March 25, 2003
Dear Fellow Shareholders:
You are cordially invited to attend the 2003 Annual Meeting
of Shareholders of Old Point Financial Corporation, the holding
company for The Old Point National Bank of Phoebus and Old Point
Trust & Financial Services, N.A. The meeting will be held on
Tuesday, April 22, 2003 at 6:00 p.m. at the Williamsburg Marriott
Hotel, 50 Kingsmill Road, Williamsburg, Virginia. The
accompanying Notice and Proxy Statement describe the matters to
be presented at the meeting. Enclosed is our Annual Report to
Shareholders that will be reviewed at the Annual Meeting.
Please complete, sign, date, and return the enclosed proxy
card as soon as possible. Whether or not you will be able to
attend the Annual Meeting, it is important that your shares be
represented and your vote recorded. If you decide to attend the
Annual Meeting in person, you can revoke your proxy any time
before it is voted at the Annual Meeting. You may also follow
the instructions on your proxy card to vote by telephone or over
the internet.
We appreciate your continuing loyalty and support of Old
Point Financial Corporation.
Sincerely,
/s/Robert F. Shuford
Robert F. Shuford
Chairman of the Board and President
OLD POINT FINANCIAL CORPORATION
1 West Mellen Street
Hampton, Virginia 23663
_________________________________________________________________
NOTICE OF 2003 ANNUAL MEETING OF SHAREHOLDERS
_________________________________________________________________
TO BE HELD APRIL 22, 2003
The 2003 Annual Meeting of Shareholders of Old Point
Financial Corporation (the "Company") will be held at the
Williamsburg Marriott Hotel, 50 Kingsmill Road, Williamsburg,
Virginia, on Tuesday, April 22, 2003, at 6:00 p.m. for the
following purposes:
1. To elect [12] directors to the Board of
Directors of the Company to serve until the 2004
Annual Meeting of Shareholders, as described in
the Proxy Statement accompanying this notice.
2. To ratify the Board of Directors' appointment
of Eggleston Smith P.C., Certified Public
Accountants, as the Company's independent public
accountants for the fiscal year ending
December 31, 2003.
3. To transact such other business as may properly
come before the meeting or any adjournment
thereof.
Shareholders of record at the close of business on March
14, 2003 are entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof.
By Order of the Board of Directors
/s/Louis G. Morris
Louis G. Morris
Secretary to the Board
March 25, 2003
IMPORTANT NOTICE
Please complete, sign, date, and return the enclosed proxy
card in the accompanying postage paid envelope so that your
shares will be represented at the meeting. Shareholders
attending the meeting may personally vote on all matters that are
considered, in which event their signed proxies are revoked. You
may also follow the instructions on your proxy card to vote by
telephone or over the internet.
OLD POINT FINANCIAL CORPORATION
1 West Mellen Street
Hampton, Virginia 23663
________________________________________________________
PROXY STATEMENT
________________________________________________________
2003 ANNUAL MEETING OF SHAREHOLDERS
To be held on April 22, 2003
General
The following information is furnished in connection with
the solicitation by and on behalf of the Board of Directors of
the enclosed proxy to be used at the 2003 Annual Meeting of the
Shareholders (the "Annual Meeting") of Old Point Financial
Corporation (the "Company") to be held Tuesday, April 22, 2003,
at 6:00 p.m. at the Williamsburg Marriott Hotel, 50 Kingsmill
Road, Williamsburg, Virginia. The approximate mailing date of
this Proxy Statement and accompanying proxy is March 25, 2003.
Revocation and Voting of Proxies
Execution of a proxy will not affect a shareholder's right
to attend the Annual Meeting and to vote in person. Any
shareholder who has executed and returned a proxy may revoke it
by attending the Annual Meeting and requesting to vote in person.
A shareholder may also revoke his proxy at any time before it is
exercised by filing a written notice with the Company or by
submitting a proxy bearing a later date. Proxies will extend to,
and will be voted at, any properly adjourned session of the
Annual Meeting. If a shareholder specifies how the proxy is to
be voted with respect to any proposals for which a choice is
provided, the proxy will be voted in accordance with such
specifications. If a shareholder fails to specify with respect
to such proposals, the proxy will be voted FOR proposals 1 and 2
set forth in the accompanying notice and further described
herein.
Voting Rights of Shareholders
Only those shareholders of record at the close of business
on March 14, 2003, are entitled to notice of and to vote at the
Annual Meeting, or any adjournments thereof. The number of
shares of common stock of the Company outstanding and entitled to
vote at the Annual Meeting is 3,944,070. The Company has no
other class of stock outstanding. A majority of the votes
entitled to be cast, represented in person or by proxy, will
constitute a quorum for the transaction of business.
Each share of Company common stock entitles the record
holder thereof to one vote for each matter to be voted upon at
the Annual Meeting, except that in the election of directors
cumulative voting entitles a shareholder to give one nominee as
many votes as is equal to the number of directors to be elected,
-1-
multiplied by the number of shares owned by such shareholder or
to distribute his or her votes on the same principle between two
or more nominees as he or she sees fit. The Board of Directors
will instruct the proxies to use cumulative voting, if necessary,
to elect all or as many of the nominees as possible.
With regard to the election of directors, votes may be cast
in favor or withheld. If a quorum is present, the nominees
receiving a plurality of the votes cast at the Annual Meeting
will be elected directors; therefore, votes withheld will have no
effect. The ratification of Eggleston Smith P.C., Certified
Public Accountants, as the Company's independent public
accountants requires an affirmative vote of a majority of the
shares cast on the matter. Thus, although abstentions and broker
non-votes (shares held by customers that may not be voted on
certain matters because the broker has not received specific
instructions from the customers) are counted for purposes of
determining the presence or absence of a quorum for the
transaction of business, they are generally not counted for
purposes of determining if such a proposal has been approved, and
therefore have no effect.
