UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant
to Section 14(a) of the
Securities Exchange Act
of 1934
Filed by the Registrant x
Filed by a Party other than the
Registrant ¨
Check the appropriate box:
| ¨ | Preliminary
Proxy Statement |
| ¨ | Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| x | Definitive
Proxy Statement |
| ¨ | Definitive
Additional Materials |
| ¨ | Soliciting
Material Pursuant to § 240.14a-12 |
VILLAGE
BANK AND TRUST FINANCIAL CORP.
(Name of Registrant as
Specified In Its Charter)
(Name of Person(s) Filing
Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the
appropriate box):
| ¨ | Fee
paid previously with preliminary materials. |
[ ] Fee computed on table in exhibit required by Item 25(b) per Exchange
Act Rules 14a6(i)(1) and 0-11
Dear Fellow Shareholders:
You are cordially invited to attend
the Annual Meeting of Shareholders of Village Bank and Trust Financial Corp. The meeting will be held on Tuesday, May 24, 2022, at 10:00
a.m. Eastern Time. We will be hosting a virtual meeting of shareholders. The meeting will be conducted exclusively via live webcast and
there will be no physical location for the meeting. You will be able to attend and participate in the Annual Meeting online, vote your
shares electronically and submit your questions prior to and during the meeting. We believe that hosting a virtual meeting this year
will enable greater shareholder attendance and participation.
At the meeting, you will be
asked to:
| 1. | elect three directors for a term of
three years each; |
| 2. | approve,
in an advisory (non-binding) vote, the Company’s named executive officer compensation
disclosed in the Proxy Statement; |
| 3. | ratify
the appointment of Yount, Hyde and Barbour, P.C. as Village Bank and Trust Financial Corp.’s
independent registered public accounting firm for the year ending December 31, 2022;
and |
| 4. | transact
such other business as may properly come before the Annual Meeting or any adjournments or
postponement thereof. |
You will find information regarding
these matters in the Proxy Statement.
You may vote your shares by internet,
telephone, or regular mail, or virtually at the Annual Meeting. On or about April 14, 2022, we will mail our shareholders a Notice containing
instructions on how to obtain the Proxy Statement and the 2021 Annual Report to Shareholders on the internet and how to vote their shares
over the internet. You may read, print, or download the Proxy Statement and 2021 Annual Report to Shareholders at www.envisionreports.com/VBFC.
You may request paper copies of these materials as well by following the instructions on the Notice. If you receive a proxy card, it
also contains instructions regarding how to vote by internet, telephone, regular mail or virtually at the Annual Meeting.
Your vote is very important.
Please take time to vote now so that your shares are represented at the meeting. We appreciate your continued support.
|
Sincerely, |
|
|
|
James E. Hendricks, Jr. |
|
President and Chief Executive Officer |
Midlothian, Virginia
April 5,
2022
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
YOU ARE HEREBY NOTIFIED of and
invited to attend the Annual Meeting of Shareholders of Village Bank and Trust Financial Corp., a Virginia corporation, to be held on
May 24, 2022, at 10:00 a.m. Eastern Time. We will be hosting a virtual meeting to mitigate any health risks associated with the COVID-19
pandemic for our shareholders and employees. The meeting will be conducted exclusively by live webcast. As a shareholder of the Company
as of the close of business on April 4, 2022, the record date, you will be able to attend the Annual Meeting online, vote your shares
electronically and submit your questions during the meeting by visiting www.meetnow.global/MGXN27M on the meeting date and time described
in the Proxy Statement. There is no physical location for the Annual Meeting.
The Annual Meeting is being held
for the purpose of considering and voting on the following:
| 1. | The election of three directors for a
term of three years each; |
| 2. | The approval, in an advisory (non-binding)
vote, of the Company’s named executive officer compensation disclosed in the Proxy
Statement; |
| 3. | The ratification of the appointment of
Yount, Hyde & Barbour, P.C. as Village Bank and Trust Financial Corp.’s independent
registered public accounting firm for the year ending December 31, 2022; and |
| 4. | To transact any other business as may
properly come before the Annual Meeting or any adjournments or postponements thereof. |
The board of directors has fixed
April 4, 2022 as the record date for determination of shareholders entitled to notice of and to vote at the meeting and any adjournments
thereof.
|
By Order of the Board of Directors, |
|
|
|
Deborah M. Golding, Corporate Secretary |
Dated: April 5, 2022
YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the Annual
Meeting of Shareholders online, we urge you to vote and submit your proxy by telephone, the internet or mail as promptly as possible
to ensure the presence of a quorum for the meeting. For additional instructions on voting by telephone or the internet, please refer
to your proxy card or the Important Notice Regarding the Availability of Proxy Materials. To vote and submit your proxy by mail, please
complete, sign and date the proxy card and return it in the postage-paid envelope. If you attend the meeting online, you may, if you
desire, revoke the proxy, and vote online during the meeting. If you hold your shares through an account with a brokerage firm, bank, or
other nominee, please follow the instructions you receive from them to vote your shares. As beneficial owner, you must register in advance
to attend the Annual Meeting virtually on the internet. Additional instructions are included in the Proxy Statement under “General
Information” – “Voting and Revocation of Proxies.”
TABLE OF CONTENTS | |
Page |
| |
|
GENERAL INFORMATION | |
1 |
Voting and Revocation of Proxies | |
| 1 |
Voting Rights | |
| 2 |
Routine and Non-Routine Proposals | |
| 2 |
Costs of Proxy Solicitation | |
| 3 |
PROPOSAL 1 – ELECTION OF DIRECTORS | |
| 3 |
Nominees for Election | |
| 3 |
Incumbent Directors | |
| 4 |
Executive Officers Who Are Not Directors | |
| 6 |
Board Diversity Matrix | |
| 7 |
SECURITY OWNERSHIP | |
| 7 |
Security Ownership of Directors and Executive Officers | |
| 7 |
Security Ownership of Certain Beneficial Owners | |
| 8 |
No Hedging Policy | |
| 8 |
Delinquent Section 16(a) Reports | |
| 9
|
CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS | |
| 9 |
General | |
| 9 |
Board Leadership | |
| 9 |
Board’s Role in Risk Oversight | |
| 9 |
Independence of the Directors | |
| 10 |
Annual Meeting Attendance | |
| 10 |
Board and Committee Meeting Attendance | |
| 10 |
Executive Sessions | |
| 11 |
Committees of the Board | |
| 11 |
Audit Committee | |
| 11 |
Compensation Committee | |
| 11 |
Executive Committee | |
| 11 |
Board Risk Committee | |
| 12 |
Credit Risk Management Committee | |
| 12 |
Nominating and Corporate Governance Committee | |
| 12 |
Director Nomination Process | |
| 12 |
Director Compensation | |
| 13 |
Communications with Directors | |
| 14 |
EXECUTIVE COMPENSATION | |
| 14 |
Introduction | |
| 14 |
Compensation Policy and Objectives | |
| 14 |
Compensation Consultants | |
| 15 |
Base Salary | |
| 15 |
Short-Term Incentive Compensation | |
| 15 |
Long-Term Incentive Plans | |
| 16 |
Supplemental Executive Retirement Plan | |
| 18 |
Employment and Change of Control Agreements with Named Executive
Officers | |
| 19 |
Other Benefits and Agreements | |
| 20 |
Summary Compensation Table | |
| 21 |
Plan-Based Awards in 2021 | |
| 22 |
Outstanding Equity Awards | |
| 23 |
Equity Compensation Plans | |
| 23 |
Certain Relationships and Related Transactions | |
| 24 |
PROPOSAL 2 – ADVISORY (NON-BINDING) VOTE TO APPROVE
NAMED EXECUTIVE OFFICER | |
| |
COMPENSATION | |
| 25 |
PROPOSAL 3 – RATIFICATION OF APPOINTMENT OF INDEPDENT
REGISTERED PUBLIC ACCOUNTING | |
| |
FIRM | |
| 26 |
AUDIT INFORMATION | |
| 27 |
Fees of Independent Registered Public Accounting Firm | |
| 27 |
Audit Committee Report | |
| 27 |
Pre-Approval Policies | |
| 28 |
PROPOSALS FOR 2023 ANNUAL MEETING OF SHAREHOLDER | |
| 28 |
OTHER MATTERS | |
| 28 |
PROXY
STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 24, 2022
GENERAL INFORMATION
The board of directors of Village
Bank and Trust Financial Corp. (the “Company”) is furnishing you with this Proxy Statement to solicit proxies on its behalf
to be voted at the Annual Meeting of Shareholders of the Company (the “Annual Meeting”). The Annual Meeting will be held
on May 24, 2022, at 10:00 a.m. Eastern Time. The meeting will be conducted exclusively by live webcast and there will be no physical
location for the meeting. As a shareholder of the Company as of the close of business on the record date, you will be able to attend
and participate in the Annual Meeting online, vote your shares electronically and submit your questions during the meeting by visiting
www.meetnow.global/MGXN27M on the meeting date and time described in this Proxy Statement.
The mailing address of the Company’s
principal executive office is 13319 Midlothian Turnpike, Midlothian, Virginia 23113.
This Proxy Statement will be furnished
to shareholders beginning April 14, 2022. In accordance with U.S. Securities and Exchange Commission (“SEC”) rules, the Company
is furnishing this Proxy Statement over the internet to its shareholders. Most of the Company’s shareholders will not receive printed
copies of the Proxy Statement; instead, most shareholders will receive the Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting to be held May 24, 2022 (the “Notice of Internet Availability”), which contains instructions on how
to access the proxy materials over the internet and vote shares. The Notice of Internet Availability will be mailed to shareholders on
or about April 14, 2022. By furnishing proxy materials over the internet, the Company is able to reduce the printing and mailing costs
of this solicitation and help conserve natural resources. If you would like to receive paper copies of the proxy materials, please follow
the instructions on the Notice of Internet Availability. Shareholders may vote over the internet, by telephone or mail.
Important
Notice Regarding the Availability of Proxy Materials for the
Annual
Meeting of Shareholders to be held on May 24, 2022
A complete
set of proxy materials relating to the Annual Meeting is available on the internet. These materials, including the Proxy Statement and
the 2021 Annual Report on Form 10-K, may be viewed at www.envisionreports.com/VBFC.
Voting and Revocation of
Proxies
All properly executed proxies,
and all properly completed proxies submitted by telephone or internet pursuant to this solicitation will be voted in accordance with
the directions given in the proxy unless the proxy is revoked prior to the completion of voting at the Annual Meeting. Execution of a
proxy will not affect a shareholder’s right to attend the Annual Meeting and to vote at the meeting. Any shareholder who has completed
and returned a proxy may revoke it by attending the Annual Meeting and voting, by submitting a new proxy bearing a later date, or by
submitting written notice of revocation to the Corporate Secretary addressed to Village Bank and Trust Financial Corp., P.O. Box 330,
Midlothian, Virginia, 23113. Proxies will extend to, and will be voted at, any adjournments or postponements of the Annual Meeting.
If you are a registered shareholder
(i.e., hold your shares in your own name and not through a broker or custodian), you do not need to register to attend the Annual Meeting
virtually on the internet. Please follow the instructions on the notice or proxy card that you received to attend the meeting and vote
your shares.
If you hold your shares through
a broker or other custodian, then that organization is considered the shareholder of record and the shares are considered held in “street
name.” The Company provided its proxy materials to the shareholder of record for distribution to you along with voting instructions.
As the beneficial owner of the shares, you have the right to direct the shareholder of record how to vote your shares. Check the information
forwarded to you by the shareholder of record to see which voting methods are available to you. If your shares are held through a broker
or other custodian and you wish to revoke your proxy or change your vote, you should contact that organization.
If you hold your shares through
a broker or other custodian, such as a bank, you must register in advance to attend the Annual Meeting virtually on the internet. To
register, you must submit proof of your proxy power (legal proxy) reflecting your Village Bank and Trust Financial Corp. holdings along
with your name and email address to the Company’s transfer agent, Computershare. Requests for registration must be labeled as “Legal
Proxy” and be received no later than 5:00 p.m., Eastern Time, on May 20, 2022. You will receive a confirmation of your registration
by email after Computershare receives your registration materials. Requests for registration should be directed to Computershare at the
following:
By email: |
Forward
the email from your broker, or attach an image of your legal proxy, to
legalproxy@computershare.com |
By mail: |
Computershare, Inc., Village Bank and Trust Financial
Corp., Legal Proxy
P.O. Box 505000, Louisville, KY 40233-5000 |
Voting Rights
Only shareholders of record of
the Company’s common stock at the close of business on April 4, 2022, are entitled to notice of and to vote at the Annual Meeting
or any adjournment or postponement thereof. At the close of business on April 4, 2022, there were 1,476,165 shares of the Company’s
common stock outstanding and entitled to vote at the Annual Meeting. A majority of the votes entitled to be cast by the holders of the
common stock, represented by attendance at the meeting or by proxy, will constitute a quorum for the transaction of business.
