DEF 14A of Virginia National Bankshares Corp, May 30, 2025

DEF 14A of Virginia National Bankshares Corp

Filed May 30, 2025 · FY20240000950170-25-079318

Open on EDGAR

  1. PROPOSAL 1 – ELECTION OF DIRECTORS

    PROPOSAL 1 – ELECTION OF DIRECTORS Ten (10) directors will be elected at the Annual Meeting to serve until the next annual meeting of shareholders of the Company and until their successors are elected and qualified. Directors will be elected by a plurality of the votes cast, so the ten (10) nominees receiving the highest number of votes will be elected, even though such ten (10) individuals may not receive “FOR” votes from a majority of the votes cast.

  2. Nominations for Directors

    Nominations for Directors The Board of Directors has nominated the ten (10) individuals named below for election to the Board at the Annual Meeting, all of whom are currently serving on the Board. All persons nominated have consented to being named as nominees in this proxy statement and have indicated they are willing to serve as directors if elected. If, at the time of the Annual Meeting, any nominee is unable or unwilling to serve, shares represented by proxies will be voted at the discretion of the named proxies for such other person as the Board of Directors may nominate. The following table sets forth certain information concerning the persons who have been nominated for election as directors by the Board of Directors (ages and committee roles as of May 27, 2025):

  3. Nominations for Directors

    | Name (Age) | Principal Occupation | Director Since | Committee Membership *** | | John B. Adams, Jr. (80) | Chief Executive Officer and President of a real estate holding company | 2021* | CC | | Kevin T. Carter (59) | Managing Director of a resort property | 2021* | CC | | Hunter E. Craig (64) | Owner of a residential, commercial and industrial property company | 2020* | AC | | William D. Dittmar, Jr. (72) | Entrepreneur, Investor and Developer | 1998** | CG | | Randolph D. Frostick (68) | Attorney | 2021* | AC; CC; CG | | Linda M. Houston (67) | Retired, former Managing Director/Division Executive for Merrill Lynch | 2018 | AC; CC; CG | | Jay B. Keyser (68) | Chief Executive of a family office | 2021* | AC | | Glenn W. Rust (70) | President and Chief Executive Officer, Virginia National Bankshares Corporation and Virginia National Bank (the "Bank") | 2006** | | | Sterling T. Strange, III (64) | President and Chief Executive Officer of an information technology software firm | 2021* | AC; CG | | Gregory L. Wells (68) | Independent Business Advisor | 2012** | AC; CC |

