRST), U.S.B. Holding Co., Inc. (UBH), Capital City Bank
Group, Inc. (CCBG), Sandy Spring Bancorp, Inc. (SASR), City Holding
Company (CHCO), Security Bank Corporation (SBKC), Hudson Valley Holding Corp.
(HUVL), First Indiana Corporation (FINB), Tompkins Trustco, Inc. (TMP),
CoBiz Inc. (COBZ), Union Bankshares Corporation (UBSH), First Community
Bancshares, Inc. (FCBC), TowneBank (TOWN), Univest Corporation of
Pennsylvania (UVSP), Interchange Financial Services Corp. (IFCJ), Virginia
Financial Group, Inc. (VFGI), Cardinal Financial Corporation (CFNL), FNB
Corporation (FNBP), and Severn Bancorp, Inc. (SVBI).
|
10
|
|
|
|
|
|
Goals & Objectives
|
|
|
|
Award as a % of Salary
|
|
|
|
Departmental/
|
|
Executive
|
|
Target Range
|
|
Maximum
|
|
Company
|
|
Individual
|
|
EVP-CFO
|
|
40% - 60%
|
|
60%- 80%
|
|
75
|
%
|
25
|
%
|
EVP-Operations
and Technology
|
|
30% - 40%
|
|
40%- 80%
|
|
25
|
%
|
75
|
%
|
The Company performance measurements used for all executives to
determine if the Company goals and objectives are met is return on equity as
well as various other financial performance measures. The Chief Executive
Officer is measured solely on overall Company performance, while the Company
Presidents individual performance measurement is business development related,
the EVP-CLOs individual measurement is loan production, loan profitability and
credit quality related, the EVP-CFOs is based on asset /liability management
and the efficiency ratio, and the EVP-Operations and Technology is also based
on the efficiency ratio. No annual bonuses were paid to executive officers for 2008.
All other officers of the Company participate in the Annual Bonus Plan
with formula driven bonuses for production officers in lending, business
development and retail banking and subjective bonuses for non-production
support officers. As with the named executive officer participants, payouts are
based on achieving Company and individual performance objectives.
401(k) Plan
Our 401(k) Plan allows substantially all full-time officers and
employees of the company to defer a portion of their compensation, and provides
a match of up to 5% of their base salaries and bonus amounts, subject to
certain IRS limitations. While the decision to match employee contributions is
discretionary, in general, all employees receive the same percentage match.
Stock
Options
We believe that our long-term interests are best advanced by aligning
the interests of our executives and key non-executive officers with the
interests of our stockholders. Accordingly, we make options available to our
executives pursuant to our 1998 Stock Option Plan, which was adopted by our
stockholders in 1998. Options under the current plan are qualified stock
options granted at the then current fair market value at the time the option is
granted. Currently, options have a five year vesting period. Generally, options expire at the end of ten
years from the date of grant or ninety days after separation from the Company
for reasons other than cause, death or disability.
Option grants are approved by our Compensation Committee in January each
year, and periodically for certain key new officer hires during the year. The Compensation Committee awards grants
based on a number of criteria including the relative rank of the executive
within the Company and his or her specific contributions to the success of the
Company. We believe the options serve to enhance stockholder value by aligning
the interest of our executives with those of the stockholders and also by
helping to retain our named executive officers through the extended vesting
period of the options. The table below details the range of option awards as a
percentage of base salary each executive is eligible to earn, targeted to the
50
th
and 75
th
percentiles of
the peer group, as well as industry data for banks with assets of $1-5 billion,
and provided as a matter of guidance and not an entitlement for the named
executives.
|
|
Award as a % of Salary
|
|
Executive
|
|
Up to 100% of Goal
|
|
Maximum
|
|
CEO
|
|
30%-40%
|
|
60%-80%
|
|
President-Holding
Company
|
|
20%-30%
|
|
40%-60%
|
|
EVP
|
|
20%-30%
|
|
40%-60%
|
|
For 2007
performance, awards for all executive officers were based on 30% of base
salary, and calculated using the Black-Scholes option-pricing model. For 2008
the executive officers received half the award they received in 2007.
11
Employment
and Severance Arrangements
No named executive
officer has any written severance arrangements, any written employment
agreement, or any agreement providing for a payment upon a change in control of
the Company. Since the beginning of his tenure at the Company, Mr. Converse
and the Compensation Committee have had an oral agreement to provide him with a
change in control agreement, which would pay him one year of base salary in the
event of his termination or certain other events, following a change in control
of the Company. This payment may be subject to limitation or elimination in
order to comply with the requirements of the American Reinvestment and Recovery
Act of 2009, discussed below. Under the
terms of the Companys option plans, all options fully vest upon a change in
control.
Inter-Relationship
of Elements of Total Compensation
The various elements of the compensation package are not interrelated.
For example, if it does not appear as though the target bonus will be achieved,
the number of options that will be granted may not be affected. There is no
significant interplay of the various elements of total compensation between
each other. If options that are granted in one year become underwater, the
amount of the bonus or base compensation to be paid the executive officer for the next year is not impacted.
Similarly, if options become extremely valuable, the amount of base
compensation or bonus to be awarded for
the
next year
is not affected. While
the Board has discretion to make exceptions to any base compensation or bonus
payouts under existing plans, it has not approved any exceptions to the plans
with regard to any executive officers.
Other
Information
We have not adopted formal stock ownership requirements for our
executive officers and directors. We encourage our executive officers and
directors to make investments in our Company stock as a long term investment,
but do not have a policy related to any required or target levels of
investment. All of the executive
officers and directors own common stock and options to purchase common stock
pursuant to our 1998 Stock Option Plan. We also have no policy with regard to
the adjustment or recovery of awards or payments if the relevant company
performance measures upon which they are based are restated or otherwise
adjusted in a manner that would reduce the size of an award or payment.
