Scott C. Harvard
About Scott C. Harvard
Scott C. Harvard is President and Chief Executive Officer of First National Corporation (FXNC) since May 2011 and CEO of First Bank since June 2015; he previously served as President and CEO of the Bank from May 2011–May 2015 . Prior roles include owner/operator of Harvard Resources (2009–2011), EVP at Hampton Roads Bankshares (2008–2009), and President & CEO of Shore Financial Corporation/ Shore Bank (1985–2008) . As principal executive officer, compensation “actually paid” aligned with net income over 2022–2024 but diverged from TSR in certain years; cumulative TSR on a $100 initial investment was $110.24 for 2024 versus $131.26 in 2023 and $107.54 in 2022, and net income was $6.97M in 2024, $9.62M in 2023, and $16.80M in 2022 . Harvard serves as a Company director; the Board chair role is held by an independent director (Elizabeth H. Cottrell), and Harvard does not receive board fees .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Shore Financial Corporation / Shore Bank | President & CEO | 1985–2008 | Led regional bank; long-tenured leadership in financial services |
| Hampton Roads Bankshares | Executive Vice President | 2008–2009 | Senior corporate role in multi-bank holding company |
| Harvard Resources | Owner & Operator | 2009–2011 | Entrepreneurial leadership; consulting/operating experience |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Federal Home Loan Bank of Atlanta | Director | Not disclosed (current) | Industry oversight; access to funding system and policy network |
| CBB Financial Corp. / Community Bankers Bank | Director | Not disclosed (current) | Information flow among correspondent banks; governance experience |
| Virginia Bankers Association | Past Chair; Director; VBA Education Foundation Chair | Not disclosed (past/current) | Sector advocacy; executive education leadership |
| Top of Virginia Regional Chamber of Commerce | Chair of Board (2022 proxy); Director (2023 proxy) | Not disclosed (past/current) | Community leadership; regional business ties |
Fixed Compensation
| Metric ($USD) | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|
| Salary | $362,785 | $405,734 | $435,865 | $459,185 |
| All Other Compensation (401k match, life insurance, vehicle use, club dues) | $21,227 | $25,370 | $29,561 | $20,894 |
| Director Fees (cash retainer) | — (CEO does not receive board fees) | — | — | — |
Performance Compensation
| Metric | Target | Actual | Weighting | Payout ($) | Vesting/Timing |
|---|---|---|---|---|---|
| EPS (Company) | Not disclosed | Achieved; blended 110% of target after merger adjustments | Not disclosed | Included in $252,552 2024 EIP payout | Paid March 2025 (for FY 2024) |
| Efficiency Ratio | Not disclosed | Achieved; blended 110% of target | Not disclosed | Included in $252,552 2024 EIP payout | Paid March 2025 |
| New Deposit Sales | Not disclosed | Achieved; blended 110% of target | Not disclosed | Included in $252,552 2024 EIP payout | Paid March 2025 |
| Net Deposit Balances Change | Not disclosed | Achieved; blended 110% of target | Not disclosed | Included in $252,552 2024 EIP payout | Paid March 2025 |
| Equity Awards | Grant Date | Type | Shares/Units | Grant-date Fair Value ($) | Vesting |
|---|---|---|---|---|---|
| Annual RSU (FY 2024) | 2/14/2024 | RSU | 4,633 | Included in $558,746 2024 stock awards | 1/3 on 2/15/2024; remaining 1/3 on 2/15/2025 and 2/15/2026 |
| Retention/Strategic RSU (FY 2024) | 11/20/2024 | RSU | 19,725 | Included in $558,746 2024 stock awards | Equal 1/3 annual tranches beginning 12/31/2025 |
| Prior RSU | 2/9/2022 | RSU | 1,098 unvested at 12/31/2023 | $23,882 market value at 12/31/2023 | 1/2 on each anniversary over two years from grant |
| Prior RSU | 2/8/2023 | RSU | 3,196 unvested at 12/31/2023 | $69,513 market value at 12/31/2023 | 1/2 on each anniversary over two years from grant |
Additional plan features:
- Clawback policy adopted in 2023; mandatory reimbursement of excess incentive compensation following restatements covering prior 3 fiscal years .
- Stock Incentive Plan allows acceleration of RSU vesting upon change in control at Compensation Committee’s discretion .
