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 ☒
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))
|
|
☒
|
Definitive
Proxy Statement
|
|
☐
|
Definitive
Additional Materials
|
|
☐
|
Soliciting
Material Pursuant to §240.14a-12
|
PEOPLES
FINANCIAL SERVICES CORP.
(Name
of Registrant as Specified in its Charter)
NOT
APPLICABLE
(Name
of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
|
☐
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
|
|
|
(1)
|
Title
of each class of securities to which transaction applies: _____________________________________________________
|
|
|
(2)
|
Aggregate
number of securities to which transaction applies: _____________________________________________________
|
|
|
(3)
|
Per
unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it
was determined): ________________________________________________
|
|
|
(4)
|
Proposed
maximum aggregate value of transaction:
|
|
|
|
☐
|
Fee
paid previously with preliminary materials:
|
|
☐
|
Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule and the date of its
filing.
|
|
|
(1)
|
Amount
Previously Paid:
|
|
|
|
(2)
|
Form,
Schedule or Registration Statement No.:
|
|
Peoples
Financial Services Corp.
150 North Washington Avenue
Scranton, Pennsylvania 18503
April
5, 2021
To
Our Shareholders:
You
are cordially invited to participate in the 2021 Annual Meeting of Shareholders of Peoples Financial Services Corp. to be held
on Saturday, May 15, 2021 at 9:00 a.m. Eastern Daylight Time. As we did last year, we will be holding a virtual meeting where
you will be able to listen to the meeting live, vote on the matters submitted to shareholders and pose questions and make comments.
The virtual meeting can be accessed by visiting www.virtualshareholdermeeting.com/PFIS2021.
At
the annual meeting, shareholders will be asked to consider and vote upon: the election of two directors to the Company’s
board of directors, each to serve until the 2024 annual meeting of shareholders and until his or her successor has been selected
and qualified; a proposal to approve, on an advisory basis, the compensation of our named executive officers; the ratification
of Baker Tilly US, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021; and
any other business as may properly be brought before the meeting.
On
behalf of the board of directors, we urge you to submit your proxy by mail, telephone or internet as soon as possible, even if
you currently plan to attend the virtual meeting. This will not prevent you from voting at the annual meeting, but will assure
that your vote is counted if you do not attend.
Your
cooperation is appreciated, as shareholders entitled to cast at least a majority of the votes which all shareholders are entitled
to cast must be represented at the annual meeting, either by proxy or by participation in the virtual meeting, to constitute a
quorum for the conduct of business.
Very
truly yours,
|
/s/
William E. Aubrey II
|
|
/s/
Craig W. Best
|
|
/s/
Thomas P. Tulaney
|
|
William E. Aubrey II
|
|
Craig W. Best
|
|
Thomas P. Tulaney
|
|
Chairman of the Board
|
|
Chief Executive Officer
|
|
President and COO
|
Peoples
Financial Services Corp.
150 North Washington Avenue
Scranton, Pennsylvania 18503
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD May 15, 2021
Notice
is hereby given that the 2021 Annual Meeting of Shareholders of Peoples Financial Services Corp., referred to as “we”
or the “Company,” will be held via live audio webcast at www.virtualshareholdermeeting.com/PFIS2021, on Saturday,
May 15, 2021, at 9:00 a.m. Eastern Daylight Time, for the purpose of considering and voting upon the following matters:
|
|
•
|
Election
of two directors to our board of directors, each to serve until the 2024 annual meeting
of shareholders and until his or her successor has been elected and qualified;
|
|
|
•
|
A
proposal to approve, on an advisory basis, the compensation of our named executive officers;
|
|
|
•
|
Ratification
of Baker Tilly US, LLP as our independent registered public accounting firm for the fiscal
year ending December 31, 2021; and
|
|
|
•
|
Such
other business as may properly come before the meeting.
|
Shareholders
of record at the close of business on March 1, 2021 are entitled to notice of and to vote at the annual meeting. Whether or not
you contemplate participating in the virtual annual meeting, the board of directors of the Company recommends that you execute
and return the enclosed proxy by mail or submit your proxy by telephone or the internet. You may revoke your proxy at any time
prior to the exercise of the proxy by delivering to the Company a later dated proxy, by delivering a later dated written notice
of revocation to the Company, or by voting your shares at the virtual annual meeting.
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to Be Held on May 15, 2021:
Our
proxy statement, annual report to shareholders and form of proxy card are available at www.proxyvote.com.
|
|
BY ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
|
|
/s/
TIMOTHY H. KIRTLEY
|
|
|
TIMOTHY
H. KIRTLEY
Secretary
|
April
5, 2021
Peoples
Financial Services Corp.
150 North Washington Avenue
Scranton, Pennsylvania 18503
PROXY
STATEMENT FOR ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD ON May 15, 2021
This
proxy statement is being furnished to shareholders of Peoples Financial Services Corp., referred to as “we” or the
“Company,” in connection with the solicitation by the board of directors of the Company of proxies to be voted at
the annual meeting of shareholders to be held via live audio webcast at www.virtualshareholdermeeting.com/PFIS2021 at 9:00 a.m.
Eastern Daylight Time on Saturday, May 15, 2021, or such later date to which the annual meeting may be adjourned or postponed.
At
the annual meeting, you will be asked to consider and vote upon the following matters:
|
|
•
|
Election
of two directors to the Company’s board of directors each to serve until the 2024
annual meeting of shareholders and until his or her successor has been elected and qualified;
|
|
|
•
|
A
proposal to approve, on an advisory basis, the compensation of our named executive officers;
|
|
|
•
|
Ratification
of Baker Tilly US, LLP as our independent registered public accounting firm for the fiscal
year ending December 31, 2021; and
|
|
|
•
|
Such
other business as may properly come before the meeting.
|
Information
regarding the election of directors and the other proposals is included in this proxy statement. Shareholders should carefully
read this proxy statement.
The
first date on which this proxy statement and the enclosed form of proxy are being sent to the shareholders of the Company is on
or about April 5, 2021.
Table
of Contents
A
Warning About Forward-Looking Statements
This
document contains forward-looking statements, in addition to historical information. Forward looking statements are typically
identified by words or phrases such as “believe,” “expect,” “anticipate,” “intend,”
“estimate,” “project,” and variations of such words and similar expressions, or future or conditional
verbs such as “would,” “should,” “could,” “may,” or similar expressions. Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, provide a safe
harbor in regard to the inclusion of forward-looking statements in this document and any documents incorporated by reference.
You
should note that many factors, some of which are discussed elsewhere in this document and in documents that are incorporated by
reference, could affect the future financial results of Peoples Financial Services Corp. and its subsidiaries and could cause
those results to differ materially from those expressed in the forward-looking statements contained or incorporated by reference
in this document. These factors include, but are not limited, to the following:
|
|
•
|
the
COVID-19 pandemic, or any other pandemic, and governmental responses to the pandemic;
|
|
|
•
|
changes
in interest rates;
|
|
|
•
|
economic
conditions, particularly in the Peoples Financial Services Corp. market area;
|
|
|
•
|
legislative
and regulatory changes and the ability to comply with the significant laws and regulations
governing the banking and financial services business;
|
|
|
•
|
monetary
and fiscal policies of the U.S. government, including policies of the U.S. Department
of Treasury and the Federal Reserve System;
|
|
|
•
|
credit
risk associated with lending activities and changes in the quality and composition of
our loan and investment portfolios;
|
|
|
•
|
demand
for loan and other products;
|
|
|
•
|
changes
in the values of real estate and other collateral securing the loan portfolio, particularly
in the Peoples Financial Services Corp. market area;
|
|
|
•
|
the
ability to achieve the intended benefits of, or other risks associated with, business
combinations;
|
|
|
•
|
changes
in relevant accounting principles and guidelines;
|
|
|
•
|
inability
of third party service providers to perform;
|
|
|
•
|
the
ability to prevent, detect and respond to cyberattacks; and
|
|
|
•
|
other
factors that may be described in our Annual Reports on Form 10-K and Quarterly Reports
on Form 10-Q as filed with the Securities and Exchange Commission from time to time.
|
We
caution that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, all of which change
over time, and we assume no duty to update forward-looking statements, except as may be required by applicable law or regulation,
and except as required by applicable law or regulation, we do not undertake, and specifically disclaim any obligation, to publicly
release any revisions to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances
after the date of such statements. We caution readers not to place undue reliance on any forward-looking statements. These statements
speak only as of the date made, and we advise readers that various factors, including those described above, could affect our
financial performance and could cause actual results or circumstances for future periods to differ materially from those anticipated
or projected.
Information
About Voting
How
are proxies being solicited?
This
proxy solicitation is being made by and at the direction of the board of directors of the Company, and we will pay all expenses
relating to the solicitation. Proxies may be solicited by mail, personally, by telephone or by other electronic means by officers,
directors and employees of the Company and its subsidiary, Peoples Security Bank and Trust Company, or the “Bank,”
who will not be compensated for such solicitation activities. In addition, we have engaged Regan & Associates, Inc. (New York,
NY) to assist us with the solicitation. We will pay Regan & Associates a fee of $10,500 and reimburse them for their reasonable
out-of-pocket expenses. Arrangements may be made with brokerage houses and other custodians, nominees and fiduciaries for forwarding
solicitation materials to the beneficial owners of shares held of record by such persons, and we will reimburse those persons
for their reasonable expenses.
What
is on the agenda for the annual meeting?
The
agenda for the annual meeting includes: the election of two directors to the Company’s board of directors, each to serve
until the 2024 annual meeting of shareholders and until his or her successor has been elected and qualified; a proposal to approve,
on an advisory basis, the compensation of our named executive officers; the ratification of Baker Tilly US, LLP as our independent
registered public accounting firm for the fiscal year ending December 31, 2021; and such other business as may properly come before
the annual meeting. We are not aware of any such other business that may properly come before the annual meeting at the present
time.
How
do I participate in the annual meeting?
This
year, we will be holding a virtual meeting where you will be able to listen to the meeting live, vote on the matters submitted
to shareholders and pose questions and make comments. The virtual meeting will be accessed by visiting www.virtualshareholdermeeting.com/PFIS2021.
You
are entitled to participate in the annual meeting if you were a shareholder as of the close of business on March 1, 2021, the
record date, or hold a valid proxy for the meeting. To be admitted to the annual meeting at www.virtualshareholdermeeting.com/PFIS2021,
you must enter the control number found on your proxy card.
We
encourage you to access the annual meeting before it begins. Online check-in will start shortly before the meeting on May 15,
2021. If you have difficulty accessing the meeting, please call 800-586-1548 (US) or 303-562-9288 (International).
Who
can vote?
You
can vote at the annual meeting if you were a holder of our common stock at the close of business on the record date. The record
date for the annual meeting is March 1, 2021. Each share of common stock you own as of the record date entitles you to one vote
for each director to be elected in the election of directors and one vote on any other business as may properly come before the
annual meeting. As of the record date, there were 7,203,101 shares of common stock outstanding and entitled to vote.
How
do I vote if shares are held directly in my name?
If
you hold your shares in certificate or direct registration system form, and not through a bank, brokerage firm or other nominee,
you may vote your shares in one of the following ways:
|
|
•
|
VOTE
BY INTERNET - Before The Meeting – Go to www.proxyvote.com. Use the Internet to
transmit your voting instructions and for electronic delivery of information up until
11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy
card in hand when you access the web site and follow the instructions to obtain your
records and to create an electronic voting instruction form.
|
|
|
•
|
VOTE
BY INTERNET – During The Meeting – Go to
|
www.virtualshareholdermeeting.com/PFIS2021.
You may attend the virtual annual meeting and vote your shares during the meeting. To attend the annual meeting, you will need
the control number included on your proxy card.
|
|
•
|
VOTE
BY PHONE - 1-800-690-6903. Use any touch-tone telephone to transmit your voting instructions
up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have
your proxy card in hand when you call and then follow the instructions.
|
|
|
•
|
VOTE
BY MAIL. Mark, sign and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood,
NY 11717.
|
How
do I vote if shares are held in street name or through a bank, brokerage firm or other nominee?
If
you hold your shares in street name or through a bank, brokerage firm or other nominee, you will need to vote your shares by providing
voting instructions to your bank, brokerage firm or other nominee, in accordance with the voting instruction form provided to
you by your bank, brokerage firm or other nominee, or by obtaining a legal proxy from your bank, brokerage firm or other nominee
authorizing you to vote those shares at the annual meeting. Only with a legal proxy from your bank, brokerage firm or other nominee
can you cast your vote at the annual meeting.
How
will my proxy be voted?
If
you hold your shares directly in your name, unless you indicate differently on your proxy, we plan to vote signed and returned
proxies FOR the election of the board’s director nominees named in this proxy statement, FOR the proposal
to approve, on an advisory basis, the compensation of our named executive officers, and FOR the ratification of Baker Tilly
US, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021.
If
you hold your shares of the Company’s common stock in “street name” (that is, through a broker or other nominee),
under applicable rules, brokers have the discretion to vote on routine matters, such as the ratification of the selection of accounting
firms, but do not have discretion to vote on non-routine matters. Rules applicable to brokers consider uncontested elections of
directors, matters related to executive compensation, and matters related to corporate governance to be considered non-routine.
If you hold your shares in street name, but do not give your broker or other nominee instructions on how to vote your shares,
votes may not be cast on your behalf. If your broker or other nominee submits a proxy but does not vote your shares on a particular
proposal because it has not received voting instructions from you, your shares will be considered to be “broker non-votes”
with regard to that matter.
At
or after the annual meeting, a judge of elections will tabulate ballots cast by shareholders present and voting at the virtual
annual meeting and votes cast by proxy.
What
is a broker non-vote?
A
broker non-vote occurs when a bank or brokerage firm holding shares on behalf of a shareholder does not receive voting instructions
from the shareholder by a specified date before the annual meeting and the bank or brokerage firm is not permitted to vote, or
otherwise does not vote, those undirected shares on specified matters. Thus, if you do not give your broker specific instructions,
your shares may not be voted on those matters (so-called “broker non-votes”) and will not be counted in determining
the number of shares necessary for approval. Broker non-votes are not considered to be votes cast and, therefore, generally have
no effect on the outcome of elections of directors or other business which are determined based on votes cast. Shares represented
by “broker non-votes” will be counted, however, in determining the number of shares of common stock represented by
participation in the virtual annual meeting or by proxy and entitled to vote.
Can
I revoke my proxy or change my vote after submitting my proxy?
Yes.
Any shareholder giving a proxy has the right to virtually attend the annual meeting and vote during the annual meeting. A proxy
may be revoked prior to the annual meeting if a later-dated proxy or a written revocation is sent to the Company at Peoples Financial
Services Corp., 150 North Washington Avenue, Scranton, Pennsylvania 18503, Attn.: Secretary, and received prior to the annual
meeting. In addition, a shareholder may revoke a proxy by timely executing and delivering, by Internet, telephone, or mail, another
proxy dated as of a later date.
What
constitutes a quorum at the annual meeting and how are votes counted?
We
need a quorum of shareholders to hold a valid annual meeting. A quorum will be present if shareholders entitled to cast at least
a majority of the votes which all shareholders are entitled to cast are represented by proxy or by participation in the virtual
annual meeting. Abstentions and broker non-votes are counted as present for the purpose of establishing a quorum.
How
many votes are required for the election of directors?
Last
year, our shareholders voted to amend our articles of incorporation to provide for majority voting in uncontested elections of
directors. Under the new majority voting standard, each vote cast will be counted either “for” or “against”
the nominee’s election as a director. To be elected in an uncontested election, a quorum must be present at the meeting
and the number of votes cast by shareholders “for” a nominee’s election must exceed the number of votes cast
“against” the nominee’s election. In a contested election, defined as on in which the number of director nominees
exceeds the number of directors to be elected, the directors elected at such meeting shall be elected by a plurality of the votes
cast in such election of directors, provided that a quorum is present. A “plurality” means that the candidates for
election as directors receiving the highest number of votes, up to the number of directors to be elected, shall be elected. Because
the election of directors is based on votes cast, abstentions and broker non-votes have no effect on the outcome of the vote.
Shareholders are not entitled to cumulative voting in the election of directors.
What
happens if a director nominee fails to receive a majority of the votes cast for his or her election?
Pursuant
to a corporate governance policy, any incumbent director who is nominated for re-election but does not receive a majority of the
votes cast for his or her re-election, is required to tender his or her resignation to the nominating and corporate governance
committee and the board for their consideration. The nominating and corporate governance committee will consider such tendered
resignation and, within thirty days after certification of the election results of the shareholders’ meeting at which a
director failed to receive the required votes for re-election, will make a recommendation to the board as to the appropriate action,
primarily whether to accept or reject such resignation. In determining its recommendation to the board, the nominating and corporate
governance committee will consider all factors deemed relevant by the members of the committee including, without limitation,
any reason or reasons known to the committee why shareholders voted against the director’s re-election, the qualifications
of the director, whether acceptance of the resignation would adversely affect the Company’s ability to comply with applicable
stock exchange listing standards, and whether the director’s resignation from the board of directors would generally be
in the best interests of the Company and its shareholders. The board will act on the nominating and corporate governance committee’s
recommendation and publicly disclose its decision and the rationale behind such decision within ninety days after certification
of the results of the election in which the director failed to receive the number of votes required. If any director nominee is
not an incumbent director and fails to receive a majority of the votes cast for his or her election, he or she will not be elected.
How
many votes are required to approve, on an advisory basis, the compensation of our named executive officers?
As
long as a quorum is present, the affirmative vote of the holders, present by participation in the virtual meeting or by proxy,
of shares entitled to cast at least a majority of the votes which all shareholders are entitled to cast, is required to approve,
on an advisory basis, the compensation of our named executive officers. Abstentions and broker non-votes will have the same effect
as votes against this proposal.
How
many votes are required for the ratification of the appointment of Baker Tilly US, LLP?
As
long as a quorum is present, the affirmative vote of the holders, present by participation in the virtual meeting or by proxy,
of shares entitled to cast at least a majority of the votes which all shareholders are entitled to cast, is required to ratify
the appointment of Baker Tilly US, LLP as our independent registered public accounting firm for the fiscal year ending December
31, 2021. Abstentions and broker non-votes will have the same effect as votes against this proposal.