  4. Nominations for Directors

    * Before their election to the Company’s Board of Directors, Mr. Craig served on the Bank’s board since 1998, and each of the other directors serving since 2021 previously served on the board of Fauquier Bankshares, Inc. (“Fauquier Bankshares”). ** Includes continuous service on the Board of the Bank prior to the Bank’s reorganization into a holding company form of ownership. *** AC - Audit and Compliance Committee; CC - Compensation Committee; and CG - Corporate Governance Committee. The Board of Directors of the Company recommends that shareholders vote “FOR” the election of each of these nominees. Unless otherwise indicated on the proxy, the proxy holder(s) will vote “FOR” the election of these nominees. The following biographies of the nominees standing for election contain information regarding the person’s business experience, public company director positions held currently or at any time during the last five years, and the experiences, qualifications, attributes and/or skills that caused the Board of Directors to determine the person should serve as a director of the Company. Unless otherwise noted, the person has held their current position for at least five years. All nominees also serve on the board of directors of the Bank. John B. Adams, Jr. serves as non-executive vice chairman of the Company and the Bank. Mr. Adams also serves as President and Chief Executive Officer of Bowman Companies, Inc., primarily a family real estate holding company, and was a director of Universal Corporation, a publicly traded company headquartered in Richmond, Virginia, from 2003 to 2018. He was President and Chief Executive Officer of A. Smith Bowman Distillery from 1989 to 2003. Mr. Adams served as chairman of The National Theatre in Washington, D.C. for 39 years and has served on the foundation boards of several higher education institutions. Prior to joining the Company and the Bank boards in April 2021, Mr. Adams served as a director of Fauquier Bankshares and The Fauquier Bank from 2002 to March 2021. He was chairman of Fauquier Bankshares and The Fauquier Bank from 2010 to March 2021. As a result of his various leadership roles, the Company believes that Mr. Adams is qualified to serve on our Board as he brings valuable insight and business acumen, along with significant business expertise. Kevin T. Carter is the executive vice president of TCMA, Washington, D.C. and formerly the managing director for Lansdowne Resort in Leesburg, Virginia. Mr. Carter previously served as the President of Guests, Inc., a full-service hotel management company headquartered in Strasburg, Virginia, from October 2016 to December 2020 and served as the managing director for the Airlie Foundation from November 2000 to October 2016. He has been in the luxury hospitality field for 44 years. Mr. Carter is currently serving as Chairman of the Board of Supervisors for Fauquier County, Virginia and has served on several boards, including Fauquier Hospital & Health System and the Path Foundation. Prior to joining the Company and the Bank boards in April 2021, Mr. Carter served as a director of Fauquier Bankshares and The Fauquier Bank from 2016 to March 2021. Through his personal community involvement and his professional experience, the Company believes Mr. Carter is qualified to serve on our Board as he provides significant market knowledge and financial management skills. Hunter E. Craig is President of Hunter E. Craig Co., a residential, commercial and industrial property company. Since 1991, Mr. Craig has been a principal real estate broker with Georgetown Real Estate. Mr. Craig is involved in various business activities and civic organizations in the Charlottesville, Virginia area and served on the Board of Visitors of the University of Virginia from 2010 to 2014. Mr. Craig has served as a director of the Company since 2020 and a director of the Bank since its formation in 1998. As a lifelong resident of Charlottesville and a co-founder of the Bank, the Company believes Mr. Craig is qualified to serve on our Board as he provides a deep knowledge of local business conditions and has extensive community contacts. William D. Dittmar, Jr. serves as the non-executive chairman of the Company and the Bank. Mr. Dittmar is the managing member of Enterprise Properties, LLC in Charlottesville, Virginia, which is the parent company for various real estate and commercial property subsidiaries, as well as other investments. Mr. Dittmar has served as a director of the Company since its incorporation in 2013 and a director of the Bank since its formation in 1998. The Company believes Mr. Dittmar is qualified to serve on our Board due to his extensive business background as a corporate executive, real estate executive and project manager. Randolph D. Frostick is an attorney practicing primarily civil litigation involving real estate, commercial leasing, construction, business, and trust and estate matters. He is currently Of Counsel to Vanderpool, Frostick and Nishanian, P.C., a law firm located in Manassas, Virginia, which focuses primarily on civil litigation, business, employment, real estate transactions, financing, land use and development. Mr. Frostick co-founded the firm and was a shareholder, director, and officer of the firm until 2020. Mr. Frostick has 43 years of experience as a civil trial attorney. In addition to practicing law, Mr. Frostick is actively involved in commercial leasing in Manassas, Virginia. Prior to joining the Company and the Bank boards in April 2021, Mr. Frostick served as a director of Fauquier Bankshares and The Fauquier Bank from 2009 through March 2021. The Company believes Mr. Frostick is qualified to serve on our Board as he brings insightful knowledge and valuable business expertise. Linda M. Houston, retired, was employed with Merrill Lynch/Bank of America Corporation from 1984 to May 2017, and as Financial Advisor since 1987. From 2011 to 2017, Ms. Houston served as managing director/division executive. Her prior roles with Merrill Lynch included head of Global Wealth and Investment Management Diversity and Inclusion Council, regional managing director, national marketing and sales manager, and managing director/market executive. Since October 2023, Ms. Houston has served on the board of directors of SPAR Group, Inc. (SGRP), a provider of merchandising, marketing and distribution services and a public company listed on the Nasdaq Capital Market. Ms. Houston has served as a director of the Company and the Bank since 2018. The Company believes Ms. Houston is qualified to serve on our Board as she has extensive experience in wealth and investment management, compliance and compensation practices. Jay B. Keyser served as the chief executive of the William A. Hazel Family Office from 2015 through the end of 2024 and is currently an executive for the Family Office. He is also the manager of various real estate ventures and trustee of several trusts. He previously served on the board and was the Chief Executive Officer of William A. Hazel, Inc., a site construction company headquartered in Chantilly, Virginia, from June 2008 to December 2014. Mr. Keyser had served for 26 years in various capacities, including chief financial officer of this construction entity. Prior to joining the Company and the Bank boards in April 2021, Mr. Keyser served as a director of Fauquier Bankshares and The Fauquier Bank from 2009 to March 2021. The Company believes Mr. Keyser is qualified to serve on our Board as he brings vast business and financial management knowledge and experience.

  5. Nominations for Directors

    Glenn W. Rust is President and Chief Executive Officer of the Company and the Bank. He has over 50 years of experience in financial services, technology and network systems design, security, corporate restructuring and government infrastructure analysis. He served as a substantial expert on internet security and banking while working with the National Infrastructure Advisory Council shortly after the September 11, 2001 attacks. Prior to joining the Bank in 2006, he held various executive management positions at Texas Commerce Bank, Chemical Bank, J.P. Morgan, Chase and Sterling Bank. Mr. Rust also serves on the board of, and provides advice and strategic counsel to, several charitable organizations in the Charlottesville, Houston and Washington, D.C. areas. Mr. Rust has served as a director of the Company since its incorporation in 2013 and a director of the Bank since 2006. The Company believes Mr. Rust is qualified to serve on our Board as he brings wide-ranging executive bank management experience, as well as expertise in successfully managing growth opportunities. Sterling T. Strange, III is President and Chief Executive Officer of The Solution Design Group, Inc., an information technology software firm to the public sector and higher education industries, located in Warrenton, Virginia and Orlando, Florida. Prior to founding The Solution Design Group, Inc. in 2004, Mr. Strange was President and founder of Decision Support Technologies, Inc., a transportation software company that provided solutions and services to over 100 airports and seaports worldwide. Mr. Strange has served in senior management positions in both private and public companies for over 30 years. Prior to joining the Company and the Bank boards in April 2021, Mr. Strange served as a director of Fauquier Bankshares and The Fauquier Bank from 2007 to March 2021. The Company believes Mr. Strange is qualified to serve on our Board due to his valuable entrepreneurial experience and financial management expertise. Gregory L. Wells is currently working as an independent business advisor. He was the Chief Executive Officer of ACAC Fitness and Wellness Centers from 2006 until 2020. ACAC has operations in Charlottesville and Richmond, Virginia, in West Chester, Pennsylvania, and in Baltimore and Germantown, Maryland. He also served as a board member of PT@ACAC, a joint venture between Legacy Management, Inc. and Sentara Martha Jefferson Hospital. Prior to joining ACAC in 2006, he was the Chief Executive Officer and an owner of Mailing Services of Virginia in Charlottesville and held executive positions with the former Centel Corporation. Mr. Wells has served as a director of the Company since its incorporation in 2013 and a director of the Bank since 2012. The Company believes Mr. Wells is qualified to serve on our Board due to his experience in leading companies of various sizes, including responsibilities for finance, strategic planning, operations, business development, marketing and human resources.