Perquisites, which are not material to the named executives overall
compensation, are noted in the Summary Compensation Table.
Input from
the Chief
Executive Officer is considered by the Compensation Committee regarding the
criteria to be used to determine base salary, annual bonuses and other benefits
for
executive officers other than
the Chief Executive Officer. Although input from
the Chief Executive Officer is considered by the
Compensation Committee, it is not given any disproportionate weight. The
Compensation Committee has the final authority on compensation matters.
Emergency Economic Stabilization
Act of 2008
On December 12, 2008, the Company sold a series
of its preferred stock and common stock purchase warrants to the United States
Department of Treasury (the Treasury) under the Troubled Asset Relief Program
(TARP) Capital Purchase Program (CPP) created under the Emergency Economic
Stabilization Act of 2008 (EESA). As a result of this transaction, the
Company became subject to certain executive compensation requirements under the
CPP, the EESA, and Treasury regulations. Those requirements apply the Companys
named executive officers of the Company, as they be determined from time to
time (collectively, the SEOs). Those requirements are:
·
A
prohibition on providing incentive compensation arrangements that encourage
SEOs to take unnecessary and excessive risks.
·
The
Compensation Committee must review SEO incentive compensation arrangements with
senior risk officers to ensure that SEOs are not encouraged to take such risks
and must meet annually with senior risk officers to discuss and review the
relationship between risk management policies and practices and the SEO
incentive compensation arrangements.
12
·
Recovery
of any bonus or incentive compensation paid to an SEO where the payment was
later found to have been based on statements of earnings, gains, or other
criteria which prove to be materially inaccurate.
·
Limits
on the amounts that can be paid under change in control and similar agreements
which provide payments upon separation of service.
·
Limits
on the Companys tax deduction for compensation paid to any SEO of $500,000
annually.
American Reinvestment and Recovery
Act of 2009
On
February 17, 2009, the President of the United States signed into law the
American Reinvestment and Recovery Act of 2009 (ARRA). ARRA contains
expansive new restrictions on executive compensation for participants in the
CPP. The ARRA amends the executive compensation and corporate governance
provisions of EESA.
Key
features of the ARRA are:
·
A prohibition of the payment of any bonus,
retention award, or incentive compensation to the five most highly compensated
employees of the Company (whether or not SEOs) for as long as any CPP related
obligations are outstanding. The prohibition does not apply to bonuses payable
pursuant to employment agreements in effect prior to February 11, 2009.
·
Long-term restricted stock is excluded from
ARRAs bonus prohibition, but only to the extent the value of the stock does
not exceed one-third of the total amount of annual compensation of the employee
receiving the stock, the stock does not fully vest until after all
obligations under financial assistance provided under the TARP is outstanding
(excluding any period in which the federal government only holds warrants to
purchase common stock, referred to as while assistance is outstanding), and
any other conditions which the Treasury may specify have been met.
·
Prohibition on any payment to any SEO or any
of the next five most highly-compensated employees upon termination of
employment for any reason for while assistance is outstanding.
·
Recovery of any bonus or other incentive
payment made on the basis of materially inaccurate financial or other
performance criteria that is paid to the next twenty most highly compensated
employees in addition to the senior executive officers.
·
Limits on compensation that exclude
incentives for SEOs to take unnecessary and excessive risks that threaten the
value of the Company while assistance is outstanding.
·
Prohibition on compensation plans that encourage
earnings manipulation in order to enhance any employees compensation.
·
A requirement that the CEO and CFO provide a
written certification of compliance with the executive compensation
restrictions in ARRA in the Companys annual filings with the SEC.
·
Implementation of a company-wide policy
regarding excessive or luxury expenditures.
·
Review by Treasury of bonuses, retention
awards, and other compensation paid to the SEOs and the next twenty most
highly-compensated employees of each company receiving CPP assistance before
ARRA was enacted, and that Treasury seek to negotiate with the CPP recipient
and affected employees for reimbursement if it finds any such payments were
inconsistent with the CPP or otherwise in conflict with the public interest.
The
ARRA requires both the Treasury and the Securities and Exchange Commission (the
SEC) to issue rules to implement these new executive compensation
restrictions, and as such the requirements remain subject to clarification,
revision or expansion. After the
Treasury and the SEC publish these rules, the Compensation Committee will
consider these new limits on executive compensation and determine how they
impact the Companys executive compensation program. While the Compensation
Committee believes that it does not have any compensation policies which are
inconsistent with EESA or the ARRA, it expects that the Company will seek
changes to its compensation policies and agreements in order to meet the
requirements of these statutes and regulations while any CPP assistance is
outstanding.
13
Compensation
Committee Report
We have reviewed and discussed the foregoing CD&A with management,
as well as with our compensation consultant, Clark Consulting. Based on our
review and discussion with management, we have recommended to the Board of
Directors that the CD&A be included in this proxy statement and
incorporated by reference in our annual report on Form 10-K for the year
ended December 31, 2008.
The compensation committee certifies that it has reviewed with senior
risk officers the incentive compensation arrangements for named executive
officers and has made reasonable efforts to ensure that such arrangements do
not encourage such officers to take unnecessary and excessive risks that
threaten the value of the financial institution.
|
Members of the
Personnel and Compensation Committee
|
|
|
|
W. Douglas Fisher,
Chairman
|
|
Leonard Adler
|
|
David M. Guernsey
|
|
Robert H. LHommedieu
|
|
Norris E. Mitchell
|
|
Arthur L. Walters
|
This report shall not be deemed to be incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed
filed under such acts.
Executive
Compensation Tables
The following table sets forth a comprehensive overview of the
compensation for Mr. Converse, the Chief Executive Officer of the Company,
Mr. Beauchesne, the Chief Financial Officer, and the three most highly
compensated executive officers of the Company (including officers of the Bank)
who received total compensation of $100,000 or more (without reference to the
change in value of certain pension benefits and above-market earnings on
nonqualified deferred compensation plans) during the fiscal year ended December 31,
2008.
