executive compensation packages at bank holding companies and
subsidiaries of comparable size to us and our subsidiaries.
However, the committee does not maintain a specific
target percentile with respect to this peer group in
determining executive compensation levels. A selection of national
information is used for comparative compensation survey data,
including data from a peer group of small-cap bank holding
companies in our geographic area. The peer group is periodically
revised, and, for 2019 compensation decisions, the group consisted
of the following companies: ACNB Corporation, Franklin Financial
Services Corporation, Peoples Financial Services Corp., Chemung
Financial Corporation, Codorus Valley Bancorp, Inc., First United
Corporation, Farmers National Banc Corp., Citizens & Northern
Corporation, Penns Woods Bancorp, Inc., Orrstown Financial
Services, Inc., ESSA Bancorp, Inc., CB Financial Services, Inc.,
Riverview Financial Corporation, and Civista Bancshares, Inc.
Our executive compensation policy is designed to encourage
decisions and actions that have a positive impact on overall
corporate performance. For that reason, participation is focused on
executive officers who have the greatest opportunity to influence
the achievement of strategic corporate objectives.
We use two components of the executive compensation program to
establish and maintain the desired relationship between executive
pay and performance.
The first component, the formal performance appraisal system,
relates to annual salary adjustments. We establish quantitative and
qualitative performance factors for each executive position, and
annually evaluate the performance of the executive against these
standards. We then integrate this appraisal with market-based
adjustments to salary ranges to determine if a base salary increase
The second component of ensuring the desired relationship between
executive pay and performance relates to the committee’s role in
administering our 2011 Stock Incentive Plan and recommending
executive discretionary cash incentive/bonus awards. The committee
recommends to the board of directors cash and equity at-risk
compensation awards when, in the judgment of committee members,
such awards are justified by the performance of executive officers
in relation to our performance with due regard for the level of
risk assumed by the company.
The accounting and tax treatment of particular forms of
compensation do not materially affect the committee’s compensation
decisions. However, the committee evaluates the effect of such
accounting and tax treatment on an ongoing basis and will make
appropriate modifications to its compensation policies where
Components of Compensation.
The elements of compensation for the Named Executive Officers are
generally comprised of the following:
incentive opportunities under our cash- and stock-based incentive
equity awards under our 2011 Stock Incentive Plan,
benefits under our pension plan,
benefits under our health and welfare benefits plans, and
certain limited perquisites.
compensation/human resources committee reviews the base salaries of
the Named Executive Officers on an annual basis as well as in the
event of any promotion or significant change in job
responsibilities. The committee reviews peer group data to
establish a market-competitive executive base salary program,
combined with a formal performance appraisal system that focuses on
awards that are integrated with strategic corporate objectives.
Salary income for each Named Executive Officer is reported in the
Summary Compensation Table, which appears following this
Compensation Discussion and Analysis.
2. Incentive Cash and
Stock Compensation. We have an
established, written executive incentive compensation plan, our
Executive At-Risk Incentive Compensation Plan, which generally
provides for payment of 75% in cash and 25% in stock for the
achievement of corporate performance goals, weighted