  6. 2022 STOCK INCENTIVE PLAN

    2022 STOCK INCENTIVE PLAN

  7. General

    General The Virginia National Bankshares Corporation 2022 Stock Incentive Plan (the “2022 Plan”) is designed to promote the interests of the Company and its shareholders by strengthening the Company’s ability to attract, motivate and retain employees, directors and consultants upon whose judgment, initiative and efforts the financial success and growth of the business of the Company largely depend. The 2022 Plan was approved by the Company’s shareholders at the 2022 annual meeting, with a total of 150,000 shares of common stock reserved for issuance under the 2022 Plan. Since the approval of the 2022 Plan, the Company has issued stock options to purchase 56,300 shares and granted restricted stock awards for 65,280 shares of the Company's common stock. No other types of awards have been granted. As of the date of this proxy statement, only 28,420 shares are available for issuance pursuant to new awards under the 2022 Plan. The Board of Directors believes that the limited number of shares available for new awards under the 2022 Plan is insufficient to provide for anticipated future years’ incentives, based on historical award practices and future compensatory needs. Accordingly, on May 28, 2025, the Board of Directors approved an amendment to the 2022 Plan that would add an additional 150,000 shares to be available for issuance under the 2022 Plan, subject to shareholder approval. Other than the proposed share increase, the only other amendments to the 2022 Plan approved by the Board of Directors are ministerial and relate to the dates of adoption and approval by the Board of Directors and shareholders, respectively. The 2022 Plan, as amended and adopted by the Board of Directors, has been renamed the Virginia National Bankshares Corporation Amended and Restated 2022 Stock Incentive Plan and is referred to in this proxy statement as the “Plan.” At the Annual Meeting, shareholders of the Company are being asked to approve an amendment to the Company’s 2022 Plan to increase the number of shares of common stock available for issuance under such plan by 150,000 shares. The Board of Directors recommends that the shareholders vote “FOR” approval of the proposed amendment to the 2022 Plan. The material terms of the Plan are summarized below. Because this is a summary, it may not contain all the information that shareholders may consider important. In order to aid understanding of the Plan, the full text of the Plan, as proposed for adoption and approval by shareholders, is provided as Appendix A to this proxy statement.

  8. Executive Summary

    Executive Summary The following is a summary of the key provisions of the Plan, including important features that enable the Company to maintain sound governance practices in granting awards. Award Types: The following types of awards are available for issuance under the Plan: • nonstatutory and incentive stock options; • restricted stock and other stock-based awards; and • restricted stock units. Eligible Participants: All employees, directors and consultants of the Company and its subsidiaries. Shares Available under the Plan: If this proposal is approved, a total of 300,000 shares of the Company’s common stock will have been made available for issuance under the Plan, which amounts to 5.56% of the Company’s outstanding common stock as of May 27, 2025. The 300,000 shares of common stock include shares relating to stock options and restricted stock previously awarded under the Plan. As of the date of this proxy statement, only 28,420 shares of common stock are available for issuance pursuant to new awards under the 2022 Plan. If the proposal is approved, the total number of shares available for new awards under the Plan will be 178,420 shares, which amounts to 3.31% of the Company’s outstanding common stock as of May 27, 2025. The number of shares available for issuance under the Plan is subject to adjustment to reflect stock splits, stock dividends and similar events. Minimum Vesting: The Plan includes a 95% minimum vesting requirement. That is, awards with respect to at least 95% of the shares of common stock authorized for issuance under the Plan, or 285,000 shares, must have a vesting or exercise schedule of at least one year. Correspondingly, awards with respect to an aggregate of 15,000 shares will not need to have a minimum vesting or exercise schedule. No Liberal Share Recycling: Under the Plan, shares of the Company’s common stock used to pay the exercise price of a stock option or to satisfy tax withholding in connection with an award will not be added back (recycled) to the aggregate plan limit. No Discounted Stock Options: The Plan prohibits the grant of stock options with an exercise price less than the fair market value of the Company’s common stock on the grant date. Protective Provisions: The Plan provides for the possible forfeiture of outstanding awards upon a participant’s termination for cause and adds provisions subjecting all awards under the plan to the terms of any recoupment or clawback required by law or government regulation (or similar policy in effect at the Company). Term of the Plan: No awards may be granted under the Plan after April 26, 2032, the termination date of the Plan.

  9. Equity Compensation Plans Approved by Shareholders

    Equity Compensation Plans Approved by Shareholders The following table sets forth information as of December 31, 2024, with respect to equity compensation plans under which shares of the Company’s common stock are authorized for issuance.

  10. Equity Compensation Plans Approved by Shareholders

    | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | | | (a) | (b) | (c) | | Equity compensation plans approved by security holders | 223,001 | $33.22 | 52,088 | | Total | 223,001 | $33.22 | 52,088 |