Summary Compensation Table
Name and Principal Position
|
|
Year
|
|
Salary
|
|
Bonus(1)
|
|
Option
Awards(2)
|
|
All Other
Compensation
|
|
Total
|
|
Peter A. Converse, Director, Chief Executive Officer
Company; President and Chief Executive Officer Bank
|
|
2008
|
|
$
|
381,000
|
|
$
|
|
|
$
|
44,896
|
|
$
|
65,466
|
(3)
|
$
|
491,362
|
|
|
2007
|
|
$
|
370,000
|
|
$
|
200,000
|
|
$
|
31,384
|
|
$
|
62,885
|
(4)
|
$
|
664,269
|
|
|
2006
|
|
$
|
325,000
|
|
$
|
300,000
|
|
$
|
14,312
|
|
$
|
62,328
|
(5)
|
$
|
699,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael G. Anzilotti Director and President of the
Company
|
|
2008
|
|
$
|
169,950
|
|
$
|
|
|
$
|
22,249
|
|
$
|
17,276
|
(6)
|
$
|
209,475
|
|
|
2007
|
|
$
|
165,000
|
|
$
|
48,000
|
|
$
|
17,027
|
|
$
|
16,660
|
(7)
|
$
|
246,687
|
|
|
2006
|
|
$
|
150,000
|
|
$
|
60,000
|
|
$
|
8,808
|
|
$
|
12,846
|
(8)
|
$
|
231,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard B. Anderson, Jr., Executive Vice President
and Chief Lending Officer Bank
|
|
2008
|
|
$
|
231,750
|
|
$
|
|
|
$
|
29,276
|
|
$
|
17,500
|
(9)
|
$
|
278,526
|
|
|
2007
|
|
$
|
225,000
|
|
$
|
100,000
|
|
$
|
21,828
|
|
$
|
15,000
|
(10)
|
$
|
361,828
|
|
|
2006
|
|
$
|
205,000
|
|
$
|
125,000
|
|
$
|
11,009
|
|
$
|
13,500
|
(11)
|
$
|
354,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William K. Beauchesne, Treasurer and Chief Financial
Officer Company; Executive Vice President and Chief Financial Officer
Bank
|
|
2008
|
|
$
|
190,550
|
|
$
|
|
|
$
|
25,474
|
|
$
|
14,829
|
(12)
|
$
|
230,853
|
|
|
2007
|
|
$
|
185,000
|
|
$
|
56,000
|
|
$
|
20,016
|
|
$
|
15,000
|
(10)
|
$
|
276,016
|
|
|
2006
|
|
$
|
170,000
|
|
$
|
70,000
|
|
$
|
11,009
|
|
$
|
13,500
|
(11)
|
$
|
264,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John P. Perseo, Executive Vice President Operations
and Technology - Bank
|
|
2008
|
|
$
|
164,800
|
|
$
|
25,000
|
(13)
|
$
|
19,267
|
|
$
|
17,108
|
(14)
|
$
|
226,175
|
|
14
(1)
|
Reflects amounts earned pursuant to the Companys Annual
Bonus Plan. Amounts shown are earned and accrue in the year indicated and are
paid in the following year.
|
(2)
|
Represents the amount of expense
recognized in 2008 with respect to option awards for financial reporting
purposes. Please refer to note 12 to the Companys Consolidated Financial
Statements for the year ended December 31, 2008 for a discussion on the
assumptions used in calculating the grant date fair value.
|
(3)
|
Represents $11,500 of 401(k) matching contribution, $48,000 of
director fees paid by the Company/Bank and $5,966 in club memberships.
|
(4)
|
Represents $9,000 of 401(k) matching contribution, $48,000 of
director fees paid by the Company/Bank and $5,885 in club memberships.
|
(5)
|
Represents $7,500 of 401(k) matching contribution, $48,000 of
director fees paid by the Company/Bank and $4,828 in club memberships.
|
(6)
|
Represents $9,673 of 401(k) matching contribution, $6,000 car
allowance and $1,603 in club membership.
|
(7)
|
Represents $9,000 of 401(k) matching contribution, $6,000 car
allowance and $1,666 in club membership
|
(8)
|
Represents $7,500 of 401(k) matching contribution, $6,000 car
allowance and $1,594 in club membership.
|
(9)
|
Represents $11,500 of 401(k) matching contribution and $6,000 car
allowance.
|
(10)
|
Represents $9,000 of 401(k) matching contribution and $6,000 car
allowance.
|
(11)
|
Represents $7,500 of 401(k) matching
contribution and $6,000 car allowance.
|
(12)
|
Represents $8,829 of 401(k) matching contribution and $6,000 car
allowance.
|
(13)
|
Represents special bonus paid in 2008 for cost savings in renegotiation
of certain Bank vendor contracts.
|
(14)
|
Represents $11,108 of 401(k) matching contribution and $6,000 car
allowance.
|
The Company does
not maintain (i) any equity based incentive plans that permit the grant of
equity based awards other than stock options, any (ii) non-equity
incentive plans or compensation programs (other than discretionary bonuses), or
(iii) any defined benefit retirement plans. Prior to 2008, the Company did not maintain
any nonqualified deferred compensation program or arrangement. No named executive officer has deferred any
amounts under the deferred compensation plan.
All of the named
executive officers are at will employees and serve at the pleasure of the Board
of Directors. For 2009, the named executive officers are entitled to receive
the same base salary as they did in 2008.
Grants of Plan-Based Awards
The following table presents information regarding awards to named
executive officers under the Companys 1998 Stock Option Plan.