Solicitation of Proxies
The cost of solicitation of proxies will be borne by the
Company. Solicitations will be made only by the use of the mail,
except that officers and regular employees of the Company, The
Old Point National Bank of Phoebus (the "Bank") and Old Point
Trust & Financial Services, N.A. (the "Trust Company") may make
solicitations of proxies by telephone, telegram, special letter,
or by special call, acting without compensation other than their
regular compensation. We anticipate that brokerage houses and
other nominees, custodians, and fiduciaries will be requested to
forward the proxy soliciting material to the beneficial owners of
the stock held of record by such persons, and the Company will
reimburse them for their charges and expenses in this connection.
Security Ownership of Certain Beneficial Owners and Management
The following table shows the share ownership as of March
14, 2003, of the shareholders known to the Company to be the
beneficial owners of more than 5% of the outstanding shares of
the Company's common stock.
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial of Class
Ownership(1)
---------------------------------------------------------------------
Old Point Trust & Financial Serives, 640,177 (2) 16.3 % (2)
N.A.
11780 Jefferson Avenue, Suite D
Newport News, Virginia 23606
James Reade Chisman 342,084 (3) 8.7 %
1700-B George Washington Highway
Yorktown, Virginia 23693-3109
Robert F. Shuford
1 West Mellen Street
P.O. Box 3392 535,484 (3) (4) 13.4 %
Hampton, Virginia 23663
-2-
VuBay Foundation
c/o Cyrus A. Dolph, IV
P.O. Box 13109 290,376 (5) 7.4 %
Norfolk, Virginia 23506-3109
Ann DeVenny Wallace
2636 South Lynn Street 296,472 (3) 7.5 %
Arlington, Virginia 22202-2264
(1) For purposes of this table, beneficial ownership has been
determined in accordance with the provisions of Rule 13d-3
of the Securities Exchange Act of 1934 under which, in
general, a person is deemed to be the beneficial owner of a
security if he or she has or shares the power to vote or
direct the voting of the security or the power to dispose of
or direct the disposition of the security, or if he or she
has the right to acquire beneficial ownership of the
security within sixty days.
(2) Old Point Trust & Financial Services, N.A. (the "Trust
Company") filed a Schedule 13G with the Securities and
Exchange Commission on February 7, 2003. As of February 28,
2003, the Trust Company, had sole voting power with respect
to 476,025 of these shares, sole dispositive power with
respect to 487,660 of these shares and shared dispositive
power with respect to 9,107 of these shares, but as a matter
of state law, the Trust Company must refrain from voting any
of these shares unless a co-fiduciary is appointed for the
sole purpose of voting the shares. The Trust Company has no
voting power (sole or shared) with respect to 170,078 of
these shares and has no dispositive power (sole or shared)
with respect to 149,336 of these shares. The 646,103 shares
are held by the Trust Company as trustee of various trust
accounts, of which no single trust account holds more than
5% of the Company's outstanding shares.
(3) According to information provided to the Company in February
2003 by VuBay Foundation, James Reade Chisman, Robert F. Shuford
and Ann DeVenny Wallace, with respect to shares owned as of
February 13, 2003 (the "VuBay information"). According to the
VuBay information, Mr. Chisman has sole voting power with respect
to 25,458 shares, shared voting power with respect to 316,626
shares, sole dispositive power with respect to 25,458 shares and
shared dispositive power with respect to 316,626 shares; Mr.
Shuford has sole voting power with respect to 131,723 shares,
shared voting power with respect to 403,761 shares, sole
dispositive power with respect to 131,723 shares and shared
dispositive power with respect to 403,761 shares; and Ms. Wallace
has sole voting power with respect to 6,096 shares, shared voting
power with respect to 290,376 shares, sole dispositive power with
respect to 6,096 shares and shared dispositive power with respect
to 290,376 shares. Mr. Chisman, Mr. Shuford and Ms. Wallace each
disclaim any beneficial interest in 290,376 of the shares
reported, which he or she may be deemed to beneficially own by
virtue of his or her position as a director of VuBay Foundation,
the holder of record of the 290,376 shares. In their capacities
as directors of VuBay Foundation, Mr. Chisman, Mr. Shuford and
Ms. Wallace each share voting and dispositive power with respect
to the shares held by VuBay Foundation with the other two
directors.
(4) See also footnotes 2 and 3 to the chart on page 5.
-3-
(5) According to VuBay Foundation information, VuBay has sole
voting power with respect to 290,376 of these shares and
sole dispositive power with respect to 290,376 shares.
VuBay Foundation's decision with respect to a vote or
disposition of these 290,376 shares is dictated by the
majority vote of the three directors of VuBay Foundation,
who share voting and dispositive power with respect to the
shares owned by VuBay Foundation, as described in footnote 3
to this chart.
The following table shows, as of March 14, 2003, the
beneficial ownership of the Company's common stock of each
director, director nominee, certain executive officers and of all
directors, director nominees, and executive officers of the
Company as a group.