  11. Shares Available for Issuance

    Shares Available for Issuance As of the date of this proxy statement, only 28,420 shares of the Company’s common stock are available for issuance pursuant to new awards under the 2022 Plan. Subject to approval by shareholders of the plan amendment, the aggregate number of shares that may be issued under the Plan is 300,000, and the total number of shares available for new awards under the Plan will be 178,420 shares, as of the date of this proxy statement. Of this total, all of the shares available to be awarded under the Plan may be issued pursuant to the exercise of incentive stock options. If any award granted under the Plan is canceled, forfeited or expires for any reason other than as a result of exercise, vesting or settlement, the shares associated with such award will be available for future awards under the Plan. In contrast, any shares withheld by the Company, delivered by a participant, or otherwise used to pay an option exercise price or withholding taxes associated with an award will not be available for future awards under the Plan. Further, in the event shares are withheld or delivered by a participant in connection with an option exercise, the number of shares available for future awards will be reduced by the gross number of shares to which the exercise relates, rather than the net number of new shares issued upon exercise. With certain limitations, the total number of shares that may be granted under the Plan (including for incentive stock options), the terms of outstanding awards and the individual annual award limits (described below) will be adjusted by the Compensation Committee of the Company’s Board of Directors in an equitable and proportionate manner to prevent dilution or enlargement of benefits or potential benefits intended to be made available under the Plan in the event of any stock or extraordinary cash dividend, stock split, reverse stock split, an extraordinary corporate transaction such as any recapitalization, reorganization, merger, spin-off of a subsidiary, or other relevant change in capitalization.

  12. Types of Awards

    Types of Awards Stock Options. Stock options granted under the Plan may be incentive stock options (which meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “IRC”), and options that do not qualify as incentive stock options (“nonstatutory stock options”). A stock option entitles a recipient to purchase shares of common stock at a specified exercise price. The Compensation Committee will fix the exercise price at the time the stock option is granted, provided the exercise price cannot be less than 100% of the fair market value of a share of the Company’s common stock on the date of grant (or, in the case of an incentive stock option granted to a 10% shareholder of the Company, 110% of the shares’ fair market value on the date of grant). On May 27, 2025, the closing price of the common stock was $37.42 per share. The exercise price may be paid (i) in cash, (ii) by delivery of previously acquired shares with an aggregate fair market value equal to the exercise price for the number of option shares being acquired, (iii) if and as permitted by an award agreement, through a “net share exercise” whereby the Company withholds and retains sufficient shares issuable in connection with the stock option to cover the exercise price (other than for incentive stock options), (iv) through a “cashless exercise” procedure that enables a participant the opportunity to sell immediately some of the shares underlying the exercised portion of the stock option to generate sufficient cash to pay the exercise price, or (v) through a combination of the foregoing. Stock options may be exercised at such times and subject to such conditions as may be prescribed by the Compensation Committee, including the requirement that they will not be exercisable after 10 years from the date of grant (or five years in the case of an incentive stock option granted to a 10% shareholder of the Company). Restricted Stock Awards. The Plan permits the grant of restricted stock awards that are subject to forfeiture until the restrictions established by the Compensation Committee lapse and the restricted shares vest. A restricted stock award is an award of common stock that may be subject to restrictions on transferability and other restrictions as the Compensation Committee determines in sole discretion on the date of grant. The restrictions may lapse over a specified period of time based on continued employment or service and/or the achievement of certain performance objectives. Unless a restricted stock award agreement provides otherwise, a participant who receives a restricted stock award will have all the rights of a shareholder as to those shares, including the right to vote and to receive cash and stock dividends. Restricted Stock Unit Awards. The Compensation Committee may also award a restricted stock unit (“RSU”) under the Plan. An RSU is an award stated with reference to a number of shares of common stock. The Compensation Committee may place such restrictions on the vesting and settlement of RSUs as the Compensation Committee deems appropriate, including restrictions relating to continued employment or service and/or achievement of certain performance objectives. An RSU may entitle the recipient to receive, upon satisfaction of the vesting conditions set forth in the RSU agreement, cash, shares of common stock or a combination of cash and shares of common stock. Holders of RSUs have no right to vote the shares represented by the units, but may, if provided in the RSU agreement, be credited with cash and stock dividends paid by the Company in respect of its common stock, with distribution to occur either upon settlement of such RSU or at such other time or times set forth in the RSU agreement. Except as otherwise provided in the RSU agreement, if such RSU is forfeited, the participant will have no right to such credited dividends. Subject to any exceptions authorized by the Compensation Committee, RSUs will be forfeited if the restrictions on vesting, whether time-based or performance-based, established with respect to such awards are not satisfied. Other Stock-Based Awards. The Compensation Committee may grant other types of equity-based or equity-related awards, subject to restrictions under applicable federal or state securities laws and the Plan (such as the requirement that at least 95% of the shares authorized for issuance under the Plan must have a vesting or exercise schedule of at least one year). These “other stock-based awards” may involve the transfer of actual shares to participants or payment in cash or otherwise of amounts based on the value of shares of the Company’s common stock, if the conditions set forth in the award agreement are met. If the value of an other stock-based award is based on the appreciation of shares from an initial value determined as of the date of grant, then such initial value will not be less than the fair market value of a share of the Company’s common stock on the date of grant of such award.

  13. Change in Control Provisions

    Change in Control Provisions In the event of a “change in control” (as defined in the Plan) of the Company, the Compensation Committee will provide for an outstanding award to become fully vested, settled, and/or exercisable (in full for a time-based award and at the greater of target or actual performance levels for a performance-based award) if the award is not assumed or new rights substituted therefor, by the acquiring or surviving corporation in the change in control. The Compensation Committee will cause any such assumption or substitution to provide that the assumed or substituted award will become fully vested, settled, and/or exercisable (in full for a time-based award and at the greater of target or actual performance levels for a performance-based award) in the event of an involuntary termination of employment without cause or for good reason (as such terms are defined in the Plan) in connection with the change in control. In addition, the Compensation Committee will make such adjustments to outstanding awards as it deems appropriate to reflect the change in control and retain the economic value of the award.