Name
|
|
Grant Date
|
|
Option Awards:
Number of Securities
Underlying Options(1)
|
|
Exercise or Base Price
of Option Awards(1)
|
|
Grant Date Fair
Value of Stock and
Option Awards
|
|
Peter A. Converse
|
|
01/30/2008
|
|
26,950
|
|
$
|
10.67
|
|
$
|
105,477
|
|
Michael G. Anzilotti
|
|
01/30/2008
|
|
12,017
|
|
$
|
10.67
|
|
$
|
47,032
|
|
Richard B. Anderson, Jr.
|
|
01/30/2008
|
|
16,390
|
|
$
|
10.67
|
|
$
|
64,147
|
|
William K. Beauchesne
|
|
01/30/2008
|
|
13,475
|
|
$
|
10.67
|
|
$
|
52,738
|
|
John P. Perseo
|
|
01/30/2008
|
|
10,928
|
|
$
|
10.67
|
|
$
|
42,770
|
|
(1)
Adjusted to reflect a
10% stock dividend paid in May 2008.
The Companys practice is that other than awards of options made to new
hires, all options awards to employees are made by the Compensation Committee
at its annual meeting in January each year. As a public company, our Compensation
Committees equity award process is independent of any consideration of the
timing of the release of material nonpublic information, including with respect
to the determination of grant dates or stock option exercise prices. Similarly,
we expect that the release of material nonpublic information will not be timed
with the purpose or intent to affect the value of executive compensation. Under
the Companys 1998 Stock Option Plan, the exercise price of any option granted
may not be less than 100% of the fair market value of the common stock on the
date of grant. For purposes of the 1998
Stock Option Plan, fair market value is determined by reference to the average
of the highest and lowest selling price on any exchange (including NASDAQ) on
which the common stock is traded on such date, or if there were no sales on
such date, then the exercise price shall be not less than the mean between the
bid and asked price
15
on such date. As a result of this provision of the plan,
the grant price may be higher or lower than the closing price on the date of
grant.
The options granted in January 2008 vest in five equal annual
installments commencing on the first anniversary of the date of grant. The awards do not have any performance
conditions, but generally require the officer to be in the employ of the
Company on the date of vesting. All options will vest immediately upon a change
in control of the Company or Bank.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth, on an award by award basis, information
concerning all options awards held by named executive officers at December 31,
2008. All options were granted at 100%
of market value as determined in accordance with the applicable option
plan. The number of shares subject to
each award and the exercise price have been adjusted to reflect all stock
dividends, stock splits and capital restructurings effected after the date of
such award, but have not otherwise been modified, except for the acceleration
of vesting discussed below.
|
|
Option Awards
|
|
Name
|
|
Number of Securities
Underlying
Unexercised Options
Exercisable
|
|
Number of Securities
Underlying
Unexercised Options
Unexercisable
|
|
Option Exercise
Price
|
|
Option Expiration
Date
|
|
Peter A. Converse
|
|
80,415
|
|
|
|
$
|
1.39
|
|
01/03/2009
|
|
|
|
97,479
|
|
|
|
$
|
1.47
|
|
01/12/2010
|
|
|
|
44,306
|
|
|
|
$
|
1.54
|
|
01/10/2011
|
|
|
|
53,171
|
|
|
|
$
|
3.01
|
|
01/09/2012
|
|
|
|
28,358
|
|
|
|
$
|
4.32
|
|
01/11/2013
|
|
|
|
17,014
|
|
|
|
$
|
11.09
|
|
01/10/2014
|
|
|
|
14,745
|
|
|
|
$
|
12.78
|
|
01/18/2015
|
|
|
|
4,719
|
|
7,078
|
|
$
|
16.76
|
|
01/11/2016
|
|
|
|
2,783
|
|
11,132
|
|
$
|
15.99
|
|
01/16/2017
|
|
|
|
|
|
26,950
|
|
$
|
10.67
|
|
01/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
Michael G. Anzilotti
|
|
28,358
|
|
|
|
$
|
10.12
|
|
07/01/2014
|
|
|
|
5,670
|
|
|
|
$
|
12.78
|
|
01/18/2015
|
|
|
|
2,904
|
|
4,356
|
|
$
|
16.76
|
|
01/11/2016
|
|
|
|
1,331
|
|
5,324
|
|
$
|
15.99
|
|
01/16/2017
|
|
|
|
|
|
12,017
|
|
$
|
10.67
|
|
01/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
Richard B. Anderson, Jr.
|
|
26,803
|
|
|
|
$
|
1.39
|
|
01/03/2009
|
|
|
|
29,242
|
|
|
|
$
|
1.47
|
|
01/12/2010
|
|
|
|
31,012
|
|
|
|
$
|
1.54
|
|
01/10/2011
|
|
|
|
28,358
|
|
|
|
$
|
3.01
|
|
01/09/2012
|
|
|
|
22,687
|
|
|
|
$
|
4.32
|
|
01/11/2013
|
|
|
|
12,760
|
|
|
|
$
|
11.09
|
|
01/10/2014
|
|
|
|
11,343
|
|
|
|
$
|
12.78
|
|
01/18/2015
|
|
|
|
3,630
|
|
5,445
|
|
$
|
16.76
|
|
01/11/2016
|
|
|
|
1,754
|
|
7,018
|
|
$
|
15.99
|
|
01/16/2017
|
|
|
|
|
|
16,390
|
|
$
|
10.67
|
|
01/30/2018
|
|
16
|
|
Option Awards
|
|
Name
|
|
Number of Securities
Underlying
Unexercised Options
Exercisable
|
|
Number of Securities
Underlying
Unexercised Options
Unexercisable
|
|
Option Exercise
Price
|
|
Option Expiration
Date
|
|
William K. Beauchesne
|
|
3,850
|
|
|
|
$
|
1.47
|
|
01/12/2010
|
|
|
|
26,581
|
|
|
|
$
|
1.54
|
|
01/10/2011
|
|
|
|
26,581
|
|
|
|
$
|
3.01
|
|
01/09/2012
|
|
|
|
22,687
|
|
|
|
$
|
4.32
|
|
01/11/2013
|
|
|
|
12,760
|
|
|
|
$
|
11.09
|
|
01/10/2014
|
|
|
|
11,343
|
|
|
|
$
|
12.78
|
|
01/18/2015
|
|
|
|
3,630
|
|
5,445
|
|
$
|
16.76
|
|
01/11/2016
|
|
|
|
1,452
|
|
5,808
|
|
$
|
15.99
|
|
01/16/2017
|
|
|
|
|
|
13,475
|
|
$
|
10.67
|
|
01/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
John P. Perseo
|
|
4,537
|
|
|
|
$
|
11.68
|
|
04/01/2015
|
|
|
|
2,541
|
|
3,811
|
|
$
|
16.76
|
|
01/11/2016
|
|
|
|
1,089
|
|
4,356
|
|
$
|
15.99
|
|
01/16/2017
|
|
|
|
|
|
10,928
|
|
$
|
10.67
|
|
01/30/2018
|
|
No option may be transferred by the holder during his or her lifetime.