How
many votes are required for any other proposals that may properly come before the annual meeting?
Any
other proposals that may properly come before the annual meeting will be approved if the holders, present by proxy or by participation
in the virtual meeting, of shares entitled to cast at least a majority of the votes which all shareholders are entitled to cast
are voted in favor of the action, unless the question is one upon which a different vote is required by express provision of law
or by our articles of incorporation or our bylaws. Abstentions and broker non-votes will have the same effect as votes against
any proposal that requires approval by a majority of the votes which all shareholders are entitled to cast. Abstentions and broker
non-votes are not considered votes cast, however, and, as such, have no effect on the outcome of any proposals which would be
approved based on votes cast. We are not aware of any such other proposals that may properly come before the annual meeting at
the present time.
Proposal
1 – Election of Directors
Our
bylaws provide that the number of directors constituting the entire board will be not less than five nor more than twenty-five,
with the exact number to be fixed from time to time by our board of directors.
Our
bylaws also provide that our board of directors will be classified into three classes, each class to be as nearly equal in number,
in respect to the time for which they severally hold office. At each annual meeting of shareholders, one class of directors is
to be elected and each class of directors so elected will serve for a term of approximately three years. In accordance with our
mandatory retirement bylaw, Steven L. Weinberger will retire at the expiration of his current term at the annual meeting. Based
on the recommendation of our nominating and governance committee, our board of directors resolved to decrease the number of directors
comprising the entire board to seven upon the expiration of the retiring directors’ terms. Accordingly, two nominees will
be elected to the 2024 class of directors.
It
is intended that the proxies solicited by the board of directors will be voted FOR the two director nominees named below
(unless the shareholder otherwise directs). If, for any reason, any nominee becomes unavailable for election or service on the
board, the proxy solicited by the board of directors will be voted for such substituted nominee as is selected by the board of
directors. The board has no reason to believe that any of the named nominees are not available or will not serve if elected.
Nominees
for Director - Term Expiring In 2024
The
board has nominated incumbent directors Richard S. Lochen, Jr. and James B. Nicholas for election to the board of directors at
the 2021 annual meeting of shareholders, each to serve until the 2024 annual meeting of shareholders and until his successor has
been elected and qualified. The names of the director nominees and certain information about them are set forth below:
Richard
S. Lochen, Jr., age 57, has been a director of Peoples Financial Services Corp. and Peoples Security Bank and Trust Company
since 2003. He has been a Certified Public Accountant with the firm of Lochen & Chase PC since 1995. In May 2006, Mr. Lochen
was appointed as President of Peoples Financial Services Corp. and its banking subsidiary (then known as Peoples National Bank)
and served as President and Chief Executive Officer from January 2007 until November 2009. The board has determined that Mr. Lochen
is qualified to be on the board due to his knowledge of auditing publicly-traded financial institutions that he gained during
his career as a CPA, which included assisting in preparation of annual and quarterly filings with the Securities and Exchange
Commission. He also brings executive leadership experience and understanding of the operations of Peoples gained from his past
service as an officer of Peoples Financial Services Corp. and its banking subsidiary.
James
B. Nicholas, age 69, was appointed as a director of Peoples Financial Services Corp. and Peoples Security Bank and Trust
Company in connection with the consummation of our merger with Penseco in November 2013. Prior to that, he served as a director
of Penseco Financial Services Corporation and Penn Security Bank and Trust Company since 1981. The Company has concluded that
Mr. Nicholas is qualified to serve as a director of the Company as a result of his substantial small company management experience,
particularly within the region in which the Bank conducts its business, and his familiarity with the operations of the former
Penn Security Bank and Trust Company. Mr. Nicholas has served as the President of D.G. Nicholas Co., a wholesale auto parts company
located in Scranton, Pennsylvania, since 1990. Through his oversight of D.G. Nicholas Co., Mr. Nicholas is able to obtain insight
regarding the local business and consumer environment that is valuable to our board of directors in its oversight of the Company’s
and Bank’s operations. His service as a director of Penseco and Penn Security has enabled him to develop a knowledge of
their former operations, which is beneficial to the Company’s Board.
Continuing
Directors
The
names of our directors, whose current terms will continue after the 2021 annual meeting of shareholders, and certain information
about them, are set forth below:
Term
Expiring In 2022
William
E. Aubrey II, age 58, has been a director of Peoples Financial Services Corp. and Peoples Security Bank and Trust Company
since 2006 and Chairman of the Board since 2008. He was President and Chief Executive Officer of Gertrude Hawk Chocolates based
in Dunmore, PA from 2003 to 2019 and is currently President of Alternative Investments at Gertrude Hawk Holdings. The board has
determined that Mr. Aubrey is qualified to be on the board due to his executive management experience gained by serving as a chief
executive. He also brings knowledge gained by serving on the board of directors of United Gilsonite Laboratories in Scranton,
PA, Schlotterbeck & Foss in Portland, ME and Rustic Crust in Pittsfield, NH. In addition, he has served on many community
boards including past Chairman of Geisinger CMC Hospital, Keystone College, Holy Cross School System, Everhart Museum and the
Waverly Community House. He holds an MBA and CPA.
Craig
W. Best, age 60, was appointed as a director of Peoples Financial Services Corp. and Peoples Security Bank and Trust Company
in connection with the consummation of our merger with Penseco in November 2013. Prior to that, he served as a director of Penseco
Financial Services Corporation and Penn Security Bank and Trust Company since 2006. The Company has concluded that Mr. Best is
qualified to serve as a director of the Company as a result of his leadership and prior experience in the banking industry. Mr.
Best has served as Chief Executive Officer of the Company and the Bank since May 2020. Mr. Best served as President and Chief
Executive Officer of Peoples Financial Services Corp. and Peoples Security Bank and Trust Company from the time of the 2013 Penseco
merger until May 2020, and from 2006 until the merger served as President and Chief Executive Officer of Penseco Financial Services
Corporation and Penn Security Bank and Trust Company Penseco merger. Prior to joining Penseco, Mr. Best served as Chief Operating
Officer of First Commonwealth Bank, a $6.2 billion financial services institution headquartered in Indiana, Pennsylvania, from
July 2000 to December 2005. During his employment with First Commonwealth Bank, Mr. Best was responsible for overseeing the day
to day operations of all lines of business and administrative functions for First Commonwealth Bank. Before serving as Chief Operating
Officer of First Commonwealth Bank, Mr. Best was President of NBOC, a $1.0 billion division of First Commonwealth Bank. This collective
experience, along with his knowledge of all aspects of the Company’s and the Bank’s business through his position
as President and Chief Executive Officer, uniquely qualify Mr. Best for service on the Company’s board of directors.
Joseph
T. Wright, Jr., age 65, has been a director of Peoples Financial Services Corp. and Peoples Security Bank and Trust Company
since 2009. He has been an attorney at law with Wright & Reihner PC since 1980. The board has determined that Mr. Wright is
qualified to be on the board due to his experience and knowledge gained while being a practicing attorney for nearly forty years
with involvement in numerous financially complex matters related to disputes involving shareholders, employment matters, contracts,
valuation issues, real estate matters, and general business issues related to risk assessment.
Term
Expiring In 2023
Sandra
L. Bodnyk, age 69, was appointed as a director of Peoples Financial Services Corp. and Peoples Security Bank and Trust
Company on February 28, 2020. Ms. Bodnyk was Executive Vice President, Senior Loan Administrator for Branch Banking and Trust
Company, the banking subsidiary of BB&T Corporation, from April 2016 through December 2018, and was Senior Executive Vice
President, Chief Risk Officer for National Penn Bank, the banking subsidiary of National Penn Bancshares, Inc., from January 2013
until their merger with BB&T in April 2016. Before Ms. Bodnyk’s appointment to that position, she was Group Executive
Vice President & Chief Risk Officer for National Penn Bank, and before that she held various positions with KNBT Bancorp,
Inc. and Keystone Nazareth Bank & Trust Company. Our board of directors determined that Ms. Bodnyk is qualified to serve as
a director of the Company as a result of her extensive background in commercial banking, including her experience with commercial
lending and enterprise risk management, and oversight of regulatory compliance and technology and information security.
Ronald
G. Kukuchka, age 67, has been a director of Peoples Financial Services Corp. and Peoples Security Bank and Trust Company
since 2007. He has been President of Ace Robbins, Inc. since 1982. The board has determined that Mr. Kukuchka is qualified to
be on the board due to his leadership skills gained from owning a successful petroleum company in our market area for over 37
years. He also brings experience gained by serving as director for the Pennsylvania Marketers & Convenience Store Association,
director of the Tunkhannock Fireman’s Relief Association, and from being trustee of the Roy Piper Charitable Trust.
Recommendation
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF ITS NOMINEES TO THE BOARD OF DIRECTORS OF
THE COMPANY TO SERVE UNTIL THE 2024 ANNUAL MEETING OF SHAREHOLDERS AND UNTIL HIS SUCCESSOR HAS BEEN ELECTED AND QUALIFIED.
Proposal
2 – To Approve, on an Advisory Basis,
the Compensation of our Named Executive Officers
As
required pursuant to Section 14A of the Securities Exchange Act of 1934, as amended (commonly referred to as the “Exchange
Act”), we are providing our shareholders with the opportunity to vote, on an advisory basis, on the compensation of our
named executive officers as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal,
gives our shareholders the opportunity to express their views on the compensation of our named executive officers. We are currently
soliciting this advisory vote on an annual basis.
Even
though this say-on-pay vote is advisory and therefore will not be binding on us, the members of our compensation committee and
board of directors value the opinions of our shareholders. Accordingly, to the extent there is a significant vote against the
compensation of our named executive officers, we will consider our shareholders’ concerns and the compensation committee
will evaluate what actions may be appropriate to address those concerns.
Our
executive compensation program is designed to attract, reward, and retain key employees, including our named executive officers,
who are critical to our success. Under this program, our named executive officers are rewarded for the achievement of specific
short-term and long-term goals that enhance shareholder value. Shareholders are urged to read the “Compensation Discussion
and Analysis” and “Executive Compensation” sections of this proxy statement for greater detail about our executive
compensation programs, including information about the fiscal year 2020 compensation of our named executive officers.
We
are asking our shareholders to indicate their support for the compensation of our named executive officers as described in this
proxy statement by voting in favor of the following resolution:
“RESOLVED,
that the compensation paid to the Company’s named executive officers, as disclosed in this proxy statement pursuant to Item
402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby
APPROVED.”
Recommendation
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF
OUR NAMED EXECUTIVE OFFICERS BY THE ADOPTION OF THE FOREGOING RESOLUTION.
Proposal
3 – Ratification of the Appointment of Baker Tilly US, LLP as the Company’s Independent Registered Public Accounting
Firm for the Fiscal Year Ending December 31, 2021
The
audit committee of our board of directors has engaged Baker Tilly US, LLP or “Baker Tilly,” to serve as our independent
registered public accounting firm for the year ending December 31, 2021. Baker Tilly served as our independent registered public
accounting firm for the Company for the fiscal years ended December 31, 2020 and 2019. Representatives of the firm are expected
to participate in the virtual annual meeting and will have an opportunity to make a statement if they so desire and will be available
to respond to appropriate questions.
The
following table presents the aggregate fees billed or expected to be billed to us by our principal independent registered public
accounting firm for the fiscal years ended December 31, 2020 and 2019.
|
|
|
2020
|
|
|
2019
|
|
|
Fee
Category
|
|
|
|
|
|
|
|
|
|
Audit
Fees
|
|
$
|
328,825
|
|
|
$
|
293,125
|
|
|
Audit-Related
Fees
|
|
|
–
|
|
|
|
–
|
|
|
Tax
Fees
|
|
|
–
|
|
|
|
–
|
|
|
All
Other Fees
|
|
|
–
|
|
|
|
–
|
|
|
Total
Fees
|
|
$
|
328,825
|
|
|
$
|
293,125
|
|
Audit-related
fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or review
of our financial statements and are not reported under “Audit Fees.”
Our
audit committee’s charter includes a formal policy concerning the pre-approval of audit and non-audit services (including
the fees and terms thereof) to be provided by our independent registered public accounting firm, subject to the de minimis exception
for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act, which are approved by the audit committee prior
to the completion of the audit. The policy requires that all services to be performed by Baker Tilly, including audit services,
audit-related services and permitted non-audit services, be performed either pursuant to detailed pre-approval policies and procedures
established by the committee as to the services to be performed, or upon presentation to and pre-approval by the committee (subject
to the de minimis exception). All services rendered by Baker Tilly are permissible under applicable laws and regulations, and
the audit committee pre-approved all audit services performed by Baker Tilly during 2020 and 2019.
Recommendation
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF BAKER TILLY US, LLP AS THE
COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021.
Board
of Directors and Committees
Director
Independence
Our
common stock is listed on The Nasdaq Stock Market, LLC. Accordingly, our board evaluated the independence of each director and
director nominee under the listing standards of The Nasdaq Stock Market, LLC. During this review, the board considered transactions
and relationships between each director or any member of his or her immediate family and the Company and its subsidiaries and
affiliates. The board also considered whether there were any transactions or relationships between any director or any member
of his or her immediate family (or any entity of which a director or an immediate family member is an executive officer, general
partner or significant equity holder) and members of our senior management or their affiliates.
As
a result of this review, the board affirmatively determined that William E. Aubrey II, Sandra L. Bodnyk, Ronald G. Kukuchka, Richard
S. Lochen, Jr., James B. Nicholas, Steven L. Weinberger and Joseph T. Wright, Jr. are independent under the listing standards
of The Nasdaq Stock Market, LLC. Former directors, James G. Keisling, Robert W. Naismith, Ph.D. and George H. Stover, whose terms
ended in May 2020, also were determined to be independent. In addition, the board determined that each member of our nominating
and governance, audit and compensation committees is independent in accordance with the additional independence criteria applicable
to such committee members under the listing standards of The Nasdaq Stock Market, LLC, including the additional independence standards
applicable to members of the audit and compensation committees. Craig W. Best, our Chief Executive Officer, was determined to
be not independent.
In
determining the independence of our independent directors, we considered loan transactions, as more particularly described in
“Certain Relationships and Related Transactions,” deposits with Peoples Security Bank and Trust Company, a lease agreement,
pursuant to which we lease space in one of our branches, and certain arm’s-length purchases of products from companies at
which some of our directors or their immediate family members were officers or employees. The board determined that none of these
relationships impaired the independence of the independent directors.
Board
Meetings
During
2020, the board of directors held twelve meetings. Each of our directors attended at least 75 percent of the aggregate number
of meetings held by the board of directors and the committees on which he or she served.
We
have no formal policy with respect to director attendance at our annual meeting of shareholders. All of our directors attended
our 2020 annual meeting of shareholders.
Board
Leadership Structure and Role in Risk Oversight
The
board of directors of the Company has determined that the separation of the offices of chairman of the board, chief executive
officer and the president allows the chairman to lead the board in its fundamental role of providing advice to and independence
oversight of management. The chief executive officer focuses on his responsibility of enhancing shareholder value and expanding
and strengthening the Company’s franchise. The president is responsible for day-to-day management of the Company. This structure
also aids in the development of management and succession planning. Currently, William E. Aubrey II serves as Chairman of the
Board, Craig W. Best serves as Chief Executive Officer and Thomas P. Tulaney serves as President.
Risk
is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of
risks, including credit risk, interest rate risk, liquidity risk, operational risk, strategic risk, legal risk and reputational
risk. Management, including our chief risk officer, is responsible for the day-to-day management of risks we face, while our board
of directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk management
oversight role, the board of directors has the responsibility to satisfy itself that the risk management processes designed and
implemented by management are adequate and functioning as designed. To do this, the Chairman of the Board meets regularly with
management to discuss strategy and risks facing the Company. Senior management attends board meetings and is available to address
any questions or concerns raised by the board on risk management. The Chairman of the Board and independent members of the board
of directors work together to provide strong, independent oversight of the Company’s management and affairs through its
standing committees and, when necessary, special meetings of independent directors.
Primary
responsibility for areas of risk oversight is allocated among our standing committees as follows:
|
Committee
|
|
Primary
Areas of Risk Oversight
|
|
Audit
Committee
|
|
Risks
and exposures associated with financial matters, particularly financial reporting, tax, accounting, disclosure, internal control
over financial reporting, financial policies, investment guidelines and credit and liquidity matters.
|
|
|
|
|
|
Nominating
and Governance Committee
|
|
Risks
and exposures associated with leadership, succession planning and corporate governance.
|
|
|
|
|
|
Compensation
Committee
|
|
Risks
and exposures associated with executive compensation programs and arrangements, including incentive plans.
|
Compensation
Risk Management
Our
compensation committee has reviewed the compensation policies and practices of the Company and has determined that the policies
and practices do not motivate imprudent risk taking and are not reasonably likely to have a material adverse effect on the Company.
The compensation committee is aware that compensation arrangements, if not properly structured, may encourage inappropriate risk-taking.
Further, banking regulators expect us to maintain incentive compensation practices that are consistent with our safety and soundness
as a banking organization. Compensation arrangements are expected to provide employees incentives that appropriately balance risk
and reward, are compatible with effective controls and risk-management, and are supported by strong corporate governance, including
active and effective oversight by our board of directors. A long-standing example of how our compensation programs protect against
imprudent risk taking is the clawback provision included in the Peoples Cash Incentive Plan. In addition, since January 2017,
we have maintained a compensation recoupment policy, which applies to all executive officers who receive cash or equity incentive
awards.
Board
Committees
As
noted above, the board of directors of the Company conducts much of its business through committees of the board. During 2020,
the board maintained standing audit, compensation and nominating and governance committees.
Audit
Committee
Directors
Lochen, Bodnyk, Kukuchka and Nicholas currently comprise the audit committee of the board of directors. During the fiscal year
ended December 31, 2020, they and former directors James G. Keisling and Robert W. Naismith, Ph.D. served on the audit committee.
Each
member of the audit committee was independent under the requirements of The Nasdaq Stock Market, LLC relating to audit committee
members. The board of directors has determined that director Richard S. Lochen, Jr. qualifies as an “audit committee financial
expert,” as defined under the rules of the Securities and Exchange Commission, or “SEC.” The audit committee
met four times in 2020.