Each shareholder of record of
the Company’s common stock on the record date will be entitled to one vote for each share registered in his or her name with respect
to each matter to be voted upon at the Annual Meeting. Shares for which the shareholder has elected to abstain or to withhold the proxies’
authority to vote on a matter, and “broker non-votes,” will count toward a quorum.
With regard to the election of
directors, votes may be cast in favor or withheld. If a quorum is present, the three nominees for Class A who receive the greatest number
of affirmative votes cast at the Annual Meeting, during the meeting or by proxy, even if less than a majority, will be elected directors;
therefore, votes withheld and broker non-votes will have no effect.
For all other proposals, votes
may be cast in favor or against, or shareholders may abstain from voting. Approval of the other proposals requires an affirmative vote
of a majority of the votes cast on the matter. Although abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum, they generally do not count as votes cast, and therefore will have no effect on such proposals.
Routine and Non-Routine Proposals
If you own shares held in street
name, meaning through a broker or other similar organization, and you do not provide the organization that holds the shares with specific
voting instructions, then under applicable rules the organization that holds the shares may generally vote your shares with respect to
routine matters but cannot vote on non-routine matters. If the organization that holds such shares does not receive instructions from
you on how to vote your shares on a non-routine matter, that organization will inform the inspector of election that it does not have
the authority to vote on the matter with respect to your shares. This is generally referred to as a “broker non-vote.”
The ratification of the appointment
of Yount, Hyde & Barbour, P.C. (Proposal 3) as the Company’s independent registered public accounting firm for the year ending
December 31, 2022, is considered a routine matter under applicable rules. A broker or other nominee may generally vote on routine matters,
and therefore no broker non-votes are expected to occur in connection with Proposal 3. The election of three Class A directors (Proposal
1) and the advisory (non-binding) vote to approve the Company’s named executive officer compensation (Proposal 2) are considered
non-routine matters under applicable rules. A broker or other nominee cannot vote without instructions on these non-routine matters,
and therefore “broker non-votes” may occur in connection with Proposals 1 and 2.
Costs of Proxy Solicitation
The cost of soliciting proxies
will be borne by the Company. Solicitation is being made by the Company’s board of directors by mail and electronic notice and
access to the internet. In addition to the solicitation of proxies by mail, the Company may also solicit proxies through its directors,
officers, and employees. The Company will also request persons, firms, and corporations holding shares in their names or in the name
of nominees that are beneficially owned by others to send proxy materials to and obtain proxies from those beneficial owners and will
reimburse the holders for their reasonable expenses in doing so.
PROPOSAL
1
ELECTION
OF DIRECTORS
The Company’s board of directors
currently consists of nine directors that are divided into three classes (A, B and C). The terms of office for the three Class A directors
of the Company will expire at the Annual Meeting and these directors have been nominated for election to continue serving as directors
in Class A. If elected, each of the Class A nominees will serve three-year terms ending at the 2025 Annual Meeting of Shareholders, or
until his earlier resignation or removal. Six other directors will continue serving terms that end in either 2023 or 2024, as indicated
below.
The election of each nominee for
director requires the affirmative vote of the holders of a plurality of the shares of common stock cast in the election of directors.
If the proxy is executed in such manner as not to withhold authority for the election of any or all the nominees for directors, then
the persons named in the proxy will vote the shares represented by the proxy for the election of the nominees named below. If the proxy
indicates that the shareholder wishes to withhold a vote from one or more nominees for director, such instructions will be followed by
the persons named in the proxy.
Each nominee has consented to
being named in this Proxy Statement and has agreed to serve, if elected. The board of directors has no reason to believe that any of
the nominees will be unable or unwilling to serve. If, at the time of the Annual Meeting, any nominee is unable or unwilling to serve
as a director, votes will be cast, pursuant to the accompanying proxy, for such substitute nominee as may be nominated by the board of
directors. There are no current arrangements between any nominee and any other person pursuant to which a nominee was selected. No family
relationships exist among any of the directors or between any of the directors and executive officers of the Company.
The following information provides
certain biographical information with respect to each director and director nominee for election at the Annual Meeting, followed by a
statement regarding the specific experience, qualifications, attributes, or skills that led the board to conclude that each director
or director nominee should serve as a director of the Company.
Nominees for Election
Class A Directors for Terms to Expire in 2025
Craig D. Bell, 64, is a founder
of Village Bank (the “Bank”) and has been a director since 1998. Mr. Bell is Chair of the board of directors of the Company
and the Bank. He is a partner with the law firm of McGuireWoods LLP, where he is head of the State and Local Tax and Tax Litigation Groups.
McGuireWoods is an international law firm having offices in thirteen states and seven countries. Mr. Bell is an Emeritus Director of
the Community Tax Law Project, a non-profit provider of pro bono tax assistance to low income families and its former President; a Fellow
of the American College of Tax Council; former Chair of both the Virginia State Bar Section of Taxation and the Virginia Bar Association
Tax Section; a Master member of the Edgar J. Murdock Inn of Court for Tax; an adjunct Professor of Law at the College of William and
Mary School of Law; and a Trustee and Board Chair of the Henricus Park Foundation. He is also President of the ASAC Foundation, a nonprofit
organization that has charitable and educational purposes in the areas of antique arms and armor. Mr. Bell is also a credentialed Accredited
Member appraiser by the International Society of Appraisers where he focuses his appraisal engagements to antique arms and armor of the
15th-19th centuries. Mr. Bell retired from the Army Reserves in 2006 as a Lieutenant Colonel after completing 27
years of service. As a result of the foregoing experience, Mr. Bell brings leadership, sound judgment, effective communication, business
acumen, and decision-making skills to the board of directors. Mr. Bell currently serves as Chair of the Executive Committee, Chair of
the Nominating and Corporate Governance Committee, and is a member of the Compensation Committee and Board Risk Committee. He also serves
as an ex officio member of all committees.
Devon M. Henry, 44, has been a
director since March 2018. Mr. Henry is Chief Executive Officer and President of Team Henry Enterprises, LLC. Team Henry is a multi-discipline
contracting and logistics firm headquartered in Newport News, Virginia, with offices in Richmond, Virginia, Raleigh, North Carolina and
Miami, Florida. In 2014, Team Henry Enterprises was recognized in Fortune Magazine, ranking 12th on the 100 List of fastest
growing inner-city companies in the country. Mr. Henry brings valuable business experience to the board of directors as a business owner
and entrepreneur. His substantial network of business and personal relationships helps the Company grow and achieve its strategic goals.
Mr. Henry is active in the community and speaks at several local universities about entrepreneurship and S.T.E.M. initiatives. He serves
on several boards and committees to include the Board of Visitors for Norfolk State University, Eastern Regional Director for Phi Beta
Sigma Fraternity, Board of Directors for Venture Richmond, Transportation DBE Advisory Committee, Young Presidents Organization (YPO),
and Metropolitan Business League. Mr. Henry serves as a member of the Compensation Committee, Nominating and Corporate Governance Committee
and Board Risk Committee. He is also a member of the board of directors of Village Bank Mortgage Corporation.
George R. Whittemore, 72, has
been a director since 1998. Mr. Whittemore is Vice Chair of the board of directors of the Company and the Bank. Mr. Whittemore is retired
and served as a member of the board of directors of Condor Hospitality, Inc. (formerly SuperTel Hospitality Trust, Inc.), a publicly
traded (Nasdaq listed) real estate investment trust that owns hotels (from November 1994 to March 2016) and served as chair of its compensation
committee and was a member of its audit committee. He was a consultant to SuperTel Hospitality from August 2004 to August 2005 and its
president from November 2001 to August 2004. Mr. Whittemore served as director and Senior Vice President/Senior Administrative Officer
of Anderson & Strudwick, Inc., a brokerage and investment banking firm from November 1996 until November 2001. He was President/Chief
Executive Officer of Pioneer Financial Corporation and its subsidiary, Pioneer Federal Savings Bank, from September 1982 until its merger
with Signet Banking Corporation (now Wells Fargo Corporation) in August 1994. Mr. Whittemore was a director of Prime Group Realty Trust,
Inc., a real estate investment trust that owned commercial office buildings, and served as chair of its audit committee from July 2005
until December 2012. He is a director of Lightstone Value Plus REIT I (since July 2006), Lightstone Value Plus REIT II (since June 2008),
and Lightstone Value Plus REIT III, Inc. (since December 2013), all of which are non-publicly traded real estate investment trusts (all
three of which are SEC filers) that own various types of commercial real estate and related investments. He is chair of the audit committee
of Lightstone Value Plus REIT I, Lightstone Value Plus II and Lightstone Value Plus III. Mr. Whittemore provides experience in banking,
investment banking, commercial real estate, public company management and board governance that are important to the Company. Mr. Whittemore
qualifies as an audit committee financial expert under SEC guidelines. Mr. Whittemore serves as Chair of the Board Risk Committee, and
is a member of the Executive Committee, Audit Committee and Nominating and Corporate Governance Committee.
THE BOARD
OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
THE ELECTIONS
OF THE NOMINEES SET FORTH ABOVE
________________________________________________________
Incumbent Directors
Class
B Directors Whose Terms Will Expire in 2023
Raymond
T. Avery, III, 72, has been a director since 1998. Mr. Avery is President and co-founder of Chesterfield Construction Services, Inc.,
which trades as Emerald Homes. This company specializes in the work force affordable sector of the residential construction market. Mr.
Avery has over 40 years of experience in real estate development and home building in central Virginia. This experience provides managerial
expertise to the board of directors as well as an extensive knowledge of the real estate market in which the Bank operates. Mr. Avery
serves as Vice Chairman of the Board Risk Committee and is a member of the Audit Committee. He is also a member of the board of directors
of Village Bank Mortgage Corporation.
James E. Hendricks, Jr., 59, has
been a director since August 15, 2020, and has served as Chief Executive Officer and President of the Company and the Bank since August
15, 2020. He previously served as Executive Vice President, Chief Operating Officer and Chief Risk Officer of the Bank since December
2016, and as Chief Credit Officer since March 2014. Prior thereto, he served as Director of Special Assets of the Bank. From 1990 to
2013, Mr. Hendricks served in several leadership roles at SunTrust Bank (and its predecessor Crestar Bank), including Senior Vice President
and Consumer Banking Chief Operational Risk Officer, Senior Vice President and Consumer Lending Credit and Compliance Risk Officer, and
Senior Vice President of Credit Process Review. Prior to 1990, he served as Bank Examiner for the Comptroller of the Currency. Mr. Hendricks
received his Bachelor of Science degree in Finance from Virginia Tech and Master of Business Administration degree from University of
Richmond. He volunteers his time to a local Boy Scout troop in various capacities. Mr. Hendricks has over 30 years of banking industry
experience, which has afforded him broad knowledge and a keen understanding of all aspects of banking. In addition to his banking experience,
he currently serves on the board of directors of the Virginia Association of Community Banks and the Virginia Bankers Association’s
Benefits Board. Mr. Hendricks is a member of the Executive Committee and the Board Risk Committee. Mr. Hendricks is also a member of
the board of directors of Village Bank Mortgage Corporation.
Mary Margaret Kastelberg, 58,
has been a director since October 1, 2020. Mrs. Kastelberg is Director of Investment Research at Alpha Wealth Advisors, LLC, a full service
independent financial advisory firm. Alpha Wealth partners with individuals, families, and small businesses to help them grow and to
articulate and achieve their long-term financial objectives. Mrs. Kastelberg has lived in the Richmond community for her entire life.
With more than 35 years of small business and financial experience, Mrs. Kastelberg brings a unique perspective to the board. Her background
in managing small business, mortgage securitizations, and mergers and acquisitions is of value in supporting Village Bank as it continues
to grow and achieve its strategic goals. Mrs. Kastelberg serves as a board member and former Chair of Commonwealth Catholic Charities
and as Secretary of the Board for Benedictine Education Foundation. She is a past board member of Western Wildcats Youth Football Association.
She is FINRA registered with Series 7 (General Securities Representative), 63 (Uniform Securities Agent State Law Examinations), and
65 (Uniform Investment Adviser Law Examination) licenses. Mrs. Kastelberg graduated from Princeton University with a B.A. degree in Politics
and earned a Master’s in Business Administration from the University of Virginia’s Colgate Darden School. Mrs. Kastelberg
serves as a member of the Board Risk Committee and Compensation Committee.