No awards are subject to performance conditions or other vesting requirement
other than continued employment. Awards
made prior to 2002 (i.e., those awards expiring in 2012 or earlier) vest in
three equal annual installments commencing on the first anniversary the date of
grant. Awards made after 2002 (i.e.,
those awards expiring in 2013 and after) vest in five equal annual installments
commencing on the first anniversary of the date of grant. In December 2005, in connection with the
implementation of a new accounting standard regarding the recognition of
compensation expense with respect to option awards, the Board of Directors
accelerated the vesting of all options that were unvested as of December 15,
2005, resulting in the avoidance of future option expense with respect to such
awards.
Options
Exercised and Stock Vested
The following
table sets forth information regarding options exercised by the named executive
officers during 2008, and the amount realized upon such exercises, based on the
difference between the market value on the exercise date and the exercise or
base price.
|
|
Aggregated Option Exercises in Last Fiscal Year
|
|
Name
|
|
Shares Acquired
on Exercise
|
|
Value Realized
|
|
Peter A. Converse
|
|
88,456
|
(1)
|
$
|
755,897
|
|
Richard B. Anderson, Jr.
|
|
|
|
|
|
Michael G. Anzilotti
|
|
|
|
|
|
William K. Beauchesne
|
|
3,600
|
|
$
|
36,477
|
|
John P. Perseo
|
|
|
|
|
|
(1) Adjusted
to reflect a 10% stock dividend paid in May 2008.
Employee
Benefit Plans
The Company provides all officers and full-time employees with group life
and medical and dental insurance coverage.
With the exception of all of the executive officers, all employees pay a
portion of the premium costs of medical and dental insurance.
17
401(k) Plan.
The Bank maintains
a 401(k) defined contribution plan (the Plan). Employees who are at
least 21 years of age, have completed at least ninety days of continuous
service with the Bank and have completed at least 1,000 hours of work during any
Plan year are eligible to participate in the Plan. Under the Plan, a participant may contribute
up to 15% of his or her compensation for the year, subject to certain
limitations. The Bank may also make, but
is not required to make, a discretionary contribution for each
participant. The amount of such
contribution, if any, is determined on an annual basis by the Board of
Directors. Contributions by the Bank
totaled $745,836 for the fiscal year ended December 31, 2008.
Nonqualified Deferred Compensation Plan
. On November 22, 2006, the Board of
Directors of the Bank approved the adoption of the Nonqualified Deferred
Compensation Plan for directors and key management employees of the Company,
the Bank and their affiliates. Participation in the plan is available to
members of the Board of Directors and a select group of management or highly
compensated employees of the Company, the Bank and their affiliates, including
each named executive officer disclosed in this proxy statement. Under the plan,
participants who are directors may defer on a pre-tax basis up to 100% of their
director fees, and participants who are employees may defer on a pre-tax basis
up to 80% of their base compensation and 80% of bonus or commissions. Under the plan, the Bank has no obligation to
make contributions for the benefit of participants, although they have
discretion to make contributions for the benefit of one or more
participants. No named executive
officers have deferred any amounts under the plan.
The deferred compensation accounts are fully vested to the extent they
consist of amounts attributable to deferrals by the participants, but may be
subject to a vesting schedule to the extent that they consist of amounts, if
any, attributable to discretionary contributions by the Bank. The deferred
compensation accounts are credited with earnings or losses based upon
investment elections that the participants make from among various measurement
funds designated by the Bank. The plan is unfunded and the deferred
compensation account balances are general obligations of the Bank.
At the time deferral elections are made, participants may choose when
the amounts they defer will be paid to them. Distributions of amounts deferred
under the plan upon a participants retirement are payable in installments or
in a lump sum, at the participants option; distributions for reasons other
than retirement are generally payable in a lump sum. Elections may be changed,
subject to the provisions of the plan, and, in limited circumstances such as
unforeseeable financial emergency, distributions may be made early.
Stock Option Plans.
The Company maintains the 1998 Stock Option Plan (the 1998
Plan), which was approved by stockholders of the Bank at the 1998 Annual
Meeting of Stockholders, and assumed by the Company in connection with the
reorganization in to the holding company form of ownership. Under the 1998 Plan, as amended, 2,264,585
shares of common stock (as adjusted), are available for issuance under options
granted between May 30, 1998 and April 24, 2017. As of March 7,
2009, there were an aggregate of 2,059,593
(as adjusted)
options to purchase shares of common stock outstanding under the 1998 Plan, at
exercise prices ranging from $1.47 to $19.62
per
share. Options currently outstanding under the 1998 Plan will expire no later
than January 2019.