  14. INFORMATION ABOUT THE BOARD OF DIRECTORS

    INFORMATION ABOUT THE BOARD OF DIRECTORS

  15. Compensation of Directors

    Compensation of Directors The following table provides information concerning the compensation of non-employee directors of the Company who served at any time during 2024 for service on the boards and board committees of the Company and the Bank. The cash fees were paid as retainers for serving on the Boards of the Company and the Bank during 2024. Mr. Rust, as an executive officer, did not receive separate compensation for serving on the Board. Note that Mr. Blaine did not stand for re-election and retired from the boards of directors of the Company and the Bank as of the 2024 Annual Meeting of Shareholders.

  16. Compensation of Directors

    | Name | Fees Earned or Paid in Cash | Stock Awards (1) | Total | | John B. Adams, Jr. | $40,045 | $44,955 | $85,000 | | Steven W. Blaine | $20,000 | $- | $20,000 | | Kevin T. Carter | $40,045 | $44,955 | $85,000 | | Hunter E. Craig | $40,045 | $44,955 | $85,000 | | William D. Dittmar, Jr. | $39,995 | $75,005 | $115,000 | | Randolph D. Frostick | $40,045 | $44,955 | $85,000 | | Linda M. Houston | $40,045 | $44,955 | $85,000 | | Jay B. Keyser | $40,045 | $44,955 | $85,000 | | Sterling T. Strange, III | $40,045 | $44,955 | $85,000 | | Gregory L. Wells | $40,045 | $44,955 | $85,000 |

  17. Compensation of Directors

    (1) The value included in the table above is the aggregate grant date fair value computed in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“FASB’s ASC Topic 718”). In 2024, each non-employee director other than Mr. Blaine, received a restricted stock award of 1,496 shares, with the exception of director Dittmar, who received 2,496 shares. As of December 31, 2024, (a) directors Adams, Carter, Frostick, Keyser and Strange each had 3,661 shares of unvested restricted stock, (b) directors Craig, Houston and Wells each had 3,743 shares of unvested restricted stock and unexercised options for 3,937 shares, and (c) director Dittmar had 5,481 shares of unvested restricted stock and unexercised options for 3,937 shares.

  18. Compensation Discussion

    Compensation Discussion Philosophy and Objectives of the Company’s Compensation Program. The Board believes compensation of its executive officers should reflect and support the Company’s strategic and financial performance goals, the primary goal being the creation of long-term value for the shareholders of the Company, while protecting the interests of the depositors of the Bank. The philosophy behind the compensation program is to provide both cash compensation, in the form of salaries and bonuses, as well as stock incentives, in an effort to promote an ownership mentality among the executive officers and other key individuals within the Company and its affiliates. The Compensation Committee is tasked with reviewing and making recommendations regarding the Company’s executive compensation policies to ensure they are (i) competitive, (ii) performance-based, and (iii) consistent with the Company’s annual and long-term business objectives. The Compensation Committee is also responsible for administering the Company’s stock incentive plans. The Compensation Committee specifically reviews and makes recommendations to the Board regarding the compensation of the President and Chief Executive Officer (“CEO”) of the Company and its affiliates based on reasonableness, competitiveness and relationship to performance. In determining the compensation to recommend for the CEO, the Compensation Committee reviews certain established bank performance metrics and goals. During 2023 and 2024, the Compensation Committee considered whether the cash compensation and the stock incentive awards made to the CEO were reasonable and reflective of the merger-related efforts and positive impact on the Company and shareholder value. The Compensation Committee also considered whether the cash compensation and the stock incentive awards motivate him to remain at the Company. In 2023, the Compensation Committee recommended, based on the CEO’s performance in 2022, that (a) his salary remain at $500,000, (b) he be given a $150,000 cash bonus, and (c) he receive 8,400 shares restricted stock vesting in equal annual installments over four years. In 2024, the Compensation Committee recommended, based on the CEO’s performance in 2023, that (a) his salary remain at $500,000, (b) he be given a $100,000 cash bonus, and (c) he receive 10,816 shares restricted stock vesting in equal annual installments over four years. The Board approved the Compensation Committee’s recommendations in both 2023 and 2024. For 2023 and 2024, the CEO established the compensation for the other NEOs. The compensation of the Company's NEOs is designed to be reflective of the level of responsibility and the performance of the executive officer relative to the positive impact on the Company and shareholder values. During 2023 and 2024, no compensation consultants were engaged or used by the Compensation Committee, the Board of Directors or management with respect to executive compensation. The Compensation Committee and management do use certain compensation surveys and information available from various organizations. Composition of Compensation. There are four primary components of executive compensation, as follows: base salary; cash bonuses; stock option grants or other stock awards under the Company’s stock incentive plans; and benefits. Base Salary. Base salary provides competitive levels of compensation to executives, in accordance with their experience, duties and responsibilities. Base salaries are necessary to recruit and retain executives, and base salary adjustments are reflective of an individual’s performance or changed responsibilities. Cash Bonuses. Cash bonuses are designed to align the interests of executive officers with the Company’s shareholders by rewarding officers based on the performance of the Company; such bonuses are discretionary and, for Mr. Rust, subject to Board approval. Stock Option Grants and Other Stock Incentive Awards. Periodically, stock option grants, restricted and unrestricted stock grants, or other awards under the Company’s stock incentive plans may be awarded to executive officers and others within the Company and its affiliates whose performance is critical to the ongoing success of the Company. Stock options that have been granted have a ten-year term and typically vest evenly over a four-year or five-year period. All outstanding options have an exercise price equal to the closing price of the Company’s common stock on the date of the grant. The Company may also grant stock, restricted stock or other stock awards, which may vest immediately or over time. The actual value that may be realized by an option holder or by the recipient of a stock grant or other stock incentive award is tied to the appreciation of the Company’s common stock, thereby aligning the option holders’ or recipients’ interests with those of the Company’s other shareholders. In addition to the restricted stock awarded to Mr. Rust in 2023 and 2024, each of the other NEOs received 9,900 options to purchase shares of stock in April 2024 with a four-year vesting schedule. No restricted stock or stock options were granted to the other NEOs in 2023. Outstanding stock options and restricted stock granted to the NEOs in 2024 and certain prior years are included on page 21 in “Outstanding Equity Awards at Fiscal Year-End.” Benefits. 401(k) Profit Sharing Plan. The Company has a 401(k) plan which is available to all employees. Employees are able to elect the amount to contribute, not to exceed a maximum amount as determined by IRS regulations. The Company matches 100% of the first 6% of employee contributions. Matching contributions, as well as employee contributions, are fully vested immediately. “Vesting” refers to the rights of ownership to the assets in the 401(k) accounts. Health and Welfare Benefits. The Company also offers health and welfare benefits to the executive officers and others within the Company, including medical, dental and vision insurance, group term life insurance, disability insurance and flexible spending accounts. Split-Dollar Life Insurance. The Company has certain split-dollar insurance or bank-owned life insurance (“BOLI”) arrangements with each named executive officer and certain other senior officers of the Company and/or its subsidiaries. Under these BOLI arrangements, the Company is the owner of, and pays all premiums for, insurance policies on an officer’s life. Upon the death of the insured officer, a portion of the death benefit will be paid to beneficiary(ies) designated by the officer, subject to the terms and restrictions of the split-dollar endorsement agreement between the officer and the Company, and the balance is paid to the Company. Perquisites. Perquisites may be granted to executive officers and other employees, after proper consideration of the business need. Perquisites may include memberships in local clubs and the provision of a bank-owned automobile that will be primarily used for Company business. All perquisites represent a small portion of the Company’s compensation program, and those for the NEOs are disclosed according to regulations in the “Summary Compensation Table” on page 20. Executive and Change in Control Arrangements. The Company entered into an amended and restated management continuity agreement (a “Management Continuity Agreement”) with each of Mr. Rust, Ms. Bayes and Ms. Harrison on October 23, 2024.