Amount and Nature of Percent
Name Beneficial of Class
Ownership(1) (2) (3)
--------------------------------------------------------------------
Dr. Richard F. Clark 100,116 2.5 %
Russell Smith Evans Jr. 8,475 0.2 %
G. Royden Goodson, III 15,397 0.4 %
Dr. Arthur D. Greene 9,520 0.2 %
Gerald E. Hansen 11,066 0.3 %
Stephen D. Harris 19,332 0.5 %
John Cabot Ishon 29,689 0.8 %
Eugene M. Jordan 31,500 0.8 %
John B. Morgan, II 9,865 0.2 %
Louis G. Morris 48,966 1.2 %
Dr. H. Robert Schappert 139,110 3.5 %
Robert F. Shuford 535,484 (4) 13.4 %
Cary B. Epes 27,274 0.7 %
Margaret P. Causby 25,936 0.7 %
Eugene M. Jordan, II 12,389 0.3 %
Laurie D. Grabow 10,083 0.3 %
Frank E. Continetti 494 0 %
* Mr. Continetti resigned effective October 4, 2002.
-4-
All directors & Executive Officers 1,034,696 25.2%
as a group (17) persons
(1) For purposes of this table, beneficial ownership has been
determined in accordance with the provisions of Rule 13d-3
of the Securities Exchange Act of 1934 under which, in
general, a person is deemed to be the beneficial owner of a
security if he or she has or shares the power to vote or
direct the voting of the security or the power to dispose of
or direct the disposition of the security, or if he or she
has the right to acquire beneficial ownership of the
security within sixty days.
(2) Includes shares held (i) by their close relatives or held
jointly with their spouses, (ii) as custodian or trustee for the
benefit of their children or others, or (iii) as attorney-in-fact
subject to a general power of attorney -- Dr. Clark, 300 shares;
Mr. Evans, 975 shares; Mr. Goodson, 4,362; Mrs. Grabow, 2; Dr.
Greene, 2,952 shares; Mr. Hansen, 1,144 shares; Mr. Harris, 638
shares; Mr. Ishon, 5,239 shares; Mr. Jordan, 6,000 shares; Mr.
Morgan, 4,765 shares; Dr. Schappert, 119,715 shares; and Mr.
Shuford, 113,385 shares.
(3) Includes shares that may be acquired within sixty days
pursuant to the exercise of stock options granted under the 1989
and 1998 Old Point Stock Option Plans -- Dr. Clark, 4,500 shares;
Mr. Evans, 4,500 shares; Mr. Goodson, 4,500 shares; Dr. Greene,
4,500 shares; Mr. Hansen, 3,000 shares; Mr. Harris, 4,500 shares;
Mr. Ishon, 4,500 shares; Mr. Jordan, 4,500 shares; Mr. Morgan,
4,500 shares; Mr. Morris, 26,031 shares; Dr. Schappert, 4,500
shares; Mr. Shuford, 39,941 shares; Mr. Epes, 21,345 shares; Mrs.
Causby, 22,095 shares; Mrs. Grabow 8,730 and Mr. Jordan, II, 0
shares.
(4) See footnote 3 to the chart on page 3.
PROPOSAL ONE
ELECTION OF DIRECTORS
The twelve persons named below, all of whom currently
serve as directors of the Company, will be nominated to serve as
directors until the 2004 Annual Meeting, or until their
successors have been duly elected and have qualified. The
persons named in the proxy will vote for the election of the
nominees named below unless authority is withheld. The Company's
Board believes that the nominees will be available and able to
serve as directors, but if any of these persons should not be
available or able to serve, the proxies may exercise
discretionary authority to vote for a substitute proposed by the
Company's Board.
Director Principal Occupation For
Name (Age) Since (1) Past Five Years
--------------------------------------------------------------------------------
Dr. Richard F. Clark (70) 1981 Pathologist (retired), Sentara
Hampton General Hospital
Russell Smith Evans Jr. (60) 1993 Assistant Treasurer and
Corporate Fleet Manager
Ferguson Enterprises
G. Royden Goodson, III (47) 1994 President, Warwick Plumbing &
Heating Corp
-5-
Dr. Arthur D. Greene (58) 1994 Surgeon - Partner
Tidewater Orthopaedic Associates
Gerald E. Hansen (61) 2000 President, Chesapeake Insurance
Services, Inc.
Stephen D. Harris (61) 1988 Attorney-at-Law - Partner
Geddy, Harris, Franck & Hickman, L.L.P.
John Cabot Ishon (56) 1989 President, Hampton Stationery
Eugene M. Jordan (79) 1964 Attorney-at-Law (retired)
John B. Morgan, II (56) 1994 President, Morgan Marrow Insurance
Louis G. Morris (48) 2000 President & CEO, Old Point
National Bank (2000 - present)
EVP/CFO Old Point National Bank
(1988 - 1999)
Dr. H. Robert Schappert (64) 1996 Veterinarian - Owner, Beechmont
Veterinary Hospital
Robert F. Shuford (65) 1965 Chairman of the Board, President
& CEO, Old Point Financial
Corporation; Chairman of the
Board, Old Point National Bank
(1) Refers to the year in which the individual first became a
director of the Bank. Dr. Richard F. Clark, Eugene M. Jordan,
and Robert F. Shuford became directors of the Company upon
consummation of the Bank's reorganization on October 1, 1984.
All present directors of the Company are also directors of the
Bank. Dr. Richard F. Clark, Dr. Arthur D. Greene, Mr. John C.
Ishon and Mr. Robert F. Shuford are directors of the Trust
Company.
There are three family relationships among the directors and
executive officers. Mr. Jordan is the father of Mr. Jordan, II
and the father-in-law of Mr. Ishon. Mr. Shuford and Dr. Schappert
are married to sisters. None of the directors serve as a
director of any other company with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act
of 1934.