The
audit committee is governed by a formal charter approved by the board of directors, a current copy of which is available via the
Company’s website, psbt.com, at the “Corporate Info – Governance Documents” page under “Investor
Relations.” The primary purposes, duties and responsibilities of the audit committee include:
|
|
•
|
oversee
our accounting and financial reporting processes, including management’s preparation
of financial reports and other financial information;
|
|
|
•
|
oversee
our management’s maintenance of internal controls and procedures for financial
reporting, accounting and financial reporting processes generally;
|
|
|
•
|
assist
our board of directors in its oversight of our compliance with legal and regulatory requirements;
|
|
|
•
|
evaluate
the independence and oversee the performance of our independent registered public accounting
firm and oversee the audits of the financial statements of the Company;
|
|
|
•
|
assist
our board of directors in risk assessment and risk management;
|
|
|
•
|
pre-approve
all auditing services and permitted non-audit services (including the fees for such services
and terms thereof) to be performed by our independent registered public accounting firm;
|
|
|
•
|
establish
and periodically review and, as appropriate, revise, procedures for the receipt, retention,
and treatment of complaints regarding accounting, internal accounting controls, or auditing
matters, and the confidential, anonymous submission by our employees of concerns regarding
questionable accounting or auditing matters;
|
|
|
•
|
oversee
our internal audit function; and
|
|
|
•
|
oversee
any related party transactions.
|
Audit
Committee Report
In
accordance with SEC regulations, the audit committee has prepared the following report. As part of its ongoing activities, the
audit committee has:
|
|
•
|
reviewed
and discussed the audited consolidated financial statements of the Company at and for
the year ended December 31, 2020, with management;
|
|
|
•
|
discussed
with Baker Tilly, the Company’s independent registered public accounting firm,
the matters required to be discussed by Public Company Accounting Oversight Board Auditing
Standard No. 16, Communications with Audit Committees; and
|
|
|
•
|
received
the written disclosures and letter from Baker Tilly required by applicable requirements
of the Public Company Accounting Oversight Board regarding the independent registered
public accounting firm’s communications with the audit committee concerning independence,
and has discussed with Baker Tilly such firm’s independence.
|
Based
upon its review and the considerations and discussions referenced above, the audit committee recommended to the board of directors
that our audited consolidated financial statements be included in the Company’s annual report on Form 10-K, as filed with
the SEC on March 16, 2021.
|
|
Submitted by the Audit Committee:
|
|
|
|
|
|
Richard
S. Lochen, Jr., Chairman
Sandra
L. Bodnyk
Ronald
G. Kukuchka
James
B. Nicholas
|
The
foregoing Audit Committee Report shall not be deemed to be incorporated by reference into any filing made by the Company under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, notwithstanding any general statement
contained in any such filing incorporating this proxy statement by reference, except to the extent the Company incorporates such
report by specific reference.
Compensation
Committee
Directors
Aubrey, Bodnyk, Lochen and Wright currently comprise the compensation committee of the board of directors. During the fiscal year
ended December 31, 2020, they and former directors James G. Keisling and Robert W. Naismith, Ph.D. served on the compensation
committee. During 2020, the compensation committee of the board of directors met seven times.
The
compensation committee is governed by a formal charter approved by the board of directors, a current copy of which is available
via the Company’s website, psbt.com, at the “Corporate Info – Governance Documents” page under “Investor
Relations.” The primary purposes, duties and responsibilities of the compensation committee include:
|
|
•
|
review
and approve the annual base salaries and annual incentive opportunities of our chief
executive officer and other executive officers;
|
|
|
•
|
review
and approve incentive awards and opportunities, including both cash-based and equity-based
awards and opportunities, any employment agreements and severance arrangements, any change-in-control
agreements and change-in-control provisions affecting any elements of compensation and
benefits, and any special or supplemental compensation and benefits, in each case for
our executive officers;
|
|
|
•
|
review
and make recommendations to our board of directors with respect to new compensation programs;
|
|
|
•
|
review
periodically the operation of our compensation programs;
|
|
|
•
|
establish
and periodically review policies for the administration of compensation programs;
|
|
|
•
|
ensure
that our compensation programs comport with our compensation philosophy;
|
|
|
•
|
review
and make recommendations to our board of directors with respect to director compensation;
|
|
|
•
|
review
and make recommendations to our board of directors with respect to our employee benefit
plans;
|
|
|
•
|
administer
our compensation programs, including equity incentive programs, for all employees;
|
|
|
•
|
review
and provide guidance on our human resource programs, which may include talent review
and leadership development and “best place to work” initiatives;
|
|
|
•
|
oversee
all matters relating to the outcome of shareholder advisory votes regarding executive
compensation; and
|
|
|
•
|
oversee
risks and exposures associated with leadership assessment, and compensation programs
and arrangements, including incentive plans, and reviewing and evaluating our compensation
policies and practices of compensating our employees, including non-executive officers,
as they relate to risk management practices and risk-taking incentives.
|
Compensation
Committee Report
The
compensation committee has reviewed and discussed with management the Compensation Discussion and Analysis that is required by
the rules established by the SEC. Based on such review and discussions, the compensation committee has recommended to the board
of directors that the Compensation Discussion and Analysis be included in this proxy statement. See “Compensation Discussion
and Analysis.”
|
|
Submitted by the compensation
committee:
Joseph
T. Wright, Jr., Chairman
William
E. Aubrey II
Sandra
L. Bodnyk
Richard
S. Lochen, Jr.
|
The
foregoing Compensation Committee Report shall not be deemed to be incorporated by reference into any filing made by the Company
under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, notwithstanding any general
statement contained in any such filing incorporating this proxy statement by reference, except to the extent the Company incorporates
such report by specific reference.
Nominations
and Shareholder Communications
Directors
Aubrey, Bodnyk, Kukuchka, Nicholas and Wright currently comprise the nominating and corporate governance committee of the board
of directors. During the fiscal year ended December 31, 2020, they and former director George H. Stover, Jr. served on the nominating
and corporate governance committee. During 2020, the nominating and corporate governance committee of the board of directors met
two times.
The
nominating and corporate governance committee is governed by a formal charter approved by the board of directors, a current copy
of which is available via the Company’s website, psbt.com, at the “Corporate Info – Governance Documents”
page under “Investor Relations.” The primary purposes, duties and responsibilities of the nominating and corporate
governance committee include:
|
|
•
|
recommend
director nominees for selection by our board of directors;
|
|
|
•
|
review
recommendations from directors, shareholders, management, and other appropriate third
parties for potential director candidates and collect and analyze information regarding
their suitability;
|
|
|
•
|
assist
our board of directors in determining the size and composition of the board and its committees,
and of the board of directors and committees of our subsidiaries;
|
|
|
•
|
develop
and make recommendations to our board of directors with respect to corporate governance
guidelines and other governance policies;
|
|
|
•
|
develop
and recommend to the Board a policy with regard to the consideration of diversity in
identifying director candidates, implement any approved diversity policy, evaluate candidates
in accordance with such policy, and periodically assess the effectiveness of such policy;
|
|
|
•
|
identify
and prioritize with management significant risks that we face and recommend to our board
of directors whether the full board or a particular board committee should have primary
responsibility for oversight of each such identified risk;
|
|
|
•
|
keep
apprised of requirements, trends and best practices in corporate governance;
|
|
|
•
|
review
and make recommendations to our board of directors with respect to any proposed changes
to our articles of incorporation, bylaws, or committee charters; and
|
|
|
•
|
develop
and make recommendations to our board of directors with respect to key executive succession
plans.
|
Nomination
Process
Our
nominating and corporate governance committee is responsible for recommending director nominees to our board of directors. The
board of directors will consider director candidates recommended by shareholders. Any shareholder who wishes to recommend a director
candidate for consideration may send notice to Peoples Financial Services Corp., 150 North Washington Avenue, Scranton, Pennsylvania
18503, Attention: Investor Relations Officer. The notice should contain the information described in the section titled “Shareholder
Proposals,” on page 45.
Process
for Identifying and Evaluating Nominees
In
selecting director candidates to be nominated for election at an annual meeting, the nominating and corporate governance committee
begins by determining whether the incumbent directors whose terms expire at the meeting desire, and are qualified, to continue
their service on the board. We are of the view that the repeated service of qualified incumbents promotes stability and continuity
in the boardroom, giving us the benefit of the familiarity and insight into our affairs that our directors have accumulated during
their tenure. Accordingly, it is the policy of the nominating and corporate governance committee, absent special circumstances,
to nominate qualified incumbent directors who continue to satisfy the committee’s criteria for membership on the Board;
who the committee believes will continue to make important contributions to the Board; and who consent to stand for re-election
and, if re-elected, to continue their service on the Board.
If
there are Board positions for which the committee will identify and evaluate non-incumbent directors, it will proceed as follows:
Identification.
For purposes of identifying nominees for the board of directors, the nominating and corporate governance committee relies on personal
contacts of the committee and other members of the board of directors as well as its knowledge of members of the Company’s
market area. The nominating and corporate governance committee will also consider director candidates recommended by shareholders
in accordance with the policy and procedures set forth above. The nominating and corporate governance committee may use an independent
search firm in identifying nominees. However, the committee did not engage an independent search firm for this purpose during
the year ended December 31, 2020 or in connection with identifying the nominees for election at the 2021 annual meeting.
Evaluation.
In evaluating potential nominees, the nominating and corporate governance committee determines whether the candidate is eligible
and qualified for service on the board of directors by evaluating the candidate under the selection criteria set forth below under
the heading “Minimum Qualifications” below. In addition, the nominating and corporate governance committee may conduct
a background check and may interview the candidate. Candidates proposed by shareholders are considered under the same criteria,
except that the committee may also consider the size and duration of the equity interest of the recommending shareholder in the
Company and the extent to which the recommending shareholder intends to continue holding this interest.
Minimum
Qualifications
Our
bylaws include a mandatory retirement policy applicable to our directors. Any director, upon reaching the mandatory retirement
age of 73 years, will be permitted to serve as a director for the remainder of his or her term, after which he or she shall no
longer be eligible to serve as a director.
The
nominating and corporate governance committee has not adopted a specific set of minimum qualifications that must be met by nominees.
Nominees are selected on the basis of their integrity, experience, achievements, judgment, intelligence, personal character and
capacity to make independent analytical inquiries, ability and willingness to devote adequate time to Board duties, and the likelihood
of being able to serve on the Board for a sustained period. In evaluating potential director nominees, our nominating and corporate
governance committee will evaluate an individual’s specific qualities or skills including, but not limited to an individual’s:
contributions to the range of talent, skill and expertise of the Board; financial, regulatory and business experience, knowledge
of the banking and financial services industries, familiarity with the operations of public companies and ability to read and
understand financial statements; familiarity with our market area and participation in and ties to local businesses and local
civic, charitable and religious organizations; personal and professional integrity, honesty and reputation; ability to represent
the best interests of the Company’s shareholders and the best interests of the Company and Bank; ability to devote sufficient
time and energy to the performance of his or her duties; independence; and current equity holdings in the Company. The committee
also considers factors such as global experience, experience as a director of a public company, and knowledge of relevant industries.
The
nominating and corporate governance committee will also consider any other factors it deems relevant, including competition, size
of the board of directors, and regulatory disclosure obligations. The nominating and corporate governance committee will also
consider the extent to which a candidate helps the board of directors reflect the diversity of the Company’s shareholders,
employees, customers, and communities, including with respect to characteristics such as age, color, disability, ethnicity, family
or marital status, gender identity or expression, language, national origin , physical and mental ability, political affiliation,
race, religion, sexual orientation, socio-economic status, veteran status, and other characteristics. We have taken steps to increase
the diversity of our board, and the nominating and corporate governance committee will continue to seek opportunities to enhance
board diversity in the future.
In
addition, prior to nominating an incumbent director for re-election to the board of directors, the committee will consider and
review an existing director’s Board and committee performance and his or her satisfaction of any minimum qualifications
established by the committee.
Since
January 2017, we have maintained a share ownership policy, which applies to our directors, as well as our senior executive officers.
This policy requires our directors to beneficially own our common stock in an amount equal to four times their annual retainer
for board service, and allows five years from the time policy becomes applicable to them for our directors to reach compliance.
Shareholder
Communications
Any
shareholder who desires to send communications to our board of directors or to individual directors may do so by directing his
or her communication to the following address: Peoples Financial Services Corp., 150 North Washington Avenue, Scranton, Pennsylvania
18503, Attention: Investor Relations Officer. All shareholder communications, other than any communications we believe may pose
a security risk, will be sent directly to board members.
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth certain information concerning the ownership of shares of the common stock by each director of the
Company, each “named executive officer” identified below under the heading “Executive Compensation” beginning
on page 27, all directors and executive officers as a group, and any person who is known by us to own beneficially more than five
percent of the issued and outstanding common stock. Except as noted below, information is provided as of March 1, 2021.
|
Name
|
|
Number of Shares
Beneficially Owned+
|
|
|
Percentage of Ownership++
|
|
|
William E. Aubrey II
|
|
|
44,000.000
|
|
|
|
*
|
|
|
Craig W. Best
|
|
|
28,019.408
|
(1)
|
|
|
*
|
|
|
Sandra L. Bodnyk
|
|
|
3,000.000
|
|
|
|
*
|
|
|
Ronald G. Kukuchka
|
|
|
27,402.061
|
(2)
|
|
|
*
|
|
|
Richard S. Lochen, Jr.
|
|
|
13,881.371
|
(3)
|
|
|
*
|
|
|
James B. Nicholas
|
|
|
27,118.440
|
(4)
|
|
|
*
|
|
|
Steven L. Weinberger
|
|
|
38,137.284
|
(5)
|
|
|
*
|
|
|
Joseph T. Wright, Jr.
|
|
|
32,463.185
|
(6)
|
|
|
*
|
|
|
John R. Anderson III
|
|
|
2,620.428
|
(7)
|
|
|
*
|
|
|
Timothy H. Kirtley
|
|
|
1,286.551
|
(8)
|
|
|
*
|
|
|
Neal D. Koplin
|
|
|
4,543.040
|
(9)
|
|
|
*
|
|
|
Thomas P. Tulaney
|
|
|
29,428.766
|
(10)
|
|
|
*
|
|
|
All directors and executive officers as a group (13 persons)
|
|
|
252,843.864
|
|
|
|
3.5
|
%
|
|
|
|
|
|
|
|
|
|
|
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
|
|
|
403,979.000
|
(11)
|
|
|
5.6
|
%
|
|
|
+
|
Any
person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares:
voting power, which includes the power to vote, or to direct the voting of, our common stock; and/or, investment power, which
includes the power to dispose, or to direct the disposition of, our common stock, is determined to be a beneficial owner of our
common stock. All shares are subject to the named person’s sole voting and investment power unless otherwise indicated.
|
|
|
++
|
Shares
beneficially owned include any shares of which the holder or group has the right to acquire beneficial ownership within 60 days
after March 1, 2021. Percentage calculations are based on 7,203,101 shares outstanding at March 1, 2021, and presume that the
identified holder or group acquires any such shares that the identified holder or group has the right to acquire, and that no
other holders of any such rights do so.
|
|
|
(1)
|
Includes
1,344.7571 shares under the Company’s employee stock ownership plan (“ESOP”)
which have been allocated to Mr. Best’s account, 3,168 shares of restricted stock
and 17,226 shares in a self-directed IRA.
|
|
|
(2)
|
Includes
20,425.522 shares owned jointly by Mr. Kukuchka and his wife.
|
|
|
(3)
|
Includes
280.290 shares held by minor children, 7,730.081 shares owned jointly by Mr. Lochen and
his wife, and 3,756 shares in a self-directed IRA.
|
|
|
(4)
|
Includes
2,282.630 shares in a self-directed IRA and 2,983.530 shares owned by Mr. Nicholas’s
wife.
|
|
|
(5)
|
Includes
356.079 shares owned jointly by Mr. Weinberger and his wife, 713.205 shares in a self-directed
IRA, and 27,181 shares held in the following companies of which Mr. Weinberger has an
interest: J. Weinberger Partners and G. Weinberger Co.
|
|
|
(6)
|
Includes
818.077 shares owned by Mr. Wright’s child.
|
|
|
(7)
|
Includes
40 shares owned jointly by Mr. Anderson and his wife, 1,459.3729 shares under the ESOP
which have been allocated to Mr. Anderson’s account, and 989 shares of restricted
stock.
|
|
|
(8)
|
Includes
134.5507 shares under the ESOP which have been allocated to Mr. Kirtley’s account
and 1,033 shares of restricted stock.
|
|
|
(9)
|
Includes
400 shares in a self-directed IRA, 1,284 shares of restricted stock and 278.2649 shares
under the ESOP which have been allocated to Mr. Koplin’s account.
|
|
|
(10)
|
Includes
14,356.100 shares in a self-directed IRA, 1,543 shares of restricted stock, 707.2539
shares under the ESOP which have been allocated to Mr. Tulaney’s account and 177
shares owned jointly by Mr. Tulaney and his wife.
|
|
|
(11)
|
Based
solely on Amendment No. 1 to Schedule 13G filed with the SEC on January 29, 2021. Based
upon the information contained in the filing, BlackRock, Inc. has sole voting and dispositive
power with respect to 396,877 and 403,979 shares, respectively, and beneficially owns
403,979 shares of the Company’s common stock. BlackRock is the beneficial owner
of these holdings in its capacity as a parent holding company or control person.
|
Policy
Regarding Hedging. Because certain hedging or monetization transactions relative to our securities may cause the interests
and objectives of those persons engaged in such transactions to differ those of our shareholders generally, our board of directors
has adopted a securities trading policy that prohibits our directors, officers and employees, and family members and other persons
and entities under their influence or control, from engaging in any hedging or monetization transactions involving our securities.
Executive
Officers and Compensation
Executive
Officers
Following
is information regarding our executive officers other than Craig W. Best, Chief Executive Officer. Information regarding Mr. Best
is included under the heading “Election of Directors – Continuing Directors – Term Expiring In 2022,”
beginning on page 6, and additional information regarding the compensation of our named executive officers is included under the
heading “Executive Compensation,” beginning on page 27.