Class C Directors Whose Terms Will Expire in 2024
Frank E. Jenkins, Jr., 56, has
been a director since 2017. He is Managing Partner of Adams, Jenkins and Cheatham, one of the largest accounting firms in Virginia. The
firm’s core client base and business strategy align well with the mission of the Bank working closely with individuals and businesses
to solve problems and help businesses grow and prosper. Mr. Jenkins brings valuable business and accounting experience to the board of
directors as a Certified Public Accountant, business owner and entrepreneur. His substantial network of business and personal relationships
helps the Company grow and achieve its strategic goals. Mr. Jenkins is a member of the Virginia Young Presidents' Organization (YPO),
the American Institute of Certified Public Accountants (AICPA), the Community Associations Institute, and the Virginia Society of Certified
Public Accountants (VSCPA). He is a licensed CPA in Virginia and North Carolina and qualifies as an audit committee financial expert
under SEC guidelines. Mr. Jenkins serves as Chair of the Audit Committee and is a member of the Executive Committee, Nominating and Corporate
Governance Committee and Board Risk Committee.
Michael A. Katzen, 69, has been
a director since 2008 when River City Bank merged with the Bank. He formerly served as a director of River City Bank. Mr. Katzen is Partner
and President of The Law Firm of Michael A. Katzen, P.C. He is a director of Glebe Hill Associates, Inc., a privately held development
company. His experience with real estate law provides the board of directors with expertise in evaluating significant loan relationships
as well as working out nonperforming loans collateralized by real estate. Mr. Katzen currently serves as Chair of the Compensation Committee,
and is a member of the Executive Committee, Nominating and Corporate Governance Committee and Board Risk Committee.
Michael L. Toalson, 69, has been
a director since 2004. Mr. Toalson retired as Chief Executive Officer of the Home Builders Association of Virginia (“HBAV”)
in June 2017. He led the HBAV lobbying team before state lawmakers and regulators and was the chief administrative officer of the 3,000-member
business organization. His familiarity with various home builders and the Virginia real estate market in general are invaluable to the
board of directors in evaluating significant loan relationships and marketing the Bank’s services to the home building community.
Mr. Toalson currently serves as a member of the Audit Committee and Board Risk Committee. He also serves as Chair of the board of directors
of Village Bank Mortgage Corporation.
Executive Officers Who Are
Not Directors
Roy
I. Barzel, 70, has served as Executive Vice President and Chief Credit Officer of the Bank since August 1, 2020. He joined the Bank in
July 2017 as Director of Strategic Initiatives, and also serves as the Bank’s Community Reinvestment Act Officer. He was Executive
Vice President and Chief Credit Officer of Bank of Virginia from April 2011 until it was acquired by First Citizens Bank in September
2016, and as Senior Vice President and Regional Credit Manager of First Citizens Bank until he joined the Bank. Mr. Barzel started his
banking career in 1983 at United Virginia Bank, predecessor to Crestar Bank and SunTrust Bank, and performed a number of credit roles,
culminating in a Senior Regional Credit Officer position in Commercial Real Estate banking. Mr. Barzel is a graduate of the University
of Florida with a Bachelor of Science in Zoology and a Master of Business Administration.
Jennifer
J. Church, 42, has served as Executive Vice President - Retail Banking of the Bank since March 21, 2022. Ms. Church was the Market Leader,
Vice President with BB&T from September 2018 to March 2022, and prior thereto, she served in various positions with Union Bank &
Trust from 2007 to 2018, including Retail Support Manager, Senior Retail Operations Consultant and Branch Manager. Ms. Church is a graduate
of Longwood University with a Bachelor of Science in Business Administration and has over 20 years of banking experience.
Donald M. Kaloski, Jr., 40, has
served as Executive Vice President and Chief Financial Officer of the Company and the Bank since May 31, 2018, and as Chief Risk Officer
of the Bank since August 15, 2020. He joined the Company in March 2013 and was promoted to Senior Vice President of Accounting in April
2015. Prior thereto, he had over six years of experience in public accounting, supervising audit teams on financial institution engagements
throughout the country. Mr. Kaloski is a 2006 graduate of Troy University with a Bachelor of Science degree in Accounting, holds a Master
of Business Administration degree from Troy University, and is a Certified Public Accountant and Chartered Global Management Accountant
with 14 years of experience in the banking industry. Mr. Kaloski serves as Vice-Chair on the Virginia Bankers Association Chief Financial
Officer Committee. He also served as past Lt. Governor for Capital District Division 11 of Kiwanis International.
Max C. Morehead, Jr., 58, has
served as Executive Vice President - Commercial Banking since March 2014. Prior thereto, Mr. Morehead held various positions at SunTrust
Bank for 25 years, including managing commercial and business banking groups. Mr. Morehead also serves as Immediate Past Chair of the
Chesterfield County based non-profit, Substance Abuse Free Environment (SAFE). He is a 1986 graduate of the Virginia Military Institute.
He has over 33 years of banking experience.
Christy F. Quesenbery, 63, has served
as Executive Vice President of Operations since August 24, 2020. Mrs. Quesenbery’s expertise includes loan and deposit operations,
compliance, human resources, information technology and information security. Mrs. Quesenbery was Executive Vice President and Chief
Operating Officer for Touchstone Bankshares, Inc. from July 2016 to August 2020, where she was responsible for deposit and loan operations,
compliance, information security and technology, as well as enterprise risk and vendor management. She was Senior Vice President and
Enterprise Risk Manager at CCB Bankshares, Inc. from May 2016 until July 2016 when CCB Bankshares, Inc. merged with Touchstone Bankshares,
Inc. and served as Senior Vice President of Operations, Information and Security at Bank of Virginia from November 2011 until February
2016. Prior thereto, she held leadership roles at various community banks in Virginia during her career. Mrs. Quesenbery holds a Bachelor
of Science degree in Psychology and Business Administration from James Madison University and graduated from the Virginia Bankers School
of Bank Management. Mrs. Quesenbery has over 35 years’ experience in commercial banking.
James C. Winn, 48, has served
as President and Chief Executive Officer of Village Bank Mortgage Corporation since December 2017. Prior thereto, he served as Senior
Vice President and Risk Manager of Village Bank Mortgage Corporation. From 1998 to 2009, he served in several leadership roles with Benchmark
Mortgage, including Vice President of Secondary Market. Mr. Winn is a 1997 graduate of Virginia Commonwealth University and has over
20 years of mortgage banking experience.
Board Diversity
Matrix
The table below provides certain diversity information
regarding the board of directors as of April 5, 2022. Each of the categories listed in the table below has the meaning used in Nasdaq
Listing Rule 5605(f).
Total Number of Directors:
9
| |
Female | | |
Male | | |
Non-Binary | | |
Did Not
Disclose | |
Gender Identity | |
| | | |
| | | |
| | | |
| | |
Directors | |
| 1 | | |
| 8 | | |
| - | | |
| - | |
Demographic Background | |
| | | |
| | | |
| | | |
| | |
African American
or Black | |
| - | | |
| 1 | | |
| - | | |
| - | |
Alaskan Native or
Native American | |
| - | | |
| - | | |
| - | | |
| - | |
Asian | |
| - | | |
| - | | |
| - | | |
| - | |
Hispanic or Latinx | |
| - | | |
| - | | |
| - | | |
| - | |
Native Hawaiian
or Pacific Islander | |
| - | | |
| - | | |
| - | | |
| - | |
White | |
| 1 | | |
| 7 | | |
| - | | |
| - | |
Two or more Races
or Ethnicities | |
| - | | |
| - | | |
| - | | |
| - | |
LGBTQ+ | |
| - | | |
| | | |
| | | |
| | |
Did not disclose
demographic background | |
| - | | |
| | | |
| | | |
| | |
SECURITY OWNERSHIP
Security Ownership of Directors and Executive
Officers
The following table sets forth,
as of April 4, 2022, unless otherwise noted, certain information with respect to the beneficial ownership of shares of common stock by
each of the directors, by the executive officers named in the “Summary Compensation Table” below, and by the directors and
executive officers as a group. Beneficial ownership includes shares, if any, held in the name of the spouse, minor children or other
relatives of a director or executive officer living in such person’s home, as well as shares, if any, held in the name of another
person under an arrangement whereby the director or executive officer can vest title in themselves at once or at some future time.
Name | |
Amount of Beneficial Ownership | | |
Percent
of Class (%) | |
Directors | |
| | |
| |
R.T.
Avery, III (1) | |
| 20,426 | | |
| 1.38 | % |
Craig
D. Bell (2) | |
| 21,359 | | |
| 1.45 | % |
James
E. Hendricks, Jr. (3) | |
| 23,763 | | |
| 1.61 | % |
Devon
M. Henry (4) | |
| 1,086 | | |
| * | |
Frank
E. Jenkins, Jr. (5) | |
| 4,825 | | |
| * | |
Mary
Margaret Kastelberg (6) | |
| 1,374 | | |
| * | |
Michael
A. Katzen (7) | |
| 9,894 | | |
| * | |
Michael
L. Toalson (8) | |
| 10,385 | | |
| * | |
George
R. Whittemore (9) | |
| 11,801 | | |
| * | |
Named
Executive Officers Who Are Not Directors | |
| | | |
| | |
Max
C. Morehead, Jr. (10) | |
| 12,423 | | |
| * | |
James
C. Winn (11) | |
| 2,349 | | |
| * | |
Directors
and executive officers as a group (15 persons) | |
| 126,342 | | |
| 8.56 | % |
*Indicates
holdings amount to less than 1% of the outstanding shares of common stock.
(1) Amount disclosed
includes 2,819 shares of common stock owned by Mr. Avery; 3,803 shares of common stock held in Mr. Avery’s IRA account; 3,136 shares
of common stock owned by Mr. Avery’s spouse; 252 shares of common stock owned by JG Developers, Inc., in which Mr. Avery has a
100% interest; 9,973 shares of common stock held by the Trustee under the Village Bank Outside Directors Deferral Plan Trust FBO Raymond
T. Avery, III; and the unvested portion of restricted stock awards (time-based) of 443 shares.
(2) Amount disclosed
includes 3,601 shares of common stock owned by Mr. Bell; 3,125 shares of common stock held in Mr. Bell’s IRA account; 4,506 shares
of common stock in a revocable trust; 7 shares of common stock owned jointly with Mr. Bell’s brother; 9,277 shares of common stock
held by the Trustee under the Village Bank Outside Directors Deferral Plan Trust FBO Craig D. Bell; and the unvested portion of restricted
stock awards (time-based) of 468 shares. Mr. Bell also has stock options for 375 shares, which vested on July 15, 2013 and have not been
exercised.
(3) Amount disclosed includes
13,783 shares of common stock owned by Mr. Hendricks, of which 807 shares are held jointly with Mr. Hendricks’ spouse; 4,957 shares
of common stock held in Mr. Hendricks’ IRA account; 1,964 shares of common stock owned by Mr. Hendricks’ spouse; and the
unvested portion of restricted stock awards (time-based) of 3,059 shares.
(4) Amount disclosed includes
643 shares of common stock owned by Mr. Henry, and the unvested portion of restricted stock awards (time-based) of 443 shares.
(5) Amount disclosed includes
3,807 shares of common stock owned by Mr. Jenkins; 575 shares held in Mr. Jenkins’ IRA account; and the unvested portion of restricted
stock awards (time-based) of 443 shares.
(6) Amount disclosed includes
1,001 shares of common stock owned by Mrs. Kastelberg; and the unvested portion of a restricted stock award (time-based) of 373 shares.
(7) Amount disclosed includes
2,310 shares of common stock owned by Mr. Katzen, of which 114 shares are held jointly with Mr. Katzen’s spouse; 300 shares held
in Mr. Katzen’s IRA account; 6,841 shares of common stock held by the Trustee under the Village Bank Outside Directors Deferral
Plan Trust FBO Michael A. Katzen; and the unvested portion of a restricted stock award (time-based) of 443 shares.
(8) Amount disclosed includes
3,023 shares of common stock owned by Mr. Toalson, of which 2,050 shares are held jointly with Mr. Toalson’s spouse; 5,438 shares
of common stock held in Mr. Toalson’s IRA account; 1,481 shares of common stock held by the Trustee under the Village Bank Outside
Directors Deferral Plan Trust FBO Michael L. Toalson; and the unvested portion of restricted stock awards (time-based) of 443 shares.
(9) Amount disclosed includes
1,131 shares of common stock owned by Mr. Whittemore; 6,786 shares of common stock held in Mr. Whittemore’s IRA accounts; 1,255
shares of common stock owned by Mr. Whittemore’s spouse; 2,186 shares of common stock held by the Trustee under the Village Bank
Outside Directors Deferral Plan Trust FBO George R. Whittemore; and the unvested portion of restricted stock awards (time-based) of 443
shares.
(10) Amount disclosed
includes 7,210 shares of common stock owned by Mr. Morehead; 2,920 shares of common stock held in Mr. Morehead’s IRA account; and
the unvested portion of restricted stock awards (time-based) of 2,293 shares.
(11) Amount disclosed
includes 1,954 shares of common stock owned by Mr. Winn; and the unvested portion of restricted stock awards (time-based) of 395 shares.