The Board of Directors recommends that shareholders vote "FOR"
the individuals nominated to serve as Directors.
Board Committees and Attendance
During 2003, there were 14 meetings of the Board of
Directors of the Company. Each director attended at least 75% of
all meetings of the Board and committees on which he served. The
Board of Directors of the Company has standing Executive, Audit
and Compensation Committees.
-6-
Executive Committee. Members of the Executive Committee are
Messrs. Shuford (Chairman), Harris, Jordan, Morris, and Dr.
Clark. The Executive Committee serves in an advisory capacity,
reviewing matters and making recommendations to the Board of
Directors. The Executive Committee met 4 times in 2002.
Compensation Committee. The Compensation Committee is
described below under "Report on Executive Compensation."
Audit Committee. Members of the Audit Committee are Messrs.
Hansen (Chairman), Evans, Greene, and Harris. The Audit
Committee reviews on a regular basis the work of the Company's
internal audit department. It also reviews and approves the
scope and detail of the continuous audit program, which is
conducted by the internal audit staff to protect against improper
and unsound practices and to furnish adequate protection for all
assets and records. Subject to the approval of the Board of
Directors, the Audit Committee engages a firm of certified public
accountants to conduct such audit work as is necessary and
receives written reports, supplemented by such oral reports as it
deems necessary, from the audit firm. During 2002, the Audit
Committee met 4 times.
The Board has no separate nominating committee. The
Executive Committee reviews any director nominations or
recommendations and gives its recommendations to the Board. The
entire Board reviews, on an as needed basis, the qualifications
of candidates for membership to the Board. Following appropriate
review, the Board ascertains the willingness of selected
individuals to serve and extends invitations to serve as a Board
member.
In its capacity as the nominating committee, the Executive
Committee will accept for consideration shareholders' nominations
for directors if made in writing by a shareholder entitled to
vote in the election of directors. In accordance with the
Company's bylaws, such a shareholder nomination must include
sufficient background information with respect to the nominee,
sufficient identification of the nominating shareholder and a
representation by the shareholder of his or her eligibility and
intention to appear at the annual meeting (in person or by proxy)
to nominate the individual specified in the notice, a description
of any arrangements or understandings between the shareholder and
the nominee or others regarding the nomination, an indication of
the total number of shares expected to be voted for the nominee,
and the nominee's written consent to the nomination. Shareholder
nominations must be received by the Company's President at the
Company's principal office in Hampton, Virginia, not more than 50
days and not less than 14 days prior to the date of the 2004
annual meeting in order to be considered for the 2004 annual
election of directors.
Compensation Committee Interlocks and Insider Participation
Members of the Compensation Committee are Messrs. Goodson
(Chairman), Evans, Morgan and Dr. Clark. No member of the
Compensation Committee is or has been an officer or employee of
the Company or any of its affiliates. Furthermore, none of the
Company's executive officers has served on the board of directors
of any company of which a Compensation Committee member is an
employee.
During 2002 and through the present time, there have been
transactions between the Company's banking subsidiary and certain
members of the Compensation Committee or their associates, all
consisting of extensions of credit by the Bank in the ordinary
course of business. Each transaction was made on substantially
the same terms, including interest rates, collateral and
-7-
repayment terms, as those prevailing at the time for comparable
transactions with the general public. In the opinion of
management, none of the transactions involved more than the
normal risk of collectibility or presented other unfavorable
features.
Morgan Marrow Insurance, of which director John B. Morgan,
II is president, provided insurance for which the Company paid
$69,337 during 2002. Warwick Plumbing & Heating Corp., of which
director G. Royden Goodson, III is president, provide products
and services to the Company.
Directors' Compensation
Non-employee directors of the Company receive $400 for each
Board meeting they attend and $150 for each committee meeting
they attend. Directors of the Bank and Trust Company receive
$400 and $250, respectively, for each board meeting they attend.
The directors of the Bank and Trust Company receive $150 for each
committee meeting they attend. In addition, outside directors of
the Bank and Trust Company are paid an annual retainer fee of
$5,000 and $2,500, respectively. Directors serving on the Bank
board who also serve on the Trust Company board receive an
additional $1,000 annual retainer for serving on the Trust
Company board. All Company directors have been elected as
directors of the Bank, but there is no assurance that this
practice will continue. Not all Company directors serve as
directors of the Trust Company.
Directors who are employees of the Company and its
subsidiaries receive the stated fees for attendance at board
meetings, but do not receive any fees for committee meetings and
are not paid annual retainer fees.
Interest of Management in Certain Transactions
Some of the Company's directors, executive officers, and
members of their immediate families, and corporations,
partnerships and other entities of which such persons are
officers, directors, partners, trustees, executors or
beneficiaries, are customers of the Bank. All loans and
commitments to lend to such individuals were made in the ordinary
course of business, upon substantially the same terms, including
interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons and did not
involve more than normal risk of collectibility or present other
unfavorable features.
The law firm of Jordan, Ishon & Jordan served as legal
counsel to the Bank and Trust Company until December 31, 2002, at
which time the firm dissolved. Director Eugene M. Jordan was a
member of the firm. During 2002, the firm received a retainer
and fees totaling $42,781. Hampton Stationery, of which director
John Cabot Ishon is president, and Geddy, Harris, Franck &
Hickman LLP, of which director Stephen D. Harris is a partner
provide products and services to the Company. See "Compensation
Committee Interlocks and Insider Participation" for information
relating to Mr. Morgan's and Mr. Goodson's relationship with the
Company.