John
R. Anderson III, Executive Vice President and Chief Financial Officer, of Peoples Security Bank and Trust Company, age
54. Mr. Anderson was appointed to his current position in March 2018, after serving as the Senior Vice President and Interim Principal
Financial and Accounting Officer since April 2016. Prior to that he was Vice President/Planning and Statistical Analyst, of Penn
Security Bank and Trust Company since May 2011. Prior to that he was Assistant Vice President/Financial Reporting Officer at Penn
Security Bank since January 2006.
Susan
L. Hubble, Executive Vice President, Chief Information Officer, age 65. Ms. Hubble was appointed to her current position
in December 2019. Prior to that, she was Senior Vice President, Senior Information Technology Officer, since April 2019. Prior
to that, she was Vice President, Information Technology Officer since July 2014.
Timothy
H. Kirtley, Executive Vice President, Chief Risk Officer and Corporate Secretary, age 50. Mr. Kirtley was appointed
to his current position in April 2020, and served as Executive Vice President and Chief Credit Officer from July 2016 until April
2020. Prior to joining Peoples Security Bank and Trust Company, he served as Executive Vice President and Chief Credit Officer
of Peoples Bank, Marietta, Ohio from 2011 to 2016. From 2009 to 2011, Mr. Kirtley served as Executive Vice President, Chief Credit
Officer of Delaware County Bank & Trust Co., in Lewis Center, Ohio. From 2007 to 2009, he served as Vice President, Regional
Credit Officer and Commercial Real Estate for Fifth Third Bank in Columbus, Ohio. From 1992 to 2007, Mr. Kirtley served in various
commercial banking and credit risk management capacities, the most recent of which was Vice President, Regional Credit Officer,
Community Banking from 2002 to 2007 for U.S. Bank, N.A. in Columbus, Ohio.
Neal
D. Koplin, Senior Executive Vice President and Chief Banking Officer, age 60. Mr. Koplin was appointed to his current
position in December 2019. Prior to that, he was Executive Vice President and Lehigh Valley Division Head since August 2014. He
served as Senior Vice President and Northern Region Manager of National Penn Bank’s Commercial Real Estate Lending Group
from 2004 until joining Peoples Security Bank. He was with National Penn Bank in various executive positions from 1982 until 2004.
Thomas
P. Tulaney, President and Chief Operating Officer, age 61. Mr. Tulaney was appointed to his current position in May 2020,
at which time he also became a director of Peoples Security Bank and Trust Company. He served as Senior Executive Vice President
and Chief Operating Officer from May 2017 until May 2020. In December 2018, he assumed oversight of the Bank’s Wealth Management
Division. Prior to May 2017, and since our merger with Penseco in November 2013, he served as our Executive Vice President and
Chief Lending Officer, the same position he held with Penseco from March 2012. He joined Penn Security Bank and Trust Company
in April 2011 as Executive Vice President and Deputy Chief Lending Officer. Before that, Mr. Tulaney was a Senior Executive Vice
President and the Corporate Sales Division Manager of First National Community Bank, a position he held since 2008, when he was
promoted from Executive Vice President. He was an employee of First National Community Bank from 1994 to 2011. Prior to 1994 Mr.
Tulaney was a Senior Vice President of Third National Bank a division of Independence Bank Corp and a Regional Vice President
of PNC Bank.
Compensation
Discussion and Analysis
Overview
of Objectives
The
executive compensation program of Peoples is designed to provide a competitive base salary as well as to provide certain incentives
to our named executive officers to effectively lead and manage the Company and its growth strategy. Decisions regarding executive
compensation are determined by the compensation committee. In accordance with the compensation committee charter, the committee
may refer any matter that it has the authority to approve, together with the committee’s report and recommendation, to the
full board for approval, unless such matter is required to be approved by an independent compensation committee by applicable
law, regulation or listing standard.
The
compensation program is designed to support annual and long-term Company goals that create sustainable profitable growth while
providing long-term value to our shareholders. The objectives of our executive compensation programs are to:
|
|
•
|
attract,
motivate and retain highly qualified executives;
|
|
|
•
|
link
total compensation to both individual performance and the performance of the bank and
holding company; and
|
|
|
•
|
appropriately
balance short-term and long-term financial objectives, build shareholder value and reward
individual, team and company performances.
|
We
seek to pay for superior performance, both in achieving short-term goals and continuing to build a growing and sustainable financial
institution on a long-term basis.
During
the year ended December 31, 2020, we compensated our named executive officers, identified below, with a combination of base salary,
performance-based cash incentive awards, discretionary bonus payments, time-vested and performance-vested equity awards, equity
compensation through the employee stock ownership plan, or “ESOP,” and benefit plans and perquisites which the compensation
committee believed were comparable to other financial institutions of similar size in our region.
Benchmarking
Periodically,
the compensation committee compares our senior management compensation levels with comparable levels in industry benchmark studies
and peer group data to gain a general knowledge of compensation programs in the industry. To do so, we participate in a survey
provided by L.R. Webber Associates that benchmarks salary and benefits from Pennsylvania financial institutions who participate
in the survey. The survey includes general compensation information and ranges for executives. The results are reported by bank
asset size and geographic region. We use the survey data to compare the base salaries of our named executive positions to the
range reported for those positions at other banking institutions with total asset size and geography similar to ours to determine
whether we are compensating our named executive officers within the industry standard range. For 2020, the compensation committee
did not engage a compensation consultant.
The
compensation committee also considers salary levels for comparable positions in industries other than the financial services industry.
Components
of the Compensation Program
During
2020, our executive compensation program included four key elements: base salary, annual cash incentives, equity awards and benefit
plans.
Base
Salary
Base
salary is the basic element of our executive compensation program and the foundation for setting targets for incentive compensation
awards. The compensation committee determines the range of base salary to offer to a new executive by evaluating the duties, complexities
and responsibilities of the respective position; the level of experience required, and the compensation payable for positions
having similar scope and accountability as those in a peer group of banks.
For
2020, our compensation committee reviewed each named executive officer’s individual performance, length and nature of experience
and competency, and the potential for advancement in determining the amount of pay adjustments to recommend to the board of directors.
In connection with such review, no changes were made to the base salaries of the named executive officers other than Mr. Anderson.
Mr. Best’s base compensation remained at $439,500, Mr. Tulaney’s at $290,000, Mr. Koplin’s at $250,000 and Mr.
Kirtley’s at $225,254. Mr. Anderson’s base salary was increased from $190,000 to $215,000.
Cash
Incentive Plan
We
maintain an annual cash incentive plan (the “Cash Incentive Plan”) pursuant to which our designated executive officers,
including our named executive officers, have the opportunity to earn performance-based incentive payments based upon the attainment
of performance goals approved by the compensation committee. Incentive compensation under the Cash Incentive Plan represents the
“at risk” portion of an executive’s cash compensation subject to the achievement of performance goals. Annually,
the compensation committee sets goals for the named executive officers to achieve in order to qualify for a cash incentive payment
under the Cash Incentive Plan. In May 2020, our compensation committee approved an amendment and restatement of the Cash Incentive
Plan. The amendments clarified the purposes of the plan, eliminated default performance goals, recognized the ability of the compensation
committee to approve discretionary cash bonuses from time to time, and recognized that awards, in addition to being subject to
the clawback provisions of the Plan, are subject to any other clawback policy maintained by the Company or its banking subsidiary
from time to time.
The
following table provides information concerning the Cash Incentive Plan awards to our named executive officers during the year
ended December 31, 2020:
|
Named Executive Officer
|
|
Target/Maximum Cash Incentive Plan Payment
(% of base salary)
|
|
|
Target/Maximum Cash Incentive Plan Payment
($)
|
|
|
Craig W. Best
|
|
|
35
|
%
|
|
|
153,825
|
|
|
Thomas P. Tulaney
|
|
|
35
|
%
|
|
|
101,500
|
|
|
Neal D. Koplin
|
|
|
30
|
%
|
|
|
75,000
|
|
|
Timothy H. Kirtley
|
|
|
25
|
%
|
|
|
56,314
|
|
|
John R. Anderson III
|
|
|
25
|
%
|
|
|
53,750
|
|
The
Cash Incentive Plan rewards the attainment of company-wide performance goals, including growth in assets, loans, deposits, revenues
and earnings per share, efficiency and asset quality, as well as individual performance goals. Our objective is to drive superior
annual performance at both the company and individual levels. Performance goals for our Chief Executive Officer are set solely
by the compensation committee, and performance goals for our other named executive officers are typically set by the compensation
committee upon the recommendation of our Chief Executive Officer. Performance goals are typically communicated to officers during
the first quarter of the year, and achievement of goals is evaluated by the compensation committee after year-end.
The
following table sets forth the 2020 company performance goals, actual performance and achievement of company performance goals.
|
Performance Measure
|
|
2020
Performance
Goal
|
|
|
2020
Actual
Performance
|
|
|
Weighting of Goal (% of Total Potential Payment)
|
|
|
Earned
|
|
|
EPS Growth ($)
|
|
|
3.83
|
|
|
|
4.00
|
|
|
|
35
|
|
|
|
35
|
|
|
Revenue Growth ($000)
|
|
|
94,286
|
|
|
|
96,443
|
|
|
|
10
|
|
|
|
10
|
|
|
Expense to Asset Ratio (%)
|
|
|
2.30
|
|
|
|
2.03
|
|
|
|
10
|
|
|
|
10
|
|
|
Loan Growth ($000)
|
|
|
2,095,805
|
|
|
|
2,177,982
|
|
|
|
10
|
|
|
|
10
|
|
|
Deposit Growth ($000)
|
|
|
2,065,621
|
|
|
|
2,437,113
|
|
|
|
10
|
|
|
|
10
|
|
|
Asset Growth ($000)
|
|
|
2,601,952
|
|
|
|
2,883,802
|
|
|
|
10
|
|
|
|
10
|
|
|
Asset quality
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing assets/Avg. loans +OREO (%)
|
|
|
.66
|
|
|
|
.48
|
|
|
|
7.5
|
|
|
|
7.5
|
|
|
Net charge-offs/average loans (%)
|
|
|
.13
|
|
|
|
.13
|
|
|
|
7.5
|
|
|
|
7.5
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
100
|
|
|
|
100
|
|
Additional
details regarding the Cash Incentive Plan awards are included in the 2020 Summary Compensation and Grants of Plan-Based Awards
tables and the accompany narrative disclosure beginning on page 27.
Equity
Awards
In
February 2020, the compensation committee granted equity awards as part of its incentive compensation program. The compensation
committee approved a mix of long-term equity incentives with the majority consisting of performance-vested restricted stock units
(RSUs) (70% of the targeted equity award) and the remainder consisting of time-vested restricted stock (30% of the targeted equity
award). This design is intended to provide long-term incentive opportunity that rewards long-term, sustained performance, is aligned
with shareholder interests and promotes the long-term success of the Company.
The
performance-vested RSUs granted in 2020 vest over a three-year cumulative performance period beginning January 1, 2020 and ending
December 31, 2022. The potential number of shares that can vest ranges from 0% to 150% of the target levels depending on achievement
of 3-year Cumulative Diluted Earnings Per Share (EPS) and cumulative 3-year Average Return on Average Tangible Common Equity (ROATCE)
goals set by the compensation committee. These goals were selected to represent performance drivers that align with shareholder
value. In order to vest, performance must be at or above the threshold performance set by the compensation committee, and, subject
to certain exceptions, the executive’s employment must continue through the end of the performance period.
Time-vested
restricted stock vests over three years subject to the executive officer’s continued employment by us. This component reinforces
our goal of equity ownership, shareholder alignment and provides additional retention value for our executive officers.
Below
is a summary of the 2020 grants issued to the named executive officers.
|
|
|
|
Performance-Vested RSUs
|
|
|
|
Restricted Stock
|
|
|
Executive
|
|
|
Target
Units (#)
|
|
|
|
Grant
Value(1)
|
|
|
|
Shares
(#)
|
|
|
|
Grant
Value(1)
|
|
|
Craig W. Best
|
|
|
2,376
|
|
|
$
|
107,633
|
|
|
|
1,019
|
|
|
$
|
46,161
|
|
|
Thomas P. Tulaney
|
|
|
1,120
|
|
|
$
|
50,736
|
|
|
|
480
|
|
|
$
|
21,744
|
|
|
Neal D. Koplin
|
|
|
966
|
|
|
$
|
43,760
|
|
|
|
414
|
|
|
$
|
18,754
|
|
|
Timothy H. Kirtley
|
|
|
870
|
|
|
$
|
39,411
|
|
|
|
373
|
|
|
$
|
16,897
|
|
|
John R. Anderson III
|
|
|
830
|
|
|
$
|
37,599
|
|
|
|
356
|
|
|
$
|
16,127
|
|
|
(1)
|
Grant
values based on the $45.30 per share closing price of our common stock on the grant date
of February 27, 2020.
|
Clawback
Agreements
Pursuant
to the terms of the Cash Incentive Plan, all executives are subject to a clawback provision. The clawback provision allows us
to recover any overpayment under the Cash Incentive Plan in the event that we are required to restate our financial statements
because of any material noncompliance with a financial reporting requirement. If within the previous three years a participant
received an award based upon erroneous data, the participant is required to return any amount received in excess of what would
have been paid to the participant under the accounting restatement. In the event that the restatement is due to a participant’s
misconduct or fraudulent activity, then the participant is required to return the entire amount received based upon the erroneous
data. Mr. Best has a substantially similar provision included in his employment agreement. In addition, since January 2017, we
have maintained a compensation recoupment policy, which applies to all executive officers who receive cash or equity incentive
awards. Under this policy, if we restate our financial statements or determine that any performance metric or metrics pursuant
to which incentive compensation was awarded was materially inaccurate, we will require each current or former executive officer
who received incentive compensation within the preceding three years to reimburse us to the extent that the incentive compensation
received exceeded that which would have been paid if it were based upon the financial statements as so restated or upon the accurate
performance metric or metrics.
Benefits
ESOP.
We maintain an employee stock ownership plan, or “ESOP,” as a long-term incentive to focus executives on long-term
value creation. The ESOP covers substantially all employees who meet the eligibility requirements and is intended to incentivize
and reward all employees, including the named executive officers, based upon our long-term success as measured by shareholder
return.
401(k)
Profit Sharing Plan. We maintain a profit sharing plan, the Peoples Security Bank 401(k) Profit Sharing Plan, under the provisions
of Section 401(k) of the Internal Revenue Code in an effort to provide employees with a means and an incentive to save for retirement
and also to provide tax-deferred compensation, not to exceed the amounts allowed under the Internal Revenue Code. All named executive
officers are eligible to participate in the Peoples Security Bank 401(k) Profit Sharing Plan on the same basis as other employees
participating in the plan.
Pension
Plan. The Company also maintains the Employees’ Pension Plan, a legacy defined benefit pension plan assumed in connection
with our merger with Penseco in November 2013, which was amended in June 2008 to cease benefit accruals.
Health
and Welfare Benefits. Named executive officers participate in the Company’s other benefit plans on the same terms as
other employees. These plans include medical, dental, vision, disability, life insurance, health savings account and flex spending
account benefits and are standard in the industry.
Supplemental
Employee Retirement Plans. Peoples maintain supplemental employee retirement plans, or “SERPs,” for certain executive
officers, including Messrs. Tulaney and Koplin the primary intent of which is retention. Under their respective SERPs, Messrs.
Tulaney and Koplin are eligible to receive certain retirement benefits that accrue based on their service to the Company and are
payable at retirement, or earlier under a qualifying termination of employment. See additional discussion below under the heading
“Pension Benefits.”
Deferred
Compensation Plans. We also maintain the “Executive Deferred Compensation Plan” and “Deferred Compensation
Plan No. 2” under which we make certain contributions for Mr. Best. See additional discussion below under the heading “Nonqualified
Deferred Compensation.”
Chief
Executive Officer Supplemental Retirement Benefits. We provide our Chief Executive Officer with certain retirement benefits
under an Excess Benefit Plan which we assumed in connection with our merger with Penseco in November 2013. This plan provides
Mr. Best with additional benefits in excess of those accrued under the 401(k) Profit Sharing Plan and ESOP due to the limit on
compensation contained in Section 401(a)(17) of the Internal Revenue Code. See additional discussion below under the heading “Nonqualified
Deferred Compensation.”
Split
Dollar and Other Life Insurance Agreements. We provide split-dollar and other life insurance benefits to Mr. Best. See additional
discussion below under the headings “Craig W. Best Employment Agreement.”
Perquisites
The
compensation committee regularly reviews our executive perquisites and believes they are appropriate and modest when compared
to peers and are necessary to attract and retain high-caliber talent. During 2020, we provided a vehicle allowance or use of a
company vehicle to Messrs. Best, Tulaney and Koplin, as they are required to entertain business clients or otherwise travel in
connection with their duties. The compensation committee also believes that country clubs can serve as appropriate forums for
building client relationships and for community interaction. We reimburse Messrs. Best, Tulaney, Koplin, Kirtley and Anderson
for the cost of country and dining club memberships.
The
Role of Management in Determining Compensation
For
2020, our compensation committee set performance goals, including company-wide performance goals under the Cash Incentive Plan
and the equity incentive awards. The compensation committee did not set additional individual performance goals for the Chief
Executive Officer, believing that the Chief Executive Officer should be evaluated on the basis of company performance. Individual
performance goals for our other named executive officers were set by the compensation committee upon the recommendation of our
Chief Executive Officer. Our Chief Executive Officer reviewed each of the other named executive officer’s annual performance,
discussed the performance review with the compensation committee, and made recommendations to the compensation committee with
respect to the compensation of the other named executive officers. Our Chief Executive Officer does not participate in discussions
on his own compensation.
The
Role of the Compensation Committee
In
accordance with the compensation committee charter, among other things, the compensation committee is responsible for the review
and approval of our named executive officers’ base salaries and incentive opportunities, the administration of our benefit
plans, and the recommendation to our board of directors of new compensation programs or changes in existing compensation programs.
The committee may refer any matter that it has the authority to approve, together with the committee’s report and recommendation,
to the full board for approval, unless such matter is required to be approved by an independent compensation committee by applicable
law, regulation or listing standard. As a matter of practice, the committee routinely refers key items pertaining to executive
compensation, such as base salary increases, the size and performance targets associated with awards under the Cash Incentive
Plan and equity incentives, and the offering of special retirement agreements, to the board with recommendation of the committee.