Multi-Year Compensation Summary (PEO)
| Component ($USD) | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|
| Salary | $362,785 | $405,734 | $435,865 | $459,185 |
| Stock Awards | $23,072 | $124,397 | $128,042 | $558,746 |
| Non-Equity Incentive (EIP) | $193,484 | $218,416 | — | $252,552 |
| All Other Compensation | $21,227 | $25,370 | $29,561 | $20,894 |
| Total Compensation | $600,568 | $773,917 | $593,468 | $1,291,377 |
Pay versus Performance (Context)
| Measure | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| PEO Summary Compensation Table Total ($) | $773,917 | $593,468 | $1,291,377 |
| PEO Compensation “Actually Paid” ($) | $807,184 | $669,071 | $1,281,970 |
| TSR – Value of $100 Investment ($) | $107.54 | $131.26 | $110.24 |
| Net Income ($ thousands) | $16,797 | $9,624 | $6,966 |
Equity Ownership & Alignment
| Ownership Metric | As of 3/19/2021 | As of 3/18/2022 | As of 3/19/2024 |
|---|---|---|---|
| Beneficially Owned Shares (Direct/Indirect) | 55,450 | 57,709 | 68,952 |
| Percent of Class | 1.14% | Not disclosed | 1.10% |
| Right to acquire within 60 days | None disclosed | None disclosed | None disclosed |
Additional alignment and plan status:
- Equity compensation plans outstanding rights (primarily RSUs): 85,512 shares as of 12/31/2024; no outstanding options (weighted average exercise price not applicable), with 248,380 shares remaining for future issuance under the 2023 plan . Comparable data as of 12/31/2023: 40,551 outstanding under the 2014 plan; 313,300 available under the then-new 2023 plan .
- Anti-hedging: The Company does not have policies restricting hedging or derivative transactions to offset stock value declines, a potential alignment gap .
- Pledging: No explicit pledging disclosures or policy references were identified in the proxy; ownership tables do not indicate pledged shares .
Employment Terms
| Provision | Key Terms |
|---|---|
| Employment Agreement | Effective May 22, 2014; initial term through May 21, 2016; automatically extends one year each May 21 unless notice is given . |
| Severance (without cause / good reason) | Salary and benefits for remainder of contract; as-of 12/31/2024 indicative lump-sum: $932,644 (paid 6 months post-termination) . |
| Change-of-Control (CoC) | Double-trigger: if terminated without cause or for good reason within 12 months post-CoC, severance ≈ 299% of annual cash compensation; as-of 12/31/2024 indicative amount: $1,892,345 (paid 6 months post-termination) . Prior disclosures: $1,863,210 as-of 12/31/2023; $1,659,626 as-of 12/31/2022 . |
| Restrictive Covenants | Non-compete and non-solicitation for 12 months post-employment; termination benefits forfeited on covenant breach . |
| SERP | Normal retirement benefit $66,667 per year payable in 180 monthly installments (retirement age 68 for Harvard); CoC within two years triggers present value of normal benefit; non-compete/non-solicitation covenants for 24 months post-separation . |
| Clawback | Mandatory recovery of excess incentive compensation if financial statements are restated; covers preceding three fiscal years . |
| Perquisites | 401(k) match, life insurance premiums, personal use of Company vehicles, and club dues included in “All Other Compensation” . |
Board Governance
- Role and Tenure: Director since 2011; currently serves on the Company Board alongside an independent Chair (Elizabeth H. Cottrell) . Harvard does not receive board fees .
- Committee Structure: Two standing committees—Audit Committee and Compensation & Governance Committee—comprised exclusively of independent directors; Harvard is not listed as a member of these committees .
- Independence and Oversight: Board determined independence for listed directors; separation of Chair and CEO roles is a deliberate governance choice to ensure independent oversight and risk management .
- Attendance: Eleven Board meetings in 2024; all incumbent directors attended >75% of Board and committee meetings .
Director Compensation (Context)
- Non-employee directors: $2,362.50 monthly retainer; Chair additional $875/month; Vice Chair $105/month; grants of unrestricted common stock from time to time (14,625 shares granted in 2024 to directors); no unvested director stock awards outstanding at year-end 2024; Harvard received no director fees as CEO .
Risk Indicators & Red Flags
- Anti-hedging policy absent; potential misalignment if executives hedge exposure .