-8-
Executive Compensation
The following table presents a three-year summary of all
compensation paid or accrued by the Company and its subsidiaries
for the Company's Chief Executive Officer and next four most
highly compensated executive officers.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary (1) Bonus (2) Compensation (3) Options/SAR Compensation (4)
----------------------------------------------------------------------------------------------------------
Robert F. Shuford 2002 $175,766 $40,000 0 0 $15,646
Chairman, President 2001 $158,600 $33,000 4,000 $16,006
& CEO (Company) 2000 $156,800 $27,000 0 $15,519
Louis G. Morris 2002 $147,266 $34,000 0 0 $12,329
President & CEO 2001 $130,600 $27,500 3,744 $10,729
(Bank) 2000 $129,800 $22,500 4,000 $10,241
Cary B. Epes 2002 $115,333 $27,680 0 0 $10,059
EVP/CCO (Bank) 2001 $107,000 $23,540 2,500 $ 9,329
2000 $107,000 $19,260 2,500 $ 8,948
Margaret P. Causby 2002 $114,333 $27,440 0 0 $10,025
EVP/CAO (Bank) 2001 $106,000 $23,320 2,500 $ 9,532
2000 $106,000 $19,080 2,500 $ 8,863
Frank E. Continetti * 2002 $ 87,650 $ 0 0 0 $ 2,759
President & CEO 2001 $103,333 $11,160 2,500 $ 9,112
(Trust Company) 2000 $102,000 $15,000 2,500 $ 8,511
* Mr. Continetti resigned effective October 4, 2002.
(1) Salary includes directors' fees as follows: Mr. Shuford --
2002 - $9,100, 2001 - $8,600, 2000 - $6,800; Mr. Morris -
2002 - $5,600, 2001 - $5,600, 2000 - $4,800; Mr. Continetti
- 2002 - $2,750, 2001 - $3,500, 2000 - $2,000.
(2) Bonus consideration for Mr. Shuford is paid in the year
following the year in which the bonus is earned so that the
Compensation Committee can evaluate year-end results. Bonus
consideration for Mr. Morris, Mr. Epes, Mrs. Causby and Mr.
Continetti is paid in the year in which it is earned.
(3) The amount of compensation in the form of perquisites or
other personal benefits properly categorized in this column
according to the disclosure rules adopted by the Securities
and Exchange Commission did not exceed the lesser of either
$50,000 or 10% of the total annual salary and bonus reported
in each of the three years reported for Mr. Shuford, Mr.
Morris, Mr. Epes, Mrs. Causby and Mr. Continetti,
respectively.
-9-
(4) Mr. Shuford's "other compensation" consists of the
following:
2002 2001 2000
------- ------- -------
Deferred Profit Sharing $ 4,578 $ 4,119 $ 3,896
Cash Profit Sharing 4,606 3,823 3,559
401(k) Matching Plan 5,000 4,500 4,500
Life Insurance 1,462 3,564 3,564
------- ------- -------
Total $15,646 $16,006 $15,519
Mr. Morris' "other compensation" consists of the following:
2002 2001 2000
------- ------- -------
Deferred Profit Sharing $ 3,891 $ 3,433 $ 3,247
Cash Profit Sharing 3,915 3,186 2,966
401(k) Matching Plan 4,250 3,750 3,750
Life Insurance 273 360 278
------- ------- -------
Total $12,329 $10,729 $10,241
Mr. Epes' "other compensation" consists of the following:
2002 2001 2000
------- ------- -------
Deferred Profit Sharing $ 3,168 $ 2,939 $ 2,779
Cash Profit Sharing 3,188 2,727 2,539
401(k) Matching Plan 3,460 3,210 3,210
Life Insurance 243 453 420
------- ------- -------
Total $10,059 $ 9,329 $ 8,948
Mrs. Causby's "other compensation" consists of the following:
2002 2001 2000
------- ------- -------
Deferred Profit Sharing $ 3,140 $ 2,911 $ 2,753
Cash Profit Sharing 3,160 2,701 2,516
401(k) Matching Plan 3,430 3,180 3,180
Life Insurance 295 740 414
------- -------- -------
Total $10,025 $ 9,532 $ 8,863
Mr. Continetti's "other compensation" consists of the following: *
2002 2001 2000
------- ------- -------
Deferred Profit Sharing $ 0 $ 2,838 $ 2,598
Cash Profit Sharing 0 2,634 2,373
401(k) Matching Plan 2,547 3,100 3,000
Life Insurance 212 540 540
------- ------- -------
Total $ 2,759 $ 9,112 $ 8,511
* Mr. Continetti resigned effective October 4, 2002.
-10-
No stock options were granted to Mr. Shuford, Mr.
Morris, Mr. Epes, Mrs. Causby or Mr. Continetti in 2002.
-11-
The following table shows stock option holdings of the
Company's Chief Executive Officer and next four most highly
compensated executive officers as of December 31, 2002.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTIONS/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
12/31/02 (#) 12/31/02($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($)(1) Unexercisable Unexercisable(1)
--------------------------------------------------------------------------------------
Robert F. Shuford 10,000 $115,755 39,941/0 $ 329,650/$0
Louis G. Morris 0 $ 0 26,031/0 $ 199,248/$0
Cary B. Epes 2,000 $ 19,542 21,345/0 $ 149,484/$0
Margaret P. Causby 1,600 $ 24,045 22,095/0 $ 157,594/$0
Frank E. Continetti * 6,200 $ 69,357 0/0 $ 0/$0
* Mr. Continetti resigned effective October 4, 2002.
(1) Market value of underlying securities at exercise or year-
end, minus the exercise or base price.
-12-
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth information as of December
31, 2002 with respect to certain compensation plans under which
equity securities of the Company are authorized for issuance.
Equity Compensation Plan Information
Number of securities
Number of securities Weighted-average remaining available for
to be issued upon exercise price of future issuance under
exercise of outstanding equity compensation
outstanding options, options, warrants plans (excluding
warrants and rights and rights (b) securities reflected in
Plan Category (a) column (a)) (c)
Equity compensation
plans approved by 312,740 $17.68 464,250 (2)
shareholders
Equity compensation - 0 - - 0 - - 0 -
plans not approved by
shareholders
Total 312,740 $17,68 464,250
(1) These plans consist of the 1989 Stock Option Plan and the
1998 Stock Option Plan
(2) Includes zero shares available to be granted in the form of
options under the 1989 Stock Option Plan, and 464,250 shares
available to be granted in the form of options under the 1998
Stock Option Plan.
Stock Option Plans. The Company has two stock option plans -
the 1989 Stock Option Plan and the 1998 Stock Option Plan (the
"Plans"). The Plans provide for the award of nonqualified stock
options and incentive stock options to directors and employees of
the Company and its subsidiaries selected by the Board of
Directors to participate in the Plans. The Board of Directors
makes awards under the Plans and establishes the terms and
conditions of each award in the option agreement entered into with
each optionee. The price of shares of stock to be issued upon the
exercise of options will be at least 100% of the fair market value
on the date of award. Options may not be granted more than ten
years after the adoption of the Plans by the Board and are
exercisable only during the term specified in the option
agreement, which in the case of incentive stock options shall not
exceed ten years. The options are not transferable other than by
will or the laws of descent and distribution. The 1989 Plan did
not permit grants of options to non-employees, whereas, the 1998
Plan permits grants of options to non-employee directors.
-13-
Retirement Benefits
Pension Plan. The Company has a noncontributory defined
benefit pension plan, which covers substantially all full-time
employees of the Company and its subsidiaries who have completed
one year of service. A participant's monthly retirement benefit
(if he or she has 25 years of benefit service at his normal
retirement date) is 20% of his final five year's average salary
plus 15% of final five year's average salary in excess of the
participant's Social Security Covered Pay. The Social Security
Covered Pay is the average pay of the calendar year prior to the
year the participant attains his Social Security Retirement Age.
If the participant has less than 25 years of benefit service at
his Normal Retirement Date, the participant's monthly retirement
benefit will be actuarially reduced by 1/25 for each year of
benefit service less than 25 years. Cash benefits under the plan
generally commence on retirement, death or other termination of
employment and are payable in various forms at the election of the
participant.
The following table shows the estimated annual retirement
benefits payable to employees in the average annual salary and
years of service classifications set forth below assuming
retirement at the normal retirement age of 65.
PENSION PLAN TABLE
Consecutive Five-Year Years of Credited Service
Average Salary 15 20 25 30 35
-----------------------------------------------------------------
$ 25,000 $ 2,520 $ 4,000 $ 5,000 $ 5,000 $ 5,000
$ 50,000 $ 7,150 $ 9,534 $11,918 $11,918 $11,918
$ 75,000 $12,400 $16,534 $20,668 $20,668 $20,668
$150,000 $28,150 $37,534 $46,918 $46,918 $46,918
Benefits under the pension plan are based on a straight
life annuity assuming full benefit at age 65, no offsets, and
covered compensation of $37,212 for a person age 65 in 2001.
Compensation is currently limited to $170,000 by the Internal
Revenue Code, but is anticipated to increase to $200,000,
effective January 1, 2002. The estimated annual benefit payable
under the pension plan upon retirement is $46,345, $32,792,
$22,250 and $26,973 for Messrs. Shuford, Morris, Epes, and Mrs.
Causby respectively, credited with 38, 37, 31, and 47 years of
service, respectively. Benefits are estimated on the basis that
they will continue to receive, until age 65, covered salary in
the same amount paid in 2001.
The Company owns life insurance policies on the above
executive officers, in which their beneficiaries will receive
three times their annual salary upon death, except that Mr.
Shuford's beneficiary will receive 50% of three times his annual
salary.
Compensation Committee Report on Executive Compensation
Compensation for the CEO and other executive officers is
administered by the Compensation Committee (the "Committee"). The
Committee is comprised of four non-employee directors, Messrs.
Goodson (Chairman), Evans, Morgan and Dr. Clark. It met two times
in 2002. All decisions of the Committee are recommended to the
entire Board of Directors, which makes the final decisions.
-14-
In an environment characterized by change, regulatory
oversight and increased competition, total executive compensation
is designed to attract and retain qualified personnel by providing
competitive levels of compensation as compared to similarly sized
financial institutions. Executive compensation consists of the
several elements specified in the Summary Compensation Table under
"Executive Compensation," namely, base salary and annual and long-
term incentive compensation. Base salaries generally represent a
large portion of the executive officers' total cash compensation
and are considered to be average relative to comparably sized
financial institutions. Bonuses make up a smaller portion of the
executive officers' total cash compensation. The committee
believes that basing a portion of an executive officer's
compensation on both the Company's performance and that of the
individual motivates the executive to perform at the highest
possible level. Bonuses are determined based upon the Company's
performance and that of the individual executive during the fiscal
year. In evaluating performance, financial, non-financial and long-
term strategic objectives are considered.
As a component of our executive officers' compensation
program, the committee annually considers awarding executive
officers options to acquire shares of the Company's common stock.