Security Ownership of Certain Beneficial Owners
The following table sets forth,
as of April 4, 2022, certain information known to the Company with respect to the beneficial ownership of shares of common stock by owners
of 5% or more of the outstanding shares of the Company’s common stock. Beneficial ownership includes shares, if any, held in the
name of the spouse, minor children or other relatives of such owner living in such person’s home, as well as shares, if any, held
in the name of another person under an arrangement whereby such owner can vest title in himself at once or at some future time.
| |
Amount and Nature of | | |
Percent of | |
Name | |
Beneficial
Ownership | | |
Class(%) | |
Kenneth R. Lehman | |
| 768,379 | (1) | |
| 52.05 | % |
122 North Gordon Road | |
| | | |
| | |
Fort Lauderdale, FL 33301 | |
| | | |
| | |
| (1) | This information is based
solely on a Form 4 filed by Mr. Lehman with the SEC on December 16, 2020. |
No Hedging Policy
The Company’s insider trading
policy prohibits directors and executive officers from engaging in transactions designed to hedge or offset any decrease in the market
value of the Company’s common stock, such as prepaid variable forward contracts, equity swaps, puts, calls, collars, forwards,
exchange funds and other derivative instruments. The policy also prohibits directors and executive officers from engaging in short sale
transactions in the Company’s common stock.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities
Exchange Act of 1934, as amended, requires the Company’s directors and executive officers, and any persons who own more than 10%
of the outstanding shares of common stock, to file reports of ownership and changes in ownership of common stock. Officers and directors
are required by regulations to furnish the Company with copies of all Section 16(a) reports that they file. Based solely on review of
the copies of such reports furnished to the Company or written representation that no other reports were required, the Company believes
that, during fiscal year 2021, all of the Company’s insiders were in compliance with the reporting requirements of Section 16(a),
other than there were ten late filings, specifically Form 4 filings on February 16, 2021 for vested shares issued January 28, 2021 for
performance-based restricted stock units granted under the 2015 Stock Incentive Plan to James E. Hendricks, Jr., Donald M. Kaloski, Jr.,
Rebecca L. Kline and Max C. Morehead, Jr.; and Form 4 filings on August 9, 2021 for vested shares issued July 29, 2021 for performance-based
restricted stock units granted under the 2015 Stock Incentive Plan to Roy I. Barzel, James E. Hendricks, Jr., Donald M. Kaloski, Jr.,
Rebecca L. Kline, Max C. Morehead, Jr. and Christy F. Quesenbery.
CORPORATE GOVERNANCE
AND THE BOARD OF DIRECTORS
General
The business and affairs of the
Company are managed under the direction of the board of directors in accordance with the Virginia Stock Corporation Act and the Company’s
Articles of Incorporation and Bylaws. Members of the board are kept informed of the Company’s business through discussions with
the President and Chief Executive Officer and other officers, by reviewing materials provided to them and by participating in meetings
of the board of directors and its committees.
Board Leadership
The positions of Chair of the board
of directors and President and Chief Executive Officer of the Company are held by separate persons due to the distinct and time-consuming
natures of these roles. The principal role of the President and Chief Executive Officer is to manage the business of the Company in a
safe, sound, and profitable manner. The role of the board of directors, including its Chair, is to provide independent oversight of the
President and Chief Executive Officer, to oversee the business and affairs of the Company for the benefit of its shareholders, to balance
the interests of the Company’s diverse constituencies including shareholders, customers, employees, bank regulators, and communities,
and to identify business opportunities for the Bank and Village Bank Mortgage Corporation. Each director of the Company also serves as
a director of the Bank. All directors are actively involved in our strategic planning process.
Board’s Role in Risk Oversight
The board of directors oversees
risk to be reasonably certain that the Company’s risk management policies, procedures, and practices are consistent with corporate
strategy and functioning appropriately.
The board of directors performs
its risk oversight in several ways, including through the Bank’s Board Risk Committee. The Board Risk Committee is responsible
for providing fiduciary oversight to achieve the Company’s enterprise risk management vision and mission. Enterprise risk management
helps achieve this vision by creating a comprehensive approach to anticipate, identify, prioritize, and manage material risks to our
business strategies. Specific to credit risk, the Committee assists the board of directors in its oversight of the Bank’s asset
quality and loan portfolio management by monitoring the credit risk of the Bank, monitoring the quality, trends and management of the
Bank’s loan portfolio, monitoring loan growth and concentrations, approving all loan policies, approving loans according to the
Bank’s loan policies, and ensuring processes and controls are in place to ensure compliance with policies and all lending laws
and regulations. The board of directors establishes standards for risk management by approving policies that address and mitigate the
Company’s most material risks. These include policies addressing credit risk, interest rate risk, capital risk, and liquidity risk,
as well as Bank Secrecy Act/Anti-Money-Laundering compliance and cybersecurity. The board of directors also monitors, reviews, and reacts
to risk through various reports presented by management, internal and external auditors, and regulatory examiners.
The goal of the Board Risk Committee
is to open lines of communication among the directors, executives, and employees. The Committee ensures that management has identified,
assessed, and established a risk management infrastructure capable of addressing those risks given the scope and complexity of the Company.
These risks include credit, liquidity, accounting, legal, compliance, operational, interest rate, cybersecurity, strategic and reputational
risks. The Committee also oversees the division of risk-related responsibilities to each board committee as clearly as possible and performs
a gap analysis to determine that the oversight of any risks is not missed.
The board of directors conducts
certain risk oversight activities through its other committees with direct oversight over specific functional areas. The risk oversight
activities of the Audit, Compensation, Executive, and Nominating and Corporate Governance Committees are described in the “Committees
of the Board” section of this Proxy Statement below; in the “Executive Compensation” section, beginning on page 14
and in the “Audit Information” section, beginning on page 27. The board of directors is empowered to create additional standing
and ad hoc committees to facilitate regular monitoring and deeper analysis of matters that may arise from time to time. The board of
directors also meets regularly in an outside directors’ session to discuss a variety of topics, including risk, without members
of management present.
In the foregoing ways, the full
board of directors is able to monitor the Company’s risk profile and risk management activities on an ongoing basis.
Independence of the Directors
The board of directors has determined
that the following eight individuals of its nine current members are independent as defined by applicable SEC rules and the listing standards
of the Nasdaq Stock Market (“Nasdaq”): Raymond T. Avery, III, Craig D. Bell, Devon M. Henry, Frank E. Jenkins, Jr., Mary
Margaret Kastelberg, Michael A. Katzen, Michael L. Toalson and George R. Whittemore. In reaching this conclusion, the board of directors
considered that the Company and its subsidiary conduct business with companies of which certain members of the board of directors or
members of their immediate families are or were directors or officers. In particular, the board of directors considered that in 2021,
the Bank paid an agent fee for loans processed under the Small Business Administration Paycheck Protection Program to Adams, Jenkins
& Cheatham in the amount of $139,318.07. Frank E. Jenkins, Jr., a member of the board of directors of the Company and the Bank, is
a Managing Partner with Adams, Jenkins & Cheatham. The board concluded that such fee was in the nature of a referral fee and not
a consulting, advisory or other compensatory fee as contemplated by Rule 10A-3 under the Securities Exchange Act of 1934. Adams, Jenkins
& Cheatham did not provide any professional services to the Company, or the Bank and the amount of the fee was not in excess of the
limit under Nasdaq Listing Rule 5605(a)(2)(D). Given the nature of the fee and the fact that this was a non-recurring payment that arose
under exceptional circumstances related to the COVID-19 pandemic, the board concluded that the transaction would not impact Mr. Jenkins’
ability to exercise independent judgment with respect to the Company.
There were no other relationships
between the Company and its directors except as disclosed below under “Certain Relationships and Related Transactions.”
Annual Meeting Attendance
The Company encourages members
of the board of directors to attend the Annual Meeting of Shareholders. Eight of the nine directors serving at the time attended the
May 18, 2021 Annual Meeting.
Board and Committee Meeting Attendance
Each director is expected to devote
sufficient time, energy, and attention to ensure diligent performance of the director’s duties, including attendance at board and
committee meetings. There were twelve meetings of the Company’s board of directors and twelve meetings of the Bank’s board
of directors in 2021. Each director attended at least 75% of the aggregate number of meetings of the board and meetings of committees
of which the director was a member during 2021.
Executive Sessions
The board of directors generally
holds executive sessions of non-employee directors at each board meeting. At least one executive session is held for the purpose of formally
evaluating the President and Chief Executive Officer. Any independent director can request that an executive session be scheduled.
Committees of the Board
The Company has an Audit Committee,
Compensation Committee, Executive Committee, and Nominating and Corporate Governance Committee. The Bank also has a Board Risk Committee.
Audit Committee
The Company’s Audit Committee
assists the board of directors in fulfilling its oversight responsibility to the shareholders relating to the integrity of the Company’s
financial statements, compliance with legal and regulatory requirements and the qualifications, independence, and the performance of
the internal audit function. The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight
of the work of the independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing
other audit, review, or attestation services for the Company. The board of directors has adopted a written charter for the Audit Committee.
A copy of the charter of the Audit Committee is available on the “Investor Relations” page of the Company’s website
at www.villagebank.com under the heading “Corporate Information - Governance Documents.”
The Audit Committee is composed
of Messrs. Jenkins (Chair), Avery, Toalson and Whittemore. The board of directors, in its business judgment, has determined that such
directors are independent as defined by Nasdaq’s listing standards and SEC regulations. The board of directors also has determined
that all of the members of the Audit Committee have sufficient knowledge in financial and auditing matters to serve on the Audit Committee
and that Messrs. Jenkins and Whittemore qualify as audit committee financial experts as defined by SEC regulations.
The Audit Committee met four times
in 2021. For additional information regarding the Audit Committee, see “Audit Information – Audit Committee Report”
on page 27.
Compensation Committee
The Company’s Compensation
Committee assists the board of directors in fulfilling their responsibility to the shareholders to ensure that the Company's officers,
key executives, and board members are compensated in accordance with the Company's total compensation objectives and executive compensation
policy. The Compensation Committee advises and recommends for approval compensation policies, strategies, and pay levels necessary to
support organizational objectives. The board of directors has adopted a written charter for the Compensation Committee. A copy of the
charter of the Compensation Committee is available on the “Investor Relations” page of the Company’s website at www.villagebank.com
under the heading “Corporation Information - Governance Documents.”
The Compensation Committee is
composed of Messrs. Katzen (Chair), Bell, Henry, and Mrs. Kastelberg, all of whom the board in its business judgment has determined are
independent as defined by Nasdaq’s listing standards and SEC regulations.
The Compensation Committee met
five times in 2021. For additional information regarding the Compensation Committee, see “Executive Compensation” on page
14.
Executive Committee
When the board of directors is
not in session, the Executive Committee is authorized to exercise all the board of director’s power except for certain matters
reserved to the board by law, such as approval of an amendment of the articles of incorporation, a plan of merger or consolidation or
the issuance of stock.
The Executive Committee is composed
of Messrs. Bell (Chair), Jenkins, Katzen, Whittemore and Hendricks. The Executive Committee met twelve times in 2021.
Board Risk Committee
The Bank’s Board Risk Committee
is responsible for providing fiduciary oversight to achieve the Company’s and Bank’s enterprise risk management vision and
mission, as described in the Board’s Role in Risk Oversight on page 9. All nine members of the Bank board serve on the Board Risk
Committee. This Committee met a total of four times in 2021.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance
Committee is responsible for selecting and recommending to the board of directors with respect to (i) nominees for election at the Annual
Meeting of Shareholders, and (ii) nominees to fill board vacancies. The Nominating and Corporate Governance Committee is responsible
for assisting the board in identifying individuals qualified to become board members and to recommend to the board nominees for directors;
to oversee the board’s compliance with its ethics program as set forth in the Company’s Code of Ethics, Conflicts of Interest
and Bribery Policy; to review and make recommendations to the board on matters involving the general operation of the board, including
the size and composition of the board and the structure and composition of board committees; to oversee an annual assessment of the board’s
performance as well as peer evaluation of the board and its committees; to recommend board committee appointments and removals; to recommend
to the board a determination of each directors’ independence under applicable rules and guidelines; to recommend to the board candidates
for new local board appointments; and to consider corporate governance issues that may arise from time to time and make recommendations
to the board with respect thereto. The board of directors has adopted a written charter for the Nominating and Corporate Governance Committee,
a copy of which is available on the “Investor Relations” page of the Company’s website at www.villagebank.com under
the heading “Corporate Information - Governance Documents”.
The Nominating and Corporate Governance
Committee is composed of Messrs. Bell (Chair), Henry, Jenkins, Katzen and Whittemore, all of whom the board of directors in its business
judgment has determined are independent as defined by Nasdaq’s listing standards and SEC regulations. The Nominating and Corporate
Governance Committee met three times in 2021.