Subsequent to December 31, 2008, options to purchase 136,709
shares of common stock, at an exercise price of $4.31 per share, were issued to
sixty-four officers and six outside
directors of the Company and Bank, including options to purchase 12,250
shares of common stock issued to Mr. Converse, options to purchase 7,450
shares of common stock issued to Mr. Anderson, options to purchase 6,125
shares of common stock issued to Mr. Beauchesne, options to purchase 5,463
shares of common stock issued to Mr. Anzilotti, options to purchase 4,968
shares of common stock issued to Mr. Perseo and options to purchase 3,000
shares of common stock issued to each outside director. These awards vest in
five equal annual installments commencing on the first anniversary of the date
of grant. As of March 10, 2009, there were 204,992 options available for
granting under the 1998 Plan.
Options under the 1998 Plan may be either incentive stock options (ISOs)
as defined in Section 422 of the Internal Revenue Code of 1986, as amended
(the Code), or options that are not ISOs (Non-ISOs). Awards to directors
may consist only of Non-ISOs. The purpose of the 1998 Plan is to advance the
interests of the Company through providing selected key employees and the
directors of the Company and its subsidiaries with the opportunity to acquire
shares of common stock. By encouraging
such stock ownership, the Company seeks to attract, retain and motivate the
best available personnel for positions of substantial responsibility and to
provide additional incentive to key employees and directors of the Company to
promote the success of the business, as measured by the value of its shares,
18
and to increase
the commonality of interests among key employees, directors and other
stockholders. The 1998 Plan is administered by the Compensation Committee of
the Board of Directors, which performs the functions of the option committee,
consisting of at least three directors of the Company who are not employees of
the Company.
Under the 1998 Plan, a participant may receive additional options
notwithstanding the earlier grant of options and regardless of their having
been exercised, expired, or surrendered.
Participants owning more than 10% of the voting power of all classes of
the Companys voting securities (and of its parent or subsidiary companies, if
any) may not receive additional ISOs unless the option exercise price is at
least 110% of the fair market value of the common stock and unless the option
expires on the fifth anniversary of the date of its grant. All other options granted under the 1998 Plan
may expire no later than the tenth anniversary of the date of their grant.
Option exercise prices are determined by the Compensation Committee on
the date the subject options are granted. No option may be granted at an
exercise price below 100% of the market value of the common stock on the date
of grant. For purposes of the 1998 Plan,
the market value is determined by the Compensation Committee, but may not be
less than the average of the highest and lowest selling price on any exchange
on which the common stock is traded on the grant date, or if there were no
sales on such date, then not less than the mean between the bid and asked price
on such date. In the event of any merger, consolidation, recapitalization,
reorganization, reclassification, stock dividend, stock split, combination or
subdivision of shares, or similar event in which the number or kind of shares
is changed without receipt or payment of consideration by the Company, the
Compensation Committee will adjust both the number and kind of shares of stock
as to which options may be awarded under the 1998 Plan, the affected terms (including
exercise price) of all outstanding options and the aggregate number of shares
of common stock remaining available for grant under the 1998 Plan. Options may be exercised in whole or in part
and are not transferable except upon the death of the participant. Any unexercised options then existing may be
exercised by the transferee under the terms of such options.
No option may be exercised within six months of its date of grant. In the absence of Compensation Committee
action to the contrary: (A) an otherwise unexpired ISO, or a Non-ISO
granted to an employee, shall cease to be exercisable upon (i) an employees
termination of employment for just cause (as defined in the 1998 Plan), (ii) the
date three months after an employee terminates service for a reason other than
just cause, death, or disability, or (iii) the date one year after an
employee terminates service due to disability, or two years after termination
of such service due to his death; (B) an unexpired Non-ISO granted to a
non-employee director shall be exercisable at any time (but not later than the
date on which the Non-ISO would otherwise expire). Notwithstanding the provisions of any option
which provides for its exercise in installments as designated by the
Compensation Committee, such option shall become immediately exercisable upon
the optionees death or permanent and total disability. Notwithstanding the
provisions of any award which provide for its exercise or vesting in
installments, on the date of a change in control, all options issued under the
1998 Plan shall be immediately exercisable and fully vested. At the time of a change in control, the
optionee shall, at the discretion of the Compensation Committee, be entitled to
receive cash in an amount equal to the excess of the fair market value of the
common stock subject to such option over the exercise price of such shares, in
exchange for the cancellation of such options by the optionee. Notwithstanding the previous sentence, in no
event may an option be cancelled in exchange for cash within the six-month
period following the date of its grant.
For purposes of the 1998 Plan, change in control means any one of the
following events: (1) the acquisition of ownership of, holding or power to
vote more than 51% of the Companys voting stock; (2) the acquisition of
the power to control the election of a majority of the Companys directors; (3) the
exercise of a controlling influence over the management or policies of the
Company by any person or by persons acting as a group within the meaning of Section 13(d) of
the Exchange Act; or (4) the failure during any period of two consecutive
years, of individuals who at the beginning of such period constitute the Board
of Directors of the Company (the Continuing Directors) for any reason to
constitute at least two-thirds thereof, provided that any individual whose
election or nomination for election as a member of the Board was approved by a
vote of at least two-thirds of the Continuing Directors then in office shall be
considered a Continuing Director. For
purposes of defining change in control, the term person refers to an
individual or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of entity not specifically listed.
The decision of the Compensation Committee as to whether a change in
control has occurred shall be conclusive and binding.
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The Company previously maintained the Incentive Stock Option Plan
approved by stockholders in 1989. That
plan expired in 1999, and the last options outstanding under that plan were
exercised in January 2008.
Transactions with Related Parties.
Some of the directors of
the Company and Bank or companies with which they are associated, and some of
the officers of the Company and Bank, were customers of, and had banking
transactions with, the Bank during the fiscal year ended December 31,
2008. The Company maintains written
policies and procedures to strictly control all loans to insiders in accordance
with Federal law (Regulation O).