  19. Compensation Discussion

    Under the terms of each Management Continuity Agreement, in event of a “change in control” (as defined in the agreement) of the Company, the Company or its successor is required to continue to employ each executive officer for a period of two years following the date of the change in control with commensurate authority, responsibilities, compensation and benefits for that period. If, within six months prior to a change in control of the Company or during the above-described employment period, an executive officer’s employment terminates without “cause” or for “good reason” (each as defined in the agreement), such executive officer is entitled to receive (i) a lump sum cash payment equal to two times the sum of (A) the executive officer’s annual base salary in effect at termination, plus (B) the average annual bonus paid or payable to the executive officer for the two most recently completed years, plus (C) any amounts contributed by the executive officer during the most recently completed year pursuant to a salary reduction agreement or any other program that provides for pre-tax salary reductions or compensation deferrals; (ii) continuation of employee welfare benefits for up to 18 months following the date of termination; and (iii) a lump sum cash payment equal to the Company’s contributions to the executive officer’s account in the Company’s sponsored 401(k) plan for the two-year period prior to termination of employment. The severance benefits will be reduced to the extent necessary to avoid the imposition of the golden parachute excise taxes under Section 4999 of the Internal Revenue Code. Each Management Continuity Agreement also provides that any incentive based compensation or award an executive officer receives will be subject to clawback by the Company as may be required by applicable law or stock exchange listing requirement and on such basis as the Board determines. As defined in each Management Continuity Agreement, the term “change in control” includes, among other things, the acquisition by any person or group of 30% or more of the Company’s outstanding shares of common stock (excluding issuance directly from the Company), individuals who serve on the Board (including successors whose nominations were approved by at least two-thirds of the Board) cease to constitute a majority of the Board, certain merger transactions, and the consummation of a sale of all or substantially all of the Company’s assets. Each of Mr. Rust, Ms. Bayes and Ms. Harrison is also a party to a Non-Disclosure, Non-Solicitation and Non-Competition Agreement (a “Non-Competition Agreement”) with the Bank that was entered into on May 18, 2020 pursuant to which each of the executive officers has agreed (a) to protect and not disclose the confidential and proprietary information of the Bank or its affiliates, (b) for a period of 12 months following the termination of the executive officer’s employment for any reason, not to solicit the customers or employees of the Bank or its affiliates, or to provide services or interfere with customers of the Bank or its affiliates, and (c) for a period of three months following the voluntary termination of the executive officer’s employment for any reason or involuntary termination of executive officer’s employment for “cause” (as defined in the agreement), not to engage in any activity or work that competes with the business of the Bank or its affiliates that is the same or substantially similar to services previously provided by the executive officer within a 30-mile radius of his/her office location, or within any other office location where the executive officer worked within the previous 12 months. Under the terms of each Management Continuity Agreement, the provisions of the Non-Competition Agreements will survive termination of the executive officer’s employment except the non-competition provisions will not apply after the executive officer ceases to be employed by Virginia National following a change in control unless the executive officer is entitled to receive severance benefits provided under the Management Continuity Agreement in connection with termination of his/her employment without cause or for good reason.