Operating
within the framework of duties and responsibilities established by the board, the compensation committee’s role is to assure
our compensation strategy is aligned with the long-term interests of our shareholders; our compensation structure is fair and
reasonable; and compensation reflects both corporate and individual performance.
Compensation
Committee Consultants
The
compensation committee’s charter provides that the compensation committee shall be directly responsible for the appointment,
compensation and oversight of the work of any compensation consultant, legal counsel and other adviser retained by the compensation
committee. The Company must provide for appropriate funding, as determined by the compensation committee, for payment of reasonable
compensation to a compensation consultant, legal counsel or any other adviser retained by the compensation committee. Prior to
engaging any compensation consultant, legal counsel or other adviser (other than in-house legal counsel), the compensation committee
must conduct an independence assessment with respect to such adviser. The compensation committee did not engage a compensation
consultant during 2020 or with respect to 2020 compensation.
Accounting
and Tax Treatments
All
elements of compensation generate charges to earnings under generally accepted accounting principles (GAAP). Generally, no adjustment
is made to compensation based on accounting factors, but the tax effects of various types of compensation are considered. In administering
our executive compensation program, the Company takes into account the tax deductibility of the compensation, including as applicable,
Section 162(m) of the Internal Revenue Code. Although our intent is to maximize the deductibility of compensation, under certain
circumstances that are in the best interest of the Company and our shareholders, the compensation committee may authorize compensation
that is not deductible if it is determined to be appropriate.
Company
Stock Ownership
We
believe that it is important that our named executive officers and directors own shares of our common stock. Since January 2017,
we have maintained a share ownership policy, which is applicable to our executive officers and directors. Under the terms of the
policy, executive officers who receive equity incentive awards are expected to beneficially own shares of our common stock having
a fair market value equal to or greater than twice their respective annual base salaries, and have five years to achieve compliance.
In addition, under the terms of Mr. Best’s employment agreement, his failure to own shares of our common stock having a
fair market value equal to or greater than his annual base salary would be “cause” for termination.
Severance
and Change in Control Benefits
We
recognize that an important consideration in our ability to attract, retain and motivate key personnel is our ability to minimize
the impact on our management team of the possible disruption associated with our exploration of strategic opportunities. Accordingly,
we believe that it is in our best interest and the best interest of our shareholders to provide certain key personnel with reasonable
financial arrangements in the event of termination of employment following a change in control or involuntary termination of employment
for reasons other than “cause” so that they are able to focus fully on the merits of any potential change in control
situation without undue concern for the loss of their jobs. All of our named executive officers with employment agreements have
provisions in their respective agreements that provide for certain benefits in the event of voluntary or involuntary termination
following a change in control transaction. These provisions, along with certain benefits estimates, are described under the heading
“Other Potential Post-Termination Benefits” below and under the headings “Craig W. Best Employment Agreement,”
“Thomas P. Tulaney Employment Agreement,” “Neal D. Koplin Employment Agreement” and “Timothy H.
Kirtley Employment Agreement.” Mr. Anderson does not have an employment agreement but is covered by a severance policy applicable
to our employees generally. In addition, in January 2021, the compensation committee approved a change in control severance agreement
for Mr. Anderson.
Many
of the plans that we maintain and in which our named executive officers participate include provisions which accelerate vesting
or payment of benefits upon a change in control and are described under the heading “Other Potential Post-Termination Benefits”
below.
Compensation
Risk Assessment
Our
executive compensation program and policies are driven by our business environment and designed to enable us to achieve our mission
and adhere to our values. The compensation committee and senior management evaluate the relationship between risk and reward as
it relates to our executive compensation program. Our compensation committee has determined that the structure of our executive
compensation programs does not put our shareholders or the Company at any material risk.
Executive
Compensation
Our
principal executive officer is Craig W. Best, Chief Executive Officer, and our principal financial officer is John R. Anderson
III, Executive Vice President and Chief Financial Officer. Messrs. Best and Anderson, together with Thomas P. Tulaney, Neal D.
Koplin and Timothy H. Kirtley, are referred to in this proxy statement as our “named executive officers.” The following
tables and narratives set forth certain information regarding the compensation of our named executive officers.
2020
Summary Compensation Table
|
Name
and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)(1)
|
|
|
Non-Equity
Incentive Plan Compensation
($)
|
|
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings
($)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
|
Craig
W. Best
|
|
|
2020
|
|
|
|
439,500
|
|
|
|
–
|
|
|
|
207,701
|
|
|
|
153,825
|
|
|
|
20,310
|
|
|
|
157,962
|
(2)
|
|
|
979,298
|
|
|
Chief Executive
Officer
|
|
|
2019
|
|
|
|
439,500
|
|
|
|
–
|
|
|
|
207,701
|
|
|
|
–
|
|
|
|
14,695
|
|
|
|
158,277
|
|
|
|
820,173
|
|
|
|
|
|
2018
|
|
|
|
425,000
|
|
|
|
–
|
|
|
|
200,831
|
|
|
|
119,000
|
|
|
|
–
|
(3)
|
|
|
167,812
|
|
|
|
912,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas P. Tulaney
|
|
|
2020
|
|
|
|
290,000
|
|
|
|
40,000
|
|
|
|
97,848
|
|
|
|
101,500
|
|
|
|
139,928
|
|
|
|
34,168
|
(4)
|
|
|
703,444
|
|
|
President and
Chief
|
|
|
2019
|
|
|
|
290,000
|
|
|
|
–
|
|
|
|
97,848
|
|
|
|
–
|
|
|
|
133,117
|
|
|
|
32,738
|
|
|
|
553,703
|
|
|
Operating Officer
|
|
|
2018
|
|
|
|
275,000
|
|
|
|
14,688
|
|
|
|
102,264
|
|
|
|
66,000
|
|
|
|
126,638
|
|
|
|
41,711
|
|
|
|
626,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neal D. Koplin
|
|
|
2020
|
|
|
|
250,000
|
|
|
|
30,000
|
|
|
|
84,349
|
|
|
|
75,000
|
|
|
|
61,635
|
|
|
|
30,236
|
(5)
|
|
|
531,220
|
|
|
Senior Executive
Vice President
|
|
|
2019
|
|
|
|
250,000
|
|
|
|
–
|
|
|
|
84,349
|
|
|
|
–
|
|
|
|
58,782
|
|
|
|
28,209
|
|
|
|
421,340
|
|
|
and Chief Banking
Officer
|
|
|
2018
|
|
|
|
240,000
|
|
|
|
–
|
|
|
|
80,974
|
|
|
|
45,900
|
|
|
|
56,480
|
|
|
|
42,409
|
|
|
|
465,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy H.
Kirtley
|
|
|
2020
|
|
|
|
225,254
|
|
|
|
30,000
|
|
|
|
76,059
|
|
|
|
56,313
|
|
|
|
–
|
|
|
|
22,385
|
(6)
|
|
|
410,011
|
|
|
Executive Vice
President, Chief Risk Officer and Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Anderson
III
|
|
|
2020
|
|
|
|
215,000
|
|
|
|
18,938
|
|
|
|
72,571
|
|
|
|
51,062
|
|
|
|
21,248
|
|
|
|
23,080
|
(7)
|
|
|
401,899
|
|
|
Executive Vice
President and
|
|
|
2019
|
|
|
|
190,000
|
|
|
|
9,562
|
|
|
|
64,100
|
|
|
|
15,438
|
|
|
|
14,136
|
|
|
|
21,504
|
|
|
|
314,740
|
|
|
Chief Financial
Officer
|
|
|
2018
|
|
|
|
165,000
|
|
|
|
–
|
|
|
|
–
|
|
|
|
23,760
|
|
|
|
–
|
(3)
|
|
|
16,973
|
|
|
|
205,733
|
|
|
(1)
|
The
entries in the stock awards column reflect the grant date fair value of awards of time-vested
restricted stock and performance-vested restricted stock units, as calculated for financial
statement reporting purposes in accordance with Accounting Standards Codification (ASC)
No. 718, Compensation—Stock Compensation. See Notes 1 and 15 of the Notes to Consolidated
Financial Statements for the fiscal year ended December 31, 2020 for a discussion of
the relevant assumptions used to determine the valuation of our stock awards for accounting
purposes. The value of the performance-vested restricted stock units at the grant date
assumes that the maximum level of performance conditions will be achieved.
|
|
(2)
|
For
2020, includes $9,270 contribution to the Excess Benefit Plan; $26,000 matching contribution
to the Executive Deferred Compensation Plan; $80,000 contribution to Deferred Compensation
Plan No. 2; country club memberships $11,370; automobile allowance $12,692; 401(k) safe
harbor contribution of $8,400; 401(k) match $8,400; ESOP $1,000 and life insurance $830.
|
|
(3)
|
Change
in pension value in 2018 was negative $551 for Mr. Best and negative $1,349 for Mr. Anderson.
|
|
(4)
|
For
2020, includes country club membership $13,080; automobile allowance $2,988; 401(k) safe
harbor $8,550; 401(k) match $8,550 and ESOP $1,000.
|
|
(5)
|
For
2020, includes country club membership $10,212; automobile allowance $2,224; 401(k)
safe harbor $8,400; 401(k) match $8,400 and ESOP $1,000.
|
|
(6)
|
For
2020, includes country club membership $6,070; 401(k) safe harbor $7,657; 401(k) match
$7,658 and ESOP $1,000.
|
|
(7)
|
For
2020, includes country club membership $7,680; 401(k) safe harbor $7,200; 401(k) match
$7,200 and ESOP $1,000.
|
Grants
of Plan-Based Awards
The
following table provides information concerning grants of plan-based awards made to our named executive officers during the year
ended December 31, 2020.
|
|
|
|
|
Estimated
Future Payouts Under
Non-Equity Incentive Plan Awards
|
|
|
Estimated
Future Payouts Under
Equity Incentive Plan Awards
|
|
|
All Other Stock Awards: Number
of Shares of
|
|
|
Grant Date Fair Value
of Stock
|
|
|
Name
|
|
Grant Date
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
Stock
(#)
|
|
|
Awards
($)(1)
|
|
|
Craig W. Best
|
|
2/27/2020
|
|
|
–
|
|
|
|
153,825
|
|
|
|
153,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,188
|
|
|
|
2,376
|
|
|
|
3,566
|
|
|
|
|
|
|
|
161,540
|
|
|
|
|
2/27/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,019
|
|
|
|
46,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas P. Tulaney
|
|
2/27/2020
|
|
|
–
|
|
|
|
101,500
|
|
|
|
101,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
560
|
|
|
|
1,120
|
|
|
|
1,680
|
|
|
|
|
|
|
|
76,104
|
|
|
|
|
2/27/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
480
|
|
|
|
21,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neal D. Koplin
|
|
2/27/2020
|
|
|
–
|
|
|
|
75,000
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
482
|
|
|
|
966
|
|
|
|
1,448
|
|
|
|
|
|
|
|
65,594
|
|
|
|
|
2/27/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
414
|
|
|
|
18,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy H. Kirtley
|
|
2/27/2020
|
|
|
–
|
|
|
|
56,314
|
|
|
|
56,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
436
|
|
|
|
870
|
|
|
|
1,306
|
|
|
|
|
|
|
|
59,162
|
|
|
|
|
2/27/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
373
|
|
|
|
16,897
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R Anderson
|
|
2/27/2020
|
|
|
–
|
|
|
|
53,750
|
|
|
|
53,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
416
|
|
|
|
830
|
|
|
|
1,246
|
|
|
|
|
|
|
|
56,444
|
|
|
|
|
2/27/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
356
|
|
|
|
16,127
|
|
|
|
(1)
|
Grant
date values based on the maximum payoff of equity incentive plan awards and the closing
prices of $45.30 per share of our common stock on the grant date of February 27, 2020.
|
The
table above includes the fiscal 2020 threshold, target and maximum payouts designated under our Cash Incentive Plan, the threshold,
target and maximum payouts designated under performance-vested restricted stock units issued under the 2017 Equity Incentive Plan,
and the number of time-vested restricted stock awards issued under the 2017 Equity Incentive Plan.
Narrative
Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
With
respect to the Cash Incentive Plan, the target and maximum payout for Mr. Tulaney was set by the compensation committee at 35
percent of his base salary; for Mr. Koplin, at 30 percent of his base salary; for Mr. Kirtley at 25 percent of his base salary
and for Mr. Anderson at 25 percent of his base salary. The target and maximum payout for Mr. Best was set by the compensation
committee at 35 percent of his base salary. As described above in “Compensation Discussion and Analysis,” based on
2020 performance, all of the Company performance goals were achieved, with 100 percent weighted achievement.
In
May 2020, the compensation committee approved special discretionary cash bonuses payable to Messrs. Kirtley and Koplin. Each officer
received $30,000. These discretionary bonuses were for their respective efforts in providing direct supervision and oversight
in the Company’s participation as a lender in the Paycheck Protection Program (PPP). The Company generated a total of 1,452
PPP loans aggregating over $217 million in assistance and recognized $7.5 million in origination fees. The compensation committee
also approved year-end discretionary cash bonuses payable to Mr. Anderson, in the amount of $18,938 for his efforts in effectively
managing the Bank’s investment portfolio producing $918 thousand in investment gains for 2020, and to Mr. Tulaney, in the
amount of $40,000 in recognition of his promotion to President of the Company and the Bank, as well as his leadership during the
COVID-19 pandemic.
With
respect to the equity awards, the compensation committee approved a mix of long-term equity incentives with the majority consisting
of performance-vested restricted stock units (RSUs) (70% of the targeted equity award) and the remainder consisting of time-vested
restricted stock (30% of the targeted equity award). As described above in “Compensation Discussion and Analysis,”
the performance-vested RSUs vest over a three-year cumulative performance period beginning January 1, 2020 and ending December
31, 2022. The potential number of shares that can vest ranges from 0% to 150% of the target levels depending on achievement of
3-year Cumulative Earnings Per Share (EPS) and cumulative Average Return on Equity (ROE) goals set by the compensation committee.
We
are a party to employment agreements with certain of our named executive officers, which are described in the following sections.
These employment agreements control many aspects of the compensation of our named executive officers.
Craig
W. Best Employment Agreement
We
are party to an amended and restated employment agreement with our Chief Executive Officer, Craig W. Best, dated January 3, 2011,
as amended as of December 31, 2015 (the “Best Employment Agreement”).
The
Best Employment Agreement provided for an annual base salary, which is subject to annual review by the compensation committee.
In 2020, no change was made to Mr. Best’s annual base salary, which remained at $439,500. In the event of an across-the-board
salary reduction affecting all of the Company’s management employees, we may decrease Mr. Best’s base salary.
The
Best Employment Agreement also provides that Mr. Best will be eligible to:
|
|
•
|
receive
an annual cash incentive payment equal to a percentage of his base salary, which percentage
will be determined by the compensation committee from time to time;
|
|
|
•
|
participate
in certain deferred compensation plans maintained by the Company; and
|
|
|
•
|
participate
in our long-term incentive equity-based compensation plans.
|
Under
the Best Employment Agreement, the Company agreed to purchase and maintain a bank owned life insurance (BOLI) policy on the life
of Mr. Best. Any death benefit payable under the policy is payable to the Company, subject to a split-dollar arrangement that
provides if Mr. Best dies in active service to the Company, the Company will pay his estate a portion of the death benefit. In
addition, the Best Employment Agreement provides that Mr. Best will be eligible for Company-paid term-life insurance coverage
with a death benefit of not less than two times Mr. Best’s base salary, as in effect from time to time, a portion of which
may be satisfied by the Company’s group term life insurance. The Company also agrees to provide Mr. Best with the use of
an automobile, along with reasonable insurance and maintenance costs, as well as reimbursement for country and dining club memberships
and reasonable business expenses.
The
Best Employment Agreement provides that any “excess annual incentive cash payments” and “excess long-term incentive
awards” (each as defined in the Best Employment Agreement) paid to Mr. Best are subject to clawback provisions in the incentive
plans pursuant to which the board of directors may request reimbursement for such payments from Mr. Best in the event that the
Bank’s financial statements are the subject of a restatement that is required by applicable law.
Mr.
Best’s employment is on an “at will” basis, and each of the Company, the Bank and Mr. Best may terminate the
Employment Agreement at any time and for any reason (subject to Mr. Best’s right to any severance payments). Under the Best
Employment Agreement, and in the event that Mr. Best’s employment is terminated involuntarily without “Cause”
(as defined in the Best Employment Agreement) or voluntarily for “Good Reason” (as defined in the Best Employment
Agreement), we are obligated to, among other things, make monthly payments to Mr. Best for two (2) years following the termination
equal to the sum of 1/12th of Mr. Best’s base salary at the time of termination and 1/12th of the
average annual bonus paid in the three calendar years ending before the date of termination, make monthly payments equal to the
amount of the COBRA continuation premium for a period of two (2) years following termination and pay up to $30,000 to an outplacement
firm of Mr. Best’s choice for outplacement services. In the event that Mr. Best is terminated without “Cause”
or resigns for “Good Reason” within three (3) years following a “Change of Control” (as defined in the
Best Employment Agreement), he will be entitled to the salary and bonus payments described above for a period of three (3) years
following termination (in lieu of two (2) years) and monthly payments equal to the amount of the COBRA “applicable premium”
for a period of three (3) years following termination (in lieu of two (2) years). Payment of severance under the Best Employment
Agreement is in each case contingent upon Mr. Best’s execution and delivery of a release agreement to the Company and the
Bank.
The
Best Employment Agreement contains customary confidentiality and restrictive covenant provisions. For a period of 12 months following
termination of employment for any reason, Mr. Best has agreed that he will not: (1) solicit customers, potential customers or
suppliers for or on behalf of a competing business (as defined under the Best Employment Agreement); (2) recruit employees
of the Bank or Company for a competing business; or (3) serve as a director, officer, employee or investor in a competing business.
Thomas
P. Tulaney Employment Agreement
We
are party to an employment agreement with our President and Chief Operating Officer, Thomas P. Tulaney, dated May 30, 2012 (the
“Tulaney Employment Agreement”). The initial term of the Tulaney Employment Agreement ended on May 29, 2016. The term
renews automatically for subsequent one-year terms unless either party terminates the agreement earlier in accordance with the
provisions of the Tulaney Employment Agreement.
The
Tulaney Employment Agreement provides for an annual base salary, which is subject to annual review by the compensation committee.
In 2020, no change was made to Mr. Tulaney’s annual base salary, which remained at $290,000. In the event of an across-the-board
salary reduction affecting all of the Company’s management employees, we may decrease Mr. Tulaney’s base salary. The
Tulaney Employment Agreement also provides that Mr. Tulaney will be eligible to:
|
|
•
|
receive
an annual cash incentive payment targeted at 30 percent of his base salary, , although
the compensation committee approved a target of 35 percent for 2020, with the actual
payment based on achievement of corporate and individual performance goals, as determined
by the compensation committee from time to time;
|
|
|
•
|
participate
in his SERP arrangement; and
|
|
|
•
|
participate
in our long-term incentive equity-based compensation plans.
|
Under
the Tulaney Employment Agreement, in the event that Mr. Tulaney’s employment is terminated without “Cause” (as
defined in the Tulaney Employment Agreement) or he voluntarily resigns for “Good Reason” (as defined in the Tulaney
Employment Agreement), we are obligated to, among other things, make monthly payments to Mr. Tulaney for one (1) year following
the termination equal to sum of 1/12th of Mr. Tulaney’s base salary at the time of termination and 1/12th
of the average incentive payment that Mr. Tulaney had received in the immediately preceding three (3) years, and make monthly
COBRA continuation premium payments for eighteen (18) months. In the event that Mr. Tulaney is terminated without “Cause”
or he resigns with “Good Reason” within two (2) years following a Change of Control (as defined in the Tulaney Employment
Agreement), he will be entitled to the salary and incentive payments described above for a period of two (2) years following termination
(in lieu of one (1) year) and COBRA continuation premium payments for two (2) years (in lieu of eighteen (18) months). Payment
of severance under the Tulaney Employment Agreement is in each case contingent upon Mr. Tulaney’s execution and delivery
of a release agreement to the Company and the Bank.
The
Tulaney Employment Agreement contains customary confidentiality and restrictive covenant provisions. For a period of 12 months
following termination of employment for any reason other than in connection with a Change of Control (in which case the applicable
period is 24 months), Mr. Tulaney has agreed that he will not: (1) solicit customers, potential customers or suppliers for or
on behalf of a competing business (as defined under the agreement); (2) recruit employees of the Bank or Company for a competing
business; or (3) serve as a director, officer, employee or investor, or otherwise engage, in a completing business.
Neal
D. Koplin Employment Agreement
We
are party to an employment agreement dated August 27, 2014, with Neal D. Koplin, our Senior Executive Vice President and Chief
Banking Officer (the “Koplin Employment Agreement”). The initial term of the Koplin Employment Agreement will ended
on August 11, 2017. The term renews automatically for subsequent one-year terms unless either party terminates the agreement earlier
in accordance with the provisions of the Koplin Employment Agreement.
In
2020, no change was made to Mr. Koplin’s annual base salary, which remained at $250,000. The Koplin Employment Agreement
also provides that Mr. Koplin will be eligible to:
|
|
•
|
receive
an annual cash incentive payment targeted at 25 percent of his base salary, although
the compensation committee approved a target of 30 percent for 2020, with the actual
payment based on achievement of corporate and individual performance goals, as determined
by the compensation committee from time to time;
|
|
|
•
|
participate
in his SERP arrangement; and
|
|
|
•
|
participate
in our long-term incentive equity-based compensation plans.
|
Under
the Koplin Employment Agreement, in the event that Mr. Koplin’s employment is terminated without “Cause” (as
defined in the Koplin Employment Agreement), we are obligated to, among other things, make monthly payments to Mr. Koplin for
one (1) year following the termination equal to 1/12th of Mr. Koplin’s base salary at the time of termination.
In the event that Mr. Koplin is terminated within 24 months following a Change of Control (as defined in the Koplin Employment
Agreement) or resigns for Good Reason (as defined in the Koplin Employment Agreement), he will be entitled to the salary payments
described above for a period of three (3) years following termination (in lieu of one (1) year). Payment of severance under the
Koplin Employment Agreement is in each case contingent upon Mr. Koplin’s execution and delivery of a release agreement to
the Company and the Bank.
The
Koplin Employment Agreement contains customary confidentiality and non-solicitation provisions. For a period of 12 months following
termination of employment for any reason other than in connection with a Change of Control (in which case the applicable period
is 36 months), Mr. Koplin has agreed that he will not solicit customers, potential customers or suppliers for or on behalf of
a competing business (as defined under the agreement), and will not recruit employees of the Bank or Company for a competing business.
The
Company also agrees to provide Mr. Koplin with a monthly automobile allowance, currently satisfied by the Company’s providing
Mr. Koplin use of a Company-owned automobile, as well as reimbursement for a country club membership and reasonable business expenses.
Timothy
H. Kirtley Employment Agreement
We
are party to an employment agreement dated September 30, 2016 with Timothy H. Kirtley, our Executive Vice President, Chief Risk
Officer and Corporate Secretary, which was amended as of December 5, 2017 and May 8, 2020 (as amended, the “Kirtley Employment
Agreement”). The Kirtley Employment Agreement is automatically renewed on annual basis date for an annual renewal term unless
either party provides notice of non-renewal in accordance with the provisions of the Kirtley Employment Agreement.
The
Kirtley Employment Agreement provides for an annual base salary, which is subject to annual review by the compensation committee.
In 2020 there was no change to Mr. Kirtley’s annual base salary, which remained at $225,254. The Kirtley Employment Agreement
also provides that Mr. Kirtley will be eligible to:
|
|
•
|
receive
an annual cash incentive payment targeted at 20 percent of his base salary, although
the compensation committee approved a target of 25 percent for 2020, with the actual
payment based on achievement of corporate and individual performance goals, as determined
by the compensation committee from time to time
|
|
|
•
|
Under
the Kirtley Employment Agreement, in the event that Mr. Kirtley’s employment is
terminated without “Cause” (as defined in the Kirtley Employment Agreement)
or he voluntarily resigns for “Good Reason” (as defined in the Kirtley Employment
Agreement), we are obligated to, among other things, make monthly payments to Mr. Kirtley
for one (1) year following the termination equal to sum of 1/12th of Mr. Kirtley’s
base salary at the time of termination and 1/12th of the average incentive
payment that Mr. Kirtley had received in the immediately preceding three (3) years, and
make monthly COBRA continuation premium payments for eighteen (18) months. In the event
that Mr. Kirtley is terminated without “Cause” or he resigns with “Good
Reason” within two (2) years following a Change of Control (as defined in the Kirtley
Employment Agreement), he will be entitled to the salary and incentive payments described
above for a period of two (2) years following termination (in lieu of one (1) year) and
COBRA continuation premium payments for eighteen (18) months. Payment of severance under
the Kirtley Employment Agreement is in each case contingent upon Mr. Kirtley’s
execution and delivery of a release agreement to the Company and the Bank.
|
The
Kirtley Employment Agreement contains customary confidentiality and restrictive covenant provisions. For a period of 12 months
following termination of employment for any reason other than in connection with a Change of Control (in which case the applicable
period is 24 months), Mr. Kirtley has agreed that he will not: (1) solicit customers, potential customers or suppliers for or
on behalf of a competing business (as defined under the agreement); (2) recruit employees of the Bank or Company for a competing
business; or (3) serve as a director, officer, employee or investor, or otherwise engage, in a completing business.
Outstanding
Equity Awards at Fiscal Year End
The
following table sets forth information concerning equity awards outstanding as of December 31, 2020.
|
Name
|
|
Number of Shares or Units of Stock That Have Not Vested
(#)
|
|
|
Market Value of Shares or Units of Stock That Have Not Vested
($)(7)
|
|
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#)(6)
|
|
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
($)(7)
|
|
|
Craig W. Best(1)
|
|
|
2,032
|
|
|
|
74,696
|
|
|
|
4,752
|
|
|
|
174,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas P. Tulaney(2)
|
|
|
970
|
|
|
|
35,657
|
|
|
|
2,240
|
|
|
|
82,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neal D. Koplin(3)
|
|
|
825
|
|
|
|
30,327
|
|
|
|
1,932
|
|
|
|
71,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy H. Kirtley
|
|
|
610
|
|
|
|
22,424
|
|
|
|
1,702
|
|
|
|
62,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Anderson III(5)
|
|
|
566
|
|
|
|
20,806
|
|
|
|
1,564
|
|
|
|
57,493
|
|
|
(1)
|
Mr.
Best’s outstanding equity awards consist of 334 shares of restricted stock, subject
to vesting in one annual installment on April 11, 2021; 679 shares of restricted stock,
subject to vesting in two annual installments on March 26, 2021 and 2022; 1,019 shares
of restricted stock, subject to vesting in three annual installments on March 11, 2021,
2022, and 2023; 2,376 unearned performance-vested restricted stock units that would be
earned for achieving target performance goals over a three-year period ending December
31, 2021; 2,376 unearned performance-vested restricted stock units that would be earned
for achieving target performance goals over a three-year period ending December 31, 2022.
|
|
(2)
|
Mr.
Tulaney’s outstanding equity awards consist of 170 shares of restricted stock,
subject to vesting in one annual installment on April 11, 2021; 320 shares of restricted
stock, subject to vesting in two annual installments on March 26, 2021 and 2022; 480
shares of restricted stock, subject to vesting in three annual installments on March
11, 2021, 2022, and 2023; 1,120 unearned performance-vested restricted stock units that
would be earned for achieving target performance goals over a three-year period ending
December 31, 2021; 1,120 unearned performance-vested restricted stock units that would
be earned for achieving target performance goals over a three-year period ending December
31, 2022.
|
|
(3)
|
Mr.
Koplin’s outstanding equity awards consist of 135 shares of restricted stock, subject
to vesting in one annual installment on April 11, 2021; 276 shares of restricted stock,
subject to vesting in two annual installments on March 26, 2021 and 2022; 414 shares
of restricted stock, subject to vesting in three annual installments on March 11, 2021,
2022, and 2023; 966 unearned performance-vested restricted stock units that would be
earned for achieving target performance goals over a three-year period ending December
31, 2021; and 966 unearned performance-vested restricted stock units that would be earned
for achieving target performance goals over a three-year period ending December 31, 2022.
|
|
(4)
|
Mr.
Kirtley’s outstanding equity awards consist of 237 shares of restricted stock,
subject to vesting in two annual installments on March 26, 2021 and 2022; 373 shares
of restricted stock, subject to vesting in three annual installments on March 11, 2021,
2022, and 2023; 832 unearned performance-vested restricted stock units that would be
earned for achieving target performance goals over a three-year period ending December
31, 2021; 870 unearned performance-vested restricted stock units that would be earned
for achieving target performance goals over a three-year period ending December 31, 2022.
|
|
(5)
|
Mr.
Anderson’s outstanding equity awards consist of 210 shares of restricted stock,
subject to vesting in two annual installments on March 26, 2021 and 2022; 356 shares
of restricted stock, subject to vesting in three annual installments on March 11, 2021,
2022, and 2023; 734 unearned performance-vested restricted stock units that would be
earned for achieving target performance goals over a three-year period ending December
31, 2021; 830 unearned performance-vested restricted stock units that would be earned
for achieving target performance goals over a three-year period ending December 31, 2022.
|
|
(6)
|
These
amounts reflect a portion of the unvested RSUs that may become vested based on the actual
performance over the applicable performance periods. For purposes of calculating the
amounts set forth in the table and based on performance through December 31, 2020, it
is assumed that the RSUs will be earned at target; however, the number of shares actually
earned will depend upon actual performance over the applicable performance periods.
|
|
(7)
|
Market
value is based on a closing price of $36.76 per share of our common stock on December
31, 2020.
|
Stock
Vested
The
following table sets forth information concerning restricted stock that vested during the fiscal year ended December 31, 2020.
|
Name
|
|
Number of Shares Acquired on Vesting (#)
|
|
|
Value Realized
on Vesting ($)
|
|
|
Craig W. Best
|
|
|
1,044
|
|
|
|
42,090
|
(1)
|
|
Thomas P. Tulaney
|
|
|
484
|
|
|
|
19,435
|
(2)
|
|
Neal D. Koplin
|
|
|
421
|
|
|
|
16,976
|
(3)
|
|
Timothy H. Kirtley
|
|
|
119
|
|
|
|
4,939
|
(4)
|
|
John R. Anderson III
|
|
|
105
|
|
|
|
4,358
|
(5)
|
|
(1)
|
Mr.
Best’s restricted stock awards consist of 1,044 shares; 370 shares of restricted
stock based on the closing price of $42.15 per share of our common stock on the vesting
date, March 13, 2020; 334 shares of restricted stock based on the closing price of $37.08
per share of our common stock on the vesting date, April 11, 2020 and 340 shares of restricted
stock based on the closing price of $41.50 per share of our common stock on the vesting
date, March 26, 2020.
|
|
(2)
|
Mr.
Tulaney’s restricted stock awards consist of 484 shares; 154 shares of restricted
stock based on the closing price of $42.15 per share of our common stock on the vesting
date, March 13, 2020; 170 shares of restricted stock based on the closing price of $37.08
per share of our common stock on the vesting date, April 11, 2020 and 160 shares of restricted
stock based on the closing price of $41.50 per share of our common stock on the vesting
date, March 26, 2020.
|
|
(3)
|
Mr.
Koplin’s restricted stock awards consist of 421 shares; 149 shares of restricted
stock based on the closing price of $42.15 per share of our common stock on the vesting
date, March 13, 2020; 134 shares of restricted stock based on the closing price of $37.08
per share of our common stock on the vesting date, April 11, 2020 and 138 shares of restricted
stock based on the closing price of $41.50 per share of our common stock on the vesting
date, March 26, 2020.
|
|
(4)
|
Mr.
Kirtley’s restricted stock awards consist of 119 shares of restricted stock based
on the closing price of $41.50 per share of our common stock on the vesting date, March
26, 2020.
|
|
(5)
|
Mr.
Anderson’s restricted stock awards consist of 105 shares of restricted stock based
on the closing price of $41.50 per share of our common stock on the vesting date, March
26, 2020.
|
The
following table sets forth information concerning performance-vested restricted stock units that vested during the fiscal year
ended December 31, 2020.
|
Name
|
|
Number of Shares Acquired on Vesting (#)
|
|
|
Value Realized
on Vesting ($)(1)
|
|
|
Craig W. Best
|
|
|
2,780
|
|
|
|
102,193
|
|
|
Thomas P. Tulaney
|
|
|
1,284
|
|
|
|
47,200
|
|
|
Neal D. Koplin
|
|
|
1,121
|
|
|
|
41,208
|
|
|
(1)
|
Based
on the closing price of $36.76 per share of our common stock on the vesting date, December
31, 2020.
|
Pension
Benefits
The
following table sets forth information concerning our plans that provide for payments or other benefits at, following, or in connection
with, retirement for each of the named executive officers.
|
Name
|
|
Plan Name
|
|
Number of
Years of
Credited Service
(#)(1)
|
|
|
Present Value
of Accumulated
Benefit
($)(2)
|
|
|
Payment
During Last
Fiscal
Year ($)(3)
|
|
|
Craig W. Best
|
|
Penseco Employees’ Pension Plan
|
|
|
3
|
|
|
|
122,965
|
|
|
|
–
|
|
|
John R. Anderson III
|
|
Penseco Employees’ Pension Plan
|
|
|
18
|
|
|
|
99,979
|
|
|
|
–
|
|
|
Thomas P. Tulaney
|
|
Supplemental Executive Retirement Plan
|
|
|
9
|
|
|
|
1,117,806
|
|
|
|
–
|
|
|
Neal D. Koplin
|
|
Supplemental Executive Retirement Plan
|
|
|
4
|
|
|
|
226,282
|
|
|
|
–
|
|
|
|
(1)
|
Represents
the number of benefit years of service credited to the executive officer under the plan,
computed as of the same pension plan measurement date used for financial statement reporting
purposes with respect to the registrant’s audited financial statements for the
last completed fiscal year. The Penseco Employees’ Pension Plan was frozen as of
June 2008, and no additional years of services are being credited under such plan.
|
|
|
(2)
|
Reflects
the actuarial present value of the named executive officer’s accumulated benefit
under the plan(s), computed as of the same measurement date used for financial statement
reporting purposes with respect to the registrant’s audited financial statements
for the last completed fiscal year.
|
|
|
(3)
|
Represents
the dollar amount of any payments and benefits paid to the named executive officer during
the 2020 fiscal year.
|
The
information in the foregoing table for Messrs. Best and Anderson includes information related to the Penseco Employees’
Pension Plan, a qualified defined benefit retirement plan. As of June 2008, no further benefits are being accrued in this plan.
The plan provided for fixed benefits payable for life upon retirement at the age of 65, based on length of service and compensation
levels as defined in the plan. The information in the table has been determined using interest rate and mortality rate assumptions
consistent with those used in the preparation of the Company’s financial statements. Messrs. Best and Anderson participate
in the Employees’ Pension Plan on the same basis as all other former Penseco employees who were participants as of June
2008, and receive only those benefits that are available to all such other employees.
Under
his SERP arrangement, Mr. Tulaney is eligible to earn a benefit of $114,600 per year commencing upon his retirement at age 65
and continuing for twenty years. Mr. Tulaney may receive lesser or equal benefits upon a qualifying termination of employment
that occurs prior to Mr. Tulaney reaching age 65.
Under
his SERP arrangement, Mr. Koplin is eligible to earn a benefit of $62,000 per year commencing upon his retirement at age 67 and
continuing for fifteen years. Mr. Koplin may receive lesser or equal benefits upon a qualifying termination of employment that
occurs prior to Mr. Koplin reaching age 67.
Nonqualified
Deferred Compensation
The
following table sets forth nonqualified deferred compensation contributions during the year ended December 31, 2020.
|
Name
|
|
Executive
Contributions
in 2020($)
|
|
|
Company
Contributions
in 2020($)
|
|
|
Aggregate
Earnings in
2020($)
|
|
|
Aggregate
Withdrawals/
Distributions ($)
|
|
|
Aggregate
Balance at
December
31,
2020($)
|
|
|
Craig W. Best
|
|
|
–
|
|
|
|
9,270
|
(1)
|
|
|
–
|
|
|
|
–
|
|
|
|
141,894
|
|
|
Craig W. Best
|
|
|
52,000
|
|
|
|
26,000
|
(2)
|
|
|
49,246
|
(3)
|
|
|
–
|
|
|
|
480,277
|
|
|
Craig W. Best
|
|
|
–
|
|
|
|
80,000
|
(4)
|
|
|
26,993
|
(5)
|
|
|
–
|
|
|
|
954,331
|
|
|
(1)
|
Represents
Company accrued contributions for the 2020 plan year under the Excess Benefit Plan, which
contributions are included in “All Other Compensation” in the Summary
Compensation Table set forth above.
|
|
(2)
|
Represents
Company matching contributions under the Executive Deferred Compensation Plan, which
contributions are included in “All Other Compensation” in the Summary
Compensation Table set forth above.
|
|
(3)
|
Represents
earnings on balances in the Executive Deferred Compensation Plan.
|
|
(4)
|
Represents
Company contributions under the Deferred Compensation Plan No. 2, which contributions
are included in “All Other Compensation” in the Summary Compensation Table
set forth above.
|
|
(5)
|
Represents
earnings on balances in the Deferred Compensation Plan No. 2.
|
Excess
Benefit Plan. The company contribution set forth in the table above represents our contribution pursuant to the Excess Benefit
Plan maintained for Mr. Best. The plan provides Mr. Best with benefits in an amount which is equivalent to the excess, if any,
of the matching and ESOP contributions he would have been entitled to receive under the 401(k) Plan and ESOP if those plans were
administered without regard to the limitations required by Section 401(a)(17) of the Internal Revenue Code and any regulations
thereunder, over the amount he is entitled to receive under those plans for the applicable plan year. The Excess Benefit Plan
is intended to be an unfunded excess benefit plan.
The
benefit described above is to be computed as of the date of Mr. Best’s separation from service. The accrued benefit will
become payable if Mr. Best separates from service for any reason. If a change in control (as defined in the Excess Benefit Plan)
occurs, the accrued benefit at the date of the change in control shall be valued and payable according to the provisions set forth
below as if the change in control constituted a separation from service.
Mr.
Best, or his beneficiaries, will be entitled to receive, by virtue of his separation from service, a distribution in an aggregate
amount equal to his accrued benefit. The actuarial equivalent of his accrued benefit will be distributed in a single lump sum
payment within five days following the date that is six months after the date Mr. Best separates from service.
If
Mr. Best dies before terminating his employment with the Bank and before the commencement of payments under the Excess Benefit
Plan, the actuarial equivalent of the entire value of his accrued benefit will be paid, in a single lump sum, within sixty days
following the date of his death, to his designated beneficiaries.
If
Mr. Best’s employment had terminated on December 31, 2020 his accrued benefit under the Excess Benefit Plan would have been
$141,894.
Executive
Deferred Compensation Plan. The Executive Deferred Compensation Plan is an account-based deferred compensation arrangement
that provides Mr. Best an opportunity to defer base salary and annual bonus compensation and requires the Company to make matching
contributions to Mr. Best’s account in an amount equal to 50 percent of Mr. Best’s deferrals, up to a maximum of six
percent of Mr. Best’s salary and annual bonus for a given year. The Company may also contribute a discretionary contribution
to Mr. Best’s account under the plan. National interest or earnings and losses, based on the investment returns under our
401(k) profit sharing plan, will also be credited. Distributions from the Executive Deferred Compensation Plan will be made upon
Mr. Best’s retirement or other separation from service, or upon his death or a change in control if earlier.
Deferred
Compensation Plan No. 2. The Deferred Compensation Plan No. 2 is an account-based deferred compensation arrangement contemplated
by the amendment and restatement of Mr. Best’s employment agreement on January 3, 2011. Pursuant to the agreement, the Deferred
Compensation Plan No. 2 provides Mr. Best an opportunity to defer base salary and bonus compensation and required the Company
to make contributions to Mr. Best’s account in the amount of $61,375 on or around the time his employment agreement was
amended and restated, followed by credits of $60,000 each August 1 beginning in 2011 and ending in 2014. The plan was amended
August 31, 2014 and, as amended, requires an annual contribution of $80,000 per year from 2015 through 2019 subject to Mr. Best’s
continued employment. On January 30, 2020, a Second Amendment to the Amended and Restated Deferred Compensation Plan No. 2 was
approved. The second amendment provides for a contribution of $80,000 each August 1 from 2020 through 2024, each conditioned on
Mr. Best’s continued employment through the applicable date. Notional interest will be credited to such deferred amounts
and Mr. Best’s account will be distributed upon his retirement or other separation from service, or upon his death or a
change in control if earlier. The second amendment provides that with respect to the benefit attributable to contributions accrued
on August 1, 2020 and thereafter, subject to the other terms and conditions of the plan, such benefit will be paid in a lump sum
within forty-five (45) days following Mr. Best’s separations from service. With respect to the benefit attributable to contributions
accrued through August 1, 2019, such benefit will be paid in one hundred twenty (120) consecutive monthly installments.
Other
Potential Post-Termination Benefits
Payments
Made Upon Termination of Employment. The following chart summarizes the total benefits payable to the named executive officers
upon a termination of employment, assuming that the termination occurred on December 31, 2020 and based on a closing price of
$36.76 per share of our common stock on December 31, 2020:
|
Name
|
|
Termination
Without “Cause”
|
|
|
Termination for
“Good
Reason”
|
|
|
Termination After a
Change in Control
|
|
|
Craig W. Best
|
|
|
2,708,605
|
|
|
|
2,708,605
|
|
|
|
3,343,834
|
|
|
Thomas P. Tulaney
|
|
|
1,986,978
|
|
|
|
364,063
|
|
|
|
2,828,016
|
|
|
Neal D. Koplin
|
|
|
538,420
|
|
|
|
–
|
|
|
|
1,510,076
|
|
|
Timothy H. Kirtley
|
|
|
302,344
|
|
|
|
302,344
|
|
|
|
607,382
|
|
|
John R. Anderson III
|
|
|
107,500
|
|
|
|
–
|
|
|
|
141,760
|
|
Payments
Made Upon Termination for Cause. Under the employment agreements with Messrs. Best, Tulaney, Koplin and Kirtley, we may
terminate their employment for cause (as defined in the agreement) at any time. Mr. Anderson is an at-will employee without an
employment agreement. If any of the name executive officers is terminated for cause, he will receive only accrued compensation
and vested benefits through his termination date.
Payments
Made Upon Termination Without Cause or For Good Reason. Craig W. Best – Upon termination by the Company without
“cause” (as defined in his employment agreement) or voluntary termination by Mr. Best with good reason (constructive
termination), he will receive his accrued compensation and other benefits through his termination date, along with a severance
payment equal to 24 months of payments based upon base salary and average annual incentive and bonus payments and $30,000 in outplacement
assistance to be paid by us to a firm selected by Mr. Best. In addition, the Company will pay the applicable premium otherwise
payable for COBRA continuation coverage for the executive, his spouse and any dependents for a period of 24 months following termination.
If the Company terminated Mr. Best’s employment without cause or he resigned with good reason on December 31, 2020, the
cash severance payment due under his employment agreement (based solely on Mr. Best’s then current cash compensation and
average annual incentive and bonus payments, without regard to future adjustments, incentives or bonuses) would have been $1,060,883.
In addition, Mr. Best would have received the outplacement assistance noted above, payment of health insurance premiums valued
at $41,220, and payment of accrued benefits of $141,894 under the Excess Benefit Plan, $480,277 under the Executive Deferred Compensation
Plan and $954,331 under Deferred Compensation Plan No. 2. The Best Employment Agreement provides that payment of severance is
contingent upon Mr. Best’s execution and delivery of a release agreement to the Company and the Bank.
Thomas
P. Tulaney – Pursuant to the terms of his employment agreement, upon termination by the Company without “cause”
(as defined in his employment agreement) or voluntary termination by Mr. Tulaney with good reason (constructive termination),
he will receive his accrued compensation and other benefits through his termination date, along with a severance payment equal
to 12 months of payments based upon base salary and average annual incentive and bonus payments. In addition, the Company will
pay the applicable premium otherwise payable for COBRA continuation coverage for the executive, his spouse and dependents for
a period of 18 months following termination. If the Company terminated Mr. Tulaney’s employment without cause or he resigned
with good reason on December 31, 2020, the cash severance payment due under his employment agreement (based solely on Mr. Tulaney’s
then current base salary and average annual incentive and bonus payments, without regard to future adjustments, incentives or
bonuses) would have been $364,063. In addition, Mr. Tulaney would have received payment of health insurance premiums valued at
$30,915 and, upon termination by the Company without “cause,” $79,600 per year, payable in monthly installments for
twenty years, under his SERP. The Tulaney Employment Agreement provides that payment of severance is contingent upon Mr. Tulaney’s
execution and delivery of a release agreement to the Company and the Bank.
Neal
D. Koplin – Pursuant to the terms of his employment agreement, upon termination by the Company without “cause”
(as defined in his employment agreement), we are obligated to, among other things, make monthly payments to Mr. Koplin for one
(1) year following the termination equal to 1/12th of Mr. Koplin’s base salary at the time of termination. If the company
terminated Mr. Koplin’s employment without cause on December 31, 2020, the cash severance payment due under his employment
agreement (based solely on Mr. Koplin’s then current base salary, without regard to future base salary adjustments) would
have been $250,000. Payment of severance under the Koplin Employment Agreement is contingent upon Mr. Koplin’s execution
and delivery of a release agreement to the Company and the Bank. In addition, upon termination by the Company without “cause,”
Mr. Koplin would have received $19,228 per year, payable in monthly installments for fifteen years, under his SERP.
Timothy
H. Kirtley – Pursuant to the terms of his employment agreement, upon termination by the Company without “cause”
(as defined in his employment agreement) or voluntary termination by Mr. Kirtley with good reason (constructive termination),
he will receive his accrued compensation and other benefits through his termination date, along with a severance payment equal
to 12 months of payments based upon base salary and average annual incentive and bonus payments. In addition, the Company will
pay the applicable premium otherwise payable for COBRA continuation coverage for the executive, his spouse and dependents for
a period of 18 months following termination. If the Company terminated Mr. Kirtley’s employment without cause or he resigned
with good reason on December 31, 2020, the cash severance payment due under his employment agreement (based solely on Mr. Kirtley’s
then current base salary and average annual incentive and bonus payments, without regard to future adjustments, incentives or
bonuses) would have been $254,025. In addition, Mr. Kirtley would have received payment of health insurance premiums valued at
$34,986. Payment of severance under the Kirtley Employment Agreement is contingent upon Mr. Kirtley’s execution and delivery
of a release agreement to the Company and the Bank.
John
R. Anderson III – Upon termination by the Company without cause, Mr. Anderson will receive his accrued compensation
and other benefits through his termination date, along with a severance benefits available under a policy applicable to employees
generally, namely two weeks of severance pay for each year of employment, subject to a maximum of twenty-six weeks.
Payments
Made Upon Disability or Death. The employment agreements with Messrs. Best, Tulaney, Koplin and Kirtley provide that,
upon termination due to the executive’s death or disability, he will receive only accrued compensation and vested benefits
through his termination date. Likewise, upon a termination due to Mr. Anderson’s death or disability, he will receive only
accrued compensation and vested benefits through his termination date.
If
Mr. Best’s employment terminated December 31, 2020 due to his death or disability, he would be entitled to receive payment
of accrued benefits of $141,894 under the Excess Benefit Plan, $480,277 under the Executive Deferred Compensation Plan and $954,331
under Deferred Compensation Plan No. 2. In addition, he would have received accelerated vesting of $26,835 or $74,696 in restricted
stock, if terminated due to death or disability, respectively, and accelerated vesting of $87,342 in RSUs if terminated due to
death. If terminated due to death at December 31, 2020, Mr. Best’s estate would have been entitled to $593,000 in life insurance
benefits, in addition to any benefit under the group life insurance plan maintained for employees generally.
If
Mr. Tulaney’s employment terminated December 31, 2020 due to his death or disability, under his SERP he would be entitled
to receive, respectively, $114,600 per year or $79,600 per year, in either case payable in monthly installments for twenty years.
In addition, he would have received accelerated vesting of $12,976 or $35,657 in restricted stock, if terminated due to death
or disability, respectively, and accelerated vesting of $41,134 in RSUs if terminated due to death.
If
Mr. Koplin’s employment terminated December 31, 2020 due to his death or disability, under his SERP he would be entitled
to receive, respectively, $62,000 per year or $19,228 per year, in either case payable in monthly installments for fifteen years.
In addition, he would have received accelerated vesting of $10,881 or $30,327 in restricted stock, if terminated due to death
or disability, respectively, and accelerated vesting of $35,510 in RSUs if terminated due to death.
If
Mr. Kirtley’s employment terminated December 31, 2020 he would have received accelerated vesting of $6,654 or $22,424 in
restricted stock, if terminated due to death or disability, respectively, and accelerated vesting of $31,025 in RSUs if terminated
due to death.
If
Mr. Anderson’s employment terminated December 31, 2020 he would have received accelerated vesting of $6,139 or $20,806 in
restricted stock, if terminated due to death or disability, respectively, and accelerated vesting of $28,121 in RSUs if terminated
due to death.
Payments
Made Upon a Change in Control. In accordance with the terms of their employment agreements, our named executive
officers are entitled to the following payments upon termination in connection with a change of control:
Craig
W. Best – If we terminate Mr. Best without cause or Mr. Best terminates for good reason within 36 months of a change
in control, he will receive, in addition to previously accrued compensation and benefits, monthly severance payments for 36 months
following termination, equal to the sum of 1/12th of the executive’s base salary at the time of termination and 1/12th of
the average bonus and incentive payment that Mr. Best received over the prior three years. In addition, the Company will pay the
applicable premium otherwise payable for COBRA continuation coverage for the executive and his spouse for a period of 36 months
following termination. If the payments or benefits payable to Mr. Best in connection with a change in control would be subject
to the excise tax on golden parachutes imposed under Section 4999 of the Internal Revenue Code, or be non-deductible by us under
Section 280G of the Internal Revenue Code, then those payments or benefits will be reduced to an amount that will not exceed the
Section 280G and Section 4999 limits under the Internal Revenue Code. If Mr. Best was terminated without cause or resigned for
good reason on December 31, 2020 following a change in control, the cash severance payment due under his employment agreement
(based solely on Mr. Best’s then current base salary and average bonus and incentive payments, without regard to future
adjustments, bonuses or incentives) would have been $1,591,325. In addition, Mr. Best would have received payment of health insurance
premiums valued at $61,830, and payment of accrued benefits of $141,894 under the Excess Benefit Plan, $480,277 under the Executive
Deferred Compensation Plan and $954,331 under Deferred Compensation Plan No. 2. In the event that Mr. Best had been terminated
without cause or had resigned for good reason on December 31, 2020, within 12 months following a change of control, he would have
received accelerated vesting of $ $26,835 in restricted stock and accelerated vesting of $87,342 in RSUs. For purposes of calculating
accelerated vesting of RSUs upon a change of control, based on performance through December 31, 2020, it is assumed that RSUs
would be earned at target.
Thomas
P. Tulaney – Pursuant to the terms of his employment agreement, if we terminate Mr. Tulaney without cause or Mr. Tulaney
terminates for good reason within 24 months of a change in control, he will receive, in addition to previously accrued compensation
and benefits, monthly severance payments for 24 months following termination, equal to the sum of 1/12th of the executive’s
base salary at the time of termination and 1/12th of average annual incentive and bonus payments. In addition, the Company will
pay the applicable premium otherwise payable for COBRA continuation coverage for the executive, his spouse and any dependents
for a period of 24 months following termination. If Mr. Tulaney was terminated without cause or resigned for good reason on December
31, 2020 following a change in control, the cash severance payment due under his employment agreement (based solely on Mr. Tulaney’s
then current base salary and average annual incentive and bonus payments, without regard to future adjustments, incentives or
bonuses) would have been $728,125. In addition, Mr. Tulaney would have received payment of health insurance premiums valued at
$41,220, accelerated vesting of $12,976 in restricted stock and accelerated vesting of $41,134 in RSUs, and $100,228 per year,
payable in monthly installments for twenty years, under his SERP. For purposes of calculating accelerated vesting of RSUs upon
a change of control, based on performance through December 31, 2020, it is assumed that RSUs would be earned at target. If the
payments or benefits payable to Mr. Tulaney under his employment agreement in connection with a change in control would be subject
to the excise tax on golden parachutes imposed under Section 4999 of the Internal Revenue Code, or be non-deductible by us under
Section 280G of the Internal Revenue Code, then those payments or benefits will be reduced to an amount that will not exceed the
Section 280G and Section 4999 limits under the Internal Revenue Code.
Neal
D. Koplin – In the event that Mr. Koplin is terminated within 24 months following a Change of Control (as defined in
the Koplin Employment Agreement) or resigns for Good Reason (as defined in the Koplin Employment Agreement), he will be entitled
to the salary payments described above for a period of three (3) years following termination (in lieu of one (1) year). Payment
of severance under the Koplin Employment Agreement is in each case contingent upon Mr. Koplin’s execution and delivery of
a release agreement to the Company and the Bank. If Mr. Koplin was terminated without cause or resigned for good reason on December
31, 2020 following a change in control, the cash severance due to Mr. Koplin under his employment agreement would have been $750,000.
If the payments or benefits payable to Mr. Koplin under his employment agreement in connection with a change in control would
be subject to the excise tax on golden parachutes imposed under Section 4999 of the Internal Revenue Code, or be non-deductible
by us under Section 280G of the Internal Revenue Code, then those payments or benefits will be reduced to an amount that will
not exceed the Section 280G and Section 4999 limits under the Internal Revenue Code. In addition, Mr. Koplin would have received
accelerated vesting of $10,881 in restricted stock and accelerated vesting of $35,510 in RSUs, and $47,579 per year, payable in
monthly installments for fifteen years, under his SERP. For purposes of calculating accelerated vesting of RSUs upon a change
of control, based on performance through December 31, 2020, it is assumed that RSUs would be earned at target.