Insiders include any executive officer, director, or principal
stockholder and entities which such persons control. All loans and commitments to make loans to
such persons by the Bank were made in the normal course of business on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with unrelated persons and
do not involve more than a normal risk of collectibility or present other
unfavorable features. Loans to insiders require approval by the Board of
Directors, with any interested director not participating. The Company also applies the same standards
to any other transaction with an insider. The maximum aggregate amount of loans
(including lines of credit) to officers, directors and affiliates of the
Company during 2008 amounted to $29,707,466 representing approximately 11.7% of
the Companys total stockholders equity at December 31, 2008. The
aggregate amount outstanding on such loans at December 31, 2008 was
$22,802,875. None of these loans has
ever been reported as nonaccrual, past due, restructured or potential problem
loans, and all of such loans are current as to the payment of interest and
principal.
The Companys Compliance Officer provides an annual report to the Audit
Committee on compliance with regulation.
In September 2008, the Company
entered into a Purchase Agreement pursuant to
which it sold an aggregate of $25 million of 10.20% trust preferred securities,
liquidation amount $1,000 per security (the Preferred Securities), through
VCBI Capital Trust IV, a newly formed trust subsidiary organized under Delaware
law (the Trust), on a private placement basis. In connection with the
issuance of the Preferred Securities, the Company issued warrants to purchase
an aggregate of 1.5 million shares of its common stock to the purchasers of the
Preferred Securities (the Warrants and collectively with the Preferred
Securities, the Securities). The Warrants have a term of five years
from the date of issuance, and an exercise price of $6.83 per share, which is
equal to 120% of the average closing price of the common stock for the five
trading days prior to the closing of the sale of the Securities. No additional
consideration was received for the issuance of the warrants. The gross proceeds
to the Company of the sale and issuance of the trust preferred securities and
Warrants was $25 million. The sale of the Securities was consummated on September 24,
2008.
All of the purchasers of the Securities are directors
or executive officers of the Company and/or the Bank, or such persons related
parties. The directors and executive
officers, or their related parties, purchased Securities as follows: Mr. Adler: $4,000,000 of Preferred Securities
and 240,000 Warrants; Mr. Anderson: $250,000 of Preferred Securities and 15,000
Warrants; Mr. Anzilotti: $500,000 of Preferred Securities and 30,000 Warrants; Mr.
Beauchesne: $250,000 of Preferred Securities and 15,000 Warrants; Mr. Converse:
$1,000,000 of Preferred Securities and 60,000 Warrants; :Mr. Fisher:
$1,000,000of Preferred Securities and 60,000 Warrants; Mr. Guernsey: $1,500,000
of Preferred Securities and 90,000 Warrants; Mr. LHommedieu: $2,000,000 of
Preferred Securities and 120,000 Warrants; Mr. Mitchell: $10,000,000 of
Preferred Securities and 600,000 Warrants; and Mr. Walters: $4,500,000 of
Preferred Securities and 270,000 Warrants. The Company obtained a fairness
opinion from an independent third party financial advisor with respect to the
terms of the Securities. The Company
believes that the terms of the Securities and the issuance of Securities are on
substantially the same terms as those prevailing at the time for comparable
transactions with unrelated persons.
PROPOSAL 2 - NON-BINDING ADVISORY VOTE ON EXECUTIVE
COMPENSATION
On
February 17, 2009, the President of the United States signed into law the
American Recovery and Reinvestment Act of 2009 (ARRA). ARRA revised Section 111
of the Emergency Economic Stabilization Act to require any recipient of funds
under TARP to permit a separate stockholder vote to approve the compensation of
executives, as disclosed pursuant to the compensation disclosure rules of
the Securities and Exchange Commission (the SEC). The SEC has advised that
this requirement is effective prior to the adoption of implementing regulations
under ARRA, for companies filing proxy statements after February 17, 2009.
As a result, the Company is providing stockholders with the opportunity to cast
a non-binding advisory vote at the meeting to approve the
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compensation of the Companys
executives. This proposal, commonly known as a Say-on-Pay proposal, gives
stockholders the opportunity to endorse or not endorse our executive pay
program through the following resolution:
RESOLVED
, that the shareholders approve the overall
executive compensation policies and procedures employed by the Company, as
described in Compensation Discussion and Analysis and the tabular disclosure
regarding named executive officer compensation (together with the accompanying
narrative disclosure) in this proxy statement for the 2009 Annual Meeting.
Because
this vote is advisory, it will not be binding upon the Board of Directors.
However, the Compensation Committee will take into account the outcome of the
vote when considering future executive compensation arrangements. Under the
ARRA, the vote may not be construed as overruling a decision by such the Board
of Directors, or to create or imply any additional fiduciary duty by the Board.
Stockholders are encouraged to read the section of this proxy
statement tiled Compensation Discussion and Analysis as well as the tabular
disclosure regarding named executive officer compensation, together with the
accompanying narrative disclosure.
Vote Required
The
affirmative vote of a majority of the votes cast on the proposal by the holders
of the Companys common stock present or represented at the meeting is required
to approve this proposal. Proxies received by the Company and not revoked prior
to or at the meeting will be voted in favor of this non-binding proposal unless
otherwise instructed by the stockholder.
We
believe are compensation policies are strongly aligned with the long term
interests of the Company and its stockholders.
As such,
the Board of
Directors recommends that stockholders vote FOR approval of this non-binding
advisory resolution.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
the Companys directors and executive officers, and persons who own more than
ten percent of the common stock, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission, and
to provide the Company with copies of all Forms 3, 4, and 5 they file.
Based solely upon the Companys review of the copies of the forms which
it has received and written representations from the Companys directors,
executive officers and ten percent stockholders, the Company is not aware of
any failure of any such person to comply with the requirements of Section 16(a) except
that a Form 4 reporting one transaction for Mr. Walters, a Form 4
reporting one transaction for Mr. Beauchesne and Forms 4 reporting option
grants in January 2008 for all directors and executive officers were not
filed in a timely manner.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors has selected the independent registered public
accounting firm of Yount, Hyde & Barbour, P.C. to audit the accounts
of the Company for the fiscal year ended December 31, 2009. Yount, Hyde &
Barbour audited the Companys financial statements for the year ended December 31,
2008. Representatives of Yount, Hyde &
Barbour are expected to be present at the meeting and available to respond to
appropriate questions. The representatives also will be provided with an
opportunity to make a statement, if they desire.
Audit Fees.
During 2008, the aggregate amount of fees
billed to the Company by Yount, Hyde and Barbour for services rendered by it
for the audit of the Companys financial statements and review of financial
statements included in the Companys reports on Form 10-K and 10-Q, and
for services normally provided in connection with statutory and regulatory
filings was $148,000. In 2007, Yount,
Hyde & Barbour billed $135,250 for such services. This category includes fees for services
necessary to perform the audit in accordance with the standards of the Public
21
Company Accounting
Oversight Board, and things such as consents and assistance with and review of
documents filed with Commission, and the audit of the Companys internal
control over financial reporting.
AuditRelated
Fees.
During 2008, the
aggregate amount of fees billed to the Company by Yount, Hyde and Barbour for
assurance and related services reasonably related to the performance of the
audit services rendered by it, and for consultation, was $16,312. In 2007, Yount, Hyde & Barbour
billed $8,850 for such services. For
both 2008 and 2007 this category included an employee benefit plan audit.
Tax Fees.
During 2008, the aggregate amount of fees
billed to the Company by Yount, Hyde and Barbour for tax advice, compliance and
planning services was $8,800. In 2007, Yount, Hyde & Barbour billed
$8,000 for such services. For both years fees were limited to the preparation
of federal and state tax returns for the Company and its subsidiary trusts.
All Other
Fees.
During 2008 and
2007, there were no other fees billed to the Company by Yount, Hyde and
Barbour.
None of the engagements of Yount, Hyde & Barbour provide
services other than audit services was made pursuant to the
de minimus
exception to the pre-approval
requirement contained in the rules of the Securities and Exchange
Commission and the Companys audit committee charter.
FORM 10-K ANNUAL REPORT
The Company will provide to any stockholder
solicited hereby, without charge, a copy of its Annual Report on Form 10-K
for the year ended December 31, 2008 filed with the Securities and
Exchange Commission, upon written request.
Requests should be directed to Lynda Cornell, Assistant to the Chief
Executive Officer, Virginia Commerce Bancorp, Inc., 5350 Lee Highway,
Arlington, Virginia 22207.
OTHER MATTERS
Management is not aware of any other matters to be presented for action
by stockholders at the meeting. If,
however, any other matters not now known are properly brought before the
meeting or any adjournment thereof, the persons named in the accompanying proxy
will vote such proxy in accordance with their judgment on such matters.
STOCKHOLDER PROPOSALS
All proposals of stockholders to be presented for consideration at the
next annual meeting and included in the Companys proxy materials must be
received by the Company no later than November 25, 2009. Any such proposals shall be subject to the
requirements of the proxy rules adopted under the Securities Exchange Act
of 1934. The Company must receive
written notice of intent to make a nomination to be acted upon at the next
annual meeting, for which inclusion in the Companys proxy materials is not
sought, by January 29, 2009.
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By Order of the Board
of Directors
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VIRGINIA COMMERCE BANCORP, INC.
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Robert H. LHommedieu,
Secretary
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March 24,
2009
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PLEASE MARK VOTES AS IN
THIS EXAMPLE
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REVOCABLE
PROXY
VIRGINIA COMMERCE BANCORP, INC.
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The undersigned hereby makes, constitutes and appoints W. Douglas
Fisher, David M. Guernsey and Arthur L. Walters, and each of them (with the
power of substitution), proxies for the undersigned to represent and to vote,
as designated below, all shares of common stock of Virginia Commerce
Bancorp, Inc. (the Company) which the undersigned would be entitled to
vote if personally present at the Companys Annual Meeting of Shareholders to
be held on April 29, 2009 and at any adjournment or postponement thereof.
1.
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o
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FOR
all nominees listed below (except as
noted to the contrary below)
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WITHHOLD AUTHORITY
to vote for all nominees listed below
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Nominees: Leonard
Adler; Michael G. Anzilotti; Peter A. Converse; W. Douglas Fisher; David M.
Guernsey; Robert H. LHommedieu; Norris E. Mitchell; and Arthur L. Walters
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(Instructions: To withhold
authority to vote for any individual nominee, write that nominees name in
the space provided below.)
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2.
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The non-binding, advisory proposal to approve the Companys executive
Company.
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o
FOR
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AGAINST
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ABSTAIN
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This proxy, when
properly executed, will be voted in the manner directed herein by the
undersigned stockholder. If no direction is made, this proxy will be voted
FOR
all of the nominees listed above and
FOR
the proposal to approve the Companys executive compensation.
In addition, this proxy will be voted at
the discretion of the proxy holder(s) upon any other matter which may
properly come before the meeting or any adjournment or postponement of the
meeting.
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Important: Please date
and sign your name as addressed, and return this proxy in the enclosed
envelope. When signing as executor, administrator, trustee, guardian, etc.,
please give full title as such. If the stockholder is a corporation, the
proxy should be signed in the full corporate name by a duly authorized
officer whose title is stated.
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Please check box if you
plan to attend the Annual Meeting.
o
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Please be sure to sign
and date this Proxy in the box below.
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Date
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Stockholder
sign above
(Co-holder, if any, sign above)
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Detach
above card, sign, date and mail in postage paid envelope provided.
VIRGINIA
COMMERCE BANCORP, INC.
PLEASE
COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE
ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN
THE ENVELOPE PROVIDED.
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