Director Nomination Process
In identifying potential nominees,
the Nominating and Corporate Governance Committee takes into account such factors as it deems appropriate, including the current composition
of the board of directors, the range of talents, experiences and skills that would best complement those that are already represented
on the board of directors, the balance of management and independent directors and the need for specialized expertise. The Nominating
and Corporate Governance Committee considers candidates for board membership suggested by its members and by management, and the independent
directors will also consider candidates suggested informally by a shareholder of the Company. In the consideration of director nominees,
including any nominee that a shareholder may submit, the Nominating and Corporate Governance Committee considers, at a minimum, the following
factors for new directors, or the continued service of existing directors:
| · | The
ability of the prospective nominee to represent the interests of the shareholders of the
Company; |
| · | The
prospective nominee’s standards of integrity, commitment and independence of thought
and judgment; |
| · | The
prospective nominee’s ability to dedicate sufficient time, energy and attention to
the diligent performance of his or her duties, including the prospective nominee’s
service on other public company boards; |
| · | The
extent to which the prospective nominee contributes to the range of talent, skill and expertise
appropriate for the board of directors and to the board’s overall diversity –
diversity being broadly construed to mean a variety of opinions, perspectives, personal and
professional experiences and backgrounds, such as gender, race and ethnicity differences,
as well as other differentiating characteristics; and |
| · | The
prospective nominee’s involvement within the communities the Company serves. |
Shareholders entitled to vote
for the election of directors may recommend candidates for the Nominating and Corporate Governance Committee to consider formally in
connection with an annual meeting as long as the recommendation is made on or before the last date on which a shareholder may nominate
an individual for election to the board of directors under the Company's Bylaws.
Under the process used by the
Company for selecting new board candidates, the Nominating and Corporate Governance Committee identifies the need to add a new board
member with specific qualifications or to fill a vacancy on the board. The Committee will initiate a search, working with staff support
and seeking input from board members and executive management, hiring a search firm, if necessary, and considering any candidates recommended
by shareholders. An initial slate of candidates that will satisfy criteria and otherwise qualify for membership on the board may be presented
to the board of directors. A determination is made as to whether board members have relationships with preferred candidates and can initiate
contacts. The Nominating and Corporate Governance Committee interviews prospective candidates. The board of directors meets to conduct
further interviews of prospective candidates, if necessary or appropriate, and to consider and recommend final candidates for approval.
Director Compensation
Members of the board of directors
of the Company do not receive cash fees for their service as directors. However, all of the directors of the Company also serve as directors
of the Bank, and the non-employee directors are compensated for their service on the Bank board. In 2021, the Chair of the board of directors
of the Bank received a $26,000 retainer payable semi-annually in increments of $13,000. The Chairs of the Audit Committee, Board Risk
Committee and Compensation Committee each received a $22,000 retainer payable semi-annually in increments of $11,000. Each of the remaining
non-employee members of the board of directors of the Bank received a $20,000 retainer payable semi-annually in increments of $10,000.
Directors of the Company also received awards of time-based restricted stock in connection with the Company’s long-term incentive
plan as described below. Directors do not receive attendance fees for board or committee meetings.
Board members who are also officers
of the Company or the Bank receive compensation only for their executive roles. They do not receive additional compensation for board
service or attending committee meetings.
In 2005, the Bank adopted the Outside
Directors Deferral Plan under which non-employee directors of the Bank have the opportunity to defer receipt of all or a portion of their
compensation until retirement or departure from the board of directors. Any amounts deferred under this plan are maintained in an account
for the benefit of the director and are credited annually with interest on the cash portion of the deferred amount at a market rate established
at the beginning of each plan year (3.68% for 2021).
The following table provides information
concerning the compensation of all non-employee directors for the year ended December 31, 2021:
| |
Fees Earned | | |
| | |
| | |
| |
| |
or Paid | | |
Stock | | |
BOLI | | |
| |
Name | |
in Cash | | |
Awards | | |
Income | | |
Total | |
R.T. Avery, III | |
$ | 20,000 | (1) | |
$ | 9,425 | (2) | |
$ | 641 | | |
$ | 30,066 | |
Craig D. Bell | |
$ | 26,000 | (1) | |
$ | 10,787 | (2) | |
$ | 237 | | |
$ | 37,024 | |
Devon M. Henry | |
$ | 20,000 | | |
$ | 9,425 | (2) | |
$ | — | | |
$ | 29,425 | |
Frank E. Jenkins, Jr. | |
$ | 22,000 | (1) | |
$ | 9,425 | (2) | |
$ | — | | |
$ | 31,425 | |
Mary Margaret Kastelberg | |
$ | 20,000 | | |
$ | 9,425 | (2) | |
$ | — | | |
$ | 29,425 | |
Michael A. Katzen | |
$ | 22,000 | (1) | |
$ | 9,425 | (2) | |
$ | — | | |
$ | 31,425 | |
Michael L. Toalson | |
$ | 20,000 | | |
$ | 9,425 | (2) | |
$ | 463 | | |
$ | 29,888 | |
George R. Whittemore | |
$ | 22,000 | | |
$ | 9,425 | (2) | |
$ | 579 | | |
$ | 32,004 | |
(1) All fees earned
by the director were deferred for the year ended December 31, 2021.
(2) Represents the
grant date fair value of the awards computed in accordance with the Financial Accounting Standards Board's Accounting Standards Codification
Topic 718, Compensation - Stock Compensation. These awards are part of the long-term incentive plan described on page 16 and consist
of time-based restricted stock. The time-based awards vest in equal installments over a period of three years. The grant date fair value
per share was $54.48 and was based on the Company's common stock closing price on November 1, 2021.
Communications with Directors
Any director may be contacted by
writing to the named director, c/o Village Bank and Trust Financial Corp., P.O. Box 330, Midlothian, Virginia 23113. Communications to
the non-management directors as a group may be sent to the same address, c/o the Corporate Secretary of the Company. The Company promptly
forwards all such correspondence to the indicated directors.
EXECUTIVE COMPENSATION
Introduction
This section of the Proxy Statement
provides an overview and explanation of the material information relevant to understanding the objectives, policies, and the philosophy
underlying the Company’s compensation programs for its executives, focusing on the named executive officers (referred to as “NEOs”).
The NEOs for 2021 were as follows:
·
James E. Hendricks, Jr., President and Chief Executive Officer of the Company
·
Max C. Morehead, Jr., Executive Vice President-Commercial Banking of the Bank
·
James Clifton Winn, President and Chief Executive Officer of Village Bank Mortgage Corporation
This section of the Proxy Statement is
intended to inform shareholders about certain incentive compensation plans as well as components of compensation paid to the NEOs. Following
this section, the Company provides additional information relating to executive compensation in a series of tables, including important
explanatory footnotes and narrative.
At
the May 18, 2021 Annual Meeting of the Company’s shareholders, the shareholders voted to approve, on an advisory basis, the compensation
of the Company’s NEOs, as described in the “Executive Compensation” section, the tabular disclosure regarding such
compensation, and the accompanying narrative disclosure, set forth in the Company’s 2021 Proxy Statement. The vote was 1,107,226
shares “For” (91.86% of the shares voted), 15,055 shares “Against” (1.25% of the shares voted), and 83,086 shares
“Abstained” (6.89% of the shares voted).
The
Compensation Committee took into account the result of the shareholder vote in determining executive compensation policies and decisions
since the 2021 Annual Meeting. The Compensation Committee viewed the vote as an expression of the shareholders’ overall satisfaction
with the Company’s current executive compensation programs. While the Compensation Committee considered this shareholder satisfaction
in determining to continue the Company’s executive compensation programs, decisions regarding incremental changes in individual
compensation were made in consideration of the factors described below.
Compensation Policy and Objectives
The Compensation Committee’s
compensation philosophy with respect to its executive officers is one of pay for performance. Accordingly, an executive officer’s
annual compensation consists of a base salary, an annual monetary bonus and stock-based compensation. The annual monetary bonus is utilized
to reward our executives for achieving short-term financial and productivity goals, and stock-based compensation is utilized for achieving
long-term financial and productivity goals. The Compensation Committee evaluates all compensation plans to ensure that they do not encourage
unnecessary or excessive risk.
The Compensation Committee’s
primary objective is to provide competitive levels of compensation to attract, retain and reward outstanding executive officers. In a
highly competitive community banking marketplace, excellent leadership is essential. Our executive officers are expected to manage the
business of the Company in a manner that promotes its growth and profitability for the benefit of our shareholders. To that end, we believe
that:
| · | Our
key executives should have compensation opportunities at levels that are competitive with
peer institutions; |
| · | Total
compensation should include significant “at risk” components that are linked
to annual and longer term performance results; and |
| · | Stock-based
compensation should form a key component of total compensation as a means of linking executive
management to the long-term performance of the Company and aligning their interests with
those of shareholders. |
Compensation Consultants
The Compensation Committee engaged
Lockton Companies, LLC in 2021 as its independent executive compensation advisor. The compensation advisor advises the Compensation Committee
on matters relating to compensation benchmarking, staying current with regulatory and legal issues related to executive compensation,
and designing appropriate compensation programs. As part of its consultation with the Compensation Committee, the compensation advisor
provides the Committee with peer group comparisons. The Compensation Committee has direct access to the consultant and control over its
engagement. The Compensation Committee has determined that the work of the compensation advisor and its employees as compensation consultants
to the Company has not created any conflict of interest.
Base Salary
The Company believes that a competitive
salary for executive management is essential. Furthermore, flexibility to adapt to the particular skills of an individual or the specific
needs of the Company is required. Proposed salary adjustments for executive management are presented to the Compensation Committee by
the Chief Executive Officer, typically during the second quarter. The Compensation Committee reviews the recommendations, makes any further
adjustments and generally approves the recommendations with input from the Compensation Committee’s external compensation advisor.
Recommendations regarding adjustments to Mr. Hendricks’ salary are reviewed and, if appropriate, approved by the board of directors.
There were generally modest salary increases for the NEOs during 2021. The base salaries for 2021 and 2020 were as follows:
Name and Principal | |
| | |
| |
Position | |
Year | | |
Base
Salary | |
James E. Hendricks, Jr. | |
| 2021 | | |
$ | 325,000 | |
President and Chief Executive Officer | |
| 2020 | | |
$ | 300,000 | |
| |
| | | |
| | |
Max C. Morehead Jr. | |
| 2021 | | |
$ | 208,000 | |
Executive Vice President-Commercial Banking | |
| 2020 | | |
$ | 202,000 | |
| |
| | | |
| | |
James C. Winn | |
| 2021 | | |
$ | 165,000 | |
President and Chief Executive Officer
of Village Bank Mortgage Corporation | |
| 2020 | | |
$ | 160,000 | |
Short-Term Incentive Compensation
In 2019 and again in 2020, the
board of directors approved a short-term incentive plan to reward executives for creating value for the Company by achieving corporate
and individual performance goals during 2020 and 2021, respectively. The corporate goals included measures of net income before taxes
and incentive accrual, noninterest expense to average assets for the Bank, average relationship deposits, average core loans, and noninterest
income to budget for the Bank. The Compensation Committee was given the responsibility to administer and enforce the plan. Under the
plan, the following incentive amounts were set for each of the NEOs (other than Mr. Winn) if certain Company performance goals were attained,
adjusted for the NEO’s individual performance results against the plan:
| |
Percent of Base Salary | |
Name | |
2021 | | |
2020 | |
James E. Hendricks, Jr. | |
| 30 | % | |
| 30 | % |
Max C. Morehead Jr. | |
| 20 | % | |
| 15 | % |
Actual awards would be adjusted
upward or downward based on actual performance results versus goal and individual performance relative to goal. The Company performance
goals were met above target in 2020 and the following awards were paid to NEOs in March 2021:
Name | |
Amount | | |
Percent
of Base Salary | |
James E. Hendricks, Jr. | |
$ | 90,000 | | |
| 30 | % |
Max C. Morehead Jr. | |
$ | 43,200 | | |
| 21 | % |
The Company performance goals
were met above target in 2021 and the following awards were paid to NEOs in March 2022:
Name | |
Amount | | |
Percent
of Base Salary | |
James E. Hendricks, Jr. | |
$ | 150,000 | | |
| 46 | % |
Max C. Morehead Jr. | |
$ | 64,603 | | |
| 31 | % |
Mr. Winn did not participate in
the short-term incentive plan, as he received performance-based incentive compensation based on the profitability of Village Bank Mortgage
Corporation, as is customary in the mortgage loan industry. In lieu of incentive bonuses like the other NEOs, Mr. Winn receives an amount
equal to a fixed percentage of the annual pretax profit contribution of Village Bank Mortgage Corporation. See “Summary Compensation
Table” below.