- High CoC multiple (≈299% of annual cash compensation) may create transaction-sensitive incentives .
- RSU vesting cliffs can create predictable supply and potential insider selling pressure around vest dates (Feb 15 annually from 2024 grant; year-end tranches from Nov 20, 2024 grant) .
- Related party loans exist but disclosed as arm’s-length (director/executive loans totaled $3.6M as of 12/31/2024; 2% of equity) .
Compensation Structure Analysis
- Mix shift: 2024 total compensation increased materially versus 2023, driven by a larger equity grant ($558,746 vs. $128,042) and higher EIP payout ($252,552 vs. none in 2023), implying a pivot toward equity and variable pay in the post-merger year .
- RSU usage: Awards are RSUs with time-based vesting; no outstanding options disclosed (no weighted average exercise price), which reduces leverage and risk relative to options but increases guaranteed value versus performance-contingent equity .
- Performance metrics: 2024 EIP incorporated EPS, efficiency ratio, deposit growth metrics; committee adjusted for non-recurring merger expenses and paid at 110% of target—introducing discretion via adjustments while still metric-anchored .
- Consultant involvement: Pearl Meyer engaged in 2021 to review executive compensation competitiveness and alignment; program retained post-evaluation .
Equity Vesting & Potential Insider Selling Pressure
| Grant | Shares | Vest Dates | Commentary |
|---|---|---|---|
| 2/14/2024 RSU | 4,633 | 2/15/2024; 2/15/2025; 2/15/2026 | Annual vest tranches can create predictable liquidity events. |
| 11/20/2024 RSU | 19,725 | 12/31/2025; 12/31/2026; 12/31/2027 | Year-end vest tranches may align with holiday-period liquidity and tax planning. |
| Prior RSUs (2022/2023) | 1,098 / 3,196 unvested at 12/31/2023 | 1/2 per anniversary over two years | Short vest horizons increase near-term selling optionality. |
Note: Section 16 compliance in 2024 was broadly satisfactory; late Form 4s were noted for other directors (Mr. Smith and Mr. Wilkins), not for Harvard .
Equity Ownership & Plan Capacity
| Plan Status (12/31/2024) | Outstanding Rights | Weighted Avg Exercise Price | Remaining Available |
|---|---|---|---|
| 2014 Stock Incentive Plan | 26,521 | — (RSUs) | — |
| 2023 Stock Incentive Plan | 58,991 | — (RSUs) | 248,380 |
| Total | 85,512 | — | 248,380 |
Employment Economics (Severance/CoC)
| Scenario | As of 12/31/2022 | As of 12/31/2023 | As of 12/31/2024 |
|---|---|---|---|
| Good Reason / Without Cause | $628,418 | $612,827 | $932,644 |
| CoC + Good Reason / Without Cause (Double Trigger) | $1,659,626 | $1,863,210 | $1,892,345 |
Board Service History, Committees, and Dual-Role Implications
- Board Service: Harvard has served as a director since 2011; age listings in recent proxies indicate continued tenure with evolving board composition .
- Committees: Audit and Compensation & Governance committees are fully independent; Harvard is not a member of these committees .
- Dual-role implications: Separation of Chair (independent) and CEO mitigates concentration of power; independent committees oversee audit and compensation risks, and the Board meets regularly in executive session for risk oversight .
Investment Implications
- Alignment: Harvard’s rising equity-based pay (RSUs) and a formal clawback enhance alignment; however, absence of anti-hedging policies and generous CoC economics (≈299% of cash comp, double trigger) warrant monitoring during M&A or stress scenarios .
- Vesting Supply: Material RSU tranches vest in mid-February and year-end through 2027, creating predictable windows for potential insider liquidity; watch for Form 4 activity around 2/15 and 12/31 cycles .
- Performance linkage: 2024 EIP was tied to EPS, efficiency, and deposits and paid at 110% post-merger adjustments; this suggests willingness to normalize for one-offs, beneficial for incentivizing execution but introduces adjustment risk to pay-for-performance purity .
- Retention: Auto-renewing employment term with 12-month non-compete and SERP benefits provides retention strength; severance levels and accelerated vesting prospects under CoC reduce departure risk but heighten potential M&A-related costs .
- Governance: Independent Chair and committees with >75% attendance and structured oversight support governance quality; Harvard’s external directorships expand network/information flow while necessitating ongoing conflict oversight .