Timothy
H. Kirtley – Pursuant to the terms of his employment agreement, if we terminate Mr. Kirtley without cause or Mr. Kirtley
terminates for good reason within 24 months of a change in control, he will receive, in addition to previously accrued compensation
and benefits, monthly severance payments for 24 months following termination, equal to the sum of 1/12th of the executive’s
base salary at the time of termination and 1/12th of average annual incentive and bonus payments. In addition, the Company will
pay the applicable premium otherwise payable for COBRA continuation coverage for the executive, his spouse and any dependents
for a period of 18 months following termination. If Mr. Kirtley was terminated without cause or resigned for good reason on December
31, 2020 following a change in control, the cash severance payment due under his employment agreement (based solely on Mr. Kirtley’s
then current base salary and average annual incentive and bonus payments, without regard to future adjustments, incentives or
bonuses) would have been $508,050. In addition, Mr. Kirtley would have received payment of health insurance premiums valued at
$34,986, accelerated vesting of $6,654 in restricted stock and accelerated vesting of $31,025 in RSUs. For purposes of calculating
accelerated vesting of RSUs upon a change of control, based on performance through December 31, 2020, it is assumed that RSUs
would be earned at target. If the payments or benefits payable to Mr. Kirtley under his employment agreement in connection with
a change in control would be subject to the excise tax on golden parachutes imposed under Section 4999 of the Internal Revenue
Code, or be non-deductible by us under Section 280G of the Internal Revenue Code, then those payments or benefits will be reduced
to an amount that will not exceed the Section 280G and Section 4999 limits under the Internal Revenue Code.
John
R. Anderson III – Upon termination by the Company without cause (whether or not following a change in control), Mr.
Anderson will receive his accrued compensation and other benefits through his termination date, along with a severance benefits
available under a policy applicable to employees, generally, namely two weeks of severance pay for each year of employment, subject
to a maximum of twenty-six weeks. In addition, he would receive accelerated vesting of $6,139 in restricted stock and accelerated
vesting of $28,121 in RSUs. For purposes of calculating accelerated vesting of RSUs upon a change of control, based on performance
through December 31, 2020, it is assumed that RSUs would be earned at target.
Pay
Ratio Disclosure
We
identified our median employee as of December 31, 2020, using our entire employee population, other than our principal executive
officer, and the total base salary or wages, plus bonus, earned by those employees during the 2020 calendar year. We calculated
the total compensation of our median employee in the same manner that the total compensation of our principal executive officer
is calculated in the summary compensation table, although the median employee’s total compensation consisted solely of salary,
bonus and contributions to our ESOP and 401(k) profit sharing plan. Based on this methodology, the 2020 total compensation of
our median employee was $41,516. The 2020 total compensation of our principal executive officer was $979,298 and the ratio of
the median employee’s total compensation to our principal executive officer’s total compensation for 2020 was 1:23.6.
2020
Director Compensation
The
following table sets forth information concerning the compensation received by individuals who served as directors (other than
Craig W. Best) during the year ended December 31, 2020.
|
Name
|
|
Fees Earned
or Paid in
Cash ($)
|
|
|
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)
|
|
|
All Other
Compensation ($)(1)
|
|
|
Total ($)
|
|
|
William E. Aubrey II
|
|
|
68,008
|
|
|
|
1,402
|
|
|
|
106
|
|
|
|
69,516
|
|
|
Sandra L. Bodnyk
|
|
|
40,633
|
|
|
|
–
|
|
|
|
–
|
|
|
|
40,633
|
|
|
James G. Keisling
|
|
|
14,668
|
|
|
|
25,935
|
|
|
|
–
|
|
|
|
40,603
|
|
|
Ronald G. Kukuchka
|
|
|
40,504
|
|
|
|
1,765
|
|
|
|
252
|
|
|
|
42,521
|
|
|
Richard S. Lochen, Jr.
|
|
|
59,516
|
|
|
|
1,457
|
|
|
|
106
|
|
|
|
61,079
|
|
|
Robert W. Naismith, Ph.D.
|
|
|
17,964
|
|
|
|
6,347
|
|
|
|
–
|
|
|
|
24,311
|
|
|
James B. Nicholas
|
|
|
50,512
|
|
|
|
4,758
|
|
|
|
–
|
|
|
|
55,270
|
|
|
George H. Stover, Jr.
|
|
|
14,668
|
|
|
|
5,555
|
|
|
|
449
|
|
|
|
20,672
|
|
|
Steven L. Weinberger
|
|
|
40,012
|
|
|
|
6,787
|
|
|
|
–
|
|
|
|
46,799
|
|
|
Joseph T. Wright, Jr.
|
|
|
56,548
|
|
|
|
1,405
|
|
|
|
225
|
|
|
|
58,178
|
|
|
|
(1)
|
Amount
reflects 2020 imputed income on supplemental life insurance split-dollar arrangements.
|
Each
non-employee director receives $1,000 for attendance at each board meeting, $500 for each committee meeting, and $300 for each
branch meeting. All non-employee directors receive a retainer of $20,000 per year. The Chairman of the Board receives a retainer
of $40,000 per year, and the Audit Committee Chairman receives an additional $417 per month; the Compensation Committee Chairman
receives an additional $292 per month; the Nominating and Corporate Governance Committee Chairman receives an additional $250
per month; the Trust Committee Chairman receives an additional $209 per month; the Asset Liability Management Committee Chairman
receives an additional $209 per month: the Asset Quality/Credit Committee Chairman receives an additional $209 per month and the
Information Technology Committee Chairwomen receives an additional $209 per month.
We
maintain a director supplemental life insurance plan. All directors are eligible for the life insurance benefit, subject to medical
underwriting acceptance. The plan currently insures seven directors. The director life insurance benefit of up to $100,000 per
participating director is provided through a single premium bank-owned life insurance, or “BOLI,” program because
BOLI is a more cost-effective way of providing the benefits. The eligible participating directors are not required to pay any
premiums on the life insurance policy, but have the imputed value of the insurance coverage included in their taxable income.
We
also maintain a deferred compensation plan for directors. All current non-employee directors are eligible to participate in the
plan. The plan allows for deferrals by participants of up to 100 percent of their director’s fees and there is no maximum
dollar limit on the amount that may be deferred each year. Participants are permitted to change their percentage of deferral annually.
The participants are always 100 percent vested in the amounts they defer and earnings are credited to their accounts at market
rates. Participants are entitled to receive a distribution from their account upon a termination of service, a change in control,
or a specified date as allowed within the plan.
The
Company provides a retirement benefit to its non-employee directors. Upon vesting, based on either a change in control or ten
years of service, a director is eligible to receive an annual cash payment equal to the product of the director’s number
of years of service multiplied by $150, payable for a ten years period following retirement from board service.
Certain
Relationships and Related Transactions
The
Bank has made, and expects to continue to make, loans in the future to our directors and executive officers and their family members,
and to firms, corporations, and other entities in which they and their family members maintain interests. All such loans require
the prior approval of our board of directors. None of such loans are, as of the date of this proxy statement, or were at December
31, 2020, nonaccrual, past due, restructured or potential problems, and all of such loans were made in the ordinary course of
business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable
loans with persons not related to the Company or the Bank and did not involve more than the normal risk of collectability or present
other unfavorable features.
Thomas
P. Tulaney II is the son of Thomas P. Tulaney, one of our named executive officers, and is employed as a vice president of the
Bank. Thomas P. Tulaney II’s compensation and benefit package totaled $144,629 during the 2020 fiscal year.
Except
for loan transactions and employment described above, deposits with the Bank, and transactions where the rates or charges were
determined by competitive bids, there were no transactions since the beginning of our last fiscal year, and there are no currently
proposed transactions, in which we were or are to be a participant, the amount involved exceeds $120,000, and in which any related
person who is also an executive officer had or will have a direct or indirect material interest.
The
Bank has a formal process with respect to the review and approval of loans extended by it to related persons. In accordance with
these procedures, all transactions with related persons must be approved or ratified by disinterested members of board of directors.
All loans and commitments to lend included in such transactions were made under substantially the same terms, including interest
rates, collateral, and repayment terms as those prevailing at the time for comparable transactions with other persons not related
to the Bank and do not involve more than the normal risk of collection or present other unfavorable features.
Our
code of business conduct and ethics, audit committee charter, and loan policy and procedures related to the approval of loans
set forth our policies and procedures for the review, approval, or ratification of any transactions with related persons. Any
transaction that involves the purchase from, sale to, or joint ownership with, a related person, of an interest in real or personal
property must receive any required approvals of regulatory authorities confirming that the terms of such transactions are fair
to, and in the best interests of the Company or the Bank; be supported by an independent appraisal not prepared by a related person
or an employee of the Company or the Bank; and be approved in advance by a resolution duly adopted, with full disclosure, by our
audit committee. Any extension of credit to a related person must be approved in advance by a resolution duly adopted after full
disclosure by a majority of the entire board of directors of the Bank, with each interested director abstaining from participating,
directly or indirectly, in the vote. All other transactions not expressly described in our code of conduct and ethics, in which
any related person will have a direct or indirect material interest, are subject to review and approval by our audit committee.
Compensation
Committee Interlocks and Insider Participation
During
2020, directors Aubrey, Bodnyk, Lochen, and Wright served as members of our compensation committee. Except for Mr. Lochen, who
served as an executive officer of the Company from 2006 until 2010, no member of the compensation committee has ever served as
an officer or employee of the Company or its subsidiaries. During 2020, there were no compensation committee interlocks between
the Company or its subsidiaries and any other entity involving the Company or its subsidiaries or any such entity’s executive
officers or directors.
Code
of Ethics
We
have adopted a code of conduct and ethics that applies to our directors and executive officers, including our principal executive
officer, principal financial officer, principal accounting officer and other senior financial officers. Our code of conduct and
ethics is available via our website, psbt.com, at the “Corporate Info – Governance Documents” page under “Investor
Relations.”
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires the Company’s officers and directors and persons who own more than ten percent of a registered
class of the Company’s equity securities (“ten-percent holders”) to file reports of ownership and changes in
ownership with the SEC. Officers, directors and ten-percent holders are required by regulation to furnish the Company with copies
of all Section 16(a) forms they file. To the Company’s knowledge, based solely on review of the copies of such reports furnished
to the Company and representations that no other reports were required, during the fiscal year ended December 31, 2020, each of
the Company’s officers, directors, and greater than ten-percent holders complied with all Section 16(a) filing requirements
applicable to him or her, except that two Form 4s, reporting one transaction each, were not filed on a timely basis by Mr. Lochen.
Equity
Compensation Plan Information
The
table below sets forth information with respect to compensation plans under which equity securities of the Company were authorized
for issuance as of December 31, 2020.
|
Plan Category
|
|
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 Shares Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in First Column)
|
|
|
Equity Compensation Plans Equity compensation plans approved by security holders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Equity Incentive Plan
|
|
–
|
|
|
N/A
|
|
56,966
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans not approved by security holders: None
|
|
–
|
|
|
N/A
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
–
|
|
|
N/A
|
|
56,966
|
(1)
|
|
|
(1)
|
The
2017 Equity Incentive Plan provides for the grant of the following equity-based and cash-based
incentive awards to participants: stock options, stock appreciation rights, restricted
stock, restricted stock units, cash awards and performance awards.
|
Shareholder
Proposals
Nominations
of persons for election to the board of directors and the proposal of business to be considered by the shareholders at an annual
meeting of shareholders may be made by any shareholder of the Company who was a shareholder of record at the time of the notice
for the annual meeting, who is entitled to vote at the annual meeting, and who complies with the notice procedures set forth in
our bylaws.
For
director nominations or other proposals to be properly brought before the 2022 annual meeting by a shareholder, the shareholder
must give written notice to the Secretary of the Company at Peoples Financial Services Corp., 150 North Washington Avenue, Scranton,
Pennsylvania 18503, by March 16, 2022, and any proposal other than a director nomination must be a proper matter for shareholder
action, and not otherwise excludable under the rules and regulations of the SEC. In order for a shareholder proposal other than
a director nomination to be included in the Company’s proxy statement for the 2022 annual meeting of shareholders, in addition
to meeting all of the requirements set forth in our bylaws, and all requirements of applicable securities laws, we must receive
the proposal by December 6, 2021.
A
shareholder’s notice must set forth (i) the name and address of the shareholder who intends to bring the business before
the meeting (“Proposing Shareholder”); (ii) the name and address of the beneficial owner, if different than the Proposing
Shareholder, or any of the shares of Peoples common stock which are owned of record and beneficially by the Proposing Shareholder
and the number which are owned beneficially by any beneficial owner; (iii) any interest (other than an interest solely as a shareholder)
which the Proposing Shareholder or a beneficial owner has in the business being proposed by the Proposing Shareholder; (iv) a
description of all arrangements and understandings between the Proposing Shareholder and any beneficial owner and any other person
or persons (naming such person or persons) pursuant to which the proposal in the shareholder notice is being made; (v) a description
of the business which the Proposing Shareholder seeks to bring before the meeting, the reason for doing so and, if a specific
action is to be proposed, the text of the resolution or resolutions which the Proposing Shareholder proposes that the Company
adopt; and (vi) a representation that the Proposing Shareholder is at the time of giving the shareholder notice, was or will be
on the record date for the meeting, and will be on the meeting date a holder of record of shares of the Company entitled to vote
at such meeting, and intends to appear in person or by proxy at the meeting to bring the business specified in the shareholder
notice before the meeting. The presiding officer of the meeting may, in such officer’s sole discretion, refuse to acknowledge
any business proposed by a shareholder which the presiding officer determines is not made in compliance with the foregoing procedure.
Reports
and Other Documents
Annual
Report
A
copy of the Company’s 2020 Annual Report to Shareholders accompanies this proxy statement. On written request, we will
provide, without charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC
(including a list briefly describing the exhibits thereto), to any record holder or beneficial owner of common stock on March
1, 2021, the record date for the annual meeting, or to any person who subsequently becomes such a record holder or beneficial
owner. Additionally, our proxy statement, annual report to shareholders and proxy card are available at www.proxyvote.com.
Requests should be directed to the attention of the Secretary of the Company at Peoples Financial Services Corp., 150 North Washington
Avenue, Scranton, Pennsylvania 18503.
Security
Holders Sharing an Address
Only
one copy of this proxy statement and the accompanying 2020 Annual Report to Shareholders is being delivered to multiple shareholders
sharing an address unless we have previously received contrary instructions from one or more of such shareholders. On written
or oral request to the Secretary of the Company at Peoples Financial Services Corp., 150 North Washington Avenue, Scranton, Pennsylvania
18503, we will deliver promptly a separate copy of this proxy statement and the accompanying 2020 Annual Report to Shareholders
to a shareholder at a shared address to which a single copy of the documents was delivered. Shareholders sharing an address who
wish, in the future, to receive separate copies or a single copy of our proxy statements and annual reports should provide written
or oral notice to the Secretary of the Company at the address and telephone number set forth above.
|
|
BY
ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
|
|
/s/ TIMOTHY
H. KIRTLEY
|
|
|
TIMOTHY
H. KIRTLEY
|
|
|
Secretary
|
|
VIEW MATERIALS & VOTE w SCAN TO PEOPLES FINANCIAL SERVICES CORP. 150 N. WASHINGTON AVENUE SCRANTON, PA 18503 VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/PFIS2021 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D41134-P50948 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. PEOPLES FINANCIAL SERVICES CORP. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES, AND VOTES FOR THE OTHER PROPOSALS. 1. Election of two directors to our Board of Directors, each to serve until the 2024 Annual Meeting of Shareholders and until his successor has been elected and qualified. Nominees: 01) Richard S. Lochen, Jr. For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! 02) James B. Nicholas 2. Proposal to approve, on an advisory basis, the compensation of our named executive officers. 3. Ratification of the appointment of Baker Tilly US, LLP as the Company’s independent accounting firm for the fiscal year ending December 31, 2021. Should a director nominee be unable to serve as a director, an event that Peoples Financial Services Corp. does not currently anticipate, the persons named in this proxy reserve the right, in their discretion to vote for a substitute nominee designated by the board of directors. This proxy may be revoked at any time before it is voted by delivering to the secretary of Peoples Financial Services Corp. on or before the taking of the vote at the annual meeting, a written notice of revocation bearing a later date than the proxy or a later dated proxy relating to the same shares of Peoples Financial Services Corp. common stock, or by attending the annual meeting and voting in person. Attendance at the annual meeting will not in itself constitute the revocation of a proxy. If any other business is presented at such meeting, including any motion to adjourn or postpone the meeting, for the purpose of soliciting additional proxies or for any other reason, or other matters incidental to the conduct of the meeting or otherwise, this proxy will be voted by those named in this proxy in their best judgment. At the present time, the board of directors knows of no other business to be presented at the meeting. Note: Please sign exactly as your name or names appear(s) on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
|
|
ANNUAL MEETING OF SHAREHOLDERS OF PEOPLES FINANCIAL SERVICES CORP. May 15, 2021 Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. D41135-P50948 PEOPLES FINANCIAL SERVICES CORP. 150 N. Washington Avenue Scranton, PA 18503 PROXY ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 15, 2021 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoint(s) Stephen N. Lawrenson and Lynn M. Thiel as proxies, each with full power of substitution, to represent and vote as designated on the reverse side, all the shares of Common Stock of Peoples Financial Services Corp. held of record by the undersigned at the close of business day on March 1, 2021, the record date for the meeting, at the Annual Meeting of Shareholders to be held at www.virtualshareholdermeeting.com/PFIS2021 on May 15, 2021, and any adjournments or postponements thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED, AND FOR THE OTHER PROPOSALS. The undersigned hereby acknowledges receipt of the Proxy Statement dated on or about April 5, 2021 and Annual Report, and hereby revokes any proxy or proxies heretofore given to vote shares at the Meeting and any adjournments or postponements thereof. Please sign, date and mail your proxy card in the envelope provided as soon as possible. (Continued and to be signed on the reverse side)
|
Peoples Financial Services (NASDAQ:PFIS)
Historical Stock Chart
From Oct 2024 to Nov 2024
Peoples Financial Services (NASDAQ:PFIS)
Historical Stock Chart
From Nov 2023 to Nov 2024