The committee believes that stock options provide a highly
efficient form of compensation from both a cost and an accounting
perspective, and that such awards provide an incentive to achieve
the Company's longer-term strategic goals by aligning the long-
term financial interests of the executive officers with those of
our shareholders. The committee also believes that significant
levels of stock ownership and ownership potential will assist in
retaining the qualified and motivated executive officers.
In making its recommendation to the Board, the Committee
obtains from market and economic research companies information
pertaining to CEO and other executive's salary levels at other
comparable financial institutions. Annual compensation is
determined by evaluating several factors. The primary factor
considered in evaluating the level of CEO and other executive
compensation is the progress the Company made during the year in
achieving performance goals. The performance goals evaluated
include, but are not limited to, return on average assets, return
on average equity, net income, asset quality, and deposit and loan
growth. Secondary factors considered by the Committee include
comparing the Company's performance with other local institutions
and comparable executive compensation packages. Lastly, the
Committee gives some consideration to the expected future
contributions of the executive, the executive's length of service
and standing within the local banking communities, general
economic conditions, and other factors. Bonuses are awarded based
on evaluation of the foregoing factors relating to the Company's
financial performance. Decisions regarding compensation, however,
are mostly subjective in nature, and no specific formulas are used
to calculate an executive's compensation.
The asset growth, loan growth and earnings increase resulted
in an overall positive financial performance of the Company and
its subsidiaries in fiscal year 2002. In addition, the Company
attained the majority of its 2002 non-financial objectives and
made significant strides towards its long-term strategic goals.
For 2002, the committee recommended and the Board approved
2002 compensation of Mr. Shuford, Chairman, CEO and President of
the Company, pursuant to the policies described above for
executive officers. The base salaries effective in March 2002
were as follows: Mr. Shuford, $170,000; Mr. Morris, $145,000; Mr.
Epes, $117,000; Mrs. Causby, $116,000; and Mr. Continetti,
$104,000.
For 2002, the committee recommended and the Board approved
bonuses be granted to Mr. Shuford in the amount of $40,000, to Mr.
Morris in the amount of $34,000, to Mr. Epes in the amount of
$27,680, and to Mrs. Causby in the amount of $27,440. No stock
options were granted in 2002.
-15-
Compensation Committee
G. Royden Goodson, III (Chairman)
Dr. Richard F. Clark
Russell S. Evans, Jr.
John B. Morgan, II
Report of the Audit Committee
The Audit Committee of the Board of Directors (the
"Committee") is composed of four directors, each of whom
satisfies the independence requirements of Rule 4200(a)(15) of
the National Association of Securities Dealers' listing standards
and FDICIA. The Committee operates under a written charter
adopted by the Board of Directors. The Committee reviews and
reassesses the charter annually and recommends any changes to the
Board for approval.
Management is responsible for the Company's internal
controls, financial reporting process and compliance with the
laws and regulations and ethical business standards. The
Company's independent accountants are responsible for performing
an independent audit of the Company's consolidated financial
statements in accordance with generally accepted auditing
standards and to issue a report thereon. The Committee's
responsibility is to monitor and oversee these processes.
In this context, the Committee has met and held discussions
with management and the independent accountants. Management
represented to the Committee that the Company's audited
consolidated financial statements were prepared in accordance
with generally accepted accounting principles, and the Committee
has reviewed and discussed the audited consolidated financial
statements with management and the independent accountants. The
Committee discussed with the independent accountants matters
required to be discussed by Statement on Auditing Standards No.
61 (Communication with Audit Committees).
The Company's independent accountants also provided to the
Committee the written disclosures and letter required by
Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), and the Committee discussed
with the independent accountants that firm's independence.
Based upon the Committee's discussions with management and
the independent accountants and the Committee's review of the
representation of management and the report of the independent
accountants to the Committee, the Committee recommended to the
Board of Directors that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10-
K for the year ended December 31, 2002, filed with the Securities
and Exchange Commission.
Audit Committee
Gerald E. Hansen (Chairman)
Russell S. Evans, Jr.
Dr. Arthur D. Greene
Stephen D. Harris
-16-
Principal Accounting Fees
Eggleston Smith P.C., Certified Public Accountants billed
the following fees for services provided to the Company during
fiscal year 2002:
Audit Fees $42,425
Financial Information
System Design and $ 0
Implementation Fees
All Other Fees $14,775
The Audit Committee considers the provision of all of the
above services to be compatible with the maintenance of the
independence of the Company's principal accountants, Eggleston
Smith P.C.
-17-
FIVE YEAR STOCK PERFORMANCE
The line graph below compares the Company's shareholder
return with the return of the NASDAQ Bank Index and the Russell
2000 Index.
This performance graph was created by comparing the
percentage change in stock prices for the Company and the indices
on a year to year basis, factoring in dividend payments, and
looking only at the closing price of the stock as of December 31
of each year surveyed. This graph may be affected by unusually
high or low prices at December 31, 1997 or by temporary swings in
stock price at December 31 of any given year. Accordingly, this
is not necessarily the best measure of the Company's performance.
The index reflects the total return on the stock that is
shown, including price appreciation, all stock splits and stock
dividends, and reinvestment of cash dividends at time of payment,
relative to the value of the stock at the beginning of the time
period. Thus a move from 100 to 150 on the index scale indicates
a 50% increase in the value of the investment. The NASDAQ Bank
Index contains all non-holding company banking institutions
traded on the NASDAQ exchange. In addition to traditional banks
this includes thrifts but does not include other non-regulated
finance companies. The Russell 2000 index is comprised of the
smallest 2000 companies in the Russell 3000 Index, which tracks
almost 99 percent of the stocks included in portfolios of
institutional investors.