Long-Term Incentive Plans
2019 Long-Term Incentive
Plan
On July 23, 2019, the board approved
a Long-Term Incentive Plan under which directors were awarded time-vested restricted stock. Executives were awarded time-vested restricted
stock and performance-based restricted stock units. The time-vested restricted stock awards vest annually with 33.333% vesting on each
of July 29, 2020, 2021 and 2022. The performance-based restricted stock units were to vest based on performance versus goals for 2020-2021
with shares issued in 2020-2022. Goals were established in the following categories and carry the following weighting:
50% |
Consolidated
Return on Tangible Common Equity |
50% |
Bank
Adversely Classified Items Ratio |
100% |
|
The Company’s performance goal for the 2019
Long-Term Incentive Plan of Consolidated Return on Tangible Common Equity was based on a two-year performance period that ended on December 31,
2021. The performance goal was met at the maximum level, and the following awards were paid to NEOs in 2022:
|
|
Consolidated
Return on Tangible Common Equity | |
|
|
| | |
| | |
| | |
| | |
| | |
| |
Name |
|
| Year | | |
| Threshold
(#) | | |
| Target
Shares
(#) | | |
| Maximum
(#) | | |
| Actual
Shares
Awarded (#) | | |
| Fair
Value of
Actual Award
($)(1) | |
James E. Hendricks, Jr. |
|
| 2021 | | |
| 188 | | |
| 375 | | |
| 563 | | |
| 563 | | |
$ | 30,121 | |
Max. C. Morehead Jr. |
|
| 2021 | | |
| 125 | | |
| 250 | | |
| 375 | | |
| 375 | | |
$ | 20,063 | |
James C. Winn |
|
| 2021 | | |
| 113 | | |
| 225 | | |
| 338 | | |
| 338 | | |
$ | 18,083 | |
(1)
The amount represents the fair value of the awards on the vesting date calculated in accordance with Financial Accounting Standards
Board's Accounting Standards Codification Topic 718, Compensation - Stock Compensation. The fair value per share was $53.50 and was based
on the Company's common stock closing price on March 25, 2022, the date of issuance.
The Company’s performance for the 2019 Long-Term
Incentive Plan for the Bank Adversely Classified Items Ratio was measured at June 30, 2021 and December 31, 2021. The performance goal
was met at the maximum level at each measurement date, and the following awards were paid to NEOs:
|
Bank
Adversely Classified Items Ratio as of June 30, 2021 |
| |
| | |
| | |
| | |
| | |
| | |
| |
Name | |
Year | | |
Threshold
(#) | | |
Target
Shares
(#) | | |
Maximum
(#) | | |
Actual
Shares
Awarded (#) | | |
Fair
Value of
Actual Award
($)(1) | |
James E. Hendricks, Jr. | |
| 2021 | | |
| 47 | | |
| 94 | | |
| 141 | | |
| 141 | | |
$ | 6,566 | |
Max. C. Morehead Jr. | |
| 2021 | | |
| 32 | | |
| 63 | | |
| 95 | | |
| 95 | | |
$ | 4,424 | |
James Winn | |
| 2021 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
(1) The amount represents
the fair value of the awards on the vesting date calculated in accordance with Financial Accounting Standards Board's Accounting Standards
Codification Topic 718, Compensation - Stock Compensation. The fair value per share was $46.57 and was based on the Company's common
stock closing price on July 29, 2021, the date of issuance.
|
Bank
Adversely Classified Items Ratio as of December 31, 2021 |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Name | |
| Year | | |
| Threshold
(#) | | |
| Target
Shares (#) | | |
| Maximum
(#) | | |
| Actual
Shares Awarded (#) | | |
| Fair
Value of Actual Award ($)(1) | |
James E. Hendricks, Jr. | |
| 2021 | | |
| 47 | | |
| 94 | | |
| 141 | | |
| 141 | | |
$ | 8,312 | |
Max. C. Morehead Jr. | |
| 2021 | | |
| 32 | | |
| 63 | | |
| 95 | | |
| 95 | | |
$ | 5,600 | |
James Winn | |
| 2021 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
(1) The amount represents
the fair value of the awards on the vesting date calculated in accordance with Financial Accounting Standards Board's Accounting Standards
Codification Topic 718, Compensation - Stock Compensation. The fair value per share was $58.95 and was based on the Company's common
stock closing price on January 28, 2022, the date of issuance.
2020 Long-Term Incentive Plan
On July 28, 2020, the board approved
a Long-Term Incentive Plan under which directors were awarded time-vested restricted stock. Executives were awarded time-vested restricted
stock and performance-based restricted stock units. The time-vested restricted stock awards vest annually with 33.333% vesting on each
of August 3, 2021, 2022 and 2023. The performance-based restricted stock units can be earned based on performance versus goals for 2021-2022
with shares issued in 2021-2023. Goals were established in the following categories and carry the following weighting:
50% |
Consolidated
Return on Tangible Common Equity |
50% |
Bank
Adversely Classified Items Ratio |
100% |
|
The Company’s performance
goal of Consolidated Return on Tangible Common Equity is based on a two-year performance period that will end on December 31, 2022, and
is currently tracking towards the target threshold. The table below details the awards levels:
|
Consolidated
Return on Tangible Common Equity(1) |
| |
| | |
| | |
| | |
| |
Name | |
| Year | | |
| Threshold
(#) | | |
| Target
Shares (#) | | |
| Maximum
(#) | |
James E. Hendricks, Jr. | |
| 2021 | | |
| 313 | | |
| 625 | | |
| 938 | |
Max. C. Morehead Jr. | |
| 2021 | | |
| 125 | | |
| 250 | | |
| 375 | |
James C. Winn | |
| 2021 | | |
| 125 | | |
| 250 | | |
| 375 | |
(1)
The performance-based restricted stock awards will vest on December 31, 2022, based on the Company's average consolidated return on tangible
common equity for fiscal years 2021 and 2022. The Company is currently tracking towards the maximum threshold as of December 31, 2021.
The Company’s performance for the 2020 Long-Term
Incentive Plan for the Bank Adversely Classified Items Ratio was measured at June 30, 2021 and December 31, 2021. The performance goal
was met at the maximum level at each measurement date, and the following awards were paid to NEOs:
|
Bank
Adversely Classified Items Ratio as of June 30, 2021 |
| |
| | |
| | |
| | |
| | |
| | |
| |
Name | |
| Year | | |
| Threshold
(#) | | |
| Target
Shares
(#) | | |
| Maximum
(#) | | |
| Actual
Shares
Awarded (#) | | |
| Fair
Value of
Actual Award
($)(1) | |
James E. Hendricks, Jr. | |
| 2021 | | |
| 79 | | |
| 157 | | |
| 236 | | |
| 236 | | |
$ | 10,991 | |
Max. C. Morehead Jr. | |
| 2021 | | |
| 32 | | |
| 63 | | |
| 94 | | |
| 94 | | |
$ | 4,378 | |
James Winn | |
| 2021 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
(1)
The amount for 2021 represents the fair value of the awards on the vesting date calculated in accordance with Financial Accounting
Standards Board's Accounting Standards Codification Topic 718, Compensation - Stock Compensation. The fair value per share was $46.57
and was based on the Company's common stock closing price on July 29, 2021.
| |
| | |
| | |
| | |
| | |
| | |
| |
|
Bank
Adversely Classified Items Ratio as of December 31, 2021 |
| |
| | |
| | |
| | |
| | |
| | |
| |
Name | |
| Year | | |
| Threshold
(#) | | |
| Target
Shares
(#) | | |
| Maximum
(#) | | |
| Actual
Shares
Awarded (#) | | |
| Fair
Value of
Actual Award
($)(1) | |
James E. Hendricks, Jr. | |
| 2021 | | |
| 78 | | |
| 156 | | |
| 234 | | |
| 234 | | |
$ | 13,794 | |
Max. C. Morehead Jr. | |
| 2021 | | |
| 32 | | |
| 63 | | |
| 94 | | |
| 94 | | |
$ | 5,541 | |
James Winn | |
| 2021 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
(1)
The amount for 2021 represents the fair value of the awards on the vesting date calculated in accordance with Financial Accounting
Standards Board's Accounting Standards Codification Topic 718, Compensation - Stock Compensation. The fair value per share was $58.95
and was based on the Company's common stock closing price on January 28, 2022.
2021 Long-Term Incentive Plan
On October 26, 2021, the board
approved a Long-Term Incentive Plan under which directors were awarded time-vested restricted stock. Executives were awarded time-vested
restricted stock and performance-based restricted stock units. The time-vested restricted stock awards vest annually with 33.333% vesting
on each of November 1, 2022, 2023 and 2024. The performance-based restricted stock units can be earned based on performance versus goals
for Consolidated Return on Tangible Common Equity for 2022-2023 with shares issued in 2024.
In granting the stock awards, the
Compensation Committee asked its external compensation advisor to provide a recommendation regarding incentive stock awards for executive
management and directors. The Compensation Committee’s advisor recommended stock awards and/or stock units for executives based
on the Company’s executive compensation philosophy statement. As a result of this evaluation, the Compensation Committee and board
approved a combination of time-vested restricted stock and performance-based restricted stock units in 2020 and 2021. The number of shares
is reported below under Grants of Plan-Based Awards in 2021. The stock-based compensation for the NEOs shown in the Summary Compensation
Table includes the target value of the performance-based restricted stock units as of the date of grant.
Supplemental Executive Retirement
Plan
We believe that retirement compensation
plays an important role in retaining key executives, as well as helping them provide for retirement. The Compensation Committee engaged
an independent compensation advisor to analyze the total retirement benefits provided by the Company and/or the Bank and Social Security
to employees with various levels of compensation and years of service so that the Compensation Committee could determine the projected
replacement ratio of income at retirement compared with active employment. Because of limits under our qualified retirement plan on the
amount of deferrals that our executives can make, several of our executives can expect to have a lower retirement replacement ratio than
we have targeted for all employees. Consequently, as a matter of “pension equity”, we have adopted a supplemental plan, which
should provide a benefit for designated executives that will help approach the targeted retirement replacement ratio.
Under the Bank’s Supplemental
Executive Retirement Plan, the Bank has agreed to provide a supplemental retirement benefit of $50,000 annually for 20 years to Mr. Hendricks
and a benefit of $25,000 annually for 15 years to Mr. Morehead. Other than Mr. Hendricks, the participants are fully vested in their
respective. Mr. Hendricks is vested in a benefit equal to $25,000 annually for 15 years. The remainder of Mr. Hendricks’s benefit,
which was awarded in connection with his promotion to President and Chief Executive Officer in 2020, is subject to vesting and requires
Mr. Hendricks to remain employed by the Company for a term of 90 months beginning December 31, 2020. Under the plan, each participant’s
payments will begin on the later of the date of his termination of employment with the Company or the date he would otherwise have completed
his service requirement. In the event of a pre-termination death, the executive’s named beneficiary receives the benefit under
the applicable payout schedule. In the event of a post-termination death, the executive’s named beneficiary receives any remaining
benefit payments under the applicable payout schedule.
Employment and Change of Control Agreements with
Named Executive Officers
Securing the continued service of
key executives is essential to the successful future of the Company. Employment agreements and change of control agreements assist the
Company by providing security to key executives. The Company has an employment agreement with Mr. Hendricks. The Bank has an employment
agreement with Mr. Morehead and a change of control agreement with Mr. Winn.
Mr. Hendricks’ employment
agreement with the Company was entered into on July 28, 2020, and the initial term of the agreement will expire on August 14, 2023; provided
that on August 14, 2022 and on each August 14th thereafter, the agreement will be automatically extended for an additional
12 month period unless either party gives notice of nonrenewal at least 90 days prior to the renewal date. Pursuant to the agreement,
Mr. Hendricks is entitled to receive an annual base salary of not less than $300,000. His current base salary is $325,000. The Company’s
board of directors or compensation committee will review his base salary at least annually and may increase his salary in its discretion.
Mr. Hendricks is entitled to an annual performance bonus based on a target of 30% of his annual base salary, provided that he
meets the performance goals established by the board of directors or compensation committee. He is also entitled to stock-based awards
in such amounts as may be determined by the Company’s board of directors or compensation committee in accordance with the terms
and conditions of the applicable incentive plans in effect for senior executives of the Company and the Bank. Mr. Hendricks is also entitled
to participate in the Village Bank Supplemental Executive Retirement Plan as described above. Pursuant to his agreement, if Mr. Hendricks
is terminated without “Cause” (as defined in his agreement) or resigns for “Good Reason” (as defined in his agreement),
he will be paid two times the sum of (i) his annual base salary in effect as of the date of termination, plus (ii) an annual bonus amount
equal to 30% of such annual base salary. If, within 24 months following a change of control of the Company, he is terminated by the Company
without Cause, he terminates his employment for Good Reason or the Company fails to renew his agreement, he will be paid a lump sum cash
payment equal to 2.99 times the sum of his annual base salary as of the date of termination.
Mr. Morehead’s employment
agreement with the Bank was entered into on September 4, 2020, and the initial term of the agreement will expire on September 4, 2023;
provided that on September 4, 2022 and on each September 4th thereafter, the agreement will be automatically extended for
an additional 12 month period unless either party gives notice of nonrenewal at least 90 days prior to the renewal date. Pursuant to
the agreement, Mr. Morehead is entitled to receive an annual base salary of not less than $202,000. His current base salary is $208,000.
The Bank’s board of directors or compensation committee will review his base salary at least annually and may increase his salary
in its discretion. Mr. Morehead is entitled to an annual performance bonus based on a target of 15%
of his annual base salary, provided that he meets the performance goals established by the board of directors or compensation committee.
His annual performance bonus for 2021 was based on a target of 20% of his base salary. He is also entitled to stock-based awards in such
amounts as may be determined by the Bank’s board of directors or compensation committee in accordance with the terms and conditions
of the applicable incentive plans in effect for senior executives of the Bank. Mr. Morehead is also entitled to participate in the Village
Bank Supplemental Executive Retirement Plan as described above. Pursuant to his agreement, if Mr. Morehead is terminated without “Cause”
(as defined in his agreement) or resigns for “Good Reason” (as defined in his agreement), he will be paid the sum of (i)
his annual base salary in effect as of the date of termination, plus (ii) an annual bonus amount equal to 15% of such annual base salary.
If, within 24 months following a change of control of the Company, he is terminated by the Company without Cause, he terminates his employment
for Good Reason or the Company fails to renew his agreement, he will be paid a lump sum cash payment equal to two times the sum of his
annual base salary as of the date of termination.
Mr. Winn’s amended and
restated change of control agreement was entered into on March 24, 2022 and the initial term of the agreement will expire on March 31,
2024. The agreement replaced his prior change in control
agreement with the Bank dated March 24, 2020, which
expired on March 31, 2022 in accordance with its terms. The change of control agreement may be extended for an additional period of up
to 24 months at the discretion of the board of directors. Pursuant to the terms of the agreement, if, within 12 months following a change
of control of the Company, Mr. Winn’s employment is terminated by the Bank without “Cause” (as defined in his agreement)
or by Mr. Winn following a reduction in his base salary of at least 10%, then he will be entitled to a lump sum cash payment equal to
9 months of his monthly base salary as in effect on his termination date or in effect immediately prior to the change of control, whichever
is greater.
Other Benefits and Agreements
All NEOs are eligible to participate
in the health and welfare benefit programs available to all of the Company’s employees. These programs include medical, dental,
and vision coverages, short and long-term disability plans, and life insurance.
In addition, the Company has a
401(k) profit sharing plan. The NEOs participate in this plan and are fully vested in their own contributions. The Company’s discretionary
matching contributions cliff vest 100% at two years.
The Company and certain members
of the board of directors and NEOs are parties to split dollar life insurance agreements or bank owned life insurance (“BOLI”)
agreements. Generally, under each split dollar or BOLI agreement, the Company has life insurance on the executive’s life. Upon
death, a death benefit will be paid to the executive’s designated beneficiary, or to his estate, as may be applicable, under the
provisions of the applicable agreement, and a death benefit will also be paid to the Company. Any death benefit paid to the Company will
be in excess of any death benefit paid to the insured executive’s designated beneficiary.
All NEOs have access to a Non-Qualified
Deferred Compensation plan, which allows a select group of management and highly compensated employees to save additional pre-tax dollars
beyond the current retirement plan limits. Participants may elect to defer dollars from base salary, incentive pay, commissions, and/or
401(k) refunds per the terms of this program. All participants in the plan are fully vested in their own contributions. James E. Hendricks,
Jr. elected to defer a portion of his compensation into the plan in 2021. No other NEOs participated in the plan as of December 31, 2021.
Summary Compensation Table
The following table presents information
concerning the compensation of the NEOs for services rendered in all capacities to the Company and the Bank.
| |
| | |
| | |
| | |
| | |
Non-Equity | | |
Nonqualified | | |
| | |
| |
| | |
| | |
| | |
Stock | | |
Incentive Plan | | |
Deferred | | |
All Other | | |
Name and Principal | |
| | |
| | |
| | |
Awards | | |
Compensation | | |
Compensation | | |
Compensation | | |
Position | |
Year | | |
Salary
($) | | |
Bonus
($)(1) | | |
($)
(2) | | |
($)
(3) | | |
Earnings
($) | | |
($)
(4) | | Total
($) |
James E. Hendricks,
Jr. | |
| 2021 | | |
| 303,846 | | |
| 20,000 | | |
| 94,250 | | |
| 150,000 | | |
| 44,796 | | |
| 22,647 | |
635,539 |
President and Chief | |
| 2020 | | |
| 256,923 | | |
| 5,000 | | |
| 84,564 | | |
| 90,000 | | |
| 23,279 | | |
| 16,575 | |
476,341 |
Executive Officer | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
Max C. Morehead Jr. | |
| 2021 | | |
| 202,923 | | |
| 2,500 | | |
| 58,021 | | |
| 64,603 | | |
| 9,547 | | |
| 17,578 | |
355,172 |
Executive Vice President/ | |
| 2020 | | |
| 198,536 | | |
| 5,000 | | |
| 63,075 | | |
| 43,200 | | |
| 9,155 | | |
| 14,146 | |
333,112 |
Commercial Banking | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
James C. Winn | |
| 2021 | | |
| 160,769 | | |
| - | | |
| 16,780 | | |
| 385,020 | | |
| - | | |
| 17,130 | |
579,699 |
President and Chief | |
| 2020 | | |
| 157,114 | | |
| - | | |
| 7,250 | | |
| 424,620 | | |
| - | | |
| 15,911 | |
604,895 |
Executive Officer of | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
Village Bank Mortgage Corporation | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
(1)
The amounts in this column for the periods ended 2021 and 2020 reflect short-term incentive compensation awards for recognition of
efforts around the origination of Small Business Administration Payroll Protection Program loans during 2021 and 2020. |
(2)
The amounts represent the grant date fair value of the awards calculated in accordance with Financial Accounting Standards Board's
Accounting Standards Codification Topic 718, Compensation - Stock Compensation. The 2021 and 2020 stock awards consist of time-based
and performance-based restricted stock awards. The performance-based awards in the above table assume the probable outcome of performance
conditions is equal to the targeted potential value of the awards. The time-based awards vest over a period of three years and the
performance-based awards can be earned over a period of two years. The grant date fair value per share was $54.48 and
$29.00 and was based on the Company's common stock closing price on November 1, 2021 and August 3, 2020, respectively. The Assumptions
used in the calculation of these amounts are included in Note 14 of the Company's audited financial statements for the year ended
December 31, 2021 included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 25, 2022. |
(3)
The amounts in this column reflect the short-term incentive compensation awards for 2020 and 2019, which are discussed in further
detail on page 15. |
(4)
Amounts shown in the "All Other Compensation" column are detailed in the following table: |
|
|
|
All Other
Compensation |
| |
| | |
| | |
| | |
| | |
| | |
| |
| |
| | |
| | |
Company | | |
| | |
| | |
| |
| |
| | |
| | |
Contributions | | |
Company | | |
| | |
| |
| |
| | |
| | |
to Retirement | | |
Vehicle / | | |
| | |
| |
Name and Principal | |
| | |
BOLI | | |
and 401(k) | | |
Automobile | | |
Telephone | | |
| |
Position | |
Year | | |
Income | | |
Plans | | |
Allowance | | |
Allowance | | |
Total | |
James E. Hendricks,
Jr. | |
| 2021 | | |
$ | 149 | | |
$ | 16,047 | | |
$ | 6,000 | | |
$ | 600 | | |
$ | 22,647 | |
| |
| 2020 | | |
$ | - | | |
$ | 9,975 | | |
$ | 6,000 | | |
$ | 600 | | |
$ | 16,575 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Max. C. Morehead Jr. | |
| 2021 | | |
$ | 141 | | |
$ | 10,837 | | |
$ | 6,000 | | |
$ | 600 | | |
$ | 17,578 | |
| |
| 2020 | | |
$ | - | | |
$ | 7,546 | | |
$ | 6,000 | | |
$ | 600 | | |
$ | 14,146 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
James C. Winn | |
| 2021 | | |
$ | 78 | | |
$ | 10,452 | | |
$ | 6,000 | | |
$ | 600 | | |
$ | 17,130 | |
| |
| 2020 | | |
$ | - | | |
$ | 9,311 | | |
$ | 6,000 | | |
$ | 600 | | |
$ | 15,911 | |
Plan-Based Awards in 2021
The following table sets forth
certain information with respect to the amount and value of plan-based awards granted to the NEOs during 2021.
| |
| |
| | |
Grants
of Plan-Based Award in 2021 | | |
| | |
| |
| |
| |
| | |
Estimated
Future Payouts Under Non-Equity
Incentive Plan Awards | | |
Estimated
Future Payouts Under
Equity Incentive Plan Awards | | |
All Other
Stock | | |
| |
Name | |
Grant
Date | |
Actual
Cash
Payout(1) | | |
Threshold | | |
Target | | |
Maximum | | |
Threshold | | |
Target | | |
Maximum | | |
Awards:
Number of Share of
Stock or
Units | | |
Grant Date
Fair
Value of Stock
and Option
Awards(2) | |
James E. Hendricks,
Jr. | |
N/A | |
$ | 150,000 | | |
$ | 48,750 | | |
$ | 97,500 | | |
$ | 146,250 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| N/A
| |
| |
11/1/2021 | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
| 433 | | |
| 865 | | |
| 1,298 | | |
| - | | |
$ | 47,125 | |
| |
11/1/2021 | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
| - | | |
| - | | |
| - | | |
| 865 | | |
$ | 47,125 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Max C. Morehead, Jr. | |
N/A | |
$ | 64,603 | | |
$ | 20,800 | | |
$ | 41,600 | | |
$ | 62,400 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| N/A
| |
| |
11/1/2021 | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
| 194 | | |
| 388 | | |
| 582 | | |
| - | | |
$ | 21,138 | |
| |
11/1/2021 | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
| - | | |
| - | | |
| - | | |
| 677 | | |
$ | 36,883 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
James C. Winn | |
N/A | |
$ | 385,020 | | |
$ | - | | |
$ | - | | |
$ | - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| N/A
| |
| |
11/1/2021 | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
| 77 | | |
| 154 | | |
| 231 | | |
| - | | |
$ | 8,390 | |
| |
11/1/2021 | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
| - | | |
| - | | |
| - | | |
| 154 | | |
$ | 8,390 | |
|
|
|
|
|
|
|
|
|
|
|
(1)
In lieu of non-equity incentive bonuses like the other NEOs, Mr. Winn receives an amount equal to a fixed percentage of the annual
pretax profit contribution of Village Bank Mortgage Corporation. |
(2) The
amounts represent the grant date fair value of the awards calculated in accordance with Financial Accounting Standards Board's Accounting
Standards Codification Topic 718, Compensation - Stock Compensation. The performance-based awards in the above table assume the probable
outcome of performance conditions is equal to the targeted potential value of the awards. The time-based awards vest over a period
of three years and the performance-based awards can be earned over a period of two years. The grant date fair value per share was
$54.48 and was based on the Company's common stock closing price on November 1, 2021. The Assumptions used in the calculation of
these amounts are included in Note 14 of the Company's audited financial statements for the year ended December 31, 2021 included
in the Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 25, 2022. |
Outstanding Equity Awards
The following table sets forth
certain information with respect to the amount and value of outstanding equity awards on an award-by-award basis held by the NEOs at
December 31, 2021.
Outstanding Equity
Awards at Fiscal Year-end |
|
| |
| |
Stock
Awards |
|
Name | |
Grant Date | |
Number
of
Shares
or Units
of Stock That
Have Not
Vested
| | |
Market
Value
of Shares
or Units
of Stock That
Have Not
Vested(1)
| | |
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested
| | |
Equity
Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested(1)
| |
James E. Hendricks, Jr. | |
7/29/2019(2) | |
| 250 | | |
$ | 14,463 | | |
| - | | |
$ | - | |
| |
8/3/2020(3) | |
| 1,944 | | |
$ | 112,460 | | |
| 937 | | |
$ | 54,205 | |
| |
11/1/2021(4) | |
| 865 | | |
$ | 50,040 | | |
| 865 | | |
$ | 50,040 | |
| |
| |
| 3,059 | | |
$ | 176,963 | | |
| 1,802 | | |
$ | 104,246 | |
| |
| |
| | | |
| | | |
| | | |
| | |
Max C. Morehead, Jr. | |
7/29/2019(2) | |
| 166 | | |
$ | 9,603 | | |
| - | | |
$ | - | |
| |
8/3/2020(3) | |
| 1,450 | | |
$ | 83,883 | | |
| 374 | | |
$ | 21,636 | |
| |
11/1/2021(4) | |
| 677 | | |
$ | 39,164 | | |
| 388 | | |
$ | 22,446 | |
| |
| |
| 2,293 | | |
$ | 132,650 | | |
| 762 | | |
$ | 44,082 | |
| |
| |
| | | |
| | | |
| | | |
| | |
James C. Winn | |
7/29/2019(2) | |
| 75 | | |
$ | 4,339 | | |
| - | | |
$ | - | |
| |
8/3/2020(3) | |
| 166 | | |
$ | 9,603 | | |
| 250 | | |
$ | 14,463 | |
| |
11/1/2021(4) | |
| 154 | | |
$ | 8,909 | | |
| 154 | | |
$ | 8,909 | |
| |
| |
| 395 | | |
$ | 22,851 | | |
| 404 | | |
$ | 23,371 | |
|
|
|
|
|
|
(1) The market value of the
stock awards that have not vested was determined based on the per share closing price of the Company's common stock on December 31,
2021 ($57.85). |
(2) Time based restricted
stock awards and performance based restricted stock unit awards under the 2019 Long Term Incentive Plan described on page 16. |
(3) Time based restricted
stock awards and performance based restricted stock unit awards under the 2020 Long Term Incentive Plan described on page 17. |
(4) Time based restricted
stock awards and performance based restricted stock unit awards under the 2021 Long Term Incentive Plan described on page 18. |
Equity Compensation Plans
The following table summarizes
information, as of December 31, 2021, relating to the Company’s stock-based compensation plans, pursuant to which grants of
options to acquire shares of common stock may be granted from time to time.
| |
Number of Shares To be Issued Upon Exercise of
Outstanding Options, Warrants and
Rights | | |
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | | |
Number of Shares Remaining Available for Future Issuance Under Equity Compensation Plan | |
Equity compensation plans approved by shareholders | |
| 23,734 | | |
$ | 37.45 | | |
| 39,379 | |
Equity compensation plans not approved by shareholders | |
| - | | |
| - | | |
| - | |
Total | |
| 23,734 | | |
$ | 37.45 | | |
| 39,379 | |
Certain Relationships and Related Transactions
Some of the directors and officers
of the Company are customers of the Company and the Bank, and the Company and the Bank have had banking transactions in the ordinary
course of business with directors, officers, and their associates, on substantially the same terms, including interest rates, collateral,
and repayment terms on loans, as those prevailing at the same time for comparable transactions with persons not related to the Company.
All outstanding loans to such officers and directors and their associates are current as to principal and interest and do not involve
more than the normal risk of collectability or present other unfavorable features. None of such outstanding loans is classified as non-accrual,
past due, restructured or a potential problem.
In 2021, the
Bank paid an agent fee for loans processed under the Small Business Administration Paycheck Protection Program to Adams, Jenkins &
Cheatham in the amount of $139,318.07. Frank E. Jenkins, Jr., a member of the board of directors of the Company and the Bank, is a Managing
Partner with Adams, Jenkins & Cheatham.
There are no legal proceedings
to which any director, officer or associate is a party that would be material and adverse to the Company.
PROPOSAL 2
ADVISORY (NON-BINDING)
VOTE TO APPROVE
NAMED EXECUTIVE OFFICER
COMPENSATION
As part of implementing the “say
on pay” requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, pursuant to applicable rules, the SEC requires
a separate and non-binding shareholder vote to approve the compensation of the named executive officers in this Proxy Statement. This
proposal, commonly known as a “say on pay” proposal, gives shareholders the opportunity to endorse or not endorse a company’s
executive pay program. Accordingly, shareholders of the Company are being asked to approve the following resolution:
“RESOLVED,
that the shareholders of Village Bank and Trust Financial Corp. approve the compensation of named executive officers as disclosed in
this Proxy Statement pursuant to the rules of the Securities and Exchange Commission.”
As stated above, this is an advisory
vote only. Approval of the proposed resolution requires the affirmative vote of a majority of the shares present at the Annual Meeting
and entitled to vote.
The board of directors believes
that the Company’s compensation policies and procedures are strongly aligned with the long-term interests of its shareholders.
Because your 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.
THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE FOR
THE APPROVAL OF THE RESOLUTION
TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS
_____________________________________________________________________
PROPOSAL 3
RATIFICATION OF THE APPOINTMENT
OF THE
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The board of directors, with the
recommendation of the Audit Committee, has appointed the firm of Yount, Hyde & Barbour, P.C. (“YHB”) as the independent
registered public accounting firm to audit the consolidated financial statements of the Company for the fiscal year ending December 31,
2022.
The Audit Committee is directly
responsible for the appointment, compensation, retention, and oversight of the Company’s independent registered public accounting
firm. The Audit Committee engages in an annual evaluation of the independent registered public accounting firm’s qualifications,
assessing a wide variety of factors. After assessing the performance and independence of YHB, the Audit Committee believes it is in the
best interests of the Company and its shareholders to retain YHB.
The selection of YHB as the Company’s
independent auditors is not required to be submitted to a vote of the shareholders for ratification. The Company is doing so because
it believes that it is a matter of good corporate practice. Should the shareholders not ratify the appointment of YHB, it is contemplated
that the appointment will be permitted to stand unless the Company’s Audit Committee finds other compelling reasons for making
a change. Disapproval by the shareholders will be taken into consideration for the selection of the independent registered public accounting
firm for the following year.
A majority of the votes cast at
the meeting by holders of the common stock is required for the ratification of the appointment of the independent registered public accounting
firm.
A representative of YHB is expected
to participate in the Annual Meeting, will have an opportunity to make a statement if he or she so desires, and is expected to be available
to respond to appropriate questions.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
RATIFICATION
OF THE APPOINTMENT OF YOUNT, HYDE & BARBOUR, P.C.
AS
THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR
THE FISCAL YEAR ENDING DECEMBER 31, 2022
_____________________________________________
AUDIT INFORMATION
The Audit Committee operates under
a written charter that the board of directors has adopted.
Fees of Independent Registered Public Accounting
Firm
The Company’s independent registered
public accounting firm, Yount, Hyde & Barbour, P.C., billed the following fees for services provided to the Company for the fiscal
year ended December 31, 2021, and 2020.
| |
Yount, Hyde &
Barbour, P.C. | |
| |
2021 | | |
2020 | |
Audit
fees (1) | |
$ | 99,500 | | |
$ | 98,500 | |
Audit-related
fees (2) | |
| 32,700 | | |
| 29,075 | |
Tax
fees (3) | |
| 16,000 | | |
| 15,450 | |
Total | |
$ | 148,200 | | |
$ | 143,025 | |
(1) Audit fees: Audit
and review services, review of documents filed with the SEC. |
(2) Audit-related fees: Audit of the
VBA Defined Contribution Plan; agreed upon procedures related to the U.S. Department of Education Student Loan Program, Public Deposits;
and HUD engagement for Village Bank Mortgage Corporation. |
(3) Tax fees: Preparation of tax returns
and consultation on tax matters. |
Audit Committee Report
The Audit Committee is composed
of four directors, each of whom is independent within the meaning of the listing standards of Nasdaq and SEC regulations. The Audit Committee
operates under a written charter adopted by the board of directors. The Audit Committee reviews its charter at least annually and revises
it as necessary to ensure compliance with current regulatory requirements.
Management is responsible for the
preparation, presentation, and integrity of the Company’s consolidated financial statements; and complying with laws and regulations
and ethical business standards.
The Company’s independent registered
public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements; and
expressing an opinion as to the conformity of the Company’s consolidated financial statements with U.S. generally accepted accounting
principles (“GAAP”).
The Audit Committee is responsible
for the appointment, compensation, retention and oversight of the work of (a) the independent registered public accounting firm engaged
for the purpose of preparing or issuing an audit report or performing other audit, review or attestation services for the Company; (b)
the accounting firm engaged for the purpose of performing internal audit procedures for the Company; (c) the firm engaged for the purpose
of performing a review of the loan portfolio for the Company; and (d) monitoring, overseeing and reviewing the accounting and financial
reporting processes of the Company.
The Audit Committee has met and held
discussions with management and Yount, Hyde & Barbour, P.C., the Company’s independent registered public accounting firm. Management
represented to the Audit Committee that the Company’s consolidated financial statements for the year ended December 31, 2021, were
prepared in accordance with GAAP. The Audit Committee has reviewed and discussed these consolidated financial statements with management
and Yount, Hyde & Barbour, P.C., including the scope of the independent registered public accounting firm’s responsibilities,
critical accounting policies and practices used, and significant financial reporting issues and judgments made in connection with the
preparation of such financial statements.
The Audit Committee has discussed
with Yount, Hyde & Barbour, P.C. the matters required to be discussed by Auditing Standard No. 1301 “Communication with Audit
Committees,” issued by the Public Company Accounting Oversight Board. The Audit Committee has also received the written disclosures
and the letter from Yount, Hyde & Barbour, P.C. required by applicable requirements of the Public Company Accounting Oversight Board
regarding Yount, Hyde & Barbour, P.C.’s communications with the Audit Committee concerning independence, and has discussed
with Yount, Hyde & Barbour, P.C. the firm’s independence from the Company. Moreover, the Audit Committee has considered whether
the provision of the audit services described above is compatible with maintaining the independence of the independent auditors.
Based upon its discussions with management
and Yount, Hyde & Barbour, P.C., and its review of the representations of management and the report of Yount, Hyde & Barbour,
P.C. to the Audit Committee, the Audit 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, 2021, for filing with the SEC. By recommending
to the board of directors that the audited consolidated financial statements be so included, the Audit Committee is not opining on the
accuracy, completeness or presentation of the information contained in the audited financial statements.
Audit Committee
Members
Frank E. Jenkins,
Jr., Chair
Raymond T. Avery,
III
Michael L. Toalson
George R. Whittemore
Pre-Approval Policies
All audit related services, tax services
and other services were pre-approved by the Audit Committee, which concluded that the provision of such services by Yount, Hyde &
Barbour, P.C. was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. The Audit
Committee’s Charter provides for pre-approval of audit, audit-related and tax services. The Charter authorizes the Audit Committee
to delegate to one or more of its members pre-approval authority with respect to permitted services.
PROPOSALS FOR 2023 ANNUAL MEETING OF SHAREHOLDERS
The next Annual Meeting of shareholders
will be held by the Company on or about May 23, 2023.
Any shareholder who wishes to submit
a proposal for consideration at that meeting, and who wishes to have such proposal included in the Company’s Proxy Statement, must
comply with SEC Rule 14a-8 and must submit the proposal in writing no later than December 6, 2022. All such proposals and notifications
should be sent to James E. Hendricks, Jr., President and Chief Executive Officer, at P.O. Box 330, 13319 Midlothian Turnpike, Midlothian,
Virginia 23113.
The Company’s bylaws also
prescribe the procedure that a shareholder must follow to nominate directors for election. Such nominations require written notice delivered
to the Secretary of the Company at its principal executive office not less than 60 days nor more than 90 days prior to the date of the
Annual Meeting; or in the event that less than 70 days’ notice or prior public disclosure of the date of the meeting is given or
made, the shareholder has 10 days after the earlier of the date of notice or public disclosure to give written notice. The written notice
must provide certain information and representations regarding both the nominee and the shareholder making the nomination and a written
consent of the nominee to be named in a Proxy Statement as a nominee and to serve as a director if elected. Any shareholder may obtain
a copy of the bylaws, without charge, upon written request to the Corporate Secretary of the Company. Based upon an anticipated date
of May 23, 2023, for the next Annual Meeting, the Company must receive any notice of nomination or other business no later than March
24, 2023, and no earlier than February 22, 2023, for such meeting.
OTHER MATTERS
THE COMPANY’S ANNUAL REPORT
TO SHAREHOLDERS, WHICH INCLUDES A COPY OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2020
(EXCLUDING EXHIBITS), AS FILED WITH THE SEC, IS BEING MAILED TO SHAREHOLDERS WITH THIS PROXY STATEMENT. FOR THOSE SHAREHOLDERS THAT ONLY
RECEIVED THE NOTICE OF INTERNET AVAILABILITY, THIS PROXY STATEMENT AND THE ANNUAL REPORT ARE AVAILABLE AT WWW.ENVISIONREPORTS.COM/VBFC.
A COPY OF THE ANNUAL REPORT MAY ALSO BE OBTAINED WITHOUT CHARGE BY WRITING TO DONALD M. KALOSKI, JR., EXECUTIVE VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER, WHOSE ADDRESS IS P.O. BOX 330, MIDLOTHIAN, VIRGINIA, 23113-0330. THE ANNUAL REPORT IS NOT PART OF THE PROXY SOLICITATION
MATERIALS.
Village Bank and Trust F... (NASDAQ:VBFC)
Gráfico Histórico do Ativo
De Mai 2024 até Jun 2024
Village Bank and Trust F... (NASDAQ:VBFC)
Gráfico Histórico do Ativo
De Jun 2023 até Jun 2024