ROANOKE TIMES
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, March 20, 1993                   TAG: 9303200120
SECTION: BUSINESS                    PAGE: A-8   EDITION: METRO 
SOURCE: DANIEL HOWES STAFF WRITER
DATELINE:                                 LENGTH: Medium


DALHOUSE WINS A LUCRATIVE DEAL

WARNER DALHOUSE apparently took a pay cut when Dominion Bankshares Corp. became the northern territory for a growing Charlotte bank. But look at the fine print . . .

It pays to sell The Bank to the Carolina Boys from First Union Corp.

Just ask Warner Dalhouse, the Dominion Bankshares Corp. chairman who brokered the sale of Roanoke's major banking company under pressure from federal regulators and outside directors.

A First Union proxy statement, filed with the Securities and Exchange Commission and mailed to shareholders last week, says Dalhouse has a 40-month employment contract with First Union guaranteeing him an annual salary of $500,000.

That's $25,000 and 5 percent less than the base salary Dominion paid Dalhouse last year, according to internal company documents. And, based on public records, it's $59,000 and nearly 12 percent less than he was paid in 1990 and 1991, when the company's real estate troubles continued to reach critical proportions.

But that's only the cash compensation.

Under terms of the contract - which was effective March 1 - Dalhouse will receive a $325,000 lump-sum payment from First Union, plus 10,000 shares of common stock, worth about $508,000 at current market prices, and other perquisites.

When Dalhouse, 58, retires on July 1, 1996, the proxy says, he will receive a retirement benefit of $26,436.50 per month - $317,238 per year - for life.

"It sounds like it's a real sweet deal for Warner," said a senior executive who worked closely with Dalhouse. "I don't think he's giving up a helluva lot. He really doesn't really give up anything on his contract," the executive continued, insisting he not be identified.

Phone calls requesting comments from Dalhouse were not returned Friday.

News of Dalhouse's lucrative contract comes as some 850 Dominion workers in the Roanoke Valley prepare to lose their jobs because of First Union's acquisition of Dominion, which was effective March 1. The company plans to cut 1,300 jobs systemwide.

Pressured by board members weary from fights with federal regulators and among themselves, Dalhouse last summer engineered the company's sale to First Union. Even Dominion's chief financial and chief credit officers were unaware of the deal until the final stages of the negotiations.

As part of the deal, Dalhouse became chairman of First Union National Bank of Virginia, First Union's new Virginia subsidiary. He also was among a select few senior Dominion executives to survive First Union's acquisition of the Roanoke company.

Dalhouse is the only former Dominion executive to have his contract detailed in the First Union proxy. His new contract "supersedes all previous employment agreements" he had with Dominion. A now-expired contract between Dalhouse and Dominion would have paid him just over $3 million had he lost his job within three years of a merger, according to SEC filings.

Under the new contract, First Union will:

Reimburse Dalhouse for any taxes incurred from payments made under the employment contract.

Merge Dalhouse's savings from Dominion's Employee Savings Plan - $496,179 as of Dec. 31. - into First Union's savings plan.

Exchange Dalhouse's unexercised Dominion stock option grants to First Union common stock options. He held option for 118,616 shares of Dominion common stock at the time of the acquisition.

Dalhouse, one of three Dominion directors named to First Union's board, will not receive directors' fees, because First Union employees cannot be paid for serving on the board.

But Virginia Tech President James McComas and former James River Corp. Chairman Brenton Halsey will be eligible to receive quarterly retainers of $5,500, plus $1,000 for each committee meeting attended and $2,000 for each board meeting attended.

The First Union board met eight times last year; some committees met as often as six times. Based on full attendance, McComas and Halsey could receive as much as $36,000 per year for sitting on the First Union board.

Still, they may not be around long. McComas, 64, was appointed to a term that will expire next year, the proxy says. Halsey, 65, was appointed to a term that will expire in 1995. First Union directors must retire at 68.

"I think those two were the best of the lot," said the senior executive. "The reality of the situation is they'll both be there a short period of time."



by Archana Subramaniam by CNB