-18-
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires directors, executive officers, and 10% beneficial owners
of the Company's common stock to file reports concerning their
ownership of common stock. The Company believes that its
officers, directors and 10% beneficial owners during 2002
complied with all filing requirements under Section 16(a), with
the exception of one late filing of Form 4 on behalf of Mr.
Eugene M. Jordan, Sr. and two late filings of Form 4 on behalf of
Mr. G. Royden Goodson, III.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
On the recommendation of the Audit Committee, the Board of
Directors has appointed Eggleston Smith P.C., Certified Public
Accountants, as the Company's independent auditors for the fiscal
year ending December 31, 2003, subject to ratification by
shareholders at the Annual Meeting. Eggleston Smith P.C.
rendered audit services to the Company during the fiscal year
ended December 31, 2002. These services consisted primarily of
the examination and audit of the Company's financial statements,
tax reporting assistance, and other audit and accounting matters.
Representatives of Eggleston Smith P.C. are expected to be
present at the Annual Meeting, will have the opportunity to make
a statement if they desire to do so, and are expected to be
available to respond to your questions.
The Board of Directors recommends that shareholders vote "FOR"
ratification of Eggleston Smith P.C., as the Company's
independent auditors for the fiscal year ending December 31,
2003.
-19-
SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
In accordance with the bylaws of the Company as currently in
effect, the 2004 Annual Meeting of Shareholders will be held on
April 27, 2004.
If any shareholder intends to present a proposal to be
considered for inclusion in the Company's proxy materials in
connection with the 2004 Annual Meeting, the proposal must be in
proper form and must be received by the Company at its main
office in Hampton, Virginia, on or before November 26, 2003. In
addition, if a shareholder intends to present a proposal for
action at the 2004 Annual Meeting, the shareholder must provide
the Company with notice thereof on or before February 9, 2004, by
delivering such notice to the Company at its main office.
OTHER MATTERS
As of the date of this Proxy Statement, management of the
Company has no knowledge of any matters to be presented for
consideration at the Annual Meeting other than those referred to
above. If any other matters properly come before the Annual
Meeting, the persons named in the accompanying proxy intend to
vote such proxy, to the extent entitled, in accordance with their
best judgment.
ANNUAL FINANCIAL DISCLOSURE STATEMENT
A copy of the Company's Annual Report on Form 10-K (including
exhibits) as filed with the Securities and Exchange Commission for
the year ended December 31, 2002, will be furnished without charge
to shareholders upon written request directed to:
Laurie D. Grabow
Executive Vice President/Finance
The Old Point National Bank of Phoebus
1 West Mellen Street
Hampton, Virginia 23663
(757) 728-1251
The Company's Annual Report on Form 10-K (including
exhibits) can also be viewed on the Investors Relations link on
the Company's Internet web site at http://www.oldpoint.com
-20-
OLD POINT FINANCIAL CORPORATION
P.O. BOX 3392, HAMPTON, VIRGINIA 23663
PROXY CARD FOR
ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The
undersigned hereby appoints Ann Johnson Behm and Richard S. vonSchilling
as Proxies, each with full power to appoint his substitute and hereby
authorizes them to represent and to vote, as designated below, all of the
shares of voting common stock, $5.00 par value, of Old Point Financial
Corporation held of record by the undersigned on March 14, 2003 at the
Annual Meeting of Shareholders, to be held on April 22, 2003, and at any
and all adjournments thereof.
This proxy will be voted in the manner directed by the undersigned. If no
direction is made, this proxy will be voted FOR Items 1 and 2.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as your names(s) appear(s) hereon. When shares are
held by joint tenants, both must sign.
When signing in a representative capacity, please provide full title.
HAS YOUR ADDRESS CHANGES? DO YOU HAVE ANY COMMENTS?
X PLEASE MARK VOTES
AS IN THIS EXAMPLE
------------------------------------ 1. Election of Directors. For All With- For All
OLD POINT FINANCIAL CORPORATION (1) Richard F. Clark, Nominees hold Except
------------------------------------ (2) Russell S. Evans, Jr.
(3) G. Royden Goodson, III,
Mark box at right if you plan to (4) Arthur D. Greene,
attend the Annual Meeting. (5) Gerald E. Hansen, (6) Stephen D. Harris,
(7) John Cabot Ishon, (8) Eugene M. Jordan,
(9) John B. Morgan, II, (10) Louis G. Morris,
Mark box at right if an address (11) H. Robert Schappert, (12) Robert F. Shuford
change or comment has been noted on
the reverse side of this card.
INSTRUCTION: To withhold
CONTROL NUMBER: authority to vote for any
RECORD DATE SHARES: nominee, mark the "For All
Except" box and strike a line
through the nominee's name in
the list above.
Please be sure to sign and date
this Proxy. Date
For Against Abstain
Shareholder sign here 2. Ratification of the
Co-owner sign here appointment of
Eggleston Smith, P.C.,
DETACH CARD Certified Public Accountants, as
independent auditors for 2003. --- ------- -------
In their discretion, the
Proxies are authorized to vote
upon such other business as
may properly come before the
meeting and at any
adjournment(s) thereof.
DETACH CARD
--------------------------------------- --------------------------------------
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Proxy Statement/Prospectus Proxy Statement/Prospectus
and Proxy Card. and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/opof
There is NO CHARGE for this call.
3. Enter your Control Number 3. Enter your Control Number
located on your Proxy Card. located on your Proxy Card.
4. Follow the recorded 4. Follow the instructions
instructions. provided.
------------------------------------- --------------------------------------
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