  20. Summary Compensation Table

    Summary Compensation Table The following table sets forth, for the periods indicated, certain information concerning the compensation of the NEOs:

  21. Summary Compensation Table

    | Name and Position | Year | Salary | Bonus | Stock Awards (1) | All Other Compensation (2) | Total | | Glenn W. Rust | 2024 | $500,000 | $100,000 | $325,000 | $82,824 | $1,007,824 | | President and Chief Executive Officer (Principal Executive Officer) | 2023 | $500,000 | $150,000 | $274,932 | $80,830 | $1,005,762 | | Virginia R. Bayes | 2024 | $365,064 | $18,781 | $56,549 | $38,301 | $478,695 | | Chief Banking Officer, Executive Vice President and Corporate Secretary | 2023 | $344,400 | - | - | $25,494 | $369,894 | | Tara Y. Harrison | 2024 | $308,415 | $21,987 | $56,549 | $31,338 | $418,289 | | Chief Financial Officer and Executive Vice President (Principal Financial and Accounting Officer) | 2023 | $290,958 | - | - | $23,646 | $314,604 |

  22. Summary Compensation Table

    _________________ (1) Stock awards consist of restricted stock granted to Mr. Rust in both 2024 and 2023 that vests over a four-year period and stock options granted to Ms. Bayes and Ms. Harrison in 2024 that vest over a four-year period, as described in the Outstanding Equity Awards at Fiscal Year-End 2024 table. The value indicated is the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. Assumptions utilized in such valuation estimates are described in Note 19 – Stock Incentive Plans, in the notes to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. (2) Amounts shown in the "All Other Compensation" column are detailed in the following table:

  23. Summary Compensation Table

    | Name and Position | Year | Company Contributions to 401(k) Plans | Club Memberships | Group Term Life Insurance, Disability and BOLI | Company Vehicle | Information Technology Budget | Health and Wellness Benefit | Tax gross-ups (1) | Total | | Glenn W. Rust | 2024 | $20,625 | $17,299 | $19,666 | $15,540 | $3,352 | $1,142 | $5,200 | $82,824 | | President and Chief Executive Officer (Principal Executive Officer) | 2023 | $19,800 | $18,632 | $19,205 | $14,966 | $3,352 | $1,082 | $3,793 | $80,830 | | Virginia R. Bayes | 2024 | $17,529 | - | $7,597 | $10,277 | - | $960 | $1,938 | $38,301 | | Chief Banking Officer, Executive Vice President and Corporate Secretary | 2023 | $16,947 | - | $7,071 | - | - | - | $1,476 | $25,494 | | Tara Y. Harrison | 2024 | $19,824 | - | $4,251 | $4,853 | - | $1,046 | $1,364 | $31,338 | | Chief Financial Officer and Executive Vice President (Principal Financial and Accounting Officer) | 2023 | $17,458 | - | $4,002 | - | - | $991 | $1,195 | $23,646 |

  24. Summary Compensation Table

    _________________ (1) The amounts in this column reflect the tax gross-ups for a portion of imputed income related to restricted stock awards and premiums paid for bank-owned life insurance.

  25. Outstanding Equity Awards at Fiscal Year-End 2024

    Outstanding Equity Awards at Fiscal Year-End 2024 The following table provides certain information on unexercised options and restricted stock held by each of the NEOs as of December 31, 2024. There were no other equity awards outstanding to the NEOs.

  26. Outstanding Equity Awards at Fiscal Year-End 2024

    | | Option Awards | | | | Stock Awards | | | | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($) | | Glenn W. Rust (1) | 8,400 | - | $39.52 | 04/18/2028 | 1,257 | $48,017 | | Glenn W. Rust (2) | 12,000 | - | $37.25 | 10/15/2029 | 2,790 | $106,578 | | Glenn W. Rust (3) | 20,800 | 5,200 | $26.00 | 03/24/2030 | 6,300 | $240,660 | | Glenn W. Rust (4) | | | | | 10,816 | $413,171 | | Virginia R. Bayes (5) | 5,512 | - | $42.62 | 05/16/2028 | 1,500 | $57,300 | | Virginia R. Bayes (6) | 8,000 | 2,000 | $23.75 | 09/22/2030 | | | | Virginia R. Bayes (7) | 3,300 | 1,100 | $36.14 | 09/29/2031 | | | | Virginia R. Bayes (8) | - | 9,900 | $28.21 | 4/29/2034 | | | | Tara Y. Harrison (5) | 5,512 | - | $42.62 | 05/16/2028 | 1,500 | $57,300 | | Tara Y. Harrison (6) | 7,000 | 2,000 | $23.75 | 09/22/2030 | | | | Tara Y. Harrison (7) | 3,300 | 1,100 | $36.14 | 09/29/2031 | | | | Tara Y. Harrison (8) | - | 9,900 | $28.21 | 4/29/2034 | | |

  27. Outstanding Equity Awards at Fiscal Year-End 2024

    _______________ (1) Options vested in five equal annual installments beginning April 19, 2019, and restricted stock vests in four equal annual installments beginning February 24, 2022. (2) Options vested in five equal annual installments beginning October 16, 2020 and restricted stock vests in four equal annual installments beginning February 23, 2023. (3) Options vest in five equal annual installments beginning March 25, 2021 and restricted stock vests in four equal annual installments beginning April 28, 2024. (4) Restricted stock vests in four equal annual installments beginning March 27, 2025. (5) Options vested in five equal annual installments beginning May 17, 2019, and restricted stock vests in five equal annual installments beginning November 1, 2023. (6) Options vest in five equal annual installments beginning September 23, 2021. (7) Options vest in four equal annual installments beginning September 30, 2022. Options vest in four equal annual installments beginning April 30, 2025.

  28. Pay Versus Performance Table

    Pay Versus Performance Table As required by Item 402(v) of Regulation S-K, we are providing the following information regarding the relationship between executive compensation and our financial performance for each of the last three completed calendar years. In determining the “compensation actually paid” to our NEOs, we are required to make various adjustments to amounts that have been previously reported in the Summary Compensation Table ("SCT"), as the SEC’s valuation methods for this section differ from those required in the SCT. The table below summarizes compensation values both previously reported in our SCT, as well as the adjusted values required in this section for the 2022, 2023 and 2024 calendar years. Note that for our NEOs other than our principal executive officer (the “PEO”), compensation is reported as an average.

  29. Pay Versus Performance Table

    | Year | Summary Compensation Table Total for PEO (1) | Compensation Actually Paid to PEO (2) | Average Summary Compensation Table Total for Non-PEO NEOs (1) | Average Compensation Actually Paid to Non-PEO NEOs (2) | Value of Initial Fixed $100 Investment Based on TSR (3) | Net Income | | 2024 | $1,007,824 | $1,123,954 | $448,492 | $493,110 | $112.76 | $16,966,385 | | 2023 | $1,005,762 | $1,030,097 | $335,061 | $342,601 | $114.89 | $19,262,929 | | 2022 | $975,165 | $983,392 | $421,764 | $435,784 | $107.40 | $23,437,900 |

  30. Pay Versus Performance Table

    | (1) The amounts reflect the amounts reported in the SCT as total compensation for Mr. Rust, who was the principal executive officer ("PEO") for all years presented, and the average for each year of total compensation for the other NEOs as reported in the SCT. The other NEOs for 2022 were Ms. Bayes and Ms. Shewmake, the other NEOs for 2023 were Ms. Bayes, Ms. Shewmake and Ms. Harrison and the other NEOs for 2024 were Ms. Bayes and Ms. Harrison. |

  31. Pay Versus Performance Table

    | (2) Compensation actually paid to the PEO and Non-PEO NEOs represents total compensation reported in the SCT, with certain adjustments as described below. Compensation actually paid differs from the amount shown in the SCT and does not represent the total amount earned or the total amount paid in any particular year. Total compensation, as reported in the SCT, was adjusted by (a) removing the grant date fair value of stock awards granted in each year, as determined under ASC Topic 718; (b) including with respect to outstanding restricted stock awards for each year (i) the year-end fair value of any awards granted during the year that are outstanding and unvested as of the end of the year; (ii) the change in fair value as of the end of the year (from the end of the prior year) of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year, and (iii) for awards granted in prior years that vested in the applicable year, the change in fair value as of the vesting date (from the end of the prior year); and (c) the amount of dividends paid on unvested restricted stock awards. |

  32. Pay Versus Performance Table

    | (3) Total shareholder return ("TSR") is calculated assuming a fixed investment of $100 in the Company’s common stock based on the closing price on December 31, 2021, the last trading day prior to January 1, 2022, assuming reinvestment of dividends, through and including the end of each fiscal year. The amount for 2022 represents the one-year total shareholder return, the amount for 2023 represents the two-year total shareholder return and the amount for 2024 represents the three-year total shareholder return. |

  33. Pay Versus Performance Table

    The amounts of the adjustments that were added to (or deducted from) the SCT total for the PEO to arrive at compensation actually paid to the PEO for each year are shown in the table below:

  34. Pay Versus Performance Table

    | Adjustments to determine compensation "actually paid" for PEO | 2024 | 2023 | 2022 | | Deduction for amounts reported under the "Stock Awards" column in the Summary Compensation Table | $(325,000) | $(274,932) | $(200,043) | | Year-end fair value of awards granted during year that remained unvested at year-end | 413,171 | 288,792 | 204,563 | | Change in fair value from prior year-end to year-end of awards granted in a prior year that were outstanding and unvested at year-end | 39,526 | (15,271) | (4,598) | | Change in fair value from prior year-end to vesting date of awards granted in a prior year that vested during year | (29,599) | 7,714 | (2,914) | | Increase based on dividends paid during year prior to vesting | 18,032 | 18,032 | 11,219 | | Total adjustments | $116,130 | $24,335 | $8,227 |

  35. Pay Versus Performance Table

    The amounts of the adjustments that were added to (or deducted from) the SCT total for the NEOs other than the PEO to arrive at compensation actually paid to non-PEO NEOs for each year are shown in the following table:

  36. Pay Versus Performance Table

    | Adjustments to determine compensation "actually paid" for non-PEO NEOs | 2024 | 2023 | 2022 | | Deduction for amounts reported under the "Stock Awards" column in the Summary Compensation Table | $(56,549) | $- | $(82,500) | | Year-end fair value of awards granted during year that remained unvested at year-end | 92,382 | - | 91,650 | | Change in fair value from prior year-end to year-end of awards granted in a prior year that were outstanding and unvested at year-end | 5,730 | (5,985) | (1,830) | | Change in fair value from prior year-end to vesting date of awards granted in a prior year that vested during year | 375 | 8,864 | 3,813 | | Increase based on dividends paid during year prior to vesting | 2,681 | 4,661 | 2,888 | | Total adjustments | $44,618 | $7,540 | $14,021 |

  37. Pay Versus Performance Table

    The relationship between (i) the executive compensation actually paid to the PEO and the average compensation actually paid to the NEOs other than the PEO and (ii) cumulative TSR on the Company’s common stock is shown below: The relationship between (i) the executive compensation actually paid to the PEO and the average compensation actually paid to the NEOs other than the PEO and (ii) net income of the Company for the last three years is shown below: